UniCredit S.p.A.
Annual Report 2018

Plain-text annual report

One Bank, One Bank, One UniCredit. One UniCredit. 2018 Annual Report and Accounts GENERAL MEETING DRAFT   One Bank, One UniCredit. Our strategy is clear and long-term. We are transforming the Group to build the bank of tomorrow for our extensive client franchise. Everything we do is designed to make UniCredit a true pan-European winner.  Contents UniCredit ·2018 Annual Report and Accounts 3 Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 5 Chairman’s message 6 Chief Executive Officer’s message 8 Ethics and respect: Do the right thing! 10 Highlights 12 A pan-European winner 13 Business Growth 14 Transform 2019 Milestones 15 Note to the report 17 CONSOLIDATED REPORT AND ACCOUNTS 2018 OF UNICREDIT GROUP 23 REPORT AND ACCOUNTS 2018 OF UNICREDIT S.P.A. 505 Glossary 775 Contacts 789 Notes The following conventional symbols have been used in the tables: • a dash (-) indicates that the item/figure is inexistent; • two stops (..) or “n.m.” when the figures do not reach the minimum considered significant or are not meaningful; • “n.a.” indicates that the figure is not available. Any discrepancies between data are solely due to the effect of rounding. Contents UniCredit ·2018 Annual Report and Accounts 3 Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 5 Chairman’s message 6 Chief Executive Officer’s message 8 Ethics and respect: Do the right thing! 10 Highlights 12 A pan-European winner 13 Business Growth 14 Transform 2019 Milestones 15 Note to the report 17 CONSOLIDATED REPORT AND ACCOUNTS 2018 OF UNICREDIT GROUP 23 REPORT AND ACCOUNTS 2018 OF UNICREDIT S.P.A. 505 Glossary 775 Contacts 789 Notes The following conventional symbols have been used in the tables: • a dash (-) indicates that the item/figure is inexistent; • two stops (..) or “n.m.” when the figures do not reach the minimum considered significant or are not meaningful; • “n.a.” indicates that the figure is not available. Any discrepancies between data are solely due to the effect of rounding. Contents UniCredit ·2018 Annual Report and Accounts 3 Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 5 Chairman’s message 6 Chief Executive Officer’s message 8 Ethics and respect: Do the right thing! 10 Highlights 12 A pan-European winner 13 Business Growth 14 Transform 2019 Milestones 15 Note to the report 17 CONSOLIDATED REPORT AND ACCOUNTS 2018 OF UNICREDIT GROUP 23 REPORT AND ACCOUNTS 2018 OF UNICREDIT S.P.A. 505 Glossary 775 Contacts 789 Notes The following conventional symbols have been used in the tables: • a dash (-) indicates that the item/figure is inexistent; • two stops (..) or “n.m.” when the figures do not reach the minimum considered significant or are not meaningful; • “n.a.” indicates that the figure is not available. Any discrepancies between data are solely due to the effect of rounding. Contents UniCredit ·2018 Annual Report and Accounts 3 Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 5 Chairman’s message 6 Chief Executive Officer’s message 8 Ethics and respect: Do the right thing! 10 Highlights 12 A pan-European winner 13 Business Growth 14 Transform 2019 Milestones 15 Note to the report 17 CONSOLIDATED REPORT AND ACCOUNTS 2018 OF UNICREDIT GROUP 23 REPORT AND ACCOUNTS 2018 OF UNICREDIT S.P.A. 505 Glossary 775 Contacts 789 Notes The following conventional symbols have been used in the tables: • a dash (-) indicates that the item/figure is inexistent; • two stops (..) or “n.m.” when the figures do not reach the minimum considered significant or are not meaningful; • “n.a.” indicates that the figure is not available. Any discrepancies between data are solely due to the effect of rounding. Contents UniCredit ·2018 Annual Report and Accounts 3 Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 5 Chairman’s message 6 Chief Executive Officer’s message 8 Ethics and respect: Do the right thing! 10 Highlights 12 A pan-European winner 13 Business Growth 14 Transform 2019 Milestones 15 Note to the report 17 CONSOLIDATED REPORT AND ACCOUNTS 2018 OF UNICREDIT GROUP 23 REPORT AND ACCOUNTS 2018 OF UNICREDIT S.P.A. 505 Glossary 775 Contacts 789 Notes The following conventional symbols have been used in the tables: • a dash (-) indicates that the item/figure is inexistent; • two stops (..) or “n.m.” when the figures do not reach the minimum considered significant or are not meaningful; • “n.a.” indicates that the figure is not available. Any discrepancies between data are solely due to the effect of rounding.  I 4 2018 Annual Report and Accounts · UniCredit UniCredit S.p.A. A joint stock company Registered Office and Head Office: Piazza Gae Aulenti, 3 - Tower A - 20154 Milano Share capital €20,940,398,466.81 fully paid in Registered in the Register of Banking Groups and Parent Company of the UniCredit Banking Group, with cod. 02008.1 Cod. ABI 02008.1 Fiscal Code, VAT number and Registration number with the Company Register of Milan-Monza-Brianza-Lodi: 00348170101 Member of the National Interbank Deposit Guarantee Fund and of the National Compensation Fund Stamp duty paid virtually, if due - Auth. Agenzia delle Entrate, Ufficio di Roma 1, No.143106/07 of 12.21.2007 I 4 2018 Annual Report and Accounts · UniCredit UniCredit S.p.A. A joint stock company Registered Office and Head Office: Piazza Gae Aulenti, 3 - Tower A - 20154 Milano Share capital €20,940,398,466.81 fully paid in Registered in the Register of Banking Groups and Parent Company of the UniCredit Banking Group, with cod. 02008.1 Cod. ABI 02008.1 Fiscal Code, VAT number and Registration number with the Company Register of Milan-Monza-Brianza-Lodi: 00348170101 Member of the National Interbank Deposit Guarantee Fund and of the National Compensation Fund Stamp duty paid virtually, if due - Auth. Agenzia delle Entrate, Ufficio di Roma 1, No.143106/07 of 12.21.2007 I 4 2018 Annual Report and Accounts · UniCredit UniCredit S.p.A. A joint stock company Registered Office and Head Office: Piazza Gae Aulenti, 3 - Tower A - 20154 Milano Share capital €20,940,398,466.81 fully paid in Registered in the Register of Banking Groups and Parent Company of the UniCredit Banking Group, with cod. 02008.1 Cod. ABI 02008.1 Fiscal Code, VAT number and Registration number with the Company Register of Milan-Monza-Brianza-Lodi: 00348170101 Member of the National Interbank Deposit Guarantee Fund and of the National Compensation Fund Stamp duty paid virtually, if due - Auth. Agenzia delle Entrate, Ufficio di Roma 1, No.143106/07 of 12.21.2007 I 4 2018 Annual Report and Accounts · UniCredit UniCredit S.p.A. A joint stock company Registered Office and Head Office: Piazza Gae Aulenti, 3 - Tower A - 20154 Milano Share capital €20,940,398,466.81 fully paid in Registered in the Register of Banking Groups and Parent Company of the UniCredit Banking Group, with cod. 02008.1 Cod. ABI 02008.1 Fiscal Code, VAT number and Registration number with the Company Register of Milan-Monza-Brianza-Lodi: 00348170101 Member of the National Interbank Deposit Guarantee Fund and of the National Compensation Fund Stamp duty paid virtually, if due - Auth. Agenzia delle Entrate, Ufficio di Roma 1, No.143106/07 of 12.21.2007 I 4 2018 Annual Report and Accounts · UniCredit UniCredit S.p.A. A joint stock company Registered Office and Head Office: Piazza Gae Aulenti, 3 - Tower A - 20154 Milano Share capital €20,940,398,466.81 fully paid in Registered in the Register of Banking Groups and Parent Company of the UniCredit Banking Group, with cod. 02008.1 Cod. ABI 02008.1 Fiscal Code, VAT number and Registration number with the Company Register of Milan-Monza-Brianza-Lodi: 00348170101 Member of the National Interbank Deposit Guarantee Fund and of the National Compensation Fund Stamp duty paid virtually, if due - Auth. Agenzia delle Entrate, Ufficio di Roma 1, No.143106/07 of 12.21.2007  Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 UniCredit ·2018 Annual Report and Accounts 5 Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 Board of Directors, Board of Statutory Auditors and External Auditors as at 30 June 2018 Board of Directors Fabrizio Saccomanni Chairman Cesare Bisoni Deputy Vice Chairman Jean Pierre Mustier CEO Mohamed Hamad Al Mehairi Directors Lamberto Andreotti Sergio Balbinot Martha Boeckenfeld Vincenzo Cariello Isabelle de Wismes Stefano Micossi Maria Pierdicchi Andrea Sironi(*) Francesca Tondi Alexander Wolfgring Elena Zambon Gianpaolo Alessandro Company Secretary Board of Statutory Auditors Pierpaolo Singer Chairman Antonella Bientinesi Standing Auditors Angelo Rocco Bonissoni Benedetta Navarra Guido Paolucci Stefano Porro Manager in charge with preparing the financial reports Deloitte & Touche S.p.A. External Auditors Note: (*) Prof. Andrea Sironi resigned from his position as Director starting from 6 February 2019 and the same day the Board of Directors coopted Prof.ssa Elena Carletti. Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 UniCredit ·2018 Annual Report and Accounts 5 Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 Board of Directors, Board of Statutory Auditors and External Auditors as at 30 June 2018 Board of Directors Fabrizio Saccomanni Chairman Cesare Bisoni Deputy Vice Chairman Jean Pierre Mustier CEO Mohamed Hamad Al Mehairi Directors Lamberto Andreotti Sergio Balbinot Martha Boeckenfeld Vincenzo Cariello Isabelle de Wismes Stefano Micossi Maria Pierdicchi Andrea Sironi(*) Francesca Tondi Alexander Wolfgring Elena Zambon Gianpaolo Alessandro Company Secretary Board of Statutory Auditors Pierpaolo Singer Chairman Antonella Bientinesi Standing Auditors Angelo Rocco Bonissoni Benedetta Navarra Guido Paolucci Stefano Porro Manager in charge with preparing the financial reports Deloitte & Touche S.p.A. External Auditors Note: (*) Prof. Andrea Sironi resigned from his position as Director starting from 6 February 2019 and the same day the Board of Directors coopted Prof.ssa Elena Carletti. Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 UniCredit ·2018 Annual Report and Accounts 5 Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 Board of Directors, Board of Statutory Auditors and External Auditors as at 30 June 2018 Board of Directors Fabrizio Saccomanni Chairman Cesare Bisoni Deputy Vice Chairman Jean Pierre Mustier CEO Mohamed Hamad Al Mehairi Directors Lamberto Andreotti Sergio Balbinot Martha Boeckenfeld Vincenzo Cariello Isabelle de Wismes Stefano Micossi Maria Pierdicchi Andrea Sironi(*) Francesca Tondi Alexander Wolfgring Elena Zambon Gianpaolo Alessandro Company Secretary Board of Statutory Auditors Pierpaolo Singer Chairman Antonella Bientinesi Standing Auditors Angelo Rocco Bonissoni Benedetta Navarra Guido Paolucci Stefano Porro Manager in charge with preparing the financial reports Deloitte & Touche S.p.A. External Auditors Note: (*) Prof. Andrea Sironi resigned from his position as Director starting from 6 February 2019 and the same day the Board of Directors coopted Prof.ssa Elena Carletti. Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 UniCredit ·2018 Annual Report and Accounts 5 Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 Board of Directors, Board of Statutory Auditors and External Auditors as at 30 June 2018 Board of Directors Fabrizio Saccomanni Chairman Cesare Bisoni Deputy Vice Chairman Jean Pierre Mustier CEO Mohamed Hamad Al Mehairi Directors Lamberto Andreotti Sergio Balbinot Martha Boeckenfeld Vincenzo Cariello Isabelle de Wismes Stefano Micossi Maria Pierdicchi Andrea Sironi(*) Francesca Tondi Alexander Wolfgring Elena Zambon Gianpaolo Alessandro Company Secretary Board of Statutory Auditors Pierpaolo Singer Chairman Antonella Bientinesi Standing Auditors Angelo Rocco Bonissoni Benedetta Navarra Guido Paolucci Stefano Porro Manager in charge with preparing the financial reports Deloitte & Touche S.p.A. External Auditors Note: (*) Prof. Andrea Sironi resigned from his position as Director starting from 6 February 2019 and the same day the Board of Directors coopted Prof.ssa Elena Carletti. Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 UniCredit ·2018 Annual Report and Accounts 5 Board of Directors, Board of Statutory Auditors and External Auditors as at 31 December 2018 Board of Directors, Board of Statutory Auditors and External Auditors as at 30 June 2018 Board of Directors Fabrizio Saccomanni Chairman Cesare Bisoni Deputy Vice Chairman Jean Pierre Mustier CEO Mohamed Hamad Al Mehairi Directors Lamberto Andreotti Sergio Balbinot Martha Boeckenfeld Vincenzo Cariello Isabelle de Wismes Stefano Micossi Maria Pierdicchi Andrea Sironi(*) Francesca Tondi Alexander Wolfgring Elena Zambon Gianpaolo Alessandro Company Secretary Board of Statutory Auditors Pierpaolo Singer Chairman Antonella Bientinesi Standing Auditors Angelo Rocco Bonissoni Benedetta Navarra Guido Paolucci Stefano Porro Manager in charge with preparing the financial reports Deloitte & Touche S.p.A. External Auditors Note: (*) Prof. Andrea Sironi resigned from his position as Director starting from 6 February 2019 and the same day the Board of Directors coopted Prof.ssa Elena Carletti. Chairman's message 6 2018 Annual Report and Accounts · UniCredit Thanks to the support of both our shareholders and stakeholders, I am confident that UniCredit will meet its goals ensuring sustainable profitability and an ever increasing high level of service. Fabrizio Saccomanni Chairman Dear Shareholders, I have greatly enjoyed my first year as chairman of UniCredit. Over the course of 2018, there have been many opportunities to admire the group’s incredible potential, thanks to the unique European positioning and high levels of professional and personal excellence of everyone in the group. The financial community shares this positive view. The solidity of our governance system, which guarantees the quality and integrity of our decision-making processes, is widely recognised. UniCredit will continue to invest in ensuring transparency and in maintaining an open dialogue with all of our stakeholders. The past year has also confirmed the increasing challenges that our sector faces. Firstly, a more complex macroeconomic context. Secondly, a continuously evolving regulatory environment. Last, but not least, growing competitive pressures, mainly from digitalisation. These trends are driving transformation in banking business models. The UniCredit board of directors, who I represent, is very focused on these topics. Renewed in April, they bring diverse professional experiences, including vast economic and financial knowledge at both national and international levels. Their active involvement, through new insights and ideas, allow our excellent management team, expertly led by our CEO, Jean Pierre Mustier, to keep making UniCredit a successful pan-European bank. Our results demonstrate that we have made the right choices. Where necessary, the group has taken decisive actions, especially related to non-recurring events, without compromising on stability. We are optimistic for the future. Progress on our strategic plan is ahead of schedule. We are protecting the bank's capital position and have accelerated the de-risking process, which will allow us to complete the rundown of non-performing legacies in three years. We have achieved important results on efficiency, risk management, process simplification and the digitisation of services we provide to customers – all through significant investments. To continue our progress in the transformation of the bank, we will leverage on the new transformation & innovation advisory board, which gives us access to thought leaders in technology and innovation. This team will regularly debrief the UniCredit board of directors. Looking to 2019, we will continue to support the “real economy” in the countries in which we operate. As a simple, successful pan- European commercial bank, UniCredit is dedicated to supporting customers, contributing to Europe’s economic and social development. For example, we will remain focused on supporting the growth of SMEs, the backbone of the European economy, and our social banking initiatives. UniCredit is characterised by solidity, credibility and a clear outlook on our future, distinguishing the group in a challenging competitive landscape. Thanks to the support of both our shareholders and stakeholders, I am confident that UniCredit will meet its goals, ensuring sustainable profitability and an ever increasing high level of service. Sincerely, Fabrizio Saccomanni Chairman UniCredit S.p.A. UniCredit · 2018 Annual Report and Accounts 7 Chief Executive Officer's message We are focused on sustainable business growth, based on ethics and respect, to ensure UniCredit remains a pan-European winner. Jean Pierre Mustier Chief Executive Officer 8 2018 Annual Report and Accounts · UniCredit Dear Shareholders, Thank you for your valuable, ongoing support. We have closed a second, successful year of our Transform 2019 strategic plan. UniCredit is a solid bank with strong capital ratios and an unstinting focus on value creation for all of its stakeholders through innovative commercial actions, digital transformation, enhanced risk management, transparent corporate governance and key social impact banking initiatives – based on ethics and respect. For us this means doing the right thing. As the banking industry continues to evolve, UniCredit will stay focused on "what matters" – the changing needs of our customers – to protect the value of our business and ensure sustainability. Our strategy is One Bank, One UniCredit: we are and will remain a simple, successful, pan European commercial bank, with a fully plugged in CIB, delivering a unique Western, Central and Eastern European network to our extensive and growing client franchise. The combined energy, commitment and hard work of all UniCredit team members is what allows us to deliver tangible results. We confirm our Transform 2019 targets: net profit target of 4.7 billion Euro and a RoTE of above 9 per cent, with our Group Core RoTE above 10 per cent. We will maintain a strong capital position by generating solid profits and ensure we have a comfortable MDA buffer. Our CET1 capital ratio is fully loaded and compliant with all regulatory requirements. The UniCredit Group fared well in the EBA stress test results, with one of the highest CET1 ratios compared to Eurozone peers. In terms of asset quality, we have decisively continued to de-risk our balance sheet, completing the final phase of Project FINO. Our disciplined risk management strategy is ensuring improved asset quality as well as high quality origination across the Group. We are fully on track for the accelerated rundown of our Non Core portfolio, brought forward by four years to 2021. We are leveraging on digitalisation to transform our operating model, with an improved cost reduction. We will continue to enhance the customer experience through simpler processes, ensuring greater efficiency and effectiveness. We continue to maximise commercial bank value thanks to a renewed and dynamic focus on our clients, pursuing a multichannel strategy with best-in-class products and services. Our CIB is fully plugged into the Group’s strong commercial banking and focused on supporting the real economy. Finally, I extend a warm welcome to Fabrizio Saccomanni, our new Chairman. Fabrizio's significant experience in international monetary and financial cooperation, particularly in terms of supervisory and regulatory knowhow, brings great value to our Group. Together we have started to actively prepare for the next strategic cycle. We will focus on the development of our business activities and the continued optimisation of our processes, while providing all colleagues with a best in class work environment and experience, to continue to attract the right people. This begins with an even more energised leadership team, and a changed leadership structure, that will bring this new strategy to fruition. We will keep working hard to ensure that UniCredit remains a true pan-European winner. Sincerely, Jean Pierre Mustier Chief Executive Officer UniCredit S.p.A. UniCredit · 2018 Annual Report and Accounts 9 Ethics and respect: Do the right thing! UniCredit’s Board and Senior Management consider that the way in which results are achieved is as important as the actual results. Therefore, the following Group Principles1 should guide all employees’ decisions and behaviors irrespective of seniority, responsibility and geographical area: “Ethics and respect: Do the right thing!” Group Principles are designed to help all UniCredit employees, to guide their decision-making and their behaviours towards all stakeholders in their day to day activities. In particular, such Principles require: • compliance with the highest ethics standards - beyond banking regulation and beyond the law - in relationships with clients, colleagues, environment, shareholders and any other stakeholders; fostering a respectful, harmonious and productive workplace; • to best protect the Bank, its reputation and to be an employer and a counterparty of choice. Group Principles underpin a set of core guidelines that further clarify expectations about the way to work as One Team, One UniCredit and support employees in the fulfillment of UniCredit Five Fundamentals. The spirit of each of these principles is extremely important and it will be the subject of more detailed policies that will be developed or updated in the coming months. Group principles in day to day activities • Ethics as a guiding principle of fairness and respect towards all stakeholders in order to achieve sustainable results. UniCredit colleagues, irrespective of seniority, responsibility and geographical area, are expected to do the right thing in their daily activities and to be fair towards all stakeholders to gain and retain their trust. • “Ethics and respect” is a guiding principle which applies to all Group policies. The “Ethics and respect” principle is based on a long term view of the Group business activities and relationships with stakeholders as well as a comprehensive view of the internal and external working environment. Business policies require care to ensure that responsible sales approach work in harmony with balanced, fair and respectful customer interactions, enabling the achievement of sustainable business success and long-term targets. Targets and other business results are not considered achieved if they are not met in compliance with the Group Principles, related policies and the requirements that flow from them. • “Ethics and respect” is a guiding principle for interactions amongst all Group employees. UniCredit colleagues are expected to contribute in their daily activities toward creating and maintaining a work environment that is as respectful and harmonious as possible, eliminating intimidating, hostile, degrading, humiliating or offensive behaviors and words. UniCredit must contribute to assuring the respect for the rights, value and dignity of people and the environment. All forms of harassment, bullying and sexual misconduct are unacceptable. 10 2018 Annual Report and Accounts · UniCredit • “Ethics and respect” is a guiding principle for the promotion of diversity and work life balance which are considered valuable assets. UniCredit colleagues are expected to assure a workplace where all kinds of diversity (e.g. age, race, nationality, political opinions, religion, gender, sexual orientation) are not only respected, but also proactively promoted as well as to contribute to an environment in which respect for, and attention to, colleagues’ needs, health, work-life balance and well being are deemed essential to achieving sustainable results. • “Ethics and respect” is a guiding principle underpinning the reinforcement of a “Speak-up culture” and anti-retaliation protection. UniCredit is firmly committed to promoting an environment in which colleagues and third parties feel comfortable engaging in open and honest communication. UniCredit encourages colleagues and third parties to speak up and raise promptly good-faith concerns without fear of retaliation relating to any situation that may involve unethical or illegal conduct or inappropriate interactions with others. 1. Which substitute the former group values. UniCredit · 2018 Annual Report and Accounts 11 Highlights UniCredit is a simple successful pan-European Commercial Bank, with a fully plugged in CIB, delivering a unique Western, Central and Eastern European network to our extensive client franchise: 26 million clients. UniCredit offers both local and international expertise providing its clients with unparalleled access to leading banks in its 14 core markets as well as in other 18 countries worldwide. UniCredit European banking network includes Italy, Germany, Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey. Financial Highlights1 Operating income € 19,723 m Net profit (loss) € 3,892 m Shareholders' equity € 55,841 m Revenues1 (%) 13 19 3 8 by Business Lines 21 Total assets € 831,469 m Common Equity Tier 1 ratio* 12.07% Commercial Banking Italy CEE Division CIB 10 20 36 Commercial Banking Germany Commercial Banking Austria Asset Gathering by Regions 49 21 Italy Germany CEE Austria 1. Data as at December 31, 2018. * Fully loaded CET1 ratio. 12 2018 Annual Report and Accounts · UniCredit A pan-European winner European banks must continue to focus on their clients, supporting European companies aiming for international growth. Achieving both reach and scale is important, to provide customers with effi cient products at the best possible price. UniCredit is a successful pan-European banking group. We deliver the best products and services to our 26 million clients in 14 core markets, responding to their concrete needs. Our geographically diversifi ed reach provides all our shareholders, clients and colleagues with greater security. And our "One Bank, One UniCredit" strategic approach combines central guidance with local implementation, to keep making our Group a pan-European winner. Achievements 2018 Top Employers Institute: Top employer Europe 2018 Awarded thanks to local certifi cation achieved in Bulgaria, Croatia, Germany, Italy and Russia Bank of the Year 2018 Bank of the Year 2018 • The Banker: Bank of the Year in Italy 2018 • The Banker: Bank of the Year in Bosnia 2018 TRADE FINANCE Euromoney: Trade Finance Survey 2019 #1 across 28 categories Global Best Service Provider for: "All Services", "Advisory", "Financing/payments", "Overall Execution" and "Products" Digital Partnerships Key transaction partnerships • Apple Pay • Samsung Pay • Alipay • Google Pay Digital innovation for customers • Alexa in Austria, to bank through Amazon’s voice assistant • U-days in Italy, to promote knowledge of digital payments and payment apps: Apple Pay, Samsung Pay, Alipay, Google Pay UniCredit · 2018 Annual Report and Accounts 13 Business Growth Our positive overall financial performance proves our good progress in strengthening the Group through strategic business initiatives and a focus on digitalisation and process simplification, leveraging on best practices across the Group. This is already driving significant growth. As the banking industry continues to evolve, we will maintain our focus on changing customer needs, ensuring the future sustainability of our business. In UniCredit, building the bank of tomorrow means: • Constant focus on customer satisfaction and consistent service quality • Continued review of processes to improve the customer experience and optimise cost, with a strong focus on risk management • Further revenues growth Key Performance Indicators FY 2017 FY 2018 FY 2019 Cost-Income Ratio 56.9 % 54.2 % 52-53 % Group Gross NPEs Ratio 10.33 % 7.67 % 7.5 % Revenues 19.9 € bn 19.7 € bn 19.8 € bn 14 2018 Annual Report and Accounts · UniCredit Transform 2019 Milestones Through Transform 2019 – our strategic plan – we are building the bank of tomorrow. Our strategy is clear and long-term: we are One Bank, One UniCredit – a simple, successful pan-European commercial bank with a fully plugged in CIB delivering a unique Western, Central and Eastern European network to our extensive client franchise. We are and we will remain a pan-European winner. 2018 Improve Asset Quality 07.02 Adopt Lean but Steering Corporate Center 13.04 Transform Operating Model 23.05 Strengthen and Optimise Capital 02.11 Maximise Commercial Bank Value 31.12 Transform 2019 PROJECT FINO Completion of fi nal phase of Project Fino CORPORATE GOVERNANCE New Chairman appointed (Fabrizio Saccomanni) based on the Board presenting its own list of candidates GROUP CHIEF TRANSFORMATION OFFICER Group Chief Transformation Offi cer appointed (Finja Carolin Kütz) EBA STRESS TEST EBA stress test results: third highest CET1 ratio among systemic banks in the Eurozone NEW CLIENTS ACQUISITION Over 1.9 million gross new clients acquired UniCredit · 2018 Annual Report and Accounts 15 Banking that matters. We are dedicated to creating tangible value for all our clients, employees and stakeholders by providing real solutions to real needs. Everything we do is grounded on ethics and respect.  Preliminary notes UniCredit ·2018 Annual Report and Accounts 17 Note to the report Starting from 2018, UniCredit prepares a single document called “Annual report and accounts 2018” replacing the two documents relating to the UniCredit group consolidated financial statements and the UniCredit S.p.A. company financial statements. The integration of the contents of the two previous financial statements into a single document has led to the elimination of duplications of the qualitative information previously presented in both files and, in order to facilitate the reading, the adoption of a system of cross-references between the chapters dedicated to the consolidated financial statements and the company ones, pursuant to which the contents of the single paragraphs referenced are entirely reproduced in the paragraphs containing the reference. General aspects The UniCredit group’s Consolidated Financial Statements and UniCredit S.p.A. Financial Statements as at 31 December 2018 were drafted in accordance with the IAS/IFRS international accounting standards, in compliance with the instructions of Banca d’Italia in circular 262 of 22 December 2005 (and subsequent amendments). These instructions are binding for the Accounts tables and the methods of completion, as well as for the minimal content of the notes to the Accounts. The Consolidated Financial Statements comprise the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement, the Notes to the Accounts, as well as a Report on Operations, the economic results achieved, the Group’s financial situation and Annexes. The Consolidated Financial Statements include: • a section on Corporate Governance; • the Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99 as amended; • the Independent Auditor’s Report pursuant to Art.14 of Legislative Decree No.39 of 27 January 2010 and Art.10 of the EU Regulation No.537/2014. UniCredit S.p.A. Financial Statements comprise the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholder’s Equity, the Cash Flow Statement, the Notes to the Accounts as well as a Report on operation, the economic results achieved, the Bank’s financial situation and Annexes. UniCredit S.p.A. Financial Statements includes: • the Annual Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended; • the Report of the Board of Statutory Auditors pursuant to Art.153 of Legislative Decree No.58/1998; • the Independent Auditor’s Report pursuant to Art.14 of Legislative Decree No.39 of 27 January 2010 and Art.10 of the EU Regulation No.537/2014. UniCredit’s website also contains the press releases concerning the main events of the period, the market presentation of Group results and the UniCredit group Disclosure (Pillar III), this latter is subject of joint publication with this document. For the declaration of a non-financial nature, refer to the Integrated Report published on the company website. Any discrepancy between data disclosed in this report are solely due to the effect of rounding. The following is the list of the incorporations of qualitative information by reference made by the Consolidated financial statements to the Company financial statements: PART OF THE CONSOLIDATED FINANCIAL STATEMENTS WHERE A REFERENCE IS PRESENT DESCRIPTION OF THE PART OF THE COMPANY FINANCIAL STATEMENTS WHERE IS DETECTABLE THE QUALITATIVE INFORMATION INCORPORATED BY REFERENCE Part B - Information on Consolidated balance sheet - Assets - Section 2 Financial assets at fair value through profit or loss - Item 20 The paragraph “Information about the units of Atlante Fund and Italian Recovery Fund” is incorporated by reference to Part B - Balance sheet - Assets - Section 2 - Financial assets at fair value through profit or loss - Item 20 of the Notes to the accounts Part B - Information on Consolidated balance sheet - Assets - Section 3 - Financial assets at fair value through other comprehensive income - Item 30 The paragraph “Information about the shareholding in Banca d'Italia” is incorporated by reference to Part B - Balance sheet – Assets - Section 3 - Financial assets at fair value through other comprehensive income - Item 30 of the Notes to the accounts Preliminary notes UniCredit ·2018 Annual Report and Accounts 17 Note to the report Starting from 2018, UniCredit prepares a single document called “Annual report and accounts 2018” replacing the two documents relating to the UniCredit group consolidated financial statements and the UniCredit S.p.A. company financial statements. The integration of the contents of the two previous financial statements into a single document has led to the elimination of duplications of the qualitative information previously presented in both files and, in order to facilitate the reading, the adoption of a system of cross-references between the chapters dedicated to the consolidated financial statements and the company ones, pursuant to which the contents of the single paragraphs referenced are entirely reproduced in the paragraphs containing the reference. General aspects The UniCredit group’s Consolidated Financial Statements and UniCredit S.p.A. Financial Statements as at 31 December 2018 were drafted in accordance with the IAS/IFRS international accounting standards, in compliance with the instructions of Banca d’Italia in circular 262 of 22 December 2005 (and subsequent amendments). These instructions are binding for the Accounts tables and the methods of completion, as well as for the minimal content of the notes to the Accounts. The Consolidated Financial Statements comprise the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement, the Notes to the Accounts, as well as a Report on Operations, the economic results achieved, the Group’s financial situation and Annexes. The Consolidated Financial Statements include: • a section on Corporate Governance; • the Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99 as amended; • the Independent Auditor’s Report pursuant to Art.14 of Legislative Decree No.39 of 27 January 2010 and Art.10 of the EU Regulation No.537/2014. UniCredit S.p.A. Financial Statements comprise the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholder’s Equity, the Cash Flow Statement, the Notes to the Accounts as well as a Report on operation, the economic results achieved, the Bank’s financial situation and Annexes. UniCredit S.p.A. Financial Statements includes: • the Annual Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended; • the Report of the Board of Statutory Auditors pursuant to Art.153 of Legislative Decree No.58/1998; • the Independent Auditor’s Report pursuant to Art.14 of Legislative Decree No.39 of 27 January 2010 and Art.10 of the EU Regulation No.537/2014. UniCredit’s website also contains the press releases concerning the main events of the period, the market presentation of Group results and the UniCredit group Disclosure (Pillar III), this latter is subject of joint publication with this document. For the declaration of a non-financial nature, refer to the Integrated Report published on the company website. Any discrepancy between data disclosed in this report are solely due to the effect of rounding. The following is the list of the incorporations of qualitative information by reference made by the Consolidated financial statements to the Company financial statements: PART OF THE CONSOLIDATED FINANCIAL STATEMENTS WHERE A REFERENCE IS PRESENT DESCRIPTION OF THE PART OF THE COMPANY FINANCIAL STATEMENTS WHERE IS DETECTABLE THE QUALITATIVE INFORMATION INCORPORATED BY REFERENCE Part B - Information on Consolidated balance sheet - Assets - Section 2 Financial assets at fair value through profit or loss - Item 20 The paragraph “Information about the units of Atlante Fund and Italian Recovery Fund” is incorporated by reference to Part B - Balance sheet - Assets - Section 2 - Financial assets at fair value through profit or loss - Item 20 of the Notes to the accounts Part B - Information on Consolidated balance sheet - Assets - Section 3 - Financial assets at fair value through other comprehensive income - Item 30 The paragraph “Information about the shareholding in Banca d'Italia” is incorporated by reference to Part B - Balance sheet – Assets - Section 3 - Financial assets at fair value through other comprehensive income - Item 30 of the Notes to the accounts Preliminary notes UniCredit ·2018 Annual Report and Accounts 17 Note to the report Starting from 2018, UniCredit prepares a single document called “Annual report and accounts 2018” replacing the two documents relating to the UniCredit group consolidated financial statements and the UniCredit S.p.A. company financial statements. The integration of the contents of the two previous financial statements into a single document has led to the elimination of duplications of the qualitative information previously presented in both files and, in order to facilitate the reading, the adoption of a system of cross-references between the chapters dedicated to the consolidated financial statements and the company ones, pursuant to which the contents of the single paragraphs referenced are entirely reproduced in the paragraphs containing the reference. General aspects The UniCredit group’s Consolidated Financial Statements and UniCredit S.p.A. Financial Statements as at 31 December 2018 were drafted in accordance with the IAS/IFRS international accounting standards, in compliance with the instructions of Banca d’Italia in circular 262 of 22 December 2005 (and subsequent amendments). These instructions are binding for the Accounts tables and the methods of completion, as well as for the minimal content of the notes to the Accounts. The Consolidated Financial Statements comprise the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement, the Notes to the Accounts, as well as a Report on Operations, the economic results achieved, the Group’s financial situation and Annexes. The Consolidated Financial Statements include: • a section on Corporate Governance; • the Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99 as amended; • the Independent Auditor’s Report pursuant to Art.14 of Legislative Decree No.39 of 27 January 2010 and Art.10 of the EU Regulation No.537/2014. UniCredit S.p.A. Financial Statements comprise the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholder’s Equity, the Cash Flow Statement, the Notes to the Accounts as well as a Report on operation, the economic results achieved, the Bank’s financial situation and Annexes. UniCredit S.p.A. Financial Statements includes: • the Annual Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended; • the Report of the Board of Statutory Auditors pursuant to Art.153 of Legislative Decree No.58/1998; • the Independent Auditor’s Report pursuant to Art.14 of Legislative Decree No.39 of 27 January 2010 and Art.10 of the EU Regulation No.537/2014. UniCredit’s website also contains the press releases concerning the main events of the period, the market presentation of Group results and the UniCredit group Disclosure (Pillar III), this latter is subject of joint publication with this document. For the declaration of a non-financial nature, refer to the Integrated Report published on the company website. Any discrepancy between data disclosed in this report are solely due to the effect of rounding. The following is the list of the incorporations of qualitative information by reference made by the Consolidated financial statements to the Company financial statements: PART OF THE CONSOLIDATED FINANCIAL STATEMENTS WHERE A REFERENCE IS PRESENT DESCRIPTION OF THE PART OF THE COMPANY FINANCIAL STATEMENTS WHERE IS DETECTABLE THE QUALITATIVE INFORMATION INCORPORATED BY REFERENCE Part B - Information on Consolidated balance sheet - Assets - Section 2 Financial assets at fair value through profit or loss - Item 20 The paragraph “Information about the units of Atlante Fund and Italian Recovery Fund” is incorporated by reference to Part B - Balance sheet - Assets - Section 2 - Financial assets at fair value through profit or loss - Item 20 of the Notes to the accounts Part B - Information on Consolidated balance sheet - Assets - Section 3 - Financial assets at fair value through other comprehensive income - Item 30 The paragraph “Information about the shareholding in Banca d'Italia” is incorporated by reference to Part B - Balance sheet – Assets - Section 3 - Financial assets at fair value through other comprehensive income - Item 30 of the Notes to the accounts Preliminary notes UniCredit ·2018 Annual Report and Accounts 17 Note to the report Starting from 2018, UniCredit prepares a single document called “Annual report and accounts 2018” replacing the two documents relating to the UniCredit group consolidated financial statements and the UniCredit S.p.A. company financial statements. The integration of the contents of the two previous financial statements into a single document has led to the elimination of duplications of the qualitative information previously presented in both files and, in order to facilitate the reading, the adoption of a system of cross-references between the chapters dedicated to the consolidated financial statements and the company ones, pursuant to which the contents of the single paragraphs referenced are entirely reproduced in the paragraphs containing the reference. General aspects The UniCredit group’s Consolidated Financial Statements and UniCredit S.p.A. Financial Statements as at 31 December 2018 were drafted in accordance with the IAS/IFRS international accounting standards, in compliance with the instructions of Banca d’Italia in circular 262 of 22 December 2005 (and subsequent amendments). These instructions are binding for the Accounts tables and the methods of completion, as well as for the minimal content of the notes to the Accounts. The Consolidated Financial Statements comprise the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement, the Notes to the Accounts, as well as a Report on Operations, the economic results achieved, the Group’s financial situation and Annexes. The Consolidated Financial Statements include: • a section on Corporate Governance; • the Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99 as amended; • the Independent Auditor’s Report pursuant to Art.14 of Legislative Decree No.39 of 27 January 2010 and Art.10 of the EU Regulation No.537/2014. UniCredit S.p.A. Financial Statements comprise the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholder’s Equity, the Cash Flow Statement, the Notes to the Accounts as well as a Report on operation, the economic results achieved, the Bank’s financial situation and Annexes. UniCredit S.p.A. Financial Statements includes: • the Annual Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended; • the Report of the Board of Statutory Auditors pursuant to Art.153 of Legislative Decree No.58/1998; • the Independent Auditor’s Report pursuant to Art.14 of Legislative Decree No.39 of 27 January 2010 and Art.10 of the EU Regulation No.537/2014. UniCredit’s website also contains the press releases concerning the main events of the period, the market presentation of Group results and the UniCredit group Disclosure (Pillar III), this latter is subject of joint publication with this document. For the declaration of a non-financial nature, refer to the Integrated Report published on the company website. Any discrepancy between data disclosed in this report are solely due to the effect of rounding. The following is the list of the incorporations of qualitative information by reference made by the Consolidated financial statements to the Company financial statements: PART OF THE CONSOLIDATED FINANCIAL STATEMENTS WHERE A REFERENCE IS PRESENT DESCRIPTION OF THE PART OF THE COMPANY FINANCIAL STATEMENTS WHERE IS DETECTABLE THE QUALITATIVE INFORMATION INCORPORATED BY REFERENCE Part B - Information on Consolidated balance sheet - Assets - Section 2 Financial assets at fair value through profit or loss - Item 20 The paragraph “Information about the units of Atlante Fund and Italian Recovery Fund” is incorporated by reference to Part B - Balance sheet - Assets - Section 2 - Financial assets at fair value through profit or loss - Item 20 of the Notes to the accounts Part B - Information on Consolidated balance sheet - Assets - Section 3 - Financial assets at fair value through other comprehensive income - Item 30 The paragraph “Information about the shareholding in Banca d'Italia” is incorporated by reference to Part B - Balance sheet – Assets - Section 3 - Financial assets at fair value through other comprehensive income - Item 30 of the Notes to the accounts Preliminary notes UniCredit ·2018 Annual Report and Accounts 17 Note to the report Starting from 2018, UniCredit prepares a single document called “Annual report and accounts 2018” replacing the two documents relating to the UniCredit group consolidated financial statements and the UniCredit S.p.A. company financial statements. The integration of the contents of the two previous financial statements into a single document has led to the elimination of duplications of the qualitative information previously presented in both files and, in order to facilitate the reading, the adoption of a system of cross-references between the chapters dedicated to the consolidated financial statements and the company ones, pursuant to which the contents of the single paragraphs referenced are entirely reproduced in the paragraphs containing the reference. General aspects The UniCredit group’s Consolidated Financial Statements and UniCredit S.p.A. Financial Statements as at 31 December 2018 were drafted in accordance with the IAS/IFRS international accounting standards, in compliance with the instructions of Banca d’Italia in circular 262 of 22 December 2005 (and subsequent amendments). These instructions are binding for the Accounts tables and the methods of completion, as well as for the minimal content of the notes to the Accounts. The Consolidated Financial Statements comprise the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement, the Notes to the Accounts, as well as a Report on Operations, the economic results achieved, the Group’s financial situation and Annexes. The Consolidated Financial Statements include: • a section on Corporate Governance; • the Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99 as amended; • the Independent Auditor’s Report pursuant to Art.14 of Legislative Decree No.39 of 27 January 2010 and Art.10 of the EU Regulation No.537/2014. UniCredit S.p.A. Financial Statements comprise the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholder’s Equity, the Cash Flow Statement, the Notes to the Accounts as well as a Report on operation, the economic results achieved, the Bank’s financial situation and Annexes. UniCredit S.p.A. Financial Statements includes: • the Annual Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended; • the Report of the Board of Statutory Auditors pursuant to Art.153 of Legislative Decree No.58/1998; • the Independent Auditor’s Report pursuant to Art.14 of Legislative Decree No.39 of 27 January 2010 and Art.10 of the EU Regulation No.537/2014. UniCredit’s website also contains the press releases concerning the main events of the period, the market presentation of Group results and the UniCredit group Disclosure (Pillar III), this latter is subject of joint publication with this document. For the declaration of a non-financial nature, refer to the Integrated Report published on the company website. Any discrepancy between data disclosed in this report are solely due to the effect of rounding. The following is the list of the incorporations of qualitative information by reference made by the Consolidated financial statements to the Company financial statements: PART OF THE CONSOLIDATED FINANCIAL STATEMENTS WHERE A REFERENCE IS PRESENT DESCRIPTION OF THE PART OF THE COMPANY FINANCIAL STATEMENTS WHERE IS DETECTABLE THE QUALITATIVE INFORMATION INCORPORATED BY REFERENCE Part B - Information on Consolidated balance sheet - Assets - Section 2 Financial assets at fair value through profit or loss - Item 20 The paragraph “Information about the units of Atlante Fund and Italian Recovery Fund” is incorporated by reference to Part B - Balance sheet - Assets - Section 2 - Financial assets at fair value through profit or loss - Item 20 of the Notes to the accounts Part B - Information on Consolidated balance sheet - Assets - Section 3 - Financial assets at fair value through other comprehensive income - Item 30 The paragraph “Information about the shareholding in Banca d'Italia” is incorporated by reference to Part B - Balance sheet – Assets - Section 3 - Financial assets at fair value through other comprehensive income - Item 30 of the Notes to the accounts  Preliminary notes 18 2018 Annual Report and Accounts · UniCredit Part B - Information on Consolidated balance sheet - Assets - Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) The qualitative disclosure of deferred tax assets and liabilities of the Parent company is incorporated by reference to Part B - Information on Balance sheet - Assets - Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) of the Notes to the accounts Part B - Information on Consolidated balance sheet - Liabilities - Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 The paragraphs “12.1 Share capital and treasury shares", “12.2 Share capital - Number of shares”, “12.3 Capital: other information” and “12.5 Equity instruments: breakdown and annual changes” are incorporated by reference to Part B - Information on Balance sheet – Liabilities - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 of the Notes to the accounts Part C - Information on Consolidated income statement - Section 21 - Tax expenses (income) for the period from continuing operations - Items 300 The qualitative disclosure of tax expenses (income) for the period of the Parent company is incorporated by reference to Part C - Income statement - Section 19 -Tax expenses (income) for the period from continuing operations - Item 270 of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk - Qualitative information The qualitative disclosure with reference to governance issues, commercial policies and credit strategies relating to the UniCredit S.p.A. perimeter, is incorporated by reference to paragraph of Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Qualitative information - 1. General Aspects of the Notes to the accounts The qualitative disclosure with reference to the Italian perimeter of UniCredit S.p.A., reporting to the “Group Lending Office”, is incorporated by reference to Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk - Quantitative information - E. Prudential perimeter - Credit risk measurement model The quantitative information of UniCredit S.p.A. on Credit risk measurement model is incorporated by reference to the paragraph in Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Quantitative information - F. Credit risk measurement models of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2.5 - Operational risks The paragraph “E. Other claims by customers” and the sub-paragraph “Diamond offer” are incorporated by reference to the similar paragraphs of Part E - Information on risks and hedging policies - Section 5 - Operational risks of the Notes to the accounts. The following is the list of the incorporations of qualitative information by reference made by the Company financial statements to the Consolidated financial statements: PART OF THE COMPANY FINANCIAL STATEMENTS WHERE A REFERENCE IS PRESENT DESCRIPTION OF THE PART OF THE CONSOLIDATED FINANCIAL STATEMENTS WHERE IS DETECTABLE THE QUALITATIVE INFORMATION INCORPORATED BY REFERRENCE Report on operations - Introduction and highlights The paragraph “Share information” is presented by reference to the paragraph “Share information” - Group and UniCredit share historical data series of the Consolidated report on operations The paragraph “Macroeconomic situation, banking and financial markets” is presented by reference to the paragraph “Macroeconomic situation, banking and financial markets” - Group results of the Consolidated report on operations References of UniCredit official website where can be found Report on corporate governance and ownership structure, Report on remuneration and Non-financial information are reported in Other information of the Consolidated report on operations The paragraph “Research and development projects” is presented by reference to the paragraph “Research and development projects” - Other information of the Consolidated report on operations The paragraph “Organizational model” is presented by reference to the paragraph “Organizational model” - Other information of the Consolidated report on operations Preliminary notes 18 2018 Annual Report and Accounts · UniCredit Part B - Information on Consolidated balance sheet - Assets - Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) The qualitative disclosure of deferred tax assets and liabilities of the Parent company is incorporated by reference to Part B - Information on Balance sheet - Assets - Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) of the Notes to the accounts Part B - Information on Consolidated balance sheet - Liabilities - Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 The paragraphs “12.1 Share capital and treasury shares", “12.2 Share capital - Number of shares”, “12.3 Capital: other information” and “12.5 Equity instruments: breakdown and annual changes” are incorporated by reference to Part B - Information on Balance sheet – Liabilities - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 of the Notes to the accounts Part C - Information on Consolidated income statement - Section 21 - Tax expenses (income) for the period from continuing operations - Items 300 The qualitative disclosure of tax expenses (income) for the period of the Parent company is incorporated by reference to Part C - Income statement - Section 19 -Tax expenses (income) for the period from continuing operations - Item 270 of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk - Qualitative information The qualitative disclosure with reference to governance issues, commercial policies and credit strategies relating to the UniCredit S.p.A. perimeter, is incorporated by reference to paragraph of Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Qualitative information - 1. General Aspects of the Notes to the accounts The qualitative disclosure with reference to the Italian perimeter of UniCredit S.p.A., reporting to the “Group Lending Office”, is incorporated by reference to Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk - Quantitative information - E. Prudential perimeter - Credit risk measurement model The quantitative information of UniCredit S.p.A. on Credit risk measurement model is incorporated by reference to the paragraph in Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Quantitative information - F. Credit risk measurement models of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2.5 - Operational risks The paragraph “E. Other claims by customers” and the sub-paragraph “Diamond offer” are incorporated by reference to the similar paragraphs of Part E - Information on risks and hedging policies - Section 5 - Operational risks of the Notes to the accounts. The following is the list of the incorporations of qualitative information by reference made by the Company financial statements to the Consolidated financial statements: PART OF THE COMPANY FINANCIAL STATEMENTS WHERE A REFERENCE IS PRESENT DESCRIPTION OF THE PART OF THE CONSOLIDATED FINANCIAL STATEMENTS WHERE IS DETECTABLE THE QUALITATIVE INFORMATION INCORPORATED BY REFERRENCE Report on operations - Introduction and highlights The paragraph “Share information” is presented by reference to the paragraph “Share information” - Group and UniCredit share historical data series of the Consolidated report on operations The paragraph “Macroeconomic situation, banking and financial markets” is presented by reference to the paragraph “Macroeconomic situation, banking and financial markets” - Group results of the Consolidated report on operations References of UniCredit official website where can be found Report on corporate governance and ownership structure, Report on remuneration and Non-financial information are reported in Other information of the Consolidated report on operations The paragraph “Research and development projects” is presented by reference to the paragraph “Research and development projects” - Other information of the Consolidated report on operations The paragraph “Organizational model” is presented by reference to the paragraph “Organizational model” - Other information of the Consolidated report on operations Preliminary notes 18 2018 Annual Report and Accounts · UniCredit Part B - Information on Consolidated balance sheet - Assets - Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) The qualitative disclosure of deferred tax assets and liabilities of the Parent company is incorporated by reference to Part B - Information on Balance sheet - Assets - Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) of the Notes to the accounts Part B - Information on Consolidated balance sheet - Liabilities - Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 The paragraphs “12.1 Share capital and treasury shares", “12.2 Share capital - Number of shares”, “12.3 Capital: other information” and “12.5 Equity instruments: breakdown and annual changes” are incorporated by reference to Part B - Information on Balance sheet – Liabilities - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 of the Notes to the accounts Part C - Information on Consolidated income statement - Section 21 - Tax expenses (income) for the period from continuing operations - Items 300 The qualitative disclosure of tax expenses (income) for the period of the Parent company is incorporated by reference to Part C - Income statement - Section 19 -Tax expenses (income) for the period from continuing operations - Item 270 of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk - Qualitative information The qualitative disclosure with reference to governance issues, commercial policies and credit strategies relating to the UniCredit S.p.A. perimeter, is incorporated by reference to paragraph of Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Qualitative information - 1. General Aspects of the Notes to the accounts The qualitative disclosure with reference to the Italian perimeter of UniCredit S.p.A., reporting to the “Group Lending Office”, is incorporated by reference to Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk - Quantitative information - E. Prudential perimeter - Credit risk measurement model The quantitative information of UniCredit S.p.A. on Credit risk measurement model is incorporated by reference to the paragraph in Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Quantitative information - F. Credit risk measurement models of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2.5 - Operational risks The paragraph “E. Other claims by customers” and the sub-paragraph “Diamond offer” are incorporated by reference to the similar paragraphs of Part E - Information on risks and hedging policies - Section 5 - Operational risks of the Notes to the accounts. The following is the list of the incorporations of qualitative information by reference made by the Company financial statements to the Consolidated financial statements: PART OF THE COMPANY FINANCIAL STATEMENTS WHERE A REFERENCE IS PRESENT DESCRIPTION OF THE PART OF THE CONSOLIDATED FINANCIAL STATEMENTS WHERE IS DETECTABLE THE QUALITATIVE INFORMATION INCORPORATED BY REFERRENCE Report on operations - Introduction and highlights The paragraph “Share information” is presented by reference to the paragraph “Share information” - Group and UniCredit share historical data series of the Consolidated report on operations The paragraph “Macroeconomic situation, banking and financial markets” is presented by reference to the paragraph “Macroeconomic situation, banking and financial markets” - Group results of the Consolidated report on operations References of UniCredit official website where can be found Report on corporate governance and ownership structure, Report on remuneration and Non-financial information are reported in Other information of the Consolidated report on operations The paragraph “Research and development projects” is presented by reference to the paragraph “Research and development projects” - Other information of the Consolidated report on operations The paragraph “Organizational model” is presented by reference to the paragraph “Organizational model” - Other information of the Consolidated report on operations Preliminary notes 18 2018 Annual Report and Accounts · UniCredit Part B - Information on Consolidated balance sheet - Assets - Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) The qualitative disclosure of deferred tax assets and liabilities of the Parent company is incorporated by reference to Part B - Information on Balance sheet - Assets - Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) of the Notes to the accounts Part B - Information on Consolidated balance sheet - Liabilities - Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 The paragraphs “12.1 Share capital and treasury shares", “12.2 Share capital - Number of shares”, “12.3 Capital: other information” and “12.5 Equity instruments: breakdown and annual changes” are incorporated by reference to Part B - Information on Balance sheet – Liabilities - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 of the Notes to the accounts Part C - Information on Consolidated income statement - Section 21 - Tax expenses (income) for the period from continuing operations - Items 300 The qualitative disclosure of tax expenses (income) for the period of the Parent company is incorporated by reference to Part C - Income statement - Section 19 -Tax expenses (income) for the period from continuing operations - Item 270 of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk - Qualitative information The qualitative disclosure with reference to governance issues, commercial policies and credit strategies relating to the UniCredit S.p.A. perimeter, is incorporated by reference to paragraph of Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Qualitative information - 1. General Aspects of the Notes to the accounts The qualitative disclosure with reference to the Italian perimeter of UniCredit S.p.A., reporting to the “Group Lending Office”, is incorporated by reference to Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk - Quantitative information - E. Prudential perimeter - Credit risk measurement model The quantitative information of UniCredit S.p.A. on Credit risk measurement model is incorporated by reference to the paragraph in Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Quantitative information - F. Credit risk measurement models of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2.5 - Operational risks The paragraph “E. Other claims by customers” and the sub-paragraph “Diamond offer” are incorporated by reference to the similar paragraphs of Part E - Information on risks and hedging policies - Section 5 - Operational risks of the Notes to the accounts. The following is the list of the incorporations of qualitative information by reference made by the Company financial statements to the Consolidated financial statements: PART OF THE COMPANY FINANCIAL STATEMENTS WHERE A REFERENCE IS PRESENT DESCRIPTION OF THE PART OF THE CONSOLIDATED FINANCIAL STATEMENTS WHERE IS DETECTABLE THE QUALITATIVE INFORMATION INCORPORATED BY REFERRENCE Report on operations - Introduction and highlights The paragraph “Share information” is presented by reference to the paragraph “Share information” - Group and UniCredit share historical data series of the Consolidated report on operations The paragraph “Macroeconomic situation, banking and financial markets” is presented by reference to the paragraph “Macroeconomic situation, banking and financial markets” - Group results of the Consolidated report on operations References of UniCredit official website where can be found Report on corporate governance and ownership structure, Report on remuneration and Non-financial information are reported in Other information of the Consolidated report on operations The paragraph “Research and development projects” is presented by reference to the paragraph “Research and development projects” - Other information of the Consolidated report on operations The paragraph “Organizational model” is presented by reference to the paragraph “Organizational model” - Other information of the Consolidated report on operations Preliminary notes 18 2018 Annual Report and Accounts · UniCredit Part B - Information on Consolidated balance sheet - Assets - Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) The qualitative disclosure of deferred tax assets and liabilities of the Parent company is incorporated by reference to Part B - Information on Balance sheet - Assets - Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) of the Notes to the accounts Part B - Information on Consolidated balance sheet - Liabilities - Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 The paragraphs “12.1 Share capital and treasury shares", “12.2 Share capital - Number of shares”, “12.3 Capital: other information” and “12.5 Equity instruments: breakdown and annual changes” are incorporated by reference to Part B - Information on Balance sheet – Liabilities - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 of the Notes to the accounts Part C - Information on Consolidated income statement - Section 21 - Tax expenses (income) for the period from continuing operations - Items 300 The qualitative disclosure of tax expenses (income) for the period of the Parent company is incorporated by reference to Part C - Income statement - Section 19 -Tax expenses (income) for the period from continuing operations - Item 270 of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk - Qualitative information The qualitative disclosure with reference to governance issues, commercial policies and credit strategies relating to the UniCredit S.p.A. perimeter, is incorporated by reference to paragraph of Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Qualitative information - 1. General Aspects of the Notes to the accounts The qualitative disclosure with reference to the Italian perimeter of UniCredit S.p.A., reporting to the “Group Lending Office”, is incorporated by reference to Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk - Quantitative information - E. Prudential perimeter - Credit risk measurement model The quantitative information of UniCredit S.p.A. on Credit risk measurement model is incorporated by reference to the paragraph in Part E - Information on risks and hedging policies - Section 1 - Credit Risk - Quantitative information - F. Credit risk measurement models of the Notes to the accounts Part E - Information on risks and hedging policies - Section 2.5 - Operational risks The paragraph “E. Other claims by customers” and the sub-paragraph “Diamond offer” are incorporated by reference to the similar paragraphs of Part E - Information on risks and hedging policies - Section 5 - Operational risks of the Notes to the accounts. The following is the list of the incorporations of qualitative information by reference made by the Company financial statements to the Consolidated financial statements: PART OF THE COMPANY FINANCIAL STATEMENTS WHERE A REFERENCE IS PRESENT DESCRIPTION OF THE PART OF THE CONSOLIDATED FINANCIAL STATEMENTS WHERE IS DETECTABLE THE QUALITATIVE INFORMATION INCORPORATED BY REFERRENCE Report on operations - Introduction and highlights The paragraph “Share information” is presented by reference to the paragraph “Share information” - Group and UniCredit share historical data series of the Consolidated report on operations The paragraph “Macroeconomic situation, banking and financial markets” is presented by reference to the paragraph “Macroeconomic situation, banking and financial markets” - Group results of the Consolidated report on operations References of UniCredit official website where can be found Report on corporate governance and ownership structure, Report on remuneration and Non-financial information are reported in Other information of the Consolidated report on operations The paragraph “Research and development projects” is presented by reference to the paragraph “Research and development projects” - Other information of the Consolidated report on operations The paragraph “Organizational model” is presented by reference to the paragraph “Organizational model” - Other information of the Consolidated report on operations  Preliminary notes UniCredit ·2018 Annual Report and Accounts 19 Report on operations - Results of the year - Capital and value management The qualitative disclosure of “Principles of value creation and disciplined capital allocation”, “Capital ratios” for information relating to transitional capital requirements and buffers for UniCredit group and “Capital strengthening“ are incorporated by reference to the same paragraphs in “Capital and value management” - Group results of the Consolidated report on operations Report on operations - Other information The paragraph “Group activities development operations and other corporate transactions”, with specific reference to events relating to the parent company UniCredit S.p.A., is incorporated by reference to the same paragraph “Group activities development operations and other corporate transaction” - Other information of the Consolidated report on operations The paragraph “Certifications and other communications” is incorporated by reference to the same paragraph “Certifications and other communications” - Other information of the Consolidated report on operations Report on operations - Subsequent events and Outlook The paragraph “Subsequent events”, with specific reference to events relating to the parent company UniCredit S.p.A., is incorporated by reference to the paragraph “Subsequent events” - Other information of the Consolidated report on operations The paragraph “Outlook” is incorporated by reference to the paragraph “Outlook” of the Consolidated report on operations Part B - Balance sheet - Assets - Section 2 - Financial assets at fair value through profit or loss - Item 20 The paragraph “Information about the investments in the “Schema Volontario (Voluntary Scheme)” is incorporated by reference to Part B - Information on Consolidated balance sheet - Assets - Section 2 Financial assets at fair value through profit or loss - Item 20 of the Notes to consolidated accounts Part B - Balance sheet - Assets - Section 7 - Equity investments - Item 7 Information relating to value in use determination, is incorporated by reference to the paragraph of Part B - Information on Consolidated balance sheet - Assets - Section 10 - Intangible assets - 10.3 Intangible assets: other information – paragraph “Estimating cash flows to determine the value in use of the CGUs” of the Notes to consolidated accounts Part C - Income statement Section 10 - Other administrative expenses - Item 160 The paragraph “Contributions to Resolution and Guarantee Funds” is incorporated by reference to the paragraph “Contributions to Resolution and Guarantee Funds Part C - Consolidated income statement - Section 12 Administrative expenses - Item 190 of the Notes to consolidated accounts The paragraph “DTA guarantee fees”, with specific reference to the parent company UniCredit S.p.A., is incorporated by reference to the paragraph “DTA guarantee fees” Part C - Consolidated income statement - Section 12 Administrative expenses - Item 190 of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Introduction The paragraph “Introduction” is incorporated by reference to the paragraph “Introduction” of Part E - Information on risks and hedging policies of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 1 - Credit risk - Qualitative information Qualitative information relating to “1. General aspects”, “2. Credit risk management policies”, “3. Non-performing credit exposure”, “4. Commercial renegotiation of financial assets and forborne exposures” is partially incorporated by reference to the same paragraph of Part E - Information on risks and hedging policies Section 2 - Risks of prudential perimeter - 2.1 Credit risk - Qualitative information of the Notes to consolidated accounts The paragraph “E.4 Covered bond transaction” is incorporated by reference to the paragraph “E.4 Covered bond transaction” Section 2 - Risks of prudential perimeter - 2.1 Credit risk - Qualitative information Part E - Information on risks and hedging policies of the Notes to consolidated accounts Preliminary notes UniCredit ·2018 Annual Report and Accounts 19 Report on operations - Results of the year - Capital and value management The qualitative disclosure of “Principles of value creation and disciplined capital allocation”, “Capital ratios” for information relating to transitional capital requirements and buffers for UniCredit group and “Capital strengthening“ are incorporated by reference to the same paragraphs in “Capital and value management” - Group results of the Consolidated report on operations Report on operations - Other information The paragraph “Group activities development operations and other corporate transactions”, with specific reference to events relating to the parent company UniCredit S.p.A., is incorporated by reference to the same paragraph “Group activities development operations and other corporate transaction” - Other information of the Consolidated report on operations The paragraph “Certifications and other communications” is incorporated by reference to the same paragraph “Certifications and other communications” - Other information of the Consolidated report on operations Report on operations - Subsequent events and Outlook The paragraph “Subsequent events”, with specific reference to events relating to the parent company UniCredit S.p.A., is incorporated by reference to the paragraph “Subsequent events” - Other information of the Consolidated report on operations The paragraph “Outlook” is incorporated by reference to the paragraph “Outlook” of the Consolidated report on operations Part B - Balance sheet - Assets - Section 2 - Financial assets at fair value through profit or loss - Item 20 The paragraph “Information about the investments in the “Schema Volontario (Voluntary Scheme)” is incorporated by reference to Part B - Information on Consolidated balance sheet - Assets - Section 2 Financial assets at fair value through profit or loss - Item 20 of the Notes to consolidated accounts Part B - Balance sheet - Assets - Section 7 - Equity investments - Item 7 Information relating to value in use determination, is incorporated by reference to the paragraph of Part B - Information on Consolidated balance sheet - Assets - Section 10 - Intangible assets - 10.3 Intangible assets: other information – paragraph “Estimating cash flows to determine the value in use of the CGUs” of the Notes to consolidated accounts Part C - Income statement Section 10 - Other administrative expenses - Item 160 The paragraph “Contributions to Resolution and Guarantee Funds” is incorporated by reference to the paragraph “Contributions to Resolution and Guarantee Funds Part C - Consolidated income statement - Section 12 Administrative expenses - Item 190 of the Notes to consolidated accounts The paragraph “DTA guarantee fees”, with specific reference to the parent company UniCredit S.p.A., is incorporated by reference to the paragraph “DTA guarantee fees” Part C - Consolidated income statement - Section 12 Administrative expenses - Item 190 of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Introduction The paragraph “Introduction” is incorporated by reference to the paragraph “Introduction” of Part E - Information on risks and hedging policies of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 1 - Credit risk - Qualitative information Qualitative information relating to “1. General aspects”, “2. Credit risk management policies”, “3. Non-performing credit exposure”, “4. Commercial renegotiation of financial assets and forborne exposures” is partially incorporated by reference to the same paragraph of Part E - Information on risks and hedging policies Section 2 - Risks of prudential perimeter - 2.1 Credit risk - Qualitative information of the Notes to consolidated accounts The paragraph “E.4 Covered bond transaction” is incorporated by reference to the paragraph “E.4 Covered bond transaction” Section 2 - Risks of prudential perimeter - 2.1 Credit risk - Qualitative information Part E - Information on risks and hedging policies of the Notes to consolidated accounts Preliminary notes UniCredit ·2018 Annual Report and Accounts 19 Report on operations - Results of the year - Capital and value management The qualitative disclosure of “Principles of value creation and disciplined capital allocation”, “Capital ratios” for information relating to transitional capital requirements and buffers for UniCredit group and “Capital strengthening“ are incorporated by reference to the same paragraphs in “Capital and value management” - Group results of the Consolidated report on operations Report on operations - Other information The paragraph “Group activities development operations and other corporate transactions”, with specific reference to events relating to the parent company UniCredit S.p.A., is incorporated by reference to the same paragraph “Group activities development operations and other corporate transaction” - Other information of the Consolidated report on operations The paragraph “Certifications and other communications” is incorporated by reference to the same paragraph “Certifications and other communications” - Other information of the Consolidated report on operations Report on operations - Subsequent events and Outlook The paragraph “Subsequent events”, with specific reference to events relating to the parent company UniCredit S.p.A., is incorporated by reference to the paragraph “Subsequent events” - Other information of the Consolidated report on operations The paragraph “Outlook” is incorporated by reference to the paragraph “Outlook” of the Consolidated report on operations Part B - Balance sheet - Assets - Section 2 - Financial assets at fair value through profit or loss - Item 20 The paragraph “Information about the investments in the “Schema Volontario (Voluntary Scheme)” is incorporated by reference to Part B - Information on Consolidated balance sheet - Assets - Section 2 Financial assets at fair value through profit or loss - Item 20 of the Notes to consolidated accounts Part B - Balance sheet - Assets - Section 7 - Equity investments - Item 7 Information relating to value in use determination, is incorporated by reference to the paragraph of Part B - Information on Consolidated balance sheet - Assets - Section 10 - Intangible assets - 10.3 Intangible assets: other information – paragraph “Estimating cash flows to determine the value in use of the CGUs” of the Notes to consolidated accounts Part C - Income statement Section 10 - Other administrative expenses - Item 160 The paragraph “Contributions to Resolution and Guarantee Funds” is incorporated by reference to the paragraph “Contributions to Resolution and Guarantee Funds Part C - Consolidated income statement - Section 12 Administrative expenses - Item 190 of the Notes to consolidated accounts The paragraph “DTA guarantee fees”, with specific reference to the parent company UniCredit S.p.A., is incorporated by reference to the paragraph “DTA guarantee fees” Part C - Consolidated income statement - Section 12 Administrative expenses - Item 190 of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Introduction The paragraph “Introduction” is incorporated by reference to the paragraph “Introduction” of Part E - Information on risks and hedging policies of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 1 - Credit risk - Qualitative information Qualitative information relating to “1. General aspects”, “2. Credit risk management policies”, “3. Non-performing credit exposure”, “4. Commercial renegotiation of financial assets and forborne exposures” is partially incorporated by reference to the same paragraph of Part E - Information on risks and hedging policies Section 2 - Risks of prudential perimeter - 2.1 Credit risk - Qualitative information of the Notes to consolidated accounts The paragraph “E.4 Covered bond transaction” is incorporated by reference to the paragraph “E.4 Covered bond transaction” Section 2 - Risks of prudential perimeter - 2.1 Credit risk - Qualitative information Part E - Information on risks and hedging policies of the Notes to consolidated accounts Preliminary notes UniCredit ·2018 Annual Report and Accounts 19 Report on operations - Results of the year - Capital and value management The qualitative disclosure of “Principles of value creation and disciplined capital allocation”, “Capital ratios” for information relating to transitional capital requirements and buffers for UniCredit group and “Capital strengthening“ are incorporated by reference to the same paragraphs in “Capital and value management” - Group results of the Consolidated report on operations Report on operations - Other information The paragraph “Group activities development operations and other corporate transactions”, with specific reference to events relating to the parent company UniCredit S.p.A., is incorporated by reference to the same paragraph “Group activities development operations and other corporate transaction” - Other information of the Consolidated report on operations The paragraph “Certifications and other communications” is incorporated by reference to the same paragraph “Certifications and other communications” - Other information of the Consolidated report on operations Report on operations - Subsequent events and Outlook The paragraph “Subsequent events”, with specific reference to events relating to the parent company UniCredit S.p.A., is incorporated by reference to the paragraph “Subsequent events” - Other information of the Consolidated report on operations The paragraph “Outlook” is incorporated by reference to the paragraph “Outlook” of the Consolidated report on operations Part B - Balance sheet - Assets - Section 2 - Financial assets at fair value through profit or loss - Item 20 The paragraph “Information about the investments in the “Schema Volontario (Voluntary Scheme)” is incorporated by reference to Part B - Information on Consolidated balance sheet - Assets - Section 2 Financial assets at fair value through profit or loss - Item 20 of the Notes to consolidated accounts Part B - Balance sheet - Assets - Section 7 - Equity investments - Item 7 Information relating to value in use determination, is incorporated by reference to the paragraph of Part B - Information on Consolidated balance sheet - Assets - Section 10 - Intangible assets - 10.3 Intangible assets: other information – paragraph “Estimating cash flows to determine the value in use of the CGUs” of the Notes to consolidated accounts Part C - Income statement Section 10 - Other administrative expenses - Item 160 The paragraph “Contributions to Resolution and Guarantee Funds” is incorporated by reference to the paragraph “Contributions to Resolution and Guarantee Funds Part C - Consolidated income statement - Section 12 Administrative expenses - Item 190 of the Notes to consolidated accounts The paragraph “DTA guarantee fees”, with specific reference to the parent company UniCredit S.p.A., is incorporated by reference to the paragraph “DTA guarantee fees” Part C - Consolidated income statement - Section 12 Administrative expenses - Item 190 of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Introduction The paragraph “Introduction” is incorporated by reference to the paragraph “Introduction” of Part E - Information on risks and hedging policies of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 1 - Credit risk - Qualitative information Qualitative information relating to “1. General aspects”, “2. Credit risk management policies”, “3. Non-performing credit exposure”, “4. Commercial renegotiation of financial assets and forborne exposures” is partially incorporated by reference to the same paragraph of Part E - Information on risks and hedging policies Section 2 - Risks of prudential perimeter - 2.1 Credit risk - Qualitative information of the Notes to consolidated accounts The paragraph “E.4 Covered bond transaction” is incorporated by reference to the paragraph “E.4 Covered bond transaction” Section 2 - Risks of prudential perimeter - 2.1 Credit risk - Qualitative information Part E - Information on risks and hedging policies of the Notes to consolidated accounts Preliminary notes UniCredit ·2018 Annual Report and Accounts 19 Report on operations - Results of the year - Capital and value management The qualitative disclosure of “Principles of value creation and disciplined capital allocation”, “Capital ratios” for information relating to transitional capital requirements and buffers for UniCredit group and “Capital strengthening“ are incorporated by reference to the same paragraphs in “Capital and value management” - Group results of the Consolidated report on operations Report on operations - Other information The paragraph “Group activities development operations and other corporate transactions”, with specific reference to events relating to the parent company UniCredit S.p.A., is incorporated by reference to the same paragraph “Group activities development operations and other corporate transaction” - Other information of the Consolidated report on operations The paragraph “Certifications and other communications” is incorporated by reference to the same paragraph “Certifications and other communications” - Other information of the Consolidated report on operations Report on operations - Subsequent events and Outlook The paragraph “Subsequent events”, with specific reference to events relating to the parent company UniCredit S.p.A., is incorporated by reference to the paragraph “Subsequent events” - Other information of the Consolidated report on operations The paragraph “Outlook” is incorporated by reference to the paragraph “Outlook” of the Consolidated report on operations Part B - Balance sheet - Assets - Section 2 - Financial assets at fair value through profit or loss - Item 20 The paragraph “Information about the investments in the “Schema Volontario (Voluntary Scheme)” is incorporated by reference to Part B - Information on Consolidated balance sheet - Assets - Section 2 Financial assets at fair value through profit or loss - Item 20 of the Notes to consolidated accounts Part B - Balance sheet - Assets - Section 7 - Equity investments - Item 7 Information relating to value in use determination, is incorporated by reference to the paragraph of Part B - Information on Consolidated balance sheet - Assets - Section 10 - Intangible assets - 10.3 Intangible assets: other information – paragraph “Estimating cash flows to determine the value in use of the CGUs” of the Notes to consolidated accounts Part C - Income statement Section 10 - Other administrative expenses - Item 160 The paragraph “Contributions to Resolution and Guarantee Funds” is incorporated by reference to the paragraph “Contributions to Resolution and Guarantee Funds Part C - Consolidated income statement - Section 12 Administrative expenses - Item 190 of the Notes to consolidated accounts The paragraph “DTA guarantee fees”, with specific reference to the parent company UniCredit S.p.A., is incorporated by reference to the paragraph “DTA guarantee fees” Part C - Consolidated income statement - Section 12 Administrative expenses - Item 190 of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Introduction The paragraph “Introduction” is incorporated by reference to the paragraph “Introduction” of Part E - Information on risks and hedging policies of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 1 - Credit risk - Qualitative information Qualitative information relating to “1. General aspects”, “2. Credit risk management policies”, “3. Non-performing credit exposure”, “4. Commercial renegotiation of financial assets and forborne exposures” is partially incorporated by reference to the same paragraph of Part E - Information on risks and hedging policies Section 2 - Risks of prudential perimeter - 2.1 Credit risk - Qualitative information of the Notes to consolidated accounts The paragraph “E.4 Covered bond transaction” is incorporated by reference to the paragraph “E.4 Covered bond transaction” Section 2 - Risks of prudential perimeter - 2.1 Credit risk - Qualitative information Part E - Information on risks and hedging policies of the Notes to consolidated accounts  Preliminary notes 20 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies - Section 2 - Market risk Qualitative information as introduction (“Risk management strategies and processes”, “Structure and organisation”, “Risk measurement and reporting systems”, “Hedging policies and risk mitigation”, “Internal model for price, interest rate and exchange rate risk of the regulatory trading book”) is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Qualitative information of “2.1 Interest rate risk and price risk - Regulatory trading book”, “2.2 Interest rate and price risk - Banking book” and “2.3 Exchange rate risk” is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Quantitative information of paragraph “3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis” of Interest rate risk and price risk - Regulatory trading book and of “2. Internal models and other methodologies for sensitivity analysis” of Exchange rate risk is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 4 - Liquidity risks Qualitative information is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.4 Liquidity Risk of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 5 - Operational risk - Qualitative information The paragraph “A. General aspects, operational processes and methods for measuring operational risk” is incorporated by reference paragraph “A. General aspects, operational processes and methods for measuring operational risk” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “B. Risks arising from legal disputes” is incorporated by reference to paragraph “B. Risks arising from legal disputes” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “C. Risks arising from employment law cases” is incorporated by reference to paragraph “Risks arising from employment law cases” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “D. Risks arising from tax disputes is incorporated by reference to paragraph “D. Risks arising from tax disputes” Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 6 - Other risk Qualitative information of paragraphs “Other risks included in Economic Capital”, “Reputational risk” and “Top and emerging risk” is incorporated by reference to qualitative information in different paragraph of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks of the Notes to consolidated accounts Part F - Shareholders’ Equity The paragraph “A. Qualitative information” is incorporated by reference to paragraph “A. Qualitative information” of Part F - Consolidated Shareholders’ Equity of the Notes to consolidated accounts Part H - Related-party transactions The paragraph “Introduction” and the qualitative information of paragraph “2. Related-party transactions” are incorporated by reference paragraphs “Introduction” and “2. Related-party transactions” of Part H - Related-party transactions of the Notes to consolidated accounts Part I - Share based payments The paragraph “A. Qualitative information” and paragraph “B. Quantitative information -1. Annual changes” are incorporated by reference to paragraphs “A. Qualitative information” and “1 B. Quantitative information -1. Annual changes” of Part I - Shared base payments of the Notes to consolidated accounts Annex 4 - Securitizations - qualitative tables Information is incorporated by reference to information in Annex 3 - Securitizations - qualitative tables of the consolidated financial statement Preliminary notes 20 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies - Section 2 - Market risk Qualitative information as introduction (“Risk management strategies and processes”, “Structure and organisation”, “Risk measurement and reporting systems”, “Hedging policies and risk mitigation”, “Internal model for price, interest rate and exchange rate risk of the regulatory trading book”) is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Qualitative information of “2.1 Interest rate risk and price risk - Regulatory trading book”, “2.2 Interest rate and price risk - Banking book” and “2.3 Exchange rate risk” is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Quantitative information of paragraph “3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis” of Interest rate risk and price risk - Regulatory trading book and of “2. Internal models and other methodologies for sensitivity analysis” of Exchange rate risk is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 4 - Liquidity risks Qualitative information is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.4 Liquidity Risk of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 5 - Operational risk - Qualitative information The paragraph “A. General aspects, operational processes and methods for measuring operational risk” is incorporated by reference paragraph “A. General aspects, operational processes and methods for measuring operational risk” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “B. Risks arising from legal disputes” is incorporated by reference to paragraph “B. Risks arising from legal disputes” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “C. Risks arising from employment law cases” is incorporated by reference to paragraph “Risks arising from employment law cases” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “D. Risks arising from tax disputes is incorporated by reference to paragraph “D. Risks arising from tax disputes” Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 6 - Other risk Qualitative information of paragraphs “Other risks included in Economic Capital”, “Reputational risk” and “Top and emerging risk” is incorporated by reference to qualitative information in different paragraph of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks of the Notes to consolidated accounts Part F - Shareholders’ Equity The paragraph “A. Qualitative information” is incorporated by reference to paragraph “A. Qualitative information” of Part F - Consolidated Shareholders’ Equity of the Notes to consolidated accounts Part H - Related-party transactions The paragraph “Introduction” and the qualitative information of paragraph “2. Related-party transactions” are incorporated by reference paragraphs “Introduction” and “2. Related-party transactions” of Part H - Related-party transactions of the Notes to consolidated accounts Part I - Share based payments The paragraph “A. Qualitative information” and paragraph “B. Quantitative information -1. Annual changes” are incorporated by reference to paragraphs “A. Qualitative information” and “1 B. Quantitative information -1. Annual changes” of Part I - Shared base payments of the Notes to consolidated accounts Annex 4 - Securitizations - qualitative tables Information is incorporated by reference to information in Annex 3 - Securitizations - qualitative tables of the consolidated financial statement Preliminary notes 20 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies - Section 2 - Market risk Qualitative information as introduction (“Risk management strategies and processes”, “Structure and organisation”, “Risk measurement and reporting systems”, “Hedging policies and risk mitigation”, “Internal model for price, interest rate and exchange rate risk of the regulatory trading book”) is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Qualitative information of “2.1 Interest rate risk and price risk - Regulatory trading book”, “2.2 Interest rate and price risk - Banking book” and “2.3 Exchange rate risk” is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Quantitative information of paragraph “3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis” of Interest rate risk and price risk - Regulatory trading book and of “2. Internal models and other methodologies for sensitivity analysis” of Exchange rate risk is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 4 - Liquidity risks Qualitative information is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.4 Liquidity Risk of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 5 - Operational risk - Qualitative information The paragraph “A. General aspects, operational processes and methods for measuring operational risk” is incorporated by reference paragraph “A. General aspects, operational processes and methods for measuring operational risk” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “B. Risks arising from legal disputes” is incorporated by reference to paragraph “B. Risks arising from legal disputes” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “C. Risks arising from employment law cases” is incorporated by reference to paragraph “Risks arising from employment law cases” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “D. Risks arising from tax disputes is incorporated by reference to paragraph “D. Risks arising from tax disputes” Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 6 - Other risk Qualitative information of paragraphs “Other risks included in Economic Capital”, “Reputational risk” and “Top and emerging risk” is incorporated by reference to qualitative information in different paragraph of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks of the Notes to consolidated accounts Part F - Shareholders’ Equity The paragraph “A. Qualitative information” is incorporated by reference to paragraph “A. Qualitative information” of Part F - Consolidated Shareholders’ Equity of the Notes to consolidated accounts Part H - Related-party transactions The paragraph “Introduction” and the qualitative information of paragraph “2. Related-party transactions” are incorporated by reference paragraphs “Introduction” and “2. Related-party transactions” of Part H - Related-party transactions of the Notes to consolidated accounts Part I - Share based payments The paragraph “A. Qualitative information” and paragraph “B. Quantitative information -1. Annual changes” are incorporated by reference to paragraphs “A. Qualitative information” and “1 B. Quantitative information -1. Annual changes” of Part I - Shared base payments of the Notes to consolidated accounts Annex 4 - Securitizations - qualitative tables Information is incorporated by reference to information in Annex 3 - Securitizations - qualitative tables of the consolidated financial statement Preliminary notes 20 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies - Section 2 - Market risk Qualitative information as introduction (“Risk management strategies and processes”, “Structure and organisation”, “Risk measurement and reporting systems”, “Hedging policies and risk mitigation”, “Internal model for price, interest rate and exchange rate risk of the regulatory trading book”) is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Qualitative information of “2.1 Interest rate risk and price risk - Regulatory trading book”, “2.2 Interest rate and price risk - Banking book” and “2.3 Exchange rate risk” is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Quantitative information of paragraph “3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis” of Interest rate risk and price risk - Regulatory trading book and of “2. Internal models and other methodologies for sensitivity analysis” of Exchange rate risk is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 4 - Liquidity risks Qualitative information is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.4 Liquidity Risk of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 5 - Operational risk - Qualitative information The paragraph “A. General aspects, operational processes and methods for measuring operational risk” is incorporated by reference paragraph “A. General aspects, operational processes and methods for measuring operational risk” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “B. Risks arising from legal disputes” is incorporated by reference to paragraph “B. Risks arising from legal disputes” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “C. Risks arising from employment law cases” is incorporated by reference to paragraph “Risks arising from employment law cases” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “D. Risks arising from tax disputes is incorporated by reference to paragraph “D. Risks arising from tax disputes” Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 6 - Other risk Qualitative information of paragraphs “Other risks included in Economic Capital”, “Reputational risk” and “Top and emerging risk” is incorporated by reference to qualitative information in different paragraph of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks of the Notes to consolidated accounts Part F - Shareholders’ Equity The paragraph “A. Qualitative information” is incorporated by reference to paragraph “A. Qualitative information” of Part F - Consolidated Shareholders’ Equity of the Notes to consolidated accounts Part H - Related-party transactions The paragraph “Introduction” and the qualitative information of paragraph “2. Related-party transactions” are incorporated by reference paragraphs “Introduction” and “2. Related-party transactions” of Part H - Related-party transactions of the Notes to consolidated accounts Part I - Share based payments The paragraph “A. Qualitative information” and paragraph “B. Quantitative information -1. Annual changes” are incorporated by reference to paragraphs “A. Qualitative information” and “1 B. Quantitative information -1. Annual changes” of Part I - Shared base payments of the Notes to consolidated accounts Annex 4 - Securitizations - qualitative tables Information is incorporated by reference to information in Annex 3 - Securitizations - qualitative tables of the consolidated financial statement Preliminary notes 20 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies - Section 2 - Market risk Qualitative information as introduction (“Risk management strategies and processes”, “Structure and organisation”, “Risk measurement and reporting systems”, “Hedging policies and risk mitigation”, “Internal model for price, interest rate and exchange rate risk of the regulatory trading book”) is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Qualitative information of “2.1 Interest rate risk and price risk - Regulatory trading book”, “2.2 Interest rate and price risk - Banking book” and “2.3 Exchange rate risk” is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Quantitative information of paragraph “3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis” of Interest rate risk and price risk - Regulatory trading book and of “2. Internal models and other methodologies for sensitivity analysis” of Exchange rate risk is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 4 - Liquidity risks Qualitative information is incorporated by reference to qualitative information of paragraph of Part E Information on risks and hedging policies Section 2 - Risk of the prudential consolidated perimeter - 2.4 Liquidity Risk of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 5 - Operational risk - Qualitative information The paragraph “A. General aspects, operational processes and methods for measuring operational risk” is incorporated by reference paragraph “A. General aspects, operational processes and methods for measuring operational risk” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “B. Risks arising from legal disputes” is incorporated by reference to paragraph “B. Risks arising from legal disputes” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “C. Risks arising from employment law cases” is incorporated by reference to paragraph “Risks arising from employment law cases” of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts The paragraph “D. Risks arising from tax disputes is incorporated by reference to paragraph “D. Risks arising from tax disputes” Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks of the Notes to consolidated accounts Part E - Information on risks and hedging policies - Section 6 - Other risk Qualitative information of paragraphs “Other risks included in Economic Capital”, “Reputational risk” and “Top and emerging risk” is incorporated by reference to qualitative information in different paragraph of Part E - Information on risks and hedging policies - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks of the Notes to consolidated accounts Part F - Shareholders’ Equity The paragraph “A. Qualitative information” is incorporated by reference to paragraph “A. Qualitative information” of Part F - Consolidated Shareholders’ Equity of the Notes to consolidated accounts Part H - Related-party transactions The paragraph “Introduction” and the qualitative information of paragraph “2. Related-party transactions” are incorporated by reference paragraphs “Introduction” and “2. Related-party transactions” of Part H - Related-party transactions of the Notes to consolidated accounts Part I - Share based payments The paragraph “A. Qualitative information” and paragraph “B. Quantitative information -1. Annual changes” are incorporated by reference to paragraphs “A. Qualitative information” and “1 B. Quantitative information -1. Annual changes” of Part I - Shared base payments of the Notes to consolidated accounts Annex 4 - Securitizations - qualitative tables Information is incorporated by reference to information in Annex 3 - Securitizations - qualitative tables of the consolidated financial statement One Bank, One UniCredit. 2018 Consolidated Report and Accounts of UniCredit Group c 22 2018 Annual Report and Accounts · UniCredit c 22 2018 Annual Report and Accounts · UniCredit c 22 2018 Annual Report and Accounts · UniCredit c 22 2018 Annual Report and Accounts · UniCredit c 22 2018 Annual Report and Accounts · UniCredit  Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 23 CONSOLIDATED REPORT AND ACCOUNTS 2018 OF UNICREDIT GROUP Consolidated report on operations 29 Introduction and Group highlights 29 Introduction to the Consolidated report on operations of UniCredit group 29 Group highlights, alternative performance indicators and other measures 29 Reclassified consolidated accounts 32 Summary results by business segments 39 Group and UniCredit share historical data series 40 Group results 43 Macroeconomic situation, banking and financial markets 43 Main results and performance for the period 46 Capital and value management 52 Principles of value creation and capital allocation 52 Capital ratios 53 Capital strengthening 54 Shareholders’ equity attributable to the Group, Parent Company 55 Reconciliation parent company UniCredit S.p.A. - Consolidated accounts 55 Contribution of the sector of activity to the results of the Group 56 Other information 60 Report on corporate governance and ownership structure 60 Report on remuneration 60 Non-financial information 60 Research and development projects 60 Group activities development operations and other corporate transactions 60 Organisational model 64 Conversion of DTAs into tax credits 65 Certifications and other communications 65 Information on risks 65 Subsequent events and outlook 66 Subsequent events 66 Outlook 67 Corporate Governance 69 Governance organisational structure 69 UniCredit Senior management team reorganisation 82 Senior Executive Management Team 84 Group Management Team 86 Consolidated financial statements 89 Consolidated accounts 89 Consolidated balance sheet 89 Consolidated income statement 91 Consolidated statement of comprehensive income 93 Statement of changes in the consolidated shareholders’ equity 94 Consolidated cash flow statement 98 Notes to the consolidated accounts 101 Part A - Accounting policies 101 A.1 - General 101 Section 1 - Statement of compliance with IFRS 101 Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 23 CONSOLIDATED REPORT AND ACCOUNTS 2018 OF UNICREDIT GROUP Consolidated report on operations 29 Introduction and Group highlights 29 Introduction to the Consolidated report on operations of UniCredit group 29 Group highlights, alternative performance indicators and other measures 29 Reclassified consolidated accounts 32 Summary results by business segments 39 Group and UniCredit share historical data series 40 Group results 43 Macroeconomic situation, banking and financial markets 43 Main results and performance for the period 46 Capital and value management 52 Principles of value creation and capital allocation 52 Capital ratios 53 Capital strengthening 54 Shareholders’ equity attributable to the Group, Parent Company 55 Reconciliation parent company UniCredit S.p.A. - Consolidated accounts 55 Contribution of the sector of activity to the results of the Group 56 Other information 60 Report on corporate governance and ownership structure 60 Report on remuneration 60 Non-financial information 60 Research and development projects 60 Group activities development operations and other corporate transactions 60 Organisational model 64 Conversion of DTAs into tax credits 65 Certifications and other communications 65 Information on risks 65 Subsequent events and outlook 66 Subsequent events 66 Outlook 67 Corporate Governance 69 Governance organisational structure 69 UniCredit Senior management team reorganisation 82 Senior Executive Management Team 84 Group Management Team 86 Consolidated financial statements 89 Consolidated accounts 89 Consolidated balance sheet 89 Consolidated income statement 91 Consolidated statement of comprehensive income 93 Statement of changes in the consolidated shareholders’ equity 94 Consolidated cash flow statement 98 Notes to the consolidated accounts 101 Part A - Accounting policies 101 A.1 - General 101 Section 1 - Statement of compliance with IFRS 101 Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 23 CONSOLIDATED REPORT AND ACCOUNTS 2018 OF UNICREDIT GROUP Consolidated report on operations 29 Introduction and Group highlights 29 Introduction to the Consolidated report on operations of UniCredit group 29 Group highlights, alternative performance indicators and other measures 29 Reclassified consolidated accounts 32 Summary results by business segments 39 Group and UniCredit share historical data series 40 Group results 43 Macroeconomic situation, banking and financial markets 43 Main results and performance for the period 46 Capital and value management 52 Principles of value creation and capital allocation 52 Capital ratios 53 Capital strengthening 54 Shareholders’ equity attributable to the Group, Parent Company 55 Reconciliation parent company UniCredit S.p.A. - Consolidated accounts 55 Contribution of the sector of activity to the results of the Group 56 Other information 60 Report on corporate governance and ownership structure 60 Report on remuneration 60 Non-financial information 60 Research and development projects 60 Group activities development operations and other corporate transactions 60 Organisational model 64 Conversion of DTAs into tax credits 65 Certifications and other communications 65 Information on risks 65 Subsequent events and outlook 66 Subsequent events 66 Outlook 67 Corporate Governance 69 Governance organisational structure 69 UniCredit Senior management team reorganisation 82 Senior Executive Management Team 84 Group Management Team 86 Consolidated financial statements 89 Consolidated accounts 89 Consolidated balance sheet 89 Consolidated income statement 91 Consolidated statement of comprehensive income 93 Statement of changes in the consolidated shareholders’ equity 94 Consolidated cash flow statement 98 Notes to the consolidated accounts 101 Part A - Accounting policies 101 A.1 - General 101 Section 1 - Statement of compliance with IFRS 101 Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 23 CONSOLIDATED REPORT AND ACCOUNTS 2018 OF UNICREDIT GROUP Consolidated report on operations 29 Introduction and Group highlights 29 Introduction to the Consolidated report on operations of UniCredit group 29 Group highlights, alternative performance indicators and other measures 29 Reclassified consolidated accounts 32 Summary results by business segments 39 Group and UniCredit share historical data series 40 Group results 43 Macroeconomic situation, banking and financial markets 43 Main results and performance for the period 46 Capital and value management 52 Principles of value creation and capital allocation 52 Capital ratios 53 Capital strengthening 54 Shareholders’ equity attributable to the Group, Parent Company 55 Reconciliation parent company UniCredit S.p.A. - Consolidated accounts 55 Contribution of the sector of activity to the results of the Group 56 Other information 60 Report on corporate governance and ownership structure 60 Report on remuneration 60 Non-financial information 60 Research and development projects 60 Group activities development operations and other corporate transactions 60 Organisational model 64 Conversion of DTAs into tax credits 65 Certifications and other communications 65 Information on risks 65 Subsequent events and outlook 66 Subsequent events 66 Outlook 67 Corporate Governance 69 Governance organisational structure 69 UniCredit Senior management team reorganisation 82 Senior Executive Management Team 84 Group Management Team 86 Consolidated financial statements 89 Consolidated accounts 89 Consolidated balance sheet 89 Consolidated income statement 91 Consolidated statement of comprehensive income 93 Statement of changes in the consolidated shareholders’ equity 94 Consolidated cash flow statement 98 Notes to the consolidated accounts 101 Part A - Accounting policies 101 A.1 - General 101 Section 1 - Statement of compliance with IFRS 101 Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 23 CONSOLIDATED REPORT AND ACCOUNTS 2018 OF UNICREDIT GROUP Consolidated report on operations 29 Introduction and Group highlights 29 Introduction to the Consolidated report on operations of UniCredit group 29 Group highlights, alternative performance indicators and other measures 29 Reclassified consolidated accounts 32 Summary results by business segments 39 Group and UniCredit share historical data series 40 Group results 43 Macroeconomic situation, banking and financial markets 43 Main results and performance for the period 46 Capital and value management 52 Principles of value creation and capital allocation 52 Capital ratios 53 Capital strengthening 54 Shareholders’ equity attributable to the Group, Parent Company 55 Reconciliation parent company UniCredit S.p.A. - Consolidated accounts 55 Contribution of the sector of activity to the results of the Group 56 Other information 60 Report on corporate governance and ownership structure 60 Report on remuneration 60 Non-financial information 60 Research and development projects 60 Group activities development operations and other corporate transactions 60 Organisational model 64 Conversion of DTAs into tax credits 65 Certifications and other communications 65 Information on risks 65 Subsequent events and outlook 66 Subsequent events 66 Outlook 67 Corporate Governance 69 Governance organisational structure 69 UniCredit Senior management team reorganisation 82 Senior Executive Management Team 84 Group Management Team 86 Consolidated financial statements 89 Consolidated accounts 89 Consolidated balance sheet 89 Consolidated income statement 91 Consolidated statement of comprehensive income 93 Statement of changes in the consolidated shareholders’ equity 94 Consolidated cash flow statement 98 Notes to the consolidated accounts 101 Part A - Accounting policies 101 A.1 - General 101 Section 1 - Statement of compliance with IFRS 101  Consolidated report and accounts 2018 of UniCredit Group 24 2018 Annual Report and Accounts · UniCredit Section 2 - General preparation criteria 101 Section 3 - Consolidation scope and methods 103 Section 4 - Subsequent events 137 Section 5 - Other matters 137 A.2 - Main items of the accounts 153 A.3 - Information on transfers between portfolios of financial assets 170 A.4 - Information on fair value 171 A.5 - Information on “day one profit/loss" 183 Part B - Consolidated balance sheet 184 Assets 184 Section 1 - Cash and cash balances - Item 10 184 Section 2 - Financial assets at fair value through profit or loss - Item 20 184 Information about the units of Atlante Fund and Italian Recovery Fund 187 Information about the investments in the “Schema Volontario” (Voluntary Scheme) 187 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 190 Information about the shareholding in Banca d'Italia 191 Section 4 - Financial assets at amortised cost - Item 40 193 Section 5 - Hedging derivatives - Item 50 198 Section 6 - Changes in fair value of portfolio hedged items - Item 60 199 Section 7 - Equity investments - Item 70 200 Section 8 - Insurance reserves charged to reinsurers - Item 80 208 Section 9 - Property, plant and equipment - Item 90 208 Section 10 - Intangible assets - Item 100 212 Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) 221 Section 12 - Non-current assets and disposal groups classified as held for sale - Item 120 (Assets) and Item 70 (Liabilities) 225 Section 13 - Other assets - Item 130 227 Liabilities 229 Section 1 - Financial liabilities at amortised cost - Item 10 229 Section 2 - Financial liabilities held for trading - Item 20 233 Section 3 - Financial liabilities designated at fair value - Item 30 235 Section 4 - Hedging derivatives - Item 40 236 Section 5 - Value adjustment of hedged financial liabilities - Item 50 237 Section 6 - Tax liabilities - Item 60 237 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 237 Section 8 - Other liabilities - Item 80 238 Section 9 - Provision for employee severance pay - Item 90 239 Section 10 - Provisions for risks and charges - Item 100 239 Section 11 - Technical reserves - Item 110 243 Section 12 - Redeemable shares - Item 130 243 Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 243 Section 14 - Minority shareholders‘ equity - Item 190 246 Other information 247 Consolidated report and accounts 2018 of UniCredit Group 24 2018 Annual Report and Accounts · UniCredit Section 2 - General preparation criteria 101 Section 3 - Consolidation scope and methods 103 Section 4 - Subsequent events 137 Section 5 - Other matters 137 A.2 - Main items of the accounts 153 A.3 - Information on transfers between portfolios of financial assets 170 A.4 - Information on fair value 171 A.5 - Information on “day one profit/loss" 183 Part B - Consolidated balance sheet 184 Assets 184 Section 1 - Cash and cash balances - Item 10 184 Section 2 - Financial assets at fair value through profit or loss - Item 20 184 Information about the units of Atlante Fund and Italian Recovery Fund 187 Information about the investments in the “Schema Volontario” (Voluntary Scheme) 187 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 190 Information about the shareholding in Banca d'Italia 191 Section 4 - Financial assets at amortised cost - Item 40 193 Section 5 - Hedging derivatives - Item 50 198 Section 6 - Changes in fair value of portfolio hedged items - Item 60 199 Section 7 - Equity investments - Item 70 200 Section 8 - Insurance reserves charged to reinsurers - Item 80 208 Section 9 - Property, plant and equipment - Item 90 208 Section 10 - Intangible assets - Item 100 212 Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) 221 Section 12 - Non-current assets and disposal groups classified as held for sale - Item 120 (Assets) and Item 70 (Liabilities) 225 Section 13 - Other assets - Item 130 227 Liabilities 229 Section 1 - Financial liabilities at amortised cost - Item 10 229 Section 2 - Financial liabilities held for trading - Item 20 233 Section 3 - Financial liabilities designated at fair value - Item 30 235 Section 4 - Hedging derivatives - Item 40 236 Section 5 - Value adjustment of hedged financial liabilities - Item 50 237 Section 6 - Tax liabilities - Item 60 237 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 237 Section 8 - Other liabilities - Item 80 238 Section 9 - Provision for employee severance pay - Item 90 239 Section 10 - Provisions for risks and charges - Item 100 239 Section 11 - Technical reserves - Item 110 243 Section 12 - Redeemable shares - Item 130 243 Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 243 Section 14 - Minority shareholders‘ equity - Item 190 246 Other information 247 Consolidated report and accounts 2018 of UniCredit Group 24 2018 Annual Report and Accounts · UniCredit Section 2 - General preparation criteria 101 Section 3 - Consolidation scope and methods 103 Section 4 - Subsequent events 137 Section 5 - Other matters 137 A.2 - Main items of the accounts 153 A.3 - Information on transfers between portfolios of financial assets 170 A.4 - Information on fair value 171 A.5 - Information on “day one profit/loss" 183 Part B - Consolidated balance sheet 184 Assets 184 Section 1 - Cash and cash balances - Item 10 184 Section 2 - Financial assets at fair value through profit or loss - Item 20 184 Information about the units of Atlante Fund and Italian Recovery Fund 187 Information about the investments in the “Schema Volontario” (Voluntary Scheme) 187 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 190 Information about the shareholding in Banca d'Italia 191 Section 4 - Financial assets at amortised cost - Item 40 193 Section 5 - Hedging derivatives - Item 50 198 Section 6 - Changes in fair value of portfolio hedged items - Item 60 199 Section 7 - Equity investments - Item 70 200 Section 8 - Insurance reserves charged to reinsurers - Item 80 208 Section 9 - Property, plant and equipment - Item 90 208 Section 10 - Intangible assets - Item 100 212 Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) 221 Section 12 - Non-current assets and disposal groups classified as held for sale - Item 120 (Assets) and Item 70 (Liabilities) 225 Section 13 - Other assets - Item 130 227 Liabilities 229 Section 1 - Financial liabilities at amortised cost - Item 10 229 Section 2 - Financial liabilities held for trading - Item 20 233 Section 3 - Financial liabilities designated at fair value - Item 30 235 Section 4 - Hedging derivatives - Item 40 236 Section 5 - Value adjustment of hedged financial liabilities - Item 50 237 Section 6 - Tax liabilities - Item 60 237 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 237 Section 8 - Other liabilities - Item 80 238 Section 9 - Provision for employee severance pay - Item 90 239 Section 10 - Provisions for risks and charges - Item 100 239 Section 11 - Technical reserves - Item 110 243 Section 12 - Redeemable shares - Item 130 243 Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 243 Section 14 - Minority shareholders‘ equity - Item 190 246 Other information 247 Consolidated report and accounts 2018 of UniCredit Group 24 2018 Annual Report and Accounts · UniCredit Section 2 - General preparation criteria 101 Section 3 - Consolidation scope and methods 103 Section 4 - Subsequent events 137 Section 5 - Other matters 137 A.2 - Main items of the accounts 153 A.3 - Information on transfers between portfolios of financial assets 170 A.4 - Information on fair value 171 A.5 - Information on “day one profit/loss" 183 Part B - Consolidated balance sheet 184 Assets 184 Section 1 - Cash and cash balances - Item 10 184 Section 2 - Financial assets at fair value through profit or loss - Item 20 184 Information about the units of Atlante Fund and Italian Recovery Fund 187 Information about the investments in the “Schema Volontario” (Voluntary Scheme) 187 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 190 Information about the shareholding in Banca d'Italia 191 Section 4 - Financial assets at amortised cost - Item 40 193 Section 5 - Hedging derivatives - Item 50 198 Section 6 - Changes in fair value of portfolio hedged items - Item 60 199 Section 7 - Equity investments - Item 70 200 Section 8 - Insurance reserves charged to reinsurers - Item 80 208 Section 9 - Property, plant and equipment - Item 90 208 Section 10 - Intangible assets - Item 100 212 Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) 221 Section 12 - Non-current assets and disposal groups classified as held for sale - Item 120 (Assets) and Item 70 (Liabilities) 225 Section 13 - Other assets - Item 130 227 Liabilities 229 Section 1 - Financial liabilities at amortised cost - Item 10 229 Section 2 - Financial liabilities held for trading - Item 20 233 Section 3 - Financial liabilities designated at fair value - Item 30 235 Section 4 - Hedging derivatives - Item 40 236 Section 5 - Value adjustment of hedged financial liabilities - Item 50 237 Section 6 - Tax liabilities - Item 60 237 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 237 Section 8 - Other liabilities - Item 80 238 Section 9 - Provision for employee severance pay - Item 90 239 Section 10 - Provisions for risks and charges - Item 100 239 Section 11 - Technical reserves - Item 110 243 Section 12 - Redeemable shares - Item 130 243 Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 243 Section 14 - Minority shareholders‘ equity - Item 190 246 Other information 247 Consolidated report and accounts 2018 of UniCredit Group 24 2018 Annual Report and Accounts · UniCredit Section 2 - General preparation criteria 101 Section 3 - Consolidation scope and methods 103 Section 4 - Subsequent events 137 Section 5 - Other matters 137 A.2 - Main items of the accounts 153 A.3 - Information on transfers between portfolios of financial assets 170 A.4 - Information on fair value 171 A.5 - Information on “day one profit/loss" 183 Part B - Consolidated balance sheet 184 Assets 184 Section 1 - Cash and cash balances - Item 10 184 Section 2 - Financial assets at fair value through profit or loss - Item 20 184 Information about the units of Atlante Fund and Italian Recovery Fund 187 Information about the investments in the “Schema Volontario” (Voluntary Scheme) 187 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 190 Information about the shareholding in Banca d'Italia 191 Section 4 - Financial assets at amortised cost - Item 40 193 Section 5 - Hedging derivatives - Item 50 198 Section 6 - Changes in fair value of portfolio hedged items - Item 60 199 Section 7 - Equity investments - Item 70 200 Section 8 - Insurance reserves charged to reinsurers - Item 80 208 Section 9 - Property, plant and equipment - Item 90 208 Section 10 - Intangible assets - Item 100 212 Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) 221 Section 12 - Non-current assets and disposal groups classified as held for sale - Item 120 (Assets) and Item 70 (Liabilities) 225 Section 13 - Other assets - Item 130 227 Liabilities 229 Section 1 - Financial liabilities at amortised cost - Item 10 229 Section 2 - Financial liabilities held for trading - Item 20 233 Section 3 - Financial liabilities designated at fair value - Item 30 235 Section 4 - Hedging derivatives - Item 40 236 Section 5 - Value adjustment of hedged financial liabilities - Item 50 237 Section 6 - Tax liabilities - Item 60 237 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 237 Section 8 - Other liabilities - Item 80 238 Section 9 - Provision for employee severance pay - Item 90 239 Section 10 - Provisions for risks and charges - Item 100 239 Section 11 - Technical reserves - Item 110 243 Section 12 - Redeemable shares - Item 130 243 Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 243 Section 14 - Minority shareholders‘ equity - Item 190 246 Other information 247  Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 25 Part C - Consolidated income statement 251 Section 1 - Interests - Items 10 and 20 251 Section 2 - Fees and commissions - Items 40 and 50 253 Section 3 - Dividend income and similar revenue - Item 70 254 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 255 Section 5 - Fair value adjustments in hedge accounting - Item 90 256 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 256 Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 258 Section 8 - Net losses/recoveries on credit impairment - Item 130 259 Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 260 Section 10 - Net premiums - Item 160 261 Section 11 - Other net insurance income/expenses - Item 170 261 Section 12 - Administrative expenses - Item 190 261 Contributions to Resolution and Guarantee Funds 263 Guarantee fees for DTA conversion 264 Section 13 - Net provisions for risks and charges - Item 200 264 Section 14 - Net value adjustments/write-backs on property, plant and equipment - Item 210 265 Section 15 - Net value adjustments/write-backs on intangible assets - Item 220 266 Section 16 - Other operating expenses/income - Item 230 266 Section 17 - Gains (Losses) of equity investments - Item 250 267 Section 18 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 260 269 Section 19 - Goodwill impairment - Item 270 269 Section 20 - Gains (Losses) on disposals on investments - Item 280 269 Section 21 - Tax expenses (income) for the period from continuing operations - Item 300 271 Section 22 - Profit (Loss) after tax from discontinued operations - Item 320 273 Section 23 - Minority profit (loss) of the year - Item 340 273 Section 24 - Other information 274 Section 25 - Earnings per share 275 Part D - Consolidated comprehensive income 276 Part E - Information on risks and hedging policies 278 Introduction 278 Section 1 - Risks of the accounting consolidated perimeter 284 Quantitative information 284 A. Credit quality 284 A.1 Impaired and non performing credit exposures: stocks, value adjustments, dynamics and economic 284 B. Structured entities (other than entities for securitisation transaction) 286 B.1 Consolidated structured entities 286 B.2 Non-consolidated for accounting purposes structured entities 287 Section 2 - Risks of the prudential consolidated 290 2.1 Credit risk 290 Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 25 Part C - Consolidated income statement 251 Section 1 - Interests - Items 10 and 20 251 Section 2 - Fees and commissions - Items 40 and 50 253 Section 3 - Dividend income and similar revenue - Item 70 254 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 255 Section 5 - Fair value adjustments in hedge accounting - Item 90 256 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 256 Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 258 Section 8 - Net losses/recoveries on credit impairment - Item 130 259 Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 260 Section 10 - Net premiums - Item 160 261 Section 11 - Other net insurance income/expenses - Item 170 261 Section 12 - Administrative expenses - Item 190 261 Contributions to Resolution and Guarantee Funds 263 Guarantee fees for DTA conversion 264 Section 13 - Net provisions for risks and charges - Item 200 264 Section 14 - Net value adjustments/write-backs on property, plant and equipment - Item 210 265 Section 15 - Net value adjustments/write-backs on intangible assets - Item 220 266 Section 16 - Other operating expenses/income - Item 230 266 Section 17 - Gains (Losses) of equity investments - Item 250 267 Section 18 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 260 269 Section 19 - Goodwill impairment - Item 270 269 Section 20 - Gains (Losses) on disposals on investments - Item 280 269 Section 21 - Tax expenses (income) for the period from continuing operations - Item 300 271 Section 22 - Profit (Loss) after tax from discontinued operations - Item 320 273 Section 23 - Minority profit (loss) of the year - Item 340 273 Section 24 - Other information 274 Section 25 - Earnings per share 275 Part D - Consolidated comprehensive income 276 Part E - Information on risks and hedging policies 278 Introduction 278 Section 1 - Risks of the accounting consolidated perimeter 284 Quantitative information 284 A. Credit quality 284 A.1 Impaired and non performing credit exposures: stocks, value adjustments, dynamics and economic 284 B. Structured entities (other than entities for securitisation transaction) 286 B.1 Consolidated structured entities 286 B.2 Non-consolidated for accounting purposes structured entities 287 Section 2 - Risks of the prudential consolidated 290 2.1 Credit risk 290 Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 25 Part C - Consolidated income statement 251 Section 1 - Interests - Items 10 and 20 251 Section 2 - Fees and commissions - Items 40 and 50 253 Section 3 - Dividend income and similar revenue - Item 70 254 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 255 Section 5 - Fair value adjustments in hedge accounting - Item 90 256 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 256 Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 258 Section 8 - Net losses/recoveries on credit impairment - Item 130 259 Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 260 Section 10 - Net premiums - Item 160 261 Section 11 - Other net insurance income/expenses - Item 170 261 Section 12 - Administrative expenses - Item 190 261 Contributions to Resolution and Guarantee Funds 263 Guarantee fees for DTA conversion 264 Section 13 - Net provisions for risks and charges - Item 200 264 Section 14 - Net value adjustments/write-backs on property, plant and equipment - Item 210 265 Section 15 - Net value adjustments/write-backs on intangible assets - Item 220 266 Section 16 - Other operating expenses/income - Item 230 266 Section 17 - Gains (Losses) of equity investments - Item 250 267 Section 18 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 260 269 Section 19 - Goodwill impairment - Item 270 269 Section 20 - Gains (Losses) on disposals on investments - Item 280 269 Section 21 - Tax expenses (income) for the period from continuing operations - Item 300 271 Section 22 - Profit (Loss) after tax from discontinued operations - Item 320 273 Section 23 - Minority profit (loss) of the year - Item 340 273 Section 24 - Other information 274 Section 25 - Earnings per share 275 Part D - Consolidated comprehensive income 276 Part E - Information on risks and hedging policies 278 Introduction 278 Section 1 - Risks of the accounting consolidated perimeter 284 Quantitative information 284 A. Credit quality 284 A.1 Impaired and non performing credit exposures: stocks, value adjustments, dynamics and economic 284 B. Structured entities (other than entities for securitisation transaction) 286 B.1 Consolidated structured entities 286 B.2 Non-consolidated for accounting purposes structured entities 287 Section 2 - Risks of the prudential consolidated 290 2.1 Credit risk 290 Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 25 Part C - Consolidated income statement 251 Section 1 - Interests - Items 10 and 20 251 Section 2 - Fees and commissions - Items 40 and 50 253 Section 3 - Dividend income and similar revenue - Item 70 254 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 255 Section 5 - Fair value adjustments in hedge accounting - Item 90 256 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 256 Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 258 Section 8 - Net losses/recoveries on credit impairment - Item 130 259 Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 260 Section 10 - Net premiums - Item 160 261 Section 11 - Other net insurance income/expenses - Item 170 261 Section 12 - Administrative expenses - Item 190 261 Contributions to Resolution and Guarantee Funds 263 Guarantee fees for DTA conversion 264 Section 13 - Net provisions for risks and charges - Item 200 264 Section 14 - Net value adjustments/write-backs on property, plant and equipment - Item 210 265 Section 15 - Net value adjustments/write-backs on intangible assets - Item 220 266 Section 16 - Other operating expenses/income - Item 230 266 Section 17 - Gains (Losses) of equity investments - Item 250 267 Section 18 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 260 269 Section 19 - Goodwill impairment - Item 270 269 Section 20 - Gains (Losses) on disposals on investments - Item 280 269 Section 21 - Tax expenses (income) for the period from continuing operations - Item 300 271 Section 22 - Profit (Loss) after tax from discontinued operations - Item 320 273 Section 23 - Minority profit (loss) of the year - Item 340 273 Section 24 - Other information 274 Section 25 - Earnings per share 275 Part D - Consolidated comprehensive income 276 Part E - Information on risks and hedging policies 278 Introduction 278 Section 1 - Risks of the accounting consolidated perimeter 284 Quantitative information 284 A. Credit quality 284 A.1 Impaired and non performing credit exposures: stocks, value adjustments, dynamics and economic 284 B. Structured entities (other than entities for securitisation transaction) 286 B.1 Consolidated structured entities 286 B.2 Non-consolidated for accounting purposes structured entities 287 Section 2 - Risks of the prudential consolidated 290 2.1 Credit risk 290 Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 25 Part C - Consolidated income statement 251 Section 1 - Interests - Items 10 and 20 251 Section 2 - Fees and commissions - Items 40 and 50 253 Section 3 - Dividend income and similar revenue - Item 70 254 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 255 Section 5 - Fair value adjustments in hedge accounting - Item 90 256 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 256 Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 258 Section 8 - Net losses/recoveries on credit impairment - Item 130 259 Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 260 Section 10 - Net premiums - Item 160 261 Section 11 - Other net insurance income/expenses - Item 170 261 Section 12 - Administrative expenses - Item 190 261 Contributions to Resolution and Guarantee Funds 263 Guarantee fees for DTA conversion 264 Section 13 - Net provisions for risks and charges - Item 200 264 Section 14 - Net value adjustments/write-backs on property, plant and equipment - Item 210 265 Section 15 - Net value adjustments/write-backs on intangible assets - Item 220 266 Section 16 - Other operating expenses/income - Item 230 266 Section 17 - Gains (Losses) of equity investments - Item 250 267 Section 18 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 260 269 Section 19 - Goodwill impairment - Item 270 269 Section 20 - Gains (Losses) on disposals on investments - Item 280 269 Section 21 - Tax expenses (income) for the period from continuing operations - Item 300 271 Section 22 - Profit (Loss) after tax from discontinued operations - Item 320 273 Section 23 - Minority profit (loss) of the year - Item 340 273 Section 24 - Other information 274 Section 25 - Earnings per share 275 Part D - Consolidated comprehensive income 276 Part E - Information on risks and hedging policies 278 Introduction 278 Section 1 - Risks of the accounting consolidated perimeter 284 Quantitative information 284 A. Credit quality 284 A.1 Impaired and non performing credit exposures: stocks, value adjustments, dynamics and economic 284 B. Structured entities (other than entities for securitisation transaction) 286 B.1 Consolidated structured entities 286 B.2 Non-consolidated for accounting purposes structured entities 287 Section 2 - Risks of the prudential consolidated 290 2.1 Credit risk 290  Consolidated report and accounts 2018 of UniCredit Group 26 2018 Annual Report and Accounts · UniCredit Qualitative information 290 1. General aspects 290 2. Credit risk management policies 291 3. Non-performing credit exposures 300 4. Commercial renegotiation financial assets and forborne exposures 303 Quantitative information 305 A. Credit quality 305 B. Distribution and concentration of credit exposures 317 C. Securitisation transactions 321 D. Sales Transactions 343 E. Prudential perimeter - Credit risk measurement models 353 2.2 Market risk 353 Risk management strategies and processes 353 Structure and organisation 356 Risk measurement and reporting systems 357 Hedging policies and risk mitigation 358 Internal model for price, interest rate and exchange rate risk of the regulatory trading book 359 2.2.1 Interest rate risk and price risk - Regulatory trading book 365 Qualitative information 365 Quantitative information 365 2.2.2 Interest rate risk and price risk - Banking book 368 Qualitative information 368 Quantitative information 369 2.2.3 Exchange rate risk 372 Qualitative information 372 Quantitative information 372 Credit spread risk 373 Stress test 375 2.3 Derivative instruments and hedging policies 378 2.3.1 Trading financial derivatives 378 A Financial Derivatives 378 B. Credit derivatives 381 2.3.2 Hending policies 382 Qualitative information 382 Quantitative information 384 2.3.3 Other information on derivatives instruments (trading and hedging) 388 A. Financial and credit derivatives 388 2.4 Liquidity risk 389 Qualitative information 389 Quantitative information 396 Consolidated report and accounts 2018 of UniCredit Group 26 2018 Annual Report and Accounts · UniCredit Qualitative information 290 1. General aspects 290 2. Credit risk management policies 291 3. Non-performing credit exposures 300 4. Commercial renegotiation financial assets and forborne exposures 303 Quantitative information 305 A. Credit quality 305 B. Distribution and concentration of credit exposures 317 C. Securitisation transactions 321 D. Sales Transactions 343 E. Prudential perimeter - Credit risk measurement models 353 2.2 Market risk 353 Risk management strategies and processes 353 Structure and organisation 356 Risk measurement and reporting systems 357 Hedging policies and risk mitigation 358 Internal model for price, interest rate and exchange rate risk of the regulatory trading book 359 2.2.1 Interest rate risk and price risk - Regulatory trading book 365 Qualitative information 365 Quantitative information 365 2.2.2 Interest rate risk and price risk - Banking book 368 Qualitative information 368 Quantitative information 369 2.2.3 Exchange rate risk 372 Qualitative information 372 Quantitative information 372 Credit spread risk 373 Stress test 375 2.3 Derivative instruments and hedging policies 378 2.3.1 Trading financial derivatives 378 A Financial Derivatives 378 B. Credit derivatives 381 2.3.2 Hending policies 382 Qualitative information 382 Quantitative information 384 2.3.3 Other information on derivatives instruments (trading and hedging) 388 A. Financial and credit derivatives 388 2.4 Liquidity risk 389 Qualitative information 389 Quantitative information 396 Consolidated report and accounts 2018 of UniCredit Group 26 2018 Annual Report and Accounts · UniCredit Qualitative information 290 1. General aspects 290 2. Credit risk management policies 291 3. Non-performing credit exposures 300 4. Commercial renegotiation financial assets and forborne exposures 303 Quantitative information 305 A. Credit quality 305 B. Distribution and concentration of credit exposures 317 C. Securitisation transactions 321 D. Sales Transactions 343 E. Prudential perimeter - Credit risk measurement models 353 2.2 Market risk 353 Risk management strategies and processes 353 Structure and organisation 356 Risk measurement and reporting systems 357 Hedging policies and risk mitigation 358 Internal model for price, interest rate and exchange rate risk of the regulatory trading book 359 2.2.1 Interest rate risk and price risk - Regulatory trading book 365 Qualitative information 365 Quantitative information 365 2.2.2 Interest rate risk and price risk - Banking book 368 Qualitative information 368 Quantitative information 369 2.2.3 Exchange rate risk 372 Qualitative information 372 Quantitative information 372 Credit spread risk 373 Stress test 375 2.3 Derivative instruments and hedging policies 378 2.3.1 Trading financial derivatives 378 A Financial Derivatives 378 B. Credit derivatives 381 2.3.2 Hending policies 382 Qualitative information 382 Quantitative information 384 2.3.3 Other information on derivatives instruments (trading and hedging) 388 A. Financial and credit derivatives 388 2.4 Liquidity risk 389 Qualitative information 389 Quantitative information 396 Consolidated report and accounts 2018 of UniCredit Group 26 2018 Annual Report and Accounts · UniCredit Qualitative information 290 1. General aspects 290 2. Credit risk management policies 291 3. Non-performing credit exposures 300 4. Commercial renegotiation financial assets and forborne exposures 303 Quantitative information 305 A. Credit quality 305 B. Distribution and concentration of credit exposures 317 C. Securitisation transactions 321 D. Sales Transactions 343 E. Prudential perimeter - Credit risk measurement models 353 2.2 Market risk 353 Risk management strategies and processes 353 Structure and organisation 356 Risk measurement and reporting systems 357 Hedging policies and risk mitigation 358 Internal model for price, interest rate and exchange rate risk of the regulatory trading book 359 2.2.1 Interest rate risk and price risk - Regulatory trading book 365 Qualitative information 365 Quantitative information 365 2.2.2 Interest rate risk and price risk - Banking book 368 Qualitative information 368 Quantitative information 369 2.2.3 Exchange rate risk 372 Qualitative information 372 Quantitative information 372 Credit spread risk 373 Stress test 375 2.3 Derivative instruments and hedging policies 378 2.3.1 Trading financial derivatives 378 A Financial Derivatives 378 B. Credit derivatives 381 2.3.2 Hending policies 382 Qualitative information 382 Quantitative information 384 2.3.3 Other information on derivatives instruments (trading and hedging) 388 A. Financial and credit derivatives 388 2.4 Liquidity risk 389 Qualitative information 389 Quantitative information 396 Consolidated report and accounts 2018 of UniCredit Group 26 2018 Annual Report and Accounts · UniCredit Qualitative information 290 1. General aspects 290 2. Credit risk management policies 291 3. Non-performing credit exposures 300 4. Commercial renegotiation financial assets and forborne exposures 303 Quantitative information 305 A. Credit quality 305 B. Distribution and concentration of credit exposures 317 C. Securitisation transactions 321 D. Sales Transactions 343 E. Prudential perimeter - Credit risk measurement models 353 2.2 Market risk 353 Risk management strategies and processes 353 Structure and organisation 356 Risk measurement and reporting systems 357 Hedging policies and risk mitigation 358 Internal model for price, interest rate and exchange rate risk of the regulatory trading book 359 2.2.1 Interest rate risk and price risk - Regulatory trading book 365 Qualitative information 365 Quantitative information 365 2.2.2 Interest rate risk and price risk - Banking book 368 Qualitative information 368 Quantitative information 369 2.2.3 Exchange rate risk 372 Qualitative information 372 Quantitative information 372 Credit spread risk 373 Stress test 375 2.3 Derivative instruments and hedging policies 378 2.3.1 Trading financial derivatives 378 A Financial Derivatives 378 B. Credit derivatives 381 2.3.2 Hending policies 382 Qualitative information 382 Quantitative information 384 2.3.3 Other information on derivatives instruments (trading and hedging) 388 A. Financial and credit derivatives 388 2.4 Liquidity risk 389 Qualitative information 389 Quantitative information 396  Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 27 2.5 Operational risks 399 Qualitative information 399 A. General aspects, operational processes and methods for measuring operational risk 399 B. Legal risks 402 C. Risks arising from employment law cases 409 D. Risks arising from tax disputes 410 E. Other claims by customers 411 Quantitative information 412 2.6 Other risks 413 Other risks included in Economic Capital 413 1. Business risk 413 2. Real estate risk 413 3. Financial investments risk 413 Reputational risk 414 Top and emerging risks 414 Part F - Consolidated shareholders’ equity 417 Section 1 - Consolidated Shareholders’ Equity 417 A. Qualitative information 417 B. Quantitative information 418 Section 2 - Own funds and banking regulatory ratios 419 Part G - Business combinatios 420 Section 1 - Business combinations completed in the year 420 Section 2 - Business combinations completed after year-end 420 Section 3 - Retrospective adjustments 420 Part H - Related-party transactions 421 Introduction 421 1. Details of Key management personnels’ compensation 422 2. Related-party transactions 423 Part I - Share-based payments 427 Qualitative information 427 1. Description of payment agreements based on own equity instruments 427 Quantitative information 429 1. Annual changes 429 2. Other Information 430 Part L - Segment reporting 431 Organizational structure 431 A - Primary segment 433 B - Secondary segment 435 Annexes 437 Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 437 Annex 2 - Fees for annual audits and related services 445 Annex 3 - Securitisations - qualitative tables 446 Certification 489 Report of the External Auditors 491 Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 27 2.5 Operational risks 399 Qualitative information 399 A. General aspects, operational processes and methods for measuring operational risk 399 B. Legal risks 402 C. Risks arising from employment law cases 409 D. Risks arising from tax disputes 410 E. Other claims by customers 411 Quantitative information 412 2.6 Other risks 413 Other risks included in Economic Capital 413 1. Business risk 413 2. Real estate risk 413 3. Financial investments risk 413 Reputational risk 414 Top and emerging risks 414 Part F - Consolidated shareholders’ equity 417 Section 1 - Consolidated Shareholders’ Equity 417 A. Qualitative information 417 B. Quantitative information 418 Section 2 - Own funds and banking regulatory ratios 419 Part G - Business combinatios 420 Section 1 - Business combinations completed in the year 420 Section 2 - Business combinations completed after year-end 420 Section 3 - Retrospective adjustments 420 Part H - Related-party transactions 421 Introduction 421 1. Details of Key management personnels’ compensation 422 2. Related-party transactions 423 Part I - Share-based payments 427 Qualitative information 427 1. Description of payment agreements based on own equity instruments 427 Quantitative information 429 1. Annual changes 429 2. Other Information 430 Part L - Segment reporting 431 Organizational structure 431 A - Primary segment 433 B - Secondary segment 435 Annexes 437 Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 437 Annex 2 - Fees for annual audits and related services 445 Annex 3 - Securitisations - qualitative tables 446 Certification 489 Report of the External Auditors 491 Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 27 2.5 Operational risks 399 Qualitative information 399 A. General aspects, operational processes and methods for measuring operational risk 399 B. Legal risks 402 C. Risks arising from employment law cases 409 D. Risks arising from tax disputes 410 E. Other claims by customers 411 Quantitative information 412 2.6 Other risks 413 Other risks included in Economic Capital 413 1. Business risk 413 2. Real estate risk 413 3. Financial investments risk 413 Reputational risk 414 Top and emerging risks 414 Part F - Consolidated shareholders’ equity 417 Section 1 - Consolidated Shareholders’ Equity 417 A. Qualitative information 417 B. Quantitative information 418 Section 2 - Own funds and banking regulatory ratios 419 Part G - Business combinatios 420 Section 1 - Business combinations completed in the year 420 Section 2 - Business combinations completed after year-end 420 Section 3 - Retrospective adjustments 420 Part H - Related-party transactions 421 Introduction 421 1. Details of Key management personnels’ compensation 422 2. Related-party transactions 423 Part I - Share-based payments 427 Qualitative information 427 1. Description of payment agreements based on own equity instruments 427 Quantitative information 429 1. Annual changes 429 2. Other Information 430 Part L - Segment reporting 431 Organizational structure 431 A - Primary segment 433 B - Secondary segment 435 Annexes 437 Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 437 Annex 2 - Fees for annual audits and related services 445 Annex 3 - Securitisations - qualitative tables 446 Certification 489 Report of the External Auditors 491 Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 27 2.5 Operational risks 399 Qualitative information 399 A. General aspects, operational processes and methods for measuring operational risk 399 B. Legal risks 402 C. Risks arising from employment law cases 409 D. Risks arising from tax disputes 410 E. Other claims by customers 411 Quantitative information 412 2.6 Other risks 413 Other risks included in Economic Capital 413 1. Business risk 413 2. Real estate risk 413 3. Financial investments risk 413 Reputational risk 414 Top and emerging risks 414 Part F - Consolidated shareholders’ equity 417 Section 1 - Consolidated Shareholders’ Equity 417 A. Qualitative information 417 B. Quantitative information 418 Section 2 - Own funds and banking regulatory ratios 419 Part G - Business combinatios 420 Section 1 - Business combinations completed in the year 420 Section 2 - Business combinations completed after year-end 420 Section 3 - Retrospective adjustments 420 Part H - Related-party transactions 421 Introduction 421 1. Details of Key management personnels’ compensation 422 2. Related-party transactions 423 Part I - Share-based payments 427 Qualitative information 427 1. Description of payment agreements based on own equity instruments 427 Quantitative information 429 1. Annual changes 429 2. Other Information 430 Part L - Segment reporting 431 Organizational structure 431 A - Primary segment 433 B - Secondary segment 435 Annexes 437 Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 437 Annex 2 - Fees for annual audits and related services 445 Annex 3 - Securitisations - qualitative tables 446 Certification 489 Report of the External Auditors 491 Consolidated report and accounts 2018 of UniCredit Group UniCredit ·2018 Annual Report and Accounts 27 2.5 Operational risks 399 Qualitative information 399 A. General aspects, operational processes and methods for measuring operational risk 399 B. Legal risks 402 C. Risks arising from employment law cases 409 D. Risks arising from tax disputes 410 E. Other claims by customers 411 Quantitative information 412 2.6 Other risks 413 Other risks included in Economic Capital 413 1. Business risk 413 2. Real estate risk 413 3. Financial investments risk 413 Reputational risk 414 Top and emerging risks 414 Part F - Consolidated shareholders’ equity 417 Section 1 - Consolidated Shareholders’ Equity 417 A. Qualitative information 417 B. Quantitative information 418 Section 2 - Own funds and banking regulatory ratios 419 Part G - Business combinatios 420 Section 1 - Business combinations completed in the year 420 Section 2 - Business combinations completed after year-end 420 Section 3 - Retrospective adjustments 420 Part H - Related-party transactions 421 Introduction 421 1. Details of Key management personnels’ compensation 422 2. Related-party transactions 423 Part I - Share-based payments 427 Qualitative information 427 1. Description of payment agreements based on own equity instruments 427 Quantitative information 429 1. Annual changes 429 2. Other Information 430 Part L - Segment reporting 431 Organizational structure 431 A - Primary segment 433 B - Secondary segment 435 Annexes 437 Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 437 Annex 2 - Fees for annual audits and related services 445 Annex 3 - Securitisations - qualitative tables 446 Certification 489 Report of the External Auditors 491 Strengthen and optimise capital. We will maintain a strong capital position by generating solid profit. We confirm our MDA buffer. The Group fared well in the EBA stress test results, with the third highest CET1 ratio among systemic banks in the Eurozone. Consolidated report on operations Introduction and Group highlights UniCredit ·2018 Annual Report and Accounts 29 Consolidated report on operations Introduction and Group highlights Introduction to the Consolidated report on operations of UniCredit group This Consolidated report on operations illustrates the performance of the UniCredit group and related amounts and results. It includes financial information such as Group highlights, Reclassified consolidated accounts and their Quarterly figures, Summary results by business segment, Group and UniCredit share historical data series as well as a comment on “Group results”. The information in this report is supported, in order to provide further information about the performance achieved by the Group, by some alternative performance indicators (“API”) such as: Cost/Income ratio, EVA, ROTE, Net bad loans to customers/Loans to customers, Net non-performing loans to customers/Loans to customers, Absorbed capital, ROAC, Cost of risk). Although some of this information, including certain APIs, is neither extracted nor directly reconciled with Consolidated financial statements, the Consolidated report on operations, the Annexes and the Glossary provide explanatory descriptions of the contents and, in case, the calculation methods used, in accordance with European Securities and Markets Authority Guidelines (ESMA/2015/1415) of 5 October 2015. In particular in Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For information relating to related-party relations and transactions refer to the Notes to the consolidated accounts - Part H of Consolidated financial statements of UniCredit group. For a complete description of risks and uncertainties that the Group has to face in the current market situation refer to the specific paragraph of this Consolidated report on operations and to the Notes to the consolidated accounts - Part E of the Consolidated financial statements of UniCredit group. Group highlights, alternative performance indicators and other measures Income statement (€ million) YEAR 2018 2017 % CHANGE Operating income 19,723 19,941 - 1.1% of which: - net interest 10,856 10,633 + 2.1% - dividends and other income from equity investments 738 638 + 15.6% - net fees and commissions 6,756 6,695 + 0.9% Operating costs (10,698) (11,338) - 5.6% Operating profit (loss) 9,025 8,603 + 4.9% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) - 10.9% Net operating profit (loss) 6,406 5,664 + 13.1% Profit (Loss) before tax 3,619 4,148 - 12.7% Group net profit (loss) 3,892 5,473 - 28.9% The figures in this table refer to the reclassified income statement. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. Consolidated report on operations Introduction and Group highlights UniCredit ·2018 Annual Report and Accounts 29 Consolidated report on operations Introduction and Group highlights Introduction to the Consolidated report on operations of UniCredit group This Consolidated report on operations illustrates the performance of the UniCredit group and related amounts and results. It includes financial information such as Group highlights, Reclassified consolidated accounts and their Quarterly figures, Summary results by business segment, Group and UniCredit share historical data series as well as a comment on “Group results”. The information in this report is supported, in order to provide further information about the performance achieved by the Group, by some alternative performance indicators (“API”) such as: Cost/Income ratio, EVA, ROTE, Net bad loans to customers/Loans to customers, Net non-performing loans to customers/Loans to customers, Absorbed capital, ROAC, Cost of risk). Although some of this information, including certain APIs, is neither extracted nor directly reconciled with Consolidated financial statements, the Consolidated report on operations, the Annexes and the Glossary provide explanatory descriptions of the contents and, in case, the calculation methods used, in accordance with European Securities and Markets Authority Guidelines (ESMA/2015/1415) of 5 October 2015. In particular in Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For information relating to related-party relations and transactions refer to the Notes to the consolidated accounts - Part H of Consolidated financial statements of UniCredit group. For a complete description of risks and uncertainties that the Group has to face in the current market situation refer to the specific paragraph of this Consolidated report on operations and to the Notes to the consolidated accounts - Part E of the Consolidated financial statements of UniCredit group. Group highlights, alternative performance indicators and other measures Income statement (€ million) YEAR 2018 2017 % CHANGE Operating income 19,723 19,941 - 1.1% of which: - net interest 10,856 10,633 + 2.1% - dividends and other income from equity investments 738 638 + 15.6% - net fees and commissions 6,756 6,695 + 0.9% Operating costs (10,698) (11,338) - 5.6% Operating profit (loss) 9,025 8,603 + 4.9% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) - 10.9% Net operating profit (loss) 6,406 5,664 + 13.1% Profit (Loss) before tax 3,619 4,148 - 12.7% Group net profit (loss) 3,892 5,473 - 28.9% The figures in this table refer to the reclassified income statement. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. Consolidated report on operations Introduction and Group highlights UniCredit ·2018 Annual Report and Accounts 29 Consolidated report on operations Introduction and Group highlights Introduction to the Consolidated report on operations of UniCredit group This Consolidated report on operations illustrates the performance of the UniCredit group and related amounts and results. It includes financial information such as Group highlights, Reclassified consolidated accounts and their Quarterly figures, Summary results by business segment, Group and UniCredit share historical data series as well as a comment on “Group results”. The information in this report is supported, in order to provide further information about the performance achieved by the Group, by some alternative performance indicators (“API”) such as: Cost/Income ratio, EVA, ROTE, Net bad loans to customers/Loans to customers, Net non-performing loans to customers/Loans to customers, Absorbed capital, ROAC, Cost of risk). Although some of this information, including certain APIs, is neither extracted nor directly reconciled with Consolidated financial statements, the Consolidated report on operations, the Annexes and the Glossary provide explanatory descriptions of the contents and, in case, the calculation methods used, in accordance with European Securities and Markets Authority Guidelines (ESMA/2015/1415) of 5 October 2015. In particular in Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For information relating to related-party relations and transactions refer to the Notes to the consolidated accounts - Part H of Consolidated financial statements of UniCredit group. For a complete description of risks and uncertainties that the Group has to face in the current market situation refer to the specific paragraph of this Consolidated report on operations and to the Notes to the consolidated accounts - Part E of the Consolidated financial statements of UniCredit group. Group highlights, alternative performance indicators and other measures Income statement (€ million) YEAR 2018 2017 % CHANGE Operating income 19,723 19,941 - 1.1% of which: - net interest 10,856 10,633 + 2.1% - dividends and other income from equity investments 738 638 + 15.6% - net fees and commissions 6,756 6,695 + 0.9% Operating costs (10,698) (11,338) - 5.6% Operating profit (loss) 9,025 8,603 + 4.9% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) - 10.9% Net operating profit (loss) 6,406 5,664 + 13.1% Profit (Loss) before tax 3,619 4,148 - 12.7% Group net profit (loss) 3,892 5,473 - 28.9% The figures in this table refer to the reclassified income statement. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. Consolidated report on operations Introduction and Group highlights UniCredit ·2018 Annual Report and Accounts 29 Consolidated report on operations Introduction and Group highlights Introduction to the Consolidated report on operations of UniCredit group This Consolidated report on operations illustrates the performance of the UniCredit group and related amounts and results. It includes financial information such as Group highlights, Reclassified consolidated accounts and their Quarterly figures, Summary results by business segment, Group and UniCredit share historical data series as well as a comment on “Group results”. The information in this report is supported, in order to provide further information about the performance achieved by the Group, by some alternative performance indicators (“API”) such as: Cost/Income ratio, EVA, ROTE, Net bad loans to customers/Loans to customers, Net non-performing loans to customers/Loans to customers, Absorbed capital, ROAC, Cost of risk). Although some of this information, including certain APIs, is neither extracted nor directly reconciled with Consolidated financial statements, the Consolidated report on operations, the Annexes and the Glossary provide explanatory descriptions of the contents and, in case, the calculation methods used, in accordance with European Securities and Markets Authority Guidelines (ESMA/2015/1415) of 5 October 2015. In particular in Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For information relating to related-party relations and transactions refer to the Notes to the consolidated accounts - Part H of Consolidated financial statements of UniCredit group. For a complete description of risks and uncertainties that the Group has to face in the current market situation refer to the specific paragraph of this Consolidated report on operations and to the Notes to the consolidated accounts - Part E of the Consolidated financial statements of UniCredit group. Group highlights, alternative performance indicators and other measures Income statement (€ million) YEAR 2018 2017 % CHANGE Operating income 19,723 19,941 - 1.1% of which: - net interest 10,856 10,633 + 2.1% - dividends and other income from equity investments 738 638 + 15.6% - net fees and commissions 6,756 6,695 + 0.9% Operating costs (10,698) (11,338) - 5.6% Operating profit (loss) 9,025 8,603 + 4.9% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) - 10.9% Net operating profit (loss) 6,406 5,664 + 13.1% Profit (Loss) before tax 3,619 4,148 - 12.7% Group net profit (loss) 3,892 5,473 - 28.9% The figures in this table refer to the reclassified income statement. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. Consolidated report on operations Introduction and Group highlights UniCredit ·2018 Annual Report and Accounts 29 Consolidated report on operations Introduction and Group highlights Introduction to the Consolidated report on operations of UniCredit group This Consolidated report on operations illustrates the performance of the UniCredit group and related amounts and results. It includes financial information such as Group highlights, Reclassified consolidated accounts and their Quarterly figures, Summary results by business segment, Group and UniCredit share historical data series as well as a comment on “Group results”. The information in this report is supported, in order to provide further information about the performance achieved by the Group, by some alternative performance indicators (“API”) such as: Cost/Income ratio, EVA, ROTE, Net bad loans to customers/Loans to customers, Net non-performing loans to customers/Loans to customers, Absorbed capital, ROAC, Cost of risk). Although some of this information, including certain APIs, is neither extracted nor directly reconciled with Consolidated financial statements, the Consolidated report on operations, the Annexes and the Glossary provide explanatory descriptions of the contents and, in case, the calculation methods used, in accordance with European Securities and Markets Authority Guidelines (ESMA/2015/1415) of 5 October 2015. In particular in Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For information relating to related-party relations and transactions refer to the Notes to the consolidated accounts - Part H of Consolidated financial statements of UniCredit group. For a complete description of risks and uncertainties that the Group has to face in the current market situation refer to the specific paragraph of this Consolidated report on operations and to the Notes to the consolidated accounts - Part E of the Consolidated financial statements of UniCredit group. Group highlights, alternative performance indicators and other measures Income statement (€ million) YEAR 2018 2017 % CHANGE Operating income 19,723 19,941 - 1.1% of which: - net interest 10,856 10,633 + 2.1% - dividends and other income from equity investments 738 638 + 15.6% - net fees and commissions 6,756 6,695 + 0.9% Operating costs (10,698) (11,338) - 5.6% Operating profit (loss) 9,025 8,603 + 4.9% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) - 10.9% Net operating profit (loss) 6,406 5,664 + 13.1% Profit (Loss) before tax 3,619 4,148 - 12.7% Group net profit (loss) 3,892 5,473 - 28.9% The figures in this table refer to the reclassified income statement. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. Consolidated report on operations Introduction and Group highlights 30 2018 Annual Report and Accounts · UniCredit Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 12.31.2017 % CHANGE Total assets 831,469 836,790 - 0.6% Financial assets held for trading 65,231 74,686 - 12.7% Loans and receivables with customers 471,839 438,895 + 7.5% of which: non-performing loans 14,903 21,112 - 29.4% Financial liabilities held for trading 43,111 55,784 - 22.7% Deposits from customers and debt securities issue 560,141 561,498 - 0.2% of which: - deposits from customers 478,988 462,895 + 3.5% - debt securities issue 81,153 98,603 - 17.7% Group shareholders' equity 55,841 59,331 - 5.9% Figures in this table refer to the reclassified balance sheet. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified balance sheet”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For further details on "non-performing loans" see paragraph "Net write-downs on loans and provisions for guarantees and commitments" in this Consolidated report on operations. Profitability ratios YEAR 2018 2017 CHANGE EPS(1) (€) 1.712 2.794 -1.082 Cost/Income ratio(2) 54.2% 56.9% - 2.6% EVA(3) (€ million) (850) (757) - 93 ROTE(4) 8.1% 11.8% - 3.7% ROA(5) 0.49% 0.69% - 0.2% Notes: (1) Earnings per share. For further details refer to Part C - Section 25. (2) Ratio between operating expenses and operating income. (3) Economic value added equal to the difference between Net operating profit after tax (NOPAT) and the Cost of the absorbed capital. (4) Annualised ratio between the net profit and the average tangible equity. (5) Return on assets calculated as the ratio between Net profit (loss) attributable to the Group and Total assets pursuant to art. 90 of CRD IV. The amounts relating to 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. Risk ratios AS AT % CHANGE ON % CHANGE ON 12.31.2018 01.01.2018 12.31.2017 12.31.2018/01.01.2018 01.01.2018/12.31.2017 Net bad loans to customers/Loans to customers 1.2% 1.6% 2.2% - 0.4% - 0.5% Net non-performing loans to customers/Loans to customers 3.2% 4.3% 4.8% - 1.1% - 0.5% For the amounts refer to table “Loans to customers - Asset quality” in paragraph “Net write-downs on loans and provisions for guarantees and commitments” of this Consolidated report on operations. Consolidated report on operations Introduction and Group highlights 30 2018 Annual Report and Accounts · UniCredit Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 12.31.2017 % CHANGE Total assets 831,469 836,790 - 0.6% Financial assets held for trading 65,231 74,686 - 12.7% Loans and receivables with customers 471,839 438,895 + 7.5% of which: non-performing loans 14,903 21,112 - 29.4% Financial liabilities held for trading 43,111 55,784 - 22.7% Deposits from customers and debt securities issue 560,141 561,498 - 0.2% of which: - deposits from customers 478,988 462,895 + 3.5% - debt securities issue 81,153 98,603 - 17.7% Group shareholders' equity 55,841 59,331 - 5.9% Figures in this table refer to the reclassified balance sheet. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified balance sheet”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For further details on "non-performing loans" see paragraph "Net write-downs on loans and provisions for guarantees and commitments" in this Consolidated report on operations. Profitability ratios YEAR 2018 2017 CHANGE EPS(1) (€) 1.712 2.794 -1.082 Cost/Income ratio(2) 54.2% 56.9% - 2.6% EVA(3) (€ million) (850) (757) - 93 ROTE(4) 8.1% 11.8% - 3.7% ROA(5) 0.49% 0.69% - 0.2% Notes: (1) Earnings per share. For further details refer to Part C - Section 25. (2) Ratio between operating expenses and operating income. (3) Economic value added equal to the difference between Net operating profit after tax (NOPAT) and the Cost of the absorbed capital. (4) Annualised ratio between the net profit and the average tangible equity. (5) Return on assets calculated as the ratio between Net profit (loss) attributable to the Group and Total assets pursuant to art. 90 of CRD IV. The amounts relating to 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. Risk ratios AS AT % CHANGE ON % CHANGE ON 12.31.2018 01.01.2018 12.31.2017 12.31.2018/01.01.2018 01.01.2018/12.31.2017 Net bad loans to customers/Loans to customers 1.2% 1.6% 2.2% - 0.4% - 0.5% Net non-performing loans to customers/Loans to customers 3.2% 4.3% 4.8% - 1.1% - 0.5% For the amounts refer to table “Loans to customers - Asset quality” in paragraph “Net write-downs on loans and provisions for guarantees and commitments” of this Consolidated report on operations. Consolidated report on operations Introduction and Group highlights 30 2018 Annual Report and Accounts · UniCredit Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 12.31.2017 % CHANGE Total assets 831,469 836,790 - 0.6% Financial assets held for trading 65,231 74,686 - 12.7% Loans and receivables with customers 471,839 438,895 + 7.5% of which: non-performing loans 14,903 21,112 - 29.4% Financial liabilities held for trading 43,111 55,784 - 22.7% Deposits from customers and debt securities issue 560,141 561,498 - 0.2% of which: - deposits from customers 478,988 462,895 + 3.5% - debt securities issue 81,153 98,603 - 17.7% Group shareholders' equity 55,841 59,331 - 5.9% Figures in this table refer to the reclassified balance sheet. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified balance sheet”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For further details on "non-performing loans" see paragraph "Net write-downs on loans and provisions for guarantees and commitments" in this Consolidated report on operations. Profitability ratios YEAR 2018 2017 CHANGE EPS(1) (€) 1.712 2.794 -1.082 Cost/Income ratio(2) 54.2% 56.9% - 2.6% EVA(3) (€ million) (850) (757) - 93 ROTE(4) 8.1% 11.8% - 3.7% ROA(5) 0.49% 0.69% - 0.2% Notes: (1) Earnings per share. For further details refer to Part C - Section 25. (2) Ratio between operating expenses and operating income. (3) Economic value added equal to the difference between Net operating profit after tax (NOPAT) and the Cost of the absorbed capital. (4) Annualised ratio between the net profit and the average tangible equity. (5) Return on assets calculated as the ratio between Net profit (loss) attributable to the Group and Total assets pursuant to art. 90 of CRD IV. The amounts relating to 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. Risk ratios AS AT % CHANGE ON % CHANGE ON 12.31.2018 01.01.2018 12.31.2017 12.31.2018/01.01.2018 01.01.2018/12.31.2017 Net bad loans to customers/Loans to customers 1.2% 1.6% 2.2% - 0.4% - 0.5% Net non-performing loans to customers/Loans to customers 3.2% 4.3% 4.8% - 1.1% - 0.5% For the amounts refer to table “Loans to customers - Asset quality” in paragraph “Net write-downs on loans and provisions for guarantees and commitments” of this Consolidated report on operations. Consolidated report on operations Introduction and Group highlights 30 2018 Annual Report and Accounts · UniCredit Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 12.31.2017 % CHANGE Total assets 831,469 836,790 - 0.6% Financial assets held for trading 65,231 74,686 - 12.7% Loans and receivables with customers 471,839 438,895 + 7.5% of which: non-performing loans 14,903 21,112 - 29.4% Financial liabilities held for trading 43,111 55,784 - 22.7% Deposits from customers and debt securities issue 560,141 561,498 - 0.2% of which: - deposits from customers 478,988 462,895 + 3.5% - debt securities issue 81,153 98,603 - 17.7% Group shareholders' equity 55,841 59,331 - 5.9% Figures in this table refer to the reclassified balance sheet. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified balance sheet”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For further details on "non-performing loans" see paragraph "Net write-downs on loans and provisions for guarantees and commitments" in this Consolidated report on operations. Profitability ratios YEAR 2018 2017 CHANGE EPS(1) (€) 1.712 2.794 -1.082 Cost/Income ratio(2) 54.2% 56.9% - 2.6% EVA(3) (€ million) (850) (757) - 93 ROTE(4) 8.1% 11.8% - 3.7% ROA(5) 0.49% 0.69% - 0.2% Notes: (1) Earnings per share. For further details refer to Part C - Section 25. (2) Ratio between operating expenses and operating income. (3) Economic value added equal to the difference between Net operating profit after tax (NOPAT) and the Cost of the absorbed capital. (4) Annualised ratio between the net profit and the average tangible equity. (5) Return on assets calculated as the ratio between Net profit (loss) attributable to the Group and Total assets pursuant to art. 90 of CRD IV. The amounts relating to 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. Risk ratios AS AT % CHANGE ON % CHANGE ON 12.31.2018 01.01.2018 12.31.2017 12.31.2018/01.01.2018 01.01.2018/12.31.2017 Net bad loans to customers/Loans to customers 1.2% 1.6% 2.2% - 0.4% - 0.5% Net non-performing loans to customers/Loans to customers 3.2% 4.3% 4.8% - 1.1% - 0.5% For the amounts refer to table “Loans to customers - Asset quality” in paragraph “Net write-downs on loans and provisions for guarantees and commitments” of this Consolidated report on operations. Consolidated report on operations Introduction and Group highlights 30 2018 Annual Report and Accounts · UniCredit Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 12.31.2017 % CHANGE Total assets 831,469 836,790 - 0.6% Financial assets held for trading 65,231 74,686 - 12.7% Loans and receivables with customers 471,839 438,895 + 7.5% of which: non-performing loans 14,903 21,112 - 29.4% Financial liabilities held for trading 43,111 55,784 - 22.7% Deposits from customers and debt securities issue 560,141 561,498 - 0.2% of which: - deposits from customers 478,988 462,895 + 3.5% - debt securities issue 81,153 98,603 - 17.7% Group shareholders' equity 55,841 59,331 - 5.9% Figures in this table refer to the reclassified balance sheet. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified balance sheet”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For further details on "non-performing loans" see paragraph "Net write-downs on loans and provisions for guarantees and commitments" in this Consolidated report on operations. Profitability ratios YEAR 2018 2017 CHANGE EPS(1) (€) 1.712 2.794 -1.082 Cost/Income ratio(2) 54.2% 56.9% - 2.6% EVA(3) (€ million) (850) (757) - 93 ROTE(4) 8.1% 11.8% - 3.7% ROA(5) 0.49% 0.69% - 0.2% Notes: (1) Earnings per share. For further details refer to Part C - Section 25. (2) Ratio between operating expenses and operating income. (3) Economic value added equal to the difference between Net operating profit after tax (NOPAT) and the Cost of the absorbed capital. (4) Annualised ratio between the net profit and the average tangible equity. (5) Return on assets calculated as the ratio between Net profit (loss) attributable to the Group and Total assets pursuant to art. 90 of CRD IV. The amounts relating to 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. Risk ratios AS AT % CHANGE ON % CHANGE ON 12.31.2018 01.01.2018 12.31.2017 12.31.2018/01.01.2018 01.01.2018/12.31.2017 Net bad loans to customers/Loans to customers 1.2% 1.6% 2.2% - 0.4% - 0.5% Net non-performing loans to customers/Loans to customers 3.2% 4.3% 4.8% - 1.1% - 0.5% For the amounts refer to table “Loans to customers - Asset quality” in paragraph “Net write-downs on loans and provisions for guarantees and commitments” of this Consolidated report on operations. Consolidated report on operations Introduction and Group highlights UniCredit ·2018 Annual Report and Accounts 31 Staff and branches AS AT 12.31.2018 12.31.2017 CHANGE Employees(1) 86,786 91,952 -5,166 Branches(2) 3,815 4,030 -215 of which: - Italy 2,466 2,663 -197 - Other countries 1,349 1,367 -18 Note: (1) "Full time equivalent" data (FTE): number of employees counted for the rate of presence. Employees of sub-group Koc Finansal Hizmetler AS are not included. (2) Retail branches only. The branches of of sub-group Koc Finansal Hizmetler AS are not included. Figures as at 31 December 2017 were restated accordingly to increase comparability. Transitional capital ratios AS AT 12.31.2018(*) 12.31.2017(*) CHANGE Total own funds (€ million) 58,476 64,454 - 5,979 Total risk-weighted assets (€ million) 370,180 356,100 + 14,080 Common Equity Tier 1 Capital Ratio 12.13% 13.73% - 1.6% Total Capital Ratio 15.80% 18.10% - 2.3% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit Group has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. For more details see paragraph "Capital and value management - Capital ratios" of this Consolidated report on operations. Ratings SHORT-TERM MEDIUM AND STANDALONE DEBT LONG-TERM OUTLOOK RATING Fitch Ratings F2 BBB negative bbb Moody's Investors Service P-2 Baa1 stable ba1 Standard & Poor's A-2 BBB negative bbb Ratings updated as at 31 January 2019. Consolidated report on operations Introduction and Group highlights UniCredit ·2018 Annual Report and Accounts 31 Staff and branches AS AT 12.31.2018 12.31.2017 CHANGE Employees(1) 86,786 91,952 -5,166 Branches(2) 3,815 4,030 -215 of which: - Italy 2,466 2,663 -197 - Other countries 1,349 1,367 -18 Note: (1) "Full time equivalent" data (FTE): number of employees counted for the rate of presence. Employees of sub-group Koc Finansal Hizmetler AS are not included. (2) Retail branches only. The branches of of sub-group Koc Finansal Hizmetler AS are not included. Figures as at 31 December 2017 were restated accordingly to increase comparability. Transitional capital ratios AS AT 12.31.2018(*) 12.31.2017(*) CHANGE Total own funds (€ million) 58,476 64,454 - 5,979 Total risk-weighted assets (€ million) 370,180 356,100 + 14,080 Common Equity Tier 1 Capital Ratio 12.13% 13.73% - 1.6% Total Capital Ratio 15.80% 18.10% - 2.3% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit Group has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. For more details see paragraph "Capital and value management - Capital ratios" of this Consolidated report on operations. Ratings SHORT-TERM MEDIUM AND STANDALONE DEBT LONG-TERM OUTLOOK RATING Fitch Ratings F2 BBB negative bbb Moody's Investors Service P-2 Baa1 stable ba1 Standard & Poor's A-2 BBB negative bbb Ratings updated as at 31 January 2019. Consolidated report on operations Introduction and Group highlights UniCredit ·2018 Annual Report and Accounts 31 Staff and branches AS AT 12.31.2018 12.31.2017 CHANGE Employees(1) 86,786 91,952 -5,166 Branches(2) 3,815 4,030 -215 of which: - Italy 2,466 2,663 -197 - Other countries 1,349 1,367 -18 Note: (1) "Full time equivalent" data (FTE): number of employees counted for the rate of presence. Employees of sub-group Koc Finansal Hizmetler AS are not included. (2) Retail branches only. The branches of of sub-group Koc Finansal Hizmetler AS are not included. Figures as at 31 December 2017 were restated accordingly to increase comparability. Transitional capital ratios AS AT 12.31.2018(*) 12.31.2017(*) CHANGE Total own funds (€ million) 58,476 64,454 - 5,979 Total risk-weighted assets (€ million) 370,180 356,100 + 14,080 Common Equity Tier 1 Capital Ratio 12.13% 13.73% - 1.6% Total Capital Ratio 15.80% 18.10% - 2.3% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit Group has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. For more details see paragraph "Capital and value management - Capital ratios" of this Consolidated report on operations. Ratings SHORT-TERM MEDIUM AND STANDALONE DEBT LONG-TERM OUTLOOK RATING Fitch Ratings F2 BBB negative bbb Moody's Investors Service P-2 Baa1 stable ba1 Standard & Poor's A-2 BBB negative bbb Ratings updated as at 31 January 2019. Consolidated report on operations Introduction and Group highlights UniCredit ·2018 Annual Report and Accounts 31 Staff and branches AS AT 12.31.2018 12.31.2017 CHANGE Employees(1) 86,786 91,952 -5,166 Branches(2) 3,815 4,030 -215 of which: - Italy 2,466 2,663 -197 - Other countries 1,349 1,367 -18 Note: (1) "Full time equivalent" data (FTE): number of employees counted for the rate of presence. Employees of sub-group Koc Finansal Hizmetler AS are not included. (2) Retail branches only. The branches of of sub-group Koc Finansal Hizmetler AS are not included. Figures as at 31 December 2017 were restated accordingly to increase comparability. Transitional capital ratios AS AT 12.31.2018(*) 12.31.2017(*) CHANGE Total own funds (€ million) 58,476 64,454 - 5,979 Total risk-weighted assets (€ million) 370,180 356,100 + 14,080 Common Equity Tier 1 Capital Ratio 12.13% 13.73% - 1.6% Total Capital Ratio 15.80% 18.10% - 2.3% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit Group has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. For more details see paragraph "Capital and value management - Capital ratios" of this Consolidated report on operations. Ratings SHORT-TERM MEDIUM AND STANDALONE DEBT LONG-TERM OUTLOOK RATING Fitch Ratings F2 BBB negative bbb Moody's Investors Service P-2 Baa1 stable ba1 Standard & Poor's A-2 BBB negative bbb Ratings updated as at 31 January 2019. Consolidated report on operations Introduction and Group highlights UniCredit ·2018 Annual Report and Accounts 31 Staff and branches AS AT 12.31.2018 12.31.2017 CHANGE Employees(1) 86,786 91,952 -5,166 Branches(2) 3,815 4,030 -215 of which: - Italy 2,466 2,663 -197 - Other countries 1,349 1,367 -18 Note: (1) "Full time equivalent" data (FTE): number of employees counted for the rate of presence. Employees of sub-group Koc Finansal Hizmetler AS are not included. (2) Retail branches only. The branches of of sub-group Koc Finansal Hizmetler AS are not included. Figures as at 31 December 2017 were restated accordingly to increase comparability. Transitional capital ratios AS AT 12.31.2018(*) 12.31.2017(*) CHANGE Total own funds (€ million) 58,476 64,454 - 5,979 Total risk-weighted assets (€ million) 370,180 356,100 + 14,080 Common Equity Tier 1 Capital Ratio 12.13% 13.73% - 1.6% Total Capital Ratio 15.80% 18.10% - 2.3% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit Group has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. For more details see paragraph "Capital and value management - Capital ratios" of this Consolidated report on operations. Ratings SHORT-TERM MEDIUM AND STANDALONE DEBT LONG-TERM OUTLOOK RATING Fitch Ratings F2 BBB negative bbb Moody's Investors Service P-2 Baa1 stable ba1 Standard & Poor's A-2 BBB negative bbb Ratings updated as at 31 January 2019. Consolidated report on operations Reclassified consolidated accounts 32 2018 Annual Report and Accounts · UniCredit Reclassified consolidated accounts Changes occurred scope of consolidation During 2018, with reference to the consolidation perimeter, the following overall changes have been recorded: • the number of fully consolidated companies, including those ones classified as non-current assets and asset disposal groups based on accounting principle IFRS5, present a decrease of 85 (4 incoming and 89 exited) changing from 590 at the end of 2017 to 505 at December 2018; • the number of companies consolidated using the equity method, including those ones classified as non-current assets and asset disposal groups, present a decrease of 12 (12 exited) changing from 66 at the end of 2017 to 54 at December 2018. For further details see Notes to the consolidated accounts - Part A - Accounting Policies; A.1 - General, Section 3 - Consolidation scope and methods and Part B - Consolidated balance sheet - Assets, Section 7 - Equity investments (Item 70). Non-current assets and disposal groups classified as held for sale In the Balance Sheet at 31 December 2018, the main reclassified assets, based on the IFRS5 accounting principle, as non-current assets and asset disposal groups refer to: • regarding the individual asset and liabilities held for sale: - the subsidiary General Logistic Solutions LLC, the companies of the Card Complete Service Bank AG group and the associated companies Oesterreichische Hotel-und TourismusBank Gesellschaft M.B.H. and Swancap Partners GmbH; - the non-performing loans related to sale initiatives of portfolios; - the real estate properties held by certain companies in the Group, mainly in Germany; • regarding the data relating to groups of assets held for sale and associated liabilities, the companies of the Immobilien Holding group (Austria). For additional information, reference is made to Notes to the consolidated accounts - Part B - Consolidated balance sheet - Assets, Section 12 - Non-current assets and disposal groups classified as held for sale (Item 120 - Assets and Item 70 - Liabilities). Reconciliation principles followed for the reclassified balance sheet The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Loans to banks” of “Financial assets at amortised cost: a) Loans and receivables with banks” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the inclusion in “Loans to customers” of “Financial assets at amortised cost: b) Loans and receivables with customers” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the aggregation as “Other financial assets” of “Financial assets at fair value through profit and loss: b) Financial assets designated at fair value and c) Other financial assets mandatorily at fair value” net of loans reclassified in “Loans to banks and to customers”, of “Financial assets at fair value through other comprehensive income” and of “Equity investments” with inclusion of debt securities from Loans to banks and customers - Item 40 a) and b); • grouping under “Hedging instruments”, both assets and liabilities, of “Hedging derivatives” and “Changes in fair value of portfolio hedged items”; • the inclusion of “Provision for employee severance pay”, “Provisions for risks and charges” and “Technical reserves” under “Other liabilities”. The format of this Reclassified Balance Sheet is different from the one used in the financial year 2017 following the reclassification/aggregation of item “Provisions for risks and charges” from a separate item to “Other liabilities” and of item “Revaluation Reserves” from a separate item to item “Capital and Reserves”. The item “Financial investments” has also been renamed in “Other financial assets”. The comparative periods were restated accordingly. 2017 figures were also restated following the reclassification of the component relating to debt securities from “Loans to customers” to item “Other financial assets”. Consolidated report on operations Reclassified consolidated accounts 32 2018 Annual Report and Accounts · UniCredit Reclassified consolidated accounts Changes occurred scope of consolidation During 2018, with reference to the consolidation perimeter, the following overall changes have been recorded: • the number of fully consolidated companies, including those ones classified as non-current assets and asset disposal groups based on accounting principle IFRS5, present a decrease of 85 (4 incoming and 89 exited) changing from 590 at the end of 2017 to 505 at December 2018; • the number of companies consolidated using the equity method, including those ones classified as non-current assets and asset disposal groups, present a decrease of 12 (12 exited) changing from 66 at the end of 2017 to 54 at December 2018. For further details see Notes to the consolidated accounts - Part A - Accounting Policies; A.1 - General, Section 3 - Consolidation scope and methods and Part B - Consolidated balance sheet - Assets, Section 7 - Equity investments (Item 70). Non-current assets and disposal groups classified as held for sale In the Balance Sheet at 31 December 2018, the main reclassified assets, based on the IFRS5 accounting principle, as non-current assets and asset disposal groups refer to: • regarding the individual asset and liabilities held for sale: - the subsidiary General Logistic Solutions LLC, the companies of the Card Complete Service Bank AG group and the associated companies Oesterreichische Hotel-und TourismusBank Gesellschaft M.B.H. and Swancap Partners GmbH; - the non-performing loans related to sale initiatives of portfolios; - the real estate properties held by certain companies in the Group, mainly in Germany; • regarding the data relating to groups of assets held for sale and associated liabilities, the companies of the Immobilien Holding group (Austria). For additional information, reference is made to Notes to the consolidated accounts - Part B - Consolidated balance sheet - Assets, Section 12 - Non-current assets and disposal groups classified as held for sale (Item 120 - Assets and Item 70 - Liabilities). Reconciliation principles followed for the reclassified balance sheet The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Loans to banks” of “Financial assets at amortised cost: a) Loans and receivables with banks” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the inclusion in “Loans to customers” of “Financial assets at amortised cost: b) Loans and receivables with customers” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the aggregation as “Other financial assets” of “Financial assets at fair value through profit and loss: b) Financial assets designated at fair value and c) Other financial assets mandatorily at fair value” net of loans reclassified in “Loans to banks and to customers”, of “Financial assets at fair value through other comprehensive income” and of “Equity investments” with inclusion of debt securities from Loans to banks and customers - Item 40 a) and b); • grouping under “Hedging instruments”, both assets and liabilities, of “Hedging derivatives” and “Changes in fair value of portfolio hedged items”; • the inclusion of “Provision for employee severance pay”, “Provisions for risks and charges” and “Technical reserves” under “Other liabilities”. The format of this Reclassified Balance Sheet is different from the one used in the financial year 2017 following the reclassification/aggregation of item “Provisions for risks and charges” from a separate item to “Other liabilities” and of item “Revaluation Reserves” from a separate item to item “Capital and Reserves”. The item “Financial investments” has also been renamed in “Other financial assets”. The comparative periods were restated accordingly. 2017 figures were also restated following the reclassification of the component relating to debt securities from “Loans to customers” to item “Other financial assets”. Consolidated report on operations Reclassified consolidated accounts 32 2018 Annual Report and Accounts · UniCredit Reclassified consolidated accounts Changes occurred scope of consolidation During 2018, with reference to the consolidation perimeter, the following overall changes have been recorded: • the number of fully consolidated companies, including those ones classified as non-current assets and asset disposal groups based on accounting principle IFRS5, present a decrease of 85 (4 incoming and 89 exited) changing from 590 at the end of 2017 to 505 at December 2018; • the number of companies consolidated using the equity method, including those ones classified as non-current assets and asset disposal groups, present a decrease of 12 (12 exited) changing from 66 at the end of 2017 to 54 at December 2018. For further details see Notes to the consolidated accounts - Part A - Accounting Policies; A.1 - General, Section 3 - Consolidation scope and methods and Part B - Consolidated balance sheet - Assets, Section 7 - Equity investments (Item 70). Non-current assets and disposal groups classified as held for sale In the Balance Sheet at 31 December 2018, the main reclassified assets, based on the IFRS5 accounting principle, as non-current assets and asset disposal groups refer to: • regarding the individual asset and liabilities held for sale: - the subsidiary General Logistic Solutions LLC, the companies of the Card Complete Service Bank AG group and the associated companies Oesterreichische Hotel-und TourismusBank Gesellschaft M.B.H. and Swancap Partners GmbH; - the non-performing loans related to sale initiatives of portfolios; - the real estate properties held by certain companies in the Group, mainly in Germany; • regarding the data relating to groups of assets held for sale and associated liabilities, the companies of the Immobilien Holding group (Austria). For additional information, reference is made to Notes to the consolidated accounts - Part B - Consolidated balance sheet - Assets, Section 12 - Non-current assets and disposal groups classified as held for sale (Item 120 - Assets and Item 70 - Liabilities). Reconciliation principles followed for the reclassified balance sheet The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Loans to banks” of “Financial assets at amortised cost: a) Loans and receivables with banks” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the inclusion in “Loans to customers” of “Financial assets at amortised cost: b) Loans and receivables with customers” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the aggregation as “Other financial assets” of “Financial assets at fair value through profit and loss: b) Financial assets designated at fair value and c) Other financial assets mandatorily at fair value” net of loans reclassified in “Loans to banks and to customers”, of “Financial assets at fair value through other comprehensive income” and of “Equity investments” with inclusion of debt securities from Loans to banks and customers - Item 40 a) and b); • grouping under “Hedging instruments”, both assets and liabilities, of “Hedging derivatives” and “Changes in fair value of portfolio hedged items”; • the inclusion of “Provision for employee severance pay”, “Provisions for risks and charges” and “Technical reserves” under “Other liabilities”. The format of this Reclassified Balance Sheet is different from the one used in the financial year 2017 following the reclassification/aggregation of item “Provisions for risks and charges” from a separate item to “Other liabilities” and of item “Revaluation Reserves” from a separate item to item “Capital and Reserves”. The item “Financial investments” has also been renamed in “Other financial assets”. The comparative periods were restated accordingly. 2017 figures were also restated following the reclassification of the component relating to debt securities from “Loans to customers” to item “Other financial assets”. Consolidated report on operations Reclassified consolidated accounts 32 2018 Annual Report and Accounts · UniCredit Reclassified consolidated accounts Changes occurred scope of consolidation During 2018, with reference to the consolidation perimeter, the following overall changes have been recorded: • the number of fully consolidated companies, including those ones classified as non-current assets and asset disposal groups based on accounting principle IFRS5, present a decrease of 85 (4 incoming and 89 exited) changing from 590 at the end of 2017 to 505 at December 2018; • the number of companies consolidated using the equity method, including those ones classified as non-current assets and asset disposal groups, present a decrease of 12 (12 exited) changing from 66 at the end of 2017 to 54 at December 2018. For further details see Notes to the consolidated accounts - Part A - Accounting Policies; A.1 - General, Section 3 - Consolidation scope and methods and Part B - Consolidated balance sheet - Assets, Section 7 - Equity investments (Item 70). Non-current assets and disposal groups classified as held for sale In the Balance Sheet at 31 December 2018, the main reclassified assets, based on the IFRS5 accounting principle, as non-current assets and asset disposal groups refer to: • regarding the individual asset and liabilities held for sale: - the subsidiary General Logistic Solutions LLC, the companies of the Card Complete Service Bank AG group and the associated companies Oesterreichische Hotel-und TourismusBank Gesellschaft M.B.H. and Swancap Partners GmbH; - the non-performing loans related to sale initiatives of portfolios; - the real estate properties held by certain companies in the Group, mainly in Germany; • regarding the data relating to groups of assets held for sale and associated liabilities, the companies of the Immobilien Holding group (Austria). For additional information, reference is made to Notes to the consolidated accounts - Part B - Consolidated balance sheet - Assets, Section 12 - Non-current assets and disposal groups classified as held for sale (Item 120 - Assets and Item 70 - Liabilities). Reconciliation principles followed for the reclassified balance sheet The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Loans to banks” of “Financial assets at amortised cost: a) Loans and receivables with banks” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the inclusion in “Loans to customers” of “Financial assets at amortised cost: b) Loans and receivables with customers” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the aggregation as “Other financial assets” of “Financial assets at fair value through profit and loss: b) Financial assets designated at fair value and c) Other financial assets mandatorily at fair value” net of loans reclassified in “Loans to banks and to customers”, of “Financial assets at fair value through other comprehensive income” and of “Equity investments” with inclusion of debt securities from Loans to banks and customers - Item 40 a) and b); • grouping under “Hedging instruments”, both assets and liabilities, of “Hedging derivatives” and “Changes in fair value of portfolio hedged items”; • the inclusion of “Provision for employee severance pay”, “Provisions for risks and charges” and “Technical reserves” under “Other liabilities”. The format of this Reclassified Balance Sheet is different from the one used in the financial year 2017 following the reclassification/aggregation of item “Provisions for risks and charges” from a separate item to “Other liabilities” and of item “Revaluation Reserves” from a separate item to item “Capital and Reserves”. The item “Financial investments” has also been renamed in “Other financial assets”. The comparative periods were restated accordingly. 2017 figures were also restated following the reclassification of the component relating to debt securities from “Loans to customers” to item “Other financial assets”. Consolidated report on operations Reclassified consolidated accounts 32 2018 Annual Report and Accounts · UniCredit Reclassified consolidated accounts Changes occurred scope of consolidation During 2018, with reference to the consolidation perimeter, the following overall changes have been recorded: • the number of fully consolidated companies, including those ones classified as non-current assets and asset disposal groups based on accounting principle IFRS5, present a decrease of 85 (4 incoming and 89 exited) changing from 590 at the end of 2017 to 505 at December 2018; • the number of companies consolidated using the equity method, including those ones classified as non-current assets and asset disposal groups, present a decrease of 12 (12 exited) changing from 66 at the end of 2017 to 54 at December 2018. For further details see Notes to the consolidated accounts - Part A - Accounting Policies; A.1 - General, Section 3 - Consolidation scope and methods and Part B - Consolidated balance sheet - Assets, Section 7 - Equity investments (Item 70). Non-current assets and disposal groups classified as held for sale In the Balance Sheet at 31 December 2018, the main reclassified assets, based on the IFRS5 accounting principle, as non-current assets and asset disposal groups refer to: • regarding the individual asset and liabilities held for sale: - the subsidiary General Logistic Solutions LLC, the companies of the Card Complete Service Bank AG group and the associated companies Oesterreichische Hotel-und TourismusBank Gesellschaft M.B.H. and Swancap Partners GmbH; - the non-performing loans related to sale initiatives of portfolios; - the real estate properties held by certain companies in the Group, mainly in Germany; • regarding the data relating to groups of assets held for sale and associated liabilities, the companies of the Immobilien Holding group (Austria). For additional information, reference is made to Notes to the consolidated accounts - Part B - Consolidated balance sheet - Assets, Section 12 - Non-current assets and disposal groups classified as held for sale (Item 120 - Assets and Item 70 - Liabilities). Reconciliation principles followed for the reclassified balance sheet The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Loans to banks” of “Financial assets at amortised cost: a) Loans and receivables with banks” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the inclusion in “Loans to customers” of “Financial assets at amortised cost: b) Loans and receivables with customers” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the aggregation as “Other financial assets” of “Financial assets at fair value through profit and loss: b) Financial assets designated at fair value and c) Other financial assets mandatorily at fair value” net of loans reclassified in “Loans to banks and to customers”, of “Financial assets at fair value through other comprehensive income” and of “Equity investments” with inclusion of debt securities from Loans to banks and customers - Item 40 a) and b); • grouping under “Hedging instruments”, both assets and liabilities, of “Hedging derivatives” and “Changes in fair value of portfolio hedged items”; • the inclusion of “Provision for employee severance pay”, “Provisions for risks and charges” and “Technical reserves” under “Other liabilities”. The format of this Reclassified Balance Sheet is different from the one used in the financial year 2017 following the reclassification/aggregation of item “Provisions for risks and charges” from a separate item to “Other liabilities” and of item “Revaluation Reserves” from a separate item to item “Capital and Reserves”. The item “Financial investments” has also been renamed in “Other financial assets”. The comparative periods were restated accordingly. 2017 figures were also restated following the reclassification of the component relating to debt securities from “Loans to customers” to item “Other financial assets”. Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 33 Reclassified consolidated balance sheet (€ million) AMOUNTS AS AT CHANGE ASSETS 12.31.2018 12.31.2017 AMOUNT % Cash and cash balances 30,991 64,493 - 33,502 - 51.9% Financial assets held for trading 65,231 74,686 - 9,454 - 12.7% Loans to banks 69,850 70,983 - 1,133 - 1.6% Loans to customers 471,839 438,895 + 32,945 + 7.5% Other financial assets 152,310 147,496 + 4,814 + 3.3% Hedging instruments 7,120 5,676 + 1,444 + 25.4% Property, plant and equipment 8,408 8,449 - 41 - 0.5% Goodwill 1,484 1,484 - - Other intangible assets 2,024 1,902 + 122 + 6.4% Tax assets 13,078 12,658 + 419 + 3.3% Non-current assets and disposal groups classified as held for sale 1,800 1,111 + 689 + 62.0% Other assets 7,334 8,958 - 1,624 - 18.1% Total assets 831,469 836,790 - 5,321 - 0.6% (€ million) AMOUNTS AS AT CHANGE LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 AMOUNT % Deposits from banks 125,895 123,244 + 2,651 + 2.2% Deposits from customers 478,988 462,895 + 16,092 + 3.5% Debt securities issued 81,153 98,603 - 17,449 - 17.7% Financial liabilities held for trading 43,111 55,784 - 12,672 - 22.7% Financial liabilities designated at fair value 9,318 3,011 + 6,307 n.m. Hedging instruments 9,262 6,610 + 2,652 + 40.1% Tax liabilities 825 1,093 - 268 - 24.5% Liabilities included in disposal groups classified as held for sale 540 185 + 355 n.m. Other liabilities 25,609 25,141 + 468 + 1.9% Minorities 927 894 + 33 + 3.7% Group Shareholders' Equity 55,841 59,331 - 3,490 - 5.9% of which: - capital and reserves 51,948 53,858 - 1,909 - 3.6% - net profit (loss) 3,892 5,473 - 1,581 - 28.9% Total liabilities and shareholders' equity 831,469 836,790 - 5,321 - 0.6% Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 33 Reclassified consolidated balance sheet (€ million) AMOUNTS AS AT CHANGE ASSETS 12.31.2018 12.31.2017 AMOUNT % Cash and cash balances 30,991 64,493 - 33,502 - 51.9% Financial assets held for trading 65,231 74,686 - 9,454 - 12.7% Loans to banks 69,850 70,983 - 1,133 - 1.6% Loans to customers 471,839 438,895 + 32,945 + 7.5% Other financial assets 152,310 147,496 + 4,814 + 3.3% Hedging instruments 7,120 5,676 + 1,444 + 25.4% Property, plant and equipment 8,408 8,449 - 41 - 0.5% Goodwill 1,484 1,484 - - Other intangible assets 2,024 1,902 + 122 + 6.4% Tax assets 13,078 12,658 + 419 + 3.3% Non-current assets and disposal groups classified as held for sale 1,800 1,111 + 689 + 62.0% Other assets 7,334 8,958 - 1,624 - 18.1% Total assets 831,469 836,790 - 5,321 - 0.6% (€ million) AMOUNTS AS AT CHANGE LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 AMOUNT % Deposits from banks 125,895 123,244 + 2,651 + 2.2% Deposits from customers 478,988 462,895 + 16,092 + 3.5% Debt securities issued 81,153 98,603 - 17,449 - 17.7% Financial liabilities held for trading 43,111 55,784 - 12,672 - 22.7% Financial liabilities designated at fair value 9,318 3,011 + 6,307 n.m. Hedging instruments 9,262 6,610 + 2,652 + 40.1% Tax liabilities 825 1,093 - 268 - 24.5% Liabilities included in disposal groups classified as held for sale 540 185 + 355 n.m. Other liabilities 25,609 25,141 + 468 + 1.9% Minorities 927 894 + 33 + 3.7% Group Shareholders' Equity 55,841 59,331 - 3,490 - 5.9% of which: - capital and reserves 51,948 53,858 - 1,909 - 3.6% - net profit (loss) 3,892 5,473 - 1,581 - 28.9% Total liabilities and shareholders' equity 831,469 836,790 - 5,321 - 0.6% Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 33 Reclassified consolidated balance sheet (€ million) AMOUNTS AS AT CHANGE ASSETS 12.31.2018 12.31.2017 AMOUNT % Cash and cash balances 30,991 64,493 - 33,502 - 51.9% Financial assets held for trading 65,231 74,686 - 9,454 - 12.7% Loans to banks 69,850 70,983 - 1,133 - 1.6% Loans to customers 471,839 438,895 + 32,945 + 7.5% Other financial assets 152,310 147,496 + 4,814 + 3.3% Hedging instruments 7,120 5,676 + 1,444 + 25.4% Property, plant and equipment 8,408 8,449 - 41 - 0.5% Goodwill 1,484 1,484 - - Other intangible assets 2,024 1,902 + 122 + 6.4% Tax assets 13,078 12,658 + 419 + 3.3% Non-current assets and disposal groups classified as held for sale 1,800 1,111 + 689 + 62.0% Other assets 7,334 8,958 - 1,624 - 18.1% Total assets 831,469 836,790 - 5,321 - 0.6% (€ million) AMOUNTS AS AT CHANGE LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 AMOUNT % Deposits from banks 125,895 123,244 + 2,651 + 2.2% Deposits from customers 478,988 462,895 + 16,092 + 3.5% Debt securities issued 81,153 98,603 - 17,449 - 17.7% Financial liabilities held for trading 43,111 55,784 - 12,672 - 22.7% Financial liabilities designated at fair value 9,318 3,011 + 6,307 n.m. Hedging instruments 9,262 6,610 + 2,652 + 40.1% Tax liabilities 825 1,093 - 268 - 24.5% Liabilities included in disposal groups classified as held for sale 540 185 + 355 n.m. Other liabilities 25,609 25,141 + 468 + 1.9% Minorities 927 894 + 33 + 3.7% Group Shareholders' Equity 55,841 59,331 - 3,490 - 5.9% of which: - capital and reserves 51,948 53,858 - 1,909 - 3.6% - net profit (loss) 3,892 5,473 - 1,581 - 28.9% Total liabilities and shareholders' equity 831,469 836,790 - 5,321 - 0.6% Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 33 Reclassified consolidated balance sheet (€ million) AMOUNTS AS AT CHANGE ASSETS 12.31.2018 12.31.2017 AMOUNT % Cash and cash balances 30,991 64,493 - 33,502 - 51.9% Financial assets held for trading 65,231 74,686 - 9,454 - 12.7% Loans to banks 69,850 70,983 - 1,133 - 1.6% Loans to customers 471,839 438,895 + 32,945 + 7.5% Other financial assets 152,310 147,496 + 4,814 + 3.3% Hedging instruments 7,120 5,676 + 1,444 + 25.4% Property, plant and equipment 8,408 8,449 - 41 - 0.5% Goodwill 1,484 1,484 - - Other intangible assets 2,024 1,902 + 122 + 6.4% Tax assets 13,078 12,658 + 419 + 3.3% Non-current assets and disposal groups classified as held for sale 1,800 1,111 + 689 + 62.0% Other assets 7,334 8,958 - 1,624 - 18.1% Total assets 831,469 836,790 - 5,321 - 0.6% (€ million) AMOUNTS AS AT CHANGE LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 AMOUNT % Deposits from banks 125,895 123,244 + 2,651 + 2.2% Deposits from customers 478,988 462,895 + 16,092 + 3.5% Debt securities issued 81,153 98,603 - 17,449 - 17.7% Financial liabilities held for trading 43,111 55,784 - 12,672 - 22.7% Financial liabilities designated at fair value 9,318 3,011 + 6,307 n.m. Hedging instruments 9,262 6,610 + 2,652 + 40.1% Tax liabilities 825 1,093 - 268 - 24.5% Liabilities included in disposal groups classified as held for sale 540 185 + 355 n.m. Other liabilities 25,609 25,141 + 468 + 1.9% Minorities 927 894 + 33 + 3.7% Group Shareholders' Equity 55,841 59,331 - 3,490 - 5.9% of which: - capital and reserves 51,948 53,858 - 1,909 - 3.6% - net profit (loss) 3,892 5,473 - 1,581 - 28.9% Total liabilities and shareholders' equity 831,469 836,790 - 5,321 - 0.6% Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 33 Reclassified consolidated balance sheet (€ million) AMOUNTS AS AT CHANGE ASSETS 12.31.2018 12.31.2017 AMOUNT % Cash and cash balances 30,991 64,493 - 33,502 - 51.9% Financial assets held for trading 65,231 74,686 - 9,454 - 12.7% Loans to banks 69,850 70,983 - 1,133 - 1.6% Loans to customers 471,839 438,895 + 32,945 + 7.5% Other financial assets 152,310 147,496 + 4,814 + 3.3% Hedging instruments 7,120 5,676 + 1,444 + 25.4% Property, plant and equipment 8,408 8,449 - 41 - 0.5% Goodwill 1,484 1,484 - - Other intangible assets 2,024 1,902 + 122 + 6.4% Tax assets 13,078 12,658 + 419 + 3.3% Non-current assets and disposal groups classified as held for sale 1,800 1,111 + 689 + 62.0% Other assets 7,334 8,958 - 1,624 - 18.1% Total assets 831,469 836,790 - 5,321 - 0.6% (€ million) AMOUNTS AS AT CHANGE LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 AMOUNT % Deposits from banks 125,895 123,244 + 2,651 + 2.2% Deposits from customers 478,988 462,895 + 16,092 + 3.5% Debt securities issued 81,153 98,603 - 17,449 - 17.7% Financial liabilities held for trading 43,111 55,784 - 12,672 - 22.7% Financial liabilities designated at fair value 9,318 3,011 + 6,307 n.m. Hedging instruments 9,262 6,610 + 2,652 + 40.1% Tax liabilities 825 1,093 - 268 - 24.5% Liabilities included in disposal groups classified as held for sale 540 185 + 355 n.m. Other liabilities 25,609 25,141 + 468 + 1.9% Minorities 927 894 + 33 + 3.7% Group Shareholders' Equity 55,841 59,331 - 3,490 - 5.9% of which: - capital and reserves 51,948 53,858 - 1,909 - 3.6% - net profit (loss) 3,892 5,473 - 1,581 - 28.9% Total liabilities and shareholders' equity 831,469 836,790 - 5,321 - 0.6% Consolidated report on operations Reclassified consolidated accounts 34 2018 Annual Report and Accounts · UniCredit Reclassified consolidated balance sheet - Quarterly figures (€ million) AMOUNTS AS AT AMOUNTS AS AT ASSETS 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Cash and cash balances 30,991 26,356 21,238 49,944 64,493 48,982 48,428 32,261 Financial assets held for trading 65,231 81,258 83,262 80,324 74,686 81,493 79,529 86,191 Loans to banks 69,850 76,289 73,004 70,324 70,983 67,888 65,225 77,968 Loans to customers 471,839 462,235 458,787 441,783 438,895 441,351 440,821 443,002 Other financial assets 152,310 150,232 148,841 142,917 147,496 145,775 147,686 151,886 Hedging instruments 7,120 5,225 5,700 5,688 5,676 5,665 5,975 6,231 Property, plant and equipment 8,408 9,106 9,077 9,115 8,449 8,812 8,947 9,054 Goodwill 1,484 1,484 1,484 1,484 1,484 1,484 1,484 1,484 Other intangible assets 2,024 1,873 1,864 1,872 1,902 1,790 1,763 1,687 Tax assets 13,078 12,257 11,998 12,110 12,658 13,347 14,252 15,293 Non-current assets and disposal groups classified as held for sale 1,800 491 915 955 1,111 1,671 4,052 46,603 Other assets 7,334 7,253 7,740 7,461 8,958 8,841 8,966 9,424 Total assets 831,469 834,057 823,908 823,978 836,790 827,099 827,128 881,085 (€ million) AMOUNTS AS AT AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Deposits from banks 125,895 136,664 129,747 125,177 123,244 128,110 129,844 138,581 Deposits from customers 478,988 469,044 456,094 456,959 462,895 438,334 433,017 437,996 Debt securities issued 81,153 79,493 87,567 93,369 98,603 106,383 110,664 109,103 Financial liabilities held for trading 43,111 51,920 52,454 48,685 55,784 58,806 55,505 60,631 Financial liabilities designated at fair value 9,318 8,736 8,524 8,575 3,011 2,960 3,045 3,027 Hedging instruments 9,262 5,508 6,254 5,881 6,610 6,859 7,245 8,202 Tax liabilities 825 1,039 1,066 1,140 1,093 1,190 1,188 1,443 Liabilities included in disposal groups classified as held for sale 540 49 79 196 185 161 618 36,031 Other liabilities 25,609 26,426 25,825 26,104 25,141 25,720 30,019 29,035 Minorities 927 869 837 941 894 872 822 4,312 Group shareholders' equity 55,841 54,309 55,462 56,950 59,331 57,705 55,161 52,723 of which: - capital and reserves 51,948 52,144 53,325 55,838 53,858 53,033 53,308 51,816 - net profit (loss) 3,892 2,165 2,136 1,112 5,473 4,672 1,853 907 Total liabilities and shareholders' equity 831,469 834,057 823,908 823,978 836,790 827,099 827,128 881,085 Consolidated report on operations Reclassified consolidated accounts 34 2018 Annual Report and Accounts · UniCredit Reclassified consolidated balance sheet - Quarterly figures (€ million) AMOUNTS AS AT AMOUNTS AS AT ASSETS 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Cash and cash balances 30,991 26,356 21,238 49,944 64,493 48,982 48,428 32,261 Financial assets held for trading 65,231 81,258 83,262 80,324 74,686 81,493 79,529 86,191 Loans to banks 69,850 76,289 73,004 70,324 70,983 67,888 65,225 77,968 Loans to customers 471,839 462,235 458,787 441,783 438,895 441,351 440,821 443,002 Other financial assets 152,310 150,232 148,841 142,917 147,496 145,775 147,686 151,886 Hedging instruments 7,120 5,225 5,700 5,688 5,676 5,665 5,975 6,231 Property, plant and equipment 8,408 9,106 9,077 9,115 8,449 8,812 8,947 9,054 Goodwill 1,484 1,484 1,484 1,484 1,484 1,484 1,484 1,484 Other intangible assets 2,024 1,873 1,864 1,872 1,902 1,790 1,763 1,687 Tax assets 13,078 12,257 11,998 12,110 12,658 13,347 14,252 15,293 Non-current assets and disposal groups classified as held for sale 1,800 491 915 955 1,111 1,671 4,052 46,603 Other assets 7,334 7,253 7,740 7,461 8,958 8,841 8,966 9,424 Total assets 831,469 834,057 823,908 823,978 836,790 827,099 827,128 881,085 (€ million) AMOUNTS AS AT AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Deposits from banks 125,895 136,664 129,747 125,177 123,244 128,110 129,844 138,581 Deposits from customers 478,988 469,044 456,094 456,959 462,895 438,334 433,017 437,996 Debt securities issued 81,153 79,493 87,567 93,369 98,603 106,383 110,664 109,103 Financial liabilities held for trading 43,111 51,920 52,454 48,685 55,784 58,806 55,505 60,631 Financial liabilities designated at fair value 9,318 8,736 8,524 8,575 3,011 2,960 3,045 3,027 Hedging instruments 9,262 5,508 6,254 5,881 6,610 6,859 7,245 8,202 Tax liabilities 825 1,039 1,066 1,140 1,093 1,190 1,188 1,443 Liabilities included in disposal groups classified as held for sale 540 49 79 196 185 161 618 36,031 Other liabilities 25,609 26,426 25,825 26,104 25,141 25,720 30,019 29,035 Minorities 927 869 837 941 894 872 822 4,312 Group shareholders' equity 55,841 54,309 55,462 56,950 59,331 57,705 55,161 52,723 of which: - capital and reserves 51,948 52,144 53,325 55,838 53,858 53,033 53,308 51,816 - net profit (loss) 3,892 2,165 2,136 1,112 5,473 4,672 1,853 907 Total liabilities and shareholders' equity 831,469 834,057 823,908 823,978 836,790 827,099 827,128 881,085 Consolidated report on operations Reclassified consolidated accounts 34 2018 Annual Report and Accounts · UniCredit Reclassified consolidated balance sheet - Quarterly figures (€ million) AMOUNTS AS AT AMOUNTS AS AT ASSETS 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Cash and cash balances 30,991 26,356 21,238 49,944 64,493 48,982 48,428 32,261 Financial assets held for trading 65,231 81,258 83,262 80,324 74,686 81,493 79,529 86,191 Loans to banks 69,850 76,289 73,004 70,324 70,983 67,888 65,225 77,968 Loans to customers 471,839 462,235 458,787 441,783 438,895 441,351 440,821 443,002 Other financial assets 152,310 150,232 148,841 142,917 147,496 145,775 147,686 151,886 Hedging instruments 7,120 5,225 5,700 5,688 5,676 5,665 5,975 6,231 Property, plant and equipment 8,408 9,106 9,077 9,115 8,449 8,812 8,947 9,054 Goodwill 1,484 1,484 1,484 1,484 1,484 1,484 1,484 1,484 Other intangible assets 2,024 1,873 1,864 1,872 1,902 1,790 1,763 1,687 Tax assets 13,078 12,257 11,998 12,110 12,658 13,347 14,252 15,293 Non-current assets and disposal groups classified as held for sale 1,800 491 915 955 1,111 1,671 4,052 46,603 Other assets 7,334 7,253 7,740 7,461 8,958 8,841 8,966 9,424 Total assets 831,469 834,057 823,908 823,978 836,790 827,099 827,128 881,085 (€ million) AMOUNTS AS AT AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Deposits from banks 125,895 136,664 129,747 125,177 123,244 128,110 129,844 138,581 Deposits from customers 478,988 469,044 456,094 456,959 462,895 438,334 433,017 437,996 Debt securities issued 81,153 79,493 87,567 93,369 98,603 106,383 110,664 109,103 Financial liabilities held for trading 43,111 51,920 52,454 48,685 55,784 58,806 55,505 60,631 Financial liabilities designated at fair value 9,318 8,736 8,524 8,575 3,011 2,960 3,045 3,027 Hedging instruments 9,262 5,508 6,254 5,881 6,610 6,859 7,245 8,202 Tax liabilities 825 1,039 1,066 1,140 1,093 1,190 1,188 1,443 Liabilities included in disposal groups classified as held for sale 540 49 79 196 185 161 618 36,031 Other liabilities 25,609 26,426 25,825 26,104 25,141 25,720 30,019 29,035 Minorities 927 869 837 941 894 872 822 4,312 Group shareholders' equity 55,841 54,309 55,462 56,950 59,331 57,705 55,161 52,723 of which: - capital and reserves 51,948 52,144 53,325 55,838 53,858 53,033 53,308 51,816 - net profit (loss) 3,892 2,165 2,136 1,112 5,473 4,672 1,853 907 Total liabilities and shareholders' equity 831,469 834,057 823,908 823,978 836,790 827,099 827,128 881,085 Consolidated report on operations Reclassified consolidated accounts 34 2018 Annual Report and Accounts · UniCredit Reclassified consolidated balance sheet - Quarterly figures (€ million) AMOUNTS AS AT AMOUNTS AS AT ASSETS 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Cash and cash balances 30,991 26,356 21,238 49,944 64,493 48,982 48,428 32,261 Financial assets held for trading 65,231 81,258 83,262 80,324 74,686 81,493 79,529 86,191 Loans to banks 69,850 76,289 73,004 70,324 70,983 67,888 65,225 77,968 Loans to customers 471,839 462,235 458,787 441,783 438,895 441,351 440,821 443,002 Other financial assets 152,310 150,232 148,841 142,917 147,496 145,775 147,686 151,886 Hedging instruments 7,120 5,225 5,700 5,688 5,676 5,665 5,975 6,231 Property, plant and equipment 8,408 9,106 9,077 9,115 8,449 8,812 8,947 9,054 Goodwill 1,484 1,484 1,484 1,484 1,484 1,484 1,484 1,484 Other intangible assets 2,024 1,873 1,864 1,872 1,902 1,790 1,763 1,687 Tax assets 13,078 12,257 11,998 12,110 12,658 13,347 14,252 15,293 Non-current assets and disposal groups classified as held for sale 1,800 491 915 955 1,111 1,671 4,052 46,603 Other assets 7,334 7,253 7,740 7,461 8,958 8,841 8,966 9,424 Total assets 831,469 834,057 823,908 823,978 836,790 827,099 827,128 881,085 (€ million) AMOUNTS AS AT AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Deposits from banks 125,895 136,664 129,747 125,177 123,244 128,110 129,844 138,581 Deposits from customers 478,988 469,044 456,094 456,959 462,895 438,334 433,017 437,996 Debt securities issued 81,153 79,493 87,567 93,369 98,603 106,383 110,664 109,103 Financial liabilities held for trading 43,111 51,920 52,454 48,685 55,784 58,806 55,505 60,631 Financial liabilities designated at fair value 9,318 8,736 8,524 8,575 3,011 2,960 3,045 3,027 Hedging instruments 9,262 5,508 6,254 5,881 6,610 6,859 7,245 8,202 Tax liabilities 825 1,039 1,066 1,140 1,093 1,190 1,188 1,443 Liabilities included in disposal groups classified as held for sale 540 49 79 196 185 161 618 36,031 Other liabilities 25,609 26,426 25,825 26,104 25,141 25,720 30,019 29,035 Minorities 927 869 837 941 894 872 822 4,312 Group shareholders' equity 55,841 54,309 55,462 56,950 59,331 57,705 55,161 52,723 of which: - capital and reserves 51,948 52,144 53,325 55,838 53,858 53,033 53,308 51,816 - net profit (loss) 3,892 2,165 2,136 1,112 5,473 4,672 1,853 907 Total liabilities and shareholders' equity 831,469 834,057 823,908 823,978 836,790 827,099 827,128 881,085 Consolidated report on operations Reclassified consolidated accounts 34 2018 Annual Report and Accounts · UniCredit Reclassified consolidated balance sheet - Quarterly figures (€ million) AMOUNTS AS AT AMOUNTS AS AT ASSETS 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Cash and cash balances 30,991 26,356 21,238 49,944 64,493 48,982 48,428 32,261 Financial assets held for trading 65,231 81,258 83,262 80,324 74,686 81,493 79,529 86,191 Loans to banks 69,850 76,289 73,004 70,324 70,983 67,888 65,225 77,968 Loans to customers 471,839 462,235 458,787 441,783 438,895 441,351 440,821 443,002 Other financial assets 152,310 150,232 148,841 142,917 147,496 145,775 147,686 151,886 Hedging instruments 7,120 5,225 5,700 5,688 5,676 5,665 5,975 6,231 Property, plant and equipment 8,408 9,106 9,077 9,115 8,449 8,812 8,947 9,054 Goodwill 1,484 1,484 1,484 1,484 1,484 1,484 1,484 1,484 Other intangible assets 2,024 1,873 1,864 1,872 1,902 1,790 1,763 1,687 Tax assets 13,078 12,257 11,998 12,110 12,658 13,347 14,252 15,293 Non-current assets and disposal groups classified as held for sale 1,800 491 915 955 1,111 1,671 4,052 46,603 Other assets 7,334 7,253 7,740 7,461 8,958 8,841 8,966 9,424 Total assets 831,469 834,057 823,908 823,978 836,790 827,099 827,128 881,085 (€ million) AMOUNTS AS AT AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Deposits from banks 125,895 136,664 129,747 125,177 123,244 128,110 129,844 138,581 Deposits from customers 478,988 469,044 456,094 456,959 462,895 438,334 433,017 437,996 Debt securities issued 81,153 79,493 87,567 93,369 98,603 106,383 110,664 109,103 Financial liabilities held for trading 43,111 51,920 52,454 48,685 55,784 58,806 55,505 60,631 Financial liabilities designated at fair value 9,318 8,736 8,524 8,575 3,011 2,960 3,045 3,027 Hedging instruments 9,262 5,508 6,254 5,881 6,610 6,859 7,245 8,202 Tax liabilities 825 1,039 1,066 1,140 1,093 1,190 1,188 1,443 Liabilities included in disposal groups classified as held for sale 540 49 79 196 185 161 618 36,031 Other liabilities 25,609 26,426 25,825 26,104 25,141 25,720 30,019 29,035 Minorities 927 869 837 941 894 872 822 4,312 Group shareholders' equity 55,841 54,309 55,462 56,950 59,331 57,705 55,161 52,723 of which: - capital and reserves 51,948 52,144 53,325 55,838 53,858 53,033 53,308 51,816 - net profit (loss) 3,892 2,165 2,136 1,112 5,473 4,672 1,853 907 Total liabilities and shareholders' equity 831,469 834,057 823,908 823,978 836,790 827,099 827,128 881,085 Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 35 Reconciliation principles followed for the reclassified income statement The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Dividends and other income from equity investments” of “Profit (Loss) of equity investments valued at equity” and the exclusion of “Dividends from held for trading equity instruments” which are included in “Net trading income”; • the inclusion among “Net trading income” of net gains (losses) on trading, on hedge accounting, of net gains/losses on the financial assets/liabilities at fair value through profit or loss and of gains/losses on disposal or repurchase of financial assets at fair value through other comprehensive income; • the inclusion in the “Net other operating expenses/income”, excluding “Recovery of expenses” which is classified under its own item, the exclusion of the costs for “Write-downs on leasehold improvements” classified among “Other administrative expenses” and inclusion of result of industrial companies; • presentation of “Payroll costs”, “Other administrative expenses”, “Amortisation, depreciation and impairment losses on tangible and intangible assets” and “Other charges and Provisions” net of any “Integration costs” relating to the reorganisation operations, classified as a separate item; • the exclusion from the “Other administrative expenses” of the Contributions to the Resolution Funds (SRF), the Deposit Guarantee Schemes (DGS), the Bank Levies and the Guarantee fees for DTA reclassified in item “Other charges and provision”; • the exclusion from “Amortisation, depreciation and impairment losses on intangible and tangible assets” of property owned for investment and those related to operating lease assets, which are reclassified respectively among “Net income from investments” and “Net other expenses/income”; • the inclusion in “Net income from investments” of write-downs and write-backs on financial assets at amortised cost and at fair value through other comprehensive income - debt securities, gains (losses) on disposal of investments, gains (losses) on tangible and intangible assets measured at fair value as well as gains (losses) on equity investments and on disposal of investments; • in “Net write-downs on loans and provisions for guarantees and commitments”, the inclusion of net losses/recoveries on financial assets at amortised cost and at fair value through other comprehensive income net of debt securities and the inclusion of commitments and financial guarantees given on “Net provisions for risks and charge”. 2017 figures were restated: • starting from March 2018 following the reclassification of interests from item “Net write-downs on loans and provisions for guarantees and commitments” to item “Net interest” considering: - the component linked to the interests due to time value unwinding, determined in the valuation of non-performing financial assets; - the identification of interests income on the non-performing financial assets calculated on their net balance sheet exposure based on the related interest rates. • starting from September 2018 following the reclassifications: - of some expenses that, as a result of change in contracts, were addressed from item “Other administrative expenses” to item “Net fees and commissions”; - of irrevocable payment commitments versus Resolutions and Guarantee funds in item “Other charges and provisions - of which: systemic charges”. Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 35 Reconciliation principles followed for the reclassified income statement The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Dividends and other income from equity investments” of “Profit (Loss) of equity investments valued at equity” and the exclusion of “Dividends from held for trading equity instruments” which are included in “Net trading income”; • the inclusion among “Net trading income” of net gains (losses) on trading, on hedge accounting, of net gains/losses on the financial assets/liabilities at fair value through profit or loss and of gains/losses on disposal or repurchase of financial assets at fair value through other comprehensive income; • the inclusion in the “Net other operating expenses/income”, excluding “Recovery of expenses” which is classified under its own item, the exclusion of the costs for “Write-downs on leasehold improvements” classified among “Other administrative expenses” and inclusion of result of industrial companies; • presentation of “Payroll costs”, “Other administrative expenses”, “Amortisation, depreciation and impairment losses on tangible and intangible assets” and “Other charges and Provisions” net of any “Integration costs” relating to the reorganisation operations, classified as a separate item; • the exclusion from the “Other administrative expenses” of the Contributions to the Resolution Funds (SRF), the Deposit Guarantee Schemes (DGS), the Bank Levies and the Guarantee fees for DTA reclassified in item “Other charges and provision”; • the exclusion from “Amortisation, depreciation and impairment losses on intangible and tangible assets” of property owned for investment and those related to operating lease assets, which are reclassified respectively among “Net income from investments” and “Net other expenses/income”; • the inclusion in “Net income from investments” of write-downs and write-backs on financial assets at amortised cost and at fair value through other comprehensive income - debt securities, gains (losses) on disposal of investments, gains (losses) on tangible and intangible assets measured at fair value as well as gains (losses) on equity investments and on disposal of investments; • in “Net write-downs on loans and provisions for guarantees and commitments”, the inclusion of net losses/recoveries on financial assets at amortised cost and at fair value through other comprehensive income net of debt securities and the inclusion of commitments and financial guarantees given on “Net provisions for risks and charge”. 2017 figures were restated: • starting from March 2018 following the reclassification of interests from item “Net write-downs on loans and provisions for guarantees and commitments” to item “Net interest” considering: - the component linked to the interests due to time value unwinding, determined in the valuation of non-performing financial assets; - the identification of interests income on the non-performing financial assets calculated on their net balance sheet exposure based on the related interest rates. • starting from September 2018 following the reclassifications: - of some expenses that, as a result of change in contracts, were addressed from item “Other administrative expenses” to item “Net fees and commissions”; - of irrevocable payment commitments versus Resolutions and Guarantee funds in item “Other charges and provisions - of which: systemic charges”. Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 35 Reconciliation principles followed for the reclassified income statement The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Dividends and other income from equity investments” of “Profit (Loss) of equity investments valued at equity” and the exclusion of “Dividends from held for trading equity instruments” which are included in “Net trading income”; • the inclusion among “Net trading income” of net gains (losses) on trading, on hedge accounting, of net gains/losses on the financial assets/liabilities at fair value through profit or loss and of gains/losses on disposal or repurchase of financial assets at fair value through other comprehensive income; • the inclusion in the “Net other operating expenses/income”, excluding “Recovery of expenses” which is classified under its own item, the exclusion of the costs for “Write-downs on leasehold improvements” classified among “Other administrative expenses” and inclusion of result of industrial companies; • presentation of “Payroll costs”, “Other administrative expenses”, “Amortisation, depreciation and impairment losses on tangible and intangible assets” and “Other charges and Provisions” net of any “Integration costs” relating to the reorganisation operations, classified as a separate item; • the exclusion from the “Other administrative expenses” of the Contributions to the Resolution Funds (SRF), the Deposit Guarantee Schemes (DGS), the Bank Levies and the Guarantee fees for DTA reclassified in item “Other charges and provision”; • the exclusion from “Amortisation, depreciation and impairment losses on intangible and tangible assets” of property owned for investment and those related to operating lease assets, which are reclassified respectively among “Net income from investments” and “Net other expenses/income”; • the inclusion in “Net income from investments” of write-downs and write-backs on financial assets at amortised cost and at fair value through other comprehensive income - debt securities, gains (losses) on disposal of investments, gains (losses) on tangible and intangible assets measured at fair value as well as gains (losses) on equity investments and on disposal of investments; • in “Net write-downs on loans and provisions for guarantees and commitments”, the inclusion of net losses/recoveries on financial assets at amortised cost and at fair value through other comprehensive income net of debt securities and the inclusion of commitments and financial guarantees given on “Net provisions for risks and charge”. 2017 figures were restated: • starting from March 2018 following the reclassification of interests from item “Net write-downs on loans and provisions for guarantees and commitments” to item “Net interest” considering: - the component linked to the interests due to time value unwinding, determined in the valuation of non-performing financial assets; - the identification of interests income on the non-performing financial assets calculated on their net balance sheet exposure based on the related interest rates. • starting from September 2018 following the reclassifications: - of some expenses that, as a result of change in contracts, were addressed from item “Other administrative expenses” to item “Net fees and commissions”; - of irrevocable payment commitments versus Resolutions and Guarantee funds in item “Other charges and provisions - of which: systemic charges”. Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 35 Reconciliation principles followed for the reclassified income statement The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Dividends and other income from equity investments” of “Profit (Loss) of equity investments valued at equity” and the exclusion of “Dividends from held for trading equity instruments” which are included in “Net trading income”; • the inclusion among “Net trading income” of net gains (losses) on trading, on hedge accounting, of net gains/losses on the financial assets/liabilities at fair value through profit or loss and of gains/losses on disposal or repurchase of financial assets at fair value through other comprehensive income; • the inclusion in the “Net other operating expenses/income”, excluding “Recovery of expenses” which is classified under its own item, the exclusion of the costs for “Write-downs on leasehold improvements” classified among “Other administrative expenses” and inclusion of result of industrial companies; • presentation of “Payroll costs”, “Other administrative expenses”, “Amortisation, depreciation and impairment losses on tangible and intangible assets” and “Other charges and Provisions” net of any “Integration costs” relating to the reorganisation operations, classified as a separate item; • the exclusion from the “Other administrative expenses” of the Contributions to the Resolution Funds (SRF), the Deposit Guarantee Schemes (DGS), the Bank Levies and the Guarantee fees for DTA reclassified in item “Other charges and provision”; • the exclusion from “Amortisation, depreciation and impairment losses on intangible and tangible assets” of property owned for investment and those related to operating lease assets, which are reclassified respectively among “Net income from investments” and “Net other expenses/income”; • the inclusion in “Net income from investments” of write-downs and write-backs on financial assets at amortised cost and at fair value through other comprehensive income - debt securities, gains (losses) on disposal of investments, gains (losses) on tangible and intangible assets measured at fair value as well as gains (losses) on equity investments and on disposal of investments; • in “Net write-downs on loans and provisions for guarantees and commitments”, the inclusion of net losses/recoveries on financial assets at amortised cost and at fair value through other comprehensive income net of debt securities and the inclusion of commitments and financial guarantees given on “Net provisions for risks and charge”. 2017 figures were restated: • starting from March 2018 following the reclassification of interests from item “Net write-downs on loans and provisions for guarantees and commitments” to item “Net interest” considering: - the component linked to the interests due to time value unwinding, determined in the valuation of non-performing financial assets; - the identification of interests income on the non-performing financial assets calculated on their net balance sheet exposure based on the related interest rates. • starting from September 2018 following the reclassifications: - of some expenses that, as a result of change in contracts, were addressed from item “Other administrative expenses” to item “Net fees and commissions”; - of irrevocable payment commitments versus Resolutions and Guarantee funds in item “Other charges and provisions - of which: systemic charges”. Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 35 Reconciliation principles followed for the reclassified income statement The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Dividends and other income from equity investments” of “Profit (Loss) of equity investments valued at equity” and the exclusion of “Dividends from held for trading equity instruments” which are included in “Net trading income”; • the inclusion among “Net trading income” of net gains (losses) on trading, on hedge accounting, of net gains/losses on the financial assets/liabilities at fair value through profit or loss and of gains/losses on disposal or repurchase of financial assets at fair value through other comprehensive income; • the inclusion in the “Net other operating expenses/income”, excluding “Recovery of expenses” which is classified under its own item, the exclusion of the costs for “Write-downs on leasehold improvements” classified among “Other administrative expenses” and inclusion of result of industrial companies; • presentation of “Payroll costs”, “Other administrative expenses”, “Amortisation, depreciation and impairment losses on tangible and intangible assets” and “Other charges and Provisions” net of any “Integration costs” relating to the reorganisation operations, classified as a separate item; • the exclusion from the “Other administrative expenses” of the Contributions to the Resolution Funds (SRF), the Deposit Guarantee Schemes (DGS), the Bank Levies and the Guarantee fees for DTA reclassified in item “Other charges and provision”; • the exclusion from “Amortisation, depreciation and impairment losses on intangible and tangible assets” of property owned for investment and those related to operating lease assets, which are reclassified respectively among “Net income from investments” and “Net other expenses/income”; • the inclusion in “Net income from investments” of write-downs and write-backs on financial assets at amortised cost and at fair value through other comprehensive income - debt securities, gains (losses) on disposal of investments, gains (losses) on tangible and intangible assets measured at fair value as well as gains (losses) on equity investments and on disposal of investments; • in “Net write-downs on loans and provisions for guarantees and commitments”, the inclusion of net losses/recoveries on financial assets at amortised cost and at fair value through other comprehensive income net of debt securities and the inclusion of commitments and financial guarantees given on “Net provisions for risks and charge”. 2017 figures were restated: • starting from March 2018 following the reclassification of interests from item “Net write-downs on loans and provisions for guarantees and commitments” to item “Net interest” considering: - the component linked to the interests due to time value unwinding, determined in the valuation of non-performing financial assets; - the identification of interests income on the non-performing financial assets calculated on their net balance sheet exposure based on the related interest rates. • starting from September 2018 following the reclassifications: - of some expenses that, as a result of change in contracts, were addressed from item “Other administrative expenses” to item “Net fees and commissions”; - of irrevocable payment commitments versus Resolutions and Guarantee funds in item “Other charges and provisions - of which: systemic charges”. Consolidated report on operations Reclassified consolidated accounts 36 2018 Annual Report and Accounts · UniCredit Reclassified consolidated income statement (€ million) YEAR CHANGE 2018 2017 P&L % % AT CONSTANT FX(*) RATES Net interest 10,856 10,633 + 223 + 2.1% + 2.6% Dividends and other income from equity investments 738 638 + 100 + 15.6% + 32.5% Net fees and commissions 6,756 6,695 + 60 + 0.9% + 1.1% Net trading income 1,245 1,818 - 573 - 31.5% - 31.7% Net other expenses/income 130 156 - 26 - 16.9% - 17.6% OPERATING INCOME 19,723 19,941 - 217 - 1.1% - 0.2% Payroll costs (6,423) (6,905) + 482 - 7.0% - 6.8% Other administrative expenses (4,157) (4,385) + 228 - 5.2% - 5.0% Recovery of expenses 685 760 - 75 - 9.9% - 9.9% Amortisation, depreciation and impairment losses on intangible and tangible assets (804) (807) + 4 - 0.5% - 0.0% Operating costs (10,698) (11,338) + 639 - 5.6% - 5.4% OPERATING PROFIT (LOSS) 9,025 8,603 + 422 + 4.9% + 6.7% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) + 320 - 10.9% - 10.3% NET OPERATING PROFIT (LOSS) 6,406 5,664 + 742 + 13.1% + 15.5% Other charges and provisions (2,293) (1,064) - 1,229 n.m. n.m. of which: systemic charges (846) (610) - 236 + 38.8% + 39.2% Integration costs (9) (147) + 137 - 93.7% - 93.6% Net income from investments (485) (305) - 179 + 58.8% + 59.5% PROFIT (LOSS) BEFORE TAX 3,619 4,148 - 529 - 12.7% - 9.4% Income tax for the period 479 (609) + 1,088 n.m. n.m. NET PROFIT (LOSS) 4,098 3,539 + 559 + 15.8% + 19.4% Profit (Loss) from non-current assets held for sale after tax 14 2,251 - 2,237 - 99.4% - 99.4% PROFIT (LOSS) FOR THE PERIOD 4,112 5,790 - 1,678 - 29.0% - 26.4% Minorities (216) (313) + 96 - 30.8% - 30.0% NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 3,896 5,477 - 1,581 - 28.9% - 26.2% Purchase Price Allocation effect (3) (4) + 1 - 19.2% - 19.2% Goodwill impairment - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 3,892 5,473 - 1,581 - 28.9% - 26.2% Note: (*) Foreign Exchange. Consolidated report on operations Reclassified consolidated accounts 36 2018 Annual Report and Accounts · UniCredit Reclassified consolidated income statement (€ million) YEAR CHANGE 2018 2017 P&L % % AT CONSTANT FX(*) RATES Net interest 10,856 10,633 + 223 + 2.1% + 2.6% Dividends and other income from equity investments 738 638 + 100 + 15.6% + 32.5% Net fees and commissions 6,756 6,695 + 60 + 0.9% + 1.1% Net trading income 1,245 1,818 - 573 - 31.5% - 31.7% Net other expenses/income 130 156 - 26 - 16.9% - 17.6% OPERATING INCOME 19,723 19,941 - 217 - 1.1% - 0.2% Payroll costs (6,423) (6,905) + 482 - 7.0% - 6.8% Other administrative expenses (4,157) (4,385) + 228 - 5.2% - 5.0% Recovery of expenses 685 760 - 75 - 9.9% - 9.9% Amortisation, depreciation and impairment losses on intangible and tangible assets (804) (807) + 4 - 0.5% - 0.0% Operating costs (10,698) (11,338) + 639 - 5.6% - 5.4% OPERATING PROFIT (LOSS) 9,025 8,603 + 422 + 4.9% + 6.7% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) + 320 - 10.9% - 10.3% NET OPERATING PROFIT (LOSS) 6,406 5,664 + 742 + 13.1% + 15.5% Other charges and provisions (2,293) (1,064) - 1,229 n.m. n.m. of which: systemic charges (846) (610) - 236 + 38.8% + 39.2% Integration costs (9) (147) + 137 - 93.7% - 93.6% Net income from investments (485) (305) - 179 + 58.8% + 59.5% PROFIT (LOSS) BEFORE TAX 3,619 4,148 - 529 - 12.7% - 9.4% Income tax for the period 479 (609) + 1,088 n.m. n.m. NET PROFIT (LOSS) 4,098 3,539 + 559 + 15.8% + 19.4% Profit (Loss) from non-current assets held for sale after tax 14 2,251 - 2,237 - 99.4% - 99.4% PROFIT (LOSS) FOR THE PERIOD 4,112 5,790 - 1,678 - 29.0% - 26.4% Minorities (216) (313) + 96 - 30.8% - 30.0% NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 3,896 5,477 - 1,581 - 28.9% - 26.2% Purchase Price Allocation effect (3) (4) + 1 - 19.2% - 19.2% Goodwill impairment - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 3,892 5,473 - 1,581 - 28.9% - 26.2% Note: (*) Foreign Exchange. Consolidated report on operations Reclassified consolidated accounts 36 2018 Annual Report and Accounts · UniCredit Reclassified consolidated income statement (€ million) YEAR CHANGE 2018 2017 P&L % % AT CONSTANT FX(*) RATES Net interest 10,856 10,633 + 223 + 2.1% + 2.6% Dividends and other income from equity investments 738 638 + 100 + 15.6% + 32.5% Net fees and commissions 6,756 6,695 + 60 + 0.9% + 1.1% Net trading income 1,245 1,818 - 573 - 31.5% - 31.7% Net other expenses/income 130 156 - 26 - 16.9% - 17.6% OPERATING INCOME 19,723 19,941 - 217 - 1.1% - 0.2% Payroll costs (6,423) (6,905) + 482 - 7.0% - 6.8% Other administrative expenses (4,157) (4,385) + 228 - 5.2% - 5.0% Recovery of expenses 685 760 - 75 - 9.9% - 9.9% Amortisation, depreciation and impairment losses on intangible and tangible assets (804) (807) + 4 - 0.5% - 0.0% Operating costs (10,698) (11,338) + 639 - 5.6% - 5.4% OPERATING PROFIT (LOSS) 9,025 8,603 + 422 + 4.9% + 6.7% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) + 320 - 10.9% - 10.3% NET OPERATING PROFIT (LOSS) 6,406 5,664 + 742 + 13.1% + 15.5% Other charges and provisions (2,293) (1,064) - 1,229 n.m. n.m. of which: systemic charges (846) (610) - 236 + 38.8% + 39.2% Integration costs (9) (147) + 137 - 93.7% - 93.6% Net income from investments (485) (305) - 179 + 58.8% + 59.5% PROFIT (LOSS) BEFORE TAX 3,619 4,148 - 529 - 12.7% - 9.4% Income tax for the period 479 (609) + 1,088 n.m. n.m. NET PROFIT (LOSS) 4,098 3,539 + 559 + 15.8% + 19.4% Profit (Loss) from non-current assets held for sale after tax 14 2,251 - 2,237 - 99.4% - 99.4% PROFIT (LOSS) FOR THE PERIOD 4,112 5,790 - 1,678 - 29.0% - 26.4% Minorities (216) (313) + 96 - 30.8% - 30.0% NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 3,896 5,477 - 1,581 - 28.9% - 26.2% Purchase Price Allocation effect (3) (4) + 1 - 19.2% - 19.2% Goodwill impairment - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 3,892 5,473 - 1,581 - 28.9% - 26.2% Note: (*) Foreign Exchange. Consolidated report on operations Reclassified consolidated accounts 36 2018 Annual Report and Accounts · UniCredit Reclassified consolidated income statement (€ million) YEAR CHANGE 2018 2017 P&L % % AT CONSTANT FX(*) RATES Net interest 10,856 10,633 + 223 + 2.1% + 2.6% Dividends and other income from equity investments 738 638 + 100 + 15.6% + 32.5% Net fees and commissions 6,756 6,695 + 60 + 0.9% + 1.1% Net trading income 1,245 1,818 - 573 - 31.5% - 31.7% Net other expenses/income 130 156 - 26 - 16.9% - 17.6% OPERATING INCOME 19,723 19,941 - 217 - 1.1% - 0.2% Payroll costs (6,423) (6,905) + 482 - 7.0% - 6.8% Other administrative expenses (4,157) (4,385) + 228 - 5.2% - 5.0% Recovery of expenses 685 760 - 75 - 9.9% - 9.9% Amortisation, depreciation and impairment losses on intangible and tangible assets (804) (807) + 4 - 0.5% - 0.0% Operating costs (10,698) (11,338) + 639 - 5.6% - 5.4% OPERATING PROFIT (LOSS) 9,025 8,603 + 422 + 4.9% + 6.7% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) + 320 - 10.9% - 10.3% NET OPERATING PROFIT (LOSS) 6,406 5,664 + 742 + 13.1% + 15.5% Other charges and provisions (2,293) (1,064) - 1,229 n.m. n.m. of which: systemic charges (846) (610) - 236 + 38.8% + 39.2% Integration costs (9) (147) + 137 - 93.7% - 93.6% Net income from investments (485) (305) - 179 + 58.8% + 59.5% PROFIT (LOSS) BEFORE TAX 3,619 4,148 - 529 - 12.7% - 9.4% Income tax for the period 479 (609) + 1,088 n.m. n.m. NET PROFIT (LOSS) 4,098 3,539 + 559 + 15.8% + 19.4% Profit (Loss) from non-current assets held for sale after tax 14 2,251 - 2,237 - 99.4% - 99.4% PROFIT (LOSS) FOR THE PERIOD 4,112 5,790 - 1,678 - 29.0% - 26.4% Minorities (216) (313) + 96 - 30.8% - 30.0% NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 3,896 5,477 - 1,581 - 28.9% - 26.2% Purchase Price Allocation effect (3) (4) + 1 - 19.2% - 19.2% Goodwill impairment - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 3,892 5,473 - 1,581 - 28.9% - 26.2% Note: (*) Foreign Exchange. Consolidated report on operations Reclassified consolidated accounts 36 2018 Annual Report and Accounts · UniCredit Reclassified consolidated income statement (€ million) YEAR CHANGE 2018 2017 P&L % % AT CONSTANT FX(*) RATES Net interest 10,856 10,633 + 223 + 2.1% + 2.6% Dividends and other income from equity investments 738 638 + 100 + 15.6% + 32.5% Net fees and commissions 6,756 6,695 + 60 + 0.9% + 1.1% Net trading income 1,245 1,818 - 573 - 31.5% - 31.7% Net other expenses/income 130 156 - 26 - 16.9% - 17.6% OPERATING INCOME 19,723 19,941 - 217 - 1.1% - 0.2% Payroll costs (6,423) (6,905) + 482 - 7.0% - 6.8% Other administrative expenses (4,157) (4,385) + 228 - 5.2% - 5.0% Recovery of expenses 685 760 - 75 - 9.9% - 9.9% Amortisation, depreciation and impairment losses on intangible and tangible assets (804) (807) + 4 - 0.5% - 0.0% Operating costs (10,698) (11,338) + 639 - 5.6% - 5.4% OPERATING PROFIT (LOSS) 9,025 8,603 + 422 + 4.9% + 6.7% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) + 320 - 10.9% - 10.3% NET OPERATING PROFIT (LOSS) 6,406 5,664 + 742 + 13.1% + 15.5% Other charges and provisions (2,293) (1,064) - 1,229 n.m. n.m. of which: systemic charges (846) (610) - 236 + 38.8% + 39.2% Integration costs (9) (147) + 137 - 93.7% - 93.6% Net income from investments (485) (305) - 179 + 58.8% + 59.5% PROFIT (LOSS) BEFORE TAX 3,619 4,148 - 529 - 12.7% - 9.4% Income tax for the period 479 (609) + 1,088 n.m. n.m. NET PROFIT (LOSS) 4,098 3,539 + 559 + 15.8% + 19.4% Profit (Loss) from non-current assets held for sale after tax 14 2,251 - 2,237 - 99.4% - 99.4% PROFIT (LOSS) FOR THE PERIOD 4,112 5,790 - 1,678 - 29.0% - 26.4% Minorities (216) (313) + 96 - 30.8% - 30.0% NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 3,896 5,477 - 1,581 - 28.9% - 26.2% Purchase Price Allocation effect (3) (4) + 1 - 19.2% - 19.2% Goodwill impairment - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 3,892 5,473 - 1,581 - 28.9% - 26.2% Note: (*) Foreign Exchange. Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 37 Reclassified consolidated income statement - Quarterly figures (€ million) 2018 2017 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net interest 2,776 2,765 2,678 2,636 2,646 2,579 2,748 2,660 Dividends and other income from equity investments 219 149 180 189 120 165 183 170 Net fees and commissions 1,659 1,628 1,722 1,746 1,682 1,588 1,726 1,699 Net trading income 159 277 331 478 384 381 462 590 Net other expenses/income 42 (5) 33 60 73 7 49 28 OPERATING INCOME 4,856 4,814 4,944 5,110 4,905 4,721 5,168 5,147 Payroll costs (1,601) (1,575) (1,612) (1,634) (1,701) (1,704) (1,744) (1,755) Other administrative expenses (1,078) (985) (1,029) (1,065) (1,123) (1,074) (1,078) (1,110) Recovery of expenses 165 173 185 163 246 171 167 176 Amortisation, depreciation and impairment losses on intangible and tangible assets (203) (204) (199) (197) (214) (201) (199) (193) Operating costs (2,718) (2,592) (2,655) (2,734) (2,793) (2,809) (2,854) (2,882) OPERATING PROFIT (LOSS) 2,138 2,222 2,289 2,376 2,112 1,912 2,315 2,264 Net write-downs on loans and provisions for guarantees and commitments (923) (696) (504) (496) (835) (677) (661) (766) NET OPERATING PROFIT (LOSS) 1,215 1,526 1,785 1,880 1,277 1,235 1,654 1,498 Other charges and provisions (371) (741) (662) (519) (193) (273) (135) (463) of which: systemic charges (60) (148) (173) (465) 14 (157) (33) (434) Integration costs (15) (3) (2) 11 (103) (31) (8) (5) Net income from investments (52) (655) 205 17 (151) (5) (173) 24 PROFIT (LOSS) BEFORE TAX 778 127 1,325 1,389 830 926 1,338 1,054 Income tax for the period 998 (40) (258) (221) (66) (181) (143) (219) NET PROFIT (LOSS) 1,776 87 1,067 1,169 764 745 1,195 835 Profit (Loss) from non-current assets held for sale after tax 1 (1) 15 (1) 96 2,126 (133) 162 PROFIT (LOSS) FOR THE PERIOD 1,777 86 1,082 1,168 860 2,871 1,062 997 Minorities (49) (56) (56) (55) (58) (50) (116) (89) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 1,728 30 1,025 1,113 802 2,821 946 909 Purchase Price Allocation effect - (1) (1) (1) (1) (1) (1) (1) Goodwill impairment - - - - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 1,727 29 1,024 1,112 801 2,820 945 907 Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 37 Reclassified consolidated income statement - Quarterly figures (€ million) 2018 2017 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net interest 2,776 2,765 2,678 2,636 2,646 2,579 2,748 2,660 Dividends and other income from equity investments 219 149 180 189 120 165 183 170 Net fees and commissions 1,659 1,628 1,722 1,746 1,682 1,588 1,726 1,699 Net trading income 159 277 331 478 384 381 462 590 Net other expenses/income 42 (5) 33 60 73 7 49 28 OPERATING INCOME 4,856 4,814 4,944 5,110 4,905 4,721 5,168 5,147 Payroll costs (1,601) (1,575) (1,612) (1,634) (1,701) (1,704) (1,744) (1,755) Other administrative expenses (1,078) (985) (1,029) (1,065) (1,123) (1,074) (1,078) (1,110) Recovery of expenses 165 173 185 163 246 171 167 176 Amortisation, depreciation and impairment losses on intangible and tangible assets (203) (204) (199) (197) (214) (201) (199) (193) Operating costs (2,718) (2,592) (2,655) (2,734) (2,793) (2,809) (2,854) (2,882) OPERATING PROFIT (LOSS) 2,138 2,222 2,289 2,376 2,112 1,912 2,315 2,264 Net write-downs on loans and provisions for guarantees and commitments (923) (696) (504) (496) (835) (677) (661) (766) NET OPERATING PROFIT (LOSS) 1,215 1,526 1,785 1,880 1,277 1,235 1,654 1,498 Other charges and provisions (371) (741) (662) (519) (193) (273) (135) (463) of which: systemic charges (60) (148) (173) (465) 14 (157) (33) (434) Integration costs (15) (3) (2) 11 (103) (31) (8) (5) Net income from investments (52) (655) 205 17 (151) (5) (173) 24 PROFIT (LOSS) BEFORE TAX 778 127 1,325 1,389 830 926 1,338 1,054 Income tax for the period 998 (40) (258) (221) (66) (181) (143) (219) NET PROFIT (LOSS) 1,776 87 1,067 1,169 764 745 1,195 835 Profit (Loss) from non-current assets held for sale after tax 1 (1) 15 (1) 96 2,126 (133) 162 PROFIT (LOSS) FOR THE PERIOD 1,777 86 1,082 1,168 860 2,871 1,062 997 Minorities (49) (56) (56) (55) (58) (50) (116) (89) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 1,728 30 1,025 1,113 802 2,821 946 909 Purchase Price Allocation effect - (1) (1) (1) (1) (1) (1) (1) Goodwill impairment - - - - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 1,727 29 1,024 1,112 801 2,820 945 907 Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 37 Reclassified consolidated income statement - Quarterly figures (€ million) 2018 2017 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net interest 2,776 2,765 2,678 2,636 2,646 2,579 2,748 2,660 Dividends and other income from equity investments 219 149 180 189 120 165 183 170 Net fees and commissions 1,659 1,628 1,722 1,746 1,682 1,588 1,726 1,699 Net trading income 159 277 331 478 384 381 462 590 Net other expenses/income 42 (5) 33 60 73 7 49 28 OPERATING INCOME 4,856 4,814 4,944 5,110 4,905 4,721 5,168 5,147 Payroll costs (1,601) (1,575) (1,612) (1,634) (1,701) (1,704) (1,744) (1,755) Other administrative expenses (1,078) (985) (1,029) (1,065) (1,123) (1,074) (1,078) (1,110) Recovery of expenses 165 173 185 163 246 171 167 176 Amortisation, depreciation and impairment losses on intangible and tangible assets (203) (204) (199) (197) (214) (201) (199) (193) Operating costs (2,718) (2,592) (2,655) (2,734) (2,793) (2,809) (2,854) (2,882) OPERATING PROFIT (LOSS) 2,138 2,222 2,289 2,376 2,112 1,912 2,315 2,264 Net write-downs on loans and provisions for guarantees and commitments (923) (696) (504) (496) (835) (677) (661) (766) NET OPERATING PROFIT (LOSS) 1,215 1,526 1,785 1,880 1,277 1,235 1,654 1,498 Other charges and provisions (371) (741) (662) (519) (193) (273) (135) (463) of which: systemic charges (60) (148) (173) (465) 14 (157) (33) (434) Integration costs (15) (3) (2) 11 (103) (31) (8) (5) Net income from investments (52) (655) 205 17 (151) (5) (173) 24 PROFIT (LOSS) BEFORE TAX 778 127 1,325 1,389 830 926 1,338 1,054 Income tax for the period 998 (40) (258) (221) (66) (181) (143) (219) NET PROFIT (LOSS) 1,776 87 1,067 1,169 764 745 1,195 835 Profit (Loss) from non-current assets held for sale after tax 1 (1) 15 (1) 96 2,126 (133) 162 PROFIT (LOSS) FOR THE PERIOD 1,777 86 1,082 1,168 860 2,871 1,062 997 Minorities (49) (56) (56) (55) (58) (50) (116) (89) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 1,728 30 1,025 1,113 802 2,821 946 909 Purchase Price Allocation effect - (1) (1) (1) (1) (1) (1) (1) Goodwill impairment - - - - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 1,727 29 1,024 1,112 801 2,820 945 907 Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 37 Reclassified consolidated income statement - Quarterly figures (€ million) 2018 2017 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net interest 2,776 2,765 2,678 2,636 2,646 2,579 2,748 2,660 Dividends and other income from equity investments 219 149 180 189 120 165 183 170 Net fees and commissions 1,659 1,628 1,722 1,746 1,682 1,588 1,726 1,699 Net trading income 159 277 331 478 384 381 462 590 Net other expenses/income 42 (5) 33 60 73 7 49 28 OPERATING INCOME 4,856 4,814 4,944 5,110 4,905 4,721 5,168 5,147 Payroll costs (1,601) (1,575) (1,612) (1,634) (1,701) (1,704) (1,744) (1,755) Other administrative expenses (1,078) (985) (1,029) (1,065) (1,123) (1,074) (1,078) (1,110) Recovery of expenses 165 173 185 163 246 171 167 176 Amortisation, depreciation and impairment losses on intangible and tangible assets (203) (204) (199) (197) (214) (201) (199) (193) Operating costs (2,718) (2,592) (2,655) (2,734) (2,793) (2,809) (2,854) (2,882) OPERATING PROFIT (LOSS) 2,138 2,222 2,289 2,376 2,112 1,912 2,315 2,264 Net write-downs on loans and provisions for guarantees and commitments (923) (696) (504) (496) (835) (677) (661) (766) NET OPERATING PROFIT (LOSS) 1,215 1,526 1,785 1,880 1,277 1,235 1,654 1,498 Other charges and provisions (371) (741) (662) (519) (193) (273) (135) (463) of which: systemic charges (60) (148) (173) (465) 14 (157) (33) (434) Integration costs (15) (3) (2) 11 (103) (31) (8) (5) Net income from investments (52) (655) 205 17 (151) (5) (173) 24 PROFIT (LOSS) BEFORE TAX 778 127 1,325 1,389 830 926 1,338 1,054 Income tax for the period 998 (40) (258) (221) (66) (181) (143) (219) NET PROFIT (LOSS) 1,776 87 1,067 1,169 764 745 1,195 835 Profit (Loss) from non-current assets held for sale after tax 1 (1) 15 (1) 96 2,126 (133) 162 PROFIT (LOSS) FOR THE PERIOD 1,777 86 1,082 1,168 860 2,871 1,062 997 Minorities (49) (56) (56) (55) (58) (50) (116) (89) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 1,728 30 1,025 1,113 802 2,821 946 909 Purchase Price Allocation effect - (1) (1) (1) (1) (1) (1) (1) Goodwill impairment - - - - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 1,727 29 1,024 1,112 801 2,820 945 907 Consolidated report on operations Reclassified consolidated accounts UniCredit ·2018 Annual Report and Accounts 37 Reclassified consolidated income statement - Quarterly figures (€ million) 2018 2017 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net interest 2,776 2,765 2,678 2,636 2,646 2,579 2,748 2,660 Dividends and other income from equity investments 219 149 180 189 120 165 183 170 Net fees and commissions 1,659 1,628 1,722 1,746 1,682 1,588 1,726 1,699 Net trading income 159 277 331 478 384 381 462 590 Net other expenses/income 42 (5) 33 60 73 7 49 28 OPERATING INCOME 4,856 4,814 4,944 5,110 4,905 4,721 5,168 5,147 Payroll costs (1,601) (1,575) (1,612) (1,634) (1,701) (1,704) (1,744) (1,755) Other administrative expenses (1,078) (985) (1,029) (1,065) (1,123) (1,074) (1,078) (1,110) Recovery of expenses 165 173 185 163 246 171 167 176 Amortisation, depreciation and impairment losses on intangible and tangible assets (203) (204) (199) (197) (214) (201) (199) (193) Operating costs (2,718) (2,592) (2,655) (2,734) (2,793) (2,809) (2,854) (2,882) OPERATING PROFIT (LOSS) 2,138 2,222 2,289 2,376 2,112 1,912 2,315 2,264 Net write-downs on loans and provisions for guarantees and commitments (923) (696) (504) (496) (835) (677) (661) (766) NET OPERATING PROFIT (LOSS) 1,215 1,526 1,785 1,880 1,277 1,235 1,654 1,498 Other charges and provisions (371) (741) (662) (519) (193) (273) (135) (463) of which: systemic charges (60) (148) (173) (465) 14 (157) (33) (434) Integration costs (15) (3) (2) 11 (103) (31) (8) (5) Net income from investments (52) (655) 205 17 (151) (5) (173) 24 PROFIT (LOSS) BEFORE TAX 778 127 1,325 1,389 830 926 1,338 1,054 Income tax for the period 998 (40) (258) (221) (66) (181) (143) (219) NET PROFIT (LOSS) 1,776 87 1,067 1,169 764 745 1,195 835 Profit (Loss) from non-current assets held for sale after tax 1 (1) 15 (1) 96 2,126 (133) 162 PROFIT (LOSS) FOR THE PERIOD 1,777 86 1,082 1,168 860 2,871 1,062 997 Minorities (49) (56) (56) (55) (58) (50) (116) (89) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 1,728 30 1,025 1,113 802 2,821 946 909 Purchase Price Allocation effect - (1) (1) (1) (1) (1) (1) (1) Goodwill impairment - - - - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 1,727 29 1,024 1,112 801 2,820 945 907 Consolidated report on operations Reclassified consolidated accounts 38 2018 Annual Report and Accounts · UniCredit Reclassified consolidated income statement - Comparison of Q4 2018/Q4 2017 (€ million) Q4 CHANGE 2018 2017 P&L % % AT CONSTANT FX(*) RATES Net interest 2,776 2,646 + 130 + 4.9% + 5.5% Dividends and other income from equity investments 219 120 + 99 + 83.0% n.m. Net fees and commissions 1,659 1,682 - 23 - 1.4% - 1.1% Net trading income 159 384 - 225 - 58.6% - 59.0% Net other expenses/income 42 73 - 31 - 42.8% - 43.4% OPERATING INCOME 4,856 4,905 - 49 - 1.0% + 0.2% Payroll costs (1,601) (1,701) + 100 - 5.9% - 5.7% Other administrative expenses (1,078) (1,123) + 45 - 4.0% - 3.8% Recovery of expenses 165 246 - 81 - 33.0% - 33.0% Amortisation, depreciation and impairment losses on intangible and tangible assets (203) (214) + 11 - 5.1% - 4.7% Operating costs (2,718) (2,793) + 75 - 2.7% - 2.4% OPERATING PROFIT (LOSS) 2,138 2,112 + 26 + 1.2% + 3.8% Net write-downs on loans and provisions for guarantees and commitments (923) (835) - 87 + 10.5% + 10.6% NET OPERATING PROFIT (LOSS) 1,215 1,277 - 62 - 4.8% - 0.7% Other charges and provisions (371) (193) - 178 + 92.1% + 92.5% of which: systemic charges (60) 14 - 74 n.m. n.m. Integration costs (15) (103) + 88 - 85.8% - 85.6% Net income from investments (52) (151) + 99 - 65.4% - 64.9% PROFIT (LOSS) BEFORE TAX 778 830 - 52 - 6.3% - 0.1% Income tax for the period 998 (66) + 1,064 n.m. n.m. NET PROFIT (LOSS) 1,776 764 + 1,012 n.m. n.m. Profit (Loss) from non-current assets held for sale after tax 1 96 - 95 - 99.3% - 99.3% PROFIT (LOSS) FOR THE PERIOD 1,777 860 + 917 n.m. n.m. Minorities (49) (58) + 9 - 15.7% - 15.4% NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 1,728 802 + 926 n.m. n.m. Purchase Price Allocation effect (0) (1) + 0 - 58.8% - 58.8% Goodwill impairment - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 1,727 801 + 927 n.m. n.m. Note: (*) Foreign Exchange. Consolidated report on operations Reclassified consolidated accounts 38 2018 Annual Report and Accounts · UniCredit Reclassified consolidated income statement - Comparison of Q4 2018/Q4 2017 (€ million) Q4 CHANGE 2018 2017 P&L % % AT CONSTANT FX(*) RATES Net interest 2,776 2,646 + 130 + 4.9% + 5.5% Dividends and other income from equity investments 219 120 + 99 + 83.0% n.m. Net fees and commissions 1,659 1,682 - 23 - 1.4% - 1.1% Net trading income 159 384 - 225 - 58.6% - 59.0% Net other expenses/income 42 73 - 31 - 42.8% - 43.4% OPERATING INCOME 4,856 4,905 - 49 - 1.0% + 0.2% Payroll costs (1,601) (1,701) + 100 - 5.9% - 5.7% Other administrative expenses (1,078) (1,123) + 45 - 4.0% - 3.8% Recovery of expenses 165 246 - 81 - 33.0% - 33.0% Amortisation, depreciation and impairment losses on intangible and tangible assets (203) (214) + 11 - 5.1% - 4.7% Operating costs (2,718) (2,793) + 75 - 2.7% - 2.4% OPERATING PROFIT (LOSS) 2,138 2,112 + 26 + 1.2% + 3.8% Net write-downs on loans and provisions for guarantees and commitments (923) (835) - 87 + 10.5% + 10.6% NET OPERATING PROFIT (LOSS) 1,215 1,277 - 62 - 4.8% - 0.7% Other charges and provisions (371) (193) - 178 + 92.1% + 92.5% of which: systemic charges (60) 14 - 74 n.m. n.m. Integration costs (15) (103) + 88 - 85.8% - 85.6% Net income from investments (52) (151) + 99 - 65.4% - 64.9% PROFIT (LOSS) BEFORE TAX 778 830 - 52 - 6.3% - 0.1% Income tax for the period 998 (66) + 1,064 n.m. n.m. NET PROFIT (LOSS) 1,776 764 + 1,012 n.m. n.m. Profit (Loss) from non-current assets held for sale after tax 1 96 - 95 - 99.3% - 99.3% PROFIT (LOSS) FOR THE PERIOD 1,777 860 + 917 n.m. n.m. Minorities (49) (58) + 9 - 15.7% - 15.4% NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 1,728 802 + 926 n.m. n.m. Purchase Price Allocation effect (0) (1) + 0 - 58.8% - 58.8% Goodwill impairment - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 1,727 801 + 927 n.m. n.m. Note: (*) Foreign Exchange. Consolidated report on operations Reclassified consolidated accounts 38 2018 Annual Report and Accounts · UniCredit Reclassified consolidated income statement - Comparison of Q4 2018/Q4 2017 (€ million) Q4 CHANGE 2018 2017 P&L % % AT CONSTANT FX(*) RATES Net interest 2,776 2,646 + 130 + 4.9% + 5.5% Dividends and other income from equity investments 219 120 + 99 + 83.0% n.m. Net fees and commissions 1,659 1,682 - 23 - 1.4% - 1.1% Net trading income 159 384 - 225 - 58.6% - 59.0% Net other expenses/income 42 73 - 31 - 42.8% - 43.4% OPERATING INCOME 4,856 4,905 - 49 - 1.0% + 0.2% Payroll costs (1,601) (1,701) + 100 - 5.9% - 5.7% Other administrative expenses (1,078) (1,123) + 45 - 4.0% - 3.8% Recovery of expenses 165 246 - 81 - 33.0% - 33.0% Amortisation, depreciation and impairment losses on intangible and tangible assets (203) (214) + 11 - 5.1% - 4.7% Operating costs (2,718) (2,793) + 75 - 2.7% - 2.4% OPERATING PROFIT (LOSS) 2,138 2,112 + 26 + 1.2% + 3.8% Net write-downs on loans and provisions for guarantees and commitments (923) (835) - 87 + 10.5% + 10.6% NET OPERATING PROFIT (LOSS) 1,215 1,277 - 62 - 4.8% - 0.7% Other charges and provisions (371) (193) - 178 + 92.1% + 92.5% of which: systemic charges (60) 14 - 74 n.m. n.m. Integration costs (15) (103) + 88 - 85.8% - 85.6% Net income from investments (52) (151) + 99 - 65.4% - 64.9% PROFIT (LOSS) BEFORE TAX 778 830 - 52 - 6.3% - 0.1% Income tax for the period 998 (66) + 1,064 n.m. n.m. NET PROFIT (LOSS) 1,776 764 + 1,012 n.m. n.m. Profit (Loss) from non-current assets held for sale after tax 1 96 - 95 - 99.3% - 99.3% PROFIT (LOSS) FOR THE PERIOD 1,777 860 + 917 n.m. n.m. Minorities (49) (58) + 9 - 15.7% - 15.4% NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 1,728 802 + 926 n.m. n.m. Purchase Price Allocation effect (0) (1) + 0 - 58.8% - 58.8% Goodwill impairment - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 1,727 801 + 927 n.m. n.m. Note: (*) Foreign Exchange. Consolidated report on operations Reclassified consolidated accounts 38 2018 Annual Report and Accounts · UniCredit Reclassified consolidated income statement - Comparison of Q4 2018/Q4 2017 (€ million) Q4 CHANGE 2018 2017 P&L % % AT CONSTANT FX(*) RATES Net interest 2,776 2,646 + 130 + 4.9% + 5.5% Dividends and other income from equity investments 219 120 + 99 + 83.0% n.m. Net fees and commissions 1,659 1,682 - 23 - 1.4% - 1.1% Net trading income 159 384 - 225 - 58.6% - 59.0% Net other expenses/income 42 73 - 31 - 42.8% - 43.4% OPERATING INCOME 4,856 4,905 - 49 - 1.0% + 0.2% Payroll costs (1,601) (1,701) + 100 - 5.9% - 5.7% Other administrative expenses (1,078) (1,123) + 45 - 4.0% - 3.8% Recovery of expenses 165 246 - 81 - 33.0% - 33.0% Amortisation, depreciation and impairment losses on intangible and tangible assets (203) (214) + 11 - 5.1% - 4.7% Operating costs (2,718) (2,793) + 75 - 2.7% - 2.4% OPERATING PROFIT (LOSS) 2,138 2,112 + 26 + 1.2% + 3.8% Net write-downs on loans and provisions for guarantees and commitments (923) (835) - 87 + 10.5% + 10.6% NET OPERATING PROFIT (LOSS) 1,215 1,277 - 62 - 4.8% - 0.7% Other charges and provisions (371) (193) - 178 + 92.1% + 92.5% of which: systemic charges (60) 14 - 74 n.m. n.m. Integration costs (15) (103) + 88 - 85.8% - 85.6% Net income from investments (52) (151) + 99 - 65.4% - 64.9% PROFIT (LOSS) BEFORE TAX 778 830 - 52 - 6.3% - 0.1% Income tax for the period 998 (66) + 1,064 n.m. n.m. NET PROFIT (LOSS) 1,776 764 + 1,012 n.m. n.m. Profit (Loss) from non-current assets held for sale after tax 1 96 - 95 - 99.3% - 99.3% PROFIT (LOSS) FOR THE PERIOD 1,777 860 + 917 n.m. n.m. Minorities (49) (58) + 9 - 15.7% - 15.4% NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 1,728 802 + 926 n.m. n.m. Purchase Price Allocation effect (0) (1) + 0 - 58.8% - 58.8% Goodwill impairment - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 1,727 801 + 927 n.m. n.m. Note: (*) Foreign Exchange. Consolidated report on operations Reclassified consolidated accounts 38 2018 Annual Report and Accounts · UniCredit Reclassified consolidated income statement - Comparison of Q4 2018/Q4 2017 (€ million) Q4 CHANGE 2018 2017 P&L % % AT CONSTANT FX(*) RATES Net interest 2,776 2,646 + 130 + 4.9% + 5.5% Dividends and other income from equity investments 219 120 + 99 + 83.0% n.m. Net fees and commissions 1,659 1,682 - 23 - 1.4% - 1.1% Net trading income 159 384 - 225 - 58.6% - 59.0% Net other expenses/income 42 73 - 31 - 42.8% - 43.4% OPERATING INCOME 4,856 4,905 - 49 - 1.0% + 0.2% Payroll costs (1,601) (1,701) + 100 - 5.9% - 5.7% Other administrative expenses (1,078) (1,123) + 45 - 4.0% - 3.8% Recovery of expenses 165 246 - 81 - 33.0% - 33.0% Amortisation, depreciation and impairment losses on intangible and tangible assets (203) (214) + 11 - 5.1% - 4.7% Operating costs (2,718) (2,793) + 75 - 2.7% - 2.4% OPERATING PROFIT (LOSS) 2,138 2,112 + 26 + 1.2% + 3.8% Net write-downs on loans and provisions for guarantees and commitments (923) (835) - 87 + 10.5% + 10.6% NET OPERATING PROFIT (LOSS) 1,215 1,277 - 62 - 4.8% - 0.7% Other charges and provisions (371) (193) - 178 + 92.1% + 92.5% of which: systemic charges (60) 14 - 74 n.m. n.m. Integration costs (15) (103) + 88 - 85.8% - 85.6% Net income from investments (52) (151) + 99 - 65.4% - 64.9% PROFIT (LOSS) BEFORE TAX 778 830 - 52 - 6.3% - 0.1% Income tax for the period 998 (66) + 1,064 n.m. n.m. NET PROFIT (LOSS) 1,776 764 + 1,012 n.m. n.m. Profit (Loss) from non-current assets held for sale after tax 1 96 - 95 - 99.3% - 99.3% PROFIT (LOSS) FOR THE PERIOD 1,777 860 + 917 n.m. n.m. Minorities (49) (58) + 9 - 15.7% - 15.4% NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 1,728 802 + 926 n.m. n.m. Purchase Price Allocation effect (0) (1) + 0 - 58.8% - 58.8% Goodwill impairment - - - - - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 1,727 801 + 927 n.m. n.m. Note: (*) Foreign Exchange. Consolidated report on operations Summary results by business segments UniCredit ·2018 Annual Report and Accounts 39 Key figures by business segment (€ million) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CEE DIVISION CIB FINECO GROUP CORPORATE CENTRE(1) NON CORE CONSOLIDATED GROUP TOTAL Income statement OPERATING INCOME 2018 7,257 2,470 1,563 4,262 3,813 624 (205) (60) 19,723 2017 7,442 2,694 1,583 4,186 4,113 586 (732) 68 19,941 OPERATING COSTS 2018 (4,125) (1,704) (1,022) (1,566) (1,563) (246) (364) (109) (10,698) 2017 (4,438) (1,810) (1,085) (1,543) (1,626) (233) (482) (120) (11,338) OPERATING PROFIT 2018 3,131 766 542 2,697 2,249 378 (569) (168) 9,025 2017 3,004 883 498 2,643 2,487 353 (1,213) (51) 8,603 PROFIT BEFORE TAX 2018 1,882 369 448 2,034 1,370 353 (1,638) (1,199) 3,619 2017 1,775 631 445 1,855 2,003 315 (1,743) (1,133) 4,148 Balance sheet CUSTOMERS LOANS(2) as at 31 December, 2018 145,645 84,463 44,971 65,344 80,448 2,805 3,271 6,629 433,576 as at 31 December, 2017 137,437 80,749 44,336 59,966 71,647 1,927 2,729 14,223 413,014 CUSTOMERS DEPOS(2) as at 31 December, 2018 146,260 91,694 47,375 65,744 45,281 22,157 2,985 528 422,024 as at 31 December, 2017 140,935 91,582 46,487 62,406 47,775 20,059 3,634 914 413,791 TOTAL RISK WEIGHTED ASSETS(2) as at 31 December, 2018 94,914 36,062 23,314 86,277 81,040 2,372 34,073 12,129 370,180 as at 31 December, 2017 85,592 33,999 20,963 85,996 75,639 2,332 29,985 21,595 356,100 EVA 2018 9 (44) 173 493 (21) 66 (506) (1,022) (850) 2017 90 153 293 332 497 65 (1,103) (1,084) (757) Cost/income ratio 2018 56.9% 69.0% 65.3% 36.7% 41.0% 39.4% n.m. n.m. 54.2% 2017 59.6% 67.2% 68.5% 36.9% 39.5% 39.8% n.m. n.m. 56.9% Employees as at 31 December, 2018 29,669 9,208 4,873 24,218 3,289 1,125 14,059 345 86,786 as at 31 December, 2017 32,334 10,105 5,092 24,089 3,298 1,082 15,488 464 91,952 Note: (1) COO Services, Corporate Centre Global Functions, inter-segment adjustments and consolidation adjustments not attributable to individual segments. (2) Net of repo and intercompany transactions. Figures were recasted, where necessary, on a like-to-like basis to consider changes in scope of business segment and methodological rules. Summary results by business segments Consolidated report on operations Summary results by business segments UniCredit ·2018 Annual Report and Accounts 39 Key figures by business segment (€ million) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CEE DIVISION CIB FINECO GROUP CORPORATE CENTRE(1) NON CORE CONSOLIDATED GROUP TOTAL Income statement OPERATING INCOME 2018 7,257 2,470 1,563 4,262 3,813 624 (205) (60) 19,723 2017 7,442 2,694 1,583 4,186 4,113 586 (732) 68 19,941 OPERATING COSTS 2018 (4,125) (1,704) (1,022) (1,566) (1,563) (246) (364) (109) (10,698) 2017 (4,438) (1,810) (1,085) (1,543) (1,626) (233) (482) (120) (11,338) OPERATING PROFIT 2018 3,131 766 542 2,697 2,249 378 (569) (168) 9,025 2017 3,004 883 498 2,643 2,487 353 (1,213) (51) 8,603 PROFIT BEFORE TAX 2018 1,882 369 448 2,034 1,370 353 (1,638) (1,199) 3,619 2017 1,775 631 445 1,855 2,003 315 (1,743) (1,133) 4,148 Balance sheet CUSTOMERS LOANS(2) as at 31 December, 2018 145,645 84,463 44,971 65,344 80,448 2,805 3,271 6,629 433,576 as at 31 December, 2017 137,437 80,749 44,336 59,966 71,647 1,927 2,729 14,223 413,014 CUSTOMERS DEPOS(2) as at 31 December, 2018 146,260 91,694 47,375 65,744 45,281 22,157 2,985 528 422,024 as at 31 December, 2017 140,935 91,582 46,487 62,406 47,775 20,059 3,634 914 413,791 TOTAL RISK WEIGHTED ASSETS(2) as at 31 December, 2018 94,914 36,062 23,314 86,277 81,040 2,372 34,073 12,129 370,180 as at 31 December, 2017 85,592 33,999 20,963 85,996 75,639 2,332 29,985 21,595 356,100 EVA 2018 9 (44) 173 493 (21) 66 (506) (1,022) (850) 2017 90 153 293 332 497 65 (1,103) (1,084) (757) Cost/income ratio 2018 56.9% 69.0% 65.3% 36.7% 41.0% 39.4% n.m. n.m. 54.2% 2017 59.6% 67.2% 68.5% 36.9% 39.5% 39.8% n.m. n.m. 56.9% Employees as at 31 December, 2018 29,669 9,208 4,873 24,218 3,289 1,125 14,059 345 86,786 as at 31 December, 2017 32,334 10,105 5,092 24,089 3,298 1,082 15,488 464 91,952 Note: (1) COO Services, Corporate Centre Global Functions, inter-segment adjustments and consolidation adjustments not attributable to individual segments. (2) Net of repo and intercompany transactions. Figures were recasted, where necessary, on a like-to-like basis to consider changes in scope of business segment and methodological rules. Summary results by business segments Consolidated report on operations Summary results by business segments UniCredit ·2018 Annual Report and Accounts 39 Key figures by business segment (€ million) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CEE DIVISION CIB FINECO GROUP CORPORATE CENTRE(1) NON CORE CONSOLIDATED GROUP TOTAL Income statement OPERATING INCOME 2018 7,257 2,470 1,563 4,262 3,813 624 (205) (60) 19,723 2017 7,442 2,694 1,583 4,186 4,113 586 (732) 68 19,941 OPERATING COSTS 2018 (4,125) (1,704) (1,022) (1,566) (1,563) (246) (364) (109) (10,698) 2017 (4,438) (1,810) (1,085) (1,543) (1,626) (233) (482) (120) (11,338) OPERATING PROFIT 2018 3,131 766 542 2,697 2,249 378 (569) (168) 9,025 2017 3,004 883 498 2,643 2,487 353 (1,213) (51) 8,603 PROFIT BEFORE TAX 2018 1,882 369 448 2,034 1,370 353 (1,638) (1,199) 3,619 2017 1,775 631 445 1,855 2,003 315 (1,743) (1,133) 4,148 Balance sheet CUSTOMERS LOANS(2) as at 31 December, 2018 145,645 84,463 44,971 65,344 80,448 2,805 3,271 6,629 433,576 as at 31 December, 2017 137,437 80,749 44,336 59,966 71,647 1,927 2,729 14,223 413,014 CUSTOMERS DEPOS(2) as at 31 December, 2018 146,260 91,694 47,375 65,744 45,281 22,157 2,985 528 422,024 as at 31 December, 2017 140,935 91,582 46,487 62,406 47,775 20,059 3,634 914 413,791 TOTAL RISK WEIGHTED ASSETS(2) as at 31 December, 2018 94,914 36,062 23,314 86,277 81,040 2,372 34,073 12,129 370,180 as at 31 December, 2017 85,592 33,999 20,963 85,996 75,639 2,332 29,985 21,595 356,100 EVA 2018 9 (44) 173 493 (21) 66 (506) (1,022) (850) 2017 90 153 293 332 497 65 (1,103) (1,084) (757) Cost/income ratio 2018 56.9% 69.0% 65.3% 36.7% 41.0% 39.4% n.m. n.m. 54.2% 2017 59.6% 67.2% 68.5% 36.9% 39.5% 39.8% n.m. n.m. 56.9% Employees as at 31 December, 2018 29,669 9,208 4,873 24,218 3,289 1,125 14,059 345 86,786 as at 31 December, 2017 32,334 10,105 5,092 24,089 3,298 1,082 15,488 464 91,952 Note: (1) COO Services, Corporate Centre Global Functions, inter-segment adjustments and consolidation adjustments not attributable to individual segments. (2) Net of repo and intercompany transactions. Figures were recasted, where necessary, on a like-to-like basis to consider changes in scope of business segment and methodological rules. Summary results by business segments Consolidated report on operations Summary results by business segments UniCredit ·2018 Annual Report and Accounts 39 Key figures by business segment (€ million) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CEE DIVISION CIB FINECO GROUP CORPORATE CENTRE(1) NON CORE CONSOLIDATED GROUP TOTAL Income statement OPERATING INCOME 2018 7,257 2,470 1,563 4,262 3,813 624 (205) (60) 19,723 2017 7,442 2,694 1,583 4,186 4,113 586 (732) 68 19,941 OPERATING COSTS 2018 (4,125) (1,704) (1,022) (1,566) (1,563) (246) (364) (109) (10,698) 2017 (4,438) (1,810) (1,085) (1,543) (1,626) (233) (482) (120) (11,338) OPERATING PROFIT 2018 3,131 766 542 2,697 2,249 378 (569) (168) 9,025 2017 3,004 883 498 2,643 2,487 353 (1,213) (51) 8,603 PROFIT BEFORE TAX 2018 1,882 369 448 2,034 1,370 353 (1,638) (1,199) 3,619 2017 1,775 631 445 1,855 2,003 315 (1,743) (1,133) 4,148 Balance sheet CUSTOMERS LOANS(2) as at 31 December, 2018 145,645 84,463 44,971 65,344 80,448 2,805 3,271 6,629 433,576 as at 31 December, 2017 137,437 80,749 44,336 59,966 71,647 1,927 2,729 14,223 413,014 CUSTOMERS DEPOS(2) as at 31 December, 2018 146,260 91,694 47,375 65,744 45,281 22,157 2,985 528 422,024 as at 31 December, 2017 140,935 91,582 46,487 62,406 47,775 20,059 3,634 914 413,791 TOTAL RISK WEIGHTED ASSETS(2) as at 31 December, 2018 94,914 36,062 23,314 86,277 81,040 2,372 34,073 12,129 370,180 as at 31 December, 2017 85,592 33,999 20,963 85,996 75,639 2,332 29,985 21,595 356,100 EVA 2018 9 (44) 173 493 (21) 66 (506) (1,022) (850) 2017 90 153 293 332 497 65 (1,103) (1,084) (757) Cost/income ratio 2018 56.9% 69.0% 65.3% 36.7% 41.0% 39.4% n.m. n.m. 54.2% 2017 59.6% 67.2% 68.5% 36.9% 39.5% 39.8% n.m. n.m. 56.9% Employees as at 31 December, 2018 29,669 9,208 4,873 24,218 3,289 1,125 14,059 345 86,786 as at 31 December, 2017 32,334 10,105 5,092 24,089 3,298 1,082 15,488 464 91,952 Note: (1) COO Services, Corporate Centre Global Functions, inter-segment adjustments and consolidation adjustments not attributable to individual segments. (2) Net of repo and intercompany transactions. Figures were recasted, where necessary, on a like-to-like basis to consider changes in scope of business segment and methodological rules. Summary results by business segments Consolidated report on operations Summary results by business segments UniCredit ·2018 Annual Report and Accounts 39 Key figures by business segment (€ million) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CEE DIVISION CIB FINECO GROUP CORPORATE CENTRE(1) NON CORE CONSOLIDATED GROUP TOTAL Income statement OPERATING INCOME 2018 7,257 2,470 1,563 4,262 3,813 624 (205) (60) 19,723 2017 7,442 2,694 1,583 4,186 4,113 586 (732) 68 19,941 OPERATING COSTS 2018 (4,125) (1,704) (1,022) (1,566) (1,563) (246) (364) (109) (10,698) 2017 (4,438) (1,810) (1,085) (1,543) (1,626) (233) (482) (120) (11,338) OPERATING PROFIT 2018 3,131 766 542 2,697 2,249 378 (569) (168) 9,025 2017 3,004 883 498 2,643 2,487 353 (1,213) (51) 8,603 PROFIT BEFORE TAX 2018 1,882 369 448 2,034 1,370 353 (1,638) (1,199) 3,619 2017 1,775 631 445 1,855 2,003 315 (1,743) (1,133) 4,148 Balance sheet CUSTOMERS LOANS(2) as at 31 December, 2018 145,645 84,463 44,971 65,344 80,448 2,805 3,271 6,629 433,576 as at 31 December, 2017 137,437 80,749 44,336 59,966 71,647 1,927 2,729 14,223 413,014 CUSTOMERS DEPOS(2) as at 31 December, 2018 146,260 91,694 47,375 65,744 45,281 22,157 2,985 528 422,024 as at 31 December, 2017 140,935 91,582 46,487 62,406 47,775 20,059 3,634 914 413,791 TOTAL RISK WEIGHTED ASSETS(2) as at 31 December, 2018 94,914 36,062 23,314 86,277 81,040 2,372 34,073 12,129 370,180 as at 31 December, 2017 85,592 33,999 20,963 85,996 75,639 2,332 29,985 21,595 356,100 EVA 2018 9 (44) 173 493 (21) 66 (506) (1,022) (850) 2017 90 153 293 332 497 65 (1,103) (1,084) (757) Cost/income ratio 2018 56.9% 69.0% 65.3% 36.7% 41.0% 39.4% n.m. n.m. 54.2% 2017 59.6% 67.2% 68.5% 36.9% 39.5% 39.8% n.m. n.m. 56.9% Employees as at 31 December, 2018 29,669 9,208 4,873 24,218 3,289 1,125 14,059 345 86,786 as at 31 December, 2017 32,334 10,105 5,092 24,089 3,298 1,082 15,488 464 91,952 Note: (1) COO Services, Corporate Centre Global Functions, inter-segment adjustments and consolidation adjustments not attributable to individual segments. (2) Net of repo and intercompany transactions. Figures were recasted, where necessary, on a like-to-like basis to consider changes in scope of business segment and methodological rules. Summary results by business segments Consolidated report on operations Group and UniCredit share historical data series 40 2018 Annual Report and Accounts · UniCredit Group figures 2008 – 2018(*) IAS/IFRS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Income Statement (€ million) Operating income 19,723 19,619 18,801 22,405 22,513 23,973 25,049 25,200 26,347 27,572 26,866 Operating costs (10,698) (11,350) (12,453) (13,618) (13,838) (14,801) (14,979) (15,460) (15,483) (15,324) (16,692) Operating profit (loss) 9,025 8,268 6,348 8,787 8,675 9,172 10,070 9,740 10,864 12,248 10,174 Profit (loss) before income tax 3,619 4,148 (10,978) 2,671 4,091 (4,888) 317 2,060 2,517 3,300 5,458 Net profit (loss) for the period 4,112 5,790 (11,061) 2,239 2,669 (3,920) 1,687 644 1,876 2,291 4,831 Net profit (loss) attributable to the Group 3,892 5,473 (11,790) 1,694 2,008 (13,965) 865 (9,206) 1,323 1,702 4,012 Balance Sheet (€ million) Total assets 831,469 836,790 859,533 860,433 844,217 845,838 926,827 926,769 929,488 928,760 1,045,612 Loans and receivables with customers 471,839 447,727 444,607 473,999 470,569 503,142 547,144 559,553 555,653 564,986 612,480 of which: non-performing loans 5,787 9,499 10,945 19,924 19,701 18,058 19,360 18,118 16,344 12,692 10,464 Deposits from customers and debt securities in issue 560,141 561,498 567,855 584,268 560,688 571,024 579,965 561,370 583,239 596,396 591,290 Shareholders’ equity 55,841 59,331 39,336 50,087 49,390 46,841 62,784 51,479 64,224 59,689 54,999 Profitability ratios (%) Operating profit (loss)/Total assets 1.09 0.99 0.74 1.02 1.03 1.08 1.09 1.05 1.17 1.32 0.97 Cost/income ratio 54.2 57.9 66.2 60.8 61.5 61.7 59.8 61.4 58.8 55.6 62.1 (*) The figures shown refer to what was published in the reference year. Group and UniCredit share historical data series 1,04692992992792784684486086083783102004006008001,0001,20020082009201020112012201320142015201620172018Total assets(€billion)Consolidated report on operations Group and UniCredit share historical data series 40 2018 Annual Report and Accounts · UniCredit Group figures 2008 – 2018(*) IAS/IFRS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Income Statement (€ million) Operating income 19,723 19,619 18,801 22,405 22,513 23,973 25,049 25,200 26,347 27,572 26,866 Operating costs (10,698) (11,350) (12,453) (13,618) (13,838) (14,801) (14,979) (15,460) (15,483) (15,324) (16,692) Operating profit (loss) 9,025 8,268 6,348 8,787 8,675 9,172 10,070 9,740 10,864 12,248 10,174 Profit (loss) before income tax 3,619 4,148 (10,978) 2,671 4,091 (4,888) 317 2,060 2,517 3,300 5,458 Net profit (loss) for the period 4,112 5,790 (11,061) 2,239 2,669 (3,920) 1,687 644 1,876 2,291 4,831 Net profit (loss) attributable to the Group 3,892 5,473 (11,790) 1,694 2,008 (13,965) 865 (9,206) 1,323 1,702 4,012 Balance Sheet (€ million) Total assets 831,469 836,790 859,533 860,433 844,217 845,838 926,827 926,769 929,488 928,760 1,045,612 Loans and receivables with customers 471,839 447,727 444,607 473,999 470,569 503,142 547,144 559,553 555,653 564,986 612,480 of which: non-performing loans 5,787 9,499 10,945 19,924 19,701 18,058 19,360 18,118 16,344 12,692 10,464 Deposits from customers and debt securities in issue 560,141 561,498 567,855 584,268 560,688 571,024 579,965 561,370 583,239 596,396 591,290 Shareholders’ equity 55,841 59,331 39,336 50,087 49,390 46,841 62,784 51,479 64,224 59,689 54,999 Profitability ratios (%) Operating profit (loss)/Total assets 1.09 0.99 0.74 1.02 1.03 1.08 1.09 1.05 1.17 1.32 0.97 Cost/income ratio 54.2 57.9 66.2 60.8 61.5 61.7 59.8 61.4 58.8 55.6 62.1 (*) The figures shown refer to what was published in the reference year. Group and UniCredit share historical data series 1,04692992992792784684486086083783102004006008001,0001,20020082009201020112012201320142015201620172018Total assets(€billion)Consolidated report on operations Group and UniCredit share historical data series 40 2018 Annual Report and Accounts · UniCredit Group figures 2008 – 2018(*) IAS/IFRS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Income Statement (€ million) Operating income 19,723 19,619 18,801 22,405 22,513 23,973 25,049 25,200 26,347 27,572 26,866 Operating costs (10,698) (11,350) (12,453) (13,618) (13,838) (14,801) (14,979) (15,460) (15,483) (15,324) (16,692) Operating profit (loss) 9,025 8,268 6,348 8,787 8,675 9,172 10,070 9,740 10,864 12,248 10,174 Profit (loss) before income tax 3,619 4,148 (10,978) 2,671 4,091 (4,888) 317 2,060 2,517 3,300 5,458 Net profit (loss) for the period 4,112 5,790 (11,061) 2,239 2,669 (3,920) 1,687 644 1,876 2,291 4,831 Net profit (loss) attributable to the Group 3,892 5,473 (11,790) 1,694 2,008 (13,965) 865 (9,206) 1,323 1,702 4,012 Balance Sheet (€ million) Total assets 831,469 836,790 859,533 860,433 844,217 845,838 926,827 926,769 929,488 928,760 1,045,612 Loans and receivables with customers 471,839 447,727 444,607 473,999 470,569 503,142 547,144 559,553 555,653 564,986 612,480 of which: non-performing loans 5,787 9,499 10,945 19,924 19,701 18,058 19,360 18,118 16,344 12,692 10,464 Deposits from customers and debt securities in issue 560,141 561,498 567,855 584,268 560,688 571,024 579,965 561,370 583,239 596,396 591,290 Shareholders’ equity 55,841 59,331 39,336 50,087 49,390 46,841 62,784 51,479 64,224 59,689 54,999 Profitability ratios (%) Operating profit (loss)/Total assets 1.09 0.99 0.74 1.02 1.03 1.08 1.09 1.05 1.17 1.32 0.97 Cost/income ratio 54.2 57.9 66.2 60.8 61.5 61.7 59.8 61.4 58.8 55.6 62.1 (*) The figures shown refer to what was published in the reference year. Group and UniCredit share historical data series 1,04692992992792784684486086083783102004006008001,0001,20020082009201020112012201320142015201620172018Total assets(€billion)Consolidated report on operations Group and UniCredit share historical data series 40 2018 Annual Report and Accounts · UniCredit Group figures 2008 – 2018(*) IAS/IFRS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Income Statement (€ million) Operating income 19,723 19,619 18,801 22,405 22,513 23,973 25,049 25,200 26,347 27,572 26,866 Operating costs (10,698) (11,350) (12,453) (13,618) (13,838) (14,801) (14,979) (15,460) (15,483) (15,324) (16,692) Operating profit (loss) 9,025 8,268 6,348 8,787 8,675 9,172 10,070 9,740 10,864 12,248 10,174 Profit (loss) before income tax 3,619 4,148 (10,978) 2,671 4,091 (4,888) 317 2,060 2,517 3,300 5,458 Net profit (loss) for the period 4,112 5,790 (11,061) 2,239 2,669 (3,920) 1,687 644 1,876 2,291 4,831 Net profit (loss) attributable to the Group 3,892 5,473 (11,790) 1,694 2,008 (13,965) 865 (9,206) 1,323 1,702 4,012 Balance Sheet (€ million) Total assets 831,469 836,790 859,533 860,433 844,217 845,838 926,827 926,769 929,488 928,760 1,045,612 Loans and receivables with customers 471,839 447,727 444,607 473,999 470,569 503,142 547,144 559,553 555,653 564,986 612,480 of which: non-performing loans 5,787 9,499 10,945 19,924 19,701 18,058 19,360 18,118 16,344 12,692 10,464 Deposits from customers and debt securities in issue 560,141 561,498 567,855 584,268 560,688 571,024 579,965 561,370 583,239 596,396 591,290 Shareholders’ equity 55,841 59,331 39,336 50,087 49,390 46,841 62,784 51,479 64,224 59,689 54,999 Profitability ratios (%) Operating profit (loss)/Total assets 1.09 0.99 0.74 1.02 1.03 1.08 1.09 1.05 1.17 1.32 0.97 Cost/income ratio 54.2 57.9 66.2 60.8 61.5 61.7 59.8 61.4 58.8 55.6 62.1 (*) The figures shown refer to what was published in the reference year. Group and UniCredit share historical data series 1,04692992992792784684486086083783102004006008001,0001,20020082009201020112012201320142015201620172018Total assets(€billion)Consolidated report on operations Group and UniCredit share historical data series 40 2018 Annual Report and Accounts · UniCredit Group figures 2008 – 2018(*) IAS/IFRS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Income Statement (€ million) Operating income 19,723 19,619 18,801 22,405 22,513 23,973 25,049 25,200 26,347 27,572 26,866 Operating costs (10,698) (11,350) (12,453) (13,618) (13,838) (14,801) (14,979) (15,460) (15,483) (15,324) (16,692) Operating profit (loss) 9,025 8,268 6,348 8,787 8,675 9,172 10,070 9,740 10,864 12,248 10,174 Profit (loss) before income tax 3,619 4,148 (10,978) 2,671 4,091 (4,888) 317 2,060 2,517 3,300 5,458 Net profit (loss) for the period 4,112 5,790 (11,061) 2,239 2,669 (3,920) 1,687 644 1,876 2,291 4,831 Net profit (loss) attributable to the Group 3,892 5,473 (11,790) 1,694 2,008 (13,965) 865 (9,206) 1,323 1,702 4,012 Balance Sheet (€ million) Total assets 831,469 836,790 859,533 860,433 844,217 845,838 926,827 926,769 929,488 928,760 1,045,612 Loans and receivables with customers 471,839 447,727 444,607 473,999 470,569 503,142 547,144 559,553 555,653 564,986 612,480 of which: non-performing loans 5,787 9,499 10,945 19,924 19,701 18,058 19,360 18,118 16,344 12,692 10,464 Deposits from customers and debt securities in issue 560,141 561,498 567,855 584,268 560,688 571,024 579,965 561,370 583,239 596,396 591,290 Shareholders’ equity 55,841 59,331 39,336 50,087 49,390 46,841 62,784 51,479 64,224 59,689 54,999 Profitability ratios (%) Operating profit (loss)/Total assets 1.09 0.99 0.74 1.02 1.03 1.08 1.09 1.05 1.17 1.32 0.97 Cost/income ratio 54.2 57.9 66.2 60.8 61.5 61.7 59.8 61.4 58.8 55.6 62.1 (*) The figures shown refer to what was published in the reference year. Group and UniCredit share historical data series 1,04692992992792784684486086083783102004006008001,0001,20020082009201020112012201320142015201620172018Total assets(€billion)Consolidated report on operations Group and UniCredit share historical data series UniCredit ·2018 Annual Report and Accounts 41 Share information 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Share price (€)(*) - maximum 18.212 18.350 25.733 32.824 34.427 28.213 22.440 65.912 76.243 87.212 151.942 - minimum 9.596 12.160 8.785 24.605 25.583 16.227 11.456 21.157 49.212 19.283 40.138 - average 14.635 15.801 13.820 29.509 30.015 22.067 16.520 42.923 63.702 59.078 99.949 - end of period 9.894 15.580 13.701 25.733 26.735 26.961 18.572 21.190 51.093 73.819 46.507 Number of outstanding shares (million) - at period end(1) 2,230 2,226 618 5,970 5,866 5,792 5,789 1,930 19,297.6 16,779.3 13,368.1 - shares cum dividend 2,220 2,216 608 5,873 5,769 5,695 5,693 1,833 18,330.5 18,329.5 13,372.7 of which: savings shares - 0.25 0.25 2.48 2.45 2.42 2.42 2.42 24.2 24.2 21.7 - average(1) 2,229 1,957 611 5,927 5,837 5,791 5,473 1,930 19,101.8 16,637.8 13,204.6 Dividend - total dividends (€ million) - 726 - 706 697 570 512 (***) 550 550 (**) - dividend per ordinary share - 0.320 - 0.120 0.120 0.100 0.090 (***) 0.030 0.030 (**) - dividend per savings share - - - 0.120 1.065 0.100 0.090 (***) 0.045 0.045 (**) Notes: (1) The number of shares is net of Treasury shares and includes 9.676 million of shares held under a usufruct contract signed with Mediobanca S.p.A. (*) Following extraordinary corporate operations, which involve the detachment of rights, stock splitting or grouping, demerger operations and distribution of extraordinary dividends, the price of the shares can fluctuate so much that they are no longer comparable. Thus, the time series hereby published are adjusted accordingly to restore the continuity of historical price series. (**) 2008 dividend was paid with cash to savings shareholders (€0.025 per share, for a total amount of €0.5 million), and with newly issued shares (so-called "scrip dividend"). (***) As per Banca d’Italia’s paper dated 2 March 2012, in keeping with the decision of UniCredit S.p.A.’s Board of Directors and in line with the intention announced to the Shareholders’ Meeting in 2012, UniCredit S.p.A. did not pay any dividends with respect to its 2011 financial results. In 2011 the following operations were carried out: • the €2.5 billion free capital increase, through the allocation to capital of an equivalent amount transferred from the “Issue-premium reserve”; • the reverse stock split of ordinary and savings shares based on a ratio of 1 new ordinary or savings share for every 10 existing ordinary or savings shares; • the elimination of the per-share nominal value of UniCredit shares. In the first quarter of 2012 the capital increase of €7.5 billion equal to a number of shares issued of 3,859.602.938 was fully subscribed for. Figures relating to the 2013 dividend are shown according to the specific Board of Directors’ reports on the distribution to Shareholders. The Shareholders’ Meeting of 13 May 2014 approved a scrip dividend scheme under which the holders of ordinary shares and the holders of savings shares will be allocated one new share for every sixty shares held and one new share for every eighty-four shares held, respectively. The new shares were allocated through a free share capital increase, without prejudice to the shareholders’ right to opt for a cash payout (€0.10 for each ordinary and savings share) in lieu of the allocation of the new shares. The Shareholders' Meeting of the 13 May 2015, approved the payment of dividends in the form of a "scrip dividend", with the assignment to shareholders who hold ordinary shares of one new share per fifty shares held, and to holders of savings shares one new share per seventy-two shares held. The assignment of the new shares occurred following a free share-capital increase, without affecting the shareholders' right to request payment of the dividend in cash (€0.12 per ordinary and savings share), in place of assignment of shares. The Shareholders' Meeting also approved the partial distribution of 2014 and previous year profits, with payment of €0.945 per savings share, as preferred dividend. The Shareholders' Meeting of the14 April 2016, approved the payment of dividends in the form of a "scrip dividend", with the assignment to shareholders who hold ordinary shares of one new share per twenty-three shares held, and to holders of savings shares one new share per fifty-four shares held. The assignment of the new shares occurred following a free share-capital increase, without affecting the shareholders' right to request payment of the dividend in cash (€0.12 per ordinary and savings share), in place of assignment of shares. In 2017 the following operations were carried out: • the reverse stock split of ordinary and savings shares based on a ratio of 1 new ordinary or savings share for every 10 existing ordinary or savings shares; • the €13,000 million fully subscribed capital increase, of which €16 million as share capital and €12,984 as share premium, through the issuance of No.1,606,876,817 new ordinary shares. Consolidated report on operations Group and UniCredit share historical data series UniCredit ·2018 Annual Report and Accounts 41 Share information 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Share price (€)(*) - maximum 18.212 18.350 25.733 32.824 34.427 28.213 22.440 65.912 76.243 87.212 151.942 - minimum 9.596 12.160 8.785 24.605 25.583 16.227 11.456 21.157 49.212 19.283 40.138 - average 14.635 15.801 13.820 29.509 30.015 22.067 16.520 42.923 63.702 59.078 99.949 - end of period 9.894 15.580 13.701 25.733 26.735 26.961 18.572 21.190 51.093 73.819 46.507 Number of outstanding shares (million) - at period end(1) 2,230 2,226 618 5,970 5,866 5,792 5,789 1,930 19,297.6 16,779.3 13,368.1 - shares cum dividend 2,220 2,216 608 5,873 5,769 5,695 5,693 1,833 18,330.5 18,329.5 13,372.7 of which: savings shares - 0.25 0.25 2.48 2.45 2.42 2.42 2.42 24.2 24.2 21.7 - average(1) 2,229 1,957 611 5,927 5,837 5,791 5,473 1,930 19,101.8 16,637.8 13,204.6 Dividend - total dividends (€ million) - 726 - 706 697 570 512 (***) 550 550 (**) - dividend per ordinary share - 0.320 - 0.120 0.120 0.100 0.090 (***) 0.030 0.030 (**) - dividend per savings share - - - 0.120 1.065 0.100 0.090 (***) 0.045 0.045 (**) Notes: (1) The number of shares is net of Treasury shares and includes 9.676 million of shares held under a usufruct contract signed with Mediobanca S.p.A. (*) Following extraordinary corporate operations, which involve the detachment of rights, stock splitting or grouping, demerger operations and distribution of extraordinary dividends, the price of the shares can fluctuate so much that they are no longer comparable. Thus, the time series hereby published are adjusted accordingly to restore the continuity of historical price series. (**) 2008 dividend was paid with cash to savings shareholders (€0.025 per share, for a total amount of €0.5 million), and with newly issued shares (so-called "scrip dividend"). (***) As per Banca d’Italia’s paper dated 2 March 2012, in keeping with the decision of UniCredit S.p.A.’s Board of Directors and in line with the intention announced to the Shareholders’ Meeting in 2012, UniCredit S.p.A. did not pay any dividends with respect to its 2011 financial results. In 2011 the following operations were carried out: • the €2.5 billion free capital increase, through the allocation to capital of an equivalent amount transferred from the “Issue-premium reserve”; • the reverse stock split of ordinary and savings shares based on a ratio of 1 new ordinary or savings share for every 10 existing ordinary or savings shares; • the elimination of the per-share nominal value of UniCredit shares. In the first quarter of 2012 the capital increase of €7.5 billion equal to a number of shares issued of 3,859.602.938 was fully subscribed for. Figures relating to the 2013 dividend are shown according to the specific Board of Directors’ reports on the distribution to Shareholders. The Shareholders’ Meeting of 13 May 2014 approved a scrip dividend scheme under which the holders of ordinary shares and the holders of savings shares will be allocated one new share for every sixty shares held and one new share for every eighty-four shares held, respectively. The new shares were allocated through a free share capital increase, without prejudice to the shareholders’ right to opt for a cash payout (€0.10 for each ordinary and savings share) in lieu of the allocation of the new shares. The Shareholders' Meeting of the 13 May 2015, approved the payment of dividends in the form of a "scrip dividend", with the assignment to shareholders who hold ordinary shares of one new share per fifty shares held, and to holders of savings shares one new share per seventy-two shares held. The assignment of the new shares occurred following a free share-capital increase, without affecting the shareholders' right to request payment of the dividend in cash (€0.12 per ordinary and savings share), in place of assignment of shares. The Shareholders' Meeting also approved the partial distribution of 2014 and previous year profits, with payment of €0.945 per savings share, as preferred dividend. The Shareholders' Meeting of the14 April 2016, approved the payment of dividends in the form of a "scrip dividend", with the assignment to shareholders who hold ordinary shares of one new share per twenty-three shares held, and to holders of savings shares one new share per fifty-four shares held. The assignment of the new shares occurred following a free share-capital increase, without affecting the shareholders' right to request payment of the dividend in cash (€0.12 per ordinary and savings share), in place of assignment of shares. In 2017 the following operations were carried out: • the reverse stock split of ordinary and savings shares based on a ratio of 1 new ordinary or savings share for every 10 existing ordinary or savings shares; • the €13,000 million fully subscribed capital increase, of which €16 million as share capital and €12,984 as share premium, through the issuance of No.1,606,876,817 new ordinary shares. Consolidated report on operations Group and UniCredit share historical data series UniCredit ·2018 Annual Report and Accounts 41 Share information 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Share price (€)(*) - maximum 18.212 18.350 25.733 32.824 34.427 28.213 22.440 65.912 76.243 87.212 151.942 - minimum 9.596 12.160 8.785 24.605 25.583 16.227 11.456 21.157 49.212 19.283 40.138 - average 14.635 15.801 13.820 29.509 30.015 22.067 16.520 42.923 63.702 59.078 99.949 - end of period 9.894 15.580 13.701 25.733 26.735 26.961 18.572 21.190 51.093 73.819 46.507 Number of outstanding shares (million) - at period end(1) 2,230 2,226 618 5,970 5,866 5,792 5,789 1,930 19,297.6 16,779.3 13,368.1 - shares cum dividend 2,220 2,216 608 5,873 5,769 5,695 5,693 1,833 18,330.5 18,329.5 13,372.7 of which: savings shares - 0.25 0.25 2.48 2.45 2.42 2.42 2.42 24.2 24.2 21.7 - average(1) 2,229 1,957 611 5,927 5,837 5,791 5,473 1,930 19,101.8 16,637.8 13,204.6 Dividend - total dividends (€ million) - 726 - 706 697 570 512 (***) 550 550 (**) - dividend per ordinary share - 0.320 - 0.120 0.120 0.100 0.090 (***) 0.030 0.030 (**) - dividend per savings share - - - 0.120 1.065 0.100 0.090 (***) 0.045 0.045 (**) Notes: (1) The number of shares is net of Treasury shares and includes 9.676 million of shares held under a usufruct contract signed with Mediobanca S.p.A. (*) Following extraordinary corporate operations, which involve the detachment of rights, stock splitting or grouping, demerger operations and distribution of extraordinary dividends, the price of the shares can fluctuate so much that they are no longer comparable. Thus, the time series hereby published are adjusted accordingly to restore the continuity of historical price series. (**) 2008 dividend was paid with cash to savings shareholders (€0.025 per share, for a total amount of €0.5 million), and with newly issued shares (so-called "scrip dividend"). (***) As per Banca d’Italia’s paper dated 2 March 2012, in keeping with the decision of UniCredit S.p.A.’s Board of Directors and in line with the intention announced to the Shareholders’ Meeting in 2012, UniCredit S.p.A. did not pay any dividends with respect to its 2011 financial results. In 2011 the following operations were carried out: • the €2.5 billion free capital increase, through the allocation to capital of an equivalent amount transferred from the “Issue-premium reserve”; • the reverse stock split of ordinary and savings shares based on a ratio of 1 new ordinary or savings share for every 10 existing ordinary or savings shares; • the elimination of the per-share nominal value of UniCredit shares. In the first quarter of 2012 the capital increase of €7.5 billion equal to a number of shares issued of 3,859.602.938 was fully subscribed for. Figures relating to the 2013 dividend are shown according to the specific Board of Directors’ reports on the distribution to Shareholders. The Shareholders’ Meeting of 13 May 2014 approved a scrip dividend scheme under which the holders of ordinary shares and the holders of savings shares will be allocated one new share for every sixty shares held and one new share for every eighty-four shares held, respectively. The new shares were allocated through a free share capital increase, without prejudice to the shareholders’ right to opt for a cash payout (€0.10 for each ordinary and savings share) in lieu of the allocation of the new shares. The Shareholders' Meeting of the 13 May 2015, approved the payment of dividends in the form of a "scrip dividend", with the assignment to shareholders who hold ordinary shares of one new share per fifty shares held, and to holders of savings shares one new share per seventy-two shares held. The assignment of the new shares occurred following a free share-capital increase, without affecting the shareholders' right to request payment of the dividend in cash (€0.12 per ordinary and savings share), in place of assignment of shares. The Shareholders' Meeting also approved the partial distribution of 2014 and previous year profits, with payment of €0.945 per savings share, as preferred dividend. The Shareholders' Meeting of the14 April 2016, approved the payment of dividends in the form of a "scrip dividend", with the assignment to shareholders who hold ordinary shares of one new share per twenty-three shares held, and to holders of savings shares one new share per fifty-four shares held. The assignment of the new shares occurred following a free share-capital increase, without affecting the shareholders' right to request payment of the dividend in cash (€0.12 per ordinary and savings share), in place of assignment of shares. In 2017 the following operations were carried out: • the reverse stock split of ordinary and savings shares based on a ratio of 1 new ordinary or savings share for every 10 existing ordinary or savings shares; • the €13,000 million fully subscribed capital increase, of which €16 million as share capital and €12,984 as share premium, through the issuance of No.1,606,876,817 new ordinary shares. Consolidated report on operations Group and UniCredit share historical data series UniCredit ·2018 Annual Report and Accounts 41 Share information 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Share price (€)(*) - maximum 18.212 18.350 25.733 32.824 34.427 28.213 22.440 65.912 76.243 87.212 151.942 - minimum 9.596 12.160 8.785 24.605 25.583 16.227 11.456 21.157 49.212 19.283 40.138 - average 14.635 15.801 13.820 29.509 30.015 22.067 16.520 42.923 63.702 59.078 99.949 - end of period 9.894 15.580 13.701 25.733 26.735 26.961 18.572 21.190 51.093 73.819 46.507 Number of outstanding shares (million) - at period end(1) 2,230 2,226 618 5,970 5,866 5,792 5,789 1,930 19,297.6 16,779.3 13,368.1 - shares cum dividend 2,220 2,216 608 5,873 5,769 5,695 5,693 1,833 18,330.5 18,329.5 13,372.7 of which: savings shares - 0.25 0.25 2.48 2.45 2.42 2.42 2.42 24.2 24.2 21.7 - average(1) 2,229 1,957 611 5,927 5,837 5,791 5,473 1,930 19,101.8 16,637.8 13,204.6 Dividend - total dividends (€ million) - 726 - 706 697 570 512 (***) 550 550 (**) - dividend per ordinary share - 0.320 - 0.120 0.120 0.100 0.090 (***) 0.030 0.030 (**) - dividend per savings share - - - 0.120 1.065 0.100 0.090 (***) 0.045 0.045 (**) Notes: (1) The number of shares is net of Treasury shares and includes 9.676 million of shares held under a usufruct contract signed with Mediobanca S.p.A. (*) Following extraordinary corporate operations, which involve the detachment of rights, stock splitting or grouping, demerger operations and distribution of extraordinary dividends, the price of the shares can fluctuate so much that they are no longer comparable. Thus, the time series hereby published are adjusted accordingly to restore the continuity of historical price series. (**) 2008 dividend was paid with cash to savings shareholders (€0.025 per share, for a total amount of €0.5 million), and with newly issued shares (so-called "scrip dividend"). (***) As per Banca d’Italia’s paper dated 2 March 2012, in keeping with the decision of UniCredit S.p.A.’s Board of Directors and in line with the intention announced to the Shareholders’ Meeting in 2012, UniCredit S.p.A. did not pay any dividends with respect to its 2011 financial results. In 2011 the following operations were carried out: • the €2.5 billion free capital increase, through the allocation to capital of an equivalent amount transferred from the “Issue-premium reserve”; • the reverse stock split of ordinary and savings shares based on a ratio of 1 new ordinary or savings share for every 10 existing ordinary or savings shares; • the elimination of the per-share nominal value of UniCredit shares. In the first quarter of 2012 the capital increase of €7.5 billion equal to a number of shares issued of 3,859.602.938 was fully subscribed for. Figures relating to the 2013 dividend are shown according to the specific Board of Directors’ reports on the distribution to Shareholders. The Shareholders’ Meeting of 13 May 2014 approved a scrip dividend scheme under which the holders of ordinary shares and the holders of savings shares will be allocated one new share for every sixty shares held and one new share for every eighty-four shares held, respectively. The new shares were allocated through a free share capital increase, without prejudice to the shareholders’ right to opt for a cash payout (€0.10 for each ordinary and savings share) in lieu of the allocation of the new shares. The Shareholders' Meeting of the 13 May 2015, approved the payment of dividends in the form of a "scrip dividend", with the assignment to shareholders who hold ordinary shares of one new share per fifty shares held, and to holders of savings shares one new share per seventy-two shares held. The assignment of the new shares occurred following a free share-capital increase, without affecting the shareholders' right to request payment of the dividend in cash (€0.12 per ordinary and savings share), in place of assignment of shares. The Shareholders' Meeting also approved the partial distribution of 2014 and previous year profits, with payment of €0.945 per savings share, as preferred dividend. The Shareholders' Meeting of the14 April 2016, approved the payment of dividends in the form of a "scrip dividend", with the assignment to shareholders who hold ordinary shares of one new share per twenty-three shares held, and to holders of savings shares one new share per fifty-four shares held. The assignment of the new shares occurred following a free share-capital increase, without affecting the shareholders' right to request payment of the dividend in cash (€0.12 per ordinary and savings share), in place of assignment of shares. In 2017 the following operations were carried out: • the reverse stock split of ordinary and savings shares based on a ratio of 1 new ordinary or savings share for every 10 existing ordinary or savings shares; • the €13,000 million fully subscribed capital increase, of which €16 million as share capital and €12,984 as share premium, through the issuance of No.1,606,876,817 new ordinary shares. Consolidated report on operations Group and UniCredit share historical data series UniCredit ·2018 Annual Report and Accounts 41 Share information 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Share price (€)(*) - maximum 18.212 18.350 25.733 32.824 34.427 28.213 22.440 65.912 76.243 87.212 151.942 - minimum 9.596 12.160 8.785 24.605 25.583 16.227 11.456 21.157 49.212 19.283 40.138 - average 14.635 15.801 13.820 29.509 30.015 22.067 16.520 42.923 63.702 59.078 99.949 - end of period 9.894 15.580 13.701 25.733 26.735 26.961 18.572 21.190 51.093 73.819 46.507 Number of outstanding shares (million) - at period end(1) 2,230 2,226 618 5,970 5,866 5,792 5,789 1,930 19,297.6 16,779.3 13,368.1 - shares cum dividend 2,220 2,216 608 5,873 5,769 5,695 5,693 1,833 18,330.5 18,329.5 13,372.7 of which: savings shares - 0.25 0.25 2.48 2.45 2.42 2.42 2.42 24.2 24.2 21.7 - average(1) 2,229 1,957 611 5,927 5,837 5,791 5,473 1,930 19,101.8 16,637.8 13,204.6 Dividend - total dividends (€ million) - 726 - 706 697 570 512 (***) 550 550 (**) - dividend per ordinary share - 0.320 - 0.120 0.120 0.100 0.090 (***) 0.030 0.030 (**) - dividend per savings share - - - 0.120 1.065 0.100 0.090 (***) 0.045 0.045 (**) Notes: (1) The number of shares is net of Treasury shares and includes 9.676 million of shares held under a usufruct contract signed with Mediobanca S.p.A. (*) Following extraordinary corporate operations, which involve the detachment of rights, stock splitting or grouping, demerger operations and distribution of extraordinary dividends, the price of the shares can fluctuate so much that they are no longer comparable. Thus, the time series hereby published are adjusted accordingly to restore the continuity of historical price series. (**) 2008 dividend was paid with cash to savings shareholders (€0.025 per share, for a total amount of €0.5 million), and with newly issued shares (so-called "scrip dividend"). (***) As per Banca d’Italia’s paper dated 2 March 2012, in keeping with the decision of UniCredit S.p.A.’s Board of Directors and in line with the intention announced to the Shareholders’ Meeting in 2012, UniCredit S.p.A. did not pay any dividends with respect to its 2011 financial results. In 2011 the following operations were carried out: • the €2.5 billion free capital increase, through the allocation to capital of an equivalent amount transferred from the “Issue-premium reserve”; • the reverse stock split of ordinary and savings shares based on a ratio of 1 new ordinary or savings share for every 10 existing ordinary or savings shares; • the elimination of the per-share nominal value of UniCredit shares. In the first quarter of 2012 the capital increase of €7.5 billion equal to a number of shares issued of 3,859.602.938 was fully subscribed for. Figures relating to the 2013 dividend are shown according to the specific Board of Directors’ reports on the distribution to Shareholders. The Shareholders’ Meeting of 13 May 2014 approved a scrip dividend scheme under which the holders of ordinary shares and the holders of savings shares will be allocated one new share for every sixty shares held and one new share for every eighty-four shares held, respectively. The new shares were allocated through a free share capital increase, without prejudice to the shareholders’ right to opt for a cash payout (€0.10 for each ordinary and savings share) in lieu of the allocation of the new shares. The Shareholders' Meeting of the 13 May 2015, approved the payment of dividends in the form of a "scrip dividend", with the assignment to shareholders who hold ordinary shares of one new share per fifty shares held, and to holders of savings shares one new share per seventy-two shares held. The assignment of the new shares occurred following a free share-capital increase, without affecting the shareholders' right to request payment of the dividend in cash (€0.12 per ordinary and savings share), in place of assignment of shares. The Shareholders' Meeting also approved the partial distribution of 2014 and previous year profits, with payment of €0.945 per savings share, as preferred dividend. The Shareholders' Meeting of the14 April 2016, approved the payment of dividends in the form of a "scrip dividend", with the assignment to shareholders who hold ordinary shares of one new share per twenty-three shares held, and to holders of savings shares one new share per fifty-four shares held. The assignment of the new shares occurred following a free share-capital increase, without affecting the shareholders' right to request payment of the dividend in cash (€0.12 per ordinary and savings share), in place of assignment of shares. In 2017 the following operations were carried out: • the reverse stock split of ordinary and savings shares based on a ratio of 1 new ordinary or savings share for every 10 existing ordinary or savings shares; • the €13,000 million fully subscribed capital increase, of which €16 million as share capital and €12,984 as share premium, through the issuance of No.1,606,876,817 new ordinary shares. Consolidated report on operations Group and UniCredit share historical data series 42 2018 Annual Report and Accounts · UniCredit Shareholders' Meeting held on 4 December 2017 resolved mandatory conversion of the existing No.252,489 savings shares into ordinary shares with a conversion ratio of No.3.82 ordinary shares each 1 savings share subject to the conversion, assigning newly issued shares and/or treasury shares and in any case without variation of the share capital value. The conversion became effective at the end of the period for exercising the withdrawal rights on 12 March 2018. The Shareholders’ Meeting of 12 April 2018 approved the payment of dividends to the holders of ordinary shares a dividend of €0.32 for each share outstanding and entitled to dividend at payment date, for a maximum amount of €726 million, from allocation of 2017 net profit. Earnings ratios IAS/IFRS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Shareholders' equity (€ million) 55,841 59,331 39,336 50,087 49,390 46,841 62,784 51,479 64,224 59,689 54,999 Group portion of net profit (loss) (€ million) 3,892 5,473 (11,790) 1,694 2,008 (13,965) 865 (9,206) 1,323 1,702 4,012 Shareholders' equity per share (€) 25.04 26.65 6.36 8.39 8.42 8.09 10.85 26.67 3.33 3.56 4.11 Price/Book value 0.40 0.58 4.30 0.61 0.63 0.67 0.34 0.16 3.06 4.14 2.37 Earnings per share(1) (€) 1.712 2.794 (1.982) 0.27 0.34 (2.47) 0.15 (5.12) 0.06 0.10 0.30 Payout ratio (%) - 13.3 - 41.7 34.7 -4.1 59.2 - 41.6 32.3 (*) Dividend yield on average price per ordinary share (%) - 2.03 - 2.04 2.00 2.27 2.73 - 1.55 1.58 (*) Note: (1) For further details refer to Part C - Section 25 Earnings per share. (*) 2008 dividend was paid with cash to savings shareholders (€0,025 per share, for a total amount of €0.5 million), and with newly issued shares (so-called “scrip dividend”). The amounts in the table are "historical figures" and they should be read with reference to each single period. The 2008 Earnings per share (EPS) figure published in the consolidated report as at 31 December 2008 was €0.30 and has been amended to €0.26 due to the increase in the number of shares following the capital increase (IAS33 paragraph 28). From 2009 net profit for the period used to calculate EPS has been reduced for the following amounts related to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes”: €131 million for 2009, €156 million for 2010, €172 million for 2011, €46 million for 2012, €105 million for 2013, €35 million for 2014, €100 million for 2015, €128 million for 2016, €32 million for 2017 and €93 million for 2018. 0.300.100.06-5.120.15-2.470.340.27-1.982.7941.712-6.00-4.00-2.000.002.004.0020082009201020112012201320142015201620172018Earnings per share(€)Consolidated report on operations Group and UniCredit share historical data series 42 2018 Annual Report and Accounts · UniCredit Shareholders' Meeting held on 4 December 2017 resolved mandatory conversion of the existing No.252,489 savings shares into ordinary shares with a conversion ratio of No.3.82 ordinary shares each 1 savings share subject to the conversion, assigning newly issued shares and/or treasury shares and in any case without variation of the share capital value. The conversion became effective at the end of the period for exercising the withdrawal rights on 12 March 2018. The Shareholders’ Meeting of 12 April 2018 approved the payment of dividends to the holders of ordinary shares a dividend of €0.32 for each share outstanding and entitled to dividend at payment date, for a maximum amount of €726 million, from allocation of 2017 net profit. Earnings ratios IAS/IFRS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Shareholders' equity (€ million) 55,841 59,331 39,336 50,087 49,390 46,841 62,784 51,479 64,224 59,689 54,999 Group portion of net profit (loss) (€ million) 3,892 5,473 (11,790) 1,694 2,008 (13,965) 865 (9,206) 1,323 1,702 4,012 Shareholders' equity per share (€) 25.04 26.65 6.36 8.39 8.42 8.09 10.85 26.67 3.33 3.56 4.11 Price/Book value 0.40 0.58 4.30 0.61 0.63 0.67 0.34 0.16 3.06 4.14 2.37 Earnings per share(1) (€) 1.712 2.794 (1.982) 0.27 0.34 (2.47) 0.15 (5.12) 0.06 0.10 0.30 Payout ratio (%) - 13.3 - 41.7 34.7 -4.1 59.2 - 41.6 32.3 (*) Dividend yield on average price per ordinary share (%) - 2.03 - 2.04 2.00 2.27 2.73 - 1.55 1.58 (*) Note: (1) For further details refer to Part C - Section 25 Earnings per share. (*) 2008 dividend was paid with cash to savings shareholders (€0,025 per share, for a total amount of €0.5 million), and with newly issued shares (so-called “scrip dividend”). The amounts in the table are "historical figures" and they should be read with reference to each single period. The 2008 Earnings per share (EPS) figure published in the consolidated report as at 31 December 2008 was €0.30 and has been amended to €0.26 due to the increase in the number of shares following the capital increase (IAS33 paragraph 28). From 2009 net profit for the period used to calculate EPS has been reduced for the following amounts related to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes”: €131 million for 2009, €156 million for 2010, €172 million for 2011, €46 million for 2012, €105 million for 2013, €35 million for 2014, €100 million for 2015, €128 million for 2016, €32 million for 2017 and €93 million for 2018. 0.300.100.06-5.120.15-2.470.340.27-1.982.7941.712-6.00-4.00-2.000.002.004.0020082009201020112012201320142015201620172018Earnings per share(€)Consolidated report on operations Group and UniCredit share historical data series 42 2018 Annual Report and Accounts · UniCredit Shareholders' Meeting held on 4 December 2017 resolved mandatory conversion of the existing No.252,489 savings shares into ordinary shares with a conversion ratio of No.3.82 ordinary shares each 1 savings share subject to the conversion, assigning newly issued shares and/or treasury shares and in any case without variation of the share capital value. The conversion became effective at the end of the period for exercising the withdrawal rights on 12 March 2018. The Shareholders’ Meeting of 12 April 2018 approved the payment of dividends to the holders of ordinary shares a dividend of €0.32 for each share outstanding and entitled to dividend at payment date, for a maximum amount of €726 million, from allocation of 2017 net profit. Earnings ratios IAS/IFRS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Shareholders' equity (€ million) 55,841 59,331 39,336 50,087 49,390 46,841 62,784 51,479 64,224 59,689 54,999 Group portion of net profit (loss) (€ million) 3,892 5,473 (11,790) 1,694 2,008 (13,965) 865 (9,206) 1,323 1,702 4,012 Shareholders' equity per share (€) 25.04 26.65 6.36 8.39 8.42 8.09 10.85 26.67 3.33 3.56 4.11 Price/Book value 0.40 0.58 4.30 0.61 0.63 0.67 0.34 0.16 3.06 4.14 2.37 Earnings per share(1) (€) 1.712 2.794 (1.982) 0.27 0.34 (2.47) 0.15 (5.12) 0.06 0.10 0.30 Payout ratio (%) - 13.3 - 41.7 34.7 -4.1 59.2 - 41.6 32.3 (*) Dividend yield on average price per ordinary share (%) - 2.03 - 2.04 2.00 2.27 2.73 - 1.55 1.58 (*) Note: (1) For further details refer to Part C - Section 25 Earnings per share. (*) 2008 dividend was paid with cash to savings shareholders (€0,025 per share, for a total amount of €0.5 million), and with newly issued shares (so-called “scrip dividend”). The amounts in the table are "historical figures" and they should be read with reference to each single period. The 2008 Earnings per share (EPS) figure published in the consolidated report as at 31 December 2008 was €0.30 and has been amended to €0.26 due to the increase in the number of shares following the capital increase (IAS33 paragraph 28). From 2009 net profit for the period used to calculate EPS has been reduced for the following amounts related to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes”: €131 million for 2009, €156 million for 2010, €172 million for 2011, €46 million for 2012, €105 million for 2013, €35 million for 2014, €100 million for 2015, €128 million for 2016, €32 million for 2017 and €93 million for 2018. 0.300.100.06-5.120.15-2.470.340.27-1.982.7941.712-6.00-4.00-2.000.002.004.0020082009201020112012201320142015201620172018Earnings per share(€)Consolidated report on operations Group and UniCredit share historical data series 42 2018 Annual Report and Accounts · UniCredit Shareholders' Meeting held on 4 December 2017 resolved mandatory conversion of the existing No.252,489 savings shares into ordinary shares with a conversion ratio of No.3.82 ordinary shares each 1 savings share subject to the conversion, assigning newly issued shares and/or treasury shares and in any case without variation of the share capital value. The conversion became effective at the end of the period for exercising the withdrawal rights on 12 March 2018. The Shareholders’ Meeting of 12 April 2018 approved the payment of dividends to the holders of ordinary shares a dividend of €0.32 for each share outstanding and entitled to dividend at payment date, for a maximum amount of €726 million, from allocation of 2017 net profit. Earnings ratios IAS/IFRS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Shareholders' equity (€ million) 55,841 59,331 39,336 50,087 49,390 46,841 62,784 51,479 64,224 59,689 54,999 Group portion of net profit (loss) (€ million) 3,892 5,473 (11,790) 1,694 2,008 (13,965) 865 (9,206) 1,323 1,702 4,012 Shareholders' equity per share (€) 25.04 26.65 6.36 8.39 8.42 8.09 10.85 26.67 3.33 3.56 4.11 Price/Book value 0.40 0.58 4.30 0.61 0.63 0.67 0.34 0.16 3.06 4.14 2.37 Earnings per share(1) (€) 1.712 2.794 (1.982) 0.27 0.34 (2.47) 0.15 (5.12) 0.06 0.10 0.30 Payout ratio (%) - 13.3 - 41.7 34.7 -4.1 59.2 - 41.6 32.3 (*) Dividend yield on average price per ordinary share (%) - 2.03 - 2.04 2.00 2.27 2.73 - 1.55 1.58 (*) Note: (1) For further details refer to Part C - Section 25 Earnings per share. (*) 2008 dividend was paid with cash to savings shareholders (€0,025 per share, for a total amount of €0.5 million), and with newly issued shares (so-called “scrip dividend”). The amounts in the table are "historical figures" and they should be read with reference to each single period. The 2008 Earnings per share (EPS) figure published in the consolidated report as at 31 December 2008 was €0.30 and has been amended to €0.26 due to the increase in the number of shares following the capital increase (IAS33 paragraph 28). From 2009 net profit for the period used to calculate EPS has been reduced for the following amounts related to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes”: €131 million for 2009, €156 million for 2010, €172 million for 2011, €46 million for 2012, €105 million for 2013, €35 million for 2014, €100 million for 2015, €128 million for 2016, €32 million for 2017 and €93 million for 2018. 0.300.100.06-5.120.15-2.470.340.27-1.982.7941.712-6.00-4.00-2.000.002.004.0020082009201020112012201320142015201620172018Earnings per share(€)Consolidated report on operations Group and UniCredit share historical data series 42 2018 Annual Report and Accounts · UniCredit Shareholders' Meeting held on 4 December 2017 resolved mandatory conversion of the existing No.252,489 savings shares into ordinary shares with a conversion ratio of No.3.82 ordinary shares each 1 savings share subject to the conversion, assigning newly issued shares and/or treasury shares and in any case without variation of the share capital value. The conversion became effective at the end of the period for exercising the withdrawal rights on 12 March 2018. The Shareholders’ Meeting of 12 April 2018 approved the payment of dividends to the holders of ordinary shares a dividend of €0.32 for each share outstanding and entitled to dividend at payment date, for a maximum amount of €726 million, from allocation of 2017 net profit. Earnings ratios IAS/IFRS 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Shareholders' equity (€ million) 55,841 59,331 39,336 50,087 49,390 46,841 62,784 51,479 64,224 59,689 54,999 Group portion of net profit (loss) (€ million) 3,892 5,473 (11,790) 1,694 2,008 (13,965) 865 (9,206) 1,323 1,702 4,012 Shareholders' equity per share (€) 25.04 26.65 6.36 8.39 8.42 8.09 10.85 26.67 3.33 3.56 4.11 Price/Book value 0.40 0.58 4.30 0.61 0.63 0.67 0.34 0.16 3.06 4.14 2.37 Earnings per share(1) (€) 1.712 2.794 (1.982) 0.27 0.34 (2.47) 0.15 (5.12) 0.06 0.10 0.30 Payout ratio (%) - 13.3 - 41.7 34.7 -4.1 59.2 - 41.6 32.3 (*) Dividend yield on average price per ordinary share (%) - 2.03 - 2.04 2.00 2.27 2.73 - 1.55 1.58 (*) Note: (1) For further details refer to Part C - Section 25 Earnings per share. (*) 2008 dividend was paid with cash to savings shareholders (€0,025 per share, for a total amount of €0.5 million), and with newly issued shares (so-called “scrip dividend”). The amounts in the table are "historical figures" and they should be read with reference to each single period. The 2008 Earnings per share (EPS) figure published in the consolidated report as at 31 December 2008 was €0.30 and has been amended to €0.26 due to the increase in the number of shares following the capital increase (IAS33 paragraph 28). From 2009 net profit for the period used to calculate EPS has been reduced for the following amounts related to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes”: €131 million for 2009, €156 million for 2010, €172 million for 2011, €46 million for 2012, €105 million for 2013, €35 million for 2014, €100 million for 2015, €128 million for 2016, €32 million for 2017 and €93 million for 2018. 0.300.100.06-5.120.15-2.470.340.27-1.982.7941.712-6.00-4.00-2.000.002.004.0020082009201020112012201320142015201620172018Earnings per share(€)Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 43 Group results Macroeconomic situation, banking and financial markets International situation In the second half of 2018, the global recovery lost further momentum, but world output kept expanding at a pace of about 3.5%. The main source of uncertainty was represented by a deceleration in global trade amid rising trade tensions between the United States (US) and China and expectations of tighter monetary policies, particularly in the US. Political uncertainty remained a key concern for investors, with the populist tide blowing across the world. The US economy kept expanding at a fast pace, driven particularly by investment. In Japan, instead, the economy struggled to show signs of a rebound and forced the Bank of Japan to maintain a highly accommodative policy stance, whereas growth in the United Kingdom remained unscathed by the increasing Brexit uncertainty. In China, economic activity remained robust despite rising protectionist threats from the US and a less interventionist government. 2018 has been a strong year for the US economy. With real GDP growth on track to match the 2.9% seen in 2015, the US has easily outpaced most other advanced economies this year. Private consumption remained a key support for economic growth. In particular, household disposable income continued to be lifted by the combination of a strong labor market and the boost from massive fiscal stimulus, while positive wealth effects continued to push the savings rate lower. Capex spending was another bright spot in 2018, with business investment which rose by 6.4% between third quarter 2017 and third quarter 2018. Given the buoyant macroeconomic performance, the Fed has raised its policy rates four times in 2018, with fed fund rates closing the year at 2.50%. In the euro area, economic growth moderated in the second half of 2018, on the back of a deceleration in global trade, sharper-than-expected slowdown in Germany, social unrest in France and the tough negotiations over the budget in Italy. The latest economic indicators point to a mild growth expansion, with annualized real Gross Domestic Product (GDP) growth standing at 0.8%, on average, in second half 2018, as opposed to 1.6% in the first half of the year. This means that GDP reached 1.8% annual growth in 2018 from 2.5% in 2017. The ongoing underperformance of indicators of foreign trade suggests that external factors have been the main source of weakness. In contrast, domestic demand (notably private consumption and fixed investment spending) continued to expand at a decent pace. Eurozone headline inflation peaked at 2.2% yoy in October 2018 and it seems on track to progressively ease from this level (the exact intensity and timing of this will mainly depend on swings in oil prices). In December, the European Central Bank (ECB)’s Governing Council confirmed the end of net asset purchases under the Asset Purchase Programme (APP), as it had first announced in June, and it also indicated that it intends to continue reinvesting, in full, the principal payments from maturing assets purchased under the programme “for an extended period of time past the date when we start raising the key ECB interest rates”; it suggests that full reinvestments might continue until at least the end of 2020. Banking and financial markets The credit recovery in the euro area consolidated over the course of 2018. The rate of growth in loans to the private sector accelerated throughout the year, in line with easing credit supply conditions and good demand for loans. At the end of the year, the annual growth rate of loans to the private sector stood at 3.4%, compared to just below 3.0% at the end of 2017. This was mainly supported by a visible recovery of loans to non-financial corporations, which had accelerated to 4% on yearly basis by the end of 2018. The ongoing improvement in credit aggregates was particularly strong in Germany and Austria, both with respect to loans to non-financial corporations and to households. The growth of the credit aggregates in these two countries continued to reflect the recovery in private consumption and fixed investment. In Italy, on the other hand, corporate loans showed some signs of weakness in the last quarter of 2018. This weakness was probably a reflection of lower demand for loans from companies. This lower demand was due to the context of moderating investment growth and increasing domestic uncertainty, amid tensions in the financial markets due to the government decision concerning the budget in September. Annual growth in loans to households stabilized at around 3%, in line with the eurozone average. As for bank funding at a system level, over the course of 2018, bank deposits maintained a sustained growth trend in all the three reference countries, both in terms of household deposits and deposits of non-financial corporations. The persistently low interest rates continued to support the increase in sight deposits, to the detriment of medium and long-term funding. Further, this trend of low interest rates still does not seem to be reversing. This is consistent with the decision of the European Central Bank (ECB) to conclude its financial assets purchasing program in December 2018 without introducing changes to its forward-looking guidance for interest rates. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 43 Group results Macroeconomic situation, banking and financial markets International situation In the second half of 2018, the global recovery lost further momentum, but world output kept expanding at a pace of about 3.5%. The main source of uncertainty was represented by a deceleration in global trade amid rising trade tensions between the United States (US) and China and expectations of tighter monetary policies, particularly in the US. Political uncertainty remained a key concern for investors, with the populist tide blowing across the world. The US economy kept expanding at a fast pace, driven particularly by investment. In Japan, instead, the economy struggled to show signs of a rebound and forced the Bank of Japan to maintain a highly accommodative policy stance, whereas growth in the United Kingdom remained unscathed by the increasing Brexit uncertainty. In China, economic activity remained robust despite rising protectionist threats from the US and a less interventionist government. 2018 has been a strong year for the US economy. With real GDP growth on track to match the 2.9% seen in 2015, the US has easily outpaced most other advanced economies this year. Private consumption remained a key support for economic growth. In particular, household disposable income continued to be lifted by the combination of a strong labor market and the boost from massive fiscal stimulus, while positive wealth effects continued to push the savings rate lower. Capex spending was another bright spot in 2018, with business investment which rose by 6.4% between third quarter 2017 and third quarter 2018. Given the buoyant macroeconomic performance, the Fed has raised its policy rates four times in 2018, with fed fund rates closing the year at 2.50%. In the euro area, economic growth moderated in the second half of 2018, on the back of a deceleration in global trade, sharper-than-expected slowdown in Germany, social unrest in France and the tough negotiations over the budget in Italy. The latest economic indicators point to a mild growth expansion, with annualized real Gross Domestic Product (GDP) growth standing at 0.8%, on average, in second half 2018, as opposed to 1.6% in the first half of the year. This means that GDP reached 1.8% annual growth in 2018 from 2.5% in 2017. The ongoing underperformance of indicators of foreign trade suggests that external factors have been the main source of weakness. In contrast, domestic demand (notably private consumption and fixed investment spending) continued to expand at a decent pace. Eurozone headline inflation peaked at 2.2% yoy in October 2018 and it seems on track to progressively ease from this level (the exact intensity and timing of this will mainly depend on swings in oil prices). In December, the European Central Bank (ECB)’s Governing Council confirmed the end of net asset purchases under the Asset Purchase Programme (APP), as it had first announced in June, and it also indicated that it intends to continue reinvesting, in full, the principal payments from maturing assets purchased under the programme “for an extended period of time past the date when we start raising the key ECB interest rates”; it suggests that full reinvestments might continue until at least the end of 2020. Banking and financial markets The credit recovery in the euro area consolidated over the course of 2018. The rate of growth in loans to the private sector accelerated throughout the year, in line with easing credit supply conditions and good demand for loans. At the end of the year, the annual growth rate of loans to the private sector stood at 3.4%, compared to just below 3.0% at the end of 2017. This was mainly supported by a visible recovery of loans to non-financial corporations, which had accelerated to 4% on yearly basis by the end of 2018. The ongoing improvement in credit aggregates was particularly strong in Germany and Austria, both with respect to loans to non-financial corporations and to households. The growth of the credit aggregates in these two countries continued to reflect the recovery in private consumption and fixed investment. In Italy, on the other hand, corporate loans showed some signs of weakness in the last quarter of 2018. This weakness was probably a reflection of lower demand for loans from companies. This lower demand was due to the context of moderating investment growth and increasing domestic uncertainty, amid tensions in the financial markets due to the government decision concerning the budget in September. Annual growth in loans to households stabilized at around 3%, in line with the eurozone average. As for bank funding at a system level, over the course of 2018, bank deposits maintained a sustained growth trend in all the three reference countries, both in terms of household deposits and deposits of non-financial corporations. The persistently low interest rates continued to support the increase in sight deposits, to the detriment of medium and long-term funding. Further, this trend of low interest rates still does not seem to be reversing. This is consistent with the decision of the European Central Bank (ECB) to conclude its financial assets purchasing program in December 2018 without introducing changes to its forward-looking guidance for interest rates. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 43 Group results Macroeconomic situation, banking and financial markets International situation In the second half of 2018, the global recovery lost further momentum, but world output kept expanding at a pace of about 3.5%. The main source of uncertainty was represented by a deceleration in global trade amid rising trade tensions between the United States (US) and China and expectations of tighter monetary policies, particularly in the US. Political uncertainty remained a key concern for investors, with the populist tide blowing across the world. The US economy kept expanding at a fast pace, driven particularly by investment. In Japan, instead, the economy struggled to show signs of a rebound and forced the Bank of Japan to maintain a highly accommodative policy stance, whereas growth in the United Kingdom remained unscathed by the increasing Brexit uncertainty. In China, economic activity remained robust despite rising protectionist threats from the US and a less interventionist government. 2018 has been a strong year for the US economy. With real GDP growth on track to match the 2.9% seen in 2015, the US has easily outpaced most other advanced economies this year. Private consumption remained a key support for economic growth. In particular, household disposable income continued to be lifted by the combination of a strong labor market and the boost from massive fiscal stimulus, while positive wealth effects continued to push the savings rate lower. Capex spending was another bright spot in 2018, with business investment which rose by 6.4% between third quarter 2017 and third quarter 2018. Given the buoyant macroeconomic performance, the Fed has raised its policy rates four times in 2018, with fed fund rates closing the year at 2.50%. In the euro area, economic growth moderated in the second half of 2018, on the back of a deceleration in global trade, sharper-than-expected slowdown in Germany, social unrest in France and the tough negotiations over the budget in Italy. The latest economic indicators point to a mild growth expansion, with annualized real Gross Domestic Product (GDP) growth standing at 0.8%, on average, in second half 2018, as opposed to 1.6% in the first half of the year. This means that GDP reached 1.8% annual growth in 2018 from 2.5% in 2017. The ongoing underperformance of indicators of foreign trade suggests that external factors have been the main source of weakness. In contrast, domestic demand (notably private consumption and fixed investment spending) continued to expand at a decent pace. Eurozone headline inflation peaked at 2.2% yoy in October 2018 and it seems on track to progressively ease from this level (the exact intensity and timing of this will mainly depend on swings in oil prices). In December, the European Central Bank (ECB)’s Governing Council confirmed the end of net asset purchases under the Asset Purchase Programme (APP), as it had first announced in June, and it also indicated that it intends to continue reinvesting, in full, the principal payments from maturing assets purchased under the programme “for an extended period of time past the date when we start raising the key ECB interest rates”; it suggests that full reinvestments might continue until at least the end of 2020. Banking and financial markets The credit recovery in the euro area consolidated over the course of 2018. The rate of growth in loans to the private sector accelerated throughout the year, in line with easing credit supply conditions and good demand for loans. At the end of the year, the annual growth rate of loans to the private sector stood at 3.4%, compared to just below 3.0% at the end of 2017. This was mainly supported by a visible recovery of loans to non-financial corporations, which had accelerated to 4% on yearly basis by the end of 2018. The ongoing improvement in credit aggregates was particularly strong in Germany and Austria, both with respect to loans to non-financial corporations and to households. The growth of the credit aggregates in these two countries continued to reflect the recovery in private consumption and fixed investment. In Italy, on the other hand, corporate loans showed some signs of weakness in the last quarter of 2018. This weakness was probably a reflection of lower demand for loans from companies. This lower demand was due to the context of moderating investment growth and increasing domestic uncertainty, amid tensions in the financial markets due to the government decision concerning the budget in September. Annual growth in loans to households stabilized at around 3%, in line with the eurozone average. As for bank funding at a system level, over the course of 2018, bank deposits maintained a sustained growth trend in all the three reference countries, both in terms of household deposits and deposits of non-financial corporations. The persistently low interest rates continued to support the increase in sight deposits, to the detriment of medium and long-term funding. Further, this trend of low interest rates still does not seem to be reversing. This is consistent with the decision of the European Central Bank (ECB) to conclude its financial assets purchasing program in December 2018 without introducing changes to its forward-looking guidance for interest rates. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 43 Group results Macroeconomic situation, banking and financial markets International situation In the second half of 2018, the global recovery lost further momentum, but world output kept expanding at a pace of about 3.5%. The main source of uncertainty was represented by a deceleration in global trade amid rising trade tensions between the United States (US) and China and expectations of tighter monetary policies, particularly in the US. Political uncertainty remained a key concern for investors, with the populist tide blowing across the world. The US economy kept expanding at a fast pace, driven particularly by investment. In Japan, instead, the economy struggled to show signs of a rebound and forced the Bank of Japan to maintain a highly accommodative policy stance, whereas growth in the United Kingdom remained unscathed by the increasing Brexit uncertainty. In China, economic activity remained robust despite rising protectionist threats from the US and a less interventionist government. 2018 has been a strong year for the US economy. With real GDP growth on track to match the 2.9% seen in 2015, the US has easily outpaced most other advanced economies this year. Private consumption remained a key support for economic growth. In particular, household disposable income continued to be lifted by the combination of a strong labor market and the boost from massive fiscal stimulus, while positive wealth effects continued to push the savings rate lower. Capex spending was another bright spot in 2018, with business investment which rose by 6.4% between third quarter 2017 and third quarter 2018. Given the buoyant macroeconomic performance, the Fed has raised its policy rates four times in 2018, with fed fund rates closing the year at 2.50%. In the euro area, economic growth moderated in the second half of 2018, on the back of a deceleration in global trade, sharper-than-expected slowdown in Germany, social unrest in France and the tough negotiations over the budget in Italy. The latest economic indicators point to a mild growth expansion, with annualized real Gross Domestic Product (GDP) growth standing at 0.8%, on average, in second half 2018, as opposed to 1.6% in the first half of the year. This means that GDP reached 1.8% annual growth in 2018 from 2.5% in 2017. The ongoing underperformance of indicators of foreign trade suggests that external factors have been the main source of weakness. In contrast, domestic demand (notably private consumption and fixed investment spending) continued to expand at a decent pace. Eurozone headline inflation peaked at 2.2% yoy in October 2018 and it seems on track to progressively ease from this level (the exact intensity and timing of this will mainly depend on swings in oil prices). In December, the European Central Bank (ECB)’s Governing Council confirmed the end of net asset purchases under the Asset Purchase Programme (APP), as it had first announced in June, and it also indicated that it intends to continue reinvesting, in full, the principal payments from maturing assets purchased under the programme “for an extended period of time past the date when we start raising the key ECB interest rates”; it suggests that full reinvestments might continue until at least the end of 2020. Banking and financial markets The credit recovery in the euro area consolidated over the course of 2018. The rate of growth in loans to the private sector accelerated throughout the year, in line with easing credit supply conditions and good demand for loans. At the end of the year, the annual growth rate of loans to the private sector stood at 3.4%, compared to just below 3.0% at the end of 2017. This was mainly supported by a visible recovery of loans to non-financial corporations, which had accelerated to 4% on yearly basis by the end of 2018. The ongoing improvement in credit aggregates was particularly strong in Germany and Austria, both with respect to loans to non-financial corporations and to households. The growth of the credit aggregates in these two countries continued to reflect the recovery in private consumption and fixed investment. In Italy, on the other hand, corporate loans showed some signs of weakness in the last quarter of 2018. This weakness was probably a reflection of lower demand for loans from companies. This lower demand was due to the context of moderating investment growth and increasing domestic uncertainty, amid tensions in the financial markets due to the government decision concerning the budget in September. Annual growth in loans to households stabilized at around 3%, in line with the eurozone average. As for bank funding at a system level, over the course of 2018, bank deposits maintained a sustained growth trend in all the three reference countries, both in terms of household deposits and deposits of non-financial corporations. The persistently low interest rates continued to support the increase in sight deposits, to the detriment of medium and long-term funding. Further, this trend of low interest rates still does not seem to be reversing. This is consistent with the decision of the European Central Bank (ECB) to conclude its financial assets purchasing program in December 2018 without introducing changes to its forward-looking guidance for interest rates. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 43 Group results Macroeconomic situation, banking and financial markets International situation In the second half of 2018, the global recovery lost further momentum, but world output kept expanding at a pace of about 3.5%. The main source of uncertainty was represented by a deceleration in global trade amid rising trade tensions between the United States (US) and China and expectations of tighter monetary policies, particularly in the US. Political uncertainty remained a key concern for investors, with the populist tide blowing across the world. The US economy kept expanding at a fast pace, driven particularly by investment. In Japan, instead, the economy struggled to show signs of a rebound and forced the Bank of Japan to maintain a highly accommodative policy stance, whereas growth in the United Kingdom remained unscathed by the increasing Brexit uncertainty. In China, economic activity remained robust despite rising protectionist threats from the US and a less interventionist government. 2018 has been a strong year for the US economy. With real GDP growth on track to match the 2.9% seen in 2015, the US has easily outpaced most other advanced economies this year. Private consumption remained a key support for economic growth. In particular, household disposable income continued to be lifted by the combination of a strong labor market and the boost from massive fiscal stimulus, while positive wealth effects continued to push the savings rate lower. Capex spending was another bright spot in 2018, with business investment which rose by 6.4% between third quarter 2017 and third quarter 2018. Given the buoyant macroeconomic performance, the Fed has raised its policy rates four times in 2018, with fed fund rates closing the year at 2.50%. In the euro area, economic growth moderated in the second half of 2018, on the back of a deceleration in global trade, sharper-than-expected slowdown in Germany, social unrest in France and the tough negotiations over the budget in Italy. The latest economic indicators point to a mild growth expansion, with annualized real Gross Domestic Product (GDP) growth standing at 0.8%, on average, in second half 2018, as opposed to 1.6% in the first half of the year. This means that GDP reached 1.8% annual growth in 2018 from 2.5% in 2017. The ongoing underperformance of indicators of foreign trade suggests that external factors have been the main source of weakness. In contrast, domestic demand (notably private consumption and fixed investment spending) continued to expand at a decent pace. Eurozone headline inflation peaked at 2.2% yoy in October 2018 and it seems on track to progressively ease from this level (the exact intensity and timing of this will mainly depend on swings in oil prices). In December, the European Central Bank (ECB)’s Governing Council confirmed the end of net asset purchases under the Asset Purchase Programme (APP), as it had first announced in June, and it also indicated that it intends to continue reinvesting, in full, the principal payments from maturing assets purchased under the programme “for an extended period of time past the date when we start raising the key ECB interest rates”; it suggests that full reinvestments might continue until at least the end of 2020. Banking and financial markets The credit recovery in the euro area consolidated over the course of 2018. The rate of growth in loans to the private sector accelerated throughout the year, in line with easing credit supply conditions and good demand for loans. At the end of the year, the annual growth rate of loans to the private sector stood at 3.4%, compared to just below 3.0% at the end of 2017. This was mainly supported by a visible recovery of loans to non-financial corporations, which had accelerated to 4% on yearly basis by the end of 2018. The ongoing improvement in credit aggregates was particularly strong in Germany and Austria, both with respect to loans to non-financial corporations and to households. The growth of the credit aggregates in these two countries continued to reflect the recovery in private consumption and fixed investment. In Italy, on the other hand, corporate loans showed some signs of weakness in the last quarter of 2018. This weakness was probably a reflection of lower demand for loans from companies. This lower demand was due to the context of moderating investment growth and increasing domestic uncertainty, amid tensions in the financial markets due to the government decision concerning the budget in September. Annual growth in loans to households stabilized at around 3%, in line with the eurozone average. As for bank funding at a system level, over the course of 2018, bank deposits maintained a sustained growth trend in all the three reference countries, both in terms of household deposits and deposits of non-financial corporations. The persistently low interest rates continued to support the increase in sight deposits, to the detriment of medium and long-term funding. Further, this trend of low interest rates still does not seem to be reversing. This is consistent with the decision of the European Central Bank (ECB) to conclude its financial assets purchasing program in December 2018 without introducing changes to its forward-looking guidance for interest rates. Consolidated report on operations Group results 44 2018 Annual Report and Accounts · UniCredit As a consequence, bank interest rates broadly stabilized in all the three reference countries for the Group (Italy, Germany and Austria) by the end of 2018, and interest rates on sight deposits in particular remained at levels close to zero. The bank interest rate spread (i.e. the difference between the average interest rate on loans and the average interest rate on deposits) stabilized or gradually declined throughout the entire year. In 2018, financial markets in the euro area saw a return to rising volatility on the back of greater uncertainty regarding growth prospects in the area and the budget discussion in Italy. This uncertainty fueled an ongoing deterioration in the performance of the equity market, which became particularly significant for Italy starting in May 2018 as domestic political uncertainty increased. In particular, the Italian stock exchange, after having grown by roughly 10% between the beginning of the year and mid-May, ended the full year down by 16% compared to December 2017. The performance of both the German stock exchange and the Austrian stock market was not entirely dissimilar, with declines of around 18% and 20%, respectively, compared to December 2017. CEE countries Economic growth remained solid in most CEE countries in 2018 and is expected to have hit its cyclical peak. This year growth is likely to slow due to weakening global trade growth, a cyclical slowdown in the eurozone, capital outflows from emerging markets and weaker fiscal and credit impulses in most countries. However, domestic demand will remain robust and ensure that growth stays above potential in all countries but Turkey. In 2018, growth remained well above potential in EU-CEE1 , driven by consumption and investment. The former benefited from fast income growth amid tightening labor market conditions and from loose monetary conditions underpinning strong credit growth. Labor shortages reached the highest levels on record, especially in the Czech Republic, where vacancies exceeded unemployment, and in Hungary. These shortages are unlikely to be solved if countries do not foster economic immigration in a similar fashion to Poland, which expanded the scope and the duration of work contracts for non-EU citizens from the former Soviet Union and South-East Asia. As a result of tighter labor market conditions, wage growth continues to outpace productivity in most EU-CEE countries. In addition, governments increased wages in the public sector before several rounds of elections, especially in Romania and Hungary. Investment rebounded as well, with EU fund inflows picking up, especially in Hungary and Poland. As the end of the current budget approaches, absorption is likely to pick up in other countries as well. In 2018, private investment was dominated by real estate projects, with demand moving from home buyers to investors, especially in capital cities and other economic centers. Productive investment recovered in most countries, with large foreign investment projects announced in Slovenia and underway in car-producing countries like Hungary and Slovakia. At the same time, some companies postponed a stronger capex expansion due to labor shortages and external risks. In Romania, tighter monetary conditions and an uncertain tax outlook may have affected corporate borrowing. Last year, economic growth reached 1.7% in Russia. Russia’s economic performance in 2018 was characterized by close to potential growth and more volatility in sentiment, financial and monetary indicators. Higher oil prices for most of the year increased the C/A surplus despite larger imports. However, real export growth was outpaced by import growth, mitigating the positive impact on growth. In 2H18, growth fell closer to potential (which we estimate at around 1.0%) and the soft patch may continue in 1H19 amid higher inflation and tighter financial conditions leading to temporarily weaker consumption and investment. Economic policies are calibrated to ensure macroeconomic and financial stability, rather than to boost potential growth. This means that potential growth is unlikely to rise from very low levels in the 2018-24 presidential mandate. In Turkey, the economy started to contract in the third quarter of 2018, due to an overdue debt adjustment triggered by US sanctions imposed in August. While political diplomatic tensions have eased, and financial markets stabilized in the last months of 2018, the downturn likely intensified in the final quarter of 2018 as the private sector continued to delever at a rapid pace. As part of the adjustment, the currency depreciated, asset prices fell and inflation accelerated above 25% in October, although it decelerated to 20% at the end of 2018 on the back of tax cuts, lower energy prices and partial recovery of the currency. The government has been pushing for measures to boost lending and shore up economic activity in the run-up to local elections expected at the end of 1Q19. Such steps would likely have limited impact on economic growth, but could weaken investor trust 1 Bulgaria, Croatia, Czechia, Hungary, Poland, Romania, Slovakia and Slovenia. Consolidated report on operations Group results 44 2018 Annual Report and Accounts · UniCredit As a consequence, bank interest rates broadly stabilized in all the three reference countries for the Group (Italy, Germany and Austria) by the end of 2018, and interest rates on sight deposits in particular remained at levels close to zero. The bank interest rate spread (i.e. the difference between the average interest rate on loans and the average interest rate on deposits) stabilized or gradually declined throughout the entire year. In 2018, financial markets in the euro area saw a return to rising volatility on the back of greater uncertainty regarding growth prospects in the area and the budget discussion in Italy. This uncertainty fueled an ongoing deterioration in the performance of the equity market, which became particularly significant for Italy starting in May 2018 as domestic political uncertainty increased. In particular, the Italian stock exchange, after having grown by roughly 10% between the beginning of the year and mid-May, ended the full year down by 16% compared to December 2017. The performance of both the German stock exchange and the Austrian stock market was not entirely dissimilar, with declines of around 18% and 20%, respectively, compared to December 2017. CEE countries Economic growth remained solid in most CEE countries in 2018 and is expected to have hit its cyclical peak. This year growth is likely to slow due to weakening global trade growth, a cyclical slowdown in the eurozone, capital outflows from emerging markets and weaker fiscal and credit impulses in most countries. However, domestic demand will remain robust and ensure that growth stays above potential in all countries but Turkey. In 2018, growth remained well above potential in EU-CEE1 , driven by consumption and investment. The former benefited from fast income growth amid tightening labor market conditions and from loose monetary conditions underpinning strong credit growth. Labor shortages reached the highest levels on record, especially in the Czech Republic, where vacancies exceeded unemployment, and in Hungary. These shortages are unlikely to be solved if countries do not foster economic immigration in a similar fashion to Poland, which expanded the scope and the duration of work contracts for non-EU citizens from the former Soviet Union and South-East Asia. As a result of tighter labor market conditions, wage growth continues to outpace productivity in most EU-CEE countries. In addition, governments increased wages in the public sector before several rounds of elections, especially in Romania and Hungary. Investment rebounded as well, with EU fund inflows picking up, especially in Hungary and Poland. As the end of the current budget approaches, absorption is likely to pick up in other countries as well. In 2018, private investment was dominated by real estate projects, with demand moving from home buyers to investors, especially in capital cities and other economic centers. Productive investment recovered in most countries, with large foreign investment projects announced in Slovenia and underway in car-producing countries like Hungary and Slovakia. At the same time, some companies postponed a stronger capex expansion due to labor shortages and external risks. In Romania, tighter monetary conditions and an uncertain tax outlook may have affected corporate borrowing. Last year, economic growth reached 1.7% in Russia. Russia’s economic performance in 2018 was characterized by close to potential growth and more volatility in sentiment, financial and monetary indicators. Higher oil prices for most of the year increased the C/A surplus despite larger imports. However, real export growth was outpaced by import growth, mitigating the positive impact on growth. In 2H18, growth fell closer to potential (which we estimate at around 1.0%) and the soft patch may continue in 1H19 amid higher inflation and tighter financial conditions leading to temporarily weaker consumption and investment. Economic policies are calibrated to ensure macroeconomic and financial stability, rather than to boost potential growth. This means that potential growth is unlikely to rise from very low levels in the 2018-24 presidential mandate. In Turkey, the economy started to contract in the third quarter of 2018, due to an overdue debt adjustment triggered by US sanctions imposed in August. While political diplomatic tensions have eased, and financial markets stabilized in the last months of 2018, the downturn likely intensified in the final quarter of 2018 as the private sector continued to delever at a rapid pace. As part of the adjustment, the currency depreciated, asset prices fell and inflation accelerated above 25% in October, although it decelerated to 20% at the end of 2018 on the back of tax cuts, lower energy prices and partial recovery of the currency. The government has been pushing for measures to boost lending and shore up economic activity in the run-up to local elections expected at the end of 1Q19. Such steps would likely have limited impact on economic growth, but could weaken investor trust 1 Bulgaria, Croatia, Czechia, Hungary, Poland, Romania, Slovakia and Slovenia. Consolidated report on operations Group results 44 2018 Annual Report and Accounts · UniCredit As a consequence, bank interest rates broadly stabilized in all the three reference countries for the Group (Italy, Germany and Austria) by the end of 2018, and interest rates on sight deposits in particular remained at levels close to zero. The bank interest rate spread (i.e. the difference between the average interest rate on loans and the average interest rate on deposits) stabilized or gradually declined throughout the entire year. In 2018, financial markets in the euro area saw a return to rising volatility on the back of greater uncertainty regarding growth prospects in the area and the budget discussion in Italy. This uncertainty fueled an ongoing deterioration in the performance of the equity market, which became particularly significant for Italy starting in May 2018 as domestic political uncertainty increased. In particular, the Italian stock exchange, after having grown by roughly 10% between the beginning of the year and mid-May, ended the full year down by 16% compared to December 2017. The performance of both the German stock exchange and the Austrian stock market was not entirely dissimilar, with declines of around 18% and 20%, respectively, compared to December 2017. CEE countries Economic growth remained solid in most CEE countries in 2018 and is expected to have hit its cyclical peak. This year growth is likely to slow due to weakening global trade growth, a cyclical slowdown in the eurozone, capital outflows from emerging markets and weaker fiscal and credit impulses in most countries. However, domestic demand will remain robust and ensure that growth stays above potential in all countries but Turkey. In 2018, growth remained well above potential in EU-CEE1 , driven by consumption and investment. The former benefited from fast income growth amid tightening labor market conditions and from loose monetary conditions underpinning strong credit growth. Labor shortages reached the highest levels on record, especially in the Czech Republic, where vacancies exceeded unemployment, and in Hungary. These shortages are unlikely to be solved if countries do not foster economic immigration in a similar fashion to Poland, which expanded the scope and the duration of work contracts for non-EU citizens from the former Soviet Union and South-East Asia. As a result of tighter labor market conditions, wage growth continues to outpace productivity in most EU-CEE countries. In addition, governments increased wages in the public sector before several rounds of elections, especially in Romania and Hungary. Investment rebounded as well, with EU fund inflows picking up, especially in Hungary and Poland. As the end of the current budget approaches, absorption is likely to pick up in other countries as well. In 2018, private investment was dominated by real estate projects, with demand moving from home buyers to investors, especially in capital cities and other economic centers. Productive investment recovered in most countries, with large foreign investment projects announced in Slovenia and underway in car-producing countries like Hungary and Slovakia. At the same time, some companies postponed a stronger capex expansion due to labor shortages and external risks. In Romania, tighter monetary conditions and an uncertain tax outlook may have affected corporate borrowing. Last year, economic growth reached 1.7% in Russia. Russia’s economic performance in 2018 was characterized by close to potential growth and more volatility in sentiment, financial and monetary indicators. Higher oil prices for most of the year increased the C/A surplus despite larger imports. However, real export growth was outpaced by import growth, mitigating the positive impact on growth. In 2H18, growth fell closer to potential (which we estimate at around 1.0%) and the soft patch may continue in 1H19 amid higher inflation and tighter financial conditions leading to temporarily weaker consumption and investment. Economic policies are calibrated to ensure macroeconomic and financial stability, rather than to boost potential growth. This means that potential growth is unlikely to rise from very low levels in the 2018-24 presidential mandate. In Turkey, the economy started to contract in the third quarter of 2018, due to an overdue debt adjustment triggered by US sanctions imposed in August. While political diplomatic tensions have eased, and financial markets stabilized in the last months of 2018, the downturn likely intensified in the final quarter of 2018 as the private sector continued to delever at a rapid pace. As part of the adjustment, the currency depreciated, asset prices fell and inflation accelerated above 25% in October, although it decelerated to 20% at the end of 2018 on the back of tax cuts, lower energy prices and partial recovery of the currency. The government has been pushing for measures to boost lending and shore up economic activity in the run-up to local elections expected at the end of 1Q19. Such steps would likely have limited impact on economic growth, but could weaken investor trust 1 Bulgaria, Croatia, Czechia, Hungary, Poland, Romania, Slovakia and Slovenia. Consolidated report on operations Group results 44 2018 Annual Report and Accounts · UniCredit As a consequence, bank interest rates broadly stabilized in all the three reference countries for the Group (Italy, Germany and Austria) by the end of 2018, and interest rates on sight deposits in particular remained at levels close to zero. The bank interest rate spread (i.e. the difference between the average interest rate on loans and the average interest rate on deposits) stabilized or gradually declined throughout the entire year. In 2018, financial markets in the euro area saw a return to rising volatility on the back of greater uncertainty regarding growth prospects in the area and the budget discussion in Italy. This uncertainty fueled an ongoing deterioration in the performance of the equity market, which became particularly significant for Italy starting in May 2018 as domestic political uncertainty increased. In particular, the Italian stock exchange, after having grown by roughly 10% between the beginning of the year and mid-May, ended the full year down by 16% compared to December 2017. The performance of both the German stock exchange and the Austrian stock market was not entirely dissimilar, with declines of around 18% and 20%, respectively, compared to December 2017. CEE countries Economic growth remained solid in most CEE countries in 2018 and is expected to have hit its cyclical peak. This year growth is likely to slow due to weakening global trade growth, a cyclical slowdown in the eurozone, capital outflows from emerging markets and weaker fiscal and credit impulses in most countries. However, domestic demand will remain robust and ensure that growth stays above potential in all countries but Turkey. In 2018, growth remained well above potential in EU-CEE1 , driven by consumption and investment. The former benefited from fast income growth amid tightening labor market conditions and from loose monetary conditions underpinning strong credit growth. Labor shortages reached the highest levels on record, especially in the Czech Republic, where vacancies exceeded unemployment, and in Hungary. These shortages are unlikely to be solved if countries do not foster economic immigration in a similar fashion to Poland, which expanded the scope and the duration of work contracts for non-EU citizens from the former Soviet Union and South-East Asia. As a result of tighter labor market conditions, wage growth continues to outpace productivity in most EU-CEE countries. In addition, governments increased wages in the public sector before several rounds of elections, especially in Romania and Hungary. Investment rebounded as well, with EU fund inflows picking up, especially in Hungary and Poland. As the end of the current budget approaches, absorption is likely to pick up in other countries as well. In 2018, private investment was dominated by real estate projects, with demand moving from home buyers to investors, especially in capital cities and other economic centers. Productive investment recovered in most countries, with large foreign investment projects announced in Slovenia and underway in car-producing countries like Hungary and Slovakia. At the same time, some companies postponed a stronger capex expansion due to labor shortages and external risks. In Romania, tighter monetary conditions and an uncertain tax outlook may have affected corporate borrowing. Last year, economic growth reached 1.7% in Russia. Russia’s economic performance in 2018 was characterized by close to potential growth and more volatility in sentiment, financial and monetary indicators. Higher oil prices for most of the year increased the C/A surplus despite larger imports. However, real export growth was outpaced by import growth, mitigating the positive impact on growth. In 2H18, growth fell closer to potential (which we estimate at around 1.0%) and the soft patch may continue in 1H19 amid higher inflation and tighter financial conditions leading to temporarily weaker consumption and investment. Economic policies are calibrated to ensure macroeconomic and financial stability, rather than to boost potential growth. This means that potential growth is unlikely to rise from very low levels in the 2018-24 presidential mandate. In Turkey, the economy started to contract in the third quarter of 2018, due to an overdue debt adjustment triggered by US sanctions imposed in August. While political diplomatic tensions have eased, and financial markets stabilized in the last months of 2018, the downturn likely intensified in the final quarter of 2018 as the private sector continued to delever at a rapid pace. As part of the adjustment, the currency depreciated, asset prices fell and inflation accelerated above 25% in October, although it decelerated to 20% at the end of 2018 on the back of tax cuts, lower energy prices and partial recovery of the currency. The government has been pushing for measures to boost lending and shore up economic activity in the run-up to local elections expected at the end of 1Q19. Such steps would likely have limited impact on economic growth, but could weaken investor trust 1 Bulgaria, Croatia, Czechia, Hungary, Poland, Romania, Slovakia and Slovenia. Consolidated report on operations Group results 44 2018 Annual Report and Accounts · UniCredit As a consequence, bank interest rates broadly stabilized in all the three reference countries for the Group (Italy, Germany and Austria) by the end of 2018, and interest rates on sight deposits in particular remained at levels close to zero. The bank interest rate spread (i.e. the difference between the average interest rate on loans and the average interest rate on deposits) stabilized or gradually declined throughout the entire year. In 2018, financial markets in the euro area saw a return to rising volatility on the back of greater uncertainty regarding growth prospects in the area and the budget discussion in Italy. This uncertainty fueled an ongoing deterioration in the performance of the equity market, which became particularly significant for Italy starting in May 2018 as domestic political uncertainty increased. In particular, the Italian stock exchange, after having grown by roughly 10% between the beginning of the year and mid-May, ended the full year down by 16% compared to December 2017. The performance of both the German stock exchange and the Austrian stock market was not entirely dissimilar, with declines of around 18% and 20%, respectively, compared to December 2017. CEE countries Economic growth remained solid in most CEE countries in 2018 and is expected to have hit its cyclical peak. This year growth is likely to slow due to weakening global trade growth, a cyclical slowdown in the eurozone, capital outflows from emerging markets and weaker fiscal and credit impulses in most countries. However, domestic demand will remain robust and ensure that growth stays above potential in all countries but Turkey. In 2018, growth remained well above potential in EU-CEE1 , driven by consumption and investment. The former benefited from fast income growth amid tightening labor market conditions and from loose monetary conditions underpinning strong credit growth. Labor shortages reached the highest levels on record, especially in the Czech Republic, where vacancies exceeded unemployment, and in Hungary. These shortages are unlikely to be solved if countries do not foster economic immigration in a similar fashion to Poland, which expanded the scope and the duration of work contracts for non-EU citizens from the former Soviet Union and South-East Asia. As a result of tighter labor market conditions, wage growth continues to outpace productivity in most EU-CEE countries. In addition, governments increased wages in the public sector before several rounds of elections, especially in Romania and Hungary. Investment rebounded as well, with EU fund inflows picking up, especially in Hungary and Poland. As the end of the current budget approaches, absorption is likely to pick up in other countries as well. In 2018, private investment was dominated by real estate projects, with demand moving from home buyers to investors, especially in capital cities and other economic centers. Productive investment recovered in most countries, with large foreign investment projects announced in Slovenia and underway in car-producing countries like Hungary and Slovakia. At the same time, some companies postponed a stronger capex expansion due to labor shortages and external risks. In Romania, tighter monetary conditions and an uncertain tax outlook may have affected corporate borrowing. Last year, economic growth reached 1.7% in Russia. Russia’s economic performance in 2018 was characterized by close to potential growth and more volatility in sentiment, financial and monetary indicators. Higher oil prices for most of the year increased the C/A surplus despite larger imports. However, real export growth was outpaced by import growth, mitigating the positive impact on growth. In 2H18, growth fell closer to potential (which we estimate at around 1.0%) and the soft patch may continue in 1H19 amid higher inflation and tighter financial conditions leading to temporarily weaker consumption and investment. Economic policies are calibrated to ensure macroeconomic and financial stability, rather than to boost potential growth. This means that potential growth is unlikely to rise from very low levels in the 2018-24 presidential mandate. In Turkey, the economy started to contract in the third quarter of 2018, due to an overdue debt adjustment triggered by US sanctions imposed in August. While political diplomatic tensions have eased, and financial markets stabilized in the last months of 2018, the downturn likely intensified in the final quarter of 2018 as the private sector continued to delever at a rapid pace. As part of the adjustment, the currency depreciated, asset prices fell and inflation accelerated above 25% in October, although it decelerated to 20% at the end of 2018 on the back of tax cuts, lower energy prices and partial recovery of the currency. The government has been pushing for measures to boost lending and shore up economic activity in the run-up to local elections expected at the end of 1Q19. Such steps would likely have limited impact on economic growth, but could weaken investor trust 1 Bulgaria, Croatia, Czechia, Hungary, Poland, Romania, Slovakia and Slovenia. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 45 again, leading to renewed capital outflows. Growth will likely remain in the negative territory for most of 2019 and a rebound would be supported by a financial backstop from international financial institutions. The Central Bank of the Republic of Turkey (CBRT) hiked the average cost of funding by more than 11pp in 2018. The bulk of this hike came in September 2018, following the plunge of the currency in August. As inflation will likely resume the upward trend in the coming months, the CBRT is expected to remain on hold for most of first half 2019. With disinflation expected to resume in mid-2019, rate cuts could follow amid large base effects from 2018’s currency depreciation and weak pressure on prices from domestic demand. Other central banks tightened monetary policy in 2018. The Central Bank of Russia (CBR) reversed 1Q18 cuts in September and December 2018, reacting to the potential flare-up in inflation expectations from several supply shocks (RUB depreciation, higher food and fuel prices and a 2pp VAT hike on 1 January 2019). The Czech National Bank (CNB) increased the benchmark repo rate from 0.50% to 1.75% as the CZK failed to appreciate significantly against the EUR. The National Bank of Romania (NBR) hiked as well, from 1.75% to 2.50% and tightened liquidity through FX interventions, pushing ROBOR rates above 3%, the highest levels in more than four years. The National Banks of Hungary (NBH) and Poland (NBP) remained on hold at the expense of weaker currencies. The National Bank of Serbia (NBS) cut twice to 3%, bringing its policy rate to the level of the inflation target. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 45 again, leading to renewed capital outflows. Growth will likely remain in the negative territory for most of 2019 and a rebound would be supported by a financial backstop from international financial institutions. The Central Bank of the Republic of Turkey (CBRT) hiked the average cost of funding by more than 11pp in 2018. The bulk of this hike came in September 2018, following the plunge of the currency in August. As inflation will likely resume the upward trend in the coming months, the CBRT is expected to remain on hold for most of first half 2019. With disinflation expected to resume in mid-2019, rate cuts could follow amid large base effects from 2018’s currency depreciation and weak pressure on prices from domestic demand. Other central banks tightened monetary policy in 2018. The Central Bank of Russia (CBR) reversed 1Q18 cuts in September and December 2018, reacting to the potential flare-up in inflation expectations from several supply shocks (RUB depreciation, higher food and fuel prices and a 2pp VAT hike on 1 January 2019). The Czech National Bank (CNB) increased the benchmark repo rate from 0.50% to 1.75% as the CZK failed to appreciate significantly against the EUR. The National Bank of Romania (NBR) hiked as well, from 1.75% to 2.50% and tightened liquidity through FX interventions, pushing ROBOR rates above 3%, the highest levels in more than four years. The National Banks of Hungary (NBH) and Poland (NBP) remained on hold at the expense of weaker currencies. The National Bank of Serbia (NBS) cut twice to 3%, bringing its policy rate to the level of the inflation target. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 45 again, leading to renewed capital outflows. Growth will likely remain in the negative territory for most of 2019 and a rebound would be supported by a financial backstop from international financial institutions. The Central Bank of the Republic of Turkey (CBRT) hiked the average cost of funding by more than 11pp in 2018. The bulk of this hike came in September 2018, following the plunge of the currency in August. As inflation will likely resume the upward trend in the coming months, the CBRT is expected to remain on hold for most of first half 2019. With disinflation expected to resume in mid-2019, rate cuts could follow amid large base effects from 2018’s currency depreciation and weak pressure on prices from domestic demand. Other central banks tightened monetary policy in 2018. The Central Bank of Russia (CBR) reversed 1Q18 cuts in September and December 2018, reacting to the potential flare-up in inflation expectations from several supply shocks (RUB depreciation, higher food and fuel prices and a 2pp VAT hike on 1 January 2019). The Czech National Bank (CNB) increased the benchmark repo rate from 0.50% to 1.75% as the CZK failed to appreciate significantly against the EUR. The National Bank of Romania (NBR) hiked as well, from 1.75% to 2.50% and tightened liquidity through FX interventions, pushing ROBOR rates above 3%, the highest levels in more than four years. The National Banks of Hungary (NBH) and Poland (NBP) remained on hold at the expense of weaker currencies. The National Bank of Serbia (NBS) cut twice to 3%, bringing its policy rate to the level of the inflation target. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 45 again, leading to renewed capital outflows. Growth will likely remain in the negative territory for most of 2019 and a rebound would be supported by a financial backstop from international financial institutions. The Central Bank of the Republic of Turkey (CBRT) hiked the average cost of funding by more than 11pp in 2018. The bulk of this hike came in September 2018, following the plunge of the currency in August. As inflation will likely resume the upward trend in the coming months, the CBRT is expected to remain on hold for most of first half 2019. With disinflation expected to resume in mid-2019, rate cuts could follow amid large base effects from 2018’s currency depreciation and weak pressure on prices from domestic demand. Other central banks tightened monetary policy in 2018. The Central Bank of Russia (CBR) reversed 1Q18 cuts in September and December 2018, reacting to the potential flare-up in inflation expectations from several supply shocks (RUB depreciation, higher food and fuel prices and a 2pp VAT hike on 1 January 2019). The Czech National Bank (CNB) increased the benchmark repo rate from 0.50% to 1.75% as the CZK failed to appreciate significantly against the EUR. The National Bank of Romania (NBR) hiked as well, from 1.75% to 2.50% and tightened liquidity through FX interventions, pushing ROBOR rates above 3%, the highest levels in more than four years. The National Banks of Hungary (NBH) and Poland (NBP) remained on hold at the expense of weaker currencies. The National Bank of Serbia (NBS) cut twice to 3%, bringing its policy rate to the level of the inflation target. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 45 again, leading to renewed capital outflows. Growth will likely remain in the negative territory for most of 2019 and a rebound would be supported by a financial backstop from international financial institutions. The Central Bank of the Republic of Turkey (CBRT) hiked the average cost of funding by more than 11pp in 2018. The bulk of this hike came in September 2018, following the plunge of the currency in August. As inflation will likely resume the upward trend in the coming months, the CBRT is expected to remain on hold for most of first half 2019. With disinflation expected to resume in mid-2019, rate cuts could follow amid large base effects from 2018’s currency depreciation and weak pressure on prices from domestic demand. Other central banks tightened monetary policy in 2018. The Central Bank of Russia (CBR) reversed 1Q18 cuts in September and December 2018, reacting to the potential flare-up in inflation expectations from several supply shocks (RUB depreciation, higher food and fuel prices and a 2pp VAT hike on 1 January 2019). The Czech National Bank (CNB) increased the benchmark repo rate from 0.50% to 1.75% as the CZK failed to appreciate significantly against the EUR. The National Bank of Romania (NBR) hiked as well, from 1.75% to 2.50% and tightened liquidity through FX interventions, pushing ROBOR rates above 3%, the highest levels in more than four years. The National Banks of Hungary (NBH) and Poland (NBP) remained on hold at the expense of weaker currencies. The National Bank of Serbia (NBS) cut twice to 3%, bringing its policy rate to the level of the inflation target. Consolidated report on operations Group results 46 2018 Annual Report and Accounts · UniCredit Main results and performance for the period2 Introduction In 2018 the Group initiatives have continued to be oriented to the accomplishment of the plan’s founding goals of the strategic plan 2016-2019 “Transform 2019”, achieving the following tangible results: • Strengthen and optimise capital After having successfully completed the Capital increase, the sale of subsidiaries (Pekao and Pioneer) and considering the net profit and balance sheets dynamics of the year, the Group shows a strong capital position with the CET13 ratio (fully loaded) at 12.07% at 31 December 2018. • Improve the asset quality During the year the proactive risk reduction measures have continued, leading the Non-Performing Exposure (NPE) ratio to 7.67% at the end of December, in comparison to the 9.80% of 1 January 2018 (following the new IFRS9 principle adoption), with a coverage ratio increased to 60.98%, compared to 59.25% of the beginning of 2018. • Transform the operating model Also in 2018 the strict cost control carried out by the Group produced results well in advance compared to the plan’s timing. The commercial network rationalization has continued, with the branch closures that have reached 881 units (of which 62 in the last quarter of 2018) starting from 2015, corresponding to 93% of the 944 closures forecasted by 2019 in the strategic plan. In the year the staff has been reduced by 5,166 FTEs, bringing the overall reduction to about 14,000 FTEs starting from the end of 2015 thus achieving a year in advance the exits expected by 2019. • Maximise commercial bank value In the whole Group, commercial initiatives are ongoing, bringing tangible results. In particular during the first half of 2018 the following initiatives have been mainly carried out: - strengthening of the offer of mobile payments through the new partnership with Google Pay activated in the last quarter of the year in Italy and Germany. The new app Google Pay has been added to Samsung Pay, Apple Pay and Alipay already previously activated; - the distribution of the new product “My Care Family” started in November; - UniCredit was one of the founding partners of we.trade consortium, the first blockchain trade platform able to offer cross-border instant payments; - strengthening of the Group digital offer through the new partnership with Meniga, firstly implemented in Italy and Serbia; - extension of the end-to-end processes optimisation in Italy, that after the redesign of 11 products (among which current accounts, mortgages, receivable financing, credit and debit card, asset under management) have been enlarged to two additional products (checks and asset under custody); - starting of the end-to-end products redesign program also in Germany, with a new in-branch account opening process for private banking customers already activated and the redesign of residential mortgages process under development; - release in Italy of the new product “Easy Export”, supporting the Italian companies internationalisation, leveraging on the new partnership with Alibaba; - increase of the remote sales (ATM, on line, mobile, call centre), that in Italy reached 28.8% of total sales of the bank’s products that have a direct selling process; - increase of the mobile user penetration in the CEE division, that reached 40.5% of the total clients. • Adopt a lean but strong steering Group Corporate Centre Referring to the Group Corporate Centre rationalisation, in 2018 its weight on total costs was equal to the 3.4%, decreasing by 85 basis points in comparison to the previuos year. The target set for the 2019 is 3.8% (recasted as of September 2018, previously 3.6%). Also thanks to these initiatives, the Group in 2018 reached a net profit of €3,892 million, in comparison to a rectified net result of 2017 for €3,578 million. It is worth reminding that the net profit of 2017 (equal to €5,473 million) has benefitted from the capital gains related to the sale of Pioneer for about €2.1 billion and the Polish subsidiaries for €102 million, partially balanced by the reclassification through profit and loss of Bank Pekao negative exchange effects as a result of dismissal occurred in the first half 2017 for -€310 million, by a non-recurring cost related to the FINO transaction for -€80 million and by transfer price adjustments of Pioneer and Pekao for -€9 million. Furthermore has to be considered that the 2017 Group net result was also including 130 million related to the economic results of Pioneer and Pekao achieved during the year, before the companies dismissal. Net of these elements the Group net profit would have been €3,578 million. 2 The amounts related to 2017 differ from the ones published at that time. For further details refer to the paragraphs “Reconciliation principles followed for the reclassified accounts“. 3 Common Equity Tier 1 Capital (CET1), calculated without taking into account the transitional adjustments applicable according to the regulation in force as of 31 December 2018. Consolidated report on operations Group results 46 2018 Annual Report and Accounts · UniCredit Main results and performance for the period2 Introduction In 2018 the Group initiatives have continued to be oriented to the accomplishment of the plan’s founding goals of the strategic plan 2016-2019 “Transform 2019”, achieving the following tangible results: • Strengthen and optimise capital After having successfully completed the Capital increase, the sale of subsidiaries (Pekao and Pioneer) and considering the net profit and balance sheets dynamics of the year, the Group shows a strong capital position with the CET13 ratio (fully loaded) at 12.07% at 31 December 2018. • Improve the asset quality During the year the proactive risk reduction measures have continued, leading the Non-Performing Exposure (NPE) ratio to 7.67% at the end of December, in comparison to the 9.80% of 1 January 2018 (following the new IFRS9 principle adoption), with a coverage ratio increased to 60.98%, compared to 59.25% of the beginning of 2018. • Transform the operating model Also in 2018 the strict cost control carried out by the Group produced results well in advance compared to the plan’s timing. The commercial network rationalization has continued, with the branch closures that have reached 881 units (of which 62 in the last quarter of 2018) starting from 2015, corresponding to 93% of the 944 closures forecasted by 2019 in the strategic plan. In the year the staff has been reduced by 5,166 FTEs, bringing the overall reduction to about 14,000 FTEs starting from the end of 2015 thus achieving a year in advance the exits expected by 2019. • Maximise commercial bank value In the whole Group, commercial initiatives are ongoing, bringing tangible results. In particular during the first half of 2018 the following initiatives have been mainly carried out: - strengthening of the offer of mobile payments through the new partnership with Google Pay activated in the last quarter of the year in Italy and Germany. The new app Google Pay has been added to Samsung Pay, Apple Pay and Alipay already previously activated; - the distribution of the new product “My Care Family” started in November; - UniCredit was one of the founding partners of we.trade consortium, the first blockchain trade platform able to offer cross-border instant payments; - strengthening of the Group digital offer through the new partnership with Meniga, firstly implemented in Italy and Serbia; - extension of the end-to-end processes optimisation in Italy, that after the redesign of 11 products (among which current accounts, mortgages, receivable financing, credit and debit card, asset under management) have been enlarged to two additional products (checks and asset under custody); - starting of the end-to-end products redesign program also in Germany, with a new in-branch account opening process for private banking customers already activated and the redesign of residential mortgages process under development; - release in Italy of the new product “Easy Export”, supporting the Italian companies internationalisation, leveraging on the new partnership with Alibaba; - increase of the remote sales (ATM, on line, mobile, call centre), that in Italy reached 28.8% of total sales of the bank’s products that have a direct selling process; - increase of the mobile user penetration in the CEE division, that reached 40.5% of the total clients. • Adopt a lean but strong steering Group Corporate Centre Referring to the Group Corporate Centre rationalisation, in 2018 its weight on total costs was equal to the 3.4%, decreasing by 85 basis points in comparison to the previuos year. The target set for the 2019 is 3.8% (recasted as of September 2018, previously 3.6%). Also thanks to these initiatives, the Group in 2018 reached a net profit of €3,892 million, in comparison to a rectified net result of 2017 for €3,578 million. It is worth reminding that the net profit of 2017 (equal to €5,473 million) has benefitted from the capital gains related to the sale of Pioneer for about €2.1 billion and the Polish subsidiaries for €102 million, partially balanced by the reclassification through profit and loss of Bank Pekao negative exchange effects as a result of dismissal occurred in the first half 2017 for -€310 million, by a non-recurring cost related to the FINO transaction for -€80 million and by transfer price adjustments of Pioneer and Pekao for -€9 million. Furthermore has to be considered that the 2017 Group net result was also including 130 million related to the economic results of Pioneer and Pekao achieved during the year, before the companies dismissal. Net of these elements the Group net profit would have been €3,578 million. 2 The amounts related to 2017 differ from the ones published at that time. For further details refer to the paragraphs “Reconciliation principles followed for the reclassified accounts“. 3 Common Equity Tier 1 Capital (CET1), calculated without taking into account the transitional adjustments applicable according to the regulation in force as of 31 December 2018. Consolidated report on operations Group results 46 2018 Annual Report and Accounts · UniCredit Main results and performance for the period2 Introduction In 2018 the Group initiatives have continued to be oriented to the accomplishment of the plan’s founding goals of the strategic plan 2016-2019 “Transform 2019”, achieving the following tangible results: • Strengthen and optimise capital After having successfully completed the Capital increase, the sale of subsidiaries (Pekao and Pioneer) and considering the net profit and balance sheets dynamics of the year, the Group shows a strong capital position with the CET13 ratio (fully loaded) at 12.07% at 31 December 2018. • Improve the asset quality During the year the proactive risk reduction measures have continued, leading the Non-Performing Exposure (NPE) ratio to 7.67% at the end of December, in comparison to the 9.80% of 1 January 2018 (following the new IFRS9 principle adoption), with a coverage ratio increased to 60.98%, compared to 59.25% of the beginning of 2018. • Transform the operating model Also in 2018 the strict cost control carried out by the Group produced results well in advance compared to the plan’s timing. The commercial network rationalization has continued, with the branch closures that have reached 881 units (of which 62 in the last quarter of 2018) starting from 2015, corresponding to 93% of the 944 closures forecasted by 2019 in the strategic plan. In the year the staff has been reduced by 5,166 FTEs, bringing the overall reduction to about 14,000 FTEs starting from the end of 2015 thus achieving a year in advance the exits expected by 2019. • Maximise commercial bank value In the whole Group, commercial initiatives are ongoing, bringing tangible results. In particular during the first half of 2018 the following initiatives have been mainly carried out: - strengthening of the offer of mobile payments through the new partnership with Google Pay activated in the last quarter of the year in Italy and Germany. The new app Google Pay has been added to Samsung Pay, Apple Pay and Alipay already previously activated; - the distribution of the new product “My Care Family” started in November; - UniCredit was one of the founding partners of we.trade consortium, the first blockchain trade platform able to offer cross-border instant payments; - strengthening of the Group digital offer through the new partnership with Meniga, firstly implemented in Italy and Serbia; - extension of the end-to-end processes optimisation in Italy, that after the redesign of 11 products (among which current accounts, mortgages, receivable financing, credit and debit card, asset under management) have been enlarged to two additional products (checks and asset under custody); - starting of the end-to-end products redesign program also in Germany, with a new in-branch account opening process for private banking customers already activated and the redesign of residential mortgages process under development; - release in Italy of the new product “Easy Export”, supporting the Italian companies internationalisation, leveraging on the new partnership with Alibaba; - increase of the remote sales (ATM, on line, mobile, call centre), that in Italy reached 28.8% of total sales of the bank’s products that have a direct selling process; - increase of the mobile user penetration in the CEE division, that reached 40.5% of the total clients. • Adopt a lean but strong steering Group Corporate Centre Referring to the Group Corporate Centre rationalisation, in 2018 its weight on total costs was equal to the 3.4%, decreasing by 85 basis points in comparison to the previuos year. The target set for the 2019 is 3.8% (recasted as of September 2018, previously 3.6%). Also thanks to these initiatives, the Group in 2018 reached a net profit of €3,892 million, in comparison to a rectified net result of 2017 for €3,578 million. It is worth reminding that the net profit of 2017 (equal to €5,473 million) has benefitted from the capital gains related to the sale of Pioneer for about €2.1 billion and the Polish subsidiaries for €102 million, partially balanced by the reclassification through profit and loss of Bank Pekao negative exchange effects as a result of dismissal occurred in the first half 2017 for -€310 million, by a non-recurring cost related to the FINO transaction for -€80 million and by transfer price adjustments of Pioneer and Pekao for -€9 million. Furthermore has to be considered that the 2017 Group net result was also including 130 million related to the economic results of Pioneer and Pekao achieved during the year, before the companies dismissal. Net of these elements the Group net profit would have been €3,578 million. 2 The amounts related to 2017 differ from the ones published at that time. For further details refer to the paragraphs “Reconciliation principles followed for the reclassified accounts“. 3 Common Equity Tier 1 Capital (CET1), calculated without taking into account the transitional adjustments applicable according to the regulation in force as of 31 December 2018. Consolidated report on operations Group results 46 2018 Annual Report and Accounts · UniCredit Main results and performance for the period2 Introduction In 2018 the Group initiatives have continued to be oriented to the accomplishment of the plan’s founding goals of the strategic plan 2016-2019 “Transform 2019”, achieving the following tangible results: • Strengthen and optimise capital After having successfully completed the Capital increase, the sale of subsidiaries (Pekao and Pioneer) and considering the net profit and balance sheets dynamics of the year, the Group shows a strong capital position with the CET13 ratio (fully loaded) at 12.07% at 31 December 2018. • Improve the asset quality During the year the proactive risk reduction measures have continued, leading the Non-Performing Exposure (NPE) ratio to 7.67% at the end of December, in comparison to the 9.80% of 1 January 2018 (following the new IFRS9 principle adoption), with a coverage ratio increased to 60.98%, compared to 59.25% of the beginning of 2018. • Transform the operating model Also in 2018 the strict cost control carried out by the Group produced results well in advance compared to the plan’s timing. The commercial network rationalization has continued, with the branch closures that have reached 881 units (of which 62 in the last quarter of 2018) starting from 2015, corresponding to 93% of the 944 closures forecasted by 2019 in the strategic plan. In the year the staff has been reduced by 5,166 FTEs, bringing the overall reduction to about 14,000 FTEs starting from the end of 2015 thus achieving a year in advance the exits expected by 2019. • Maximise commercial bank value In the whole Group, commercial initiatives are ongoing, bringing tangible results. In particular during the first half of 2018 the following initiatives have been mainly carried out: - strengthening of the offer of mobile payments through the new partnership with Google Pay activated in the last quarter of the year in Italy and Germany. The new app Google Pay has been added to Samsung Pay, Apple Pay and Alipay already previously activated; - the distribution of the new product “My Care Family” started in November; - UniCredit was one of the founding partners of we.trade consortium, the first blockchain trade platform able to offer cross-border instant payments; - strengthening of the Group digital offer through the new partnership with Meniga, firstly implemented in Italy and Serbia; - extension of the end-to-end processes optimisation in Italy, that after the redesign of 11 products (among which current accounts, mortgages, receivable financing, credit and debit card, asset under management) have been enlarged to two additional products (checks and asset under custody); - starting of the end-to-end products redesign program also in Germany, with a new in-branch account opening process for private banking customers already activated and the redesign of residential mortgages process under development; - release in Italy of the new product “Easy Export”, supporting the Italian companies internationalisation, leveraging on the new partnership with Alibaba; - increase of the remote sales (ATM, on line, mobile, call centre), that in Italy reached 28.8% of total sales of the bank’s products that have a direct selling process; - increase of the mobile user penetration in the CEE division, that reached 40.5% of the total clients. • Adopt a lean but strong steering Group Corporate Centre Referring to the Group Corporate Centre rationalisation, in 2018 its weight on total costs was equal to the 3.4%, decreasing by 85 basis points in comparison to the previuos year. The target set for the 2019 is 3.8% (recasted as of September 2018, previously 3.6%). Also thanks to these initiatives, the Group in 2018 reached a net profit of €3,892 million, in comparison to a rectified net result of 2017 for €3,578 million. It is worth reminding that the net profit of 2017 (equal to €5,473 million) has benefitted from the capital gains related to the sale of Pioneer for about €2.1 billion and the Polish subsidiaries for €102 million, partially balanced by the reclassification through profit and loss of Bank Pekao negative exchange effects as a result of dismissal occurred in the first half 2017 for -€310 million, by a non-recurring cost related to the FINO transaction for -€80 million and by transfer price adjustments of Pioneer and Pekao for -€9 million. Furthermore has to be considered that the 2017 Group net result was also including 130 million related to the economic results of Pioneer and Pekao achieved during the year, before the companies dismissal. Net of these elements the Group net profit would have been €3,578 million. 2 The amounts related to 2017 differ from the ones published at that time. For further details refer to the paragraphs “Reconciliation principles followed for the reclassified accounts“. 3 Common Equity Tier 1 Capital (CET1), calculated without taking into account the transitional adjustments applicable according to the regulation in force as of 31 December 2018. Consolidated report on operations Group results 46 2018 Annual Report and Accounts · UniCredit Main results and performance for the period2 Introduction In 2018 the Group initiatives have continued to be oriented to the accomplishment of the plan’s founding goals of the strategic plan 2016-2019 “Transform 2019”, achieving the following tangible results: • Strengthen and optimise capital After having successfully completed the Capital increase, the sale of subsidiaries (Pekao and Pioneer) and considering the net profit and balance sheets dynamics of the year, the Group shows a strong capital position with the CET13 ratio (fully loaded) at 12.07% at 31 December 2018. • Improve the asset quality During the year the proactive risk reduction measures have continued, leading the Non-Performing Exposure (NPE) ratio to 7.67% at the end of December, in comparison to the 9.80% of 1 January 2018 (following the new IFRS9 principle adoption), with a coverage ratio increased to 60.98%, compared to 59.25% of the beginning of 2018. • Transform the operating model Also in 2018 the strict cost control carried out by the Group produced results well in advance compared to the plan’s timing. The commercial network rationalization has continued, with the branch closures that have reached 881 units (of which 62 in the last quarter of 2018) starting from 2015, corresponding to 93% of the 944 closures forecasted by 2019 in the strategic plan. In the year the staff has been reduced by 5,166 FTEs, bringing the overall reduction to about 14,000 FTEs starting from the end of 2015 thus achieving a year in advance the exits expected by 2019. • Maximise commercial bank value In the whole Group, commercial initiatives are ongoing, bringing tangible results. In particular during the first half of 2018 the following initiatives have been mainly carried out: - strengthening of the offer of mobile payments through the new partnership with Google Pay activated in the last quarter of the year in Italy and Germany. The new app Google Pay has been added to Samsung Pay, Apple Pay and Alipay already previously activated; - the distribution of the new product “My Care Family” started in November; - UniCredit was one of the founding partners of we.trade consortium, the first blockchain trade platform able to offer cross-border instant payments; - strengthening of the Group digital offer through the new partnership with Meniga, firstly implemented in Italy and Serbia; - extension of the end-to-end processes optimisation in Italy, that after the redesign of 11 products (among which current accounts, mortgages, receivable financing, credit and debit card, asset under management) have been enlarged to two additional products (checks and asset under custody); - starting of the end-to-end products redesign program also in Germany, with a new in-branch account opening process for private banking customers already activated and the redesign of residential mortgages process under development; - release in Italy of the new product “Easy Export”, supporting the Italian companies internationalisation, leveraging on the new partnership with Alibaba; - increase of the remote sales (ATM, on line, mobile, call centre), that in Italy reached 28.8% of total sales of the bank’s products that have a direct selling process; - increase of the mobile user penetration in the CEE division, that reached 40.5% of the total clients. • Adopt a lean but strong steering Group Corporate Centre Referring to the Group Corporate Centre rationalisation, in 2018 its weight on total costs was equal to the 3.4%, decreasing by 85 basis points in comparison to the previuos year. The target set for the 2019 is 3.8% (recasted as of September 2018, previously 3.6%). Also thanks to these initiatives, the Group in 2018 reached a net profit of €3,892 million, in comparison to a rectified net result of 2017 for €3,578 million. It is worth reminding that the net profit of 2017 (equal to €5,473 million) has benefitted from the capital gains related to the sale of Pioneer for about €2.1 billion and the Polish subsidiaries for €102 million, partially balanced by the reclassification through profit and loss of Bank Pekao negative exchange effects as a result of dismissal occurred in the first half 2017 for -€310 million, by a non-recurring cost related to the FINO transaction for -€80 million and by transfer price adjustments of Pioneer and Pekao for -€9 million. Furthermore has to be considered that the 2017 Group net result was also including 130 million related to the economic results of Pioneer and Pekao achieved during the year, before the companies dismissal. Net of these elements the Group net profit would have been €3,578 million. 2 The amounts related to 2017 differ from the ones published at that time. For further details refer to the paragraphs “Reconciliation principles followed for the reclassified accounts“. 3 Common Equity Tier 1 Capital (CET1), calculated without taking into account the transitional adjustments applicable according to the regulation in force as of 31 December 2018. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 47 The 2018 Group net profit (€3,892 million) was instead affected in the third quarter of the year by the Koc Finansal Hizmetler Istanbul share impairment for -€846 million (-€851 million as at 31 December 2018) and by the extraordinary positive impact accounted in the fourth quarter of the year for a total amount of €887million related to: • the recognition through P&L of the temporary differences tax effect (€871 million) deriving from the change, due to new Italian Budgetary Law, of the fiscal treatment related to the IFRS9 First Time Adoption on Loan Loss Provisions; • the effect on IRAP current tax (€16 million) following the adoption of the abovementioned approach. Excluding these extraordinary elements, during 2018 a net profit of €3,852 million would have been recorded, increasing by 7.7% in comparison to the 2017 rectified net result (€3,578 million). In case the positive tax effects related to IFRS9 First Time Adoption would have been recognised through equity, the 2018 Group net profit (€3,892 million) would have been equal to €3,006 million; 20% of this last amount is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting . It should also be noted that according to the IFRS5 accounting principle, Pioneer and Bank Pekao, subject to disposal to third parties, have been classified already since 2016 until the sale in 2017, as dismissal legal entities and their economic results have been accounted to item “Profit (Loss) from non-current assets held for sale, after tax”, while their assets and liabilities have been respectively recognised under item “Non-current assets and disposal groups classified as held for sale” and item “Liabilities included in disposal groups classified as held for sale”. Always according to the IFRS5 accounting principle the positions involved by the “FINO Project” have been classified in 2016 and until the sale took place in July 2017 as “Non-current assets and disposal groups classified as held for sale”. Operating income In 2018 Group’s revenues were €19,723 million, decreasing by 1.1% compared to 2017 (down by 0.2% at constant exchange rates). The decrease was mainly due to the lower net trading income that more than balanced the improvements recorded by the net interest and fees. In particular, net interest was equal to €10,856 million, increasing by 2.1% compared to 2017 (up by 2.6% at constant exchange rates). It is worth remembering that the 2017 benefitted from a release of interests on fiscal related accruals in Germany with regards to the years 2005-2008, that proved to be in excess, for an amount of €90 million, while in 2018 an extraordinary amount of €20 million for fiscal accruals release has been recorded. Net of this extraordinary components net interest would has registered an yearly growth of 2.8%. During the 2018 net interest was characterised by the reduction of interests income on lending to customers, as well as by the time value component decline and by the increase of the passive interests on deposits following the collection's volumes growth. These effects have been mainly balanced by the decrease of the average cost of the bonds issues, as well as by the good result of treasury and investment & trading activities. Credit spreads have continued to shrink also in 2018, notwithstanding the stabilisation of the market rates, remained anyway in a negative territory (average 3 months Euribor in 2018 was equal to -0.32% increasing only by 1 basis point in comparison to 2017). Net interests improvement has been generated by an upturning loans volumes’ dynamic (€471.8 billion as at 31 December 2018, up by €32.9 billion or up by 7.5% over the last year), that more than offset the €7.6 billion reduction of the Non Core component, subject of the initiatives aimed to reduce the Non-Performing Exposure (NPE). The customer loans highlighted a positive trend also excluding the repos component, recording a 5.0% growth compared to the last year, or up by 7.1% net of the Non Core component. All the different geographic areas in which the Group is operating have extensively contributed to the customers loans net of repos growth, with Italy that shows an increase of 6.7%, net of Non Core Division contribution, compared to 2017, Germany up by 7.3% and Austria up 5.8%. The loans improvement has characterised also the CEE Division’s countries (up by 12.2% at constant exchange rates), mainly driven by Russia (up by 29.0% at constant exchange rates), Hungary (up by 17.8% at constant exchange rates), Serbia (up by 10.2% at constant exchange rates), Bosnia (up by 9.0%), Czech Republic (up by 6.6% at constant exchange rates) and Bulgaria (up by 6.2%). Non Core Division recorded a further reduction of customers loans net of repos from €14.2 billion at the end of December 2017 to €6.6 billion at the end of December 2018 (down by 53.4%), continuing to pursue the goal of the Division’s portfolio rundown by the 2021. Deposits from customers, equal to €479.0 billion, have been growing by 3.5% (up by 4.0% at constant exchange rates) compared to 2017. The increase has been confirmed also by the deposits from customers net of repos: up by 2.0% (up by 2.6% at constant exchange rates). More specifically, the deposits from customers net of repos grew in Italy up by 3.0% (net of Non Core Division) and Austria up by 1.3%, while Germany recorded a decrease of 0.7%. The CEE Division grew by 5.3% (up by 9.1% at constant exchange rates) compared to 2017, mainly driven by Russia (up by 22.8% at constant exchange rates), Serbia (up by 18.8% at constant exchange rates), Hungary (up by 15.5% at constant exchange rates), Bosnia (up by 10.3% at constant exchange rates) and Romania (up by 8.9% at constant exchange rates). Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 47 The 2018 Group net profit (€3,892 million) was instead affected in the third quarter of the year by the Koc Finansal Hizmetler Istanbul share impairment for -€846 million (-€851 million as at 31 December 2018) and by the extraordinary positive impact accounted in the fourth quarter of the year for a total amount of €887million related to: • the recognition through P&L of the temporary differences tax effect (€871 million) deriving from the change, due to new Italian Budgetary Law, of the fiscal treatment related to the IFRS9 First Time Adoption on Loan Loss Provisions; • the effect on IRAP current tax (€16 million) following the adoption of the abovementioned approach. Excluding these extraordinary elements, during 2018 a net profit of €3,852 million would have been recorded, increasing by 7.7% in comparison to the 2017 rectified net result (€3,578 million). In case the positive tax effects related to IFRS9 First Time Adoption would have been recognised through equity, the 2018 Group net profit (€3,892 million) would have been equal to €3,006 million; 20% of this last amount is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting . It should also be noted that according to the IFRS5 accounting principle, Pioneer and Bank Pekao, subject to disposal to third parties, have been classified already since 2016 until the sale in 2017, as dismissal legal entities and their economic results have been accounted to item “Profit (Loss) from non-current assets held for sale, after tax”, while their assets and liabilities have been respectively recognised under item “Non-current assets and disposal groups classified as held for sale” and item “Liabilities included in disposal groups classified as held for sale”. Always according to the IFRS5 accounting principle the positions involved by the “FINO Project” have been classified in 2016 and until the sale took place in July 2017 as “Non-current assets and disposal groups classified as held for sale”. Operating income In 2018 Group’s revenues were €19,723 million, decreasing by 1.1% compared to 2017 (down by 0.2% at constant exchange rates). The decrease was mainly due to the lower net trading income that more than balanced the improvements recorded by the net interest and fees. In particular, net interest was equal to €10,856 million, increasing by 2.1% compared to 2017 (up by 2.6% at constant exchange rates). It is worth remembering that the 2017 benefitted from a release of interests on fiscal related accruals in Germany with regards to the years 2005-2008, that proved to be in excess, for an amount of €90 million, while in 2018 an extraordinary amount of €20 million for fiscal accruals release has been recorded. Net of this extraordinary components net interest would has registered an yearly growth of 2.8%. During the 2018 net interest was characterised by the reduction of interests income on lending to customers, as well as by the time value component decline and by the increase of the passive interests on deposits following the collection's volumes growth. These effects have been mainly balanced by the decrease of the average cost of the bonds issues, as well as by the good result of treasury and investment & trading activities. Credit spreads have continued to shrink also in 2018, notwithstanding the stabilisation of the market rates, remained anyway in a negative territory (average 3 months Euribor in 2018 was equal to -0.32% increasing only by 1 basis point in comparison to 2017). Net interests improvement has been generated by an upturning loans volumes’ dynamic (€471.8 billion as at 31 December 2018, up by €32.9 billion or up by 7.5% over the last year), that more than offset the €7.6 billion reduction of the Non Core component, subject of the initiatives aimed to reduce the Non-Performing Exposure (NPE). The customer loans highlighted a positive trend also excluding the repos component, recording a 5.0% growth compared to the last year, or up by 7.1% net of the Non Core component. All the different geographic areas in which the Group is operating have extensively contributed to the customers loans net of repos growth, with Italy that shows an increase of 6.7%, net of Non Core Division contribution, compared to 2017, Germany up by 7.3% and Austria up 5.8%. The loans improvement has characterised also the CEE Division’s countries (up by 12.2% at constant exchange rates), mainly driven by Russia (up by 29.0% at constant exchange rates), Hungary (up by 17.8% at constant exchange rates), Serbia (up by 10.2% at constant exchange rates), Bosnia (up by 9.0%), Czech Republic (up by 6.6% at constant exchange rates) and Bulgaria (up by 6.2%). Non Core Division recorded a further reduction of customers loans net of repos from €14.2 billion at the end of December 2017 to €6.6 billion at the end of December 2018 (down by 53.4%), continuing to pursue the goal of the Division’s portfolio rundown by the 2021. Deposits from customers, equal to €479.0 billion, have been growing by 3.5% (up by 4.0% at constant exchange rates) compared to 2017. The increase has been confirmed also by the deposits from customers net of repos: up by 2.0% (up by 2.6% at constant exchange rates). More specifically, the deposits from customers net of repos grew in Italy up by 3.0% (net of Non Core Division) and Austria up by 1.3%, while Germany recorded a decrease of 0.7%. The CEE Division grew by 5.3% (up by 9.1% at constant exchange rates) compared to 2017, mainly driven by Russia (up by 22.8% at constant exchange rates), Serbia (up by 18.8% at constant exchange rates), Hungary (up by 15.5% at constant exchange rates), Bosnia (up by 10.3% at constant exchange rates) and Romania (up by 8.9% at constant exchange rates). Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 47 The 2018 Group net profit (€3,892 million) was instead affected in the third quarter of the year by the Koc Finansal Hizmetler Istanbul share impairment for -€846 million (-€851 million as at 31 December 2018) and by the extraordinary positive impact accounted in the fourth quarter of the year for a total amount of €887million related to: • the recognition through P&L of the temporary differences tax effect (€871 million) deriving from the change, due to new Italian Budgetary Law, of the fiscal treatment related to the IFRS9 First Time Adoption on Loan Loss Provisions; • the effect on IRAP current tax (€16 million) following the adoption of the abovementioned approach. Excluding these extraordinary elements, during 2018 a net profit of €3,852 million would have been recorded, increasing by 7.7% in comparison to the 2017 rectified net result (€3,578 million). In case the positive tax effects related to IFRS9 First Time Adoption would have been recognised through equity, the 2018 Group net profit (€3,892 million) would have been equal to €3,006 million; 20% of this last amount is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting . It should also be noted that according to the IFRS5 accounting principle, Pioneer and Bank Pekao, subject to disposal to third parties, have been classified already since 2016 until the sale in 2017, as dismissal legal entities and their economic results have been accounted to item “Profit (Loss) from non-current assets held for sale, after tax”, while their assets and liabilities have been respectively recognised under item “Non-current assets and disposal groups classified as held for sale” and item “Liabilities included in disposal groups classified as held for sale”. Always according to the IFRS5 accounting principle the positions involved by the “FINO Project” have been classified in 2016 and until the sale took place in July 2017 as “Non-current assets and disposal groups classified as held for sale”. Operating income In 2018 Group’s revenues were €19,723 million, decreasing by 1.1% compared to 2017 (down by 0.2% at constant exchange rates). The decrease was mainly due to the lower net trading income that more than balanced the improvements recorded by the net interest and fees. In particular, net interest was equal to €10,856 million, increasing by 2.1% compared to 2017 (up by 2.6% at constant exchange rates). It is worth remembering that the 2017 benefitted from a release of interests on fiscal related accruals in Germany with regards to the years 2005-2008, that proved to be in excess, for an amount of €90 million, while in 2018 an extraordinary amount of €20 million for fiscal accruals release has been recorded. Net of this extraordinary components net interest would has registered an yearly growth of 2.8%. During the 2018 net interest was characterised by the reduction of interests income on lending to customers, as well as by the time value component decline and by the increase of the passive interests on deposits following the collection's volumes growth. These effects have been mainly balanced by the decrease of the average cost of the bonds issues, as well as by the good result of treasury and investment & trading activities. Credit spreads have continued to shrink also in 2018, notwithstanding the stabilisation of the market rates, remained anyway in a negative territory (average 3 months Euribor in 2018 was equal to -0.32% increasing only by 1 basis point in comparison to 2017). Net interests improvement has been generated by an upturning loans volumes’ dynamic (€471.8 billion as at 31 December 2018, up by €32.9 billion or up by 7.5% over the last year), that more than offset the €7.6 billion reduction of the Non Core component, subject of the initiatives aimed to reduce the Non-Performing Exposure (NPE). The customer loans highlighted a positive trend also excluding the repos component, recording a 5.0% growth compared to the last year, or up by 7.1% net of the Non Core component. All the different geographic areas in which the Group is operating have extensively contributed to the customers loans net of repos growth, with Italy that shows an increase of 6.7%, net of Non Core Division contribution, compared to 2017, Germany up by 7.3% and Austria up 5.8%. The loans improvement has characterised also the CEE Division’s countries (up by 12.2% at constant exchange rates), mainly driven by Russia (up by 29.0% at constant exchange rates), Hungary (up by 17.8% at constant exchange rates), Serbia (up by 10.2% at constant exchange rates), Bosnia (up by 9.0%), Czech Republic (up by 6.6% at constant exchange rates) and Bulgaria (up by 6.2%). Non Core Division recorded a further reduction of customers loans net of repos from €14.2 billion at the end of December 2017 to €6.6 billion at the end of December 2018 (down by 53.4%), continuing to pursue the goal of the Division’s portfolio rundown by the 2021. Deposits from customers, equal to €479.0 billion, have been growing by 3.5% (up by 4.0% at constant exchange rates) compared to 2017. The increase has been confirmed also by the deposits from customers net of repos: up by 2.0% (up by 2.6% at constant exchange rates). More specifically, the deposits from customers net of repos grew in Italy up by 3.0% (net of Non Core Division) and Austria up by 1.3%, while Germany recorded a decrease of 0.7%. The CEE Division grew by 5.3% (up by 9.1% at constant exchange rates) compared to 2017, mainly driven by Russia (up by 22.8% at constant exchange rates), Serbia (up by 18.8% at constant exchange rates), Hungary (up by 15.5% at constant exchange rates), Bosnia (up by 10.3% at constant exchange rates) and Romania (up by 8.9% at constant exchange rates). Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 47 The 2018 Group net profit (€3,892 million) was instead affected in the third quarter of the year by the Koc Finansal Hizmetler Istanbul share impairment for -€846 million (-€851 million as at 31 December 2018) and by the extraordinary positive impact accounted in the fourth quarter of the year for a total amount of €887million related to: • the recognition through P&L of the temporary differences tax effect (€871 million) deriving from the change, due to new Italian Budgetary Law, of the fiscal treatment related to the IFRS9 First Time Adoption on Loan Loss Provisions; • the effect on IRAP current tax (€16 million) following the adoption of the abovementioned approach. Excluding these extraordinary elements, during 2018 a net profit of €3,852 million would have been recorded, increasing by 7.7% in comparison to the 2017 rectified net result (€3,578 million). In case the positive tax effects related to IFRS9 First Time Adoption would have been recognised through equity, the 2018 Group net profit (€3,892 million) would have been equal to €3,006 million; 20% of this last amount is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting . It should also be noted that according to the IFRS5 accounting principle, Pioneer and Bank Pekao, subject to disposal to third parties, have been classified already since 2016 until the sale in 2017, as dismissal legal entities and their economic results have been accounted to item “Profit (Loss) from non-current assets held for sale, after tax”, while their assets and liabilities have been respectively recognised under item “Non-current assets and disposal groups classified as held for sale” and item “Liabilities included in disposal groups classified as held for sale”. Always according to the IFRS5 accounting principle the positions involved by the “FINO Project” have been classified in 2016 and until the sale took place in July 2017 as “Non-current assets and disposal groups classified as held for sale”. Operating income In 2018 Group’s revenues were €19,723 million, decreasing by 1.1% compared to 2017 (down by 0.2% at constant exchange rates). The decrease was mainly due to the lower net trading income that more than balanced the improvements recorded by the net interest and fees. In particular, net interest was equal to €10,856 million, increasing by 2.1% compared to 2017 (up by 2.6% at constant exchange rates). It is worth remembering that the 2017 benefitted from a release of interests on fiscal related accruals in Germany with regards to the years 2005-2008, that proved to be in excess, for an amount of €90 million, while in 2018 an extraordinary amount of €20 million for fiscal accruals release has been recorded. Net of this extraordinary components net interest would has registered an yearly growth of 2.8%. During the 2018 net interest was characterised by the reduction of interests income on lending to customers, as well as by the time value component decline and by the increase of the passive interests on deposits following the collection's volumes growth. These effects have been mainly balanced by the decrease of the average cost of the bonds issues, as well as by the good result of treasury and investment & trading activities. Credit spreads have continued to shrink also in 2018, notwithstanding the stabilisation of the market rates, remained anyway in a negative territory (average 3 months Euribor in 2018 was equal to -0.32% increasing only by 1 basis point in comparison to 2017). Net interests improvement has been generated by an upturning loans volumes’ dynamic (€471.8 billion as at 31 December 2018, up by €32.9 billion or up by 7.5% over the last year), that more than offset the €7.6 billion reduction of the Non Core component, subject of the initiatives aimed to reduce the Non-Performing Exposure (NPE). The customer loans highlighted a positive trend also excluding the repos component, recording a 5.0% growth compared to the last year, or up by 7.1% net of the Non Core component. All the different geographic areas in which the Group is operating have extensively contributed to the customers loans net of repos growth, with Italy that shows an increase of 6.7%, net of Non Core Division contribution, compared to 2017, Germany up by 7.3% and Austria up 5.8%. The loans improvement has characterised also the CEE Division’s countries (up by 12.2% at constant exchange rates), mainly driven by Russia (up by 29.0% at constant exchange rates), Hungary (up by 17.8% at constant exchange rates), Serbia (up by 10.2% at constant exchange rates), Bosnia (up by 9.0%), Czech Republic (up by 6.6% at constant exchange rates) and Bulgaria (up by 6.2%). Non Core Division recorded a further reduction of customers loans net of repos from €14.2 billion at the end of December 2017 to €6.6 billion at the end of December 2018 (down by 53.4%), continuing to pursue the goal of the Division’s portfolio rundown by the 2021. Deposits from customers, equal to €479.0 billion, have been growing by 3.5% (up by 4.0% at constant exchange rates) compared to 2017. The increase has been confirmed also by the deposits from customers net of repos: up by 2.0% (up by 2.6% at constant exchange rates). More specifically, the deposits from customers net of repos grew in Italy up by 3.0% (net of Non Core Division) and Austria up by 1.3%, while Germany recorded a decrease of 0.7%. The CEE Division grew by 5.3% (up by 9.1% at constant exchange rates) compared to 2017, mainly driven by Russia (up by 22.8% at constant exchange rates), Serbia (up by 18.8% at constant exchange rates), Hungary (up by 15.5% at constant exchange rates), Bosnia (up by 10.3% at constant exchange rates) and Romania (up by 8.9% at constant exchange rates). Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 47 The 2018 Group net profit (€3,892 million) was instead affected in the third quarter of the year by the Koc Finansal Hizmetler Istanbul share impairment for -€846 million (-€851 million as at 31 December 2018) and by the extraordinary positive impact accounted in the fourth quarter of the year for a total amount of €887million related to: • the recognition through P&L of the temporary differences tax effect (€871 million) deriving from the change, due to new Italian Budgetary Law, of the fiscal treatment related to the IFRS9 First Time Adoption on Loan Loss Provisions; • the effect on IRAP current tax (€16 million) following the adoption of the abovementioned approach. Excluding these extraordinary elements, during 2018 a net profit of €3,852 million would have been recorded, increasing by 7.7% in comparison to the 2017 rectified net result (€3,578 million). In case the positive tax effects related to IFRS9 First Time Adoption would have been recognised through equity, the 2018 Group net profit (€3,892 million) would have been equal to €3,006 million; 20% of this last amount is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting . It should also be noted that according to the IFRS5 accounting principle, Pioneer and Bank Pekao, subject to disposal to third parties, have been classified already since 2016 until the sale in 2017, as dismissal legal entities and their economic results have been accounted to item “Profit (Loss) from non-current assets held for sale, after tax”, while their assets and liabilities have been respectively recognised under item “Non-current assets and disposal groups classified as held for sale” and item “Liabilities included in disposal groups classified as held for sale”. Always according to the IFRS5 accounting principle the positions involved by the “FINO Project” have been classified in 2016 and until the sale took place in July 2017 as “Non-current assets and disposal groups classified as held for sale”. Operating income In 2018 Group’s revenues were €19,723 million, decreasing by 1.1% compared to 2017 (down by 0.2% at constant exchange rates). The decrease was mainly due to the lower net trading income that more than balanced the improvements recorded by the net interest and fees. In particular, net interest was equal to €10,856 million, increasing by 2.1% compared to 2017 (up by 2.6% at constant exchange rates). It is worth remembering that the 2017 benefitted from a release of interests on fiscal related accruals in Germany with regards to the years 2005-2008, that proved to be in excess, for an amount of €90 million, while in 2018 an extraordinary amount of €20 million for fiscal accruals release has been recorded. Net of this extraordinary components net interest would has registered an yearly growth of 2.8%. During the 2018 net interest was characterised by the reduction of interests income on lending to customers, as well as by the time value component decline and by the increase of the passive interests on deposits following the collection's volumes growth. These effects have been mainly balanced by the decrease of the average cost of the bonds issues, as well as by the good result of treasury and investment & trading activities. Credit spreads have continued to shrink also in 2018, notwithstanding the stabilisation of the market rates, remained anyway in a negative territory (average 3 months Euribor in 2018 was equal to -0.32% increasing only by 1 basis point in comparison to 2017). Net interests improvement has been generated by an upturning loans volumes’ dynamic (€471.8 billion as at 31 December 2018, up by €32.9 billion or up by 7.5% over the last year), that more than offset the €7.6 billion reduction of the Non Core component, subject of the initiatives aimed to reduce the Non-Performing Exposure (NPE). The customer loans highlighted a positive trend also excluding the repos component, recording a 5.0% growth compared to the last year, or up by 7.1% net of the Non Core component. All the different geographic areas in which the Group is operating have extensively contributed to the customers loans net of repos growth, with Italy that shows an increase of 6.7%, net of Non Core Division contribution, compared to 2017, Germany up by 7.3% and Austria up 5.8%. The loans improvement has characterised also the CEE Division’s countries (up by 12.2% at constant exchange rates), mainly driven by Russia (up by 29.0% at constant exchange rates), Hungary (up by 17.8% at constant exchange rates), Serbia (up by 10.2% at constant exchange rates), Bosnia (up by 9.0%), Czech Republic (up by 6.6% at constant exchange rates) and Bulgaria (up by 6.2%). Non Core Division recorded a further reduction of customers loans net of repos from €14.2 billion at the end of December 2017 to €6.6 billion at the end of December 2018 (down by 53.4%), continuing to pursue the goal of the Division’s portfolio rundown by the 2021. Deposits from customers, equal to €479.0 billion, have been growing by 3.5% (up by 4.0% at constant exchange rates) compared to 2017. The increase has been confirmed also by the deposits from customers net of repos: up by 2.0% (up by 2.6% at constant exchange rates). More specifically, the deposits from customers net of repos grew in Italy up by 3.0% (net of Non Core Division) and Austria up by 1.3%, while Germany recorded a decrease of 0.7%. The CEE Division grew by 5.3% (up by 9.1% at constant exchange rates) compared to 2017, mainly driven by Russia (up by 22.8% at constant exchange rates), Serbia (up by 18.8% at constant exchange rates), Hungary (up by 15.5% at constant exchange rates), Bosnia (up by 10.3% at constant exchange rates) and Romania (up by 8.9% at constant exchange rates). Consolidated report on operations Group results 48 2018 Annual Report and Accounts · UniCredit Dividends and other income from equity investments (which include the profits of the companies accounted at equity method) in 2018 amounted to €738 million, increasing by 100 million, or up by 15.6% (up by 32.5% at constant exchange rates) compared with 2017. Main incomes stemmed out from dividends from Bank Pekao S.A. shares (€30 million) that have been however substantially balanced in the net trading income for the mark to market valuation of Bank Pekao S.A. shares and for realized and unrealized effects of the linked “Secured mandatorily exchangeable equity-linked certificate”), from an extraordinary gain of Camfin, consolidated with the equity method (€29 million) and from the disappearance of the charge generated by the sale of Yapi Moscow recorded in 2017 (-€26 million). The net fees and commissions in 2018 amounted to €6,756 million, growing by 0.9% (up by 1.1% at constant exchange rates) compared to the previous year. The growth has been determined by the transactional services fees (up by 10.4% in comparison to 2017; up by 10.7% at constant exchange rates), thanks to the good performance of the current account fees and credit and debit cards fees. The investment services fees were down, recording a 4.9% decrease in comparison to the 2017 (down by 4.8% at constant exchange rates), mainly generated by the investment funds diminished sales in the field of the assets under management. Financing services were decreasing too, resulting down by 1.9% compared to 2017 (down by 1.5% at constant exchange rates), mainly as an effect of the lower commissions for “Money supply” and guarantees. The net trading income in 2018 was firmly decreasing, moving from €1,818 million of 2017 to €1,245 million of the current year (down by 31.5% or down by 31.7% at constant exchange rate), also due to the unfavourable market environment, affected by the temporary spread widening, that caused a drop of the gains by the client activity and securities portfolio. In front of these changes in market conditions, in particular with reference to the volatility affecting the Italian government bonds, a further allocation of newly acquired government bonds was also carried out in the portfolio of financial assets valued at amortized cost, with an underlying model of business aimed at the collection of contractual cash flows ("Held to collect"), which goes hand in hand with the traditional operations with an underlying business model aimed at both the collection of contractual cash flows and the sale of the instruments ("Held to collect and sell ") and determines the classification of the related securities in the portfolio "financial assets valued at fair value through other comprehensive income". Finally, in 2018 the net other expenses/income amounted to €130 million, down by €26 million over the 2017 (down by16.9% and down by 17.6% at constant exchange rates). Operating income (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Net interest 10,856 10,633 + 2.1% 2,776 + 0.4% Dividends and other income from equity investments 738 638 + 15.6% 219 + 46.7% Net fees and commissions 6,756 6,695 + 0.9% 1,659 + 1.9% Net trading income 1,245 1,818 - 31.5% 159 - 42.5% Net other expenses/income 130 156 - 16.9% 42 n.m. Operating income 19,723 19,941 - 1.1% 4,856 + 0.9% Operating costs Group’s operating costs in 2018 were equal to €10,698 million, decreasing by 5.6% compared to 2017 (down by 5.4% at constant exchange rates), thanks to the continuation of the staff resizing initiatives and the administrative expenses control actions. In detail, the staff expenses of 2018 were €6,423 million, decreasing by 7.0% over the 2017 (down by 6.8% at constant exchange rates). This result was achieved mainly thanks to the resolute dynamic of employees reduction, characterised by a drop of 5,166 FTEs compared to the 2017, equal to a decrease of 5.6%. The other administrative expenses, in 2018 amounted to €4,157 million, decreasing by 5.2% in comparison to 2017 (down by 5.0% at constant exchange rates). Lower costs have been recorded mainly among the real estate expenses, mostly relating to the branch network rationalisation, the communication and marketing expenses and the consulting expenses. The expenses recovery in 2018 amounted to €685 million, decreasing in comparison to €760 million of the last year (-9.9%), in particular the drop was mainly related to the lower credit inquiries of the Non Core Division that, consequently, have entailed the diminution of the correspondent expense recoveries and to the lower expense recoveries from external data centers following the direct taking charge of some IT expenses by these latter. Finally, the write-downs on tangible and intangible assets in 2018 amounted to €804 million, substantially stable in comparison to €807 million of 2017 (down by 0.5% or 0% at constant exchange rates). Consolidated report on operations Group results 48 2018 Annual Report and Accounts · UniCredit Dividends and other income from equity investments (which include the profits of the companies accounted at equity method) in 2018 amounted to €738 million, increasing by 100 million, or up by 15.6% (up by 32.5% at constant exchange rates) compared with 2017. Main incomes stemmed out from dividends from Bank Pekao S.A. shares (€30 million) that have been however substantially balanced in the net trading income for the mark to market valuation of Bank Pekao S.A. shares and for realized and unrealized effects of the linked “Secured mandatorily exchangeable equity-linked certificate”), from an extraordinary gain of Camfin, consolidated with the equity method (€29 million) and from the disappearance of the charge generated by the sale of Yapi Moscow recorded in 2017 (-€26 million). The net fees and commissions in 2018 amounted to €6,756 million, growing by 0.9% (up by 1.1% at constant exchange rates) compared to the previous year. The growth has been determined by the transactional services fees (up by 10.4% in comparison to 2017; up by 10.7% at constant exchange rates), thanks to the good performance of the current account fees and credit and debit cards fees. The investment services fees were down, recording a 4.9% decrease in comparison to the 2017 (down by 4.8% at constant exchange rates), mainly generated by the investment funds diminished sales in the field of the assets under management. Financing services were decreasing too, resulting down by 1.9% compared to 2017 (down by 1.5% at constant exchange rates), mainly as an effect of the lower commissions for “Money supply” and guarantees. The net trading income in 2018 was firmly decreasing, moving from €1,818 million of 2017 to €1,245 million of the current year (down by 31.5% or down by 31.7% at constant exchange rate), also due to the unfavourable market environment, affected by the temporary spread widening, that caused a drop of the gains by the client activity and securities portfolio. In front of these changes in market conditions, in particular with reference to the volatility affecting the Italian government bonds, a further allocation of newly acquired government bonds was also carried out in the portfolio of financial assets valued at amortized cost, with an underlying model of business aimed at the collection of contractual cash flows ("Held to collect"), which goes hand in hand with the traditional operations with an underlying business model aimed at both the collection of contractual cash flows and the sale of the instruments ("Held to collect and sell ") and determines the classification of the related securities in the portfolio "financial assets valued at fair value through other comprehensive income". Finally, in 2018 the net other expenses/income amounted to €130 million, down by €26 million over the 2017 (down by16.9% and down by 17.6% at constant exchange rates). Operating income (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Net interest 10,856 10,633 + 2.1% 2,776 + 0.4% Dividends and other income from equity investments 738 638 + 15.6% 219 + 46.7% Net fees and commissions 6,756 6,695 + 0.9% 1,659 + 1.9% Net trading income 1,245 1,818 - 31.5% 159 - 42.5% Net other expenses/income 130 156 - 16.9% 42 n.m. Operating income 19,723 19,941 - 1.1% 4,856 + 0.9% Operating costs Group’s operating costs in 2018 were equal to €10,698 million, decreasing by 5.6% compared to 2017 (down by 5.4% at constant exchange rates), thanks to the continuation of the staff resizing initiatives and the administrative expenses control actions. In detail, the staff expenses of 2018 were €6,423 million, decreasing by 7.0% over the 2017 (down by 6.8% at constant exchange rates). This result was achieved mainly thanks to the resolute dynamic of employees reduction, characterised by a drop of 5,166 FTEs compared to the 2017, equal to a decrease of 5.6%. The other administrative expenses, in 2018 amounted to €4,157 million, decreasing by 5.2% in comparison to 2017 (down by 5.0% at constant exchange rates). Lower costs have been recorded mainly among the real estate expenses, mostly relating to the branch network rationalisation, the communication and marketing expenses and the consulting expenses. The expenses recovery in 2018 amounted to €685 million, decreasing in comparison to €760 million of the last year (-9.9%), in particular the drop was mainly related to the lower credit inquiries of the Non Core Division that, consequently, have entailed the diminution of the correspondent expense recoveries and to the lower expense recoveries from external data centers following the direct taking charge of some IT expenses by these latter. Finally, the write-downs on tangible and intangible assets in 2018 amounted to €804 million, substantially stable in comparison to €807 million of 2017 (down by 0.5% or 0% at constant exchange rates). Consolidated report on operations Group results 48 2018 Annual Report and Accounts · UniCredit Dividends and other income from equity investments (which include the profits of the companies accounted at equity method) in 2018 amounted to €738 million, increasing by 100 million, or up by 15.6% (up by 32.5% at constant exchange rates) compared with 2017. Main incomes stemmed out from dividends from Bank Pekao S.A. shares (€30 million) that have been however substantially balanced in the net trading income for the mark to market valuation of Bank Pekao S.A. shares and for realized and unrealized effects of the linked “Secured mandatorily exchangeable equity-linked certificate”), from an extraordinary gain of Camfin, consolidated with the equity method (€29 million) and from the disappearance of the charge generated by the sale of Yapi Moscow recorded in 2017 (-€26 million). The net fees and commissions in 2018 amounted to €6,756 million, growing by 0.9% (up by 1.1% at constant exchange rates) compared to the previous year. The growth has been determined by the transactional services fees (up by 10.4% in comparison to 2017; up by 10.7% at constant exchange rates), thanks to the good performance of the current account fees and credit and debit cards fees. The investment services fees were down, recording a 4.9% decrease in comparison to the 2017 (down by 4.8% at constant exchange rates), mainly generated by the investment funds diminished sales in the field of the assets under management. Financing services were decreasing too, resulting down by 1.9% compared to 2017 (down by 1.5% at constant exchange rates), mainly as an effect of the lower commissions for “Money supply” and guarantees. The net trading income in 2018 was firmly decreasing, moving from €1,818 million of 2017 to €1,245 million of the current year (down by 31.5% or down by 31.7% at constant exchange rate), also due to the unfavourable market environment, affected by the temporary spread widening, that caused a drop of the gains by the client activity and securities portfolio. In front of these changes in market conditions, in particular with reference to the volatility affecting the Italian government bonds, a further allocation of newly acquired government bonds was also carried out in the portfolio of financial assets valued at amortized cost, with an underlying model of business aimed at the collection of contractual cash flows ("Held to collect"), which goes hand in hand with the traditional operations with an underlying business model aimed at both the collection of contractual cash flows and the sale of the instruments ("Held to collect and sell ") and determines the classification of the related securities in the portfolio "financial assets valued at fair value through other comprehensive income". Finally, in 2018 the net other expenses/income amounted to €130 million, down by €26 million over the 2017 (down by16.9% and down by 17.6% at constant exchange rates). Operating income (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Net interest 10,856 10,633 + 2.1% 2,776 + 0.4% Dividends and other income from equity investments 738 638 + 15.6% 219 + 46.7% Net fees and commissions 6,756 6,695 + 0.9% 1,659 + 1.9% Net trading income 1,245 1,818 - 31.5% 159 - 42.5% Net other expenses/income 130 156 - 16.9% 42 n.m. Operating income 19,723 19,941 - 1.1% 4,856 + 0.9% Operating costs Group’s operating costs in 2018 were equal to €10,698 million, decreasing by 5.6% compared to 2017 (down by 5.4% at constant exchange rates), thanks to the continuation of the staff resizing initiatives and the administrative expenses control actions. In detail, the staff expenses of 2018 were €6,423 million, decreasing by 7.0% over the 2017 (down by 6.8% at constant exchange rates). This result was achieved mainly thanks to the resolute dynamic of employees reduction, characterised by a drop of 5,166 FTEs compared to the 2017, equal to a decrease of 5.6%. The other administrative expenses, in 2018 amounted to €4,157 million, decreasing by 5.2% in comparison to 2017 (down by 5.0% at constant exchange rates). Lower costs have been recorded mainly among the real estate expenses, mostly relating to the branch network rationalisation, the communication and marketing expenses and the consulting expenses. The expenses recovery in 2018 amounted to €685 million, decreasing in comparison to €760 million of the last year (-9.9%), in particular the drop was mainly related to the lower credit inquiries of the Non Core Division that, consequently, have entailed the diminution of the correspondent expense recoveries and to the lower expense recoveries from external data centers following the direct taking charge of some IT expenses by these latter. Finally, the write-downs on tangible and intangible assets in 2018 amounted to €804 million, substantially stable in comparison to €807 million of 2017 (down by 0.5% or 0% at constant exchange rates). Consolidated report on operations Group results 48 2018 Annual Report and Accounts · UniCredit Dividends and other income from equity investments (which include the profits of the companies accounted at equity method) in 2018 amounted to €738 million, increasing by 100 million, or up by 15.6% (up by 32.5% at constant exchange rates) compared with 2017. Main incomes stemmed out from dividends from Bank Pekao S.A. shares (€30 million) that have been however substantially balanced in the net trading income for the mark to market valuation of Bank Pekao S.A. shares and for realized and unrealized effects of the linked “Secured mandatorily exchangeable equity-linked certificate”), from an extraordinary gain of Camfin, consolidated with the equity method (€29 million) and from the disappearance of the charge generated by the sale of Yapi Moscow recorded in 2017 (-€26 million). The net fees and commissions in 2018 amounted to €6,756 million, growing by 0.9% (up by 1.1% at constant exchange rates) compared to the previous year. The growth has been determined by the transactional services fees (up by 10.4% in comparison to 2017; up by 10.7% at constant exchange rates), thanks to the good performance of the current account fees and credit and debit cards fees. The investment services fees were down, recording a 4.9% decrease in comparison to the 2017 (down by 4.8% at constant exchange rates), mainly generated by the investment funds diminished sales in the field of the assets under management. Financing services were decreasing too, resulting down by 1.9% compared to 2017 (down by 1.5% at constant exchange rates), mainly as an effect of the lower commissions for “Money supply” and guarantees. The net trading income in 2018 was firmly decreasing, moving from €1,818 million of 2017 to €1,245 million of the current year (down by 31.5% or down by 31.7% at constant exchange rate), also due to the unfavourable market environment, affected by the temporary spread widening, that caused a drop of the gains by the client activity and securities portfolio. In front of these changes in market conditions, in particular with reference to the volatility affecting the Italian government bonds, a further allocation of newly acquired government bonds was also carried out in the portfolio of financial assets valued at amortized cost, with an underlying model of business aimed at the collection of contractual cash flows ("Held to collect"), which goes hand in hand with the traditional operations with an underlying business model aimed at both the collection of contractual cash flows and the sale of the instruments ("Held to collect and sell ") and determines the classification of the related securities in the portfolio "financial assets valued at fair value through other comprehensive income". Finally, in 2018 the net other expenses/income amounted to €130 million, down by €26 million over the 2017 (down by16.9% and down by 17.6% at constant exchange rates). Operating income (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Net interest 10,856 10,633 + 2.1% 2,776 + 0.4% Dividends and other income from equity investments 738 638 + 15.6% 219 + 46.7% Net fees and commissions 6,756 6,695 + 0.9% 1,659 + 1.9% Net trading income 1,245 1,818 - 31.5% 159 - 42.5% Net other expenses/income 130 156 - 16.9% 42 n.m. Operating income 19,723 19,941 - 1.1% 4,856 + 0.9% Operating costs Group’s operating costs in 2018 were equal to €10,698 million, decreasing by 5.6% compared to 2017 (down by 5.4% at constant exchange rates), thanks to the continuation of the staff resizing initiatives and the administrative expenses control actions. In detail, the staff expenses of 2018 were €6,423 million, decreasing by 7.0% over the 2017 (down by 6.8% at constant exchange rates). This result was achieved mainly thanks to the resolute dynamic of employees reduction, characterised by a drop of 5,166 FTEs compared to the 2017, equal to a decrease of 5.6%. The other administrative expenses, in 2018 amounted to €4,157 million, decreasing by 5.2% in comparison to 2017 (down by 5.0% at constant exchange rates). Lower costs have been recorded mainly among the real estate expenses, mostly relating to the branch network rationalisation, the communication and marketing expenses and the consulting expenses. The expenses recovery in 2018 amounted to €685 million, decreasing in comparison to €760 million of the last year (-9.9%), in particular the drop was mainly related to the lower credit inquiries of the Non Core Division that, consequently, have entailed the diminution of the correspondent expense recoveries and to the lower expense recoveries from external data centers following the direct taking charge of some IT expenses by these latter. Finally, the write-downs on tangible and intangible assets in 2018 amounted to €804 million, substantially stable in comparison to €807 million of 2017 (down by 0.5% or 0% at constant exchange rates). Consolidated report on operations Group results 48 2018 Annual Report and Accounts · UniCredit Dividends and other income from equity investments (which include the profits of the companies accounted at equity method) in 2018 amounted to €738 million, increasing by 100 million, or up by 15.6% (up by 32.5% at constant exchange rates) compared with 2017. Main incomes stemmed out from dividends from Bank Pekao S.A. shares (€30 million) that have been however substantially balanced in the net trading income for the mark to market valuation of Bank Pekao S.A. shares and for realized and unrealized effects of the linked “Secured mandatorily exchangeable equity-linked certificate”), from an extraordinary gain of Camfin, consolidated with the equity method (€29 million) and from the disappearance of the charge generated by the sale of Yapi Moscow recorded in 2017 (-€26 million). The net fees and commissions in 2018 amounted to €6,756 million, growing by 0.9% (up by 1.1% at constant exchange rates) compared to the previous year. The growth has been determined by the transactional services fees (up by 10.4% in comparison to 2017; up by 10.7% at constant exchange rates), thanks to the good performance of the current account fees and credit and debit cards fees. The investment services fees were down, recording a 4.9% decrease in comparison to the 2017 (down by 4.8% at constant exchange rates), mainly generated by the investment funds diminished sales in the field of the assets under management. Financing services were decreasing too, resulting down by 1.9% compared to 2017 (down by 1.5% at constant exchange rates), mainly as an effect of the lower commissions for “Money supply” and guarantees. The net trading income in 2018 was firmly decreasing, moving from €1,818 million of 2017 to €1,245 million of the current year (down by 31.5% or down by 31.7% at constant exchange rate), also due to the unfavourable market environment, affected by the temporary spread widening, that caused a drop of the gains by the client activity and securities portfolio. In front of these changes in market conditions, in particular with reference to the volatility affecting the Italian government bonds, a further allocation of newly acquired government bonds was also carried out in the portfolio of financial assets valued at amortized cost, with an underlying model of business aimed at the collection of contractual cash flows ("Held to collect"), which goes hand in hand with the traditional operations with an underlying business model aimed at both the collection of contractual cash flows and the sale of the instruments ("Held to collect and sell ") and determines the classification of the related securities in the portfolio "financial assets valued at fair value through other comprehensive income". Finally, in 2018 the net other expenses/income amounted to €130 million, down by €26 million over the 2017 (down by16.9% and down by 17.6% at constant exchange rates). Operating income (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Net interest 10,856 10,633 + 2.1% 2,776 + 0.4% Dividends and other income from equity investments 738 638 + 15.6% 219 + 46.7% Net fees and commissions 6,756 6,695 + 0.9% 1,659 + 1.9% Net trading income 1,245 1,818 - 31.5% 159 - 42.5% Net other expenses/income 130 156 - 16.9% 42 n.m. Operating income 19,723 19,941 - 1.1% 4,856 + 0.9% Operating costs Group’s operating costs in 2018 were equal to €10,698 million, decreasing by 5.6% compared to 2017 (down by 5.4% at constant exchange rates), thanks to the continuation of the staff resizing initiatives and the administrative expenses control actions. In detail, the staff expenses of 2018 were €6,423 million, decreasing by 7.0% over the 2017 (down by 6.8% at constant exchange rates). This result was achieved mainly thanks to the resolute dynamic of employees reduction, characterised by a drop of 5,166 FTEs compared to the 2017, equal to a decrease of 5.6%. The other administrative expenses, in 2018 amounted to €4,157 million, decreasing by 5.2% in comparison to 2017 (down by 5.0% at constant exchange rates). Lower costs have been recorded mainly among the real estate expenses, mostly relating to the branch network rationalisation, the communication and marketing expenses and the consulting expenses. The expenses recovery in 2018 amounted to €685 million, decreasing in comparison to €760 million of the last year (-9.9%), in particular the drop was mainly related to the lower credit inquiries of the Non Core Division that, consequently, have entailed the diminution of the correspondent expense recoveries and to the lower expense recoveries from external data centers following the direct taking charge of some IT expenses by these latter. Finally, the write-downs on tangible and intangible assets in 2018 amounted to €804 million, substantially stable in comparison to €807 million of 2017 (down by 0.5% or 0% at constant exchange rates). Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 49 Operating costs (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Payroll costs (6,423) (6,905) - 7.0% (1,601) + 1.7% Other administrative expenses (4,157) (4,385) - 5.2% (1,078) + 9.4% Recovery of expenses 685 760 - 9.9% 165 - 4.8% Write downs of tangible and intangible assets (804) (807) - 0.5% (203) - 0.5% Operating costs (10,698) (11,338) - 5.6% (2,718) + 4.9% The good result achieved in terms of cost reduction deeply balanced the revenues decline, generating a Group gross operating profit of €9,025, up by 4.9% compared to 2017 (up by 6.7% at constant exchange rates). The cost income ratio of 2018 amounted to 54.2%, improving by 2.6 percentage points over the previous year. Net write-downs on loans and provisions for guarantees and commitments Net write-downs on loans and provisions for guarantees and commitments of the Group in 2018 were €2,619 million, compared to €2,939 million of 2017 (down by 10.9% or down by 10.3% at constant exchange rates). The cost of risk was equal to 58 basis points, in comparison to 67 basis points of 2017. In particular, Italy recording a cost of risk of 103 basis points, stable in comparison to 2017. Germany recorded 3 basis points, improving by 15 basis points over last year, Austria accounted -11 basis points, improving by 12 basis points over last year, having both benefited from some write-backs. CEE Division highlighted a cost of risk of 73 basis points, improving by 24 basis points in comparison to 2017. The Group gross impaired loans at 31 December 2018 were decreasing by €7.5 billion compared to 1 January 2018 (post IFRS9 accounting principle adoption), thanks to the continuous proactive risk reduction measures carried out. Thanks to this decrease, the gross non-performing loans on total loans ratio improved, moving from 9.80% of the beginning of January 2018 (post IFRS9 accounting principle adoption) to 7.67% of December 2018. Gross bad exposures stock was at €21.2 billion, decreasing by €4.2 billion over the beginning of January 2018 (€25.4 billion). The Group coverage ratio of the gross non-performing loans as at 31 December 2018 was furtherly improved by 173 basis points, reaching 60.98% in comparison to 59.25% as at the beginning of January 2018 (post IFRS9 accounting principle adoption). Loans to customers - Asset quality (€ million) BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE TOTAL(*) NON-PERFORMING PERFORMING TOTAL LOANS As at 12.31.2018 Gross exposure 21,154 16,196 840 38,190 459,473 497,663 as a percentage of total loans 4.25% 3.25% 0.17% 7.67% 92.33% Writedowns 15,367 7,657 263 23,287 2,537 25,824 as a percentage of face value 72.64% 47.28% 31.35% 60.98% 0.55% Carrying value 5,787 8,539 577 14,903 456,936 471,839 as a percentage of total loans 1.23% 1.81% 0.12% 3.16% 96.84% As at 01.01.2018(**) Gross exposure 25,360 19,338 1,014 45,711 420,810 466,521 as a percentage of total loans 5.44% 4.15% 0.22% 9.80% 90.20% Writedowns 18,289 8,436 359 27,085 2,732 29,817 as a percentage of face value 72.12% 43.62% 35.44% 59.25% 0.65% Carrying value 7,070 10,902 654 18,626 418,078 436,704 as a percentage of total loans 1.62% 2.50% 0.15% 4.27% 95.73% As at 12.31.2017(***) Gross exposure 27,775 19,470 1,105 48,349 419,797 468,146 as a percentage of total loans 5.93% 4.16% 0.24% 10.33% 89.67% Writedowns 18,306 8,491 441 27,237 2,015 29,252 as a percentage of face value 65.91% 43.61% 39.89% 56.33% 0.48% Carrying value 9,469 10,979 664 21,112 417,782 438,895 as a percentage of total loans 2.16% 2.50% 0.15% 4.81% 95.19% Notes: (*) The perimeter of non-performing loans is equivalent to the perimeter of EBA NPE exposures. (**) The figures as at 1 January 2018 differ from the ones as at 31 December 2017 as a result of IFRS9 accounting principle adoption and of the exclusion of “Interessi di mora” components. The latter are excluded from Gross exposures and Writedowns in accordance with the 5th update of Banca d’Italia Circular 262 issued on 22 December 2017. (***) The figures as at 31 December 2017 differ from the ones published at the reference date due to the exclusion of the debt securities. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 49 Operating costs (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Payroll costs (6,423) (6,905) - 7.0% (1,601) + 1.7% Other administrative expenses (4,157) (4,385) - 5.2% (1,078) + 9.4% Recovery of expenses 685 760 - 9.9% 165 - 4.8% Write downs of tangible and intangible assets (804) (807) - 0.5% (203) - 0.5% Operating costs (10,698) (11,338) - 5.6% (2,718) + 4.9% The good result achieved in terms of cost reduction deeply balanced the revenues decline, generating a Group gross operating profit of €9,025, up by 4.9% compared to 2017 (up by 6.7% at constant exchange rates). The cost income ratio of 2018 amounted to 54.2%, improving by 2.6 percentage points over the previous year. Net write-downs on loans and provisions for guarantees and commitments Net write-downs on loans and provisions for guarantees and commitments of the Group in 2018 were €2,619 million, compared to €2,939 million of 2017 (down by 10.9% or down by 10.3% at constant exchange rates). The cost of risk was equal to 58 basis points, in comparison to 67 basis points of 2017. In particular, Italy recording a cost of risk of 103 basis points, stable in comparison to 2017. Germany recorded 3 basis points, improving by 15 basis points over last year, Austria accounted -11 basis points, improving by 12 basis points over last year, having both benefited from some write-backs. CEE Division highlighted a cost of risk of 73 basis points, improving by 24 basis points in comparison to 2017. The Group gross impaired loans at 31 December 2018 were decreasing by €7.5 billion compared to 1 January 2018 (post IFRS9 accounting principle adoption), thanks to the continuous proactive risk reduction measures carried out. Thanks to this decrease, the gross non-performing loans on total loans ratio improved, moving from 9.80% of the beginning of January 2018 (post IFRS9 accounting principle adoption) to 7.67% of December 2018. Gross bad exposures stock was at €21.2 billion, decreasing by €4.2 billion over the beginning of January 2018 (€25.4 billion). The Group coverage ratio of the gross non-performing loans as at 31 December 2018 was furtherly improved by 173 basis points, reaching 60.98% in comparison to 59.25% as at the beginning of January 2018 (post IFRS9 accounting principle adoption). Loans to customers - Asset quality (€ million) BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE TOTAL(*) NON-PERFORMING PERFORMING TOTAL LOANS As at 12.31.2018 Gross exposure 21,154 16,196 840 38,190 459,473 497,663 as a percentage of total loans 4.25% 3.25% 0.17% 7.67% 92.33% Writedowns 15,367 7,657 263 23,287 2,537 25,824 as a percentage of face value 72.64% 47.28% 31.35% 60.98% 0.55% Carrying value 5,787 8,539 577 14,903 456,936 471,839 as a percentage of total loans 1.23% 1.81% 0.12% 3.16% 96.84% As at 01.01.2018(**) Gross exposure 25,360 19,338 1,014 45,711 420,810 466,521 as a percentage of total loans 5.44% 4.15% 0.22% 9.80% 90.20% Writedowns 18,289 8,436 359 27,085 2,732 29,817 as a percentage of face value 72.12% 43.62% 35.44% 59.25% 0.65% Carrying value 7,070 10,902 654 18,626 418,078 436,704 as a percentage of total loans 1.62% 2.50% 0.15% 4.27% 95.73% As at 12.31.2017(***) Gross exposure 27,775 19,470 1,105 48,349 419,797 468,146 as a percentage of total loans 5.93% 4.16% 0.24% 10.33% 89.67% Writedowns 18,306 8,491 441 27,237 2,015 29,252 as a percentage of face value 65.91% 43.61% 39.89% 56.33% 0.48% Carrying value 9,469 10,979 664 21,112 417,782 438,895 as a percentage of total loans 2.16% 2.50% 0.15% 4.81% 95.19% Notes: (*) The perimeter of non-performing loans is equivalent to the perimeter of EBA NPE exposures. (**) The figures as at 1 January 2018 differ from the ones as at 31 December 2017 as a result of IFRS9 accounting principle adoption and of the exclusion of “Interessi di mora” components. The latter are excluded from Gross exposures and Writedowns in accordance with the 5th update of Banca d’Italia Circular 262 issued on 22 December 2017. (***) The figures as at 31 December 2017 differ from the ones published at the reference date due to the exclusion of the debt securities. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 49 Operating costs (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Payroll costs (6,423) (6,905) - 7.0% (1,601) + 1.7% Other administrative expenses (4,157) (4,385) - 5.2% (1,078) + 9.4% Recovery of expenses 685 760 - 9.9% 165 - 4.8% Write downs of tangible and intangible assets (804) (807) - 0.5% (203) - 0.5% Operating costs (10,698) (11,338) - 5.6% (2,718) + 4.9% The good result achieved in terms of cost reduction deeply balanced the revenues decline, generating a Group gross operating profit of €9,025, up by 4.9% compared to 2017 (up by 6.7% at constant exchange rates). The cost income ratio of 2018 amounted to 54.2%, improving by 2.6 percentage points over the previous year. Net write-downs on loans and provisions for guarantees and commitments Net write-downs on loans and provisions for guarantees and commitments of the Group in 2018 were €2,619 million, compared to €2,939 million of 2017 (down by 10.9% or down by 10.3% at constant exchange rates). The cost of risk was equal to 58 basis points, in comparison to 67 basis points of 2017. In particular, Italy recording a cost of risk of 103 basis points, stable in comparison to 2017. Germany recorded 3 basis points, improving by 15 basis points over last year, Austria accounted -11 basis points, improving by 12 basis points over last year, having both benefited from some write-backs. CEE Division highlighted a cost of risk of 73 basis points, improving by 24 basis points in comparison to 2017. The Group gross impaired loans at 31 December 2018 were decreasing by €7.5 billion compared to 1 January 2018 (post IFRS9 accounting principle adoption), thanks to the continuous proactive risk reduction measures carried out. Thanks to this decrease, the gross non-performing loans on total loans ratio improved, moving from 9.80% of the beginning of January 2018 (post IFRS9 accounting principle adoption) to 7.67% of December 2018. Gross bad exposures stock was at €21.2 billion, decreasing by €4.2 billion over the beginning of January 2018 (€25.4 billion). The Group coverage ratio of the gross non-performing loans as at 31 December 2018 was furtherly improved by 173 basis points, reaching 60.98% in comparison to 59.25% as at the beginning of January 2018 (post IFRS9 accounting principle adoption). Loans to customers - Asset quality (€ million) BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE TOTAL(*) NON-PERFORMING PERFORMING TOTAL LOANS As at 12.31.2018 Gross exposure 21,154 16,196 840 38,190 459,473 497,663 as a percentage of total loans 4.25% 3.25% 0.17% 7.67% 92.33% Writedowns 15,367 7,657 263 23,287 2,537 25,824 as a percentage of face value 72.64% 47.28% 31.35% 60.98% 0.55% Carrying value 5,787 8,539 577 14,903 456,936 471,839 as a percentage of total loans 1.23% 1.81% 0.12% 3.16% 96.84% As at 01.01.2018(**) Gross exposure 25,360 19,338 1,014 45,711 420,810 466,521 as a percentage of total loans 5.44% 4.15% 0.22% 9.80% 90.20% Writedowns 18,289 8,436 359 27,085 2,732 29,817 as a percentage of face value 72.12% 43.62% 35.44% 59.25% 0.65% Carrying value 7,070 10,902 654 18,626 418,078 436,704 as a percentage of total loans 1.62% 2.50% 0.15% 4.27% 95.73% As at 12.31.2017(***) Gross exposure 27,775 19,470 1,105 48,349 419,797 468,146 as a percentage of total loans 5.93% 4.16% 0.24% 10.33% 89.67% Writedowns 18,306 8,491 441 27,237 2,015 29,252 as a percentage of face value 65.91% 43.61% 39.89% 56.33% 0.48% Carrying value 9,469 10,979 664 21,112 417,782 438,895 as a percentage of total loans 2.16% 2.50% 0.15% 4.81% 95.19% Notes: (*) The perimeter of non-performing loans is equivalent to the perimeter of EBA NPE exposures. (**) The figures as at 1 January 2018 differ from the ones as at 31 December 2017 as a result of IFRS9 accounting principle adoption and of the exclusion of “Interessi di mora” components. The latter are excluded from Gross exposures and Writedowns in accordance with the 5th update of Banca d’Italia Circular 262 issued on 22 December 2017. (***) The figures as at 31 December 2017 differ from the ones published at the reference date due to the exclusion of the debt securities. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 49 Operating costs (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Payroll costs (6,423) (6,905) - 7.0% (1,601) + 1.7% Other administrative expenses (4,157) (4,385) - 5.2% (1,078) + 9.4% Recovery of expenses 685 760 - 9.9% 165 - 4.8% Write downs of tangible and intangible assets (804) (807) - 0.5% (203) - 0.5% Operating costs (10,698) (11,338) - 5.6% (2,718) + 4.9% The good result achieved in terms of cost reduction deeply balanced the revenues decline, generating a Group gross operating profit of €9,025, up by 4.9% compared to 2017 (up by 6.7% at constant exchange rates). The cost income ratio of 2018 amounted to 54.2%, improving by 2.6 percentage points over the previous year. Net write-downs on loans and provisions for guarantees and commitments Net write-downs on loans and provisions for guarantees and commitments of the Group in 2018 were €2,619 million, compared to €2,939 million of 2017 (down by 10.9% or down by 10.3% at constant exchange rates). The cost of risk was equal to 58 basis points, in comparison to 67 basis points of 2017. In particular, Italy recording a cost of risk of 103 basis points, stable in comparison to 2017. Germany recorded 3 basis points, improving by 15 basis points over last year, Austria accounted -11 basis points, improving by 12 basis points over last year, having both benefited from some write-backs. CEE Division highlighted a cost of risk of 73 basis points, improving by 24 basis points in comparison to 2017. The Group gross impaired loans at 31 December 2018 were decreasing by €7.5 billion compared to 1 January 2018 (post IFRS9 accounting principle adoption), thanks to the continuous proactive risk reduction measures carried out. Thanks to this decrease, the gross non-performing loans on total loans ratio improved, moving from 9.80% of the beginning of January 2018 (post IFRS9 accounting principle adoption) to 7.67% of December 2018. Gross bad exposures stock was at €21.2 billion, decreasing by €4.2 billion over the beginning of January 2018 (€25.4 billion). The Group coverage ratio of the gross non-performing loans as at 31 December 2018 was furtherly improved by 173 basis points, reaching 60.98% in comparison to 59.25% as at the beginning of January 2018 (post IFRS9 accounting principle adoption). Loans to customers - Asset quality (€ million) BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE TOTAL(*) NON-PERFORMING PERFORMING TOTAL LOANS As at 12.31.2018 Gross exposure 21,154 16,196 840 38,190 459,473 497,663 as a percentage of total loans 4.25% 3.25% 0.17% 7.67% 92.33% Writedowns 15,367 7,657 263 23,287 2,537 25,824 as a percentage of face value 72.64% 47.28% 31.35% 60.98% 0.55% Carrying value 5,787 8,539 577 14,903 456,936 471,839 as a percentage of total loans 1.23% 1.81% 0.12% 3.16% 96.84% As at 01.01.2018(**) Gross exposure 25,360 19,338 1,014 45,711 420,810 466,521 as a percentage of total loans 5.44% 4.15% 0.22% 9.80% 90.20% Writedowns 18,289 8,436 359 27,085 2,732 29,817 as a percentage of face value 72.12% 43.62% 35.44% 59.25% 0.65% Carrying value 7,070 10,902 654 18,626 418,078 436,704 as a percentage of total loans 1.62% 2.50% 0.15% 4.27% 95.73% As at 12.31.2017(***) Gross exposure 27,775 19,470 1,105 48,349 419,797 468,146 as a percentage of total loans 5.93% 4.16% 0.24% 10.33% 89.67% Writedowns 18,306 8,491 441 27,237 2,015 29,252 as a percentage of face value 65.91% 43.61% 39.89% 56.33% 0.48% Carrying value 9,469 10,979 664 21,112 417,782 438,895 as a percentage of total loans 2.16% 2.50% 0.15% 4.81% 95.19% Notes: (*) The perimeter of non-performing loans is equivalent to the perimeter of EBA NPE exposures. (**) The figures as at 1 January 2018 differ from the ones as at 31 December 2017 as a result of IFRS9 accounting principle adoption and of the exclusion of “Interessi di mora” components. The latter are excluded from Gross exposures and Writedowns in accordance with the 5th update of Banca d’Italia Circular 262 issued on 22 December 2017. (***) The figures as at 31 December 2017 differ from the ones published at the reference date due to the exclusion of the debt securities. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 49 Operating costs (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Payroll costs (6,423) (6,905) - 7.0% (1,601) + 1.7% Other administrative expenses (4,157) (4,385) - 5.2% (1,078) + 9.4% Recovery of expenses 685 760 - 9.9% 165 - 4.8% Write downs of tangible and intangible assets (804) (807) - 0.5% (203) - 0.5% Operating costs (10,698) (11,338) - 5.6% (2,718) + 4.9% The good result achieved in terms of cost reduction deeply balanced the revenues decline, generating a Group gross operating profit of €9,025, up by 4.9% compared to 2017 (up by 6.7% at constant exchange rates). The cost income ratio of 2018 amounted to 54.2%, improving by 2.6 percentage points over the previous year. Net write-downs on loans and provisions for guarantees and commitments Net write-downs on loans and provisions for guarantees and commitments of the Group in 2018 were €2,619 million, compared to €2,939 million of 2017 (down by 10.9% or down by 10.3% at constant exchange rates). The cost of risk was equal to 58 basis points, in comparison to 67 basis points of 2017. In particular, Italy recording a cost of risk of 103 basis points, stable in comparison to 2017. Germany recorded 3 basis points, improving by 15 basis points over last year, Austria accounted -11 basis points, improving by 12 basis points over last year, having both benefited from some write-backs. CEE Division highlighted a cost of risk of 73 basis points, improving by 24 basis points in comparison to 2017. The Group gross impaired loans at 31 December 2018 were decreasing by €7.5 billion compared to 1 January 2018 (post IFRS9 accounting principle adoption), thanks to the continuous proactive risk reduction measures carried out. Thanks to this decrease, the gross non-performing loans on total loans ratio improved, moving from 9.80% of the beginning of January 2018 (post IFRS9 accounting principle adoption) to 7.67% of December 2018. Gross bad exposures stock was at €21.2 billion, decreasing by €4.2 billion over the beginning of January 2018 (€25.4 billion). The Group coverage ratio of the gross non-performing loans as at 31 December 2018 was furtherly improved by 173 basis points, reaching 60.98% in comparison to 59.25% as at the beginning of January 2018 (post IFRS9 accounting principle adoption). Loans to customers - Asset quality (€ million) BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE TOTAL(*) NON-PERFORMING PERFORMING TOTAL LOANS As at 12.31.2018 Gross exposure 21,154 16,196 840 38,190 459,473 497,663 as a percentage of total loans 4.25% 3.25% 0.17% 7.67% 92.33% Writedowns 15,367 7,657 263 23,287 2,537 25,824 as a percentage of face value 72.64% 47.28% 31.35% 60.98% 0.55% Carrying value 5,787 8,539 577 14,903 456,936 471,839 as a percentage of total loans 1.23% 1.81% 0.12% 3.16% 96.84% As at 01.01.2018(**) Gross exposure 25,360 19,338 1,014 45,711 420,810 466,521 as a percentage of total loans 5.44% 4.15% 0.22% 9.80% 90.20% Writedowns 18,289 8,436 359 27,085 2,732 29,817 as a percentage of face value 72.12% 43.62% 35.44% 59.25% 0.65% Carrying value 7,070 10,902 654 18,626 418,078 436,704 as a percentage of total loans 1.62% 2.50% 0.15% 4.27% 95.73% As at 12.31.2017(***) Gross exposure 27,775 19,470 1,105 48,349 419,797 468,146 as a percentage of total loans 5.93% 4.16% 0.24% 10.33% 89.67% Writedowns 18,306 8,491 441 27,237 2,015 29,252 as a percentage of face value 65.91% 43.61% 39.89% 56.33% 0.48% Carrying value 9,469 10,979 664 21,112 417,782 438,895 as a percentage of total loans 2.16% 2.50% 0.15% 4.81% 95.19% Notes: (*) The perimeter of non-performing loans is equivalent to the perimeter of EBA NPE exposures. (**) The figures as at 1 January 2018 differ from the ones as at 31 December 2017 as a result of IFRS9 accounting principle adoption and of the exclusion of “Interessi di mora” components. The latter are excluded from Gross exposures and Writedowns in accordance with the 5th update of Banca d’Italia Circular 262 issued on 22 December 2017. (***) The figures as at 31 December 2017 differ from the ones published at the reference date due to the exclusion of the debt securities. Consolidated report on operations Group results 50 2018 Annual Report and Accounts · UniCredit From net operating profit to profit before tax The jointly improvements of the gross operating profit (€9,025 million in 2018) and net write-downs on loans (-€2,619 million in 2018), allowed to reach in 2018 a Group’s net operating profit amounting to €6,406 million, improving by €742 million compared to 2017 (up by 13.1% or up by 15.5% at constant exchange rates). Group’s provisions for risk and charges were -€2,293 million, compared to -€1,064 million of 2017. This item includes legal cases and estimated liabilities of various nature totalling -€1,447 million (included provisions for the alleged US sanctions violations, refer to Notes to consolidated accounts Part E - 2.5 Operational risks - B. Legal risks paragraph “Financial sanctions matter” for further details), in addition to the systemic charges, amounting to -€846 million. The latter include the contributions to the Single Resolution Fund (SRF), the harmonised guarantee schemes charges (Deposits Guarantee Scheme - DGS) and the non-harmonised ones, as well as the Bank Levies. Integration costs in 2018 were -€9 million, mainly thanks to releases on write-downs and works on properties undergoing disposal, accounted in the first quarter in Austria, in comparison to -€147 million recorded in 2017. Finally, net income from investments in 2018 was -€485 million, mainly due to the Yapi Kredi share impairment of the third quarter of the year for an amount of -€846 million, that more than offset some companies and real estate dismissals, as well as the evaluations of this last, carried out in Germany and Austria in the first half of the year. In 2017 the item had recorded -€305 million, referred to Atlante stake carrying value impairment for -€137 million and some value adjustments on real estates and other impairments of shareholdings. As an effect of the items mentioned above, in 2018 the Group registered a profit before tax of €3,619 million, compared to €4,148 million of 2017 (down by 12.7% or down by 9.4% at constant exchange rates). Adjusting the figures of both the years from the extraordinary items, the profit before tax would amount to €4,466 million in 2018, increasing by 5.6% in comparison to €4.228 million of 2017. For extraordinary items refer to paragraph “Introduction” of this section. Profit before tax by business segment (€ million) OPERATING INCOME OPERATING COSTS NET WRITE-DOWNS ON LOANS AND PROVISIONS NET OPERATING PROFIT PROFIT BEFORE TAX YEAR 2018 2017 Commercial Banking Italy 7,257 (4,125) (1,046) 2,085 1,882 1,775 Commercial Banking Germany 2,470 (1,704) (145) 620 369 631 Commercial Banking Austria 1,563 (1,022) 25 567 448 445 Central Eastern Europe 4,262 (1,566) (457) 2,240 2,034 1,855 Corporate & Investment Banking 3,813 (1,563) (76) 2,174 1,370 2,003 Fineco 624 (246) (4) 374 353 315 Group Corporate Centre (205) (364) 6 (563) (1,638) (1,743) Non Core (60) (109) (921) (1,090) (1,199) (1,133) Group Total 19,723 (10,698) (2,619) 6,406 3,619 4,148 Consolidated report on operations Group results 50 2018 Annual Report and Accounts · UniCredit From net operating profit to profit before tax The jointly improvements of the gross operating profit (€9,025 million in 2018) and net write-downs on loans (-€2,619 million in 2018), allowed to reach in 2018 a Group’s net operating profit amounting to €6,406 million, improving by €742 million compared to 2017 (up by 13.1% or up by 15.5% at constant exchange rates). Group’s provisions for risk and charges were -€2,293 million, compared to -€1,064 million of 2017. This item includes legal cases and estimated liabilities of various nature totalling -€1,447 million (included provisions for the alleged US sanctions violations, refer to Notes to consolidated accounts Part E - 2.5 Operational risks - B. Legal risks paragraph “Financial sanctions matter” for further details), in addition to the systemic charges, amounting to -€846 million. The latter include the contributions to the Single Resolution Fund (SRF), the harmonised guarantee schemes charges (Deposits Guarantee Scheme - DGS) and the non-harmonised ones, as well as the Bank Levies. Integration costs in 2018 were -€9 million, mainly thanks to releases on write-downs and works on properties undergoing disposal, accounted in the first quarter in Austria, in comparison to -€147 million recorded in 2017. Finally, net income from investments in 2018 was -€485 million, mainly due to the Yapi Kredi share impairment of the third quarter of the year for an amount of -€846 million, that more than offset some companies and real estate dismissals, as well as the evaluations of this last, carried out in Germany and Austria in the first half of the year. In 2017 the item had recorded -€305 million, referred to Atlante stake carrying value impairment for -€137 million and some value adjustments on real estates and other impairments of shareholdings. As an effect of the items mentioned above, in 2018 the Group registered a profit before tax of €3,619 million, compared to €4,148 million of 2017 (down by 12.7% or down by 9.4% at constant exchange rates). Adjusting the figures of both the years from the extraordinary items, the profit before tax would amount to €4,466 million in 2018, increasing by 5.6% in comparison to €4.228 million of 2017. For extraordinary items refer to paragraph “Introduction” of this section. Profit before tax by business segment (€ million) OPERATING INCOME OPERATING COSTS NET WRITE-DOWNS ON LOANS AND PROVISIONS NET OPERATING PROFIT PROFIT BEFORE TAX YEAR 2018 2017 Commercial Banking Italy 7,257 (4,125) (1,046) 2,085 1,882 1,775 Commercial Banking Germany 2,470 (1,704) (145) 620 369 631 Commercial Banking Austria 1,563 (1,022) 25 567 448 445 Central Eastern Europe 4,262 (1,566) (457) 2,240 2,034 1,855 Corporate & Investment Banking 3,813 (1,563) (76) 2,174 1,370 2,003 Fineco 624 (246) (4) 374 353 315 Group Corporate Centre (205) (364) 6 (563) (1,638) (1,743) Non Core (60) (109) (921) (1,090) (1,199) (1,133) Group Total 19,723 (10,698) (2,619) 6,406 3,619 4,148 Consolidated report on operations Group results 50 2018 Annual Report and Accounts · UniCredit From net operating profit to profit before tax The jointly improvements of the gross operating profit (€9,025 million in 2018) and net write-downs on loans (-€2,619 million in 2018), allowed to reach in 2018 a Group’s net operating profit amounting to €6,406 million, improving by €742 million compared to 2017 (up by 13.1% or up by 15.5% at constant exchange rates). Group’s provisions for risk and charges were -€2,293 million, compared to -€1,064 million of 2017. This item includes legal cases and estimated liabilities of various nature totalling -€1,447 million (included provisions for the alleged US sanctions violations, refer to Notes to consolidated accounts Part E - 2.5 Operational risks - B. Legal risks paragraph “Financial sanctions matter” for further details), in addition to the systemic charges, amounting to -€846 million. The latter include the contributions to the Single Resolution Fund (SRF), the harmonised guarantee schemes charges (Deposits Guarantee Scheme - DGS) and the non-harmonised ones, as well as the Bank Levies. Integration costs in 2018 were -€9 million, mainly thanks to releases on write-downs and works on properties undergoing disposal, accounted in the first quarter in Austria, in comparison to -€147 million recorded in 2017. Finally, net income from investments in 2018 was -€485 million, mainly due to the Yapi Kredi share impairment of the third quarter of the year for an amount of -€846 million, that more than offset some companies and real estate dismissals, as well as the evaluations of this last, carried out in Germany and Austria in the first half of the year. In 2017 the item had recorded -€305 million, referred to Atlante stake carrying value impairment for -€137 million and some value adjustments on real estates and other impairments of shareholdings. As an effect of the items mentioned above, in 2018 the Group registered a profit before tax of €3,619 million, compared to €4,148 million of 2017 (down by 12.7% or down by 9.4% at constant exchange rates). Adjusting the figures of both the years from the extraordinary items, the profit before tax would amount to €4,466 million in 2018, increasing by 5.6% in comparison to €4.228 million of 2017. For extraordinary items refer to paragraph “Introduction” of this section. Profit before tax by business segment (€ million) OPERATING INCOME OPERATING COSTS NET WRITE-DOWNS ON LOANS AND PROVISIONS NET OPERATING PROFIT PROFIT BEFORE TAX YEAR 2018 2017 Commercial Banking Italy 7,257 (4,125) (1,046) 2,085 1,882 1,775 Commercial Banking Germany 2,470 (1,704) (145) 620 369 631 Commercial Banking Austria 1,563 (1,022) 25 567 448 445 Central Eastern Europe 4,262 (1,566) (457) 2,240 2,034 1,855 Corporate & Investment Banking 3,813 (1,563) (76) 2,174 1,370 2,003 Fineco 624 (246) (4) 374 353 315 Group Corporate Centre (205) (364) 6 (563) (1,638) (1,743) Non Core (60) (109) (921) (1,090) (1,199) (1,133) Group Total 19,723 (10,698) (2,619) 6,406 3,619 4,148 Consolidated report on operations Group results 50 2018 Annual Report and Accounts · UniCredit From net operating profit to profit before tax The jointly improvements of the gross operating profit (€9,025 million in 2018) and net write-downs on loans (-€2,619 million in 2018), allowed to reach in 2018 a Group’s net operating profit amounting to €6,406 million, improving by €742 million compared to 2017 (up by 13.1% or up by 15.5% at constant exchange rates). Group’s provisions for risk and charges were -€2,293 million, compared to -€1,064 million of 2017. This item includes legal cases and estimated liabilities of various nature totalling -€1,447 million (included provisions for the alleged US sanctions violations, refer to Notes to consolidated accounts Part E - 2.5 Operational risks - B. Legal risks paragraph “Financial sanctions matter” for further details), in addition to the systemic charges, amounting to -€846 million. The latter include the contributions to the Single Resolution Fund (SRF), the harmonised guarantee schemes charges (Deposits Guarantee Scheme - DGS) and the non-harmonised ones, as well as the Bank Levies. Integration costs in 2018 were -€9 million, mainly thanks to releases on write-downs and works on properties undergoing disposal, accounted in the first quarter in Austria, in comparison to -€147 million recorded in 2017. Finally, net income from investments in 2018 was -€485 million, mainly due to the Yapi Kredi share impairment of the third quarter of the year for an amount of -€846 million, that more than offset some companies and real estate dismissals, as well as the evaluations of this last, carried out in Germany and Austria in the first half of the year. In 2017 the item had recorded -€305 million, referred to Atlante stake carrying value impairment for -€137 million and some value adjustments on real estates and other impairments of shareholdings. As an effect of the items mentioned above, in 2018 the Group registered a profit before tax of €3,619 million, compared to €4,148 million of 2017 (down by 12.7% or down by 9.4% at constant exchange rates). Adjusting the figures of both the years from the extraordinary items, the profit before tax would amount to €4,466 million in 2018, increasing by 5.6% in comparison to €4.228 million of 2017. For extraordinary items refer to paragraph “Introduction” of this section. Profit before tax by business segment (€ million) OPERATING INCOME OPERATING COSTS NET WRITE-DOWNS ON LOANS AND PROVISIONS NET OPERATING PROFIT PROFIT BEFORE TAX YEAR 2018 2017 Commercial Banking Italy 7,257 (4,125) (1,046) 2,085 1,882 1,775 Commercial Banking Germany 2,470 (1,704) (145) 620 369 631 Commercial Banking Austria 1,563 (1,022) 25 567 448 445 Central Eastern Europe 4,262 (1,566) (457) 2,240 2,034 1,855 Corporate & Investment Banking 3,813 (1,563) (76) 2,174 1,370 2,003 Fineco 624 (246) (4) 374 353 315 Group Corporate Centre (205) (364) 6 (563) (1,638) (1,743) Non Core (60) (109) (921) (1,090) (1,199) (1,133) Group Total 19,723 (10,698) (2,619) 6,406 3,619 4,148 Consolidated report on operations Group results 50 2018 Annual Report and Accounts · UniCredit From net operating profit to profit before tax The jointly improvements of the gross operating profit (€9,025 million in 2018) and net write-downs on loans (-€2,619 million in 2018), allowed to reach in 2018 a Group’s net operating profit amounting to €6,406 million, improving by €742 million compared to 2017 (up by 13.1% or up by 15.5% at constant exchange rates). Group’s provisions for risk and charges were -€2,293 million, compared to -€1,064 million of 2017. This item includes legal cases and estimated liabilities of various nature totalling -€1,447 million (included provisions for the alleged US sanctions violations, refer to Notes to consolidated accounts Part E - 2.5 Operational risks - B. Legal risks paragraph “Financial sanctions matter” for further details), in addition to the systemic charges, amounting to -€846 million. The latter include the contributions to the Single Resolution Fund (SRF), the harmonised guarantee schemes charges (Deposits Guarantee Scheme - DGS) and the non-harmonised ones, as well as the Bank Levies. Integration costs in 2018 were -€9 million, mainly thanks to releases on write-downs and works on properties undergoing disposal, accounted in the first quarter in Austria, in comparison to -€147 million recorded in 2017. Finally, net income from investments in 2018 was -€485 million, mainly due to the Yapi Kredi share impairment of the third quarter of the year for an amount of -€846 million, that more than offset some companies and real estate dismissals, as well as the evaluations of this last, carried out in Germany and Austria in the first half of the year. In 2017 the item had recorded -€305 million, referred to Atlante stake carrying value impairment for -€137 million and some value adjustments on real estates and other impairments of shareholdings. As an effect of the items mentioned above, in 2018 the Group registered a profit before tax of €3,619 million, compared to €4,148 million of 2017 (down by 12.7% or down by 9.4% at constant exchange rates). Adjusting the figures of both the years from the extraordinary items, the profit before tax would amount to €4,466 million in 2018, increasing by 5.6% in comparison to €4.228 million of 2017. For extraordinary items refer to paragraph “Introduction” of this section. Profit before tax by business segment (€ million) OPERATING INCOME OPERATING COSTS NET WRITE-DOWNS ON LOANS AND PROVISIONS NET OPERATING PROFIT PROFIT BEFORE TAX YEAR 2018 2017 Commercial Banking Italy 7,257 (4,125) (1,046) 2,085 1,882 1,775 Commercial Banking Germany 2,470 (1,704) (145) 620 369 631 Commercial Banking Austria 1,563 (1,022) 25 567 448 445 Central Eastern Europe 4,262 (1,566) (457) 2,240 2,034 1,855 Corporate & Investment Banking 3,813 (1,563) (76) 2,174 1,370 2,003 Fineco 624 (246) (4) 374 353 315 Group Corporate Centre (205) (364) 6 (563) (1,638) (1,743) Non Core (60) (109) (921) (1,090) (1,199) (1,133) Group Total 19,723 (10,698) (2,619) 6,406 3,619 4,148 Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 51 Profit (Loss) attributable to the Group In 2018 Group’s income taxes line was positive for €479 million, in comparison to -€609 million of 2017. It is worth remembering that the 2017 tax line benefitted from a release of fiscal provisions relating to the years 2005-2008 in Germany, for a net amount of €80 million. The amount related to 2018 includes the extraordinary effects arising from the recognition through P&L of the positive tax effects related to IFRS9 First Time Adoption on Loan Loss Provisions for €887 million, of which €871 million related to deferred tax assets, further additional positive impacts arising from fiscal provision releases in Germany for €127 million and other write-ups on Deferred Tax Assets in Italy for €149 million and in Germany for €95 million. Profit from discontinued operations net of taxes in 2018 was €14 million in comparison to €2,251 million of the last year, that mainly included the capital gain related to the Pioneer disposal. The profit for the period of 2018 was €4,112 million, in comparison to €5,790 million recorded last year. Minorities, conventionally exposed with negative sign, were -€216 million, against -€313 million of 2017. Purchase price allocation was -€3 million, compared to -€4 million of 2017. Consequently, in 2018 the net profit attributable to the Group amounted to €3,892 million, compared to €5,473 million of 2017. Excluding the extraordinary element from both the years, the 2018 would have recorded a net profit of €3,852 million, increasing by 7.7% in comparison to the 2017 rectified net result, equal to €3,578 million. For extraordinary items refer to paragraph “Introduction” of this section. Profit (Loss) attributable to the Group (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 19,723 19,941 - 1.1% 4,856 + 0.9% Operating costs (10,698) (11,338) - 5.6% (2,718) + 4.9% Operating profit (loss) 9,025 8,603 + 4.9% 2,138 - 3.8% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) - 10.9% (923) + 32.5% Net operating profit (loss) 6,406 5,664 + 13.1% 1,215 - 20.4% Other charges and provisions (2,293) (1,064) n.m. (371) - 49.9% Integration costs (9) (147) - 93.7% (15) n.m. Net income from investment (485) (305) + 58.8% (52) - 92.0% Profit (Loss) before tax 3,619 4,148 - 12.7% 778 n.m. Income tax for the period 479 (609) n.m. 998 n.m. Profit (Loss) from non-current assets held for sale, after tax 14 2,251 - 99.4% 1 n.m. Profit (Loss) for the period 4,112 5,790 - 29.0% 1,777 n.m. Minorities (216) (313) - 30.8% (49) - 12.3% Net profit (loss) attributable to the Group before PPA 3,896 5,477 - 28.9% 1,728 n.m. Purchase Price Allocation effects (3) (4) - 19.2% - - 65.5% Goodwill impairment - - n.m. - n.m. Net profit (loss) attributable to the Group 3,892 5,473 - 28.9% 1,727 n.m. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 51 Profit (Loss) attributable to the Group In 2018 Group’s income taxes line was positive for €479 million, in comparison to -€609 million of 2017. It is worth remembering that the 2017 tax line benefitted from a release of fiscal provisions relating to the years 2005-2008 in Germany, for a net amount of €80 million. The amount related to 2018 includes the extraordinary effects arising from the recognition through P&L of the positive tax effects related to IFRS9 First Time Adoption on Loan Loss Provisions for €887 million, of which €871 million related to deferred tax assets, further additional positive impacts arising from fiscal provision releases in Germany for €127 million and other write-ups on Deferred Tax Assets in Italy for €149 million and in Germany for €95 million. Profit from discontinued operations net of taxes in 2018 was €14 million in comparison to €2,251 million of the last year, that mainly included the capital gain related to the Pioneer disposal. The profit for the period of 2018 was €4,112 million, in comparison to €5,790 million recorded last year. Minorities, conventionally exposed with negative sign, were -€216 million, against -€313 million of 2017. Purchase price allocation was -€3 million, compared to -€4 million of 2017. Consequently, in 2018 the net profit attributable to the Group amounted to €3,892 million, compared to €5,473 million of 2017. Excluding the extraordinary element from both the years, the 2018 would have recorded a net profit of €3,852 million, increasing by 7.7% in comparison to the 2017 rectified net result, equal to €3,578 million. For extraordinary items refer to paragraph “Introduction” of this section. Profit (Loss) attributable to the Group (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 19,723 19,941 - 1.1% 4,856 + 0.9% Operating costs (10,698) (11,338) - 5.6% (2,718) + 4.9% Operating profit (loss) 9,025 8,603 + 4.9% 2,138 - 3.8% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) - 10.9% (923) + 32.5% Net operating profit (loss) 6,406 5,664 + 13.1% 1,215 - 20.4% Other charges and provisions (2,293) (1,064) n.m. (371) - 49.9% Integration costs (9) (147) - 93.7% (15) n.m. Net income from investment (485) (305) + 58.8% (52) - 92.0% Profit (Loss) before tax 3,619 4,148 - 12.7% 778 n.m. Income tax for the period 479 (609) n.m. 998 n.m. Profit (Loss) from non-current assets held for sale, after tax 14 2,251 - 99.4% 1 n.m. Profit (Loss) for the period 4,112 5,790 - 29.0% 1,777 n.m. Minorities (216) (313) - 30.8% (49) - 12.3% Net profit (loss) attributable to the Group before PPA 3,896 5,477 - 28.9% 1,728 n.m. Purchase Price Allocation effects (3) (4) - 19.2% - - 65.5% Goodwill impairment - - n.m. - n.m. Net profit (loss) attributable to the Group 3,892 5,473 - 28.9% 1,727 n.m. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 51 Profit (Loss) attributable to the Group In 2018 Group’s income taxes line was positive for €479 million, in comparison to -€609 million of 2017. It is worth remembering that the 2017 tax line benefitted from a release of fiscal provisions relating to the years 2005-2008 in Germany, for a net amount of €80 million. The amount related to 2018 includes the extraordinary effects arising from the recognition through P&L of the positive tax effects related to IFRS9 First Time Adoption on Loan Loss Provisions for €887 million, of which €871 million related to deferred tax assets, further additional positive impacts arising from fiscal provision releases in Germany for €127 million and other write-ups on Deferred Tax Assets in Italy for €149 million and in Germany for €95 million. Profit from discontinued operations net of taxes in 2018 was €14 million in comparison to €2,251 million of the last year, that mainly included the capital gain related to the Pioneer disposal. The profit for the period of 2018 was €4,112 million, in comparison to €5,790 million recorded last year. Minorities, conventionally exposed with negative sign, were -€216 million, against -€313 million of 2017. Purchase price allocation was -€3 million, compared to -€4 million of 2017. Consequently, in 2018 the net profit attributable to the Group amounted to €3,892 million, compared to €5,473 million of 2017. Excluding the extraordinary element from both the years, the 2018 would have recorded a net profit of €3,852 million, increasing by 7.7% in comparison to the 2017 rectified net result, equal to €3,578 million. For extraordinary items refer to paragraph “Introduction” of this section. Profit (Loss) attributable to the Group (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 19,723 19,941 - 1.1% 4,856 + 0.9% Operating costs (10,698) (11,338) - 5.6% (2,718) + 4.9% Operating profit (loss) 9,025 8,603 + 4.9% 2,138 - 3.8% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) - 10.9% (923) + 32.5% Net operating profit (loss) 6,406 5,664 + 13.1% 1,215 - 20.4% Other charges and provisions (2,293) (1,064) n.m. (371) - 49.9% Integration costs (9) (147) - 93.7% (15) n.m. Net income from investment (485) (305) + 58.8% (52) - 92.0% Profit (Loss) before tax 3,619 4,148 - 12.7% 778 n.m. Income tax for the period 479 (609) n.m. 998 n.m. Profit (Loss) from non-current assets held for sale, after tax 14 2,251 - 99.4% 1 n.m. Profit (Loss) for the period 4,112 5,790 - 29.0% 1,777 n.m. Minorities (216) (313) - 30.8% (49) - 12.3% Net profit (loss) attributable to the Group before PPA 3,896 5,477 - 28.9% 1,728 n.m. Purchase Price Allocation effects (3) (4) - 19.2% - - 65.5% Goodwill impairment - - n.m. - n.m. Net profit (loss) attributable to the Group 3,892 5,473 - 28.9% 1,727 n.m. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 51 Profit (Loss) attributable to the Group In 2018 Group’s income taxes line was positive for €479 million, in comparison to -€609 million of 2017. It is worth remembering that the 2017 tax line benefitted from a release of fiscal provisions relating to the years 2005-2008 in Germany, for a net amount of €80 million. The amount related to 2018 includes the extraordinary effects arising from the recognition through P&L of the positive tax effects related to IFRS9 First Time Adoption on Loan Loss Provisions for €887 million, of which €871 million related to deferred tax assets, further additional positive impacts arising from fiscal provision releases in Germany for €127 million and other write-ups on Deferred Tax Assets in Italy for €149 million and in Germany for €95 million. Profit from discontinued operations net of taxes in 2018 was €14 million in comparison to €2,251 million of the last year, that mainly included the capital gain related to the Pioneer disposal. The profit for the period of 2018 was €4,112 million, in comparison to €5,790 million recorded last year. Minorities, conventionally exposed with negative sign, were -€216 million, against -€313 million of 2017. Purchase price allocation was -€3 million, compared to -€4 million of 2017. Consequently, in 2018 the net profit attributable to the Group amounted to €3,892 million, compared to €5,473 million of 2017. Excluding the extraordinary element from both the years, the 2018 would have recorded a net profit of €3,852 million, increasing by 7.7% in comparison to the 2017 rectified net result, equal to €3,578 million. For extraordinary items refer to paragraph “Introduction” of this section. Profit (Loss) attributable to the Group (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 19,723 19,941 - 1.1% 4,856 + 0.9% Operating costs (10,698) (11,338) - 5.6% (2,718) + 4.9% Operating profit (loss) 9,025 8,603 + 4.9% 2,138 - 3.8% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) - 10.9% (923) + 32.5% Net operating profit (loss) 6,406 5,664 + 13.1% 1,215 - 20.4% Other charges and provisions (2,293) (1,064) n.m. (371) - 49.9% Integration costs (9) (147) - 93.7% (15) n.m. Net income from investment (485) (305) + 58.8% (52) - 92.0% Profit (Loss) before tax 3,619 4,148 - 12.7% 778 n.m. Income tax for the period 479 (609) n.m. 998 n.m. Profit (Loss) from non-current assets held for sale, after tax 14 2,251 - 99.4% 1 n.m. Profit (Loss) for the period 4,112 5,790 - 29.0% 1,777 n.m. Minorities (216) (313) - 30.8% (49) - 12.3% Net profit (loss) attributable to the Group before PPA 3,896 5,477 - 28.9% 1,728 n.m. Purchase Price Allocation effects (3) (4) - 19.2% - - 65.5% Goodwill impairment - - n.m. - n.m. Net profit (loss) attributable to the Group 3,892 5,473 - 28.9% 1,727 n.m. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 51 Profit (Loss) attributable to the Group In 2018 Group’s income taxes line was positive for €479 million, in comparison to -€609 million of 2017. It is worth remembering that the 2017 tax line benefitted from a release of fiscal provisions relating to the years 2005-2008 in Germany, for a net amount of €80 million. The amount related to 2018 includes the extraordinary effects arising from the recognition through P&L of the positive tax effects related to IFRS9 First Time Adoption on Loan Loss Provisions for €887 million, of which €871 million related to deferred tax assets, further additional positive impacts arising from fiscal provision releases in Germany for €127 million and other write-ups on Deferred Tax Assets in Italy for €149 million and in Germany for €95 million. Profit from discontinued operations net of taxes in 2018 was €14 million in comparison to €2,251 million of the last year, that mainly included the capital gain related to the Pioneer disposal. The profit for the period of 2018 was €4,112 million, in comparison to €5,790 million recorded last year. Minorities, conventionally exposed with negative sign, were -€216 million, against -€313 million of 2017. Purchase price allocation was -€3 million, compared to -€4 million of 2017. Consequently, in 2018 the net profit attributable to the Group amounted to €3,892 million, compared to €5,473 million of 2017. Excluding the extraordinary element from both the years, the 2018 would have recorded a net profit of €3,852 million, increasing by 7.7% in comparison to the 2017 rectified net result, equal to €3,578 million. For extraordinary items refer to paragraph “Introduction” of this section. Profit (Loss) attributable to the Group (€ million) YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 19,723 19,941 - 1.1% 4,856 + 0.9% Operating costs (10,698) (11,338) - 5.6% (2,718) + 4.9% Operating profit (loss) 9,025 8,603 + 4.9% 2,138 - 3.8% Net write-downs on loans and provisions for guarantees and commitments (2,619) (2,939) - 10.9% (923) + 32.5% Net operating profit (loss) 6,406 5,664 + 13.1% 1,215 - 20.4% Other charges and provisions (2,293) (1,064) n.m. (371) - 49.9% Integration costs (9) (147) - 93.7% (15) n.m. Net income from investment (485) (305) + 58.8% (52) - 92.0% Profit (Loss) before tax 3,619 4,148 - 12.7% 778 n.m. Income tax for the period 479 (609) n.m. 998 n.m. Profit (Loss) from non-current assets held for sale, after tax 14 2,251 - 99.4% 1 n.m. Profit (Loss) for the period 4,112 5,790 - 29.0% 1,777 n.m. Minorities (216) (313) - 30.8% (49) - 12.3% Net profit (loss) attributable to the Group before PPA 3,896 5,477 - 28.9% 1,728 n.m. Purchase Price Allocation effects (3) (4) - 19.2% - - 65.5% Goodwill impairment - - n.m. - n.m. Net profit (loss) attributable to the Group 3,892 5,473 - 28.9% 1,727 n.m. Consolidated report on operations Group results 52 2018 Annual Report and Accounts · UniCredit Capital and value management Principles of value creation and capital allocation In order to create value for the shareholders, the Group’s strategic guidelines are aimed at optimising the composition of the business portfolio. This goal is pursued through a process of capital allocation to each business line in relation to its specific risk profile and ability to generate sustainable earnings measured as EVA (Economic Value Added), which is the main performance indicator related to TSR (Total Shareholder Return). Capital Allocated to Business Segments is quantified applying internal capitalisation targets to regulatory capital requirements (Regulatory Capital), with the exception of the capital allocated to Fineco which is determined as the highest between the Regulatory Capital and Internal Capital, i.e. the capital needed to cover, with an high level of confidence, the risks faced by the Group measured according to internal models. The development of Group operations with a view to value creation requires a process for allocating and managing capital governed by different phases in the process of planning and control, articulated as: • formulation of the proposed propensity for risk and capitalisation targets; • analysis of the risks associated with the value drivers and resulting allocation of capital to the business lines and to the Business Units; • assignment of performance targets in line with risk; • analysis of the impact on the Group’s value and of the creation of value for shareholders; • drafting and proposal of the financial plan, capital plan and dividend policy. The Group dynamically manages its capital base by monitoring regulatory capital ratios, anticipating the appropriate changes necessary to achieve its defined targets, and optimising the composition of its assets and equity. Planning and monitoring refer, on the one hand, to the total own funds (Common Equity Tier 1, Additional Tier 1 and Tier 2 Capital) and, on the other hand, to the Risk-Weighted Assets (RWAs). The Risk-Weighted Assets, for portfolios managed using the internal advanced models, do not only depend on the nominal value of the assets but also on the relevant credit parameters. Besides volume dynamics, it is also crucial to monitor and forecast the change in the loan quality of the portfolio in view of the macroeconomic scenario (the so-called pro-cyclical effect). The economic and financial crisis, which began in 2007, has raised an intense debate on the need to promote a stronger financial system, more resilient to external shocks. Therefore, over the last years, global regulators introduced a series of new regulatory requirements that have contributed greatly to re-shape the financial markets landscape. In particular, in December 2010, the Basel Committee for Banking Supervision (BCBS) published an additional series of significant changes relating to the global standard requirements for banking institutions on capital and liquidity, also known as “Basel 3”. The regulatory changes introduced by the Basel 3 framework define more stringent rules for capital requirements levels and introduce for the first time liquidity and leverage limits. According to the Basel 3 framework, the new rules are introduced gradually in order to allow the banking system to comply with the new requirements and contain the impact on the real economy. In Europe, the Basel 3 framework has been translated into law by means of two separate legislative instruments applied from 1 January 2014: Directive 213/36/EU (CRD) and Regulation 575/2013/EU (CRR). In addition, in December 2013 Banca d’Italia published Circular 285, which updated and adjusted to the new international regulation framework the rules applicable to Italian banks and banking groups. In addition, Council Regulation 1024/2013/EU of 15 October 2013 (Regulation “SSM” - Single Supervisory Mechanism) conferred specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions. Over the years, several regulations delegated by the Commission and regulations of the European Central Bank were published with the aim of disciplining specific regulatory issues. Consolidated report on operations Group results 52 2018 Annual Report and Accounts · UniCredit Capital and value management Principles of value creation and capital allocation In order to create value for the shareholders, the Group’s strategic guidelines are aimed at optimising the composition of the business portfolio. This goal is pursued through a process of capital allocation to each business line in relation to its specific risk profile and ability to generate sustainable earnings measured as EVA (Economic Value Added), which is the main performance indicator related to TSR (Total Shareholder Return). Capital Allocated to Business Segments is quantified applying internal capitalisation targets to regulatory capital requirements (Regulatory Capital), with the exception of the capital allocated to Fineco which is determined as the highest between the Regulatory Capital and Internal Capital, i.e. the capital needed to cover, with an high level of confidence, the risks faced by the Group measured according to internal models. The development of Group operations with a view to value creation requires a process for allocating and managing capital governed by different phases in the process of planning and control, articulated as: • formulation of the proposed propensity for risk and capitalisation targets; • analysis of the risks associated with the value drivers and resulting allocation of capital to the business lines and to the Business Units; • assignment of performance targets in line with risk; • analysis of the impact on the Group’s value and of the creation of value for shareholders; • drafting and proposal of the financial plan, capital plan and dividend policy. The Group dynamically manages its capital base by monitoring regulatory capital ratios, anticipating the appropriate changes necessary to achieve its defined targets, and optimising the composition of its assets and equity. Planning and monitoring refer, on the one hand, to the total own funds (Common Equity Tier 1, Additional Tier 1 and Tier 2 Capital) and, on the other hand, to the Risk-Weighted Assets (RWAs). The Risk-Weighted Assets, for portfolios managed using the internal advanced models, do not only depend on the nominal value of the assets but also on the relevant credit parameters. Besides volume dynamics, it is also crucial to monitor and forecast the change in the loan quality of the portfolio in view of the macroeconomic scenario (the so-called pro-cyclical effect). The economic and financial crisis, which began in 2007, has raised an intense debate on the need to promote a stronger financial system, more resilient to external shocks. Therefore, over the last years, global regulators introduced a series of new regulatory requirements that have contributed greatly to re-shape the financial markets landscape. In particular, in December 2010, the Basel Committee for Banking Supervision (BCBS) published an additional series of significant changes relating to the global standard requirements for banking institutions on capital and liquidity, also known as “Basel 3”. The regulatory changes introduced by the Basel 3 framework define more stringent rules for capital requirements levels and introduce for the first time liquidity and leverage limits. According to the Basel 3 framework, the new rules are introduced gradually in order to allow the banking system to comply with the new requirements and contain the impact on the real economy. In Europe, the Basel 3 framework has been translated into law by means of two separate legislative instruments applied from 1 January 2014: Directive 213/36/EU (CRD) and Regulation 575/2013/EU (CRR). In addition, in December 2013 Banca d’Italia published Circular 285, which updated and adjusted to the new international regulation framework the rules applicable to Italian banks and banking groups. In addition, Council Regulation 1024/2013/EU of 15 October 2013 (Regulation “SSM” - Single Supervisory Mechanism) conferred specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions. Over the years, several regulations delegated by the Commission and regulations of the European Central Bank were published with the aim of disciplining specific regulatory issues. Consolidated report on operations Group results 52 2018 Annual Report and Accounts · UniCredit Capital and value management Principles of value creation and capital allocation In order to create value for the shareholders, the Group’s strategic guidelines are aimed at optimising the composition of the business portfolio. This goal is pursued through a process of capital allocation to each business line in relation to its specific risk profile and ability to generate sustainable earnings measured as EVA (Economic Value Added), which is the main performance indicator related to TSR (Total Shareholder Return). Capital Allocated to Business Segments is quantified applying internal capitalisation targets to regulatory capital requirements (Regulatory Capital), with the exception of the capital allocated to Fineco which is determined as the highest between the Regulatory Capital and Internal Capital, i.e. the capital needed to cover, with an high level of confidence, the risks faced by the Group measured according to internal models. The development of Group operations with a view to value creation requires a process for allocating and managing capital governed by different phases in the process of planning and control, articulated as: • formulation of the proposed propensity for risk and capitalisation targets; • analysis of the risks associated with the value drivers and resulting allocation of capital to the business lines and to the Business Units; • assignment of performance targets in line with risk; • analysis of the impact on the Group’s value and of the creation of value for shareholders; • drafting and proposal of the financial plan, capital plan and dividend policy. The Group dynamically manages its capital base by monitoring regulatory capital ratios, anticipating the appropriate changes necessary to achieve its defined targets, and optimising the composition of its assets and equity. Planning and monitoring refer, on the one hand, to the total own funds (Common Equity Tier 1, Additional Tier 1 and Tier 2 Capital) and, on the other hand, to the Risk-Weighted Assets (RWAs). The Risk-Weighted Assets, for portfolios managed using the internal advanced models, do not only depend on the nominal value of the assets but also on the relevant credit parameters. Besides volume dynamics, it is also crucial to monitor and forecast the change in the loan quality of the portfolio in view of the macroeconomic scenario (the so-called pro-cyclical effect). The economic and financial crisis, which began in 2007, has raised an intense debate on the need to promote a stronger financial system, more resilient to external shocks. Therefore, over the last years, global regulators introduced a series of new regulatory requirements that have contributed greatly to re-shape the financial markets landscape. In particular, in December 2010, the Basel Committee for Banking Supervision (BCBS) published an additional series of significant changes relating to the global standard requirements for banking institutions on capital and liquidity, also known as “Basel 3”. The regulatory changes introduced by the Basel 3 framework define more stringent rules for capital requirements levels and introduce for the first time liquidity and leverage limits. According to the Basel 3 framework, the new rules are introduced gradually in order to allow the banking system to comply with the new requirements and contain the impact on the real economy. In Europe, the Basel 3 framework has been translated into law by means of two separate legislative instruments applied from 1 January 2014: Directive 213/36/EU (CRD) and Regulation 575/2013/EU (CRR). In addition, in December 2013 Banca d’Italia published Circular 285, which updated and adjusted to the new international regulation framework the rules applicable to Italian banks and banking groups. In addition, Council Regulation 1024/2013/EU of 15 October 2013 (Regulation “SSM” - Single Supervisory Mechanism) conferred specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions. Over the years, several regulations delegated by the Commission and regulations of the European Central Bank were published with the aim of disciplining specific regulatory issues. Consolidated report on operations Group results 52 2018 Annual Report and Accounts · UniCredit Capital and value management Principles of value creation and capital allocation In order to create value for the shareholders, the Group’s strategic guidelines are aimed at optimising the composition of the business portfolio. This goal is pursued through a process of capital allocation to each business line in relation to its specific risk profile and ability to generate sustainable earnings measured as EVA (Economic Value Added), which is the main performance indicator related to TSR (Total Shareholder Return). Capital Allocated to Business Segments is quantified applying internal capitalisation targets to regulatory capital requirements (Regulatory Capital), with the exception of the capital allocated to Fineco which is determined as the highest between the Regulatory Capital and Internal Capital, i.e. the capital needed to cover, with an high level of confidence, the risks faced by the Group measured according to internal models. The development of Group operations with a view to value creation requires a process for allocating and managing capital governed by different phases in the process of planning and control, articulated as: • formulation of the proposed propensity for risk and capitalisation targets; • analysis of the risks associated with the value drivers and resulting allocation of capital to the business lines and to the Business Units; • assignment of performance targets in line with risk; • analysis of the impact on the Group’s value and of the creation of value for shareholders; • drafting and proposal of the financial plan, capital plan and dividend policy. The Group dynamically manages its capital base by monitoring regulatory capital ratios, anticipating the appropriate changes necessary to achieve its defined targets, and optimising the composition of its assets and equity. Planning and monitoring refer, on the one hand, to the total own funds (Common Equity Tier 1, Additional Tier 1 and Tier 2 Capital) and, on the other hand, to the Risk-Weighted Assets (RWAs). The Risk-Weighted Assets, for portfolios managed using the internal advanced models, do not only depend on the nominal value of the assets but also on the relevant credit parameters. Besides volume dynamics, it is also crucial to monitor and forecast the change in the loan quality of the portfolio in view of the macroeconomic scenario (the so-called pro-cyclical effect). The economic and financial crisis, which began in 2007, has raised an intense debate on the need to promote a stronger financial system, more resilient to external shocks. Therefore, over the last years, global regulators introduced a series of new regulatory requirements that have contributed greatly to re-shape the financial markets landscape. In particular, in December 2010, the Basel Committee for Banking Supervision (BCBS) published an additional series of significant changes relating to the global standard requirements for banking institutions on capital and liquidity, also known as “Basel 3”. The regulatory changes introduced by the Basel 3 framework define more stringent rules for capital requirements levels and introduce for the first time liquidity and leverage limits. According to the Basel 3 framework, the new rules are introduced gradually in order to allow the banking system to comply with the new requirements and contain the impact on the real economy. In Europe, the Basel 3 framework has been translated into law by means of two separate legislative instruments applied from 1 January 2014: Directive 213/36/EU (CRD) and Regulation 575/2013/EU (CRR). In addition, in December 2013 Banca d’Italia published Circular 285, which updated and adjusted to the new international regulation framework the rules applicable to Italian banks and banking groups. In addition, Council Regulation 1024/2013/EU of 15 October 2013 (Regulation “SSM” - Single Supervisory Mechanism) conferred specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions. Over the years, several regulations delegated by the Commission and regulations of the European Central Bank were published with the aim of disciplining specific regulatory issues. Consolidated report on operations Group results 52 2018 Annual Report and Accounts · UniCredit Capital and value management Principles of value creation and capital allocation In order to create value for the shareholders, the Group’s strategic guidelines are aimed at optimising the composition of the business portfolio. This goal is pursued through a process of capital allocation to each business line in relation to its specific risk profile and ability to generate sustainable earnings measured as EVA (Economic Value Added), which is the main performance indicator related to TSR (Total Shareholder Return). Capital Allocated to Business Segments is quantified applying internal capitalisation targets to regulatory capital requirements (Regulatory Capital), with the exception of the capital allocated to Fineco which is determined as the highest between the Regulatory Capital and Internal Capital, i.e. the capital needed to cover, with an high level of confidence, the risks faced by the Group measured according to internal models. The development of Group operations with a view to value creation requires a process for allocating and managing capital governed by different phases in the process of planning and control, articulated as: • formulation of the proposed propensity for risk and capitalisation targets; • analysis of the risks associated with the value drivers and resulting allocation of capital to the business lines and to the Business Units; • assignment of performance targets in line with risk; • analysis of the impact on the Group’s value and of the creation of value for shareholders; • drafting and proposal of the financial plan, capital plan and dividend policy. The Group dynamically manages its capital base by monitoring regulatory capital ratios, anticipating the appropriate changes necessary to achieve its defined targets, and optimising the composition of its assets and equity. Planning and monitoring refer, on the one hand, to the total own funds (Common Equity Tier 1, Additional Tier 1 and Tier 2 Capital) and, on the other hand, to the Risk-Weighted Assets (RWAs). The Risk-Weighted Assets, for portfolios managed using the internal advanced models, do not only depend on the nominal value of the assets but also on the relevant credit parameters. Besides volume dynamics, it is also crucial to monitor and forecast the change in the loan quality of the portfolio in view of the macroeconomic scenario (the so-called pro-cyclical effect). The economic and financial crisis, which began in 2007, has raised an intense debate on the need to promote a stronger financial system, more resilient to external shocks. Therefore, over the last years, global regulators introduced a series of new regulatory requirements that have contributed greatly to re-shape the financial markets landscape. In particular, in December 2010, the Basel Committee for Banking Supervision (BCBS) published an additional series of significant changes relating to the global standard requirements for banking institutions on capital and liquidity, also known as “Basel 3”. The regulatory changes introduced by the Basel 3 framework define more stringent rules for capital requirements levels and introduce for the first time liquidity and leverage limits. According to the Basel 3 framework, the new rules are introduced gradually in order to allow the banking system to comply with the new requirements and contain the impact on the real economy. In Europe, the Basel 3 framework has been translated into law by means of two separate legislative instruments applied from 1 January 2014: Directive 213/36/EU (CRD) and Regulation 575/2013/EU (CRR). In addition, in December 2013 Banca d’Italia published Circular 285, which updated and adjusted to the new international regulation framework the rules applicable to Italian banks and banking groups. In addition, Council Regulation 1024/2013/EU of 15 October 2013 (Regulation “SSM” - Single Supervisory Mechanism) conferred specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions. Over the years, several regulations delegated by the Commission and regulations of the European Central Bank were published with the aim of disciplining specific regulatory issues. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 53 Capital ratios Transitional own funds and capital ratios (€ million) AS AT 12.31.2018(*)(**) 12.31.2017(*) Common Equity Tier 1 Capital 44,903 48,880 Tier 1 Capital 50,488 54,703 Total own funds 58,476 64,454 Total RWA 370,180 356,100 Common Equity Tier 1 Capital Ratio 12.13% 13.73% Tier 1 Capital Ratio 13.64% 15.36% Total Capital Ratio 15.80% 18.10% Notes: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit group has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. The negative change with respect to 31 December 2017 (equal to about €4 billion on Common Equity Tier 1 Capital and about €6 billion on Total own funds), in addition to the effects related to the first application of new IFRS9 accounting principle and the profit of the period recognised in Common Equity Tier 1 Capital net of 2018 dividends proposal, mainly reflects: negative change related to the reserve on capital instruments and debt securities measured at fair value (equal to €1.6 billion) that mainly reflect: (i) the trend related to the valuation of Italian government bonds, (ii) negative change related to the exchanges reserve (for €1.1 billion) mainly referred to the depreciation of Ruble and Turkish Lira, (iii) with reference to the Total Own Funds, also the effect related to the maturity/redemption of subordinated instruments classified in Additional Tier 1 Capital and Tier 2 Capital”. The capital requirements applicable to the Group as of 31 December 2018 in coherence with CRR article 92 are the following (Pillar 1): • Common Equity Tier 1 Capital: 4.50% • Tier 1 Capital: 6.00% • Total Capital: 8.00% In addition to such requirements, the Group shall also meet, through Common Equity Tier 1 Capital, the following additional requirements: • 2.00%, as Pillar 2 Requirements for 2018 in coherence with Supervisory Review and Evaluation Process (SREP) results; • 1.875%, as Capital Conservation buffer4 according to CRDIV article129; • 0.75%, as Global Systemically Important Institutions buffer5; • 0.06%, as Countercyclical Capital buffer6 according to the CRDIV Article 160 (paragraphs from 1 to 4), to be calculated on a quarterly basis7. Therefore, as at 31 December 2018, the Group shall meet the following overall capital requirements: • Common Equity Tier 1 Capital: 9.19% • Tier 1 Capital: 10.69% • Total Capital: 12.69% 4 On October 2016, Bank of Italy published the update of the Circular No.285 which provides for a different application of the transitional rules relating to the capital conservation buffer: such buffer is 1.875% for 2018; and from 1 January 2019 will be 2.50%. 5 To be increased by 0.25% per year till the target of 1.00% in 2019. Please note that UniCredit Group was identified by the Bank of Italy as an O-SII authorized to operate in Italy, and it has to maintain a CET1 capital buffer equal to 0.25% for 2018; such level will be increased starting by 0.25% on a yearly basis reaching the target of 1.00% from January 1, 2021. Nevertheless, it is worth mentioning that according to the CRDIV article 131.14, the higher of the G-SII and the O-SII buffer will apply: hence, UniCredit is subject to the application of 0.75% G-SII buffer for 2018. 6 Amount rounded to two decimal numbers. With reference to 31 December 2018: (I) countercyclical capital rates have generally been set at 0%, except for the following countries: United Kingdom (0.50%); Czech Republic (1.00%); Hong Kong (1.875%); Iceland (1.25%); Norway (2.00%); Sweden (2.00%); Slovakia (1.25%); Lithuania (0.5%); (II) with reference to the exposures towards Italian counterparties, Bank of Italy has set the rate equal to 0%. 7 In coherence with the transitional regime granted by Banca d’Italia, for 2018 institution-specific countercyclical capital buffer consists of CET1 capped to 1.875% of the total RWA of the institution. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 53 Capital ratios Transitional own funds and capital ratios (€ million) AS AT 12.31.2018(*)(**) 12.31.2017(*) Common Equity Tier 1 Capital 44,903 48,880 Tier 1 Capital 50,488 54,703 Total own funds 58,476 64,454 Total RWA 370,180 356,100 Common Equity Tier 1 Capital Ratio 12.13% 13.73% Tier 1 Capital Ratio 13.64% 15.36% Total Capital Ratio 15.80% 18.10% Notes: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit group has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. The negative change with respect to 31 December 2017 (equal to about €4 billion on Common Equity Tier 1 Capital and about €6 billion on Total own funds), in addition to the effects related to the first application of new IFRS9 accounting principle and the profit of the period recognised in Common Equity Tier 1 Capital net of 2018 dividends proposal, mainly reflects: negative change related to the reserve on capital instruments and debt securities measured at fair value (equal to €1.6 billion) that mainly reflect: (i) the trend related to the valuation of Italian government bonds, (ii) negative change related to the exchanges reserve (for €1.1 billion) mainly referred to the depreciation of Ruble and Turkish Lira, (iii) with reference to the Total Own Funds, also the effect related to the maturity/redemption of subordinated instruments classified in Additional Tier 1 Capital and Tier 2 Capital”. The capital requirements applicable to the Group as of 31 December 2018 in coherence with CRR article 92 are the following (Pillar 1): • Common Equity Tier 1 Capital: 4.50% • Tier 1 Capital: 6.00% • Total Capital: 8.00% In addition to such requirements, the Group shall also meet, through Common Equity Tier 1 Capital, the following additional requirements: • 2.00%, as Pillar 2 Requirements for 2018 in coherence with Supervisory Review and Evaluation Process (SREP) results; • 1.875%, as Capital Conservation buffer4 according to CRDIV article129; • 0.75%, as Global Systemically Important Institutions buffer5; • 0.06%, as Countercyclical Capital buffer6 according to the CRDIV Article 160 (paragraphs from 1 to 4), to be calculated on a quarterly basis7. Therefore, as at 31 December 2018, the Group shall meet the following overall capital requirements: • Common Equity Tier 1 Capital: 9.19% • Tier 1 Capital: 10.69% • Total Capital: 12.69% 4 On October 2016, Bank of Italy published the update of the Circular No.285 which provides for a different application of the transitional rules relating to the capital conservation buffer: such buffer is 1.875% for 2018; and from 1 January 2019 will be 2.50%. 5 To be increased by 0.25% per year till the target of 1.00% in 2019. Please note that UniCredit Group was identified by the Bank of Italy as an O-SII authorized to operate in Italy, and it has to maintain a CET1 capital buffer equal to 0.25% for 2018; such level will be increased starting by 0.25% on a yearly basis reaching the target of 1.00% from January 1, 2021. Nevertheless, it is worth mentioning that according to the CRDIV article 131.14, the higher of the G-SII and the O-SII buffer will apply: hence, UniCredit is subject to the application of 0.75% G-SII buffer for 2018. 6 Amount rounded to two decimal numbers. With reference to 31 December 2018: (I) countercyclical capital rates have generally been set at 0%, except for the following countries: United Kingdom (0.50%); Czech Republic (1.00%); Hong Kong (1.875%); Iceland (1.25%); Norway (2.00%); Sweden (2.00%); Slovakia (1.25%); Lithuania (0.5%); (II) with reference to the exposures towards Italian counterparties, Bank of Italy has set the rate equal to 0%. 7 In coherence with the transitional regime granted by Banca d’Italia, for 2018 institution-specific countercyclical capital buffer consists of CET1 capped to 1.875% of the total RWA of the institution. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 53 Capital ratios Transitional own funds and capital ratios (€ million) AS AT 12.31.2018(*)(**) 12.31.2017(*) Common Equity Tier 1 Capital 44,903 48,880 Tier 1 Capital 50,488 54,703 Total own funds 58,476 64,454 Total RWA 370,180 356,100 Common Equity Tier 1 Capital Ratio 12.13% 13.73% Tier 1 Capital Ratio 13.64% 15.36% Total Capital Ratio 15.80% 18.10% Notes: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit group has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. The negative change with respect to 31 December 2017 (equal to about €4 billion on Common Equity Tier 1 Capital and about €6 billion on Total own funds), in addition to the effects related to the first application of new IFRS9 accounting principle and the profit of the period recognised in Common Equity Tier 1 Capital net of 2018 dividends proposal, mainly reflects: negative change related to the reserve on capital instruments and debt securities measured at fair value (equal to €1.6 billion) that mainly reflect: (i) the trend related to the valuation of Italian government bonds, (ii) negative change related to the exchanges reserve (for €1.1 billion) mainly referred to the depreciation of Ruble and Turkish Lira, (iii) with reference to the Total Own Funds, also the effect related to the maturity/redemption of subordinated instruments classified in Additional Tier 1 Capital and Tier 2 Capital”. The capital requirements applicable to the Group as of 31 December 2018 in coherence with CRR article 92 are the following (Pillar 1): • Common Equity Tier 1 Capital: 4.50% • Tier 1 Capital: 6.00% • Total Capital: 8.00% In addition to such requirements, the Group shall also meet, through Common Equity Tier 1 Capital, the following additional requirements: • 2.00%, as Pillar 2 Requirements for 2018 in coherence with Supervisory Review and Evaluation Process (SREP) results; • 1.875%, as Capital Conservation buffer4 according to CRDIV article129; • 0.75%, as Global Systemically Important Institutions buffer5; • 0.06%, as Countercyclical Capital buffer6 according to the CRDIV Article 160 (paragraphs from 1 to 4), to be calculated on a quarterly basis7. Therefore, as at 31 December 2018, the Group shall meet the following overall capital requirements: • Common Equity Tier 1 Capital: 9.19% • Tier 1 Capital: 10.69% • Total Capital: 12.69% 4 On October 2016, Bank of Italy published the update of the Circular No.285 which provides for a different application of the transitional rules relating to the capital conservation buffer: such buffer is 1.875% for 2018; and from 1 January 2019 will be 2.50%. 5 To be increased by 0.25% per year till the target of 1.00% in 2019. Please note that UniCredit Group was identified by the Bank of Italy as an O-SII authorized to operate in Italy, and it has to maintain a CET1 capital buffer equal to 0.25% for 2018; such level will be increased starting by 0.25% on a yearly basis reaching the target of 1.00% from January 1, 2021. Nevertheless, it is worth mentioning that according to the CRDIV article 131.14, the higher of the G-SII and the O-SII buffer will apply: hence, UniCredit is subject to the application of 0.75% G-SII buffer for 2018. 6 Amount rounded to two decimal numbers. With reference to 31 December 2018: (I) countercyclical capital rates have generally been set at 0%, except for the following countries: United Kingdom (0.50%); Czech Republic (1.00%); Hong Kong (1.875%); Iceland (1.25%); Norway (2.00%); Sweden (2.00%); Slovakia (1.25%); Lithuania (0.5%); (II) with reference to the exposures towards Italian counterparties, Bank of Italy has set the rate equal to 0%. 7 In coherence with the transitional regime granted by Banca d’Italia, for 2018 institution-specific countercyclical capital buffer consists of CET1 capped to 1.875% of the total RWA of the institution. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 53 Capital ratios Transitional own funds and capital ratios (€ million) AS AT 12.31.2018(*)(**) 12.31.2017(*) Common Equity Tier 1 Capital 44,903 48,880 Tier 1 Capital 50,488 54,703 Total own funds 58,476 64,454 Total RWA 370,180 356,100 Common Equity Tier 1 Capital Ratio 12.13% 13.73% Tier 1 Capital Ratio 13.64% 15.36% Total Capital Ratio 15.80% 18.10% Notes: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit group has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. The negative change with respect to 31 December 2017 (equal to about €4 billion on Common Equity Tier 1 Capital and about €6 billion on Total own funds), in addition to the effects related to the first application of new IFRS9 accounting principle and the profit of the period recognised in Common Equity Tier 1 Capital net of 2018 dividends proposal, mainly reflects: negative change related to the reserve on capital instruments and debt securities measured at fair value (equal to €1.6 billion) that mainly reflect: (i) the trend related to the valuation of Italian government bonds, (ii) negative change related to the exchanges reserve (for €1.1 billion) mainly referred to the depreciation of Ruble and Turkish Lira, (iii) with reference to the Total Own Funds, also the effect related to the maturity/redemption of subordinated instruments classified in Additional Tier 1 Capital and Tier 2 Capital”. The capital requirements applicable to the Group as of 31 December 2018 in coherence with CRR article 92 are the following (Pillar 1): • Common Equity Tier 1 Capital: 4.50% • Tier 1 Capital: 6.00% • Total Capital: 8.00% In addition to such requirements, the Group shall also meet, through Common Equity Tier 1 Capital, the following additional requirements: • 2.00%, as Pillar 2 Requirements for 2018 in coherence with Supervisory Review and Evaluation Process (SREP) results; • 1.875%, as Capital Conservation buffer4 according to CRDIV article129; • 0.75%, as Global Systemically Important Institutions buffer5; • 0.06%, as Countercyclical Capital buffer6 according to the CRDIV Article 160 (paragraphs from 1 to 4), to be calculated on a quarterly basis7. Therefore, as at 31 December 2018, the Group shall meet the following overall capital requirements: • Common Equity Tier 1 Capital: 9.19% • Tier 1 Capital: 10.69% • Total Capital: 12.69% 4 On October 2016, Bank of Italy published the update of the Circular No.285 which provides for a different application of the transitional rules relating to the capital conservation buffer: such buffer is 1.875% for 2018; and from 1 January 2019 will be 2.50%. 5 To be increased by 0.25% per year till the target of 1.00% in 2019. Please note that UniCredit Group was identified by the Bank of Italy as an O-SII authorized to operate in Italy, and it has to maintain a CET1 capital buffer equal to 0.25% for 2018; such level will be increased starting by 0.25% on a yearly basis reaching the target of 1.00% from January 1, 2021. Nevertheless, it is worth mentioning that according to the CRDIV article 131.14, the higher of the G-SII and the O-SII buffer will apply: hence, UniCredit is subject to the application of 0.75% G-SII buffer for 2018. 6 Amount rounded to two decimal numbers. With reference to 31 December 2018: (I) countercyclical capital rates have generally been set at 0%, except for the following countries: United Kingdom (0.50%); Czech Republic (1.00%); Hong Kong (1.875%); Iceland (1.25%); Norway (2.00%); Sweden (2.00%); Slovakia (1.25%); Lithuania (0.5%); (II) with reference to the exposures towards Italian counterparties, Bank of Italy has set the rate equal to 0%. 7 In coherence with the transitional regime granted by Banca d’Italia, for 2018 institution-specific countercyclical capital buffer consists of CET1 capped to 1.875% of the total RWA of the institution. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 53 Capital ratios Transitional own funds and capital ratios (€ million) AS AT 12.31.2018(*)(**) 12.31.2017(*) Common Equity Tier 1 Capital 44,903 48,880 Tier 1 Capital 50,488 54,703 Total own funds 58,476 64,454 Total RWA 370,180 356,100 Common Equity Tier 1 Capital Ratio 12.13% 13.73% Tier 1 Capital Ratio 13.64% 15.36% Total Capital Ratio 15.80% 18.10% Notes: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit group has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. The negative change with respect to 31 December 2017 (equal to about €4 billion on Common Equity Tier 1 Capital and about €6 billion on Total own funds), in addition to the effects related to the first application of new IFRS9 accounting principle and the profit of the period recognised in Common Equity Tier 1 Capital net of 2018 dividends proposal, mainly reflects: negative change related to the reserve on capital instruments and debt securities measured at fair value (equal to €1.6 billion) that mainly reflect: (i) the trend related to the valuation of Italian government bonds, (ii) negative change related to the exchanges reserve (for €1.1 billion) mainly referred to the depreciation of Ruble and Turkish Lira, (iii) with reference to the Total Own Funds, also the effect related to the maturity/redemption of subordinated instruments classified in Additional Tier 1 Capital and Tier 2 Capital”. The capital requirements applicable to the Group as of 31 December 2018 in coherence with CRR article 92 are the following (Pillar 1): • Common Equity Tier 1 Capital: 4.50% • Tier 1 Capital: 6.00% • Total Capital: 8.00% In addition to such requirements, the Group shall also meet, through Common Equity Tier 1 Capital, the following additional requirements: • 2.00%, as Pillar 2 Requirements for 2018 in coherence with Supervisory Review and Evaluation Process (SREP) results; • 1.875%, as Capital Conservation buffer4 according to CRDIV article129; • 0.75%, as Global Systemically Important Institutions buffer5; • 0.06%, as Countercyclical Capital buffer6 according to the CRDIV Article 160 (paragraphs from 1 to 4), to be calculated on a quarterly basis7. Therefore, as at 31 December 2018, the Group shall meet the following overall capital requirements: • Common Equity Tier 1 Capital: 9.19% • Tier 1 Capital: 10.69% • Total Capital: 12.69% 4 On October 2016, Bank of Italy published the update of the Circular No.285 which provides for a different application of the transitional rules relating to the capital conservation buffer: such buffer is 1.875% for 2018; and from 1 January 2019 will be 2.50%. 5 To be increased by 0.25% per year till the target of 1.00% in 2019. Please note that UniCredit Group was identified by the Bank of Italy as an O-SII authorized to operate in Italy, and it has to maintain a CET1 capital buffer equal to 0.25% for 2018; such level will be increased starting by 0.25% on a yearly basis reaching the target of 1.00% from January 1, 2021. Nevertheless, it is worth mentioning that according to the CRDIV article 131.14, the higher of the G-SII and the O-SII buffer will apply: hence, UniCredit is subject to the application of 0.75% G-SII buffer for 2018. 6 Amount rounded to two decimal numbers. With reference to 31 December 2018: (I) countercyclical capital rates have generally been set at 0%, except for the following countries: United Kingdom (0.50%); Czech Republic (1.00%); Hong Kong (1.875%); Iceland (1.25%); Norway (2.00%); Sweden (2.00%); Slovakia (1.25%); Lithuania (0.5%); (II) with reference to the exposures towards Italian counterparties, Bank of Italy has set the rate equal to 0%. 7 In coherence with the transitional regime granted by Banca d’Italia, for 2018 institution-specific countercyclical capital buffer consists of CET1 capped to 1.875% of the total RWA of the institution. Consolidated report on operations Group results 54 2018 Annual Report and Accounts · UniCredit Find below a scheme of UniCredit Group transitional capital requirements and buffers which also provide evidences of TSCR (Total SREP Capital Requirement) and OCR (Overall Capital Requirement) related to the outcome of the SREP process held in 2017 and applicable for 2018: 2018 Transitional capital requirements and buffers for UniCredit group REQUIREMENT CET1 T1 TOTAL CAPITAL A) Pillar 1 Requirements 4.50% 6.00% 8.00% B) Pillar 2 Requirements 2.00% 2.00% 2.00% C) TSCR (A+B) 6.50% 8.00% 10.00% D) Combined capital buffer requirement, of which: 2.69% 2.69% 2.69% 1. Capital Conservation buffer (CCB) 1.875% 1.875% 1.875% 2. Global Systemically Important Institution buffer (G-SII) 0.75% 0.75% 0.75% 3. Institution-specific Countercyclical Capital buffer (CCyB) 0.06% 0.06% 0.06% E) OCR (C+D) 9.19% 10.69% 12.69% The above mentioned requirements are the ones which are relevant for MDA purposes for UniCredit group as at 31 December 2018. As at 31 December 2018, UniCredit group’s ratios are compliant with all the above requirements. The profit eligible as at 31 December 2018, equal to €3,892 million is recognised in the Own Funds for 3,287 million, resulting after i) the destination, approved by the Board of Director, to dividends for €601 million, correspondent to the 20% of the rectified Group net profit (equal to €3,006 million), excluding the positive extraordinary impact linked to the tax effects deriving from the change of the fiscal treatment related to First Time Adoption of IFRS9 (€887 million) and ii) the social and charity initiatives for €4 million. The net profit 2018 as at 31 December 2018 is included in Common Equity Tier 1 Capital following the authorization by the competent Authority according to CRR Article 26(2). Capital strengthening With the €13 billion fully subscribed capital increase approved and finalised in the first few months of 2017 which involved the issue of No.1,606,876,817 new ordinary shares, one of the fundamental pillars of the 2016-2019 Strategic Plan was successfully completed with a significant strengthening of the Group's capital ratios. On 7 February 2018 UniCredit’s Board of Directors, pursuant to the powers conferred by the Extraordinary Shareholders' Meeting of 11 May 2013, the Extraordinary Shareholders’ Meeting of 13 May 2014, the Extraordinary Shareholders’ Meeting of 13 May 2015 and the Extraordinary Shareholders' Meeting of 14 April 2016, resolved to increase the share capital by €59,848,665.00 by issuing No.3,519,352 ordinary shares to be granted to the employees of UniCredit and of Group banks and companies; the resolution to increase the share capital has been registered with the Company Register on 9 April 2018 and the fully subscribed and paid-up share capital of UniCredit S.p.A. currently amounts to €20,940,398,466.81 and is divided into No.2,230,176,665 ordinary shares with no nominal value. On 12 March 2018, the mandatory conversion of savings shares into ordinary shares, approved by the Extraordinary Shareholders' Meeting and by the Special Meeting of Savings Shareholders on 4 December 2017, became effective under the plan to strengthen corporate governance and simplify the share capital structure of the Bank's share capital. The conversion of all savings shares issued and outstanding (No.252,489), based on the conversion ratio approved by the Shareholders' Meeting, involved: i) the issue of No.964,507 new ordinary shares with regular economic rights according to the conversion ratio of 3.82 ordinary shares for each savings share converted and ii) the payment in cash of the premium to the holders of savings shares in the amount of €27.25 for each share converted. As regards the equity instruments (Additional Tier 1) that contribute to strengthening the Tier 1 Ratio of UniCredit S.p.A. during the year 2018 no new issues were made. Consolidated report on operations Group results 54 2018 Annual Report and Accounts · UniCredit Find below a scheme of UniCredit Group transitional capital requirements and buffers which also provide evidences of TSCR (Total SREP Capital Requirement) and OCR (Overall Capital Requirement) related to the outcome of the SREP process held in 2017 and applicable for 2018: 2018 Transitional capital requirements and buffers for UniCredit group REQUIREMENT CET1 T1 TOTAL CAPITAL A) Pillar 1 Requirements 4.50% 6.00% 8.00% B) Pillar 2 Requirements 2.00% 2.00% 2.00% C) TSCR (A+B) 6.50% 8.00% 10.00% D) Combined capital buffer requirement, of which: 2.69% 2.69% 2.69% 1. Capital Conservation buffer (CCB) 1.875% 1.875% 1.875% 2. Global Systemically Important Institution buffer (G-SII) 0.75% 0.75% 0.75% 3. Institution-specific Countercyclical Capital buffer (CCyB) 0.06% 0.06% 0.06% E) OCR (C+D) 9.19% 10.69% 12.69% The above mentioned requirements are the ones which are relevant for MDA purposes for UniCredit group as at 31 December 2018. As at 31 December 2018, UniCredit group’s ratios are compliant with all the above requirements. The profit eligible as at 31 December 2018, equal to €3,892 million is recognised in the Own Funds for 3,287 million, resulting after i) the destination, approved by the Board of Director, to dividends for €601 million, correspondent to the 20% of the rectified Group net profit (equal to €3,006 million), excluding the positive extraordinary impact linked to the tax effects deriving from the change of the fiscal treatment related to First Time Adoption of IFRS9 (€887 million) and ii) the social and charity initiatives for €4 million. The net profit 2018 as at 31 December 2018 is included in Common Equity Tier 1 Capital following the authorization by the competent Authority according to CRR Article 26(2). Capital strengthening With the €13 billion fully subscribed capital increase approved and finalised in the first few months of 2017 which involved the issue of No.1,606,876,817 new ordinary shares, one of the fundamental pillars of the 2016-2019 Strategic Plan was successfully completed with a significant strengthening of the Group's capital ratios. On 7 February 2018 UniCredit’s Board of Directors, pursuant to the powers conferred by the Extraordinary Shareholders' Meeting of 11 May 2013, the Extraordinary Shareholders’ Meeting of 13 May 2014, the Extraordinary Shareholders’ Meeting of 13 May 2015 and the Extraordinary Shareholders' Meeting of 14 April 2016, resolved to increase the share capital by €59,848,665.00 by issuing No.3,519,352 ordinary shares to be granted to the employees of UniCredit and of Group banks and companies; the resolution to increase the share capital has been registered with the Company Register on 9 April 2018 and the fully subscribed and paid-up share capital of UniCredit S.p.A. currently amounts to €20,940,398,466.81 and is divided into No.2,230,176,665 ordinary shares with no nominal value. On 12 March 2018, the mandatory conversion of savings shares into ordinary shares, approved by the Extraordinary Shareholders' Meeting and by the Special Meeting of Savings Shareholders on 4 December 2017, became effective under the plan to strengthen corporate governance and simplify the share capital structure of the Bank's share capital. The conversion of all savings shares issued and outstanding (No.252,489), based on the conversion ratio approved by the Shareholders' Meeting, involved: i) the issue of No.964,507 new ordinary shares with regular economic rights according to the conversion ratio of 3.82 ordinary shares for each savings share converted and ii) the payment in cash of the premium to the holders of savings shares in the amount of €27.25 for each share converted. As regards the equity instruments (Additional Tier 1) that contribute to strengthening the Tier 1 Ratio of UniCredit S.p.A. during the year 2018 no new issues were made. Consolidated report on operations Group results 54 2018 Annual Report and Accounts · UniCredit Find below a scheme of UniCredit Group transitional capital requirements and buffers which also provide evidences of TSCR (Total SREP Capital Requirement) and OCR (Overall Capital Requirement) related to the outcome of the SREP process held in 2017 and applicable for 2018: 2018 Transitional capital requirements and buffers for UniCredit group REQUIREMENT CET1 T1 TOTAL CAPITAL A) Pillar 1 Requirements 4.50% 6.00% 8.00% B) Pillar 2 Requirements 2.00% 2.00% 2.00% C) TSCR (A+B) 6.50% 8.00% 10.00% D) Combined capital buffer requirement, of which: 2.69% 2.69% 2.69% 1. Capital Conservation buffer (CCB) 1.875% 1.875% 1.875% 2. Global Systemically Important Institution buffer (G-SII) 0.75% 0.75% 0.75% 3. Institution-specific Countercyclical Capital buffer (CCyB) 0.06% 0.06% 0.06% E) OCR (C+D) 9.19% 10.69% 12.69% The above mentioned requirements are the ones which are relevant for MDA purposes for UniCredit group as at 31 December 2018. As at 31 December 2018, UniCredit group’s ratios are compliant with all the above requirements. The profit eligible as at 31 December 2018, equal to €3,892 million is recognised in the Own Funds for 3,287 million, resulting after i) the destination, approved by the Board of Director, to dividends for €601 million, correspondent to the 20% of the rectified Group net profit (equal to €3,006 million), excluding the positive extraordinary impact linked to the tax effects deriving from the change of the fiscal treatment related to First Time Adoption of IFRS9 (€887 million) and ii) the social and charity initiatives for €4 million. The net profit 2018 as at 31 December 2018 is included in Common Equity Tier 1 Capital following the authorization by the competent Authority according to CRR Article 26(2). Capital strengthening With the €13 billion fully subscribed capital increase approved and finalised in the first few months of 2017 which involved the issue of No.1,606,876,817 new ordinary shares, one of the fundamental pillars of the 2016-2019 Strategic Plan was successfully completed with a significant strengthening of the Group's capital ratios. On 7 February 2018 UniCredit’s Board of Directors, pursuant to the powers conferred by the Extraordinary Shareholders' Meeting of 11 May 2013, the Extraordinary Shareholders’ Meeting of 13 May 2014, the Extraordinary Shareholders’ Meeting of 13 May 2015 and the Extraordinary Shareholders' Meeting of 14 April 2016, resolved to increase the share capital by €59,848,665.00 by issuing No.3,519,352 ordinary shares to be granted to the employees of UniCredit and of Group banks and companies; the resolution to increase the share capital has been registered with the Company Register on 9 April 2018 and the fully subscribed and paid-up share capital of UniCredit S.p.A. currently amounts to €20,940,398,466.81 and is divided into No.2,230,176,665 ordinary shares with no nominal value. On 12 March 2018, the mandatory conversion of savings shares into ordinary shares, approved by the Extraordinary Shareholders' Meeting and by the Special Meeting of Savings Shareholders on 4 December 2017, became effective under the plan to strengthen corporate governance and simplify the share capital structure of the Bank's share capital. The conversion of all savings shares issued and outstanding (No.252,489), based on the conversion ratio approved by the Shareholders' Meeting, involved: i) the issue of No.964,507 new ordinary shares with regular economic rights according to the conversion ratio of 3.82 ordinary shares for each savings share converted and ii) the payment in cash of the premium to the holders of savings shares in the amount of €27.25 for each share converted. As regards the equity instruments (Additional Tier 1) that contribute to strengthening the Tier 1 Ratio of UniCredit S.p.A. during the year 2018 no new issues were made. Consolidated report on operations Group results 54 2018 Annual Report and Accounts · UniCredit Find below a scheme of UniCredit Group transitional capital requirements and buffers which also provide evidences of TSCR (Total SREP Capital Requirement) and OCR (Overall Capital Requirement) related to the outcome of the SREP process held in 2017 and applicable for 2018: 2018 Transitional capital requirements and buffers for UniCredit group REQUIREMENT CET1 T1 TOTAL CAPITAL A) Pillar 1 Requirements 4.50% 6.00% 8.00% B) Pillar 2 Requirements 2.00% 2.00% 2.00% C) TSCR (A+B) 6.50% 8.00% 10.00% D) Combined capital buffer requirement, of which: 2.69% 2.69% 2.69% 1. Capital Conservation buffer (CCB) 1.875% 1.875% 1.875% 2. Global Systemically Important Institution buffer (G-SII) 0.75% 0.75% 0.75% 3. Institution-specific Countercyclical Capital buffer (CCyB) 0.06% 0.06% 0.06% E) OCR (C+D) 9.19% 10.69% 12.69% The above mentioned requirements are the ones which are relevant for MDA purposes for UniCredit group as at 31 December 2018. As at 31 December 2018, UniCredit group’s ratios are compliant with all the above requirements. The profit eligible as at 31 December 2018, equal to €3,892 million is recognised in the Own Funds for 3,287 million, resulting after i) the destination, approved by the Board of Director, to dividends for €601 million, correspondent to the 20% of the rectified Group net profit (equal to €3,006 million), excluding the positive extraordinary impact linked to the tax effects deriving from the change of the fiscal treatment related to First Time Adoption of IFRS9 (€887 million) and ii) the social and charity initiatives for €4 million. The net profit 2018 as at 31 December 2018 is included in Common Equity Tier 1 Capital following the authorization by the competent Authority according to CRR Article 26(2). Capital strengthening With the €13 billion fully subscribed capital increase approved and finalised in the first few months of 2017 which involved the issue of No.1,606,876,817 new ordinary shares, one of the fundamental pillars of the 2016-2019 Strategic Plan was successfully completed with a significant strengthening of the Group's capital ratios. On 7 February 2018 UniCredit’s Board of Directors, pursuant to the powers conferred by the Extraordinary Shareholders' Meeting of 11 May 2013, the Extraordinary Shareholders’ Meeting of 13 May 2014, the Extraordinary Shareholders’ Meeting of 13 May 2015 and the Extraordinary Shareholders' Meeting of 14 April 2016, resolved to increase the share capital by €59,848,665.00 by issuing No.3,519,352 ordinary shares to be granted to the employees of UniCredit and of Group banks and companies; the resolution to increase the share capital has been registered with the Company Register on 9 April 2018 and the fully subscribed and paid-up share capital of UniCredit S.p.A. currently amounts to €20,940,398,466.81 and is divided into No.2,230,176,665 ordinary shares with no nominal value. On 12 March 2018, the mandatory conversion of savings shares into ordinary shares, approved by the Extraordinary Shareholders' Meeting and by the Special Meeting of Savings Shareholders on 4 December 2017, became effective under the plan to strengthen corporate governance and simplify the share capital structure of the Bank's share capital. The conversion of all savings shares issued and outstanding (No.252,489), based on the conversion ratio approved by the Shareholders' Meeting, involved: i) the issue of No.964,507 new ordinary shares with regular economic rights according to the conversion ratio of 3.82 ordinary shares for each savings share converted and ii) the payment in cash of the premium to the holders of savings shares in the amount of €27.25 for each share converted. As regards the equity instruments (Additional Tier 1) that contribute to strengthening the Tier 1 Ratio of UniCredit S.p.A. during the year 2018 no new issues were made. Consolidated report on operations Group results 54 2018 Annual Report and Accounts · UniCredit Find below a scheme of UniCredit Group transitional capital requirements and buffers which also provide evidences of TSCR (Total SREP Capital Requirement) and OCR (Overall Capital Requirement) related to the outcome of the SREP process held in 2017 and applicable for 2018: 2018 Transitional capital requirements and buffers for UniCredit group REQUIREMENT CET1 T1 TOTAL CAPITAL A) Pillar 1 Requirements 4.50% 6.00% 8.00% B) Pillar 2 Requirements 2.00% 2.00% 2.00% C) TSCR (A+B) 6.50% 8.00% 10.00% D) Combined capital buffer requirement, of which: 2.69% 2.69% 2.69% 1. Capital Conservation buffer (CCB) 1.875% 1.875% 1.875% 2. Global Systemically Important Institution buffer (G-SII) 0.75% 0.75% 0.75% 3. Institution-specific Countercyclical Capital buffer (CCyB) 0.06% 0.06% 0.06% E) OCR (C+D) 9.19% 10.69% 12.69% The above mentioned requirements are the ones which are relevant for MDA purposes for UniCredit group as at 31 December 2018. As at 31 December 2018, UniCredit group’s ratios are compliant with all the above requirements. The profit eligible as at 31 December 2018, equal to €3,892 million is recognised in the Own Funds for 3,287 million, resulting after i) the destination, approved by the Board of Director, to dividends for €601 million, correspondent to the 20% of the rectified Group net profit (equal to €3,006 million), excluding the positive extraordinary impact linked to the tax effects deriving from the change of the fiscal treatment related to First Time Adoption of IFRS9 (€887 million) and ii) the social and charity initiatives for €4 million. The net profit 2018 as at 31 December 2018 is included in Common Equity Tier 1 Capital following the authorization by the competent Authority according to CRR Article 26(2). Capital strengthening With the €13 billion fully subscribed capital increase approved and finalised in the first few months of 2017 which involved the issue of No.1,606,876,817 new ordinary shares, one of the fundamental pillars of the 2016-2019 Strategic Plan was successfully completed with a significant strengthening of the Group's capital ratios. On 7 February 2018 UniCredit’s Board of Directors, pursuant to the powers conferred by the Extraordinary Shareholders' Meeting of 11 May 2013, the Extraordinary Shareholders’ Meeting of 13 May 2014, the Extraordinary Shareholders’ Meeting of 13 May 2015 and the Extraordinary Shareholders' Meeting of 14 April 2016, resolved to increase the share capital by €59,848,665.00 by issuing No.3,519,352 ordinary shares to be granted to the employees of UniCredit and of Group banks and companies; the resolution to increase the share capital has been registered with the Company Register on 9 April 2018 and the fully subscribed and paid-up share capital of UniCredit S.p.A. currently amounts to €20,940,398,466.81 and is divided into No.2,230,176,665 ordinary shares with no nominal value. On 12 March 2018, the mandatory conversion of savings shares into ordinary shares, approved by the Extraordinary Shareholders' Meeting and by the Special Meeting of Savings Shareholders on 4 December 2017, became effective under the plan to strengthen corporate governance and simplify the share capital structure of the Bank's share capital. The conversion of all savings shares issued and outstanding (No.252,489), based on the conversion ratio approved by the Shareholders' Meeting, involved: i) the issue of No.964,507 new ordinary shares with regular economic rights according to the conversion ratio of 3.82 ordinary shares for each savings share converted and ii) the payment in cash of the premium to the holders of savings shares in the amount of €27.25 for each share converted. As regards the equity instruments (Additional Tier 1) that contribute to strengthening the Tier 1 Ratio of UniCredit S.p.A. during the year 2018 no new issues were made. Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 55 Shareholders’ equity attributable to the Group, Parent Company The Shareholders’ equity of the Group, including the net profit of the period equal to €3,892 million, amounted to €55,841 million as at 31 December 2018, compared to €59,331 million as at 31 December 2017. The statement of changes in shareholders’ equity is included in the consolidated accounts. The following table shows the main changes occurred in 2018. Shareholders' equity attributable to the Group (€ million) Shareholders' equity as at 31 December 2017 59,331 Change in opening balance(1) (3,327) Change in the valuation reserve relating to the financial assets and liabilities at fair value(2) (1,181) Dividends and other allocations (715) Change in the valuation reserve of the companies accounted for using the equity method(3) (838) Exchange differences reserve(4) (388) Change in the valuation reserve relating to the actuarial gains/losses on defined benefit plans (302) Changes in reserve for the unsustainable amount of Tax Losses Carried Forward deferred tax assets (TLCF)(5) (275) Change in the valuation reserve related coupon on AT1 instruments (242) Change in the valuation reserve relating to cash flow hedges (130) Others 16 Net profit (loss) for the period 3,892 Shareholders' equity as at 31 December 2018 55,841 Notes: (1) This impact includes the re-measurement effects resulting from the first time adoption of the accounting principle IFRS9. (2) Mainly refers to government bonds. (3) The negative change in the valuation reserve of the companies accounted for using the equity method is mainly due to the depreciation of the items in Turkish Lira. (4) This effect is mainly due to the negative impact of the Ruble for €352 million. (5) This impact includes the write down of TLCF DTAs due to the update of sustainability test. For further information, refer to section “Consolidated accounts - Statement of changes in shareholders’ equity”. Reconciliation parent company UniCredit S.p.A. - Consolidated accounts The following table reconciles the Parent Company’s shareholders’ equity and Net profit to the corresponding consolidated figures. Reconciliation parent company UniCredit S.p.A - Consolidated accounts (€ million) SHAREHOLDERS' of which: EQUITY NET PROFIT Balance as at 31 December 2018 of parent company UniCredit S.p.A. 50,836 2,458 Consolidated contribution: 4,684 4,871 - fully consolidated subsidiaries 1,451 3,811 - investments valued at equity method 3,233 1,060 Reverse of ordinary dividends received in the period: - (3,072) - fully consolidated subsidiaries - (2,894) - investments valued at equity method - (178) Other consolidation adjustments 1,248 (149) Balance as at 31 December 2018 (minorities included) 56,768 4,109 of which Group 55,841 3,892 of which minorities 927 216 Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 55 Shareholders’ equity attributable to the Group, Parent Company The Shareholders’ equity of the Group, including the net profit of the period equal to €3,892 million, amounted to €55,841 million as at 31 December 2018, compared to €59,331 million as at 31 December 2017. The statement of changes in shareholders’ equity is included in the consolidated accounts. The following table shows the main changes occurred in 2018. Shareholders' equity attributable to the Group (€ million) Shareholders' equity as at 31 December 2017 59,331 Change in opening balance(1) (3,327) Change in the valuation reserve relating to the financial assets and liabilities at fair value(2) (1,181) Dividends and other allocations (715) Change in the valuation reserve of the companies accounted for using the equity method(3) (838) Exchange differences reserve(4) (388) Change in the valuation reserve relating to the actuarial gains/losses on defined benefit plans (302) Changes in reserve for the unsustainable amount of Tax Losses Carried Forward deferred tax assets (TLCF)(5) (275) Change in the valuation reserve related coupon on AT1 instruments (242) Change in the valuation reserve relating to cash flow hedges (130) Others 16 Net profit (loss) for the period 3,892 Shareholders' equity as at 31 December 2018 55,841 Notes: (1) This impact includes the re-measurement effects resulting from the first time adoption of the accounting principle IFRS9. (2) Mainly refers to government bonds. (3) The negative change in the valuation reserve of the companies accounted for using the equity method is mainly due to the depreciation of the items in Turkish Lira. (4) This effect is mainly due to the negative impact of the Ruble for €352 million. (5) This impact includes the write down of TLCF DTAs due to the update of sustainability test. For further information, refer to section “Consolidated accounts - Statement of changes in shareholders’ equity”. Reconciliation parent company UniCredit S.p.A. - Consolidated accounts The following table reconciles the Parent Company’s shareholders’ equity and Net profit to the corresponding consolidated figures. Reconciliation parent company UniCredit S.p.A - Consolidated accounts (€ million) SHAREHOLDERS' of which: EQUITY NET PROFIT Balance as at 31 December 2018 of parent company UniCredit S.p.A. 50,836 2,458 Consolidated contribution: 4,684 4,871 - fully consolidated subsidiaries 1,451 3,811 - investments valued at equity method 3,233 1,060 Reverse of ordinary dividends received in the period: - (3,072) - fully consolidated subsidiaries - (2,894) - investments valued at equity method - (178) Other consolidation adjustments 1,248 (149) Balance as at 31 December 2018 (minorities included) 56,768 4,109 of which Group 55,841 3,892 of which minorities 927 216 Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 55 Shareholders’ equity attributable to the Group, Parent Company The Shareholders’ equity of the Group, including the net profit of the period equal to €3,892 million, amounted to €55,841 million as at 31 December 2018, compared to €59,331 million as at 31 December 2017. The statement of changes in shareholders’ equity is included in the consolidated accounts. The following table shows the main changes occurred in 2018. Shareholders' equity attributable to the Group (€ million) Shareholders' equity as at 31 December 2017 59,331 Change in opening balance(1) (3,327) Change in the valuation reserve relating to the financial assets and liabilities at fair value(2) (1,181) Dividends and other allocations (715) Change in the valuation reserve of the companies accounted for using the equity method(3) (838) Exchange differences reserve(4) (388) Change in the valuation reserve relating to the actuarial gains/losses on defined benefit plans (302) Changes in reserve for the unsustainable amount of Tax Losses Carried Forward deferred tax assets (TLCF)(5) (275) Change in the valuation reserve related coupon on AT1 instruments (242) Change in the valuation reserve relating to cash flow hedges (130) Others 16 Net profit (loss) for the period 3,892 Shareholders' equity as at 31 December 2018 55,841 Notes: (1) This impact includes the re-measurement effects resulting from the first time adoption of the accounting principle IFRS9. (2) Mainly refers to government bonds. (3) The negative change in the valuation reserve of the companies accounted for using the equity method is mainly due to the depreciation of the items in Turkish Lira. (4) This effect is mainly due to the negative impact of the Ruble for €352 million. (5) This impact includes the write down of TLCF DTAs due to the update of sustainability test. For further information, refer to section “Consolidated accounts - Statement of changes in shareholders’ equity”. Reconciliation parent company UniCredit S.p.A. - Consolidated accounts The following table reconciles the Parent Company’s shareholders’ equity and Net profit to the corresponding consolidated figures. Reconciliation parent company UniCredit S.p.A - Consolidated accounts (€ million) SHAREHOLDERS' of which: EQUITY NET PROFIT Balance as at 31 December 2018 of parent company UniCredit S.p.A. 50,836 2,458 Consolidated contribution: 4,684 4,871 - fully consolidated subsidiaries 1,451 3,811 - investments valued at equity method 3,233 1,060 Reverse of ordinary dividends received in the period: - (3,072) - fully consolidated subsidiaries - (2,894) - investments valued at equity method - (178) Other consolidation adjustments 1,248 (149) Balance as at 31 December 2018 (minorities included) 56,768 4,109 of which Group 55,841 3,892 of which minorities 927 216 Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 55 Shareholders’ equity attributable to the Group, Parent Company The Shareholders’ equity of the Group, including the net profit of the period equal to €3,892 million, amounted to €55,841 million as at 31 December 2018, compared to €59,331 million as at 31 December 2017. The statement of changes in shareholders’ equity is included in the consolidated accounts. The following table shows the main changes occurred in 2018. Shareholders' equity attributable to the Group (€ million) Shareholders' equity as at 31 December 2017 59,331 Change in opening balance(1) (3,327) Change in the valuation reserve relating to the financial assets and liabilities at fair value(2) (1,181) Dividends and other allocations (715) Change in the valuation reserve of the companies accounted for using the equity method(3) (838) Exchange differences reserve(4) (388) Change in the valuation reserve relating to the actuarial gains/losses on defined benefit plans (302) Changes in reserve for the unsustainable amount of Tax Losses Carried Forward deferred tax assets (TLCF)(5) (275) Change in the valuation reserve related coupon on AT1 instruments (242) Change in the valuation reserve relating to cash flow hedges (130) Others 16 Net profit (loss) for the period 3,892 Shareholders' equity as at 31 December 2018 55,841 Notes: (1) This impact includes the re-measurement effects resulting from the first time adoption of the accounting principle IFRS9. (2) Mainly refers to government bonds. (3) The negative change in the valuation reserve of the companies accounted for using the equity method is mainly due to the depreciation of the items in Turkish Lira. (4) This effect is mainly due to the negative impact of the Ruble for €352 million. (5) This impact includes the write down of TLCF DTAs due to the update of sustainability test. For further information, refer to section “Consolidated accounts - Statement of changes in shareholders’ equity”. Reconciliation parent company UniCredit S.p.A. - Consolidated accounts The following table reconciles the Parent Company’s shareholders’ equity and Net profit to the corresponding consolidated figures. Reconciliation parent company UniCredit S.p.A - Consolidated accounts (€ million) SHAREHOLDERS' of which: EQUITY NET PROFIT Balance as at 31 December 2018 of parent company UniCredit S.p.A. 50,836 2,458 Consolidated contribution: 4,684 4,871 - fully consolidated subsidiaries 1,451 3,811 - investments valued at equity method 3,233 1,060 Reverse of ordinary dividends received in the period: - (3,072) - fully consolidated subsidiaries - (2,894) - investments valued at equity method - (178) Other consolidation adjustments 1,248 (149) Balance as at 31 December 2018 (minorities included) 56,768 4,109 of which Group 55,841 3,892 of which minorities 927 216 Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 55 Shareholders’ equity attributable to the Group, Parent Company The Shareholders’ equity of the Group, including the net profit of the period equal to €3,892 million, amounted to €55,841 million as at 31 December 2018, compared to €59,331 million as at 31 December 2017. The statement of changes in shareholders’ equity is included in the consolidated accounts. The following table shows the main changes occurred in 2018. Shareholders' equity attributable to the Group (€ million) Shareholders' equity as at 31 December 2017 59,331 Change in opening balance(1) (3,327) Change in the valuation reserve relating to the financial assets and liabilities at fair value(2) (1,181) Dividends and other allocations (715) Change in the valuation reserve of the companies accounted for using the equity method(3) (838) Exchange differences reserve(4) (388) Change in the valuation reserve relating to the actuarial gains/losses on defined benefit plans (302) Changes in reserve for the unsustainable amount of Tax Losses Carried Forward deferred tax assets (TLCF)(5) (275) Change in the valuation reserve related coupon on AT1 instruments (242) Change in the valuation reserve relating to cash flow hedges (130) Others 16 Net profit (loss) for the period 3,892 Shareholders' equity as at 31 December 2018 55,841 Notes: (1) This impact includes the re-measurement effects resulting from the first time adoption of the accounting principle IFRS9. (2) Mainly refers to government bonds. (3) The negative change in the valuation reserve of the companies accounted for using the equity method is mainly due to the depreciation of the items in Turkish Lira. (4) This effect is mainly due to the negative impact of the Ruble for €352 million. (5) This impact includes the write down of TLCF DTAs due to the update of sustainability test. For further information, refer to section “Consolidated accounts - Statement of changes in shareholders’ equity”. Reconciliation parent company UniCredit S.p.A. - Consolidated accounts The following table reconciles the Parent Company’s shareholders’ equity and Net profit to the corresponding consolidated figures. Reconciliation parent company UniCredit S.p.A - Consolidated accounts (€ million) SHAREHOLDERS' of which: EQUITY NET PROFIT Balance as at 31 December 2018 of parent company UniCredit S.p.A. 50,836 2,458 Consolidated contribution: 4,684 4,871 - fully consolidated subsidiaries 1,451 3,811 - investments valued at equity method 3,233 1,060 Reverse of ordinary dividends received in the period: - (3,072) - fully consolidated subsidiaries - (2,894) - investments valued at equity method - (178) Other consolidation adjustments 1,248 (149) Balance as at 31 December 2018 (minorities included) 56,768 4,109 of which Group 55,841 3,892 of which minorities 927 216 Consolidated report on operations Group results 56 2018 Annual Report and Accounts · UniCredit Contribution of the sector of activity to the results of the Group Commercial Banking Italy Commercial Banking Italy is composed by UniCredit S.p.A. commercial network related to Core clients (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division), Leasing (excluding Non-Core clients), Factoring and local Corporate Center with supporting functions for the Italian business. In relation to individual clients (Households and clients of specialized network Private Banking), Commercial Banking Italy’ s goal is to offer a full range of products and services to fulfill transactional, investments and credit needs, relying on branches and multichannel services provided thanks to new technologies. In relation to corporate customers, Commercial Banking Italy operates trying to guarantee both the support to the economic and entrepreneurial system and the profitability and quality of its portfolio. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING ITALY YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 7,257 7,442 - 2.5% 1,747 - 0.6% Operating costs (4,125) (4,438) - 7.1% (1,022) + 0.7% Net write-downs on loans (1,046) (975) + 7.4% (298) - 5.9% Net operating profit 2,085 2,029 + 2.7% 427 + 0.2% Profit before tax 1,882 1,775 + 6.0% 345 - 25.5% Customers loans (net Repos and IC) 145,645 137,437 + 6.0% 145,645 + 1.5% Customers depos (net Repos and IC) 146,260 140,935 + 3.8% 146,260 + 0.6% Total RWA Eop 94,914 85,592 + 10.9% 94,914 + 7.2% EVA (€ million) 9 90 - 89.8% (105) n.M. Absorbed Capital (€ million) 10,988 10,348 + 6.2% 11,475 + 4.0% ROAC + 12.1% + 11.9% + 0.2 p.p. + 7.3% - 6.0 p.p. Cost/Income + 56.9% + 59.6% - 2.8 p.p. + 58.5% + 0.8 p.p. Cost of Risk 74 bps 72 bps 3 bps 83 bps - 6 bps Full Time Equivalent (eop) 29,669 32,334 - 8.2% 29,669 - 2.1% Commercial Banking Germany Commercial Banking Germany provides all German customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services through its branch network. Commercial Banking Germany holds large market shares and a strategic market position in retail banking, in private banking and especially in business with local corporate customers (including factoring and leasing). The segment also includes the local Corporate Center, which performs tasks as sub-holding towards other sub-group legal entities. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING GERMANY YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 2,470 2,694 - 8.3% 621 + 3.0% Operating costs (1,704) (1,810) - 5.9% (429) + 3.9% Net write-downs on loans (145) (125) + 15.9% (106) n.M. Net operating profit 620 758 - 18.2% 85 - 59.7% Profit before tax 369 631 - 41.5% 47 + 2.0% Customers loans (net Repos and IC) 84,463 80,749 + 4.6% 84,463 - 1.5% Customers depos (net Repos and IC) 91,694 91,582 + 0.1% 91,694 + 4.6% Total RWA Eop 36,062 33,999 + 6.1% 36,062 - 0.6% EVA (€ million) (44) 153 n.M. 77 n.M. Absorbed Capital (€ million) 4,433 4,383 + 1.1% 4,616 + 4.0% ROAC + 8.1% + 13.4% - 5.3 p.p. + 14.3% + 9.7 p.p. Cost/Income + 69.0% + 67.2% + 1.8 p.p. + 69.2% + 0.6 p.p. Cost of Risk 17 bps 15 bps 2 bps 50 bps 60 bps Full Time Equivalent (eop) 9,208 10,105 - 8.9% 9,208 - 1.3% Consolidated report on operations Group results 56 2018 Annual Report and Accounts · UniCredit Contribution of the sector of activity to the results of the Group Commercial Banking Italy Commercial Banking Italy is composed by UniCredit S.p.A. commercial network related to Core clients (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division), Leasing (excluding Non-Core clients), Factoring and local Corporate Center with supporting functions for the Italian business. In relation to individual clients (Households and clients of specialized network Private Banking), Commercial Banking Italy’ s goal is to offer a full range of products and services to fulfill transactional, investments and credit needs, relying on branches and multichannel services provided thanks to new technologies. In relation to corporate customers, Commercial Banking Italy operates trying to guarantee both the support to the economic and entrepreneurial system and the profitability and quality of its portfolio. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING ITALY YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 7,257 7,442 - 2.5% 1,747 - 0.6% Operating costs (4,125) (4,438) - 7.1% (1,022) + 0.7% Net write-downs on loans (1,046) (975) + 7.4% (298) - 5.9% Net operating profit 2,085 2,029 + 2.7% 427 + 0.2% Profit before tax 1,882 1,775 + 6.0% 345 - 25.5% Customers loans (net Repos and IC) 145,645 137,437 + 6.0% 145,645 + 1.5% Customers depos (net Repos and IC) 146,260 140,935 + 3.8% 146,260 + 0.6% Total RWA Eop 94,914 85,592 + 10.9% 94,914 + 7.2% EVA (€ million) 9 90 - 89.8% (105) n.M. Absorbed Capital (€ million) 10,988 10,348 + 6.2% 11,475 + 4.0% ROAC + 12.1% + 11.9% + 0.2 p.p. + 7.3% - 6.0 p.p. Cost/Income + 56.9% + 59.6% - 2.8 p.p. + 58.5% + 0.8 p.p. Cost of Risk 74 bps 72 bps 3 bps 83 bps - 6 bps Full Time Equivalent (eop) 29,669 32,334 - 8.2% 29,669 - 2.1% Commercial Banking Germany Commercial Banking Germany provides all German customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services through its branch network. Commercial Banking Germany holds large market shares and a strategic market position in retail banking, in private banking and especially in business with local corporate customers (including factoring and leasing). The segment also includes the local Corporate Center, which performs tasks as sub-holding towards other sub-group legal entities. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING GERMANY YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 2,470 2,694 - 8.3% 621 + 3.0% Operating costs (1,704) (1,810) - 5.9% (429) + 3.9% Net write-downs on loans (145) (125) + 15.9% (106) n.M. Net operating profit 620 758 - 18.2% 85 - 59.7% Profit before tax 369 631 - 41.5% 47 + 2.0% Customers loans (net Repos and IC) 84,463 80,749 + 4.6% 84,463 - 1.5% Customers depos (net Repos and IC) 91,694 91,582 + 0.1% 91,694 + 4.6% Total RWA Eop 36,062 33,999 + 6.1% 36,062 - 0.6% EVA (€ million) (44) 153 n.M. 77 n.M. Absorbed Capital (€ million) 4,433 4,383 + 1.1% 4,616 + 4.0% ROAC + 8.1% + 13.4% - 5.3 p.p. + 14.3% + 9.7 p.p. Cost/Income + 69.0% + 67.2% + 1.8 p.p. + 69.2% + 0.6 p.p. Cost of Risk 17 bps 15 bps 2 bps 50 bps 60 bps Full Time Equivalent (eop) 9,208 10,105 - 8.9% 9,208 - 1.3% Consolidated report on operations Group results 56 2018 Annual Report and Accounts · UniCredit Contribution of the sector of activity to the results of the Group Commercial Banking Italy Commercial Banking Italy is composed by UniCredit S.p.A. commercial network related to Core clients (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division), Leasing (excluding Non-Core clients), Factoring and local Corporate Center with supporting functions for the Italian business. In relation to individual clients (Households and clients of specialized network Private Banking), Commercial Banking Italy’ s goal is to offer a full range of products and services to fulfill transactional, investments and credit needs, relying on branches and multichannel services provided thanks to new technologies. In relation to corporate customers, Commercial Banking Italy operates trying to guarantee both the support to the economic and entrepreneurial system and the profitability and quality of its portfolio. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING ITALY YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 7,257 7,442 - 2.5% 1,747 - 0.6% Operating costs (4,125) (4,438) - 7.1% (1,022) + 0.7% Net write-downs on loans (1,046) (975) + 7.4% (298) - 5.9% Net operating profit 2,085 2,029 + 2.7% 427 + 0.2% Profit before tax 1,882 1,775 + 6.0% 345 - 25.5% Customers loans (net Repos and IC) 145,645 137,437 + 6.0% 145,645 + 1.5% Customers depos (net Repos and IC) 146,260 140,935 + 3.8% 146,260 + 0.6% Total RWA Eop 94,914 85,592 + 10.9% 94,914 + 7.2% EVA (€ million) 9 90 - 89.8% (105) n.M. Absorbed Capital (€ million) 10,988 10,348 + 6.2% 11,475 + 4.0% ROAC + 12.1% + 11.9% + 0.2 p.p. + 7.3% - 6.0 p.p. Cost/Income + 56.9% + 59.6% - 2.8 p.p. + 58.5% + 0.8 p.p. Cost of Risk 74 bps 72 bps 3 bps 83 bps - 6 bps Full Time Equivalent (eop) 29,669 32,334 - 8.2% 29,669 - 2.1% Commercial Banking Germany Commercial Banking Germany provides all German customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services through its branch network. Commercial Banking Germany holds large market shares and a strategic market position in retail banking, in private banking and especially in business with local corporate customers (including factoring and leasing). The segment also includes the local Corporate Center, which performs tasks as sub-holding towards other sub-group legal entities. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING GERMANY YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 2,470 2,694 - 8.3% 621 + 3.0% Operating costs (1,704) (1,810) - 5.9% (429) + 3.9% Net write-downs on loans (145) (125) + 15.9% (106) n.M. Net operating profit 620 758 - 18.2% 85 - 59.7% Profit before tax 369 631 - 41.5% 47 + 2.0% Customers loans (net Repos and IC) 84,463 80,749 + 4.6% 84,463 - 1.5% Customers depos (net Repos and IC) 91,694 91,582 + 0.1% 91,694 + 4.6% Total RWA Eop 36,062 33,999 + 6.1% 36,062 - 0.6% EVA (€ million) (44) 153 n.M. 77 n.M. Absorbed Capital (€ million) 4,433 4,383 + 1.1% 4,616 + 4.0% ROAC + 8.1% + 13.4% - 5.3 p.p. + 14.3% + 9.7 p.p. Cost/Income + 69.0% + 67.2% + 1.8 p.p. + 69.2% + 0.6 p.p. Cost of Risk 17 bps 15 bps 2 bps 50 bps 60 bps Full Time Equivalent (eop) 9,208 10,105 - 8.9% 9,208 - 1.3% Consolidated report on operations Group results 56 2018 Annual Report and Accounts · UniCredit Contribution of the sector of activity to the results of the Group Commercial Banking Italy Commercial Banking Italy is composed by UniCredit S.p.A. commercial network related to Core clients (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division), Leasing (excluding Non-Core clients), Factoring and local Corporate Center with supporting functions for the Italian business. In relation to individual clients (Households and clients of specialized network Private Banking), Commercial Banking Italy’ s goal is to offer a full range of products and services to fulfill transactional, investments and credit needs, relying on branches and multichannel services provided thanks to new technologies. In relation to corporate customers, Commercial Banking Italy operates trying to guarantee both the support to the economic and entrepreneurial system and the profitability and quality of its portfolio. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING ITALY YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 7,257 7,442 - 2.5% 1,747 - 0.6% Operating costs (4,125) (4,438) - 7.1% (1,022) + 0.7% Net write-downs on loans (1,046) (975) + 7.4% (298) - 5.9% Net operating profit 2,085 2,029 + 2.7% 427 + 0.2% Profit before tax 1,882 1,775 + 6.0% 345 - 25.5% Customers loans (net Repos and IC) 145,645 137,437 + 6.0% 145,645 + 1.5% Customers depos (net Repos and IC) 146,260 140,935 + 3.8% 146,260 + 0.6% Total RWA Eop 94,914 85,592 + 10.9% 94,914 + 7.2% EVA (€ million) 9 90 - 89.8% (105) n.M. Absorbed Capital (€ million) 10,988 10,348 + 6.2% 11,475 + 4.0% ROAC + 12.1% + 11.9% + 0.2 p.p. + 7.3% - 6.0 p.p. Cost/Income + 56.9% + 59.6% - 2.8 p.p. + 58.5% + 0.8 p.p. Cost of Risk 74 bps 72 bps 3 bps 83 bps - 6 bps Full Time Equivalent (eop) 29,669 32,334 - 8.2% 29,669 - 2.1% Commercial Banking Germany Commercial Banking Germany provides all German customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services through its branch network. Commercial Banking Germany holds large market shares and a strategic market position in retail banking, in private banking and especially in business with local corporate customers (including factoring and leasing). The segment also includes the local Corporate Center, which performs tasks as sub-holding towards other sub-group legal entities. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING GERMANY YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 2,470 2,694 - 8.3% 621 + 3.0% Operating costs (1,704) (1,810) - 5.9% (429) + 3.9% Net write-downs on loans (145) (125) + 15.9% (106) n.M. Net operating profit 620 758 - 18.2% 85 - 59.7% Profit before tax 369 631 - 41.5% 47 + 2.0% Customers loans (net Repos and IC) 84,463 80,749 + 4.6% 84,463 - 1.5% Customers depos (net Repos and IC) 91,694 91,582 + 0.1% 91,694 + 4.6% Total RWA Eop 36,062 33,999 + 6.1% 36,062 - 0.6% EVA (€ million) (44) 153 n.M. 77 n.M. Absorbed Capital (€ million) 4,433 4,383 + 1.1% 4,616 + 4.0% ROAC + 8.1% + 13.4% - 5.3 p.p. + 14.3% + 9.7 p.p. Cost/Income + 69.0% + 67.2% + 1.8 p.p. + 69.2% + 0.6 p.p. Cost of Risk 17 bps 15 bps 2 bps 50 bps 60 bps Full Time Equivalent (eop) 9,208 10,105 - 8.9% 9,208 - 1.3% Consolidated report on operations Group results 56 2018 Annual Report and Accounts · UniCredit Contribution of the sector of activity to the results of the Group Commercial Banking Italy Commercial Banking Italy is composed by UniCredit S.p.A. commercial network related to Core clients (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division), Leasing (excluding Non-Core clients), Factoring and local Corporate Center with supporting functions for the Italian business. In relation to individual clients (Households and clients of specialized network Private Banking), Commercial Banking Italy’ s goal is to offer a full range of products and services to fulfill transactional, investments and credit needs, relying on branches and multichannel services provided thanks to new technologies. In relation to corporate customers, Commercial Banking Italy operates trying to guarantee both the support to the economic and entrepreneurial system and the profitability and quality of its portfolio. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING ITALY YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 7,257 7,442 - 2.5% 1,747 - 0.6% Operating costs (4,125) (4,438) - 7.1% (1,022) + 0.7% Net write-downs on loans (1,046) (975) + 7.4% (298) - 5.9% Net operating profit 2,085 2,029 + 2.7% 427 + 0.2% Profit before tax 1,882 1,775 + 6.0% 345 - 25.5% Customers loans (net Repos and IC) 145,645 137,437 + 6.0% 145,645 + 1.5% Customers depos (net Repos and IC) 146,260 140,935 + 3.8% 146,260 + 0.6% Total RWA Eop 94,914 85,592 + 10.9% 94,914 + 7.2% EVA (€ million) 9 90 - 89.8% (105) n.M. Absorbed Capital (€ million) 10,988 10,348 + 6.2% 11,475 + 4.0% ROAC + 12.1% + 11.9% + 0.2 p.p. + 7.3% - 6.0 p.p. Cost/Income + 56.9% + 59.6% - 2.8 p.p. + 58.5% + 0.8 p.p. Cost of Risk 74 bps 72 bps 3 bps 83 bps - 6 bps Full Time Equivalent (eop) 29,669 32,334 - 8.2% 29,669 - 2.1% Commercial Banking Germany Commercial Banking Germany provides all German customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services through its branch network. Commercial Banking Germany holds large market shares and a strategic market position in retail banking, in private banking and especially in business with local corporate customers (including factoring and leasing). The segment also includes the local Corporate Center, which performs tasks as sub-holding towards other sub-group legal entities. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING GERMANY YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 2,470 2,694 - 8.3% 621 + 3.0% Operating costs (1,704) (1,810) - 5.9% (429) + 3.9% Net write-downs on loans (145) (125) + 15.9% (106) n.M. Net operating profit 620 758 - 18.2% 85 - 59.7% Profit before tax 369 631 - 41.5% 47 + 2.0% Customers loans (net Repos and IC) 84,463 80,749 + 4.6% 84,463 - 1.5% Customers depos (net Repos and IC) 91,694 91,582 + 0.1% 91,694 + 4.6% Total RWA Eop 36,062 33,999 + 6.1% 36,062 - 0.6% EVA (€ million) (44) 153 n.M. 77 n.M. Absorbed Capital (€ million) 4,433 4,383 + 1.1% 4,616 + 4.0% ROAC + 8.1% + 13.4% - 5.3 p.p. + 14.3% + 9.7 p.p. Cost/Income + 69.0% + 67.2% + 1.8 p.p. + 69.2% + 0.6 p.p. Cost of Risk 17 bps 15 bps 2 bps 50 bps 60 bps Full Time Equivalent (eop) 9,208 10,105 - 8.9% 9,208 - 1.3% Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 57 Commercial Banking Austria Commercial Banking Austria provides its Austrian customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services. It is composed of: Retail, Corporate (excluding CIB clients, but including the product factories Factoring and Leasing), Private Banking (with its two well-known brands Bank Austria Private Banking and Schoellerbank AG) and the local Corporate Center. Retail covers business with private individuals, ranging from mass-market to affluent customers and business customers. Corporates covers the entire range of SMEs, medium-sized and large companies which do not access capital markets (including real estate and public sector). A broad coverage of the Retail and Corporate business lines is ensured through its nation-wide branch network. Commercial Banking Austria holds significant market shares and a strategic market position in retail banking, private banking and especially in business with local corporate customers and is one of the leading providers of banking services in Austria. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING AUSTRIA YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 1,563 1,583 - 1.3% 376 - 6.7% Operating costs (1,022) (1,085) - 5.9% (260) + 8.3% Net write-downs on loans 25 17 + 49.0% (7) - 71.8% Net operating profit 567 515 + 10.1% 110 - 21.5% Profit before tax 448 445 + 0.7% 99 - 23.1% Customers loans (net Repos and IC) 44,971 44,336 + 1.4% 44,971 + 1.1% Customers depos (net Repos and IC) 47,375 46,487 + 1.9% 47,375 + 1.6% Total RWA Eop 23,314 20,963 + 11.2% 23,314 + 7.6% EVA (€ million) 173 293 - 40.9% 39 - 24.0% Absorbed Capital (€ million) 2,648 2,754 - 3.9% 2,701 + 3.3% ROAC + 16.0% + 20.1% - 4.1 p.p. + 14.5% - 4.3 p.p. Cost/Income + 65.3% + 68.5% - 3.2 p.p. + 69.0% + 9.6 p.p. Cost of Risk - 5 bps - 4 bps - 2 bps 6 bps - 15 bps Full Time Equivalent (eop) 4,873 5,092 - 4.3% 4,873 - 0.4% CEE Division The Group operates, through the CEE business segment, in 12 Central and Eastern Europe countries: Azerbaijan, Bosnia -Herzegovina, Bulgaria, Croatia, the Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey, having in addition Leasing activities in the 3 Baltic countries. The CEE business segment through its branches offers a wide range of products and services to retail, corporate and institutional clients in these countries. Income statement, key ratios and indicators (€ million) CEE DIVISION YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 4,262 4,186 + 1.8% 1,112 + 11.8% Operating costs (1,566) (1,543) + 1.5% (412) + 6.3% Net write-downs on loans (457) (584) - 21.7% (160) + 75.1% Net operating profit 2,240 2,059 + 8.8% 540 + 4.7% Profit before tax 2,034 1,855 + 9.7% 475 - 7.5% Customers loans (net Repos and IC) 65,344 59,966 + 9.0% 65,344 + 1.8% Customers depos (net Repos and IC) 65,744 62,406 + 5.3% 65,744 + 5.1% Total RWA Eop 86,277 85,996 + 0.3% 86,277 + 0.4% EVA (€ million) 493 332 + 48.4% 111 - 9.1% Absorbed Capital (€ million) 10,628 10,876 - 2.3% 10,530 - 0.6% ROAC + 15.7% + 13.9% + 1.9 p.p. + 15.2% - 0.6 p.p. Cost/Income + 36.7% + 36.9% - 0.1 p.p. + 37.1% - 1.9 p.p. Cost of Risk 73 bps 97 bps - 24 bps 98 bps 40 bps Full Time Equivalent (eop) 24,218 24,089 + 0.5% 24,218 - 0.2% Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 57 Commercial Banking Austria Commercial Banking Austria provides its Austrian customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services. It is composed of: Retail, Corporate (excluding CIB clients, but including the product factories Factoring and Leasing), Private Banking (with its two well-known brands Bank Austria Private Banking and Schoellerbank AG) and the local Corporate Center. Retail covers business with private individuals, ranging from mass-market to affluent customers and business customers. Corporates covers the entire range of SMEs, medium-sized and large companies which do not access capital markets (including real estate and public sector). A broad coverage of the Retail and Corporate business lines is ensured through its nation-wide branch network. Commercial Banking Austria holds significant market shares and a strategic market position in retail banking, private banking and especially in business with local corporate customers and is one of the leading providers of banking services in Austria. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING AUSTRIA YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 1,563 1,583 - 1.3% 376 - 6.7% Operating costs (1,022) (1,085) - 5.9% (260) + 8.3% Net write-downs on loans 25 17 + 49.0% (7) - 71.8% Net operating profit 567 515 + 10.1% 110 - 21.5% Profit before tax 448 445 + 0.7% 99 - 23.1% Customers loans (net Repos and IC) 44,971 44,336 + 1.4% 44,971 + 1.1% Customers depos (net Repos and IC) 47,375 46,487 + 1.9% 47,375 + 1.6% Total RWA Eop 23,314 20,963 + 11.2% 23,314 + 7.6% EVA (€ million) 173 293 - 40.9% 39 - 24.0% Absorbed Capital (€ million) 2,648 2,754 - 3.9% 2,701 + 3.3% ROAC + 16.0% + 20.1% - 4.1 p.p. + 14.5% - 4.3 p.p. Cost/Income + 65.3% + 68.5% - 3.2 p.p. + 69.0% + 9.6 p.p. Cost of Risk - 5 bps - 4 bps - 2 bps 6 bps - 15 bps Full Time Equivalent (eop) 4,873 5,092 - 4.3% 4,873 - 0.4% CEE Division The Group operates, through the CEE business segment, in 12 Central and Eastern Europe countries: Azerbaijan, Bosnia -Herzegovina, Bulgaria, Croatia, the Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey, having in addition Leasing activities in the 3 Baltic countries. The CEE business segment through its branches offers a wide range of products and services to retail, corporate and institutional clients in these countries. Income statement, key ratios and indicators (€ million) CEE DIVISION YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 4,262 4,186 + 1.8% 1,112 + 11.8% Operating costs (1,566) (1,543) + 1.5% (412) + 6.3% Net write-downs on loans (457) (584) - 21.7% (160) + 75.1% Net operating profit 2,240 2,059 + 8.8% 540 + 4.7% Profit before tax 2,034 1,855 + 9.7% 475 - 7.5% Customers loans (net Repos and IC) 65,344 59,966 + 9.0% 65,344 + 1.8% Customers depos (net Repos and IC) 65,744 62,406 + 5.3% 65,744 + 5.1% Total RWA Eop 86,277 85,996 + 0.3% 86,277 + 0.4% EVA (€ million) 493 332 + 48.4% 111 - 9.1% Absorbed Capital (€ million) 10,628 10,876 - 2.3% 10,530 - 0.6% ROAC + 15.7% + 13.9% + 1.9 p.p. + 15.2% - 0.6 p.p. Cost/Income + 36.7% + 36.9% - 0.1 p.p. + 37.1% - 1.9 p.p. Cost of Risk 73 bps 97 bps - 24 bps 98 bps 40 bps Full Time Equivalent (eop) 24,218 24,089 + 0.5% 24,218 - 0.2% Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 57 Commercial Banking Austria Commercial Banking Austria provides its Austrian customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services. It is composed of: Retail, Corporate (excluding CIB clients, but including the product factories Factoring and Leasing), Private Banking (with its two well-known brands Bank Austria Private Banking and Schoellerbank AG) and the local Corporate Center. Retail covers business with private individuals, ranging from mass-market to affluent customers and business customers. Corporates covers the entire range of SMEs, medium-sized and large companies which do not access capital markets (including real estate and public sector). A broad coverage of the Retail and Corporate business lines is ensured through its nation-wide branch network. Commercial Banking Austria holds significant market shares and a strategic market position in retail banking, private banking and especially in business with local corporate customers and is one of the leading providers of banking services in Austria. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING AUSTRIA YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 1,563 1,583 - 1.3% 376 - 6.7% Operating costs (1,022) (1,085) - 5.9% (260) + 8.3% Net write-downs on loans 25 17 + 49.0% (7) - 71.8% Net operating profit 567 515 + 10.1% 110 - 21.5% Profit before tax 448 445 + 0.7% 99 - 23.1% Customers loans (net Repos and IC) 44,971 44,336 + 1.4% 44,971 + 1.1% Customers depos (net Repos and IC) 47,375 46,487 + 1.9% 47,375 + 1.6% Total RWA Eop 23,314 20,963 + 11.2% 23,314 + 7.6% EVA (€ million) 173 293 - 40.9% 39 - 24.0% Absorbed Capital (€ million) 2,648 2,754 - 3.9% 2,701 + 3.3% ROAC + 16.0% + 20.1% - 4.1 p.p. + 14.5% - 4.3 p.p. Cost/Income + 65.3% + 68.5% - 3.2 p.p. + 69.0% + 9.6 p.p. Cost of Risk - 5 bps - 4 bps - 2 bps 6 bps - 15 bps Full Time Equivalent (eop) 4,873 5,092 - 4.3% 4,873 - 0.4% CEE Division The Group operates, through the CEE business segment, in 12 Central and Eastern Europe countries: Azerbaijan, Bosnia -Herzegovina, Bulgaria, Croatia, the Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey, having in addition Leasing activities in the 3 Baltic countries. The CEE business segment through its branches offers a wide range of products and services to retail, corporate and institutional clients in these countries. Income statement, key ratios and indicators (€ million) CEE DIVISION YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 4,262 4,186 + 1.8% 1,112 + 11.8% Operating costs (1,566) (1,543) + 1.5% (412) + 6.3% Net write-downs on loans (457) (584) - 21.7% (160) + 75.1% Net operating profit 2,240 2,059 + 8.8% 540 + 4.7% Profit before tax 2,034 1,855 + 9.7% 475 - 7.5% Customers loans (net Repos and IC) 65,344 59,966 + 9.0% 65,344 + 1.8% Customers depos (net Repos and IC) 65,744 62,406 + 5.3% 65,744 + 5.1% Total RWA Eop 86,277 85,996 + 0.3% 86,277 + 0.4% EVA (€ million) 493 332 + 48.4% 111 - 9.1% Absorbed Capital (€ million) 10,628 10,876 - 2.3% 10,530 - 0.6% ROAC + 15.7% + 13.9% + 1.9 p.p. + 15.2% - 0.6 p.p. Cost/Income + 36.7% + 36.9% - 0.1 p.p. + 37.1% - 1.9 p.p. Cost of Risk 73 bps 97 bps - 24 bps 98 bps 40 bps Full Time Equivalent (eop) 24,218 24,089 + 0.5% 24,218 - 0.2% Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 57 Commercial Banking Austria Commercial Banking Austria provides its Austrian customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services. It is composed of: Retail, Corporate (excluding CIB clients, but including the product factories Factoring and Leasing), Private Banking (with its two well-known brands Bank Austria Private Banking and Schoellerbank AG) and the local Corporate Center. Retail covers business with private individuals, ranging from mass-market to affluent customers and business customers. Corporates covers the entire range of SMEs, medium-sized and large companies which do not access capital markets (including real estate and public sector). A broad coverage of the Retail and Corporate business lines is ensured through its nation-wide branch network. Commercial Banking Austria holds significant market shares and a strategic market position in retail banking, private banking and especially in business with local corporate customers and is one of the leading providers of banking services in Austria. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING AUSTRIA YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 1,563 1,583 - 1.3% 376 - 6.7% Operating costs (1,022) (1,085) - 5.9% (260) + 8.3% Net write-downs on loans 25 17 + 49.0% (7) - 71.8% Net operating profit 567 515 + 10.1% 110 - 21.5% Profit before tax 448 445 + 0.7% 99 - 23.1% Customers loans (net Repos and IC) 44,971 44,336 + 1.4% 44,971 + 1.1% Customers depos (net Repos and IC) 47,375 46,487 + 1.9% 47,375 + 1.6% Total RWA Eop 23,314 20,963 + 11.2% 23,314 + 7.6% EVA (€ million) 173 293 - 40.9% 39 - 24.0% Absorbed Capital (€ million) 2,648 2,754 - 3.9% 2,701 + 3.3% ROAC + 16.0% + 20.1% - 4.1 p.p. + 14.5% - 4.3 p.p. Cost/Income + 65.3% + 68.5% - 3.2 p.p. + 69.0% + 9.6 p.p. Cost of Risk - 5 bps - 4 bps - 2 bps 6 bps - 15 bps Full Time Equivalent (eop) 4,873 5,092 - 4.3% 4,873 - 0.4% CEE Division The Group operates, through the CEE business segment, in 12 Central and Eastern Europe countries: Azerbaijan, Bosnia -Herzegovina, Bulgaria, Croatia, the Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey, having in addition Leasing activities in the 3 Baltic countries. The CEE business segment through its branches offers a wide range of products and services to retail, corporate and institutional clients in these countries. Income statement, key ratios and indicators (€ million) CEE DIVISION YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 4,262 4,186 + 1.8% 1,112 + 11.8% Operating costs (1,566) (1,543) + 1.5% (412) + 6.3% Net write-downs on loans (457) (584) - 21.7% (160) + 75.1% Net operating profit 2,240 2,059 + 8.8% 540 + 4.7% Profit before tax 2,034 1,855 + 9.7% 475 - 7.5% Customers loans (net Repos and IC) 65,344 59,966 + 9.0% 65,344 + 1.8% Customers depos (net Repos and IC) 65,744 62,406 + 5.3% 65,744 + 5.1% Total RWA Eop 86,277 85,996 + 0.3% 86,277 + 0.4% EVA (€ million) 493 332 + 48.4% 111 - 9.1% Absorbed Capital (€ million) 10,628 10,876 - 2.3% 10,530 - 0.6% ROAC + 15.7% + 13.9% + 1.9 p.p. + 15.2% - 0.6 p.p. Cost/Income + 36.7% + 36.9% - 0.1 p.p. + 37.1% - 1.9 p.p. Cost of Risk 73 bps 97 bps - 24 bps 98 bps 40 bps Full Time Equivalent (eop) 24,218 24,089 + 0.5% 24,218 - 0.2% Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 57 Commercial Banking Austria Commercial Banking Austria provides its Austrian customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services. It is composed of: Retail, Corporate (excluding CIB clients, but including the product factories Factoring and Leasing), Private Banking (with its two well-known brands Bank Austria Private Banking and Schoellerbank AG) and the local Corporate Center. Retail covers business with private individuals, ranging from mass-market to affluent customers and business customers. Corporates covers the entire range of SMEs, medium-sized and large companies which do not access capital markets (including real estate and public sector). A broad coverage of the Retail and Corporate business lines is ensured through its nation-wide branch network. Commercial Banking Austria holds significant market shares and a strategic market position in retail banking, private banking and especially in business with local corporate customers and is one of the leading providers of banking services in Austria. Income statement, key ratios and indicators (€ million) COMMERCIAL BANKING AUSTRIA YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 1,563 1,583 - 1.3% 376 - 6.7% Operating costs (1,022) (1,085) - 5.9% (260) + 8.3% Net write-downs on loans 25 17 + 49.0% (7) - 71.8% Net operating profit 567 515 + 10.1% 110 - 21.5% Profit before tax 448 445 + 0.7% 99 - 23.1% Customers loans (net Repos and IC) 44,971 44,336 + 1.4% 44,971 + 1.1% Customers depos (net Repos and IC) 47,375 46,487 + 1.9% 47,375 + 1.6% Total RWA Eop 23,314 20,963 + 11.2% 23,314 + 7.6% EVA (€ million) 173 293 - 40.9% 39 - 24.0% Absorbed Capital (€ million) 2,648 2,754 - 3.9% 2,701 + 3.3% ROAC + 16.0% + 20.1% - 4.1 p.p. + 14.5% - 4.3 p.p. Cost/Income + 65.3% + 68.5% - 3.2 p.p. + 69.0% + 9.6 p.p. Cost of Risk - 5 bps - 4 bps - 2 bps 6 bps - 15 bps Full Time Equivalent (eop) 4,873 5,092 - 4.3% 4,873 - 0.4% CEE Division The Group operates, through the CEE business segment, in 12 Central and Eastern Europe countries: Azerbaijan, Bosnia -Herzegovina, Bulgaria, Croatia, the Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey, having in addition Leasing activities in the 3 Baltic countries. The CEE business segment through its branches offers a wide range of products and services to retail, corporate and institutional clients in these countries. Income statement, key ratios and indicators (€ million) CEE DIVISION YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 4,262 4,186 + 1.8% 1,112 + 11.8% Operating costs (1,566) (1,543) + 1.5% (412) + 6.3% Net write-downs on loans (457) (584) - 21.7% (160) + 75.1% Net operating profit 2,240 2,059 + 8.8% 540 + 4.7% Profit before tax 2,034 1,855 + 9.7% 475 - 7.5% Customers loans (net Repos and IC) 65,344 59,966 + 9.0% 65,344 + 1.8% Customers depos (net Repos and IC) 65,744 62,406 + 5.3% 65,744 + 5.1% Total RWA Eop 86,277 85,996 + 0.3% 86,277 + 0.4% EVA (€ million) 493 332 + 48.4% 111 - 9.1% Absorbed Capital (€ million) 10,628 10,876 - 2.3% 10,530 - 0.6% ROAC + 15.7% + 13.9% + 1.9 p.p. + 15.2% - 0.6 p.p. Cost/Income + 36.7% + 36.9% - 0.1 p.p. + 37.1% - 1.9 p.p. Cost of Risk 73 bps 97 bps - 24 bps 98 bps 40 bps Full Time Equivalent (eop) 24,218 24,089 + 0.5% 24,218 - 0.2% Consolidated report on operations Group results 58 2018 Annual Report and Accounts · UniCredit CIB The CIB Division targets mainly Large Corporate and Multinational clients with highly sophisticated financial profile and needs for investment banking services, as well as institutional clients of UniCredit Group. Moreover CIB acts as products and solutions provider for the commercial network, provides structured financing, hedging and treasury solutions for corporate and investment products for private and retail, according to the “CIB fully plugged-in concept”. The organizational structure of CIB is based on a matrix that integrates market coverage (carried out through an extensive network in Western, Central and Eastern Europe and an international network of branches and representative offices) and product offering (divided into three Product Lines - Financing and Advisory, Markets, Global Transaction Banking - that consolidate the breadth of the Group’s CIB know-how). Income statement, key ratios and indicators (€ million) CORPORATE & INVESTMENT BANKING YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 3,813 4,113 - 7.3% 937 + 2.3% Operating costs (1,563) (1,626) - 3.9% (412) + 11.3% Net write-downs on loans (76) (275) - 72.4% (157) + 94.6% Net operating profit 2,174 2,212 - 1.7% 368 - 20.8% Profit before tax 1,370 2,003 - 31.6% 293 n.m. Customers loans (net Repos and IC) 80,448 71,647 + 12.3% 80,448 + 1.3% Customers depos (net Repos and IC) 45,281 47,775 - 5.2% 45,281 - 14.2% Total RWA Eop 81,040 75,639 + 7.1% 81,040 - 0.8% EVA (€ million) (21) 497 n.m. 14 n.m. Absorbed Capital (€ million) 10,007 9,317 + 7.4% 10,230 - 0.3% ROAC + 9.0% + 15.4% - 6.4 p.p. + 9.4% + 5.7 p.p. Cost/Income + 41.0% + 39.5% + 1.5 p.p. + 44.0% + 3.5 p.p. Cost of Risk 7 bps 27 bps - 20 bps 54 bps 25 bps Full Time Equivalent (eop) 3,289 3,298 - 0.3% 3,289 - 0.7% Fineco FinecoBank, the multichannel bank of the UniCredit Group, is one of the most important FinTech banks in Europe. It offers from a single account banking, credit, trading and investment services though transactional and advisory platform developed with proprietary technologies, and combined with one of the largest financial advisory network in Italy. Fineco is a bank leader in brokerage in Europe, and one of the most important player in Private Banking in Italy, offering tailor-made advisory services. Income statement, key ratios and indicators (€ million) FINECO YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 624 586 + 6.5% 160 + 4.9% Operating costs (246) (233) + 5.4% (61) + 2.7% Net write-downs on loans (4) (5) - 18.1% (2) n.M. Net operating profit 374 347 + 7.6% 96 + 4.8% Profit before tax 353 315 + 12.1% 91 + 21.4% Customers loans (net Repos and IC) 2,805 1,927 + 45.6% 2,805 + 9.6% Customers depos (net Repos and IC) 22,157 20,059 + 10.5% 22,157 + 2.3% Total RWA Eop 2,372 2,332 + 1.7% 2,372 - 0.1% TFAs Outstanding Stock (eop) 69,337 67,185 + 3.2% 69,337 - 2.2% TFAs Net Sales 6,226 5,958 + 4.5% 1,444 + 21.8% EVA (€ million) 66 65 + 2.3% 17 + 26.8% Absorbed Capital (€ million) 185 118 + 56.2% 224 + 12.1% ROAC + 45.3% + 62.7% - 17.4 p.p. + 39.5% + 3.1 p.p. Cost/Income + 39.4% + 39.8% - 0.4 p.p. + 38.3% - 0.8 p.p. Full Time Equivalent (eop) 1,125 1,082 + 3.9% 1,125 + 2.8% Consolidated report on operations Group results 58 2018 Annual Report and Accounts · UniCredit CIB The CIB Division targets mainly Large Corporate and Multinational clients with highly sophisticated financial profile and needs for investment banking services, as well as institutional clients of UniCredit Group. Moreover CIB acts as products and solutions provider for the commercial network, provides structured financing, hedging and treasury solutions for corporate and investment products for private and retail, according to the “CIB fully plugged-in concept”. The organizational structure of CIB is based on a matrix that integrates market coverage (carried out through an extensive network in Western, Central and Eastern Europe and an international network of branches and representative offices) and product offering (divided into three Product Lines - Financing and Advisory, Markets, Global Transaction Banking - that consolidate the breadth of the Group’s CIB know-how). Income statement, key ratios and indicators (€ million) CORPORATE & INVESTMENT BANKING YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 3,813 4,113 - 7.3% 937 + 2.3% Operating costs (1,563) (1,626) - 3.9% (412) + 11.3% Net write-downs on loans (76) (275) - 72.4% (157) + 94.6% Net operating profit 2,174 2,212 - 1.7% 368 - 20.8% Profit before tax 1,370 2,003 - 31.6% 293 n.m. Customers loans (net Repos and IC) 80,448 71,647 + 12.3% 80,448 + 1.3% Customers depos (net Repos and IC) 45,281 47,775 - 5.2% 45,281 - 14.2% Total RWA Eop 81,040 75,639 + 7.1% 81,040 - 0.8% EVA (€ million) (21) 497 n.m. 14 n.m. Absorbed Capital (€ million) 10,007 9,317 + 7.4% 10,230 - 0.3% ROAC + 9.0% + 15.4% - 6.4 p.p. + 9.4% + 5.7 p.p. Cost/Income + 41.0% + 39.5% + 1.5 p.p. + 44.0% + 3.5 p.p. Cost of Risk 7 bps 27 bps - 20 bps 54 bps 25 bps Full Time Equivalent (eop) 3,289 3,298 - 0.3% 3,289 - 0.7% Fineco FinecoBank, the multichannel bank of the UniCredit Group, is one of the most important FinTech banks in Europe. It offers from a single account banking, credit, trading and investment services though transactional and advisory platform developed with proprietary technologies, and combined with one of the largest financial advisory network in Italy. Fineco is a bank leader in brokerage in Europe, and one of the most important player in Private Banking in Italy, offering tailor-made advisory services. Income statement, key ratios and indicators (€ million) FINECO YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 624 586 + 6.5% 160 + 4.9% Operating costs (246) (233) + 5.4% (61) + 2.7% Net write-downs on loans (4) (5) - 18.1% (2) n.M. Net operating profit 374 347 + 7.6% 96 + 4.8% Profit before tax 353 315 + 12.1% 91 + 21.4% Customers loans (net Repos and IC) 2,805 1,927 + 45.6% 2,805 + 9.6% Customers depos (net Repos and IC) 22,157 20,059 + 10.5% 22,157 + 2.3% Total RWA Eop 2,372 2,332 + 1.7% 2,372 - 0.1% TFAs Outstanding Stock (eop) 69,337 67,185 + 3.2% 69,337 - 2.2% TFAs Net Sales 6,226 5,958 + 4.5% 1,444 + 21.8% EVA (€ million) 66 65 + 2.3% 17 + 26.8% Absorbed Capital (€ million) 185 118 + 56.2% 224 + 12.1% ROAC + 45.3% + 62.7% - 17.4 p.p. + 39.5% + 3.1 p.p. Cost/Income + 39.4% + 39.8% - 0.4 p.p. + 38.3% - 0.8 p.p. Full Time Equivalent (eop) 1,125 1,082 + 3.9% 1,125 + 2.8% Consolidated report on operations Group results 58 2018 Annual Report and Accounts · UniCredit CIB The CIB Division targets mainly Large Corporate and Multinational clients with highly sophisticated financial profile and needs for investment banking services, as well as institutional clients of UniCredit Group. Moreover CIB acts as products and solutions provider for the commercial network, provides structured financing, hedging and treasury solutions for corporate and investment products for private and retail, according to the “CIB fully plugged-in concept”. The organizational structure of CIB is based on a matrix that integrates market coverage (carried out through an extensive network in Western, Central and Eastern Europe and an international network of branches and representative offices) and product offering (divided into three Product Lines - Financing and Advisory, Markets, Global Transaction Banking - that consolidate the breadth of the Group’s CIB know-how). Income statement, key ratios and indicators (€ million) CORPORATE & INVESTMENT BANKING YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 3,813 4,113 - 7.3% 937 + 2.3% Operating costs (1,563) (1,626) - 3.9% (412) + 11.3% Net write-downs on loans (76) (275) - 72.4% (157) + 94.6% Net operating profit 2,174 2,212 - 1.7% 368 - 20.8% Profit before tax 1,370 2,003 - 31.6% 293 n.m. Customers loans (net Repos and IC) 80,448 71,647 + 12.3% 80,448 + 1.3% Customers depos (net Repos and IC) 45,281 47,775 - 5.2% 45,281 - 14.2% Total RWA Eop 81,040 75,639 + 7.1% 81,040 - 0.8% EVA (€ million) (21) 497 n.m. 14 n.m. Absorbed Capital (€ million) 10,007 9,317 + 7.4% 10,230 - 0.3% ROAC + 9.0% + 15.4% - 6.4 p.p. + 9.4% + 5.7 p.p. Cost/Income + 41.0% + 39.5% + 1.5 p.p. + 44.0% + 3.5 p.p. Cost of Risk 7 bps 27 bps - 20 bps 54 bps 25 bps Full Time Equivalent (eop) 3,289 3,298 - 0.3% 3,289 - 0.7% Fineco FinecoBank, the multichannel bank of the UniCredit Group, is one of the most important FinTech banks in Europe. It offers from a single account banking, credit, trading and investment services though transactional and advisory platform developed with proprietary technologies, and combined with one of the largest financial advisory network in Italy. Fineco is a bank leader in brokerage in Europe, and one of the most important player in Private Banking in Italy, offering tailor-made advisory services. Income statement, key ratios and indicators (€ million) FINECO YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 624 586 + 6.5% 160 + 4.9% Operating costs (246) (233) + 5.4% (61) + 2.7% Net write-downs on loans (4) (5) - 18.1% (2) n.M. Net operating profit 374 347 + 7.6% 96 + 4.8% Profit before tax 353 315 + 12.1% 91 + 21.4% Customers loans (net Repos and IC) 2,805 1,927 + 45.6% 2,805 + 9.6% Customers depos (net Repos and IC) 22,157 20,059 + 10.5% 22,157 + 2.3% Total RWA Eop 2,372 2,332 + 1.7% 2,372 - 0.1% TFAs Outstanding Stock (eop) 69,337 67,185 + 3.2% 69,337 - 2.2% TFAs Net Sales 6,226 5,958 + 4.5% 1,444 + 21.8% EVA (€ million) 66 65 + 2.3% 17 + 26.8% Absorbed Capital (€ million) 185 118 + 56.2% 224 + 12.1% ROAC + 45.3% + 62.7% - 17.4 p.p. + 39.5% + 3.1 p.p. Cost/Income + 39.4% + 39.8% - 0.4 p.p. + 38.3% - 0.8 p.p. Full Time Equivalent (eop) 1,125 1,082 + 3.9% 1,125 + 2.8% Consolidated report on operations Group results 58 2018 Annual Report and Accounts · UniCredit CIB The CIB Division targets mainly Large Corporate and Multinational clients with highly sophisticated financial profile and needs for investment banking services, as well as institutional clients of UniCredit Group. Moreover CIB acts as products and solutions provider for the commercial network, provides structured financing, hedging and treasury solutions for corporate and investment products for private and retail, according to the “CIB fully plugged-in concept”. The organizational structure of CIB is based on a matrix that integrates market coverage (carried out through an extensive network in Western, Central and Eastern Europe and an international network of branches and representative offices) and product offering (divided into three Product Lines - Financing and Advisory, Markets, Global Transaction Banking - that consolidate the breadth of the Group’s CIB know-how). Income statement, key ratios and indicators (€ million) CORPORATE & INVESTMENT BANKING YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 3,813 4,113 - 7.3% 937 + 2.3% Operating costs (1,563) (1,626) - 3.9% (412) + 11.3% Net write-downs on loans (76) (275) - 72.4% (157) + 94.6% Net operating profit 2,174 2,212 - 1.7% 368 - 20.8% Profit before tax 1,370 2,003 - 31.6% 293 n.m. Customers loans (net Repos and IC) 80,448 71,647 + 12.3% 80,448 + 1.3% Customers depos (net Repos and IC) 45,281 47,775 - 5.2% 45,281 - 14.2% Total RWA Eop 81,040 75,639 + 7.1% 81,040 - 0.8% EVA (€ million) (21) 497 n.m. 14 n.m. Absorbed Capital (€ million) 10,007 9,317 + 7.4% 10,230 - 0.3% ROAC + 9.0% + 15.4% - 6.4 p.p. + 9.4% + 5.7 p.p. Cost/Income + 41.0% + 39.5% + 1.5 p.p. + 44.0% + 3.5 p.p. Cost of Risk 7 bps 27 bps - 20 bps 54 bps 25 bps Full Time Equivalent (eop) 3,289 3,298 - 0.3% 3,289 - 0.7% Fineco FinecoBank, the multichannel bank of the UniCredit Group, is one of the most important FinTech banks in Europe. It offers from a single account banking, credit, trading and investment services though transactional and advisory platform developed with proprietary technologies, and combined with one of the largest financial advisory network in Italy. Fineco is a bank leader in brokerage in Europe, and one of the most important player in Private Banking in Italy, offering tailor-made advisory services. Income statement, key ratios and indicators (€ million) FINECO YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 624 586 + 6.5% 160 + 4.9% Operating costs (246) (233) + 5.4% (61) + 2.7% Net write-downs on loans (4) (5) - 18.1% (2) n.M. Net operating profit 374 347 + 7.6% 96 + 4.8% Profit before tax 353 315 + 12.1% 91 + 21.4% Customers loans (net Repos and IC) 2,805 1,927 + 45.6% 2,805 + 9.6% Customers depos (net Repos and IC) 22,157 20,059 + 10.5% 22,157 + 2.3% Total RWA Eop 2,372 2,332 + 1.7% 2,372 - 0.1% TFAs Outstanding Stock (eop) 69,337 67,185 + 3.2% 69,337 - 2.2% TFAs Net Sales 6,226 5,958 + 4.5% 1,444 + 21.8% EVA (€ million) 66 65 + 2.3% 17 + 26.8% Absorbed Capital (€ million) 185 118 + 56.2% 224 + 12.1% ROAC + 45.3% + 62.7% - 17.4 p.p. + 39.5% + 3.1 p.p. Cost/Income + 39.4% + 39.8% - 0.4 p.p. + 38.3% - 0.8 p.p. Full Time Equivalent (eop) 1,125 1,082 + 3.9% 1,125 + 2.8% Consolidated report on operations Group results 58 2018 Annual Report and Accounts · UniCredit CIB The CIB Division targets mainly Large Corporate and Multinational clients with highly sophisticated financial profile and needs for investment banking services, as well as institutional clients of UniCredit Group. Moreover CIB acts as products and solutions provider for the commercial network, provides structured financing, hedging and treasury solutions for corporate and investment products for private and retail, according to the “CIB fully plugged-in concept”. The organizational structure of CIB is based on a matrix that integrates market coverage (carried out through an extensive network in Western, Central and Eastern Europe and an international network of branches and representative offices) and product offering (divided into three Product Lines - Financing and Advisory, Markets, Global Transaction Banking - that consolidate the breadth of the Group’s CIB know-how). Income statement, key ratios and indicators (€ million) CORPORATE & INVESTMENT BANKING YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 3,813 4,113 - 7.3% 937 + 2.3% Operating costs (1,563) (1,626) - 3.9% (412) + 11.3% Net write-downs on loans (76) (275) - 72.4% (157) + 94.6% Net operating profit 2,174 2,212 - 1.7% 368 - 20.8% Profit before tax 1,370 2,003 - 31.6% 293 n.m. Customers loans (net Repos and IC) 80,448 71,647 + 12.3% 80,448 + 1.3% Customers depos (net Repos and IC) 45,281 47,775 - 5.2% 45,281 - 14.2% Total RWA Eop 81,040 75,639 + 7.1% 81,040 - 0.8% EVA (€ million) (21) 497 n.m. 14 n.m. Absorbed Capital (€ million) 10,007 9,317 + 7.4% 10,230 - 0.3% ROAC + 9.0% + 15.4% - 6.4 p.p. + 9.4% + 5.7 p.p. Cost/Income + 41.0% + 39.5% + 1.5 p.p. + 44.0% + 3.5 p.p. Cost of Risk 7 bps 27 bps - 20 bps 54 bps 25 bps Full Time Equivalent (eop) 3,289 3,298 - 0.3% 3,289 - 0.7% Fineco FinecoBank, the multichannel bank of the UniCredit Group, is one of the most important FinTech banks in Europe. It offers from a single account banking, credit, trading and investment services though transactional and advisory platform developed with proprietary technologies, and combined with one of the largest financial advisory network in Italy. Fineco is a bank leader in brokerage in Europe, and one of the most important player in Private Banking in Italy, offering tailor-made advisory services. Income statement, key ratios and indicators (€ million) FINECO YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income 624 586 + 6.5% 160 + 4.9% Operating costs (246) (233) + 5.4% (61) + 2.7% Net write-downs on loans (4) (5) - 18.1% (2) n.M. Net operating profit 374 347 + 7.6% 96 + 4.8% Profit before tax 353 315 + 12.1% 91 + 21.4% Customers loans (net Repos and IC) 2,805 1,927 + 45.6% 2,805 + 9.6% Customers depos (net Repos and IC) 22,157 20,059 + 10.5% 22,157 + 2.3% Total RWA Eop 2,372 2,332 + 1.7% 2,372 - 0.1% TFAs Outstanding Stock (eop) 69,337 67,185 + 3.2% 69,337 - 2.2% TFAs Net Sales 6,226 5,958 + 4.5% 1,444 + 21.8% EVA (€ million) 66 65 + 2.3% 17 + 26.8% Absorbed Capital (€ million) 185 118 + 56.2% 224 + 12.1% ROAC + 45.3% + 62.7% - 17.4 p.p. + 39.5% + 3.1 p.p. Cost/Income + 39.4% + 39.8% - 0.4 p.p. + 38.3% - 0.8 p.p. Full Time Equivalent (eop) 1,125 1,082 + 3.9% 1,125 + 2.8% Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 59 Non Core Non-core segment reports separately assets that the Group considers not strategic and with a poor fit to the Group’s risk-adjusted returns framework. These businesses are managed with the final goal of reducing the overall exposure in the course of time and to improve the risk profile. Specifically, the segment includes selected assets of Commercial Banking Italy (identified on a single deal/client basis) to be managed with a risk mitigation approach and some special vehicles for securitization transactions. Income statement, key ratios and indicators (€ million) NON CORE YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income (60) 68 n.m. (52) n.m. Operating costs (109) (120) - 9.4% (28) - 4.5% Net write-downs on loans and provisions for guarantees and commitments (921) (962) - 4.2% (189) - 13.4% Net operating profit (1,090) (1,013) + 7.6% (270) + 8.8% Profit before tax (1,199) (1,133) + 5.8% (355) + 42.0% Customers loans (net Repos and IC) 6,629 14,223 - 53.4% 6,629 - 25.3% Customers depos (net Repos and IC) 528 914 - 42.3% 528 - 31.6% Net Impaired Loans (percentage of total net loans Non-Core) 99.93% 78.36% n.m. 99.93% 1725.0 bps Total RWA Eop 12,129 21,595 - 43.8% 12,129 - 13.8% EVA (€ million) (1,022) (1,084) - 5.8% (255) + 12.8% Absorbed Capital (€ million) 1,986 2,899 - 31.5% 1,642 - 11.0% ROAC - 40.5% - 26.5% - 14.0 p.p. - 51.1% - 13.0 p.p. Cost/Income n.m. n.m. n.m. n.m. n.m. Cost of Risk 910 bps 585 bps 325 bps 975 bps 55 bps Full Time Equivalent (eop) 345 464 - 25.6% 345 - 12.6% Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 59 Non Core Non-core segment reports separately assets that the Group considers not strategic and with a poor fit to the Group’s risk-adjusted returns framework. These businesses are managed with the final goal of reducing the overall exposure in the course of time and to improve the risk profile. Specifically, the segment includes selected assets of Commercial Banking Italy (identified on a single deal/client basis) to be managed with a risk mitigation approach and some special vehicles for securitization transactions. Income statement, key ratios and indicators (€ million) NON CORE YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income (60) 68 n.m. (52) n.m. Operating costs (109) (120) - 9.4% (28) - 4.5% Net write-downs on loans and provisions for guarantees and commitments (921) (962) - 4.2% (189) - 13.4% Net operating profit (1,090) (1,013) + 7.6% (270) + 8.8% Profit before tax (1,199) (1,133) + 5.8% (355) + 42.0% Customers loans (net Repos and IC) 6,629 14,223 - 53.4% 6,629 - 25.3% Customers depos (net Repos and IC) 528 914 - 42.3% 528 - 31.6% Net Impaired Loans (percentage of total net loans Non-Core) 99.93% 78.36% n.m. 99.93% 1725.0 bps Total RWA Eop 12,129 21,595 - 43.8% 12,129 - 13.8% EVA (€ million) (1,022) (1,084) - 5.8% (255) + 12.8% Absorbed Capital (€ million) 1,986 2,899 - 31.5% 1,642 - 11.0% ROAC - 40.5% - 26.5% - 14.0 p.p. - 51.1% - 13.0 p.p. Cost/Income n.m. n.m. n.m. n.m. n.m. Cost of Risk 910 bps 585 bps 325 bps 975 bps 55 bps Full Time Equivalent (eop) 345 464 - 25.6% 345 - 12.6% Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 59 Non Core Non-core segment reports separately assets that the Group considers not strategic and with a poor fit to the Group’s risk-adjusted returns framework. These businesses are managed with the final goal of reducing the overall exposure in the course of time and to improve the risk profile. Specifically, the segment includes selected assets of Commercial Banking Italy (identified on a single deal/client basis) to be managed with a risk mitigation approach and some special vehicles for securitization transactions. Income statement, key ratios and indicators (€ million) NON CORE YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income (60) 68 n.m. (52) n.m. Operating costs (109) (120) - 9.4% (28) - 4.5% Net write-downs on loans and provisions for guarantees and commitments (921) (962) - 4.2% (189) - 13.4% Net operating profit (1,090) (1,013) + 7.6% (270) + 8.8% Profit before tax (1,199) (1,133) + 5.8% (355) + 42.0% Customers loans (net Repos and IC) 6,629 14,223 - 53.4% 6,629 - 25.3% Customers depos (net Repos and IC) 528 914 - 42.3% 528 - 31.6% Net Impaired Loans (percentage of total net loans Non-Core) 99.93% 78.36% n.m. 99.93% 1725.0 bps Total RWA Eop 12,129 21,595 - 43.8% 12,129 - 13.8% EVA (€ million) (1,022) (1,084) - 5.8% (255) + 12.8% Absorbed Capital (€ million) 1,986 2,899 - 31.5% 1,642 - 11.0% ROAC - 40.5% - 26.5% - 14.0 p.p. - 51.1% - 13.0 p.p. Cost/Income n.m. n.m. n.m. n.m. n.m. Cost of Risk 910 bps 585 bps 325 bps 975 bps 55 bps Full Time Equivalent (eop) 345 464 - 25.6% 345 - 12.6% Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 59 Non Core Non-core segment reports separately assets that the Group considers not strategic and with a poor fit to the Group’s risk-adjusted returns framework. These businesses are managed with the final goal of reducing the overall exposure in the course of time and to improve the risk profile. Specifically, the segment includes selected assets of Commercial Banking Italy (identified on a single deal/client basis) to be managed with a risk mitigation approach and some special vehicles for securitization transactions. Income statement, key ratios and indicators (€ million) NON CORE YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income (60) 68 n.m. (52) n.m. Operating costs (109) (120) - 9.4% (28) - 4.5% Net write-downs on loans and provisions for guarantees and commitments (921) (962) - 4.2% (189) - 13.4% Net operating profit (1,090) (1,013) + 7.6% (270) + 8.8% Profit before tax (1,199) (1,133) + 5.8% (355) + 42.0% Customers loans (net Repos and IC) 6,629 14,223 - 53.4% 6,629 - 25.3% Customers depos (net Repos and IC) 528 914 - 42.3% 528 - 31.6% Net Impaired Loans (percentage of total net loans Non-Core) 99.93% 78.36% n.m. 99.93% 1725.0 bps Total RWA Eop 12,129 21,595 - 43.8% 12,129 - 13.8% EVA (€ million) (1,022) (1,084) - 5.8% (255) + 12.8% Absorbed Capital (€ million) 1,986 2,899 - 31.5% 1,642 - 11.0% ROAC - 40.5% - 26.5% - 14.0 p.p. - 51.1% - 13.0 p.p. Cost/Income n.m. n.m. n.m. n.m. n.m. Cost of Risk 910 bps 585 bps 325 bps 975 bps 55 bps Full Time Equivalent (eop) 345 464 - 25.6% 345 - 12.6% Consolidated report on operations Group results UniCredit ·2018 Annual Report and Accounts 59 Non Core Non-core segment reports separately assets that the Group considers not strategic and with a poor fit to the Group’s risk-adjusted returns framework. These businesses are managed with the final goal of reducing the overall exposure in the course of time and to improve the risk profile. Specifically, the segment includes selected assets of Commercial Banking Italy (identified on a single deal/client basis) to be managed with a risk mitigation approach and some special vehicles for securitization transactions. Income statement, key ratios and indicators (€ million) NON CORE YEAR % CHANGE 2018 Q4 % CHANGE ON Q3 2018 2018 2017 Operating income (60) 68 n.m. (52) n.m. Operating costs (109) (120) - 9.4% (28) - 4.5% Net write-downs on loans and provisions for guarantees and commitments (921) (962) - 4.2% (189) - 13.4% Net operating profit (1,090) (1,013) + 7.6% (270) + 8.8% Profit before tax (1,199) (1,133) + 5.8% (355) + 42.0% Customers loans (net Repos and IC) 6,629 14,223 - 53.4% 6,629 - 25.3% Customers depos (net Repos and IC) 528 914 - 42.3% 528 - 31.6% Net Impaired Loans (percentage of total net loans Non-Core) 99.93% 78.36% n.m. 99.93% 1725.0 bps Total RWA Eop 12,129 21,595 - 43.8% 12,129 - 13.8% EVA (€ million) (1,022) (1,084) - 5.8% (255) + 12.8% Absorbed Capital (€ million) 1,986 2,899 - 31.5% 1,642 - 11.0% ROAC - 40.5% - 26.5% - 14.0 p.p. - 51.1% - 13.0 p.p. Cost/Income n.m. n.m. n.m. n.m. n.m. Cost of Risk 910 bps 585 bps 325 bps 975 bps 55 bps Full Time Equivalent (eop) 345 464 - 25.6% 345 - 12.6% Consolidated report on operations Other information 60 2018 Annual Report and Accounts · UniCredit Other information Report on corporate governance and ownership structure Within the meaning of Art.123-bis par.3 of the Legislative Decree No.58 dated 24 February 1998, the “Report on corporate governance and ownership structure” is available in the “Governance” section of the UniCredit website (http://www.unicreditgroup.eu). An explanatory chapter on the corporate governance structure is likewise included below in this document (“Corporate Governance”). Report on remuneration Pursuant to Art.123-ter of the Legislative Decree dated 24 February 1998 No.58 and of Art.84-quater, of the Consob Issuers’ Regulations, the “Report on remuneration” is available on UniCredit’s website (http://www.unicreditgroup.eu). Non-financial information Pursuant to articles 3 and 4 of Legislative Decree 254/2016, the Integrated Report, published on UniCredit website (http://www.unicreditgroup.eu) constitutes the Non-financial Declaration. Research and development projects In 2018, UniCredit S.p.A.’s Research & Development Department primarily focused on: • the production of a low latency e-Trading FX platform, commissioned by the CIB Division; • the production of a tool for Operations that extract and categorize meaningful data from garnishments documents; • the production of a tool for HR Rewards & Benefits that support the Share Ownership, Netting and Cashing process; • the production of a new platform for GTB Division that connects all UniCredit customers with reciprocal payments and collections; • researching FPGA-based hybrid architectures and how those can be employed to accelerate computations in the financial domain. Group activities development operations and other corporate transactions Transactions and initiatives involving shareholdings Constitution of UniCredit myAgents S.r.l. In February 2018 UniCredit myAgents S.r.l., a company wholly owned by UniCredit S.p.A., was set up to carry out the activity of an agency in financial activities, mainly acting as an accelerator for the recruiting and training of collaborators for the expansion of its distribution network agency, in order to contribute to the development of the Italian commercial bank business. The company, after having completed the fulfillment of the administrative requirements and the inclusion in the list of Agents in financial activities, has started its operations since April 2018. Yapi Kredi rights issue In April 2018, Yapi ve Kredi Bankası A.Ş. (“Yapi Kredi”) announced its capital strengthening plan and, in particular, the increase of the bank’s capital via a rights issue of ca. 4.1 billion Turkish Lira. The holding UniCredit S.p.A. has participated in such rights issue via Koç Financial Services, joint venture between UniCredit S.p.A. and Koç Group, which is the controlling shareholder of Yapi Kredi. Koç Financial Services has actually subscribed the rights issue of Yapi Kredi, slightly increasing its shareholding to 81.9% from previous 81.8%. UniCredit S.p.A. has supported Koç Financial Services in such transaction, subscribing proportionally Koç Financial Services’s rights issue together with the other shareholder (50% each). Sale of the investment in i-Faber S.p.A. On 30 April 2018, the holding UniCredit S.p.A. concluded the disposal of its 100% shareholding in i-Faber S.p.A. to Accenture Managed Services S.p.A. The investment was classified among assets held for sale (IFRS5) as at 31 December 2017 while in April 2018 UniCredit reached 100% shareholding in the company, acquiring the remaining shares from previous minorities shareholders. Consolidated report on operations Other information 60 2018 Annual Report and Accounts · UniCredit Other information Report on corporate governance and ownership structure Within the meaning of Art.123-bis par.3 of the Legislative Decree No.58 dated 24 February 1998, the “Report on corporate governance and ownership structure” is available in the “Governance” section of the UniCredit website (http://www.unicreditgroup.eu). An explanatory chapter on the corporate governance structure is likewise included below in this document (“Corporate Governance”). Report on remuneration Pursuant to Art.123-ter of the Legislative Decree dated 24 February 1998 No.58 and of Art.84-quater, of the Consob Issuers’ Regulations, the “Report on remuneration” is available on UniCredit’s website (http://www.unicreditgroup.eu). Non-financial information Pursuant to articles 3 and 4 of Legislative Decree 254/2016, the Integrated Report, published on UniCredit website (http://www.unicreditgroup.eu) constitutes the Non-financial Declaration. Research and development projects In 2018, UniCredit S.p.A.’s Research & Development Department primarily focused on: • the production of a low latency e-Trading FX platform, commissioned by the CIB Division; • the production of a tool for Operations that extract and categorize meaningful data from garnishments documents; • the production of a tool for HR Rewards & Benefits that support the Share Ownership, Netting and Cashing process; • the production of a new platform for GTB Division that connects all UniCredit customers with reciprocal payments and collections; • researching FPGA-based hybrid architectures and how those can be employed to accelerate computations in the financial domain. Group activities development operations and other corporate transactions Transactions and initiatives involving shareholdings Constitution of UniCredit myAgents S.r.l. In February 2018 UniCredit myAgents S.r.l., a company wholly owned by UniCredit S.p.A., was set up to carry out the activity of an agency in financial activities, mainly acting as an accelerator for the recruiting and training of collaborators for the expansion of its distribution network agency, in order to contribute to the development of the Italian commercial bank business. The company, after having completed the fulfillment of the administrative requirements and the inclusion in the list of Agents in financial activities, has started its operations since April 2018. Yapi Kredi rights issue In April 2018, Yapi ve Kredi Bankası A.Ş. (“Yapi Kredi”) announced its capital strengthening plan and, in particular, the increase of the bank’s capital via a rights issue of ca. 4.1 billion Turkish Lira. The holding UniCredit S.p.A. has participated in such rights issue via Koç Financial Services, joint venture between UniCredit S.p.A. and Koç Group, which is the controlling shareholder of Yapi Kredi. Koç Financial Services has actually subscribed the rights issue of Yapi Kredi, slightly increasing its shareholding to 81.9% from previous 81.8%. UniCredit S.p.A. has supported Koç Financial Services in such transaction, subscribing proportionally Koç Financial Services’s rights issue together with the other shareholder (50% each). Sale of the investment in i-Faber S.p.A. On 30 April 2018, the holding UniCredit S.p.A. concluded the disposal of its 100% shareholding in i-Faber S.p.A. to Accenture Managed Services S.p.A. The investment was classified among assets held for sale (IFRS5) as at 31 December 2017 while in April 2018 UniCredit reached 100% shareholding in the company, acquiring the remaining shares from previous minorities shareholders. Consolidated report on operations Other information 60 2018 Annual Report and Accounts · UniCredit Other information Report on corporate governance and ownership structure Within the meaning of Art.123-bis par.3 of the Legislative Decree No.58 dated 24 February 1998, the “Report on corporate governance and ownership structure” is available in the “Governance” section of the UniCredit website (http://www.unicreditgroup.eu). An explanatory chapter on the corporate governance structure is likewise included below in this document (“Corporate Governance”). Report on remuneration Pursuant to Art.123-ter of the Legislative Decree dated 24 February 1998 No.58 and of Art.84-quater, of the Consob Issuers’ Regulations, the “Report on remuneration” is available on UniCredit’s website (http://www.unicreditgroup.eu). Non-financial information Pursuant to articles 3 and 4 of Legislative Decree 254/2016, the Integrated Report, published on UniCredit website (http://www.unicreditgroup.eu) constitutes the Non-financial Declaration. Research and development projects In 2018, UniCredit S.p.A.’s Research & Development Department primarily focused on: • the production of a low latency e-Trading FX platform, commissioned by the CIB Division; • the production of a tool for Operations that extract and categorize meaningful data from garnishments documents; • the production of a tool for HR Rewards & Benefits that support the Share Ownership, Netting and Cashing process; • the production of a new platform for GTB Division that connects all UniCredit customers with reciprocal payments and collections; • researching FPGA-based hybrid architectures and how those can be employed to accelerate computations in the financial domain. Group activities development operations and other corporate transactions Transactions and initiatives involving shareholdings Constitution of UniCredit myAgents S.r.l. In February 2018 UniCredit myAgents S.r.l., a company wholly owned by UniCredit S.p.A., was set up to carry out the activity of an agency in financial activities, mainly acting as an accelerator for the recruiting and training of collaborators for the expansion of its distribution network agency, in order to contribute to the development of the Italian commercial bank business. The company, after having completed the fulfillment of the administrative requirements and the inclusion in the list of Agents in financial activities, has started its operations since April 2018. Yapi Kredi rights issue In April 2018, Yapi ve Kredi Bankası A.Ş. (“Yapi Kredi”) announced its capital strengthening plan and, in particular, the increase of the bank’s capital via a rights issue of ca. 4.1 billion Turkish Lira. The holding UniCredit S.p.A. has participated in such rights issue via Koç Financial Services, joint venture between UniCredit S.p.A. and Koç Group, which is the controlling shareholder of Yapi Kredi. Koç Financial Services has actually subscribed the rights issue of Yapi Kredi, slightly increasing its shareholding to 81.9% from previous 81.8%. UniCredit S.p.A. has supported Koç Financial Services in such transaction, subscribing proportionally Koç Financial Services’s rights issue together with the other shareholder (50% each). Sale of the investment in i-Faber S.p.A. On 30 April 2018, the holding UniCredit S.p.A. concluded the disposal of its 100% shareholding in i-Faber S.p.A. to Accenture Managed Services S.p.A. The investment was classified among assets held for sale (IFRS5) as at 31 December 2017 while in April 2018 UniCredit reached 100% shareholding in the company, acquiring the remaining shares from previous minorities shareholders. Consolidated report on operations Other information 60 2018 Annual Report and Accounts · UniCredit Other information Report on corporate governance and ownership structure Within the meaning of Art.123-bis par.3 of the Legislative Decree No.58 dated 24 February 1998, the “Report on corporate governance and ownership structure” is available in the “Governance” section of the UniCredit website (http://www.unicreditgroup.eu). An explanatory chapter on the corporate governance structure is likewise included below in this document (“Corporate Governance”). Report on remuneration Pursuant to Art.123-ter of the Legislative Decree dated 24 February 1998 No.58 and of Art.84-quater, of the Consob Issuers’ Regulations, the “Report on remuneration” is available on UniCredit’s website (http://www.unicreditgroup.eu). Non-financial information Pursuant to articles 3 and 4 of Legislative Decree 254/2016, the Integrated Report, published on UniCredit website (http://www.unicreditgroup.eu) constitutes the Non-financial Declaration. Research and development projects In 2018, UniCredit S.p.A.’s Research & Development Department primarily focused on: • the production of a low latency e-Trading FX platform, commissioned by the CIB Division; • the production of a tool for Operations that extract and categorize meaningful data from garnishments documents; • the production of a tool for HR Rewards & Benefits that support the Share Ownership, Netting and Cashing process; • the production of a new platform for GTB Division that connects all UniCredit customers with reciprocal payments and collections; • researching FPGA-based hybrid architectures and how those can be employed to accelerate computations in the financial domain. Group activities development operations and other corporate transactions Transactions and initiatives involving shareholdings Constitution of UniCredit myAgents S.r.l. In February 2018 UniCredit myAgents S.r.l., a company wholly owned by UniCredit S.p.A., was set up to carry out the activity of an agency in financial activities, mainly acting as an accelerator for the recruiting and training of collaborators for the expansion of its distribution network agency, in order to contribute to the development of the Italian commercial bank business. The company, after having completed the fulfillment of the administrative requirements and the inclusion in the list of Agents in financial activities, has started its operations since April 2018. Yapi Kredi rights issue In April 2018, Yapi ve Kredi Bankası A.Ş. (“Yapi Kredi”) announced its capital strengthening plan and, in particular, the increase of the bank’s capital via a rights issue of ca. 4.1 billion Turkish Lira. The holding UniCredit S.p.A. has participated in such rights issue via Koç Financial Services, joint venture between UniCredit S.p.A. and Koç Group, which is the controlling shareholder of Yapi Kredi. Koç Financial Services has actually subscribed the rights issue of Yapi Kredi, slightly increasing its shareholding to 81.9% from previous 81.8%. UniCredit S.p.A. has supported Koç Financial Services in such transaction, subscribing proportionally Koç Financial Services’s rights issue together with the other shareholder (50% each). Sale of the investment in i-Faber S.p.A. On 30 April 2018, the holding UniCredit S.p.A. concluded the disposal of its 100% shareholding in i-Faber S.p.A. to Accenture Managed Services S.p.A. The investment was classified among assets held for sale (IFRS5) as at 31 December 2017 while in April 2018 UniCredit reached 100% shareholding in the company, acquiring the remaining shares from previous minorities shareholders. Consolidated report on operations Other information 60 2018 Annual Report and Accounts · UniCredit Other information Report on corporate governance and ownership structure Within the meaning of Art.123-bis par.3 of the Legislative Decree No.58 dated 24 February 1998, the “Report on corporate governance and ownership structure” is available in the “Governance” section of the UniCredit website (http://www.unicreditgroup.eu). An explanatory chapter on the corporate governance structure is likewise included below in this document (“Corporate Governance”). Report on remuneration Pursuant to Art.123-ter of the Legislative Decree dated 24 February 1998 No.58 and of Art.84-quater, of the Consob Issuers’ Regulations, the “Report on remuneration” is available on UniCredit’s website (http://www.unicreditgroup.eu). Non-financial information Pursuant to articles 3 and 4 of Legislative Decree 254/2016, the Integrated Report, published on UniCredit website (http://www.unicreditgroup.eu) constitutes the Non-financial Declaration. Research and development projects In 2018, UniCredit S.p.A.’s Research & Development Department primarily focused on: • the production of a low latency e-Trading FX platform, commissioned by the CIB Division; • the production of a tool for Operations that extract and categorize meaningful data from garnishments documents; • the production of a tool for HR Rewards & Benefits that support the Share Ownership, Netting and Cashing process; • the production of a new platform for GTB Division that connects all UniCredit customers with reciprocal payments and collections; • researching FPGA-based hybrid architectures and how those can be employed to accelerate computations in the financial domain. Group activities development operations and other corporate transactions Transactions and initiatives involving shareholdings Constitution of UniCredit myAgents S.r.l. In February 2018 UniCredit myAgents S.r.l., a company wholly owned by UniCredit S.p.A., was set up to carry out the activity of an agency in financial activities, mainly acting as an accelerator for the recruiting and training of collaborators for the expansion of its distribution network agency, in order to contribute to the development of the Italian commercial bank business. The company, after having completed the fulfillment of the administrative requirements and the inclusion in the list of Agents in financial activities, has started its operations since April 2018. Yapi Kredi rights issue In April 2018, Yapi ve Kredi Bankası A.Ş. (“Yapi Kredi”) announced its capital strengthening plan and, in particular, the increase of the bank’s capital via a rights issue of ca. 4.1 billion Turkish Lira. The holding UniCredit S.p.A. has participated in such rights issue via Koç Financial Services, joint venture between UniCredit S.p.A. and Koç Group, which is the controlling shareholder of Yapi Kredi. Koç Financial Services has actually subscribed the rights issue of Yapi Kredi, slightly increasing its shareholding to 81.9% from previous 81.8%. UniCredit S.p.A. has supported Koç Financial Services in such transaction, subscribing proportionally Koç Financial Services’s rights issue together with the other shareholder (50% each). Sale of the investment in i-Faber S.p.A. On 30 April 2018, the holding UniCredit S.p.A. concluded the disposal of its 100% shareholding in i-Faber S.p.A. to Accenture Managed Services S.p.A. The investment was classified among assets held for sale (IFRS5) as at 31 December 2017 while in April 2018 UniCredit reached 100% shareholding in the company, acquiring the remaining shares from previous minorities shareholders. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 61 Start of operations of Asset Management Company In May 2018 Fineco Asset Management (FAM), an investment company under the Irish law (Asset Management Company) dedicated to the management of UCITS (Collective Investment Savings Bodies) entirely controlled by FinecoBank, received from the Central Bank of Ireland the authorisation to perform the asset management business. FAM, whose mission is to manage Funds of Funds using strategic partnerships with the best international managers, was appointed the manager of some Luxembourg and Irish “umbrella funds” UCITS. Disposal of Italian pawncredit business On 1 July 2018, the holding UniCredit S.p.A. completed the disposal of its Italian pawncredit business to Dorotheum. The transaction envisaged a consideration of €141 million, paid by Dorotheum at closing, and a potential earn-out in favor of UniCredit S.p.A. up to €9 million, to be paid after three years. In third quarter 2018 the transaction generated a positive impact for UniCredit S.p.A. of about €100 million in the Consolidated accounts and of almost 4 bps on the consolidated CET1 ratio. UniCredit group increases to 10.3% its strategic stake in Kepler Cheuvreux In second half 2018 UniCredit group completed the increase of its strategic stake in Kepler Cheuvreux to 10.3%, following the signing of a binding agreement in first half 2018. Sale initiatives of non-performing portfolios The portfolios’ sale is part of the overall UniCredit group's on-going strategy to reduce non-performing exposure ("NPE") and to sell Non Core assets aimed at strengthening its risk profile as part of UniCredit group's Transform 2019 plan. Zagrebacka Banka sells non performing credit portfolio to B2 KAPITAL On 15 June 2018 Zagrebacka Banka reached an agreement with B2 Kapital d.o.o., part of group B2 Holding ASA, Norway, in relation to the disposal on a non-recourse basis (pro-soluto) of a portfolio composed of non-performing exposures towards corporate and private individual customers. The portfolio consists entirely of Croatian loans with gross book value of about €233 million. For further details refer to “Subsequent events” of this Consolidated Report on Operations. The disposal was completed during July 2018. UniCredit announces the sale of an Italian Consumer unsecured non-performing credit portfolio On 20 June 2018 the parent company UniCredit S.p.A. reached an agreement with MBCredit Solutions ("MBCS") in relation to the disposal on a non-recourse basis (pro-soluto) of a non-performing unsecured consumer credit portfolio, in Italy. The portfolio consists entirely of Italian unsecured consumer credits with a gross book value of approximately €124 million. UniCredit and MBCS also reached an agreement for the sale of additional non-performing loans of the same type that were generated starting from the second quarter of 2018. In the second half of 2018, therefore, loans were sold for a total of € 101 million gross of value adjustments. UniCredit announces the sale of an Italian non-performing legacy portfolio On 18 July 2018 the parent company UniCredit S.p.A. reached an agreement with IFIS NPL (Banca IFIS Group) in relation to the disposal on a non-recourse basis (pro-soluto) of a legacy non-performing unsecured and secured portfolio towards SME and Private Individuals ("the Portfolio"). The Portfolio is composed by non-performing exposures owned partially by UniCredit S.p.A. and partially by Arena NPL One S.r.l. (a securitisation vehicle transferee of the securitised loans originated by UniCredit, of which the latter holds all the issued Asset Backed Securities). The Portfolio consists entirely of Italian credits with an aggregate claim value of approximately €537 million (of which gross book value of approximately €348 million) as at 31 December 2017. UniCredit announces the sale of non-performing loans portfolio composed by loans to small & medium sizes enterprises On 21 September UniCredit S.p.A. announced that has reached an agreement with IFIS NPL (Banca IFIS Group) in regards to the disposal, on a non-recourse basis (pro-soluto), of a non-performing loan portfolio composed by loans to small and medium sized enterprises "SMEs" ("the Portfolio") with an aggregate claim value of approximately €1.09 billion (of which gross book value of approximately €870 million) as at 31 December 2017. The Portfolio includes unsecured claims as well as claims secured by personal guarantees and/or by second/junior ranking mortgages. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 61 Start of operations of Asset Management Company In May 2018 Fineco Asset Management (FAM), an investment company under the Irish law (Asset Management Company) dedicated to the management of UCITS (Collective Investment Savings Bodies) entirely controlled by FinecoBank, received from the Central Bank of Ireland the authorisation to perform the asset management business. FAM, whose mission is to manage Funds of Funds using strategic partnerships with the best international managers, was appointed the manager of some Luxembourg and Irish “umbrella funds” UCITS. Disposal of Italian pawncredit business On 1 July 2018, the holding UniCredit S.p.A. completed the disposal of its Italian pawncredit business to Dorotheum. The transaction envisaged a consideration of €141 million, paid by Dorotheum at closing, and a potential earn-out in favor of UniCredit S.p.A. up to €9 million, to be paid after three years. In third quarter 2018 the transaction generated a positive impact for UniCredit S.p.A. of about €100 million in the Consolidated accounts and of almost 4 bps on the consolidated CET1 ratio. UniCredit group increases to 10.3% its strategic stake in Kepler Cheuvreux In second half 2018 UniCredit group completed the increase of its strategic stake in Kepler Cheuvreux to 10.3%, following the signing of a binding agreement in first half 2018. Sale initiatives of non-performing portfolios The portfolios’ sale is part of the overall UniCredit group's on-going strategy to reduce non-performing exposure ("NPE") and to sell Non Core assets aimed at strengthening its risk profile as part of UniCredit group's Transform 2019 plan. Zagrebacka Banka sells non performing credit portfolio to B2 KAPITAL On 15 June 2018 Zagrebacka Banka reached an agreement with B2 Kapital d.o.o., part of group B2 Holding ASA, Norway, in relation to the disposal on a non-recourse basis (pro-soluto) of a portfolio composed of non-performing exposures towards corporate and private individual customers. The portfolio consists entirely of Croatian loans with gross book value of about €233 million. For further details refer to “Subsequent events” of this Consolidated Report on Operations. The disposal was completed during July 2018. UniCredit announces the sale of an Italian Consumer unsecured non-performing credit portfolio On 20 June 2018 the parent company UniCredit S.p.A. reached an agreement with MBCredit Solutions ("MBCS") in relation to the disposal on a non-recourse basis (pro-soluto) of a non-performing unsecured consumer credit portfolio, in Italy. The portfolio consists entirely of Italian unsecured consumer credits with a gross book value of approximately €124 million. UniCredit and MBCS also reached an agreement for the sale of additional non-performing loans of the same type that were generated starting from the second quarter of 2018. In the second half of 2018, therefore, loans were sold for a total of € 101 million gross of value adjustments. UniCredit announces the sale of an Italian non-performing legacy portfolio On 18 July 2018 the parent company UniCredit S.p.A. reached an agreement with IFIS NPL (Banca IFIS Group) in relation to the disposal on a non-recourse basis (pro-soluto) of a legacy non-performing unsecured and secured portfolio towards SME and Private Individuals ("the Portfolio"). The Portfolio is composed by non-performing exposures owned partially by UniCredit S.p.A. and partially by Arena NPL One S.r.l. (a securitisation vehicle transferee of the securitised loans originated by UniCredit, of which the latter holds all the issued Asset Backed Securities). The Portfolio consists entirely of Italian credits with an aggregate claim value of approximately €537 million (of which gross book value of approximately €348 million) as at 31 December 2017. UniCredit announces the sale of non-performing loans portfolio composed by loans to small & medium sizes enterprises On 21 September UniCredit S.p.A. announced that has reached an agreement with IFIS NPL (Banca IFIS Group) in regards to the disposal, on a non-recourse basis (pro-soluto), of a non-performing loan portfolio composed by loans to small and medium sized enterprises "SMEs" ("the Portfolio") with an aggregate claim value of approximately €1.09 billion (of which gross book value of approximately €870 million) as at 31 December 2017. The Portfolio includes unsecured claims as well as claims secured by personal guarantees and/or by second/junior ranking mortgages. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 61 Start of operations of Asset Management Company In May 2018 Fineco Asset Management (FAM), an investment company under the Irish law (Asset Management Company) dedicated to the management of UCITS (Collective Investment Savings Bodies) entirely controlled by FinecoBank, received from the Central Bank of Ireland the authorisation to perform the asset management business. FAM, whose mission is to manage Funds of Funds using strategic partnerships with the best international managers, was appointed the manager of some Luxembourg and Irish “umbrella funds” UCITS. Disposal of Italian pawncredit business On 1 July 2018, the holding UniCredit S.p.A. completed the disposal of its Italian pawncredit business to Dorotheum. The transaction envisaged a consideration of €141 million, paid by Dorotheum at closing, and a potential earn-out in favor of UniCredit S.p.A. up to €9 million, to be paid after three years. In third quarter 2018 the transaction generated a positive impact for UniCredit S.p.A. of about €100 million in the Consolidated accounts and of almost 4 bps on the consolidated CET1 ratio. UniCredit group increases to 10.3% its strategic stake in Kepler Cheuvreux In second half 2018 UniCredit group completed the increase of its strategic stake in Kepler Cheuvreux to 10.3%, following the signing of a binding agreement in first half 2018. Sale initiatives of non-performing portfolios The portfolios’ sale is part of the overall UniCredit group's on-going strategy to reduce non-performing exposure ("NPE") and to sell Non Core assets aimed at strengthening its risk profile as part of UniCredit group's Transform 2019 plan. Zagrebacka Banka sells non performing credit portfolio to B2 KAPITAL On 15 June 2018 Zagrebacka Banka reached an agreement with B2 Kapital d.o.o., part of group B2 Holding ASA, Norway, in relation to the disposal on a non-recourse basis (pro-soluto) of a portfolio composed of non-performing exposures towards corporate and private individual customers. The portfolio consists entirely of Croatian loans with gross book value of about €233 million. For further details refer to “Subsequent events” of this Consolidated Report on Operations. The disposal was completed during July 2018. UniCredit announces the sale of an Italian Consumer unsecured non-performing credit portfolio On 20 June 2018 the parent company UniCredit S.p.A. reached an agreement with MBCredit Solutions ("MBCS") in relation to the disposal on a non-recourse basis (pro-soluto) of a non-performing unsecured consumer credit portfolio, in Italy. The portfolio consists entirely of Italian unsecured consumer credits with a gross book value of approximately €124 million. UniCredit and MBCS also reached an agreement for the sale of additional non-performing loans of the same type that were generated starting from the second quarter of 2018. In the second half of 2018, therefore, loans were sold for a total of € 101 million gross of value adjustments. UniCredit announces the sale of an Italian non-performing legacy portfolio On 18 July 2018 the parent company UniCredit S.p.A. reached an agreement with IFIS NPL (Banca IFIS Group) in relation to the disposal on a non-recourse basis (pro-soluto) of a legacy non-performing unsecured and secured portfolio towards SME and Private Individuals ("the Portfolio"). The Portfolio is composed by non-performing exposures owned partially by UniCredit S.p.A. and partially by Arena NPL One S.r.l. (a securitisation vehicle transferee of the securitised loans originated by UniCredit, of which the latter holds all the issued Asset Backed Securities). The Portfolio consists entirely of Italian credits with an aggregate claim value of approximately €537 million (of which gross book value of approximately €348 million) as at 31 December 2017. UniCredit announces the sale of non-performing loans portfolio composed by loans to small & medium sizes enterprises On 21 September UniCredit S.p.A. announced that has reached an agreement with IFIS NPL (Banca IFIS Group) in regards to the disposal, on a non-recourse basis (pro-soluto), of a non-performing loan portfolio composed by loans to small and medium sized enterprises "SMEs" ("the Portfolio") with an aggregate claim value of approximately €1.09 billion (of which gross book value of approximately €870 million) as at 31 December 2017. The Portfolio includes unsecured claims as well as claims secured by personal guarantees and/or by second/junior ranking mortgages. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 61 Start of operations of Asset Management Company In May 2018 Fineco Asset Management (FAM), an investment company under the Irish law (Asset Management Company) dedicated to the management of UCITS (Collective Investment Savings Bodies) entirely controlled by FinecoBank, received from the Central Bank of Ireland the authorisation to perform the asset management business. FAM, whose mission is to manage Funds of Funds using strategic partnerships with the best international managers, was appointed the manager of some Luxembourg and Irish “umbrella funds” UCITS. Disposal of Italian pawncredit business On 1 July 2018, the holding UniCredit S.p.A. completed the disposal of its Italian pawncredit business to Dorotheum. The transaction envisaged a consideration of €141 million, paid by Dorotheum at closing, and a potential earn-out in favor of UniCredit S.p.A. up to €9 million, to be paid after three years. In third quarter 2018 the transaction generated a positive impact for UniCredit S.p.A. of about €100 million in the Consolidated accounts and of almost 4 bps on the consolidated CET1 ratio. UniCredit group increases to 10.3% its strategic stake in Kepler Cheuvreux In second half 2018 UniCredit group completed the increase of its strategic stake in Kepler Cheuvreux to 10.3%, following the signing of a binding agreement in first half 2018. Sale initiatives of non-performing portfolios The portfolios’ sale is part of the overall UniCredit group's on-going strategy to reduce non-performing exposure ("NPE") and to sell Non Core assets aimed at strengthening its risk profile as part of UniCredit group's Transform 2019 plan. Zagrebacka Banka sells non performing credit portfolio to B2 KAPITAL On 15 June 2018 Zagrebacka Banka reached an agreement with B2 Kapital d.o.o., part of group B2 Holding ASA, Norway, in relation to the disposal on a non-recourse basis (pro-soluto) of a portfolio composed of non-performing exposures towards corporate and private individual customers. The portfolio consists entirely of Croatian loans with gross book value of about €233 million. For further details refer to “Subsequent events” of this Consolidated Report on Operations. The disposal was completed during July 2018. UniCredit announces the sale of an Italian Consumer unsecured non-performing credit portfolio On 20 June 2018 the parent company UniCredit S.p.A. reached an agreement with MBCredit Solutions ("MBCS") in relation to the disposal on a non-recourse basis (pro-soluto) of a non-performing unsecured consumer credit portfolio, in Italy. The portfolio consists entirely of Italian unsecured consumer credits with a gross book value of approximately €124 million. UniCredit and MBCS also reached an agreement for the sale of additional non-performing loans of the same type that were generated starting from the second quarter of 2018. In the second half of 2018, therefore, loans were sold for a total of € 101 million gross of value adjustments. UniCredit announces the sale of an Italian non-performing legacy portfolio On 18 July 2018 the parent company UniCredit S.p.A. reached an agreement with IFIS NPL (Banca IFIS Group) in relation to the disposal on a non-recourse basis (pro-soluto) of a legacy non-performing unsecured and secured portfolio towards SME and Private Individuals ("the Portfolio"). The Portfolio is composed by non-performing exposures owned partially by UniCredit S.p.A. and partially by Arena NPL One S.r.l. (a securitisation vehicle transferee of the securitised loans originated by UniCredit, of which the latter holds all the issued Asset Backed Securities). The Portfolio consists entirely of Italian credits with an aggregate claim value of approximately €537 million (of which gross book value of approximately €348 million) as at 31 December 2017. UniCredit announces the sale of non-performing loans portfolio composed by loans to small & medium sizes enterprises On 21 September UniCredit S.p.A. announced that has reached an agreement with IFIS NPL (Banca IFIS Group) in regards to the disposal, on a non-recourse basis (pro-soluto), of a non-performing loan portfolio composed by loans to small and medium sized enterprises "SMEs" ("the Portfolio") with an aggregate claim value of approximately €1.09 billion (of which gross book value of approximately €870 million) as at 31 December 2017. The Portfolio includes unsecured claims as well as claims secured by personal guarantees and/or by second/junior ranking mortgages. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 61 Start of operations of Asset Management Company In May 2018 Fineco Asset Management (FAM), an investment company under the Irish law (Asset Management Company) dedicated to the management of UCITS (Collective Investment Savings Bodies) entirely controlled by FinecoBank, received from the Central Bank of Ireland the authorisation to perform the asset management business. FAM, whose mission is to manage Funds of Funds using strategic partnerships with the best international managers, was appointed the manager of some Luxembourg and Irish “umbrella funds” UCITS. Disposal of Italian pawncredit business On 1 July 2018, the holding UniCredit S.p.A. completed the disposal of its Italian pawncredit business to Dorotheum. The transaction envisaged a consideration of €141 million, paid by Dorotheum at closing, and a potential earn-out in favor of UniCredit S.p.A. up to €9 million, to be paid after three years. In third quarter 2018 the transaction generated a positive impact for UniCredit S.p.A. of about €100 million in the Consolidated accounts and of almost 4 bps on the consolidated CET1 ratio. UniCredit group increases to 10.3% its strategic stake in Kepler Cheuvreux In second half 2018 UniCredit group completed the increase of its strategic stake in Kepler Cheuvreux to 10.3%, following the signing of a binding agreement in first half 2018. Sale initiatives of non-performing portfolios The portfolios’ sale is part of the overall UniCredit group's on-going strategy to reduce non-performing exposure ("NPE") and to sell Non Core assets aimed at strengthening its risk profile as part of UniCredit group's Transform 2019 plan. Zagrebacka Banka sells non performing credit portfolio to B2 KAPITAL On 15 June 2018 Zagrebacka Banka reached an agreement with B2 Kapital d.o.o., part of group B2 Holding ASA, Norway, in relation to the disposal on a non-recourse basis (pro-soluto) of a portfolio composed of non-performing exposures towards corporate and private individual customers. The portfolio consists entirely of Croatian loans with gross book value of about €233 million. For further details refer to “Subsequent events” of this Consolidated Report on Operations. The disposal was completed during July 2018. UniCredit announces the sale of an Italian Consumer unsecured non-performing credit portfolio On 20 June 2018 the parent company UniCredit S.p.A. reached an agreement with MBCredit Solutions ("MBCS") in relation to the disposal on a non-recourse basis (pro-soluto) of a non-performing unsecured consumer credit portfolio, in Italy. The portfolio consists entirely of Italian unsecured consumer credits with a gross book value of approximately €124 million. UniCredit and MBCS also reached an agreement for the sale of additional non-performing loans of the same type that were generated starting from the second quarter of 2018. In the second half of 2018, therefore, loans were sold for a total of € 101 million gross of value adjustments. UniCredit announces the sale of an Italian non-performing legacy portfolio On 18 July 2018 the parent company UniCredit S.p.A. reached an agreement with IFIS NPL (Banca IFIS Group) in relation to the disposal on a non-recourse basis (pro-soluto) of a legacy non-performing unsecured and secured portfolio towards SME and Private Individuals ("the Portfolio"). The Portfolio is composed by non-performing exposures owned partially by UniCredit S.p.A. and partially by Arena NPL One S.r.l. (a securitisation vehicle transferee of the securitised loans originated by UniCredit, of which the latter holds all the issued Asset Backed Securities). The Portfolio consists entirely of Italian credits with an aggregate claim value of approximately €537 million (of which gross book value of approximately €348 million) as at 31 December 2017. UniCredit announces the sale of non-performing loans portfolio composed by loans to small & medium sizes enterprises On 21 September UniCredit S.p.A. announced that has reached an agreement with IFIS NPL (Banca IFIS Group) in regards to the disposal, on a non-recourse basis (pro-soluto), of a non-performing loan portfolio composed by loans to small and medium sized enterprises "SMEs" ("the Portfolio") with an aggregate claim value of approximately €1.09 billion (of which gross book value of approximately €870 million) as at 31 December 2017. The Portfolio includes unsecured claims as well as claims secured by personal guarantees and/or by second/junior ranking mortgages. Consolidated report on operations Other information 62 2018 Annual Report and Accounts · UniCredit UniCredit Bulbank sells Bulgarian non-performing credit portfolio to DCA, part of the B2Holding group On 28 September 2018 UniCredit UniCredit Bulbank (Bulgaria), reached an agreement with DCA, part of the B2Holding group, to on a non-recourse basis (pro-soluto) sell a portfolio composed of secured and unsecured non-performing loans granted by UniCredit Bulbank to private individuals, SME's and Corporate customers. The portfolio consists entirely of Bulgarian loans with a legal claim value of approximately €249 million. AO UniCredit Bank sells Russian non-performing credit portfolio to OOO EOS, part of the EOS group On 24 October 2018 AO UniCredit Bank (Russia), reached an agreement with EOS on a non-recourse basis (pro-soluto) to sell a portfolio composed of consumer/car non-performing loans granted by AO UniCredit Bank to private individuals customers. The portfolio consists entirely of Russian loans with a Legal Claim value of approximately €101 million. UniCredit announces the sale of an Italian Small Medium Enterprise unsecured non-performing loans portfolio On 29 November 2018 UniCredit S.p.A. announces today an agreement with a securitization vehicle managed by J-Invest S.p.A. ("J-Invest") and with a securitization vehicle managed by Banca Interprovinciale S.p.A. ("Illimity") in relation to the disposal of a portfolio of Italian Small and Medium Enterprise non performing unsecured loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of large tickets Italian exposures with a total gross claim value ("Claim") of approximately €590 million. J-Invest has bought a portion of the portfolio with a Claim Value of approximately €384 million and Illimity has bought the portion with a Claim Value of approximately €206 million. UniCredit announces the sale of an Italian Small Medium Enterprise secured non performing credit portfolio On 30 November 2018 UniCredit S.p.A. signed an agreement with an affiliate of Fortress Investment Group LLC ("Fortress") in relation to the disposal of a portfolio of Italian Small and Medium Enterprise secured non-performing loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of Italian exposures with a gross claim value of approximately €675 million as of 31 March 2018. UniCredit Leasing S.p.A. announces the sale of an Italian leasing unsecured non-performing credit portfolio On 19 December 2018 UniCredit Leasing S.p.A. announced an agreement with Guber banca S.p.A. in relation to the disposal of a portfolio of Italian leasing unsecured non-performing loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of Italian exposures with a gross claim value of approximately €170 million as of 31 luglio2018. Other information on Group activities Agreement with the Italian trade unions - "Youth Plan” On 1 February 2018 UniCredit group, mainly the parent company UniCredit S.p.A., signed a "Youth Plan" with Italian trade unions to employ roughly 550 young people with permanent contracts or apprenticeships. The "Youth Plan" foresees 1:1 re-hiring for any exit. These positions will be part of a generational turnover to meet operational and development needs, primarily in the Bank's commercial network. Erg S.p.A. In April 2018, through an accelerated book-building, UniCredit S.p.A. completed the sale of a 4% stake held in Erg S.p.A for a total consideration of €111.84 million, with a gain at consolidated level of €17.5 million. With this transaction, UniCredit S.p.A. completed the path launched with the investment in ERG Renew S.p.A. in 2014. Consolidated report on operations Other information 62 2018 Annual Report and Accounts · UniCredit UniCredit Bulbank sells Bulgarian non-performing credit portfolio to DCA, part of the B2Holding group On 28 September 2018 UniCredit UniCredit Bulbank (Bulgaria), reached an agreement with DCA, part of the B2Holding group, to on a non-recourse basis (pro-soluto) sell a portfolio composed of secured and unsecured non-performing loans granted by UniCredit Bulbank to private individuals, SME's and Corporate customers. The portfolio consists entirely of Bulgarian loans with a legal claim value of approximately €249 million. AO UniCredit Bank sells Russian non-performing credit portfolio to OOO EOS, part of the EOS group On 24 October 2018 AO UniCredit Bank (Russia), reached an agreement with EOS on a non-recourse basis (pro-soluto) to sell a portfolio composed of consumer/car non-performing loans granted by AO UniCredit Bank to private individuals customers. The portfolio consists entirely of Russian loans with a Legal Claim value of approximately €101 million. UniCredit announces the sale of an Italian Small Medium Enterprise unsecured non-performing loans portfolio On 29 November 2018 UniCredit S.p.A. announces today an agreement with a securitization vehicle managed by J-Invest S.p.A. ("J-Invest") and with a securitization vehicle managed by Banca Interprovinciale S.p.A. ("Illimity") in relation to the disposal of a portfolio of Italian Small and Medium Enterprise non performing unsecured loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of large tickets Italian exposures with a total gross claim value ("Claim") of approximately €590 million. J-Invest has bought a portion of the portfolio with a Claim Value of approximately €384 million and Illimity has bought the portion with a Claim Value of approximately €206 million. UniCredit announces the sale of an Italian Small Medium Enterprise secured non performing credit portfolio On 30 November 2018 UniCredit S.p.A. signed an agreement with an affiliate of Fortress Investment Group LLC ("Fortress") in relation to the disposal of a portfolio of Italian Small and Medium Enterprise secured non-performing loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of Italian exposures with a gross claim value of approximately €675 million as of 31 March 2018. UniCredit Leasing S.p.A. announces the sale of an Italian leasing unsecured non-performing credit portfolio On 19 December 2018 UniCredit Leasing S.p.A. announced an agreement with Guber banca S.p.A. in relation to the disposal of a portfolio of Italian leasing unsecured non-performing loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of Italian exposures with a gross claim value of approximately €170 million as of 31 luglio2018. Other information on Group activities Agreement with the Italian trade unions - "Youth Plan” On 1 February 2018 UniCredit group, mainly the parent company UniCredit S.p.A., signed a "Youth Plan" with Italian trade unions to employ roughly 550 young people with permanent contracts or apprenticeships. The "Youth Plan" foresees 1:1 re-hiring for any exit. These positions will be part of a generational turnover to meet operational and development needs, primarily in the Bank's commercial network. Erg S.p.A. In April 2018, through an accelerated book-building, UniCredit S.p.A. completed the sale of a 4% stake held in Erg S.p.A for a total consideration of €111.84 million, with a gain at consolidated level of €17.5 million. With this transaction, UniCredit S.p.A. completed the path launched with the investment in ERG Renew S.p.A. in 2014. Consolidated report on operations Other information 62 2018 Annual Report and Accounts · UniCredit UniCredit Bulbank sells Bulgarian non-performing credit portfolio to DCA, part of the B2Holding group On 28 September 2018 UniCredit UniCredit Bulbank (Bulgaria), reached an agreement with DCA, part of the B2Holding group, to on a non-recourse basis (pro-soluto) sell a portfolio composed of secured and unsecured non-performing loans granted by UniCredit Bulbank to private individuals, SME's and Corporate customers. The portfolio consists entirely of Bulgarian loans with a legal claim value of approximately €249 million. AO UniCredit Bank sells Russian non-performing credit portfolio to OOO EOS, part of the EOS group On 24 October 2018 AO UniCredit Bank (Russia), reached an agreement with EOS on a non-recourse basis (pro-soluto) to sell a portfolio composed of consumer/car non-performing loans granted by AO UniCredit Bank to private individuals customers. The portfolio consists entirely of Russian loans with a Legal Claim value of approximately €101 million. UniCredit announces the sale of an Italian Small Medium Enterprise unsecured non-performing loans portfolio On 29 November 2018 UniCredit S.p.A. announces today an agreement with a securitization vehicle managed by J-Invest S.p.A. ("J-Invest") and with a securitization vehicle managed by Banca Interprovinciale S.p.A. ("Illimity") in relation to the disposal of a portfolio of Italian Small and Medium Enterprise non performing unsecured loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of large tickets Italian exposures with a total gross claim value ("Claim") of approximately €590 million. J-Invest has bought a portion of the portfolio with a Claim Value of approximately €384 million and Illimity has bought the portion with a Claim Value of approximately €206 million. UniCredit announces the sale of an Italian Small Medium Enterprise secured non performing credit portfolio On 30 November 2018 UniCredit S.p.A. signed an agreement with an affiliate of Fortress Investment Group LLC ("Fortress") in relation to the disposal of a portfolio of Italian Small and Medium Enterprise secured non-performing loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of Italian exposures with a gross claim value of approximately €675 million as of 31 March 2018. UniCredit Leasing S.p.A. announces the sale of an Italian leasing unsecured non-performing credit portfolio On 19 December 2018 UniCredit Leasing S.p.A. announced an agreement with Guber banca S.p.A. in relation to the disposal of a portfolio of Italian leasing unsecured non-performing loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of Italian exposures with a gross claim value of approximately €170 million as of 31 luglio2018. Other information on Group activities Agreement with the Italian trade unions - "Youth Plan” On 1 February 2018 UniCredit group, mainly the parent company UniCredit S.p.A., signed a "Youth Plan" with Italian trade unions to employ roughly 550 young people with permanent contracts or apprenticeships. The "Youth Plan" foresees 1:1 re-hiring for any exit. These positions will be part of a generational turnover to meet operational and development needs, primarily in the Bank's commercial network. Erg S.p.A. In April 2018, through an accelerated book-building, UniCredit S.p.A. completed the sale of a 4% stake held in Erg S.p.A for a total consideration of €111.84 million, with a gain at consolidated level of €17.5 million. With this transaction, UniCredit S.p.A. completed the path launched with the investment in ERG Renew S.p.A. in 2014. Consolidated report on operations Other information 62 2018 Annual Report and Accounts · UniCredit UniCredit Bulbank sells Bulgarian non-performing credit portfolio to DCA, part of the B2Holding group On 28 September 2018 UniCredit UniCredit Bulbank (Bulgaria), reached an agreement with DCA, part of the B2Holding group, to on a non-recourse basis (pro-soluto) sell a portfolio composed of secured and unsecured non-performing loans granted by UniCredit Bulbank to private individuals, SME's and Corporate customers. The portfolio consists entirely of Bulgarian loans with a legal claim value of approximately €249 million. AO UniCredit Bank sells Russian non-performing credit portfolio to OOO EOS, part of the EOS group On 24 October 2018 AO UniCredit Bank (Russia), reached an agreement with EOS on a non-recourse basis (pro-soluto) to sell a portfolio composed of consumer/car non-performing loans granted by AO UniCredit Bank to private individuals customers. The portfolio consists entirely of Russian loans with a Legal Claim value of approximately €101 million. UniCredit announces the sale of an Italian Small Medium Enterprise unsecured non-performing loans portfolio On 29 November 2018 UniCredit S.p.A. announces today an agreement with a securitization vehicle managed by J-Invest S.p.A. ("J-Invest") and with a securitization vehicle managed by Banca Interprovinciale S.p.A. ("Illimity") in relation to the disposal of a portfolio of Italian Small and Medium Enterprise non performing unsecured loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of large tickets Italian exposures with a total gross claim value ("Claim") of approximately €590 million. J-Invest has bought a portion of the portfolio with a Claim Value of approximately €384 million and Illimity has bought the portion with a Claim Value of approximately €206 million. UniCredit announces the sale of an Italian Small Medium Enterprise secured non performing credit portfolio On 30 November 2018 UniCredit S.p.A. signed an agreement with an affiliate of Fortress Investment Group LLC ("Fortress") in relation to the disposal of a portfolio of Italian Small and Medium Enterprise secured non-performing loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of Italian exposures with a gross claim value of approximately €675 million as of 31 March 2018. UniCredit Leasing S.p.A. announces the sale of an Italian leasing unsecured non-performing credit portfolio On 19 December 2018 UniCredit Leasing S.p.A. announced an agreement with Guber banca S.p.A. in relation to the disposal of a portfolio of Italian leasing unsecured non-performing loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of Italian exposures with a gross claim value of approximately €170 million as of 31 luglio2018. Other information on Group activities Agreement with the Italian trade unions - "Youth Plan” On 1 February 2018 UniCredit group, mainly the parent company UniCredit S.p.A., signed a "Youth Plan" with Italian trade unions to employ roughly 550 young people with permanent contracts or apprenticeships. The "Youth Plan" foresees 1:1 re-hiring for any exit. These positions will be part of a generational turnover to meet operational and development needs, primarily in the Bank's commercial network. Erg S.p.A. In April 2018, through an accelerated book-building, UniCredit S.p.A. completed the sale of a 4% stake held in Erg S.p.A for a total consideration of €111.84 million, with a gain at consolidated level of €17.5 million. With this transaction, UniCredit S.p.A. completed the path launched with the investment in ERG Renew S.p.A. in 2014. Consolidated report on operations Other information 62 2018 Annual Report and Accounts · UniCredit UniCredit Bulbank sells Bulgarian non-performing credit portfolio to DCA, part of the B2Holding group On 28 September 2018 UniCredit UniCredit Bulbank (Bulgaria), reached an agreement with DCA, part of the B2Holding group, to on a non-recourse basis (pro-soluto) sell a portfolio composed of secured and unsecured non-performing loans granted by UniCredit Bulbank to private individuals, SME's and Corporate customers. The portfolio consists entirely of Bulgarian loans with a legal claim value of approximately €249 million. AO UniCredit Bank sells Russian non-performing credit portfolio to OOO EOS, part of the EOS group On 24 October 2018 AO UniCredit Bank (Russia), reached an agreement with EOS on a non-recourse basis (pro-soluto) to sell a portfolio composed of consumer/car non-performing loans granted by AO UniCredit Bank to private individuals customers. The portfolio consists entirely of Russian loans with a Legal Claim value of approximately €101 million. UniCredit announces the sale of an Italian Small Medium Enterprise unsecured non-performing loans portfolio On 29 November 2018 UniCredit S.p.A. announces today an agreement with a securitization vehicle managed by J-Invest S.p.A. ("J-Invest") and with a securitization vehicle managed by Banca Interprovinciale S.p.A. ("Illimity") in relation to the disposal of a portfolio of Italian Small and Medium Enterprise non performing unsecured loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of large tickets Italian exposures with a total gross claim value ("Claim") of approximately €590 million. J-Invest has bought a portion of the portfolio with a Claim Value of approximately €384 million and Illimity has bought the portion with a Claim Value of approximately €206 million. UniCredit announces the sale of an Italian Small Medium Enterprise secured non performing credit portfolio On 30 November 2018 UniCredit S.p.A. signed an agreement with an affiliate of Fortress Investment Group LLC ("Fortress") in relation to the disposal of a portfolio of Italian Small and Medium Enterprise secured non-performing loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of Italian exposures with a gross claim value of approximately €675 million as of 31 March 2018. UniCredit Leasing S.p.A. announces the sale of an Italian leasing unsecured non-performing credit portfolio On 19 December 2018 UniCredit Leasing S.p.A. announced an agreement with Guber banca S.p.A. in relation to the disposal of a portfolio of Italian leasing unsecured non-performing loans, on a non-recourse basis (pro-soluto). The portfolio consists entirely of Italian exposures with a gross claim value of approximately €170 million as of 31 luglio2018. Other information on Group activities Agreement with the Italian trade unions - "Youth Plan” On 1 February 2018 UniCredit group, mainly the parent company UniCredit S.p.A., signed a "Youth Plan" with Italian trade unions to employ roughly 550 young people with permanent contracts or apprenticeships. The "Youth Plan" foresees 1:1 re-hiring for any exit. These positions will be part of a generational turnover to meet operational and development needs, primarily in the Bank's commercial network. Erg S.p.A. In April 2018, through an accelerated book-building, UniCredit S.p.A. completed the sale of a 4% stake held in Erg S.p.A for a total consideration of €111.84 million, with a gain at consolidated level of €17.5 million. With this transaction, UniCredit S.p.A. completed the path launched with the investment in ERG Renew S.p.A. in 2014. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 63 FINO Project During 2018 Phase 2 of the FINO Project was completed, aimed to the progressive sale to third party investors of the ABS securities linked to the respective securitisation transactions of the receivables, in order to bring the total value of securities subscribed to by the parent company UniCredit S.p.A. below the 20% threshold. This Phase, already initiated in the last months of 2017, was completed at the end of January 2018 with the settlement and transfer to the purchasing investors of the ABS securities. The sales transactions resulted in a negative financial out-turn of around €5 million, attributable entirely to the transaction costs incurred, and documented in the UniCredit S.p.A.’s 2018 income statement. As at 31 December 2018, following the redemptions made, the Notes relating to the FINO Project owned by UniCredit S.p.A. amounted totally about €290 million (about €230 million recorded under item "30. Financial assets at fair value through other comprehensive income" pertaining to the Senior securities and in part to the Mezzanine securities, and €60 million recorded under item "20. c) other financial assets mandatorily at fair value" in connection with the remaining Mezzanine securities and all the Junior Notes). The receivables related to the Deferred Subscription Price (DSP/Deferred Purchase Price-DPP), owed to UniCredit S.p.A. by third-party entities belonging to the relevant third-party Investor's groups, with suitable credit rating and a capital structure that can guarantee that the repayment of the DSP/DPP does not depend, either in full or mainly, on the payment of ABSs issued by the SPVs Fino 1 Securitization S.r.l., Fino 2 Securitization S.r.l. and Onif Finance S.r.l., and deriving from the securitization transactions completed during 2017, have been classified under item "40. Financial assets at amortised cost" according to IFRS9, and measured on the basis of the estimated future cash flows. As at 31 December 2018 they amount to approximately €511 million, and include, for around €15 million, the positive effect (recognised in item "10. Interest income and similar revenues" of the 2018 income statement) connected with the reversal of the time value in respect to 31 December 2017. Strategic Bancassurance partnerships In June 2018 the holding UniCredit S.p.A. has announced that it has signed two exclusive strategic partnership agreements with Allianz and Generali respectively for the distribution of insurance products for individuals and small-businesses in Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Serbia, Slovakia and Slovenia. The long-term partnerships was implemented in the majority of the countries in scope, in compliance with the all local regulations, in the second half of 2018, predominantly focused on the Life and Non-Life products with Allianz and on the CPI (Credit Protection Insurance) products with Generali. The implementation of the partnership agreements for CPI in Bosnia and Herzegovina and Life and Non-Life in Serbia is planned in 2019. Contract renegotiation with ES Shared Service Center S.p.A. ES Shared Service Center S.p.A. ("ES SSC") is a joint venture established in 2012 by UniCredit Services S.C.p.A. (formerly UniCredit Business Integrated Solutions S.c.p.A.), with a 49% stake, and Hewlett Packard Enterprise with the remaining 51% stake. The company is responsible for providing services in the Human Resources area for the companies of the UniCredit group in Italy and Austria through a 15-year outsourcing contract. In line with the new HR Transformation programme led by UniCredit HR Transformation & Operations Office, a considerable review of the relationship with the company was negotiated, also with the aim to grant to UniCredit Services a "termination for convenience" in relation to the existing agreements in Italy and Austria. In line with the said agreements, UniCredit Services has exercised its termination right of the agreement related to Italy which is effective from 1 July 2018. The termination of the said agreement envisages also a post termination assistance in order to ensure the continuity of the services and to support the migration of the systems and the activities to UniCredit S.p.A. In this context and in execution of the reached agreement, UniCredit Services has exercised its "put option"; therefore starting from 19 December 2018 UniCredit Services ceased to be a shareholder of ES SSC. EBA confirms UniCredit Cashes treatment On 20 July 2018 the parent company UniCredit S.p.A. communicated to welcome the decision of EBA not to open an investigation based on the request made by Caius Capital and to confirm its 2012 position on the Cashes treatment. This validates UniCredit's previous statement that the treatment of the Cashes has been reviewed and affirmed by all the relevant authorities and that UniCredit ordinary shares are qualified as Common Equity Tier 1 Capital - CET1. UniCredit notified the competent market authorities of Caius Capital's actions in light of possible market abuse. Afterwards UniCredit has filed a complaint against Caius Capital and the Caius funds in the Court of Milan seeking compensation of damages in the amount of approximately €90 million stemming from Caius Capital's and the funds' actions against the Bank over the course of the last months with respect to the Cashes. During December 2018 UniCredit and Caius Capital announced that they have fully and finally settled their dispute in relation to the Cashes, and accordingly that UniCredit's complaint against Caius and the funds it manages has been withdrawn. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 63 FINO Project During 2018 Phase 2 of the FINO Project was completed, aimed to the progressive sale to third party investors of the ABS securities linked to the respective securitisation transactions of the receivables, in order to bring the total value of securities subscribed to by the parent company UniCredit S.p.A. below the 20% threshold. This Phase, already initiated in the last months of 2017, was completed at the end of January 2018 with the settlement and transfer to the purchasing investors of the ABS securities. The sales transactions resulted in a negative financial out-turn of around €5 million, attributable entirely to the transaction costs incurred, and documented in the UniCredit S.p.A.’s 2018 income statement. As at 31 December 2018, following the redemptions made, the Notes relating to the FINO Project owned by UniCredit S.p.A. amounted totally about €290 million (about €230 million recorded under item "30. Financial assets at fair value through other comprehensive income" pertaining to the Senior securities and in part to the Mezzanine securities, and €60 million recorded under item "20. c) other financial assets mandatorily at fair value" in connection with the remaining Mezzanine securities and all the Junior Notes). The receivables related to the Deferred Subscription Price (DSP/Deferred Purchase Price-DPP), owed to UniCredit S.p.A. by third-party entities belonging to the relevant third-party Investor's groups, with suitable credit rating and a capital structure that can guarantee that the repayment of the DSP/DPP does not depend, either in full or mainly, on the payment of ABSs issued by the SPVs Fino 1 Securitization S.r.l., Fino 2 Securitization S.r.l. and Onif Finance S.r.l., and deriving from the securitization transactions completed during 2017, have been classified under item "40. Financial assets at amortised cost" according to IFRS9, and measured on the basis of the estimated future cash flows. As at 31 December 2018 they amount to approximately €511 million, and include, for around €15 million, the positive effect (recognised in item "10. Interest income and similar revenues" of the 2018 income statement) connected with the reversal of the time value in respect to 31 December 2017. Strategic Bancassurance partnerships In June 2018 the holding UniCredit S.p.A. has announced that it has signed two exclusive strategic partnership agreements with Allianz and Generali respectively for the distribution of insurance products for individuals and small-businesses in Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Serbia, Slovakia and Slovenia. The long-term partnerships was implemented in the majority of the countries in scope, in compliance with the all local regulations, in the second half of 2018, predominantly focused on the Life and Non-Life products with Allianz and on the CPI (Credit Protection Insurance) products with Generali. The implementation of the partnership agreements for CPI in Bosnia and Herzegovina and Life and Non-Life in Serbia is planned in 2019. Contract renegotiation with ES Shared Service Center S.p.A. ES Shared Service Center S.p.A. ("ES SSC") is a joint venture established in 2012 by UniCredit Services S.C.p.A. (formerly UniCredit Business Integrated Solutions S.c.p.A.), with a 49% stake, and Hewlett Packard Enterprise with the remaining 51% stake. The company is responsible for providing services in the Human Resources area for the companies of the UniCredit group in Italy and Austria through a 15-year outsourcing contract. In line with the new HR Transformation programme led by UniCredit HR Transformation & Operations Office, a considerable review of the relationship with the company was negotiated, also with the aim to grant to UniCredit Services a "termination for convenience" in relation to the existing agreements in Italy and Austria. In line with the said agreements, UniCredit Services has exercised its termination right of the agreement related to Italy which is effective from 1 July 2018. The termination of the said agreement envisages also a post termination assistance in order to ensure the continuity of the services and to support the migration of the systems and the activities to UniCredit S.p.A. In this context and in execution of the reached agreement, UniCredit Services has exercised its "put option"; therefore starting from 19 December 2018 UniCredit Services ceased to be a shareholder of ES SSC. EBA confirms UniCredit Cashes treatment On 20 July 2018 the parent company UniCredit S.p.A. communicated to welcome the decision of EBA not to open an investigation based on the request made by Caius Capital and to confirm its 2012 position on the Cashes treatment. This validates UniCredit's previous statement that the treatment of the Cashes has been reviewed and affirmed by all the relevant authorities and that UniCredit ordinary shares are qualified as Common Equity Tier 1 Capital - CET1. UniCredit notified the competent market authorities of Caius Capital's actions in light of possible market abuse. Afterwards UniCredit has filed a complaint against Caius Capital and the Caius funds in the Court of Milan seeking compensation of damages in the amount of approximately €90 million stemming from Caius Capital's and the funds' actions against the Bank over the course of the last months with respect to the Cashes. During December 2018 UniCredit and Caius Capital announced that they have fully and finally settled their dispute in relation to the Cashes, and accordingly that UniCredit's complaint against Caius and the funds it manages has been withdrawn. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 63 FINO Project During 2018 Phase 2 of the FINO Project was completed, aimed to the progressive sale to third party investors of the ABS securities linked to the respective securitisation transactions of the receivables, in order to bring the total value of securities subscribed to by the parent company UniCredit S.p.A. below the 20% threshold. This Phase, already initiated in the last months of 2017, was completed at the end of January 2018 with the settlement and transfer to the purchasing investors of the ABS securities. The sales transactions resulted in a negative financial out-turn of around €5 million, attributable entirely to the transaction costs incurred, and documented in the UniCredit S.p.A.’s 2018 income statement. As at 31 December 2018, following the redemptions made, the Notes relating to the FINO Project owned by UniCredit S.p.A. amounted totally about €290 million (about €230 million recorded under item "30. Financial assets at fair value through other comprehensive income" pertaining to the Senior securities and in part to the Mezzanine securities, and €60 million recorded under item "20. c) other financial assets mandatorily at fair value" in connection with the remaining Mezzanine securities and all the Junior Notes). The receivables related to the Deferred Subscription Price (DSP/Deferred Purchase Price-DPP), owed to UniCredit S.p.A. by third-party entities belonging to the relevant third-party Investor's groups, with suitable credit rating and a capital structure that can guarantee that the repayment of the DSP/DPP does not depend, either in full or mainly, on the payment of ABSs issued by the SPVs Fino 1 Securitization S.r.l., Fino 2 Securitization S.r.l. and Onif Finance S.r.l., and deriving from the securitization transactions completed during 2017, have been classified under item "40. Financial assets at amortised cost" according to IFRS9, and measured on the basis of the estimated future cash flows. As at 31 December 2018 they amount to approximately €511 million, and include, for around €15 million, the positive effect (recognised in item "10. Interest income and similar revenues" of the 2018 income statement) connected with the reversal of the time value in respect to 31 December 2017. Strategic Bancassurance partnerships In June 2018 the holding UniCredit S.p.A. has announced that it has signed two exclusive strategic partnership agreements with Allianz and Generali respectively for the distribution of insurance products for individuals and small-businesses in Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Serbia, Slovakia and Slovenia. The long-term partnerships was implemented in the majority of the countries in scope, in compliance with the all local regulations, in the second half of 2018, predominantly focused on the Life and Non-Life products with Allianz and on the CPI (Credit Protection Insurance) products with Generali. The implementation of the partnership agreements for CPI in Bosnia and Herzegovina and Life and Non-Life in Serbia is planned in 2019. Contract renegotiation with ES Shared Service Center S.p.A. ES Shared Service Center S.p.A. ("ES SSC") is a joint venture established in 2012 by UniCredit Services S.C.p.A. (formerly UniCredit Business Integrated Solutions S.c.p.A.), with a 49% stake, and Hewlett Packard Enterprise with the remaining 51% stake. The company is responsible for providing services in the Human Resources area for the companies of the UniCredit group in Italy and Austria through a 15-year outsourcing contract. In line with the new HR Transformation programme led by UniCredit HR Transformation & Operations Office, a considerable review of the relationship with the company was negotiated, also with the aim to grant to UniCredit Services a "termination for convenience" in relation to the existing agreements in Italy and Austria. In line with the said agreements, UniCredit Services has exercised its termination right of the agreement related to Italy which is effective from 1 July 2018. The termination of the said agreement envisages also a post termination assistance in order to ensure the continuity of the services and to support the migration of the systems and the activities to UniCredit S.p.A. In this context and in execution of the reached agreement, UniCredit Services has exercised its "put option"; therefore starting from 19 December 2018 UniCredit Services ceased to be a shareholder of ES SSC. EBA confirms UniCredit Cashes treatment On 20 July 2018 the parent company UniCredit S.p.A. communicated to welcome the decision of EBA not to open an investigation based on the request made by Caius Capital and to confirm its 2012 position on the Cashes treatment. This validates UniCredit's previous statement that the treatment of the Cashes has been reviewed and affirmed by all the relevant authorities and that UniCredit ordinary shares are qualified as Common Equity Tier 1 Capital - CET1. UniCredit notified the competent market authorities of Caius Capital's actions in light of possible market abuse. Afterwards UniCredit has filed a complaint against Caius Capital and the Caius funds in the Court of Milan seeking compensation of damages in the amount of approximately €90 million stemming from Caius Capital's and the funds' actions against the Bank over the course of the last months with respect to the Cashes. During December 2018 UniCredit and Caius Capital announced that they have fully and finally settled their dispute in relation to the Cashes, and accordingly that UniCredit's complaint against Caius and the funds it manages has been withdrawn. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 63 FINO Project During 2018 Phase 2 of the FINO Project was completed, aimed to the progressive sale to third party investors of the ABS securities linked to the respective securitisation transactions of the receivables, in order to bring the total value of securities subscribed to by the parent company UniCredit S.p.A. below the 20% threshold. This Phase, already initiated in the last months of 2017, was completed at the end of January 2018 with the settlement and transfer to the purchasing investors of the ABS securities. The sales transactions resulted in a negative financial out-turn of around €5 million, attributable entirely to the transaction costs incurred, and documented in the UniCredit S.p.A.’s 2018 income statement. As at 31 December 2018, following the redemptions made, the Notes relating to the FINO Project owned by UniCredit S.p.A. amounted totally about €290 million (about €230 million recorded under item "30. Financial assets at fair value through other comprehensive income" pertaining to the Senior securities and in part to the Mezzanine securities, and €60 million recorded under item "20. c) other financial assets mandatorily at fair value" in connection with the remaining Mezzanine securities and all the Junior Notes). The receivables related to the Deferred Subscription Price (DSP/Deferred Purchase Price-DPP), owed to UniCredit S.p.A. by third-party entities belonging to the relevant third-party Investor's groups, with suitable credit rating and a capital structure that can guarantee that the repayment of the DSP/DPP does not depend, either in full or mainly, on the payment of ABSs issued by the SPVs Fino 1 Securitization S.r.l., Fino 2 Securitization S.r.l. and Onif Finance S.r.l., and deriving from the securitization transactions completed during 2017, have been classified under item "40. Financial assets at amortised cost" according to IFRS9, and measured on the basis of the estimated future cash flows. As at 31 December 2018 they amount to approximately €511 million, and include, for around €15 million, the positive effect (recognised in item "10. Interest income and similar revenues" of the 2018 income statement) connected with the reversal of the time value in respect to 31 December 2017. Strategic Bancassurance partnerships In June 2018 the holding UniCredit S.p.A. has announced that it has signed two exclusive strategic partnership agreements with Allianz and Generali respectively for the distribution of insurance products for individuals and small-businesses in Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Serbia, Slovakia and Slovenia. The long-term partnerships was implemented in the majority of the countries in scope, in compliance with the all local regulations, in the second half of 2018, predominantly focused on the Life and Non-Life products with Allianz and on the CPI (Credit Protection Insurance) products with Generali. The implementation of the partnership agreements for CPI in Bosnia and Herzegovina and Life and Non-Life in Serbia is planned in 2019. Contract renegotiation with ES Shared Service Center S.p.A. ES Shared Service Center S.p.A. ("ES SSC") is a joint venture established in 2012 by UniCredit Services S.C.p.A. (formerly UniCredit Business Integrated Solutions S.c.p.A.), with a 49% stake, and Hewlett Packard Enterprise with the remaining 51% stake. The company is responsible for providing services in the Human Resources area for the companies of the UniCredit group in Italy and Austria through a 15-year outsourcing contract. In line with the new HR Transformation programme led by UniCredit HR Transformation & Operations Office, a considerable review of the relationship with the company was negotiated, also with the aim to grant to UniCredit Services a "termination for convenience" in relation to the existing agreements in Italy and Austria. In line with the said agreements, UniCredit Services has exercised its termination right of the agreement related to Italy which is effective from 1 July 2018. The termination of the said agreement envisages also a post termination assistance in order to ensure the continuity of the services and to support the migration of the systems and the activities to UniCredit S.p.A. In this context and in execution of the reached agreement, UniCredit Services has exercised its "put option"; therefore starting from 19 December 2018 UniCredit Services ceased to be a shareholder of ES SSC. EBA confirms UniCredit Cashes treatment On 20 July 2018 the parent company UniCredit S.p.A. communicated to welcome the decision of EBA not to open an investigation based on the request made by Caius Capital and to confirm its 2012 position on the Cashes treatment. This validates UniCredit's previous statement that the treatment of the Cashes has been reviewed and affirmed by all the relevant authorities and that UniCredit ordinary shares are qualified as Common Equity Tier 1 Capital - CET1. UniCredit notified the competent market authorities of Caius Capital's actions in light of possible market abuse. Afterwards UniCredit has filed a complaint against Caius Capital and the Caius funds in the Court of Milan seeking compensation of damages in the amount of approximately €90 million stemming from Caius Capital's and the funds' actions against the Bank over the course of the last months with respect to the Cashes. During December 2018 UniCredit and Caius Capital announced that they have fully and finally settled their dispute in relation to the Cashes, and accordingly that UniCredit's complaint against Caius and the funds it manages has been withdrawn. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 63 FINO Project During 2018 Phase 2 of the FINO Project was completed, aimed to the progressive sale to third party investors of the ABS securities linked to the respective securitisation transactions of the receivables, in order to bring the total value of securities subscribed to by the parent company UniCredit S.p.A. below the 20% threshold. This Phase, already initiated in the last months of 2017, was completed at the end of January 2018 with the settlement and transfer to the purchasing investors of the ABS securities. The sales transactions resulted in a negative financial out-turn of around €5 million, attributable entirely to the transaction costs incurred, and documented in the UniCredit S.p.A.’s 2018 income statement. As at 31 December 2018, following the redemptions made, the Notes relating to the FINO Project owned by UniCredit S.p.A. amounted totally about €290 million (about €230 million recorded under item "30. Financial assets at fair value through other comprehensive income" pertaining to the Senior securities and in part to the Mezzanine securities, and €60 million recorded under item "20. c) other financial assets mandatorily at fair value" in connection with the remaining Mezzanine securities and all the Junior Notes). The receivables related to the Deferred Subscription Price (DSP/Deferred Purchase Price-DPP), owed to UniCredit S.p.A. by third-party entities belonging to the relevant third-party Investor's groups, with suitable credit rating and a capital structure that can guarantee that the repayment of the DSP/DPP does not depend, either in full or mainly, on the payment of ABSs issued by the SPVs Fino 1 Securitization S.r.l., Fino 2 Securitization S.r.l. and Onif Finance S.r.l., and deriving from the securitization transactions completed during 2017, have been classified under item "40. Financial assets at amortised cost" according to IFRS9, and measured on the basis of the estimated future cash flows. As at 31 December 2018 they amount to approximately €511 million, and include, for around €15 million, the positive effect (recognised in item "10. Interest income and similar revenues" of the 2018 income statement) connected with the reversal of the time value in respect to 31 December 2017. Strategic Bancassurance partnerships In June 2018 the holding UniCredit S.p.A. has announced that it has signed two exclusive strategic partnership agreements with Allianz and Generali respectively for the distribution of insurance products for individuals and small-businesses in Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Serbia, Slovakia and Slovenia. The long-term partnerships was implemented in the majority of the countries in scope, in compliance with the all local regulations, in the second half of 2018, predominantly focused on the Life and Non-Life products with Allianz and on the CPI (Credit Protection Insurance) products with Generali. The implementation of the partnership agreements for CPI in Bosnia and Herzegovina and Life and Non-Life in Serbia is planned in 2019. Contract renegotiation with ES Shared Service Center S.p.A. ES Shared Service Center S.p.A. ("ES SSC") is a joint venture established in 2012 by UniCredit Services S.C.p.A. (formerly UniCredit Business Integrated Solutions S.c.p.A.), with a 49% stake, and Hewlett Packard Enterprise with the remaining 51% stake. The company is responsible for providing services in the Human Resources area for the companies of the UniCredit group in Italy and Austria through a 15-year outsourcing contract. In line with the new HR Transformation programme led by UniCredit HR Transformation & Operations Office, a considerable review of the relationship with the company was negotiated, also with the aim to grant to UniCredit Services a "termination for convenience" in relation to the existing agreements in Italy and Austria. In line with the said agreements, UniCredit Services has exercised its termination right of the agreement related to Italy which is effective from 1 July 2018. The termination of the said agreement envisages also a post termination assistance in order to ensure the continuity of the services and to support the migration of the systems and the activities to UniCredit S.p.A. In this context and in execution of the reached agreement, UniCredit Services has exercised its "put option"; therefore starting from 19 December 2018 UniCredit Services ceased to be a shareholder of ES SSC. EBA confirms UniCredit Cashes treatment On 20 July 2018 the parent company UniCredit S.p.A. communicated to welcome the decision of EBA not to open an investigation based on the request made by Caius Capital and to confirm its 2012 position on the Cashes treatment. This validates UniCredit's previous statement that the treatment of the Cashes has been reviewed and affirmed by all the relevant authorities and that UniCredit ordinary shares are qualified as Common Equity Tier 1 Capital - CET1. UniCredit notified the competent market authorities of Caius Capital's actions in light of possible market abuse. Afterwards UniCredit has filed a complaint against Caius Capital and the Caius funds in the Court of Milan seeking compensation of damages in the amount of approximately €90 million stemming from Caius Capital's and the funds' actions against the Bank over the course of the last months with respect to the Cashes. During December 2018 UniCredit and Caius Capital announced that they have fully and finally settled their dispute in relation to the Cashes, and accordingly that UniCredit's complaint against Caius and the funds it manages has been withdrawn. Consolidated report on operations Other information 64 2018 Annual Report and Accounts · UniCredit Mediobanca S.p.A. - new consultation agreement As at 31 December 2018, UniCredit S.p.A. is the largest shareholder in Mediobanca Banca di Credito Finanziario S.p.A. (“Mediobanca”), holding No.74.5 million shares, corresponding to 8.4% of its share capital. Following the termination of the former Mediobanca shareholders’ agreement on 31 December 2018, the Parties, including UniCredit S.p.A., representing ca. 20.7% of Mediobanca share capital signed a new “consultation agreement between Mediobanca shareholders on 20 December 2018”; the new agreement is in force on 1 January 2019. The stake in Mediobanca is accounted as associate under significant influence, in continuity with the previous financial statements. Also following the subscription of the new consultation agreement, indeed UniCredit continues to hold significant influence on Mediobanca, as the new agreement does not introduce changes in the governance framework of Mediobanca so substantial to require an update in UniCredit classification and valuation criteria of such stake; UniCredit preserves its representation in the Board of Directors of Mediobanca and the participation in determining its financial and operating policies. Further information about the carrying amount, book value and market value of Mediobanca S.p.A. are contained in the Consolidated financial statements – Notes to consolidated accounts – Part B Consolidated balance sheet - Assets - Section 7 Equity investments Organisational model Significant organisational changes in 2018 On 9 May 2018, the Board of Directors approved the set-up of the Group Transformation Office structure, led by the Group Chief Transformation Officer (GCTO), reporting to the Chief Executive Officer and functionally, for business related initiatives, to the General Manager. The GCTO manages the transformation and ensuring meaningful change to reach the higher and measurable customer satisfaction and service quality, while improving cost efficiency. Organizational structure UniCredit group organization reflects an organizational and business model that maintains a divisional structure for the governance of the Corporate Investment Banking business/products and the business in the CEE Countries, as well as overall control over the COO functions, by ensuring the autonomy of the Countries/Banks for specific activities, in order to guarantee increased proximity to the client and faster decision-making processes. Specifically: • the Chief Executive Officer (CEO) maintains a direct supervision on the definition of Group Strategy, Risks Compliance, Human Resources, on the optimisation of structure costs and on the main operating activities; • the General Manager (GM) is responsible for all the business activities (Retail, Corporate, Global CIB, Fineco and relevant Countries where the Group is present) focusing on the ongoing development of clients services aiming to maximise the cross selling and leading the Group digital strategies, as well as defining the new service model of the Bank; • the Chief Operating Officer (COO), position covered by two co-Heads (co-Chief Operating Officers) who lead the oversight of the operational machine with a specific focus on Costs and on IT & Operations; in particular the two co-Heads are respectively responsible for Finance & Cost Management and for IT & Operations, Security and Internal Controls; • the CIB Division, position covered by two co-Heads directly reporting to General Manager, has a coverage role for the multinational customers ("Multinational"), for selected "Large corporate" clients with a strong potential demand for investment banking products, for the Financial and Institutional Groups (FIG) customers, “Global Family Office” and for the Global Lines "Global Transaction Banking (GTB)", "Global Financing & Advisory (F&A)", "Markets" and for internationalisation activities; • the CEE Division coordinates the Group’s activities in the countries of Central and Eastern Europe, aligning them to a single comprehensive business vision in the area; • Group Institutional Affairs and Sustainability is responsible for developing the relations with institutional counterparts of interest for Group activities; • Group Regulatory Affairs is responsible for managing the relationship with European Banking Supervisory Authorities (e.g. EBA, ECB) and Banca d’Italia; • as far as the Italian perimeter is concerned, the co-Heads Italy, directly reporting to the General Manager, are responsible for the definition of the business strategies of the “commercial banking” and the assignment of such strategies to the territories and to the client segments (Family, First, Business First, Corporate and Private Banking); • the functions called Competence Lines (Internal Audit, Planning, Finance & Administration, Risk Management, Legal, Compliance, Lending, Identity & Communications, Human Capital) oversee the guidance, coordination and control of UniCredit's activities and manage the related risks. Consolidated report on operations Other information 64 2018 Annual Report and Accounts · UniCredit Mediobanca S.p.A. - new consultation agreement As at 31 December 2018, UniCredit S.p.A. is the largest shareholder in Mediobanca Banca di Credito Finanziario S.p.A. (“Mediobanca”), holding No.74.5 million shares, corresponding to 8.4% of its share capital. Following the termination of the former Mediobanca shareholders’ agreement on 31 December 2018, the Parties, including UniCredit S.p.A., representing ca. 20.7% of Mediobanca share capital signed a new “consultation agreement between Mediobanca shareholders on 20 December 2018”; the new agreement is in force on 1 January 2019. The stake in Mediobanca is accounted as associate under significant influence, in continuity with the previous financial statements. Also following the subscription of the new consultation agreement, indeed UniCredit continues to hold significant influence on Mediobanca, as the new agreement does not introduce changes in the governance framework of Mediobanca so substantial to require an update in UniCredit classification and valuation criteria of such stake; UniCredit preserves its representation in the Board of Directors of Mediobanca and the participation in determining its financial and operating policies. Further information about the carrying amount, book value and market value of Mediobanca S.p.A. are contained in the Consolidated financial statements – Notes to consolidated accounts – Part B Consolidated balance sheet - Assets - Section 7 Equity investments Organisational model Significant organisational changes in 2018 On 9 May 2018, the Board of Directors approved the set-up of the Group Transformation Office structure, led by the Group Chief Transformation Officer (GCTO), reporting to the Chief Executive Officer and functionally, for business related initiatives, to the General Manager. The GCTO manages the transformation and ensuring meaningful change to reach the higher and measurable customer satisfaction and service quality, while improving cost efficiency. Organizational structure UniCredit group organization reflects an organizational and business model that maintains a divisional structure for the governance of the Corporate Investment Banking business/products and the business in the CEE Countries, as well as overall control over the COO functions, by ensuring the autonomy of the Countries/Banks for specific activities, in order to guarantee increased proximity to the client and faster decision-making processes. Specifically: • the Chief Executive Officer (CEO) maintains a direct supervision on the definition of Group Strategy, Risks Compliance, Human Resources, on the optimisation of structure costs and on the main operating activities; • the General Manager (GM) is responsible for all the business activities (Retail, Corporate, Global CIB, Fineco and relevant Countries where the Group is present) focusing on the ongoing development of clients services aiming to maximise the cross selling and leading the Group digital strategies, as well as defining the new service model of the Bank; • the Chief Operating Officer (COO), position covered by two co-Heads (co-Chief Operating Officers) who lead the oversight of the operational machine with a specific focus on Costs and on IT & Operations; in particular the two co-Heads are respectively responsible for Finance & Cost Management and for IT & Operations, Security and Internal Controls; • the CIB Division, position covered by two co-Heads directly reporting to General Manager, has a coverage role for the multinational customers ("Multinational"), for selected "Large corporate" clients with a strong potential demand for investment banking products, for the Financial and Institutional Groups (FIG) customers, “Global Family Office” and for the Global Lines "Global Transaction Banking (GTB)", "Global Financing & Advisory (F&A)", "Markets" and for internationalisation activities; • the CEE Division coordinates the Group’s activities in the countries of Central and Eastern Europe, aligning them to a single comprehensive business vision in the area; • Group Institutional Affairs and Sustainability is responsible for developing the relations with institutional counterparts of interest for Group activities; • Group Regulatory Affairs is responsible for managing the relationship with European Banking Supervisory Authorities (e.g. EBA, ECB) and Banca d’Italia; • as far as the Italian perimeter is concerned, the co-Heads Italy, directly reporting to the General Manager, are responsible for the definition of the business strategies of the “commercial banking” and the assignment of such strategies to the territories and to the client segments (Family, First, Business First, Corporate and Private Banking); • the functions called Competence Lines (Internal Audit, Planning, Finance & Administration, Risk Management, Legal, Compliance, Lending, Identity & Communications, Human Capital) oversee the guidance, coordination and control of UniCredit's activities and manage the related risks. Consolidated report on operations Other information 64 2018 Annual Report and Accounts · UniCredit Mediobanca S.p.A. - new consultation agreement As at 31 December 2018, UniCredit S.p.A. is the largest shareholder in Mediobanca Banca di Credito Finanziario S.p.A. (“Mediobanca”), holding No.74.5 million shares, corresponding to 8.4% of its share capital. Following the termination of the former Mediobanca shareholders’ agreement on 31 December 2018, the Parties, including UniCredit S.p.A., representing ca. 20.7% of Mediobanca share capital signed a new “consultation agreement between Mediobanca shareholders on 20 December 2018”; the new agreement is in force on 1 January 2019. The stake in Mediobanca is accounted as associate under significant influence, in continuity with the previous financial statements. Also following the subscription of the new consultation agreement, indeed UniCredit continues to hold significant influence on Mediobanca, as the new agreement does not introduce changes in the governance framework of Mediobanca so substantial to require an update in UniCredit classification and valuation criteria of such stake; UniCredit preserves its representation in the Board of Directors of Mediobanca and the participation in determining its financial and operating policies. Further information about the carrying amount, book value and market value of Mediobanca S.p.A. are contained in the Consolidated financial statements – Notes to consolidated accounts – Part B Consolidated balance sheet - Assets - Section 7 Equity investments Organisational model Significant organisational changes in 2018 On 9 May 2018, the Board of Directors approved the set-up of the Group Transformation Office structure, led by the Group Chief Transformation Officer (GCTO), reporting to the Chief Executive Officer and functionally, for business related initiatives, to the General Manager. The GCTO manages the transformation and ensuring meaningful change to reach the higher and measurable customer satisfaction and service quality, while improving cost efficiency. Organizational structure UniCredit group organization reflects an organizational and business model that maintains a divisional structure for the governance of the Corporate Investment Banking business/products and the business in the CEE Countries, as well as overall control over the COO functions, by ensuring the autonomy of the Countries/Banks for specific activities, in order to guarantee increased proximity to the client and faster decision-making processes. Specifically: • the Chief Executive Officer (CEO) maintains a direct supervision on the definition of Group Strategy, Risks Compliance, Human Resources, on the optimisation of structure costs and on the main operating activities; • the General Manager (GM) is responsible for all the business activities (Retail, Corporate, Global CIB, Fineco and relevant Countries where the Group is present) focusing on the ongoing development of clients services aiming to maximise the cross selling and leading the Group digital strategies, as well as defining the new service model of the Bank; • the Chief Operating Officer (COO), position covered by two co-Heads (co-Chief Operating Officers) who lead the oversight of the operational machine with a specific focus on Costs and on IT & Operations; in particular the two co-Heads are respectively responsible for Finance & Cost Management and for IT & Operations, Security and Internal Controls; • the CIB Division, position covered by two co-Heads directly reporting to General Manager, has a coverage role for the multinational customers ("Multinational"), for selected "Large corporate" clients with a strong potential demand for investment banking products, for the Financial and Institutional Groups (FIG) customers, “Global Family Office” and for the Global Lines "Global Transaction Banking (GTB)", "Global Financing & Advisory (F&A)", "Markets" and for internationalisation activities; • the CEE Division coordinates the Group’s activities in the countries of Central and Eastern Europe, aligning them to a single comprehensive business vision in the area; • Group Institutional Affairs and Sustainability is responsible for developing the relations with institutional counterparts of interest for Group activities; • Group Regulatory Affairs is responsible for managing the relationship with European Banking Supervisory Authorities (e.g. EBA, ECB) and Banca d’Italia; • as far as the Italian perimeter is concerned, the co-Heads Italy, directly reporting to the General Manager, are responsible for the definition of the business strategies of the “commercial banking” and the assignment of such strategies to the territories and to the client segments (Family, First, Business First, Corporate and Private Banking); • the functions called Competence Lines (Internal Audit, Planning, Finance & Administration, Risk Management, Legal, Compliance, Lending, Identity & Communications, Human Capital) oversee the guidance, coordination and control of UniCredit's activities and manage the related risks. Consolidated report on operations Other information 64 2018 Annual Report and Accounts · UniCredit Mediobanca S.p.A. - new consultation agreement As at 31 December 2018, UniCredit S.p.A. is the largest shareholder in Mediobanca Banca di Credito Finanziario S.p.A. (“Mediobanca”), holding No.74.5 million shares, corresponding to 8.4% of its share capital. Following the termination of the former Mediobanca shareholders’ agreement on 31 December 2018, the Parties, including UniCredit S.p.A., representing ca. 20.7% of Mediobanca share capital signed a new “consultation agreement between Mediobanca shareholders on 20 December 2018”; the new agreement is in force on 1 January 2019. The stake in Mediobanca is accounted as associate under significant influence, in continuity with the previous financial statements. Also following the subscription of the new consultation agreement, indeed UniCredit continues to hold significant influence on Mediobanca, as the new agreement does not introduce changes in the governance framework of Mediobanca so substantial to require an update in UniCredit classification and valuation criteria of such stake; UniCredit preserves its representation in the Board of Directors of Mediobanca and the participation in determining its financial and operating policies. Further information about the carrying amount, book value and market value of Mediobanca S.p.A. are contained in the Consolidated financial statements – Notes to consolidated accounts – Part B Consolidated balance sheet - Assets - Section 7 Equity investments Organisational model Significant organisational changes in 2018 On 9 May 2018, the Board of Directors approved the set-up of the Group Transformation Office structure, led by the Group Chief Transformation Officer (GCTO), reporting to the Chief Executive Officer and functionally, for business related initiatives, to the General Manager. The GCTO manages the transformation and ensuring meaningful change to reach the higher and measurable customer satisfaction and service quality, while improving cost efficiency. Organizational structure UniCredit group organization reflects an organizational and business model that maintains a divisional structure for the governance of the Corporate Investment Banking business/products and the business in the CEE Countries, as well as overall control over the COO functions, by ensuring the autonomy of the Countries/Banks for specific activities, in order to guarantee increased proximity to the client and faster decision-making processes. Specifically: • the Chief Executive Officer (CEO) maintains a direct supervision on the definition of Group Strategy, Risks Compliance, Human Resources, on the optimisation of structure costs and on the main operating activities; • the General Manager (GM) is responsible for all the business activities (Retail, Corporate, Global CIB, Fineco and relevant Countries where the Group is present) focusing on the ongoing development of clients services aiming to maximise the cross selling and leading the Group digital strategies, as well as defining the new service model of the Bank; • the Chief Operating Officer (COO), position covered by two co-Heads (co-Chief Operating Officers) who lead the oversight of the operational machine with a specific focus on Costs and on IT & Operations; in particular the two co-Heads are respectively responsible for Finance & Cost Management and for IT & Operations, Security and Internal Controls; • the CIB Division, position covered by two co-Heads directly reporting to General Manager, has a coverage role for the multinational customers ("Multinational"), for selected "Large corporate" clients with a strong potential demand for investment banking products, for the Financial and Institutional Groups (FIG) customers, “Global Family Office” and for the Global Lines "Global Transaction Banking (GTB)", "Global Financing & Advisory (F&A)", "Markets" and for internationalisation activities; • the CEE Division coordinates the Group’s activities in the countries of Central and Eastern Europe, aligning them to a single comprehensive business vision in the area; • Group Institutional Affairs and Sustainability is responsible for developing the relations with institutional counterparts of interest for Group activities; • Group Regulatory Affairs is responsible for managing the relationship with European Banking Supervisory Authorities (e.g. EBA, ECB) and Banca d’Italia; • as far as the Italian perimeter is concerned, the co-Heads Italy, directly reporting to the General Manager, are responsible for the definition of the business strategies of the “commercial banking” and the assignment of such strategies to the territories and to the client segments (Family, First, Business First, Corporate and Private Banking); • the functions called Competence Lines (Internal Audit, Planning, Finance & Administration, Risk Management, Legal, Compliance, Lending, Identity & Communications, Human Capital) oversee the guidance, coordination and control of UniCredit's activities and manage the related risks. Consolidated report on operations Other information 64 2018 Annual Report and Accounts · UniCredit Mediobanca S.p.A. - new consultation agreement As at 31 December 2018, UniCredit S.p.A. is the largest shareholder in Mediobanca Banca di Credito Finanziario S.p.A. (“Mediobanca”), holding No.74.5 million shares, corresponding to 8.4% of its share capital. Following the termination of the former Mediobanca shareholders’ agreement on 31 December 2018, the Parties, including UniCredit S.p.A., representing ca. 20.7% of Mediobanca share capital signed a new “consultation agreement between Mediobanca shareholders on 20 December 2018”; the new agreement is in force on 1 January 2019. The stake in Mediobanca is accounted as associate under significant influence, in continuity with the previous financial statements. Also following the subscription of the new consultation agreement, indeed UniCredit continues to hold significant influence on Mediobanca, as the new agreement does not introduce changes in the governance framework of Mediobanca so substantial to require an update in UniCredit classification and valuation criteria of such stake; UniCredit preserves its representation in the Board of Directors of Mediobanca and the participation in determining its financial and operating policies. Further information about the carrying amount, book value and market value of Mediobanca S.p.A. are contained in the Consolidated financial statements – Notes to consolidated accounts – Part B Consolidated balance sheet - Assets - Section 7 Equity investments Organisational model Significant organisational changes in 2018 On 9 May 2018, the Board of Directors approved the set-up of the Group Transformation Office structure, led by the Group Chief Transformation Officer (GCTO), reporting to the Chief Executive Officer and functionally, for business related initiatives, to the General Manager. The GCTO manages the transformation and ensuring meaningful change to reach the higher and measurable customer satisfaction and service quality, while improving cost efficiency. Organizational structure UniCredit group organization reflects an organizational and business model that maintains a divisional structure for the governance of the Corporate Investment Banking business/products and the business in the CEE Countries, as well as overall control over the COO functions, by ensuring the autonomy of the Countries/Banks for specific activities, in order to guarantee increased proximity to the client and faster decision-making processes. Specifically: • the Chief Executive Officer (CEO) maintains a direct supervision on the definition of Group Strategy, Risks Compliance, Human Resources, on the optimisation of structure costs and on the main operating activities; • the General Manager (GM) is responsible for all the business activities (Retail, Corporate, Global CIB, Fineco and relevant Countries where the Group is present) focusing on the ongoing development of clients services aiming to maximise the cross selling and leading the Group digital strategies, as well as defining the new service model of the Bank; • the Chief Operating Officer (COO), position covered by two co-Heads (co-Chief Operating Officers) who lead the oversight of the operational machine with a specific focus on Costs and on IT & Operations; in particular the two co-Heads are respectively responsible for Finance & Cost Management and for IT & Operations, Security and Internal Controls; • the CIB Division, position covered by two co-Heads directly reporting to General Manager, has a coverage role for the multinational customers ("Multinational"), for selected "Large corporate" clients with a strong potential demand for investment banking products, for the Financial and Institutional Groups (FIG) customers, “Global Family Office” and for the Global Lines "Global Transaction Banking (GTB)", "Global Financing & Advisory (F&A)", "Markets" and for internationalisation activities; • the CEE Division coordinates the Group’s activities in the countries of Central and Eastern Europe, aligning them to a single comprehensive business vision in the area; • Group Institutional Affairs and Sustainability is responsible for developing the relations with institutional counterparts of interest for Group activities; • Group Regulatory Affairs is responsible for managing the relationship with European Banking Supervisory Authorities (e.g. EBA, ECB) and Banca d’Italia; • as far as the Italian perimeter is concerned, the co-Heads Italy, directly reporting to the General Manager, are responsible for the definition of the business strategies of the “commercial banking” and the assignment of such strategies to the territories and to the client segments (Family, First, Business First, Corporate and Private Banking); • the functions called Competence Lines (Internal Audit, Planning, Finance & Administration, Risk Management, Legal, Compliance, Lending, Identity & Communications, Human Capital) oversee the guidance, coordination and control of UniCredit's activities and manage the related risks. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 65 Conversion of DTAs into tax credits In respect of financial year 2017, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits (pursuant to Art.2, paragraph 55, of Law Decree No.225 of 29 December 2010), were not verified, since the Group legal entities having a stock of Convertible DTAs registered a net profit in their separate financial statements. In order to preserve for the future the regime of conversion of DTAs into tax credits, and in order to overcome the issues raised by the European Commission in connection to the application of State Aid rules, Art.11 of Law Decree of 3 May 2016 No.59 (so-called "Banks Decree", converted into Law 30 June 2016 No.119), introduced the possibility, starting from 2016 till 2030, to elect for the payment of an annual fee equal to 1.5% of an aggregate amount deriving from the difference between: • the increase in convertible DTAs recognised at the end of the fiscal year and the convertible DTAs existing as at 31 December 2007, for IRES tax, and as at 31 December 2012 for IRAP tax, taking into account the amounts already converted into tax credits; • taxes: - IRES paid by tax group starting from 1 January 2008; - IRAP paid registered starting from 1 January 2013 by Legal Entities included in Tax Group with convertible DTAs; - substitute taxes that generated convertible DTAs. The fee due for financial year 2018 has been paid on 27 June 2018 for an overall amount of €115.8 million relating to the whole Italian Tax Group, out of which €111 million for UniCredit S.p.A., €4.5 million for UniCredit Leasing S.p.A. and €0.3 million for UniCredit Factoring S.p.A. Certifications and other communications With reference to the “Rules of Markets organised and managed by Borsa Italiana S.p.A.” dated 3 October 2011 (Title 2.6 “Obligations of issuers”, Section 2.6.2. “Disclosure requirements”, paragraph 10) the satisfaction of conditions provided by Section 36 of Consob Regulation No.16191/2007, letters a), b) and c) is hereby certified. With reference to paragraph 8 of Art.5 - “Public information on transactions with related parties" of Consob Regulation containing provisions relating to transactions with related parties (adopted by Consob with Resolution No.17221 of 12 March 2010, as subsequently amended by Resolution No.17389 of 23 June 2010), it should be noted that: a) according to the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA” adopted by the Board of Directors of UniCredit S.p.A. on 6 February 2019, and published on the website www.unicreditgroup.eu, during 2018 the Bank’s Presidio Unico received no reports of transactions of greater importance ended in the period; b) during 2018, no transactions with related parties as defined by article 2427, paragraph 22-bis of the Civil Code were conducted, under different conditions from normal market conditions and materially affecting the Group’s financial and economic situation; c) during 2018, there were no changes or developments in the individual transactions with related parties already described in the latest annual report that had a material effect on the Group’s financial position or results during the reference period. For more information on related-party transactions refer to Notes to the consolidated accounts - Part H. Information on risks For a complete description of the risks and uncertainties that the Group must face under the current market conditions, refer to the appropriate section in the Notes to the consolidated accounts Part E. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 65 Conversion of DTAs into tax credits In respect of financial year 2017, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits (pursuant to Art.2, paragraph 55, of Law Decree No.225 of 29 December 2010), were not verified, since the Group legal entities having a stock of Convertible DTAs registered a net profit in their separate financial statements. In order to preserve for the future the regime of conversion of DTAs into tax credits, and in order to overcome the issues raised by the European Commission in connection to the application of State Aid rules, Art.11 of Law Decree of 3 May 2016 No.59 (so-called "Banks Decree", converted into Law 30 June 2016 No.119), introduced the possibility, starting from 2016 till 2030, to elect for the payment of an annual fee equal to 1.5% of an aggregate amount deriving from the difference between: • the increase in convertible DTAs recognised at the end of the fiscal year and the convertible DTAs existing as at 31 December 2007, for IRES tax, and as at 31 December 2012 for IRAP tax, taking into account the amounts already converted into tax credits; • taxes: - IRES paid by tax group starting from 1 January 2008; - IRAP paid registered starting from 1 January 2013 by Legal Entities included in Tax Group with convertible DTAs; - substitute taxes that generated convertible DTAs. The fee due for financial year 2018 has been paid on 27 June 2018 for an overall amount of €115.8 million relating to the whole Italian Tax Group, out of which €111 million for UniCredit S.p.A., €4.5 million for UniCredit Leasing S.p.A. and €0.3 million for UniCredit Factoring S.p.A. Certifications and other communications With reference to the “Rules of Markets organised and managed by Borsa Italiana S.p.A.” dated 3 October 2011 (Title 2.6 “Obligations of issuers”, Section 2.6.2. “Disclosure requirements”, paragraph 10) the satisfaction of conditions provided by Section 36 of Consob Regulation No.16191/2007, letters a), b) and c) is hereby certified. With reference to paragraph 8 of Art.5 - “Public information on transactions with related parties" of Consob Regulation containing provisions relating to transactions with related parties (adopted by Consob with Resolution No.17221 of 12 March 2010, as subsequently amended by Resolution No.17389 of 23 June 2010), it should be noted that: a) according to the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA” adopted by the Board of Directors of UniCredit S.p.A. on 6 February 2019, and published on the website www.unicreditgroup.eu, during 2018 the Bank’s Presidio Unico received no reports of transactions of greater importance ended in the period; b) during 2018, no transactions with related parties as defined by article 2427, paragraph 22-bis of the Civil Code were conducted, under different conditions from normal market conditions and materially affecting the Group’s financial and economic situation; c) during 2018, there were no changes or developments in the individual transactions with related parties already described in the latest annual report that had a material effect on the Group’s financial position or results during the reference period. For more information on related-party transactions refer to Notes to the consolidated accounts - Part H. Information on risks For a complete description of the risks and uncertainties that the Group must face under the current market conditions, refer to the appropriate section in the Notes to the consolidated accounts Part E. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 65 Conversion of DTAs into tax credits In respect of financial year 2017, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits (pursuant to Art.2, paragraph 55, of Law Decree No.225 of 29 December 2010), were not verified, since the Group legal entities having a stock of Convertible DTAs registered a net profit in their separate financial statements. In order to preserve for the future the regime of conversion of DTAs into tax credits, and in order to overcome the issues raised by the European Commission in connection to the application of State Aid rules, Art.11 of Law Decree of 3 May 2016 No.59 (so-called "Banks Decree", converted into Law 30 June 2016 No.119), introduced the possibility, starting from 2016 till 2030, to elect for the payment of an annual fee equal to 1.5% of an aggregate amount deriving from the difference between: • the increase in convertible DTAs recognised at the end of the fiscal year and the convertible DTAs existing as at 31 December 2007, for IRES tax, and as at 31 December 2012 for IRAP tax, taking into account the amounts already converted into tax credits; • taxes: - IRES paid by tax group starting from 1 January 2008; - IRAP paid registered starting from 1 January 2013 by Legal Entities included in Tax Group with convertible DTAs; - substitute taxes that generated convertible DTAs. The fee due for financial year 2018 has been paid on 27 June 2018 for an overall amount of €115.8 million relating to the whole Italian Tax Group, out of which €111 million for UniCredit S.p.A., €4.5 million for UniCredit Leasing S.p.A. and €0.3 million for UniCredit Factoring S.p.A. Certifications and other communications With reference to the “Rules of Markets organised and managed by Borsa Italiana S.p.A.” dated 3 October 2011 (Title 2.6 “Obligations of issuers”, Section 2.6.2. “Disclosure requirements”, paragraph 10) the satisfaction of conditions provided by Section 36 of Consob Regulation No.16191/2007, letters a), b) and c) is hereby certified. With reference to paragraph 8 of Art.5 - “Public information on transactions with related parties" of Consob Regulation containing provisions relating to transactions with related parties (adopted by Consob with Resolution No.17221 of 12 March 2010, as subsequently amended by Resolution No.17389 of 23 June 2010), it should be noted that: a) according to the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA” adopted by the Board of Directors of UniCredit S.p.A. on 6 February 2019, and published on the website www.unicreditgroup.eu, during 2018 the Bank’s Presidio Unico received no reports of transactions of greater importance ended in the period; b) during 2018, no transactions with related parties as defined by article 2427, paragraph 22-bis of the Civil Code were conducted, under different conditions from normal market conditions and materially affecting the Group’s financial and economic situation; c) during 2018, there were no changes or developments in the individual transactions with related parties already described in the latest annual report that had a material effect on the Group’s financial position or results during the reference period. For more information on related-party transactions refer to Notes to the consolidated accounts - Part H. Information on risks For a complete description of the risks and uncertainties that the Group must face under the current market conditions, refer to the appropriate section in the Notes to the consolidated accounts Part E. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 65 Conversion of DTAs into tax credits In respect of financial year 2017, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits (pursuant to Art.2, paragraph 55, of Law Decree No.225 of 29 December 2010), were not verified, since the Group legal entities having a stock of Convertible DTAs registered a net profit in their separate financial statements. In order to preserve for the future the regime of conversion of DTAs into tax credits, and in order to overcome the issues raised by the European Commission in connection to the application of State Aid rules, Art.11 of Law Decree of 3 May 2016 No.59 (so-called "Banks Decree", converted into Law 30 June 2016 No.119), introduced the possibility, starting from 2016 till 2030, to elect for the payment of an annual fee equal to 1.5% of an aggregate amount deriving from the difference between: • the increase in convertible DTAs recognised at the end of the fiscal year and the convertible DTAs existing as at 31 December 2007, for IRES tax, and as at 31 December 2012 for IRAP tax, taking into account the amounts already converted into tax credits; • taxes: - IRES paid by tax group starting from 1 January 2008; - IRAP paid registered starting from 1 January 2013 by Legal Entities included in Tax Group with convertible DTAs; - substitute taxes that generated convertible DTAs. The fee due for financial year 2018 has been paid on 27 June 2018 for an overall amount of €115.8 million relating to the whole Italian Tax Group, out of which €111 million for UniCredit S.p.A., €4.5 million for UniCredit Leasing S.p.A. and €0.3 million for UniCredit Factoring S.p.A. Certifications and other communications With reference to the “Rules of Markets organised and managed by Borsa Italiana S.p.A.” dated 3 October 2011 (Title 2.6 “Obligations of issuers”, Section 2.6.2. “Disclosure requirements”, paragraph 10) the satisfaction of conditions provided by Section 36 of Consob Regulation No.16191/2007, letters a), b) and c) is hereby certified. With reference to paragraph 8 of Art.5 - “Public information on transactions with related parties" of Consob Regulation containing provisions relating to transactions with related parties (adopted by Consob with Resolution No.17221 of 12 March 2010, as subsequently amended by Resolution No.17389 of 23 June 2010), it should be noted that: a) according to the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA” adopted by the Board of Directors of UniCredit S.p.A. on 6 February 2019, and published on the website www.unicreditgroup.eu, during 2018 the Bank’s Presidio Unico received no reports of transactions of greater importance ended in the period; b) during 2018, no transactions with related parties as defined by article 2427, paragraph 22-bis of the Civil Code were conducted, under different conditions from normal market conditions and materially affecting the Group’s financial and economic situation; c) during 2018, there were no changes or developments in the individual transactions with related parties already described in the latest annual report that had a material effect on the Group’s financial position or results during the reference period. For more information on related-party transactions refer to Notes to the consolidated accounts - Part H. Information on risks For a complete description of the risks and uncertainties that the Group must face under the current market conditions, refer to the appropriate section in the Notes to the consolidated accounts Part E. Consolidated report on operations Other information UniCredit ·2018 Annual Report and Accounts 65 Conversion of DTAs into tax credits In respect of financial year 2017, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits (pursuant to Art.2, paragraph 55, of Law Decree No.225 of 29 December 2010), were not verified, since the Group legal entities having a stock of Convertible DTAs registered a net profit in their separate financial statements. In order to preserve for the future the regime of conversion of DTAs into tax credits, and in order to overcome the issues raised by the European Commission in connection to the application of State Aid rules, Art.11 of Law Decree of 3 May 2016 No.59 (so-called "Banks Decree", converted into Law 30 June 2016 No.119), introduced the possibility, starting from 2016 till 2030, to elect for the payment of an annual fee equal to 1.5% of an aggregate amount deriving from the difference between: • the increase in convertible DTAs recognised at the end of the fiscal year and the convertible DTAs existing as at 31 December 2007, for IRES tax, and as at 31 December 2012 for IRAP tax, taking into account the amounts already converted into tax credits; • taxes: - IRES paid by tax group starting from 1 January 2008; - IRAP paid registered starting from 1 January 2013 by Legal Entities included in Tax Group with convertible DTAs; - substitute taxes that generated convertible DTAs. The fee due for financial year 2018 has been paid on 27 June 2018 for an overall amount of €115.8 million relating to the whole Italian Tax Group, out of which €111 million for UniCredit S.p.A., €4.5 million for UniCredit Leasing S.p.A. and €0.3 million for UniCredit Factoring S.p.A. Certifications and other communications With reference to the “Rules of Markets organised and managed by Borsa Italiana S.p.A.” dated 3 October 2011 (Title 2.6 “Obligations of issuers”, Section 2.6.2. “Disclosure requirements”, paragraph 10) the satisfaction of conditions provided by Section 36 of Consob Regulation No.16191/2007, letters a), b) and c) is hereby certified. With reference to paragraph 8 of Art.5 - “Public information on transactions with related parties" of Consob Regulation containing provisions relating to transactions with related parties (adopted by Consob with Resolution No.17221 of 12 March 2010, as subsequently amended by Resolution No.17389 of 23 June 2010), it should be noted that: a) according to the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA” adopted by the Board of Directors of UniCredit S.p.A. on 6 February 2019, and published on the website www.unicreditgroup.eu, during 2018 the Bank’s Presidio Unico received no reports of transactions of greater importance ended in the period; b) during 2018, no transactions with related parties as defined by article 2427, paragraph 22-bis of the Civil Code were conducted, under different conditions from normal market conditions and materially affecting the Group’s financial and economic situation; c) during 2018, there were no changes or developments in the individual transactions with related parties already described in the latest annual report that had a material effect on the Group’s financial position or results during the reference period. For more information on related-party transactions refer to Notes to the consolidated accounts - Part H. Information on risks For a complete description of the risks and uncertainties that the Group must face under the current market conditions, refer to the appropriate section in the Notes to the consolidated accounts Part E. Consolidated report on operations Subsequent events and outlook 66 2018 Annual Report and Accounts · UniCredit Subsequent events and outlook Subsequent events8 On 9 January 2019 the parent company UniCredit S.p.A. successfully issued USD 2.5 billion Fixed Rate Notes and USD 0.5 billion Floating Rate Notes, both due on 14 January 2022 (collectively, the "Notes") for a total combined amount of USD 3 billion. This transaction is the third on the Senior Non-Preferred market by UniCredit S.p.A. following its inaugural EUR 1.5 billion 5-year issue in January 2018 and the USD 3 billion 5-year issue executed in November 2018. The bonds will be eligible for the forthcoming of Total Loss Absorbing Capacity (TLAC) requirement improving the subordination ratio by approx. 72bps. The transaction is part of UniCredit's TLAC funding plan for which the company had announced planned issuances of EUR 3 to 5 billion by the end of first quarter 2019 during its third quarter 2018 results presentation. On 16 January 2018 UniCredit group issued a Statement with reference to recent media reporting on the non-binding recommendation of the ECB to all banks directly supervised by the Single Supervisory Mechanism (SSM) regarding the coverage of the secured and unsecured NPL stock: •since third quarter 2016, UniCredit has reduced its NPE portfolio by more than €36 billion (as of third quarter 2018). As a consequence, its Corebank NPE ratio was 4.3% in Q3 2018, in line with its EBA sample peers and it has committed to fully run off its Non-Core portfolio by 2021. Inaddition, UniCredit has a 62% NPE coverage ratio that is evidenced as highest in the sample of Eurozone banks in the recent EBA stress testsunder adverse conditions. Consequently, UniCredit considers its NPE coverage fully adequate;•thanks to such decisive actions and taking into account the NPE portfolio dynamics, UniCredit estimates that the regulatory dialogue with the ECBcould lead to a low annual single digit basis point impact on its CET1 ratio for any additional coverage of its NPE stock, for each year up to 2024,date mentioned by the ECB in its communication.On 18 January 2019 UniCredit Services S.C.p.A., the service company of the UniCredit group, informed having been admitted to the Italian cooperative compliance regime, with the Revenue Agency, pursuant to Legislative Decree No.128/2015, with effect from 2017. This follows the admittance of UniCredit S.p.A. and FinecoBank S.p.A. by the Agency in 2017, with effect from 2016, as the first banks to be admitted. It further strengthens the Group’s standing, with three companies now admitted, among the significant taxpayers operating as part of the regime. This is a fundamental milestone showing the strength of UniCredit group’s accountability process, an important element of our fair and efficient fiscal strategy, also considering that UniCredit group is already joining the tax cooperative compliance schemes in other countries where it is present. On 6 February 2019 UniCredit group announced a reorganisation project of its senior management team as it begins the development of its 2020-23 strategic plan, which will be presented to the markets in London on 3 December 2019. For further details, refer to the information provided in the following section "Corporate Governance" about the reorganisation of the senior management team. 8 Up to the date of approval by the Board of Directors’ Meeting of 6 February 2019 which, on the same date, authorised the publication also in accordance with IAS10. Consolidated report on operations Subsequent events and outlook 66 2018 Annual Report and Accounts · UniCredit Subsequent events and outlook Subsequent events8 On 9 January 2019 the parent company UniCredit S.p.A. successfully issued USD 2.5 billion Fixed Rate Notes and USD 0.5 billion Floating Rate Notes, both due on 14 January 2022 (collectively, the "Notes") for a total combined amount of USD 3 billion. This transaction is the third on the Senior Non-Preferred market by UniCredit S.p.A. following its inaugural EUR 1.5 billion 5-year issue in January 2018 and the USD 3 billion 5-year issue executed in November 2018. The bonds will be eligible for the forthcoming of Total Loss Absorbing Capacity (TLAC) requirement improving the subordination ratio by approx. 72bps. The transaction is part of UniCredit's TLAC funding plan for which the company had announced planned issuances of EUR 3 to 5 billion by the end of first quarter 2019 during its third quarter 2018 results presentation. On 16 January 2018 UniCredit group issued a Statement with reference to recent media reporting on the non-binding recommendation of the ECB to all banks directly supervised by the Single Supervisory Mechanism (SSM) regarding the coverage of the secured and unsecured NPL stock: •since third quarter 2016, UniCredit has reduced its NPE portfolio by more than €36 billion (as of third quarter 2018). As a consequence, its Corebank NPE ratio was 4.3% in Q3 2018, in line with its EBA sample peers and it has committed to fully run off its Non-Core portfolio by 2021. Inaddition, UniCredit has a 62% NPE coverage ratio that is evidenced as highest in the sample of Eurozone banks in the recent EBA stress testsunder adverse conditions. Consequently, UniCredit considers its NPE coverage fully adequate;•thanks to such decisive actions and taking into account the NPE portfolio dynamics, UniCredit estimates that the regulatory dialogue with the ECBcould lead to a low annual single digit basis point impact on its CET1 ratio for any additional coverage of its NPE stock, for each year up to 2024,date mentioned by the ECB in its communication.On 18 January 2019 UniCredit Services S.C.p.A., the service company of the UniCredit group, informed having been admitted to the Italian cooperative compliance regime, with the Revenue Agency, pursuant to Legislative Decree No.128/2015, with effect from 2017. This follows the admittance of UniCredit S.p.A. and FinecoBank S.p.A. by the Agency in 2017, with effect from 2016, as the first banks to be admitted. It further strengthens the Group’s standing, with three companies now admitted, among the significant taxpayers operating as part of the regime. This is a fundamental milestone showing the strength of UniCredit group’s accountability process, an important element of our fair and efficient fiscal strategy, also considering that UniCredit group is already joining the tax cooperative compliance schemes in other countries where it is present. On 6 February 2019 UniCredit group announced a reorganisation project of its senior management team as it begins the development of its 2020-23 strategic plan, which will be presented to the markets in London on 3 December 2019. For further details, refer to the information provided in the following section "Corporate Governance" about the reorganisation of the senior management team. 8 Up to the date of approval by the Board of Directors’ Meeting of 6 February 2019 which, on the same date, authorised the publication also in accordance with IAS10. Consolidated report on operations Subsequent events and outlook 66 2018 Annual Report and Accounts · UniCredit Subsequent events and outlook Subsequent events8 On 9 January 2019 the parent company UniCredit S.p.A. successfully issued USD 2.5 billion Fixed Rate Notes and USD 0.5 billion Floating Rate Notes, both due on 14 January 2022 (collectively, the "Notes") for a total combined amount of USD 3 billion. This transaction is the third on the Senior Non-Preferred market by UniCredit S.p.A. following its inaugural EUR 1.5 billion 5-year issue in January 2018 and the USD 3 billion 5-year issue executed in November 2018. The bonds will be eligible for the forthcoming of Total Loss Absorbing Capacity (TLAC) requirement improving the subordination ratio by approx. 72bps. The transaction is part of UniCredit's TLAC funding plan for which the company had announced planned issuances of EUR 3 to 5 billion by the end of first quarter 2019 during its third quarter 2018 results presentation. On 16 January 2018 UniCredit group issued a Statement with reference to recent media reporting on the non-binding recommendation of the ECB to all banks directly supervised by the Single Supervisory Mechanism (SSM) regarding the coverage of the secured and unsecured NPL stock: •since third quarter 2016, UniCredit has reduced its NPE portfolio by more than €36 billion (as of third quarter 2018). As a consequence, its Corebank NPE ratio was 4.3% in Q3 2018, in line with its EBA sample peers and it has committed to fully run off its Non-Core portfolio by 2021. Inaddition, UniCredit has a 62% NPE coverage ratio that is evidenced as highest in the sample of Eurozone banks in the recent EBA stress testsunder adverse conditions. Consequently, UniCredit considers its NPE coverage fully adequate;•thanks to such decisive actions and taking into account the NPE portfolio dynamics, UniCredit estimates that the regulatory dialogue with the ECBcould lead to a low annual single digit basis point impact on its CET1 ratio for any additional coverage of its NPE stock, for each year up to 2024,date mentioned by the ECB in its communication.On 18 January 2019 UniCredit Services S.C.p.A., the service company of the UniCredit group, informed having been admitted to the Italian cooperative compliance regime, with the Revenue Agency, pursuant to Legislative Decree No.128/2015, with effect from 2017. This follows the admittance of UniCredit S.p.A. and FinecoBank S.p.A. by the Agency in 2017, with effect from 2016, as the first banks to be admitted. It further strengthens the Group’s standing, with three companies now admitted, among the significant taxpayers operating as part of the regime. This is a fundamental milestone showing the strength of UniCredit group’s accountability process, an important element of our fair and efficient fiscal strategy, also considering that UniCredit group is already joining the tax cooperative compliance schemes in other countries where it is present. On 6 February 2019 UniCredit group announced a reorganisation project of its senior management team as it begins the development of its 2020-23 strategic plan, which will be presented to the markets in London on 3 December 2019. For further details, refer to the information provided in the following section "Corporate Governance" about the reorganisation of the senior management team. 8 Up to the date of approval by the Board of Directors’ Meeting of 6 February 2019 which, on the same date, authorised the publication also in accordance with IAS10. Consolidated report on operations Subsequent events and outlook 66 2018 Annual Report and Accounts · UniCredit Subsequent events and outlook Subsequent events8 On 9 January 2019 the parent company UniCredit S.p.A. successfully issued USD 2.5 billion Fixed Rate Notes and USD 0.5 billion Floating Rate Notes, both due on 14 January 2022 (collectively, the "Notes") for a total combined amount of USD 3 billion. This transaction is the third on the Senior Non-Preferred market by UniCredit S.p.A. following its inaugural EUR 1.5 billion 5-year issue in January 2018 and the USD 3 billion 5-year issue executed in November 2018. The bonds will be eligible for the forthcoming of Total Loss Absorbing Capacity (TLAC) requirement improving the subordination ratio by approx. 72bps. The transaction is part of UniCredit's TLAC funding plan for which the company had announced planned issuances of EUR 3 to 5 billion by the end of first quarter 2019 during its third quarter 2018 results presentation. On 16 January 2018 UniCredit group issued a Statement with reference to recent media reporting on the non-binding recommendation of the ECB to all banks directly supervised by the Single Supervisory Mechanism (SSM) regarding the coverage of the secured and unsecured NPL stock: •since third quarter 2016, UniCredit has reduced its NPE portfolio by more than €36 billion (as of third quarter 2018). As a consequence, its Corebank NPE ratio was 4.3% in Q3 2018, in line with its EBA sample peers and it has committed to fully run off its Non-Core portfolio by 2021. Inaddition, UniCredit has a 62% NPE coverage ratio that is evidenced as highest in the sample of Eurozone banks in the recent EBA stress testsunder adverse conditions. Consequently, UniCredit considers its NPE coverage fully adequate;•thanks to such decisive actions and taking into account the NPE portfolio dynamics, UniCredit estimates that the regulatory dialogue with the ECBcould lead to a low annual single digit basis point impact on its CET1 ratio for any additional coverage of its NPE stock, for each year up to 2024,date mentioned by the ECB in its communication.On 18 January 2019 UniCredit Services S.C.p.A., the service company of the UniCredit group, informed having been admitted to the Italian cooperative compliance regime, with the Revenue Agency, pursuant to Legislative Decree No.128/2015, with effect from 2017. This follows the admittance of UniCredit S.p.A. and FinecoBank S.p.A. by the Agency in 2017, with effect from 2016, as the first banks to be admitted. It further strengthens the Group’s standing, with three companies now admitted, among the significant taxpayers operating as part of the regime. This is a fundamental milestone showing the strength of UniCredit group’s accountability process, an important element of our fair and efficient fiscal strategy, also considering that UniCredit group is already joining the tax cooperative compliance schemes in other countries where it is present. On 6 February 2019 UniCredit group announced a reorganisation project of its senior management team as it begins the development of its 2020-23 strategic plan, which will be presented to the markets in London on 3 December 2019. For further details, refer to the information provided in the following section "Corporate Governance" about the reorganisation of the senior management team. 8 Up to the date of approval by the Board of Directors’ Meeting of 6 February 2019 which, on the same date, authorised the publication also in accordance with IAS10. Consolidated report on operations Subsequent events and outlook 66 2018 Annual Report and Accounts · UniCredit Subsequent events and outlook Subsequent events8 On 9 January 2019 the parent company UniCredit S.p.A. successfully issued USD 2.5 billion Fixed Rate Notes and USD 0.5 billion Floating Rate Notes, both due on 14 January 2022 (collectively, the "Notes") for a total combined amount of USD 3 billion. This transaction is the third on the Senior Non-Preferred market by UniCredit S.p.A. following its inaugural EUR 1.5 billion 5-year issue in January 2018 and the USD 3 billion 5-year issue executed in November 2018. The bonds will be eligible for the forthcoming of Total Loss Absorbing Capacity (TLAC) requirement improving the subordination ratio by approx. 72bps. The transaction is part of UniCredit's TLAC funding plan for which the company had announced planned issuances of EUR 3 to 5 billion by the end of first quarter 2019 during its third quarter 2018 results presentation. On 16 January 2018 UniCredit group issued a Statement with reference to recent media reporting on the non-binding recommendation of the ECB to all banks directly supervised by the Single Supervisory Mechanism (SSM) regarding the coverage of the secured and unsecured NPL stock: •since third quarter 2016, UniCredit has reduced its NPE portfolio by more than €36 billion (as of third quarter 2018). As a consequence, its Corebank NPE ratio was 4.3% in Q3 2018, in line with its EBA sample peers and it has committed to fully run off its Non-Core portfolio by 2021. Inaddition, UniCredit has a 62% NPE coverage ratio that is evidenced as highest in the sample of Eurozone banks in the recent EBA stress testsunder adverse conditions. Consequently, UniCredit considers its NPE coverage fully adequate;•thanks to such decisive actions and taking into account the NPE portfolio dynamics, UniCredit estimates that the regulatory dialogue with the ECBcould lead to a low annual single digit basis point impact on its CET1 ratio for any additional coverage of its NPE stock, for each year up to 2024,date mentioned by the ECB in its communication.On 18 January 2019 UniCredit Services S.C.p.A., the service company of the UniCredit group, informed having been admitted to the Italian cooperative compliance regime, with the Revenue Agency, pursuant to Legislative Decree No.128/2015, with effect from 2017. This follows the admittance of UniCredit S.p.A. and FinecoBank S.p.A. by the Agency in 2017, with effect from 2016, as the first banks to be admitted. It further strengthens the Group’s standing, with three companies now admitted, among the significant taxpayers operating as part of the regime. This is a fundamental milestone showing the strength of UniCredit group’s accountability process, an important element of our fair and efficient fiscal strategy, also considering that UniCredit group is already joining the tax cooperative compliance schemes in other countries where it is present. On 6 February 2019 UniCredit group announced a reorganisation project of its senior management team as it begins the development of its 2020-23 strategic plan, which will be presented to the markets in London on 3 December 2019. For further details, refer to the information provided in the following section "Corporate Governance" about the reorganisation of the senior management team. 8 Up to the date of approval by the Board of Directors’ Meeting of 6 February 2019 which, on the same date, authorised the publication also in accordance with IAS10. Consolidated report on operations Subsequent events and outlook UniCredit ·2018 Annual Report and Accounts 67 Outlook Global growth momentum has eased from the cyclical high reached in 2017 and we forecast that global GDP growth will ease to 3.4% in 2019 (down from 3.6% in 2018), followed by a more-pronounced slowdown to 2.7% in 2020. One of the most likely sources of weakness in 2020 will be the United States, due to the fact that it is at a very late stage in its business cycle. Still, risks are now tilted towards more front-loaded deterioration in global demand, in comparison to the initial expectations. China plays, and will continue to play, a critical role. The growth trajectory of this Country will remain on a structurally slowing trend, but it is plausible that the slowdown may exceed the current pace of deceleration. Economic growth in emerging markets is forecasted to slow as a result of the cyclical downturn in advanced economies and a tightening of financial conditions, but a generalized crisis in Emerging Markets remains unlikely in the near future The Eurozone’s growth outlook weakened further at the turn of 2018, primarily in the wake of external factors, especially a steep loss of momentum in global trade. This seems to mainly reflect heightened uncertainty about protectionist policies and the outcome of Brexit negotiations, that has weighed on sentiment and investment decisions globally. Domestic fundamentals have generally developed positively, especially with regard to the labor market, but economic activity in the Euro Area hardly will not suffer the expected slowdown in global growth. After GDP growth averaged 1.8% in 2018, we forecast that it will decelerate to 1.4% in 2019, with risks tilted to the downside. Among eurozone countries, weakness has been more pronounced in Italy, which slipped into a technical recession in the second half of 2018. Growth deterioration has been driven by external and domestic factors. In particular, a decline from annual growth of 1.6% in 2017 to slightly less than 1.0% in 2018 was due to an abrupt adjustment in Italian exports and the slowdown of the world trade in the first half of the year. While domestic demand turned out to be particularly weak starting from the third quarter of 2018, probably due to increasing domestic uncertainty. We expect Italy’s GDP to expand by 0.5% in 2019, with our forecast underpinning a return to modest, positive quarterly growth, supported by a recovery in business sentiment and a pickup in both external and domestic demand. Therefore the main short-term risk Italy now faces is a stronger-than-initially-expected deterioration in global trade. In contrast, following the positive resolution of the budget discussion between the government and the European Commission in December, internal demand may get some relief from lower domestic uncertainty and from the still-limited transmission of the 10Y BTP-Bund spread widening into higher lending rates for the private sector. Still, investments in equipment are expected to be particularly affected by the slowdown in global demand. Expectations of a continuation of a modest recovery in domestic demand will continue to support ongoing credit growth in Italy, however, further acceleration in lending growth to the private sector is expected to be constrained. Headline inflation has fluctuated around 2% for most of second half of 2018 but has entered 2019 on a downward trend, mainly reflecting a fall in oil prices. Core inflation has been much less volatile and has remained stuck around 1% over the last couple of years. Muted underlying price pressure, inherent in a weakening growth outlook, is likely to force the European Central Bank (ECB) to delay its plan to start normalizing interest-rate policy this year, namely the beginning of a phase of rising rates. There is also an increasing likelihood that further ECB liquidity support will be provided to the banking sector to offset the impact from the diminishing residual maturity of outstanding TLTRO money. During 2019 the Group will operate in a challenging macro-economic environment, characterized by uncertainty factors (including the protectionist tensions, the economic cycle evolution and the financial markets volatility, also in relation to the spread dynamic of Italian government bonds) and by a still low level of interest rates. During 2019, UniCredit will keep on implementing measures in order to maintain a solid capital position and will continue to focus on the execution of the Transform plan by completing the transformation of the operating model and pursuing the achievement of the plan targets, as pan-European winner. The Group's results will also benefit from ongoing commercial and cost reduction initiatives, in addition to the constant attention to the asset quality. Milan - 6 February 2019 THE BOARD OF DIRECTORS CHAIRMAN CEO FABRIZIO SACCOMANNI JEAN PIERRE MUSTIER Consolidated report on operations Subsequent events and outlook UniCredit ·2018 Annual Report and Accounts 67 Outlook Global growth momentum has eased from the cyclical high reached in 2017 and we forecast that global GDP growth will ease to 3.4% in 2019 (down from 3.6% in 2018), followed by a more-pronounced slowdown to 2.7% in 2020. One of the most likely sources of weakness in 2020 will be the United States, due to the fact that it is at a very late stage in its business cycle. Still, risks are now tilted towards more front-loaded deterioration in global demand, in comparison to the initial expectations. China plays, and will continue to play, a critical role. The growth trajectory of this Country will remain on a structurally slowing trend, but it is plausible that the slowdown may exceed the current pace of deceleration. Economic growth in emerging markets is forecasted to slow as a result of the cyclical downturn in advanced economies and a tightening of financial conditions, but a generalized crisis in Emerging Markets remains unlikely in the near future The Eurozone’s growth outlook weakened further at the turn of 2018, primarily in the wake of external factors, especially a steep loss of momentum in global trade. This seems to mainly reflect heightened uncertainty about protectionist policies and the outcome of Brexit negotiations, that has weighed on sentiment and investment decisions globally. Domestic fundamentals have generally developed positively, especially with regard to the labor market, but economic activity in the Euro Area hardly will not suffer the expected slowdown in global growth. After GDP growth averaged 1.8% in 2018, we forecast that it will decelerate to 1.4% in 2019, with risks tilted to the downside. Among eurozone countries, weakness has been more pronounced in Italy, which slipped into a technical recession in the second half of 2018. Growth deterioration has been driven by external and domestic factors. In particular, a decline from annual growth of 1.6% in 2017 to slightly less than 1.0% in 2018 was due to an abrupt adjustment in Italian exports and the slowdown of the world trade in the first half of the year. While domestic demand turned out to be particularly weak starting from the third quarter of 2018, probably due to increasing domestic uncertainty. We expect Italy’s GDP to expand by 0.5% in 2019, with our forecast underpinning a return to modest, positive quarterly growth, supported by a recovery in business sentiment and a pickup in both external and domestic demand. Therefore the main short-term risk Italy now faces is a stronger-than-initially-expected deterioration in global trade. In contrast, following the positive resolution of the budget discussion between the government and the European Commission in December, internal demand may get some relief from lower domestic uncertainty and from the still-limited transmission of the 10Y BTP-Bund spread widening into higher lending rates for the private sector. Still, investments in equipment are expected to be particularly affected by the slowdown in global demand. Expectations of a continuation of a modest recovery in domestic demand will continue to support ongoing credit growth in Italy, however, further acceleration in lending growth to the private sector is expected to be constrained. Headline inflation has fluctuated around 2% for most of second half of 2018 but has entered 2019 on a downward trend, mainly reflecting a fall in oil prices. Core inflation has been much less volatile and has remained stuck around 1% over the last couple of years. Muted underlying price pressure, inherent in a weakening growth outlook, is likely to force the European Central Bank (ECB) to delay its plan to start normalizing interest-rate policy this year, namely the beginning of a phase of rising rates. There is also an increasing likelihood that further ECB liquidity support will be provided to the banking sector to offset the impact from the diminishing residual maturity of outstanding TLTRO money. During 2019 the Group will operate in a challenging macro-economic environment, characterized by uncertainty factors (including the protectionist tensions, the economic cycle evolution and the financial markets volatility, also in relation to the spread dynamic of Italian government bonds) and by a still low level of interest rates. During 2019, UniCredit will keep on implementing measures in order to maintain a solid capital position and will continue to focus on the execution of the Transform plan by completing the transformation of the operating model and pursuing the achievement of the plan targets, as pan-European winner. The Group's results will also benefit from ongoing commercial and cost reduction initiatives, in addition to the constant attention to the asset quality. Milan - 6 February 2019 THE BOARD OF DIRECTORS CHAIRMAN CEO FABRIZIO SACCOMANNI JEAN PIERRE MUSTIER Consolidated report on operations Subsequent events and outlook UniCredit ·2018 Annual Report and Accounts 67 Outlook Global growth momentum has eased from the cyclical high reached in 2017 and we forecast that global GDP growth will ease to 3.4% in 2019 (down from 3.6% in 2018), followed by a more-pronounced slowdown to 2.7% in 2020. One of the most likely sources of weakness in 2020 will be the United States, due to the fact that it is at a very late stage in its business cycle. Still, risks are now tilted towards more front-loaded deterioration in global demand, in comparison to the initial expectations. China plays, and will continue to play, a critical role. The growth trajectory of this Country will remain on a structurally slowing trend, but it is plausible that the slowdown may exceed the current pace of deceleration. Economic growth in emerging markets is forecasted to slow as a result of the cyclical downturn in advanced economies and a tightening of financial conditions, but a generalized crisis in Emerging Markets remains unlikely in the near future The Eurozone’s growth outlook weakened further at the turn of 2018, primarily in the wake of external factors, especially a steep loss of momentum in global trade. This seems to mainly reflect heightened uncertainty about protectionist policies and the outcome of Brexit negotiations, that has weighed on sentiment and investment decisions globally. Domestic fundamentals have generally developed positively, especially with regard to the labor market, but economic activity in the Euro Area hardly will not suffer the expected slowdown in global growth. After GDP growth averaged 1.8% in 2018, we forecast that it will decelerate to 1.4% in 2019, with risks tilted to the downside. Among eurozone countries, weakness has been more pronounced in Italy, which slipped into a technical recession in the second half of 2018. Growth deterioration has been driven by external and domestic factors. In particular, a decline from annual growth of 1.6% in 2017 to slightly less than 1.0% in 2018 was due to an abrupt adjustment in Italian exports and the slowdown of the world trade in the first half of the year. While domestic demand turned out to be particularly weak starting from the third quarter of 2018, probably due to increasing domestic uncertainty. We expect Italy’s GDP to expand by 0.5% in 2019, with our forecast underpinning a return to modest, positive quarterly growth, supported by a recovery in business sentiment and a pickup in both external and domestic demand. Therefore the main short-term risk Italy now faces is a stronger-than-initially-expected deterioration in global trade. In contrast, following the positive resolution of the budget discussion between the government and the European Commission in December, internal demand may get some relief from lower domestic uncertainty and from the still-limited transmission of the 10Y BTP-Bund spread widening into higher lending rates for the private sector. Still, investments in equipment are expected to be particularly affected by the slowdown in global demand. Expectations of a continuation of a modest recovery in domestic demand will continue to support ongoing credit growth in Italy, however, further acceleration in lending growth to the private sector is expected to be constrained. Headline inflation has fluctuated around 2% for most of second half of 2018 but has entered 2019 on a downward trend, mainly reflecting a fall in oil prices. Core inflation has been much less volatile and has remained stuck around 1% over the last couple of years. Muted underlying price pressure, inherent in a weakening growth outlook, is likely to force the European Central Bank (ECB) to delay its plan to start normalizing interest-rate policy this year, namely the beginning of a phase of rising rates. There is also an increasing likelihood that further ECB liquidity support will be provided to the banking sector to offset the impact from the diminishing residual maturity of outstanding TLTRO money. During 2019 the Group will operate in a challenging macro-economic environment, characterized by uncertainty factors (including the protectionist tensions, the economic cycle evolution and the financial markets volatility, also in relation to the spread dynamic of Italian government bonds) and by a still low level of interest rates. During 2019, UniCredit will keep on implementing measures in order to maintain a solid capital position and will continue to focus on the execution of the Transform plan by completing the transformation of the operating model and pursuing the achievement of the plan targets, as pan-European winner. The Group's results will also benefit from ongoing commercial and cost reduction initiatives, in addition to the constant attention to the asset quality. Milan - 6 February 2019 THE BOARD OF DIRECTORS CHAIRMAN CEO FABRIZIO SACCOMANNI JEAN PIERRE MUSTIER Consolidated report on operations Subsequent events and outlook UniCredit ·2018 Annual Report and Accounts 67 Outlook Global growth momentum has eased from the cyclical high reached in 2017 and we forecast that global GDP growth will ease to 3.4% in 2019 (down from 3.6% in 2018), followed by a more-pronounced slowdown to 2.7% in 2020. One of the most likely sources of weakness in 2020 will be the United States, due to the fact that it is at a very late stage in its business cycle. Still, risks are now tilted towards more front-loaded deterioration in global demand, in comparison to the initial expectations. China plays, and will continue to play, a critical role. The growth trajectory of this Country will remain on a structurally slowing trend, but it is plausible that the slowdown may exceed the current pace of deceleration. Economic growth in emerging markets is forecasted to slow as a result of the cyclical downturn in advanced economies and a tightening of financial conditions, but a generalized crisis in Emerging Markets remains unlikely in the near future The Eurozone’s growth outlook weakened further at the turn of 2018, primarily in the wake of external factors, especially a steep loss of momentum in global trade. This seems to mainly reflect heightened uncertainty about protectionist policies and the outcome of Brexit negotiations, that has weighed on sentiment and investment decisions globally. Domestic fundamentals have generally developed positively, especially with regard to the labor market, but economic activity in the Euro Area hardly will not suffer the expected slowdown in global growth. After GDP growth averaged 1.8% in 2018, we forecast that it will decelerate to 1.4% in 2019, with risks tilted to the downside. Among eurozone countries, weakness has been more pronounced in Italy, which slipped into a technical recession in the second half of 2018. Growth deterioration has been driven by external and domestic factors. In particular, a decline from annual growth of 1.6% in 2017 to slightly less than 1.0% in 2018 was due to an abrupt adjustment in Italian exports and the slowdown of the world trade in the first half of the year. While domestic demand turned out to be particularly weak starting from the third quarter of 2018, probably due to increasing domestic uncertainty. We expect Italy’s GDP to expand by 0.5% in 2019, with our forecast underpinning a return to modest, positive quarterly growth, supported by a recovery in business sentiment and a pickup in both external and domestic demand. Therefore the main short-term risk Italy now faces is a stronger-than-initially-expected deterioration in global trade. In contrast, following the positive resolution of the budget discussion between the government and the European Commission in December, internal demand may get some relief from lower domestic uncertainty and from the still-limited transmission of the 10Y BTP-Bund spread widening into higher lending rates for the private sector. Still, investments in equipment are expected to be particularly affected by the slowdown in global demand. Expectations of a continuation of a modest recovery in domestic demand will continue to support ongoing credit growth in Italy, however, further acceleration in lending growth to the private sector is expected to be constrained. Headline inflation has fluctuated around 2% for most of second half of 2018 but has entered 2019 on a downward trend, mainly reflecting a fall in oil prices. Core inflation has been much less volatile and has remained stuck around 1% over the last couple of years. Muted underlying price pressure, inherent in a weakening growth outlook, is likely to force the European Central Bank (ECB) to delay its plan to start normalizing interest-rate policy this year, namely the beginning of a phase of rising rates. There is also an increasing likelihood that further ECB liquidity support will be provided to the banking sector to offset the impact from the diminishing residual maturity of outstanding TLTRO money. During 2019 the Group will operate in a challenging macro-economic environment, characterized by uncertainty factors (including the protectionist tensions, the economic cycle evolution and the financial markets volatility, also in relation to the spread dynamic of Italian government bonds) and by a still low level of interest rates. During 2019, UniCredit will keep on implementing measures in order to maintain a solid capital position and will continue to focus on the execution of the Transform plan by completing the transformation of the operating model and pursuing the achievement of the plan targets, as pan-European winner. The Group's results will also benefit from ongoing commercial and cost reduction initiatives, in addition to the constant attention to the asset quality. Milan - 6 February 2019 THE BOARD OF DIRECTORS CHAIRMAN CEO FABRIZIO SACCOMANNI JEAN PIERRE MUSTIER Consolidated report on operations Subsequent events and outlook UniCredit ·2018 Annual Report and Accounts 67 Outlook Global growth momentum has eased from the cyclical high reached in 2017 and we forecast that global GDP growth will ease to 3.4% in 2019 (down from 3.6% in 2018), followed by a more-pronounced slowdown to 2.7% in 2020. One of the most likely sources of weakness in 2020 will be the United States, due to the fact that it is at a very late stage in its business cycle. Still, risks are now tilted towards more front-loaded deterioration in global demand, in comparison to the initial expectations. China plays, and will continue to play, a critical role. The growth trajectory of this Country will remain on a structurally slowing trend, but it is plausible that the slowdown may exceed the current pace of deceleration. Economic growth in emerging markets is forecasted to slow as a result of the cyclical downturn in advanced economies and a tightening of financial conditions, but a generalized crisis in Emerging Markets remains unlikely in the near future The Eurozone’s growth outlook weakened further at the turn of 2018, primarily in the wake of external factors, especially a steep loss of momentum in global trade. This seems to mainly reflect heightened uncertainty about protectionist policies and the outcome of Brexit negotiations, that has weighed on sentiment and investment decisions globally. Domestic fundamentals have generally developed positively, especially with regard to the labor market, but economic activity in the Euro Area hardly will not suffer the expected slowdown in global growth. After GDP growth averaged 1.8% in 2018, we forecast that it will decelerate to 1.4% in 2019, with risks tilted to the downside. Among eurozone countries, weakness has been more pronounced in Italy, which slipped into a technical recession in the second half of 2018. Growth deterioration has been driven by external and domestic factors. In particular, a decline from annual growth of 1.6% in 2017 to slightly less than 1.0% in 2018 was due to an abrupt adjustment in Italian exports and the slowdown of the world trade in the first half of the year. While domestic demand turned out to be particularly weak starting from the third quarter of 2018, probably due to increasing domestic uncertainty. We expect Italy’s GDP to expand by 0.5% in 2019, with our forecast underpinning a return to modest, positive quarterly growth, supported by a recovery in business sentiment and a pickup in both external and domestic demand. Therefore the main short-term risk Italy now faces is a stronger-than-initially-expected deterioration in global trade. In contrast, following the positive resolution of the budget discussion between the government and the European Commission in December, internal demand may get some relief from lower domestic uncertainty and from the still-limited transmission of the 10Y BTP-Bund spread widening into higher lending rates for the private sector. Still, investments in equipment are expected to be particularly affected by the slowdown in global demand. Expectations of a continuation of a modest recovery in domestic demand will continue to support ongoing credit growth in Italy, however, further acceleration in lending growth to the private sector is expected to be constrained. Headline inflation has fluctuated around 2% for most of second half of 2018 but has entered 2019 on a downward trend, mainly reflecting a fall in oil prices. Core inflation has been much less volatile and has remained stuck around 1% over the last couple of years. Muted underlying price pressure, inherent in a weakening growth outlook, is likely to force the European Central Bank (ECB) to delay its plan to start normalizing interest-rate policy this year, namely the beginning of a phase of rising rates. There is also an increasing likelihood that further ECB liquidity support will be provided to the banking sector to offset the impact from the diminishing residual maturity of outstanding TLTRO money. During 2019 the Group will operate in a challenging macro-economic environment, characterized by uncertainty factors (including the protectionist tensions, the economic cycle evolution and the financial markets volatility, also in relation to the spread dynamic of Italian government bonds) and by a still low level of interest rates. During 2019, UniCredit will keep on implementing measures in order to maintain a solid capital position and will continue to focus on the execution of the Transform plan by completing the transformation of the operating model and pursuing the achievement of the plan targets, as pan-European winner. The Group's results will also benefit from ongoing commercial and cost reduction initiatives, in addition to the constant attention to the asset quality. Milan - 6 February 2019 THE BOARD OF DIRECTORS CHAIRMAN CEO FABRIZIO SACCOMANNI JEAN PIERRE MUSTIER Improve asset quality. We are continuing to improve our asset quality by de-risking our balance sheet, fully on track for the accelerated rundown of our Non Core portfolio by 2021. A disciplined risk management approach guarantees high quality origination across the Group. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 69 Corporate Governance Governance organisational structure Introduction UniCredit’s overall corporate governance framework, i.e. the system of rules and procedures that its corporate bodies refer to steer the principles of their behaviour and fulfil their various responsibilities towards the Group’s stakeholders, has been defined in compliance with current national and European provisions as well as the recommendations contained in the Italian Corporate Governance Code for listed companies (hereinafter, also the “Code”). The Code, according to the major international markets’ experience, identifies the corporate governance standards and best practices for Italian listed companies recommended by the Corporate Governance Committee, to be applied according to the “comply or explain” principle that requires the explanation in the corporate governance report of the reasons of failure to comply with one or more recommendations contained in its principles or criteria. Moreover, UniCredit is subject to the provisions contained in the Supervisory Regulations issued by Banca d’Italia and, in detail, with regards to corporate governance issues, to the Supervisory Regulations on banks’ corporate governance (Circular No.285/2013, Part I, Title IV, Chapter 1). In compliance with the aforementioned Supervisory Regulations UniCredit, as significant bank subject to the direct prudential supervision of the ECB, as well as a listed bank, is qualifiable as bank of a major size or operational complexity and consequently complies with the provisions applicable to such kind of bank. Since 2001, UniCredit has adopted the Code which is available to the public on the Corporate Governance Committee website (http://www.borsaitaliana.it/comitato-corporate-governance/codice/codiceeng2018.en.pdf). UniCredit yearly draws up a corporate governance report meant for its shareholders, institutional and non-institutional investors and the market. The report supplies suitable information on the UniCredit own corporate governance system. Consistently with the relevant legal and regulatory obligations, as well as in line with the provisions of the Code, in its latest edition approved in July 2018, the 2018 Report on corporate governance and ownership structure has been drafted, in accordance with Section 123/bis of the Legislative Decree No.58 dated 24 February 1998 (hereinafter, also the “TUF”). The Report on corporate governance and ownership structure is approved by the Board of Directors and published at the same time as the Report on Operations on the Issuer’s website (https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html). For further information on the UniCredit corporate governance system please see the first of the above documents. UniCredit, as issuer of shares also listed on the Frankfurt and Warsaw regulated markets, also fulfils the legal and regulatory obligations relating to listings on said markets as well as the provisions on corporate governance contained in the Polish Corporate Governance Code issued by the Warsaw Stock Exchange. The information provided, unless otherwise specified, refers to the financial year 1 January-31 December 2018. Since its establishment, UniCredit has adopted the so-called traditional management and control system. The distinctive feature of this model is that the strategic supervision and the management of the company, the overseeing of its management and the legal accounting supervision are separated. In particular, the Board of Directors is solely responsible for the strategic supervision and the management of the Company, while the Board of Statutory Auditors is entrusted with supervising its management. Legal accounting supervision on the Company is assigned to an external audit firm by the Shareholders' Meeting on the basis of a proposal from the Board of Statutory Auditors, in compliance with relevant current laws. The reasons behind the choice of such governance model are that it has proven capable of managing the business efficiently, while ensuring effective controls. That is, it creates the conditions for UniCredit S.p.A. to be able to guarantee the sound and prudent management of a complex and global banking group, such as the UniCredit Group. Moreover, the traditional management ascribes certain aspects to the sole responsibility of the Shareholders' Meeting, creating in this way an opportunity for dialogue and debate between shareholders and management about the fundamental elements of governance. These include the appointment and dismissal of directors, the appointment of the Board of Statutory Auditors members, the granting of a mandate for the external auditing to an audit firm, the setting of the related remuneration, as well as the approval of the financial statements, the profit allocations, the resolutions on the remuneration and incentive policies and practices provided for by current provisions and the criteria to determine the compensation to be granted in the event of early termination of employment or early retirement from office. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 69 Corporate Governance Governance organisational structure Introduction UniCredit’s overall corporate governance framework, i.e. the system of rules and procedures that its corporate bodies refer to steer the principles of their behaviour and fulfil their various responsibilities towards the Group’s stakeholders, has been defined in compliance with current national and European provisions as well as the recommendations contained in the Italian Corporate Governance Code for listed companies (hereinafter, also the “Code”). The Code, according to the major international markets’ experience, identifies the corporate governance standards and best practices for Italian listed companies recommended by the Corporate Governance Committee, to be applied according to the “comply or explain” principle that requires the explanation in the corporate governance report of the reasons of failure to comply with one or more recommendations contained in its principles or criteria. Moreover, UniCredit is subject to the provisions contained in the Supervisory Regulations issued by Banca d’Italia and, in detail, with regards to corporate governance issues, to the Supervisory Regulations on banks’ corporate governance (Circular No.285/2013, Part I, Title IV, Chapter 1). In compliance with the aforementioned Supervisory Regulations UniCredit, as significant bank subject to the direct prudential supervision of the ECB, as well as a listed bank, is qualifiable as bank of a major size or operational complexity and consequently complies with the provisions applicable to such kind of bank. Since 2001, UniCredit has adopted the Code which is available to the public on the Corporate Governance Committee website (http://www.borsaitaliana.it/comitato-corporate-governance/codice/codiceeng2018.en.pdf). UniCredit yearly draws up a corporate governance report meant for its shareholders, institutional and non-institutional investors and the market. The report supplies suitable information on the UniCredit own corporate governance system. Consistently with the relevant legal and regulatory obligations, as well as in line with the provisions of the Code, in its latest edition approved in July 2018, the 2018 Report on corporate governance and ownership structure has been drafted, in accordance with Section 123/bis of the Legislative Decree No.58 dated 24 February 1998 (hereinafter, also the “TUF”). The Report on corporate governance and ownership structure is approved by the Board of Directors and published at the same time as the Report on Operations on the Issuer’s website (https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html). For further information on the UniCredit corporate governance system please see the first of the above documents. UniCredit, as issuer of shares also listed on the Frankfurt and Warsaw regulated markets, also fulfils the legal and regulatory obligations relating to listings on said markets as well as the provisions on corporate governance contained in the Polish Corporate Governance Code issued by the Warsaw Stock Exchange. The information provided, unless otherwise specified, refers to the financial year 1 January-31 December 2018. Since its establishment, UniCredit has adopted the so-called traditional management and control system. The distinctive feature of this model is that the strategic supervision and the management of the company, the overseeing of its management and the legal accounting supervision are separated. In particular, the Board of Directors is solely responsible for the strategic supervision and the management of the Company, while the Board of Statutory Auditors is entrusted with supervising its management. Legal accounting supervision on the Company is assigned to an external audit firm by the Shareholders' Meeting on the basis of a proposal from the Board of Statutory Auditors, in compliance with relevant current laws. The reasons behind the choice of such governance model are that it has proven capable of managing the business efficiently, while ensuring effective controls. That is, it creates the conditions for UniCredit S.p.A. to be able to guarantee the sound and prudent management of a complex and global banking group, such as the UniCredit Group. Moreover, the traditional management ascribes certain aspects to the sole responsibility of the Shareholders' Meeting, creating in this way an opportunity for dialogue and debate between shareholders and management about the fundamental elements of governance. These include the appointment and dismissal of directors, the appointment of the Board of Statutory Auditors members, the granting of a mandate for the external auditing to an audit firm, the setting of the related remuneration, as well as the approval of the financial statements, the profit allocations, the resolutions on the remuneration and incentive policies and practices provided for by current provisions and the criteria to determine the compensation to be granted in the event of early termination of employment or early retirement from office. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 69 Corporate Governance Governance organisational structure Introduction UniCredit’s overall corporate governance framework, i.e. the system of rules and procedures that its corporate bodies refer to steer the principles of their behaviour and fulfil their various responsibilities towards the Group’s stakeholders, has been defined in compliance with current national and European provisions as well as the recommendations contained in the Italian Corporate Governance Code for listed companies (hereinafter, also the “Code”). The Code, according to the major international markets’ experience, identifies the corporate governance standards and best practices for Italian listed companies recommended by the Corporate Governance Committee, to be applied according to the “comply or explain” principle that requires the explanation in the corporate governance report of the reasons of failure to comply with one or more recommendations contained in its principles or criteria. Moreover, UniCredit is subject to the provisions contained in the Supervisory Regulations issued by Banca d’Italia and, in detail, with regards to corporate governance issues, to the Supervisory Regulations on banks’ corporate governance (Circular No.285/2013, Part I, Title IV, Chapter 1). In compliance with the aforementioned Supervisory Regulations UniCredit, as significant bank subject to the direct prudential supervision of the ECB, as well as a listed bank, is qualifiable as bank of a major size or operational complexity and consequently complies with the provisions applicable to such kind of bank. Since 2001, UniCredit has adopted the Code which is available to the public on the Corporate Governance Committee website (http://www.borsaitaliana.it/comitato-corporate-governance/codice/codiceeng2018.en.pdf). UniCredit yearly draws up a corporate governance report meant for its shareholders, institutional and non-institutional investors and the market. The report supplies suitable information on the UniCredit own corporate governance system. Consistently with the relevant legal and regulatory obligations, as well as in line with the provisions of the Code, in its latest edition approved in July 2018, the 2018 Report on corporate governance and ownership structure has been drafted, in accordance with Section 123/bis of the Legislative Decree No.58 dated 24 February 1998 (hereinafter, also the “TUF”). The Report on corporate governance and ownership structure is approved by the Board of Directors and published at the same time as the Report on Operations on the Issuer’s website (https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html). For further information on the UniCredit corporate governance system please see the first of the above documents. UniCredit, as issuer of shares also listed on the Frankfurt and Warsaw regulated markets, also fulfils the legal and regulatory obligations relating to listings on said markets as well as the provisions on corporate governance contained in the Polish Corporate Governance Code issued by the Warsaw Stock Exchange. The information provided, unless otherwise specified, refers to the financial year 1 January-31 December 2018. Since its establishment, UniCredit has adopted the so-called traditional management and control system. The distinctive feature of this model is that the strategic supervision and the management of the company, the overseeing of its management and the legal accounting supervision are separated. In particular, the Board of Directors is solely responsible for the strategic supervision and the management of the Company, while the Board of Statutory Auditors is entrusted with supervising its management. Legal accounting supervision on the Company is assigned to an external audit firm by the Shareholders' Meeting on the basis of a proposal from the Board of Statutory Auditors, in compliance with relevant current laws. The reasons behind the choice of such governance model are that it has proven capable of managing the business efficiently, while ensuring effective controls. That is, it creates the conditions for UniCredit S.p.A. to be able to guarantee the sound and prudent management of a complex and global banking group, such as the UniCredit Group. Moreover, the traditional management ascribes certain aspects to the sole responsibility of the Shareholders' Meeting, creating in this way an opportunity for dialogue and debate between shareholders and management about the fundamental elements of governance. These include the appointment and dismissal of directors, the appointment of the Board of Statutory Auditors members, the granting of a mandate for the external auditing to an audit firm, the setting of the related remuneration, as well as the approval of the financial statements, the profit allocations, the resolutions on the remuneration and incentive policies and practices provided for by current provisions and the criteria to determine the compensation to be granted in the event of early termination of employment or early retirement from office. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 69 Corporate Governance Governance organisational structure Introduction UniCredit’s overall corporate governance framework, i.e. the system of rules and procedures that its corporate bodies refer to steer the principles of their behaviour and fulfil their various responsibilities towards the Group’s stakeholders, has been defined in compliance with current national and European provisions as well as the recommendations contained in the Italian Corporate Governance Code for listed companies (hereinafter, also the “Code”). The Code, according to the major international markets’ experience, identifies the corporate governance standards and best practices for Italian listed companies recommended by the Corporate Governance Committee, to be applied according to the “comply or explain” principle that requires the explanation in the corporate governance report of the reasons of failure to comply with one or more recommendations contained in its principles or criteria. Moreover, UniCredit is subject to the provisions contained in the Supervisory Regulations issued by Banca d’Italia and, in detail, with regards to corporate governance issues, to the Supervisory Regulations on banks’ corporate governance (Circular No.285/2013, Part I, Title IV, Chapter 1). In compliance with the aforementioned Supervisory Regulations UniCredit, as significant bank subject to the direct prudential supervision of the ECB, as well as a listed bank, is qualifiable as bank of a major size or operational complexity and consequently complies with the provisions applicable to such kind of bank. Since 2001, UniCredit has adopted the Code which is available to the public on the Corporate Governance Committee website (http://www.borsaitaliana.it/comitato-corporate-governance/codice/codiceeng2018.en.pdf). UniCredit yearly draws up a corporate governance report meant for its shareholders, institutional and non-institutional investors and the market. The report supplies suitable information on the UniCredit own corporate governance system. Consistently with the relevant legal and regulatory obligations, as well as in line with the provisions of the Code, in its latest edition approved in July 2018, the 2018 Report on corporate governance and ownership structure has been drafted, in accordance with Section 123/bis of the Legislative Decree No.58 dated 24 February 1998 (hereinafter, also the “TUF”). The Report on corporate governance and ownership structure is approved by the Board of Directors and published at the same time as the Report on Operations on the Issuer’s website (https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html). For further information on the UniCredit corporate governance system please see the first of the above documents. UniCredit, as issuer of shares also listed on the Frankfurt and Warsaw regulated markets, also fulfils the legal and regulatory obligations relating to listings on said markets as well as the provisions on corporate governance contained in the Polish Corporate Governance Code issued by the Warsaw Stock Exchange. The information provided, unless otherwise specified, refers to the financial year 1 January-31 December 2018. Since its establishment, UniCredit has adopted the so-called traditional management and control system. The distinctive feature of this model is that the strategic supervision and the management of the company, the overseeing of its management and the legal accounting supervision are separated. In particular, the Board of Directors is solely responsible for the strategic supervision and the management of the Company, while the Board of Statutory Auditors is entrusted with supervising its management. Legal accounting supervision on the Company is assigned to an external audit firm by the Shareholders' Meeting on the basis of a proposal from the Board of Statutory Auditors, in compliance with relevant current laws. The reasons behind the choice of such governance model are that it has proven capable of managing the business efficiently, while ensuring effective controls. That is, it creates the conditions for UniCredit S.p.A. to be able to guarantee the sound and prudent management of a complex and global banking group, such as the UniCredit Group. Moreover, the traditional management ascribes certain aspects to the sole responsibility of the Shareholders' Meeting, creating in this way an opportunity for dialogue and debate between shareholders and management about the fundamental elements of governance. These include the appointment and dismissal of directors, the appointment of the Board of Statutory Auditors members, the granting of a mandate for the external auditing to an audit firm, the setting of the related remuneration, as well as the approval of the financial statements, the profit allocations, the resolutions on the remuneration and incentive policies and practices provided for by current provisions and the criteria to determine the compensation to be granted in the event of early termination of employment or early retirement from office. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 69 Corporate Governance Governance organisational structure Introduction UniCredit’s overall corporate governance framework, i.e. the system of rules and procedures that its corporate bodies refer to steer the principles of their behaviour and fulfil their various responsibilities towards the Group’s stakeholders, has been defined in compliance with current national and European provisions as well as the recommendations contained in the Italian Corporate Governance Code for listed companies (hereinafter, also the “Code”). The Code, according to the major international markets’ experience, identifies the corporate governance standards and best practices for Italian listed companies recommended by the Corporate Governance Committee, to be applied according to the “comply or explain” principle that requires the explanation in the corporate governance report of the reasons of failure to comply with one or more recommendations contained in its principles or criteria. Moreover, UniCredit is subject to the provisions contained in the Supervisory Regulations issued by Banca d’Italia and, in detail, with regards to corporate governance issues, to the Supervisory Regulations on banks’ corporate governance (Circular No.285/2013, Part I, Title IV, Chapter 1). In compliance with the aforementioned Supervisory Regulations UniCredit, as significant bank subject to the direct prudential supervision of the ECB, as well as a listed bank, is qualifiable as bank of a major size or operational complexity and consequently complies with the provisions applicable to such kind of bank. Since 2001, UniCredit has adopted the Code which is available to the public on the Corporate Governance Committee website (http://www.borsaitaliana.it/comitato-corporate-governance/codice/codiceeng2018.en.pdf). UniCredit yearly draws up a corporate governance report meant for its shareholders, institutional and non-institutional investors and the market. The report supplies suitable information on the UniCredit own corporate governance system. Consistently with the relevant legal and regulatory obligations, as well as in line with the provisions of the Code, in its latest edition approved in July 2018, the 2018 Report on corporate governance and ownership structure has been drafted, in accordance with Section 123/bis of the Legislative Decree No.58 dated 24 February 1998 (hereinafter, also the “TUF”). The Report on corporate governance and ownership structure is approved by the Board of Directors and published at the same time as the Report on Operations on the Issuer’s website (https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html). For further information on the UniCredit corporate governance system please see the first of the above documents. UniCredit, as issuer of shares also listed on the Frankfurt and Warsaw regulated markets, also fulfils the legal and regulatory obligations relating to listings on said markets as well as the provisions on corporate governance contained in the Polish Corporate Governance Code issued by the Warsaw Stock Exchange. The information provided, unless otherwise specified, refers to the financial year 1 January-31 December 2018. Since its establishment, UniCredit has adopted the so-called traditional management and control system. The distinctive feature of this model is that the strategic supervision and the management of the company, the overseeing of its management and the legal accounting supervision are separated. In particular, the Board of Directors is solely responsible for the strategic supervision and the management of the Company, while the Board of Statutory Auditors is entrusted with supervising its management. Legal accounting supervision on the Company is assigned to an external audit firm by the Shareholders' Meeting on the basis of a proposal from the Board of Statutory Auditors, in compliance with relevant current laws. The reasons behind the choice of such governance model are that it has proven capable of managing the business efficiently, while ensuring effective controls. That is, it creates the conditions for UniCredit S.p.A. to be able to guarantee the sound and prudent management of a complex and global banking group, such as the UniCredit Group. Moreover, the traditional management ascribes certain aspects to the sole responsibility of the Shareholders' Meeting, creating in this way an opportunity for dialogue and debate between shareholders and management about the fundamental elements of governance. These include the appointment and dismissal of directors, the appointment of the Board of Statutory Auditors members, the granting of a mandate for the external auditing to an audit firm, the setting of the related remuneration, as well as the approval of the financial statements, the profit allocations, the resolutions on the remuneration and incentive policies and practices provided for by current provisions and the criteria to determine the compensation to be granted in the event of early termination of employment or early retirement from office. Corporate Governance Governance organisational structure 70 2018 Annual Report and Accounts · UniCredit Shareholders' Meeting The Ordinary Shareholders’ Meeting of UniCredit is convened at least once a year within 180 days of the end of the financial year, in order to resolve upon the issues that current laws and the Articles of Association make it responsible for. An Extraordinary Shareholders’ Meeting is convened, instead, whenever it is necessary to resolve upon any of the matters that are exclusively attributed to it by current laws. The Agenda of the Shareholders’ Meeting is established pursuant to legal requirements and to the UniCredit Articles of Association by whoever exercises the power to call a Meeting. The Ordinary Shareholders’ Meeting has adopted Regulations governing Ordinary and Extraordinary Meetings in a functional and regular way. The Regulations are available on the Governance/Shareholders Meeting Section of the UniCredit website. Board of Directors The Board of Directors of UniCredit may be comprised of between a minimum of 9 up to a maximum of 24 members. As at the approval date of this document, UniCredit has 15 Directors. Their term in office is 3 financial years, unless a shorter term is established at the time they are appointed, and ends on the date of the Shareholders’ Meeting called upon to approve the financial statements relating to the latest year in which they were in office. The term in office of the current Board of Directors, which was appointed by the Shareholders’ Meeting of 12 April 2018, will expire on the date of the Shareholders’ Meeting called upon to approve the 2020 financial statements. UniCredit Directors shall be appointed, according to the current legal and regulatory provisions, on the basis of a proportional representation mechanism (“voto di lista”) abiding by the membership criteria concerning, inter alia, minority and independent Directors, apart from abiding by the rules on the balance between genders envisaged by Law No.120/2011, pursuant to the procedures specified in Clause 20 of the UniCredit Articles of Association. The legitimate parties who are entitled to submit lists are the Board of Directors and the shareholders, who individually or collectively with others represent at least 0.5% of share capital in the form of ordinary shares with voting rights at ordinary Shareholders’ Meetings. The UniCredit Articles of Association envisage that, regardless of the total number of the Board members, two Directors shall be appointed from the second list receiving the highest votes, without any connection with the shareholders who, even jointly, filed, or voted for, the slate first by number of votes, to ensure to the minority shareholders a greater presence on the Board of Directors. The Board establishes its qualitative and quantitative composition deemed to be optimal for the effective completion of the duties and responsibilities entrusted to the Board of Directors by law, by the Supervisory Provisions and by the UniCredit Articles of Association, according to the current national and European provisions applicable on such topics, also concerning the time commitment and the limits upon the maximum number of offices that UniCredit Directors may hold. Moreover, Directors must take into account the provisions of Section 36 of Law Decree No.201/2011 (“ban on interlocking directorships”), approved as statute by Law No.214/2011, which establishes that holders of a seat in managerial, supervisory and controlling bodies, as well as top management officers in companies or group of companies active in banking, insurance and financial markets are forbidden to hold, or to exercise, similar duties, in competing companies or groups of companies. The function and competencies of the Board of Directors are set forth in the UniCredit Corporate Bodies and Committees Regulation, available on the Governance/Governance system & policies Section of the UniCredit website. Corporate Governance Governance organisational structure 70 2018 Annual Report and Accounts · UniCredit Shareholders' Meeting The Ordinary Shareholders’ Meeting of UniCredit is convened at least once a year within 180 days of the end of the financial year, in order to resolve upon the issues that current laws and the Articles of Association make it responsible for. An Extraordinary Shareholders’ Meeting is convened, instead, whenever it is necessary to resolve upon any of the matters that are exclusively attributed to it by current laws. The Agenda of the Shareholders’ Meeting is established pursuant to legal requirements and to the UniCredit Articles of Association by whoever exercises the power to call a Meeting. The Ordinary Shareholders’ Meeting has adopted Regulations governing Ordinary and Extraordinary Meetings in a functional and regular way. The Regulations are available on the Governance/Shareholders Meeting Section of the UniCredit website. Board of Directors The Board of Directors of UniCredit may be comprised of between a minimum of 9 up to a maximum of 24 members. As at the approval date of this document, UniCredit has 15 Directors. Their term in office is 3 financial years, unless a shorter term is established at the time they are appointed, and ends on the date of the Shareholders’ Meeting called upon to approve the financial statements relating to the latest year in which they were in office. The term in office of the current Board of Directors, which was appointed by the Shareholders’ Meeting of 12 April 2018, will expire on the date of the Shareholders’ Meeting called upon to approve the 2020 financial statements. UniCredit Directors shall be appointed, according to the current legal and regulatory provisions, on the basis of a proportional representation mechanism (“voto di lista”) abiding by the membership criteria concerning, inter alia, minority and independent Directors, apart from abiding by the rules on the balance between genders envisaged by Law No.120/2011, pursuant to the procedures specified in Clause 20 of the UniCredit Articles of Association. The legitimate parties who are entitled to submit lists are the Board of Directors and the shareholders, who individually or collectively with others represent at least 0.5% of share capital in the form of ordinary shares with voting rights at ordinary Shareholders’ Meetings. The UniCredit Articles of Association envisage that, regardless of the total number of the Board members, two Directors shall be appointed from the second list receiving the highest votes, without any connection with the shareholders who, even jointly, filed, or voted for, the slate first by number of votes, to ensure to the minority shareholders a greater presence on the Board of Directors. The Board establishes its qualitative and quantitative composition deemed to be optimal for the effective completion of the duties and responsibilities entrusted to the Board of Directors by law, by the Supervisory Provisions and by the UniCredit Articles of Association, according to the current national and European provisions applicable on such topics, also concerning the time commitment and the limits upon the maximum number of offices that UniCredit Directors may hold. Moreover, Directors must take into account the provisions of Section 36 of Law Decree No.201/2011 (“ban on interlocking directorships”), approved as statute by Law No.214/2011, which establishes that holders of a seat in managerial, supervisory and controlling bodies, as well as top management officers in companies or group of companies active in banking, insurance and financial markets are forbidden to hold, or to exercise, similar duties, in competing companies or groups of companies. The function and competencies of the Board of Directors are set forth in the UniCredit Corporate Bodies and Committees Regulation, available on the Governance/Governance system & policies Section of the UniCredit website. Corporate Governance Governance organisational structure 70 2018 Annual Report and Accounts · UniCredit Shareholders' Meeting The Ordinary Shareholders’ Meeting of UniCredit is convened at least once a year within 180 days of the end of the financial year, in order to resolve upon the issues that current laws and the Articles of Association make it responsible for. An Extraordinary Shareholders’ Meeting is convened, instead, whenever it is necessary to resolve upon any of the matters that are exclusively attributed to it by current laws. The Agenda of the Shareholders’ Meeting is established pursuant to legal requirements and to the UniCredit Articles of Association by whoever exercises the power to call a Meeting. The Ordinary Shareholders’ Meeting has adopted Regulations governing Ordinary and Extraordinary Meetings in a functional and regular way. The Regulations are available on the Governance/Shareholders Meeting Section of the UniCredit website. Board of Directors The Board of Directors of UniCredit may be comprised of between a minimum of 9 up to a maximum of 24 members. As at the approval date of this document, UniCredit has 15 Directors. Their term in office is 3 financial years, unless a shorter term is established at the time they are appointed, and ends on the date of the Shareholders’ Meeting called upon to approve the financial statements relating to the latest year in which they were in office. The term in office of the current Board of Directors, which was appointed by the Shareholders’ Meeting of 12 April 2018, will expire on the date of the Shareholders’ Meeting called upon to approve the 2020 financial statements. UniCredit Directors shall be appointed, according to the current legal and regulatory provisions, on the basis of a proportional representation mechanism (“voto di lista”) abiding by the membership criteria concerning, inter alia, minority and independent Directors, apart from abiding by the rules on the balance between genders envisaged by Law No.120/2011, pursuant to the procedures specified in Clause 20 of the UniCredit Articles of Association. The legitimate parties who are entitled to submit lists are the Board of Directors and the shareholders, who individually or collectively with others represent at least 0.5% of share capital in the form of ordinary shares with voting rights at ordinary Shareholders’ Meetings. The UniCredit Articles of Association envisage that, regardless of the total number of the Board members, two Directors shall be appointed from the second list receiving the highest votes, without any connection with the shareholders who, even jointly, filed, or voted for, the slate first by number of votes, to ensure to the minority shareholders a greater presence on the Board of Directors. The Board establishes its qualitative and quantitative composition deemed to be optimal for the effective completion of the duties and responsibilities entrusted to the Board of Directors by law, by the Supervisory Provisions and by the UniCredit Articles of Association, according to the current national and European provisions applicable on such topics, also concerning the time commitment and the limits upon the maximum number of offices that UniCredit Directors may hold. Moreover, Directors must take into account the provisions of Section 36 of Law Decree No.201/2011 (“ban on interlocking directorships”), approved as statute by Law No.214/2011, which establishes that holders of a seat in managerial, supervisory and controlling bodies, as well as top management officers in companies or group of companies active in banking, insurance and financial markets are forbidden to hold, or to exercise, similar duties, in competing companies or groups of companies. The function and competencies of the Board of Directors are set forth in the UniCredit Corporate Bodies and Committees Regulation, available on the Governance/Governance system & policies Section of the UniCredit website. Corporate Governance Governance organisational structure 70 2018 Annual Report and Accounts · UniCredit Shareholders' Meeting The Ordinary Shareholders’ Meeting of UniCredit is convened at least once a year within 180 days of the end of the financial year, in order to resolve upon the issues that current laws and the Articles of Association make it responsible for. An Extraordinary Shareholders’ Meeting is convened, instead, whenever it is necessary to resolve upon any of the matters that are exclusively attributed to it by current laws. The Agenda of the Shareholders’ Meeting is established pursuant to legal requirements and to the UniCredit Articles of Association by whoever exercises the power to call a Meeting. The Ordinary Shareholders’ Meeting has adopted Regulations governing Ordinary and Extraordinary Meetings in a functional and regular way. The Regulations are available on the Governance/Shareholders Meeting Section of the UniCredit website. Board of Directors The Board of Directors of UniCredit may be comprised of between a minimum of 9 up to a maximum of 24 members. As at the approval date of this document, UniCredit has 15 Directors. Their term in office is 3 financial years, unless a shorter term is established at the time they are appointed, and ends on the date of the Shareholders’ Meeting called upon to approve the financial statements relating to the latest year in which they were in office. The term in office of the current Board of Directors, which was appointed by the Shareholders’ Meeting of 12 April 2018, will expire on the date of the Shareholders’ Meeting called upon to approve the 2020 financial statements. UniCredit Directors shall be appointed, according to the current legal and regulatory provisions, on the basis of a proportional representation mechanism (“voto di lista”) abiding by the membership criteria concerning, inter alia, minority and independent Directors, apart from abiding by the rules on the balance between genders envisaged by Law No.120/2011, pursuant to the procedures specified in Clause 20 of the UniCredit Articles of Association. The legitimate parties who are entitled to submit lists are the Board of Directors and the shareholders, who individually or collectively with others represent at least 0.5% of share capital in the form of ordinary shares with voting rights at ordinary Shareholders’ Meetings. The UniCredit Articles of Association envisage that, regardless of the total number of the Board members, two Directors shall be appointed from the second list receiving the highest votes, without any connection with the shareholders who, even jointly, filed, or voted for, the slate first by number of votes, to ensure to the minority shareholders a greater presence on the Board of Directors. The Board establishes its qualitative and quantitative composition deemed to be optimal for the effective completion of the duties and responsibilities entrusted to the Board of Directors by law, by the Supervisory Provisions and by the UniCredit Articles of Association, according to the current national and European provisions applicable on such topics, also concerning the time commitment and the limits upon the maximum number of offices that UniCredit Directors may hold. Moreover, Directors must take into account the provisions of Section 36 of Law Decree No.201/2011 (“ban on interlocking directorships”), approved as statute by Law No.214/2011, which establishes that holders of a seat in managerial, supervisory and controlling bodies, as well as top management officers in companies or group of companies active in banking, insurance and financial markets are forbidden to hold, or to exercise, similar duties, in competing companies or groups of companies. The function and competencies of the Board of Directors are set forth in the UniCredit Corporate Bodies and Committees Regulation, available on the Governance/Governance system & policies Section of the UniCredit website. Corporate Governance Governance organisational structure 70 2018 Annual Report and Accounts · UniCredit Shareholders' Meeting The Ordinary Shareholders’ Meeting of UniCredit is convened at least once a year within 180 days of the end of the financial year, in order to resolve upon the issues that current laws and the Articles of Association make it responsible for. An Extraordinary Shareholders’ Meeting is convened, instead, whenever it is necessary to resolve upon any of the matters that are exclusively attributed to it by current laws. The Agenda of the Shareholders’ Meeting is established pursuant to legal requirements and to the UniCredit Articles of Association by whoever exercises the power to call a Meeting. The Ordinary Shareholders’ Meeting has adopted Regulations governing Ordinary and Extraordinary Meetings in a functional and regular way. The Regulations are available on the Governance/Shareholders Meeting Section of the UniCredit website. Board of Directors The Board of Directors of UniCredit may be comprised of between a minimum of 9 up to a maximum of 24 members. As at the approval date of this document, UniCredit has 15 Directors. Their term in office is 3 financial years, unless a shorter term is established at the time they are appointed, and ends on the date of the Shareholders’ Meeting called upon to approve the financial statements relating to the latest year in which they were in office. The term in office of the current Board of Directors, which was appointed by the Shareholders’ Meeting of 12 April 2018, will expire on the date of the Shareholders’ Meeting called upon to approve the 2020 financial statements. UniCredit Directors shall be appointed, according to the current legal and regulatory provisions, on the basis of a proportional representation mechanism (“voto di lista”) abiding by the membership criteria concerning, inter alia, minority and independent Directors, apart from abiding by the rules on the balance between genders envisaged by Law No.120/2011, pursuant to the procedures specified in Clause 20 of the UniCredit Articles of Association. The legitimate parties who are entitled to submit lists are the Board of Directors and the shareholders, who individually or collectively with others represent at least 0.5% of share capital in the form of ordinary shares with voting rights at ordinary Shareholders’ Meetings. The UniCredit Articles of Association envisage that, regardless of the total number of the Board members, two Directors shall be appointed from the second list receiving the highest votes, without any connection with the shareholders who, even jointly, filed, or voted for, the slate first by number of votes, to ensure to the minority shareholders a greater presence on the Board of Directors. The Board establishes its qualitative and quantitative composition deemed to be optimal for the effective completion of the duties and responsibilities entrusted to the Board of Directors by law, by the Supervisory Provisions and by the UniCredit Articles of Association, according to the current national and European provisions applicable on such topics, also concerning the time commitment and the limits upon the maximum number of offices that UniCredit Directors may hold. Moreover, Directors must take into account the provisions of Section 36 of Law Decree No.201/2011 (“ban on interlocking directorships”), approved as statute by Law No.214/2011, which establishes that holders of a seat in managerial, supervisory and controlling bodies, as well as top management officers in companies or group of companies active in banking, insurance and financial markets are forbidden to hold, or to exercise, similar duties, in competing companies or groups of companies. The function and competencies of the Board of Directors are set forth in the UniCredit Corporate Bodies and Committees Regulation, available on the Governance/Governance system & policies Section of the UniCredit website. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 71 Independence of Directors In compliance with the criteria established by Section 3 of the Code (which coincide with those envisaged by the UniCredit Articles of Association) and the provisions set out by Section 148 of the TUF, the Directors’ independence shall be assessed by the Board of Directors every time the Board is renewed, as well as on an annual basis and whenever a person is appointed as Director, on the basis of the information provided by the Director him/herself or, however, available to the Company. The outcome of the assessments of the Board shall be notified after the appointment, through a press release disclosed to the market and, subsequently, within the Corporate Governance Report. With reference to the Board of Directors’ members, the Corporate Governance, Nomination and Sustainability Committee and the Board of Directors, the latter at the verification carried out at the time of the Board renewal on 9 May 2018, carried out the assessment of the Directors’ independence requirements based on the statements made by the parties concerned and on the information available to the Company. With specific reference to the independence requirements laid down by the Code and the Articles of Association, information relating to the existence of direct or indirect relationships (credit relationships, business/professional relationships and employee relationships, as well as significant offices held, ) that the Directors and their other connected subjects may have with UniCredit and Group Companies was taken into account. In order to assess the potential significance of the abovementioned relationships, the Board of Directors has decided not to proceed with merely identifying predefined economic targets, which if simply exceeded could automatically indicate that independence has been compromised, as such check requires an overall assessment of both objective and subjective aspects. Therefore, for this purpose, the following criteria should be taken into account: (i) the nature and characteristics of the relationship; (ii) the amount in absolute and relative terms of the transactions; and (iii) the subjective profile of the relationship. More specifically, when assessing the significance of the relationship, the following information, where available, is considered by the Board: • as far as credit relations are concerned, the amount in absolute value of the credit granted, its weighting in relation to the system and, where appropriate, the economic and financial situation of the borrower; • as far as professional/commercial relations are concerned, the characteristics of the transaction/relationship, the amount of the consideration and, where appropriate, the economic and financial situation of the counterparty; • as far as offices held in Group companies are concerned, the total amount of any additional remunerations. In all the above cases, all the parties involved (Director or family member; UniCredit or Group Company) and, for relationships with companies/entities, the related kind of “connection" (post held/control participation) with the Director or the family member were taken into account. As a result of such assessments, the number of independent Directors according to the provisions of the Code is equal to 12. According to the Code, the Board of Statutory Auditors, in its 22 May 2018 meeting, ascertained, with a positive outcome, the proper application of the criteria and procedures adopted by the Board of Directors to assess the independence of its own members. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 71 Independence of Directors In compliance with the criteria established by Section 3 of the Code (which coincide with those envisaged by the UniCredit Articles of Association) and the provisions set out by Section 148 of the TUF, the Directors’ independence shall be assessed by the Board of Directors every time the Board is renewed, as well as on an annual basis and whenever a person is appointed as Director, on the basis of the information provided by the Director him/herself or, however, available to the Company. The outcome of the assessments of the Board shall be notified after the appointment, through a press release disclosed to the market and, subsequently, within the Corporate Governance Report. With reference to the Board of Directors’ members, the Corporate Governance, Nomination and Sustainability Committee and the Board of Directors, the latter at the verification carried out at the time of the Board renewal on 9 May 2018, carried out the assessment of the Directors’ independence requirements based on the statements made by the parties concerned and on the information available to the Company. With specific reference to the independence requirements laid down by the Code and the Articles of Association, information relating to the existence of direct or indirect relationships (credit relationships, business/professional relationships and employee relationships, as well as significant offices held, ) that the Directors and their other connected subjects may have with UniCredit and Group Companies was taken into account. In order to assess the potential significance of the abovementioned relationships, the Board of Directors has decided not to proceed with merely identifying predefined economic targets, which if simply exceeded could automatically indicate that independence has been compromised, as such check requires an overall assessment of both objective and subjective aspects. Therefore, for this purpose, the following criteria should be taken into account: (i) the nature and characteristics of the relationship; (ii) the amount in absolute and relative terms of the transactions; and (iii) the subjective profile of the relationship. More specifically, when assessing the significance of the relationship, the following information, where available, is considered by the Board: • as far as credit relations are concerned, the amount in absolute value of the credit granted, its weighting in relation to the system and, where appropriate, the economic and financial situation of the borrower; • as far as professional/commercial relations are concerned, the characteristics of the transaction/relationship, the amount of the consideration and, where appropriate, the economic and financial situation of the counterparty; • as far as offices held in Group companies are concerned, the total amount of any additional remunerations. In all the above cases, all the parties involved (Director or family member; UniCredit or Group Company) and, for relationships with companies/entities, the related kind of “connection" (post held/control participation) with the Director or the family member were taken into account. As a result of such assessments, the number of independent Directors according to the provisions of the Code is equal to 12. According to the Code, the Board of Statutory Auditors, in its 22 May 2018 meeting, ascertained, with a positive outcome, the proper application of the criteria and procedures adopted by the Board of Directors to assess the independence of its own members. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 71 Independence of Directors In compliance with the criteria established by Section 3 of the Code (which coincide with those envisaged by the UniCredit Articles of Association) and the provisions set out by Section 148 of the TUF, the Directors’ independence shall be assessed by the Board of Directors every time the Board is renewed, as well as on an annual basis and whenever a person is appointed as Director, on the basis of the information provided by the Director him/herself or, however, available to the Company. The outcome of the assessments of the Board shall be notified after the appointment, through a press release disclosed to the market and, subsequently, within the Corporate Governance Report. With reference to the Board of Directors’ members, the Corporate Governance, Nomination and Sustainability Committee and the Board of Directors, the latter at the verification carried out at the time of the Board renewal on 9 May 2018, carried out the assessment of the Directors’ independence requirements based on the statements made by the parties concerned and on the information available to the Company. With specific reference to the independence requirements laid down by the Code and the Articles of Association, information relating to the existence of direct or indirect relationships (credit relationships, business/professional relationships and employee relationships, as well as significant offices held, ) that the Directors and their other connected subjects may have with UniCredit and Group Companies was taken into account. In order to assess the potential significance of the abovementioned relationships, the Board of Directors has decided not to proceed with merely identifying predefined economic targets, which if simply exceeded could automatically indicate that independence has been compromised, as such check requires an overall assessment of both objective and subjective aspects. Therefore, for this purpose, the following criteria should be taken into account: (i) the nature and characteristics of the relationship; (ii) the amount in absolute and relative terms of the transactions; and (iii) the subjective profile of the relationship. More specifically, when assessing the significance of the relationship, the following information, where available, is considered by the Board: • as far as credit relations are concerned, the amount in absolute value of the credit granted, its weighting in relation to the system and, where appropriate, the economic and financial situation of the borrower; • as far as professional/commercial relations are concerned, the characteristics of the transaction/relationship, the amount of the consideration and, where appropriate, the economic and financial situation of the counterparty; • as far as offices held in Group companies are concerned, the total amount of any additional remunerations. In all the above cases, all the parties involved (Director or family member; UniCredit or Group Company) and, for relationships with companies/entities, the related kind of “connection" (post held/control participation) with the Director or the family member were taken into account. As a result of such assessments, the number of independent Directors according to the provisions of the Code is equal to 12. According to the Code, the Board of Statutory Auditors, in its 22 May 2018 meeting, ascertained, with a positive outcome, the proper application of the criteria and procedures adopted by the Board of Directors to assess the independence of its own members. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 71 Independence of Directors In compliance with the criteria established by Section 3 of the Code (which coincide with those envisaged by the UniCredit Articles of Association) and the provisions set out by Section 148 of the TUF, the Directors’ independence shall be assessed by the Board of Directors every time the Board is renewed, as well as on an annual basis and whenever a person is appointed as Director, on the basis of the information provided by the Director him/herself or, however, available to the Company. The outcome of the assessments of the Board shall be notified after the appointment, through a press release disclosed to the market and, subsequently, within the Corporate Governance Report. With reference to the Board of Directors’ members, the Corporate Governance, Nomination and Sustainability Committee and the Board of Directors, the latter at the verification carried out at the time of the Board renewal on 9 May 2018, carried out the assessment of the Directors’ independence requirements based on the statements made by the parties concerned and on the information available to the Company. With specific reference to the independence requirements laid down by the Code and the Articles of Association, information relating to the existence of direct or indirect relationships (credit relationships, business/professional relationships and employee relationships, as well as significant offices held, ) that the Directors and their other connected subjects may have with UniCredit and Group Companies was taken into account. In order to assess the potential significance of the abovementioned relationships, the Board of Directors has decided not to proceed with merely identifying predefined economic targets, which if simply exceeded could automatically indicate that independence has been compromised, as such check requires an overall assessment of both objective and subjective aspects. Therefore, for this purpose, the following criteria should be taken into account: (i) the nature and characteristics of the relationship; (ii) the amount in absolute and relative terms of the transactions; and (iii) the subjective profile of the relationship. More specifically, when assessing the significance of the relationship, the following information, where available, is considered by the Board: • as far as credit relations are concerned, the amount in absolute value of the credit granted, its weighting in relation to the system and, where appropriate, the economic and financial situation of the borrower; • as far as professional/commercial relations are concerned, the characteristics of the transaction/relationship, the amount of the consideration and, where appropriate, the economic and financial situation of the counterparty; • as far as offices held in Group companies are concerned, the total amount of any additional remunerations. In all the above cases, all the parties involved (Director or family member; UniCredit or Group Company) and, for relationships with companies/entities, the related kind of “connection" (post held/control participation) with the Director or the family member were taken into account. As a result of such assessments, the number of independent Directors according to the provisions of the Code is equal to 12. According to the Code, the Board of Statutory Auditors, in its 22 May 2018 meeting, ascertained, with a positive outcome, the proper application of the criteria and procedures adopted by the Board of Directors to assess the independence of its own members. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 71 Independence of Directors In compliance with the criteria established by Section 3 of the Code (which coincide with those envisaged by the UniCredit Articles of Association) and the provisions set out by Section 148 of the TUF, the Directors’ independence shall be assessed by the Board of Directors every time the Board is renewed, as well as on an annual basis and whenever a person is appointed as Director, on the basis of the information provided by the Director him/herself or, however, available to the Company. The outcome of the assessments of the Board shall be notified after the appointment, through a press release disclosed to the market and, subsequently, within the Corporate Governance Report. With reference to the Board of Directors’ members, the Corporate Governance, Nomination and Sustainability Committee and the Board of Directors, the latter at the verification carried out at the time of the Board renewal on 9 May 2018, carried out the assessment of the Directors’ independence requirements based on the statements made by the parties concerned and on the information available to the Company. With specific reference to the independence requirements laid down by the Code and the Articles of Association, information relating to the existence of direct or indirect relationships (credit relationships, business/professional relationships and employee relationships, as well as significant offices held, ) that the Directors and their other connected subjects may have with UniCredit and Group Companies was taken into account. In order to assess the potential significance of the abovementioned relationships, the Board of Directors has decided not to proceed with merely identifying predefined economic targets, which if simply exceeded could automatically indicate that independence has been compromised, as such check requires an overall assessment of both objective and subjective aspects. Therefore, for this purpose, the following criteria should be taken into account: (i) the nature and characteristics of the relationship; (ii) the amount in absolute and relative terms of the transactions; and (iii) the subjective profile of the relationship. More specifically, when assessing the significance of the relationship, the following information, where available, is considered by the Board: • as far as credit relations are concerned, the amount in absolute value of the credit granted, its weighting in relation to the system and, where appropriate, the economic and financial situation of the borrower; • as far as professional/commercial relations are concerned, the characteristics of the transaction/relationship, the amount of the consideration and, where appropriate, the economic and financial situation of the counterparty; • as far as offices held in Group companies are concerned, the total amount of any additional remunerations. In all the above cases, all the parties involved (Director or family member; UniCredit or Group Company) and, for relationships with companies/entities, the related kind of “connection" (post held/control participation) with the Director or the family member were taken into account. As a result of such assessments, the number of independent Directors according to the provisions of the Code is equal to 12. According to the Code, the Board of Statutory Auditors, in its 22 May 2018 meeting, ascertained, with a positive outcome, the proper application of the criteria and procedures adopted by the Board of Directors to assess the independence of its own members. Corporate Governance Governance organisational structure 72 2018 Annual Report and Accounts · UniCredit Status and activities of the Directors In the following chart the information regarding the members of the Board of Directors in office at the approval date of this document is reported. IN OFFICE SLATE (M/m) (*) EXECUTIVE NON-EXECUTIVE INDEPENDENT AS PER ARTICLES OF ASSOCIATION AND CODE INDEPENDENT AS PER TUF BOARD MEETINGS ATTENDANCE % (**) NUMBER OF OTHER POSITIONS (***) POSITION MEMBERS SINCE UNTIL Chairman Saccomanni Fabrizio 04.12.2018 Approval of 2020 financial statements M X X 100 -- Deputy Vice Chairman Bisoni Cesare 04.12.2018 Approval of 2020 financial statements M X X X 100 -- CEO ◊ Mustier Jean Pierre 04.12.2018 Approval of 2020 financial statements M X 100 -- Director Al Mehairi Mohamed Hamad 04.12.2018 Approval of 2020 financial statements M X X X 100 7 Director Andreotti Lamberto 04.12.2018 Approval of 2020 financial statements M X X X 100 1 Director Balbinot Sergio 04.12.2018 Approval of 2020 financial statements M X X 100 7 Director Böchenfeld Martha Dagmar 04.12.2018 Approval of 2020 financial statements M X X X 94.12 6 Director Cariello Vincenzo 04.12.2018 Approval of 2020 financial statements m X X X 90.91 -- Director Carletti Elena(1) 02.07.2019 04.11.2019 -- X X X -- -- Director de Wismes Isabelle 04.12.2018 Approval of 2020 financial statements M X X X 100 -- Director Micossi Stefano 04.12.2018 Approval of 2020 financial statements M X X X 100 -- Director Pierdicchi Maria 04.12.2018 Approval of 2020 financial statements M X X X 100 3 Director Tondi Francesca 04.12.2018 Approval of 2020 financial statements m X X X 100 1 Director Wolfgring Alexander 04.12.2018 Approval of 2020 financial statements M X X X 100 3 Director Zambon Elena 04.12.2018 Approval of 2020 financial statements M X X X 88.24 12 Directors that left off during and after the end of the Period Chairman Vita Giuseppe 05.13.2015 04.12.2018 m X X 100 1 Deputy Vice Chairman Calandra Buonaura Vincenzo 05.13.2015 04.12.2018 m X X 100 -- Director Bochniarz Henryka 05.13.2015 04.12.2018 m X X X 100 2 Director Caltagirone Alessandro 05.13.2015 04.12.2018 m X X X 83.33 5 Director Cordero di Montezemolo Luca(2) 05.13.2015 04.12.2018 m X X X 83.33 4 Director Reichlin Lucrezia 05.13.2015 04.12.2018 M X X X 100 4 Director Sironi Andrea(3) 04.12.2018 02.06.2019 M X X X 72.73 3 Director Streit Clara C. 05.13.2015 04.12.2018 m X X X 83.33 4 Director Vezzani Paola 05.13.2015 04.12.2018 m X X X 100 -- Director Wyand Anthony 05.13.2015 04.12.2018 m X X 83.33 2 Quorum required for the submission of the slates for the latest appointment: 0.5% Number of meetings held during the financial year: 17 Notes: (*) M = Member elected from the slate that obtained the majority of the Shareholders’ votes; m = Member elected from the slate voted by the minority; (**) Number of meeting attended/number of meetings held during the concerned party’s term of office with regard to the Period; (***) Number of positions as Director or Auditor held in other companies listed on regulated markets (both in Italy and abroad), including financial services companies, banks, insurance companies or other large companies. There is a list of such companies for each Director attached to the Report on corporate governance and ownership structure. ◊ Director in charge of the internal controls and risks management system. (1) Co-opted by the Board of Directors held on 6 February 2019, effective from 7 February 2019, in place of Mr. Andrea Sironi. As at the approval date of this document, information about the Director’s independence requirements is based on her statement. The meeting of such requirements shall be checked by the UniCredit Board of Directors in compliance with the applicable provisions. (2) Mr. Cordero di Montezemolo stepped down from his role as Vice Chairman on 20 April 2017. (3) Resigned effective as from 7 February 2019. Corporate Governance Governance organisational structure 72 2018 Annual Report and Accounts · UniCredit Status and activities of the Directors In the following chart the information regarding the members of the Board of Directors in office at the approval date of this document is reported. IN OFFICE SLATE (M/m) (*) EXECUTIVE NON-EXECUTIVE INDEPENDENT AS PER ARTICLES OF ASSOCIATION AND CODE INDEPENDENT AS PER TUF BOARD MEETINGS ATTENDANCE % (**) NUMBER OF OTHER POSITIONS (***) POSITION MEMBERS SINCE UNTIL Chairman Saccomanni Fabrizio 04.12.2018 Approval of 2020 financial statements M X X 100 -- Deputy Vice Chairman Bisoni Cesare 04.12.2018 Approval of 2020 financial statements M X X X 100 -- CEO ◊ Mustier Jean Pierre 04.12.2018 Approval of 2020 financial statements M X 100 -- Director Al Mehairi Mohamed Hamad 04.12.2018 Approval of 2020 financial statements M X X X 100 7 Director Andreotti Lamberto 04.12.2018 Approval of 2020 financial statements M X X X 100 1 Director Balbinot Sergio 04.12.2018 Approval of 2020 financial statements M X X 100 7 Director Böchenfeld Martha Dagmar 04.12.2018 Approval of 2020 financial statements M X X X 94.12 6 Director Cariello Vincenzo 04.12.2018 Approval of 2020 financial statements m X X X 90.91 -- Director Carletti Elena(1) 02.07.2019 04.11.2019 -- X X X -- -- Director de Wismes Isabelle 04.12.2018 Approval of 2020 financial statements M X X X 100 -- Director Micossi Stefano 04.12.2018 Approval of 2020 financial statements M X X X 100 -- Director Pierdicchi Maria 04.12.2018 Approval of 2020 financial statements M X X X 100 3 Director Tondi Francesca 04.12.2018 Approval of 2020 financial statements m X X X 100 1 Director Wolfgring Alexander 04.12.2018 Approval of 2020 financial statements M X X X 100 3 Director Zambon Elena 04.12.2018 Approval of 2020 financial statements M X X X 88.24 12 Directors that left off during and after the end of the Period Chairman Vita Giuseppe 05.13.2015 04.12.2018 m X X 100 1 Deputy Vice Chairman Calandra Buonaura Vincenzo 05.13.2015 04.12.2018 m X X 100 -- Director Bochniarz Henryka 05.13.2015 04.12.2018 m X X X 100 2 Director Caltagirone Alessandro 05.13.2015 04.12.2018 m X X X 83.33 5 Director Cordero di Montezemolo Luca(2) 05.13.2015 04.12.2018 m X X X 83.33 4 Director Reichlin Lucrezia 05.13.2015 04.12.2018 M X X X 100 4 Director Sironi Andrea(3) 04.12.2018 02.06.2019 M X X X 72.73 3 Director Streit Clara C. 05.13.2015 04.12.2018 m X X X 83.33 4 Director Vezzani Paola 05.13.2015 04.12.2018 m X X X 100 -- Director Wyand Anthony 05.13.2015 04.12.2018 m X X 83.33 2 Quorum required for the submission of the slates for the latest appointment: 0.5% Number of meetings held during the financial year: 17 Notes: (*) M = Member elected from the slate that obtained the majority of the Shareholders’ votes; m = Member elected from the slate voted by the minority; (**) Number of meeting attended/number of meetings held during the concerned party’s term of office with regard to the Period; (***) Number of positions as Director or Auditor held in other companies listed on regulated markets (both in Italy and abroad), including financial services companies, banks, insurance companies or other large companies. There is a list of such companies for each Director attached to the Report on corporate governance and ownership structure. ◊ Director in charge of the internal controls and risks management system. (1) Co-opted by the Board of Directors held on 6 February 2019, effective from 7 February 2019, in place of Mr. Andrea Sironi. As at the approval date of this document, information about the Director’s independence requirements is based on her statement. The meeting of such requirements shall be checked by the UniCredit Board of Directors in compliance with the applicable provisions. (2) Mr. Cordero di Montezemolo stepped down from his role as Vice Chairman on 20 April 2017. (3) Resigned effective as from 7 February 2019. Corporate Governance Governance organisational structure 72 2018 Annual Report and Accounts · UniCredit Status and activities of the Directors In the following chart the information regarding the members of the Board of Directors in office at the approval date of this document is reported. IN OFFICE SLATE (M/m) (*) EXECUTIVE NON-EXECUTIVE INDEPENDENT AS PER ARTICLES OF ASSOCIATION AND CODE INDEPENDENT AS PER TUF BOARD MEETINGS ATTENDANCE % (**) NUMBER OF OTHER POSITIONS (***) POSITION MEMBERS SINCE UNTIL Chairman Saccomanni Fabrizio 04.12.2018 Approval of 2020 financial statements M X X 100 -- Deputy Vice Chairman Bisoni Cesare 04.12.2018 Approval of 2020 financial statements M X X X 100 -- CEO ◊ Mustier Jean Pierre 04.12.2018 Approval of 2020 financial statements M X 100 -- Director Al Mehairi Mohamed Hamad 04.12.2018 Approval of 2020 financial statements M X X X 100 7 Director Andreotti Lamberto 04.12.2018 Approval of 2020 financial statements M X X X 100 1 Director Balbinot Sergio 04.12.2018 Approval of 2020 financial statements M X X 100 7 Director Böchenfeld Martha Dagmar 04.12.2018 Approval of 2020 financial statements M X X X 94.12 6 Director Cariello Vincenzo 04.12.2018 Approval of 2020 financial statements m X X X 90.91 -- Director Carletti Elena(1) 02.07.2019 04.11.2019 -- X X X -- -- Director de Wismes Isabelle 04.12.2018 Approval of 2020 financial statements M X X X 100 -- Director Micossi Stefano 04.12.2018 Approval of 2020 financial statements M X X X 100 -- Director Pierdicchi Maria 04.12.2018 Approval of 2020 financial statements M X X X 100 3 Director Tondi Francesca 04.12.2018 Approval of 2020 financial statements m X X X 100 1 Director Wolfgring Alexander 04.12.2018 Approval of 2020 financial statements M X X X 100 3 Director Zambon Elena 04.12.2018 Approval of 2020 financial statements M X X X 88.24 12 Directors that left off during and after the end of the Period Chairman Vita Giuseppe 05.13.2015 04.12.2018 m X X 100 1 Deputy Vice Chairman Calandra Buonaura Vincenzo 05.13.2015 04.12.2018 m X X 100 -- Director Bochniarz Henryka 05.13.2015 04.12.2018 m X X X 100 2 Director Caltagirone Alessandro 05.13.2015 04.12.2018 m X X X 83.33 5 Director Cordero di Montezemolo Luca(2) 05.13.2015 04.12.2018 m X X X 83.33 4 Director Reichlin Lucrezia 05.13.2015 04.12.2018 M X X X 100 4 Director Sironi Andrea(3) 04.12.2018 02.06.2019 M X X X 72.73 3 Director Streit Clara C. 05.13.2015 04.12.2018 m X X X 83.33 4 Director Vezzani Paola 05.13.2015 04.12.2018 m X X X 100 -- Director Wyand Anthony 05.13.2015 04.12.2018 m X X 83.33 2 Quorum required for the submission of the slates for the latest appointment: 0.5% Number of meetings held during the financial year: 17 Notes: (*) M = Member elected from the slate that obtained the majority of the Shareholders’ votes; m = Member elected from the slate voted by the minority; (**) Number of meeting attended/number of meetings held during the concerned party’s term of office with regard to the Period; (***) Number of positions as Director or Auditor held in other companies listed on regulated markets (both in Italy and abroad), including financial services companies, banks, insurance companies or other large companies. There is a list of such companies for each Director attached to the Report on corporate governance and ownership structure. ◊ Director in charge of the internal controls and risks management system. (1) Co-opted by the Board of Directors held on 6 February 2019, effective from 7 February 2019, in place of Mr. Andrea Sironi. As at the approval date of this document, information about the Director’s independence requirements is based on her statement. The meeting of such requirements shall be checked by the UniCredit Board of Directors in compliance with the applicable provisions. (2) Mr. Cordero di Montezemolo stepped down from his role as Vice Chairman on 20 April 2017. (3) Resigned effective as from 7 February 2019. Corporate Governance Governance organisational structure 72 2018 Annual Report and Accounts · UniCredit Status and activities of the Directors In the following chart the information regarding the members of the Board of Directors in office at the approval date of this document is reported. IN OFFICE SLATE (M/m) (*) EXECUTIVE NON-EXECUTIVE INDEPENDENT AS PER ARTICLES OF ASSOCIATION AND CODE INDEPENDENT AS PER TUF BOARD MEETINGS ATTENDANCE % (**) NUMBER OF OTHER POSITIONS (***) POSITION MEMBERS SINCE UNTIL Chairman Saccomanni Fabrizio 04.12.2018 Approval of 2020 financial statements M X X 100 -- Deputy Vice Chairman Bisoni Cesare 04.12.2018 Approval of 2020 financial statements M X X X 100 -- CEO ◊ Mustier Jean Pierre 04.12.2018 Approval of 2020 financial statements M X 100 -- Director Al Mehairi Mohamed Hamad 04.12.2018 Approval of 2020 financial statements M X X X 100 7 Director Andreotti Lamberto 04.12.2018 Approval of 2020 financial statements M X X X 100 1 Director Balbinot Sergio 04.12.2018 Approval of 2020 financial statements M X X 100 7 Director Böchenfeld Martha Dagmar 04.12.2018 Approval of 2020 financial statements M X X X 94.12 6 Director Cariello Vincenzo 04.12.2018 Approval of 2020 financial statements m X X X 90.91 -- Director Carletti Elena(1) 02.07.2019 04.11.2019 -- X X X -- -- Director de Wismes Isabelle 04.12.2018 Approval of 2020 financial statements M X X X 100 -- Director Micossi Stefano 04.12.2018 Approval of 2020 financial statements M X X X 100 -- Director Pierdicchi Maria 04.12.2018 Approval of 2020 financial statements M X X X 100 3 Director Tondi Francesca 04.12.2018 Approval of 2020 financial statements m X X X 100 1 Director Wolfgring Alexander 04.12.2018 Approval of 2020 financial statements M X X X 100 3 Director Zambon Elena 04.12.2018 Approval of 2020 financial statements M X X X 88.24 12 Directors that left off during and after the end of the Period Chairman Vita Giuseppe 05.13.2015 04.12.2018 m X X 100 1 Deputy Vice Chairman Calandra Buonaura Vincenzo 05.13.2015 04.12.2018 m X X 100 -- Director Bochniarz Henryka 05.13.2015 04.12.2018 m X X X 100 2 Director Caltagirone Alessandro 05.13.2015 04.12.2018 m X X X 83.33 5 Director Cordero di Montezemolo Luca(2) 05.13.2015 04.12.2018 m X X X 83.33 4 Director Reichlin Lucrezia 05.13.2015 04.12.2018 M X X X 100 4 Director Sironi Andrea(3) 04.12.2018 02.06.2019 M X X X 72.73 3 Director Streit Clara C. 05.13.2015 04.12.2018 m X X X 83.33 4 Director Vezzani Paola 05.13.2015 04.12.2018 m X X X 100 -- Director Wyand Anthony 05.13.2015 04.12.2018 m X X 83.33 2 Quorum required for the submission of the slates for the latest appointment: 0.5% Number of meetings held during the financial year: 17 Notes: (*) M = Member elected from the slate that obtained the majority of the Shareholders’ votes; m = Member elected from the slate voted by the minority; (**) Number of meeting attended/number of meetings held during the concerned party’s term of office with regard to the Period; (***) Number of positions as Director or Auditor held in other companies listed on regulated markets (both in Italy and abroad), including financial services companies, banks, insurance companies or other large companies. There is a list of such companies for each Director attached to the Report on corporate governance and ownership structure. ◊ Director in charge of the internal controls and risks management system. (1) Co-opted by the Board of Directors held on 6 February 2019, effective from 7 February 2019, in place of Mr. Andrea Sironi. As at the approval date of this document, information about the Director’s independence requirements is based on her statement. The meeting of such requirements shall be checked by the UniCredit Board of Directors in compliance with the applicable provisions. (2) Mr. Cordero di Montezemolo stepped down from his role as Vice Chairman on 20 April 2017. (3) Resigned effective as from 7 February 2019. Corporate Governance Governance organisational structure 72 2018 Annual Report and Accounts · UniCredit Status and activities of the Directors In the following chart the information regarding the members of the Board of Directors in office at the approval date of this document is reported. IN OFFICE SLATE (M/m) (*) EXECUTIVE NON-EXECUTIVE INDEPENDENT AS PER ARTICLES OF ASSOCIATION AND CODE INDEPENDENT AS PER TUF BOARD MEETINGS ATTENDANCE % (**) NUMBER OF OTHER POSITIONS (***) POSITION MEMBERS SINCE UNTIL Chairman Saccomanni Fabrizio 04.12.2018 Approval of 2020 financial statements M X X 100 -- Deputy Vice Chairman Bisoni Cesare 04.12.2018 Approval of 2020 financial statements M X X X 100 -- CEO ◊ Mustier Jean Pierre 04.12.2018 Approval of 2020 financial statements M X 100 -- Director Al Mehairi Mohamed Hamad 04.12.2018 Approval of 2020 financial statements M X X X 100 7 Director Andreotti Lamberto 04.12.2018 Approval of 2020 financial statements M X X X 100 1 Director Balbinot Sergio 04.12.2018 Approval of 2020 financial statements M X X 100 7 Director Böchenfeld Martha Dagmar 04.12.2018 Approval of 2020 financial statements M X X X 94.12 6 Director Cariello Vincenzo 04.12.2018 Approval of 2020 financial statements m X X X 90.91 -- Director Carletti Elena(1) 02.07.2019 04.11.2019 -- X X X -- -- Director de Wismes Isabelle 04.12.2018 Approval of 2020 financial statements M X X X 100 -- Director Micossi Stefano 04.12.2018 Approval of 2020 financial statements M X X X 100 -- Director Pierdicchi Maria 04.12.2018 Approval of 2020 financial statements M X X X 100 3 Director Tondi Francesca 04.12.2018 Approval of 2020 financial statements m X X X 100 1 Director Wolfgring Alexander 04.12.2018 Approval of 2020 financial statements M X X X 100 3 Director Zambon Elena 04.12.2018 Approval of 2020 financial statements M X X X 88.24 12 Directors that left off during and after the end of the Period Chairman Vita Giuseppe 05.13.2015 04.12.2018 m X X 100 1 Deputy Vice Chairman Calandra Buonaura Vincenzo 05.13.2015 04.12.2018 m X X 100 -- Director Bochniarz Henryka 05.13.2015 04.12.2018 m X X X 100 2 Director Caltagirone Alessandro 05.13.2015 04.12.2018 m X X X 83.33 5 Director Cordero di Montezemolo Luca(2) 05.13.2015 04.12.2018 m X X X 83.33 4 Director Reichlin Lucrezia 05.13.2015 04.12.2018 M X X X 100 4 Director Sironi Andrea(3) 04.12.2018 02.06.2019 M X X X 72.73 3 Director Streit Clara C. 05.13.2015 04.12.2018 m X X X 83.33 4 Director Vezzani Paola 05.13.2015 04.12.2018 m X X X 100 -- Director Wyand Anthony 05.13.2015 04.12.2018 m X X 83.33 2 Quorum required for the submission of the slates for the latest appointment: 0.5% Number of meetings held during the financial year: 17 Notes: (*) M = Member elected from the slate that obtained the majority of the Shareholders’ votes; m = Member elected from the slate voted by the minority; (**) Number of meeting attended/number of meetings held during the concerned party’s term of office with regard to the Period; (***) Number of positions as Director or Auditor held in other companies listed on regulated markets (both in Italy and abroad), including financial services companies, banks, insurance companies or other large companies. There is a list of such companies for each Director attached to the Report on corporate governance and ownership structure. ◊ Director in charge of the internal controls and risks management system. (1) Co-opted by the Board of Directors held on 6 February 2019, effective from 7 February 2019, in place of Mr. Andrea Sironi. As at the approval date of this document, information about the Director’s independence requirements is based on her statement. The meeting of such requirements shall be checked by the UniCredit Board of Directors in compliance with the applicable provisions. (2) Mr. Cordero di Montezemolo stepped down from his role as Vice Chairman on 20 April 2017. (3) Resigned effective as from 7 February 2019. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 73 Committees of the Board of Directors In order to foster an efficient information and advisory system to enable the Board of Directors better to assess the topics for which it is responsible, also in accordance with the provisions of the Code, the Board has established four Committees, vested with research, advisory and proposal-making powers diversified by sector of competence: the Internal Controls & Risks Committee, the Corporate Governance, Nomination and Sustainability Committee, the Remuneration Committee and the Related-Parties Committee. Their duties are undertaken based on terms of reference and procedures set forth by the Board. The Committees consist, as a rule, of a number of members from 3 up to 5. More specifically, the Internal Controls & Risks Committee, the Corporate Governance, Nomination and Sustainability Committee and the Remuneration Committee, set up in compliance with the provisions of the Banca d’Italia Supervisory Regulations on banks’ corporate governance, envisaging 3 specialist committees, one on appointments, one on risks and one on remuneration, are composed of non-executives Directors, mostly independent pursuant to the Articles of Association. Such Committees must be differentiated from each other by at least one member and, if a Director elected by the minorities is present, that Director is a member of at least one Committee. The Chairman of each Committee shall be chosen from among the independent members. The Related-Parties Committee, set up for overseeing issues concerning transactions with related and associated parties, in compliance with the CONSOB regulatory provisions and the Banca d’Italia Supervisory Regulations, consists only of independent Directors pursuant to Code. The Corporate Governance, Nomination and Sustainability Committee also supervises the sustainability issues linked to the activity exercised by UniCredit and to the dynamics of the interactions of the latter with all the stakeholders. None of the functions of one or more specialist Committees on appointments, risks and remuneration envisaged by the Code has been reserved to the Board of Directors. Moreover, none of the abovementioned Committees, per se, performs the multiple functions of two or more committees as envisaged by the Code. The Committee functions have not been allocated amongst the various Committees in a different manner vis-à-vis the provisions of the Code. The Committee’s tasks are coordinated by the Chairman, who exercises all necessary powers for its proper functioning. Each Committee draws up an annual plan of activities to ensure the fulfillment of its tasks. Except as specifically provided for the Related-Parties Committee, Committee meetings are convened by the Chairman with frequency adequate to the fulfillment of its tasks and plan of activities or when needed or requested in writing, with proper motivation, by at least two members of the Committee. Committee members have the necessary knowledge, skills and experience to perform the duties assigned to them and ensure that any other corporate positions they hold in other companies or entities (including non-Italian ones) are compatible with their availability and commitment to serve as a Committee member. At the invitation of each Committee Chairman, the CEO, other Directors, the General Manager, the Manager in charge of drafting the company financial reports, as well as personnel belonging to the Company and the Group, may attend Committee meetings on specific Agenda items. Without prejudice to the possibility for the Statutory Auditors to attend the meetings, at the invitation of each Committee Chairman, the Chairman of the Board of Statutory Auditors, or other Auditors designated by the latter, may be called upon to attend Committee meetings. Always at the invitation of each Committee Chairman, personnel or externals appointed in the corporate bodies of the Group’s subsidiaries may be called upon to attend Committee meetings. To perform their duties, Committees have access to the financial resources necessary to guarantee their operational independence and, within the limitations of the budget approved by the Board of Directors, may consult independent external experts and invite them to attend meetings; in the event of specific requirements, the relevant budget may be supplemented. The Chairman of each Committee reports at the first available meeting of the Board of Directors on the work undertaken at the Committee meetings. The Board Committees’ composition, functions and competencies are set forth in the Corporate Bodies and Committees Regulation, available on the Governance/Governance system & policies Section of the UniCredit website. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 73 Committees of the Board of Directors In order to foster an efficient information and advisory system to enable the Board of Directors better to assess the topics for which it is responsible, also in accordance with the provisions of the Code, the Board has established four Committees, vested with research, advisory and proposal-making powers diversified by sector of competence: the Internal Controls & Risks Committee, the Corporate Governance, Nomination and Sustainability Committee, the Remuneration Committee and the Related-Parties Committee. Their duties are undertaken based on terms of reference and procedures set forth by the Board. The Committees consist, as a rule, of a number of members from 3 up to 5. More specifically, the Internal Controls & Risks Committee, the Corporate Governance, Nomination and Sustainability Committee and the Remuneration Committee, set up in compliance with the provisions of the Banca d’Italia Supervisory Regulations on banks’ corporate governance, envisaging 3 specialist committees, one on appointments, one on risks and one on remuneration, are composed of non-executives Directors, mostly independent pursuant to the Articles of Association. Such Committees must be differentiated from each other by at least one member and, if a Director elected by the minorities is present, that Director is a member of at least one Committee. The Chairman of each Committee shall be chosen from among the independent members. The Related-Parties Committee, set up for overseeing issues concerning transactions with related and associated parties, in compliance with the CONSOB regulatory provisions and the Banca d’Italia Supervisory Regulations, consists only of independent Directors pursuant to Code. The Corporate Governance, Nomination and Sustainability Committee also supervises the sustainability issues linked to the activity exercised by UniCredit and to the dynamics of the interactions of the latter with all the stakeholders. None of the functions of one or more specialist Committees on appointments, risks and remuneration envisaged by the Code has been reserved to the Board of Directors. Moreover, none of the abovementioned Committees, per se, performs the multiple functions of two or more committees as envisaged by the Code. The Committee functions have not been allocated amongst the various Committees in a different manner vis-à-vis the provisions of the Code. The Committee’s tasks are coordinated by the Chairman, who exercises all necessary powers for its proper functioning. Each Committee draws up an annual plan of activities to ensure the fulfillment of its tasks. Except as specifically provided for the Related-Parties Committee, Committee meetings are convened by the Chairman with frequency adequate to the fulfillment of its tasks and plan of activities or when needed or requested in writing, with proper motivation, by at least two members of the Committee. Committee members have the necessary knowledge, skills and experience to perform the duties assigned to them and ensure that any other corporate positions they hold in other companies or entities (including non-Italian ones) are compatible with their availability and commitment to serve as a Committee member. At the invitation of each Committee Chairman, the CEO, other Directors, the General Manager, the Manager in charge of drafting the company financial reports, as well as personnel belonging to the Company and the Group, may attend Committee meetings on specific Agenda items. Without prejudice to the possibility for the Statutory Auditors to attend the meetings, at the invitation of each Committee Chairman, the Chairman of the Board of Statutory Auditors, or other Auditors designated by the latter, may be called upon to attend Committee meetings. Always at the invitation of each Committee Chairman, personnel or externals appointed in the corporate bodies of the Group’s subsidiaries may be called upon to attend Committee meetings. To perform their duties, Committees have access to the financial resources necessary to guarantee their operational independence and, within the limitations of the budget approved by the Board of Directors, may consult independent external experts and invite them to attend meetings; in the event of specific requirements, the relevant budget may be supplemented. The Chairman of each Committee reports at the first available meeting of the Board of Directors on the work undertaken at the Committee meetings. The Board Committees’ composition, functions and competencies are set forth in the Corporate Bodies and Committees Regulation, available on the Governance/Governance system & policies Section of the UniCredit website. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 73 Committees of the Board of Directors In order to foster an efficient information and advisory system to enable the Board of Directors better to assess the topics for which it is responsible, also in accordance with the provisions of the Code, the Board has established four Committees, vested with research, advisory and proposal-making powers diversified by sector of competence: the Internal Controls & Risks Committee, the Corporate Governance, Nomination and Sustainability Committee, the Remuneration Committee and the Related-Parties Committee. Their duties are undertaken based on terms of reference and procedures set forth by the Board. The Committees consist, as a rule, of a number of members from 3 up to 5. More specifically, the Internal Controls & Risks Committee, the Corporate Governance, Nomination and Sustainability Committee and the Remuneration Committee, set up in compliance with the provisions of the Banca d’Italia Supervisory Regulations on banks’ corporate governance, envisaging 3 specialist committees, one on appointments, one on risks and one on remuneration, are composed of non-executives Directors, mostly independent pursuant to the Articles of Association. Such Committees must be differentiated from each other by at least one member and, if a Director elected by the minorities is present, that Director is a member of at least one Committee. The Chairman of each Committee shall be chosen from among the independent members. The Related-Parties Committee, set up for overseeing issues concerning transactions with related and associated parties, in compliance with the CONSOB regulatory provisions and the Banca d’Italia Supervisory Regulations, consists only of independent Directors pursuant to Code. The Corporate Governance, Nomination and Sustainability Committee also supervises the sustainability issues linked to the activity exercised by UniCredit and to the dynamics of the interactions of the latter with all the stakeholders. None of the functions of one or more specialist Committees on appointments, risks and remuneration envisaged by the Code has been reserved to the Board of Directors. Moreover, none of the abovementioned Committees, per se, performs the multiple functions of two or more committees as envisaged by the Code. The Committee functions have not been allocated amongst the various Committees in a different manner vis-à-vis the provisions of the Code. The Committee’s tasks are coordinated by the Chairman, who exercises all necessary powers for its proper functioning. Each Committee draws up an annual plan of activities to ensure the fulfillment of its tasks. Except as specifically provided for the Related-Parties Committee, Committee meetings are convened by the Chairman with frequency adequate to the fulfillment of its tasks and plan of activities or when needed or requested in writing, with proper motivation, by at least two members of the Committee. Committee members have the necessary knowledge, skills and experience to perform the duties assigned to them and ensure that any other corporate positions they hold in other companies or entities (including non-Italian ones) are compatible with their availability and commitment to serve as a Committee member. At the invitation of each Committee Chairman, the CEO, other Directors, the General Manager, the Manager in charge of drafting the company financial reports, as well as personnel belonging to the Company and the Group, may attend Committee meetings on specific Agenda items. Without prejudice to the possibility for the Statutory Auditors to attend the meetings, at the invitation of each Committee Chairman, the Chairman of the Board of Statutory Auditors, or other Auditors designated by the latter, may be called upon to attend Committee meetings. Always at the invitation of each Committee Chairman, personnel or externals appointed in the corporate bodies of the Group’s subsidiaries may be called upon to attend Committee meetings. To perform their duties, Committees have access to the financial resources necessary to guarantee their operational independence and, within the limitations of the budget approved by the Board of Directors, may consult independent external experts and invite them to attend meetings; in the event of specific requirements, the relevant budget may be supplemented. The Chairman of each Committee reports at the first available meeting of the Board of Directors on the work undertaken at the Committee meetings. The Board Committees’ composition, functions and competencies are set forth in the Corporate Bodies and Committees Regulation, available on the Governance/Governance system & policies Section of the UniCredit website. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 73 Committees of the Board of Directors In order to foster an efficient information and advisory system to enable the Board of Directors better to assess the topics for which it is responsible, also in accordance with the provisions of the Code, the Board has established four Committees, vested with research, advisory and proposal-making powers diversified by sector of competence: the Internal Controls & Risks Committee, the Corporate Governance, Nomination and Sustainability Committee, the Remuneration Committee and the Related-Parties Committee. Their duties are undertaken based on terms of reference and procedures set forth by the Board. The Committees consist, as a rule, of a number of members from 3 up to 5. More specifically, the Internal Controls & Risks Committee, the Corporate Governance, Nomination and Sustainability Committee and the Remuneration Committee, set up in compliance with the provisions of the Banca d’Italia Supervisory Regulations on banks’ corporate governance, envisaging 3 specialist committees, one on appointments, one on risks and one on remuneration, are composed of non-executives Directors, mostly independent pursuant to the Articles of Association. Such Committees must be differentiated from each other by at least one member and, if a Director elected by the minorities is present, that Director is a member of at least one Committee. The Chairman of each Committee shall be chosen from among the independent members. The Related-Parties Committee, set up for overseeing issues concerning transactions with related and associated parties, in compliance with the CONSOB regulatory provisions and the Banca d’Italia Supervisory Regulations, consists only of independent Directors pursuant to Code. The Corporate Governance, Nomination and Sustainability Committee also supervises the sustainability issues linked to the activity exercised by UniCredit and to the dynamics of the interactions of the latter with all the stakeholders. None of the functions of one or more specialist Committees on appointments, risks and remuneration envisaged by the Code has been reserved to the Board of Directors. Moreover, none of the abovementioned Committees, per se, performs the multiple functions of two or more committees as envisaged by the Code. The Committee functions have not been allocated amongst the various Committees in a different manner vis-à-vis the provisions of the Code. The Committee’s tasks are coordinated by the Chairman, who exercises all necessary powers for its proper functioning. Each Committee draws up an annual plan of activities to ensure the fulfillment of its tasks. Except as specifically provided for the Related-Parties Committee, Committee meetings are convened by the Chairman with frequency adequate to the fulfillment of its tasks and plan of activities or when needed or requested in writing, with proper motivation, by at least two members of the Committee. Committee members have the necessary knowledge, skills and experience to perform the duties assigned to them and ensure that any other corporate positions they hold in other companies or entities (including non-Italian ones) are compatible with their availability and commitment to serve as a Committee member. At the invitation of each Committee Chairman, the CEO, other Directors, the General Manager, the Manager in charge of drafting the company financial reports, as well as personnel belonging to the Company and the Group, may attend Committee meetings on specific Agenda items. Without prejudice to the possibility for the Statutory Auditors to attend the meetings, at the invitation of each Committee Chairman, the Chairman of the Board of Statutory Auditors, or other Auditors designated by the latter, may be called upon to attend Committee meetings. Always at the invitation of each Committee Chairman, personnel or externals appointed in the corporate bodies of the Group’s subsidiaries may be called upon to attend Committee meetings. To perform their duties, Committees have access to the financial resources necessary to guarantee their operational independence and, within the limitations of the budget approved by the Board of Directors, may consult independent external experts and invite them to attend meetings; in the event of specific requirements, the relevant budget may be supplemented. The Chairman of each Committee reports at the first available meeting of the Board of Directors on the work undertaken at the Committee meetings. The Board Committees’ composition, functions and competencies are set forth in the Corporate Bodies and Committees Regulation, available on the Governance/Governance system & policies Section of the UniCredit website. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 73 Committees of the Board of Directors In order to foster an efficient information and advisory system to enable the Board of Directors better to assess the topics for which it is responsible, also in accordance with the provisions of the Code, the Board has established four Committees, vested with research, advisory and proposal-making powers diversified by sector of competence: the Internal Controls & Risks Committee, the Corporate Governance, Nomination and Sustainability Committee, the Remuneration Committee and the Related-Parties Committee. Their duties are undertaken based on terms of reference and procedures set forth by the Board. The Committees consist, as a rule, of a number of members from 3 up to 5. More specifically, the Internal Controls & Risks Committee, the Corporate Governance, Nomination and Sustainability Committee and the Remuneration Committee, set up in compliance with the provisions of the Banca d’Italia Supervisory Regulations on banks’ corporate governance, envisaging 3 specialist committees, one on appointments, one on risks and one on remuneration, are composed of non-executives Directors, mostly independent pursuant to the Articles of Association. Such Committees must be differentiated from each other by at least one member and, if a Director elected by the minorities is present, that Director is a member of at least one Committee. The Chairman of each Committee shall be chosen from among the independent members. The Related-Parties Committee, set up for overseeing issues concerning transactions with related and associated parties, in compliance with the CONSOB regulatory provisions and the Banca d’Italia Supervisory Regulations, consists only of independent Directors pursuant to Code. The Corporate Governance, Nomination and Sustainability Committee also supervises the sustainability issues linked to the activity exercised by UniCredit and to the dynamics of the interactions of the latter with all the stakeholders. None of the functions of one or more specialist Committees on appointments, risks and remuneration envisaged by the Code has been reserved to the Board of Directors. Moreover, none of the abovementioned Committees, per se, performs the multiple functions of two or more committees as envisaged by the Code. The Committee functions have not been allocated amongst the various Committees in a different manner vis-à-vis the provisions of the Code. The Committee’s tasks are coordinated by the Chairman, who exercises all necessary powers for its proper functioning. Each Committee draws up an annual plan of activities to ensure the fulfillment of its tasks. Except as specifically provided for the Related-Parties Committee, Committee meetings are convened by the Chairman with frequency adequate to the fulfillment of its tasks and plan of activities or when needed or requested in writing, with proper motivation, by at least two members of the Committee. Committee members have the necessary knowledge, skills and experience to perform the duties assigned to them and ensure that any other corporate positions they hold in other companies or entities (including non-Italian ones) are compatible with their availability and commitment to serve as a Committee member. At the invitation of each Committee Chairman, the CEO, other Directors, the General Manager, the Manager in charge of drafting the company financial reports, as well as personnel belonging to the Company and the Group, may attend Committee meetings on specific Agenda items. Without prejudice to the possibility for the Statutory Auditors to attend the meetings, at the invitation of each Committee Chairman, the Chairman of the Board of Statutory Auditors, or other Auditors designated by the latter, may be called upon to attend Committee meetings. Always at the invitation of each Committee Chairman, personnel or externals appointed in the corporate bodies of the Group’s subsidiaries may be called upon to attend Committee meetings. To perform their duties, Committees have access to the financial resources necessary to guarantee their operational independence and, within the limitations of the budget approved by the Board of Directors, may consult independent external experts and invite them to attend meetings; in the event of specific requirements, the relevant budget may be supplemented. The Chairman of each Committee reports at the first available meeting of the Board of Directors on the work undertaken at the Committee meetings. The Board Committees’ composition, functions and competencies are set forth in the Corporate Bodies and Committees Regulation, available on the Governance/Governance system & policies Section of the UniCredit website. Corporate Governance Governance organisational structure 74 2018 Annual Report and Accounts · UniCredit Internal Controls & Risks Committee The Internal Controls & Risks Committee consists of 5 non-executive Directors. The composition of the Committee is the following: Mr. Alexander Wolfgring (Chairman), Ms. Martha Dagmar Böckenfeld, Ms. Isabelle de Wismes, Ms. Maria Pierdicchi and Mr. Andrea Sironi. Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Internal Controls & Risks Committee effective from 7 February 2019. All members of the Committee meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. Committee meetings are attended by the Chairman of the Board of Statutory Auditors, the Head of Internal Audit, the Chief Compliance Officer and the Group Chief Risk Officer. At the invitation of the Committee Chairman, The Chief Executive Officer, other Directors, the Manager in charge of drafting the Company financial reports, as well as personnel belonging to the Company and the Group, may attend Committee meetings. Staff from the external audit firm may also be invited. The Committee is responsible for setting up the necessary functional links with the Board of Statutory Auditors, so as to undertake activities deemed common to the two bodies, and to exchange information of mutual interest, within the purview of their respective competencies. The Committee must be able to access relevant corporate information, consult external experts and, where necessary, communicate directly with the Heads of Internal Audit, Group Risk Management and Group Compliance. In 2018, the Committee held 13 meetings. Duties The Committee supports the Board of Directors on risk management and control-related issues. Among other things, the Committee: a) with the support of the Corporate Governance, Nomination and Sustainability Committee, identifies and proposes to the Board who should be appointed as Head of the corporate control functions or assesses the evaluation of their dismissal; for the Head of Internal Audit function, issues its opinion on setting the remuneration and the performance goals associated with its variable portion in line with the company policies; b) pre-examines activity programmes (including audit plans) and annual reports from corporate control functions to be sent to the Board, as well as periodical reports prepared by these functions above and beyond legal or regulatory requirements; c) evaluates and issues opinions to the Board on the compliance of the internal control system and corporate organization with the applicable rules and regulations, and on the requirements that must be complied with by the corporate control functions, drawing the Board’s attention to any weaknesses and consequent corrective actions to be implemented; for this purpose, it assesses proposals put forward by the CEO; d) through evaluations and opinions, contributes to defining company policy on the outsourcing of corporate control functions; e) verifies that the corporate control functions correctly comply with the Board’s recommendations and guidelines, assisting the Board in drafting the coordination documents envisaged under Banca d’Italia Circular No.285; f) examines and assesses the correct use of accounting principles and their uniformity with regard to drafting the main accounting documents (such as, by way of example, operating and consolidated financial statements, interim operating reports, etc.), for this purpose coordinating with the Manager in charge of drafting the company financial reports and with the Board of Statutory Auditors; g) examines the work carried out by the Group’s external auditors and the results stated in their reports or any letters and suggestions; h) assesses any findings reported by Internal Audit and Group Compliance, or that may arise from enquiries and/or investigations carried out by third parties; i) may seek specific audit interventions, at such time informing the Chairman of the Board of Statutory Auditors; j) analyses Group guidelines for the Group Compliance function that fall within its remit, monitoring that they have been adopted and implemented; k) requests that the Head of Internal Audit draft any proposals for the qualitative and quantitative improvement of the function itself; l) ss involved, within its specific remit, in the process of identifying material risk takers on an on-going basis. Corporate Governance Governance organisational structure 74 2018 Annual Report and Accounts · UniCredit Internal Controls & Risks Committee The Internal Controls & Risks Committee consists of 5 non-executive Directors. The composition of the Committee is the following: Mr. Alexander Wolfgring (Chairman), Ms. Martha Dagmar Böckenfeld, Ms. Isabelle de Wismes, Ms. Maria Pierdicchi and Mr. Andrea Sironi. Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Internal Controls & Risks Committee effective from 7 February 2019. All members of the Committee meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. Committee meetings are attended by the Chairman of the Board of Statutory Auditors, the Head of Internal Audit, the Chief Compliance Officer and the Group Chief Risk Officer. At the invitation of the Committee Chairman, The Chief Executive Officer, other Directors, the Manager in charge of drafting the Company financial reports, as well as personnel belonging to the Company and the Group, may attend Committee meetings. Staff from the external audit firm may also be invited. The Committee is responsible for setting up the necessary functional links with the Board of Statutory Auditors, so as to undertake activities deemed common to the two bodies, and to exchange information of mutual interest, within the purview of their respective competencies. The Committee must be able to access relevant corporate information, consult external experts and, where necessary, communicate directly with the Heads of Internal Audit, Group Risk Management and Group Compliance. In 2018, the Committee held 13 meetings. Duties The Committee supports the Board of Directors on risk management and control-related issues. Among other things, the Committee: a) with the support of the Corporate Governance, Nomination and Sustainability Committee, identifies and proposes to the Board who should be appointed as Head of the corporate control functions or assesses the evaluation of their dismissal; for the Head of Internal Audit function, issues its opinion on setting the remuneration and the performance goals associated with its variable portion in line with the company policies; b) pre-examines activity programmes (including audit plans) and annual reports from corporate control functions to be sent to the Board, as well as periodical reports prepared by these functions above and beyond legal or regulatory requirements; c) evaluates and issues opinions to the Board on the compliance of the internal control system and corporate organization with the applicable rules and regulations, and on the requirements that must be complied with by the corporate control functions, drawing the Board’s attention to any weaknesses and consequent corrective actions to be implemented; for this purpose, it assesses proposals put forward by the CEO; d) through evaluations and opinions, contributes to defining company policy on the outsourcing of corporate control functions; e) verifies that the corporate control functions correctly comply with the Board’s recommendations and guidelines, assisting the Board in drafting the coordination documents envisaged under Banca d’Italia Circular No.285; f) examines and assesses the correct use of accounting principles and their uniformity with regard to drafting the main accounting documents (such as, by way of example, operating and consolidated financial statements, interim operating reports, etc.), for this purpose coordinating with the Manager in charge of drafting the company financial reports and with the Board of Statutory Auditors; g) examines the work carried out by the Group’s external auditors and the results stated in their reports or any letters and suggestions; h) assesses any findings reported by Internal Audit and Group Compliance, or that may arise from enquiries and/or investigations carried out by third parties; i) may seek specific audit interventions, at such time informing the Chairman of the Board of Statutory Auditors; j) analyses Group guidelines for the Group Compliance function that fall within its remit, monitoring that they have been adopted and implemented; k) requests that the Head of Internal Audit draft any proposals for the qualitative and quantitative improvement of the function itself; l) ss involved, within its specific remit, in the process of identifying material risk takers on an on-going basis. Corporate Governance Governance organisational structure 74 2018 Annual Report and Accounts · UniCredit Internal Controls & Risks Committee The Internal Controls & Risks Committee consists of 5 non-executive Directors. The composition of the Committee is the following: Mr. Alexander Wolfgring (Chairman), Ms. Martha Dagmar Böckenfeld, Ms. Isabelle de Wismes, Ms. Maria Pierdicchi and Mr. Andrea Sironi. Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Internal Controls & Risks Committee effective from 7 February 2019. All members of the Committee meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. Committee meetings are attended by the Chairman of the Board of Statutory Auditors, the Head of Internal Audit, the Chief Compliance Officer and the Group Chief Risk Officer. At the invitation of the Committee Chairman, The Chief Executive Officer, other Directors, the Manager in charge of drafting the Company financial reports, as well as personnel belonging to the Company and the Group, may attend Committee meetings. Staff from the external audit firm may also be invited. The Committee is responsible for setting up the necessary functional links with the Board of Statutory Auditors, so as to undertake activities deemed common to the two bodies, and to exchange information of mutual interest, within the purview of their respective competencies. The Committee must be able to access relevant corporate information, consult external experts and, where necessary, communicate directly with the Heads of Internal Audit, Group Risk Management and Group Compliance. In 2018, the Committee held 13 meetings. Duties The Committee supports the Board of Directors on risk management and control-related issues. Among other things, the Committee: a) with the support of the Corporate Governance, Nomination and Sustainability Committee, identifies and proposes to the Board who should be appointed as Head of the corporate control functions or assesses the evaluation of their dismissal; for the Head of Internal Audit function, issues its opinion on setting the remuneration and the performance goals associated with its variable portion in line with the company policies; b) pre-examines activity programmes (including audit plans) and annual reports from corporate control functions to be sent to the Board, as well as periodical reports prepared by these functions above and beyond legal or regulatory requirements; c) evaluates and issues opinions to the Board on the compliance of the internal control system and corporate organization with the applicable rules and regulations, and on the requirements that must be complied with by the corporate control functions, drawing the Board’s attention to any weaknesses and consequent corrective actions to be implemented; for this purpose, it assesses proposals put forward by the CEO; d) through evaluations and opinions, contributes to defining company policy on the outsourcing of corporate control functions; e) verifies that the corporate control functions correctly comply with the Board’s recommendations and guidelines, assisting the Board in drafting the coordination documents envisaged under Banca d’Italia Circular No.285; f) examines and assesses the correct use of accounting principles and their uniformity with regard to drafting the main accounting documents (such as, by way of example, operating and consolidated financial statements, interim operating reports, etc.), for this purpose coordinating with the Manager in charge of drafting the company financial reports and with the Board of Statutory Auditors; g) examines the work carried out by the Group’s external auditors and the results stated in their reports or any letters and suggestions; h) assesses any findings reported by Internal Audit and Group Compliance, or that may arise from enquiries and/or investigations carried out by third parties; i) may seek specific audit interventions, at such time informing the Chairman of the Board of Statutory Auditors; j) analyses Group guidelines for the Group Compliance function that fall within its remit, monitoring that they have been adopted and implemented; k) requests that the Head of Internal Audit draft any proposals for the qualitative and quantitative improvement of the function itself; l) ss involved, within its specific remit, in the process of identifying material risk takers on an on-going basis. Corporate Governance Governance organisational structure 74 2018 Annual Report and Accounts · UniCredit Internal Controls & Risks Committee The Internal Controls & Risks Committee consists of 5 non-executive Directors. The composition of the Committee is the following: Mr. Alexander Wolfgring (Chairman), Ms. Martha Dagmar Böckenfeld, Ms. Isabelle de Wismes, Ms. Maria Pierdicchi and Mr. Andrea Sironi. Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Internal Controls & Risks Committee effective from 7 February 2019. All members of the Committee meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. Committee meetings are attended by the Chairman of the Board of Statutory Auditors, the Head of Internal Audit, the Chief Compliance Officer and the Group Chief Risk Officer. At the invitation of the Committee Chairman, The Chief Executive Officer, other Directors, the Manager in charge of drafting the Company financial reports, as well as personnel belonging to the Company and the Group, may attend Committee meetings. Staff from the external audit firm may also be invited. The Committee is responsible for setting up the necessary functional links with the Board of Statutory Auditors, so as to undertake activities deemed common to the two bodies, and to exchange information of mutual interest, within the purview of their respective competencies. The Committee must be able to access relevant corporate information, consult external experts and, where necessary, communicate directly with the Heads of Internal Audit, Group Risk Management and Group Compliance. In 2018, the Committee held 13 meetings. Duties The Committee supports the Board of Directors on risk management and control-related issues. Among other things, the Committee: a) with the support of the Corporate Governance, Nomination and Sustainability Committee, identifies and proposes to the Board who should be appointed as Head of the corporate control functions or assesses the evaluation of their dismissal; for the Head of Internal Audit function, issues its opinion on setting the remuneration and the performance goals associated with its variable portion in line with the company policies; b) pre-examines activity programmes (including audit plans) and annual reports from corporate control functions to be sent to the Board, as well as periodical reports prepared by these functions above and beyond legal or regulatory requirements; c) evaluates and issues opinions to the Board on the compliance of the internal control system and corporate organization with the applicable rules and regulations, and on the requirements that must be complied with by the corporate control functions, drawing the Board’s attention to any weaknesses and consequent corrective actions to be implemented; for this purpose, it assesses proposals put forward by the CEO; d) through evaluations and opinions, contributes to defining company policy on the outsourcing of corporate control functions; e) verifies that the corporate control functions correctly comply with the Board’s recommendations and guidelines, assisting the Board in drafting the coordination documents envisaged under Banca d’Italia Circular No.285; f) examines and assesses the correct use of accounting principles and their uniformity with regard to drafting the main accounting documents (such as, by way of example, operating and consolidated financial statements, interim operating reports, etc.), for this purpose coordinating with the Manager in charge of drafting the company financial reports and with the Board of Statutory Auditors; g) examines the work carried out by the Group’s external auditors and the results stated in their reports or any letters and suggestions; h) assesses any findings reported by Internal Audit and Group Compliance, or that may arise from enquiries and/or investigations carried out by third parties; i) may seek specific audit interventions, at such time informing the Chairman of the Board of Statutory Auditors; j) analyses Group guidelines for the Group Compliance function that fall within its remit, monitoring that they have been adopted and implemented; k) requests that the Head of Internal Audit draft any proposals for the qualitative and quantitative improvement of the function itself; l) ss involved, within its specific remit, in the process of identifying material risk takers on an on-going basis. Corporate Governance Governance organisational structure 74 2018 Annual Report and Accounts · UniCredit Internal Controls & Risks Committee The Internal Controls & Risks Committee consists of 5 non-executive Directors. The composition of the Committee is the following: Mr. Alexander Wolfgring (Chairman), Ms. Martha Dagmar Böckenfeld, Ms. Isabelle de Wismes, Ms. Maria Pierdicchi and Mr. Andrea Sironi. Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Internal Controls & Risks Committee effective from 7 February 2019. All members of the Committee meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. Committee meetings are attended by the Chairman of the Board of Statutory Auditors, the Head of Internal Audit, the Chief Compliance Officer and the Group Chief Risk Officer. At the invitation of the Committee Chairman, The Chief Executive Officer, other Directors, the Manager in charge of drafting the Company financial reports, as well as personnel belonging to the Company and the Group, may attend Committee meetings. Staff from the external audit firm may also be invited. The Committee is responsible for setting up the necessary functional links with the Board of Statutory Auditors, so as to undertake activities deemed common to the two bodies, and to exchange information of mutual interest, within the purview of their respective competencies. The Committee must be able to access relevant corporate information, consult external experts and, where necessary, communicate directly with the Heads of Internal Audit, Group Risk Management and Group Compliance. In 2018, the Committee held 13 meetings. Duties The Committee supports the Board of Directors on risk management and control-related issues. Among other things, the Committee: a) with the support of the Corporate Governance, Nomination and Sustainability Committee, identifies and proposes to the Board who should be appointed as Head of the corporate control functions or assesses the evaluation of their dismissal; for the Head of Internal Audit function, issues its opinion on setting the remuneration and the performance goals associated with its variable portion in line with the company policies; b) pre-examines activity programmes (including audit plans) and annual reports from corporate control functions to be sent to the Board, as well as periodical reports prepared by these functions above and beyond legal or regulatory requirements; c) evaluates and issues opinions to the Board on the compliance of the internal control system and corporate organization with the applicable rules and regulations, and on the requirements that must be complied with by the corporate control functions, drawing the Board’s attention to any weaknesses and consequent corrective actions to be implemented; for this purpose, it assesses proposals put forward by the CEO; d) through evaluations and opinions, contributes to defining company policy on the outsourcing of corporate control functions; e) verifies that the corporate control functions correctly comply with the Board’s recommendations and guidelines, assisting the Board in drafting the coordination documents envisaged under Banca d’Italia Circular No.285; f) examines and assesses the correct use of accounting principles and their uniformity with regard to drafting the main accounting documents (such as, by way of example, operating and consolidated financial statements, interim operating reports, etc.), for this purpose coordinating with the Manager in charge of drafting the company financial reports and with the Board of Statutory Auditors; g) examines the work carried out by the Group’s external auditors and the results stated in their reports or any letters and suggestions; h) assesses any findings reported by Internal Audit and Group Compliance, or that may arise from enquiries and/or investigations carried out by third parties; i) may seek specific audit interventions, at such time informing the Chairman of the Board of Statutory Auditors; j) analyses Group guidelines for the Group Compliance function that fall within its remit, monitoring that they have been adopted and implemented; k) requests that the Head of Internal Audit draft any proposals for the qualitative and quantitative improvement of the function itself; l) ss involved, within its specific remit, in the process of identifying material risk takers on an on-going basis. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 75 With a special focus on risk management and control-related issues, the Committee supports the Board of Directors in: • defining and approving strategic guidelines and risk management policies with specific reference to risk appetite and risk tolerance. For this purpose, it also examines the annual budget drafting guidelines; • verifying that risk strategies, management policies and the Risk Appetite Framework (RAF) have been correctly implemented; • defining policies and processes for evaluating corporate activities, including verification that the price and conditions of client transactions comply with the risk-related business model and strategies. Without prejudice to the competencies of the Remuneration Committee, the Committee checks that the incentives underlying the remuneration and incentive system comply with the RAF, particularly taking into account risks, capital and liquidity. Moreover, the Committee reports to the Board of Directors on the status of the Group’s internal control system. Furthermore, as regards investments in non-financial equities, the Committee assesses, supports and puts forward proposals with regard to organizing and enacting internal controls on the making and managing of equity investments in non-financial companies, in addition to verifying compliance within the framework of such equity investments in terms of strategic and operational guidelines. Corporate Governance, Nomination and Sustainability Committee The Corporate Governance, Nomination and Sustainability Committee consists of 5 non-executive Directors. The composition of the Corporate Governance, Nomination and Sustainability Committee is the following: Mr. Stefano Micossi (Chairman), Mr. Cesare Bisoni, Ms. Francesca Tondi, Mr. Alexander Wolfgring and Ms. Elena Zambon. All members of the Committee, in its composition at such date, meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. In 2018, the Committee held 15 meetings. Duties Among other things, the Committee: a) provides opinions and support to the Board regarding the definition of the UniCredit corporate governance system, corporate structure and Group governance models and guidelines; b) drafts proposals to be submitted to the Board regarding the optimal qualitative and quantitative composition of the Board, and the maximum number of posts held by Directors in other companies considered compatible with effectively fulfilling these roles at UniCredit; c) provides opinions and support regarding the Board self-assessment process, as directed by the Chairman of the Board of Directors; d) sets targets for the least well represented gender in corporate bodies as well as for management and staff belonging to the Group, and prepares a plan to bring this proportion up to set targets; e) drafts proposals to be submitted to the Chairman of the Board of Directors regarding the selection of staff appointed to conduct the Board’s self-assessment process. The Committee provides opinions and support to the Board also regarding: a) the verification that UniCredit Directors comply with the requirements provided by applicable laws and the Articles of Association (including the ban on interlocking directorships laid down by applicable laws), and that they collectively and individually ensure abidance with the qualitative and quantitative composition of the Board deemed to be optimal; b) the selection of candidates for the post of Chairman, Chief Executive Officer and Director of UniCredit, in the event of co-optation, and, should the Board present its own list of candidates for the position of independent Director for approval by the UniCredit Shareholders’ Meeting, taking into due account any recommendations from shareholders, as per the process for selecting candidates to the post of Board of Directors members (including the Chairman and the Chief Executive Officer) approved by the Board itself; c) the appointment of the CEO, General Manager, Deputy General Managers and other executives with strategic responsibilities, as well as Senior Executive Vice Presidents; d) the verification that the General Manager and the Manager in charge of drafting the company financial reports comply with the requirements provided by applicable laws and the Articles of Association, if applicable; e) the definition of appointment and succession plan policies for the CEO, General Manager, Deputy General Managers and other executives with strategic responsibilities, Senior Executive Vice Presidents, the Group Management Team (Executive Vice Presidents) and Leadership Team (Senior Vice Presidents); Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 75 With a special focus on risk management and control-related issues, the Committee supports the Board of Directors in: • defining and approving strategic guidelines and risk management policies with specific reference to risk appetite and risk tolerance. For this purpose, it also examines the annual budget drafting guidelines; • verifying that risk strategies, management policies and the Risk Appetite Framework (RAF) have been correctly implemented; • defining policies and processes for evaluating corporate activities, including verification that the price and conditions of client transactions comply with the risk-related business model and strategies. Without prejudice to the competencies of the Remuneration Committee, the Committee checks that the incentives underlying the remuneration and incentive system comply with the RAF, particularly taking into account risks, capital and liquidity. Moreover, the Committee reports to the Board of Directors on the status of the Group’s internal control system. Furthermore, as regards investments in non-financial equities, the Committee assesses, supports and puts forward proposals with regard to organizing and enacting internal controls on the making and managing of equity investments in non-financial companies, in addition to verifying compliance within the framework of such equity investments in terms of strategic and operational guidelines. Corporate Governance, Nomination and Sustainability Committee The Corporate Governance, Nomination and Sustainability Committee consists of 5 non-executive Directors. The composition of the Corporate Governance, Nomination and Sustainability Committee is the following: Mr. Stefano Micossi (Chairman), Mr. Cesare Bisoni, Ms. Francesca Tondi, Mr. Alexander Wolfgring and Ms. Elena Zambon. All members of the Committee, in its composition at such date, meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. In 2018, the Committee held 15 meetings. Duties Among other things, the Committee: a) provides opinions and support to the Board regarding the definition of the UniCredit corporate governance system, corporate structure and Group governance models and guidelines; b) drafts proposals to be submitted to the Board regarding the optimal qualitative and quantitative composition of the Board, and the maximum number of posts held by Directors in other companies considered compatible with effectively fulfilling these roles at UniCredit; c) provides opinions and support regarding the Board self-assessment process, as directed by the Chairman of the Board of Directors; d) sets targets for the least well represented gender in corporate bodies as well as for management and staff belonging to the Group, and prepares a plan to bring this proportion up to set targets; e) drafts proposals to be submitted to the Chairman of the Board of Directors regarding the selection of staff appointed to conduct the Board’s self-assessment process. The Committee provides opinions and support to the Board also regarding: a) the verification that UniCredit Directors comply with the requirements provided by applicable laws and the Articles of Association (including the ban on interlocking directorships laid down by applicable laws), and that they collectively and individually ensure abidance with the qualitative and quantitative composition of the Board deemed to be optimal; b) the selection of candidates for the post of Chairman, Chief Executive Officer and Director of UniCredit, in the event of co-optation, and, should the Board present its own list of candidates for the position of independent Director for approval by the UniCredit Shareholders’ Meeting, taking into due account any recommendations from shareholders, as per the process for selecting candidates to the post of Board of Directors members (including the Chairman and the Chief Executive Officer) approved by the Board itself; c) the appointment of the CEO, General Manager, Deputy General Managers and other executives with strategic responsibilities, as well as Senior Executive Vice Presidents; d) the verification that the General Manager and the Manager in charge of drafting the company financial reports comply with the requirements provided by applicable laws and the Articles of Association, if applicable; e) the definition of appointment and succession plan policies for the CEO, General Manager, Deputy General Managers and other executives with strategic responsibilities, Senior Executive Vice Presidents, the Group Management Team (Executive Vice Presidents) and Leadership Team (Senior Vice Presidents); Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 75 With a special focus on risk management and control-related issues, the Committee supports the Board of Directors in: • defining and approving strategic guidelines and risk management policies with specific reference to risk appetite and risk tolerance. For this purpose, it also examines the annual budget drafting guidelines; • verifying that risk strategies, management policies and the Risk Appetite Framework (RAF) have been correctly implemented; • defining policies and processes for evaluating corporate activities, including verification that the price and conditions of client transactions comply with the risk-related business model and strategies. Without prejudice to the competencies of the Remuneration Committee, the Committee checks that the incentives underlying the remuneration and incentive system comply with the RAF, particularly taking into account risks, capital and liquidity. Moreover, the Committee reports to the Board of Directors on the status of the Group’s internal control system. Furthermore, as regards investments in non-financial equities, the Committee assesses, supports and puts forward proposals with regard to organizing and enacting internal controls on the making and managing of equity investments in non-financial companies, in addition to verifying compliance within the framework of such equity investments in terms of strategic and operational guidelines. Corporate Governance, Nomination and Sustainability Committee The Corporate Governance, Nomination and Sustainability Committee consists of 5 non-executive Directors. The composition of the Corporate Governance, Nomination and Sustainability Committee is the following: Mr. Stefano Micossi (Chairman), Mr. Cesare Bisoni, Ms. Francesca Tondi, Mr. Alexander Wolfgring and Ms. Elena Zambon. All members of the Committee, in its composition at such date, meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. In 2018, the Committee held 15 meetings. Duties Among other things, the Committee: a) provides opinions and support to the Board regarding the definition of the UniCredit corporate governance system, corporate structure and Group governance models and guidelines; b) drafts proposals to be submitted to the Board regarding the optimal qualitative and quantitative composition of the Board, and the maximum number of posts held by Directors in other companies considered compatible with effectively fulfilling these roles at UniCredit; c) provides opinions and support regarding the Board self-assessment process, as directed by the Chairman of the Board of Directors; d) sets targets for the least well represented gender in corporate bodies as well as for management and staff belonging to the Group, and prepares a plan to bring this proportion up to set targets; e) drafts proposals to be submitted to the Chairman of the Board of Directors regarding the selection of staff appointed to conduct the Board’s self-assessment process. The Committee provides opinions and support to the Board also regarding: a) the verification that UniCredit Directors comply with the requirements provided by applicable laws and the Articles of Association (including the ban on interlocking directorships laid down by applicable laws), and that they collectively and individually ensure abidance with the qualitative and quantitative composition of the Board deemed to be optimal; b) the selection of candidates for the post of Chairman, Chief Executive Officer and Director of UniCredit, in the event of co-optation, and, should the Board present its own list of candidates for the position of independent Director for approval by the UniCredit Shareholders’ Meeting, taking into due account any recommendations from shareholders, as per the process for selecting candidates to the post of Board of Directors members (including the Chairman and the Chief Executive Officer) approved by the Board itself; c) the appointment of the CEO, General Manager, Deputy General Managers and other executives with strategic responsibilities, as well as Senior Executive Vice Presidents; d) the verification that the General Manager and the Manager in charge of drafting the company financial reports comply with the requirements provided by applicable laws and the Articles of Association, if applicable; e) the definition of appointment and succession plan policies for the CEO, General Manager, Deputy General Managers and other executives with strategic responsibilities, Senior Executive Vice Presidents, the Group Management Team (Executive Vice Presidents) and Leadership Team (Senior Vice Presidents); Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 75 With a special focus on risk management and control-related issues, the Committee supports the Board of Directors in: • defining and approving strategic guidelines and risk management policies with specific reference to risk appetite and risk tolerance. For this purpose, it also examines the annual budget drafting guidelines; • verifying that risk strategies, management policies and the Risk Appetite Framework (RAF) have been correctly implemented; • defining policies and processes for evaluating corporate activities, including verification that the price and conditions of client transactions comply with the risk-related business model and strategies. Without prejudice to the competencies of the Remuneration Committee, the Committee checks that the incentives underlying the remuneration and incentive system comply with the RAF, particularly taking into account risks, capital and liquidity. Moreover, the Committee reports to the Board of Directors on the status of the Group’s internal control system. Furthermore, as regards investments in non-financial equities, the Committee assesses, supports and puts forward proposals with regard to organizing and enacting internal controls on the making and managing of equity investments in non-financial companies, in addition to verifying compliance within the framework of such equity investments in terms of strategic and operational guidelines. Corporate Governance, Nomination and Sustainability Committee The Corporate Governance, Nomination and Sustainability Committee consists of 5 non-executive Directors. The composition of the Corporate Governance, Nomination and Sustainability Committee is the following: Mr. Stefano Micossi (Chairman), Mr. Cesare Bisoni, Ms. Francesca Tondi, Mr. Alexander Wolfgring and Ms. Elena Zambon. All members of the Committee, in its composition at such date, meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. In 2018, the Committee held 15 meetings. Duties Among other things, the Committee: a) provides opinions and support to the Board regarding the definition of the UniCredit corporate governance system, corporate structure and Group governance models and guidelines; b) drafts proposals to be submitted to the Board regarding the optimal qualitative and quantitative composition of the Board, and the maximum number of posts held by Directors in other companies considered compatible with effectively fulfilling these roles at UniCredit; c) provides opinions and support regarding the Board self-assessment process, as directed by the Chairman of the Board of Directors; d) sets targets for the least well represented gender in corporate bodies as well as for management and staff belonging to the Group, and prepares a plan to bring this proportion up to set targets; e) drafts proposals to be submitted to the Chairman of the Board of Directors regarding the selection of staff appointed to conduct the Board’s self-assessment process. The Committee provides opinions and support to the Board also regarding: a) the verification that UniCredit Directors comply with the requirements provided by applicable laws and the Articles of Association (including the ban on interlocking directorships laid down by applicable laws), and that they collectively and individually ensure abidance with the qualitative and quantitative composition of the Board deemed to be optimal; b) the selection of candidates for the post of Chairman, Chief Executive Officer and Director of UniCredit, in the event of co-optation, and, should the Board present its own list of candidates for the position of independent Director for approval by the UniCredit Shareholders’ Meeting, taking into due account any recommendations from shareholders, as per the process for selecting candidates to the post of Board of Directors members (including the Chairman and the Chief Executive Officer) approved by the Board itself; c) the appointment of the CEO, General Manager, Deputy General Managers and other executives with strategic responsibilities, as well as Senior Executive Vice Presidents; d) the verification that the General Manager and the Manager in charge of drafting the company financial reports comply with the requirements provided by applicable laws and the Articles of Association, if applicable; e) the definition of appointment and succession plan policies for the CEO, General Manager, Deputy General Managers and other executives with strategic responsibilities, Senior Executive Vice Presidents, the Group Management Team (Executive Vice Presidents) and Leadership Team (Senior Vice Presidents); Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 75 With a special focus on risk management and control-related issues, the Committee supports the Board of Directors in: • defining and approving strategic guidelines and risk management policies with specific reference to risk appetite and risk tolerance. For this purpose, it also examines the annual budget drafting guidelines; • verifying that risk strategies, management policies and the Risk Appetite Framework (RAF) have been correctly implemented; • defining policies and processes for evaluating corporate activities, including verification that the price and conditions of client transactions comply with the risk-related business model and strategies. Without prejudice to the competencies of the Remuneration Committee, the Committee checks that the incentives underlying the remuneration and incentive system comply with the RAF, particularly taking into account risks, capital and liquidity. Moreover, the Committee reports to the Board of Directors on the status of the Group’s internal control system. Furthermore, as regards investments in non-financial equities, the Committee assesses, supports and puts forward proposals with regard to organizing and enacting internal controls on the making and managing of equity investments in non-financial companies, in addition to verifying compliance within the framework of such equity investments in terms of strategic and operational guidelines. Corporate Governance, Nomination and Sustainability Committee The Corporate Governance, Nomination and Sustainability Committee consists of 5 non-executive Directors. The composition of the Corporate Governance, Nomination and Sustainability Committee is the following: Mr. Stefano Micossi (Chairman), Mr. Cesare Bisoni, Ms. Francesca Tondi, Mr. Alexander Wolfgring and Ms. Elena Zambon. All members of the Committee, in its composition at such date, meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. In 2018, the Committee held 15 meetings. Duties Among other things, the Committee: a) provides opinions and support to the Board regarding the definition of the UniCredit corporate governance system, corporate structure and Group governance models and guidelines; b) drafts proposals to be submitted to the Board regarding the optimal qualitative and quantitative composition of the Board, and the maximum number of posts held by Directors in other companies considered compatible with effectively fulfilling these roles at UniCredit; c) provides opinions and support regarding the Board self-assessment process, as directed by the Chairman of the Board of Directors; d) sets targets for the least well represented gender in corporate bodies as well as for management and staff belonging to the Group, and prepares a plan to bring this proportion up to set targets; e) drafts proposals to be submitted to the Chairman of the Board of Directors regarding the selection of staff appointed to conduct the Board’s self-assessment process. The Committee provides opinions and support to the Board also regarding: a) the verification that UniCredit Directors comply with the requirements provided by applicable laws and the Articles of Association (including the ban on interlocking directorships laid down by applicable laws), and that they collectively and individually ensure abidance with the qualitative and quantitative composition of the Board deemed to be optimal; b) the selection of candidates for the post of Chairman, Chief Executive Officer and Director of UniCredit, in the event of co-optation, and, should the Board present its own list of candidates for the position of independent Director for approval by the UniCredit Shareholders’ Meeting, taking into due account any recommendations from shareholders, as per the process for selecting candidates to the post of Board of Directors members (including the Chairman and the Chief Executive Officer) approved by the Board itself; c) the appointment of the CEO, General Manager, Deputy General Managers and other executives with strategic responsibilities, as well as Senior Executive Vice Presidents; d) the verification that the General Manager and the Manager in charge of drafting the company financial reports comply with the requirements provided by applicable laws and the Articles of Association, if applicable; e) the definition of appointment and succession plan policies for the CEO, General Manager, Deputy General Managers and other executives with strategic responsibilities, Senior Executive Vice Presidents, the Group Management Team (Executive Vice Presidents) and Leadership Team (Senior Vice Presidents); Corporate Governance Governance organisational structure 76 2018 Annual Report and Accounts · UniCredit f) the definition of the policy for the appointment of corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at Group companies; g) the designation of corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at the main companies. Moreover, the Committee: • provides support, coordinating with the Internal Controls & Risks Committee, in proposing candidates or assessing dismissal for the roles of Heads of corporate control functions to the Board of Directors; • undertakes research to help the Board of Directors draft a succession plan for executive directors. Furthermore, the Committee oversees sustainability issues linked to the activities carried out by UniCredit and the dynamics underpinning interactions between UniCredit and all of its stakeholders. Within this framework, in particular, the Committee: • pre-examines the yearly Integrated Report, which constitutes a non-financial declaration pursuant to the provisions of Sections 3 and 4 of Legislative Decree No.254/2016, to be submitted for approval to the Board of Directors; • drafts proposals with regard to the Group environmental and social strategy, annual objectives and targets, monitoring over time that they are implemented; • oversees sustainability-related developments also in light of international guidelines and principles, monitoring the Group’s performance. Corporate Governance Governance organisational structure 76 2018 Annual Report and Accounts · UniCredit f) the definition of the policy for the appointment of corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at Group companies; g) the designation of corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at the main companies. Moreover, the Committee: • provides support, coordinating with the Internal Controls & Risks Committee, in proposing candidates or assessing dismissal for the roles of Heads of corporate control functions to the Board of Directors; • undertakes research to help the Board of Directors draft a succession plan for executive directors. Furthermore, the Committee oversees sustainability issues linked to the activities carried out by UniCredit and the dynamics underpinning interactions between UniCredit and all of its stakeholders. Within this framework, in particular, the Committee: • pre-examines the yearly Integrated Report, which constitutes a non-financial declaration pursuant to the provisions of Sections 3 and 4 of Legislative Decree No.254/2016, to be submitted for approval to the Board of Directors; • drafts proposals with regard to the Group environmental and social strategy, annual objectives and targets, monitoring over time that they are implemented; • oversees sustainability-related developments also in light of international guidelines and principles, monitoring the Group’s performance. Corporate Governance Governance organisational structure 76 2018 Annual Report and Accounts · UniCredit f) the definition of the policy for the appointment of corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at Group companies; g) the designation of corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at the main companies. Moreover, the Committee: • provides support, coordinating with the Internal Controls & Risks Committee, in proposing candidates or assessing dismissal for the roles of Heads of corporate control functions to the Board of Directors; • undertakes research to help the Board of Directors draft a succession plan for executive directors. Furthermore, the Committee oversees sustainability issues linked to the activities carried out by UniCredit and the dynamics underpinning interactions between UniCredit and all of its stakeholders. Within this framework, in particular, the Committee: • pre-examines the yearly Integrated Report, which constitutes a non-financial declaration pursuant to the provisions of Sections 3 and 4 of Legislative Decree No.254/2016, to be submitted for approval to the Board of Directors; • drafts proposals with regard to the Group environmental and social strategy, annual objectives and targets, monitoring over time that they are implemented; • oversees sustainability-related developments also in light of international guidelines and principles, monitoring the Group’s performance. Corporate Governance Governance organisational structure 76 2018 Annual Report and Accounts · UniCredit f) the definition of the policy for the appointment of corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at Group companies; g) the designation of corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at the main companies. Moreover, the Committee: • provides support, coordinating with the Internal Controls & Risks Committee, in proposing candidates or assessing dismissal for the roles of Heads of corporate control functions to the Board of Directors; • undertakes research to help the Board of Directors draft a succession plan for executive directors. Furthermore, the Committee oversees sustainability issues linked to the activities carried out by UniCredit and the dynamics underpinning interactions between UniCredit and all of its stakeholders. Within this framework, in particular, the Committee: • pre-examines the yearly Integrated Report, which constitutes a non-financial declaration pursuant to the provisions of Sections 3 and 4 of Legislative Decree No.254/2016, to be submitted for approval to the Board of Directors; • drafts proposals with regard to the Group environmental and social strategy, annual objectives and targets, monitoring over time that they are implemented; • oversees sustainability-related developments also in light of international guidelines and principles, monitoring the Group’s performance. Corporate Governance Governance organisational structure 76 2018 Annual Report and Accounts · UniCredit f) the definition of the policy for the appointment of corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at Group companies; g) the designation of corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at the main companies. Moreover, the Committee: • provides support, coordinating with the Internal Controls & Risks Committee, in proposing candidates or assessing dismissal for the roles of Heads of corporate control functions to the Board of Directors; • undertakes research to help the Board of Directors draft a succession plan for executive directors. Furthermore, the Committee oversees sustainability issues linked to the activities carried out by UniCredit and the dynamics underpinning interactions between UniCredit and all of its stakeholders. Within this framework, in particular, the Committee: • pre-examines the yearly Integrated Report, which constitutes a non-financial declaration pursuant to the provisions of Sections 3 and 4 of Legislative Decree No.254/2016, to be submitted for approval to the Board of Directors; • drafts proposals with regard to the Group environmental and social strategy, annual objectives and targets, monitoring over time that they are implemented; • oversees sustainability-related developments also in light of international guidelines and principles, monitoring the Group’s performance. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 77 Remuneration Committee The Remuneration Committee consists of 3 non-executive Directors. The composition of the Remuneration Committee is the following: Mr. Lamberto Andreotti (Chairman), Mr. Andrea Sironi and Ms. Elena Zambon. Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Remuneration Committee effective from 7 February 2019 All members of the Committee, in its composition at such date, meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. At least one member of the Committee has adequate knowledge and experience in finance or remuneration policies, which the Board of Directors assesses at such time as they are appointed to the Committee. In order for the incentives included in the compensation and incentive schemes to be consistent with the Bank’s risk, capital and liquidity management, as well as to get updates on the market trends, compensation levels and regulatory developments, an external advisor also attends Committee meetings. The Group Chief Risk Officer is invited, upon need, to attend Committee meetings to ensure that incentive schemes are appropriately updated to take into account all of the risks that the Bank has taken on, pursuant to methodologies in compliance with those adopted by the Bank in managing risk for regulatory and internal purposes. In 2018, the Committee held 8 meetings. Duties Among other things, the Committee: • puts proposals to the Board regarding the remuneration and the performance goals associated with its variable portion, for the members of the Board of Directors, the General Manager, Deputy General Managers, Heads of the corporate control functions and personnel whose remuneration and incentive systems are decided upon by the Board; • exercises oversight on the criteria for remunerating the most significant employees, as identified pursuant to the relevant Banca d’Italia provisions, as well as on the outcomes of the application of such criteria. Furthermore, the Committee issues opinions to the Board on: a) the remuneration policy for Senior Executive Vice Presidents, the Group Management Team (Executive Vice Presidents) and the Leadership Team (Senior Vice Presidents); b) Group incentive schemes based on financial instruments; c) the remuneration policy for corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at Group companies. Committee members regarding whom the Committee is called upon to express its opinion on their remuneration as a result of their specific assignments shall not attend meetings at which the proposal for such remuneration is calculated. Furthermore, the Committee: • coordinates the process for identifying material risk takers on an on-going basis; • directly oversees the correct application of rules regarding the remuneration of the Heads of corporate control functions, working closely with the Board of Statutory Auditors; • works with the other committees, particularly the Internal Controls & Risks Committee, to verify that the incentives included in compensation and incentive schemes are consistent with the RAF, ensuring the involvement of the corporate functions responsible for drafting and monitoring remuneration and incentive policies and practices; • provides appropriate feedback on its operations to the Board of Directors, Board of Statutory Auditors and the Shareholders’ Meeting; • where necessary drawing on information received from the relevant corporate functions, expresses its opinion on the achievement of the performance targets associated with incentive schemes, and on the other conditions laid down for bonus payments. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 77 Remuneration Committee The Remuneration Committee consists of 3 non-executive Directors. The composition of the Remuneration Committee is the following: Mr. Lamberto Andreotti (Chairman), Mr. Andrea Sironi and Ms. Elena Zambon. Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Remuneration Committee effective from 7 February 2019 All members of the Committee, in its composition at such date, meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. At least one member of the Committee has adequate knowledge and experience in finance or remuneration policies, which the Board of Directors assesses at such time as they are appointed to the Committee. In order for the incentives included in the compensation and incentive schemes to be consistent with the Bank’s risk, capital and liquidity management, as well as to get updates on the market trends, compensation levels and regulatory developments, an external advisor also attends Committee meetings. The Group Chief Risk Officer is invited, upon need, to attend Committee meetings to ensure that incentive schemes are appropriately updated to take into account all of the risks that the Bank has taken on, pursuant to methodologies in compliance with those adopted by the Bank in managing risk for regulatory and internal purposes. In 2018, the Committee held 8 meetings. Duties Among other things, the Committee: • puts proposals to the Board regarding the remuneration and the performance goals associated with its variable portion, for the members of the Board of Directors, the General Manager, Deputy General Managers, Heads of the corporate control functions and personnel whose remuneration and incentive systems are decided upon by the Board; • exercises oversight on the criteria for remunerating the most significant employees, as identified pursuant to the relevant Banca d’Italia provisions, as well as on the outcomes of the application of such criteria. Furthermore, the Committee issues opinions to the Board on: a) the remuneration policy for Senior Executive Vice Presidents, the Group Management Team (Executive Vice Presidents) and the Leadership Team (Senior Vice Presidents); b) Group incentive schemes based on financial instruments; c) the remuneration policy for corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at Group companies. Committee members regarding whom the Committee is called upon to express its opinion on their remuneration as a result of their specific assignments shall not attend meetings at which the proposal for such remuneration is calculated. Furthermore, the Committee: • coordinates the process for identifying material risk takers on an on-going basis; • directly oversees the correct application of rules regarding the remuneration of the Heads of corporate control functions, working closely with the Board of Statutory Auditors; • works with the other committees, particularly the Internal Controls & Risks Committee, to verify that the incentives included in compensation and incentive schemes are consistent with the RAF, ensuring the involvement of the corporate functions responsible for drafting and monitoring remuneration and incentive policies and practices; • provides appropriate feedback on its operations to the Board of Directors, Board of Statutory Auditors and the Shareholders’ Meeting; • where necessary drawing on information received from the relevant corporate functions, expresses its opinion on the achievement of the performance targets associated with incentive schemes, and on the other conditions laid down for bonus payments. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 77 Remuneration Committee The Remuneration Committee consists of 3 non-executive Directors. The composition of the Remuneration Committee is the following: Mr. Lamberto Andreotti (Chairman), Mr. Andrea Sironi and Ms. Elena Zambon. Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Remuneration Committee effective from 7 February 2019 All members of the Committee, in its composition at such date, meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. At least one member of the Committee has adequate knowledge and experience in finance or remuneration policies, which the Board of Directors assesses at such time as they are appointed to the Committee. In order for the incentives included in the compensation and incentive schemes to be consistent with the Bank’s risk, capital and liquidity management, as well as to get updates on the market trends, compensation levels and regulatory developments, an external advisor also attends Committee meetings. The Group Chief Risk Officer is invited, upon need, to attend Committee meetings to ensure that incentive schemes are appropriately updated to take into account all of the risks that the Bank has taken on, pursuant to methodologies in compliance with those adopted by the Bank in managing risk for regulatory and internal purposes. In 2018, the Committee held 8 meetings. Duties Among other things, the Committee: • puts proposals to the Board regarding the remuneration and the performance goals associated with its variable portion, for the members of the Board of Directors, the General Manager, Deputy General Managers, Heads of the corporate control functions and personnel whose remuneration and incentive systems are decided upon by the Board; • exercises oversight on the criteria for remunerating the most significant employees, as identified pursuant to the relevant Banca d’Italia provisions, as well as on the outcomes of the application of such criteria. Furthermore, the Committee issues opinions to the Board on: a) the remuneration policy for Senior Executive Vice Presidents, the Group Management Team (Executive Vice Presidents) and the Leadership Team (Senior Vice Presidents); b) Group incentive schemes based on financial instruments; c) the remuneration policy for corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at Group companies. Committee members regarding whom the Committee is called upon to express its opinion on their remuneration as a result of their specific assignments shall not attend meetings at which the proposal for such remuneration is calculated. Furthermore, the Committee: • coordinates the process for identifying material risk takers on an on-going basis; • directly oversees the correct application of rules regarding the remuneration of the Heads of corporate control functions, working closely with the Board of Statutory Auditors; • works with the other committees, particularly the Internal Controls & Risks Committee, to verify that the incentives included in compensation and incentive schemes are consistent with the RAF, ensuring the involvement of the corporate functions responsible for drafting and monitoring remuneration and incentive policies and practices; • provides appropriate feedback on its operations to the Board of Directors, Board of Statutory Auditors and the Shareholders’ Meeting; • where necessary drawing on information received from the relevant corporate functions, expresses its opinion on the achievement of the performance targets associated with incentive schemes, and on the other conditions laid down for bonus payments. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 77 Remuneration Committee The Remuneration Committee consists of 3 non-executive Directors. The composition of the Remuneration Committee is the following: Mr. Lamberto Andreotti (Chairman), Mr. Andrea Sironi and Ms. Elena Zambon. Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Remuneration Committee effective from 7 February 2019 All members of the Committee, in its composition at such date, meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. At least one member of the Committee has adequate knowledge and experience in finance or remuneration policies, which the Board of Directors assesses at such time as they are appointed to the Committee. In order for the incentives included in the compensation and incentive schemes to be consistent with the Bank’s risk, capital and liquidity management, as well as to get updates on the market trends, compensation levels and regulatory developments, an external advisor also attends Committee meetings. The Group Chief Risk Officer is invited, upon need, to attend Committee meetings to ensure that incentive schemes are appropriately updated to take into account all of the risks that the Bank has taken on, pursuant to methodologies in compliance with those adopted by the Bank in managing risk for regulatory and internal purposes. In 2018, the Committee held 8 meetings. Duties Among other things, the Committee: • puts proposals to the Board regarding the remuneration and the performance goals associated with its variable portion, for the members of the Board of Directors, the General Manager, Deputy General Managers, Heads of the corporate control functions and personnel whose remuneration and incentive systems are decided upon by the Board; • exercises oversight on the criteria for remunerating the most significant employees, as identified pursuant to the relevant Banca d’Italia provisions, as well as on the outcomes of the application of such criteria. Furthermore, the Committee issues opinions to the Board on: a) the remuneration policy for Senior Executive Vice Presidents, the Group Management Team (Executive Vice Presidents) and the Leadership Team (Senior Vice Presidents); b) Group incentive schemes based on financial instruments; c) the remuneration policy for corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at Group companies. Committee members regarding whom the Committee is called upon to express its opinion on their remuneration as a result of their specific assignments shall not attend meetings at which the proposal for such remuneration is calculated. Furthermore, the Committee: • coordinates the process for identifying material risk takers on an on-going basis; • directly oversees the correct application of rules regarding the remuneration of the Heads of corporate control functions, working closely with the Board of Statutory Auditors; • works with the other committees, particularly the Internal Controls & Risks Committee, to verify that the incentives included in compensation and incentive schemes are consistent with the RAF, ensuring the involvement of the corporate functions responsible for drafting and monitoring remuneration and incentive policies and practices; • provides appropriate feedback on its operations to the Board of Directors, Board of Statutory Auditors and the Shareholders’ Meeting; • where necessary drawing on information received from the relevant corporate functions, expresses its opinion on the achievement of the performance targets associated with incentive schemes, and on the other conditions laid down for bonus payments. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 77 Remuneration Committee The Remuneration Committee consists of 3 non-executive Directors. The composition of the Remuneration Committee is the following: Mr. Lamberto Andreotti (Chairman), Mr. Andrea Sironi and Ms. Elena Zambon. Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Remuneration Committee effective from 7 February 2019 All members of the Committee, in its composition at such date, meet the independence requirements prescribed by the Code, which coincide with those envisaged by the UniCredit Articles of Association, and are independent pursuant to Section 148, paragraph 3, of the TUF. At least one member of the Committee has adequate knowledge and experience in finance or remuneration policies, which the Board of Directors assesses at such time as they are appointed to the Committee. In order for the incentives included in the compensation and incentive schemes to be consistent with the Bank’s risk, capital and liquidity management, as well as to get updates on the market trends, compensation levels and regulatory developments, an external advisor also attends Committee meetings. The Group Chief Risk Officer is invited, upon need, to attend Committee meetings to ensure that incentive schemes are appropriately updated to take into account all of the risks that the Bank has taken on, pursuant to methodologies in compliance with those adopted by the Bank in managing risk for regulatory and internal purposes. In 2018, the Committee held 8 meetings. Duties Among other things, the Committee: • puts proposals to the Board regarding the remuneration and the performance goals associated with its variable portion, for the members of the Board of Directors, the General Manager, Deputy General Managers, Heads of the corporate control functions and personnel whose remuneration and incentive systems are decided upon by the Board; • exercises oversight on the criteria for remunerating the most significant employees, as identified pursuant to the relevant Banca d’Italia provisions, as well as on the outcomes of the application of such criteria. Furthermore, the Committee issues opinions to the Board on: a) the remuneration policy for Senior Executive Vice Presidents, the Group Management Team (Executive Vice Presidents) and the Leadership Team (Senior Vice Presidents); b) Group incentive schemes based on financial instruments; c) the remuneration policy for corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at Group companies. Committee members regarding whom the Committee is called upon to express its opinion on their remuneration as a result of their specific assignments shall not attend meetings at which the proposal for such remuneration is calculated. Furthermore, the Committee: • coordinates the process for identifying material risk takers on an on-going basis; • directly oversees the correct application of rules regarding the remuneration of the Heads of corporate control functions, working closely with the Board of Statutory Auditors; • works with the other committees, particularly the Internal Controls & Risks Committee, to verify that the incentives included in compensation and incentive schemes are consistent with the RAF, ensuring the involvement of the corporate functions responsible for drafting and monitoring remuneration and incentive policies and practices; • provides appropriate feedback on its operations to the Board of Directors, Board of Statutory Auditors and the Shareholders’ Meeting; • where necessary drawing on information received from the relevant corporate functions, expresses its opinion on the achievement of the performance targets associated with incentive schemes, and on the other conditions laid down for bonus payments. Corporate Governance Governance organisational structure 78 2018 Annual Report and Accounts · UniCredit Related-Parties Committee The Related-Parties Committee consist of 3 independent Directors. The composition of the Related-Parties Committee is the following: Mr. Cesare Bisoni (Chairman), Mr. Vincenzo Cariello and Mr. Stefano Micossi. In reference to the Related-Parties Committee’s meetings, only for reasons of urgency, in specific cases dealing with transactions falling into the decision-making powers of the Board of Directors, a meeting may be convened at least twelve hours in advance. In 2018 the Committee held 15 meetings. Duties The Committee operates on a consultative and proposition-making basis. The Committee oversees issues concerning transactions with related parties pursuant to CONSOB Regulation no.17221/2010 and transactions with associated parties pursuant to Banca d’Italia Circular No.263/2006 (Title V, Chapter 5), carrying out the specific role attributed to independent directors by the aforementioned provisions. Furthermore, it carries out any other duties assigned to it within the Global Policy for the management of transactions with persons in conflict of interest. The Company’s competent offices ensure a constant monitoring of transactions envisaged by the procedures for the identification and management of transactions with related and/or associated parties, also in view of enabling the Committee to propose corrective actions. a) Temporary replacement in cases of conflict of interest For each individual transaction, Committee members must be different from the counterparty, its associated parties and/or any entities related to it. If a Committee member is a counterparty to the transaction under examination (or is related/associated with the counterparty), he/she must promptly inform the Chairman of the Board of Directors and the Committee Chairman (provided he/she is not in a conflict of interest situation), and abstain from attending further Committee proceedings with regard to the transaction in which the relationship exists. Having consulted with the Committee Chairman (provided he/she is not in a conflict of interest situation), the Chairman of the Board of Directors shall immediately take steps to replace the member who has this conflict of interest with another member from the Board of Directors who qualifies as independent pursuant to the Italian Corporate Governance Code for listed companies, after contacting them beforehand, in order to restore the Committee to three non-related and non-associated independent Directors. b) Temporary replacement of unavailable members in the event of an urgent transaction For transactions that need to be finalised urgently and require the intervention of the Related-Parties Committee during negotiations and due diligence and/or during the issue of opinions, having acknowledged the urgency and noted that the majority or all members are unable to meet or carry out the required activities in time to conclude the transaction, the Committee Chairman shall promptly inform the Chairman of the Board of Directors of this situation. In any event, these circumstances must be communicated no later than the day after the Committee Chairman was informed that the majority or all Committee members were not available. Having consulted with the CEO and determined that the transaction cannot be delayed, the Chairman of the Board of Directors immediately takes steps to find three Directors to sit on the Committee and follow the process for temporary substitutions in the event of conflicts of interest. As regards sections a) and b) above, it should be noted that: • replacements must be provided with all available information in good time before the meeting at which the Committee is called upon to express its opinion regarding the transaction; • replacements undertake the duties allocated to them until the conclusion of the decision-making process regarding the specific transaction in question, and remain involved in the decisions taken by the Committee. Corporate Governance Governance organisational structure 78 2018 Annual Report and Accounts · UniCredit Related-Parties Committee The Related-Parties Committee consist of 3 independent Directors. The composition of the Related-Parties Committee is the following: Mr. Cesare Bisoni (Chairman), Mr. Vincenzo Cariello and Mr. Stefano Micossi. In reference to the Related-Parties Committee’s meetings, only for reasons of urgency, in specific cases dealing with transactions falling into the decision-making powers of the Board of Directors, a meeting may be convened at least twelve hours in advance. In 2018 the Committee held 15 meetings. Duties The Committee operates on a consultative and proposition-making basis. The Committee oversees issues concerning transactions with related parties pursuant to CONSOB Regulation no.17221/2010 and transactions with associated parties pursuant to Banca d’Italia Circular No.263/2006 (Title V, Chapter 5), carrying out the specific role attributed to independent directors by the aforementioned provisions. Furthermore, it carries out any other duties assigned to it within the Global Policy for the management of transactions with persons in conflict of interest. The Company’s competent offices ensure a constant monitoring of transactions envisaged by the procedures for the identification and management of transactions with related and/or associated parties, also in view of enabling the Committee to propose corrective actions. a) Temporary replacement in cases of conflict of interest For each individual transaction, Committee members must be different from the counterparty, its associated parties and/or any entities related to it. If a Committee member is a counterparty to the transaction under examination (or is related/associated with the counterparty), he/she must promptly inform the Chairman of the Board of Directors and the Committee Chairman (provided he/she is not in a conflict of interest situation), and abstain from attending further Committee proceedings with regard to the transaction in which the relationship exists. Having consulted with the Committee Chairman (provided he/she is not in a conflict of interest situation), the Chairman of the Board of Directors shall immediately take steps to replace the member who has this conflict of interest with another member from the Board of Directors who qualifies as independent pursuant to the Italian Corporate Governance Code for listed companies, after contacting them beforehand, in order to restore the Committee to three non-related and non-associated independent Directors. b) Temporary replacement of unavailable members in the event of an urgent transaction For transactions that need to be finalised urgently and require the intervention of the Related-Parties Committee during negotiations and due diligence and/or during the issue of opinions, having acknowledged the urgency and noted that the majority or all members are unable to meet or carry out the required activities in time to conclude the transaction, the Committee Chairman shall promptly inform the Chairman of the Board of Directors of this situation. In any event, these circumstances must be communicated no later than the day after the Committee Chairman was informed that the majority or all Committee members were not available. Having consulted with the CEO and determined that the transaction cannot be delayed, the Chairman of the Board of Directors immediately takes steps to find three Directors to sit on the Committee and follow the process for temporary substitutions in the event of conflicts of interest. As regards sections a) and b) above, it should be noted that: • replacements must be provided with all available information in good time before the meeting at which the Committee is called upon to express its opinion regarding the transaction; • replacements undertake the duties allocated to them until the conclusion of the decision-making process regarding the specific transaction in question, and remain involved in the decisions taken by the Committee. Corporate Governance Governance organisational structure 78 2018 Annual Report and Accounts · UniCredit Related-Parties Committee The Related-Parties Committee consist of 3 independent Directors. The composition of the Related-Parties Committee is the following: Mr. Cesare Bisoni (Chairman), Mr. Vincenzo Cariello and Mr. Stefano Micossi. In reference to the Related-Parties Committee’s meetings, only for reasons of urgency, in specific cases dealing with transactions falling into the decision-making powers of the Board of Directors, a meeting may be convened at least twelve hours in advance. In 2018 the Committee held 15 meetings. Duties The Committee operates on a consultative and proposition-making basis. The Committee oversees issues concerning transactions with related parties pursuant to CONSOB Regulation no.17221/2010 and transactions with associated parties pursuant to Banca d’Italia Circular No.263/2006 (Title V, Chapter 5), carrying out the specific role attributed to independent directors by the aforementioned provisions. Furthermore, it carries out any other duties assigned to it within the Global Policy for the management of transactions with persons in conflict of interest. The Company’s competent offices ensure a constant monitoring of transactions envisaged by the procedures for the identification and management of transactions with related and/or associated parties, also in view of enabling the Committee to propose corrective actions. a) Temporary replacement in cases of conflict of interest For each individual transaction, Committee members must be different from the counterparty, its associated parties and/or any entities related to it. If a Committee member is a counterparty to the transaction under examination (or is related/associated with the counterparty), he/she must promptly inform the Chairman of the Board of Directors and the Committee Chairman (provided he/she is not in a conflict of interest situation), and abstain from attending further Committee proceedings with regard to the transaction in which the relationship exists. Having consulted with the Committee Chairman (provided he/she is not in a conflict of interest situation), the Chairman of the Board of Directors shall immediately take steps to replace the member who has this conflict of interest with another member from the Board of Directors who qualifies as independent pursuant to the Italian Corporate Governance Code for listed companies, after contacting them beforehand, in order to restore the Committee to three non-related and non-associated independent Directors. b) Temporary replacement of unavailable members in the event of an urgent transaction For transactions that need to be finalised urgently and require the intervention of the Related-Parties Committee during negotiations and due diligence and/or during the issue of opinions, having acknowledged the urgency and noted that the majority or all members are unable to meet or carry out the required activities in time to conclude the transaction, the Committee Chairman shall promptly inform the Chairman of the Board of Directors of this situation. In any event, these circumstances must be communicated no later than the day after the Committee Chairman was informed that the majority or all Committee members were not available. Having consulted with the CEO and determined that the transaction cannot be delayed, the Chairman of the Board of Directors immediately takes steps to find three Directors to sit on the Committee and follow the process for temporary substitutions in the event of conflicts of interest. As regards sections a) and b) above, it should be noted that: • replacements must be provided with all available information in good time before the meeting at which the Committee is called upon to express its opinion regarding the transaction; • replacements undertake the duties allocated to them until the conclusion of the decision-making process regarding the specific transaction in question, and remain involved in the decisions taken by the Committee. Corporate Governance Governance organisational structure 78 2018 Annual Report and Accounts · UniCredit Related-Parties Committee The Related-Parties Committee consist of 3 independent Directors. The composition of the Related-Parties Committee is the following: Mr. Cesare Bisoni (Chairman), Mr. Vincenzo Cariello and Mr. Stefano Micossi. In reference to the Related-Parties Committee’s meetings, only for reasons of urgency, in specific cases dealing with transactions falling into the decision-making powers of the Board of Directors, a meeting may be convened at least twelve hours in advance. In 2018 the Committee held 15 meetings. Duties The Committee operates on a consultative and proposition-making basis. The Committee oversees issues concerning transactions with related parties pursuant to CONSOB Regulation no.17221/2010 and transactions with associated parties pursuant to Banca d’Italia Circular No.263/2006 (Title V, Chapter 5), carrying out the specific role attributed to independent directors by the aforementioned provisions. Furthermore, it carries out any other duties assigned to it within the Global Policy for the management of transactions with persons in conflict of interest. The Company’s competent offices ensure a constant monitoring of transactions envisaged by the procedures for the identification and management of transactions with related and/or associated parties, also in view of enabling the Committee to propose corrective actions. a) Temporary replacement in cases of conflict of interest For each individual transaction, Committee members must be different from the counterparty, its associated parties and/or any entities related to it. If a Committee member is a counterparty to the transaction under examination (or is related/associated with the counterparty), he/she must promptly inform the Chairman of the Board of Directors and the Committee Chairman (provided he/she is not in a conflict of interest situation), and abstain from attending further Committee proceedings with regard to the transaction in which the relationship exists. Having consulted with the Committee Chairman (provided he/she is not in a conflict of interest situation), the Chairman of the Board of Directors shall immediately take steps to replace the member who has this conflict of interest with another member from the Board of Directors who qualifies as independent pursuant to the Italian Corporate Governance Code for listed companies, after contacting them beforehand, in order to restore the Committee to three non-related and non-associated independent Directors. b) Temporary replacement of unavailable members in the event of an urgent transaction For transactions that need to be finalised urgently and require the intervention of the Related-Parties Committee during negotiations and due diligence and/or during the issue of opinions, having acknowledged the urgency and noted that the majority or all members are unable to meet or carry out the required activities in time to conclude the transaction, the Committee Chairman shall promptly inform the Chairman of the Board of Directors of this situation. In any event, these circumstances must be communicated no later than the day after the Committee Chairman was informed that the majority or all Committee members were not available. Having consulted with the CEO and determined that the transaction cannot be delayed, the Chairman of the Board of Directors immediately takes steps to find three Directors to sit on the Committee and follow the process for temporary substitutions in the event of conflicts of interest. As regards sections a) and b) above, it should be noted that: • replacements must be provided with all available information in good time before the meeting at which the Committee is called upon to express its opinion regarding the transaction; • replacements undertake the duties allocated to them until the conclusion of the decision-making process regarding the specific transaction in question, and remain involved in the decisions taken by the Committee. Corporate Governance Governance organisational structure 78 2018 Annual Report and Accounts · UniCredit Related-Parties Committee The Related-Parties Committee consist of 3 independent Directors. The composition of the Related-Parties Committee is the following: Mr. Cesare Bisoni (Chairman), Mr. Vincenzo Cariello and Mr. Stefano Micossi. In reference to the Related-Parties Committee’s meetings, only for reasons of urgency, in specific cases dealing with transactions falling into the decision-making powers of the Board of Directors, a meeting may be convened at least twelve hours in advance. In 2018 the Committee held 15 meetings. Duties The Committee operates on a consultative and proposition-making basis. The Committee oversees issues concerning transactions with related parties pursuant to CONSOB Regulation no.17221/2010 and transactions with associated parties pursuant to Banca d’Italia Circular No.263/2006 (Title V, Chapter 5), carrying out the specific role attributed to independent directors by the aforementioned provisions. Furthermore, it carries out any other duties assigned to it within the Global Policy for the management of transactions with persons in conflict of interest. The Company’s competent offices ensure a constant monitoring of transactions envisaged by the procedures for the identification and management of transactions with related and/or associated parties, also in view of enabling the Committee to propose corrective actions. a) Temporary replacement in cases of conflict of interest For each individual transaction, Committee members must be different from the counterparty, its associated parties and/or any entities related to it. If a Committee member is a counterparty to the transaction under examination (or is related/associated with the counterparty), he/she must promptly inform the Chairman of the Board of Directors and the Committee Chairman (provided he/she is not in a conflict of interest situation), and abstain from attending further Committee proceedings with regard to the transaction in which the relationship exists. Having consulted with the Committee Chairman (provided he/she is not in a conflict of interest situation), the Chairman of the Board of Directors shall immediately take steps to replace the member who has this conflict of interest with another member from the Board of Directors who qualifies as independent pursuant to the Italian Corporate Governance Code for listed companies, after contacting them beforehand, in order to restore the Committee to three non-related and non-associated independent Directors. b) Temporary replacement of unavailable members in the event of an urgent transaction For transactions that need to be finalised urgently and require the intervention of the Related-Parties Committee during negotiations and due diligence and/or during the issue of opinions, having acknowledged the urgency and noted that the majority or all members are unable to meet or carry out the required activities in time to conclude the transaction, the Committee Chairman shall promptly inform the Chairman of the Board of Directors of this situation. In any event, these circumstances must be communicated no later than the day after the Committee Chairman was informed that the majority or all Committee members were not available. Having consulted with the CEO and determined that the transaction cannot be delayed, the Chairman of the Board of Directors immediately takes steps to find three Directors to sit on the Committee and follow the process for temporary substitutions in the event of conflicts of interest. As regards sections a) and b) above, it should be noted that: • replacements must be provided with all available information in good time before the meeting at which the Committee is called upon to express its opinion regarding the transaction; • replacements undertake the duties allocated to them until the conclusion of the decision-making process regarding the specific transaction in question, and remain involved in the decisions taken by the Committee. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 79 Board Committees INTERNAL CONTROLS & RISKS COMMITTEE CORPORATE GOVERNANCE, NOMINATION AND SUSTAINABILITY COMMITTEE REMUNERATION COMMITTEE RELATED-PARTIES COMMITTEE MEMBERS EXEC. NON EXEC. INDEP. AS PER ARTICLES OF ASSOCIATION AND CODE (*) (**) (*) (**) (*) (**) (*) (**) Saccomanni Fabrizio X M(1) 100% M(1) 100% Bisoni Cesare X X M(1) 100% M(2) 100% C 100% Mustier Jean Pierre X Al Mehairi Mohamed Hamad X X Andreotti Lamberto X X C(2) 100% Balbinot Sergio X Böchenfeld Martha Dagmar X X M(2) 100% Cariello Vincenzo X X M(2) 100% Carletti Elena X X M(3) -- M(3) -- de Wismes Isabelle X X M(2) 100% Micossi Stefano X X C(2) 100% M(2) 100% Pierdicchi Maria X X M(2) 100% Tondi Francesca X X M(2) 90.91% Wolfgring Alexander X X C 100% M(2) 100% M(1) 100% Zambon Elena X X M 80% M(2) 100% Members that left off during and after the end of the Period Vita Giuseppe X M(1) 100% M(1) 100% M(1) 100% Calandra Buonaura Vincenzo X M(1) 100% M(1) 100% Bochniarz Henryka X X M(1) 66.67% Caltagirone Alessandro X X M(1) 50% C(1) 100% Cordero di Montezemolo Luca X X C(1) 100% Reichlin Lucrezia X X M(1) 100% M(1) 75% Sironi Andrea X X M(4) 88.89% M(4) 80% Streit Clara C. X X M(1) 100% M(1) 75% Vezzani Paola X X M(1) 100% M(1) 100% Wyand Anthony X M(1) 100% M(1) 100% No. of meetings held during the financial year IC&RC: 13 CGN&S: 15 RC: 8 RPC: 15 Notes: (*) A “C” (Chairman) or an “M” (Member) in this column shows that the member of the Board of Directors belongs to the Committee and also indicates his/her position. (**) Meetings’ attendance percentage (number of meetings attended/number of meetings held during the concerned party’s term of office with regard to the Period). (1) Office held until 12 April 2018. (2) Office held since 13 April 2018. (3) Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Internal Controls & Risks Committee and Remuneration Committee effective from 7 February 2019. (4) Office held from 13 April 2018 up to 6 February 2019. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 79 Board Committees INTERNAL CONTROLS & RISKS COMMITTEE CORPORATE GOVERNANCE, NOMINATION AND SUSTAINABILITY COMMITTEE REMUNERATION COMMITTEE RELATED-PARTIES COMMITTEE MEMBERS EXEC. NON EXEC. INDEP. AS PER ARTICLES OF ASSOCIATION AND CODE (*) (**) (*) (**) (*) (**) (*) (**) Saccomanni Fabrizio X M(1) 100% M(1) 100% Bisoni Cesare X X M(1) 100% M(2) 100% C 100% Mustier Jean Pierre X Al Mehairi Mohamed Hamad X X Andreotti Lamberto X X C(2) 100% Balbinot Sergio X Böchenfeld Martha Dagmar X X M(2) 100% Cariello Vincenzo X X M(2) 100% Carletti Elena X X M(3) -- M(3) -- de Wismes Isabelle X X M(2) 100% Micossi Stefano X X C(2) 100% M(2) 100% Pierdicchi Maria X X M(2) 100% Tondi Francesca X X M(2) 90.91% Wolfgring Alexander X X C 100% M(2) 100% M(1) 100% Zambon Elena X X M 80% M(2) 100% Members that left off during and after the end of the Period Vita Giuseppe X M(1) 100% M(1) 100% M(1) 100% Calandra Buonaura Vincenzo X M(1) 100% M(1) 100% Bochniarz Henryka X X M(1) 66.67% Caltagirone Alessandro X X M(1) 50% C(1) 100% Cordero di Montezemolo Luca X X C(1) 100% Reichlin Lucrezia X X M(1) 100% M(1) 75% Sironi Andrea X X M(4) 88.89% M(4) 80% Streit Clara C. X X M(1) 100% M(1) 75% Vezzani Paola X X M(1) 100% M(1) 100% Wyand Anthony X M(1) 100% M(1) 100% No. of meetings held during the financial year IC&RC: 13 CGN&S: 15 RC: 8 RPC: 15 Notes: (*) A “C” (Chairman) or an “M” (Member) in this column shows that the member of the Board of Directors belongs to the Committee and also indicates his/her position. (**) Meetings’ attendance percentage (number of meetings attended/number of meetings held during the concerned party’s term of office with regard to the Period). (1) Office held until 12 April 2018. (2) Office held since 13 April 2018. (3) Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Internal Controls & Risks Committee and Remuneration Committee effective from 7 February 2019. (4) Office held from 13 April 2018 up to 6 February 2019. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 79 Board Committees INTERNAL CONTROLS & RISKS COMMITTEE CORPORATE GOVERNANCE, NOMINATION AND SUSTAINABILITY COMMITTEE REMUNERATION COMMITTEE RELATED-PARTIES COMMITTEE MEMBERS EXEC. NON EXEC. INDEP. AS PER ARTICLES OF ASSOCIATION AND CODE (*) (**) (*) (**) (*) (**) (*) (**) Saccomanni Fabrizio X M(1) 100% M(1) 100% Bisoni Cesare X X M(1) 100% M(2) 100% C 100% Mustier Jean Pierre X Al Mehairi Mohamed Hamad X X Andreotti Lamberto X X C(2) 100% Balbinot Sergio X Böchenfeld Martha Dagmar X X M(2) 100% Cariello Vincenzo X X M(2) 100% Carletti Elena X X M(3) -- M(3) -- de Wismes Isabelle X X M(2) 100% Micossi Stefano X X C(2) 100% M(2) 100% Pierdicchi Maria X X M(2) 100% Tondi Francesca X X M(2) 90.91% Wolfgring Alexander X X C 100% M(2) 100% M(1) 100% Zambon Elena X X M 80% M(2) 100% Members that left off during and after the end of the Period Vita Giuseppe X M(1) 100% M(1) 100% M(1) 100% Calandra Buonaura Vincenzo X M(1) 100% M(1) 100% Bochniarz Henryka X X M(1) 66.67% Caltagirone Alessandro X X M(1) 50% C(1) 100% Cordero di Montezemolo Luca X X C(1) 100% Reichlin Lucrezia X X M(1) 100% M(1) 75% Sironi Andrea X X M(4) 88.89% M(4) 80% Streit Clara C. X X M(1) 100% M(1) 75% Vezzani Paola X X M(1) 100% M(1) 100% Wyand Anthony X M(1) 100% M(1) 100% No. of meetings held during the financial year IC&RC: 13 CGN&S: 15 RC: 8 RPC: 15 Notes: (*) A “C” (Chairman) or an “M” (Member) in this column shows that the member of the Board of Directors belongs to the Committee and also indicates his/her position. (**) Meetings’ attendance percentage (number of meetings attended/number of meetings held during the concerned party’s term of office with regard to the Period). (1) Office held until 12 April 2018. (2) Office held since 13 April 2018. (3) Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Internal Controls & Risks Committee and Remuneration Committee effective from 7 February 2019. (4) Office held from 13 April 2018 up to 6 February 2019. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 79 Board Committees INTERNAL CONTROLS & RISKS COMMITTEE CORPORATE GOVERNANCE, NOMINATION AND SUSTAINABILITY COMMITTEE REMUNERATION COMMITTEE RELATED-PARTIES COMMITTEE MEMBERS EXEC. NON EXEC. INDEP. AS PER ARTICLES OF ASSOCIATION AND CODE (*) (**) (*) (**) (*) (**) (*) (**) Saccomanni Fabrizio X M(1) 100% M(1) 100% Bisoni Cesare X X M(1) 100% M(2) 100% C 100% Mustier Jean Pierre X Al Mehairi Mohamed Hamad X X Andreotti Lamberto X X C(2) 100% Balbinot Sergio X Böchenfeld Martha Dagmar X X M(2) 100% Cariello Vincenzo X X M(2) 100% Carletti Elena X X M(3) -- M(3) -- de Wismes Isabelle X X M(2) 100% Micossi Stefano X X C(2) 100% M(2) 100% Pierdicchi Maria X X M(2) 100% Tondi Francesca X X M(2) 90.91% Wolfgring Alexander X X C 100% M(2) 100% M(1) 100% Zambon Elena X X M 80% M(2) 100% Members that left off during and after the end of the Period Vita Giuseppe X M(1) 100% M(1) 100% M(1) 100% Calandra Buonaura Vincenzo X M(1) 100% M(1) 100% Bochniarz Henryka X X M(1) 66.67% Caltagirone Alessandro X X M(1) 50% C(1) 100% Cordero di Montezemolo Luca X X C(1) 100% Reichlin Lucrezia X X M(1) 100% M(1) 75% Sironi Andrea X X M(4) 88.89% M(4) 80% Streit Clara C. X X M(1) 100% M(1) 75% Vezzani Paola X X M(1) 100% M(1) 100% Wyand Anthony X M(1) 100% M(1) 100% No. of meetings held during the financial year IC&RC: 13 CGN&S: 15 RC: 8 RPC: 15 Notes: (*) A “C” (Chairman) or an “M” (Member) in this column shows that the member of the Board of Directors belongs to the Committee and also indicates his/her position. (**) Meetings’ attendance percentage (number of meetings attended/number of meetings held during the concerned party’s term of office with regard to the Period). (1) Office held until 12 April 2018. (2) Office held since 13 April 2018. (3) Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Internal Controls & Risks Committee and Remuneration Committee effective from 7 February 2019. (4) Office held from 13 April 2018 up to 6 February 2019. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 79 Board Committees INTERNAL CONTROLS & RISKS COMMITTEE CORPORATE GOVERNANCE, NOMINATION AND SUSTAINABILITY COMMITTEE REMUNERATION COMMITTEE RELATED-PARTIES COMMITTEE MEMBERS EXEC. NON EXEC. INDEP. AS PER ARTICLES OF ASSOCIATION AND CODE (*) (**) (*) (**) (*) (**) (*) (**) Saccomanni Fabrizio X M(1) 100% M(1) 100% Bisoni Cesare X X M(1) 100% M(2) 100% C 100% Mustier Jean Pierre X Al Mehairi Mohamed Hamad X X Andreotti Lamberto X X C(2) 100% Balbinot Sergio X Böchenfeld Martha Dagmar X X M(2) 100% Cariello Vincenzo X X M(2) 100% Carletti Elena X X M(3) -- M(3) -- de Wismes Isabelle X X M(2) 100% Micossi Stefano X X C(2) 100% M(2) 100% Pierdicchi Maria X X M(2) 100% Tondi Francesca X X M(2) 90.91% Wolfgring Alexander X X C 100% M(2) 100% M(1) 100% Zambon Elena X X M 80% M(2) 100% Members that left off during and after the end of the Period Vita Giuseppe X M(1) 100% M(1) 100% M(1) 100% Calandra Buonaura Vincenzo X M(1) 100% M(1) 100% Bochniarz Henryka X X M(1) 66.67% Caltagirone Alessandro X X M(1) 50% C(1) 100% Cordero di Montezemolo Luca X X C(1) 100% Reichlin Lucrezia X X M(1) 100% M(1) 75% Sironi Andrea X X M(4) 88.89% M(4) 80% Streit Clara C. X X M(1) 100% M(1) 75% Vezzani Paola X X M(1) 100% M(1) 100% Wyand Anthony X M(1) 100% M(1) 100% No. of meetings held during the financial year IC&RC: 13 CGN&S: 15 RC: 8 RPC: 15 Notes: (*) A “C” (Chairman) or an “M” (Member) in this column shows that the member of the Board of Directors belongs to the Committee and also indicates his/her position. (**) Meetings’ attendance percentage (number of meetings attended/number of meetings held during the concerned party’s term of office with regard to the Period). (1) Office held until 12 April 2018. (2) Office held since 13 April 2018. (3) Further to the resignation handed in by the Director Mr. Andrea Sironi, the Board of Directors, in its meeting held on 6 February 2019, has appointed Ms. Elena Carletti as member of the Internal Controls & Risks Committee and Remuneration Committee effective from 7 February 2019. (4) Office held from 13 April 2018 up to 6 February 2019. Corporate Governance Governance organisational structure 80 2018 Annual Report and Accounts · UniCredit Board of Statutory Auditors Pursuant to the UniCredit Articles of Association, the Ordinary Shareholders’ Meeting appoints 5 permanent Statutory Auditors, among whom the Chairman, and 4 substitute Statutory Auditors. Both the permanent and substitute Statutory Auditors may be re-elected. Permanent and substitute members of the Board of Statutory Auditors are appointed on the basis of a proportional representation mechanism (“voto di lista”) in abidance by the composition criteria regarding, inter alia, the appointment of the Chairman of the Board by the minority shareholders and according to the rules on the balance of genders envisaged by Law No.120/2011, as established by the UniCredit Articles of Association, and in compliance with current legal provisions. In detail, the candidate who has obtained the highest share of votes among the candidates belonging to the slate that obtained the highest number of votes among the minority slates, as defined by current provisions (also regulatory) in force, shall be selected by the Shareholders’ Meeting as Chairman of the Board of Statutory Auditors. Their term in office is three financial years and ends on the date of the Shareholders’ Meeting called upon to approve the financial statements for the third year of office. Members of the Board of Statutory Auditors shall meet the professional experience, integrity and independence requirements laid down by law and they can hold administrative and control appointments with other companies within the limits set by current laws and regulations. The Shareholders’ Meeting of 14 April 2016, appointed the permanent and substitute Statutory Auditors for the 2016-2018 financial years, with term of office until the date of the Shareholders’ Meeting called upon to approve the 2018 financial statements. In the following chart the information regarding the members of the Board of Statutory Auditors in office as at the approval date of this document. Statutory Auditors POSITION MEMBERS IN OFFICE SLATE (M/m) (*) INDEPENDENT AS PER CODE % (**) NUMBER OF OTHERS POSITIONS (***)SINCE UNTIL Chairman Singer Pierpaolo 04.14.2016 04.11.2019 m X 100% -- Permanent Statutory Auditor Bonissoni Angelo R04.14.2016 04.11.2019 M X 97.37% -- Permanent Statutory Auditor Navarra Benedetta 04.14.2016 04.11.2019 M X 97.37% 3 Permanent Statutory Auditor Paolucci Guido(1) 12.04.2017 04.11.2019 M X 100% -- Permanent Statutory Auditor Bientinesi Antonella(2) 12.04.2017 04.11.2019 m X 97.37% 1 Substitute Statutory Auditor Manes Paola 04.14.2016 04.11.2019 M X -- Substitute Statutory Auditor Talamonti Maria F04.14.2016 04.11.2019 m X 2 Substitute Statutory Auditor Pagani Raffaella(3) 12.04.2017 04.11.2019 −− X 3 Substitute Statutory Auditor Amato Myriam(3) 12.04.2017 04.11.2019 −− X 1 Statutory Auditors that left off during the Period … Quorum required for the submission of the slates for the latest appointment: 0.5% Number of meetings held during the financial year: 38 Notes: (*) M = Member elected from the slate obtaining the majority of the Shareholders' votes; m = Member elected from the slate voted by a minority. (**) Meetings’ attendance percentage (number of meetings attended/number of meetings held during the concerned party’s term of office with regard to the Period). (***) Number of positions as Director or Auditor held by the concerned party pursuant to Section 148/bis of the TUF. A complete list of such positions is published by the CONSOB on its website pursuant to Section 144-quinquiesdecies of the CONSOB Issuers Rules. (1) He took office under Article 2401 of the Italian Civil Code in replacement of Mr. Enrico Laghi who resigned on 2 May 2017 and was appointed as Statutory Auditor by the Shareholders’ Meeting held on 4 December 2017. (2) She took office under Article 2401 of the Italian Civil Code in replacement of Ms. Maria Enrica Spinardi who resigned on 26 October 2017 and was appointed as Statutory Auditor by the Shareholders’ Meeting held on 4 December 2017. (3) Appointed by the Shareholders’ Meeting held on 4 December 2017. Corporate Governance Governance organisational structure 80 2018 Annual Report and Accounts · UniCredit Board of Statutory Auditors Pursuant to the UniCredit Articles of Association, the Ordinary Shareholders’ Meeting appoints 5 permanent Statutory Auditors, among whom the Chairman, and 4 substitute Statutory Auditors. Both the permanent and substitute Statutory Auditors may be re-elected. Permanent and substitute members of the Board of Statutory Auditors are appointed on the basis of a proportional representation mechanism (“voto di lista”) in abidance by the composition criteria regarding, inter alia, the appointment of the Chairman of the Board by the minority shareholders and according to the rules on the balance of genders envisaged by Law No.120/2011, as established by the UniCredit Articles of Association, and in compliance with current legal provisions. In detail, the candidate who has obtained the highest share of votes among the candidates belonging to the slate that obtained the highest number of votes among the minority slates, as defined by current provisions (also regulatory) in force, shall be selected by the Shareholders’ Meeting as Chairman of the Board of Statutory Auditors. Their term in office is three financial years and ends on the date of the Shareholders’ Meeting called upon to approve the financial statements for the third year of office. Members of the Board of Statutory Auditors shall meet the professional experience, integrity and independence requirements laid down by law and they can hold administrative and control appointments with other companies within the limits set by current laws and regulations. The Shareholders’ Meeting of 14 April 2016, appointed the permanent and substitute Statutory Auditors for the 2016-2018 financial years, with term of office until the date of the Shareholders’ Meeting called upon to approve the 2018 financial statements. In the following chart the information regarding the members of the Board of Statutory Auditors in office as at the approval date of this document. Statutory Auditors POSITION MEMBERS IN OFFICE SLATE (M/m) (*) INDEPENDENT AS PER CODE % (**) NUMBER OF OTHERS POSITIONS (***)SINCE UNTIL Chairman Singer Pierpaolo 04.14.2016 04.11.2019 m X 100% -- Permanent Statutory Auditor Bonissoni Angelo R04.14.2016 04.11.2019 M X 97.37% -- Permanent Statutory Auditor Navarra Benedetta 04.14.2016 04.11.2019 M X 97.37% 3 Permanent Statutory Auditor Paolucci Guido(1) 12.04.2017 04.11.2019 M X 100% -- Permanent Statutory Auditor Bientinesi Antonella(2) 12.04.2017 04.11.2019 m X 97.37% 1 Substitute Statutory Auditor Manes Paola 04.14.2016 04.11.2019 M X -- Substitute Statutory Auditor Talamonti Maria F04.14.2016 04.11.2019 m X 2 Substitute Statutory Auditor Pagani Raffaella(3) 12.04.2017 04.11.2019 −− X 3 Substitute Statutory Auditor Amato Myriam(3) 12.04.2017 04.11.2019 −− X 1 Statutory Auditors that left off during the Period … Quorum required for the submission of the slates for the latest appointment: 0.5% Number of meetings held during the financial year: 38 Notes: (*) M = Member elected from the slate obtaining the majority of the Shareholders' votes; m = Member elected from the slate voted by a minority. (**) Meetings’ attendance percentage (number of meetings attended/number of meetings held during the concerned party’s term of office with regard to the Period). (***) Number of positions as Director or Auditor held by the concerned party pursuant to Section 148/bis of the TUF. A complete list of such positions is published by the CONSOB on its website pursuant to Section 144-quinquiesdecies of the CONSOB Issuers Rules. (1) He took office under Article 2401 of the Italian Civil Code in replacement of Mr. Enrico Laghi who resigned on 2 May 2017 and was appointed as Statutory Auditor by the Shareholders’ Meeting held on 4 December 2017. (2) She took office under Article 2401 of the Italian Civil Code in replacement of Ms. Maria Enrica Spinardi who resigned on 26 October 2017 and was appointed as Statutory Auditor by the Shareholders’ Meeting held on 4 December 2017. (3) Appointed by the Shareholders’ Meeting held on 4 December 2017. Corporate Governance Governance organisational structure 80 2018 Annual Report and Accounts · UniCredit Board of Statutory Auditors Pursuant to the UniCredit Articles of Association, the Ordinary Shareholders’ Meeting appoints 5 permanent Statutory Auditors, among whom the Chairman, and 4 substitute Statutory Auditors. Both the permanent and substitute Statutory Auditors may be re-elected. Permanent and substitute members of the Board of Statutory Auditors are appointed on the basis of a proportional representation mechanism (“voto di lista”) in abidance by the composition criteria regarding, inter alia, the appointment of the Chairman of the Board by the minority shareholders and according to the rules on the balance of genders envisaged by Law No.120/2011, as established by the UniCredit Articles of Association, and in compliance with current legal provisions. In detail, the candidate who has obtained the highest share of votes among the candidates belonging to the slate that obtained the highest number of votes among the minority slates, as defined by current provisions (also regulatory) in force, shall be selected by the Shareholders’ Meeting as Chairman of the Board of Statutory Auditors. Their term in office is three financial years and ends on the date of the Shareholders’ Meeting called upon to approve the financial statements for the third year of office. Members of the Board of Statutory Auditors shall meet the professional experience, integrity and independence requirements laid down by law and they can hold administrative and control appointments with other companies within the limits set by current laws and regulations. The Shareholders’ Meeting of 14 April 2016, appointed the permanent and substitute Statutory Auditors for the 2016-2018 financial years, with term of office until the date of the Shareholders’ Meeting called upon to approve the 2018 financial statements. In the following chart the information regarding the members of the Board of Statutory Auditors in office as at the approval date of this document. Statutory Auditors POSITION MEMBERS IN OFFICE SLATE (M/m) (*) INDEPENDENT AS PER CODE % (**) NUMBER OF OTHERS POSITIONS (***)SINCE UNTIL Chairman Singer Pierpaolo 04.14.2016 04.11.2019 m X 100% -- Permanent Statutory Auditor Bonissoni Angelo R04.14.2016 04.11.2019 M X 97.37% -- Permanent Statutory Auditor Navarra Benedetta 04.14.2016 04.11.2019 M X 97.37% 3 Permanent Statutory Auditor Paolucci Guido(1) 12.04.2017 04.11.2019 M X 100% -- Permanent Statutory Auditor Bientinesi Antonella(2) 12.04.2017 04.11.2019 m X 97.37% 1 Substitute Statutory Auditor Manes Paola 04.14.2016 04.11.2019 M X -- Substitute Statutory Auditor Talamonti Maria F04.14.2016 04.11.2019 m X 2 Substitute Statutory Auditor Pagani Raffaella(3) 12.04.2017 04.11.2019 −− X 3 Substitute Statutory Auditor Amato Myriam(3) 12.04.2017 04.11.2019 −− X 1 Statutory Auditors that left off during the Period … Quorum required for the submission of the slates for the latest appointment: 0.5% Number of meetings held during the financial year: 38 Notes: (*) M = Member elected from the slate obtaining the majority of the Shareholders' votes; m = Member elected from the slate voted by a minority. (**) Meetings’ attendance percentage (number of meetings attended/number of meetings held during the concerned party’s term of office with regard to the Period). (***) Number of positions as Director or Auditor held by the concerned party pursuant to Section 148/bis of the TUF. A complete list of such positions is published by the CONSOB on its website pursuant to Section 144-quinquiesdecies of the CONSOB Issuers Rules. (1) He took office under Article 2401 of the Italian Civil Code in replacement of Mr. Enrico Laghi who resigned on 2 May 2017 and was appointed as Statutory Auditor by the Shareholders’ Meeting held on 4 December 2017. (2) She took office under Article 2401 of the Italian Civil Code in replacement of Ms. Maria Enrica Spinardi who resigned on 26 October 2017 and was appointed as Statutory Auditor by the Shareholders’ Meeting held on 4 December 2017. (3) Appointed by the Shareholders’ Meeting held on 4 December 2017. Corporate Governance Governance organisational structure 80 2018 Annual Report and Accounts · UniCredit Board of Statutory Auditors Pursuant to the UniCredit Articles of Association, the Ordinary Shareholders’ Meeting appoints 5 permanent Statutory Auditors, among whom the Chairman, and 4 substitute Statutory Auditors. Both the permanent and substitute Statutory Auditors may be re-elected. Permanent and substitute members of the Board of Statutory Auditors are appointed on the basis of a proportional representation mechanism (“voto di lista”) in abidance by the composition criteria regarding, inter alia, the appointment of the Chairman of the Board by the minority shareholders and according to the rules on the balance of genders envisaged by Law No.120/2011, as established by the UniCredit Articles of Association, and in compliance with current legal provisions. In detail, the candidate who has obtained the highest share of votes among the candidates belonging to the slate that obtained the highest number of votes among the minority slates, as defined by current provisions (also regulatory) in force, shall be selected by the Shareholders’ Meeting as Chairman of the Board of Statutory Auditors. Their term in office is three financial years and ends on the date of the Shareholders’ Meeting called upon to approve the financial statements for the third year of office. Members of the Board of Statutory Auditors shall meet the professional experience, integrity and independence requirements laid down by law and they can hold administrative and control appointments with other companies within the limits set by current laws and regulations. The Shareholders’ Meeting of 14 April 2016, appointed the permanent and substitute Statutory Auditors for the 2016-2018 financial years, with term of office until the date of the Shareholders’ Meeting called upon to approve the 2018 financial statements. In the following chart the information regarding the members of the Board of Statutory Auditors in office as at the approval date of this document. Statutory Auditors POSITION MEMBERS IN OFFICE SLATE (M/m) (*) INDEPENDENT AS PER CODE % (**) NUMBER OF OTHERS POSITIONS (***)SINCE UNTIL Chairman Singer Pierpaolo 04.14.2016 04.11.2019 m X 100% -- Permanent Statutory Auditor Bonissoni Angelo R04.14.2016 04.11.2019 M X 97.37% -- Permanent Statutory Auditor Navarra Benedetta 04.14.2016 04.11.2019 M X 97.37% 3 Permanent Statutory Auditor Paolucci Guido(1) 12.04.2017 04.11.2019 M X 100% -- Permanent Statutory Auditor Bientinesi Antonella(2) 12.04.2017 04.11.2019 m X 97.37% 1 Substitute Statutory Auditor Manes Paola 04.14.2016 04.11.2019 M X -- Substitute Statutory Auditor Talamonti Maria F04.14.2016 04.11.2019 m X 2 Substitute Statutory Auditor Pagani Raffaella(3) 12.04.2017 04.11.2019 −− X 3 Substitute Statutory Auditor Amato Myriam(3) 12.04.2017 04.11.2019 −− X 1 Statutory Auditors that left off during the Period … Quorum required for the submission of the slates for the latest appointment: 0.5% Number of meetings held during the financial year: 38 Notes: (*) M = Member elected from the slate obtaining the majority of the Shareholders' votes; m = Member elected from the slate voted by a minority. (**) Meetings’ attendance percentage (number of meetings attended/number of meetings held during the concerned party’s term of office with regard to the Period). (***) Number of positions as Director or Auditor held by the concerned party pursuant to Section 148/bis of the TUF. A complete list of such positions is published by the CONSOB on its website pursuant to Section 144-quinquiesdecies of the CONSOB Issuers Rules. (1) He took office under Article 2401 of the Italian Civil Code in replacement of Mr. Enrico Laghi who resigned on 2 May 2017 and was appointed as Statutory Auditor by the Shareholders’ Meeting held on 4 December 2017. (2) She took office under Article 2401 of the Italian Civil Code in replacement of Ms. Maria Enrica Spinardi who resigned on 26 October 2017 and was appointed as Statutory Auditor by the Shareholders’ Meeting held on 4 December 2017. (3) Appointed by the Shareholders’ Meeting held on 4 December 2017. Corporate Governance Governance organisational structure 80 2018 Annual Report and Accounts · UniCredit Board of Statutory Auditors Pursuant to the UniCredit Articles of Association, the Ordinary Shareholders’ Meeting appoints 5 permanent Statutory Auditors, among whom the Chairman, and 4 substitute Statutory Auditors. Both the permanent and substitute Statutory Auditors may be re-elected. Permanent and substitute members of the Board of Statutory Auditors are appointed on the basis of a proportional representation mechanism (“voto di lista”) in abidance by the composition criteria regarding, inter alia, the appointment of the Chairman of the Board by the minority shareholders and according to the rules on the balance of genders envisaged by Law No.120/2011, as established by the UniCredit Articles of Association, and in compliance with current legal provisions. In detail, the candidate who has obtained the highest share of votes among the candidates belonging to the slate that obtained the highest number of votes among the minority slates, as defined by current provisions (also regulatory) in force, shall be selected by the Shareholders’ Meeting as Chairman of the Board of Statutory Auditors. Their term in office is three financial years and ends on the date of the Shareholders’ Meeting called upon to approve the financial statements for the third year of office. Members of the Board of Statutory Auditors shall meet the professional experience, integrity and independence requirements laid down by law and they can hold administrative and control appointments with other companies within the limits set by current laws and regulations. The Shareholders’ Meeting of 14 April 2016, appointed the permanent and substitute Statutory Auditors for the 2016-2018 financial years, with term of office until the date of the Shareholders’ Meeting called upon to approve the 2018 financial statements. In the following chart the information regarding the members of the Board of Statutory Auditors in office as at the approval date of this document. Statutory Auditors POSITION MEMBERS IN OFFICE SLATE (M/m) (*) INDEPENDENT AS PER CODE % (**) NUMBER OF OTHERS POSITIONS (***)SINCE UNTIL Chairman Singer Pierpaolo 04.14.2016 04.11.2019 m X 100% -- Permanent Statutory Auditor Bonissoni Angelo R04.14.2016 04.11.2019 M X 97.37% -- Permanent Statutory Auditor Navarra Benedetta 04.14.2016 04.11.2019 M X 97.37% 3 Permanent Statutory Auditor Paolucci Guido(1) 12.04.2017 04.11.2019 M X 100% -- Permanent Statutory Auditor Bientinesi Antonella(2) 12.04.2017 04.11.2019 m X 97.37% 1 Substitute Statutory Auditor Manes Paola 04.14.2016 04.11.2019 M X -- Substitute Statutory Auditor Talamonti Maria F04.14.2016 04.11.2019 m X 2 Substitute Statutory Auditor Pagani Raffaella(3) 12.04.2017 04.11.2019 −− X 3 Substitute Statutory Auditor Amato Myriam(3) 12.04.2017 04.11.2019 −− X 1 Statutory Auditors that left off during the Period … Quorum required for the submission of the slates for the latest appointment: 0.5% Number of meetings held during the financial year: 38 Notes: (*) M = Member elected from the slate obtaining the majority of the Shareholders' votes; m = Member elected from the slate voted by a minority. (**) Meetings’ attendance percentage (number of meetings attended/number of meetings held during the concerned party’s term of office with regard to the Period). (***) Number of positions as Director or Auditor held by the concerned party pursuant to Section 148/bis of the TUF. A complete list of such positions is published by the CONSOB on its website pursuant to Section 144-quinquiesdecies of the CONSOB Issuers Rules. (1) He took office under Article 2401 of the Italian Civil Code in replacement of Mr. Enrico Laghi who resigned on 2 May 2017 and was appointed as Statutory Auditor by the Shareholders’ Meeting held on 4 December 2017. (2) She took office under Article 2401 of the Italian Civil Code in replacement of Ms. Maria Enrica Spinardi who resigned on 26 October 2017 and was appointed as Statutory Auditor by the Shareholders’ Meeting held on 4 December 2017. (3) Appointed by the Shareholders’ Meeting held on 4 December 2017. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 81 Share capital As at 31 December 2018, the fully subscribed and paid up UniCredit share capital amounted to Euro 20,940,398,466.81, divided into 2,230,176,665 ordinary shares with no nominal value. The ordinary shares are issued in a dematerialized form and are indivisible as well as freely transferable. No other types of shares, equity instruments or convertible or exchangeable bonds have been issued. Major Shareholders On the basis of the results from the Shareholders Register, completed with the communications received according to Section 120 of the TUF and other information known to the Company, the relevant equity holdings, direct and indirect, as at 31 December 2018 were as follows. According to the communications received pursuant to current provisions, the shareholder listed below hold significant shareholdings (more than 3%), not falling within the disclosure exemptions (Section 119/bis of the Consob Rules no.11971/99). DECLARANT DIRECT SHAREHOLDER % OF ORDINARY CAPITAL % OF VOTING CAPITAL Mubadala Investment Company PJSC Aabar Luxembourg S.a.r.l. 5.028% 5.028% Participation Rights Eligible to attend Shareholders' Meetings are those who hold voting rights and in respect of whom the Company has received, from the broker holding the relevant securities account, the notification within the deadline set forth by applicable law (record date, i.e. seven market trading days before the Shareholders’ Meeting date). Those who hold voting rights may arrange to be represented in the Shareholders’ Meeting, in compliance with the provisions of the prevailing law. UniCredit has always encouraged its shareholders to exercise their participation and voting rights and; for that reason, some time ago it adopted the Regulations governing Shareholders’ Meetings to ensure their regular conduct. Said Regulations are available on UniCredit website on the Governance/Shareholders’ Meeting Section. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 81 Share capital As at 31 December 2018, the fully subscribed and paid up UniCredit share capital amounted to Euro 20,940,398,466.81, divided into 2,230,176,665 ordinary shares with no nominal value. The ordinary shares are issued in a dematerialized form and are indivisible as well as freely transferable. No other types of shares, equity instruments or convertible or exchangeable bonds have been issued. Major Shareholders On the basis of the results from the Shareholders Register, completed with the communications received according to Section 120 of the TUF and other information known to the Company, the relevant equity holdings, direct and indirect, as at 31 December 2018 were as follows. According to the communications received pursuant to current provisions, the shareholder listed below hold significant shareholdings (more than 3%), not falling within the disclosure exemptions (Section 119/bis of the Consob Rules no.11971/99). DECLARANT DIRECT SHAREHOLDER % OF ORDINARY CAPITAL % OF VOTING CAPITAL Mubadala Investment Company PJSC Aabar Luxembourg S.a.r.l. 5.028% 5.028% Participation Rights Eligible to attend Shareholders' Meetings are those who hold voting rights and in respect of whom the Company has received, from the broker holding the relevant securities account, the notification within the deadline set forth by applicable law (record date, i.e. seven market trading days before the Shareholders’ Meeting date). Those who hold voting rights may arrange to be represented in the Shareholders’ Meeting, in compliance with the provisions of the prevailing law. UniCredit has always encouraged its shareholders to exercise their participation and voting rights and; for that reason, some time ago it adopted the Regulations governing Shareholders’ Meetings to ensure their regular conduct. Said Regulations are available on UniCredit website on the Governance/Shareholders’ Meeting Section. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 81 Share capital As at 31 December 2018, the fully subscribed and paid up UniCredit share capital amounted to Euro 20,940,398,466.81, divided into 2,230,176,665 ordinary shares with no nominal value. The ordinary shares are issued in a dematerialized form and are indivisible as well as freely transferable. No other types of shares, equity instruments or convertible or exchangeable bonds have been issued. Major Shareholders On the basis of the results from the Shareholders Register, completed with the communications received according to Section 120 of the TUF and other information known to the Company, the relevant equity holdings, direct and indirect, as at 31 December 2018 were as follows. According to the communications received pursuant to current provisions, the shareholder listed below hold significant shareholdings (more than 3%), not falling within the disclosure exemptions (Section 119/bis of the Consob Rules no.11971/99). DECLARANT DIRECT SHAREHOLDER % OF ORDINARY CAPITAL % OF VOTING CAPITAL Mubadala Investment Company PJSC Aabar Luxembourg S.a.r.l. 5.028% 5.028% Participation Rights Eligible to attend Shareholders' Meetings are those who hold voting rights and in respect of whom the Company has received, from the broker holding the relevant securities account, the notification within the deadline set forth by applicable law (record date, i.e. seven market trading days before the Shareholders’ Meeting date). Those who hold voting rights may arrange to be represented in the Shareholders’ Meeting, in compliance with the provisions of the prevailing law. UniCredit has always encouraged its shareholders to exercise their participation and voting rights and; for that reason, some time ago it adopted the Regulations governing Shareholders’ Meetings to ensure their regular conduct. Said Regulations are available on UniCredit website on the Governance/Shareholders’ Meeting Section. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 81 Share capital As at 31 December 2018, the fully subscribed and paid up UniCredit share capital amounted to Euro 20,940,398,466.81, divided into 2,230,176,665 ordinary shares with no nominal value. The ordinary shares are issued in a dematerialized form and are indivisible as well as freely transferable. No other types of shares, equity instruments or convertible or exchangeable bonds have been issued. Major Shareholders On the basis of the results from the Shareholders Register, completed with the communications received according to Section 120 of the TUF and other information known to the Company, the relevant equity holdings, direct and indirect, as at 31 December 2018 were as follows. According to the communications received pursuant to current provisions, the shareholder listed below hold significant shareholdings (more than 3%), not falling within the disclosure exemptions (Section 119/bis of the Consob Rules no.11971/99). DECLARANT DIRECT SHAREHOLDER % OF ORDINARY CAPITAL % OF VOTING CAPITAL Mubadala Investment Company PJSC Aabar Luxembourg S.a.r.l. 5.028% 5.028% Participation Rights Eligible to attend Shareholders' Meetings are those who hold voting rights and in respect of whom the Company has received, from the broker holding the relevant securities account, the notification within the deadline set forth by applicable law (record date, i.e. seven market trading days before the Shareholders’ Meeting date). Those who hold voting rights may arrange to be represented in the Shareholders’ Meeting, in compliance with the provisions of the prevailing law. UniCredit has always encouraged its shareholders to exercise their participation and voting rights and; for that reason, some time ago it adopted the Regulations governing Shareholders’ Meetings to ensure their regular conduct. Said Regulations are available on UniCredit website on the Governance/Shareholders’ Meeting Section. Corporate Governance Governance organisational structure UniCredit ·2018 Annual Report and Accounts 81 Share capital As at 31 December 2018, the fully subscribed and paid up UniCredit share capital amounted to Euro 20,940,398,466.81, divided into 2,230,176,665 ordinary shares with no nominal value. The ordinary shares are issued in a dematerialized form and are indivisible as well as freely transferable. No other types of shares, equity instruments or convertible or exchangeable bonds have been issued. Major Shareholders On the basis of the results from the Shareholders Register, completed with the communications received according to Section 120 of the TUF and other information known to the Company, the relevant equity holdings, direct and indirect, as at 31 December 2018 were as follows. According to the communications received pursuant to current provisions, the shareholder listed below hold significant shareholdings (more than 3%), not falling within the disclosure exemptions (Section 119/bis of the Consob Rules no.11971/99). DECLARANT DIRECT SHAREHOLDER % OF ORDINARY CAPITAL % OF VOTING CAPITAL Mubadala Investment Company PJSC Aabar Luxembourg S.a.r.l. 5.028% 5.028% Participation Rights Eligible to attend Shareholders' Meetings are those who hold voting rights and in respect of whom the Company has received, from the broker holding the relevant securities account, the notification within the deadline set forth by applicable law (record date, i.e. seven market trading days before the Shareholders’ Meeting date). Those who hold voting rights may arrange to be represented in the Shareholders’ Meeting, in compliance with the provisions of the prevailing law. UniCredit has always encouraged its shareholders to exercise their participation and voting rights and; for that reason, some time ago it adopted the Regulations governing Shareholders’ Meetings to ensure their regular conduct. Said Regulations are available on UniCredit website on the Governance/Shareholders’ Meeting Section. Senior management team reorganisation UniCredit announced the reorganisation of its senior management team, to support the development of its 2020-23 strategic plan. The reorganisation project, approved by the UniCredit board of directors on 6 February 2019, aims to continue the streamlining process initiated with Transform 2019, and will ensure that the management team who will deliver the next 2020-23 plan will have full ownership of the new strategy from the very outset of the planning process. Jean Pierre Mustier, Group CEO: As we reach the final stretch of our Transform 2019 marathon, nearing the achievement of our key financial and operational targets, it is now time to actively prepare for the next strategic cycle. Our overarching objective is to create sustained value for all our stakeholders, primarily through proactive self help actions focused on the development of our activities and continued optimisation of our processes, to ensure UniCredit remains a pan- European winner. This begins with an even more energised leadership team, and a changed leadership structure that will bring this new strategy to fruition. We will build the next phase of the Group's long term transformational journey capitalising on our Transform 2019 achievements with an even stronger focus on commercial banking supported by the Group's successfully plugged in CIB. We shall also continue the comprehensive review and digitalisation of our processes and roll-out an even more proactive and enhanced Group-wide customer service. By further streamlining the management structure with fewer direct reports, the CEO will be able to fully focus on the new strategy, drive the transformation process as well as actively contribute to the development of the next generation of UniCredit managers. The new organisational project will be effective before the end of March. 82 2018 Annual Report and Accounts · UniCredit New organisation setup Group CEO J.P. Mustier CB Western Europe CIB CB Central Eastern Europe COO F. Giordano O. Khayat R. Burton G. Bisagni N. Ubertalli R. De Marchis C. Vivaldi Finance & Control ____1 CB Italy CB Germany CEE Banks Human Capital Transformation Office2 Risk Mgmt Regulatory Affairs CB Austria Fineco Wealth Mgmt ICT & Security Procurement & Cost Mgmt Compliance Real Estate Operations Legal Lending Office CFO Group Data Office Strategy and M&A Group Administr. Office G I&C Institutional & Sustainability 1. Ad interim covered by Group CEO. 2. Mrs. Kuetz, will become deputy COO. UniCredit · 2018 Annual Report and Accounts 83 Corporate G ov ernance S enior M anag em ent T eam JEAN PIERRE MUSTIER Chief Executive Officer GIANPAOLO ALESSANDRO Head of Group Legal Secretary of the BoD CARLO APPETITI MAURIZIO BERETTA MIRKO BIANCHI Group Compliance Officer Head of Group Institutional Affairs & Sustainability Group Chief Financial Officer GIANFRANCO BISAGNI MARCO BIZZOZERO Designated Co-CEO Commercial Banking CEE CEO Group Wealth Management RICHARD BURTON Designated CEO CIB Division ANDREA CASINI Co-CEO Commercial Banking Italy PAOLO CORNETTA Head of Group Human Capital SERENELLA DE CANDIA* Head of Internal Audit RANIERI DE MARCHIS Co-Chief Operating Officer MICHAEL DIEDERICH CEO Commercial Banking Germany 84 2018 Annual Report and Accounts · UniCredit FRANCESCO GIORDANO Designated Co-CEO Commercial Banking WEu AURELIO MACCARIO Head of Group Regulatory Affairs ANDREA FRANCESCO MAFFEZZONI Head of Strategy and M&A MAXIMILIAN HOHENBERG Head of Group Identity & Communication OLIVIER KHAYAT FINJA CAROLIN KÜTZ TJ LIM STEFANO PORRO Designated Co-CEO Commercial Banking WEu Designated Deputy COO Chief Transformation Officer Group Chief Risk Officer Designated Head of Group Administrative & Analytics Office GIOVANNI RONCA Co-CEO Commercial Banking Italy ANDREA UMBERTO VARESE Chief Lending Officer CARLO VIVALDI NICCOLÒ UBERTALLI Designated Co-Chief Operating Officer Designated Co-CEO Commercial Banking CEE * Not EMC Member ** EMC Permanent Guest ROBERT ZADRAZIL CEO Commercial Banking Austria ALESSANDRO FOTI** CEO Fineco UniCredit · 2018 Annual Report and Accounts 85 Corporate G ov ernance roup M anag em ent T eam ist of oth er m em b ers of G roup M anag em ent T eam Enrico Maria Minniti General Manager - Bulgaria Mihály Patai Chief Executive Officer - Hungary Rasvan Radu Chief Executive Officer - Romania Luca Rubaga G H ead of CE & CE CI Arcangelo Michele Vassallo B ank Assurance H ead of CE Ivan Vlaho H ead of CE Retail Miljenko Zivaljic Chief Executive Officer - Croatia Feza Tan ** Chief Executive Officer - Serbia Gordan Pehar ** Chief Executive Officer - Banja Luka Dalibor Cubela ** Chief Executive Officer - Mostar Stefan Vavti ** Chief Executive Officer - Slovenia & I CO RP O RAT Giuseppe Aquaro H ead of CI T ransf orm ation B usiness and P B AN rocess Luca Corsini lob al H ead of G lob al T ransaction B ank ing Alfredo Maria De Falco Head of CIB Italy Jérôme Frizé H ead of F inancial I nstititutions G roups Guy Laffineur H ead of M ark ets Patrick Soulard Country Head France COUNTRY AUSTRIA – UNICREDIT BANK AUSTRIA AG Romeo Collina Chief Operating Officer Dieter Hengl H ead of CI N etw ork Austria Juergen Kullnigg Chief Risk Officer E CUT P RE I CE CE T RAL E AS Mikhail Alekseev Chief Executive Officer - Russia E URO E RN Graziano Cameli General Manager - Russia Claudio Cesario General Manager - Croatia Marco Cravario General Manager - Romania Andrea Diamanti & H ead of CE CI P Levon Hampartzoumian Chief Executive Officer - Bulgaria Marco Iannaccone General Manager - Hungary Paolo Iannone Deputy Chief Executive Officer - Czech ia Repub lov ak lic & S Jiri Kunert Chief Executive Officer - Czech lov ak Repub lic & ia S 86 2018 Annual Report and Accounts · UniCredit Susanne Wendler Unterneh m erb ank ( Corporate B ank ing COUNTRY GERMANY – UNICREDIT BANK AG Sandra Betocchi Chief Operating Officer Markus Beumer H ead of Com m ercial B ank ing Diego Biondo H ead of S RM Emanuele Butta' H ead of Com riv atk unden B ank m ercial B ank ing Ljiljana Cortan Chief Risk Officer Joachim Dobrikat f Accounting H ead O Reg . Reporting , S h areh olding s & Andreas Frueh H ead of L eg al, Corporate Af D ocum entation f airs Jan Kupfer H ead of Corporate & I nv estm ent B ank ing Angelika Plauk H ead of Audit M anag em ent Georg Rohleder H ead of H um an Capital & Corporate Activ ities Guglielmo Zadra Chief Financial Officer E CO B AN Mauro Albanese H ead of Com and P riv ate B ank m ercial P ing F A N etw ork Paolo Di Grazia Deputy General Manager and H ead of G lob al B usiness Fabio Milanesi Deputy General Manager and lob al B ank H ead of G ing S erv ices Lorena Pelliciari Chief Financial Officer ITALY Andrea Burchi Reg ional M anag er Centro N ord Giovanni Forestiero Reg ional M anag er Centro Mauro Maschio riv atk undenb ank ( Retail, m all B usiness, P riv ate) Elena Goitini Reg ional M anag er S ud Doris Tomanek H ead of H R Austria Lucio Izzi H ead of Corporate S ales & M ark eting L * G E X I V E V S I D E N T N T P E E B B E B S E O E E E N V E S T M E N T K I N G B G B P S ) ( P ) & F I N K Giandomenico Miceli H ead of G roup O perational Reputational Risk Corrado Pavanati H ead of G G ov ernance roup Risk M odels & Credit Risk Wolfgang Schilk H ead of CRO CE COO AREA Alessandro Brusadelli inance roup F H ead of G Stefano Ceccacci H ead of G roup T ax Af f airs Mihaela Alina Lupu H ead of G trateg roup P ic AL S lanning , Capital M anag em ent Simone Marcucci H ead of G lob al B usiness P lanning & Control Roberto Monachino Head of Group Data Office Fabio Cesaretti UniCredit Services - CIO CIB and Germany Paolo Chiaverini UniCredit Services - Head of Global Operations Salvatore Greco H ead of G roup Real E state Marcello Vittorio Ronco UniCredit Services - CIO Commercial Banking & Italy Daniele Tonella UniCredit Services - Chief Executive Officer Stefan Vogt Head of Group ICT & Security Office Salvatore Malandrino ional M anag er S Reg icilia Salvatore Pisconti Head of Private Banking Sales & Advisory Giovanni Solaroli Reg ional M anag er L om b ardia Remo Taricani H ead of Retail S ales & M ark eting GROUP WEALTH MANAGEMENT Gaspare Amico Head of GWM Strategy, Business M anag em ent & D ev elopm ent Paolo Lange' Cordusio SIM - Chief Executive Officer CE F UN CT GROUP COMPLIANCE Martin Boehm H ead of G roup CI Com pliance Giovanni Buson Head of Group Compl Advisory & Country Italy Management GROUP HUMAN CAPITAL Angelo Carletta H ead of H R CO Area Cihangir Kavuncu H ead of H R T ransf orm ation and Operations Office Luigi Luciani Head of HR Italy & CEO Functions Ivan Tardivo H ead of H R CI Andrea Vintani H ead of P Capital D ev elopm ent lanning & Rew ard and H um an GROUP IDENTITY & COMMUNICATION Laura Spotorno H ead of G roup I nternal Com m unication GROUP LEGAL Leila Canetta Roeder H ead of G roup CI L eg al GROUP LENDING OFFICE Mario Agostini Head of CLO Italy Maurizio Maria Francescatti H ead of G roup L ending P rocesses Andreas Mayer H ead of G roup Credit T ransactions GROUP RISK MANAGEMENT Davide Bazzarello H ead of G roup Credit & I nteg rated Risk s * Data as at February 1, 2019 itle roup T * S G UniCredit · 2018 Annual Report and Accounts 87 * V P O I O N S B O B B & E & M Transform operating model. We are leveraging on digitalisation to transform our operating model. We are ahead of schedule, with an improved cost reduction. The optimisation of the cost base will remain important to ensure our Group’s efficiency and effectiveness. Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 89 Consolidated financial statements Consolidated accounts Consolidated balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2018 12.31.2017 10. Cash and cash balances 30,991,361 64,493,411 20. Financial assets at fair value through profit or loss: 86,137,755 a) financial assets held for trading 65,231,474 b) financial assets designated at fair value 106 c) other financial assets mandatorily at fair value 20,906,175 Financial assets held for trading (ex IAS39 Item 20) 74,685,890 Financial assets at fair value through profit or loss (ex IAS39 Item 30) 22,073,343 30. Financial assets at fair value through other comprehensive income 88,280,157 Available-for-sale financial assets (ex IAS39 Item 40) 104,101,031 40. Financial assets at amortised cost: 579,310,842 a) loans and advances to banks 73,642,827 b) loans and advances to customers 505,668,015 Held-to-maturity investments (ex IAS39 Item 50) 6,277,022 Loans and receivables with banks (ex IAS39 Item 60) 70,982,743 Loans and receivables with customers (ex IAS39 Item 70) 447,726,913 50. Hedging derivatives 4,681,517 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,438,598 2,244,685 70. Equity investments 5,501,533 6,212,142 80. Insurance reserves charged to reinsurers - - 90. Property, plant and equipment 8,408,356 8,449,288 100. Intangible assets 3,507,246 3,385,310 of which: goodwill 1,483,721 1,483,721 110. Tax assets: 13,077,671 12,658,279 a) current 1,031,863 2,039,696 b) deferred 12,045,808 10,618,583 120. Non-current assets and disposal groups classified as held for sale 1,799,936 1,110,960 130. Other assets 7,333,752 8,957,637 Total assets 831,468,724 836,789,724 Consolidated balance sheet Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 89 Consolidated financial statements Consolidated accounts Consolidated balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2018 12.31.2017 10. Cash and cash balances 30,991,361 64,493,411 20. Financial assets at fair value through profit or loss: 86,137,755 a) financial assets held for trading 65,231,474 b) financial assets designated at fair value 106 c) other financial assets mandatorily at fair value 20,906,175 Financial assets held for trading (ex IAS39 Item 20) 74,685,890 Financial assets at fair value through profit or loss (ex IAS39 Item 30) 22,073,343 30. Financial assets at fair value through other comprehensive income 88,280,157 Available-for-sale financial assets (ex IAS39 Item 40) 104,101,031 40. Financial assets at amortised cost: 579,310,842 a) loans and advances to banks 73,642,827 b) loans and advances to customers 505,668,015 Held-to-maturity investments (ex IAS39 Item 50) 6,277,022 Loans and receivables with banks (ex IAS39 Item 60) 70,982,743 Loans and receivables with customers (ex IAS39 Item 70) 447,726,913 50. Hedging derivatives 4,681,517 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,438,598 2,244,685 70. Equity investments 5,501,533 6,212,142 80. Insurance reserves charged to reinsurers - - 90. Property, plant and equipment 8,408,356 8,449,288 100. Intangible assets 3,507,246 3,385,310 of which: goodwill 1,483,721 1,483,721 110. Tax assets: 13,077,671 12,658,279 a) current 1,031,863 2,039,696 b) deferred 12,045,808 10,618,583 120. Non-current assets and disposal groups classified as held for sale 1,799,936 1,110,960 130. Other assets 7,333,752 8,957,637 Total assets 831,468,724 836,789,724 Consolidated balance sheet Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 89 Consolidated financial statements Consolidated accounts Consolidated balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2018 12.31.2017 10. Cash and cash balances 30,991,361 64,493,411 20. Financial assets at fair value through profit or loss: 86,137,755 a) financial assets held for trading 65,231,474 b) financial assets designated at fair value 106 c) other financial assets mandatorily at fair value 20,906,175 Financial assets held for trading (ex IAS39 Item 20) 74,685,890 Financial assets at fair value through profit or loss (ex IAS39 Item 30) 22,073,343 30. Financial assets at fair value through other comprehensive income 88,280,157 Available-for-sale financial assets (ex IAS39 Item 40) 104,101,031 40. Financial assets at amortised cost: 579,310,842 a) loans and advances to banks 73,642,827 b) loans and advances to customers 505,668,015 Held-to-maturity investments (ex IAS39 Item 50) 6,277,022 Loans and receivables with banks (ex IAS39 Item 60) 70,982,743 Loans and receivables with customers (ex IAS39 Item 70) 447,726,913 50. Hedging derivatives 4,681,517 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,438,598 2,244,685 70. Equity investments 5,501,533 6,212,142 80. Insurance reserves charged to reinsurers - - 90. Property, plant and equipment 8,408,356 8,449,288 100. Intangible assets 3,507,246 3,385,310 of which: goodwill 1,483,721 1,483,721 110. Tax assets: 13,077,671 12,658,279 a) current 1,031,863 2,039,696 b) deferred 12,045,808 10,618,583 120. Non-current assets and disposal groups classified as held for sale 1,799,936 1,110,960 130. Other assets 7,333,752 8,957,637 Total assets 831,468,724 836,789,724 Consolidated balance sheet Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 89 Consolidated financial statements Consolidated accounts Consolidated balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2018 12.31.2017 10. Cash and cash balances 30,991,361 64,493,411 20. Financial assets at fair value through profit or loss: 86,137,755 a) financial assets held for trading 65,231,474 b) financial assets designated at fair value 106 c) other financial assets mandatorily at fair value 20,906,175 Financial assets held for trading (ex IAS39 Item 20) 74,685,890 Financial assets at fair value through profit or loss (ex IAS39 Item 30) 22,073,343 30. Financial assets at fair value through other comprehensive income 88,280,157 Available-for-sale financial assets (ex IAS39 Item 40) 104,101,031 40. Financial assets at amortised cost: 579,310,842 a) loans and advances to banks 73,642,827 b) loans and advances to customers 505,668,015 Held-to-maturity investments (ex IAS39 Item 50) 6,277,022 Loans and receivables with banks (ex IAS39 Item 60) 70,982,743 Loans and receivables with customers (ex IAS39 Item 70) 447,726,913 50. Hedging derivatives 4,681,517 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,438,598 2,244,685 70. Equity investments 5,501,533 6,212,142 80. Insurance reserves charged to reinsurers - - 90. Property, plant and equipment 8,408,356 8,449,288 100. Intangible assets 3,507,246 3,385,310 of which: goodwill 1,483,721 1,483,721 110. Tax assets: 13,077,671 12,658,279 a) current 1,031,863 2,039,696 b) deferred 12,045,808 10,618,583 120. Non-current assets and disposal groups classified as held for sale 1,799,936 1,110,960 130. Other assets 7,333,752 8,957,637 Total assets 831,468,724 836,789,724 Consolidated balance sheet Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 89 Consolidated financial statements Consolidated accounts Consolidated balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2018 12.31.2017 10. Cash and cash balances 30,991,361 64,493,411 20. Financial assets at fair value through profit or loss: 86,137,755 a) financial assets held for trading 65,231,474 b) financial assets designated at fair value 106 c) other financial assets mandatorily at fair value 20,906,175 Financial assets held for trading (ex IAS39 Item 20) 74,685,890 Financial assets at fair value through profit or loss (ex IAS39 Item 30) 22,073,343 30. Financial assets at fair value through other comprehensive income 88,280,157 Available-for-sale financial assets (ex IAS39 Item 40) 104,101,031 40. Financial assets at amortised cost: 579,310,842 a) loans and advances to banks 73,642,827 b) loans and advances to customers 505,668,015 Held-to-maturity investments (ex IAS39 Item 50) 6,277,022 Loans and receivables with banks (ex IAS39 Item 60) 70,982,743 Loans and receivables with customers (ex IAS39 Item 70) 447,726,913 50. Hedging derivatives 4,681,517 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,438,598 2,244,685 70. Equity investments 5,501,533 6,212,142 80. Insurance reserves charged to reinsurers - - 90. Property, plant and equipment 8,408,356 8,449,288 100. Intangible assets 3,507,246 3,385,310 of which: goodwill 1,483,721 1,483,721 110. Tax assets: 13,077,671 12,658,279 a) current 1,031,863 2,039,696 b) deferred 12,045,808 10,618,583 120. Non-current assets and disposal groups classified as held for sale 1,799,936 1,110,960 130. Other assets 7,333,752 8,957,637 Total assets 831,468,724 836,789,724 Consolidated balance sheet Consolidated financial statements | Consolidated accounts Consolidated accounts 90 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 10. Financial liabilities at amortised cost: 686,036,242 a) deposits from banks 125,895,243 b) deposits from customers 478,987,709 c) debt securities in issue 81,153,290 Deposits from banks (ex IAS39 Item 10) 123,244,080 Deposits from customers (ex IAS39 Item 20) 462,895,261 Debt securities in issue (ex IAS39 Item 30) 98,602,632 20. Financial liabilities held for trading 43,111,236 Financial liabilities held for trading (ex IAS39 Item 40) 55,783,725 30. Financial liabilities designated at fair value 9,317,731 Financial liabilities at fair value through profit or loss (ex IAS39 Item 50) 3,010,529 40. Hedging derivatives 6,032,029 3,567,845 50. Value adjustment of hedged financial liabilities (+/-) 3,229,796 3,041,990 60. Tax liabilities: 824,740 1,092,905 a) current 401,717 651,263 b) deferred 423,023 441,642 70. Liabilities associated with assets classified as held for sale 539,987 184,829 80. Other liabilities 13,950,607 15,573,476 90. Provision for employee severance pay 697,592 917,284 100. Provisions for risks and charges: 10,960,983 8,650,468 a) committments and guarantees given 1,140,057 b) post-retirement benefit obligations 4,767,399 4,522,188 c) other provisions for risks and charges 5,053,527 4,128,280 110. Technical reserves - - 120. Valuation reserves (7,489,131) (4,327,092) 130. Redeemable shares - - 140. Equity instruments 4,610,073 4,610,073 150. Reserves 20,502,728 19,296,907 160. Share premium 13,392,918 13,399,799 170. Share capital 20,940,398 20,880,550 180. Treasury shares (-) (8,826) (2,695) 190. Minority shareholders' equity (+/-) 927,182 894,083 200. Profit (Loss) of the year (+/-) 3,892,439 5,473,075 Total liabilities and shareholders' equity 831,468,724 836,789,724 Consolidated financial statements | Consolidated accounts Consolidated accounts 90 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 10. Financial liabilities at amortised cost: 686,036,242 a) deposits from banks 125,895,243 b) deposits from customers 478,987,709 c) debt securities in issue 81,153,290 Deposits from banks (ex IAS39 Item 10) 123,244,080 Deposits from customers (ex IAS39 Item 20) 462,895,261 Debt securities in issue (ex IAS39 Item 30) 98,602,632 20. Financial liabilities held for trading 43,111,236 Financial liabilities held for trading (ex IAS39 Item 40) 55,783,725 30. Financial liabilities designated at fair value 9,317,731 Financial liabilities at fair value through profit or loss (ex IAS39 Item 50) 3,010,529 40. Hedging derivatives 6,032,029 3,567,845 50. Value adjustment of hedged financial liabilities (+/-) 3,229,796 3,041,990 60. Tax liabilities: 824,740 1,092,905 a) current 401,717 651,263 b) deferred 423,023 441,642 70. Liabilities associated with assets classified as held for sale 539,987 184,829 80. Other liabilities 13,950,607 15,573,476 90. Provision for employee severance pay 697,592 917,284 100. Provisions for risks and charges: 10,960,983 8,650,468 a) committments and guarantees given 1,140,057 b) post-retirement benefit obligations 4,767,399 4,522,188 c) other provisions for risks and charges 5,053,527 4,128,280 110. Technical reserves - - 120. Valuation reserves (7,489,131) (4,327,092) 130. Redeemable shares - - 140. Equity instruments 4,610,073 4,610,073 150. Reserves 20,502,728 19,296,907 160. Share premium 13,392,918 13,399,799 170. Share capital 20,940,398 20,880,550 180. Treasury shares (-) (8,826) (2,695) 190. Minority shareholders' equity (+/-) 927,182 894,083 200. Profit (Loss) of the year (+/-) 3,892,439 5,473,075 Total liabilities and shareholders' equity 831,468,724 836,789,724 Consolidated financial statements | Consolidated accounts Consolidated accounts 90 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 10. Financial liabilities at amortised cost: 686,036,242 a) deposits from banks 125,895,243 b) deposits from customers 478,987,709 c) debt securities in issue 81,153,290 Deposits from banks (ex IAS39 Item 10) 123,244,080 Deposits from customers (ex IAS39 Item 20) 462,895,261 Debt securities in issue (ex IAS39 Item 30) 98,602,632 20. Financial liabilities held for trading 43,111,236 Financial liabilities held for trading (ex IAS39 Item 40) 55,783,725 30. Financial liabilities designated at fair value 9,317,731 Financial liabilities at fair value through profit or loss (ex IAS39 Item 50) 3,010,529 40. Hedging derivatives 6,032,029 3,567,845 50. Value adjustment of hedged financial liabilities (+/-) 3,229,796 3,041,990 60. Tax liabilities: 824,740 1,092,905 a) current 401,717 651,263 b) deferred 423,023 441,642 70. Liabilities associated with assets classified as held for sale 539,987 184,829 80. Other liabilities 13,950,607 15,573,476 90. Provision for employee severance pay 697,592 917,284 100. Provisions for risks and charges: 10,960,983 8,650,468 a) committments and guarantees given 1,140,057 b) post-retirement benefit obligations 4,767,399 4,522,188 c) other provisions for risks and charges 5,053,527 4,128,280 110. Technical reserves - - 120. Valuation reserves (7,489,131) (4,327,092) 130. Redeemable shares - - 140. Equity instruments 4,610,073 4,610,073 150. Reserves 20,502,728 19,296,907 160. Share premium 13,392,918 13,399,799 170. Share capital 20,940,398 20,880,550 180. Treasury shares (-) (8,826) (2,695) 190. Minority shareholders' equity (+/-) 927,182 894,083 200. Profit (Loss) of the year (+/-) 3,892,439 5,473,075 Total liabilities and shareholders' equity 831,468,724 836,789,724 Consolidated financial statements | Consolidated accounts Consolidated accounts 90 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 10. Financial liabilities at amortised cost: 686,036,242 a) deposits from banks 125,895,243 b) deposits from customers 478,987,709 c) debt securities in issue 81,153,290 Deposits from banks (ex IAS39 Item 10) 123,244,080 Deposits from customers (ex IAS39 Item 20) 462,895,261 Debt securities in issue (ex IAS39 Item 30) 98,602,632 20. Financial liabilities held for trading 43,111,236 Financial liabilities held for trading (ex IAS39 Item 40) 55,783,725 30. Financial liabilities designated at fair value 9,317,731 Financial liabilities at fair value through profit or loss (ex IAS39 Item 50) 3,010,529 40. Hedging derivatives 6,032,029 3,567,845 50. Value adjustment of hedged financial liabilities (+/-) 3,229,796 3,041,990 60. Tax liabilities: 824,740 1,092,905 a) current 401,717 651,263 b) deferred 423,023 441,642 70. Liabilities associated with assets classified as held for sale 539,987 184,829 80. Other liabilities 13,950,607 15,573,476 90. Provision for employee severance pay 697,592 917,284 100. Provisions for risks and charges: 10,960,983 8,650,468 a) committments and guarantees given 1,140,057 b) post-retirement benefit obligations 4,767,399 4,522,188 c) other provisions for risks and charges 5,053,527 4,128,280 110. Technical reserves - - 120. Valuation reserves (7,489,131) (4,327,092) 130. Redeemable shares - - 140. Equity instruments 4,610,073 4,610,073 150. Reserves 20,502,728 19,296,907 160. Share premium 13,392,918 13,399,799 170. Share capital 20,940,398 20,880,550 180. Treasury shares (-) (8,826) (2,695) 190. Minority shareholders' equity (+/-) 927,182 894,083 200. Profit (Loss) of the year (+/-) 3,892,439 5,473,075 Total liabilities and shareholders' equity 831,468,724 836,789,724 Consolidated financial statements | Consolidated accounts Consolidated accounts 90 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 10. Financial liabilities at amortised cost: 686,036,242 a) deposits from banks 125,895,243 b) deposits from customers 478,987,709 c) debt securities in issue 81,153,290 Deposits from banks (ex IAS39 Item 10) 123,244,080 Deposits from customers (ex IAS39 Item 20) 462,895,261 Debt securities in issue (ex IAS39 Item 30) 98,602,632 20. Financial liabilities held for trading 43,111,236 Financial liabilities held for trading (ex IAS39 Item 40) 55,783,725 30. Financial liabilities designated at fair value 9,317,731 Financial liabilities at fair value through profit or loss (ex IAS39 Item 50) 3,010,529 40. Hedging derivatives 6,032,029 3,567,845 50. Value adjustment of hedged financial liabilities (+/-) 3,229,796 3,041,990 60. Tax liabilities: 824,740 1,092,905 a) current 401,717 651,263 b) deferred 423,023 441,642 70. Liabilities associated with assets classified as held for sale 539,987 184,829 80. Other liabilities 13,950,607 15,573,476 90. Provision for employee severance pay 697,592 917,284 100. Provisions for risks and charges: 10,960,983 8,650,468 a) committments and guarantees given 1,140,057 b) post-retirement benefit obligations 4,767,399 4,522,188 c) other provisions for risks and charges 5,053,527 4,128,280 110. Technical reserves - - 120. Valuation reserves (7,489,131) (4,327,092) 130. Redeemable shares - - 140. Equity instruments 4,610,073 4,610,073 150. Reserves 20,502,728 19,296,907 160. Share premium 13,392,918 13,399,799 170. Share capital 20,940,398 20,880,550 180. Treasury shares (-) (8,826) (2,695) 190. Minority shareholders' equity (+/-) 927,182 894,083 200. Profit (Loss) of the year (+/-) 3,892,439 5,473,075 Total liabilities and shareholders' equity 831,468,724 836,789,724 Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 91 Consolidated income statement (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Interest income and similar revenues 15,219,793 14,759,711 of which: interest income calculated with the effective interest method 12,989,294 20. Interest expenses and similar charges (4,366,666) (4,461,650) 30. Net interest margin 10,853,127 10,298,061 40. Fees and commissions income 8,165,441 7,663,454 50. Fees and commissions expenses (1,295,370) (1,271,029) 60. Net fees and commissions 6,870,071 6,392,425 70. Dividend income and similar revenues 412,939 314,807 80. Net gains (losses) on trading 416,633 Gains (Losses) on financial assets and liabilities held for trading (ex IAS39 Item 80) 1,075,435 90. Net gains (losses) on hedge accounting 17,163 57,344 100. Gains (Losses) on disposal and repurchase of: 308,048 a) financial assets at amortised cost 128,650 b) financial assets at fair value through other comprehensive income 176,005 c) financial liabilities 3,393 Gains (Losses) on disposal and repurchase of: (ex IAS39 Item 100) 98,963 a) loans (433,732) b) available-for-sale financial assets 533,353 c) held-to-maturity investments 10 d) financial liabilities (668) 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: 289,014 a) financial assets/liabilities designated at fair value 411,248 b) other financial assets mandatorily at fair value (122,234) Gains (Losses) on financial assets/liabilities at fair value through profit or loss (ex IAS39 Item 110) (91,007) 120. Operating income 19,166,995 18,146,028 130. Net losses/recoveries on credit impairment relating to: (2,680,959) a) financial assets at amortised cost (2,661,563) b) financial assets at fair value through other comprehensive income (19,396) Net losses/recoveries on impairment: (ex IAS39 Item 130) (2,412,669) a) loans (2,090,607) b) available-for-sale financial assets (334,642) c) held-to-maturity investments 6,387 d) other financial assets 6,193 140. Gains/Losses from contractual changes with no cancellations (3,002) 150. Net profit from financial activities 16,483,034 15,733,359 160. Net premiums - - 170. Other net insurance income/expenses - - 180. Net profit from financial and insurance activities 16,483,034 15,733,359 Consolidated income statement Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 91 Consolidated income statement (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Interest income and similar revenues 15,219,793 14,759,711 of which: interest income calculated with the effective interest method 12,989,294 20. Interest expenses and similar charges (4,366,666) (4,461,650) 30. Net interest margin 10,853,127 10,298,061 40. Fees and commissions income 8,165,441 7,663,454 50. Fees and commissions expenses (1,295,370) (1,271,029) 60. Net fees and commissions 6,870,071 6,392,425 70. Dividend income and similar revenues 412,939 314,807 80. Net gains (losses) on trading 416,633 Gains (Losses) on financial assets and liabilities held for trading (ex IAS39 Item 80) 1,075,435 90. Net gains (losses) on hedge accounting 17,163 57,344 100. Gains (Losses) on disposal and repurchase of: 308,048 a) financial assets at amortised cost 128,650 b) financial assets at fair value through other comprehensive income 176,005 c) financial liabilities 3,393 Gains (Losses) on disposal and repurchase of: (ex IAS39 Item 100) 98,963 a) loans (433,732) b) available-for-sale financial assets 533,353 c) held-to-maturity investments 10 d) financial liabilities (668) 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: 289,014 a) financial assets/liabilities designated at fair value 411,248 b) other financial assets mandatorily at fair value (122,234) Gains (Losses) on financial assets/liabilities at fair value through profit or loss (ex IAS39 Item 110) (91,007) 120. Operating income 19,166,995 18,146,028 130. Net losses/recoveries on credit impairment relating to: (2,680,959) a) financial assets at amortised cost (2,661,563) b) financial assets at fair value through other comprehensive income (19,396) Net losses/recoveries on impairment: (ex IAS39 Item 130) (2,412,669) a) loans (2,090,607) b) available-for-sale financial assets (334,642) c) held-to-maturity investments 6,387 d) other financial assets 6,193 140. Gains/Losses from contractual changes with no cancellations (3,002) 150. Net profit from financial activities 16,483,034 15,733,359 160. Net premiums - - 170. Other net insurance income/expenses - - 180. Net profit from financial and insurance activities 16,483,034 15,733,359 Consolidated income statement Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 91 Consolidated income statement (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Interest income and similar revenues 15,219,793 14,759,711 of which: interest income calculated with the effective interest method 12,989,294 20. Interest expenses and similar charges (4,366,666) (4,461,650) 30. Net interest margin 10,853,127 10,298,061 40. Fees and commissions income 8,165,441 7,663,454 50. Fees and commissions expenses (1,295,370) (1,271,029) 60. Net fees and commissions 6,870,071 6,392,425 70. Dividend income and similar revenues 412,939 314,807 80. Net gains (losses) on trading 416,633 Gains (Losses) on financial assets and liabilities held for trading (ex IAS39 Item 80) 1,075,435 90. Net gains (losses) on hedge accounting 17,163 57,344 100. Gains (Losses) on disposal and repurchase of: 308,048 a) financial assets at amortised cost 128,650 b) financial assets at fair value through other comprehensive income 176,005 c) financial liabilities 3,393 Gains (Losses) on disposal and repurchase of: (ex IAS39 Item 100) 98,963 a) loans (433,732) b) available-for-sale financial assets 533,353 c) held-to-maturity investments 10 d) financial liabilities (668) 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: 289,014 a) financial assets/liabilities designated at fair value 411,248 b) other financial assets mandatorily at fair value (122,234) Gains (Losses) on financial assets/liabilities at fair value through profit or loss (ex IAS39 Item 110) (91,007) 120. Operating income 19,166,995 18,146,028 130. Net losses/recoveries on credit impairment relating to: (2,680,959) a) financial assets at amortised cost (2,661,563) b) financial assets at fair value through other comprehensive income (19,396) Net losses/recoveries on impairment: (ex IAS39 Item 130) (2,412,669) a) loans (2,090,607) b) available-for-sale financial assets (334,642) c) held-to-maturity investments 6,387 d) other financial assets 6,193 140. Gains/Losses from contractual changes with no cancellations (3,002) 150. Net profit from financial activities 16,483,034 15,733,359 160. Net premiums - - 170. Other net insurance income/expenses - - 180. Net profit from financial and insurance activities 16,483,034 15,733,359 Consolidated income statement Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 91 Consolidated income statement (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Interest income and similar revenues 15,219,793 14,759,711 of which: interest income calculated with the effective interest method 12,989,294 20. Interest expenses and similar charges (4,366,666) (4,461,650) 30. Net interest margin 10,853,127 10,298,061 40. Fees and commissions income 8,165,441 7,663,454 50. Fees and commissions expenses (1,295,370) (1,271,029) 60. Net fees and commissions 6,870,071 6,392,425 70. Dividend income and similar revenues 412,939 314,807 80. Net gains (losses) on trading 416,633 Gains (Losses) on financial assets and liabilities held for trading (ex IAS39 Item 80) 1,075,435 90. Net gains (losses) on hedge accounting 17,163 57,344 100. Gains (Losses) on disposal and repurchase of: 308,048 a) financial assets at amortised cost 128,650 b) financial assets at fair value through other comprehensive income 176,005 c) financial liabilities 3,393 Gains (Losses) on disposal and repurchase of: (ex IAS39 Item 100) 98,963 a) loans (433,732) b) available-for-sale financial assets 533,353 c) held-to-maturity investments 10 d) financial liabilities (668) 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: 289,014 a) financial assets/liabilities designated at fair value 411,248 b) other financial assets mandatorily at fair value (122,234) Gains (Losses) on financial assets/liabilities at fair value through profit or loss (ex IAS39 Item 110) (91,007) 120. Operating income 19,166,995 18,146,028 130. Net losses/recoveries on credit impairment relating to: (2,680,959) a) financial assets at amortised cost (2,661,563) b) financial assets at fair value through other comprehensive income (19,396) Net losses/recoveries on impairment: (ex IAS39 Item 130) (2,412,669) a) loans (2,090,607) b) available-for-sale financial assets (334,642) c) held-to-maturity investments 6,387 d) other financial assets 6,193 140. Gains/Losses from contractual changes with no cancellations (3,002) 150. Net profit from financial activities 16,483,034 15,733,359 160. Net premiums - - 170. Other net insurance income/expenses - - 180. Net profit from financial and insurance activities 16,483,034 15,733,359 Consolidated income statement Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 91 Consolidated income statement (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Interest income and similar revenues 15,219,793 14,759,711 of which: interest income calculated with the effective interest method 12,989,294 20. Interest expenses and similar charges (4,366,666) (4,461,650) 30. Net interest margin 10,853,127 10,298,061 40. Fees and commissions income 8,165,441 7,663,454 50. Fees and commissions expenses (1,295,370) (1,271,029) 60. Net fees and commissions 6,870,071 6,392,425 70. Dividend income and similar revenues 412,939 314,807 80. Net gains (losses) on trading 416,633 Gains (Losses) on financial assets and liabilities held for trading (ex IAS39 Item 80) 1,075,435 90. Net gains (losses) on hedge accounting 17,163 57,344 100. Gains (Losses) on disposal and repurchase of: 308,048 a) financial assets at amortised cost 128,650 b) financial assets at fair value through other comprehensive income 176,005 c) financial liabilities 3,393 Gains (Losses) on disposal and repurchase of: (ex IAS39 Item 100) 98,963 a) loans (433,732) b) available-for-sale financial assets 533,353 c) held-to-maturity investments 10 d) financial liabilities (668) 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: 289,014 a) financial assets/liabilities designated at fair value 411,248 b) other financial assets mandatorily at fair value (122,234) Gains (Losses) on financial assets/liabilities at fair value through profit or loss (ex IAS39 Item 110) (91,007) 120. Operating income 19,166,995 18,146,028 130. Net losses/recoveries on credit impairment relating to: (2,680,959) a) financial assets at amortised cost (2,661,563) b) financial assets at fair value through other comprehensive income (19,396) Net losses/recoveries on impairment: (ex IAS39 Item 130) (2,412,669) a) loans (2,090,607) b) available-for-sale financial assets (334,642) c) held-to-maturity investments 6,387 d) other financial assets 6,193 140. Gains/Losses from contractual changes with no cancellations (3,002) 150. Net profit from financial activities 16,483,034 15,733,359 160. Net premiums - - 170. Other net insurance income/expenses - - 180. Net profit from financial and insurance activities 16,483,034 15,733,359 Consolidated income statement Consolidated financial statements | Consolidated accounts Consolidated accounts 92 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 190. Administrative expenses: (11,488,781) (12,069,279) a) staff costs (6,436,912) (6,930,132) b) other administrative expenses (5,051,869) (5,139,147) 200. Net provisions for risks and charges: (1,523,003) (508,576) a) commitments and financial guarantees given (19,037) b) other net provisions (1,503,966) (508,576) 210. Net value adjustments/write-backs on property, plant and equipment (606,074) (759,679) 220. Net value adjustments/write-backs on intangible assets (425,217) (407,384) 230. Other operating expenses/income 1,018,489 1,035,651 240. Operating costs (13,024,586) (12,709,267) 250. Gains (Losses) of equity investments (97,452) 576,326 260. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value 956 (613) 270. Goodwill impairment - - 280. Gains (Losses) on disposals on investments 231,421 99,835 290. Profit (Loss) before tax from continuing operations 3,593,373 3,699,640 300. Tax (expenses) income of the year from continuing operations 501,694 (595,662) 310. Profit (Loss) after tax from continuing operations 4,095,067 3,103,978 320. Profit (Loss) after tax from discontinued operations 13,515 2,681,598 330. Profit (Loss) of the year 4,108,582 5,785,576 340. Minority profit (loss) of the year (216,143) (312,501) 350. Parent Company's profit (loss) of the year 3,892,439 5,473,075 Earnings per share (€) 1.712 2.794 Diluted earnings per share (€) 1.704 2.779 Consolidated financial statements | Consolidated accounts Consolidated accounts 92 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 190. Administrative expenses: (11,488,781) (12,069,279) a) staff costs (6,436,912) (6,930,132) b) other administrative expenses (5,051,869) (5,139,147) 200. Net provisions for risks and charges: (1,523,003) (508,576) a) commitments and financial guarantees given (19,037) b) other net provisions (1,503,966) (508,576) 210. Net value adjustments/write-backs on property, plant and equipment (606,074) (759,679) 220. Net value adjustments/write-backs on intangible assets (425,217) (407,384) 230. Other operating expenses/income 1,018,489 1,035,651 240. Operating costs (13,024,586) (12,709,267) 250. Gains (Losses) of equity investments (97,452) 576,326 260. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value 956 (613) 270. Goodwill impairment - - 280. Gains (Losses) on disposals on investments 231,421 99,835 290. Profit (Loss) before tax from continuing operations 3,593,373 3,699,640 300. Tax (expenses) income of the year from continuing operations 501,694 (595,662) 310. Profit (Loss) after tax from continuing operations 4,095,067 3,103,978 320. Profit (Loss) after tax from discontinued operations 13,515 2,681,598 330. Profit (Loss) of the year 4,108,582 5,785,576 340. Minority profit (loss) of the year (216,143) (312,501) 350. Parent Company's profit (loss) of the year 3,892,439 5,473,075 Earnings per share (€) 1.712 2.794 Diluted earnings per share (€) 1.704 2.779 Consolidated financial statements | Consolidated accounts Consolidated accounts 92 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 190. Administrative expenses: (11,488,781) (12,069,279) a) staff costs (6,436,912) (6,930,132) b) other administrative expenses (5,051,869) (5,139,147) 200. Net provisions for risks and charges: (1,523,003) (508,576) a) commitments and financial guarantees given (19,037) b) other net provisions (1,503,966) (508,576) 210. Net value adjustments/write-backs on property, plant and equipment (606,074) (759,679) 220. Net value adjustments/write-backs on intangible assets (425,217) (407,384) 230. Other operating expenses/income 1,018,489 1,035,651 240. Operating costs (13,024,586) (12,709,267) 250. Gains (Losses) of equity investments (97,452) 576,326 260. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value 956 (613) 270. Goodwill impairment - - 280. Gains (Losses) on disposals on investments 231,421 99,835 290. Profit (Loss) before tax from continuing operations 3,593,373 3,699,640 300. Tax (expenses) income of the year from continuing operations 501,694 (595,662) 310. Profit (Loss) after tax from continuing operations 4,095,067 3,103,978 320. Profit (Loss) after tax from discontinued operations 13,515 2,681,598 330. Profit (Loss) of the year 4,108,582 5,785,576 340. Minority profit (loss) of the year (216,143) (312,501) 350. Parent Company's profit (loss) of the year 3,892,439 5,473,075 Earnings per share (€) 1.712 2.794 Diluted earnings per share (€) 1.704 2.779 Consolidated financial statements | Consolidated accounts Consolidated accounts 92 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 190. Administrative expenses: (11,488,781) (12,069,279) a) staff costs (6,436,912) (6,930,132) b) other administrative expenses (5,051,869) (5,139,147) 200. Net provisions for risks and charges: (1,523,003) (508,576) a) commitments and financial guarantees given (19,037) b) other net provisions (1,503,966) (508,576) 210. Net value adjustments/write-backs on property, plant and equipment (606,074) (759,679) 220. Net value adjustments/write-backs on intangible assets (425,217) (407,384) 230. Other operating expenses/income 1,018,489 1,035,651 240. Operating costs (13,024,586) (12,709,267) 250. Gains (Losses) of equity investments (97,452) 576,326 260. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value 956 (613) 270. Goodwill impairment - - 280. Gains (Losses) on disposals on investments 231,421 99,835 290. Profit (Loss) before tax from continuing operations 3,593,373 3,699,640 300. Tax (expenses) income of the year from continuing operations 501,694 (595,662) 310. Profit (Loss) after tax from continuing operations 4,095,067 3,103,978 320. Profit (Loss) after tax from discontinued operations 13,515 2,681,598 330. Profit (Loss) of the year 4,108,582 5,785,576 340. Minority profit (loss) of the year (216,143) (312,501) 350. Parent Company's profit (loss) of the year 3,892,439 5,473,075 Earnings per share (€) 1.712 2.794 Diluted earnings per share (€) 1.704 2.779 Consolidated financial statements | Consolidated accounts Consolidated accounts 92 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 190. Administrative expenses: (11,488,781) (12,069,279) a) staff costs (6,436,912) (6,930,132) b) other administrative expenses (5,051,869) (5,139,147) 200. Net provisions for risks and charges: (1,523,003) (508,576) a) commitments and financial guarantees given (19,037) b) other net provisions (1,503,966) (508,576) 210. Net value adjustments/write-backs on property, plant and equipment (606,074) (759,679) 220. Net value adjustments/write-backs on intangible assets (425,217) (407,384) 230. Other operating expenses/income 1,018,489 1,035,651 240. Operating costs (13,024,586) (12,709,267) 250. Gains (Losses) of equity investments (97,452) 576,326 260. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value 956 (613) 270. Goodwill impairment - - 280. Gains (Losses) on disposals on investments 231,421 99,835 290. Profit (Loss) before tax from continuing operations 3,593,373 3,699,640 300. Tax (expenses) income of the year from continuing operations 501,694 (595,662) 310. Profit (Loss) after tax from continuing operations 4,095,067 3,103,978 320. Profit (Loss) after tax from discontinued operations 13,515 2,681,598 330. Profit (Loss) of the year 4,108,582 5,785,576 340. Minority profit (loss) of the year (216,143) (312,501) 350. Parent Company's profit (loss) of the year 3,892,439 5,473,075 Earnings per share (€) 1.712 2.794 Diluted earnings per share (€) 1.704 2.779 Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 93 Consolidated statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Profit (Loss) of the year 4,108,582 5,785,576 Other comprehensive income after tax not reclassified to profit or loss 20. Equity instruments designated at fair value through other comprehensive income 15,810 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 120,104 40. Hedge accounting of equity instruments designated at fair value through other comprehensive income - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined-benefit plans (297,712) 238,653 80. Non-current assets and disposal groups classified as held for sale - (45) 90. Portion of valuation reserves from investments valued at equity method (2,181) (17,895) Other comprehensive income after tax reclassified to profit or loss 100. Foreign investments hedging - - 110. Foreign exchange differences (386,090) 306,928 120. Cash flow hedging (130,101) (126,985) 130. Hedging instruments (non-designated items) - 140. Financial assets (different from equity instruments) at fair value through other comprehensive income (1,289,667) Available-for-sale financial assets:(ex IAS39 Item 100) (84,396) 150. Non-current assets and disposal groups classified as held for sale - 40,960 160. Part of valuation reserves from investments valued at equity method (829,057) (456,037) 170. Total other comprehensive income after tax (2,798,894) (98,817) 180. Other comprehensive income (Item 10+170) 1,309,688 5,686,759 190. Minority consolidated other comprehensive income (214,741) (522,041) 200. Parent Company's consolidated other comprehensive income 1,094,947 5,164,718 Consolidated statement of comprehensive income Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 93 Consolidated statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Profit (Loss) of the year 4,108,582 5,785,576 Other comprehensive income after tax not reclassified to profit or loss 20. Equity instruments designated at fair value through other comprehensive income 15,810 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 120,104 40. Hedge accounting of equity instruments designated at fair value through other comprehensive income - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined-benefit plans (297,712) 238,653 80. Non-current assets and disposal groups classified as held for sale - (45) 90. Portion of valuation reserves from investments valued at equity method (2,181) (17,895) Other comprehensive income after tax reclassified to profit or loss 100. Foreign investments hedging - - 110. Foreign exchange differences (386,090) 306,928 120. Cash flow hedging (130,101) (126,985) 130. Hedging instruments (non-designated items) - 140. Financial assets (different from equity instruments) at fair value through other comprehensive income (1,289,667) Available-for-sale financial assets:(ex IAS39 Item 100) (84,396) 150. Non-current assets and disposal groups classified as held for sale - 40,960 160. Part of valuation reserves from investments valued at equity method (829,057) (456,037) 170. Total other comprehensive income after tax (2,798,894) (98,817) 180. Other comprehensive income (Item 10+170) 1,309,688 5,686,759 190. Minority consolidated other comprehensive income (214,741) (522,041) 200. Parent Company's consolidated other comprehensive income 1,094,947 5,164,718 Consolidated statement of comprehensive income Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 93 Consolidated statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Profit (Loss) of the year 4,108,582 5,785,576 Other comprehensive income after tax not reclassified to profit or loss 20. Equity instruments designated at fair value through other comprehensive income 15,810 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 120,104 40. Hedge accounting of equity instruments designated at fair value through other comprehensive income - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined-benefit plans (297,712) 238,653 80. Non-current assets and disposal groups classified as held for sale - (45) 90. Portion of valuation reserves from investments valued at equity method (2,181) (17,895) Other comprehensive income after tax reclassified to profit or loss 100. Foreign investments hedging - - 110. Foreign exchange differences (386,090) 306,928 120. Cash flow hedging (130,101) (126,985) 130. Hedging instruments (non-designated items) - 140. Financial assets (different from equity instruments) at fair value through other comprehensive income (1,289,667) Available-for-sale financial assets:(ex IAS39 Item 100) (84,396) 150. Non-current assets and disposal groups classified as held for sale - 40,960 160. Part of valuation reserves from investments valued at equity method (829,057) (456,037) 170. Total other comprehensive income after tax (2,798,894) (98,817) 180. Other comprehensive income (Item 10+170) 1,309,688 5,686,759 190. Minority consolidated other comprehensive income (214,741) (522,041) 200. Parent Company's consolidated other comprehensive income 1,094,947 5,164,718 Consolidated statement of comprehensive income Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 93 Consolidated statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Profit (Loss) of the year 4,108,582 5,785,576 Other comprehensive income after tax not reclassified to profit or loss 20. Equity instruments designated at fair value through other comprehensive income 15,810 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 120,104 40. Hedge accounting of equity instruments designated at fair value through other comprehensive income - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined-benefit plans (297,712) 238,653 80. Non-current assets and disposal groups classified as held for sale - (45) 90. Portion of valuation reserves from investments valued at equity method (2,181) (17,895) Other comprehensive income after tax reclassified to profit or loss 100. Foreign investments hedging - - 110. Foreign exchange differences (386,090) 306,928 120. Cash flow hedging (130,101) (126,985) 130. Hedging instruments (non-designated items) - 140. Financial assets (different from equity instruments) at fair value through other comprehensive income (1,289,667) Available-for-sale financial assets:(ex IAS39 Item 100) (84,396) 150. Non-current assets and disposal groups classified as held for sale - 40,960 160. Part of valuation reserves from investments valued at equity method (829,057) (456,037) 170. Total other comprehensive income after tax (2,798,894) (98,817) 180. Other comprehensive income (Item 10+170) 1,309,688 5,686,759 190. Minority consolidated other comprehensive income (214,741) (522,041) 200. Parent Company's consolidated other comprehensive income 1,094,947 5,164,718 Consolidated statement of comprehensive income Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 93 Consolidated statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Profit (Loss) of the year 4,108,582 5,785,576 Other comprehensive income after tax not reclassified to profit or loss 20. Equity instruments designated at fair value through other comprehensive income 15,810 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 120,104 40. Hedge accounting of equity instruments designated at fair value through other comprehensive income - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined-benefit plans (297,712) 238,653 80. Non-current assets and disposal groups classified as held for sale - (45) 90. Portion of valuation reserves from investments valued at equity method (2,181) (17,895) Other comprehensive income after tax reclassified to profit or loss 100. Foreign investments hedging - - 110. Foreign exchange differences (386,090) 306,928 120. Cash flow hedging (130,101) (126,985) 130. Hedging instruments (non-designated items) - 140. Financial assets (different from equity instruments) at fair value through other comprehensive income (1,289,667) Available-for-sale financial assets:(ex IAS39 Item 100) (84,396) 150. Non-current assets and disposal groups classified as held for sale - 40,960 160. Part of valuation reserves from investments valued at equity method (829,057) (456,037) 170. Total other comprehensive income after tax (2,798,894) (98,817) 180. Other comprehensive income (Item 10+170) 1,309,688 5,686,759 190. Minority consolidated other comprehensive income (214,741) (522,041) 200. Parent Company's consolidated other comprehensive income 1,094,947 5,164,718 Consolidated statement of comprehensive income Consolidated financial statements | Consolidated accounts Consolidated accounts 94 2018 Annual Report and Accounts · UniCredit Statement of changes in the consolidated shareholders' equity as at 31 December 2018 PREVIOUS YEAR PROFIT (LOSS) ALLOCATION 12.31.2017 CHANGE IN OPENING BALANCE 01.01.2018 DIVIDENDS AND OTHER ALLOCATIONS BALANCE AS AT BALANCE AS AT RESERVES Share capital: - ordinary shares 21,200,353 - 21,200,353 - - - other shares 2,368 - 2,368 - - Share premium 13,488,060 - 13,488,060 - - Reserves: - from profits 11,519,736 (3,011,723) 8,508,013 4,923,995 - - other 7,950,530 - 7,950,530 - - Valuation reserves (4,329,035) (325,404) (4,654,439) - - Advanced dividends - - - - - Equity instruments 4,610,073 - 4,610,073 - - Treasury shares (2,961) - (2,961) - - Profit (Loss) of the year 5,785,576 - 5,785,576 (4,923,995) (861,581) Total shareholders’ equity 60,224,700 (3,337,127) 56,887,573 - (861,581) Group shareholders' equity 59,330,617 (3,327,358) 56,003,259 - (714,559) Minority shareholders' equity 894,083 (9,769) 884,314 - (147,022) Statement of changes in the consolidated shareholders’ equity The column change in opening balances includes the reclassification and remeasurement effects resulting from the first time adoption of accounting principle IFRS9. It should be noted that these effects include a negative impact for €198 million related to a company consolidated using the equity method totally compensated by previous impairment reversal. Furthermore, it is worth specifying that due to deposits certificates reclassification, performed in order to grant the homogeneous classification within the Group, the accumulated changes in fair value related to the own credit risk for €21 million have been accounted with negative impact in revaluation reserves with a corresponding positive effect under other reserves. Refer to “Transition to ‘IFRS9 Financial Instruments’ of UniCredit group”, General - Other matters, for further details. The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares (Stock Options, Performance Shares, Discount and Matching Shares connected with the ESOP Plans and other Group Executive Incentive Plans). The cumulated change of revaluation reserve includes the negative effect for €299 million of actuarial gain (losses) from the measurement of the actuarial liabilities (defined benefit plans), the negative effects of the cash flow hedges reserve for €130 million and the negative effect of financial asset and liabilities at fair value for €1,186 million. This cumulated change includes furthermore the negative effect of exchange differences reserve for €386 million, mainly related to negative effect of Ruble for €352 million and the negative change in the valuation reserve of the companies accounted for using the equity method for €838 million, mainly due to the depreciation of the items in Turkish Lira for €712 million. The negative change of the other reserves includes the payment of coupon on AT1 equity instruments for €242 million. The main change in share capital refers to the increase of €60 million following the resolution of the Board of Directors of 7 February 2018 of UniCredit S.p.A. executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel. For further details about the Shareholders’ Equity changes see Part B - Consolidated Balance Sheet - Liabilities - Section 13 of the Consolidated Financial Statement, Note to the Consolidated Accounts. Consolidated financial statements | Consolidated accounts Consolidated accounts 94 2018 Annual Report and Accounts · UniCredit Statement of changes in the consolidated shareholders' equity as at 31 December 2018 PREVIOUS YEAR PROFIT (LOSS) ALLOCATION 12.31.2017 CHANGE IN OPENING BALANCE 01.01.2018 DIVIDENDS AND OTHER ALLOCATIONS BALANCE AS AT BALANCE AS AT RESERVES Share capital: - ordinary shares 21,200,353 - 21,200,353 - - - other shares 2,368 - 2,368 - - Share premium 13,488,060 - 13,488,060 - - Reserves: - from profits 11,519,736 (3,011,723) 8,508,013 4,923,995 - - other 7,950,530 - 7,950,530 - - Valuation reserves (4,329,035) (325,404) (4,654,439) - - Advanced dividends - - - - - Equity instruments 4,610,073 - 4,610,073 - - Treasury shares (2,961) - (2,961) - - Profit (Loss) of the year 5,785,576 - 5,785,576 (4,923,995) (861,581) Total shareholders’ equity 60,224,700 (3,337,127) 56,887,573 - (861,581) Group shareholders' equity 59,330,617 (3,327,358) 56,003,259 - (714,559) Minority shareholders' equity 894,083 (9,769) 884,314 - (147,022) Statement of changes in the consolidated shareholders’ equity The column change in opening balances includes the reclassification and remeasurement effects resulting from the first time adoption of accounting principle IFRS9. It should be noted that these effects include a negative impact for €198 million related to a company consolidated using the equity method totally compensated by previous impairment reversal. Furthermore, it is worth specifying that due to deposits certificates reclassification, performed in order to grant the homogeneous classification within the Group, the accumulated changes in fair value related to the own credit risk for €21 million have been accounted with negative impact in revaluation reserves with a corresponding positive effect under other reserves. Refer to “Transition to ‘IFRS9 Financial Instruments’ of UniCredit group”, General - Other matters, for further details. The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares (Stock Options, Performance Shares, Discount and Matching Shares connected with the ESOP Plans and other Group Executive Incentive Plans). The cumulated change of revaluation reserve includes the negative effect for €299 million of actuarial gain (losses) from the measurement of the actuarial liabilities (defined benefit plans), the negative effects of the cash flow hedges reserve for €130 million and the negative effect of financial asset and liabilities at fair value for €1,186 million. This cumulated change includes furthermore the negative effect of exchange differences reserve for €386 million, mainly related to negative effect of Ruble for €352 million and the negative change in the valuation reserve of the companies accounted for using the equity method for €838 million, mainly due to the depreciation of the items in Turkish Lira for €712 million. The negative change of the other reserves includes the payment of coupon on AT1 equity instruments for €242 million. The main change in share capital refers to the increase of €60 million following the resolution of the Board of Directors of 7 February 2018 of UniCredit S.p.A. executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel. For further details about the Shareholders’ Equity changes see Part B - Consolidated Balance Sheet - Liabilities - Section 13 of the Consolidated Financial Statement, Note to the Consolidated Accounts. Consolidated financial statements | Consolidated accounts Consolidated accounts 94 2018 Annual Report and Accounts · UniCredit Statement of changes in the consolidated shareholders' equity as at 31 December 2018 PREVIOUS YEAR PROFIT (LOSS) ALLOCATION 12.31.2017 CHANGE IN OPENING BALANCE 01.01.2018 DIVIDENDS AND OTHER ALLOCATIONS BALANCE AS AT BALANCE AS AT RESERVES Share capital: - ordinary shares 21,200,353 - 21,200,353 - - - other shares 2,368 - 2,368 - - Share premium 13,488,060 - 13,488,060 - - Reserves: - from profits 11,519,736 (3,011,723) 8,508,013 4,923,995 - - other 7,950,530 - 7,950,530 - - Valuation reserves (4,329,035) (325,404) (4,654,439) - - Advanced dividends - - - - - Equity instruments 4,610,073 - 4,610,073 - - Treasury shares (2,961) - (2,961) - - Profit (Loss) of the year 5,785,576 - 5,785,576 (4,923,995) (861,581) Total shareholders’ equity 60,224,700 (3,337,127) 56,887,573 - (861,581) Group shareholders' equity 59,330,617 (3,327,358) 56,003,259 - (714,559) Minority shareholders' equity 894,083 (9,769) 884,314 - (147,022) Statement of changes in the consolidated shareholders’ equity The column change in opening balances includes the reclassification and remeasurement effects resulting from the first time adoption of accounting principle IFRS9. It should be noted that these effects include a negative impact for €198 million related to a company consolidated using the equity method totally compensated by previous impairment reversal. Furthermore, it is worth specifying that due to deposits certificates reclassification, performed in order to grant the homogeneous classification within the Group, the accumulated changes in fair value related to the own credit risk for €21 million have been accounted with negative impact in revaluation reserves with a corresponding positive effect under other reserves. Refer to “Transition to ‘IFRS9 Financial Instruments’ of UniCredit group”, General - Other matters, for further details. The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares (Stock Options, Performance Shares, Discount and Matching Shares connected with the ESOP Plans and other Group Executive Incentive Plans). The cumulated change of revaluation reserve includes the negative effect for €299 million of actuarial gain (losses) from the measurement of the actuarial liabilities (defined benefit plans), the negative effects of the cash flow hedges reserve for €130 million and the negative effect of financial asset and liabilities at fair value for €1,186 million. This cumulated change includes furthermore the negative effect of exchange differences reserve for €386 million, mainly related to negative effect of Ruble for €352 million and the negative change in the valuation reserve of the companies accounted for using the equity method for €838 million, mainly due to the depreciation of the items in Turkish Lira for €712 million. The negative change of the other reserves includes the payment of coupon on AT1 equity instruments for €242 million. The main change in share capital refers to the increase of €60 million following the resolution of the Board of Directors of 7 February 2018 of UniCredit S.p.A. executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel. For further details about the Shareholders’ Equity changes see Part B - Consolidated Balance Sheet - Liabilities - Section 13 of the Consolidated Financial Statement, Note to the Consolidated Accounts. Consolidated financial statements | Consolidated accounts Consolidated accounts 94 2018 Annual Report and Accounts · UniCredit Statement of changes in the consolidated shareholders' equity as at 31 December 2018 PREVIOUS YEAR PROFIT (LOSS) ALLOCATION 12.31.2017 CHANGE IN OPENING BALANCE 01.01.2018 DIVIDENDS AND OTHER ALLOCATIONS BALANCE AS AT BALANCE AS AT RESERVES Share capital: - ordinary shares 21,200,353 - 21,200,353 - - - other shares 2,368 - 2,368 - - Share premium 13,488,060 - 13,488,060 - - Reserves: - from profits 11,519,736 (3,011,723) 8,508,013 4,923,995 - - other 7,950,530 - 7,950,530 - - Valuation reserves (4,329,035) (325,404) (4,654,439) - - Advanced dividends - - - - - Equity instruments 4,610,073 - 4,610,073 - - Treasury shares (2,961) - (2,961) - - Profit (Loss) of the year 5,785,576 - 5,785,576 (4,923,995) (861,581) Total shareholders’ equity 60,224,700 (3,337,127) 56,887,573 - (861,581) Group shareholders' equity 59,330,617 (3,327,358) 56,003,259 - (714,559) Minority shareholders' equity 894,083 (9,769) 884,314 - (147,022) Statement of changes in the consolidated shareholders’ equity The column change in opening balances includes the reclassification and remeasurement effects resulting from the first time adoption of accounting principle IFRS9. It should be noted that these effects include a negative impact for €198 million related to a company consolidated using the equity method totally compensated by previous impairment reversal. Furthermore, it is worth specifying that due to deposits certificates reclassification, performed in order to grant the homogeneous classification within the Group, the accumulated changes in fair value related to the own credit risk for €21 million have been accounted with negative impact in revaluation reserves with a corresponding positive effect under other reserves. Refer to “Transition to ‘IFRS9 Financial Instruments’ of UniCredit group”, General - Other matters, for further details. The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares (Stock Options, Performance Shares, Discount and Matching Shares connected with the ESOP Plans and other Group Executive Incentive Plans). The cumulated change of revaluation reserve includes the negative effect for €299 million of actuarial gain (losses) from the measurement of the actuarial liabilities (defined benefit plans), the negative effects of the cash flow hedges reserve for €130 million and the negative effect of financial asset and liabilities at fair value for €1,186 million. This cumulated change includes furthermore the negative effect of exchange differences reserve for €386 million, mainly related to negative effect of Ruble for €352 million and the negative change in the valuation reserve of the companies accounted for using the equity method for €838 million, mainly due to the depreciation of the items in Turkish Lira for €712 million. The negative change of the other reserves includes the payment of coupon on AT1 equity instruments for €242 million. The main change in share capital refers to the increase of €60 million following the resolution of the Board of Directors of 7 February 2018 of UniCredit S.p.A. executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel. For further details about the Shareholders’ Equity changes see Part B - Consolidated Balance Sheet - Liabilities - Section 13 of the Consolidated Financial Statement, Note to the Consolidated Accounts. Consolidated financial statements | Consolidated accounts Consolidated accounts 94 2018 Annual Report and Accounts · UniCredit Statement of changes in the consolidated shareholders' equity as at 31 December 2018 PREVIOUS YEAR PROFIT (LOSS) ALLOCATION 12.31.2017 CHANGE IN OPENING BALANCE 01.01.2018 DIVIDENDS AND OTHER ALLOCATIONS BALANCE AS AT BALANCE AS AT RESERVES Share capital: - ordinary shares 21,200,353 - 21,200,353 - - - other shares 2,368 - 2,368 - - Share premium 13,488,060 - 13,488,060 - - Reserves: - from profits 11,519,736 (3,011,723) 8,508,013 4,923,995 - - other 7,950,530 - 7,950,530 - - Valuation reserves (4,329,035) (325,404) (4,654,439) - - Advanced dividends - - - - - Equity instruments 4,610,073 - 4,610,073 - - Treasury shares (2,961) - (2,961) - - Profit (Loss) of the year 5,785,576 - 5,785,576 (4,923,995) (861,581) Total shareholders’ equity 60,224,700 (3,337,127) 56,887,573 - (861,581) Group shareholders' equity 59,330,617 (3,327,358) 56,003,259 - (714,559) Minority shareholders' equity 894,083 (9,769) 884,314 - (147,022) Statement of changes in the consolidated shareholders’ equity The column change in opening balances includes the reclassification and remeasurement effects resulting from the first time adoption of accounting principle IFRS9. It should be noted that these effects include a negative impact for €198 million related to a company consolidated using the equity method totally compensated by previous impairment reversal. Furthermore, it is worth specifying that due to deposits certificates reclassification, performed in order to grant the homogeneous classification within the Group, the accumulated changes in fair value related to the own credit risk for €21 million have been accounted with negative impact in revaluation reserves with a corresponding positive effect under other reserves. Refer to “Transition to ‘IFRS9 Financial Instruments’ of UniCredit group”, General - Other matters, for further details. The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares (Stock Options, Performance Shares, Discount and Matching Shares connected with the ESOP Plans and other Group Executive Incentive Plans). The cumulated change of revaluation reserve includes the negative effect for €299 million of actuarial gain (losses) from the measurement of the actuarial liabilities (defined benefit plans), the negative effects of the cash flow hedges reserve for €130 million and the negative effect of financial asset and liabilities at fair value for €1,186 million. This cumulated change includes furthermore the negative effect of exchange differences reserve for €386 million, mainly related to negative effect of Ruble for €352 million and the negative change in the valuation reserve of the companies accounted for using the equity method for €838 million, mainly due to the depreciation of the items in Turkish Lira for €712 million. The negative change of the other reserves includes the payment of coupon on AT1 equity instruments for €242 million. The main change in share capital refers to the increase of €60 million following the resolution of the Board of Directors of 7 February 2018 of UniCredit S.p.A. executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel. For further details about the Shareholders’ Equity changes see Part B - Consolidated Balance Sheet - Liabilities - Section 13 of the Consolidated Financial Statement, Note to the Consolidated Accounts. Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 95 (€ '000) CHANGES IN THE YEAR SHAREHOLDERS' EQUITY TRANSACTIONS 12.31.2018 12.31.2018 12.31.2018 CHANGES IN RESERVES ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES ADVANCED DIVIDENDS DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS CHANGES IN EQUITY INVESTMENTS OTHER COMPREHENSIVE INCOME 2018 TOTAL SHAREHOLDERS' EQUITY AS AT GROUP SHAREHOLDERS' EQUITY AS AT MINORITY SHAREHOLDERS' EQUITY AS AT (14,490) 62,216 - - - - - - - - 21,248,079 20,940,398 307,681 - - (2,368) - - - - - - - - - - (8,291) - - - - - - - - - 13,479,768 13,392,918 86,850 53,700 (59,849) - - - - - - - - 13,425,860 13,221,839 204,021 (613,235) - - - - - - 70,465 - - 7,407,760 7,280,889 126,871 (40,886) - - - - - - - - (2,798,894) (7,494,219) (7,489,131) (5,088) - - - - - - - - - - - - - - - - - - - - - - - 4,610,073 4,610,073 - (15,161) - - - - - - - - - (18,122) (8,826) (9,296) - - - - - - - - - 4,108,582 4,108,582 3,892,439 216,143 (638,364) 2,368 (2,368) - - - - 70,465 - 1,309,688 56,767,781 55,840,599 927,182 (615,562) 2,368 (2,368) - - - - 70,465 2,049 1,094,947 55,840,599 (22,802) - - - - - - - (2,049) 214,741 927,182 Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 95 (€ '000) CHANGES IN THE YEAR SHAREHOLDERS' EQUITY TRANSACTIONS 12.31.2018 12.31.2018 12.31.2018 CHANGES IN RESERVES ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES ADVANCED DIVIDENDS DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS CHANGES IN EQUITY INVESTMENTS OTHER COMPREHENSIVE INCOME 2018 TOTAL SHAREHOLDERS' EQUITY AS AT GROUP SHAREHOLDERS' EQUITY AS AT MINORITY SHAREHOLDERS' EQUITY AS AT (14,490) 62,216 - - - - - - - - 21,248,079 20,940,398 307,681 - - (2,368) - - - - - - - - - - (8,291) - - - - - - - - - 13,479,768 13,392,918 86,850 53,700 (59,849) - - - - - - - - 13,425,860 13,221,839 204,021 (613,235) - - - - - - 70,465 - - 7,407,760 7,280,889 126,871 (40,886) - - - - - - - - (2,798,894) (7,494,219) (7,489,131) (5,088) - - - - - - - - - - - - - - - - - - - - - - - 4,610,073 4,610,073 - (15,161) - - - - - - - - - (18,122) (8,826) (9,296) - - - - - - - - - 4,108,582 4,108,582 3,892,439 216,143 (638,364) 2,368 (2,368) - - - - 70,465 - 1,309,688 56,767,781 55,840,599 927,182 (615,562) 2,368 (2,368) - - - - 70,465 2,049 1,094,947 55,840,599 (22,802) - - - - - - - (2,049) 214,741 927,182 Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 95 (€ '000) CHANGES IN THE YEAR SHAREHOLDERS' EQUITY TRANSACTIONS 12.31.2018 12.31.2018 12.31.2018 CHANGES IN RESERVES ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES ADVANCED DIVIDENDS DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS CHANGES IN EQUITY INVESTMENTS OTHER COMPREHENSIVE INCOME 2018 TOTAL SHAREHOLDERS' EQUITY AS AT GROUP SHAREHOLDERS' EQUITY AS AT MINORITY SHAREHOLDERS' EQUITY AS AT (14,490) 62,216 - - - - - - - - 21,248,079 20,940,398 307,681 - - (2,368) - - - - - - - - - - (8,291) - - - - - - - - - 13,479,768 13,392,918 86,850 53,700 (59,849) - - - - - - - - 13,425,860 13,221,839 204,021 (613,235) - - - - - - 70,465 - - 7,407,760 7,280,889 126,871 (40,886) - - - - - - - - (2,798,894) (7,494,219) (7,489,131) (5,088) - - - - - - - - - - - - - - - - - - - - - - - 4,610,073 4,610,073 - (15,161) - - - - - - - - - (18,122) (8,826) (9,296) - - - - - - - - - 4,108,582 4,108,582 3,892,439 216,143 (638,364) 2,368 (2,368) - - - - 70,465 - 1,309,688 56,767,781 55,840,599 927,182 (615,562) 2,368 (2,368) - - - - 70,465 2,049 1,094,947 55,840,599 (22,802) - - - - - - - (2,049) 214,741 927,182 Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 95 (€ '000) CHANGES IN THE YEAR SHAREHOLDERS' EQUITY TRANSACTIONS 12.31.2018 12.31.2018 12.31.2018 CHANGES IN RESERVES ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES ADVANCED DIVIDENDS DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS CHANGES IN EQUITY INVESTMENTS OTHER COMPREHENSIVE INCOME 2018 TOTAL SHAREHOLDERS' EQUITY AS AT GROUP SHAREHOLDERS' EQUITY AS AT MINORITY SHAREHOLDERS' EQUITY AS AT (14,490) 62,216 - - - - - - - - 21,248,079 20,940,398 307,681 - - (2,368) - - - - - - - - - - (8,291) - - - - - - - - - 13,479,768 13,392,918 86,850 53,700 (59,849) - - - - - - - - 13,425,860 13,221,839 204,021 (613,235) - - - - - - 70,465 - - 7,407,760 7,280,889 126,871 (40,886) - - - - - - - - (2,798,894) (7,494,219) (7,489,131) (5,088) - - - - - - - - - - - - - - - - - - - - - - - 4,610,073 4,610,073 - (15,161) - - - - - - - - - (18,122) (8,826) (9,296) - - - - - - - - - 4,108,582 4,108,582 3,892,439 216,143 (638,364) 2,368 (2,368) - - - - 70,465 - 1,309,688 56,767,781 55,840,599 927,182 (615,562) 2,368 (2,368) - - - - 70,465 2,049 1,094,947 55,840,599 (22,802) - - - - - - - (2,049) 214,741 927,182 Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 95 (€ '000) CHANGES IN THE YEAR SHAREHOLDERS' EQUITY TRANSACTIONS 12.31.2018 12.31.2018 12.31.2018 CHANGES IN RESERVES ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES ADVANCED DIVIDENDS DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS CHANGES IN EQUITY INVESTMENTS OTHER COMPREHENSIVE INCOME 2018 TOTAL SHAREHOLDERS' EQUITY AS AT GROUP SHAREHOLDERS' EQUITY AS AT MINORITY SHAREHOLDERS' EQUITY AS AT (14,490) 62,216 - - - - - - - - 21,248,079 20,940,398 307,681 - - (2,368) - - - - - - - - - - (8,291) - - - - - - - - - 13,479,768 13,392,918 86,850 53,700 (59,849) - - - - - - - - 13,425,860 13,221,839 204,021 (613,235) - - - - - - 70,465 - - 7,407,760 7,280,889 126,871 (40,886) - - - - - - - - (2,798,894) (7,494,219) (7,489,131) (5,088) - - - - - - - - - - - - - - - - - - - - - - - 4,610,073 4,610,073 - (15,161) - - - - - - - - - (18,122) (8,826) (9,296) - - - - - - - - - 4,108,582 4,108,582 3,892,439 216,143 (638,364) 2,368 (2,368) - - - - 70,465 - 1,309,688 56,767,781 55,840,599 927,182 (615,562) 2,368 (2,368) - - - - 70,465 2,049 1,094,947 55,840,599 (22,802) - - - - - - - (2,049) 214,741 927,182 Consolidated financial statements | Consolidated accounts Consolidated accounts 96 2018 Annual Report and Accounts · UniCredit Statement of changes in the consolidated shareholders' equity as at 31 December 2017 PREVIOUS YEAR PROFIT (LOSS) ALLOCATION 12.31.2016 CHANGE IN OPENING BALANCE 01.01.2017 DIVIDENDS AND OTHER ALLOCATIONS BALANCE AS AT BALANCE AS AT RESERVES Share capital: - ordinary shares 21,371,076 - 21,371,076 - - - other shares 8,517 - 8,517 - - Share premium 15,833,467 - 15,833,467 (11,460,133) - Reserves: - from profits 13,648,993 - 13,648,993 (67,363) - - other 5,531,632 - 5,531,632 - - Valuation reserves (4,255,598) - (4,255,598) - - Advanced dividends - - - - - Equity instruments 2,383,463 - 2,383,463 - - Treasury shares (6,935) - (6,935) - - Profit (Loss) of the year (11,326,313) - (11,326,313) 11,527,496 (201,183) Total shareholders’ equity 43,188,302 - 43,188,302 - (201,183) Group shareholders' equity 39,335,550 - 39,335,550 - (2,000) Minority shareholders' equity 3,852,752 - 3,852,752 - (199,183) The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares (Stock Options, Performance Shares, Discount and Matching Shares connected with the ESOP Plans and other Group Executive Incentive Plans). The cumulated change of revaluation reserve includes the positive effect for €239 million of actuarial gain (losses) from the measurement of the actuarial liabilities (defined benefit plans), the negative effect of €84 million of the reserve on AFS financial assets, the negative effects of the cash flow hedges reserve for €127 million and the positive effects of the reserve on non-current assets classified as held for sale for €68 million mainly due to the sale of the Polish subsidiary and to the disposal to Amundi of the subsidiaries belonging to Pioneer group. This change includes furthermore the positive effect of exchange differences reserve for €307 million, mainly related to the reduction for €494 million of the negative exchange differences reserve of Zloty, €310 million referred to Group portion, related to the Polish subsidiary due to the loss of control occurred on 7 June 2017 partially net by the negative effect of Ruble for €219 million. In addition this positive effect is partly net of the negative change in the valuation reserve of the companies accounted for using the equity method for €475 million, mainly due to the depreciation of the items in Turkish Lira for €427 million. The column “Changes in reserves” for items “Reserves”, “Issued Capital” e “Share premiums” represent the coverage of the loss included in “Reserves - other” through the use of Share Premium reserve for €2,509 million. The reduction of “Issued Capital”, “Share premiums” and “Reserves from profit” related to minorities refers to the sale of the Bank Pekao S.A. for €3,462 million. The changes in shareholdings relate to the effects of the disposal of Bank Pekao S.A. share (1.04%) due to the early redemption of “Secured mandatorily exchangeable equity-linked certificate” occurred in the first quarter of 2017 before loss of control on 7 June 2017 following the sale of 32.8% to Powszechny Zakład Ubezpieczeń S.A and Polish Development Fund S.A. Consolidated financial statements | Consolidated accounts Consolidated accounts 96 2018 Annual Report and Accounts · UniCredit Statement of changes in the consolidated shareholders' equity as at 31 December 2017 PREVIOUS YEAR PROFIT (LOSS) ALLOCATION 12.31.2016 CHANGE IN OPENING BALANCE 01.01.2017 DIVIDENDS AND OTHER ALLOCATIONS BALANCE AS AT BALANCE AS AT RESERVES Share capital: - ordinary shares 21,371,076 - 21,371,076 - - - other shares 8,517 - 8,517 - - Share premium 15,833,467 - 15,833,467 (11,460,133) - Reserves: - from profits 13,648,993 - 13,648,993 (67,363) - - other 5,531,632 - 5,531,632 - - Valuation reserves (4,255,598) - (4,255,598) - - Advanced dividends - - - - - Equity instruments 2,383,463 - 2,383,463 - - Treasury shares (6,935) - (6,935) - - Profit (Loss) of the year (11,326,313) - (11,326,313) 11,527,496 (201,183) Total shareholders’ equity 43,188,302 - 43,188,302 - (201,183) Group shareholders' equity 39,335,550 - 39,335,550 - (2,000) Minority shareholders' equity 3,852,752 - 3,852,752 - (199,183) The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares (Stock Options, Performance Shares, Discount and Matching Shares connected with the ESOP Plans and other Group Executive Incentive Plans). The cumulated change of revaluation reserve includes the positive effect for €239 million of actuarial gain (losses) from the measurement of the actuarial liabilities (defined benefit plans), the negative effect of €84 million of the reserve on AFS financial assets, the negative effects of the cash flow hedges reserve for €127 million and the positive effects of the reserve on non-current assets classified as held for sale for €68 million mainly due to the sale of the Polish subsidiary and to the disposal to Amundi of the subsidiaries belonging to Pioneer group. This change includes furthermore the positive effect of exchange differences reserve for €307 million, mainly related to the reduction for €494 million of the negative exchange differences reserve of Zloty, €310 million referred to Group portion, related to the Polish subsidiary due to the loss of control occurred on 7 June 2017 partially net by the negative effect of Ruble for €219 million. In addition this positive effect is partly net of the negative change in the valuation reserve of the companies accounted for using the equity method for €475 million, mainly due to the depreciation of the items in Turkish Lira for €427 million. The column “Changes in reserves” for items “Reserves”, “Issued Capital” e “Share premiums” represent the coverage of the loss included in “Reserves - other” through the use of Share Premium reserve for €2,509 million. The reduction of “Issued Capital”, “Share premiums” and “Reserves from profit” related to minorities refers to the sale of the Bank Pekao S.A. for €3,462 million. The changes in shareholdings relate to the effects of the disposal of Bank Pekao S.A. share (1.04%) due to the early redemption of “Secured mandatorily exchangeable equity-linked certificate” occurred in the first quarter of 2017 before loss of control on 7 June 2017 following the sale of 32.8% to Powszechny Zakład Ubezpieczeń S.A and Polish Development Fund S.A. Consolidated financial statements | Consolidated accounts Consolidated accounts 96 2018 Annual Report and Accounts · UniCredit Statement of changes in the consolidated shareholders' equity as at 31 December 2017 PREVIOUS YEAR PROFIT (LOSS) ALLOCATION 12.31.2016 CHANGE IN OPENING BALANCE 01.01.2017 DIVIDENDS AND OTHER ALLOCATIONS BALANCE AS AT BALANCE AS AT RESERVES Share capital: - ordinary shares 21,371,076 - 21,371,076 - - - other shares 8,517 - 8,517 - - Share premium 15,833,467 - 15,833,467 (11,460,133) - Reserves: - from profits 13,648,993 - 13,648,993 (67,363) - - other 5,531,632 - 5,531,632 - - Valuation reserves (4,255,598) - (4,255,598) - - Advanced dividends - - - - - Equity instruments 2,383,463 - 2,383,463 - - Treasury shares (6,935) - (6,935) - - Profit (Loss) of the year (11,326,313) - (11,326,313) 11,527,496 (201,183) Total shareholders’ equity 43,188,302 - 43,188,302 - (201,183) Group shareholders' equity 39,335,550 - 39,335,550 - (2,000) Minority shareholders' equity 3,852,752 - 3,852,752 - (199,183) The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares (Stock Options, Performance Shares, Discount and Matching Shares connected with the ESOP Plans and other Group Executive Incentive Plans). The cumulated change of revaluation reserve includes the positive effect for €239 million of actuarial gain (losses) from the measurement of the actuarial liabilities (defined benefit plans), the negative effect of €84 million of the reserve on AFS financial assets, the negative effects of the cash flow hedges reserve for €127 million and the positive effects of the reserve on non-current assets classified as held for sale for €68 million mainly due to the sale of the Polish subsidiary and to the disposal to Amundi of the subsidiaries belonging to Pioneer group. This change includes furthermore the positive effect of exchange differences reserve for €307 million, mainly related to the reduction for €494 million of the negative exchange differences reserve of Zloty, €310 million referred to Group portion, related to the Polish subsidiary due to the loss of control occurred on 7 June 2017 partially net by the negative effect of Ruble for €219 million. In addition this positive effect is partly net of the negative change in the valuation reserve of the companies accounted for using the equity method for €475 million, mainly due to the depreciation of the items in Turkish Lira for €427 million. The column “Changes in reserves” for items “Reserves”, “Issued Capital” e “Share premiums” represent the coverage of the loss included in “Reserves - other” through the use of Share Premium reserve for €2,509 million. The reduction of “Issued Capital”, “Share premiums” and “Reserves from profit” related to minorities refers to the sale of the Bank Pekao S.A. for €3,462 million. The changes in shareholdings relate to the effects of the disposal of Bank Pekao S.A. share (1.04%) due to the early redemption of “Secured mandatorily exchangeable equity-linked certificate” occurred in the first quarter of 2017 before loss of control on 7 June 2017 following the sale of 32.8% to Powszechny Zakład Ubezpieczeń S.A and Polish Development Fund S.A. Consolidated financial statements | Consolidated accounts Consolidated accounts 96 2018 Annual Report and Accounts · UniCredit Statement of changes in the consolidated shareholders' equity as at 31 December 2017 PREVIOUS YEAR PROFIT (LOSS) ALLOCATION 12.31.2016 CHANGE IN OPENING BALANCE 01.01.2017 DIVIDENDS AND OTHER ALLOCATIONS BALANCE AS AT BALANCE AS AT RESERVES Share capital: - ordinary shares 21,371,076 - 21,371,076 - - - other shares 8,517 - 8,517 - - Share premium 15,833,467 - 15,833,467 (11,460,133) - Reserves: - from profits 13,648,993 - 13,648,993 (67,363) - - other 5,531,632 - 5,531,632 - - Valuation reserves (4,255,598) - (4,255,598) - - Advanced dividends - - - - - Equity instruments 2,383,463 - 2,383,463 - - Treasury shares (6,935) - (6,935) - - Profit (Loss) of the year (11,326,313) - (11,326,313) 11,527,496 (201,183) Total shareholders’ equity 43,188,302 - 43,188,302 - (201,183) Group shareholders' equity 39,335,550 - 39,335,550 - (2,000) Minority shareholders' equity 3,852,752 - 3,852,752 - (199,183) The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares (Stock Options, Performance Shares, Discount and Matching Shares connected with the ESOP Plans and other Group Executive Incentive Plans). The cumulated change of revaluation reserve includes the positive effect for €239 million of actuarial gain (losses) from the measurement of the actuarial liabilities (defined benefit plans), the negative effect of €84 million of the reserve on AFS financial assets, the negative effects of the cash flow hedges reserve for €127 million and the positive effects of the reserve on non-current assets classified as held for sale for €68 million mainly due to the sale of the Polish subsidiary and to the disposal to Amundi of the subsidiaries belonging to Pioneer group. This change includes furthermore the positive effect of exchange differences reserve for €307 million, mainly related to the reduction for €494 million of the negative exchange differences reserve of Zloty, €310 million referred to Group portion, related to the Polish subsidiary due to the loss of control occurred on 7 June 2017 partially net by the negative effect of Ruble for €219 million. In addition this positive effect is partly net of the negative change in the valuation reserve of the companies accounted for using the equity method for €475 million, mainly due to the depreciation of the items in Turkish Lira for €427 million. The column “Changes in reserves” for items “Reserves”, “Issued Capital” e “Share premiums” represent the coverage of the loss included in “Reserves - other” through the use of Share Premium reserve for €2,509 million. The reduction of “Issued Capital”, “Share premiums” and “Reserves from profit” related to minorities refers to the sale of the Bank Pekao S.A. for €3,462 million. The changes in shareholdings relate to the effects of the disposal of Bank Pekao S.A. share (1.04%) due to the early redemption of “Secured mandatorily exchangeable equity-linked certificate” occurred in the first quarter of 2017 before loss of control on 7 June 2017 following the sale of 32.8% to Powszechny Zakład Ubezpieczeń S.A and Polish Development Fund S.A. Consolidated financial statements | Consolidated accounts Consolidated accounts 96 2018 Annual Report and Accounts · UniCredit Statement of changes in the consolidated shareholders' equity as at 31 December 2017 PREVIOUS YEAR PROFIT (LOSS) ALLOCATION 12.31.2016 CHANGE IN OPENING BALANCE 01.01.2017 DIVIDENDS AND OTHER ALLOCATIONS BALANCE AS AT BALANCE AS AT RESERVES Share capital: - ordinary shares 21,371,076 - 21,371,076 - - - other shares 8,517 - 8,517 - - Share premium 15,833,467 - 15,833,467 (11,460,133) - Reserves: - from profits 13,648,993 - 13,648,993 (67,363) - - other 5,531,632 - 5,531,632 - - Valuation reserves (4,255,598) - (4,255,598) - - Advanced dividends - - - - - Equity instruments 2,383,463 - 2,383,463 - - Treasury shares (6,935) - (6,935) - - Profit (Loss) of the year (11,326,313) - (11,326,313) 11,527,496 (201,183) Total shareholders’ equity 43,188,302 - 43,188,302 - (201,183) Group shareholders' equity 39,335,550 - 39,335,550 - (2,000) Minority shareholders' equity 3,852,752 - 3,852,752 - (199,183) The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares (Stock Options, Performance Shares, Discount and Matching Shares connected with the ESOP Plans and other Group Executive Incentive Plans). The cumulated change of revaluation reserve includes the positive effect for €239 million of actuarial gain (losses) from the measurement of the actuarial liabilities (defined benefit plans), the negative effect of €84 million of the reserve on AFS financial assets, the negative effects of the cash flow hedges reserve for €127 million and the positive effects of the reserve on non-current assets classified as held for sale for €68 million mainly due to the sale of the Polish subsidiary and to the disposal to Amundi of the subsidiaries belonging to Pioneer group. This change includes furthermore the positive effect of exchange differences reserve for €307 million, mainly related to the reduction for €494 million of the negative exchange differences reserve of Zloty, €310 million referred to Group portion, related to the Polish subsidiary due to the loss of control occurred on 7 June 2017 partially net by the negative effect of Ruble for €219 million. In addition this positive effect is partly net of the negative change in the valuation reserve of the companies accounted for using the equity method for €475 million, mainly due to the depreciation of the items in Turkish Lira for €427 million. The column “Changes in reserves” for items “Reserves”, “Issued Capital” e “Share premiums” represent the coverage of the loss included in “Reserves - other” through the use of Share Premium reserve for €2,509 million. The reduction of “Issued Capital”, “Share premiums” and “Reserves from profit” related to minorities refers to the sale of the Bank Pekao S.A. for €3,462 million. The changes in shareholdings relate to the effects of the disposal of Bank Pekao S.A. share (1.04%) due to the early redemption of “Secured mandatorily exchangeable equity-linked certificate” occurred in the first quarter of 2017 before loss of control on 7 June 2017 following the sale of 32.8% to Powszechny Zakład Ubezpieczeń S.A and Polish Development Fund S.A. Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 97 (€ '000) CHANGES IN THE YEAR SHAREHOLDERS' EQUITY TRANSACTIONS 12.31.2017 12.31.2017 12.31.2017 CHANGES IN RESERVES ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES ADVANCED DIVIDENDS DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS CHANGES IN EQUITY INVESTMENTS OTHER COMPREHENSIVE INCOME 2017 TOTAL SHAREHOLDERS' EQUITY AS AT GROUP SHAREHOLDERS' EQUITY AS AT MINORITY SHAREHOLDERS' EQUITY AS AT (213,836) 39,805 - - - - - - 3,307 - 21,200,353 20,878,182 322,171 - (6,149) - - - - - - - - 2,368 2,368 - (3,891,425) 12,983,565 - - - - - - 22,586 - 13,488,060 13,399,799 88,261 (2,105,128) (17,588) - - - - - - 60,821 - 11,519,736 11,473,248 46,488 2,340,559 - - - - - - 78,339 - - 7,950,530 7,823,659 126,871 25,380 - - - - - - - - (98,817) (4,329,035) (4,327,092) (1,943) - - - - - - - - - - - - - - - - - - 2,226,610 - - - - 4,610,073 4,610,073 - 3,974 - - - - - - - - - (2,961) (2,695) (266) - - - - - - - - - 5,785,576 5,785,576 5,473,075 312,501 (3,840,476) 12,999,633 - - - 2,226,610 - 78,339 86,714 5,686,759 60,224,700 59,330,617 894,083 (501,227) 12,999,633 - - - 2,226,610 - 78,339 28,992 5,164,718 59,330,617 (3,339,249) - - - - - - - 57,722 522,041 894,083 Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 97 (€ '000) CHANGES IN THE YEAR SHAREHOLDERS' EQUITY TRANSACTIONS 12.31.2017 12.31.2017 12.31.2017 CHANGES IN RESERVES ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES ADVANCED DIVIDENDS DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS CHANGES IN EQUITY INVESTMENTS OTHER COMPREHENSIVE INCOME 2017 TOTAL SHAREHOLDERS' EQUITY AS AT GROUP SHAREHOLDERS' EQUITY AS AT MINORITY SHAREHOLDERS' EQUITY AS AT (213,836) 39,805 - - - - - - 3,307 - 21,200,353 20,878,182 322,171 - (6,149) - - - - - - - - 2,368 2,368 - (3,891,425) 12,983,565 - - - - - - 22,586 - 13,488,060 13,399,799 88,261 (2,105,128) (17,588) - - - - - - 60,821 - 11,519,736 11,473,248 46,488 2,340,559 - - - - - - 78,339 - - 7,950,530 7,823,659 126,871 25,380 - - - - - - - - (98,817) (4,329,035) (4,327,092) (1,943) - - - - - - - - - - - - - - - - - - 2,226,610 - - - - 4,610,073 4,610,073 - 3,974 - - - - - - - - - (2,961) (2,695) (266) - - - - - - - - - 5,785,576 5,785,576 5,473,075 312,501 (3,840,476) 12,999,633 - - - 2,226,610 - 78,339 86,714 5,686,759 60,224,700 59,330,617 894,083 (501,227) 12,999,633 - - - 2,226,610 - 78,339 28,992 5,164,718 59,330,617 (3,339,249) - - - - - - - 57,722 522,041 894,083 Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 97 (€ '000) CHANGES IN THE YEAR SHAREHOLDERS' EQUITY TRANSACTIONS 12.31.2017 12.31.2017 12.31.2017 CHANGES IN RESERVES ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES ADVANCED DIVIDENDS DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS CHANGES IN EQUITY INVESTMENTS OTHER COMPREHENSIVE INCOME 2017 TOTAL SHAREHOLDERS' EQUITY AS AT GROUP SHAREHOLDERS' EQUITY AS AT MINORITY SHAREHOLDERS' EQUITY AS AT (213,836) 39,805 - - - - - - 3,307 - 21,200,353 20,878,182 322,171 - (6,149) - - - - - - - - 2,368 2,368 - (3,891,425) 12,983,565 - - - - - - 22,586 - 13,488,060 13,399,799 88,261 (2,105,128) (17,588) - - - - - - 60,821 - 11,519,736 11,473,248 46,488 2,340,559 - - - - - - 78,339 - - 7,950,530 7,823,659 126,871 25,380 - - - - - - - - (98,817) (4,329,035) (4,327,092) (1,943) - - - - - - - - - - - - - - - - - - 2,226,610 - - - - 4,610,073 4,610,073 - 3,974 - - - - - - - - - (2,961) (2,695) (266) - - - - - - - - - 5,785,576 5,785,576 5,473,075 312,501 (3,840,476) 12,999,633 - - - 2,226,610 - 78,339 86,714 5,686,759 60,224,700 59,330,617 894,083 (501,227) 12,999,633 - - - 2,226,610 - 78,339 28,992 5,164,718 59,330,617 (3,339,249) - - - - - - - 57,722 522,041 894,083 Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 97 (€ '000) CHANGES IN THE YEAR SHAREHOLDERS' EQUITY TRANSACTIONS 12.31.2017 12.31.2017 12.31.2017 CHANGES IN RESERVES ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES ADVANCED DIVIDENDS DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS CHANGES IN EQUITY INVESTMENTS OTHER COMPREHENSIVE INCOME 2017 TOTAL SHAREHOLDERS' EQUITY AS AT GROUP SHAREHOLDERS' EQUITY AS AT MINORITY SHAREHOLDERS' EQUITY AS AT (213,836) 39,805 - - - - - - 3,307 - 21,200,353 20,878,182 322,171 - (6,149) - - - - - - - - 2,368 2,368 - (3,891,425) 12,983,565 - - - - - - 22,586 - 13,488,060 13,399,799 88,261 (2,105,128) (17,588) - - - - - - 60,821 - 11,519,736 11,473,248 46,488 2,340,559 - - - - - - 78,339 - - 7,950,530 7,823,659 126,871 25,380 - - - - - - - - (98,817) (4,329,035) (4,327,092) (1,943) - - - - - - - - - - - - - - - - - - 2,226,610 - - - - 4,610,073 4,610,073 - 3,974 - - - - - - - - - (2,961) (2,695) (266) - - - - - - - - - 5,785,576 5,785,576 5,473,075 312,501 (3,840,476) 12,999,633 - - - 2,226,610 - 78,339 86,714 5,686,759 60,224,700 59,330,617 894,083 (501,227) 12,999,633 - - - 2,226,610 - 78,339 28,992 5,164,718 59,330,617 (3,339,249) - - - - - - - 57,722 522,041 894,083 Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 97 (€ '000) CHANGES IN THE YEAR SHAREHOLDERS' EQUITY TRANSACTIONS 12.31.2017 12.31.2017 12.31.2017 CHANGES IN RESERVES ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES ADVANCED DIVIDENDS DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS CHANGES IN EQUITY INVESTMENTS OTHER COMPREHENSIVE INCOME 2017 TOTAL SHAREHOLDERS' EQUITY AS AT GROUP SHAREHOLDERS' EQUITY AS AT MINORITY SHAREHOLDERS' EQUITY AS AT (213,836) 39,805 - - - - - - 3,307 - 21,200,353 20,878,182 322,171 - (6,149) - - - - - - - - 2,368 2,368 - (3,891,425) 12,983,565 - - - - - - 22,586 - 13,488,060 13,399,799 88,261 (2,105,128) (17,588) - - - - - - 60,821 - 11,519,736 11,473,248 46,488 2,340,559 - - - - - - 78,339 - - 7,950,530 7,823,659 126,871 25,380 - - - - - - - - (98,817) (4,329,035) (4,327,092) (1,943) - - - - - - - - - - - - - - - - - - 2,226,610 - - - - 4,610,073 4,610,073 - 3,974 - - - - - - - - - (2,961) (2,695) (266) - - - - - - - - - 5,785,576 5,785,576 5,473,075 312,501 (3,840,476) 12,999,633 - - - 2,226,610 - 78,339 86,714 5,686,759 60,224,700 59,330,617 894,083 (501,227) 12,999,633 - - - 2,226,610 - 78,339 28,992 5,164,718 59,330,617 (3,339,249) - - - - - - - 57,722 522,041 894,083 Consolidated financial statements | Consolidated accounts Consolidated accounts 98 2018 Annual Report and Accounts · UniCredit Consolidated cash flow statement (indirect method) (€ '000) AS AT 12.31.2018 12.31.2017 A. OPERATING ACTIVITIES 1. Operations: 8,565,661 10,370,919 - profit (loss) of the period (+/-) 3,892,439 5,473,075 - gains/losses on financial assets held for trading and on other financial assets/liabilities at fair value through profit or loss (-/+) (2,202,705) - - capital gains/losses on financial assets/liabilities held for trading and on assets/liabilities designated at fair value through profit and loss (+/-) (ex IAS39) - 212,862 - gains (losses) on hedge accounting (-/+) (17,163) (57,344) - net losses/recoveries on impairment (+/-) 4,485,919 - - net losses/recoveries on impairment (+/-) (ex IAS39) - 4,345,256 - net value adjustments/write-backs on property, plant and equipment and intangible assets (+/-) 1,030,335 1,167,676 - net provisions for risks and charges and other expenses/income (+/-) 1,044,621 - - provisions and other incomes/expenses (+/-) (ex IAS39) - 390,210 - uncollected net premiums (-) - - - other uncollected insurance income/expenses (-/+) - - - unpaid duties, taxes and tax credits (+/-) (728,803) 274,083 - impairment/write-backs after tax on discontinued operations (+/-) (19,484) (1,739,601) - other adjustments (+/-) 1,080,502 304,702 2. Liquidity generated/absorbed by financial assets: (39,033,291) 19,635,267 - financial assets held for trading 10,559,453 - - financial assets held for trading (ex IAS39) - 12,571,386 - financial assets designated at fair value (96) - - other financial assets mandatorily at fair value 6,153,236 - - financial assets at fair value (ex IAS39) - 6,559,653 - financial assets at fair value through other comprehensive income 10,436,086 - - available-for-sale financial assets (ex IAS39) - 5,611,395 - financial assets at amortised cost (68,600,901) - - loans and receivables with banks (ex IAS39) - 3,217,078 - loans and receivables with customers (ex IAS39) - (6,606,690) - other assets 2,418,931 (1,717,555) 3. Liquidity generated/absorbed by financial liabilities: (491,896) 2,493,222 - financial liabilities at amortised cost 6,386,534 - - deposits from banks (ex IAS39) - 20,608,680 - deposits from customers (ex IAS39) - 9,747,803 - debt certificates including bonds (ex IAS39) - (16,163,807) - financial liabilities held for trading (7,373,824) - - financial liabilities held for trading (ex IAS39) - (12,544,782) - financial liabilities designated at fair value 1,634,897 - - financial liabilities designated at fair value (ex IAS39) - 513,797 - other liabilities (1,139,503) 331,531 Net liquidity generated/absorbed by operating activities (30,959,526) 32,499,408 Consolidated cash flow statement Consolidated financial statements | Consolidated accounts Consolidated accounts 98 2018 Annual Report and Accounts · UniCredit Consolidated cash flow statement (indirect method) (€ '000) AS AT 12.31.2018 12.31.2017 A. OPERATING ACTIVITIES 1. Operations: 8,565,661 10,370,919 - profit (loss) of the period (+/-) 3,892,439 5,473,075 - gains/losses on financial assets held for trading and on other financial assets/liabilities at fair value through profit or loss (-/+) (2,202,705) - - capital gains/losses on financial assets/liabilities held for trading and on assets/liabilities designated at fair value through profit and loss (+/-) (ex IAS39) - 212,862 - gains (losses) on hedge accounting (-/+) (17,163) (57,344) - net losses/recoveries on impairment (+/-) 4,485,919 - - net losses/recoveries on impairment (+/-) (ex IAS39) - 4,345,256 - net value adjustments/write-backs on property, plant and equipment and intangible assets (+/-) 1,030,335 1,167,676 - net provisions for risks and charges and other expenses/income (+/-) 1,044,621 - - provisions and other incomes/expenses (+/-) (ex IAS39) - 390,210 - uncollected net premiums (-) - - - other uncollected insurance income/expenses (-/+) - - - unpaid duties, taxes and tax credits (+/-) (728,803) 274,083 - impairment/write-backs after tax on discontinued operations (+/-) (19,484) (1,739,601) - other adjustments (+/-) 1,080,502 304,702 2. Liquidity generated/absorbed by financial assets: (39,033,291) 19,635,267 - financial assets held for trading 10,559,453 - - financial assets held for trading (ex IAS39) - 12,571,386 - financial assets designated at fair value (96) - - other financial assets mandatorily at fair value 6,153,236 - - financial assets at fair value (ex IAS39) - 6,559,653 - financial assets at fair value through other comprehensive income 10,436,086 - - available-for-sale financial assets (ex IAS39) - 5,611,395 - financial assets at amortised cost (68,600,901) - - loans and receivables with banks (ex IAS39) - 3,217,078 - loans and receivables with customers (ex IAS39) - (6,606,690) - other assets 2,418,931 (1,717,555) 3. Liquidity generated/absorbed by financial liabilities: (491,896) 2,493,222 - financial liabilities at amortised cost 6,386,534 - - deposits from banks (ex IAS39) - 20,608,680 - deposits from customers (ex IAS39) - 9,747,803 - debt certificates including bonds (ex IAS39) - (16,163,807) - financial liabilities held for trading (7,373,824) - - financial liabilities held for trading (ex IAS39) - (12,544,782) - financial liabilities designated at fair value 1,634,897 - - financial liabilities designated at fair value (ex IAS39) - 513,797 - other liabilities (1,139,503) 331,531 Net liquidity generated/absorbed by operating activities (30,959,526) 32,499,408 Consolidated cash flow statement Consolidated financial statements | Consolidated accounts Consolidated accounts 98 2018 Annual Report and Accounts · UniCredit Consolidated cash flow statement (indirect method) (€ '000) AS AT 12.31.2018 12.31.2017 A. OPERATING ACTIVITIES 1. Operations: 8,565,661 10,370,919 - profit (loss) of the period (+/-) 3,892,439 5,473,075 - gains/losses on financial assets held for trading and on other financial assets/liabilities at fair value through profit or loss (-/+) (2,202,705) - - capital gains/losses on financial assets/liabilities held for trading and on assets/liabilities designated at fair value through profit and loss (+/-) (ex IAS39) - 212,862 - gains (losses) on hedge accounting (-/+) (17,163) (57,344) - net losses/recoveries on impairment (+/-) 4,485,919 - - net losses/recoveries on impairment (+/-) (ex IAS39) - 4,345,256 - net value adjustments/write-backs on property, plant and equipment and intangible assets (+/-) 1,030,335 1,167,676 - net provisions for risks and charges and other expenses/income (+/-) 1,044,621 - - provisions and other incomes/expenses (+/-) (ex IAS39) - 390,210 - uncollected net premiums (-) - - - other uncollected insurance income/expenses (-/+) - - - unpaid duties, taxes and tax credits (+/-) (728,803) 274,083 - impairment/write-backs after tax on discontinued operations (+/-) (19,484) (1,739,601) - other adjustments (+/-) 1,080,502 304,702 2. Liquidity generated/absorbed by financial assets: (39,033,291) 19,635,267 - financial assets held for trading 10,559,453 - - financial assets held for trading (ex IAS39) - 12,571,386 - financial assets designated at fair value (96) - - other financial assets mandatorily at fair value 6,153,236 - - financial assets at fair value (ex IAS39) - 6,559,653 - financial assets at fair value through other comprehensive income 10,436,086 - - available-for-sale financial assets (ex IAS39) - 5,611,395 - financial assets at amortised cost (68,600,901) - - loans and receivables with banks (ex IAS39) - 3,217,078 - loans and receivables with customers (ex IAS39) - (6,606,690) - other assets 2,418,931 (1,717,555) 3. Liquidity generated/absorbed by financial liabilities: (491,896) 2,493,222 - financial liabilities at amortised cost 6,386,534 - - deposits from banks (ex IAS39) - 20,608,680 - deposits from customers (ex IAS39) - 9,747,803 - debt certificates including bonds (ex IAS39) - (16,163,807) - financial liabilities held for trading (7,373,824) - - financial liabilities held for trading (ex IAS39) - (12,544,782) - financial liabilities designated at fair value 1,634,897 - - financial liabilities designated at fair value (ex IAS39) - 513,797 - other liabilities (1,139,503) 331,531 Net liquidity generated/absorbed by operating activities (30,959,526) 32,499,408 Consolidated cash flow statement Consolidated financial statements | Consolidated accounts Consolidated accounts 98 2018 Annual Report and Accounts · UniCredit Consolidated cash flow statement (indirect method) (€ '000) AS AT 12.31.2018 12.31.2017 A. OPERATING ACTIVITIES 1. Operations: 8,565,661 10,370,919 - profit (loss) of the period (+/-) 3,892,439 5,473,075 - gains/losses on financial assets held for trading and on other financial assets/liabilities at fair value through profit or loss (-/+) (2,202,705) - - capital gains/losses on financial assets/liabilities held for trading and on assets/liabilities designated at fair value through profit and loss (+/-) (ex IAS39) - 212,862 - gains (losses) on hedge accounting (-/+) (17,163) (57,344) - net losses/recoveries on impairment (+/-) 4,485,919 - - net losses/recoveries on impairment (+/-) (ex IAS39) - 4,345,256 - net value adjustments/write-backs on property, plant and equipment and intangible assets (+/-) 1,030,335 1,167,676 - net provisions for risks and charges and other expenses/income (+/-) 1,044,621 - - provisions and other incomes/expenses (+/-) (ex IAS39) - 390,210 - uncollected net premiums (-) - - - other uncollected insurance income/expenses (-/+) - - - unpaid duties, taxes and tax credits (+/-) (728,803) 274,083 - impairment/write-backs after tax on discontinued operations (+/-) (19,484) (1,739,601) - other adjustments (+/-) 1,080,502 304,702 2. Liquidity generated/absorbed by financial assets: (39,033,291) 19,635,267 - financial assets held for trading 10,559,453 - - financial assets held for trading (ex IAS39) - 12,571,386 - financial assets designated at fair value (96) - - other financial assets mandatorily at fair value 6,153,236 - - financial assets at fair value (ex IAS39) - 6,559,653 - financial assets at fair value through other comprehensive income 10,436,086 - - available-for-sale financial assets (ex IAS39) - 5,611,395 - financial assets at amortised cost (68,600,901) - - loans and receivables with banks (ex IAS39) - 3,217,078 - loans and receivables with customers (ex IAS39) - (6,606,690) - other assets 2,418,931 (1,717,555) 3. Liquidity generated/absorbed by financial liabilities: (491,896) 2,493,222 - financial liabilities at amortised cost 6,386,534 - - deposits from banks (ex IAS39) - 20,608,680 - deposits from customers (ex IAS39) - 9,747,803 - debt certificates including bonds (ex IAS39) - (16,163,807) - financial liabilities held for trading (7,373,824) - - financial liabilities held for trading (ex IAS39) - (12,544,782) - financial liabilities designated at fair value 1,634,897 - - financial liabilities designated at fair value (ex IAS39) - 513,797 - other liabilities (1,139,503) 331,531 Net liquidity generated/absorbed by operating activities (30,959,526) 32,499,408 Consolidated cash flow statement Consolidated financial statements | Consolidated accounts Consolidated accounts 98 2018 Annual Report and Accounts · UniCredit Consolidated cash flow statement (indirect method) (€ '000) AS AT 12.31.2018 12.31.2017 A. OPERATING ACTIVITIES 1. Operations: 8,565,661 10,370,919 - profit (loss) of the period (+/-) 3,892,439 5,473,075 - gains/losses on financial assets held for trading and on other financial assets/liabilities at fair value through profit or loss (-/+) (2,202,705) - - capital gains/losses on financial assets/liabilities held for trading and on assets/liabilities designated at fair value through profit and loss (+/-) (ex IAS39) - 212,862 - gains (losses) on hedge accounting (-/+) (17,163) (57,344) - net losses/recoveries on impairment (+/-) 4,485,919 - - net losses/recoveries on impairment (+/-) (ex IAS39) - 4,345,256 - net value adjustments/write-backs on property, plant and equipment and intangible assets (+/-) 1,030,335 1,167,676 - net provisions for risks and charges and other expenses/income (+/-) 1,044,621 - - provisions and other incomes/expenses (+/-) (ex IAS39) - 390,210 - uncollected net premiums (-) - - - other uncollected insurance income/expenses (-/+) - - - unpaid duties, taxes and tax credits (+/-) (728,803) 274,083 - impairment/write-backs after tax on discontinued operations (+/-) (19,484) (1,739,601) - other adjustments (+/-) 1,080,502 304,702 2. Liquidity generated/absorbed by financial assets: (39,033,291) 19,635,267 - financial assets held for trading 10,559,453 - - financial assets held for trading (ex IAS39) - 12,571,386 - financial assets designated at fair value (96) - - other financial assets mandatorily at fair value 6,153,236 - - financial assets at fair value (ex IAS39) - 6,559,653 - financial assets at fair value through other comprehensive income 10,436,086 - - available-for-sale financial assets (ex IAS39) - 5,611,395 - financial assets at amortised cost (68,600,901) - - loans and receivables with banks (ex IAS39) - 3,217,078 - loans and receivables with customers (ex IAS39) - (6,606,690) - other assets 2,418,931 (1,717,555) 3. Liquidity generated/absorbed by financial liabilities: (491,896) 2,493,222 - financial liabilities at amortised cost 6,386,534 - - deposits from banks (ex IAS39) - 20,608,680 - deposits from customers (ex IAS39) - 9,747,803 - debt certificates including bonds (ex IAS39) - (16,163,807) - financial liabilities held for trading (7,373,824) - - financial liabilities held for trading (ex IAS39) - (12,544,782) - financial liabilities designated at fair value 1,634,897 - - financial liabilities designated at fair value (ex IAS39) - 513,797 - other liabilities (1,139,503) 331,531 Net liquidity generated/absorbed by operating activities (30,959,526) 32,499,408 Consolidated cash flow statement Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 99 continued: Consolidated cash flow statement (indirect method) (€ '000) AS AT 12.31.2018 12.31.2017 B. INVESTMENT ACTIVITIES - - 1. Liquidity generated by: 841,857 7,694,211 - sales of equity investments 14,147 44,937 - collected dividends on equity investments 182,892 131,409 - sales of property, plant and equipment 376,723 291,830 - sales of intangible assets 6,225 12,790 - sales of subsidiaries and business units 261,870 7,176,545 - sales of financial assets held to maturity (ex IAS39) - 36,700 2. Liquidity absorbed by: (2,061,504) (3,898,008) - purchases of equity investments (484,934) (57,322) - purchases of property, plant and equipment (1,007,528) (781,419) - purchases of intangible assets (569,042) (627,462) - purchases of subsidiaries and business units - - - purchases of financial assets held to maturity (ex IAS39) - (2,431,805) Net liquidity generated/absorbed by investment activities (1,219,647) 3,796,203 C. FUNDING ACTIVITIES - - - issue/purchase of treasury shares - 12,590,744 - issue/purchase of equity instruments - 2,226,610 - dividend distribution and other (1,300,584) (477,993) - sale/purchase of minority control - - Net liquidity generated/absorbed by funding activities (1,300,584) 14,339,361 NET LIQUIDITY GENERATED/ABSORBED IN THE YEAR (33,479,757) 50,634,972 Key: (+) generated; (-) absorbed. Reconciliation (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 Cash and cash balances at the beginning of the year 64,493,411 13,857,831 Net liquidity generated/absorbed in the year (33,479,757) 50,634,972 Cash and cash balances: foreign exchange effect (22,293) 608 Cash and cash balances at the end of the year 30,991,361 64,493,411 For the purposes of determining the liquidity generated/absorbed by financial assets and liabilities, the balance sheet figures as at 31 December 2018, including the effects of the application of IFRS9, are compared with those as at 1 January 2018. With regard to reconciliation between the data as at 31 December 2017 and those resulting as at 1 January 2018 from the First Time Adoption of the new standards, refer to the section "Transition to ‘IFRS9: Financial Instruments’ of UniCredit group” in Part A - Accounting policies, A.1 - General, Section 5 - Other matters of this document. For further details related to the change of the Funding activities regarding the issue/purchase of equity instruments, refer to Part B – Consolidated balance sheet - Liabilities - Section 13 - Group shareholders’ equity. The item "Cash and cash equivalents" refers to the definition according to Banca d’Italia (Circular 262, 22 December 2005). The information related to the significant restrictions are provided in Part A - Accounting Policies - A.1 - General - Section 3 - Consolidation scope and methods. Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 99 continued: Consolidated cash flow statement (indirect method) (€ '000) AS AT 12.31.2018 12.31.2017 B. INVESTMENT ACTIVITIES - - 1. Liquidity generated by: 841,857 7,694,211 - sales of equity investments 14,147 44,937 - collected dividends on equity investments 182,892 131,409 - sales of property, plant and equipment 376,723 291,830 - sales of intangible assets 6,225 12,790 - sales of subsidiaries and business units 261,870 7,176,545 - sales of financial assets held to maturity (ex IAS39) - 36,700 2. Liquidity absorbed by: (2,061,504) (3,898,008) - purchases of equity investments (484,934) (57,322) - purchases of property, plant and equipment (1,007,528) (781,419) - purchases of intangible assets (569,042) (627,462) - purchases of subsidiaries and business units - - - purchases of financial assets held to maturity (ex IAS39) - (2,431,805) Net liquidity generated/absorbed by investment activities (1,219,647) 3,796,203 C. FUNDING ACTIVITIES - - - issue/purchase of treasury shares - 12,590,744 - issue/purchase of equity instruments - 2,226,610 - dividend distribution and other (1,300,584) (477,993) - sale/purchase of minority control - - Net liquidity generated/absorbed by funding activities (1,300,584) 14,339,361 NET LIQUIDITY GENERATED/ABSORBED IN THE YEAR (33,479,757) 50,634,972 Key: (+) generated; (-) absorbed. Reconciliation (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 Cash and cash balances at the beginning of the year 64,493,411 13,857,831 Net liquidity generated/absorbed in the year (33,479,757) 50,634,972 Cash and cash balances: foreign exchange effect (22,293) 608 Cash and cash balances at the end of the year 30,991,361 64,493,411 For the purposes of determining the liquidity generated/absorbed by financial assets and liabilities, the balance sheet figures as at 31 December 2018, including the effects of the application of IFRS9, are compared with those as at 1 January 2018. With regard to reconciliation between the data as at 31 December 2017 and those resulting as at 1 January 2018 from the First Time Adoption of the new standards, refer to the section "Transition to ‘IFRS9: Financial Instruments’ of UniCredit group” in Part A - Accounting policies, A.1 - General, Section 5 - Other matters of this document. For further details related to the change of the Funding activities regarding the issue/purchase of equity instruments, refer to Part B – Consolidated balance sheet - Liabilities - Section 13 - Group shareholders’ equity. The item "Cash and cash equivalents" refers to the definition according to Banca d’Italia (Circular 262, 22 December 2005). The information related to the significant restrictions are provided in Part A - Accounting Policies - A.1 - General - Section 3 - Consolidation scope and methods. Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 99 continued: Consolidated cash flow statement (indirect method) (€ '000) AS AT 12.31.2018 12.31.2017 B. INVESTMENT ACTIVITIES - - 1. Liquidity generated by: 841,857 7,694,211 - sales of equity investments 14,147 44,937 - collected dividends on equity investments 182,892 131,409 - sales of property, plant and equipment 376,723 291,830 - sales of intangible assets 6,225 12,790 - sales of subsidiaries and business units 261,870 7,176,545 - sales of financial assets held to maturity (ex IAS39) - 36,700 2. Liquidity absorbed by: (2,061,504) (3,898,008) - purchases of equity investments (484,934) (57,322) - purchases of property, plant and equipment (1,007,528) (781,419) - purchases of intangible assets (569,042) (627,462) - purchases of subsidiaries and business units - - - purchases of financial assets held to maturity (ex IAS39) - (2,431,805) Net liquidity generated/absorbed by investment activities (1,219,647) 3,796,203 C. FUNDING ACTIVITIES - - - issue/purchase of treasury shares - 12,590,744 - issue/purchase of equity instruments - 2,226,610 - dividend distribution and other (1,300,584) (477,993) - sale/purchase of minority control - - Net liquidity generated/absorbed by funding activities (1,300,584) 14,339,361 NET LIQUIDITY GENERATED/ABSORBED IN THE YEAR (33,479,757) 50,634,972 Key: (+) generated; (-) absorbed. Reconciliation (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 Cash and cash balances at the beginning of the year 64,493,411 13,857,831 Net liquidity generated/absorbed in the year (33,479,757) 50,634,972 Cash and cash balances: foreign exchange effect (22,293) 608 Cash and cash balances at the end of the year 30,991,361 64,493,411 For the purposes of determining the liquidity generated/absorbed by financial assets and liabilities, the balance sheet figures as at 31 December 2018, including the effects of the application of IFRS9, are compared with those as at 1 January 2018. With regard to reconciliation between the data as at 31 December 2017 and those resulting as at 1 January 2018 from the First Time Adoption of the new standards, refer to the section "Transition to ‘IFRS9: Financial Instruments’ of UniCredit group” in Part A - Accounting policies, A.1 - General, Section 5 - Other matters of this document. For further details related to the change of the Funding activities regarding the issue/purchase of equity instruments, refer to Part B – Consolidated balance sheet - Liabilities - Section 13 - Group shareholders’ equity. The item "Cash and cash equivalents" refers to the definition according to Banca d’Italia (Circular 262, 22 December 2005). The information related to the significant restrictions are provided in Part A - Accounting Policies - A.1 - General - Section 3 - Consolidation scope and methods. Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 99 continued: Consolidated cash flow statement (indirect method) (€ '000) AS AT 12.31.2018 12.31.2017 B. INVESTMENT ACTIVITIES - - 1. Liquidity generated by: 841,857 7,694,211 - sales of equity investments 14,147 44,937 - collected dividends on equity investments 182,892 131,409 - sales of property, plant and equipment 376,723 291,830 - sales of intangible assets 6,225 12,790 - sales of subsidiaries and business units 261,870 7,176,545 - sales of financial assets held to maturity (ex IAS39) - 36,700 2. Liquidity absorbed by: (2,061,504) (3,898,008) - purchases of equity investments (484,934) (57,322) - purchases of property, plant and equipment (1,007,528) (781,419) - purchases of intangible assets (569,042) (627,462) - purchases of subsidiaries and business units - - - purchases of financial assets held to maturity (ex IAS39) - (2,431,805) Net liquidity generated/absorbed by investment activities (1,219,647) 3,796,203 C. FUNDING ACTIVITIES - - - issue/purchase of treasury shares - 12,590,744 - issue/purchase of equity instruments - 2,226,610 - dividend distribution and other (1,300,584) (477,993) - sale/purchase of minority control - - Net liquidity generated/absorbed by funding activities (1,300,584) 14,339,361 NET LIQUIDITY GENERATED/ABSORBED IN THE YEAR (33,479,757) 50,634,972 Key: (+) generated; (-) absorbed. Reconciliation (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 Cash and cash balances at the beginning of the year 64,493,411 13,857,831 Net liquidity generated/absorbed in the year (33,479,757) 50,634,972 Cash and cash balances: foreign exchange effect (22,293) 608 Cash and cash balances at the end of the year 30,991,361 64,493,411 For the purposes of determining the liquidity generated/absorbed by financial assets and liabilities, the balance sheet figures as at 31 December 2018, including the effects of the application of IFRS9, are compared with those as at 1 January 2018. With regard to reconciliation between the data as at 31 December 2017 and those resulting as at 1 January 2018 from the First Time Adoption of the new standards, refer to the section "Transition to ‘IFRS9: Financial Instruments’ of UniCredit group” in Part A - Accounting policies, A.1 - General, Section 5 - Other matters of this document. For further details related to the change of the Funding activities regarding the issue/purchase of equity instruments, refer to Part B – Consolidated balance sheet - Liabilities - Section 13 - Group shareholders’ equity. The item "Cash and cash equivalents" refers to the definition according to Banca d’Italia (Circular 262, 22 December 2005). The information related to the significant restrictions are provided in Part A - Accounting Policies - A.1 - General - Section 3 - Consolidation scope and methods. Consolidated financial statements | Consolidated accounts Consolidated accounts UniCredit ·2018 Annual Report and Accounts 99 continued: Consolidated cash flow statement (indirect method) (€ '000) AS AT 12.31.2018 12.31.2017 B. INVESTMENT ACTIVITIES - - 1. Liquidity generated by: 841,857 7,694,211 - sales of equity investments 14,147 44,937 - collected dividends on equity investments 182,892 131,409 - sales of property, plant and equipment 376,723 291,830 - sales of intangible assets 6,225 12,790 - sales of subsidiaries and business units 261,870 7,176,545 - sales of financial assets held to maturity (ex IAS39) - 36,700 2. Liquidity absorbed by: (2,061,504) (3,898,008) - purchases of equity investments (484,934) (57,322) - purchases of property, plant and equipment (1,007,528) (781,419) - purchases of intangible assets (569,042) (627,462) - purchases of subsidiaries and business units - - - purchases of financial assets held to maturity (ex IAS39) - (2,431,805) Net liquidity generated/absorbed by investment activities (1,219,647) 3,796,203 C. FUNDING ACTIVITIES - - - issue/purchase of treasury shares - 12,590,744 - issue/purchase of equity instruments - 2,226,610 - dividend distribution and other (1,300,584) (477,993) - sale/purchase of minority control - - Net liquidity generated/absorbed by funding activities (1,300,584) 14,339,361 NET LIQUIDITY GENERATED/ABSORBED IN THE YEAR (33,479,757) 50,634,972 Key: (+) generated; (-) absorbed. Reconciliation (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 Cash and cash balances at the beginning of the year 64,493,411 13,857,831 Net liquidity generated/absorbed in the year (33,479,757) 50,634,972 Cash and cash balances: foreign exchange effect (22,293) 608 Cash and cash balances at the end of the year 30,991,361 64,493,411 For the purposes of determining the liquidity generated/absorbed by financial assets and liabilities, the balance sheet figures as at 31 December 2018, including the effects of the application of IFRS9, are compared with those as at 1 January 2018. With regard to reconciliation between the data as at 31 December 2017 and those resulting as at 1 January 2018 from the First Time Adoption of the new standards, refer to the section "Transition to ‘IFRS9: Financial Instruments’ of UniCredit group” in Part A - Accounting policies, A.1 - General, Section 5 - Other matters of this document. For further details related to the change of the Funding activities regarding the issue/purchase of equity instruments, refer to Part B – Consolidated balance sheet - Liabilities - Section 13 - Group shareholders’ equity. The item "Cash and cash equivalents" refers to the definition according to Banca d’Italia (Circular 262, 22 December 2005). The information related to the significant restrictions are provided in Part A - Accounting Policies - A.1 - General - Section 3 - Consolidation scope and methods. Consolidated financial statements | Consolidated accounts Consolidated accounts 100 2018 Annual Report and Accounts · UniCredit Consolidated financial statements | Consolidated accounts Consolidated accounts 100 2018 Annual Report and Accounts · UniCredit Consolidated financial statements | Consolidated accounts Consolidated accounts 100 2018 Annual Report and Accounts · UniCredit Consolidated financial statements | Consolidated accounts Consolidated accounts 100 2018 Annual Report and Accounts · UniCredit Consolidated financial statements | Consolidated accounts Consolidated accounts 100 2018 Annual Report and Accounts · UniCredit Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 101 Notes to the consolidated accounts Part A - Accounting policies A.1 - General Section 1 - Statement of compliance with IFRS These Consolidated Accounts have been prepared in accordance with the IFRS issued by the International Accounting Standards Board (IASB), including the interpretation documents issued by the SIC and the IFRIC, and endorsed by the European Commission up to 31 December 2018, pursuant to EU Regulation No.1606/2002 which was incorporated into Italian legislation through Legislative Decree No.38 of 28 February 2005 (see Section 5 - Other matters). The Consolidated Accounts are an integral part of the Annual Financial Statements as required by Art.154-ter, par.1 of the Single Finance Act (TUF, Legislative Decree No.58 of 24 February 1998). In its circular 262 of 22 December 2005 and subsequent amendments Banca d’Italia laid down the formats for the financial statements and explanatory notes used to prepare these Accounts. Banca d’Italia issued on 22 December 2017 the 5th update of its circular 262 adjusting the formats for the financial statements and explanatory notes to the requirements of IFRS9 Financial Instruments. Please note that as a result of the first time adoption of the new accounting standard IFRS9 and the choice not to restate the previous period, the templates and the tables in the notes prescribed by the mentioned circular have been integrated with additional items in order to allow comparisons with the previous period that has been presented according to IAS39 standard and to Circular 262 (4th update of 15 December 2015). Opening balances shown in tables of the notes to the consolidated accounts are the ones coming from the first time adoption of the new accounting standard IFRS9. In addition, with reference to Part E - Information on risks and hedging policies, the abovementioned circumstances have required the choice not to provide the comparison with the previous period with reference to certain tables whose content is not comparable with previous period tables. Section 2 - General preparation criteria As mentioned above, these Consolidated Accounts have been prepared in accordance with the IFRS endorsed by the European Commission. The following documents have been used to interpret and support the application of IFRS, even though not all of them have been endorsed by the European Commission: • The Conceptual Framework for Financial Reporting; • Implementation Guidance, Basis for Conclusions, IFRICs and any other documents prepared by the IASB or International Financial Reporting Interpretations Committee (IFRIC) supplementing the IFRSs; • Interpretative documents on the application of IAS/IFRS in Italy prepared by the Organismo Italiano di Contabilità (OIC) and Associazione Bancaria Italiana (ABI); • ESMA (European Securities and Markets Authority) and CONSOB documents on the application of specific IFRS provisions. The Consolidated Accounts include the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement (compiled using the “indirect method”) and the Notes to the Accounts, together with the Consolidated Report on Operations and Annexes. In addition, pursuant to Art.123-bis par.3 of TUF, as reported in chapter “Other information” of the Consolidated Report on Operations, the Report on Corporate Governance and Ownership Structures is available in the "Governance" section of UniCredit website: https://www.unicreditgroup.eu/it/governance/governance-system-and-policies.html - Italian version and https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html - English version. Figures in the financial statements and Notes to the Accounts are given in thousands of euros, unless otherwise specified. In their joint Document No.4 of 3 March 2010, Banca d’Italia, Consob and Isvap made a few observations on the current situation of the markets and businesses and requested to disclose in the financial statements information which are essential for a better understanding of business trends and outlook. In this regard, the Directors, based on the 2016-2019 Strategic Plan as well as on the results of the capital increase fully subscribed with effect from 2 March 2017, identified no symptoms in the capital and financial structure and in the economic performance that could indicate uncertainty about the ability to continue as a going-concern and therefore believe with reasonable certainty that the Group will continue to operate profitably in the foreseeable future; as a result, in accordance with the provisions of IAS1, the Consolidated Financial Statements as at 31 December 2018 have been prepared on a going-concern basis. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 101 Notes to the consolidated accounts Part A - Accounting policies A.1 - General Section 1 - Statement of compliance with IFRS These Consolidated Accounts have been prepared in accordance with the IFRS issued by the International Accounting Standards Board (IASB), including the interpretation documents issued by the SIC and the IFRIC, and endorsed by the European Commission up to 31 December 2018, pursuant to EU Regulation No.1606/2002 which was incorporated into Italian legislation through Legislative Decree No.38 of 28 February 2005 (see Section 5 - Other matters). The Consolidated Accounts are an integral part of the Annual Financial Statements as required by Art.154-ter, par.1 of the Single Finance Act (TUF, Legislative Decree No.58 of 24 February 1998). In its circular 262 of 22 December 2005 and subsequent amendments Banca d’Italia laid down the formats for the financial statements and explanatory notes used to prepare these Accounts. Banca d’Italia issued on 22 December 2017 the 5th update of its circular 262 adjusting the formats for the financial statements and explanatory notes to the requirements of IFRS9 Financial Instruments. Please note that as a result of the first time adoption of the new accounting standard IFRS9 and the choice not to restate the previous period, the templates and the tables in the notes prescribed by the mentioned circular have been integrated with additional items in order to allow comparisons with the previous period that has been presented according to IAS39 standard and to Circular 262 (4th update of 15 December 2015). Opening balances shown in tables of the notes to the consolidated accounts are the ones coming from the first time adoption of the new accounting standard IFRS9. In addition, with reference to Part E - Information on risks and hedging policies, the abovementioned circumstances have required the choice not to provide the comparison with the previous period with reference to certain tables whose content is not comparable with previous period tables. Section 2 - General preparation criteria As mentioned above, these Consolidated Accounts have been prepared in accordance with the IFRS endorsed by the European Commission. The following documents have been used to interpret and support the application of IFRS, even though not all of them have been endorsed by the European Commission: • The Conceptual Framework for Financial Reporting; • Implementation Guidance, Basis for Conclusions, IFRICs and any other documents prepared by the IASB or International Financial Reporting Interpretations Committee (IFRIC) supplementing the IFRSs; • Interpretative documents on the application of IAS/IFRS in Italy prepared by the Organismo Italiano di Contabilità (OIC) and Associazione Bancaria Italiana (ABI); • ESMA (European Securities and Markets Authority) and CONSOB documents on the application of specific IFRS provisions. The Consolidated Accounts include the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement (compiled using the “indirect method”) and the Notes to the Accounts, together with the Consolidated Report on Operations and Annexes. In addition, pursuant to Art.123-bis par.3 of TUF, as reported in chapter “Other information” of the Consolidated Report on Operations, the Report on Corporate Governance and Ownership Structures is available in the "Governance" section of UniCredit website: https://www.unicreditgroup.eu/it/governance/governance-system-and-policies.html - Italian version and https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html - English version. Figures in the financial statements and Notes to the Accounts are given in thousands of euros, unless otherwise specified. In their joint Document No.4 of 3 March 2010, Banca d’Italia, Consob and Isvap made a few observations on the current situation of the markets and businesses and requested to disclose in the financial statements information which are essential for a better understanding of business trends and outlook. In this regard, the Directors, based on the 2016-2019 Strategic Plan as well as on the results of the capital increase fully subscribed with effect from 2 March 2017, identified no symptoms in the capital and financial structure and in the economic performance that could indicate uncertainty about the ability to continue as a going-concern and therefore believe with reasonable certainty that the Group will continue to operate profitably in the foreseeable future; as a result, in accordance with the provisions of IAS1, the Consolidated Financial Statements as at 31 December 2018 have been prepared on a going-concern basis. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 101 Notes to the consolidated accounts Part A - Accounting policies A.1 - General Section 1 - Statement of compliance with IFRS These Consolidated Accounts have been prepared in accordance with the IFRS issued by the International Accounting Standards Board (IASB), including the interpretation documents issued by the SIC and the IFRIC, and endorsed by the European Commission up to 31 December 2018, pursuant to EU Regulation No.1606/2002 which was incorporated into Italian legislation through Legislative Decree No.38 of 28 February 2005 (see Section 5 - Other matters). The Consolidated Accounts are an integral part of the Annual Financial Statements as required by Art.154-ter, par.1 of the Single Finance Act (TUF, Legislative Decree No.58 of 24 February 1998). In its circular 262 of 22 December 2005 and subsequent amendments Banca d’Italia laid down the formats for the financial statements and explanatory notes used to prepare these Accounts. Banca d’Italia issued on 22 December 2017 the 5th update of its circular 262 adjusting the formats for the financial statements and explanatory notes to the requirements of IFRS9 Financial Instruments. Please note that as a result of the first time adoption of the new accounting standard IFRS9 and the choice not to restate the previous period, the templates and the tables in the notes prescribed by the mentioned circular have been integrated with additional items in order to allow comparisons with the previous period that has been presented according to IAS39 standard and to Circular 262 (4th update of 15 December 2015). Opening balances shown in tables of the notes to the consolidated accounts are the ones coming from the first time adoption of the new accounting standard IFRS9. In addition, with reference to Part E - Information on risks and hedging policies, the abovementioned circumstances have required the choice not to provide the comparison with the previous period with reference to certain tables whose content is not comparable with previous period tables. Section 2 - General preparation criteria As mentioned above, these Consolidated Accounts have been prepared in accordance with the IFRS endorsed by the European Commission. The following documents have been used to interpret and support the application of IFRS, even though not all of them have been endorsed by the European Commission: • The Conceptual Framework for Financial Reporting; • Implementation Guidance, Basis for Conclusions, IFRICs and any other documents prepared by the IASB or International Financial Reporting Interpretations Committee (IFRIC) supplementing the IFRSs; • Interpretative documents on the application of IAS/IFRS in Italy prepared by the Organismo Italiano di Contabilità (OIC) and Associazione Bancaria Italiana (ABI); • ESMA (European Securities and Markets Authority) and CONSOB documents on the application of specific IFRS provisions. The Consolidated Accounts include the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement (compiled using the “indirect method”) and the Notes to the Accounts, together with the Consolidated Report on Operations and Annexes. In addition, pursuant to Art.123-bis par.3 of TUF, as reported in chapter “Other information” of the Consolidated Report on Operations, the Report on Corporate Governance and Ownership Structures is available in the "Governance" section of UniCredit website: https://www.unicreditgroup.eu/it/governance/governance-system-and-policies.html - Italian version and https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html - English version. Figures in the financial statements and Notes to the Accounts are given in thousands of euros, unless otherwise specified. In their joint Document No.4 of 3 March 2010, Banca d’Italia, Consob and Isvap made a few observations on the current situation of the markets and businesses and requested to disclose in the financial statements information which are essential for a better understanding of business trends and outlook. In this regard, the Directors, based on the 2016-2019 Strategic Plan as well as on the results of the capital increase fully subscribed with effect from 2 March 2017, identified no symptoms in the capital and financial structure and in the economic performance that could indicate uncertainty about the ability to continue as a going-concern and therefore believe with reasonable certainty that the Group will continue to operate profitably in the foreseeable future; as a result, in accordance with the provisions of IAS1, the Consolidated Financial Statements as at 31 December 2018 have been prepared on a going-concern basis. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 101 Notes to the consolidated accounts Part A - Accounting policies A.1 - General Section 1 - Statement of compliance with IFRS These Consolidated Accounts have been prepared in accordance with the IFRS issued by the International Accounting Standards Board (IASB), including the interpretation documents issued by the SIC and the IFRIC, and endorsed by the European Commission up to 31 December 2018, pursuant to EU Regulation No.1606/2002 which was incorporated into Italian legislation through Legislative Decree No.38 of 28 February 2005 (see Section 5 - Other matters). The Consolidated Accounts are an integral part of the Annual Financial Statements as required by Art.154-ter, par.1 of the Single Finance Act (TUF, Legislative Decree No.58 of 24 February 1998). In its circular 262 of 22 December 2005 and subsequent amendments Banca d’Italia laid down the formats for the financial statements and explanatory notes used to prepare these Accounts. Banca d’Italia issued on 22 December 2017 the 5th update of its circular 262 adjusting the formats for the financial statements and explanatory notes to the requirements of IFRS9 Financial Instruments. Please note that as a result of the first time adoption of the new accounting standard IFRS9 and the choice not to restate the previous period, the templates and the tables in the notes prescribed by the mentioned circular have been integrated with additional items in order to allow comparisons with the previous period that has been presented according to IAS39 standard and to Circular 262 (4th update of 15 December 2015). Opening balances shown in tables of the notes to the consolidated accounts are the ones coming from the first time adoption of the new accounting standard IFRS9. In addition, with reference to Part E - Information on risks and hedging policies, the abovementioned circumstances have required the choice not to provide the comparison with the previous period with reference to certain tables whose content is not comparable with previous period tables. Section 2 - General preparation criteria As mentioned above, these Consolidated Accounts have been prepared in accordance with the IFRS endorsed by the European Commission. The following documents have been used to interpret and support the application of IFRS, even though not all of them have been endorsed by the European Commission: • The Conceptual Framework for Financial Reporting; • Implementation Guidance, Basis for Conclusions, IFRICs and any other documents prepared by the IASB or International Financial Reporting Interpretations Committee (IFRIC) supplementing the IFRSs; • Interpretative documents on the application of IAS/IFRS in Italy prepared by the Organismo Italiano di Contabilità (OIC) and Associazione Bancaria Italiana (ABI); • ESMA (European Securities and Markets Authority) and CONSOB documents on the application of specific IFRS provisions. The Consolidated Accounts include the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement (compiled using the “indirect method”) and the Notes to the Accounts, together with the Consolidated Report on Operations and Annexes. In addition, pursuant to Art.123-bis par.3 of TUF, as reported in chapter “Other information” of the Consolidated Report on Operations, the Report on Corporate Governance and Ownership Structures is available in the "Governance" section of UniCredit website: https://www.unicreditgroup.eu/it/governance/governance-system-and-policies.html - Italian version and https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html - English version. Figures in the financial statements and Notes to the Accounts are given in thousands of euros, unless otherwise specified. In their joint Document No.4 of 3 March 2010, Banca d’Italia, Consob and Isvap made a few observations on the current situation of the markets and businesses and requested to disclose in the financial statements information which are essential for a better understanding of business trends and outlook. In this regard, the Directors, based on the 2016-2019 Strategic Plan as well as on the results of the capital increase fully subscribed with effect from 2 March 2017, identified no symptoms in the capital and financial structure and in the economic performance that could indicate uncertainty about the ability to continue as a going-concern and therefore believe with reasonable certainty that the Group will continue to operate profitably in the foreseeable future; as a result, in accordance with the provisions of IAS1, the Consolidated Financial Statements as at 31 December 2018 have been prepared on a going-concern basis. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 101 Notes to the consolidated accounts Part A - Accounting policies A.1 - General Section 1 - Statement of compliance with IFRS These Consolidated Accounts have been prepared in accordance with the IFRS issued by the International Accounting Standards Board (IASB), including the interpretation documents issued by the SIC and the IFRIC, and endorsed by the European Commission up to 31 December 2018, pursuant to EU Regulation No.1606/2002 which was incorporated into Italian legislation through Legislative Decree No.38 of 28 February 2005 (see Section 5 - Other matters). The Consolidated Accounts are an integral part of the Annual Financial Statements as required by Art.154-ter, par.1 of the Single Finance Act (TUF, Legislative Decree No.58 of 24 February 1998). In its circular 262 of 22 December 2005 and subsequent amendments Banca d’Italia laid down the formats for the financial statements and explanatory notes used to prepare these Accounts. Banca d’Italia issued on 22 December 2017 the 5th update of its circular 262 adjusting the formats for the financial statements and explanatory notes to the requirements of IFRS9 Financial Instruments. Please note that as a result of the first time adoption of the new accounting standard IFRS9 and the choice not to restate the previous period, the templates and the tables in the notes prescribed by the mentioned circular have been integrated with additional items in order to allow comparisons with the previous period that has been presented according to IAS39 standard and to Circular 262 (4th update of 15 December 2015). Opening balances shown in tables of the notes to the consolidated accounts are the ones coming from the first time adoption of the new accounting standard IFRS9. In addition, with reference to Part E - Information on risks and hedging policies, the abovementioned circumstances have required the choice not to provide the comparison with the previous period with reference to certain tables whose content is not comparable with previous period tables. Section 2 - General preparation criteria As mentioned above, these Consolidated Accounts have been prepared in accordance with the IFRS endorsed by the European Commission. The following documents have been used to interpret and support the application of IFRS, even though not all of them have been endorsed by the European Commission: • The Conceptual Framework for Financial Reporting; • Implementation Guidance, Basis for Conclusions, IFRICs and any other documents prepared by the IASB or International Financial Reporting Interpretations Committee (IFRIC) supplementing the IFRSs; • Interpretative documents on the application of IAS/IFRS in Italy prepared by the Organismo Italiano di Contabilità (OIC) and Associazione Bancaria Italiana (ABI); • ESMA (European Securities and Markets Authority) and CONSOB documents on the application of specific IFRS provisions. The Consolidated Accounts include the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement (compiled using the “indirect method”) and the Notes to the Accounts, together with the Consolidated Report on Operations and Annexes. In addition, pursuant to Art.123-bis par.3 of TUF, as reported in chapter “Other information” of the Consolidated Report on Operations, the Report on Corporate Governance and Ownership Structures is available in the "Governance" section of UniCredit website: https://www.unicreditgroup.eu/it/governance/governance-system-and-policies.html - Italian version and https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html - English version. Figures in the financial statements and Notes to the Accounts are given in thousands of euros, unless otherwise specified. In their joint Document No.4 of 3 March 2010, Banca d’Italia, Consob and Isvap made a few observations on the current situation of the markets and businesses and requested to disclose in the financial statements information which are essential for a better understanding of business trends and outlook. In this regard, the Directors, based on the 2016-2019 Strategic Plan as well as on the results of the capital increase fully subscribed with effect from 2 March 2017, identified no symptoms in the capital and financial structure and in the economic performance that could indicate uncertainty about the ability to continue as a going-concern and therefore believe with reasonable certainty that the Group will continue to operate profitably in the foreseeable future; as a result, in accordance with the provisions of IAS1, the Consolidated Financial Statements as at 31 December 2018 have been prepared on a going-concern basis. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 102 2018 Annual Report and Accounts · UniCredit The measurement criteria adopted are therefore consistent with the assumption that the business is a going-concern and with the principles of accrual based accounting, the relevance and materiality of accounting information, and the prevalence of economic substance over legal form. These criteria have not changed compared with the previous year. Risks and uncertainty relating to the use of estimates Pursuant to IFRSs, Management must make judgments, estimates and assumptions that affect the application of accounting principles and the amounts of assets, liabilities, income and expenses reported in the accounts, as well as the disclosure concerning potential assets and liabilities. Estimates and the related assumptions are based on previous experience and other factors considered reasonable under the circumstances and have been used to estimate the carrying values of assets and liabilities not readily available from other sources. In particular estimated figures have been used for the recognition of some of the largest value-based items in the Consolidated Accounts at 31 December 2018, as required by the accounting policies and regulations described above. These estimates are largely based on calculations of future recoverability of the values recognised in the accounts according to the rules laid down in current legislation and have been made on the assumption of a going-concern, i.e. without contemplating the possibility of the forced sale of the estimated items. The processes adopted confirm the carrying values at 31 December 2018. Valuation is particularly difficult because of the uncertainty in the macroeconomic and market environment. The parameters and information used to check the above-mentioned values were therefore significantly affected by such factors, which could change rapidly in ways that are currently unforeseeable, such that further effects on future carrying values cannot be ruled out. Estimates and assumptions are regularly reviewed. Any changes resulting from these reviews are recognised in the period in which the review was carried out, provided the change only concerns that period. If the revision concerns both current and future periods it is recognised accordingly in both current and future periods. Uncertainty affecting estimates is generally inherent in the measurement of: • fair value of financial instruments not listed in active markets; • loans and receivables, equity investments and, in general, any other financial assets/liabilities; • severance pay (Italy) and other employee benefits; • provisions for risks and charges and contingent assets (for more information on legal risks see Part E – Par. 1.5 Operational risk); • goodwill and other intangible assets; • deferred tax assets; • investment properties; whose assessment may significantly change over time according to the trend in (i) domestic and international socio-economic conditions and subsequent impact on the Group’s profitability and customers’ creditworthiness, (ii) financial markets, which affect changes in interest rates, prices and actuarial assumptions and (iii) real estate market affecting the value of property owned by the Bank or received as collateral. Regarding the evaluation of credit exposures, it should be noted that, with the entrance into force of IFRS9, their evaluation depends on forward-looking information and, in particular, on the evolution of macro-economic scenarios used in the calculation of loan loss provisions. Please note that the economic and political uncertainty in Turkey and Russia were taken into account during the assessment of the net assets owned by the Group in these countries. See Part E - Information on risks and hedging policies - Section 5 - Other Risks - Top and emerging risks. Similarly, risks and uncertainties associated with a macroeconomic scenario involving tensions in international trade, an increase in rates and spreads, with specific reference to certain geographical areas and the expected contractions of quantitative easing measures so far implemented by Central Banks, were considered in the valuation of assets. In this regard, refer to the Outlook. With specific reference to future cash flow projections used in the valuation of goodwill, other intangible assets and deferred tax assets, it should be noted that the parameters and information used are significantly influenced by the macro-economic market situation, which may change in unpredictably. For further information see Part B - Consolidated Balance Sheet - Assets - Section 10 - Intangible assets. With specific reference to valuation techniques, unobservable inputs used in the fair value measurement and sensitivities to changes in those inputs, please refer to Section A.4 - Information on fair value. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 102 2018 Annual Report and Accounts · UniCredit The measurement criteria adopted are therefore consistent with the assumption that the business is a going-concern and with the principles of accrual based accounting, the relevance and materiality of accounting information, and the prevalence of economic substance over legal form. These criteria have not changed compared with the previous year. Risks and uncertainty relating to the use of estimates Pursuant to IFRSs, Management must make judgments, estimates and assumptions that affect the application of accounting principles and the amounts of assets, liabilities, income and expenses reported in the accounts, as well as the disclosure concerning potential assets and liabilities. Estimates and the related assumptions are based on previous experience and other factors considered reasonable under the circumstances and have been used to estimate the carrying values of assets and liabilities not readily available from other sources. In particular estimated figures have been used for the recognition of some of the largest value-based items in the Consolidated Accounts at 31 December 2018, as required by the accounting policies and regulations described above. These estimates are largely based on calculations of future recoverability of the values recognised in the accounts according to the rules laid down in current legislation and have been made on the assumption of a going-concern, i.e. without contemplating the possibility of the forced sale of the estimated items. The processes adopted confirm the carrying values at 31 December 2018. Valuation is particularly difficult because of the uncertainty in the macroeconomic and market environment. The parameters and information used to check the above-mentioned values were therefore significantly affected by such factors, which could change rapidly in ways that are currently unforeseeable, such that further effects on future carrying values cannot be ruled out. Estimates and assumptions are regularly reviewed. Any changes resulting from these reviews are recognised in the period in which the review was carried out, provided the change only concerns that period. If the revision concerns both current and future periods it is recognised accordingly in both current and future periods. Uncertainty affecting estimates is generally inherent in the measurement of: • fair value of financial instruments not listed in active markets; • loans and receivables, equity investments and, in general, any other financial assets/liabilities; • severance pay (Italy) and other employee benefits; • provisions for risks and charges and contingent assets (for more information on legal risks see Part E – Par. 1.5 Operational risk); • goodwill and other intangible assets; • deferred tax assets; • investment properties; whose assessment may significantly change over time according to the trend in (i) domestic and international socio-economic conditions and subsequent impact on the Group’s profitability and customers’ creditworthiness, (ii) financial markets, which affect changes in interest rates, prices and actuarial assumptions and (iii) real estate market affecting the value of property owned by the Bank or received as collateral. Regarding the evaluation of credit exposures, it should be noted that, with the entrance into force of IFRS9, their evaluation depends on forward-looking information and, in particular, on the evolution of macro-economic scenarios used in the calculation of loan loss provisions. Please note that the economic and political uncertainty in Turkey and Russia were taken into account during the assessment of the net assets owned by the Group in these countries. See Part E - Information on risks and hedging policies - Section 5 - Other Risks - Top and emerging risks. Similarly, risks and uncertainties associated with a macroeconomic scenario involving tensions in international trade, an increase in rates and spreads, with specific reference to certain geographical areas and the expected contractions of quantitative easing measures so far implemented by Central Banks, were considered in the valuation of assets. In this regard, refer to the Outlook. With specific reference to future cash flow projections used in the valuation of goodwill, other intangible assets and deferred tax assets, it should be noted that the parameters and information used are significantly influenced by the macro-economic market situation, which may change in unpredictably. For further information see Part B - Consolidated Balance Sheet - Assets - Section 10 - Intangible assets. With specific reference to valuation techniques, unobservable inputs used in the fair value measurement and sensitivities to changes in those inputs, please refer to Section A.4 - Information on fair value. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 102 2018 Annual Report and Accounts · UniCredit The measurement criteria adopted are therefore consistent with the assumption that the business is a going-concern and with the principles of accrual based accounting, the relevance and materiality of accounting information, and the prevalence of economic substance over legal form. These criteria have not changed compared with the previous year. Risks and uncertainty relating to the use of estimates Pursuant to IFRSs, Management must make judgments, estimates and assumptions that affect the application of accounting principles and the amounts of assets, liabilities, income and expenses reported in the accounts, as well as the disclosure concerning potential assets and liabilities. Estimates and the related assumptions are based on previous experience and other factors considered reasonable under the circumstances and have been used to estimate the carrying values of assets and liabilities not readily available from other sources. In particular estimated figures have been used for the recognition of some of the largest value-based items in the Consolidated Accounts at 31 December 2018, as required by the accounting policies and regulations described above. These estimates are largely based on calculations of future recoverability of the values recognised in the accounts according to the rules laid down in current legislation and have been made on the assumption of a going-concern, i.e. without contemplating the possibility of the forced sale of the estimated items. The processes adopted confirm the carrying values at 31 December 2018. Valuation is particularly difficult because of the uncertainty in the macroeconomic and market environment. The parameters and information used to check the above-mentioned values were therefore significantly affected by such factors, which could change rapidly in ways that are currently unforeseeable, such that further effects on future carrying values cannot be ruled out. Estimates and assumptions are regularly reviewed. Any changes resulting from these reviews are recognised in the period in which the review was carried out, provided the change only concerns that period. If the revision concerns both current and future periods it is recognised accordingly in both current and future periods. Uncertainty affecting estimates is generally inherent in the measurement of: • fair value of financial instruments not listed in active markets; • loans and receivables, equity investments and, in general, any other financial assets/liabilities; • severance pay (Italy) and other employee benefits; • provisions for risks and charges and contingent assets (for more information on legal risks see Part E – Par. 1.5 Operational risk); • goodwill and other intangible assets; • deferred tax assets; • investment properties; whose assessment may significantly change over time according to the trend in (i) domestic and international socio-economic conditions and subsequent impact on the Group’s profitability and customers’ creditworthiness, (ii) financial markets, which affect changes in interest rates, prices and actuarial assumptions and (iii) real estate market affecting the value of property owned by the Bank or received as collateral. Regarding the evaluation of credit exposures, it should be noted that, with the entrance into force of IFRS9, their evaluation depends on forward-looking information and, in particular, on the evolution of macro-economic scenarios used in the calculation of loan loss provisions. Please note that the economic and political uncertainty in Turkey and Russia were taken into account during the assessment of the net assets owned by the Group in these countries. See Part E - Information on risks and hedging policies - Section 5 - Other Risks - Top and emerging risks. Similarly, risks and uncertainties associated with a macroeconomic scenario involving tensions in international trade, an increase in rates and spreads, with specific reference to certain geographical areas and the expected contractions of quantitative easing measures so far implemented by Central Banks, were considered in the valuation of assets. In this regard, refer to the Outlook. With specific reference to future cash flow projections used in the valuation of goodwill, other intangible assets and deferred tax assets, it should be noted that the parameters and information used are significantly influenced by the macro-economic market situation, which may change in unpredictably. For further information see Part B - Consolidated Balance Sheet - Assets - Section 10 - Intangible assets. With specific reference to valuation techniques, unobservable inputs used in the fair value measurement and sensitivities to changes in those inputs, please refer to Section A.4 - Information on fair value. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 102 2018 Annual Report and Accounts · UniCredit The measurement criteria adopted are therefore consistent with the assumption that the business is a going-concern and with the principles of accrual based accounting, the relevance and materiality of accounting information, and the prevalence of economic substance over legal form. These criteria have not changed compared with the previous year. Risks and uncertainty relating to the use of estimates Pursuant to IFRSs, Management must make judgments, estimates and assumptions that affect the application of accounting principles and the amounts of assets, liabilities, income and expenses reported in the accounts, as well as the disclosure concerning potential assets and liabilities. Estimates and the related assumptions are based on previous experience and other factors considered reasonable under the circumstances and have been used to estimate the carrying values of assets and liabilities not readily available from other sources. In particular estimated figures have been used for the recognition of some of the largest value-based items in the Consolidated Accounts at 31 December 2018, as required by the accounting policies and regulations described above. These estimates are largely based on calculations of future recoverability of the values recognised in the accounts according to the rules laid down in current legislation and have been made on the assumption of a going-concern, i.e. without contemplating the possibility of the forced sale of the estimated items. The processes adopted confirm the carrying values at 31 December 2018. Valuation is particularly difficult because of the uncertainty in the macroeconomic and market environment. The parameters and information used to check the above-mentioned values were therefore significantly affected by such factors, which could change rapidly in ways that are currently unforeseeable, such that further effects on future carrying values cannot be ruled out. Estimates and assumptions are regularly reviewed. Any changes resulting from these reviews are recognised in the period in which the review was carried out, provided the change only concerns that period. If the revision concerns both current and future periods it is recognised accordingly in both current and future periods. Uncertainty affecting estimates is generally inherent in the measurement of: • fair value of financial instruments not listed in active markets; • loans and receivables, equity investments and, in general, any other financial assets/liabilities; • severance pay (Italy) and other employee benefits; • provisions for risks and charges and contingent assets (for more information on legal risks see Part E – Par. 1.5 Operational risk); • goodwill and other intangible assets; • deferred tax assets; • investment properties; whose assessment may significantly change over time according to the trend in (i) domestic and international socio-economic conditions and subsequent impact on the Group’s profitability and customers’ creditworthiness, (ii) financial markets, which affect changes in interest rates, prices and actuarial assumptions and (iii) real estate market affecting the value of property owned by the Bank or received as collateral. Regarding the evaluation of credit exposures, it should be noted that, with the entrance into force of IFRS9, their evaluation depends on forward-looking information and, in particular, on the evolution of macro-economic scenarios used in the calculation of loan loss provisions. Please note that the economic and political uncertainty in Turkey and Russia were taken into account during the assessment of the net assets owned by the Group in these countries. See Part E - Information on risks and hedging policies - Section 5 - Other Risks - Top and emerging risks. Similarly, risks and uncertainties associated with a macroeconomic scenario involving tensions in international trade, an increase in rates and spreads, with specific reference to certain geographical areas and the expected contractions of quantitative easing measures so far implemented by Central Banks, were considered in the valuation of assets. In this regard, refer to the Outlook. With specific reference to future cash flow projections used in the valuation of goodwill, other intangible assets and deferred tax assets, it should be noted that the parameters and information used are significantly influenced by the macro-economic market situation, which may change in unpredictably. For further information see Part B - Consolidated Balance Sheet - Assets - Section 10 - Intangible assets. With specific reference to valuation techniques, unobservable inputs used in the fair value measurement and sensitivities to changes in those inputs, please refer to Section A.4 - Information on fair value. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 102 2018 Annual Report and Accounts · UniCredit The measurement criteria adopted are therefore consistent with the assumption that the business is a going-concern and with the principles of accrual based accounting, the relevance and materiality of accounting information, and the prevalence of economic substance over legal form. These criteria have not changed compared with the previous year. Risks and uncertainty relating to the use of estimates Pursuant to IFRSs, Management must make judgments, estimates and assumptions that affect the application of accounting principles and the amounts of assets, liabilities, income and expenses reported in the accounts, as well as the disclosure concerning potential assets and liabilities. Estimates and the related assumptions are based on previous experience and other factors considered reasonable under the circumstances and have been used to estimate the carrying values of assets and liabilities not readily available from other sources. In particular estimated figures have been used for the recognition of some of the largest value-based items in the Consolidated Accounts at 31 December 2018, as required by the accounting policies and regulations described above. These estimates are largely based on calculations of future recoverability of the values recognised in the accounts according to the rules laid down in current legislation and have been made on the assumption of a going-concern, i.e. without contemplating the possibility of the forced sale of the estimated items. The processes adopted confirm the carrying values at 31 December 2018. Valuation is particularly difficult because of the uncertainty in the macroeconomic and market environment. The parameters and information used to check the above-mentioned values were therefore significantly affected by such factors, which could change rapidly in ways that are currently unforeseeable, such that further effects on future carrying values cannot be ruled out. Estimates and assumptions are regularly reviewed. Any changes resulting from these reviews are recognised in the period in which the review was carried out, provided the change only concerns that period. If the revision concerns both current and future periods it is recognised accordingly in both current and future periods. Uncertainty affecting estimates is generally inherent in the measurement of: • fair value of financial instruments not listed in active markets; • loans and receivables, equity investments and, in general, any other financial assets/liabilities; • severance pay (Italy) and other employee benefits; • provisions for risks and charges and contingent assets (for more information on legal risks see Part E – Par. 1.5 Operational risk); • goodwill and other intangible assets; • deferred tax assets; • investment properties; whose assessment may significantly change over time according to the trend in (i) domestic and international socio-economic conditions and subsequent impact on the Group’s profitability and customers’ creditworthiness, (ii) financial markets, which affect changes in interest rates, prices and actuarial assumptions and (iii) real estate market affecting the value of property owned by the Bank or received as collateral. Regarding the evaluation of credit exposures, it should be noted that, with the entrance into force of IFRS9, their evaluation depends on forward-looking information and, in particular, on the evolution of macro-economic scenarios used in the calculation of loan loss provisions. Please note that the economic and political uncertainty in Turkey and Russia were taken into account during the assessment of the net assets owned by the Group in these countries. See Part E - Information on risks and hedging policies - Section 5 - Other Risks - Top and emerging risks. Similarly, risks and uncertainties associated with a macroeconomic scenario involving tensions in international trade, an increase in rates and spreads, with specific reference to certain geographical areas and the expected contractions of quantitative easing measures so far implemented by Central Banks, were considered in the valuation of assets. In this regard, refer to the Outlook. With specific reference to future cash flow projections used in the valuation of goodwill, other intangible assets and deferred tax assets, it should be noted that the parameters and information used are significantly influenced by the macro-economic market situation, which may change in unpredictably. For further information see Part B - Consolidated Balance Sheet - Assets - Section 10 - Intangible assets. With specific reference to valuation techniques, unobservable inputs used in the fair value measurement and sensitivities to changes in those inputs, please refer to Section A.4 - Information on fair value. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 103 Section 3 - Consolidation scope and methods The consolidation criteria and principles used to prepare the Consolidated accounts as at 31 December 2018 are described below. Consolidated Accounts For the preparation of the Consolidated accounts as at 31 December 2018 the following sources have been used: • UniCredit S.p.A. draft accounts as at 31 December 2018; • the accounts as at 31 December 2018, approved by the competent bodies and functions, of the other fully consolidated subsidiaries duly reclassified and adjusted to take account of consolidation needs and, where necessary, to align them to the Group accounting principles; • the sub-consolidated Accounts of Nuova Compagnia di Partecipazioni Group, including Nuova Compagnia di Partecipazioni S.p.A. (formerly Compagnia Italpetroli S.p.A.), and Capital Dev Group, including Capital Dev S.p.A., and their direct and indirect subsidiaries, as at 31 December 2018. Amounts in foreign currencies are converted at closing exchange rates in the balance sheet, whereas the average exchange rate for the year is used for the income statement. The accounts and Explanatory Notes of the main fully consolidated subsidiaries prepared under IIAS/IFRS are subject to limited review by leading audit companies. Subsidiaries Entities, including structured entities, over which the Group has direct or indirect control, are considered subsidiaries. Control over an entity entails: • the existence of power over the relevant activities; • the exposure to the variability of returns; • the ability to use the power exercised in order to influence the returns to which it is exposed. In order to verify the existence of control, the Group considers the following factors: • the purpose and establishment of the investee, in order to identify which are the entity's objectives, the activities that determine its returns and how these activities are governed; • the power, in order to understand whether the Group has contractual rights that attribute the ability to govern the relevant activities; to this end only substantial rights that provide practical ability to govern are considered; • the exposure held in relation to the investee, in order to assess whether the Group has relations with the investee, the returns of which are subject to changes depending on the investee's performance; • the existence of potential “principal - agent” relationships. If the relevant activities are governed through voting rights, the existence of control is verified considering the voting rights held, including the potential ones, and the existence of any shareholders' or other agreements which attribute the right to control the majority of the voting rights, to appoint the majority of the governing body or in any case the power to determine the entity's financial and operating policies. Subsidiaries may also include any “structured entity” in which the voting rights are not significant for establishing control, including special purpose entities and investment funds. In the case of structured entities, the existence of control is ascertained considering both the contractual rights that enable governance of the relevant activities of the entity (or those that contribute most to the results) and the Group's exposure to the variability of returns deriving from these activities. The carrying amount of an equity interest in a fully consolidated entity held by the Parent company or another Group company is eliminated, against the recognition of the assets and liabilities of the investee, as an offsetting entry to the corresponding portion of net equity of the subsidiary attributable to the Group. Intragroup balances, the off-balance sheet transactions, the income and expenses, and the gain/losses between consolidated companies are eliminated in full, according to the method of consolidation adopted. A subsidiary’s income and expenses are included in the consolidation from the date the Parent acquires the control. On disposal of a subsidiary, its income and expenses are consolidated up to the date of the disposal, i.e. until the Parent ceases to control the subsidiary. The difference between the consideration received of the subsidiary and the carrying amount of its net assets at the same date is recognised in the Income Statement under item “280 Gains (Losses) on disposal of investments” for fully consolidated companies. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 103 Section 3 - Consolidation scope and methods The consolidation criteria and principles used to prepare the Consolidated accounts as at 31 December 2018 are described below. Consolidated Accounts For the preparation of the Consolidated accounts as at 31 December 2018 the following sources have been used: • UniCredit S.p.A. draft accounts as at 31 December 2018; • the accounts as at 31 December 2018, approved by the competent bodies and functions, of the other fully consolidated subsidiaries duly reclassified and adjusted to take account of consolidation needs and, where necessary, to align them to the Group accounting principles; • the sub-consolidated Accounts of Nuova Compagnia di Partecipazioni Group, including Nuova Compagnia di Partecipazioni S.p.A. (formerly Compagnia Italpetroli S.p.A.), and Capital Dev Group, including Capital Dev S.p.A., and their direct and indirect subsidiaries, as at 31 December 2018. Amounts in foreign currencies are converted at closing exchange rates in the balance sheet, whereas the average exchange rate for the year is used for the income statement. The accounts and Explanatory Notes of the main fully consolidated subsidiaries prepared under IIAS/IFRS are subject to limited review by leading audit companies. Subsidiaries Entities, including structured entities, over which the Group has direct or indirect control, are considered subsidiaries. Control over an entity entails: • the existence of power over the relevant activities; • the exposure to the variability of returns; • the ability to use the power exercised in order to influence the returns to which it is exposed. In order to verify the existence of control, the Group considers the following factors: • the purpose and establishment of the investee, in order to identify which are the entity's objectives, the activities that determine its returns and how these activities are governed; • the power, in order to understand whether the Group has contractual rights that attribute the ability to govern the relevant activities; to this end only substantial rights that provide practical ability to govern are considered; • the exposure held in relation to the investee, in order to assess whether the Group has relations with the investee, the returns of which are subject to changes depending on the investee's performance; • the existence of potential “principal - agent” relationships. If the relevant activities are governed through voting rights, the existence of control is verified considering the voting rights held, including the potential ones, and the existence of any shareholders' or other agreements which attribute the right to control the majority of the voting rights, to appoint the majority of the governing body or in any case the power to determine the entity's financial and operating policies. Subsidiaries may also include any “structured entity” in which the voting rights are not significant for establishing control, including special purpose entities and investment funds. In the case of structured entities, the existence of control is ascertained considering both the contractual rights that enable governance of the relevant activities of the entity (or those that contribute most to the results) and the Group's exposure to the variability of returns deriving from these activities. The carrying amount of an equity interest in a fully consolidated entity held by the Parent company or another Group company is eliminated, against the recognition of the assets and liabilities of the investee, as an offsetting entry to the corresponding portion of net equity of the subsidiary attributable to the Group. Intragroup balances, the off-balance sheet transactions, the income and expenses, and the gain/losses between consolidated companies are eliminated in full, according to the method of consolidation adopted. A subsidiary’s income and expenses are included in the consolidation from the date the Parent acquires the control. On disposal of a subsidiary, its income and expenses are consolidated up to the date of the disposal, i.e. until the Parent ceases to control the subsidiary. The difference between the consideration received of the subsidiary and the carrying amount of its net assets at the same date is recognised in the Income Statement under item “280 Gains (Losses) on disposal of investments” for fully consolidated companies. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 103 Section 3 - Consolidation scope and methods The consolidation criteria and principles used to prepare the Consolidated accounts as at 31 December 2018 are described below. Consolidated Accounts For the preparation of the Consolidated accounts as at 31 December 2018 the following sources have been used: • UniCredit S.p.A. draft accounts as at 31 December 2018; • the accounts as at 31 December 2018, approved by the competent bodies and functions, of the other fully consolidated subsidiaries duly reclassified and adjusted to take account of consolidation needs and, where necessary, to align them to the Group accounting principles; • the sub-consolidated Accounts of Nuova Compagnia di Partecipazioni Group, including Nuova Compagnia di Partecipazioni S.p.A. (formerly Compagnia Italpetroli S.p.A.), and Capital Dev Group, including Capital Dev S.p.A., and their direct and indirect subsidiaries, as at 31 December 2018. Amounts in foreign currencies are converted at closing exchange rates in the balance sheet, whereas the average exchange rate for the year is used for the income statement. The accounts and Explanatory Notes of the main fully consolidated subsidiaries prepared under IIAS/IFRS are subject to limited review by leading audit companies. Subsidiaries Entities, including structured entities, over which the Group has direct or indirect control, are considered subsidiaries. Control over an entity entails: • the existence of power over the relevant activities; • the exposure to the variability of returns; • the ability to use the power exercised in order to influence the returns to which it is exposed. In order to verify the existence of control, the Group considers the following factors: • the purpose and establishment of the investee, in order to identify which are the entity's objectives, the activities that determine its returns and how these activities are governed; • the power, in order to understand whether the Group has contractual rights that attribute the ability to govern the relevant activities; to this end only substantial rights that provide practical ability to govern are considered; • the exposure held in relation to the investee, in order to assess whether the Group has relations with the investee, the returns of which are subject to changes depending on the investee's performance; • the existence of potential “principal - agent” relationships. If the relevant activities are governed through voting rights, the existence of control is verified considering the voting rights held, including the potential ones, and the existence of any shareholders' or other agreements which attribute the right to control the majority of the voting rights, to appoint the majority of the governing body or in any case the power to determine the entity's financial and operating policies. Subsidiaries may also include any “structured entity” in which the voting rights are not significant for establishing control, including special purpose entities and investment funds. In the case of structured entities, the existence of control is ascertained considering both the contractual rights that enable governance of the relevant activities of the entity (or those that contribute most to the results) and the Group's exposure to the variability of returns deriving from these activities. The carrying amount of an equity interest in a fully consolidated entity held by the Parent company or another Group company is eliminated, against the recognition of the assets and liabilities of the investee, as an offsetting entry to the corresponding portion of net equity of the subsidiary attributable to the Group. Intragroup balances, the off-balance sheet transactions, the income and expenses, and the gain/losses between consolidated companies are eliminated in full, according to the method of consolidation adopted. A subsidiary’s income and expenses are included in the consolidation from the date the Parent acquires the control. On disposal of a subsidiary, its income and expenses are consolidated up to the date of the disposal, i.e. until the Parent ceases to control the subsidiary. The difference between the consideration received of the subsidiary and the carrying amount of its net assets at the same date is recognised in the Income Statement under item “280 Gains (Losses) on disposal of investments” for fully consolidated companies. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 103 Section 3 - Consolidation scope and methods The consolidation criteria and principles used to prepare the Consolidated accounts as at 31 December 2018 are described below. Consolidated Accounts For the preparation of the Consolidated accounts as at 31 December 2018 the following sources have been used: • UniCredit S.p.A. draft accounts as at 31 December 2018; • the accounts as at 31 December 2018, approved by the competent bodies and functions, of the other fully consolidated subsidiaries duly reclassified and adjusted to take account of consolidation needs and, where necessary, to align them to the Group accounting principles; • the sub-consolidated Accounts of Nuova Compagnia di Partecipazioni Group, including Nuova Compagnia di Partecipazioni S.p.A. (formerly Compagnia Italpetroli S.p.A.), and Capital Dev Group, including Capital Dev S.p.A., and their direct and indirect subsidiaries, as at 31 December 2018. Amounts in foreign currencies are converted at closing exchange rates in the balance sheet, whereas the average exchange rate for the year is used for the income statement. The accounts and Explanatory Notes of the main fully consolidated subsidiaries prepared under IIAS/IFRS are subject to limited review by leading audit companies. Subsidiaries Entities, including structured entities, over which the Group has direct or indirect control, are considered subsidiaries. Control over an entity entails: • the existence of power over the relevant activities; • the exposure to the variability of returns; • the ability to use the power exercised in order to influence the returns to which it is exposed. In order to verify the existence of control, the Group considers the following factors: • the purpose and establishment of the investee, in order to identify which are the entity's objectives, the activities that determine its returns and how these activities are governed; • the power, in order to understand whether the Group has contractual rights that attribute the ability to govern the relevant activities; to this end only substantial rights that provide practical ability to govern are considered; • the exposure held in relation to the investee, in order to assess whether the Group has relations with the investee, the returns of which are subject to changes depending on the investee's performance; • the existence of potential “principal - agent” relationships. If the relevant activities are governed through voting rights, the existence of control is verified considering the voting rights held, including the potential ones, and the existence of any shareholders' or other agreements which attribute the right to control the majority of the voting rights, to appoint the majority of the governing body or in any case the power to determine the entity's financial and operating policies. Subsidiaries may also include any “structured entity” in which the voting rights are not significant for establishing control, including special purpose entities and investment funds. In the case of structured entities, the existence of control is ascertained considering both the contractual rights that enable governance of the relevant activities of the entity (or those that contribute most to the results) and the Group's exposure to the variability of returns deriving from these activities. The carrying amount of an equity interest in a fully consolidated entity held by the Parent company or another Group company is eliminated, against the recognition of the assets and liabilities of the investee, as an offsetting entry to the corresponding portion of net equity of the subsidiary attributable to the Group. Intragroup balances, the off-balance sheet transactions, the income and expenses, and the gain/losses between consolidated companies are eliminated in full, according to the method of consolidation adopted. A subsidiary’s income and expenses are included in the consolidation from the date the Parent acquires the control. On disposal of a subsidiary, its income and expenses are consolidated up to the date of the disposal, i.e. until the Parent ceases to control the subsidiary. The difference between the consideration received of the subsidiary and the carrying amount of its net assets at the same date is recognised in the Income Statement under item “280 Gains (Losses) on disposal of investments” for fully consolidated companies. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 103 Section 3 - Consolidation scope and methods The consolidation criteria and principles used to prepare the Consolidated accounts as at 31 December 2018 are described below. Consolidated Accounts For the preparation of the Consolidated accounts as at 31 December 2018 the following sources have been used: • UniCredit S.p.A. draft accounts as at 31 December 2018; • the accounts as at 31 December 2018, approved by the competent bodies and functions, of the other fully consolidated subsidiaries duly reclassified and adjusted to take account of consolidation needs and, where necessary, to align them to the Group accounting principles; • the sub-consolidated Accounts of Nuova Compagnia di Partecipazioni Group, including Nuova Compagnia di Partecipazioni S.p.A. (formerly Compagnia Italpetroli S.p.A.), and Capital Dev Group, including Capital Dev S.p.A., and their direct and indirect subsidiaries, as at 31 December 2018. Amounts in foreign currencies are converted at closing exchange rates in the balance sheet, whereas the average exchange rate for the year is used for the income statement. The accounts and Explanatory Notes of the main fully consolidated subsidiaries prepared under IIAS/IFRS are subject to limited review by leading audit companies. Subsidiaries Entities, including structured entities, over which the Group has direct or indirect control, are considered subsidiaries. Control over an entity entails: • the existence of power over the relevant activities; • the exposure to the variability of returns; • the ability to use the power exercised in order to influence the returns to which it is exposed. In order to verify the existence of control, the Group considers the following factors: • the purpose and establishment of the investee, in order to identify which are the entity's objectives, the activities that determine its returns and how these activities are governed; • the power, in order to understand whether the Group has contractual rights that attribute the ability to govern the relevant activities; to this end only substantial rights that provide practical ability to govern are considered; • the exposure held in relation to the investee, in order to assess whether the Group has relations with the investee, the returns of which are subject to changes depending on the investee's performance; • the existence of potential “principal - agent” relationships. If the relevant activities are governed through voting rights, the existence of control is verified considering the voting rights held, including the potential ones, and the existence of any shareholders' or other agreements which attribute the right to control the majority of the voting rights, to appoint the majority of the governing body or in any case the power to determine the entity's financial and operating policies. Subsidiaries may also include any “structured entity” in which the voting rights are not significant for establishing control, including special purpose entities and investment funds. In the case of structured entities, the existence of control is ascertained considering both the contractual rights that enable governance of the relevant activities of the entity (or those that contribute most to the results) and the Group's exposure to the variability of returns deriving from these activities. The carrying amount of an equity interest in a fully consolidated entity held by the Parent company or another Group company is eliminated, against the recognition of the assets and liabilities of the investee, as an offsetting entry to the corresponding portion of net equity of the subsidiary attributable to the Group. Intragroup balances, the off-balance sheet transactions, the income and expenses, and the gain/losses between consolidated companies are eliminated in full, according to the method of consolidation adopted. A subsidiary’s income and expenses are included in the consolidation from the date the Parent acquires the control. On disposal of a subsidiary, its income and expenses are consolidated up to the date of the disposal, i.e. until the Parent ceases to control the subsidiary. The difference between the consideration received of the subsidiary and the carrying amount of its net assets at the same date is recognised in the Income Statement under item “280 Gains (Losses) on disposal of investments” for fully consolidated companies. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 104 2018 Annual Report and Accounts · UniCredit The portion attributable to non-controlling interests is presented in the Balance Sheet under item “190 Minorities”, separately from the liabilities and net equity attributable to the Group. In the Income Statement, the portion attributable to minorities is also presented separately under item “340 Minorities”. With respect to companies included in the consolidation scope for the first time, the fair value of the cost paid to obtain control of this equity interest, including ancillary expenses, is measured at the acquisition date. The difference between the consideration received of an interest held in a subsidiary and the carrying amount of the net assets is recognised in the Net Equity, if the sale does not entail loss of control. Joint arrangements A joint arrangement is a contractual agreement under the terms of which two or more counterparties arrange to jointly control an entity. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when the decisions about the relevant activities require the unanimous consent of the parties sharing control. According to the standard IFRS11 - Joint Arrangements, such agreements must be classified as Joint Operations or Joint Ventures according to the contractual rights and obligations held by the Group. A Joint Operation is a joint arrangement in which the parties have rights on the assets and obligations with respect to the liabilities of the arrangement. A Joint Venture is a joint arrangement in which the parties have rights on the net assets of the arrangement. The Group has assessed the nature of the joint arrangements and has determined that its jointly controlled equity investments are of the Joint Venture type. These equity investments are recognised using the equity method. Carrying amount of the Joint Ventures is tested in accordance with IAS36 as a single asset, by comparing it with the corresponding recoverable amount (i.e. higher of VIU and FV less cost to sell). Associates An associate is an entity over which the investor has significant influence and which are not subsidiaries or joint ventures. Significant influence is presumed when the investor: • holds, directly or indirectly, at least 20% of the share capital of another entity, or • is able, also through shareholders' agreements, to exercise significant influence through: - representation on the governing body of the company; - participation in the policy-making process, including participation in decisions about dividends or other distributions; - the existence of significant transactions; - interchange of managerial personnel; - provision of key technical information. It is to be pointed out that only companies which are governed through voting rights can be classified as subject to significant influence. Investments in associates are recognised using the equity method. Carrying amount of Associates is tested in accordance with IAS36 as a single asset, by comparing it with the corresponding recoverable amount (i.e. higher of VIU and FV less cost to sell). Equity Method Equity investments in companies measured using the equity method include the goodwill (less any impairment loss) paid to purchase them. The investor’s share of the profit and loss of the investee after the date of acquisition is recognised in the Income Statement under item “250 Profit (Loss) of investments”. Any dividends distributed reduce the carrying amount of the equity investment. If the investor’s share of an investee’s losses is equal to or greater than its carrying amount, no further losses are recognised, unless the investor has incurred specific obligations or made payments on behalf of the associate. Gains and losses on transactions with associates or joint arrangements are eliminated according to the percentage interest in the said company. Any changes in the revaluation reserves of associates or joint arrangements, which are recorded as a contra item to changes in value of the phenomena relevant to this purpose, are reported separately in the Statement of Other Comprehensive Income. The following table shows the companies included in the scope of consolidation. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 104 2018 Annual Report and Accounts · UniCredit The portion attributable to non-controlling interests is presented in the Balance Sheet under item “190 Minorities”, separately from the liabilities and net equity attributable to the Group. In the Income Statement, the portion attributable to minorities is also presented separately under item “340 Minorities”. With respect to companies included in the consolidation scope for the first time, the fair value of the cost paid to obtain control of this equity interest, including ancillary expenses, is measured at the acquisition date. The difference between the consideration received of an interest held in a subsidiary and the carrying amount of the net assets is recognised in the Net Equity, if the sale does not entail loss of control. Joint arrangements A joint arrangement is a contractual agreement under the terms of which two or more counterparties arrange to jointly control an entity. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when the decisions about the relevant activities require the unanimous consent of the parties sharing control. According to the standard IFRS11 - Joint Arrangements, such agreements must be classified as Joint Operations or Joint Ventures according to the contractual rights and obligations held by the Group. A Joint Operation is a joint arrangement in which the parties have rights on the assets and obligations with respect to the liabilities of the arrangement. A Joint Venture is a joint arrangement in which the parties have rights on the net assets of the arrangement. The Group has assessed the nature of the joint arrangements and has determined that its jointly controlled equity investments are of the Joint Venture type. These equity investments are recognised using the equity method. Carrying amount of the Joint Ventures is tested in accordance with IAS36 as a single asset, by comparing it with the corresponding recoverable amount (i.e. higher of VIU and FV less cost to sell). Associates An associate is an entity over which the investor has significant influence and which are not subsidiaries or joint ventures. Significant influence is presumed when the investor: • holds, directly or indirectly, at least 20% of the share capital of another entity, or • is able, also through shareholders' agreements, to exercise significant influence through: - representation on the governing body of the company; - participation in the policy-making process, including participation in decisions about dividends or other distributions; - the existence of significant transactions; - interchange of managerial personnel; - provision of key technical information. It is to be pointed out that only companies which are governed through voting rights can be classified as subject to significant influence. Investments in associates are recognised using the equity method. Carrying amount of Associates is tested in accordance with IAS36 as a single asset, by comparing it with the corresponding recoverable amount (i.e. higher of VIU and FV less cost to sell). Equity Method Equity investments in companies measured using the equity method include the goodwill (less any impairment loss) paid to purchase them. The investor’s share of the profit and loss of the investee after the date of acquisition is recognised in the Income Statement under item “250 Profit (Loss) of investments”. Any dividends distributed reduce the carrying amount of the equity investment. If the investor’s share of an investee’s losses is equal to or greater than its carrying amount, no further losses are recognised, unless the investor has incurred specific obligations or made payments on behalf of the associate. Gains and losses on transactions with associates or joint arrangements are eliminated according to the percentage interest in the said company. Any changes in the revaluation reserves of associates or joint arrangements, which are recorded as a contra item to changes in value of the phenomena relevant to this purpose, are reported separately in the Statement of Other Comprehensive Income. The following table shows the companies included in the scope of consolidation. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 104 2018 Annual Report and Accounts · UniCredit The portion attributable to non-controlling interests is presented in the Balance Sheet under item “190 Minorities”, separately from the liabilities and net equity attributable to the Group. In the Income Statement, the portion attributable to minorities is also presented separately under item “340 Minorities”. With respect to companies included in the consolidation scope for the first time, the fair value of the cost paid to obtain control of this equity interest, including ancillary expenses, is measured at the acquisition date. The difference between the consideration received of an interest held in a subsidiary and the carrying amount of the net assets is recognised in the Net Equity, if the sale does not entail loss of control. Joint arrangements A joint arrangement is a contractual agreement under the terms of which two or more counterparties arrange to jointly control an entity. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when the decisions about the relevant activities require the unanimous consent of the parties sharing control. According to the standard IFRS11 - Joint Arrangements, such agreements must be classified as Joint Operations or Joint Ventures according to the contractual rights and obligations held by the Group. A Joint Operation is a joint arrangement in which the parties have rights on the assets and obligations with respect to the liabilities of the arrangement. A Joint Venture is a joint arrangement in which the parties have rights on the net assets of the arrangement. The Group has assessed the nature of the joint arrangements and has determined that its jointly controlled equity investments are of the Joint Venture type. These equity investments are recognised using the equity method. Carrying amount of the Joint Ventures is tested in accordance with IAS36 as a single asset, by comparing it with the corresponding recoverable amount (i.e. higher of VIU and FV less cost to sell). Associates An associate is an entity over which the investor has significant influence and which are not subsidiaries or joint ventures. Significant influence is presumed when the investor: • holds, directly or indirectly, at least 20% of the share capital of another entity, or • is able, also through shareholders' agreements, to exercise significant influence through: - representation on the governing body of the company; - participation in the policy-making process, including participation in decisions about dividends or other distributions; - the existence of significant transactions; - interchange of managerial personnel; - provision of key technical information. It is to be pointed out that only companies which are governed through voting rights can be classified as subject to significant influence. Investments in associates are recognised using the equity method. Carrying amount of Associates is tested in accordance with IAS36 as a single asset, by comparing it with the corresponding recoverable amount (i.e. higher of VIU and FV less cost to sell). Equity Method Equity investments in companies measured using the equity method include the goodwill (less any impairment loss) paid to purchase them. The investor’s share of the profit and loss of the investee after the date of acquisition is recognised in the Income Statement under item “250 Profit (Loss) of investments”. Any dividends distributed reduce the carrying amount of the equity investment. If the investor’s share of an investee’s losses is equal to or greater than its carrying amount, no further losses are recognised, unless the investor has incurred specific obligations or made payments on behalf of the associate. Gains and losses on transactions with associates or joint arrangements are eliminated according to the percentage interest in the said company. Any changes in the revaluation reserves of associates or joint arrangements, which are recorded as a contra item to changes in value of the phenomena relevant to this purpose, are reported separately in the Statement of Other Comprehensive Income. The following table shows the companies included in the scope of consolidation. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 104 2018 Annual Report and Accounts · UniCredit The portion attributable to non-controlling interests is presented in the Balance Sheet under item “190 Minorities”, separately from the liabilities and net equity attributable to the Group. In the Income Statement, the portion attributable to minorities is also presented separately under item “340 Minorities”. With respect to companies included in the consolidation scope for the first time, the fair value of the cost paid to obtain control of this equity interest, including ancillary expenses, is measured at the acquisition date. The difference between the consideration received of an interest held in a subsidiary and the carrying amount of the net assets is recognised in the Net Equity, if the sale does not entail loss of control. Joint arrangements A joint arrangement is a contractual agreement under the terms of which two or more counterparties arrange to jointly control an entity. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when the decisions about the relevant activities require the unanimous consent of the parties sharing control. According to the standard IFRS11 - Joint Arrangements, such agreements must be classified as Joint Operations or Joint Ventures according to the contractual rights and obligations held by the Group. A Joint Operation is a joint arrangement in which the parties have rights on the assets and obligations with respect to the liabilities of the arrangement. A Joint Venture is a joint arrangement in which the parties have rights on the net assets of the arrangement. The Group has assessed the nature of the joint arrangements and has determined that its jointly controlled equity investments are of the Joint Venture type. These equity investments are recognised using the equity method. Carrying amount of the Joint Ventures is tested in accordance with IAS36 as a single asset, by comparing it with the corresponding recoverable amount (i.e. higher of VIU and FV less cost to sell). Associates An associate is an entity over which the investor has significant influence and which are not subsidiaries or joint ventures. Significant influence is presumed when the investor: • holds, directly or indirectly, at least 20% of the share capital of another entity, or • is able, also through shareholders' agreements, to exercise significant influence through: - representation on the governing body of the company; - participation in the policy-making process, including participation in decisions about dividends or other distributions; - the existence of significant transactions; - interchange of managerial personnel; - provision of key technical information. It is to be pointed out that only companies which are governed through voting rights can be classified as subject to significant influence. Investments in associates are recognised using the equity method. Carrying amount of Associates is tested in accordance with IAS36 as a single asset, by comparing it with the corresponding recoverable amount (i.e. higher of VIU and FV less cost to sell). Equity Method Equity investments in companies measured using the equity method include the goodwill (less any impairment loss) paid to purchase them. The investor’s share of the profit and loss of the investee after the date of acquisition is recognised in the Income Statement under item “250 Profit (Loss) of investments”. Any dividends distributed reduce the carrying amount of the equity investment. If the investor’s share of an investee’s losses is equal to or greater than its carrying amount, no further losses are recognised, unless the investor has incurred specific obligations or made payments on behalf of the associate. Gains and losses on transactions with associates or joint arrangements are eliminated according to the percentage interest in the said company. Any changes in the revaluation reserves of associates or joint arrangements, which are recorded as a contra item to changes in value of the phenomena relevant to this purpose, are reported separately in the Statement of Other Comprehensive Income. The following table shows the companies included in the scope of consolidation. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 104 2018 Annual Report and Accounts · UniCredit The portion attributable to non-controlling interests is presented in the Balance Sheet under item “190 Minorities”, separately from the liabilities and net equity attributable to the Group. In the Income Statement, the portion attributable to minorities is also presented separately under item “340 Minorities”. With respect to companies included in the consolidation scope for the first time, the fair value of the cost paid to obtain control of this equity interest, including ancillary expenses, is measured at the acquisition date. The difference between the consideration received of an interest held in a subsidiary and the carrying amount of the net assets is recognised in the Net Equity, if the sale does not entail loss of control. Joint arrangements A joint arrangement is a contractual agreement under the terms of which two or more counterparties arrange to jointly control an entity. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when the decisions about the relevant activities require the unanimous consent of the parties sharing control. According to the standard IFRS11 - Joint Arrangements, such agreements must be classified as Joint Operations or Joint Ventures according to the contractual rights and obligations held by the Group. A Joint Operation is a joint arrangement in which the parties have rights on the assets and obligations with respect to the liabilities of the arrangement. A Joint Venture is a joint arrangement in which the parties have rights on the net assets of the arrangement. The Group has assessed the nature of the joint arrangements and has determined that its jointly controlled equity investments are of the Joint Venture type. These equity investments are recognised using the equity method. Carrying amount of the Joint Ventures is tested in accordance with IAS36 as a single asset, by comparing it with the corresponding recoverable amount (i.e. higher of VIU and FV less cost to sell). Associates An associate is an entity over which the investor has significant influence and which are not subsidiaries or joint ventures. Significant influence is presumed when the investor: • holds, directly or indirectly, at least 20% of the share capital of another entity, or • is able, also through shareholders' agreements, to exercise significant influence through: - representation on the governing body of the company; - participation in the policy-making process, including participation in decisions about dividends or other distributions; - the existence of significant transactions; - interchange of managerial personnel; - provision of key technical information. It is to be pointed out that only companies which are governed through voting rights can be classified as subject to significant influence. Investments in associates are recognised using the equity method. Carrying amount of Associates is tested in accordance with IAS36 as a single asset, by comparing it with the corresponding recoverable amount (i.e. higher of VIU and FV less cost to sell). Equity Method Equity investments in companies measured using the equity method include the goodwill (less any impairment loss) paid to purchase them. The investor’s share of the profit and loss of the investee after the date of acquisition is recognised in the Income Statement under item “250 Profit (Loss) of investments”. Any dividends distributed reduce the carrying amount of the equity investment. If the investor’s share of an investee’s losses is equal to or greater than its carrying amount, no further losses are recognised, unless the investor has incurred specific obligations or made payments on behalf of the associate. Gains and losses on transactions with associates or joint arrangements are eliminated according to the percentage interest in the said company. Any changes in the revaluation reserves of associates or joint arrangements, which are recorded as a contra item to changes in value of the phenomena relevant to this purpose, are reported separately in the Statement of Other Comprehensive Income. The following table shows the companies included in the scope of consolidation. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 105 1. Investments in Subsidiaries OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % A. LINE BY LINE METHOD 1 UNICREDIT SPA MILAN MILAN HOLDING Issued capital EUR 20,940,398,466.81 2 A&T-PROJEKTENTWICKLUNGS GMBH & CO. POTSDAMER PLATZ BERLIN KG MUNICH MUNICH 1 GRUNDSTUCKSAKTIENGESELLSCHAFT AM POTSDAMER PLATZ (HAUS VATERLAND) 100.00 Issued capital EUR 613,550 3 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. OBERBAUM CITY KG GRUNWALD GRUNWALD 1 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 Issued capital EUR 26,000 SIRIUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH 100.00 98.11 4 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. PARKKOLONNADEN KG GRUNWALD GRUNWALD 1 A&T-PROJEKTENTWICKLUNGS GMBH & CO. POTSDAMER PLATZ BERLIN KG 100.00 98.11 Issued capital EUR 26,000 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 5 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. STUTTGART KRONPRINZSTRASSE KG GRUNWALD GRUNWALD 1 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 Issued capital EUR 26,000 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 98.11 6 AGROB IMMOBILIEN AG ISMANING ISMANING 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 52.72 75.02 Issued capital EUR 11,689,200 7 AI BETEILIGUNGS GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 8 ALLEGRO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 9 ALLIB LEASING S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 100,000 10 ALLIB NEKRETNINE D.O.O. ZA POSLOVANJE NEKRETNINAMA ZAGREB ZAGREB 1 LOCAT CROATIA DOO 100.00 Issued capital HRK 20,000 11 ALMS LEASING GMBH. VIENNA SALZBURG 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,000 12 ALPINE CAYMAN ISLANDS LTD. GRAND CAYMAN GEORGE TOWN 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 798 13 ALTUS ALPHA PLC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 14 ALV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 15 AMBASSADOR PARC DEDINJE D.O.O. BEOGRAD BELGRADE BELGRADE 1 UCTAM D.O.O. BEOGRAD 100.00 Issued capital RSD 98,672,974 16 ANTARES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 17 ANTHEMIS EVO LLP LONDON LONDON 4 UNICREDIT SPA .. (3) Issued capital EUR 30,904,702 18 AO LOCAT LEASING RUSSIA MOSCOW MOSCOW 1 OOO UNICREDIT LEASING 100.00 Issued capital RUR 106,998,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 105 1. Investments in Subsidiaries OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % A. LINE BY LINE METHOD 1 UNICREDIT SPA MILAN MILAN HOLDING Issued capital EUR 20,940,398,466.81 2 A&T-PROJEKTENTWICKLUNGS GMBH & CO. POTSDAMER PLATZ BERLIN KG MUNICH MUNICH 1 GRUNDSTUCKSAKTIENGESELLSCHAFT AM POTSDAMER PLATZ (HAUS VATERLAND) 100.00 Issued capital EUR 613,550 3 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. OBERBAUM CITY KG GRUNWALD GRUNWALD 1 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 Issued capital EUR 26,000 SIRIUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH 100.00 98.11 4 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. PARKKOLONNADEN KG GRUNWALD GRUNWALD 1 A&T-PROJEKTENTWICKLUNGS GMBH & CO. POTSDAMER PLATZ BERLIN KG 100.00 98.11 Issued capital EUR 26,000 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 5 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. STUTTGART KRONPRINZSTRASSE KG GRUNWALD GRUNWALD 1 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 Issued capital EUR 26,000 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 98.11 6 AGROB IMMOBILIEN AG ISMANING ISMANING 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 52.72 75.02 Issued capital EUR 11,689,200 7 AI BETEILIGUNGS GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 8 ALLEGRO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 9 ALLIB LEASING S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 100,000 10 ALLIB NEKRETNINE D.O.O. ZA POSLOVANJE NEKRETNINAMA ZAGREB ZAGREB 1 LOCAT CROATIA DOO 100.00 Issued capital HRK 20,000 11 ALMS LEASING GMBH. VIENNA SALZBURG 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,000 12 ALPINE CAYMAN ISLANDS LTD. GRAND CAYMAN GEORGE TOWN 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 798 13 ALTUS ALPHA PLC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 14 ALV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 15 AMBASSADOR PARC DEDINJE D.O.O. BEOGRAD BELGRADE BELGRADE 1 UCTAM D.O.O. BEOGRAD 100.00 Issued capital RSD 98,672,974 16 ANTARES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 17 ANTHEMIS EVO LLP LONDON LONDON 4 UNICREDIT SPA .. (3) Issued capital EUR 30,904,702 18 AO LOCAT LEASING RUSSIA MOSCOW MOSCOW 1 OOO UNICREDIT LEASING 100.00 Issued capital RUR 106,998,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 105 1. Investments in Subsidiaries OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % A. LINE BY LINE METHOD 1 UNICREDIT SPA MILAN MILAN HOLDING Issued capital EUR 20,940,398,466.81 2 A&T-PROJEKTENTWICKLUNGS GMBH & CO. POTSDAMER PLATZ BERLIN KG MUNICH MUNICH 1 GRUNDSTUCKSAKTIENGESELLSCHAFT AM POTSDAMER PLATZ (HAUS VATERLAND) 100.00 Issued capital EUR 613,550 3 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. OBERBAUM CITY KG GRUNWALD GRUNWALD 1 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 Issued capital EUR 26,000 SIRIUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH 100.00 98.11 4 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. PARKKOLONNADEN KG GRUNWALD GRUNWALD 1 A&T-PROJEKTENTWICKLUNGS GMBH & CO. POTSDAMER PLATZ BERLIN KG 100.00 98.11 Issued capital EUR 26,000 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 5 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. STUTTGART KRONPRINZSTRASSE KG GRUNWALD GRUNWALD 1 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 Issued capital EUR 26,000 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 98.11 6 AGROB IMMOBILIEN AG ISMANING ISMANING 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 52.72 75.02 Issued capital EUR 11,689,200 7 AI BETEILIGUNGS GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 8 ALLEGRO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 9 ALLIB LEASING S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 100,000 10 ALLIB NEKRETNINE D.O.O. ZA POSLOVANJE NEKRETNINAMA ZAGREB ZAGREB 1 LOCAT CROATIA DOO 100.00 Issued capital HRK 20,000 11 ALMS LEASING GMBH. VIENNA SALZBURG 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,000 12 ALPINE CAYMAN ISLANDS LTD. GRAND CAYMAN GEORGE TOWN 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 798 13 ALTUS ALPHA PLC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 14 ALV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 15 AMBASSADOR PARC DEDINJE D.O.O. BEOGRAD BELGRADE BELGRADE 1 UCTAM D.O.O. BEOGRAD 100.00 Issued capital RSD 98,672,974 16 ANTARES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 17 ANTHEMIS EVO LLP LONDON LONDON 4 UNICREDIT SPA .. (3) Issued capital EUR 30,904,702 18 AO LOCAT LEASING RUSSIA MOSCOW MOSCOW 1 OOO UNICREDIT LEASING 100.00 Issued capital RUR 106,998,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 105 1. Investments in Subsidiaries OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % A. LINE BY LINE METHOD 1 UNICREDIT SPA MILAN MILAN HOLDING Issued capital EUR 20,940,398,466.81 2 A&T-PROJEKTENTWICKLUNGS GMBH & CO. POTSDAMER PLATZ BERLIN KG MUNICH MUNICH 1 GRUNDSTUCKSAKTIENGESELLSCHAFT AM POTSDAMER PLATZ (HAUS VATERLAND) 100.00 Issued capital EUR 613,550 3 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. OBERBAUM CITY KG GRUNWALD GRUNWALD 1 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 Issued capital EUR 26,000 SIRIUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH 100.00 98.11 4 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. PARKKOLONNADEN KG GRUNWALD GRUNWALD 1 A&T-PROJEKTENTWICKLUNGS GMBH & CO. POTSDAMER PLATZ BERLIN KG 100.00 98.11 Issued capital EUR 26,000 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 5 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. STUTTGART KRONPRINZSTRASSE KG GRUNWALD GRUNWALD 1 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 Issued capital EUR 26,000 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 98.11 6 AGROB IMMOBILIEN AG ISMANING ISMANING 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 52.72 75.02 Issued capital EUR 11,689,200 7 AI BETEILIGUNGS GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 8 ALLEGRO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 9 ALLIB LEASING S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 100,000 10 ALLIB NEKRETNINE D.O.O. ZA POSLOVANJE NEKRETNINAMA ZAGREB ZAGREB 1 LOCAT CROATIA DOO 100.00 Issued capital HRK 20,000 11 ALMS LEASING GMBH. VIENNA SALZBURG 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,000 12 ALPINE CAYMAN ISLANDS LTD. GRAND CAYMAN GEORGE TOWN 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 798 13 ALTUS ALPHA PLC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 14 ALV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 15 AMBASSADOR PARC DEDINJE D.O.O. BEOGRAD BELGRADE BELGRADE 1 UCTAM D.O.O. BEOGRAD 100.00 Issued capital RSD 98,672,974 16 ANTARES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 17 ANTHEMIS EVO LLP LONDON LONDON 4 UNICREDIT SPA .. (3) Issued capital EUR 30,904,702 18 AO LOCAT LEASING RUSSIA MOSCOW MOSCOW 1 OOO UNICREDIT LEASING 100.00 Issued capital RUR 106,998,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 105 1. Investments in Subsidiaries OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % A. LINE BY LINE METHOD 1 UNICREDIT SPA MILAN MILAN HOLDING Issued capital EUR 20,940,398,466.81 2 A&T-PROJEKTENTWICKLUNGS GMBH & CO. POTSDAMER PLATZ BERLIN KG MUNICH MUNICH 1 GRUNDSTUCKSAKTIENGESELLSCHAFT AM POTSDAMER PLATZ (HAUS VATERLAND) 100.00 Issued capital EUR 613,550 3 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. OBERBAUM CITY KG GRUNWALD GRUNWALD 1 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 Issued capital EUR 26,000 SIRIUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH 100.00 98.11 4 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. PARKKOLONNADEN KG GRUNWALD GRUNWALD 1 A&T-PROJEKTENTWICKLUNGS GMBH & CO. POTSDAMER PLATZ BERLIN KG 100.00 98.11 Issued capital EUR 26,000 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 5 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. STUTTGART KRONPRINZSTRASSE KG GRUNWALD GRUNWALD 1 ACIS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 1.89 Issued capital EUR 26,000 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 98.11 6 AGROB IMMOBILIEN AG ISMANING ISMANING 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 52.72 75.02 Issued capital EUR 11,689,200 7 AI BETEILIGUNGS GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 8 ALLEGRO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 9 ALLIB LEASING S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 100,000 10 ALLIB NEKRETNINE D.O.O. ZA POSLOVANJE NEKRETNINAMA ZAGREB ZAGREB 1 LOCAT CROATIA DOO 100.00 Issued capital HRK 20,000 11 ALMS LEASING GMBH. VIENNA SALZBURG 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,000 12 ALPINE CAYMAN ISLANDS LTD. GRAND CAYMAN GEORGE TOWN 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 798 13 ALTUS ALPHA PLC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 14 ALV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 15 AMBASSADOR PARC DEDINJE D.O.O. BEOGRAD BELGRADE BELGRADE 1 UCTAM D.O.O. BEOGRAD 100.00 Issued capital RSD 98,672,974 16 ANTARES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 17 ANTHEMIS EVO LLP LONDON LONDON 4 UNICREDIT SPA .. (3) Issued capital EUR 30,904,702 18 AO LOCAT LEASING RUSSIA MOSCOW MOSCOW 1 OOO UNICREDIT LEASING 100.00 Issued capital RUR 106,998,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 106 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 19 AO UNICREDIT BANK MOSCOW MOSCOW 1 UNICREDIT SPA 100.00 Issued capital RUR 41,787,805,174 20 ARABELLA FINANCE DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 21 ARENA NPL ONE S.R.L. (CARTOLARIZZAZIONE 2014) VERONA VERONA 4 UNICREDIT SPA .. (3) 22 ARGENTAURUS IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 511,300 23 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 24 ATLANTERRA IMMOBILIENVERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 90.00 Issued capital EUR 1,023,000 25 AUSTRIA LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 0.40 Issued capital EUR 36,336 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.40 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 26 BA ALPINE HOLDINGS, INC. WILMINGTON WILMINGTON 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital USD 74,435,918 27 BA BETRIEBSOBJEKTE GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 5,630,000 28 BA CA LEASING (DEUTSCHLAND) GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING SPA 94.90 Issued capital EUR 153,388 THROUGH A TRUST COMPANY OUTSIDETHE GROUP 5.10 (4) 29 BA CA SECUND LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 30 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 363,364 31 BA GEBAEUDEVERMIETUNGSGMBH VIENNA VIENNA 1 BA GVG-HOLDING GMBH 89.00 Issued capital EUR 36,336 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 10.00 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 1.00 32 BA GVG-HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,168 33 BA IMMO GEWINNSCHEIN FONDS1 VIENNA VIENNA 4 UNICREDIT BANK AUSTRIA AG .. (3) 34 BA-CA ANDANTE LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 35 BA-CA FINANCE (CAYMAN) II LIMITED GEORGE TOWN GEORGE TOWN 1 ALPINE CAYMAN ISLANDS LTD. 100.00 Issued capital EUR 15,000 36 BA-CA FINANCE (CAYMAN) LIMITED GEORGE TOWN GEORGE TOWN 1 ALPINE CAYMAN ISLANDS LTD. 100.00 Issued capital EUR 15,000 37 BA-CA LEASING DREI GARAGEN GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 35,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 38 BA-CA LEASING MAR IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 106 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 19 AO UNICREDIT BANK MOSCOW MOSCOW 1 UNICREDIT SPA 100.00 Issued capital RUR 41,787,805,174 20 ARABELLA FINANCE DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 21 ARENA NPL ONE S.R.L. (CARTOLARIZZAZIONE 2014) VERONA VERONA 4 UNICREDIT SPA .. (3) 22 ARGENTAURUS IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 511,300 23 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 24 ATLANTERRA IMMOBILIENVERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 90.00 Issued capital EUR 1,023,000 25 AUSTRIA LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 0.40 Issued capital EUR 36,336 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.40 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 26 BA ALPINE HOLDINGS, INC. WILMINGTON WILMINGTON 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital USD 74,435,918 27 BA BETRIEBSOBJEKTE GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 5,630,000 28 BA CA LEASING (DEUTSCHLAND) GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING SPA 94.90 Issued capital EUR 153,388 THROUGH A TRUST COMPANY OUTSIDETHE GROUP 5.10 (4) 29 BA CA SECUND LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 30 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 363,364 31 BA GEBAEUDEVERMIETUNGSGMBH VIENNA VIENNA 1 BA GVG-HOLDING GMBH 89.00 Issued capital EUR 36,336 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 10.00 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 1.00 32 BA GVG-HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,168 33 BA IMMO GEWINNSCHEIN FONDS1 VIENNA VIENNA 4 UNICREDIT BANK AUSTRIA AG .. (3) 34 BA-CA ANDANTE LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 35 BA-CA FINANCE (CAYMAN) II LIMITED GEORGE TOWN GEORGE TOWN 1 ALPINE CAYMAN ISLANDS LTD. 100.00 Issued capital EUR 15,000 36 BA-CA FINANCE (CAYMAN) LIMITED GEORGE TOWN GEORGE TOWN 1 ALPINE CAYMAN ISLANDS LTD. 100.00 Issued capital EUR 15,000 37 BA-CA LEASING DREI GARAGEN GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 35,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 38 BA-CA LEASING MAR IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 106 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 19 AO UNICREDIT BANK MOSCOW MOSCOW 1 UNICREDIT SPA 100.00 Issued capital RUR 41,787,805,174 20 ARABELLA FINANCE DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 21 ARENA NPL ONE S.R.L. (CARTOLARIZZAZIONE 2014) VERONA VERONA 4 UNICREDIT SPA .. (3) 22 ARGENTAURUS IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 511,300 23 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 24 ATLANTERRA IMMOBILIENVERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 90.00 Issued capital EUR 1,023,000 25 AUSTRIA LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 0.40 Issued capital EUR 36,336 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.40 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 26 BA ALPINE HOLDINGS, INC. WILMINGTON WILMINGTON 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital USD 74,435,918 27 BA BETRIEBSOBJEKTE GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 5,630,000 28 BA CA LEASING (DEUTSCHLAND) GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING SPA 94.90 Issued capital EUR 153,388 THROUGH A TRUST COMPANY OUTSIDETHE GROUP 5.10 (4) 29 BA CA SECUND LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 30 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 363,364 31 BA GEBAEUDEVERMIETUNGSGMBH VIENNA VIENNA 1 BA GVG-HOLDING GMBH 89.00 Issued capital EUR 36,336 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 10.00 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 1.00 32 BA GVG-HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,168 33 BA IMMO GEWINNSCHEIN FONDS1 VIENNA VIENNA 4 UNICREDIT BANK AUSTRIA AG .. (3) 34 BA-CA ANDANTE LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 35 BA-CA FINANCE (CAYMAN) II LIMITED GEORGE TOWN GEORGE TOWN 1 ALPINE CAYMAN ISLANDS LTD. 100.00 Issued capital EUR 15,000 36 BA-CA FINANCE (CAYMAN) LIMITED GEORGE TOWN GEORGE TOWN 1 ALPINE CAYMAN ISLANDS LTD. 100.00 Issued capital EUR 15,000 37 BA-CA LEASING DREI GARAGEN GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 35,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 38 BA-CA LEASING MAR IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 106 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 19 AO UNICREDIT BANK MOSCOW MOSCOW 1 UNICREDIT SPA 100.00 Issued capital RUR 41,787,805,174 20 ARABELLA FINANCE DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 21 ARENA NPL ONE S.R.L. (CARTOLARIZZAZIONE 2014) VERONA VERONA 4 UNICREDIT SPA .. (3) 22 ARGENTAURUS IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 511,300 23 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 24 ATLANTERRA IMMOBILIENVERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 90.00 Issued capital EUR 1,023,000 25 AUSTRIA LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 0.40 Issued capital EUR 36,336 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.40 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 26 BA ALPINE HOLDINGS, INC. WILMINGTON WILMINGTON 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital USD 74,435,918 27 BA BETRIEBSOBJEKTE GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 5,630,000 28 BA CA LEASING (DEUTSCHLAND) GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING SPA 94.90 Issued capital EUR 153,388 THROUGH A TRUST COMPANY OUTSIDETHE GROUP 5.10 (4) 29 BA CA SECUND LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 30 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 363,364 31 BA GEBAEUDEVERMIETUNGSGMBH VIENNA VIENNA 1 BA GVG-HOLDING GMBH 89.00 Issued capital EUR 36,336 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 10.00 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 1.00 32 BA GVG-HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,168 33 BA IMMO GEWINNSCHEIN FONDS1 VIENNA VIENNA 4 UNICREDIT BANK AUSTRIA AG .. (3) 34 BA-CA ANDANTE LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 35 BA-CA FINANCE (CAYMAN) II LIMITED GEORGE TOWN GEORGE TOWN 1 ALPINE CAYMAN ISLANDS LTD. 100.00 Issued capital EUR 15,000 36 BA-CA FINANCE (CAYMAN) LIMITED GEORGE TOWN GEORGE TOWN 1 ALPINE CAYMAN ISLANDS LTD. 100.00 Issued capital EUR 15,000 37 BA-CA LEASING DREI GARAGEN GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 35,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 38 BA-CA LEASING MAR IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 106 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 19 AO UNICREDIT BANK MOSCOW MOSCOW 1 UNICREDIT SPA 100.00 Issued capital RUR 41,787,805,174 20 ARABELLA FINANCE DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 21 ARENA NPL ONE S.R.L. (CARTOLARIZZAZIONE 2014) VERONA VERONA 4 UNICREDIT SPA .. (3) 22 ARGENTAURUS IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 511,300 23 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 24 ATLANTERRA IMMOBILIENVERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 90.00 Issued capital EUR 1,023,000 25 AUSTRIA LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 0.40 Issued capital EUR 36,336 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.40 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 26 BA ALPINE HOLDINGS, INC. WILMINGTON WILMINGTON 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital USD 74,435,918 27 BA BETRIEBSOBJEKTE GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 5,630,000 28 BA CA LEASING (DEUTSCHLAND) GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING SPA 94.90 Issued capital EUR 153,388 THROUGH A TRUST COMPANY OUTSIDETHE GROUP 5.10 (4) 29 BA CA SECUND LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 30 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 363,364 31 BA GEBAEUDEVERMIETUNGSGMBH VIENNA VIENNA 1 BA GVG-HOLDING GMBH 89.00 Issued capital EUR 36,336 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 10.00 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 1.00 32 BA GVG-HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,168 33 BA IMMO GEWINNSCHEIN FONDS1 VIENNA VIENNA 4 UNICREDIT BANK AUSTRIA AG .. (3) 34 BA-CA ANDANTE LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 35 BA-CA FINANCE (CAYMAN) II LIMITED GEORGE TOWN GEORGE TOWN 1 ALPINE CAYMAN ISLANDS LTD. 100.00 Issued capital EUR 15,000 36 BA-CA FINANCE (CAYMAN) LIMITED GEORGE TOWN GEORGE TOWN 1 ALPINE CAYMAN ISLANDS LTD. 100.00 Issued capital EUR 15,000 37 BA-CA LEASING DREI GARAGEN GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 35,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 38 BA-CA LEASING MAR IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 107 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 39 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 127,177 40 BA-CA PRESTO LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 41 BA-CA WIEN MITTE HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 42 BA/CA-LEASING BETEILIGUNGEN GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 454,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 43 BACA CENA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 44 BACA HYDRA LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 45 BACA KOMMUNALLEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 46 BACA LEASING ALFA S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 110,000 47 BACA LEASING CARMEN GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 48 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 98.80 Issued capital EUR 18,287 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 49 BACAL ALPHA DOO ZA POSLOVANJE NEKRETNINAMA ZAGREB ZAGREB 1 LOCAT CROATIA DOO 100.00 Issued capital HRK 20,000 50 BAL CARINA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 51 BAL HESTIA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 52 BAL HORUS IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 53 BAL HYPNOS IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 54 BAL LETO IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 55 BAL OSIRIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 56 BAL SOBEK IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 99.80 57 BANK AUSTRIA CREDITANSTALT LEASING IMMOBILIENANLAGEN GMBH VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 107 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 39 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 127,177 40 BA-CA PRESTO LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 41 BA-CA WIEN MITTE HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 42 BA/CA-LEASING BETEILIGUNGEN GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 454,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 43 BACA CENA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 44 BACA HYDRA LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 45 BACA KOMMUNALLEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 46 BACA LEASING ALFA S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 110,000 47 BACA LEASING CARMEN GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 48 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 98.80 Issued capital EUR 18,287 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 49 BACAL ALPHA DOO ZA POSLOVANJE NEKRETNINAMA ZAGREB ZAGREB 1 LOCAT CROATIA DOO 100.00 Issued capital HRK 20,000 50 BAL CARINA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 51 BAL HESTIA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 52 BAL HORUS IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 53 BAL HYPNOS IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 54 BAL LETO IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 55 BAL OSIRIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 56 BAL SOBEK IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 99.80 57 BANK AUSTRIA CREDITANSTALT LEASING IMMOBILIENANLAGEN GMBH VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 107 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 39 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 127,177 40 BA-CA PRESTO LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 41 BA-CA WIEN MITTE HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 42 BA/CA-LEASING BETEILIGUNGEN GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 454,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 43 BACA CENA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 44 BACA HYDRA LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 45 BACA KOMMUNALLEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 46 BACA LEASING ALFA S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 110,000 47 BACA LEASING CARMEN GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 48 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 98.80 Issued capital EUR 18,287 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 49 BACAL ALPHA DOO ZA POSLOVANJE NEKRETNINAMA ZAGREB ZAGREB 1 LOCAT CROATIA DOO 100.00 Issued capital HRK 20,000 50 BAL CARINA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 51 BAL HESTIA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 52 BAL HORUS IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 53 BAL HYPNOS IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 54 BAL LETO IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 55 BAL OSIRIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 56 BAL SOBEK IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 99.80 57 BANK AUSTRIA CREDITANSTALT LEASING IMMOBILIENANLAGEN GMBH VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 107 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 39 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 127,177 40 BA-CA PRESTO LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 41 BA-CA WIEN MITTE HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 42 BA/CA-LEASING BETEILIGUNGEN GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 454,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 43 BACA CENA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 44 BACA HYDRA LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 45 BACA KOMMUNALLEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 46 BACA LEASING ALFA S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 110,000 47 BACA LEASING CARMEN GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 48 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 98.80 Issued capital EUR 18,287 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 49 BACAL ALPHA DOO ZA POSLOVANJE NEKRETNINAMA ZAGREB ZAGREB 1 LOCAT CROATIA DOO 100.00 Issued capital HRK 20,000 50 BAL CARINA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 51 BAL HESTIA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 52 BAL HORUS IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 53 BAL HYPNOS IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 54 BAL LETO IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 55 BAL OSIRIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 56 BAL SOBEK IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 99.80 57 BANK AUSTRIA CREDITANSTALT LEASING IMMOBILIENANLAGEN GMBH VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 107 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 39 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 127,177 40 BA-CA PRESTO LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 41 BA-CA WIEN MITTE HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 42 BA/CA-LEASING BETEILIGUNGEN GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 454,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 43 BACA CENA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 44 BACA HYDRA LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 45 BACA KOMMUNALLEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 46 BACA LEASING ALFA S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 110,000 47 BACA LEASING CARMEN GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 48 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 98.80 Issued capital EUR 18,287 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 49 BACAL ALPHA DOO ZA POSLOVANJE NEKRETNINAMA ZAGREB ZAGREB 1 LOCAT CROATIA DOO 100.00 Issued capital HRK 20,000 50 BAL CARINA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 51 BAL HESTIA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 52 BAL HORUS IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 53 BAL HYPNOS IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 54 BAL LETO IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 55 BAL OSIRIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 56 BAL SOBEK IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 99.80 57 BANK AUSTRIA CREDITANSTALT LEASING IMMOBILIENANLAGEN GMBH VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 108 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 58 BANK AUSTRIA FINANZSERVICE GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 490,542 59 BANK AUSTRIA HUNGARIA BETA LEASING KORLATOLT FELELOSSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 60 BANK AUSTRIA LEASING ARGO IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 99.80 61 BANK AUSTRIA LEASING HERA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,337 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 62 BANK AUSTRIA LEASING IKARUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 63 BANK AUSTRIA LEASING MEDEA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 64 BANK AUSTRIA REAL INVEST CLIENT INVESTMENT GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 145,500 65 BANK AUSTRIA REAL INVEST IMMOBILIEN-KAPITALANLAGE GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 5,000,000 66 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 94.95 Issued capital EUR 10,900,500 67 BANK AUSTRIA WOHNBAUBANK AG VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,765,944 68 BARD ENGINEERING GMBH EMDEN EMDEN 4 BARD HOLDING GMBH .. (3) 69 BARD HOLDING GMBH EMDEN EMDEN 4 UNICREDIT BANK AG .. (3) 70 BAULANDENTWICKLUNG GDST 1682/8 GMBH & CO OEG VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 1.00 Issued capital EUR 0 CALG IMMOBILIEN LEASING GMBH 99.00 71 BAVARIA SERVICOS DE REPRESENTACAO COMERCIAL LTDA. SAO PAULO SAO PAULO 1 UNICREDIT SPA 100.00 Issued capital BRL 351,531 UNICREDIT U.S. FINANCE LLC .. 72 BERTRAM PROJEKT UNODECIMA TECHNIKZENTRUM GMBH & CO. KG HANNOVER HANNOVER 1 ROLIN GRUNDSTUCKSPLANUNGS- UND -VERWALTUNGSGESELLSCHAFT MBH 87.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 WEALTHCAP MANAGEMENT SERVICES GMBH 1.00 73 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 74 BF NINE HOLDING GMBH VIENNA VIENNA 1 ALLEGRO LEASING GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 35,000 75 BIL LEASING-FONDS GMBH & CO VELUM KG GRUNWALD GRUNWALD 1 BIL LEASING-FONDS VERWALTUNGS-GMBH .. 33.33 Issued capital EUR 2,556 UNICREDIT BANK AG 100.00 33.33 76 BIL LEASING-FONDS VERWALTUNGS-GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 26,000 77 BORGO DI PEROLLA SRL MASSA MARITTIMA MASSA MARITTIMA 1 FONDIARIA LASA SPA 100.00 Issued capital EUR 2,043,952 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 108 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 58 BANK AUSTRIA FINANZSERVICE GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 490,542 59 BANK AUSTRIA HUNGARIA BETA LEASING KORLATOLT FELELOSSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 60 BANK AUSTRIA LEASING ARGO IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 99.80 61 BANK AUSTRIA LEASING HERA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,337 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 62 BANK AUSTRIA LEASING IKARUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 63 BANK AUSTRIA LEASING MEDEA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 64 BANK AUSTRIA REAL INVEST CLIENT INVESTMENT GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 145,500 65 BANK AUSTRIA REAL INVEST IMMOBILIEN-KAPITALANLAGE GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 5,000,000 66 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 94.95 Issued capital EUR 10,900,500 67 BANK AUSTRIA WOHNBAUBANK AG VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,765,944 68 BARD ENGINEERING GMBH EMDEN EMDEN 4 BARD HOLDING GMBH .. (3) 69 BARD HOLDING GMBH EMDEN EMDEN 4 UNICREDIT BANK AG .. (3) 70 BAULANDENTWICKLUNG GDST 1682/8 GMBH & CO OEG VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 1.00 Issued capital EUR 0 CALG IMMOBILIEN LEASING GMBH 99.00 71 BAVARIA SERVICOS DE REPRESENTACAO COMERCIAL LTDA. SAO PAULO SAO PAULO 1 UNICREDIT SPA 100.00 Issued capital BRL 351,531 UNICREDIT U.S. FINANCE LLC .. 72 BERTRAM PROJEKT UNODECIMA TECHNIKZENTRUM GMBH & CO. KG HANNOVER HANNOVER 1 ROLIN GRUNDSTUCKSPLANUNGS- UND -VERWALTUNGSGESELLSCHAFT MBH 87.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 WEALTHCAP MANAGEMENT SERVICES GMBH 1.00 73 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 74 BF NINE HOLDING GMBH VIENNA VIENNA 1 ALLEGRO LEASING GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 35,000 75 BIL LEASING-FONDS GMBH & CO VELUM KG GRUNWALD GRUNWALD 1 BIL LEASING-FONDS VERWALTUNGS-GMBH .. 33.33 Issued capital EUR 2,556 UNICREDIT BANK AG 100.00 33.33 76 BIL LEASING-FONDS VERWALTUNGS-GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 26,000 77 BORGO DI PEROLLA SRL MASSA MARITTIMA MASSA MARITTIMA 1 FONDIARIA LASA SPA 100.00 Issued capital EUR 2,043,952 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 108 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 58 BANK AUSTRIA FINANZSERVICE GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 490,542 59 BANK AUSTRIA HUNGARIA BETA LEASING KORLATOLT FELELOSSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 60 BANK AUSTRIA LEASING ARGO IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 99.80 61 BANK AUSTRIA LEASING HERA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,337 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 62 BANK AUSTRIA LEASING IKARUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 63 BANK AUSTRIA LEASING MEDEA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 64 BANK AUSTRIA REAL INVEST CLIENT INVESTMENT GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 145,500 65 BANK AUSTRIA REAL INVEST IMMOBILIEN-KAPITALANLAGE GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 5,000,000 66 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 94.95 Issued capital EUR 10,900,500 67 BANK AUSTRIA WOHNBAUBANK AG VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,765,944 68 BARD ENGINEERING GMBH EMDEN EMDEN 4 BARD HOLDING GMBH .. (3) 69 BARD HOLDING GMBH EMDEN EMDEN 4 UNICREDIT BANK AG .. (3) 70 BAULANDENTWICKLUNG GDST 1682/8 GMBH & CO OEG VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 1.00 Issued capital EUR 0 CALG IMMOBILIEN LEASING GMBH 99.00 71 BAVARIA SERVICOS DE REPRESENTACAO COMERCIAL LTDA. SAO PAULO SAO PAULO 1 UNICREDIT SPA 100.00 Issued capital BRL 351,531 UNICREDIT U.S. FINANCE LLC .. 72 BERTRAM PROJEKT UNODECIMA TECHNIKZENTRUM GMBH & CO. KG HANNOVER HANNOVER 1 ROLIN GRUNDSTUCKSPLANUNGS- UND -VERWALTUNGSGESELLSCHAFT MBH 87.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 WEALTHCAP MANAGEMENT SERVICES GMBH 1.00 73 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 74 BF NINE HOLDING GMBH VIENNA VIENNA 1 ALLEGRO LEASING GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 35,000 75 BIL LEASING-FONDS GMBH & CO VELUM KG GRUNWALD GRUNWALD 1 BIL LEASING-FONDS VERWALTUNGS-GMBH .. 33.33 Issued capital EUR 2,556 UNICREDIT BANK AG 100.00 33.33 76 BIL LEASING-FONDS VERWALTUNGS-GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 26,000 77 BORGO DI PEROLLA SRL MASSA MARITTIMA MASSA MARITTIMA 1 FONDIARIA LASA SPA 100.00 Issued capital EUR 2,043,952 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 108 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 58 BANK AUSTRIA FINANZSERVICE GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 490,542 59 BANK AUSTRIA HUNGARIA BETA LEASING KORLATOLT FELELOSSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 60 BANK AUSTRIA LEASING ARGO IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 99.80 61 BANK AUSTRIA LEASING HERA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,337 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 62 BANK AUSTRIA LEASING IKARUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 63 BANK AUSTRIA LEASING MEDEA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 64 BANK AUSTRIA REAL INVEST CLIENT INVESTMENT GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 145,500 65 BANK AUSTRIA REAL INVEST IMMOBILIEN-KAPITALANLAGE GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 5,000,000 66 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 94.95 Issued capital EUR 10,900,500 67 BANK AUSTRIA WOHNBAUBANK AG VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,765,944 68 BARD ENGINEERING GMBH EMDEN EMDEN 4 BARD HOLDING GMBH .. (3) 69 BARD HOLDING GMBH EMDEN EMDEN 4 UNICREDIT BANK AG .. (3) 70 BAULANDENTWICKLUNG GDST 1682/8 GMBH & CO OEG VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 1.00 Issued capital EUR 0 CALG IMMOBILIEN LEASING GMBH 99.00 71 BAVARIA SERVICOS DE REPRESENTACAO COMERCIAL LTDA. SAO PAULO SAO PAULO 1 UNICREDIT SPA 100.00 Issued capital BRL 351,531 UNICREDIT U.S. FINANCE LLC .. 72 BERTRAM PROJEKT UNODECIMA TECHNIKZENTRUM GMBH & CO. KG HANNOVER HANNOVER 1 ROLIN GRUNDSTUCKSPLANUNGS- UND -VERWALTUNGSGESELLSCHAFT MBH 87.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 WEALTHCAP MANAGEMENT SERVICES GMBH 1.00 73 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 74 BF NINE HOLDING GMBH VIENNA VIENNA 1 ALLEGRO LEASING GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 35,000 75 BIL LEASING-FONDS GMBH & CO VELUM KG GRUNWALD GRUNWALD 1 BIL LEASING-FONDS VERWALTUNGS-GMBH .. 33.33 Issued capital EUR 2,556 UNICREDIT BANK AG 100.00 33.33 76 BIL LEASING-FONDS VERWALTUNGS-GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 26,000 77 BORGO DI PEROLLA SRL MASSA MARITTIMA MASSA MARITTIMA 1 FONDIARIA LASA SPA 100.00 Issued capital EUR 2,043,952 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 108 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 58 BANK AUSTRIA FINANZSERVICE GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 490,542 59 BANK AUSTRIA HUNGARIA BETA LEASING KORLATOLT FELELOSSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 60 BANK AUSTRIA LEASING ARGO IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 99.80 61 BANK AUSTRIA LEASING HERA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,337 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 62 BANK AUSTRIA LEASING IKARUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 63 BANK AUSTRIA LEASING MEDEA IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 64 BANK AUSTRIA REAL INVEST CLIENT INVESTMENT GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 145,500 65 BANK AUSTRIA REAL INVEST IMMOBILIEN-KAPITALANLAGE GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 5,000,000 66 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 94.95 Issued capital EUR 10,900,500 67 BANK AUSTRIA WOHNBAUBANK AG VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,765,944 68 BARD ENGINEERING GMBH EMDEN EMDEN 4 BARD HOLDING GMBH .. (3) 69 BARD HOLDING GMBH EMDEN EMDEN 4 UNICREDIT BANK AG .. (3) 70 BAULANDENTWICKLUNG GDST 1682/8 GMBH & CO OEG VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 1.00 Issued capital EUR 0 CALG IMMOBILIEN LEASING GMBH 99.00 71 BAVARIA SERVICOS DE REPRESENTACAO COMERCIAL LTDA. SAO PAULO SAO PAULO 1 UNICREDIT SPA 100.00 Issued capital BRL 351,531 UNICREDIT U.S. FINANCE LLC .. 72 BERTRAM PROJEKT UNODECIMA TECHNIKZENTRUM GMBH & CO. KG HANNOVER HANNOVER 1 ROLIN GRUNDSTUCKSPLANUNGS- UND -VERWALTUNGSGESELLSCHAFT MBH 87.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 WEALTHCAP MANAGEMENT SERVICES GMBH 1.00 73 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 74 BF NINE HOLDING GMBH VIENNA VIENNA 1 ALLEGRO LEASING GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 35,000 75 BIL LEASING-FONDS GMBH & CO VELUM KG GRUNWALD GRUNWALD 1 BIL LEASING-FONDS VERWALTUNGS-GMBH .. 33.33 Issued capital EUR 2,556 UNICREDIT BANK AG 100.00 33.33 76 BIL LEASING-FONDS VERWALTUNGS-GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 26,000 77 BORGO DI PEROLLA SRL MASSA MARITTIMA MASSA MARITTIMA 1 FONDIARIA LASA SPA 100.00 Issued capital EUR 2,043,952 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 109 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 78 BREWO GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT PEGASUS LEASING GMBH 100.00 Issued capital EUR 36,337 79 BUITENGAATS HOLDING B.V. EEMSHAVEN EEMSHAVEN 4 BARD ENGINEERING GMBH .. (3) 80 C.E.CO.S. COMPLETAMENTO EDILIZIO CORSO SICILIA SPA CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 100.00 Issued capital EUR 103,300 81 CA-LEASING OVUS S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 100,000 82 CA-LEASING SENIOREN PARK GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 83 CA-ZETA REAL ESTATE DEVELOPMENT LIMITED LIABILITY COMPANY BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 84 CABET-HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 290,909 85 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 CABET-HOLDING GMBH 100.00 Issued capital EUR 35,000 86 CALG 307 MOBILIEN LEASING GMBH VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 18,286 87 CALG 443 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,336 CALG IMMOBILIEN LEASING GMBH 1.00 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 88 CALG 445 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.60 Issued capital EUR 18,168 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.40 89 CALG 451 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 90 CALG ALPHA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 91 CALG ANLAGEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 92 CALG ANLAGEN LEASING GMBH & CO GRUNDSTUECKVERMIETUNG UND -VERWALTUNG KG MUNICH MUNICH 1 CALG ANLAGEN LEASING GMBH 99.90 Issued capital EUR 2,326,378 93 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 94 CALG GAMMA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 95 CALG GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 96 CALG IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 254,355 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 109 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 78 BREWO GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT PEGASUS LEASING GMBH 100.00 Issued capital EUR 36,337 79 BUITENGAATS HOLDING B.V. EEMSHAVEN EEMSHAVEN 4 BARD ENGINEERING GMBH .. (3) 80 C.E.CO.S. COMPLETAMENTO EDILIZIO CORSO SICILIA SPA CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 100.00 Issued capital EUR 103,300 81 CA-LEASING OVUS S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 100,000 82 CA-LEASING SENIOREN PARK GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 83 CA-ZETA REAL ESTATE DEVELOPMENT LIMITED LIABILITY COMPANY BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 84 CABET-HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 290,909 85 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 CABET-HOLDING GMBH 100.00 Issued capital EUR 35,000 86 CALG 307 MOBILIEN LEASING GMBH VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 18,286 87 CALG 443 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,336 CALG IMMOBILIEN LEASING GMBH 1.00 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 88 CALG 445 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.60 Issued capital EUR 18,168 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.40 89 CALG 451 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 90 CALG ALPHA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 91 CALG ANLAGEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 92 CALG ANLAGEN LEASING GMBH & CO GRUNDSTUECKVERMIETUNG UND -VERWALTUNG KG MUNICH MUNICH 1 CALG ANLAGEN LEASING GMBH 99.90 Issued capital EUR 2,326,378 93 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 94 CALG GAMMA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 95 CALG GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 96 CALG IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 254,355 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 109 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 78 BREWO GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT PEGASUS LEASING GMBH 100.00 Issued capital EUR 36,337 79 BUITENGAATS HOLDING B.V. EEMSHAVEN EEMSHAVEN 4 BARD ENGINEERING GMBH .. (3) 80 C.E.CO.S. COMPLETAMENTO EDILIZIO CORSO SICILIA SPA CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 100.00 Issued capital EUR 103,300 81 CA-LEASING OVUS S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 100,000 82 CA-LEASING SENIOREN PARK GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 83 CA-ZETA REAL ESTATE DEVELOPMENT LIMITED LIABILITY COMPANY BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 84 CABET-HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 290,909 85 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 CABET-HOLDING GMBH 100.00 Issued capital EUR 35,000 86 CALG 307 MOBILIEN LEASING GMBH VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 18,286 87 CALG 443 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,336 CALG IMMOBILIEN LEASING GMBH 1.00 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 88 CALG 445 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.60 Issued capital EUR 18,168 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.40 89 CALG 451 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 90 CALG ALPHA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 91 CALG ANLAGEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 92 CALG ANLAGEN LEASING GMBH & CO GRUNDSTUECKVERMIETUNG UND -VERWALTUNG KG MUNICH MUNICH 1 CALG ANLAGEN LEASING GMBH 99.90 Issued capital EUR 2,326,378 93 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 94 CALG GAMMA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 95 CALG GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 96 CALG IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 254,355 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 109 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 78 BREWO GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT PEGASUS LEASING GMBH 100.00 Issued capital EUR 36,337 79 BUITENGAATS HOLDING B.V. EEMSHAVEN EEMSHAVEN 4 BARD ENGINEERING GMBH .. (3) 80 C.E.CO.S. COMPLETAMENTO EDILIZIO CORSO SICILIA SPA CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 100.00 Issued capital EUR 103,300 81 CA-LEASING OVUS S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 100,000 82 CA-LEASING SENIOREN PARK GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 83 CA-ZETA REAL ESTATE DEVELOPMENT LIMITED LIABILITY COMPANY BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 84 CABET-HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 290,909 85 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 CABET-HOLDING GMBH 100.00 Issued capital EUR 35,000 86 CALG 307 MOBILIEN LEASING GMBH VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 18,286 87 CALG 443 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,336 CALG IMMOBILIEN LEASING GMBH 1.00 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 88 CALG 445 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.60 Issued capital EUR 18,168 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.40 89 CALG 451 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 90 CALG ALPHA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 91 CALG ANLAGEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 92 CALG ANLAGEN LEASING GMBH & CO GRUNDSTUECKVERMIETUNG UND -VERWALTUNG KG MUNICH MUNICH 1 CALG ANLAGEN LEASING GMBH 99.90 Issued capital EUR 2,326,378 93 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 94 CALG GAMMA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 95 CALG GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 96 CALG IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 254,355 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 109 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 78 BREWO GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT PEGASUS LEASING GMBH 100.00 Issued capital EUR 36,337 79 BUITENGAATS HOLDING B.V. EEMSHAVEN EEMSHAVEN 4 BARD ENGINEERING GMBH .. (3) 80 C.E.CO.S. COMPLETAMENTO EDILIZIO CORSO SICILIA SPA CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 100.00 Issued capital EUR 103,300 81 CA-LEASING OVUS S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 100,000 82 CA-LEASING SENIOREN PARK GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 83 CA-ZETA REAL ESTATE DEVELOPMENT LIMITED LIABILITY COMPANY BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 84 CABET-HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 290,909 85 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 CABET-HOLDING GMBH 100.00 Issued capital EUR 35,000 86 CALG 307 MOBILIEN LEASING GMBH VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 18,286 87 CALG 443 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,336 CALG IMMOBILIEN LEASING GMBH 1.00 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 88 CALG 445 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.60 Issued capital EUR 18,168 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.40 89 CALG 451 GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 90 CALG ALPHA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 91 CALG ANLAGEN LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 92 CALG ANLAGEN LEASING GMBH & CO GRUNDSTUECKVERMIETUNG UND -VERWALTUNG KG MUNICH MUNICH 1 CALG ANLAGEN LEASING GMBH 99.90 Issued capital EUR 2,326,378 93 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 94 CALG GAMMA GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 95 CALG GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 96 CALG IMMOBILIEN LEASING GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 254,355 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 110 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 97 CALG MINAL GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 18,286 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 98 CAPITAL DEV SPA ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 272,000 99 CAPITAL MORTGAGE SRL (CARTOLARIZZAZIONE: BIPCA CORDUSIO RMBS) VERONA VERONA 4 UNICREDIT SPA .. (3) 100 CAPITAL MORTGAGE SRL (CARTOLARIZZAZIONE: CAPITAL MORTGAGE 2007 - 1) VERONA VERONA 4 UNICREDIT SPA .. (3) 101 CARD COMPLETE SERVICE BANK AG VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 50.10 Issued capital EUR 6,000,000 102 CARDS & SYSTEMS EDV-DIENSTLEISTUNGS GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 55.00 Issued capital EUR 75,000 103 CASTELLANI LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 1,800,000 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 90.00 104 CAVE NUOVE SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 140,000 105 CHARADE LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 106 CHEFREN LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 107 CIVITAS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 108 COMMUNA - LEASING GRUNDSTUECKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 REAL-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 109 COMPAGNIA FONDIARIA ROMANA - SOCIETA' A RESPONDABILITA' LIMITATA ROME ROME 1 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA 100.00 Issued capital EUR 103,400 110 CONSUMER THREE SRL (CARTOLARIZZAZIONE: CONSUMER THREE ) VERONA VERONA 4 UNICREDIT SPA .. (3) 111 CONTRA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 JAUSERN-LEASING GESELLSCHAFT M.B.H. 25.00 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 112 CORDUSIO RMBS - UCFIN SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS UCFIN - SERIE 2006) VERONA VERONA 4 UNICREDIT SPA .. (3) 113 CORDUSIO RMBS SECURITISATION SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS SECURITISATION - SERIE 2006) VERONA VERONA 4 UNICREDIT SPA .. (3) 114 CORDUSIO RMBS SECURITISATION SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS SECURITISATION - SERIE 2007) VERONA VERONA 4 UNICREDIT SPA .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 110 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 97 CALG MINAL GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 18,286 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 98 CAPITAL DEV SPA ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 272,000 99 CAPITAL MORTGAGE SRL (CARTOLARIZZAZIONE: BIPCA CORDUSIO RMBS) VERONA VERONA 4 UNICREDIT SPA .. (3) 100 CAPITAL MORTGAGE SRL (CARTOLARIZZAZIONE: CAPITAL MORTGAGE 2007 - 1) VERONA VERONA 4 UNICREDIT SPA .. (3) 101 CARD COMPLETE SERVICE BANK AG VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 50.10 Issued capital EUR 6,000,000 102 CARDS & SYSTEMS EDV-DIENSTLEISTUNGS GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 55.00 Issued capital EUR 75,000 103 CASTELLANI LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 1,800,000 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 90.00 104 CAVE NUOVE SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 140,000 105 CHARADE LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 106 CHEFREN LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 107 CIVITAS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 108 COMMUNA - LEASING GRUNDSTUECKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 REAL-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 109 COMPAGNIA FONDIARIA ROMANA - SOCIETA' A RESPONDABILITA' LIMITATA ROME ROME 1 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA 100.00 Issued capital EUR 103,400 110 CONSUMER THREE SRL (CARTOLARIZZAZIONE: CONSUMER THREE ) VERONA VERONA 4 UNICREDIT SPA .. (3) 111 CONTRA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 JAUSERN-LEASING GESELLSCHAFT M.B.H. 25.00 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 112 CORDUSIO RMBS - UCFIN SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS UCFIN - SERIE 2006) VERONA VERONA 4 UNICREDIT SPA .. (3) 113 CORDUSIO RMBS SECURITISATION SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS SECURITISATION - SERIE 2006) VERONA VERONA 4 UNICREDIT SPA .. (3) 114 CORDUSIO RMBS SECURITISATION SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS SECURITISATION - SERIE 2007) VERONA VERONA 4 UNICREDIT SPA .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 110 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 97 CALG MINAL GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 18,286 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 98 CAPITAL DEV SPA ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 272,000 99 CAPITAL MORTGAGE SRL (CARTOLARIZZAZIONE: BIPCA CORDUSIO RMBS) VERONA VERONA 4 UNICREDIT SPA .. (3) 100 CAPITAL MORTGAGE SRL (CARTOLARIZZAZIONE: CAPITAL MORTGAGE 2007 - 1) VERONA VERONA 4 UNICREDIT SPA .. (3) 101 CARD COMPLETE SERVICE BANK AG VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 50.10 Issued capital EUR 6,000,000 102 CARDS & SYSTEMS EDV-DIENSTLEISTUNGS GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 55.00 Issued capital EUR 75,000 103 CASTELLANI LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 1,800,000 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 90.00 104 CAVE NUOVE SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 140,000 105 CHARADE LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 106 CHEFREN LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 107 CIVITAS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 108 COMMUNA - LEASING GRUNDSTUECKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 REAL-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 109 COMPAGNIA FONDIARIA ROMANA - SOCIETA' A RESPONDABILITA' LIMITATA ROME ROME 1 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA 100.00 Issued capital EUR 103,400 110 CONSUMER THREE SRL (CARTOLARIZZAZIONE: CONSUMER THREE ) VERONA VERONA 4 UNICREDIT SPA .. (3) 111 CONTRA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 JAUSERN-LEASING GESELLSCHAFT M.B.H. 25.00 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 112 CORDUSIO RMBS - UCFIN SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS UCFIN - SERIE 2006) VERONA VERONA 4 UNICREDIT SPA .. (3) 113 CORDUSIO RMBS SECURITISATION SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS SECURITISATION - SERIE 2006) VERONA VERONA 4 UNICREDIT SPA .. (3) 114 CORDUSIO RMBS SECURITISATION SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS SECURITISATION - SERIE 2007) VERONA VERONA 4 UNICREDIT SPA .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 110 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 97 CALG MINAL GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 18,286 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 98 CAPITAL DEV SPA ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 272,000 99 CAPITAL MORTGAGE SRL (CARTOLARIZZAZIONE: BIPCA CORDUSIO RMBS) VERONA VERONA 4 UNICREDIT SPA .. (3) 100 CAPITAL MORTGAGE SRL (CARTOLARIZZAZIONE: CAPITAL MORTGAGE 2007 - 1) VERONA VERONA 4 UNICREDIT SPA .. (3) 101 CARD COMPLETE SERVICE BANK AG VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 50.10 Issued capital EUR 6,000,000 102 CARDS & SYSTEMS EDV-DIENSTLEISTUNGS GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 55.00 Issued capital EUR 75,000 103 CASTELLANI LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 1,800,000 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 90.00 104 CAVE NUOVE SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 140,000 105 CHARADE LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 106 CHEFREN LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 107 CIVITAS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 108 COMMUNA - LEASING GRUNDSTUECKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 REAL-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 109 COMPAGNIA FONDIARIA ROMANA - SOCIETA' A RESPONDABILITA' LIMITATA ROME ROME 1 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA 100.00 Issued capital EUR 103,400 110 CONSUMER THREE SRL (CARTOLARIZZAZIONE: CONSUMER THREE ) VERONA VERONA 4 UNICREDIT SPA .. (3) 111 CONTRA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 JAUSERN-LEASING GESELLSCHAFT M.B.H. 25.00 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 112 CORDUSIO RMBS - UCFIN SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS UCFIN - SERIE 2006) VERONA VERONA 4 UNICREDIT SPA .. (3) 113 CORDUSIO RMBS SECURITISATION SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS SECURITISATION - SERIE 2006) VERONA VERONA 4 UNICREDIT SPA .. (3) 114 CORDUSIO RMBS SECURITISATION SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS SECURITISATION - SERIE 2007) VERONA VERONA 4 UNICREDIT SPA .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 110 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 97 CALG MINAL GRUNDSTUECKVERWALTUNG GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 18,286 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 98 CAPITAL DEV SPA ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 272,000 99 CAPITAL MORTGAGE SRL (CARTOLARIZZAZIONE: BIPCA CORDUSIO RMBS) VERONA VERONA 4 UNICREDIT SPA .. (3) 100 CAPITAL MORTGAGE SRL (CARTOLARIZZAZIONE: CAPITAL MORTGAGE 2007 - 1) VERONA VERONA 4 UNICREDIT SPA .. (3) 101 CARD COMPLETE SERVICE BANK AG VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 50.10 Issued capital EUR 6,000,000 102 CARDS & SYSTEMS EDV-DIENSTLEISTUNGS GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 55.00 Issued capital EUR 75,000 103 CASTELLANI LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 1,800,000 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 90.00 104 CAVE NUOVE SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 140,000 105 CHARADE LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 106 CHEFREN LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 107 CIVITAS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 108 COMMUNA - LEASING GRUNDSTUECKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 REAL-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 109 COMPAGNIA FONDIARIA ROMANA - SOCIETA' A RESPONDABILITA' LIMITATA ROME ROME 1 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA 100.00 Issued capital EUR 103,400 110 CONSUMER THREE SRL (CARTOLARIZZAZIONE: CONSUMER THREE ) VERONA VERONA 4 UNICREDIT SPA .. (3) 111 CONTRA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 JAUSERN-LEASING GESELLSCHAFT M.B.H. 25.00 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 112 CORDUSIO RMBS - UCFIN SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS UCFIN - SERIE 2006) VERONA VERONA 4 UNICREDIT SPA .. (3) 113 CORDUSIO RMBS SECURITISATION SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS SECURITISATION - SERIE 2006) VERONA VERONA 4 UNICREDIT SPA .. (3) 114 CORDUSIO RMBS SECURITISATION SRL (CARTOLARIZZAZIONE: CORDUSIO RMBS SECURITISATION - SERIE 2007) VERONA VERONA 4 UNICREDIT SPA .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 111 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 115 CORDUSIO SIM SPA MILAN MILAN 1 UNICREDIT SPA 96.1 (5) Issued capital EUR 56,282,051 116 CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 520,000 117 CORIT - CONCESSIONARIA RISCOSSIONE TRIBUTI S.P.A. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 60.00 Issued capital EUR 1,243,732 118 CRIVELLI SRL MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 10,000 119 DC BANK AG VIENNA VIENNA 1 CARD COMPLETE SERVICE BANK AG 100.00 Issued capital EUR 5,000,000 120 DC ELEKTRONISCHE ZAHLUNGSSYSTEME GMBH VIENNA VIENNA 1 KSG KARTEN-VERRECHNUNGS- UND SERVICEGESELLSCHAFT M.B.H. 100.00 Issued capital EUR 35,000 121 DEBO LEASING SRL BUCHAREST BUCHAREST 1 UNICREDIT CONSUMER FINANCING IFN S.A. 0.01 Issued capital RON 724,400 UNICREDIT LEASING CORPORATION IFN S.A. 99.99 122 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT ALPHA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 123 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT BETA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 124 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT GAMMA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 125 DINERS CLUB CS, S.R.O. BRATISLAVA BRATISLAVA 1 DC BANK AG 100.00 Issued capital EUR 995,000 126 DINERS CLUB POLSKA SP.Z.O.O. WARSAW WARSAW 1 DC BANK AG 100.00 Issued capital PLN 7,500,000 127 DIRANA LIEGENSCHAFTSVERWERTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 17,500 128 DLV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 129 DUODEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 130 ELEKTRA PURCHASE NO. 28 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 131 ELEKTRA PURCHASE NO. 31 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 132 ELEKTRA PURCHASE NO. 32 S.A. LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 133 ELEKTRA PURCHASE NO. 32 S.A. - COMPARTEMENT 2 LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 134 ELEKTRA PURCHASE NO. 33 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 135 ELEKTRA PURCHASE NO. 34 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 136 ELEKTRA PURCHASE NO. 36 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 111 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 115 CORDUSIO SIM SPA MILAN MILAN 1 UNICREDIT SPA 96.1 (5) Issued capital EUR 56,282,051 116 CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 520,000 117 CORIT - CONCESSIONARIA RISCOSSIONE TRIBUTI S.P.A. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 60.00 Issued capital EUR 1,243,732 118 CRIVELLI SRL MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 10,000 119 DC BANK AG VIENNA VIENNA 1 CARD COMPLETE SERVICE BANK AG 100.00 Issued capital EUR 5,000,000 120 DC ELEKTRONISCHE ZAHLUNGSSYSTEME GMBH VIENNA VIENNA 1 KSG KARTEN-VERRECHNUNGS- UND SERVICEGESELLSCHAFT M.B.H. 100.00 Issued capital EUR 35,000 121 DEBO LEASING SRL BUCHAREST BUCHAREST 1 UNICREDIT CONSUMER FINANCING IFN S.A. 0.01 Issued capital RON 724,400 UNICREDIT LEASING CORPORATION IFN S.A. 99.99 122 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT ALPHA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 123 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT BETA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 124 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT GAMMA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 125 DINERS CLUB CS, S.R.O. BRATISLAVA BRATISLAVA 1 DC BANK AG 100.00 Issued capital EUR 995,000 126 DINERS CLUB POLSKA SP.Z.O.O. WARSAW WARSAW 1 DC BANK AG 100.00 Issued capital PLN 7,500,000 127 DIRANA LIEGENSCHAFTSVERWERTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 17,500 128 DLV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 129 DUODEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 130 ELEKTRA PURCHASE NO. 28 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 131 ELEKTRA PURCHASE NO. 31 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 132 ELEKTRA PURCHASE NO. 32 S.A. LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 133 ELEKTRA PURCHASE NO. 32 S.A. - COMPARTEMENT 2 LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 134 ELEKTRA PURCHASE NO. 33 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 135 ELEKTRA PURCHASE NO. 34 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 136 ELEKTRA PURCHASE NO. 36 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 111 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 115 CORDUSIO SIM SPA MILAN MILAN 1 UNICREDIT SPA 96.1 (5) Issued capital EUR 56,282,051 116 CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 520,000 117 CORIT - CONCESSIONARIA RISCOSSIONE TRIBUTI S.P.A. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 60.00 Issued capital EUR 1,243,732 118 CRIVELLI SRL MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 10,000 119 DC BANK AG VIENNA VIENNA 1 CARD COMPLETE SERVICE BANK AG 100.00 Issued capital EUR 5,000,000 120 DC ELEKTRONISCHE ZAHLUNGSSYSTEME GMBH VIENNA VIENNA 1 KSG KARTEN-VERRECHNUNGS- UND SERVICEGESELLSCHAFT M.B.H. 100.00 Issued capital EUR 35,000 121 DEBO LEASING SRL BUCHAREST BUCHAREST 1 UNICREDIT CONSUMER FINANCING IFN S.A. 0.01 Issued capital RON 724,400 UNICREDIT LEASING CORPORATION IFN S.A. 99.99 122 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT ALPHA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 123 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT BETA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 124 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT GAMMA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 125 DINERS CLUB CS, S.R.O. BRATISLAVA BRATISLAVA 1 DC BANK AG 100.00 Issued capital EUR 995,000 126 DINERS CLUB POLSKA SP.Z.O.O. WARSAW WARSAW 1 DC BANK AG 100.00 Issued capital PLN 7,500,000 127 DIRANA LIEGENSCHAFTSVERWERTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 17,500 128 DLV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 129 DUODEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 130 ELEKTRA PURCHASE NO. 28 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 131 ELEKTRA PURCHASE NO. 31 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 132 ELEKTRA PURCHASE NO. 32 S.A. LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 133 ELEKTRA PURCHASE NO. 32 S.A. - COMPARTEMENT 2 LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 134 ELEKTRA PURCHASE NO. 33 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 135 ELEKTRA PURCHASE NO. 34 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 136 ELEKTRA PURCHASE NO. 36 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 111 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 115 CORDUSIO SIM SPA MILAN MILAN 1 UNICREDIT SPA 96.1 (5) Issued capital EUR 56,282,051 116 CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 520,000 117 CORIT - CONCESSIONARIA RISCOSSIONE TRIBUTI S.P.A. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 60.00 Issued capital EUR 1,243,732 118 CRIVELLI SRL MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 10,000 119 DC BANK AG VIENNA VIENNA 1 CARD COMPLETE SERVICE BANK AG 100.00 Issued capital EUR 5,000,000 120 DC ELEKTRONISCHE ZAHLUNGSSYSTEME GMBH VIENNA VIENNA 1 KSG KARTEN-VERRECHNUNGS- UND SERVICEGESELLSCHAFT M.B.H. 100.00 Issued capital EUR 35,000 121 DEBO LEASING SRL BUCHAREST BUCHAREST 1 UNICREDIT CONSUMER FINANCING IFN S.A. 0.01 Issued capital RON 724,400 UNICREDIT LEASING CORPORATION IFN S.A. 99.99 122 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT ALPHA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 123 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT BETA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 124 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT GAMMA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 125 DINERS CLUB CS, S.R.O. BRATISLAVA BRATISLAVA 1 DC BANK AG 100.00 Issued capital EUR 995,000 126 DINERS CLUB POLSKA SP.Z.O.O. WARSAW WARSAW 1 DC BANK AG 100.00 Issued capital PLN 7,500,000 127 DIRANA LIEGENSCHAFTSVERWERTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 17,500 128 DLV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 129 DUODEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 130 ELEKTRA PURCHASE NO. 28 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 131 ELEKTRA PURCHASE NO. 31 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 132 ELEKTRA PURCHASE NO. 32 S.A. LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 133 ELEKTRA PURCHASE NO. 32 S.A. - COMPARTEMENT 2 LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 134 ELEKTRA PURCHASE NO. 33 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 135 ELEKTRA PURCHASE NO. 34 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 136 ELEKTRA PURCHASE NO. 36 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 111 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 115 CORDUSIO SIM SPA MILAN MILAN 1 UNICREDIT SPA 96.1 (5) Issued capital EUR 56,282,051 116 CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 520,000 117 CORIT - CONCESSIONARIA RISCOSSIONE TRIBUTI S.P.A. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 60.00 Issued capital EUR 1,243,732 118 CRIVELLI SRL MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 10,000 119 DC BANK AG VIENNA VIENNA 1 CARD COMPLETE SERVICE BANK AG 100.00 Issued capital EUR 5,000,000 120 DC ELEKTRONISCHE ZAHLUNGSSYSTEME GMBH VIENNA VIENNA 1 KSG KARTEN-VERRECHNUNGS- UND SERVICEGESELLSCHAFT M.B.H. 100.00 Issued capital EUR 35,000 121 DEBO LEASING SRL BUCHAREST BUCHAREST 1 UNICREDIT CONSUMER FINANCING IFN S.A. 0.01 Issued capital RON 724,400 UNICREDIT LEASING CORPORATION IFN S.A. 99.99 122 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT ALPHA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 123 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT BETA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 124 DELPHA IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. GROSSKUGEL BAUABSCHNITT GAMMA MANAGEMENT KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 255,650 125 DINERS CLUB CS, S.R.O. BRATISLAVA BRATISLAVA 1 DC BANK AG 100.00 Issued capital EUR 995,000 126 DINERS CLUB POLSKA SP.Z.O.O. WARSAW WARSAW 1 DC BANK AG 100.00 Issued capital PLN 7,500,000 127 DIRANA LIEGENSCHAFTSVERWERTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 17,500 128 DLV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 129 DUODEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 130 ELEKTRA PURCHASE NO. 28 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 131 ELEKTRA PURCHASE NO. 31 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 132 ELEKTRA PURCHASE NO. 32 S.A. LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 133 ELEKTRA PURCHASE NO. 32 S.A. - COMPARTEMENT 2 LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 134 ELEKTRA PURCHASE NO. 33 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 135 ELEKTRA PURCHASE NO. 34 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 136 ELEKTRA PURCHASE NO. 36 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 112 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 137 ELEKTRA PURCHASE NO. 37 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 138 ELEKTRA PURCHASE NO. 38 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 139 ELEKTRA PURCHASE NO. 39 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 140 ELEKTRA PURCHASE NO. 41 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 141 ELEKTRA PURCHASE NO. 43 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 142 ELEKTRA PURCHASE NO. 44 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 143 ELEKTRA PURCHASE NO. 46 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 144 ELEKTRA PURCHASE NO. 48 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 145 ELEKTRA PURCHASE NO. 54 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 146 ELEKTRA PURCHASE NO. 55 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 147 ELEKTRA PURCHASE NO. 56 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 148 ELEKTRA PURCHASE NO. 57 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 149 ELEKTRA PURCHASE NO. 63 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 150 ELEKTRA PURCHASE NO. 718 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 151 ELEKTRA PURCHASE NO. 911 LTD ST. HELIER ST. HELIER 4 UNICREDIT BANK AG .. (3) 152 EUROLEASE AMUN IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 153 EUROLEASE ANUBIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 154 EUROLEASE ISIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 155 EUROLEASE MARDUK IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 156 EUROLEASE RA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 157 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 158 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) BUDAPEST BUDAPEST 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital HUF 100,000,000 159 EUROPA INGATLANBEFEKTETESI ALAP (EUROPE REAL-ESTATE INVESTMENT FUND) BUDAPEST BUDAPEST 4 UNICREDIT BANK HUNGARY ZRT. .. (3) 160 EUROPEAN-OFFICE-FONDS MUNICH MUNICH 4 UNICREDIT BANK AG .. (3) 161 EXPANDA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 162 F-E MORTGAGES SRL (CARTOLARIZZAZIONE: F-E MORTGAGES 2005) VERONA VERONA 4 UNICREDIT SPA .. (3) 163 F-E MORTGAGES SRL (CARTOLARIZZAZIONE: F-E MORTGAGES SERIES 1 - 2003) VERONA VERONA 4 UNICREDIT SPA .. (3) 164 FACTORBANK AKTIENGESELLSCHAFT VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 3,000,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 112 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 137 ELEKTRA PURCHASE NO. 37 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 138 ELEKTRA PURCHASE NO. 38 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 139 ELEKTRA PURCHASE NO. 39 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 140 ELEKTRA PURCHASE NO. 41 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 141 ELEKTRA PURCHASE NO. 43 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 142 ELEKTRA PURCHASE NO. 44 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 143 ELEKTRA PURCHASE NO. 46 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 144 ELEKTRA PURCHASE NO. 48 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 145 ELEKTRA PURCHASE NO. 54 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 146 ELEKTRA PURCHASE NO. 55 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 147 ELEKTRA PURCHASE NO. 56 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 148 ELEKTRA PURCHASE NO. 57 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 149 ELEKTRA PURCHASE NO. 63 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 150 ELEKTRA PURCHASE NO. 718 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 151 ELEKTRA PURCHASE NO. 911 LTD ST. HELIER ST. HELIER 4 UNICREDIT BANK AG .. (3) 152 EUROLEASE AMUN IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 153 EUROLEASE ANUBIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 154 EUROLEASE ISIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 155 EUROLEASE MARDUK IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 156 EUROLEASE RA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 157 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 158 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) BUDAPEST BUDAPEST 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital HUF 100,000,000 159 EUROPA INGATLANBEFEKTETESI ALAP (EUROPE REAL-ESTATE INVESTMENT FUND) BUDAPEST BUDAPEST 4 UNICREDIT BANK HUNGARY ZRT. .. (3) 160 EUROPEAN-OFFICE-FONDS MUNICH MUNICH 4 UNICREDIT BANK AG .. (3) 161 EXPANDA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 162 F-E MORTGAGES SRL (CARTOLARIZZAZIONE: F-E MORTGAGES 2005) VERONA VERONA 4 UNICREDIT SPA .. (3) 163 F-E MORTGAGES SRL (CARTOLARIZZAZIONE: F-E MORTGAGES SERIES 1 - 2003) VERONA VERONA 4 UNICREDIT SPA .. (3) 164 FACTORBANK AKTIENGESELLSCHAFT VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 3,000,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 112 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 137 ELEKTRA PURCHASE NO. 37 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 138 ELEKTRA PURCHASE NO. 38 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 139 ELEKTRA PURCHASE NO. 39 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 140 ELEKTRA PURCHASE NO. 41 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 141 ELEKTRA PURCHASE NO. 43 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 142 ELEKTRA PURCHASE NO. 44 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 143 ELEKTRA PURCHASE NO. 46 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 144 ELEKTRA PURCHASE NO. 48 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 145 ELEKTRA PURCHASE NO. 54 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 146 ELEKTRA PURCHASE NO. 55 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 147 ELEKTRA PURCHASE NO. 56 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 148 ELEKTRA PURCHASE NO. 57 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 149 ELEKTRA PURCHASE NO. 63 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 150 ELEKTRA PURCHASE NO. 718 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 151 ELEKTRA PURCHASE NO. 911 LTD ST. HELIER ST. HELIER 4 UNICREDIT BANK AG .. (3) 152 EUROLEASE AMUN IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 153 EUROLEASE ANUBIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 154 EUROLEASE ISIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 155 EUROLEASE MARDUK IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 156 EUROLEASE RA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 157 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 158 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) BUDAPEST BUDAPEST 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital HUF 100,000,000 159 EUROPA INGATLANBEFEKTETESI ALAP (EUROPE REAL-ESTATE INVESTMENT FUND) BUDAPEST BUDAPEST 4 UNICREDIT BANK HUNGARY ZRT. .. (3) 160 EUROPEAN-OFFICE-FONDS MUNICH MUNICH 4 UNICREDIT BANK AG .. (3) 161 EXPANDA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 162 F-E MORTGAGES SRL (CARTOLARIZZAZIONE: F-E MORTGAGES 2005) VERONA VERONA 4 UNICREDIT SPA .. (3) 163 F-E MORTGAGES SRL (CARTOLARIZZAZIONE: F-E MORTGAGES SERIES 1 - 2003) VERONA VERONA 4 UNICREDIT SPA .. (3) 164 FACTORBANK AKTIENGESELLSCHAFT VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 3,000,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 112 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 137 ELEKTRA PURCHASE NO. 37 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 138 ELEKTRA PURCHASE NO. 38 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 139 ELEKTRA PURCHASE NO. 39 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 140 ELEKTRA PURCHASE NO. 41 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 141 ELEKTRA PURCHASE NO. 43 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 142 ELEKTRA PURCHASE NO. 44 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 143 ELEKTRA PURCHASE NO. 46 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 144 ELEKTRA PURCHASE NO. 48 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 145 ELEKTRA PURCHASE NO. 54 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 146 ELEKTRA PURCHASE NO. 55 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 147 ELEKTRA PURCHASE NO. 56 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 148 ELEKTRA PURCHASE NO. 57 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 149 ELEKTRA PURCHASE NO. 63 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 150 ELEKTRA PURCHASE NO. 718 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 151 ELEKTRA PURCHASE NO. 911 LTD ST. HELIER ST. HELIER 4 UNICREDIT BANK AG .. (3) 152 EUROLEASE AMUN IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 153 EUROLEASE ANUBIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 154 EUROLEASE ISIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 155 EUROLEASE MARDUK IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 156 EUROLEASE RA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 157 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 158 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) BUDAPEST BUDAPEST 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital HUF 100,000,000 159 EUROPA INGATLANBEFEKTETESI ALAP (EUROPE REAL-ESTATE INVESTMENT FUND) BUDAPEST BUDAPEST 4 UNICREDIT BANK HUNGARY ZRT. .. (3) 160 EUROPEAN-OFFICE-FONDS MUNICH MUNICH 4 UNICREDIT BANK AG .. (3) 161 EXPANDA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 162 F-E MORTGAGES SRL (CARTOLARIZZAZIONE: F-E MORTGAGES 2005) VERONA VERONA 4 UNICREDIT SPA .. (3) 163 F-E MORTGAGES SRL (CARTOLARIZZAZIONE: F-E MORTGAGES SERIES 1 - 2003) VERONA VERONA 4 UNICREDIT SPA .. (3) 164 FACTORBANK AKTIENGESELLSCHAFT VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 3,000,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 112 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 137 ELEKTRA PURCHASE NO. 37 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 138 ELEKTRA PURCHASE NO. 38 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 139 ELEKTRA PURCHASE NO. 39 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 140 ELEKTRA PURCHASE NO. 41 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 141 ELEKTRA PURCHASE NO. 43 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 142 ELEKTRA PURCHASE NO. 44 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 143 ELEKTRA PURCHASE NO. 46 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 144 ELEKTRA PURCHASE NO. 48 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 145 ELEKTRA PURCHASE NO. 54 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 146 ELEKTRA PURCHASE NO. 55 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 147 ELEKTRA PURCHASE NO. 56 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 148 ELEKTRA PURCHASE NO. 57 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 149 ELEKTRA PURCHASE NO. 63 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 150 ELEKTRA PURCHASE NO. 718 DAC DUBLIN DUBLIN 4 UNICREDIT BANK AG .. (3) 151 ELEKTRA PURCHASE NO. 911 LTD ST. HELIER ST. HELIER 4 UNICREDIT BANK AG .. (3) 152 EUROLEASE AMUN IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 153 EUROLEASE ANUBIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 154 EUROLEASE ISIS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 155 EUROLEASE MARDUK IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 156 EUROLEASE RA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 157 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 158 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) BUDAPEST BUDAPEST 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital HUF 100,000,000 159 EUROPA INGATLANBEFEKTETESI ALAP (EUROPE REAL-ESTATE INVESTMENT FUND) BUDAPEST BUDAPEST 4 UNICREDIT BANK HUNGARY ZRT. .. (3) 160 EUROPEAN-OFFICE-FONDS MUNICH MUNICH 4 UNICREDIT BANK AG .. (3) 161 EXPANDA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 162 F-E MORTGAGES SRL (CARTOLARIZZAZIONE: F-E MORTGAGES 2005) VERONA VERONA 4 UNICREDIT SPA .. (3) 163 F-E MORTGAGES SRL (CARTOLARIZZAZIONE: F-E MORTGAGES SERIES 1 - 2003) VERONA VERONA 4 UNICREDIT SPA .. (3) 164 FACTORBANK AKTIENGESELLSCHAFT VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 3,000,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 113 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 165 FINECO ASSET MANAGEMENT DESIGNATED ACTIVITY COMPANY DUBLIN DUBLIN 1 FINECOBANK SPA 100.00 Issued capital EUR 3,000,000 166 FINECO VERWALTUNG AG MUNICH MUNICH 1 UNICREDIT SPA 100.00 Issued capital EUR 50,000 167 FINECOBANK SPA MILAN REGGIO EMILIA 1 UNICREDIT SPA 35.35 Issued capital EUR 200,773,450 168 FINN ARSENAL LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.60 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 0.20 169 FMC LEASING INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 170 FMZ SAVARIA SZOLGALTATO KORLATOLT FELELOESSEG TARSASAG BUDAPEST BUDAPEST 1 UNICREDIT LEASING KFT 75.00 Issued capital HUF 3,000,000 171 FMZ SIGMA PROJEKTENTWICKLUNGS GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 172 FOLIA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 173 FONDIARIA LASA SPA ROME ROME 1 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA 100.00 Issued capital EUR 3,102,000 174 FOOD & MORE GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 100,000 175 FUGATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 36,336 176 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.80 Issued capital EUR 27,434 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 177 GEBAEUDELEASING GRUNDSTUCKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 178 GELDILUX-TS-2015 S.A. LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 179 GEMEINDELEASING GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 37.30 Issued capital EUR 18,333 CALG IMMOBILIEN LEASING GMBH 37.50 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 180 GEMMA VERWALTUNGSGESELLSCHAFT MBH & CO. VERMIETUNGS KG PULLACH PULLACH 4 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH .. (3) Issued capital EUR 68,272,038 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 113 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 165 FINECO ASSET MANAGEMENT DESIGNATED ACTIVITY COMPANY DUBLIN DUBLIN 1 FINECOBANK SPA 100.00 Issued capital EUR 3,000,000 166 FINECO VERWALTUNG AG MUNICH MUNICH 1 UNICREDIT SPA 100.00 Issued capital EUR 50,000 167 FINECOBANK SPA MILAN REGGIO EMILIA 1 UNICREDIT SPA 35.35 Issued capital EUR 200,773,450 168 FINN ARSENAL LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.60 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 0.20 169 FMC LEASING INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 170 FMZ SAVARIA SZOLGALTATO KORLATOLT FELELOESSEG TARSASAG BUDAPEST BUDAPEST 1 UNICREDIT LEASING KFT 75.00 Issued capital HUF 3,000,000 171 FMZ SIGMA PROJEKTENTWICKLUNGS GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 172 FOLIA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 173 FONDIARIA LASA SPA ROME ROME 1 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA 100.00 Issued capital EUR 3,102,000 174 FOOD & MORE GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 100,000 175 FUGATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 36,336 176 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.80 Issued capital EUR 27,434 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 177 GEBAEUDELEASING GRUNDSTUCKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 178 GELDILUX-TS-2015 S.A. LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 179 GEMEINDELEASING GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 37.30 Issued capital EUR 18,333 CALG IMMOBILIEN LEASING GMBH 37.50 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 180 GEMMA VERWALTUNGSGESELLSCHAFT MBH & CO. VERMIETUNGS KG PULLACH PULLACH 4 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH .. (3) Issued capital EUR 68,272,038 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 113 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 165 FINECO ASSET MANAGEMENT DESIGNATED ACTIVITY COMPANY DUBLIN DUBLIN 1 FINECOBANK SPA 100.00 Issued capital EUR 3,000,000 166 FINECO VERWALTUNG AG MUNICH MUNICH 1 UNICREDIT SPA 100.00 Issued capital EUR 50,000 167 FINECOBANK SPA MILAN REGGIO EMILIA 1 UNICREDIT SPA 35.35 Issued capital EUR 200,773,450 168 FINN ARSENAL LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.60 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 0.20 169 FMC LEASING INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 170 FMZ SAVARIA SZOLGALTATO KORLATOLT FELELOESSEG TARSASAG BUDAPEST BUDAPEST 1 UNICREDIT LEASING KFT 75.00 Issued capital HUF 3,000,000 171 FMZ SIGMA PROJEKTENTWICKLUNGS GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 172 FOLIA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 173 FONDIARIA LASA SPA ROME ROME 1 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA 100.00 Issued capital EUR 3,102,000 174 FOOD & MORE GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 100,000 175 FUGATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 36,336 176 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.80 Issued capital EUR 27,434 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 177 GEBAEUDELEASING GRUNDSTUCKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 178 GELDILUX-TS-2015 S.A. LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 179 GEMEINDELEASING GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 37.30 Issued capital EUR 18,333 CALG IMMOBILIEN LEASING GMBH 37.50 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 180 GEMMA VERWALTUNGSGESELLSCHAFT MBH & CO. VERMIETUNGS KG PULLACH PULLACH 4 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH .. (3) Issued capital EUR 68,272,038 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 113 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 165 FINECO ASSET MANAGEMENT DESIGNATED ACTIVITY COMPANY DUBLIN DUBLIN 1 FINECOBANK SPA 100.00 Issued capital EUR 3,000,000 166 FINECO VERWALTUNG AG MUNICH MUNICH 1 UNICREDIT SPA 100.00 Issued capital EUR 50,000 167 FINECOBANK SPA MILAN REGGIO EMILIA 1 UNICREDIT SPA 35.35 Issued capital EUR 200,773,450 168 FINN ARSENAL LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.60 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 0.20 169 FMC LEASING INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 170 FMZ SAVARIA SZOLGALTATO KORLATOLT FELELOESSEG TARSASAG BUDAPEST BUDAPEST 1 UNICREDIT LEASING KFT 75.00 Issued capital HUF 3,000,000 171 FMZ SIGMA PROJEKTENTWICKLUNGS GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 172 FOLIA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 173 FONDIARIA LASA SPA ROME ROME 1 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA 100.00 Issued capital EUR 3,102,000 174 FOOD & MORE GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 100,000 175 FUGATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 36,336 176 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.80 Issued capital EUR 27,434 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 177 GEBAEUDELEASING GRUNDSTUCKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 178 GELDILUX-TS-2015 S.A. LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 179 GEMEINDELEASING GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 37.30 Issued capital EUR 18,333 CALG IMMOBILIEN LEASING GMBH 37.50 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 180 GEMMA VERWALTUNGSGESELLSCHAFT MBH & CO. VERMIETUNGS KG PULLACH PULLACH 4 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH .. (3) Issued capital EUR 68,272,038 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 113 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 165 FINECO ASSET MANAGEMENT DESIGNATED ACTIVITY COMPANY DUBLIN DUBLIN 1 FINECOBANK SPA 100.00 Issued capital EUR 3,000,000 166 FINECO VERWALTUNG AG MUNICH MUNICH 1 UNICREDIT SPA 100.00 Issued capital EUR 50,000 167 FINECOBANK SPA MILAN REGGIO EMILIA 1 UNICREDIT SPA 35.35 Issued capital EUR 200,773,450 168 FINN ARSENAL LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.60 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 0.20 169 FMC LEASING INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 170 FMZ SAVARIA SZOLGALTATO KORLATOLT FELELOESSEG TARSASAG BUDAPEST BUDAPEST 1 UNICREDIT LEASING KFT 75.00 Issued capital HUF 3,000,000 171 FMZ SIGMA PROJEKTENTWICKLUNGS GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 172 FOLIA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 173 FONDIARIA LASA SPA ROME ROME 1 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA 100.00 Issued capital EUR 3,102,000 174 FOOD & MORE GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 100,000 175 FUGATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 36,336 176 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 99.80 Issued capital EUR 27,434 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 177 GEBAEUDELEASING GRUNDSTUCKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 178 GELDILUX-TS-2015 S.A. LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 179 GEMEINDELEASING GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 37.30 Issued capital EUR 18,333 CALG IMMOBILIEN LEASING GMBH 37.50 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 180 GEMMA VERWALTUNGSGESELLSCHAFT MBH & CO. VERMIETUNGS KG PULLACH PULLACH 4 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH .. (3) Issued capital EUR 68,272,038 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 114 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 181 GENERAL LOGISTIC SOLUTIONS LLC MOSCOW MOSCOW 1 UCTAM RU LIMITED LIABILITY COMPANY 100.00 Issued capital RUB 2,342,309,444 182 GRUNDSTUCKSAKTIENGESELLSCHAFT AM POTSDAMER PLATZ (HAUS VATERLAND) MUNICH MUNICH 1 TERRENO GRUNDSTUCKSVERWALTUNG GMBH & CO. ENTWICKLUNGS- UND FINANZIERUNGSVERMITTLUNGS-KG 98.24 Issued capital EUR 4,086,245 183 GRUNDSTUCKSGESELLSCHAFT SIMON BESCHRANKT HAFTENDE KOMMANDITGESELLSCHAF MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 51,500 184 GRUNDSTUECKSVERWALTUNG LINZ-MITTE GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 185 H.F.S. IMMOBILIENFONDS GMBH EBERSBERG EBERSBERG 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 25,565 186 H.F.S. LEASINGFONDS DEUTSCHLAND 1 GMBH & CO. KG (IMMOBILIENLEASING) MUNICH MUNICH 1 BIL IMMOBILIEN FONDS GMBH .. Issued capital EUR 97,154,824 HVB IMMOBILIEN AG 99.43 187 H.F.S. LEASINGFONDS DEUTSCHLAND 7 GMBH & CO. KG MUNICH MUNICH 4 HVB PROJEKT GMBH .. (3) Issued capital EUR 56,605,126 WEALTHCAP REAL ESTATE MANAGEMENT GMBH .. 188 H.F.S. LEASINGFONDS GMBH EBERSBERG EBERSBERG 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 26,000 189 HAMZO PROJECT DEVELOPMENT I GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 35,000 UNICREDIT PEGASUS LEASING GMBH 90.00 190 HAWA GRUNDSTUCKS GMBH & CO. OHG HOTELVERWALTUNG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 99.50 Issued capital EUR 276,200 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 0.50 191 HAWA GRUNDSTUCKS GMBH & CO. OHG IMMOBILIENVERWALTUNG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 99.50 Issued capital EUR 54,300 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 0.50 192 HELICONUS SRL (CARTOLARIZZAZIONE: HELICONUS) VERONA VERONA 4 UNICREDIT SPA .. (3) 193 HERKU LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 194 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 25,000 195 HONEU LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 196 HUMAN RESOURCES SERVICE AND DEVELOPMENT GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,168 197 HVB CAPITAL LLC WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 10,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 114 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 181 GENERAL LOGISTIC SOLUTIONS LLC MOSCOW MOSCOW 1 UCTAM RU LIMITED LIABILITY COMPANY 100.00 Issued capital RUB 2,342,309,444 182 GRUNDSTUCKSAKTIENGESELLSCHAFT AM POTSDAMER PLATZ (HAUS VATERLAND) MUNICH MUNICH 1 TERRENO GRUNDSTUCKSVERWALTUNG GMBH & CO. ENTWICKLUNGS- UND FINANZIERUNGSVERMITTLUNGS-KG 98.24 Issued capital EUR 4,086,245 183 GRUNDSTUCKSGESELLSCHAFT SIMON BESCHRANKT HAFTENDE KOMMANDITGESELLSCHAF MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 51,500 184 GRUNDSTUECKSVERWALTUNG LINZ-MITTE GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 185 H.F.S. IMMOBILIENFONDS GMBH EBERSBERG EBERSBERG 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 25,565 186 H.F.S. LEASINGFONDS DEUTSCHLAND 1 GMBH & CO. KG (IMMOBILIENLEASING) MUNICH MUNICH 1 BIL IMMOBILIEN FONDS GMBH .. Issued capital EUR 97,154,824 HVB IMMOBILIEN AG 99.43 187 H.F.S. LEASINGFONDS DEUTSCHLAND 7 GMBH & CO. KG MUNICH MUNICH 4 HVB PROJEKT GMBH .. (3) Issued capital EUR 56,605,126 WEALTHCAP REAL ESTATE MANAGEMENT GMBH .. 188 H.F.S. LEASINGFONDS GMBH EBERSBERG EBERSBERG 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 26,000 189 HAMZO PROJECT DEVELOPMENT I GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 35,000 UNICREDIT PEGASUS LEASING GMBH 90.00 190 HAWA GRUNDSTUCKS GMBH & CO. OHG HOTELVERWALTUNG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 99.50 Issued capital EUR 276,200 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 0.50 191 HAWA GRUNDSTUCKS GMBH & CO. OHG IMMOBILIENVERWALTUNG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 99.50 Issued capital EUR 54,300 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 0.50 192 HELICONUS SRL (CARTOLARIZZAZIONE: HELICONUS) VERONA VERONA 4 UNICREDIT SPA .. (3) 193 HERKU LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 194 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 25,000 195 HONEU LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 196 HUMAN RESOURCES SERVICE AND DEVELOPMENT GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,168 197 HVB CAPITAL LLC WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 10,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 114 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 181 GENERAL LOGISTIC SOLUTIONS LLC MOSCOW MOSCOW 1 UCTAM RU LIMITED LIABILITY COMPANY 100.00 Issued capital RUB 2,342,309,444 182 GRUNDSTUCKSAKTIENGESELLSCHAFT AM POTSDAMER PLATZ (HAUS VATERLAND) MUNICH MUNICH 1 TERRENO GRUNDSTUCKSVERWALTUNG GMBH & CO. ENTWICKLUNGS- UND FINANZIERUNGSVERMITTLUNGS-KG 98.24 Issued capital EUR 4,086,245 183 GRUNDSTUCKSGESELLSCHAFT SIMON BESCHRANKT HAFTENDE KOMMANDITGESELLSCHAF MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 51,500 184 GRUNDSTUECKSVERWALTUNG LINZ-MITTE GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 185 H.F.S. IMMOBILIENFONDS GMBH EBERSBERG EBERSBERG 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 25,565 186 H.F.S. LEASINGFONDS DEUTSCHLAND 1 GMBH & CO. KG (IMMOBILIENLEASING) MUNICH MUNICH 1 BIL IMMOBILIEN FONDS GMBH .. Issued capital EUR 97,154,824 HVB IMMOBILIEN AG 99.43 187 H.F.S. LEASINGFONDS DEUTSCHLAND 7 GMBH & CO. KG MUNICH MUNICH 4 HVB PROJEKT GMBH .. (3) Issued capital EUR 56,605,126 WEALTHCAP REAL ESTATE MANAGEMENT GMBH .. 188 H.F.S. LEASINGFONDS GMBH EBERSBERG EBERSBERG 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 26,000 189 HAMZO PROJECT DEVELOPMENT I GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 35,000 UNICREDIT PEGASUS LEASING GMBH 90.00 190 HAWA GRUNDSTUCKS GMBH & CO. OHG HOTELVERWALTUNG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 99.50 Issued capital EUR 276,200 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 0.50 191 HAWA GRUNDSTUCKS GMBH & CO. OHG IMMOBILIENVERWALTUNG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 99.50 Issued capital EUR 54,300 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 0.50 192 HELICONUS SRL (CARTOLARIZZAZIONE: HELICONUS) VERONA VERONA 4 UNICREDIT SPA .. (3) 193 HERKU LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 194 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 25,000 195 HONEU LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 196 HUMAN RESOURCES SERVICE AND DEVELOPMENT GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,168 197 HVB CAPITAL LLC WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 10,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 114 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 181 GENERAL LOGISTIC SOLUTIONS LLC MOSCOW MOSCOW 1 UCTAM RU LIMITED LIABILITY COMPANY 100.00 Issued capital RUB 2,342,309,444 182 GRUNDSTUCKSAKTIENGESELLSCHAFT AM POTSDAMER PLATZ (HAUS VATERLAND) MUNICH MUNICH 1 TERRENO GRUNDSTUCKSVERWALTUNG GMBH & CO. ENTWICKLUNGS- UND FINANZIERUNGSVERMITTLUNGS-KG 98.24 Issued capital EUR 4,086,245 183 GRUNDSTUCKSGESELLSCHAFT SIMON BESCHRANKT HAFTENDE KOMMANDITGESELLSCHAF MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 51,500 184 GRUNDSTUECKSVERWALTUNG LINZ-MITTE GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 185 H.F.S. IMMOBILIENFONDS GMBH EBERSBERG EBERSBERG 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 25,565 186 H.F.S. LEASINGFONDS DEUTSCHLAND 1 GMBH & CO. KG (IMMOBILIENLEASING) MUNICH MUNICH 1 BIL IMMOBILIEN FONDS GMBH .. Issued capital EUR 97,154,824 HVB IMMOBILIEN AG 99.43 187 H.F.S. LEASINGFONDS DEUTSCHLAND 7 GMBH & CO. KG MUNICH MUNICH 4 HVB PROJEKT GMBH .. (3) Issued capital EUR 56,605,126 WEALTHCAP REAL ESTATE MANAGEMENT GMBH .. 188 H.F.S. LEASINGFONDS GMBH EBERSBERG EBERSBERG 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 26,000 189 HAMZO PROJECT DEVELOPMENT I GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 35,000 UNICREDIT PEGASUS LEASING GMBH 90.00 190 HAWA GRUNDSTUCKS GMBH & CO. OHG HOTELVERWALTUNG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 99.50 Issued capital EUR 276,200 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 0.50 191 HAWA GRUNDSTUCKS GMBH & CO. OHG IMMOBILIENVERWALTUNG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 99.50 Issued capital EUR 54,300 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 0.50 192 HELICONUS SRL (CARTOLARIZZAZIONE: HELICONUS) VERONA VERONA 4 UNICREDIT SPA .. (3) 193 HERKU LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 194 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 25,000 195 HONEU LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 196 HUMAN RESOURCES SERVICE AND DEVELOPMENT GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,168 197 HVB CAPITAL LLC WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 10,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 114 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 181 GENERAL LOGISTIC SOLUTIONS LLC MOSCOW MOSCOW 1 UCTAM RU LIMITED LIABILITY COMPANY 100.00 Issued capital RUB 2,342,309,444 182 GRUNDSTUCKSAKTIENGESELLSCHAFT AM POTSDAMER PLATZ (HAUS VATERLAND) MUNICH MUNICH 1 TERRENO GRUNDSTUCKSVERWALTUNG GMBH & CO. ENTWICKLUNGS- UND FINANZIERUNGSVERMITTLUNGS-KG 98.24 Issued capital EUR 4,086,245 183 GRUNDSTUCKSGESELLSCHAFT SIMON BESCHRANKT HAFTENDE KOMMANDITGESELLSCHAF MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 51,500 184 GRUNDSTUECKSVERWALTUNG LINZ-MITTE GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 185 H.F.S. IMMOBILIENFONDS GMBH EBERSBERG EBERSBERG 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 25,565 186 H.F.S. LEASINGFONDS DEUTSCHLAND 1 GMBH & CO. KG (IMMOBILIENLEASING) MUNICH MUNICH 1 BIL IMMOBILIEN FONDS GMBH .. Issued capital EUR 97,154,824 HVB IMMOBILIEN AG 99.43 187 H.F.S. LEASINGFONDS DEUTSCHLAND 7 GMBH & CO. KG MUNICH MUNICH 4 HVB PROJEKT GMBH .. (3) Issued capital EUR 56,605,126 WEALTHCAP REAL ESTATE MANAGEMENT GMBH .. 188 H.F.S. LEASINGFONDS GMBH EBERSBERG EBERSBERG 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 26,000 189 HAMZO PROJECT DEVELOPMENT I GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 35,000 UNICREDIT PEGASUS LEASING GMBH 90.00 190 HAWA GRUNDSTUCKS GMBH & CO. OHG HOTELVERWALTUNG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 99.50 Issued capital EUR 276,200 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 0.50 191 HAWA GRUNDSTUCKS GMBH & CO. OHG IMMOBILIENVERWALTUNG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 99.50 Issued capital EUR 54,300 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 0.50 192 HELICONUS SRL (CARTOLARIZZAZIONE: HELICONUS) VERONA VERONA 4 UNICREDIT SPA .. (3) 193 HERKU LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 194 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 25,000 195 HONEU LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 196 HUMAN RESOURCES SERVICE AND DEVELOPMENT GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 18,168 197 HVB CAPITAL LLC WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 10,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 115 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 198 HVB CAPITAL LLC II WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 13 199 HVB CAPITAL LLC III WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 10,000 200 HVB CAPITAL PARTNERS AG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 2,500,000 201 HVB FUNDING TRUST WILMINGTON WILMINGTON 4 UNICREDIT BANK AG .. (3) 202 HVB FUNDING TRUST II WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 2,298 203 HVB FUNDING TRUST III WILMINGTON WILMINGTON 4 UNICREDIT BANK AG .. (3) 204 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 10,000,000 205 HVB HONG KONG LIMITED HONG KONG HONG KONG 1 UNICREDIT BANK AG 100.00 Issued capital USD 129 206 HVB IMMOBILIEN AG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 520,000 207 HVB LEASING CZECH REPUBLIC S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 49,632,000 208 HVB PROJEKT GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 24,543,000 UNICREDIT BANK AG 6.00 209 HVB SECUR GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 50,000 210 HVB TECTA GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 1,534,000 UNICREDIT BANK AG 6.00 211 HVB VERWA 4 GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 26,000 212 HVB VERWA 4.4 GMBH MUNICH MUNICH 1 HVB VERWA 4 GMBH 100.00 Issued capital EUR 25,000 213 HVB-LEASING JUPITER INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 214 HVB-LEASING ROCCA INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 215 HVZ GMBH & CO. OBJEKT KG MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 100.00 Issued capital EUR 148,090,766 216 HYPO-BANK VERWALTUNGSZENTRUM GMBH & CO. KG OBJEKT ARABELLASTRASSE MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 25,600 217 IDEA FIMIT SGR FONDO SIGMA IMMOBILIARE ROME ROME 4 UNICREDIT SPA .. (3) Issued capital EUR 180,100,960 218 IMMOBILIEN HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 36,336 219 IMMOBILIEN RATING GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 61.00 Issued capital EUR 50,000 UNICREDIT BANK AUSTRIA AG 19.00 UNICREDIT LEASING (AUSTRIA) GMBH 19.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 115 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 198 HVB CAPITAL LLC II WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 13 199 HVB CAPITAL LLC III WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 10,000 200 HVB CAPITAL PARTNERS AG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 2,500,000 201 HVB FUNDING TRUST WILMINGTON WILMINGTON 4 UNICREDIT BANK AG .. (3) 202 HVB FUNDING TRUST II WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 2,298 203 HVB FUNDING TRUST III WILMINGTON WILMINGTON 4 UNICREDIT BANK AG .. (3) 204 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 10,000,000 205 HVB HONG KONG LIMITED HONG KONG HONG KONG 1 UNICREDIT BANK AG 100.00 Issued capital USD 129 206 HVB IMMOBILIEN AG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 520,000 207 HVB LEASING CZECH REPUBLIC S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 49,632,000 208 HVB PROJEKT GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 24,543,000 UNICREDIT BANK AG 6.00 209 HVB SECUR GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 50,000 210 HVB TECTA GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 1,534,000 UNICREDIT BANK AG 6.00 211 HVB VERWA 4 GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 26,000 212 HVB VERWA 4.4 GMBH MUNICH MUNICH 1 HVB VERWA 4 GMBH 100.00 Issued capital EUR 25,000 213 HVB-LEASING JUPITER INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 214 HVB-LEASING ROCCA INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 215 HVZ GMBH & CO. OBJEKT KG MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 100.00 Issued capital EUR 148,090,766 216 HYPO-BANK VERWALTUNGSZENTRUM GMBH & CO. KG OBJEKT ARABELLASTRASSE MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 25,600 217 IDEA FIMIT SGR FONDO SIGMA IMMOBILIARE ROME ROME 4 UNICREDIT SPA .. (3) Issued capital EUR 180,100,960 218 IMMOBILIEN HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 36,336 219 IMMOBILIEN RATING GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 61.00 Issued capital EUR 50,000 UNICREDIT BANK AUSTRIA AG 19.00 UNICREDIT LEASING (AUSTRIA) GMBH 19.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 115 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 198 HVB CAPITAL LLC II WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 13 199 HVB CAPITAL LLC III WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 10,000 200 HVB CAPITAL PARTNERS AG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 2,500,000 201 HVB FUNDING TRUST WILMINGTON WILMINGTON 4 UNICREDIT BANK AG .. (3) 202 HVB FUNDING TRUST II WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 2,298 203 HVB FUNDING TRUST III WILMINGTON WILMINGTON 4 UNICREDIT BANK AG .. (3) 204 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 10,000,000 205 HVB HONG KONG LIMITED HONG KONG HONG KONG 1 UNICREDIT BANK AG 100.00 Issued capital USD 129 206 HVB IMMOBILIEN AG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 520,000 207 HVB LEASING CZECH REPUBLIC S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 49,632,000 208 HVB PROJEKT GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 24,543,000 UNICREDIT BANK AG 6.00 209 HVB SECUR GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 50,000 210 HVB TECTA GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 1,534,000 UNICREDIT BANK AG 6.00 211 HVB VERWA 4 GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 26,000 212 HVB VERWA 4.4 GMBH MUNICH MUNICH 1 HVB VERWA 4 GMBH 100.00 Issued capital EUR 25,000 213 HVB-LEASING JUPITER INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 214 HVB-LEASING ROCCA INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 215 HVZ GMBH & CO. OBJEKT KG MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 100.00 Issued capital EUR 148,090,766 216 HYPO-BANK VERWALTUNGSZENTRUM GMBH & CO. KG OBJEKT ARABELLASTRASSE MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 25,600 217 IDEA FIMIT SGR FONDO SIGMA IMMOBILIARE ROME ROME 4 UNICREDIT SPA .. (3) Issued capital EUR 180,100,960 218 IMMOBILIEN HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 36,336 219 IMMOBILIEN RATING GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 61.00 Issued capital EUR 50,000 UNICREDIT BANK AUSTRIA AG 19.00 UNICREDIT LEASING (AUSTRIA) GMBH 19.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 115 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 198 HVB CAPITAL LLC II WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 13 199 HVB CAPITAL LLC III WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 10,000 200 HVB CAPITAL PARTNERS AG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 2,500,000 201 HVB FUNDING TRUST WILMINGTON WILMINGTON 4 UNICREDIT BANK AG .. (3) 202 HVB FUNDING TRUST II WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 2,298 203 HVB FUNDING TRUST III WILMINGTON WILMINGTON 4 UNICREDIT BANK AG .. (3) 204 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 10,000,000 205 HVB HONG KONG LIMITED HONG KONG HONG KONG 1 UNICREDIT BANK AG 100.00 Issued capital USD 129 206 HVB IMMOBILIEN AG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 520,000 207 HVB LEASING CZECH REPUBLIC S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 49,632,000 208 HVB PROJEKT GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 24,543,000 UNICREDIT BANK AG 6.00 209 HVB SECUR GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 50,000 210 HVB TECTA GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 1,534,000 UNICREDIT BANK AG 6.00 211 HVB VERWA 4 GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 26,000 212 HVB VERWA 4.4 GMBH MUNICH MUNICH 1 HVB VERWA 4 GMBH 100.00 Issued capital EUR 25,000 213 HVB-LEASING JUPITER INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 214 HVB-LEASING ROCCA INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 215 HVZ GMBH & CO. OBJEKT KG MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 100.00 Issued capital EUR 148,090,766 216 HYPO-BANK VERWALTUNGSZENTRUM GMBH & CO. KG OBJEKT ARABELLASTRASSE MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 25,600 217 IDEA FIMIT SGR FONDO SIGMA IMMOBILIARE ROME ROME 4 UNICREDIT SPA .. (3) Issued capital EUR 180,100,960 218 IMMOBILIEN HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 36,336 219 IMMOBILIEN RATING GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 61.00 Issued capital EUR 50,000 UNICREDIT BANK AUSTRIA AG 19.00 UNICREDIT LEASING (AUSTRIA) GMBH 19.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 115 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 198 HVB CAPITAL LLC II WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 13 199 HVB CAPITAL LLC III WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 10,000 200 HVB CAPITAL PARTNERS AG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 2,500,000 201 HVB FUNDING TRUST WILMINGTON WILMINGTON 4 UNICREDIT BANK AG .. (3) 202 HVB FUNDING TRUST II WILMINGTON WILMINGTON 1 UNICREDIT BANK AG 100.00 Issued capital USD 2,298 203 HVB FUNDING TRUST III WILMINGTON WILMINGTON 4 UNICREDIT BANK AG .. (3) 204 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 10,000,000 205 HVB HONG KONG LIMITED HONG KONG HONG KONG 1 UNICREDIT BANK AG 100.00 Issued capital USD 129 206 HVB IMMOBILIEN AG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 520,000 207 HVB LEASING CZECH REPUBLIC S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 49,632,000 208 HVB PROJEKT GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 24,543,000 UNICREDIT BANK AG 6.00 209 HVB SECUR GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 50,000 210 HVB TECTA GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 1,534,000 UNICREDIT BANK AG 6.00 211 HVB VERWA 4 GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 26,000 212 HVB VERWA 4.4 GMBH MUNICH MUNICH 1 HVB VERWA 4 GMBH 100.00 Issued capital EUR 25,000 213 HVB-LEASING JUPITER INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 214 HVB-LEASING ROCCA INGATLANHASZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 215 HVZ GMBH & CO. OBJEKT KG MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 100.00 Issued capital EUR 148,090,766 216 HYPO-BANK VERWALTUNGSZENTRUM GMBH & CO. KG OBJEKT ARABELLASTRASSE MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 25,600 217 IDEA FIMIT SGR FONDO SIGMA IMMOBILIARE ROME ROME 4 UNICREDIT SPA .. (3) Issued capital EUR 180,100,960 218 IMMOBILIEN HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 36,336 219 IMMOBILIEN RATING GMBH VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 61.00 Issued capital EUR 50,000 UNICREDIT BANK AUSTRIA AG 19.00 UNICREDIT LEASING (AUSTRIA) GMBH 19.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 116 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 220 IMMOBILIENLEASING GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 221 INTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 93.85 Issued capital EUR 26,000 UNICREDIT BANK AG 6.15 222 INTRO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,336 223 ISB UNIVERSALE BAU GMBH BERLIN BERLIN 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 6,288,890 224 ISTITUTO IMMOBILIARE DI CATANIA SPA CATANIA CATANIA 1 CAPITAL DEV SPA 93.92 Issued capital EUR 7,700,000 UNICREDIT SPA 1.12 225 ISTITUTO PER L'EDILIZIA POPOLARE DI SAN BERILLO SRL IN LIQUIDAZIONE CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 99.90 Issued capital EUR 154,800 226 JAUSERN-LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,336 227 KAISERWASSER BAU- UND ERRICHTUNGS GMBH UND CO OG VIENNA VIENNA 1 RAMSES-IMMOBILIENHOLDING GMBH .. 100.00 Issued capital EUR 36,336 UNICREDIT BANK AUSTRIA AG 99.80 0.00 228 KLEA ZS-LIEGENSCHAFTSVERMIETUNG G.M.B.H. VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,336 UNICREDIT BANK AUSTRIA AG 99.80 229 KSG KARTEN-VERRECHNUNGS- UND SERVICEGESELLSCHAFT M.B.H. VIENNA VIENNA 1 CARD COMPLETE SERVICE BANK AG 100.00 Issued capital EUR 44,000 230 KUNSTHAUS LEASING GMBH VIENNA VIENNA 1 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 5.00 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 231 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 232 LAGERMAX LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 233 LAGEV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 234 LARGE CORPORATE ONE SRL (CARTOLARIZZAZIONE: LARGE CORPORATE ONE) VERONA VERONA 4 UNICREDIT SPA .. (3) 235 LARGO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 VAPE COMMUNA LEASINGGESELLSCHAFT M.B.H. 98.80 236 LEASFINANZ ALPHA ASSETVERMIETUNG GMBH VIENNA VIENNA 1 LEASFINANZ GMBH 100.00 Issued capital EUR 35,000 237 LEASFINANZ BANK GMBH VIENNA VIENNA 1 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH 100.00 Issued capital EUR 36,500 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 116 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 220 IMMOBILIENLEASING GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 221 INTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 93.85 Issued capital EUR 26,000 UNICREDIT BANK AG 6.15 222 INTRO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,336 223 ISB UNIVERSALE BAU GMBH BERLIN BERLIN 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 6,288,890 224 ISTITUTO IMMOBILIARE DI CATANIA SPA CATANIA CATANIA 1 CAPITAL DEV SPA 93.92 Issued capital EUR 7,700,000 UNICREDIT SPA 1.12 225 ISTITUTO PER L'EDILIZIA POPOLARE DI SAN BERILLO SRL IN LIQUIDAZIONE CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 99.90 Issued capital EUR 154,800 226 JAUSERN-LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,336 227 KAISERWASSER BAU- UND ERRICHTUNGS GMBH UND CO OG VIENNA VIENNA 1 RAMSES-IMMOBILIENHOLDING GMBH .. 100.00 Issued capital EUR 36,336 UNICREDIT BANK AUSTRIA AG 99.80 0.00 228 KLEA ZS-LIEGENSCHAFTSVERMIETUNG G.M.B.H. VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,336 UNICREDIT BANK AUSTRIA AG 99.80 229 KSG KARTEN-VERRECHNUNGS- UND SERVICEGESELLSCHAFT M.B.H. VIENNA VIENNA 1 CARD COMPLETE SERVICE BANK AG 100.00 Issued capital EUR 44,000 230 KUNSTHAUS LEASING GMBH VIENNA VIENNA 1 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 5.00 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 231 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 232 LAGERMAX LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 233 LAGEV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 234 LARGE CORPORATE ONE SRL (CARTOLARIZZAZIONE: LARGE CORPORATE ONE) VERONA VERONA 4 UNICREDIT SPA .. (3) 235 LARGO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 VAPE COMMUNA LEASINGGESELLSCHAFT M.B.H. 98.80 236 LEASFINANZ ALPHA ASSETVERMIETUNG GMBH VIENNA VIENNA 1 LEASFINANZ GMBH 100.00 Issued capital EUR 35,000 237 LEASFINANZ BANK GMBH VIENNA VIENNA 1 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH 100.00 Issued capital EUR 36,500 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 116 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 220 IMMOBILIENLEASING GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 221 INTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 93.85 Issued capital EUR 26,000 UNICREDIT BANK AG 6.15 222 INTRO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,336 223 ISB UNIVERSALE BAU GMBH BERLIN BERLIN 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 6,288,890 224 ISTITUTO IMMOBILIARE DI CATANIA SPA CATANIA CATANIA 1 CAPITAL DEV SPA 93.92 Issued capital EUR 7,700,000 UNICREDIT SPA 1.12 225 ISTITUTO PER L'EDILIZIA POPOLARE DI SAN BERILLO SRL IN LIQUIDAZIONE CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 99.90 Issued capital EUR 154,800 226 JAUSERN-LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,336 227 KAISERWASSER BAU- UND ERRICHTUNGS GMBH UND CO OG VIENNA VIENNA 1 RAMSES-IMMOBILIENHOLDING GMBH .. 100.00 Issued capital EUR 36,336 UNICREDIT BANK AUSTRIA AG 99.80 0.00 228 KLEA ZS-LIEGENSCHAFTSVERMIETUNG G.M.B.H. VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,336 UNICREDIT BANK AUSTRIA AG 99.80 229 KSG KARTEN-VERRECHNUNGS- UND SERVICEGESELLSCHAFT M.B.H. VIENNA VIENNA 1 CARD COMPLETE SERVICE BANK AG 100.00 Issued capital EUR 44,000 230 KUNSTHAUS LEASING GMBH VIENNA VIENNA 1 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 5.00 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 231 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 232 LAGERMAX LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 233 LAGEV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 234 LARGE CORPORATE ONE SRL (CARTOLARIZZAZIONE: LARGE CORPORATE ONE) VERONA VERONA 4 UNICREDIT SPA .. (3) 235 LARGO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 VAPE COMMUNA LEASINGGESELLSCHAFT M.B.H. 98.80 236 LEASFINANZ ALPHA ASSETVERMIETUNG GMBH VIENNA VIENNA 1 LEASFINANZ GMBH 100.00 Issued capital EUR 35,000 237 LEASFINANZ BANK GMBH VIENNA VIENNA 1 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH 100.00 Issued capital EUR 36,500 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 116 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 220 IMMOBILIENLEASING GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 221 INTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 93.85 Issued capital EUR 26,000 UNICREDIT BANK AG 6.15 222 INTRO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,336 223 ISB UNIVERSALE BAU GMBH BERLIN BERLIN 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 6,288,890 224 ISTITUTO IMMOBILIARE DI CATANIA SPA CATANIA CATANIA 1 CAPITAL DEV SPA 93.92 Issued capital EUR 7,700,000 UNICREDIT SPA 1.12 225 ISTITUTO PER L'EDILIZIA POPOLARE DI SAN BERILLO SRL IN LIQUIDAZIONE CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 99.90 Issued capital EUR 154,800 226 JAUSERN-LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,336 227 KAISERWASSER BAU- UND ERRICHTUNGS GMBH UND CO OG VIENNA VIENNA 1 RAMSES-IMMOBILIENHOLDING GMBH .. 100.00 Issued capital EUR 36,336 UNICREDIT BANK AUSTRIA AG 99.80 0.00 228 KLEA ZS-LIEGENSCHAFTSVERMIETUNG G.M.B.H. VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,336 UNICREDIT BANK AUSTRIA AG 99.80 229 KSG KARTEN-VERRECHNUNGS- UND SERVICEGESELLSCHAFT M.B.H. VIENNA VIENNA 1 CARD COMPLETE SERVICE BANK AG 100.00 Issued capital EUR 44,000 230 KUNSTHAUS LEASING GMBH VIENNA VIENNA 1 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 5.00 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 231 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 232 LAGERMAX LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 233 LAGEV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 234 LARGE CORPORATE ONE SRL (CARTOLARIZZAZIONE: LARGE CORPORATE ONE) VERONA VERONA 4 UNICREDIT SPA .. (3) 235 LARGO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 VAPE COMMUNA LEASINGGESELLSCHAFT M.B.H. 98.80 236 LEASFINANZ ALPHA ASSETVERMIETUNG GMBH VIENNA VIENNA 1 LEASFINANZ GMBH 100.00 Issued capital EUR 35,000 237 LEASFINANZ BANK GMBH VIENNA VIENNA 1 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH 100.00 Issued capital EUR 36,500 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 116 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 220 IMMOBILIENLEASING GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 221 INTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 93.85 Issued capital EUR 26,000 UNICREDIT BANK AG 6.15 222 INTRO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,336 223 ISB UNIVERSALE BAU GMBH BERLIN BERLIN 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 6,288,890 224 ISTITUTO IMMOBILIARE DI CATANIA SPA CATANIA CATANIA 1 CAPITAL DEV SPA 93.92 Issued capital EUR 7,700,000 UNICREDIT SPA 1.12 225 ISTITUTO PER L'EDILIZIA POPOLARE DI SAN BERILLO SRL IN LIQUIDAZIONE CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 99.90 Issued capital EUR 154,800 226 JAUSERN-LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,336 227 KAISERWASSER BAU- UND ERRICHTUNGS GMBH UND CO OG VIENNA VIENNA 1 RAMSES-IMMOBILIENHOLDING GMBH .. 100.00 Issued capital EUR 36,336 UNICREDIT BANK AUSTRIA AG 99.80 0.00 228 KLEA ZS-LIEGENSCHAFTSVERMIETUNG G.M.B.H. VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,336 UNICREDIT BANK AUSTRIA AG 99.80 229 KSG KARTEN-VERRECHNUNGS- UND SERVICEGESELLSCHAFT M.B.H. VIENNA VIENNA 1 CARD COMPLETE SERVICE BANK AG 100.00 Issued capital EUR 44,000 230 KUNSTHAUS LEASING GMBH VIENNA VIENNA 1 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 5.00 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 231 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 232 LAGERMAX LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 233 LAGEV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 234 LARGE CORPORATE ONE SRL (CARTOLARIZZAZIONE: LARGE CORPORATE ONE) VERONA VERONA 4 UNICREDIT SPA .. (3) 235 LARGO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 VAPE COMMUNA LEASINGGESELLSCHAFT M.B.H. 98.80 236 LEASFINANZ ALPHA ASSETVERMIETUNG GMBH VIENNA VIENNA 1 LEASFINANZ GMBH 100.00 Issued capital EUR 35,000 237 LEASFINANZ BANK GMBH VIENNA VIENNA 1 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH 100.00 Issued capital EUR 36,500 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 117 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 238 LEASFINANZ GMBH VIENNA VIENNA 1 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH 100.00 Issued capital EUR 218,019 239 LEGATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 240 LELEV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 241 LIFE MANAGEMENT ERSTE GMBH MUNICH MUNICH 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 25,000 242 LINO HOTEL-LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 243 LIPARK LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 244 LIVA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 245 LOCAT CROATIA DOO ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 39,000,000 246 LOCAT SV SRL (CARTOLARIZZAZIONE: SERIE 2016) CONEGLIANO CONEGLIANO 4 UNICREDIT LEASING SPA .. (3) 247 M. A. V. 7., BANK AUSTRIA LEASING BAUTRAEGER GMBH & CO.OG. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 1.96 Issued capital EUR 3,707 UNICREDIT LUNA LEASING GMBH 98.04 248 MBC IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 249 MCL RE LJUBLJANA, POSLOVNI NAJEM NEPREMI NIN, D.O.O. LJUBLJANA LJUBLJANA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 7,500 250 MENUETT GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,337 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 251 MERKURHOF GRUNDSTUCKSGESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 5,112,919 252 MM OMEGA PROJEKTENTWICKLUNGS GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 253 MOC VERWALTUNGS GMBH & CO. IMMOBILIEN KG MUNICH MUNICH 4 HVB PROJEKT GMBH .. (3) Issued capital EUR 5,112,940 254 MOEGRA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 117 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 238 LEASFINANZ GMBH VIENNA VIENNA 1 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH 100.00 Issued capital EUR 218,019 239 LEGATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 240 LELEV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 241 LIFE MANAGEMENT ERSTE GMBH MUNICH MUNICH 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 25,000 242 LINO HOTEL-LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 243 LIPARK LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 244 LIVA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 245 LOCAT CROATIA DOO ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 39,000,000 246 LOCAT SV SRL (CARTOLARIZZAZIONE: SERIE 2016) CONEGLIANO CONEGLIANO 4 UNICREDIT LEASING SPA .. (3) 247 M. A. V. 7., BANK AUSTRIA LEASING BAUTRAEGER GMBH & CO.OG. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 1.96 Issued capital EUR 3,707 UNICREDIT LUNA LEASING GMBH 98.04 248 MBC IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 249 MCL RE LJUBLJANA, POSLOVNI NAJEM NEPREMI NIN, D.O.O. LJUBLJANA LJUBLJANA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 7,500 250 MENUETT GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,337 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 251 MERKURHOF GRUNDSTUCKSGESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 5,112,919 252 MM OMEGA PROJEKTENTWICKLUNGS GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 253 MOC VERWALTUNGS GMBH & CO. IMMOBILIEN KG MUNICH MUNICH 4 HVB PROJEKT GMBH .. (3) Issued capital EUR 5,112,940 254 MOEGRA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 117 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 238 LEASFINANZ GMBH VIENNA VIENNA 1 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH 100.00 Issued capital EUR 218,019 239 LEGATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 240 LELEV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 241 LIFE MANAGEMENT ERSTE GMBH MUNICH MUNICH 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 25,000 242 LINO HOTEL-LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 243 LIPARK LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 244 LIVA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 245 LOCAT CROATIA DOO ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 39,000,000 246 LOCAT SV SRL (CARTOLARIZZAZIONE: SERIE 2016) CONEGLIANO CONEGLIANO 4 UNICREDIT LEASING SPA .. (3) 247 M. A. V. 7., BANK AUSTRIA LEASING BAUTRAEGER GMBH & CO.OG. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 1.96 Issued capital EUR 3,707 UNICREDIT LUNA LEASING GMBH 98.04 248 MBC IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 249 MCL RE LJUBLJANA, POSLOVNI NAJEM NEPREMI NIN, D.O.O. LJUBLJANA LJUBLJANA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 7,500 250 MENUETT GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,337 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 251 MERKURHOF GRUNDSTUCKSGESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 5,112,919 252 MM OMEGA PROJEKTENTWICKLUNGS GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 253 MOC VERWALTUNGS GMBH & CO. IMMOBILIEN KG MUNICH MUNICH 4 HVB PROJEKT GMBH .. (3) Issued capital EUR 5,112,940 254 MOEGRA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 117 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 238 LEASFINANZ GMBH VIENNA VIENNA 1 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH 100.00 Issued capital EUR 218,019 239 LEGATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 240 LELEV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 241 LIFE MANAGEMENT ERSTE GMBH MUNICH MUNICH 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 25,000 242 LINO HOTEL-LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 243 LIPARK LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 244 LIVA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 245 LOCAT CROATIA DOO ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 39,000,000 246 LOCAT SV SRL (CARTOLARIZZAZIONE: SERIE 2016) CONEGLIANO CONEGLIANO 4 UNICREDIT LEASING SPA .. (3) 247 M. A. V. 7., BANK AUSTRIA LEASING BAUTRAEGER GMBH & CO.OG. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 1.96 Issued capital EUR 3,707 UNICREDIT LUNA LEASING GMBH 98.04 248 MBC IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 249 MCL RE LJUBLJANA, POSLOVNI NAJEM NEPREMI NIN, D.O.O. LJUBLJANA LJUBLJANA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 7,500 250 MENUETT GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,337 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 251 MERKURHOF GRUNDSTUCKSGESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 5,112,919 252 MM OMEGA PROJEKTENTWICKLUNGS GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 253 MOC VERWALTUNGS GMBH & CO. IMMOBILIEN KG MUNICH MUNICH 4 HVB PROJEKT GMBH .. (3) Issued capital EUR 5,112,940 254 MOEGRA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 117 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 238 LEASFINANZ GMBH VIENNA VIENNA 1 BACA LEASING UND BETEILIGUNGSMANAGEMENT GMBH 100.00 Issued capital EUR 218,019 239 LEGATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 240 LELEV IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 241 LIFE MANAGEMENT ERSTE GMBH MUNICH MUNICH 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 25,000 242 LINO HOTEL-LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 243 LIPARK LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 244 LIVA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 245 LOCAT CROATIA DOO ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 39,000,000 246 LOCAT SV SRL (CARTOLARIZZAZIONE: SERIE 2016) CONEGLIANO CONEGLIANO 4 UNICREDIT LEASING SPA .. (3) 247 M. A. V. 7., BANK AUSTRIA LEASING BAUTRAEGER GMBH & CO.OG. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 1.96 Issued capital EUR 3,707 UNICREDIT LUNA LEASING GMBH 98.04 248 MBC IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 249 MCL RE LJUBLJANA, POSLOVNI NAJEM NEPREMI NIN, D.O.O. LJUBLJANA LJUBLJANA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital EUR 7,500 250 MENUETT GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,337 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 251 MERKURHOF GRUNDSTUCKSGESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 5,112,919 252 MM OMEGA PROJEKTENTWICKLUNGS GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 35,000 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 253 MOC VERWALTUNGS GMBH & CO. IMMOBILIEN KG MUNICH MUNICH 4 HVB PROJEKT GMBH .. (3) Issued capital EUR 5,112,940 254 MOEGRA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 118 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 255 MOMENTUM ALLWEATHER STRATEGIES - LONG TERM STRATEG HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 256 MOMENTUM LONG TERM VALUE FUND HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 257 NAGE LOKALVERMIETUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 258 NF OBJEKT FFM GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 100.00 Issued capital EUR 25,000 259 NF OBJEKTE BERLIN GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 100.00 Issued capital EUR 25,000 260 NOE HYPO LEASING ASTRICTA GRUNDSTUECKVERMIETUNGS GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 Issued capital EUR 36,337 261 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 200,000 262 OCEAN BREEZE ASSET GMBH & CO. KG BREMEN BREMEN 1 OCEAN BREEZE ENERGY GMBH & CO. KG 100.00 Issued capital EUR 2,000 263 OCEAN BREEZE ENERGY GMBH & CO. KG BREMEN BREMEN 1 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH 100.00 Issued capital EUR 2,000 264 OCEAN BREEZE FINANCE S.A. - COMPARTMENT 1 LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 265 OCEAN BREEZE GMBH BREMEN BREMEN 1 OCEAN BREEZE ENERGY GMBH & CO. KG 100.00 Issued capital EUR 25,000 266 OCT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 267 OLG HANDELS- UND BETEILIGUNGSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 36,336 268 OMNIA GRUNDSTUCKS-GMBH & CO. OBJEKT HAIDENAUPLATZ KG MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 26,000 UNICREDIT BANK AG 6.00 269 OMNIA GRUNDSTUECKS-GMBH & CO. OBJEKT PERLACH KG MUNICH MUNICH 1 OMNIA GRUNDSTUCKS-GMBH .. 0.99 Issued capital EUR 5,125,701 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 94.78 93.87 WEALTHCAP LEASING GMBH 5.22 5.14 270 OOO UNICREDIT LEASING MOSCOW MOSCOW 1 AO UNICREDIT BANK 100.00 Issued capital RUR 149,160,248 271 ORBIT PERFORMANCE STRATEGIES - ORBIT US CLASSE I U HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 272 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 10,149,150 273 OTHMARSCHEN PARK HAMBURG GMBH & CO. CENTERPARK KG MUNICH MUNICH 1 HVB PROJEKT GMBH 10.00 Issued capital EUR 51,129 T & P FRANKFURT DEVELOPMENT B.V. 30.00 T & P VASTGOED STUTTGART B.V. 60.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 118 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 255 MOMENTUM ALLWEATHER STRATEGIES - LONG TERM STRATEG HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 256 MOMENTUM LONG TERM VALUE FUND HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 257 NAGE LOKALVERMIETUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 258 NF OBJEKT FFM GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 100.00 Issued capital EUR 25,000 259 NF OBJEKTE BERLIN GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 100.00 Issued capital EUR 25,000 260 NOE HYPO LEASING ASTRICTA GRUNDSTUECKVERMIETUNGS GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 Issued capital EUR 36,337 261 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 200,000 262 OCEAN BREEZE ASSET GMBH & CO. KG BREMEN BREMEN 1 OCEAN BREEZE ENERGY GMBH & CO. KG 100.00 Issued capital EUR 2,000 263 OCEAN BREEZE ENERGY GMBH & CO. KG BREMEN BREMEN 1 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH 100.00 Issued capital EUR 2,000 264 OCEAN BREEZE FINANCE S.A. - COMPARTMENT 1 LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 265 OCEAN BREEZE GMBH BREMEN BREMEN 1 OCEAN BREEZE ENERGY GMBH & CO. KG 100.00 Issued capital EUR 25,000 266 OCT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 267 OLG HANDELS- UND BETEILIGUNGSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 36,336 268 OMNIA GRUNDSTUCKS-GMBH & CO. OBJEKT HAIDENAUPLATZ KG MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 26,000 UNICREDIT BANK AG 6.00 269 OMNIA GRUNDSTUECKS-GMBH & CO. OBJEKT PERLACH KG MUNICH MUNICH 1 OMNIA GRUNDSTUCKS-GMBH .. 0.99 Issued capital EUR 5,125,701 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 94.78 93.87 WEALTHCAP LEASING GMBH 5.22 5.14 270 OOO UNICREDIT LEASING MOSCOW MOSCOW 1 AO UNICREDIT BANK 100.00 Issued capital RUR 149,160,248 271 ORBIT PERFORMANCE STRATEGIES - ORBIT US CLASSE I U HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 272 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 10,149,150 273 OTHMARSCHEN PARK HAMBURG GMBH & CO. CENTERPARK KG MUNICH MUNICH 1 HVB PROJEKT GMBH 10.00 Issued capital EUR 51,129 T & P FRANKFURT DEVELOPMENT B.V. 30.00 T & P VASTGOED STUTTGART B.V. 60.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 118 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 255 MOMENTUM ALLWEATHER STRATEGIES - LONG TERM STRATEG HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 256 MOMENTUM LONG TERM VALUE FUND HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 257 NAGE LOKALVERMIETUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 258 NF OBJEKT FFM GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 100.00 Issued capital EUR 25,000 259 NF OBJEKTE BERLIN GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 100.00 Issued capital EUR 25,000 260 NOE HYPO LEASING ASTRICTA GRUNDSTUECKVERMIETUNGS GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 Issued capital EUR 36,337 261 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 200,000 262 OCEAN BREEZE ASSET GMBH & CO. KG BREMEN BREMEN 1 OCEAN BREEZE ENERGY GMBH & CO. KG 100.00 Issued capital EUR 2,000 263 OCEAN BREEZE ENERGY GMBH & CO. KG BREMEN BREMEN 1 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH 100.00 Issued capital EUR 2,000 264 OCEAN BREEZE FINANCE S.A. - COMPARTMENT 1 LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 265 OCEAN BREEZE GMBH BREMEN BREMEN 1 OCEAN BREEZE ENERGY GMBH & CO. KG 100.00 Issued capital EUR 25,000 266 OCT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 267 OLG HANDELS- UND BETEILIGUNGSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 36,336 268 OMNIA GRUNDSTUCKS-GMBH & CO. OBJEKT HAIDENAUPLATZ KG MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 26,000 UNICREDIT BANK AG 6.00 269 OMNIA GRUNDSTUECKS-GMBH & CO. OBJEKT PERLACH KG MUNICH MUNICH 1 OMNIA GRUNDSTUCKS-GMBH .. 0.99 Issued capital EUR 5,125,701 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 94.78 93.87 WEALTHCAP LEASING GMBH 5.22 5.14 270 OOO UNICREDIT LEASING MOSCOW MOSCOW 1 AO UNICREDIT BANK 100.00 Issued capital RUR 149,160,248 271 ORBIT PERFORMANCE STRATEGIES - ORBIT US CLASSE I U HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 272 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 10,149,150 273 OTHMARSCHEN PARK HAMBURG GMBH & CO. CENTERPARK KG MUNICH MUNICH 1 HVB PROJEKT GMBH 10.00 Issued capital EUR 51,129 T & P FRANKFURT DEVELOPMENT B.V. 30.00 T & P VASTGOED STUTTGART B.V. 60.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 118 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 255 MOMENTUM ALLWEATHER STRATEGIES - LONG TERM STRATEG HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 256 MOMENTUM LONG TERM VALUE FUND HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 257 NAGE LOKALVERMIETUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 258 NF OBJEKT FFM GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 100.00 Issued capital EUR 25,000 259 NF OBJEKTE BERLIN GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 100.00 Issued capital EUR 25,000 260 NOE HYPO LEASING ASTRICTA GRUNDSTUECKVERMIETUNGS GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 Issued capital EUR 36,337 261 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 200,000 262 OCEAN BREEZE ASSET GMBH & CO. KG BREMEN BREMEN 1 OCEAN BREEZE ENERGY GMBH & CO. KG 100.00 Issued capital EUR 2,000 263 OCEAN BREEZE ENERGY GMBH & CO. KG BREMEN BREMEN 1 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH 100.00 Issued capital EUR 2,000 264 OCEAN BREEZE FINANCE S.A. - COMPARTMENT 1 LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 265 OCEAN BREEZE GMBH BREMEN BREMEN 1 OCEAN BREEZE ENERGY GMBH & CO. KG 100.00 Issued capital EUR 25,000 266 OCT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 267 OLG HANDELS- UND BETEILIGUNGSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 36,336 268 OMNIA GRUNDSTUCKS-GMBH & CO. OBJEKT HAIDENAUPLATZ KG MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 26,000 UNICREDIT BANK AG 6.00 269 OMNIA GRUNDSTUECKS-GMBH & CO. OBJEKT PERLACH KG MUNICH MUNICH 1 OMNIA GRUNDSTUCKS-GMBH .. 0.99 Issued capital EUR 5,125,701 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 94.78 93.87 WEALTHCAP LEASING GMBH 5.22 5.14 270 OOO UNICREDIT LEASING MOSCOW MOSCOW 1 AO UNICREDIT BANK 100.00 Issued capital RUR 149,160,248 271 ORBIT PERFORMANCE STRATEGIES - ORBIT US CLASSE I U HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 272 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 10,149,150 273 OTHMARSCHEN PARK HAMBURG GMBH & CO. CENTERPARK KG MUNICH MUNICH 1 HVB PROJEKT GMBH 10.00 Issued capital EUR 51,129 T & P FRANKFURT DEVELOPMENT B.V. 30.00 T & P VASTGOED STUTTGART B.V. 60.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 118 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 255 MOMENTUM ALLWEATHER STRATEGIES - LONG TERM STRATEG HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 256 MOMENTUM LONG TERM VALUE FUND HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 257 NAGE LOKALVERMIETUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 258 NF OBJEKT FFM GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 100.00 Issued capital EUR 25,000 259 NF OBJEKTE BERLIN GMBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 100.00 Issued capital EUR 25,000 260 NOE HYPO LEASING ASTRICTA GRUNDSTUECKVERMIETUNGS GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 Issued capital EUR 36,337 261 NUOVA COMPAGNIA DI PARTECIPAZIONI SPA ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 200,000 262 OCEAN BREEZE ASSET GMBH & CO. KG BREMEN BREMEN 1 OCEAN BREEZE ENERGY GMBH & CO. KG 100.00 Issued capital EUR 2,000 263 OCEAN BREEZE ENERGY GMBH & CO. KG BREMEN BREMEN 1 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH 100.00 Issued capital EUR 2,000 264 OCEAN BREEZE FINANCE S.A. - COMPARTMENT 1 LUXEMBOURG LUXEMBOURG 4 UNICREDIT BANK AG .. (3) 265 OCEAN BREEZE GMBH BREMEN BREMEN 1 OCEAN BREEZE ENERGY GMBH & CO. KG 100.00 Issued capital EUR 25,000 266 OCT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 267 OLG HANDELS- UND BETEILIGUNGSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 36,336 268 OMNIA GRUNDSTUCKS-GMBH & CO. OBJEKT HAIDENAUPLATZ KG MUNICH MUNICH 1 HVB IMMOBILIEN AG 94.00 Issued capital EUR 26,000 UNICREDIT BANK AG 6.00 269 OMNIA GRUNDSTUECKS-GMBH & CO. OBJEKT PERLACH KG MUNICH MUNICH 1 OMNIA GRUNDSTUCKS-GMBH .. 0.99 Issued capital EUR 5,125,701 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 94.78 93.87 WEALTHCAP LEASING GMBH 5.22 5.14 270 OOO UNICREDIT LEASING MOSCOW MOSCOW 1 AO UNICREDIT BANK 100.00 Issued capital RUR 149,160,248 271 ORBIT PERFORMANCE STRATEGIES - ORBIT US CLASSE I U HAMILTON HAMILTON 4 UNICREDIT SPA .. (3) 272 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 10,149,150 273 OTHMARSCHEN PARK HAMBURG GMBH & CO. CENTERPARK KG MUNICH MUNICH 1 HVB PROJEKT GMBH 10.00 Issued capital EUR 51,129 T & P FRANKFURT DEVELOPMENT B.V. 30.00 T & P VASTGOED STUTTGART B.V. 60.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 119 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 274 OTHMARSCHEN PARK HAMBURG GMBH & CO. GEWERBEPARK KG MUNICH MUNICH 1 HVB PROJEKT GMBH 10.00 Issued capital EUR 51,129 T & P FRANKFURT DEVELOPMENT B.V. 30.00 T & P VASTGOED STUTTGART B.V. 60.00 275 PAI (BERMUDA) LIMITED HAMILTON HAMILTON 1 UNICREDIT SPA 100.00 Issued capital USD 12,000 276 PAI (NEW YORK) LIMITED DOVER NEW YORK 1 UNICREDIT SPA 100.00 Issued capital USD 1 277 PAI MANAGEMENT LTD DUBLIN DUBLIN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,032,000 278 PALAIS ROTHSCHILD VERMIETUNGS GMBH & CO OG VIENNA VIENNA 1 SCHOELLERBANK AKTIENGESELLSCHAFT 100.00 Issued capital EUR 2,180,185 279 PARCO DELLE ACACIE DUE S.P.A. ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 90,000 280 PARSEC 6 SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 90,000 281 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 36,336 282 PELOPS LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 283 PENSIONSKASSE DER HYPO VEREINSBANK VVAG MUNICH MUNICH 4 UNICREDIT BANK AG .. (3) 284 PERIKLES 20092 VERMOGENSVERWALTUNG GMBH BREMEN BREMEN 1 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH 100.00 Issued capital EUR 25,000 285 PIANA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 286 PIONEER ALTERNATIVE INVESTMENTS (ISRAEL) LIMITED IN VOLUNTARY LIQUIDATION RAMAT GAN RAMAT GAN 1 UNICREDIT SPA 100.00 Issued capital ILS 50,000 287 PIRTA VERWALTUNGS GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 2,067,138 288 PISANA S.P.A. ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 1,000,000 289 POLLUX IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 290 POMINVEST DD SPLIT SPLIT 1 ZAGREBACKA BANKA D.D. 88.66 88.95 Issued capital HRK 17,434,000 291 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 500,013,550 292 POSATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 119 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 274 OTHMARSCHEN PARK HAMBURG GMBH & CO. GEWERBEPARK KG MUNICH MUNICH 1 HVB PROJEKT GMBH 10.00 Issued capital EUR 51,129 T & P FRANKFURT DEVELOPMENT B.V. 30.00 T & P VASTGOED STUTTGART B.V. 60.00 275 PAI (BERMUDA) LIMITED HAMILTON HAMILTON 1 UNICREDIT SPA 100.00 Issued capital USD 12,000 276 PAI (NEW YORK) LIMITED DOVER NEW YORK 1 UNICREDIT SPA 100.00 Issued capital USD 1 277 PAI MANAGEMENT LTD DUBLIN DUBLIN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,032,000 278 PALAIS ROTHSCHILD VERMIETUNGS GMBH & CO OG VIENNA VIENNA 1 SCHOELLERBANK AKTIENGESELLSCHAFT 100.00 Issued capital EUR 2,180,185 279 PARCO DELLE ACACIE DUE S.P.A. ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 90,000 280 PARSEC 6 SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 90,000 281 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 36,336 282 PELOPS LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 283 PENSIONSKASSE DER HYPO VEREINSBANK VVAG MUNICH MUNICH 4 UNICREDIT BANK AG .. (3) 284 PERIKLES 20092 VERMOGENSVERWALTUNG GMBH BREMEN BREMEN 1 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH 100.00 Issued capital EUR 25,000 285 PIANA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 286 PIONEER ALTERNATIVE INVESTMENTS (ISRAEL) LIMITED IN VOLUNTARY LIQUIDATION RAMAT GAN RAMAT GAN 1 UNICREDIT SPA 100.00 Issued capital ILS 50,000 287 PIRTA VERWALTUNGS GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 2,067,138 288 PISANA S.P.A. ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 1,000,000 289 POLLUX IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 290 POMINVEST DD SPLIT SPLIT 1 ZAGREBACKA BANKA D.D. 88.66 88.95 Issued capital HRK 17,434,000 291 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 500,013,550 292 POSATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 119 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 274 OTHMARSCHEN PARK HAMBURG GMBH & CO. GEWERBEPARK KG MUNICH MUNICH 1 HVB PROJEKT GMBH 10.00 Issued capital EUR 51,129 T & P FRANKFURT DEVELOPMENT B.V. 30.00 T & P VASTGOED STUTTGART B.V. 60.00 275 PAI (BERMUDA) LIMITED HAMILTON HAMILTON 1 UNICREDIT SPA 100.00 Issued capital USD 12,000 276 PAI (NEW YORK) LIMITED DOVER NEW YORK 1 UNICREDIT SPA 100.00 Issued capital USD 1 277 PAI MANAGEMENT LTD DUBLIN DUBLIN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,032,000 278 PALAIS ROTHSCHILD VERMIETUNGS GMBH & CO OG VIENNA VIENNA 1 SCHOELLERBANK AKTIENGESELLSCHAFT 100.00 Issued capital EUR 2,180,185 279 PARCO DELLE ACACIE DUE S.P.A. ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 90,000 280 PARSEC 6 SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 90,000 281 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 36,336 282 PELOPS LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 283 PENSIONSKASSE DER HYPO VEREINSBANK VVAG MUNICH MUNICH 4 UNICREDIT BANK AG .. (3) 284 PERIKLES 20092 VERMOGENSVERWALTUNG GMBH BREMEN BREMEN 1 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH 100.00 Issued capital EUR 25,000 285 PIANA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 286 PIONEER ALTERNATIVE INVESTMENTS (ISRAEL) LIMITED IN VOLUNTARY LIQUIDATION RAMAT GAN RAMAT GAN 1 UNICREDIT SPA 100.00 Issued capital ILS 50,000 287 PIRTA VERWALTUNGS GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 2,067,138 288 PISANA S.P.A. ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 1,000,000 289 POLLUX IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 290 POMINVEST DD SPLIT SPLIT 1 ZAGREBACKA BANKA D.D. 88.66 88.95 Issued capital HRK 17,434,000 291 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 500,013,550 292 POSATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 119 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 274 OTHMARSCHEN PARK HAMBURG GMBH & CO. GEWERBEPARK KG MUNICH MUNICH 1 HVB PROJEKT GMBH 10.00 Issued capital EUR 51,129 T & P FRANKFURT DEVELOPMENT B.V. 30.00 T & P VASTGOED STUTTGART B.V. 60.00 275 PAI (BERMUDA) LIMITED HAMILTON HAMILTON 1 UNICREDIT SPA 100.00 Issued capital USD 12,000 276 PAI (NEW YORK) LIMITED DOVER NEW YORK 1 UNICREDIT SPA 100.00 Issued capital USD 1 277 PAI MANAGEMENT LTD DUBLIN DUBLIN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,032,000 278 PALAIS ROTHSCHILD VERMIETUNGS GMBH & CO OG VIENNA VIENNA 1 SCHOELLERBANK AKTIENGESELLSCHAFT 100.00 Issued capital EUR 2,180,185 279 PARCO DELLE ACACIE DUE S.P.A. ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 90,000 280 PARSEC 6 SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 90,000 281 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 36,336 282 PELOPS LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 283 PENSIONSKASSE DER HYPO VEREINSBANK VVAG MUNICH MUNICH 4 UNICREDIT BANK AG .. (3) 284 PERIKLES 20092 VERMOGENSVERWALTUNG GMBH BREMEN BREMEN 1 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH 100.00 Issued capital EUR 25,000 285 PIANA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 286 PIONEER ALTERNATIVE INVESTMENTS (ISRAEL) LIMITED IN VOLUNTARY LIQUIDATION RAMAT GAN RAMAT GAN 1 UNICREDIT SPA 100.00 Issued capital ILS 50,000 287 PIRTA VERWALTUNGS GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 2,067,138 288 PISANA S.P.A. ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 1,000,000 289 POLLUX IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 290 POMINVEST DD SPLIT SPLIT 1 ZAGREBACKA BANKA D.D. 88.66 88.95 Issued capital HRK 17,434,000 291 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 500,013,550 292 POSATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 119 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 274 OTHMARSCHEN PARK HAMBURG GMBH & CO. GEWERBEPARK KG MUNICH MUNICH 1 HVB PROJEKT GMBH 10.00 Issued capital EUR 51,129 T & P FRANKFURT DEVELOPMENT B.V. 30.00 T & P VASTGOED STUTTGART B.V. 60.00 275 PAI (BERMUDA) LIMITED HAMILTON HAMILTON 1 UNICREDIT SPA 100.00 Issued capital USD 12,000 276 PAI (NEW YORK) LIMITED DOVER NEW YORK 1 UNICREDIT SPA 100.00 Issued capital USD 1 277 PAI MANAGEMENT LTD DUBLIN DUBLIN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,032,000 278 PALAIS ROTHSCHILD VERMIETUNGS GMBH & CO OG VIENNA VIENNA 1 SCHOELLERBANK AKTIENGESELLSCHAFT 100.00 Issued capital EUR 2,180,185 279 PARCO DELLE ACACIE DUE S.P.A. ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 90,000 280 PARSEC 6 SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 90,000 281 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 36,336 282 PELOPS LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 283 PENSIONSKASSE DER HYPO VEREINSBANK VVAG MUNICH MUNICH 4 UNICREDIT BANK AG .. (3) 284 PERIKLES 20092 VERMOGENSVERWALTUNG GMBH BREMEN BREMEN 1 HJS 12 BETEILIGUNGSGESELLSCHAFT MBH 100.00 Issued capital EUR 25,000 285 PIANA LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 286 PIONEER ALTERNATIVE INVESTMENTS (ISRAEL) LIMITED IN VOLUNTARY LIQUIDATION RAMAT GAN RAMAT GAN 1 UNICREDIT SPA 100.00 Issued capital ILS 50,000 287 PIRTA VERWALTUNGS GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 2,067,138 288 PISANA S.P.A. ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 1,000,000 289 POLLUX IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 290 POMINVEST DD SPLIT SPLIT 1 ZAGREBACKA BANKA D.D. 88.66 88.95 Issued capital HRK 17,434,000 291 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 500,013,550 292 POSATO LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 120 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 293 PRELUDE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 294 PRO WOHNBAU GMBH VIENNA VIENNA 1 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 0.31 Issued capital EUR 23,621,113 IMMOBILIEN HOLDING GMBH 99.69 295 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 296 QUADEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 297 QUART Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 298 QUINT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 299 RANA-LIEGENSCHAFTSVERWERTUNG GMBH VIENNA VIENNA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 99.90 Issued capital EUR 72,700 300 RE-ST.MARX HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 301 REAL INVEST EUROPE DER BANK AUSTRIA REAL INVEST IMMOBILIEN- KAPI VIENNA VIENNA 4 UNICREDIT BANK AUSTRIA AG .. (3) 302 REAL INVEST IMMOBILIEN GMBH VIENNA VIENNA 1 BACA INVESTOR BETEILIGUNGS GMBH 1.00 Issued capital EUR 36,400 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. 99.00 303 REAL INVEST PROPERTY GMBH & CO SPB JOTA KG VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH .. 32.07 Issued capital EUR 0 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. 44.55 304 REAL-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 305 REAL-RENT LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 73,000 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 306 REGEV REALITAETENVERWERTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 726,728 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 307 RIGEL IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 308 ROLIN GRUNDSTUCKSPLANUNGS- UND -VERWALTUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 30,677 309 ROSENKAVALIER 2008 GMBH FRANKFURT FRANKFURT 4 UNICREDIT BANK AG .. (3) 310 ROSENKAVALIER 2015 UG FRANKFURT FRANKFURT 4 UNICREDIT BANK AG .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 120 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 293 PRELUDE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 294 PRO WOHNBAU GMBH VIENNA VIENNA 1 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 0.31 Issued capital EUR 23,621,113 IMMOBILIEN HOLDING GMBH 99.69 295 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 296 QUADEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 297 QUART Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 298 QUINT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 299 RANA-LIEGENSCHAFTSVERWERTUNG GMBH VIENNA VIENNA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 99.90 Issued capital EUR 72,700 300 RE-ST.MARX HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 301 REAL INVEST EUROPE DER BANK AUSTRIA REAL INVEST IMMOBILIEN- KAPI VIENNA VIENNA 4 UNICREDIT BANK AUSTRIA AG .. (3) 302 REAL INVEST IMMOBILIEN GMBH VIENNA VIENNA 1 BACA INVESTOR BETEILIGUNGS GMBH 1.00 Issued capital EUR 36,400 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. 99.00 303 REAL INVEST PROPERTY GMBH & CO SPB JOTA KG VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH .. 32.07 Issued capital EUR 0 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. 44.55 304 REAL-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 305 REAL-RENT LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 73,000 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 306 REGEV REALITAETENVERWERTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 726,728 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 307 RIGEL IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 308 ROLIN GRUNDSTUCKSPLANUNGS- UND -VERWALTUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 30,677 309 ROSENKAVALIER 2008 GMBH FRANKFURT FRANKFURT 4 UNICREDIT BANK AG .. (3) 310 ROSENKAVALIER 2015 UG FRANKFURT FRANKFURT 4 UNICREDIT BANK AG .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 120 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 293 PRELUDE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 294 PRO WOHNBAU GMBH VIENNA VIENNA 1 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 0.31 Issued capital EUR 23,621,113 IMMOBILIEN HOLDING GMBH 99.69 295 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 296 QUADEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 297 QUART Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 298 QUINT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 299 RANA-LIEGENSCHAFTSVERWERTUNG GMBH VIENNA VIENNA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 99.90 Issued capital EUR 72,700 300 RE-ST.MARX HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 301 REAL INVEST EUROPE DER BANK AUSTRIA REAL INVEST IMMOBILIEN- KAPI VIENNA VIENNA 4 UNICREDIT BANK AUSTRIA AG .. (3) 302 REAL INVEST IMMOBILIEN GMBH VIENNA VIENNA 1 BACA INVESTOR BETEILIGUNGS GMBH 1.00 Issued capital EUR 36,400 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. 99.00 303 REAL INVEST PROPERTY GMBH & CO SPB JOTA KG VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH .. 32.07 Issued capital EUR 0 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. 44.55 304 REAL-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 305 REAL-RENT LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 73,000 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 306 REGEV REALITAETENVERWERTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 726,728 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 307 RIGEL IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 308 ROLIN GRUNDSTUCKSPLANUNGS- UND -VERWALTUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 30,677 309 ROSENKAVALIER 2008 GMBH FRANKFURT FRANKFURT 4 UNICREDIT BANK AG .. (3) 310 ROSENKAVALIER 2015 UG FRANKFURT FRANKFURT 4 UNICREDIT BANK AG .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 120 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 293 PRELUDE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 294 PRO WOHNBAU GMBH VIENNA VIENNA 1 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 0.31 Issued capital EUR 23,621,113 IMMOBILIEN HOLDING GMBH 99.69 295 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 296 QUADEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 297 QUART Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 298 QUINT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 299 RANA-LIEGENSCHAFTSVERWERTUNG GMBH VIENNA VIENNA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 99.90 Issued capital EUR 72,700 300 RE-ST.MARX HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 301 REAL INVEST EUROPE DER BANK AUSTRIA REAL INVEST IMMOBILIEN- KAPI VIENNA VIENNA 4 UNICREDIT BANK AUSTRIA AG .. (3) 302 REAL INVEST IMMOBILIEN GMBH VIENNA VIENNA 1 BACA INVESTOR BETEILIGUNGS GMBH 1.00 Issued capital EUR 36,400 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. 99.00 303 REAL INVEST PROPERTY GMBH & CO SPB JOTA KG VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH .. 32.07 Issued capital EUR 0 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. 44.55 304 REAL-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 305 REAL-RENT LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 73,000 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 306 REGEV REALITAETENVERWERTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 726,728 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 307 RIGEL IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 308 ROLIN GRUNDSTUCKSPLANUNGS- UND -VERWALTUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 30,677 309 ROSENKAVALIER 2008 GMBH FRANKFURT FRANKFURT 4 UNICREDIT BANK AG .. (3) 310 ROSENKAVALIER 2015 UG FRANKFURT FRANKFURT 4 UNICREDIT BANK AG .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 120 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 293 PRELUDE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 294 PRO WOHNBAU GMBH VIENNA VIENNA 1 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 0.31 Issued capital EUR 23,621,113 IMMOBILIEN HOLDING GMBH 99.69 295 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 296 QUADEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 297 QUART Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 298 QUINT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 299 RANA-LIEGENSCHAFTSVERWERTUNG GMBH VIENNA VIENNA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 99.90 Issued capital EUR 72,700 300 RE-ST.MARX HOLDING GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 301 REAL INVEST EUROPE DER BANK AUSTRIA REAL INVEST IMMOBILIEN- KAPI VIENNA VIENNA 4 UNICREDIT BANK AUSTRIA AG .. (3) 302 REAL INVEST IMMOBILIEN GMBH VIENNA VIENNA 1 BACA INVESTOR BETEILIGUNGS GMBH 1.00 Issued capital EUR 36,400 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. 99.00 303 REAL INVEST PROPERTY GMBH & CO SPB JOTA KG VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH .. 32.07 Issued capital EUR 0 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. 44.55 304 REAL-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 305 REAL-RENT LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 73,000 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 306 REGEV REALITAETENVERWERTUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 726,728 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 307 RIGEL IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 308 ROLIN GRUNDSTUCKSPLANUNGS- UND -VERWALTUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 30,677 309 ROSENKAVALIER 2008 GMBH FRANKFURT FRANKFURT 4 UNICREDIT BANK AG .. (3) 310 ROSENKAVALIER 2015 UG FRANKFURT FRANKFURT 4 UNICREDIT BANK AG .. (3) Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 121 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 311 RSB ANLAGENVERMIETUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,337 312 S. MARIA DELLA GUARDIA S.R.L. CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 51.00 Issued capital EUR 210,000 313 SALVATORPLATZ-GRUNDSTUCKSGESELLSCHAFT MBH & CO. OHG SAARLAND MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 1,533,900 314 SALVATORPLATZ-GRUNDSTUCKSGESELLSCHAFT MBH & CO. OHG VERWALTUNGSZENTRUM MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 97.78 Issued capital EUR 2,300,850 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 2.22 315 SAMAR SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 50,000 316 SANITA' - S.R.L. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 99.60 Issued capital EUR 5,164,333 317 SCHOELLERBANK AKTIENGESELLSCHAFT VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.01 Issued capital EUR 20,000,000 UNICREDIT BANK AUSTRIA AG 99.99 318 SCHOELLERBANK INVEST AG SALZBURG SALZBURG 1 SCHOELLERBANK AKTIENGESELLSCHAFT 100.00 Issued capital EUR 2,543,549 319 SECA-LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 320 SEDEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 321 SELFOSS BETEILIGUNGSGESELLSCHAFT MBH GRUNWALD GRUNWALD 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 25,000 322 SEXT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 323 SHOPPING PALACE BRATISLAVA, V.O.S. BRATISLAVA BRATISLAVA 1 REAL INVEST PROPERTY GMBH & CO SPB JOTA KG 100.00 Issued capital EUR 0 324 SIA UNICREDIT INSURANCE BROKER RIGA RIGA 1 SIA UNICREDIT LEASING 100.00 Issued capital EUR 15,080 325 SIA UNICREDIT LEASING RIGA RIGA 1 UNICREDIT SPA 100.00 Issued capital EUR 15,569,120 326 SIGMA LEASING GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.40 Issued capital EUR 18,286 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 0.40 327 SIMON VERWALTUNGS-AKTIENGESELLSCHAFT I.L. MUNICH MUNICH 1 UNICREDIT BANK AG 99.98 Issued capital EUR 2,556,459 328 SIRIUS IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 121 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 311 RSB ANLAGENVERMIETUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,337 312 S. MARIA DELLA GUARDIA S.R.L. CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 51.00 Issued capital EUR 210,000 313 SALVATORPLATZ-GRUNDSTUCKSGESELLSCHAFT MBH & CO. OHG SAARLAND MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 1,533,900 314 SALVATORPLATZ-GRUNDSTUCKSGESELLSCHAFT MBH & CO. OHG VERWALTUNGSZENTRUM MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 97.78 Issued capital EUR 2,300,850 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 2.22 315 SAMAR SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 50,000 316 SANITA' - S.R.L. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 99.60 Issued capital EUR 5,164,333 317 SCHOELLERBANK AKTIENGESELLSCHAFT VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.01 Issued capital EUR 20,000,000 UNICREDIT BANK AUSTRIA AG 99.99 318 SCHOELLERBANK INVEST AG SALZBURG SALZBURG 1 SCHOELLERBANK AKTIENGESELLSCHAFT 100.00 Issued capital EUR 2,543,549 319 SECA-LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 320 SEDEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 321 SELFOSS BETEILIGUNGSGESELLSCHAFT MBH GRUNWALD GRUNWALD 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 25,000 322 SEXT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 323 SHOPPING PALACE BRATISLAVA, V.O.S. BRATISLAVA BRATISLAVA 1 REAL INVEST PROPERTY GMBH & CO SPB JOTA KG 100.00 Issued capital EUR 0 324 SIA UNICREDIT INSURANCE BROKER RIGA RIGA 1 SIA UNICREDIT LEASING 100.00 Issued capital EUR 15,080 325 SIA UNICREDIT LEASING RIGA RIGA 1 UNICREDIT SPA 100.00 Issued capital EUR 15,569,120 326 SIGMA LEASING GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.40 Issued capital EUR 18,286 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 0.40 327 SIMON VERWALTUNGS-AKTIENGESELLSCHAFT I.L. MUNICH MUNICH 1 UNICREDIT BANK AG 99.98 Issued capital EUR 2,556,459 328 SIRIUS IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 121 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 311 RSB ANLAGENVERMIETUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,337 312 S. MARIA DELLA GUARDIA S.R.L. CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 51.00 Issued capital EUR 210,000 313 SALVATORPLATZ-GRUNDSTUCKSGESELLSCHAFT MBH & CO. OHG SAARLAND MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 1,533,900 314 SALVATORPLATZ-GRUNDSTUCKSGESELLSCHAFT MBH & CO. OHG VERWALTUNGSZENTRUM MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 97.78 Issued capital EUR 2,300,850 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 2.22 315 SAMAR SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 50,000 316 SANITA' - S.R.L. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 99.60 Issued capital EUR 5,164,333 317 SCHOELLERBANK AKTIENGESELLSCHAFT VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.01 Issued capital EUR 20,000,000 UNICREDIT BANK AUSTRIA AG 99.99 318 SCHOELLERBANK INVEST AG SALZBURG SALZBURG 1 SCHOELLERBANK AKTIENGESELLSCHAFT 100.00 Issued capital EUR 2,543,549 319 SECA-LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 320 SEDEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 321 SELFOSS BETEILIGUNGSGESELLSCHAFT MBH GRUNWALD GRUNWALD 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 25,000 322 SEXT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 323 SHOPPING PALACE BRATISLAVA, V.O.S. BRATISLAVA BRATISLAVA 1 REAL INVEST PROPERTY GMBH & CO SPB JOTA KG 100.00 Issued capital EUR 0 324 SIA UNICREDIT INSURANCE BROKER RIGA RIGA 1 SIA UNICREDIT LEASING 100.00 Issued capital EUR 15,080 325 SIA UNICREDIT LEASING RIGA RIGA 1 UNICREDIT SPA 100.00 Issued capital EUR 15,569,120 326 SIGMA LEASING GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.40 Issued capital EUR 18,286 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 0.40 327 SIMON VERWALTUNGS-AKTIENGESELLSCHAFT I.L. MUNICH MUNICH 1 UNICREDIT BANK AG 99.98 Issued capital EUR 2,556,459 328 SIRIUS IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 121 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 311 RSB ANLAGENVERMIETUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,337 312 S. MARIA DELLA GUARDIA S.R.L. CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 51.00 Issued capital EUR 210,000 313 SALVATORPLATZ-GRUNDSTUCKSGESELLSCHAFT MBH & CO. OHG SAARLAND MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 1,533,900 314 SALVATORPLATZ-GRUNDSTUCKSGESELLSCHAFT MBH & CO. OHG VERWALTUNGSZENTRUM MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 97.78 Issued capital EUR 2,300,850 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 2.22 315 SAMAR SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 50,000 316 SANITA' - S.R.L. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 99.60 Issued capital EUR 5,164,333 317 SCHOELLERBANK AKTIENGESELLSCHAFT VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.01 Issued capital EUR 20,000,000 UNICREDIT BANK AUSTRIA AG 99.99 318 SCHOELLERBANK INVEST AG SALZBURG SALZBURG 1 SCHOELLERBANK AKTIENGESELLSCHAFT 100.00 Issued capital EUR 2,543,549 319 SECA-LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 320 SEDEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 321 SELFOSS BETEILIGUNGSGESELLSCHAFT MBH GRUNWALD GRUNWALD 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 25,000 322 SEXT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 323 SHOPPING PALACE BRATISLAVA, V.O.S. BRATISLAVA BRATISLAVA 1 REAL INVEST PROPERTY GMBH & CO SPB JOTA KG 100.00 Issued capital EUR 0 324 SIA UNICREDIT INSURANCE BROKER RIGA RIGA 1 SIA UNICREDIT LEASING 100.00 Issued capital EUR 15,080 325 SIA UNICREDIT LEASING RIGA RIGA 1 UNICREDIT SPA 100.00 Issued capital EUR 15,569,120 326 SIGMA LEASING GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.40 Issued capital EUR 18,286 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 0.40 327 SIMON VERWALTUNGS-AKTIENGESELLSCHAFT I.L. MUNICH MUNICH 1 UNICREDIT BANK AG 99.98 Issued capital EUR 2,556,459 328 SIRIUS IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 121 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 311 RSB ANLAGENVERMIETUNG GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,337 312 S. MARIA DELLA GUARDIA S.R.L. CATANIA CATANIA 1 ISTITUTO IMMOBILIARE DI CATANIA SPA 51.00 Issued capital EUR 210,000 313 SALVATORPLATZ-GRUNDSTUCKSGESELLSCHAFT MBH & CO. OHG SAARLAND MUNICH MUNICH 1 HVB GESELLSCHAFT FUR GEBAUDE MBH & CO KG 100.00 Issued capital EUR 1,533,900 314 SALVATORPLATZ-GRUNDSTUCKSGESELLSCHAFT MBH & CO. OHG VERWALTUNGSZENTRUM MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 97.78 Issued capital EUR 2,300,850 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT 2.22 315 SAMAR SPA ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 50,000 316 SANITA' - S.R.L. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 99.60 Issued capital EUR 5,164,333 317 SCHOELLERBANK AKTIENGESELLSCHAFT VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.01 Issued capital EUR 20,000,000 UNICREDIT BANK AUSTRIA AG 99.99 318 SCHOELLERBANK INVEST AG SALZBURG SALZBURG 1 SCHOELLERBANK AKTIENGESELLSCHAFT 100.00 Issued capital EUR 2,543,549 319 SECA-LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 320 SEDEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 321 SELFOSS BETEILIGUNGSGESELLSCHAFT MBH GRUNWALD GRUNWALD 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 25,000 322 SEXT Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 323 SHOPPING PALACE BRATISLAVA, V.O.S. BRATISLAVA BRATISLAVA 1 REAL INVEST PROPERTY GMBH & CO SPB JOTA KG 100.00 Issued capital EUR 0 324 SIA UNICREDIT INSURANCE BROKER RIGA RIGA 1 SIA UNICREDIT LEASING 100.00 Issued capital EUR 15,080 325 SIA UNICREDIT LEASING RIGA RIGA 1 UNICREDIT SPA 100.00 Issued capital EUR 15,569,120 326 SIGMA LEASING GMBH VIENNA VIENNA 1 CALG ANLAGEN LEASING GMBH 99.40 Issued capital EUR 18,286 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 0.40 327 SIMON VERWALTUNGS-AKTIENGESELLSCHAFT I.L. MUNICH MUNICH 1 UNICREDIT BANK AG 99.98 Issued capital EUR 2,556,459 328 SIRIUS IMMOBILIEN GMBH VIENNA VIENNA 1 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.20 Issued capital EUR 36,500 UNICREDIT BANK AUSTRIA AG 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 122 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 329 SIRIUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 5.00 Issued capital EUR 30,000 SOLOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. SIRIUS BETEILIGUNGS KG 95.00 330 SOCIETA' DI GESTIONI ESATTORIALI IN SICILIA SO.G.E.SI. S.P.A. IN LIQ. PALERMO PALERMO 1 UNICREDIT SPA 80.00 Issued capital EUR 36,151,500 331 SOCIETA' ITALIANA GESTIONE ED INCASSO CREDITI S.P.A. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 341,916 332 SOFIGERE SOCIETE PAR ACTIONS SIMPLIFIEE (IN LIQUIDAZIONE) PARIS PARIS 1 UNICREDIT SPA 100.00 Issued capital EUR 40,000 333 SOLOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. SIRIUS BETEILIGUNGS KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 35,800 334 SONATA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 1.00 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 98.8 335 SPECTRUM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,336 336 SPREE GALERIE HOTELBETRIEBSGESELLSCHAFT MBH MUNICH MUNICH 1 ARGENTAURUS IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH 100.00 Issued capital EUR 511,300 337 STEWE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 24.00 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 75.80 338 STRUCTURED INVEST SOCIETE ANONYME LUXEMBOURG LUXEMBOURG 1 UNICREDIT BANK AG 100.00 Issued capital EUR 125,500 339 SUCCESS 2015 B.V. AMSTERDAM AMSTERDAM 4 UNICREDIT LEASING (AUSTRIA) GMBH .. (3) 340 SVILUPPO IMMOBILIARE PESCACCIO - SOCIETA' A RESPONSABILITA' LIMITATA ROME ROME 1 CAVE NUOVE SPA 100.00 Issued capital EUR 10,000 341 T & P FRANKFURT DEVELOPMENT B.V. AMSTERDAM AMSTERDAM 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 4,938,271 342 T & P VASTGOED STUTTGART B.V. AMSTERDAM AMSTERDAM 1 HVB PROJEKT GMBH 87.50 Issued capital EUR 10,769,773 343 TERRENO GRUNDSTUCKSVERWALTUNG GMBH & CO. ENTWICKLUNGS- UND FINANZIERUNGSVERMITTLUNGS-KG MUNICH MUNICH 1 HVB TECTA GMBH 75.00 Issued capital EUR 920,400 344 TERZ Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 345 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 99.67 Issued capital EUR 6,240,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 122 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 329 SIRIUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 5.00 Issued capital EUR 30,000 SOLOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. SIRIUS BETEILIGUNGS KG 95.00 330 SOCIETA' DI GESTIONI ESATTORIALI IN SICILIA SO.G.E.SI. S.P.A. IN LIQ. PALERMO PALERMO 1 UNICREDIT SPA 80.00 Issued capital EUR 36,151,500 331 SOCIETA' ITALIANA GESTIONE ED INCASSO CREDITI S.P.A. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 341,916 332 SOFIGERE SOCIETE PAR ACTIONS SIMPLIFIEE (IN LIQUIDAZIONE) PARIS PARIS 1 UNICREDIT SPA 100.00 Issued capital EUR 40,000 333 SOLOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. SIRIUS BETEILIGUNGS KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 35,800 334 SONATA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 1.00 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 98.8 335 SPECTRUM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,336 336 SPREE GALERIE HOTELBETRIEBSGESELLSCHAFT MBH MUNICH MUNICH 1 ARGENTAURUS IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH 100.00 Issued capital EUR 511,300 337 STEWE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 24.00 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 75.80 338 STRUCTURED INVEST SOCIETE ANONYME LUXEMBOURG LUXEMBOURG 1 UNICREDIT BANK AG 100.00 Issued capital EUR 125,500 339 SUCCESS 2015 B.V. AMSTERDAM AMSTERDAM 4 UNICREDIT LEASING (AUSTRIA) GMBH .. (3) 340 SVILUPPO IMMOBILIARE PESCACCIO - SOCIETA' A RESPONSABILITA' LIMITATA ROME ROME 1 CAVE NUOVE SPA 100.00 Issued capital EUR 10,000 341 T & P FRANKFURT DEVELOPMENT B.V. AMSTERDAM AMSTERDAM 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 4,938,271 342 T & P VASTGOED STUTTGART B.V. AMSTERDAM AMSTERDAM 1 HVB PROJEKT GMBH 87.50 Issued capital EUR 10,769,773 343 TERRENO GRUNDSTUCKSVERWALTUNG GMBH & CO. ENTWICKLUNGS- UND FINANZIERUNGSVERMITTLUNGS-KG MUNICH MUNICH 1 HVB TECTA GMBH 75.00 Issued capital EUR 920,400 344 TERZ Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 345 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 99.67 Issued capital EUR 6,240,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 122 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 329 SIRIUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 5.00 Issued capital EUR 30,000 SOLOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. SIRIUS BETEILIGUNGS KG 95.00 330 SOCIETA' DI GESTIONI ESATTORIALI IN SICILIA SO.G.E.SI. S.P.A. IN LIQ. PALERMO PALERMO 1 UNICREDIT SPA 80.00 Issued capital EUR 36,151,500 331 SOCIETA' ITALIANA GESTIONE ED INCASSO CREDITI S.P.A. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 341,916 332 SOFIGERE SOCIETE PAR ACTIONS SIMPLIFIEE (IN LIQUIDAZIONE) PARIS PARIS 1 UNICREDIT SPA 100.00 Issued capital EUR 40,000 333 SOLOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. SIRIUS BETEILIGUNGS KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 35,800 334 SONATA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 1.00 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 98.8 335 SPECTRUM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,336 336 SPREE GALERIE HOTELBETRIEBSGESELLSCHAFT MBH MUNICH MUNICH 1 ARGENTAURUS IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH 100.00 Issued capital EUR 511,300 337 STEWE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 24.00 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 75.80 338 STRUCTURED INVEST SOCIETE ANONYME LUXEMBOURG LUXEMBOURG 1 UNICREDIT BANK AG 100.00 Issued capital EUR 125,500 339 SUCCESS 2015 B.V. AMSTERDAM AMSTERDAM 4 UNICREDIT LEASING (AUSTRIA) GMBH .. (3) 340 SVILUPPO IMMOBILIARE PESCACCIO - SOCIETA' A RESPONSABILITA' LIMITATA ROME ROME 1 CAVE NUOVE SPA 100.00 Issued capital EUR 10,000 341 T & P FRANKFURT DEVELOPMENT B.V. AMSTERDAM AMSTERDAM 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 4,938,271 342 T & P VASTGOED STUTTGART B.V. AMSTERDAM AMSTERDAM 1 HVB PROJEKT GMBH 87.50 Issued capital EUR 10,769,773 343 TERRENO GRUNDSTUCKSVERWALTUNG GMBH & CO. ENTWICKLUNGS- UND FINANZIERUNGSVERMITTLUNGS-KG MUNICH MUNICH 1 HVB TECTA GMBH 75.00 Issued capital EUR 920,400 344 TERZ Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 345 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 99.67 Issued capital EUR 6,240,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 122 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 329 SIRIUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 5.00 Issued capital EUR 30,000 SOLOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. SIRIUS BETEILIGUNGS KG 95.00 330 SOCIETA' DI GESTIONI ESATTORIALI IN SICILIA SO.G.E.SI. S.P.A. IN LIQ. PALERMO PALERMO 1 UNICREDIT SPA 80.00 Issued capital EUR 36,151,500 331 SOCIETA' ITALIANA GESTIONE ED INCASSO CREDITI S.P.A. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 341,916 332 SOFIGERE SOCIETE PAR ACTIONS SIMPLIFIEE (IN LIQUIDAZIONE) PARIS PARIS 1 UNICREDIT SPA 100.00 Issued capital EUR 40,000 333 SOLOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. SIRIUS BETEILIGUNGS KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 35,800 334 SONATA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 1.00 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 98.8 335 SPECTRUM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,336 336 SPREE GALERIE HOTELBETRIEBSGESELLSCHAFT MBH MUNICH MUNICH 1 ARGENTAURUS IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH 100.00 Issued capital EUR 511,300 337 STEWE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 24.00 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 75.80 338 STRUCTURED INVEST SOCIETE ANONYME LUXEMBOURG LUXEMBOURG 1 UNICREDIT BANK AG 100.00 Issued capital EUR 125,500 339 SUCCESS 2015 B.V. AMSTERDAM AMSTERDAM 4 UNICREDIT LEASING (AUSTRIA) GMBH .. (3) 340 SVILUPPO IMMOBILIARE PESCACCIO - SOCIETA' A RESPONSABILITA' LIMITATA ROME ROME 1 CAVE NUOVE SPA 100.00 Issued capital EUR 10,000 341 T & P FRANKFURT DEVELOPMENT B.V. AMSTERDAM AMSTERDAM 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 4,938,271 342 T & P VASTGOED STUTTGART B.V. AMSTERDAM AMSTERDAM 1 HVB PROJEKT GMBH 87.50 Issued capital EUR 10,769,773 343 TERRENO GRUNDSTUCKSVERWALTUNG GMBH & CO. ENTWICKLUNGS- UND FINANZIERUNGSVERMITTLUNGS-KG MUNICH MUNICH 1 HVB TECTA GMBH 75.00 Issued capital EUR 920,400 344 TERZ Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 345 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 99.67 Issued capital EUR 6,240,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 122 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 329 SIRIUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH MUNICH MUNICH 1 HVB PROJEKT GMBH 5.00 Issued capital EUR 30,000 SOLOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. SIRIUS BETEILIGUNGS KG 95.00 330 SOCIETA' DI GESTIONI ESATTORIALI IN SICILIA SO.G.E.SI. S.P.A. IN LIQ. PALERMO PALERMO 1 UNICREDIT SPA 80.00 Issued capital EUR 36,151,500 331 SOCIETA' ITALIANA GESTIONE ED INCASSO CREDITI S.P.A. IN LIQUIDAZIONE ROME ROME 1 UNICREDIT SPA 100.00 Issued capital EUR 341,916 332 SOFIGERE SOCIETE PAR ACTIONS SIMPLIFIEE (IN LIQUIDAZIONE) PARIS PARIS 1 UNICREDIT SPA 100.00 Issued capital EUR 40,000 333 SOLOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH & CO. SIRIUS BETEILIGUNGS KG MUNICH MUNICH 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 35,800 334 SONATA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 ARNO GRUNDSTUECKSVERWALTUNGS GESELLSCHAFT M.B.H. 1.00 Issued capital EUR 36,336 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 98.8 335 SPECTRUM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 36,336 336 SPREE GALERIE HOTELBETRIEBSGESELLSCHAFT MBH MUNICH MUNICH 1 ARGENTAURUS IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH 100.00 Issued capital EUR 511,300 337 STEWE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 PROJEKT-LEASE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 24.00 Issued capital EUR 36,337 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 75.80 338 STRUCTURED INVEST SOCIETE ANONYME LUXEMBOURG LUXEMBOURG 1 UNICREDIT BANK AG 100.00 Issued capital EUR 125,500 339 SUCCESS 2015 B.V. AMSTERDAM AMSTERDAM 4 UNICREDIT LEASING (AUSTRIA) GMBH .. (3) 340 SVILUPPO IMMOBILIARE PESCACCIO - SOCIETA' A RESPONSABILITA' LIMITATA ROME ROME 1 CAVE NUOVE SPA 100.00 Issued capital EUR 10,000 341 T & P FRANKFURT DEVELOPMENT B.V. AMSTERDAM AMSTERDAM 1 HVB PROJEKT GMBH 100.00 Issued capital EUR 4,938,271 342 T & P VASTGOED STUTTGART B.V. AMSTERDAM AMSTERDAM 1 HVB PROJEKT GMBH 87.50 Issued capital EUR 10,769,773 343 TERRENO GRUNDSTUCKSVERWALTUNG GMBH & CO. ENTWICKLUNGS- UND FINANZIERUNGSVERMITTLUNGS-KG MUNICH MUNICH 1 HVB TECTA GMBH 75.00 Issued capital EUR 920,400 344 TERZ Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 345 TIVOLI GRUNDSTUCKS-AKTIENGESELLSCHAFT MUNICH MUNICH 1 PORTIA GRUNDSTUCKS-VERWALTUNGSGESELLSCHAFT MBH & CO. OBJEKT KG 99.67 Issued capital EUR 6,240,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 123 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 346 TRANSTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 93.85 Issued capital EUR 26,000 UNICREDIT BANK AG 6.15 347 TREDEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 348 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 365,000 349 TRICASA GRUNDBESITZ GESELLSCHAFT MBH & CO. 1. VERMIETUNGS KG MUNICH MUNICH 1 HYPO-REAL HAUS- UND GRUNDBESITZ GESELLSCHAFT MBH .. Issued capital EUR 6,979,476 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 100.00 350 TRICASA GRUNDBESITZGESELLSCHAFT DES BURGERLICHEN RECHTS NR. 1 MUNICH MUNICH 1 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 100.00 Issued capital EUR 13,687,272 351 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 90.00 Issued capital EUR 10,000 BA-CA ANDANTE LEASING GMBH 10.00 352 UCTAM BALTICS SIA RIGA RIGA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital EUR 4,265,585 353 UCTAM BH D.O.O. MOSTAR MOSTAR 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital BAM 2,000 354 UCTAM BULGARIA EOOD SOFIA SOFIA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital BGN 20,000 355 UCTAM CZECH REPUBLIC SRO PRAGUE PRAGUE 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital CZK 45,500,000 356 UCTAM D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital RSD 631,564,325 357 UCTAM HUNGARY KFT BUDAPEST BUDAPEST 1 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) 1.00 Issued capital HUF 10,300,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 99.00 358 UCTAM RETAIL HUNGARY KFT. BUDAPEST BUDAPEST 1 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) 1.00 Issued capital HUF 10,000,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 99.00 359 UCTAM RO S.R.L. BUCHAREST BUCHAREST 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital RON 30,560,080 360 UCTAM RU LIMITED LIABILITY COMPANY MOSCOW MOSCOW 1 UCTAM BALTICS SIA .. Issued capital RUB 4,000,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 361 UCTAM SVK S.R.O. BRATISLAVA BRATISLAVA 1 UCTAM BALTICS SIA 15.00 0.01 Issued capital EUR 5,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 85.00 99.99 362 UCTAM UPRAVLJANJE D.O.O. LJUBLJANA LJUBLJANA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital EUR 7,500 363 UFFICIUM IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 5.00 Issued capital EUR 36,337 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 123 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 346 TRANSTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 93.85 Issued capital EUR 26,000 UNICREDIT BANK AG 6.15 347 TREDEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 348 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 365,000 349 TRICASA GRUNDBESITZ GESELLSCHAFT MBH & CO. 1. VERMIETUNGS KG MUNICH MUNICH 1 HYPO-REAL HAUS- UND GRUNDBESITZ GESELLSCHAFT MBH .. Issued capital EUR 6,979,476 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 100.00 350 TRICASA GRUNDBESITZGESELLSCHAFT DES BURGERLICHEN RECHTS NR. 1 MUNICH MUNICH 1 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 100.00 Issued capital EUR 13,687,272 351 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 90.00 Issued capital EUR 10,000 BA-CA ANDANTE LEASING GMBH 10.00 352 UCTAM BALTICS SIA RIGA RIGA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital EUR 4,265,585 353 UCTAM BH D.O.O. MOSTAR MOSTAR 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital BAM 2,000 354 UCTAM BULGARIA EOOD SOFIA SOFIA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital BGN 20,000 355 UCTAM CZECH REPUBLIC SRO PRAGUE PRAGUE 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital CZK 45,500,000 356 UCTAM D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital RSD 631,564,325 357 UCTAM HUNGARY KFT BUDAPEST BUDAPEST 1 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) 1.00 Issued capital HUF 10,300,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 99.00 358 UCTAM RETAIL HUNGARY KFT. BUDAPEST BUDAPEST 1 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) 1.00 Issued capital HUF 10,000,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 99.00 359 UCTAM RO S.R.L. BUCHAREST BUCHAREST 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital RON 30,560,080 360 UCTAM RU LIMITED LIABILITY COMPANY MOSCOW MOSCOW 1 UCTAM BALTICS SIA .. Issued capital RUB 4,000,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 361 UCTAM SVK S.R.O. BRATISLAVA BRATISLAVA 1 UCTAM BALTICS SIA 15.00 0.01 Issued capital EUR 5,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 85.00 99.99 362 UCTAM UPRAVLJANJE D.O.O. LJUBLJANA LJUBLJANA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital EUR 7,500 363 UFFICIUM IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 5.00 Issued capital EUR 36,337 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 123 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 346 TRANSTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 93.85 Issued capital EUR 26,000 UNICREDIT BANK AG 6.15 347 TREDEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 348 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 365,000 349 TRICASA GRUNDBESITZ GESELLSCHAFT MBH & CO. 1. VERMIETUNGS KG MUNICH MUNICH 1 HYPO-REAL HAUS- UND GRUNDBESITZ GESELLSCHAFT MBH .. Issued capital EUR 6,979,476 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 100.00 350 TRICASA GRUNDBESITZGESELLSCHAFT DES BURGERLICHEN RECHTS NR. 1 MUNICH MUNICH 1 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 100.00 Issued capital EUR 13,687,272 351 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 90.00 Issued capital EUR 10,000 BA-CA ANDANTE LEASING GMBH 10.00 352 UCTAM BALTICS SIA RIGA RIGA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital EUR 4,265,585 353 UCTAM BH D.O.O. MOSTAR MOSTAR 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital BAM 2,000 354 UCTAM BULGARIA EOOD SOFIA SOFIA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital BGN 20,000 355 UCTAM CZECH REPUBLIC SRO PRAGUE PRAGUE 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital CZK 45,500,000 356 UCTAM D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital RSD 631,564,325 357 UCTAM HUNGARY KFT BUDAPEST BUDAPEST 1 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) 1.00 Issued capital HUF 10,300,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 99.00 358 UCTAM RETAIL HUNGARY KFT. BUDAPEST BUDAPEST 1 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) 1.00 Issued capital HUF 10,000,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 99.00 359 UCTAM RO S.R.L. BUCHAREST BUCHAREST 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital RON 30,560,080 360 UCTAM RU LIMITED LIABILITY COMPANY MOSCOW MOSCOW 1 UCTAM BALTICS SIA .. Issued capital RUB 4,000,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 361 UCTAM SVK S.R.O. BRATISLAVA BRATISLAVA 1 UCTAM BALTICS SIA 15.00 0.01 Issued capital EUR 5,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 85.00 99.99 362 UCTAM UPRAVLJANJE D.O.O. LJUBLJANA LJUBLJANA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital EUR 7,500 363 UFFICIUM IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 5.00 Issued capital EUR 36,337 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 123 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 346 TRANSTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 93.85 Issued capital EUR 26,000 UNICREDIT BANK AG 6.15 347 TREDEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 348 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 365,000 349 TRICASA GRUNDBESITZ GESELLSCHAFT MBH & CO. 1. VERMIETUNGS KG MUNICH MUNICH 1 HYPO-REAL HAUS- UND GRUNDBESITZ GESELLSCHAFT MBH .. Issued capital EUR 6,979,476 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 100.00 350 TRICASA GRUNDBESITZGESELLSCHAFT DES BURGERLICHEN RECHTS NR. 1 MUNICH MUNICH 1 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 100.00 Issued capital EUR 13,687,272 351 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 90.00 Issued capital EUR 10,000 BA-CA ANDANTE LEASING GMBH 10.00 352 UCTAM BALTICS SIA RIGA RIGA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital EUR 4,265,585 353 UCTAM BH D.O.O. MOSTAR MOSTAR 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital BAM 2,000 354 UCTAM BULGARIA EOOD SOFIA SOFIA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital BGN 20,000 355 UCTAM CZECH REPUBLIC SRO PRAGUE PRAGUE 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital CZK 45,500,000 356 UCTAM D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital RSD 631,564,325 357 UCTAM HUNGARY KFT BUDAPEST BUDAPEST 1 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) 1.00 Issued capital HUF 10,300,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 99.00 358 UCTAM RETAIL HUNGARY KFT. BUDAPEST BUDAPEST 1 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) 1.00 Issued capital HUF 10,000,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 99.00 359 UCTAM RO S.R.L. BUCHAREST BUCHAREST 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital RON 30,560,080 360 UCTAM RU LIMITED LIABILITY COMPANY MOSCOW MOSCOW 1 UCTAM BALTICS SIA .. Issued capital RUB 4,000,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 361 UCTAM SVK S.R.O. BRATISLAVA BRATISLAVA 1 UCTAM BALTICS SIA 15.00 0.01 Issued capital EUR 5,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 85.00 99.99 362 UCTAM UPRAVLJANJE D.O.O. LJUBLJANA LJUBLJANA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital EUR 7,500 363 UFFICIUM IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 5.00 Issued capital EUR 36,337 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 123 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 346 TRANSTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH MUNICH 1 HVB IMMOBILIEN AG 93.85 Issued capital EUR 26,000 UNICREDIT BANK AG 6.15 347 TREDEC Z IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 348 TREUCONSULT BETEILIGUNGSGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BANK AUSTRIA REAL INVEST IMMOBILIEN-MANAGEMENT GMBH 100.00 Issued capital EUR 365,000 349 TRICASA GRUNDBESITZ GESELLSCHAFT MBH & CO. 1. VERMIETUNGS KG MUNICH MUNICH 1 HYPO-REAL HAUS- UND GRUNDBESITZ GESELLSCHAFT MBH .. Issued capital EUR 6,979,476 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 100.00 350 TRICASA GRUNDBESITZGESELLSCHAFT DES BURGERLICHEN RECHTS NR. 1 MUNICH MUNICH 1 ORESTOS IMMOBILIEN-VERWALTUNGS GMBH 100.00 Issued capital EUR 13,687,272 351 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 90.00 Issued capital EUR 10,000 BA-CA ANDANTE LEASING GMBH 10.00 352 UCTAM BALTICS SIA RIGA RIGA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital EUR 4,265,585 353 UCTAM BH D.O.O. MOSTAR MOSTAR 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital BAM 2,000 354 UCTAM BULGARIA EOOD SOFIA SOFIA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital BGN 20,000 355 UCTAM CZECH REPUBLIC SRO PRAGUE PRAGUE 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital CZK 45,500,000 356 UCTAM D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital RSD 631,564,325 357 UCTAM HUNGARY KFT BUDAPEST BUDAPEST 1 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) 1.00 Issued capital HUF 10,300,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 99.00 358 UCTAM RETAIL HUNGARY KFT. BUDAPEST BUDAPEST 1 EUROPA BEFEKTETESI ALAPKEZELOE ZRT (EUROPA INVESTMENT FUND MANAGEMENT LTD.) 1.00 Issued capital HUF 10,000,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 99.00 359 UCTAM RO S.R.L. BUCHAREST BUCHAREST 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital RON 30,560,080 360 UCTAM RU LIMITED LIABILITY COMPANY MOSCOW MOSCOW 1 UCTAM BALTICS SIA .. Issued capital RUB 4,000,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 361 UCTAM SVK S.R.O. BRATISLAVA BRATISLAVA 1 UCTAM BALTICS SIA 15.00 0.01 Issued capital EUR 5,000 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 85.00 99.99 362 UCTAM UPRAVLJANJE D.O.O. LJUBLJANA LJUBLJANA 1 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH 100.00 Issued capital EUR 7,500 363 UFFICIUM IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 KUTRA GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. 5.00 Issued capital EUR 36,337 UNICREDIT LEASING (AUSTRIA) GMBH 95.00 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 124 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 364 UNICOM IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 365 UNICREDIT AURORA LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 219,000 366 UNICREDIT BANK A.D. BANJA LUKA BANJA LUKA BANJA LUKA 1 UNICREDIT SPA 98.46 Issued capital BAM 97,055,000 367 UNICREDIT BANK AG MUNICH MUNICH 1 UNICREDIT SPA 100.00 Issued capital EUR 2,407,151,016 368 UNICREDIT BANK AUSTRIA AG VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 1,681,033,521 369 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. PRAGUE PRAGUE 1 UNICREDIT SPA 100.00 Issued capital CZK 8,754,617,898 370 UNICREDIT BANK D.D. MOSTAR MOSTAR 1 ZAGREBACKA BANKA D.D. 99.35 99.31 Issued capital BAM 119,195,000 371 UNICREDIT BANK HUNGARY ZRT. BUDAPEST BUDAPEST 1 UNICREDIT SPA 100.00 Issued capital HUF 24,118,220,000 372 UNICREDIT BANK IRELAND PLC DUBLIN DUBLIN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,343,118,650 373 UNICREDIT BANK S.A. BUCHAREST BUCHAREST 1 UNICREDIT SPA 98.63 Issued capital RON 1,177,748,253 374 UNICREDIT BANK SERBIA JSC BELGRADE BELGRADE 1 UNICREDIT SPA 100.00 Issued capital RSD 23,607,620,000 375 UNICREDIT BANKA SLOVENIJA D.D. LJUBLJANA LJUBLJANA 1 UNICREDIT SPA 100.00 Issued capital EUR 20,383,765 376 UNICREDIT BETEILIGUNGS GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 1,000,000 377 UNICREDIT BIZTOSITASKOEZVETITO KFT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 5,000,000 378 UNICREDIT BPC MORTAGE SRL (COVERED BONDS) VERONA VERONA 4 UNICREDIT SPA .. (3) 379 UNICREDIT BPC MORTGAGE S.R.L. VERONA VERONA 1 UNICREDIT SPA 60.00 Issued capital EUR 12,000 380 UNICREDIT BROKER S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 8,266 381 UNICREDIT BULBANK AD SOFIA SOFIA 1 UNICREDIT SPA 99.45 Issued capital BGN 285,776,674 382 UNICREDIT CAPITAL MARKETS LLC NEW YORK NEW YORK 1 UNICREDIT U.S. FINANCE LLC 100.00 Issued capital USD 100,100 383 UNICREDIT CENTER AM KAISERWASSER GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 384 UNICREDIT CONSUMER FINANCING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 2,800,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 124 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 364 UNICOM IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 365 UNICREDIT AURORA LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 219,000 366 UNICREDIT BANK A.D. BANJA LUKA BANJA LUKA BANJA LUKA 1 UNICREDIT SPA 98.46 Issued capital BAM 97,055,000 367 UNICREDIT BANK AG MUNICH MUNICH 1 UNICREDIT SPA 100.00 Issued capital EUR 2,407,151,016 368 UNICREDIT BANK AUSTRIA AG VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 1,681,033,521 369 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. PRAGUE PRAGUE 1 UNICREDIT SPA 100.00 Issued capital CZK 8,754,617,898 370 UNICREDIT BANK D.D. MOSTAR MOSTAR 1 ZAGREBACKA BANKA D.D. 99.35 99.31 Issued capital BAM 119,195,000 371 UNICREDIT BANK HUNGARY ZRT. BUDAPEST BUDAPEST 1 UNICREDIT SPA 100.00 Issued capital HUF 24,118,220,000 372 UNICREDIT BANK IRELAND PLC DUBLIN DUBLIN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,343,118,650 373 UNICREDIT BANK S.A. BUCHAREST BUCHAREST 1 UNICREDIT SPA 98.63 Issued capital RON 1,177,748,253 374 UNICREDIT BANK SERBIA JSC BELGRADE BELGRADE 1 UNICREDIT SPA 100.00 Issued capital RSD 23,607,620,000 375 UNICREDIT BANKA SLOVENIJA D.D. LJUBLJANA LJUBLJANA 1 UNICREDIT SPA 100.00 Issued capital EUR 20,383,765 376 UNICREDIT BETEILIGUNGS GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 1,000,000 377 UNICREDIT BIZTOSITASKOEZVETITO KFT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 5,000,000 378 UNICREDIT BPC MORTAGE SRL (COVERED BONDS) VERONA VERONA 4 UNICREDIT SPA .. (3) 379 UNICREDIT BPC MORTGAGE S.R.L. VERONA VERONA 1 UNICREDIT SPA 60.00 Issued capital EUR 12,000 380 UNICREDIT BROKER S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 8,266 381 UNICREDIT BULBANK AD SOFIA SOFIA 1 UNICREDIT SPA 99.45 Issued capital BGN 285,776,674 382 UNICREDIT CAPITAL MARKETS LLC NEW YORK NEW YORK 1 UNICREDIT U.S. FINANCE LLC 100.00 Issued capital USD 100,100 383 UNICREDIT CENTER AM KAISERWASSER GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 384 UNICREDIT CONSUMER FINANCING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 2,800,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 124 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 364 UNICOM IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 365 UNICREDIT AURORA LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 219,000 366 UNICREDIT BANK A.D. BANJA LUKA BANJA LUKA BANJA LUKA 1 UNICREDIT SPA 98.46 Issued capital BAM 97,055,000 367 UNICREDIT BANK AG MUNICH MUNICH 1 UNICREDIT SPA 100.00 Issued capital EUR 2,407,151,016 368 UNICREDIT BANK AUSTRIA AG VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 1,681,033,521 369 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. PRAGUE PRAGUE 1 UNICREDIT SPA 100.00 Issued capital CZK 8,754,617,898 370 UNICREDIT BANK D.D. MOSTAR MOSTAR 1 ZAGREBACKA BANKA D.D. 99.35 99.31 Issued capital BAM 119,195,000 371 UNICREDIT BANK HUNGARY ZRT. BUDAPEST BUDAPEST 1 UNICREDIT SPA 100.00 Issued capital HUF 24,118,220,000 372 UNICREDIT BANK IRELAND PLC DUBLIN DUBLIN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,343,118,650 373 UNICREDIT BANK S.A. BUCHAREST BUCHAREST 1 UNICREDIT SPA 98.63 Issued capital RON 1,177,748,253 374 UNICREDIT BANK SERBIA JSC BELGRADE BELGRADE 1 UNICREDIT SPA 100.00 Issued capital RSD 23,607,620,000 375 UNICREDIT BANKA SLOVENIJA D.D. LJUBLJANA LJUBLJANA 1 UNICREDIT SPA 100.00 Issued capital EUR 20,383,765 376 UNICREDIT BETEILIGUNGS GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 1,000,000 377 UNICREDIT BIZTOSITASKOEZVETITO KFT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 5,000,000 378 UNICREDIT BPC MORTAGE SRL (COVERED BONDS) VERONA VERONA 4 UNICREDIT SPA .. (3) 379 UNICREDIT BPC MORTGAGE S.R.L. VERONA VERONA 1 UNICREDIT SPA 60.00 Issued capital EUR 12,000 380 UNICREDIT BROKER S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 8,266 381 UNICREDIT BULBANK AD SOFIA SOFIA 1 UNICREDIT SPA 99.45 Issued capital BGN 285,776,674 382 UNICREDIT CAPITAL MARKETS LLC NEW YORK NEW YORK 1 UNICREDIT U.S. FINANCE LLC 100.00 Issued capital USD 100,100 383 UNICREDIT CENTER AM KAISERWASSER GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 384 UNICREDIT CONSUMER FINANCING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 2,800,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 124 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 364 UNICOM IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 365 UNICREDIT AURORA LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 219,000 366 UNICREDIT BANK A.D. BANJA LUKA BANJA LUKA BANJA LUKA 1 UNICREDIT SPA 98.46 Issued capital BAM 97,055,000 367 UNICREDIT BANK AG MUNICH MUNICH 1 UNICREDIT SPA 100.00 Issued capital EUR 2,407,151,016 368 UNICREDIT BANK AUSTRIA AG VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 1,681,033,521 369 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. PRAGUE PRAGUE 1 UNICREDIT SPA 100.00 Issued capital CZK 8,754,617,898 370 UNICREDIT BANK D.D. MOSTAR MOSTAR 1 ZAGREBACKA BANKA D.D. 99.35 99.31 Issued capital BAM 119,195,000 371 UNICREDIT BANK HUNGARY ZRT. BUDAPEST BUDAPEST 1 UNICREDIT SPA 100.00 Issued capital HUF 24,118,220,000 372 UNICREDIT BANK IRELAND PLC DUBLIN DUBLIN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,343,118,650 373 UNICREDIT BANK S.A. BUCHAREST BUCHAREST 1 UNICREDIT SPA 98.63 Issued capital RON 1,177,748,253 374 UNICREDIT BANK SERBIA JSC BELGRADE BELGRADE 1 UNICREDIT SPA 100.00 Issued capital RSD 23,607,620,000 375 UNICREDIT BANKA SLOVENIJA D.D. LJUBLJANA LJUBLJANA 1 UNICREDIT SPA 100.00 Issued capital EUR 20,383,765 376 UNICREDIT BETEILIGUNGS GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 1,000,000 377 UNICREDIT BIZTOSITASKOEZVETITO KFT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 5,000,000 378 UNICREDIT BPC MORTAGE SRL (COVERED BONDS) VERONA VERONA 4 UNICREDIT SPA .. (3) 379 UNICREDIT BPC MORTGAGE S.R.L. VERONA VERONA 1 UNICREDIT SPA 60.00 Issued capital EUR 12,000 380 UNICREDIT BROKER S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 8,266 381 UNICREDIT BULBANK AD SOFIA SOFIA 1 UNICREDIT SPA 99.45 Issued capital BGN 285,776,674 382 UNICREDIT CAPITAL MARKETS LLC NEW YORK NEW YORK 1 UNICREDIT U.S. FINANCE LLC 100.00 Issued capital USD 100,100 383 UNICREDIT CENTER AM KAISERWASSER GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 384 UNICREDIT CONSUMER FINANCING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 2,800,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 124 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 364 UNICOM IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 365 UNICREDIT AURORA LEASING GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 219,000 366 UNICREDIT BANK A.D. BANJA LUKA BANJA LUKA BANJA LUKA 1 UNICREDIT SPA 98.46 Issued capital BAM 97,055,000 367 UNICREDIT BANK AG MUNICH MUNICH 1 UNICREDIT SPA 100.00 Issued capital EUR 2,407,151,016 368 UNICREDIT BANK AUSTRIA AG VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 1,681,033,521 369 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. PRAGUE PRAGUE 1 UNICREDIT SPA 100.00 Issued capital CZK 8,754,617,898 370 UNICREDIT BANK D.D. MOSTAR MOSTAR 1 ZAGREBACKA BANKA D.D. 99.35 99.31 Issued capital BAM 119,195,000 371 UNICREDIT BANK HUNGARY ZRT. BUDAPEST BUDAPEST 1 UNICREDIT SPA 100.00 Issued capital HUF 24,118,220,000 372 UNICREDIT BANK IRELAND PLC DUBLIN DUBLIN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,343,118,650 373 UNICREDIT BANK S.A. BUCHAREST BUCHAREST 1 UNICREDIT SPA 98.63 Issued capital RON 1,177,748,253 374 UNICREDIT BANK SERBIA JSC BELGRADE BELGRADE 1 UNICREDIT SPA 100.00 Issued capital RSD 23,607,620,000 375 UNICREDIT BANKA SLOVENIJA D.D. LJUBLJANA LJUBLJANA 1 UNICREDIT SPA 100.00 Issued capital EUR 20,383,765 376 UNICREDIT BETEILIGUNGS GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 1,000,000 377 UNICREDIT BIZTOSITASKOEZVETITO KFT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 5,000,000 378 UNICREDIT BPC MORTAGE SRL (COVERED BONDS) VERONA VERONA 4 UNICREDIT SPA .. (3) 379 UNICREDIT BPC MORTGAGE S.R.L. VERONA VERONA 1 UNICREDIT SPA 60.00 Issued capital EUR 12,000 380 UNICREDIT BROKER S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 8,266 381 UNICREDIT BULBANK AD SOFIA SOFIA 1 UNICREDIT SPA 99.45 Issued capital BGN 285,776,674 382 UNICREDIT CAPITAL MARKETS LLC NEW YORK NEW YORK 1 UNICREDIT U.S. FINANCE LLC 100.00 Issued capital USD 100,100 383 UNICREDIT CENTER AM KAISERWASSER GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 35,000 384 UNICREDIT CONSUMER FINANCING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 2,800,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 125 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 385 UNICREDIT CONSUMER FINANCING IFN S.A. BUCHAREST BUCHAREST 1 UNICREDIT BANK S.A. 50.10 Issued capital RON 103,269,200 UNICREDIT SPA 49.90 386 UNICREDIT DIRECT SERVICES GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 767,000 387 UNICREDIT FACTORING CZECH REPUBLIC AND SLOVAKIA, A.S. PRAGUE PRAGUE 1 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. 100.00 Issued capital CZK 222,600,000 388 UNICREDIT FACTORING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 1,000,000 389 UNICREDIT FACTORING SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 414,348,000 390 UNICREDIT FLEET MANAGEMENT EOOD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 100,000 391 UNICREDIT FLEET MANAGEMENT S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 5,000,000 392 UNICREDIT FLEET MANAGEMENT S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 6,639 393 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH VIENNA VIENNA 1 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 57,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 394 UNICREDIT GLOBAL LEASING EXPORT GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 36,336 395 UNICREDIT GLOBAL LEASING PARTICIPATION MANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT LEASING SPA 100.00 Issued capital EUR 35,000 396 UNICREDIT INSURANCE BROKER EOOD SOFIA SOFIA 1 UNICREDIT LEASING EAD 100.00 Issued capital BGN 5,000 397 UNICREDIT INSURANCE BROKER SRL BUCHAREST BUCHAREST 1 PIRTA VERWALTUNGS GMBH 0.03 Issued capital RON 150,000 UNICREDIT INSURANCE MANAGEMENT CEE GMBH 99.97 398 UNICREDIT INSURANCE MANAGEMENT CEE GMBH VIENNA VIENNA 1 PIRTA VERWALTUNGS GMBH 100.00 Issued capital EUR 156,905 399 UNICREDIT INTERNATIONAL BANK (LUXEMBOURG) SA LUXEMBOURG LUXEMBOURG 1 UNICREDIT SPA 100.00 Issued capital EUR 13,406,600 400 UNICREDIT JELZALOGBANK ZRT. BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 3,000,000,000 401 UNICREDIT KFZ LEASING GMBH VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 648,000 402 UNICREDIT LEASING (AUSTRIA) GMBH VIENNA VIENNA 1 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 10.00 Issued capital EUR 17,296,134 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.02 UNICREDIT BANK AUSTRIA AG 89.98 403 UNICREDIT LEASING ALPHA ASSETVERMIETUNG GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 35,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 125 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 385 UNICREDIT CONSUMER FINANCING IFN S.A. BUCHAREST BUCHAREST 1 UNICREDIT BANK S.A. 50.10 Issued capital RON 103,269,200 UNICREDIT SPA 49.90 386 UNICREDIT DIRECT SERVICES GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 767,000 387 UNICREDIT FACTORING CZECH REPUBLIC AND SLOVAKIA, A.S. PRAGUE PRAGUE 1 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. 100.00 Issued capital CZK 222,600,000 388 UNICREDIT FACTORING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 1,000,000 389 UNICREDIT FACTORING SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 414,348,000 390 UNICREDIT FLEET MANAGEMENT EOOD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 100,000 391 UNICREDIT FLEET MANAGEMENT S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 5,000,000 392 UNICREDIT FLEET MANAGEMENT S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 6,639 393 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH VIENNA VIENNA 1 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 57,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 394 UNICREDIT GLOBAL LEASING EXPORT GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 36,336 395 UNICREDIT GLOBAL LEASING PARTICIPATION MANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT LEASING SPA 100.00 Issued capital EUR 35,000 396 UNICREDIT INSURANCE BROKER EOOD SOFIA SOFIA 1 UNICREDIT LEASING EAD 100.00 Issued capital BGN 5,000 397 UNICREDIT INSURANCE BROKER SRL BUCHAREST BUCHAREST 1 PIRTA VERWALTUNGS GMBH 0.03 Issued capital RON 150,000 UNICREDIT INSURANCE MANAGEMENT CEE GMBH 99.97 398 UNICREDIT INSURANCE MANAGEMENT CEE GMBH VIENNA VIENNA 1 PIRTA VERWALTUNGS GMBH 100.00 Issued capital EUR 156,905 399 UNICREDIT INTERNATIONAL BANK (LUXEMBOURG) SA LUXEMBOURG LUXEMBOURG 1 UNICREDIT SPA 100.00 Issued capital EUR 13,406,600 400 UNICREDIT JELZALOGBANK ZRT. BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 3,000,000,000 401 UNICREDIT KFZ LEASING GMBH VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 648,000 402 UNICREDIT LEASING (AUSTRIA) GMBH VIENNA VIENNA 1 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 10.00 Issued capital EUR 17,296,134 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.02 UNICREDIT BANK AUSTRIA AG 89.98 403 UNICREDIT LEASING ALPHA ASSETVERMIETUNG GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 35,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 125 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 385 UNICREDIT CONSUMER FINANCING IFN S.A. BUCHAREST BUCHAREST 1 UNICREDIT BANK S.A. 50.10 Issued capital RON 103,269,200 UNICREDIT SPA 49.90 386 UNICREDIT DIRECT SERVICES GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 767,000 387 UNICREDIT FACTORING CZECH REPUBLIC AND SLOVAKIA, A.S. PRAGUE PRAGUE 1 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. 100.00 Issued capital CZK 222,600,000 388 UNICREDIT FACTORING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 1,000,000 389 UNICREDIT FACTORING SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 414,348,000 390 UNICREDIT FLEET MANAGEMENT EOOD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 100,000 391 UNICREDIT FLEET MANAGEMENT S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 5,000,000 392 UNICREDIT FLEET MANAGEMENT S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 6,639 393 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH VIENNA VIENNA 1 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 57,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 394 UNICREDIT GLOBAL LEASING EXPORT GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 36,336 395 UNICREDIT GLOBAL LEASING PARTICIPATION MANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT LEASING SPA 100.00 Issued capital EUR 35,000 396 UNICREDIT INSURANCE BROKER EOOD SOFIA SOFIA 1 UNICREDIT LEASING EAD 100.00 Issued capital BGN 5,000 397 UNICREDIT INSURANCE BROKER SRL BUCHAREST BUCHAREST 1 PIRTA VERWALTUNGS GMBH 0.03 Issued capital RON 150,000 UNICREDIT INSURANCE MANAGEMENT CEE GMBH 99.97 398 UNICREDIT INSURANCE MANAGEMENT CEE GMBH VIENNA VIENNA 1 PIRTA VERWALTUNGS GMBH 100.00 Issued capital EUR 156,905 399 UNICREDIT INTERNATIONAL BANK (LUXEMBOURG) SA LUXEMBOURG LUXEMBOURG 1 UNICREDIT SPA 100.00 Issued capital EUR 13,406,600 400 UNICREDIT JELZALOGBANK ZRT. BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 3,000,000,000 401 UNICREDIT KFZ LEASING GMBH VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 648,000 402 UNICREDIT LEASING (AUSTRIA) GMBH VIENNA VIENNA 1 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 10.00 Issued capital EUR 17,296,134 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.02 UNICREDIT BANK AUSTRIA AG 89.98 403 UNICREDIT LEASING ALPHA ASSETVERMIETUNG GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 35,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 125 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 385 UNICREDIT CONSUMER FINANCING IFN S.A. BUCHAREST BUCHAREST 1 UNICREDIT BANK S.A. 50.10 Issued capital RON 103,269,200 UNICREDIT SPA 49.90 386 UNICREDIT DIRECT SERVICES GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 767,000 387 UNICREDIT FACTORING CZECH REPUBLIC AND SLOVAKIA, A.S. PRAGUE PRAGUE 1 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. 100.00 Issued capital CZK 222,600,000 388 UNICREDIT FACTORING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 1,000,000 389 UNICREDIT FACTORING SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 414,348,000 390 UNICREDIT FLEET MANAGEMENT EOOD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 100,000 391 UNICREDIT FLEET MANAGEMENT S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 5,000,000 392 UNICREDIT FLEET MANAGEMENT S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 6,639 393 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH VIENNA VIENNA 1 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 57,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 394 UNICREDIT GLOBAL LEASING EXPORT GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 36,336 395 UNICREDIT GLOBAL LEASING PARTICIPATION MANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT LEASING SPA 100.00 Issued capital EUR 35,000 396 UNICREDIT INSURANCE BROKER EOOD SOFIA SOFIA 1 UNICREDIT LEASING EAD 100.00 Issued capital BGN 5,000 397 UNICREDIT INSURANCE BROKER SRL BUCHAREST BUCHAREST 1 PIRTA VERWALTUNGS GMBH 0.03 Issued capital RON 150,000 UNICREDIT INSURANCE MANAGEMENT CEE GMBH 99.97 398 UNICREDIT INSURANCE MANAGEMENT CEE GMBH VIENNA VIENNA 1 PIRTA VERWALTUNGS GMBH 100.00 Issued capital EUR 156,905 399 UNICREDIT INTERNATIONAL BANK (LUXEMBOURG) SA LUXEMBOURG LUXEMBOURG 1 UNICREDIT SPA 100.00 Issued capital EUR 13,406,600 400 UNICREDIT JELZALOGBANK ZRT. BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 3,000,000,000 401 UNICREDIT KFZ LEASING GMBH VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 648,000 402 UNICREDIT LEASING (AUSTRIA) GMBH VIENNA VIENNA 1 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 10.00 Issued capital EUR 17,296,134 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.02 UNICREDIT BANK AUSTRIA AG 89.98 403 UNICREDIT LEASING ALPHA ASSETVERMIETUNG GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 35,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 125 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 385 UNICREDIT CONSUMER FINANCING IFN S.A. BUCHAREST BUCHAREST 1 UNICREDIT BANK S.A. 50.10 Issued capital RON 103,269,200 UNICREDIT SPA 49.90 386 UNICREDIT DIRECT SERVICES GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 767,000 387 UNICREDIT FACTORING CZECH REPUBLIC AND SLOVAKIA, A.S. PRAGUE PRAGUE 1 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. 100.00 Issued capital CZK 222,600,000 388 UNICREDIT FACTORING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 1,000,000 389 UNICREDIT FACTORING SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 414,348,000 390 UNICREDIT FLEET MANAGEMENT EOOD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 100,000 391 UNICREDIT FLEET MANAGEMENT S.R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 5,000,000 392 UNICREDIT FLEET MANAGEMENT S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 6,639 393 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH VIENNA VIENNA 1 EUROLEASE RAMSES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 57,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 394 UNICREDIT GLOBAL LEASING EXPORT GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 36,336 395 UNICREDIT GLOBAL LEASING PARTICIPATION MANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT LEASING SPA 100.00 Issued capital EUR 35,000 396 UNICREDIT INSURANCE BROKER EOOD SOFIA SOFIA 1 UNICREDIT LEASING EAD 100.00 Issued capital BGN 5,000 397 UNICREDIT INSURANCE BROKER SRL BUCHAREST BUCHAREST 1 PIRTA VERWALTUNGS GMBH 0.03 Issued capital RON 150,000 UNICREDIT INSURANCE MANAGEMENT CEE GMBH 99.97 398 UNICREDIT INSURANCE MANAGEMENT CEE GMBH VIENNA VIENNA 1 PIRTA VERWALTUNGS GMBH 100.00 Issued capital EUR 156,905 399 UNICREDIT INTERNATIONAL BANK (LUXEMBOURG) SA LUXEMBOURG LUXEMBOURG 1 UNICREDIT SPA 100.00 Issued capital EUR 13,406,600 400 UNICREDIT JELZALOGBANK ZRT. BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 3,000,000,000 401 UNICREDIT KFZ LEASING GMBH VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 100.00 Issued capital EUR 648,000 402 UNICREDIT LEASING (AUSTRIA) GMBH VIENNA VIENNA 1 BA-CA MARKETS & INVESTMENT BETEILIGUNG GES.M.B.H. 10.00 Issued capital EUR 17,296,134 PAYTRIA UNTERNEHMENSBETEILIGUNGEN GMBH 0.02 UNICREDIT BANK AUSTRIA AG 89.98 403 UNICREDIT LEASING ALPHA ASSETVERMIETUNG GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 100.00 Issued capital EUR 35,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 126 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 404 UNICREDIT LEASING AVIATION GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING GMBH 100.00 Issued capital EUR 1,600,000 405 UNICREDIT LEASING CORPORATION IFN S.A. BUCHAREST BUCHAREST 1 UNICREDIT BANK S.A. 99.96 Issued capital RON 90,989,013 UNICREDIT CONSUMER FINANCING IFN S.A. 0.04 406 UNICREDIT LEASING CROATIA D.O.O. ZA LEASING ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 28,741,800 407 UNICREDIT LEASING CZ, A.S. PRAGUE PRAGUE 1 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. 100.00 Issued capital CZK 981,452,000 408 UNICREDIT LEASING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 2,605,000 409 UNICREDIT LEASING FINANCE GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING GMBH 100.00 Issued capital EUR 17,580,000 410 UNICREDIT LEASING FLEET MANAGEMENT S.R.L. BUCHAREST BUCHAREST 1 PIRTA VERWALTUNGS GMBH 90.02 Issued capital RON 680,000 UNICREDIT LEASING CORPORATION IFN S.A. 9.98 411 UNICREDIT LEASING FUHRPARKMANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 364,000 412 UNICREDIT LEASING GMBH HAMBURG HAMBURG 1 UNICREDIT BANK AG 100.00 Issued capital EUR 15,000,000 413 UNICREDIT LEASING HUNGARY ZRT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 50,000,000 414 UNICREDIT LEASING IMMOTRUCK ZRT. BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 52,500,000 415 UNICREDIT LEASING INSURANCE SERVICES S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 5,000 416 UNICREDIT LEASING KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,100,000 417 UNICREDIT LEASING LUNA KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 418 UNICREDIT LEASING MARS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 419 UNICREDIT LEASING SLOVAKIA A.S. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital EUR 26,560,000 420 UNICREDIT LEASING SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,106,877,000 421 UNICREDIT LEASING SRBIJA D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT BANK SERBIA JSC 100.00 Issued capital RSD 1,078,133,000 422 UNICREDIT LEASING TECHNIKUM GMBH VIENNA VIENNA 1 LEASFINANZ GMBH 99.80 Issued capital EUR 35,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 423 UNICREDIT LEASING URANUS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 126 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 404 UNICREDIT LEASING AVIATION GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING GMBH 100.00 Issued capital EUR 1,600,000 405 UNICREDIT LEASING CORPORATION IFN S.A. BUCHAREST BUCHAREST 1 UNICREDIT BANK S.A. 99.96 Issued capital RON 90,989,013 UNICREDIT CONSUMER FINANCING IFN S.A. 0.04 406 UNICREDIT LEASING CROATIA D.O.O. ZA LEASING ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 28,741,800 407 UNICREDIT LEASING CZ, A.S. PRAGUE PRAGUE 1 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. 100.00 Issued capital CZK 981,452,000 408 UNICREDIT LEASING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 2,605,000 409 UNICREDIT LEASING FINANCE GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING GMBH 100.00 Issued capital EUR 17,580,000 410 UNICREDIT LEASING FLEET MANAGEMENT S.R.L. BUCHAREST BUCHAREST 1 PIRTA VERWALTUNGS GMBH 90.02 Issued capital RON 680,000 UNICREDIT LEASING CORPORATION IFN S.A. 9.98 411 UNICREDIT LEASING FUHRPARKMANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 364,000 412 UNICREDIT LEASING GMBH HAMBURG HAMBURG 1 UNICREDIT BANK AG 100.00 Issued capital EUR 15,000,000 413 UNICREDIT LEASING HUNGARY ZRT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 50,000,000 414 UNICREDIT LEASING IMMOTRUCK ZRT. BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 52,500,000 415 UNICREDIT LEASING INSURANCE SERVICES S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 5,000 416 UNICREDIT LEASING KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,100,000 417 UNICREDIT LEASING LUNA KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 418 UNICREDIT LEASING MARS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 419 UNICREDIT LEASING SLOVAKIA A.S. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital EUR 26,560,000 420 UNICREDIT LEASING SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,106,877,000 421 UNICREDIT LEASING SRBIJA D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT BANK SERBIA JSC 100.00 Issued capital RSD 1,078,133,000 422 UNICREDIT LEASING TECHNIKUM GMBH VIENNA VIENNA 1 LEASFINANZ GMBH 99.80 Issued capital EUR 35,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 423 UNICREDIT LEASING URANUS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 126 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 404 UNICREDIT LEASING AVIATION GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING GMBH 100.00 Issued capital EUR 1,600,000 405 UNICREDIT LEASING CORPORATION IFN S.A. BUCHAREST BUCHAREST 1 UNICREDIT BANK S.A. 99.96 Issued capital RON 90,989,013 UNICREDIT CONSUMER FINANCING IFN S.A. 0.04 406 UNICREDIT LEASING CROATIA D.O.O. ZA LEASING ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 28,741,800 407 UNICREDIT LEASING CZ, A.S. PRAGUE PRAGUE 1 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. 100.00 Issued capital CZK 981,452,000 408 UNICREDIT LEASING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 2,605,000 409 UNICREDIT LEASING FINANCE GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING GMBH 100.00 Issued capital EUR 17,580,000 410 UNICREDIT LEASING FLEET MANAGEMENT S.R.L. BUCHAREST BUCHAREST 1 PIRTA VERWALTUNGS GMBH 90.02 Issued capital RON 680,000 UNICREDIT LEASING CORPORATION IFN S.A. 9.98 411 UNICREDIT LEASING FUHRPARKMANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 364,000 412 UNICREDIT LEASING GMBH HAMBURG HAMBURG 1 UNICREDIT BANK AG 100.00 Issued capital EUR 15,000,000 413 UNICREDIT LEASING HUNGARY ZRT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 50,000,000 414 UNICREDIT LEASING IMMOTRUCK ZRT. BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 52,500,000 415 UNICREDIT LEASING INSURANCE SERVICES S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 5,000 416 UNICREDIT LEASING KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,100,000 417 UNICREDIT LEASING LUNA KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 418 UNICREDIT LEASING MARS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 419 UNICREDIT LEASING SLOVAKIA A.S. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital EUR 26,560,000 420 UNICREDIT LEASING SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,106,877,000 421 UNICREDIT LEASING SRBIJA D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT BANK SERBIA JSC 100.00 Issued capital RSD 1,078,133,000 422 UNICREDIT LEASING TECHNIKUM GMBH VIENNA VIENNA 1 LEASFINANZ GMBH 99.80 Issued capital EUR 35,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 423 UNICREDIT LEASING URANUS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 126 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 404 UNICREDIT LEASING AVIATION GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING GMBH 100.00 Issued capital EUR 1,600,000 405 UNICREDIT LEASING CORPORATION IFN S.A. BUCHAREST BUCHAREST 1 UNICREDIT BANK S.A. 99.96 Issued capital RON 90,989,013 UNICREDIT CONSUMER FINANCING IFN S.A. 0.04 406 UNICREDIT LEASING CROATIA D.O.O. ZA LEASING ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 28,741,800 407 UNICREDIT LEASING CZ, A.S. PRAGUE PRAGUE 1 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. 100.00 Issued capital CZK 981,452,000 408 UNICREDIT LEASING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 2,605,000 409 UNICREDIT LEASING FINANCE GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING GMBH 100.00 Issued capital EUR 17,580,000 410 UNICREDIT LEASING FLEET MANAGEMENT S.R.L. BUCHAREST BUCHAREST 1 PIRTA VERWALTUNGS GMBH 90.02 Issued capital RON 680,000 UNICREDIT LEASING CORPORATION IFN S.A. 9.98 411 UNICREDIT LEASING FUHRPARKMANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 364,000 412 UNICREDIT LEASING GMBH HAMBURG HAMBURG 1 UNICREDIT BANK AG 100.00 Issued capital EUR 15,000,000 413 UNICREDIT LEASING HUNGARY ZRT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 50,000,000 414 UNICREDIT LEASING IMMOTRUCK ZRT. BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 52,500,000 415 UNICREDIT LEASING INSURANCE SERVICES S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 5,000 416 UNICREDIT LEASING KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,100,000 417 UNICREDIT LEASING LUNA KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 418 UNICREDIT LEASING MARS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 419 UNICREDIT LEASING SLOVAKIA A.S. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital EUR 26,560,000 420 UNICREDIT LEASING SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,106,877,000 421 UNICREDIT LEASING SRBIJA D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT BANK SERBIA JSC 100.00 Issued capital RSD 1,078,133,000 422 UNICREDIT LEASING TECHNIKUM GMBH VIENNA VIENNA 1 LEASFINANZ GMBH 99.80 Issued capital EUR 35,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 423 UNICREDIT LEASING URANUS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 126 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 404 UNICREDIT LEASING AVIATION GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING GMBH 100.00 Issued capital EUR 1,600,000 405 UNICREDIT LEASING CORPORATION IFN S.A. BUCHAREST BUCHAREST 1 UNICREDIT BANK S.A. 99.96 Issued capital RON 90,989,013 UNICREDIT CONSUMER FINANCING IFN S.A. 0.04 406 UNICREDIT LEASING CROATIA D.O.O. ZA LEASING ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 28,741,800 407 UNICREDIT LEASING CZ, A.S. PRAGUE PRAGUE 1 UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. 100.00 Issued capital CZK 981,452,000 408 UNICREDIT LEASING EAD SOFIA SOFIA 1 UNICREDIT BULBANK AD 100.00 Issued capital BGN 2,605,000 409 UNICREDIT LEASING FINANCE GMBH HAMBURG HAMBURG 1 UNICREDIT LEASING GMBH 100.00 Issued capital EUR 17,580,000 410 UNICREDIT LEASING FLEET MANAGEMENT S.R.L. BUCHAREST BUCHAREST 1 PIRTA VERWALTUNGS GMBH 90.02 Issued capital RON 680,000 UNICREDIT LEASING CORPORATION IFN S.A. 9.98 411 UNICREDIT LEASING FUHRPARKMANAGEMENT GMBH VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 364,000 412 UNICREDIT LEASING GMBH HAMBURG HAMBURG 1 UNICREDIT BANK AG 100.00 Issued capital EUR 15,000,000 413 UNICREDIT LEASING HUNGARY ZRT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 50,000,000 414 UNICREDIT LEASING IMMOTRUCK ZRT. BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 52,500,000 415 UNICREDIT LEASING INSURANCE SERVICES S.R.O. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING SLOVAKIA A.S. 100.00 Issued capital EUR 5,000 416 UNICREDIT LEASING KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,100,000 417 UNICREDIT LEASING LUNA KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 418 UNICREDIT LEASING MARS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 419 UNICREDIT LEASING SLOVAKIA A.S. BRATISLAVA BRATISLAVA 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital EUR 26,560,000 420 UNICREDIT LEASING SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 1,106,877,000 421 UNICREDIT LEASING SRBIJA D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT BANK SERBIA JSC 100.00 Issued capital RSD 1,078,133,000 422 UNICREDIT LEASING TECHNIKUM GMBH VIENNA VIENNA 1 LEASFINANZ GMBH 99.80 Issued capital EUR 35,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 423 UNICREDIT LEASING URANUS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 80.00 Issued capital HUF 3,000,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 127 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 424 UNICREDIT LEASING VERSICHERUNGSSERVICE GMBH & CO KG VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 425 UNICREDIT LEASING, LEASING, D.O.O. LJUBLJANA LJUBLJANA 1 UNICREDIT BANKA SLOVENIJA D.D. 100.00 Issued capital EUR 25,039,658 426 UNICREDIT LUNA LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 427 UNICREDIT MOBILIEN UND KFZ LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 428 UNICREDIT OBG S.R.L. VERONA VERONA 1 UNICREDIT SPA 60.00 Issued capital EUR 10,000 429 UNICREDIT OBG SRL (COVERED BONDS) VERONA VERONA 4 UNICREDIT SPA .. (3) 430 UNICREDIT OPERATIV LIZING KFT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 3,000,000 431 UNICREDIT PARTNER D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT BANK SERBIA JSC 100.00 Issued capital RSD 2,001,875 432 UNICREDIT PEGASUS LEASING GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 433 UNICREDIT POJISTOVACI MAKLERSKA SPOL.S R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 510,000 434 UNICREDIT POLARIS LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 435 UNICREDIT RENT D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital RSD 3,285,948,900 436 UNICREDIT SERVICES GMBH VIENNA VIENNA 1 UNICREDIT SERVICES S.C.P.A. 100.00 Issued capital EUR 1,200,000 437 UNICREDIT SERVICES S.C.P.A. MILAN MILAN 1 CORDUSIO SIM SPA .. Issued capital EUR 237,523,160 CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI .. FINECOBANK SPA .. UNICREDIT BANK AG .. UNICREDIT FACTORING SPA .. UNICREDIT SPA 100.00 100.00 438 UNICREDIT SUBITO CASA SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 500,000 439 UNICREDIT TECHRENT LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.00 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 440 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 750,000 441 UNICREDIT U.S. FINANCE LLC WILMINGTON NEW YORK 1 UNICREDIT BANK AG 100.00 Issued capital USD 130 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 127 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 424 UNICREDIT LEASING VERSICHERUNGSSERVICE GMBH & CO KG VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 425 UNICREDIT LEASING, LEASING, D.O.O. LJUBLJANA LJUBLJANA 1 UNICREDIT BANKA SLOVENIJA D.D. 100.00 Issued capital EUR 25,039,658 426 UNICREDIT LUNA LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 427 UNICREDIT MOBILIEN UND KFZ LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 428 UNICREDIT OBG S.R.L. VERONA VERONA 1 UNICREDIT SPA 60.00 Issued capital EUR 10,000 429 UNICREDIT OBG SRL (COVERED BONDS) VERONA VERONA 4 UNICREDIT SPA .. (3) 430 UNICREDIT OPERATIV LIZING KFT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 3,000,000 431 UNICREDIT PARTNER D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT BANK SERBIA JSC 100.00 Issued capital RSD 2,001,875 432 UNICREDIT PEGASUS LEASING GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 433 UNICREDIT POJISTOVACI MAKLERSKA SPOL.S R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 510,000 434 UNICREDIT POLARIS LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 435 UNICREDIT RENT D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital RSD 3,285,948,900 436 UNICREDIT SERVICES GMBH VIENNA VIENNA 1 UNICREDIT SERVICES S.C.P.A. 100.00 Issued capital EUR 1,200,000 437 UNICREDIT SERVICES S.C.P.A. MILAN MILAN 1 CORDUSIO SIM SPA .. Issued capital EUR 237,523,160 CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI .. FINECOBANK SPA .. UNICREDIT BANK AG .. UNICREDIT FACTORING SPA .. UNICREDIT SPA 100.00 100.00 438 UNICREDIT SUBITO CASA SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 500,000 439 UNICREDIT TECHRENT LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.00 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 440 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 750,000 441 UNICREDIT U.S. FINANCE LLC WILMINGTON NEW YORK 1 UNICREDIT BANK AG 100.00 Issued capital USD 130 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 127 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 424 UNICREDIT LEASING VERSICHERUNGSSERVICE GMBH & CO KG VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 425 UNICREDIT LEASING, LEASING, D.O.O. LJUBLJANA LJUBLJANA 1 UNICREDIT BANKA SLOVENIJA D.D. 100.00 Issued capital EUR 25,039,658 426 UNICREDIT LUNA LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 427 UNICREDIT MOBILIEN UND KFZ LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 428 UNICREDIT OBG S.R.L. VERONA VERONA 1 UNICREDIT SPA 60.00 Issued capital EUR 10,000 429 UNICREDIT OBG SRL (COVERED BONDS) VERONA VERONA 4 UNICREDIT SPA .. (3) 430 UNICREDIT OPERATIV LIZING KFT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 3,000,000 431 UNICREDIT PARTNER D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT BANK SERBIA JSC 100.00 Issued capital RSD 2,001,875 432 UNICREDIT PEGASUS LEASING GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 433 UNICREDIT POJISTOVACI MAKLERSKA SPOL.S R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 510,000 434 UNICREDIT POLARIS LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 435 UNICREDIT RENT D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital RSD 3,285,948,900 436 UNICREDIT SERVICES GMBH VIENNA VIENNA 1 UNICREDIT SERVICES S.C.P.A. 100.00 Issued capital EUR 1,200,000 437 UNICREDIT SERVICES S.C.P.A. MILAN MILAN 1 CORDUSIO SIM SPA .. Issued capital EUR 237,523,160 CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI .. FINECOBANK SPA .. UNICREDIT BANK AG .. UNICREDIT FACTORING SPA .. UNICREDIT SPA 100.00 100.00 438 UNICREDIT SUBITO CASA SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 500,000 439 UNICREDIT TECHRENT LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.00 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 440 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 750,000 441 UNICREDIT U.S. FINANCE LLC WILMINGTON NEW YORK 1 UNICREDIT BANK AG 100.00 Issued capital USD 130 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 127 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 424 UNICREDIT LEASING VERSICHERUNGSSERVICE GMBH & CO KG VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 425 UNICREDIT LEASING, LEASING, D.O.O. LJUBLJANA LJUBLJANA 1 UNICREDIT BANKA SLOVENIJA D.D. 100.00 Issued capital EUR 25,039,658 426 UNICREDIT LUNA LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 427 UNICREDIT MOBILIEN UND KFZ LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 428 UNICREDIT OBG S.R.L. VERONA VERONA 1 UNICREDIT SPA 60.00 Issued capital EUR 10,000 429 UNICREDIT OBG SRL (COVERED BONDS) VERONA VERONA 4 UNICREDIT SPA .. (3) 430 UNICREDIT OPERATIV LIZING KFT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 3,000,000 431 UNICREDIT PARTNER D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT BANK SERBIA JSC 100.00 Issued capital RSD 2,001,875 432 UNICREDIT PEGASUS LEASING GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 433 UNICREDIT POJISTOVACI MAKLERSKA SPOL.S R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 510,000 434 UNICREDIT POLARIS LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 435 UNICREDIT RENT D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital RSD 3,285,948,900 436 UNICREDIT SERVICES GMBH VIENNA VIENNA 1 UNICREDIT SERVICES S.C.P.A. 100.00 Issued capital EUR 1,200,000 437 UNICREDIT SERVICES S.C.P.A. MILAN MILAN 1 CORDUSIO SIM SPA .. Issued capital EUR 237,523,160 CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI .. FINECOBANK SPA .. UNICREDIT BANK AG .. UNICREDIT FACTORING SPA .. UNICREDIT SPA 100.00 100.00 438 UNICREDIT SUBITO CASA SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 500,000 439 UNICREDIT TECHRENT LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.00 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 440 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 750,000 441 UNICREDIT U.S. FINANCE LLC WILMINGTON NEW YORK 1 UNICREDIT BANK AG 100.00 Issued capital USD 130 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 127 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 424 UNICREDIT LEASING VERSICHERUNGSSERVICE GMBH & CO KG VIENNA VIENNA 1 UNICREDIT LEASING (AUSTRIA) GMBH 100.00 Issued capital EUR 36,500 425 UNICREDIT LEASING, LEASING, D.O.O. LJUBLJANA LJUBLJANA 1 UNICREDIT BANKA SLOVENIJA D.D. 100.00 Issued capital EUR 25,039,658 426 UNICREDIT LUNA LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 427 UNICREDIT MOBILIEN UND KFZ LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 98.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 428 UNICREDIT OBG S.R.L. VERONA VERONA 1 UNICREDIT SPA 60.00 Issued capital EUR 10,000 429 UNICREDIT OBG SRL (COVERED BONDS) VERONA VERONA 4 UNICREDIT SPA .. (3) 430 UNICREDIT OPERATIV LIZING KFT BUDAPEST BUDAPEST 1 UNICREDIT BANK HUNGARY ZRT. 100.00 Issued capital HUF 3,000,000 431 UNICREDIT PARTNER D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNICREDIT BANK SERBIA JSC 100.00 Issued capital RSD 2,001,875 432 UNICREDIT PEGASUS LEASING GMBH VIENNA VIENNA 1 CALG IMMOBILIEN LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 433 UNICREDIT POJISTOVACI MAKLERSKA SPOL.S R.O. PRAGUE PRAGUE 1 UNICREDIT LEASING CZ, A.S. 100.00 Issued capital CZK 510,000 434 UNICREDIT POLARIS LEASING GMBH VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 435 UNICREDIT RENT D.O.O. BEOGRAD BELGRADE BELGRADE 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital RSD 3,285,948,900 436 UNICREDIT SERVICES GMBH VIENNA VIENNA 1 UNICREDIT SERVICES S.C.P.A. 100.00 Issued capital EUR 1,200,000 437 UNICREDIT SERVICES S.C.P.A. MILAN MILAN 1 CORDUSIO SIM SPA .. Issued capital EUR 237,523,160 CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI .. FINECOBANK SPA .. UNICREDIT BANK AG .. UNICREDIT FACTORING SPA .. UNICREDIT SPA 100.00 100.00 438 UNICREDIT SUBITO CASA SPA MILAN MILAN 1 UNICREDIT SPA 100.00 Issued capital EUR 500,000 439 UNICREDIT TECHRENT LEASING GMBH VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.00 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 1.00 440 UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH VIENNA VIENNA 1 UNICREDIT SPA 100.00 Issued capital EUR 750,000 441 UNICREDIT U.S. FINANCE LLC WILMINGTON NEW YORK 1 UNICREDIT BANK AG 100.00 Issued capital USD 130 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 128 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 442 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 443 UNICREDIT-LEASING HOSPES KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 444 UNICREDIT-LEASING NEPTUNUS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,010,000 445 UNIVERSALE INTERNATIONAL REALITAETEN GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 32,715,000 446 V.M.G. VERMIETUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 25,565 447 VAPE COMMUNA LEASINGGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 448 VERMIETUNGSGESELLSCHAFT MBH & CO OBJEKT MOC KG MUNICH MUNICH 1 HVB IMMOBILIEN AG 89.28 89.23 Issued capital EUR 48,728,161 LANDOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 0.06 449 VERWALTUNGSGESELLSCHAFT KATHARINENHOF MBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 511,292 450 VICOVARO RE SRL ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 10,000 451 VISCONTI SRL MILAN MILAN 1 UNICREDIT SPA 76.00 Issued capital EUR 11,000,000 452 WEALTH MANAGEMENT CAPITAL HOLDING GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 26,000 453 WEALTHCAP ENTITY SERVICE GMBH MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 100.00 Issued capital EUR 25,000 454 WEALTHCAP EQUITY GMBH MUNICH MUNICH 1 WEALTHCAP INITIATOREN GMBH 100.00 Issued capital EUR 500,000 455 WEALTHCAP EQUITY MANAGEMENT GMBH MUNICH MUNICH 1 WEALTHCAP EQUITY GMBH 100.00 Issued capital EUR 25,000 456 WEALTHCAP FONDS GMBH MUNICH MUNICH 1 WEALTHCAP INITIATOREN GMBH 100.00 Issued capital EUR 512,000 457 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 100.00 50.00 Issued capital EUR 5,000 WEALTHCAP VORRATS-2 GMBH .. 50.00 458 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 94.34 50.00 Issued capital EUR 10,600 WEALTHCAP VORRATS-2 GMBH 5.66 50.00 459 WEALTHCAP IMMOBILIENFONDS DEUTSCHLAND 36 KOMPLEMENTAR GMBH GRUNWALD MUNICH 1 H.F.S. LEASINGFONDS GMBH 100.00 Issued capital EUR 25,565 460 WEALTHCAP IMMOBILIENFONDS DEUTSCHLAND 38 KOMPLEMENTAR GMBH GRUNWALD GRUNWALD 1 WEALTHCAP ENTITY SERVICE GMBH 100.00 Issued capital EUR 25,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 128 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 442 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 443 UNICREDIT-LEASING HOSPES KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 444 UNICREDIT-LEASING NEPTUNUS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,010,000 445 UNIVERSALE INTERNATIONAL REALITAETEN GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 32,715,000 446 V.M.G. VERMIETUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 25,565 447 VAPE COMMUNA LEASINGGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 448 VERMIETUNGSGESELLSCHAFT MBH & CO OBJEKT MOC KG MUNICH MUNICH 1 HVB IMMOBILIEN AG 89.28 89.23 Issued capital EUR 48,728,161 LANDOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 0.06 449 VERWALTUNGSGESELLSCHAFT KATHARINENHOF MBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 511,292 450 VICOVARO RE SRL ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 10,000 451 VISCONTI SRL MILAN MILAN 1 UNICREDIT SPA 76.00 Issued capital EUR 11,000,000 452 WEALTH MANAGEMENT CAPITAL HOLDING GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 26,000 453 WEALTHCAP ENTITY SERVICE GMBH MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 100.00 Issued capital EUR 25,000 454 WEALTHCAP EQUITY GMBH MUNICH MUNICH 1 WEALTHCAP INITIATOREN GMBH 100.00 Issued capital EUR 500,000 455 WEALTHCAP EQUITY MANAGEMENT GMBH MUNICH MUNICH 1 WEALTHCAP EQUITY GMBH 100.00 Issued capital EUR 25,000 456 WEALTHCAP FONDS GMBH MUNICH MUNICH 1 WEALTHCAP INITIATOREN GMBH 100.00 Issued capital EUR 512,000 457 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 100.00 50.00 Issued capital EUR 5,000 WEALTHCAP VORRATS-2 GMBH .. 50.00 458 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 94.34 50.00 Issued capital EUR 10,600 WEALTHCAP VORRATS-2 GMBH 5.66 50.00 459 WEALTHCAP IMMOBILIENFONDS DEUTSCHLAND 36 KOMPLEMENTAR GMBH GRUNWALD MUNICH 1 H.F.S. LEASINGFONDS GMBH 100.00 Issued capital EUR 25,565 460 WEALTHCAP IMMOBILIENFONDS DEUTSCHLAND 38 KOMPLEMENTAR GMBH GRUNWALD GRUNWALD 1 WEALTHCAP ENTITY SERVICE GMBH 100.00 Issued capital EUR 25,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 128 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 442 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 443 UNICREDIT-LEASING HOSPES KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 444 UNICREDIT-LEASING NEPTUNUS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,010,000 445 UNIVERSALE INTERNATIONAL REALITAETEN GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 32,715,000 446 V.M.G. VERMIETUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 25,565 447 VAPE COMMUNA LEASINGGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 448 VERMIETUNGSGESELLSCHAFT MBH & CO OBJEKT MOC KG MUNICH MUNICH 1 HVB IMMOBILIEN AG 89.28 89.23 Issued capital EUR 48,728,161 LANDOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 0.06 449 VERWALTUNGSGESELLSCHAFT KATHARINENHOF MBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 511,292 450 VICOVARO RE SRL ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 10,000 451 VISCONTI SRL MILAN MILAN 1 UNICREDIT SPA 76.00 Issued capital EUR 11,000,000 452 WEALTH MANAGEMENT CAPITAL HOLDING GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 26,000 453 WEALTHCAP ENTITY SERVICE GMBH MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 100.00 Issued capital EUR 25,000 454 WEALTHCAP EQUITY GMBH MUNICH MUNICH 1 WEALTHCAP INITIATOREN GMBH 100.00 Issued capital EUR 500,000 455 WEALTHCAP EQUITY MANAGEMENT GMBH MUNICH MUNICH 1 WEALTHCAP EQUITY GMBH 100.00 Issued capital EUR 25,000 456 WEALTHCAP FONDS GMBH MUNICH MUNICH 1 WEALTHCAP INITIATOREN GMBH 100.00 Issued capital EUR 512,000 457 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 100.00 50.00 Issued capital EUR 5,000 WEALTHCAP VORRATS-2 GMBH .. 50.00 458 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 94.34 50.00 Issued capital EUR 10,600 WEALTHCAP VORRATS-2 GMBH 5.66 50.00 459 WEALTHCAP IMMOBILIENFONDS DEUTSCHLAND 36 KOMPLEMENTAR GMBH GRUNWALD MUNICH 1 H.F.S. LEASINGFONDS GMBH 100.00 Issued capital EUR 25,565 460 WEALTHCAP IMMOBILIENFONDS DEUTSCHLAND 38 KOMPLEMENTAR GMBH GRUNWALD GRUNWALD 1 WEALTHCAP ENTITY SERVICE GMBH 100.00 Issued capital EUR 25,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 128 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 442 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 443 UNICREDIT-LEASING HOSPES KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 444 UNICREDIT-LEASING NEPTUNUS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,010,000 445 UNIVERSALE INTERNATIONAL REALITAETEN GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 32,715,000 446 V.M.G. VERMIETUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 25,565 447 VAPE COMMUNA LEASINGGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 448 VERMIETUNGSGESELLSCHAFT MBH & CO OBJEKT MOC KG MUNICH MUNICH 1 HVB IMMOBILIEN AG 89.28 89.23 Issued capital EUR 48,728,161 LANDOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 0.06 449 VERWALTUNGSGESELLSCHAFT KATHARINENHOF MBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 511,292 450 VICOVARO RE SRL ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 10,000 451 VISCONTI SRL MILAN MILAN 1 UNICREDIT SPA 76.00 Issued capital EUR 11,000,000 452 WEALTH MANAGEMENT CAPITAL HOLDING GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 26,000 453 WEALTHCAP ENTITY SERVICE GMBH MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 100.00 Issued capital EUR 25,000 454 WEALTHCAP EQUITY GMBH MUNICH MUNICH 1 WEALTHCAP INITIATOREN GMBH 100.00 Issued capital EUR 500,000 455 WEALTHCAP EQUITY MANAGEMENT GMBH MUNICH MUNICH 1 WEALTHCAP EQUITY GMBH 100.00 Issued capital EUR 25,000 456 WEALTHCAP FONDS GMBH MUNICH MUNICH 1 WEALTHCAP INITIATOREN GMBH 100.00 Issued capital EUR 512,000 457 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 100.00 50.00 Issued capital EUR 5,000 WEALTHCAP VORRATS-2 GMBH .. 50.00 458 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 94.34 50.00 Issued capital EUR 10,600 WEALTHCAP VORRATS-2 GMBH 5.66 50.00 459 WEALTHCAP IMMOBILIENFONDS DEUTSCHLAND 36 KOMPLEMENTAR GMBH GRUNWALD MUNICH 1 H.F.S. LEASINGFONDS GMBH 100.00 Issued capital EUR 25,565 460 WEALTHCAP IMMOBILIENFONDS DEUTSCHLAND 38 KOMPLEMENTAR GMBH GRUNWALD GRUNWALD 1 WEALTHCAP ENTITY SERVICE GMBH 100.00 Issued capital EUR 25,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 128 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 442 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 443 UNICREDIT-LEASING HOSPES KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,000,000 444 UNICREDIT-LEASING NEPTUNUS KFT BUDAPEST BUDAPEST 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HUF 3,010,000 445 UNIVERSALE INTERNATIONAL REALITAETEN GMBH VIENNA VIENNA 1 UNICREDIT BANK AUSTRIA AG 100.00 Issued capital EUR 32,715,000 446 V.M.G. VERMIETUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 25,565 447 VAPE COMMUNA LEASINGGESELLSCHAFT M.B.H. VIENNA VIENNA 1 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 74.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 UNICREDIT LEASING (AUSTRIA) GMBH 25.00 448 VERMIETUNGSGESELLSCHAFT MBH & CO OBJEKT MOC KG MUNICH MUNICH 1 HVB IMMOBILIEN AG 89.28 89.23 Issued capital EUR 48,728,161 LANDOS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH .. 0.06 449 VERWALTUNGSGESELLSCHAFT KATHARINENHOF MBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 511,292 450 VICOVARO RE SRL ROME ROME 1 CAPITAL DEV SPA 100.00 Issued capital EUR 10,000 451 VISCONTI SRL MILAN MILAN 1 UNICREDIT SPA 76.00 Issued capital EUR 11,000,000 452 WEALTH MANAGEMENT CAPITAL HOLDING GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 100.00 Issued capital EUR 26,000 453 WEALTHCAP ENTITY SERVICE GMBH MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 100.00 Issued capital EUR 25,000 454 WEALTHCAP EQUITY GMBH MUNICH MUNICH 1 WEALTHCAP INITIATOREN GMBH 100.00 Issued capital EUR 500,000 455 WEALTHCAP EQUITY MANAGEMENT GMBH MUNICH MUNICH 1 WEALTHCAP EQUITY GMBH 100.00 Issued capital EUR 25,000 456 WEALTHCAP FONDS GMBH MUNICH MUNICH 1 WEALTHCAP INITIATOREN GMBH 100.00 Issued capital EUR 512,000 457 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 100.00 50.00 Issued capital EUR 5,000 WEALTHCAP VORRATS-2 GMBH .. 50.00 458 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP REAL ESTATE MANAGEMENT GMBH 94.34 50.00 Issued capital EUR 10,600 WEALTHCAP VORRATS-2 GMBH 5.66 50.00 459 WEALTHCAP IMMOBILIENFONDS DEUTSCHLAND 36 KOMPLEMENTAR GMBH GRUNWALD MUNICH 1 H.F.S. LEASINGFONDS GMBH 100.00 Issued capital EUR 25,565 460 WEALTHCAP IMMOBILIENFONDS DEUTSCHLAND 38 KOMPLEMENTAR GMBH GRUNWALD GRUNWALD 1 WEALTHCAP ENTITY SERVICE GMBH 100.00 Issued capital EUR 25,000 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 129 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 461 WEALTHCAP INITIATOREN GMBH MUNICH MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 1,533,876 462 WEALTHCAP INVESTMENT SERVICES GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 10.00 Issued capital EUR 4,000,000 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 90.00 463 WEALTHCAP INVESTMENTS INC. WILMINGTON ATLANTA 1 WEALTHCAP FONDS GMBH 100.00 Issued capital USD 312,000 464 WEALTHCAP INVESTORENBETREUUNG GMBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 60,000 465 WEALTHCAP KAPITALVERWALTUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 125,000 466 WEALTHCAP LEASING GMBH GRUNWALD MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 25,000 467 WEALTHCAP LOS GATOS 131 ALBRIGHT WAY L.P. WILMINGTON WILMINGTON 1 WEALTHCAP INVESTMENTS INC. 100.00 Issued capital USD 1,000 468 WEALTHCAP MANAGEMENT SERVICES GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 50,000 469 WEALTHCAP OBJEKT-VORRAT 20 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG 6.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 WEALTHCAP MANAGEMENT SERVICES GMBH 88.00 WEALTHCAP OBJEKT-VORRAT 20 KOMPLEMENTAER GMBH .. 470 WEALTHCAP OBJEKT-VORRAT 21 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG 6.00 25.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 25.00 WEALTHCAP KAPITALVERWALTUNGSGESELLSCHAFT MBH 88.00 25.00 WEALTHCAP SPEZIAL BURO 6 KOMPLEMENTAR GMBH .. 25.00 471 WEALTHCAP PEIA KOMPLEMENTAR GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 26,000 472 WEALTHCAP PEIA MANAGEMENT GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 6.00 Issued capital EUR 1,023,000 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 94.00 473 WEALTHCAP PORTLAND PARK SQUARE, L.P. WILMINGTON WILMINGTON 1 WEALTHCAP INVESTMENTS INC. 99.90 Issued capital USD 1,000 WEALTHCAP PORTLAND PARK SQUARE GP INC. 0.10 474 WEALTHCAP REAL ESTATE MANAGEMENT GMBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 60,000 475 WEALTHCAP VORRATS-2 GMBH GRUNWALD BAD SODEN 1 WEALTHCAP FONDS GMBH 100.00 Issued capital EUR 25,000 476 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 477 Z LEASING ALFA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 129 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 461 WEALTHCAP INITIATOREN GMBH MUNICH MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 1,533,876 462 WEALTHCAP INVESTMENT SERVICES GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 10.00 Issued capital EUR 4,000,000 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 90.00 463 WEALTHCAP INVESTMENTS INC. WILMINGTON ATLANTA 1 WEALTHCAP FONDS GMBH 100.00 Issued capital USD 312,000 464 WEALTHCAP INVESTORENBETREUUNG GMBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 60,000 465 WEALTHCAP KAPITALVERWALTUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 125,000 466 WEALTHCAP LEASING GMBH GRUNWALD MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 25,000 467 WEALTHCAP LOS GATOS 131 ALBRIGHT WAY L.P. WILMINGTON WILMINGTON 1 WEALTHCAP INVESTMENTS INC. 100.00 Issued capital USD 1,000 468 WEALTHCAP MANAGEMENT SERVICES GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 50,000 469 WEALTHCAP OBJEKT-VORRAT 20 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG 6.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 WEALTHCAP MANAGEMENT SERVICES GMBH 88.00 WEALTHCAP OBJEKT-VORRAT 20 KOMPLEMENTAER GMBH .. 470 WEALTHCAP OBJEKT-VORRAT 21 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG 6.00 25.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 25.00 WEALTHCAP KAPITALVERWALTUNGSGESELLSCHAFT MBH 88.00 25.00 WEALTHCAP SPEZIAL BURO 6 KOMPLEMENTAR GMBH .. 25.00 471 WEALTHCAP PEIA KOMPLEMENTAR GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 26,000 472 WEALTHCAP PEIA MANAGEMENT GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 6.00 Issued capital EUR 1,023,000 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 94.00 473 WEALTHCAP PORTLAND PARK SQUARE, L.P. WILMINGTON WILMINGTON 1 WEALTHCAP INVESTMENTS INC. 99.90 Issued capital USD 1,000 WEALTHCAP PORTLAND PARK SQUARE GP INC. 0.10 474 WEALTHCAP REAL ESTATE MANAGEMENT GMBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 60,000 475 WEALTHCAP VORRATS-2 GMBH GRUNWALD BAD SODEN 1 WEALTHCAP FONDS GMBH 100.00 Issued capital EUR 25,000 476 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 477 Z LEASING ALFA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 129 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 461 WEALTHCAP INITIATOREN GMBH MUNICH MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 1,533,876 462 WEALTHCAP INVESTMENT SERVICES GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 10.00 Issued capital EUR 4,000,000 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 90.00 463 WEALTHCAP INVESTMENTS INC. WILMINGTON ATLANTA 1 WEALTHCAP FONDS GMBH 100.00 Issued capital USD 312,000 464 WEALTHCAP INVESTORENBETREUUNG GMBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 60,000 465 WEALTHCAP KAPITALVERWALTUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 125,000 466 WEALTHCAP LEASING GMBH GRUNWALD MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 25,000 467 WEALTHCAP LOS GATOS 131 ALBRIGHT WAY L.P. WILMINGTON WILMINGTON 1 WEALTHCAP INVESTMENTS INC. 100.00 Issued capital USD 1,000 468 WEALTHCAP MANAGEMENT SERVICES GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 50,000 469 WEALTHCAP OBJEKT-VORRAT 20 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG 6.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 WEALTHCAP MANAGEMENT SERVICES GMBH 88.00 WEALTHCAP OBJEKT-VORRAT 20 KOMPLEMENTAER GMBH .. 470 WEALTHCAP OBJEKT-VORRAT 21 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG 6.00 25.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 25.00 WEALTHCAP KAPITALVERWALTUNGSGESELLSCHAFT MBH 88.00 25.00 WEALTHCAP SPEZIAL BURO 6 KOMPLEMENTAR GMBH .. 25.00 471 WEALTHCAP PEIA KOMPLEMENTAR GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 26,000 472 WEALTHCAP PEIA MANAGEMENT GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 6.00 Issued capital EUR 1,023,000 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 94.00 473 WEALTHCAP PORTLAND PARK SQUARE, L.P. WILMINGTON WILMINGTON 1 WEALTHCAP INVESTMENTS INC. 99.90 Issued capital USD 1,000 WEALTHCAP PORTLAND PARK SQUARE GP INC. 0.10 474 WEALTHCAP REAL ESTATE MANAGEMENT GMBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 60,000 475 WEALTHCAP VORRATS-2 GMBH GRUNWALD BAD SODEN 1 WEALTHCAP FONDS GMBH 100.00 Issued capital EUR 25,000 476 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 477 Z LEASING ALFA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 129 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 461 WEALTHCAP INITIATOREN GMBH MUNICH MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 1,533,876 462 WEALTHCAP INVESTMENT SERVICES GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 10.00 Issued capital EUR 4,000,000 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 90.00 463 WEALTHCAP INVESTMENTS INC. WILMINGTON ATLANTA 1 WEALTHCAP FONDS GMBH 100.00 Issued capital USD 312,000 464 WEALTHCAP INVESTORENBETREUUNG GMBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 60,000 465 WEALTHCAP KAPITALVERWALTUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 125,000 466 WEALTHCAP LEASING GMBH GRUNWALD MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 25,000 467 WEALTHCAP LOS GATOS 131 ALBRIGHT WAY L.P. WILMINGTON WILMINGTON 1 WEALTHCAP INVESTMENTS INC. 100.00 Issued capital USD 1,000 468 WEALTHCAP MANAGEMENT SERVICES GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 50,000 469 WEALTHCAP OBJEKT-VORRAT 20 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG 6.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 WEALTHCAP MANAGEMENT SERVICES GMBH 88.00 WEALTHCAP OBJEKT-VORRAT 20 KOMPLEMENTAER GMBH .. 470 WEALTHCAP OBJEKT-VORRAT 21 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG 6.00 25.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 25.00 WEALTHCAP KAPITALVERWALTUNGSGESELLSCHAFT MBH 88.00 25.00 WEALTHCAP SPEZIAL BURO 6 KOMPLEMENTAR GMBH .. 25.00 471 WEALTHCAP PEIA KOMPLEMENTAR GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 26,000 472 WEALTHCAP PEIA MANAGEMENT GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 6.00 Issued capital EUR 1,023,000 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 94.00 473 WEALTHCAP PORTLAND PARK SQUARE, L.P. WILMINGTON WILMINGTON 1 WEALTHCAP INVESTMENTS INC. 99.90 Issued capital USD 1,000 WEALTHCAP PORTLAND PARK SQUARE GP INC. 0.10 474 WEALTHCAP REAL ESTATE MANAGEMENT GMBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 60,000 475 WEALTHCAP VORRATS-2 GMBH GRUNWALD BAD SODEN 1 WEALTHCAP FONDS GMBH 100.00 Issued capital EUR 25,000 476 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 477 Z LEASING ALFA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 129 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 461 WEALTHCAP INITIATOREN GMBH MUNICH MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 1,533,876 462 WEALTHCAP INVESTMENT SERVICES GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 10.00 Issued capital EUR 4,000,000 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 90.00 463 WEALTHCAP INVESTMENTS INC. WILMINGTON ATLANTA 1 WEALTHCAP FONDS GMBH 100.00 Issued capital USD 312,000 464 WEALTHCAP INVESTORENBETREUUNG GMBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 60,000 465 WEALTHCAP KAPITALVERWALTUNGSGESELLSCHAFT MBH MUNICH MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 125,000 466 WEALTHCAP LEASING GMBH GRUNWALD MUNICH 1 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 100.00 Issued capital EUR 25,000 467 WEALTHCAP LOS GATOS 131 ALBRIGHT WAY L.P. WILMINGTON WILMINGTON 1 WEALTHCAP INVESTMENTS INC. 100.00 Issued capital USD 1,000 468 WEALTHCAP MANAGEMENT SERVICES GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 50,000 469 WEALTHCAP OBJEKT-VORRAT 20 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG 6.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 WEALTHCAP MANAGEMENT SERVICES GMBH 88.00 WEALTHCAP OBJEKT-VORRAT 20 KOMPLEMENTAER GMBH .. 470 WEALTHCAP OBJEKT-VORRAT 21 GMBH & CO. KG MUNICH MUNICH 1 WEALTHCAP IMMOBILIEN 1 GMBH & CO. KG 6.00 25.00 Issued capital EUR 10,000 WEALTHCAP IMMOBILIEN 2 GMBH & CO. KG 6.00 25.00 WEALTHCAP KAPITALVERWALTUNGSGESELLSCHAFT MBH 88.00 25.00 WEALTHCAP SPEZIAL BURO 6 KOMPLEMENTAR GMBH .. 25.00 471 WEALTHCAP PEIA KOMPLEMENTAR GMBH GRUNWALD GRUNWALD 1 WEALTHCAP PEIA MANAGEMENT GMBH 100.00 Issued capital EUR 26,000 472 WEALTHCAP PEIA MANAGEMENT GMBH MUNICH MUNICH 1 UNICREDIT BANK AG 6.00 Issued capital EUR 1,023,000 WEALTH MANAGEMENT CAPITAL HOLDING GMBH 94.00 473 WEALTHCAP PORTLAND PARK SQUARE, L.P. WILMINGTON WILMINGTON 1 WEALTHCAP INVESTMENTS INC. 99.90 Issued capital USD 1,000 WEALTHCAP PORTLAND PARK SQUARE GP INC. 0.10 474 WEALTHCAP REAL ESTATE MANAGEMENT GMBH MUNICH MUNICH 1 WEALTHCAP INVESTMENT SERVICES GMBH 100.00 Issued capital EUR 60,000 475 WEALTHCAP VORRATS-2 GMBH GRUNWALD BAD SODEN 1 WEALTHCAP FONDS GMBH 100.00 Issued capital EUR 25,000 476 WOEM GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,336 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 477 Z LEASING ALFA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 130 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 478 Z LEASING ARKTUR IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 479 Z LEASING AURIGA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 480 Z LEASING CORVUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 481 Z LEASING DORADO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 482 Z LEASING DRACO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 483 Z LEASING GAMA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 484 Z LEASING GEMINI IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 485 Z LEASING HEBE IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GEBAEUDELEASING GRUNDSTUCKSVERWALTUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 486 Z LEASING HERCULES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 487 Z LEASING IPSILON IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 488 Z LEASING ITA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 489 Z LEASING JANUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 490 Z LEASING KALLISTO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 491 Z LEASING KAPA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 492 Z LEASING LYRA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 493 Z LEASING NEREIDE IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 494 Z LEASING OMEGA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 130 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 478 Z LEASING ARKTUR IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 479 Z LEASING AURIGA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 480 Z LEASING CORVUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 481 Z LEASING DORADO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 482 Z LEASING DRACO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 483 Z LEASING GAMA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 484 Z LEASING GEMINI IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 485 Z LEASING HEBE IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GEBAEUDELEASING GRUNDSTUCKSVERWALTUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 486 Z LEASING HERCULES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 487 Z LEASING IPSILON IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 488 Z LEASING ITA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 489 Z LEASING JANUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 490 Z LEASING KALLISTO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 491 Z LEASING KAPA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 492 Z LEASING LYRA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 493 Z LEASING NEREIDE IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 494 Z LEASING OMEGA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 130 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 478 Z LEASING ARKTUR IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 479 Z LEASING AURIGA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 480 Z LEASING CORVUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 481 Z LEASING DORADO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 482 Z LEASING DRACO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 483 Z LEASING GAMA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 484 Z LEASING GEMINI IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 485 Z LEASING HEBE IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GEBAEUDELEASING GRUNDSTUCKSVERWALTUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 486 Z LEASING HERCULES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 487 Z LEASING IPSILON IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 488 Z LEASING ITA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 489 Z LEASING JANUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 490 Z LEASING KALLISTO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 491 Z LEASING KAPA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 492 Z LEASING LYRA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 493 Z LEASING NEREIDE IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 494 Z LEASING OMEGA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 130 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 478 Z LEASING ARKTUR IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 479 Z LEASING AURIGA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 480 Z LEASING CORVUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 481 Z LEASING DORADO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 482 Z LEASING DRACO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 483 Z LEASING GAMA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 484 Z LEASING GEMINI IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 485 Z LEASING HEBE IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GEBAEUDELEASING GRUNDSTUCKSVERWALTUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 486 Z LEASING HERCULES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 487 Z LEASING IPSILON IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 488 Z LEASING ITA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 489 Z LEASING JANUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 490 Z LEASING KALLISTO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 491 Z LEASING KAPA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 492 Z LEASING LYRA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 493 Z LEASING NEREIDE IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 494 Z LEASING OMEGA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 130 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 478 Z LEASING ARKTUR IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 479 Z LEASING AURIGA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 480 Z LEASING CORVUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 481 Z LEASING DORADO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 482 Z LEASING DRACO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 483 Z LEASING GAMA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 484 Z LEASING GEMINI IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 485 Z LEASING HEBE IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GEBAEUDELEASING GRUNDSTUCKSVERWALTUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 486 Z LEASING HERCULES IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 487 Z LEASING IPSILON IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT GARAGEN ERRICHTUNG UND VERWERTUNG GMBH 99.80 488 Z LEASING ITA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 489 Z LEASING JANUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 490 Z LEASING KALLISTO IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 491 Z LEASING KAPA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 492 Z LEASING LYRA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 GALA GRUNDSTUECKVERWALTUNG GESELLSCHAFT M.B.H. 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 493 Z LEASING NEREIDE IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 494 Z LEASING OMEGA IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 CALG DELTA GRUNDSTUECKVERWALTUNG GMBH 99.80 Issued capital EUR 36,500 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 131 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 495 Z LEASING PERSEUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 36,500 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 90.00 496 Z LEASING SCORPIUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 497 Z LEASING TAURUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 73,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 498 Z LEASING VENUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 499 Z LEASING VOLANS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT PEGASUS LEASING GMBH 99.80 500 ZABA PARTNER DOO ZA POSREDOVANJE U OSIGURANJU I REOSIGURANJU ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 1,500,000 501 ZAGREB NEKRETNINE DOO ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 5,000,000 502 ZAGREBACKA BANKA D.D. ZAGREB ZAGREB 1 UNICREDIT SPA 84.48 Issued capital HRK 6,404,839,100 503 ZANE BH DOO SARAJEVO SARAJEVO 1 ZAGREB NEKRETNINE DOO 100.00 Issued capital BAM 131,529 504 ZAPADNI TRGOVACKI CENTAR D.O.O. RIJEKA RIJEKA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HRK 20,000 505 ZB INVEST D.O.O. ZA UPRAVLJANJE INVESTICIJSKIM FONDOVIMA ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 4,000,000 Notes to the table showing the investments in subsidiaries: (1) Type of relationship: 1= majority of voting rights at ordinary shareholders’ meeting; 2= dominant influence at ordinary shareholders’ meeting; 3= agreements with other shareholders; 4= other types of control; 5= centralised management pursuant to paragraph 1 of Art.39 of “Legislative decree 136/2015”; 6= centralised management pursuant to paragraph 2 of Art.39 of “Legislative decree 136/2015”; (2) Voting rights available in general meeting. Voting rights are disclosed only if different from the percentage of ownership. (3) Companies consolidated line by line under IFRS10 as a result of the simultaneous availability of power to govern the relevant activities and exposures to variability of related returns. (4) In the consolidated financial statements the Group’s stake is 100% as the trust company does not share in the profits. The voting rights are held by the grantor, a Group company. (5) The equity investment in Cordusio SIM - Advisory & Family Office S.p.A. is consolidated at 100% by virtue of UniCredit S.p.A.’s 96.10% and its option on minority interests representing 3.90% of the share capital. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 131 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 495 Z LEASING PERSEUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 36,500 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 90.00 496 Z LEASING SCORPIUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 497 Z LEASING TAURUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 73,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 498 Z LEASING VENUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 499 Z LEASING VOLANS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT PEGASUS LEASING GMBH 99.80 500 ZABA PARTNER DOO ZA POSREDOVANJE U OSIGURANJU I REOSIGURANJU ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 1,500,000 501 ZAGREB NEKRETNINE DOO ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 5,000,000 502 ZAGREBACKA BANKA D.D. ZAGREB ZAGREB 1 UNICREDIT SPA 84.48 Issued capital HRK 6,404,839,100 503 ZANE BH DOO SARAJEVO SARAJEVO 1 ZAGREB NEKRETNINE DOO 100.00 Issued capital BAM 131,529 504 ZAPADNI TRGOVACKI CENTAR D.O.O. RIJEKA RIJEKA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HRK 20,000 505 ZB INVEST D.O.O. ZA UPRAVLJANJE INVESTICIJSKIM FONDOVIMA ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 4,000,000 Notes to the table showing the investments in subsidiaries: (1) Type of relationship: 1= majority of voting rights at ordinary shareholders’ meeting; 2= dominant influence at ordinary shareholders’ meeting; 3= agreements with other shareholders; 4= other types of control; 5= centralised management pursuant to paragraph 1 of Art.39 of “Legislative decree 136/2015”; 6= centralised management pursuant to paragraph 2 of Art.39 of “Legislative decree 136/2015”; (2) Voting rights available in general meeting. Voting rights are disclosed only if different from the percentage of ownership. (3) Companies consolidated line by line under IFRS10 as a result of the simultaneous availability of power to govern the relevant activities and exposures to variability of related returns. (4) In the consolidated financial statements the Group’s stake is 100% as the trust company does not share in the profits. The voting rights are held by the grantor, a Group company. (5) The equity investment in Cordusio SIM - Advisory & Family Office S.p.A. is consolidated at 100% by virtue of UniCredit S.p.A.’s 96.10% and its option on minority interests representing 3.90% of the share capital. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 131 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 495 Z LEASING PERSEUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 36,500 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 90.00 496 Z LEASING SCORPIUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 497 Z LEASING TAURUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 73,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 498 Z LEASING VENUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 499 Z LEASING VOLANS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT PEGASUS LEASING GMBH 99.80 500 ZABA PARTNER DOO ZA POSREDOVANJE U OSIGURANJU I REOSIGURANJU ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 1,500,000 501 ZAGREB NEKRETNINE DOO ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 5,000,000 502 ZAGREBACKA BANKA D.D. ZAGREB ZAGREB 1 UNICREDIT SPA 84.48 Issued capital HRK 6,404,839,100 503 ZANE BH DOO SARAJEVO SARAJEVO 1 ZAGREB NEKRETNINE DOO 100.00 Issued capital BAM 131,529 504 ZAPADNI TRGOVACKI CENTAR D.O.O. RIJEKA RIJEKA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HRK 20,000 505 ZB INVEST D.O.O. ZA UPRAVLJANJE INVESTICIJSKIM FONDOVIMA ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 4,000,000 Notes to the table showing the investments in subsidiaries: (1) Type of relationship: 1= majority of voting rights at ordinary shareholders’ meeting; 2= dominant influence at ordinary shareholders’ meeting; 3= agreements with other shareholders; 4= other types of control; 5= centralised management pursuant to paragraph 1 of Art.39 of “Legislative decree 136/2015”; 6= centralised management pursuant to paragraph 2 of Art.39 of “Legislative decree 136/2015”; (2) Voting rights available in general meeting. Voting rights are disclosed only if different from the percentage of ownership. (3) Companies consolidated line by line under IFRS10 as a result of the simultaneous availability of power to govern the relevant activities and exposures to variability of related returns. (4) In the consolidated financial statements the Group’s stake is 100% as the trust company does not share in the profits. The voting rights are held by the grantor, a Group company. (5) The equity investment in Cordusio SIM - Advisory & Family Office S.p.A. is consolidated at 100% by virtue of UniCredit S.p.A.’s 96.10% and its option on minority interests representing 3.90% of the share capital. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 131 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 495 Z LEASING PERSEUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 36,500 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 90.00 496 Z LEASING SCORPIUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 497 Z LEASING TAURUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 73,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 498 Z LEASING VENUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 499 Z LEASING VOLANS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT PEGASUS LEASING GMBH 99.80 500 ZABA PARTNER DOO ZA POSREDOVANJE U OSIGURANJU I REOSIGURANJU ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 1,500,000 501 ZAGREB NEKRETNINE DOO ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 5,000,000 502 ZAGREBACKA BANKA D.D. ZAGREB ZAGREB 1 UNICREDIT SPA 84.48 Issued capital HRK 6,404,839,100 503 ZANE BH DOO SARAJEVO SARAJEVO 1 ZAGREB NEKRETNINE DOO 100.00 Issued capital BAM 131,529 504 ZAPADNI TRGOVACKI CENTAR D.O.O. RIJEKA RIJEKA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HRK 20,000 505 ZB INVEST D.O.O. ZA UPRAVLJANJE INVESTICIJSKIM FONDOVIMA ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 4,000,000 Notes to the table showing the investments in subsidiaries: (1) Type of relationship: 1= majority of voting rights at ordinary shareholders’ meeting; 2= dominant influence at ordinary shareholders’ meeting; 3= agreements with other shareholders; 4= other types of control; 5= centralised management pursuant to paragraph 1 of Art.39 of “Legislative decree 136/2015”; 6= centralised management pursuant to paragraph 2 of Art.39 of “Legislative decree 136/2015”; (2) Voting rights available in general meeting. Voting rights are disclosed only if different from the percentage of ownership. (3) Companies consolidated line by line under IFRS10 as a result of the simultaneous availability of power to govern the relevant activities and exposures to variability of related returns. (4) In the consolidated financial statements the Group’s stake is 100% as the trust company does not share in the profits. The voting rights are held by the grantor, a Group company. (5) The equity investment in Cordusio SIM - Advisory & Family Office S.p.A. is consolidated at 100% by virtue of UniCredit S.p.A.’s 96.10% and its option on minority interests representing 3.90% of the share capital. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 131 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) HELD BY HOLDING % 495 Z LEASING PERSEUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 10.00 Issued capital EUR 36,500 UNICREDIT ZEGA LEASING-GESELLSCHAFT M.B.H. 90.00 496 Z LEASING SCORPIUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 497 Z LEASING TAURUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 BA EUROLEASE BETEILIGUNGSGESELLSCHAFT M.B.H. 99.80 Issued capital EUR 73,000 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 498 Z LEASING VENUS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT LEASING (AUSTRIA) GMBH 99.80 499 Z LEASING VOLANS IMMOBILIEN LEASING GESELLSCHAFT M.B.H. VIENNA VIENNA 1 UCLA IMMO-BETEILIGUNGSHOLDUNG GMBH & CO KG 0.20 Issued capital EUR 36,500 UNICREDIT PEGASUS LEASING GMBH 99.80 500 ZABA PARTNER DOO ZA POSREDOVANJE U OSIGURANJU I REOSIGURANJU ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 1,500,000 501 ZAGREB NEKRETNINE DOO ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 5,000,000 502 ZAGREBACKA BANKA D.D. ZAGREB ZAGREB 1 UNICREDIT SPA 84.48 Issued capital HRK 6,404,839,100 503 ZANE BH DOO SARAJEVO SARAJEVO 1 ZAGREB NEKRETNINE DOO 100.00 Issued capital BAM 131,529 504 ZAPADNI TRGOVACKI CENTAR D.O.O. RIJEKA RIJEKA 1 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 100.00 Issued capital HRK 20,000 505 ZB INVEST D.O.O. ZA UPRAVLJANJE INVESTICIJSKIM FONDOVIMA ZAGREB ZAGREB 1 ZAGREBACKA BANKA D.D. 100.00 Issued capital HRK 4,000,000 Notes to the table showing the investments in subsidiaries: (1) Type of relationship: 1= majority of voting rights at ordinary shareholders’ meeting; 2= dominant influence at ordinary shareholders’ meeting; 3= agreements with other shareholders; 4= other types of control; 5= centralised management pursuant to paragraph 1 of Art.39 of “Legislative decree 136/2015”; 6= centralised management pursuant to paragraph 2 of Art.39 of “Legislative decree 136/2015”; (2) Voting rights available in general meeting. Voting rights are disclosed only if different from the percentage of ownership. (3) Companies consolidated line by line under IFRS10 as a result of the simultaneous availability of power to govern the relevant activities and exposures to variability of related returns. (4) In the consolidated financial statements the Group’s stake is 100% as the trust company does not share in the profits. The voting rights are held by the grantor, a Group company. (5) The equity investment in Cordusio SIM - Advisory & Family Office S.p.A. is consolidated at 100% by virtue of UniCredit S.p.A.’s 96.10% and its option on minority interests representing 3.90% of the share capital. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 132 2018 Annual Report and Accounts · UniCredit Changes in the scope of consolidation Companies consolidated line by line, including the Parent Company and those ones classified as non-current assets and asset disposal groups, decreased by 85 entities compared with 31 December 2017 (4 inclusions and 89 exclusions as a result of disposals, changes of the consolidation method and mergers), from 590 as at 31 December 2017 to 505 as at 31 December 2018. Wholly-owned subsidiaries The following table shows the changes in equity investments in wholly-owned subsidiaries. Equity investments in wholly-owned subsidiaries (consolidated line by line): annual changes NUMBER OF COMPANIES A. Opening balance (from previous year) 590 B. Increased by 4 B.1 Newly established companies - B.2 Change of the consolidation method - B.3 Entities consolidated for the first time in the year 4 C. Reduced by 89 C.1 Disposal/Liquidation 26 C.2 Change of the consolidation method 48 C.3 Absorption by other Group entities 15 D. Closing balance 505 The tables below analyze the other increases and decreases occurred during the first half of the year by company. Increases Newly established companies During the period there were no changes in newly established companies and change of the consolidation method. Entities consolidated for the first time in the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE ELEKTRA PURCHASE NO. 56 DAC DUBLIN RE-ST.MARX HOLDING GMBH VIENNA HAMZO PROJECT DEVELOPMENT I GMBH VIENNA ELEKTRA PURCHASE NO. 63 DAC DUBLIN Reductions The above table refers to disposals and liquidations of inactive companies. Disposal COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE CENTAR KAPTOL DOO ZAGREB ELEKTRA PURCHASE NO. 35 DAC DUBLIN ELEKTRA PURCHASE NO. 40 DAC DUBLIN UCTAM AIRPORT BUILDING S.R.O PRAGUE I-FABER SPA MILAN PIONEER GLOBAL FUNDS DISTRIBUTOR LTD HAMILTON MOBILITY CONCEPT GMBH OBERHACHING LOCAT SV SRL (CARTOLARIZZAZIONE: SERIE 2006) CONEGLIANO BA BETRIEBSOBJEKTE PRAHA, SPOL.S.R.O. PRAGUE GARAGE AM HOF GESELLSCHAFT M.B.H. VIENNA UNO-EINKAUFSZENTRUM-VERWALTUNGSGESELLSCHAFT M.B.H. IN LIQU. LEONDING JOHA GEBAEUDE- ERRICHTUNGS- UND VERMIETUNGS- GESELLSCHAFT M.B.H. IN LIQ. VIENNA RAMSES IMMOBILIEN GESELLSCHAFT M.B.H. & CO OG VIENNA TREUCONSULT PROPERTY EPSILON GMBH IN LIQU. VIENNA GELDILUX-TS-2013 S.A. LUXEMBOURG HVB-LEASING FORTE INGATLANHASNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST TRIESTE ADRIATIC MARITIME INITIATIVES SRL TRIESTE BARODA PIONEER ASSET MANAGEMENT COMPANY LTD MUMBAI BARODA PIONEER TRUSTEE COMPANY PVT LTD MUMBAI UNI IT SRL TRENTO ELEKTRA PURCHASE NO. 47 DAC DUBLIN LASSALLESTRASSE BAU-, PLANUNGS-, ERRICHTUNGS- UND VERWERTUNGSGESELLSCHAFT M.B.H. VIENNA EUROVENTURES-AUSTRIA-CA-MANAGEMENT VIENNA ELEKTRA PURCHASE NO. 42 DAC DUBLIN ELEKTRA PURCHASE NO. 58 DAC DUBLIN DBC SP.Z O.O. W LIKWIDACJI WARSAW Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 132 2018 Annual Report and Accounts · UniCredit Changes in the scope of consolidation Companies consolidated line by line, including the Parent Company and those ones classified as non-current assets and asset disposal groups, decreased by 85 entities compared with 31 December 2017 (4 inclusions and 89 exclusions as a result of disposals, changes of the consolidation method and mergers), from 590 as at 31 December 2017 to 505 as at 31 December 2018. Wholly-owned subsidiaries The following table shows the changes in equity investments in wholly-owned subsidiaries. Equity investments in wholly-owned subsidiaries (consolidated line by line): annual changes NUMBER OF COMPANIES A. Opening balance (from previous year) 590 B. Increased by 4 B.1 Newly established companies - B.2 Change of the consolidation method - B.3 Entities consolidated for the first time in the year 4 C. Reduced by 89 C.1 Disposal/Liquidation 26 C.2 Change of the consolidation method 48 C.3 Absorption by other Group entities 15 D. Closing balance 505 The tables below analyze the other increases and decreases occurred during the first half of the year by company. Increases Newly established companies During the period there were no changes in newly established companies and change of the consolidation method. Entities consolidated for the first time in the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE ELEKTRA PURCHASE NO. 56 DAC DUBLIN RE-ST.MARX HOLDING GMBH VIENNA HAMZO PROJECT DEVELOPMENT I GMBH VIENNA ELEKTRA PURCHASE NO. 63 DAC DUBLIN Reductions The above table refers to disposals and liquidations of inactive companies. Disposal COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE CENTAR KAPTOL DOO ZAGREB ELEKTRA PURCHASE NO. 35 DAC DUBLIN ELEKTRA PURCHASE NO. 40 DAC DUBLIN UCTAM AIRPORT BUILDING S.R.O PRAGUE I-FABER SPA MILAN PIONEER GLOBAL FUNDS DISTRIBUTOR LTD HAMILTON MOBILITY CONCEPT GMBH OBERHACHING LOCAT SV SRL (CARTOLARIZZAZIONE: SERIE 2006) CONEGLIANO BA BETRIEBSOBJEKTE PRAHA, SPOL.S.R.O. PRAGUE GARAGE AM HOF GESELLSCHAFT M.B.H. VIENNA UNO-EINKAUFSZENTRUM-VERWALTUNGSGESELLSCHAFT M.B.H. IN LIQU. LEONDING JOHA GEBAEUDE- ERRICHTUNGS- UND VERMIETUNGS- GESELLSCHAFT M.B.H. IN LIQ. VIENNA RAMSES IMMOBILIEN GESELLSCHAFT M.B.H. & CO OG VIENNA TREUCONSULT PROPERTY EPSILON GMBH IN LIQU. VIENNA GELDILUX-TS-2013 S.A. LUXEMBOURG HVB-LEASING FORTE INGATLANHASNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST TRIESTE ADRIATIC MARITIME INITIATIVES SRL TRIESTE BARODA PIONEER ASSET MANAGEMENT COMPANY LTD MUMBAI BARODA PIONEER TRUSTEE COMPANY PVT LTD MUMBAI UNI IT SRL TRENTO ELEKTRA PURCHASE NO. 47 DAC DUBLIN LASSALLESTRASSE BAU-, PLANUNGS-, ERRICHTUNGS- UND VERWERTUNGSGESELLSCHAFT M.B.H. VIENNA EUROVENTURES-AUSTRIA-CA-MANAGEMENT VIENNA ELEKTRA PURCHASE NO. 42 DAC DUBLIN ELEKTRA PURCHASE NO. 58 DAC DUBLIN DBC SP.Z O.O. W LIKWIDACJI WARSAW Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 132 2018 Annual Report and Accounts · UniCredit Changes in the scope of consolidation Companies consolidated line by line, including the Parent Company and those ones classified as non-current assets and asset disposal groups, decreased by 85 entities compared with 31 December 2017 (4 inclusions and 89 exclusions as a result of disposals, changes of the consolidation method and mergers), from 590 as at 31 December 2017 to 505 as at 31 December 2018. Wholly-owned subsidiaries The following table shows the changes in equity investments in wholly-owned subsidiaries. Equity investments in wholly-owned subsidiaries (consolidated line by line): annual changes NUMBER OF COMPANIES A. Opening balance (from previous year) 590 B. Increased by 4 B.1 Newly established companies - B.2 Change of the consolidation method - B.3 Entities consolidated for the first time in the year 4 C. Reduced by 89 C.1 Disposal/Liquidation 26 C.2 Change of the consolidation method 48 C.3 Absorption by other Group entities 15 D. Closing balance 505 The tables below analyze the other increases and decreases occurred during the first half of the year by company. Increases Newly established companies During the period there were no changes in newly established companies and change of the consolidation method. Entities consolidated for the first time in the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE ELEKTRA PURCHASE NO. 56 DAC DUBLIN RE-ST.MARX HOLDING GMBH VIENNA HAMZO PROJECT DEVELOPMENT I GMBH VIENNA ELEKTRA PURCHASE NO. 63 DAC DUBLIN Reductions The above table refers to disposals and liquidations of inactive companies. Disposal COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE CENTAR KAPTOL DOO ZAGREB ELEKTRA PURCHASE NO. 35 DAC DUBLIN ELEKTRA PURCHASE NO. 40 DAC DUBLIN UCTAM AIRPORT BUILDING S.R.O PRAGUE I-FABER SPA MILAN PIONEER GLOBAL FUNDS DISTRIBUTOR LTD HAMILTON MOBILITY CONCEPT GMBH OBERHACHING LOCAT SV SRL (CARTOLARIZZAZIONE: SERIE 2006) CONEGLIANO BA BETRIEBSOBJEKTE PRAHA, SPOL.S.R.O. PRAGUE GARAGE AM HOF GESELLSCHAFT M.B.H. VIENNA UNO-EINKAUFSZENTRUM-VERWALTUNGSGESELLSCHAFT M.B.H. IN LIQU. LEONDING JOHA GEBAEUDE- ERRICHTUNGS- UND VERMIETUNGS- GESELLSCHAFT M.B.H. IN LIQ. VIENNA RAMSES IMMOBILIEN GESELLSCHAFT M.B.H. & CO OG VIENNA TREUCONSULT PROPERTY EPSILON GMBH IN LIQU. VIENNA GELDILUX-TS-2013 S.A. LUXEMBOURG HVB-LEASING FORTE INGATLANHASNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST TRIESTE ADRIATIC MARITIME INITIATIVES SRL TRIESTE BARODA PIONEER ASSET MANAGEMENT COMPANY LTD MUMBAI BARODA PIONEER TRUSTEE COMPANY PVT LTD MUMBAI UNI IT SRL TRENTO ELEKTRA PURCHASE NO. 47 DAC DUBLIN LASSALLESTRASSE BAU-, PLANUNGS-, ERRICHTUNGS- UND VERWERTUNGSGESELLSCHAFT M.B.H. VIENNA EUROVENTURES-AUSTRIA-CA-MANAGEMENT VIENNA ELEKTRA PURCHASE NO. 42 DAC DUBLIN ELEKTRA PURCHASE NO. 58 DAC DUBLIN DBC SP.Z O.O. W LIKWIDACJI WARSAW Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 132 2018 Annual Report and Accounts · UniCredit Changes in the scope of consolidation Companies consolidated line by line, including the Parent Company and those ones classified as non-current assets and asset disposal groups, decreased by 85 entities compared with 31 December 2017 (4 inclusions and 89 exclusions as a result of disposals, changes of the consolidation method and mergers), from 590 as at 31 December 2017 to 505 as at 31 December 2018. Wholly-owned subsidiaries The following table shows the changes in equity investments in wholly-owned subsidiaries. Equity investments in wholly-owned subsidiaries (consolidated line by line): annual changes NUMBER OF COMPANIES A. Opening balance (from previous year) 590 B. Increased by 4 B.1 Newly established companies - B.2 Change of the consolidation method - B.3 Entities consolidated for the first time in the year 4 C. Reduced by 89 C.1 Disposal/Liquidation 26 C.2 Change of the consolidation method 48 C.3 Absorption by other Group entities 15 D. Closing balance 505 The tables below analyze the other increases and decreases occurred during the first half of the year by company. Increases Newly established companies During the period there were no changes in newly established companies and change of the consolidation method. Entities consolidated for the first time in the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE ELEKTRA PURCHASE NO. 56 DAC DUBLIN RE-ST.MARX HOLDING GMBH VIENNA HAMZO PROJECT DEVELOPMENT I GMBH VIENNA ELEKTRA PURCHASE NO. 63 DAC DUBLIN Reductions The above table refers to disposals and liquidations of inactive companies. Disposal COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE CENTAR KAPTOL DOO ZAGREB ELEKTRA PURCHASE NO. 35 DAC DUBLIN ELEKTRA PURCHASE NO. 40 DAC DUBLIN UCTAM AIRPORT BUILDING S.R.O PRAGUE I-FABER SPA MILAN PIONEER GLOBAL FUNDS DISTRIBUTOR LTD HAMILTON MOBILITY CONCEPT GMBH OBERHACHING LOCAT SV SRL (CARTOLARIZZAZIONE: SERIE 2006) CONEGLIANO BA BETRIEBSOBJEKTE PRAHA, SPOL.S.R.O. PRAGUE GARAGE AM HOF GESELLSCHAFT M.B.H. VIENNA UNO-EINKAUFSZENTRUM-VERWALTUNGSGESELLSCHAFT M.B.H. IN LIQU. LEONDING JOHA GEBAEUDE- ERRICHTUNGS- UND VERMIETUNGS- GESELLSCHAFT M.B.H. IN LIQ. VIENNA RAMSES IMMOBILIEN GESELLSCHAFT M.B.H. & CO OG VIENNA TREUCONSULT PROPERTY EPSILON GMBH IN LIQU. VIENNA GELDILUX-TS-2013 S.A. LUXEMBOURG HVB-LEASING FORTE INGATLANHASNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST TRIESTE ADRIATIC MARITIME INITIATIVES SRL TRIESTE BARODA PIONEER ASSET MANAGEMENT COMPANY LTD MUMBAI BARODA PIONEER TRUSTEE COMPANY PVT LTD MUMBAI UNI IT SRL TRENTO ELEKTRA PURCHASE NO. 47 DAC DUBLIN LASSALLESTRASSE BAU-, PLANUNGS-, ERRICHTUNGS- UND VERWERTUNGSGESELLSCHAFT M.B.H. VIENNA EUROVENTURES-AUSTRIA-CA-MANAGEMENT VIENNA ELEKTRA PURCHASE NO. 42 DAC DUBLIN ELEKTRA PURCHASE NO. 58 DAC DUBLIN DBC SP.Z O.O. W LIKWIDACJI WARSAW Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 132 2018 Annual Report and Accounts · UniCredit Changes in the scope of consolidation Companies consolidated line by line, including the Parent Company and those ones classified as non-current assets and asset disposal groups, decreased by 85 entities compared with 31 December 2017 (4 inclusions and 89 exclusions as a result of disposals, changes of the consolidation method and mergers), from 590 as at 31 December 2017 to 505 as at 31 December 2018. Wholly-owned subsidiaries The following table shows the changes in equity investments in wholly-owned subsidiaries. Equity investments in wholly-owned subsidiaries (consolidated line by line): annual changes NUMBER OF COMPANIES A. Opening balance (from previous year) 590 B. Increased by 4 B.1 Newly established companies - B.2 Change of the consolidation method - B.3 Entities consolidated for the first time in the year 4 C. Reduced by 89 C.1 Disposal/Liquidation 26 C.2 Change of the consolidation method 48 C.3 Absorption by other Group entities 15 D. Closing balance 505 The tables below analyze the other increases and decreases occurred during the first half of the year by company. Increases Newly established companies During the period there were no changes in newly established companies and change of the consolidation method. Entities consolidated for the first time in the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE ELEKTRA PURCHASE NO. 56 DAC DUBLIN RE-ST.MARX HOLDING GMBH VIENNA HAMZO PROJECT DEVELOPMENT I GMBH VIENNA ELEKTRA PURCHASE NO. 63 DAC DUBLIN Reductions The above table refers to disposals and liquidations of inactive companies. Disposal COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE CENTAR KAPTOL DOO ZAGREB ELEKTRA PURCHASE NO. 35 DAC DUBLIN ELEKTRA PURCHASE NO. 40 DAC DUBLIN UCTAM AIRPORT BUILDING S.R.O PRAGUE I-FABER SPA MILAN PIONEER GLOBAL FUNDS DISTRIBUTOR LTD HAMILTON MOBILITY CONCEPT GMBH OBERHACHING LOCAT SV SRL (CARTOLARIZZAZIONE: SERIE 2006) CONEGLIANO BA BETRIEBSOBJEKTE PRAHA, SPOL.S.R.O. PRAGUE GARAGE AM HOF GESELLSCHAFT M.B.H. VIENNA UNO-EINKAUFSZENTRUM-VERWALTUNGSGESELLSCHAFT M.B.H. IN LIQU. LEONDING JOHA GEBAEUDE- ERRICHTUNGS- UND VERMIETUNGS- GESELLSCHAFT M.B.H. IN LIQ. VIENNA RAMSES IMMOBILIEN GESELLSCHAFT M.B.H. & CO OG VIENNA TREUCONSULT PROPERTY EPSILON GMBH IN LIQU. VIENNA GELDILUX-TS-2013 S.A. LUXEMBOURG HVB-LEASING FORTE INGATLANHASNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST TRIESTE ADRIATIC MARITIME INITIATIVES SRL TRIESTE BARODA PIONEER ASSET MANAGEMENT COMPANY LTD MUMBAI BARODA PIONEER TRUSTEE COMPANY PVT LTD MUMBAI UNI IT SRL TRENTO ELEKTRA PURCHASE NO. 47 DAC DUBLIN LASSALLESTRASSE BAU-, PLANUNGS-, ERRICHTUNGS- UND VERWERTUNGSGESELLSCHAFT M.B.H. VIENNA EUROVENTURES-AUSTRIA-CA-MANAGEMENT VIENNA ELEKTRA PURCHASE NO. 42 DAC DUBLIN ELEKTRA PURCHASE NO. 58 DAC DUBLIN DBC SP.Z O.O. W LIKWIDACJI WARSAW Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 133 The changes in the consolidation method refer to companies excluded from the consolidation scope due to their immateriality. Change of the consolidation method COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE FCT UCG TIKEHAU PARIS HVB GESELLSCHAFT FUR GEBAUDE BETEILIGUNGS GMBH MUNICH HYPO-BANK VERWALTUNGSZENTRUM GMBH MUNICH HYPO-REAL HAUS- UND GRUNDBESITZ GESELLSCHAFT MBH & CO. IMMOBILIEN-VERMIETUNGS KG MUNICH IVONA BETEILIGUNGSVERWALTUNG GMBH IN LIQU. VIENNA MARTIANEZ COMERCIAL, SOCIEDAD ANONIMA PUERTO DE LA CRUZ MILLETERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH PORTIA GRUNDSTUCKSVERWALTUNGS-GESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH RHOTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH RONCASA IMMOBILIEN-VERWALTUNGS GMBH MUNICH SALVATORPLATZ-GRUNDSTUECKSGESELLSCHAFT MIT BESCHRAENKTER HAFTUNG MUNICH TERRONDA DEVELOPMENT B.V. AMSTERDAM ANTUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH MUNICH HVB-LEASING RUBIN KFT. BUDAPEST ARRONDA IMMOBILIENVERWALTUNGS GMBH MUNICH AUFBAU DRESDEN GMBH MUNICH NF OBJEKT MUNCHEN GMBH MUNICH BV GRUNDSTUCKSENTWICKLUNGS-GMBH MUNICH BAYERISCHE WOHNUNGSGESELLSCHAFT FUER HANDEL UND INDUSTRIE, GESELLSCHAFT MIT BESCHRAENKTER HAFTUNG MUNICH WOHNPARK BRANDENBURG-GORDEN GESELLSCHAFT M.B.H IN LIQUIDATION BRANDEBURG H & B IMMOBILIEN GMBH & CO. OBJEKTE KG MUNICH CUMTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH GOLF- UND COUNTRY CLUB SEDDINER SEE IMMOBILIEN GMBH MUNICH HVB EXPORT LEASING GMBH MUNICH WEALTHCAP OBJEKTE SUEDWEST GMBH & CO. KG MUNICH B.I. INTERNATIONAL LIMITED GEORGE TOWN HVBFF INTERNATIONALE LEASING GMBH MUNICH HVBFF OBJEKT BETEILIGUNGS GMBH MUNICH TRINITRADE VERMOGENSVERWALTUNGS-GESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH WEALTHCAP AIRCRAFT 27 GMBH & CO KG GRUNWALD ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK KRAHENBERG KG OLDENBURG HVB PROFIL GESELLSCHAFT FUR PERSONALMANAGEMENT MBH MUNICH UNICREDIT (CHINA) ADVISORY LIMITED (IN LIQUIDAZIONE) BEIJING HVB LONDON INVESTMENTS (AVON) LIMITED ( IN LIQUIDAZIONE) LONDON MOVIE MARKET BETEILIGUNGS GMBH I.L. MUNICH LIFE MANAGEMENT ZWEITE GMBH GRUNWALD HVBFF INTERNATIONAL GREECE GMBH MUNICH CUXHAVEN STEEL CONSTRUCTION GMBH CUXHAVEN GIMMO IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH MUNICH ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK GREFRATH KG OLDENBURG ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK MOSE KG OLDENBURG WEALTHCAP USA IMMOBILIEN VERWALTUNGS GMBH MUNICH WEALTHCAP STIFTUNGSTREUHAND GMBH MUNICH WEALTHCAP AIRCRAFT 27 KOMPLEMENTAR GMBH GRUNWALD UNICREDIT BROKER D.O.O. SARAJEVO BROKERSKO DRUSTVO U OSIGURANJU SARAJEVO HVB INVESTMENTS (UK) LIMITED GEORGE TOWN UNICREDIT PARTNER LLC KIEV REAL ESTATE MANAGEMENT POLAND SP. Z O.O. WARSAW Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 133 The changes in the consolidation method refer to companies excluded from the consolidation scope due to their immateriality. Change of the consolidation method COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE FCT UCG TIKEHAU PARIS HVB GESELLSCHAFT FUR GEBAUDE BETEILIGUNGS GMBH MUNICH HYPO-BANK VERWALTUNGSZENTRUM GMBH MUNICH HYPO-REAL HAUS- UND GRUNDBESITZ GESELLSCHAFT MBH & CO. IMMOBILIEN-VERMIETUNGS KG MUNICH IVONA BETEILIGUNGSVERWALTUNG GMBH IN LIQU. VIENNA MARTIANEZ COMERCIAL, SOCIEDAD ANONIMA PUERTO DE LA CRUZ MILLETERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH PORTIA GRUNDSTUCKSVERWALTUNGS-GESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH RHOTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH RONCASA IMMOBILIEN-VERWALTUNGS GMBH MUNICH SALVATORPLATZ-GRUNDSTUECKSGESELLSCHAFT MIT BESCHRAENKTER HAFTUNG MUNICH TERRONDA DEVELOPMENT B.V. AMSTERDAM ANTUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH MUNICH HVB-LEASING RUBIN KFT. BUDAPEST ARRONDA IMMOBILIENVERWALTUNGS GMBH MUNICH AUFBAU DRESDEN GMBH MUNICH NF OBJEKT MUNCHEN GMBH MUNICH BV GRUNDSTUCKSENTWICKLUNGS-GMBH MUNICH BAYERISCHE WOHNUNGSGESELLSCHAFT FUER HANDEL UND INDUSTRIE, GESELLSCHAFT MIT BESCHRAENKTER HAFTUNG MUNICH WOHNPARK BRANDENBURG-GORDEN GESELLSCHAFT M.B.H IN LIQUIDATION BRANDEBURG H & B IMMOBILIEN GMBH & CO. OBJEKTE KG MUNICH CUMTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH GOLF- UND COUNTRY CLUB SEDDINER SEE IMMOBILIEN GMBH MUNICH HVB EXPORT LEASING GMBH MUNICH WEALTHCAP OBJEKTE SUEDWEST GMBH & CO. KG MUNICH B.I. INTERNATIONAL LIMITED GEORGE TOWN HVBFF INTERNATIONALE LEASING GMBH MUNICH HVBFF OBJEKT BETEILIGUNGS GMBH MUNICH TRINITRADE VERMOGENSVERWALTUNGS-GESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH WEALTHCAP AIRCRAFT 27 GMBH & CO KG GRUNWALD ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK KRAHENBERG KG OLDENBURG HVB PROFIL GESELLSCHAFT FUR PERSONALMANAGEMENT MBH MUNICH UNICREDIT (CHINA) ADVISORY LIMITED (IN LIQUIDAZIONE) BEIJING HVB LONDON INVESTMENTS (AVON) LIMITED ( IN LIQUIDAZIONE) LONDON MOVIE MARKET BETEILIGUNGS GMBH I.L. MUNICH LIFE MANAGEMENT ZWEITE GMBH GRUNWALD HVBFF INTERNATIONAL GREECE GMBH MUNICH CUXHAVEN STEEL CONSTRUCTION GMBH CUXHAVEN GIMMO IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH MUNICH ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK GREFRATH KG OLDENBURG ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK MOSE KG OLDENBURG WEALTHCAP USA IMMOBILIEN VERWALTUNGS GMBH MUNICH WEALTHCAP STIFTUNGSTREUHAND GMBH MUNICH WEALTHCAP AIRCRAFT 27 KOMPLEMENTAR GMBH GRUNWALD UNICREDIT BROKER D.O.O. SARAJEVO BROKERSKO DRUSTVO U OSIGURANJU SARAJEVO HVB INVESTMENTS (UK) LIMITED GEORGE TOWN UNICREDIT PARTNER LLC KIEV REAL ESTATE MANAGEMENT POLAND SP. Z O.O. WARSAW Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 133 The changes in the consolidation method refer to companies excluded from the consolidation scope due to their immateriality. Change of the consolidation method COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE FCT UCG TIKEHAU PARIS HVB GESELLSCHAFT FUR GEBAUDE BETEILIGUNGS GMBH MUNICH HYPO-BANK VERWALTUNGSZENTRUM GMBH MUNICH HYPO-REAL HAUS- UND GRUNDBESITZ GESELLSCHAFT MBH & CO. IMMOBILIEN-VERMIETUNGS KG MUNICH IVONA BETEILIGUNGSVERWALTUNG GMBH IN LIQU. VIENNA MARTIANEZ COMERCIAL, SOCIEDAD ANONIMA PUERTO DE LA CRUZ MILLETERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH PORTIA GRUNDSTUCKSVERWALTUNGS-GESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH RHOTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH RONCASA IMMOBILIEN-VERWALTUNGS GMBH MUNICH SALVATORPLATZ-GRUNDSTUECKSGESELLSCHAFT MIT BESCHRAENKTER HAFTUNG MUNICH TERRONDA DEVELOPMENT B.V. AMSTERDAM ANTUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH MUNICH HVB-LEASING RUBIN KFT. BUDAPEST ARRONDA IMMOBILIENVERWALTUNGS GMBH MUNICH AUFBAU DRESDEN GMBH MUNICH NF OBJEKT MUNCHEN GMBH MUNICH BV GRUNDSTUCKSENTWICKLUNGS-GMBH MUNICH BAYERISCHE WOHNUNGSGESELLSCHAFT FUER HANDEL UND INDUSTRIE, GESELLSCHAFT MIT BESCHRAENKTER HAFTUNG MUNICH WOHNPARK BRANDENBURG-GORDEN GESELLSCHAFT M.B.H IN LIQUIDATION BRANDEBURG H & B IMMOBILIEN GMBH & CO. OBJEKTE KG MUNICH CUMTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH GOLF- UND COUNTRY CLUB SEDDINER SEE IMMOBILIEN GMBH MUNICH HVB EXPORT LEASING GMBH MUNICH WEALTHCAP OBJEKTE SUEDWEST GMBH & CO. KG MUNICH B.I. INTERNATIONAL LIMITED GEORGE TOWN HVBFF INTERNATIONALE LEASING GMBH MUNICH HVBFF OBJEKT BETEILIGUNGS GMBH MUNICH TRINITRADE VERMOGENSVERWALTUNGS-GESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH WEALTHCAP AIRCRAFT 27 GMBH & CO KG GRUNWALD ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK KRAHENBERG KG OLDENBURG HVB PROFIL GESELLSCHAFT FUR PERSONALMANAGEMENT MBH MUNICH UNICREDIT (CHINA) ADVISORY LIMITED (IN LIQUIDAZIONE) BEIJING HVB LONDON INVESTMENTS (AVON) LIMITED ( IN LIQUIDAZIONE) LONDON MOVIE MARKET BETEILIGUNGS GMBH I.L. MUNICH LIFE MANAGEMENT ZWEITE GMBH GRUNWALD HVBFF INTERNATIONAL GREECE GMBH MUNICH CUXHAVEN STEEL CONSTRUCTION GMBH CUXHAVEN GIMMO IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH MUNICH ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK GREFRATH KG OLDENBURG ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK MOSE KG OLDENBURG WEALTHCAP USA IMMOBILIEN VERWALTUNGS GMBH MUNICH WEALTHCAP STIFTUNGSTREUHAND GMBH MUNICH WEALTHCAP AIRCRAFT 27 KOMPLEMENTAR GMBH GRUNWALD UNICREDIT BROKER D.O.O. SARAJEVO BROKERSKO DRUSTVO U OSIGURANJU SARAJEVO HVB INVESTMENTS (UK) LIMITED GEORGE TOWN UNICREDIT PARTNER LLC KIEV REAL ESTATE MANAGEMENT POLAND SP. Z O.O. WARSAW Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 133 The changes in the consolidation method refer to companies excluded from the consolidation scope due to their immateriality. Change of the consolidation method COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE FCT UCG TIKEHAU PARIS HVB GESELLSCHAFT FUR GEBAUDE BETEILIGUNGS GMBH MUNICH HYPO-BANK VERWALTUNGSZENTRUM GMBH MUNICH HYPO-REAL HAUS- UND GRUNDBESITZ GESELLSCHAFT MBH & CO. IMMOBILIEN-VERMIETUNGS KG MUNICH IVONA BETEILIGUNGSVERWALTUNG GMBH IN LIQU. VIENNA MARTIANEZ COMERCIAL, SOCIEDAD ANONIMA PUERTO DE LA CRUZ MILLETERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH PORTIA GRUNDSTUCKSVERWALTUNGS-GESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH RHOTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH RONCASA IMMOBILIEN-VERWALTUNGS GMBH MUNICH SALVATORPLATZ-GRUNDSTUECKSGESELLSCHAFT MIT BESCHRAENKTER HAFTUNG MUNICH TERRONDA DEVELOPMENT B.V. AMSTERDAM ANTUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH MUNICH HVB-LEASING RUBIN KFT. BUDAPEST ARRONDA IMMOBILIENVERWALTUNGS GMBH MUNICH AUFBAU DRESDEN GMBH MUNICH NF OBJEKT MUNCHEN GMBH MUNICH BV GRUNDSTUCKSENTWICKLUNGS-GMBH MUNICH BAYERISCHE WOHNUNGSGESELLSCHAFT FUER HANDEL UND INDUSTRIE, GESELLSCHAFT MIT BESCHRAENKTER HAFTUNG MUNICH WOHNPARK BRANDENBURG-GORDEN GESELLSCHAFT M.B.H IN LIQUIDATION BRANDEBURG H & B IMMOBILIEN GMBH & CO. OBJEKTE KG MUNICH CUMTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH GOLF- UND COUNTRY CLUB SEDDINER SEE IMMOBILIEN GMBH MUNICH HVB EXPORT LEASING GMBH MUNICH WEALTHCAP OBJEKTE SUEDWEST GMBH & CO. KG MUNICH B.I. INTERNATIONAL LIMITED GEORGE TOWN HVBFF INTERNATIONALE LEASING GMBH MUNICH HVBFF OBJEKT BETEILIGUNGS GMBH MUNICH TRINITRADE VERMOGENSVERWALTUNGS-GESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH WEALTHCAP AIRCRAFT 27 GMBH & CO KG GRUNWALD ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK KRAHENBERG KG OLDENBURG HVB PROFIL GESELLSCHAFT FUR PERSONALMANAGEMENT MBH MUNICH UNICREDIT (CHINA) ADVISORY LIMITED (IN LIQUIDAZIONE) BEIJING HVB LONDON INVESTMENTS (AVON) LIMITED ( IN LIQUIDAZIONE) LONDON MOVIE MARKET BETEILIGUNGS GMBH I.L. MUNICH LIFE MANAGEMENT ZWEITE GMBH GRUNWALD HVBFF INTERNATIONAL GREECE GMBH MUNICH CUXHAVEN STEEL CONSTRUCTION GMBH CUXHAVEN GIMMO IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH MUNICH ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK GREFRATH KG OLDENBURG ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK MOSE KG OLDENBURG WEALTHCAP USA IMMOBILIEN VERWALTUNGS GMBH MUNICH WEALTHCAP STIFTUNGSTREUHAND GMBH MUNICH WEALTHCAP AIRCRAFT 27 KOMPLEMENTAR GMBH GRUNWALD UNICREDIT BROKER D.O.O. SARAJEVO BROKERSKO DRUSTVO U OSIGURANJU SARAJEVO HVB INVESTMENTS (UK) LIMITED GEORGE TOWN UNICREDIT PARTNER LLC KIEV REAL ESTATE MANAGEMENT POLAND SP. Z O.O. WARSAW Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 133 The changes in the consolidation method refer to companies excluded from the consolidation scope due to their immateriality. Change of the consolidation method COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE FCT UCG TIKEHAU PARIS HVB GESELLSCHAFT FUR GEBAUDE BETEILIGUNGS GMBH MUNICH HYPO-BANK VERWALTUNGSZENTRUM GMBH MUNICH HYPO-REAL HAUS- UND GRUNDBESITZ GESELLSCHAFT MBH & CO. IMMOBILIEN-VERMIETUNGS KG MUNICH IVONA BETEILIGUNGSVERWALTUNG GMBH IN LIQU. VIENNA MARTIANEZ COMERCIAL, SOCIEDAD ANONIMA PUERTO DE LA CRUZ MILLETERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH PORTIA GRUNDSTUCKSVERWALTUNGS-GESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH RHOTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH RONCASA IMMOBILIEN-VERWALTUNGS GMBH MUNICH SALVATORPLATZ-GRUNDSTUECKSGESELLSCHAFT MIT BESCHRAENKTER HAFTUNG MUNICH TERRONDA DEVELOPMENT B.V. AMSTERDAM ANTUS IMMOBILIEN- UND PROJEKTENTWICKLUNGS GMBH MUNICH HVB-LEASING RUBIN KFT. BUDAPEST ARRONDA IMMOBILIENVERWALTUNGS GMBH MUNICH AUFBAU DRESDEN GMBH MUNICH NF OBJEKT MUNCHEN GMBH MUNICH BV GRUNDSTUCKSENTWICKLUNGS-GMBH MUNICH BAYERISCHE WOHNUNGSGESELLSCHAFT FUER HANDEL UND INDUSTRIE, GESELLSCHAFT MIT BESCHRAENKTER HAFTUNG MUNICH WOHNPARK BRANDENBURG-GORDEN GESELLSCHAFT M.B.H IN LIQUIDATION BRANDEBURG H & B IMMOBILIEN GMBH & CO. OBJEKTE KG MUNICH CUMTERRA GESELLSCHAFT FUR IMMOBILIENVERWALTUNG MBH MUNICH GOLF- UND COUNTRY CLUB SEDDINER SEE IMMOBILIEN GMBH MUNICH HVB EXPORT LEASING GMBH MUNICH WEALTHCAP OBJEKTE SUEDWEST GMBH & CO. KG MUNICH B.I. INTERNATIONAL LIMITED GEORGE TOWN HVBFF INTERNATIONALE LEASING GMBH MUNICH HVBFF OBJEKT BETEILIGUNGS GMBH MUNICH TRINITRADE VERMOGENSVERWALTUNGS-GESELLSCHAFT MIT BESCHRANKTER HAFTUNG MUNICH WEALTHCAP AIRCRAFT 27 GMBH & CO KG GRUNWALD ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK KRAHENBERG KG OLDENBURG HVB PROFIL GESELLSCHAFT FUR PERSONALMANAGEMENT MBH MUNICH UNICREDIT (CHINA) ADVISORY LIMITED (IN LIQUIDAZIONE) BEIJING HVB LONDON INVESTMENTS (AVON) LIMITED ( IN LIQUIDAZIONE) LONDON MOVIE MARKET BETEILIGUNGS GMBH I.L. MUNICH LIFE MANAGEMENT ZWEITE GMBH GRUNWALD HVBFF INTERNATIONAL GREECE GMBH MUNICH CUXHAVEN STEEL CONSTRUCTION GMBH CUXHAVEN GIMMO IMMOBILIEN-VERMIETUNGS- UND VERWALTUNGS GMBH MUNICH ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK GREFRATH KG OLDENBURG ERSTE ONSHORE WINDKRAFT BETEILIGUNGSGESELLSCHAFT MBH & CO. WINDPARK MOSE KG OLDENBURG WEALTHCAP USA IMMOBILIEN VERWALTUNGS GMBH MUNICH WEALTHCAP STIFTUNGSTREUHAND GMBH MUNICH WEALTHCAP AIRCRAFT 27 KOMPLEMENTAR GMBH GRUNWALD UNICREDIT BROKER D.O.O. SARAJEVO BROKERSKO DRUSTVO U OSIGURANJU SARAJEVO HVB INVESTMENTS (UK) LIMITED GEORGE TOWN UNICREDIT PARTNER LLC KIEV REAL ESTATE MANAGEMENT POLAND SP. Z O.O. WARSAW Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 134 2018 Annual Report and Accounts · UniCredit Absorption by other Group entities COMPANY NAME OF THE MERGERED ENTITY MAIN OFFICE COMPANY NAME OF THE TAKING IN ENTITY MAIN ARANY PENZUEGYI LIZING ZRT. BUDAPEST >>> UNICREDIT BANK HUNGARY ZRT. BUDAPEST SAS-REAL INGATLANUEZEMELTETOE ES KEZELOE KFT. (ENGLISH :SAS-REAL KFT) BUDAPEST >>> UNICREDIT BANK HUNGARY ZRT. BUDAPEST OMNIA GRUNDSTUCKS-GMBH & CO. OBJEKT EGGENFELDENER STRASSE KG MUNICH >>> HVB IMMOBILIEN AG MUNICH UNICREDIT TURN-AROUND MANAGEMENT GMBH VIENNA >>> UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH VIENNA UNICREDIT PARTNER D.O.O. ZA TRGOVINU I USLUGE ZAGREB >>> UNICREDIT LEASING CROATIA D.O.O. ZA LEASING ZAGREB PRVA STAMBENA STEDIONICA DD ZAGREB ZAGREB >>> ZAGREBACKA BANKA D.D. ZAGREB UNICREDIT LUXEMBOURG S.A. LUXEMBOURG >>> UNICREDIT BANK AG MUNICH KLEA ZS-IMMOBILIENVERMIETUNG G.M.B.H. VIENNA >>> KLEA ZS-LIEGENSCHAFTSVERMIETUNG G.M.B.H. VIENNA NORDBAHNHOF PROJEKTE HOLDING GMBH VIENNA >>> RE-ST.MARX HOLDING GMBH VIENNA UNICREDIT INGATLANLIZING ZRT BUDAPEST >>> UNICREDIT LEASING IMMOTRUCK ZRT. BUDAPEST MY DREI HANDELS GMBH VIENNA >>> BA BETRIEBSOBJEKTE GMBH VIENNA HVB-LEASING GARO INGATLANHSZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST >>> UNICREDIT LEASING KFT BUDAPEST HVB-LEASING SMARAGD KFT. BUDAPEST >>> UNICREDIT LEASING KFT BUDAPEST BV GRUNDSTUCKSENTWICKLUNGS-GMBH & CO. VERWALTUNGS-KG MUNICH >>> UNICREDIT BANK AG MUNICH BA BETRIEBSOBJEKTE GMBH & CO BETA VERMIETUNGS OG VIENNA >>> BA BETRIEBSOBJEKTE GMBH VIENNA Entities line by line which changed the company name during the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE WOHNPARK BRANDENBURG-GORDEN GESELLSCHAFT M.B.H IN LIQUIDATION (ex WOHNPARK BRANDENBURG-GORDEN GMBH) BRANDEBURG IVONA BETEILIGUNGSVERWALTUNG GMBH IN LIQU. (ex IVONA BETEILIGUNGSVERWALTUNG GMBH) VIENNA PAI (NEW YORK) LIMITED (ex PIONEER ALTERNATIVE INVESTMENTS (NEW YORK) LTD) DOVER FINECO ASSET MANAGEMENT DESIGNATED ACTIVITY COMPANY (ex FINECO AM LIMITED) DUBLIN UNICREDIT SERVICES S.C.P.A. (ex UNICREDIT BUSINESS INTEGRATED SOLUTIONS SOCIETA CONSORTILE PER AZIONI) MILAN UNICREDIT SERVICE GMBH (ex UNICREDIT BUSINESS INTEGRATED SOLUTIONS AUSTRIA GMBH) VIENNA PAI MANAGEMENT LTD (ex PIONEER ALTERNATIVE INVESTMENT MANAGEMENT LTD) DUBLIN PAI (BERMUDA) LIMITED (ex PIONEER ALTERNATIVE INVESTMENT MANAGEMENT (BERMUDA) LIMITED) HAMILTON AO LOCAT LEASING RUSSIA (ex ZAO LOCAT LEASING RUSSIA) MOSCOW DBC SP.Z O.O. W LIKWIDACJI (ex DBC SP.Z O.O.) WARSAW ZB INVEST D.O.O. ZA UPRAVLJANJE INVESTICIJSKIM FONDOVIMA (ex ZB INVEST DOO) ZAGREB FINECO VERWALTUNG AG (ex FINECO VERWALTUNG AG (IN LIQUIDATION)) MUNICH DEBO LEASING SRL (ex DEBO LEASING IFN S.A.) BUCAREST Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 134 2018 Annual Report and Accounts · UniCredit Absorption by other Group entities COMPANY NAME OF THE MERGERED ENTITY MAIN OFFICE COMPANY NAME OF THE TAKING IN ENTITY MAIN ARANY PENZUEGYI LIZING ZRT. BUDAPEST >>> UNICREDIT BANK HUNGARY ZRT. BUDAPEST SAS-REAL INGATLANUEZEMELTETOE ES KEZELOE KFT. (ENGLISH :SAS-REAL KFT) BUDAPEST >>> UNICREDIT BANK HUNGARY ZRT. BUDAPEST OMNIA GRUNDSTUCKS-GMBH & CO. OBJEKT EGGENFELDENER STRASSE KG MUNICH >>> HVB IMMOBILIEN AG MUNICH UNICREDIT TURN-AROUND MANAGEMENT GMBH VIENNA >>> UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH VIENNA UNICREDIT PARTNER D.O.O. ZA TRGOVINU I USLUGE ZAGREB >>> UNICREDIT LEASING CROATIA D.O.O. ZA LEASING ZAGREB PRVA STAMBENA STEDIONICA DD ZAGREB ZAGREB >>> ZAGREBACKA BANKA D.D. ZAGREB UNICREDIT LUXEMBOURG S.A. LUXEMBOURG >>> UNICREDIT BANK AG MUNICH KLEA ZS-IMMOBILIENVERMIETUNG G.M.B.H. VIENNA >>> KLEA ZS-LIEGENSCHAFTSVERMIETUNG G.M.B.H. VIENNA NORDBAHNHOF PROJEKTE HOLDING GMBH VIENNA >>> RE-ST.MARX HOLDING GMBH VIENNA UNICREDIT INGATLANLIZING ZRT BUDAPEST >>> UNICREDIT LEASING IMMOTRUCK ZRT. BUDAPEST MY DREI HANDELS GMBH VIENNA >>> BA BETRIEBSOBJEKTE GMBH VIENNA HVB-LEASING GARO INGATLANHSZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST >>> UNICREDIT LEASING KFT BUDAPEST HVB-LEASING SMARAGD KFT. BUDAPEST >>> UNICREDIT LEASING KFT BUDAPEST BV GRUNDSTUCKSENTWICKLUNGS-GMBH & CO. VERWALTUNGS-KG MUNICH >>> UNICREDIT BANK AG MUNICH BA BETRIEBSOBJEKTE GMBH & CO BETA VERMIETUNGS OG VIENNA >>> BA BETRIEBSOBJEKTE GMBH VIENNA Entities line by line which changed the company name during the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE WOHNPARK BRANDENBURG-GORDEN GESELLSCHAFT M.B.H IN LIQUIDATION (ex WOHNPARK BRANDENBURG-GORDEN GMBH) BRANDEBURG IVONA BETEILIGUNGSVERWALTUNG GMBH IN LIQU. (ex IVONA BETEILIGUNGSVERWALTUNG GMBH) VIENNA PAI (NEW YORK) LIMITED (ex PIONEER ALTERNATIVE INVESTMENTS (NEW YORK) LTD) DOVER FINECO ASSET MANAGEMENT DESIGNATED ACTIVITY COMPANY (ex FINECO AM LIMITED) DUBLIN UNICREDIT SERVICES S.C.P.A. (ex UNICREDIT BUSINESS INTEGRATED SOLUTIONS SOCIETA CONSORTILE PER AZIONI) MILAN UNICREDIT SERVICE GMBH (ex UNICREDIT BUSINESS INTEGRATED SOLUTIONS AUSTRIA GMBH) VIENNA PAI MANAGEMENT LTD (ex PIONEER ALTERNATIVE INVESTMENT MANAGEMENT LTD) DUBLIN PAI (BERMUDA) LIMITED (ex PIONEER ALTERNATIVE INVESTMENT MANAGEMENT (BERMUDA) LIMITED) HAMILTON AO LOCAT LEASING RUSSIA (ex ZAO LOCAT LEASING RUSSIA) MOSCOW DBC SP.Z O.O. W LIKWIDACJI (ex DBC SP.Z O.O.) WARSAW ZB INVEST D.O.O. ZA UPRAVLJANJE INVESTICIJSKIM FONDOVIMA (ex ZB INVEST DOO) ZAGREB FINECO VERWALTUNG AG (ex FINECO VERWALTUNG AG (IN LIQUIDATION)) MUNICH DEBO LEASING SRL (ex DEBO LEASING IFN S.A.) BUCAREST Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 134 2018 Annual Report and Accounts · UniCredit Absorption by other Group entities COMPANY NAME OF THE MERGERED ENTITY MAIN OFFICE COMPANY NAME OF THE TAKING IN ENTITY MAIN ARANY PENZUEGYI LIZING ZRT. BUDAPEST >>> UNICREDIT BANK HUNGARY ZRT. BUDAPEST SAS-REAL INGATLANUEZEMELTETOE ES KEZELOE KFT. (ENGLISH :SAS-REAL KFT) BUDAPEST >>> UNICREDIT BANK HUNGARY ZRT. BUDAPEST OMNIA GRUNDSTUCKS-GMBH & CO. OBJEKT EGGENFELDENER STRASSE KG MUNICH >>> HVB IMMOBILIEN AG MUNICH UNICREDIT TURN-AROUND MANAGEMENT GMBH VIENNA >>> UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH VIENNA UNICREDIT PARTNER D.O.O. ZA TRGOVINU I USLUGE ZAGREB >>> UNICREDIT LEASING CROATIA D.O.O. ZA LEASING ZAGREB PRVA STAMBENA STEDIONICA DD ZAGREB ZAGREB >>> ZAGREBACKA BANKA D.D. ZAGREB UNICREDIT LUXEMBOURG S.A. LUXEMBOURG >>> UNICREDIT BANK AG MUNICH KLEA ZS-IMMOBILIENVERMIETUNG G.M.B.H. VIENNA >>> KLEA ZS-LIEGENSCHAFTSVERMIETUNG G.M.B.H. VIENNA NORDBAHNHOF PROJEKTE HOLDING GMBH VIENNA >>> RE-ST.MARX HOLDING GMBH VIENNA UNICREDIT INGATLANLIZING ZRT BUDAPEST >>> UNICREDIT LEASING IMMOTRUCK ZRT. BUDAPEST MY DREI HANDELS GMBH VIENNA >>> BA BETRIEBSOBJEKTE GMBH VIENNA HVB-LEASING GARO INGATLANHSZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST >>> UNICREDIT LEASING KFT BUDAPEST HVB-LEASING SMARAGD KFT. BUDAPEST >>> UNICREDIT LEASING KFT BUDAPEST BV GRUNDSTUCKSENTWICKLUNGS-GMBH & CO. VERWALTUNGS-KG MUNICH >>> UNICREDIT BANK AG MUNICH BA BETRIEBSOBJEKTE GMBH & CO BETA VERMIETUNGS OG VIENNA >>> BA BETRIEBSOBJEKTE GMBH VIENNA Entities line by line which changed the company name during the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE WOHNPARK BRANDENBURG-GORDEN GESELLSCHAFT M.B.H IN LIQUIDATION (ex WOHNPARK BRANDENBURG-GORDEN GMBH) BRANDEBURG IVONA BETEILIGUNGSVERWALTUNG GMBH IN LIQU. (ex IVONA BETEILIGUNGSVERWALTUNG GMBH) VIENNA PAI (NEW YORK) LIMITED (ex PIONEER ALTERNATIVE INVESTMENTS (NEW YORK) LTD) DOVER FINECO ASSET MANAGEMENT DESIGNATED ACTIVITY COMPANY (ex FINECO AM LIMITED) DUBLIN UNICREDIT SERVICES S.C.P.A. (ex UNICREDIT BUSINESS INTEGRATED SOLUTIONS SOCIETA CONSORTILE PER AZIONI) MILAN UNICREDIT SERVICE GMBH (ex UNICREDIT BUSINESS INTEGRATED SOLUTIONS AUSTRIA GMBH) VIENNA PAI MANAGEMENT LTD (ex PIONEER ALTERNATIVE INVESTMENT MANAGEMENT LTD) DUBLIN PAI (BERMUDA) LIMITED (ex PIONEER ALTERNATIVE INVESTMENT MANAGEMENT (BERMUDA) LIMITED) HAMILTON AO LOCAT LEASING RUSSIA (ex ZAO LOCAT LEASING RUSSIA) MOSCOW DBC SP.Z O.O. W LIKWIDACJI (ex DBC SP.Z O.O.) WARSAW ZB INVEST D.O.O. ZA UPRAVLJANJE INVESTICIJSKIM FONDOVIMA (ex ZB INVEST DOO) ZAGREB FINECO VERWALTUNG AG (ex FINECO VERWALTUNG AG (IN LIQUIDATION)) MUNICH DEBO LEASING SRL (ex DEBO LEASING IFN S.A.) BUCAREST Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 134 2018 Annual Report and Accounts · UniCredit Absorption by other Group entities COMPANY NAME OF THE MERGERED ENTITY MAIN OFFICE COMPANY NAME OF THE TAKING IN ENTITY MAIN ARANY PENZUEGYI LIZING ZRT. BUDAPEST >>> UNICREDIT BANK HUNGARY ZRT. BUDAPEST SAS-REAL INGATLANUEZEMELTETOE ES KEZELOE KFT. (ENGLISH :SAS-REAL KFT) BUDAPEST >>> UNICREDIT BANK HUNGARY ZRT. BUDAPEST OMNIA GRUNDSTUCKS-GMBH & CO. OBJEKT EGGENFELDENER STRASSE KG MUNICH >>> HVB IMMOBILIEN AG MUNICH UNICREDIT TURN-AROUND MANAGEMENT GMBH VIENNA >>> UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH VIENNA UNICREDIT PARTNER D.O.O. ZA TRGOVINU I USLUGE ZAGREB >>> UNICREDIT LEASING CROATIA D.O.O. ZA LEASING ZAGREB PRVA STAMBENA STEDIONICA DD ZAGREB ZAGREB >>> ZAGREBACKA BANKA D.D. ZAGREB UNICREDIT LUXEMBOURG S.A. LUXEMBOURG >>> UNICREDIT BANK AG MUNICH KLEA ZS-IMMOBILIENVERMIETUNG G.M.B.H. VIENNA >>> KLEA ZS-LIEGENSCHAFTSVERMIETUNG G.M.B.H. VIENNA NORDBAHNHOF PROJEKTE HOLDING GMBH VIENNA >>> RE-ST.MARX HOLDING GMBH VIENNA UNICREDIT INGATLANLIZING ZRT BUDAPEST >>> UNICREDIT LEASING IMMOTRUCK ZRT. BUDAPEST MY DREI HANDELS GMBH VIENNA >>> BA BETRIEBSOBJEKTE GMBH VIENNA HVB-LEASING GARO INGATLANHSZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST >>> UNICREDIT LEASING KFT BUDAPEST HVB-LEASING SMARAGD KFT. BUDAPEST >>> UNICREDIT LEASING KFT BUDAPEST BV GRUNDSTUCKSENTWICKLUNGS-GMBH & CO. VERWALTUNGS-KG MUNICH >>> UNICREDIT BANK AG MUNICH BA BETRIEBSOBJEKTE GMBH & CO BETA VERMIETUNGS OG VIENNA >>> BA BETRIEBSOBJEKTE GMBH VIENNA Entities line by line which changed the company name during the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE WOHNPARK BRANDENBURG-GORDEN GESELLSCHAFT M.B.H IN LIQUIDATION (ex WOHNPARK BRANDENBURG-GORDEN GMBH) BRANDEBURG IVONA BETEILIGUNGSVERWALTUNG GMBH IN LIQU. (ex IVONA BETEILIGUNGSVERWALTUNG GMBH) VIENNA PAI (NEW YORK) LIMITED (ex PIONEER ALTERNATIVE INVESTMENTS (NEW YORK) LTD) DOVER FINECO ASSET MANAGEMENT DESIGNATED ACTIVITY COMPANY (ex FINECO AM LIMITED) DUBLIN UNICREDIT SERVICES S.C.P.A. (ex UNICREDIT BUSINESS INTEGRATED SOLUTIONS SOCIETA CONSORTILE PER AZIONI) MILAN UNICREDIT SERVICE GMBH (ex UNICREDIT BUSINESS INTEGRATED SOLUTIONS AUSTRIA GMBH) VIENNA PAI MANAGEMENT LTD (ex PIONEER ALTERNATIVE INVESTMENT MANAGEMENT LTD) DUBLIN PAI (BERMUDA) LIMITED (ex PIONEER ALTERNATIVE INVESTMENT MANAGEMENT (BERMUDA) LIMITED) HAMILTON AO LOCAT LEASING RUSSIA (ex ZAO LOCAT LEASING RUSSIA) MOSCOW DBC SP.Z O.O. W LIKWIDACJI (ex DBC SP.Z O.O.) WARSAW ZB INVEST D.O.O. ZA UPRAVLJANJE INVESTICIJSKIM FONDOVIMA (ex ZB INVEST DOO) ZAGREB FINECO VERWALTUNG AG (ex FINECO VERWALTUNG AG (IN LIQUIDATION)) MUNICH DEBO LEASING SRL (ex DEBO LEASING IFN S.A.) BUCAREST Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 134 2018 Annual Report and Accounts · UniCredit Absorption by other Group entities COMPANY NAME OF THE MERGERED ENTITY MAIN OFFICE COMPANY NAME OF THE TAKING IN ENTITY MAIN ARANY PENZUEGYI LIZING ZRT. BUDAPEST >>> UNICREDIT BANK HUNGARY ZRT. BUDAPEST SAS-REAL INGATLANUEZEMELTETOE ES KEZELOE KFT. (ENGLISH :SAS-REAL KFT) BUDAPEST >>> UNICREDIT BANK HUNGARY ZRT. BUDAPEST OMNIA GRUNDSTUCKS-GMBH & CO. OBJEKT EGGENFELDENER STRASSE KG MUNICH >>> HVB IMMOBILIEN AG MUNICH UNICREDIT TURN-AROUND MANAGEMENT GMBH VIENNA >>> UNICREDIT TURN-AROUND MANAGEMENT CEE GMBH VIENNA UNICREDIT PARTNER D.O.O. ZA TRGOVINU I USLUGE ZAGREB >>> UNICREDIT LEASING CROATIA D.O.O. ZA LEASING ZAGREB PRVA STAMBENA STEDIONICA DD ZAGREB ZAGREB >>> ZAGREBACKA BANKA D.D. ZAGREB UNICREDIT LUXEMBOURG S.A. LUXEMBOURG >>> UNICREDIT BANK AG MUNICH KLEA ZS-IMMOBILIENVERMIETUNG G.M.B.H. VIENNA >>> KLEA ZS-LIEGENSCHAFTSVERMIETUNG G.M.B.H. VIENNA NORDBAHNHOF PROJEKTE HOLDING GMBH VIENNA >>> RE-ST.MARX HOLDING GMBH VIENNA UNICREDIT INGATLANLIZING ZRT BUDAPEST >>> UNICREDIT LEASING IMMOTRUCK ZRT. BUDAPEST MY DREI HANDELS GMBH VIENNA >>> BA BETRIEBSOBJEKTE GMBH VIENNA HVB-LEASING GARO INGATLANHSZNOSITO KORLATOLT FELELOESSEGUE TARSASAG BUDAPEST >>> UNICREDIT LEASING KFT BUDAPEST HVB-LEASING SMARAGD KFT. BUDAPEST >>> UNICREDIT LEASING KFT BUDAPEST BV GRUNDSTUCKSENTWICKLUNGS-GMBH & CO. VERWALTUNGS-KG MUNICH >>> UNICREDIT BANK AG MUNICH BA BETRIEBSOBJEKTE GMBH & CO BETA VERMIETUNGS OG VIENNA >>> BA BETRIEBSOBJEKTE GMBH VIENNA Entities line by line which changed the company name during the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE WOHNPARK BRANDENBURG-GORDEN GESELLSCHAFT M.B.H IN LIQUIDATION (ex WOHNPARK BRANDENBURG-GORDEN GMBH) BRANDEBURG IVONA BETEILIGUNGSVERWALTUNG GMBH IN LIQU. (ex IVONA BETEILIGUNGSVERWALTUNG GMBH) VIENNA PAI (NEW YORK) LIMITED (ex PIONEER ALTERNATIVE INVESTMENTS (NEW YORK) LTD) DOVER FINECO ASSET MANAGEMENT DESIGNATED ACTIVITY COMPANY (ex FINECO AM LIMITED) DUBLIN UNICREDIT SERVICES S.C.P.A. (ex UNICREDIT BUSINESS INTEGRATED SOLUTIONS SOCIETA CONSORTILE PER AZIONI) MILAN UNICREDIT SERVICE GMBH (ex UNICREDIT BUSINESS INTEGRATED SOLUTIONS AUSTRIA GMBH) VIENNA PAI MANAGEMENT LTD (ex PIONEER ALTERNATIVE INVESTMENT MANAGEMENT LTD) DUBLIN PAI (BERMUDA) LIMITED (ex PIONEER ALTERNATIVE INVESTMENT MANAGEMENT (BERMUDA) LIMITED) HAMILTON AO LOCAT LEASING RUSSIA (ex ZAO LOCAT LEASING RUSSIA) MOSCOW DBC SP.Z O.O. W LIKWIDACJI (ex DBC SP.Z O.O.) WARSAW ZB INVEST D.O.O. ZA UPRAVLJANJE INVESTICIJSKIM FONDOVIMA (ex ZB INVEST DOO) ZAGREB FINECO VERWALTUNG AG (ex FINECO VERWALTUNG AG (IN LIQUIDATION)) MUNICH DEBO LEASING SRL (ex DEBO LEASING IFN S.A.) BUCAREST Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 135 2. Significant assumptions and assessment in determining the consolidation scope The Group determines the existence of control and, consequently, the consolidation scope, checking, with reference to the entities in which it holds exposures: • the existence of power over the relevant activities; • the exposure to the variability of returns; • the ability to use the power exercised in order to influence the returns to which it is exposed. The factors that have been considered for the purposes of this assessment depend on the entity's governance methods, purposes and equity structure. On this point, the Group differentiates between entities governed through voting rights, i.e. operating entities, and entities not governed through voting rights, which comprise special purpose entities (SPEs) and investment funds. In the case of operating entities, the following factors provide evidence of control: • more than half of the company's voting rights are held directly or indirectly through subsidiaries (also when they act as trustee companies) unless, exceptionally, it can be clearly demonstrated that this ownership does not originate control; • half, or a lower proportion, of the votes exercisable in the shareholders' meeting are held and it is possible to govern the relevant activities unilaterally through: - the control of more than half of the voting rights based on an agreement with other investors; - the power to determine the entity's financial and operating policies based on a contract or a statutory clause; - the power to appoint or remove the majority of the members of the Board of Directors or the equivalent governing body, and that board or body is responsible for managing the company; - the power to exercise the majority of voting rights in meetings of the Board of Directors or the equivalent governing body, and that board or body is responsible for managing the company. The existence and effect of potential voting rights, including those incorporated in options, way-out clauses, or instruments convertible into shares, are taken into consideration when assessing the existence of control, in case they are substantial. In particular, potential voting rights are considered substantial if all the following conditions are met: • they can be exercised either immediately or at least in good time for the company's shareholders' meeting; • there are no legal or economic barriers to exercise them; • exercising them is economically convenient. As at 31 December 2018 the Group holds the majority of the voting rights in all the operating entities subject to consolidation, with the exception of five companies for which the Group, although not holding the majority of voting rights, (i) has signed shareholders' agreements which enable it to appoint the majority of members of the governing body, or contractual agreements which determine the possibility of managing the company’s business unilaterally, and (ii) is exposed to the variability of the said company’s returns. It should also be noted that there are no cases in which control derives from holding potential voting rights. Special purpose entities are considered controlled if the Group is, at one and the same time: • exposed to a significant extent to the variability of returns, as a result of exposures in securities, of disbursing loans or of providing guarantees. In this regard it is assumed as a rebuttable presumption that the exposure to variability of returns is significant if the Group has at least 30% of the most subordinated exposure, and • able to govern the relevant activities, also in a de facto manner. Examples of the power to govern on this point are performing the role of sponsor or servicer appointed to recover underlying receivables, or managing the company's business. In particular, consolidated special purpose entities include: • Conduits in which the Group plays the role of sponsor and is exposed to the variability of returns, as a result of subscribing Asset Backed Commercial Paper issued by them and/or of providing guarantees in the form of letters of credit or liquidity lines; • vehicles used to carry out securitisation transactions in which the Group is the originator as a result of subscribing the subordinated tranches; • vehicles financed by the Group and established for the sole purpose of performing financial or operating leasing in favour of customers which are financed by the Group; • vehicles in which, as a result of deteriorating market conditions, the Group has found itself holding the majority of the financial exposure and, at the same time, managing the underlying assets or the related collections. It should be noted that, in the case of special purpose entities set up as part of securitisation transactions pursuant to Italian Law 130/99, the segregated assets are analysed separately with respect to the analysis of the SPE. For the latter, control is assessed on the basis of possession of the voting rights attributed to the company's shares. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 135 2. Significant assumptions and assessment in determining the consolidation scope The Group determines the existence of control and, consequently, the consolidation scope, checking, with reference to the entities in which it holds exposures: • the existence of power over the relevant activities; • the exposure to the variability of returns; • the ability to use the power exercised in order to influence the returns to which it is exposed. The factors that have been considered for the purposes of this assessment depend on the entity's governance methods, purposes and equity structure. On this point, the Group differentiates between entities governed through voting rights, i.e. operating entities, and entities not governed through voting rights, which comprise special purpose entities (SPEs) and investment funds. In the case of operating entities, the following factors provide evidence of control: • more than half of the company's voting rights are held directly or indirectly through subsidiaries (also when they act as trustee companies) unless, exceptionally, it can be clearly demonstrated that this ownership does not originate control; • half, or a lower proportion, of the votes exercisable in the shareholders' meeting are held and it is possible to govern the relevant activities unilaterally through: - the control of more than half of the voting rights based on an agreement with other investors; - the power to determine the entity's financial and operating policies based on a contract or a statutory clause; - the power to appoint or remove the majority of the members of the Board of Directors or the equivalent governing body, and that board or body is responsible for managing the company; - the power to exercise the majority of voting rights in meetings of the Board of Directors or the equivalent governing body, and that board or body is responsible for managing the company. The existence and effect of potential voting rights, including those incorporated in options, way-out clauses, or instruments convertible into shares, are taken into consideration when assessing the existence of control, in case they are substantial. In particular, potential voting rights are considered substantial if all the following conditions are met: • they can be exercised either immediately or at least in good time for the company's shareholders' meeting; • there are no legal or economic barriers to exercise them; • exercising them is economically convenient. As at 31 December 2018 the Group holds the majority of the voting rights in all the operating entities subject to consolidation, with the exception of five companies for which the Group, although not holding the majority of voting rights, (i) has signed shareholders' agreements which enable it to appoint the majority of members of the governing body, or contractual agreements which determine the possibility of managing the company’s business unilaterally, and (ii) is exposed to the variability of the said company’s returns. It should also be noted that there are no cases in which control derives from holding potential voting rights. Special purpose entities are considered controlled if the Group is, at one and the same time: • exposed to a significant extent to the variability of returns, as a result of exposures in securities, of disbursing loans or of providing guarantees. In this regard it is assumed as a rebuttable presumption that the exposure to variability of returns is significant if the Group has at least 30% of the most subordinated exposure, and • able to govern the relevant activities, also in a de facto manner. Examples of the power to govern on this point are performing the role of sponsor or servicer appointed to recover underlying receivables, or managing the company's business. In particular, consolidated special purpose entities include: • Conduits in which the Group plays the role of sponsor and is exposed to the variability of returns, as a result of subscribing Asset Backed Commercial Paper issued by them and/or of providing guarantees in the form of letters of credit or liquidity lines; • vehicles used to carry out securitisation transactions in which the Group is the originator as a result of subscribing the subordinated tranches; • vehicles financed by the Group and established for the sole purpose of performing financial or operating leasing in favour of customers which are financed by the Group; • vehicles in which, as a result of deteriorating market conditions, the Group has found itself holding the majority of the financial exposure and, at the same time, managing the underlying assets or the related collections. It should be noted that, in the case of special purpose entities set up as part of securitisation transactions pursuant to Italian Law 130/99, the segregated assets are analysed separately with respect to the analysis of the SPE. For the latter, control is assessed on the basis of possession of the voting rights attributed to the company's shares. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 135 2. Significant assumptions and assessment in determining the consolidation scope The Group determines the existence of control and, consequently, the consolidation scope, checking, with reference to the entities in which it holds exposures: • the existence of power over the relevant activities; • the exposure to the variability of returns; • the ability to use the power exercised in order to influence the returns to which it is exposed. The factors that have been considered for the purposes of this assessment depend on the entity's governance methods, purposes and equity structure. On this point, the Group differentiates between entities governed through voting rights, i.e. operating entities, and entities not governed through voting rights, which comprise special purpose entities (SPEs) and investment funds. In the case of operating entities, the following factors provide evidence of control: • more than half of the company's voting rights are held directly or indirectly through subsidiaries (also when they act as trustee companies) unless, exceptionally, it can be clearly demonstrated that this ownership does not originate control; • half, or a lower proportion, of the votes exercisable in the shareholders' meeting are held and it is possible to govern the relevant activities unilaterally through: - the control of more than half of the voting rights based on an agreement with other investors; - the power to determine the entity's financial and operating policies based on a contract or a statutory clause; - the power to appoint or remove the majority of the members of the Board of Directors or the equivalent governing body, and that board or body is responsible for managing the company; - the power to exercise the majority of voting rights in meetings of the Board of Directors or the equivalent governing body, and that board or body is responsible for managing the company. The existence and effect of potential voting rights, including those incorporated in options, way-out clauses, or instruments convertible into shares, are taken into consideration when assessing the existence of control, in case they are substantial. In particular, potential voting rights are considered substantial if all the following conditions are met: • they can be exercised either immediately or at least in good time for the company's shareholders' meeting; • there are no legal or economic barriers to exercise them; • exercising them is economically convenient. As at 31 December 2018 the Group holds the majority of the voting rights in all the operating entities subject to consolidation, with the exception of five companies for which the Group, although not holding the majority of voting rights, (i) has signed shareholders' agreements which enable it to appoint the majority of members of the governing body, or contractual agreements which determine the possibility of managing the company’s business unilaterally, and (ii) is exposed to the variability of the said company’s returns. It should also be noted that there are no cases in which control derives from holding potential voting rights. Special purpose entities are considered controlled if the Group is, at one and the same time: • exposed to a significant extent to the variability of returns, as a result of exposures in securities, of disbursing loans or of providing guarantees. In this regard it is assumed as a rebuttable presumption that the exposure to variability of returns is significant if the Group has at least 30% of the most subordinated exposure, and • able to govern the relevant activities, also in a de facto manner. Examples of the power to govern on this point are performing the role of sponsor or servicer appointed to recover underlying receivables, or managing the company's business. In particular, consolidated special purpose entities include: • Conduits in which the Group plays the role of sponsor and is exposed to the variability of returns, as a result of subscribing Asset Backed Commercial Paper issued by them and/or of providing guarantees in the form of letters of credit or liquidity lines; • vehicles used to carry out securitisation transactions in which the Group is the originator as a result of subscribing the subordinated tranches; • vehicles financed by the Group and established for the sole purpose of performing financial or operating leasing in favour of customers which are financed by the Group; • vehicles in which, as a result of deteriorating market conditions, the Group has found itself holding the majority of the financial exposure and, at the same time, managing the underlying assets or the related collections. It should be noted that, in the case of special purpose entities set up as part of securitisation transactions pursuant to Italian Law 130/99, the segregated assets are analysed separately with respect to the analysis of the SPE. For the latter, control is assessed on the basis of possession of the voting rights attributed to the company's shares. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 135 2. Significant assumptions and assessment in determining the consolidation scope The Group determines the existence of control and, consequently, the consolidation scope, checking, with reference to the entities in which it holds exposures: • the existence of power over the relevant activities; • the exposure to the variability of returns; • the ability to use the power exercised in order to influence the returns to which it is exposed. The factors that have been considered for the purposes of this assessment depend on the entity's governance methods, purposes and equity structure. On this point, the Group differentiates between entities governed through voting rights, i.e. operating entities, and entities not governed through voting rights, which comprise special purpose entities (SPEs) and investment funds. In the case of operating entities, the following factors provide evidence of control: • more than half of the company's voting rights are held directly or indirectly through subsidiaries (also when they act as trustee companies) unless, exceptionally, it can be clearly demonstrated that this ownership does not originate control; • half, or a lower proportion, of the votes exercisable in the shareholders' meeting are held and it is possible to govern the relevant activities unilaterally through: - the control of more than half of the voting rights based on an agreement with other investors; - the power to determine the entity's financial and operating policies based on a contract or a statutory clause; - the power to appoint or remove the majority of the members of the Board of Directors or the equivalent governing body, and that board or body is responsible for managing the company; - the power to exercise the majority of voting rights in meetings of the Board of Directors or the equivalent governing body, and that board or body is responsible for managing the company. The existence and effect of potential voting rights, including those incorporated in options, way-out clauses, or instruments convertible into shares, are taken into consideration when assessing the existence of control, in case they are substantial. In particular, potential voting rights are considered substantial if all the following conditions are met: • they can be exercised either immediately or at least in good time for the company's shareholders' meeting; • there are no legal or economic barriers to exercise them; • exercising them is economically convenient. As at 31 December 2018 the Group holds the majority of the voting rights in all the operating entities subject to consolidation, with the exception of five companies for which the Group, although not holding the majority of voting rights, (i) has signed shareholders' agreements which enable it to appoint the majority of members of the governing body, or contractual agreements which determine the possibility of managing the company’s business unilaterally, and (ii) is exposed to the variability of the said company’s returns. It should also be noted that there are no cases in which control derives from holding potential voting rights. Special purpose entities are considered controlled if the Group is, at one and the same time: • exposed to a significant extent to the variability of returns, as a result of exposures in securities, of disbursing loans or of providing guarantees. In this regard it is assumed as a rebuttable presumption that the exposure to variability of returns is significant if the Group has at least 30% of the most subordinated exposure, and • able to govern the relevant activities, also in a de facto manner. Examples of the power to govern on this point are performing the role of sponsor or servicer appointed to recover underlying receivables, or managing the company's business. In particular, consolidated special purpose entities include: • Conduits in which the Group plays the role of sponsor and is exposed to the variability of returns, as a result of subscribing Asset Backed Commercial Paper issued by them and/or of providing guarantees in the form of letters of credit or liquidity lines; • vehicles used to carry out securitisation transactions in which the Group is the originator as a result of subscribing the subordinated tranches; • vehicles financed by the Group and established for the sole purpose of performing financial or operating leasing in favour of customers which are financed by the Group; • vehicles in which, as a result of deteriorating market conditions, the Group has found itself holding the majority of the financial exposure and, at the same time, managing the underlying assets or the related collections. It should be noted that, in the case of special purpose entities set up as part of securitisation transactions pursuant to Italian Law 130/99, the segregated assets are analysed separately with respect to the analysis of the SPE. For the latter, control is assessed on the basis of possession of the voting rights attributed to the company's shares. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 135 2. Significant assumptions and assessment in determining the consolidation scope The Group determines the existence of control and, consequently, the consolidation scope, checking, with reference to the entities in which it holds exposures: • the existence of power over the relevant activities; • the exposure to the variability of returns; • the ability to use the power exercised in order to influence the returns to which it is exposed. The factors that have been considered for the purposes of this assessment depend on the entity's governance methods, purposes and equity structure. On this point, the Group differentiates between entities governed through voting rights, i.e. operating entities, and entities not governed through voting rights, which comprise special purpose entities (SPEs) and investment funds. In the case of operating entities, the following factors provide evidence of control: • more than half of the company's voting rights are held directly or indirectly through subsidiaries (also when they act as trustee companies) unless, exceptionally, it can be clearly demonstrated that this ownership does not originate control; • half, or a lower proportion, of the votes exercisable in the shareholders' meeting are held and it is possible to govern the relevant activities unilaterally through: - the control of more than half of the voting rights based on an agreement with other investors; - the power to determine the entity's financial and operating policies based on a contract or a statutory clause; - the power to appoint or remove the majority of the members of the Board of Directors or the equivalent governing body, and that board or body is responsible for managing the company; - the power to exercise the majority of voting rights in meetings of the Board of Directors or the equivalent governing body, and that board or body is responsible for managing the company. The existence and effect of potential voting rights, including those incorporated in options, way-out clauses, or instruments convertible into shares, are taken into consideration when assessing the existence of control, in case they are substantial. In particular, potential voting rights are considered substantial if all the following conditions are met: • they can be exercised either immediately or at least in good time for the company's shareholders' meeting; • there are no legal or economic barriers to exercise them; • exercising them is economically convenient. As at 31 December 2018 the Group holds the majority of the voting rights in all the operating entities subject to consolidation, with the exception of five companies for which the Group, although not holding the majority of voting rights, (i) has signed shareholders' agreements which enable it to appoint the majority of members of the governing body, or contractual agreements which determine the possibility of managing the company’s business unilaterally, and (ii) is exposed to the variability of the said company’s returns. It should also be noted that there are no cases in which control derives from holding potential voting rights. Special purpose entities are considered controlled if the Group is, at one and the same time: • exposed to a significant extent to the variability of returns, as a result of exposures in securities, of disbursing loans or of providing guarantees. In this regard it is assumed as a rebuttable presumption that the exposure to variability of returns is significant if the Group has at least 30% of the most subordinated exposure, and • able to govern the relevant activities, also in a de facto manner. Examples of the power to govern on this point are performing the role of sponsor or servicer appointed to recover underlying receivables, or managing the company's business. In particular, consolidated special purpose entities include: • Conduits in which the Group plays the role of sponsor and is exposed to the variability of returns, as a result of subscribing Asset Backed Commercial Paper issued by them and/or of providing guarantees in the form of letters of credit or liquidity lines; • vehicles used to carry out securitisation transactions in which the Group is the originator as a result of subscribing the subordinated tranches; • vehicles financed by the Group and established for the sole purpose of performing financial or operating leasing in favour of customers which are financed by the Group; • vehicles in which, as a result of deteriorating market conditions, the Group has found itself holding the majority of the financial exposure and, at the same time, managing the underlying assets or the related collections. It should be noted that, in the case of special purpose entities set up as part of securitisation transactions pursuant to Italian Law 130/99, the segregated assets are analysed separately with respect to the analysis of the SPE. For the latter, control is assessed on the basis of possession of the voting rights attributed to the company's shares. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 136 2018 Annual Report and Accounts · UniCredit Investment funds managed by Group companies are considered controlled if the Group is significantly exposed to the variability of returns and if the third-party investors have no rights to remove the management company. In this regard it is assumed as a rebuttable presumption that the exposure to the variability of returns is significant if the Group has at least 30% as a result of subscription of the units and commissions received for the management of the fund's assets. Funds managed by Group companies that are in seed/warehousing phases are not considered controlled. In this phase, in fact, the aim of the fund is to invest, in accordance with fund’s regulation, in financial and non financial assets with the aim of allotting the quotas to third party investors. Consequently it has been evaluated that the management company is not able to exercise power due to its limited decision power Investment funds managed by third-party companies are considered controlled if the Group is significantly exposed to the variability of returns and at the same time, has the unilateral right to remove the management company. In this regard it is assumed as a rebuttable presumption that the exposure to the variability of returns is significant if the Group has subscribed at least 30% of the fund’s units. With reference to 31 December 2018, it should be noted that 219 controlled entities (of which 20 belonging to the Banking Group) were not consolidated pursuant to IFRS10, of which 206 for materiality threshold and/or liquidation procedures. Among the 13 remaining non consolidated entities it should be noted: • 2 investment funds whose the majority of quotas are subscribed by the Group and for which consolidation would not determine neither a significant increase in Group consolidated assets; • 6 operating entities deriving from restructuring procedures or work- out, whose risks are measured as part of the overall credit exposures; • 4 entities expected to be sold or liquidated within a year and with a limited amount of total assets; • 1 SPE which has repaid its liabilities and distributed the dividends. Based on available information, it should be considered that their consolidation would not have impacted significantly the Group shareholders’ equity. 3. Equity investments in wholly-owned subsidiaries with significant non-controlling interests 3.1 Non-controlling interests, availability of votes of NCIs and dividends distributed to NCIs NAME MINORITIES EQUITY RATIOS (%) MINORITIES VOTING RIGHTS (%) DIVIDENDS TO MINORITIES (€ '000) FINECOBANK SPA 64.65 64.65 112,102 ZAGREBACKA BANKA D.D. 15.53 15.53 17,575 3.2 Equity investments with significant non-controlling interests: accounting information (€ '000) LEGAL ENTITIES TOTAL ASSETS CASH AND CASH EQUIVALENTS FINANCIAL ASSETS TANGIBLE AND INTANGIBLE ASSETS FINANCIAL LIABILITIES NET EQUITY NET INTEREST MARGIN FINECOBANK SPA 24,713,572 6 24,241,608 114,637 23,289,036 962,547 278,702 ZAGREBACKA BANKA D.D. 15,285,673 2,649,921 12,409,975 180,752 12,847,726 2,230,204 359,457 continued: 3.2 Equity investments with significant non-controlling interests: accounting information LEGAL ENTITIES OPERATING INCOME OPERATING COSTS PROFIT (LOSS) BEFORE TAX FROM CONTINUING OPERATIONS PROFIT (LOSS) AFTER TAX FROM CONTINUING OPERATIONS PROFIT (LOSS) AFTER TAX FROM DISCONTINUED OPERATIONS PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME AFTER TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) FINECOBANK SPA 604,812 (262,723) 338,399 227,920 - 227,922 (3,432) 224,490 ZAGREBACKA BANKA D.D. 627,286 (265,565) 248,150 220,463 - 220,463 (2,508) 217,955 The exposures above refer to the amounts of individual accounts of subsidiaries as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 136 2018 Annual Report and Accounts · UniCredit Investment funds managed by Group companies are considered controlled if the Group is significantly exposed to the variability of returns and if the third-party investors have no rights to remove the management company. In this regard it is assumed as a rebuttable presumption that the exposure to the variability of returns is significant if the Group has at least 30% as a result of subscription of the units and commissions received for the management of the fund's assets. Funds managed by Group companies that are in seed/warehousing phases are not considered controlled. In this phase, in fact, the aim of the fund is to invest, in accordance with fund’s regulation, in financial and non financial assets with the aim of allotting the quotas to third party investors. Consequently it has been evaluated that the management company is not able to exercise power due to its limited decision power Investment funds managed by third-party companies are considered controlled if the Group is significantly exposed to the variability of returns and at the same time, has the unilateral right to remove the management company. In this regard it is assumed as a rebuttable presumption that the exposure to the variability of returns is significant if the Group has subscribed at least 30% of the fund’s units. With reference to 31 December 2018, it should be noted that 219 controlled entities (of which 20 belonging to the Banking Group) were not consolidated pursuant to IFRS10, of which 206 for materiality threshold and/or liquidation procedures. Among the 13 remaining non consolidated entities it should be noted: • 2 investment funds whose the majority of quotas are subscribed by the Group and for which consolidation would not determine neither a significant increase in Group consolidated assets; • 6 operating entities deriving from restructuring procedures or work- out, whose risks are measured as part of the overall credit exposures; • 4 entities expected to be sold or liquidated within a year and with a limited amount of total assets; • 1 SPE which has repaid its liabilities and distributed the dividends. Based on available information, it should be considered that their consolidation would not have impacted significantly the Group shareholders’ equity. 3. Equity investments in wholly-owned subsidiaries with significant non-controlling interests 3.1 Non-controlling interests, availability of votes of NCIs and dividends distributed to NCIs NAME MINORITIES EQUITY RATIOS (%) MINORITIES VOTING RIGHTS (%) DIVIDENDS TO MINORITIES (€ '000) FINECOBANK SPA 64.65 64.65 112,102 ZAGREBACKA BANKA D.D. 15.53 15.53 17,575 3.2 Equity investments with significant non-controlling interests: accounting information (€ '000) LEGAL ENTITIES TOTAL ASSETS CASH AND CASH EQUIVALENTS FINANCIAL ASSETS TANGIBLE AND INTANGIBLE ASSETS FINANCIAL LIABILITIES NET EQUITY NET INTEREST MARGIN FINECOBANK SPA 24,713,572 6 24,241,608 114,637 23,289,036 962,547 278,702 ZAGREBACKA BANKA D.D. 15,285,673 2,649,921 12,409,975 180,752 12,847,726 2,230,204 359,457 continued: 3.2 Equity investments with significant non-controlling interests: accounting information LEGAL ENTITIES OPERATING INCOME OPERATING COSTS PROFIT (LOSS) BEFORE TAX FROM CONTINUING OPERATIONS PROFIT (LOSS) AFTER TAX FROM CONTINUING OPERATIONS PROFIT (LOSS) AFTER TAX FROM DISCONTINUED OPERATIONS PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME AFTER TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) FINECOBANK SPA 604,812 (262,723) 338,399 227,920 - 227,922 (3,432) 224,490 ZAGREBACKA BANKA D.D. 627,286 (265,565) 248,150 220,463 - 220,463 (2,508) 217,955 The exposures above refer to the amounts of individual accounts of subsidiaries as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 136 2018 Annual Report and Accounts · UniCredit Investment funds managed by Group companies are considered controlled if the Group is significantly exposed to the variability of returns and if the third-party investors have no rights to remove the management company. In this regard it is assumed as a rebuttable presumption that the exposure to the variability of returns is significant if the Group has at least 30% as a result of subscription of the units and commissions received for the management of the fund's assets. Funds managed by Group companies that are in seed/warehousing phases are not considered controlled. In this phase, in fact, the aim of the fund is to invest, in accordance with fund’s regulation, in financial and non financial assets with the aim of allotting the quotas to third party investors. Consequently it has been evaluated that the management company is not able to exercise power due to its limited decision power Investment funds managed by third-party companies are considered controlled if the Group is significantly exposed to the variability of returns and at the same time, has the unilateral right to remove the management company. In this regard it is assumed as a rebuttable presumption that the exposure to the variability of returns is significant if the Group has subscribed at least 30% of the fund’s units. With reference to 31 December 2018, it should be noted that 219 controlled entities (of which 20 belonging to the Banking Group) were not consolidated pursuant to IFRS10, of which 206 for materiality threshold and/or liquidation procedures. Among the 13 remaining non consolidated entities it should be noted: • 2 investment funds whose the majority of quotas are subscribed by the Group and for which consolidation would not determine neither a significant increase in Group consolidated assets; • 6 operating entities deriving from restructuring procedures or work- out, whose risks are measured as part of the overall credit exposures; • 4 entities expected to be sold or liquidated within a year and with a limited amount of total assets; • 1 SPE which has repaid its liabilities and distributed the dividends. Based on available information, it should be considered that their consolidation would not have impacted significantly the Group shareholders’ equity. 3. Equity investments in wholly-owned subsidiaries with significant non-controlling interests 3.1 Non-controlling interests, availability of votes of NCIs and dividends distributed to NCIs NAME MINORITIES EQUITY RATIOS (%) MINORITIES VOTING RIGHTS (%) DIVIDENDS TO MINORITIES (€ '000) FINECOBANK SPA 64.65 64.65 112,102 ZAGREBACKA BANKA D.D. 15.53 15.53 17,575 3.2 Equity investments with significant non-controlling interests: accounting information (€ '000) LEGAL ENTITIES TOTAL ASSETS CASH AND CASH EQUIVALENTS FINANCIAL ASSETS TANGIBLE AND INTANGIBLE ASSETS FINANCIAL LIABILITIES NET EQUITY NET INTEREST MARGIN FINECOBANK SPA 24,713,572 6 24,241,608 114,637 23,289,036 962,547 278,702 ZAGREBACKA BANKA D.D. 15,285,673 2,649,921 12,409,975 180,752 12,847,726 2,230,204 359,457 continued: 3.2 Equity investments with significant non-controlling interests: accounting information LEGAL ENTITIES OPERATING INCOME OPERATING COSTS PROFIT (LOSS) BEFORE TAX FROM CONTINUING OPERATIONS PROFIT (LOSS) AFTER TAX FROM CONTINUING OPERATIONS PROFIT (LOSS) AFTER TAX FROM DISCONTINUED OPERATIONS PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME AFTER TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) FINECOBANK SPA 604,812 (262,723) 338,399 227,920 - 227,922 (3,432) 224,490 ZAGREBACKA BANKA D.D. 627,286 (265,565) 248,150 220,463 - 220,463 (2,508) 217,955 The exposures above refer to the amounts of individual accounts of subsidiaries as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 136 2018 Annual Report and Accounts · UniCredit Investment funds managed by Group companies are considered controlled if the Group is significantly exposed to the variability of returns and if the third-party investors have no rights to remove the management company. In this regard it is assumed as a rebuttable presumption that the exposure to the variability of returns is significant if the Group has at least 30% as a result of subscription of the units and commissions received for the management of the fund's assets. Funds managed by Group companies that are in seed/warehousing phases are not considered controlled. In this phase, in fact, the aim of the fund is to invest, in accordance with fund’s regulation, in financial and non financial assets with the aim of allotting the quotas to third party investors. Consequently it has been evaluated that the management company is not able to exercise power due to its limited decision power Investment funds managed by third-party companies are considered controlled if the Group is significantly exposed to the variability of returns and at the same time, has the unilateral right to remove the management company. In this regard it is assumed as a rebuttable presumption that the exposure to the variability of returns is significant if the Group has subscribed at least 30% of the fund’s units. With reference to 31 December 2018, it should be noted that 219 controlled entities (of which 20 belonging to the Banking Group) were not consolidated pursuant to IFRS10, of which 206 for materiality threshold and/or liquidation procedures. Among the 13 remaining non consolidated entities it should be noted: • 2 investment funds whose the majority of quotas are subscribed by the Group and for which consolidation would not determine neither a significant increase in Group consolidated assets; • 6 operating entities deriving from restructuring procedures or work- out, whose risks are measured as part of the overall credit exposures; • 4 entities expected to be sold or liquidated within a year and with a limited amount of total assets; • 1 SPE which has repaid its liabilities and distributed the dividends. Based on available information, it should be considered that their consolidation would not have impacted significantly the Group shareholders’ equity. 3. Equity investments in wholly-owned subsidiaries with significant non-controlling interests 3.1 Non-controlling interests, availability of votes of NCIs and dividends distributed to NCIs NAME MINORITIES EQUITY RATIOS (%) MINORITIES VOTING RIGHTS (%) DIVIDENDS TO MINORITIES (€ '000) FINECOBANK SPA 64.65 64.65 112,102 ZAGREBACKA BANKA D.D. 15.53 15.53 17,575 3.2 Equity investments with significant non-controlling interests: accounting information (€ '000) LEGAL ENTITIES TOTAL ASSETS CASH AND CASH EQUIVALENTS FINANCIAL ASSETS TANGIBLE AND INTANGIBLE ASSETS FINANCIAL LIABILITIES NET EQUITY NET INTEREST MARGIN FINECOBANK SPA 24,713,572 6 24,241,608 114,637 23,289,036 962,547 278,702 ZAGREBACKA BANKA D.D. 15,285,673 2,649,921 12,409,975 180,752 12,847,726 2,230,204 359,457 continued: 3.2 Equity investments with significant non-controlling interests: accounting information LEGAL ENTITIES OPERATING INCOME OPERATING COSTS PROFIT (LOSS) BEFORE TAX FROM CONTINUING OPERATIONS PROFIT (LOSS) AFTER TAX FROM CONTINUING OPERATIONS PROFIT (LOSS) AFTER TAX FROM DISCONTINUED OPERATIONS PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME AFTER TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) FINECOBANK SPA 604,812 (262,723) 338,399 227,920 - 227,922 (3,432) 224,490 ZAGREBACKA BANKA D.D. 627,286 (265,565) 248,150 220,463 - 220,463 (2,508) 217,955 The exposures above refer to the amounts of individual accounts of subsidiaries as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 136 2018 Annual Report and Accounts · UniCredit Investment funds managed by Group companies are considered controlled if the Group is significantly exposed to the variability of returns and if the third-party investors have no rights to remove the management company. In this regard it is assumed as a rebuttable presumption that the exposure to the variability of returns is significant if the Group has at least 30% as a result of subscription of the units and commissions received for the management of the fund's assets. Funds managed by Group companies that are in seed/warehousing phases are not considered controlled. In this phase, in fact, the aim of the fund is to invest, in accordance with fund’s regulation, in financial and non financial assets with the aim of allotting the quotas to third party investors. Consequently it has been evaluated that the management company is not able to exercise power due to its limited decision power Investment funds managed by third-party companies are considered controlled if the Group is significantly exposed to the variability of returns and at the same time, has the unilateral right to remove the management company. In this regard it is assumed as a rebuttable presumption that the exposure to the variability of returns is significant if the Group has subscribed at least 30% of the fund’s units. With reference to 31 December 2018, it should be noted that 219 controlled entities (of which 20 belonging to the Banking Group) were not consolidated pursuant to IFRS10, of which 206 for materiality threshold and/or liquidation procedures. Among the 13 remaining non consolidated entities it should be noted: • 2 investment funds whose the majority of quotas are subscribed by the Group and for which consolidation would not determine neither a significant increase in Group consolidated assets; • 6 operating entities deriving from restructuring procedures or work- out, whose risks are measured as part of the overall credit exposures; • 4 entities expected to be sold or liquidated within a year and with a limited amount of total assets; • 1 SPE which has repaid its liabilities and distributed the dividends. Based on available information, it should be considered that their consolidation would not have impacted significantly the Group shareholders’ equity. 3. Equity investments in wholly-owned subsidiaries with significant non-controlling interests 3.1 Non-controlling interests, availability of votes of NCIs and dividends distributed to NCIs NAME MINORITIES EQUITY RATIOS (%) MINORITIES VOTING RIGHTS (%) DIVIDENDS TO MINORITIES (€ '000) FINECOBANK SPA 64.65 64.65 112,102 ZAGREBACKA BANKA D.D. 15.53 15.53 17,575 3.2 Equity investments with significant non-controlling interests: accounting information (€ '000) LEGAL ENTITIES TOTAL ASSETS CASH AND CASH EQUIVALENTS FINANCIAL ASSETS TANGIBLE AND INTANGIBLE ASSETS FINANCIAL LIABILITIES NET EQUITY NET INTEREST MARGIN FINECOBANK SPA 24,713,572 6 24,241,608 114,637 23,289,036 962,547 278,702 ZAGREBACKA BANKA D.D. 15,285,673 2,649,921 12,409,975 180,752 12,847,726 2,230,204 359,457 continued: 3.2 Equity investments with significant non-controlling interests: accounting information LEGAL ENTITIES OPERATING INCOME OPERATING COSTS PROFIT (LOSS) BEFORE TAX FROM CONTINUING OPERATIONS PROFIT (LOSS) AFTER TAX FROM CONTINUING OPERATIONS PROFIT (LOSS) AFTER TAX FROM DISCONTINUED OPERATIONS PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME AFTER TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) FINECOBANK SPA 604,812 (262,723) 338,399 227,920 - 227,922 (3,432) 224,490 ZAGREBACKA BANKA D.D. 627,286 (265,565) 248,150 220,463 - 220,463 (2,508) 217,955 The exposures above refer to the amounts of individual accounts of subsidiaries as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 137 4. Significant restrictions Shareholder agreements, regulatory requirements and contractual agreements can limit the ability of the Group to access the assets or settle the liabilities of its subsidiaries or restrict the latter from distribution of capital and/or dividends. With reference to shareholder agreements, it should be noted that to the consolidated entities UniCredit BPC Mortgages S.r.l. and UniCredit OBG S.r.l. companies established according to Law 130/99 for the execution of securitisation transactions or the issuance of covered bonds (Obbligazioni Bancarie Garantite), shareholders’ agreements allow the distribution of dividends only when the credit claims of guaranteed lenders and bearer of covered bonds are satisfied. In the course of the demerger of the CEE Banking Business from UniCredit Bank Austria AG to UniCredit S.p.A. effected in 2016, UniCredit S.p.A. undertook vis-a-vis its co-shareholders in UniCredit Bank Austria AG and UniCredit Bank Austria AG that until 30 June 2024: (i) it will restrict itself, as shareholder of UniCredit Bank Austria AG, from resolving on any dividend distributions of the latter in case UniCredit Bank Austria AG’s consolidated and solo CET1 ratios, as a consequence thereof, fall below (a) 14% or (b) the higher minimum CET1 ratio required at the time by the applicable regulatory framework, plus any required buffers, and (ii) support any management decision and board resolution of UCBA aimed at safeguarding such CET1 ratios. With reference to regulatory requirements, it should be noted that UniCredit group is a banking group subject to the rules provided by Directive 2013/36/EU on the “access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms” (CRD IV) and by Regulation (EU) No.575/2013 on “prudential requirements for credit institutions and investment firms” (CRR) and which controls financial institutions subject to the same regulation. The ability of the controlled banks to distribute capital or dividends may be restricted to the fulfilment of these requirements in terms of both capital ratios and “Maximum Distributable Amount” as well as further recommendation by competent authorities provided time by time (e.g. Recommendation of the European Central Bank on dividend distribution policy - ECB/2019/01). For the disclosure on UniCredit group Capital Requirements and on the outcome of mentioned SREP, process held in 2017 and applicable for 2018, refer to the chapter “Capital and value management” of the Consolidated report on operations. With reference to subsidiaries, it should be noted that in some jurisdictions and for some foreign entities of the Group, commitments to maintain local supervisory capital higher than regulatory thresholds may exist also as a result of SREP performed at local level. With reference to contractual agreements, UniCredit group has also issued financial liabilities whose callability, redemption, repurchase or repayment prior to the date of their contractual maturity is subordinated to the consent by the authorization of competent authority. The value of these instruments as of 31 December 2018 is equal to 14,531,930 thousand. 5. Other information For information on jointly-controlled companies and companies subject to significant influence that have not been consolidated in accordance with IFRS10 as of 31 December 2018, in addition to the controlled ones disclosed in previous paragraph 2. Significant assumptions and assessment in determining the consolidation scope, reference is made to Part B - Assets - Section 7 - Equity investments - Item 70 - paragraph 7.6 Valuation and significant assumptions to establish the existence of joint control or significant influence of this Notes to the consolidated accounts. Section 4 - Subsequent events No material events have occurred after the balance sheet date that would make it necessary to change any of the information given in the Consolidated Accounts as of 31 December 2018. For a description of the significant events after year-end see the specific paragraph of the Consolidated report on operations. Section 5 - Other matters In 2018 the following standards, amendments or interpretations came into force: • IFRS9 - Financial Instruments (EU Regulation 2016/2067); • IFRS15 - Revenue from Contracts with Customers (EU Regulation 2016/1905); • Amendments to IFRS4: Applying IFRS9 Financial Instruments with IFRS4 Insurance Contracts (EU Regulation 2017/1988); • Clarifications to IFRS15 Revenue from Contracts with Customers (EU Regulation 2017/1987); • IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (Reg. UE 2018/519); • Amendments to IAS40: Transfers of Investment Property (Reg. UE 2018/400); • Amendments to IFRS2: Classification and Measurement of Share-based Payment Transactions (Reg. UE 2018/289); • Annual Improvements to IFRS Standards 2014-2016 Cycle (Reg. UE 2018/182). For further details on the impacts coming from IFRS9 and IFRS15 adoption, refer to the specific paragraphs of the current section. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 137 4. Significant restrictions Shareholder agreements, regulatory requirements and contractual agreements can limit the ability of the Group to access the assets or settle the liabilities of its subsidiaries or restrict the latter from distribution of capital and/or dividends. With reference to shareholder agreements, it should be noted that to the consolidated entities UniCredit BPC Mortgages S.r.l. and UniCredit OBG S.r.l. companies established according to Law 130/99 for the execution of securitisation transactions or the issuance of covered bonds (Obbligazioni Bancarie Garantite), shareholders’ agreements allow the distribution of dividends only when the credit claims of guaranteed lenders and bearer of covered bonds are satisfied. In the course of the demerger of the CEE Banking Business from UniCredit Bank Austria AG to UniCredit S.p.A. effected in 2016, UniCredit S.p.A. undertook vis-a-vis its co-shareholders in UniCredit Bank Austria AG and UniCredit Bank Austria AG that until 30 June 2024: (i) it will restrict itself, as shareholder of UniCredit Bank Austria AG, from resolving on any dividend distributions of the latter in case UniCredit Bank Austria AG’s consolidated and solo CET1 ratios, as a consequence thereof, fall below (a) 14% or (b) the higher minimum CET1 ratio required at the time by the applicable regulatory framework, plus any required buffers, and (ii) support any management decision and board resolution of UCBA aimed at safeguarding such CET1 ratios. With reference to regulatory requirements, it should be noted that UniCredit group is a banking group subject to the rules provided by Directive 2013/36/EU on the “access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms” (CRD IV) and by Regulation (EU) No.575/2013 on “prudential requirements for credit institutions and investment firms” (CRR) and which controls financial institutions subject to the same regulation. The ability of the controlled banks to distribute capital or dividends may be restricted to the fulfilment of these requirements in terms of both capital ratios and “Maximum Distributable Amount” as well as further recommendation by competent authorities provided time by time (e.g. Recommendation of the European Central Bank on dividend distribution policy - ECB/2019/01). For the disclosure on UniCredit group Capital Requirements and on the outcome of mentioned SREP, process held in 2017 and applicable for 2018, refer to the chapter “Capital and value management” of the Consolidated report on operations. With reference to subsidiaries, it should be noted that in some jurisdictions and for some foreign entities of the Group, commitments to maintain local supervisory capital higher than regulatory thresholds may exist also as a result of SREP performed at local level. With reference to contractual agreements, UniCredit group has also issued financial liabilities whose callability, redemption, repurchase or repayment prior to the date of their contractual maturity is subordinated to the consent by the authorization of competent authority. The value of these instruments as of 31 December 2018 is equal to 14,531,930 thousand. 5. Other information For information on jointly-controlled companies and companies subject to significant influence that have not been consolidated in accordance with IFRS10 as of 31 December 2018, in addition to the controlled ones disclosed in previous paragraph 2. Significant assumptions and assessment in determining the consolidation scope, reference is made to Part B - Assets - Section 7 - Equity investments - Item 70 - paragraph 7.6 Valuation and significant assumptions to establish the existence of joint control or significant influence of this Notes to the consolidated accounts. Section 4 - Subsequent events No material events have occurred after the balance sheet date that would make it necessary to change any of the information given in the Consolidated Accounts as of 31 December 2018. For a description of the significant events after year-end see the specific paragraph of the Consolidated report on operations. Section 5 - Other matters In 2018 the following standards, amendments or interpretations came into force: • IFRS9 - Financial Instruments (EU Regulation 2016/2067); • IFRS15 - Revenue from Contracts with Customers (EU Regulation 2016/1905); • Amendments to IFRS4: Applying IFRS9 Financial Instruments with IFRS4 Insurance Contracts (EU Regulation 2017/1988); • Clarifications to IFRS15 Revenue from Contracts with Customers (EU Regulation 2017/1987); • IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (Reg. UE 2018/519); • Amendments to IAS40: Transfers of Investment Property (Reg. UE 2018/400); • Amendments to IFRS2: Classification and Measurement of Share-based Payment Transactions (Reg. UE 2018/289); • Annual Improvements to IFRS Standards 2014-2016 Cycle (Reg. UE 2018/182). For further details on the impacts coming from IFRS9 and IFRS15 adoption, refer to the specific paragraphs of the current section. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 137 4. Significant restrictions Shareholder agreements, regulatory requirements and contractual agreements can limit the ability of the Group to access the assets or settle the liabilities of its subsidiaries or restrict the latter from distribution of capital and/or dividends. With reference to shareholder agreements, it should be noted that to the consolidated entities UniCredit BPC Mortgages S.r.l. and UniCredit OBG S.r.l. companies established according to Law 130/99 for the execution of securitisation transactions or the issuance of covered bonds (Obbligazioni Bancarie Garantite), shareholders’ agreements allow the distribution of dividends only when the credit claims of guaranteed lenders and bearer of covered bonds are satisfied. In the course of the demerger of the CEE Banking Business from UniCredit Bank Austria AG to UniCredit S.p.A. effected in 2016, UniCredit S.p.A. undertook vis-a-vis its co-shareholders in UniCredit Bank Austria AG and UniCredit Bank Austria AG that until 30 June 2024: (i) it will restrict itself, as shareholder of UniCredit Bank Austria AG, from resolving on any dividend distributions of the latter in case UniCredit Bank Austria AG’s consolidated and solo CET1 ratios, as a consequence thereof, fall below (a) 14% or (b) the higher minimum CET1 ratio required at the time by the applicable regulatory framework, plus any required buffers, and (ii) support any management decision and board resolution of UCBA aimed at safeguarding such CET1 ratios. With reference to regulatory requirements, it should be noted that UniCredit group is a banking group subject to the rules provided by Directive 2013/36/EU on the “access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms” (CRD IV) and by Regulation (EU) No.575/2013 on “prudential requirements for credit institutions and investment firms” (CRR) and which controls financial institutions subject to the same regulation. The ability of the controlled banks to distribute capital or dividends may be restricted to the fulfilment of these requirements in terms of both capital ratios and “Maximum Distributable Amount” as well as further recommendation by competent authorities provided time by time (e.g. Recommendation of the European Central Bank on dividend distribution policy - ECB/2019/01). For the disclosure on UniCredit group Capital Requirements and on the outcome of mentioned SREP, process held in 2017 and applicable for 2018, refer to the chapter “Capital and value management” of the Consolidated report on operations. With reference to subsidiaries, it should be noted that in some jurisdictions and for some foreign entities of the Group, commitments to maintain local supervisory capital higher than regulatory thresholds may exist also as a result of SREP performed at local level. With reference to contractual agreements, UniCredit group has also issued financial liabilities whose callability, redemption, repurchase or repayment prior to the date of their contractual maturity is subordinated to the consent by the authorization of competent authority. The value of these instruments as of 31 December 2018 is equal to 14,531,930 thousand. 5. Other information For information on jointly-controlled companies and companies subject to significant influence that have not been consolidated in accordance with IFRS10 as of 31 December 2018, in addition to the controlled ones disclosed in previous paragraph 2. Significant assumptions and assessment in determining the consolidation scope, reference is made to Part B - Assets - Section 7 - Equity investments - Item 70 - paragraph 7.6 Valuation and significant assumptions to establish the existence of joint control or significant influence of this Notes to the consolidated accounts. Section 4 - Subsequent events No material events have occurred after the balance sheet date that would make it necessary to change any of the information given in the Consolidated Accounts as of 31 December 2018. For a description of the significant events after year-end see the specific paragraph of the Consolidated report on operations. Section 5 - Other matters In 2018 the following standards, amendments or interpretations came into force: • IFRS9 - Financial Instruments (EU Regulation 2016/2067); • IFRS15 - Revenue from Contracts with Customers (EU Regulation 2016/1905); • Amendments to IFRS4: Applying IFRS9 Financial Instruments with IFRS4 Insurance Contracts (EU Regulation 2017/1988); • Clarifications to IFRS15 Revenue from Contracts with Customers (EU Regulation 2017/1987); • IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (Reg. UE 2018/519); • Amendments to IAS40: Transfers of Investment Property (Reg. UE 2018/400); • Amendments to IFRS2: Classification and Measurement of Share-based Payment Transactions (Reg. UE 2018/289); • Annual Improvements to IFRS Standards 2014-2016 Cycle (Reg. UE 2018/182). For further details on the impacts coming from IFRS9 and IFRS15 adoption, refer to the specific paragraphs of the current section. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 137 4. Significant restrictions Shareholder agreements, regulatory requirements and contractual agreements can limit the ability of the Group to access the assets or settle the liabilities of its subsidiaries or restrict the latter from distribution of capital and/or dividends. With reference to shareholder agreements, it should be noted that to the consolidated entities UniCredit BPC Mortgages S.r.l. and UniCredit OBG S.r.l. companies established according to Law 130/99 for the execution of securitisation transactions or the issuance of covered bonds (Obbligazioni Bancarie Garantite), shareholders’ agreements allow the distribution of dividends only when the credit claims of guaranteed lenders and bearer of covered bonds are satisfied. In the course of the demerger of the CEE Banking Business from UniCredit Bank Austria AG to UniCredit S.p.A. effected in 2016, UniCredit S.p.A. undertook vis-a-vis its co-shareholders in UniCredit Bank Austria AG and UniCredit Bank Austria AG that until 30 June 2024: (i) it will restrict itself, as shareholder of UniCredit Bank Austria AG, from resolving on any dividend distributions of the latter in case UniCredit Bank Austria AG’s consolidated and solo CET1 ratios, as a consequence thereof, fall below (a) 14% or (b) the higher minimum CET1 ratio required at the time by the applicable regulatory framework, plus any required buffers, and (ii) support any management decision and board resolution of UCBA aimed at safeguarding such CET1 ratios. With reference to regulatory requirements, it should be noted that UniCredit group is a banking group subject to the rules provided by Directive 2013/36/EU on the “access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms” (CRD IV) and by Regulation (EU) No.575/2013 on “prudential requirements for credit institutions and investment firms” (CRR) and which controls financial institutions subject to the same regulation. The ability of the controlled banks to distribute capital or dividends may be restricted to the fulfilment of these requirements in terms of both capital ratios and “Maximum Distributable Amount” as well as further recommendation by competent authorities provided time by time (e.g. Recommendation of the European Central Bank on dividend distribution policy - ECB/2019/01). For the disclosure on UniCredit group Capital Requirements and on the outcome of mentioned SREP, process held in 2017 and applicable for 2018, refer to the chapter “Capital and value management” of the Consolidated report on operations. With reference to subsidiaries, it should be noted that in some jurisdictions and for some foreign entities of the Group, commitments to maintain local supervisory capital higher than regulatory thresholds may exist also as a result of SREP performed at local level. With reference to contractual agreements, UniCredit group has also issued financial liabilities whose callability, redemption, repurchase or repayment prior to the date of their contractual maturity is subordinated to the consent by the authorization of competent authority. The value of these instruments as of 31 December 2018 is equal to 14,531,930 thousand. 5. Other information For information on jointly-controlled companies and companies subject to significant influence that have not been consolidated in accordance with IFRS10 as of 31 December 2018, in addition to the controlled ones disclosed in previous paragraph 2. Significant assumptions and assessment in determining the consolidation scope, reference is made to Part B - Assets - Section 7 - Equity investments - Item 70 - paragraph 7.6 Valuation and significant assumptions to establish the existence of joint control or significant influence of this Notes to the consolidated accounts. Section 4 - Subsequent events No material events have occurred after the balance sheet date that would make it necessary to change any of the information given in the Consolidated Accounts as of 31 December 2018. For a description of the significant events after year-end see the specific paragraph of the Consolidated report on operations. Section 5 - Other matters In 2018 the following standards, amendments or interpretations came into force: • IFRS9 - Financial Instruments (EU Regulation 2016/2067); • IFRS15 - Revenue from Contracts with Customers (EU Regulation 2016/1905); • Amendments to IFRS4: Applying IFRS9 Financial Instruments with IFRS4 Insurance Contracts (EU Regulation 2017/1988); • Clarifications to IFRS15 Revenue from Contracts with Customers (EU Regulation 2017/1987); • IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (Reg. UE 2018/519); • Amendments to IAS40: Transfers of Investment Property (Reg. UE 2018/400); • Amendments to IFRS2: Classification and Measurement of Share-based Payment Transactions (Reg. UE 2018/289); • Annual Improvements to IFRS Standards 2014-2016 Cycle (Reg. UE 2018/182). For further details on the impacts coming from IFRS9 and IFRS15 adoption, refer to the specific paragraphs of the current section. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 137 4. Significant restrictions Shareholder agreements, regulatory requirements and contractual agreements can limit the ability of the Group to access the assets or settle the liabilities of its subsidiaries or restrict the latter from distribution of capital and/or dividends. With reference to shareholder agreements, it should be noted that to the consolidated entities UniCredit BPC Mortgages S.r.l. and UniCredit OBG S.r.l. companies established according to Law 130/99 for the execution of securitisation transactions or the issuance of covered bonds (Obbligazioni Bancarie Garantite), shareholders’ agreements allow the distribution of dividends only when the credit claims of guaranteed lenders and bearer of covered bonds are satisfied. In the course of the demerger of the CEE Banking Business from UniCredit Bank Austria AG to UniCredit S.p.A. effected in 2016, UniCredit S.p.A. undertook vis-a-vis its co-shareholders in UniCredit Bank Austria AG and UniCredit Bank Austria AG that until 30 June 2024: (i) it will restrict itself, as shareholder of UniCredit Bank Austria AG, from resolving on any dividend distributions of the latter in case UniCredit Bank Austria AG’s consolidated and solo CET1 ratios, as a consequence thereof, fall below (a) 14% or (b) the higher minimum CET1 ratio required at the time by the applicable regulatory framework, plus any required buffers, and (ii) support any management decision and board resolution of UCBA aimed at safeguarding such CET1 ratios. With reference to regulatory requirements, it should be noted that UniCredit group is a banking group subject to the rules provided by Directive 2013/36/EU on the “access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms” (CRD IV) and by Regulation (EU) No.575/2013 on “prudential requirements for credit institutions and investment firms” (CRR) and which controls financial institutions subject to the same regulation. The ability of the controlled banks to distribute capital or dividends may be restricted to the fulfilment of these requirements in terms of both capital ratios and “Maximum Distributable Amount” as well as further recommendation by competent authorities provided time by time (e.g. Recommendation of the European Central Bank on dividend distribution policy - ECB/2019/01). For the disclosure on UniCredit group Capital Requirements and on the outcome of mentioned SREP, process held in 2017 and applicable for 2018, refer to the chapter “Capital and value management” of the Consolidated report on operations. With reference to subsidiaries, it should be noted that in some jurisdictions and for some foreign entities of the Group, commitments to maintain local supervisory capital higher than regulatory thresholds may exist also as a result of SREP performed at local level. With reference to contractual agreements, UniCredit group has also issued financial liabilities whose callability, redemption, repurchase or repayment prior to the date of their contractual maturity is subordinated to the consent by the authorization of competent authority. The value of these instruments as of 31 December 2018 is equal to 14,531,930 thousand. 5. Other information For information on jointly-controlled companies and companies subject to significant influence that have not been consolidated in accordance with IFRS10 as of 31 December 2018, in addition to the controlled ones disclosed in previous paragraph 2. Significant assumptions and assessment in determining the consolidation scope, reference is made to Part B - Assets - Section 7 - Equity investments - Item 70 - paragraph 7.6 Valuation and significant assumptions to establish the existence of joint control or significant influence of this Notes to the consolidated accounts. Section 4 - Subsequent events No material events have occurred after the balance sheet date that would make it necessary to change any of the information given in the Consolidated Accounts as of 31 December 2018. For a description of the significant events after year-end see the specific paragraph of the Consolidated report on operations. Section 5 - Other matters In 2018 the following standards, amendments or interpretations came into force: • IFRS9 - Financial Instruments (EU Regulation 2016/2067); • IFRS15 - Revenue from Contracts with Customers (EU Regulation 2016/1905); • Amendments to IFRS4: Applying IFRS9 Financial Instruments with IFRS4 Insurance Contracts (EU Regulation 2017/1988); • Clarifications to IFRS15 Revenue from Contracts with Customers (EU Regulation 2017/1987); • IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (Reg. UE 2018/519); • Amendments to IAS40: Transfers of Investment Property (Reg. UE 2018/400); • Amendments to IFRS2: Classification and Measurement of Share-based Payment Transactions (Reg. UE 2018/289); • Annual Improvements to IFRS Standards 2014-2016 Cycle (Reg. UE 2018/182). For further details on the impacts coming from IFRS9 and IFRS15 adoption, refer to the specific paragraphs of the current section. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 138 2018 Annual Report and Accounts · UniCredit As of 31 December 2018 the European Commission endorsed the following accounting principles that will be applicable for reporting periods beginning on or after 1 January 2019: • IFRS16 - Leasing (EU Regulation 2017/1986); • IFRIC 23 Uncertainty over Income Tax Treatments (Reg. UE 2018/1595); • Amendments to IFRS9: Prepayment Features with Negative Compensation (EU Regulation 2018/498). IFRS16, effective starting from 1 January 2019 and subject to the completion of the endorsement process by the European Union on 31 October 2017, modifies the current set of international accounting principles and interpretations on leases and, in particular, IAS17. IFRS16 introduces a new definition for leases and confirms the current distinction between two types of leases (operating and finance) with reference to the accounting treatment to be applied by the lessor. With reference to the accounting treatment to be applied by the lessee, the new accounting standard sets, for all the leasing typologies, the recognition as an asset, representing the right of use of the underlying asset and, at the same time, a liability for the future payments requested by the lease contract. At the initial recognition such asset is measured on the basis of the lease contract cash flows. After the initial recognition the right-of-use will be measured on the basis of the rules set for the assets by IAS16, IAS38 or by IAS40 and therefore applying the cost model, less any accumulated depreciation and any accumulated impairment losses, the revaluation model or the fair value model as applicable. In this context, the Group is performing the activities aimed to ensure compliance with this accounting principle, in particular with reference to the calculation and accounting for Right of Use and Lease Liability that represent the main discontinuity compared to the current accounting model required by IAS17. The activities aimed to the development of rules, principles and IT systems to be used for the proper evaluation of new assets and liabilities and the subsequent calculation of the related economic effects have been finalised. In this context the Group has decided, as allowed by the standard, not to apply IFRS16 provisions to: • leases of intangible assets; • short term leases, lower than 12 months; and • low value assets leases. For this purpose an asset is considered as “low value” when its fair value when new is equal to or lower than €5 thousand. This category mainly comprises office equipment (PC, monitors, tablets, etc.) and fixed and mobile phones. In order to calculate the lease liability and the related right-of-use asset, the Group proceeds with discounting the future lease payments at a proper discount rate. In this respect, future lease payments to discount are determined based on contractual provisions and net of VAT, when applicable, as the obligation to pay such a tax starts when the invoice is issued by the lessor and not at the starting date of the lease contract. To perform the mentioned calculation lease payments have to be discounted at the interest rate implicit in the contract or, if it is not available, at the incremental borrowing rate. The latter is determined on the basis of the cost of funding for liabilities of similar duration and similar security of those implicit in the lease contract. In addition if the lease payments foreseen by the contracts include additional services beside the mere rental of the asset, the right of use and the associated lease liability are calculated considering also these components. In determining the lease term it is necessary to consider the non-cancellable period, established in the contract, in which the lessee is entitled to use the underlying asset taking also into account potential renewal options if the lessee is reasonably certain to renew. In particular, with regard to those contracts that allows the lessee to tacitly renew the lease contract after a first set of years, the lease term is determined taking into account factors such as the length of the first period, the existence of dismissal plans for the asset leased and any other circumstance indicating the reasonably certainty of the renewal. The Group has decided not to restate comparatives and has chosen, for First Time Adoption purposes, to put the value of right of use equal to the lease liability. In particular, the adoption of IFRS16 will determine an increase of the Group total assets and liabilities that can be preliminary estimated in the range of 0.3% while the effect on Group CET1 ratio can be preliminarily estimated in the range of -0.1%, gross of tax effect. As at 31 December 2018 the IASB issued the following standards, amendments, interpretations or revisions, whose application is subject to completion of the endorsement process by the competent bodies of the European Commission, which is still ongoing: • IFRS17: Insurance Contracts (May 2017); • Amendments to IAS28: Long-term Interests in Associates and Joint Ventures (October 2017); • Annual Improvements to IFRS Standards 2015-2017 Cycle (December 2017); • Amendments to IAS19: Plan Amendment, Curtailment or Settlement (February 2018); Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 138 2018 Annual Report and Accounts · UniCredit As of 31 December 2018 the European Commission endorsed the following accounting principles that will be applicable for reporting periods beginning on or after 1 January 2019: • IFRS16 - Leasing (EU Regulation 2017/1986); • IFRIC 23 Uncertainty over Income Tax Treatments (Reg. UE 2018/1595); • Amendments to IFRS9: Prepayment Features with Negative Compensation (EU Regulation 2018/498). IFRS16, effective starting from 1 January 2019 and subject to the completion of the endorsement process by the European Union on 31 October 2017, modifies the current set of international accounting principles and interpretations on leases and, in particular, IAS17. IFRS16 introduces a new definition for leases and confirms the current distinction between two types of leases (operating and finance) with reference to the accounting treatment to be applied by the lessor. With reference to the accounting treatment to be applied by the lessee, the new accounting standard sets, for all the leasing typologies, the recognition as an asset, representing the right of use of the underlying asset and, at the same time, a liability for the future payments requested by the lease contract. At the initial recognition such asset is measured on the basis of the lease contract cash flows. After the initial recognition the right-of-use will be measured on the basis of the rules set for the assets by IAS16, IAS38 or by IAS40 and therefore applying the cost model, less any accumulated depreciation and any accumulated impairment losses, the revaluation model or the fair value model as applicable. In this context, the Group is performing the activities aimed to ensure compliance with this accounting principle, in particular with reference to the calculation and accounting for Right of Use and Lease Liability that represent the main discontinuity compared to the current accounting model required by IAS17. The activities aimed to the development of rules, principles and IT systems to be used for the proper evaluation of new assets and liabilities and the subsequent calculation of the related economic effects have been finalised. In this context the Group has decided, as allowed by the standard, not to apply IFRS16 provisions to: • leases of intangible assets; • short term leases, lower than 12 months; and • low value assets leases. For this purpose an asset is considered as “low value” when its fair value when new is equal to or lower than €5 thousand. This category mainly comprises office equipment (PC, monitors, tablets, etc.) and fixed and mobile phones. In order to calculate the lease liability and the related right-of-use asset, the Group proceeds with discounting the future lease payments at a proper discount rate. In this respect, future lease payments to discount are determined based on contractual provisions and net of VAT, when applicable, as the obligation to pay such a tax starts when the invoice is issued by the lessor and not at the starting date of the lease contract. To perform the mentioned calculation lease payments have to be discounted at the interest rate implicit in the contract or, if it is not available, at the incremental borrowing rate. The latter is determined on the basis of the cost of funding for liabilities of similar duration and similar security of those implicit in the lease contract. In addition if the lease payments foreseen by the contracts include additional services beside the mere rental of the asset, the right of use and the associated lease liability are calculated considering also these components. In determining the lease term it is necessary to consider the non-cancellable period, established in the contract, in which the lessee is entitled to use the underlying asset taking also into account potential renewal options if the lessee is reasonably certain to renew. In particular, with regard to those contracts that allows the lessee to tacitly renew the lease contract after a first set of years, the lease term is determined taking into account factors such as the length of the first period, the existence of dismissal plans for the asset leased and any other circumstance indicating the reasonably certainty of the renewal. The Group has decided not to restate comparatives and has chosen, for First Time Adoption purposes, to put the value of right of use equal to the lease liability. In particular, the adoption of IFRS16 will determine an increase of the Group total assets and liabilities that can be preliminary estimated in the range of 0.3% while the effect on Group CET1 ratio can be preliminarily estimated in the range of -0.1%, gross of tax effect. As at 31 December 2018 the IASB issued the following standards, amendments, interpretations or revisions, whose application is subject to completion of the endorsement process by the competent bodies of the European Commission, which is still ongoing: • IFRS17: Insurance Contracts (May 2017); • Amendments to IAS28: Long-term Interests in Associates and Joint Ventures (October 2017); • Annual Improvements to IFRS Standards 2015-2017 Cycle (December 2017); • Amendments to IAS19: Plan Amendment, Curtailment or Settlement (February 2018); Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 138 2018 Annual Report and Accounts · UniCredit As of 31 December 2018 the European Commission endorsed the following accounting principles that will be applicable for reporting periods beginning on or after 1 January 2019: • IFRS16 - Leasing (EU Regulation 2017/1986); • IFRIC 23 Uncertainty over Income Tax Treatments (Reg. UE 2018/1595); • Amendments to IFRS9: Prepayment Features with Negative Compensation (EU Regulation 2018/498). IFRS16, effective starting from 1 January 2019 and subject to the completion of the endorsement process by the European Union on 31 October 2017, modifies the current set of international accounting principles and interpretations on leases and, in particular, IAS17. IFRS16 introduces a new definition for leases and confirms the current distinction between two types of leases (operating and finance) with reference to the accounting treatment to be applied by the lessor. With reference to the accounting treatment to be applied by the lessee, the new accounting standard sets, for all the leasing typologies, the recognition as an asset, representing the right of use of the underlying asset and, at the same time, a liability for the future payments requested by the lease contract. At the initial recognition such asset is measured on the basis of the lease contract cash flows. After the initial recognition the right-of-use will be measured on the basis of the rules set for the assets by IAS16, IAS38 or by IAS40 and therefore applying the cost model, less any accumulated depreciation and any accumulated impairment losses, the revaluation model or the fair value model as applicable. In this context, the Group is performing the activities aimed to ensure compliance with this accounting principle, in particular with reference to the calculation and accounting for Right of Use and Lease Liability that represent the main discontinuity compared to the current accounting model required by IAS17. The activities aimed to the development of rules, principles and IT systems to be used for the proper evaluation of new assets and liabilities and the subsequent calculation of the related economic effects have been finalised. In this context the Group has decided, as allowed by the standard, not to apply IFRS16 provisions to: • leases of intangible assets; • short term leases, lower than 12 months; and • low value assets leases. For this purpose an asset is considered as “low value” when its fair value when new is equal to or lower than €5 thousand. This category mainly comprises office equipment (PC, monitors, tablets, etc.) and fixed and mobile phones. In order to calculate the lease liability and the related right-of-use asset, the Group proceeds with discounting the future lease payments at a proper discount rate. In this respect, future lease payments to discount are determined based on contractual provisions and net of VAT, when applicable, as the obligation to pay such a tax starts when the invoice is issued by the lessor and not at the starting date of the lease contract. To perform the mentioned calculation lease payments have to be discounted at the interest rate implicit in the contract or, if it is not available, at the incremental borrowing rate. The latter is determined on the basis of the cost of funding for liabilities of similar duration and similar security of those implicit in the lease contract. In addition if the lease payments foreseen by the contracts include additional services beside the mere rental of the asset, the right of use and the associated lease liability are calculated considering also these components. In determining the lease term it is necessary to consider the non-cancellable period, established in the contract, in which the lessee is entitled to use the underlying asset taking also into account potential renewal options if the lessee is reasonably certain to renew. In particular, with regard to those contracts that allows the lessee to tacitly renew the lease contract after a first set of years, the lease term is determined taking into account factors such as the length of the first period, the existence of dismissal plans for the asset leased and any other circumstance indicating the reasonably certainty of the renewal. The Group has decided not to restate comparatives and has chosen, for First Time Adoption purposes, to put the value of right of use equal to the lease liability. In particular, the adoption of IFRS16 will determine an increase of the Group total assets and liabilities that can be preliminary estimated in the range of 0.3% while the effect on Group CET1 ratio can be preliminarily estimated in the range of -0.1%, gross of tax effect. As at 31 December 2018 the IASB issued the following standards, amendments, interpretations or revisions, whose application is subject to completion of the endorsement process by the competent bodies of the European Commission, which is still ongoing: • IFRS17: Insurance Contracts (May 2017); • Amendments to IAS28: Long-term Interests in Associates and Joint Ventures (October 2017); • Annual Improvements to IFRS Standards 2015-2017 Cycle (December 2017); • Amendments to IAS19: Plan Amendment, Curtailment or Settlement (February 2018); Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 138 2018 Annual Report and Accounts · UniCredit As of 31 December 2018 the European Commission endorsed the following accounting principles that will be applicable for reporting periods beginning on or after 1 January 2019: • IFRS16 - Leasing (EU Regulation 2017/1986); • IFRIC 23 Uncertainty over Income Tax Treatments (Reg. UE 2018/1595); • Amendments to IFRS9: Prepayment Features with Negative Compensation (EU Regulation 2018/498). IFRS16, effective starting from 1 January 2019 and subject to the completion of the endorsement process by the European Union on 31 October 2017, modifies the current set of international accounting principles and interpretations on leases and, in particular, IAS17. IFRS16 introduces a new definition for leases and confirms the current distinction between two types of leases (operating and finance) with reference to the accounting treatment to be applied by the lessor. With reference to the accounting treatment to be applied by the lessee, the new accounting standard sets, for all the leasing typologies, the recognition as an asset, representing the right of use of the underlying asset and, at the same time, a liability for the future payments requested by the lease contract. At the initial recognition such asset is measured on the basis of the lease contract cash flows. After the initial recognition the right-of-use will be measured on the basis of the rules set for the assets by IAS16, IAS38 or by IAS40 and therefore applying the cost model, less any accumulated depreciation and any accumulated impairment losses, the revaluation model or the fair value model as applicable. In this context, the Group is performing the activities aimed to ensure compliance with this accounting principle, in particular with reference to the calculation and accounting for Right of Use and Lease Liability that represent the main discontinuity compared to the current accounting model required by IAS17. The activities aimed to the development of rules, principles and IT systems to be used for the proper evaluation of new assets and liabilities and the subsequent calculation of the related economic effects have been finalised. In this context the Group has decided, as allowed by the standard, not to apply IFRS16 provisions to: • leases of intangible assets; • short term leases, lower than 12 months; and • low value assets leases. For this purpose an asset is considered as “low value” when its fair value when new is equal to or lower than €5 thousand. This category mainly comprises office equipment (PC, monitors, tablets, etc.) and fixed and mobile phones. In order to calculate the lease liability and the related right-of-use asset, the Group proceeds with discounting the future lease payments at a proper discount rate. In this respect, future lease payments to discount are determined based on contractual provisions and net of VAT, when applicable, as the obligation to pay such a tax starts when the invoice is issued by the lessor and not at the starting date of the lease contract. To perform the mentioned calculation lease payments have to be discounted at the interest rate implicit in the contract or, if it is not available, at the incremental borrowing rate. The latter is determined on the basis of the cost of funding for liabilities of similar duration and similar security of those implicit in the lease contract. In addition if the lease payments foreseen by the contracts include additional services beside the mere rental of the asset, the right of use and the associated lease liability are calculated considering also these components. In determining the lease term it is necessary to consider the non-cancellable period, established in the contract, in which the lessee is entitled to use the underlying asset taking also into account potential renewal options if the lessee is reasonably certain to renew. In particular, with regard to those contracts that allows the lessee to tacitly renew the lease contract after a first set of years, the lease term is determined taking into account factors such as the length of the first period, the existence of dismissal plans for the asset leased and any other circumstance indicating the reasonably certainty of the renewal. The Group has decided not to restate comparatives and has chosen, for First Time Adoption purposes, to put the value of right of use equal to the lease liability. In particular, the adoption of IFRS16 will determine an increase of the Group total assets and liabilities that can be preliminary estimated in the range of 0.3% while the effect on Group CET1 ratio can be preliminarily estimated in the range of -0.1%, gross of tax effect. As at 31 December 2018 the IASB issued the following standards, amendments, interpretations or revisions, whose application is subject to completion of the endorsement process by the competent bodies of the European Commission, which is still ongoing: • IFRS17: Insurance Contracts (May 2017); • Amendments to IAS28: Long-term Interests in Associates and Joint Ventures (October 2017); • Annual Improvements to IFRS Standards 2015-2017 Cycle (December 2017); • Amendments to IAS19: Plan Amendment, Curtailment or Settlement (February 2018); Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 138 2018 Annual Report and Accounts · UniCredit As of 31 December 2018 the European Commission endorsed the following accounting principles that will be applicable for reporting periods beginning on or after 1 January 2019: • IFRS16 - Leasing (EU Regulation 2017/1986); • IFRIC 23 Uncertainty over Income Tax Treatments (Reg. UE 2018/1595); • Amendments to IFRS9: Prepayment Features with Negative Compensation (EU Regulation 2018/498). IFRS16, effective starting from 1 January 2019 and subject to the completion of the endorsement process by the European Union on 31 October 2017, modifies the current set of international accounting principles and interpretations on leases and, in particular, IAS17. IFRS16 introduces a new definition for leases and confirms the current distinction between two types of leases (operating and finance) with reference to the accounting treatment to be applied by the lessor. With reference to the accounting treatment to be applied by the lessee, the new accounting standard sets, for all the leasing typologies, the recognition as an asset, representing the right of use of the underlying asset and, at the same time, a liability for the future payments requested by the lease contract. At the initial recognition such asset is measured on the basis of the lease contract cash flows. After the initial recognition the right-of-use will be measured on the basis of the rules set for the assets by IAS16, IAS38 or by IAS40 and therefore applying the cost model, less any accumulated depreciation and any accumulated impairment losses, the revaluation model or the fair value model as applicable. In this context, the Group is performing the activities aimed to ensure compliance with this accounting principle, in particular with reference to the calculation and accounting for Right of Use and Lease Liability that represent the main discontinuity compared to the current accounting model required by IAS17. The activities aimed to the development of rules, principles and IT systems to be used for the proper evaluation of new assets and liabilities and the subsequent calculation of the related economic effects have been finalised. In this context the Group has decided, as allowed by the standard, not to apply IFRS16 provisions to: • leases of intangible assets; • short term leases, lower than 12 months; and • low value assets leases. For this purpose an asset is considered as “low value” when its fair value when new is equal to or lower than €5 thousand. This category mainly comprises office equipment (PC, monitors, tablets, etc.) and fixed and mobile phones. In order to calculate the lease liability and the related right-of-use asset, the Group proceeds with discounting the future lease payments at a proper discount rate. In this respect, future lease payments to discount are determined based on contractual provisions and net of VAT, when applicable, as the obligation to pay such a tax starts when the invoice is issued by the lessor and not at the starting date of the lease contract. To perform the mentioned calculation lease payments have to be discounted at the interest rate implicit in the contract or, if it is not available, at the incremental borrowing rate. The latter is determined on the basis of the cost of funding for liabilities of similar duration and similar security of those implicit in the lease contract. In addition if the lease payments foreseen by the contracts include additional services beside the mere rental of the asset, the right of use and the associated lease liability are calculated considering also these components. In determining the lease term it is necessary to consider the non-cancellable period, established in the contract, in which the lessee is entitled to use the underlying asset taking also into account potential renewal options if the lessee is reasonably certain to renew. In particular, with regard to those contracts that allows the lessee to tacitly renew the lease contract after a first set of years, the lease term is determined taking into account factors such as the length of the first period, the existence of dismissal plans for the asset leased and any other circumstance indicating the reasonably certainty of the renewal. The Group has decided not to restate comparatives and has chosen, for First Time Adoption purposes, to put the value of right of use equal to the lease liability. In particular, the adoption of IFRS16 will determine an increase of the Group total assets and liabilities that can be preliminary estimated in the range of 0.3% while the effect on Group CET1 ratio can be preliminarily estimated in the range of -0.1%, gross of tax effect. As at 31 December 2018 the IASB issued the following standards, amendments, interpretations or revisions, whose application is subject to completion of the endorsement process by the competent bodies of the European Commission, which is still ongoing: • IFRS17: Insurance Contracts (May 2017); • Amendments to IAS28: Long-term Interests in Associates and Joint Ventures (October 2017); • Annual Improvements to IFRS Standards 2015-2017 Cycle (December 2017); • Amendments to IAS19: Plan Amendment, Curtailment or Settlement (February 2018); Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 139 • Amendments to the IFRS Conceptual Framework (March 2018); • Amendments to IFRS3: Business combination (October 2018); • Amendments to IAS1 and IAS8: Definition of Material (October 2018). Transition to “IFRS15: Revenue from Contracts with Customers” of UniCredit group IFRS15, effective starting from 1 January 2018, endorsed by the European Union with Regulation EU 2016/1905 of 22 September 2016 (published on 29 October 2016), modifies the previous set of international accounting principles and interpretations on revenue recognition and, in particular, IAS18. IFRS15 provides for: • two approaches for the revenue recognition (“point in time” or “over time”) depending on the nature of the performance obligation; • a new model for the analysis of the transactions (“Five steps model”) focused on the transfer of control; and • the request for a more detailed disclosure to be included in the explanatory notes to the financial statements. The adoption of the new accounting standard could determine (i) the reclassification between lines of income statement, used for presenting revenues, (ii) a change in the timing recognition of such revenue, when the contract with the customer contains several performance obligation, that must be accounted for separately under the accounting standard, (iii) a different measure of the revenue in order to reflect their variability. Based on the analysis performed, no major impacts have been detected by the adoption of IFRS15 on current economic and financial volumes. Transition to “IFRS9: Financial Instruments” of UniCredit group 1. Summary of impacts As at 1 January 2018, UniCredit group has adopted the accounting standard “IFRS9: Financial instruments”. The adoption of the standard is the result of a long-time project aimed at creating reporting and risk monitoring methods, harmonised between Group’s Legal Entities, that ensure compliance with the standard and at updating governance and monitoring processes in light of the new rules. This project was organised at Group level through specific work-streams: • work-stream “Classification and Measurement” aimed at reviewing financial instruments classification in line with new IFRS9 criteria; • work-stream “Impairment” aimed at developing and implementing models and methods for calculating impairment. These work-streams go together with a specific activity aimed at adapting models and methods to the specific characteristics of Corporate & Investment Banking (CIB). The entire project was developed actively involving Bank’s structures, Board of Directors and Top Management. The following should be noted with regard to the new accounting standard: • has introduced significant changes in the rules for classifying and measuring financial instruments compared to IAS39. With reference to loans and debt securities, the classification and consequent measurement of these instruments is based on the "business model” and on the characteristics of the financial instrument cash flows (SPPI criterion - Solely Payments of Principal and Interests). With reference to equity instruments, they will be classified as financial instruments at fair value, with differences recognised through profit or loss or in other comprehensive income. In the latter case, unlike the requirements of IAS39 for available-for-sale financial assets, IFRS9 no longer requires to recognise impairment losses and provides that, in the event of sale of the instrument, the profits and losses on disposal must be reclassified to other shareholders' equity reserve and not to profit or loss. Lastly, with reference to financial liabilities designated at fair value, it modified the accounting of "own credit risk", i.e. the changes in the value of liabilities at fair value that are due to fluctuations in their creditworthiness. According to the new standard, these changes must be recognised in an equity reserve, rather than in the income statement as per IAS39, thus eliminating a source of volatility in economic results; • has introduced a new accounting model of impairment for credit exposures based on (i) an "expected losses" approach replacing the current one based on the recognition of "incurred losses" and (ii) the concept of "lifetime" expected loss; • has introduced guidelines that clarify when financial instruments shall be written off by specifying that the write-off constitutes an event of accounting derecognition; • has also modified the rules applicable to "hedge accounting" with regard to designating a hedging relationship and verifying its effectiveness with the aim of ensuring greater alignment between the accounting recognition of hedges and the underlying management rationale. The Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 139 • Amendments to the IFRS Conceptual Framework (March 2018); • Amendments to IFRS3: Business combination (October 2018); • Amendments to IAS1 and IAS8: Definition of Material (October 2018). Transition to “IFRS15: Revenue from Contracts with Customers” of UniCredit group IFRS15, effective starting from 1 January 2018, endorsed by the European Union with Regulation EU 2016/1905 of 22 September 2016 (published on 29 October 2016), modifies the previous set of international accounting principles and interpretations on revenue recognition and, in particular, IAS18. IFRS15 provides for: • two approaches for the revenue recognition (“point in time” or “over time”) depending on the nature of the performance obligation; • a new model for the analysis of the transactions (“Five steps model”) focused on the transfer of control; and • the request for a more detailed disclosure to be included in the explanatory notes to the financial statements. The adoption of the new accounting standard could determine (i) the reclassification between lines of income statement, used for presenting revenues, (ii) a change in the timing recognition of such revenue, when the contract with the customer contains several performance obligation, that must be accounted for separately under the accounting standard, (iii) a different measure of the revenue in order to reflect their variability. Based on the analysis performed, no major impacts have been detected by the adoption of IFRS15 on current economic and financial volumes. Transition to “IFRS9: Financial Instruments” of UniCredit group 1. Summary of impacts As at 1 January 2018, UniCredit group has adopted the accounting standard “IFRS9: Financial instruments”. The adoption of the standard is the result of a long-time project aimed at creating reporting and risk monitoring methods, harmonised between Group’s Legal Entities, that ensure compliance with the standard and at updating governance and monitoring processes in light of the new rules. This project was organised at Group level through specific work-streams: • work-stream “Classification and Measurement” aimed at reviewing financial instruments classification in line with new IFRS9 criteria; • work-stream “Impairment” aimed at developing and implementing models and methods for calculating impairment. These work-streams go together with a specific activity aimed at adapting models and methods to the specific characteristics of Corporate & Investment Banking (CIB). The entire project was developed actively involving Bank’s structures, Board of Directors and Top Management. The following should be noted with regard to the new accounting standard: • has introduced significant changes in the rules for classifying and measuring financial instruments compared to IAS39. With reference to loans and debt securities, the classification and consequent measurement of these instruments is based on the "business model” and on the characteristics of the financial instrument cash flows (SPPI criterion - Solely Payments of Principal and Interests). With reference to equity instruments, they will be classified as financial instruments at fair value, with differences recognised through profit or loss or in other comprehensive income. In the latter case, unlike the requirements of IAS39 for available-for-sale financial assets, IFRS9 no longer requires to recognise impairment losses and provides that, in the event of sale of the instrument, the profits and losses on disposal must be reclassified to other shareholders' equity reserve and not to profit or loss. Lastly, with reference to financial liabilities designated at fair value, it modified the accounting of "own credit risk", i.e. the changes in the value of liabilities at fair value that are due to fluctuations in their creditworthiness. According to the new standard, these changes must be recognised in an equity reserve, rather than in the income statement as per IAS39, thus eliminating a source of volatility in economic results; • has introduced a new accounting model of impairment for credit exposures based on (i) an "expected losses" approach replacing the current one based on the recognition of "incurred losses" and (ii) the concept of "lifetime" expected loss; • has introduced guidelines that clarify when financial instruments shall be written off by specifying that the write-off constitutes an event of accounting derecognition; • has also modified the rules applicable to "hedge accounting" with regard to designating a hedging relationship and verifying its effectiveness with the aim of ensuring greater alignment between the accounting recognition of hedges and the underlying management rationale. The Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 139 • Amendments to the IFRS Conceptual Framework (March 2018); • Amendments to IFRS3: Business combination (October 2018); • Amendments to IAS1 and IAS8: Definition of Material (October 2018). Transition to “IFRS15: Revenue from Contracts with Customers” of UniCredit group IFRS15, effective starting from 1 January 2018, endorsed by the European Union with Regulation EU 2016/1905 of 22 September 2016 (published on 29 October 2016), modifies the previous set of international accounting principles and interpretations on revenue recognition and, in particular, IAS18. IFRS15 provides for: • two approaches for the revenue recognition (“point in time” or “over time”) depending on the nature of the performance obligation; • a new model for the analysis of the transactions (“Five steps model”) focused on the transfer of control; and • the request for a more detailed disclosure to be included in the explanatory notes to the financial statements. The adoption of the new accounting standard could determine (i) the reclassification between lines of income statement, used for presenting revenues, (ii) a change in the timing recognition of such revenue, when the contract with the customer contains several performance obligation, that must be accounted for separately under the accounting standard, (iii) a different measure of the revenue in order to reflect their variability. Based on the analysis performed, no major impacts have been detected by the adoption of IFRS15 on current economic and financial volumes. Transition to “IFRS9: Financial Instruments” of UniCredit group 1. Summary of impacts As at 1 January 2018, UniCredit group has adopted the accounting standard “IFRS9: Financial instruments”. The adoption of the standard is the result of a long-time project aimed at creating reporting and risk monitoring methods, harmonised between Group’s Legal Entities, that ensure compliance with the standard and at updating governance and monitoring processes in light of the new rules. This project was organised at Group level through specific work-streams: • work-stream “Classification and Measurement” aimed at reviewing financial instruments classification in line with new IFRS9 criteria; • work-stream “Impairment” aimed at developing and implementing models and methods for calculating impairment. These work-streams go together with a specific activity aimed at adapting models and methods to the specific characteristics of Corporate & Investment Banking (CIB). The entire project was developed actively involving Bank’s structures, Board of Directors and Top Management. The following should be noted with regard to the new accounting standard: • has introduced significant changes in the rules for classifying and measuring financial instruments compared to IAS39. With reference to loans and debt securities, the classification and consequent measurement of these instruments is based on the "business model” and on the characteristics of the financial instrument cash flows (SPPI criterion - Solely Payments of Principal and Interests). With reference to equity instruments, they will be classified as financial instruments at fair value, with differences recognised through profit or loss or in other comprehensive income. In the latter case, unlike the requirements of IAS39 for available-for-sale financial assets, IFRS9 no longer requires to recognise impairment losses and provides that, in the event of sale of the instrument, the profits and losses on disposal must be reclassified to other shareholders' equity reserve and not to profit or loss. Lastly, with reference to financial liabilities designated at fair value, it modified the accounting of "own credit risk", i.e. the changes in the value of liabilities at fair value that are due to fluctuations in their creditworthiness. According to the new standard, these changes must be recognised in an equity reserve, rather than in the income statement as per IAS39, thus eliminating a source of volatility in economic results; • has introduced a new accounting model of impairment for credit exposures based on (i) an "expected losses" approach replacing the current one based on the recognition of "incurred losses" and (ii) the concept of "lifetime" expected loss; • has introduced guidelines that clarify when financial instruments shall be written off by specifying that the write-off constitutes an event of accounting derecognition; • has also modified the rules applicable to "hedge accounting" with regard to designating a hedging relationship and verifying its effectiveness with the aim of ensuring greater alignment between the accounting recognition of hedges and the underlying management rationale. The Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 139 • Amendments to the IFRS Conceptual Framework (March 2018); • Amendments to IFRS3: Business combination (October 2018); • Amendments to IAS1 and IAS8: Definition of Material (October 2018). Transition to “IFRS15: Revenue from Contracts with Customers” of UniCredit group IFRS15, effective starting from 1 January 2018, endorsed by the European Union with Regulation EU 2016/1905 of 22 September 2016 (published on 29 October 2016), modifies the previous set of international accounting principles and interpretations on revenue recognition and, in particular, IAS18. IFRS15 provides for: • two approaches for the revenue recognition (“point in time” or “over time”) depending on the nature of the performance obligation; • a new model for the analysis of the transactions (“Five steps model”) focused on the transfer of control; and • the request for a more detailed disclosure to be included in the explanatory notes to the financial statements. The adoption of the new accounting standard could determine (i) the reclassification between lines of income statement, used for presenting revenues, (ii) a change in the timing recognition of such revenue, when the contract with the customer contains several performance obligation, that must be accounted for separately under the accounting standard, (iii) a different measure of the revenue in order to reflect their variability. Based on the analysis performed, no major impacts have been detected by the adoption of IFRS15 on current economic and financial volumes. Transition to “IFRS9: Financial Instruments” of UniCredit group 1. Summary of impacts As at 1 January 2018, UniCredit group has adopted the accounting standard “IFRS9: Financial instruments”. The adoption of the standard is the result of a long-time project aimed at creating reporting and risk monitoring methods, harmonised between Group’s Legal Entities, that ensure compliance with the standard and at updating governance and monitoring processes in light of the new rules. This project was organised at Group level through specific work-streams: • work-stream “Classification and Measurement” aimed at reviewing financial instruments classification in line with new IFRS9 criteria; • work-stream “Impairment” aimed at developing and implementing models and methods for calculating impairment. These work-streams go together with a specific activity aimed at adapting models and methods to the specific characteristics of Corporate & Investment Banking (CIB). The entire project was developed actively involving Bank’s structures, Board of Directors and Top Management. The following should be noted with regard to the new accounting standard: • has introduced significant changes in the rules for classifying and measuring financial instruments compared to IAS39. With reference to loans and debt securities, the classification and consequent measurement of these instruments is based on the "business model” and on the characteristics of the financial instrument cash flows (SPPI criterion - Solely Payments of Principal and Interests). With reference to equity instruments, they will be classified as financial instruments at fair value, with differences recognised through profit or loss or in other comprehensive income. In the latter case, unlike the requirements of IAS39 for available-for-sale financial assets, IFRS9 no longer requires to recognise impairment losses and provides that, in the event of sale of the instrument, the profits and losses on disposal must be reclassified to other shareholders' equity reserve and not to profit or loss. Lastly, with reference to financial liabilities designated at fair value, it modified the accounting of "own credit risk", i.e. the changes in the value of liabilities at fair value that are due to fluctuations in their creditworthiness. According to the new standard, these changes must be recognised in an equity reserve, rather than in the income statement as per IAS39, thus eliminating a source of volatility in economic results; • has introduced a new accounting model of impairment for credit exposures based on (i) an "expected losses" approach replacing the current one based on the recognition of "incurred losses" and (ii) the concept of "lifetime" expected loss; • has introduced guidelines that clarify when financial instruments shall be written off by specifying that the write-off constitutes an event of accounting derecognition; • has also modified the rules applicable to "hedge accounting" with regard to designating a hedging relationship and verifying its effectiveness with the aim of ensuring greater alignment between the accounting recognition of hedges and the underlying management rationale. The Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 139 • Amendments to the IFRS Conceptual Framework (March 2018); • Amendments to IFRS3: Business combination (October 2018); • Amendments to IAS1 and IAS8: Definition of Material (October 2018). Transition to “IFRS15: Revenue from Contracts with Customers” of UniCredit group IFRS15, effective starting from 1 January 2018, endorsed by the European Union with Regulation EU 2016/1905 of 22 September 2016 (published on 29 October 2016), modifies the previous set of international accounting principles and interpretations on revenue recognition and, in particular, IAS18. IFRS15 provides for: • two approaches for the revenue recognition (“point in time” or “over time”) depending on the nature of the performance obligation; • a new model for the analysis of the transactions (“Five steps model”) focused on the transfer of control; and • the request for a more detailed disclosure to be included in the explanatory notes to the financial statements. The adoption of the new accounting standard could determine (i) the reclassification between lines of income statement, used for presenting revenues, (ii) a change in the timing recognition of such revenue, when the contract with the customer contains several performance obligation, that must be accounted for separately under the accounting standard, (iii) a different measure of the revenue in order to reflect their variability. Based on the analysis performed, no major impacts have been detected by the adoption of IFRS15 on current economic and financial volumes. Transition to “IFRS9: Financial Instruments” of UniCredit group 1. Summary of impacts As at 1 January 2018, UniCredit group has adopted the accounting standard “IFRS9: Financial instruments”. The adoption of the standard is the result of a long-time project aimed at creating reporting and risk monitoring methods, harmonised between Group’s Legal Entities, that ensure compliance with the standard and at updating governance and monitoring processes in light of the new rules. This project was organised at Group level through specific work-streams: • work-stream “Classification and Measurement” aimed at reviewing financial instruments classification in line with new IFRS9 criteria; • work-stream “Impairment” aimed at developing and implementing models and methods for calculating impairment. These work-streams go together with a specific activity aimed at adapting models and methods to the specific characteristics of Corporate & Investment Banking (CIB). The entire project was developed actively involving Bank’s structures, Board of Directors and Top Management. The following should be noted with regard to the new accounting standard: • has introduced significant changes in the rules for classifying and measuring financial instruments compared to IAS39. With reference to loans and debt securities, the classification and consequent measurement of these instruments is based on the "business model” and on the characteristics of the financial instrument cash flows (SPPI criterion - Solely Payments of Principal and Interests). With reference to equity instruments, they will be classified as financial instruments at fair value, with differences recognised through profit or loss or in other comprehensive income. In the latter case, unlike the requirements of IAS39 for available-for-sale financial assets, IFRS9 no longer requires to recognise impairment losses and provides that, in the event of sale of the instrument, the profits and losses on disposal must be reclassified to other shareholders' equity reserve and not to profit or loss. Lastly, with reference to financial liabilities designated at fair value, it modified the accounting of "own credit risk", i.e. the changes in the value of liabilities at fair value that are due to fluctuations in their creditworthiness. According to the new standard, these changes must be recognised in an equity reserve, rather than in the income statement as per IAS39, thus eliminating a source of volatility in economic results; • has introduced a new accounting model of impairment for credit exposures based on (i) an "expected losses" approach replacing the current one based on the recognition of "incurred losses" and (ii) the concept of "lifetime" expected loss; • has introduced guidelines that clarify when financial instruments shall be written off by specifying that the write-off constitutes an event of accounting derecognition; • has also modified the rules applicable to "hedge accounting" with regard to designating a hedging relationship and verifying its effectiveness with the aim of ensuring greater alignment between the accounting recognition of hedges and the underlying management rationale. The Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 140 2018 Annual Report and Accounts · UniCredit The Group has decided to exploit the option provided by the accounting standard not to restate comparative figures of previous years, consequently, for UniCredit group, the first time adoption of the new standard is 1 January 2018. UniCredit group's Balance Sheet as at 1 January 2018 is presented below, prepared in accordance with the mandatory format envisaged by the 5th update of Banca d’Italia Circular 262 issued on 22 December 2017. Consolidated balance sheet '(€ '000) AMOUNTS AS AT ASSETS 01.01.2018 10. Cash and cash balances 64,493,411 20. Financial assets at fair value through profit and loss: 101,810,077 a) Financial assets held for trading 74,665,851 b) Financial assets designated at fair value 4 c) Other financial assets mandatorily at fair value 27,144,222 30. Financial assets at fair value through other comprehensive income 100,636,410 40. Financial assets at amortised cost: 519,900,654 a) Loans and receivables with banks 71,134,306 b) Loans and receivables with customers 448,766,348 50. Hedging derivatives 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,600,594 70. Equity investments 6,211,911 80. Insurance reserves charged to reinsurers - 90. Property, plant and equipment 8,623,778 100. Intangible assets 3,385,310 of which: goodwill 1,483,721 110. Tax assets: 12,848,869 a) Current 2,042,410 b) Deferred 10,806,459 120. Non-current assets and disposal groups classified as held for sale 1,110,780 130. Other assets 8,800,375 Total assets 833,853,239 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 140 2018 Annual Report and Accounts · UniCredit The Group has decided to exploit the option provided by the accounting standard not to restate comparative figures of previous years, consequently, for UniCredit group, the first time adoption of the new standard is 1 January 2018. UniCredit group's Balance Sheet as at 1 January 2018 is presented below, prepared in accordance with the mandatory format envisaged by the 5th update of Banca d’Italia Circular 262 issued on 22 December 2017. Consolidated balance sheet '(€ '000) AMOUNTS AS AT ASSETS 01.01.2018 10. Cash and cash balances 64,493,411 20. Financial assets at fair value through profit and loss: 101,810,077 a) Financial assets held for trading 74,665,851 b) Financial assets designated at fair value 4 c) Other financial assets mandatorily at fair value 27,144,222 30. Financial assets at fair value through other comprehensive income 100,636,410 40. Financial assets at amortised cost: 519,900,654 a) Loans and receivables with banks 71,134,306 b) Loans and receivables with customers 448,766,348 50. Hedging derivatives 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,600,594 70. Equity investments 6,211,911 80. Insurance reserves charged to reinsurers - 90. Property, plant and equipment 8,623,778 100. Intangible assets 3,385,310 of which: goodwill 1,483,721 110. Tax assets: 12,848,869 a) Current 2,042,410 b) Deferred 10,806,459 120. Non-current assets and disposal groups classified as held for sale 1,110,780 130. Other assets 8,800,375 Total assets 833,853,239 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 140 2018 Annual Report and Accounts · UniCredit The Group has decided to exploit the option provided by the accounting standard not to restate comparative figures of previous years, consequently, for UniCredit group, the first time adoption of the new standard is 1 January 2018. UniCredit group's Balance Sheet as at 1 January 2018 is presented below, prepared in accordance with the mandatory format envisaged by the 5th update of Banca d’Italia Circular 262 issued on 22 December 2017. Consolidated balance sheet '(€ '000) AMOUNTS AS AT ASSETS 01.01.2018 10. Cash and cash balances 64,493,411 20. Financial assets at fair value through profit and loss: 101,810,077 a) Financial assets held for trading 74,665,851 b) Financial assets designated at fair value 4 c) Other financial assets mandatorily at fair value 27,144,222 30. Financial assets at fair value through other comprehensive income 100,636,410 40. Financial assets at amortised cost: 519,900,654 a) Loans and receivables with banks 71,134,306 b) Loans and receivables with customers 448,766,348 50. Hedging derivatives 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,600,594 70. Equity investments 6,211,911 80. Insurance reserves charged to reinsurers - 90. Property, plant and equipment 8,623,778 100. Intangible assets 3,385,310 of which: goodwill 1,483,721 110. Tax assets: 12,848,869 a) Current 2,042,410 b) Deferred 10,806,459 120. Non-current assets and disposal groups classified as held for sale 1,110,780 130. Other assets 8,800,375 Total assets 833,853,239 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 140 2018 Annual Report and Accounts · UniCredit The Group has decided to exploit the option provided by the accounting standard not to restate comparative figures of previous years, consequently, for UniCredit group, the first time adoption of the new standard is 1 January 2018. UniCredit group's Balance Sheet as at 1 January 2018 is presented below, prepared in accordance with the mandatory format envisaged by the 5th update of Banca d’Italia Circular 262 issued on 22 December 2017. Consolidated balance sheet '(€ '000) AMOUNTS AS AT ASSETS 01.01.2018 10. Cash and cash balances 64,493,411 20. Financial assets at fair value through profit and loss: 101,810,077 a) Financial assets held for trading 74,665,851 b) Financial assets designated at fair value 4 c) Other financial assets mandatorily at fair value 27,144,222 30. Financial assets at fair value through other comprehensive income 100,636,410 40. Financial assets at amortised cost: 519,900,654 a) Loans and receivables with banks 71,134,306 b) Loans and receivables with customers 448,766,348 50. Hedging derivatives 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,600,594 70. Equity investments 6,211,911 80. Insurance reserves charged to reinsurers - 90. Property, plant and equipment 8,623,778 100. Intangible assets 3,385,310 of which: goodwill 1,483,721 110. Tax assets: 12,848,869 a) Current 2,042,410 b) Deferred 10,806,459 120. Non-current assets and disposal groups classified as held for sale 1,110,780 130. Other assets 8,800,375 Total assets 833,853,239 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 140 2018 Annual Report and Accounts · UniCredit The Group has decided to exploit the option provided by the accounting standard not to restate comparative figures of previous years, consequently, for UniCredit group, the first time adoption of the new standard is 1 January 2018. UniCredit group's Balance Sheet as at 1 January 2018 is presented below, prepared in accordance with the mandatory format envisaged by the 5th update of Banca d’Italia Circular 262 issued on 22 December 2017. Consolidated balance sheet '(€ '000) AMOUNTS AS AT ASSETS 01.01.2018 10. Cash and cash balances 64,493,411 20. Financial assets at fair value through profit and loss: 101,810,077 a) Financial assets held for trading 74,665,851 b) Financial assets designated at fair value 4 c) Other financial assets mandatorily at fair value 27,144,222 30. Financial assets at fair value through other comprehensive income 100,636,410 40. Financial assets at amortised cost: 519,900,654 a) Loans and receivables with banks 71,134,306 b) Loans and receivables with customers 448,766,348 50. Hedging derivatives 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,600,594 70. Equity investments 6,211,911 80. Insurance reserves charged to reinsurers - 90. Property, plant and equipment 8,623,778 100. Intangible assets 3,385,310 of which: goodwill 1,483,721 110. Tax assets: 12,848,869 a) Current 2,042,410 b) Deferred 10,806,459 120. Non-current assets and disposal groups classified as held for sale 1,110,780 130. Other assets 8,800,375 Total assets 833,853,239 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 141 continued: Consolidated balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 01.01.2018 10. Financial liabilities at amortised cost: 684,189,854 a) Deposits from banks 123,234,090 b) Deposits from customers 462,895,261 c) Debt securities in issue 98,060,503 20. Financial liabilities held for trading 51,099,691 30. Financial liabilities designated at fair value 8,301,781 40. Hedging derivatives 3,567,846 50. Value adjustment of hedged financial liabilities (+/-) 3,046,609 60. Tax liabilities: 1,108,062 a) Current 644,439 b) Deferred 463,623 70. Liabilities referrable to disposal groups classified as held for sale 184,831 80. Other liabilities 14,808,680 90. Provision for employee severance pay 917,284 100. Provisions for risks and charges: 9,740,979 a) Committments and guarantees given 1,090,289 b) Post-retirement benefit obligations 4,522,188 c) Other provisions for risks and charges 4,128,502 110. Technical reserves - 120. Valuation reserves (4,650,811) 130. Redeemable shares - 140. Equity instruments 4,610,073 150. Reserves 16,293,284 160. Share premium 13,399,799 170. Share capital 20,880,550 180. Treasury shares (-) (2,695) 190. Minority shareholders' equity (+/-) 884,314 200. Profit (Loss) for the period (+/-) 5,473,108 Total Liabilities and Shareholders' Equity 833,853,239 The adoption of IFRS9 has determined: • an overall negative effect on consolidated net equity for an amount of -€3,535,207 thousand, net of taxes calculated on 1 January 20189 (-€3,708,885 thousand gross of taxes); • an overall negative effect on CET1 Ratio10 fully loaded equal to -99 bps11 (-104 bps12 gross of taxes); • the increase of loan loss provisions to an amount equal to €31,002,599 thousand. In particular, this effect (-€3,535,207 thousand net of taxes and -€3,708,885 thousand gross of taxes) stems from: • for an amount, net of the taxes, of -€303,977 thousand (-€339,948 thousand gross of taxes) from changes in the revaluation reserves reported in item “120. Valuation Reserve” which is attributable to instruments classified in item “30 Financial assets at fair value through other comprehensive income” and in item “30. Financial liabilities designated at fair value”, for the component relating to the valuation of own creditworthiness; • for an amount, net of the tax effect, of -€3,231,230 thousand, net of the taxes (-€3,368,937 thousand gross of taxes) from changes in item “150. Reserves” attributable to the effects of reclassification and measurement of financial instruments other than those reported in item “30. Financial assets at fair value through other comprehensive income” and to the calculation of impairment on on-balance-sheet and off-balance sheet exposures. It should be noted that these impacts include negative effects, for an amount of €198,083 thousand, attributable to a joint venture that is valued according to the equity method for which adoption of IFRS9 resulted in a corresponding negative change in shareholders’ equity. This investee was tested for impairment in previous years, pursuant to IAS36. Since the impairment test carried out on 1 January 2018 confirmed its book value as at 31 December 2017, the negative impact from adoption of IFRS9 was offset by an increase for the same amount of its book value. 9 In the current section “Transition to “IFRS9: Financial Instruments” of UniCredit group” the tax impacts shown are based on tax regulation existing as at 1 January 2018. 10 UniCredit group has decided not to apply the IFRS9 transitional approach as reported in article 473a of the CRR. Therefore, the calculation of own funds, capital absorption, capital ratios and leverage fully reflects the impact arising from the application of the IFRS9 principle. 11 Considering tax impact and FTA related effects on loans and Deferred Tax Assets Risk weighted assets. 12 Considering FTA related effects on loans Risk weighted assets. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 141 continued: Consolidated balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 01.01.2018 10. Financial liabilities at amortised cost: 684,189,854 a) Deposits from banks 123,234,090 b) Deposits from customers 462,895,261 c) Debt securities in issue 98,060,503 20. Financial liabilities held for trading 51,099,691 30. Financial liabilities designated at fair value 8,301,781 40. Hedging derivatives 3,567,846 50. Value adjustment of hedged financial liabilities (+/-) 3,046,609 60. Tax liabilities: 1,108,062 a) Current 644,439 b) Deferred 463,623 70. Liabilities referrable to disposal groups classified as held for sale 184,831 80. Other liabilities 14,808,680 90. Provision for employee severance pay 917,284 100. Provisions for risks and charges: 9,740,979 a) Committments and guarantees given 1,090,289 b) Post-retirement benefit obligations 4,522,188 c) Other provisions for risks and charges 4,128,502 110. Technical reserves - 120. Valuation reserves (4,650,811) 130. Redeemable shares - 140. Equity instruments 4,610,073 150. Reserves 16,293,284 160. Share premium 13,399,799 170. Share capital 20,880,550 180. Treasury shares (-) (2,695) 190. Minority shareholders' equity (+/-) 884,314 200. Profit (Loss) for the period (+/-) 5,473,108 Total Liabilities and Shareholders' Equity 833,853,239 The adoption of IFRS9 has determined: • an overall negative effect on consolidated net equity for an amount of -€3,535,207 thousand, net of taxes calculated on 1 January 20189 (-€3,708,885 thousand gross of taxes); • an overall negative effect on CET1 Ratio10 fully loaded equal to -99 bps11 (-104 bps12 gross of taxes); • the increase of loan loss provisions to an amount equal to €31,002,599 thousand. In particular, this effect (-€3,535,207 thousand net of taxes and -€3,708,885 thousand gross of taxes) stems from: • for an amount, net of the taxes, of -€303,977 thousand (-€339,948 thousand gross of taxes) from changes in the revaluation reserves reported in item “120. Valuation Reserve” which is attributable to instruments classified in item “30 Financial assets at fair value through other comprehensive income” and in item “30. Financial liabilities designated at fair value”, for the component relating to the valuation of own creditworthiness; • for an amount, net of the tax effect, of -€3,231,230 thousand, net of the taxes (-€3,368,937 thousand gross of taxes) from changes in item “150. Reserves” attributable to the effects of reclassification and measurement of financial instruments other than those reported in item “30. Financial assets at fair value through other comprehensive income” and to the calculation of impairment on on-balance-sheet and off-balance sheet exposures. It should be noted that these impacts include negative effects, for an amount of €198,083 thousand, attributable to a joint venture that is valued according to the equity method for which adoption of IFRS9 resulted in a corresponding negative change in shareholders’ equity. This investee was tested for impairment in previous years, pursuant to IAS36. Since the impairment test carried out on 1 January 2018 confirmed its book value as at 31 December 2017, the negative impact from adoption of IFRS9 was offset by an increase for the same amount of its book value. 9 In the current section “Transition to “IFRS9: Financial Instruments” of UniCredit group” the tax impacts shown are based on tax regulation existing as at 1 January 2018. 10 UniCredit group has decided not to apply the IFRS9 transitional approach as reported in article 473a of the CRR. Therefore, the calculation of own funds, capital absorption, capital ratios and leverage fully reflects the impact arising from the application of the IFRS9 principle. 11 Considering tax impact and FTA related effects on loans and Deferred Tax Assets Risk weighted assets. 12 Considering FTA related effects on loans Risk weighted assets. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 141 continued: Consolidated balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 01.01.2018 10. Financial liabilities at amortised cost: 684,189,854 a) Deposits from banks 123,234,090 b) Deposits from customers 462,895,261 c) Debt securities in issue 98,060,503 20. Financial liabilities held for trading 51,099,691 30. Financial liabilities designated at fair value 8,301,781 40. Hedging derivatives 3,567,846 50. Value adjustment of hedged financial liabilities (+/-) 3,046,609 60. Tax liabilities: 1,108,062 a) Current 644,439 b) Deferred 463,623 70. Liabilities referrable to disposal groups classified as held for sale 184,831 80. Other liabilities 14,808,680 90. Provision for employee severance pay 917,284 100. Provisions for risks and charges: 9,740,979 a) Committments and guarantees given 1,090,289 b) Post-retirement benefit obligations 4,522,188 c) Other provisions for risks and charges 4,128,502 110. Technical reserves - 120. Valuation reserves (4,650,811) 130. Redeemable shares - 140. Equity instruments 4,610,073 150. Reserves 16,293,284 160. Share premium 13,399,799 170. Share capital 20,880,550 180. Treasury shares (-) (2,695) 190. Minority shareholders' equity (+/-) 884,314 200. Profit (Loss) for the period (+/-) 5,473,108 Total Liabilities and Shareholders' Equity 833,853,239 The adoption of IFRS9 has determined: • an overall negative effect on consolidated net equity for an amount of -€3,535,207 thousand, net of taxes calculated on 1 January 20189 (-€3,708,885 thousand gross of taxes); • an overall negative effect on CET1 Ratio10 fully loaded equal to -99 bps11 (-104 bps12 gross of taxes); • the increase of loan loss provisions to an amount equal to €31,002,599 thousand. In particular, this effect (-€3,535,207 thousand net of taxes and -€3,708,885 thousand gross of taxes) stems from: • for an amount, net of the taxes, of -€303,977 thousand (-€339,948 thousand gross of taxes) from changes in the revaluation reserves reported in item “120. Valuation Reserve” which is attributable to instruments classified in item “30 Financial assets at fair value through other comprehensive income” and in item “30. Financial liabilities designated at fair value”, for the component relating to the valuation of own creditworthiness; • for an amount, net of the tax effect, of -€3,231,230 thousand, net of the taxes (-€3,368,937 thousand gross of taxes) from changes in item “150. Reserves” attributable to the effects of reclassification and measurement of financial instruments other than those reported in item “30. Financial assets at fair value through other comprehensive income” and to the calculation of impairment on on-balance-sheet and off-balance sheet exposures. It should be noted that these impacts include negative effects, for an amount of €198,083 thousand, attributable to a joint venture that is valued according to the equity method for which adoption of IFRS9 resulted in a corresponding negative change in shareholders’ equity. This investee was tested for impairment in previous years, pursuant to IAS36. Since the impairment test carried out on 1 January 2018 confirmed its book value as at 31 December 2017, the negative impact from adoption of IFRS9 was offset by an increase for the same amount of its book value. 9 In the current section “Transition to “IFRS9: Financial Instruments” of UniCredit group” the tax impacts shown are based on tax regulation existing as at 1 January 2018. 10 UniCredit group has decided not to apply the IFRS9 transitional approach as reported in article 473a of the CRR. Therefore, the calculation of own funds, capital absorption, capital ratios and leverage fully reflects the impact arising from the application of the IFRS9 principle. 11 Considering tax impact and FTA related effects on loans and Deferred Tax Assets Risk weighted assets. 12 Considering FTA related effects on loans Risk weighted assets. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 141 continued: Consolidated balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 01.01.2018 10. Financial liabilities at amortised cost: 684,189,854 a) Deposits from banks 123,234,090 b) Deposits from customers 462,895,261 c) Debt securities in issue 98,060,503 20. Financial liabilities held for trading 51,099,691 30. Financial liabilities designated at fair value 8,301,781 40. Hedging derivatives 3,567,846 50. Value adjustment of hedged financial liabilities (+/-) 3,046,609 60. Tax liabilities: 1,108,062 a) Current 644,439 b) Deferred 463,623 70. Liabilities referrable to disposal groups classified as held for sale 184,831 80. Other liabilities 14,808,680 90. Provision for employee severance pay 917,284 100. Provisions for risks and charges: 9,740,979 a) Committments and guarantees given 1,090,289 b) Post-retirement benefit obligations 4,522,188 c) Other provisions for risks and charges 4,128,502 110. Technical reserves - 120. Valuation reserves (4,650,811) 130. Redeemable shares - 140. Equity instruments 4,610,073 150. Reserves 16,293,284 160. Share premium 13,399,799 170. Share capital 20,880,550 180. Treasury shares (-) (2,695) 190. Minority shareholders' equity (+/-) 884,314 200. Profit (Loss) for the period (+/-) 5,473,108 Total Liabilities and Shareholders' Equity 833,853,239 The adoption of IFRS9 has determined: • an overall negative effect on consolidated net equity for an amount of -€3,535,207 thousand, net of taxes calculated on 1 January 20189 (-€3,708,885 thousand gross of taxes); • an overall negative effect on CET1 Ratio10 fully loaded equal to -99 bps11 (-104 bps12 gross of taxes); • the increase of loan loss provisions to an amount equal to €31,002,599 thousand. In particular, this effect (-€3,535,207 thousand net of taxes and -€3,708,885 thousand gross of taxes) stems from: • for an amount, net of the taxes, of -€303,977 thousand (-€339,948 thousand gross of taxes) from changes in the revaluation reserves reported in item “120. Valuation Reserve” which is attributable to instruments classified in item “30 Financial assets at fair value through other comprehensive income” and in item “30. Financial liabilities designated at fair value”, for the component relating to the valuation of own creditworthiness; • for an amount, net of the tax effect, of -€3,231,230 thousand, net of the taxes (-€3,368,937 thousand gross of taxes) from changes in item “150. Reserves” attributable to the effects of reclassification and measurement of financial instruments other than those reported in item “30. Financial assets at fair value through other comprehensive income” and to the calculation of impairment on on-balance-sheet and off-balance sheet exposures. It should be noted that these impacts include negative effects, for an amount of €198,083 thousand, attributable to a joint venture that is valued according to the equity method for which adoption of IFRS9 resulted in a corresponding negative change in shareholders’ equity. This investee was tested for impairment in previous years, pursuant to IAS36. Since the impairment test carried out on 1 January 2018 confirmed its book value as at 31 December 2017, the negative impact from adoption of IFRS9 was offset by an increase for the same amount of its book value. 9 In the current section “Transition to “IFRS9: Financial Instruments” of UniCredit group” the tax impacts shown are based on tax regulation existing as at 1 January 2018. 10 UniCredit group has decided not to apply the IFRS9 transitional approach as reported in article 473a of the CRR. Therefore, the calculation of own funds, capital absorption, capital ratios and leverage fully reflects the impact arising from the application of the IFRS9 principle. 11 Considering tax impact and FTA related effects on loans and Deferred Tax Assets Risk weighted assets. 12 Considering FTA related effects on loans Risk weighted assets. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 141 continued: Consolidated balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 01.01.2018 10. Financial liabilities at amortised cost: 684,189,854 a) Deposits from banks 123,234,090 b) Deposits from customers 462,895,261 c) Debt securities in issue 98,060,503 20. Financial liabilities held for trading 51,099,691 30. Financial liabilities designated at fair value 8,301,781 40. Hedging derivatives 3,567,846 50. Value adjustment of hedged financial liabilities (+/-) 3,046,609 60. Tax liabilities: 1,108,062 a) Current 644,439 b) Deferred 463,623 70. Liabilities referrable to disposal groups classified as held for sale 184,831 80. Other liabilities 14,808,680 90. Provision for employee severance pay 917,284 100. Provisions for risks and charges: 9,740,979 a) Committments and guarantees given 1,090,289 b) Post-retirement benefit obligations 4,522,188 c) Other provisions for risks and charges 4,128,502 110. Technical reserves - 120. Valuation reserves (4,650,811) 130. Redeemable shares - 140. Equity instruments 4,610,073 150. Reserves 16,293,284 160. Share premium 13,399,799 170. Share capital 20,880,550 180. Treasury shares (-) (2,695) 190. Minority shareholders' equity (+/-) 884,314 200. Profit (Loss) for the period (+/-) 5,473,108 Total Liabilities and Shareholders' Equity 833,853,239 The adoption of IFRS9 has determined: • an overall negative effect on consolidated net equity for an amount of -€3,535,207 thousand, net of taxes calculated on 1 January 20189 (-€3,708,885 thousand gross of taxes); • an overall negative effect on CET1 Ratio10 fully loaded equal to -99 bps11 (-104 bps12 gross of taxes); • the increase of loan loss provisions to an amount equal to €31,002,599 thousand. In particular, this effect (-€3,535,207 thousand net of taxes and -€3,708,885 thousand gross of taxes) stems from: • for an amount, net of the taxes, of -€303,977 thousand (-€339,948 thousand gross of taxes) from changes in the revaluation reserves reported in item “120. Valuation Reserve” which is attributable to instruments classified in item “30 Financial assets at fair value through other comprehensive income” and in item “30. Financial liabilities designated at fair value”, for the component relating to the valuation of own creditworthiness; • for an amount, net of the tax effect, of -€3,231,230 thousand, net of the taxes (-€3,368,937 thousand gross of taxes) from changes in item “150. Reserves” attributable to the effects of reclassification and measurement of financial instruments other than those reported in item “30. Financial assets at fair value through other comprehensive income” and to the calculation of impairment on on-balance-sheet and off-balance sheet exposures. It should be noted that these impacts include negative effects, for an amount of €198,083 thousand, attributable to a joint venture that is valued according to the equity method for which adoption of IFRS9 resulted in a corresponding negative change in shareholders’ equity. This investee was tested for impairment in previous years, pursuant to IAS36. Since the impairment test carried out on 1 January 2018 confirmed its book value as at 31 December 2017, the negative impact from adoption of IFRS9 was offset by an increase for the same amount of its book value. 9 In the current section “Transition to “IFRS9: Financial Instruments” of UniCredit group” the tax impacts shown are based on tax regulation existing as at 1 January 2018. 10 UniCredit group has decided not to apply the IFRS9 transitional approach as reported in article 473a of the CRR. Therefore, the calculation of own funds, capital absorption, capital ratios and leverage fully reflects the impact arising from the application of the IFRS9 principle. 11 Considering tax impact and FTA related effects on loans and Deferred Tax Assets Risk weighted assets. 12 Considering FTA related effects on loans Risk weighted assets. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 142 2018 Annual Report and Accounts · UniCredit Note that these final impacts are different from those preliminarily disclosed in the Consolidated Reports and Accounts as at 31 December 201713 mainly as a result of: • the observation of market transactions occurred on a specific asset class of NPL loans that are included in Group NPL Strategy that has required the revision of prices, estimated through internal models, considered in the sale scenario for the measurement of non-performing exposures14. This price adjustments has determined a negative FTA effect of €270,675 thousand, gross of taxes; • the inclusion in the “NPL strategy” of an additional portfolio of non-performing exposures for an amount equal to their residual value after write-off recognition in light of: - the Group strategy for the management of the non-performing loan portfolio that gives precedence to the deleveraging of such portfolio, as illustrated in the Multi-year Plan (MYP) communicated to the market in December 2017; - the introduction by IFRS9 of specific guidance on write-off. Note that the Group has developed specific guidelines on write-off aimed at granting the compliance with IFRS9 and the document “Guidance to banks on non-performing loans“ issued by ECB. Write-offs have determined a negative FTA effect of €802,763 thousand, gross of taxes15. 2. Classification and measurement As a result of the entry into force of the new accounting standard, the Group has reclassified financial assets and liabilities as at 1 January 2018 into the new envisaged categories. In this regard, it should be noted that this classification is based on business model and characteristics of the contractual cash flows. The analysis of the business model was conducted by mapping the business areas that make up the Group and by allocating a specific business model, for IFRS9 purposes, to each of them. In this regard, the business areas that make up the Group's banking portfolio have been assigned "held-to-collect" or "held-to-collect and sell" business models according to holding intentions and expected turnover of the financial instruments. The business areas that make up the Group's trading portfolio have been assigned an "other" business model in order to reflect trading intentions. For the purposes of classifying financial instruments in the new categories envisaged by IFRS9, the business model analysis must be complemented by an analysis of contractual flows ("SPPI Test"). In this regard, the Group has developed systems and processes to analyse the portfolio of debt securities and loans in place and assess whether the characteristics of contractual cash flows allow for measurement at amortised cost (“held-to-collect” portfolio) or at fair value with effect on other comprehensive income (“held-to-collect and sell” portfolio). The analysis in question was carried out both by contract and by defining specific clusters based on the characteristics of the transactions and using a specific internally developed tool ("SPPI Tool") to analyse the contract features with respect to IFRS9 requirements, or by using external data providers. 3. Impairment The entry into force of the new accounting standard has required the developments of model aimed at calculating the amount of loan loss provisions on the basis of the expected credit loss. The models developed are based on two main pillars: • the allocation of credit exposures in the Stages 1, 2 and 3 as required by the standard (Stage Allocation); • the calculation of the associated expected credit loss. With reference to stage allocation the Group has developed a combination of relative and absolute elements aimed at granting the proper allocation of credit exposures in the different credit Stages. For additional information refer to Part E - Section 2 - 2.1 Credit risk. With reference to the calculation of expected credit loss, Group models leverage on the Probability of Default (“PD”), Loss Given Default, (“LGD”) and Exposure at Default (“EAD”) used for regulatory purposes, with specific adjustments in order to ensure compliance with accounting rules. These adjustments are aimed, among other things, at introducing “point-in-time” adjustments to replace “through-the-cycle” adjustments required for regulatory purposes and including “forward looking” information. 13 UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017, page 141: “[…] Overall adjustments to the carrying value of financial instruments due to IFRS9 transition will be accounted for through Equity as of 1 January 2018 and they will have an impact on fully loaded CET1 ratio, gross of tax effect, that can be preliminarily estimated in the range of -75bps which is equivalent to about -€2.8 billion.” 14 Refer to the related paragraph of Part A - Section 16 - Other Information. 15 Refer to the related paragraph of Part A - Section 16 - Other Information. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 142 2018 Annual Report and Accounts · UniCredit Note that these final impacts are different from those preliminarily disclosed in the Consolidated Reports and Accounts as at 31 December 201713 mainly as a result of: • the observation of market transactions occurred on a specific asset class of NPL loans that are included in Group NPL Strategy that has required the revision of prices, estimated through internal models, considered in the sale scenario for the measurement of non-performing exposures14. This price adjustments has determined a negative FTA effect of €270,675 thousand, gross of taxes; • the inclusion in the “NPL strategy” of an additional portfolio of non-performing exposures for an amount equal to their residual value after write-off recognition in light of: - the Group strategy for the management of the non-performing loan portfolio that gives precedence to the deleveraging of such portfolio, as illustrated in the Multi-year Plan (MYP) communicated to the market in December 2017; - the introduction by IFRS9 of specific guidance on write-off. Note that the Group has developed specific guidelines on write-off aimed at granting the compliance with IFRS9 and the document “Guidance to banks on non-performing loans“ issued by ECB. Write-offs have determined a negative FTA effect of €802,763 thousand, gross of taxes15. 2. Classification and measurement As a result of the entry into force of the new accounting standard, the Group has reclassified financial assets and liabilities as at 1 January 2018 into the new envisaged categories. In this regard, it should be noted that this classification is based on business model and characteristics of the contractual cash flows. The analysis of the business model was conducted by mapping the business areas that make up the Group and by allocating a specific business model, for IFRS9 purposes, to each of them. In this regard, the business areas that make up the Group's banking portfolio have been assigned "held-to-collect" or "held-to-collect and sell" business models according to holding intentions and expected turnover of the financial instruments. The business areas that make up the Group's trading portfolio have been assigned an "other" business model in order to reflect trading intentions. For the purposes of classifying financial instruments in the new categories envisaged by IFRS9, the business model analysis must be complemented by an analysis of contractual flows ("SPPI Test"). In this regard, the Group has developed systems and processes to analyse the portfolio of debt securities and loans in place and assess whether the characteristics of contractual cash flows allow for measurement at amortised cost (“held-to-collect” portfolio) or at fair value with effect on other comprehensive income (“held-to-collect and sell” portfolio). The analysis in question was carried out both by contract and by defining specific clusters based on the characteristics of the transactions and using a specific internally developed tool ("SPPI Tool") to analyse the contract features with respect to IFRS9 requirements, or by using external data providers. 3. Impairment The entry into force of the new accounting standard has required the developments of model aimed at calculating the amount of loan loss provisions on the basis of the expected credit loss. The models developed are based on two main pillars: • the allocation of credit exposures in the Stages 1, 2 and 3 as required by the standard (Stage Allocation); • the calculation of the associated expected credit loss. With reference to stage allocation the Group has developed a combination of relative and absolute elements aimed at granting the proper allocation of credit exposures in the different credit Stages. For additional information refer to Part E - Section 2 - 2.1 Credit risk. With reference to the calculation of expected credit loss, Group models leverage on the Probability of Default (“PD”), Loss Given Default, (“LGD”) and Exposure at Default (“EAD”) used for regulatory purposes, with specific adjustments in order to ensure compliance with accounting rules. These adjustments are aimed, among other things, at introducing “point-in-time” adjustments to replace “through-the-cycle” adjustments required for regulatory purposes and including “forward looking” information. 13 UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017, page 141: “[…] Overall adjustments to the carrying value of financial instruments due to IFRS9 transition will be accounted for through Equity as of 1 January 2018 and they will have an impact on fully loaded CET1 ratio, gross of tax effect, that can be preliminarily estimated in the range of -75bps which is equivalent to about -€2.8 billion.” 14 Refer to the related paragraph of Part A - Section 16 - Other Information. 15 Refer to the related paragraph of Part A - Section 16 - Other Information. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 142 2018 Annual Report and Accounts · UniCredit Note that these final impacts are different from those preliminarily disclosed in the Consolidated Reports and Accounts as at 31 December 201713 mainly as a result of: • the observation of market transactions occurred on a specific asset class of NPL loans that are included in Group NPL Strategy that has required the revision of prices, estimated through internal models, considered in the sale scenario for the measurement of non-performing exposures14. This price adjustments has determined a negative FTA effect of €270,675 thousand, gross of taxes; • the inclusion in the “NPL strategy” of an additional portfolio of non-performing exposures for an amount equal to their residual value after write-off recognition in light of: - the Group strategy for the management of the non-performing loan portfolio that gives precedence to the deleveraging of such portfolio, as illustrated in the Multi-year Plan (MYP) communicated to the market in December 2017; - the introduction by IFRS9 of specific guidance on write-off. Note that the Group has developed specific guidelines on write-off aimed at granting the compliance with IFRS9 and the document “Guidance to banks on non-performing loans“ issued by ECB. Write-offs have determined a negative FTA effect of €802,763 thousand, gross of taxes15. 2. Classification and measurement As a result of the entry into force of the new accounting standard, the Group has reclassified financial assets and liabilities as at 1 January 2018 into the new envisaged categories. In this regard, it should be noted that this classification is based on business model and characteristics of the contractual cash flows. The analysis of the business model was conducted by mapping the business areas that make up the Group and by allocating a specific business model, for IFRS9 purposes, to each of them. In this regard, the business areas that make up the Group's banking portfolio have been assigned "held-to-collect" or "held-to-collect and sell" business models according to holding intentions and expected turnover of the financial instruments. The business areas that make up the Group's trading portfolio have been assigned an "other" business model in order to reflect trading intentions. For the purposes of classifying financial instruments in the new categories envisaged by IFRS9, the business model analysis must be complemented by an analysis of contractual flows ("SPPI Test"). In this regard, the Group has developed systems and processes to analyse the portfolio of debt securities and loans in place and assess whether the characteristics of contractual cash flows allow for measurement at amortised cost (“held-to-collect” portfolio) or at fair value with effect on other comprehensive income (“held-to-collect and sell” portfolio). The analysis in question was carried out both by contract and by defining specific clusters based on the characteristics of the transactions and using a specific internally developed tool ("SPPI Tool") to analyse the contract features with respect to IFRS9 requirements, or by using external data providers. 3. Impairment The entry into force of the new accounting standard has required the developments of model aimed at calculating the amount of loan loss provisions on the basis of the expected credit loss. The models developed are based on two main pillars: • the allocation of credit exposures in the Stages 1, 2 and 3 as required by the standard (Stage Allocation); • the calculation of the associated expected credit loss. With reference to stage allocation the Group has developed a combination of relative and absolute elements aimed at granting the proper allocation of credit exposures in the different credit Stages. For additional information refer to Part E - Section 2 - 2.1 Credit risk. With reference to the calculation of expected credit loss, Group models leverage on the Probability of Default (“PD”), Loss Given Default, (“LGD”) and Exposure at Default (“EAD”) used for regulatory purposes, with specific adjustments in order to ensure compliance with accounting rules. These adjustments are aimed, among other things, at introducing “point-in-time” adjustments to replace “through-the-cycle” adjustments required for regulatory purposes and including “forward looking” information. 13 UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017, page 141: “[…] Overall adjustments to the carrying value of financial instruments due to IFRS9 transition will be accounted for through Equity as of 1 January 2018 and they will have an impact on fully loaded CET1 ratio, gross of tax effect, that can be preliminarily estimated in the range of -75bps which is equivalent to about -€2.8 billion.” 14 Refer to the related paragraph of Part A - Section 16 - Other Information. 15 Refer to the related paragraph of Part A - Section 16 - Other Information. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 142 2018 Annual Report and Accounts · UniCredit Note that these final impacts are different from those preliminarily disclosed in the Consolidated Reports and Accounts as at 31 December 201713 mainly as a result of: • the observation of market transactions occurred on a specific asset class of NPL loans that are included in Group NPL Strategy that has required the revision of prices, estimated through internal models, considered in the sale scenario for the measurement of non-performing exposures14. This price adjustments has determined a negative FTA effect of €270,675 thousand, gross of taxes; • the inclusion in the “NPL strategy” of an additional portfolio of non-performing exposures for an amount equal to their residual value after write-off recognition in light of: - the Group strategy for the management of the non-performing loan portfolio that gives precedence to the deleveraging of such portfolio, as illustrated in the Multi-year Plan (MYP) communicated to the market in December 2017; - the introduction by IFRS9 of specific guidance on write-off. Note that the Group has developed specific guidelines on write-off aimed at granting the compliance with IFRS9 and the document “Guidance to banks on non-performing loans“ issued by ECB. Write-offs have determined a negative FTA effect of €802,763 thousand, gross of taxes15. 2. Classification and measurement As a result of the entry into force of the new accounting standard, the Group has reclassified financial assets and liabilities as at 1 January 2018 into the new envisaged categories. In this regard, it should be noted that this classification is based on business model and characteristics of the contractual cash flows. The analysis of the business model was conducted by mapping the business areas that make up the Group and by allocating a specific business model, for IFRS9 purposes, to each of them. In this regard, the business areas that make up the Group's banking portfolio have been assigned "held-to-collect" or "held-to-collect and sell" business models according to holding intentions and expected turnover of the financial instruments. The business areas that make up the Group's trading portfolio have been assigned an "other" business model in order to reflect trading intentions. For the purposes of classifying financial instruments in the new categories envisaged by IFRS9, the business model analysis must be complemented by an analysis of contractual flows ("SPPI Test"). In this regard, the Group has developed systems and processes to analyse the portfolio of debt securities and loans in place and assess whether the characteristics of contractual cash flows allow for measurement at amortised cost (“held-to-collect” portfolio) or at fair value with effect on other comprehensive income (“held-to-collect and sell” portfolio). The analysis in question was carried out both by contract and by defining specific clusters based on the characteristics of the transactions and using a specific internally developed tool ("SPPI Tool") to analyse the contract features with respect to IFRS9 requirements, or by using external data providers. 3. Impairment The entry into force of the new accounting standard has required the developments of model aimed at calculating the amount of loan loss provisions on the basis of the expected credit loss. The models developed are based on two main pillars: • the allocation of credit exposures in the Stages 1, 2 and 3 as required by the standard (Stage Allocation); • the calculation of the associated expected credit loss. With reference to stage allocation the Group has developed a combination of relative and absolute elements aimed at granting the proper allocation of credit exposures in the different credit Stages. For additional information refer to Part E - Section 2 - 2.1 Credit risk. With reference to the calculation of expected credit loss, Group models leverage on the Probability of Default (“PD”), Loss Given Default, (“LGD”) and Exposure at Default (“EAD”) used for regulatory purposes, with specific adjustments in order to ensure compliance with accounting rules. These adjustments are aimed, among other things, at introducing “point-in-time” adjustments to replace “through-the-cycle” adjustments required for regulatory purposes and including “forward looking” information. 13 UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017, page 141: “[…] Overall adjustments to the carrying value of financial instruments due to IFRS9 transition will be accounted for through Equity as of 1 January 2018 and they will have an impact on fully loaded CET1 ratio, gross of tax effect, that can be preliminarily estimated in the range of -75bps which is equivalent to about -€2.8 billion.” 14 Refer to the related paragraph of Part A - Section 16 - Other Information. 15 Refer to the related paragraph of Part A - Section 16 - Other Information. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 142 2018 Annual Report and Accounts · UniCredit Note that these final impacts are different from those preliminarily disclosed in the Consolidated Reports and Accounts as at 31 December 201713 mainly as a result of: • the observation of market transactions occurred on a specific asset class of NPL loans that are included in Group NPL Strategy that has required the revision of prices, estimated through internal models, considered in the sale scenario for the measurement of non-performing exposures14. This price adjustments has determined a negative FTA effect of €270,675 thousand, gross of taxes; • the inclusion in the “NPL strategy” of an additional portfolio of non-performing exposures for an amount equal to their residual value after write-off recognition in light of: - the Group strategy for the management of the non-performing loan portfolio that gives precedence to the deleveraging of such portfolio, as illustrated in the Multi-year Plan (MYP) communicated to the market in December 2017; - the introduction by IFRS9 of specific guidance on write-off. Note that the Group has developed specific guidelines on write-off aimed at granting the compliance with IFRS9 and the document “Guidance to banks on non-performing loans“ issued by ECB. Write-offs have determined a negative FTA effect of €802,763 thousand, gross of taxes15. 2. Classification and measurement As a result of the entry into force of the new accounting standard, the Group has reclassified financial assets and liabilities as at 1 January 2018 into the new envisaged categories. In this regard, it should be noted that this classification is based on business model and characteristics of the contractual cash flows. The analysis of the business model was conducted by mapping the business areas that make up the Group and by allocating a specific business model, for IFRS9 purposes, to each of them. In this regard, the business areas that make up the Group's banking portfolio have been assigned "held-to-collect" or "held-to-collect and sell" business models according to holding intentions and expected turnover of the financial instruments. The business areas that make up the Group's trading portfolio have been assigned an "other" business model in order to reflect trading intentions. For the purposes of classifying financial instruments in the new categories envisaged by IFRS9, the business model analysis must be complemented by an analysis of contractual flows ("SPPI Test"). In this regard, the Group has developed systems and processes to analyse the portfolio of debt securities and loans in place and assess whether the characteristics of contractual cash flows allow for measurement at amortised cost (“held-to-collect” portfolio) or at fair value with effect on other comprehensive income (“held-to-collect and sell” portfolio). The analysis in question was carried out both by contract and by defining specific clusters based on the characteristics of the transactions and using a specific internally developed tool ("SPPI Tool") to analyse the contract features with respect to IFRS9 requirements, or by using external data providers. 3. Impairment The entry into force of the new accounting standard has required the developments of model aimed at calculating the amount of loan loss provisions on the basis of the expected credit loss. The models developed are based on two main pillars: • the allocation of credit exposures in the Stages 1, 2 and 3 as required by the standard (Stage Allocation); • the calculation of the associated expected credit loss. With reference to stage allocation the Group has developed a combination of relative and absolute elements aimed at granting the proper allocation of credit exposures in the different credit Stages. For additional information refer to Part E - Section 2 - 2.1 Credit risk. With reference to the calculation of expected credit loss, Group models leverage on the Probability of Default (“PD”), Loss Given Default, (“LGD”) and Exposure at Default (“EAD”) used for regulatory purposes, with specific adjustments in order to ensure compliance with accounting rules. These adjustments are aimed, among other things, at introducing “point-in-time” adjustments to replace “through-the-cycle” adjustments required for regulatory purposes and including “forward looking” information. 13 UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017, page 141: “[…] Overall adjustments to the carrying value of financial instruments due to IFRS9 transition will be accounted for through Equity as of 1 January 2018 and they will have an impact on fully loaded CET1 ratio, gross of tax effect, that can be preliminarily estimated in the range of -75bps which is equivalent to about -€2.8 billion.” 14 Refer to the related paragraph of Part A - Section 16 - Other Information. 15 Refer to the related paragraph of Part A - Section 16 - Other Information. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 143 With reference to the latter the Group has selected three macroeconomic scenarios to determine the forward looking component, a baseline scenario, a positive scenario and a negative scenario. The baseline scenario is the main scenario and indeed is expected to be the one with the highest likelihood of occurrence. The positive and the negative scenario represent alternative occurrences, either better or worse when compared to the baseline scenario in terms of evolution of the economies of the countries where the Group operates. • The Base Scenario (“Baseline”) reflects the macroeconomic evolution expected from the Group and as such is coherent with the assumptions used by the Group in the planning processes. The Baseline Scenario foresees an economic growth stable and positive, both for the Eurozone and for the CEE countries, in a context where the interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. Specifically, the annual growth of the real GDP for the Eurozone is foreseen at +1.8% for 2018 and +1.5% for 2019 (with Italy at +1.2% and +1.0% and Germany at +1.9% and +1.8%, respectively), while the foreseen growth for the CEE countries is +2.4% in 2018 and +2.2% in 2019. The Scenario implies that the 3 months Euribor stays negative for 2018 and comes back near zero in 2019; • The Positive Scenario is based on the hypothesis that the positive economic growth of 2017 both at global level and at European level might consolidate even in 2018, sustained by the trend in the global commerce and by accommodating economic policies. This would imply, for the biggest European countries, a maximum phase of the economic cycle prolonged by an year, that would reflect in a bigger growth of the annual real GDP (with respect to the baseline scenario) of about 0.2%-0.5% both in 2018 and in 2019. Specifically, the annual growth of the real GDP for the Eurozone would grow to +2.3% for 2018 and +1.9% for 2019 (with Italy at +1.5% and +1.2% respectively) in a context of short term rates (3 months Euribor) still negatives or close to zero. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a better trend of the economy than the one assumed in the Baseline scenario; • The Adverse Scenario reflects one of the scenarios used in the evaluation processes of the capital adequacy (ICAAP). In coherence with the ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks of the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tension between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for different “asset class” and to a slowdown of the economic growth both of the Eurozone (lower of about 1.5 per year with respect to the baseline scenario, in terms of real GDP) and of CEE countries (lower of about 2. points percentage, respectively). Specifically, the annual growth of the GDP for the Eurozone would be +0.4% for 2018 and -0.1% for 2019 (with Italy to -0.2% and -1.1% respectively) in a context of rates in the short run (3 months Euribor) that would stay negative even in 2019, based on the hypothesis that the ECB would prolong in such a market context the liquidity support to markets. The likelihood of happening of such scenario, at the time of its definition, is foreseen probable and appropriate to quantify the adverse trend of the economy. In coherence with the scenario and with the magnitude of changes compared to the baseline scenario, it is assumed that the negative scenario is less likely than the positive scenario. In addition the assessment of impaired exposures (Stage 3) considered sale scenarios whereas the Group's Non-Performing Asset Strategy foresees the sale on the market as a recovery method. For additional information on the methods used for the calculation of expected loss refer to Part E - Section 2 - 2.1 Credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 143 With reference to the latter the Group has selected three macroeconomic scenarios to determine the forward looking component, a baseline scenario, a positive scenario and a negative scenario. The baseline scenario is the main scenario and indeed is expected to be the one with the highest likelihood of occurrence. The positive and the negative scenario represent alternative occurrences, either better or worse when compared to the baseline scenario in terms of evolution of the economies of the countries where the Group operates. • The Base Scenario (“Baseline”) reflects the macroeconomic evolution expected from the Group and as such is coherent with the assumptions used by the Group in the planning processes. The Baseline Scenario foresees an economic growth stable and positive, both for the Eurozone and for the CEE countries, in a context where the interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. Specifically, the annual growth of the real GDP for the Eurozone is foreseen at +1.8% for 2018 and +1.5% for 2019 (with Italy at +1.2% and +1.0% and Germany at +1.9% and +1.8%, respectively), while the foreseen growth for the CEE countries is +2.4% in 2018 and +2.2% in 2019. The Scenario implies that the 3 months Euribor stays negative for 2018 and comes back near zero in 2019; • The Positive Scenario is based on the hypothesis that the positive economic growth of 2017 both at global level and at European level might consolidate even in 2018, sustained by the trend in the global commerce and by accommodating economic policies. This would imply, for the biggest European countries, a maximum phase of the economic cycle prolonged by an year, that would reflect in a bigger growth of the annual real GDP (with respect to the baseline scenario) of about 0.2%-0.5% both in 2018 and in 2019. Specifically, the annual growth of the real GDP for the Eurozone would grow to +2.3% for 2018 and +1.9% for 2019 (with Italy at +1.5% and +1.2% respectively) in a context of short term rates (3 months Euribor) still negatives or close to zero. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a better trend of the economy than the one assumed in the Baseline scenario; • The Adverse Scenario reflects one of the scenarios used in the evaluation processes of the capital adequacy (ICAAP). In coherence with the ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks of the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tension between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for different “asset class” and to a slowdown of the economic growth both of the Eurozone (lower of about 1.5 per year with respect to the baseline scenario, in terms of real GDP) and of CEE countries (lower of about 2. points percentage, respectively). Specifically, the annual growth of the GDP for the Eurozone would be +0.4% for 2018 and -0.1% for 2019 (with Italy to -0.2% and -1.1% respectively) in a context of rates in the short run (3 months Euribor) that would stay negative even in 2019, based on the hypothesis that the ECB would prolong in such a market context the liquidity support to markets. The likelihood of happening of such scenario, at the time of its definition, is foreseen probable and appropriate to quantify the adverse trend of the economy. In coherence with the scenario and with the magnitude of changes compared to the baseline scenario, it is assumed that the negative scenario is less likely than the positive scenario. In addition the assessment of impaired exposures (Stage 3) considered sale scenarios whereas the Group's Non-Performing Asset Strategy foresees the sale on the market as a recovery method. For additional information on the methods used for the calculation of expected loss refer to Part E - Section 2 - 2.1 Credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 143 With reference to the latter the Group has selected three macroeconomic scenarios to determine the forward looking component, a baseline scenario, a positive scenario and a negative scenario. The baseline scenario is the main scenario and indeed is expected to be the one with the highest likelihood of occurrence. The positive and the negative scenario represent alternative occurrences, either better or worse when compared to the baseline scenario in terms of evolution of the economies of the countries where the Group operates. • The Base Scenario (“Baseline”) reflects the macroeconomic evolution expected from the Group and as such is coherent with the assumptions used by the Group in the planning processes. The Baseline Scenario foresees an economic growth stable and positive, both for the Eurozone and for the CEE countries, in a context where the interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. Specifically, the annual growth of the real GDP for the Eurozone is foreseen at +1.8% for 2018 and +1.5% for 2019 (with Italy at +1.2% and +1.0% and Germany at +1.9% and +1.8%, respectively), while the foreseen growth for the CEE countries is +2.4% in 2018 and +2.2% in 2019. The Scenario implies that the 3 months Euribor stays negative for 2018 and comes back near zero in 2019; • The Positive Scenario is based on the hypothesis that the positive economic growth of 2017 both at global level and at European level might consolidate even in 2018, sustained by the trend in the global commerce and by accommodating economic policies. This would imply, for the biggest European countries, a maximum phase of the economic cycle prolonged by an year, that would reflect in a bigger growth of the annual real GDP (with respect to the baseline scenario) of about 0.2%-0.5% both in 2018 and in 2019. Specifically, the annual growth of the real GDP for the Eurozone would grow to +2.3% for 2018 and +1.9% for 2019 (with Italy at +1.5% and +1.2% respectively) in a context of short term rates (3 months Euribor) still negatives or close to zero. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a better trend of the economy than the one assumed in the Baseline scenario; • The Adverse Scenario reflects one of the scenarios used in the evaluation processes of the capital adequacy (ICAAP). In coherence with the ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks of the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tension between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for different “asset class” and to a slowdown of the economic growth both of the Eurozone (lower of about 1.5 per year with respect to the baseline scenario, in terms of real GDP) and of CEE countries (lower of about 2. points percentage, respectively). Specifically, the annual growth of the GDP for the Eurozone would be +0.4% for 2018 and -0.1% for 2019 (with Italy to -0.2% and -1.1% respectively) in a context of rates in the short run (3 months Euribor) that would stay negative even in 2019, based on the hypothesis that the ECB would prolong in such a market context the liquidity support to markets. The likelihood of happening of such scenario, at the time of its definition, is foreseen probable and appropriate to quantify the adverse trend of the economy. In coherence with the scenario and with the magnitude of changes compared to the baseline scenario, it is assumed that the negative scenario is less likely than the positive scenario. In addition the assessment of impaired exposures (Stage 3) considered sale scenarios whereas the Group's Non-Performing Asset Strategy foresees the sale on the market as a recovery method. For additional information on the methods used for the calculation of expected loss refer to Part E - Section 2 - 2.1 Credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 143 With reference to the latter the Group has selected three macroeconomic scenarios to determine the forward looking component, a baseline scenario, a positive scenario and a negative scenario. The baseline scenario is the main scenario and indeed is expected to be the one with the highest likelihood of occurrence. The positive and the negative scenario represent alternative occurrences, either better or worse when compared to the baseline scenario in terms of evolution of the economies of the countries where the Group operates. • The Base Scenario (“Baseline”) reflects the macroeconomic evolution expected from the Group and as such is coherent with the assumptions used by the Group in the planning processes. The Baseline Scenario foresees an economic growth stable and positive, both for the Eurozone and for the CEE countries, in a context where the interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. Specifically, the annual growth of the real GDP for the Eurozone is foreseen at +1.8% for 2018 and +1.5% for 2019 (with Italy at +1.2% and +1.0% and Germany at +1.9% and +1.8%, respectively), while the foreseen growth for the CEE countries is +2.4% in 2018 and +2.2% in 2019. The Scenario implies that the 3 months Euribor stays negative for 2018 and comes back near zero in 2019; • The Positive Scenario is based on the hypothesis that the positive economic growth of 2017 both at global level and at European level might consolidate even in 2018, sustained by the trend in the global commerce and by accommodating economic policies. This would imply, for the biggest European countries, a maximum phase of the economic cycle prolonged by an year, that would reflect in a bigger growth of the annual real GDP (with respect to the baseline scenario) of about 0.2%-0.5% both in 2018 and in 2019. Specifically, the annual growth of the real GDP for the Eurozone would grow to +2.3% for 2018 and +1.9% for 2019 (with Italy at +1.5% and +1.2% respectively) in a context of short term rates (3 months Euribor) still negatives or close to zero. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a better trend of the economy than the one assumed in the Baseline scenario; • The Adverse Scenario reflects one of the scenarios used in the evaluation processes of the capital adequacy (ICAAP). In coherence with the ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks of the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tension between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for different “asset class” and to a slowdown of the economic growth both of the Eurozone (lower of about 1.5 per year with respect to the baseline scenario, in terms of real GDP) and of CEE countries (lower of about 2. points percentage, respectively). Specifically, the annual growth of the GDP for the Eurozone would be +0.4% for 2018 and -0.1% for 2019 (with Italy to -0.2% and -1.1% respectively) in a context of rates in the short run (3 months Euribor) that would stay negative even in 2019, based on the hypothesis that the ECB would prolong in such a market context the liquidity support to markets. The likelihood of happening of such scenario, at the time of its definition, is foreseen probable and appropriate to quantify the adverse trend of the economy. In coherence with the scenario and with the magnitude of changes compared to the baseline scenario, it is assumed that the negative scenario is less likely than the positive scenario. In addition the assessment of impaired exposures (Stage 3) considered sale scenarios whereas the Group's Non-Performing Asset Strategy foresees the sale on the market as a recovery method. For additional information on the methods used for the calculation of expected loss refer to Part E - Section 2 - 2.1 Credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 143 With reference to the latter the Group has selected three macroeconomic scenarios to determine the forward looking component, a baseline scenario, a positive scenario and a negative scenario. The baseline scenario is the main scenario and indeed is expected to be the one with the highest likelihood of occurrence. The positive and the negative scenario represent alternative occurrences, either better or worse when compared to the baseline scenario in terms of evolution of the economies of the countries where the Group operates. • The Base Scenario (“Baseline”) reflects the macroeconomic evolution expected from the Group and as such is coherent with the assumptions used by the Group in the planning processes. The Baseline Scenario foresees an economic growth stable and positive, both for the Eurozone and for the CEE countries, in a context where the interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. Specifically, the annual growth of the real GDP for the Eurozone is foreseen at +1.8% for 2018 and +1.5% for 2019 (with Italy at +1.2% and +1.0% and Germany at +1.9% and +1.8%, respectively), while the foreseen growth for the CEE countries is +2.4% in 2018 and +2.2% in 2019. The Scenario implies that the 3 months Euribor stays negative for 2018 and comes back near zero in 2019; • The Positive Scenario is based on the hypothesis that the positive economic growth of 2017 both at global level and at European level might consolidate even in 2018, sustained by the trend in the global commerce and by accommodating economic policies. This would imply, for the biggest European countries, a maximum phase of the economic cycle prolonged by an year, that would reflect in a bigger growth of the annual real GDP (with respect to the baseline scenario) of about 0.2%-0.5% both in 2018 and in 2019. Specifically, the annual growth of the real GDP for the Eurozone would grow to +2.3% for 2018 and +1.9% for 2019 (with Italy at +1.5% and +1.2% respectively) in a context of short term rates (3 months Euribor) still negatives or close to zero. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a better trend of the economy than the one assumed in the Baseline scenario; • The Adverse Scenario reflects one of the scenarios used in the evaluation processes of the capital adequacy (ICAAP). In coherence with the ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks of the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tension between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for different “asset class” and to a slowdown of the economic growth both of the Eurozone (lower of about 1.5 per year with respect to the baseline scenario, in terms of real GDP) and of CEE countries (lower of about 2. points percentage, respectively). Specifically, the annual growth of the GDP for the Eurozone would be +0.4% for 2018 and -0.1% for 2019 (with Italy to -0.2% and -1.1% respectively) in a context of rates in the short run (3 months Euribor) that would stay negative even in 2019, based on the hypothesis that the ECB would prolong in such a market context the liquidity support to markets. The likelihood of happening of such scenario, at the time of its definition, is foreseen probable and appropriate to quantify the adverse trend of the economy. In coherence with the scenario and with the magnitude of changes compared to the baseline scenario, it is assumed that the negative scenario is less likely than the positive scenario. In addition the assessment of impaired exposures (Stage 3) considered sale scenarios whereas the Group's Non-Performing Asset Strategy foresees the sale on the market as a recovery method. For additional information on the methods used for the calculation of expected loss refer to Part E - Section 2 - 2.1 Credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 144 2018 Annual Report and Accounts · UniCredit 4. Reclassifications performed as at 1 January 2018 The following tables summarise the reclassifications performed on Balance Sheet (Assets and Liabilities) based on IFRS9 initial application and 5th update of Banca d’Italia Circular 262. Consolidated balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Cash and cash balances 64,493,411 - - - 64,493,411 20. Financial assets at fair value through profit or loss: 101,767,535 42,542 - 101,810,077 a) Financial assets held for trading 74,665,851 - - 74,665,851 b) Financial assets designated at fair value 4 - - 4 c) Other financial assets mandatorily at fair value 27,101,680 42,542 - 27,144,222 Financial assets held for trading (ex IAS39 Item N. 20) 74,685,890 (74,685,890) - - Financial assets at fair value through profit or loss (ex IAS39 Item N. 30) 22,073,343 (22,073,343) - - 30. Financial assets at fair value through other comprehensive income 100,561,170 75,240 - 100,636,410 Available-for-sale financial assets (ex IAS39 Item N. 40) 104,101,031 (104,101,031) - - - 40. Financial assets at amortised cost: 523,518,237 (3,617,583) - 519,900,654 Held-to-maturity investments (ex IAS39 Item N. 50) 6,277,022 (6,277,022) - - Loans and receivables with banks (ex IAS39 Item N. 60) 70,982,743 (70,982,743) - - Loans and receivables with customers (ex IAS39 Item N. 70) 447,726,913 (447,726,913) - - 50. Hedging derivatives 3,431,070 - - - 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,244,685 - 355,909 - 2,600,594 70. Equity investments 6,212,142 - (231) - 6,211,911 80. Insurance reserves charged to reinsurers - - - - - 90. Property, plant and equipment 8,449,288 174,490 - - 8,623,778 100. Intangible assets 3,385,310 - - - 3,385,310 of which: goodwill 1,483,721 - - - 1,483,721 110. Tax assets: 12,658,279 - 190,590 - 12,848,869 a) Current 2,039,696 - 2,714 - 2,042,410 b) Deferred 10,618,583 - 187,876 - 10,806,459 120. Non-current assets and disposal groups classified as held for sale 1,110,960 - (180) - 1,110,780 130. Other assets 8,957,637 (174,490) - 17,228 8,800,375 Total assets 836,789,724 833,853,239 The amounts reported under “Other changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 144 2018 Annual Report and Accounts · UniCredit 4. Reclassifications performed as at 1 January 2018 The following tables summarise the reclassifications performed on Balance Sheet (Assets and Liabilities) based on IFRS9 initial application and 5th update of Banca d’Italia Circular 262. Consolidated balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Cash and cash balances 64,493,411 - - - 64,493,411 20. Financial assets at fair value through profit or loss: 101,767,535 42,542 - 101,810,077 a) Financial assets held for trading 74,665,851 - - 74,665,851 b) Financial assets designated at fair value 4 - - 4 c) Other financial assets mandatorily at fair value 27,101,680 42,542 - 27,144,222 Financial assets held for trading (ex IAS39 Item N. 20) 74,685,890 (74,685,890) - - Financial assets at fair value through profit or loss (ex IAS39 Item N. 30) 22,073,343 (22,073,343) - - 30. Financial assets at fair value through other comprehensive income 100,561,170 75,240 - 100,636,410 Available-for-sale financial assets (ex IAS39 Item N. 40) 104,101,031 (104,101,031) - - - 40. Financial assets at amortised cost: 523,518,237 (3,617,583) - 519,900,654 Held-to-maturity investments (ex IAS39 Item N. 50) 6,277,022 (6,277,022) - - Loans and receivables with banks (ex IAS39 Item N. 60) 70,982,743 (70,982,743) - - Loans and receivables with customers (ex IAS39 Item N. 70) 447,726,913 (447,726,913) - - 50. Hedging derivatives 3,431,070 - - - 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,244,685 - 355,909 - 2,600,594 70. Equity investments 6,212,142 - (231) - 6,211,911 80. Insurance reserves charged to reinsurers - - - - - 90. Property, plant and equipment 8,449,288 174,490 - - 8,623,778 100. Intangible assets 3,385,310 - - - 3,385,310 of which: goodwill 1,483,721 - - - 1,483,721 110. Tax assets: 12,658,279 - 190,590 - 12,848,869 a) Current 2,039,696 - 2,714 - 2,042,410 b) Deferred 10,618,583 - 187,876 - 10,806,459 120. Non-current assets and disposal groups classified as held for sale 1,110,960 - (180) - 1,110,780 130. Other assets 8,957,637 (174,490) - 17,228 8,800,375 Total assets 836,789,724 833,853,239 The amounts reported under “Other changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 144 2018 Annual Report and Accounts · UniCredit 4. Reclassifications performed as at 1 January 2018 The following tables summarise the reclassifications performed on Balance Sheet (Assets and Liabilities) based on IFRS9 initial application and 5th update of Banca d’Italia Circular 262. Consolidated balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Cash and cash balances 64,493,411 - - - 64,493,411 20. Financial assets at fair value through profit or loss: 101,767,535 42,542 - 101,810,077 a) Financial assets held for trading 74,665,851 - - 74,665,851 b) Financial assets designated at fair value 4 - - 4 c) Other financial assets mandatorily at fair value 27,101,680 42,542 - 27,144,222 Financial assets held for trading (ex IAS39 Item N. 20) 74,685,890 (74,685,890) - - Financial assets at fair value through profit or loss (ex IAS39 Item N. 30) 22,073,343 (22,073,343) - - 30. Financial assets at fair value through other comprehensive income 100,561,170 75,240 - 100,636,410 Available-for-sale financial assets (ex IAS39 Item N. 40) 104,101,031 (104,101,031) - - - 40. Financial assets at amortised cost: 523,518,237 (3,617,583) - 519,900,654 Held-to-maturity investments (ex IAS39 Item N. 50) 6,277,022 (6,277,022) - - Loans and receivables with banks (ex IAS39 Item N. 60) 70,982,743 (70,982,743) - - Loans and receivables with customers (ex IAS39 Item N. 70) 447,726,913 (447,726,913) - - 50. Hedging derivatives 3,431,070 - - - 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,244,685 - 355,909 - 2,600,594 70. Equity investments 6,212,142 - (231) - 6,211,911 80. Insurance reserves charged to reinsurers - - - - - 90. Property, plant and equipment 8,449,288 174,490 - - 8,623,778 100. Intangible assets 3,385,310 - - - 3,385,310 of which: goodwill 1,483,721 - - - 1,483,721 110. Tax assets: 12,658,279 - 190,590 - 12,848,869 a) Current 2,039,696 - 2,714 - 2,042,410 b) Deferred 10,618,583 - 187,876 - 10,806,459 120. Non-current assets and disposal groups classified as held for sale 1,110,960 - (180) - 1,110,780 130. Other assets 8,957,637 (174,490) - 17,228 8,800,375 Total assets 836,789,724 833,853,239 The amounts reported under “Other changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 144 2018 Annual Report and Accounts · UniCredit 4. Reclassifications performed as at 1 January 2018 The following tables summarise the reclassifications performed on Balance Sheet (Assets and Liabilities) based on IFRS9 initial application and 5th update of Banca d’Italia Circular 262. Consolidated balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Cash and cash balances 64,493,411 - - - 64,493,411 20. Financial assets at fair value through profit or loss: 101,767,535 42,542 - 101,810,077 a) Financial assets held for trading 74,665,851 - - 74,665,851 b) Financial assets designated at fair value 4 - - 4 c) Other financial assets mandatorily at fair value 27,101,680 42,542 - 27,144,222 Financial assets held for trading (ex IAS39 Item N. 20) 74,685,890 (74,685,890) - - Financial assets at fair value through profit or loss (ex IAS39 Item N. 30) 22,073,343 (22,073,343) - - 30. Financial assets at fair value through other comprehensive income 100,561,170 75,240 - 100,636,410 Available-for-sale financial assets (ex IAS39 Item N. 40) 104,101,031 (104,101,031) - - - 40. Financial assets at amortised cost: 523,518,237 (3,617,583) - 519,900,654 Held-to-maturity investments (ex IAS39 Item N. 50) 6,277,022 (6,277,022) - - Loans and receivables with banks (ex IAS39 Item N. 60) 70,982,743 (70,982,743) - - Loans and receivables with customers (ex IAS39 Item N. 70) 447,726,913 (447,726,913) - - 50. Hedging derivatives 3,431,070 - - - 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,244,685 - 355,909 - 2,600,594 70. Equity investments 6,212,142 - (231) - 6,211,911 80. Insurance reserves charged to reinsurers - - - - - 90. Property, plant and equipment 8,449,288 174,490 - - 8,623,778 100. Intangible assets 3,385,310 - - - 3,385,310 of which: goodwill 1,483,721 - - - 1,483,721 110. Tax assets: 12,658,279 - 190,590 - 12,848,869 a) Current 2,039,696 - 2,714 - 2,042,410 b) Deferred 10,618,583 - 187,876 - 10,806,459 120. Non-current assets and disposal groups classified as held for sale 1,110,960 - (180) - 1,110,780 130. Other assets 8,957,637 (174,490) - 17,228 8,800,375 Total assets 836,789,724 833,853,239 The amounts reported under “Other changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 144 2018 Annual Report and Accounts · UniCredit 4. Reclassifications performed as at 1 January 2018 The following tables summarise the reclassifications performed on Balance Sheet (Assets and Liabilities) based on IFRS9 initial application and 5th update of Banca d’Italia Circular 262. Consolidated balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Cash and cash balances 64,493,411 - - - 64,493,411 20. Financial assets at fair value through profit or loss: 101,767,535 42,542 - 101,810,077 a) Financial assets held for trading 74,665,851 - - 74,665,851 b) Financial assets designated at fair value 4 - - 4 c) Other financial assets mandatorily at fair value 27,101,680 42,542 - 27,144,222 Financial assets held for trading (ex IAS39 Item N. 20) 74,685,890 (74,685,890) - - Financial assets at fair value through profit or loss (ex IAS39 Item N. 30) 22,073,343 (22,073,343) - - 30. Financial assets at fair value through other comprehensive income 100,561,170 75,240 - 100,636,410 Available-for-sale financial assets (ex IAS39 Item N. 40) 104,101,031 (104,101,031) - - - 40. Financial assets at amortised cost: 523,518,237 (3,617,583) - 519,900,654 Held-to-maturity investments (ex IAS39 Item N. 50) 6,277,022 (6,277,022) - - Loans and receivables with banks (ex IAS39 Item N. 60) 70,982,743 (70,982,743) - - Loans and receivables with customers (ex IAS39 Item N. 70) 447,726,913 (447,726,913) - - 50. Hedging derivatives 3,431,070 - - - 3,431,070 60. Changes in fair value of portfolio hedged items (+/-) 2,244,685 - 355,909 - 2,600,594 70. Equity investments 6,212,142 - (231) - 6,211,911 80. Insurance reserves charged to reinsurers - - - - - 90. Property, plant and equipment 8,449,288 174,490 - - 8,623,778 100. Intangible assets 3,385,310 - - - 3,385,310 of which: goodwill 1,483,721 - - - 1,483,721 110. Tax assets: 12,658,279 - 190,590 - 12,848,869 a) Current 2,039,696 - 2,714 - 2,042,410 b) Deferred 10,618,583 - 187,876 - 10,806,459 120. Non-current assets and disposal groups classified as held for sale 1,110,960 - (180) - 1,110,780 130. Other assets 8,957,637 (174,490) - 17,228 8,800,375 Total assets 836,789,724 833,853,239 The amounts reported under “Other changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 145 continued: Consolidated balance sheet '(€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017(*) RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Financial liabilities at amortised cost: 684,189,854 - - 684,189,854 a) Deposits from banks 123,234,090 - - 123,234,090 b) Deposits from customers 462,895,261 - - 462,895,261 c) Debt securities in issue 98,060,503 - - 98,060,503 Deposits from banks (ex IAS39 Item N. 10) 123,244,080 (123,244,080) - - Deposits from customers (ex IAS39 Item N. 20) 462,895,261 (462,895,261) - - Debt securities in issue (ex IAS39 Item N. 30) 98,602,632 (98,602,632) - - 20. Financial liabilities held for trading 51,099,691 - - 51,099,691 Financial liabilities held for trading (ex IAS39 Item N. 40) 51,089,701 (51,089,701) - - 30. Financial liabilities designated at fair value 8,246,682 55,099 - 8,301,781 Financial liabilities at fair value through profit or loss (ex IAS 39 Item N. 50) 7,704,553 (7,704,553) - - 40. Hedging derivatives 3,567,845 - - 1 3,567,846 50. Value adjustment of hedged financial liabilities (+/-) 3,041,990 - 4,619 - 3,046,609 60. Tax liabilities: 1,092,905 - 15,157 - 1,108,062 a) Current 651,263 - (6,824) - 644,439 b) Deferred 441,642 - 21,981 - 463,623 70. Liabilities associated with assets classified as held for sale 184,829 - - 2 184,831 80. Other liabilities 15,573,476 - (782,024) 17,228 14,808,680 90. Provision for employee severance pay 917,284 - - - 917,284 100. Provisions for risks and charges: 8,650,468 - 1,090,511 - 9,740,979 110. Technical reserves - - - - - 120. Valuation reserves (4,327,092) - (323,719) - (4,650,811) 130. Redeemable shares - - - - - 140. Equity instruments 4,610,073 - - - 4,610,073 150. Reserves 19,296,907 - (3,003,623) - 16,293,284 160. Share premium 13,399,799 - - - 13,399,799 170. Share capital 20,880,550 - - - 20,880,550 180. Treasury shares (-) (2,695) - - - (2,695) 190. Minority shareholders' equity (+/-) 894,083 - (9,769) - 884,314 200. Profit (Loss) for the period (+/-) 5,473,075 - - 33 5,473,108 Total liabilities and shareholders' equity 836,789,724 833,853,239 Note: (*) Note that the amounts presented in column “12.31.2017” for the categories “Financial liabilities held for trading (ex IAS39 Item 40)” and “Financial liabilities at fair value through profit or loss (ex IAS39 Item 50)” differ from those published in UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017 as a result of a reclassification of deposit certificates for an amount of €4.694.024 thousand in order to grant the homogeneous classification of this type of liabilities within the Group. The amounts reported under “Other changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. 4.1 Reclassification of financial instruments performed as at 1 January 2018 With reference to the reclassifications of financial instruments in application of the new accounting standard, the following tables show separately for financial assets and liabilities: a) the portfolio under IAS39 and the related closing balance as at 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as at 1 January 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 145 continued: Consolidated balance sheet '(€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017(*) RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Financial liabilities at amortised cost: 684,189,854 - - 684,189,854 a) Deposits from banks 123,234,090 - - 123,234,090 b) Deposits from customers 462,895,261 - - 462,895,261 c) Debt securities in issue 98,060,503 - - 98,060,503 Deposits from banks (ex IAS39 Item N. 10) 123,244,080 (123,244,080) - - Deposits from customers (ex IAS39 Item N. 20) 462,895,261 (462,895,261) - - Debt securities in issue (ex IAS39 Item N. 30) 98,602,632 (98,602,632) - - 20. Financial liabilities held for trading 51,099,691 - - 51,099,691 Financial liabilities held for trading (ex IAS39 Item N. 40) 51,089,701 (51,089,701) - - 30. Financial liabilities designated at fair value 8,246,682 55,099 - 8,301,781 Financial liabilities at fair value through profit or loss (ex IAS 39 Item N. 50) 7,704,553 (7,704,553) - - 40. Hedging derivatives 3,567,845 - - 1 3,567,846 50. Value adjustment of hedged financial liabilities (+/-) 3,041,990 - 4,619 - 3,046,609 60. Tax liabilities: 1,092,905 - 15,157 - 1,108,062 a) Current 651,263 - (6,824) - 644,439 b) Deferred 441,642 - 21,981 - 463,623 70. Liabilities associated with assets classified as held for sale 184,829 - - 2 184,831 80. Other liabilities 15,573,476 - (782,024) 17,228 14,808,680 90. Provision for employee severance pay 917,284 - - - 917,284 100. Provisions for risks and charges: 8,650,468 - 1,090,511 - 9,740,979 110. Technical reserves - - - - - 120. Valuation reserves (4,327,092) - (323,719) - (4,650,811) 130. Redeemable shares - - - - - 140. Equity instruments 4,610,073 - - - 4,610,073 150. Reserves 19,296,907 - (3,003,623) - 16,293,284 160. Share premium 13,399,799 - - - 13,399,799 170. Share capital 20,880,550 - - - 20,880,550 180. Treasury shares (-) (2,695) - - - (2,695) 190. Minority shareholders' equity (+/-) 894,083 - (9,769) - 884,314 200. Profit (Loss) for the period (+/-) 5,473,075 - - 33 5,473,108 Total liabilities and shareholders' equity 836,789,724 833,853,239 Note: (*) Note that the amounts presented in column “12.31.2017” for the categories “Financial liabilities held for trading (ex IAS39 Item 40)” and “Financial liabilities at fair value through profit or loss (ex IAS39 Item 50)” differ from those published in UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017 as a result of a reclassification of deposit certificates for an amount of €4.694.024 thousand in order to grant the homogeneous classification of this type of liabilities within the Group. The amounts reported under “Other changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. 4.1 Reclassification of financial instruments performed as at 1 January 2018 With reference to the reclassifications of financial instruments in application of the new accounting standard, the following tables show separately for financial assets and liabilities: a) the portfolio under IAS39 and the related closing balance as at 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as at 1 January 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 145 continued: Consolidated balance sheet '(€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017(*) RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Financial liabilities at amortised cost: 684,189,854 - - 684,189,854 a) Deposits from banks 123,234,090 - - 123,234,090 b) Deposits from customers 462,895,261 - - 462,895,261 c) Debt securities in issue 98,060,503 - - 98,060,503 Deposits from banks (ex IAS39 Item N. 10) 123,244,080 (123,244,080) - - Deposits from customers (ex IAS39 Item N. 20) 462,895,261 (462,895,261) - - Debt securities in issue (ex IAS39 Item N. 30) 98,602,632 (98,602,632) - - 20. Financial liabilities held for trading 51,099,691 - - 51,099,691 Financial liabilities held for trading (ex IAS39 Item N. 40) 51,089,701 (51,089,701) - - 30. Financial liabilities designated at fair value 8,246,682 55,099 - 8,301,781 Financial liabilities at fair value through profit or loss (ex IAS 39 Item N. 50) 7,704,553 (7,704,553) - - 40. Hedging derivatives 3,567,845 - - 1 3,567,846 50. Value adjustment of hedged financial liabilities (+/-) 3,041,990 - 4,619 - 3,046,609 60. Tax liabilities: 1,092,905 - 15,157 - 1,108,062 a) Current 651,263 - (6,824) - 644,439 b) Deferred 441,642 - 21,981 - 463,623 70. Liabilities associated with assets classified as held for sale 184,829 - - 2 184,831 80. Other liabilities 15,573,476 - (782,024) 17,228 14,808,680 90. Provision for employee severance pay 917,284 - - - 917,284 100. Provisions for risks and charges: 8,650,468 - 1,090,511 - 9,740,979 110. Technical reserves - - - - - 120. Valuation reserves (4,327,092) - (323,719) - (4,650,811) 130. Redeemable shares - - - - - 140. Equity instruments 4,610,073 - - - 4,610,073 150. Reserves 19,296,907 - (3,003,623) - 16,293,284 160. Share premium 13,399,799 - - - 13,399,799 170. Share capital 20,880,550 - - - 20,880,550 180. Treasury shares (-) (2,695) - - - (2,695) 190. Minority shareholders' equity (+/-) 894,083 - (9,769) - 884,314 200. Profit (Loss) for the period (+/-) 5,473,075 - - 33 5,473,108 Total liabilities and shareholders' equity 836,789,724 833,853,239 Note: (*) Note that the amounts presented in column “12.31.2017” for the categories “Financial liabilities held for trading (ex IAS39 Item 40)” and “Financial liabilities at fair value through profit or loss (ex IAS39 Item 50)” differ from those published in UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017 as a result of a reclassification of deposit certificates for an amount of €4.694.024 thousand in order to grant the homogeneous classification of this type of liabilities within the Group. The amounts reported under “Other changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. 4.1 Reclassification of financial instruments performed as at 1 January 2018 With reference to the reclassifications of financial instruments in application of the new accounting standard, the following tables show separately for financial assets and liabilities: a) the portfolio under IAS39 and the related closing balance as at 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as at 1 January 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 145 continued: Consolidated balance sheet '(€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017(*) RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Financial liabilities at amortised cost: 684,189,854 - - 684,189,854 a) Deposits from banks 123,234,090 - - 123,234,090 b) Deposits from customers 462,895,261 - - 462,895,261 c) Debt securities in issue 98,060,503 - - 98,060,503 Deposits from banks (ex IAS39 Item N. 10) 123,244,080 (123,244,080) - - Deposits from customers (ex IAS39 Item N. 20) 462,895,261 (462,895,261) - - Debt securities in issue (ex IAS39 Item N. 30) 98,602,632 (98,602,632) - - 20. Financial liabilities held for trading 51,099,691 - - 51,099,691 Financial liabilities held for trading (ex IAS39 Item N. 40) 51,089,701 (51,089,701) - - 30. Financial liabilities designated at fair value 8,246,682 55,099 - 8,301,781 Financial liabilities at fair value through profit or loss (ex IAS 39 Item N. 50) 7,704,553 (7,704,553) - - 40. Hedging derivatives 3,567,845 - - 1 3,567,846 50. Value adjustment of hedged financial liabilities (+/-) 3,041,990 - 4,619 - 3,046,609 60. Tax liabilities: 1,092,905 - 15,157 - 1,108,062 a) Current 651,263 - (6,824) - 644,439 b) Deferred 441,642 - 21,981 - 463,623 70. Liabilities associated with assets classified as held for sale 184,829 - - 2 184,831 80. Other liabilities 15,573,476 - (782,024) 17,228 14,808,680 90. Provision for employee severance pay 917,284 - - - 917,284 100. Provisions for risks and charges: 8,650,468 - 1,090,511 - 9,740,979 110. Technical reserves - - - - - 120. Valuation reserves (4,327,092) - (323,719) - (4,650,811) 130. Redeemable shares - - - - - 140. Equity instruments 4,610,073 - - - 4,610,073 150. Reserves 19,296,907 - (3,003,623) - 16,293,284 160. Share premium 13,399,799 - - - 13,399,799 170. Share capital 20,880,550 - - - 20,880,550 180. Treasury shares (-) (2,695) - - - (2,695) 190. Minority shareholders' equity (+/-) 894,083 - (9,769) - 884,314 200. Profit (Loss) for the period (+/-) 5,473,075 - - 33 5,473,108 Total liabilities and shareholders' equity 836,789,724 833,853,239 Note: (*) Note that the amounts presented in column “12.31.2017” for the categories “Financial liabilities held for trading (ex IAS39 Item 40)” and “Financial liabilities at fair value through profit or loss (ex IAS39 Item 50)” differ from those published in UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017 as a result of a reclassification of deposit certificates for an amount of €4.694.024 thousand in order to grant the homogeneous classification of this type of liabilities within the Group. The amounts reported under “Other changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. 4.1 Reclassification of financial instruments performed as at 1 January 2018 With reference to the reclassifications of financial instruments in application of the new accounting standard, the following tables show separately for financial assets and liabilities: a) the portfolio under IAS39 and the related closing balance as at 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as at 1 January 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 145 continued: Consolidated balance sheet '(€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017(*) RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Financial liabilities at amortised cost: 684,189,854 - - 684,189,854 a) Deposits from banks 123,234,090 - - 123,234,090 b) Deposits from customers 462,895,261 - - 462,895,261 c) Debt securities in issue 98,060,503 - - 98,060,503 Deposits from banks (ex IAS39 Item N. 10) 123,244,080 (123,244,080) - - Deposits from customers (ex IAS39 Item N. 20) 462,895,261 (462,895,261) - - Debt securities in issue (ex IAS39 Item N. 30) 98,602,632 (98,602,632) - - 20. Financial liabilities held for trading 51,099,691 - - 51,099,691 Financial liabilities held for trading (ex IAS39 Item N. 40) 51,089,701 (51,089,701) - - 30. Financial liabilities designated at fair value 8,246,682 55,099 - 8,301,781 Financial liabilities at fair value through profit or loss (ex IAS 39 Item N. 50) 7,704,553 (7,704,553) - - 40. Hedging derivatives 3,567,845 - - 1 3,567,846 50. Value adjustment of hedged financial liabilities (+/-) 3,041,990 - 4,619 - 3,046,609 60. Tax liabilities: 1,092,905 - 15,157 - 1,108,062 a) Current 651,263 - (6,824) - 644,439 b) Deferred 441,642 - 21,981 - 463,623 70. Liabilities associated with assets classified as held for sale 184,829 - - 2 184,831 80. Other liabilities 15,573,476 - (782,024) 17,228 14,808,680 90. Provision for employee severance pay 917,284 - - - 917,284 100. Provisions for risks and charges: 8,650,468 - 1,090,511 - 9,740,979 110. Technical reserves - - - - - 120. Valuation reserves (4,327,092) - (323,719) - (4,650,811) 130. Redeemable shares - - - - - 140. Equity instruments 4,610,073 - - - 4,610,073 150. Reserves 19,296,907 - (3,003,623) - 16,293,284 160. Share premium 13,399,799 - - - 13,399,799 170. Share capital 20,880,550 - - - 20,880,550 180. Treasury shares (-) (2,695) - - - (2,695) 190. Minority shareholders' equity (+/-) 894,083 - (9,769) - 884,314 200. Profit (Loss) for the period (+/-) 5,473,075 - - 33 5,473,108 Total liabilities and shareholders' equity 836,789,724 833,853,239 Note: (*) Note that the amounts presented in column “12.31.2017” for the categories “Financial liabilities held for trading (ex IAS39 Item 40)” and “Financial liabilities at fair value through profit or loss (ex IAS39 Item 50)” differ from those published in UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017 as a result of a reclassification of deposit certificates for an amount of €4.694.024 thousand in order to grant the homogeneous classification of this type of liabilities within the Group. The amounts reported under “Other changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. 4.1 Reclassification of financial instruments performed as at 1 January 2018 With reference to the reclassifications of financial instruments in application of the new accounting standard, the following tables show separately for financial assets and liabilities: a) the portfolio under IAS39 and the related closing balance as at 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as at 1 January 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 146 2018 Annual Report and Accounts · UniCredit Reclassification of financial assets Legend A: Reclassification of former IAS39 book value B: Change in measurement C: New book value as per IFRS9 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS HELD FOR TRADING FINANCIAL ASSETS DESIGNATED AT FAIR VALUE A B C A B C Financial assets held for trading 74,685,890 74,665,851 - 74,665,851 - - - Financial assets at Fair Value through profit or loss 22,073,343 - - - 4 - 4 Available for sale financial assets 104,101,031 - - - - - - Held to Maturity Investments 6,277,022 - - - - - - Loans to Banks 70,982,743 - - - - - - Loans to Customers 447,726,913 - - - - - - IFRS9 Total 74,665,851 4 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME A B C A B C Financial assets held for trading 74,685,890 4,202 - 4,202 15,837 - 15,837 Financial assets at Fair Value through profit or loss 22,073,343 22,073,339 - 22,073,339 - - - Available for sale financial assets 104,101,031 1,719,442 46,365 1,765,807 99,984,921 23,967 100,008,888 Held to Maturity Investments 6,277,022 747,692 12,323 760,015 431,425 17,240 448,665 Loans to Banks 70,982,743 395,299 17,892 413,191 128,987 34,033 163,020 Loans to Customers 447,726,913 2,161,706 (34,038) 2,127,668 - - - IFRS9 Total 27,144,222 100,636,410 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS AT AMORTIZED COST TOTAL A B C A B C Financial assets held for trading 74,685,890 - - - 74,685,890 - 74,685,890 Financial assets at Fair Value through profit or loss 22,073,343 - - - 22,073,343 - 22,073,343 Available for sale financial assets 104,101,031 2,396,668 (331,536) 2,065,132 104,101,031 (261,204) 103,839,827 Held to Maturity Investments 6,277,022 5,097,905 (3,043) 5,094,862 6,277,022 26,520 6,303,542 Loans to Banks 70,982,743 70,458,457 (4,118) 70,454,339 70,982,743 47,807 71,030,550 Loans to Customers 447,726,913 445,565,207 (3,278,886) 442,286,321 447,726,913 (3,312,924) 444,413,989 IFRS9 Total 519,900,654 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 146 2018 Annual Report and Accounts · UniCredit Reclassification of financial assets Legend A: Reclassification of former IAS39 book value B: Change in measurement C: New book value as per IFRS9 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS HELD FOR TRADING FINANCIAL ASSETS DESIGNATED AT FAIR VALUE A B C A B C Financial assets held for trading 74,685,890 74,665,851 - 74,665,851 - - - Financial assets at Fair Value through profit or loss 22,073,343 - - - 4 - 4 Available for sale financial assets 104,101,031 - - - - - - Held to Maturity Investments 6,277,022 - - - - - - Loans to Banks 70,982,743 - - - - - - Loans to Customers 447,726,913 - - - - - - IFRS9 Total 74,665,851 4 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME A B C A B C Financial assets held for trading 74,685,890 4,202 - 4,202 15,837 - 15,837 Financial assets at Fair Value through profit or loss 22,073,343 22,073,339 - 22,073,339 - - - Available for sale financial assets 104,101,031 1,719,442 46,365 1,765,807 99,984,921 23,967 100,008,888 Held to Maturity Investments 6,277,022 747,692 12,323 760,015 431,425 17,240 448,665 Loans to Banks 70,982,743 395,299 17,892 413,191 128,987 34,033 163,020 Loans to Customers 447,726,913 2,161,706 (34,038) 2,127,668 - - - IFRS9 Total 27,144,222 100,636,410 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS AT AMORTIZED COST TOTAL A B C A B C Financial assets held for trading 74,685,890 - - - 74,685,890 - 74,685,890 Financial assets at Fair Value through profit or loss 22,073,343 - - - 22,073,343 - 22,073,343 Available for sale financial assets 104,101,031 2,396,668 (331,536) 2,065,132 104,101,031 (261,204) 103,839,827 Held to Maturity Investments 6,277,022 5,097,905 (3,043) 5,094,862 6,277,022 26,520 6,303,542 Loans to Banks 70,982,743 70,458,457 (4,118) 70,454,339 70,982,743 47,807 71,030,550 Loans to Customers 447,726,913 445,565,207 (3,278,886) 442,286,321 447,726,913 (3,312,924) 444,413,989 IFRS9 Total 519,900,654 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 146 2018 Annual Report and Accounts · UniCredit Reclassification of financial assets Legend A: Reclassification of former IAS39 book value B: Change in measurement C: New book value as per IFRS9 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS HELD FOR TRADING FINANCIAL ASSETS DESIGNATED AT FAIR VALUE A B C A B C Financial assets held for trading 74,685,890 74,665,851 - 74,665,851 - - - Financial assets at Fair Value through profit or loss 22,073,343 - - - 4 - 4 Available for sale financial assets 104,101,031 - - - - - - Held to Maturity Investments 6,277,022 - - - - - - Loans to Banks 70,982,743 - - - - - - Loans to Customers 447,726,913 - - - - - - IFRS9 Total 74,665,851 4 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME A B C A B C Financial assets held for trading 74,685,890 4,202 - 4,202 15,837 - 15,837 Financial assets at Fair Value through profit or loss 22,073,343 22,073,339 - 22,073,339 - - - Available for sale financial assets 104,101,031 1,719,442 46,365 1,765,807 99,984,921 23,967 100,008,888 Held to Maturity Investments 6,277,022 747,692 12,323 760,015 431,425 17,240 448,665 Loans to Banks 70,982,743 395,299 17,892 413,191 128,987 34,033 163,020 Loans to Customers 447,726,913 2,161,706 (34,038) 2,127,668 - - - IFRS9 Total 27,144,222 100,636,410 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS AT AMORTIZED COST TOTAL A B C A B C Financial assets held for trading 74,685,890 - - - 74,685,890 - 74,685,890 Financial assets at Fair Value through profit or loss 22,073,343 - - - 22,073,343 - 22,073,343 Available for sale financial assets 104,101,031 2,396,668 (331,536) 2,065,132 104,101,031 (261,204) 103,839,827 Held to Maturity Investments 6,277,022 5,097,905 (3,043) 5,094,862 6,277,022 26,520 6,303,542 Loans to Banks 70,982,743 70,458,457 (4,118) 70,454,339 70,982,743 47,807 71,030,550 Loans to Customers 447,726,913 445,565,207 (3,278,886) 442,286,321 447,726,913 (3,312,924) 444,413,989 IFRS9 Total 519,900,654 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 146 2018 Annual Report and Accounts · UniCredit Reclassification of financial assets Legend A: Reclassification of former IAS39 book value B: Change in measurement C: New book value as per IFRS9 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS HELD FOR TRADING FINANCIAL ASSETS DESIGNATED AT FAIR VALUE A B C A B C Financial assets held for trading 74,685,890 74,665,851 - 74,665,851 - - - Financial assets at Fair Value through profit or loss 22,073,343 - - - 4 - 4 Available for sale financial assets 104,101,031 - - - - - - Held to Maturity Investments 6,277,022 - - - - - - Loans to Banks 70,982,743 - - - - - - Loans to Customers 447,726,913 - - - - - - IFRS9 Total 74,665,851 4 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME A B C A B C Financial assets held for trading 74,685,890 4,202 - 4,202 15,837 - 15,837 Financial assets at Fair Value through profit or loss 22,073,343 22,073,339 - 22,073,339 - - - Available for sale financial assets 104,101,031 1,719,442 46,365 1,765,807 99,984,921 23,967 100,008,888 Held to Maturity Investments 6,277,022 747,692 12,323 760,015 431,425 17,240 448,665 Loans to Banks 70,982,743 395,299 17,892 413,191 128,987 34,033 163,020 Loans to Customers 447,726,913 2,161,706 (34,038) 2,127,668 - - - IFRS9 Total 27,144,222 100,636,410 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS AT AMORTIZED COST TOTAL A B C A B C Financial assets held for trading 74,685,890 - - - 74,685,890 - 74,685,890 Financial assets at Fair Value through profit or loss 22,073,343 - - - 22,073,343 - 22,073,343 Available for sale financial assets 104,101,031 2,396,668 (331,536) 2,065,132 104,101,031 (261,204) 103,839,827 Held to Maturity Investments 6,277,022 5,097,905 (3,043) 5,094,862 6,277,022 26,520 6,303,542 Loans to Banks 70,982,743 70,458,457 (4,118) 70,454,339 70,982,743 47,807 71,030,550 Loans to Customers 447,726,913 445,565,207 (3,278,886) 442,286,321 447,726,913 (3,312,924) 444,413,989 IFRS9 Total 519,900,654 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 146 2018 Annual Report and Accounts · UniCredit Reclassification of financial assets Legend A: Reclassification of former IAS39 book value B: Change in measurement C: New book value as per IFRS9 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS HELD FOR TRADING FINANCIAL ASSETS DESIGNATED AT FAIR VALUE A B C A B C Financial assets held for trading 74,685,890 74,665,851 - 74,665,851 - - - Financial assets at Fair Value through profit or loss 22,073,343 - - - 4 - 4 Available for sale financial assets 104,101,031 - - - - - - Held to Maturity Investments 6,277,022 - - - - - - Loans to Banks 70,982,743 - - - - - - Loans to Customers 447,726,913 - - - - - - IFRS9 Total 74,665,851 4 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME A B C A B C Financial assets held for trading 74,685,890 4,202 - 4,202 15,837 - 15,837 Financial assets at Fair Value through profit or loss 22,073,343 22,073,339 - 22,073,339 - - - Available for sale financial assets 104,101,031 1,719,442 46,365 1,765,807 99,984,921 23,967 100,008,888 Held to Maturity Investments 6,277,022 747,692 12,323 760,015 431,425 17,240 448,665 Loans to Banks 70,982,743 395,299 17,892 413,191 128,987 34,033 163,020 Loans to Customers 447,726,913 2,161,706 (34,038) 2,127,668 - - - IFRS9 Total 27,144,222 100,636,410 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS AT AMORTIZED COST TOTAL A B C A B C Financial assets held for trading 74,685,890 - - - 74,685,890 - 74,685,890 Financial assets at Fair Value through profit or loss 22,073,343 - - - 22,073,343 - 22,073,343 Available for sale financial assets 104,101,031 2,396,668 (331,536) 2,065,132 104,101,031 (261,204) 103,839,827 Held to Maturity Investments 6,277,022 5,097,905 (3,043) 5,094,862 6,277,022 26,520 6,303,542 Loans to Banks 70,982,743 70,458,457 (4,118) 70,454,339 70,982,743 47,807 71,030,550 Loans to Customers 447,726,913 445,565,207 (3,278,886) 442,286,321 447,726,913 (3,312,924) 444,413,989 IFRS9 Total 519,900,654 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 147 The reclassification of financial assets shows: • with reference to financial assets previously classified under item “20. Financial assets held for trading” and “30. Financial assets at fair value through profit or loss” their almost complete classification in the analogous categories foreseen by IFRS9.It must be noted that the execution of the SPPI Test has required embedded derivatives (€15,837 thousand) previously bifurcated and classified in financial assets held for trading according to IAS39 rules, to be re-conducted in the host instrument classification category; • with reference financial assets previously classified under item “40. Available-for-sale-financial assets”: - the almost complete reclassification of debt securities (€101,101,315 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€98,099,003 thousand). The remaining part was reclassified under item “20. c) Other financial assets mandatorily at fair value” or in item “40. Financial assets at amortised cost” due to the characteristics of cash flows, which do not allow for classification as Financial assets at fair value through other comprehensive income despite a "held to collect and sell" business model or to better reflect the "held to collect" business model associated with these financial instruments; With reference to the reclassifications to financial assets at amortised cost, it should be noted that this transfer had a negative effect of -€331,571 thousand due to the simultaneous reversal of previously recognised revaluation reserves and the recognition of impairment on these instruments; - the classification of equity instruments (€2,254,426 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€1,901,753 thousand) given the nature of the relationship and/or the characteristics of the instrument. The remaining part was classified under item “20.c) Other financial assets mandatorily at fair value”. In this case the revaluation reserve have been reclassified in item “150. Reserves”. Note that, as a result of IFRS9 that does no longer allow to measure equity instrument at cost when their fair value is deemed not to be reliable, revaluation effects for €75,590 thousand were recognised. These effects have been recognised either in time “120. Valuation Reserve” or in item “150. Reserves” depending on the classification category; - the classification of units in investment funds (€726,245 thousand) in item “20.c) Other financial assets mandatorily at fair value” also due to regulatory clarifications according to which these instruments cannot be considered as equity instruments with consequent recognition of the related revaluation reserves recognised under IAS39 in item “150. Reserves”; - the reclassification of loans (€19,045 thousand) in item “40. Financial assets at amortised cost” in order to better reflect the "held to collect" business model associated with these financial instruments; • with reference to financial assets previously classified under item “50. Financial assets held to maturity”, consisting exclusively of debt securities (€6,277,022 thousand), they were mainly classified under item “40. Financial assets at amortised cost” (€5,097,905 thousand). This reclassification had a negative effect of -€3,043 thousand due to application of the new impairment rules.The remaining part of the portfolio was reclassified in item “20.c) Other financial assets mandatorily at fair value” (€747,692 thousand) following failure of the SPPI test or in item “30. Financial assets at fair value through other comprehensive income” (€431,425 thousand) to reflect the changed business model. The necessary re-measurement of these positions at fair value had positive balance sheet effects of €29,563 thousand; • with reference to financial assets previously classified under item “60. Loans and receivables with banks” (€70,982,743 thousand) consisting of both loans and debt securities, they were almost entirely classified (€70,458,457 thousand) under item “40. Financial assets at amortised cost”.This reclassification had a negative effect of €4,118 thousand due to application of the new impairment rules.The remaining part has been reclassified in item “20.c) Other financial assets mandatorily measured at fair value” due to the characteristics of the cash flows or, as regards debt securities, in item “30. Financial assets at fair value through other comprehensive” income to reflect the changed business model associated with these positions. These reclassifications had a positive impact on shareholders' equity of €51,925 thousand arising from fair value measurement; • with reference to financial assets previously classified under item “70. Loans and receivables with customers” (€447,726,913 thousand) consisting of both loans and debt securities, they were almost entirely classified (€445,565,207 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €3,278,886 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Other financial assets mandatorily at fair value” (€2,161,706 thousand) due to the characteristics of the cash flows. These reclassifications had a positive impact on shareholders' equity of €34,038 thousand arising from fair value measurement. As regards financial assets reclassified in item “30. Financial assets at fair value through other comprehensive income”, it should be noted that the table does not include the effects from application of impairment rules on these instruments. These effects, however, do not have an impact on shareholders' equity since, according to the rules of the standard, the impairment leads to recognition upon first application of a negative reserve in item “150. Reserves” which is offset by an increase of equal amount in item “120. Valuation reserves”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 147 The reclassification of financial assets shows: • with reference to financial assets previously classified under item “20. Financial assets held for trading” and “30. Financial assets at fair value through profit or loss” their almost complete classification in the analogous categories foreseen by IFRS9.It must be noted that the execution of the SPPI Test has required embedded derivatives (€15,837 thousand) previously bifurcated and classified in financial assets held for trading according to IAS39 rules, to be re-conducted in the host instrument classification category; • with reference financial assets previously classified under item “40. Available-for-sale-financial assets”: - the almost complete reclassification of debt securities (€101,101,315 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€98,099,003 thousand). The remaining part was reclassified under item “20. c) Other financial assets mandatorily at fair value” or in item “40. Financial assets at amortised cost” due to the characteristics of cash flows, which do not allow for classification as Financial assets at fair value through other comprehensive income despite a "held to collect and sell" business model or to better reflect the "held to collect" business model associated with these financial instruments; With reference to the reclassifications to financial assets at amortised cost, it should be noted that this transfer had a negative effect of -€331,571 thousand due to the simultaneous reversal of previously recognised revaluation reserves and the recognition of impairment on these instruments; - the classification of equity instruments (€2,254,426 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€1,901,753 thousand) given the nature of the relationship and/or the characteristics of the instrument. The remaining part was classified under item “20.c) Other financial assets mandatorily at fair value”. In this case the revaluation reserve have been reclassified in item “150. Reserves”. Note that, as a result of IFRS9 that does no longer allow to measure equity instrument at cost when their fair value is deemed not to be reliable, revaluation effects for €75,590 thousand were recognised. These effects have been recognised either in time “120. Valuation Reserve” or in item “150. Reserves” depending on the classification category; - the classification of units in investment funds (€726,245 thousand) in item “20.c) Other financial assets mandatorily at fair value” also due to regulatory clarifications according to which these instruments cannot be considered as equity instruments with consequent recognition of the related revaluation reserves recognised under IAS39 in item “150. Reserves”; - the reclassification of loans (€19,045 thousand) in item “40. Financial assets at amortised cost” in order to better reflect the "held to collect" business model associated with these financial instruments; • with reference to financial assets previously classified under item “50. Financial assets held to maturity”, consisting exclusively of debt securities (€6,277,022 thousand), they were mainly classified under item “40. Financial assets at amortised cost” (€5,097,905 thousand). This reclassification had a negative effect of -€3,043 thousand due to application of the new impairment rules.The remaining part of the portfolio was reclassified in item “20.c) Other financial assets mandatorily at fair value” (€747,692 thousand) following failure of the SPPI test or in item “30. Financial assets at fair value through other comprehensive income” (€431,425 thousand) to reflect the changed business model. The necessary re-measurement of these positions at fair value had positive balance sheet effects of €29,563 thousand; • with reference to financial assets previously classified under item “60. Loans and receivables with banks” (€70,982,743 thousand) consisting of both loans and debt securities, they were almost entirely classified (€70,458,457 thousand) under item “40. Financial assets at amortised cost”.This reclassification had a negative effect of €4,118 thousand due to application of the new impairment rules.The remaining part has been reclassified in item “20.c) Other financial assets mandatorily measured at fair value” due to the characteristics of the cash flows or, as regards debt securities, in item “30. Financial assets at fair value through other comprehensive” income to reflect the changed business model associated with these positions. These reclassifications had a positive impact on shareholders' equity of €51,925 thousand arising from fair value measurement; • with reference to financial assets previously classified under item “70. Loans and receivables with customers” (€447,726,913 thousand) consisting of both loans and debt securities, they were almost entirely classified (€445,565,207 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €3,278,886 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Other financial assets mandatorily at fair value” (€2,161,706 thousand) due to the characteristics of the cash flows. These reclassifications had a positive impact on shareholders' equity of €34,038 thousand arising from fair value measurement. As regards financial assets reclassified in item “30. Financial assets at fair value through other comprehensive income”, it should be noted that the table does not include the effects from application of impairment rules on these instruments. These effects, however, do not have an impact on shareholders' equity since, according to the rules of the standard, the impairment leads to recognition upon first application of a negative reserve in item “150. Reserves” which is offset by an increase of equal amount in item “120. Valuation reserves”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 147 The reclassification of financial assets shows: • with reference to financial assets previously classified under item “20. Financial assets held for trading” and “30. Financial assets at fair value through profit or loss” their almost complete classification in the analogous categories foreseen by IFRS9.It must be noted that the execution of the SPPI Test has required embedded derivatives (€15,837 thousand) previously bifurcated and classified in financial assets held for trading according to IAS39 rules, to be re-conducted in the host instrument classification category; • with reference financial assets previously classified under item “40. Available-for-sale-financial assets”: - the almost complete reclassification of debt securities (€101,101,315 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€98,099,003 thousand). The remaining part was reclassified under item “20. c) Other financial assets mandatorily at fair value” or in item “40. Financial assets at amortised cost” due to the characteristics of cash flows, which do not allow for classification as Financial assets at fair value through other comprehensive income despite a "held to collect and sell" business model or to better reflect the "held to collect" business model associated with these financial instruments; With reference to the reclassifications to financial assets at amortised cost, it should be noted that this transfer had a negative effect of -€331,571 thousand due to the simultaneous reversal of previously recognised revaluation reserves and the recognition of impairment on these instruments; - the classification of equity instruments (€2,254,426 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€1,901,753 thousand) given the nature of the relationship and/or the characteristics of the instrument. The remaining part was classified under item “20.c) Other financial assets mandatorily at fair value”. In this case the revaluation reserve have been reclassified in item “150. Reserves”. Note that, as a result of IFRS9 that does no longer allow to measure equity instrument at cost when their fair value is deemed not to be reliable, revaluation effects for €75,590 thousand were recognised. These effects have been recognised either in time “120. Valuation Reserve” or in item “150. Reserves” depending on the classification category; - the classification of units in investment funds (€726,245 thousand) in item “20.c) Other financial assets mandatorily at fair value” also due to regulatory clarifications according to which these instruments cannot be considered as equity instruments with consequent recognition of the related revaluation reserves recognised under IAS39 in item “150. Reserves”; - the reclassification of loans (€19,045 thousand) in item “40. Financial assets at amortised cost” in order to better reflect the "held to collect" business model associated with these financial instruments; • with reference to financial assets previously classified under item “50. Financial assets held to maturity”, consisting exclusively of debt securities (€6,277,022 thousand), they were mainly classified under item “40. Financial assets at amortised cost” (€5,097,905 thousand). This reclassification had a negative effect of -€3,043 thousand due to application of the new impairment rules.The remaining part of the portfolio was reclassified in item “20.c) Other financial assets mandatorily at fair value” (€747,692 thousand) following failure of the SPPI test or in item “30. Financial assets at fair value through other comprehensive income” (€431,425 thousand) to reflect the changed business model. The necessary re-measurement of these positions at fair value had positive balance sheet effects of €29,563 thousand; • with reference to financial assets previously classified under item “60. Loans and receivables with banks” (€70,982,743 thousand) consisting of both loans and debt securities, they were almost entirely classified (€70,458,457 thousand) under item “40. Financial assets at amortised cost”.This reclassification had a negative effect of €4,118 thousand due to application of the new impairment rules.The remaining part has been reclassified in item “20.c) Other financial assets mandatorily measured at fair value” due to the characteristics of the cash flows or, as regards debt securities, in item “30. Financial assets at fair value through other comprehensive” income to reflect the changed business model associated with these positions. These reclassifications had a positive impact on shareholders' equity of €51,925 thousand arising from fair value measurement; • with reference to financial assets previously classified under item “70. Loans and receivables with customers” (€447,726,913 thousand) consisting of both loans and debt securities, they were almost entirely classified (€445,565,207 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €3,278,886 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Other financial assets mandatorily at fair value” (€2,161,706 thousand) due to the characteristics of the cash flows. These reclassifications had a positive impact on shareholders' equity of €34,038 thousand arising from fair value measurement. As regards financial assets reclassified in item “30. Financial assets at fair value through other comprehensive income”, it should be noted that the table does not include the effects from application of impairment rules on these instruments. These effects, however, do not have an impact on shareholders' equity since, according to the rules of the standard, the impairment leads to recognition upon first application of a negative reserve in item “150. Reserves” which is offset by an increase of equal amount in item “120. Valuation reserves”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 147 The reclassification of financial assets shows: • with reference to financial assets previously classified under item “20. Financial assets held for trading” and “30. Financial assets at fair value through profit or loss” their almost complete classification in the analogous categories foreseen by IFRS9.It must be noted that the execution of the SPPI Test has required embedded derivatives (€15,837 thousand) previously bifurcated and classified in financial assets held for trading according to IAS39 rules, to be re-conducted in the host instrument classification category; • with reference financial assets previously classified under item “40. Available-for-sale-financial assets”: - the almost complete reclassification of debt securities (€101,101,315 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€98,099,003 thousand). The remaining part was reclassified under item “20. c) Other financial assets mandatorily at fair value” or in item “40. Financial assets at amortised cost” due to the characteristics of cash flows, which do not allow for classification as Financial assets at fair value through other comprehensive income despite a "held to collect and sell" business model or to better reflect the "held to collect" business model associated with these financial instruments; With reference to the reclassifications to financial assets at amortised cost, it should be noted that this transfer had a negative effect of -€331,571 thousand due to the simultaneous reversal of previously recognised revaluation reserves and the recognition of impairment on these instruments; - the classification of equity instruments (€2,254,426 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€1,901,753 thousand) given the nature of the relationship and/or the characteristics of the instrument. The remaining part was classified under item “20.c) Other financial assets mandatorily at fair value”. In this case the revaluation reserve have been reclassified in item “150. Reserves”. Note that, as a result of IFRS9 that does no longer allow to measure equity instrument at cost when their fair value is deemed not to be reliable, revaluation effects for €75,590 thousand were recognised. These effects have been recognised either in time “120. Valuation Reserve” or in item “150. Reserves” depending on the classification category; - the classification of units in investment funds (€726,245 thousand) in item “20.c) Other financial assets mandatorily at fair value” also due to regulatory clarifications according to which these instruments cannot be considered as equity instruments with consequent recognition of the related revaluation reserves recognised under IAS39 in item “150. Reserves”; - the reclassification of loans (€19,045 thousand) in item “40. Financial assets at amortised cost” in order to better reflect the "held to collect" business model associated with these financial instruments; • with reference to financial assets previously classified under item “50. Financial assets held to maturity”, consisting exclusively of debt securities (€6,277,022 thousand), they were mainly classified under item “40. Financial assets at amortised cost” (€5,097,905 thousand). This reclassification had a negative effect of -€3,043 thousand due to application of the new impairment rules.The remaining part of the portfolio was reclassified in item “20.c) Other financial assets mandatorily at fair value” (€747,692 thousand) following failure of the SPPI test or in item “30. Financial assets at fair value through other comprehensive income” (€431,425 thousand) to reflect the changed business model. The necessary re-measurement of these positions at fair value had positive balance sheet effects of €29,563 thousand; • with reference to financial assets previously classified under item “60. Loans and receivables with banks” (€70,982,743 thousand) consisting of both loans and debt securities, they were almost entirely classified (€70,458,457 thousand) under item “40. Financial assets at amortised cost”.This reclassification had a negative effect of €4,118 thousand due to application of the new impairment rules.The remaining part has been reclassified in item “20.c) Other financial assets mandatorily measured at fair value” due to the characteristics of the cash flows or, as regards debt securities, in item “30. Financial assets at fair value through other comprehensive” income to reflect the changed business model associated with these positions. These reclassifications had a positive impact on shareholders' equity of €51,925 thousand arising from fair value measurement; • with reference to financial assets previously classified under item “70. Loans and receivables with customers” (€447,726,913 thousand) consisting of both loans and debt securities, they were almost entirely classified (€445,565,207 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €3,278,886 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Other financial assets mandatorily at fair value” (€2,161,706 thousand) due to the characteristics of the cash flows. These reclassifications had a positive impact on shareholders' equity of €34,038 thousand arising from fair value measurement. As regards financial assets reclassified in item “30. Financial assets at fair value through other comprehensive income”, it should be noted that the table does not include the effects from application of impairment rules on these instruments. These effects, however, do not have an impact on shareholders' equity since, according to the rules of the standard, the impairment leads to recognition upon first application of a negative reserve in item “150. Reserves” which is offset by an increase of equal amount in item “120. Valuation reserves”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 147 The reclassification of financial assets shows: • with reference to financial assets previously classified under item “20. Financial assets held for trading” and “30. Financial assets at fair value through profit or loss” their almost complete classification in the analogous categories foreseen by IFRS9.It must be noted that the execution of the SPPI Test has required embedded derivatives (€15,837 thousand) previously bifurcated and classified in financial assets held for trading according to IAS39 rules, to be re-conducted in the host instrument classification category; • with reference financial assets previously classified under item “40. Available-for-sale-financial assets”: - the almost complete reclassification of debt securities (€101,101,315 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€98,099,003 thousand). The remaining part was reclassified under item “20. c) Other financial assets mandatorily at fair value” or in item “40. Financial assets at amortised cost” due to the characteristics of cash flows, which do not allow for classification as Financial assets at fair value through other comprehensive income despite a "held to collect and sell" business model or to better reflect the "held to collect" business model associated with these financial instruments; With reference to the reclassifications to financial assets at amortised cost, it should be noted that this transfer had a negative effect of -€331,571 thousand due to the simultaneous reversal of previously recognised revaluation reserves and the recognition of impairment on these instruments; - the classification of equity instruments (€2,254,426 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€1,901,753 thousand) given the nature of the relationship and/or the characteristics of the instrument. The remaining part was classified under item “20.c) Other financial assets mandatorily at fair value”. In this case the revaluation reserve have been reclassified in item “150. Reserves”. Note that, as a result of IFRS9 that does no longer allow to measure equity instrument at cost when their fair value is deemed not to be reliable, revaluation effects for €75,590 thousand were recognised. These effects have been recognised either in time “120. Valuation Reserve” or in item “150. Reserves” depending on the classification category; - the classification of units in investment funds (€726,245 thousand) in item “20.c) Other financial assets mandatorily at fair value” also due to regulatory clarifications according to which these instruments cannot be considered as equity instruments with consequent recognition of the related revaluation reserves recognised under IAS39 in item “150. Reserves”; - the reclassification of loans (€19,045 thousand) in item “40. Financial assets at amortised cost” in order to better reflect the "held to collect" business model associated with these financial instruments; • with reference to financial assets previously classified under item “50. Financial assets held to maturity”, consisting exclusively of debt securities (€6,277,022 thousand), they were mainly classified under item “40. Financial assets at amortised cost” (€5,097,905 thousand). This reclassification had a negative effect of -€3,043 thousand due to application of the new impairment rules.The remaining part of the portfolio was reclassified in item “20.c) Other financial assets mandatorily at fair value” (€747,692 thousand) following failure of the SPPI test or in item “30. Financial assets at fair value through other comprehensive income” (€431,425 thousand) to reflect the changed business model. The necessary re-measurement of these positions at fair value had positive balance sheet effects of €29,563 thousand; • with reference to financial assets previously classified under item “60. Loans and receivables with banks” (€70,982,743 thousand) consisting of both loans and debt securities, they were almost entirely classified (€70,458,457 thousand) under item “40. Financial assets at amortised cost”.This reclassification had a negative effect of €4,118 thousand due to application of the new impairment rules.The remaining part has been reclassified in item “20.c) Other financial assets mandatorily measured at fair value” due to the characteristics of the cash flows or, as regards debt securities, in item “30. Financial assets at fair value through other comprehensive” income to reflect the changed business model associated with these positions. These reclassifications had a positive impact on shareholders' equity of €51,925 thousand arising from fair value measurement; • with reference to financial assets previously classified under item “70. Loans and receivables with customers” (€447,726,913 thousand) consisting of both loans and debt securities, they were almost entirely classified (€445,565,207 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €3,278,886 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Other financial assets mandatorily at fair value” (€2,161,706 thousand) due to the characteristics of the cash flows. These reclassifications had a positive impact on shareholders' equity of €34,038 thousand arising from fair value measurement. As regards financial assets reclassified in item “30. Financial assets at fair value through other comprehensive income”, it should be noted that the table does not include the effects from application of impairment rules on these instruments. These effects, however, do not have an impact on shareholders' equity since, according to the rules of the standard, the impairment leads to recognition upon first application of a negative reserve in item “150. Reserves” which is offset by an increase of equal amount in item “120. Valuation reserves”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 148 2018 Annual Report and Accounts · UniCredit The following table focuses on the reclassification from “Available-for-sale-financial assets”, according to IAS39, to “Financial assets at amortised cost”, according to IFRS9”, in order to represent, both for debt securities and loans, the carrying value as at 31 December 2018, Fair Value that would have been accounted for at the same date in case of no reclassification in FTA and the consequent changes in Fair Value that would have been recognised in the period. (€ '000) INSTRUMENTS TYPE ACCOUNTING PORTFOLIO UNDER IAS39 ACCOUNTING PORTFOLIO UNDER IFRS9 CARRYING AMOUNT AS AT FAIR VALUE AS AT FAIR VALUE GAINS OR LOSSES ABSENT RECLASSIFICATION 12.31.2018 12.31.2018 Financial Assets reclassified from Available for sale (AFS) to Financial Assets at amortized cost 1. Debt securities AFS AC 1,640,110 1,843,660 (73,993) 2. Loans AFS AC 14,824 14,568 (256) Total 1,654,934 1,858,228 (74,249) Reclassification of financial liabilities16 A: Reclassification of former IAS39 book value B: Change in measurement C: New IFRS9 book value (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM BANKS FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM CUSTOMERS A B C A B C Deposits from banks 123,244,080 123,234,090 - 123,234,090 - - - Deposits from customers 462,895,261 - - - 462,895,261 - 462,895,261 Debt securities in issue 98,602,632 - - - - - - Financial liabilities held for trading 51,089,701 - - - - - - Financial liabilities at fair value through p&l 7,704,553 - - - - - - IFRS9 total 123,234,090 462,895,261 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEBT SECURITIES IN ISSUE FINANCIAL LIABILITIES HELD FOR TRADING A B C A B C Deposits from banks 123,244,080 - - - 9,990 - 9,990 Deposits from customers 462,895,261 - - - - - - Debt securities in issue 98,602,632 98,060,503 - 98,060,503 - - - Financial liabilities held for trading 51,089,701 - - - 51,089,701 - 51,089,701 Financial liabilities at fair value through p&l 7,704,553 - - - - - - IFRS9 total 98,060,503 51,099,691 16 Note that the amounts presented in column “Book value as at 31 December 2017 IAS39” for the categories “Financial liabilities held for trading” and “Financial liabilities at fair value through profit or loss” differ from those published in UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017 as a result of a reclassification of deposit certificates for an amount of €4.694.024 thousand in order to grant the homogeneous classification of this type of liabilities within the Group. As at 1 January 2018 the related accumulated changes in FV from the issuance date, related to changes in own credit risk, have been accounted for under item “120. Valuation reserves” with a corresponding effect under item “150. Reserves” for an amount equal to -€21,427 thousand. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 148 2018 Annual Report and Accounts · UniCredit The following table focuses on the reclassification from “Available-for-sale-financial assets”, according to IAS39, to “Financial assets at amortised cost”, according to IFRS9”, in order to represent, both for debt securities and loans, the carrying value as at 31 December 2018, Fair Value that would have been accounted for at the same date in case of no reclassification in FTA and the consequent changes in Fair Value that would have been recognised in the period. (€ '000) INSTRUMENTS TYPE ACCOUNTING PORTFOLIO UNDER IAS39 ACCOUNTING PORTFOLIO UNDER IFRS9 CARRYING AMOUNT AS AT FAIR VALUE AS AT FAIR VALUE GAINS OR LOSSES ABSENT RECLASSIFICATION 12.31.2018 12.31.2018 Financial Assets reclassified from Available for sale (AFS) to Financial Assets at amortized cost 1. Debt securities AFS AC 1,640,110 1,843,660 (73,993) 2. Loans AFS AC 14,824 14,568 (256) Total 1,654,934 1,858,228 (74,249) Reclassification of financial liabilities16 A: Reclassification of former IAS39 book value B: Change in measurement C: New IFRS9 book value (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM BANKS FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM CUSTOMERS A B C A B C Deposits from banks 123,244,080 123,234,090 - 123,234,090 - - - Deposits from customers 462,895,261 - - - 462,895,261 - 462,895,261 Debt securities in issue 98,602,632 - - - - - - Financial liabilities held for trading 51,089,701 - - - - - - Financial liabilities at fair value through p&l 7,704,553 - - - - - - IFRS9 total 123,234,090 462,895,261 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEBT SECURITIES IN ISSUE FINANCIAL LIABILITIES HELD FOR TRADING A B C A B C Deposits from banks 123,244,080 - - - 9,990 - 9,990 Deposits from customers 462,895,261 - - - - - - Debt securities in issue 98,602,632 98,060,503 - 98,060,503 - - - Financial liabilities held for trading 51,089,701 - - - 51,089,701 - 51,089,701 Financial liabilities at fair value through p&l 7,704,553 - - - - - - IFRS9 total 98,060,503 51,099,691 16 Note that the amounts presented in column “Book value as at 31 December 2017 IAS39” for the categories “Financial liabilities held for trading” and “Financial liabilities at fair value through profit or loss” differ from those published in UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017 as a result of a reclassification of deposit certificates for an amount of €4.694.024 thousand in order to grant the homogeneous classification of this type of liabilities within the Group. As at 1 January 2018 the related accumulated changes in FV from the issuance date, related to changes in own credit risk, have been accounted for under item “120. Valuation reserves” with a corresponding effect under item “150. Reserves” for an amount equal to -€21,427 thousand. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 148 2018 Annual Report and Accounts · UniCredit The following table focuses on the reclassification from “Available-for-sale-financial assets”, according to IAS39, to “Financial assets at amortised cost”, according to IFRS9”, in order to represent, both for debt securities and loans, the carrying value as at 31 December 2018, Fair Value that would have been accounted for at the same date in case of no reclassification in FTA and the consequent changes in Fair Value that would have been recognised in the period. (€ '000) INSTRUMENTS TYPE ACCOUNTING PORTFOLIO UNDER IAS39 ACCOUNTING PORTFOLIO UNDER IFRS9 CARRYING AMOUNT AS AT FAIR VALUE AS AT FAIR VALUE GAINS OR LOSSES ABSENT RECLASSIFICATION 12.31.2018 12.31.2018 Financial Assets reclassified from Available for sale (AFS) to Financial Assets at amortized cost 1. Debt securities AFS AC 1,640,110 1,843,660 (73,993) 2. Loans AFS AC 14,824 14,568 (256) Total 1,654,934 1,858,228 (74,249) Reclassification of financial liabilities16 A: Reclassification of former IAS39 book value B: Change in measurement C: New IFRS9 book value (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM BANKS FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM CUSTOMERS A B C A B C Deposits from banks 123,244,080 123,234,090 - 123,234,090 - - - Deposits from customers 462,895,261 - - - 462,895,261 - 462,895,261 Debt securities in issue 98,602,632 - - - - - - Financial liabilities held for trading 51,089,701 - - - - - - Financial liabilities at fair value through p&l 7,704,553 - - - - - - IFRS9 total 123,234,090 462,895,261 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEBT SECURITIES IN ISSUE FINANCIAL LIABILITIES HELD FOR TRADING A B C A B C Deposits from banks 123,244,080 - - - 9,990 - 9,990 Deposits from customers 462,895,261 - - - - - - Debt securities in issue 98,602,632 98,060,503 - 98,060,503 - - - Financial liabilities held for trading 51,089,701 - - - 51,089,701 - 51,089,701 Financial liabilities at fair value through p&l 7,704,553 - - - - - - IFRS9 total 98,060,503 51,099,691 16 Note that the amounts presented in column “Book value as at 31 December 2017 IAS39” for the categories “Financial liabilities held for trading” and “Financial liabilities at fair value through profit or loss” differ from those published in UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017 as a result of a reclassification of deposit certificates for an amount of €4.694.024 thousand in order to grant the homogeneous classification of this type of liabilities within the Group. As at 1 January 2018 the related accumulated changes in FV from the issuance date, related to changes in own credit risk, have been accounted for under item “120. Valuation reserves” with a corresponding effect under item “150. Reserves” for an amount equal to -€21,427 thousand. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 148 2018 Annual Report and Accounts · UniCredit The following table focuses on the reclassification from “Available-for-sale-financial assets”, according to IAS39, to “Financial assets at amortised cost”, according to IFRS9”, in order to represent, both for debt securities and loans, the carrying value as at 31 December 2018, Fair Value that would have been accounted for at the same date in case of no reclassification in FTA and the consequent changes in Fair Value that would have been recognised in the period. (€ '000) INSTRUMENTS TYPE ACCOUNTING PORTFOLIO UNDER IAS39 ACCOUNTING PORTFOLIO UNDER IFRS9 CARRYING AMOUNT AS AT FAIR VALUE AS AT FAIR VALUE GAINS OR LOSSES ABSENT RECLASSIFICATION 12.31.2018 12.31.2018 Financial Assets reclassified from Available for sale (AFS) to Financial Assets at amortized cost 1. Debt securities AFS AC 1,640,110 1,843,660 (73,993) 2. Loans AFS AC 14,824 14,568 (256) Total 1,654,934 1,858,228 (74,249) Reclassification of financial liabilities16 A: Reclassification of former IAS39 book value B: Change in measurement C: New IFRS9 book value (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM BANKS FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM CUSTOMERS A B C A B C Deposits from banks 123,244,080 123,234,090 - 123,234,090 - - - Deposits from customers 462,895,261 - - - 462,895,261 - 462,895,261 Debt securities in issue 98,602,632 - - - - - - Financial liabilities held for trading 51,089,701 - - - - - - Financial liabilities at fair value through p&l 7,704,553 - - - - - - IFRS9 total 123,234,090 462,895,261 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEBT SECURITIES IN ISSUE FINANCIAL LIABILITIES HELD FOR TRADING A B C A B C Deposits from banks 123,244,080 - - - 9,990 - 9,990 Deposits from customers 462,895,261 - - - - - - Debt securities in issue 98,602,632 98,060,503 - 98,060,503 - - - Financial liabilities held for trading 51,089,701 - - - 51,089,701 - 51,089,701 Financial liabilities at fair value through p&l 7,704,553 - - - - - - IFRS9 total 98,060,503 51,099,691 16 Note that the amounts presented in column “Book value as at 31 December 2017 IAS39” for the categories “Financial liabilities held for trading” and “Financial liabilities at fair value through profit or loss” differ from those published in UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017 as a result of a reclassification of deposit certificates for an amount of €4.694.024 thousand in order to grant the homogeneous classification of this type of liabilities within the Group. As at 1 January 2018 the related accumulated changes in FV from the issuance date, related to changes in own credit risk, have been accounted for under item “120. Valuation reserves” with a corresponding effect under item “150. Reserves” for an amount equal to -€21,427 thousand. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 148 2018 Annual Report and Accounts · UniCredit The following table focuses on the reclassification from “Available-for-sale-financial assets”, according to IAS39, to “Financial assets at amortised cost”, according to IFRS9”, in order to represent, both for debt securities and loans, the carrying value as at 31 December 2018, Fair Value that would have been accounted for at the same date in case of no reclassification in FTA and the consequent changes in Fair Value that would have been recognised in the period. (€ '000) INSTRUMENTS TYPE ACCOUNTING PORTFOLIO UNDER IAS39 ACCOUNTING PORTFOLIO UNDER IFRS9 CARRYING AMOUNT AS AT FAIR VALUE AS AT FAIR VALUE GAINS OR LOSSES ABSENT RECLASSIFICATION 12.31.2018 12.31.2018 Financial Assets reclassified from Available for sale (AFS) to Financial Assets at amortized cost 1. Debt securities AFS AC 1,640,110 1,843,660 (73,993) 2. Loans AFS AC 14,824 14,568 (256) Total 1,654,934 1,858,228 (74,249) Reclassification of financial liabilities16 A: Reclassification of former IAS39 book value B: Change in measurement C: New IFRS9 book value (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM BANKS FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM CUSTOMERS A B C A B C Deposits from banks 123,244,080 123,234,090 - 123,234,090 - - - Deposits from customers 462,895,261 - - - 462,895,261 - 462,895,261 Debt securities in issue 98,602,632 - - - - - - Financial liabilities held for trading 51,089,701 - - - - - - Financial liabilities at fair value through p&l 7,704,553 - - - - - - IFRS9 total 123,234,090 462,895,261 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEBT SECURITIES IN ISSUE FINANCIAL LIABILITIES HELD FOR TRADING A B C A B C Deposits from banks 123,244,080 - - - 9,990 - 9,990 Deposits from customers 462,895,261 - - - - - - Debt securities in issue 98,602,632 98,060,503 - 98,060,503 - - - Financial liabilities held for trading 51,089,701 - - - 51,089,701 - 51,089,701 Financial liabilities at fair value through p&l 7,704,553 - - - - - - IFRS9 total 98,060,503 51,099,691 16 Note that the amounts presented in column “Book value as at 31 December 2017 IAS39” for the categories “Financial liabilities held for trading” and “Financial liabilities at fair value through profit or loss” differ from those published in UniCredit group’s Consolidated Reports and Accounts as at 31 December 2017 as a result of a reclassification of deposit certificates for an amount of €4.694.024 thousand in order to grant the homogeneous classification of this type of liabilities within the Group. As at 1 January 2018 the related accumulated changes in FV from the issuance date, related to changes in own credit risk, have been accounted for under item “120. Valuation reserves” with a corresponding effect under item “150. Reserves” for an amount equal to -€21,427 thousand. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 149 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS TOTAL A B C A B C Deposits from banks 123,244,080 - - - 123,244,080 - 123,244,080 Deposits from customers 462,895,261 - - - 462,895,261 - 462,895,261 Debt securities in issue 98,602,632 542,129 55,099 597,228 98,602,632 55,099 98,657,731 Financial liabilities held for trading 51,089,701 - - - 51,089,701 - 51,089,701 Financial liabilities at fair value through p&l 7,704,553 7,704,553 - 7,704,553 7,704,553 - 7,704,553 IFRS9 total 8,301,781 The reclassification of financial liabilities highlights a substantial continuity of the classifications compared to those applied according to IAS39, taking also into account the change of the name of the various categories following the implementation of the 5th update of Circular 262. As regards financial liabilities recorded in item “30. Financial liabilities designated at fair value”, the cumulative fair value changes deriving from changes in own creditworthiness as of the issue date have been reported in item “120. Valuation reserves” in application of the rules established by IFRS9. As regards the financial liabilities previously recorded in item “50. Financial liabilities at fair value”, the application of this rule does not affect the shareholders’ equity but leads to a transfer between item “150. Reserves” and item “120. Valuation reserves”. 4.2 Loan Loss Provisions With reference to impairment, the following table shows, as at 1 January 2018, the gross exposure and value adjustments broken down by accounting portfolio and by classification stage. (€ '000) GROSS AMOUNT LOAN LOSS PROVISIONS NET EXPOSURE S1 S2 S3 S1 S2 S3 S1 S2 S3 Item 30. Financial assets at fair value through other comprehensive income 98,145,268 593,530 - (18,698) (9,340) - 98,126,570 584,190 - - Debt securities 98,145,268 593,530 - (18,698) (9,340) - 98,126,570 584,190 - - Loans and advances with banks - - - - - - - - - - Loans and advances with customers - - - - - - - - - Item 40. Financial assets measured at amortized cost 454,187,232 49,966,237 45,631,457 (1,029,621) (1,793,842) (27,060,809) 453,157,611 48,172,395 18,570,648 - Debt securities 16,821,949 329,959 79,735 (14,671) (49,590) (20,635) 16,807,278 280,369 59,100 - Loans and advances with banks 67,262,774 1,458,492 53,676 (21,864) (5,532) (48,336) 67,240,910 1,452,960 5,340 - Loans and advances with customers 370,102,509 48,177,786 45,498,046 (993,086) (1,738,720) (26,991,838) 369,109,423 46,439,066 18,506,208 The amount of loan loss provision on commitments and guarantees given amount to €1,090,289 thousand as reported in the Balance sheet Liabilities in item “100. Provisions for risks and charges: a) commitments and guarantees given”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 149 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS TOTAL A B C A B C Deposits from banks 123,244,080 - - - 123,244,080 - 123,244,080 Deposits from customers 462,895,261 - - - 462,895,261 - 462,895,261 Debt securities in issue 98,602,632 542,129 55,099 597,228 98,602,632 55,099 98,657,731 Financial liabilities held for trading 51,089,701 - - - 51,089,701 - 51,089,701 Financial liabilities at fair value through p&l 7,704,553 7,704,553 - 7,704,553 7,704,553 - 7,704,553 IFRS9 total 8,301,781 The reclassification of financial liabilities highlights a substantial continuity of the classifications compared to those applied according to IAS39, taking also into account the change of the name of the various categories following the implementation of the 5th update of Circular 262. As regards financial liabilities recorded in item “30. Financial liabilities designated at fair value”, the cumulative fair value changes deriving from changes in own creditworthiness as of the issue date have been reported in item “120. Valuation reserves” in application of the rules established by IFRS9. As regards the financial liabilities previously recorded in item “50. Financial liabilities at fair value”, the application of this rule does not affect the shareholders’ equity but leads to a transfer between item “150. Reserves” and item “120. Valuation reserves”. 4.2 Loan Loss Provisions With reference to impairment, the following table shows, as at 1 January 2018, the gross exposure and value adjustments broken down by accounting portfolio and by classification stage. (€ '000) GROSS AMOUNT LOAN LOSS PROVISIONS NET EXPOSURE S1 S2 S3 S1 S2 S3 S1 S2 S3 Item 30. Financial assets at fair value through other comprehensive income 98,145,268 593,530 - (18,698) (9,340) - 98,126,570 584,190 - - Debt securities 98,145,268 593,530 - (18,698) (9,340) - 98,126,570 584,190 - - Loans and advances with banks - - - - - - - - - - Loans and advances with customers - - - - - - - - - Item 40. Financial assets measured at amortized cost 454,187,232 49,966,237 45,631,457 (1,029,621) (1,793,842) (27,060,809) 453,157,611 48,172,395 18,570,648 - Debt securities 16,821,949 329,959 79,735 (14,671) (49,590) (20,635) 16,807,278 280,369 59,100 - Loans and advances with banks 67,262,774 1,458,492 53,676 (21,864) (5,532) (48,336) 67,240,910 1,452,960 5,340 - Loans and advances with customers 370,102,509 48,177,786 45,498,046 (993,086) (1,738,720) (26,991,838) 369,109,423 46,439,066 18,506,208 The amount of loan loss provision on commitments and guarantees given amount to €1,090,289 thousand as reported in the Balance sheet Liabilities in item “100. Provisions for risks and charges: a) commitments and guarantees given”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 149 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS TOTAL A B C A B C Deposits from banks 123,244,080 - - - 123,244,080 - 123,244,080 Deposits from customers 462,895,261 - - - 462,895,261 - 462,895,261 Debt securities in issue 98,602,632 542,129 55,099 597,228 98,602,632 55,099 98,657,731 Financial liabilities held for trading 51,089,701 - - - 51,089,701 - 51,089,701 Financial liabilities at fair value through p&l 7,704,553 7,704,553 - 7,704,553 7,704,553 - 7,704,553 IFRS9 total 8,301,781 The reclassification of financial liabilities highlights a substantial continuity of the classifications compared to those applied according to IAS39, taking also into account the change of the name of the various categories following the implementation of the 5th update of Circular 262. As regards financial liabilities recorded in item “30. Financial liabilities designated at fair value”, the cumulative fair value changes deriving from changes in own creditworthiness as of the issue date have been reported in item “120. Valuation reserves” in application of the rules established by IFRS9. As regards the financial liabilities previously recorded in item “50. Financial liabilities at fair value”, the application of this rule does not affect the shareholders’ equity but leads to a transfer between item “150. Reserves” and item “120. Valuation reserves”. 4.2 Loan Loss Provisions With reference to impairment, the following table shows, as at 1 January 2018, the gross exposure and value adjustments broken down by accounting portfolio and by classification stage. (€ '000) GROSS AMOUNT LOAN LOSS PROVISIONS NET EXPOSURE S1 S2 S3 S1 S2 S3 S1 S2 S3 Item 30. Financial assets at fair value through other comprehensive income 98,145,268 593,530 - (18,698) (9,340) - 98,126,570 584,190 - - Debt securities 98,145,268 593,530 - (18,698) (9,340) - 98,126,570 584,190 - - Loans and advances with banks - - - - - - - - - - Loans and advances with customers - - - - - - - - - Item 40. Financial assets measured at amortized cost 454,187,232 49,966,237 45,631,457 (1,029,621) (1,793,842) (27,060,809) 453,157,611 48,172,395 18,570,648 - Debt securities 16,821,949 329,959 79,735 (14,671) (49,590) (20,635) 16,807,278 280,369 59,100 - Loans and advances with banks 67,262,774 1,458,492 53,676 (21,864) (5,532) (48,336) 67,240,910 1,452,960 5,340 - Loans and advances with customers 370,102,509 48,177,786 45,498,046 (993,086) (1,738,720) (26,991,838) 369,109,423 46,439,066 18,506,208 The amount of loan loss provision on commitments and guarantees given amount to €1,090,289 thousand as reported in the Balance sheet Liabilities in item “100. Provisions for risks and charges: a) commitments and guarantees given”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 149 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS TOTAL A B C A B C Deposits from banks 123,244,080 - - - 123,244,080 - 123,244,080 Deposits from customers 462,895,261 - - - 462,895,261 - 462,895,261 Debt securities in issue 98,602,632 542,129 55,099 597,228 98,602,632 55,099 98,657,731 Financial liabilities held for trading 51,089,701 - - - 51,089,701 - 51,089,701 Financial liabilities at fair value through p&l 7,704,553 7,704,553 - 7,704,553 7,704,553 - 7,704,553 IFRS9 total 8,301,781 The reclassification of financial liabilities highlights a substantial continuity of the classifications compared to those applied according to IAS39, taking also into account the change of the name of the various categories following the implementation of the 5th update of Circular 262. As regards financial liabilities recorded in item “30. Financial liabilities designated at fair value”, the cumulative fair value changes deriving from changes in own creditworthiness as of the issue date have been reported in item “120. Valuation reserves” in application of the rules established by IFRS9. As regards the financial liabilities previously recorded in item “50. Financial liabilities at fair value”, the application of this rule does not affect the shareholders’ equity but leads to a transfer between item “150. Reserves” and item “120. Valuation reserves”. 4.2 Loan Loss Provisions With reference to impairment, the following table shows, as at 1 January 2018, the gross exposure and value adjustments broken down by accounting portfolio and by classification stage. (€ '000) GROSS AMOUNT LOAN LOSS PROVISIONS NET EXPOSURE S1 S2 S3 S1 S2 S3 S1 S2 S3 Item 30. Financial assets at fair value through other comprehensive income 98,145,268 593,530 - (18,698) (9,340) - 98,126,570 584,190 - - Debt securities 98,145,268 593,530 - (18,698) (9,340) - 98,126,570 584,190 - - Loans and advances with banks - - - - - - - - - - Loans and advances with customers - - - - - - - - - Item 40. Financial assets measured at amortized cost 454,187,232 49,966,237 45,631,457 (1,029,621) (1,793,842) (27,060,809) 453,157,611 48,172,395 18,570,648 - Debt securities 16,821,949 329,959 79,735 (14,671) (49,590) (20,635) 16,807,278 280,369 59,100 - Loans and advances with banks 67,262,774 1,458,492 53,676 (21,864) (5,532) (48,336) 67,240,910 1,452,960 5,340 - Loans and advances with customers 370,102,509 48,177,786 45,498,046 (993,086) (1,738,720) (26,991,838) 369,109,423 46,439,066 18,506,208 The amount of loan loss provision on commitments and guarantees given amount to €1,090,289 thousand as reported in the Balance sheet Liabilities in item “100. Provisions for risks and charges: a) commitments and guarantees given”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 149 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS TOTAL A B C A B C Deposits from banks 123,244,080 - - - 123,244,080 - 123,244,080 Deposits from customers 462,895,261 - - - 462,895,261 - 462,895,261 Debt securities in issue 98,602,632 542,129 55,099 597,228 98,602,632 55,099 98,657,731 Financial liabilities held for trading 51,089,701 - - - 51,089,701 - 51,089,701 Financial liabilities at fair value through p&l 7,704,553 7,704,553 - 7,704,553 7,704,553 - 7,704,553 IFRS9 total 8,301,781 The reclassification of financial liabilities highlights a substantial continuity of the classifications compared to those applied according to IAS39, taking also into account the change of the name of the various categories following the implementation of the 5th update of Circular 262. As regards financial liabilities recorded in item “30. Financial liabilities designated at fair value”, the cumulative fair value changes deriving from changes in own creditworthiness as of the issue date have been reported in item “120. Valuation reserves” in application of the rules established by IFRS9. As regards the financial liabilities previously recorded in item “50. Financial liabilities at fair value”, the application of this rule does not affect the shareholders’ equity but leads to a transfer between item “150. Reserves” and item “120. Valuation reserves”. 4.2 Loan Loss Provisions With reference to impairment, the following table shows, as at 1 January 2018, the gross exposure and value adjustments broken down by accounting portfolio and by classification stage. (€ '000) GROSS AMOUNT LOAN LOSS PROVISIONS NET EXPOSURE S1 S2 S3 S1 S2 S3 S1 S2 S3 Item 30. Financial assets at fair value through other comprehensive income 98,145,268 593,530 - (18,698) (9,340) - 98,126,570 584,190 - - Debt securities 98,145,268 593,530 - (18,698) (9,340) - 98,126,570 584,190 - - Loans and advances with banks - - - - - - - - - - Loans and advances with customers - - - - - - - - - Item 40. Financial assets measured at amortized cost 454,187,232 49,966,237 45,631,457 (1,029,621) (1,793,842) (27,060,809) 453,157,611 48,172,395 18,570,648 - Debt securities 16,821,949 329,959 79,735 (14,671) (49,590) (20,635) 16,807,278 280,369 59,100 - Loans and advances with banks 67,262,774 1,458,492 53,676 (21,864) (5,532) (48,336) 67,240,910 1,452,960 5,340 - Loans and advances with customers 370,102,509 48,177,786 45,498,046 (993,086) (1,738,720) (26,991,838) 369,109,423 46,439,066 18,506,208 The amount of loan loss provision on commitments and guarantees given amount to €1,090,289 thousand as reported in the Balance sheet Liabilities in item “100. Provisions for risks and charges: a) commitments and guarantees given”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 150 2018 Annual Report and Accounts · UniCredit With reference to impairment on cash exposures the following tables show: a) the portfolio under IAS39 and the related closing balance as at 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as at 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) 20. Financial assets held for trading - - - 30. Financial assets at fair value through profit or loss - - - 40. Financial assets available for sale - 24,750 24,750 50. Held to maturity investments - 1,120 1,120 60. Loans and receivables with banks 25,293 50,283 75,576 70. Loans and receivables with customers 2,014,712 27,240,342 29,255,054 Total 2,040,005 27,316,495 29,356,500 (€ '000) IAS39 CATEGORY PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale - - - - 28,038 28,038 - 3,222 3,222 50. Held to maturity investments - - - - - - - 2,575 2,575 60. Loans and receivables with banks - - - - - - 25,293 (27,056) (1,763) 70. Loans and receivables with customers 3,777 (3,777) - - - - 2,010,935 808,494 2,819,429 Total 3,777 (3,777) - - 28,038 28,038 2,036,228 787,235 2,823,463 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 150 2018 Annual Report and Accounts · UniCredit With reference to impairment on cash exposures the following tables show: a) the portfolio under IAS39 and the related closing balance as at 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as at 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) 20. Financial assets held for trading - - - 30. Financial assets at fair value through profit or loss - - - 40. Financial assets available for sale - 24,750 24,750 50. Held to maturity investments - 1,120 1,120 60. Loans and receivables with banks 25,293 50,283 75,576 70. Loans and receivables with customers 2,014,712 27,240,342 29,255,054 Total 2,040,005 27,316,495 29,356,500 (€ '000) IAS39 CATEGORY PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale - - - - 28,038 28,038 - 3,222 3,222 50. Held to maturity investments - - - - - - - 2,575 2,575 60. Loans and receivables with banks - - - - - - 25,293 (27,056) (1,763) 70. Loans and receivables with customers 3,777 (3,777) - - - - 2,010,935 808,494 2,819,429 Total 3,777 (3,777) - - 28,038 28,038 2,036,228 787,235 2,823,463 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 150 2018 Annual Report and Accounts · UniCredit With reference to impairment on cash exposures the following tables show: a) the portfolio under IAS39 and the related closing balance as at 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as at 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) 20. Financial assets held for trading - - - 30. Financial assets at fair value through profit or loss - - - 40. Financial assets available for sale - 24,750 24,750 50. Held to maturity investments - 1,120 1,120 60. Loans and receivables with banks 25,293 50,283 75,576 70. Loans and receivables with customers 2,014,712 27,240,342 29,255,054 Total 2,040,005 27,316,495 29,356,500 (€ '000) IAS39 CATEGORY PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale - - - - 28,038 28,038 - 3,222 3,222 50. Held to maturity investments - - - - - - - 2,575 2,575 60. Loans and receivables with banks - - - - - - 25,293 (27,056) (1,763) 70. Loans and receivables with customers 3,777 (3,777) - - - - 2,010,935 808,494 2,819,429 Total 3,777 (3,777) - - 28,038 28,038 2,036,228 787,235 2,823,463 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 150 2018 Annual Report and Accounts · UniCredit With reference to impairment on cash exposures the following tables show: a) the portfolio under IAS39 and the related closing balance as at 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as at 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) 20. Financial assets held for trading - - - 30. Financial assets at fair value through profit or loss - - - 40. Financial assets available for sale - 24,750 24,750 50. Held to maturity investments - 1,120 1,120 60. Loans and receivables with banks 25,293 50,283 75,576 70. Loans and receivables with customers 2,014,712 27,240,342 29,255,054 Total 2,040,005 27,316,495 29,356,500 (€ '000) IAS39 CATEGORY PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale - - - - 28,038 28,038 - 3,222 3,222 50. Held to maturity investments - - - - - - - 2,575 2,575 60. Loans and receivables with banks - - - - - - 25,293 (27,056) (1,763) 70. Loans and receivables with customers 3,777 (3,777) - - - - 2,010,935 808,494 2,819,429 Total 3,777 (3,777) - - 28,038 28,038 2,036,228 787,235 2,823,463 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 150 2018 Annual Report and Accounts · UniCredit With reference to impairment on cash exposures the following tables show: a) the portfolio under IAS39 and the related closing balance as at 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as at 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) 20. Financial assets held for trading - - - 30. Financial assets at fair value through profit or loss - - - 40. Financial assets available for sale - 24,750 24,750 50. Held to maturity investments - 1,120 1,120 60. Loans and receivables with banks 25,293 50,283 75,576 70. Loans and receivables with customers 2,014,712 27,240,342 29,255,054 Total 2,040,005 27,316,495 29,356,500 (€ '000) IAS39 CATEGORY PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale - - - - 28,038 28,038 - 3,222 3,222 50. Held to maturity investments - - - - - - - 2,575 2,575 60. Loans and receivables with banks - - - - - - 25,293 (27,056) (1,763) 70. Loans and receivables with customers 3,777 (3,777) - - - - 2,010,935 808,494 2,819,429 Total 3,777 (3,777) - - 28,038 28,038 2,036,228 787,235 2,823,463 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 151 (€ '000) IAS39 CATEGORY NON PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale 20,042 (20,042) - 42 (42) - 4,666 - 4,666 50. Held to maturity investments - - - - - - 1,120 - 1,120 60. Loans and receivables with banks 2,904 (2,904) - - - - 47,379 (320) 47,059 70. Loans and receivables with customers 129,638 (129,638) - - - - 27,110,704 (102,740) 27,007,964 Total 152,584 (152,584) - 42 (42) - 27,163,869 (103,060) 27,060,809 With reference to impairment off-balance exposures the following table show: a) the closing balance as at 31 December 2017; b) the effects from application of the measurement criteria envisaged by IFRS9; c) the opening IFRS9 balance as at 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IFRS9) Off-balance sheet exposures 124,703 172,351 297,054 625,540 167,695 793,235 750,243 1,090,289 Note that the item “change in measurement” includes, in addition to the effects deriving from the adoption of new IFRS9 loan loss provision calculation rules, the impacts linked to the reversal of penalty interest from loan loss provisions as requested by the 5th update of Banca d’Italia Circular 262, the impact of write-off of some credit exposures included in the NPL strategy and the impact coming from the reclassification of some exposures to portfolio evaluated at fair value through profit or loss. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 151 (€ '000) IAS39 CATEGORY NON PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale 20,042 (20,042) - 42 (42) - 4,666 - 4,666 50. Held to maturity investments - - - - - - 1,120 - 1,120 60. Loans and receivables with banks 2,904 (2,904) - - - - 47,379 (320) 47,059 70. Loans and receivables with customers 129,638 (129,638) - - - - 27,110,704 (102,740) 27,007,964 Total 152,584 (152,584) - 42 (42) - 27,163,869 (103,060) 27,060,809 With reference to impairment off-balance exposures the following table show: a) the closing balance as at 31 December 2017; b) the effects from application of the measurement criteria envisaged by IFRS9; c) the opening IFRS9 balance as at 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IFRS9) Off-balance sheet exposures 124,703 172,351 297,054 625,540 167,695 793,235 750,243 1,090,289 Note that the item “change in measurement” includes, in addition to the effects deriving from the adoption of new IFRS9 loan loss provision calculation rules, the impacts linked to the reversal of penalty interest from loan loss provisions as requested by the 5th update of Banca d’Italia Circular 262, the impact of write-off of some credit exposures included in the NPL strategy and the impact coming from the reclassification of some exposures to portfolio evaluated at fair value through profit or loss. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 151 (€ '000) IAS39 CATEGORY NON PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale 20,042 (20,042) - 42 (42) - 4,666 - 4,666 50. Held to maturity investments - - - - - - 1,120 - 1,120 60. Loans and receivables with banks 2,904 (2,904) - - - - 47,379 (320) 47,059 70. Loans and receivables with customers 129,638 (129,638) - - - - 27,110,704 (102,740) 27,007,964 Total 152,584 (152,584) - 42 (42) - 27,163,869 (103,060) 27,060,809 With reference to impairment off-balance exposures the following table show: a) the closing balance as at 31 December 2017; b) the effects from application of the measurement criteria envisaged by IFRS9; c) the opening IFRS9 balance as at 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IFRS9) Off-balance sheet exposures 124,703 172,351 297,054 625,540 167,695 793,235 750,243 1,090,289 Note that the item “change in measurement” includes, in addition to the effects deriving from the adoption of new IFRS9 loan loss provision calculation rules, the impacts linked to the reversal of penalty interest from loan loss provisions as requested by the 5th update of Banca d’Italia Circular 262, the impact of write-off of some credit exposures included in the NPL strategy and the impact coming from the reclassification of some exposures to portfolio evaluated at fair value through profit or loss. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 151 (€ '000) IAS39 CATEGORY NON PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale 20,042 (20,042) - 42 (42) - 4,666 - 4,666 50. Held to maturity investments - - - - - - 1,120 - 1,120 60. Loans and receivables with banks 2,904 (2,904) - - - - 47,379 (320) 47,059 70. Loans and receivables with customers 129,638 (129,638) - - - - 27,110,704 (102,740) 27,007,964 Total 152,584 (152,584) - 42 (42) - 27,163,869 (103,060) 27,060,809 With reference to impairment off-balance exposures the following table show: a) the closing balance as at 31 December 2017; b) the effects from application of the measurement criteria envisaged by IFRS9; c) the opening IFRS9 balance as at 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IFRS9) Off-balance sheet exposures 124,703 172,351 297,054 625,540 167,695 793,235 750,243 1,090,289 Note that the item “change in measurement” includes, in addition to the effects deriving from the adoption of new IFRS9 loan loss provision calculation rules, the impacts linked to the reversal of penalty interest from loan loss provisions as requested by the 5th update of Banca d’Italia Circular 262, the impact of write-off of some credit exposures included in the NPL strategy and the impact coming from the reclassification of some exposures to portfolio evaluated at fair value through profit or loss. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 151 (€ '000) IAS39 CATEGORY NON PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale 20,042 (20,042) - 42 (42) - 4,666 - 4,666 50. Held to maturity investments - - - - - - 1,120 - 1,120 60. Loans and receivables with banks 2,904 (2,904) - - - - 47,379 (320) 47,059 70. Loans and receivables with customers 129,638 (129,638) - - - - 27,110,704 (102,740) 27,007,964 Total 152,584 (152,584) - 42 (42) - 27,163,869 (103,060) 27,060,809 With reference to impairment off-balance exposures the following table show: a) the closing balance as at 31 December 2017; b) the effects from application of the measurement criteria envisaged by IFRS9; c) the opening IFRS9 balance as at 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IFRS9) Off-balance sheet exposures 124,703 172,351 297,054 625,540 167,695 793,235 750,243 1,090,289 Note that the item “change in measurement” includes, in addition to the effects deriving from the adoption of new IFRS9 loan loss provision calculation rules, the impacts linked to the reversal of penalty interest from loan loss provisions as requested by the 5th update of Banca d’Italia Circular 262, the impact of write-off of some credit exposures included in the NPL strategy and the impact coming from the reclassification of some exposures to portfolio evaluated at fair value through profit or loss. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 152 2018 Annual Report and Accounts · UniCredit 4.3 Further reclassifications carried out as at 1 January 2018 in compliance with IFRS9 and the 5th update of Circular 262 The widespread impact of the introduction of the IFRS9 principle is further demonstrated by the fact that the impacts arising from its adoption have determined effects not only on the single financial asset and liabilities but also on other items relating to the latter. In this regard the following should be noted: • the item “Changes in fair value of portfolio hedged items” (assets and liabilities) that as at 31 December 2017 respectively amounted to €2,244,685 thousand and €3,041,990 thousand turn to €2,600,594 thousand and €3,046,609 thousand. Those differences relate to the reclassification of assets and liabilities subject to “macro-hedging” relationship in item “20.c) Other financial assets mandatorily at fair value” with their consequent exclusion from hedging relationship; • the item “Equity investments”, that as at 31 December 2017 amounted to €6,212,142 thousand now amount to €6,211,911 thousand due to the first application of IFRS9 by subsidiaries measured using the Equity method; • the item “Non-current assets and disposal groups classified as held for sale” and associated liabilities that as at 31 December 2017 respectively amounted to €1,110,960 thousand and €184,829 thousand now amount to €1,110,780 thousand and €184,831 thousand due to the application of IFRS9 by Legal Entities Held for Sale whose assets and liabilities have been reported in the abovementioned items according to IFRS5; • tax assets and liabilities that as at 31 December 2017 amounted respectively to €12,658,279 thousand and €1,092,905 thousand now amount to €12,848,869 thousand and 1,108,062 thousand as a result of tax effects on the accounting changes resulting from IFRS9 application; • the other assets, which amounted to €8.957.637 thousand as at 31 December 2017, amount to €8.800.375 thousand due to both the application of 5th update of Circular 262 which clarified that tangible assets accounted for in accordance with the provisions of IAS2 must be recorded in item “90. Tangible assets” rather than in item “Other Assets” and the application of IFRS9 by UniCredit S.p.A. foreign branches. • the other liabilities, which amounted to €15.573.476 thousand as at 31 December 2017,becomes equal to €14.808.680 thousand due to both the application of the 5th update of Circular 262 which clarified that provisions for off-balance sheet exposures must be shown in item “100. Provisions for risks and charges” rather than in item “Other liabilities” and the application of IFRS9 by UniCredit S.p.A. foreign branches. Approval of 2019 Budgetary law and consequent effects on deferred taxes related to IFRS9 adoption Starting from 1 January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1 January 2018 net equity (First Time Adoption - FTA17). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Budgetary Law approved in December 2018 envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. Recognition of these DTAs has required an in-depth analysis by the management so to assess the proper accounting treatment, given the absence of specific indications by IAS12 on their recognition against equity or against P&L. On this matter, which pertains to a strict representation issue not involving recognition nor measurement topics, the management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and ISVAP (now IVASS) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). 17 Refer to Part A - Accounting policies - Section 5 Other matters - “Transition to IFRS9: Financial Instruments of UniCredit group” for an explanation of the effects arising from the first time adoption of IFRS9. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 152 2018 Annual Report and Accounts · UniCredit 4.3 Further reclassifications carried out as at 1 January 2018 in compliance with IFRS9 and the 5th update of Circular 262 The widespread impact of the introduction of the IFRS9 principle is further demonstrated by the fact that the impacts arising from its adoption have determined effects not only on the single financial asset and liabilities but also on other items relating to the latter. In this regard the following should be noted: • the item “Changes in fair value of portfolio hedged items” (assets and liabilities) that as at 31 December 2017 respectively amounted to €2,244,685 thousand and €3,041,990 thousand turn to €2,600,594 thousand and €3,046,609 thousand. Those differences relate to the reclassification of assets and liabilities subject to “macro-hedging” relationship in item “20.c) Other financial assets mandatorily at fair value” with their consequent exclusion from hedging relationship; • the item “Equity investments”, that as at 31 December 2017 amounted to €6,212,142 thousand now amount to €6,211,911 thousand due to the first application of IFRS9 by subsidiaries measured using the Equity method; • the item “Non-current assets and disposal groups classified as held for sale” and associated liabilities that as at 31 December 2017 respectively amounted to €1,110,960 thousand and €184,829 thousand now amount to €1,110,780 thousand and €184,831 thousand due to the application of IFRS9 by Legal Entities Held for Sale whose assets and liabilities have been reported in the abovementioned items according to IFRS5; • tax assets and liabilities that as at 31 December 2017 amounted respectively to €12,658,279 thousand and €1,092,905 thousand now amount to €12,848,869 thousand and 1,108,062 thousand as a result of tax effects on the accounting changes resulting from IFRS9 application; • the other assets, which amounted to €8.957.637 thousand as at 31 December 2017, amount to €8.800.375 thousand due to both the application of 5th update of Circular 262 which clarified that tangible assets accounted for in accordance with the provisions of IAS2 must be recorded in item “90. Tangible assets” rather than in item “Other Assets” and the application of IFRS9 by UniCredit S.p.A. foreign branches. • the other liabilities, which amounted to €15.573.476 thousand as at 31 December 2017,becomes equal to €14.808.680 thousand due to both the application of the 5th update of Circular 262 which clarified that provisions for off-balance sheet exposures must be shown in item “100. Provisions for risks and charges” rather than in item “Other liabilities” and the application of IFRS9 by UniCredit S.p.A. foreign branches. Approval of 2019 Budgetary law and consequent effects on deferred taxes related to IFRS9 adoption Starting from 1 January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1 January 2018 net equity (First Time Adoption - FTA17). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Budgetary Law approved in December 2018 envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. Recognition of these DTAs has required an in-depth analysis by the management so to assess the proper accounting treatment, given the absence of specific indications by IAS12 on their recognition against equity or against P&L. On this matter, which pertains to a strict representation issue not involving recognition nor measurement topics, the management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and ISVAP (now IVASS) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). 17 Refer to Part A - Accounting policies - Section 5 Other matters - “Transition to IFRS9: Financial Instruments of UniCredit group” for an explanation of the effects arising from the first time adoption of IFRS9. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 152 2018 Annual Report and Accounts · UniCredit 4.3 Further reclassifications carried out as at 1 January 2018 in compliance with IFRS9 and the 5th update of Circular 262 The widespread impact of the introduction of the IFRS9 principle is further demonstrated by the fact that the impacts arising from its adoption have determined effects not only on the single financial asset and liabilities but also on other items relating to the latter. In this regard the following should be noted: • the item “Changes in fair value of portfolio hedged items” (assets and liabilities) that as at 31 December 2017 respectively amounted to €2,244,685 thousand and €3,041,990 thousand turn to €2,600,594 thousand and €3,046,609 thousand. Those differences relate to the reclassification of assets and liabilities subject to “macro-hedging” relationship in item “20.c) Other financial assets mandatorily at fair value” with their consequent exclusion from hedging relationship; • the item “Equity investments”, that as at 31 December 2017 amounted to €6,212,142 thousand now amount to €6,211,911 thousand due to the first application of IFRS9 by subsidiaries measured using the Equity method; • the item “Non-current assets and disposal groups classified as held for sale” and associated liabilities that as at 31 December 2017 respectively amounted to €1,110,960 thousand and €184,829 thousand now amount to €1,110,780 thousand and €184,831 thousand due to the application of IFRS9 by Legal Entities Held for Sale whose assets and liabilities have been reported in the abovementioned items according to IFRS5; • tax assets and liabilities that as at 31 December 2017 amounted respectively to €12,658,279 thousand and €1,092,905 thousand now amount to €12,848,869 thousand and 1,108,062 thousand as a result of tax effects on the accounting changes resulting from IFRS9 application; • the other assets, which amounted to €8.957.637 thousand as at 31 December 2017, amount to €8.800.375 thousand due to both the application of 5th update of Circular 262 which clarified that tangible assets accounted for in accordance with the provisions of IAS2 must be recorded in item “90. Tangible assets” rather than in item “Other Assets” and the application of IFRS9 by UniCredit S.p.A. foreign branches. • the other liabilities, which amounted to €15.573.476 thousand as at 31 December 2017,becomes equal to €14.808.680 thousand due to both the application of the 5th update of Circular 262 which clarified that provisions for off-balance sheet exposures must be shown in item “100. Provisions for risks and charges” rather than in item “Other liabilities” and the application of IFRS9 by UniCredit S.p.A. foreign branches. Approval of 2019 Budgetary law and consequent effects on deferred taxes related to IFRS9 adoption Starting from 1 January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1 January 2018 net equity (First Time Adoption - FTA17). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Budgetary Law approved in December 2018 envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. Recognition of these DTAs has required an in-depth analysis by the management so to assess the proper accounting treatment, given the absence of specific indications by IAS12 on their recognition against equity or against P&L. On this matter, which pertains to a strict representation issue not involving recognition nor measurement topics, the management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and ISVAP (now IVASS) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). 17 Refer to Part A - Accounting policies - Section 5 Other matters - “Transition to IFRS9: Financial Instruments of UniCredit group” for an explanation of the effects arising from the first time adoption of IFRS9. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 152 2018 Annual Report and Accounts · UniCredit 4.3 Further reclassifications carried out as at 1 January 2018 in compliance with IFRS9 and the 5th update of Circular 262 The widespread impact of the introduction of the IFRS9 principle is further demonstrated by the fact that the impacts arising from its adoption have determined effects not only on the single financial asset and liabilities but also on other items relating to the latter. In this regard the following should be noted: • the item “Changes in fair value of portfolio hedged items” (assets and liabilities) that as at 31 December 2017 respectively amounted to €2,244,685 thousand and €3,041,990 thousand turn to €2,600,594 thousand and €3,046,609 thousand. Those differences relate to the reclassification of assets and liabilities subject to “macro-hedging” relationship in item “20.c) Other financial assets mandatorily at fair value” with their consequent exclusion from hedging relationship; • the item “Equity investments”, that as at 31 December 2017 amounted to €6,212,142 thousand now amount to €6,211,911 thousand due to the first application of IFRS9 by subsidiaries measured using the Equity method; • the item “Non-current assets and disposal groups classified as held for sale” and associated liabilities that as at 31 December 2017 respectively amounted to €1,110,960 thousand and €184,829 thousand now amount to €1,110,780 thousand and €184,831 thousand due to the application of IFRS9 by Legal Entities Held for Sale whose assets and liabilities have been reported in the abovementioned items according to IFRS5; • tax assets and liabilities that as at 31 December 2017 amounted respectively to €12,658,279 thousand and €1,092,905 thousand now amount to €12,848,869 thousand and 1,108,062 thousand as a result of tax effects on the accounting changes resulting from IFRS9 application; • the other assets, which amounted to €8.957.637 thousand as at 31 December 2017, amount to €8.800.375 thousand due to both the application of 5th update of Circular 262 which clarified that tangible assets accounted for in accordance with the provisions of IAS2 must be recorded in item “90. Tangible assets” rather than in item “Other Assets” and the application of IFRS9 by UniCredit S.p.A. foreign branches. • the other liabilities, which amounted to €15.573.476 thousand as at 31 December 2017,becomes equal to €14.808.680 thousand due to both the application of the 5th update of Circular 262 which clarified that provisions for off-balance sheet exposures must be shown in item “100. Provisions for risks and charges” rather than in item “Other liabilities” and the application of IFRS9 by UniCredit S.p.A. foreign branches. Approval of 2019 Budgetary law and consequent effects on deferred taxes related to IFRS9 adoption Starting from 1 January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1 January 2018 net equity (First Time Adoption - FTA17). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Budgetary Law approved in December 2018 envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. Recognition of these DTAs has required an in-depth analysis by the management so to assess the proper accounting treatment, given the absence of specific indications by IAS12 on their recognition against equity or against P&L. On this matter, which pertains to a strict representation issue not involving recognition nor measurement topics, the management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and ISVAP (now IVASS) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). 17 Refer to Part A - Accounting policies - Section 5 Other matters - “Transition to IFRS9: Financial Instruments of UniCredit group” for an explanation of the effects arising from the first time adoption of IFRS9. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 152 2018 Annual Report and Accounts · UniCredit 4.3 Further reclassifications carried out as at 1 January 2018 in compliance with IFRS9 and the 5th update of Circular 262 The widespread impact of the introduction of the IFRS9 principle is further demonstrated by the fact that the impacts arising from its adoption have determined effects not only on the single financial asset and liabilities but also on other items relating to the latter. In this regard the following should be noted: • the item “Changes in fair value of portfolio hedged items” (assets and liabilities) that as at 31 December 2017 respectively amounted to €2,244,685 thousand and €3,041,990 thousand turn to €2,600,594 thousand and €3,046,609 thousand. Those differences relate to the reclassification of assets and liabilities subject to “macro-hedging” relationship in item “20.c) Other financial assets mandatorily at fair value” with their consequent exclusion from hedging relationship; • the item “Equity investments”, that as at 31 December 2017 amounted to €6,212,142 thousand now amount to €6,211,911 thousand due to the first application of IFRS9 by subsidiaries measured using the Equity method; • the item “Non-current assets and disposal groups classified as held for sale” and associated liabilities that as at 31 December 2017 respectively amounted to €1,110,960 thousand and €184,829 thousand now amount to €1,110,780 thousand and €184,831 thousand due to the application of IFRS9 by Legal Entities Held for Sale whose assets and liabilities have been reported in the abovementioned items according to IFRS5; • tax assets and liabilities that as at 31 December 2017 amounted respectively to €12,658,279 thousand and €1,092,905 thousand now amount to €12,848,869 thousand and 1,108,062 thousand as a result of tax effects on the accounting changes resulting from IFRS9 application; • the other assets, which amounted to €8.957.637 thousand as at 31 December 2017, amount to €8.800.375 thousand due to both the application of 5th update of Circular 262 which clarified that tangible assets accounted for in accordance with the provisions of IAS2 must be recorded in item “90. Tangible assets” rather than in item “Other Assets” and the application of IFRS9 by UniCredit S.p.A. foreign branches. • the other liabilities, which amounted to €15.573.476 thousand as at 31 December 2017,becomes equal to €14.808.680 thousand due to both the application of the 5th update of Circular 262 which clarified that provisions for off-balance sheet exposures must be shown in item “100. Provisions for risks and charges” rather than in item “Other liabilities” and the application of IFRS9 by UniCredit S.p.A. foreign branches. Approval of 2019 Budgetary law and consequent effects on deferred taxes related to IFRS9 adoption Starting from 1 January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1 January 2018 net equity (First Time Adoption - FTA17). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Budgetary Law approved in December 2018 envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. Recognition of these DTAs has required an in-depth analysis by the management so to assess the proper accounting treatment, given the absence of specific indications by IAS12 on their recognition against equity or against P&L. On this matter, which pertains to a strict representation issue not involving recognition nor measurement topics, the management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and ISVAP (now IVASS) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). 17 Refer to Part A - Accounting policies - Section 5 Other matters - “Transition to IFRS9: Financial Instruments of UniCredit group” for an explanation of the effects arising from the first time adoption of IFRS9. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 153 In conclusion, DTAs related to the first time adoption of IFRS9, have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €3,892 million (€1,727million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €3,006 million (€840 million in the fourth quarter of 2018); 20% of rectified net profit (3,006 million) is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting. Lastly note that the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. *** The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 are audited by Deloitte & Touche S.p.A. pursuant to Legislative Decree No.39 of 27 January 2010 and to the resolution passed by the Shareholders’ Meeting on 11 May 2012. UniCredit group prepared and published within the time limits set by law and pursuant to the requirements of Consob, the Consolidated First Half Financial Report as at 30 June 2018, subject to limited scope audit, as well as the Consolidated Interim Reports as at 31 March and 30 September 2018, both as Press Releases. The Parent company accounts and the Consolidated accounts as at 31 December 2018 has been approved by the Board of Directors’ meeting of 6 February 2019, which authorised its disclosure to the public, also pursuant to IAS10. The whole document is filed in the competent offices and entities as required by law. A.2 - Main items of the accounts 1 - Financial assets at fair value through profit or loss a) Financial assets held for trading A financial asset is s classified as held for trading if it is: • acquired or incurred principally for the purpose of selling or repurchasing it in the short term; • part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; • a derivative (except for derivatives which constitute financial guarantees, and derivatives designated as hedging instruments). Like other financial instruments, on initial recognition, at settlement date, a held-for-trading financial asset is measured at its fair value, usually equal to the amount paid, excluding transaction costs and income, which are recognised in profit and loss even when directly attributable to the financial assets. Held for Trading are recognised at trade date. After initial recognition these financial assets are measured at their fair value through profit or loss. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial asset is recognised in profit or loss in item “80. Net gains (losses) on trading”, including gains or losses related to derivative contracts that are linked to assets and/or liabilities designated at fair value and other financial assets mandatorily at fair value. If the fair value of a financial instrument falls below zero, which may happen with derivative contracts, it is recognised in item “20. Financial liabilities held for trading”. A derivative is a financial instrument or other contract that has all three of the following characteristics: • its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable (usually called the “underlying”) provided that in case of non-financial variable, this is not specific of one of the parties to the contract; • it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; • it is settled at a future date. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 153 In conclusion, DTAs related to the first time adoption of IFRS9, have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €3,892 million (€1,727million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €3,006 million (€840 million in the fourth quarter of 2018); 20% of rectified net profit (3,006 million) is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting. Lastly note that the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. *** The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 are audited by Deloitte & Touche S.p.A. pursuant to Legislative Decree No.39 of 27 January 2010 and to the resolution passed by the Shareholders’ Meeting on 11 May 2012. UniCredit group prepared and published within the time limits set by law and pursuant to the requirements of Consob, the Consolidated First Half Financial Report as at 30 June 2018, subject to limited scope audit, as well as the Consolidated Interim Reports as at 31 March and 30 September 2018, both as Press Releases. The Parent company accounts and the Consolidated accounts as at 31 December 2018 has been approved by the Board of Directors’ meeting of 6 February 2019, which authorised its disclosure to the public, also pursuant to IAS10. The whole document is filed in the competent offices and entities as required by law. A.2 - Main items of the accounts 1 - Financial assets at fair value through profit or loss a) Financial assets held for trading A financial asset is s classified as held for trading if it is: • acquired or incurred principally for the purpose of selling or repurchasing it in the short term; • part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; • a derivative (except for derivatives which constitute financial guarantees, and derivatives designated as hedging instruments). Like other financial instruments, on initial recognition, at settlement date, a held-for-trading financial asset is measured at its fair value, usually equal to the amount paid, excluding transaction costs and income, which are recognised in profit and loss even when directly attributable to the financial assets. Held for Trading are recognised at trade date. After initial recognition these financial assets are measured at their fair value through profit or loss. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial asset is recognised in profit or loss in item “80. Net gains (losses) on trading”, including gains or losses related to derivative contracts that are linked to assets and/or liabilities designated at fair value and other financial assets mandatorily at fair value. If the fair value of a financial instrument falls below zero, which may happen with derivative contracts, it is recognised in item “20. Financial liabilities held for trading”. A derivative is a financial instrument or other contract that has all three of the following characteristics: • its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable (usually called the “underlying”) provided that in case of non-financial variable, this is not specific of one of the parties to the contract; • it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; • it is settled at a future date. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 153 In conclusion, DTAs related to the first time adoption of IFRS9, have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €3,892 million (€1,727million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €3,006 million (€840 million in the fourth quarter of 2018); 20% of rectified net profit (3,006 million) is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting. Lastly note that the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. *** The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 are audited by Deloitte & Touche S.p.A. pursuant to Legislative Decree No.39 of 27 January 2010 and to the resolution passed by the Shareholders’ Meeting on 11 May 2012. UniCredit group prepared and published within the time limits set by law and pursuant to the requirements of Consob, the Consolidated First Half Financial Report as at 30 June 2018, subject to limited scope audit, as well as the Consolidated Interim Reports as at 31 March and 30 September 2018, both as Press Releases. The Parent company accounts and the Consolidated accounts as at 31 December 2018 has been approved by the Board of Directors’ meeting of 6 February 2019, which authorised its disclosure to the public, also pursuant to IAS10. The whole document is filed in the competent offices and entities as required by law. A.2 - Main items of the accounts 1 - Financial assets at fair value through profit or loss a) Financial assets held for trading A financial asset is s classified as held for trading if it is: • acquired or incurred principally for the purpose of selling or repurchasing it in the short term; • part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; • a derivative (except for derivatives which constitute financial guarantees, and derivatives designated as hedging instruments). Like other financial instruments, on initial recognition, at settlement date, a held-for-trading financial asset is measured at its fair value, usually equal to the amount paid, excluding transaction costs and income, which are recognised in profit and loss even when directly attributable to the financial assets. Held for Trading are recognised at trade date. After initial recognition these financial assets are measured at their fair value through profit or loss. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial asset is recognised in profit or loss in item “80. Net gains (losses) on trading”, including gains or losses related to derivative contracts that are linked to assets and/or liabilities designated at fair value and other financial assets mandatorily at fair value. If the fair value of a financial instrument falls below zero, which may happen with derivative contracts, it is recognised in item “20. Financial liabilities held for trading”. A derivative is a financial instrument or other contract that has all three of the following characteristics: • its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable (usually called the “underlying”) provided that in case of non-financial variable, this is not specific of one of the parties to the contract; • it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; • it is settled at a future date. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 153 In conclusion, DTAs related to the first time adoption of IFRS9, have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €3,892 million (€1,727million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €3,006 million (€840 million in the fourth quarter of 2018); 20% of rectified net profit (3,006 million) is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting. Lastly note that the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. *** The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 are audited by Deloitte & Touche S.p.A. pursuant to Legislative Decree No.39 of 27 January 2010 and to the resolution passed by the Shareholders’ Meeting on 11 May 2012. UniCredit group prepared and published within the time limits set by law and pursuant to the requirements of Consob, the Consolidated First Half Financial Report as at 30 June 2018, subject to limited scope audit, as well as the Consolidated Interim Reports as at 31 March and 30 September 2018, both as Press Releases. The Parent company accounts and the Consolidated accounts as at 31 December 2018 has been approved by the Board of Directors’ meeting of 6 February 2019, which authorised its disclosure to the public, also pursuant to IAS10. The whole document is filed in the competent offices and entities as required by law. A.2 - Main items of the accounts 1 - Financial assets at fair value through profit or loss a) Financial assets held for trading A financial asset is s classified as held for trading if it is: • acquired or incurred principally for the purpose of selling or repurchasing it in the short term; • part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; • a derivative (except for derivatives which constitute financial guarantees, and derivatives designated as hedging instruments). Like other financial instruments, on initial recognition, at settlement date, a held-for-trading financial asset is measured at its fair value, usually equal to the amount paid, excluding transaction costs and income, which are recognised in profit and loss even when directly attributable to the financial assets. Held for Trading are recognised at trade date. After initial recognition these financial assets are measured at their fair value through profit or loss. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial asset is recognised in profit or loss in item “80. Net gains (losses) on trading”, including gains or losses related to derivative contracts that are linked to assets and/or liabilities designated at fair value and other financial assets mandatorily at fair value. If the fair value of a financial instrument falls below zero, which may happen with derivative contracts, it is recognised in item “20. Financial liabilities held for trading”. A derivative is a financial instrument or other contract that has all three of the following characteristics: • its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable (usually called the “underlying”) provided that in case of non-financial variable, this is not specific of one of the parties to the contract; • it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; • it is settled at a future date. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 153 In conclusion, DTAs related to the first time adoption of IFRS9, have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €3,892 million (€1,727million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €3,006 million (€840 million in the fourth quarter of 2018); 20% of rectified net profit (3,006 million) is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting. Lastly note that the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. *** The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 are audited by Deloitte & Touche S.p.A. pursuant to Legislative Decree No.39 of 27 January 2010 and to the resolution passed by the Shareholders’ Meeting on 11 May 2012. UniCredit group prepared and published within the time limits set by law and pursuant to the requirements of Consob, the Consolidated First Half Financial Report as at 30 June 2018, subject to limited scope audit, as well as the Consolidated Interim Reports as at 31 March and 30 September 2018, both as Press Releases. The Parent company accounts and the Consolidated accounts as at 31 December 2018 has been approved by the Board of Directors’ meeting of 6 February 2019, which authorised its disclosure to the public, also pursuant to IAS10. The whole document is filed in the competent offices and entities as required by law. A.2 - Main items of the accounts 1 - Financial assets at fair value through profit or loss a) Financial assets held for trading A financial asset is s classified as held for trading if it is: • acquired or incurred principally for the purpose of selling or repurchasing it in the short term; • part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; • a derivative (except for derivatives which constitute financial guarantees, and derivatives designated as hedging instruments). Like other financial instruments, on initial recognition, at settlement date, a held-for-trading financial asset is measured at its fair value, usually equal to the amount paid, excluding transaction costs and income, which are recognised in profit and loss even when directly attributable to the financial assets. Held for Trading are recognised at trade date. After initial recognition these financial assets are measured at their fair value through profit or loss. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial asset is recognised in profit or loss in item “80. Net gains (losses) on trading”, including gains or losses related to derivative contracts that are linked to assets and/or liabilities designated at fair value and other financial assets mandatorily at fair value. If the fair value of a financial instrument falls below zero, which may happen with derivative contracts, it is recognised in item “20. Financial liabilities held for trading”. A derivative is a financial instrument or other contract that has all three of the following characteristics: • its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable (usually called the “underlying”) provided that in case of non-financial variable, this is not specific of one of the parties to the contract; • it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; • it is settled at a future date. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 154 2018 Annual Report and Accounts · UniCredit An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract, with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative is separated from financial liabilities other than those measured at fair value through profit or loss and from non-financial instruments, and is recognised as a derivative, if: • the economic characteristics and risks of the embedded derivative are not closely relating to those of the host contract; • a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and • the hybrid (combined) instrument is not measured entirely at fair value through profit or loss. When an embedded derivative is separated, the host contract is accounted for according to its accounting classification. b) Financial assets designated at fair value through profit or loss A non-derivative financial asset can be designated at fair value if the abovementioned designation avoids accounting mismatches that arise from measuring assets and associated liabilities according to different measurement criteria. These assets are accounted for alike “Financial assets held for trading” however gains and losses, whether realised or unrealised, are recognised in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value”; such item also includes changes in fair value on “financial liabilities designated at fair value” linked to own credit risk, if such a designation creates or increases an accounting mismatch in P&L according to IFRS9. c) Other financial assets mandatorily at fair value A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. Specifically, the following assets have been classified in this portfolio: • debt instruments, securities and loans for which the business model is neither held to collect nor held to collect and sell but which are not part of the trading book; • debt instruments, securities and loans with cash flows that are not solely payment of principal and interest; • units in investment funds; • equity instruments not held for trading for which the Group does not apply the option granted by the standard of valuing these instruments at fair value through other comprehensive income. These assets are accounted for alike “Financial assets held for trading”, however gains and losses, whether realised or unrealised, are recognised in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - b) Other financial assets mandatorily at fair value”. 2 - Financial assets at fair value through other comprehensive income A financial asset is classified at fair value through other comprehensive income if: • its business model is held to collect and sell; • its cash flows are solely the payment of principal and interest. This category also includes equity instruments not held for trading for which the Group applies the option granted by the standard of valuing the instruments at fair value through other comprehensive income. On initial recognition, at settlement date, a financial assets is measured at fair value, which is usually equal to the consideration paid, plus transaction costs and revenues directly attributable to the instrument. After initial recognition, the interests accrued on interest-bearing instruments are recorded in the income statement according to the amortised cost criterion in item “10. Interest income and similar revenues” if positive, or in item 20. “Interest expenses and similar charges” if negative. The gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “120. Valuation reserves” in shareholders' equity. These instruments are tested for impairment as illustrated in the specific section 16 - Other Information - Impairment. Impairment losses are recorded in the income statement in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income” with contra-entry in the statement of other comprehensive income and also reported under item “120. Valuation reserves” in shareholders' equity. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 154 2018 Annual Report and Accounts · UniCredit An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract, with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative is separated from financial liabilities other than those measured at fair value through profit or loss and from non-financial instruments, and is recognised as a derivative, if: • the economic characteristics and risks of the embedded derivative are not closely relating to those of the host contract; • a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and • the hybrid (combined) instrument is not measured entirely at fair value through profit or loss. When an embedded derivative is separated, the host contract is accounted for according to its accounting classification. b) Financial assets designated at fair value through profit or loss A non-derivative financial asset can be designated at fair value if the abovementioned designation avoids accounting mismatches that arise from measuring assets and associated liabilities according to different measurement criteria. These assets are accounted for alike “Financial assets held for trading” however gains and losses, whether realised or unrealised, are recognised in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value”; such item also includes changes in fair value on “financial liabilities designated at fair value” linked to own credit risk, if such a designation creates or increases an accounting mismatch in P&L according to IFRS9. c) Other financial assets mandatorily at fair value A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. Specifically, the following assets have been classified in this portfolio: • debt instruments, securities and loans for which the business model is neither held to collect nor held to collect and sell but which are not part of the trading book; • debt instruments, securities and loans with cash flows that are not solely payment of principal and interest; • units in investment funds; • equity instruments not held for trading for which the Group does not apply the option granted by the standard of valuing these instruments at fair value through other comprehensive income. These assets are accounted for alike “Financial assets held for trading”, however gains and losses, whether realised or unrealised, are recognised in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - b) Other financial assets mandatorily at fair value”. 2 - Financial assets at fair value through other comprehensive income A financial asset is classified at fair value through other comprehensive income if: • its business model is held to collect and sell; • its cash flows are solely the payment of principal and interest. This category also includes equity instruments not held for trading for which the Group applies the option granted by the standard of valuing the instruments at fair value through other comprehensive income. On initial recognition, at settlement date, a financial assets is measured at fair value, which is usually equal to the consideration paid, plus transaction costs and revenues directly attributable to the instrument. After initial recognition, the interests accrued on interest-bearing instruments are recorded in the income statement according to the amortised cost criterion in item “10. Interest income and similar revenues” if positive, or in item 20. “Interest expenses and similar charges” if negative. The gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “120. Valuation reserves” in shareholders' equity. These instruments are tested for impairment as illustrated in the specific section 16 - Other Information - Impairment. Impairment losses are recorded in the income statement in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income” with contra-entry in the statement of other comprehensive income and also reported under item “120. Valuation reserves” in shareholders' equity. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 154 2018 Annual Report and Accounts · UniCredit An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract, with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative is separated from financial liabilities other than those measured at fair value through profit or loss and from non-financial instruments, and is recognised as a derivative, if: • the economic characteristics and risks of the embedded derivative are not closely relating to those of the host contract; • a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and • the hybrid (combined) instrument is not measured entirely at fair value through profit or loss. When an embedded derivative is separated, the host contract is accounted for according to its accounting classification. b) Financial assets designated at fair value through profit or loss A non-derivative financial asset can be designated at fair value if the abovementioned designation avoids accounting mismatches that arise from measuring assets and associated liabilities according to different measurement criteria. These assets are accounted for alike “Financial assets held for trading” however gains and losses, whether realised or unrealised, are recognised in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value”; such item also includes changes in fair value on “financial liabilities designated at fair value” linked to own credit risk, if such a designation creates or increases an accounting mismatch in P&L according to IFRS9. c) Other financial assets mandatorily at fair value A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. Specifically, the following assets have been classified in this portfolio: • debt instruments, securities and loans for which the business model is neither held to collect nor held to collect and sell but which are not part of the trading book; • debt instruments, securities and loans with cash flows that are not solely payment of principal and interest; • units in investment funds; • equity instruments not held for trading for which the Group does not apply the option granted by the standard of valuing these instruments at fair value through other comprehensive income. These assets are accounted for alike “Financial assets held for trading”, however gains and losses, whether realised or unrealised, are recognised in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - b) Other financial assets mandatorily at fair value”. 2 - Financial assets at fair value through other comprehensive income A financial asset is classified at fair value through other comprehensive income if: • its business model is held to collect and sell; • its cash flows are solely the payment of principal and interest. This category also includes equity instruments not held for trading for which the Group applies the option granted by the standard of valuing the instruments at fair value through other comprehensive income. On initial recognition, at settlement date, a financial assets is measured at fair value, which is usually equal to the consideration paid, plus transaction costs and revenues directly attributable to the instrument. After initial recognition, the interests accrued on interest-bearing instruments are recorded in the income statement according to the amortised cost criterion in item “10. Interest income and similar revenues” if positive, or in item 20. “Interest expenses and similar charges” if negative. The gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “120. Valuation reserves” in shareholders' equity. These instruments are tested for impairment as illustrated in the specific section 16 - Other Information - Impairment. Impairment losses are recorded in the income statement in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income” with contra-entry in the statement of other comprehensive income and also reported under item “120. Valuation reserves” in shareholders' equity. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 154 2018 Annual Report and Accounts · UniCredit An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract, with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative is separated from financial liabilities other than those measured at fair value through profit or loss and from non-financial instruments, and is recognised as a derivative, if: • the economic characteristics and risks of the embedded derivative are not closely relating to those of the host contract; • a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and • the hybrid (combined) instrument is not measured entirely at fair value through profit or loss. When an embedded derivative is separated, the host contract is accounted for according to its accounting classification. b) Financial assets designated at fair value through profit or loss A non-derivative financial asset can be designated at fair value if the abovementioned designation avoids accounting mismatches that arise from measuring assets and associated liabilities according to different measurement criteria. These assets are accounted for alike “Financial assets held for trading” however gains and losses, whether realised or unrealised, are recognised in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value”; such item also includes changes in fair value on “financial liabilities designated at fair value” linked to own credit risk, if such a designation creates or increases an accounting mismatch in P&L according to IFRS9. c) Other financial assets mandatorily at fair value A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. Specifically, the following assets have been classified in this portfolio: • debt instruments, securities and loans for which the business model is neither held to collect nor held to collect and sell but which are not part of the trading book; • debt instruments, securities and loans with cash flows that are not solely payment of principal and interest; • units in investment funds; • equity instruments not held for trading for which the Group does not apply the option granted by the standard of valuing these instruments at fair value through other comprehensive income. These assets are accounted for alike “Financial assets held for trading”, however gains and losses, whether realised or unrealised, are recognised in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - b) Other financial assets mandatorily at fair value”. 2 - Financial assets at fair value through other comprehensive income A financial asset is classified at fair value through other comprehensive income if: • its business model is held to collect and sell; • its cash flows are solely the payment of principal and interest. This category also includes equity instruments not held for trading for which the Group applies the option granted by the standard of valuing the instruments at fair value through other comprehensive income. On initial recognition, at settlement date, a financial assets is measured at fair value, which is usually equal to the consideration paid, plus transaction costs and revenues directly attributable to the instrument. After initial recognition, the interests accrued on interest-bearing instruments are recorded in the income statement according to the amortised cost criterion in item “10. Interest income and similar revenues” if positive, or in item 20. “Interest expenses and similar charges” if negative. The gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “120. Valuation reserves” in shareholders' equity. These instruments are tested for impairment as illustrated in the specific section 16 - Other Information - Impairment. Impairment losses are recorded in the income statement in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income” with contra-entry in the statement of other comprehensive income and also reported under item “120. Valuation reserves” in shareholders' equity. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 154 2018 Annual Report and Accounts · UniCredit An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract, with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative is separated from financial liabilities other than those measured at fair value through profit or loss and from non-financial instruments, and is recognised as a derivative, if: • the economic characteristics and risks of the embedded derivative are not closely relating to those of the host contract; • a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and • the hybrid (combined) instrument is not measured entirely at fair value through profit or loss. When an embedded derivative is separated, the host contract is accounted for according to its accounting classification. b) Financial assets designated at fair value through profit or loss A non-derivative financial asset can be designated at fair value if the abovementioned designation avoids accounting mismatches that arise from measuring assets and associated liabilities according to different measurement criteria. These assets are accounted for alike “Financial assets held for trading” however gains and losses, whether realised or unrealised, are recognised in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value”; such item also includes changes in fair value on “financial liabilities designated at fair value” linked to own credit risk, if such a designation creates or increases an accounting mismatch in P&L according to IFRS9. c) Other financial assets mandatorily at fair value A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. Specifically, the following assets have been classified in this portfolio: • debt instruments, securities and loans for which the business model is neither held to collect nor held to collect and sell but which are not part of the trading book; • debt instruments, securities and loans with cash flows that are not solely payment of principal and interest; • units in investment funds; • equity instruments not held for trading for which the Group does not apply the option granted by the standard of valuing these instruments at fair value through other comprehensive income. These assets are accounted for alike “Financial assets held for trading”, however gains and losses, whether realised or unrealised, are recognised in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - b) Other financial assets mandatorily at fair value”. 2 - Financial assets at fair value through other comprehensive income A financial asset is classified at fair value through other comprehensive income if: • its business model is held to collect and sell; • its cash flows are solely the payment of principal and interest. This category also includes equity instruments not held for trading for which the Group applies the option granted by the standard of valuing the instruments at fair value through other comprehensive income. On initial recognition, at settlement date, a financial assets is measured at fair value, which is usually equal to the consideration paid, plus transaction costs and revenues directly attributable to the instrument. After initial recognition, the interests accrued on interest-bearing instruments are recorded in the income statement according to the amortised cost criterion in item “10. Interest income and similar revenues” if positive, or in item 20. “Interest expenses and similar charges” if negative. The gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “120. Valuation reserves” in shareholders' equity. These instruments are tested for impairment as illustrated in the specific section 16 - Other Information - Impairment. Impairment losses are recorded in the income statement in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income” with contra-entry in the statement of other comprehensive income and also reported under item “120. Valuation reserves” in shareholders' equity. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 155 In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. With regard to equity instruments, the gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “120. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in item “150. Reserves”. In accordance with the provisions of IFRS9, no impairment losses on equity instruments are recognised in the income statement. Only dividends are recognised in P&L within item “70. Dividend income and similar revenues”. 3 - Financial assets at amortised cost A financial asset is classified as financial asset measured at amortised cost if: • its business model is held to collect; • its cash flows are solely the payment of principal and interest. These items also include the net value of finance leases of assets under construction or awaiting lease, provided the leases have the characteristics of contracts entailing the transfer of risk. On initial recognition, at settlement date, financial assets at amortised cost are measured at fair value, which is usually equal to the consideration paid, plus transaction costs and income directly attributable to the instrument. After initial recognition at fair value, these assets are measured at amortised cost which requires the recognition of interest on an accrual basis by using the effective interest rate method over the term of the loan. Such interest is recognised in item “10. Interest income and similar revenues” if positive or in item “20. Interest expenses and similar charges” if negative. The amount of financial assets at amortised cost is adjusted in order to take into account impairment losses arising from valuation process as illustrated in the specific section 16 - Other information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 155 In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. With regard to equity instruments, the gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “120. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in item “150. Reserves”. In accordance with the provisions of IFRS9, no impairment losses on equity instruments are recognised in the income statement. Only dividends are recognised in P&L within item “70. Dividend income and similar revenues”. 3 - Financial assets at amortised cost A financial asset is classified as financial asset measured at amortised cost if: • its business model is held to collect; • its cash flows are solely the payment of principal and interest. These items also include the net value of finance leases of assets under construction or awaiting lease, provided the leases have the characteristics of contracts entailing the transfer of risk. On initial recognition, at settlement date, financial assets at amortised cost are measured at fair value, which is usually equal to the consideration paid, plus transaction costs and income directly attributable to the instrument. After initial recognition at fair value, these assets are measured at amortised cost which requires the recognition of interest on an accrual basis by using the effective interest rate method over the term of the loan. Such interest is recognised in item “10. Interest income and similar revenues” if positive or in item “20. Interest expenses and similar charges” if negative. The amount of financial assets at amortised cost is adjusted in order to take into account impairment losses arising from valuation process as illustrated in the specific section 16 - Other information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 155 In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. With regard to equity instruments, the gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “120. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in item “150. Reserves”. In accordance with the provisions of IFRS9, no impairment losses on equity instruments are recognised in the income statement. Only dividends are recognised in P&L within item “70. Dividend income and similar revenues”. 3 - Financial assets at amortised cost A financial asset is classified as financial asset measured at amortised cost if: • its business model is held to collect; • its cash flows are solely the payment of principal and interest. These items also include the net value of finance leases of assets under construction or awaiting lease, provided the leases have the characteristics of contracts entailing the transfer of risk. On initial recognition, at settlement date, financial assets at amortised cost are measured at fair value, which is usually equal to the consideration paid, plus transaction costs and income directly attributable to the instrument. After initial recognition at fair value, these assets are measured at amortised cost which requires the recognition of interest on an accrual basis by using the effective interest rate method over the term of the loan. Such interest is recognised in item “10. Interest income and similar revenues” if positive or in item “20. Interest expenses and similar charges” if negative. The amount of financial assets at amortised cost is adjusted in order to take into account impairment losses arising from valuation process as illustrated in the specific section 16 - Other information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 155 In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. With regard to equity instruments, the gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “120. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in item “150. Reserves”. In accordance with the provisions of IFRS9, no impairment losses on equity instruments are recognised in the income statement. Only dividends are recognised in P&L within item “70. Dividend income and similar revenues”. 3 - Financial assets at amortised cost A financial asset is classified as financial asset measured at amortised cost if: • its business model is held to collect; • its cash flows are solely the payment of principal and interest. These items also include the net value of finance leases of assets under construction or awaiting lease, provided the leases have the characteristics of contracts entailing the transfer of risk. On initial recognition, at settlement date, financial assets at amortised cost are measured at fair value, which is usually equal to the consideration paid, plus transaction costs and income directly attributable to the instrument. After initial recognition at fair value, these assets are measured at amortised cost which requires the recognition of interest on an accrual basis by using the effective interest rate method over the term of the loan. Such interest is recognised in item “10. Interest income and similar revenues” if positive or in item “20. Interest expenses and similar charges” if negative. The amount of financial assets at amortised cost is adjusted in order to take into account impairment losses arising from valuation process as illustrated in the specific section 16 - Other information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 155 In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. With regard to equity instruments, the gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “120. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in item “150. Reserves”. In accordance with the provisions of IFRS9, no impairment losses on equity instruments are recognised in the income statement. Only dividends are recognised in P&L within item “70. Dividend income and similar revenues”. 3 - Financial assets at amortised cost A financial asset is classified as financial asset measured at amortised cost if: • its business model is held to collect; • its cash flows are solely the payment of principal and interest. These items also include the net value of finance leases of assets under construction or awaiting lease, provided the leases have the characteristics of contracts entailing the transfer of risk. On initial recognition, at settlement date, financial assets at amortised cost are measured at fair value, which is usually equal to the consideration paid, plus transaction costs and income directly attributable to the instrument. After initial recognition at fair value, these assets are measured at amortised cost which requires the recognition of interest on an accrual basis by using the effective interest rate method over the term of the loan. Such interest is recognised in item “10. Interest income and similar revenues” if positive or in item “20. Interest expenses and similar charges” if negative. The amount of financial assets at amortised cost is adjusted in order to take into account impairment losses arising from valuation process as illustrated in the specific section 16 - Other information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 156 2018 Annual Report and Accounts · UniCredit 4 - Hedge accounting Hedging instruments are created to hedge market (interest-rate, currency and price) and/or credit risk to which the hedged positions are exposed. They may be described as follows: • fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or liability, or an identifiable portion of such an asset or liability; • cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction which could affect profit or loss in future periods; • hedge of a net investment in a foreign entity, whose operations are based or conducted in a currency other than euro. It should be noted that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Hedging derivatives are initially recognised on trade date and are valued at their fair value. A hedging relationship qualifies for hedge accounting if there is formal designation and documentation of the hedging relationship including the risk management objective, the strategy for undertaking the hedge, and how the hedging instrument’s prospective and retrospective effectiveness will be assessed. It is necessary to assess the hedge’s effectiveness, at inception and in subsequent periods, in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Generally a hedge is regarded as highly effective if, at the inception of the hedge and in subsequent periods, it is determined prospectively to remain highly effective, and retrospectively verified that the hedge ratio (i.e. the changes in fair value of hedged items and hedging instruments) is within a range of 80-125%. The hedge is assessed on an ongoing basis and thus must prospectively remain highly effective throughout the financial reporting periods for which the hedge has been designated. The assessment of effectiveness is made at each balance-sheet date or other reporting date. If the assessment does not confirm the effectiveness of the hedge, from that time on hedge accounting is discontinued in respect of the hedge and the hedging derivative is reclassified as a held-for-trading instrument. In addition, the hedging relationship ceases when (i) the hedging instrument expires or is sold, terminated or exercised, (ii) the hedged item is sold, expires or is repaid, (iii) it is no longer highly probable that the forecast transaction will occur. Hedging instruments are so designated when identifiable with an ultimate counterparty outside the Group. Hedging derivatives are measured at fair value. Specifically: • Fair Value Hedging, an effective fair value hedge is accounted for as follows: the gain or loss from remeasuring the hedging instrument at fair value is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; the gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised through profit or loss in the same item. Hedging ineffectiveness is represented by the difference between the change in the fair value of hedging instruments and the change in the fair value of hedged item. If the hedging relationship is terminated for reasons other than the sale of the hedged item, the difference between the carrying amount of the hedged item on termination of the hedging and the carrying amount it would have had if the hedge had never existed, is recognised through profit or loss in interest receivable or payable over the residual life of the original hedge, in the case of interest-bearing instruments; if the financial instrument does not bear interest, the difference is recognised in profit or loss under item “90. Net gains (losses) on hedge accounting” at once. If the hedged item is sold or repaid, the portion of fair value which is still unamortised is at once recognised through profit or loss in item “100. Gains (Losses) on disposal and repurchase”; • Cash Flow Hedging, hedging instruments are valued at fair value. Change in the fair value of a hedging instrument that is considered effective is recognised in equity item “120. Valuation reserves”. The ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”. If a cash flow hedge is determined to be no longer effective or the hedging relationship is terminated, the cumulative gain or loss on the hedging instrument that remains recognised in revaluation reserves from the period when the hedge was effective remains separately recognised in revaluation reserves until the forecast hedged transaction occurs or is determined to be no longer possible; in the latter case gains or losses are transferred through profit or loss to item “90. Net gains (losses) on hedge accounting “. The fair value changes are recorded in the Statement of Other Comprehensive Income and disclosed in item “120. Valuation reserves "; • Hedging a Net Investment in a Foreign Entity, hedges of a net investment in a foreign entity whose activities are based or conducted in a country or currency other than those of the reporting entity are accounted for similarly to cash flow hedges. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognised directly in equity is recognised through profit or loss on disposal of the foreign entity. The fair value changes are recorded in the Statement of Comprehensive Income and disclosed in item “120. Valuation reserves "; the ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 156 2018 Annual Report and Accounts · UniCredit 4 - Hedge accounting Hedging instruments are created to hedge market (interest-rate, currency and price) and/or credit risk to which the hedged positions are exposed. They may be described as follows: • fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or liability, or an identifiable portion of such an asset or liability; • cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction which could affect profit or loss in future periods; • hedge of a net investment in a foreign entity, whose operations are based or conducted in a currency other than euro. It should be noted that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Hedging derivatives are initially recognised on trade date and are valued at their fair value. A hedging relationship qualifies for hedge accounting if there is formal designation and documentation of the hedging relationship including the risk management objective, the strategy for undertaking the hedge, and how the hedging instrument’s prospective and retrospective effectiveness will be assessed. It is necessary to assess the hedge’s effectiveness, at inception and in subsequent periods, in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Generally a hedge is regarded as highly effective if, at the inception of the hedge and in subsequent periods, it is determined prospectively to remain highly effective, and retrospectively verified that the hedge ratio (i.e. the changes in fair value of hedged items and hedging instruments) is within a range of 80-125%. The hedge is assessed on an ongoing basis and thus must prospectively remain highly effective throughout the financial reporting periods for which the hedge has been designated. The assessment of effectiveness is made at each balance-sheet date or other reporting date. If the assessment does not confirm the effectiveness of the hedge, from that time on hedge accounting is discontinued in respect of the hedge and the hedging derivative is reclassified as a held-for-trading instrument. In addition, the hedging relationship ceases when (i) the hedging instrument expires or is sold, terminated or exercised, (ii) the hedged item is sold, expires or is repaid, (iii) it is no longer highly probable that the forecast transaction will occur. Hedging instruments are so designated when identifiable with an ultimate counterparty outside the Group. Hedging derivatives are measured at fair value. Specifically: • Fair Value Hedging, an effective fair value hedge is accounted for as follows: the gain or loss from remeasuring the hedging instrument at fair value is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; the gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised through profit or loss in the same item. Hedging ineffectiveness is represented by the difference between the change in the fair value of hedging instruments and the change in the fair value of hedged item. If the hedging relationship is terminated for reasons other than the sale of the hedged item, the difference between the carrying amount of the hedged item on termination of the hedging and the carrying amount it would have had if the hedge had never existed, is recognised through profit or loss in interest receivable or payable over the residual life of the original hedge, in the case of interest-bearing instruments; if the financial instrument does not bear interest, the difference is recognised in profit or loss under item “90. Net gains (losses) on hedge accounting” at once. If the hedged item is sold or repaid, the portion of fair value which is still unamortised is at once recognised through profit or loss in item “100. Gains (Losses) on disposal and repurchase”; • Cash Flow Hedging, hedging instruments are valued at fair value. Change in the fair value of a hedging instrument that is considered effective is recognised in equity item “120. Valuation reserves”. The ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”. If a cash flow hedge is determined to be no longer effective or the hedging relationship is terminated, the cumulative gain or loss on the hedging instrument that remains recognised in revaluation reserves from the period when the hedge was effective remains separately recognised in revaluation reserves until the forecast hedged transaction occurs or is determined to be no longer possible; in the latter case gains or losses are transferred through profit or loss to item “90. Net gains (losses) on hedge accounting “. The fair value changes are recorded in the Statement of Other Comprehensive Income and disclosed in item “120. Valuation reserves "; • Hedging a Net Investment in a Foreign Entity, hedges of a net investment in a foreign entity whose activities are based or conducted in a country or currency other than those of the reporting entity are accounted for similarly to cash flow hedges. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognised directly in equity is recognised through profit or loss on disposal of the foreign entity. The fair value changes are recorded in the Statement of Comprehensive Income and disclosed in item “120. Valuation reserves "; the ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 156 2018 Annual Report and Accounts · UniCredit 4 - Hedge accounting Hedging instruments are created to hedge market (interest-rate, currency and price) and/or credit risk to which the hedged positions are exposed. They may be described as follows: • fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or liability, or an identifiable portion of such an asset or liability; • cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction which could affect profit or loss in future periods; • hedge of a net investment in a foreign entity, whose operations are based or conducted in a currency other than euro. It should be noted that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Hedging derivatives are initially recognised on trade date and are valued at their fair value. A hedging relationship qualifies for hedge accounting if there is formal designation and documentation of the hedging relationship including the risk management objective, the strategy for undertaking the hedge, and how the hedging instrument’s prospective and retrospective effectiveness will be assessed. It is necessary to assess the hedge’s effectiveness, at inception and in subsequent periods, in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Generally a hedge is regarded as highly effective if, at the inception of the hedge and in subsequent periods, it is determined prospectively to remain highly effective, and retrospectively verified that the hedge ratio (i.e. the changes in fair value of hedged items and hedging instruments) is within a range of 80-125%. The hedge is assessed on an ongoing basis and thus must prospectively remain highly effective throughout the financial reporting periods for which the hedge has been designated. The assessment of effectiveness is made at each balance-sheet date or other reporting date. If the assessment does not confirm the effectiveness of the hedge, from that time on hedge accounting is discontinued in respect of the hedge and the hedging derivative is reclassified as a held-for-trading instrument. In addition, the hedging relationship ceases when (i) the hedging instrument expires or is sold, terminated or exercised, (ii) the hedged item is sold, expires or is repaid, (iii) it is no longer highly probable that the forecast transaction will occur. Hedging instruments are so designated when identifiable with an ultimate counterparty outside the Group. Hedging derivatives are measured at fair value. Specifically: • Fair Value Hedging, an effective fair value hedge is accounted for as follows: the gain or loss from remeasuring the hedging instrument at fair value is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; the gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised through profit or loss in the same item. Hedging ineffectiveness is represented by the difference between the change in the fair value of hedging instruments and the change in the fair value of hedged item. If the hedging relationship is terminated for reasons other than the sale of the hedged item, the difference between the carrying amount of the hedged item on termination of the hedging and the carrying amount it would have had if the hedge had never existed, is recognised through profit or loss in interest receivable or payable over the residual life of the original hedge, in the case of interest-bearing instruments; if the financial instrument does not bear interest, the difference is recognised in profit or loss under item “90. Net gains (losses) on hedge accounting” at once. If the hedged item is sold or repaid, the portion of fair value which is still unamortised is at once recognised through profit or loss in item “100. Gains (Losses) on disposal and repurchase”; • Cash Flow Hedging, hedging instruments are valued at fair value. Change in the fair value of a hedging instrument that is considered effective is recognised in equity item “120. Valuation reserves”. The ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”. If a cash flow hedge is determined to be no longer effective or the hedging relationship is terminated, the cumulative gain or loss on the hedging instrument that remains recognised in revaluation reserves from the period when the hedge was effective remains separately recognised in revaluation reserves until the forecast hedged transaction occurs or is determined to be no longer possible; in the latter case gains or losses are transferred through profit or loss to item “90. Net gains (losses) on hedge accounting “. The fair value changes are recorded in the Statement of Other Comprehensive Income and disclosed in item “120. Valuation reserves "; • Hedging a Net Investment in a Foreign Entity, hedges of a net investment in a foreign entity whose activities are based or conducted in a country or currency other than those of the reporting entity are accounted for similarly to cash flow hedges. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognised directly in equity is recognised through profit or loss on disposal of the foreign entity. The fair value changes are recorded in the Statement of Comprehensive Income and disclosed in item “120. Valuation reserves "; the ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 156 2018 Annual Report and Accounts · UniCredit 4 - Hedge accounting Hedging instruments are created to hedge market (interest-rate, currency and price) and/or credit risk to which the hedged positions are exposed. They may be described as follows: • fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or liability, or an identifiable portion of such an asset or liability; • cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction which could affect profit or loss in future periods; • hedge of a net investment in a foreign entity, whose operations are based or conducted in a currency other than euro. It should be noted that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Hedging derivatives are initially recognised on trade date and are valued at their fair value. A hedging relationship qualifies for hedge accounting if there is formal designation and documentation of the hedging relationship including the risk management objective, the strategy for undertaking the hedge, and how the hedging instrument’s prospective and retrospective effectiveness will be assessed. It is necessary to assess the hedge’s effectiveness, at inception and in subsequent periods, in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Generally a hedge is regarded as highly effective if, at the inception of the hedge and in subsequent periods, it is determined prospectively to remain highly effective, and retrospectively verified that the hedge ratio (i.e. the changes in fair value of hedged items and hedging instruments) is within a range of 80-125%. The hedge is assessed on an ongoing basis and thus must prospectively remain highly effective throughout the financial reporting periods for which the hedge has been designated. The assessment of effectiveness is made at each balance-sheet date or other reporting date. If the assessment does not confirm the effectiveness of the hedge, from that time on hedge accounting is discontinued in respect of the hedge and the hedging derivative is reclassified as a held-for-trading instrument. In addition, the hedging relationship ceases when (i) the hedging instrument expires or is sold, terminated or exercised, (ii) the hedged item is sold, expires or is repaid, (iii) it is no longer highly probable that the forecast transaction will occur. Hedging instruments are so designated when identifiable with an ultimate counterparty outside the Group. Hedging derivatives are measured at fair value. Specifically: • Fair Value Hedging, an effective fair value hedge is accounted for as follows: the gain or loss from remeasuring the hedging instrument at fair value is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; the gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised through profit or loss in the same item. Hedging ineffectiveness is represented by the difference between the change in the fair value of hedging instruments and the change in the fair value of hedged item. If the hedging relationship is terminated for reasons other than the sale of the hedged item, the difference between the carrying amount of the hedged item on termination of the hedging and the carrying amount it would have had if the hedge had never existed, is recognised through profit or loss in interest receivable or payable over the residual life of the original hedge, in the case of interest-bearing instruments; if the financial instrument does not bear interest, the difference is recognised in profit or loss under item “90. Net gains (losses) on hedge accounting” at once. If the hedged item is sold or repaid, the portion of fair value which is still unamortised is at once recognised through profit or loss in item “100. Gains (Losses) on disposal and repurchase”; • Cash Flow Hedging, hedging instruments are valued at fair value. Change in the fair value of a hedging instrument that is considered effective is recognised in equity item “120. Valuation reserves”. The ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”. If a cash flow hedge is determined to be no longer effective or the hedging relationship is terminated, the cumulative gain or loss on the hedging instrument that remains recognised in revaluation reserves from the period when the hedge was effective remains separately recognised in revaluation reserves until the forecast hedged transaction occurs or is determined to be no longer possible; in the latter case gains or losses are transferred through profit or loss to item “90. Net gains (losses) on hedge accounting “. The fair value changes are recorded in the Statement of Other Comprehensive Income and disclosed in item “120. Valuation reserves "; • Hedging a Net Investment in a Foreign Entity, hedges of a net investment in a foreign entity whose activities are based or conducted in a country or currency other than those of the reporting entity are accounted for similarly to cash flow hedges. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognised directly in equity is recognised through profit or loss on disposal of the foreign entity. The fair value changes are recorded in the Statement of Comprehensive Income and disclosed in item “120. Valuation reserves "; the ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 156 2018 Annual Report and Accounts · UniCredit 4 - Hedge accounting Hedging instruments are created to hedge market (interest-rate, currency and price) and/or credit risk to which the hedged positions are exposed. They may be described as follows: • fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or liability, or an identifiable portion of such an asset or liability; • cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction which could affect profit or loss in future periods; • hedge of a net investment in a foreign entity, whose operations are based or conducted in a currency other than euro. It should be noted that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Hedging derivatives are initially recognised on trade date and are valued at their fair value. A hedging relationship qualifies for hedge accounting if there is formal designation and documentation of the hedging relationship including the risk management objective, the strategy for undertaking the hedge, and how the hedging instrument’s prospective and retrospective effectiveness will be assessed. It is necessary to assess the hedge’s effectiveness, at inception and in subsequent periods, in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Generally a hedge is regarded as highly effective if, at the inception of the hedge and in subsequent periods, it is determined prospectively to remain highly effective, and retrospectively verified that the hedge ratio (i.e. the changes in fair value of hedged items and hedging instruments) is within a range of 80-125%. The hedge is assessed on an ongoing basis and thus must prospectively remain highly effective throughout the financial reporting periods for which the hedge has been designated. The assessment of effectiveness is made at each balance-sheet date or other reporting date. If the assessment does not confirm the effectiveness of the hedge, from that time on hedge accounting is discontinued in respect of the hedge and the hedging derivative is reclassified as a held-for-trading instrument. In addition, the hedging relationship ceases when (i) the hedging instrument expires or is sold, terminated or exercised, (ii) the hedged item is sold, expires or is repaid, (iii) it is no longer highly probable that the forecast transaction will occur. Hedging instruments are so designated when identifiable with an ultimate counterparty outside the Group. Hedging derivatives are measured at fair value. Specifically: • Fair Value Hedging, an effective fair value hedge is accounted for as follows: the gain or loss from remeasuring the hedging instrument at fair value is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; the gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised through profit or loss in the same item. Hedging ineffectiveness is represented by the difference between the change in the fair value of hedging instruments and the change in the fair value of hedged item. If the hedging relationship is terminated for reasons other than the sale of the hedged item, the difference between the carrying amount of the hedged item on termination of the hedging and the carrying amount it would have had if the hedge had never existed, is recognised through profit or loss in interest receivable or payable over the residual life of the original hedge, in the case of interest-bearing instruments; if the financial instrument does not bear interest, the difference is recognised in profit or loss under item “90. Net gains (losses) on hedge accounting” at once. If the hedged item is sold or repaid, the portion of fair value which is still unamortised is at once recognised through profit or loss in item “100. Gains (Losses) on disposal and repurchase”; • Cash Flow Hedging, hedging instruments are valued at fair value. Change in the fair value of a hedging instrument that is considered effective is recognised in equity item “120. Valuation reserves”. The ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”. If a cash flow hedge is determined to be no longer effective or the hedging relationship is terminated, the cumulative gain or loss on the hedging instrument that remains recognised in revaluation reserves from the period when the hedge was effective remains separately recognised in revaluation reserves until the forecast hedged transaction occurs or is determined to be no longer possible; in the latter case gains or losses are transferred through profit or loss to item “90. Net gains (losses) on hedge accounting “. The fair value changes are recorded in the Statement of Other Comprehensive Income and disclosed in item “120. Valuation reserves "; • Hedging a Net Investment in a Foreign Entity, hedges of a net investment in a foreign entity whose activities are based or conducted in a country or currency other than those of the reporting entity are accounted for similarly to cash flow hedges. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognised directly in equity is recognised through profit or loss on disposal of the foreign entity. The fair value changes are recorded in the Statement of Comprehensive Income and disclosed in item “120. Valuation reserves "; the ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 157 • Macro-hedges of Financial Assets (Liabilities) - IAS39 allows a fair-value item hedged against interest rate fluctuations to be not only a single asset or liability but also a monetary position contained in a number of financial assets or liabilities (or parts of them); accordingly, a group of derivatives can be used to offset fair-value fluctuations in hedged items due to changes in market rates. Macro-hedging may not be used for net positions resulting from the offsetting of assets and liabilities. As for fair value micro-hedging, macrohedging is considered highly effective if, at the inception of the hedge and in subsequent periods, changes in the fair value attributable to the hedged position are offset by changes in fair value of the hedging instrument and if the hedge ratio is retrospectively assessed falling within the range of 80-125%. Net changes, gains or losses, in the fair value of the macro-hedged assets and liabilities attributable to the hedged risk are recognised in asset item “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)”, respectively and offset the profit and loss item “90. Net gains (losses) on hedge accounting “. The ineffectiveness of the hedging arises to the extent that the change in the fair value of the hedging item differs from the change in the fair value of the hedged monetary position. The extent of hedge ineffectiveness is in any case recognised in profit and loss item “90. Net gains (losses) on hedge accounting”. If the hedging relationship is terminated, for reasons other than the sale of the hedged items, cumulative gain or loss in items “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)” is recognised through profit or loss in items “10. Interest income and similar revenues” or “20. Interest expenses and similar charges”, along the residual life of the hedged financial assets or liabilities. If the latter are sold or repaid, unamortised fair value is at once recognised through profit and loss in item “100. Gains (Losses) on disposal and repurchase”. 5 - Equity investments The principles governing the recognition and measurement of equity investments under IFRS10 Consolidated Financial Statements, IAS27 Separate Financial Statements, IAS28 Investments in Associates and Joint Ventures and IFRS11 Joint Arrangements are provided in detail in Part A.1, Section 3 - Consolidation Procedures and Scope, where disclosure on the evaluation processes and key assumptions used to assess the existence of control, joint control or significant influence in accordance with IFRS12 (paragraphs 7-9) is provided. The remaining interests other than subsidiaries, associates and joint ventures, and interests recognised in items “120. Non-current assets and disposal groups classified as held for sale” and “70. Liabilities associated with assets classified as held for sale” are classified as financial assets at fair value through other comprehensive income or other financial assets mandatorily at fair value and accordingly accounted. 6 - Property, plant and equipment (Tangible assets) The item includes: • land; • buildings; • furniture and fixtures; • plant and machinery; • other machinery and equipment; and is divided between: • assets used in the business; • assets held as investments; • inventories in the scope of IAS2 standard. This item also includes tangible assets arising from collection of collaterals. Assets used in the business and Assets held as investments Assets used in the business are held for use in the production or supply of goods or services or for administrative purposes and are expected to be used for more than one period. This category also (conventionally) includes assets to be let or under construction and to be leased under a finance lease, only for those finance leases which provide for retention of risk by the lessor until the acceptance of the asset by the lessee and the start of rentals under the finance lease. The item “Property, plant and equipment” includes assets used by the Group as lessee under a finance lease, or let/hired out by the Group as lessor under an operating lease. Property, plant and equipment also include leasehold improvements relating to assets which can be separately identified. They are classified according to the specific sub-items relating to the asset type (e.g. plants). Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 157 • Macro-hedges of Financial Assets (Liabilities) - IAS39 allows a fair-value item hedged against interest rate fluctuations to be not only a single asset or liability but also a monetary position contained in a number of financial assets or liabilities (or parts of them); accordingly, a group of derivatives can be used to offset fair-value fluctuations in hedged items due to changes in market rates. Macro-hedging may not be used for net positions resulting from the offsetting of assets and liabilities. As for fair value micro-hedging, macrohedging is considered highly effective if, at the inception of the hedge and in subsequent periods, changes in the fair value attributable to the hedged position are offset by changes in fair value of the hedging instrument and if the hedge ratio is retrospectively assessed falling within the range of 80-125%. Net changes, gains or losses, in the fair value of the macro-hedged assets and liabilities attributable to the hedged risk are recognised in asset item “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)”, respectively and offset the profit and loss item “90. Net gains (losses) on hedge accounting “. The ineffectiveness of the hedging arises to the extent that the change in the fair value of the hedging item differs from the change in the fair value of the hedged monetary position. The extent of hedge ineffectiveness is in any case recognised in profit and loss item “90. Net gains (losses) on hedge accounting”. If the hedging relationship is terminated, for reasons other than the sale of the hedged items, cumulative gain or loss in items “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)” is recognised through profit or loss in items “10. Interest income and similar revenues” or “20. Interest expenses and similar charges”, along the residual life of the hedged financial assets or liabilities. If the latter are sold or repaid, unamortised fair value is at once recognised through profit and loss in item “100. Gains (Losses) on disposal and repurchase”. 5 - Equity investments The principles governing the recognition and measurement of equity investments under IFRS10 Consolidated Financial Statements, IAS27 Separate Financial Statements, IAS28 Investments in Associates and Joint Ventures and IFRS11 Joint Arrangements are provided in detail in Part A.1, Section 3 - Consolidation Procedures and Scope, where disclosure on the evaluation processes and key assumptions used to assess the existence of control, joint control or significant influence in accordance with IFRS12 (paragraphs 7-9) is provided. The remaining interests other than subsidiaries, associates and joint ventures, and interests recognised in items “120. Non-current assets and disposal groups classified as held for sale” and “70. Liabilities associated with assets classified as held for sale” are classified as financial assets at fair value through other comprehensive income or other financial assets mandatorily at fair value and accordingly accounted. 6 - Property, plant and equipment (Tangible assets) The item includes: • land; • buildings; • furniture and fixtures; • plant and machinery; • other machinery and equipment; and is divided between: • assets used in the business; • assets held as investments; • inventories in the scope of IAS2 standard. This item also includes tangible assets arising from collection of collaterals. Assets used in the business and Assets held as investments Assets used in the business are held for use in the production or supply of goods or services or for administrative purposes and are expected to be used for more than one period. This category also (conventionally) includes assets to be let or under construction and to be leased under a finance lease, only for those finance leases which provide for retention of risk by the lessor until the acceptance of the asset by the lessee and the start of rentals under the finance lease. The item “Property, plant and equipment” includes assets used by the Group as lessee under a finance lease, or let/hired out by the Group as lessor under an operating lease. Property, plant and equipment also include leasehold improvements relating to assets which can be separately identified. They are classified according to the specific sub-items relating to the asset type (e.g. plants). Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 157 • Macro-hedges of Financial Assets (Liabilities) - IAS39 allows a fair-value item hedged against interest rate fluctuations to be not only a single asset or liability but also a monetary position contained in a number of financial assets or liabilities (or parts of them); accordingly, a group of derivatives can be used to offset fair-value fluctuations in hedged items due to changes in market rates. Macro-hedging may not be used for net positions resulting from the offsetting of assets and liabilities. As for fair value micro-hedging, macrohedging is considered highly effective if, at the inception of the hedge and in subsequent periods, changes in the fair value attributable to the hedged position are offset by changes in fair value of the hedging instrument and if the hedge ratio is retrospectively assessed falling within the range of 80-125%. Net changes, gains or losses, in the fair value of the macro-hedged assets and liabilities attributable to the hedged risk are recognised in asset item “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)”, respectively and offset the profit and loss item “90. Net gains (losses) on hedge accounting “. The ineffectiveness of the hedging arises to the extent that the change in the fair value of the hedging item differs from the change in the fair value of the hedged monetary position. The extent of hedge ineffectiveness is in any case recognised in profit and loss item “90. Net gains (losses) on hedge accounting”. If the hedging relationship is terminated, for reasons other than the sale of the hedged items, cumulative gain or loss in items “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)” is recognised through profit or loss in items “10. Interest income and similar revenues” or “20. Interest expenses and similar charges”, along the residual life of the hedged financial assets or liabilities. If the latter are sold or repaid, unamortised fair value is at once recognised through profit and loss in item “100. Gains (Losses) on disposal and repurchase”. 5 - Equity investments The principles governing the recognition and measurement of equity investments under IFRS10 Consolidated Financial Statements, IAS27 Separate Financial Statements, IAS28 Investments in Associates and Joint Ventures and IFRS11 Joint Arrangements are provided in detail in Part A.1, Section 3 - Consolidation Procedures and Scope, where disclosure on the evaluation processes and key assumptions used to assess the existence of control, joint control or significant influence in accordance with IFRS12 (paragraphs 7-9) is provided. The remaining interests other than subsidiaries, associates and joint ventures, and interests recognised in items “120. Non-current assets and disposal groups classified as held for sale” and “70. Liabilities associated with assets classified as held for sale” are classified as financial assets at fair value through other comprehensive income or other financial assets mandatorily at fair value and accordingly accounted. 6 - Property, plant and equipment (Tangible assets) The item includes: • land; • buildings; • furniture and fixtures; • plant and machinery; • other machinery and equipment; and is divided between: • assets used in the business; • assets held as investments; • inventories in the scope of IAS2 standard. This item also includes tangible assets arising from collection of collaterals. Assets used in the business and Assets held as investments Assets used in the business are held for use in the production or supply of goods or services or for administrative purposes and are expected to be used for more than one period. This category also (conventionally) includes assets to be let or under construction and to be leased under a finance lease, only for those finance leases which provide for retention of risk by the lessor until the acceptance of the asset by the lessee and the start of rentals under the finance lease. The item “Property, plant and equipment” includes assets used by the Group as lessee under a finance lease, or let/hired out by the Group as lessor under an operating lease. Property, plant and equipment also include leasehold improvements relating to assets which can be separately identified. They are classified according to the specific sub-items relating to the asset type (e.g. plants). Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 157 • Macro-hedges of Financial Assets (Liabilities) - IAS39 allows a fair-value item hedged against interest rate fluctuations to be not only a single asset or liability but also a monetary position contained in a number of financial assets or liabilities (or parts of them); accordingly, a group of derivatives can be used to offset fair-value fluctuations in hedged items due to changes in market rates. Macro-hedging may not be used for net positions resulting from the offsetting of assets and liabilities. As for fair value micro-hedging, macrohedging is considered highly effective if, at the inception of the hedge and in subsequent periods, changes in the fair value attributable to the hedged position are offset by changes in fair value of the hedging instrument and if the hedge ratio is retrospectively assessed falling within the range of 80-125%. Net changes, gains or losses, in the fair value of the macro-hedged assets and liabilities attributable to the hedged risk are recognised in asset item “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)”, respectively and offset the profit and loss item “90. Net gains (losses) on hedge accounting “. The ineffectiveness of the hedging arises to the extent that the change in the fair value of the hedging item differs from the change in the fair value of the hedged monetary position. The extent of hedge ineffectiveness is in any case recognised in profit and loss item “90. Net gains (losses) on hedge accounting”. If the hedging relationship is terminated, for reasons other than the sale of the hedged items, cumulative gain or loss in items “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)” is recognised through profit or loss in items “10. Interest income and similar revenues” or “20. Interest expenses and similar charges”, along the residual life of the hedged financial assets or liabilities. If the latter are sold or repaid, unamortised fair value is at once recognised through profit and loss in item “100. Gains (Losses) on disposal and repurchase”. 5 - Equity investments The principles governing the recognition and measurement of equity investments under IFRS10 Consolidated Financial Statements, IAS27 Separate Financial Statements, IAS28 Investments in Associates and Joint Ventures and IFRS11 Joint Arrangements are provided in detail in Part A.1, Section 3 - Consolidation Procedures and Scope, where disclosure on the evaluation processes and key assumptions used to assess the existence of control, joint control or significant influence in accordance with IFRS12 (paragraphs 7-9) is provided. The remaining interests other than subsidiaries, associates and joint ventures, and interests recognised in items “120. Non-current assets and disposal groups classified as held for sale” and “70. Liabilities associated with assets classified as held for sale” are classified as financial assets at fair value through other comprehensive income or other financial assets mandatorily at fair value and accordingly accounted. 6 - Property, plant and equipment (Tangible assets) The item includes: • land; • buildings; • furniture and fixtures; • plant and machinery; • other machinery and equipment; and is divided between: • assets used in the business; • assets held as investments; • inventories in the scope of IAS2 standard. This item also includes tangible assets arising from collection of collaterals. Assets used in the business and Assets held as investments Assets used in the business are held for use in the production or supply of goods or services or for administrative purposes and are expected to be used for more than one period. This category also (conventionally) includes assets to be let or under construction and to be leased under a finance lease, only for those finance leases which provide for retention of risk by the lessor until the acceptance of the asset by the lessee and the start of rentals under the finance lease. The item “Property, plant and equipment” includes assets used by the Group as lessee under a finance lease, or let/hired out by the Group as lessor under an operating lease. Property, plant and equipment also include leasehold improvements relating to assets which can be separately identified. They are classified according to the specific sub-items relating to the asset type (e.g. plants). Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 157 • Macro-hedges of Financial Assets (Liabilities) - IAS39 allows a fair-value item hedged against interest rate fluctuations to be not only a single asset or liability but also a monetary position contained in a number of financial assets or liabilities (or parts of them); accordingly, a group of derivatives can be used to offset fair-value fluctuations in hedged items due to changes in market rates. Macro-hedging may not be used for net positions resulting from the offsetting of assets and liabilities. As for fair value micro-hedging, macrohedging is considered highly effective if, at the inception of the hedge and in subsequent periods, changes in the fair value attributable to the hedged position are offset by changes in fair value of the hedging instrument and if the hedge ratio is retrospectively assessed falling within the range of 80-125%. Net changes, gains or losses, in the fair value of the macro-hedged assets and liabilities attributable to the hedged risk are recognised in asset item “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)”, respectively and offset the profit and loss item “90. Net gains (losses) on hedge accounting “. The ineffectiveness of the hedging arises to the extent that the change in the fair value of the hedging item differs from the change in the fair value of the hedged monetary position. The extent of hedge ineffectiveness is in any case recognised in profit and loss item “90. Net gains (losses) on hedge accounting”. If the hedging relationship is terminated, for reasons other than the sale of the hedged items, cumulative gain or loss in items “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)” is recognised through profit or loss in items “10. Interest income and similar revenues” or “20. Interest expenses and similar charges”, along the residual life of the hedged financial assets or liabilities. If the latter are sold or repaid, unamortised fair value is at once recognised through profit and loss in item “100. Gains (Losses) on disposal and repurchase”. 5 - Equity investments The principles governing the recognition and measurement of equity investments under IFRS10 Consolidated Financial Statements, IAS27 Separate Financial Statements, IAS28 Investments in Associates and Joint Ventures and IFRS11 Joint Arrangements are provided in detail in Part A.1, Section 3 - Consolidation Procedures and Scope, where disclosure on the evaluation processes and key assumptions used to assess the existence of control, joint control or significant influence in accordance with IFRS12 (paragraphs 7-9) is provided. The remaining interests other than subsidiaries, associates and joint ventures, and interests recognised in items “120. Non-current assets and disposal groups classified as held for sale” and “70. Liabilities associated with assets classified as held for sale” are classified as financial assets at fair value through other comprehensive income or other financial assets mandatorily at fair value and accordingly accounted. 6 - Property, plant and equipment (Tangible assets) The item includes: • land; • buildings; • furniture and fixtures; • plant and machinery; • other machinery and equipment; and is divided between: • assets used in the business; • assets held as investments; • inventories in the scope of IAS2 standard. This item also includes tangible assets arising from collection of collaterals. Assets used in the business and Assets held as investments Assets used in the business are held for use in the production or supply of goods or services or for administrative purposes and are expected to be used for more than one period. This category also (conventionally) includes assets to be let or under construction and to be leased under a finance lease, only for those finance leases which provide for retention of risk by the lessor until the acceptance of the asset by the lessee and the start of rentals under the finance lease. The item “Property, plant and equipment” includes assets used by the Group as lessee under a finance lease, or let/hired out by the Group as lessor under an operating lease. Property, plant and equipment also include leasehold improvements relating to assets which can be separately identified. They are classified according to the specific sub-items relating to the asset type (e.g. plants). Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 158 2018 Annual Report and Accounts · UniCredit Leasehold improvements are usually borne in order to make leased premises fit for the expected use. Improvements and additional expenses relating to property, plant and equipment identifiable but not separable are recognised in item “130. Other assets”. Assets held for investment purposes are properties covered by IAS40, i.e. properties held (owned or under a finance lease) in order to derive rentals and/or a capital gain. Property, plant and equipment are initially recognised at cost including all costs directly attributable to bringing the asset into use (transaction costs, professional fees, direct transport costs incurred in bringing the asset to the desired location, installation costs and dismantling costs). Subsequent costs are added to the carrying amount or recognised as a separate asset only when it is probable that there will be future economic benefits in excess of those initially foreseen and the cost can be reliably measured. Other expenses borne at a later time (e.g. normal maintenance costs) are recognised in the year they are incurred in profit and loss items: • “190. Administrative expenses: b) other administrative expenses”, if they refer to assets used in the business; or: • “230. Other operating expenses/income”, if they refer to property held for investment. After being recognised as an asset, an item of property, plant and equipment is carried at cost less any accumulated depreciation and any cumulative impairment losses. Exceptions are made for property investments underlying liabilities whose yield is linked to their fair value. For these latter assets the fair value model as per IAS40 paragraph 32A is used. An item with a finite useful life is subject to straight-line depreciation. Residual useful life is usually assessed as follows: • buildings up to 50 years; • furniture and fixtures up to 25 years; • electronic equipment up to 15 years; • other up to 10 years; • leasehold improvements up to 25 years. An item with an indefinite useful life is not depreciated. Land and buildings are recognised separately, even if acquired together. Land is not depreciated since it usually has an indefinite useful life. Buildings have instead a finite useful life and are therefore subject to depreciation. The estimate of the useful life of an asset is reviewed at least at each accounting period-end on the basis inter alia of the conditions of use of the asset, of maintenance conditions and expected obsolescence, and, if expectations differ from previous estimates, the depreciation amount for the current and subsequent financial years is adjusted accordingly. If there is clear evidence that an asset has been impaired the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e., the present value of future cash flow expected to originate from the asset. Any value adjustment is recognised in profit and loss item “210. Net value adjustments/write-backs on property, plant and equipment”. If the value of a previously impaired asset is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there had been no losses recognised on the prior-year impairment. An item of property, plant and equipment is derecognised (i) on disposal or (ii) when no future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in profit and loss item “280. Gains (losses) on disposals on investments” or “210. Net value adjustments/write-backs on property, plant and equipment”, respectively. Inventories in the scope of IAS2 standard Inventories are assets held for sale in the ordinary course of business. They are accounted for at the lower of their carrying amounts and net realizable value. Any value adjustment arising from the application of the aforementioned criterion is recognised under item “210. Net value adjustments/write-backs on property, plant and equipment”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 158 2018 Annual Report and Accounts · UniCredit Leasehold improvements are usually borne in order to make leased premises fit for the expected use. Improvements and additional expenses relating to property, plant and equipment identifiable but not separable are recognised in item “130. Other assets”. Assets held for investment purposes are properties covered by IAS40, i.e. properties held (owned or under a finance lease) in order to derive rentals and/or a capital gain. Property, plant and equipment are initially recognised at cost including all costs directly attributable to bringing the asset into use (transaction costs, professional fees, direct transport costs incurred in bringing the asset to the desired location, installation costs and dismantling costs). Subsequent costs are added to the carrying amount or recognised as a separate asset only when it is probable that there will be future economic benefits in excess of those initially foreseen and the cost can be reliably measured. Other expenses borne at a later time (e.g. normal maintenance costs) are recognised in the year they are incurred in profit and loss items: • “190. Administrative expenses: b) other administrative expenses”, if they refer to assets used in the business; or: • “230. Other operating expenses/income”, if they refer to property held for investment. After being recognised as an asset, an item of property, plant and equipment is carried at cost less any accumulated depreciation and any cumulative impairment losses. Exceptions are made for property investments underlying liabilities whose yield is linked to their fair value. For these latter assets the fair value model as per IAS40 paragraph 32A is used. An item with a finite useful life is subject to straight-line depreciation. Residual useful life is usually assessed as follows: • buildings up to 50 years; • furniture and fixtures up to 25 years; • electronic equipment up to 15 years; • other up to 10 years; • leasehold improvements up to 25 years. An item with an indefinite useful life is not depreciated. Land and buildings are recognised separately, even if acquired together. Land is not depreciated since it usually has an indefinite useful life. Buildings have instead a finite useful life and are therefore subject to depreciation. The estimate of the useful life of an asset is reviewed at least at each accounting period-end on the basis inter alia of the conditions of use of the asset, of maintenance conditions and expected obsolescence, and, if expectations differ from previous estimates, the depreciation amount for the current and subsequent financial years is adjusted accordingly. If there is clear evidence that an asset has been impaired the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e., the present value of future cash flow expected to originate from the asset. Any value adjustment is recognised in profit and loss item “210. Net value adjustments/write-backs on property, plant and equipment”. If the value of a previously impaired asset is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there had been no losses recognised on the prior-year impairment. An item of property, plant and equipment is derecognised (i) on disposal or (ii) when no future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in profit and loss item “280. Gains (losses) on disposals on investments” or “210. Net value adjustments/write-backs on property, plant and equipment”, respectively. Inventories in the scope of IAS2 standard Inventories are assets held for sale in the ordinary course of business. They are accounted for at the lower of their carrying amounts and net realizable value. Any value adjustment arising from the application of the aforementioned criterion is recognised under item “210. Net value adjustments/write-backs on property, plant and equipment”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 158 2018 Annual Report and Accounts · UniCredit Leasehold improvements are usually borne in order to make leased premises fit for the expected use. Improvements and additional expenses relating to property, plant and equipment identifiable but not separable are recognised in item “130. Other assets”. Assets held for investment purposes are properties covered by IAS40, i.e. properties held (owned or under a finance lease) in order to derive rentals and/or a capital gain. Property, plant and equipment are initially recognised at cost including all costs directly attributable to bringing the asset into use (transaction costs, professional fees, direct transport costs incurred in bringing the asset to the desired location, installation costs and dismantling costs). Subsequent costs are added to the carrying amount or recognised as a separate asset only when it is probable that there will be future economic benefits in excess of those initially foreseen and the cost can be reliably measured. Other expenses borne at a later time (e.g. normal maintenance costs) are recognised in the year they are incurred in profit and loss items: • “190. Administrative expenses: b) other administrative expenses”, if they refer to assets used in the business; or: • “230. Other operating expenses/income”, if they refer to property held for investment. After being recognised as an asset, an item of property, plant and equipment is carried at cost less any accumulated depreciation and any cumulative impairment losses. Exceptions are made for property investments underlying liabilities whose yield is linked to their fair value. For these latter assets the fair value model as per IAS40 paragraph 32A is used. An item with a finite useful life is subject to straight-line depreciation. Residual useful life is usually assessed as follows: • buildings up to 50 years; • furniture and fixtures up to 25 years; • electronic equipment up to 15 years; • other up to 10 years; • leasehold improvements up to 25 years. An item with an indefinite useful life is not depreciated. Land and buildings are recognised separately, even if acquired together. Land is not depreciated since it usually has an indefinite useful life. Buildings have instead a finite useful life and are therefore subject to depreciation. The estimate of the useful life of an asset is reviewed at least at each accounting period-end on the basis inter alia of the conditions of use of the asset, of maintenance conditions and expected obsolescence, and, if expectations differ from previous estimates, the depreciation amount for the current and subsequent financial years is adjusted accordingly. If there is clear evidence that an asset has been impaired the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e., the present value of future cash flow expected to originate from the asset. Any value adjustment is recognised in profit and loss item “210. Net value adjustments/write-backs on property, plant and equipment”. If the value of a previously impaired asset is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there had been no losses recognised on the prior-year impairment. An item of property, plant and equipment is derecognised (i) on disposal or (ii) when no future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in profit and loss item “280. Gains (losses) on disposals on investments” or “210. Net value adjustments/write-backs on property, plant and equipment”, respectively. Inventories in the scope of IAS2 standard Inventories are assets held for sale in the ordinary course of business. They are accounted for at the lower of their carrying amounts and net realizable value. Any value adjustment arising from the application of the aforementioned criterion is recognised under item “210. Net value adjustments/write-backs on property, plant and equipment”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 158 2018 Annual Report and Accounts · UniCredit Leasehold improvements are usually borne in order to make leased premises fit for the expected use. Improvements and additional expenses relating to property, plant and equipment identifiable but not separable are recognised in item “130. Other assets”. Assets held for investment purposes are properties covered by IAS40, i.e. properties held (owned or under a finance lease) in order to derive rentals and/or a capital gain. Property, plant and equipment are initially recognised at cost including all costs directly attributable to bringing the asset into use (transaction costs, professional fees, direct transport costs incurred in bringing the asset to the desired location, installation costs and dismantling costs). Subsequent costs are added to the carrying amount or recognised as a separate asset only when it is probable that there will be future economic benefits in excess of those initially foreseen and the cost can be reliably measured. Other expenses borne at a later time (e.g. normal maintenance costs) are recognised in the year they are incurred in profit and loss items: • “190. Administrative expenses: b) other administrative expenses”, if they refer to assets used in the business; or: • “230. Other operating expenses/income”, if they refer to property held for investment. After being recognised as an asset, an item of property, plant and equipment is carried at cost less any accumulated depreciation and any cumulative impairment losses. Exceptions are made for property investments underlying liabilities whose yield is linked to their fair value. For these latter assets the fair value model as per IAS40 paragraph 32A is used. An item with a finite useful life is subject to straight-line depreciation. Residual useful life is usually assessed as follows: • buildings up to 50 years; • furniture and fixtures up to 25 years; • electronic equipment up to 15 years; • other up to 10 years; • leasehold improvements up to 25 years. An item with an indefinite useful life is not depreciated. Land and buildings are recognised separately, even if acquired together. Land is not depreciated since it usually has an indefinite useful life. Buildings have instead a finite useful life and are therefore subject to depreciation. The estimate of the useful life of an asset is reviewed at least at each accounting period-end on the basis inter alia of the conditions of use of the asset, of maintenance conditions and expected obsolescence, and, if expectations differ from previous estimates, the depreciation amount for the current and subsequent financial years is adjusted accordingly. If there is clear evidence that an asset has been impaired the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e., the present value of future cash flow expected to originate from the asset. Any value adjustment is recognised in profit and loss item “210. Net value adjustments/write-backs on property, plant and equipment”. If the value of a previously impaired asset is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there had been no losses recognised on the prior-year impairment. An item of property, plant and equipment is derecognised (i) on disposal or (ii) when no future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in profit and loss item “280. Gains (losses) on disposals on investments” or “210. Net value adjustments/write-backs on property, plant and equipment”, respectively. Inventories in the scope of IAS2 standard Inventories are assets held for sale in the ordinary course of business. They are accounted for at the lower of their carrying amounts and net realizable value. Any value adjustment arising from the application of the aforementioned criterion is recognised under item “210. Net value adjustments/write-backs on property, plant and equipment”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 158 2018 Annual Report and Accounts · UniCredit Leasehold improvements are usually borne in order to make leased premises fit for the expected use. Improvements and additional expenses relating to property, plant and equipment identifiable but not separable are recognised in item “130. Other assets”. Assets held for investment purposes are properties covered by IAS40, i.e. properties held (owned or under a finance lease) in order to derive rentals and/or a capital gain. Property, plant and equipment are initially recognised at cost including all costs directly attributable to bringing the asset into use (transaction costs, professional fees, direct transport costs incurred in bringing the asset to the desired location, installation costs and dismantling costs). Subsequent costs are added to the carrying amount or recognised as a separate asset only when it is probable that there will be future economic benefits in excess of those initially foreseen and the cost can be reliably measured. Other expenses borne at a later time (e.g. normal maintenance costs) are recognised in the year they are incurred in profit and loss items: • “190. Administrative expenses: b) other administrative expenses”, if they refer to assets used in the business; or: • “230. Other operating expenses/income”, if they refer to property held for investment. After being recognised as an asset, an item of property, plant and equipment is carried at cost less any accumulated depreciation and any cumulative impairment losses. Exceptions are made for property investments underlying liabilities whose yield is linked to their fair value. For these latter assets the fair value model as per IAS40 paragraph 32A is used. An item with a finite useful life is subject to straight-line depreciation. Residual useful life is usually assessed as follows: • buildings up to 50 years; • furniture and fixtures up to 25 years; • electronic equipment up to 15 years; • other up to 10 years; • leasehold improvements up to 25 years. An item with an indefinite useful life is not depreciated. Land and buildings are recognised separately, even if acquired together. Land is not depreciated since it usually has an indefinite useful life. Buildings have instead a finite useful life and are therefore subject to depreciation. The estimate of the useful life of an asset is reviewed at least at each accounting period-end on the basis inter alia of the conditions of use of the asset, of maintenance conditions and expected obsolescence, and, if expectations differ from previous estimates, the depreciation amount for the current and subsequent financial years is adjusted accordingly. If there is clear evidence that an asset has been impaired the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e., the present value of future cash flow expected to originate from the asset. Any value adjustment is recognised in profit and loss item “210. Net value adjustments/write-backs on property, plant and equipment”. If the value of a previously impaired asset is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there had been no losses recognised on the prior-year impairment. An item of property, plant and equipment is derecognised (i) on disposal or (ii) when no future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in profit and loss item “280. Gains (losses) on disposals on investments” or “210. Net value adjustments/write-backs on property, plant and equipment”, respectively. Inventories in the scope of IAS2 standard Inventories are assets held for sale in the ordinary course of business. They are accounted for at the lower of their carrying amounts and net realizable value. Any value adjustment arising from the application of the aforementioned criterion is recognised under item “210. Net value adjustments/write-backs on property, plant and equipment”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 159 7 - Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance which is expected to be used for more than one period, controlled by the Group and from which future economic benefits are probable. Intangible assets are principally goodwill, software, brands and patents. This item also includes intangible assets used by the Group as lessee under finance leases or as lessor under operating leases (rental/hire). Intangible assets other than goodwill are recognised at purchase cost, i.e. including cost incurred to bring the asset into use, less accumulated amortisation and impairment losses. In case of internally generated software the expenses incurred to develop the project are recognised under intangible assets only if the following elements are demonstrated: the technical feasibility of the project, the intention to complete the intangible asset, its future usefulness, the availability of adequate technical, financial and other resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. An intangible asset with a finite life is subject to straight-line amortisation over its estimated useful life. Residual useful life is usually assessed as follows: • Software up to 10 years; • Other intangible assets up to 20 years. Intangible assets with an indefinite life are not amortised. If there is clear evidence that an asset has been impaired, the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e. the present value of future cash flows expected to originate from the asset. Any impairment loss is recognised in profit and loss item “220. Net value adjustments/write-backs on intangible assets”. For an intangible asset with indefinite life even if there are no indications of impairment, the carrying amount is compared annually with its recoverable value. If the carrying amount is greater than the recoverable value, the difference is recognised in profit and loss item “220. Net value adjustments /write-backs on intangible assets”. If the value of a previously impaired intangible asset, other than goodwill is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there were no losses recognised on the prior-year impairment. An intangible asset is derecognised (i) on disposal or (ii) when no further future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in the profit and loss item “280. Gains (Losses) on disposals on investments” or “220. Net value adjustments/write-backs on intangible assets”, respectively. Goodwill In accordance with IFRS3, goodwill is the excess of the cost of a business combination over the interest acquired in the net fair value of the assets and liabilities acquired at the acquisition date. Goodwill arising from the acquisition of subsidiaries is recognised as an intangible asset, whereas goodwill arising from the acquisition of associates is included in the carrying amount of the investments in associates. At a subsequent financial reporting date, goodwill is recognised net of any cumulative impairment losses and is not amortised. Goodwill is tested for impairment annually, as for other intangible assets with an indefinite useful life. To this end it is allocated to the Group’s business areas identified as the Cash Generating Units (CGUs). Goodwill is monitored by the CGUs at the lowest level in the Group in line with its business model. Impairment losses on goodwill are recognised in profit and loss item “270. Goodwill impairment”. In respect of goodwill, no write-backs are allowed. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 159 7 - Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance which is expected to be used for more than one period, controlled by the Group and from which future economic benefits are probable. Intangible assets are principally goodwill, software, brands and patents. This item also includes intangible assets used by the Group as lessee under finance leases or as lessor under operating leases (rental/hire). Intangible assets other than goodwill are recognised at purchase cost, i.e. including cost incurred to bring the asset into use, less accumulated amortisation and impairment losses. In case of internally generated software the expenses incurred to develop the project are recognised under intangible assets only if the following elements are demonstrated: the technical feasibility of the project, the intention to complete the intangible asset, its future usefulness, the availability of adequate technical, financial and other resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. An intangible asset with a finite life is subject to straight-line amortisation over its estimated useful life. Residual useful life is usually assessed as follows: • Software up to 10 years; • Other intangible assets up to 20 years. Intangible assets with an indefinite life are not amortised. If there is clear evidence that an asset has been impaired, the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e. the present value of future cash flows expected to originate from the asset. Any impairment loss is recognised in profit and loss item “220. Net value adjustments/write-backs on intangible assets”. For an intangible asset with indefinite life even if there are no indications of impairment, the carrying amount is compared annually with its recoverable value. If the carrying amount is greater than the recoverable value, the difference is recognised in profit and loss item “220. Net value adjustments /write-backs on intangible assets”. If the value of a previously impaired intangible asset, other than goodwill is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there were no losses recognised on the prior-year impairment. An intangible asset is derecognised (i) on disposal or (ii) when no further future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in the profit and loss item “280. Gains (Losses) on disposals on investments” or “220. Net value adjustments/write-backs on intangible assets”, respectively. Goodwill In accordance with IFRS3, goodwill is the excess of the cost of a business combination over the interest acquired in the net fair value of the assets and liabilities acquired at the acquisition date. Goodwill arising from the acquisition of subsidiaries is recognised as an intangible asset, whereas goodwill arising from the acquisition of associates is included in the carrying amount of the investments in associates. At a subsequent financial reporting date, goodwill is recognised net of any cumulative impairment losses and is not amortised. Goodwill is tested for impairment annually, as for other intangible assets with an indefinite useful life. To this end it is allocated to the Group’s business areas identified as the Cash Generating Units (CGUs). Goodwill is monitored by the CGUs at the lowest level in the Group in line with its business model. Impairment losses on goodwill are recognised in profit and loss item “270. Goodwill impairment”. In respect of goodwill, no write-backs are allowed. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 159 7 - Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance which is expected to be used for more than one period, controlled by the Group and from which future economic benefits are probable. Intangible assets are principally goodwill, software, brands and patents. This item also includes intangible assets used by the Group as lessee under finance leases or as lessor under operating leases (rental/hire). Intangible assets other than goodwill are recognised at purchase cost, i.e. including cost incurred to bring the asset into use, less accumulated amortisation and impairment losses. In case of internally generated software the expenses incurred to develop the project are recognised under intangible assets only if the following elements are demonstrated: the technical feasibility of the project, the intention to complete the intangible asset, its future usefulness, the availability of adequate technical, financial and other resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. An intangible asset with a finite life is subject to straight-line amortisation over its estimated useful life. Residual useful life is usually assessed as follows: • Software up to 10 years; • Other intangible assets up to 20 years. Intangible assets with an indefinite life are not amortised. If there is clear evidence that an asset has been impaired, the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e. the present value of future cash flows expected to originate from the asset. Any impairment loss is recognised in profit and loss item “220. Net value adjustments/write-backs on intangible assets”. For an intangible asset with indefinite life even if there are no indications of impairment, the carrying amount is compared annually with its recoverable value. If the carrying amount is greater than the recoverable value, the difference is recognised in profit and loss item “220. Net value adjustments /write-backs on intangible assets”. If the value of a previously impaired intangible asset, other than goodwill is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there were no losses recognised on the prior-year impairment. An intangible asset is derecognised (i) on disposal or (ii) when no further future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in the profit and loss item “280. Gains (Losses) on disposals on investments” or “220. Net value adjustments/write-backs on intangible assets”, respectively. Goodwill In accordance with IFRS3, goodwill is the excess of the cost of a business combination over the interest acquired in the net fair value of the assets and liabilities acquired at the acquisition date. Goodwill arising from the acquisition of subsidiaries is recognised as an intangible asset, whereas goodwill arising from the acquisition of associates is included in the carrying amount of the investments in associates. At a subsequent financial reporting date, goodwill is recognised net of any cumulative impairment losses and is not amortised. Goodwill is tested for impairment annually, as for other intangible assets with an indefinite useful life. To this end it is allocated to the Group’s business areas identified as the Cash Generating Units (CGUs). Goodwill is monitored by the CGUs at the lowest level in the Group in line with its business model. Impairment losses on goodwill are recognised in profit and loss item “270. Goodwill impairment”. In respect of goodwill, no write-backs are allowed. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 159 7 - Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance which is expected to be used for more than one period, controlled by the Group and from which future economic benefits are probable. Intangible assets are principally goodwill, software, brands and patents. This item also includes intangible assets used by the Group as lessee under finance leases or as lessor under operating leases (rental/hire). Intangible assets other than goodwill are recognised at purchase cost, i.e. including cost incurred to bring the asset into use, less accumulated amortisation and impairment losses. In case of internally generated software the expenses incurred to develop the project are recognised under intangible assets only if the following elements are demonstrated: the technical feasibility of the project, the intention to complete the intangible asset, its future usefulness, the availability of adequate technical, financial and other resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. An intangible asset with a finite life is subject to straight-line amortisation over its estimated useful life. Residual useful life is usually assessed as follows: • Software up to 10 years; • Other intangible assets up to 20 years. Intangible assets with an indefinite life are not amortised. If there is clear evidence that an asset has been impaired, the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e. the present value of future cash flows expected to originate from the asset. Any impairment loss is recognised in profit and loss item “220. Net value adjustments/write-backs on intangible assets”. For an intangible asset with indefinite life even if there are no indications of impairment, the carrying amount is compared annually with its recoverable value. If the carrying amount is greater than the recoverable value, the difference is recognised in profit and loss item “220. Net value adjustments /write-backs on intangible assets”. If the value of a previously impaired intangible asset, other than goodwill is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there were no losses recognised on the prior-year impairment. An intangible asset is derecognised (i) on disposal or (ii) when no further future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in the profit and loss item “280. Gains (Losses) on disposals on investments” or “220. Net value adjustments/write-backs on intangible assets”, respectively. Goodwill In accordance with IFRS3, goodwill is the excess of the cost of a business combination over the interest acquired in the net fair value of the assets and liabilities acquired at the acquisition date. Goodwill arising from the acquisition of subsidiaries is recognised as an intangible asset, whereas goodwill arising from the acquisition of associates is included in the carrying amount of the investments in associates. At a subsequent financial reporting date, goodwill is recognised net of any cumulative impairment losses and is not amortised. Goodwill is tested for impairment annually, as for other intangible assets with an indefinite useful life. To this end it is allocated to the Group’s business areas identified as the Cash Generating Units (CGUs). Goodwill is monitored by the CGUs at the lowest level in the Group in line with its business model. Impairment losses on goodwill are recognised in profit and loss item “270. Goodwill impairment”. In respect of goodwill, no write-backs are allowed. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 159 7 - Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance which is expected to be used for more than one period, controlled by the Group and from which future economic benefits are probable. Intangible assets are principally goodwill, software, brands and patents. This item also includes intangible assets used by the Group as lessee under finance leases or as lessor under operating leases (rental/hire). Intangible assets other than goodwill are recognised at purchase cost, i.e. including cost incurred to bring the asset into use, less accumulated amortisation and impairment losses. In case of internally generated software the expenses incurred to develop the project are recognised under intangible assets only if the following elements are demonstrated: the technical feasibility of the project, the intention to complete the intangible asset, its future usefulness, the availability of adequate technical, financial and other resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. An intangible asset with a finite life is subject to straight-line amortisation over its estimated useful life. Residual useful life is usually assessed as follows: • Software up to 10 years; • Other intangible assets up to 20 years. Intangible assets with an indefinite life are not amortised. If there is clear evidence that an asset has been impaired, the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e. the present value of future cash flows expected to originate from the asset. Any impairment loss is recognised in profit and loss item “220. Net value adjustments/write-backs on intangible assets”. For an intangible asset with indefinite life even if there are no indications of impairment, the carrying amount is compared annually with its recoverable value. If the carrying amount is greater than the recoverable value, the difference is recognised in profit and loss item “220. Net value adjustments /write-backs on intangible assets”. If the value of a previously impaired intangible asset, other than goodwill is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there were no losses recognised on the prior-year impairment. An intangible asset is derecognised (i) on disposal or (ii) when no further future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in the profit and loss item “280. Gains (Losses) on disposals on investments” or “220. Net value adjustments/write-backs on intangible assets”, respectively. Goodwill In accordance with IFRS3, goodwill is the excess of the cost of a business combination over the interest acquired in the net fair value of the assets and liabilities acquired at the acquisition date. Goodwill arising from the acquisition of subsidiaries is recognised as an intangible asset, whereas goodwill arising from the acquisition of associates is included in the carrying amount of the investments in associates. At a subsequent financial reporting date, goodwill is recognised net of any cumulative impairment losses and is not amortised. Goodwill is tested for impairment annually, as for other intangible assets with an indefinite useful life. To this end it is allocated to the Group’s business areas identified as the Cash Generating Units (CGUs). Goodwill is monitored by the CGUs at the lowest level in the Group in line with its business model. Impairment losses on goodwill are recognised in profit and loss item “270. Goodwill impairment”. In respect of goodwill, no write-backs are allowed. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 160 2018 Annual Report and Accounts · UniCredit See Explanatory notes - Part B - Section 10 Intangible Assets - 10.3 Other information for further information on intangibles, goodwill, the CGUs and impairment testing for these. 8 - Non-current assets and disposal groups classified as held for sale These categories include individual assets held for disposal (tangible, intangible and financial assets) or groups of assets held for sale, with the related liabilities, as required by IFRS5. Individual assets (or groups of assets held for sale) are recognised in item “120. Non-current assets and disposal groups classified as held for sale” and item “70. Liabilities associated with assets classified as held for sale”, respectively, at the lower of their carrying amounts and fair values less costs to sell. The revaluation reserves relating to non-current assets classified as held for sale, which are recorded as a contra item to changes in value relevant for this purpose, are reported separately in the Statement of Other Comprehensive Income (see Explanatory notes - Part D - Consolidated Other Comprehensive Income). The net balance of profits (dividends, interest income, etc.) and losses (interest expense, etc.) attributable to discontinued operations are recognised in the income statement under item “320. Profit (Loss) after tax from discontinued operations”. Profits and losses attributable to individual assets or disposal groups, that do not constitute discontinued operations, held for disposal are recognised in the income statement under the appropriate item. 9 - Current and deferred tax Tax assets and tax liabilities are recognised in the Consolidated Balance Sheet respectively in item “110. Tax assets” and item “60. Tax liabilities”. In compliance with the “balance sheet method”, current and deferred tax items are: • current tax assets, i.e. amount of tax paid in excess of income tax due in accordance with local tax regulations; • current tax liabilities, i.e. amount of corporate tax due in accordance with local tax regulations; • deferred tax assets, i.e. amounts of income tax recoverable in future fiscal years and attributable to: - deductible temporary differences; - the carryforward of unused tax losses; and - the carryforward of unused tax credits; • deferred tax liabilities, i.e. the amounts of income tax due in future fiscal years in respect of taxable temporary differences. Current and deferred tax assets and tax liabilities are calculated in accordance with local tax regulations and are recognised in profit or loss on an accrual basis. In general, deferred tax assets and liabilities arise when there is a difference between the accounting treatment and the tax treatment of the carrying amount of an asset or liability. Deferred tax assets and liabilities are recognised applying tax rates that at the balance sheet date are expected to apply in the period when the carrying amount of the asset will be recovered or the liability will be settled on the basis of tax regulations in force, and are periodically reviewed in order to reflect any changes in regulations. In addition, under the tax consolidation system adopted by the Bank deferred tax assets are recognised only to the extent that it is probable that sufficient taxable profit will be generated by the entity. In accordance with the provisions of IAS12, the probability that sufficient future taxable profit against which the deferred tax assets can be utilised will be available is reviewed periodically. The carrying amount of deferred tax assets should be reduced to the extent that it is not probable that sufficient taxable profit will be available. Current and deferred taxes are recognised in profit and loss item “300. Tax expense (income) for the period from continuing operations”, except for tax referred to items that in the same or in another fiscal year are credited or charged directly to equity, such as those relating to gains or losses on financial assets at fair value through other comprehensive income and those relating to changes in the fair value of cash flow hedging instruments, whose changes in value are recognised, net of tax, directly in the Statement of Other Comprehensive Income - Revaluation reserves. Current tax assets and liabilities are presented on the Balance Sheet net of the related current tax liabilities if the following requirements are met: • existence of a legally enforceable right to offset the amounts recognised; and • the intention to extinguish for the remaining net, or realise the asset and at the same time extinguish the liability. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 160 2018 Annual Report and Accounts · UniCredit See Explanatory notes - Part B - Section 10 Intangible Assets - 10.3 Other information for further information on intangibles, goodwill, the CGUs and impairment testing for these. 8 - Non-current assets and disposal groups classified as held for sale These categories include individual assets held for disposal (tangible, intangible and financial assets) or groups of assets held for sale, with the related liabilities, as required by IFRS5. Individual assets (or groups of assets held for sale) are recognised in item “120. Non-current assets and disposal groups classified as held for sale” and item “70. Liabilities associated with assets classified as held for sale”, respectively, at the lower of their carrying amounts and fair values less costs to sell. The revaluation reserves relating to non-current assets classified as held for sale, which are recorded as a contra item to changes in value relevant for this purpose, are reported separately in the Statement of Other Comprehensive Income (see Explanatory notes - Part D - Consolidated Other Comprehensive Income). The net balance of profits (dividends, interest income, etc.) and losses (interest expense, etc.) attributable to discontinued operations are recognised in the income statement under item “320. Profit (Loss) after tax from discontinued operations”. Profits and losses attributable to individual assets or disposal groups, that do not constitute discontinued operations, held for disposal are recognised in the income statement under the appropriate item. 9 - Current and deferred tax Tax assets and tax liabilities are recognised in the Consolidated Balance Sheet respectively in item “110. Tax assets” and item “60. Tax liabilities”. In compliance with the “balance sheet method”, current and deferred tax items are: • current tax assets, i.e. amount of tax paid in excess of income tax due in accordance with local tax regulations; • current tax liabilities, i.e. amount of corporate tax due in accordance with local tax regulations; • deferred tax assets, i.e. amounts of income tax recoverable in future fiscal years and attributable to: - deductible temporary differences; - the carryforward of unused tax losses; and - the carryforward of unused tax credits; • deferred tax liabilities, i.e. the amounts of income tax due in future fiscal years in respect of taxable temporary differences. Current and deferred tax assets and tax liabilities are calculated in accordance with local tax regulations and are recognised in profit or loss on an accrual basis. In general, deferred tax assets and liabilities arise when there is a difference between the accounting treatment and the tax treatment of the carrying amount of an asset or liability. Deferred tax assets and liabilities are recognised applying tax rates that at the balance sheet date are expected to apply in the period when the carrying amount of the asset will be recovered or the liability will be settled on the basis of tax regulations in force, and are periodically reviewed in order to reflect any changes in regulations. In addition, under the tax consolidation system adopted by the Bank deferred tax assets are recognised only to the extent that it is probable that sufficient taxable profit will be generated by the entity. In accordance with the provisions of IAS12, the probability that sufficient future taxable profit against which the deferred tax assets can be utilised will be available is reviewed periodically. The carrying amount of deferred tax assets should be reduced to the extent that it is not probable that sufficient taxable profit will be available. Current and deferred taxes are recognised in profit and loss item “300. Tax expense (income) for the period from continuing operations”, except for tax referred to items that in the same or in another fiscal year are credited or charged directly to equity, such as those relating to gains or losses on financial assets at fair value through other comprehensive income and those relating to changes in the fair value of cash flow hedging instruments, whose changes in value are recognised, net of tax, directly in the Statement of Other Comprehensive Income - Revaluation reserves. Current tax assets and liabilities are presented on the Balance Sheet net of the related current tax liabilities if the following requirements are met: • existence of a legally enforceable right to offset the amounts recognised; and • the intention to extinguish for the remaining net, or realise the asset and at the same time extinguish the liability. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 160 2018 Annual Report and Accounts · UniCredit See Explanatory notes - Part B - Section 10 Intangible Assets - 10.3 Other information for further information on intangibles, goodwill, the CGUs and impairment testing for these. 8 - Non-current assets and disposal groups classified as held for sale These categories include individual assets held for disposal (tangible, intangible and financial assets) or groups of assets held for sale, with the related liabilities, as required by IFRS5. Individual assets (or groups of assets held for sale) are recognised in item “120. Non-current assets and disposal groups classified as held for sale” and item “70. Liabilities associated with assets classified as held for sale”, respectively, at the lower of their carrying amounts and fair values less costs to sell. The revaluation reserves relating to non-current assets classified as held for sale, which are recorded as a contra item to changes in value relevant for this purpose, are reported separately in the Statement of Other Comprehensive Income (see Explanatory notes - Part D - Consolidated Other Comprehensive Income). The net balance of profits (dividends, interest income, etc.) and losses (interest expense, etc.) attributable to discontinued operations are recognised in the income statement under item “320. Profit (Loss) after tax from discontinued operations”. Profits and losses attributable to individual assets or disposal groups, that do not constitute discontinued operations, held for disposal are recognised in the income statement under the appropriate item. 9 - Current and deferred tax Tax assets and tax liabilities are recognised in the Consolidated Balance Sheet respectively in item “110. Tax assets” and item “60. Tax liabilities”. In compliance with the “balance sheet method”, current and deferred tax items are: • current tax assets, i.e. amount of tax paid in excess of income tax due in accordance with local tax regulations; • current tax liabilities, i.e. amount of corporate tax due in accordance with local tax regulations; • deferred tax assets, i.e. amounts of income tax recoverable in future fiscal years and attributable to: - deductible temporary differences; - the carryforward of unused tax losses; and - the carryforward of unused tax credits; • deferred tax liabilities, i.e. the amounts of income tax due in future fiscal years in respect of taxable temporary differences. Current and deferred tax assets and tax liabilities are calculated in accordance with local tax regulations and are recognised in profit or loss on an accrual basis. In general, deferred tax assets and liabilities arise when there is a difference between the accounting treatment and the tax treatment of the carrying amount of an asset or liability. Deferred tax assets and liabilities are recognised applying tax rates that at the balance sheet date are expected to apply in the period when the carrying amount of the asset will be recovered or the liability will be settled on the basis of tax regulations in force, and are periodically reviewed in order to reflect any changes in regulations. In addition, under the tax consolidation system adopted by the Bank deferred tax assets are recognised only to the extent that it is probable that sufficient taxable profit will be generated by the entity. In accordance with the provisions of IAS12, the probability that sufficient future taxable profit against which the deferred tax assets can be utilised will be available is reviewed periodically. The carrying amount of deferred tax assets should be reduced to the extent that it is not probable that sufficient taxable profit will be available. Current and deferred taxes are recognised in profit and loss item “300. Tax expense (income) for the period from continuing operations”, except for tax referred to items that in the same or in another fiscal year are credited or charged directly to equity, such as those relating to gains or losses on financial assets at fair value through other comprehensive income and those relating to changes in the fair value of cash flow hedging instruments, whose changes in value are recognised, net of tax, directly in the Statement of Other Comprehensive Income - Revaluation reserves. Current tax assets and liabilities are presented on the Balance Sheet net of the related current tax liabilities if the following requirements are met: • existence of a legally enforceable right to offset the amounts recognised; and • the intention to extinguish for the remaining net, or realise the asset and at the same time extinguish the liability. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 160 2018 Annual Report and Accounts · UniCredit See Explanatory notes - Part B - Section 10 Intangible Assets - 10.3 Other information for further information on intangibles, goodwill, the CGUs and impairment testing for these. 8 - Non-current assets and disposal groups classified as held for sale These categories include individual assets held for disposal (tangible, intangible and financial assets) or groups of assets held for sale, with the related liabilities, as required by IFRS5. Individual assets (or groups of assets held for sale) are recognised in item “120. Non-current assets and disposal groups classified as held for sale” and item “70. Liabilities associated with assets classified as held for sale”, respectively, at the lower of their carrying amounts and fair values less costs to sell. The revaluation reserves relating to non-current assets classified as held for sale, which are recorded as a contra item to changes in value relevant for this purpose, are reported separately in the Statement of Other Comprehensive Income (see Explanatory notes - Part D - Consolidated Other Comprehensive Income). The net balance of profits (dividends, interest income, etc.) and losses (interest expense, etc.) attributable to discontinued operations are recognised in the income statement under item “320. Profit (Loss) after tax from discontinued operations”. Profits and losses attributable to individual assets or disposal groups, that do not constitute discontinued operations, held for disposal are recognised in the income statement under the appropriate item. 9 - Current and deferred tax Tax assets and tax liabilities are recognised in the Consolidated Balance Sheet respectively in item “110. Tax assets” and item “60. Tax liabilities”. In compliance with the “balance sheet method”, current and deferred tax items are: • current tax assets, i.e. amount of tax paid in excess of income tax due in accordance with local tax regulations; • current tax liabilities, i.e. amount of corporate tax due in accordance with local tax regulations; • deferred tax assets, i.e. amounts of income tax recoverable in future fiscal years and attributable to: - deductible temporary differences; - the carryforward of unused tax losses; and - the carryforward of unused tax credits; • deferred tax liabilities, i.e. the amounts of income tax due in future fiscal years in respect of taxable temporary differences. Current and deferred tax assets and tax liabilities are calculated in accordance with local tax regulations and are recognised in profit or loss on an accrual basis. In general, deferred tax assets and liabilities arise when there is a difference between the accounting treatment and the tax treatment of the carrying amount of an asset or liability. Deferred tax assets and liabilities are recognised applying tax rates that at the balance sheet date are expected to apply in the period when the carrying amount of the asset will be recovered or the liability will be settled on the basis of tax regulations in force, and are periodically reviewed in order to reflect any changes in regulations. In addition, under the tax consolidation system adopted by the Bank deferred tax assets are recognised only to the extent that it is probable that sufficient taxable profit will be generated by the entity. In accordance with the provisions of IAS12, the probability that sufficient future taxable profit against which the deferred tax assets can be utilised will be available is reviewed periodically. The carrying amount of deferred tax assets should be reduced to the extent that it is not probable that sufficient taxable profit will be available. Current and deferred taxes are recognised in profit and loss item “300. Tax expense (income) for the period from continuing operations”, except for tax referred to items that in the same or in another fiscal year are credited or charged directly to equity, such as those relating to gains or losses on financial assets at fair value through other comprehensive income and those relating to changes in the fair value of cash flow hedging instruments, whose changes in value are recognised, net of tax, directly in the Statement of Other Comprehensive Income - Revaluation reserves. Current tax assets and liabilities are presented on the Balance Sheet net of the related current tax liabilities if the following requirements are met: • existence of a legally enforceable right to offset the amounts recognised; and • the intention to extinguish for the remaining net, or realise the asset and at the same time extinguish the liability. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 160 2018 Annual Report and Accounts · UniCredit See Explanatory notes - Part B - Section 10 Intangible Assets - 10.3 Other information for further information on intangibles, goodwill, the CGUs and impairment testing for these. 8 - Non-current assets and disposal groups classified as held for sale These categories include individual assets held for disposal (tangible, intangible and financial assets) or groups of assets held for sale, with the related liabilities, as required by IFRS5. Individual assets (or groups of assets held for sale) are recognised in item “120. Non-current assets and disposal groups classified as held for sale” and item “70. Liabilities associated with assets classified as held for sale”, respectively, at the lower of their carrying amounts and fair values less costs to sell. The revaluation reserves relating to non-current assets classified as held for sale, which are recorded as a contra item to changes in value relevant for this purpose, are reported separately in the Statement of Other Comprehensive Income (see Explanatory notes - Part D - Consolidated Other Comprehensive Income). The net balance of profits (dividends, interest income, etc.) and losses (interest expense, etc.) attributable to discontinued operations are recognised in the income statement under item “320. Profit (Loss) after tax from discontinued operations”. Profits and losses attributable to individual assets or disposal groups, that do not constitute discontinued operations, held for disposal are recognised in the income statement under the appropriate item. 9 - Current and deferred tax Tax assets and tax liabilities are recognised in the Consolidated Balance Sheet respectively in item “110. Tax assets” and item “60. Tax liabilities”. In compliance with the “balance sheet method”, current and deferred tax items are: • current tax assets, i.e. amount of tax paid in excess of income tax due in accordance with local tax regulations; • current tax liabilities, i.e. amount of corporate tax due in accordance with local tax regulations; • deferred tax assets, i.e. amounts of income tax recoverable in future fiscal years and attributable to: - deductible temporary differences; - the carryforward of unused tax losses; and - the carryforward of unused tax credits; • deferred tax liabilities, i.e. the amounts of income tax due in future fiscal years in respect of taxable temporary differences. Current and deferred tax assets and tax liabilities are calculated in accordance with local tax regulations and are recognised in profit or loss on an accrual basis. In general, deferred tax assets and liabilities arise when there is a difference between the accounting treatment and the tax treatment of the carrying amount of an asset or liability. Deferred tax assets and liabilities are recognised applying tax rates that at the balance sheet date are expected to apply in the period when the carrying amount of the asset will be recovered or the liability will be settled on the basis of tax regulations in force, and are periodically reviewed in order to reflect any changes in regulations. In addition, under the tax consolidation system adopted by the Bank deferred tax assets are recognised only to the extent that it is probable that sufficient taxable profit will be generated by the entity. In accordance with the provisions of IAS12, the probability that sufficient future taxable profit against which the deferred tax assets can be utilised will be available is reviewed periodically. The carrying amount of deferred tax assets should be reduced to the extent that it is not probable that sufficient taxable profit will be available. Current and deferred taxes are recognised in profit and loss item “300. Tax expense (income) for the period from continuing operations”, except for tax referred to items that in the same or in another fiscal year are credited or charged directly to equity, such as those relating to gains or losses on financial assets at fair value through other comprehensive income and those relating to changes in the fair value of cash flow hedging instruments, whose changes in value are recognised, net of tax, directly in the Statement of Other Comprehensive Income - Revaluation reserves. Current tax assets and liabilities are presented on the Balance Sheet net of the related current tax liabilities if the following requirements are met: • existence of a legally enforceable right to offset the amounts recognised; and • the intention to extinguish for the remaining net, or realise the asset and at the same time extinguish the liability. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 161 Deferred tax assets are presented on the Balance Sheet net of the related deferred tax liabilities if the following requirements are met: • existence of an enforceable right to offset current tax assets with current tax liabilities; and • the deferred tax assets and liabilities must relate to income taxes applied to the same tax authority on the same taxable entity or on different taxable entities that intend to settle the current tax liabilities and assets on a net basis. 10 - Provisions for risks and charges Commitments and guarantees given Provisions for risks and charges for commitments and guarantees given are recognised against all revocable and irrevocable commitments and guarantees whether they are in scope of IFRS9 or IAS37. The item hosts the estimates of expected loss calculated on these instruments resulting from valuation process as described in Section 16 - Other Information - Impairment. The provision of the period is accounted under item “200. Net provisions for risks and charges: a) commitments and financial guarantees given”. Please note that all contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument are considered financial guarantees. Retirement payments and similar obligations Retirement provisions, i.e. provisions for employee benefits payable after the completion of employment, are defined as contribution plans or defined-benefit plans according to the nature of the plan. In detail: • Defined-benefit plans provide a series of benefits depending on factors such as age, years of service and compensation policies. Under this type of plan actuarial and investment risks are borne by the company; • Defined-contribution plans are plans under which the company makes fixed contributions. Benefits are the result of the amount of contributions paid and return on contributions invested. The employer bears no actuarial and/or investment risks connected with this type of plans as it has no legal or implicit obligation to make further contributions, should the plan not be sufficient to provide benefits to all employees. Defined-benefit plans are present-valued by an external actuary using the Unit Credit Projection method. This method distributes the cost of benefits uniformly over the employee’s working life. Obligations are the present value of average future benefits pro rata to the ratio of years of service to theoretical seniority at the time of benefit payment. More specifically, the amount recognised according to IAS19 Revised as a net liability/asset in item “100. Provisions for risks and charges: b) post-retirement benefit obligations” is the present value of the obligation at the balance sheet date, less any pension charges relating to benefits already provided but not yet recognised, less the fair value at the balance sheet date of plan assets other than those due to directly settle the obligations adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. Actuarial gains or losses are recorded in the Statement of Other Comprehensive Income and disclosed in item “120. Valuation reserves”. The discount rate used to discount obligations (whether financed or not) relating to benefits to be provided after retirement varies according to the currency of denomination and country where the liabilities are allocated and is determined on the basis of market yield at the balance sheet date of prime issuers’ bonds (HQCB: High quality corporate bonds) with an average life in keeping with that of the relevant liability. Other provisions Provisions for risks and charges are recognised when: • the entity has a present obligation (legal or constructive) as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • a reliable estimate can be made of the amount of the obligation. The amounts recognised as provisions are the best estimate of the expenditure required to settle the present obligation. The risks and uncertainties that inevitably surround the relevant events and circumstances are taken into account in reaching the best estimate of a provision. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 161 Deferred tax assets are presented on the Balance Sheet net of the related deferred tax liabilities if the following requirements are met: • existence of an enforceable right to offset current tax assets with current tax liabilities; and • the deferred tax assets and liabilities must relate to income taxes applied to the same tax authority on the same taxable entity or on different taxable entities that intend to settle the current tax liabilities and assets on a net basis. 10 - Provisions for risks and charges Commitments and guarantees given Provisions for risks and charges for commitments and guarantees given are recognised against all revocable and irrevocable commitments and guarantees whether they are in scope of IFRS9 or IAS37. The item hosts the estimates of expected loss calculated on these instruments resulting from valuation process as described in Section 16 - Other Information - Impairment. The provision of the period is accounted under item “200. Net provisions for risks and charges: a) commitments and financial guarantees given”. Please note that all contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument are considered financial guarantees. Retirement payments and similar obligations Retirement provisions, i.e. provisions for employee benefits payable after the completion of employment, are defined as contribution plans or defined-benefit plans according to the nature of the plan. In detail: • Defined-benefit plans provide a series of benefits depending on factors such as age, years of service and compensation policies. Under this type of plan actuarial and investment risks are borne by the company; • Defined-contribution plans are plans under which the company makes fixed contributions. Benefits are the result of the amount of contributions paid and return on contributions invested. The employer bears no actuarial and/or investment risks connected with this type of plans as it has no legal or implicit obligation to make further contributions, should the plan not be sufficient to provide benefits to all employees. Defined-benefit plans are present-valued by an external actuary using the Unit Credit Projection method. This method distributes the cost of benefits uniformly over the employee’s working life. Obligations are the present value of average future benefits pro rata to the ratio of years of service to theoretical seniority at the time of benefit payment. More specifically, the amount recognised according to IAS19 Revised as a net liability/asset in item “100. Provisions for risks and charges: b) post-retirement benefit obligations” is the present value of the obligation at the balance sheet date, less any pension charges relating to benefits already provided but not yet recognised, less the fair value at the balance sheet date of plan assets other than those due to directly settle the obligations adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. Actuarial gains or losses are recorded in the Statement of Other Comprehensive Income and disclosed in item “120. Valuation reserves”. The discount rate used to discount obligations (whether financed or not) relating to benefits to be provided after retirement varies according to the currency of denomination and country where the liabilities are allocated and is determined on the basis of market yield at the balance sheet date of prime issuers’ bonds (HQCB: High quality corporate bonds) with an average life in keeping with that of the relevant liability. Other provisions Provisions for risks and charges are recognised when: • the entity has a present obligation (legal or constructive) as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • a reliable estimate can be made of the amount of the obligation. The amounts recognised as provisions are the best estimate of the expenditure required to settle the present obligation. The risks and uncertainties that inevitably surround the relevant events and circumstances are taken into account in reaching the best estimate of a provision. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 161 Deferred tax assets are presented on the Balance Sheet net of the related deferred tax liabilities if the following requirements are met: • existence of an enforceable right to offset current tax assets with current tax liabilities; and • the deferred tax assets and liabilities must relate to income taxes applied to the same tax authority on the same taxable entity or on different taxable entities that intend to settle the current tax liabilities and assets on a net basis. 10 - Provisions for risks and charges Commitments and guarantees given Provisions for risks and charges for commitments and guarantees given are recognised against all revocable and irrevocable commitments and guarantees whether they are in scope of IFRS9 or IAS37. The item hosts the estimates of expected loss calculated on these instruments resulting from valuation process as described in Section 16 - Other Information - Impairment. The provision of the period is accounted under item “200. Net provisions for risks and charges: a) commitments and financial guarantees given”. Please note that all contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument are considered financial guarantees. Retirement payments and similar obligations Retirement provisions, i.e. provisions for employee benefits payable after the completion of employment, are defined as contribution plans or defined-benefit plans according to the nature of the plan. In detail: • Defined-benefit plans provide a series of benefits depending on factors such as age, years of service and compensation policies. Under this type of plan actuarial and investment risks are borne by the company; • Defined-contribution plans are plans under which the company makes fixed contributions. Benefits are the result of the amount of contributions paid and return on contributions invested. The employer bears no actuarial and/or investment risks connected with this type of plans as it has no legal or implicit obligation to make further contributions, should the plan not be sufficient to provide benefits to all employees. Defined-benefit plans are present-valued by an external actuary using the Unit Credit Projection method. This method distributes the cost of benefits uniformly over the employee’s working life. Obligations are the present value of average future benefits pro rata to the ratio of years of service to theoretical seniority at the time of benefit payment. More specifically, the amount recognised according to IAS19 Revised as a net liability/asset in item “100. Provisions for risks and charges: b) post-retirement benefit obligations” is the present value of the obligation at the balance sheet date, less any pension charges relating to benefits already provided but not yet recognised, less the fair value at the balance sheet date of plan assets other than those due to directly settle the obligations adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. Actuarial gains or losses are recorded in the Statement of Other Comprehensive Income and disclosed in item “120. Valuation reserves”. The discount rate used to discount obligations (whether financed or not) relating to benefits to be provided after retirement varies according to the currency of denomination and country where the liabilities are allocated and is determined on the basis of market yield at the balance sheet date of prime issuers’ bonds (HQCB: High quality corporate bonds) with an average life in keeping with that of the relevant liability. Other provisions Provisions for risks and charges are recognised when: • the entity has a present obligation (legal or constructive) as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • a reliable estimate can be made of the amount of the obligation. The amounts recognised as provisions are the best estimate of the expenditure required to settle the present obligation. The risks and uncertainties that inevitably surround the relevant events and circumstances are taken into account in reaching the best estimate of a provision. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 161 Deferred tax assets are presented on the Balance Sheet net of the related deferred tax liabilities if the following requirements are met: • existence of an enforceable right to offset current tax assets with current tax liabilities; and • the deferred tax assets and liabilities must relate to income taxes applied to the same tax authority on the same taxable entity or on different taxable entities that intend to settle the current tax liabilities and assets on a net basis. 10 - Provisions for risks and charges Commitments and guarantees given Provisions for risks and charges for commitments and guarantees given are recognised against all revocable and irrevocable commitments and guarantees whether they are in scope of IFRS9 or IAS37. The item hosts the estimates of expected loss calculated on these instruments resulting from valuation process as described in Section 16 - Other Information - Impairment. The provision of the period is accounted under item “200. Net provisions for risks and charges: a) commitments and financial guarantees given”. Please note that all contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument are considered financial guarantees. Retirement payments and similar obligations Retirement provisions, i.e. provisions for employee benefits payable after the completion of employment, are defined as contribution plans or defined-benefit plans according to the nature of the plan. In detail: • Defined-benefit plans provide a series of benefits depending on factors such as age, years of service and compensation policies. Under this type of plan actuarial and investment risks are borne by the company; • Defined-contribution plans are plans under which the company makes fixed contributions. Benefits are the result of the amount of contributions paid and return on contributions invested. The employer bears no actuarial and/or investment risks connected with this type of plans as it has no legal or implicit obligation to make further contributions, should the plan not be sufficient to provide benefits to all employees. Defined-benefit plans are present-valued by an external actuary using the Unit Credit Projection method. This method distributes the cost of benefits uniformly over the employee’s working life. Obligations are the present value of average future benefits pro rata to the ratio of years of service to theoretical seniority at the time of benefit payment. More specifically, the amount recognised according to IAS19 Revised as a net liability/asset in item “100. Provisions for risks and charges: b) post-retirement benefit obligations” is the present value of the obligation at the balance sheet date, less any pension charges relating to benefits already provided but not yet recognised, less the fair value at the balance sheet date of plan assets other than those due to directly settle the obligations adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. Actuarial gains or losses are recorded in the Statement of Other Comprehensive Income and disclosed in item “120. Valuation reserves”. The discount rate used to discount obligations (whether financed or not) relating to benefits to be provided after retirement varies according to the currency of denomination and country where the liabilities are allocated and is determined on the basis of market yield at the balance sheet date of prime issuers’ bonds (HQCB: High quality corporate bonds) with an average life in keeping with that of the relevant liability. Other provisions Provisions for risks and charges are recognised when: • the entity has a present obligation (legal or constructive) as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • a reliable estimate can be made of the amount of the obligation. The amounts recognised as provisions are the best estimate of the expenditure required to settle the present obligation. The risks and uncertainties that inevitably surround the relevant events and circumstances are taken into account in reaching the best estimate of a provision. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 161 Deferred tax assets are presented on the Balance Sheet net of the related deferred tax liabilities if the following requirements are met: • existence of an enforceable right to offset current tax assets with current tax liabilities; and • the deferred tax assets and liabilities must relate to income taxes applied to the same tax authority on the same taxable entity or on different taxable entities that intend to settle the current tax liabilities and assets on a net basis. 10 - Provisions for risks and charges Commitments and guarantees given Provisions for risks and charges for commitments and guarantees given are recognised against all revocable and irrevocable commitments and guarantees whether they are in scope of IFRS9 or IAS37. The item hosts the estimates of expected loss calculated on these instruments resulting from valuation process as described in Section 16 - Other Information - Impairment. The provision of the period is accounted under item “200. Net provisions for risks and charges: a) commitments and financial guarantees given”. Please note that all contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument are considered financial guarantees. Retirement payments and similar obligations Retirement provisions, i.e. provisions for employee benefits payable after the completion of employment, are defined as contribution plans or defined-benefit plans according to the nature of the plan. In detail: • Defined-benefit plans provide a series of benefits depending on factors such as age, years of service and compensation policies. Under this type of plan actuarial and investment risks are borne by the company; • Defined-contribution plans are plans under which the company makes fixed contributions. Benefits are the result of the amount of contributions paid and return on contributions invested. The employer bears no actuarial and/or investment risks connected with this type of plans as it has no legal or implicit obligation to make further contributions, should the plan not be sufficient to provide benefits to all employees. Defined-benefit plans are present-valued by an external actuary using the Unit Credit Projection method. This method distributes the cost of benefits uniformly over the employee’s working life. Obligations are the present value of average future benefits pro rata to the ratio of years of service to theoretical seniority at the time of benefit payment. More specifically, the amount recognised according to IAS19 Revised as a net liability/asset in item “100. Provisions for risks and charges: b) post-retirement benefit obligations” is the present value of the obligation at the balance sheet date, less any pension charges relating to benefits already provided but not yet recognised, less the fair value at the balance sheet date of plan assets other than those due to directly settle the obligations adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. Actuarial gains or losses are recorded in the Statement of Other Comprehensive Income and disclosed in item “120. Valuation reserves”. The discount rate used to discount obligations (whether financed or not) relating to benefits to be provided after retirement varies according to the currency of denomination and country where the liabilities are allocated and is determined on the basis of market yield at the balance sheet date of prime issuers’ bonds (HQCB: High quality corporate bonds) with an average life in keeping with that of the relevant liability. Other provisions Provisions for risks and charges are recognised when: • the entity has a present obligation (legal or constructive) as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • a reliable estimate can be made of the amount of the obligation. The amounts recognised as provisions are the best estimate of the expenditure required to settle the present obligation. The risks and uncertainties that inevitably surround the relevant events and circumstances are taken into account in reaching the best estimate of a provision. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 162 2018 Annual Report and Accounts · UniCredit In particular, where the effect of the time value of money is significant, the amount of the provision should be the present value of the best estimate of the cost required to settle the obligation. The discount rate used reflects the current market assessments. Provisions are reviewed periodically and adjusted to reflect the current best estimate. If it becomes clear that it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Provisions are used only for expenses for which they were originally recognised. Allocations made in the year are recognised in profit and loss item “200. Net provisions for risks and charges: b) other net provisions” and include increases due to the passage of time; they are also net of any reversals. “Other provisions” also include obligations relating to benefits due to agents, specifically supplementary customer portfolio payments, merit payments, contractual payments and payments under non-competition agreements, which are measured as per defined benefit plans; accordingly these obligations are calculated using the Unit Credit Projection method (see previous paragraph Retirement Payments and Similar Obligations). 11 - Financial liabilities measured at amortised cost Financial liabilities measured at amortised cost comprise financial instruments (other than liabilities held for trading or those designated at fair value) representing the various forms of third-party funding. These financial liabilities are recognised at settlement date initially at fair value, which is normally the consideration received less transaction costs directly attributable to the financial liability. Subsequently these instruments are measured at amortised cost using the effective interest method. Such interest is recognised in item “20. Interest expenses and similar charges” if negative or in item “10. Interest income and similar revenues” if positive. Instruments indexed to equity instruments, foreign exchange, credit instruments or indexes, are treated as structured instruments. The embedded derivative is separated from the host contract and recognised as a derivative, provided that separation requirements are met, and recognised at fair value. The embedded derivative is recognised at its fair value, classified as financial assets or liabilities held for trading and subsequently measured at fair value through profit or loss with changes in fair value recognised in P&L in item “80. Net gains (losses) on trading”. The difference between the total amount received and the initial fair value of the embedded derivative is attributed to the host contract. Instruments convertible into treasury shares imply recognition, at the issuance date, of a financial liability and of the equity part to be recognised in item “140. Equity instruments”, if a physical delivery settles the contract. The equity part is initially measured at the residual value, i.e. the overall value of the instrument less the separately determined value of a financial liability with no conversion clause and the same cash flows. The resulting financial liability is recognised at amortised cost using the effective interest method. Securities in issue are recognised net of repurchased amounts; the difference between the carrying value of the liability and the amount paid to buy it in is recognised into profit and loss in line “100. Gains (Losses) on disposal and repurchase of: c) financial liabilities”. Subsequent disposal by the issuer is considered as a new issue which doesn’t produce gains or losses. 12 - Financial liabilities held for trading Financial liabilities held for trading include: • derivatives that are not designated as hedging instruments; • obligations to deliver financial assets borrowed by a short seller (i.e. an entity that sells financial assets it does not yet own); • financial liabilities issued with an intention to repurchase them in the short term; • financial liabilities that are part of a portfolio of financial instruments considered as a unit and for which there is evidence of a recent pattern of trading. Financial liabilities held for trading, including derivatives, are measured at fair value on initial recognition and during the life of the transaction. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial liability is recognised in profit or loss in item “80. Net gains (losses) on trading”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 162 2018 Annual Report and Accounts · UniCredit In particular, where the effect of the time value of money is significant, the amount of the provision should be the present value of the best estimate of the cost required to settle the obligation. The discount rate used reflects the current market assessments. Provisions are reviewed periodically and adjusted to reflect the current best estimate. If it becomes clear that it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Provisions are used only for expenses for which they were originally recognised. Allocations made in the year are recognised in profit and loss item “200. Net provisions for risks and charges: b) other net provisions” and include increases due to the passage of time; they are also net of any reversals. “Other provisions” also include obligations relating to benefits due to agents, specifically supplementary customer portfolio payments, merit payments, contractual payments and payments under non-competition agreements, which are measured as per defined benefit plans; accordingly these obligations are calculated using the Unit Credit Projection method (see previous paragraph Retirement Payments and Similar Obligations). 11 - Financial liabilities measured at amortised cost Financial liabilities measured at amortised cost comprise financial instruments (other than liabilities held for trading or those designated at fair value) representing the various forms of third-party funding. These financial liabilities are recognised at settlement date initially at fair value, which is normally the consideration received less transaction costs directly attributable to the financial liability. Subsequently these instruments are measured at amortised cost using the effective interest method. Such interest is recognised in item “20. Interest expenses and similar charges” if negative or in item “10. Interest income and similar revenues” if positive. Instruments indexed to equity instruments, foreign exchange, credit instruments or indexes, are treated as structured instruments. The embedded derivative is separated from the host contract and recognised as a derivative, provided that separation requirements are met, and recognised at fair value. The embedded derivative is recognised at its fair value, classified as financial assets or liabilities held for trading and subsequently measured at fair value through profit or loss with changes in fair value recognised in P&L in item “80. Net gains (losses) on trading”. The difference between the total amount received and the initial fair value of the embedded derivative is attributed to the host contract. Instruments convertible into treasury shares imply recognition, at the issuance date, of a financial liability and of the equity part to be recognised in item “140. Equity instruments”, if a physical delivery settles the contract. The equity part is initially measured at the residual value, i.e. the overall value of the instrument less the separately determined value of a financial liability with no conversion clause and the same cash flows. The resulting financial liability is recognised at amortised cost using the effective interest method. Securities in issue are recognised net of repurchased amounts; the difference between the carrying value of the liability and the amount paid to buy it in is recognised into profit and loss in line “100. Gains (Losses) on disposal and repurchase of: c) financial liabilities”. Subsequent disposal by the issuer is considered as a new issue which doesn’t produce gains or losses. 12 - Financial liabilities held for trading Financial liabilities held for trading include: • derivatives that are not designated as hedging instruments; • obligations to deliver financial assets borrowed by a short seller (i.e. an entity that sells financial assets it does not yet own); • financial liabilities issued with an intention to repurchase them in the short term; • financial liabilities that are part of a portfolio of financial instruments considered as a unit and for which there is evidence of a recent pattern of trading. Financial liabilities held for trading, including derivatives, are measured at fair value on initial recognition and during the life of the transaction. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial liability is recognised in profit or loss in item “80. Net gains (losses) on trading”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 162 2018 Annual Report and Accounts · UniCredit In particular, where the effect of the time value of money is significant, the amount of the provision should be the present value of the best estimate of the cost required to settle the obligation. The discount rate used reflects the current market assessments. Provisions are reviewed periodically and adjusted to reflect the current best estimate. If it becomes clear that it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Provisions are used only for expenses for which they were originally recognised. Allocations made in the year are recognised in profit and loss item “200. Net provisions for risks and charges: b) other net provisions” and include increases due to the passage of time; they are also net of any reversals. “Other provisions” also include obligations relating to benefits due to agents, specifically supplementary customer portfolio payments, merit payments, contractual payments and payments under non-competition agreements, which are measured as per defined benefit plans; accordingly these obligations are calculated using the Unit Credit Projection method (see previous paragraph Retirement Payments and Similar Obligations). 11 - Financial liabilities measured at amortised cost Financial liabilities measured at amortised cost comprise financial instruments (other than liabilities held for trading or those designated at fair value) representing the various forms of third-party funding. These financial liabilities are recognised at settlement date initially at fair value, which is normally the consideration received less transaction costs directly attributable to the financial liability. Subsequently these instruments are measured at amortised cost using the effective interest method. Such interest is recognised in item “20. Interest expenses and similar charges” if negative or in item “10. Interest income and similar revenues” if positive. Instruments indexed to equity instruments, foreign exchange, credit instruments or indexes, are treated as structured instruments. The embedded derivative is separated from the host contract and recognised as a derivative, provided that separation requirements are met, and recognised at fair value. The embedded derivative is recognised at its fair value, classified as financial assets or liabilities held for trading and subsequently measured at fair value through profit or loss with changes in fair value recognised in P&L in item “80. Net gains (losses) on trading”. The difference between the total amount received and the initial fair value of the embedded derivative is attributed to the host contract. Instruments convertible into treasury shares imply recognition, at the issuance date, of a financial liability and of the equity part to be recognised in item “140. Equity instruments”, if a physical delivery settles the contract. The equity part is initially measured at the residual value, i.e. the overall value of the instrument less the separately determined value of a financial liability with no conversion clause and the same cash flows. The resulting financial liability is recognised at amortised cost using the effective interest method. Securities in issue are recognised net of repurchased amounts; the difference between the carrying value of the liability and the amount paid to buy it in is recognised into profit and loss in line “100. Gains (Losses) on disposal and repurchase of: c) financial liabilities”. Subsequent disposal by the issuer is considered as a new issue which doesn’t produce gains or losses. 12 - Financial liabilities held for trading Financial liabilities held for trading include: • derivatives that are not designated as hedging instruments; • obligations to deliver financial assets borrowed by a short seller (i.e. an entity that sells financial assets it does not yet own); • financial liabilities issued with an intention to repurchase them in the short term; • financial liabilities that are part of a portfolio of financial instruments considered as a unit and for which there is evidence of a recent pattern of trading. Financial liabilities held for trading, including derivatives, are measured at fair value on initial recognition and during the life of the transaction. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial liability is recognised in profit or loss in item “80. Net gains (losses) on trading”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 162 2018 Annual Report and Accounts · UniCredit In particular, where the effect of the time value of money is significant, the amount of the provision should be the present value of the best estimate of the cost required to settle the obligation. The discount rate used reflects the current market assessments. Provisions are reviewed periodically and adjusted to reflect the current best estimate. If it becomes clear that it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Provisions are used only for expenses for which they were originally recognised. Allocations made in the year are recognised in profit and loss item “200. Net provisions for risks and charges: b) other net provisions” and include increases due to the passage of time; they are also net of any reversals. “Other provisions” also include obligations relating to benefits due to agents, specifically supplementary customer portfolio payments, merit payments, contractual payments and payments under non-competition agreements, which are measured as per defined benefit plans; accordingly these obligations are calculated using the Unit Credit Projection method (see previous paragraph Retirement Payments and Similar Obligations). 11 - Financial liabilities measured at amortised cost Financial liabilities measured at amortised cost comprise financial instruments (other than liabilities held for trading or those designated at fair value) representing the various forms of third-party funding. These financial liabilities are recognised at settlement date initially at fair value, which is normally the consideration received less transaction costs directly attributable to the financial liability. Subsequently these instruments are measured at amortised cost using the effective interest method. Such interest is recognised in item “20. Interest expenses and similar charges” if negative or in item “10. Interest income and similar revenues” if positive. Instruments indexed to equity instruments, foreign exchange, credit instruments or indexes, are treated as structured instruments. The embedded derivative is separated from the host contract and recognised as a derivative, provided that separation requirements are met, and recognised at fair value. The embedded derivative is recognised at its fair value, classified as financial assets or liabilities held for trading and subsequently measured at fair value through profit or loss with changes in fair value recognised in P&L in item “80. Net gains (losses) on trading”. The difference between the total amount received and the initial fair value of the embedded derivative is attributed to the host contract. Instruments convertible into treasury shares imply recognition, at the issuance date, of a financial liability and of the equity part to be recognised in item “140. Equity instruments”, if a physical delivery settles the contract. The equity part is initially measured at the residual value, i.e. the overall value of the instrument less the separately determined value of a financial liability with no conversion clause and the same cash flows. The resulting financial liability is recognised at amortised cost using the effective interest method. Securities in issue are recognised net of repurchased amounts; the difference between the carrying value of the liability and the amount paid to buy it in is recognised into profit and loss in line “100. Gains (Losses) on disposal and repurchase of: c) financial liabilities”. Subsequent disposal by the issuer is considered as a new issue which doesn’t produce gains or losses. 12 - Financial liabilities held for trading Financial liabilities held for trading include: • derivatives that are not designated as hedging instruments; • obligations to deliver financial assets borrowed by a short seller (i.e. an entity that sells financial assets it does not yet own); • financial liabilities issued with an intention to repurchase them in the short term; • financial liabilities that are part of a portfolio of financial instruments considered as a unit and for which there is evidence of a recent pattern of trading. Financial liabilities held for trading, including derivatives, are measured at fair value on initial recognition and during the life of the transaction. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial liability is recognised in profit or loss in item “80. Net gains (losses) on trading”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 162 2018 Annual Report and Accounts · UniCredit In particular, where the effect of the time value of money is significant, the amount of the provision should be the present value of the best estimate of the cost required to settle the obligation. The discount rate used reflects the current market assessments. Provisions are reviewed periodically and adjusted to reflect the current best estimate. If it becomes clear that it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Provisions are used only for expenses for which they were originally recognised. Allocations made in the year are recognised in profit and loss item “200. Net provisions for risks and charges: b) other net provisions” and include increases due to the passage of time; they are also net of any reversals. “Other provisions” also include obligations relating to benefits due to agents, specifically supplementary customer portfolio payments, merit payments, contractual payments and payments under non-competition agreements, which are measured as per defined benefit plans; accordingly these obligations are calculated using the Unit Credit Projection method (see previous paragraph Retirement Payments and Similar Obligations). 11 - Financial liabilities measured at amortised cost Financial liabilities measured at amortised cost comprise financial instruments (other than liabilities held for trading or those designated at fair value) representing the various forms of third-party funding. These financial liabilities are recognised at settlement date initially at fair value, which is normally the consideration received less transaction costs directly attributable to the financial liability. Subsequently these instruments are measured at amortised cost using the effective interest method. Such interest is recognised in item “20. Interest expenses and similar charges” if negative or in item “10. Interest income and similar revenues” if positive. Instruments indexed to equity instruments, foreign exchange, credit instruments or indexes, are treated as structured instruments. The embedded derivative is separated from the host contract and recognised as a derivative, provided that separation requirements are met, and recognised at fair value. The embedded derivative is recognised at its fair value, classified as financial assets or liabilities held for trading and subsequently measured at fair value through profit or loss with changes in fair value recognised in P&L in item “80. Net gains (losses) on trading”. The difference between the total amount received and the initial fair value of the embedded derivative is attributed to the host contract. Instruments convertible into treasury shares imply recognition, at the issuance date, of a financial liability and of the equity part to be recognised in item “140. Equity instruments”, if a physical delivery settles the contract. The equity part is initially measured at the residual value, i.e. the overall value of the instrument less the separately determined value of a financial liability with no conversion clause and the same cash flows. The resulting financial liability is recognised at amortised cost using the effective interest method. Securities in issue are recognised net of repurchased amounts; the difference between the carrying value of the liability and the amount paid to buy it in is recognised into profit and loss in line “100. Gains (Losses) on disposal and repurchase of: c) financial liabilities”. Subsequent disposal by the issuer is considered as a new issue which doesn’t produce gains or losses. 12 - Financial liabilities held for trading Financial liabilities held for trading include: • derivatives that are not designated as hedging instruments; • obligations to deliver financial assets borrowed by a short seller (i.e. an entity that sells financial assets it does not yet own); • financial liabilities issued with an intention to repurchase them in the short term; • financial liabilities that are part of a portfolio of financial instruments considered as a unit and for which there is evidence of a recent pattern of trading. Financial liabilities held for trading, including derivatives, are measured at fair value on initial recognition and during the life of the transaction. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial liability is recognised in profit or loss in item “80. Net gains (losses) on trading”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 163 13 - Financial liabilities designated at fair value Financial liabilities, like financial assets may also be designated, according to IFRS9, on initial recognition as measured at fair value, provided that: • this designation eliminates or considerably reduces an accounting or measurement inconsistency that would arise from the application of different methods of measurement to assets and liabilities and related gains or losses; or • a group of financial assets, financial liabilities or both are managed and measured at fair value under risk management or investment strategy which is internally documented with the entity’s key management personnel. This category may also include financial liabilities represented by hybrid (combined) instruments containing embedded derivatives that otherwise should have been separated from the host contract. Financial liabilities presented in this category are measured at fair value at initial recognition and for the life of the transaction. The changes in fair value are recognised in the income statement in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value” except for any changes in fair value arising from changes in their creditworthiness, which are shown under item “120. Valuation reserves” of shareholders’ equity unless such accounting results in an inconsistency that arises from the application of different methods of measuring assets and liabilities and related gains or losses, in which case also the changes in fair value deriving from changes in creditworthiness are recorded in the income statement. In case of redemption the balance of cumulated changes in fair value due to own credit risk booked in item “120. Valuation reserves” is reclassified in line “150. Reserves”. 14 - Foreign currency transactions A foreign currency transaction is recognised at the spot exchange rate of the transaction date. Foreign currency monetary assets and liabilities are translated at the closing rate of the period. Exchange differences arising from settlement of monetary items at rates different from those of the transaction date and unrealised exchange rate differences on foreign currency assets and liabilities not yet settled, other than assets and liabilities designated as measured at fair value and hedging instruments, are recognised in profit and loss item “80. Net gains (losses) on trading”. Exchange rate differences arising on a monetary item that is part of an entity’s net investment in a foreign operation whose activities are based or conducted in a country or currency other than those of the reporting entity are initially recognised in the entity’s equity, and recognised in profit or loss on disposal of the net investment. Non-monetary assets and liabilities recognised at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated at the closing rate. In this case the exchange differences are recognised: • in profit and loss if the financial asset is classified in a portfolio measured at fair value through profit or loss; or • in the Statement of Other Comprehensive Income, and disclosed in the Revaluation reserves, if the financial asset is classified in “Financial assets at fair value through other comprehensive income”. Hedges of a net investment in a foreign operation are recognised similarly to cash flow hedges. The assets and liabilities of fully consolidated foreign entities are translated at the closing exchange rate of each period. Gains and losses are translated at the average exchange rate for the period. Differences arising from the use of closing exchange rates and from the average exchange rates and from the remeasurement of the initial net amount of the assets of a foreign company at the closing rate are classified directly in item “120. Valuation reserves”. Any goodwill arising on the acquisition of a foreign operation realised after IAS First Time Adoption (i.e., 1 January 2004) whose assets are located or managed in a currency other than the euro, and any fair value adjustments of the carrying amounts of assets and liabilities are treated as assets and liabilities of the foreign operation, expressed in the functional currency of the foreign operation and translated at the closing rate. On the disposal of a foreign operation, the cumulative amount of the exchange rate differences, classified in an Equity reserve, is reclassified in profit or loss. All exchange differences recorded under revaluation reserves in Shareholders’ Equity are also reported in the Statement of Other Comprehensive Income. 15 - Insurance assets and liabilities Please note that the Group does not conduct such business. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 163 13 - Financial liabilities designated at fair value Financial liabilities, like financial assets may also be designated, according to IFRS9, on initial recognition as measured at fair value, provided that: • this designation eliminates or considerably reduces an accounting or measurement inconsistency that would arise from the application of different methods of measurement to assets and liabilities and related gains or losses; or • a group of financial assets, financial liabilities or both are managed and measured at fair value under risk management or investment strategy which is internally documented with the entity’s key management personnel. This category may also include financial liabilities represented by hybrid (combined) instruments containing embedded derivatives that otherwise should have been separated from the host contract. Financial liabilities presented in this category are measured at fair value at initial recognition and for the life of the transaction. The changes in fair value are recognised in the income statement in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value” except for any changes in fair value arising from changes in their creditworthiness, which are shown under item “120. Valuation reserves” of shareholders’ equity unless such accounting results in an inconsistency that arises from the application of different methods of measuring assets and liabilities and related gains or losses, in which case also the changes in fair value deriving from changes in creditworthiness are recorded in the income statement. In case of redemption the balance of cumulated changes in fair value due to own credit risk booked in item “120. Valuation reserves” is reclassified in line “150. Reserves”. 14 - Foreign currency transactions A foreign currency transaction is recognised at the spot exchange rate of the transaction date. Foreign currency monetary assets and liabilities are translated at the closing rate of the period. Exchange differences arising from settlement of monetary items at rates different from those of the transaction date and unrealised exchange rate differences on foreign currency assets and liabilities not yet settled, other than assets and liabilities designated as measured at fair value and hedging instruments, are recognised in profit and loss item “80. Net gains (losses) on trading”. Exchange rate differences arising on a monetary item that is part of an entity’s net investment in a foreign operation whose activities are based or conducted in a country or currency other than those of the reporting entity are initially recognised in the entity’s equity, and recognised in profit or loss on disposal of the net investment. Non-monetary assets and liabilities recognised at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated at the closing rate. In this case the exchange differences are recognised: • in profit and loss if the financial asset is classified in a portfolio measured at fair value through profit or loss; or • in the Statement of Other Comprehensive Income, and disclosed in the Revaluation reserves, if the financial asset is classified in “Financial assets at fair value through other comprehensive income”. Hedges of a net investment in a foreign operation are recognised similarly to cash flow hedges. The assets and liabilities of fully consolidated foreign entities are translated at the closing exchange rate of each period. Gains and losses are translated at the average exchange rate for the period. Differences arising from the use of closing exchange rates and from the average exchange rates and from the remeasurement of the initial net amount of the assets of a foreign company at the closing rate are classified directly in item “120. Valuation reserves”. Any goodwill arising on the acquisition of a foreign operation realised after IAS First Time Adoption (i.e., 1 January 2004) whose assets are located or managed in a currency other than the euro, and any fair value adjustments of the carrying amounts of assets and liabilities are treated as assets and liabilities of the foreign operation, expressed in the functional currency of the foreign operation and translated at the closing rate. On the disposal of a foreign operation, the cumulative amount of the exchange rate differences, classified in an Equity reserve, is reclassified in profit or loss. All exchange differences recorded under revaluation reserves in Shareholders’ Equity are also reported in the Statement of Other Comprehensive Income. 15 - Insurance assets and liabilities Please note that the Group does not conduct such business. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 163 13 - Financial liabilities designated at fair value Financial liabilities, like financial assets may also be designated, according to IFRS9, on initial recognition as measured at fair value, provided that: • this designation eliminates or considerably reduces an accounting or measurement inconsistency that would arise from the application of different methods of measurement to assets and liabilities and related gains or losses; or • a group of financial assets, financial liabilities or both are managed and measured at fair value under risk management or investment strategy which is internally documented with the entity’s key management personnel. This category may also include financial liabilities represented by hybrid (combined) instruments containing embedded derivatives that otherwise should have been separated from the host contract. Financial liabilities presented in this category are measured at fair value at initial recognition and for the life of the transaction. The changes in fair value are recognised in the income statement in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value” except for any changes in fair value arising from changes in their creditworthiness, which are shown under item “120. Valuation reserves” of shareholders’ equity unless such accounting results in an inconsistency that arises from the application of different methods of measuring assets and liabilities and related gains or losses, in which case also the changes in fair value deriving from changes in creditworthiness are recorded in the income statement. In case of redemption the balance of cumulated changes in fair value due to own credit risk booked in item “120. Valuation reserves” is reclassified in line “150. Reserves”. 14 - Foreign currency transactions A foreign currency transaction is recognised at the spot exchange rate of the transaction date. Foreign currency monetary assets and liabilities are translated at the closing rate of the period. Exchange differences arising from settlement of monetary items at rates different from those of the transaction date and unrealised exchange rate differences on foreign currency assets and liabilities not yet settled, other than assets and liabilities designated as measured at fair value and hedging instruments, are recognised in profit and loss item “80. Net gains (losses) on trading”. Exchange rate differences arising on a monetary item that is part of an entity’s net investment in a foreign operation whose activities are based or conducted in a country or currency other than those of the reporting entity are initially recognised in the entity’s equity, and recognised in profit or loss on disposal of the net investment. Non-monetary assets and liabilities recognised at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated at the closing rate. In this case the exchange differences are recognised: • in profit and loss if the financial asset is classified in a portfolio measured at fair value through profit or loss; or • in the Statement of Other Comprehensive Income, and disclosed in the Revaluation reserves, if the financial asset is classified in “Financial assets at fair value through other comprehensive income”. Hedges of a net investment in a foreign operation are recognised similarly to cash flow hedges. The assets and liabilities of fully consolidated foreign entities are translated at the closing exchange rate of each period. Gains and losses are translated at the average exchange rate for the period. Differences arising from the use of closing exchange rates and from the average exchange rates and from the remeasurement of the initial net amount of the assets of a foreign company at the closing rate are classified directly in item “120. Valuation reserves”. Any goodwill arising on the acquisition of a foreign operation realised after IAS First Time Adoption (i.e., 1 January 2004) whose assets are located or managed in a currency other than the euro, and any fair value adjustments of the carrying amounts of assets and liabilities are treated as assets and liabilities of the foreign operation, expressed in the functional currency of the foreign operation and translated at the closing rate. On the disposal of a foreign operation, the cumulative amount of the exchange rate differences, classified in an Equity reserve, is reclassified in profit or loss. All exchange differences recorded under revaluation reserves in Shareholders’ Equity are also reported in the Statement of Other Comprehensive Income. 15 - Insurance assets and liabilities Please note that the Group does not conduct such business. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 163 13 - Financial liabilities designated at fair value Financial liabilities, like financial assets may also be designated, according to IFRS9, on initial recognition as measured at fair value, provided that: • this designation eliminates or considerably reduces an accounting or measurement inconsistency that would arise from the application of different methods of measurement to assets and liabilities and related gains or losses; or • a group of financial assets, financial liabilities or both are managed and measured at fair value under risk management or investment strategy which is internally documented with the entity’s key management personnel. This category may also include financial liabilities represented by hybrid (combined) instruments containing embedded derivatives that otherwise should have been separated from the host contract. Financial liabilities presented in this category are measured at fair value at initial recognition and for the life of the transaction. The changes in fair value are recognised in the income statement in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value” except for any changes in fair value arising from changes in their creditworthiness, which are shown under item “120. Valuation reserves” of shareholders’ equity unless such accounting results in an inconsistency that arises from the application of different methods of measuring assets and liabilities and related gains or losses, in which case also the changes in fair value deriving from changes in creditworthiness are recorded in the income statement. In case of redemption the balance of cumulated changes in fair value due to own credit risk booked in item “120. Valuation reserves” is reclassified in line “150. Reserves”. 14 - Foreign currency transactions A foreign currency transaction is recognised at the spot exchange rate of the transaction date. Foreign currency monetary assets and liabilities are translated at the closing rate of the period. Exchange differences arising from settlement of monetary items at rates different from those of the transaction date and unrealised exchange rate differences on foreign currency assets and liabilities not yet settled, other than assets and liabilities designated as measured at fair value and hedging instruments, are recognised in profit and loss item “80. Net gains (losses) on trading”. Exchange rate differences arising on a monetary item that is part of an entity’s net investment in a foreign operation whose activities are based or conducted in a country or currency other than those of the reporting entity are initially recognised in the entity’s equity, and recognised in profit or loss on disposal of the net investment. Non-monetary assets and liabilities recognised at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated at the closing rate. In this case the exchange differences are recognised: • in profit and loss if the financial asset is classified in a portfolio measured at fair value through profit or loss; or • in the Statement of Other Comprehensive Income, and disclosed in the Revaluation reserves, if the financial asset is classified in “Financial assets at fair value through other comprehensive income”. Hedges of a net investment in a foreign operation are recognised similarly to cash flow hedges. The assets and liabilities of fully consolidated foreign entities are translated at the closing exchange rate of each period. Gains and losses are translated at the average exchange rate for the period. Differences arising from the use of closing exchange rates and from the average exchange rates and from the remeasurement of the initial net amount of the assets of a foreign company at the closing rate are classified directly in item “120. Valuation reserves”. Any goodwill arising on the acquisition of a foreign operation realised after IAS First Time Adoption (i.e., 1 January 2004) whose assets are located or managed in a currency other than the euro, and any fair value adjustments of the carrying amounts of assets and liabilities are treated as assets and liabilities of the foreign operation, expressed in the functional currency of the foreign operation and translated at the closing rate. On the disposal of a foreign operation, the cumulative amount of the exchange rate differences, classified in an Equity reserve, is reclassified in profit or loss. All exchange differences recorded under revaluation reserves in Shareholders’ Equity are also reported in the Statement of Other Comprehensive Income. 15 - Insurance assets and liabilities Please note that the Group does not conduct such business. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 163 13 - Financial liabilities designated at fair value Financial liabilities, like financial assets may also be designated, according to IFRS9, on initial recognition as measured at fair value, provided that: • this designation eliminates or considerably reduces an accounting or measurement inconsistency that would arise from the application of different methods of measurement to assets and liabilities and related gains or losses; or • a group of financial assets, financial liabilities or both are managed and measured at fair value under risk management or investment strategy which is internally documented with the entity’s key management personnel. This category may also include financial liabilities represented by hybrid (combined) instruments containing embedded derivatives that otherwise should have been separated from the host contract. Financial liabilities presented in this category are measured at fair value at initial recognition and for the life of the transaction. The changes in fair value are recognised in the income statement in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value” except for any changes in fair value arising from changes in their creditworthiness, which are shown under item “120. Valuation reserves” of shareholders’ equity unless such accounting results in an inconsistency that arises from the application of different methods of measuring assets and liabilities and related gains or losses, in which case also the changes in fair value deriving from changes in creditworthiness are recorded in the income statement. In case of redemption the balance of cumulated changes in fair value due to own credit risk booked in item “120. Valuation reserves” is reclassified in line “150. Reserves”. 14 - Foreign currency transactions A foreign currency transaction is recognised at the spot exchange rate of the transaction date. Foreign currency monetary assets and liabilities are translated at the closing rate of the period. Exchange differences arising from settlement of monetary items at rates different from those of the transaction date and unrealised exchange rate differences on foreign currency assets and liabilities not yet settled, other than assets and liabilities designated as measured at fair value and hedging instruments, are recognised in profit and loss item “80. Net gains (losses) on trading”. Exchange rate differences arising on a monetary item that is part of an entity’s net investment in a foreign operation whose activities are based or conducted in a country or currency other than those of the reporting entity are initially recognised in the entity’s equity, and recognised in profit or loss on disposal of the net investment. Non-monetary assets and liabilities recognised at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated at the closing rate. In this case the exchange differences are recognised: • in profit and loss if the financial asset is classified in a portfolio measured at fair value through profit or loss; or • in the Statement of Other Comprehensive Income, and disclosed in the Revaluation reserves, if the financial asset is classified in “Financial assets at fair value through other comprehensive income”. Hedges of a net investment in a foreign operation are recognised similarly to cash flow hedges. The assets and liabilities of fully consolidated foreign entities are translated at the closing exchange rate of each period. Gains and losses are translated at the average exchange rate for the period. Differences arising from the use of closing exchange rates and from the average exchange rates and from the remeasurement of the initial net amount of the assets of a foreign company at the closing rate are classified directly in item “120. Valuation reserves”. Any goodwill arising on the acquisition of a foreign operation realised after IAS First Time Adoption (i.e., 1 January 2004) whose assets are located or managed in a currency other than the euro, and any fair value adjustments of the carrying amounts of assets and liabilities are treated as assets and liabilities of the foreign operation, expressed in the functional currency of the foreign operation and translated at the closing rate. On the disposal of a foreign operation, the cumulative amount of the exchange rate differences, classified in an Equity reserve, is reclassified in profit or loss. All exchange differences recorded under revaluation reserves in Shareholders’ Equity are also reported in the Statement of Other Comprehensive Income. 15 - Insurance assets and liabilities Please note that the Group does not conduct such business. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 164 2018 Annual Report and Accounts · UniCredit 16 - Other information Impairment Loans and debt securities classified as financial assets at amortised cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures are tested for impairment as required by IFRS9. In this regard, these instruments are classified in stage 1, stage 2 or stage 3 according to their absolute or relative credit quality with respect to initial disbursement. Specifically: • Stage 1: includes (i) newly issued or acquired credit exposures, (ii) exposures for which credit risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk (low credit risk exemption); • Stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • Stage 3: includes impaired credit exposures. For exposures in stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. The allocation of credit exposures in one of the abovementioned stages is done at initial recognition, when the exposures is classified at stage 1 and it is periodically reviewed based on “stage allocation” rules as specified in Part E - Section 1 - Credit risk (Company Financial Statements). Same information is provided in Part E - Section 2 - 2.1 Credit risk. In order to calculate the expected loss and the related loan loss provision, the Bank uses Probability of Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”) parameters, used for regulatory purposes and adjusted in order to ensure that impairment measurement represents values which are “point in time”, “forward looking” and inclusive of multiple scenarios. In this respect see Part E - Section 1 - Credit risk (Company Financial Statements) for further information on expected loss calculation methodologies. Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. With reference to stage 3, it should be noted that it includes impaired exposures corresponding to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 7/24/2014), in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates. In particular EBA has defined as “Non-Performing” the exposures that meet one or both of the following criteria: • material exposures with more than 90 days past due; • exposures for which the bank values that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. In addition, the abovementioned Circular No.272 establishes that the aggregate of impaired assets is divided into the following categories: • Bad loans: cash and off-balance exposures to borrowers in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation. The assessment is generally carried out on an analytical basis (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or, in case of non-significant individually amounts, on a flat-rate basis for homogeneous types of exposures; • Unlikely to pay: cash and off-balance exposures for which conditions for evaluating the debt as bad loan are not met and for which it is unlikely that without recurring to enforcement of collaterals the debtor is able to pay in full (capital and/or interests) his credit obligations. Such assessment is made independently of any past due and unpaid amount/instalments. The classification among unlikely to pay is not necessarily linked to anomalies (non-repayment), rather it is linked to factors that indicate a situation of risk of default of the debtor. Unlikely to pay are generally accounted analytically (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or on a flat-rate basis for homogeneous types of exposures. The exposures classified among unlikely to pay and qualified as so-called forborne can be reclassified among non-impaired receivables only after at least one year has elapsed from the time of granting and the conditions indicated in paragraph 157 of EBA Implementing Technical Standards . With reference to their evaluation: - they are generally analytically evaluated and may include the discounted charge deriving from the possible renegotiation of the rate at conditions Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 164 2018 Annual Report and Accounts · UniCredit 16 - Other information Impairment Loans and debt securities classified as financial assets at amortised cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures are tested for impairment as required by IFRS9. In this regard, these instruments are classified in stage 1, stage 2 or stage 3 according to their absolute or relative credit quality with respect to initial disbursement. Specifically: • Stage 1: includes (i) newly issued or acquired credit exposures, (ii) exposures for which credit risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk (low credit risk exemption); • Stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • Stage 3: includes impaired credit exposures. For exposures in stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. The allocation of credit exposures in one of the abovementioned stages is done at initial recognition, when the exposures is classified at stage 1 and it is periodically reviewed based on “stage allocation” rules as specified in Part E - Section 1 - Credit risk (Company Financial Statements). Same information is provided in Part E - Section 2 - 2.1 Credit risk. In order to calculate the expected loss and the related loan loss provision, the Bank uses Probability of Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”) parameters, used for regulatory purposes and adjusted in order to ensure that impairment measurement represents values which are “point in time”, “forward looking” and inclusive of multiple scenarios. In this respect see Part E - Section 1 - Credit risk (Company Financial Statements) for further information on expected loss calculation methodologies. Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. With reference to stage 3, it should be noted that it includes impaired exposures corresponding to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 7/24/2014), in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates. In particular EBA has defined as “Non-Performing” the exposures that meet one or both of the following criteria: • material exposures with more than 90 days past due; • exposures for which the bank values that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. In addition, the abovementioned Circular No.272 establishes that the aggregate of impaired assets is divided into the following categories: • Bad loans: cash and off-balance exposures to borrowers in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation. The assessment is generally carried out on an analytical basis (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or, in case of non-significant individually amounts, on a flat-rate basis for homogeneous types of exposures; • Unlikely to pay: cash and off-balance exposures for which conditions for evaluating the debt as bad loan are not met and for which it is unlikely that without recurring to enforcement of collaterals the debtor is able to pay in full (capital and/or interests) his credit obligations. Such assessment is made independently of any past due and unpaid amount/instalments. The classification among unlikely to pay is not necessarily linked to anomalies (non-repayment), rather it is linked to factors that indicate a situation of risk of default of the debtor. Unlikely to pay are generally accounted analytically (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or on a flat-rate basis for homogeneous types of exposures. The exposures classified among unlikely to pay and qualified as so-called forborne can be reclassified among non-impaired receivables only after at least one year has elapsed from the time of granting and the conditions indicated in paragraph 157 of EBA Implementing Technical Standards . With reference to their evaluation: - they are generally analytically evaluated and may include the discounted charge deriving from the possible renegotiation of the rate at conditions Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 164 2018 Annual Report and Accounts · UniCredit 16 - Other information Impairment Loans and debt securities classified as financial assets at amortised cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures are tested for impairment as required by IFRS9. In this regard, these instruments are classified in stage 1, stage 2 or stage 3 according to their absolute or relative credit quality with respect to initial disbursement. Specifically: • Stage 1: includes (i) newly issued or acquired credit exposures, (ii) exposures for which credit risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk (low credit risk exemption); • Stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • Stage 3: includes impaired credit exposures. For exposures in stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. The allocation of credit exposures in one of the abovementioned stages is done at initial recognition, when the exposures is classified at stage 1 and it is periodically reviewed based on “stage allocation” rules as specified in Part E - Section 1 - Credit risk (Company Financial Statements). Same information is provided in Part E - Section 2 - 2.1 Credit risk. In order to calculate the expected loss and the related loan loss provision, the Bank uses Probability of Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”) parameters, used for regulatory purposes and adjusted in order to ensure that impairment measurement represents values which are “point in time”, “forward looking” and inclusive of multiple scenarios. In this respect see Part E - Section 1 - Credit risk (Company Financial Statements) for further information on expected loss calculation methodologies. Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. With reference to stage 3, it should be noted that it includes impaired exposures corresponding to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 7/24/2014), in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates. In particular EBA has defined as “Non-Performing” the exposures that meet one or both of the following criteria: • material exposures with more than 90 days past due; • exposures for which the bank values that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. In addition, the abovementioned Circular No.272 establishes that the aggregate of impaired assets is divided into the following categories: • Bad loans: cash and off-balance exposures to borrowers in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation. The assessment is generally carried out on an analytical basis (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or, in case of non-significant individually amounts, on a flat-rate basis for homogeneous types of exposures; • Unlikely to pay: cash and off-balance exposures for which conditions for evaluating the debt as bad loan are not met and for which it is unlikely that without recurring to enforcement of collaterals the debtor is able to pay in full (capital and/or interests) his credit obligations. Such assessment is made independently of any past due and unpaid amount/instalments. The classification among unlikely to pay is not necessarily linked to anomalies (non-repayment), rather it is linked to factors that indicate a situation of risk of default of the debtor. Unlikely to pay are generally accounted analytically (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or on a flat-rate basis for homogeneous types of exposures. The exposures classified among unlikely to pay and qualified as so-called forborne can be reclassified among non-impaired receivables only after at least one year has elapsed from the time of granting and the conditions indicated in paragraph 157 of EBA Implementing Technical Standards . With reference to their evaluation: - they are generally analytically evaluated and may include the discounted charge deriving from the possible renegotiation of the rate at conditions Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 164 2018 Annual Report and Accounts · UniCredit 16 - Other information Impairment Loans and debt securities classified as financial assets at amortised cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures are tested for impairment as required by IFRS9. In this regard, these instruments are classified in stage 1, stage 2 or stage 3 according to their absolute or relative credit quality with respect to initial disbursement. Specifically: • Stage 1: includes (i) newly issued or acquired credit exposures, (ii) exposures for which credit risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk (low credit risk exemption); • Stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • Stage 3: includes impaired credit exposures. For exposures in stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. The allocation of credit exposures in one of the abovementioned stages is done at initial recognition, when the exposures is classified at stage 1 and it is periodically reviewed based on “stage allocation” rules as specified in Part E - Section 1 - Credit risk (Company Financial Statements). Same information is provided in Part E - Section 2 - 2.1 Credit risk. In order to calculate the expected loss and the related loan loss provision, the Bank uses Probability of Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”) parameters, used for regulatory purposes and adjusted in order to ensure that impairment measurement represents values which are “point in time”, “forward looking” and inclusive of multiple scenarios. In this respect see Part E - Section 1 - Credit risk (Company Financial Statements) for further information on expected loss calculation methodologies. Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. With reference to stage 3, it should be noted that it includes impaired exposures corresponding to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 7/24/2014), in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates. In particular EBA has defined as “Non-Performing” the exposures that meet one or both of the following criteria: • material exposures with more than 90 days past due; • exposures for which the bank values that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. In addition, the abovementioned Circular No.272 establishes that the aggregate of impaired assets is divided into the following categories: • Bad loans: cash and off-balance exposures to borrowers in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation. The assessment is generally carried out on an analytical basis (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or, in case of non-significant individually amounts, on a flat-rate basis for homogeneous types of exposures; • Unlikely to pay: cash and off-balance exposures for which conditions for evaluating the debt as bad loan are not met and for which it is unlikely that without recurring to enforcement of collaterals the debtor is able to pay in full (capital and/or interests) his credit obligations. Such assessment is made independently of any past due and unpaid amount/instalments. The classification among unlikely to pay is not necessarily linked to anomalies (non-repayment), rather it is linked to factors that indicate a situation of risk of default of the debtor. Unlikely to pay are generally accounted analytically (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or on a flat-rate basis for homogeneous types of exposures. The exposures classified among unlikely to pay and qualified as so-called forborne can be reclassified among non-impaired receivables only after at least one year has elapsed from the time of granting and the conditions indicated in paragraph 157 of EBA Implementing Technical Standards . With reference to their evaluation: - they are generally analytically evaluated and may include the discounted charge deriving from the possible renegotiation of the rate at conditions Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 164 2018 Annual Report and Accounts · UniCredit 16 - Other information Impairment Loans and debt securities classified as financial assets at amortised cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures are tested for impairment as required by IFRS9. In this regard, these instruments are classified in stage 1, stage 2 or stage 3 according to their absolute or relative credit quality with respect to initial disbursement. Specifically: • Stage 1: includes (i) newly issued or acquired credit exposures, (ii) exposures for which credit risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk (low credit risk exemption); • Stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • Stage 3: includes impaired credit exposures. For exposures in stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. The allocation of credit exposures in one of the abovementioned stages is done at initial recognition, when the exposures is classified at stage 1 and it is periodically reviewed based on “stage allocation” rules as specified in Part E - Section 1 - Credit risk (Company Financial Statements). Same information is provided in Part E - Section 2 - 2.1 Credit risk. In order to calculate the expected loss and the related loan loss provision, the Bank uses Probability of Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”) parameters, used for regulatory purposes and adjusted in order to ensure that impairment measurement represents values which are “point in time”, “forward looking” and inclusive of multiple scenarios. In this respect see Part E - Section 1 - Credit risk (Company Financial Statements) for further information on expected loss calculation methodologies. Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. With reference to stage 3, it should be noted that it includes impaired exposures corresponding to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 7/24/2014), in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates. In particular EBA has defined as “Non-Performing” the exposures that meet one or both of the following criteria: • material exposures with more than 90 days past due; • exposures for which the bank values that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. In addition, the abovementioned Circular No.272 establishes that the aggregate of impaired assets is divided into the following categories: • Bad loans: cash and off-balance exposures to borrowers in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation. The assessment is generally carried out on an analytical basis (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or, in case of non-significant individually amounts, on a flat-rate basis for homogeneous types of exposures; • Unlikely to pay: cash and off-balance exposures for which conditions for evaluating the debt as bad loan are not met and for which it is unlikely that without recurring to enforcement of collaterals the debtor is able to pay in full (capital and/or interests) his credit obligations. Such assessment is made independently of any past due and unpaid amount/instalments. The classification among unlikely to pay is not necessarily linked to anomalies (non-repayment), rather it is linked to factors that indicate a situation of risk of default of the debtor. Unlikely to pay are generally accounted analytically (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or on a flat-rate basis for homogeneous types of exposures. The exposures classified among unlikely to pay and qualified as so-called forborne can be reclassified among non-impaired receivables only after at least one year has elapsed from the time of granting and the conditions indicated in paragraph 157 of EBA Implementing Technical Standards . With reference to their evaluation: - they are generally analytically evaluated and may include the discounted charge deriving from the possible renegotiation of the rate at conditions Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 165 below the original contractual rate; - the renegotiations of loans that require their derecognition in exchange of shares through “debt-to-equity swap” transactions requires the assessment, before executing the swap, of the credit exposures in accordance with stipulated agreements at the date of preparation of the financial statements. Any differences between the value of receivables and the value at initial recognition of equity instruments is accounted in income statement in the impairment losses; • Past due exposures: cash exposures different from those classified as non-performing loans and unlikely to pay that at the reporting date are past due. Past due exposures can be determined referring alternatively to individual debtor or individual transaction. In particular they represent an entire exposure to counterparties different from those classified as unlikely to pay and bad loans that at the reporting date show past due receivables from more than 90 days as well as requirements established by local prudential regulation for the inclusion of these credits into “past due” (standardised banks) or “default exposures” (IRB banks). Past due exposures are evaluated on a on a flat-rate basis on historical/statistical basis, applying, if available, the riskiness identified by the risk factor used for the purposes of EU Regulation No.575/2013 (CRR) relating to prudential requirements for credit institutions and investment firms (LGD - Loss Given Default). Allowances for impairment of loans and receivables are based on the present value of expected cash flows of principal and interest. In determining the present value of future cash flows, the basic requirement is the identification of estimated collections, the timing of payments and the discount rate used. In particular, the amount of the loss on impaired exposures classified as bad loans and unlikely to pay, according to the categories specified above, is the difference between the carrying amount and the present value of estimated cash flows discounted at the original interest rate of the financial asset. For all fixed rate positions, the interest rate thus determined is kept constant in subsequent financial years, while for floating rate positions the interest rate is updated according to contractual terms. If the original interest rate cannot be found, or if finding it would be excessively burdensome, the rate that best approximates is applied, also recurring to “practical expedients” that do not alter the substance, and ensure consistency with the international accounting standards. Recovery times are estimated on the basis of business plans or forecasts based on historical recovery experience observed for similar classes of loans, taking into account the customer segment, the type of loan, the type of security and any other factors considered relevant. Also the impairment on impaired exposures was calculated as required by the new accounting standard to include (i) the adjustments necessary to reach the calculation of a point-in-time and forward-looking loss; and (ii) multiple scenarios applicable to this type of exposure including any sale scenarios in case the Bank’s NPL strategy foresees the recovery through sale on the market according to what is specified in Part E - Section 1 - Credit risk (Company Financial Statements). Same information is provided in Part E - Section 2 - 2.1 Credit risk. If there are no reasonable expectations to recover a financial assets in its entirety or a portion thereof, the gross exposure is subject to write-off. Write-off, that may involve either a full or a part of a financial asset, might be accounted for before that the legal actions, activated to recover the credit exposure, are closed and doesn’t imply the forfeiture of the legal right to recover. In this context the Group has developed a specific guideline that assess the need to recognize a write-off. For further information see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. Modification Renegotiations of financial instruments which cause a change in contractual conditions are accounted for depending on the significance of the contractual change itself. In particular, when renegotiations are not considered significant the gross exposure is re-determined through the calculation of the present value of cash flows following the renegotiation at the original effective interest rate. The difference between the gross exposure before and after renegotiation, adjusted to consider changes in the related loan loss provision, is recognised in P&L as modification gain or loss. In this regard, renegotiations achieved both by amending the original contract or by closing a new one, are considered significant when they determine the expiry of the right to receive cash flows accordingly to the original contract. In particular, the rights to receive cash flows are considered as expired in case of renegotiations that introduce contractual clauses which determine a change in the financial instrument classification, which determine a change in the currency or which are carried out at market conditions therefore without causing credit concession. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 165 below the original contractual rate; - the renegotiations of loans that require their derecognition in exchange of shares through “debt-to-equity swap” transactions requires the assessment, before executing the swap, of the credit exposures in accordance with stipulated agreements at the date of preparation of the financial statements. Any differences between the value of receivables and the value at initial recognition of equity instruments is accounted in income statement in the impairment losses; • Past due exposures: cash exposures different from those classified as non-performing loans and unlikely to pay that at the reporting date are past due. Past due exposures can be determined referring alternatively to individual debtor or individual transaction. In particular they represent an entire exposure to counterparties different from those classified as unlikely to pay and bad loans that at the reporting date show past due receivables from more than 90 days as well as requirements established by local prudential regulation for the inclusion of these credits into “past due” (standardised banks) or “default exposures” (IRB banks). Past due exposures are evaluated on a on a flat-rate basis on historical/statistical basis, applying, if available, the riskiness identified by the risk factor used for the purposes of EU Regulation No.575/2013 (CRR) relating to prudential requirements for credit institutions and investment firms (LGD - Loss Given Default). Allowances for impairment of loans and receivables are based on the present value of expected cash flows of principal and interest. In determining the present value of future cash flows, the basic requirement is the identification of estimated collections, the timing of payments and the discount rate used. In particular, the amount of the loss on impaired exposures classified as bad loans and unlikely to pay, according to the categories specified above, is the difference between the carrying amount and the present value of estimated cash flows discounted at the original interest rate of the financial asset. For all fixed rate positions, the interest rate thus determined is kept constant in subsequent financial years, while for floating rate positions the interest rate is updated according to contractual terms. If the original interest rate cannot be found, or if finding it would be excessively burdensome, the rate that best approximates is applied, also recurring to “practical expedients” that do not alter the substance, and ensure consistency with the international accounting standards. Recovery times are estimated on the basis of business plans or forecasts based on historical recovery experience observed for similar classes of loans, taking into account the customer segment, the type of loan, the type of security and any other factors considered relevant. Also the impairment on impaired exposures was calculated as required by the new accounting standard to include (i) the adjustments necessary to reach the calculation of a point-in-time and forward-looking loss; and (ii) multiple scenarios applicable to this type of exposure including any sale scenarios in case the Bank’s NPL strategy foresees the recovery through sale on the market according to what is specified in Part E - Section 1 - Credit risk (Company Financial Statements). Same information is provided in Part E - Section 2 - 2.1 Credit risk. If there are no reasonable expectations to recover a financial assets in its entirety or a portion thereof, the gross exposure is subject to write-off. Write-off, that may involve either a full or a part of a financial asset, might be accounted for before that the legal actions, activated to recover the credit exposure, are closed and doesn’t imply the forfeiture of the legal right to recover. In this context the Group has developed a specific guideline that assess the need to recognize a write-off. For further information see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. Modification Renegotiations of financial instruments which cause a change in contractual conditions are accounted for depending on the significance of the contractual change itself. In particular, when renegotiations are not considered significant the gross exposure is re-determined through the calculation of the present value of cash flows following the renegotiation at the original effective interest rate. The difference between the gross exposure before and after renegotiation, adjusted to consider changes in the related loan loss provision, is recognised in P&L as modification gain or loss. In this regard, renegotiations achieved both by amending the original contract or by closing a new one, are considered significant when they determine the expiry of the right to receive cash flows accordingly to the original contract. In particular, the rights to receive cash flows are considered as expired in case of renegotiations that introduce contractual clauses which determine a change in the financial instrument classification, which determine a change in the currency or which are carried out at market conditions therefore without causing credit concession. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 165 below the original contractual rate; - the renegotiations of loans that require their derecognition in exchange of shares through “debt-to-equity swap” transactions requires the assessment, before executing the swap, of the credit exposures in accordance with stipulated agreements at the date of preparation of the financial statements. Any differences between the value of receivables and the value at initial recognition of equity instruments is accounted in income statement in the impairment losses; • Past due exposures: cash exposures different from those classified as non-performing loans and unlikely to pay that at the reporting date are past due. Past due exposures can be determined referring alternatively to individual debtor or individual transaction. In particular they represent an entire exposure to counterparties different from those classified as unlikely to pay and bad loans that at the reporting date show past due receivables from more than 90 days as well as requirements established by local prudential regulation for the inclusion of these credits into “past due” (standardised banks) or “default exposures” (IRB banks). Past due exposures are evaluated on a on a flat-rate basis on historical/statistical basis, applying, if available, the riskiness identified by the risk factor used for the purposes of EU Regulation No.575/2013 (CRR) relating to prudential requirements for credit institutions and investment firms (LGD - Loss Given Default). Allowances for impairment of loans and receivables are based on the present value of expected cash flows of principal and interest. In determining the present value of future cash flows, the basic requirement is the identification of estimated collections, the timing of payments and the discount rate used. In particular, the amount of the loss on impaired exposures classified as bad loans and unlikely to pay, according to the categories specified above, is the difference between the carrying amount and the present value of estimated cash flows discounted at the original interest rate of the financial asset. For all fixed rate positions, the interest rate thus determined is kept constant in subsequent financial years, while for floating rate positions the interest rate is updated according to contractual terms. If the original interest rate cannot be found, or if finding it would be excessively burdensome, the rate that best approximates is applied, also recurring to “practical expedients” that do not alter the substance, and ensure consistency with the international accounting standards. Recovery times are estimated on the basis of business plans or forecasts based on historical recovery experience observed for similar classes of loans, taking into account the customer segment, the type of loan, the type of security and any other factors considered relevant. Also the impairment on impaired exposures was calculated as required by the new accounting standard to include (i) the adjustments necessary to reach the calculation of a point-in-time and forward-looking loss; and (ii) multiple scenarios applicable to this type of exposure including any sale scenarios in case the Bank’s NPL strategy foresees the recovery through sale on the market according to what is specified in Part E - Section 1 - Credit risk (Company Financial Statements). Same information is provided in Part E - Section 2 - 2.1 Credit risk. If there are no reasonable expectations to recover a financial assets in its entirety or a portion thereof, the gross exposure is subject to write-off. Write-off, that may involve either a full or a part of a financial asset, might be accounted for before that the legal actions, activated to recover the credit exposure, are closed and doesn’t imply the forfeiture of the legal right to recover. In this context the Group has developed a specific guideline that assess the need to recognize a write-off. For further information see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. Modification Renegotiations of financial instruments which cause a change in contractual conditions are accounted for depending on the significance of the contractual change itself. In particular, when renegotiations are not considered significant the gross exposure is re-determined through the calculation of the present value of cash flows following the renegotiation at the original effective interest rate. The difference between the gross exposure before and after renegotiation, adjusted to consider changes in the related loan loss provision, is recognised in P&L as modification gain or loss. In this regard, renegotiations achieved both by amending the original contract or by closing a new one, are considered significant when they determine the expiry of the right to receive cash flows accordingly to the original contract. In particular, the rights to receive cash flows are considered as expired in case of renegotiations that introduce contractual clauses which determine a change in the financial instrument classification, which determine a change in the currency or which are carried out at market conditions therefore without causing credit concession. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 165 below the original contractual rate; - the renegotiations of loans that require their derecognition in exchange of shares through “debt-to-equity swap” transactions requires the assessment, before executing the swap, of the credit exposures in accordance with stipulated agreements at the date of preparation of the financial statements. Any differences between the value of receivables and the value at initial recognition of equity instruments is accounted in income statement in the impairment losses; • Past due exposures: cash exposures different from those classified as non-performing loans and unlikely to pay that at the reporting date are past due. Past due exposures can be determined referring alternatively to individual debtor or individual transaction. In particular they represent an entire exposure to counterparties different from those classified as unlikely to pay and bad loans that at the reporting date show past due receivables from more than 90 days as well as requirements established by local prudential regulation for the inclusion of these credits into “past due” (standardised banks) or “default exposures” (IRB banks). Past due exposures are evaluated on a on a flat-rate basis on historical/statistical basis, applying, if available, the riskiness identified by the risk factor used for the purposes of EU Regulation No.575/2013 (CRR) relating to prudential requirements for credit institutions and investment firms (LGD - Loss Given Default). Allowances for impairment of loans and receivables are based on the present value of expected cash flows of principal and interest. In determining the present value of future cash flows, the basic requirement is the identification of estimated collections, the timing of payments and the discount rate used. In particular, the amount of the loss on impaired exposures classified as bad loans and unlikely to pay, according to the categories specified above, is the difference between the carrying amount and the present value of estimated cash flows discounted at the original interest rate of the financial asset. For all fixed rate positions, the interest rate thus determined is kept constant in subsequent financial years, while for floating rate positions the interest rate is updated according to contractual terms. If the original interest rate cannot be found, or if finding it would be excessively burdensome, the rate that best approximates is applied, also recurring to “practical expedients” that do not alter the substance, and ensure consistency with the international accounting standards. Recovery times are estimated on the basis of business plans or forecasts based on historical recovery experience observed for similar classes of loans, taking into account the customer segment, the type of loan, the type of security and any other factors considered relevant. Also the impairment on impaired exposures was calculated as required by the new accounting standard to include (i) the adjustments necessary to reach the calculation of a point-in-time and forward-looking loss; and (ii) multiple scenarios applicable to this type of exposure including any sale scenarios in case the Bank’s NPL strategy foresees the recovery through sale on the market according to what is specified in Part E - Section 1 - Credit risk (Company Financial Statements). Same information is provided in Part E - Section 2 - 2.1 Credit risk. If there are no reasonable expectations to recover a financial assets in its entirety or a portion thereof, the gross exposure is subject to write-off. Write-off, that may involve either a full or a part of a financial asset, might be accounted for before that the legal actions, activated to recover the credit exposure, are closed and doesn’t imply the forfeiture of the legal right to recover. In this context the Group has developed a specific guideline that assess the need to recognize a write-off. For further information see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. Modification Renegotiations of financial instruments which cause a change in contractual conditions are accounted for depending on the significance of the contractual change itself. In particular, when renegotiations are not considered significant the gross exposure is re-determined through the calculation of the present value of cash flows following the renegotiation at the original effective interest rate. The difference between the gross exposure before and after renegotiation, adjusted to consider changes in the related loan loss provision, is recognised in P&L as modification gain or loss. In this regard, renegotiations achieved both by amending the original contract or by closing a new one, are considered significant when they determine the expiry of the right to receive cash flows accordingly to the original contract. In particular, the rights to receive cash flows are considered as expired in case of renegotiations that introduce contractual clauses which determine a change in the financial instrument classification, which determine a change in the currency or which are carried out at market conditions therefore without causing credit concession. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 165 below the original contractual rate; - the renegotiations of loans that require their derecognition in exchange of shares through “debt-to-equity swap” transactions requires the assessment, before executing the swap, of the credit exposures in accordance with stipulated agreements at the date of preparation of the financial statements. Any differences between the value of receivables and the value at initial recognition of equity instruments is accounted in income statement in the impairment losses; • Past due exposures: cash exposures different from those classified as non-performing loans and unlikely to pay that at the reporting date are past due. Past due exposures can be determined referring alternatively to individual debtor or individual transaction. In particular they represent an entire exposure to counterparties different from those classified as unlikely to pay and bad loans that at the reporting date show past due receivables from more than 90 days as well as requirements established by local prudential regulation for the inclusion of these credits into “past due” (standardised banks) or “default exposures” (IRB banks). Past due exposures are evaluated on a on a flat-rate basis on historical/statistical basis, applying, if available, the riskiness identified by the risk factor used for the purposes of EU Regulation No.575/2013 (CRR) relating to prudential requirements for credit institutions and investment firms (LGD - Loss Given Default). Allowances for impairment of loans and receivables are based on the present value of expected cash flows of principal and interest. In determining the present value of future cash flows, the basic requirement is the identification of estimated collections, the timing of payments and the discount rate used. In particular, the amount of the loss on impaired exposures classified as bad loans and unlikely to pay, according to the categories specified above, is the difference between the carrying amount and the present value of estimated cash flows discounted at the original interest rate of the financial asset. For all fixed rate positions, the interest rate thus determined is kept constant in subsequent financial years, while for floating rate positions the interest rate is updated according to contractual terms. If the original interest rate cannot be found, or if finding it would be excessively burdensome, the rate that best approximates is applied, also recurring to “practical expedients” that do not alter the substance, and ensure consistency with the international accounting standards. Recovery times are estimated on the basis of business plans or forecasts based on historical recovery experience observed for similar classes of loans, taking into account the customer segment, the type of loan, the type of security and any other factors considered relevant. Also the impairment on impaired exposures was calculated as required by the new accounting standard to include (i) the adjustments necessary to reach the calculation of a point-in-time and forward-looking loss; and (ii) multiple scenarios applicable to this type of exposure including any sale scenarios in case the Bank’s NPL strategy foresees the recovery through sale on the market according to what is specified in Part E - Section 1 - Credit risk (Company Financial Statements). Same information is provided in Part E - Section 2 - 2.1 Credit risk. If there are no reasonable expectations to recover a financial assets in its entirety or a portion thereof, the gross exposure is subject to write-off. Write-off, that may involve either a full or a part of a financial asset, might be accounted for before that the legal actions, activated to recover the credit exposure, are closed and doesn’t imply the forfeiture of the legal right to recover. In this context the Group has developed a specific guideline that assess the need to recognize a write-off. For further information see Part E - Section 1 - Credit risk (Company Financial Statements). Same information is also provided in Part E - Section 2 - Risks of the prudential consolidated - 2.1 Credit risk. Modification Renegotiations of financial instruments which cause a change in contractual conditions are accounted for depending on the significance of the contractual change itself. In particular, when renegotiations are not considered significant the gross exposure is re-determined through the calculation of the present value of cash flows following the renegotiation at the original effective interest rate. The difference between the gross exposure before and after renegotiation, adjusted to consider changes in the related loan loss provision, is recognised in P&L as modification gain or loss. In this regard, renegotiations achieved both by amending the original contract or by closing a new one, are considered significant when they determine the expiry of the right to receive cash flows accordingly to the original contract. In particular, the rights to receive cash flows are considered as expired in case of renegotiations that introduce contractual clauses which determine a change in the financial instrument classification, which determine a change in the currency or which are carried out at market conditions therefore without causing credit concession. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 166 2018 Annual Report and Accounts · UniCredit Business combinations A business combination is a transaction through which an entity obtains control of a company or of a business segment, thus bringing together different businesses into one reporting entity. A business combination may result in a Parent-subsidiary relationship in which the acquirer is the Parent and the acquiree is a subsidiary of the acquirer. A business combination may involve the purchase of the net assets of another entity, in which case goodwill can arise, or the purchase of the equity of the other entity (mergers). IFRS3 requires that all business combinations shall be accounted for by applying the purchase method, that involves the following steps: • identifying an acquirer; • measuring the cost of the business combination, and: • allocating, at the acquisition date, the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed. The cost of a business combination is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer, in exchange for control of the acquiree. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. When this is achieved through a single exchange transaction, the date of exchange coincides with the acquisition date. A business combination may involve more than one exchange transaction; nevertheless, the cost of the business combination remains equal to the fair value of the total shareholding acquired. This involves the revaluation at fair value, with the recognition of the effects in the Income Statement - of the equity investments previously held in the acquired entity. The cost of a business combination is allocated by recognising the assets, the liabilities and the identifiable contingent liabilities of the acquired company at their acquisition-date fair value. Exceptions to this principle are deferred income tax assets and liabilities, employee benefits, indemnification assets, reacquired rights, non-current assets held for sale, and share-based payment transactions that are subject to review in accordance with the principle applicable to them. Positive difference between the cost of the business combination and the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities so recognised is accounted for as goodwill. After initial recognition, goodwill is tested for impairment at least annually. If the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the acquirer shall reassess the fair values and recognise immediately any excess remaining after that reassessment in profit or loss. If the acquisition concerns a percentage less than 100% of the assets of the acquired company, minorities are recognised. At the acquisition date, minorities are valued: • at fair value, or • as a proportion of minority interests in the assets, liabilities and identifiable contingent liabilities of the acquired company. Derecognition of financial assets Derecognition is the removal of a previously recognised financial asset from an entity’s balance sheet. Before evaluating whether, and to what extent, derecognition is appropriate, under IFRS9 an entity should determine whether the relevant conditions apply to a financial asset in its entirety or to a part of a financial asset. The standard is applied to a part of financial assets being transferred if, and only if, the part being considered for derecognition meets one of the following conditions: • the part comprises only specifically identified cash flows from a financial asset, or a group of assets, (e.g. interest cash flows from an asset); • the part comprises a clearly identified percentage of the cash flows from a financial asset, (e.g. a 90% share of all cash flows from an asset); • the part comprises only a fully proportionate (pro rata) share of specifically identified cash flow, (e.g. 90% share of interest cash flows from an asset). In all other cases, the standard is applied to the financial asset in its entirety (or to the group of similar financial assets in their entirety). An entity shall derecognise a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the contractual rights to receive the cash flows of the financial asset to a non-Group counterparty. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 166 2018 Annual Report and Accounts · UniCredit Business combinations A business combination is a transaction through which an entity obtains control of a company or of a business segment, thus bringing together different businesses into one reporting entity. A business combination may result in a Parent-subsidiary relationship in which the acquirer is the Parent and the acquiree is a subsidiary of the acquirer. A business combination may involve the purchase of the net assets of another entity, in which case goodwill can arise, or the purchase of the equity of the other entity (mergers). IFRS3 requires that all business combinations shall be accounted for by applying the purchase method, that involves the following steps: • identifying an acquirer; • measuring the cost of the business combination, and: • allocating, at the acquisition date, the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed. The cost of a business combination is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer, in exchange for control of the acquiree. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. When this is achieved through a single exchange transaction, the date of exchange coincides with the acquisition date. A business combination may involve more than one exchange transaction; nevertheless, the cost of the business combination remains equal to the fair value of the total shareholding acquired. This involves the revaluation at fair value, with the recognition of the effects in the Income Statement - of the equity investments previously held in the acquired entity. The cost of a business combination is allocated by recognising the assets, the liabilities and the identifiable contingent liabilities of the acquired company at their acquisition-date fair value. Exceptions to this principle are deferred income tax assets and liabilities, employee benefits, indemnification assets, reacquired rights, non-current assets held for sale, and share-based payment transactions that are subject to review in accordance with the principle applicable to them. Positive difference between the cost of the business combination and the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities so recognised is accounted for as goodwill. After initial recognition, goodwill is tested for impairment at least annually. If the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the acquirer shall reassess the fair values and recognise immediately any excess remaining after that reassessment in profit or loss. If the acquisition concerns a percentage less than 100% of the assets of the acquired company, minorities are recognised. At the acquisition date, minorities are valued: • at fair value, or • as a proportion of minority interests in the assets, liabilities and identifiable contingent liabilities of the acquired company. Derecognition of financial assets Derecognition is the removal of a previously recognised financial asset from an entity’s balance sheet. Before evaluating whether, and to what extent, derecognition is appropriate, under IFRS9 an entity should determine whether the relevant conditions apply to a financial asset in its entirety or to a part of a financial asset. The standard is applied to a part of financial assets being transferred if, and only if, the part being considered for derecognition meets one of the following conditions: • the part comprises only specifically identified cash flows from a financial asset, or a group of assets, (e.g. interest cash flows from an asset); • the part comprises a clearly identified percentage of the cash flows from a financial asset, (e.g. a 90% share of all cash flows from an asset); • the part comprises only a fully proportionate (pro rata) share of specifically identified cash flow, (e.g. 90% share of interest cash flows from an asset). In all other cases, the standard is applied to the financial asset in its entirety (or to the group of similar financial assets in their entirety). An entity shall derecognise a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the contractual rights to receive the cash flows of the financial asset to a non-Group counterparty. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 166 2018 Annual Report and Accounts · UniCredit Business combinations A business combination is a transaction through which an entity obtains control of a company or of a business segment, thus bringing together different businesses into one reporting entity. A business combination may result in a Parent-subsidiary relationship in which the acquirer is the Parent and the acquiree is a subsidiary of the acquirer. A business combination may involve the purchase of the net assets of another entity, in which case goodwill can arise, or the purchase of the equity of the other entity (mergers). IFRS3 requires that all business combinations shall be accounted for by applying the purchase method, that involves the following steps: • identifying an acquirer; • measuring the cost of the business combination, and: • allocating, at the acquisition date, the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed. The cost of a business combination is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer, in exchange for control of the acquiree. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. When this is achieved through a single exchange transaction, the date of exchange coincides with the acquisition date. A business combination may involve more than one exchange transaction; nevertheless, the cost of the business combination remains equal to the fair value of the total shareholding acquired. This involves the revaluation at fair value, with the recognition of the effects in the Income Statement - of the equity investments previously held in the acquired entity. The cost of a business combination is allocated by recognising the assets, the liabilities and the identifiable contingent liabilities of the acquired company at their acquisition-date fair value. Exceptions to this principle are deferred income tax assets and liabilities, employee benefits, indemnification assets, reacquired rights, non-current assets held for sale, and share-based payment transactions that are subject to review in accordance with the principle applicable to them. Positive difference between the cost of the business combination and the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities so recognised is accounted for as goodwill. After initial recognition, goodwill is tested for impairment at least annually. If the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the acquirer shall reassess the fair values and recognise immediately any excess remaining after that reassessment in profit or loss. If the acquisition concerns a percentage less than 100% of the assets of the acquired company, minorities are recognised. At the acquisition date, minorities are valued: • at fair value, or • as a proportion of minority interests in the assets, liabilities and identifiable contingent liabilities of the acquired company. Derecognition of financial assets Derecognition is the removal of a previously recognised financial asset from an entity’s balance sheet. Before evaluating whether, and to what extent, derecognition is appropriate, under IFRS9 an entity should determine whether the relevant conditions apply to a financial asset in its entirety or to a part of a financial asset. The standard is applied to a part of financial assets being transferred if, and only if, the part being considered for derecognition meets one of the following conditions: • the part comprises only specifically identified cash flows from a financial asset, or a group of assets, (e.g. interest cash flows from an asset); • the part comprises a clearly identified percentage of the cash flows from a financial asset, (e.g. a 90% share of all cash flows from an asset); • the part comprises only a fully proportionate (pro rata) share of specifically identified cash flow, (e.g. 90% share of interest cash flows from an asset). In all other cases, the standard is applied to the financial asset in its entirety (or to the group of similar financial assets in their entirety). An entity shall derecognise a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the contractual rights to receive the cash flows of the financial asset to a non-Group counterparty. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 166 2018 Annual Report and Accounts · UniCredit Business combinations A business combination is a transaction through which an entity obtains control of a company or of a business segment, thus bringing together different businesses into one reporting entity. A business combination may result in a Parent-subsidiary relationship in which the acquirer is the Parent and the acquiree is a subsidiary of the acquirer. A business combination may involve the purchase of the net assets of another entity, in which case goodwill can arise, or the purchase of the equity of the other entity (mergers). IFRS3 requires that all business combinations shall be accounted for by applying the purchase method, that involves the following steps: • identifying an acquirer; • measuring the cost of the business combination, and: • allocating, at the acquisition date, the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed. The cost of a business combination is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer, in exchange for control of the acquiree. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. When this is achieved through a single exchange transaction, the date of exchange coincides with the acquisition date. A business combination may involve more than one exchange transaction; nevertheless, the cost of the business combination remains equal to the fair value of the total shareholding acquired. This involves the revaluation at fair value, with the recognition of the effects in the Income Statement - of the equity investments previously held in the acquired entity. The cost of a business combination is allocated by recognising the assets, the liabilities and the identifiable contingent liabilities of the acquired company at their acquisition-date fair value. Exceptions to this principle are deferred income tax assets and liabilities, employee benefits, indemnification assets, reacquired rights, non-current assets held for sale, and share-based payment transactions that are subject to review in accordance with the principle applicable to them. Positive difference between the cost of the business combination and the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities so recognised is accounted for as goodwill. After initial recognition, goodwill is tested for impairment at least annually. If the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the acquirer shall reassess the fair values and recognise immediately any excess remaining after that reassessment in profit or loss. If the acquisition concerns a percentage less than 100% of the assets of the acquired company, minorities are recognised. At the acquisition date, minorities are valued: • at fair value, or • as a proportion of minority interests in the assets, liabilities and identifiable contingent liabilities of the acquired company. Derecognition of financial assets Derecognition is the removal of a previously recognised financial asset from an entity’s balance sheet. Before evaluating whether, and to what extent, derecognition is appropriate, under IFRS9 an entity should determine whether the relevant conditions apply to a financial asset in its entirety or to a part of a financial asset. The standard is applied to a part of financial assets being transferred if, and only if, the part being considered for derecognition meets one of the following conditions: • the part comprises only specifically identified cash flows from a financial asset, or a group of assets, (e.g. interest cash flows from an asset); • the part comprises a clearly identified percentage of the cash flows from a financial asset, (e.g. a 90% share of all cash flows from an asset); • the part comprises only a fully proportionate (pro rata) share of specifically identified cash flow, (e.g. 90% share of interest cash flows from an asset). In all other cases, the standard is applied to the financial asset in its entirety (or to the group of similar financial assets in their entirety). An entity shall derecognise a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the contractual rights to receive the cash flows of the financial asset to a non-Group counterparty. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 166 2018 Annual Report and Accounts · UniCredit Business combinations A business combination is a transaction through which an entity obtains control of a company or of a business segment, thus bringing together different businesses into one reporting entity. A business combination may result in a Parent-subsidiary relationship in which the acquirer is the Parent and the acquiree is a subsidiary of the acquirer. A business combination may involve the purchase of the net assets of another entity, in which case goodwill can arise, or the purchase of the equity of the other entity (mergers). IFRS3 requires that all business combinations shall be accounted for by applying the purchase method, that involves the following steps: • identifying an acquirer; • measuring the cost of the business combination, and: • allocating, at the acquisition date, the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed. The cost of a business combination is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer, in exchange for control of the acquiree. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. When this is achieved through a single exchange transaction, the date of exchange coincides with the acquisition date. A business combination may involve more than one exchange transaction; nevertheless, the cost of the business combination remains equal to the fair value of the total shareholding acquired. This involves the revaluation at fair value, with the recognition of the effects in the Income Statement - of the equity investments previously held in the acquired entity. The cost of a business combination is allocated by recognising the assets, the liabilities and the identifiable contingent liabilities of the acquired company at their acquisition-date fair value. Exceptions to this principle are deferred income tax assets and liabilities, employee benefits, indemnification assets, reacquired rights, non-current assets held for sale, and share-based payment transactions that are subject to review in accordance with the principle applicable to them. Positive difference between the cost of the business combination and the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities so recognised is accounted for as goodwill. After initial recognition, goodwill is tested for impairment at least annually. If the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the acquirer shall reassess the fair values and recognise immediately any excess remaining after that reassessment in profit or loss. If the acquisition concerns a percentage less than 100% of the assets of the acquired company, minorities are recognised. At the acquisition date, minorities are valued: • at fair value, or • as a proportion of minority interests in the assets, liabilities and identifiable contingent liabilities of the acquired company. Derecognition of financial assets Derecognition is the removal of a previously recognised financial asset from an entity’s balance sheet. Before evaluating whether, and to what extent, derecognition is appropriate, under IFRS9 an entity should determine whether the relevant conditions apply to a financial asset in its entirety or to a part of a financial asset. The standard is applied to a part of financial assets being transferred if, and only if, the part being considered for derecognition meets one of the following conditions: • the part comprises only specifically identified cash flows from a financial asset, or a group of assets, (e.g. interest cash flows from an asset); • the part comprises a clearly identified percentage of the cash flows from a financial asset, (e.g. a 90% share of all cash flows from an asset); • the part comprises only a fully proportionate (pro rata) share of specifically identified cash flow, (e.g. 90% share of interest cash flows from an asset). In all other cases, the standard is applied to the financial asset in its entirety (or to the group of similar financial assets in their entirety). An entity shall derecognise a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the contractual rights to receive the cash flows of the financial asset to a non-Group counterparty. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 167 Rights to cash flow are considered to be transferred even if contractual rights to receive the asset’s cash flow are retained but there is an obligation to pay this cash flow to one or more entities and all the following conditions are fulfilled (pass-through agreement): • there is no obligation on the Group to pay amounts not received from the original asset; • sale or pledge of the original asset is not allowed, unless it secures the obligation to pay cash flow; • the Group is obliged to transfer forthwith all cash flows received and may not invest them, except for liquidity invested for the short period between the date of receipt and that of payment, provided that the interest accrued in that period is paid on. Recognition is also subject to verification of effective transfer of all the risks and rewards of ownership of the financial asset. If the entity transfers substantially all the risks and rewards of ownership of the financial asset, the entity shall derecognise the asset (or group of assets) and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer. Conversely, if the entity substantially retains all the risks and rewards of ownership of the asset (or group of assets), the entity shall continue to recognise the transferred asset(s). In this case it is necessary to recognise a liability corresponding to the amount received under the transfer and subsequently recognise all income accruing on the asset and expense accruing on the liability. The main transactions that do not allow, under the above rules, total derecognition of a financial asset are securitisations, repurchase (sell and buy-backs) and stock lending transactions. In the case of securitisations the Group does not derecognise the financial asset on purchase of the equity tranche or provision of other types of support of the structure which result in the Group retaining the credit risk of the securitised portfolio. In the case of repurchase transactions and stock lending, the assets transacted are not derecognised since the terms of the transaction entail the retention of all their risks and rewards. Finally, it should be noted that securities lending transactions collateralised by other securities or not collateralised were recorded as off-balance sheet items. Repo transactions and securities lending Securities received in a transaction that entails a contractual obligation to sell them at a later date or delivered under a contractual obligation to repurchase are neither recognised nor derecognised. In respect of securities purchased under an agreement to resell, the consideration is recognised as a loan to customers or banks among Financial assets at amortised cost, or as an asset held for trading. In respect of securities held in a repurchase agreement, the liability is recognised as due to banks or customers among Financial liabilities at amortised cost, or as an held for trading financial liability. Revenue from these loans, being the coupons accrued on the securities and the difference between the sale/purchase and resale/repurchase prices, is recognised in profit or loss through interest income and expenses on an accruals basis. These transactions can only be offset if, and only if, they are carried out with the same counterparty and provided that such offset is provided for in the underlying contracts. The same rules apply to securities lending transactions collateralised by cash fully available to the lender. The P&L items connected with these transactions are booked respectively: • in item Interest, with respect to the positive item (borrower) and the negative item (lender) relating to the return on cash paid to the lender; • in item Fees and commissions, with respect to the negative item (borrower) and the positive item (lender) relating to the service provided by the lender by making the security available. With reference to securities lending transactions collateralised by other securities, or not collateralised, the security lent or the security put up as collateral are still recognised as assets in the balance sheet, depending on the role, lender or borrower, respectively, played in the transaction. Counterparty risk relating to the latter securities lending or borrowing transactions is shown under the off-balance sheet exposures in the tables of Explanatory notes - Part E - Section 2 - 2.1 Credit risk - Quantitative information - A. Credit quality. Equity instruments Equity instruments are instruments that represent a residual interest in Group’s assets net of its liabilities. Classification of an issued instrument as equity is possible only if there are no contractual obligation to make payments in form of capital redemptions, interest or other kinds of returns. In particular instruments having the following features are classified as equity instruments: • the instrument is perpetual or has a maturity equal to duration of the entity; • full discretion of the issuer in coupon payments and redemptions, also advanced, of the principal outstanding. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 167 Rights to cash flow are considered to be transferred even if contractual rights to receive the asset’s cash flow are retained but there is an obligation to pay this cash flow to one or more entities and all the following conditions are fulfilled (pass-through agreement): • there is no obligation on the Group to pay amounts not received from the original asset; • sale or pledge of the original asset is not allowed, unless it secures the obligation to pay cash flow; • the Group is obliged to transfer forthwith all cash flows received and may not invest them, except for liquidity invested for the short period between the date of receipt and that of payment, provided that the interest accrued in that period is paid on. Recognition is also subject to verification of effective transfer of all the risks and rewards of ownership of the financial asset. If the entity transfers substantially all the risks and rewards of ownership of the financial asset, the entity shall derecognise the asset (or group of assets) and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer. Conversely, if the entity substantially retains all the risks and rewards of ownership of the asset (or group of assets), the entity shall continue to recognise the transferred asset(s). In this case it is necessary to recognise a liability corresponding to the amount received under the transfer and subsequently recognise all income accruing on the asset and expense accruing on the liability. The main transactions that do not allow, under the above rules, total derecognition of a financial asset are securitisations, repurchase (sell and buy-backs) and stock lending transactions. In the case of securitisations the Group does not derecognise the financial asset on purchase of the equity tranche or provision of other types of support of the structure which result in the Group retaining the credit risk of the securitised portfolio. In the case of repurchase transactions and stock lending, the assets transacted are not derecognised since the terms of the transaction entail the retention of all their risks and rewards. Finally, it should be noted that securities lending transactions collateralised by other securities or not collateralised were recorded as off-balance sheet items. Repo transactions and securities lending Securities received in a transaction that entails a contractual obligation to sell them at a later date or delivered under a contractual obligation to repurchase are neither recognised nor derecognised. In respect of securities purchased under an agreement to resell, the consideration is recognised as a loan to customers or banks among Financial assets at amortised cost, or as an asset held for trading. In respect of securities held in a repurchase agreement, the liability is recognised as due to banks or customers among Financial liabilities at amortised cost, or as an held for trading financial liability. Revenue from these loans, being the coupons accrued on the securities and the difference between the sale/purchase and resale/repurchase prices, is recognised in profit or loss through interest income and expenses on an accruals basis. These transactions can only be offset if, and only if, they are carried out with the same counterparty and provided that such offset is provided for in the underlying contracts. The same rules apply to securities lending transactions collateralised by cash fully available to the lender. The P&L items connected with these transactions are booked respectively: • in item Interest, with respect to the positive item (borrower) and the negative item (lender) relating to the return on cash paid to the lender; • in item Fees and commissions, with respect to the negative item (borrower) and the positive item (lender) relating to the service provided by the lender by making the security available. With reference to securities lending transactions collateralised by other securities, or not collateralised, the security lent or the security put up as collateral are still recognised as assets in the balance sheet, depending on the role, lender or borrower, respectively, played in the transaction. Counterparty risk relating to the latter securities lending or borrowing transactions is shown under the off-balance sheet exposures in the tables of Explanatory notes - Part E - Section 2 - 2.1 Credit risk - Quantitative information - A. Credit quality. Equity instruments Equity instruments are instruments that represent a residual interest in Group’s assets net of its liabilities. Classification of an issued instrument as equity is possible only if there are no contractual obligation to make payments in form of capital redemptions, interest or other kinds of returns. In particular instruments having the following features are classified as equity instruments: • the instrument is perpetual or has a maturity equal to duration of the entity; • full discretion of the issuer in coupon payments and redemptions, also advanced, of the principal outstanding. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 167 Rights to cash flow are considered to be transferred even if contractual rights to receive the asset’s cash flow are retained but there is an obligation to pay this cash flow to one or more entities and all the following conditions are fulfilled (pass-through agreement): • there is no obligation on the Group to pay amounts not received from the original asset; • sale or pledge of the original asset is not allowed, unless it secures the obligation to pay cash flow; • the Group is obliged to transfer forthwith all cash flows received and may not invest them, except for liquidity invested for the short period between the date of receipt and that of payment, provided that the interest accrued in that period is paid on. Recognition is also subject to verification of effective transfer of all the risks and rewards of ownership of the financial asset. If the entity transfers substantially all the risks and rewards of ownership of the financial asset, the entity shall derecognise the asset (or group of assets) and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer. Conversely, if the entity substantially retains all the risks and rewards of ownership of the asset (or group of assets), the entity shall continue to recognise the transferred asset(s). In this case it is necessary to recognise a liability corresponding to the amount received under the transfer and subsequently recognise all income accruing on the asset and expense accruing on the liability. The main transactions that do not allow, under the above rules, total derecognition of a financial asset are securitisations, repurchase (sell and buy-backs) and stock lending transactions. In the case of securitisations the Group does not derecognise the financial asset on purchase of the equity tranche or provision of other types of support of the structure which result in the Group retaining the credit risk of the securitised portfolio. In the case of repurchase transactions and stock lending, the assets transacted are not derecognised since the terms of the transaction entail the retention of all their risks and rewards. Finally, it should be noted that securities lending transactions collateralised by other securities or not collateralised were recorded as off-balance sheet items. Repo transactions and securities lending Securities received in a transaction that entails a contractual obligation to sell them at a later date or delivered under a contractual obligation to repurchase are neither recognised nor derecognised. In respect of securities purchased under an agreement to resell, the consideration is recognised as a loan to customers or banks among Financial assets at amortised cost, or as an asset held for trading. In respect of securities held in a repurchase agreement, the liability is recognised as due to banks or customers among Financial liabilities at amortised cost, or as an held for trading financial liability. Revenue from these loans, being the coupons accrued on the securities and the difference between the sale/purchase and resale/repurchase prices, is recognised in profit or loss through interest income and expenses on an accruals basis. These transactions can only be offset if, and only if, they are carried out with the same counterparty and provided that such offset is provided for in the underlying contracts. The same rules apply to securities lending transactions collateralised by cash fully available to the lender. The P&L items connected with these transactions are booked respectively: • in item Interest, with respect to the positive item (borrower) and the negative item (lender) relating to the return on cash paid to the lender; • in item Fees and commissions, with respect to the negative item (borrower) and the positive item (lender) relating to the service provided by the lender by making the security available. With reference to securities lending transactions collateralised by other securities, or not collateralised, the security lent or the security put up as collateral are still recognised as assets in the balance sheet, depending on the role, lender or borrower, respectively, played in the transaction. Counterparty risk relating to the latter securities lending or borrowing transactions is shown under the off-balance sheet exposures in the tables of Explanatory notes - Part E - Section 2 - 2.1 Credit risk - Quantitative information - A. Credit quality. Equity instruments Equity instruments are instruments that represent a residual interest in Group’s assets net of its liabilities. Classification of an issued instrument as equity is possible only if there are no contractual obligation to make payments in form of capital redemptions, interest or other kinds of returns. In particular instruments having the following features are classified as equity instruments: • the instrument is perpetual or has a maturity equal to duration of the entity; • full discretion of the issuer in coupon payments and redemptions, also advanced, of the principal outstanding. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 167 Rights to cash flow are considered to be transferred even if contractual rights to receive the asset’s cash flow are retained but there is an obligation to pay this cash flow to one or more entities and all the following conditions are fulfilled (pass-through agreement): • there is no obligation on the Group to pay amounts not received from the original asset; • sale or pledge of the original asset is not allowed, unless it secures the obligation to pay cash flow; • the Group is obliged to transfer forthwith all cash flows received and may not invest them, except for liquidity invested for the short period between the date of receipt and that of payment, provided that the interest accrued in that period is paid on. Recognition is also subject to verification of effective transfer of all the risks and rewards of ownership of the financial asset. If the entity transfers substantially all the risks and rewards of ownership of the financial asset, the entity shall derecognise the asset (or group of assets) and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer. Conversely, if the entity substantially retains all the risks and rewards of ownership of the asset (or group of assets), the entity shall continue to recognise the transferred asset(s). In this case it is necessary to recognise a liability corresponding to the amount received under the transfer and subsequently recognise all income accruing on the asset and expense accruing on the liability. The main transactions that do not allow, under the above rules, total derecognition of a financial asset are securitisations, repurchase (sell and buy-backs) and stock lending transactions. In the case of securitisations the Group does not derecognise the financial asset on purchase of the equity tranche or provision of other types of support of the structure which result in the Group retaining the credit risk of the securitised portfolio. In the case of repurchase transactions and stock lending, the assets transacted are not derecognised since the terms of the transaction entail the retention of all their risks and rewards. Finally, it should be noted that securities lending transactions collateralised by other securities or not collateralised were recorded as off-balance sheet items. Repo transactions and securities lending Securities received in a transaction that entails a contractual obligation to sell them at a later date or delivered under a contractual obligation to repurchase are neither recognised nor derecognised. In respect of securities purchased under an agreement to resell, the consideration is recognised as a loan to customers or banks among Financial assets at amortised cost, or as an asset held for trading. In respect of securities held in a repurchase agreement, the liability is recognised as due to banks or customers among Financial liabilities at amortised cost, or as an held for trading financial liability. Revenue from these loans, being the coupons accrued on the securities and the difference between the sale/purchase and resale/repurchase prices, is recognised in profit or loss through interest income and expenses on an accruals basis. These transactions can only be offset if, and only if, they are carried out with the same counterparty and provided that such offset is provided for in the underlying contracts. The same rules apply to securities lending transactions collateralised by cash fully available to the lender. The P&L items connected with these transactions are booked respectively: • in item Interest, with respect to the positive item (borrower) and the negative item (lender) relating to the return on cash paid to the lender; • in item Fees and commissions, with respect to the negative item (borrower) and the positive item (lender) relating to the service provided by the lender by making the security available. With reference to securities lending transactions collateralised by other securities, or not collateralised, the security lent or the security put up as collateral are still recognised as assets in the balance sheet, depending on the role, lender or borrower, respectively, played in the transaction. Counterparty risk relating to the latter securities lending or borrowing transactions is shown under the off-balance sheet exposures in the tables of Explanatory notes - Part E - Section 2 - 2.1 Credit risk - Quantitative information - A. Credit quality. Equity instruments Equity instruments are instruments that represent a residual interest in Group’s assets net of its liabilities. Classification of an issued instrument as equity is possible only if there are no contractual obligation to make payments in form of capital redemptions, interest or other kinds of returns. In particular instruments having the following features are classified as equity instruments: • the instrument is perpetual or has a maturity equal to duration of the entity; • full discretion of the issuer in coupon payments and redemptions, also advanced, of the principal outstanding. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 167 Rights to cash flow are considered to be transferred even if contractual rights to receive the asset’s cash flow are retained but there is an obligation to pay this cash flow to one or more entities and all the following conditions are fulfilled (pass-through agreement): • there is no obligation on the Group to pay amounts not received from the original asset; • sale or pledge of the original asset is not allowed, unless it secures the obligation to pay cash flow; • the Group is obliged to transfer forthwith all cash flows received and may not invest them, except for liquidity invested for the short period between the date of receipt and that of payment, provided that the interest accrued in that period is paid on. Recognition is also subject to verification of effective transfer of all the risks and rewards of ownership of the financial asset. If the entity transfers substantially all the risks and rewards of ownership of the financial asset, the entity shall derecognise the asset (or group of assets) and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer. Conversely, if the entity substantially retains all the risks and rewards of ownership of the asset (or group of assets), the entity shall continue to recognise the transferred asset(s). In this case it is necessary to recognise a liability corresponding to the amount received under the transfer and subsequently recognise all income accruing on the asset and expense accruing on the liability. The main transactions that do not allow, under the above rules, total derecognition of a financial asset are securitisations, repurchase (sell and buy-backs) and stock lending transactions. In the case of securitisations the Group does not derecognise the financial asset on purchase of the equity tranche or provision of other types of support of the structure which result in the Group retaining the credit risk of the securitised portfolio. In the case of repurchase transactions and stock lending, the assets transacted are not derecognised since the terms of the transaction entail the retention of all their risks and rewards. Finally, it should be noted that securities lending transactions collateralised by other securities or not collateralised were recorded as off-balance sheet items. Repo transactions and securities lending Securities received in a transaction that entails a contractual obligation to sell them at a later date or delivered under a contractual obligation to repurchase are neither recognised nor derecognised. In respect of securities purchased under an agreement to resell, the consideration is recognised as a loan to customers or banks among Financial assets at amortised cost, or as an asset held for trading. In respect of securities held in a repurchase agreement, the liability is recognised as due to banks or customers among Financial liabilities at amortised cost, or as an held for trading financial liability. Revenue from these loans, being the coupons accrued on the securities and the difference between the sale/purchase and resale/repurchase prices, is recognised in profit or loss through interest income and expenses on an accruals basis. These transactions can only be offset if, and only if, they are carried out with the same counterparty and provided that such offset is provided for in the underlying contracts. The same rules apply to securities lending transactions collateralised by cash fully available to the lender. The P&L items connected with these transactions are booked respectively: • in item Interest, with respect to the positive item (borrower) and the negative item (lender) relating to the return on cash paid to the lender; • in item Fees and commissions, with respect to the negative item (borrower) and the positive item (lender) relating to the service provided by the lender by making the security available. With reference to securities lending transactions collateralised by other securities, or not collateralised, the security lent or the security put up as collateral are still recognised as assets in the balance sheet, depending on the role, lender or borrower, respectively, played in the transaction. Counterparty risk relating to the latter securities lending or borrowing transactions is shown under the off-balance sheet exposures in the tables of Explanatory notes - Part E - Section 2 - 2.1 Credit risk - Quantitative information - A. Credit quality. Equity instruments Equity instruments are instruments that represent a residual interest in Group’s assets net of its liabilities. Classification of an issued instrument as equity is possible only if there are no contractual obligation to make payments in form of capital redemptions, interest or other kinds of returns. In particular instruments having the following features are classified as equity instruments: • the instrument is perpetual or has a maturity equal to duration of the entity; • full discretion of the issuer in coupon payments and redemptions, also advanced, of the principal outstanding. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 168 2018 Annual Report and Accounts · UniCredit Additional Tier 1 instruments are included in this category, in line with the provisions of Regulation (EU) No.575/2013 (CRR) on prudential requirements for credit institutions and investment firms, if, additionally to the characteristics described above: • maintain within the full discretion of the issuer the possibility to perform a write-up of the nominal value after the occurrence of a capital event that has determined a write-down; • do not incorporate outlook that force the issuer to provide for payments (must-pay clauses) following genuine events under the direct control of the parties. Equity instruments, different from common or saving shares, are presented in item “140. Equity instruments” for the consideration received including transaction costs directly attributable to the instruments. Any coupon paid, net of related taxes, reduces item “150. Reserves”. Any difference between the amounts paid for the redemption or repurchase of these instruments and their carrying value is recognised in item “150. Reserves”. Treasury shares Changes in treasury shares are reported as a direct contra item to Shareholders' Equity, i.e. as a reduction to the latter in the amount of any purchases, and as an increase in the amount of any sales proceeds. This entails that, if treasury shares are subsequently sold, the difference between the sale price and the related post-tax repurchase cost is recognised entirely as a contra item to Shareholders' Equity. Finance leases Finance leases effectively transfer all the risks and benefits of ownership of an asset to the lessee; ownership of the asset is transferred to the lessee, however not necessarily at contractual maturity. The lessee acquires the economic benefit of the use of the leased asset for most of its useful life, in exchange for a commitment to pay to the lessor an amount approximately equivalent to the fair value of the asset and related finance costs. Recognition in the lessor’s accounts is as follows: • in assets, the value of the loan, less the principal of lease payments due and paid by the lessee; • in profit or loss, interest received. See previous paragraphs 6 - Property, Plant and Equipment and 7 - Intangible Assets below for treatment of the lessee’s assets. Factoring Loans acquired in factoring transactions with recourse are recognised to the extent of the advances granted to customers on their consideration. Loans acquired without recourse are recognised as such once it has been established that there are no contractual clauses that would invalidate the transfer of all risks and benefits to the factor. Share-based payment Equity-settled payments made to employees or other staff in consideration of goods received or services rendered, using equity instruments comprise: • Stock options; • Performance shares (i.e. awarded on attainment of certain objectives); • Restricted shares (i.e. subject to a lock-up period). Considering the difficulty of reliably measuring the fair value of the services rendered against equity-settled payments, reference is made to the fair value of the instruments themselves, measured at the date of the allocation. This fair value is recognised as cost in profit and loss item “190. Administrative expenses: a) staff costs” offsetting the Shareholders’ Equity item “150. Reserves”, on an accruals basis over the period in which the services are rendered. The fair value of a cash-settled share-based payment, the services acquired and the liability incurred are measured at the fair value of the liability, recognised in item “80. Other liabilities”. The fair value of the liability, as long as it remains unsettled, is remeasured at each balance sheet date and all changes in fair value are recognised in profit and loss item “190. Administrative expenses: a) staff costs”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 168 2018 Annual Report and Accounts · UniCredit Additional Tier 1 instruments are included in this category, in line with the provisions of Regulation (EU) No.575/2013 (CRR) on prudential requirements for credit institutions and investment firms, if, additionally to the characteristics described above: • maintain within the full discretion of the issuer the possibility to perform a write-up of the nominal value after the occurrence of a capital event that has determined a write-down; • do not incorporate outlook that force the issuer to provide for payments (must-pay clauses) following genuine events under the direct control of the parties. Equity instruments, different from common or saving shares, are presented in item “140. Equity instruments” for the consideration received including transaction costs directly attributable to the instruments. Any coupon paid, net of related taxes, reduces item “150. Reserves”. Any difference between the amounts paid for the redemption or repurchase of these instruments and their carrying value is recognised in item “150. Reserves”. Treasury shares Changes in treasury shares are reported as a direct contra item to Shareholders' Equity, i.e. as a reduction to the latter in the amount of any purchases, and as an increase in the amount of any sales proceeds. This entails that, if treasury shares are subsequently sold, the difference between the sale price and the related post-tax repurchase cost is recognised entirely as a contra item to Shareholders' Equity. Finance leases Finance leases effectively transfer all the risks and benefits of ownership of an asset to the lessee; ownership of the asset is transferred to the lessee, however not necessarily at contractual maturity. The lessee acquires the economic benefit of the use of the leased asset for most of its useful life, in exchange for a commitment to pay to the lessor an amount approximately equivalent to the fair value of the asset and related finance costs. Recognition in the lessor’s accounts is as follows: • in assets, the value of the loan, less the principal of lease payments due and paid by the lessee; • in profit or loss, interest received. See previous paragraphs 6 - Property, Plant and Equipment and 7 - Intangible Assets below for treatment of the lessee’s assets. Factoring Loans acquired in factoring transactions with recourse are recognised to the extent of the advances granted to customers on their consideration. Loans acquired without recourse are recognised as such once it has been established that there are no contractual clauses that would invalidate the transfer of all risks and benefits to the factor. Share-based payment Equity-settled payments made to employees or other staff in consideration of goods received or services rendered, using equity instruments comprise: • Stock options; • Performance shares (i.e. awarded on attainment of certain objectives); • Restricted shares (i.e. subject to a lock-up period). Considering the difficulty of reliably measuring the fair value of the services rendered against equity-settled payments, reference is made to the fair value of the instruments themselves, measured at the date of the allocation. This fair value is recognised as cost in profit and loss item “190. Administrative expenses: a) staff costs” offsetting the Shareholders’ Equity item “150. Reserves”, on an accruals basis over the period in which the services are rendered. The fair value of a cash-settled share-based payment, the services acquired and the liability incurred are measured at the fair value of the liability, recognised in item “80. Other liabilities”. The fair value of the liability, as long as it remains unsettled, is remeasured at each balance sheet date and all changes in fair value are recognised in profit and loss item “190. Administrative expenses: a) staff costs”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 168 2018 Annual Report and Accounts · UniCredit Additional Tier 1 instruments are included in this category, in line with the provisions of Regulation (EU) No.575/2013 (CRR) on prudential requirements for credit institutions and investment firms, if, additionally to the characteristics described above: • maintain within the full discretion of the issuer the possibility to perform a write-up of the nominal value after the occurrence of a capital event that has determined a write-down; • do not incorporate outlook that force the issuer to provide for payments (must-pay clauses) following genuine events under the direct control of the parties. Equity instruments, different from common or saving shares, are presented in item “140. Equity instruments” for the consideration received including transaction costs directly attributable to the instruments. Any coupon paid, net of related taxes, reduces item “150. Reserves”. Any difference between the amounts paid for the redemption or repurchase of these instruments and their carrying value is recognised in item “150. Reserves”. Treasury shares Changes in treasury shares are reported as a direct contra item to Shareholders' Equity, i.e. as a reduction to the latter in the amount of any purchases, and as an increase in the amount of any sales proceeds. This entails that, if treasury shares are subsequently sold, the difference between the sale price and the related post-tax repurchase cost is recognised entirely as a contra item to Shareholders' Equity. Finance leases Finance leases effectively transfer all the risks and benefits of ownership of an asset to the lessee; ownership of the asset is transferred to the lessee, however not necessarily at contractual maturity. The lessee acquires the economic benefit of the use of the leased asset for most of its useful life, in exchange for a commitment to pay to the lessor an amount approximately equivalent to the fair value of the asset and related finance costs. Recognition in the lessor’s accounts is as follows: • in assets, the value of the loan, less the principal of lease payments due and paid by the lessee; • in profit or loss, interest received. See previous paragraphs 6 - Property, Plant and Equipment and 7 - Intangible Assets below for treatment of the lessee’s assets. Factoring Loans acquired in factoring transactions with recourse are recognised to the extent of the advances granted to customers on their consideration. Loans acquired without recourse are recognised as such once it has been established that there are no contractual clauses that would invalidate the transfer of all risks and benefits to the factor. Share-based payment Equity-settled payments made to employees or other staff in consideration of goods received or services rendered, using equity instruments comprise: • Stock options; • Performance shares (i.e. awarded on attainment of certain objectives); • Restricted shares (i.e. subject to a lock-up period). Considering the difficulty of reliably measuring the fair value of the services rendered against equity-settled payments, reference is made to the fair value of the instruments themselves, measured at the date of the allocation. This fair value is recognised as cost in profit and loss item “190. Administrative expenses: a) staff costs” offsetting the Shareholders’ Equity item “150. Reserves”, on an accruals basis over the period in which the services are rendered. The fair value of a cash-settled share-based payment, the services acquired and the liability incurred are measured at the fair value of the liability, recognised in item “80. Other liabilities”. The fair value of the liability, as long as it remains unsettled, is remeasured at each balance sheet date and all changes in fair value are recognised in profit and loss item “190. Administrative expenses: a) staff costs”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 168 2018 Annual Report and Accounts · UniCredit Additional Tier 1 instruments are included in this category, in line with the provisions of Regulation (EU) No.575/2013 (CRR) on prudential requirements for credit institutions and investment firms, if, additionally to the characteristics described above: • maintain within the full discretion of the issuer the possibility to perform a write-up of the nominal value after the occurrence of a capital event that has determined a write-down; • do not incorporate outlook that force the issuer to provide for payments (must-pay clauses) following genuine events under the direct control of the parties. Equity instruments, different from common or saving shares, are presented in item “140. Equity instruments” for the consideration received including transaction costs directly attributable to the instruments. Any coupon paid, net of related taxes, reduces item “150. Reserves”. Any difference between the amounts paid for the redemption or repurchase of these instruments and their carrying value is recognised in item “150. Reserves”. Treasury shares Changes in treasury shares are reported as a direct contra item to Shareholders' Equity, i.e. as a reduction to the latter in the amount of any purchases, and as an increase in the amount of any sales proceeds. This entails that, if treasury shares are subsequently sold, the difference between the sale price and the related post-tax repurchase cost is recognised entirely as a contra item to Shareholders' Equity. Finance leases Finance leases effectively transfer all the risks and benefits of ownership of an asset to the lessee; ownership of the asset is transferred to the lessee, however not necessarily at contractual maturity. The lessee acquires the economic benefit of the use of the leased asset for most of its useful life, in exchange for a commitment to pay to the lessor an amount approximately equivalent to the fair value of the asset and related finance costs. Recognition in the lessor’s accounts is as follows: • in assets, the value of the loan, less the principal of lease payments due and paid by the lessee; • in profit or loss, interest received. See previous paragraphs 6 - Property, Plant and Equipment and 7 - Intangible Assets below for treatment of the lessee’s assets. Factoring Loans acquired in factoring transactions with recourse are recognised to the extent of the advances granted to customers on their consideration. Loans acquired without recourse are recognised as such once it has been established that there are no contractual clauses that would invalidate the transfer of all risks and benefits to the factor. Share-based payment Equity-settled payments made to employees or other staff in consideration of goods received or services rendered, using equity instruments comprise: • Stock options; • Performance shares (i.e. awarded on attainment of certain objectives); • Restricted shares (i.e. subject to a lock-up period). Considering the difficulty of reliably measuring the fair value of the services rendered against equity-settled payments, reference is made to the fair value of the instruments themselves, measured at the date of the allocation. This fair value is recognised as cost in profit and loss item “190. Administrative expenses: a) staff costs” offsetting the Shareholders’ Equity item “150. Reserves”, on an accruals basis over the period in which the services are rendered. The fair value of a cash-settled share-based payment, the services acquired and the liability incurred are measured at the fair value of the liability, recognised in item “80. Other liabilities”. The fair value of the liability, as long as it remains unsettled, is remeasured at each balance sheet date and all changes in fair value are recognised in profit and loss item “190. Administrative expenses: a) staff costs”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 168 2018 Annual Report and Accounts · UniCredit Additional Tier 1 instruments are included in this category, in line with the provisions of Regulation (EU) No.575/2013 (CRR) on prudential requirements for credit institutions and investment firms, if, additionally to the characteristics described above: • maintain within the full discretion of the issuer the possibility to perform a write-up of the nominal value after the occurrence of a capital event that has determined a write-down; • do not incorporate outlook that force the issuer to provide for payments (must-pay clauses) following genuine events under the direct control of the parties. Equity instruments, different from common or saving shares, are presented in item “140. Equity instruments” for the consideration received including transaction costs directly attributable to the instruments. Any coupon paid, net of related taxes, reduces item “150. Reserves”. Any difference between the amounts paid for the redemption or repurchase of these instruments and their carrying value is recognised in item “150. Reserves”. Treasury shares Changes in treasury shares are reported as a direct contra item to Shareholders' Equity, i.e. as a reduction to the latter in the amount of any purchases, and as an increase in the amount of any sales proceeds. This entails that, if treasury shares are subsequently sold, the difference between the sale price and the related post-tax repurchase cost is recognised entirely as a contra item to Shareholders' Equity. Finance leases Finance leases effectively transfer all the risks and benefits of ownership of an asset to the lessee; ownership of the asset is transferred to the lessee, however not necessarily at contractual maturity. The lessee acquires the economic benefit of the use of the leased asset for most of its useful life, in exchange for a commitment to pay to the lessor an amount approximately equivalent to the fair value of the asset and related finance costs. Recognition in the lessor’s accounts is as follows: • in assets, the value of the loan, less the principal of lease payments due and paid by the lessee; • in profit or loss, interest received. See previous paragraphs 6 - Property, Plant and Equipment and 7 - Intangible Assets below for treatment of the lessee’s assets. Factoring Loans acquired in factoring transactions with recourse are recognised to the extent of the advances granted to customers on their consideration. Loans acquired without recourse are recognised as such once it has been established that there are no contractual clauses that would invalidate the transfer of all risks and benefits to the factor. Share-based payment Equity-settled payments made to employees or other staff in consideration of goods received or services rendered, using equity instruments comprise: • Stock options; • Performance shares (i.e. awarded on attainment of certain objectives); • Restricted shares (i.e. subject to a lock-up period). Considering the difficulty of reliably measuring the fair value of the services rendered against equity-settled payments, reference is made to the fair value of the instruments themselves, measured at the date of the allocation. This fair value is recognised as cost in profit and loss item “190. Administrative expenses: a) staff costs” offsetting the Shareholders’ Equity item “150. Reserves”, on an accruals basis over the period in which the services are rendered. The fair value of a cash-settled share-based payment, the services acquired and the liability incurred are measured at the fair value of the liability, recognised in item “80. Other liabilities”. The fair value of the liability, as long as it remains unsettled, is remeasured at each balance sheet date and all changes in fair value are recognised in profit and loss item “190. Administrative expenses: a) staff costs”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 169 Other long-term employee benefits Long-term employee benefits - e.g. long-service bonuses, paid on reaching a predefined number of years’ service - are recognised in item “80. Other liabilities” on the basis of the measurement of the liability at the balance sheet date, also in this case determined by an external actuary using the unit credit projection method (see previous paragraph 10 - Provisions for risks and charges). Actuarial gains (losses) on this type of benefit are recognised immediately in the income statement. Guarantees and credit derivatives in the same class Guarantees and credit derivatives in the same class measured under IFRS9 (i.e. contracts under which the issuer make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument) are initially and subsequently (on remeasurement following impairment losses) recognised in item “100. Provisions for risks and charges: a) commitments and guarantees given”. On initial recognition guarantees given are recognised at fair value, which usually corresponds to the amount received when the guarantee is issued. After the initial recognition, guarantees given are recognised at the higher of the initially recognised value, net of any amortised portion, and the estimated amount required to meet the obligation. The effects of valuation, relating to any impairment of the underlying, are recognised in the same balance-sheet item contra item “200. Net provisions for risks and charges: a)commitments and financial guarantees given” in the income statement. Offsetting financial assets and financial liabilities The accounting offsetting of assets and liabilities items has been performed according to IAS32, assessing the fulfillment of the following requirements: • current legally enforceable right to set off the recognised amounts; • intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously. In accordance with IFRS7, further information have been included in the table of Note to the Consolidated Accounts, in Part B - Other information. In these tables, in particular the following information have to be reported: • balance-sheet values, before and after the accounting offsetting effects, relating to the assets and liabilities which meet the criteria for applying those effects; • values of the exposures which do not meet the above-mentioned criteria, but are included in Master Netting Agreements, or similar agreements, which create the right to set-off only following specified circumstances (e.g. default events); • amounts of related collaterals. Amortised cost The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at the initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability. The effective interest method is a method of allocating the interest income or interest expense over the life of a financial asset or liability. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. The calculation includes all fees and basis points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. Commissions forming an integral part of the effective interest rate include loan drawdown fees or underwriting fees relating to a financial asset not designated at fair value, e.g., fees received as compensation for the assessment of the issuer’s or borrower’s financial situation, for valuation and registration of security, and generally for the completion of the transaction. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include financing costs or internal administrative or holding costs. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 169 Other long-term employee benefits Long-term employee benefits - e.g. long-service bonuses, paid on reaching a predefined number of years’ service - are recognised in item “80. Other liabilities” on the basis of the measurement of the liability at the balance sheet date, also in this case determined by an external actuary using the unit credit projection method (see previous paragraph 10 - Provisions for risks and charges). Actuarial gains (losses) on this type of benefit are recognised immediately in the income statement. Guarantees and credit derivatives in the same class Guarantees and credit derivatives in the same class measured under IFRS9 (i.e. contracts under which the issuer make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument) are initially and subsequently (on remeasurement following impairment losses) recognised in item “100. Provisions for risks and charges: a) commitments and guarantees given”. On initial recognition guarantees given are recognised at fair value, which usually corresponds to the amount received when the guarantee is issued. After the initial recognition, guarantees given are recognised at the higher of the initially recognised value, net of any amortised portion, and the estimated amount required to meet the obligation. The effects of valuation, relating to any impairment of the underlying, are recognised in the same balance-sheet item contra item “200. Net provisions for risks and charges: a)commitments and financial guarantees given” in the income statement. Offsetting financial assets and financial liabilities The accounting offsetting of assets and liabilities items has been performed according to IAS32, assessing the fulfillment of the following requirements: • current legally enforceable right to set off the recognised amounts; • intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously. In accordance with IFRS7, further information have been included in the table of Note to the Consolidated Accounts, in Part B - Other information. In these tables, in particular the following information have to be reported: • balance-sheet values, before and after the accounting offsetting effects, relating to the assets and liabilities which meet the criteria for applying those effects; • values of the exposures which do not meet the above-mentioned criteria, but are included in Master Netting Agreements, or similar agreements, which create the right to set-off only following specified circumstances (e.g. default events); • amounts of related collaterals. Amortised cost The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at the initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability. The effective interest method is a method of allocating the interest income or interest expense over the life of a financial asset or liability. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. The calculation includes all fees and basis points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. Commissions forming an integral part of the effective interest rate include loan drawdown fees or underwriting fees relating to a financial asset not designated at fair value, e.g., fees received as compensation for the assessment of the issuer’s or borrower’s financial situation, for valuation and registration of security, and generally for the completion of the transaction. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include financing costs or internal administrative or holding costs. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 169 Other long-term employee benefits Long-term employee benefits - e.g. long-service bonuses, paid on reaching a predefined number of years’ service - are recognised in item “80. Other liabilities” on the basis of the measurement of the liability at the balance sheet date, also in this case determined by an external actuary using the unit credit projection method (see previous paragraph 10 - Provisions for risks and charges). Actuarial gains (losses) on this type of benefit are recognised immediately in the income statement. Guarantees and credit derivatives in the same class Guarantees and credit derivatives in the same class measured under IFRS9 (i.e. contracts under which the issuer make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument) are initially and subsequently (on remeasurement following impairment losses) recognised in item “100. Provisions for risks and charges: a) commitments and guarantees given”. On initial recognition guarantees given are recognised at fair value, which usually corresponds to the amount received when the guarantee is issued. After the initial recognition, guarantees given are recognised at the higher of the initially recognised value, net of any amortised portion, and the estimated amount required to meet the obligation. The effects of valuation, relating to any impairment of the underlying, are recognised in the same balance-sheet item contra item “200. Net provisions for risks and charges: a)commitments and financial guarantees given” in the income statement. Offsetting financial assets and financial liabilities The accounting offsetting of assets and liabilities items has been performed according to IAS32, assessing the fulfillment of the following requirements: • current legally enforceable right to set off the recognised amounts; • intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously. In accordance with IFRS7, further information have been included in the table of Note to the Consolidated Accounts, in Part B - Other information. In these tables, in particular the following information have to be reported: • balance-sheet values, before and after the accounting offsetting effects, relating to the assets and liabilities which meet the criteria for applying those effects; • values of the exposures which do not meet the above-mentioned criteria, but are included in Master Netting Agreements, or similar agreements, which create the right to set-off only following specified circumstances (e.g. default events); • amounts of related collaterals. Amortised cost The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at the initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability. The effective interest method is a method of allocating the interest income or interest expense over the life of a financial asset or liability. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. The calculation includes all fees and basis points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. Commissions forming an integral part of the effective interest rate include loan drawdown fees or underwriting fees relating to a financial asset not designated at fair value, e.g., fees received as compensation for the assessment of the issuer’s or borrower’s financial situation, for valuation and registration of security, and generally for the completion of the transaction. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include financing costs or internal administrative or holding costs. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 169 Other long-term employee benefits Long-term employee benefits - e.g. long-service bonuses, paid on reaching a predefined number of years’ service - are recognised in item “80. Other liabilities” on the basis of the measurement of the liability at the balance sheet date, also in this case determined by an external actuary using the unit credit projection method (see previous paragraph 10 - Provisions for risks and charges). Actuarial gains (losses) on this type of benefit are recognised immediately in the income statement. Guarantees and credit derivatives in the same class Guarantees and credit derivatives in the same class measured under IFRS9 (i.e. contracts under which the issuer make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument) are initially and subsequently (on remeasurement following impairment losses) recognised in item “100. Provisions for risks and charges: a) commitments and guarantees given”. On initial recognition guarantees given are recognised at fair value, which usually corresponds to the amount received when the guarantee is issued. After the initial recognition, guarantees given are recognised at the higher of the initially recognised value, net of any amortised portion, and the estimated amount required to meet the obligation. The effects of valuation, relating to any impairment of the underlying, are recognised in the same balance-sheet item contra item “200. Net provisions for risks and charges: a)commitments and financial guarantees given” in the income statement. Offsetting financial assets and financial liabilities The accounting offsetting of assets and liabilities items has been performed according to IAS32, assessing the fulfillment of the following requirements: • current legally enforceable right to set off the recognised amounts; • intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously. In accordance with IFRS7, further information have been included in the table of Note to the Consolidated Accounts, in Part B - Other information. In these tables, in particular the following information have to be reported: • balance-sheet values, before and after the accounting offsetting effects, relating to the assets and liabilities which meet the criteria for applying those effects; • values of the exposures which do not meet the above-mentioned criteria, but are included in Master Netting Agreements, or similar agreements, which create the right to set-off only following specified circumstances (e.g. default events); • amounts of related collaterals. Amortised cost The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at the initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability. The effective interest method is a method of allocating the interest income or interest expense over the life of a financial asset or liability. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. The calculation includes all fees and basis points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. Commissions forming an integral part of the effective interest rate include loan drawdown fees or underwriting fees relating to a financial asset not designated at fair value, e.g., fees received as compensation for the assessment of the issuer’s or borrower’s financial situation, for valuation and registration of security, and generally for the completion of the transaction. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include financing costs or internal administrative or holding costs. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 169 Other long-term employee benefits Long-term employee benefits - e.g. long-service bonuses, paid on reaching a predefined number of years’ service - are recognised in item “80. Other liabilities” on the basis of the measurement of the liability at the balance sheet date, also in this case determined by an external actuary using the unit credit projection method (see previous paragraph 10 - Provisions for risks and charges). Actuarial gains (losses) on this type of benefit are recognised immediately in the income statement. Guarantees and credit derivatives in the same class Guarantees and credit derivatives in the same class measured under IFRS9 (i.e. contracts under which the issuer make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument) are initially and subsequently (on remeasurement following impairment losses) recognised in item “100. Provisions for risks and charges: a) commitments and guarantees given”. On initial recognition guarantees given are recognised at fair value, which usually corresponds to the amount received when the guarantee is issued. After the initial recognition, guarantees given are recognised at the higher of the initially recognised value, net of any amortised portion, and the estimated amount required to meet the obligation. The effects of valuation, relating to any impairment of the underlying, are recognised in the same balance-sheet item contra item “200. Net provisions for risks and charges: a)commitments and financial guarantees given” in the income statement. Offsetting financial assets and financial liabilities The accounting offsetting of assets and liabilities items has been performed according to IAS32, assessing the fulfillment of the following requirements: • current legally enforceable right to set off the recognised amounts; • intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously. In accordance with IFRS7, further information have been included in the table of Note to the Consolidated Accounts, in Part B - Other information. In these tables, in particular the following information have to be reported: • balance-sheet values, before and after the accounting offsetting effects, relating to the assets and liabilities which meet the criteria for applying those effects; • values of the exposures which do not meet the above-mentioned criteria, but are included in Master Netting Agreements, or similar agreements, which create the right to set-off only following specified circumstances (e.g. default events); • amounts of related collaterals. Amortised cost The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at the initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability. The effective interest method is a method of allocating the interest income or interest expense over the life of a financial asset or liability. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. The calculation includes all fees and basis points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. Commissions forming an integral part of the effective interest rate include loan drawdown fees or underwriting fees relating to a financial asset not designated at fair value, e.g., fees received as compensation for the assessment of the issuer’s or borrower’s financial situation, for valuation and registration of security, and generally for the completion of the transaction. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include financing costs or internal administrative or holding costs. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 170 2018 Annual Report and Accounts · UniCredit Recognition of income and expenses Interest income and expenses Interest income and expenses and similar income and expense items relate to monetary items, i.e. liquidity and debt financial instruments (i) held for trading, (ii) designated at fair value (iii) mandatorily at fair value (iv) at fair value through other comprehensive income (v) at amortised cost and financial liabilities at amortised cost. Interest income and expense are recognised through profit or loss with respect to all instruments measured at amortised cost, using the effective interest method. Interest also includes the net credit or debit balance of differentials and margins on financial derivatives: • hedging interest-bearing assets and liabilities; • HfT but linked for business purposes to assets and liabilities designated as measured at fair value (fair value option); • linked for business purposes to HfT assets and liabilities paying differentials or margins on different maturities. Fees and commissions income and other operating income Fees and commissions income and other operating income are accounted for in P&L as the entity satisfies the performance obligation embedded in the contract, according to “IFRS15 Revenue from Contracts with Customers” rules. In particular: • if the performance obligation is satisfied at a specific moment (“point in time”), the related revenue is recognized in P&L when the service is provided; • if the performance obligation is satisfied over-time, the related revenue is recognized in P&L in order to reflect the progress of satisfaction of such obligation. Due to the above mentioned rules, transaction fees coming from trading in securities are typically booked in the moment when the service is provided while fees related to portfolios management, consulting or fund management are normally recognized during the term of the contract (input method). For this second type of fees, in fact, it is deemed that the input which are necessary to provide the service incorporated in the performance obligation are evenly distributed during the term of the contract. If the timing of cash-in is not aligned to the way the performance obligation is satisfied, the Group accounts for a contract asset or a contract liability for the portion of revenue accrued in the period or to defer in the following periods. The amount of revenues linked to fees and commissions income and other operating income is measured based on contractual provisions. If the amount contractually foreseen is subject, totally or partially, to variability, a revenue has to be booked based on the most probable amount that the Group expects to receive. Such amount is determined on the basis of all facts and circumstances considered relevant for the evaluation, that depend on the type of service provided and, in particular, on the presumption that it is not highly probable that the revenue recognized will not be significantly reversed. Please note, nevertheless, that for the services provided by the Group such a variability is not usually foreseen. Finally, if a contract regards different goods/services whose performance obligations are not satisfied at the same time, the revenue is allocated among the different obligation proportionally to the stand-alone price of the single item delivered. These amounts will therefore be accounted for in P&L on the basis of the timing of satisfaction of each obligation. This circumstance, which is not significant, might happen in case of customer loyalty programs that require to provide goods or services for free, or by cashing-in a price not at market condition, if the client reaches a specific volume of fees, or in case of programs to acquire new customers that assign a bonus to the target (in the form of a product or a service) when it becomes a new client. Dividends Dividends are recognised in profit and loss in the financial year in which their distribution has been approved. A.3 - Information on transfers between portfolios of financial assets There were no transfers between portfolios of financial assets in 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 170 2018 Annual Report and Accounts · UniCredit Recognition of income and expenses Interest income and expenses Interest income and expenses and similar income and expense items relate to monetary items, i.e. liquidity and debt financial instruments (i) held for trading, (ii) designated at fair value (iii) mandatorily at fair value (iv) at fair value through other comprehensive income (v) at amortised cost and financial liabilities at amortised cost. Interest income and expense are recognised through profit or loss with respect to all instruments measured at amortised cost, using the effective interest method. Interest also includes the net credit or debit balance of differentials and margins on financial derivatives: • hedging interest-bearing assets and liabilities; • HfT but linked for business purposes to assets and liabilities designated as measured at fair value (fair value option); • linked for business purposes to HfT assets and liabilities paying differentials or margins on different maturities. Fees and commissions income and other operating income Fees and commissions income and other operating income are accounted for in P&L as the entity satisfies the performance obligation embedded in the contract, according to “IFRS15 Revenue from Contracts with Customers” rules. In particular: • if the performance obligation is satisfied at a specific moment (“point in time”), the related revenue is recognized in P&L when the service is provided; • if the performance obligation is satisfied over-time, the related revenue is recognized in P&L in order to reflect the progress of satisfaction of such obligation. Due to the above mentioned rules, transaction fees coming from trading in securities are typically booked in the moment when the service is provided while fees related to portfolios management, consulting or fund management are normally recognized during the term of the contract (input method). For this second type of fees, in fact, it is deemed that the input which are necessary to provide the service incorporated in the performance obligation are evenly distributed during the term of the contract. If the timing of cash-in is not aligned to the way the performance obligation is satisfied, the Group accounts for a contract asset or a contract liability for the portion of revenue accrued in the period or to defer in the following periods. The amount of revenues linked to fees and commissions income and other operating income is measured based on contractual provisions. If the amount contractually foreseen is subject, totally or partially, to variability, a revenue has to be booked based on the most probable amount that the Group expects to receive. Such amount is determined on the basis of all facts and circumstances considered relevant for the evaluation, that depend on the type of service provided and, in particular, on the presumption that it is not highly probable that the revenue recognized will not be significantly reversed. Please note, nevertheless, that for the services provided by the Group such a variability is not usually foreseen. Finally, if a contract regards different goods/services whose performance obligations are not satisfied at the same time, the revenue is allocated among the different obligation proportionally to the stand-alone price of the single item delivered. These amounts will therefore be accounted for in P&L on the basis of the timing of satisfaction of each obligation. This circumstance, which is not significant, might happen in case of customer loyalty programs that require to provide goods or services for free, or by cashing-in a price not at market condition, if the client reaches a specific volume of fees, or in case of programs to acquire new customers that assign a bonus to the target (in the form of a product or a service) when it becomes a new client. Dividends Dividends are recognised in profit and loss in the financial year in which their distribution has been approved. A.3 - Information on transfers between portfolios of financial assets There were no transfers between portfolios of financial assets in 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 170 2018 Annual Report and Accounts · UniCredit Recognition of income and expenses Interest income and expenses Interest income and expenses and similar income and expense items relate to monetary items, i.e. liquidity and debt financial instruments (i) held for trading, (ii) designated at fair value (iii) mandatorily at fair value (iv) at fair value through other comprehensive income (v) at amortised cost and financial liabilities at amortised cost. Interest income and expense are recognised through profit or loss with respect to all instruments measured at amortised cost, using the effective interest method. Interest also includes the net credit or debit balance of differentials and margins on financial derivatives: • hedging interest-bearing assets and liabilities; • HfT but linked for business purposes to assets and liabilities designated as measured at fair value (fair value option); • linked for business purposes to HfT assets and liabilities paying differentials or margins on different maturities. Fees and commissions income and other operating income Fees and commissions income and other operating income are accounted for in P&L as the entity satisfies the performance obligation embedded in the contract, according to “IFRS15 Revenue from Contracts with Customers” rules. In particular: • if the performance obligation is satisfied at a specific moment (“point in time”), the related revenue is recognized in P&L when the service is provided; • if the performance obligation is satisfied over-time, the related revenue is recognized in P&L in order to reflect the progress of satisfaction of such obligation. Due to the above mentioned rules, transaction fees coming from trading in securities are typically booked in the moment when the service is provided while fees related to portfolios management, consulting or fund management are normally recognized during the term of the contract (input method). For this second type of fees, in fact, it is deemed that the input which are necessary to provide the service incorporated in the performance obligation are evenly distributed during the term of the contract. If the timing of cash-in is not aligned to the way the performance obligation is satisfied, the Group accounts for a contract asset or a contract liability for the portion of revenue accrued in the period or to defer in the following periods. The amount of revenues linked to fees and commissions income and other operating income is measured based on contractual provisions. If the amount contractually foreseen is subject, totally or partially, to variability, a revenue has to be booked based on the most probable amount that the Group expects to receive. Such amount is determined on the basis of all facts and circumstances considered relevant for the evaluation, that depend on the type of service provided and, in particular, on the presumption that it is not highly probable that the revenue recognized will not be significantly reversed. Please note, nevertheless, that for the services provided by the Group such a variability is not usually foreseen. Finally, if a contract regards different goods/services whose performance obligations are not satisfied at the same time, the revenue is allocated among the different obligation proportionally to the stand-alone price of the single item delivered. These amounts will therefore be accounted for in P&L on the basis of the timing of satisfaction of each obligation. This circumstance, which is not significant, might happen in case of customer loyalty programs that require to provide goods or services for free, or by cashing-in a price not at market condition, if the client reaches a specific volume of fees, or in case of programs to acquire new customers that assign a bonus to the target (in the form of a product or a service) when it becomes a new client. Dividends Dividends are recognised in profit and loss in the financial year in which their distribution has been approved. A.3 - Information on transfers between portfolios of financial assets There were no transfers between portfolios of financial assets in 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 170 2018 Annual Report and Accounts · UniCredit Recognition of income and expenses Interest income and expenses Interest income and expenses and similar income and expense items relate to monetary items, i.e. liquidity and debt financial instruments (i) held for trading, (ii) designated at fair value (iii) mandatorily at fair value (iv) at fair value through other comprehensive income (v) at amortised cost and financial liabilities at amortised cost. Interest income and expense are recognised through profit or loss with respect to all instruments measured at amortised cost, using the effective interest method. Interest also includes the net credit or debit balance of differentials and margins on financial derivatives: • hedging interest-bearing assets and liabilities; • HfT but linked for business purposes to assets and liabilities designated as measured at fair value (fair value option); • linked for business purposes to HfT assets and liabilities paying differentials or margins on different maturities. Fees and commissions income and other operating income Fees and commissions income and other operating income are accounted for in P&L as the entity satisfies the performance obligation embedded in the contract, according to “IFRS15 Revenue from Contracts with Customers” rules. In particular: • if the performance obligation is satisfied at a specific moment (“point in time”), the related revenue is recognized in P&L when the service is provided; • if the performance obligation is satisfied over-time, the related revenue is recognized in P&L in order to reflect the progress of satisfaction of such obligation. Due to the above mentioned rules, transaction fees coming from trading in securities are typically booked in the moment when the service is provided while fees related to portfolios management, consulting or fund management are normally recognized during the term of the contract (input method). For this second type of fees, in fact, it is deemed that the input which are necessary to provide the service incorporated in the performance obligation are evenly distributed during the term of the contract. If the timing of cash-in is not aligned to the way the performance obligation is satisfied, the Group accounts for a contract asset or a contract liability for the portion of revenue accrued in the period or to defer in the following periods. The amount of revenues linked to fees and commissions income and other operating income is measured based on contractual provisions. If the amount contractually foreseen is subject, totally or partially, to variability, a revenue has to be booked based on the most probable amount that the Group expects to receive. Such amount is determined on the basis of all facts and circumstances considered relevant for the evaluation, that depend on the type of service provided and, in particular, on the presumption that it is not highly probable that the revenue recognized will not be significantly reversed. Please note, nevertheless, that for the services provided by the Group such a variability is not usually foreseen. Finally, if a contract regards different goods/services whose performance obligations are not satisfied at the same time, the revenue is allocated among the different obligation proportionally to the stand-alone price of the single item delivered. These amounts will therefore be accounted for in P&L on the basis of the timing of satisfaction of each obligation. This circumstance, which is not significant, might happen in case of customer loyalty programs that require to provide goods or services for free, or by cashing-in a price not at market condition, if the client reaches a specific volume of fees, or in case of programs to acquire new customers that assign a bonus to the target (in the form of a product or a service) when it becomes a new client. Dividends Dividends are recognised in profit and loss in the financial year in which their distribution has been approved. A.3 - Information on transfers between portfolios of financial assets There were no transfers between portfolios of financial assets in 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 170 2018 Annual Report and Accounts · UniCredit Recognition of income and expenses Interest income and expenses Interest income and expenses and similar income and expense items relate to monetary items, i.e. liquidity and debt financial instruments (i) held for trading, (ii) designated at fair value (iii) mandatorily at fair value (iv) at fair value through other comprehensive income (v) at amortised cost and financial liabilities at amortised cost. Interest income and expense are recognised through profit or loss with respect to all instruments measured at amortised cost, using the effective interest method. Interest also includes the net credit or debit balance of differentials and margins on financial derivatives: • hedging interest-bearing assets and liabilities; • HfT but linked for business purposes to assets and liabilities designated as measured at fair value (fair value option); • linked for business purposes to HfT assets and liabilities paying differentials or margins on different maturities. Fees and commissions income and other operating income Fees and commissions income and other operating income are accounted for in P&L as the entity satisfies the performance obligation embedded in the contract, according to “IFRS15 Revenue from Contracts with Customers” rules. In particular: • if the performance obligation is satisfied at a specific moment (“point in time”), the related revenue is recognized in P&L when the service is provided; • if the performance obligation is satisfied over-time, the related revenue is recognized in P&L in order to reflect the progress of satisfaction of such obligation. Due to the above mentioned rules, transaction fees coming from trading in securities are typically booked in the moment when the service is provided while fees related to portfolios management, consulting or fund management are normally recognized during the term of the contract (input method). For this second type of fees, in fact, it is deemed that the input which are necessary to provide the service incorporated in the performance obligation are evenly distributed during the term of the contract. If the timing of cash-in is not aligned to the way the performance obligation is satisfied, the Group accounts for a contract asset or a contract liability for the portion of revenue accrued in the period or to defer in the following periods. The amount of revenues linked to fees and commissions income and other operating income is measured based on contractual provisions. If the amount contractually foreseen is subject, totally or partially, to variability, a revenue has to be booked based on the most probable amount that the Group expects to receive. Such amount is determined on the basis of all facts and circumstances considered relevant for the evaluation, that depend on the type of service provided and, in particular, on the presumption that it is not highly probable that the revenue recognized will not be significantly reversed. Please note, nevertheless, that for the services provided by the Group such a variability is not usually foreseen. Finally, if a contract regards different goods/services whose performance obligations are not satisfied at the same time, the revenue is allocated among the different obligation proportionally to the stand-alone price of the single item delivered. These amounts will therefore be accounted for in P&L on the basis of the timing of satisfaction of each obligation. This circumstance, which is not significant, might happen in case of customer loyalty programs that require to provide goods or services for free, or by cashing-in a price not at market condition, if the client reaches a specific volume of fees, or in case of programs to acquire new customers that assign a bonus to the target (in the form of a product or a service) when it becomes a new client. Dividends Dividends are recognised in profit and loss in the financial year in which their distribution has been approved. A.3 - Information on transfers between portfolios of financial assets There were no transfers between portfolios of financial assets in 2018. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 171 A.4 - Information on fair value Qualitative information This section presents a disclosure on fair value as required by IFRS13. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants in the principal market at the measurement date (i.e. an exit price). The fair value of a financial liability with a demand feature (e.g. a demand deposit) cannot be lower than the amount payable on demand, discounted from the first date that the amount could be required to be paid. For financial instruments listed in active markets, fair value is determined on the basis of official prices in the principal market to which the Group has access (Mark to Market). A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from a pricing service, dealer, broker, agency that determines prices or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If a published price quotation in an active market does not exist for a financial instrument in its entirety, but active markets exist for its component parts, fair value can be determined on the basis of the relevant market prices for the component parts. If the observable prices in active market or other observable inputs, such as the quoted price of a similar instrument in an active market, the Group may use another valuation techniques, such as: • a market approach (e.g. using quoted prices for similar liabilities or equity instruments held by other parties as assets); • cost approach (e.g. it reflects the amount that would be required currently to replace the service capacity of an asset, that is the current replacement cost); • an income approach (e.g. a present value technique that takes into account the future cash flows that a market participant would expect to receive from holding the liability or equity instrument as an asset). The Group uses valuation models (Mark to Model) in keeping with the methods generally accepted and used by the market. Valuation models include techniques based on the discounting of future cash flows and on volatility estimates, and they are subject to revision both during their development and periodically in order to ensure their consistency with the objectives of the valuation. These methods use inputs based on prices set in recent transactions for the instrument being valued and/or prices/quotations for instruments having similar characteristics in terms of risk profile. Indeed, these prices/quotations are relevant for determining significant parameters in terms of credit, liquidity and price risk of the instrument being valued. Reference to these market parameters allows to limit the discretionary nature of the valuation, and ensures that the resulting fair value can be verified. If, for one or more risk factors it is not possible to refer to market data, the valuation models employed use estimates based on historical data as inputs. As a further guarantee of the objectivity of valuations derived from valuation models, the Group employs: • independent price verifications (IPVs); • fair value adjustments (FVAs). Independent price verification requires that the prices are verified at least monthly by Risk Management units that are independent from the units that assume the risk exposure. This verification calls for comparing and adjusting the price in line with valuations obtained from independent market participants. For instruments not quoted in active markets, the above verification process uses prices contributed by info providers as a reference, and assigns a greater weighting to those prices that are considered representative of the instrument being valued. This valuation can include the executability of the transaction at the price observed, the number of contributors, the degree of similarity of the financial instruments, the consistency of prices from different sources, and the process followed by the info provider to obtain the information. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 171 A.4 - Information on fair value Qualitative information This section presents a disclosure on fair value as required by IFRS13. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants in the principal market at the measurement date (i.e. an exit price). The fair value of a financial liability with a demand feature (e.g. a demand deposit) cannot be lower than the amount payable on demand, discounted from the first date that the amount could be required to be paid. For financial instruments listed in active markets, fair value is determined on the basis of official prices in the principal market to which the Group has access (Mark to Market). A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from a pricing service, dealer, broker, agency that determines prices or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If a published price quotation in an active market does not exist for a financial instrument in its entirety, but active markets exist for its component parts, fair value can be determined on the basis of the relevant market prices for the component parts. If the observable prices in active market or other observable inputs, such as the quoted price of a similar instrument in an active market, the Group may use another valuation techniques, such as: • a market approach (e.g. using quoted prices for similar liabilities or equity instruments held by other parties as assets); • cost approach (e.g. it reflects the amount that would be required currently to replace the service capacity of an asset, that is the current replacement cost); • an income approach (e.g. a present value technique that takes into account the future cash flows that a market participant would expect to receive from holding the liability or equity instrument as an asset). The Group uses valuation models (Mark to Model) in keeping with the methods generally accepted and used by the market. Valuation models include techniques based on the discounting of future cash flows and on volatility estimates, and they are subject to revision both during their development and periodically in order to ensure their consistency with the objectives of the valuation. These methods use inputs based on prices set in recent transactions for the instrument being valued and/or prices/quotations for instruments having similar characteristics in terms of risk profile. Indeed, these prices/quotations are relevant for determining significant parameters in terms of credit, liquidity and price risk of the instrument being valued. Reference to these market parameters allows to limit the discretionary nature of the valuation, and ensures that the resulting fair value can be verified. If, for one or more risk factors it is not possible to refer to market data, the valuation models employed use estimates based on historical data as inputs. As a further guarantee of the objectivity of valuations derived from valuation models, the Group employs: • independent price verifications (IPVs); • fair value adjustments (FVAs). Independent price verification requires that the prices are verified at least monthly by Risk Management units that are independent from the units that assume the risk exposure. This verification calls for comparing and adjusting the price in line with valuations obtained from independent market participants. For instruments not quoted in active markets, the above verification process uses prices contributed by info providers as a reference, and assigns a greater weighting to those prices that are considered representative of the instrument being valued. This valuation can include the executability of the transaction at the price observed, the number of contributors, the degree of similarity of the financial instruments, the consistency of prices from different sources, and the process followed by the info provider to obtain the information. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 171 A.4 - Information on fair value Qualitative information This section presents a disclosure on fair value as required by IFRS13. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants in the principal market at the measurement date (i.e. an exit price). The fair value of a financial liability with a demand feature (e.g. a demand deposit) cannot be lower than the amount payable on demand, discounted from the first date that the amount could be required to be paid. For financial instruments listed in active markets, fair value is determined on the basis of official prices in the principal market to which the Group has access (Mark to Market). A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from a pricing service, dealer, broker, agency that determines prices or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If a published price quotation in an active market does not exist for a financial instrument in its entirety, but active markets exist for its component parts, fair value can be determined on the basis of the relevant market prices for the component parts. If the observable prices in active market or other observable inputs, such as the quoted price of a similar instrument in an active market, the Group may use another valuation techniques, such as: • a market approach (e.g. using quoted prices for similar liabilities or equity instruments held by other parties as assets); • cost approach (e.g. it reflects the amount that would be required currently to replace the service capacity of an asset, that is the current replacement cost); • an income approach (e.g. a present value technique that takes into account the future cash flows that a market participant would expect to receive from holding the liability or equity instrument as an asset). The Group uses valuation models (Mark to Model) in keeping with the methods generally accepted and used by the market. Valuation models include techniques based on the discounting of future cash flows and on volatility estimates, and they are subject to revision both during their development and periodically in order to ensure their consistency with the objectives of the valuation. These methods use inputs based on prices set in recent transactions for the instrument being valued and/or prices/quotations for instruments having similar characteristics in terms of risk profile. Indeed, these prices/quotations are relevant for determining significant parameters in terms of credit, liquidity and price risk of the instrument being valued. Reference to these market parameters allows to limit the discretionary nature of the valuation, and ensures that the resulting fair value can be verified. If, for one or more risk factors it is not possible to refer to market data, the valuation models employed use estimates based on historical data as inputs. As a further guarantee of the objectivity of valuations derived from valuation models, the Group employs: • independent price verifications (IPVs); • fair value adjustments (FVAs). Independent price verification requires that the prices are verified at least monthly by Risk Management units that are independent from the units that assume the risk exposure. This verification calls for comparing and adjusting the price in line with valuations obtained from independent market participants. For instruments not quoted in active markets, the above verification process uses prices contributed by info providers as a reference, and assigns a greater weighting to those prices that are considered representative of the instrument being valued. This valuation can include the executability of the transaction at the price observed, the number of contributors, the degree of similarity of the financial instruments, the consistency of prices from different sources, and the process followed by the info provider to obtain the information. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 171 A.4 - Information on fair value Qualitative information This section presents a disclosure on fair value as required by IFRS13. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants in the principal market at the measurement date (i.e. an exit price). The fair value of a financial liability with a demand feature (e.g. a demand deposit) cannot be lower than the amount payable on demand, discounted from the first date that the amount could be required to be paid. For financial instruments listed in active markets, fair value is determined on the basis of official prices in the principal market to which the Group has access (Mark to Market). A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from a pricing service, dealer, broker, agency that determines prices or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If a published price quotation in an active market does not exist for a financial instrument in its entirety, but active markets exist for its component parts, fair value can be determined on the basis of the relevant market prices for the component parts. If the observable prices in active market or other observable inputs, such as the quoted price of a similar instrument in an active market, the Group may use another valuation techniques, such as: • a market approach (e.g. using quoted prices for similar liabilities or equity instruments held by other parties as assets); • cost approach (e.g. it reflects the amount that would be required currently to replace the service capacity of an asset, that is the current replacement cost); • an income approach (e.g. a present value technique that takes into account the future cash flows that a market participant would expect to receive from holding the liability or equity instrument as an asset). The Group uses valuation models (Mark to Model) in keeping with the methods generally accepted and used by the market. Valuation models include techniques based on the discounting of future cash flows and on volatility estimates, and they are subject to revision both during their development and periodically in order to ensure their consistency with the objectives of the valuation. These methods use inputs based on prices set in recent transactions for the instrument being valued and/or prices/quotations for instruments having similar characteristics in terms of risk profile. Indeed, these prices/quotations are relevant for determining significant parameters in terms of credit, liquidity and price risk of the instrument being valued. Reference to these market parameters allows to limit the discretionary nature of the valuation, and ensures that the resulting fair value can be verified. If, for one or more risk factors it is not possible to refer to market data, the valuation models employed use estimates based on historical data as inputs. As a further guarantee of the objectivity of valuations derived from valuation models, the Group employs: • independent price verifications (IPVs); • fair value adjustments (FVAs). Independent price verification requires that the prices are verified at least monthly by Risk Management units that are independent from the units that assume the risk exposure. This verification calls for comparing and adjusting the price in line with valuations obtained from independent market participants. For instruments not quoted in active markets, the above verification process uses prices contributed by info providers as a reference, and assigns a greater weighting to those prices that are considered representative of the instrument being valued. This valuation can include the executability of the transaction at the price observed, the number of contributors, the degree of similarity of the financial instruments, the consistency of prices from different sources, and the process followed by the info provider to obtain the information. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 171 A.4 - Information on fair value Qualitative information This section presents a disclosure on fair value as required by IFRS13. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants in the principal market at the measurement date (i.e. an exit price). The fair value of a financial liability with a demand feature (e.g. a demand deposit) cannot be lower than the amount payable on demand, discounted from the first date that the amount could be required to be paid. For financial instruments listed in active markets, fair value is determined on the basis of official prices in the principal market to which the Group has access (Mark to Market). A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from a pricing service, dealer, broker, agency that determines prices or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If a published price quotation in an active market does not exist for a financial instrument in its entirety, but active markets exist for its component parts, fair value can be determined on the basis of the relevant market prices for the component parts. If the observable prices in active market or other observable inputs, such as the quoted price of a similar instrument in an active market, the Group may use another valuation techniques, such as: • a market approach (e.g. using quoted prices for similar liabilities or equity instruments held by other parties as assets); • cost approach (e.g. it reflects the amount that would be required currently to replace the service capacity of an asset, that is the current replacement cost); • an income approach (e.g. a present value technique that takes into account the future cash flows that a market participant would expect to receive from holding the liability or equity instrument as an asset). The Group uses valuation models (Mark to Model) in keeping with the methods generally accepted and used by the market. Valuation models include techniques based on the discounting of future cash flows and on volatility estimates, and they are subject to revision both during their development and periodically in order to ensure their consistency with the objectives of the valuation. These methods use inputs based on prices set in recent transactions for the instrument being valued and/or prices/quotations for instruments having similar characteristics in terms of risk profile. Indeed, these prices/quotations are relevant for determining significant parameters in terms of credit, liquidity and price risk of the instrument being valued. Reference to these market parameters allows to limit the discretionary nature of the valuation, and ensures that the resulting fair value can be verified. If, for one or more risk factors it is not possible to refer to market data, the valuation models employed use estimates based on historical data as inputs. As a further guarantee of the objectivity of valuations derived from valuation models, the Group employs: • independent price verifications (IPVs); • fair value adjustments (FVAs). Independent price verification requires that the prices are verified at least monthly by Risk Management units that are independent from the units that assume the risk exposure. This verification calls for comparing and adjusting the price in line with valuations obtained from independent market participants. For instruments not quoted in active markets, the above verification process uses prices contributed by info providers as a reference, and assigns a greater weighting to those prices that are considered representative of the instrument being valued. This valuation can include the executability of the transaction at the price observed, the number of contributors, the degree of similarity of the financial instruments, the consistency of prices from different sources, and the process followed by the info provider to obtain the information. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 172 2018 Annual Report and Accounts · UniCredit A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used Hereby we provide IFRS13 disclosure requirements about accounting portfolios measured at fair value on a recurring basis, not measured at fair value, or measured at fair value on a non-recurring basis. Assets and Liabilities measured at fair value on a recurring basis Fixed-Income Securities Fixed-Income Securities are priced in a two tier process depending on the liquidity in the respective market. Liquid instruments in active markets are marked to market and consequently positions in these instruments are disclosed in reference to Fair Value Hierarchy under Level 118. In order to assess it, within the global bond Independent Price Verification (IPV) process a daily Liquidity Indicator is defined taking into account: the number of executable bid/ask quotes, their relative sizes and spreads. Such indicator is tracked over a 20 business days time window in order to obtain a stable monthly indicator. Instruments not traded in active markets are marked to model based on implied credit spread curves derived from the former Level 1 instruments. The model maximises the use of observable input and minimises the use of unobservable inputs. With this respect, depending on the proximity of the credit spread curve applied, the bonds are disclosed as Level 2 or Level 3 respectively; Level 3 is applied in case credit spread curves used are significantly unobservable. Under fair value accounting, fair value adjustments for liquidity and model deficiencies compensate for the lack of market observables for the Level 2 and Level 3 positions. In the global bond IPV process market prices of Level 1 bonds and pricing models for illiquid bonds are regularly verified for accuracy. Structured Financial Products The Group determines the fair value of structured financial products not quoted on active markets using the appropriate derivative valuation methodology given the nature of the embedded structure (when this is not to be separated). Such instruments are classified as Level 2 or Level 3 depending on the observability of significant inputs to the model. Asset Backed Securities UniCredit valuation process relies on internal policies centered on: • extension and implementation across all the Group’s Legal Entities of an independent Price Verification (IPV) process suited to the changed market conditions for Structured Credit Bonds; • integration of current Fair Value Adjustments Policy. According to the IPV process the quality of a price is assessed based upon the availability of quotes of independent market players for identical assets. The process relies first on consensus data provider as reliable collector of market quotes. As a second step, prices are assessed by benchmarking each security to a pool of similar securities with available market quotes. An alternative approach consists in evaluating the instrument through the use of quantitative pricing models, which are applicable every time that information regarding market participants assumptions on model parameters are reasonably made available without excessive costs or efforts. Derivatives Fair value of derivatives not traded in an active market is determined using a mark-to-model valuation technique. In such cases, where active markets exist for its component parts, then fair value is determined on the basis of the relevant market prices for the component parts. Valuation techniques that are based on significant inputs that are observable are referred to as Level 2 valuations, while those based on techniques that use significant unobservable inputs are referred to as Level 3 valuations. Equity instruments Equity Instruments are assigned to Level 1 when a quoted price is available on a liquid market and to Level 3 when no quotations are available or quotations have been suspended indefinitely. These instruments are classifies as Level 2 only when trading volume on the market where the instrument is quoted has decreased significantly. For equity instruments measured at cost an impairment is given, if the carrying amount exceeds the recoverable amount significantly and/or over a prolonged period of time. 18 As far as Italian Government bonds are concerned, it is worth stressing they are typically exchanged on the MTS market which is largely acknowledged as the main liquid platform for this kind of asset. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 172 2018 Annual Report and Accounts · UniCredit A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used Hereby we provide IFRS13 disclosure requirements about accounting portfolios measured at fair value on a recurring basis, not measured at fair value, or measured at fair value on a non-recurring basis. Assets and Liabilities measured at fair value on a recurring basis Fixed-Income Securities Fixed-Income Securities are priced in a two tier process depending on the liquidity in the respective market. Liquid instruments in active markets are marked to market and consequently positions in these instruments are disclosed in reference to Fair Value Hierarchy under Level 118. In order to assess it, within the global bond Independent Price Verification (IPV) process a daily Liquidity Indicator is defined taking into account: the number of executable bid/ask quotes, their relative sizes and spreads. Such indicator is tracked over a 20 business days time window in order to obtain a stable monthly indicator. Instruments not traded in active markets are marked to model based on implied credit spread curves derived from the former Level 1 instruments. The model maximises the use of observable input and minimises the use of unobservable inputs. With this respect, depending on the proximity of the credit spread curve applied, the bonds are disclosed as Level 2 or Level 3 respectively; Level 3 is applied in case credit spread curves used are significantly unobservable. Under fair value accounting, fair value adjustments for liquidity and model deficiencies compensate for the lack of market observables for the Level 2 and Level 3 positions. In the global bond IPV process market prices of Level 1 bonds and pricing models for illiquid bonds are regularly verified for accuracy. Structured Financial Products The Group determines the fair value of structured financial products not quoted on active markets using the appropriate derivative valuation methodology given the nature of the embedded structure (when this is not to be separated). Such instruments are classified as Level 2 or Level 3 depending on the observability of significant inputs to the model. Asset Backed Securities UniCredit valuation process relies on internal policies centered on: • extension and implementation across all the Group’s Legal Entities of an independent Price Verification (IPV) process suited to the changed market conditions for Structured Credit Bonds; • integration of current Fair Value Adjustments Policy. According to the IPV process the quality of a price is assessed based upon the availability of quotes of independent market players for identical assets. The process relies first on consensus data provider as reliable collector of market quotes. As a second step, prices are assessed by benchmarking each security to a pool of similar securities with available market quotes. An alternative approach consists in evaluating the instrument through the use of quantitative pricing models, which are applicable every time that information regarding market participants assumptions on model parameters are reasonably made available without excessive costs or efforts. Derivatives Fair value of derivatives not traded in an active market is determined using a mark-to-model valuation technique. In such cases, where active markets exist for its component parts, then fair value is determined on the basis of the relevant market prices for the component parts. Valuation techniques that are based on significant inputs that are observable are referred to as Level 2 valuations, while those based on techniques that use significant unobservable inputs are referred to as Level 3 valuations. Equity instruments Equity Instruments are assigned to Level 1 when a quoted price is available on a liquid market and to Level 3 when no quotations are available or quotations have been suspended indefinitely. These instruments are classifies as Level 2 only when trading volume on the market where the instrument is quoted has decreased significantly. For equity instruments measured at cost an impairment is given, if the carrying amount exceeds the recoverable amount significantly and/or over a prolonged period of time. 18 As far as Italian Government bonds are concerned, it is worth stressing they are typically exchanged on the MTS market which is largely acknowledged as the main liquid platform for this kind of asset. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 172 2018 Annual Report and Accounts · UniCredit A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used Hereby we provide IFRS13 disclosure requirements about accounting portfolios measured at fair value on a recurring basis, not measured at fair value, or measured at fair value on a non-recurring basis. Assets and Liabilities measured at fair value on a recurring basis Fixed-Income Securities Fixed-Income Securities are priced in a two tier process depending on the liquidity in the respective market. Liquid instruments in active markets are marked to market and consequently positions in these instruments are disclosed in reference to Fair Value Hierarchy under Level 118. In order to assess it, within the global bond Independent Price Verification (IPV) process a daily Liquidity Indicator is defined taking into account: the number of executable bid/ask quotes, their relative sizes and spreads. Such indicator is tracked over a 20 business days time window in order to obtain a stable monthly indicator. Instruments not traded in active markets are marked to model based on implied credit spread curves derived from the former Level 1 instruments. The model maximises the use of observable input and minimises the use of unobservable inputs. With this respect, depending on the proximity of the credit spread curve applied, the bonds are disclosed as Level 2 or Level 3 respectively; Level 3 is applied in case credit spread curves used are significantly unobservable. Under fair value accounting, fair value adjustments for liquidity and model deficiencies compensate for the lack of market observables for the Level 2 and Level 3 positions. In the global bond IPV process market prices of Level 1 bonds and pricing models for illiquid bonds are regularly verified for accuracy. Structured Financial Products The Group determines the fair value of structured financial products not quoted on active markets using the appropriate derivative valuation methodology given the nature of the embedded structure (when this is not to be separated). Such instruments are classified as Level 2 or Level 3 depending on the observability of significant inputs to the model. Asset Backed Securities UniCredit valuation process relies on internal policies centered on: • extension and implementation across all the Group’s Legal Entities of an independent Price Verification (IPV) process suited to the changed market conditions for Structured Credit Bonds; • integration of current Fair Value Adjustments Policy. According to the IPV process the quality of a price is assessed based upon the availability of quotes of independent market players for identical assets. The process relies first on consensus data provider as reliable collector of market quotes. As a second step, prices are assessed by benchmarking each security to a pool of similar securities with available market quotes. An alternative approach consists in evaluating the instrument through the use of quantitative pricing models, which are applicable every time that information regarding market participants assumptions on model parameters are reasonably made available without excessive costs or efforts. Derivatives Fair value of derivatives not traded in an active market is determined using a mark-to-model valuation technique. In such cases, where active markets exist for its component parts, then fair value is determined on the basis of the relevant market prices for the component parts. Valuation techniques that are based on significant inputs that are observable are referred to as Level 2 valuations, while those based on techniques that use significant unobservable inputs are referred to as Level 3 valuations. Equity instruments Equity Instruments are assigned to Level 1 when a quoted price is available on a liquid market and to Level 3 when no quotations are available or quotations have been suspended indefinitely. These instruments are classifies as Level 2 only when trading volume on the market where the instrument is quoted has decreased significantly. For equity instruments measured at cost an impairment is given, if the carrying amount exceeds the recoverable amount significantly and/or over a prolonged period of time. 18 As far as Italian Government bonds are concerned, it is worth stressing they are typically exchanged on the MTS market which is largely acknowledged as the main liquid platform for this kind of asset. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 172 2018 Annual Report and Accounts · UniCredit A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used Hereby we provide IFRS13 disclosure requirements about accounting portfolios measured at fair value on a recurring basis, not measured at fair value, or measured at fair value on a non-recurring basis. Assets and Liabilities measured at fair value on a recurring basis Fixed-Income Securities Fixed-Income Securities are priced in a two tier process depending on the liquidity in the respective market. Liquid instruments in active markets are marked to market and consequently positions in these instruments are disclosed in reference to Fair Value Hierarchy under Level 118. In order to assess it, within the global bond Independent Price Verification (IPV) process a daily Liquidity Indicator is defined taking into account: the number of executable bid/ask quotes, their relative sizes and spreads. Such indicator is tracked over a 20 business days time window in order to obtain a stable monthly indicator. Instruments not traded in active markets are marked to model based on implied credit spread curves derived from the former Level 1 instruments. The model maximises the use of observable input and minimises the use of unobservable inputs. With this respect, depending on the proximity of the credit spread curve applied, the bonds are disclosed as Level 2 or Level 3 respectively; Level 3 is applied in case credit spread curves used are significantly unobservable. Under fair value accounting, fair value adjustments for liquidity and model deficiencies compensate for the lack of market observables for the Level 2 and Level 3 positions. In the global bond IPV process market prices of Level 1 bonds and pricing models for illiquid bonds are regularly verified for accuracy. Structured Financial Products The Group determines the fair value of structured financial products not quoted on active markets using the appropriate derivative valuation methodology given the nature of the embedded structure (when this is not to be separated). Such instruments are classified as Level 2 or Level 3 depending on the observability of significant inputs to the model. Asset Backed Securities UniCredit valuation process relies on internal policies centered on: • extension and implementation across all the Group’s Legal Entities of an independent Price Verification (IPV) process suited to the changed market conditions for Structured Credit Bonds; • integration of current Fair Value Adjustments Policy. According to the IPV process the quality of a price is assessed based upon the availability of quotes of independent market players for identical assets. The process relies first on consensus data provider as reliable collector of market quotes. As a second step, prices are assessed by benchmarking each security to a pool of similar securities with available market quotes. An alternative approach consists in evaluating the instrument through the use of quantitative pricing models, which are applicable every time that information regarding market participants assumptions on model parameters are reasonably made available without excessive costs or efforts. Derivatives Fair value of derivatives not traded in an active market is determined using a mark-to-model valuation technique. In such cases, where active markets exist for its component parts, then fair value is determined on the basis of the relevant market prices for the component parts. Valuation techniques that are based on significant inputs that are observable are referred to as Level 2 valuations, while those based on techniques that use significant unobservable inputs are referred to as Level 3 valuations. Equity instruments Equity Instruments are assigned to Level 1 when a quoted price is available on a liquid market and to Level 3 when no quotations are available or quotations have been suspended indefinitely. These instruments are classifies as Level 2 only when trading volume on the market where the instrument is quoted has decreased significantly. For equity instruments measured at cost an impairment is given, if the carrying amount exceeds the recoverable amount significantly and/or over a prolonged period of time. 18 As far as Italian Government bonds are concerned, it is worth stressing they are typically exchanged on the MTS market which is largely acknowledged as the main liquid platform for this kind of asset. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 172 2018 Annual Report and Accounts · UniCredit A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used Hereby we provide IFRS13 disclosure requirements about accounting portfolios measured at fair value on a recurring basis, not measured at fair value, or measured at fair value on a non-recurring basis. Assets and Liabilities measured at fair value on a recurring basis Fixed-Income Securities Fixed-Income Securities are priced in a two tier process depending on the liquidity in the respective market. Liquid instruments in active markets are marked to market and consequently positions in these instruments are disclosed in reference to Fair Value Hierarchy under Level 118. In order to assess it, within the global bond Independent Price Verification (IPV) process a daily Liquidity Indicator is defined taking into account: the number of executable bid/ask quotes, their relative sizes and spreads. Such indicator is tracked over a 20 business days time window in order to obtain a stable monthly indicator. Instruments not traded in active markets are marked to model based on implied credit spread curves derived from the former Level 1 instruments. The model maximises the use of observable input and minimises the use of unobservable inputs. With this respect, depending on the proximity of the credit spread curve applied, the bonds are disclosed as Level 2 or Level 3 respectively; Level 3 is applied in case credit spread curves used are significantly unobservable. Under fair value accounting, fair value adjustments for liquidity and model deficiencies compensate for the lack of market observables for the Level 2 and Level 3 positions. In the global bond IPV process market prices of Level 1 bonds and pricing models for illiquid bonds are regularly verified for accuracy. Structured Financial Products The Group determines the fair value of structured financial products not quoted on active markets using the appropriate derivative valuation methodology given the nature of the embedded structure (when this is not to be separated). Such instruments are classified as Level 2 or Level 3 depending on the observability of significant inputs to the model. Asset Backed Securities UniCredit valuation process relies on internal policies centered on: • extension and implementation across all the Group’s Legal Entities of an independent Price Verification (IPV) process suited to the changed market conditions for Structured Credit Bonds; • integration of current Fair Value Adjustments Policy. According to the IPV process the quality of a price is assessed based upon the availability of quotes of independent market players for identical assets. The process relies first on consensus data provider as reliable collector of market quotes. As a second step, prices are assessed by benchmarking each security to a pool of similar securities with available market quotes. An alternative approach consists in evaluating the instrument through the use of quantitative pricing models, which are applicable every time that information regarding market participants assumptions on model parameters are reasonably made available without excessive costs or efforts. Derivatives Fair value of derivatives not traded in an active market is determined using a mark-to-model valuation technique. In such cases, where active markets exist for its component parts, then fair value is determined on the basis of the relevant market prices for the component parts. Valuation techniques that are based on significant inputs that are observable are referred to as Level 2 valuations, while those based on techniques that use significant unobservable inputs are referred to as Level 3 valuations. Equity instruments Equity Instruments are assigned to Level 1 when a quoted price is available on a liquid market and to Level 3 when no quotations are available or quotations have been suspended indefinitely. These instruments are classifies as Level 2 only when trading volume on the market where the instrument is quoted has decreased significantly. For equity instruments measured at cost an impairment is given, if the carrying amount exceeds the recoverable amount significantly and/or over a prolonged period of time. 18 As far as Italian Government bonds are concerned, it is worth stressing they are typically exchanged on the MTS market which is largely acknowledged as the main liquid platform for this kind of asset. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 173 Investment funds The Group holds investments in certain investment funds that publish net asset value (NAV) per share, including mutual funds, private equity funds, hedge funds (including funds of funds) and real estate funds. The Group’s investments include co-investments in funds that are managed by the Group and investments in funds that are managed by third parties and in particular: Real Estate Funds Real Estate Funds are mapped to Level 1 when quoted prices are available on an active market; when this condition does not hold, Real Estate Funds are disclosed as Level 3 and they are evaluated through an adequate credit adjustment of the NAV based on the specific features of each fund. Other funds The Group holds investments also in mutual funds, hedge funds and private equity funds. Funds are usually assigned to Level 1 when a quoted price is available on an active market. Funds are disclosed as Level 2 or Level 3 depending on NAV availability, portfolio transparency and possible issues relating to position write-off. Property, plant and equipment measured at fair value The Group owns property, plant and equipment held for investment purposes, which are valued according to the fair value model for Real Estate investments linked to liabilities that generate a return on investments themselves. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Given the current portfolio composition, most of the positions are at level 3. Fair Value Adjustments (FVA) Fair value adjustment is defined as the amount to be added either to the market observed mid-price or to the theoretical price generated by a valuation model with the aim of obtaining a fair value of the position. Therefore FVA are aimed at insuring that the fair value reflects the actual exit price of a certain position. Below a list of adjustments: • Credit/Debit valuation adjustment (CVA/DVA); • model Risk; • close-out Costs; • other Adjustments. Credit/Debit valuation adjustment (CVA/DVA) Credit valuation adjustments (CVAs) and debit valuation adjustments (DVAs) are incorporated into derivative valuations to reflect the impact on fair value of counterparty credit risk and UniCredit own credit quality respectively. UniCredit CVA/DVA methodology is based on the following inputs: • EAD derived by simulation techniques. Simulated exposures also take into account Specific Wrong-Way Risk that arises from transactions where there is a correlation between counterparty credit risk and the underlying derivative risk factors; • PD implied by current market default rates, obtained from Credit Default Swaps; • LGD based on the estimated level of expected recovery should a counterparty default and implied by current market default rates, obtained from credit default swaps. As of 31 December 2018, net CVA/DVA cumulative adjustment, relating to performing counterparts, amounts to €125 million negative. The part related to own credit spread evolution, which is filtered out from regulatory capital (accordingly to CRDIV), amounts to €82 million negative. Funding Cost and Benefit Adjustment (FCA/FBA) Funding Valuation Adjustment (FundVA) is the sum of a Funding Cost Adjustment (FCA) and of a Funding Benefit Adjustment (FBA) that indeed accounts for the expected future funding costs/benefits for derivatives that are not fully collateralised. Most material contributors are in-the-money trades with uncollateralised counterparties. UniCredit FVA methodology is based on the following inputs: • positive and Negative exposure profiles derived leveraging on a risk-neutral spin-off of the Counterparty Credit Risk internal model; • PD term structure implied by current market default rates obtained from credit default swaps; • a funding spread curve that is representative of the average funding spread of peer financial groups. As of 31 December 2018 the Fair Value Adjustment component (FundVA) reflect into P&L amounts to €120.75 million negative. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 173 Investment funds The Group holds investments in certain investment funds that publish net asset value (NAV) per share, including mutual funds, private equity funds, hedge funds (including funds of funds) and real estate funds. The Group’s investments include co-investments in funds that are managed by the Group and investments in funds that are managed by third parties and in particular: Real Estate Funds Real Estate Funds are mapped to Level 1 when quoted prices are available on an active market; when this condition does not hold, Real Estate Funds are disclosed as Level 3 and they are evaluated through an adequate credit adjustment of the NAV based on the specific features of each fund. Other funds The Group holds investments also in mutual funds, hedge funds and private equity funds. Funds are usually assigned to Level 1 when a quoted price is available on an active market. Funds are disclosed as Level 2 or Level 3 depending on NAV availability, portfolio transparency and possible issues relating to position write-off. Property, plant and equipment measured at fair value The Group owns property, plant and equipment held for investment purposes, which are valued according to the fair value model for Real Estate investments linked to liabilities that generate a return on investments themselves. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Given the current portfolio composition, most of the positions are at level 3. Fair Value Adjustments (FVA) Fair value adjustment is defined as the amount to be added either to the market observed mid-price or to the theoretical price generated by a valuation model with the aim of obtaining a fair value of the position. Therefore FVA are aimed at insuring that the fair value reflects the actual exit price of a certain position. Below a list of adjustments: • Credit/Debit valuation adjustment (CVA/DVA); • model Risk; • close-out Costs; • other Adjustments. Credit/Debit valuation adjustment (CVA/DVA) Credit valuation adjustments (CVAs) and debit valuation adjustments (DVAs) are incorporated into derivative valuations to reflect the impact on fair value of counterparty credit risk and UniCredit own credit quality respectively. UniCredit CVA/DVA methodology is based on the following inputs: • EAD derived by simulation techniques. Simulated exposures also take into account Specific Wrong-Way Risk that arises from transactions where there is a correlation between counterparty credit risk and the underlying derivative risk factors; • PD implied by current market default rates, obtained from Credit Default Swaps; • LGD based on the estimated level of expected recovery should a counterparty default and implied by current market default rates, obtained from credit default swaps. As of 31 December 2018, net CVA/DVA cumulative adjustment, relating to performing counterparts, amounts to €125 million negative. The part related to own credit spread evolution, which is filtered out from regulatory capital (accordingly to CRDIV), amounts to €82 million negative. Funding Cost and Benefit Adjustment (FCA/FBA) Funding Valuation Adjustment (FundVA) is the sum of a Funding Cost Adjustment (FCA) and of a Funding Benefit Adjustment (FBA) that indeed accounts for the expected future funding costs/benefits for derivatives that are not fully collateralised. Most material contributors are in-the-money trades with uncollateralised counterparties. UniCredit FVA methodology is based on the following inputs: • positive and Negative exposure profiles derived leveraging on a risk-neutral spin-off of the Counterparty Credit Risk internal model; • PD term structure implied by current market default rates obtained from credit default swaps; • a funding spread curve that is representative of the average funding spread of peer financial groups. As of 31 December 2018 the Fair Value Adjustment component (FundVA) reflect into P&L amounts to €120.75 million negative. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 173 Investment funds The Group holds investments in certain investment funds that publish net asset value (NAV) per share, including mutual funds, private equity funds, hedge funds (including funds of funds) and real estate funds. The Group’s investments include co-investments in funds that are managed by the Group and investments in funds that are managed by third parties and in particular: Real Estate Funds Real Estate Funds are mapped to Level 1 when quoted prices are available on an active market; when this condition does not hold, Real Estate Funds are disclosed as Level 3 and they are evaluated through an adequate credit adjustment of the NAV based on the specific features of each fund. Other funds The Group holds investments also in mutual funds, hedge funds and private equity funds. Funds are usually assigned to Level 1 when a quoted price is available on an active market. Funds are disclosed as Level 2 or Level 3 depending on NAV availability, portfolio transparency and possible issues relating to position write-off. Property, plant and equipment measured at fair value The Group owns property, plant and equipment held for investment purposes, which are valued according to the fair value model for Real Estate investments linked to liabilities that generate a return on investments themselves. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Given the current portfolio composition, most of the positions are at level 3. Fair Value Adjustments (FVA) Fair value adjustment is defined as the amount to be added either to the market observed mid-price or to the theoretical price generated by a valuation model with the aim of obtaining a fair value of the position. Therefore FVA are aimed at insuring that the fair value reflects the actual exit price of a certain position. Below a list of adjustments: • Credit/Debit valuation adjustment (CVA/DVA); • model Risk; • close-out Costs; • other Adjustments. Credit/Debit valuation adjustment (CVA/DVA) Credit valuation adjustments (CVAs) and debit valuation adjustments (DVAs) are incorporated into derivative valuations to reflect the impact on fair value of counterparty credit risk and UniCredit own credit quality respectively. UniCredit CVA/DVA methodology is based on the following inputs: • EAD derived by simulation techniques. Simulated exposures also take into account Specific Wrong-Way Risk that arises from transactions where there is a correlation between counterparty credit risk and the underlying derivative risk factors; • PD implied by current market default rates, obtained from Credit Default Swaps; • LGD based on the estimated level of expected recovery should a counterparty default and implied by current market default rates, obtained from credit default swaps. As of 31 December 2018, net CVA/DVA cumulative adjustment, relating to performing counterparts, amounts to €125 million negative. The part related to own credit spread evolution, which is filtered out from regulatory capital (accordingly to CRDIV), amounts to €82 million negative. Funding Cost and Benefit Adjustment (FCA/FBA) Funding Valuation Adjustment (FundVA) is the sum of a Funding Cost Adjustment (FCA) and of a Funding Benefit Adjustment (FBA) that indeed accounts for the expected future funding costs/benefits for derivatives that are not fully collateralised. Most material contributors are in-the-money trades with uncollateralised counterparties. UniCredit FVA methodology is based on the following inputs: • positive and Negative exposure profiles derived leveraging on a risk-neutral spin-off of the Counterparty Credit Risk internal model; • PD term structure implied by current market default rates obtained from credit default swaps; • a funding spread curve that is representative of the average funding spread of peer financial groups. As of 31 December 2018 the Fair Value Adjustment component (FundVA) reflect into P&L amounts to €120.75 million negative. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 173 Investment funds The Group holds investments in certain investment funds that publish net asset value (NAV) per share, including mutual funds, private equity funds, hedge funds (including funds of funds) and real estate funds. The Group’s investments include co-investments in funds that are managed by the Group and investments in funds that are managed by third parties and in particular: Real Estate Funds Real Estate Funds are mapped to Level 1 when quoted prices are available on an active market; when this condition does not hold, Real Estate Funds are disclosed as Level 3 and they are evaluated through an adequate credit adjustment of the NAV based on the specific features of each fund. Other funds The Group holds investments also in mutual funds, hedge funds and private equity funds. Funds are usually assigned to Level 1 when a quoted price is available on an active market. Funds are disclosed as Level 2 or Level 3 depending on NAV availability, portfolio transparency and possible issues relating to position write-off. Property, plant and equipment measured at fair value The Group owns property, plant and equipment held for investment purposes, which are valued according to the fair value model for Real Estate investments linked to liabilities that generate a return on investments themselves. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Given the current portfolio composition, most of the positions are at level 3. Fair Value Adjustments (FVA) Fair value adjustment is defined as the amount to be added either to the market observed mid-price or to the theoretical price generated by a valuation model with the aim of obtaining a fair value of the position. Therefore FVA are aimed at insuring that the fair value reflects the actual exit price of a certain position. Below a list of adjustments: • Credit/Debit valuation adjustment (CVA/DVA); • model Risk; • close-out Costs; • other Adjustments. Credit/Debit valuation adjustment (CVA/DVA) Credit valuation adjustments (CVAs) and debit valuation adjustments (DVAs) are incorporated into derivative valuations to reflect the impact on fair value of counterparty credit risk and UniCredit own credit quality respectively. UniCredit CVA/DVA methodology is based on the following inputs: • EAD derived by simulation techniques. Simulated exposures also take into account Specific Wrong-Way Risk that arises from transactions where there is a correlation between counterparty credit risk and the underlying derivative risk factors; • PD implied by current market default rates, obtained from Credit Default Swaps; • LGD based on the estimated level of expected recovery should a counterparty default and implied by current market default rates, obtained from credit default swaps. As of 31 December 2018, net CVA/DVA cumulative adjustment, relating to performing counterparts, amounts to €125 million negative. The part related to own credit spread evolution, which is filtered out from regulatory capital (accordingly to CRDIV), amounts to €82 million negative. Funding Cost and Benefit Adjustment (FCA/FBA) Funding Valuation Adjustment (FundVA) is the sum of a Funding Cost Adjustment (FCA) and of a Funding Benefit Adjustment (FBA) that indeed accounts for the expected future funding costs/benefits for derivatives that are not fully collateralised. Most material contributors are in-the-money trades with uncollateralised counterparties. UniCredit FVA methodology is based on the following inputs: • positive and Negative exposure profiles derived leveraging on a risk-neutral spin-off of the Counterparty Credit Risk internal model; • PD term structure implied by current market default rates obtained from credit default swaps; • a funding spread curve that is representative of the average funding spread of peer financial groups. As of 31 December 2018 the Fair Value Adjustment component (FundVA) reflect into P&L amounts to €120.75 million negative. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 173 Investment funds The Group holds investments in certain investment funds that publish net asset value (NAV) per share, including mutual funds, private equity funds, hedge funds (including funds of funds) and real estate funds. The Group’s investments include co-investments in funds that are managed by the Group and investments in funds that are managed by third parties and in particular: Real Estate Funds Real Estate Funds are mapped to Level 1 when quoted prices are available on an active market; when this condition does not hold, Real Estate Funds are disclosed as Level 3 and they are evaluated through an adequate credit adjustment of the NAV based on the specific features of each fund. Other funds The Group holds investments also in mutual funds, hedge funds and private equity funds. Funds are usually assigned to Level 1 when a quoted price is available on an active market. Funds are disclosed as Level 2 or Level 3 depending on NAV availability, portfolio transparency and possible issues relating to position write-off. Property, plant and equipment measured at fair value The Group owns property, plant and equipment held for investment purposes, which are valued according to the fair value model for Real Estate investments linked to liabilities that generate a return on investments themselves. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Given the current portfolio composition, most of the positions are at level 3. Fair Value Adjustments (FVA) Fair value adjustment is defined as the amount to be added either to the market observed mid-price or to the theoretical price generated by a valuation model with the aim of obtaining a fair value of the position. Therefore FVA are aimed at insuring that the fair value reflects the actual exit price of a certain position. Below a list of adjustments: • Credit/Debit valuation adjustment (CVA/DVA); • model Risk; • close-out Costs; • other Adjustments. Credit/Debit valuation adjustment (CVA/DVA) Credit valuation adjustments (CVAs) and debit valuation adjustments (DVAs) are incorporated into derivative valuations to reflect the impact on fair value of counterparty credit risk and UniCredit own credit quality respectively. UniCredit CVA/DVA methodology is based on the following inputs: • EAD derived by simulation techniques. Simulated exposures also take into account Specific Wrong-Way Risk that arises from transactions where there is a correlation between counterparty credit risk and the underlying derivative risk factors; • PD implied by current market default rates, obtained from Credit Default Swaps; • LGD based on the estimated level of expected recovery should a counterparty default and implied by current market default rates, obtained from credit default swaps. As of 31 December 2018, net CVA/DVA cumulative adjustment, relating to performing counterparts, amounts to €125 million negative. The part related to own credit spread evolution, which is filtered out from regulatory capital (accordingly to CRDIV), amounts to €82 million negative. Funding Cost and Benefit Adjustment (FCA/FBA) Funding Valuation Adjustment (FundVA) is the sum of a Funding Cost Adjustment (FCA) and of a Funding Benefit Adjustment (FBA) that indeed accounts for the expected future funding costs/benefits for derivatives that are not fully collateralised. Most material contributors are in-the-money trades with uncollateralised counterparties. UniCredit FVA methodology is based on the following inputs: • positive and Negative exposure profiles derived leveraging on a risk-neutral spin-off of the Counterparty Credit Risk internal model; • PD term structure implied by current market default rates obtained from credit default swaps; • a funding spread curve that is representative of the average funding spread of peer financial groups. As of 31 December 2018 the Fair Value Adjustment component (FundVA) reflect into P&L amounts to €120.75 million negative. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 174 2018 Annual Report and Accounts · UniCredit Model Risk Financial models are used for the valuation of the financial instruments if the direct market quotes are not readily available. In general the model risk is represented by the possibility that a financial instrument’s evaluation is actually sensitive to the choice of model. It is possible to value the same financial instrument by using alternative models which could provide different results in term of pricing. The model risk adjustment refers to the risk that the actual fair value of the instrument differs from the value produced by the model. Close-out Costs It measures the implicit costs of closing an (aggregated) trading position. The position could be closed by a long position (or purchase in the case of a short position), or by entering into a new transaction (or several transactions) that offsets (hedges) the open position. The close-out costs are typically derived from the bid/ask spreads observed on the market. It accounts for the fact that a position is valued at mid but can only be closed at bid or ask. This adjustment is not needed when the position is marked at bid or ask and already represents an exit price. In addition a close-out adjustment of the NAV is applied when there are some penalties relating to position write-off in an investment fund. Other adjustments Other fair value adjustments, which are not included in the previous categories, could be taken into consideration to align the evaluation to the current exit price, also according to the level of liquidity of the market and valuation parameters, e.g. adjustment of equity prices whose quotation on the market are not representative of the effective exit price. Assets and Liabilities not measured at fair value or measured at fair value on a non-recurring basis Financial instrument not carried at fair value, for example retail loans and deposit, and credit facilities extended to corporate clients are not managed on a fair value basis. For these instruments fair value is calculated for disclosure purposes only and does not impact the balance sheet or the profit or loss. Additionally, since these instruments generally do not trade, there is significant management judgment required to determine their fair values as defined by IFRS13. Cash and cash balances Cash and cash balances are not carried at fair value on the Consolidated Balance Sheets, but they are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. Financial assets at amortised cost For the assets that are composed by securities, fair value is determined according to what explained in section “Assets and Liabilities measured at fair value on a recurring basis - Fixed Income Securities”. On the other hands, fair value for performing Loans and Receivables to banks and customers is determined using the discounted cash flow model adjusted for credit risk. Some portfolios are valued according to simplified approaches, which however take into account the financial features of the financial instruments. Property, plant and equipment held for investment purposes The fair value of property, plant and equipment held for investment purposes is determined on the basis of a valuation by an independent appraiser who holds a recognised and relevant professional qualification which perform its valuation mainly on the basis of an indirect knowledge of the assets through the information made available by the owner and relating to the localization, consistency, destination and in consideration of market analysis. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Financial liabilities at amortised cost Fair value for debt securities in issue is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s subordinated and non-subordinated risk curves. On the other hands, Fair value for other financial liabilities is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s senior and subordinated risk curves. Description of the valuation techniques Specific valuation techniques are used to value positions for which a market price is not directly observable from market sources. The Group uses well known valuation techniques for determining fair values of financial and non-financial instruments that are not actively traded and quoted. The valuation techniques used for Level 2 and 3 assets and liabilities are described below. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 174 2018 Annual Report and Accounts · UniCredit Model Risk Financial models are used for the valuation of the financial instruments if the direct market quotes are not readily available. In general the model risk is represented by the possibility that a financial instrument’s evaluation is actually sensitive to the choice of model. It is possible to value the same financial instrument by using alternative models which could provide different results in term of pricing. The model risk adjustment refers to the risk that the actual fair value of the instrument differs from the value produced by the model. Close-out Costs It measures the implicit costs of closing an (aggregated) trading position. The position could be closed by a long position (or purchase in the case of a short position), or by entering into a new transaction (or several transactions) that offsets (hedges) the open position. The close-out costs are typically derived from the bid/ask spreads observed on the market. It accounts for the fact that a position is valued at mid but can only be closed at bid or ask. This adjustment is not needed when the position is marked at bid or ask and already represents an exit price. In addition a close-out adjustment of the NAV is applied when there are some penalties relating to position write-off in an investment fund. Other adjustments Other fair value adjustments, which are not included in the previous categories, could be taken into consideration to align the evaluation to the current exit price, also according to the level of liquidity of the market and valuation parameters, e.g. adjustment of equity prices whose quotation on the market are not representative of the effective exit price. Assets and Liabilities not measured at fair value or measured at fair value on a non-recurring basis Financial instrument not carried at fair value, for example retail loans and deposit, and credit facilities extended to corporate clients are not managed on a fair value basis. For these instruments fair value is calculated for disclosure purposes only and does not impact the balance sheet or the profit or loss. Additionally, since these instruments generally do not trade, there is significant management judgment required to determine their fair values as defined by IFRS13. Cash and cash balances Cash and cash balances are not carried at fair value on the Consolidated Balance Sheets, but they are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. Financial assets at amortised cost For the assets that are composed by securities, fair value is determined according to what explained in section “Assets and Liabilities measured at fair value on a recurring basis - Fixed Income Securities”. On the other hands, fair value for performing Loans and Receivables to banks and customers is determined using the discounted cash flow model adjusted for credit risk. Some portfolios are valued according to simplified approaches, which however take into account the financial features of the financial instruments. Property, plant and equipment held for investment purposes The fair value of property, plant and equipment held for investment purposes is determined on the basis of a valuation by an independent appraiser who holds a recognised and relevant professional qualification which perform its valuation mainly on the basis of an indirect knowledge of the assets through the information made available by the owner and relating to the localization, consistency, destination and in consideration of market analysis. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Financial liabilities at amortised cost Fair value for debt securities in issue is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s subordinated and non-subordinated risk curves. On the other hands, Fair value for other financial liabilities is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s senior and subordinated risk curves. Description of the valuation techniques Specific valuation techniques are used to value positions for which a market price is not directly observable from market sources. The Group uses well known valuation techniques for determining fair values of financial and non-financial instruments that are not actively traded and quoted. The valuation techniques used for Level 2 and 3 assets and liabilities are described below. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 174 2018 Annual Report and Accounts · UniCredit Model Risk Financial models are used for the valuation of the financial instruments if the direct market quotes are not readily available. In general the model risk is represented by the possibility that a financial instrument’s evaluation is actually sensitive to the choice of model. It is possible to value the same financial instrument by using alternative models which could provide different results in term of pricing. The model risk adjustment refers to the risk that the actual fair value of the instrument differs from the value produced by the model. Close-out Costs It measures the implicit costs of closing an (aggregated) trading position. The position could be closed by a long position (or purchase in the case of a short position), or by entering into a new transaction (or several transactions) that offsets (hedges) the open position. The close-out costs are typically derived from the bid/ask spreads observed on the market. It accounts for the fact that a position is valued at mid but can only be closed at bid or ask. This adjustment is not needed when the position is marked at bid or ask and already represents an exit price. In addition a close-out adjustment of the NAV is applied when there are some penalties relating to position write-off in an investment fund. Other adjustments Other fair value adjustments, which are not included in the previous categories, could be taken into consideration to align the evaluation to the current exit price, also according to the level of liquidity of the market and valuation parameters, e.g. adjustment of equity prices whose quotation on the market are not representative of the effective exit price. Assets and Liabilities not measured at fair value or measured at fair value on a non-recurring basis Financial instrument not carried at fair value, for example retail loans and deposit, and credit facilities extended to corporate clients are not managed on a fair value basis. For these instruments fair value is calculated for disclosure purposes only and does not impact the balance sheet or the profit or loss. Additionally, since these instruments generally do not trade, there is significant management judgment required to determine their fair values as defined by IFRS13. Cash and cash balances Cash and cash balances are not carried at fair value on the Consolidated Balance Sheets, but they are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. Financial assets at amortised cost For the assets that are composed by securities, fair value is determined according to what explained in section “Assets and Liabilities measured at fair value on a recurring basis - Fixed Income Securities”. On the other hands, fair value for performing Loans and Receivables to banks and customers is determined using the discounted cash flow model adjusted for credit risk. Some portfolios are valued according to simplified approaches, which however take into account the financial features of the financial instruments. Property, plant and equipment held for investment purposes The fair value of property, plant and equipment held for investment purposes is determined on the basis of a valuation by an independent appraiser who holds a recognised and relevant professional qualification which perform its valuation mainly on the basis of an indirect knowledge of the assets through the information made available by the owner and relating to the localization, consistency, destination and in consideration of market analysis. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Financial liabilities at amortised cost Fair value for debt securities in issue is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s subordinated and non-subordinated risk curves. On the other hands, Fair value for other financial liabilities is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s senior and subordinated risk curves. Description of the valuation techniques Specific valuation techniques are used to value positions for which a market price is not directly observable from market sources. The Group uses well known valuation techniques for determining fair values of financial and non-financial instruments that are not actively traded and quoted. The valuation techniques used for Level 2 and 3 assets and liabilities are described below. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 174 2018 Annual Report and Accounts · UniCredit Model Risk Financial models are used for the valuation of the financial instruments if the direct market quotes are not readily available. In general the model risk is represented by the possibility that a financial instrument’s evaluation is actually sensitive to the choice of model. It is possible to value the same financial instrument by using alternative models which could provide different results in term of pricing. The model risk adjustment refers to the risk that the actual fair value of the instrument differs from the value produced by the model. Close-out Costs It measures the implicit costs of closing an (aggregated) trading position. The position could be closed by a long position (or purchase in the case of a short position), or by entering into a new transaction (or several transactions) that offsets (hedges) the open position. The close-out costs are typically derived from the bid/ask spreads observed on the market. It accounts for the fact that a position is valued at mid but can only be closed at bid or ask. This adjustment is not needed when the position is marked at bid or ask and already represents an exit price. In addition a close-out adjustment of the NAV is applied when there are some penalties relating to position write-off in an investment fund. Other adjustments Other fair value adjustments, which are not included in the previous categories, could be taken into consideration to align the evaluation to the current exit price, also according to the level of liquidity of the market and valuation parameters, e.g. adjustment of equity prices whose quotation on the market are not representative of the effective exit price. Assets and Liabilities not measured at fair value or measured at fair value on a non-recurring basis Financial instrument not carried at fair value, for example retail loans and deposit, and credit facilities extended to corporate clients are not managed on a fair value basis. For these instruments fair value is calculated for disclosure purposes only and does not impact the balance sheet or the profit or loss. Additionally, since these instruments generally do not trade, there is significant management judgment required to determine their fair values as defined by IFRS13. Cash and cash balances Cash and cash balances are not carried at fair value on the Consolidated Balance Sheets, but they are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. Financial assets at amortised cost For the assets that are composed by securities, fair value is determined according to what explained in section “Assets and Liabilities measured at fair value on a recurring basis - Fixed Income Securities”. On the other hands, fair value for performing Loans and Receivables to banks and customers is determined using the discounted cash flow model adjusted for credit risk. Some portfolios are valued according to simplified approaches, which however take into account the financial features of the financial instruments. Property, plant and equipment held for investment purposes The fair value of property, plant and equipment held for investment purposes is determined on the basis of a valuation by an independent appraiser who holds a recognised and relevant professional qualification which perform its valuation mainly on the basis of an indirect knowledge of the assets through the information made available by the owner and relating to the localization, consistency, destination and in consideration of market analysis. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Financial liabilities at amortised cost Fair value for debt securities in issue is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s subordinated and non-subordinated risk curves. On the other hands, Fair value for other financial liabilities is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s senior and subordinated risk curves. Description of the valuation techniques Specific valuation techniques are used to value positions for which a market price is not directly observable from market sources. The Group uses well known valuation techniques for determining fair values of financial and non-financial instruments that are not actively traded and quoted. The valuation techniques used for Level 2 and 3 assets and liabilities are described below. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 174 2018 Annual Report and Accounts · UniCredit Model Risk Financial models are used for the valuation of the financial instruments if the direct market quotes are not readily available. In general the model risk is represented by the possibility that a financial instrument’s evaluation is actually sensitive to the choice of model. It is possible to value the same financial instrument by using alternative models which could provide different results in term of pricing. The model risk adjustment refers to the risk that the actual fair value of the instrument differs from the value produced by the model. Close-out Costs It measures the implicit costs of closing an (aggregated) trading position. The position could be closed by a long position (or purchase in the case of a short position), or by entering into a new transaction (or several transactions) that offsets (hedges) the open position. The close-out costs are typically derived from the bid/ask spreads observed on the market. It accounts for the fact that a position is valued at mid but can only be closed at bid or ask. This adjustment is not needed when the position is marked at bid or ask and already represents an exit price. In addition a close-out adjustment of the NAV is applied when there are some penalties relating to position write-off in an investment fund. Other adjustments Other fair value adjustments, which are not included in the previous categories, could be taken into consideration to align the evaluation to the current exit price, also according to the level of liquidity of the market and valuation parameters, e.g. adjustment of equity prices whose quotation on the market are not representative of the effective exit price. Assets and Liabilities not measured at fair value or measured at fair value on a non-recurring basis Financial instrument not carried at fair value, for example retail loans and deposit, and credit facilities extended to corporate clients are not managed on a fair value basis. For these instruments fair value is calculated for disclosure purposes only and does not impact the balance sheet or the profit or loss. Additionally, since these instruments generally do not trade, there is significant management judgment required to determine their fair values as defined by IFRS13. Cash and cash balances Cash and cash balances are not carried at fair value on the Consolidated Balance Sheets, but they are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. Financial assets at amortised cost For the assets that are composed by securities, fair value is determined according to what explained in section “Assets and Liabilities measured at fair value on a recurring basis - Fixed Income Securities”. On the other hands, fair value for performing Loans and Receivables to banks and customers is determined using the discounted cash flow model adjusted for credit risk. Some portfolios are valued according to simplified approaches, which however take into account the financial features of the financial instruments. Property, plant and equipment held for investment purposes The fair value of property, plant and equipment held for investment purposes is determined on the basis of a valuation by an independent appraiser who holds a recognised and relevant professional qualification which perform its valuation mainly on the basis of an indirect knowledge of the assets through the information made available by the owner and relating to the localization, consistency, destination and in consideration of market analysis. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Financial liabilities at amortised cost Fair value for debt securities in issue is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s subordinated and non-subordinated risk curves. On the other hands, Fair value for other financial liabilities is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s senior and subordinated risk curves. Description of the valuation techniques Specific valuation techniques are used to value positions for which a market price is not directly observable from market sources. The Group uses well known valuation techniques for determining fair values of financial and non-financial instruments that are not actively traded and quoted. The valuation techniques used for Level 2 and 3 assets and liabilities are described below. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 175 Option Pricing Model Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return. Discounted cash flow Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument. The model requires the estimation of the cash flow and the adoption of market’s parameters for the discounting: discount rate or discount margin reflects the credit and/or funding spreads required by the market for instruments with similar risk and liquidity profiles to produce a “discounted value”. The fair value of the contract is given by the sum of the present values of future cash flows. Hazard Rate Model The valuation of CDS instruments requires the knowledge of the entity’s survival probability at future dates. The estimate of this probability curve uses the standard model for survival probabilities and requires as parameters the credit default swap market quotes on standard future dates in addition to the risk free curve and the expected recovery rate. The hazard rate is part of the described process and it indicates the instantaneous probability of default at different future instants. Market Approach A valuation technique that uses prices generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities. Gordon Growth Model This is the model used to determine the intrinsic value of an equity investment, based on a series of future dividends which grow at a constant rate. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the present value of future dividends. Dividend Discount Model This model is used to determine the value of an equity investment, based on the series of predicted future dividends. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the fair value of an equity share as the sum of the present value of all future dividends. Adjusted NAV Net asset value is the total value of a fund’s assets less liabilities. An increase in net asset value would result in an increase in a fair value measure. Usually for funds classified as Level 3, NAV represents a risk free valuation, therefore in this case the NAV is adjusted so as to consider the issuer’s default risk. Description of the inputs used to measure the fair value of items categorized in Level 2 and 3 Hereby a description of the main significant inputs used to measure the fair value of items categorized in Level 2 and 3 of the fair value hierarchy. Volatility Volatility is a measure for variation of price of a financial instrument over time. In particular, volatility measures the speed and severity of market price changes for an instrument, parameter or market index given the particular instrument, parameter or index changes in value over time, expressed as a percentage of relative change in price. The higher the volatility of the underlying, the riskier the instrument. In general, long option positions benefit from increases in volatility, whereas short option positions will suffer losses. There are different types of volatility: • volatility of interest rate; • inflation volatility; • volatility of foreign exchange; • volatility of equity stocks, equity or other indexes/prices. Correlation Correlation is a measure of the relationship between the movements of two variables. When parameters are positively correlated, an increase in correlation results in a higher fair value measure. On the contrary, given a short correlation position, an increase in correlation, in isolation, would generally result in a decrease in a fair value measure. Therefore changes in correlation levels can have a major impact, favorable or unfavorable, on the fair value of an instrument, depending on the type of correlation. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 175 Option Pricing Model Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return. Discounted cash flow Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument. The model requires the estimation of the cash flow and the adoption of market’s parameters for the discounting: discount rate or discount margin reflects the credit and/or funding spreads required by the market for instruments with similar risk and liquidity profiles to produce a “discounted value”. The fair value of the contract is given by the sum of the present values of future cash flows. Hazard Rate Model The valuation of CDS instruments requires the knowledge of the entity’s survival probability at future dates. The estimate of this probability curve uses the standard model for survival probabilities and requires as parameters the credit default swap market quotes on standard future dates in addition to the risk free curve and the expected recovery rate. The hazard rate is part of the described process and it indicates the instantaneous probability of default at different future instants. Market Approach A valuation technique that uses prices generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities. Gordon Growth Model This is the model used to determine the intrinsic value of an equity investment, based on a series of future dividends which grow at a constant rate. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the present value of future dividends. Dividend Discount Model This model is used to determine the value of an equity investment, based on the series of predicted future dividends. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the fair value of an equity share as the sum of the present value of all future dividends. Adjusted NAV Net asset value is the total value of a fund’s assets less liabilities. An increase in net asset value would result in an increase in a fair value measure. Usually for funds classified as Level 3, NAV represents a risk free valuation, therefore in this case the NAV is adjusted so as to consider the issuer’s default risk. Description of the inputs used to measure the fair value of items categorized in Level 2 and 3 Hereby a description of the main significant inputs used to measure the fair value of items categorized in Level 2 and 3 of the fair value hierarchy. Volatility Volatility is a measure for variation of price of a financial instrument over time. In particular, volatility measures the speed and severity of market price changes for an instrument, parameter or market index given the particular instrument, parameter or index changes in value over time, expressed as a percentage of relative change in price. The higher the volatility of the underlying, the riskier the instrument. In general, long option positions benefit from increases in volatility, whereas short option positions will suffer losses. There are different types of volatility: • volatility of interest rate; • inflation volatility; • volatility of foreign exchange; • volatility of equity stocks, equity or other indexes/prices. Correlation Correlation is a measure of the relationship between the movements of two variables. When parameters are positively correlated, an increase in correlation results in a higher fair value measure. On the contrary, given a short correlation position, an increase in correlation, in isolation, would generally result in a decrease in a fair value measure. Therefore changes in correlation levels can have a major impact, favorable or unfavorable, on the fair value of an instrument, depending on the type of correlation. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 175 Option Pricing Model Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return. Discounted cash flow Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument. The model requires the estimation of the cash flow and the adoption of market’s parameters for the discounting: discount rate or discount margin reflects the credit and/or funding spreads required by the market for instruments with similar risk and liquidity profiles to produce a “discounted value”. The fair value of the contract is given by the sum of the present values of future cash flows. Hazard Rate Model The valuation of CDS instruments requires the knowledge of the entity’s survival probability at future dates. The estimate of this probability curve uses the standard model for survival probabilities and requires as parameters the credit default swap market quotes on standard future dates in addition to the risk free curve and the expected recovery rate. The hazard rate is part of the described process and it indicates the instantaneous probability of default at different future instants. Market Approach A valuation technique that uses prices generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities. Gordon Growth Model This is the model used to determine the intrinsic value of an equity investment, based on a series of future dividends which grow at a constant rate. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the present value of future dividends. Dividend Discount Model This model is used to determine the value of an equity investment, based on the series of predicted future dividends. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the fair value of an equity share as the sum of the present value of all future dividends. Adjusted NAV Net asset value is the total value of a fund’s assets less liabilities. An increase in net asset value would result in an increase in a fair value measure. Usually for funds classified as Level 3, NAV represents a risk free valuation, therefore in this case the NAV is adjusted so as to consider the issuer’s default risk. Description of the inputs used to measure the fair value of items categorized in Level 2 and 3 Hereby a description of the main significant inputs used to measure the fair value of items categorized in Level 2 and 3 of the fair value hierarchy. Volatility Volatility is a measure for variation of price of a financial instrument over time. In particular, volatility measures the speed and severity of market price changes for an instrument, parameter or market index given the particular instrument, parameter or index changes in value over time, expressed as a percentage of relative change in price. The higher the volatility of the underlying, the riskier the instrument. In general, long option positions benefit from increases in volatility, whereas short option positions will suffer losses. There are different types of volatility: • volatility of interest rate; • inflation volatility; • volatility of foreign exchange; • volatility of equity stocks, equity or other indexes/prices. Correlation Correlation is a measure of the relationship between the movements of two variables. When parameters are positively correlated, an increase in correlation results in a higher fair value measure. On the contrary, given a short correlation position, an increase in correlation, in isolation, would generally result in a decrease in a fair value measure. Therefore changes in correlation levels can have a major impact, favorable or unfavorable, on the fair value of an instrument, depending on the type of correlation. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 175 Option Pricing Model Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return. Discounted cash flow Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument. The model requires the estimation of the cash flow and the adoption of market’s parameters for the discounting: discount rate or discount margin reflects the credit and/or funding spreads required by the market for instruments with similar risk and liquidity profiles to produce a “discounted value”. The fair value of the contract is given by the sum of the present values of future cash flows. Hazard Rate Model The valuation of CDS instruments requires the knowledge of the entity’s survival probability at future dates. The estimate of this probability curve uses the standard model for survival probabilities and requires as parameters the credit default swap market quotes on standard future dates in addition to the risk free curve and the expected recovery rate. The hazard rate is part of the described process and it indicates the instantaneous probability of default at different future instants. Market Approach A valuation technique that uses prices generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities. Gordon Growth Model This is the model used to determine the intrinsic value of an equity investment, based on a series of future dividends which grow at a constant rate. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the present value of future dividends. Dividend Discount Model This model is used to determine the value of an equity investment, based on the series of predicted future dividends. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the fair value of an equity share as the sum of the present value of all future dividends. Adjusted NAV Net asset value is the total value of a fund’s assets less liabilities. An increase in net asset value would result in an increase in a fair value measure. Usually for funds classified as Level 3, NAV represents a risk free valuation, therefore in this case the NAV is adjusted so as to consider the issuer’s default risk. Description of the inputs used to measure the fair value of items categorized in Level 2 and 3 Hereby a description of the main significant inputs used to measure the fair value of items categorized in Level 2 and 3 of the fair value hierarchy. Volatility Volatility is a measure for variation of price of a financial instrument over time. In particular, volatility measures the speed and severity of market price changes for an instrument, parameter or market index given the particular instrument, parameter or index changes in value over time, expressed as a percentage of relative change in price. The higher the volatility of the underlying, the riskier the instrument. In general, long option positions benefit from increases in volatility, whereas short option positions will suffer losses. There are different types of volatility: • volatility of interest rate; • inflation volatility; • volatility of foreign exchange; • volatility of equity stocks, equity or other indexes/prices. Correlation Correlation is a measure of the relationship between the movements of two variables. When parameters are positively correlated, an increase in correlation results in a higher fair value measure. On the contrary, given a short correlation position, an increase in correlation, in isolation, would generally result in a decrease in a fair value measure. Therefore changes in correlation levels can have a major impact, favorable or unfavorable, on the fair value of an instrument, depending on the type of correlation. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 175 Option Pricing Model Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return. Discounted cash flow Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument. The model requires the estimation of the cash flow and the adoption of market’s parameters for the discounting: discount rate or discount margin reflects the credit and/or funding spreads required by the market for instruments with similar risk and liquidity profiles to produce a “discounted value”. The fair value of the contract is given by the sum of the present values of future cash flows. Hazard Rate Model The valuation of CDS instruments requires the knowledge of the entity’s survival probability at future dates. The estimate of this probability curve uses the standard model for survival probabilities and requires as parameters the credit default swap market quotes on standard future dates in addition to the risk free curve and the expected recovery rate. The hazard rate is part of the described process and it indicates the instantaneous probability of default at different future instants. Market Approach A valuation technique that uses prices generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities. Gordon Growth Model This is the model used to determine the intrinsic value of an equity investment, based on a series of future dividends which grow at a constant rate. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the present value of future dividends. Dividend Discount Model This model is used to determine the value of an equity investment, based on the series of predicted future dividends. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the fair value of an equity share as the sum of the present value of all future dividends. Adjusted NAV Net asset value is the total value of a fund’s assets less liabilities. An increase in net asset value would result in an increase in a fair value measure. Usually for funds classified as Level 3, NAV represents a risk free valuation, therefore in this case the NAV is adjusted so as to consider the issuer’s default risk. Description of the inputs used to measure the fair value of items categorized in Level 2 and 3 Hereby a description of the main significant inputs used to measure the fair value of items categorized in Level 2 and 3 of the fair value hierarchy. Volatility Volatility is a measure for variation of price of a financial instrument over time. In particular, volatility measures the speed and severity of market price changes for an instrument, parameter or market index given the particular instrument, parameter or index changes in value over time, expressed as a percentage of relative change in price. The higher the volatility of the underlying, the riskier the instrument. In general, long option positions benefit from increases in volatility, whereas short option positions will suffer losses. There are different types of volatility: • volatility of interest rate; • inflation volatility; • volatility of foreign exchange; • volatility of equity stocks, equity or other indexes/prices. Correlation Correlation is a measure of the relationship between the movements of two variables. When parameters are positively correlated, an increase in correlation results in a higher fair value measure. On the contrary, given a short correlation position, an increase in correlation, in isolation, would generally result in a decrease in a fair value measure. Therefore changes in correlation levels can have a major impact, favorable or unfavorable, on the fair value of an instrument, depending on the type of correlation. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 176 2018 Annual Report and Accounts · UniCredit Correlation is a pricing input for a derivative product where the payoff is driven by multiple underlying risks. The level of correlation used in the valuation of derivatives with multiple underlying risks depends on a number of factors including the nature of those risks. Dividends The derivation of a forward price for an individual stock or index is important both for measuring fair value for forward or swap contracts and for measuring fair value using option pricing models. The relationship between the current stock price and the forward price is based on a combination of expected future dividend levels and payment timings and, to a lesser extent, the relevant funding rates applicable to the stock in question. The dividend yield and timing represents the most significant parameter in determining fair value for instruments that are sensitive to an equity forward price. Interest rate curve The calculation of the interest rate curve is based on standard bootstrapping techniques relying on the set of quotes of appropriate financial instruments, for each currency, which turns interest rates in zero-coupon. Less liquid currencies interest curve refer to the rates in currencies for which a market liquidity doesn’t exist in terms of tightness, depth and resiliency. The illiquidity of these input data impacts directly the valuation of securities or derivatives expressed in illiquid currencies. Inflation Swap rate The determination of forward levels for inflation indexes is based on swap quote over inflation indexes. Swap over inflation may present a low liquidity level whether there is no liquid market in terms of rigidity, deepness and resistance. The illiquidity of those inputs has an indirect impact on the valuation of a debt instrument linked to inflation (inflation-linked note) or in case of a derivative over inflation. Credit spreads Different valuation models, especially for credit derivatives require an input for the credit spread which reflects the credit quality of the associated credit name. The credit spread of a particular security is quoted in relation to the yield on a benchmark security or reference rate, typically either U.S. Treasury or LIBOR/EURIBOR and is generally expressed in terms of basis points. The ranges for credit spreads cover a variety of underlings (index and single names), regions, sectors, maturities and credit qualities (high-yield and investment-grade). The broad range of this population gives rise to the width of the ranges of unobservable inputs. Loss Given Default (LGD)/Recovery Rate LGD also known as loss severity (the inverse concept is the recovery rate) represents the percentage of contractual cash flows lost in the event of a default, expressed as the net amount of loss relating to the outstanding balance. An increase in the loss severity, in isolation, would result in a decrease in a fair value measure. Loss given default is facility-specific because such losses are generally understood to be influenced by key transaction characteristics such as the presence of collateral and the degree of subordination. Price Where market prices are not observable, comparison via proxy is used to measure a fair value. Prepayment Rate (PR) The PR is the estimated rate at which forecasted prepayments of principal of the related debt instrument are expected to occur. Voluntary unscheduled payments (prepayments) change the future cash flows for the investor and thereby change the fair value of the security. In general as prepayment speeds change, the weighted average life of the security changes, which impacts the valuation either positively or negatively, depending upon the nature of the security and the direction of the change in the weighted average life. Probability of Default (PD) The probability of default is an estimate of the likelihood of not collecting contractual amounts. It provides an estimate of the likelihood that a client of a financial institution will be unable to meet its debt obligations over a particular time horizon. The PD of an obligor not only depends on the risk characteristics of that particular obligor but also the economic environment and the degree to which it affects the obligor. Early conversion The early conversion is the estimate of the probability that the liability would be converted into equity earlier than the terms stated. EBITDA EBITDA is an indicator of the current operating profitability of the business, that is the income generated by the use of the company’s assets and the commercialisation of the products manufactured. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 176 2018 Annual Report and Accounts · UniCredit Correlation is a pricing input for a derivative product where the payoff is driven by multiple underlying risks. The level of correlation used in the valuation of derivatives with multiple underlying risks depends on a number of factors including the nature of those risks. Dividends The derivation of a forward price for an individual stock or index is important both for measuring fair value for forward or swap contracts and for measuring fair value using option pricing models. The relationship between the current stock price and the forward price is based on a combination of expected future dividend levels and payment timings and, to a lesser extent, the relevant funding rates applicable to the stock in question. The dividend yield and timing represents the most significant parameter in determining fair value for instruments that are sensitive to an equity forward price. Interest rate curve The calculation of the interest rate curve is based on standard bootstrapping techniques relying on the set of quotes of appropriate financial instruments, for each currency, which turns interest rates in zero-coupon. Less liquid currencies interest curve refer to the rates in currencies for which a market liquidity doesn’t exist in terms of tightness, depth and resiliency. The illiquidity of these input data impacts directly the valuation of securities or derivatives expressed in illiquid currencies. Inflation Swap rate The determination of forward levels for inflation indexes is based on swap quote over inflation indexes. Swap over inflation may present a low liquidity level whether there is no liquid market in terms of rigidity, deepness and resistance. The illiquidity of those inputs has an indirect impact on the valuation of a debt instrument linked to inflation (inflation-linked note) or in case of a derivative over inflation. Credit spreads Different valuation models, especially for credit derivatives require an input for the credit spread which reflects the credit quality of the associated credit name. The credit spread of a particular security is quoted in relation to the yield on a benchmark security or reference rate, typically either U.S. Treasury or LIBOR/EURIBOR and is generally expressed in terms of basis points. The ranges for credit spreads cover a variety of underlings (index and single names), regions, sectors, maturities and credit qualities (high-yield and investment-grade). The broad range of this population gives rise to the width of the ranges of unobservable inputs. Loss Given Default (LGD)/Recovery Rate LGD also known as loss severity (the inverse concept is the recovery rate) represents the percentage of contractual cash flows lost in the event of a default, expressed as the net amount of loss relating to the outstanding balance. An increase in the loss severity, in isolation, would result in a decrease in a fair value measure. Loss given default is facility-specific because such losses are generally understood to be influenced by key transaction characteristics such as the presence of collateral and the degree of subordination. Price Where market prices are not observable, comparison via proxy is used to measure a fair value. Prepayment Rate (PR) The PR is the estimated rate at which forecasted prepayments of principal of the related debt instrument are expected to occur. Voluntary unscheduled payments (prepayments) change the future cash flows for the investor and thereby change the fair value of the security. In general as prepayment speeds change, the weighted average life of the security changes, which impacts the valuation either positively or negatively, depending upon the nature of the security and the direction of the change in the weighted average life. Probability of Default (PD) The probability of default is an estimate of the likelihood of not collecting contractual amounts. It provides an estimate of the likelihood that a client of a financial institution will be unable to meet its debt obligations over a particular time horizon. The PD of an obligor not only depends on the risk characteristics of that particular obligor but also the economic environment and the degree to which it affects the obligor. Early conversion The early conversion is the estimate of the probability that the liability would be converted into equity earlier than the terms stated. EBITDA EBITDA is an indicator of the current operating profitability of the business, that is the income generated by the use of the company’s assets and the commercialisation of the products manufactured. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 176 2018 Annual Report and Accounts · UniCredit Correlation is a pricing input for a derivative product where the payoff is driven by multiple underlying risks. The level of correlation used in the valuation of derivatives with multiple underlying risks depends on a number of factors including the nature of those risks. Dividends The derivation of a forward price for an individual stock or index is important both for measuring fair value for forward or swap contracts and for measuring fair value using option pricing models. The relationship between the current stock price and the forward price is based on a combination of expected future dividend levels and payment timings and, to a lesser extent, the relevant funding rates applicable to the stock in question. The dividend yield and timing represents the most significant parameter in determining fair value for instruments that are sensitive to an equity forward price. Interest rate curve The calculation of the interest rate curve is based on standard bootstrapping techniques relying on the set of quotes of appropriate financial instruments, for each currency, which turns interest rates in zero-coupon. Less liquid currencies interest curve refer to the rates in currencies for which a market liquidity doesn’t exist in terms of tightness, depth and resiliency. The illiquidity of these input data impacts directly the valuation of securities or derivatives expressed in illiquid currencies. Inflation Swap rate The determination of forward levels for inflation indexes is based on swap quote over inflation indexes. Swap over inflation may present a low liquidity level whether there is no liquid market in terms of rigidity, deepness and resistance. The illiquidity of those inputs has an indirect impact on the valuation of a debt instrument linked to inflation (inflation-linked note) or in case of a derivative over inflation. Credit spreads Different valuation models, especially for credit derivatives require an input for the credit spread which reflects the credit quality of the associated credit name. The credit spread of a particular security is quoted in relation to the yield on a benchmark security or reference rate, typically either U.S. Treasury or LIBOR/EURIBOR and is generally expressed in terms of basis points. The ranges for credit spreads cover a variety of underlings (index and single names), regions, sectors, maturities and credit qualities (high-yield and investment-grade). The broad range of this population gives rise to the width of the ranges of unobservable inputs. Loss Given Default (LGD)/Recovery Rate LGD also known as loss severity (the inverse concept is the recovery rate) represents the percentage of contractual cash flows lost in the event of a default, expressed as the net amount of loss relating to the outstanding balance. An increase in the loss severity, in isolation, would result in a decrease in a fair value measure. Loss given default is facility-specific because such losses are generally understood to be influenced by key transaction characteristics such as the presence of collateral and the degree of subordination. Price Where market prices are not observable, comparison via proxy is used to measure a fair value. Prepayment Rate (PR) The PR is the estimated rate at which forecasted prepayments of principal of the related debt instrument are expected to occur. Voluntary unscheduled payments (prepayments) change the future cash flows for the investor and thereby change the fair value of the security. In general as prepayment speeds change, the weighted average life of the security changes, which impacts the valuation either positively or negatively, depending upon the nature of the security and the direction of the change in the weighted average life. Probability of Default (PD) The probability of default is an estimate of the likelihood of not collecting contractual amounts. It provides an estimate of the likelihood that a client of a financial institution will be unable to meet its debt obligations over a particular time horizon. The PD of an obligor not only depends on the risk characteristics of that particular obligor but also the economic environment and the degree to which it affects the obligor. Early conversion The early conversion is the estimate of the probability that the liability would be converted into equity earlier than the terms stated. EBITDA EBITDA is an indicator of the current operating profitability of the business, that is the income generated by the use of the company’s assets and the commercialisation of the products manufactured. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 176 2018 Annual Report and Accounts · UniCredit Correlation is a pricing input for a derivative product where the payoff is driven by multiple underlying risks. The level of correlation used in the valuation of derivatives with multiple underlying risks depends on a number of factors including the nature of those risks. Dividends The derivation of a forward price for an individual stock or index is important both for measuring fair value for forward or swap contracts and for measuring fair value using option pricing models. The relationship between the current stock price and the forward price is based on a combination of expected future dividend levels and payment timings and, to a lesser extent, the relevant funding rates applicable to the stock in question. The dividend yield and timing represents the most significant parameter in determining fair value for instruments that are sensitive to an equity forward price. Interest rate curve The calculation of the interest rate curve is based on standard bootstrapping techniques relying on the set of quotes of appropriate financial instruments, for each currency, which turns interest rates in zero-coupon. Less liquid currencies interest curve refer to the rates in currencies for which a market liquidity doesn’t exist in terms of tightness, depth and resiliency. The illiquidity of these input data impacts directly the valuation of securities or derivatives expressed in illiquid currencies. Inflation Swap rate The determination of forward levels for inflation indexes is based on swap quote over inflation indexes. Swap over inflation may present a low liquidity level whether there is no liquid market in terms of rigidity, deepness and resistance. The illiquidity of those inputs has an indirect impact on the valuation of a debt instrument linked to inflation (inflation-linked note) or in case of a derivative over inflation. Credit spreads Different valuation models, especially for credit derivatives require an input for the credit spread which reflects the credit quality of the associated credit name. The credit spread of a particular security is quoted in relation to the yield on a benchmark security or reference rate, typically either U.S. Treasury or LIBOR/EURIBOR and is generally expressed in terms of basis points. The ranges for credit spreads cover a variety of underlings (index and single names), regions, sectors, maturities and credit qualities (high-yield and investment-grade). The broad range of this population gives rise to the width of the ranges of unobservable inputs. Loss Given Default (LGD)/Recovery Rate LGD also known as loss severity (the inverse concept is the recovery rate) represents the percentage of contractual cash flows lost in the event of a default, expressed as the net amount of loss relating to the outstanding balance. An increase in the loss severity, in isolation, would result in a decrease in a fair value measure. Loss given default is facility-specific because such losses are generally understood to be influenced by key transaction characteristics such as the presence of collateral and the degree of subordination. Price Where market prices are not observable, comparison via proxy is used to measure a fair value. Prepayment Rate (PR) The PR is the estimated rate at which forecasted prepayments of principal of the related debt instrument are expected to occur. Voluntary unscheduled payments (prepayments) change the future cash flows for the investor and thereby change the fair value of the security. In general as prepayment speeds change, the weighted average life of the security changes, which impacts the valuation either positively or negatively, depending upon the nature of the security and the direction of the change in the weighted average life. Probability of Default (PD) The probability of default is an estimate of the likelihood of not collecting contractual amounts. It provides an estimate of the likelihood that a client of a financial institution will be unable to meet its debt obligations over a particular time horizon. The PD of an obligor not only depends on the risk characteristics of that particular obligor but also the economic environment and the degree to which it affects the obligor. Early conversion The early conversion is the estimate of the probability that the liability would be converted into equity earlier than the terms stated. EBITDA EBITDA is an indicator of the current operating profitability of the business, that is the income generated by the use of the company’s assets and the commercialisation of the products manufactured. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 176 2018 Annual Report and Accounts · UniCredit Correlation is a pricing input for a derivative product where the payoff is driven by multiple underlying risks. The level of correlation used in the valuation of derivatives with multiple underlying risks depends on a number of factors including the nature of those risks. Dividends The derivation of a forward price for an individual stock or index is important both for measuring fair value for forward or swap contracts and for measuring fair value using option pricing models. The relationship between the current stock price and the forward price is based on a combination of expected future dividend levels and payment timings and, to a lesser extent, the relevant funding rates applicable to the stock in question. The dividend yield and timing represents the most significant parameter in determining fair value for instruments that are sensitive to an equity forward price. Interest rate curve The calculation of the interest rate curve is based on standard bootstrapping techniques relying on the set of quotes of appropriate financial instruments, for each currency, which turns interest rates in zero-coupon. Less liquid currencies interest curve refer to the rates in currencies for which a market liquidity doesn’t exist in terms of tightness, depth and resiliency. The illiquidity of these input data impacts directly the valuation of securities or derivatives expressed in illiquid currencies. Inflation Swap rate The determination of forward levels for inflation indexes is based on swap quote over inflation indexes. Swap over inflation may present a low liquidity level whether there is no liquid market in terms of rigidity, deepness and resistance. The illiquidity of those inputs has an indirect impact on the valuation of a debt instrument linked to inflation (inflation-linked note) or in case of a derivative over inflation. Credit spreads Different valuation models, especially for credit derivatives require an input for the credit spread which reflects the credit quality of the associated credit name. The credit spread of a particular security is quoted in relation to the yield on a benchmark security or reference rate, typically either U.S. Treasury or LIBOR/EURIBOR and is generally expressed in terms of basis points. The ranges for credit spreads cover a variety of underlings (index and single names), regions, sectors, maturities and credit qualities (high-yield and investment-grade). The broad range of this population gives rise to the width of the ranges of unobservable inputs. Loss Given Default (LGD)/Recovery Rate LGD also known as loss severity (the inverse concept is the recovery rate) represents the percentage of contractual cash flows lost in the event of a default, expressed as the net amount of loss relating to the outstanding balance. An increase in the loss severity, in isolation, would result in a decrease in a fair value measure. Loss given default is facility-specific because such losses are generally understood to be influenced by key transaction characteristics such as the presence of collateral and the degree of subordination. Price Where market prices are not observable, comparison via proxy is used to measure a fair value. Prepayment Rate (PR) The PR is the estimated rate at which forecasted prepayments of principal of the related debt instrument are expected to occur. Voluntary unscheduled payments (prepayments) change the future cash flows for the investor and thereby change the fair value of the security. In general as prepayment speeds change, the weighted average life of the security changes, which impacts the valuation either positively or negatively, depending upon the nature of the security and the direction of the change in the weighted average life. Probability of Default (PD) The probability of default is an estimate of the likelihood of not collecting contractual amounts. It provides an estimate of the likelihood that a client of a financial institution will be unable to meet its debt obligations over a particular time horizon. The PD of an obligor not only depends on the risk characteristics of that particular obligor but also the economic environment and the degree to which it affects the obligor. Early conversion The early conversion is the estimate of the probability that the liability would be converted into equity earlier than the terms stated. EBITDA EBITDA is an indicator of the current operating profitability of the business, that is the income generated by the use of the company’s assets and the commercialisation of the products manufactured. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 177 Ke The Ke (cost of capital) represents the minimum rate that the company has to offer to its shareholders as remuneration for the funds received. Growth rate It is the constant growth rate used for the future dividends estimate. Quantitative information on significant unobservable inputs used in the fair value measurement: accounting portfolios measured at fair value categorised as Level 3 The following table shows, for each product category, the amount of Assets and Liabilities measured at fair value and the range of variation of unobservable parameters, across the whole portfolio, as monitored by Group Risk Management functions. (€ million) PRODUCT CATEGORIES FAIR VALUE ASSETS FAIR VALUE LIABILITIES VALUATION TECHNIQUES UNOBSERVABLE PARAMETERS RANGE Derivatives Financial Equity & Commodities 398.27 329.96 Option Pricing Model Volatility 1% 107% Correlation -98% 98% Option Pricing Model/ Discounted Cash Flows Dividends Yield 0% 17% Foreign Exchange 104.41 41.61 Option Pricing Model Volatility 1% 40% Discounted Cash Flows Interest rate -60% 30% Interest Rate 837.13 693.88 Discounted Cash Flows Swap Rate (bps) -40 bps 1000 bps Inflation Swap Rate 0 bps 230 bps Option Pricing Model Inflation Volatility 1% 10% Interest Rate Volatility 1% 100% Correlation 0% 100% Hybrid - - Option Pricing Model Volatility 0% 0% Correlation 0% 0% Credit 2.94 9.52 Hazard Rate Model Credit Spread 100% 28% Recovery rate 0% 54% Correlation 0% 0% Option Pricing Model Volatility 0% 0% Debt Securities and Loans Corporate/ Government/Other 1,322.50 536.70 Market Approach Price (% of used value) 0% 199% Mortgage & Asset Backed Securities 236.93 - Discounted Cash Flows Credit Spread (bps) 7bps 1190bps LGD 20% 100% Default Rate 0% 8% Prepayment Rate 0% 30% Equity Securities Unlisted Equity & Holdings 1,173.62 - Market Approach Price (% of used value) 0% 100% Gordon Growth Model Ke 8.0% 16.0% Growth Rate 2.0% 3.0% Units in Investment Funds Real Estate & Other Funds 949.96 - Adjusted Nav PD 1% 30% LGD 35% 60% Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 177 Ke The Ke (cost of capital) represents the minimum rate that the company has to offer to its shareholders as remuneration for the funds received. Growth rate It is the constant growth rate used for the future dividends estimate. Quantitative information on significant unobservable inputs used in the fair value measurement: accounting portfolios measured at fair value categorised as Level 3 The following table shows, for each product category, the amount of Assets and Liabilities measured at fair value and the range of variation of unobservable parameters, across the whole portfolio, as monitored by Group Risk Management functions. (€ million) PRODUCT CATEGORIES FAIR VALUE ASSETS FAIR VALUE LIABILITIES VALUATION TECHNIQUES UNOBSERVABLE PARAMETERS RANGE Derivatives Financial Equity & Commodities 398.27 329.96 Option Pricing Model Volatility 1% 107% Correlation -98% 98% Option Pricing Model/ Discounted Cash Flows Dividends Yield 0% 17% Foreign Exchange 104.41 41.61 Option Pricing Model Volatility 1% 40% Discounted Cash Flows Interest rate -60% 30% Interest Rate 837.13 693.88 Discounted Cash Flows Swap Rate (bps) -40 bps 1000 bps Inflation Swap Rate 0 bps 230 bps Option Pricing Model Inflation Volatility 1% 10% Interest Rate Volatility 1% 100% Correlation 0% 100% Hybrid - - Option Pricing Model Volatility 0% 0% Correlation 0% 0% Credit 2.94 9.52 Hazard Rate Model Credit Spread 100% 28% Recovery rate 0% 54% Correlation 0% 0% Option Pricing Model Volatility 0% 0% Debt Securities and Loans Corporate/ Government/Other 1,322.50 536.70 Market Approach Price (% of used value) 0% 199% Mortgage & Asset Backed Securities 236.93 - Discounted Cash Flows Credit Spread (bps) 7bps 1190bps LGD 20% 100% Default Rate 0% 8% Prepayment Rate 0% 30% Equity Securities Unlisted Equity & Holdings 1,173.62 - Market Approach Price (% of used value) 0% 100% Gordon Growth Model Ke 8.0% 16.0% Growth Rate 2.0% 3.0% Units in Investment Funds Real Estate & Other Funds 949.96 - Adjusted Nav PD 1% 30% LGD 35% 60% Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 177 Ke The Ke (cost of capital) represents the minimum rate that the company has to offer to its shareholders as remuneration for the funds received. Growth rate It is the constant growth rate used for the future dividends estimate. Quantitative information on significant unobservable inputs used in the fair value measurement: accounting portfolios measured at fair value categorised as Level 3 The following table shows, for each product category, the amount of Assets and Liabilities measured at fair value and the range of variation of unobservable parameters, across the whole portfolio, as monitored by Group Risk Management functions. (€ million) PRODUCT CATEGORIES FAIR VALUE ASSETS FAIR VALUE LIABILITIES VALUATION TECHNIQUES UNOBSERVABLE PARAMETERS RANGE Derivatives Financial Equity & Commodities 398.27 329.96 Option Pricing Model Volatility 1% 107% Correlation -98% 98% Option Pricing Model/ Discounted Cash Flows Dividends Yield 0% 17% Foreign Exchange 104.41 41.61 Option Pricing Model Volatility 1% 40% Discounted Cash Flows Interest rate -60% 30% Interest Rate 837.13 693.88 Discounted Cash Flows Swap Rate (bps) -40 bps 1000 bps Inflation Swap Rate 0 bps 230 bps Option Pricing Model Inflation Volatility 1% 10% Interest Rate Volatility 1% 100% Correlation 0% 100% Hybrid - - Option Pricing Model Volatility 0% 0% Correlation 0% 0% Credit 2.94 9.52 Hazard Rate Model Credit Spread 100% 28% Recovery rate 0% 54% Correlation 0% 0% Option Pricing Model Volatility 0% 0% Debt Securities and Loans Corporate/ Government/Other 1,322.50 536.70 Market Approach Price (% of used value) 0% 199% Mortgage & Asset Backed Securities 236.93 - Discounted Cash Flows Credit Spread (bps) 7bps 1190bps LGD 20% 100% Default Rate 0% 8% Prepayment Rate 0% 30% Equity Securities Unlisted Equity & Holdings 1,173.62 - Market Approach Price (% of used value) 0% 100% Gordon Growth Model Ke 8.0% 16.0% Growth Rate 2.0% 3.0% Units in Investment Funds Real Estate & Other Funds 949.96 - Adjusted Nav PD 1% 30% LGD 35% 60% Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 177 Ke The Ke (cost of capital) represents the minimum rate that the company has to offer to its shareholders as remuneration for the funds received. Growth rate It is the constant growth rate used for the future dividends estimate. Quantitative information on significant unobservable inputs used in the fair value measurement: accounting portfolios measured at fair value categorised as Level 3 The following table shows, for each product category, the amount of Assets and Liabilities measured at fair value and the range of variation of unobservable parameters, across the whole portfolio, as monitored by Group Risk Management functions. (€ million) PRODUCT CATEGORIES FAIR VALUE ASSETS FAIR VALUE LIABILITIES VALUATION TECHNIQUES UNOBSERVABLE PARAMETERS RANGE Derivatives Financial Equity & Commodities 398.27 329.96 Option Pricing Model Volatility 1% 107% Correlation -98% 98% Option Pricing Model/ Discounted Cash Flows Dividends Yield 0% 17% Foreign Exchange 104.41 41.61 Option Pricing Model Volatility 1% 40% Discounted Cash Flows Interest rate -60% 30% Interest Rate 837.13 693.88 Discounted Cash Flows Swap Rate (bps) -40 bps 1000 bps Inflation Swap Rate 0 bps 230 bps Option Pricing Model Inflation Volatility 1% 10% Interest Rate Volatility 1% 100% Correlation 0% 100% Hybrid - - Option Pricing Model Volatility 0% 0% Correlation 0% 0% Credit 2.94 9.52 Hazard Rate Model Credit Spread 100% 28% Recovery rate 0% 54% Correlation 0% 0% Option Pricing Model Volatility 0% 0% Debt Securities and Loans Corporate/ Government/Other 1,322.50 536.70 Market Approach Price (% of used value) 0% 199% Mortgage & Asset Backed Securities 236.93 - Discounted Cash Flows Credit Spread (bps) 7bps 1190bps LGD 20% 100% Default Rate 0% 8% Prepayment Rate 0% 30% Equity Securities Unlisted Equity & Holdings 1,173.62 - Market Approach Price (% of used value) 0% 100% Gordon Growth Model Ke 8.0% 16.0% Growth Rate 2.0% 3.0% Units in Investment Funds Real Estate & Other Funds 949.96 - Adjusted Nav PD 1% 30% LGD 35% 60% Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 177 Ke The Ke (cost of capital) represents the minimum rate that the company has to offer to its shareholders as remuneration for the funds received. Growth rate It is the constant growth rate used for the future dividends estimate. Quantitative information on significant unobservable inputs used in the fair value measurement: accounting portfolios measured at fair value categorised as Level 3 The following table shows, for each product category, the amount of Assets and Liabilities measured at fair value and the range of variation of unobservable parameters, across the whole portfolio, as monitored by Group Risk Management functions. (€ million) PRODUCT CATEGORIES FAIR VALUE ASSETS FAIR VALUE LIABILITIES VALUATION TECHNIQUES UNOBSERVABLE PARAMETERS RANGE Derivatives Financial Equity & Commodities 398.27 329.96 Option Pricing Model Volatility 1% 107% Correlation -98% 98% Option Pricing Model/ Discounted Cash Flows Dividends Yield 0% 17% Foreign Exchange 104.41 41.61 Option Pricing Model Volatility 1% 40% Discounted Cash Flows Interest rate -60% 30% Interest Rate 837.13 693.88 Discounted Cash Flows Swap Rate (bps) -40 bps 1000 bps Inflation Swap Rate 0 bps 230 bps Option Pricing Model Inflation Volatility 1% 10% Interest Rate Volatility 1% 100% Correlation 0% 100% Hybrid - - Option Pricing Model Volatility 0% 0% Correlation 0% 0% Credit 2.94 9.52 Hazard Rate Model Credit Spread 100% 28% Recovery rate 0% 54% Correlation 0% 0% Option Pricing Model Volatility 0% 0% Debt Securities and Loans Corporate/ Government/Other 1,322.50 536.70 Market Approach Price (% of used value) 0% 199% Mortgage & Asset Backed Securities 236.93 - Discounted Cash Flows Credit Spread (bps) 7bps 1190bps LGD 20% 100% Default Rate 0% 8% Prepayment Rate 0% 30% Equity Securities Unlisted Equity & Holdings 1,173.62 - Market Approach Price (% of used value) 0% 100% Gordon Growth Model Ke 8.0% 16.0% Growth Rate 2.0% 3.0% Units in Investment Funds Real Estate & Other Funds 949.96 - Adjusted Nav PD 1% 30% LGD 35% 60% Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 178 2018 Annual Report and Accounts · UniCredit A.4.2 Valuations processes and sensitivities The Group verifies that the value attributed to each position reflects the current fair value in an appropriate way. Assets and liabilities subject to fair value measurements are determined using different techniques, among which (but not only) models such as discounted cash flow and internal models. On the basis of the observability of the input used, all the measurements are classified as Level 1, Level 2 or Level 3 of the fair value hierarchy. When a financial instrument, measured at fair value, is valued through the use of one or more significant inputs not directly observable on the market, a further procedure for the price verification is implemented. These procedures include the revision of relevant historical data, the analysis of profits and losses, the individual valuation of each component for structural products and benchmarking. This approach uses subjective opinions and judgments based on experience and, therefore, it could require valuation adjustments which take into account the bid/ask spread, liquidity and counterparty risk, in addition to the valuation model type adopted. According to Group Market Risk Governance guidelines, in order to ensure the right separateness of the functions in charge of the model development and those in charge of the validation processes, all valuation models developed by Group companies’ front offices are independently tested centrally and validated by the Group Internal Validation functions. The aim of this independent control structure is evaluating the model risk from a theoretical solidity, calibration techniques eventually applied and appropriateness of the model for a specific product in a defined market point of views. In addition to the daily mark-to-market or mark-to-model valuation, the Independent Price Verification (IPV) is applied by from Market Risk function with the aim of guaranteeing a fair value provided by an independent structure for all instruments, illiquid included. Fair value sensitivity to variations in unobservable input used in the fair value computation for instruments categorised as Level 3 The direction of sensitivity for instruments categorised at level 3 of fair value hierarchy to variations in significant unobservable inputs is supplied in the following table. For fair value computations where significant unobservable input are employed (Level 3), the sensitivity analysis is performed using a range of reasonable alternatives for the unobservable parameters. The Group takes into account that the impact of unobservable inputs in the fair value computation of level 3 financial instruments, depends on the correlation among different inputs used in the valuation technique. In addition, the effect of unobservable input variation has an impact on the amount and the direction of fair value measurement, also according to the instrument nature and sign. (€ million) PRODUCT CATEGORIES FAIR VALUE MOVEMENTS GIVEN REASONABLE POSSIBLE ALTERNATIVES Derivatives Financial Equity +/- 84.44 Foreign Exchange +/- 28.99 Interest Rate +/- 31.60 Hybrid +/- - Credit +/- 14.43 Debt Securities and Loans Corporate/Government/Other +/- 3.45 Mortgage & Asset Backed Securities +/- 10.34 Equity Securities Unlisted Equity & Holdings +/- 52.15 Units in Investment Funds Real Estate & Other Funds +/- 12.70 Within the unlisted Level 3 Units in Investment Funds, measured using a model, the shares in Atlante and Italian Recovery Fund, former Atlante II, (€355 million at 31 December 2018) are classified and, within Equity Securities, the investments in the Voluntary Scheme (as at 31 December 2018 equal to €47,6 million). For further information, please refer to Part B - Section 2 - Financial assets at fair value through profit or loss: c) other financial assets mandatorily at fair value. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 178 2018 Annual Report and Accounts · UniCredit A.4.2 Valuations processes and sensitivities The Group verifies that the value attributed to each position reflects the current fair value in an appropriate way. Assets and liabilities subject to fair value measurements are determined using different techniques, among which (but not only) models such as discounted cash flow and internal models. On the basis of the observability of the input used, all the measurements are classified as Level 1, Level 2 or Level 3 of the fair value hierarchy. When a financial instrument, measured at fair value, is valued through the use of one or more significant inputs not directly observable on the market, a further procedure for the price verification is implemented. These procedures include the revision of relevant historical data, the analysis of profits and losses, the individual valuation of each component for structural products and benchmarking. This approach uses subjective opinions and judgments based on experience and, therefore, it could require valuation adjustments which take into account the bid/ask spread, liquidity and counterparty risk, in addition to the valuation model type adopted. According to Group Market Risk Governance guidelines, in order to ensure the right separateness of the functions in charge of the model development and those in charge of the validation processes, all valuation models developed by Group companies’ front offices are independently tested centrally and validated by the Group Internal Validation functions. The aim of this independent control structure is evaluating the model risk from a theoretical solidity, calibration techniques eventually applied and appropriateness of the model for a specific product in a defined market point of views. In addition to the daily mark-to-market or mark-to-model valuation, the Independent Price Verification (IPV) is applied by from Market Risk function with the aim of guaranteeing a fair value provided by an independent structure for all instruments, illiquid included. Fair value sensitivity to variations in unobservable input used in the fair value computation for instruments categorised as Level 3 The direction of sensitivity for instruments categorised at level 3 of fair value hierarchy to variations in significant unobservable inputs is supplied in the following table. For fair value computations where significant unobservable input are employed (Level 3), the sensitivity analysis is performed using a range of reasonable alternatives for the unobservable parameters. The Group takes into account that the impact of unobservable inputs in the fair value computation of level 3 financial instruments, depends on the correlation among different inputs used in the valuation technique. In addition, the effect of unobservable input variation has an impact on the amount and the direction of fair value measurement, also according to the instrument nature and sign. (€ million) PRODUCT CATEGORIES FAIR VALUE MOVEMENTS GIVEN REASONABLE POSSIBLE ALTERNATIVES Derivatives Financial Equity +/- 84.44 Foreign Exchange +/- 28.99 Interest Rate +/- 31.60 Hybrid +/- - Credit +/- 14.43 Debt Securities and Loans Corporate/Government/Other +/- 3.45 Mortgage & Asset Backed Securities +/- 10.34 Equity Securities Unlisted Equity & Holdings +/- 52.15 Units in Investment Funds Real Estate & Other Funds +/- 12.70 Within the unlisted Level 3 Units in Investment Funds, measured using a model, the shares in Atlante and Italian Recovery Fund, former Atlante II, (€355 million at 31 December 2018) are classified and, within Equity Securities, the investments in the Voluntary Scheme (as at 31 December 2018 equal to €47,6 million). For further information, please refer to Part B - Section 2 - Financial assets at fair value through profit or loss: c) other financial assets mandatorily at fair value. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 178 2018 Annual Report and Accounts · UniCredit A.4.2 Valuations processes and sensitivities The Group verifies that the value attributed to each position reflects the current fair value in an appropriate way. Assets and liabilities subject to fair value measurements are determined using different techniques, among which (but not only) models such as discounted cash flow and internal models. On the basis of the observability of the input used, all the measurements are classified as Level 1, Level 2 or Level 3 of the fair value hierarchy. When a financial instrument, measured at fair value, is valued through the use of one or more significant inputs not directly observable on the market, a further procedure for the price verification is implemented. These procedures include the revision of relevant historical data, the analysis of profits and losses, the individual valuation of each component for structural products and benchmarking. This approach uses subjective opinions and judgments based on experience and, therefore, it could require valuation adjustments which take into account the bid/ask spread, liquidity and counterparty risk, in addition to the valuation model type adopted. According to Group Market Risk Governance guidelines, in order to ensure the right separateness of the functions in charge of the model development and those in charge of the validation processes, all valuation models developed by Group companies’ front offices are independently tested centrally and validated by the Group Internal Validation functions. The aim of this independent control structure is evaluating the model risk from a theoretical solidity, calibration techniques eventually applied and appropriateness of the model for a specific product in a defined market point of views. In addition to the daily mark-to-market or mark-to-model valuation, the Independent Price Verification (IPV) is applied by from Market Risk function with the aim of guaranteeing a fair value provided by an independent structure for all instruments, illiquid included. Fair value sensitivity to variations in unobservable input used in the fair value computation for instruments categorised as Level 3 The direction of sensitivity for instruments categorised at level 3 of fair value hierarchy to variations in significant unobservable inputs is supplied in the following table. For fair value computations where significant unobservable input are employed (Level 3), the sensitivity analysis is performed using a range of reasonable alternatives for the unobservable parameters. The Group takes into account that the impact of unobservable inputs in the fair value computation of level 3 financial instruments, depends on the correlation among different inputs used in the valuation technique. In addition, the effect of unobservable input variation has an impact on the amount and the direction of fair value measurement, also according to the instrument nature and sign. (€ million) PRODUCT CATEGORIES FAIR VALUE MOVEMENTS GIVEN REASONABLE POSSIBLE ALTERNATIVES Derivatives Financial Equity +/- 84.44 Foreign Exchange +/- 28.99 Interest Rate +/- 31.60 Hybrid +/- - Credit +/- 14.43 Debt Securities and Loans Corporate/Government/Other +/- 3.45 Mortgage & Asset Backed Securities +/- 10.34 Equity Securities Unlisted Equity & Holdings +/- 52.15 Units in Investment Funds Real Estate & Other Funds +/- 12.70 Within the unlisted Level 3 Units in Investment Funds, measured using a model, the shares in Atlante and Italian Recovery Fund, former Atlante II, (€355 million at 31 December 2018) are classified and, within Equity Securities, the investments in the Voluntary Scheme (as at 31 December 2018 equal to €47,6 million). For further information, please refer to Part B - Section 2 - Financial assets at fair value through profit or loss: c) other financial assets mandatorily at fair value. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 178 2018 Annual Report and Accounts · UniCredit A.4.2 Valuations processes and sensitivities The Group verifies that the value attributed to each position reflects the current fair value in an appropriate way. Assets and liabilities subject to fair value measurements are determined using different techniques, among which (but not only) models such as discounted cash flow and internal models. On the basis of the observability of the input used, all the measurements are classified as Level 1, Level 2 or Level 3 of the fair value hierarchy. When a financial instrument, measured at fair value, is valued through the use of one or more significant inputs not directly observable on the market, a further procedure for the price verification is implemented. These procedures include the revision of relevant historical data, the analysis of profits and losses, the individual valuation of each component for structural products and benchmarking. This approach uses subjective opinions and judgments based on experience and, therefore, it could require valuation adjustments which take into account the bid/ask spread, liquidity and counterparty risk, in addition to the valuation model type adopted. According to Group Market Risk Governance guidelines, in order to ensure the right separateness of the functions in charge of the model development and those in charge of the validation processes, all valuation models developed by Group companies’ front offices are independently tested centrally and validated by the Group Internal Validation functions. The aim of this independent control structure is evaluating the model risk from a theoretical solidity, calibration techniques eventually applied and appropriateness of the model for a specific product in a defined market point of views. In addition to the daily mark-to-market or mark-to-model valuation, the Independent Price Verification (IPV) is applied by from Market Risk function with the aim of guaranteeing a fair value provided by an independent structure for all instruments, illiquid included. Fair value sensitivity to variations in unobservable input used in the fair value computation for instruments categorised as Level 3 The direction of sensitivity for instruments categorised at level 3 of fair value hierarchy to variations in significant unobservable inputs is supplied in the following table. For fair value computations where significant unobservable input are employed (Level 3), the sensitivity analysis is performed using a range of reasonable alternatives for the unobservable parameters. The Group takes into account that the impact of unobservable inputs in the fair value computation of level 3 financial instruments, depends on the correlation among different inputs used in the valuation technique. In addition, the effect of unobservable input variation has an impact on the amount and the direction of fair value measurement, also according to the instrument nature and sign. (€ million) PRODUCT CATEGORIES FAIR VALUE MOVEMENTS GIVEN REASONABLE POSSIBLE ALTERNATIVES Derivatives Financial Equity +/- 84.44 Foreign Exchange +/- 28.99 Interest Rate +/- 31.60 Hybrid +/- - Credit +/- 14.43 Debt Securities and Loans Corporate/Government/Other +/- 3.45 Mortgage & Asset Backed Securities +/- 10.34 Equity Securities Unlisted Equity & Holdings +/- 52.15 Units in Investment Funds Real Estate & Other Funds +/- 12.70 Within the unlisted Level 3 Units in Investment Funds, measured using a model, the shares in Atlante and Italian Recovery Fund, former Atlante II, (€355 million at 31 December 2018) are classified and, within Equity Securities, the investments in the Voluntary Scheme (as at 31 December 2018 equal to €47,6 million). For further information, please refer to Part B - Section 2 - Financial assets at fair value through profit or loss: c) other financial assets mandatorily at fair value. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 178 2018 Annual Report and Accounts · UniCredit A.4.2 Valuations processes and sensitivities The Group verifies that the value attributed to each position reflects the current fair value in an appropriate way. Assets and liabilities subject to fair value measurements are determined using different techniques, among which (but not only) models such as discounted cash flow and internal models. On the basis of the observability of the input used, all the measurements are classified as Level 1, Level 2 or Level 3 of the fair value hierarchy. When a financial instrument, measured at fair value, is valued through the use of one or more significant inputs not directly observable on the market, a further procedure for the price verification is implemented. These procedures include the revision of relevant historical data, the analysis of profits and losses, the individual valuation of each component for structural products and benchmarking. This approach uses subjective opinions and judgments based on experience and, therefore, it could require valuation adjustments which take into account the bid/ask spread, liquidity and counterparty risk, in addition to the valuation model type adopted. According to Group Market Risk Governance guidelines, in order to ensure the right separateness of the functions in charge of the model development and those in charge of the validation processes, all valuation models developed by Group companies’ front offices are independently tested centrally and validated by the Group Internal Validation functions. The aim of this independent control structure is evaluating the model risk from a theoretical solidity, calibration techniques eventually applied and appropriateness of the model for a specific product in a defined market point of views. In addition to the daily mark-to-market or mark-to-model valuation, the Independent Price Verification (IPV) is applied by from Market Risk function with the aim of guaranteeing a fair value provided by an independent structure for all instruments, illiquid included. Fair value sensitivity to variations in unobservable input used in the fair value computation for instruments categorised as Level 3 The direction of sensitivity for instruments categorised at level 3 of fair value hierarchy to variations in significant unobservable inputs is supplied in the following table. For fair value computations where significant unobservable input are employed (Level 3), the sensitivity analysis is performed using a range of reasonable alternatives for the unobservable parameters. The Group takes into account that the impact of unobservable inputs in the fair value computation of level 3 financial instruments, depends on the correlation among different inputs used in the valuation technique. In addition, the effect of unobservable input variation has an impact on the amount and the direction of fair value measurement, also according to the instrument nature and sign. (€ million) PRODUCT CATEGORIES FAIR VALUE MOVEMENTS GIVEN REASONABLE POSSIBLE ALTERNATIVES Derivatives Financial Equity +/- 84.44 Foreign Exchange +/- 28.99 Interest Rate +/- 31.60 Hybrid +/- - Credit +/- 14.43 Debt Securities and Loans Corporate/Government/Other +/- 3.45 Mortgage & Asset Backed Securities +/- 10.34 Equity Securities Unlisted Equity & Holdings +/- 52.15 Units in Investment Funds Real Estate & Other Funds +/- 12.70 Within the unlisted Level 3 Units in Investment Funds, measured using a model, the shares in Atlante and Italian Recovery Fund, former Atlante II, (€355 million at 31 December 2018) are classified and, within Equity Securities, the investments in the Voluntary Scheme (as at 31 December 2018 equal to €47,6 million). For further information, please refer to Part B - Section 2 - Financial assets at fair value through profit or loss: c) other financial assets mandatorily at fair value. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 179 A.4.3 Fair value hierarchy IFRS13 establishes a fair value hierarchy according to the observability of the input used in the valuation techniques adopted for valuations. The fair value hierarchy level associated to assets and liabilities is set as the minimum level among all significant valuation inputs used. A valuation input is not considered significant for the fair value of an instrument if the remaining inputs are able to explain the major part of the fair value variance itself over a period of three months. In some specific cases, the significance limit is assessed in relation to the fair value of the instrument at the measurement date. In particular, three levels are considered: • level 1: fair value for instruments classified within this level is determined according to the quoted prices on active markets; • level 2: fair value for instruments classified within this level is determined according to the valuation models which use observable inputs on active markets; • level 3: fair value for instruments classified within this level is determined according to the valuation models which prevalently use significant unobservable input on active markets. Financial instruments are classified to a certain fair value level according to the observability of the input used for the valuation. Level 1 (quoted prices in active markets): quoted prices (unadjusted) in active markets are available for identical assets or liabilities that the entity has the ability to access at the measurement date. An active market is a market in which orderly transactions for the asset or liability take place with sufficient frequency and volume for pricing information to be provided on an on-going basis (e.g. MTS market about prices for most of the government bonds therein traded). Level 2 (observable inputs): inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Inputs are observable if they are developed on the basis of publicly available information about actual events or transactions and reflect the assumptions that market participants would use when pricing the asset or liability. Level 3 (unobservable inputs): inputs other than the ones included in level 1 and level 2, not directly observable on the market for the evaluation of asset and liability, or used for the definition of significant adjustments to fair value. Unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk. When fair value is measured directly taking into consideration an observable price and quoted on an active market, the hierarchy attribution process will assign Level 1. When fair value has to be measured either via Comparable approach or via Mark-to-Model approach, the hierarchy attribution process will assign Level 2 or Level 3, depending on the observability of all the significant input parameters. Within the choice among various valuation techniques the Group employs the one which maximises the use of observable inputs. Transfers between hierarchy levels The main drivers to transfers in and out the FV levels (both between L1 and L2 and in/out L3) include changes in market conditions (among which liquidity parameter) and enhancements to valuation techniques and weights for unobservable inputs used for the valuation itself. Quantitative and qualitative details about transfers between FV levels occurred in the period is presented in Part A.4.5 - Fair Value Hierarchy. A.4.4 Other information The Group uses the IFRS13 exception for fair value measurements on a net basis with reference to financial assets and liabilities with offsetting positions of market risk or counterparty credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 179 A.4.3 Fair value hierarchy IFRS13 establishes a fair value hierarchy according to the observability of the input used in the valuation techniques adopted for valuations. The fair value hierarchy level associated to assets and liabilities is set as the minimum level among all significant valuation inputs used. A valuation input is not considered significant for the fair value of an instrument if the remaining inputs are able to explain the major part of the fair value variance itself over a period of three months. In some specific cases, the significance limit is assessed in relation to the fair value of the instrument at the measurement date. In particular, three levels are considered: • level 1: fair value for instruments classified within this level is determined according to the quoted prices on active markets; • level 2: fair value for instruments classified within this level is determined according to the valuation models which use observable inputs on active markets; • level 3: fair value for instruments classified within this level is determined according to the valuation models which prevalently use significant unobservable input on active markets. Financial instruments are classified to a certain fair value level according to the observability of the input used for the valuation. Level 1 (quoted prices in active markets): quoted prices (unadjusted) in active markets are available for identical assets or liabilities that the entity has the ability to access at the measurement date. An active market is a market in which orderly transactions for the asset or liability take place with sufficient frequency and volume for pricing information to be provided on an on-going basis (e.g. MTS market about prices for most of the government bonds therein traded). Level 2 (observable inputs): inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Inputs are observable if they are developed on the basis of publicly available information about actual events or transactions and reflect the assumptions that market participants would use when pricing the asset or liability. Level 3 (unobservable inputs): inputs other than the ones included in level 1 and level 2, not directly observable on the market for the evaluation of asset and liability, or used for the definition of significant adjustments to fair value. Unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk. When fair value is measured directly taking into consideration an observable price and quoted on an active market, the hierarchy attribution process will assign Level 1. When fair value has to be measured either via Comparable approach or via Mark-to-Model approach, the hierarchy attribution process will assign Level 2 or Level 3, depending on the observability of all the significant input parameters. Within the choice among various valuation techniques the Group employs the one which maximises the use of observable inputs. Transfers between hierarchy levels The main drivers to transfers in and out the FV levels (both between L1 and L2 and in/out L3) include changes in market conditions (among which liquidity parameter) and enhancements to valuation techniques and weights for unobservable inputs used for the valuation itself. Quantitative and qualitative details about transfers between FV levels occurred in the period is presented in Part A.4.5 - Fair Value Hierarchy. A.4.4 Other information The Group uses the IFRS13 exception for fair value measurements on a net basis with reference to financial assets and liabilities with offsetting positions of market risk or counterparty credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 179 A.4.3 Fair value hierarchy IFRS13 establishes a fair value hierarchy according to the observability of the input used in the valuation techniques adopted for valuations. The fair value hierarchy level associated to assets and liabilities is set as the minimum level among all significant valuation inputs used. A valuation input is not considered significant for the fair value of an instrument if the remaining inputs are able to explain the major part of the fair value variance itself over a period of three months. In some specific cases, the significance limit is assessed in relation to the fair value of the instrument at the measurement date. In particular, three levels are considered: • level 1: fair value for instruments classified within this level is determined according to the quoted prices on active markets; • level 2: fair value for instruments classified within this level is determined according to the valuation models which use observable inputs on active markets; • level 3: fair value for instruments classified within this level is determined according to the valuation models which prevalently use significant unobservable input on active markets. Financial instruments are classified to a certain fair value level according to the observability of the input used for the valuation. Level 1 (quoted prices in active markets): quoted prices (unadjusted) in active markets are available for identical assets or liabilities that the entity has the ability to access at the measurement date. An active market is a market in which orderly transactions for the asset or liability take place with sufficient frequency and volume for pricing information to be provided on an on-going basis (e.g. MTS market about prices for most of the government bonds therein traded). Level 2 (observable inputs): inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Inputs are observable if they are developed on the basis of publicly available information about actual events or transactions and reflect the assumptions that market participants would use when pricing the asset or liability. Level 3 (unobservable inputs): inputs other than the ones included in level 1 and level 2, not directly observable on the market for the evaluation of asset and liability, or used for the definition of significant adjustments to fair value. Unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk. When fair value is measured directly taking into consideration an observable price and quoted on an active market, the hierarchy attribution process will assign Level 1. When fair value has to be measured either via Comparable approach or via Mark-to-Model approach, the hierarchy attribution process will assign Level 2 or Level 3, depending on the observability of all the significant input parameters. Within the choice among various valuation techniques the Group employs the one which maximises the use of observable inputs. Transfers between hierarchy levels The main drivers to transfers in and out the FV levels (both between L1 and L2 and in/out L3) include changes in market conditions (among which liquidity parameter) and enhancements to valuation techniques and weights for unobservable inputs used for the valuation itself. Quantitative and qualitative details about transfers between FV levels occurred in the period is presented in Part A.4.5 - Fair Value Hierarchy. A.4.4 Other information The Group uses the IFRS13 exception for fair value measurements on a net basis with reference to financial assets and liabilities with offsetting positions of market risk or counterparty credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 179 A.4.3 Fair value hierarchy IFRS13 establishes a fair value hierarchy according to the observability of the input used in the valuation techniques adopted for valuations. The fair value hierarchy level associated to assets and liabilities is set as the minimum level among all significant valuation inputs used. A valuation input is not considered significant for the fair value of an instrument if the remaining inputs are able to explain the major part of the fair value variance itself over a period of three months. In some specific cases, the significance limit is assessed in relation to the fair value of the instrument at the measurement date. In particular, three levels are considered: • level 1: fair value for instruments classified within this level is determined according to the quoted prices on active markets; • level 2: fair value for instruments classified within this level is determined according to the valuation models which use observable inputs on active markets; • level 3: fair value for instruments classified within this level is determined according to the valuation models which prevalently use significant unobservable input on active markets. Financial instruments are classified to a certain fair value level according to the observability of the input used for the valuation. Level 1 (quoted prices in active markets): quoted prices (unadjusted) in active markets are available for identical assets or liabilities that the entity has the ability to access at the measurement date. An active market is a market in which orderly transactions for the asset or liability take place with sufficient frequency and volume for pricing information to be provided on an on-going basis (e.g. MTS market about prices for most of the government bonds therein traded). Level 2 (observable inputs): inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Inputs are observable if they are developed on the basis of publicly available information about actual events or transactions and reflect the assumptions that market participants would use when pricing the asset or liability. Level 3 (unobservable inputs): inputs other than the ones included in level 1 and level 2, not directly observable on the market for the evaluation of asset and liability, or used for the definition of significant adjustments to fair value. Unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk. When fair value is measured directly taking into consideration an observable price and quoted on an active market, the hierarchy attribution process will assign Level 1. When fair value has to be measured either via Comparable approach or via Mark-to-Model approach, the hierarchy attribution process will assign Level 2 or Level 3, depending on the observability of all the significant input parameters. Within the choice among various valuation techniques the Group employs the one which maximises the use of observable inputs. Transfers between hierarchy levels The main drivers to transfers in and out the FV levels (both between L1 and L2 and in/out L3) include changes in market conditions (among which liquidity parameter) and enhancements to valuation techniques and weights for unobservable inputs used for the valuation itself. Quantitative and qualitative details about transfers between FV levels occurred in the period is presented in Part A.4.5 - Fair Value Hierarchy. A.4.4 Other information The Group uses the IFRS13 exception for fair value measurements on a net basis with reference to financial assets and liabilities with offsetting positions of market risk or counterparty credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 179 A.4.3 Fair value hierarchy IFRS13 establishes a fair value hierarchy according to the observability of the input used in the valuation techniques adopted for valuations. The fair value hierarchy level associated to assets and liabilities is set as the minimum level among all significant valuation inputs used. A valuation input is not considered significant for the fair value of an instrument if the remaining inputs are able to explain the major part of the fair value variance itself over a period of three months. In some specific cases, the significance limit is assessed in relation to the fair value of the instrument at the measurement date. In particular, three levels are considered: • level 1: fair value for instruments classified within this level is determined according to the quoted prices on active markets; • level 2: fair value for instruments classified within this level is determined according to the valuation models which use observable inputs on active markets; • level 3: fair value for instruments classified within this level is determined according to the valuation models which prevalently use significant unobservable input on active markets. Financial instruments are classified to a certain fair value level according to the observability of the input used for the valuation. Level 1 (quoted prices in active markets): quoted prices (unadjusted) in active markets are available for identical assets or liabilities that the entity has the ability to access at the measurement date. An active market is a market in which orderly transactions for the asset or liability take place with sufficient frequency and volume for pricing information to be provided on an on-going basis (e.g. MTS market about prices for most of the government bonds therein traded). Level 2 (observable inputs): inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Inputs are observable if they are developed on the basis of publicly available information about actual events or transactions and reflect the assumptions that market participants would use when pricing the asset or liability. Level 3 (unobservable inputs): inputs other than the ones included in level 1 and level 2, not directly observable on the market for the evaluation of asset and liability, or used for the definition of significant adjustments to fair value. Unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk. When fair value is measured directly taking into consideration an observable price and quoted on an active market, the hierarchy attribution process will assign Level 1. When fair value has to be measured either via Comparable approach or via Mark-to-Model approach, the hierarchy attribution process will assign Level 2 or Level 3, depending on the observability of all the significant input parameters. Within the choice among various valuation techniques the Group employs the one which maximises the use of observable inputs. Transfers between hierarchy levels The main drivers to transfers in and out the FV levels (both between L1 and L2 and in/out L3) include changes in market conditions (among which liquidity parameter) and enhancements to valuation techniques and weights for unobservable inputs used for the valuation itself. Quantitative and qualitative details about transfers between FV levels occurred in the period is presented in Part A.4.5 - Fair Value Hierarchy. A.4.4 Other information The Group uses the IFRS13 exception for fair value measurements on a net basis with reference to financial assets and liabilities with offsetting positions of market risk or counterparty credit risk. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 180 2018 Annual Report and Accounts · UniCredit Quantitative information A.4.5 Fair value hierarchy A.4.5 Fair Value Hierarchy The following tables show the portfolios breakdown in terms of (i) financial assets and liabilities valued at fair value as well as (ii) assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis, according to the above-mentioned levels. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2018 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at fair value through profit or loss 32,822,586 48,509,976 4,805,193 a) Financial assets held for trading 25,214,655 37,940,593 2,076,226 b) Financial assets designated at fair value 3 103 - c) Financial assets mandatorily at fair value 7,607,928 10,569,280 2,728,967 2. Financial assets at fair value through other comprehensive income 76,843,736 10,392,587 1,043,834 3. Hedging derivatives 98,986 4,578,280 4,251 4. Property, plant and equipment - - 47,147 5. Intangible assets - - - Total 109,765,308 63,480,843 5,900,425 1. Financial liabilities held for trading 13,514,689 28,235,890 1,360,657 2. Financial liabilities designated at fair value 427,415 8,663,748 226,568 3. Hedging derivatives 100,445 5,906,926 24,658 Total 14,042,549 42,806,564 1,611,883 The item “1. c) Financial assets mandatorily at fair value” at level 3 as at 31 December 2018 includes the investments in Atlante and Italian Recovery Fund, former Atlante II (carrying value €355 million) and in “Schema Volontario” (carrying value €47,6 million). Since no market valuations or prices of comparable securities are available for “Schema Volontario”, at 31 December 2018 the fair value of such instrument was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the Rendiconto 2018 of the “Schema Volontario” itself, while concerning Atlante and Italian Recovery Fund, former Atlante II, the Fair Value was determined having as reference the valuation of the financial assets provided from the fund itself, supplemented, if appropriate, using internal models (Discounted Cash Flow and Market Multiples). See Part B - Section 2.5 - Financial assets mandatorily at fair value income for further information. Transfers between level of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities. Besides the transfers related to financial assets and liabilities carried at level 3 detailed in the sections below during the year the following transfers occurred: • from level 1 to level 2 owing to a worsening of the liquidity and price reliability indicators (based on the bid-ask spread, relative size and applicability of the published prices) collected by third parties as calculated and recorded in the context of the Global Bond IPV process: - of financial assets measured at fair value through profit & loss (financial assets held for trading, designed at fair value and mandatorily at fair value) for approximately €176 million; - of financial liabilities measured at fair value through profit & loss (financial liabilities held for trading and designed at fair value) for approximately €4 million; • from level 2 to level 1 owing to an improvement of the liquidity and price reliability indicators (based on the bid-ask spread, relative size and applicability of the published prices) collected by third parties as calculated and recorded in the context of the Global Bond IPV process: - of financial assets measured at fair value through profit & loss (financial assets held for trading, designed at fair value and mandatorily at fair value) for approximately €1,969 million; - of financial assets measured at fair value through reserves (financial assets at fair value through other comprehensive income) for approximately €340 million; - of financial liabilities measured at fair value through profit & loss (financial liabilities held for trading and designed at fair value) for approximately €47 million. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 180 2018 Annual Report and Accounts · UniCredit Quantitative information A.4.5 Fair value hierarchy A.4.5 Fair Value Hierarchy The following tables show the portfolios breakdown in terms of (i) financial assets and liabilities valued at fair value as well as (ii) assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis, according to the above-mentioned levels. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2018 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at fair value through profit or loss 32,822,586 48,509,976 4,805,193 a) Financial assets held for trading 25,214,655 37,940,593 2,076,226 b) Financial assets designated at fair value 3 103 - c) Financial assets mandatorily at fair value 7,607,928 10,569,280 2,728,967 2. Financial assets at fair value through other comprehensive income 76,843,736 10,392,587 1,043,834 3. Hedging derivatives 98,986 4,578,280 4,251 4. Property, plant and equipment - - 47,147 5. Intangible assets - - - Total 109,765,308 63,480,843 5,900,425 1. Financial liabilities held for trading 13,514,689 28,235,890 1,360,657 2. Financial liabilities designated at fair value 427,415 8,663,748 226,568 3. Hedging derivatives 100,445 5,906,926 24,658 Total 14,042,549 42,806,564 1,611,883 The item “1. c) Financial assets mandatorily at fair value” at level 3 as at 31 December 2018 includes the investments in Atlante and Italian Recovery Fund, former Atlante II (carrying value €355 million) and in “Schema Volontario” (carrying value €47,6 million). Since no market valuations or prices of comparable securities are available for “Schema Volontario”, at 31 December 2018 the fair value of such instrument was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the Rendiconto 2018 of the “Schema Volontario” itself, while concerning Atlante and Italian Recovery Fund, former Atlante II, the Fair Value was determined having as reference the valuation of the financial assets provided from the fund itself, supplemented, if appropriate, using internal models (Discounted Cash Flow and Market Multiples). See Part B - Section 2.5 - Financial assets mandatorily at fair value income for further information. Transfers between level of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities. Besides the transfers related to financial assets and liabilities carried at level 3 detailed in the sections below during the year the following transfers occurred: • from level 1 to level 2 owing to a worsening of the liquidity and price reliability indicators (based on the bid-ask spread, relative size and applicability of the published prices) collected by third parties as calculated and recorded in the context of the Global Bond IPV process: - of financial assets measured at fair value through profit & loss (financial assets held for trading, designed at fair value and mandatorily at fair value) for approximately €176 million; - of financial liabilities measured at fair value through profit & loss (financial liabilities held for trading and designed at fair value) for approximately €4 million; • from level 2 to level 1 owing to an improvement of the liquidity and price reliability indicators (based on the bid-ask spread, relative size and applicability of the published prices) collected by third parties as calculated and recorded in the context of the Global Bond IPV process: - of financial assets measured at fair value through profit & loss (financial assets held for trading, designed at fair value and mandatorily at fair value) for approximately €1,969 million; - of financial assets measured at fair value through reserves (financial assets at fair value through other comprehensive income) for approximately €340 million; - of financial liabilities measured at fair value through profit & loss (financial liabilities held for trading and designed at fair value) for approximately €47 million. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 180 2018 Annual Report and Accounts · UniCredit Quantitative information A.4.5 Fair value hierarchy A.4.5 Fair Value Hierarchy The following tables show the portfolios breakdown in terms of (i) financial assets and liabilities valued at fair value as well as (ii) assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis, according to the above-mentioned levels. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2018 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at fair value through profit or loss 32,822,586 48,509,976 4,805,193 a) Financial assets held for trading 25,214,655 37,940,593 2,076,226 b) Financial assets designated at fair value 3 103 - c) Financial assets mandatorily at fair value 7,607,928 10,569,280 2,728,967 2. Financial assets at fair value through other comprehensive income 76,843,736 10,392,587 1,043,834 3. Hedging derivatives 98,986 4,578,280 4,251 4. Property, plant and equipment - - 47,147 5. Intangible assets - - - Total 109,765,308 63,480,843 5,900,425 1. Financial liabilities held for trading 13,514,689 28,235,890 1,360,657 2. Financial liabilities designated at fair value 427,415 8,663,748 226,568 3. Hedging derivatives 100,445 5,906,926 24,658 Total 14,042,549 42,806,564 1,611,883 The item “1. c) Financial assets mandatorily at fair value” at level 3 as at 31 December 2018 includes the investments in Atlante and Italian Recovery Fund, former Atlante II (carrying value €355 million) and in “Schema Volontario” (carrying value €47,6 million). Since no market valuations or prices of comparable securities are available for “Schema Volontario”, at 31 December 2018 the fair value of such instrument was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the Rendiconto 2018 of the “Schema Volontario” itself, while concerning Atlante and Italian Recovery Fund, former Atlante II, the Fair Value was determined having as reference the valuation of the financial assets provided from the fund itself, supplemented, if appropriate, using internal models (Discounted Cash Flow and Market Multiples). See Part B - Section 2.5 - Financial assets mandatorily at fair value income for further information. Transfers between level of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities. Besides the transfers related to financial assets and liabilities carried at level 3 detailed in the sections below during the year the following transfers occurred: • from level 1 to level 2 owing to a worsening of the liquidity and price reliability indicators (based on the bid-ask spread, relative size and applicability of the published prices) collected by third parties as calculated and recorded in the context of the Global Bond IPV process: - of financial assets measured at fair value through profit & loss (financial assets held for trading, designed at fair value and mandatorily at fair value) for approximately €176 million; - of financial liabilities measured at fair value through profit & loss (financial liabilities held for trading and designed at fair value) for approximately €4 million; • from level 2 to level 1 owing to an improvement of the liquidity and price reliability indicators (based on the bid-ask spread, relative size and applicability of the published prices) collected by third parties as calculated and recorded in the context of the Global Bond IPV process: - of financial assets measured at fair value through profit & loss (financial assets held for trading, designed at fair value and mandatorily at fair value) for approximately €1,969 million; - of financial assets measured at fair value through reserves (financial assets at fair value through other comprehensive income) for approximately €340 million; - of financial liabilities measured at fair value through profit & loss (financial liabilities held for trading and designed at fair value) for approximately €47 million. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 180 2018 Annual Report and Accounts · UniCredit Quantitative information A.4.5 Fair value hierarchy A.4.5 Fair Value Hierarchy The following tables show the portfolios breakdown in terms of (i) financial assets and liabilities valued at fair value as well as (ii) assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis, according to the above-mentioned levels. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2018 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at fair value through profit or loss 32,822,586 48,509,976 4,805,193 a) Financial assets held for trading 25,214,655 37,940,593 2,076,226 b) Financial assets designated at fair value 3 103 - c) Financial assets mandatorily at fair value 7,607,928 10,569,280 2,728,967 2. Financial assets at fair value through other comprehensive income 76,843,736 10,392,587 1,043,834 3. Hedging derivatives 98,986 4,578,280 4,251 4. Property, plant and equipment - - 47,147 5. Intangible assets - - - Total 109,765,308 63,480,843 5,900,425 1. Financial liabilities held for trading 13,514,689 28,235,890 1,360,657 2. Financial liabilities designated at fair value 427,415 8,663,748 226,568 3. Hedging derivatives 100,445 5,906,926 24,658 Total 14,042,549 42,806,564 1,611,883 The item “1. c) Financial assets mandatorily at fair value” at level 3 as at 31 December 2018 includes the investments in Atlante and Italian Recovery Fund, former Atlante II (carrying value €355 million) and in “Schema Volontario” (carrying value €47,6 million). Since no market valuations or prices of comparable securities are available for “Schema Volontario”, at 31 December 2018 the fair value of such instrument was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the Rendiconto 2018 of the “Schema Volontario” itself, while concerning Atlante and Italian Recovery Fund, former Atlante II, the Fair Value was determined having as reference the valuation of the financial assets provided from the fund itself, supplemented, if appropriate, using internal models (Discounted Cash Flow and Market Multiples). See Part B - Section 2.5 - Financial assets mandatorily at fair value income for further information. Transfers between level of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities. Besides the transfers related to financial assets and liabilities carried at level 3 detailed in the sections below during the year the following transfers occurred: • from level 1 to level 2 owing to a worsening of the liquidity and price reliability indicators (based on the bid-ask spread, relative size and applicability of the published prices) collected by third parties as calculated and recorded in the context of the Global Bond IPV process: - of financial assets measured at fair value through profit & loss (financial assets held for trading, designed at fair value and mandatorily at fair value) for approximately €176 million; - of financial liabilities measured at fair value through profit & loss (financial liabilities held for trading and designed at fair value) for approximately €4 million; • from level 2 to level 1 owing to an improvement of the liquidity and price reliability indicators (based on the bid-ask spread, relative size and applicability of the published prices) collected by third parties as calculated and recorded in the context of the Global Bond IPV process: - of financial assets measured at fair value through profit & loss (financial assets held for trading, designed at fair value and mandatorily at fair value) for approximately €1,969 million; - of financial assets measured at fair value through reserves (financial assets at fair value through other comprehensive income) for approximately €340 million; - of financial liabilities measured at fair value through profit & loss (financial liabilities held for trading and designed at fair value) for approximately €47 million. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 180 2018 Annual Report and Accounts · UniCredit Quantitative information A.4.5 Fair value hierarchy A.4.5 Fair Value Hierarchy The following tables show the portfolios breakdown in terms of (i) financial assets and liabilities valued at fair value as well as (ii) assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis, according to the above-mentioned levels. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2018 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at fair value through profit or loss 32,822,586 48,509,976 4,805,193 a) Financial assets held for trading 25,214,655 37,940,593 2,076,226 b) Financial assets designated at fair value 3 103 - c) Financial assets mandatorily at fair value 7,607,928 10,569,280 2,728,967 2. Financial assets at fair value through other comprehensive income 76,843,736 10,392,587 1,043,834 3. Hedging derivatives 98,986 4,578,280 4,251 4. Property, plant and equipment - - 47,147 5. Intangible assets - - - Total 109,765,308 63,480,843 5,900,425 1. Financial liabilities held for trading 13,514,689 28,235,890 1,360,657 2. Financial liabilities designated at fair value 427,415 8,663,748 226,568 3. Hedging derivatives 100,445 5,906,926 24,658 Total 14,042,549 42,806,564 1,611,883 The item “1. c) Financial assets mandatorily at fair value” at level 3 as at 31 December 2018 includes the investments in Atlante and Italian Recovery Fund, former Atlante II (carrying value €355 million) and in “Schema Volontario” (carrying value €47,6 million). Since no market valuations or prices of comparable securities are available for “Schema Volontario”, at 31 December 2018 the fair value of such instrument was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the Rendiconto 2018 of the “Schema Volontario” itself, while concerning Atlante and Italian Recovery Fund, former Atlante II, the Fair Value was determined having as reference the valuation of the financial assets provided from the fund itself, supplemented, if appropriate, using internal models (Discounted Cash Flow and Market Multiples). See Part B - Section 2.5 - Financial assets mandatorily at fair value income for further information. Transfers between level of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities. Besides the transfers related to financial assets and liabilities carried at level 3 detailed in the sections below during the year the following transfers occurred: • from level 1 to level 2 owing to a worsening of the liquidity and price reliability indicators (based on the bid-ask spread, relative size and applicability of the published prices) collected by third parties as calculated and recorded in the context of the Global Bond IPV process: - of financial assets measured at fair value through profit & loss (financial assets held for trading, designed at fair value and mandatorily at fair value) for approximately €176 million; - of financial liabilities measured at fair value through profit & loss (financial liabilities held for trading and designed at fair value) for approximately €4 million; • from level 2 to level 1 owing to an improvement of the liquidity and price reliability indicators (based on the bid-ask spread, relative size and applicability of the published prices) collected by third parties as calculated and recorded in the context of the Global Bond IPV process: - of financial assets measured at fair value through profit & loss (financial assets held for trading, designed at fair value and mandatorily at fair value) for approximately €1,969 million; - of financial assets measured at fair value through reserves (financial assets at fair value through other comprehensive income) for approximately €340 million; - of financial liabilities measured at fair value through profit & loss (financial liabilities held for trading and designed at fair value) for approximately €47 million. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 181 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2017 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets held for trading 33,318,221 39,882,888 1,484,781 2. Financial assets at fair value through P&L 7,067,178 14,960,870 45,295 3. Available for sale financial assets 92,344,616 9,806,925 1,488,481 4. Hedging derivatives 1 3,428,674 2,395 5. Property, plant and equipment - - 47,380 6. Intangible assets - - - Total 132,730,016 68,079,357 3,068,332 1. Financial liabilities held for Trading 14,994,487 38,874,678 1,914,560 2. Financial liabilities at fair value through P&L - 2,980,270 30,259 3. Hedging derivatives 79 3,509,219 58,547 Total 14,994,566 45,364,167 2,003,366 A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME HEDGING DERIVATIVES PROPERTY, PLANT AND EQUIPMENT INTANGIBLE ASSETS TOTAL OF WHICH: A) FINANCIAL ASSETS HELD FOR TRADING OF WHICH: B) FINANCIAL ASSETS DESIGNATED AT FAIR OF WHICH: C) FINANCIAL ASSETS MANDATORILY AT FAIR VALUE 1. Opening balances 3,702,074 1,421,686 - 2,280,388 1,065,570 2,394 47,375 - 2. Increases 2,887,933 1,787,222 - 1,100,711 806,940 14,489 1,526 - 2.1 Purchases 1,667,449 1,187,738 - 479,711 28,661 - - - 2.2 Profits recognised in 663,977 510,847 - 153,130 41,652 4,186 1,526 - 2.2.1 Income statement 663,977 510,847 - 153,130 3,681 4,186 1,526 - - of which unrealised gains 339,641 231,520 - 108,121 - - 1,526 - 2.2.2 Equity X X X X 37,971 - - - 2.3 Transfers from other levels 206,098 23,913 - 182,185 433,457 - - - 2.4 Other increases 350,409 64,724 - 285,685 303,170 10,303 - - 3. Decreases 1,784,814 1,132,682 - 652,132 828,676 12,632 1,754 - 3.1 Sales 855,311 671,081 - 184,230 373,187 - - - 3.2 Redemptions 24,187 101 - 24,086 58,041 - - - 3.3 Losses recognised in 420,978 323,517 - 97,461 122,450 2,018 623 - 3.3.1 Income statement 420,978 323,517 - 97,461 2,853 269 623 - - of which unrealised losses 167,683 112,998 - 54,685 - - 623 - 3.3.2 Equity X X X X 119,597 1,749 - - 3.4 Transfers to other levels 128,572 78,059 - 50,513 5,793 - - - 3.5 Other decreases 355,766 59,924 - 295,842 269,205 10,614 1,131 - of which: business combinations - - - - - - - - 4. Closing balances 4,805,193 2,076,226 - 2,728,967 1,043,834 4,251 47,147 - The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting; • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. The sub-item “2.2 Profits” and the sub-item “3.3 Losses” on fair value on financial assets at fair value through other comprehensive income are accounted in item “120. Revaluation reserves” of Shareholder’s Equity, with the exception of impairment and gains and losses on exchange rates on monetary assets (liabilities) which are reported respectively within item “130. Net losses/recoveries on credit impairment: b) financial assets/liabilities at fair value through other comprehensive income” and item “80. Gains and losses on financial assets and liabilities held for trading” until the financial asset is not sold, instant in which cumulative gains and losses are reported at Income Statement at item “100. b) Gains and losses on financial assets at fair value through other comprehensive income”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 181 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2017 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets held for trading 33,318,221 39,882,888 1,484,781 2. Financial assets at fair value through P&L 7,067,178 14,960,870 45,295 3. Available for sale financial assets 92,344,616 9,806,925 1,488,481 4. Hedging derivatives 1 3,428,674 2,395 5. Property, plant and equipment - - 47,380 6. Intangible assets - - - Total 132,730,016 68,079,357 3,068,332 1. Financial liabilities held for Trading 14,994,487 38,874,678 1,914,560 2. Financial liabilities at fair value through P&L - 2,980,270 30,259 3. Hedging derivatives 79 3,509,219 58,547 Total 14,994,566 45,364,167 2,003,366 A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME HEDGING DERIVATIVES PROPERTY, PLANT AND EQUIPMENT INTANGIBLE ASSETS TOTAL OF WHICH: A) FINANCIAL ASSETS HELD FOR TRADING OF WHICH: B) FINANCIAL ASSETS DESIGNATED AT FAIR OF WHICH: C) FINANCIAL ASSETS MANDATORILY AT FAIR VALUE 1. Opening balances 3,702,074 1,421,686 - 2,280,388 1,065,570 2,394 47,375 - 2. Increases 2,887,933 1,787,222 - 1,100,711 806,940 14,489 1,526 - 2.1 Purchases 1,667,449 1,187,738 - 479,711 28,661 - - - 2.2 Profits recognised in 663,977 510,847 - 153,130 41,652 4,186 1,526 - 2.2.1 Income statement 663,977 510,847 - 153,130 3,681 4,186 1,526 - - of which unrealised gains 339,641 231,520 - 108,121 - - 1,526 - 2.2.2 Equity X X X X 37,971 - - - 2.3 Transfers from other levels 206,098 23,913 - 182,185 433,457 - - - 2.4 Other increases 350,409 64,724 - 285,685 303,170 10,303 - - 3. Decreases 1,784,814 1,132,682 - 652,132 828,676 12,632 1,754 - 3.1 Sales 855,311 671,081 - 184,230 373,187 - - - 3.2 Redemptions 24,187 101 - 24,086 58,041 - - - 3.3 Losses recognised in 420,978 323,517 - 97,461 122,450 2,018 623 - 3.3.1 Income statement 420,978 323,517 - 97,461 2,853 269 623 - - of which unrealised losses 167,683 112,998 - 54,685 - - 623 - 3.3.2 Equity X X X X 119,597 1,749 - - 3.4 Transfers to other levels 128,572 78,059 - 50,513 5,793 - - - 3.5 Other decreases 355,766 59,924 - 295,842 269,205 10,614 1,131 - of which: business combinations - - - - - - - - 4. Closing balances 4,805,193 2,076,226 - 2,728,967 1,043,834 4,251 47,147 - The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting; • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. The sub-item “2.2 Profits” and the sub-item “3.3 Losses” on fair value on financial assets at fair value through other comprehensive income are accounted in item “120. Revaluation reserves” of Shareholder’s Equity, with the exception of impairment and gains and losses on exchange rates on monetary assets (liabilities) which are reported respectively within item “130. Net losses/recoveries on credit impairment: b) financial assets/liabilities at fair value through other comprehensive income” and item “80. Gains and losses on financial assets and liabilities held for trading” until the financial asset is not sold, instant in which cumulative gains and losses are reported at Income Statement at item “100. b) Gains and losses on financial assets at fair value through other comprehensive income”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 181 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2017 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets held for trading 33,318,221 39,882,888 1,484,781 2. Financial assets at fair value through P&L 7,067,178 14,960,870 45,295 3. Available for sale financial assets 92,344,616 9,806,925 1,488,481 4. Hedging derivatives 1 3,428,674 2,395 5. Property, plant and equipment - - 47,380 6. Intangible assets - - - Total 132,730,016 68,079,357 3,068,332 1. Financial liabilities held for Trading 14,994,487 38,874,678 1,914,560 2. Financial liabilities at fair value through P&L - 2,980,270 30,259 3. Hedging derivatives 79 3,509,219 58,547 Total 14,994,566 45,364,167 2,003,366 A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME HEDGING DERIVATIVES PROPERTY, PLANT AND EQUIPMENT INTANGIBLE ASSETS TOTAL OF WHICH: A) FINANCIAL ASSETS HELD FOR TRADING OF WHICH: B) FINANCIAL ASSETS DESIGNATED AT FAIR OF WHICH: C) FINANCIAL ASSETS MANDATORILY AT FAIR VALUE 1. Opening balances 3,702,074 1,421,686 - 2,280,388 1,065,570 2,394 47,375 - 2. Increases 2,887,933 1,787,222 - 1,100,711 806,940 14,489 1,526 - 2.1 Purchases 1,667,449 1,187,738 - 479,711 28,661 - - - 2.2 Profits recognised in 663,977 510,847 - 153,130 41,652 4,186 1,526 - 2.2.1 Income statement 663,977 510,847 - 153,130 3,681 4,186 1,526 - - of which unrealised gains 339,641 231,520 - 108,121 - - 1,526 - 2.2.2 Equity X X X X 37,971 - - - 2.3 Transfers from other levels 206,098 23,913 - 182,185 433,457 - - - 2.4 Other increases 350,409 64,724 - 285,685 303,170 10,303 - - 3. Decreases 1,784,814 1,132,682 - 652,132 828,676 12,632 1,754 - 3.1 Sales 855,311 671,081 - 184,230 373,187 - - - 3.2 Redemptions 24,187 101 - 24,086 58,041 - - - 3.3 Losses recognised in 420,978 323,517 - 97,461 122,450 2,018 623 - 3.3.1 Income statement 420,978 323,517 - 97,461 2,853 269 623 - - of which unrealised losses 167,683 112,998 - 54,685 - - 623 - 3.3.2 Equity X X X X 119,597 1,749 - - 3.4 Transfers to other levels 128,572 78,059 - 50,513 5,793 - - - 3.5 Other decreases 355,766 59,924 - 295,842 269,205 10,614 1,131 - of which: business combinations - - - - - - - - 4. Closing balances 4,805,193 2,076,226 - 2,728,967 1,043,834 4,251 47,147 - The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting; • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. The sub-item “2.2 Profits” and the sub-item “3.3 Losses” on fair value on financial assets at fair value through other comprehensive income are accounted in item “120. Revaluation reserves” of Shareholder’s Equity, with the exception of impairment and gains and losses on exchange rates on monetary assets (liabilities) which are reported respectively within item “130. Net losses/recoveries on credit impairment: b) financial assets/liabilities at fair value through other comprehensive income” and item “80. Gains and losses on financial assets and liabilities held for trading” until the financial asset is not sold, instant in which cumulative gains and losses are reported at Income Statement at item “100. b) Gains and losses on financial assets at fair value through other comprehensive income”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 181 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2017 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets held for trading 33,318,221 39,882,888 1,484,781 2. Financial assets at fair value through P&L 7,067,178 14,960,870 45,295 3. Available for sale financial assets 92,344,616 9,806,925 1,488,481 4. Hedging derivatives 1 3,428,674 2,395 5. Property, plant and equipment - - 47,380 6. Intangible assets - - - Total 132,730,016 68,079,357 3,068,332 1. Financial liabilities held for Trading 14,994,487 38,874,678 1,914,560 2. Financial liabilities at fair value through P&L - 2,980,270 30,259 3. Hedging derivatives 79 3,509,219 58,547 Total 14,994,566 45,364,167 2,003,366 A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME HEDGING DERIVATIVES PROPERTY, PLANT AND EQUIPMENT INTANGIBLE ASSETS TOTAL OF WHICH: A) FINANCIAL ASSETS HELD FOR TRADING OF WHICH: B) FINANCIAL ASSETS DESIGNATED AT FAIR OF WHICH: C) FINANCIAL ASSETS MANDATORILY AT FAIR VALUE 1. Opening balances 3,702,074 1,421,686 - 2,280,388 1,065,570 2,394 47,375 - 2. Increases 2,887,933 1,787,222 - 1,100,711 806,940 14,489 1,526 - 2.1 Purchases 1,667,449 1,187,738 - 479,711 28,661 - - - 2.2 Profits recognised in 663,977 510,847 - 153,130 41,652 4,186 1,526 - 2.2.1 Income statement 663,977 510,847 - 153,130 3,681 4,186 1,526 - - of which unrealised gains 339,641 231,520 - 108,121 - - 1,526 - 2.2.2 Equity X X X X 37,971 - - - 2.3 Transfers from other levels 206,098 23,913 - 182,185 433,457 - - - 2.4 Other increases 350,409 64,724 - 285,685 303,170 10,303 - - 3. Decreases 1,784,814 1,132,682 - 652,132 828,676 12,632 1,754 - 3.1 Sales 855,311 671,081 - 184,230 373,187 - - - 3.2 Redemptions 24,187 101 - 24,086 58,041 - - - 3.3 Losses recognised in 420,978 323,517 - 97,461 122,450 2,018 623 - 3.3.1 Income statement 420,978 323,517 - 97,461 2,853 269 623 - - of which unrealised losses 167,683 112,998 - 54,685 - - 623 - 3.3.2 Equity X X X X 119,597 1,749 - - 3.4 Transfers to other levels 128,572 78,059 - 50,513 5,793 - - - 3.5 Other decreases 355,766 59,924 - 295,842 269,205 10,614 1,131 - of which: business combinations - - - - - - - - 4. Closing balances 4,805,193 2,076,226 - 2,728,967 1,043,834 4,251 47,147 - The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting; • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. The sub-item “2.2 Profits” and the sub-item “3.3 Losses” on fair value on financial assets at fair value through other comprehensive income are accounted in item “120. Revaluation reserves” of Shareholder’s Equity, with the exception of impairment and gains and losses on exchange rates on monetary assets (liabilities) which are reported respectively within item “130. Net losses/recoveries on credit impairment: b) financial assets/liabilities at fair value through other comprehensive income” and item “80. Gains and losses on financial assets and liabilities held for trading” until the financial asset is not sold, instant in which cumulative gains and losses are reported at Income Statement at item “100. b) Gains and losses on financial assets at fair value through other comprehensive income”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 181 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2017 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets held for trading 33,318,221 39,882,888 1,484,781 2. Financial assets at fair value through P&L 7,067,178 14,960,870 45,295 3. Available for sale financial assets 92,344,616 9,806,925 1,488,481 4. Hedging derivatives 1 3,428,674 2,395 5. Property, plant and equipment - - 47,380 6. Intangible assets - - - Total 132,730,016 68,079,357 3,068,332 1. Financial liabilities held for Trading 14,994,487 38,874,678 1,914,560 2. Financial liabilities at fair value through P&L - 2,980,270 30,259 3. Hedging derivatives 79 3,509,219 58,547 Total 14,994,566 45,364,167 2,003,366 A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME HEDGING DERIVATIVES PROPERTY, PLANT AND EQUIPMENT INTANGIBLE ASSETS TOTAL OF WHICH: A) FINANCIAL ASSETS HELD FOR TRADING OF WHICH: B) FINANCIAL ASSETS DESIGNATED AT FAIR OF WHICH: C) FINANCIAL ASSETS MANDATORILY AT FAIR VALUE 1. Opening balances 3,702,074 1,421,686 - 2,280,388 1,065,570 2,394 47,375 - 2. Increases 2,887,933 1,787,222 - 1,100,711 806,940 14,489 1,526 - 2.1 Purchases 1,667,449 1,187,738 - 479,711 28,661 - - - 2.2 Profits recognised in 663,977 510,847 - 153,130 41,652 4,186 1,526 - 2.2.1 Income statement 663,977 510,847 - 153,130 3,681 4,186 1,526 - - of which unrealised gains 339,641 231,520 - 108,121 - - 1,526 - 2.2.2 Equity X X X X 37,971 - - - 2.3 Transfers from other levels 206,098 23,913 - 182,185 433,457 - - - 2.4 Other increases 350,409 64,724 - 285,685 303,170 10,303 - - 3. Decreases 1,784,814 1,132,682 - 652,132 828,676 12,632 1,754 - 3.1 Sales 855,311 671,081 - 184,230 373,187 - - - 3.2 Redemptions 24,187 101 - 24,086 58,041 - - - 3.3 Losses recognised in 420,978 323,517 - 97,461 122,450 2,018 623 - 3.3.1 Income statement 420,978 323,517 - 97,461 2,853 269 623 - - of which unrealised losses 167,683 112,998 - 54,685 - - 623 - 3.3.2 Equity X X X X 119,597 1,749 - - 3.4 Transfers to other levels 128,572 78,059 - 50,513 5,793 - - - 3.5 Other decreases 355,766 59,924 - 295,842 269,205 10,614 1,131 - of which: business combinations - - - - - - - - 4. Closing balances 4,805,193 2,076,226 - 2,728,967 1,043,834 4,251 47,147 - The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting; • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. The sub-item “2.2 Profits” and the sub-item “3.3 Losses” on fair value on financial assets at fair value through other comprehensive income are accounted in item “120. Revaluation reserves” of Shareholder’s Equity, with the exception of impairment and gains and losses on exchange rates on monetary assets (liabilities) which are reported respectively within item “130. Net losses/recoveries on credit impairment: b) financial assets/liabilities at fair value through other comprehensive income” and item “80. Gains and losses on financial assets and liabilities held for trading” until the financial asset is not sold, instant in which cumulative gains and losses are reported at Income Statement at item “100. b) Gains and losses on financial assets at fair value through other comprehensive income”. Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 182 2018 Annual Report and Accounts · UniCredit Transfers between levels of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities and mostly refer to exposure held by UniCredit S.p.A. and UniCredit Bank AG. A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL LIABILITIES HELD FOR TRADING FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE HEDGING DERIVATIVES 1. Opening balances 1,371,167 581,280 58,546 2. Increases 1,407,530 122,114 5,267 2.1 Issuance 846,689 105,771 - 2.2 Losses recognised in 542,324 5,710 3,155 2.2.1 Income statement 542,324 5,300 658 - of which unrealised losses 232,683 1,552 - 2.2.2 Equity X 410 2,497 2.3 Transfers from other levels 12,543 756 - 2.4 Other increases 5,974 9,877 2,112 3. Decreases 1,418,040 476,826 39,155 3.1 Redemptions 665,590 16,396 - 3.2 Purchases - 209,601 - 3.3 Profits recognised in 477,506 19,923 29,462 3.3.1 Income statement 477,506 19,923 29,462 - of which unrealised gains 377,187 19,198 - 3.3.2 Equity X - - 3.4 Transfers to other levels 223,140 217,882 - 3.5 Other decreases 51,804 13,024 9,693 of which: business combinations - - - 4. Closing balances 1,360,657 226,568 24,658 The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting. • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. Transfers between levels of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities and mostly refer to exposure held by UniCredit S.p.A. and UniCredit Bank AG. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at amortised cost 579,310,842 30,468,419 204,525,199 350,139,974 2. Property, plant and equipment held for investment 1,517,593 - 88,561 2,133,818 3. Non-current assets and disposal groups classified as held for sale 1,799,936 7,554 57,275 122,678 Total 582,628,371 30,475,973 204,671,035 352,396,470 1. Financial liabilities at amortised cost 686,036,242 39,645,119 269,213,794 379,395,468 2. Liabilities associated with assets classified as held for sale 539,987 - - 35,657 Total 686,576,229 39,645,119 269,213,794 379,431,125 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 182 2018 Annual Report and Accounts · UniCredit Transfers between levels of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities and mostly refer to exposure held by UniCredit S.p.A. and UniCredit Bank AG. A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL LIABILITIES HELD FOR TRADING FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE HEDGING DERIVATIVES 1. Opening balances 1,371,167 581,280 58,546 2. Increases 1,407,530 122,114 5,267 2.1 Issuance 846,689 105,771 - 2.2 Losses recognised in 542,324 5,710 3,155 2.2.1 Income statement 542,324 5,300 658 - of which unrealised losses 232,683 1,552 - 2.2.2 Equity X 410 2,497 2.3 Transfers from other levels 12,543 756 - 2.4 Other increases 5,974 9,877 2,112 3. Decreases 1,418,040 476,826 39,155 3.1 Redemptions 665,590 16,396 - 3.2 Purchases - 209,601 - 3.3 Profits recognised in 477,506 19,923 29,462 3.3.1 Income statement 477,506 19,923 29,462 - of which unrealised gains 377,187 19,198 - 3.3.2 Equity X - - 3.4 Transfers to other levels 223,140 217,882 - 3.5 Other decreases 51,804 13,024 9,693 of which: business combinations - - - 4. Closing balances 1,360,657 226,568 24,658 The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting. • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. Transfers between levels of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities and mostly refer to exposure held by UniCredit S.p.A. and UniCredit Bank AG. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at amortised cost 579,310,842 30,468,419 204,525,199 350,139,974 2. Property, plant and equipment held for investment 1,517,593 - 88,561 2,133,818 3. Non-current assets and disposal groups classified as held for sale 1,799,936 7,554 57,275 122,678 Total 582,628,371 30,475,973 204,671,035 352,396,470 1. Financial liabilities at amortised cost 686,036,242 39,645,119 269,213,794 379,395,468 2. Liabilities associated with assets classified as held for sale 539,987 - - 35,657 Total 686,576,229 39,645,119 269,213,794 379,431,125 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 182 2018 Annual Report and Accounts · UniCredit Transfers between levels of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities and mostly refer to exposure held by UniCredit S.p.A. and UniCredit Bank AG. A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL LIABILITIES HELD FOR TRADING FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE HEDGING DERIVATIVES 1. Opening balances 1,371,167 581,280 58,546 2. Increases 1,407,530 122,114 5,267 2.1 Issuance 846,689 105,771 - 2.2 Losses recognised in 542,324 5,710 3,155 2.2.1 Income statement 542,324 5,300 658 - of which unrealised losses 232,683 1,552 - 2.2.2 Equity X 410 2,497 2.3 Transfers from other levels 12,543 756 - 2.4 Other increases 5,974 9,877 2,112 3. Decreases 1,418,040 476,826 39,155 3.1 Redemptions 665,590 16,396 - 3.2 Purchases - 209,601 - 3.3 Profits recognised in 477,506 19,923 29,462 3.3.1 Income statement 477,506 19,923 29,462 - of which unrealised gains 377,187 19,198 - 3.3.2 Equity X - - 3.4 Transfers to other levels 223,140 217,882 - 3.5 Other decreases 51,804 13,024 9,693 of which: business combinations - - - 4. Closing balances 1,360,657 226,568 24,658 The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting. • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. Transfers between levels of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities and mostly refer to exposure held by UniCredit S.p.A. and UniCredit Bank AG. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at amortised cost 579,310,842 30,468,419 204,525,199 350,139,974 2. Property, plant and equipment held for investment 1,517,593 - 88,561 2,133,818 3. Non-current assets and disposal groups classified as held for sale 1,799,936 7,554 57,275 122,678 Total 582,628,371 30,475,973 204,671,035 352,396,470 1. Financial liabilities at amortised cost 686,036,242 39,645,119 269,213,794 379,395,468 2. Liabilities associated with assets classified as held for sale 539,987 - - 35,657 Total 686,576,229 39,645,119 269,213,794 379,431,125 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 182 2018 Annual Report and Accounts · UniCredit Transfers between levels of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities and mostly refer to exposure held by UniCredit S.p.A. and UniCredit Bank AG. A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL LIABILITIES HELD FOR TRADING FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE HEDGING DERIVATIVES 1. Opening balances 1,371,167 581,280 58,546 2. Increases 1,407,530 122,114 5,267 2.1 Issuance 846,689 105,771 - 2.2 Losses recognised in 542,324 5,710 3,155 2.2.1 Income statement 542,324 5,300 658 - of which unrealised losses 232,683 1,552 - 2.2.2 Equity X 410 2,497 2.3 Transfers from other levels 12,543 756 - 2.4 Other increases 5,974 9,877 2,112 3. Decreases 1,418,040 476,826 39,155 3.1 Redemptions 665,590 16,396 - 3.2 Purchases - 209,601 - 3.3 Profits recognised in 477,506 19,923 29,462 3.3.1 Income statement 477,506 19,923 29,462 - of which unrealised gains 377,187 19,198 - 3.3.2 Equity X - - 3.4 Transfers to other levels 223,140 217,882 - 3.5 Other decreases 51,804 13,024 9,693 of which: business combinations - - - 4. Closing balances 1,360,657 226,568 24,658 The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting. • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. Transfers between levels of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities and mostly refer to exposure held by UniCredit S.p.A. and UniCredit Bank AG. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at amortised cost 579,310,842 30,468,419 204,525,199 350,139,974 2. Property, plant and equipment held for investment 1,517,593 - 88,561 2,133,818 3. Non-current assets and disposal groups classified as held for sale 1,799,936 7,554 57,275 122,678 Total 582,628,371 30,475,973 204,671,035 352,396,470 1. Financial liabilities at amortised cost 686,036,242 39,645,119 269,213,794 379,395,468 2. Liabilities associated with assets classified as held for sale 539,987 - - 35,657 Total 686,576,229 39,645,119 269,213,794 379,431,125 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies 182 2018 Annual Report and Accounts · UniCredit Transfers between levels of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities and mostly refer to exposure held by UniCredit S.p.A. and UniCredit Bank AG. A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL LIABILITIES HELD FOR TRADING FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE HEDGING DERIVATIVES 1. Opening balances 1,371,167 581,280 58,546 2. Increases 1,407,530 122,114 5,267 2.1 Issuance 846,689 105,771 - 2.2 Losses recognised in 542,324 5,710 3,155 2.2.1 Income statement 542,324 5,300 658 - of which unrealised losses 232,683 1,552 - 2.2.2 Equity X 410 2,497 2.3 Transfers from other levels 12,543 756 - 2.4 Other increases 5,974 9,877 2,112 3. Decreases 1,418,040 476,826 39,155 3.1 Redemptions 665,590 16,396 - 3.2 Purchases - 209,601 - 3.3 Profits recognised in 477,506 19,923 29,462 3.3.1 Income statement 477,506 19,923 29,462 - of which unrealised gains 377,187 19,198 - 3.3.2 Equity X - - 3.4 Transfers to other levels 223,140 217,882 - 3.5 Other decreases 51,804 13,024 9,693 of which: business combinations - - - 4. Closing balances 1,360,657 226,568 24,658 The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting. • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. Transfers between levels of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution in some Group entities and mostly refer to exposure held by UniCredit S.p.A. and UniCredit Bank AG. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at amortised cost 579,310,842 30,468,419 204,525,199 350,139,974 2. Property, plant and equipment held for investment 1,517,593 - 88,561 2,133,818 3. Non-current assets and disposal groups classified as held for sale 1,799,936 7,554 57,275 122,678 Total 582,628,371 30,475,973 204,671,035 352,396,470 1. Financial liabilities at amortised cost 686,036,242 39,645,119 269,213,794 379,395,468 2. Liabilities associated with assets classified as held for sale 539,987 - - 35,657 Total 686,576,229 39,645,119 269,213,794 379,431,125 Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 183 The changes occurred between 31 December 2017 and 31 December 2018 in the ratio between fair value and book value for financial assets at amortised cost reflect the enhancement of the methodology and the parameters adopted for the fair value calculation for disclosure and the evolution in the benchmark interest rate, in the risk premium and in the probability of default depending on or deriving from markets trend. These events together with the evolution of the approach to identify the significance of non-observable inputs have been reflected in fair value hierarchy level distribution. The book value of items “3. Non-current assets and disposal groups classified as held for sale” (Assets) and “2. Liabilities associated with assets classified as held for sale” (Liabilities) includes amounts referred to assets and liabilities measured on Balance Sheet on the basis of their cost, respectively for €1,612 million and €504 million. For further details on these two sub-items see Part B - Section 12 - table 12.1. The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value level (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Held-to-maturity investments 6,277,022 5,096,861 1,189,062 60,735 2. Loans and receivables with banks 70,982,743 526,248 47,955,776 22,869,184 3. Loans and receivables with customers 447,726,913 1,115,810 142,196,033 311,225,039 4. Property, plant and equipment held for investment 2,132,168 14,821 97,488 2,469,292 5. Non-current assets and disposal groups classified as held for sale 1,110,960 - 79,305 195,941 Total 528,229,806 6,753,740 191,517,664 336,820,191 1. Deposits from banks 123,244,080 - 56,419,195 66,675,209 2. Deposits from customers 462,895,261 - 162,598,619 301,045,127 3. Debt securities in issue 98,602,632 43,856,076 36,978,706 22,893,916 4. Liabilities included in disposal groups classified as held for sale 184,829 - - 78,884 Total 684,926,802 43,856,076 255,996,520 390,693,136 A.5 - Information on “day one profit/loss" The value at which financial instruments are recognised is equal to their fair value on the same date. The fair value of financial instruments, different from those designated at fair value through profit or loss, at their recognition date is usually assumed to be equal to the amount collected or paid. For financial instruments held for trading (see Sections 1 and 14 of Part A.2 above) and instruments designated at fair value (see Sections 5 and 15 of Part A.2 above), any difference from the amount collected or paid is posted under the appropriate items of the income statement. The use of conservative valuation models, the processes described above for revising the models used and related parameters and value adjustments to reflect model risk ensure that the amount recognised in the income statement is not derived from the use of valuation parameters that cannot be observed. More specifically, the calculation of fair value adjustments to reflect model risk ensures that the fair value portion of these instruments relating to the use of subjective parameters is not recognised in the profit and loss account, but changes the balance sheet value of these instruments. The presence of further “day one profit” leads to the recognition of a distinct asset component that is the object of linear competition. Recognition of these portions in the profit and loss account is then made only when objective parameters are applied and therefore the adjustments are derecognised. The overall fair value adjustments to reflect these adjustments (amount not recognised in the Income Statement) amounts to +€44,581 thousand at 31 December 2018 (+€25,200 thousand in 2017). Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 183 The changes occurred between 31 December 2017 and 31 December 2018 in the ratio between fair value and book value for financial assets at amortised cost reflect the enhancement of the methodology and the parameters adopted for the fair value calculation for disclosure and the evolution in the benchmark interest rate, in the risk premium and in the probability of default depending on or deriving from markets trend. These events together with the evolution of the approach to identify the significance of non-observable inputs have been reflected in fair value hierarchy level distribution. The book value of items “3. Non-current assets and disposal groups classified as held for sale” (Assets) and “2. Liabilities associated with assets classified as held for sale” (Liabilities) includes amounts referred to assets and liabilities measured on Balance Sheet on the basis of their cost, respectively for €1,612 million and €504 million. For further details on these two sub-items see Part B - Section 12 - table 12.1. The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value level (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Held-to-maturity investments 6,277,022 5,096,861 1,189,062 60,735 2. Loans and receivables with banks 70,982,743 526,248 47,955,776 22,869,184 3. Loans and receivables with customers 447,726,913 1,115,810 142,196,033 311,225,039 4. Property, plant and equipment held for investment 2,132,168 14,821 97,488 2,469,292 5. Non-current assets and disposal groups classified as held for sale 1,110,960 - 79,305 195,941 Total 528,229,806 6,753,740 191,517,664 336,820,191 1. Deposits from banks 123,244,080 - 56,419,195 66,675,209 2. Deposits from customers 462,895,261 - 162,598,619 301,045,127 3. Debt securities in issue 98,602,632 43,856,076 36,978,706 22,893,916 4. Liabilities included in disposal groups classified as held for sale 184,829 - - 78,884 Total 684,926,802 43,856,076 255,996,520 390,693,136 A.5 - Information on “day one profit/loss" The value at which financial instruments are recognised is equal to their fair value on the same date. The fair value of financial instruments, different from those designated at fair value through profit or loss, at their recognition date is usually assumed to be equal to the amount collected or paid. For financial instruments held for trading (see Sections 1 and 14 of Part A.2 above) and instruments designated at fair value (see Sections 5 and 15 of Part A.2 above), any difference from the amount collected or paid is posted under the appropriate items of the income statement. The use of conservative valuation models, the processes described above for revising the models used and related parameters and value adjustments to reflect model risk ensure that the amount recognised in the income statement is not derived from the use of valuation parameters that cannot be observed. More specifically, the calculation of fair value adjustments to reflect model risk ensures that the fair value portion of these instruments relating to the use of subjective parameters is not recognised in the profit and loss account, but changes the balance sheet value of these instruments. The presence of further “day one profit” leads to the recognition of a distinct asset component that is the object of linear competition. Recognition of these portions in the profit and loss account is then made only when objective parameters are applied and therefore the adjustments are derecognised. The overall fair value adjustments to reflect these adjustments (amount not recognised in the Income Statement) amounts to +€44,581 thousand at 31 December 2018 (+€25,200 thousand in 2017). Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 183 The changes occurred between 31 December 2017 and 31 December 2018 in the ratio between fair value and book value for financial assets at amortised cost reflect the enhancement of the methodology and the parameters adopted for the fair value calculation for disclosure and the evolution in the benchmark interest rate, in the risk premium and in the probability of default depending on or deriving from markets trend. These events together with the evolution of the approach to identify the significance of non-observable inputs have been reflected in fair value hierarchy level distribution. The book value of items “3. Non-current assets and disposal groups classified as held for sale” (Assets) and “2. Liabilities associated with assets classified as held for sale” (Liabilities) includes amounts referred to assets and liabilities measured on Balance Sheet on the basis of their cost, respectively for €1,612 million and €504 million. For further details on these two sub-items see Part B - Section 12 - table 12.1. The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value level (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Held-to-maturity investments 6,277,022 5,096,861 1,189,062 60,735 2. Loans and receivables with banks 70,982,743 526,248 47,955,776 22,869,184 3. Loans and receivables with customers 447,726,913 1,115,810 142,196,033 311,225,039 4. Property, plant and equipment held for investment 2,132,168 14,821 97,488 2,469,292 5. Non-current assets and disposal groups classified as held for sale 1,110,960 - 79,305 195,941 Total 528,229,806 6,753,740 191,517,664 336,820,191 1. Deposits from banks 123,244,080 - 56,419,195 66,675,209 2. Deposits from customers 462,895,261 - 162,598,619 301,045,127 3. Debt securities in issue 98,602,632 43,856,076 36,978,706 22,893,916 4. Liabilities included in disposal groups classified as held for sale 184,829 - - 78,884 Total 684,926,802 43,856,076 255,996,520 390,693,136 A.5 - Information on “day one profit/loss" The value at which financial instruments are recognised is equal to their fair value on the same date. The fair value of financial instruments, different from those designated at fair value through profit or loss, at their recognition date is usually assumed to be equal to the amount collected or paid. For financial instruments held for trading (see Sections 1 and 14 of Part A.2 above) and instruments designated at fair value (see Sections 5 and 15 of Part A.2 above), any difference from the amount collected or paid is posted under the appropriate items of the income statement. The use of conservative valuation models, the processes described above for revising the models used and related parameters and value adjustments to reflect model risk ensure that the amount recognised in the income statement is not derived from the use of valuation parameters that cannot be observed. More specifically, the calculation of fair value adjustments to reflect model risk ensures that the fair value portion of these instruments relating to the use of subjective parameters is not recognised in the profit and loss account, but changes the balance sheet value of these instruments. The presence of further “day one profit” leads to the recognition of a distinct asset component that is the object of linear competition. Recognition of these portions in the profit and loss account is then made only when objective parameters are applied and therefore the adjustments are derecognised. The overall fair value adjustments to reflect these adjustments (amount not recognised in the Income Statement) amounts to +€44,581 thousand at 31 December 2018 (+€25,200 thousand in 2017). Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 183 The changes occurred between 31 December 2017 and 31 December 2018 in the ratio between fair value and book value for financial assets at amortised cost reflect the enhancement of the methodology and the parameters adopted for the fair value calculation for disclosure and the evolution in the benchmark interest rate, in the risk premium and in the probability of default depending on or deriving from markets trend. These events together with the evolution of the approach to identify the significance of non-observable inputs have been reflected in fair value hierarchy level distribution. The book value of items “3. Non-current assets and disposal groups classified as held for sale” (Assets) and “2. Liabilities associated with assets classified as held for sale” (Liabilities) includes amounts referred to assets and liabilities measured on Balance Sheet on the basis of their cost, respectively for €1,612 million and €504 million. For further details on these two sub-items see Part B - Section 12 - table 12.1. The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value level (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Held-to-maturity investments 6,277,022 5,096,861 1,189,062 60,735 2. Loans and receivables with banks 70,982,743 526,248 47,955,776 22,869,184 3. Loans and receivables with customers 447,726,913 1,115,810 142,196,033 311,225,039 4. Property, plant and equipment held for investment 2,132,168 14,821 97,488 2,469,292 5. Non-current assets and disposal groups classified as held for sale 1,110,960 - 79,305 195,941 Total 528,229,806 6,753,740 191,517,664 336,820,191 1. Deposits from banks 123,244,080 - 56,419,195 66,675,209 2. Deposits from customers 462,895,261 - 162,598,619 301,045,127 3. Debt securities in issue 98,602,632 43,856,076 36,978,706 22,893,916 4. Liabilities included in disposal groups classified as held for sale 184,829 - - 78,884 Total 684,926,802 43,856,076 255,996,520 390,693,136 A.5 - Information on “day one profit/loss" The value at which financial instruments are recognised is equal to their fair value on the same date. The fair value of financial instruments, different from those designated at fair value through profit or loss, at their recognition date is usually assumed to be equal to the amount collected or paid. For financial instruments held for trading (see Sections 1 and 14 of Part A.2 above) and instruments designated at fair value (see Sections 5 and 15 of Part A.2 above), any difference from the amount collected or paid is posted under the appropriate items of the income statement. The use of conservative valuation models, the processes described above for revising the models used and related parameters and value adjustments to reflect model risk ensure that the amount recognised in the income statement is not derived from the use of valuation parameters that cannot be observed. More specifically, the calculation of fair value adjustments to reflect model risk ensures that the fair value portion of these instruments relating to the use of subjective parameters is not recognised in the profit and loss account, but changes the balance sheet value of these instruments. The presence of further “day one profit” leads to the recognition of a distinct asset component that is the object of linear competition. Recognition of these portions in the profit and loss account is then made only when objective parameters are applied and therefore the adjustments are derecognised. The overall fair value adjustments to reflect these adjustments (amount not recognised in the Income Statement) amounts to +€44,581 thousand at 31 December 2018 (+€25,200 thousand in 2017). Consolidated financial statements | Notes to the consolidated accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 183 The changes occurred between 31 December 2017 and 31 December 2018 in the ratio between fair value and book value for financial assets at amortised cost reflect the enhancement of the methodology and the parameters adopted for the fair value calculation for disclosure and the evolution in the benchmark interest rate, in the risk premium and in the probability of default depending on or deriving from markets trend. These events together with the evolution of the approach to identify the significance of non-observable inputs have been reflected in fair value hierarchy level distribution. The book value of items “3. Non-current assets and disposal groups classified as held for sale” (Assets) and “2. Liabilities associated with assets classified as held for sale” (Liabilities) includes amounts referred to assets and liabilities measured on Balance Sheet on the basis of their cost, respectively for €1,612 million and €504 million. For further details on these two sub-items see Part B - Section 12 - table 12.1. The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value level (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Held-to-maturity investments 6,277,022 5,096,861 1,189,062 60,735 2. Loans and receivables with banks 70,982,743 526,248 47,955,776 22,869,184 3. Loans and receivables with customers 447,726,913 1,115,810 142,196,033 311,225,039 4. Property, plant and equipment held for investment 2,132,168 14,821 97,488 2,469,292 5. Non-current assets and disposal groups classified as held for sale 1,110,960 - 79,305 195,941 Total 528,229,806 6,753,740 191,517,664 336,820,191 1. Deposits from banks 123,244,080 - 56,419,195 66,675,209 2. Deposits from customers 462,895,261 - 162,598,619 301,045,127 3. Debt securities in issue 98,602,632 43,856,076 36,978,706 22,893,916 4. Liabilities included in disposal groups classified as held for sale 184,829 - - 78,884 Total 684,926,802 43,856,076 255,996,520 390,693,136 A.5 - Information on “day one profit/loss" The value at which financial instruments are recognised is equal to their fair value on the same date. The fair value of financial instruments, different from those designated at fair value through profit or loss, at their recognition date is usually assumed to be equal to the amount collected or paid. For financial instruments held for trading (see Sections 1 and 14 of Part A.2 above) and instruments designated at fair value (see Sections 5 and 15 of Part A.2 above), any difference from the amount collected or paid is posted under the appropriate items of the income statement. The use of conservative valuation models, the processes described above for revising the models used and related parameters and value adjustments to reflect model risk ensure that the amount recognised in the income statement is not derived from the use of valuation parameters that cannot be observed. More specifically, the calculation of fair value adjustments to reflect model risk ensures that the fair value portion of these instruments relating to the use of subjective parameters is not recognised in the profit and loss account, but changes the balance sheet value of these instruments. The presence of further “day one profit” leads to the recognition of a distinct asset component that is the object of linear competition. Recognition of these portions in the profit and loss account is then made only when objective parameters are applied and therefore the adjustments are derecognised. The overall fair value adjustments to reflect these adjustments (amount not recognised in the Income Statement) amounts to +€44,581 thousand at 31 December 2018 (+€25,200 thousand in 2017). Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 184 2018 Annual Report and Accounts · UniCredit Part B - Consolidated balance sheet Assets Section 1 - Cash and cash balances - Item 10 1.1 Cash and cash balances: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 a) Cash 9,005,671 8,848,377 b) Demand deposits with Central banks 21,985,690 55,645,034 Total 30,991,361 64,493,411 Section 2 - Financial assets at fair value through profit or loss - Item 20 2.1 Financial assets held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Financial assets (non-derivatives) 1. Debt securities 12,375,516 2,552,712 650,741 1.1 Structured securities 85,277 1,585,116 1,141 1.2 Other debt securities 12,290,239 967,596 649,600 2. Equity instruments 7,489,505 27,269 590 3. Units in investment funds 1,339,859 485,508 47,250 4. Loans 1,758,521 6,310,659 39,143 4.1 Reverse Repos - 2,659,085 - 4.2 Other 1,758,521 3,651,574 39,143 Total (A) 22,963,401 9,376,148 737,724 B. Derivative instruments 1. Financial derivatives 2,236,981 28,379,121 1,328,571 1.1 Trading 2,236,981 27,018,532 1,326,776 1.2 Linked to fair value option - 35,204 - 1.3 Other - 1,325,385 1,795 2. Credit derivatives 14,273 185,324 9,931 2.1 Trading 14,273 183,604 9,931 2.2 Linked to fair value option - - - 2.3 Other - 1,720 - Total (B) 2,251,254 28,564,445 1,338,502 Total (A+B) 25,214,655 37,940,593 2,076,226 Total Level 1, Level 2 and Level 3 65,231,474 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value of this Notes to the consolidated accounts. The financial assets and liabilities relating to OTC Derivatives and Reverse repos managed through Central Counterparty Clearing Houses (CCPs) are offset when (i) the clearing systems of CCPs guarantee the elimination or reduce to immaterial the credit and liquidity risks of these contracts and (ii) the entity intends to settle these contracts on a net basis, in accordance with IAS32 - Offsetting, in order to improve the presentation of the liquidity profile and counterparty risk connected with them. The offset effect as at 31 December 2018, already included in the net presentation of these transactions, totaled €13,533,439 thousand (€14,314,420 thousand as at 31 December 2017). Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 184 2018 Annual Report and Accounts · UniCredit Part B - Consolidated balance sheet Assets Section 1 - Cash and cash balances - Item 10 1.1 Cash and cash balances: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 a) Cash 9,005,671 8,848,377 b) Demand deposits with Central banks 21,985,690 55,645,034 Total 30,991,361 64,493,411 Section 2 - Financial assets at fair value through profit or loss - Item 20 2.1 Financial assets held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Financial assets (non-derivatives) 1. Debt securities 12,375,516 2,552,712 650,741 1.1 Structured securities 85,277 1,585,116 1,141 1.2 Other debt securities 12,290,239 967,596 649,600 2. Equity instruments 7,489,505 27,269 590 3. Units in investment funds 1,339,859 485,508 47,250 4. Loans 1,758,521 6,310,659 39,143 4.1 Reverse Repos - 2,659,085 - 4.2 Other 1,758,521 3,651,574 39,143 Total (A) 22,963,401 9,376,148 737,724 B. Derivative instruments 1. Financial derivatives 2,236,981 28,379,121 1,328,571 1.1 Trading 2,236,981 27,018,532 1,326,776 1.2 Linked to fair value option - 35,204 - 1.3 Other - 1,325,385 1,795 2. Credit derivatives 14,273 185,324 9,931 2.1 Trading 14,273 183,604 9,931 2.2 Linked to fair value option - - - 2.3 Other - 1,720 - Total (B) 2,251,254 28,564,445 1,338,502 Total (A+B) 25,214,655 37,940,593 2,076,226 Total Level 1, Level 2 and Level 3 65,231,474 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value of this Notes to the consolidated accounts. The financial assets and liabilities relating to OTC Derivatives and Reverse repos managed through Central Counterparty Clearing Houses (CCPs) are offset when (i) the clearing systems of CCPs guarantee the elimination or reduce to immaterial the credit and liquidity risks of these contracts and (ii) the entity intends to settle these contracts on a net basis, in accordance with IAS32 - Offsetting, in order to improve the presentation of the liquidity profile and counterparty risk connected with them. The offset effect as at 31 December 2018, already included in the net presentation of these transactions, totaled €13,533,439 thousand (€14,314,420 thousand as at 31 December 2017). Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 184 2018 Annual Report and Accounts · UniCredit Part B - Consolidated balance sheet Assets Section 1 - Cash and cash balances - Item 10 1.1 Cash and cash balances: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 a) Cash 9,005,671 8,848,377 b) Demand deposits with Central banks 21,985,690 55,645,034 Total 30,991,361 64,493,411 Section 2 - Financial assets at fair value through profit or loss - Item 20 2.1 Financial assets held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Financial assets (non-derivatives) 1. Debt securities 12,375,516 2,552,712 650,741 1.1 Structured securities 85,277 1,585,116 1,141 1.2 Other debt securities 12,290,239 967,596 649,600 2. Equity instruments 7,489,505 27,269 590 3. Units in investment funds 1,339,859 485,508 47,250 4. Loans 1,758,521 6,310,659 39,143 4.1 Reverse Repos - 2,659,085 - 4.2 Other 1,758,521 3,651,574 39,143 Total (A) 22,963,401 9,376,148 737,724 B. Derivative instruments 1. Financial derivatives 2,236,981 28,379,121 1,328,571 1.1 Trading 2,236,981 27,018,532 1,326,776 1.2 Linked to fair value option - 35,204 - 1.3 Other - 1,325,385 1,795 2. Credit derivatives 14,273 185,324 9,931 2.1 Trading 14,273 183,604 9,931 2.2 Linked to fair value option - - - 2.3 Other - 1,720 - Total (B) 2,251,254 28,564,445 1,338,502 Total (A+B) 25,214,655 37,940,593 2,076,226 Total Level 1, Level 2 and Level 3 65,231,474 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value of this Notes to the consolidated accounts. The financial assets and liabilities relating to OTC Derivatives and Reverse repos managed through Central Counterparty Clearing Houses (CCPs) are offset when (i) the clearing systems of CCPs guarantee the elimination or reduce to immaterial the credit and liquidity risks of these contracts and (ii) the entity intends to settle these contracts on a net basis, in accordance with IAS32 - Offsetting, in order to improve the presentation of the liquidity profile and counterparty risk connected with them. The offset effect as at 31 December 2018, already included in the net presentation of these transactions, totaled €13,533,439 thousand (€14,314,420 thousand as at 31 December 2017). Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 184 2018 Annual Report and Accounts · UniCredit Part B - Consolidated balance sheet Assets Section 1 - Cash and cash balances - Item 10 1.1 Cash and cash balances: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 a) Cash 9,005,671 8,848,377 b) Demand deposits with Central banks 21,985,690 55,645,034 Total 30,991,361 64,493,411 Section 2 - Financial assets at fair value through profit or loss - Item 20 2.1 Financial assets held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Financial assets (non-derivatives) 1. Debt securities 12,375,516 2,552,712 650,741 1.1 Structured securities 85,277 1,585,116 1,141 1.2 Other debt securities 12,290,239 967,596 649,600 2. Equity instruments 7,489,505 27,269 590 3. Units in investment funds 1,339,859 485,508 47,250 4. Loans 1,758,521 6,310,659 39,143 4.1 Reverse Repos - 2,659,085 - 4.2 Other 1,758,521 3,651,574 39,143 Total (A) 22,963,401 9,376,148 737,724 B. Derivative instruments 1. Financial derivatives 2,236,981 28,379,121 1,328,571 1.1 Trading 2,236,981 27,018,532 1,326,776 1.2 Linked to fair value option - 35,204 - 1.3 Other - 1,325,385 1,795 2. Credit derivatives 14,273 185,324 9,931 2.1 Trading 14,273 183,604 9,931 2.2 Linked to fair value option - - - 2.3 Other - 1,720 - Total (B) 2,251,254 28,564,445 1,338,502 Total (A+B) 25,214,655 37,940,593 2,076,226 Total Level 1, Level 2 and Level 3 65,231,474 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value of this Notes to the consolidated accounts. The financial assets and liabilities relating to OTC Derivatives and Reverse repos managed through Central Counterparty Clearing Houses (CCPs) are offset when (i) the clearing systems of CCPs guarantee the elimination or reduce to immaterial the credit and liquidity risks of these contracts and (ii) the entity intends to settle these contracts on a net basis, in accordance with IAS32 - Offsetting, in order to improve the presentation of the liquidity profile and counterparty risk connected with them. The offset effect as at 31 December 2018, already included in the net presentation of these transactions, totaled €13,533,439 thousand (€14,314,420 thousand as at 31 December 2017). Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 184 2018 Annual Report and Accounts · UniCredit Part B - Consolidated balance sheet Assets Section 1 - Cash and cash balances - Item 10 1.1 Cash and cash balances: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 a) Cash 9,005,671 8,848,377 b) Demand deposits with Central banks 21,985,690 55,645,034 Total 30,991,361 64,493,411 Section 2 - Financial assets at fair value through profit or loss - Item 20 2.1 Financial assets held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Financial assets (non-derivatives) 1. Debt securities 12,375,516 2,552,712 650,741 1.1 Structured securities 85,277 1,585,116 1,141 1.2 Other debt securities 12,290,239 967,596 649,600 2. Equity instruments 7,489,505 27,269 590 3. Units in investment funds 1,339,859 485,508 47,250 4. Loans 1,758,521 6,310,659 39,143 4.1 Reverse Repos - 2,659,085 - 4.2 Other 1,758,521 3,651,574 39,143 Total (A) 22,963,401 9,376,148 737,724 B. Derivative instruments 1. Financial derivatives 2,236,981 28,379,121 1,328,571 1.1 Trading 2,236,981 27,018,532 1,326,776 1.2 Linked to fair value option - 35,204 - 1.3 Other - 1,325,385 1,795 2. Credit derivatives 14,273 185,324 9,931 2.1 Trading 14,273 183,604 9,931 2.2 Linked to fair value option - - - 2.3 Other - 1,720 - Total (B) 2,251,254 28,564,445 1,338,502 Total (A+B) 25,214,655 37,940,593 2,076,226 Total Level 1, Level 2 and Level 3 65,231,474 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value of this Notes to the consolidated accounts. The financial assets and liabilities relating to OTC Derivatives and Reverse repos managed through Central Counterparty Clearing Houses (CCPs) are offset when (i) the clearing systems of CCPs guarantee the elimination or reduce to immaterial the credit and liquidity risks of these contracts and (ii) the entity intends to settle these contracts on a net basis, in accordance with IAS32 - Offsetting, in order to improve the presentation of the liquidity profile and counterparty risk connected with them. The offset effect as at 31 December 2018, already included in the net presentation of these transactions, totaled €13,533,439 thousand (€14,314,420 thousand as at 31 December 2017). Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 185 Item “1. Debt securities" includes securities related to securitisation transactions shown in the following table. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 40,533 Mezzanine - Junior - Total 40,533 2.2 Financial assets held for trading: breakdown by borrowers/issuers/counterparties (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 A. Financial assets (non-derivatives) 1. Debt securities 15,578,969 a) Central Banks - b) Governments and other Public Sector Entities 9,841,185 c) Banks 3,200,929 d) Other financial companies 1,512,328 of which: insurance companies 11,234 e) Non-financial companies 1,024,527 2. Equity instruments 7,517,364 a) Banks 707,007 b) Other financial companies 507,236 of which: insurance companies 279,379 c) Non-financial companies 6,303,121 d) Other issuers - 3. Units in investment funds 1,872,617 4. Loans 8,108,323 a) Central Banks 590,300 b) Governments and other Public Sector Entities 1,484,807 c) Banks 536,359 d) Other financial companies 1,504,985 of which: insurance companies - e) Non-financial companies 3,991,872 f) Households - Total A 33,077,273 B. Derivative instruments a) Central counterparties 2,219,685 d) Other 29,934,516 Total B 32,154,201 Total (A+B) 65,231,474 2.3 Financial assets designated at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 3 103 - 1.1 Structured securities 3 - - 1.2 Other debt securities - 103 - 2. Loans - - - 2.1 Structured - - - 2.2 Other - - - Total 3 103 - Total Level 1, Level 2 and Level 3 106 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 185 Item “1. Debt securities" includes securities related to securitisation transactions shown in the following table. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 40,533 Mezzanine - Junior - Total 40,533 2.2 Financial assets held for trading: breakdown by borrowers/issuers/counterparties (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 A. Financial assets (non-derivatives) 1. Debt securities 15,578,969 a) Central Banks - b) Governments and other Public Sector Entities 9,841,185 c) Banks 3,200,929 d) Other financial companies 1,512,328 of which: insurance companies 11,234 e) Non-financial companies 1,024,527 2. Equity instruments 7,517,364 a) Banks 707,007 b) Other financial companies 507,236 of which: insurance companies 279,379 c) Non-financial companies 6,303,121 d) Other issuers - 3. Units in investment funds 1,872,617 4. Loans 8,108,323 a) Central Banks 590,300 b) Governments and other Public Sector Entities 1,484,807 c) Banks 536,359 d) Other financial companies 1,504,985 of which: insurance companies - e) Non-financial companies 3,991,872 f) Households - Total A 33,077,273 B. Derivative instruments a) Central counterparties 2,219,685 d) Other 29,934,516 Total B 32,154,201 Total (A+B) 65,231,474 2.3 Financial assets designated at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 3 103 - 1.1 Structured securities 3 - - 1.2 Other debt securities - 103 - 2. Loans - - - 2.1 Structured - - - 2.2 Other - - - Total 3 103 - Total Level 1, Level 2 and Level 3 106 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 185 Item “1. Debt securities" includes securities related to securitisation transactions shown in the following table. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 40,533 Mezzanine - Junior - Total 40,533 2.2 Financial assets held for trading: breakdown by borrowers/issuers/counterparties (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 A. Financial assets (non-derivatives) 1. Debt securities 15,578,969 a) Central Banks - b) Governments and other Public Sector Entities 9,841,185 c) Banks 3,200,929 d) Other financial companies 1,512,328 of which: insurance companies 11,234 e) Non-financial companies 1,024,527 2. Equity instruments 7,517,364 a) Banks 707,007 b) Other financial companies 507,236 of which: insurance companies 279,379 c) Non-financial companies 6,303,121 d) Other issuers - 3. Units in investment funds 1,872,617 4. Loans 8,108,323 a) Central Banks 590,300 b) Governments and other Public Sector Entities 1,484,807 c) Banks 536,359 d) Other financial companies 1,504,985 of which: insurance companies - e) Non-financial companies 3,991,872 f) Households - Total A 33,077,273 B. Derivative instruments a) Central counterparties 2,219,685 d) Other 29,934,516 Total B 32,154,201 Total (A+B) 65,231,474 2.3 Financial assets designated at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 3 103 - 1.1 Structured securities 3 - - 1.2 Other debt securities - 103 - 2. Loans - - - 2.1 Structured - - - 2.2 Other - - - Total 3 103 - Total Level 1, Level 2 and Level 3 106 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 185 Item “1. Debt securities" includes securities related to securitisation transactions shown in the following table. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 40,533 Mezzanine - Junior - Total 40,533 2.2 Financial assets held for trading: breakdown by borrowers/issuers/counterparties (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 A. Financial assets (non-derivatives) 1. Debt securities 15,578,969 a) Central Banks - b) Governments and other Public Sector Entities 9,841,185 c) Banks 3,200,929 d) Other financial companies 1,512,328 of which: insurance companies 11,234 e) Non-financial companies 1,024,527 2. Equity instruments 7,517,364 a) Banks 707,007 b) Other financial companies 507,236 of which: insurance companies 279,379 c) Non-financial companies 6,303,121 d) Other issuers - 3. Units in investment funds 1,872,617 4. Loans 8,108,323 a) Central Banks 590,300 b) Governments and other Public Sector Entities 1,484,807 c) Banks 536,359 d) Other financial companies 1,504,985 of which: insurance companies - e) Non-financial companies 3,991,872 f) Households - Total A 33,077,273 B. Derivative instruments a) Central counterparties 2,219,685 d) Other 29,934,516 Total B 32,154,201 Total (A+B) 65,231,474 2.3 Financial assets designated at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 3 103 - 1.1 Structured securities 3 - - 1.2 Other debt securities - 103 - 2. Loans - - - 2.1 Structured - - - 2.2 Other - - - Total 3 103 - Total Level 1, Level 2 and Level 3 106 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 185 Item “1. Debt securities" includes securities related to securitisation transactions shown in the following table. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 40,533 Mezzanine - Junior - Total 40,533 2.2 Financial assets held for trading: breakdown by borrowers/issuers/counterparties (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 A. Financial assets (non-derivatives) 1. Debt securities 15,578,969 a) Central Banks - b) Governments and other Public Sector Entities 9,841,185 c) Banks 3,200,929 d) Other financial companies 1,512,328 of which: insurance companies 11,234 e) Non-financial companies 1,024,527 2. Equity instruments 7,517,364 a) Banks 707,007 b) Other financial companies 507,236 of which: insurance companies 279,379 c) Non-financial companies 6,303,121 d) Other issuers - 3. Units in investment funds 1,872,617 4. Loans 8,108,323 a) Central Banks 590,300 b) Governments and other Public Sector Entities 1,484,807 c) Banks 536,359 d) Other financial companies 1,504,985 of which: insurance companies - e) Non-financial companies 3,991,872 f) Households - Total A 33,077,273 B. Derivative instruments a) Central counterparties 2,219,685 d) Other 29,934,516 Total B 32,154,201 Total (A+B) 65,231,474 2.3 Financial assets designated at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 3 103 - 1.1 Structured securities 3 - - 1.2 Other debt securities - 103 - 2. Loans - - - 2.1 Structured - - - 2.2 Other - - - Total 3 103 - Total Level 1, Level 2 and Level 3 106 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 186 2018 Annual Report and Accounts · UniCredit Assets are recognised in this item to reduce the accounting mismatch arising from financial instruments measured with changes in fair value in the income statement in order to manage the risk profile. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting policies - A.4 Information on fair value. 2.4 Financial assets designated at fair value: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 106 a) Central Banks - b) Governments and other Public Sector Entities 3 c) Banks 103 d) Other financial companies - of which: insurance companies - e) Non-financial companies - 2. Loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 106 2.5 Other financial assets mandatorily at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 7,153,722 8,761,726 640,370 1.1 Structured securities - 4,694 29,042 1.2 Other debt securities 7,153,722 8,757,032 611,328 2. Equity instruments 416,819 44,476 397,541 3. Units in investment funds 37,387 29,872 902,841 4. Loans - 1,733,206 788,215 4.1 Structured - - - 4.2 Other - 1,733,206 788,215 Total 7,607,928 10,569,280 2,728,967 Total Level 1, Level 2 and Level 3 20,906,175 A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. The item “1. Debt securities” includes investments in FINO Project’s Mezzanine and Junior Notes with a value of €60 million. The item “2. Equity instruments” includes the investment in a “Schema Volontario” (presented among level 3 instruments) with a value of about €47.6 million and the residual shares of Bank Pekao S.A. with a value of €416 million at 31 December 2018, reclassified into such category after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. (with subsequent loss of control) occurred in first half of 2017 and the IFRS9 adoption starting from 2018. This classification is consistent with the recognition of the “Secured mandatorily exchangeable equity-linked certificate” certificate into financial liabilities at fair value. The item “3. Unit in investment funds” includes the investments in Atlante and Italian Recovery Fund, former Atlante II, presented among level 3 instruments, with a value of €355 million as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 186 2018 Annual Report and Accounts · UniCredit Assets are recognised in this item to reduce the accounting mismatch arising from financial instruments measured with changes in fair value in the income statement in order to manage the risk profile. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting policies - A.4 Information on fair value. 2.4 Financial assets designated at fair value: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 106 a) Central Banks - b) Governments and other Public Sector Entities 3 c) Banks 103 d) Other financial companies - of which: insurance companies - e) Non-financial companies - 2. Loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 106 2.5 Other financial assets mandatorily at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 7,153,722 8,761,726 640,370 1.1 Structured securities - 4,694 29,042 1.2 Other debt securities 7,153,722 8,757,032 611,328 2. Equity instruments 416,819 44,476 397,541 3. Units in investment funds 37,387 29,872 902,841 4. Loans - 1,733,206 788,215 4.1 Structured - - - 4.2 Other - 1,733,206 788,215 Total 7,607,928 10,569,280 2,728,967 Total Level 1, Level 2 and Level 3 20,906,175 A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. The item “1. Debt securities” includes investments in FINO Project’s Mezzanine and Junior Notes with a value of €60 million. The item “2. Equity instruments” includes the investment in a “Schema Volontario” (presented among level 3 instruments) with a value of about €47.6 million and the residual shares of Bank Pekao S.A. with a value of €416 million at 31 December 2018, reclassified into such category after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. (with subsequent loss of control) occurred in first half of 2017 and the IFRS9 adoption starting from 2018. This classification is consistent with the recognition of the “Secured mandatorily exchangeable equity-linked certificate” certificate into financial liabilities at fair value. The item “3. Unit in investment funds” includes the investments in Atlante and Italian Recovery Fund, former Atlante II, presented among level 3 instruments, with a value of €355 million as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 186 2018 Annual Report and Accounts · UniCredit Assets are recognised in this item to reduce the accounting mismatch arising from financial instruments measured with changes in fair value in the income statement in order to manage the risk profile. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting policies - A.4 Information on fair value. 2.4 Financial assets designated at fair value: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 106 a) Central Banks - b) Governments and other Public Sector Entities 3 c) Banks 103 d) Other financial companies - of which: insurance companies - e) Non-financial companies - 2. Loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 106 2.5 Other financial assets mandatorily at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 7,153,722 8,761,726 640,370 1.1 Structured securities - 4,694 29,042 1.2 Other debt securities 7,153,722 8,757,032 611,328 2. Equity instruments 416,819 44,476 397,541 3. Units in investment funds 37,387 29,872 902,841 4. Loans - 1,733,206 788,215 4.1 Structured - - - 4.2 Other - 1,733,206 788,215 Total 7,607,928 10,569,280 2,728,967 Total Level 1, Level 2 and Level 3 20,906,175 A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. The item “1. Debt securities” includes investments in FINO Project’s Mezzanine and Junior Notes with a value of €60 million. The item “2. Equity instruments” includes the investment in a “Schema Volontario” (presented among level 3 instruments) with a value of about €47.6 million and the residual shares of Bank Pekao S.A. with a value of €416 million at 31 December 2018, reclassified into such category after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. (with subsequent loss of control) occurred in first half of 2017 and the IFRS9 adoption starting from 2018. This classification is consistent with the recognition of the “Secured mandatorily exchangeable equity-linked certificate” certificate into financial liabilities at fair value. The item “3. Unit in investment funds” includes the investments in Atlante and Italian Recovery Fund, former Atlante II, presented among level 3 instruments, with a value of €355 million as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 186 2018 Annual Report and Accounts · UniCredit Assets are recognised in this item to reduce the accounting mismatch arising from financial instruments measured with changes in fair value in the income statement in order to manage the risk profile. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting policies - A.4 Information on fair value. 2.4 Financial assets designated at fair value: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 106 a) Central Banks - b) Governments and other Public Sector Entities 3 c) Banks 103 d) Other financial companies - of which: insurance companies - e) Non-financial companies - 2. Loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 106 2.5 Other financial assets mandatorily at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 7,153,722 8,761,726 640,370 1.1 Structured securities - 4,694 29,042 1.2 Other debt securities 7,153,722 8,757,032 611,328 2. Equity instruments 416,819 44,476 397,541 3. Units in investment funds 37,387 29,872 902,841 4. Loans - 1,733,206 788,215 4.1 Structured - - - 4.2 Other - 1,733,206 788,215 Total 7,607,928 10,569,280 2,728,967 Total Level 1, Level 2 and Level 3 20,906,175 A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. The item “1. Debt securities” includes investments in FINO Project’s Mezzanine and Junior Notes with a value of €60 million. The item “2. Equity instruments” includes the investment in a “Schema Volontario” (presented among level 3 instruments) with a value of about €47.6 million and the residual shares of Bank Pekao S.A. with a value of €416 million at 31 December 2018, reclassified into such category after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. (with subsequent loss of control) occurred in first half of 2017 and the IFRS9 adoption starting from 2018. This classification is consistent with the recognition of the “Secured mandatorily exchangeable equity-linked certificate” certificate into financial liabilities at fair value. The item “3. Unit in investment funds” includes the investments in Atlante and Italian Recovery Fund, former Atlante II, presented among level 3 instruments, with a value of €355 million as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 186 2018 Annual Report and Accounts · UniCredit Assets are recognised in this item to reduce the accounting mismatch arising from financial instruments measured with changes in fair value in the income statement in order to manage the risk profile. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting policies - A.4 Information on fair value. 2.4 Financial assets designated at fair value: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 106 a) Central Banks - b) Governments and other Public Sector Entities 3 c) Banks 103 d) Other financial companies - of which: insurance companies - e) Non-financial companies - 2. Loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 106 2.5 Other financial assets mandatorily at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 7,153,722 8,761,726 640,370 1.1 Structured securities - 4,694 29,042 1.2 Other debt securities 7,153,722 8,757,032 611,328 2. Equity instruments 416,819 44,476 397,541 3. Units in investment funds 37,387 29,872 902,841 4. Loans - 1,733,206 788,215 4.1 Structured - - - 4.2 Other - 1,733,206 788,215 Total 7,607,928 10,569,280 2,728,967 Total Level 1, Level 2 and Level 3 20,906,175 A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. The item “1. Debt securities” includes investments in FINO Project’s Mezzanine and Junior Notes with a value of €60 million. The item “2. Equity instruments” includes the investment in a “Schema Volontario” (presented among level 3 instruments) with a value of about €47.6 million and the residual shares of Bank Pekao S.A. with a value of €416 million at 31 December 2018, reclassified into such category after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. (with subsequent loss of control) occurred in first half of 2017 and the IFRS9 adoption starting from 2018. This classification is consistent with the recognition of the “Secured mandatorily exchangeable equity-linked certificate” certificate into financial liabilities at fair value. The item “3. Unit in investment funds” includes the investments in Atlante and Italian Recovery Fund, former Atlante II, presented among level 3 instruments, with a value of €355 million as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 187 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 20,664 Mezzanine 75,866 Junior 58,169 Total 154,699 Information about the units of Atlante Fund and Italian Recovery Fund Refer to Part B Balance sheet - Assets - Section 2 Financial assets at fair value through profit and loss - Item 20 - Information about the units of Atlante Fund and Italian Recovery Fund of individual financial statements notes that here are intended as completely reported. Information about the investments in the “Schema Volontario” (Voluntary Scheme) UniCredit group has joined to the "Schema Volontario", introduced by FITD, with appropriate modification of its statute, in November 2015. The “Schema Volontario” is an instrument for the resolution of bank crises through support measures in favor of its member banks, if specific conditions laid down by the legislation occurring. The “Schema Volontario” has an independent funding and the participating banks are committed to supply the relevant resources upon demand, when resources are needed to fund interventions. The “Schema Volontario”, as a private entity, has provided in April 2016 the restructuring of the support of the action that FITD had operated in July 2014 in favor of Bank Tercas, operation that generated no further charges for participating banks. Subsequently, the participating size of the “Schema Volontario” was increased up to €700 million (of which €127 million of UniCredit group, of which €110 million referred to UniCredit S.p.A.). In this context, on June 2016 the “Schema Volontario” approved an action in support of Cassa di Risparmio di Cesena (CariCesena), in relation to a capital increase approved by the same bank on 8 June 2016 for €280 million (commitment relating to UniCredit group amounted to €51 million, of which €44 million referred to UniCredit S.p.A.). On 30 September 2016 this commitment has been converted into a monetary payment which has led to the recognition of capital instruments classified, on the basis of the pre-existing accounting standard IAS39, as “available for sale" for €51 million for the Group and €44 million for UniCredit S.p.A. (consistent with the monetary payment). Update of evaluation of the instruments as at December 2016, according to an internal evaluation model based on multiples of a banking basket integrated with estimates on Cassa di Risparmio di Cesena’s credit portfolio and related equity/capital needs, has brought to full impairment of the position. In September 2017, to face Credit Agricole CariParma intervention in favour of CariCesena, Cassa di Risparmio di Rimini (Carim) and Cassa di Risparmio di San Miniato (Carismi) (based on a capital increase for €464 million and subscription of bonds from NPL securitisation of these banks for €170 million), the Fund has increased its capital endowment till to €795 million (share of total investments attributable to UniCredit group equal to approximately €146 million, of which €125 million referred to UniCredit S.p.A.). Further in the same month, UniCredit group has paid €10 million (of which €9 million UniCredit S.p.A.) to the Fund in respect of the part of the intervention related to the capital increase of Carim and Carismi. During December 2017, UniCredit group has paid the remaining €85 million (€52 million referred to capital increase of the banks and €33 million referred to the subscription of securitisation’s notes; for UniCredit S.p.A. €72 million, of which €45 million referred to capital increase and €27 million to securitization). Following these events, UniCredit group’s residual commitment towards “Schema Volontario” substantially nil. All payments referred to capital increase of the banks have brought to the recognition of capital instruments classified, on the basis of the pre-existing accounting standard IAS39, as “available for sale” for the amount of €63 million (€54 million for UniCredit S.p.A.), entirely cancelled in 2017 Financial Statements due to the sale of the banks to Credit Agricole CariParma at a symbolic price. Regarding the portion of investment referred to subscription of “Schema Volontario” of Junior and Mezzanine quotes of the securitisation, initial value (€33 million for the Group, €27 million for UniCredit S.p.A.) has been rectified in 2017 to reflect fair value valuation declared by the “Schema Volontario” (€5 million for the Group, €4.4 million for UniCredit S.p.A.), as resulting from analysis conducted by the advisors in charge for the underlying credits evaluation, conducted according to a Discounted Cash Flow model based on recovery plans elaborated by SPV’s special servicer. Following the update of the assessment received from “Schema Volontario” (supported by the analysis of the appointed advisor), at 31 December 2018 a further impairment of €1.4 million for the Group (of which €1.2 million for UniCredit S.p.A.) has been recognised. On 30 November 2018, the Shareholders' Meeting of the “Schema Volontario” decided to intervene in favor of Banca Carige S.p.A. by subscribing a Tier 2 subordinated loan (for a maximum amount of €320 million) issued by Banca Carige S.p.A. and intended for conversion into capital to the extent necessary to allow an expected capital increase of €400 million. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 187 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 20,664 Mezzanine 75,866 Junior 58,169 Total 154,699 Information about the units of Atlante Fund and Italian Recovery Fund Refer to Part B Balance sheet - Assets - Section 2 Financial assets at fair value through profit and loss - Item 20 - Information about the units of Atlante Fund and Italian Recovery Fund of individual financial statements notes that here are intended as completely reported. Information about the investments in the “Schema Volontario” (Voluntary Scheme) UniCredit group has joined to the "Schema Volontario", introduced by FITD, with appropriate modification of its statute, in November 2015. The “Schema Volontario” is an instrument for the resolution of bank crises through support measures in favor of its member banks, if specific conditions laid down by the legislation occurring. The “Schema Volontario” has an independent funding and the participating banks are committed to supply the relevant resources upon demand, when resources are needed to fund interventions. The “Schema Volontario”, as a private entity, has provided in April 2016 the restructuring of the support of the action that FITD had operated in July 2014 in favor of Bank Tercas, operation that generated no further charges for participating banks. Subsequently, the participating size of the “Schema Volontario” was increased up to €700 million (of which €127 million of UniCredit group, of which €110 million referred to UniCredit S.p.A.). In this context, on June 2016 the “Schema Volontario” approved an action in support of Cassa di Risparmio di Cesena (CariCesena), in relation to a capital increase approved by the same bank on 8 June 2016 for €280 million (commitment relating to UniCredit group amounted to €51 million, of which €44 million referred to UniCredit S.p.A.). On 30 September 2016 this commitment has been converted into a monetary payment which has led to the recognition of capital instruments classified, on the basis of the pre-existing accounting standard IAS39, as “available for sale" for €51 million for the Group and €44 million for UniCredit S.p.A. (consistent with the monetary payment). Update of evaluation of the instruments as at December 2016, according to an internal evaluation model based on multiples of a banking basket integrated with estimates on Cassa di Risparmio di Cesena’s credit portfolio and related equity/capital needs, has brought to full impairment of the position. In September 2017, to face Credit Agricole CariParma intervention in favour of CariCesena, Cassa di Risparmio di Rimini (Carim) and Cassa di Risparmio di San Miniato (Carismi) (based on a capital increase for €464 million and subscription of bonds from NPL securitisation of these banks for €170 million), the Fund has increased its capital endowment till to €795 million (share of total investments attributable to UniCredit group equal to approximately €146 million, of which €125 million referred to UniCredit S.p.A.). Further in the same month, UniCredit group has paid €10 million (of which €9 million UniCredit S.p.A.) to the Fund in respect of the part of the intervention related to the capital increase of Carim and Carismi. During December 2017, UniCredit group has paid the remaining €85 million (€52 million referred to capital increase of the banks and €33 million referred to the subscription of securitisation’s notes; for UniCredit S.p.A. €72 million, of which €45 million referred to capital increase and €27 million to securitization). Following these events, UniCredit group’s residual commitment towards “Schema Volontario” substantially nil. All payments referred to capital increase of the banks have brought to the recognition of capital instruments classified, on the basis of the pre-existing accounting standard IAS39, as “available for sale” for the amount of €63 million (€54 million for UniCredit S.p.A.), entirely cancelled in 2017 Financial Statements due to the sale of the banks to Credit Agricole CariParma at a symbolic price. Regarding the portion of investment referred to subscription of “Schema Volontario” of Junior and Mezzanine quotes of the securitisation, initial value (€33 million for the Group, €27 million for UniCredit S.p.A.) has been rectified in 2017 to reflect fair value valuation declared by the “Schema Volontario” (€5 million for the Group, €4.4 million for UniCredit S.p.A.), as resulting from analysis conducted by the advisors in charge for the underlying credits evaluation, conducted according to a Discounted Cash Flow model based on recovery plans elaborated by SPV’s special servicer. Following the update of the assessment received from “Schema Volontario” (supported by the analysis of the appointed advisor), at 31 December 2018 a further impairment of €1.4 million for the Group (of which €1.2 million for UniCredit S.p.A.) has been recognised. On 30 November 2018, the Shareholders' Meeting of the “Schema Volontario” decided to intervene in favor of Banca Carige S.p.A. by subscribing a Tier 2 subordinated loan (for a maximum amount of €320 million) issued by Banca Carige S.p.A. and intended for conversion into capital to the extent necessary to allow an expected capital increase of €400 million. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 187 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 20,664 Mezzanine 75,866 Junior 58,169 Total 154,699 Information about the units of Atlante Fund and Italian Recovery Fund Refer to Part B Balance sheet - Assets - Section 2 Financial assets at fair value through profit and loss - Item 20 - Information about the units of Atlante Fund and Italian Recovery Fund of individual financial statements notes that here are intended as completely reported. Information about the investments in the “Schema Volontario” (Voluntary Scheme) UniCredit group has joined to the "Schema Volontario", introduced by FITD, with appropriate modification of its statute, in November 2015. The “Schema Volontario” is an instrument for the resolution of bank crises through support measures in favor of its member banks, if specific conditions laid down by the legislation occurring. The “Schema Volontario” has an independent funding and the participating banks are committed to supply the relevant resources upon demand, when resources are needed to fund interventions. The “Schema Volontario”, as a private entity, has provided in April 2016 the restructuring of the support of the action that FITD had operated in July 2014 in favor of Bank Tercas, operation that generated no further charges for participating banks. Subsequently, the participating size of the “Schema Volontario” was increased up to €700 million (of which €127 million of UniCredit group, of which €110 million referred to UniCredit S.p.A.). In this context, on June 2016 the “Schema Volontario” approved an action in support of Cassa di Risparmio di Cesena (CariCesena), in relation to a capital increase approved by the same bank on 8 June 2016 for €280 million (commitment relating to UniCredit group amounted to €51 million, of which €44 million referred to UniCredit S.p.A.). On 30 September 2016 this commitment has been converted into a monetary payment which has led to the recognition of capital instruments classified, on the basis of the pre-existing accounting standard IAS39, as “available for sale" for €51 million for the Group and €44 million for UniCredit S.p.A. (consistent with the monetary payment). Update of evaluation of the instruments as at December 2016, according to an internal evaluation model based on multiples of a banking basket integrated with estimates on Cassa di Risparmio di Cesena’s credit portfolio and related equity/capital needs, has brought to full impairment of the position. In September 2017, to face Credit Agricole CariParma intervention in favour of CariCesena, Cassa di Risparmio di Rimini (Carim) and Cassa di Risparmio di San Miniato (Carismi) (based on a capital increase for €464 million and subscription of bonds from NPL securitisation of these banks for €170 million), the Fund has increased its capital endowment till to €795 million (share of total investments attributable to UniCredit group equal to approximately €146 million, of which €125 million referred to UniCredit S.p.A.). Further in the same month, UniCredit group has paid €10 million (of which €9 million UniCredit S.p.A.) to the Fund in respect of the part of the intervention related to the capital increase of Carim and Carismi. During December 2017, UniCredit group has paid the remaining €85 million (€52 million referred to capital increase of the banks and €33 million referred to the subscription of securitisation’s notes; for UniCredit S.p.A. €72 million, of which €45 million referred to capital increase and €27 million to securitization). Following these events, UniCredit group’s residual commitment towards “Schema Volontario” substantially nil. All payments referred to capital increase of the banks have brought to the recognition of capital instruments classified, on the basis of the pre-existing accounting standard IAS39, as “available for sale” for the amount of €63 million (€54 million for UniCredit S.p.A.), entirely cancelled in 2017 Financial Statements due to the sale of the banks to Credit Agricole CariParma at a symbolic price. Regarding the portion of investment referred to subscription of “Schema Volontario” of Junior and Mezzanine quotes of the securitisation, initial value (€33 million for the Group, €27 million for UniCredit S.p.A.) has been rectified in 2017 to reflect fair value valuation declared by the “Schema Volontario” (€5 million for the Group, €4.4 million for UniCredit S.p.A.), as resulting from analysis conducted by the advisors in charge for the underlying credits evaluation, conducted according to a Discounted Cash Flow model based on recovery plans elaborated by SPV’s special servicer. Following the update of the assessment received from “Schema Volontario” (supported by the analysis of the appointed advisor), at 31 December 2018 a further impairment of €1.4 million for the Group (of which €1.2 million for UniCredit S.p.A.) has been recognised. On 30 November 2018, the Shareholders' Meeting of the “Schema Volontario” decided to intervene in favor of Banca Carige S.p.A. by subscribing a Tier 2 subordinated loan (for a maximum amount of €320 million) issued by Banca Carige S.p.A. and intended for conversion into capital to the extent necessary to allow an expected capital increase of €400 million. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 187 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 20,664 Mezzanine 75,866 Junior 58,169 Total 154,699 Information about the units of Atlante Fund and Italian Recovery Fund Refer to Part B Balance sheet - Assets - Section 2 Financial assets at fair value through profit and loss - Item 20 - Information about the units of Atlante Fund and Italian Recovery Fund of individual financial statements notes that here are intended as completely reported. Information about the investments in the “Schema Volontario” (Voluntary Scheme) UniCredit group has joined to the "Schema Volontario", introduced by FITD, with appropriate modification of its statute, in November 2015. The “Schema Volontario” is an instrument for the resolution of bank crises through support measures in favor of its member banks, if specific conditions laid down by the legislation occurring. The “Schema Volontario” has an independent funding and the participating banks are committed to supply the relevant resources upon demand, when resources are needed to fund interventions. The “Schema Volontario”, as a private entity, has provided in April 2016 the restructuring of the support of the action that FITD had operated in July 2014 in favor of Bank Tercas, operation that generated no further charges for participating banks. Subsequently, the participating size of the “Schema Volontario” was increased up to €700 million (of which €127 million of UniCredit group, of which €110 million referred to UniCredit S.p.A.). In this context, on June 2016 the “Schema Volontario” approved an action in support of Cassa di Risparmio di Cesena (CariCesena), in relation to a capital increase approved by the same bank on 8 June 2016 for €280 million (commitment relating to UniCredit group amounted to €51 million, of which €44 million referred to UniCredit S.p.A.). On 30 September 2016 this commitment has been converted into a monetary payment which has led to the recognition of capital instruments classified, on the basis of the pre-existing accounting standard IAS39, as “available for sale" for €51 million for the Group and €44 million for UniCredit S.p.A. (consistent with the monetary payment). Update of evaluation of the instruments as at December 2016, according to an internal evaluation model based on multiples of a banking basket integrated with estimates on Cassa di Risparmio di Cesena’s credit portfolio and related equity/capital needs, has brought to full impairment of the position. In September 2017, to face Credit Agricole CariParma intervention in favour of CariCesena, Cassa di Risparmio di Rimini (Carim) and Cassa di Risparmio di San Miniato (Carismi) (based on a capital increase for €464 million and subscription of bonds from NPL securitisation of these banks for €170 million), the Fund has increased its capital endowment till to €795 million (share of total investments attributable to UniCredit group equal to approximately €146 million, of which €125 million referred to UniCredit S.p.A.). Further in the same month, UniCredit group has paid €10 million (of which €9 million UniCredit S.p.A.) to the Fund in respect of the part of the intervention related to the capital increase of Carim and Carismi. During December 2017, UniCredit group has paid the remaining €85 million (€52 million referred to capital increase of the banks and €33 million referred to the subscription of securitisation’s notes; for UniCredit S.p.A. €72 million, of which €45 million referred to capital increase and €27 million to securitization). Following these events, UniCredit group’s residual commitment towards “Schema Volontario” substantially nil. All payments referred to capital increase of the banks have brought to the recognition of capital instruments classified, on the basis of the pre-existing accounting standard IAS39, as “available for sale” for the amount of €63 million (€54 million for UniCredit S.p.A.), entirely cancelled in 2017 Financial Statements due to the sale of the banks to Credit Agricole CariParma at a symbolic price. Regarding the portion of investment referred to subscription of “Schema Volontario” of Junior and Mezzanine quotes of the securitisation, initial value (€33 million for the Group, €27 million for UniCredit S.p.A.) has been rectified in 2017 to reflect fair value valuation declared by the “Schema Volontario” (€5 million for the Group, €4.4 million for UniCredit S.p.A.), as resulting from analysis conducted by the advisors in charge for the underlying credits evaluation, conducted according to a Discounted Cash Flow model based on recovery plans elaborated by SPV’s special servicer. Following the update of the assessment received from “Schema Volontario” (supported by the analysis of the appointed advisor), at 31 December 2018 a further impairment of €1.4 million for the Group (of which €1.2 million for UniCredit S.p.A.) has been recognised. On 30 November 2018, the Shareholders' Meeting of the “Schema Volontario” decided to intervene in favor of Banca Carige S.p.A. by subscribing a Tier 2 subordinated loan (for a maximum amount of €320 million) issued by Banca Carige S.p.A. and intended for conversion into capital to the extent necessary to allow an expected capital increase of €400 million. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 187 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 20,664 Mezzanine 75,866 Junior 58,169 Total 154,699 Information about the units of Atlante Fund and Italian Recovery Fund Refer to Part B Balance sheet - Assets - Section 2 Financial assets at fair value through profit and loss - Item 20 - Information about the units of Atlante Fund and Italian Recovery Fund of individual financial statements notes that here are intended as completely reported. Information about the investments in the “Schema Volontario” (Voluntary Scheme) UniCredit group has joined to the "Schema Volontario", introduced by FITD, with appropriate modification of its statute, in November 2015. The “Schema Volontario” is an instrument for the resolution of bank crises through support measures in favor of its member banks, if specific conditions laid down by the legislation occurring. The “Schema Volontario” has an independent funding and the participating banks are committed to supply the relevant resources upon demand, when resources are needed to fund interventions. The “Schema Volontario”, as a private entity, has provided in April 2016 the restructuring of the support of the action that FITD had operated in July 2014 in favor of Bank Tercas, operation that generated no further charges for participating banks. Subsequently, the participating size of the “Schema Volontario” was increased up to €700 million (of which €127 million of UniCredit group, of which €110 million referred to UniCredit S.p.A.). In this context, on June 2016 the “Schema Volontario” approved an action in support of Cassa di Risparmio di Cesena (CariCesena), in relation to a capital increase approved by the same bank on 8 June 2016 for €280 million (commitment relating to UniCredit group amounted to €51 million, of which €44 million referred to UniCredit S.p.A.). On 30 September 2016 this commitment has been converted into a monetary payment which has led to the recognition of capital instruments classified, on the basis of the pre-existing accounting standard IAS39, as “available for sale" for €51 million for the Group and €44 million for UniCredit S.p.A. (consistent with the monetary payment). Update of evaluation of the instruments as at December 2016, according to an internal evaluation model based on multiples of a banking basket integrated with estimates on Cassa di Risparmio di Cesena’s credit portfolio and related equity/capital needs, has brought to full impairment of the position. In September 2017, to face Credit Agricole CariParma intervention in favour of CariCesena, Cassa di Risparmio di Rimini (Carim) and Cassa di Risparmio di San Miniato (Carismi) (based on a capital increase for €464 million and subscription of bonds from NPL securitisation of these banks for €170 million), the Fund has increased its capital endowment till to €795 million (share of total investments attributable to UniCredit group equal to approximately €146 million, of which €125 million referred to UniCredit S.p.A.). Further in the same month, UniCredit group has paid €10 million (of which €9 million UniCredit S.p.A.) to the Fund in respect of the part of the intervention related to the capital increase of Carim and Carismi. During December 2017, UniCredit group has paid the remaining €85 million (€52 million referred to capital increase of the banks and €33 million referred to the subscription of securitisation’s notes; for UniCredit S.p.A. €72 million, of which €45 million referred to capital increase and €27 million to securitization). Following these events, UniCredit group’s residual commitment towards “Schema Volontario” substantially nil. All payments referred to capital increase of the banks have brought to the recognition of capital instruments classified, on the basis of the pre-existing accounting standard IAS39, as “available for sale” for the amount of €63 million (€54 million for UniCredit S.p.A.), entirely cancelled in 2017 Financial Statements due to the sale of the banks to Credit Agricole CariParma at a symbolic price. Regarding the portion of investment referred to subscription of “Schema Volontario” of Junior and Mezzanine quotes of the securitisation, initial value (€33 million for the Group, €27 million for UniCredit S.p.A.) has been rectified in 2017 to reflect fair value valuation declared by the “Schema Volontario” (€5 million for the Group, €4.4 million for UniCredit S.p.A.), as resulting from analysis conducted by the advisors in charge for the underlying credits evaluation, conducted according to a Discounted Cash Flow model based on recovery plans elaborated by SPV’s special servicer. Following the update of the assessment received from “Schema Volontario” (supported by the analysis of the appointed advisor), at 31 December 2018 a further impairment of €1.4 million for the Group (of which €1.2 million for UniCredit S.p.A.) has been recognised. On 30 November 2018, the Shareholders' Meeting of the “Schema Volontario” decided to intervene in favor of Banca Carige S.p.A. by subscribing a Tier 2 subordinated loan (for a maximum amount of €320 million) issued by Banca Carige S.p.A. and intended for conversion into capital to the extent necessary to allow an expected capital increase of €400 million. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 188 2018 Annual Report and Accounts · UniCredit On the same date, within the framework of the agreement stipulated with the “Schema Volontario”, Banca Carige S.p.A. has placed bonds for €320 million, of which €318.2 million subscribed directly through the same “Schema Volontario”. The bonds were issued at par (100% of the nominal value), with a fixed rate coupon of 13% and a maturity of 10 years (maturity 30 November 2028). Given the failure to provide, by 22 December 2018, by the Extraordinary Shareholders' Meeting of Banca Carige S.p.A. of the delegation to the Board of Directors, also pursuant to art.2443 of the Civil Code, to increase by payment the share capital for a maximum total amount, including share premium, of €400 million, with retroactive effect, starting from the date of issue, interests on the principal amount of outstanding bonds from time to time, mature at a nominal fixed rate of 16%. With reference to the intervention in favor of Banca Carige S.p.A., UniCredit group contribution to the “Schema Volontario” amounts to approximately €62.5 million (of which approximately €53 million attributable to UniCredit S.p.A. and €9.5 million to Fineco Bank S.p.A.), and it has been identified as a financial instrument classified, on the basis of the existing accounting standard IFRS9, under item "20.c) Financial assets mandatorily at fair value through profit or loss”. Since no market valuations or prices of comparable securities are available, at 31 December 2018 the fair value of the instrument, equal to nearly €44 million (of which nearly €37.3 million for UniCredit S.p.A. and €6.7 million for Fineco Bank S.p.A.) was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the “Rendiconto 2018” of the “Schema Volontario” itself. 2.6 Other Financial assets mandatorily at fair value:breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Equity instruments 858,836 of which: banks 439,609 of which: other financial companies 317,352 of which: non-financial companies 101,875 2. Debt securities 16,555,818 a) Central banks - b) Governments and other Public Sector Entities 10,547,136 c) Banks 4,861,551 d) Other financial companies 1,017,960 of which: insurance companies 418,745 e) Non-financial companies 129,171 3. Units in investment funds 970,100 4. Loans and advances 2,521,421 a) Central banks - b) Governments and other Public Sector Entities 994,460 c) Banks 46,730 d) Other financial companies 3,159 of which: insurance companies - e) Non-financial companies 1,039,546 f) Households 437,526 Total 20,906,175 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 188 2018 Annual Report and Accounts · UniCredit On the same date, within the framework of the agreement stipulated with the “Schema Volontario”, Banca Carige S.p.A. has placed bonds for €320 million, of which €318.2 million subscribed directly through the same “Schema Volontario”. The bonds were issued at par (100% of the nominal value), with a fixed rate coupon of 13% and a maturity of 10 years (maturity 30 November 2028). Given the failure to provide, by 22 December 2018, by the Extraordinary Shareholders' Meeting of Banca Carige S.p.A. of the delegation to the Board of Directors, also pursuant to art.2443 of the Civil Code, to increase by payment the share capital for a maximum total amount, including share premium, of €400 million, with retroactive effect, starting from the date of issue, interests on the principal amount of outstanding bonds from time to time, mature at a nominal fixed rate of 16%. With reference to the intervention in favor of Banca Carige S.p.A., UniCredit group contribution to the “Schema Volontario” amounts to approximately €62.5 million (of which approximately €53 million attributable to UniCredit S.p.A. and €9.5 million to Fineco Bank S.p.A.), and it has been identified as a financial instrument classified, on the basis of the existing accounting standard IFRS9, under item "20.c) Financial assets mandatorily at fair value through profit or loss”. Since no market valuations or prices of comparable securities are available, at 31 December 2018 the fair value of the instrument, equal to nearly €44 million (of which nearly €37.3 million for UniCredit S.p.A. and €6.7 million for Fineco Bank S.p.A.) was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the “Rendiconto 2018” of the “Schema Volontario” itself. 2.6 Other Financial assets mandatorily at fair value:breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Equity instruments 858,836 of which: banks 439,609 of which: other financial companies 317,352 of which: non-financial companies 101,875 2. Debt securities 16,555,818 a) Central banks - b) Governments and other Public Sector Entities 10,547,136 c) Banks 4,861,551 d) Other financial companies 1,017,960 of which: insurance companies 418,745 e) Non-financial companies 129,171 3. Units in investment funds 970,100 4. Loans and advances 2,521,421 a) Central banks - b) Governments and other Public Sector Entities 994,460 c) Banks 46,730 d) Other financial companies 3,159 of which: insurance companies - e) Non-financial companies 1,039,546 f) Households 437,526 Total 20,906,175 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 188 2018 Annual Report and Accounts · UniCredit On the same date, within the framework of the agreement stipulated with the “Schema Volontario”, Banca Carige S.p.A. has placed bonds for €320 million, of which €318.2 million subscribed directly through the same “Schema Volontario”. The bonds were issued at par (100% of the nominal value), with a fixed rate coupon of 13% and a maturity of 10 years (maturity 30 November 2028). Given the failure to provide, by 22 December 2018, by the Extraordinary Shareholders' Meeting of Banca Carige S.p.A. of the delegation to the Board of Directors, also pursuant to art.2443 of the Civil Code, to increase by payment the share capital for a maximum total amount, including share premium, of €400 million, with retroactive effect, starting from the date of issue, interests on the principal amount of outstanding bonds from time to time, mature at a nominal fixed rate of 16%. With reference to the intervention in favor of Banca Carige S.p.A., UniCredit group contribution to the “Schema Volontario” amounts to approximately €62.5 million (of which approximately €53 million attributable to UniCredit S.p.A. and €9.5 million to Fineco Bank S.p.A.), and it has been identified as a financial instrument classified, on the basis of the existing accounting standard IFRS9, under item "20.c) Financial assets mandatorily at fair value through profit or loss”. Since no market valuations or prices of comparable securities are available, at 31 December 2018 the fair value of the instrument, equal to nearly €44 million (of which nearly €37.3 million for UniCredit S.p.A. and €6.7 million for Fineco Bank S.p.A.) was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the “Rendiconto 2018” of the “Schema Volontario” itself. 2.6 Other Financial assets mandatorily at fair value:breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Equity instruments 858,836 of which: banks 439,609 of which: other financial companies 317,352 of which: non-financial companies 101,875 2. Debt securities 16,555,818 a) Central banks - b) Governments and other Public Sector Entities 10,547,136 c) Banks 4,861,551 d) Other financial companies 1,017,960 of which: insurance companies 418,745 e) Non-financial companies 129,171 3. Units in investment funds 970,100 4. Loans and advances 2,521,421 a) Central banks - b) Governments and other Public Sector Entities 994,460 c) Banks 46,730 d) Other financial companies 3,159 of which: insurance companies - e) Non-financial companies 1,039,546 f) Households 437,526 Total 20,906,175 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 188 2018 Annual Report and Accounts · UniCredit On the same date, within the framework of the agreement stipulated with the “Schema Volontario”, Banca Carige S.p.A. has placed bonds for €320 million, of which €318.2 million subscribed directly through the same “Schema Volontario”. The bonds were issued at par (100% of the nominal value), with a fixed rate coupon of 13% and a maturity of 10 years (maturity 30 November 2028). Given the failure to provide, by 22 December 2018, by the Extraordinary Shareholders' Meeting of Banca Carige S.p.A. of the delegation to the Board of Directors, also pursuant to art.2443 of the Civil Code, to increase by payment the share capital for a maximum total amount, including share premium, of €400 million, with retroactive effect, starting from the date of issue, interests on the principal amount of outstanding bonds from time to time, mature at a nominal fixed rate of 16%. With reference to the intervention in favor of Banca Carige S.p.A., UniCredit group contribution to the “Schema Volontario” amounts to approximately €62.5 million (of which approximately €53 million attributable to UniCredit S.p.A. and €9.5 million to Fineco Bank S.p.A.), and it has been identified as a financial instrument classified, on the basis of the existing accounting standard IFRS9, under item "20.c) Financial assets mandatorily at fair value through profit or loss”. Since no market valuations or prices of comparable securities are available, at 31 December 2018 the fair value of the instrument, equal to nearly €44 million (of which nearly €37.3 million for UniCredit S.p.A. and €6.7 million for Fineco Bank S.p.A.) was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the “Rendiconto 2018” of the “Schema Volontario” itself. 2.6 Other Financial assets mandatorily at fair value:breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Equity instruments 858,836 of which: banks 439,609 of which: other financial companies 317,352 of which: non-financial companies 101,875 2. Debt securities 16,555,818 a) Central banks - b) Governments and other Public Sector Entities 10,547,136 c) Banks 4,861,551 d) Other financial companies 1,017,960 of which: insurance companies 418,745 e) Non-financial companies 129,171 3. Units in investment funds 970,100 4. Loans and advances 2,521,421 a) Central banks - b) Governments and other Public Sector Entities 994,460 c) Banks 46,730 d) Other financial companies 3,159 of which: insurance companies - e) Non-financial companies 1,039,546 f) Households 437,526 Total 20,906,175 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 188 2018 Annual Report and Accounts · UniCredit On the same date, within the framework of the agreement stipulated with the “Schema Volontario”, Banca Carige S.p.A. has placed bonds for €320 million, of which €318.2 million subscribed directly through the same “Schema Volontario”. The bonds were issued at par (100% of the nominal value), with a fixed rate coupon of 13% and a maturity of 10 years (maturity 30 November 2028). Given the failure to provide, by 22 December 2018, by the Extraordinary Shareholders' Meeting of Banca Carige S.p.A. of the delegation to the Board of Directors, also pursuant to art.2443 of the Civil Code, to increase by payment the share capital for a maximum total amount, including share premium, of €400 million, with retroactive effect, starting from the date of issue, interests on the principal amount of outstanding bonds from time to time, mature at a nominal fixed rate of 16%. With reference to the intervention in favor of Banca Carige S.p.A., UniCredit group contribution to the “Schema Volontario” amounts to approximately €62.5 million (of which approximately €53 million attributable to UniCredit S.p.A. and €9.5 million to Fineco Bank S.p.A.), and it has been identified as a financial instrument classified, on the basis of the existing accounting standard IFRS9, under item "20.c) Financial assets mandatorily at fair value through profit or loss”. Since no market valuations or prices of comparable securities are available, at 31 December 2018 the fair value of the instrument, equal to nearly €44 million (of which nearly €37.3 million for UniCredit S.p.A. and €6.7 million for Fineco Bank S.p.A.) was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the “Rendiconto 2018” of the “Schema Volontario” itself. 2.6 Other Financial assets mandatorily at fair value:breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Equity instruments 858,836 of which: banks 439,609 of which: other financial companies 317,352 of which: non-financial companies 101,875 2. Debt securities 16,555,818 a) Central banks - b) Governments and other Public Sector Entities 10,547,136 c) Banks 4,861,551 d) Other financial companies 1,017,960 of which: insurance companies 418,745 e) Non-financial companies 129,171 3. Units in investment funds 970,100 4. Loans and advances 2,521,421 a) Central banks - b) Governments and other Public Sector Entities 994,460 c) Banks 46,730 d) Other financial companies 3,159 of which: insurance companies - e) Non-financial companies 1,039,546 f) Households 437,526 Total 20,906,175 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 189 2.1 Financial assets held for trading: product breakdown (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A) Financial assets (non-derivatives) 1. Debt securities 15,342,291 2,717,730 295,378 1.1 Structured securities 49,791 1,482,592 3,713 1.2 Other debt securities 15,292,500 1,235,138 291,665 2. Equity instruments 12,628,952 1,293 846 3. Units in investment funds 2,218,885 387,331 71,058 4. Loans 1,377,563 4,867,312 7,917 4.1 Reverse Repos - 4,150,057 - 4.2 Other 1,377,563 717,255 7,917 Total (A) 31,567,691 7,973,666 375,199 B) Derivative instruments 1. Financial derivatives 1,738,187 31,676,886 1,093,616 1.1 Trading 1,738,187 30,301,914 1,093,616 1.2 Related to fair value option - - - 1.3 Other - 1,374,972 - 2. Credit derivatives 12,343 232,336 15,966 2.1 Trading 12,343 231,893 15,966 2.2 Related to fair value option - - - 2.3 Other - 443 - Total (B) 1,750,530 31,909,222 1,109,582 Total (A+B) 33,318,221 39,882,888 1,484,781 Total Level 1, Level 2 and Level 3 74,685,890 2.2 Financial assets held for trading: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 A. Financial assets (non-derivatives) 1. Debt securities 18,355,399 a) Governments and Central Banks 13,043,476 b) Other public-sector entities 478,353 c) Banks 2,557,314 d) Other issuers 2,276,256 2. Equity instruments 12,631,091 a) Banks 1,057,605 b) Other issuers 11,573,486 - insurance companies 703,398 - financial companies 549,364 - non-financial companies 10,320,724 - other - 3. Units in investment funds 2,677,274 4. Loans 6,252,792 a) Governments and Central Banks 1,233,166 b) Other public-sector entities 3,498 c) Banks 1,944,471 d) Other issuers 3,071,657 Total A 39,916,556 B. Derivative instruments a) Banks 15,831,862 - fair value 15,831,862 b) Customers 18,937,472 - fair value 18,937,472 Total B 34,769,334 Total (A+B) 74,685,890 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 189 2.1 Financial assets held for trading: product breakdown (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A) Financial assets (non-derivatives) 1. Debt securities 15,342,291 2,717,730 295,378 1.1 Structured securities 49,791 1,482,592 3,713 1.2 Other debt securities 15,292,500 1,235,138 291,665 2. Equity instruments 12,628,952 1,293 846 3. Units in investment funds 2,218,885 387,331 71,058 4. Loans 1,377,563 4,867,312 7,917 4.1 Reverse Repos - 4,150,057 - 4.2 Other 1,377,563 717,255 7,917 Total (A) 31,567,691 7,973,666 375,199 B) Derivative instruments 1. Financial derivatives 1,738,187 31,676,886 1,093,616 1.1 Trading 1,738,187 30,301,914 1,093,616 1.2 Related to fair value option - - - 1.3 Other - 1,374,972 - 2. Credit derivatives 12,343 232,336 15,966 2.1 Trading 12,343 231,893 15,966 2.2 Related to fair value option - - - 2.3 Other - 443 - Total (B) 1,750,530 31,909,222 1,109,582 Total (A+B) 33,318,221 39,882,888 1,484,781 Total Level 1, Level 2 and Level 3 74,685,890 2.2 Financial assets held for trading: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 A. Financial assets (non-derivatives) 1. Debt securities 18,355,399 a) Governments and Central Banks 13,043,476 b) Other public-sector entities 478,353 c) Banks 2,557,314 d) Other issuers 2,276,256 2. Equity instruments 12,631,091 a) Banks 1,057,605 b) Other issuers 11,573,486 - insurance companies 703,398 - financial companies 549,364 - non-financial companies 10,320,724 - other - 3. Units in investment funds 2,677,274 4. Loans 6,252,792 a) Governments and Central Banks 1,233,166 b) Other public-sector entities 3,498 c) Banks 1,944,471 d) Other issuers 3,071,657 Total A 39,916,556 B. Derivative instruments a) Banks 15,831,862 - fair value 15,831,862 b) Customers 18,937,472 - fair value 18,937,472 Total B 34,769,334 Total (A+B) 74,685,890 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 189 2.1 Financial assets held for trading: product breakdown (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A) Financial assets (non-derivatives) 1. Debt securities 15,342,291 2,717,730 295,378 1.1 Structured securities 49,791 1,482,592 3,713 1.2 Other debt securities 15,292,500 1,235,138 291,665 2. Equity instruments 12,628,952 1,293 846 3. Units in investment funds 2,218,885 387,331 71,058 4. Loans 1,377,563 4,867,312 7,917 4.1 Reverse Repos - 4,150,057 - 4.2 Other 1,377,563 717,255 7,917 Total (A) 31,567,691 7,973,666 375,199 B) Derivative instruments 1. Financial derivatives 1,738,187 31,676,886 1,093,616 1.1 Trading 1,738,187 30,301,914 1,093,616 1.2 Related to fair value option - - - 1.3 Other - 1,374,972 - 2. Credit derivatives 12,343 232,336 15,966 2.1 Trading 12,343 231,893 15,966 2.2 Related to fair value option - - - 2.3 Other - 443 - Total (B) 1,750,530 31,909,222 1,109,582 Total (A+B) 33,318,221 39,882,888 1,484,781 Total Level 1, Level 2 and Level 3 74,685,890 2.2 Financial assets held for trading: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 A. Financial assets (non-derivatives) 1. Debt securities 18,355,399 a) Governments and Central Banks 13,043,476 b) Other public-sector entities 478,353 c) Banks 2,557,314 d) Other issuers 2,276,256 2. Equity instruments 12,631,091 a) Banks 1,057,605 b) Other issuers 11,573,486 - insurance companies 703,398 - financial companies 549,364 - non-financial companies 10,320,724 - other - 3. Units in investment funds 2,677,274 4. Loans 6,252,792 a) Governments and Central Banks 1,233,166 b) Other public-sector entities 3,498 c) Banks 1,944,471 d) Other issuers 3,071,657 Total A 39,916,556 B. Derivative instruments a) Banks 15,831,862 - fair value 15,831,862 b) Customers 18,937,472 - fair value 18,937,472 Total B 34,769,334 Total (A+B) 74,685,890 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 189 2.1 Financial assets held for trading: product breakdown (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A) Financial assets (non-derivatives) 1. Debt securities 15,342,291 2,717,730 295,378 1.1 Structured securities 49,791 1,482,592 3,713 1.2 Other debt securities 15,292,500 1,235,138 291,665 2. Equity instruments 12,628,952 1,293 846 3. Units in investment funds 2,218,885 387,331 71,058 4. Loans 1,377,563 4,867,312 7,917 4.1 Reverse Repos - 4,150,057 - 4.2 Other 1,377,563 717,255 7,917 Total (A) 31,567,691 7,973,666 375,199 B) Derivative instruments 1. Financial derivatives 1,738,187 31,676,886 1,093,616 1.1 Trading 1,738,187 30,301,914 1,093,616 1.2 Related to fair value option - - - 1.3 Other - 1,374,972 - 2. Credit derivatives 12,343 232,336 15,966 2.1 Trading 12,343 231,893 15,966 2.2 Related to fair value option - - - 2.3 Other - 443 - Total (B) 1,750,530 31,909,222 1,109,582 Total (A+B) 33,318,221 39,882,888 1,484,781 Total Level 1, Level 2 and Level 3 74,685,890 2.2 Financial assets held for trading: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 A. Financial assets (non-derivatives) 1. Debt securities 18,355,399 a) Governments and Central Banks 13,043,476 b) Other public-sector entities 478,353 c) Banks 2,557,314 d) Other issuers 2,276,256 2. Equity instruments 12,631,091 a) Banks 1,057,605 b) Other issuers 11,573,486 - insurance companies 703,398 - financial companies 549,364 - non-financial companies 10,320,724 - other - 3. Units in investment funds 2,677,274 4. Loans 6,252,792 a) Governments and Central Banks 1,233,166 b) Other public-sector entities 3,498 c) Banks 1,944,471 d) Other issuers 3,071,657 Total A 39,916,556 B. Derivative instruments a) Banks 15,831,862 - fair value 15,831,862 b) Customers 18,937,472 - fair value 18,937,472 Total B 34,769,334 Total (A+B) 74,685,890 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 189 2.1 Financial assets held for trading: product breakdown (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A) Financial assets (non-derivatives) 1. Debt securities 15,342,291 2,717,730 295,378 1.1 Structured securities 49,791 1,482,592 3,713 1.2 Other debt securities 15,292,500 1,235,138 291,665 2. Equity instruments 12,628,952 1,293 846 3. Units in investment funds 2,218,885 387,331 71,058 4. Loans 1,377,563 4,867,312 7,917 4.1 Reverse Repos - 4,150,057 - 4.2 Other 1,377,563 717,255 7,917 Total (A) 31,567,691 7,973,666 375,199 B) Derivative instruments 1. Financial derivatives 1,738,187 31,676,886 1,093,616 1.1 Trading 1,738,187 30,301,914 1,093,616 1.2 Related to fair value option - - - 1.3 Other - 1,374,972 - 2. Credit derivatives 12,343 232,336 15,966 2.1 Trading 12,343 231,893 15,966 2.2 Related to fair value option - - - 2.3 Other - 443 - Total (B) 1,750,530 31,909,222 1,109,582 Total (A+B) 33,318,221 39,882,888 1,484,781 Total Level 1, Level 2 and Level 3 74,685,890 2.2 Financial assets held for trading: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 A. Financial assets (non-derivatives) 1. Debt securities 18,355,399 a) Governments and Central Banks 13,043,476 b) Other public-sector entities 478,353 c) Banks 2,557,314 d) Other issuers 2,276,256 2. Equity instruments 12,631,091 a) Banks 1,057,605 b) Other issuers 11,573,486 - insurance companies 703,398 - financial companies 549,364 - non-financial companies 10,320,724 - other - 3. Units in investment funds 2,677,274 4. Loans 6,252,792 a) Governments and Central Banks 1,233,166 b) Other public-sector entities 3,498 c) Banks 1,944,471 d) Other issuers 3,071,657 Total A 39,916,556 B. Derivative instruments a) Banks 15,831,862 - fair value 15,831,862 b) Customers 18,937,472 - fair value 18,937,472 Total B 34,769,334 Total (A+B) 74,685,890 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 190 2018 Annual Report and Accounts · UniCredit 3.1 Financial assets at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 6,540,805 13,851,379 39,927 1.1 Structured securities - - - 1.2 Other debt securities 6,540,805 13,851,379 39,927 2. Equity instruments 509,382 - - 3. Units in investment funds 16,991 - 5,368 4. Loans - 1,109,491 - 4.1 Structured - - - 4.2 Other - 1,109,491 - Total 7,067,178 14,960,870 45,295 Cost 6,541,219 14,800,533 102,331 Total Level 1, Level 2 and Level 3 22,073,343 3.2 Financial assets at fair value through profit or loss: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 20,432,111 a) Governments and central banks 1,072,882 b) Other public-sector entities 14,162,209 c) Banks 4,526,376 d) Other issuers 670,644 2. Equity instruments 509,382 a) Banks 509,381 b) Other issuers: 1 - insurance companies - - financial companies - - non-financial companies 1 - other - 3. Units in investment funds 22,359 4. Loans 1,109,491 a) Governments and central banks 326,061 b) Other public-sector entities 737,600 c) Banks 45,830 d) Other entities - Total 22,073,343 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 3.1 Financial assets at fair value through other comprehensive income: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 76,843,053 9,337,631 268,340 1.1 Structured securities - - - 1.2 Other 76,843,053 9,337,631 268,340 2. Equity instruments 683 1,054,956 775,494 3. Loans - - - Total 76,843,736 10,392,587 1,043,834 Total Level 1, Level 2 and Level 3 88,280,157 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 190 2018 Annual Report and Accounts · UniCredit 3.1 Financial assets at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 6,540,805 13,851,379 39,927 1.1 Structured securities - - - 1.2 Other debt securities 6,540,805 13,851,379 39,927 2. Equity instruments 509,382 - - 3. Units in investment funds 16,991 - 5,368 4. Loans - 1,109,491 - 4.1 Structured - - - 4.2 Other - 1,109,491 - Total 7,067,178 14,960,870 45,295 Cost 6,541,219 14,800,533 102,331 Total Level 1, Level 2 and Level 3 22,073,343 3.2 Financial assets at fair value through profit or loss: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 20,432,111 a) Governments and central banks 1,072,882 b) Other public-sector entities 14,162,209 c) Banks 4,526,376 d) Other issuers 670,644 2. Equity instruments 509,382 a) Banks 509,381 b) Other issuers: 1 - insurance companies - - financial companies - - non-financial companies 1 - other - 3. Units in investment funds 22,359 4. Loans 1,109,491 a) Governments and central banks 326,061 b) Other public-sector entities 737,600 c) Banks 45,830 d) Other entities - Total 22,073,343 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 3.1 Financial assets at fair value through other comprehensive income: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 76,843,053 9,337,631 268,340 1.1 Structured securities - - - 1.2 Other 76,843,053 9,337,631 268,340 2. Equity instruments 683 1,054,956 775,494 3. Loans - - - Total 76,843,736 10,392,587 1,043,834 Total Level 1, Level 2 and Level 3 88,280,157 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 190 2018 Annual Report and Accounts · UniCredit 3.1 Financial assets at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 6,540,805 13,851,379 39,927 1.1 Structured securities - - - 1.2 Other debt securities 6,540,805 13,851,379 39,927 2. Equity instruments 509,382 - - 3. Units in investment funds 16,991 - 5,368 4. Loans - 1,109,491 - 4.1 Structured - - - 4.2 Other - 1,109,491 - Total 7,067,178 14,960,870 45,295 Cost 6,541,219 14,800,533 102,331 Total Level 1, Level 2 and Level 3 22,073,343 3.2 Financial assets at fair value through profit or loss: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 20,432,111 a) Governments and central banks 1,072,882 b) Other public-sector entities 14,162,209 c) Banks 4,526,376 d) Other issuers 670,644 2. Equity instruments 509,382 a) Banks 509,381 b) Other issuers: 1 - insurance companies - - financial companies - - non-financial companies 1 - other - 3. Units in investment funds 22,359 4. Loans 1,109,491 a) Governments and central banks 326,061 b) Other public-sector entities 737,600 c) Banks 45,830 d) Other entities - Total 22,073,343 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 3.1 Financial assets at fair value through other comprehensive income: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 76,843,053 9,337,631 268,340 1.1 Structured securities - - - 1.2 Other 76,843,053 9,337,631 268,340 2. Equity instruments 683 1,054,956 775,494 3. Loans - - - Total 76,843,736 10,392,587 1,043,834 Total Level 1, Level 2 and Level 3 88,280,157 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 190 2018 Annual Report and Accounts · UniCredit 3.1 Financial assets at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 6,540,805 13,851,379 39,927 1.1 Structured securities - - - 1.2 Other debt securities 6,540,805 13,851,379 39,927 2. Equity instruments 509,382 - - 3. Units in investment funds 16,991 - 5,368 4. Loans - 1,109,491 - 4.1 Structured - - - 4.2 Other - 1,109,491 - Total 7,067,178 14,960,870 45,295 Cost 6,541,219 14,800,533 102,331 Total Level 1, Level 2 and Level 3 22,073,343 3.2 Financial assets at fair value through profit or loss: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 20,432,111 a) Governments and central banks 1,072,882 b) Other public-sector entities 14,162,209 c) Banks 4,526,376 d) Other issuers 670,644 2. Equity instruments 509,382 a) Banks 509,381 b) Other issuers: 1 - insurance companies - - financial companies - - non-financial companies 1 - other - 3. Units in investment funds 22,359 4. Loans 1,109,491 a) Governments and central banks 326,061 b) Other public-sector entities 737,600 c) Banks 45,830 d) Other entities - Total 22,073,343 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 3.1 Financial assets at fair value through other comprehensive income: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 76,843,053 9,337,631 268,340 1.1 Structured securities - - - 1.2 Other 76,843,053 9,337,631 268,340 2. Equity instruments 683 1,054,956 775,494 3. Loans - - - Total 76,843,736 10,392,587 1,043,834 Total Level 1, Level 2 and Level 3 88,280,157 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 190 2018 Annual Report and Accounts · UniCredit 3.1 Financial assets at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 6,540,805 13,851,379 39,927 1.1 Structured securities - - - 1.2 Other debt securities 6,540,805 13,851,379 39,927 2. Equity instruments 509,382 - - 3. Units in investment funds 16,991 - 5,368 4. Loans - 1,109,491 - 4.1 Structured - - - 4.2 Other - 1,109,491 - Total 7,067,178 14,960,870 45,295 Cost 6,541,219 14,800,533 102,331 Total Level 1, Level 2 and Level 3 22,073,343 3.2 Financial assets at fair value through profit or loss: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 20,432,111 a) Governments and central banks 1,072,882 b) Other public-sector entities 14,162,209 c) Banks 4,526,376 d) Other issuers 670,644 2. Equity instruments 509,382 a) Banks 509,381 b) Other issuers: 1 - insurance companies - - financial companies - - non-financial companies 1 - other - 3. Units in investment funds 22,359 4. Loans 1,109,491 a) Governments and central banks 326,061 b) Other public-sector entities 737,600 c) Banks 45,830 d) Other entities - Total 22,073,343 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 3.1 Financial assets at fair value through other comprehensive income: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 76,843,053 9,337,631 268,340 1.1 Structured securities - - - 1.2 Other 76,843,053 9,337,631 268,340 2. Equity instruments 683 1,054,956 775,494 3. Loans - - - Total 76,843,736 10,392,587 1,043,834 Total Level 1, Level 2 and Level 3 88,280,157 Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 191 The Item “1. Debt Securities” includes investments FINO Project’s in instrument Senior and in one part of instrument Mezzanine notes with a value of €230 million as at 31 December 2018. The Item “2. Equity instruments” includes (i) Banca d’Italia stake (presented among level 2 instruments), with a value of €1,008 million and (ii) ABH Holding SA investments (presented among Level 3 instruments) acquired in contemplation of the sale of PJSC Ukrsotbank to Alfa Group, with a value at 31 December 2018 of €334 million. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 205,211 Mezzanine 24,317 Junior - Total 229,528 Information about the shareholding in Banca d'Italia Reference is made to the paragraph “Information about the shareholding in Banca d’Italia” - Part B - Balance sheet - Assets - Section 3 - Financial assets at fair value through other comprehensive income of the parent company UniCredit S.p.A.’s Notes to the accounts, which is herewith quoted entirely. 3.2 Financial assets at fair value through other comprehensive income: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 86,449,024 a) Central Banks - b) Governments and other Public Sector Entities 78,170,426 c) Banks 5,830,011 d) Other financial companies 791,845 of which: insurance companies - e) Non-financial companies 1,656,742 2. Equity instruments 1,831,133 a) Banks 1,116,415 b) Other issuers 714,718 - Other financial companies 518,783 of which: insurance companies 19,821 - Non-financial companies 193,744 - Other 2,191 3. Loans and advances - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 88,280,157 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 191 The Item “1. Debt Securities” includes investments FINO Project’s in instrument Senior and in one part of instrument Mezzanine notes with a value of €230 million as at 31 December 2018. The Item “2. Equity instruments” includes (i) Banca d’Italia stake (presented among level 2 instruments), with a value of €1,008 million and (ii) ABH Holding SA investments (presented among Level 3 instruments) acquired in contemplation of the sale of PJSC Ukrsotbank to Alfa Group, with a value at 31 December 2018 of €334 million. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 205,211 Mezzanine 24,317 Junior - Total 229,528 Information about the shareholding in Banca d'Italia Reference is made to the paragraph “Information about the shareholding in Banca d’Italia” - Part B - Balance sheet - Assets - Section 3 - Financial assets at fair value through other comprehensive income of the parent company UniCredit S.p.A.’s Notes to the accounts, which is herewith quoted entirely. 3.2 Financial assets at fair value through other comprehensive income: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 86,449,024 a) Central Banks - b) Governments and other Public Sector Entities 78,170,426 c) Banks 5,830,011 d) Other financial companies 791,845 of which: insurance companies - e) Non-financial companies 1,656,742 2. Equity instruments 1,831,133 a) Banks 1,116,415 b) Other issuers 714,718 - Other financial companies 518,783 of which: insurance companies 19,821 - Non-financial companies 193,744 - Other 2,191 3. Loans and advances - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 88,280,157 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 191 The Item “1. Debt Securities” includes investments FINO Project’s in instrument Senior and in one part of instrument Mezzanine notes with a value of €230 million as at 31 December 2018. The Item “2. Equity instruments” includes (i) Banca d’Italia stake (presented among level 2 instruments), with a value of €1,008 million and (ii) ABH Holding SA investments (presented among Level 3 instruments) acquired in contemplation of the sale of PJSC Ukrsotbank to Alfa Group, with a value at 31 December 2018 of €334 million. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 205,211 Mezzanine 24,317 Junior - Total 229,528 Information about the shareholding in Banca d'Italia Reference is made to the paragraph “Information about the shareholding in Banca d’Italia” - Part B - Balance sheet - Assets - Section 3 - Financial assets at fair value through other comprehensive income of the parent company UniCredit S.p.A.’s Notes to the accounts, which is herewith quoted entirely. 3.2 Financial assets at fair value through other comprehensive income: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 86,449,024 a) Central Banks - b) Governments and other Public Sector Entities 78,170,426 c) Banks 5,830,011 d) Other financial companies 791,845 of which: insurance companies - e) Non-financial companies 1,656,742 2. Equity instruments 1,831,133 a) Banks 1,116,415 b) Other issuers 714,718 - Other financial companies 518,783 of which: insurance companies 19,821 - Non-financial companies 193,744 - Other 2,191 3. Loans and advances - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 88,280,157 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 191 The Item “1. Debt Securities” includes investments FINO Project’s in instrument Senior and in one part of instrument Mezzanine notes with a value of €230 million as at 31 December 2018. The Item “2. Equity instruments” includes (i) Banca d’Italia stake (presented among level 2 instruments), with a value of €1,008 million and (ii) ABH Holding SA investments (presented among Level 3 instruments) acquired in contemplation of the sale of PJSC Ukrsotbank to Alfa Group, with a value at 31 December 2018 of €334 million. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 205,211 Mezzanine 24,317 Junior - Total 229,528 Information about the shareholding in Banca d'Italia Reference is made to the paragraph “Information about the shareholding in Banca d’Italia” - Part B - Balance sheet - Assets - Section 3 - Financial assets at fair value through other comprehensive income of the parent company UniCredit S.p.A.’s Notes to the accounts, which is herewith quoted entirely. 3.2 Financial assets at fair value through other comprehensive income: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 86,449,024 a) Central Banks - b) Governments and other Public Sector Entities 78,170,426 c) Banks 5,830,011 d) Other financial companies 791,845 of which: insurance companies - e) Non-financial companies 1,656,742 2. Equity instruments 1,831,133 a) Banks 1,116,415 b) Other issuers 714,718 - Other financial companies 518,783 of which: insurance companies 19,821 - Non-financial companies 193,744 - Other 2,191 3. Loans and advances - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 88,280,157 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 191 The Item “1. Debt Securities” includes investments FINO Project’s in instrument Senior and in one part of instrument Mezzanine notes with a value of €230 million as at 31 December 2018. The Item “2. Equity instruments” includes (i) Banca d’Italia stake (presented among level 2 instruments), with a value of €1,008 million and (ii) ABH Holding SA investments (presented among Level 3 instruments) acquired in contemplation of the sale of PJSC Ukrsotbank to Alfa Group, with a value at 31 December 2018 of €334 million. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 205,211 Mezzanine 24,317 Junior - Total 229,528 Information about the shareholding in Banca d'Italia Reference is made to the paragraph “Information about the shareholding in Banca d’Italia” - Part B - Balance sheet - Assets - Section 3 - Financial assets at fair value through other comprehensive income of the parent company UniCredit S.p.A.’s Notes to the accounts, which is herewith quoted entirely. 3.2 Financial assets at fair value through other comprehensive income: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 86,449,024 a) Central Banks - b) Governments and other Public Sector Entities 78,170,426 c) Banks 5,830,011 d) Other financial companies 791,845 of which: insurance companies - e) Non-financial companies 1,656,742 2. Equity instruments 1,831,133 a) Banks 1,116,415 b) Other issuers 714,718 - Other financial companies 518,783 of which: insurance companies 19,821 - Non-financial companies 193,744 - Other 2,191 3. Loans and advances - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 88,280,157 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 192 2018 Annual Report and Accounts · UniCredit 3.3 Financial assets at fair value through other comprehensive income: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS PARTIAL ACCUMULATED WRITE-OFFS(*) STAGE 1 STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION Debt securities 86,053,335 66,030,763 436,001 69 32,657 7,696 28 - Loans and advances - - - - - - - - Total 12.31.2018 86,053,335 66,030,763 436,001 69 32,657 7,696 28 - of which: purchased or originated credit-impaired financial assets - - - - - - - - Note: (*) Value shown for information purposes . The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Available for sale financial assets:breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 92,161,088 8,592,241 347,986 1.1 Structured securities 74,029 4,753 15,434 1.2 Other debt securities 92,087,059 8,587,488 332,552 2. Equity instruments 99,314 1,163,479 991,633 2.1 Measured at fair value 99,313 1,163,479 680,270 2.2 Carried at cost 1 - 311,363 3. Units in investment funds 84,213 32,161 609,871 4. Loans 1 19,044 - Total 92,344,616 9,806,925 1,949,490 Total Level 1, Level 2 and Level 3 104,101,031 4.2 Available-for-sale financial assets: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 101,101,315 a) Governments and central banks 90,171,824 b) Other public-sector entities 1,360,460 c) Banks 6,807,698 d) Other issuers 2,761,333 2.Equity instruments 2,254,426 a) Banks 1,216,836 b) Other issuers: 1,037,590 - insurance companies 36,585 - financial companies 645,185 - non-financial companies 354,942 - other 878 3. Units in investment funds 726,245 4. Loans 19,045 a) Governments and central banks - b) Other public-sector entities 19,044 c) Banks 1 d) Other entities - Total 104,101,031 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 192 2018 Annual Report and Accounts · UniCredit 3.3 Financial assets at fair value through other comprehensive income: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS PARTIAL ACCUMULATED WRITE-OFFS(*) STAGE 1 STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION Debt securities 86,053,335 66,030,763 436,001 69 32,657 7,696 28 - Loans and advances - - - - - - - - Total 12.31.2018 86,053,335 66,030,763 436,001 69 32,657 7,696 28 - of which: purchased or originated credit-impaired financial assets - - - - - - - - Note: (*) Value shown for information purposes . The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Available for sale financial assets:breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 92,161,088 8,592,241 347,986 1.1 Structured securities 74,029 4,753 15,434 1.2 Other debt securities 92,087,059 8,587,488 332,552 2. Equity instruments 99,314 1,163,479 991,633 2.1 Measured at fair value 99,313 1,163,479 680,270 2.2 Carried at cost 1 - 311,363 3. Units in investment funds 84,213 32,161 609,871 4. Loans 1 19,044 - Total 92,344,616 9,806,925 1,949,490 Total Level 1, Level 2 and Level 3 104,101,031 4.2 Available-for-sale financial assets: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 101,101,315 a) Governments and central banks 90,171,824 b) Other public-sector entities 1,360,460 c) Banks 6,807,698 d) Other issuers 2,761,333 2.Equity instruments 2,254,426 a) Banks 1,216,836 b) Other issuers: 1,037,590 - insurance companies 36,585 - financial companies 645,185 - non-financial companies 354,942 - other 878 3. Units in investment funds 726,245 4. Loans 19,045 a) Governments and central banks - b) Other public-sector entities 19,044 c) Banks 1 d) Other entities - Total 104,101,031 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 192 2018 Annual Report and Accounts · UniCredit 3.3 Financial assets at fair value through other comprehensive income: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS PARTIAL ACCUMULATED WRITE-OFFS(*) STAGE 1 STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION Debt securities 86,053,335 66,030,763 436,001 69 32,657 7,696 28 - Loans and advances - - - - - - - - Total 12.31.2018 86,053,335 66,030,763 436,001 69 32,657 7,696 28 - of which: purchased or originated credit-impaired financial assets - - - - - - - - Note: (*) Value shown for information purposes . The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Available for sale financial assets:breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 92,161,088 8,592,241 347,986 1.1 Structured securities 74,029 4,753 15,434 1.2 Other debt securities 92,087,059 8,587,488 332,552 2. Equity instruments 99,314 1,163,479 991,633 2.1 Measured at fair value 99,313 1,163,479 680,270 2.2 Carried at cost 1 - 311,363 3. Units in investment funds 84,213 32,161 609,871 4. Loans 1 19,044 - Total 92,344,616 9,806,925 1,949,490 Total Level 1, Level 2 and Level 3 104,101,031 4.2 Available-for-sale financial assets: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 101,101,315 a) Governments and central banks 90,171,824 b) Other public-sector entities 1,360,460 c) Banks 6,807,698 d) Other issuers 2,761,333 2.Equity instruments 2,254,426 a) Banks 1,216,836 b) Other issuers: 1,037,590 - insurance companies 36,585 - financial companies 645,185 - non-financial companies 354,942 - other 878 3. Units in investment funds 726,245 4. Loans 19,045 a) Governments and central banks - b) Other public-sector entities 19,044 c) Banks 1 d) Other entities - Total 104,101,031 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 192 2018 Annual Report and Accounts · UniCredit 3.3 Financial assets at fair value through other comprehensive income: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS PARTIAL ACCUMULATED WRITE-OFFS(*) STAGE 1 STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION Debt securities 86,053,335 66,030,763 436,001 69 32,657 7,696 28 - Loans and advances - - - - - - - - Total 12.31.2018 86,053,335 66,030,763 436,001 69 32,657 7,696 28 - of which: purchased or originated credit-impaired financial assets - - - - - - - - Note: (*) Value shown for information purposes . The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Available for sale financial assets:breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 92,161,088 8,592,241 347,986 1.1 Structured securities 74,029 4,753 15,434 1.2 Other debt securities 92,087,059 8,587,488 332,552 2. Equity instruments 99,314 1,163,479 991,633 2.1 Measured at fair value 99,313 1,163,479 680,270 2.2 Carried at cost 1 - 311,363 3. Units in investment funds 84,213 32,161 609,871 4. Loans 1 19,044 - Total 92,344,616 9,806,925 1,949,490 Total Level 1, Level 2 and Level 3 104,101,031 4.2 Available-for-sale financial assets: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 101,101,315 a) Governments and central banks 90,171,824 b) Other public-sector entities 1,360,460 c) Banks 6,807,698 d) Other issuers 2,761,333 2.Equity instruments 2,254,426 a) Banks 1,216,836 b) Other issuers: 1,037,590 - insurance companies 36,585 - financial companies 645,185 - non-financial companies 354,942 - other 878 3. Units in investment funds 726,245 4. Loans 19,045 a) Governments and central banks - b) Other public-sector entities 19,044 c) Banks 1 d) Other entities - Total 104,101,031 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 192 2018 Annual Report and Accounts · UniCredit 3.3 Financial assets at fair value through other comprehensive income: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS PARTIAL ACCUMULATED WRITE-OFFS(*) STAGE 1 STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION Debt securities 86,053,335 66,030,763 436,001 69 32,657 7,696 28 - Loans and advances - - - - - - - - Total 12.31.2018 86,053,335 66,030,763 436,001 69 32,657 7,696 28 - of which: purchased or originated credit-impaired financial assets - - - - - - - - Note: (*) Value shown for information purposes . The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Available for sale financial assets:breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 92,161,088 8,592,241 347,986 1.1 Structured securities 74,029 4,753 15,434 1.2 Other debt securities 92,087,059 8,587,488 332,552 2. Equity instruments 99,314 1,163,479 991,633 2.1 Measured at fair value 99,313 1,163,479 680,270 2.2 Carried at cost 1 - 311,363 3. Units in investment funds 84,213 32,161 609,871 4. Loans 1 19,044 - Total 92,344,616 9,806,925 1,949,490 Total Level 1, Level 2 and Level 3 104,101,031 4.2 Available-for-sale financial assets: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 101,101,315 a) Governments and central banks 90,171,824 b) Other public-sector entities 1,360,460 c) Banks 6,807,698 d) Other issuers 2,761,333 2.Equity instruments 2,254,426 a) Banks 1,216,836 b) Other issuers: 1,037,590 - insurance companies 36,585 - financial companies 645,185 - non-financial companies 354,942 - other 878 3. Units in investment funds 726,245 4. Loans 19,045 a) Governments and central banks - b) Other public-sector entities 19,044 c) Banks 1 d) Other entities - Total 104,101,031 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 193 Section 4 - Financial assets at amortised cost - Item 40 4.1 Financial assets at amortised cost: breakdown by product of loans and advances to banks (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 A. Loans and advances to Central Banks 19,274,444 6 - - 803,858 18,490,070 1. Time deposits 120,425 - - X X X 2. Compulsory reserves 10,876,895 6 - X X X 3. Reverse repos 7,741,306 - - X X X 4. Other 535,818 - - X X X B. Loans and advances to banks 54,368,034 343 - 1,982,902 42,752,464 10,011,657 1. Loans 50,528,340 343 - 123,223 40,588,267 10,002,908 1.1 Current accounts and demand deposits 11,667,875 - - X X X 1.2 Time deposits 8,741,372 343 - X X X 1.3 Other loans 30,119,093 - - X X X - Reverse repos 22,869,038 - - X X X - Finance leases 917 - - X X X - Other 7,249,138 - - X X X 2. Debt securities 3,839,694 - - 1,859,679 2,164,197 8,749 2.1 Structured 1,792 - - - - - 2.2 Other 3,837,902 - - 1,859,679 2,164,197 8,749 Total 73,642,478 349 - 1,982,902 43,556,322 28,501,727 Total Level 1, Level 2 and Level 3 74,040,951 Loans and advances to banks are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. It should be noted that securities lending transactions collateralised by other securities or not collateralised are shown under “off-balance sheet” exposures in table A.1.4 of Part E - Section 1 - Credit Risk, in accordance with current Banca d’Italia regulations. See also the Part B of paragraph “Other information”. . Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 193 Section 4 - Financial assets at amortised cost - Item 40 4.1 Financial assets at amortised cost: breakdown by product of loans and advances to banks (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 A. Loans and advances to Central Banks 19,274,444 6 - - 803,858 18,490,070 1. Time deposits 120,425 - - X X X 2. Compulsory reserves 10,876,895 6 - X X X 3. Reverse repos 7,741,306 - - X X X 4. Other 535,818 - - X X X B. Loans and advances to banks 54,368,034 343 - 1,982,902 42,752,464 10,011,657 1. Loans 50,528,340 343 - 123,223 40,588,267 10,002,908 1.1 Current accounts and demand deposits 11,667,875 - - X X X 1.2 Time deposits 8,741,372 343 - X X X 1.3 Other loans 30,119,093 - - X X X - Reverse repos 22,869,038 - - X X X - Finance leases 917 - - X X X - Other 7,249,138 - - X X X 2. Debt securities 3,839,694 - - 1,859,679 2,164,197 8,749 2.1 Structured 1,792 - - - - - 2.2 Other 3,837,902 - - 1,859,679 2,164,197 8,749 Total 73,642,478 349 - 1,982,902 43,556,322 28,501,727 Total Level 1, Level 2 and Level 3 74,040,951 Loans and advances to banks are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. It should be noted that securities lending transactions collateralised by other securities or not collateralised are shown under “off-balance sheet” exposures in table A.1.4 of Part E - Section 1 - Credit Risk, in accordance with current Banca d’Italia regulations. See also the Part B of paragraph “Other information”. . Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 193 Section 4 - Financial assets at amortised cost - Item 40 4.1 Financial assets at amortised cost: breakdown by product of loans and advances to banks (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 A. Loans and advances to Central Banks 19,274,444 6 - - 803,858 18,490,070 1. Time deposits 120,425 - - X X X 2. Compulsory reserves 10,876,895 6 - X X X 3. Reverse repos 7,741,306 - - X X X 4. Other 535,818 - - X X X B. Loans and advances to banks 54,368,034 343 - 1,982,902 42,752,464 10,011,657 1. Loans 50,528,340 343 - 123,223 40,588,267 10,002,908 1.1 Current accounts and demand deposits 11,667,875 - - X X X 1.2 Time deposits 8,741,372 343 - X X X 1.3 Other loans 30,119,093 - - X X X - Reverse repos 22,869,038 - - X X X - Finance leases 917 - - X X X - Other 7,249,138 - - X X X 2. Debt securities 3,839,694 - - 1,859,679 2,164,197 8,749 2.1 Structured 1,792 - - - - - 2.2 Other 3,837,902 - - 1,859,679 2,164,197 8,749 Total 73,642,478 349 - 1,982,902 43,556,322 28,501,727 Total Level 1, Level 2 and Level 3 74,040,951 Loans and advances to banks are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. It should be noted that securities lending transactions collateralised by other securities or not collateralised are shown under “off-balance sheet” exposures in table A.1.4 of Part E - Section 1 - Credit Risk, in accordance with current Banca d’Italia regulations. See also the Part B of paragraph “Other information”. . Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 193 Section 4 - Financial assets at amortised cost - Item 40 4.1 Financial assets at amortised cost: breakdown by product of loans and advances to banks (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 A. Loans and advances to Central Banks 19,274,444 6 - - 803,858 18,490,070 1. Time deposits 120,425 - - X X X 2. Compulsory reserves 10,876,895 6 - X X X 3. Reverse repos 7,741,306 - - X X X 4. Other 535,818 - - X X X B. Loans and advances to banks 54,368,034 343 - 1,982,902 42,752,464 10,011,657 1. Loans 50,528,340 343 - 123,223 40,588,267 10,002,908 1.1 Current accounts and demand deposits 11,667,875 - - X X X 1.2 Time deposits 8,741,372 343 - X X X 1.3 Other loans 30,119,093 - - X X X - Reverse repos 22,869,038 - - X X X - Finance leases 917 - - X X X - Other 7,249,138 - - X X X 2. Debt securities 3,839,694 - - 1,859,679 2,164,197 8,749 2.1 Structured 1,792 - - - - - 2.2 Other 3,837,902 - - 1,859,679 2,164,197 8,749 Total 73,642,478 349 - 1,982,902 43,556,322 28,501,727 Total Level 1, Level 2 and Level 3 74,040,951 Loans and advances to banks are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. It should be noted that securities lending transactions collateralised by other securities or not collateralised are shown under “off-balance sheet” exposures in table A.1.4 of Part E - Section 1 - Credit Risk, in accordance with current Banca d’Italia regulations. See also the Part B of paragraph “Other information”. . Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 193 Section 4 - Financial assets at amortised cost - Item 40 4.1 Financial assets at amortised cost: breakdown by product of loans and advances to banks (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 A. Loans and advances to Central Banks 19,274,444 6 - - 803,858 18,490,070 1. Time deposits 120,425 - - X X X 2. Compulsory reserves 10,876,895 6 - X X X 3. Reverse repos 7,741,306 - - X X X 4. Other 535,818 - - X X X B. Loans and advances to banks 54,368,034 343 - 1,982,902 42,752,464 10,011,657 1. Loans 50,528,340 343 - 123,223 40,588,267 10,002,908 1.1 Current accounts and demand deposits 11,667,875 - - X X X 1.2 Time deposits 8,741,372 343 - X X X 1.3 Other loans 30,119,093 - - X X X - Reverse repos 22,869,038 - - X X X - Finance leases 917 - - X X X - Other 7,249,138 - - X X X 2. Debt securities 3,839,694 - - 1,859,679 2,164,197 8,749 2.1 Structured 1,792 - - - - - 2.2 Other 3,837,902 - - 1,859,679 2,164,197 8,749 Total 73,642,478 349 - 1,982,902 43,556,322 28,501,727 Total Level 1, Level 2 and Level 3 74,040,951 Loans and advances to banks are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. It should be noted that securities lending transactions collateralised by other securities or not collateralised are shown under “off-balance sheet” exposures in table A.1.4 of Part E - Section 1 - Credit Risk, in accordance with current Banca d’Italia regulations. See also the Part B of paragraph “Other information”. . Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 194 2018 Annual Report and Accounts · UniCredit 4.2 Financial assets at amortised cost: breakdown by product of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 1. Loans 454,500,313 14,864,032 17,395 182,209 152,256,437 320,589,764 1.1 Current accounts 32,762,516 1,554,529 7,954 X X X 1.2 Reverse repos 38,263,258 29 - X X X 1.3 Mortgages 162,154,684 5,889,703 7,380 X X X 1.4 Credit cards and personal loans, including wage assignment 17,653,340 281,058 1 X X X 1.5 Finance leases 18,453,434 2,274,906 - X X X 1.6 Factoring 14,001,246 187,709 - X X X 1.7 Other loans 171,211,835 4,676,098 2,060 X X X 2. Debt securities 36,258,362 45,308 - 28,303,308 8,712,440 1,048,483 2.1 Structured securities 21,344 - - 13,408 - 8,999 2.2 Other debt securities 36,237,018 45,308 - 28,289,900 8,712,440 1,039,484 Total 490,758,675 14,909,340 17,395 28,485,517 160,968,877 321,638,247 Total Level 1, Level 2 and Level 3 511,092,641 The column “NPE - purchased” includes impaired loans purchased as part of transactions other than business combinations. The sub-items “1.2. Reverse repos" and “1.7. Other loans” do not include the type of securities lending transactions collateralised by securities or not collateralised. These transactions were classified under "off-balance sheet" exposures of table A.1.5 of Part E - Section 1 - Credit Risk. See also the section "Other Information" of Part B. The sub-item “7. Other loans” includes: • €7,381 million for trade receivables; • €33,502 million for other non-current account loans; • €9,657 million for pooled transactions; • €5,834 million advances to customers for import/export; • €10,722 million for advances to ordinary customers. Loans and advances to customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. The fair value of impaired loans was estimated by considering that the analytical realizable value represents by their net book value being the best estimate of the future expected cash flows discounted at the valuation date, further adjusted to incorporate, when available, a premium derived from significant market’s transaction for similar instruments. According to this assumption, impaired loans were classified as level 3 in the fair value hierarchy. For further details see the Consolidated report on operations and the chapter “Credit quality” in Part E - Information on risks and hedging policies. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 194 2018 Annual Report and Accounts · UniCredit 4.2 Financial assets at amortised cost: breakdown by product of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 1. Loans 454,500,313 14,864,032 17,395 182,209 152,256,437 320,589,764 1.1 Current accounts 32,762,516 1,554,529 7,954 X X X 1.2 Reverse repos 38,263,258 29 - X X X 1.3 Mortgages 162,154,684 5,889,703 7,380 X X X 1.4 Credit cards and personal loans, including wage assignment 17,653,340 281,058 1 X X X 1.5 Finance leases 18,453,434 2,274,906 - X X X 1.6 Factoring 14,001,246 187,709 - X X X 1.7 Other loans 171,211,835 4,676,098 2,060 X X X 2. Debt securities 36,258,362 45,308 - 28,303,308 8,712,440 1,048,483 2.1 Structured securities 21,344 - - 13,408 - 8,999 2.2 Other debt securities 36,237,018 45,308 - 28,289,900 8,712,440 1,039,484 Total 490,758,675 14,909,340 17,395 28,485,517 160,968,877 321,638,247 Total Level 1, Level 2 and Level 3 511,092,641 The column “NPE - purchased” includes impaired loans purchased as part of transactions other than business combinations. The sub-items “1.2. Reverse repos" and “1.7. Other loans” do not include the type of securities lending transactions collateralised by securities or not collateralised. These transactions were classified under "off-balance sheet" exposures of table A.1.5 of Part E - Section 1 - Credit Risk. See also the section "Other Information" of Part B. The sub-item “7. Other loans” includes: • €7,381 million for trade receivables; • €33,502 million for other non-current account loans; • €9,657 million for pooled transactions; • €5,834 million advances to customers for import/export; • €10,722 million for advances to ordinary customers. Loans and advances to customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. The fair value of impaired loans was estimated by considering that the analytical realizable value represents by their net book value being the best estimate of the future expected cash flows discounted at the valuation date, further adjusted to incorporate, when available, a premium derived from significant market’s transaction for similar instruments. According to this assumption, impaired loans were classified as level 3 in the fair value hierarchy. For further details see the Consolidated report on operations and the chapter “Credit quality” in Part E - Information on risks and hedging policies. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 194 2018 Annual Report and Accounts · UniCredit 4.2 Financial assets at amortised cost: breakdown by product of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 1. Loans 454,500,313 14,864,032 17,395 182,209 152,256,437 320,589,764 1.1 Current accounts 32,762,516 1,554,529 7,954 X X X 1.2 Reverse repos 38,263,258 29 - X X X 1.3 Mortgages 162,154,684 5,889,703 7,380 X X X 1.4 Credit cards and personal loans, including wage assignment 17,653,340 281,058 1 X X X 1.5 Finance leases 18,453,434 2,274,906 - X X X 1.6 Factoring 14,001,246 187,709 - X X X 1.7 Other loans 171,211,835 4,676,098 2,060 X X X 2. Debt securities 36,258,362 45,308 - 28,303,308 8,712,440 1,048,483 2.1 Structured securities 21,344 - - 13,408 - 8,999 2.2 Other debt securities 36,237,018 45,308 - 28,289,900 8,712,440 1,039,484 Total 490,758,675 14,909,340 17,395 28,485,517 160,968,877 321,638,247 Total Level 1, Level 2 and Level 3 511,092,641 The column “NPE - purchased” includes impaired loans purchased as part of transactions other than business combinations. The sub-items “1.2. Reverse repos" and “1.7. Other loans” do not include the type of securities lending transactions collateralised by securities or not collateralised. These transactions were classified under "off-balance sheet" exposures of table A.1.5 of Part E - Section 1 - Credit Risk. See also the section "Other Information" of Part B. The sub-item “7. Other loans” includes: • €7,381 million for trade receivables; • €33,502 million for other non-current account loans; • €9,657 million for pooled transactions; • €5,834 million advances to customers for import/export; • €10,722 million for advances to ordinary customers. Loans and advances to customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. The fair value of impaired loans was estimated by considering that the analytical realizable value represents by their net book value being the best estimate of the future expected cash flows discounted at the valuation date, further adjusted to incorporate, when available, a premium derived from significant market’s transaction for similar instruments. According to this assumption, impaired loans were classified as level 3 in the fair value hierarchy. For further details see the Consolidated report on operations and the chapter “Credit quality” in Part E - Information on risks and hedging policies. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 194 2018 Annual Report and Accounts · UniCredit 4.2 Financial assets at amortised cost: breakdown by product of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 1. Loans 454,500,313 14,864,032 17,395 182,209 152,256,437 320,589,764 1.1 Current accounts 32,762,516 1,554,529 7,954 X X X 1.2 Reverse repos 38,263,258 29 - X X X 1.3 Mortgages 162,154,684 5,889,703 7,380 X X X 1.4 Credit cards and personal loans, including wage assignment 17,653,340 281,058 1 X X X 1.5 Finance leases 18,453,434 2,274,906 - X X X 1.6 Factoring 14,001,246 187,709 - X X X 1.7 Other loans 171,211,835 4,676,098 2,060 X X X 2. Debt securities 36,258,362 45,308 - 28,303,308 8,712,440 1,048,483 2.1 Structured securities 21,344 - - 13,408 - 8,999 2.2 Other debt securities 36,237,018 45,308 - 28,289,900 8,712,440 1,039,484 Total 490,758,675 14,909,340 17,395 28,485,517 160,968,877 321,638,247 Total Level 1, Level 2 and Level 3 511,092,641 The column “NPE - purchased” includes impaired loans purchased as part of transactions other than business combinations. The sub-items “1.2. Reverse repos" and “1.7. Other loans” do not include the type of securities lending transactions collateralised by securities or not collateralised. These transactions were classified under "off-balance sheet" exposures of table A.1.5 of Part E - Section 1 - Credit Risk. See also the section "Other Information" of Part B. The sub-item “7. Other loans” includes: • €7,381 million for trade receivables; • €33,502 million for other non-current account loans; • €9,657 million for pooled transactions; • €5,834 million advances to customers for import/export; • €10,722 million for advances to ordinary customers. Loans and advances to customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. The fair value of impaired loans was estimated by considering that the analytical realizable value represents by their net book value being the best estimate of the future expected cash flows discounted at the valuation date, further adjusted to incorporate, when available, a premium derived from significant market’s transaction for similar instruments. According to this assumption, impaired loans were classified as level 3 in the fair value hierarchy. For further details see the Consolidated report on operations and the chapter “Credit quality” in Part E - Information on risks and hedging policies. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 194 2018 Annual Report and Accounts · UniCredit 4.2 Financial assets at amortised cost: breakdown by product of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 1. Loans 454,500,313 14,864,032 17,395 182,209 152,256,437 320,589,764 1.1 Current accounts 32,762,516 1,554,529 7,954 X X X 1.2 Reverse repos 38,263,258 29 - X X X 1.3 Mortgages 162,154,684 5,889,703 7,380 X X X 1.4 Credit cards and personal loans, including wage assignment 17,653,340 281,058 1 X X X 1.5 Finance leases 18,453,434 2,274,906 - X X X 1.6 Factoring 14,001,246 187,709 - X X X 1.7 Other loans 171,211,835 4,676,098 2,060 X X X 2. Debt securities 36,258,362 45,308 - 28,303,308 8,712,440 1,048,483 2.1 Structured securities 21,344 - - 13,408 - 8,999 2.2 Other debt securities 36,237,018 45,308 - 28,289,900 8,712,440 1,039,484 Total 490,758,675 14,909,340 17,395 28,485,517 160,968,877 321,638,247 Total Level 1, Level 2 and Level 3 511,092,641 The column “NPE - purchased” includes impaired loans purchased as part of transactions other than business combinations. The sub-items “1.2. Reverse repos" and “1.7. Other loans” do not include the type of securities lending transactions collateralised by securities or not collateralised. These transactions were classified under "off-balance sheet" exposures of table A.1.5 of Part E - Section 1 - Credit Risk. See also the section "Other Information" of Part B. The sub-item “7. Other loans” includes: • €7,381 million for trade receivables; • €33,502 million for other non-current account loans; • €9,657 million for pooled transactions; • €5,834 million advances to customers for import/export; • €10,722 million for advances to ordinary customers. Loans and advances to customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. The fair value of impaired loans was estimated by considering that the analytical realizable value represents by their net book value being the best estimate of the future expected cash flows discounted at the valuation date, further adjusted to incorporate, when available, a premium derived from significant market’s transaction for similar instruments. According to this assumption, impaired loans were classified as level 3 in the fair value hierarchy. For further details see the Consolidated report on operations and the chapter “Credit quality” in Part E - Information on risks and hedging policies. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 195 The item “2.2. Other debt securities" include securities related to securitisation transactions shown in the following table. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 6,571,332 Mezzanine 101,553 Junior - Total 6,672,885 4.3 Financial leases (€ '000) AMOUNTS AS AT 12.31.2018 LOANS AND ADVANCES TO BANKS LOANS AND ADVANCES TO CUSTOMERS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases Up to 12 months 172 152 4,662,348 4,102,392 1 to 5 years 360 301 11,666,234 10,202,020 over 5 years 489 464 7,356,507 6,423,928 Total gross/net investment value 1,021 917 23,685,089 20,728,340 of which: unguaranteed residual values of assets leased 27 27 2,536,179 2,509,346 Less: unearned finance income (by remaining maturity) (104) X (2,805,631) X Present value of minim lease payments receivable (net investment in the lease) 917 917 20,879,458 20,728,340 4.4 Financial assets at amortised cost: breakdown by borrowers/issuers of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES STAGE 1 OR STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS 1. Debt securities 36,258,362 45,308 - a) Governments and other Public Sector Entities 27,619,802 7,076 - b) Other financial companies 7,452,473 38,140 - of which: insurance companies 51,866 - - c) Non-financial companies 1,186,087 92 - 2. Loans 454,500,313 14,864,032 17,395 a) Governments and other Public Sector Entities 21,771,414 259,688 - b) Other financial companies 70,572,682 769,488 - of which: insurance companies 3,131,457 5,909 - c) Non-financial companies 239,662,382 10,203,984 12,197 d) Households 122,493,835 3,630,872 5,198 Total 490,758,675 14,909,340 17,395 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 195 The item “2.2. Other debt securities" include securities related to securitisation transactions shown in the following table. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 6,571,332 Mezzanine 101,553 Junior - Total 6,672,885 4.3 Financial leases (€ '000) AMOUNTS AS AT 12.31.2018 LOANS AND ADVANCES TO BANKS LOANS AND ADVANCES TO CUSTOMERS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases Up to 12 months 172 152 4,662,348 4,102,392 1 to 5 years 360 301 11,666,234 10,202,020 over 5 years 489 464 7,356,507 6,423,928 Total gross/net investment value 1,021 917 23,685,089 20,728,340 of which: unguaranteed residual values of assets leased 27 27 2,536,179 2,509,346 Less: unearned finance income (by remaining maturity) (104) X (2,805,631) X Present value of minim lease payments receivable (net investment in the lease) 917 917 20,879,458 20,728,340 4.4 Financial assets at amortised cost: breakdown by borrowers/issuers of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES STAGE 1 OR STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS 1. Debt securities 36,258,362 45,308 - a) Governments and other Public Sector Entities 27,619,802 7,076 - b) Other financial companies 7,452,473 38,140 - of which: insurance companies 51,866 - - c) Non-financial companies 1,186,087 92 - 2. Loans 454,500,313 14,864,032 17,395 a) Governments and other Public Sector Entities 21,771,414 259,688 - b) Other financial companies 70,572,682 769,488 - of which: insurance companies 3,131,457 5,909 - c) Non-financial companies 239,662,382 10,203,984 12,197 d) Households 122,493,835 3,630,872 5,198 Total 490,758,675 14,909,340 17,395 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 195 The item “2.2. Other debt securities" include securities related to securitisation transactions shown in the following table. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 6,571,332 Mezzanine 101,553 Junior - Total 6,672,885 4.3 Financial leases (€ '000) AMOUNTS AS AT 12.31.2018 LOANS AND ADVANCES TO BANKS LOANS AND ADVANCES TO CUSTOMERS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases Up to 12 months 172 152 4,662,348 4,102,392 1 to 5 years 360 301 11,666,234 10,202,020 over 5 years 489 464 7,356,507 6,423,928 Total gross/net investment value 1,021 917 23,685,089 20,728,340 of which: unguaranteed residual values of assets leased 27 27 2,536,179 2,509,346 Less: unearned finance income (by remaining maturity) (104) X (2,805,631) X Present value of minim lease payments receivable (net investment in the lease) 917 917 20,879,458 20,728,340 4.4 Financial assets at amortised cost: breakdown by borrowers/issuers of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES STAGE 1 OR STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS 1. Debt securities 36,258,362 45,308 - a) Governments and other Public Sector Entities 27,619,802 7,076 - b) Other financial companies 7,452,473 38,140 - of which: insurance companies 51,866 - - c) Non-financial companies 1,186,087 92 - 2. Loans 454,500,313 14,864,032 17,395 a) Governments and other Public Sector Entities 21,771,414 259,688 - b) Other financial companies 70,572,682 769,488 - of which: insurance companies 3,131,457 5,909 - c) Non-financial companies 239,662,382 10,203,984 12,197 d) Households 122,493,835 3,630,872 5,198 Total 490,758,675 14,909,340 17,395 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 195 The item “2.2. Other debt securities" include securities related to securitisation transactions shown in the following table. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 6,571,332 Mezzanine 101,553 Junior - Total 6,672,885 4.3 Financial leases (€ '000) AMOUNTS AS AT 12.31.2018 LOANS AND ADVANCES TO BANKS LOANS AND ADVANCES TO CUSTOMERS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases Up to 12 months 172 152 4,662,348 4,102,392 1 to 5 years 360 301 11,666,234 10,202,020 over 5 years 489 464 7,356,507 6,423,928 Total gross/net investment value 1,021 917 23,685,089 20,728,340 of which: unguaranteed residual values of assets leased 27 27 2,536,179 2,509,346 Less: unearned finance income (by remaining maturity) (104) X (2,805,631) X Present value of minim lease payments receivable (net investment in the lease) 917 917 20,879,458 20,728,340 4.4 Financial assets at amortised cost: breakdown by borrowers/issuers of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES STAGE 1 OR STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS 1. Debt securities 36,258,362 45,308 - a) Governments and other Public Sector Entities 27,619,802 7,076 - b) Other financial companies 7,452,473 38,140 - of which: insurance companies 51,866 - - c) Non-financial companies 1,186,087 92 - 2. Loans 454,500,313 14,864,032 17,395 a) Governments and other Public Sector Entities 21,771,414 259,688 - b) Other financial companies 70,572,682 769,488 - of which: insurance companies 3,131,457 5,909 - c) Non-financial companies 239,662,382 10,203,984 12,197 d) Households 122,493,835 3,630,872 5,198 Total 490,758,675 14,909,340 17,395 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 195 The item “2.2. Other debt securities" include securities related to securitisation transactions shown in the following table. Exposures to securities related to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 6,571,332 Mezzanine 101,553 Junior - Total 6,672,885 4.3 Financial leases (€ '000) AMOUNTS AS AT 12.31.2018 LOANS AND ADVANCES TO BANKS LOANS AND ADVANCES TO CUSTOMERS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases Up to 12 months 172 152 4,662,348 4,102,392 1 to 5 years 360 301 11,666,234 10,202,020 over 5 years 489 464 7,356,507 6,423,928 Total gross/net investment value 1,021 917 23,685,089 20,728,340 of which: unguaranteed residual values of assets leased 27 27 2,536,179 2,509,346 Less: unearned finance income (by remaining maturity) (104) X (2,805,631) X Present value of minim lease payments receivable (net investment in the lease) 917 917 20,879,458 20,728,340 4.4 Financial assets at amortised cost: breakdown by borrowers/issuers of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES STAGE 1 OR STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS 1. Debt securities 36,258,362 45,308 - a) Governments and other Public Sector Entities 27,619,802 7,076 - b) Other financial companies 7,452,473 38,140 - of which: insurance companies 51,866 - - c) Non-financial companies 1,186,087 92 - 2. Loans 454,500,313 14,864,032 17,395 a) Governments and other Public Sector Entities 21,771,414 259,688 - b) Other financial companies 70,572,682 769,488 - of which: insurance companies 3,131,457 5,909 - c) Non-financial companies 239,662,382 10,203,984 12,197 d) Households 122,493,835 3,630,872 5,198 Total 490,758,675 14,909,340 17,395 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 196 2018 Annual Report and Accounts · UniCredit 4.5 Financial assets at amortised cost: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS STAGE 1 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 PARTIAL ACCUMULATED WRITE-OFFS(*) 1. Debt securities 39,691,604 25,833,349 450,081 58,352 11,977 31,652 13,044 - 2. Loans 481,938,860 - 44,924,184 38,104,820 1,016,732 1,543,215 23,240,439 2,767,990 Total 12.31.2018 521,630,464 25,833,349 45,374,265 38,163,172 1,028,709 1,574,867 23,253,483 2,767,990 of which: purchased or originated credit-impaired financial assets X X 22,307 43,535 X - 26,140 25,476 Total 12.31.2017 - - - - - - - - of which: purchased or originated credit-impaired financial assets X X - - X - - - Note: (*) Value shown for information purposes. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Held-to-maturity investments: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 6,277,022 5,096,861 1,189,062 60,735 - structured - - - - - other 6,277,022 5,096,861 1,189,062 60,735 2. Loans - - - - Total 6,277,022 5,096,861 1,189,062 60,735 Total Level 1, Level 2 and Level 3 6,346,658 5.2 Held-to-maturity investments: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Debt securities 6,277,022 a) Governments and central banks 5,936,561 b) Other public-sector entities 204,589 c) Banks 1,396 d) Other issuers 134,476 2. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 6,277,022 Total fair value 6,346,658 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 196 2018 Annual Report and Accounts · UniCredit 4.5 Financial assets at amortised cost: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS STAGE 1 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 PARTIAL ACCUMULATED WRITE-OFFS(*) 1. Debt securities 39,691,604 25,833,349 450,081 58,352 11,977 31,652 13,044 - 2. Loans 481,938,860 - 44,924,184 38,104,820 1,016,732 1,543,215 23,240,439 2,767,990 Total 12.31.2018 521,630,464 25,833,349 45,374,265 38,163,172 1,028,709 1,574,867 23,253,483 2,767,990 of which: purchased or originated credit-impaired financial assets X X 22,307 43,535 X - 26,140 25,476 Total 12.31.2017 - - - - - - - - of which: purchased or originated credit-impaired financial assets X X - - X - - - Note: (*) Value shown for information purposes. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Held-to-maturity investments: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 6,277,022 5,096,861 1,189,062 60,735 - structured - - - - - other 6,277,022 5,096,861 1,189,062 60,735 2. Loans - - - - Total 6,277,022 5,096,861 1,189,062 60,735 Total Level 1, Level 2 and Level 3 6,346,658 5.2 Held-to-maturity investments: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Debt securities 6,277,022 a) Governments and central banks 5,936,561 b) Other public-sector entities 204,589 c) Banks 1,396 d) Other issuers 134,476 2. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 6,277,022 Total fair value 6,346,658 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 196 2018 Annual Report and Accounts · UniCredit 4.5 Financial assets at amortised cost: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS STAGE 1 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 PARTIAL ACCUMULATED WRITE-OFFS(*) 1. Debt securities 39,691,604 25,833,349 450,081 58,352 11,977 31,652 13,044 - 2. Loans 481,938,860 - 44,924,184 38,104,820 1,016,732 1,543,215 23,240,439 2,767,990 Total 12.31.2018 521,630,464 25,833,349 45,374,265 38,163,172 1,028,709 1,574,867 23,253,483 2,767,990 of which: purchased or originated credit-impaired financial assets X X 22,307 43,535 X - 26,140 25,476 Total 12.31.2017 - - - - - - - - of which: purchased or originated credit-impaired financial assets X X - - X - - - Note: (*) Value shown for information purposes. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Held-to-maturity investments: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 6,277,022 5,096,861 1,189,062 60,735 - structured - - - - - other 6,277,022 5,096,861 1,189,062 60,735 2. Loans - - - - Total 6,277,022 5,096,861 1,189,062 60,735 Total Level 1, Level 2 and Level 3 6,346,658 5.2 Held-to-maturity investments: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Debt securities 6,277,022 a) Governments and central banks 5,936,561 b) Other public-sector entities 204,589 c) Banks 1,396 d) Other issuers 134,476 2. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 6,277,022 Total fair value 6,346,658 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 196 2018 Annual Report and Accounts · UniCredit 4.5 Financial assets at amortised cost: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS STAGE 1 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 PARTIAL ACCUMULATED WRITE-OFFS(*) 1. Debt securities 39,691,604 25,833,349 450,081 58,352 11,977 31,652 13,044 - 2. Loans 481,938,860 - 44,924,184 38,104,820 1,016,732 1,543,215 23,240,439 2,767,990 Total 12.31.2018 521,630,464 25,833,349 45,374,265 38,163,172 1,028,709 1,574,867 23,253,483 2,767,990 of which: purchased or originated credit-impaired financial assets X X 22,307 43,535 X - 26,140 25,476 Total 12.31.2017 - - - - - - - - of which: purchased or originated credit-impaired financial assets X X - - X - - - Note: (*) Value shown for information purposes. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Held-to-maturity investments: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 6,277,022 5,096,861 1,189,062 60,735 - structured - - - - - other 6,277,022 5,096,861 1,189,062 60,735 2. Loans - - - - Total 6,277,022 5,096,861 1,189,062 60,735 Total Level 1, Level 2 and Level 3 6,346,658 5.2 Held-to-maturity investments: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Debt securities 6,277,022 a) Governments and central banks 5,936,561 b) Other public-sector entities 204,589 c) Banks 1,396 d) Other issuers 134,476 2. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 6,277,022 Total fair value 6,346,658 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 196 2018 Annual Report and Accounts · UniCredit 4.5 Financial assets at amortised cost: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS STAGE 1 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 PARTIAL ACCUMULATED WRITE-OFFS(*) 1. Debt securities 39,691,604 25,833,349 450,081 58,352 11,977 31,652 13,044 - 2. Loans 481,938,860 - 44,924,184 38,104,820 1,016,732 1,543,215 23,240,439 2,767,990 Total 12.31.2018 521,630,464 25,833,349 45,374,265 38,163,172 1,028,709 1,574,867 23,253,483 2,767,990 of which: purchased or originated credit-impaired financial assets X X 22,307 43,535 X - 26,140 25,476 Total 12.31.2017 - - - - - - - - of which: purchased or originated credit-impaired financial assets X X - - X - - - Note: (*) Value shown for information purposes. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Held-to-maturity investments: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 6,277,022 5,096,861 1,189,062 60,735 - structured - - - - - other 6,277,022 5,096,861 1,189,062 60,735 2. Loans - - - - Total 6,277,022 5,096,861 1,189,062 60,735 Total Level 1, Level 2 and Level 3 6,346,658 5.2 Held-to-maturity investments: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Debt securities 6,277,022 a) Governments and central banks 5,936,561 b) Other public-sector entities 204,589 c) Banks 1,396 d) Other issuers 134,476 2. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 6,277,022 Total fair value 6,346,658 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 197 6.1 Loans and receivables with banks: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Loans to Central Banks 25,225,529 - 9,081,452 15,928,089 1. Time deposits 761,034 X X X 2. Compulsory reserve 15,498,979 X X X 3. Reverse repos 8,407,069 X X X 4. Other 558,447 X X X B. Loans to banks 45,757,214 526,248 38,874,324 6,941,095 1. Loans 43,485,129 - 37,080,658 6,904,291 1.1 Current accounts and demand deposits 11,350,779 X X X 1.2 Time deposits 7,307,880 X X X 1.3 Other loans: 24,826,470 X X X - Reverse repos 16,776,718 X X X - Finance leases 1,876 X X X - Other 8,047,876 X X X 2. Debt securities 2,272,085 526,248 1,793,666 36,804 2.1 Structured 29,511 X X X 2.2 Other 2,242,574 X X X Total 70,982,743 526,248 47,955,776 22,869,184 Total impaired assets 5,186 6.2 Loans and receivables with banks subject to micro-hedging There were no loans and receivables with banks subject to micro-hedging. 6.3 Finance leases (€ '000) AMOUNTS AS AT 12.31.2017 LESSOR INFORMATION MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases: Up to 12 months 1,063 1,037 From 1 to 5 years 348 281 Later than 5 years 594 558 Total gross/net investment value 2,005 1,876 of which: - Unguaranteed residual values of assets leased 232 233 Less: Unearned finance income (by remaining maturity) (129) X Present value of minimum lease payments receivable (net investment in the lease) 1,876 1,876 7.1 Loans and receivables with customers: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE PERFORMING NON-PERFORMING(*) TYPE OF TRANSACTION/VALUES PURCHASED OTHERS LEVEL 1 LEVEL 2 LEVEL 3 Loans 417,782,135 10,383 21,102,075 - 135,834,624 309,668,971 1. Current accounts 32,770,361 1,234 2,423,866 X X X 2. Reverse repos 25,880,540 - 81 X X X 3. Mortgages 153,425,370 8,484 9,537,835 X X X 4. Credit cards and personal loans, including wage assignment loans 15,457,682 1 225,853 X X X 5. Finance leases 18,659,861 - 2,998,217 X X X 6. Factoring 10,764,039 - 254,395 X X X 7. Other loans 160,824,282 664 5,661,828 X X X Debt securities 8,753,167 - 79,153 1,115,810 6,361,409 1,556,068 8. Structured securities - - - X X X 9. Other debt securities 8,753,167 - 79,153 X X X Total 426,535,302 10,383 21,181,228 1,115,810 142,196,033 311,225,039 Total carrying amount Performing and Non-Performing 447,726,913 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 197 6.1 Loans and receivables with banks: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Loans to Central Banks 25,225,529 - 9,081,452 15,928,089 1. Time deposits 761,034 X X X 2. Compulsory reserve 15,498,979 X X X 3. Reverse repos 8,407,069 X X X 4. Other 558,447 X X X B. Loans to banks 45,757,214 526,248 38,874,324 6,941,095 1. Loans 43,485,129 - 37,080,658 6,904,291 1.1 Current accounts and demand deposits 11,350,779 X X X 1.2 Time deposits 7,307,880 X X X 1.3 Other loans: 24,826,470 X X X - Reverse repos 16,776,718 X X X - Finance leases 1,876 X X X - Other 8,047,876 X X X 2. Debt securities 2,272,085 526,248 1,793,666 36,804 2.1 Structured 29,511 X X X 2.2 Other 2,242,574 X X X Total 70,982,743 526,248 47,955,776 22,869,184 Total impaired assets 5,186 6.2 Loans and receivables with banks subject to micro-hedging There were no loans and receivables with banks subject to micro-hedging. 6.3 Finance leases (€ '000) AMOUNTS AS AT 12.31.2017 LESSOR INFORMATION MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases: Up to 12 months 1,063 1,037 From 1 to 5 years 348 281 Later than 5 years 594 558 Total gross/net investment value 2,005 1,876 of which: - Unguaranteed residual values of assets leased 232 233 Less: Unearned finance income (by remaining maturity) (129) X Present value of minimum lease payments receivable (net investment in the lease) 1,876 1,876 7.1 Loans and receivables with customers: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE PERFORMING NON-PERFORMING(*) TYPE OF TRANSACTION/VALUES PURCHASED OTHERS LEVEL 1 LEVEL 2 LEVEL 3 Loans 417,782,135 10,383 21,102,075 - 135,834,624 309,668,971 1. Current accounts 32,770,361 1,234 2,423,866 X X X 2. Reverse repos 25,880,540 - 81 X X X 3. Mortgages 153,425,370 8,484 9,537,835 X X X 4. Credit cards and personal loans, including wage assignment loans 15,457,682 1 225,853 X X X 5. Finance leases 18,659,861 - 2,998,217 X X X 6. Factoring 10,764,039 - 254,395 X X X 7. Other loans 160,824,282 664 5,661,828 X X X Debt securities 8,753,167 - 79,153 1,115,810 6,361,409 1,556,068 8. Structured securities - - - X X X 9. Other debt securities 8,753,167 - 79,153 X X X Total 426,535,302 10,383 21,181,228 1,115,810 142,196,033 311,225,039 Total carrying amount Performing and Non-Performing 447,726,913 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 197 6.1 Loans and receivables with banks: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Loans to Central Banks 25,225,529 - 9,081,452 15,928,089 1. Time deposits 761,034 X X X 2. Compulsory reserve 15,498,979 X X X 3. Reverse repos 8,407,069 X X X 4. Other 558,447 X X X B. Loans to banks 45,757,214 526,248 38,874,324 6,941,095 1. Loans 43,485,129 - 37,080,658 6,904,291 1.1 Current accounts and demand deposits 11,350,779 X X X 1.2 Time deposits 7,307,880 X X X 1.3 Other loans: 24,826,470 X X X - Reverse repos 16,776,718 X X X - Finance leases 1,876 X X X - Other 8,047,876 X X X 2. Debt securities 2,272,085 526,248 1,793,666 36,804 2.1 Structured 29,511 X X X 2.2 Other 2,242,574 X X X Total 70,982,743 526,248 47,955,776 22,869,184 Total impaired assets 5,186 6.2 Loans and receivables with banks subject to micro-hedging There were no loans and receivables with banks subject to micro-hedging. 6.3 Finance leases (€ '000) AMOUNTS AS AT 12.31.2017 LESSOR INFORMATION MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases: Up to 12 months 1,063 1,037 From 1 to 5 years 348 281 Later than 5 years 594 558 Total gross/net investment value 2,005 1,876 of which: - Unguaranteed residual values of assets leased 232 233 Less: Unearned finance income (by remaining maturity) (129) X Present value of minimum lease payments receivable (net investment in the lease) 1,876 1,876 7.1 Loans and receivables with customers: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE PERFORMING NON-PERFORMING(*) TYPE OF TRANSACTION/VALUES PURCHASED OTHERS LEVEL 1 LEVEL 2 LEVEL 3 Loans 417,782,135 10,383 21,102,075 - 135,834,624 309,668,971 1. Current accounts 32,770,361 1,234 2,423,866 X X X 2. Reverse repos 25,880,540 - 81 X X X 3. Mortgages 153,425,370 8,484 9,537,835 X X X 4. Credit cards and personal loans, including wage assignment loans 15,457,682 1 225,853 X X X 5. Finance leases 18,659,861 - 2,998,217 X X X 6. Factoring 10,764,039 - 254,395 X X X 7. Other loans 160,824,282 664 5,661,828 X X X Debt securities 8,753,167 - 79,153 1,115,810 6,361,409 1,556,068 8. Structured securities - - - X X X 9. Other debt securities 8,753,167 - 79,153 X X X Total 426,535,302 10,383 21,181,228 1,115,810 142,196,033 311,225,039 Total carrying amount Performing and Non-Performing 447,726,913 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 197 6.1 Loans and receivables with banks: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Loans to Central Banks 25,225,529 - 9,081,452 15,928,089 1. Time deposits 761,034 X X X 2. Compulsory reserve 15,498,979 X X X 3. Reverse repos 8,407,069 X X X 4. Other 558,447 X X X B. Loans to banks 45,757,214 526,248 38,874,324 6,941,095 1. Loans 43,485,129 - 37,080,658 6,904,291 1.1 Current accounts and demand deposits 11,350,779 X X X 1.2 Time deposits 7,307,880 X X X 1.3 Other loans: 24,826,470 X X X - Reverse repos 16,776,718 X X X - Finance leases 1,876 X X X - Other 8,047,876 X X X 2. Debt securities 2,272,085 526,248 1,793,666 36,804 2.1 Structured 29,511 X X X 2.2 Other 2,242,574 X X X Total 70,982,743 526,248 47,955,776 22,869,184 Total impaired assets 5,186 6.2 Loans and receivables with banks subject to micro-hedging There were no loans and receivables with banks subject to micro-hedging. 6.3 Finance leases (€ '000) AMOUNTS AS AT 12.31.2017 LESSOR INFORMATION MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases: Up to 12 months 1,063 1,037 From 1 to 5 years 348 281 Later than 5 years 594 558 Total gross/net investment value 2,005 1,876 of which: - Unguaranteed residual values of assets leased 232 233 Less: Unearned finance income (by remaining maturity) (129) X Present value of minimum lease payments receivable (net investment in the lease) 1,876 1,876 7.1 Loans and receivables with customers: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE PERFORMING NON-PERFORMING(*) TYPE OF TRANSACTION/VALUES PURCHASED OTHERS LEVEL 1 LEVEL 2 LEVEL 3 Loans 417,782,135 10,383 21,102,075 - 135,834,624 309,668,971 1. Current accounts 32,770,361 1,234 2,423,866 X X X 2. Reverse repos 25,880,540 - 81 X X X 3. Mortgages 153,425,370 8,484 9,537,835 X X X 4. Credit cards and personal loans, including wage assignment loans 15,457,682 1 225,853 X X X 5. Finance leases 18,659,861 - 2,998,217 X X X 6. Factoring 10,764,039 - 254,395 X X X 7. Other loans 160,824,282 664 5,661,828 X X X Debt securities 8,753,167 - 79,153 1,115,810 6,361,409 1,556,068 8. Structured securities - - - X X X 9. Other debt securities 8,753,167 - 79,153 X X X Total 426,535,302 10,383 21,181,228 1,115,810 142,196,033 311,225,039 Total carrying amount Performing and Non-Performing 447,726,913 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 197 6.1 Loans and receivables with banks: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Loans to Central Banks 25,225,529 - 9,081,452 15,928,089 1. Time deposits 761,034 X X X 2. Compulsory reserve 15,498,979 X X X 3. Reverse repos 8,407,069 X X X 4. Other 558,447 X X X B. Loans to banks 45,757,214 526,248 38,874,324 6,941,095 1. Loans 43,485,129 - 37,080,658 6,904,291 1.1 Current accounts and demand deposits 11,350,779 X X X 1.2 Time deposits 7,307,880 X X X 1.3 Other loans: 24,826,470 X X X - Reverse repos 16,776,718 X X X - Finance leases 1,876 X X X - Other 8,047,876 X X X 2. Debt securities 2,272,085 526,248 1,793,666 36,804 2.1 Structured 29,511 X X X 2.2 Other 2,242,574 X X X Total 70,982,743 526,248 47,955,776 22,869,184 Total impaired assets 5,186 6.2 Loans and receivables with banks subject to micro-hedging There were no loans and receivables with banks subject to micro-hedging. 6.3 Finance leases (€ '000) AMOUNTS AS AT 12.31.2017 LESSOR INFORMATION MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases: Up to 12 months 1,063 1,037 From 1 to 5 years 348 281 Later than 5 years 594 558 Total gross/net investment value 2,005 1,876 of which: - Unguaranteed residual values of assets leased 232 233 Less: Unearned finance income (by remaining maturity) (129) X Present value of minimum lease payments receivable (net investment in the lease) 1,876 1,876 7.1 Loans and receivables with customers: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE PERFORMING NON-PERFORMING(*) TYPE OF TRANSACTION/VALUES PURCHASED OTHERS LEVEL 1 LEVEL 2 LEVEL 3 Loans 417,782,135 10,383 21,102,075 - 135,834,624 309,668,971 1. Current accounts 32,770,361 1,234 2,423,866 X X X 2. Reverse repos 25,880,540 - 81 X X X 3. Mortgages 153,425,370 8,484 9,537,835 X X X 4. Credit cards and personal loans, including wage assignment loans 15,457,682 1 225,853 X X X 5. Finance leases 18,659,861 - 2,998,217 X X X 6. Factoring 10,764,039 - 254,395 X X X 7. Other loans 160,824,282 664 5,661,828 X X X Debt securities 8,753,167 - 79,153 1,115,810 6,361,409 1,556,068 8. Structured securities - - - X X X 9. Other debt securities 8,753,167 - 79,153 X X X Total 426,535,302 10,383 21,181,228 1,115,810 142,196,033 311,225,039 Total carrying amount Performing and Non-Performing 447,726,913 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 198 2018 Annual Report and Accounts · UniCredit 7.2 Loans and receivables with customers: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT 12.31.2017 PERFORMING NON-PERFORMING(*) TYPE OF TRANSACTIONS/VALUES PURCHASED OTHERS 1. Debt securities: 8,753,167 - 79,153 a) Governments 60,918 - - b) Other public-sector entities 1,133,241 - - c) Other issuers 7,559,008 - 79,153 - non-financial companies 95,163 - 31,952 - financial companies 7,057,488 - 47,201 - insurance companies 406,357 - - - other - - - 2. Loans to: 417,782,135 10,383 21,102,075 a) Governments 9,372,438 - 163,813 b) Other public-sector entities 10,975,173 - 99,723 c) Other entities 397,434,524 10,383 20,838,539 - non-financial companies 233,886,322 5,532 14,434,821 - financial companies 52,340,530 - 596,579 - insurance companies 1,200,908 - 5,265 - other 110,006,764 4,851 5,801,874 Total 426,535,302 10,383 21,181,228 Total Performing and Non-Performing 447,726,913 Note: (*) The perimeter of impaired loans is substantially equivalent to the perimeter of EBA Non-Performing-Exposures (NPE). 7.4 Finance leases (€ '000) AMOUNTS AS AT 12.31.2017 LESSOR INFORMATION MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases Up to 12 months 4,300,048 3,689,573 From 1 to 5 years 12,458,613 10,839,008 Later than 5 years 8,243,588 7,129,497 Total gross/net investment value 25,002,249 21,658,078 of which: Unguaranteed residual assets due to the lessor 2,785,945 2,739,456 Less: Unearned finance income (by remaining maturity) (3,344,171) X Present value of minimum lease payments receivable (net investment in the lease) 21,658,078 21,658,078 Section 5 - Hedging derivatives - Item 50 5.1 Hedging derivatives: breakdown by hedged risk and fair value hierarchy (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 FAIR VALUE NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 98,986 4,578,280 4,251 199,826,000 1 3,428,674 2,395 192,313,287 1) Fair value 98,986 4,432,071 4,186 191,898,211 1 2,942,405 309 182,441,587 2) Cash flows - 146,209 65 7,927,789 - 486,269 2,086 9,871,700 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 98,986 4,578,280 4,251 199,826,000 1 3,428,674 2,395 192,313,287 Total Level 1, Level 2 and Level 3 4,681,517 3,431,070 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 198 2018 Annual Report and Accounts · UniCredit 7.2 Loans and receivables with customers: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT 12.31.2017 PERFORMING NON-PERFORMING(*) TYPE OF TRANSACTIONS/VALUES PURCHASED OTHERS 1. Debt securities: 8,753,167 - 79,153 a) Governments 60,918 - - b) Other public-sector entities 1,133,241 - - c) Other issuers 7,559,008 - 79,153 - non-financial companies 95,163 - 31,952 - financial companies 7,057,488 - 47,201 - insurance companies 406,357 - - - other - - - 2. Loans to: 417,782,135 10,383 21,102,075 a) Governments 9,372,438 - 163,813 b) Other public-sector entities 10,975,173 - 99,723 c) Other entities 397,434,524 10,383 20,838,539 - non-financial companies 233,886,322 5,532 14,434,821 - financial companies 52,340,530 - 596,579 - insurance companies 1,200,908 - 5,265 - other 110,006,764 4,851 5,801,874 Total 426,535,302 10,383 21,181,228 Total Performing and Non-Performing 447,726,913 Note: (*) The perimeter of impaired loans is substantially equivalent to the perimeter of EBA Non-Performing-Exposures (NPE). 7.4 Finance leases (€ '000) AMOUNTS AS AT 12.31.2017 LESSOR INFORMATION MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases Up to 12 months 4,300,048 3,689,573 From 1 to 5 years 12,458,613 10,839,008 Later than 5 years 8,243,588 7,129,497 Total gross/net investment value 25,002,249 21,658,078 of which: Unguaranteed residual assets due to the lessor 2,785,945 2,739,456 Less: Unearned finance income (by remaining maturity) (3,344,171) X Present value of minimum lease payments receivable (net investment in the lease) 21,658,078 21,658,078 Section 5 - Hedging derivatives - Item 50 5.1 Hedging derivatives: breakdown by hedged risk and fair value hierarchy (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 FAIR VALUE NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 98,986 4,578,280 4,251 199,826,000 1 3,428,674 2,395 192,313,287 1) Fair value 98,986 4,432,071 4,186 191,898,211 1 2,942,405 309 182,441,587 2) Cash flows - 146,209 65 7,927,789 - 486,269 2,086 9,871,700 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 98,986 4,578,280 4,251 199,826,000 1 3,428,674 2,395 192,313,287 Total Level 1, Level 2 and Level 3 4,681,517 3,431,070 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 198 2018 Annual Report and Accounts · UniCredit 7.2 Loans and receivables with customers: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT 12.31.2017 PERFORMING NON-PERFORMING(*) TYPE OF TRANSACTIONS/VALUES PURCHASED OTHERS 1. Debt securities: 8,753,167 - 79,153 a) Governments 60,918 - - b) Other public-sector entities 1,133,241 - - c) Other issuers 7,559,008 - 79,153 - non-financial companies 95,163 - 31,952 - financial companies 7,057,488 - 47,201 - insurance companies 406,357 - - - other - - - 2. Loans to: 417,782,135 10,383 21,102,075 a) Governments 9,372,438 - 163,813 b) Other public-sector entities 10,975,173 - 99,723 c) Other entities 397,434,524 10,383 20,838,539 - non-financial companies 233,886,322 5,532 14,434,821 - financial companies 52,340,530 - 596,579 - insurance companies 1,200,908 - 5,265 - other 110,006,764 4,851 5,801,874 Total 426,535,302 10,383 21,181,228 Total Performing and Non-Performing 447,726,913 Note: (*) The perimeter of impaired loans is substantially equivalent to the perimeter of EBA Non-Performing-Exposures (NPE). 7.4 Finance leases (€ '000) AMOUNTS AS AT 12.31.2017 LESSOR INFORMATION MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases Up to 12 months 4,300,048 3,689,573 From 1 to 5 years 12,458,613 10,839,008 Later than 5 years 8,243,588 7,129,497 Total gross/net investment value 25,002,249 21,658,078 of which: Unguaranteed residual assets due to the lessor 2,785,945 2,739,456 Less: Unearned finance income (by remaining maturity) (3,344,171) X Present value of minimum lease payments receivable (net investment in the lease) 21,658,078 21,658,078 Section 5 - Hedging derivatives - Item 50 5.1 Hedging derivatives: breakdown by hedged risk and fair value hierarchy (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 FAIR VALUE NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 98,986 4,578,280 4,251 199,826,000 1 3,428,674 2,395 192,313,287 1) Fair value 98,986 4,432,071 4,186 191,898,211 1 2,942,405 309 182,441,587 2) Cash flows - 146,209 65 7,927,789 - 486,269 2,086 9,871,700 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 98,986 4,578,280 4,251 199,826,000 1 3,428,674 2,395 192,313,287 Total Level 1, Level 2 and Level 3 4,681,517 3,431,070 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 198 2018 Annual Report and Accounts · UniCredit 7.2 Loans and receivables with customers: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT 12.31.2017 PERFORMING NON-PERFORMING(*) TYPE OF TRANSACTIONS/VALUES PURCHASED OTHERS 1. Debt securities: 8,753,167 - 79,153 a) Governments 60,918 - - b) Other public-sector entities 1,133,241 - - c) Other issuers 7,559,008 - 79,153 - non-financial companies 95,163 - 31,952 - financial companies 7,057,488 - 47,201 - insurance companies 406,357 - - - other - - - 2. Loans to: 417,782,135 10,383 21,102,075 a) Governments 9,372,438 - 163,813 b) Other public-sector entities 10,975,173 - 99,723 c) Other entities 397,434,524 10,383 20,838,539 - non-financial companies 233,886,322 5,532 14,434,821 - financial companies 52,340,530 - 596,579 - insurance companies 1,200,908 - 5,265 - other 110,006,764 4,851 5,801,874 Total 426,535,302 10,383 21,181,228 Total Performing and Non-Performing 447,726,913 Note: (*) The perimeter of impaired loans is substantially equivalent to the perimeter of EBA Non-Performing-Exposures (NPE). 7.4 Finance leases (€ '000) AMOUNTS AS AT 12.31.2017 LESSOR INFORMATION MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases Up to 12 months 4,300,048 3,689,573 From 1 to 5 years 12,458,613 10,839,008 Later than 5 years 8,243,588 7,129,497 Total gross/net investment value 25,002,249 21,658,078 of which: Unguaranteed residual assets due to the lessor 2,785,945 2,739,456 Less: Unearned finance income (by remaining maturity) (3,344,171) X Present value of minimum lease payments receivable (net investment in the lease) 21,658,078 21,658,078 Section 5 - Hedging derivatives - Item 50 5.1 Hedging derivatives: breakdown by hedged risk and fair value hierarchy (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 FAIR VALUE NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 98,986 4,578,280 4,251 199,826,000 1 3,428,674 2,395 192,313,287 1) Fair value 98,986 4,432,071 4,186 191,898,211 1 2,942,405 309 182,441,587 2) Cash flows - 146,209 65 7,927,789 - 486,269 2,086 9,871,700 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 98,986 4,578,280 4,251 199,826,000 1 3,428,674 2,395 192,313,287 Total Level 1, Level 2 and Level 3 4,681,517 3,431,070 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 198 2018 Annual Report and Accounts · UniCredit 7.2 Loans and receivables with customers: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT 12.31.2017 PERFORMING NON-PERFORMING(*) TYPE OF TRANSACTIONS/VALUES PURCHASED OTHERS 1. Debt securities: 8,753,167 - 79,153 a) Governments 60,918 - - b) Other public-sector entities 1,133,241 - - c) Other issuers 7,559,008 - 79,153 - non-financial companies 95,163 - 31,952 - financial companies 7,057,488 - 47,201 - insurance companies 406,357 - - - other - - - 2. Loans to: 417,782,135 10,383 21,102,075 a) Governments 9,372,438 - 163,813 b) Other public-sector entities 10,975,173 - 99,723 c) Other entities 397,434,524 10,383 20,838,539 - non-financial companies 233,886,322 5,532 14,434,821 - financial companies 52,340,530 - 596,579 - insurance companies 1,200,908 - 5,265 - other 110,006,764 4,851 5,801,874 Total 426,535,302 10,383 21,181,228 Total Performing and Non-Performing 447,726,913 Note: (*) The perimeter of impaired loans is substantially equivalent to the perimeter of EBA Non-Performing-Exposures (NPE). 7.4 Finance leases (€ '000) AMOUNTS AS AT 12.31.2017 LESSOR INFORMATION MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts receivable under finance leases Up to 12 months 4,300,048 3,689,573 From 1 to 5 years 12,458,613 10,839,008 Later than 5 years 8,243,588 7,129,497 Total gross/net investment value 25,002,249 21,658,078 of which: Unguaranteed residual assets due to the lessor 2,785,945 2,739,456 Less: Unearned finance income (by remaining maturity) (3,344,171) X Present value of minimum lease payments receivable (net investment in the lease) 21,658,078 21,658,078 Section 5 - Hedging derivatives - Item 50 5.1 Hedging derivatives: breakdown by hedged risk and fair value hierarchy (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 FAIR VALUE NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 98,986 4,578,280 4,251 199,826,000 1 3,428,674 2,395 192,313,287 1) Fair value 98,986 4,432,071 4,186 191,898,211 1 2,942,405 309 182,441,587 2) Cash flows - 146,209 65 7,927,789 - 486,269 2,086 9,871,700 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 98,986 4,578,280 4,251 199,826,000 1 3,428,674 2,395 192,313,287 Total Level 1, Level 2 and Level 3 4,681,517 3,431,070 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 199 Valuations at fair value were classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies. 5.2 Hedging derivatives: composition for covered portfolios and by type of hedging (€ '000) TRANSACTIONS/TYPE OF HEDGES AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW FOREIGN INVESTMENTS MICRO-HEDGE MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHERS 1. Financial assets at fair value through other comprehensive income 10,653 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 23,084 X 138,711 X 4. Other transactions - - - - - - X - X - Total assets 10,653 - - - - - 23,084 - 138,711 - 1. Financial liabilities 2,240,510 X 3,364 - - - X 6,740 X X 2. Portfolio X X X X X X 107,103 X 758 X Total liabilities 2,240,510 - 3,364 - - - 107,103 6,740 758 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X 2,150,529 X 65 - Section 6 - Changes in fair value of portfolio hedged items - Item 60 6.1 Changes to macro-hedged financial assets: breakdown by hedged portfolio (€ '000) AMOUNTS AS AT CHANGES TO HEDGED ASSETS/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes 4,303,297 3,695,007 1.1 Of specific portfolios 1,395,694 516,886 a) Financial assets at amortised cost 1,395,694 Loans and receivables 516,886 b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 1.2 Overall 2,907,603 3,178,121 2. Negative changes 1,864,699 1,450,322 2.1 Of specific portfolios 644,954 75,912 a) Financial assets at amortised cost 644,954 Loans and receivables 75,912 b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 2.2 Overall 1,219,745 1,374,410 Total 2,438,598 2,244,685 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 199 Valuations at fair value were classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies. 5.2 Hedging derivatives: composition for covered portfolios and by type of hedging (€ '000) TRANSACTIONS/TYPE OF HEDGES AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW FOREIGN INVESTMENTS MICRO-HEDGE MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHERS 1. Financial assets at fair value through other comprehensive income 10,653 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 23,084 X 138,711 X 4. Other transactions - - - - - - X - X - Total assets 10,653 - - - - - 23,084 - 138,711 - 1. Financial liabilities 2,240,510 X 3,364 - - - X 6,740 X X 2. Portfolio X X X X X X 107,103 X 758 X Total liabilities 2,240,510 - 3,364 - - - 107,103 6,740 758 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X 2,150,529 X 65 - Section 6 - Changes in fair value of portfolio hedged items - Item 60 6.1 Changes to macro-hedged financial assets: breakdown by hedged portfolio (€ '000) AMOUNTS AS AT CHANGES TO HEDGED ASSETS/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes 4,303,297 3,695,007 1.1 Of specific portfolios 1,395,694 516,886 a) Financial assets at amortised cost 1,395,694 Loans and receivables 516,886 b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 1.2 Overall 2,907,603 3,178,121 2. Negative changes 1,864,699 1,450,322 2.1 Of specific portfolios 644,954 75,912 a) Financial assets at amortised cost 644,954 Loans and receivables 75,912 b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 2.2 Overall 1,219,745 1,374,410 Total 2,438,598 2,244,685 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 199 Valuations at fair value were classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies. 5.2 Hedging derivatives: composition for covered portfolios and by type of hedging (€ '000) TRANSACTIONS/TYPE OF HEDGES AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW FOREIGN INVESTMENTS MICRO-HEDGE MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHERS 1. Financial assets at fair value through other comprehensive income 10,653 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 23,084 X 138,711 X 4. Other transactions - - - - - - X - X - Total assets 10,653 - - - - - 23,084 - 138,711 - 1. Financial liabilities 2,240,510 X 3,364 - - - X 6,740 X X 2. Portfolio X X X X X X 107,103 X 758 X Total liabilities 2,240,510 - 3,364 - - - 107,103 6,740 758 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X 2,150,529 X 65 - Section 6 - Changes in fair value of portfolio hedged items - Item 60 6.1 Changes to macro-hedged financial assets: breakdown by hedged portfolio (€ '000) AMOUNTS AS AT CHANGES TO HEDGED ASSETS/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes 4,303,297 3,695,007 1.1 Of specific portfolios 1,395,694 516,886 a) Financial assets at amortised cost 1,395,694 Loans and receivables 516,886 b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 1.2 Overall 2,907,603 3,178,121 2. Negative changes 1,864,699 1,450,322 2.1 Of specific portfolios 644,954 75,912 a) Financial assets at amortised cost 644,954 Loans and receivables 75,912 b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 2.2 Overall 1,219,745 1,374,410 Total 2,438,598 2,244,685 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 199 Valuations at fair value were classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies. 5.2 Hedging derivatives: composition for covered portfolios and by type of hedging (€ '000) TRANSACTIONS/TYPE OF HEDGES AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW FOREIGN INVESTMENTS MICRO-HEDGE MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHERS 1. Financial assets at fair value through other comprehensive income 10,653 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 23,084 X 138,711 X 4. Other transactions - - - - - - X - X - Total assets 10,653 - - - - - 23,084 - 138,711 - 1. Financial liabilities 2,240,510 X 3,364 - - - X 6,740 X X 2. Portfolio X X X X X X 107,103 X 758 X Total liabilities 2,240,510 - 3,364 - - - 107,103 6,740 758 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X 2,150,529 X 65 - Section 6 - Changes in fair value of portfolio hedged items - Item 60 6.1 Changes to macro-hedged financial assets: breakdown by hedged portfolio (€ '000) AMOUNTS AS AT CHANGES TO HEDGED ASSETS/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes 4,303,297 3,695,007 1.1 Of specific portfolios 1,395,694 516,886 a) Financial assets at amortised cost 1,395,694 Loans and receivables 516,886 b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 1.2 Overall 2,907,603 3,178,121 2. Negative changes 1,864,699 1,450,322 2.1 Of specific portfolios 644,954 75,912 a) Financial assets at amortised cost 644,954 Loans and receivables 75,912 b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 2.2 Overall 1,219,745 1,374,410 Total 2,438,598 2,244,685 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 199 Valuations at fair value were classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies. 5.2 Hedging derivatives: composition for covered portfolios and by type of hedging (€ '000) TRANSACTIONS/TYPE OF HEDGES AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW FOREIGN INVESTMENTS MICRO-HEDGE MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHERS 1. Financial assets at fair value through other comprehensive income 10,653 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 23,084 X 138,711 X 4. Other transactions - - - - - - X - X - Total assets 10,653 - - - - - 23,084 - 138,711 - 1. Financial liabilities 2,240,510 X 3,364 - - - X 6,740 X X 2. Portfolio X X X X X X 107,103 X 758 X Total liabilities 2,240,510 - 3,364 - - - 107,103 6,740 758 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X 2,150,529 X 65 - Section 6 - Changes in fair value of portfolio hedged items - Item 60 6.1 Changes to macro-hedged financial assets: breakdown by hedged portfolio (€ '000) AMOUNTS AS AT CHANGES TO HEDGED ASSETS/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes 4,303,297 3,695,007 1.1 Of specific portfolios 1,395,694 516,886 a) Financial assets at amortised cost 1,395,694 Loans and receivables 516,886 b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 1.2 Overall 2,907,603 3,178,121 2. Negative changes 1,864,699 1,450,322 2.1 Of specific portfolios 644,954 75,912 a) Financial assets at amortised cost 644,954 Loans and receivables 75,912 b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 2.2 Overall 1,219,745 1,374,410 Total 2,438,598 2,244,685 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 200 2018 Annual Report and Accounts · UniCredit Section 7 - Equity investments - Item 70 7.1 Equity investments: information on shareholders’ equity OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % VALUED AT EQUITY METHOD A.2 INVESTMENTS IN JOINT VENTURES 1 FIDES LEASING GMBH VIENNA VIENNA 7 2 CALG ANLAGEN LEASING GMBH 50.00 Issued capital EUR 36.000 2 HETA BA LEASING SUED GMBH KLAGENFURT KLAGENFURT 7 2 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 50.00 Issued capital EUR 36.500 3 KOC FINANSAL HIZMETLER AS ISTANBUL ISTANBUL 7 2 UNICREDIT SPA 50.00 Issued capital TRY 6.483.066.144 4 PALATIN GRUNDSTUECKVERWALTUNGS GESELLSCHAFT M.B.H. STOCKERAU STOCKERAU 7 2 UNICREDIT LEASING (AUSTRIA) GMBH 50.00 Issued capital EUR 36.336 5 PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. IN LIQ. VIENNA VIENNA 7 2 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 50.00 Issued capital EUR 36.336 6 STICHTING CUSTODY SERVICES YKB AMSTERDAM AMSTERDAM 7 2 YAPI KREDI BANK NEDERLAND N.V. 40.95 Issued capital EUR 125.000 7 YAPI KREDI BANK MALTA LTD. ST. JULIAN'S ST. JULIAN'S 7 1 KOC FINANSAL HIZMETLER AS .. Issued capital EUR 60.000.000 YAPI KREDI HOLDING BV 40.95 8 YAPI KREDI BANK AZERBAIJAN CLOSED JOINT STOCK COMPANY BAKU BAKU 7 1 YAPI KREDI FINANSAL KIRALAMA AO 0.04 Issued capital AZN 55.895.904 YAPI KREDI YATIRIM MENKUL DEGERLER AS 0.04 YAPI VE KREDI BANKASI AS 40.86 9 YAPI KREDI BANK NEDERLAND N.V. AMSTERDAM AMSTERDAM 7 1 YAPI KREDI HOLDING BV 13.42 Issued capital EUR 48.589.110 YAPI VE KREDI BANKASI AS 27.53 10 YAPI KREDI DIVERSIFIED PAYMENT RIGHTS FINANCE COMPANY GEORGE TOWN GEORGE TOWN 7 2 YAPI VE KREDI BANKASI AS 40.95 (4) Issued capital USD 1.000 11 YAPI KREDI FAKTORING AS ISTANBUL ISTANBUL 7 2 ENTERNASYONAL TURIZM YATIRIM A.S. .. Issued capital TRY 75.183.837 YAPI KREDI FINANSAL KIRALAMA AO .. YAPI VE KREDI BANKASI AS 40.93 12 YAPI KREDI FINANSAL KIRALAMA AO ISTANBUL ISTANBUL 7 2 YAPI VE KREDI BANKASI AS 40.94 Issued capital TRY 389.927.705 13 YAPI KREDI HOLDING BV AMSTERDAM AMSTERDAM 7 2 YAPI VE KREDI BANKASI AS 40.95 Issued capital EUR 102.000.000 14 YAPI KREDI PORTFOEY YOENETIMI AS ISTANBUL ISTANBUL 7 2 YAPI KREDI YATIRIM MENKUL DEGERLER AS 37.76 Issued capital TRY 5.860.131 YAPI VE KREDI BANKASI AS 5.18 15 YAPI KREDI YATIRIM MENKUL DEGERLER AS ISTANBUL ISTANBUL 7 2 YAPI KREDI FINANSAL KIRALAMA AO .. Issued capital TRY 197.682.787 YAPI VE KREDI BANKASI AS 40.94 16 YAPI VE KREDI BANKASI AS ISTANBUL ISTANBUL 7 1 KOC FINANSAL HIZMETLER AS 40.95 Issued capital TRY 8.398.165.828 A.3 COMPANIES UNDER SIGNIFICANT INFLUENCE 17 ADLER FUNDING LLC DOVER NEW YORK 8 5 UNICREDIT BANK AG 32.81 Issued capital USD 2.142.857 18 ALLIANZ YASAM VE EMEKLILIK AS ISTANBUL ISTANBUL 8 2 YAPI KREDI FAKTORING AS 0.04 Issued capital TRY 139.037.203 YAPI KREDI FINANSAL KIRALAMA AO 19.93 YAPI KREDI YATIRIM MENKUL DEGERLER AS 0.04 YAPI VE KREDI BANKASI AS .. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 200 2018 Annual Report and Accounts · UniCredit Section 7 - Equity investments - Item 70 7.1 Equity investments: information on shareholders’ equity OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % VALUED AT EQUITY METHOD A.2 INVESTMENTS IN JOINT VENTURES 1 FIDES LEASING GMBH VIENNA VIENNA 7 2 CALG ANLAGEN LEASING GMBH 50.00 Issued capital EUR 36.000 2 HETA BA LEASING SUED GMBH KLAGENFURT KLAGENFURT 7 2 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 50.00 Issued capital EUR 36.500 3 KOC FINANSAL HIZMETLER AS ISTANBUL ISTANBUL 7 2 UNICREDIT SPA 50.00 Issued capital TRY 6.483.066.144 4 PALATIN GRUNDSTUECKVERWALTUNGS GESELLSCHAFT M.B.H. STOCKERAU STOCKERAU 7 2 UNICREDIT LEASING (AUSTRIA) GMBH 50.00 Issued capital EUR 36.336 5 PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. IN LIQ. VIENNA VIENNA 7 2 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 50.00 Issued capital EUR 36.336 6 STICHTING CUSTODY SERVICES YKB AMSTERDAM AMSTERDAM 7 2 YAPI KREDI BANK NEDERLAND N.V. 40.95 Issued capital EUR 125.000 7 YAPI KREDI BANK MALTA LTD. ST. JULIAN'S ST. JULIAN'S 7 1 KOC FINANSAL HIZMETLER AS .. Issued capital EUR 60.000.000 YAPI KREDI HOLDING BV 40.95 8 YAPI KREDI BANK AZERBAIJAN CLOSED JOINT STOCK COMPANY BAKU BAKU 7 1 YAPI KREDI FINANSAL KIRALAMA AO 0.04 Issued capital AZN 55.895.904 YAPI KREDI YATIRIM MENKUL DEGERLER AS 0.04 YAPI VE KREDI BANKASI AS 40.86 9 YAPI KREDI BANK NEDERLAND N.V. AMSTERDAM AMSTERDAM 7 1 YAPI KREDI HOLDING BV 13.42 Issued capital EUR 48.589.110 YAPI VE KREDI BANKASI AS 27.53 10 YAPI KREDI DIVERSIFIED PAYMENT RIGHTS FINANCE COMPANY GEORGE TOWN GEORGE TOWN 7 2 YAPI VE KREDI BANKASI AS 40.95 (4) Issued capital USD 1.000 11 YAPI KREDI FAKTORING AS ISTANBUL ISTANBUL 7 2 ENTERNASYONAL TURIZM YATIRIM A.S. .. Issued capital TRY 75.183.837 YAPI KREDI FINANSAL KIRALAMA AO .. YAPI VE KREDI BANKASI AS 40.93 12 YAPI KREDI FINANSAL KIRALAMA AO ISTANBUL ISTANBUL 7 2 YAPI VE KREDI BANKASI AS 40.94 Issued capital TRY 389.927.705 13 YAPI KREDI HOLDING BV AMSTERDAM AMSTERDAM 7 2 YAPI VE KREDI BANKASI AS 40.95 Issued capital EUR 102.000.000 14 YAPI KREDI PORTFOEY YOENETIMI AS ISTANBUL ISTANBUL 7 2 YAPI KREDI YATIRIM MENKUL DEGERLER AS 37.76 Issued capital TRY 5.860.131 YAPI VE KREDI BANKASI AS 5.18 15 YAPI KREDI YATIRIM MENKUL DEGERLER AS ISTANBUL ISTANBUL 7 2 YAPI KREDI FINANSAL KIRALAMA AO .. Issued capital TRY 197.682.787 YAPI VE KREDI BANKASI AS 40.94 16 YAPI VE KREDI BANKASI AS ISTANBUL ISTANBUL 7 1 KOC FINANSAL HIZMETLER AS 40.95 Issued capital TRY 8.398.165.828 A.3 COMPANIES UNDER SIGNIFICANT INFLUENCE 17 ADLER FUNDING LLC DOVER NEW YORK 8 5 UNICREDIT BANK AG 32.81 Issued capital USD 2.142.857 18 ALLIANZ YASAM VE EMEKLILIK AS ISTANBUL ISTANBUL 8 2 YAPI KREDI FAKTORING AS 0.04 Issued capital TRY 139.037.203 YAPI KREDI FINANSAL KIRALAMA AO 19.93 YAPI KREDI YATIRIM MENKUL DEGERLER AS 0.04 YAPI VE KREDI BANKASI AS .. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 200 2018 Annual Report and Accounts · UniCredit Section 7 - Equity investments - Item 70 7.1 Equity investments: information on shareholders’ equity OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % VALUED AT EQUITY METHOD A.2 INVESTMENTS IN JOINT VENTURES 1 FIDES LEASING GMBH VIENNA VIENNA 7 2 CALG ANLAGEN LEASING GMBH 50.00 Issued capital EUR 36.000 2 HETA BA LEASING SUED GMBH KLAGENFURT KLAGENFURT 7 2 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 50.00 Issued capital EUR 36.500 3 KOC FINANSAL HIZMETLER AS ISTANBUL ISTANBUL 7 2 UNICREDIT SPA 50.00 Issued capital TRY 6.483.066.144 4 PALATIN GRUNDSTUECKVERWALTUNGS GESELLSCHAFT M.B.H. STOCKERAU STOCKERAU 7 2 UNICREDIT LEASING (AUSTRIA) GMBH 50.00 Issued capital EUR 36.336 5 PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. IN LIQ. VIENNA VIENNA 7 2 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 50.00 Issued capital EUR 36.336 6 STICHTING CUSTODY SERVICES YKB AMSTERDAM AMSTERDAM 7 2 YAPI KREDI BANK NEDERLAND N.V. 40.95 Issued capital EUR 125.000 7 YAPI KREDI BANK MALTA LTD. ST. JULIAN'S ST. JULIAN'S 7 1 KOC FINANSAL HIZMETLER AS .. Issued capital EUR 60.000.000 YAPI KREDI HOLDING BV 40.95 8 YAPI KREDI BANK AZERBAIJAN CLOSED JOINT STOCK COMPANY BAKU BAKU 7 1 YAPI KREDI FINANSAL KIRALAMA AO 0.04 Issued capital AZN 55.895.904 YAPI KREDI YATIRIM MENKUL DEGERLER AS 0.04 YAPI VE KREDI BANKASI AS 40.86 9 YAPI KREDI BANK NEDERLAND N.V. AMSTERDAM AMSTERDAM 7 1 YAPI KREDI HOLDING BV 13.42 Issued capital EUR 48.589.110 YAPI VE KREDI BANKASI AS 27.53 10 YAPI KREDI DIVERSIFIED PAYMENT RIGHTS FINANCE COMPANY GEORGE TOWN GEORGE TOWN 7 2 YAPI VE KREDI BANKASI AS 40.95 (4) Issued capital USD 1.000 11 YAPI KREDI FAKTORING AS ISTANBUL ISTANBUL 7 2 ENTERNASYONAL TURIZM YATIRIM A.S. .. Issued capital TRY 75.183.837 YAPI KREDI FINANSAL KIRALAMA AO .. YAPI VE KREDI BANKASI AS 40.93 12 YAPI KREDI FINANSAL KIRALAMA AO ISTANBUL ISTANBUL 7 2 YAPI VE KREDI BANKASI AS 40.94 Issued capital TRY 389.927.705 13 YAPI KREDI HOLDING BV AMSTERDAM AMSTERDAM 7 2 YAPI VE KREDI BANKASI AS 40.95 Issued capital EUR 102.000.000 14 YAPI KREDI PORTFOEY YOENETIMI AS ISTANBUL ISTANBUL 7 2 YAPI KREDI YATIRIM MENKUL DEGERLER AS 37.76 Issued capital TRY 5.860.131 YAPI VE KREDI BANKASI AS 5.18 15 YAPI KREDI YATIRIM MENKUL DEGERLER AS ISTANBUL ISTANBUL 7 2 YAPI KREDI FINANSAL KIRALAMA AO .. Issued capital TRY 197.682.787 YAPI VE KREDI BANKASI AS 40.94 16 YAPI VE KREDI BANKASI AS ISTANBUL ISTANBUL 7 1 KOC FINANSAL HIZMETLER AS 40.95 Issued capital TRY 8.398.165.828 A.3 COMPANIES UNDER SIGNIFICANT INFLUENCE 17 ADLER FUNDING LLC DOVER NEW YORK 8 5 UNICREDIT BANK AG 32.81 Issued capital USD 2.142.857 18 ALLIANZ YASAM VE EMEKLILIK AS ISTANBUL ISTANBUL 8 2 YAPI KREDI FAKTORING AS 0.04 Issued capital TRY 139.037.203 YAPI KREDI FINANSAL KIRALAMA AO 19.93 YAPI KREDI YATIRIM MENKUL DEGERLER AS 0.04 YAPI VE KREDI BANKASI AS .. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 200 2018 Annual Report and Accounts · UniCredit Section 7 - Equity investments - Item 70 7.1 Equity investments: information on shareholders’ equity OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % VALUED AT EQUITY METHOD A.2 INVESTMENTS IN JOINT VENTURES 1 FIDES LEASING GMBH VIENNA VIENNA 7 2 CALG ANLAGEN LEASING GMBH 50.00 Issued capital EUR 36.000 2 HETA BA LEASING SUED GMBH KLAGENFURT KLAGENFURT 7 2 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 50.00 Issued capital EUR 36.500 3 KOC FINANSAL HIZMETLER AS ISTANBUL ISTANBUL 7 2 UNICREDIT SPA 50.00 Issued capital TRY 6.483.066.144 4 PALATIN GRUNDSTUECKVERWALTUNGS GESELLSCHAFT M.B.H. STOCKERAU STOCKERAU 7 2 UNICREDIT LEASING (AUSTRIA) GMBH 50.00 Issued capital EUR 36.336 5 PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. IN LIQ. VIENNA VIENNA 7 2 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 50.00 Issued capital EUR 36.336 6 STICHTING CUSTODY SERVICES YKB AMSTERDAM AMSTERDAM 7 2 YAPI KREDI BANK NEDERLAND N.V. 40.95 Issued capital EUR 125.000 7 YAPI KREDI BANK MALTA LTD. ST. JULIAN'S ST. JULIAN'S 7 1 KOC FINANSAL HIZMETLER AS .. Issued capital EUR 60.000.000 YAPI KREDI HOLDING BV 40.95 8 YAPI KREDI BANK AZERBAIJAN CLOSED JOINT STOCK COMPANY BAKU BAKU 7 1 YAPI KREDI FINANSAL KIRALAMA AO 0.04 Issued capital AZN 55.895.904 YAPI KREDI YATIRIM MENKUL DEGERLER AS 0.04 YAPI VE KREDI BANKASI AS 40.86 9 YAPI KREDI BANK NEDERLAND N.V. AMSTERDAM AMSTERDAM 7 1 YAPI KREDI HOLDING BV 13.42 Issued capital EUR 48.589.110 YAPI VE KREDI BANKASI AS 27.53 10 YAPI KREDI DIVERSIFIED PAYMENT RIGHTS FINANCE COMPANY GEORGE TOWN GEORGE TOWN 7 2 YAPI VE KREDI BANKASI AS 40.95 (4) Issued capital USD 1.000 11 YAPI KREDI FAKTORING AS ISTANBUL ISTANBUL 7 2 ENTERNASYONAL TURIZM YATIRIM A.S. .. Issued capital TRY 75.183.837 YAPI KREDI FINANSAL KIRALAMA AO .. YAPI VE KREDI BANKASI AS 40.93 12 YAPI KREDI FINANSAL KIRALAMA AO ISTANBUL ISTANBUL 7 2 YAPI VE KREDI BANKASI AS 40.94 Issued capital TRY 389.927.705 13 YAPI KREDI HOLDING BV AMSTERDAM AMSTERDAM 7 2 YAPI VE KREDI BANKASI AS 40.95 Issued capital EUR 102.000.000 14 YAPI KREDI PORTFOEY YOENETIMI AS ISTANBUL ISTANBUL 7 2 YAPI KREDI YATIRIM MENKUL DEGERLER AS 37.76 Issued capital TRY 5.860.131 YAPI VE KREDI BANKASI AS 5.18 15 YAPI KREDI YATIRIM MENKUL DEGERLER AS ISTANBUL ISTANBUL 7 2 YAPI KREDI FINANSAL KIRALAMA AO .. Issued capital TRY 197.682.787 YAPI VE KREDI BANKASI AS 40.94 16 YAPI VE KREDI BANKASI AS ISTANBUL ISTANBUL 7 1 KOC FINANSAL HIZMETLER AS 40.95 Issued capital TRY 8.398.165.828 A.3 COMPANIES UNDER SIGNIFICANT INFLUENCE 17 ADLER FUNDING LLC DOVER NEW YORK 8 5 UNICREDIT BANK AG 32.81 Issued capital USD 2.142.857 18 ALLIANZ YASAM VE EMEKLILIK AS ISTANBUL ISTANBUL 8 2 YAPI KREDI FAKTORING AS 0.04 Issued capital TRY 139.037.203 YAPI KREDI FINANSAL KIRALAMA AO 19.93 YAPI KREDI YATIRIM MENKUL DEGERLER AS 0.04 YAPI VE KREDI BANKASI AS .. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 200 2018 Annual Report and Accounts · UniCredit Section 7 - Equity investments - Item 70 7.1 Equity investments: information on shareholders’ equity OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % VALUED AT EQUITY METHOD A.2 INVESTMENTS IN JOINT VENTURES 1 FIDES LEASING GMBH VIENNA VIENNA 7 2 CALG ANLAGEN LEASING GMBH 50.00 Issued capital EUR 36.000 2 HETA BA LEASING SUED GMBH KLAGENFURT KLAGENFURT 7 2 UNIVERSALE INTERNATIONAL REALITAETEN GMBH 50.00 Issued capital EUR 36.500 3 KOC FINANSAL HIZMETLER AS ISTANBUL ISTANBUL 7 2 UNICREDIT SPA 50.00 Issued capital TRY 6.483.066.144 4 PALATIN GRUNDSTUECKVERWALTUNGS GESELLSCHAFT M.B.H. STOCKERAU STOCKERAU 7 2 UNICREDIT LEASING (AUSTRIA) GMBH 50.00 Issued capital EUR 36.336 5 PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. IN LIQ. VIENNA VIENNA 7 2 BETEILIGUNGSVERWALTUNGSGESELLSCHAFT DER BANK AUSTRIA CREDITANSTALT LEASING GMBH 50.00 Issued capital EUR 36.336 6 STICHTING CUSTODY SERVICES YKB AMSTERDAM AMSTERDAM 7 2 YAPI KREDI BANK NEDERLAND N.V. 40.95 Issued capital EUR 125.000 7 YAPI KREDI BANK MALTA LTD. ST. JULIAN'S ST. JULIAN'S 7 1 KOC FINANSAL HIZMETLER AS .. Issued capital EUR 60.000.000 YAPI KREDI HOLDING BV 40.95 8 YAPI KREDI BANK AZERBAIJAN CLOSED JOINT STOCK COMPANY BAKU BAKU 7 1 YAPI KREDI FINANSAL KIRALAMA AO 0.04 Issued capital AZN 55.895.904 YAPI KREDI YATIRIM MENKUL DEGERLER AS 0.04 YAPI VE KREDI BANKASI AS 40.86 9 YAPI KREDI BANK NEDERLAND N.V. AMSTERDAM AMSTERDAM 7 1 YAPI KREDI HOLDING BV 13.42 Issued capital EUR 48.589.110 YAPI VE KREDI BANKASI AS 27.53 10 YAPI KREDI DIVERSIFIED PAYMENT RIGHTS FINANCE COMPANY GEORGE TOWN GEORGE TOWN 7 2 YAPI VE KREDI BANKASI AS 40.95 (4) Issued capital USD 1.000 11 YAPI KREDI FAKTORING AS ISTANBUL ISTANBUL 7 2 ENTERNASYONAL TURIZM YATIRIM A.S. .. Issued capital TRY 75.183.837 YAPI KREDI FINANSAL KIRALAMA AO .. YAPI VE KREDI BANKASI AS 40.93 12 YAPI KREDI FINANSAL KIRALAMA AO ISTANBUL ISTANBUL 7 2 YAPI VE KREDI BANKASI AS 40.94 Issued capital TRY 389.927.705 13 YAPI KREDI HOLDING BV AMSTERDAM AMSTERDAM 7 2 YAPI VE KREDI BANKASI AS 40.95 Issued capital EUR 102.000.000 14 YAPI KREDI PORTFOEY YOENETIMI AS ISTANBUL ISTANBUL 7 2 YAPI KREDI YATIRIM MENKUL DEGERLER AS 37.76 Issued capital TRY 5.860.131 YAPI VE KREDI BANKASI AS 5.18 15 YAPI KREDI YATIRIM MENKUL DEGERLER AS ISTANBUL ISTANBUL 7 2 YAPI KREDI FINANSAL KIRALAMA AO .. Issued capital TRY 197.682.787 YAPI VE KREDI BANKASI AS 40.94 16 YAPI VE KREDI BANKASI AS ISTANBUL ISTANBUL 7 1 KOC FINANSAL HIZMETLER AS 40.95 Issued capital TRY 8.398.165.828 A.3 COMPANIES UNDER SIGNIFICANT INFLUENCE 17 ADLER FUNDING LLC DOVER NEW YORK 8 5 UNICREDIT BANK AG 32.81 Issued capital USD 2.142.857 18 ALLIANZ YASAM VE EMEKLILIK AS ISTANBUL ISTANBUL 8 2 YAPI KREDI FAKTORING AS 0.04 Issued capital TRY 139.037.203 YAPI KREDI FINANSAL KIRALAMA AO 19.93 YAPI KREDI YATIRIM MENKUL DEGERLER AS 0.04 YAPI VE KREDI BANKASI AS .. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 201 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % 19 ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE OBVEZNIM MIROVINSKIM FONDOM ZAGABRIA ZAGABRIA 8 5 ZAGREBACKA BANKA D.D. 49.00 Issued capital HRK 105.000.000 20 ARWAG HOLDING-AKTIENGESELLSCHAFT VIENNA VIENNA 8 5 IMMOBILIEN HOLDING GMBH 34.38 Issued capital EUR 3.000.000 21 ASSET BANCARI II MILAN MILAN 8 2 UNICREDIT SPA 21.55 Issued capital EUR 25.050.203 22 AVIVA SPA MILAN MILAN 8 4 UNICREDIT SPA 49.00 Issued capital EUR 247.000.000 23 BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT INNSBRUCK INNSBRUCK 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 37.53 40.51 Issued capital EUR 68.062.500 UNICREDIT BANK AUSTRIA AG 9.85 6.34 24 BANQUE DE COMMERCE ET DE PLACEMENTS SA GENEVA GENEVA 8 1 YAPI VE KREDI BANKASI AS 30.67 Issued capital CHF 75.000.000 25 BARN BV AMSTERDAM AMSTERDAM 8 2 AO UNICREDIT BANK 40.00 Issued capital EUR 237.890.000 26 BKS BANK AG KLAGENFURT KLAGENFURT 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 23.15 24.16 Issued capital EUR 85.886.000 UNICREDIT BANK AUSTRIA AG 6.63 6.14 27 CAMFIN S.P.A. MILAN MILAN 8 5 UNICREDIT SPA 13.64 22.22 Issued capital EUR 1.000.000 28 CASH SERVICE COMPANY AD SOFIA SOFIA 8 5 UNICREDIT BULBANK AD 20.00 Issued capital BGN 12.500.000 29 CBD INTERNATIONAL SP.ZO.O. WARSAW WARSAW 8 2 ISB UNIVERSALE BAU GMBH 49.75 Issued capital PLN 100.500 30 CNP UNICREDIT VITA S.P.A. MILAN MILAN 8 4 UNICREDIT SPA 38.80 Issued capital EUR 381.698.529 31 COMPAGNIA AEREA ITALIANA S.P.A. FIUMICINO (ROME) FIUMICINO (ROME) 8 5 UNICREDIT SPA 36.59 Issued capital EUR 352.940 32 COMTRADE GROUP B.V. ROTTERDAM AMSTERDAM 8 5 HVB CAPITAL PARTNERS AG 21.05 Issued capital EUR 4.522.000 33 CREDITRAS ASSICURAZIONI SPA MILAN MILAN 8 4 UNICREDIT SPA 50.00 Issued capital EUR 52.000.000 34 CREDITRAS VITA SPA MILAN MILAN 8 4 UNICREDIT SPA 50.00 Issued capital EUR 112.200.000 35 DA VINCI S.R.L. ROME ROME 8 5 IDEA FIMIT SGR FONDO SIGMA IMMOBILIARE 37.50 Issued capital EUR 100.000 36 EUROPROGETTI & FINANZA S.R.L. IN LIQUIDAZIONE ROME ROME 8 2 UNICREDIT SPA 39.79 Issued capital EUR 5.636.400 37 INCONTRA ASSICURAZIONI S.P.A. MILAN MILAN 8 4 UNICREDIT SPA 49.00 Issued capital EUR 5.200.000 38 MEDIOBANCA BANCA DI CREDITO FINANZIARIO SPA MILAN MILAN 8 1 UNICREDIT SPA 8.40 Issued capital EUR 443.521.470 39 MULTIPLUS CARD D.O.O. ZA PROMIDZBU I USLUGE ZAGREB ZAGREB 8 2 ZAGREB NEKRETNINE DOO 75.00 25.00 Issued capital HRK 5.000.000 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 201 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % 19 ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE OBVEZNIM MIROVINSKIM FONDOM ZAGABRIA ZAGABRIA 8 5 ZAGREBACKA BANKA D.D. 49.00 Issued capital HRK 105.000.000 20 ARWAG HOLDING-AKTIENGESELLSCHAFT VIENNA VIENNA 8 5 IMMOBILIEN HOLDING GMBH 34.38 Issued capital EUR 3.000.000 21 ASSET BANCARI II MILAN MILAN 8 2 UNICREDIT SPA 21.55 Issued capital EUR 25.050.203 22 AVIVA SPA MILAN MILAN 8 4 UNICREDIT SPA 49.00 Issued capital EUR 247.000.000 23 BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT INNSBRUCK INNSBRUCK 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 37.53 40.51 Issued capital EUR 68.062.500 UNICREDIT BANK AUSTRIA AG 9.85 6.34 24 BANQUE DE COMMERCE ET DE PLACEMENTS SA GENEVA GENEVA 8 1 YAPI VE KREDI BANKASI AS 30.67 Issued capital CHF 75.000.000 25 BARN BV AMSTERDAM AMSTERDAM 8 2 AO UNICREDIT BANK 40.00 Issued capital EUR 237.890.000 26 BKS BANK AG KLAGENFURT KLAGENFURT 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 23.15 24.16 Issued capital EUR 85.886.000 UNICREDIT BANK AUSTRIA AG 6.63 6.14 27 CAMFIN S.P.A. MILAN MILAN 8 5 UNICREDIT SPA 13.64 22.22 Issued capital EUR 1.000.000 28 CASH SERVICE COMPANY AD SOFIA SOFIA 8 5 UNICREDIT BULBANK AD 20.00 Issued capital BGN 12.500.000 29 CBD INTERNATIONAL SP.ZO.O. WARSAW WARSAW 8 2 ISB UNIVERSALE BAU GMBH 49.75 Issued capital PLN 100.500 30 CNP UNICREDIT VITA S.P.A. MILAN MILAN 8 4 UNICREDIT SPA 38.80 Issued capital EUR 381.698.529 31 COMPAGNIA AEREA ITALIANA S.P.A. FIUMICINO (ROME) FIUMICINO (ROME) 8 5 UNICREDIT SPA 36.59 Issued capital EUR 352.940 32 COMTRADE GROUP B.V. ROTTERDAM AMSTERDAM 8 5 HVB CAPITAL PARTNERS AG 21.05 Issued capital EUR 4.522.000 33 CREDITRAS ASSICURAZIONI SPA MILAN MILAN 8 4 UNICREDIT SPA 50.00 Issued capital EUR 52.000.000 34 CREDITRAS VITA SPA MILAN MILAN 8 4 UNICREDIT SPA 50.00 Issued capital EUR 112.200.000 35 DA VINCI S.R.L. ROME ROME 8 5 IDEA FIMIT SGR FONDO SIGMA IMMOBILIARE 37.50 Issued capital EUR 100.000 36 EUROPROGETTI & FINANZA S.R.L. IN LIQUIDAZIONE ROME ROME 8 2 UNICREDIT SPA 39.79 Issued capital EUR 5.636.400 37 INCONTRA ASSICURAZIONI S.P.A. MILAN MILAN 8 4 UNICREDIT SPA 49.00 Issued capital EUR 5.200.000 38 MEDIOBANCA BANCA DI CREDITO FINANZIARIO SPA MILAN MILAN 8 1 UNICREDIT SPA 8.40 Issued capital EUR 443.521.470 39 MULTIPLUS CARD D.O.O. ZA PROMIDZBU I USLUGE ZAGREB ZAGREB 8 2 ZAGREB NEKRETNINE DOO 75.00 25.00 Issued capital HRK 5.000.000 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 201 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % 19 ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE OBVEZNIM MIROVINSKIM FONDOM ZAGABRIA ZAGABRIA 8 5 ZAGREBACKA BANKA D.D. 49.00 Issued capital HRK 105.000.000 20 ARWAG HOLDING-AKTIENGESELLSCHAFT VIENNA VIENNA 8 5 IMMOBILIEN HOLDING GMBH 34.38 Issued capital EUR 3.000.000 21 ASSET BANCARI II MILAN MILAN 8 2 UNICREDIT SPA 21.55 Issued capital EUR 25.050.203 22 AVIVA SPA MILAN MILAN 8 4 UNICREDIT SPA 49.00 Issued capital EUR 247.000.000 23 BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT INNSBRUCK INNSBRUCK 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 37.53 40.51 Issued capital EUR 68.062.500 UNICREDIT BANK AUSTRIA AG 9.85 6.34 24 BANQUE DE COMMERCE ET DE PLACEMENTS SA GENEVA GENEVA 8 1 YAPI VE KREDI BANKASI AS 30.67 Issued capital CHF 75.000.000 25 BARN BV AMSTERDAM AMSTERDAM 8 2 AO UNICREDIT BANK 40.00 Issued capital EUR 237.890.000 26 BKS BANK AG KLAGENFURT KLAGENFURT 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 23.15 24.16 Issued capital EUR 85.886.000 UNICREDIT BANK AUSTRIA AG 6.63 6.14 27 CAMFIN S.P.A. MILAN MILAN 8 5 UNICREDIT SPA 13.64 22.22 Issued capital EUR 1.000.000 28 CASH SERVICE COMPANY AD SOFIA SOFIA 8 5 UNICREDIT BULBANK AD 20.00 Issued capital BGN 12.500.000 29 CBD INTERNATIONAL SP.ZO.O. WARSAW WARSAW 8 2 ISB UNIVERSALE BAU GMBH 49.75 Issued capital PLN 100.500 30 CNP UNICREDIT VITA S.P.A. MILAN MILAN 8 4 UNICREDIT SPA 38.80 Issued capital EUR 381.698.529 31 COMPAGNIA AEREA ITALIANA S.P.A. FIUMICINO (ROME) FIUMICINO (ROME) 8 5 UNICREDIT SPA 36.59 Issued capital EUR 352.940 32 COMTRADE GROUP B.V. ROTTERDAM AMSTERDAM 8 5 HVB CAPITAL PARTNERS AG 21.05 Issued capital EUR 4.522.000 33 CREDITRAS ASSICURAZIONI SPA MILAN MILAN 8 4 UNICREDIT SPA 50.00 Issued capital EUR 52.000.000 34 CREDITRAS VITA SPA MILAN MILAN 8 4 UNICREDIT SPA 50.00 Issued capital EUR 112.200.000 35 DA VINCI S.R.L. ROME ROME 8 5 IDEA FIMIT SGR FONDO SIGMA IMMOBILIARE 37.50 Issued capital EUR 100.000 36 EUROPROGETTI & FINANZA S.R.L. IN LIQUIDAZIONE ROME ROME 8 2 UNICREDIT SPA 39.79 Issued capital EUR 5.636.400 37 INCONTRA ASSICURAZIONI S.P.A. MILAN MILAN 8 4 UNICREDIT SPA 49.00 Issued capital EUR 5.200.000 38 MEDIOBANCA BANCA DI CREDITO FINANZIARIO SPA MILAN MILAN 8 1 UNICREDIT SPA 8.40 Issued capital EUR 443.521.470 39 MULTIPLUS CARD D.O.O. ZA PROMIDZBU I USLUGE ZAGREB ZAGREB 8 2 ZAGREB NEKRETNINE DOO 75.00 25.00 Issued capital HRK 5.000.000 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 201 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % 19 ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE OBVEZNIM MIROVINSKIM FONDOM ZAGABRIA ZAGABRIA 8 5 ZAGREBACKA BANKA D.D. 49.00 Issued capital HRK 105.000.000 20 ARWAG HOLDING-AKTIENGESELLSCHAFT VIENNA VIENNA 8 5 IMMOBILIEN HOLDING GMBH 34.38 Issued capital EUR 3.000.000 21 ASSET BANCARI II MILAN MILAN 8 2 UNICREDIT SPA 21.55 Issued capital EUR 25.050.203 22 AVIVA SPA MILAN MILAN 8 4 UNICREDIT SPA 49.00 Issued capital EUR 247.000.000 23 BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT INNSBRUCK INNSBRUCK 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 37.53 40.51 Issued capital EUR 68.062.500 UNICREDIT BANK AUSTRIA AG 9.85 6.34 24 BANQUE DE COMMERCE ET DE PLACEMENTS SA GENEVA GENEVA 8 1 YAPI VE KREDI BANKASI AS 30.67 Issued capital CHF 75.000.000 25 BARN BV AMSTERDAM AMSTERDAM 8 2 AO UNICREDIT BANK 40.00 Issued capital EUR 237.890.000 26 BKS BANK AG KLAGENFURT KLAGENFURT 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 23.15 24.16 Issued capital EUR 85.886.000 UNICREDIT BANK AUSTRIA AG 6.63 6.14 27 CAMFIN S.P.A. MILAN MILAN 8 5 UNICREDIT SPA 13.64 22.22 Issued capital EUR 1.000.000 28 CASH SERVICE COMPANY AD SOFIA SOFIA 8 5 UNICREDIT BULBANK AD 20.00 Issued capital BGN 12.500.000 29 CBD INTERNATIONAL SP.ZO.O. WARSAW WARSAW 8 2 ISB UNIVERSALE BAU GMBH 49.75 Issued capital PLN 100.500 30 CNP UNICREDIT VITA S.P.A. MILAN MILAN 8 4 UNICREDIT SPA 38.80 Issued capital EUR 381.698.529 31 COMPAGNIA AEREA ITALIANA S.P.A. FIUMICINO (ROME) FIUMICINO (ROME) 8 5 UNICREDIT SPA 36.59 Issued capital EUR 352.940 32 COMTRADE GROUP B.V. ROTTERDAM AMSTERDAM 8 5 HVB CAPITAL PARTNERS AG 21.05 Issued capital EUR 4.522.000 33 CREDITRAS ASSICURAZIONI SPA MILAN MILAN 8 4 UNICREDIT SPA 50.00 Issued capital EUR 52.000.000 34 CREDITRAS VITA SPA MILAN MILAN 8 4 UNICREDIT SPA 50.00 Issued capital EUR 112.200.000 35 DA VINCI S.R.L. ROME ROME 8 5 IDEA FIMIT SGR FONDO SIGMA IMMOBILIARE 37.50 Issued capital EUR 100.000 36 EUROPROGETTI & FINANZA S.R.L. IN LIQUIDAZIONE ROME ROME 8 2 UNICREDIT SPA 39.79 Issued capital EUR 5.636.400 37 INCONTRA ASSICURAZIONI S.P.A. MILAN MILAN 8 4 UNICREDIT SPA 49.00 Issued capital EUR 5.200.000 38 MEDIOBANCA BANCA DI CREDITO FINANZIARIO SPA MILAN MILAN 8 1 UNICREDIT SPA 8.40 Issued capital EUR 443.521.470 39 MULTIPLUS CARD D.O.O. ZA PROMIDZBU I USLUGE ZAGREB ZAGREB 8 2 ZAGREB NEKRETNINE DOO 75.00 25.00 Issued capital HRK 5.000.000 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 201 OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % 19 ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE OBVEZNIM MIROVINSKIM FONDOM ZAGABRIA ZAGABRIA 8 5 ZAGREBACKA BANKA D.D. 49.00 Issued capital HRK 105.000.000 20 ARWAG HOLDING-AKTIENGESELLSCHAFT VIENNA VIENNA 8 5 IMMOBILIEN HOLDING GMBH 34.38 Issued capital EUR 3.000.000 21 ASSET BANCARI II MILAN MILAN 8 2 UNICREDIT SPA 21.55 Issued capital EUR 25.050.203 22 AVIVA SPA MILAN MILAN 8 4 UNICREDIT SPA 49.00 Issued capital EUR 247.000.000 23 BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT INNSBRUCK INNSBRUCK 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 37.53 40.51 Issued capital EUR 68.062.500 UNICREDIT BANK AUSTRIA AG 9.85 6.34 24 BANQUE DE COMMERCE ET DE PLACEMENTS SA GENEVA GENEVA 8 1 YAPI VE KREDI BANKASI AS 30.67 Issued capital CHF 75.000.000 25 BARN BV AMSTERDAM AMSTERDAM 8 2 AO UNICREDIT BANK 40.00 Issued capital EUR 237.890.000 26 BKS BANK AG KLAGENFURT KLAGENFURT 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 23.15 24.16 Issued capital EUR 85.886.000 UNICREDIT BANK AUSTRIA AG 6.63 6.14 27 CAMFIN S.P.A. MILAN MILAN 8 5 UNICREDIT SPA 13.64 22.22 Issued capital EUR 1.000.000 28 CASH SERVICE COMPANY AD SOFIA SOFIA 8 5 UNICREDIT BULBANK AD 20.00 Issued capital BGN 12.500.000 29 CBD INTERNATIONAL SP.ZO.O. WARSAW WARSAW 8 2 ISB UNIVERSALE BAU GMBH 49.75 Issued capital PLN 100.500 30 CNP UNICREDIT VITA S.P.A. MILAN MILAN 8 4 UNICREDIT SPA 38.80 Issued capital EUR 381.698.529 31 COMPAGNIA AEREA ITALIANA S.P.A. FIUMICINO (ROME) FIUMICINO (ROME) 8 5 UNICREDIT SPA 36.59 Issued capital EUR 352.940 32 COMTRADE GROUP B.V. ROTTERDAM AMSTERDAM 8 5 HVB CAPITAL PARTNERS AG 21.05 Issued capital EUR 4.522.000 33 CREDITRAS ASSICURAZIONI SPA MILAN MILAN 8 4 UNICREDIT SPA 50.00 Issued capital EUR 52.000.000 34 CREDITRAS VITA SPA MILAN MILAN 8 4 UNICREDIT SPA 50.00 Issued capital EUR 112.200.000 35 DA VINCI S.R.L. ROME ROME 8 5 IDEA FIMIT SGR FONDO SIGMA IMMOBILIARE 37.50 Issued capital EUR 100.000 36 EUROPROGETTI & FINANZA S.R.L. IN LIQUIDAZIONE ROME ROME 8 2 UNICREDIT SPA 39.79 Issued capital EUR 5.636.400 37 INCONTRA ASSICURAZIONI S.P.A. MILAN MILAN 8 4 UNICREDIT SPA 49.00 Issued capital EUR 5.200.000 38 MEDIOBANCA BANCA DI CREDITO FINANZIARIO SPA MILAN MILAN 8 1 UNICREDIT SPA 8.40 Issued capital EUR 443.521.470 39 MULTIPLUS CARD D.O.O. ZA PROMIDZBU I USLUGE ZAGREB ZAGREB 8 2 ZAGREB NEKRETNINE DOO 75.00 25.00 Issued capital HRK 5.000.000 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 202 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % 40 NAUTILUS TANKERS LIMITED LA VALLETTA LA VALLETTA 8 5 HVB CAPITAL PARTNERS AG 45.00 Issued capital USD 2.000 41 NOTARTREUHANDBANK AG VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 25.00 Issued capital EUR 8.030.000 42 OBERBANK AG LINZ LINZ 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 23.76 25.97 Issued capital EUR 105.820.000 UNICREDIT BANK AUSTRIA AG 3.41 1.32 43 OESTERREICHISCHE HOTEL- UND TOURISMUSBANK GESELLSCHAFT M.B.H. VIENNA VIENNA 8 1 UNICREDIT BANK AUSTRIA AG 50.00 Issued capital EUR 11.628.000 44 OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT VIENNA VIENNA 8 1 CABET-HOLDING GMBH 24.75 Issued capital EUR 130.000.000 SCHOELLERBANK AKTIENGESELLSCHAFT 8.26 UNICREDIT BANK AUSTRIA AG 16.14 45 OESTERREICHISCHE WERTPAPIERDATEN SERVICE GMBH VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 29.30 Issued capital EUR 100.000 46 PAYDIREKT BETEILIGUNGSGESELLSCHAFT PRIVATER BANKEN MBH BERLIN MUNICH 8 5 UNICREDIT BANK AG 24.02 Issued capital EUR 104.082 47 PSA PAYMENT SERVICES AUSTRIA GMBH VIENNA VIENNA 8 2 SCHOELLERBANK AKTIENGESELLSCHAFT 4.52 Issued capital EUR 285.000 UNICREDIT BANK AUSTRIA AG 19.48 48 RCI FINANCIAL SERVICES S.R.O. PRAGUE PRAGUE 8 2 UNICREDIT LEASING CZ. A.S. 50.00 49.86 Issued capital CZK 70.000.000 49 RISANAMENTO SPA MILAN MILAN 8 5 UNICREDIT SPA 22.23 Issued capital EUR 197.951.784 50 SWANCAP PARTNERS GMBH MUNICH MUNICH 8 2 UNICREDIT BANK AG 75.25 49.00 Issued capital EUR 1.010.000 51 TORRE SGR S.P.A. ROME ROME 8 2 UNICREDIT SPA 37.50 Issued capital EUR 3.200.000 52 UNI GEBAEUDEMANAGEMENT GMBH LINZ LINZ 8 2 BA GVG-HOLDING GMBH 50.00 Issued capital EUR 18.168 53 WKBG WIENER KREDITBUERGSCHAFTS- UND BETEILIGUNGSBANK AG VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 21.54 Issued capital EUR 15.550.309 54 YAPI KREDI KORAY GAYRIMENKUL YATIRIM ORTAKLIGI AS ISTANBUL ISTANBUL 8 2 YAPI VE KREDI BANKASI AS 30.45 Issued capital TRY 40.000.000 Notes to the table 7.1 - Equity investments in joint ventures (valued at equity) and in companies under significant influence: (1) Type of relationship: 7 = joint control; 8 = associates. (2) Voting rights available at the general meeting. Voting rights are disclosed only if different from the percentage of ownership; (3) Company owned by an entity fully consolidated under IFRS10; (4) SPV consolidated IFRS11; (5) Nature of relationship: 1= Banks; 2= Financial entities 3= Ancillary banking entities services; 4= Insurance enterprises; 5= Non-financial enterprises; 6= Other equity investments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 202 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % 40 NAUTILUS TANKERS LIMITED LA VALLETTA LA VALLETTA 8 5 HVB CAPITAL PARTNERS AG 45.00 Issued capital USD 2.000 41 NOTARTREUHANDBANK AG VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 25.00 Issued capital EUR 8.030.000 42 OBERBANK AG LINZ LINZ 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 23.76 25.97 Issued capital EUR 105.820.000 UNICREDIT BANK AUSTRIA AG 3.41 1.32 43 OESTERREICHISCHE HOTEL- UND TOURISMUSBANK GESELLSCHAFT M.B.H. VIENNA VIENNA 8 1 UNICREDIT BANK AUSTRIA AG 50.00 Issued capital EUR 11.628.000 44 OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT VIENNA VIENNA 8 1 CABET-HOLDING GMBH 24.75 Issued capital EUR 130.000.000 SCHOELLERBANK AKTIENGESELLSCHAFT 8.26 UNICREDIT BANK AUSTRIA AG 16.14 45 OESTERREICHISCHE WERTPAPIERDATEN SERVICE GMBH VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 29.30 Issued capital EUR 100.000 46 PAYDIREKT BETEILIGUNGSGESELLSCHAFT PRIVATER BANKEN MBH BERLIN MUNICH 8 5 UNICREDIT BANK AG 24.02 Issued capital EUR 104.082 47 PSA PAYMENT SERVICES AUSTRIA GMBH VIENNA VIENNA 8 2 SCHOELLERBANK AKTIENGESELLSCHAFT 4.52 Issued capital EUR 285.000 UNICREDIT BANK AUSTRIA AG 19.48 48 RCI FINANCIAL SERVICES S.R.O. PRAGUE PRAGUE 8 2 UNICREDIT LEASING CZ. A.S. 50.00 49.86 Issued capital CZK 70.000.000 49 RISANAMENTO SPA MILAN MILAN 8 5 UNICREDIT SPA 22.23 Issued capital EUR 197.951.784 50 SWANCAP PARTNERS GMBH MUNICH MUNICH 8 2 UNICREDIT BANK AG 75.25 49.00 Issued capital EUR 1.010.000 51 TORRE SGR S.P.A. ROME ROME 8 2 UNICREDIT SPA 37.50 Issued capital EUR 3.200.000 52 UNI GEBAEUDEMANAGEMENT GMBH LINZ LINZ 8 2 BA GVG-HOLDING GMBH 50.00 Issued capital EUR 18.168 53 WKBG WIENER KREDITBUERGSCHAFTS- UND BETEILIGUNGSBANK AG VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 21.54 Issued capital EUR 15.550.309 54 YAPI KREDI KORAY GAYRIMENKUL YATIRIM ORTAKLIGI AS ISTANBUL ISTANBUL 8 2 YAPI VE KREDI BANKASI AS 30.45 Issued capital TRY 40.000.000 Notes to the table 7.1 - Equity investments in joint ventures (valued at equity) and in companies under significant influence: (1) Type of relationship: 7 = joint control; 8 = associates. (2) Voting rights available at the general meeting. Voting rights are disclosed only if different from the percentage of ownership; (3) Company owned by an entity fully consolidated under IFRS10; (4) SPV consolidated IFRS11; (5) Nature of relationship: 1= Banks; 2= Financial entities 3= Ancillary banking entities services; 4= Insurance enterprises; 5= Non-financial enterprises; 6= Other equity investments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 202 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % 40 NAUTILUS TANKERS LIMITED LA VALLETTA LA VALLETTA 8 5 HVB CAPITAL PARTNERS AG 45.00 Issued capital USD 2.000 41 NOTARTREUHANDBANK AG VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 25.00 Issued capital EUR 8.030.000 42 OBERBANK AG LINZ LINZ 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 23.76 25.97 Issued capital EUR 105.820.000 UNICREDIT BANK AUSTRIA AG 3.41 1.32 43 OESTERREICHISCHE HOTEL- UND TOURISMUSBANK GESELLSCHAFT M.B.H. VIENNA VIENNA 8 1 UNICREDIT BANK AUSTRIA AG 50.00 Issued capital EUR 11.628.000 44 OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT VIENNA VIENNA 8 1 CABET-HOLDING GMBH 24.75 Issued capital EUR 130.000.000 SCHOELLERBANK AKTIENGESELLSCHAFT 8.26 UNICREDIT BANK AUSTRIA AG 16.14 45 OESTERREICHISCHE WERTPAPIERDATEN SERVICE GMBH VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 29.30 Issued capital EUR 100.000 46 PAYDIREKT BETEILIGUNGSGESELLSCHAFT PRIVATER BANKEN MBH BERLIN MUNICH 8 5 UNICREDIT BANK AG 24.02 Issued capital EUR 104.082 47 PSA PAYMENT SERVICES AUSTRIA GMBH VIENNA VIENNA 8 2 SCHOELLERBANK AKTIENGESELLSCHAFT 4.52 Issued capital EUR 285.000 UNICREDIT BANK AUSTRIA AG 19.48 48 RCI FINANCIAL SERVICES S.R.O. PRAGUE PRAGUE 8 2 UNICREDIT LEASING CZ. A.S. 50.00 49.86 Issued capital CZK 70.000.000 49 RISANAMENTO SPA MILAN MILAN 8 5 UNICREDIT SPA 22.23 Issued capital EUR 197.951.784 50 SWANCAP PARTNERS GMBH MUNICH MUNICH 8 2 UNICREDIT BANK AG 75.25 49.00 Issued capital EUR 1.010.000 51 TORRE SGR S.P.A. ROME ROME 8 2 UNICREDIT SPA 37.50 Issued capital EUR 3.200.000 52 UNI GEBAEUDEMANAGEMENT GMBH LINZ LINZ 8 2 BA GVG-HOLDING GMBH 50.00 Issued capital EUR 18.168 53 WKBG WIENER KREDITBUERGSCHAFTS- UND BETEILIGUNGSBANK AG VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 21.54 Issued capital EUR 15.550.309 54 YAPI KREDI KORAY GAYRIMENKUL YATIRIM ORTAKLIGI AS ISTANBUL ISTANBUL 8 2 YAPI VE KREDI BANKASI AS 30.45 Issued capital TRY 40.000.000 Notes to the table 7.1 - Equity investments in joint ventures (valued at equity) and in companies under significant influence: (1) Type of relationship: 7 = joint control; 8 = associates. (2) Voting rights available at the general meeting. Voting rights are disclosed only if different from the percentage of ownership; (3) Company owned by an entity fully consolidated under IFRS10; (4) SPV consolidated IFRS11; (5) Nature of relationship: 1= Banks; 2= Financial entities 3= Ancillary banking entities services; 4= Insurance enterprises; 5= Non-financial enterprises; 6= Other equity investments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 202 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % 40 NAUTILUS TANKERS LIMITED LA VALLETTA LA VALLETTA 8 5 HVB CAPITAL PARTNERS AG 45.00 Issued capital USD 2.000 41 NOTARTREUHANDBANK AG VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 25.00 Issued capital EUR 8.030.000 42 OBERBANK AG LINZ LINZ 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 23.76 25.97 Issued capital EUR 105.820.000 UNICREDIT BANK AUSTRIA AG 3.41 1.32 43 OESTERREICHISCHE HOTEL- UND TOURISMUSBANK GESELLSCHAFT M.B.H. VIENNA VIENNA 8 1 UNICREDIT BANK AUSTRIA AG 50.00 Issued capital EUR 11.628.000 44 OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT VIENNA VIENNA 8 1 CABET-HOLDING GMBH 24.75 Issued capital EUR 130.000.000 SCHOELLERBANK AKTIENGESELLSCHAFT 8.26 UNICREDIT BANK AUSTRIA AG 16.14 45 OESTERREICHISCHE WERTPAPIERDATEN SERVICE GMBH VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 29.30 Issued capital EUR 100.000 46 PAYDIREKT BETEILIGUNGSGESELLSCHAFT PRIVATER BANKEN MBH BERLIN MUNICH 8 5 UNICREDIT BANK AG 24.02 Issued capital EUR 104.082 47 PSA PAYMENT SERVICES AUSTRIA GMBH VIENNA VIENNA 8 2 SCHOELLERBANK AKTIENGESELLSCHAFT 4.52 Issued capital EUR 285.000 UNICREDIT BANK AUSTRIA AG 19.48 48 RCI FINANCIAL SERVICES S.R.O. PRAGUE PRAGUE 8 2 UNICREDIT LEASING CZ. A.S. 50.00 49.86 Issued capital CZK 70.000.000 49 RISANAMENTO SPA MILAN MILAN 8 5 UNICREDIT SPA 22.23 Issued capital EUR 197.951.784 50 SWANCAP PARTNERS GMBH MUNICH MUNICH 8 2 UNICREDIT BANK AG 75.25 49.00 Issued capital EUR 1.010.000 51 TORRE SGR S.P.A. ROME ROME 8 2 UNICREDIT SPA 37.50 Issued capital EUR 3.200.000 52 UNI GEBAEUDEMANAGEMENT GMBH LINZ LINZ 8 2 BA GVG-HOLDING GMBH 50.00 Issued capital EUR 18.168 53 WKBG WIENER KREDITBUERGSCHAFTS- UND BETEILIGUNGSBANK AG VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 21.54 Issued capital EUR 15.550.309 54 YAPI KREDI KORAY GAYRIMENKUL YATIRIM ORTAKLIGI AS ISTANBUL ISTANBUL 8 2 YAPI VE KREDI BANKASI AS 30.45 Issued capital TRY 40.000.000 Notes to the table 7.1 - Equity investments in joint ventures (valued at equity) and in companies under significant influence: (1) Type of relationship: 7 = joint control; 8 = associates. (2) Voting rights available at the general meeting. Voting rights are disclosed only if different from the percentage of ownership; (3) Company owned by an entity fully consolidated under IFRS10; (4) SPV consolidated IFRS11; (5) Nature of relationship: 1= Banks; 2= Financial entities 3= Ancillary banking entities services; 4= Insurance enterprises; 5= Non-financial enterprises; 6= Other equity investments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 202 2018 Annual Report and Accounts · UniCredit OWNERSHIP RELATIONSHIP VOTING RIGHTS % (2) COMPANY NAME MAIN OFFICE ADMINISTRATIVE OFFICE TYPE OF RELATIONSHIP (1) NATURE OF RELATIONSHIP (5) HELD BY HOLDING % 40 NAUTILUS TANKERS LIMITED LA VALLETTA LA VALLETTA 8 5 HVB CAPITAL PARTNERS AG 45.00 Issued capital USD 2.000 41 NOTARTREUHANDBANK AG VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 25.00 Issued capital EUR 8.030.000 42 OBERBANK AG LINZ LINZ 8 1 CABO BETEILIGUNGSGESELLSCHAFT M.B.H. 23.76 25.97 Issued capital EUR 105.820.000 UNICREDIT BANK AUSTRIA AG 3.41 1.32 43 OESTERREICHISCHE HOTEL- UND TOURISMUSBANK GESELLSCHAFT M.B.H. VIENNA VIENNA 8 1 UNICREDIT BANK AUSTRIA AG 50.00 Issued capital EUR 11.628.000 44 OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT VIENNA VIENNA 8 1 CABET-HOLDING GMBH 24.75 Issued capital EUR 130.000.000 SCHOELLERBANK AKTIENGESELLSCHAFT 8.26 UNICREDIT BANK AUSTRIA AG 16.14 45 OESTERREICHISCHE WERTPAPIERDATEN SERVICE GMBH VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 29.30 Issued capital EUR 100.000 46 PAYDIREKT BETEILIGUNGSGESELLSCHAFT PRIVATER BANKEN MBH BERLIN MUNICH 8 5 UNICREDIT BANK AG 24.02 Issued capital EUR 104.082 47 PSA PAYMENT SERVICES AUSTRIA GMBH VIENNA VIENNA 8 2 SCHOELLERBANK AKTIENGESELLSCHAFT 4.52 Issued capital EUR 285.000 UNICREDIT BANK AUSTRIA AG 19.48 48 RCI FINANCIAL SERVICES S.R.O. PRAGUE PRAGUE 8 2 UNICREDIT LEASING CZ. A.S. 50.00 49.86 Issued capital CZK 70.000.000 49 RISANAMENTO SPA MILAN MILAN 8 5 UNICREDIT SPA 22.23 Issued capital EUR 197.951.784 50 SWANCAP PARTNERS GMBH MUNICH MUNICH 8 2 UNICREDIT BANK AG 75.25 49.00 Issued capital EUR 1.010.000 51 TORRE SGR S.P.A. ROME ROME 8 2 UNICREDIT SPA 37.50 Issued capital EUR 3.200.000 52 UNI GEBAEUDEMANAGEMENT GMBH LINZ LINZ 8 2 BA GVG-HOLDING GMBH 50.00 Issued capital EUR 18.168 53 WKBG WIENER KREDITBUERGSCHAFTS- UND BETEILIGUNGSBANK AG VIENNA VIENNA 8 2 UNICREDIT BANK AUSTRIA AG 21.54 Issued capital EUR 15.550.309 54 YAPI KREDI KORAY GAYRIMENKUL YATIRIM ORTAKLIGI AS ISTANBUL ISTANBUL 8 2 YAPI VE KREDI BANKASI AS 30.45 Issued capital TRY 40.000.000 Notes to the table 7.1 - Equity investments in joint ventures (valued at equity) and in companies under significant influence: (1) Type of relationship: 7 = joint control; 8 = associates. (2) Voting rights available at the general meeting. Voting rights are disclosed only if different from the percentage of ownership; (3) Company owned by an entity fully consolidated under IFRS10; (4) SPV consolidated IFRS11; (5) Nature of relationship: 1= Banks; 2= Financial entities 3= Ancillary banking entities services; 4= Insurance enterprises; 5= Non-financial enterprises; 6= Other equity investments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 203 See Section 3 of Part A - Accounting Policies for a description of the consolidation procedures and scope. Companies consolidated at equity, including those ones classified as non-current assets and asset disposal groups, decreased from 66 as at 31 December 2017 to 54 as at 31 December 2018 due to 12 disposals, changes of the consolidation method and mergers. We remind that after the application of IFRS11, starting from 1 January 2014, the option to consolidate joint controlled entities proportionally has been eliminated, imposing the net equity method for those companies that fall in the scope of the aforementioned IFRS11. The following table shows changes in equity investments in Joint Ventures and in companies under significant influence (consolidated at Net Equity). Equity investments in joint ventures and in companies under significant influence (consolidated at net equity): annual changes NUMBER OF COMPANIES A. Opening balance (from previous year) 66 B. Increased by - B.1 Newly established companies - B.2 Change of the consolidation method - B.3 Entities consolidated for the first time in the year - C. Reduced by 12 C.1 Disposal/Liquidation 7 C.2 Change of the consolidation method 4 C.3 Absorption by other entities 1 C.4 Other changes - D. Closing balance 54 The opening balance (from previous year) has been modified to include the 4 equity investments classified among "Non-current assets and disposal groups classified as held for sale" as at 31 December 2017, previously not included in the table. Increases During the period there were no changes in newly established companies, change of the consolidation method and entities consolidated for the first time in the year. Reductions Disposal/ Liquidation COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE OBJEKT-LEASE GRUNDSTUECKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA CREDIFARMA SPA ROME MARINA CITY ENTWICKLUNGS GMBH VIENNA MARINA TOWER HOLDING GMBH VIENNA MEGAPARK OOD SOFIA MUTHGASSE ALPHA HOLDING GMBH IN LIQUIDATION VIENNA SVILUPPO GLOBALE GEIE (IN LIQUIDAZIONE) ROME Change of the consolidation method COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE ES SHARED SERVICE CENTER SOCIETA' PER AZIONI CERNUSCO SUL NAVIGLIO MACCORP ITALIANA SPA MILAN FENICE HOLDING S.P.A. IN LIQUIDAZIONE CALENZANO FOCUS INVESTMENTS SPA MILAN Absorption by other entities COMPANY NAME OF THE MERGERED ENTITY MAIN OFFICE COMPANY NAME OF THE TAKING IN ENTITY MAIN OFFICE ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE DOBROVOLJNIM MIROVINSKIM FONDOM ZAGREB >>> ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE OBVEZNIM MIROVINSKIM FONDOM ZAGREB Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 203 See Section 3 of Part A - Accounting Policies for a description of the consolidation procedures and scope. Companies consolidated at equity, including those ones classified as non-current assets and asset disposal groups, decreased from 66 as at 31 December 2017 to 54 as at 31 December 2018 due to 12 disposals, changes of the consolidation method and mergers. We remind that after the application of IFRS11, starting from 1 January 2014, the option to consolidate joint controlled entities proportionally has been eliminated, imposing the net equity method for those companies that fall in the scope of the aforementioned IFRS11. The following table shows changes in equity investments in Joint Ventures and in companies under significant influence (consolidated at Net Equity). Equity investments in joint ventures and in companies under significant influence (consolidated at net equity): annual changes NUMBER OF COMPANIES A. Opening balance (from previous year) 66 B. Increased by - B.1 Newly established companies - B.2 Change of the consolidation method - B.3 Entities consolidated for the first time in the year - C. Reduced by 12 C.1 Disposal/Liquidation 7 C.2 Change of the consolidation method 4 C.3 Absorption by other entities 1 C.4 Other changes - D. Closing balance 54 The opening balance (from previous year) has been modified to include the 4 equity investments classified among "Non-current assets and disposal groups classified as held for sale" as at 31 December 2017, previously not included in the table. Increases During the period there were no changes in newly established companies, change of the consolidation method and entities consolidated for the first time in the year. Reductions Disposal/ Liquidation COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE OBJEKT-LEASE GRUNDSTUECKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA CREDIFARMA SPA ROME MARINA CITY ENTWICKLUNGS GMBH VIENNA MARINA TOWER HOLDING GMBH VIENNA MEGAPARK OOD SOFIA MUTHGASSE ALPHA HOLDING GMBH IN LIQUIDATION VIENNA SVILUPPO GLOBALE GEIE (IN LIQUIDAZIONE) ROME Change of the consolidation method COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE ES SHARED SERVICE CENTER SOCIETA' PER AZIONI CERNUSCO SUL NAVIGLIO MACCORP ITALIANA SPA MILAN FENICE HOLDING S.P.A. IN LIQUIDAZIONE CALENZANO FOCUS INVESTMENTS SPA MILAN Absorption by other entities COMPANY NAME OF THE MERGERED ENTITY MAIN OFFICE COMPANY NAME OF THE TAKING IN ENTITY MAIN OFFICE ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE DOBROVOLJNIM MIROVINSKIM FONDOM ZAGREB >>> ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE OBVEZNIM MIROVINSKIM FONDOM ZAGREB Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 203 See Section 3 of Part A - Accounting Policies for a description of the consolidation procedures and scope. Companies consolidated at equity, including those ones classified as non-current assets and asset disposal groups, decreased from 66 as at 31 December 2017 to 54 as at 31 December 2018 due to 12 disposals, changes of the consolidation method and mergers. We remind that after the application of IFRS11, starting from 1 January 2014, the option to consolidate joint controlled entities proportionally has been eliminated, imposing the net equity method for those companies that fall in the scope of the aforementioned IFRS11. The following table shows changes in equity investments in Joint Ventures and in companies under significant influence (consolidated at Net Equity). Equity investments in joint ventures and in companies under significant influence (consolidated at net equity): annual changes NUMBER OF COMPANIES A. Opening balance (from previous year) 66 B. Increased by - B.1 Newly established companies - B.2 Change of the consolidation method - B.3 Entities consolidated for the first time in the year - C. Reduced by 12 C.1 Disposal/Liquidation 7 C.2 Change of the consolidation method 4 C.3 Absorption by other entities 1 C.4 Other changes - D. Closing balance 54 The opening balance (from previous year) has been modified to include the 4 equity investments classified among "Non-current assets and disposal groups classified as held for sale" as at 31 December 2017, previously not included in the table. Increases During the period there were no changes in newly established companies, change of the consolidation method and entities consolidated for the first time in the year. Reductions Disposal/ Liquidation COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE OBJEKT-LEASE GRUNDSTUECKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA CREDIFARMA SPA ROME MARINA CITY ENTWICKLUNGS GMBH VIENNA MARINA TOWER HOLDING GMBH VIENNA MEGAPARK OOD SOFIA MUTHGASSE ALPHA HOLDING GMBH IN LIQUIDATION VIENNA SVILUPPO GLOBALE GEIE (IN LIQUIDAZIONE) ROME Change of the consolidation method COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE ES SHARED SERVICE CENTER SOCIETA' PER AZIONI CERNUSCO SUL NAVIGLIO MACCORP ITALIANA SPA MILAN FENICE HOLDING S.P.A. IN LIQUIDAZIONE CALENZANO FOCUS INVESTMENTS SPA MILAN Absorption by other entities COMPANY NAME OF THE MERGERED ENTITY MAIN OFFICE COMPANY NAME OF THE TAKING IN ENTITY MAIN OFFICE ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE DOBROVOLJNIM MIROVINSKIM FONDOM ZAGREB >>> ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE OBVEZNIM MIROVINSKIM FONDOM ZAGREB Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 203 See Section 3 of Part A - Accounting Policies for a description of the consolidation procedures and scope. Companies consolidated at equity, including those ones classified as non-current assets and asset disposal groups, decreased from 66 as at 31 December 2017 to 54 as at 31 December 2018 due to 12 disposals, changes of the consolidation method and mergers. We remind that after the application of IFRS11, starting from 1 January 2014, the option to consolidate joint controlled entities proportionally has been eliminated, imposing the net equity method for those companies that fall in the scope of the aforementioned IFRS11. The following table shows changes in equity investments in Joint Ventures and in companies under significant influence (consolidated at Net Equity). Equity investments in joint ventures and in companies under significant influence (consolidated at net equity): annual changes NUMBER OF COMPANIES A. Opening balance (from previous year) 66 B. Increased by - B.1 Newly established companies - B.2 Change of the consolidation method - B.3 Entities consolidated for the first time in the year - C. Reduced by 12 C.1 Disposal/Liquidation 7 C.2 Change of the consolidation method 4 C.3 Absorption by other entities 1 C.4 Other changes - D. Closing balance 54 The opening balance (from previous year) has been modified to include the 4 equity investments classified among "Non-current assets and disposal groups classified as held for sale" as at 31 December 2017, previously not included in the table. Increases During the period there were no changes in newly established companies, change of the consolidation method and entities consolidated for the first time in the year. Reductions Disposal/ Liquidation COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE OBJEKT-LEASE GRUNDSTUECKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA CREDIFARMA SPA ROME MARINA CITY ENTWICKLUNGS GMBH VIENNA MARINA TOWER HOLDING GMBH VIENNA MEGAPARK OOD SOFIA MUTHGASSE ALPHA HOLDING GMBH IN LIQUIDATION VIENNA SVILUPPO GLOBALE GEIE (IN LIQUIDAZIONE) ROME Change of the consolidation method COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE ES SHARED SERVICE CENTER SOCIETA' PER AZIONI CERNUSCO SUL NAVIGLIO MACCORP ITALIANA SPA MILAN FENICE HOLDING S.P.A. IN LIQUIDAZIONE CALENZANO FOCUS INVESTMENTS SPA MILAN Absorption by other entities COMPANY NAME OF THE MERGERED ENTITY MAIN OFFICE COMPANY NAME OF THE TAKING IN ENTITY MAIN OFFICE ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE DOBROVOLJNIM MIROVINSKIM FONDOM ZAGREB >>> ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE OBVEZNIM MIROVINSKIM FONDOM ZAGREB Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 203 See Section 3 of Part A - Accounting Policies for a description of the consolidation procedures and scope. Companies consolidated at equity, including those ones classified as non-current assets and asset disposal groups, decreased from 66 as at 31 December 2017 to 54 as at 31 December 2018 due to 12 disposals, changes of the consolidation method and mergers. We remind that after the application of IFRS11, starting from 1 January 2014, the option to consolidate joint controlled entities proportionally has been eliminated, imposing the net equity method for those companies that fall in the scope of the aforementioned IFRS11. The following table shows changes in equity investments in Joint Ventures and in companies under significant influence (consolidated at Net Equity). Equity investments in joint ventures and in companies under significant influence (consolidated at net equity): annual changes NUMBER OF COMPANIES A. Opening balance (from previous year) 66 B. Increased by - B.1 Newly established companies - B.2 Change of the consolidation method - B.3 Entities consolidated for the first time in the year - C. Reduced by 12 C.1 Disposal/Liquidation 7 C.2 Change of the consolidation method 4 C.3 Absorption by other entities 1 C.4 Other changes - D. Closing balance 54 The opening balance (from previous year) has been modified to include the 4 equity investments classified among "Non-current assets and disposal groups classified as held for sale" as at 31 December 2017, previously not included in the table. Increases During the period there were no changes in newly established companies, change of the consolidation method and entities consolidated for the first time in the year. Reductions Disposal/ Liquidation COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE OBJEKT-LEASE GRUNDSTUECKSVERWALTUNGSGESELLSCHAFT M.B.H. VIENNA CREDIFARMA SPA ROME MARINA CITY ENTWICKLUNGS GMBH VIENNA MARINA TOWER HOLDING GMBH VIENNA MEGAPARK OOD SOFIA MUTHGASSE ALPHA HOLDING GMBH IN LIQUIDATION VIENNA SVILUPPO GLOBALE GEIE (IN LIQUIDAZIONE) ROME Change of the consolidation method COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE ES SHARED SERVICE CENTER SOCIETA' PER AZIONI CERNUSCO SUL NAVIGLIO MACCORP ITALIANA SPA MILAN FENICE HOLDING S.P.A. IN LIQUIDAZIONE CALENZANO FOCUS INVESTMENTS SPA MILAN Absorption by other entities COMPANY NAME OF THE MERGERED ENTITY MAIN OFFICE COMPANY NAME OF THE TAKING IN ENTITY MAIN OFFICE ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE DOBROVOLJNIM MIROVINSKIM FONDOM ZAGREB >>> ALLIANZ ZB D.O.O. DRUSTVO ZA UPRAVLJANJIE OBVEZNIM MIROVINSKIM FONDOM ZAGREB Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 204 2018 Annual Report and Accounts · UniCredit Joint ventures and the companies under significant influence that changed their names during the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE MUTHGASSE ALPHA HOLDING GMBH IN LIQUIDATION (ex. MUTHGASSE ALPHA HOLDING GMBH) VIENNA EUROPROGETTI & FINANZA S.R.L. IN LIQUIDAZIONE (ex. EUROPROGETTI & FINANZA S.P.A. IN LIQUIDAZIONE) ROME PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. IN LIQ. (ex. PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H.) VIENNA The following table shows the breakdown of item “70.Equity investments”, reporting the adopted accounting method, held either directly or through consolidated subsidiaries. NUMBER OF ENTITY CARRYING VALUE Joint ventures accounted for under equity method 16 1,342,026 Associates accounted for under equity method 35 4,071,427 Entities controlled either directly or through consolidated subsidiaries held at cost 216 82,545 Joint Venture held either directly or through consolidated subsidiaries at cost 9 25 Associates held either directly or through consolidated subsidiaries at cost 14 5,510 Total 290 5,501,533 7.2 Significant shareholdings: book value, fair value and dividends received (€ '000) COMPANY NAME BALANCE SHEET VALUE FAIR VALUE(*) DIVIDENDS RECEVED(**) NOTE(***) A. Companies under joint control KOC FINANSAL HIZMETLER AS 1,340,272 - (1) B. Companies subject to significant influence AVIVA S.P.A. 180,270 33,819 (2) BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT 694,769 381,623 4,398 (1) BKS BANK AG 339,217 214,915 2,715 (1) CNP UNICREDIT VITA S.P.A. 326,815 9,683 (2) CREDITRAS VITA S.P.A. 365,943 31,000 (2) MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. 737,196 549,746 35,030 (1) OBERBANK AG 736,332 856,278 8,635 (1) OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT 388,436 16,082 (2) Total 5,109,250 2,002,562 141,362 Notes: (*) It should be noted that all investments in listed associates show a fair value at Level 1 (L1). (**) Dividends received by the investor company. (***) In the present table and in the following relating to significant shareholdings the values of Koc Finansal Hizmetler AS are referred to 2018 financial statements approved; for the other companies the values are in line with IAS28 requirements. (1) It should be noted that on the basis of the international accounting standards, equity investments in associates listed on regulated markets with a fair value (quotation) lower than consolidated book value are impairment tested by calculating recoverable value, stated as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the recoverable value is lower than the book value. As at 31 December 2018 the recoverable value of the equity investments in associates listed on regulated markets was higher than the book value after impairment test and for Bks Bank AG it was recognised a write-back; for Bank Fuer Tirol un Vorarlberg Aktiengesellschaft for which the recoverable value was lower a write-down was recognised (for further details see the information provided in Part C – Section 17). For remaining companies listed on regulated markets no additional write-downs were recognised. Regarding Koc Finansal Hizmetler AS it should be noted that the shareholding in the subsidiary Yapi Ve Kredi Bankasi AS (its main asset) has a fair value (quotation) pro rata equal to €913,466 thousand. As at 31 December 2018 the recoverable amount of Koc Finansal Hizmetler AS, stated as the greater between the fair value net of cost to sell and the value in use, was less than the consolidated book value and, therefore, a write-down was recognised (for more details see Part C - Section 17). It is highlighted that the Book value of the investment at 31 December 2017 amounted to €2,313 million; the change with respect to the €1,340 million at 31 December 2018 is mainly due to the abovementioned impairment loss amounted to €851 million, recorded mainly in the third quarter of 2018 (for more information about value in use determination, reference is made to the paragraph of Part B - Section 10 - Intangible assets - 10.3 Intangible assets: other information - Estimating cash flows to determine the value in use of the CGUs of this Notes to the consolidated accounts). (2) Please note that on the basis of the international accounting standards, equity investments in associates for which there is clear evidence of occurrence of events that may reduce their value, are impairment tested by calculating recoverable value, stated as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the said recoverable value is lower than the book value. Please note that none additional write-downs were recognised for these companies. Financial information of the investee companies used for the purposes of measurement with the net equity method is presented below. These figures include any adjustments made on measuring the equity investment. As regards the Koc Finansal Hizmetler AS equity investment the figures refer to the data of the related sub-group for the stake held in the equity. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 204 2018 Annual Report and Accounts · UniCredit Joint ventures and the companies under significant influence that changed their names during the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE MUTHGASSE ALPHA HOLDING GMBH IN LIQUIDATION (ex. MUTHGASSE ALPHA HOLDING GMBH) VIENNA EUROPROGETTI & FINANZA S.R.L. IN LIQUIDAZIONE (ex. EUROPROGETTI & FINANZA S.P.A. IN LIQUIDAZIONE) ROME PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. IN LIQ. (ex. PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H.) VIENNA The following table shows the breakdown of item “70.Equity investments”, reporting the adopted accounting method, held either directly or through consolidated subsidiaries. NUMBER OF ENTITY CARRYING VALUE Joint ventures accounted for under equity method 16 1,342,026 Associates accounted for under equity method 35 4,071,427 Entities controlled either directly or through consolidated subsidiaries held at cost 216 82,545 Joint Venture held either directly or through consolidated subsidiaries at cost 9 25 Associates held either directly or through consolidated subsidiaries at cost 14 5,510 Total 290 5,501,533 7.2 Significant shareholdings: book value, fair value and dividends received (€ '000) COMPANY NAME BALANCE SHEET VALUE FAIR VALUE(*) DIVIDENDS RECEVED(**) NOTE(***) A. Companies under joint control KOC FINANSAL HIZMETLER AS 1,340,272 - (1) B. Companies subject to significant influence AVIVA S.P.A. 180,270 33,819 (2) BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT 694,769 381,623 4,398 (1) BKS BANK AG 339,217 214,915 2,715 (1) CNP UNICREDIT VITA S.P.A. 326,815 9,683 (2) CREDITRAS VITA S.P.A. 365,943 31,000 (2) MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. 737,196 549,746 35,030 (1) OBERBANK AG 736,332 856,278 8,635 (1) OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT 388,436 16,082 (2) Total 5,109,250 2,002,562 141,362 Notes: (*) It should be noted that all investments in listed associates show a fair value at Level 1 (L1). (**) Dividends received by the investor company. (***) In the present table and in the following relating to significant shareholdings the values of Koc Finansal Hizmetler AS are referred to 2018 financial statements approved; for the other companies the values are in line with IAS28 requirements. (1) It should be noted that on the basis of the international accounting standards, equity investments in associates listed on regulated markets with a fair value (quotation) lower than consolidated book value are impairment tested by calculating recoverable value, stated as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the recoverable value is lower than the book value. As at 31 December 2018 the recoverable value of the equity investments in associates listed on regulated markets was higher than the book value after impairment test and for Bks Bank AG it was recognised a write-back; for Bank Fuer Tirol un Vorarlberg Aktiengesellschaft for which the recoverable value was lower a write-down was recognised (for further details see the information provided in Part C – Section 17). For remaining companies listed on regulated markets no additional write-downs were recognised. Regarding Koc Finansal Hizmetler AS it should be noted that the shareholding in the subsidiary Yapi Ve Kredi Bankasi AS (its main asset) has a fair value (quotation) pro rata equal to €913,466 thousand. As at 31 December 2018 the recoverable amount of Koc Finansal Hizmetler AS, stated as the greater between the fair value net of cost to sell and the value in use, was less than the consolidated book value and, therefore, a write-down was recognised (for more details see Part C - Section 17). It is highlighted that the Book value of the investment at 31 December 2017 amounted to €2,313 million; the change with respect to the €1,340 million at 31 December 2018 is mainly due to the abovementioned impairment loss amounted to €851 million, recorded mainly in the third quarter of 2018 (for more information about value in use determination, reference is made to the paragraph of Part B - Section 10 - Intangible assets - 10.3 Intangible assets: other information - Estimating cash flows to determine the value in use of the CGUs of this Notes to the consolidated accounts). (2) Please note that on the basis of the international accounting standards, equity investments in associates for which there is clear evidence of occurrence of events that may reduce their value, are impairment tested by calculating recoverable value, stated as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the said recoverable value is lower than the book value. Please note that none additional write-downs were recognised for these companies. Financial information of the investee companies used for the purposes of measurement with the net equity method is presented below. These figures include any adjustments made on measuring the equity investment. As regards the Koc Finansal Hizmetler AS equity investment the figures refer to the data of the related sub-group for the stake held in the equity. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 204 2018 Annual Report and Accounts · UniCredit Joint ventures and the companies under significant influence that changed their names during the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE MUTHGASSE ALPHA HOLDING GMBH IN LIQUIDATION (ex. MUTHGASSE ALPHA HOLDING GMBH) VIENNA EUROPROGETTI & FINANZA S.R.L. IN LIQUIDAZIONE (ex. EUROPROGETTI & FINANZA S.P.A. IN LIQUIDAZIONE) ROME PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. IN LIQ. (ex. PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H.) VIENNA The following table shows the breakdown of item “70.Equity investments”, reporting the adopted accounting method, held either directly or through consolidated subsidiaries. NUMBER OF ENTITY CARRYING VALUE Joint ventures accounted for under equity method 16 1,342,026 Associates accounted for under equity method 35 4,071,427 Entities controlled either directly or through consolidated subsidiaries held at cost 216 82,545 Joint Venture held either directly or through consolidated subsidiaries at cost 9 25 Associates held either directly or through consolidated subsidiaries at cost 14 5,510 Total 290 5,501,533 7.2 Significant shareholdings: book value, fair value and dividends received (€ '000) COMPANY NAME BALANCE SHEET VALUE FAIR VALUE(*) DIVIDENDS RECEVED(**) NOTE(***) A. Companies under joint control KOC FINANSAL HIZMETLER AS 1,340,272 - (1) B. Companies subject to significant influence AVIVA S.P.A. 180,270 33,819 (2) BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT 694,769 381,623 4,398 (1) BKS BANK AG 339,217 214,915 2,715 (1) CNP UNICREDIT VITA S.P.A. 326,815 9,683 (2) CREDITRAS VITA S.P.A. 365,943 31,000 (2) MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. 737,196 549,746 35,030 (1) OBERBANK AG 736,332 856,278 8,635 (1) OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT 388,436 16,082 (2) Total 5,109,250 2,002,562 141,362 Notes: (*) It should be noted that all investments in listed associates show a fair value at Level 1 (L1). (**) Dividends received by the investor company. (***) In the present table and in the following relating to significant shareholdings the values of Koc Finansal Hizmetler AS are referred to 2018 financial statements approved; for the other companies the values are in line with IAS28 requirements. (1) It should be noted that on the basis of the international accounting standards, equity investments in associates listed on regulated markets with a fair value (quotation) lower than consolidated book value are impairment tested by calculating recoverable value, stated as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the recoverable value is lower than the book value. As at 31 December 2018 the recoverable value of the equity investments in associates listed on regulated markets was higher than the book value after impairment test and for Bks Bank AG it was recognised a write-back; for Bank Fuer Tirol un Vorarlberg Aktiengesellschaft for which the recoverable value was lower a write-down was recognised (for further details see the information provided in Part C – Section 17). For remaining companies listed on regulated markets no additional write-downs were recognised. Regarding Koc Finansal Hizmetler AS it should be noted that the shareholding in the subsidiary Yapi Ve Kredi Bankasi AS (its main asset) has a fair value (quotation) pro rata equal to €913,466 thousand. As at 31 December 2018 the recoverable amount of Koc Finansal Hizmetler AS, stated as the greater between the fair value net of cost to sell and the value in use, was less than the consolidated book value and, therefore, a write-down was recognised (for more details see Part C - Section 17). It is highlighted that the Book value of the investment at 31 December 2017 amounted to €2,313 million; the change with respect to the €1,340 million at 31 December 2018 is mainly due to the abovementioned impairment loss amounted to €851 million, recorded mainly in the third quarter of 2018 (for more information about value in use determination, reference is made to the paragraph of Part B - Section 10 - Intangible assets - 10.3 Intangible assets: other information - Estimating cash flows to determine the value in use of the CGUs of this Notes to the consolidated accounts). (2) Please note that on the basis of the international accounting standards, equity investments in associates for which there is clear evidence of occurrence of events that may reduce their value, are impairment tested by calculating recoverable value, stated as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the said recoverable value is lower than the book value. Please note that none additional write-downs were recognised for these companies. Financial information of the investee companies used for the purposes of measurement with the net equity method is presented below. These figures include any adjustments made on measuring the equity investment. As regards the Koc Finansal Hizmetler AS equity investment the figures refer to the data of the related sub-group for the stake held in the equity. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 204 2018 Annual Report and Accounts · UniCredit Joint ventures and the companies under significant influence that changed their names during the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE MUTHGASSE ALPHA HOLDING GMBH IN LIQUIDATION (ex. MUTHGASSE ALPHA HOLDING GMBH) VIENNA EUROPROGETTI & FINANZA S.R.L. IN LIQUIDAZIONE (ex. EUROPROGETTI & FINANZA S.P.A. IN LIQUIDAZIONE) ROME PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. IN LIQ. (ex. PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H.) VIENNA The following table shows the breakdown of item “70.Equity investments”, reporting the adopted accounting method, held either directly or through consolidated subsidiaries. NUMBER OF ENTITY CARRYING VALUE Joint ventures accounted for under equity method 16 1,342,026 Associates accounted for under equity method 35 4,071,427 Entities controlled either directly or through consolidated subsidiaries held at cost 216 82,545 Joint Venture held either directly or through consolidated subsidiaries at cost 9 25 Associates held either directly or through consolidated subsidiaries at cost 14 5,510 Total 290 5,501,533 7.2 Significant shareholdings: book value, fair value and dividends received (€ '000) COMPANY NAME BALANCE SHEET VALUE FAIR VALUE(*) DIVIDENDS RECEVED(**) NOTE(***) A. Companies under joint control KOC FINANSAL HIZMETLER AS 1,340,272 - (1) B. Companies subject to significant influence AVIVA S.P.A. 180,270 33,819 (2) BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT 694,769 381,623 4,398 (1) BKS BANK AG 339,217 214,915 2,715 (1) CNP UNICREDIT VITA S.P.A. 326,815 9,683 (2) CREDITRAS VITA S.P.A. 365,943 31,000 (2) MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. 737,196 549,746 35,030 (1) OBERBANK AG 736,332 856,278 8,635 (1) OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT 388,436 16,082 (2) Total 5,109,250 2,002,562 141,362 Notes: (*) It should be noted that all investments in listed associates show a fair value at Level 1 (L1). (**) Dividends received by the investor company. (***) In the present table and in the following relating to significant shareholdings the values of Koc Finansal Hizmetler AS are referred to 2018 financial statements approved; for the other companies the values are in line with IAS28 requirements. (1) It should be noted that on the basis of the international accounting standards, equity investments in associates listed on regulated markets with a fair value (quotation) lower than consolidated book value are impairment tested by calculating recoverable value, stated as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the recoverable value is lower than the book value. As at 31 December 2018 the recoverable value of the equity investments in associates listed on regulated markets was higher than the book value after impairment test and for Bks Bank AG it was recognised a write-back; for Bank Fuer Tirol un Vorarlberg Aktiengesellschaft for which the recoverable value was lower a write-down was recognised (for further details see the information provided in Part C – Section 17). For remaining companies listed on regulated markets no additional write-downs were recognised. Regarding Koc Finansal Hizmetler AS it should be noted that the shareholding in the subsidiary Yapi Ve Kredi Bankasi AS (its main asset) has a fair value (quotation) pro rata equal to €913,466 thousand. As at 31 December 2018 the recoverable amount of Koc Finansal Hizmetler AS, stated as the greater between the fair value net of cost to sell and the value in use, was less than the consolidated book value and, therefore, a write-down was recognised (for more details see Part C - Section 17). It is highlighted that the Book value of the investment at 31 December 2017 amounted to €2,313 million; the change with respect to the €1,340 million at 31 December 2018 is mainly due to the abovementioned impairment loss amounted to €851 million, recorded mainly in the third quarter of 2018 (for more information about value in use determination, reference is made to the paragraph of Part B - Section 10 - Intangible assets - 10.3 Intangible assets: other information - Estimating cash flows to determine the value in use of the CGUs of this Notes to the consolidated accounts). (2) Please note that on the basis of the international accounting standards, equity investments in associates for which there is clear evidence of occurrence of events that may reduce their value, are impairment tested by calculating recoverable value, stated as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the said recoverable value is lower than the book value. Please note that none additional write-downs were recognised for these companies. Financial information of the investee companies used for the purposes of measurement with the net equity method is presented below. These figures include any adjustments made on measuring the equity investment. As regards the Koc Finansal Hizmetler AS equity investment the figures refer to the data of the related sub-group for the stake held in the equity. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 204 2018 Annual Report and Accounts · UniCredit Joint ventures and the companies under significant influence that changed their names during the year COMPANY NAME MAIN OFFICE COMPANY NAME MAIN OFFICE MUTHGASSE ALPHA HOLDING GMBH IN LIQUIDATION (ex. MUTHGASSE ALPHA HOLDING GMBH) VIENNA EUROPROGETTI & FINANZA S.R.L. IN LIQUIDAZIONE (ex. EUROPROGETTI & FINANZA S.P.A. IN LIQUIDAZIONE) ROME PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H. IN LIQ. (ex. PURGE GRUNDSTUECKSVERWALTUNGS-GESELLSCHAFT M.B.H.) VIENNA The following table shows the breakdown of item “70.Equity investments”, reporting the adopted accounting method, held either directly or through consolidated subsidiaries. NUMBER OF ENTITY CARRYING VALUE Joint ventures accounted for under equity method 16 1,342,026 Associates accounted for under equity method 35 4,071,427 Entities controlled either directly or through consolidated subsidiaries held at cost 216 82,545 Joint Venture held either directly or through consolidated subsidiaries at cost 9 25 Associates held either directly or through consolidated subsidiaries at cost 14 5,510 Total 290 5,501,533 7.2 Significant shareholdings: book value, fair value and dividends received (€ '000) COMPANY NAME BALANCE SHEET VALUE FAIR VALUE(*) DIVIDENDS RECEVED(**) NOTE(***) A. Companies under joint control KOC FINANSAL HIZMETLER AS 1,340,272 - (1) B. Companies subject to significant influence AVIVA S.P.A. 180,270 33,819 (2) BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT 694,769 381,623 4,398 (1) BKS BANK AG 339,217 214,915 2,715 (1) CNP UNICREDIT VITA S.P.A. 326,815 9,683 (2) CREDITRAS VITA S.P.A. 365,943 31,000 (2) MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. 737,196 549,746 35,030 (1) OBERBANK AG 736,332 856,278 8,635 (1) OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT 388,436 16,082 (2) Total 5,109,250 2,002,562 141,362 Notes: (*) It should be noted that all investments in listed associates show a fair value at Level 1 (L1). (**) Dividends received by the investor company. (***) In the present table and in the following relating to significant shareholdings the values of Koc Finansal Hizmetler AS are referred to 2018 financial statements approved; for the other companies the values are in line with IAS28 requirements. (1) It should be noted that on the basis of the international accounting standards, equity investments in associates listed on regulated markets with a fair value (quotation) lower than consolidated book value are impairment tested by calculating recoverable value, stated as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the recoverable value is lower than the book value. As at 31 December 2018 the recoverable value of the equity investments in associates listed on regulated markets was higher than the book value after impairment test and for Bks Bank AG it was recognised a write-back; for Bank Fuer Tirol un Vorarlberg Aktiengesellschaft for which the recoverable value was lower a write-down was recognised (for further details see the information provided in Part C – Section 17). For remaining companies listed on regulated markets no additional write-downs were recognised. Regarding Koc Finansal Hizmetler AS it should be noted that the shareholding in the subsidiary Yapi Ve Kredi Bankasi AS (its main asset) has a fair value (quotation) pro rata equal to €913,466 thousand. As at 31 December 2018 the recoverable amount of Koc Finansal Hizmetler AS, stated as the greater between the fair value net of cost to sell and the value in use, was less than the consolidated book value and, therefore, a write-down was recognised (for more details see Part C - Section 17). It is highlighted that the Book value of the investment at 31 December 2017 amounted to €2,313 million; the change with respect to the €1,340 million at 31 December 2018 is mainly due to the abovementioned impairment loss amounted to €851 million, recorded mainly in the third quarter of 2018 (for more information about value in use determination, reference is made to the paragraph of Part B - Section 10 - Intangible assets - 10.3 Intangible assets: other information - Estimating cash flows to determine the value in use of the CGUs of this Notes to the consolidated accounts). (2) Please note that on the basis of the international accounting standards, equity investments in associates for which there is clear evidence of occurrence of events that may reduce their value, are impairment tested by calculating recoverable value, stated as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the said recoverable value is lower than the book value. Please note that none additional write-downs were recognised for these companies. Financial information of the investee companies used for the purposes of measurement with the net equity method is presented below. These figures include any adjustments made on measuring the equity investment. As regards the Koc Finansal Hizmetler AS equity investment the figures refer to the data of the related sub-group for the stake held in the equity. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 205 7.3 Significant Shareholdings: accounting information (€ '000) COMPANY NAME CASH AND LIQUID ASSETS FINANCIAL ASSET NON-FINANCIAL ASSET FINANCIAL LIABILIES NON-FINANCIAL LIABILITIES TOTAL REVENUES THE INTEREST MARGIN A. Companies under joint control KOC FINANSAL HIZMETLER AS 357,604 23,792,516 910,167 21,030,001 1,587,078 3,068,960 974,499 B. Companies subject to significant influence AVIVA S.P.A. X 11,202,200 475,900 - 11,415,701 2,994,200 X BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT X 10,136,296 468,107 9,334,425 321,344 337,453 X BKS BANK AG X 7,732,774 143,577 6,797,581 234,416 263,750 X CNP UNICREDIT VITA S.P.A. X 13,882,698 988,467 658,906 13,369,926 3,583,057 X CREDITRAS VITA S.P.A. X 27,617,335 1,577,913 19,350,923 9,253,263 750,706 X MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. X 70,582,100 2,597,600 63,328,500 2,687,338 2,471,200 X OBERBANK AG X 20,499,179 607,912 17,729,662 902,204 693,925 X OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT X 27,469,278 130,656 25,472,831 1,734,553 381,023 X continued: 7.3 Significant Shareholdings: accounting information COMPANY NAME ADJUSTMENTS TO THE BACKS ON TANGIBLE AND INTAGIBLE ASSETS PROFIT (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES PROFIT (LOSS) FROM CONTINUING OPERATIONS NET OF TAX PROFIT (LOSS) FROM GROUP OF ASSETS HELD FOR SALE NET OF TAX NET PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME, NET OF TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) A. Companies under joint control KOC FINANSAL HIZMETLER AS (15,986) 387,947 298,892 - 298,892 (57,316) 241,576 B. Companies subject to significant influence AVIVA S.P.A. X 63,674 36,874 - 36,874 - 36,874 BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT X 108,932 92,874 - 92,874 6,968 99,842 BKS BANK AG X 80,708 69,895 - 69,895 30,152 100,047 CNP UNICREDIT VITA S.P.A. X 36,271 26,415 - 26,415 (12,221) 14,194 CREDITRAS VITA S.P.A. X 123,205 84,205 - 84,205 (52,255) 31,950 MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. X 1,036,300 808,400 - 808,400 (240,992) 567,408 OBERBANK AG X 265,770 223,560 - 223,560 (34,927) 188,633 OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT X 51,781 40,064 - 40,064 (3,902) 36,162 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 205 7.3 Significant Shareholdings: accounting information (€ '000) COMPANY NAME CASH AND LIQUID ASSETS FINANCIAL ASSET NON-FINANCIAL ASSET FINANCIAL LIABILIES NON-FINANCIAL LIABILITIES TOTAL REVENUES THE INTEREST MARGIN A. Companies under joint control KOC FINANSAL HIZMETLER AS 357,604 23,792,516 910,167 21,030,001 1,587,078 3,068,960 974,499 B. Companies subject to significant influence AVIVA S.P.A. X 11,202,200 475,900 - 11,415,701 2,994,200 X BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT X 10,136,296 468,107 9,334,425 321,344 337,453 X BKS BANK AG X 7,732,774 143,577 6,797,581 234,416 263,750 X CNP UNICREDIT VITA S.P.A. X 13,882,698 988,467 658,906 13,369,926 3,583,057 X CREDITRAS VITA S.P.A. X 27,617,335 1,577,913 19,350,923 9,253,263 750,706 X MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. X 70,582,100 2,597,600 63,328,500 2,687,338 2,471,200 X OBERBANK AG X 20,499,179 607,912 17,729,662 902,204 693,925 X OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT X 27,469,278 130,656 25,472,831 1,734,553 381,023 X continued: 7.3 Significant Shareholdings: accounting information COMPANY NAME ADJUSTMENTS TO THE BACKS ON TANGIBLE AND INTAGIBLE ASSETS PROFIT (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES PROFIT (LOSS) FROM CONTINUING OPERATIONS NET OF TAX PROFIT (LOSS) FROM GROUP OF ASSETS HELD FOR SALE NET OF TAX NET PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME, NET OF TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) A. Companies under joint control KOC FINANSAL HIZMETLER AS (15,986) 387,947 298,892 - 298,892 (57,316) 241,576 B. Companies subject to significant influence AVIVA S.P.A. X 63,674 36,874 - 36,874 - 36,874 BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT X 108,932 92,874 - 92,874 6,968 99,842 BKS BANK AG X 80,708 69,895 - 69,895 30,152 100,047 CNP UNICREDIT VITA S.P.A. X 36,271 26,415 - 26,415 (12,221) 14,194 CREDITRAS VITA S.P.A. X 123,205 84,205 - 84,205 (52,255) 31,950 MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. X 1,036,300 808,400 - 808,400 (240,992) 567,408 OBERBANK AG X 265,770 223,560 - 223,560 (34,927) 188,633 OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT X 51,781 40,064 - 40,064 (3,902) 36,162 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 205 7.3 Significant Shareholdings: accounting information (€ '000) COMPANY NAME CASH AND LIQUID ASSETS FINANCIAL ASSET NON-FINANCIAL ASSET FINANCIAL LIABILIES NON-FINANCIAL LIABILITIES TOTAL REVENUES THE INTEREST MARGIN A. Companies under joint control KOC FINANSAL HIZMETLER AS 357,604 23,792,516 910,167 21,030,001 1,587,078 3,068,960 974,499 B. Companies subject to significant influence AVIVA S.P.A. X 11,202,200 475,900 - 11,415,701 2,994,200 X BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT X 10,136,296 468,107 9,334,425 321,344 337,453 X BKS BANK AG X 7,732,774 143,577 6,797,581 234,416 263,750 X CNP UNICREDIT VITA S.P.A. X 13,882,698 988,467 658,906 13,369,926 3,583,057 X CREDITRAS VITA S.P.A. X 27,617,335 1,577,913 19,350,923 9,253,263 750,706 X MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. X 70,582,100 2,597,600 63,328,500 2,687,338 2,471,200 X OBERBANK AG X 20,499,179 607,912 17,729,662 902,204 693,925 X OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT X 27,469,278 130,656 25,472,831 1,734,553 381,023 X continued: 7.3 Significant Shareholdings: accounting information COMPANY NAME ADJUSTMENTS TO THE BACKS ON TANGIBLE AND INTAGIBLE ASSETS PROFIT (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES PROFIT (LOSS) FROM CONTINUING OPERATIONS NET OF TAX PROFIT (LOSS) FROM GROUP OF ASSETS HELD FOR SALE NET OF TAX NET PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME, NET OF TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) A. Companies under joint control KOC FINANSAL HIZMETLER AS (15,986) 387,947 298,892 - 298,892 (57,316) 241,576 B. Companies subject to significant influence AVIVA S.P.A. X 63,674 36,874 - 36,874 - 36,874 BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT X 108,932 92,874 - 92,874 6,968 99,842 BKS BANK AG X 80,708 69,895 - 69,895 30,152 100,047 CNP UNICREDIT VITA S.P.A. X 36,271 26,415 - 26,415 (12,221) 14,194 CREDITRAS VITA S.P.A. X 123,205 84,205 - 84,205 (52,255) 31,950 MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. X 1,036,300 808,400 - 808,400 (240,992) 567,408 OBERBANK AG X 265,770 223,560 - 223,560 (34,927) 188,633 OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT X 51,781 40,064 - 40,064 (3,902) 36,162 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 205 7.3 Significant Shareholdings: accounting information (€ '000) COMPANY NAME CASH AND LIQUID ASSETS FINANCIAL ASSET NON-FINANCIAL ASSET FINANCIAL LIABILIES NON-FINANCIAL LIABILITIES TOTAL REVENUES THE INTEREST MARGIN A. Companies under joint control KOC FINANSAL HIZMETLER AS 357,604 23,792,516 910,167 21,030,001 1,587,078 3,068,960 974,499 B. Companies subject to significant influence AVIVA S.P.A. X 11,202,200 475,900 - 11,415,701 2,994,200 X BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT X 10,136,296 468,107 9,334,425 321,344 337,453 X BKS BANK AG X 7,732,774 143,577 6,797,581 234,416 263,750 X CNP UNICREDIT VITA S.P.A. X 13,882,698 988,467 658,906 13,369,926 3,583,057 X CREDITRAS VITA S.P.A. X 27,617,335 1,577,913 19,350,923 9,253,263 750,706 X MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. X 70,582,100 2,597,600 63,328,500 2,687,338 2,471,200 X OBERBANK AG X 20,499,179 607,912 17,729,662 902,204 693,925 X OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT X 27,469,278 130,656 25,472,831 1,734,553 381,023 X continued: 7.3 Significant Shareholdings: accounting information COMPANY NAME ADJUSTMENTS TO THE BACKS ON TANGIBLE AND INTAGIBLE ASSETS PROFIT (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES PROFIT (LOSS) FROM CONTINUING OPERATIONS NET OF TAX PROFIT (LOSS) FROM GROUP OF ASSETS HELD FOR SALE NET OF TAX NET PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME, NET OF TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) A. Companies under joint control KOC FINANSAL HIZMETLER AS (15,986) 387,947 298,892 - 298,892 (57,316) 241,576 B. Companies subject to significant influence AVIVA S.P.A. X 63,674 36,874 - 36,874 - 36,874 BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT X 108,932 92,874 - 92,874 6,968 99,842 BKS BANK AG X 80,708 69,895 - 69,895 30,152 100,047 CNP UNICREDIT VITA S.P.A. X 36,271 26,415 - 26,415 (12,221) 14,194 CREDITRAS VITA S.P.A. X 123,205 84,205 - 84,205 (52,255) 31,950 MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. X 1,036,300 808,400 - 808,400 (240,992) 567,408 OBERBANK AG X 265,770 223,560 - 223,560 (34,927) 188,633 OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT X 51,781 40,064 - 40,064 (3,902) 36,162 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 205 7.3 Significant Shareholdings: accounting information (€ '000) COMPANY NAME CASH AND LIQUID ASSETS FINANCIAL ASSET NON-FINANCIAL ASSET FINANCIAL LIABILIES NON-FINANCIAL LIABILITIES TOTAL REVENUES THE INTEREST MARGIN A. Companies under joint control KOC FINANSAL HIZMETLER AS 357,604 23,792,516 910,167 21,030,001 1,587,078 3,068,960 974,499 B. Companies subject to significant influence AVIVA S.P.A. X 11,202,200 475,900 - 11,415,701 2,994,200 X BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT X 10,136,296 468,107 9,334,425 321,344 337,453 X BKS BANK AG X 7,732,774 143,577 6,797,581 234,416 263,750 X CNP UNICREDIT VITA S.P.A. X 13,882,698 988,467 658,906 13,369,926 3,583,057 X CREDITRAS VITA S.P.A. X 27,617,335 1,577,913 19,350,923 9,253,263 750,706 X MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. X 70,582,100 2,597,600 63,328,500 2,687,338 2,471,200 X OBERBANK AG X 20,499,179 607,912 17,729,662 902,204 693,925 X OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT X 27,469,278 130,656 25,472,831 1,734,553 381,023 X continued: 7.3 Significant Shareholdings: accounting information COMPANY NAME ADJUSTMENTS TO THE BACKS ON TANGIBLE AND INTAGIBLE ASSETS PROFIT (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES PROFIT (LOSS) FROM CONTINUING OPERATIONS NET OF TAX PROFIT (LOSS) FROM GROUP OF ASSETS HELD FOR SALE NET OF TAX NET PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME, NET OF TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) A. Companies under joint control KOC FINANSAL HIZMETLER AS (15,986) 387,947 298,892 - 298,892 (57,316) 241,576 B. Companies subject to significant influence AVIVA S.P.A. X 63,674 36,874 - 36,874 - 36,874 BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT X 108,932 92,874 - 92,874 6,968 99,842 BKS BANK AG X 80,708 69,895 - 69,895 30,152 100,047 CNP UNICREDIT VITA S.P.A. X 36,271 26,415 - 26,415 (12,221) 14,194 CREDITRAS VITA S.P.A. X 123,205 84,205 - 84,205 (52,255) 31,950 MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. X 1,036,300 808,400 - 808,400 (240,992) 567,408 OBERBANK AG X 265,770 223,560 - 223,560 (34,927) 188,633 OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT X 51,781 40,064 - 40,064 (3,902) 36,162 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 206 2018 Annual Report and Accounts · UniCredit For each significant equity investments the reconciliation between the book value of the equity investment and summarised financial information of the companies is reported below. (€ '000) COMPANY NAME BALANCE SHEET VALUE EQUITY PROQUOTA GOODWILL ON CONSOLIDATION A. Companies under joint control KOC FINANSAL HIZMETLER AS 1,340,272 2,443,197 - B. Companies subject to significant influence AVIVA S.P.A. 180,270 180,270 - BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT 694,769 747,532 - BKS BANK AG 339,217 343,186 - CNP UNICREDIT VITA S.P.A. 326,815 326,815 - CREDITRAS VITA S.P.A. 365,943 365,943 - MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. 737,196 737,196 - OBERBANK AG 736,332 736,332 - OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT 388,436 388,436 - With reference to the nature of the relationships see Section 7.1. The carrying amount of the investments in Koc Finansal Hizmetler AS, in Bank Fuer Tirol und Vorarlberg Aktiengesellschaft and in Bks Bank AG is affected by write-downs made in previous years and by the exchange rate effect recorded on value adjustments booked in previous and current years. Summarised financial information are disclosed for the related stake in the equity held. These figures include any adjustments made on measuring the equity investment. 7.4 Non-significant equity investments: accounting information (€ '000) BALANCE SHEET VALUE OF SHAREHOLDING TOTAL ASSET TOTAL LIABILITIES TOTAL REVENUES PROFIT (LOSS) FROM CONTINUING OPERATIONS NET OF TAX PROFIT (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX NET PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME, NET OF TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) Companies under joint control 1,754 22,349 20,593 219 8 - 8 - 8 Companies subject to significant influence 302,449 3,378,122 3,108,685 1,157,363 1,318 - 1,318 (23,558) (22,240) Notes: (1) For the following companies, Compagnia Aerea Italiana S.p.A. and Risanamento S.p.A. the book value in the consolidated financial statements reflects the results of a valuation at individual level made by Unicredit S.p.A. (2) Note that on the basis of the international accounting standards, equity investments in associates for which there is objective evidence of occurrence of events that may reduce their value, are impairment tested by calculating recoverable value, understood as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the said recoverable value is lower than the book value. Note that a write-down was recognised for Risanamento S.p.A. (for more details see Part C - Section 17). Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 206 2018 Annual Report and Accounts · UniCredit For each significant equity investments the reconciliation between the book value of the equity investment and summarised financial information of the companies is reported below. (€ '000) COMPANY NAME BALANCE SHEET VALUE EQUITY PROQUOTA GOODWILL ON CONSOLIDATION A. Companies under joint control KOC FINANSAL HIZMETLER AS 1,340,272 2,443,197 - B. Companies subject to significant influence AVIVA S.P.A. 180,270 180,270 - BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT 694,769 747,532 - BKS BANK AG 339,217 343,186 - CNP UNICREDIT VITA S.P.A. 326,815 326,815 - CREDITRAS VITA S.P.A. 365,943 365,943 - MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. 737,196 737,196 - OBERBANK AG 736,332 736,332 - OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT 388,436 388,436 - With reference to the nature of the relationships see Section 7.1. The carrying amount of the investments in Koc Finansal Hizmetler AS, in Bank Fuer Tirol und Vorarlberg Aktiengesellschaft and in Bks Bank AG is affected by write-downs made in previous years and by the exchange rate effect recorded on value adjustments booked in previous and current years. Summarised financial information are disclosed for the related stake in the equity held. These figures include any adjustments made on measuring the equity investment. 7.4 Non-significant equity investments: accounting information (€ '000) BALANCE SHEET VALUE OF SHAREHOLDING TOTAL ASSET TOTAL LIABILITIES TOTAL REVENUES PROFIT (LOSS) FROM CONTINUING OPERATIONS NET OF TAX PROFIT (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX NET PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME, NET OF TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) Companies under joint control 1,754 22,349 20,593 219 8 - 8 - 8 Companies subject to significant influence 302,449 3,378,122 3,108,685 1,157,363 1,318 - 1,318 (23,558) (22,240) Notes: (1) For the following companies, Compagnia Aerea Italiana S.p.A. and Risanamento S.p.A. the book value in the consolidated financial statements reflects the results of a valuation at individual level made by Unicredit S.p.A. (2) Note that on the basis of the international accounting standards, equity investments in associates for which there is objective evidence of occurrence of events that may reduce their value, are impairment tested by calculating recoverable value, understood as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the said recoverable value is lower than the book value. Note that a write-down was recognised for Risanamento S.p.A. (for more details see Part C - Section 17). Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 206 2018 Annual Report and Accounts · UniCredit For each significant equity investments the reconciliation between the book value of the equity investment and summarised financial information of the companies is reported below. (€ '000) COMPANY NAME BALANCE SHEET VALUE EQUITY PROQUOTA GOODWILL ON CONSOLIDATION A. Companies under joint control KOC FINANSAL HIZMETLER AS 1,340,272 2,443,197 - B. Companies subject to significant influence AVIVA S.P.A. 180,270 180,270 - BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT 694,769 747,532 - BKS BANK AG 339,217 343,186 - CNP UNICREDIT VITA S.P.A. 326,815 326,815 - CREDITRAS VITA S.P.A. 365,943 365,943 - MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. 737,196 737,196 - OBERBANK AG 736,332 736,332 - OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT 388,436 388,436 - With reference to the nature of the relationships see Section 7.1. The carrying amount of the investments in Koc Finansal Hizmetler AS, in Bank Fuer Tirol und Vorarlberg Aktiengesellschaft and in Bks Bank AG is affected by write-downs made in previous years and by the exchange rate effect recorded on value adjustments booked in previous and current years. Summarised financial information are disclosed for the related stake in the equity held. These figures include any adjustments made on measuring the equity investment. 7.4 Non-significant equity investments: accounting information (€ '000) BALANCE SHEET VALUE OF SHAREHOLDING TOTAL ASSET TOTAL LIABILITIES TOTAL REVENUES PROFIT (LOSS) FROM CONTINUING OPERATIONS NET OF TAX PROFIT (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX NET PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME, NET OF TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) Companies under joint control 1,754 22,349 20,593 219 8 - 8 - 8 Companies subject to significant influence 302,449 3,378,122 3,108,685 1,157,363 1,318 - 1,318 (23,558) (22,240) Notes: (1) For the following companies, Compagnia Aerea Italiana S.p.A. and Risanamento S.p.A. the book value in the consolidated financial statements reflects the results of a valuation at individual level made by Unicredit S.p.A. (2) Note that on the basis of the international accounting standards, equity investments in associates for which there is objective evidence of occurrence of events that may reduce their value, are impairment tested by calculating recoverable value, understood as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the said recoverable value is lower than the book value. Note that a write-down was recognised for Risanamento S.p.A. (for more details see Part C - Section 17). Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 206 2018 Annual Report and Accounts · UniCredit For each significant equity investments the reconciliation between the book value of the equity investment and summarised financial information of the companies is reported below. (€ '000) COMPANY NAME BALANCE SHEET VALUE EQUITY PROQUOTA GOODWILL ON CONSOLIDATION A. Companies under joint control KOC FINANSAL HIZMETLER AS 1,340,272 2,443,197 - B. Companies subject to significant influence AVIVA S.P.A. 180,270 180,270 - BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT 694,769 747,532 - BKS BANK AG 339,217 343,186 - CNP UNICREDIT VITA S.P.A. 326,815 326,815 - CREDITRAS VITA S.P.A. 365,943 365,943 - MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. 737,196 737,196 - OBERBANK AG 736,332 736,332 - OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT 388,436 388,436 - With reference to the nature of the relationships see Section 7.1. The carrying amount of the investments in Koc Finansal Hizmetler AS, in Bank Fuer Tirol und Vorarlberg Aktiengesellschaft and in Bks Bank AG is affected by write-downs made in previous years and by the exchange rate effect recorded on value adjustments booked in previous and current years. Summarised financial information are disclosed for the related stake in the equity held. These figures include any adjustments made on measuring the equity investment. 7.4 Non-significant equity investments: accounting information (€ '000) BALANCE SHEET VALUE OF SHAREHOLDING TOTAL ASSET TOTAL LIABILITIES TOTAL REVENUES PROFIT (LOSS) FROM CONTINUING OPERATIONS NET OF TAX PROFIT (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX NET PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME, NET OF TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) Companies under joint control 1,754 22,349 20,593 219 8 - 8 - 8 Companies subject to significant influence 302,449 3,378,122 3,108,685 1,157,363 1,318 - 1,318 (23,558) (22,240) Notes: (1) For the following companies, Compagnia Aerea Italiana S.p.A. and Risanamento S.p.A. the book value in the consolidated financial statements reflects the results of a valuation at individual level made by Unicredit S.p.A. (2) Note that on the basis of the international accounting standards, equity investments in associates for which there is objective evidence of occurrence of events that may reduce their value, are impairment tested by calculating recoverable value, understood as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the said recoverable value is lower than the book value. Note that a write-down was recognised for Risanamento S.p.A. (for more details see Part C - Section 17). Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 206 2018 Annual Report and Accounts · UniCredit For each significant equity investments the reconciliation between the book value of the equity investment and summarised financial information of the companies is reported below. (€ '000) COMPANY NAME BALANCE SHEET VALUE EQUITY PROQUOTA GOODWILL ON CONSOLIDATION A. Companies under joint control KOC FINANSAL HIZMETLER AS 1,340,272 2,443,197 - B. Companies subject to significant influence AVIVA S.P.A. 180,270 180,270 - BANK FUER TIROL UND VORARLBERG AKTIENGESELLSCHAFT 694,769 747,532 - BKS BANK AG 339,217 343,186 - CNP UNICREDIT VITA S.P.A. 326,815 326,815 - CREDITRAS VITA S.P.A. 365,943 365,943 - MEDIOBANCA BANCA DI CREDITO FINANZIARIO S.P.A. 737,196 737,196 - OBERBANK AG 736,332 736,332 - OESTERREICHISCHE KONTROLLBANK AKTIENGESELLSCHAFT 388,436 388,436 - With reference to the nature of the relationships see Section 7.1. The carrying amount of the investments in Koc Finansal Hizmetler AS, in Bank Fuer Tirol und Vorarlberg Aktiengesellschaft and in Bks Bank AG is affected by write-downs made in previous years and by the exchange rate effect recorded on value adjustments booked in previous and current years. Summarised financial information are disclosed for the related stake in the equity held. These figures include any adjustments made on measuring the equity investment. 7.4 Non-significant equity investments: accounting information (€ '000) BALANCE SHEET VALUE OF SHAREHOLDING TOTAL ASSET TOTAL LIABILITIES TOTAL REVENUES PROFIT (LOSS) FROM CONTINUING OPERATIONS NET OF TAX PROFIT (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX NET PROFIT (LOSS) (1) OTHER COMPREHENSIVE INCOME, NET OF TAX (2) OTHER COMPREHENSIVE INCOME (3) = (1) + (2) Companies under joint control 1,754 22,349 20,593 219 8 - 8 - 8 Companies subject to significant influence 302,449 3,378,122 3,108,685 1,157,363 1,318 - 1,318 (23,558) (22,240) Notes: (1) For the following companies, Compagnia Aerea Italiana S.p.A. and Risanamento S.p.A. the book value in the consolidated financial statements reflects the results of a valuation at individual level made by Unicredit S.p.A. (2) Note that on the basis of the international accounting standards, equity investments in associates for which there is objective evidence of occurrence of events that may reduce their value, are impairment tested by calculating recoverable value, understood as the greater of fair value net of costs to sell and value in use, and an impairment loss is recognised when the said recoverable value is lower than the book value. Note that a write-down was recognised for Risanamento S.p.A. (for more details see Part C - Section 17). Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 207 7.5 Equity investments: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 6,211,911 6,158,551 B. Increases 1,324,325 730,817 of which: business combinations 544 - B.1 Purchases 484,934 57,322 B.2 Write-backs 27,099 10,646 B.3 Revaluation - - B.4 Other changes 812,292 662,849 C. Decreases 2,034,703 677,226 of which: business combinations 339 - C.1 Sales 1,564 9,886 C.2 Write-downs 896,637 8,328 C.3 Impairment - - C.4 Other changes 1,136,502 659,012 D. Closing balance 5,501,533 6,212,142 E. Total revaluation - - F. Total write-downs 2,204,625 1,453,643 7.6 Valuation and significant assumptions to establish the existence of joint control or significant influence The Group has classified among associates the entities governed through voting rights with reference to which it can participate in defining the operating or financial policies through possession of at least 20% of the voting rights or the possibility of appointing members of the governing body. In particular, as shown in Table “7.1 Equity investments: information on shareholding relationships”, it should be noted that the investee Mediobanca is classified among associates, see the information provided in Consolidated report on operations - Other information as regards the maintenance of significant influence following the termination of the Mediobanca shareholders agreement on 31 December 2018 and the signing of a new "consultation agreement” between Mediobanca S.p.A. and shareholders, although the Group does not have more than 20% of the voting rights. Note that, in light of the signature of the “Consultation agreement between shareholders of Mediobanca”, the investment in Mediobanca remains classified as investment in associates as a result of the continuing existence of an adequate representation by UniCredit in Mediobanca’s Board of Directors. The Group has classified its investees among jointly-controlled equity investments in the presence of agreements that state that decisions on significant activities are taken with the unanimous consent of all parties that share control. These agreements, in particular, attribute to the Group rights related only to the net assets and not rights to the assets and obligations on the liabilities of the investee. As at 31 December 2018 the following were carried at cost: • 14 equity investments (all held either directly or through consolidated subsidiaries) in associates; • 9 equity investments (of which 3 held either directly or through consolidated subsidiaries) in jointly-controlled companies. Based on available information, it should be considered that their consolidation at equity would not have impacted significantly the Group Shareholders’ Equity. 7.7 Commitments related to equity investments in jointly-controlled companies There are no commitments related to jointly-controlled companies. 7.8 Commitments related to equity investments in companies subject to significant influence There are no commitments related to companies subject to significant influence. 7.9 Significant restrictions As at 31 December 2018, we note, with reference to Value Transformation Services S.p.A., the existence of a shareholders' agreement which limits the Group's possibility to participate in the profits, in the form of dividend distribution, and in the losses to a maximum amount of €300,000. Even though not directly concluded by UniCredit S.p.A. or one of its subsidiaries, we disclose the existence of contractual agreements between Compagnia Area Italiana (CAI) and its subsidiary Alitalia SAI, company that is into special administration, that limit the ability of the latter to distribute dividends to the achievement of certain parameters in terms of liquidity and income margins. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 207 7.5 Equity investments: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 6,211,911 6,158,551 B. Increases 1,324,325 730,817 of which: business combinations 544 - B.1 Purchases 484,934 57,322 B.2 Write-backs 27,099 10,646 B.3 Revaluation - - B.4 Other changes 812,292 662,849 C. Decreases 2,034,703 677,226 of which: business combinations 339 - C.1 Sales 1,564 9,886 C.2 Write-downs 896,637 8,328 C.3 Impairment - - C.4 Other changes 1,136,502 659,012 D. Closing balance 5,501,533 6,212,142 E. Total revaluation - - F. Total write-downs 2,204,625 1,453,643 7.6 Valuation and significant assumptions to establish the existence of joint control or significant influence The Group has classified among associates the entities governed through voting rights with reference to which it can participate in defining the operating or financial policies through possession of at least 20% of the voting rights or the possibility of appointing members of the governing body. In particular, as shown in Table “7.1 Equity investments: information on shareholding relationships”, it should be noted that the investee Mediobanca is classified among associates, see the information provided in Consolidated report on operations - Other information as regards the maintenance of significant influence following the termination of the Mediobanca shareholders agreement on 31 December 2018 and the signing of a new "consultation agreement” between Mediobanca S.p.A. and shareholders, although the Group does not have more than 20% of the voting rights. Note that, in light of the signature of the “Consultation agreement between shareholders of Mediobanca”, the investment in Mediobanca remains classified as investment in associates as a result of the continuing existence of an adequate representation by UniCredit in Mediobanca’s Board of Directors. The Group has classified its investees among jointly-controlled equity investments in the presence of agreements that state that decisions on significant activities are taken with the unanimous consent of all parties that share control. These agreements, in particular, attribute to the Group rights related only to the net assets and not rights to the assets and obligations on the liabilities of the investee. As at 31 December 2018 the following were carried at cost: • 14 equity investments (all held either directly or through consolidated subsidiaries) in associates; • 9 equity investments (of which 3 held either directly or through consolidated subsidiaries) in jointly-controlled companies. Based on available information, it should be considered that their consolidation at equity would not have impacted significantly the Group Shareholders’ Equity. 7.7 Commitments related to equity investments in jointly-controlled companies There are no commitments related to jointly-controlled companies. 7.8 Commitments related to equity investments in companies subject to significant influence There are no commitments related to companies subject to significant influence. 7.9 Significant restrictions As at 31 December 2018, we note, with reference to Value Transformation Services S.p.A., the existence of a shareholders' agreement which limits the Group's possibility to participate in the profits, in the form of dividend distribution, and in the losses to a maximum amount of €300,000. Even though not directly concluded by UniCredit S.p.A. or one of its subsidiaries, we disclose the existence of contractual agreements between Compagnia Area Italiana (CAI) and its subsidiary Alitalia SAI, company that is into special administration, that limit the ability of the latter to distribute dividends to the achievement of certain parameters in terms of liquidity and income margins. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 207 7.5 Equity investments: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 6,211,911 6,158,551 B. Increases 1,324,325 730,817 of which: business combinations 544 - B.1 Purchases 484,934 57,322 B.2 Write-backs 27,099 10,646 B.3 Revaluation - - B.4 Other changes 812,292 662,849 C. Decreases 2,034,703 677,226 of which: business combinations 339 - C.1 Sales 1,564 9,886 C.2 Write-downs 896,637 8,328 C.3 Impairment - - C.4 Other changes 1,136,502 659,012 D. Closing balance 5,501,533 6,212,142 E. Total revaluation - - F. Total write-downs 2,204,625 1,453,643 7.6 Valuation and significant assumptions to establish the existence of joint control or significant influence The Group has classified among associates the entities governed through voting rights with reference to which it can participate in defining the operating or financial policies through possession of at least 20% of the voting rights or the possibility of appointing members of the governing body. In particular, as shown in Table “7.1 Equity investments: information on shareholding relationships”, it should be noted that the investee Mediobanca is classified among associates, see the information provided in Consolidated report on operations - Other information as regards the maintenance of significant influence following the termination of the Mediobanca shareholders agreement on 31 December 2018 and the signing of a new "consultation agreement” between Mediobanca S.p.A. and shareholders, although the Group does not have more than 20% of the voting rights. Note that, in light of the signature of the “Consultation agreement between shareholders of Mediobanca”, the investment in Mediobanca remains classified as investment in associates as a result of the continuing existence of an adequate representation by UniCredit in Mediobanca’s Board of Directors. The Group has classified its investees among jointly-controlled equity investments in the presence of agreements that state that decisions on significant activities are taken with the unanimous consent of all parties that share control. These agreements, in particular, attribute to the Group rights related only to the net assets and not rights to the assets and obligations on the liabilities of the investee. As at 31 December 2018 the following were carried at cost: • 14 equity investments (all held either directly or through consolidated subsidiaries) in associates; • 9 equity investments (of which 3 held either directly or through consolidated subsidiaries) in jointly-controlled companies. Based on available information, it should be considered that their consolidation at equity would not have impacted significantly the Group Shareholders’ Equity. 7.7 Commitments related to equity investments in jointly-controlled companies There are no commitments related to jointly-controlled companies. 7.8 Commitments related to equity investments in companies subject to significant influence There are no commitments related to companies subject to significant influence. 7.9 Significant restrictions As at 31 December 2018, we note, with reference to Value Transformation Services S.p.A., the existence of a shareholders' agreement which limits the Group's possibility to participate in the profits, in the form of dividend distribution, and in the losses to a maximum amount of €300,000. Even though not directly concluded by UniCredit S.p.A. or one of its subsidiaries, we disclose the existence of contractual agreements between Compagnia Area Italiana (CAI) and its subsidiary Alitalia SAI, company that is into special administration, that limit the ability of the latter to distribute dividends to the achievement of certain parameters in terms of liquidity and income margins. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 207 7.5 Equity investments: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 6,211,911 6,158,551 B. Increases 1,324,325 730,817 of which: business combinations 544 - B.1 Purchases 484,934 57,322 B.2 Write-backs 27,099 10,646 B.3 Revaluation - - B.4 Other changes 812,292 662,849 C. Decreases 2,034,703 677,226 of which: business combinations 339 - C.1 Sales 1,564 9,886 C.2 Write-downs 896,637 8,328 C.3 Impairment - - C.4 Other changes 1,136,502 659,012 D. Closing balance 5,501,533 6,212,142 E. Total revaluation - - F. Total write-downs 2,204,625 1,453,643 7.6 Valuation and significant assumptions to establish the existence of joint control or significant influence The Group has classified among associates the entities governed through voting rights with reference to which it can participate in defining the operating or financial policies through possession of at least 20% of the voting rights or the possibility of appointing members of the governing body. In particular, as shown in Table “7.1 Equity investments: information on shareholding relationships”, it should be noted that the investee Mediobanca is classified among associates, see the information provided in Consolidated report on operations - Other information as regards the maintenance of significant influence following the termination of the Mediobanca shareholders agreement on 31 December 2018 and the signing of a new "consultation agreement” between Mediobanca S.p.A. and shareholders, although the Group does not have more than 20% of the voting rights. Note that, in light of the signature of the “Consultation agreement between shareholders of Mediobanca”, the investment in Mediobanca remains classified as investment in associates as a result of the continuing existence of an adequate representation by UniCredit in Mediobanca’s Board of Directors. The Group has classified its investees among jointly-controlled equity investments in the presence of agreements that state that decisions on significant activities are taken with the unanimous consent of all parties that share control. These agreements, in particular, attribute to the Group rights related only to the net assets and not rights to the assets and obligations on the liabilities of the investee. As at 31 December 2018 the following were carried at cost: • 14 equity investments (all held either directly or through consolidated subsidiaries) in associates; • 9 equity investments (of which 3 held either directly or through consolidated subsidiaries) in jointly-controlled companies. Based on available information, it should be considered that their consolidation at equity would not have impacted significantly the Group Shareholders’ Equity. 7.7 Commitments related to equity investments in jointly-controlled companies There are no commitments related to jointly-controlled companies. 7.8 Commitments related to equity investments in companies subject to significant influence There are no commitments related to companies subject to significant influence. 7.9 Significant restrictions As at 31 December 2018, we note, with reference to Value Transformation Services S.p.A., the existence of a shareholders' agreement which limits the Group's possibility to participate in the profits, in the form of dividend distribution, and in the losses to a maximum amount of €300,000. Even though not directly concluded by UniCredit S.p.A. or one of its subsidiaries, we disclose the existence of contractual agreements between Compagnia Area Italiana (CAI) and its subsidiary Alitalia SAI, company that is into special administration, that limit the ability of the latter to distribute dividends to the achievement of certain parameters in terms of liquidity and income margins. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 207 7.5 Equity investments: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 6,211,911 6,158,551 B. Increases 1,324,325 730,817 of which: business combinations 544 - B.1 Purchases 484,934 57,322 B.2 Write-backs 27,099 10,646 B.3 Revaluation - - B.4 Other changes 812,292 662,849 C. Decreases 2,034,703 677,226 of which: business combinations 339 - C.1 Sales 1,564 9,886 C.2 Write-downs 896,637 8,328 C.3 Impairment - - C.4 Other changes 1,136,502 659,012 D. Closing balance 5,501,533 6,212,142 E. Total revaluation - - F. Total write-downs 2,204,625 1,453,643 7.6 Valuation and significant assumptions to establish the existence of joint control or significant influence The Group has classified among associates the entities governed through voting rights with reference to which it can participate in defining the operating or financial policies through possession of at least 20% of the voting rights or the possibility of appointing members of the governing body. In particular, as shown in Table “7.1 Equity investments: information on shareholding relationships”, it should be noted that the investee Mediobanca is classified among associates, see the information provided in Consolidated report on operations - Other information as regards the maintenance of significant influence following the termination of the Mediobanca shareholders agreement on 31 December 2018 and the signing of a new "consultation agreement” between Mediobanca S.p.A. and shareholders, although the Group does not have more than 20% of the voting rights. Note that, in light of the signature of the “Consultation agreement between shareholders of Mediobanca”, the investment in Mediobanca remains classified as investment in associates as a result of the continuing existence of an adequate representation by UniCredit in Mediobanca’s Board of Directors. The Group has classified its investees among jointly-controlled equity investments in the presence of agreements that state that decisions on significant activities are taken with the unanimous consent of all parties that share control. These agreements, in particular, attribute to the Group rights related only to the net assets and not rights to the assets and obligations on the liabilities of the investee. As at 31 December 2018 the following were carried at cost: • 14 equity investments (all held either directly or through consolidated subsidiaries) in associates; • 9 equity investments (of which 3 held either directly or through consolidated subsidiaries) in jointly-controlled companies. Based on available information, it should be considered that their consolidation at equity would not have impacted significantly the Group Shareholders’ Equity. 7.7 Commitments related to equity investments in jointly-controlled companies There are no commitments related to jointly-controlled companies. 7.8 Commitments related to equity investments in companies subject to significant influence There are no commitments related to companies subject to significant influence. 7.9 Significant restrictions As at 31 December 2018, we note, with reference to Value Transformation Services S.p.A., the existence of a shareholders' agreement which limits the Group's possibility to participate in the profits, in the form of dividend distribution, and in the losses to a maximum amount of €300,000. Even though not directly concluded by UniCredit S.p.A. or one of its subsidiaries, we disclose the existence of contractual agreements between Compagnia Area Italiana (CAI) and its subsidiary Alitalia SAI, company that is into special administration, that limit the ability of the latter to distribute dividends to the achievement of certain parameters in terms of liquidity and income margins. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 208 2018 Annual Report and Accounts · UniCredit Finally the ability to receive dividends or capital distributions from associates is subordinated to the majority, also qualified, or unanimous decision of the relevant corporate body as provided by the law or by specific shareholder agreements. 7.10 Other information With reference to significant equity investments in associates and jointly-controlled companies, the net equity method was applied starting from the 2018 draft financial statements approved by the competent corporate bodies or from the reports approved in the three previous months. With reference to non-significant equity investments in associates and jointly-controlled companies, in limited cases financial statements or reports with a date prior to 3 months from 31 December 2018 were used, if no more up-to-date reports were available. However, if financial statements or reports with a date other than 31 December 2018 were used, no subsequent transactions or events emerged such as to require an adjustment of the results contained therein. It should be noted that for the associated companies Risanamento S.p.A. and Compagnia Aerea Italiana S.p.A., the book value in the consolidated financial statements reflects the valuation of the investments, carried out by UniCredit S.p.A. at individual level. Section 8 - Insurance reserves charged to reinsurers - Item 80 No data to be discloused. Section 9 - Property, plant and equipment - Item 90 Property, plant and equipment, which include land, buildings used in the business, real estate investments, technical furniture and fittings, inventories of tangibles assets ruled by IAS2 amount to €8,408 million at the end of 2018, compared to €8,449 million at the end of 2017. The inventories pursuant to IAS2 are classified in this item starting from 2018 following the application of 5th update of the Banca d’Italia Circular 262. 9.1 Property, plant and equipment used in the business: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 12.31.2017 1. Owned assets 6,183,998 6,220,238 a) Land 1,224,207 1,201,374 b) Buildings 2,151,588 2,147,528 c) Office furniture and fitting 231,930 287,159 d) Electronic systems 464,082 475,361 e) Other 2,112,191 2,108,816 2. Leased assets 5 49,502 a) Land - 14,916 b) Buildings 5 31,850 c) Office furniture and fitting - - d) Electronic systems - - e) Other - 2,736 Total 6,184,003 6,269,740 of which: obtained by the enforcement of collateral 723 - As at 31 December 2018 the item “1. Owned assets e) Other” include €1.2 billion related to a windmill park owned by Ocean Breeze Energy GmbH & Co. KG, for more qualitative and quantitative information please refer to the Part E. The decrease in item “2. Leased assets e) Other”, in comparison with previous year, is mainly due an asset acquisition (consisting of land and building), previously leased. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 208 2018 Annual Report and Accounts · UniCredit Finally the ability to receive dividends or capital distributions from associates is subordinated to the majority, also qualified, or unanimous decision of the relevant corporate body as provided by the law or by specific shareholder agreements. 7.10 Other information With reference to significant equity investments in associates and jointly-controlled companies, the net equity method was applied starting from the 2018 draft financial statements approved by the competent corporate bodies or from the reports approved in the three previous months. With reference to non-significant equity investments in associates and jointly-controlled companies, in limited cases financial statements or reports with a date prior to 3 months from 31 December 2018 were used, if no more up-to-date reports were available. However, if financial statements or reports with a date other than 31 December 2018 were used, no subsequent transactions or events emerged such as to require an adjustment of the results contained therein. It should be noted that for the associated companies Risanamento S.p.A. and Compagnia Aerea Italiana S.p.A., the book value in the consolidated financial statements reflects the valuation of the investments, carried out by UniCredit S.p.A. at individual level. Section 8 - Insurance reserves charged to reinsurers - Item 80 No data to be discloused. Section 9 - Property, plant and equipment - Item 90 Property, plant and equipment, which include land, buildings used in the business, real estate investments, technical furniture and fittings, inventories of tangibles assets ruled by IAS2 amount to €8,408 million at the end of 2018, compared to €8,449 million at the end of 2017. The inventories pursuant to IAS2 are classified in this item starting from 2018 following the application of 5th update of the Banca d’Italia Circular 262. 9.1 Property, plant and equipment used in the business: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 12.31.2017 1. Owned assets 6,183,998 6,220,238 a) Land 1,224,207 1,201,374 b) Buildings 2,151,588 2,147,528 c) Office furniture and fitting 231,930 287,159 d) Electronic systems 464,082 475,361 e) Other 2,112,191 2,108,816 2. Leased assets 5 49,502 a) Land - 14,916 b) Buildings 5 31,850 c) Office furniture and fitting - - d) Electronic systems - - e) Other - 2,736 Total 6,184,003 6,269,740 of which: obtained by the enforcement of collateral 723 - As at 31 December 2018 the item “1. Owned assets e) Other” include €1.2 billion related to a windmill park owned by Ocean Breeze Energy GmbH & Co. KG, for more qualitative and quantitative information please refer to the Part E. The decrease in item “2. Leased assets e) Other”, in comparison with previous year, is mainly due an asset acquisition (consisting of land and building), previously leased. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 208 2018 Annual Report and Accounts · UniCredit Finally the ability to receive dividends or capital distributions from associates is subordinated to the majority, also qualified, or unanimous decision of the relevant corporate body as provided by the law or by specific shareholder agreements. 7.10 Other information With reference to significant equity investments in associates and jointly-controlled companies, the net equity method was applied starting from the 2018 draft financial statements approved by the competent corporate bodies or from the reports approved in the three previous months. With reference to non-significant equity investments in associates and jointly-controlled companies, in limited cases financial statements or reports with a date prior to 3 months from 31 December 2018 were used, if no more up-to-date reports were available. However, if financial statements or reports with a date other than 31 December 2018 were used, no subsequent transactions or events emerged such as to require an adjustment of the results contained therein. It should be noted that for the associated companies Risanamento S.p.A. and Compagnia Aerea Italiana S.p.A., the book value in the consolidated financial statements reflects the valuation of the investments, carried out by UniCredit S.p.A. at individual level. Section 8 - Insurance reserves charged to reinsurers - Item 80 No data to be discloused. Section 9 - Property, plant and equipment - Item 90 Property, plant and equipment, which include land, buildings used in the business, real estate investments, technical furniture and fittings, inventories of tangibles assets ruled by IAS2 amount to €8,408 million at the end of 2018, compared to €8,449 million at the end of 2017. The inventories pursuant to IAS2 are classified in this item starting from 2018 following the application of 5th update of the Banca d’Italia Circular 262. 9.1 Property, plant and equipment used in the business: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 12.31.2017 1. Owned assets 6,183,998 6,220,238 a) Land 1,224,207 1,201,374 b) Buildings 2,151,588 2,147,528 c) Office furniture and fitting 231,930 287,159 d) Electronic systems 464,082 475,361 e) Other 2,112,191 2,108,816 2. Leased assets 5 49,502 a) Land - 14,916 b) Buildings 5 31,850 c) Office furniture and fitting - - d) Electronic systems - - e) Other - 2,736 Total 6,184,003 6,269,740 of which: obtained by the enforcement of collateral 723 - As at 31 December 2018 the item “1. Owned assets e) Other” include €1.2 billion related to a windmill park owned by Ocean Breeze Energy GmbH & Co. KG, for more qualitative and quantitative information please refer to the Part E. The decrease in item “2. Leased assets e) Other”, in comparison with previous year, is mainly due an asset acquisition (consisting of land and building), previously leased. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 208 2018 Annual Report and Accounts · UniCredit Finally the ability to receive dividends or capital distributions from associates is subordinated to the majority, also qualified, or unanimous decision of the relevant corporate body as provided by the law or by specific shareholder agreements. 7.10 Other information With reference to significant equity investments in associates and jointly-controlled companies, the net equity method was applied starting from the 2018 draft financial statements approved by the competent corporate bodies or from the reports approved in the three previous months. With reference to non-significant equity investments in associates and jointly-controlled companies, in limited cases financial statements or reports with a date prior to 3 months from 31 December 2018 were used, if no more up-to-date reports were available. However, if financial statements or reports with a date other than 31 December 2018 were used, no subsequent transactions or events emerged such as to require an adjustment of the results contained therein. It should be noted that for the associated companies Risanamento S.p.A. and Compagnia Aerea Italiana S.p.A., the book value in the consolidated financial statements reflects the valuation of the investments, carried out by UniCredit S.p.A. at individual level. Section 8 - Insurance reserves charged to reinsurers - Item 80 No data to be discloused. Section 9 - Property, plant and equipment - Item 90 Property, plant and equipment, which include land, buildings used in the business, real estate investments, technical furniture and fittings, inventories of tangibles assets ruled by IAS2 amount to €8,408 million at the end of 2018, compared to €8,449 million at the end of 2017. The inventories pursuant to IAS2 are classified in this item starting from 2018 following the application of 5th update of the Banca d’Italia Circular 262. 9.1 Property, plant and equipment used in the business: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 12.31.2017 1. Owned assets 6,183,998 6,220,238 a) Land 1,224,207 1,201,374 b) Buildings 2,151,588 2,147,528 c) Office furniture and fitting 231,930 287,159 d) Electronic systems 464,082 475,361 e) Other 2,112,191 2,108,816 2. Leased assets 5 49,502 a) Land - 14,916 b) Buildings 5 31,850 c) Office furniture and fitting - - d) Electronic systems - - e) Other - 2,736 Total 6,184,003 6,269,740 of which: obtained by the enforcement of collateral 723 - As at 31 December 2018 the item “1. Owned assets e) Other” include €1.2 billion related to a windmill park owned by Ocean Breeze Energy GmbH & Co. KG, for more qualitative and quantitative information please refer to the Part E. The decrease in item “2. Leased assets e) Other”, in comparison with previous year, is mainly due an asset acquisition (consisting of land and building), previously leased. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 208 2018 Annual Report and Accounts · UniCredit Finally the ability to receive dividends or capital distributions from associates is subordinated to the majority, also qualified, or unanimous decision of the relevant corporate body as provided by the law or by specific shareholder agreements. 7.10 Other information With reference to significant equity investments in associates and jointly-controlled companies, the net equity method was applied starting from the 2018 draft financial statements approved by the competent corporate bodies or from the reports approved in the three previous months. With reference to non-significant equity investments in associates and jointly-controlled companies, in limited cases financial statements or reports with a date prior to 3 months from 31 December 2018 were used, if no more up-to-date reports were available. However, if financial statements or reports with a date other than 31 December 2018 were used, no subsequent transactions or events emerged such as to require an adjustment of the results contained therein. It should be noted that for the associated companies Risanamento S.p.A. and Compagnia Aerea Italiana S.p.A., the book value in the consolidated financial statements reflects the valuation of the investments, carried out by UniCredit S.p.A. at individual level. Section 8 - Insurance reserves charged to reinsurers - Item 80 No data to be discloused. Section 9 - Property, plant and equipment - Item 90 Property, plant and equipment, which include land, buildings used in the business, real estate investments, technical furniture and fittings, inventories of tangibles assets ruled by IAS2 amount to €8,408 million at the end of 2018, compared to €8,449 million at the end of 2017. The inventories pursuant to IAS2 are classified in this item starting from 2018 following the application of 5th update of the Banca d’Italia Circular 262. 9.1 Property, plant and equipment used in the business: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 12.31.2017 1. Owned assets 6,183,998 6,220,238 a) Land 1,224,207 1,201,374 b) Buildings 2,151,588 2,147,528 c) Office furniture and fitting 231,930 287,159 d) Electronic systems 464,082 475,361 e) Other 2,112,191 2,108,816 2. Leased assets 5 49,502 a) Land - 14,916 b) Buildings 5 31,850 c) Office furniture and fitting - - d) Electronic systems - - e) Other - 2,736 Total 6,184,003 6,269,740 of which: obtained by the enforcement of collateral 723 - As at 31 December 2018 the item “1. Owned assets e) Other” include €1.2 billion related to a windmill park owned by Ocean Breeze Energy GmbH & Co. KG, for more qualitative and quantitative information please refer to the Part E. The decrease in item “2. Leased assets e) Other”, in comparison with previous year, is mainly due an asset acquisition (consisting of land and building), previously leased. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 209 9.2 Property, plant and equipment held for investment: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets 1,471,311 - 88,561 2,077,418 2,121,656 14,821 97,488 2,458,780 a) Land 820,940 - 25,836 1,080,285 1,006,961 6,114 21,446 1,157,906 b) Buildings 650,371 - 62,725 997,133 1,114,695 8,707 76,042 1,300,874 2. Leased assets 46,282 - - 56,400 10,512 - - 10,512 a) Land 14,551 - - 22,336 10,000 - - 10,000 b) Buildings 31,731 - - 34,064 512 - - 512 Total 1,517,593 - 88,561 2,133,818 2,132,168 14,821 97,488 2,469,292 of which: obtained by the enforcement of collateral 17,697 - - 14,925 - - - - Total Level 1, Level 2 and Level 3 2,222,379 2,581,601 Fair value measurements solely for the purpose of fulfilling disclosure requirements were classified according to a hierarchy of levels reflecting the significance of the valuation inputs. For further information see Part A - Accounting Policies - A.4 Information on fair value. The decrease of property, plant and equipment carried at cost held for investments compared to 31 December 2017 is mainly due to reclassification of some real estate investments of Germany in the item “Non-current assets and disposal groups classified as held for sale” in accordance with IFRS5. 9.3 Property, plant and equipment used in the business: breakdown of revalued assets There are no revaluated property, plant and equipment used in the business. 9.4 Property, plant and equipment held for investment: breakdown of assets designated at fair value (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets - - 47,147 - - 47,380 a) Land - - 274 - - 272 b) Buildings - - 46,873 - - 47,108 2. Leased assets - - - - - - a) Land - - - - - - b) Buildings - - - - - - Total - - 47,147 - - 47,380 of which: obtained by the enforcement of collateral - - - - - - Total Level 1, Level 2 and Level 3 47,147 47,380 Under IAS40.32A the Group uses the revaluation model (fair value) to measure investment properties linked with liabilities which pay a return linked to the fair value of the relevant investments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 209 9.2 Property, plant and equipment held for investment: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets 1,471,311 - 88,561 2,077,418 2,121,656 14,821 97,488 2,458,780 a) Land 820,940 - 25,836 1,080,285 1,006,961 6,114 21,446 1,157,906 b) Buildings 650,371 - 62,725 997,133 1,114,695 8,707 76,042 1,300,874 2. Leased assets 46,282 - - 56,400 10,512 - - 10,512 a) Land 14,551 - - 22,336 10,000 - - 10,000 b) Buildings 31,731 - - 34,064 512 - - 512 Total 1,517,593 - 88,561 2,133,818 2,132,168 14,821 97,488 2,469,292 of which: obtained by the enforcement of collateral 17,697 - - 14,925 - - - - Total Level 1, Level 2 and Level 3 2,222,379 2,581,601 Fair value measurements solely for the purpose of fulfilling disclosure requirements were classified according to a hierarchy of levels reflecting the significance of the valuation inputs. For further information see Part A - Accounting Policies - A.4 Information on fair value. The decrease of property, plant and equipment carried at cost held for investments compared to 31 December 2017 is mainly due to reclassification of some real estate investments of Germany in the item “Non-current assets and disposal groups classified as held for sale” in accordance with IFRS5. 9.3 Property, plant and equipment used in the business: breakdown of revalued assets There are no revaluated property, plant and equipment used in the business. 9.4 Property, plant and equipment held for investment: breakdown of assets designated at fair value (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets - - 47,147 - - 47,380 a) Land - - 274 - - 272 b) Buildings - - 46,873 - - 47,108 2. Leased assets - - - - - - a) Land - - - - - - b) Buildings - - - - - - Total - - 47,147 - - 47,380 of which: obtained by the enforcement of collateral - - - - - - Total Level 1, Level 2 and Level 3 47,147 47,380 Under IAS40.32A the Group uses the revaluation model (fair value) to measure investment properties linked with liabilities which pay a return linked to the fair value of the relevant investments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 209 9.2 Property, plant and equipment held for investment: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets 1,471,311 - 88,561 2,077,418 2,121,656 14,821 97,488 2,458,780 a) Land 820,940 - 25,836 1,080,285 1,006,961 6,114 21,446 1,157,906 b) Buildings 650,371 - 62,725 997,133 1,114,695 8,707 76,042 1,300,874 2. Leased assets 46,282 - - 56,400 10,512 - - 10,512 a) Land 14,551 - - 22,336 10,000 - - 10,000 b) Buildings 31,731 - - 34,064 512 - - 512 Total 1,517,593 - 88,561 2,133,818 2,132,168 14,821 97,488 2,469,292 of which: obtained by the enforcement of collateral 17,697 - - 14,925 - - - - Total Level 1, Level 2 and Level 3 2,222,379 2,581,601 Fair value measurements solely for the purpose of fulfilling disclosure requirements were classified according to a hierarchy of levels reflecting the significance of the valuation inputs. For further information see Part A - Accounting Policies - A.4 Information on fair value. The decrease of property, plant and equipment carried at cost held for investments compared to 31 December 2017 is mainly due to reclassification of some real estate investments of Germany in the item “Non-current assets and disposal groups classified as held for sale” in accordance with IFRS5. 9.3 Property, plant and equipment used in the business: breakdown of revalued assets There are no revaluated property, plant and equipment used in the business. 9.4 Property, plant and equipment held for investment: breakdown of assets designated at fair value (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets - - 47,147 - - 47,380 a) Land - - 274 - - 272 b) Buildings - - 46,873 - - 47,108 2. Leased assets - - - - - - a) Land - - - - - - b) Buildings - - - - - - Total - - 47,147 - - 47,380 of which: obtained by the enforcement of collateral - - - - - - Total Level 1, Level 2 and Level 3 47,147 47,380 Under IAS40.32A the Group uses the revaluation model (fair value) to measure investment properties linked with liabilities which pay a return linked to the fair value of the relevant investments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 209 9.2 Property, plant and equipment held for investment: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets 1,471,311 - 88,561 2,077,418 2,121,656 14,821 97,488 2,458,780 a) Land 820,940 - 25,836 1,080,285 1,006,961 6,114 21,446 1,157,906 b) Buildings 650,371 - 62,725 997,133 1,114,695 8,707 76,042 1,300,874 2. Leased assets 46,282 - - 56,400 10,512 - - 10,512 a) Land 14,551 - - 22,336 10,000 - - 10,000 b) Buildings 31,731 - - 34,064 512 - - 512 Total 1,517,593 - 88,561 2,133,818 2,132,168 14,821 97,488 2,469,292 of which: obtained by the enforcement of collateral 17,697 - - 14,925 - - - - Total Level 1, Level 2 and Level 3 2,222,379 2,581,601 Fair value measurements solely for the purpose of fulfilling disclosure requirements were classified according to a hierarchy of levels reflecting the significance of the valuation inputs. For further information see Part A - Accounting Policies - A.4 Information on fair value. The decrease of property, plant and equipment carried at cost held for investments compared to 31 December 2017 is mainly due to reclassification of some real estate investments of Germany in the item “Non-current assets and disposal groups classified as held for sale” in accordance with IFRS5. 9.3 Property, plant and equipment used in the business: breakdown of revalued assets There are no revaluated property, plant and equipment used in the business. 9.4 Property, plant and equipment held for investment: breakdown of assets designated at fair value (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets - - 47,147 - - 47,380 a) Land - - 274 - - 272 b) Buildings - - 46,873 - - 47,108 2. Leased assets - - - - - - a) Land - - - - - - b) Buildings - - - - - - Total - - 47,147 - - 47,380 of which: obtained by the enforcement of collateral - - - - - - Total Level 1, Level 2 and Level 3 47,147 47,380 Under IAS40.32A the Group uses the revaluation model (fair value) to measure investment properties linked with liabilities which pay a return linked to the fair value of the relevant investments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 209 9.2 Property, plant and equipment held for investment: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets 1,471,311 - 88,561 2,077,418 2,121,656 14,821 97,488 2,458,780 a) Land 820,940 - 25,836 1,080,285 1,006,961 6,114 21,446 1,157,906 b) Buildings 650,371 - 62,725 997,133 1,114,695 8,707 76,042 1,300,874 2. Leased assets 46,282 - - 56,400 10,512 - - 10,512 a) Land 14,551 - - 22,336 10,000 - - 10,000 b) Buildings 31,731 - - 34,064 512 - - 512 Total 1,517,593 - 88,561 2,133,818 2,132,168 14,821 97,488 2,469,292 of which: obtained by the enforcement of collateral 17,697 - - 14,925 - - - - Total Level 1, Level 2 and Level 3 2,222,379 2,581,601 Fair value measurements solely for the purpose of fulfilling disclosure requirements were classified according to a hierarchy of levels reflecting the significance of the valuation inputs. For further information see Part A - Accounting Policies - A.4 Information on fair value. The decrease of property, plant and equipment carried at cost held for investments compared to 31 December 2017 is mainly due to reclassification of some real estate investments of Germany in the item “Non-current assets and disposal groups classified as held for sale” in accordance with IFRS5. 9.3 Property, plant and equipment used in the business: breakdown of revalued assets There are no revaluated property, plant and equipment used in the business. 9.4 Property, plant and equipment held for investment: breakdown of assets designated at fair value (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets - - 47,147 - - 47,380 a) Land - - 274 - - 272 b) Buildings - - 46,873 - - 47,108 2. Leased assets - - - - - - a) Land - - - - - - b) Buildings - - - - - - Total - - 47,147 - - 47,380 of which: obtained by the enforcement of collateral - - - - - - Total Level 1, Level 2 and Level 3 47,147 47,380 Under IAS40.32A the Group uses the revaluation model (fair value) to measure investment properties linked with liabilities which pay a return linked to the fair value of the relevant investments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 210 2018 Annual Report and Accounts · UniCredit 9.5 Inventories of property, plant and equipment regulated by IAS2: breakdown (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 1. Inventories of property, plant and equipment obtained through the enforcement of guarantees received 333,414 a) Land 42,599 b) Buildings 272,454 c) Office furniture and fitting 32 d) Electronic systems 4 e) Other 18,325 2. Other inventories of property, plant and equipment 326,199 Total 659,613 of which: measured at fair value less costs to sell 11,822 Note that the 5th update of the Circular 262 has required the reclassification in tangible assets of the inventories of property plant and equipment obtained through the enforcement of guarantees, that were reported until 31 December 2017 in “other assets”. 9.6 Property, plant and equipment used in the business: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS OFFICE FURNITURE AND FITTINGS ELECTRONIC SYSTEMS OTHER TOTAL A. Gross opening balance 1,216,290 4,505,589 1,345,587 2,721,808 3,441,015 13,230,289 A.1 Total net reduction in value - (2,326,211) (1,058,428) (2,246,447) (1,329,463) (6,960,549) A.2 Net opening balance 1,216,290 2,179,378 287,159 475,361 2,111,552 6,269,740 B. Increases 36,008 204,785 44,593 184,803 538,547 1,008,736 B.1 Purchases 32,792 117,007 39,614 155,252 461,899 806,564 of which: business combinations - 3 - 29 114 146 B.2 Capitalised expenditure on improvements 67 31,521 - 1 - 31,589 B.3 Write-backs 2,011 19,767 - - 817 22,595 B.4 Increases in fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - B.5 Positive exchange differences 19 533 73 98 410 1,133 B.6 Transfer from properties held for investment - 307 X X X 307 B.7 Other changes 1,119 35,650 4,906 29,452 75,421 146,548 C. Reductions 28,091 232,570 99,822 196,082 537,908 1,094,473 C.1 Disposals 1,778 6,349 57,317 22,571 145,337 233,352 of which: business combinations - - 95 334 - 429 C.2 Depreciation 1,957 109,310 39,638 155,400 296,408 602,713 C.3 Impairment losses 148 20,913 2,212 5,049 5,456 33,778 a) In equity - - - - - - b) Through profit or loss 148 20,913 2,212 5,049 5,456 33,778 C.4 Reduction of fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - C.5 Negative exchange differences 804 10,345 67 1,419 2,756 15,391 C.6 Transfer to 22,679 48,410 193 10,373 2,744 84,399 a) Property, plant and equipment held for investment 10,800 12,471 X X X 23,271 b) Non-current assets and disposal groups classified as held for sale 11,879 35,939 193 10,373 2,744 61,128 C.7 Other changes 725 37,243 395 1,270 85,207 124,840 D. Net final balance 1,224,207 2,151,593 231,930 464,082 2,112,191 6,184,003 D.1 Total net reduction in value - (2,258,142) (1,062,933) (2,249,250) (1,309,503) (6,879,828) D.2 Gross closing balance 1,224,207 4,409,735 1,294,863 2,713,332 3,421,694 13,063,831 E. Carried at cost - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 210 2018 Annual Report and Accounts · UniCredit 9.5 Inventories of property, plant and equipment regulated by IAS2: breakdown (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 1. Inventories of property, plant and equipment obtained through the enforcement of guarantees received 333,414 a) Land 42,599 b) Buildings 272,454 c) Office furniture and fitting 32 d) Electronic systems 4 e) Other 18,325 2. Other inventories of property, plant and equipment 326,199 Total 659,613 of which: measured at fair value less costs to sell 11,822 Note that the 5th update of the Circular 262 has required the reclassification in tangible assets of the inventories of property plant and equipment obtained through the enforcement of guarantees, that were reported until 31 December 2017 in “other assets”. 9.6 Property, plant and equipment used in the business: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS OFFICE FURNITURE AND FITTINGS ELECTRONIC SYSTEMS OTHER TOTAL A. Gross opening balance 1,216,290 4,505,589 1,345,587 2,721,808 3,441,015 13,230,289 A.1 Total net reduction in value - (2,326,211) (1,058,428) (2,246,447) (1,329,463) (6,960,549) A.2 Net opening balance 1,216,290 2,179,378 287,159 475,361 2,111,552 6,269,740 B. Increases 36,008 204,785 44,593 184,803 538,547 1,008,736 B.1 Purchases 32,792 117,007 39,614 155,252 461,899 806,564 of which: business combinations - 3 - 29 114 146 B.2 Capitalised expenditure on improvements 67 31,521 - 1 - 31,589 B.3 Write-backs 2,011 19,767 - - 817 22,595 B.4 Increases in fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - B.5 Positive exchange differences 19 533 73 98 410 1,133 B.6 Transfer from properties held for investment - 307 X X X 307 B.7 Other changes 1,119 35,650 4,906 29,452 75,421 146,548 C. Reductions 28,091 232,570 99,822 196,082 537,908 1,094,473 C.1 Disposals 1,778 6,349 57,317 22,571 145,337 233,352 of which: business combinations - - 95 334 - 429 C.2 Depreciation 1,957 109,310 39,638 155,400 296,408 602,713 C.3 Impairment losses 148 20,913 2,212 5,049 5,456 33,778 a) In equity - - - - - - b) Through profit or loss 148 20,913 2,212 5,049 5,456 33,778 C.4 Reduction of fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - C.5 Negative exchange differences 804 10,345 67 1,419 2,756 15,391 C.6 Transfer to 22,679 48,410 193 10,373 2,744 84,399 a) Property, plant and equipment held for investment 10,800 12,471 X X X 23,271 b) Non-current assets and disposal groups classified as held for sale 11,879 35,939 193 10,373 2,744 61,128 C.7 Other changes 725 37,243 395 1,270 85,207 124,840 D. Net final balance 1,224,207 2,151,593 231,930 464,082 2,112,191 6,184,003 D.1 Total net reduction in value - (2,258,142) (1,062,933) (2,249,250) (1,309,503) (6,879,828) D.2 Gross closing balance 1,224,207 4,409,735 1,294,863 2,713,332 3,421,694 13,063,831 E. Carried at cost - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 210 2018 Annual Report and Accounts · UniCredit 9.5 Inventories of property, plant and equipment regulated by IAS2: breakdown (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 1. Inventories of property, plant and equipment obtained through the enforcement of guarantees received 333,414 a) Land 42,599 b) Buildings 272,454 c) Office furniture and fitting 32 d) Electronic systems 4 e) Other 18,325 2. Other inventories of property, plant and equipment 326,199 Total 659,613 of which: measured at fair value less costs to sell 11,822 Note that the 5th update of the Circular 262 has required the reclassification in tangible assets of the inventories of property plant and equipment obtained through the enforcement of guarantees, that were reported until 31 December 2017 in “other assets”. 9.6 Property, plant and equipment used in the business: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS OFFICE FURNITURE AND FITTINGS ELECTRONIC SYSTEMS OTHER TOTAL A. Gross opening balance 1,216,290 4,505,589 1,345,587 2,721,808 3,441,015 13,230,289 A.1 Total net reduction in value - (2,326,211) (1,058,428) (2,246,447) (1,329,463) (6,960,549) A.2 Net opening balance 1,216,290 2,179,378 287,159 475,361 2,111,552 6,269,740 B. Increases 36,008 204,785 44,593 184,803 538,547 1,008,736 B.1 Purchases 32,792 117,007 39,614 155,252 461,899 806,564 of which: business combinations - 3 - 29 114 146 B.2 Capitalised expenditure on improvements 67 31,521 - 1 - 31,589 B.3 Write-backs 2,011 19,767 - - 817 22,595 B.4 Increases in fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - B.5 Positive exchange differences 19 533 73 98 410 1,133 B.6 Transfer from properties held for investment - 307 X X X 307 B.7 Other changes 1,119 35,650 4,906 29,452 75,421 146,548 C. Reductions 28,091 232,570 99,822 196,082 537,908 1,094,473 C.1 Disposals 1,778 6,349 57,317 22,571 145,337 233,352 of which: business combinations - - 95 334 - 429 C.2 Depreciation 1,957 109,310 39,638 155,400 296,408 602,713 C.3 Impairment losses 148 20,913 2,212 5,049 5,456 33,778 a) In equity - - - - - - b) Through profit or loss 148 20,913 2,212 5,049 5,456 33,778 C.4 Reduction of fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - C.5 Negative exchange differences 804 10,345 67 1,419 2,756 15,391 C.6 Transfer to 22,679 48,410 193 10,373 2,744 84,399 a) Property, plant and equipment held for investment 10,800 12,471 X X X 23,271 b) Non-current assets and disposal groups classified as held for sale 11,879 35,939 193 10,373 2,744 61,128 C.7 Other changes 725 37,243 395 1,270 85,207 124,840 D. Net final balance 1,224,207 2,151,593 231,930 464,082 2,112,191 6,184,003 D.1 Total net reduction in value - (2,258,142) (1,062,933) (2,249,250) (1,309,503) (6,879,828) D.2 Gross closing balance 1,224,207 4,409,735 1,294,863 2,713,332 3,421,694 13,063,831 E. Carried at cost - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 210 2018 Annual Report and Accounts · UniCredit 9.5 Inventories of property, plant and equipment regulated by IAS2: breakdown (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 1. Inventories of property, plant and equipment obtained through the enforcement of guarantees received 333,414 a) Land 42,599 b) Buildings 272,454 c) Office furniture and fitting 32 d) Electronic systems 4 e) Other 18,325 2. Other inventories of property, plant and equipment 326,199 Total 659,613 of which: measured at fair value less costs to sell 11,822 Note that the 5th update of the Circular 262 has required the reclassification in tangible assets of the inventories of property plant and equipment obtained through the enforcement of guarantees, that were reported until 31 December 2017 in “other assets”. 9.6 Property, plant and equipment used in the business: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS OFFICE FURNITURE AND FITTINGS ELECTRONIC SYSTEMS OTHER TOTAL A. Gross opening balance 1,216,290 4,505,589 1,345,587 2,721,808 3,441,015 13,230,289 A.1 Total net reduction in value - (2,326,211) (1,058,428) (2,246,447) (1,329,463) (6,960,549) A.2 Net opening balance 1,216,290 2,179,378 287,159 475,361 2,111,552 6,269,740 B. Increases 36,008 204,785 44,593 184,803 538,547 1,008,736 B.1 Purchases 32,792 117,007 39,614 155,252 461,899 806,564 of which: business combinations - 3 - 29 114 146 B.2 Capitalised expenditure on improvements 67 31,521 - 1 - 31,589 B.3 Write-backs 2,011 19,767 - - 817 22,595 B.4 Increases in fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - B.5 Positive exchange differences 19 533 73 98 410 1,133 B.6 Transfer from properties held for investment - 307 X X X 307 B.7 Other changes 1,119 35,650 4,906 29,452 75,421 146,548 C. Reductions 28,091 232,570 99,822 196,082 537,908 1,094,473 C.1 Disposals 1,778 6,349 57,317 22,571 145,337 233,352 of which: business combinations - - 95 334 - 429 C.2 Depreciation 1,957 109,310 39,638 155,400 296,408 602,713 C.3 Impairment losses 148 20,913 2,212 5,049 5,456 33,778 a) In equity - - - - - - b) Through profit or loss 148 20,913 2,212 5,049 5,456 33,778 C.4 Reduction of fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - C.5 Negative exchange differences 804 10,345 67 1,419 2,756 15,391 C.6 Transfer to 22,679 48,410 193 10,373 2,744 84,399 a) Property, plant and equipment held for investment 10,800 12,471 X X X 23,271 b) Non-current assets and disposal groups classified as held for sale 11,879 35,939 193 10,373 2,744 61,128 C.7 Other changes 725 37,243 395 1,270 85,207 124,840 D. Net final balance 1,224,207 2,151,593 231,930 464,082 2,112,191 6,184,003 D.1 Total net reduction in value - (2,258,142) (1,062,933) (2,249,250) (1,309,503) (6,879,828) D.2 Gross closing balance 1,224,207 4,409,735 1,294,863 2,713,332 3,421,694 13,063,831 E. Carried at cost - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 210 2018 Annual Report and Accounts · UniCredit 9.5 Inventories of property, plant and equipment regulated by IAS2: breakdown (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 1. Inventories of property, plant and equipment obtained through the enforcement of guarantees received 333,414 a) Land 42,599 b) Buildings 272,454 c) Office furniture and fitting 32 d) Electronic systems 4 e) Other 18,325 2. Other inventories of property, plant and equipment 326,199 Total 659,613 of which: measured at fair value less costs to sell 11,822 Note that the 5th update of the Circular 262 has required the reclassification in tangible assets of the inventories of property plant and equipment obtained through the enforcement of guarantees, that were reported until 31 December 2017 in “other assets”. 9.6 Property, plant and equipment used in the business: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS OFFICE FURNITURE AND FITTINGS ELECTRONIC SYSTEMS OTHER TOTAL A. Gross opening balance 1,216,290 4,505,589 1,345,587 2,721,808 3,441,015 13,230,289 A.1 Total net reduction in value - (2,326,211) (1,058,428) (2,246,447) (1,329,463) (6,960,549) A.2 Net opening balance 1,216,290 2,179,378 287,159 475,361 2,111,552 6,269,740 B. Increases 36,008 204,785 44,593 184,803 538,547 1,008,736 B.1 Purchases 32,792 117,007 39,614 155,252 461,899 806,564 of which: business combinations - 3 - 29 114 146 B.2 Capitalised expenditure on improvements 67 31,521 - 1 - 31,589 B.3 Write-backs 2,011 19,767 - - 817 22,595 B.4 Increases in fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - B.5 Positive exchange differences 19 533 73 98 410 1,133 B.6 Transfer from properties held for investment - 307 X X X 307 B.7 Other changes 1,119 35,650 4,906 29,452 75,421 146,548 C. Reductions 28,091 232,570 99,822 196,082 537,908 1,094,473 C.1 Disposals 1,778 6,349 57,317 22,571 145,337 233,352 of which: business combinations - - 95 334 - 429 C.2 Depreciation 1,957 109,310 39,638 155,400 296,408 602,713 C.3 Impairment losses 148 20,913 2,212 5,049 5,456 33,778 a) In equity - - - - - - b) Through profit or loss 148 20,913 2,212 5,049 5,456 33,778 C.4 Reduction of fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - C.5 Negative exchange differences 804 10,345 67 1,419 2,756 15,391 C.6 Transfer to 22,679 48,410 193 10,373 2,744 84,399 a) Property, plant and equipment held for investment 10,800 12,471 X X X 23,271 b) Non-current assets and disposal groups classified as held for sale 11,879 35,939 193 10,373 2,744 61,128 C.7 Other changes 725 37,243 395 1,270 85,207 124,840 D. Net final balance 1,224,207 2,151,593 231,930 464,082 2,112,191 6,184,003 D.1 Total net reduction in value - (2,258,142) (1,062,933) (2,249,250) (1,309,503) (6,879,828) D.2 Gross closing balance 1,224,207 4,409,735 1,294,863 2,713,332 3,421,694 13,063,831 E. Carried at cost - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 211 9.7 Property, plant and equipment held for investment: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS TOTAL A. Opening balances 1,017,233 1,162,315 2,179,548 B. Increases 54,782 250,524 305,306 B.1 Purchases 10,661 42,505 53,166 B.2 Capitalised expenditure on improvements 73 68,230 68,303 B.3 Increases in fair value 12 609 621 B.4 Write-backs 12,890 99,412 112,302 B.5 Positive exchange differences 82 1,072 1,154 B.6 Transfer from properties used in the business 10,800 12,471 23,271 B.7 Other changes 20,264 26,225 46,489 of which: business combinations 52 5,730 5,782 C. Reductions 236,250 683,864 920,114 C.1 Disposals 9,871 44,760 54,631 C.2 Depreciation - 44,767 44,767 C.3 Reductions in fair value - 623 623 C.4 Impairment losses 8,256 28,402 36,658 C.5 Negative exchange differences 403 3,231 3,634 C.6 Transfer to 190,868 515,157 706,025 a) Properties used in the business - 307 307 b) Non-current assets and disposal groups classified as held for sale 190,868 514,850 705,718 C.7 Other changes 26,852 46,924 73,776 of which: business combinations 290 7,028 7,318 D. Closing balances 835,765 728,975 1,564,740 E. Measured at fair value 1,128,457 1,093,922 2,222,379 9.8 Inventories of property, plant and equipment regulated by IAS2: annual changes (€ '000) CHANGES IN 2018 INVENTORIES OF PROPERTY, PLANT AND EQUIPMENT OBTAINED BY ENFORCEMENT OF COLLATERAL OTHER INVENTORIES OF PROPERTY, PLANT AND EQUIPMENT TOTAL LANDS BUILDINGS OFFICE FURNITURE AND FITTINGS ELECTRONIC SYSTEMS OTHER A. Opening balances 23,670 134,193 3 4 3,843 12,777 174,490 B. Increases 81,803 192,014 37 - 22,615 322,917 619,386 B.1 Purchases 1,859 11,957 10 - 247 33,833 47,906 B.2 Write-backs - 75 - - - 328 403 B.3 Positive exchange differences - - - - - - - B.4 Other changes 79,944 179,982 27 - 22,368 288,756 571,077 of which: business combinations - - - - - - - C. Reductions 62,874 53,753 8 - 8,133 9,495 134,263 C.1 Disposals 52,742 26,059 - - 7,151 4,372 90,324 C.2 Impairment losses 8,671 15,346 - - 50 1,058 25,125 C.3 Negative exchange differences 17 773 - - 1 84 875 C.4 Other changes 1,444 11,575 8 - 931 3,981 17,939 of which: business combinations - - - - - - - D. Closing balances 42,599 272,454 32 4 18,325 326,199 659,613 9.9 Commitments to purchase property, plant and equipment (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Contractual commitments 2,674 2,480 Outstanding commitments refer to the purchase of property, plant and equipment. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 211 9.7 Property, plant and equipment held for investment: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS TOTAL A. Opening balances 1,017,233 1,162,315 2,179,548 B. Increases 54,782 250,524 305,306 B.1 Purchases 10,661 42,505 53,166 B.2 Capitalised expenditure on improvements 73 68,230 68,303 B.3 Increases in fair value 12 609 621 B.4 Write-backs 12,890 99,412 112,302 B.5 Positive exchange differences 82 1,072 1,154 B.6 Transfer from properties used in the business 10,800 12,471 23,271 B.7 Other changes 20,264 26,225 46,489 of which: business combinations 52 5,730 5,782 C. Reductions 236,250 683,864 920,114 C.1 Disposals 9,871 44,760 54,631 C.2 Depreciation - 44,767 44,767 C.3 Reductions in fair value - 623 623 C.4 Impairment losses 8,256 28,402 36,658 C.5 Negative exchange differences 403 3,231 3,634 C.6 Transfer to 190,868 515,157 706,025 a) Properties used in the business - 307 307 b) Non-current assets and disposal groups classified as held for sale 190,868 514,850 705,718 C.7 Other changes 26,852 46,924 73,776 of which: business combinations 290 7,028 7,318 D. Closing balances 835,765 728,975 1,564,740 E. Measured at fair value 1,128,457 1,093,922 2,222,379 9.8 Inventories of property, plant and equipment regulated by IAS2: annual changes (€ '000) CHANGES IN 2018 INVENTORIES OF PROPERTY, PLANT AND EQUIPMENT OBTAINED BY ENFORCEMENT OF COLLATERAL OTHER INVENTORIES OF PROPERTY, PLANT AND EQUIPMENT TOTAL LANDS BUILDINGS OFFICE FURNITURE AND FITTINGS ELECTRONIC SYSTEMS OTHER A. Opening balances 23,670 134,193 3 4 3,843 12,777 174,490 B. Increases 81,803 192,014 37 - 22,615 322,917 619,386 B.1 Purchases 1,859 11,957 10 - 247 33,833 47,906 B.2 Write-backs - 75 - - - 328 403 B.3 Positive exchange differences - - - - - - - B.4 Other changes 79,944 179,982 27 - 22,368 288,756 571,077 of which: business combinations - - - - - - - C. Reductions 62,874 53,753 8 - 8,133 9,495 134,263 C.1 Disposals 52,742 26,059 - - 7,151 4,372 90,324 C.2 Impairment losses 8,671 15,346 - - 50 1,058 25,125 C.3 Negative exchange differences 17 773 - - 1 84 875 C.4 Other changes 1,444 11,575 8 - 931 3,981 17,939 of which: business combinations - - - - - - - D. Closing balances 42,599 272,454 32 4 18,325 326,199 659,613 9.9 Commitments to purchase property, plant and equipment (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Contractual commitments 2,674 2,480 Outstanding commitments refer to the purchase of property, plant and equipment. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 211 9.7 Property, plant and equipment held for investment: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS TOTAL A. Opening balances 1,017,233 1,162,315 2,179,548 B. Increases 54,782 250,524 305,306 B.1 Purchases 10,661 42,505 53,166 B.2 Capitalised expenditure on improvements 73 68,230 68,303 B.3 Increases in fair value 12 609 621 B.4 Write-backs 12,890 99,412 112,302 B.5 Positive exchange differences 82 1,072 1,154 B.6 Transfer from properties used in the business 10,800 12,471 23,271 B.7 Other changes 20,264 26,225 46,489 of which: business combinations 52 5,730 5,782 C. Reductions 236,250 683,864 920,114 C.1 Disposals 9,871 44,760 54,631 C.2 Depreciation - 44,767 44,767 C.3 Reductions in fair value - 623 623 C.4 Impairment losses 8,256 28,402 36,658 C.5 Negative exchange differences 403 3,231 3,634 C.6 Transfer to 190,868 515,157 706,025 a) Properties used in the business - 307 307 b) Non-current assets and disposal groups classified as held for sale 190,868 514,850 705,718 C.7 Other changes 26,852 46,924 73,776 of which: business combinations 290 7,028 7,318 D. Closing balances 835,765 728,975 1,564,740 E. Measured at fair value 1,128,457 1,093,922 2,222,379 9.8 Inventories of property, plant and equipment regulated by IAS2: annual changes (€ '000) CHANGES IN 2018 INVENTORIES OF PROPERTY, PLANT AND EQUIPMENT OBTAINED BY ENFORCEMENT OF COLLATERAL OTHER INVENTORIES OF PROPERTY, PLANT AND EQUIPMENT TOTAL LANDS BUILDINGS OFFICE FURNITURE AND FITTINGS ELECTRONIC SYSTEMS OTHER A. Opening balances 23,670 134,193 3 4 3,843 12,777 174,490 B. Increases 81,803 192,014 37 - 22,615 322,917 619,386 B.1 Purchases 1,859 11,957 10 - 247 33,833 47,906 B.2 Write-backs - 75 - - - 328 403 B.3 Positive exchange differences - - - - - - - B.4 Other changes 79,944 179,982 27 - 22,368 288,756 571,077 of which: business combinations - - - - - - - C. Reductions 62,874 53,753 8 - 8,133 9,495 134,263 C.1 Disposals 52,742 26,059 - - 7,151 4,372 90,324 C.2 Impairment losses 8,671 15,346 - - 50 1,058 25,125 C.3 Negative exchange differences 17 773 - - 1 84 875 C.4 Other changes 1,444 11,575 8 - 931 3,981 17,939 of which: business combinations - - - - - - - D. Closing balances 42,599 272,454 32 4 18,325 326,199 659,613 9.9 Commitments to purchase property, plant and equipment (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Contractual commitments 2,674 2,480 Outstanding commitments refer to the purchase of property, plant and equipment. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 211 9.7 Property, plant and equipment held for investment: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS TOTAL A. Opening balances 1,017,233 1,162,315 2,179,548 B. Increases 54,782 250,524 305,306 B.1 Purchases 10,661 42,505 53,166 B.2 Capitalised expenditure on improvements 73 68,230 68,303 B.3 Increases in fair value 12 609 621 B.4 Write-backs 12,890 99,412 112,302 B.5 Positive exchange differences 82 1,072 1,154 B.6 Transfer from properties used in the business 10,800 12,471 23,271 B.7 Other changes 20,264 26,225 46,489 of which: business combinations 52 5,730 5,782 C. Reductions 236,250 683,864 920,114 C.1 Disposals 9,871 44,760 54,631 C.2 Depreciation - 44,767 44,767 C.3 Reductions in fair value - 623 623 C.4 Impairment losses 8,256 28,402 36,658 C.5 Negative exchange differences 403 3,231 3,634 C.6 Transfer to 190,868 515,157 706,025 a) Properties used in the business - 307 307 b) Non-current assets and disposal groups classified as held for sale 190,868 514,850 705,718 C.7 Other changes 26,852 46,924 73,776 of which: business combinations 290 7,028 7,318 D. Closing balances 835,765 728,975 1,564,740 E. Measured at fair value 1,128,457 1,093,922 2,222,379 9.8 Inventories of property, plant and equipment regulated by IAS2: annual changes (€ '000) CHANGES IN 2018 INVENTORIES OF PROPERTY, PLANT AND EQUIPMENT OBTAINED BY ENFORCEMENT OF COLLATERAL OTHER INVENTORIES OF PROPERTY, PLANT AND EQUIPMENT TOTAL LANDS BUILDINGS OFFICE FURNITURE AND FITTINGS ELECTRONIC SYSTEMS OTHER A. Opening balances 23,670 134,193 3 4 3,843 12,777 174,490 B. Increases 81,803 192,014 37 - 22,615 322,917 619,386 B.1 Purchases 1,859 11,957 10 - 247 33,833 47,906 B.2 Write-backs - 75 - - - 328 403 B.3 Positive exchange differences - - - - - - - B.4 Other changes 79,944 179,982 27 - 22,368 288,756 571,077 of which: business combinations - - - - - - - C. Reductions 62,874 53,753 8 - 8,133 9,495 134,263 C.1 Disposals 52,742 26,059 - - 7,151 4,372 90,324 C.2 Impairment losses 8,671 15,346 - - 50 1,058 25,125 C.3 Negative exchange differences 17 773 - - 1 84 875 C.4 Other changes 1,444 11,575 8 - 931 3,981 17,939 of which: business combinations - - - - - - - D. Closing balances 42,599 272,454 32 4 18,325 326,199 659,613 9.9 Commitments to purchase property, plant and equipment (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Contractual commitments 2,674 2,480 Outstanding commitments refer to the purchase of property, plant and equipment. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 211 9.7 Property, plant and equipment held for investment: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS TOTAL A. Opening balances 1,017,233 1,162,315 2,179,548 B. Increases 54,782 250,524 305,306 B.1 Purchases 10,661 42,505 53,166 B.2 Capitalised expenditure on improvements 73 68,230 68,303 B.3 Increases in fair value 12 609 621 B.4 Write-backs 12,890 99,412 112,302 B.5 Positive exchange differences 82 1,072 1,154 B.6 Transfer from properties used in the business 10,800 12,471 23,271 B.7 Other changes 20,264 26,225 46,489 of which: business combinations 52 5,730 5,782 C. Reductions 236,250 683,864 920,114 C.1 Disposals 9,871 44,760 54,631 C.2 Depreciation - 44,767 44,767 C.3 Reductions in fair value - 623 623 C.4 Impairment losses 8,256 28,402 36,658 C.5 Negative exchange differences 403 3,231 3,634 C.6 Transfer to 190,868 515,157 706,025 a) Properties used in the business - 307 307 b) Non-current assets and disposal groups classified as held for sale 190,868 514,850 705,718 C.7 Other changes 26,852 46,924 73,776 of which: business combinations 290 7,028 7,318 D. Closing balances 835,765 728,975 1,564,740 E. Measured at fair value 1,128,457 1,093,922 2,222,379 9.8 Inventories of property, plant and equipment regulated by IAS2: annual changes (€ '000) CHANGES IN 2018 INVENTORIES OF PROPERTY, PLANT AND EQUIPMENT OBTAINED BY ENFORCEMENT OF COLLATERAL OTHER INVENTORIES OF PROPERTY, PLANT AND EQUIPMENT TOTAL LANDS BUILDINGS OFFICE FURNITURE AND FITTINGS ELECTRONIC SYSTEMS OTHER A. Opening balances 23,670 134,193 3 4 3,843 12,777 174,490 B. Increases 81,803 192,014 37 - 22,615 322,917 619,386 B.1 Purchases 1,859 11,957 10 - 247 33,833 47,906 B.2 Write-backs - 75 - - - 328 403 B.3 Positive exchange differences - - - - - - - B.4 Other changes 79,944 179,982 27 - 22,368 288,756 571,077 of which: business combinations - - - - - - - C. Reductions 62,874 53,753 8 - 8,133 9,495 134,263 C.1 Disposals 52,742 26,059 - - 7,151 4,372 90,324 C.2 Impairment losses 8,671 15,346 - - 50 1,058 25,125 C.3 Negative exchange differences 17 773 - - 1 84 875 C.4 Other changes 1,444 11,575 8 - 931 3,981 17,939 of which: business combinations - - - - - - - D. Closing balances 42,599 272,454 32 4 18,325 326,199 659,613 9.9 Commitments to purchase property, plant and equipment (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Contractual commitments 2,674 2,480 Outstanding commitments refer to the purchase of property, plant and equipment. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 212 2018 Annual Report and Accounts · UniCredit Section 10 - Intangible assets - Item 100 An intangible asset is an identifiable non-monetary asset without physical substance, to be used for several years. Intangible assets include goodwill and, among “other intangible assets”, brands, customer relationships and software. Goodwill is the excess of the cost of a business combination over the net fair value of the assets and liabilities of companies or businesses at the acquisition date. As at 31 December 2018 intangible assets amounted to €3,507 million, increased in comparison to €3,385 million as at 31 December 2017. The increase is mainly related to software both generated internally and purchased partially offset by amortisation of the period. 10.1 Intangible assets: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE A.1 Goodwill X 1,483,721 X 1,483,721 A.1.1 Attributable to the Group X 1,483,721 X 1,483,721 A.1.2 Attributable to minorities X - X - A.2 Other intangible assets 1,930,568 92,957 1,808,632 92,957 A.2.1 Assets carried at cost 1,930,568 92,957 1,808,632 92,957 a) Intangible assets generated internally 1,499,598 - 1,358,851 - b) Other assets 430,970 92,957 449,781 92,957 A.2.2 Assets measured at fair value - - - - a) Intangible assets generated internally - - - - b) Other assets - - - - Total 1,930,568 1,576,678 1,808,632 1,576,678 Total finite and indefinite life 3,507,246 3,385,310 The Group does not use the revaluation model (fair value) to measure intangible assets. Other intangible assets - Indefinite life include trademarks (brands) referred to FinecoBank S.p.A. while the Other intangible assets - Definite life, valued at cost are essentially Software. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 212 2018 Annual Report and Accounts · UniCredit Section 10 - Intangible assets - Item 100 An intangible asset is an identifiable non-monetary asset without physical substance, to be used for several years. Intangible assets include goodwill and, among “other intangible assets”, brands, customer relationships and software. Goodwill is the excess of the cost of a business combination over the net fair value of the assets and liabilities of companies or businesses at the acquisition date. As at 31 December 2018 intangible assets amounted to €3,507 million, increased in comparison to €3,385 million as at 31 December 2017. The increase is mainly related to software both generated internally and purchased partially offset by amortisation of the period. 10.1 Intangible assets: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE A.1 Goodwill X 1,483,721 X 1,483,721 A.1.1 Attributable to the Group X 1,483,721 X 1,483,721 A.1.2 Attributable to minorities X - X - A.2 Other intangible assets 1,930,568 92,957 1,808,632 92,957 A.2.1 Assets carried at cost 1,930,568 92,957 1,808,632 92,957 a) Intangible assets generated internally 1,499,598 - 1,358,851 - b) Other assets 430,970 92,957 449,781 92,957 A.2.2 Assets measured at fair value - - - - a) Intangible assets generated internally - - - - b) Other assets - - - - Total 1,930,568 1,576,678 1,808,632 1,576,678 Total finite and indefinite life 3,507,246 3,385,310 The Group does not use the revaluation model (fair value) to measure intangible assets. Other intangible assets - Indefinite life include trademarks (brands) referred to FinecoBank S.p.A. while the Other intangible assets - Definite life, valued at cost are essentially Software. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 212 2018 Annual Report and Accounts · UniCredit Section 10 - Intangible assets - Item 100 An intangible asset is an identifiable non-monetary asset without physical substance, to be used for several years. Intangible assets include goodwill and, among “other intangible assets”, brands, customer relationships and software. Goodwill is the excess of the cost of a business combination over the net fair value of the assets and liabilities of companies or businesses at the acquisition date. As at 31 December 2018 intangible assets amounted to €3,507 million, increased in comparison to €3,385 million as at 31 December 2017. The increase is mainly related to software both generated internally and purchased partially offset by amortisation of the period. 10.1 Intangible assets: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE A.1 Goodwill X 1,483,721 X 1,483,721 A.1.1 Attributable to the Group X 1,483,721 X 1,483,721 A.1.2 Attributable to minorities X - X - A.2 Other intangible assets 1,930,568 92,957 1,808,632 92,957 A.2.1 Assets carried at cost 1,930,568 92,957 1,808,632 92,957 a) Intangible assets generated internally 1,499,598 - 1,358,851 - b) Other assets 430,970 92,957 449,781 92,957 A.2.2 Assets measured at fair value - - - - a) Intangible assets generated internally - - - - b) Other assets - - - - Total 1,930,568 1,576,678 1,808,632 1,576,678 Total finite and indefinite life 3,507,246 3,385,310 The Group does not use the revaluation model (fair value) to measure intangible assets. Other intangible assets - Indefinite life include trademarks (brands) referred to FinecoBank S.p.A. while the Other intangible assets - Definite life, valued at cost are essentially Software. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 212 2018 Annual Report and Accounts · UniCredit Section 10 - Intangible assets - Item 100 An intangible asset is an identifiable non-monetary asset without physical substance, to be used for several years. Intangible assets include goodwill and, among “other intangible assets”, brands, customer relationships and software. Goodwill is the excess of the cost of a business combination over the net fair value of the assets and liabilities of companies or businesses at the acquisition date. As at 31 December 2018 intangible assets amounted to €3,507 million, increased in comparison to €3,385 million as at 31 December 2017. The increase is mainly related to software both generated internally and purchased partially offset by amortisation of the period. 10.1 Intangible assets: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE A.1 Goodwill X 1,483,721 X 1,483,721 A.1.1 Attributable to the Group X 1,483,721 X 1,483,721 A.1.2 Attributable to minorities X - X - A.2 Other intangible assets 1,930,568 92,957 1,808,632 92,957 A.2.1 Assets carried at cost 1,930,568 92,957 1,808,632 92,957 a) Intangible assets generated internally 1,499,598 - 1,358,851 - b) Other assets 430,970 92,957 449,781 92,957 A.2.2 Assets measured at fair value - - - - a) Intangible assets generated internally - - - - b) Other assets - - - - Total 1,930,568 1,576,678 1,808,632 1,576,678 Total finite and indefinite life 3,507,246 3,385,310 The Group does not use the revaluation model (fair value) to measure intangible assets. Other intangible assets - Indefinite life include trademarks (brands) referred to FinecoBank S.p.A. while the Other intangible assets - Definite life, valued at cost are essentially Software. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 212 2018 Annual Report and Accounts · UniCredit Section 10 - Intangible assets - Item 100 An intangible asset is an identifiable non-monetary asset without physical substance, to be used for several years. Intangible assets include goodwill and, among “other intangible assets”, brands, customer relationships and software. Goodwill is the excess of the cost of a business combination over the net fair value of the assets and liabilities of companies or businesses at the acquisition date. As at 31 December 2018 intangible assets amounted to €3,507 million, increased in comparison to €3,385 million as at 31 December 2017. The increase is mainly related to software both generated internally and purchased partially offset by amortisation of the period. 10.1 Intangible assets: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE A.1 Goodwill X 1,483,721 X 1,483,721 A.1.1 Attributable to the Group X 1,483,721 X 1,483,721 A.1.2 Attributable to minorities X - X - A.2 Other intangible assets 1,930,568 92,957 1,808,632 92,957 A.2.1 Assets carried at cost 1,930,568 92,957 1,808,632 92,957 a) Intangible assets generated internally 1,499,598 - 1,358,851 - b) Other assets 430,970 92,957 449,781 92,957 A.2.2 Assets measured at fair value - - - - a) Intangible assets generated internally - - - - b) Other assets - - - - Total 1,930,568 1,576,678 1,808,632 1,576,678 Total finite and indefinite life 3,507,246 3,385,310 The Group does not use the revaluation model (fair value) to measure intangible assets. Other intangible assets - Indefinite life include trademarks (brands) referred to FinecoBank S.p.A. while the Other intangible assets - Definite life, valued at cost are essentially Software. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 213 10.2 Intangible assets: annual changes (€ '000) CHANGES IN 2018 OTHER INTANGIBLE ASSETS GENERATED INTERNALLY OTHER GOODWILL FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE TOTAL A. Gross opening balance 16,835,308 3,247,120 - 5,565,786 994,734 26,642,948 A.1 Total net reduction in value (15,351,587) (1,888,269) - (5,116,005) (901,777) (23,257,638) A.2 Net opening balance 1,483,721 1,358,851 - 449,781 92,957 3,385,310 B. Increases - 447,330 - 152,814 - 600,144 B.1 Purchases - 31,773 - 138,494 - 170,267 B.2 Increases in intangible assets generated X 398,775 - - - 398,775 B.3 Write-backs X - - - - - B.4 Increases in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - B.5 Positive exchange differences - 101 - 5,460 - 5,561 B.6 Other changes - 16,681 - 8,860 - 25,541 of which: business combinations - - - - - - C. Reduction - 306,583 - 171,625 - 478,208 C.1 Disposals - - - 6,225 - 6,225 C.2 Write-downs - 298,924 - 126,293 - 425,217 - Amortisation X 288,782 - 123,059 - 411,841 - Write-downs - 10,142 - 3,234 - 13,376 + In equity X - - - - - + Through profit or loss - 10,142 - 3,234 - 13,376 C.3 Reduction in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - C.4 Transfer to non-current assets held for sale - - - 6,682 - 6,682 C.5 Negative exchange differences - 6,021 - 14,538 - 20,559 C.6 Other changes - 1,638 - 17,887 - 19,525 of which: business combinations - - - 458 - 458 D. Net closing balance 1,483,721 1,499,598 - 430,970 92,957 3,507,246 D.1 Total net write-down (15,307,380) (2,179,269) - (4,683,533) (901,777) (23,071,959) E. Gross closing balance 16,791,101 3,678,867 - 5,114,503 994,734 26,579,205 F. Carried at cost - - - - - - The book value of goodwill as at 31 December 2018 (€1,484 million) remained unchanged in comparison to the value as at 31 December 2017 since it refers to subsidiaries belonging to the Euro area. Instead the annual changes in gross closing balance and total net write-down, are due to goodwill of legal entities which reporting currency is different to Euro, completely impaired in the previous periods. For further details of impairment test on goodwill and other intangible assets with definite and indefinite life, recognised during business combinations, refer to the following pages. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 213 10.2 Intangible assets: annual changes (€ '000) CHANGES IN 2018 OTHER INTANGIBLE ASSETS GENERATED INTERNALLY OTHER GOODWILL FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE TOTAL A. Gross opening balance 16,835,308 3,247,120 - 5,565,786 994,734 26,642,948 A.1 Total net reduction in value (15,351,587) (1,888,269) - (5,116,005) (901,777) (23,257,638) A.2 Net opening balance 1,483,721 1,358,851 - 449,781 92,957 3,385,310 B. Increases - 447,330 - 152,814 - 600,144 B.1 Purchases - 31,773 - 138,494 - 170,267 B.2 Increases in intangible assets generated X 398,775 - - - 398,775 B.3 Write-backs X - - - - - B.4 Increases in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - B.5 Positive exchange differences - 101 - 5,460 - 5,561 B.6 Other changes - 16,681 - 8,860 - 25,541 of which: business combinations - - - - - - C. Reduction - 306,583 - 171,625 - 478,208 C.1 Disposals - - - 6,225 - 6,225 C.2 Write-downs - 298,924 - 126,293 - 425,217 - Amortisation X 288,782 - 123,059 - 411,841 - Write-downs - 10,142 - 3,234 - 13,376 + In equity X - - - - - + Through profit or loss - 10,142 - 3,234 - 13,376 C.3 Reduction in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - C.4 Transfer to non-current assets held for sale - - - 6,682 - 6,682 C.5 Negative exchange differences - 6,021 - 14,538 - 20,559 C.6 Other changes - 1,638 - 17,887 - 19,525 of which: business combinations - - - 458 - 458 D. Net closing balance 1,483,721 1,499,598 - 430,970 92,957 3,507,246 D.1 Total net write-down (15,307,380) (2,179,269) - (4,683,533) (901,777) (23,071,959) E. Gross closing balance 16,791,101 3,678,867 - 5,114,503 994,734 26,579,205 F. Carried at cost - - - - - - The book value of goodwill as at 31 December 2018 (€1,484 million) remained unchanged in comparison to the value as at 31 December 2017 since it refers to subsidiaries belonging to the Euro area. Instead the annual changes in gross closing balance and total net write-down, are due to goodwill of legal entities which reporting currency is different to Euro, completely impaired in the previous periods. For further details of impairment test on goodwill and other intangible assets with definite and indefinite life, recognised during business combinations, refer to the following pages. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 213 10.2 Intangible assets: annual changes (€ '000) CHANGES IN 2018 OTHER INTANGIBLE ASSETS GENERATED INTERNALLY OTHER GOODWILL FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE TOTAL A. Gross opening balance 16,835,308 3,247,120 - 5,565,786 994,734 26,642,948 A.1 Total net reduction in value (15,351,587) (1,888,269) - (5,116,005) (901,777) (23,257,638) A.2 Net opening balance 1,483,721 1,358,851 - 449,781 92,957 3,385,310 B. Increases - 447,330 - 152,814 - 600,144 B.1 Purchases - 31,773 - 138,494 - 170,267 B.2 Increases in intangible assets generated X 398,775 - - - 398,775 B.3 Write-backs X - - - - - B.4 Increases in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - B.5 Positive exchange differences - 101 - 5,460 - 5,561 B.6 Other changes - 16,681 - 8,860 - 25,541 of which: business combinations - - - - - - C. Reduction - 306,583 - 171,625 - 478,208 C.1 Disposals - - - 6,225 - 6,225 C.2 Write-downs - 298,924 - 126,293 - 425,217 - Amortisation X 288,782 - 123,059 - 411,841 - Write-downs - 10,142 - 3,234 - 13,376 + In equity X - - - - - + Through profit or loss - 10,142 - 3,234 - 13,376 C.3 Reduction in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - C.4 Transfer to non-current assets held for sale - - - 6,682 - 6,682 C.5 Negative exchange differences - 6,021 - 14,538 - 20,559 C.6 Other changes - 1,638 - 17,887 - 19,525 of which: business combinations - - - 458 - 458 D. Net closing balance 1,483,721 1,499,598 - 430,970 92,957 3,507,246 D.1 Total net write-down (15,307,380) (2,179,269) - (4,683,533) (901,777) (23,071,959) E. Gross closing balance 16,791,101 3,678,867 - 5,114,503 994,734 26,579,205 F. Carried at cost - - - - - - The book value of goodwill as at 31 December 2018 (€1,484 million) remained unchanged in comparison to the value as at 31 December 2017 since it refers to subsidiaries belonging to the Euro area. Instead the annual changes in gross closing balance and total net write-down, are due to goodwill of legal entities which reporting currency is different to Euro, completely impaired in the previous periods. For further details of impairment test on goodwill and other intangible assets with definite and indefinite life, recognised during business combinations, refer to the following pages. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 213 10.2 Intangible assets: annual changes (€ '000) CHANGES IN 2018 OTHER INTANGIBLE ASSETS GENERATED INTERNALLY OTHER GOODWILL FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE TOTAL A. Gross opening balance 16,835,308 3,247,120 - 5,565,786 994,734 26,642,948 A.1 Total net reduction in value (15,351,587) (1,888,269) - (5,116,005) (901,777) (23,257,638) A.2 Net opening balance 1,483,721 1,358,851 - 449,781 92,957 3,385,310 B. Increases - 447,330 - 152,814 - 600,144 B.1 Purchases - 31,773 - 138,494 - 170,267 B.2 Increases in intangible assets generated X 398,775 - - - 398,775 B.3 Write-backs X - - - - - B.4 Increases in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - B.5 Positive exchange differences - 101 - 5,460 - 5,561 B.6 Other changes - 16,681 - 8,860 - 25,541 of which: business combinations - - - - - - C. Reduction - 306,583 - 171,625 - 478,208 C.1 Disposals - - - 6,225 - 6,225 C.2 Write-downs - 298,924 - 126,293 - 425,217 - Amortisation X 288,782 - 123,059 - 411,841 - Write-downs - 10,142 - 3,234 - 13,376 + In equity X - - - - - + Through profit or loss - 10,142 - 3,234 - 13,376 C.3 Reduction in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - C.4 Transfer to non-current assets held for sale - - - 6,682 - 6,682 C.5 Negative exchange differences - 6,021 - 14,538 - 20,559 C.6 Other changes - 1,638 - 17,887 - 19,525 of which: business combinations - - - 458 - 458 D. Net closing balance 1,483,721 1,499,598 - 430,970 92,957 3,507,246 D.1 Total net write-down (15,307,380) (2,179,269) - (4,683,533) (901,777) (23,071,959) E. Gross closing balance 16,791,101 3,678,867 - 5,114,503 994,734 26,579,205 F. Carried at cost - - - - - - The book value of goodwill as at 31 December 2018 (€1,484 million) remained unchanged in comparison to the value as at 31 December 2017 since it refers to subsidiaries belonging to the Euro area. Instead the annual changes in gross closing balance and total net write-down, are due to goodwill of legal entities which reporting currency is different to Euro, completely impaired in the previous periods. For further details of impairment test on goodwill and other intangible assets with definite and indefinite life, recognised during business combinations, refer to the following pages. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 213 10.2 Intangible assets: annual changes (€ '000) CHANGES IN 2018 OTHER INTANGIBLE ASSETS GENERATED INTERNALLY OTHER GOODWILL FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE TOTAL A. Gross opening balance 16,835,308 3,247,120 - 5,565,786 994,734 26,642,948 A.1 Total net reduction in value (15,351,587) (1,888,269) - (5,116,005) (901,777) (23,257,638) A.2 Net opening balance 1,483,721 1,358,851 - 449,781 92,957 3,385,310 B. Increases - 447,330 - 152,814 - 600,144 B.1 Purchases - 31,773 - 138,494 - 170,267 B.2 Increases in intangible assets generated X 398,775 - - - 398,775 B.3 Write-backs X - - - - - B.4 Increases in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - B.5 Positive exchange differences - 101 - 5,460 - 5,561 B.6 Other changes - 16,681 - 8,860 - 25,541 of which: business combinations - - - - - - C. Reduction - 306,583 - 171,625 - 478,208 C.1 Disposals - - - 6,225 - 6,225 C.2 Write-downs - 298,924 - 126,293 - 425,217 - Amortisation X 288,782 - 123,059 - 411,841 - Write-downs - 10,142 - 3,234 - 13,376 + In equity X - - - - - + Through profit or loss - 10,142 - 3,234 - 13,376 C.3 Reduction in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - C.4 Transfer to non-current assets held for sale - - - 6,682 - 6,682 C.5 Negative exchange differences - 6,021 - 14,538 - 20,559 C.6 Other changes - 1,638 - 17,887 - 19,525 of which: business combinations - - - 458 - 458 D. Net closing balance 1,483,721 1,499,598 - 430,970 92,957 3,507,246 D.1 Total net write-down (15,307,380) (2,179,269) - (4,683,533) (901,777) (23,071,959) E. Gross closing balance 16,791,101 3,678,867 - 5,114,503 994,734 26,579,205 F. Carried at cost - - - - - - The book value of goodwill as at 31 December 2018 (€1,484 million) remained unchanged in comparison to the value as at 31 December 2017 since it refers to subsidiaries belonging to the Euro area. Instead the annual changes in gross closing balance and total net write-down, are due to goodwill of legal entities which reporting currency is different to Euro, completely impaired in the previous periods. For further details of impairment test on goodwill and other intangible assets with definite and indefinite life, recognised during business combinations, refer to the following pages. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 214 2018 Annual Report and Accounts · UniCredit 10.3 Intangible assets: other information Information on intangible assets noted during business combinations The application of IFRS3 to the accounting for business combinations revealed in the course of time significant amounts of intangible assets and goodwill. The following table shows the change in the values posted for the various intangible assets identified during the period, including the valuation effects described below. (€ million) INTANGIBLE ASSETS (EXCEPT SOFTWARE) TOTAL 12.31.2017 AMORTIZATION IMPAIRMENT OTHER CHANGES TOTAL 12.31.2018 Trademarks 93 - - - 93 Core deposits and customer relationships 1 - - - 1 Goodwill 1,484 - - - 1,484 TOTAL 1,578 - - - 1,578 Trademarks and goodwill are considered indefinite-life intangible assets. They are expected to contribute indefinitely to income flows. The other intangible assets have finite useful lives, originally valued by discounting the financial flows over the residual lifetime of the relationships in place on the date of the business combination from which they derive. Finite-life intangible assets are subject to amortisation based on the associated useful life. The types of intangible assets noted as a result of business combinations still present at 31 December 2018 and the methods used to determine their associated fair value on the acquisition date are indicated below. Trademarks The fair value of initial recognition of trademarks is determined using the "relief from royalty" method, which estimates their value based on the payments received for granting their use to third parties. Royalties are calculated by applying the royalty rate to the income flows (operating income adjusted for the items not associated with the trademarks themselves). In summary, the method consists of three stages: • determination of the royalty rate (based on a comparison with similar cases or calculated analytically); • application of the royalty rate to income flows; • determination of the present value of royalties after tax, calculated by applying a discount rate that takes into account the risk context of the trademark being valued. The residual gross amount as at 31 December 2018 of intangible assets with an indefinite useful life (trademarks) refers only to FinecoBank as to €93 million. Customer Relationships Following the fully write off as of 31 December 2013 of the Customer Relationship related to Assets under Management (AuM), Assets under Custody (AuC), Life Insurance and Products the remaining Customer Relationship as of 31 December 2018 refers solely to Romania and its average residual useful life is 1 year. This intangible asset includes all other types of so-called customer relationships, including by way of example those deriving from the ability of the company to obtain placement fees on third-party bonds and from securities auctions. The Group does not hold intangible assets acquired through public grants or intangible assets pledged against liabilities. Impairment test of intangible assets noted during business combinations In accordance with IAS36, impairment testing of all indefinite-useful-life intangible assets, including goodwill must be performed at least annually and, in any case, whenever there is objective evidence of the occurrence of events that may have reduced their value (trigger events). For UniCredit the trigger event is a market capitalisation lower than Shareholders’ Equity. Recoverable value is the greater of the value in use (present value of future cash flows generated by the asset being valued) and the associated fair value, less costs to sell. The recoverable value of intangible assets subject to impairment testing must be determined for the individual assets, unless both the following conditions exist: • the value in use of the asset is not estimated to be close to the fair value, net of sales costs; • the asset does not generate incoming cash flows largely independent of those coming from other assets. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 214 2018 Annual Report and Accounts · UniCredit 10.3 Intangible assets: other information Information on intangible assets noted during business combinations The application of IFRS3 to the accounting for business combinations revealed in the course of time significant amounts of intangible assets and goodwill. The following table shows the change in the values posted for the various intangible assets identified during the period, including the valuation effects described below. (€ million) INTANGIBLE ASSETS (EXCEPT SOFTWARE) TOTAL 12.31.2017 AMORTIZATION IMPAIRMENT OTHER CHANGES TOTAL 12.31.2018 Trademarks 93 - - - 93 Core deposits and customer relationships 1 - - - 1 Goodwill 1,484 - - - 1,484 TOTAL 1,578 - - - 1,578 Trademarks and goodwill are considered indefinite-life intangible assets. They are expected to contribute indefinitely to income flows. The other intangible assets have finite useful lives, originally valued by discounting the financial flows over the residual lifetime of the relationships in place on the date of the business combination from which they derive. Finite-life intangible assets are subject to amortisation based on the associated useful life. The types of intangible assets noted as a result of business combinations still present at 31 December 2018 and the methods used to determine their associated fair value on the acquisition date are indicated below. Trademarks The fair value of initial recognition of trademarks is determined using the "relief from royalty" method, which estimates their value based on the payments received for granting their use to third parties. Royalties are calculated by applying the royalty rate to the income flows (operating income adjusted for the items not associated with the trademarks themselves). In summary, the method consists of three stages: • determination of the royalty rate (based on a comparison with similar cases or calculated analytically); • application of the royalty rate to income flows; • determination of the present value of royalties after tax, calculated by applying a discount rate that takes into account the risk context of the trademark being valued. The residual gross amount as at 31 December 2018 of intangible assets with an indefinite useful life (trademarks) refers only to FinecoBank as to €93 million. Customer Relationships Following the fully write off as of 31 December 2013 of the Customer Relationship related to Assets under Management (AuM), Assets under Custody (AuC), Life Insurance and Products the remaining Customer Relationship as of 31 December 2018 refers solely to Romania and its average residual useful life is 1 year. This intangible asset includes all other types of so-called customer relationships, including by way of example those deriving from the ability of the company to obtain placement fees on third-party bonds and from securities auctions. The Group does not hold intangible assets acquired through public grants or intangible assets pledged against liabilities. Impairment test of intangible assets noted during business combinations In accordance with IAS36, impairment testing of all indefinite-useful-life intangible assets, including goodwill must be performed at least annually and, in any case, whenever there is objective evidence of the occurrence of events that may have reduced their value (trigger events). For UniCredit the trigger event is a market capitalisation lower than Shareholders’ Equity. Recoverable value is the greater of the value in use (present value of future cash flows generated by the asset being valued) and the associated fair value, less costs to sell. The recoverable value of intangible assets subject to impairment testing must be determined for the individual assets, unless both the following conditions exist: • the value in use of the asset is not estimated to be close to the fair value, net of sales costs; • the asset does not generate incoming cash flows largely independent of those coming from other assets. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 214 2018 Annual Report and Accounts · UniCredit 10.3 Intangible assets: other information Information on intangible assets noted during business combinations The application of IFRS3 to the accounting for business combinations revealed in the course of time significant amounts of intangible assets and goodwill. The following table shows the change in the values posted for the various intangible assets identified during the period, including the valuation effects described below. (€ million) INTANGIBLE ASSETS (EXCEPT SOFTWARE) TOTAL 12.31.2017 AMORTIZATION IMPAIRMENT OTHER CHANGES TOTAL 12.31.2018 Trademarks 93 - - - 93 Core deposits and customer relationships 1 - - - 1 Goodwill 1,484 - - - 1,484 TOTAL 1,578 - - - 1,578 Trademarks and goodwill are considered indefinite-life intangible assets. They are expected to contribute indefinitely to income flows. The other intangible assets have finite useful lives, originally valued by discounting the financial flows over the residual lifetime of the relationships in place on the date of the business combination from which they derive. Finite-life intangible assets are subject to amortisation based on the associated useful life. The types of intangible assets noted as a result of business combinations still present at 31 December 2018 and the methods used to determine their associated fair value on the acquisition date are indicated below. Trademarks The fair value of initial recognition of trademarks is determined using the "relief from royalty" method, which estimates their value based on the payments received for granting their use to third parties. Royalties are calculated by applying the royalty rate to the income flows (operating income adjusted for the items not associated with the trademarks themselves). In summary, the method consists of three stages: • determination of the royalty rate (based on a comparison with similar cases or calculated analytically); • application of the royalty rate to income flows; • determination of the present value of royalties after tax, calculated by applying a discount rate that takes into account the risk context of the trademark being valued. The residual gross amount as at 31 December 2018 of intangible assets with an indefinite useful life (trademarks) refers only to FinecoBank as to €93 million. Customer Relationships Following the fully write off as of 31 December 2013 of the Customer Relationship related to Assets under Management (AuM), Assets under Custody (AuC), Life Insurance and Products the remaining Customer Relationship as of 31 December 2018 refers solely to Romania and its average residual useful life is 1 year. This intangible asset includes all other types of so-called customer relationships, including by way of example those deriving from the ability of the company to obtain placement fees on third-party bonds and from securities auctions. The Group does not hold intangible assets acquired through public grants or intangible assets pledged against liabilities. Impairment test of intangible assets noted during business combinations In accordance with IAS36, impairment testing of all indefinite-useful-life intangible assets, including goodwill must be performed at least annually and, in any case, whenever there is objective evidence of the occurrence of events that may have reduced their value (trigger events). For UniCredit the trigger event is a market capitalisation lower than Shareholders’ Equity. Recoverable value is the greater of the value in use (present value of future cash flows generated by the asset being valued) and the associated fair value, less costs to sell. The recoverable value of intangible assets subject to impairment testing must be determined for the individual assets, unless both the following conditions exist: • the value in use of the asset is not estimated to be close to the fair value, net of sales costs; • the asset does not generate incoming cash flows largely independent of those coming from other assets. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 214 2018 Annual Report and Accounts · UniCredit 10.3 Intangible assets: other information Information on intangible assets noted during business combinations The application of IFRS3 to the accounting for business combinations revealed in the course of time significant amounts of intangible assets and goodwill. The following table shows the change in the values posted for the various intangible assets identified during the period, including the valuation effects described below. (€ million) INTANGIBLE ASSETS (EXCEPT SOFTWARE) TOTAL 12.31.2017 AMORTIZATION IMPAIRMENT OTHER CHANGES TOTAL 12.31.2018 Trademarks 93 - - - 93 Core deposits and customer relationships 1 - - - 1 Goodwill 1,484 - - - 1,484 TOTAL 1,578 - - - 1,578 Trademarks and goodwill are considered indefinite-life intangible assets. They are expected to contribute indefinitely to income flows. The other intangible assets have finite useful lives, originally valued by discounting the financial flows over the residual lifetime of the relationships in place on the date of the business combination from which they derive. Finite-life intangible assets are subject to amortisation based on the associated useful life. The types of intangible assets noted as a result of business combinations still present at 31 December 2018 and the methods used to determine their associated fair value on the acquisition date are indicated below. Trademarks The fair value of initial recognition of trademarks is determined using the "relief from royalty" method, which estimates their value based on the payments received for granting their use to third parties. Royalties are calculated by applying the royalty rate to the income flows (operating income adjusted for the items not associated with the trademarks themselves). In summary, the method consists of three stages: • determination of the royalty rate (based on a comparison with similar cases or calculated analytically); • application of the royalty rate to income flows; • determination of the present value of royalties after tax, calculated by applying a discount rate that takes into account the risk context of the trademark being valued. The residual gross amount as at 31 December 2018 of intangible assets with an indefinite useful life (trademarks) refers only to FinecoBank as to €93 million. Customer Relationships Following the fully write off as of 31 December 2013 of the Customer Relationship related to Assets under Management (AuM), Assets under Custody (AuC), Life Insurance and Products the remaining Customer Relationship as of 31 December 2018 refers solely to Romania and its average residual useful life is 1 year. This intangible asset includes all other types of so-called customer relationships, including by way of example those deriving from the ability of the company to obtain placement fees on third-party bonds and from securities auctions. The Group does not hold intangible assets acquired through public grants or intangible assets pledged against liabilities. Impairment test of intangible assets noted during business combinations In accordance with IAS36, impairment testing of all indefinite-useful-life intangible assets, including goodwill must be performed at least annually and, in any case, whenever there is objective evidence of the occurrence of events that may have reduced their value (trigger events). For UniCredit the trigger event is a market capitalisation lower than Shareholders’ Equity. Recoverable value is the greater of the value in use (present value of future cash flows generated by the asset being valued) and the associated fair value, less costs to sell. The recoverable value of intangible assets subject to impairment testing must be determined for the individual assets, unless both the following conditions exist: • the value in use of the asset is not estimated to be close to the fair value, net of sales costs; • the asset does not generate incoming cash flows largely independent of those coming from other assets. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 214 2018 Annual Report and Accounts · UniCredit 10.3 Intangible assets: other information Information on intangible assets noted during business combinations The application of IFRS3 to the accounting for business combinations revealed in the course of time significant amounts of intangible assets and goodwill. The following table shows the change in the values posted for the various intangible assets identified during the period, including the valuation effects described below. (€ million) INTANGIBLE ASSETS (EXCEPT SOFTWARE) TOTAL 12.31.2017 AMORTIZATION IMPAIRMENT OTHER CHANGES TOTAL 12.31.2018 Trademarks 93 - - - 93 Core deposits and customer relationships 1 - - - 1 Goodwill 1,484 - - - 1,484 TOTAL 1,578 - - - 1,578 Trademarks and goodwill are considered indefinite-life intangible assets. They are expected to contribute indefinitely to income flows. The other intangible assets have finite useful lives, originally valued by discounting the financial flows over the residual lifetime of the relationships in place on the date of the business combination from which they derive. Finite-life intangible assets are subject to amortisation based on the associated useful life. The types of intangible assets noted as a result of business combinations still present at 31 December 2018 and the methods used to determine their associated fair value on the acquisition date are indicated below. Trademarks The fair value of initial recognition of trademarks is determined using the "relief from royalty" method, which estimates their value based on the payments received for granting their use to third parties. Royalties are calculated by applying the royalty rate to the income flows (operating income adjusted for the items not associated with the trademarks themselves). In summary, the method consists of three stages: • determination of the royalty rate (based on a comparison with similar cases or calculated analytically); • application of the royalty rate to income flows; • determination of the present value of royalties after tax, calculated by applying a discount rate that takes into account the risk context of the trademark being valued. The residual gross amount as at 31 December 2018 of intangible assets with an indefinite useful life (trademarks) refers only to FinecoBank as to €93 million. Customer Relationships Following the fully write off as of 31 December 2013 of the Customer Relationship related to Assets under Management (AuM), Assets under Custody (AuC), Life Insurance and Products the remaining Customer Relationship as of 31 December 2018 refers solely to Romania and its average residual useful life is 1 year. This intangible asset includes all other types of so-called customer relationships, including by way of example those deriving from the ability of the company to obtain placement fees on third-party bonds and from securities auctions. The Group does not hold intangible assets acquired through public grants or intangible assets pledged against liabilities. Impairment test of intangible assets noted during business combinations In accordance with IAS36, impairment testing of all indefinite-useful-life intangible assets, including goodwill must be performed at least annually and, in any case, whenever there is objective evidence of the occurrence of events that may have reduced their value (trigger events). For UniCredit the trigger event is a market capitalisation lower than Shareholders’ Equity. Recoverable value is the greater of the value in use (present value of future cash flows generated by the asset being valued) and the associated fair value, less costs to sell. The recoverable value of intangible assets subject to impairment testing must be determined for the individual assets, unless both the following conditions exist: • the value in use of the asset is not estimated to be close to the fair value, net of sales costs; • the asset does not generate incoming cash flows largely independent of those coming from other assets. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 215 If these conditions exist, the impairment test is conducted at the level of the Cash Generating Unit (CGU), as required by the cited accounting principle. It should be noted that the impairment testing performed by the UniCredit group by way of the determination of the value in use of the Cash Generating Units (CGU), as described below, includes both indefinite-useful-life intangible assets (goodwill and trademarks) and finite-useful-life intangible assets (core deposits and customer relationships), whenever the loss indicators provided for by the accounting principle occur. We believe that core deposits and customer relationships cannot be subjected to separate impairment testing, because these assets do not generate cash flows independent of the cash flows from other assets. It should be noted that intangible assets and Cash Generating Units are subjected to impairment testing with reference to their current state, without taking account of the effects of restructuring plans/programmes not yet approved by the competent bodies. For the purposes of the impairment testing, the value in use of the so-called Cash Generating Units (CGUs) to which these intangible assets are allocated must be calculated taking into account the cash flows for all assets and liabilities included in the CGUs and not only those for which goodwill and/or the intangible asset were recorded when applying IFRS3. Finally, please note that the impairment test performed by the UniCredit group consists of two stages: • the first stage compares the recoverable amount and the carrying amount of each CGU; • the second stage compares the recoverable amount and the carrying amount of the Group as a whole in order to include in the analysis the negative income flows and the positive carrying amount of assets that cannot be allocated (“corporate centre”) in accordance with IAS36. Definition of Cash Generating Units (CGU) Estimating the value in use for the purposes of any impairment testing of intangible assets, including goodwill, which does not generate cash flows except in conjunction with other business assets, requires that these assets are first attributed to operating units that are relatively autonomous in the business context (from the points of view of independent cash flows generated and of internal planning and reporting). These operating units are defined as Cash Generating Units (CGU). In accordance with the provisions of IFRS3 and IAS36, for the purposes of impairment testing, goodwill has been allocated to the following operational Divisions of the Group, identified as CGUs. The CGU is the lowest level at which goodwill is monitored at Group level. The CGUs identified correspond to the organisational business units through which the Group develops its activity. For a detailed description of the Group’s CGU refer to Part L - Segment Reporting of this Notes to the Consolidated Accounts. The book value of the CGUs The book value of the CGUs is determined in accordance with the criterion used to determine their recoverable value. The recoverable value of the CGUs includes flows from their respective financial assets and liabilities, so the book value must also include the financial assets and liabilities generating those flows. Since it would be excessively complex to determine the carrying amount of the CGUs on the basis of book values, it was necessary to use operational factors to break them down correctly. Specifically, the operational driver that is used is allocated capital, which is based on the Risk-Weighted Assets absorption of the single CGU. In any case, intangible assets are attributed to the CGUs in accordance with the available accounting information. The carrying amounts of the CGUs as at 31 December 2018, determined as described above, and the portions of goodwill and other intangible assets allocated to each of them are shown below. (€ million) CASH GENERATING UNIT (CGU) VALUE AS AT 12.31.2018 OF WHICH GOODWILL (GROUP SHARE) OF WHICH OTHER INTANGIBLE ASSET (*) Commercial Banking Italy 11,873 8 - Commercial Banking Germany 4,602 - - Commercial Banking Austria 2,832 - - CIB 11,585 879 - Fineco 981 597 62 CEE 10,253 - - Group Corporate Centre 4,127 - - Non Core 1,529 - - Totale 47,782 1,484 62 Note: (*) Stated amounts are net of deferred taxes. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 215 If these conditions exist, the impairment test is conducted at the level of the Cash Generating Unit (CGU), as required by the cited accounting principle. It should be noted that the impairment testing performed by the UniCredit group by way of the determination of the value in use of the Cash Generating Units (CGU), as described below, includes both indefinite-useful-life intangible assets (goodwill and trademarks) and finite-useful-life intangible assets (core deposits and customer relationships), whenever the loss indicators provided for by the accounting principle occur. We believe that core deposits and customer relationships cannot be subjected to separate impairment testing, because these assets do not generate cash flows independent of the cash flows from other assets. It should be noted that intangible assets and Cash Generating Units are subjected to impairment testing with reference to their current state, without taking account of the effects of restructuring plans/programmes not yet approved by the competent bodies. For the purposes of the impairment testing, the value in use of the so-called Cash Generating Units (CGUs) to which these intangible assets are allocated must be calculated taking into account the cash flows for all assets and liabilities included in the CGUs and not only those for which goodwill and/or the intangible asset were recorded when applying IFRS3. Finally, please note that the impairment test performed by the UniCredit group consists of two stages: • the first stage compares the recoverable amount and the carrying amount of each CGU; • the second stage compares the recoverable amount and the carrying amount of the Group as a whole in order to include in the analysis the negative income flows and the positive carrying amount of assets that cannot be allocated (“corporate centre”) in accordance with IAS36. Definition of Cash Generating Units (CGU) Estimating the value in use for the purposes of any impairment testing of intangible assets, including goodwill, which does not generate cash flows except in conjunction with other business assets, requires that these assets are first attributed to operating units that are relatively autonomous in the business context (from the points of view of independent cash flows generated and of internal planning and reporting). These operating units are defined as Cash Generating Units (CGU). In accordance with the provisions of IFRS3 and IAS36, for the purposes of impairment testing, goodwill has been allocated to the following operational Divisions of the Group, identified as CGUs. The CGU is the lowest level at which goodwill is monitored at Group level. The CGUs identified correspond to the organisational business units through which the Group develops its activity. For a detailed description of the Group’s CGU refer to Part L - Segment Reporting of this Notes to the Consolidated Accounts. The book value of the CGUs The book value of the CGUs is determined in accordance with the criterion used to determine their recoverable value. The recoverable value of the CGUs includes flows from their respective financial assets and liabilities, so the book value must also include the financial assets and liabilities generating those flows. Since it would be excessively complex to determine the carrying amount of the CGUs on the basis of book values, it was necessary to use operational factors to break them down correctly. Specifically, the operational driver that is used is allocated capital, which is based on the Risk-Weighted Assets absorption of the single CGU. In any case, intangible assets are attributed to the CGUs in accordance with the available accounting information. The carrying amounts of the CGUs as at 31 December 2018, determined as described above, and the portions of goodwill and other intangible assets allocated to each of them are shown below. (€ million) CASH GENERATING UNIT (CGU) VALUE AS AT 12.31.2018 OF WHICH GOODWILL (GROUP SHARE) OF WHICH OTHER INTANGIBLE ASSET (*) Commercial Banking Italy 11,873 8 - Commercial Banking Germany 4,602 - - Commercial Banking Austria 2,832 - - CIB 11,585 879 - Fineco 981 597 62 CEE 10,253 - - Group Corporate Centre 4,127 - - Non Core 1,529 - - Totale 47,782 1,484 62 Note: (*) Stated amounts are net of deferred taxes. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 215 If these conditions exist, the impairment test is conducted at the level of the Cash Generating Unit (CGU), as required by the cited accounting principle. It should be noted that the impairment testing performed by the UniCredit group by way of the determination of the value in use of the Cash Generating Units (CGU), as described below, includes both indefinite-useful-life intangible assets (goodwill and trademarks) and finite-useful-life intangible assets (core deposits and customer relationships), whenever the loss indicators provided for by the accounting principle occur. We believe that core deposits and customer relationships cannot be subjected to separate impairment testing, because these assets do not generate cash flows independent of the cash flows from other assets. It should be noted that intangible assets and Cash Generating Units are subjected to impairment testing with reference to their current state, without taking account of the effects of restructuring plans/programmes not yet approved by the competent bodies. For the purposes of the impairment testing, the value in use of the so-called Cash Generating Units (CGUs) to which these intangible assets are allocated must be calculated taking into account the cash flows for all assets and liabilities included in the CGUs and not only those for which goodwill and/or the intangible asset were recorded when applying IFRS3. Finally, please note that the impairment test performed by the UniCredit group consists of two stages: • the first stage compares the recoverable amount and the carrying amount of each CGU; • the second stage compares the recoverable amount and the carrying amount of the Group as a whole in order to include in the analysis the negative income flows and the positive carrying amount of assets that cannot be allocated (“corporate centre”) in accordance with IAS36. Definition of Cash Generating Units (CGU) Estimating the value in use for the purposes of any impairment testing of intangible assets, including goodwill, which does not generate cash flows except in conjunction with other business assets, requires that these assets are first attributed to operating units that are relatively autonomous in the business context (from the points of view of independent cash flows generated and of internal planning and reporting). These operating units are defined as Cash Generating Units (CGU). In accordance with the provisions of IFRS3 and IAS36, for the purposes of impairment testing, goodwill has been allocated to the following operational Divisions of the Group, identified as CGUs. The CGU is the lowest level at which goodwill is monitored at Group level. The CGUs identified correspond to the organisational business units through which the Group develops its activity. For a detailed description of the Group’s CGU refer to Part L - Segment Reporting of this Notes to the Consolidated Accounts. The book value of the CGUs The book value of the CGUs is determined in accordance with the criterion used to determine their recoverable value. The recoverable value of the CGUs includes flows from their respective financial assets and liabilities, so the book value must also include the financial assets and liabilities generating those flows. Since it would be excessively complex to determine the carrying amount of the CGUs on the basis of book values, it was necessary to use operational factors to break them down correctly. Specifically, the operational driver that is used is allocated capital, which is based on the Risk-Weighted Assets absorption of the single CGU. In any case, intangible assets are attributed to the CGUs in accordance with the available accounting information. The carrying amounts of the CGUs as at 31 December 2018, determined as described above, and the portions of goodwill and other intangible assets allocated to each of them are shown below. (€ million) CASH GENERATING UNIT (CGU) VALUE AS AT 12.31.2018 OF WHICH GOODWILL (GROUP SHARE) OF WHICH OTHER INTANGIBLE ASSET (*) Commercial Banking Italy 11,873 8 - Commercial Banking Germany 4,602 - - Commercial Banking Austria 2,832 - - CIB 11,585 879 - Fineco 981 597 62 CEE 10,253 - - Group Corporate Centre 4,127 - - Non Core 1,529 - - Totale 47,782 1,484 62 Note: (*) Stated amounts are net of deferred taxes. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 215 If these conditions exist, the impairment test is conducted at the level of the Cash Generating Unit (CGU), as required by the cited accounting principle. It should be noted that the impairment testing performed by the UniCredit group by way of the determination of the value in use of the Cash Generating Units (CGU), as described below, includes both indefinite-useful-life intangible assets (goodwill and trademarks) and finite-useful-life intangible assets (core deposits and customer relationships), whenever the loss indicators provided for by the accounting principle occur. We believe that core deposits and customer relationships cannot be subjected to separate impairment testing, because these assets do not generate cash flows independent of the cash flows from other assets. It should be noted that intangible assets and Cash Generating Units are subjected to impairment testing with reference to their current state, without taking account of the effects of restructuring plans/programmes not yet approved by the competent bodies. For the purposes of the impairment testing, the value in use of the so-called Cash Generating Units (CGUs) to which these intangible assets are allocated must be calculated taking into account the cash flows for all assets and liabilities included in the CGUs and not only those for which goodwill and/or the intangible asset were recorded when applying IFRS3. Finally, please note that the impairment test performed by the UniCredit group consists of two stages: • the first stage compares the recoverable amount and the carrying amount of each CGU; • the second stage compares the recoverable amount and the carrying amount of the Group as a whole in order to include in the analysis the negative income flows and the positive carrying amount of assets that cannot be allocated (“corporate centre”) in accordance with IAS36. Definition of Cash Generating Units (CGU) Estimating the value in use for the purposes of any impairment testing of intangible assets, including goodwill, which does not generate cash flows except in conjunction with other business assets, requires that these assets are first attributed to operating units that are relatively autonomous in the business context (from the points of view of independent cash flows generated and of internal planning and reporting). These operating units are defined as Cash Generating Units (CGU). In accordance with the provisions of IFRS3 and IAS36, for the purposes of impairment testing, goodwill has been allocated to the following operational Divisions of the Group, identified as CGUs. The CGU is the lowest level at which goodwill is monitored at Group level. The CGUs identified correspond to the organisational business units through which the Group develops its activity. For a detailed description of the Group’s CGU refer to Part L - Segment Reporting of this Notes to the Consolidated Accounts. The book value of the CGUs The book value of the CGUs is determined in accordance with the criterion used to determine their recoverable value. The recoverable value of the CGUs includes flows from their respective financial assets and liabilities, so the book value must also include the financial assets and liabilities generating those flows. Since it would be excessively complex to determine the carrying amount of the CGUs on the basis of book values, it was necessary to use operational factors to break them down correctly. Specifically, the operational driver that is used is allocated capital, which is based on the Risk-Weighted Assets absorption of the single CGU. In any case, intangible assets are attributed to the CGUs in accordance with the available accounting information. The carrying amounts of the CGUs as at 31 December 2018, determined as described above, and the portions of goodwill and other intangible assets allocated to each of them are shown below. (€ million) CASH GENERATING UNIT (CGU) VALUE AS AT 12.31.2018 OF WHICH GOODWILL (GROUP SHARE) OF WHICH OTHER INTANGIBLE ASSET (*) Commercial Banking Italy 11,873 8 - Commercial Banking Germany 4,602 - - Commercial Banking Austria 2,832 - - CIB 11,585 879 - Fineco 981 597 62 CEE 10,253 - - Group Corporate Centre 4,127 - - Non Core 1,529 - - Totale 47,782 1,484 62 Note: (*) Stated amounts are net of deferred taxes. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 215 If these conditions exist, the impairment test is conducted at the level of the Cash Generating Unit (CGU), as required by the cited accounting principle. It should be noted that the impairment testing performed by the UniCredit group by way of the determination of the value in use of the Cash Generating Units (CGU), as described below, includes both indefinite-useful-life intangible assets (goodwill and trademarks) and finite-useful-life intangible assets (core deposits and customer relationships), whenever the loss indicators provided for by the accounting principle occur. We believe that core deposits and customer relationships cannot be subjected to separate impairment testing, because these assets do not generate cash flows independent of the cash flows from other assets. It should be noted that intangible assets and Cash Generating Units are subjected to impairment testing with reference to their current state, without taking account of the effects of restructuring plans/programmes not yet approved by the competent bodies. For the purposes of the impairment testing, the value in use of the so-called Cash Generating Units (CGUs) to which these intangible assets are allocated must be calculated taking into account the cash flows for all assets and liabilities included in the CGUs and not only those for which goodwill and/or the intangible asset were recorded when applying IFRS3. Finally, please note that the impairment test performed by the UniCredit group consists of two stages: • the first stage compares the recoverable amount and the carrying amount of each CGU; • the second stage compares the recoverable amount and the carrying amount of the Group as a whole in order to include in the analysis the negative income flows and the positive carrying amount of assets that cannot be allocated (“corporate centre”) in accordance with IAS36. Definition of Cash Generating Units (CGU) Estimating the value in use for the purposes of any impairment testing of intangible assets, including goodwill, which does not generate cash flows except in conjunction with other business assets, requires that these assets are first attributed to operating units that are relatively autonomous in the business context (from the points of view of independent cash flows generated and of internal planning and reporting). These operating units are defined as Cash Generating Units (CGU). In accordance with the provisions of IFRS3 and IAS36, for the purposes of impairment testing, goodwill has been allocated to the following operational Divisions of the Group, identified as CGUs. The CGU is the lowest level at which goodwill is monitored at Group level. The CGUs identified correspond to the organisational business units through which the Group develops its activity. For a detailed description of the Group’s CGU refer to Part L - Segment Reporting of this Notes to the Consolidated Accounts. The book value of the CGUs The book value of the CGUs is determined in accordance with the criterion used to determine their recoverable value. The recoverable value of the CGUs includes flows from their respective financial assets and liabilities, so the book value must also include the financial assets and liabilities generating those flows. Since it would be excessively complex to determine the carrying amount of the CGUs on the basis of book values, it was necessary to use operational factors to break them down correctly. Specifically, the operational driver that is used is allocated capital, which is based on the Risk-Weighted Assets absorption of the single CGU. In any case, intangible assets are attributed to the CGUs in accordance with the available accounting information. The carrying amounts of the CGUs as at 31 December 2018, determined as described above, and the portions of goodwill and other intangible assets allocated to each of them are shown below. (€ million) CASH GENERATING UNIT (CGU) VALUE AS AT 12.31.2018 OF WHICH GOODWILL (GROUP SHARE) OF WHICH OTHER INTANGIBLE ASSET (*) Commercial Banking Italy 11,873 8 - Commercial Banking Germany 4,602 - - Commercial Banking Austria 2,832 - - CIB 11,585 879 - Fineco 981 597 62 CEE 10,253 - - Group Corporate Centre 4,127 - - Non Core 1,529 - - Totale 47,782 1,484 62 Note: (*) Stated amounts are net of deferred taxes. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 216 2018 Annual Report and Accounts · UniCredit Estimating cash flows to determine the value in use of the CGUs In accordance with IAS36, the impairment test for indefinite-life intangible assets must be performed at least annually and whenever there is any indication that their value may be impaired. The referenced accounting principle requires that the impairment test is carried out by comparing the book value of each CGU with its recoverable value. When the latter proves to be lower than the book value, a write-down must be recorded in the financial statement. The recoverable amount of the CGU is the greater of its fair value (net of costs to sell) and the related value in use. Projections The impairment test at 31 December 2018 was performed on the basis of the financial projections (Net Profit and RWA) included in the Budget 2019 approved by the Board of Directors on 13 December 2018. The contribution of Turkey to the Recoverable Amount of CEE CGU, consistently with the valuation of KoC Finansal Hizmetler AS shareholding, was determined considering i) normalized 2018 and 2019 Net Profit streams excluding the impacts of any extraordinary loan loss provisions and ii) the application of a conservative haircut to 2019 Net Profit in order to take into account the recent volatility of Turkish market. With regard to the scope for the purposes of the impairment test, it should be noted that the organisational structure of the Cash Generating Units reflects the organisational structure of the Group as of 31 December 2018. Macroeconomic scenario The following tables show the forecasts concerning the main macroeconomic indicators, related to the markets in which the Group operates, which are underlying to the update of the projections used for December 2018 Impairment Test purposes. y/y % changes ITALY 2018F 2019F GDP 1.2 1.2 Inflation (CPI) 1.3 1.3 Unemployment rate 10.9 10.7 y/y % changes GERMANY 2018F 2019F GDP 2.0 1.9 Inflation (CPI) 1.8 1.7 Unemployment rate 5.3 5.2 y/y % changes AUSTRIA 2018F 2019F GDP 2.8 2.0 Inflation (CPI) 2.2 2.0 Unemployment rate 4.8 4.7 FINANCIAL INDICATORS 2018F 2019F Euribor 3m eop (%) (0.32) (0.14) BTP - Bund spread (10y, eop, bp) 300 300 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 216 2018 Annual Report and Accounts · UniCredit Estimating cash flows to determine the value in use of the CGUs In accordance with IAS36, the impairment test for indefinite-life intangible assets must be performed at least annually and whenever there is any indication that their value may be impaired. The referenced accounting principle requires that the impairment test is carried out by comparing the book value of each CGU with its recoverable value. When the latter proves to be lower than the book value, a write-down must be recorded in the financial statement. The recoverable amount of the CGU is the greater of its fair value (net of costs to sell) and the related value in use. Projections The impairment test at 31 December 2018 was performed on the basis of the financial projections (Net Profit and RWA) included in the Budget 2019 approved by the Board of Directors on 13 December 2018. The contribution of Turkey to the Recoverable Amount of CEE CGU, consistently with the valuation of KoC Finansal Hizmetler AS shareholding, was determined considering i) normalized 2018 and 2019 Net Profit streams excluding the impacts of any extraordinary loan loss provisions and ii) the application of a conservative haircut to 2019 Net Profit in order to take into account the recent volatility of Turkish market. With regard to the scope for the purposes of the impairment test, it should be noted that the organisational structure of the Cash Generating Units reflects the organisational structure of the Group as of 31 December 2018. Macroeconomic scenario The following tables show the forecasts concerning the main macroeconomic indicators, related to the markets in which the Group operates, which are underlying to the update of the projections used for December 2018 Impairment Test purposes. y/y % changes ITALY 2018F 2019F GDP 1.2 1.2 Inflation (CPI) 1.3 1.3 Unemployment rate 10.9 10.7 y/y % changes GERMANY 2018F 2019F GDP 2.0 1.9 Inflation (CPI) 1.8 1.7 Unemployment rate 5.3 5.2 y/y % changes AUSTRIA 2018F 2019F GDP 2.8 2.0 Inflation (CPI) 2.2 2.0 Unemployment rate 4.8 4.7 FINANCIAL INDICATORS 2018F 2019F Euribor 3m eop (%) (0.32) (0.14) BTP - Bund spread (10y, eop, bp) 300 300 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 216 2018 Annual Report and Accounts · UniCredit Estimating cash flows to determine the value in use of the CGUs In accordance with IAS36, the impairment test for indefinite-life intangible assets must be performed at least annually and whenever there is any indication that their value may be impaired. The referenced accounting principle requires that the impairment test is carried out by comparing the book value of each CGU with its recoverable value. When the latter proves to be lower than the book value, a write-down must be recorded in the financial statement. The recoverable amount of the CGU is the greater of its fair value (net of costs to sell) and the related value in use. Projections The impairment test at 31 December 2018 was performed on the basis of the financial projections (Net Profit and RWA) included in the Budget 2019 approved by the Board of Directors on 13 December 2018. The contribution of Turkey to the Recoverable Amount of CEE CGU, consistently with the valuation of KoC Finansal Hizmetler AS shareholding, was determined considering i) normalized 2018 and 2019 Net Profit streams excluding the impacts of any extraordinary loan loss provisions and ii) the application of a conservative haircut to 2019 Net Profit in order to take into account the recent volatility of Turkish market. With regard to the scope for the purposes of the impairment test, it should be noted that the organisational structure of the Cash Generating Units reflects the organisational structure of the Group as of 31 December 2018. Macroeconomic scenario The following tables show the forecasts concerning the main macroeconomic indicators, related to the markets in which the Group operates, which are underlying to the update of the projections used for December 2018 Impairment Test purposes. y/y % changes ITALY 2018F 2019F GDP 1.2 1.2 Inflation (CPI) 1.3 1.3 Unemployment rate 10.9 10.7 y/y % changes GERMANY 2018F 2019F GDP 2.0 1.9 Inflation (CPI) 1.8 1.7 Unemployment rate 5.3 5.2 y/y % changes AUSTRIA 2018F 2019F GDP 2.8 2.0 Inflation (CPI) 2.2 2.0 Unemployment rate 4.8 4.7 FINANCIAL INDICATORS 2018F 2019F Euribor 3m eop (%) (0.32) (0.14) BTP - Bund spread (10y, eop, bp) 300 300 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 216 2018 Annual Report and Accounts · UniCredit Estimating cash flows to determine the value in use of the CGUs In accordance with IAS36, the impairment test for indefinite-life intangible assets must be performed at least annually and whenever there is any indication that their value may be impaired. The referenced accounting principle requires that the impairment test is carried out by comparing the book value of each CGU with its recoverable value. When the latter proves to be lower than the book value, a write-down must be recorded in the financial statement. The recoverable amount of the CGU is the greater of its fair value (net of costs to sell) and the related value in use. Projections The impairment test at 31 December 2018 was performed on the basis of the financial projections (Net Profit and RWA) included in the Budget 2019 approved by the Board of Directors on 13 December 2018. The contribution of Turkey to the Recoverable Amount of CEE CGU, consistently with the valuation of KoC Finansal Hizmetler AS shareholding, was determined considering i) normalized 2018 and 2019 Net Profit streams excluding the impacts of any extraordinary loan loss provisions and ii) the application of a conservative haircut to 2019 Net Profit in order to take into account the recent volatility of Turkish market. With regard to the scope for the purposes of the impairment test, it should be noted that the organisational structure of the Cash Generating Units reflects the organisational structure of the Group as of 31 December 2018. Macroeconomic scenario The following tables show the forecasts concerning the main macroeconomic indicators, related to the markets in which the Group operates, which are underlying to the update of the projections used for December 2018 Impairment Test purposes. y/y % changes ITALY 2018F 2019F GDP 1.2 1.2 Inflation (CPI) 1.3 1.3 Unemployment rate 10.9 10.7 y/y % changes GERMANY 2018F 2019F GDP 2.0 1.9 Inflation (CPI) 1.8 1.7 Unemployment rate 5.3 5.2 y/y % changes AUSTRIA 2018F 2019F GDP 2.8 2.0 Inflation (CPI) 2.2 2.0 Unemployment rate 4.8 4.7 FINANCIAL INDICATORS 2018F 2019F Euribor 3m eop (%) (0.32) (0.14) BTP - Bund spread (10y, eop, bp) 300 300 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 216 2018 Annual Report and Accounts · UniCredit Estimating cash flows to determine the value in use of the CGUs In accordance with IAS36, the impairment test for indefinite-life intangible assets must be performed at least annually and whenever there is any indication that their value may be impaired. The referenced accounting principle requires that the impairment test is carried out by comparing the book value of each CGU with its recoverable value. When the latter proves to be lower than the book value, a write-down must be recorded in the financial statement. The recoverable amount of the CGU is the greater of its fair value (net of costs to sell) and the related value in use. Projections The impairment test at 31 December 2018 was performed on the basis of the financial projections (Net Profit and RWA) included in the Budget 2019 approved by the Board of Directors on 13 December 2018. The contribution of Turkey to the Recoverable Amount of CEE CGU, consistently with the valuation of KoC Finansal Hizmetler AS shareholding, was determined considering i) normalized 2018 and 2019 Net Profit streams excluding the impacts of any extraordinary loan loss provisions and ii) the application of a conservative haircut to 2019 Net Profit in order to take into account the recent volatility of Turkish market. With regard to the scope for the purposes of the impairment test, it should be noted that the organisational structure of the Cash Generating Units reflects the organisational structure of the Group as of 31 December 2018. Macroeconomic scenario The following tables show the forecasts concerning the main macroeconomic indicators, related to the markets in which the Group operates, which are underlying to the update of the projections used for December 2018 Impairment Test purposes. y/y % changes ITALY 2018F 2019F GDP 1.2 1.2 Inflation (CPI) 1.3 1.3 Unemployment rate 10.9 10.7 y/y % changes GERMANY 2018F 2019F GDP 2.0 1.9 Inflation (CPI) 1.8 1.7 Unemployment rate 5.3 5.2 y/y % changes AUSTRIA 2018F 2019F GDP 2.8 2.0 Inflation (CPI) 2.2 2.0 Unemployment rate 4.8 4.7 FINANCIAL INDICATORS 2018F 2019F Euribor 3m eop (%) (0.32) (0.14) BTP - Bund spread (10y, eop, bp) 300 300 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 217 CENTRAL EASTERN EUROPE (CEE) COUNTRIES REAL GDP (y/y growth, %) INFLATION (CPI) y/y, avg (%) 2018F 2019F 2018F 2019F Hungary 4.5 3.6 3.2 3.4 Czech Rep. 3.5 2.8 2.2 2.3 Slovenia 4.3 3.0 2.0 2.1 Bulgaria 4.0 3.9 2.7 2.7 Romania 3.9 3.5 5.0 3.6 Croatia 2.8 2.8 1.6 1.8 Bosnia-H. 3.1 3.4 1.8 1.7 Serbia 3.3 3.0 2.1 3.0 Turkey 3.3 0.5 17.2 22.9 Russia 1.6 1.3 2.9 4.6 INTERBANK RATES (3M, %) 1) EXCHANGE RATES / €, AVG 2018F 2019F 2017 2019 Hungary 0.3 0.6 320.8 320.3 Czech Rep. 1.1 1.7 25.4 24.9 Slovenia EUR EUR EUR EUR Bulgaria -0.5 -0.4 1.96 1.96 Romania 2.6 3.0 4.7 4.7 Croatia 0.5 0.5 7.4 7.4 Bosnia-H. EUR EUR 1.96 1.96 Serbia 3.0 3.4 118.5 118.7 Turkey 20.1 22.4 5.9 8.1 Russia 7.8 7.4 74.8 80.6 Note: (1) Annual average; Benchmark bond rate for Turkey; 1M Interbank rate for Romania. Impairment test model The calculation of the value in use for impairment testing purposes was conducted using a Discounted Cash Flow model (DCF). The cash flows were determined by subtracting from net profit (gross of minority interests) the annual capital requirement generated by changes in risk-weighted assets. The capital requirement is defined as the level of capitalisation that the Group aims to achieve in the long term, also in light of the minimum regulatory capital requirements. The Discounted Cash Flow model used by the Group is based on three stages: • first explicit year 2019, which relies on the Budget 2019 approved by the Board of Directors on 13 December 2018; • intermediate period from 2020 to 2024, for which the cash-flow projections are extrapolated by applying, from the explicit forecast period (2019), growth rates decreasing to those of the “Terminal Value”; • “Terminal Value” determined with nominal growth rates of 2%. The average growth rate of real GDP in the Eurozone from 1996 to 2017 was 1.5%. The nominal rate of 2%, corresponding to approximately 0% in real terms, was chosen for prudential reasons. The application of an intermediate period is aimed to allow a normalisation in parameters used (i.e. cost of equity and nominal growth rate) before the convergence to the Terminal Value, since the Group operates in different regions and business segments characterised by different risk profiles and growth prospects. The growth rates for the intermediated period are defined in such a way that the weighted average of the intermediate period and the Terminal Value are not higher than a cap, defined by applying a haircut to the historical average of long-term growth of the respective areas or business segments. Group assets or shared assets (corporate assets) are allocated to the CGUs to which they refer, where applicable. For the portion not allocable of these assets, the recoverable amount is assessed at overall Group level (so-called “corporate centre”). Strategic Plan “Transform 2019” The Strategic Plan “Transform 2019”, presented to the financial community on 13 December 2016, has been subsequently re-confirmed on 12 December 2017. It was prepared with the aim of maintaining a sustainable level of profitability over time, leveraging on a simple commercial bank business model, strengthening cross-selling activities and offering customers access to an extensive network. The implementation of Transform 2019 is fully on track, delivering tangible results supporting the successful execution of the five pillars of the plan. Below, the confirmed five pillars are briefly presented: • transform the operating model, in order to reduce the cost to serve customers, whilst at the same time increasing customer focus and the quality of products and services, leveraging on IT investments; the 2019 cost target is confirmed with FTE reductions and branch closures progressing ahead of Plan and with Group’s IT systems significantly simplified; Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 217 CENTRAL EASTERN EUROPE (CEE) COUNTRIES REAL GDP (y/y growth, %) INFLATION (CPI) y/y, avg (%) 2018F 2019F 2018F 2019F Hungary 4.5 3.6 3.2 3.4 Czech Rep. 3.5 2.8 2.2 2.3 Slovenia 4.3 3.0 2.0 2.1 Bulgaria 4.0 3.9 2.7 2.7 Romania 3.9 3.5 5.0 3.6 Croatia 2.8 2.8 1.6 1.8 Bosnia-H. 3.1 3.4 1.8 1.7 Serbia 3.3 3.0 2.1 3.0 Turkey 3.3 0.5 17.2 22.9 Russia 1.6 1.3 2.9 4.6 INTERBANK RATES (3M, %) 1) EXCHANGE RATES / €, AVG 2018F 2019F 2017 2019 Hungary 0.3 0.6 320.8 320.3 Czech Rep. 1.1 1.7 25.4 24.9 Slovenia EUR EUR EUR EUR Bulgaria -0.5 -0.4 1.96 1.96 Romania 2.6 3.0 4.7 4.7 Croatia 0.5 0.5 7.4 7.4 Bosnia-H. EUR EUR 1.96 1.96 Serbia 3.0 3.4 118.5 118.7 Turkey 20.1 22.4 5.9 8.1 Russia 7.8 7.4 74.8 80.6 Note: (1) Annual average; Benchmark bond rate for Turkey; 1M Interbank rate for Romania. Impairment test model The calculation of the value in use for impairment testing purposes was conducted using a Discounted Cash Flow model (DCF). The cash flows were determined by subtracting from net profit (gross of minority interests) the annual capital requirement generated by changes in risk-weighted assets. The capital requirement is defined as the level of capitalisation that the Group aims to achieve in the long term, also in light of the minimum regulatory capital requirements. The Discounted Cash Flow model used by the Group is based on three stages: • first explicit year 2019, which relies on the Budget 2019 approved by the Board of Directors on 13 December 2018; • intermediate period from 2020 to 2024, for which the cash-flow projections are extrapolated by applying, from the explicit forecast period (2019), growth rates decreasing to those of the “Terminal Value”; • “Terminal Value” determined with nominal growth rates of 2%. The average growth rate of real GDP in the Eurozone from 1996 to 2017 was 1.5%. The nominal rate of 2%, corresponding to approximately 0% in real terms, was chosen for prudential reasons. The application of an intermediate period is aimed to allow a normalisation in parameters used (i.e. cost of equity and nominal growth rate) before the convergence to the Terminal Value, since the Group operates in different regions and business segments characterised by different risk profiles and growth prospects. The growth rates for the intermediated period are defined in such a way that the weighted average of the intermediate period and the Terminal Value are not higher than a cap, defined by applying a haircut to the historical average of long-term growth of the respective areas or business segments. Group assets or shared assets (corporate assets) are allocated to the CGUs to which they refer, where applicable. For the portion not allocable of these assets, the recoverable amount is assessed at overall Group level (so-called “corporate centre”). Strategic Plan “Transform 2019” The Strategic Plan “Transform 2019”, presented to the financial community on 13 December 2016, has been subsequently re-confirmed on 12 December 2017. It was prepared with the aim of maintaining a sustainable level of profitability over time, leveraging on a simple commercial bank business model, strengthening cross-selling activities and offering customers access to an extensive network. The implementation of Transform 2019 is fully on track, delivering tangible results supporting the successful execution of the five pillars of the plan. Below, the confirmed five pillars are briefly presented: • transform the operating model, in order to reduce the cost to serve customers, whilst at the same time increasing customer focus and the quality of products and services, leveraging on IT investments; the 2019 cost target is confirmed with FTE reductions and branch closures progressing ahead of Plan and with Group’s IT systems significantly simplified; Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 217 CENTRAL EASTERN EUROPE (CEE) COUNTRIES REAL GDP (y/y growth, %) INFLATION (CPI) y/y, avg (%) 2018F 2019F 2018F 2019F Hungary 4.5 3.6 3.2 3.4 Czech Rep. 3.5 2.8 2.2 2.3 Slovenia 4.3 3.0 2.0 2.1 Bulgaria 4.0 3.9 2.7 2.7 Romania 3.9 3.5 5.0 3.6 Croatia 2.8 2.8 1.6 1.8 Bosnia-H. 3.1 3.4 1.8 1.7 Serbia 3.3 3.0 2.1 3.0 Turkey 3.3 0.5 17.2 22.9 Russia 1.6 1.3 2.9 4.6 INTERBANK RATES (3M, %) 1) EXCHANGE RATES / €, AVG 2018F 2019F 2017 2019 Hungary 0.3 0.6 320.8 320.3 Czech Rep. 1.1 1.7 25.4 24.9 Slovenia EUR EUR EUR EUR Bulgaria -0.5 -0.4 1.96 1.96 Romania 2.6 3.0 4.7 4.7 Croatia 0.5 0.5 7.4 7.4 Bosnia-H. EUR EUR 1.96 1.96 Serbia 3.0 3.4 118.5 118.7 Turkey 20.1 22.4 5.9 8.1 Russia 7.8 7.4 74.8 80.6 Note: (1) Annual average; Benchmark bond rate for Turkey; 1M Interbank rate for Romania. Impairment test model The calculation of the value in use for impairment testing purposes was conducted using a Discounted Cash Flow model (DCF). The cash flows were determined by subtracting from net profit (gross of minority interests) the annual capital requirement generated by changes in risk-weighted assets. The capital requirement is defined as the level of capitalisation that the Group aims to achieve in the long term, also in light of the minimum regulatory capital requirements. The Discounted Cash Flow model used by the Group is based on three stages: • first explicit year 2019, which relies on the Budget 2019 approved by the Board of Directors on 13 December 2018; • intermediate period from 2020 to 2024, for which the cash-flow projections are extrapolated by applying, from the explicit forecast period (2019), growth rates decreasing to those of the “Terminal Value”; • “Terminal Value” determined with nominal growth rates of 2%. The average growth rate of real GDP in the Eurozone from 1996 to 2017 was 1.5%. The nominal rate of 2%, corresponding to approximately 0% in real terms, was chosen for prudential reasons. The application of an intermediate period is aimed to allow a normalisation in parameters used (i.e. cost of equity and nominal growth rate) before the convergence to the Terminal Value, since the Group operates in different regions and business segments characterised by different risk profiles and growth prospects. The growth rates for the intermediated period are defined in such a way that the weighted average of the intermediate period and the Terminal Value are not higher than a cap, defined by applying a haircut to the historical average of long-term growth of the respective areas or business segments. Group assets or shared assets (corporate assets) are allocated to the CGUs to which they refer, where applicable. For the portion not allocable of these assets, the recoverable amount is assessed at overall Group level (so-called “corporate centre”). Strategic Plan “Transform 2019” The Strategic Plan “Transform 2019”, presented to the financial community on 13 December 2016, has been subsequently re-confirmed on 12 December 2017. It was prepared with the aim of maintaining a sustainable level of profitability over time, leveraging on a simple commercial bank business model, strengthening cross-selling activities and offering customers access to an extensive network. The implementation of Transform 2019 is fully on track, delivering tangible results supporting the successful execution of the five pillars of the plan. Below, the confirmed five pillars are briefly presented: • transform the operating model, in order to reduce the cost to serve customers, whilst at the same time increasing customer focus and the quality of products and services, leveraging on IT investments; the 2019 cost target is confirmed with FTE reductions and branch closures progressing ahead of Plan and with Group’s IT systems significantly simplified; Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 217 CENTRAL EASTERN EUROPE (CEE) COUNTRIES REAL GDP (y/y growth, %) INFLATION (CPI) y/y, avg (%) 2018F 2019F 2018F 2019F Hungary 4.5 3.6 3.2 3.4 Czech Rep. 3.5 2.8 2.2 2.3 Slovenia 4.3 3.0 2.0 2.1 Bulgaria 4.0 3.9 2.7 2.7 Romania 3.9 3.5 5.0 3.6 Croatia 2.8 2.8 1.6 1.8 Bosnia-H. 3.1 3.4 1.8 1.7 Serbia 3.3 3.0 2.1 3.0 Turkey 3.3 0.5 17.2 22.9 Russia 1.6 1.3 2.9 4.6 INTERBANK RATES (3M, %) 1) EXCHANGE RATES / €, AVG 2018F 2019F 2017 2019 Hungary 0.3 0.6 320.8 320.3 Czech Rep. 1.1 1.7 25.4 24.9 Slovenia EUR EUR EUR EUR Bulgaria -0.5 -0.4 1.96 1.96 Romania 2.6 3.0 4.7 4.7 Croatia 0.5 0.5 7.4 7.4 Bosnia-H. EUR EUR 1.96 1.96 Serbia 3.0 3.4 118.5 118.7 Turkey 20.1 22.4 5.9 8.1 Russia 7.8 7.4 74.8 80.6 Note: (1) Annual average; Benchmark bond rate for Turkey; 1M Interbank rate for Romania. Impairment test model The calculation of the value in use for impairment testing purposes was conducted using a Discounted Cash Flow model (DCF). The cash flows were determined by subtracting from net profit (gross of minority interests) the annual capital requirement generated by changes in risk-weighted assets. The capital requirement is defined as the level of capitalisation that the Group aims to achieve in the long term, also in light of the minimum regulatory capital requirements. The Discounted Cash Flow model used by the Group is based on three stages: • first explicit year 2019, which relies on the Budget 2019 approved by the Board of Directors on 13 December 2018; • intermediate period from 2020 to 2024, for which the cash-flow projections are extrapolated by applying, from the explicit forecast period (2019), growth rates decreasing to those of the “Terminal Value”; • “Terminal Value” determined with nominal growth rates of 2%. The average growth rate of real GDP in the Eurozone from 1996 to 2017 was 1.5%. The nominal rate of 2%, corresponding to approximately 0% in real terms, was chosen for prudential reasons. The application of an intermediate period is aimed to allow a normalisation in parameters used (i.e. cost of equity and nominal growth rate) before the convergence to the Terminal Value, since the Group operates in different regions and business segments characterised by different risk profiles and growth prospects. The growth rates for the intermediated period are defined in such a way that the weighted average of the intermediate period and the Terminal Value are not higher than a cap, defined by applying a haircut to the historical average of long-term growth of the respective areas or business segments. Group assets or shared assets (corporate assets) are allocated to the CGUs to which they refer, where applicable. For the portion not allocable of these assets, the recoverable amount is assessed at overall Group level (so-called “corporate centre”). Strategic Plan “Transform 2019” The Strategic Plan “Transform 2019”, presented to the financial community on 13 December 2016, has been subsequently re-confirmed on 12 December 2017. It was prepared with the aim of maintaining a sustainable level of profitability over time, leveraging on a simple commercial bank business model, strengthening cross-selling activities and offering customers access to an extensive network. The implementation of Transform 2019 is fully on track, delivering tangible results supporting the successful execution of the five pillars of the plan. Below, the confirmed five pillars are briefly presented: • transform the operating model, in order to reduce the cost to serve customers, whilst at the same time increasing customer focus and the quality of products and services, leveraging on IT investments; the 2019 cost target is confirmed with FTE reductions and branch closures progressing ahead of Plan and with Group’s IT systems significantly simplified; Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 217 CENTRAL EASTERN EUROPE (CEE) COUNTRIES REAL GDP (y/y growth, %) INFLATION (CPI) y/y, avg (%) 2018F 2019F 2018F 2019F Hungary 4.5 3.6 3.2 3.4 Czech Rep. 3.5 2.8 2.2 2.3 Slovenia 4.3 3.0 2.0 2.1 Bulgaria 4.0 3.9 2.7 2.7 Romania 3.9 3.5 5.0 3.6 Croatia 2.8 2.8 1.6 1.8 Bosnia-H. 3.1 3.4 1.8 1.7 Serbia 3.3 3.0 2.1 3.0 Turkey 3.3 0.5 17.2 22.9 Russia 1.6 1.3 2.9 4.6 INTERBANK RATES (3M, %) 1) EXCHANGE RATES / €, AVG 2018F 2019F 2017 2019 Hungary 0.3 0.6 320.8 320.3 Czech Rep. 1.1 1.7 25.4 24.9 Slovenia EUR EUR EUR EUR Bulgaria -0.5 -0.4 1.96 1.96 Romania 2.6 3.0 4.7 4.7 Croatia 0.5 0.5 7.4 7.4 Bosnia-H. EUR EUR 1.96 1.96 Serbia 3.0 3.4 118.5 118.7 Turkey 20.1 22.4 5.9 8.1 Russia 7.8 7.4 74.8 80.6 Note: (1) Annual average; Benchmark bond rate for Turkey; 1M Interbank rate for Romania. Impairment test model The calculation of the value in use for impairment testing purposes was conducted using a Discounted Cash Flow model (DCF). The cash flows were determined by subtracting from net profit (gross of minority interests) the annual capital requirement generated by changes in risk-weighted assets. The capital requirement is defined as the level of capitalisation that the Group aims to achieve in the long term, also in light of the minimum regulatory capital requirements. The Discounted Cash Flow model used by the Group is based on three stages: • first explicit year 2019, which relies on the Budget 2019 approved by the Board of Directors on 13 December 2018; • intermediate period from 2020 to 2024, for which the cash-flow projections are extrapolated by applying, from the explicit forecast period (2019), growth rates decreasing to those of the “Terminal Value”; • “Terminal Value” determined with nominal growth rates of 2%. The average growth rate of real GDP in the Eurozone from 1996 to 2017 was 1.5%. The nominal rate of 2%, corresponding to approximately 0% in real terms, was chosen for prudential reasons. The application of an intermediate period is aimed to allow a normalisation in parameters used (i.e. cost of equity and nominal growth rate) before the convergence to the Terminal Value, since the Group operates in different regions and business segments characterised by different risk profiles and growth prospects. The growth rates for the intermediated period are defined in such a way that the weighted average of the intermediate period and the Terminal Value are not higher than a cap, defined by applying a haircut to the historical average of long-term growth of the respective areas or business segments. Group assets or shared assets (corporate assets) are allocated to the CGUs to which they refer, where applicable. For the portion not allocable of these assets, the recoverable amount is assessed at overall Group level (so-called “corporate centre”). Strategic Plan “Transform 2019” The Strategic Plan “Transform 2019”, presented to the financial community on 13 December 2016, has been subsequently re-confirmed on 12 December 2017. It was prepared with the aim of maintaining a sustainable level of profitability over time, leveraging on a simple commercial bank business model, strengthening cross-selling activities and offering customers access to an extensive network. The implementation of Transform 2019 is fully on track, delivering tangible results supporting the successful execution of the five pillars of the plan. Below, the confirmed five pillars are briefly presented: • transform the operating model, in order to reduce the cost to serve customers, whilst at the same time increasing customer focus and the quality of products and services, leveraging on IT investments; the 2019 cost target is confirmed with FTE reductions and branch closures progressing ahead of Plan and with Group’s IT systems significantly simplified; Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 218 2018 Annual Report and Accounts · UniCredit • maximise commercial bank value, capitalising the potential of the retail customer base and exploiting the position of “go to” bank status for corporate customers in Western Europe, further strengthening the leadership position in Central and Eastern Europe (“CEE”) and the generation of synergies across divisions and countries, taking advantage of Corporate and Investment Banking Division (CIB) being fully plugged into commercial bank activities; the ongoing transformation has resulted in higher productivity, with increased fees and commissions across all divisions; • strengthen and optimise capital; as a result of the Group’s actions to strengthen its capital position taking also into account the current challenging macroeconomic environment and considering management estimates on new regulatory guidelines impact, CET1 ratio target has been updated in a range between 12.0% and 12.5%; • improve asset quality, both in terms of resolution of the issues associated with the Italian loans portfolio (legacy of the underwriting activities mainly going back to the years before the financial crisis that affected the Italian and European banking system), through a proactive de-risking of balance sheet assets and increasing the coverage ratio of non-performing loans and in parallel strengthening risk management policies to enhance new loans underwriting; in addition the full accelerated rundown of the Non-core Division is expected by the end of 2021 and will be entirely self-funded by the Group; • adopt lean but steering Group Corporate Centre, with the implementation of key performance indicators cascaded to the divisions and networks, streamlining of support functions and the transparent allocation of costs between divisions. The Group has taken decisive actions to strengthen its corporate governance and align it to international best practices. UCGs’ Strategic Directions Commercial Banking Italy Commercial Banking Italy will be focused on the transformation of the operating model through sales channels redesign, the improvement of interaction with customers through a simplification of the product range and the digitalisation of key processes, the enhancement of the attention on lower cost structure customers, the reduction of “in-branch transactions” and low value added functions through self-service leveraging on a multichannel client approach. The innovative redesign of branches will include full service branch, smart branch (partially automated), cash-less branch (fully automated) with the main goal to offer to individual clients a full range of products and services to fulfil transactional, investment and credit needs as well as Business Centre fully dedicated to Small Business customer needs. All this will also permit a further streamlining of the Italian headquarter. In addition the Group will further strengthen the new origination discipline by centralising underwriting for selected portfolios, focusing on investment grade customers, increasing the share of small business clients eligible for automatic lending, as well as setting up a pre-approved decision process for personal loans. The tight monitoring of the exposures will be further developed through the use of advanced early warning signals and KPIs and automatic triggering of classification to worst status as well as the faster deleveraging on riskier customers vs. competitors in order to further improve risk adjusted profitability. Commercial Banking Germany The Commercial Bank in Germany aims to: • further enhance the position in Corporate Banking given the wide number of German SMEs and large corporates and the relevance of their import and export volumes. This will be achieved also through a comprehensive restructuring of the SME customer service model, already launched, and the digital services; • increase cross-selling revenues thanks to strong cooperation between CIB and commercial banking; • continue the growth in AUM; • enhance focus on Retail lending, and renew focus on Bank-assurance. The streamlining and simplification of the organisational structure will lead to more efficient decision making processes. Commercial Banking Austria Commercial Banking Austria aims to streamline the organisation and renew focus on premium advisory. The new service model for retail has been developing the business in a sustainable way, resulting in an improvement in the cost-income ratio, new loans production and client satisfaction enhancement while maintaining the portfolio asset quality. Revenues will also be sustained by AUM volumes growth, new clients acquisition and commercial synergies with Corporate and CEE Divisions. Further progress in digital transformation are also expected. Corporate & Investment Banking (“CIB”) CIB Division is fully plugged in to Commercial Banking with the aim of maximising synergies. The Group intends to maintain the client focused approach of the Division and the strict cost discipline, benefiting also from the ongoing streamline and fine-tune of business and operating model, while maintaining a constant focus on risk culture and RWA optimisation. On the cross-selling side, CIB is fully at work with dedicated commercial actions in key geographies, leveraging on internal joint ventures with Commercial Banking. The Group aims to confirm and improve market leadership in debt finance and GTB, leveraging on international network and clients and intensifying capabilities and services for corporate and financial institutions. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 218 2018 Annual Report and Accounts · UniCredit • maximise commercial bank value, capitalising the potential of the retail customer base and exploiting the position of “go to” bank status for corporate customers in Western Europe, further strengthening the leadership position in Central and Eastern Europe (“CEE”) and the generation of synergies across divisions and countries, taking advantage of Corporate and Investment Banking Division (CIB) being fully plugged into commercial bank activities; the ongoing transformation has resulted in higher productivity, with increased fees and commissions across all divisions; • strengthen and optimise capital; as a result of the Group’s actions to strengthen its capital position taking also into account the current challenging macroeconomic environment and considering management estimates on new regulatory guidelines impact, CET1 ratio target has been updated in a range between 12.0% and 12.5%; • improve asset quality, both in terms of resolution of the issues associated with the Italian loans portfolio (legacy of the underwriting activities mainly going back to the years before the financial crisis that affected the Italian and European banking system), through a proactive de-risking of balance sheet assets and increasing the coverage ratio of non-performing loans and in parallel strengthening risk management policies to enhance new loans underwriting; in addition the full accelerated rundown of the Non-core Division is expected by the end of 2021 and will be entirely self-funded by the Group; • adopt lean but steering Group Corporate Centre, with the implementation of key performance indicators cascaded to the divisions and networks, streamlining of support functions and the transparent allocation of costs between divisions. The Group has taken decisive actions to strengthen its corporate governance and align it to international best practices. UCGs’ Strategic Directions Commercial Banking Italy Commercial Banking Italy will be focused on the transformation of the operating model through sales channels redesign, the improvement of interaction with customers through a simplification of the product range and the digitalisation of key processes, the enhancement of the attention on lower cost structure customers, the reduction of “in-branch transactions” and low value added functions through self-service leveraging on a multichannel client approach. The innovative redesign of branches will include full service branch, smart branch (partially automated), cash-less branch (fully automated) with the main goal to offer to individual clients a full range of products and services to fulfil transactional, investment and credit needs as well as Business Centre fully dedicated to Small Business customer needs. All this will also permit a further streamlining of the Italian headquarter. In addition the Group will further strengthen the new origination discipline by centralising underwriting for selected portfolios, focusing on investment grade customers, increasing the share of small business clients eligible for automatic lending, as well as setting up a pre-approved decision process for personal loans. The tight monitoring of the exposures will be further developed through the use of advanced early warning signals and KPIs and automatic triggering of classification to worst status as well as the faster deleveraging on riskier customers vs. competitors in order to further improve risk adjusted profitability. Commercial Banking Germany The Commercial Bank in Germany aims to: • further enhance the position in Corporate Banking given the wide number of German SMEs and large corporates and the relevance of their import and export volumes. This will be achieved also through a comprehensive restructuring of the SME customer service model, already launched, and the digital services; • increase cross-selling revenues thanks to strong cooperation between CIB and commercial banking; • continue the growth in AUM; • enhance focus on Retail lending, and renew focus on Bank-assurance. The streamlining and simplification of the organisational structure will lead to more efficient decision making processes. Commercial Banking Austria Commercial Banking Austria aims to streamline the organisation and renew focus on premium advisory. The new service model for retail has been developing the business in a sustainable way, resulting in an improvement in the cost-income ratio, new loans production and client satisfaction enhancement while maintaining the portfolio asset quality. Revenues will also be sustained by AUM volumes growth, new clients acquisition and commercial synergies with Corporate and CEE Divisions. Further progress in digital transformation are also expected. Corporate & Investment Banking (“CIB”) CIB Division is fully plugged in to Commercial Banking with the aim of maximising synergies. The Group intends to maintain the client focused approach of the Division and the strict cost discipline, benefiting also from the ongoing streamline and fine-tune of business and operating model, while maintaining a constant focus on risk culture and RWA optimisation. On the cross-selling side, CIB is fully at work with dedicated commercial actions in key geographies, leveraging on internal joint ventures with Commercial Banking. The Group aims to confirm and improve market leadership in debt finance and GTB, leveraging on international network and clients and intensifying capabilities and services for corporate and financial institutions. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 218 2018 Annual Report and Accounts · UniCredit • maximise commercial bank value, capitalising the potential of the retail customer base and exploiting the position of “go to” bank status for corporate customers in Western Europe, further strengthening the leadership position in Central and Eastern Europe (“CEE”) and the generation of synergies across divisions and countries, taking advantage of Corporate and Investment Banking Division (CIB) being fully plugged into commercial bank activities; the ongoing transformation has resulted in higher productivity, with increased fees and commissions across all divisions; • strengthen and optimise capital; as a result of the Group’s actions to strengthen its capital position taking also into account the current challenging macroeconomic environment and considering management estimates on new regulatory guidelines impact, CET1 ratio target has been updated in a range between 12.0% and 12.5%; • improve asset quality, both in terms of resolution of the issues associated with the Italian loans portfolio (legacy of the underwriting activities mainly going back to the years before the financial crisis that affected the Italian and European banking system), through a proactive de-risking of balance sheet assets and increasing the coverage ratio of non-performing loans and in parallel strengthening risk management policies to enhance new loans underwriting; in addition the full accelerated rundown of the Non-core Division is expected by the end of 2021 and will be entirely self-funded by the Group; • adopt lean but steering Group Corporate Centre, with the implementation of key performance indicators cascaded to the divisions and networks, streamlining of support functions and the transparent allocation of costs between divisions. The Group has taken decisive actions to strengthen its corporate governance and align it to international best practices. UCGs’ Strategic Directions Commercial Banking Italy Commercial Banking Italy will be focused on the transformation of the operating model through sales channels redesign, the improvement of interaction with customers through a simplification of the product range and the digitalisation of key processes, the enhancement of the attention on lower cost structure customers, the reduction of “in-branch transactions” and low value added functions through self-service leveraging on a multichannel client approach. The innovative redesign of branches will include full service branch, smart branch (partially automated), cash-less branch (fully automated) with the main goal to offer to individual clients a full range of products and services to fulfil transactional, investment and credit needs as well as Business Centre fully dedicated to Small Business customer needs. All this will also permit a further streamlining of the Italian headquarter. In addition the Group will further strengthen the new origination discipline by centralising underwriting for selected portfolios, focusing on investment grade customers, increasing the share of small business clients eligible for automatic lending, as well as setting up a pre-approved decision process for personal loans. The tight monitoring of the exposures will be further developed through the use of advanced early warning signals and KPIs and automatic triggering of classification to worst status as well as the faster deleveraging on riskier customers vs. competitors in order to further improve risk adjusted profitability. Commercial Banking Germany The Commercial Bank in Germany aims to: • further enhance the position in Corporate Banking given the wide number of German SMEs and large corporates and the relevance of their import and export volumes. This will be achieved also through a comprehensive restructuring of the SME customer service model, already launched, and the digital services; • increase cross-selling revenues thanks to strong cooperation between CIB and commercial banking; • continue the growth in AUM; • enhance focus on Retail lending, and renew focus on Bank-assurance. The streamlining and simplification of the organisational structure will lead to more efficient decision making processes. Commercial Banking Austria Commercial Banking Austria aims to streamline the organisation and renew focus on premium advisory. The new service model for retail has been developing the business in a sustainable way, resulting in an improvement in the cost-income ratio, new loans production and client satisfaction enhancement while maintaining the portfolio asset quality. Revenues will also be sustained by AUM volumes growth, new clients acquisition and commercial synergies with Corporate and CEE Divisions. Further progress in digital transformation are also expected. Corporate & Investment Banking (“CIB”) CIB Division is fully plugged in to Commercial Banking with the aim of maximising synergies. The Group intends to maintain the client focused approach of the Division and the strict cost discipline, benefiting also from the ongoing streamline and fine-tune of business and operating model, while maintaining a constant focus on risk culture and RWA optimisation. On the cross-selling side, CIB is fully at work with dedicated commercial actions in key geographies, leveraging on internal joint ventures with Commercial Banking. The Group aims to confirm and improve market leadership in debt finance and GTB, leveraging on international network and clients and intensifying capabilities and services for corporate and financial institutions. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 218 2018 Annual Report and Accounts · UniCredit • maximise commercial bank value, capitalising the potential of the retail customer base and exploiting the position of “go to” bank status for corporate customers in Western Europe, further strengthening the leadership position in Central and Eastern Europe (“CEE”) and the generation of synergies across divisions and countries, taking advantage of Corporate and Investment Banking Division (CIB) being fully plugged into commercial bank activities; the ongoing transformation has resulted in higher productivity, with increased fees and commissions across all divisions; • strengthen and optimise capital; as a result of the Group’s actions to strengthen its capital position taking also into account the current challenging macroeconomic environment and considering management estimates on new regulatory guidelines impact, CET1 ratio target has been updated in a range between 12.0% and 12.5%; • improve asset quality, both in terms of resolution of the issues associated with the Italian loans portfolio (legacy of the underwriting activities mainly going back to the years before the financial crisis that affected the Italian and European banking system), through a proactive de-risking of balance sheet assets and increasing the coverage ratio of non-performing loans and in parallel strengthening risk management policies to enhance new loans underwriting; in addition the full accelerated rundown of the Non-core Division is expected by the end of 2021 and will be entirely self-funded by the Group; • adopt lean but steering Group Corporate Centre, with the implementation of key performance indicators cascaded to the divisions and networks, streamlining of support functions and the transparent allocation of costs between divisions. The Group has taken decisive actions to strengthen its corporate governance and align it to international best practices. UCGs’ Strategic Directions Commercial Banking Italy Commercial Banking Italy will be focused on the transformation of the operating model through sales channels redesign, the improvement of interaction with customers through a simplification of the product range and the digitalisation of key processes, the enhancement of the attention on lower cost structure customers, the reduction of “in-branch transactions” and low value added functions through self-service leveraging on a multichannel client approach. The innovative redesign of branches will include full service branch, smart branch (partially automated), cash-less branch (fully automated) with the main goal to offer to individual clients a full range of products and services to fulfil transactional, investment and credit needs as well as Business Centre fully dedicated to Small Business customer needs. All this will also permit a further streamlining of the Italian headquarter. In addition the Group will further strengthen the new origination discipline by centralising underwriting for selected portfolios, focusing on investment grade customers, increasing the share of small business clients eligible for automatic lending, as well as setting up a pre-approved decision process for personal loans. The tight monitoring of the exposures will be further developed through the use of advanced early warning signals and KPIs and automatic triggering of classification to worst status as well as the faster deleveraging on riskier customers vs. competitors in order to further improve risk adjusted profitability. Commercial Banking Germany The Commercial Bank in Germany aims to: • further enhance the position in Corporate Banking given the wide number of German SMEs and large corporates and the relevance of their import and export volumes. This will be achieved also through a comprehensive restructuring of the SME customer service model, already launched, and the digital services; • increase cross-selling revenues thanks to strong cooperation between CIB and commercial banking; • continue the growth in AUM; • enhance focus on Retail lending, and renew focus on Bank-assurance. The streamlining and simplification of the organisational structure will lead to more efficient decision making processes. Commercial Banking Austria Commercial Banking Austria aims to streamline the organisation and renew focus on premium advisory. The new service model for retail has been developing the business in a sustainable way, resulting in an improvement in the cost-income ratio, new loans production and client satisfaction enhancement while maintaining the portfolio asset quality. Revenues will also be sustained by AUM volumes growth, new clients acquisition and commercial synergies with Corporate and CEE Divisions. Further progress in digital transformation are also expected. Corporate & Investment Banking (“CIB”) CIB Division is fully plugged in to Commercial Banking with the aim of maximising synergies. The Group intends to maintain the client focused approach of the Division and the strict cost discipline, benefiting also from the ongoing streamline and fine-tune of business and operating model, while maintaining a constant focus on risk culture and RWA optimisation. On the cross-selling side, CIB is fully at work with dedicated commercial actions in key geographies, leveraging on internal joint ventures with Commercial Banking. The Group aims to confirm and improve market leadership in debt finance and GTB, leveraging on international network and clients and intensifying capabilities and services for corporate and financial institutions. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 218 2018 Annual Report and Accounts · UniCredit • maximise commercial bank value, capitalising the potential of the retail customer base and exploiting the position of “go to” bank status for corporate customers in Western Europe, further strengthening the leadership position in Central and Eastern Europe (“CEE”) and the generation of synergies across divisions and countries, taking advantage of Corporate and Investment Banking Division (CIB) being fully plugged into commercial bank activities; the ongoing transformation has resulted in higher productivity, with increased fees and commissions across all divisions; • strengthen and optimise capital; as a result of the Group’s actions to strengthen its capital position taking also into account the current challenging macroeconomic environment and considering management estimates on new regulatory guidelines impact, CET1 ratio target has been updated in a range between 12.0% and 12.5%; • improve asset quality, both in terms of resolution of the issues associated with the Italian loans portfolio (legacy of the underwriting activities mainly going back to the years before the financial crisis that affected the Italian and European banking system), through a proactive de-risking of balance sheet assets and increasing the coverage ratio of non-performing loans and in parallel strengthening risk management policies to enhance new loans underwriting; in addition the full accelerated rundown of the Non-core Division is expected by the end of 2021 and will be entirely self-funded by the Group; • adopt lean but steering Group Corporate Centre, with the implementation of key performance indicators cascaded to the divisions and networks, streamlining of support functions and the transparent allocation of costs between divisions. The Group has taken decisive actions to strengthen its corporate governance and align it to international best practices. UCGs’ Strategic Directions Commercial Banking Italy Commercial Banking Italy will be focused on the transformation of the operating model through sales channels redesign, the improvement of interaction with customers through a simplification of the product range and the digitalisation of key processes, the enhancement of the attention on lower cost structure customers, the reduction of “in-branch transactions” and low value added functions through self-service leveraging on a multichannel client approach. The innovative redesign of branches will include full service branch, smart branch (partially automated), cash-less branch (fully automated) with the main goal to offer to individual clients a full range of products and services to fulfil transactional, investment and credit needs as well as Business Centre fully dedicated to Small Business customer needs. All this will also permit a further streamlining of the Italian headquarter. In addition the Group will further strengthen the new origination discipline by centralising underwriting for selected portfolios, focusing on investment grade customers, increasing the share of small business clients eligible for automatic lending, as well as setting up a pre-approved decision process for personal loans. The tight monitoring of the exposures will be further developed through the use of advanced early warning signals and KPIs and automatic triggering of classification to worst status as well as the faster deleveraging on riskier customers vs. competitors in order to further improve risk adjusted profitability. Commercial Banking Germany The Commercial Bank in Germany aims to: • further enhance the position in Corporate Banking given the wide number of German SMEs and large corporates and the relevance of their import and export volumes. This will be achieved also through a comprehensive restructuring of the SME customer service model, already launched, and the digital services; • increase cross-selling revenues thanks to strong cooperation between CIB and commercial banking; • continue the growth in AUM; • enhance focus on Retail lending, and renew focus on Bank-assurance. The streamlining and simplification of the organisational structure will lead to more efficient decision making processes. Commercial Banking Austria Commercial Banking Austria aims to streamline the organisation and renew focus on premium advisory. The new service model for retail has been developing the business in a sustainable way, resulting in an improvement in the cost-income ratio, new loans production and client satisfaction enhancement while maintaining the portfolio asset quality. Revenues will also be sustained by AUM volumes growth, new clients acquisition and commercial synergies with Corporate and CEE Divisions. Further progress in digital transformation are also expected. Corporate & Investment Banking (“CIB”) CIB Division is fully plugged in to Commercial Banking with the aim of maximising synergies. The Group intends to maintain the client focused approach of the Division and the strict cost discipline, benefiting also from the ongoing streamline and fine-tune of business and operating model, while maintaining a constant focus on risk culture and RWA optimisation. On the cross-selling side, CIB is fully at work with dedicated commercial actions in key geographies, leveraging on internal joint ventures with Commercial Banking. The Group aims to confirm and improve market leadership in debt finance and GTB, leveraging on international network and clients and intensifying capabilities and services for corporate and financial institutions. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 219 Central and Eastern Europe (“CEE”) CEE Division continue to be an important growth engine for the Group. Relevant transformation programmes have been launched, in particular related to innovation and digitalisation, resulting in a strong growth of CEE digital customer base. A further strengthening of Big Data and analytics capabilities support relationship managers in their day-to-day activity and client targeting with the aim to increase market penetration and cross-selling. Remain the focus on maximising synergies with the Group from Cross-border activity, thanks to increasing number of international customers, and on best practices sharing. The ongoing network optimisation will further support the lean cost structure. Fineco Fineco will keep a strong focus on high quality lending and will grow in investment services supported by the boost of productivity of the PFA network that, taking a more aggressively Robo & cyborg advisory approach (more structured asset allocation based on algorithmic/quantitative approach) that drove a better asset mix and leave more time to private banking client relationship that needs tailor-made solutions and portfolio analysis. Non Core Confirmed Transform 2019 is still very focused on the improvement of the asset quality of the Group through: a proactive review of NPEs evaluation, the disposal of a substantial amount of bad loans via securitisation vehicles, the increase of coverage ratios and additional decisive actions on workout and UTP portfolios in the Non-core segment that will enable a full and self-funded rundown accelerated of the portfolio by 2021. In addition to these actions a more disciplined risk management strategy and underwriting processes have been further developed and are still in place. Discount rates of cash flows and regulatory capital targets The following main discount rates were used in the calculation of the CGUs’ recoverable amount: CGU INITIAL DISCOUNT RATE NET OF TAX (KE) FINAL DISCOUNT RATE NET OF TAX (KE) NOMINAL GROWTH RATE USED TO CALCULATE TERMINAL VALUE Commercial Banking Italy 9.9% 9.9% 2.0% Commercial Banking Germany 8.1% 8.1% 2.0% Commercial Banking Austria 8.4% 8.4% 2.0% CIB 8.8% 8.8% 2.0% Fineco 8.1% 8.1% 2.0% CEE(1) 14.8% 11.4% 2.0% Group Corporate Center 9.3% 9.3% 0.0% Non Core 9.9% 9.9% 2.0% Note: (1) The discount rate presented for CEE CGUs are the weighted average of the discount rates in local currency used for individual countries. As shown in the above table, future financial flows were discounted using a conservative estimate of the discount rate, incorporating the various risk factors linked to the business sector into the cost of equity (Ke). The discount rate is a nominal rate, net of taxes. In particular, the cost of equity for the CGUs is the sum of the following: • Country rate: - CIB and Fineco: Country rate is the sum of: • Risk-free rate: the last six years’ average of the 10-year Bund. The six-year horizon was adopted in line with the average economic cycle in the Eurozone; • Debt risk premium: the last six years’ average of the Credit Default Swap of UniCredit; - Commercial Banking: due to the high regional specificity, rather than the risk-free rate and the debt risk premium, the Country rate is set equal to the rate of benchmark government bonds of the Country and, in particular: • for Commercial Banking Italy the last six years’ average of the 10-year BTP; • for Commercial Banking Germany the last six years’ average of the 10-year Bund; • for Commercial Banking Austria the last six years’ average of the 10-year Austrian government bond rate; • Equity Risk Premium: calculated using the Option Price Based Model, based on the volatility of UniCredit’s share price over the last six years. For CIB and Fineco, the last six years’ average volatility of selected peers operating in the same sector was used. The cost of equity for CEE is differentiated for each single country and it is the sum of the following: • Risk-free rate: the last six years’ average of the five-year local currency swap rate. If no swap rate was available, the most liquid and representative interbank rate was taken; • Country risk premium: the last six years’ average Credit Default Swap of the country; • Equity Risk Premium: calculated using the Option Price Based Model, based on the volatility of UniCredit’s share price over the last six years. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 219 Central and Eastern Europe (“CEE”) CEE Division continue to be an important growth engine for the Group. Relevant transformation programmes have been launched, in particular related to innovation and digitalisation, resulting in a strong growth of CEE digital customer base. A further strengthening of Big Data and analytics capabilities support relationship managers in their day-to-day activity and client targeting with the aim to increase market penetration and cross-selling. Remain the focus on maximising synergies with the Group from Cross-border activity, thanks to increasing number of international customers, and on best practices sharing. The ongoing network optimisation will further support the lean cost structure. Fineco Fineco will keep a strong focus on high quality lending and will grow in investment services supported by the boost of productivity of the PFA network that, taking a more aggressively Robo & cyborg advisory approach (more structured asset allocation based on algorithmic/quantitative approach) that drove a better asset mix and leave more time to private banking client relationship that needs tailor-made solutions and portfolio analysis. Non Core Confirmed Transform 2019 is still very focused on the improvement of the asset quality of the Group through: a proactive review of NPEs evaluation, the disposal of a substantial amount of bad loans via securitisation vehicles, the increase of coverage ratios and additional decisive actions on workout and UTP portfolios in the Non-core segment that will enable a full and self-funded rundown accelerated of the portfolio by 2021. In addition to these actions a more disciplined risk management strategy and underwriting processes have been further developed and are still in place. Discount rates of cash flows and regulatory capital targets The following main discount rates were used in the calculation of the CGUs’ recoverable amount: CGU INITIAL DISCOUNT RATE NET OF TAX (KE) FINAL DISCOUNT RATE NET OF TAX (KE) NOMINAL GROWTH RATE USED TO CALCULATE TERMINAL VALUE Commercial Banking Italy 9.9% 9.9% 2.0% Commercial Banking Germany 8.1% 8.1% 2.0% Commercial Banking Austria 8.4% 8.4% 2.0% CIB 8.8% 8.8% 2.0% Fineco 8.1% 8.1% 2.0% CEE(1) 14.8% 11.4% 2.0% Group Corporate Center 9.3% 9.3% 0.0% Non Core 9.9% 9.9% 2.0% Note: (1) The discount rate presented for CEE CGUs are the weighted average of the discount rates in local currency used for individual countries. As shown in the above table, future financial flows were discounted using a conservative estimate of the discount rate, incorporating the various risk factors linked to the business sector into the cost of equity (Ke). The discount rate is a nominal rate, net of taxes. In particular, the cost of equity for the CGUs is the sum of the following: • Country rate: - CIB and Fineco: Country rate is the sum of: • Risk-free rate: the last six years’ average of the 10-year Bund. The six-year horizon was adopted in line with the average economic cycle in the Eurozone; • Debt risk premium: the last six years’ average of the Credit Default Swap of UniCredit; - Commercial Banking: due to the high regional specificity, rather than the risk-free rate and the debt risk premium, the Country rate is set equal to the rate of benchmark government bonds of the Country and, in particular: • for Commercial Banking Italy the last six years’ average of the 10-year BTP; • for Commercial Banking Germany the last six years’ average of the 10-year Bund; • for Commercial Banking Austria the last six years’ average of the 10-year Austrian government bond rate; • Equity Risk Premium: calculated using the Option Price Based Model, based on the volatility of UniCredit’s share price over the last six years. For CIB and Fineco, the last six years’ average volatility of selected peers operating in the same sector was used. The cost of equity for CEE is differentiated for each single country and it is the sum of the following: • Risk-free rate: the last six years’ average of the five-year local currency swap rate. If no swap rate was available, the most liquid and representative interbank rate was taken; • Country risk premium: the last six years’ average Credit Default Swap of the country; • Equity Risk Premium: calculated using the Option Price Based Model, based on the volatility of UniCredit’s share price over the last six years. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 219 Central and Eastern Europe (“CEE”) CEE Division continue to be an important growth engine for the Group. Relevant transformation programmes have been launched, in particular related to innovation and digitalisation, resulting in a strong growth of CEE digital customer base. A further strengthening of Big Data and analytics capabilities support relationship managers in their day-to-day activity and client targeting with the aim to increase market penetration and cross-selling. Remain the focus on maximising synergies with the Group from Cross-border activity, thanks to increasing number of international customers, and on best practices sharing. The ongoing network optimisation will further support the lean cost structure. Fineco Fineco will keep a strong focus on high quality lending and will grow in investment services supported by the boost of productivity of the PFA network that, taking a more aggressively Robo & cyborg advisory approach (more structured asset allocation based on algorithmic/quantitative approach) that drove a better asset mix and leave more time to private banking client relationship that needs tailor-made solutions and portfolio analysis. Non Core Confirmed Transform 2019 is still very focused on the improvement of the asset quality of the Group through: a proactive review of NPEs evaluation, the disposal of a substantial amount of bad loans via securitisation vehicles, the increase of coverage ratios and additional decisive actions on workout and UTP portfolios in the Non-core segment that will enable a full and self-funded rundown accelerated of the portfolio by 2021. In addition to these actions a more disciplined risk management strategy and underwriting processes have been further developed and are still in place. Discount rates of cash flows and regulatory capital targets The following main discount rates were used in the calculation of the CGUs’ recoverable amount: CGU INITIAL DISCOUNT RATE NET OF TAX (KE) FINAL DISCOUNT RATE NET OF TAX (KE) NOMINAL GROWTH RATE USED TO CALCULATE TERMINAL VALUE Commercial Banking Italy 9.9% 9.9% 2.0% Commercial Banking Germany 8.1% 8.1% 2.0% Commercial Banking Austria 8.4% 8.4% 2.0% CIB 8.8% 8.8% 2.0% Fineco 8.1% 8.1% 2.0% CEE(1) 14.8% 11.4% 2.0% Group Corporate Center 9.3% 9.3% 0.0% Non Core 9.9% 9.9% 2.0% Note: (1) The discount rate presented for CEE CGUs are the weighted average of the discount rates in local currency used for individual countries. As shown in the above table, future financial flows were discounted using a conservative estimate of the discount rate, incorporating the various risk factors linked to the business sector into the cost of equity (Ke). The discount rate is a nominal rate, net of taxes. In particular, the cost of equity for the CGUs is the sum of the following: • Country rate: - CIB and Fineco: Country rate is the sum of: • Risk-free rate: the last six years’ average of the 10-year Bund. The six-year horizon was adopted in line with the average economic cycle in the Eurozone; • Debt risk premium: the last six years’ average of the Credit Default Swap of UniCredit; - Commercial Banking: due to the high regional specificity, rather than the risk-free rate and the debt risk premium, the Country rate is set equal to the rate of benchmark government bonds of the Country and, in particular: • for Commercial Banking Italy the last six years’ average of the 10-year BTP; • for Commercial Banking Germany the last six years’ average of the 10-year Bund; • for Commercial Banking Austria the last six years’ average of the 10-year Austrian government bond rate; • Equity Risk Premium: calculated using the Option Price Based Model, based on the volatility of UniCredit’s share price over the last six years. For CIB and Fineco, the last six years’ average volatility of selected peers operating in the same sector was used. The cost of equity for CEE is differentiated for each single country and it is the sum of the following: • Risk-free rate: the last six years’ average of the five-year local currency swap rate. If no swap rate was available, the most liquid and representative interbank rate was taken; • Country risk premium: the last six years’ average Credit Default Swap of the country; • Equity Risk Premium: calculated using the Option Price Based Model, based on the volatility of UniCredit’s share price over the last six years. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 219 Central and Eastern Europe (“CEE”) CEE Division continue to be an important growth engine for the Group. Relevant transformation programmes have been launched, in particular related to innovation and digitalisation, resulting in a strong growth of CEE digital customer base. A further strengthening of Big Data and analytics capabilities support relationship managers in their day-to-day activity and client targeting with the aim to increase market penetration and cross-selling. Remain the focus on maximising synergies with the Group from Cross-border activity, thanks to increasing number of international customers, and on best practices sharing. The ongoing network optimisation will further support the lean cost structure. Fineco Fineco will keep a strong focus on high quality lending and will grow in investment services supported by the boost of productivity of the PFA network that, taking a more aggressively Robo & cyborg advisory approach (more structured asset allocation based on algorithmic/quantitative approach) that drove a better asset mix and leave more time to private banking client relationship that needs tailor-made solutions and portfolio analysis. Non Core Confirmed Transform 2019 is still very focused on the improvement of the asset quality of the Group through: a proactive review of NPEs evaluation, the disposal of a substantial amount of bad loans via securitisation vehicles, the increase of coverage ratios and additional decisive actions on workout and UTP portfolios in the Non-core segment that will enable a full and self-funded rundown accelerated of the portfolio by 2021. In addition to these actions a more disciplined risk management strategy and underwriting processes have been further developed and are still in place. Discount rates of cash flows and regulatory capital targets The following main discount rates were used in the calculation of the CGUs’ recoverable amount: CGU INITIAL DISCOUNT RATE NET OF TAX (KE) FINAL DISCOUNT RATE NET OF TAX (KE) NOMINAL GROWTH RATE USED TO CALCULATE TERMINAL VALUE Commercial Banking Italy 9.9% 9.9% 2.0% Commercial Banking Germany 8.1% 8.1% 2.0% Commercial Banking Austria 8.4% 8.4% 2.0% CIB 8.8% 8.8% 2.0% Fineco 8.1% 8.1% 2.0% CEE(1) 14.8% 11.4% 2.0% Group Corporate Center 9.3% 9.3% 0.0% Non Core 9.9% 9.9% 2.0% Note: (1) The discount rate presented for CEE CGUs are the weighted average of the discount rates in local currency used for individual countries. As shown in the above table, future financial flows were discounted using a conservative estimate of the discount rate, incorporating the various risk factors linked to the business sector into the cost of equity (Ke). The discount rate is a nominal rate, net of taxes. In particular, the cost of equity for the CGUs is the sum of the following: • Country rate: - CIB and Fineco: Country rate is the sum of: • Risk-free rate: the last six years’ average of the 10-year Bund. The six-year horizon was adopted in line with the average economic cycle in the Eurozone; • Debt risk premium: the last six years’ average of the Credit Default Swap of UniCredit; - Commercial Banking: due to the high regional specificity, rather than the risk-free rate and the debt risk premium, the Country rate is set equal to the rate of benchmark government bonds of the Country and, in particular: • for Commercial Banking Italy the last six years’ average of the 10-year BTP; • for Commercial Banking Germany the last six years’ average of the 10-year Bund; • for Commercial Banking Austria the last six years’ average of the 10-year Austrian government bond rate; • Equity Risk Premium: calculated using the Option Price Based Model, based on the volatility of UniCredit’s share price over the last six years. For CIB and Fineco, the last six years’ average volatility of selected peers operating in the same sector was used. The cost of equity for CEE is differentiated for each single country and it is the sum of the following: • Risk-free rate: the last six years’ average of the five-year local currency swap rate. If no swap rate was available, the most liquid and representative interbank rate was taken; • Country risk premium: the last six years’ average Credit Default Swap of the country; • Equity Risk Premium: calculated using the Option Price Based Model, based on the volatility of UniCredit’s share price over the last six years. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 219 Central and Eastern Europe (“CEE”) CEE Division continue to be an important growth engine for the Group. Relevant transformation programmes have been launched, in particular related to innovation and digitalisation, resulting in a strong growth of CEE digital customer base. A further strengthening of Big Data and analytics capabilities support relationship managers in their day-to-day activity and client targeting with the aim to increase market penetration and cross-selling. Remain the focus on maximising synergies with the Group from Cross-border activity, thanks to increasing number of international customers, and on best practices sharing. The ongoing network optimisation will further support the lean cost structure. Fineco Fineco will keep a strong focus on high quality lending and will grow in investment services supported by the boost of productivity of the PFA network that, taking a more aggressively Robo & cyborg advisory approach (more structured asset allocation based on algorithmic/quantitative approach) that drove a better asset mix and leave more time to private banking client relationship that needs tailor-made solutions and portfolio analysis. Non Core Confirmed Transform 2019 is still very focused on the improvement of the asset quality of the Group through: a proactive review of NPEs evaluation, the disposal of a substantial amount of bad loans via securitisation vehicles, the increase of coverage ratios and additional decisive actions on workout and UTP portfolios in the Non-core segment that will enable a full and self-funded rundown accelerated of the portfolio by 2021. In addition to these actions a more disciplined risk management strategy and underwriting processes have been further developed and are still in place. Discount rates of cash flows and regulatory capital targets The following main discount rates were used in the calculation of the CGUs’ recoverable amount: CGU INITIAL DISCOUNT RATE NET OF TAX (KE) FINAL DISCOUNT RATE NET OF TAX (KE) NOMINAL GROWTH RATE USED TO CALCULATE TERMINAL VALUE Commercial Banking Italy 9.9% 9.9% 2.0% Commercial Banking Germany 8.1% 8.1% 2.0% Commercial Banking Austria 8.4% 8.4% 2.0% CIB 8.8% 8.8% 2.0% Fineco 8.1% 8.1% 2.0% CEE(1) 14.8% 11.4% 2.0% Group Corporate Center 9.3% 9.3% 0.0% Non Core 9.9% 9.9% 2.0% Note: (1) The discount rate presented for CEE CGUs are the weighted average of the discount rates in local currency used for individual countries. As shown in the above table, future financial flows were discounted using a conservative estimate of the discount rate, incorporating the various risk factors linked to the business sector into the cost of equity (Ke). The discount rate is a nominal rate, net of taxes. In particular, the cost of equity for the CGUs is the sum of the following: • Country rate: - CIB and Fineco: Country rate is the sum of: • Risk-free rate: the last six years’ average of the 10-year Bund. The six-year horizon was adopted in line with the average economic cycle in the Eurozone; • Debt risk premium: the last six years’ average of the Credit Default Swap of UniCredit; - Commercial Banking: due to the high regional specificity, rather than the risk-free rate and the debt risk premium, the Country rate is set equal to the rate of benchmark government bonds of the Country and, in particular: • for Commercial Banking Italy the last six years’ average of the 10-year BTP; • for Commercial Banking Germany the last six years’ average of the 10-year Bund; • for Commercial Banking Austria the last six years’ average of the 10-year Austrian government bond rate; • Equity Risk Premium: calculated using the Option Price Based Model, based on the volatility of UniCredit’s share price over the last six years. For CIB and Fineco, the last six years’ average volatility of selected peers operating in the same sector was used. The cost of equity for CEE is differentiated for each single country and it is the sum of the following: • Risk-free rate: the last six years’ average of the five-year local currency swap rate. If no swap rate was available, the most liquid and representative interbank rate was taken; • Country risk premium: the last six years’ average Credit Default Swap of the country; • Equity Risk Premium: calculated using the Option Price Based Model, based on the volatility of UniCredit’s share price over the last six years. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 220 2018 Annual Report and Accounts · UniCredit Prudentially, the cost of equity for Fineco was floored for the entire valuation period, at the lowest level of the cost of equity of Commercial Banking CGUs and for CIB it was prudentially floored for the entire valuation period at the weighted average (by geographical distribution of CIB RWA) of the cost of equity of the Commercial Banking CGUs Another parameter used in the model to determine the initial allocated capital and its evolution over time is the Common Equity Tier 1 ratio target. For all the CGUs the target Common Equity Tier 1 ratio is 12.5% in 2018 consistently with the updated CET 1 ratio target range. The contribution of Turkey to the Recoverable Amount of the CEE CGU was estimated considering a CET 1 ratio target of 10.50% in line with Yapi Kredi target. Results of the impairment test The impairment test as at 31 December 2018 confirms the sustainability of the goodwill with no need for an impairment on the consolidated accounts of the UniCredit group. It must be underlined that the parameters and information used to verify the recoverability of goodwill (in particular the expected cash flows for the various CGU, and the discount rates applied) are significantly influenced by the macroeconomic and market situation, which may be subject to changes currently unpredictable. In the coming reporting periods, the effect of these changes, and of changes in the corporate strategies, could therefore lead to a review of the estimated cash flows of the various CGUs and of the assumptions about the main financial variables (discount rates, expected growth rates, Common Equity Tier 1 ratio, etc.) that could impact the results of the future impairment tests. Sensitivity analysis Since the valuation exercise is affected by the macroeconomic and market environment and given the intrinsic complexity of forecasting future long-term profitability, sensitivity analyses were conducted, assuming changes to the main parameters used in the impairment test. The table below summarises for the CGUs which still have goodwill, the percentage deviations of the initial assumptions (cost of equity, capital ratio, long-term growth rate and streams of income used for the estimation of cash flows) adopted for the different CGUs, that drive the recoverable amount of each CGU equal to its book value: CGUs €/MLN INCREASE IN THE DISCOUNT RATE AFTER TAX (KE) (1) INCREASE IN THE CET 1 RATIO TARGET (2) DECREASE IN THE NOMINAL GROWTH RATE FOR THE CALCULATION OF TERMINAL VALUE (2) DECREASE IN ANNUAL EARNINGS (3) CIB 2.1% 1.7% -16.1% -19.0% Fineco 22.4% n.m. n.m. n.m. Commercial Banking Italy 0.8% 3.6% -5.5% -7.6% Notes: (1) The increase of 1% in the discount rate is applied to the whole stream from 2018 to Terminal Value. (2) Delta expressed in absolute amount. (3) Delta expressed in percentage terms. The table below shows the change of the total value in use of the Group resulting from a variation of the main parameters used in the valuation model. GROUP LEVEL €/MLN INCREASE IN THE DISCOUNT RATE AFTER TAX (KE) (1) INCREASE IN THE CET 1 RATIO TARGET (2) DECREASE IN THE NOMINAL GROWTH RATE FOR THE CALCULATION OF TERMINAL VALUE (2) DECREASE IN ANNUAL EARNINGS (3) SENSITIVITY FACTOR [%] 1% 1% -1% -5% Change of Group value in use -13% -9% -4% -7% Notes: (1) The increase of 1% in the discount rate is applied to the whole stream from 2019 to Terminal Value. (2) Delta expressed in absolute amount. (3) Delta expressed in percentage terms. The parameters and information used to verify the sustainability of goodwill (in particular the financial projections used) are significantly influenced by the macroeconomic environment and the market conditions. Should the macroeconomic environment deteriorate in the future, the results of the next sustainability tests on goodwill could show a recoverable amount lower than the carrying value and therefore highlight the need to perform a goodwill impairment. Comparison with market capitalisation The Group's total value in use resulting from the impairment test is higher than the current market capitalisation of the Parent company. The difference could be largely explained by: i) the upside potential embedded in Analysts' consensus; ii) the cost of equity used in the impairment test and iii) market expectations on long term return and its distribution. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 220 2018 Annual Report and Accounts · UniCredit Prudentially, the cost of equity for Fineco was floored for the entire valuation period, at the lowest level of the cost of equity of Commercial Banking CGUs and for CIB it was prudentially floored for the entire valuation period at the weighted average (by geographical distribution of CIB RWA) of the cost of equity of the Commercial Banking CGUs Another parameter used in the model to determine the initial allocated capital and its evolution over time is the Common Equity Tier 1 ratio target. For all the CGUs the target Common Equity Tier 1 ratio is 12.5% in 2018 consistently with the updated CET 1 ratio target range. The contribution of Turkey to the Recoverable Amount of the CEE CGU was estimated considering a CET 1 ratio target of 10.50% in line with Yapi Kredi target. Results of the impairment test The impairment test as at 31 December 2018 confirms the sustainability of the goodwill with no need for an impairment on the consolidated accounts of the UniCredit group. It must be underlined that the parameters and information used to verify the recoverability of goodwill (in particular the expected cash flows for the various CGU, and the discount rates applied) are significantly influenced by the macroeconomic and market situation, which may be subject to changes currently unpredictable. In the coming reporting periods, the effect of these changes, and of changes in the corporate strategies, could therefore lead to a review of the estimated cash flows of the various CGUs and of the assumptions about the main financial variables (discount rates, expected growth rates, Common Equity Tier 1 ratio, etc.) that could impact the results of the future impairment tests. Sensitivity analysis Since the valuation exercise is affected by the macroeconomic and market environment and given the intrinsic complexity of forecasting future long-term profitability, sensitivity analyses were conducted, assuming changes to the main parameters used in the impairment test. The table below summarises for the CGUs which still have goodwill, the percentage deviations of the initial assumptions (cost of equity, capital ratio, long-term growth rate and streams of income used for the estimation of cash flows) adopted for the different CGUs, that drive the recoverable amount of each CGU equal to its book value: CGUs €/MLN INCREASE IN THE DISCOUNT RATE AFTER TAX (KE) (1) INCREASE IN THE CET 1 RATIO TARGET (2) DECREASE IN THE NOMINAL GROWTH RATE FOR THE CALCULATION OF TERMINAL VALUE (2) DECREASE IN ANNUAL EARNINGS (3) CIB 2.1% 1.7% -16.1% -19.0% Fineco 22.4% n.m. n.m. n.m. Commercial Banking Italy 0.8% 3.6% -5.5% -7.6% Notes: (1) The increase of 1% in the discount rate is applied to the whole stream from 2018 to Terminal Value. (2) Delta expressed in absolute amount. (3) Delta expressed in percentage terms. The table below shows the change of the total value in use of the Group resulting from a variation of the main parameters used in the valuation model. GROUP LEVEL €/MLN INCREASE IN THE DISCOUNT RATE AFTER TAX (KE) (1) INCREASE IN THE CET 1 RATIO TARGET (2) DECREASE IN THE NOMINAL GROWTH RATE FOR THE CALCULATION OF TERMINAL VALUE (2) DECREASE IN ANNUAL EARNINGS (3) SENSITIVITY FACTOR [%] 1% 1% -1% -5% Change of Group value in use -13% -9% -4% -7% Notes: (1) The increase of 1% in the discount rate is applied to the whole stream from 2019 to Terminal Value. (2) Delta expressed in absolute amount. (3) Delta expressed in percentage terms. The parameters and information used to verify the sustainability of goodwill (in particular the financial projections used) are significantly influenced by the macroeconomic environment and the market conditions. Should the macroeconomic environment deteriorate in the future, the results of the next sustainability tests on goodwill could show a recoverable amount lower than the carrying value and therefore highlight the need to perform a goodwill impairment. Comparison with market capitalisation The Group's total value in use resulting from the impairment test is higher than the current market capitalisation of the Parent company. The difference could be largely explained by: i) the upside potential embedded in Analysts' consensus; ii) the cost of equity used in the impairment test and iii) market expectations on long term return and its distribution. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 220 2018 Annual Report and Accounts · UniCredit Prudentially, the cost of equity for Fineco was floored for the entire valuation period, at the lowest level of the cost of equity of Commercial Banking CGUs and for CIB it was prudentially floored for the entire valuation period at the weighted average (by geographical distribution of CIB RWA) of the cost of equity of the Commercial Banking CGUs Another parameter used in the model to determine the initial allocated capital and its evolution over time is the Common Equity Tier 1 ratio target. For all the CGUs the target Common Equity Tier 1 ratio is 12.5% in 2018 consistently with the updated CET 1 ratio target range. The contribution of Turkey to the Recoverable Amount of the CEE CGU was estimated considering a CET 1 ratio target of 10.50% in line with Yapi Kredi target. Results of the impairment test The impairment test as at 31 December 2018 confirms the sustainability of the goodwill with no need for an impairment on the consolidated accounts of the UniCredit group. It must be underlined that the parameters and information used to verify the recoverability of goodwill (in particular the expected cash flows for the various CGU, and the discount rates applied) are significantly influenced by the macroeconomic and market situation, which may be subject to changes currently unpredictable. In the coming reporting periods, the effect of these changes, and of changes in the corporate strategies, could therefore lead to a review of the estimated cash flows of the various CGUs and of the assumptions about the main financial variables (discount rates, expected growth rates, Common Equity Tier 1 ratio, etc.) that could impact the results of the future impairment tests. Sensitivity analysis Since the valuation exercise is affected by the macroeconomic and market environment and given the intrinsic complexity of forecasting future long-term profitability, sensitivity analyses were conducted, assuming changes to the main parameters used in the impairment test. The table below summarises for the CGUs which still have goodwill, the percentage deviations of the initial assumptions (cost of equity, capital ratio, long-term growth rate and streams of income used for the estimation of cash flows) adopted for the different CGUs, that drive the recoverable amount of each CGU equal to its book value: CGUs €/MLN INCREASE IN THE DISCOUNT RATE AFTER TAX (KE) (1) INCREASE IN THE CET 1 RATIO TARGET (2) DECREASE IN THE NOMINAL GROWTH RATE FOR THE CALCULATION OF TERMINAL VALUE (2) DECREASE IN ANNUAL EARNINGS (3) CIB 2.1% 1.7% -16.1% -19.0% Fineco 22.4% n.m. n.m. n.m. Commercial Banking Italy 0.8% 3.6% -5.5% -7.6% Notes: (1) The increase of 1% in the discount rate is applied to the whole stream from 2018 to Terminal Value. (2) Delta expressed in absolute amount. (3) Delta expressed in percentage terms. The table below shows the change of the total value in use of the Group resulting from a variation of the main parameters used in the valuation model. GROUP LEVEL €/MLN INCREASE IN THE DISCOUNT RATE AFTER TAX (KE) (1) INCREASE IN THE CET 1 RATIO TARGET (2) DECREASE IN THE NOMINAL GROWTH RATE FOR THE CALCULATION OF TERMINAL VALUE (2) DECREASE IN ANNUAL EARNINGS (3) SENSITIVITY FACTOR [%] 1% 1% -1% -5% Change of Group value in use -13% -9% -4% -7% Notes: (1) The increase of 1% in the discount rate is applied to the whole stream from 2019 to Terminal Value. (2) Delta expressed in absolute amount. (3) Delta expressed in percentage terms. The parameters and information used to verify the sustainability of goodwill (in particular the financial projections used) are significantly influenced by the macroeconomic environment and the market conditions. Should the macroeconomic environment deteriorate in the future, the results of the next sustainability tests on goodwill could show a recoverable amount lower than the carrying value and therefore highlight the need to perform a goodwill impairment. Comparison with market capitalisation The Group's total value in use resulting from the impairment test is higher than the current market capitalisation of the Parent company. The difference could be largely explained by: i) the upside potential embedded in Analysts' consensus; ii) the cost of equity used in the impairment test and iii) market expectations on long term return and its distribution. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 220 2018 Annual Report and Accounts · UniCredit Prudentially, the cost of equity for Fineco was floored for the entire valuation period, at the lowest level of the cost of equity of Commercial Banking CGUs and for CIB it was prudentially floored for the entire valuation period at the weighted average (by geographical distribution of CIB RWA) of the cost of equity of the Commercial Banking CGUs Another parameter used in the model to determine the initial allocated capital and its evolution over time is the Common Equity Tier 1 ratio target. For all the CGUs the target Common Equity Tier 1 ratio is 12.5% in 2018 consistently with the updated CET 1 ratio target range. The contribution of Turkey to the Recoverable Amount of the CEE CGU was estimated considering a CET 1 ratio target of 10.50% in line with Yapi Kredi target. Results of the impairment test The impairment test as at 31 December 2018 confirms the sustainability of the goodwill with no need for an impairment on the consolidated accounts of the UniCredit group. It must be underlined that the parameters and information used to verify the recoverability of goodwill (in particular the expected cash flows for the various CGU, and the discount rates applied) are significantly influenced by the macroeconomic and market situation, which may be subject to changes currently unpredictable. In the coming reporting periods, the effect of these changes, and of changes in the corporate strategies, could therefore lead to a review of the estimated cash flows of the various CGUs and of the assumptions about the main financial variables (discount rates, expected growth rates, Common Equity Tier 1 ratio, etc.) that could impact the results of the future impairment tests. Sensitivity analysis Since the valuation exercise is affected by the macroeconomic and market environment and given the intrinsic complexity of forecasting future long-term profitability, sensitivity analyses were conducted, assuming changes to the main parameters used in the impairment test. The table below summarises for the CGUs which still have goodwill, the percentage deviations of the initial assumptions (cost of equity, capital ratio, long-term growth rate and streams of income used for the estimation of cash flows) adopted for the different CGUs, that drive the recoverable amount of each CGU equal to its book value: CGUs €/MLN INCREASE IN THE DISCOUNT RATE AFTER TAX (KE) (1) INCREASE IN THE CET 1 RATIO TARGET (2) DECREASE IN THE NOMINAL GROWTH RATE FOR THE CALCULATION OF TERMINAL VALUE (2) DECREASE IN ANNUAL EARNINGS (3) CIB 2.1% 1.7% -16.1% -19.0% Fineco 22.4% n.m. n.m. n.m. Commercial Banking Italy 0.8% 3.6% -5.5% -7.6% Notes: (1) The increase of 1% in the discount rate is applied to the whole stream from 2018 to Terminal Value. (2) Delta expressed in absolute amount. (3) Delta expressed in percentage terms. The table below shows the change of the total value in use of the Group resulting from a variation of the main parameters used in the valuation model. GROUP LEVEL €/MLN INCREASE IN THE DISCOUNT RATE AFTER TAX (KE) (1) INCREASE IN THE CET 1 RATIO TARGET (2) DECREASE IN THE NOMINAL GROWTH RATE FOR THE CALCULATION OF TERMINAL VALUE (2) DECREASE IN ANNUAL EARNINGS (3) SENSITIVITY FACTOR [%] 1% 1% -1% -5% Change of Group value in use -13% -9% -4% -7% Notes: (1) The increase of 1% in the discount rate is applied to the whole stream from 2019 to Terminal Value. (2) Delta expressed in absolute amount. (3) Delta expressed in percentage terms. The parameters and information used to verify the sustainability of goodwill (in particular the financial projections used) are significantly influenced by the macroeconomic environment and the market conditions. Should the macroeconomic environment deteriorate in the future, the results of the next sustainability tests on goodwill could show a recoverable amount lower than the carrying value and therefore highlight the need to perform a goodwill impairment. Comparison with market capitalisation The Group's total value in use resulting from the impairment test is higher than the current market capitalisation of the Parent company. The difference could be largely explained by: i) the upside potential embedded in Analysts' consensus; ii) the cost of equity used in the impairment test and iii) market expectations on long term return and its distribution. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 220 2018 Annual Report and Accounts · UniCredit Prudentially, the cost of equity for Fineco was floored for the entire valuation period, at the lowest level of the cost of equity of Commercial Banking CGUs and for CIB it was prudentially floored for the entire valuation period at the weighted average (by geographical distribution of CIB RWA) of the cost of equity of the Commercial Banking CGUs Another parameter used in the model to determine the initial allocated capital and its evolution over time is the Common Equity Tier 1 ratio target. For all the CGUs the target Common Equity Tier 1 ratio is 12.5% in 2018 consistently with the updated CET 1 ratio target range. The contribution of Turkey to the Recoverable Amount of the CEE CGU was estimated considering a CET 1 ratio target of 10.50% in line with Yapi Kredi target. Results of the impairment test The impairment test as at 31 December 2018 confirms the sustainability of the goodwill with no need for an impairment on the consolidated accounts of the UniCredit group. It must be underlined that the parameters and information used to verify the recoverability of goodwill (in particular the expected cash flows for the various CGU, and the discount rates applied) are significantly influenced by the macroeconomic and market situation, which may be subject to changes currently unpredictable. In the coming reporting periods, the effect of these changes, and of changes in the corporate strategies, could therefore lead to a review of the estimated cash flows of the various CGUs and of the assumptions about the main financial variables (discount rates, expected growth rates, Common Equity Tier 1 ratio, etc.) that could impact the results of the future impairment tests. Sensitivity analysis Since the valuation exercise is affected by the macroeconomic and market environment and given the intrinsic complexity of forecasting future long-term profitability, sensitivity analyses were conducted, assuming changes to the main parameters used in the impairment test. The table below summarises for the CGUs which still have goodwill, the percentage deviations of the initial assumptions (cost of equity, capital ratio, long-term growth rate and streams of income used for the estimation of cash flows) adopted for the different CGUs, that drive the recoverable amount of each CGU equal to its book value: CGUs €/MLN INCREASE IN THE DISCOUNT RATE AFTER TAX (KE) (1) INCREASE IN THE CET 1 RATIO TARGET (2) DECREASE IN THE NOMINAL GROWTH RATE FOR THE CALCULATION OF TERMINAL VALUE (2) DECREASE IN ANNUAL EARNINGS (3) CIB 2.1% 1.7% -16.1% -19.0% Fineco 22.4% n.m. n.m. n.m. Commercial Banking Italy 0.8% 3.6% -5.5% -7.6% Notes: (1) The increase of 1% in the discount rate is applied to the whole stream from 2018 to Terminal Value. (2) Delta expressed in absolute amount. (3) Delta expressed in percentage terms. The table below shows the change of the total value in use of the Group resulting from a variation of the main parameters used in the valuation model. GROUP LEVEL €/MLN INCREASE IN THE DISCOUNT RATE AFTER TAX (KE) (1) INCREASE IN THE CET 1 RATIO TARGET (2) DECREASE IN THE NOMINAL GROWTH RATE FOR THE CALCULATION OF TERMINAL VALUE (2) DECREASE IN ANNUAL EARNINGS (3) SENSITIVITY FACTOR [%] 1% 1% -1% -5% Change of Group value in use -13% -9% -4% -7% Notes: (1) The increase of 1% in the discount rate is applied to the whole stream from 2019 to Terminal Value. (2) Delta expressed in absolute amount. (3) Delta expressed in percentage terms. The parameters and information used to verify the sustainability of goodwill (in particular the financial projections used) are significantly influenced by the macroeconomic environment and the market conditions. Should the macroeconomic environment deteriorate in the future, the results of the next sustainability tests on goodwill could show a recoverable amount lower than the carrying value and therefore highlight the need to perform a goodwill impairment. Comparison with market capitalisation The Group's total value in use resulting from the impairment test is higher than the current market capitalisation of the Parent company. The difference could be largely explained by: i) the upside potential embedded in Analysts' consensus; ii) the cost of equity used in the impairment test and iii) market expectations on long term return and its distribution. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 221 Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) 11.1 Deferred tax assets: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax assets arising from Italian law 214/2011 8,309,594 8,315,432 Deferred tax assets arising from tax losses 386,737 733,421 Deferred tax assets arising from temporary differences 4,668,339 3,212,029 Financial assets and liabilities (different from loans and deposits) 536,456 453,934 Loans and deposits to/from banks and customers 1,070,913 181,989 Hedging and hedged item revaluation 511,266 299,111 Property, plant and equipment and intangible assets different from goodwill 195,921 191,958 Goodwill and equity investments 1,232 10,597 Current assets and liabilities held for sale - 1,003 Other assets and Other liabilities 362,944 291,019 Provisions, pension funds and similar 1,989,607 1,782,288 Other - 130 Accounting offsetting (1,318,862) (1,642,299) Total 12,045,808 10,618,583 11.2 Deferred tax liabilities: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax liabilities arising from temporary differences 1,741,054 2,076,325 Financial assets and liabilities (different from from loans and deposits) 545,458 693,103 Loans and deposits to/from banks and customers 135,716 140,795 Hedging and hedged item revaluation 461,171 525,417 Property, plant and equipment and intangible assets different from goodwill 353,385 355,657 Goodwill and equity investments 24,078 23,744 Assets and liabilities held for sale - 282 Other assets and Other liabilities 185,837 295,200 Other 35,409 42,127 Accounting offsetting (1,318,031) (1,634,683) Total 423,023 441,642 Deferred Tax Assets (DTAs) totally amount to €12,046 million (compared with €10,619 million as of 31 December 2017), of which €8,310 million (compared with €8,315 million as of 31 December 2017) can be, under certain circumstances, converted into tax credits pursuant to Law No.214 of 22 December 2011 (i.e., DTA convertible into tax credits). The remaining DTAs (i.e., DTAs non-convertible into tax credits) are related to costs and write-offs deductible in future years, for €3,349 million (net of related deferred tax liabilities), and to tax losses for €387 million. DTAs on tax losses carried forward are mainly referred to the German subsidiary UniCredit Bank AG (€274 million). The above mentioned amounts are the ones resulting upon the application of the accounting impairment according to which DTAs undergo the sustainability test provided for by IAS12, that takes into account the economic projections foreseeable for future years and the peculiarities of the fiscal legislations of each country, in order to check whether there are future taxable incomes against which DTAs can be offset. With particular reference to UniCredit S.p.A., to which most of the Group's deferred tax assets are attributable, the recoverability test takes into account, besides the economic projections, the forecasts for conversion of DTAs into tax credits under the terms of Italian Law No.214/2011. At Group level, the DTAs out of balance on tax losses carried forward are mainly referred to UniCredit S.p.A. for € 3,272 million, to UniCredit Leasing S.p.A. for €234 million and to UniCredit Bank Austria for €445 million. For deferred tax assets and liabilities of the Parent company refer to paragraph of Part B - Notes to the accounts of UniCredit S.p.A. - Section 10 Tax assets and liabilities - Item 100 (Assets) and Item 60 (Liabilities) which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 221 Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) 11.1 Deferred tax assets: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax assets arising from Italian law 214/2011 8,309,594 8,315,432 Deferred tax assets arising from tax losses 386,737 733,421 Deferred tax assets arising from temporary differences 4,668,339 3,212,029 Financial assets and liabilities (different from loans and deposits) 536,456 453,934 Loans and deposits to/from banks and customers 1,070,913 181,989 Hedging and hedged item revaluation 511,266 299,111 Property, plant and equipment and intangible assets different from goodwill 195,921 191,958 Goodwill and equity investments 1,232 10,597 Current assets and liabilities held for sale - 1,003 Other assets and Other liabilities 362,944 291,019 Provisions, pension funds and similar 1,989,607 1,782,288 Other - 130 Accounting offsetting (1,318,862) (1,642,299) Total 12,045,808 10,618,583 11.2 Deferred tax liabilities: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax liabilities arising from temporary differences 1,741,054 2,076,325 Financial assets and liabilities (different from from loans and deposits) 545,458 693,103 Loans and deposits to/from banks and customers 135,716 140,795 Hedging and hedged item revaluation 461,171 525,417 Property, plant and equipment and intangible assets different from goodwill 353,385 355,657 Goodwill and equity investments 24,078 23,744 Assets and liabilities held for sale - 282 Other assets and Other liabilities 185,837 295,200 Other 35,409 42,127 Accounting offsetting (1,318,031) (1,634,683) Total 423,023 441,642 Deferred Tax Assets (DTAs) totally amount to €12,046 million (compared with €10,619 million as of 31 December 2017), of which €8,310 million (compared with €8,315 million as of 31 December 2017) can be, under certain circumstances, converted into tax credits pursuant to Law No.214 of 22 December 2011 (i.e., DTA convertible into tax credits). The remaining DTAs (i.e., DTAs non-convertible into tax credits) are related to costs and write-offs deductible in future years, for €3,349 million (net of related deferred tax liabilities), and to tax losses for €387 million. DTAs on tax losses carried forward are mainly referred to the German subsidiary UniCredit Bank AG (€274 million). The above mentioned amounts are the ones resulting upon the application of the accounting impairment according to which DTAs undergo the sustainability test provided for by IAS12, that takes into account the economic projections foreseeable for future years and the peculiarities of the fiscal legislations of each country, in order to check whether there are future taxable incomes against which DTAs can be offset. With particular reference to UniCredit S.p.A., to which most of the Group's deferred tax assets are attributable, the recoverability test takes into account, besides the economic projections, the forecasts for conversion of DTAs into tax credits under the terms of Italian Law No.214/2011. At Group level, the DTAs out of balance on tax losses carried forward are mainly referred to UniCredit S.p.A. for € 3,272 million, to UniCredit Leasing S.p.A. for €234 million and to UniCredit Bank Austria for €445 million. For deferred tax assets and liabilities of the Parent company refer to paragraph of Part B - Notes to the accounts of UniCredit S.p.A. - Section 10 Tax assets and liabilities - Item 100 (Assets) and Item 60 (Liabilities) which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 221 Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) 11.1 Deferred tax assets: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax assets arising from Italian law 214/2011 8,309,594 8,315,432 Deferred tax assets arising from tax losses 386,737 733,421 Deferred tax assets arising from temporary differences 4,668,339 3,212,029 Financial assets and liabilities (different from loans and deposits) 536,456 453,934 Loans and deposits to/from banks and customers 1,070,913 181,989 Hedging and hedged item revaluation 511,266 299,111 Property, plant and equipment and intangible assets different from goodwill 195,921 191,958 Goodwill and equity investments 1,232 10,597 Current assets and liabilities held for sale - 1,003 Other assets and Other liabilities 362,944 291,019 Provisions, pension funds and similar 1,989,607 1,782,288 Other - 130 Accounting offsetting (1,318,862) (1,642,299) Total 12,045,808 10,618,583 11.2 Deferred tax liabilities: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax liabilities arising from temporary differences 1,741,054 2,076,325 Financial assets and liabilities (different from from loans and deposits) 545,458 693,103 Loans and deposits to/from banks and customers 135,716 140,795 Hedging and hedged item revaluation 461,171 525,417 Property, plant and equipment and intangible assets different from goodwill 353,385 355,657 Goodwill and equity investments 24,078 23,744 Assets and liabilities held for sale - 282 Other assets and Other liabilities 185,837 295,200 Other 35,409 42,127 Accounting offsetting (1,318,031) (1,634,683) Total 423,023 441,642 Deferred Tax Assets (DTAs) totally amount to €12,046 million (compared with €10,619 million as of 31 December 2017), of which €8,310 million (compared with €8,315 million as of 31 December 2017) can be, under certain circumstances, converted into tax credits pursuant to Law No.214 of 22 December 2011 (i.e., DTA convertible into tax credits). The remaining DTAs (i.e., DTAs non-convertible into tax credits) are related to costs and write-offs deductible in future years, for €3,349 million (net of related deferred tax liabilities), and to tax losses for €387 million. DTAs on tax losses carried forward are mainly referred to the German subsidiary UniCredit Bank AG (€274 million). The above mentioned amounts are the ones resulting upon the application of the accounting impairment according to which DTAs undergo the sustainability test provided for by IAS12, that takes into account the economic projections foreseeable for future years and the peculiarities of the fiscal legislations of each country, in order to check whether there are future taxable incomes against which DTAs can be offset. With particular reference to UniCredit S.p.A., to which most of the Group's deferred tax assets are attributable, the recoverability test takes into account, besides the economic projections, the forecasts for conversion of DTAs into tax credits under the terms of Italian Law No.214/2011. At Group level, the DTAs out of balance on tax losses carried forward are mainly referred to UniCredit S.p.A. for € 3,272 million, to UniCredit Leasing S.p.A. for €234 million and to UniCredit Bank Austria for €445 million. For deferred tax assets and liabilities of the Parent company refer to paragraph of Part B - Notes to the accounts of UniCredit S.p.A. - Section 10 Tax assets and liabilities - Item 100 (Assets) and Item 60 (Liabilities) which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 221 Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) 11.1 Deferred tax assets: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax assets arising from Italian law 214/2011 8,309,594 8,315,432 Deferred tax assets arising from tax losses 386,737 733,421 Deferred tax assets arising from temporary differences 4,668,339 3,212,029 Financial assets and liabilities (different from loans and deposits) 536,456 453,934 Loans and deposits to/from banks and customers 1,070,913 181,989 Hedging and hedged item revaluation 511,266 299,111 Property, plant and equipment and intangible assets different from goodwill 195,921 191,958 Goodwill and equity investments 1,232 10,597 Current assets and liabilities held for sale - 1,003 Other assets and Other liabilities 362,944 291,019 Provisions, pension funds and similar 1,989,607 1,782,288 Other - 130 Accounting offsetting (1,318,862) (1,642,299) Total 12,045,808 10,618,583 11.2 Deferred tax liabilities: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax liabilities arising from temporary differences 1,741,054 2,076,325 Financial assets and liabilities (different from from loans and deposits) 545,458 693,103 Loans and deposits to/from banks and customers 135,716 140,795 Hedging and hedged item revaluation 461,171 525,417 Property, plant and equipment and intangible assets different from goodwill 353,385 355,657 Goodwill and equity investments 24,078 23,744 Assets and liabilities held for sale - 282 Other assets and Other liabilities 185,837 295,200 Other 35,409 42,127 Accounting offsetting (1,318,031) (1,634,683) Total 423,023 441,642 Deferred Tax Assets (DTAs) totally amount to €12,046 million (compared with €10,619 million as of 31 December 2017), of which €8,310 million (compared with €8,315 million as of 31 December 2017) can be, under certain circumstances, converted into tax credits pursuant to Law No.214 of 22 December 2011 (i.e., DTA convertible into tax credits). The remaining DTAs (i.e., DTAs non-convertible into tax credits) are related to costs and write-offs deductible in future years, for €3,349 million (net of related deferred tax liabilities), and to tax losses for €387 million. DTAs on tax losses carried forward are mainly referred to the German subsidiary UniCredit Bank AG (€274 million). The above mentioned amounts are the ones resulting upon the application of the accounting impairment according to which DTAs undergo the sustainability test provided for by IAS12, that takes into account the economic projections foreseeable for future years and the peculiarities of the fiscal legislations of each country, in order to check whether there are future taxable incomes against which DTAs can be offset. With particular reference to UniCredit S.p.A., to which most of the Group's deferred tax assets are attributable, the recoverability test takes into account, besides the economic projections, the forecasts for conversion of DTAs into tax credits under the terms of Italian Law No.214/2011. At Group level, the DTAs out of balance on tax losses carried forward are mainly referred to UniCredit S.p.A. for € 3,272 million, to UniCredit Leasing S.p.A. for €234 million and to UniCredit Bank Austria for €445 million. For deferred tax assets and liabilities of the Parent company refer to paragraph of Part B - Notes to the accounts of UniCredit S.p.A. - Section 10 Tax assets and liabilities - Item 100 (Assets) and Item 60 (Liabilities) which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 221 Section 11 - Tax assets and tax liabilities - Item 110 (Assets) and Item 60 (Liabilities) 11.1 Deferred tax assets: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax assets arising from Italian law 214/2011 8,309,594 8,315,432 Deferred tax assets arising from tax losses 386,737 733,421 Deferred tax assets arising from temporary differences 4,668,339 3,212,029 Financial assets and liabilities (different from loans and deposits) 536,456 453,934 Loans and deposits to/from banks and customers 1,070,913 181,989 Hedging and hedged item revaluation 511,266 299,111 Property, plant and equipment and intangible assets different from goodwill 195,921 191,958 Goodwill and equity investments 1,232 10,597 Current assets and liabilities held for sale - 1,003 Other assets and Other liabilities 362,944 291,019 Provisions, pension funds and similar 1,989,607 1,782,288 Other - 130 Accounting offsetting (1,318,862) (1,642,299) Total 12,045,808 10,618,583 11.2 Deferred tax liabilities: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax liabilities arising from temporary differences 1,741,054 2,076,325 Financial assets and liabilities (different from from loans and deposits) 545,458 693,103 Loans and deposits to/from banks and customers 135,716 140,795 Hedging and hedged item revaluation 461,171 525,417 Property, plant and equipment and intangible assets different from goodwill 353,385 355,657 Goodwill and equity investments 24,078 23,744 Assets and liabilities held for sale - 282 Other assets and Other liabilities 185,837 295,200 Other 35,409 42,127 Accounting offsetting (1,318,031) (1,634,683) Total 423,023 441,642 Deferred Tax Assets (DTAs) totally amount to €12,046 million (compared with €10,619 million as of 31 December 2017), of which €8,310 million (compared with €8,315 million as of 31 December 2017) can be, under certain circumstances, converted into tax credits pursuant to Law No.214 of 22 December 2011 (i.e., DTA convertible into tax credits). The remaining DTAs (i.e., DTAs non-convertible into tax credits) are related to costs and write-offs deductible in future years, for €3,349 million (net of related deferred tax liabilities), and to tax losses for €387 million. DTAs on tax losses carried forward are mainly referred to the German subsidiary UniCredit Bank AG (€274 million). The above mentioned amounts are the ones resulting upon the application of the accounting impairment according to which DTAs undergo the sustainability test provided for by IAS12, that takes into account the economic projections foreseeable for future years and the peculiarities of the fiscal legislations of each country, in order to check whether there are future taxable incomes against which DTAs can be offset. With particular reference to UniCredit S.p.A., to which most of the Group's deferred tax assets are attributable, the recoverability test takes into account, besides the economic projections, the forecasts for conversion of DTAs into tax credits under the terms of Italian Law No.214/2011. At Group level, the DTAs out of balance on tax losses carried forward are mainly referred to UniCredit S.p.A. for € 3,272 million, to UniCredit Leasing S.p.A. for €234 million and to UniCredit Bank Austria for €445 million. For deferred tax assets and liabilities of the Parent company refer to paragraph of Part B - Notes to the accounts of UniCredit S.p.A. - Section 10 Tax assets and liabilities - Item 100 (Assets) and Item 60 (Liabilities) which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 222 2018 Annual Report and Accounts · UniCredit 11.3 Deferred tax assets: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 9,628,985 12,989,425 2. Increases 3,566,117 2,988,892 2.1 Deferred tax assets arisen during the year 2,206,570 1,510,534 a) Relating to previous years 83,409 69,839 b) Due to change in accounting criteria 381 - c) Write-backs 560,919 721,193 d) Other 1,561,861 719,502 2.2 New taxes or increases in tax rates 1,270 - 2.3 Other increases 1,358,277 1,478,358 3. Decreases 2,575,043 6,530,348 3.1 Deferred tax assets derecognised during the year 1,245,203 1,842,649 a) Reversals of temporary differences 979,129 1,186,469 b) Write-downs of non-recoverable items 62,416 397,239 c) Change in accounting criteria 247 3,004 d) Other 203,411 255,937 3.2 Reduction in tax rates - 16,255 3.3 Other decreases 1,329,840 4,671,444 a) Conversion into tax credit under Italian Law 214/2011 - 3,019,022 b) Other 1,329,840 1,652,422 4. Closing balance 10,620,059 9,447,969 Sub-item “2.1 Deferred tax assets arisen during the year d) Other” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. 11.4 Deferred tax assets (Italian Law 214/2011): annual changes (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,315,432 11,339,783 2. Increases 267 7 3. Decreases 6,105 3,024,358 3.1 Reversals of temporary differences - 4,099 3.2 Conversion into tax credits - 3,019,022 a) Due to loss positions arisen from P&L - 3,019,022 b) Due to tax losses - - 3.3 Other decreases 6,105 1,237 4. Closing balance 8,309,594 8,315,432 Following the 5th update of Banca d’Italia Circular 262, starting from 31 December 2018, the table shows the deferred tax asset annual changes of which L.214/2011 both equity balancing and P&L balancing. According to this new approach the values at 31 December 2017 have been restated. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 222 2018 Annual Report and Accounts · UniCredit 11.3 Deferred tax assets: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 9,628,985 12,989,425 2. Increases 3,566,117 2,988,892 2.1 Deferred tax assets arisen during the year 2,206,570 1,510,534 a) Relating to previous years 83,409 69,839 b) Due to change in accounting criteria 381 - c) Write-backs 560,919 721,193 d) Other 1,561,861 719,502 2.2 New taxes or increases in tax rates 1,270 - 2.3 Other increases 1,358,277 1,478,358 3. Decreases 2,575,043 6,530,348 3.1 Deferred tax assets derecognised during the year 1,245,203 1,842,649 a) Reversals of temporary differences 979,129 1,186,469 b) Write-downs of non-recoverable items 62,416 397,239 c) Change in accounting criteria 247 3,004 d) Other 203,411 255,937 3.2 Reduction in tax rates - 16,255 3.3 Other decreases 1,329,840 4,671,444 a) Conversion into tax credit under Italian Law 214/2011 - 3,019,022 b) Other 1,329,840 1,652,422 4. Closing balance 10,620,059 9,447,969 Sub-item “2.1 Deferred tax assets arisen during the year d) Other” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. 11.4 Deferred tax assets (Italian Law 214/2011): annual changes (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,315,432 11,339,783 2. Increases 267 7 3. Decreases 6,105 3,024,358 3.1 Reversals of temporary differences - 4,099 3.2 Conversion into tax credits - 3,019,022 a) Due to loss positions arisen from P&L - 3,019,022 b) Due to tax losses - - 3.3 Other decreases 6,105 1,237 4. Closing balance 8,309,594 8,315,432 Following the 5th update of Banca d’Italia Circular 262, starting from 31 December 2018, the table shows the deferred tax asset annual changes of which L.214/2011 both equity balancing and P&L balancing. According to this new approach the values at 31 December 2017 have been restated. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 222 2018 Annual Report and Accounts · UniCredit 11.3 Deferred tax assets: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 9,628,985 12,989,425 2. Increases 3,566,117 2,988,892 2.1 Deferred tax assets arisen during the year 2,206,570 1,510,534 a) Relating to previous years 83,409 69,839 b) Due to change in accounting criteria 381 - c) Write-backs 560,919 721,193 d) Other 1,561,861 719,502 2.2 New taxes or increases in tax rates 1,270 - 2.3 Other increases 1,358,277 1,478,358 3. Decreases 2,575,043 6,530,348 3.1 Deferred tax assets derecognised during the year 1,245,203 1,842,649 a) Reversals of temporary differences 979,129 1,186,469 b) Write-downs of non-recoverable items 62,416 397,239 c) Change in accounting criteria 247 3,004 d) Other 203,411 255,937 3.2 Reduction in tax rates - 16,255 3.3 Other decreases 1,329,840 4,671,444 a) Conversion into tax credit under Italian Law 214/2011 - 3,019,022 b) Other 1,329,840 1,652,422 4. Closing balance 10,620,059 9,447,969 Sub-item “2.1 Deferred tax assets arisen during the year d) Other” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. 11.4 Deferred tax assets (Italian Law 214/2011): annual changes (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,315,432 11,339,783 2. Increases 267 7 3. Decreases 6,105 3,024,358 3.1 Reversals of temporary differences - 4,099 3.2 Conversion into tax credits - 3,019,022 a) Due to loss positions arisen from P&L - 3,019,022 b) Due to tax losses - - 3.3 Other decreases 6,105 1,237 4. Closing balance 8,309,594 8,315,432 Following the 5th update of Banca d’Italia Circular 262, starting from 31 December 2018, the table shows the deferred tax asset annual changes of which L.214/2011 both equity balancing and P&L balancing. According to this new approach the values at 31 December 2017 have been restated. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 222 2018 Annual Report and Accounts · UniCredit 11.3 Deferred tax assets: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 9,628,985 12,989,425 2. Increases 3,566,117 2,988,892 2.1 Deferred tax assets arisen during the year 2,206,570 1,510,534 a) Relating to previous years 83,409 69,839 b) Due to change in accounting criteria 381 - c) Write-backs 560,919 721,193 d) Other 1,561,861 719,502 2.2 New taxes or increases in tax rates 1,270 - 2.3 Other increases 1,358,277 1,478,358 3. Decreases 2,575,043 6,530,348 3.1 Deferred tax assets derecognised during the year 1,245,203 1,842,649 a) Reversals of temporary differences 979,129 1,186,469 b) Write-downs of non-recoverable items 62,416 397,239 c) Change in accounting criteria 247 3,004 d) Other 203,411 255,937 3.2 Reduction in tax rates - 16,255 3.3 Other decreases 1,329,840 4,671,444 a) Conversion into tax credit under Italian Law 214/2011 - 3,019,022 b) Other 1,329,840 1,652,422 4. Closing balance 10,620,059 9,447,969 Sub-item “2.1 Deferred tax assets arisen during the year d) Other” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. 11.4 Deferred tax assets (Italian Law 214/2011): annual changes (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,315,432 11,339,783 2. Increases 267 7 3. Decreases 6,105 3,024,358 3.1 Reversals of temporary differences - 4,099 3.2 Conversion into tax credits - 3,019,022 a) Due to loss positions arisen from P&L - 3,019,022 b) Due to tax losses - - 3.3 Other decreases 6,105 1,237 4. Closing balance 8,309,594 8,315,432 Following the 5th update of Banca d’Italia Circular 262, starting from 31 December 2018, the table shows the deferred tax asset annual changes of which L.214/2011 both equity balancing and P&L balancing. According to this new approach the values at 31 December 2017 have been restated. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 222 2018 Annual Report and Accounts · UniCredit 11.3 Deferred tax assets: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 9,628,985 12,989,425 2. Increases 3,566,117 2,988,892 2.1 Deferred tax assets arisen during the year 2,206,570 1,510,534 a) Relating to previous years 83,409 69,839 b) Due to change in accounting criteria 381 - c) Write-backs 560,919 721,193 d) Other 1,561,861 719,502 2.2 New taxes or increases in tax rates 1,270 - 2.3 Other increases 1,358,277 1,478,358 3. Decreases 2,575,043 6,530,348 3.1 Deferred tax assets derecognised during the year 1,245,203 1,842,649 a) Reversals of temporary differences 979,129 1,186,469 b) Write-downs of non-recoverable items 62,416 397,239 c) Change in accounting criteria 247 3,004 d) Other 203,411 255,937 3.2 Reduction in tax rates - 16,255 3.3 Other decreases 1,329,840 4,671,444 a) Conversion into tax credit under Italian Law 214/2011 - 3,019,022 b) Other 1,329,840 1,652,422 4. Closing balance 10,620,059 9,447,969 Sub-item “2.1 Deferred tax assets arisen during the year d) Other” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. 11.4 Deferred tax assets (Italian Law 214/2011): annual changes (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,315,432 11,339,783 2. Increases 267 7 3. Decreases 6,105 3,024,358 3.1 Reversals of temporary differences - 4,099 3.2 Conversion into tax credits - 3,019,022 a) Due to loss positions arisen from P&L - 3,019,022 b) Due to tax losses - - 3.3 Other decreases 6,105 1,237 4. Closing balance 8,309,594 8,315,432 Following the 5th update of Banca d’Italia Circular 262, starting from 31 December 2018, the table shows the deferred tax asset annual changes of which L.214/2011 both equity balancing and P&L balancing. According to this new approach the values at 31 December 2017 have been restated. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 223 11.5 Deferred tax liabilities: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 446,888 482,756 2. Increases 1,446,749 1,459,860 2.1 Deferred tax liabilities arisen during the year 266,406 83,355 a) Relating to previous years 2,369 375 b) Due to change in accounting criteria 1,460 350 c) Other 262,577 82,630 2.2 New taxes or increases in tax rates 448 - 2.3 Other increases 1,179,895 1,376,505 3. Decreases 1,481,356 1,520,721 3.1 Deferred tax liabilities derecognised during the year 321,672 427,096 a) Reversals of temporary differences 303,626 379,785 b) Due to change in accounting criteria - 1,665 c) Other 18,046 45,646 3.2 Reduction in tax rates - 4,994 3.3 Other decreases 1,159,684 1,088,631 4. Closing balance 412,281 421,895 11.6 Deferred tax assets: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 1,177,474 1,028,829 2. Increases 811,789 753,709 2.1 Deferred tax assets arisen during the year 436,391 432,422 a) Relating to previous years 79 - b) Due to change in accounting criteria 1,608 - c) Other 434,704 432,422 2.2 New taxes or increase in tax rates 29,363 - 2.3 Other increases 346,035 321,287 3. Decreases 563,514 611,924 3.1 Deferred tax assets derecognised during the year 345,503 351,577 a) Reversals of temporary differences 151,640 274,786 b) Write-downs of non-recoverable items 169,000 800 c) Due to change in accounting criteria - - d) Other 24,863 75,991 3.2 Reduction in tax rates - 6,140 3.3 Other decreases 218,011 254,207 4. Closing balance 1,425,749 1,170,614 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 223 11.5 Deferred tax liabilities: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 446,888 482,756 2. Increases 1,446,749 1,459,860 2.1 Deferred tax liabilities arisen during the year 266,406 83,355 a) Relating to previous years 2,369 375 b) Due to change in accounting criteria 1,460 350 c) Other 262,577 82,630 2.2 New taxes or increases in tax rates 448 - 2.3 Other increases 1,179,895 1,376,505 3. Decreases 1,481,356 1,520,721 3.1 Deferred tax liabilities derecognised during the year 321,672 427,096 a) Reversals of temporary differences 303,626 379,785 b) Due to change in accounting criteria - 1,665 c) Other 18,046 45,646 3.2 Reduction in tax rates - 4,994 3.3 Other decreases 1,159,684 1,088,631 4. Closing balance 412,281 421,895 11.6 Deferred tax assets: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 1,177,474 1,028,829 2. Increases 811,789 753,709 2.1 Deferred tax assets arisen during the year 436,391 432,422 a) Relating to previous years 79 - b) Due to change in accounting criteria 1,608 - c) Other 434,704 432,422 2.2 New taxes or increase in tax rates 29,363 - 2.3 Other increases 346,035 321,287 3. Decreases 563,514 611,924 3.1 Deferred tax assets derecognised during the year 345,503 351,577 a) Reversals of temporary differences 151,640 274,786 b) Write-downs of non-recoverable items 169,000 800 c) Due to change in accounting criteria - - d) Other 24,863 75,991 3.2 Reduction in tax rates - 6,140 3.3 Other decreases 218,011 254,207 4. Closing balance 1,425,749 1,170,614 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 223 11.5 Deferred tax liabilities: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 446,888 482,756 2. Increases 1,446,749 1,459,860 2.1 Deferred tax liabilities arisen during the year 266,406 83,355 a) Relating to previous years 2,369 375 b) Due to change in accounting criteria 1,460 350 c) Other 262,577 82,630 2.2 New taxes or increases in tax rates 448 - 2.3 Other increases 1,179,895 1,376,505 3. Decreases 1,481,356 1,520,721 3.1 Deferred tax liabilities derecognised during the year 321,672 427,096 a) Reversals of temporary differences 303,626 379,785 b) Due to change in accounting criteria - 1,665 c) Other 18,046 45,646 3.2 Reduction in tax rates - 4,994 3.3 Other decreases 1,159,684 1,088,631 4. Closing balance 412,281 421,895 11.6 Deferred tax assets: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 1,177,474 1,028,829 2. Increases 811,789 753,709 2.1 Deferred tax assets arisen during the year 436,391 432,422 a) Relating to previous years 79 - b) Due to change in accounting criteria 1,608 - c) Other 434,704 432,422 2.2 New taxes or increase in tax rates 29,363 - 2.3 Other increases 346,035 321,287 3. Decreases 563,514 611,924 3.1 Deferred tax assets derecognised during the year 345,503 351,577 a) Reversals of temporary differences 151,640 274,786 b) Write-downs of non-recoverable items 169,000 800 c) Due to change in accounting criteria - - d) Other 24,863 75,991 3.2 Reduction in tax rates - 6,140 3.3 Other decreases 218,011 254,207 4. Closing balance 1,425,749 1,170,614 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 223 11.5 Deferred tax liabilities: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 446,888 482,756 2. Increases 1,446,749 1,459,860 2.1 Deferred tax liabilities arisen during the year 266,406 83,355 a) Relating to previous years 2,369 375 b) Due to change in accounting criteria 1,460 350 c) Other 262,577 82,630 2.2 New taxes or increases in tax rates 448 - 2.3 Other increases 1,179,895 1,376,505 3. Decreases 1,481,356 1,520,721 3.1 Deferred tax liabilities derecognised during the year 321,672 427,096 a) Reversals of temporary differences 303,626 379,785 b) Due to change in accounting criteria - 1,665 c) Other 18,046 45,646 3.2 Reduction in tax rates - 4,994 3.3 Other decreases 1,159,684 1,088,631 4. Closing balance 412,281 421,895 11.6 Deferred tax assets: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 1,177,474 1,028,829 2. Increases 811,789 753,709 2.1 Deferred tax assets arisen during the year 436,391 432,422 a) Relating to previous years 79 - b) Due to change in accounting criteria 1,608 - c) Other 434,704 432,422 2.2 New taxes or increase in tax rates 29,363 - 2.3 Other increases 346,035 321,287 3. Decreases 563,514 611,924 3.1 Deferred tax assets derecognised during the year 345,503 351,577 a) Reversals of temporary differences 151,640 274,786 b) Write-downs of non-recoverable items 169,000 800 c) Due to change in accounting criteria - - d) Other 24,863 75,991 3.2 Reduction in tax rates - 6,140 3.3 Other decreases 218,011 254,207 4. Closing balance 1,425,749 1,170,614 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 223 11.5 Deferred tax liabilities: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 446,888 482,756 2. Increases 1,446,749 1,459,860 2.1 Deferred tax liabilities arisen during the year 266,406 83,355 a) Relating to previous years 2,369 375 b) Due to change in accounting criteria 1,460 350 c) Other 262,577 82,630 2.2 New taxes or increases in tax rates 448 - 2.3 Other increases 1,179,895 1,376,505 3. Decreases 1,481,356 1,520,721 3.1 Deferred tax liabilities derecognised during the year 321,672 427,096 a) Reversals of temporary differences 303,626 379,785 b) Due to change in accounting criteria - 1,665 c) Other 18,046 45,646 3.2 Reduction in tax rates - 4,994 3.3 Other decreases 1,159,684 1,088,631 4. Closing balance 412,281 421,895 11.6 Deferred tax assets: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 1,177,474 1,028,829 2. Increases 811,789 753,709 2.1 Deferred tax assets arisen during the year 436,391 432,422 a) Relating to previous years 79 - b) Due to change in accounting criteria 1,608 - c) Other 434,704 432,422 2.2 New taxes or increase in tax rates 29,363 - 2.3 Other increases 346,035 321,287 3. Decreases 563,514 611,924 3.1 Deferred tax assets derecognised during the year 345,503 351,577 a) Reversals of temporary differences 151,640 274,786 b) Write-downs of non-recoverable items 169,000 800 c) Due to change in accounting criteria - - d) Other 24,863 75,991 3.2 Reduction in tax rates - 6,140 3.3 Other decreases 218,011 254,207 4. Closing balance 1,425,749 1,170,614 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 224 2018 Annual Report and Accounts · UniCredit 11.7 Deferred tax liabilities: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 16,735 18,868 2. Increases 683,852 1,120,385 2.1 Deferred tax liabilities arisen during the year 129,347 371,544 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 129,347 371,544 2.2 New taxes or increase in tax rates - - 2.3 Other increases 554,505 748,841 3. Decreases 689,845 1,119,506 3.1 Deferred tax liabilities derecognised during the year 384,368 537,491 a) Reversal of temporary differences 144,244 203,445 b) Due to change in accounting criteria 3,551 - c) Other 236,573 334,046 3.2 Reduction in tax rates - 160 3.3 Other decreases 305,477 581,855 4. Closing balance 10,742 19,747 11.8 Other informations In respect of financial year 2017, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits (pursuant to Art.2, paragraph 55, of Decree Law No.225 of 29 December 2010), were not verified, since the Group legal entities having a stock of Convertible DTAs registered a net profit in their separate financial statements. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 224 2018 Annual Report and Accounts · UniCredit 11.7 Deferred tax liabilities: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 16,735 18,868 2. Increases 683,852 1,120,385 2.1 Deferred tax liabilities arisen during the year 129,347 371,544 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 129,347 371,544 2.2 New taxes or increase in tax rates - - 2.3 Other increases 554,505 748,841 3. Decreases 689,845 1,119,506 3.1 Deferred tax liabilities derecognised during the year 384,368 537,491 a) Reversal of temporary differences 144,244 203,445 b) Due to change in accounting criteria 3,551 - c) Other 236,573 334,046 3.2 Reduction in tax rates - 160 3.3 Other decreases 305,477 581,855 4. Closing balance 10,742 19,747 11.8 Other informations In respect of financial year 2017, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits (pursuant to Art.2, paragraph 55, of Decree Law No.225 of 29 December 2010), were not verified, since the Group legal entities having a stock of Convertible DTAs registered a net profit in their separate financial statements. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 224 2018 Annual Report and Accounts · UniCredit 11.7 Deferred tax liabilities: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 16,735 18,868 2. Increases 683,852 1,120,385 2.1 Deferred tax liabilities arisen during the year 129,347 371,544 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 129,347 371,544 2.2 New taxes or increase in tax rates - - 2.3 Other increases 554,505 748,841 3. Decreases 689,845 1,119,506 3.1 Deferred tax liabilities derecognised during the year 384,368 537,491 a) Reversal of temporary differences 144,244 203,445 b) Due to change in accounting criteria 3,551 - c) Other 236,573 334,046 3.2 Reduction in tax rates - 160 3.3 Other decreases 305,477 581,855 4. Closing balance 10,742 19,747 11.8 Other informations In respect of financial year 2017, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits (pursuant to Art.2, paragraph 55, of Decree Law No.225 of 29 December 2010), were not verified, since the Group legal entities having a stock of Convertible DTAs registered a net profit in their separate financial statements. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 224 2018 Annual Report and Accounts · UniCredit 11.7 Deferred tax liabilities: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 16,735 18,868 2. Increases 683,852 1,120,385 2.1 Deferred tax liabilities arisen during the year 129,347 371,544 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 129,347 371,544 2.2 New taxes or increase in tax rates - - 2.3 Other increases 554,505 748,841 3. Decreases 689,845 1,119,506 3.1 Deferred tax liabilities derecognised during the year 384,368 537,491 a) Reversal of temporary differences 144,244 203,445 b) Due to change in accounting criteria 3,551 - c) Other 236,573 334,046 3.2 Reduction in tax rates - 160 3.3 Other decreases 305,477 581,855 4. Closing balance 10,742 19,747 11.8 Other informations In respect of financial year 2017, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits (pursuant to Art.2, paragraph 55, of Decree Law No.225 of 29 December 2010), were not verified, since the Group legal entities having a stock of Convertible DTAs registered a net profit in their separate financial statements. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 224 2018 Annual Report and Accounts · UniCredit 11.7 Deferred tax liabilities: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 16,735 18,868 2. Increases 683,852 1,120,385 2.1 Deferred tax liabilities arisen during the year 129,347 371,544 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 129,347 371,544 2.2 New taxes or increase in tax rates - - 2.3 Other increases 554,505 748,841 3. Decreases 689,845 1,119,506 3.1 Deferred tax liabilities derecognised during the year 384,368 537,491 a) Reversal of temporary differences 144,244 203,445 b) Due to change in accounting criteria 3,551 - c) Other 236,573 334,046 3.2 Reduction in tax rates - 160 3.3 Other decreases 305,477 581,855 4. Closing balance 10,742 19,747 11.8 Other informations In respect of financial year 2017, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits (pursuant to Art.2, paragraph 55, of Decree Law No.225 of 29 December 2010), were not verified, since the Group legal entities having a stock of Convertible DTAs registered a net profit in their separate financial statements. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 225 Section 12 - Non-current assets and disposal groups classified as held for sale - Item 120 (Assets) and Item 70 (Liabilities) Non-current assets or directly connected groups of assets and liabilities, which constitute a set of cash flow generating assets, the sale of which is highly likely, are recognised under these items. They are measured at the lower value between the book value and the fair value less costs to sell according to IFRS5. In the balance sheet as at 31 December 2018, compared with 31 December 2017, the companies Mobility Concept GmbH, i-Faber S.p.A., BA Betriebsobjekte Praha - Spol.S.R.O and the remaining companies of the Pioneer Group (Baroda Pioneer Asset Management Company Ltd. and Baroda Pioneer Trustee Company PVT Ltd.) have been sold and the following has been attributed to the non-current assets and asset disposal groups pursuant to IFRS5: the subsidiary General Logistic Solutions LLC, the companies of the Card Complete Service Bank AG group and the associated companies Oesterreichische Hotel-und TourismusBank Gesellschaft M.B.H. and Swancap Partners GmbH, the non-performing loans related to sale initiatives of portfolios. As at 31 December 2018 in the same item are also included the tangible assets and real-estate properties held by some Group’s companies, mainly in Germany. As regards the data for asset related to discontinued operations, and associated liabilities, the figure at 31 December 2018 refers to the companies of the Immobilien Holding group. 12.1 Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Assets held for sale A.1 Financial assets 710,800 302,990 A.2 Equity investments 24,921 387 A.3 Property, Plant and Equipment 940,484 672,503 of which: obtained by taking possession of collateral 741 A.4 Intangible assets 6,682 12,464 A.5 Other non-current assets 78,011 20,503 Total (A) 1,760,898 1,008,847 of which: carried at cost 1,612,429 826,248 of which: designated at fair value - level 1 7,554 - of which: designated at fair value - level 2 57,275 79,305 of which: designated at fair value - level 3 83,640 103,294 B. Discontinued operations - B.1 Financial assets at fair value through profit and loss - - Financial assets held for trading - - Financial assets designed at fair value - - Other financial assets mandatorily at fair value - Financial assets held for trading (ex IAS39) - Financial assets at fair value through profit or loss (ex IAS39) - B.2 Financial assets at fair value through other comprehensive income 6 Available for sale financial assets (ex IAS39) 4,073 B.3 Financial assets at amortised cost - Held to maturity investments (ex IAS39) - Loans and receivables with banks (ex IAS39) 3,955 Loans and receivables with customers (ex IAS39) - B.4 Equity investments 22,655 22,624 B.5 Property, Plant and Equipment - 19 of which: obtained by taking possession of collateral - B.6 Intangible assets - 14 B.7 Other assets 16,377 71,428 Total (B) 39,038 102,113 of which: carried at cost - 9,466 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 39,038 92,647 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 225 Section 12 - Non-current assets and disposal groups classified as held for sale - Item 120 (Assets) and Item 70 (Liabilities) Non-current assets or directly connected groups of assets and liabilities, which constitute a set of cash flow generating assets, the sale of which is highly likely, are recognised under these items. They are measured at the lower value between the book value and the fair value less costs to sell according to IFRS5. In the balance sheet as at 31 December 2018, compared with 31 December 2017, the companies Mobility Concept GmbH, i-Faber S.p.A., BA Betriebsobjekte Praha - Spol.S.R.O and the remaining companies of the Pioneer Group (Baroda Pioneer Asset Management Company Ltd. and Baroda Pioneer Trustee Company PVT Ltd.) have been sold and the following has been attributed to the non-current assets and asset disposal groups pursuant to IFRS5: the subsidiary General Logistic Solutions LLC, the companies of the Card Complete Service Bank AG group and the associated companies Oesterreichische Hotel-und TourismusBank Gesellschaft M.B.H. and Swancap Partners GmbH, the non-performing loans related to sale initiatives of portfolios. As at 31 December 2018 in the same item are also included the tangible assets and real-estate properties held by some Group’s companies, mainly in Germany. As regards the data for asset related to discontinued operations, and associated liabilities, the figure at 31 December 2018 refers to the companies of the Immobilien Holding group. 12.1 Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Assets held for sale A.1 Financial assets 710,800 302,990 A.2 Equity investments 24,921 387 A.3 Property, Plant and Equipment 940,484 672,503 of which: obtained by taking possession of collateral 741 A.4 Intangible assets 6,682 12,464 A.5 Other non-current assets 78,011 20,503 Total (A) 1,760,898 1,008,847 of which: carried at cost 1,612,429 826,248 of which: designated at fair value - level 1 7,554 - of which: designated at fair value - level 2 57,275 79,305 of which: designated at fair value - level 3 83,640 103,294 B. Discontinued operations - B.1 Financial assets at fair value through profit and loss - - Financial assets held for trading - - Financial assets designed at fair value - - Other financial assets mandatorily at fair value - Financial assets held for trading (ex IAS39) - Financial assets at fair value through profit or loss (ex IAS39) - B.2 Financial assets at fair value through other comprehensive income 6 Available for sale financial assets (ex IAS39) 4,073 B.3 Financial assets at amortised cost - Held to maturity investments (ex IAS39) - Loans and receivables with banks (ex IAS39) 3,955 Loans and receivables with customers (ex IAS39) - B.4 Equity investments 22,655 22,624 B.5 Property, Plant and Equipment - 19 of which: obtained by taking possession of collateral - B.6 Intangible assets - 14 B.7 Other assets 16,377 71,428 Total (B) 39,038 102,113 of which: carried at cost - 9,466 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 39,038 92,647 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 225 Section 12 - Non-current assets and disposal groups classified as held for sale - Item 120 (Assets) and Item 70 (Liabilities) Non-current assets or directly connected groups of assets and liabilities, which constitute a set of cash flow generating assets, the sale of which is highly likely, are recognised under these items. They are measured at the lower value between the book value and the fair value less costs to sell according to IFRS5. In the balance sheet as at 31 December 2018, compared with 31 December 2017, the companies Mobility Concept GmbH, i-Faber S.p.A., BA Betriebsobjekte Praha - Spol.S.R.O and the remaining companies of the Pioneer Group (Baroda Pioneer Asset Management Company Ltd. and Baroda Pioneer Trustee Company PVT Ltd.) have been sold and the following has been attributed to the non-current assets and asset disposal groups pursuant to IFRS5: the subsidiary General Logistic Solutions LLC, the companies of the Card Complete Service Bank AG group and the associated companies Oesterreichische Hotel-und TourismusBank Gesellschaft M.B.H. and Swancap Partners GmbH, the non-performing loans related to sale initiatives of portfolios. As at 31 December 2018 in the same item are also included the tangible assets and real-estate properties held by some Group’s companies, mainly in Germany. As regards the data for asset related to discontinued operations, and associated liabilities, the figure at 31 December 2018 refers to the companies of the Immobilien Holding group. 12.1 Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Assets held for sale A.1 Financial assets 710,800 302,990 A.2 Equity investments 24,921 387 A.3 Property, Plant and Equipment 940,484 672,503 of which: obtained by taking possession of collateral 741 A.4 Intangible assets 6,682 12,464 A.5 Other non-current assets 78,011 20,503 Total (A) 1,760,898 1,008,847 of which: carried at cost 1,612,429 826,248 of which: designated at fair value - level 1 7,554 - of which: designated at fair value - level 2 57,275 79,305 of which: designated at fair value - level 3 83,640 103,294 B. Discontinued operations - B.1 Financial assets at fair value through profit and loss - - Financial assets held for trading - - Financial assets designed at fair value - - Other financial assets mandatorily at fair value - Financial assets held for trading (ex IAS39) - Financial assets at fair value through profit or loss (ex IAS39) - B.2 Financial assets at fair value through other comprehensive income 6 Available for sale financial assets (ex IAS39) 4,073 B.3 Financial assets at amortised cost - Held to maturity investments (ex IAS39) - Loans and receivables with banks (ex IAS39) 3,955 Loans and receivables with customers (ex IAS39) - B.4 Equity investments 22,655 22,624 B.5 Property, Plant and Equipment - 19 of which: obtained by taking possession of collateral - B.6 Intangible assets - 14 B.7 Other assets 16,377 71,428 Total (B) 39,038 102,113 of which: carried at cost - 9,466 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 39,038 92,647 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 225 Section 12 - Non-current assets and disposal groups classified as held for sale - Item 120 (Assets) and Item 70 (Liabilities) Non-current assets or directly connected groups of assets and liabilities, which constitute a set of cash flow generating assets, the sale of which is highly likely, are recognised under these items. They are measured at the lower value between the book value and the fair value less costs to sell according to IFRS5. In the balance sheet as at 31 December 2018, compared with 31 December 2017, the companies Mobility Concept GmbH, i-Faber S.p.A., BA Betriebsobjekte Praha - Spol.S.R.O and the remaining companies of the Pioneer Group (Baroda Pioneer Asset Management Company Ltd. and Baroda Pioneer Trustee Company PVT Ltd.) have been sold and the following has been attributed to the non-current assets and asset disposal groups pursuant to IFRS5: the subsidiary General Logistic Solutions LLC, the companies of the Card Complete Service Bank AG group and the associated companies Oesterreichische Hotel-und TourismusBank Gesellschaft M.B.H. and Swancap Partners GmbH, the non-performing loans related to sale initiatives of portfolios. As at 31 December 2018 in the same item are also included the tangible assets and real-estate properties held by some Group’s companies, mainly in Germany. As regards the data for asset related to discontinued operations, and associated liabilities, the figure at 31 December 2018 refers to the companies of the Immobilien Holding group. 12.1 Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Assets held for sale A.1 Financial assets 710,800 302,990 A.2 Equity investments 24,921 387 A.3 Property, Plant and Equipment 940,484 672,503 of which: obtained by taking possession of collateral 741 A.4 Intangible assets 6,682 12,464 A.5 Other non-current assets 78,011 20,503 Total (A) 1,760,898 1,008,847 of which: carried at cost 1,612,429 826,248 of which: designated at fair value - level 1 7,554 - of which: designated at fair value - level 2 57,275 79,305 of which: designated at fair value - level 3 83,640 103,294 B. Discontinued operations - B.1 Financial assets at fair value through profit and loss - - Financial assets held for trading - - Financial assets designed at fair value - - Other financial assets mandatorily at fair value - Financial assets held for trading (ex IAS39) - Financial assets at fair value through profit or loss (ex IAS39) - B.2 Financial assets at fair value through other comprehensive income 6 Available for sale financial assets (ex IAS39) 4,073 B.3 Financial assets at amortised cost - Held to maturity investments (ex IAS39) - Loans and receivables with banks (ex IAS39) 3,955 Loans and receivables with customers (ex IAS39) - B.4 Equity investments 22,655 22,624 B.5 Property, Plant and Equipment - 19 of which: obtained by taking possession of collateral - B.6 Intangible assets - 14 B.7 Other assets 16,377 71,428 Total (B) 39,038 102,113 of which: carried at cost - 9,466 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 39,038 92,647 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 225 Section 12 - Non-current assets and disposal groups classified as held for sale - Item 120 (Assets) and Item 70 (Liabilities) Non-current assets or directly connected groups of assets and liabilities, which constitute a set of cash flow generating assets, the sale of which is highly likely, are recognised under these items. They are measured at the lower value between the book value and the fair value less costs to sell according to IFRS5. In the balance sheet as at 31 December 2018, compared with 31 December 2017, the companies Mobility Concept GmbH, i-Faber S.p.A., BA Betriebsobjekte Praha - Spol.S.R.O and the remaining companies of the Pioneer Group (Baroda Pioneer Asset Management Company Ltd. and Baroda Pioneer Trustee Company PVT Ltd.) have been sold and the following has been attributed to the non-current assets and asset disposal groups pursuant to IFRS5: the subsidiary General Logistic Solutions LLC, the companies of the Card Complete Service Bank AG group and the associated companies Oesterreichische Hotel-und TourismusBank Gesellschaft M.B.H. and Swancap Partners GmbH, the non-performing loans related to sale initiatives of portfolios. As at 31 December 2018 in the same item are also included the tangible assets and real-estate properties held by some Group’s companies, mainly in Germany. As regards the data for asset related to discontinued operations, and associated liabilities, the figure at 31 December 2018 refers to the companies of the Immobilien Holding group. 12.1 Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Assets held for sale A.1 Financial assets 710,800 302,990 A.2 Equity investments 24,921 387 A.3 Property, Plant and Equipment 940,484 672,503 of which: obtained by taking possession of collateral 741 A.4 Intangible assets 6,682 12,464 A.5 Other non-current assets 78,011 20,503 Total (A) 1,760,898 1,008,847 of which: carried at cost 1,612,429 826,248 of which: designated at fair value - level 1 7,554 - of which: designated at fair value - level 2 57,275 79,305 of which: designated at fair value - level 3 83,640 103,294 B. Discontinued operations - B.1 Financial assets at fair value through profit and loss - - Financial assets held for trading - - Financial assets designed at fair value - - Other financial assets mandatorily at fair value - Financial assets held for trading (ex IAS39) - Financial assets at fair value through profit or loss (ex IAS39) - B.2 Financial assets at fair value through other comprehensive income 6 Available for sale financial assets (ex IAS39) 4,073 B.3 Financial assets at amortised cost - Held to maturity investments (ex IAS39) - Loans and receivables with banks (ex IAS39) 3,955 Loans and receivables with customers (ex IAS39) - B.4 Equity investments 22,655 22,624 B.5 Property, Plant and Equipment - 19 of which: obtained by taking possession of collateral - B.6 Intangible assets - 14 B.7 Other assets 16,377 71,428 Total (B) 39,038 102,113 of which: carried at cost - 9,466 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 39,038 92,647 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 226 2018 Annual Report and Accounts · UniCredit continued: Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) C. Liabilities associated with assets held for sale C.1 Deposits 157,932 77,904 C.2 Securities - - C.3 Other liabilities 346,723 51,822 Total (C) 504,655 129,726 of which: carried at cost 504,330 104,478 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 325 25,248 D. Liabilities associated with discontinued operations D.1 Financial liabilities at amortised cost - Deposits from banks (ex IAS39) - Deposits from customers (ex IAS39) - Debt securities in issue (ex IAS39) - D.2 Financial liabilities held for trading - Financial liabilities held for trading (ex IAS39) - D.3 Financial liabilities designated at fair value - Financial liabilities at fair value through profit or loss (ex IAS39) - D.4 Provisions - 297 D.5 Other liabilities 35,332 54,806 Total (D) 35,332 55,103 of which: carried at cost - 1,467 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 35,332 53,636 Fair value measurements, made for disclosure purposes only, are classified into a fair value hierarchy that reflects the significance of inputs used in the valuations. For further information see Part A - Accounting policies - A.4 Information on fair value. With reference to the fair value levels we must specify that the figures referred to companies of the Immobilien Holding group are presented at 31 December 2018 among level 3 assets and liabilities (the same as at 31 December 2017) reflecting their measurement using a valuation model. 12.2 Other information There is no significant information to be reported. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 226 2018 Annual Report and Accounts · UniCredit continued: Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) C. Liabilities associated with assets held for sale C.1 Deposits 157,932 77,904 C.2 Securities - - C.3 Other liabilities 346,723 51,822 Total (C) 504,655 129,726 of which: carried at cost 504,330 104,478 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 325 25,248 D. Liabilities associated with discontinued operations D.1 Financial liabilities at amortised cost - Deposits from banks (ex IAS39) - Deposits from customers (ex IAS39) - Debt securities in issue (ex IAS39) - D.2 Financial liabilities held for trading - Financial liabilities held for trading (ex IAS39) - D.3 Financial liabilities designated at fair value - Financial liabilities at fair value through profit or loss (ex IAS39) - D.4 Provisions - 297 D.5 Other liabilities 35,332 54,806 Total (D) 35,332 55,103 of which: carried at cost - 1,467 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 35,332 53,636 Fair value measurements, made for disclosure purposes only, are classified into a fair value hierarchy that reflects the significance of inputs used in the valuations. For further information see Part A - Accounting policies - A.4 Information on fair value. With reference to the fair value levels we must specify that the figures referred to companies of the Immobilien Holding group are presented at 31 December 2018 among level 3 assets and liabilities (the same as at 31 December 2017) reflecting their measurement using a valuation model. 12.2 Other information There is no significant information to be reported. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 226 2018 Annual Report and Accounts · UniCredit continued: Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) C. Liabilities associated with assets held for sale C.1 Deposits 157,932 77,904 C.2 Securities - - C.3 Other liabilities 346,723 51,822 Total (C) 504,655 129,726 of which: carried at cost 504,330 104,478 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 325 25,248 D. Liabilities associated with discontinued operations D.1 Financial liabilities at amortised cost - Deposits from banks (ex IAS39) - Deposits from customers (ex IAS39) - Debt securities in issue (ex IAS39) - D.2 Financial liabilities held for trading - Financial liabilities held for trading (ex IAS39) - D.3 Financial liabilities designated at fair value - Financial liabilities at fair value through profit or loss (ex IAS39) - D.4 Provisions - 297 D.5 Other liabilities 35,332 54,806 Total (D) 35,332 55,103 of which: carried at cost - 1,467 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 35,332 53,636 Fair value measurements, made for disclosure purposes only, are classified into a fair value hierarchy that reflects the significance of inputs used in the valuations. For further information see Part A - Accounting policies - A.4 Information on fair value. With reference to the fair value levels we must specify that the figures referred to companies of the Immobilien Holding group are presented at 31 December 2018 among level 3 assets and liabilities (the same as at 31 December 2017) reflecting their measurement using a valuation model. 12.2 Other information There is no significant information to be reported. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 226 2018 Annual Report and Accounts · UniCredit continued: Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) C. Liabilities associated with assets held for sale C.1 Deposits 157,932 77,904 C.2 Securities - - C.3 Other liabilities 346,723 51,822 Total (C) 504,655 129,726 of which: carried at cost 504,330 104,478 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 325 25,248 D. Liabilities associated with discontinued operations D.1 Financial liabilities at amortised cost - Deposits from banks (ex IAS39) - Deposits from customers (ex IAS39) - Debt securities in issue (ex IAS39) - D.2 Financial liabilities held for trading - Financial liabilities held for trading (ex IAS39) - D.3 Financial liabilities designated at fair value - Financial liabilities at fair value through profit or loss (ex IAS39) - D.4 Provisions - 297 D.5 Other liabilities 35,332 54,806 Total (D) 35,332 55,103 of which: carried at cost - 1,467 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 35,332 53,636 Fair value measurements, made for disclosure purposes only, are classified into a fair value hierarchy that reflects the significance of inputs used in the valuations. For further information see Part A - Accounting policies - A.4 Information on fair value. With reference to the fair value levels we must specify that the figures referred to companies of the Immobilien Holding group are presented at 31 December 2018 among level 3 assets and liabilities (the same as at 31 December 2017) reflecting their measurement using a valuation model. 12.2 Other information There is no significant information to be reported. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 226 2018 Annual Report and Accounts · UniCredit continued: Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) C. Liabilities associated with assets held for sale C.1 Deposits 157,932 77,904 C.2 Securities - - C.3 Other liabilities 346,723 51,822 Total (C) 504,655 129,726 of which: carried at cost 504,330 104,478 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 325 25,248 D. Liabilities associated with discontinued operations D.1 Financial liabilities at amortised cost - Deposits from banks (ex IAS39) - Deposits from customers (ex IAS39) - Debt securities in issue (ex IAS39) - D.2 Financial liabilities held for trading - Financial liabilities held for trading (ex IAS39) - D.3 Financial liabilities designated at fair value - Financial liabilities at fair value through profit or loss (ex IAS39) - D.4 Provisions - 297 D.5 Other liabilities 35,332 54,806 Total (D) 35,332 55,103 of which: carried at cost - 1,467 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 35,332 53,636 Fair value measurements, made for disclosure purposes only, are classified into a fair value hierarchy that reflects the significance of inputs used in the valuations. For further information see Part A - Accounting policies - A.4 Information on fair value. With reference to the fair value levels we must specify that the figures referred to companies of the Immobilien Holding group are presented at 31 December 2018 among level 3 assets and liabilities (the same as at 31 December 2017) reflecting their measurement using a valuation model. 12.2 Other information There is no significant information to be reported. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 227 Section 13 - Other assets - Item 130 13.1 Other assets: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Margin with derivatives clearers (non-interest bearing) 247 248 Gold, silver and precious metals 19,056 25,840 Accrued income and prepaid expenses other than capitalised income 544,610 424,187 Positive value of management agreements (so-called servicing assets) 3,669 Cash and other valuables held by cashier 277,847 230,817 - Current account cheques being settled, drawn on third parties 277,517 230,330 - Current account cheques payable by group banks, cleared and in the process of being debited 296 343 - Money orders, bank drafts and equivalent securities - 41 - Coupons, securities due on demand, revenue stamps and miscellaneous valuables 34 103 Interest and changes to be debited to 199,342 183,574 - Customers 170,437 178,280 - Banks 28,905 5,294 Items in transit between branches not yet allocated to destination accounts 2 26,558 Items in processing 461,787 857,551 Items deemed definitive but not-attributable to other items 2,670,301 2,752,803 - Securities and coupons to be settled 47,652 6,444 - Other transactions 2,622,649 2,746,359 Adjustments for unpaid bills and notes 40,298 280,161 Tax items other than those included in item 110 1,912,441 1,970,932 Commercial credits pursuant to IFRS15 14,533 Other items 1,189,619 2,204,966 Total 7,333,752 8,957,637 As at 31 December 2017 “Other items” included the Property, Plant and Equipment, deriving from repossessing and lease, classified as inventories pursuant to IAS2; this inventories have been recognised, since 2018, to item Property, Plant and Equipment following the application of IFRS9 and Banca d’Italia 262 Circular 5th amendment. Item “Accrued income and prepaid expenses other than capitalised income” includes the contract assets recognized in accordance with IFRS15. In this context accrued income represents the portion of the performance obligation already satisfied through the services provided by the Group and that will be settled in the future periods in accordance with contractual provisions. The aggregate amount of revenues from services to customers related to the portion of performance obligations not yet satisfied, and therefore not represented in the table above, is equal to €14.5 million. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 227 Section 13 - Other assets - Item 130 13.1 Other assets: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Margin with derivatives clearers (non-interest bearing) 247 248 Gold, silver and precious metals 19,056 25,840 Accrued income and prepaid expenses other than capitalised income 544,610 424,187 Positive value of management agreements (so-called servicing assets) 3,669 Cash and other valuables held by cashier 277,847 230,817 - Current account cheques being settled, drawn on third parties 277,517 230,330 - Current account cheques payable by group banks, cleared and in the process of being debited 296 343 - Money orders, bank drafts and equivalent securities - 41 - Coupons, securities due on demand, revenue stamps and miscellaneous valuables 34 103 Interest and changes to be debited to 199,342 183,574 - Customers 170,437 178,280 - Banks 28,905 5,294 Items in transit between branches not yet allocated to destination accounts 2 26,558 Items in processing 461,787 857,551 Items deemed definitive but not-attributable to other items 2,670,301 2,752,803 - Securities and coupons to be settled 47,652 6,444 - Other transactions 2,622,649 2,746,359 Adjustments for unpaid bills and notes 40,298 280,161 Tax items other than those included in item 110 1,912,441 1,970,932 Commercial credits pursuant to IFRS15 14,533 Other items 1,189,619 2,204,966 Total 7,333,752 8,957,637 As at 31 December 2017 “Other items” included the Property, Plant and Equipment, deriving from repossessing and lease, classified as inventories pursuant to IAS2; this inventories have been recognised, since 2018, to item Property, Plant and Equipment following the application of IFRS9 and Banca d’Italia 262 Circular 5th amendment. Item “Accrued income and prepaid expenses other than capitalised income” includes the contract assets recognized in accordance with IFRS15. In this context accrued income represents the portion of the performance obligation already satisfied through the services provided by the Group and that will be settled in the future periods in accordance with contractual provisions. The aggregate amount of revenues from services to customers related to the portion of performance obligations not yet satisfied, and therefore not represented in the table above, is equal to €14.5 million. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 227 Section 13 - Other assets - Item 130 13.1 Other assets: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Margin with derivatives clearers (non-interest bearing) 247 248 Gold, silver and precious metals 19,056 25,840 Accrued income and prepaid expenses other than capitalised income 544,610 424,187 Positive value of management agreements (so-called servicing assets) 3,669 Cash and other valuables held by cashier 277,847 230,817 - Current account cheques being settled, drawn on third parties 277,517 230,330 - Current account cheques payable by group banks, cleared and in the process of being debited 296 343 - Money orders, bank drafts and equivalent securities - 41 - Coupons, securities due on demand, revenue stamps and miscellaneous valuables 34 103 Interest and changes to be debited to 199,342 183,574 - Customers 170,437 178,280 - Banks 28,905 5,294 Items in transit between branches not yet allocated to destination accounts 2 26,558 Items in processing 461,787 857,551 Items deemed definitive but not-attributable to other items 2,670,301 2,752,803 - Securities and coupons to be settled 47,652 6,444 - Other transactions 2,622,649 2,746,359 Adjustments for unpaid bills and notes 40,298 280,161 Tax items other than those included in item 110 1,912,441 1,970,932 Commercial credits pursuant to IFRS15 14,533 Other items 1,189,619 2,204,966 Total 7,333,752 8,957,637 As at 31 December 2017 “Other items” included the Property, Plant and Equipment, deriving from repossessing and lease, classified as inventories pursuant to IAS2; this inventories have been recognised, since 2018, to item Property, Plant and Equipment following the application of IFRS9 and Banca d’Italia 262 Circular 5th amendment. Item “Accrued income and prepaid expenses other than capitalised income” includes the contract assets recognized in accordance with IFRS15. In this context accrued income represents the portion of the performance obligation already satisfied through the services provided by the Group and that will be settled in the future periods in accordance with contractual provisions. The aggregate amount of revenues from services to customers related to the portion of performance obligations not yet satisfied, and therefore not represented in the table above, is equal to €14.5 million. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 227 Section 13 - Other assets - Item 130 13.1 Other assets: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Margin with derivatives clearers (non-interest bearing) 247 248 Gold, silver and precious metals 19,056 25,840 Accrued income and prepaid expenses other than capitalised income 544,610 424,187 Positive value of management agreements (so-called servicing assets) 3,669 Cash and other valuables held by cashier 277,847 230,817 - Current account cheques being settled, drawn on third parties 277,517 230,330 - Current account cheques payable by group banks, cleared and in the process of being debited 296 343 - Money orders, bank drafts and equivalent securities - 41 - Coupons, securities due on demand, revenue stamps and miscellaneous valuables 34 103 Interest and changes to be debited to 199,342 183,574 - Customers 170,437 178,280 - Banks 28,905 5,294 Items in transit between branches not yet allocated to destination accounts 2 26,558 Items in processing 461,787 857,551 Items deemed definitive but not-attributable to other items 2,670,301 2,752,803 - Securities and coupons to be settled 47,652 6,444 - Other transactions 2,622,649 2,746,359 Adjustments for unpaid bills and notes 40,298 280,161 Tax items other than those included in item 110 1,912,441 1,970,932 Commercial credits pursuant to IFRS15 14,533 Other items 1,189,619 2,204,966 Total 7,333,752 8,957,637 As at 31 December 2017 “Other items” included the Property, Plant and Equipment, deriving from repossessing and lease, classified as inventories pursuant to IAS2; this inventories have been recognised, since 2018, to item Property, Plant and Equipment following the application of IFRS9 and Banca d’Italia 262 Circular 5th amendment. Item “Accrued income and prepaid expenses other than capitalised income” includes the contract assets recognized in accordance with IFRS15. In this context accrued income represents the portion of the performance obligation already satisfied through the services provided by the Group and that will be settled in the future periods in accordance with contractual provisions. The aggregate amount of revenues from services to customers related to the portion of performance obligations not yet satisfied, and therefore not represented in the table above, is equal to €14.5 million. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 227 Section 13 - Other assets - Item 130 13.1 Other assets: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Margin with derivatives clearers (non-interest bearing) 247 248 Gold, silver and precious metals 19,056 25,840 Accrued income and prepaid expenses other than capitalised income 544,610 424,187 Positive value of management agreements (so-called servicing assets) 3,669 Cash and other valuables held by cashier 277,847 230,817 - Current account cheques being settled, drawn on third parties 277,517 230,330 - Current account cheques payable by group banks, cleared and in the process of being debited 296 343 - Money orders, bank drafts and equivalent securities - 41 - Coupons, securities due on demand, revenue stamps and miscellaneous valuables 34 103 Interest and changes to be debited to 199,342 183,574 - Customers 170,437 178,280 - Banks 28,905 5,294 Items in transit between branches not yet allocated to destination accounts 2 26,558 Items in processing 461,787 857,551 Items deemed definitive but not-attributable to other items 2,670,301 2,752,803 - Securities and coupons to be settled 47,652 6,444 - Other transactions 2,622,649 2,746,359 Adjustments for unpaid bills and notes 40,298 280,161 Tax items other than those included in item 110 1,912,441 1,970,932 Commercial credits pursuant to IFRS15 14,533 Other items 1,189,619 2,204,966 Total 7,333,752 8,957,637 As at 31 December 2017 “Other items” included the Property, Plant and Equipment, deriving from repossessing and lease, classified as inventories pursuant to IAS2; this inventories have been recognised, since 2018, to item Property, Plant and Equipment following the application of IFRS9 and Banca d’Italia 262 Circular 5th amendment. Item “Accrued income and prepaid expenses other than capitalised income” includes the contract assets recognized in accordance with IFRS15. In this context accrued income represents the portion of the performance obligation already satisfied through the services provided by the Group and that will be settled in the future periods in accordance with contractual provisions. The aggregate amount of revenues from services to customers related to the portion of performance obligations not yet satisfied, and therefore not represented in the table above, is equal to €14.5 million. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 228 2018 Annual Report and Accounts · UniCredit The following table shows the changes of accrued income and prepaid expenses occurred in the period. Periodic change of accrued income/expenses and prepaid expenses/income (€ '000) AMOUNTS AS AT 12.31.2018 ACCURRED INCOME AND PREPAID EXPENSES ACCURRED INCOME AND DEFERRED EXPENSES Opening balance 424,187 468,269 Increases 219,373 204,466 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Reversal of impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 219,373 204,466 Decreases 98,950 138,287 a) Changes due to business combinations - 4 b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 98,950 138,283 Closing balance 544,610 534,448 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 228 2018 Annual Report and Accounts · UniCredit The following table shows the changes of accrued income and prepaid expenses occurred in the period. Periodic change of accrued income/expenses and prepaid expenses/income (€ '000) AMOUNTS AS AT 12.31.2018 ACCURRED INCOME AND PREPAID EXPENSES ACCURRED INCOME AND DEFERRED EXPENSES Opening balance 424,187 468,269 Increases 219,373 204,466 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Reversal of impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 219,373 204,466 Decreases 98,950 138,287 a) Changes due to business combinations - 4 b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 98,950 138,283 Closing balance 544,610 534,448 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 228 2018 Annual Report and Accounts · UniCredit The following table shows the changes of accrued income and prepaid expenses occurred in the period. Periodic change of accrued income/expenses and prepaid expenses/income (€ '000) AMOUNTS AS AT 12.31.2018 ACCURRED INCOME AND PREPAID EXPENSES ACCURRED INCOME AND DEFERRED EXPENSES Opening balance 424,187 468,269 Increases 219,373 204,466 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Reversal of impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 219,373 204,466 Decreases 98,950 138,287 a) Changes due to business combinations - 4 b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 98,950 138,283 Closing balance 544,610 534,448 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 228 2018 Annual Report and Accounts · UniCredit The following table shows the changes of accrued income and prepaid expenses occurred in the period. Periodic change of accrued income/expenses and prepaid expenses/income (€ '000) AMOUNTS AS AT 12.31.2018 ACCURRED INCOME AND PREPAID EXPENSES ACCURRED INCOME AND DEFERRED EXPENSES Opening balance 424,187 468,269 Increases 219,373 204,466 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Reversal of impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 219,373 204,466 Decreases 98,950 138,287 a) Changes due to business combinations - 4 b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 98,950 138,283 Closing balance 544,610 534,448 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Assets 228 2018 Annual Report and Accounts · UniCredit The following table shows the changes of accrued income and prepaid expenses occurred in the period. Periodic change of accrued income/expenses and prepaid expenses/income (€ '000) AMOUNTS AS AT 12.31.2018 ACCURRED INCOME AND PREPAID EXPENSES ACCURRED INCOME AND DEFERRED EXPENSES Opening balance 424,187 468,269 Increases 219,373 204,466 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Reversal of impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 219,373 204,466 Decreases 98,950 138,287 a) Changes due to business combinations - 4 b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 98,950 138,283 Closing balance 544,610 534,448 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 229 Liabilities Section 1 - Financial liabilities at amortised cost - Item 10 1.1 Financial liabilities at amortised cost: breakdown by product of deposits from banks (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from central banks 56,677,941 X X X 2. Deposits from banks 69,217,302 X X X 2.1 Current accounts and demand deposits 11,597,328 X X X 2.2 Time deposits 14,757,085 X X X 2.3 Loans 41,863,611 X X X 2.3.1 Repos 25,773,660 X X X 2.3.2 Other 16,089,951 X X X 2.4 Liabilities relating to commitments to repurchase treasury shares - X X X 2.5 Other deposits 999,278 X X X Total 125,895,243 208,242 80,674,849 44,261,426 Total Level 1, Level 2 and Level 3 125,144,517 The sub-item “2.3 Loans” includes repos executed using proprietary securities issued by Group companies, which were eliminated from assets on consolidation; the same sub-item do not include the type of bond lending transactions collateralised by securities or not collateralised. Refer also to section “Other information” of Part B for additional information. Deposits from banks are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.2 Financial liabilities at amortised cost: breakdown by product of deposits from customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTION/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Current accounts and demand deposits 350,492,185 X X X 2. Time deposits 63,266,997 X X X 3. Loans 60,168,545 X X X 3.1 Repos 56,963,626 X X X 3.2 Other 3,204,919 X X X 4. Liabilities relating to commitments to repurchase treasury shares - X X X 5. Other deposits 5,059,982 X X X Total 478,987,709 145 162,544,564 316,733,707 Total Level 1, Level 2 and Level 3 479,278,416 The item “3. Loans” also include liabilities relating to repos executed using proprietary securities issued by Group companies, which were eliminated from assets on consolidation; the same sub-item do not include the type of bond lending transactions collateralised by securities or not collateralised. Please also refer to section “Other information” of Part B for additional information. Deposits from customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 229 Liabilities Section 1 - Financial liabilities at amortised cost - Item 10 1.1 Financial liabilities at amortised cost: breakdown by product of deposits from banks (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from central banks 56,677,941 X X X 2. Deposits from banks 69,217,302 X X X 2.1 Current accounts and demand deposits 11,597,328 X X X 2.2 Time deposits 14,757,085 X X X 2.3 Loans 41,863,611 X X X 2.3.1 Repos 25,773,660 X X X 2.3.2 Other 16,089,951 X X X 2.4 Liabilities relating to commitments to repurchase treasury shares - X X X 2.5 Other deposits 999,278 X X X Total 125,895,243 208,242 80,674,849 44,261,426 Total Level 1, Level 2 and Level 3 125,144,517 The sub-item “2.3 Loans” includes repos executed using proprietary securities issued by Group companies, which were eliminated from assets on consolidation; the same sub-item do not include the type of bond lending transactions collateralised by securities or not collateralised. Refer also to section “Other information” of Part B for additional information. Deposits from banks are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.2 Financial liabilities at amortised cost: breakdown by product of deposits from customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTION/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Current accounts and demand deposits 350,492,185 X X X 2. Time deposits 63,266,997 X X X 3. Loans 60,168,545 X X X 3.1 Repos 56,963,626 X X X 3.2 Other 3,204,919 X X X 4. Liabilities relating to commitments to repurchase treasury shares - X X X 5. Other deposits 5,059,982 X X X Total 478,987,709 145 162,544,564 316,733,707 Total Level 1, Level 2 and Level 3 479,278,416 The item “3. Loans” also include liabilities relating to repos executed using proprietary securities issued by Group companies, which were eliminated from assets on consolidation; the same sub-item do not include the type of bond lending transactions collateralised by securities or not collateralised. Please also refer to section “Other information” of Part B for additional information. Deposits from customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 229 Liabilities Section 1 - Financial liabilities at amortised cost - Item 10 1.1 Financial liabilities at amortised cost: breakdown by product of deposits from banks (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from central banks 56,677,941 X X X 2. Deposits from banks 69,217,302 X X X 2.1 Current accounts and demand deposits 11,597,328 X X X 2.2 Time deposits 14,757,085 X X X 2.3 Loans 41,863,611 X X X 2.3.1 Repos 25,773,660 X X X 2.3.2 Other 16,089,951 X X X 2.4 Liabilities relating to commitments to repurchase treasury shares - X X X 2.5 Other deposits 999,278 X X X Total 125,895,243 208,242 80,674,849 44,261,426 Total Level 1, Level 2 and Level 3 125,144,517 The sub-item “2.3 Loans” includes repos executed using proprietary securities issued by Group companies, which were eliminated from assets on consolidation; the same sub-item do not include the type of bond lending transactions collateralised by securities or not collateralised. Refer also to section “Other information” of Part B for additional information. Deposits from banks are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.2 Financial liabilities at amortised cost: breakdown by product of deposits from customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTION/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Current accounts and demand deposits 350,492,185 X X X 2. Time deposits 63,266,997 X X X 3. Loans 60,168,545 X X X 3.1 Repos 56,963,626 X X X 3.2 Other 3,204,919 X X X 4. Liabilities relating to commitments to repurchase treasury shares - X X X 5. Other deposits 5,059,982 X X X Total 478,987,709 145 162,544,564 316,733,707 Total Level 1, Level 2 and Level 3 479,278,416 The item “3. Loans” also include liabilities relating to repos executed using proprietary securities issued by Group companies, which were eliminated from assets on consolidation; the same sub-item do not include the type of bond lending transactions collateralised by securities or not collateralised. Please also refer to section “Other information” of Part B for additional information. Deposits from customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 229 Liabilities Section 1 - Financial liabilities at amortised cost - Item 10 1.1 Financial liabilities at amortised cost: breakdown by product of deposits from banks (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from central banks 56,677,941 X X X 2. Deposits from banks 69,217,302 X X X 2.1 Current accounts and demand deposits 11,597,328 X X X 2.2 Time deposits 14,757,085 X X X 2.3 Loans 41,863,611 X X X 2.3.1 Repos 25,773,660 X X X 2.3.2 Other 16,089,951 X X X 2.4 Liabilities relating to commitments to repurchase treasury shares - X X X 2.5 Other deposits 999,278 X X X Total 125,895,243 208,242 80,674,849 44,261,426 Total Level 1, Level 2 and Level 3 125,144,517 The sub-item “2.3 Loans” includes repos executed using proprietary securities issued by Group companies, which were eliminated from assets on consolidation; the same sub-item do not include the type of bond lending transactions collateralised by securities or not collateralised. Refer also to section “Other information” of Part B for additional information. Deposits from banks are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.2 Financial liabilities at amortised cost: breakdown by product of deposits from customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTION/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Current accounts and demand deposits 350,492,185 X X X 2. Time deposits 63,266,997 X X X 3. Loans 60,168,545 X X X 3.1 Repos 56,963,626 X X X 3.2 Other 3,204,919 X X X 4. Liabilities relating to commitments to repurchase treasury shares - X X X 5. Other deposits 5,059,982 X X X Total 478,987,709 145 162,544,564 316,733,707 Total Level 1, Level 2 and Level 3 479,278,416 The item “3. Loans” also include liabilities relating to repos executed using proprietary securities issued by Group companies, which were eliminated from assets on consolidation; the same sub-item do not include the type of bond lending transactions collateralised by securities or not collateralised. Please also refer to section “Other information” of Part B for additional information. Deposits from customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 229 Liabilities Section 1 - Financial liabilities at amortised cost - Item 10 1.1 Financial liabilities at amortised cost: breakdown by product of deposits from banks (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from central banks 56,677,941 X X X 2. Deposits from banks 69,217,302 X X X 2.1 Current accounts and demand deposits 11,597,328 X X X 2.2 Time deposits 14,757,085 X X X 2.3 Loans 41,863,611 X X X 2.3.1 Repos 25,773,660 X X X 2.3.2 Other 16,089,951 X X X 2.4 Liabilities relating to commitments to repurchase treasury shares - X X X 2.5 Other deposits 999,278 X X X Total 125,895,243 208,242 80,674,849 44,261,426 Total Level 1, Level 2 and Level 3 125,144,517 The sub-item “2.3 Loans” includes repos executed using proprietary securities issued by Group companies, which were eliminated from assets on consolidation; the same sub-item do not include the type of bond lending transactions collateralised by securities or not collateralised. Refer also to section “Other information” of Part B for additional information. Deposits from banks are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.2 Financial liabilities at amortised cost: breakdown by product of deposits from customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTION/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Current accounts and demand deposits 350,492,185 X X X 2. Time deposits 63,266,997 X X X 3. Loans 60,168,545 X X X 3.1 Repos 56,963,626 X X X 3.2 Other 3,204,919 X X X 4. Liabilities relating to commitments to repurchase treasury shares - X X X 5. Other deposits 5,059,982 X X X Total 478,987,709 145 162,544,564 316,733,707 Total Level 1, Level 2 and Level 3 479,278,416 The item “3. Loans” also include liabilities relating to repos executed using proprietary securities issued by Group companies, which were eliminated from assets on consolidation; the same sub-item do not include the type of bond lending transactions collateralised by securities or not collateralised. Please also refer to section “Other information” of Part B for additional information. Deposits from customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements are classified according to a three level hierarchy that reflects the significance of the inputs used in the measurements. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 230 2018 Annual Report and Accounts · UniCredit For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.3 Financial liabilities at amortised cost: breakdown by product of debt securities in issue (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Debt securities 1. Bonds 73,353,162 39,436,732 24,152,719 12,441,182 1.1 Structured 1,672,960 178,231 1,450,281 - 1.2 Other 71,680,202 39,258,501 22,702,438 12,441,182 2. Other securities 7,800,128 - 1,841,662 5,959,153 2.1 Structured 109,800 - 113,767 - 2.2 Other 7,690,328 - 1,727,895 5,959,153 Total 81,153,290 39,436,732 25,994,381 18,400,335 Total Level 1, Level 2 and Level 3 83,831,448 Fair value measurements, solely for the purpose of fulfilling financial disclosure requirements, are classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4. Information on fair value. The sum of the sub-items “1.1 Bonds - Structured” and “2.1 Other securities -structured” was equal to €1,782 million and accounted for 2% of total debt securities. They mainly refer to interest-rate linked instruments with closely related embedded derivatives identified according to the classification rules of Mifid. The fair value of derivatives embedded in structured securities, presented in Line 20 of Assets and Line 20 of Liabilities and included in Trading derivatives - Others, amounted to a net balance of €34 million negative. 1.4 Breakdown of subordinated debts/securities (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks - Deposits from customers 87,467 Debt securities 9,872,898 Total 9,960,365 1.5 Breakdown of structured debts (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks 500 Deposits from customers - Total 500 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 230 2018 Annual Report and Accounts · UniCredit For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.3 Financial liabilities at amortised cost: breakdown by product of debt securities in issue (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Debt securities 1. Bonds 73,353,162 39,436,732 24,152,719 12,441,182 1.1 Structured 1,672,960 178,231 1,450,281 - 1.2 Other 71,680,202 39,258,501 22,702,438 12,441,182 2. Other securities 7,800,128 - 1,841,662 5,959,153 2.1 Structured 109,800 - 113,767 - 2.2 Other 7,690,328 - 1,727,895 5,959,153 Total 81,153,290 39,436,732 25,994,381 18,400,335 Total Level 1, Level 2 and Level 3 83,831,448 Fair value measurements, solely for the purpose of fulfilling financial disclosure requirements, are classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4. Information on fair value. The sum of the sub-items “1.1 Bonds - Structured” and “2.1 Other securities -structured” was equal to €1,782 million and accounted for 2% of total debt securities. They mainly refer to interest-rate linked instruments with closely related embedded derivatives identified according to the classification rules of Mifid. The fair value of derivatives embedded in structured securities, presented in Line 20 of Assets and Line 20 of Liabilities and included in Trading derivatives - Others, amounted to a net balance of €34 million negative. 1.4 Breakdown of subordinated debts/securities (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks - Deposits from customers 87,467 Debt securities 9,872,898 Total 9,960,365 1.5 Breakdown of structured debts (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks 500 Deposits from customers - Total 500 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 230 2018 Annual Report and Accounts · UniCredit For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.3 Financial liabilities at amortised cost: breakdown by product of debt securities in issue (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Debt securities 1. Bonds 73,353,162 39,436,732 24,152,719 12,441,182 1.1 Structured 1,672,960 178,231 1,450,281 - 1.2 Other 71,680,202 39,258,501 22,702,438 12,441,182 2. Other securities 7,800,128 - 1,841,662 5,959,153 2.1 Structured 109,800 - 113,767 - 2.2 Other 7,690,328 - 1,727,895 5,959,153 Total 81,153,290 39,436,732 25,994,381 18,400,335 Total Level 1, Level 2 and Level 3 83,831,448 Fair value measurements, solely for the purpose of fulfilling financial disclosure requirements, are classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4. Information on fair value. The sum of the sub-items “1.1 Bonds - Structured” and “2.1 Other securities -structured” was equal to €1,782 million and accounted for 2% of total debt securities. They mainly refer to interest-rate linked instruments with closely related embedded derivatives identified according to the classification rules of Mifid. The fair value of derivatives embedded in structured securities, presented in Line 20 of Assets and Line 20 of Liabilities and included in Trading derivatives - Others, amounted to a net balance of €34 million negative. 1.4 Breakdown of subordinated debts/securities (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks - Deposits from customers 87,467 Debt securities 9,872,898 Total 9,960,365 1.5 Breakdown of structured debts (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks 500 Deposits from customers - Total 500 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 230 2018 Annual Report and Accounts · UniCredit For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.3 Financial liabilities at amortised cost: breakdown by product of debt securities in issue (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Debt securities 1. Bonds 73,353,162 39,436,732 24,152,719 12,441,182 1.1 Structured 1,672,960 178,231 1,450,281 - 1.2 Other 71,680,202 39,258,501 22,702,438 12,441,182 2. Other securities 7,800,128 - 1,841,662 5,959,153 2.1 Structured 109,800 - 113,767 - 2.2 Other 7,690,328 - 1,727,895 5,959,153 Total 81,153,290 39,436,732 25,994,381 18,400,335 Total Level 1, Level 2 and Level 3 83,831,448 Fair value measurements, solely for the purpose of fulfilling financial disclosure requirements, are classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4. Information on fair value. The sum of the sub-items “1.1 Bonds - Structured” and “2.1 Other securities -structured” was equal to €1,782 million and accounted for 2% of total debt securities. They mainly refer to interest-rate linked instruments with closely related embedded derivatives identified according to the classification rules of Mifid. The fair value of derivatives embedded in structured securities, presented in Line 20 of Assets and Line 20 of Liabilities and included in Trading derivatives - Others, amounted to a net balance of €34 million negative. 1.4 Breakdown of subordinated debts/securities (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks - Deposits from customers 87,467 Debt securities 9,872,898 Total 9,960,365 1.5 Breakdown of structured debts (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks 500 Deposits from customers - Total 500 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 230 2018 Annual Report and Accounts · UniCredit For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.3 Financial liabilities at amortised cost: breakdown by product of debt securities in issue (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Debt securities 1. Bonds 73,353,162 39,436,732 24,152,719 12,441,182 1.1 Structured 1,672,960 178,231 1,450,281 - 1.2 Other 71,680,202 39,258,501 22,702,438 12,441,182 2. Other securities 7,800,128 - 1,841,662 5,959,153 2.1 Structured 109,800 - 113,767 - 2.2 Other 7,690,328 - 1,727,895 5,959,153 Total 81,153,290 39,436,732 25,994,381 18,400,335 Total Level 1, Level 2 and Level 3 83,831,448 Fair value measurements, solely for the purpose of fulfilling financial disclosure requirements, are classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4. Information on fair value. The sum of the sub-items “1.1 Bonds - Structured” and “2.1 Other securities -structured” was equal to €1,782 million and accounted for 2% of total debt securities. They mainly refer to interest-rate linked instruments with closely related embedded derivatives identified according to the classification rules of Mifid. The fair value of derivatives embedded in structured securities, presented in Line 20 of Assets and Line 20 of Liabilities and included in Trading derivatives - Others, amounted to a net balance of €34 million negative. 1.4 Breakdown of subordinated debts/securities (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks - Deposits from customers 87,467 Debt securities 9,872,898 Total 9,960,365 1.5 Breakdown of structured debts (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks 500 Deposits from customers - Total 500 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 231 1.6 Amounts payable under finance leases (€ '000) AMOUNTS AS AT 12.31.2018 DEBTS FROM BANKS DEBTS FROM CUSTOMERS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts payable under finance lease Up to 12 months - - 13,275 12,933 1 to 5 years - - 54,831 49,884 Over 5 years - - 118,475 109,654 Current value of minimum gross/net payments - - 186,581 172,471 Time value effect - X (14,109) X Current value of debts for minimum payments due for leasing - - 172,472 172,471 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1.1 Deposits from banks: product breakdown (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Deposits from central banks 58,774,849 2. Deposits from banks 64,469,231 2.1 Current accounts and demand deposits 13,182,724 2.2 Time deposits 5,533,054 2.3 Loans 44,486,155 2.3.1 repos 19,945,553 2.3.2 other 24,540,602 2.4 Liabilities in respect of commitments to repurchase treasury shares - 2.5 Other liabilities 1,267,298 Total 123,244,080 Fair value - level 1 - Fair value - level 2 56,419,195 Fair value - level 3 66,675,209 Total fair value 123,094,404 1.2 Breakdown of item 10: "Deposits from banks": subordinated debts There were no subordinated debts. 1.3 Breakdown of item 10 “Deposits from banks”: structured debts There were no structured debts. 1.5 Amounts payable under finance leases There were no amounts payable to banks under finance leases. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 231 1.6 Amounts payable under finance leases (€ '000) AMOUNTS AS AT 12.31.2018 DEBTS FROM BANKS DEBTS FROM CUSTOMERS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts payable under finance lease Up to 12 months - - 13,275 12,933 1 to 5 years - - 54,831 49,884 Over 5 years - - 118,475 109,654 Current value of minimum gross/net payments - - 186,581 172,471 Time value effect - X (14,109) X Current value of debts for minimum payments due for leasing - - 172,472 172,471 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1.1 Deposits from banks: product breakdown (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Deposits from central banks 58,774,849 2. Deposits from banks 64,469,231 2.1 Current accounts and demand deposits 13,182,724 2.2 Time deposits 5,533,054 2.3 Loans 44,486,155 2.3.1 repos 19,945,553 2.3.2 other 24,540,602 2.4 Liabilities in respect of commitments to repurchase treasury shares - 2.5 Other liabilities 1,267,298 Total 123,244,080 Fair value - level 1 - Fair value - level 2 56,419,195 Fair value - level 3 66,675,209 Total fair value 123,094,404 1.2 Breakdown of item 10: "Deposits from banks": subordinated debts There were no subordinated debts. 1.3 Breakdown of item 10 “Deposits from banks”: structured debts There were no structured debts. 1.5 Amounts payable under finance leases There were no amounts payable to banks under finance leases. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 231 1.6 Amounts payable under finance leases (€ '000) AMOUNTS AS AT 12.31.2018 DEBTS FROM BANKS DEBTS FROM CUSTOMERS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts payable under finance lease Up to 12 months - - 13,275 12,933 1 to 5 years - - 54,831 49,884 Over 5 years - - 118,475 109,654 Current value of minimum gross/net payments - - 186,581 172,471 Time value effect - X (14,109) X Current value of debts for minimum payments due for leasing - - 172,472 172,471 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1.1 Deposits from banks: product breakdown (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Deposits from central banks 58,774,849 2. Deposits from banks 64,469,231 2.1 Current accounts and demand deposits 13,182,724 2.2 Time deposits 5,533,054 2.3 Loans 44,486,155 2.3.1 repos 19,945,553 2.3.2 other 24,540,602 2.4 Liabilities in respect of commitments to repurchase treasury shares - 2.5 Other liabilities 1,267,298 Total 123,244,080 Fair value - level 1 - Fair value - level 2 56,419,195 Fair value - level 3 66,675,209 Total fair value 123,094,404 1.2 Breakdown of item 10: "Deposits from banks": subordinated debts There were no subordinated debts. 1.3 Breakdown of item 10 “Deposits from banks”: structured debts There were no structured debts. 1.5 Amounts payable under finance leases There were no amounts payable to banks under finance leases. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 231 1.6 Amounts payable under finance leases (€ '000) AMOUNTS AS AT 12.31.2018 DEBTS FROM BANKS DEBTS FROM CUSTOMERS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts payable under finance lease Up to 12 months - - 13,275 12,933 1 to 5 years - - 54,831 49,884 Over 5 years - - 118,475 109,654 Current value of minimum gross/net payments - - 186,581 172,471 Time value effect - X (14,109) X Current value of debts for minimum payments due for leasing - - 172,472 172,471 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1.1 Deposits from banks: product breakdown (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Deposits from central banks 58,774,849 2. Deposits from banks 64,469,231 2.1 Current accounts and demand deposits 13,182,724 2.2 Time deposits 5,533,054 2.3 Loans 44,486,155 2.3.1 repos 19,945,553 2.3.2 other 24,540,602 2.4 Liabilities in respect of commitments to repurchase treasury shares - 2.5 Other liabilities 1,267,298 Total 123,244,080 Fair value - level 1 - Fair value - level 2 56,419,195 Fair value - level 3 66,675,209 Total fair value 123,094,404 1.2 Breakdown of item 10: "Deposits from banks": subordinated debts There were no subordinated debts. 1.3 Breakdown of item 10 “Deposits from banks”: structured debts There were no structured debts. 1.5 Amounts payable under finance leases There were no amounts payable to banks under finance leases. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 231 1.6 Amounts payable under finance leases (€ '000) AMOUNTS AS AT 12.31.2018 DEBTS FROM BANKS DEBTS FROM CUSTOMERS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts payable under finance lease Up to 12 months - - 13,275 12,933 1 to 5 years - - 54,831 49,884 Over 5 years - - 118,475 109,654 Current value of minimum gross/net payments - - 186,581 172,471 Time value effect - X (14,109) X Current value of debts for minimum payments due for leasing - - 172,472 172,471 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1.1 Deposits from banks: product breakdown (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Deposits from central banks 58,774,849 2. Deposits from banks 64,469,231 2.1 Current accounts and demand deposits 13,182,724 2.2 Time deposits 5,533,054 2.3 Loans 44,486,155 2.3.1 repos 19,945,553 2.3.2 other 24,540,602 2.4 Liabilities in respect of commitments to repurchase treasury shares - 2.5 Other liabilities 1,267,298 Total 123,244,080 Fair value - level 1 - Fair value - level 2 56,419,195 Fair value - level 3 66,675,209 Total fair value 123,094,404 1.2 Breakdown of item 10: "Deposits from banks": subordinated debts There were no subordinated debts. 1.3 Breakdown of item 10 “Deposits from banks”: structured debts There were no structured debts. 1.5 Amounts payable under finance leases There were no amounts payable to banks under finance leases. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 232 2018 Annual Report and Accounts · UniCredit 2.1 Deposits from customers: breakdown by product (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Current accounts and demand deposits 329,267,455 2. Time deposits 67,828,496 3. Loans 60,371,399 3.1 repos 49,104,213 3.2 other 11,267,186 4. Liabilities in respect of commitments to repurchase treasury shares - 5. Other liabilities 5,427,911 Total 462,895,261 Fair value - level 1 - Fair value - level 2 162,598,619 Fair value - level 3 301,045,127 Total fair value 463,643,746 2.2 Breakdown of item 20 "Deposits from customers": subordinated debts (€ '000) AMOUNTS AS AT 12.31.2017 Deposits from customers: subordinated debts 109,854 2.3 Breakdown of item 20 "Deposits from customers": structured debts There were no structured debts from customers. 2.5 Amounts payable under finance leases (€ '000) AMOUNTS AS AT 12.31.2017 MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts payable under finance leases: Up to 12 months 13,285 12,946 From 1 to 5 years 54,793 49,851 Over 5 years 132,848 119,469 Total value of minimum lease payments 200,926 182,266 Time value effect (18,662) X Present value of minimum payment obligation 182,264 182,266 3.1 Debt securities in issue: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Listed securities 1. Bonds 86,448,072 43,856,076 33,570,769 14,087,520 1.1 structured 2,810,141 194,966 2,640,760 - 1.2 other 83,637,931 43,661,110 30,930,009 14,087,520 2. Other securities 12,154,560 - 3,407,937 8,806,396 2.1 structured 127,570 - 144,446 - 2.2 other 12,026,990 - 3,263,491 8,806,396 Total 98,602,632 43,856,076 36,978,706 22,893,916 Total Level 1, Level 2 and Level 3 103,728,698 3.2 Breakdown of item 30 "Debt securities in issue": subordinated securities (€'000) AMOUNTS AS AT 12.31.2017 Debt securities in issue: subordinated securities 12,652,304 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 232 2018 Annual Report and Accounts · UniCredit 2.1 Deposits from customers: breakdown by product (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Current accounts and demand deposits 329,267,455 2. Time deposits 67,828,496 3. Loans 60,371,399 3.1 repos 49,104,213 3.2 other 11,267,186 4. Liabilities in respect of commitments to repurchase treasury shares - 5. Other liabilities 5,427,911 Total 462,895,261 Fair value - level 1 - Fair value - level 2 162,598,619 Fair value - level 3 301,045,127 Total fair value 463,643,746 2.2 Breakdown of item 20 "Deposits from customers": subordinated debts (€ '000) AMOUNTS AS AT 12.31.2017 Deposits from customers: subordinated debts 109,854 2.3 Breakdown of item 20 "Deposits from customers": structured debts There were no structured debts from customers. 2.5 Amounts payable under finance leases (€ '000) AMOUNTS AS AT 12.31.2017 MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts payable under finance leases: Up to 12 months 13,285 12,946 From 1 to 5 years 54,793 49,851 Over 5 years 132,848 119,469 Total value of minimum lease payments 200,926 182,266 Time value effect (18,662) X Present value of minimum payment obligation 182,264 182,266 3.1 Debt securities in issue: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Listed securities 1. Bonds 86,448,072 43,856,076 33,570,769 14,087,520 1.1 structured 2,810,141 194,966 2,640,760 - 1.2 other 83,637,931 43,661,110 30,930,009 14,087,520 2. Other securities 12,154,560 - 3,407,937 8,806,396 2.1 structured 127,570 - 144,446 - 2.2 other 12,026,990 - 3,263,491 8,806,396 Total 98,602,632 43,856,076 36,978,706 22,893,916 Total Level 1, Level 2 and Level 3 103,728,698 3.2 Breakdown of item 30 "Debt securities in issue": subordinated securities (€'000) AMOUNTS AS AT 12.31.2017 Debt securities in issue: subordinated securities 12,652,304 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 232 2018 Annual Report and Accounts · UniCredit 2.1 Deposits from customers: breakdown by product (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Current accounts and demand deposits 329,267,455 2. Time deposits 67,828,496 3. Loans 60,371,399 3.1 repos 49,104,213 3.2 other 11,267,186 4. Liabilities in respect of commitments to repurchase treasury shares - 5. Other liabilities 5,427,911 Total 462,895,261 Fair value - level 1 - Fair value - level 2 162,598,619 Fair value - level 3 301,045,127 Total fair value 463,643,746 2.2 Breakdown of item 20 "Deposits from customers": subordinated debts (€ '000) AMOUNTS AS AT 12.31.2017 Deposits from customers: subordinated debts 109,854 2.3 Breakdown of item 20 "Deposits from customers": structured debts There were no structured debts from customers. 2.5 Amounts payable under finance leases (€ '000) AMOUNTS AS AT 12.31.2017 MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts payable under finance leases: Up to 12 months 13,285 12,946 From 1 to 5 years 54,793 49,851 Over 5 years 132,848 119,469 Total value of minimum lease payments 200,926 182,266 Time value effect (18,662) X Present value of minimum payment obligation 182,264 182,266 3.1 Debt securities in issue: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Listed securities 1. Bonds 86,448,072 43,856,076 33,570,769 14,087,520 1.1 structured 2,810,141 194,966 2,640,760 - 1.2 other 83,637,931 43,661,110 30,930,009 14,087,520 2. Other securities 12,154,560 - 3,407,937 8,806,396 2.1 structured 127,570 - 144,446 - 2.2 other 12,026,990 - 3,263,491 8,806,396 Total 98,602,632 43,856,076 36,978,706 22,893,916 Total Level 1, Level 2 and Level 3 103,728,698 3.2 Breakdown of item 30 "Debt securities in issue": subordinated securities (€'000) AMOUNTS AS AT 12.31.2017 Debt securities in issue: subordinated securities 12,652,304 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 232 2018 Annual Report and Accounts · UniCredit 2.1 Deposits from customers: breakdown by product (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Current accounts and demand deposits 329,267,455 2. Time deposits 67,828,496 3. Loans 60,371,399 3.1 repos 49,104,213 3.2 other 11,267,186 4. Liabilities in respect of commitments to repurchase treasury shares - 5. Other liabilities 5,427,911 Total 462,895,261 Fair value - level 1 - Fair value - level 2 162,598,619 Fair value - level 3 301,045,127 Total fair value 463,643,746 2.2 Breakdown of item 20 "Deposits from customers": subordinated debts (€ '000) AMOUNTS AS AT 12.31.2017 Deposits from customers: subordinated debts 109,854 2.3 Breakdown of item 20 "Deposits from customers": structured debts There were no structured debts from customers. 2.5 Amounts payable under finance leases (€ '000) AMOUNTS AS AT 12.31.2017 MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts payable under finance leases: Up to 12 months 13,285 12,946 From 1 to 5 years 54,793 49,851 Over 5 years 132,848 119,469 Total value of minimum lease payments 200,926 182,266 Time value effect (18,662) X Present value of minimum payment obligation 182,264 182,266 3.1 Debt securities in issue: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Listed securities 1. Bonds 86,448,072 43,856,076 33,570,769 14,087,520 1.1 structured 2,810,141 194,966 2,640,760 - 1.2 other 83,637,931 43,661,110 30,930,009 14,087,520 2. Other securities 12,154,560 - 3,407,937 8,806,396 2.1 structured 127,570 - 144,446 - 2.2 other 12,026,990 - 3,263,491 8,806,396 Total 98,602,632 43,856,076 36,978,706 22,893,916 Total Level 1, Level 2 and Level 3 103,728,698 3.2 Breakdown of item 30 "Debt securities in issue": subordinated securities (€'000) AMOUNTS AS AT 12.31.2017 Debt securities in issue: subordinated securities 12,652,304 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 232 2018 Annual Report and Accounts · UniCredit 2.1 Deposits from customers: breakdown by product (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Current accounts and demand deposits 329,267,455 2. Time deposits 67,828,496 3. Loans 60,371,399 3.1 repos 49,104,213 3.2 other 11,267,186 4. Liabilities in respect of commitments to repurchase treasury shares - 5. Other liabilities 5,427,911 Total 462,895,261 Fair value - level 1 - Fair value - level 2 162,598,619 Fair value - level 3 301,045,127 Total fair value 463,643,746 2.2 Breakdown of item 20 "Deposits from customers": subordinated debts (€ '000) AMOUNTS AS AT 12.31.2017 Deposits from customers: subordinated debts 109,854 2.3 Breakdown of item 20 "Deposits from customers": structured debts There were no structured debts from customers. 2.5 Amounts payable under finance leases (€ '000) AMOUNTS AS AT 12.31.2017 MINIMUM LEASE PAYMENTS PRESENT VALUE OF MINIMUM LEASE PAYMENTS Amounts payable under finance leases: Up to 12 months 13,285 12,946 From 1 to 5 years 54,793 49,851 Over 5 years 132,848 119,469 Total value of minimum lease payments 200,926 182,266 Time value effect (18,662) X Present value of minimum payment obligation 182,264 182,266 3.1 Debt securities in issue: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Listed securities 1. Bonds 86,448,072 43,856,076 33,570,769 14,087,520 1.1 structured 2,810,141 194,966 2,640,760 - 1.2 other 83,637,931 43,661,110 30,930,009 14,087,520 2. Other securities 12,154,560 - 3,407,937 8,806,396 2.1 structured 127,570 - 144,446 - 2.2 other 12,026,990 - 3,263,491 8,806,396 Total 98,602,632 43,856,076 36,978,706 22,893,916 Total Level 1, Level 2 and Level 3 103,728,698 3.2 Breakdown of item 30 "Debt securities in issue": subordinated securities (€'000) AMOUNTS AS AT 12.31.2017 Debt securities in issue: subordinated securities 12,652,304 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 233 Section 2 - Financial liabilities held for trading - Item 20 2.1 Financial liabilities held for trading: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Cash liabilities 1. Deposits from banks 48 1,623,799 1,517 - 1,625,316 2. Deposits from customers 1,400,265 9,637,200 1,546,717 105 11,184,082 3. Debt securities 3,374,990 - 2,524,467 310,198 2,840,198 3.1 Bonds 1,769,749 - 1,193,876 178,291 1,377,700 3.1.1 Structured 1,769,749 - 1,193,876 178,291 X 3.1.2 Other - - - - X 3.2 Other securities 1,605,241 - 1,330,591 131,907 1,462,498 3.2.1 Structured 1,605,241 - 1,330,591 131,907 X 3.2.2 Other - - - - X Total (A) 4,775,303 11,260,999 4,072,701 310,303 15,649,596 B. Derivatives instruments 1. Financial derivatives X 2,242,626 23,965,866 929,550 X 1.1 Trading derivatives X 2,242,495 23,775,969 894,368 X 1.2 Linked to fair value option X - 49,014 - X 1.3 Other X 131 140,883 35,182 X 2. Credit derivatives X 11,064 197,323 120,804 X 2.1 Trading derivatives X 11,064 188,805 120,804 X 2.2 Linked to fair value option X - - - X 2.3 Other X - 8,518 - X Total (B) X 2,253,690 24,163,189 1,050,354 X Total (A+B) X 13,514,689 28,235,890 1,360,657 X Total Level 1, Level 2 and Level 3 43,111,236 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. The financial assets and liabilities relating to OTC Derivatives and Repos managed through Central Counterparty Clearing Houses (CCPs) are offset when (i) the clearing systems of CCPs guarantee the elimination or reduce to immaterial the credit and liquidity risks of these contracts and (ii) the entity intends to settle these contracts on a net basis, in accordance with IAS32 - Offsetting, in order to better present the liquidity profile and counterparty risk connected with them. The offset effect as at 31 December 2018, already included in the net presentation of these transactions, totaled €17,198,211 thousand (€15,009,452 thousand as at 31 December 2017). The sub-item “Deposits from banks” and “Deposits from customers” include short selling totaling €11,416 million as at 31 December 2018 (€13,365 million as at 31 December 2017), in respect of which no nominal amount was attributed. 2.2 Breakdown of "Financial liabilities held for trading": subordinated liabilities No data to be disclosed. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 233 Section 2 - Financial liabilities held for trading - Item 20 2.1 Financial liabilities held for trading: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Cash liabilities 1. Deposits from banks 48 1,623,799 1,517 - 1,625,316 2. Deposits from customers 1,400,265 9,637,200 1,546,717 105 11,184,082 3. Debt securities 3,374,990 - 2,524,467 310,198 2,840,198 3.1 Bonds 1,769,749 - 1,193,876 178,291 1,377,700 3.1.1 Structured 1,769,749 - 1,193,876 178,291 X 3.1.2 Other - - - - X 3.2 Other securities 1,605,241 - 1,330,591 131,907 1,462,498 3.2.1 Structured 1,605,241 - 1,330,591 131,907 X 3.2.2 Other - - - - X Total (A) 4,775,303 11,260,999 4,072,701 310,303 15,649,596 B. Derivatives instruments 1. Financial derivatives X 2,242,626 23,965,866 929,550 X 1.1 Trading derivatives X 2,242,495 23,775,969 894,368 X 1.2 Linked to fair value option X - 49,014 - X 1.3 Other X 131 140,883 35,182 X 2. Credit derivatives X 11,064 197,323 120,804 X 2.1 Trading derivatives X 11,064 188,805 120,804 X 2.2 Linked to fair value option X - - - X 2.3 Other X - 8,518 - X Total (B) X 2,253,690 24,163,189 1,050,354 X Total (A+B) X 13,514,689 28,235,890 1,360,657 X Total Level 1, Level 2 and Level 3 43,111,236 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. The financial assets and liabilities relating to OTC Derivatives and Repos managed through Central Counterparty Clearing Houses (CCPs) are offset when (i) the clearing systems of CCPs guarantee the elimination or reduce to immaterial the credit and liquidity risks of these contracts and (ii) the entity intends to settle these contracts on a net basis, in accordance with IAS32 - Offsetting, in order to better present the liquidity profile and counterparty risk connected with them. The offset effect as at 31 December 2018, already included in the net presentation of these transactions, totaled €17,198,211 thousand (€15,009,452 thousand as at 31 December 2017). The sub-item “Deposits from banks” and “Deposits from customers” include short selling totaling €11,416 million as at 31 December 2018 (€13,365 million as at 31 December 2017), in respect of which no nominal amount was attributed. 2.2 Breakdown of "Financial liabilities held for trading": subordinated liabilities No data to be disclosed. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 233 Section 2 - Financial liabilities held for trading - Item 20 2.1 Financial liabilities held for trading: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Cash liabilities 1. Deposits from banks 48 1,623,799 1,517 - 1,625,316 2. Deposits from customers 1,400,265 9,637,200 1,546,717 105 11,184,082 3. Debt securities 3,374,990 - 2,524,467 310,198 2,840,198 3.1 Bonds 1,769,749 - 1,193,876 178,291 1,377,700 3.1.1 Structured 1,769,749 - 1,193,876 178,291 X 3.1.2 Other - - - - X 3.2 Other securities 1,605,241 - 1,330,591 131,907 1,462,498 3.2.1 Structured 1,605,241 - 1,330,591 131,907 X 3.2.2 Other - - - - X Total (A) 4,775,303 11,260,999 4,072,701 310,303 15,649,596 B. Derivatives instruments 1. Financial derivatives X 2,242,626 23,965,866 929,550 X 1.1 Trading derivatives X 2,242,495 23,775,969 894,368 X 1.2 Linked to fair value option X - 49,014 - X 1.3 Other X 131 140,883 35,182 X 2. Credit derivatives X 11,064 197,323 120,804 X 2.1 Trading derivatives X 11,064 188,805 120,804 X 2.2 Linked to fair value option X - - - X 2.3 Other X - 8,518 - X Total (B) X 2,253,690 24,163,189 1,050,354 X Total (A+B) X 13,514,689 28,235,890 1,360,657 X Total Level 1, Level 2 and Level 3 43,111,236 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. The financial assets and liabilities relating to OTC Derivatives and Repos managed through Central Counterparty Clearing Houses (CCPs) are offset when (i) the clearing systems of CCPs guarantee the elimination or reduce to immaterial the credit and liquidity risks of these contracts and (ii) the entity intends to settle these contracts on a net basis, in accordance with IAS32 - Offsetting, in order to better present the liquidity profile and counterparty risk connected with them. The offset effect as at 31 December 2018, already included in the net presentation of these transactions, totaled €17,198,211 thousand (€15,009,452 thousand as at 31 December 2017). The sub-item “Deposits from banks” and “Deposits from customers” include short selling totaling €11,416 million as at 31 December 2018 (€13,365 million as at 31 December 2017), in respect of which no nominal amount was attributed. 2.2 Breakdown of "Financial liabilities held for trading": subordinated liabilities No data to be disclosed. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 233 Section 2 - Financial liabilities held for trading - Item 20 2.1 Financial liabilities held for trading: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Cash liabilities 1. Deposits from banks 48 1,623,799 1,517 - 1,625,316 2. Deposits from customers 1,400,265 9,637,200 1,546,717 105 11,184,082 3. Debt securities 3,374,990 - 2,524,467 310,198 2,840,198 3.1 Bonds 1,769,749 - 1,193,876 178,291 1,377,700 3.1.1 Structured 1,769,749 - 1,193,876 178,291 X 3.1.2 Other - - - - X 3.2 Other securities 1,605,241 - 1,330,591 131,907 1,462,498 3.2.1 Structured 1,605,241 - 1,330,591 131,907 X 3.2.2 Other - - - - X Total (A) 4,775,303 11,260,999 4,072,701 310,303 15,649,596 B. Derivatives instruments 1. Financial derivatives X 2,242,626 23,965,866 929,550 X 1.1 Trading derivatives X 2,242,495 23,775,969 894,368 X 1.2 Linked to fair value option X - 49,014 - X 1.3 Other X 131 140,883 35,182 X 2. Credit derivatives X 11,064 197,323 120,804 X 2.1 Trading derivatives X 11,064 188,805 120,804 X 2.2 Linked to fair value option X - - - X 2.3 Other X - 8,518 - X Total (B) X 2,253,690 24,163,189 1,050,354 X Total (A+B) X 13,514,689 28,235,890 1,360,657 X Total Level 1, Level 2 and Level 3 43,111,236 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. The financial assets and liabilities relating to OTC Derivatives and Repos managed through Central Counterparty Clearing Houses (CCPs) are offset when (i) the clearing systems of CCPs guarantee the elimination or reduce to immaterial the credit and liquidity risks of these contracts and (ii) the entity intends to settle these contracts on a net basis, in accordance with IAS32 - Offsetting, in order to better present the liquidity profile and counterparty risk connected with them. The offset effect as at 31 December 2018, already included in the net presentation of these transactions, totaled €17,198,211 thousand (€15,009,452 thousand as at 31 December 2017). The sub-item “Deposits from banks” and “Deposits from customers” include short selling totaling €11,416 million as at 31 December 2018 (€13,365 million as at 31 December 2017), in respect of which no nominal amount was attributed. 2.2 Breakdown of "Financial liabilities held for trading": subordinated liabilities No data to be disclosed. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 233 Section 2 - Financial liabilities held for trading - Item 20 2.1 Financial liabilities held for trading: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Cash liabilities 1. Deposits from banks 48 1,623,799 1,517 - 1,625,316 2. Deposits from customers 1,400,265 9,637,200 1,546,717 105 11,184,082 3. Debt securities 3,374,990 - 2,524,467 310,198 2,840,198 3.1 Bonds 1,769,749 - 1,193,876 178,291 1,377,700 3.1.1 Structured 1,769,749 - 1,193,876 178,291 X 3.1.2 Other - - - - X 3.2 Other securities 1,605,241 - 1,330,591 131,907 1,462,498 3.2.1 Structured 1,605,241 - 1,330,591 131,907 X 3.2.2 Other - - - - X Total (A) 4,775,303 11,260,999 4,072,701 310,303 15,649,596 B. Derivatives instruments 1. Financial derivatives X 2,242,626 23,965,866 929,550 X 1.1 Trading derivatives X 2,242,495 23,775,969 894,368 X 1.2 Linked to fair value option X - 49,014 - X 1.3 Other X 131 140,883 35,182 X 2. Credit derivatives X 11,064 197,323 120,804 X 2.1 Trading derivatives X 11,064 188,805 120,804 X 2.2 Linked to fair value option X - - - X 2.3 Other X - 8,518 - X Total (B) X 2,253,690 24,163,189 1,050,354 X Total (A+B) X 13,514,689 28,235,890 1,360,657 X Total Level 1, Level 2 and Level 3 43,111,236 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. The financial assets and liabilities relating to OTC Derivatives and Repos managed through Central Counterparty Clearing Houses (CCPs) are offset when (i) the clearing systems of CCPs guarantee the elimination or reduce to immaterial the credit and liquidity risks of these contracts and (ii) the entity intends to settle these contracts on a net basis, in accordance with IAS32 - Offsetting, in order to better present the liquidity profile and counterparty risk connected with them. The offset effect as at 31 December 2018, already included in the net presentation of these transactions, totaled €17,198,211 thousand (€15,009,452 thousand as at 31 December 2017). The sub-item “Deposits from banks” and “Deposits from customers” include short selling totaling €11,416 million as at 31 December 2018 (€13,365 million as at 31 December 2017), in respect of which no nominal amount was attributed. 2.2 Breakdown of "Financial liabilities held for trading": subordinated liabilities No data to be disclosed. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 234 2018 Annual Report and Accounts · UniCredit 2.3 Breakdown of "Financial liabilities held for trading": structured debts (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks 22,350 Deposits from customers - Debt securities 3,374,990 Total 3,397,340 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 4.1 Financial liabilities held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF OPERATIONS/GROUP COMPONENTS NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Financial liabilities 1. Deposits from banks 266,135 1,513,171 484,213 - 1,992,134 2. Deposits from customers 2,985,910 11,485,833 3,090,485 62,294 14,583,551 3. Debt securities 6,517,659 - 6,253,503 914,890 7,228,447 3.1 Bonds 5,291,022 - 4,453,294 783,291 5,296,639 3.1.1 Structured 4,911,980 - 4,113,415 783,291 X 3.1.2 Other 379,042 - 339,879 - X 3.2 Other securities 1,226,637 - 1,800,209 131,599 1,931,808 3.2.1 Structured 1,226,637 - 1,800,209 131,599 X 3.2.2 Other - - - - X Total A 9,769,704 12,999,004 9,828,201 977,184 23,804,132 B. Derivatives instruments 1. Financial derivatives X 1,983,595 28,754,334 880,604 X 1.1 Trading X 1,983,595 28,487,256 819,149 X 1.2 Related to fair value option X - 134,565 - X 1.3 Other X - 132,513 61,455 X 2. Credit derivatives X 11,888 292,143 56,772 X 2.1 Trading derivatives X 11,888 291,615 56,772 X 2.2 Related to fair value option X - - - X 2.3 Other X - 528 - X Total B X 1,995,483 29,046,477 937,376 X Total A+B X 14,994,487 38,874,678 1,914,560 X Total Level 1, Level 2 and Level 3 55,783,725 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. 4.2 Breakdown of item 40 "Financial liabilities held for trading": subordinanted liabilities (€ '000) AMOUNTS AS AT 12.31.2017 Financial liabilities held for trading: subordinated liabilities 47,027 4.3 Breakdown of item 40 "Financial liabilities held for trading": structured debts There were no amounts to be shown. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 234 2018 Annual Report and Accounts · UniCredit 2.3 Breakdown of "Financial liabilities held for trading": structured debts (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks 22,350 Deposits from customers - Debt securities 3,374,990 Total 3,397,340 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 4.1 Financial liabilities held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF OPERATIONS/GROUP COMPONENTS NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Financial liabilities 1. Deposits from banks 266,135 1,513,171 484,213 - 1,992,134 2. Deposits from customers 2,985,910 11,485,833 3,090,485 62,294 14,583,551 3. Debt securities 6,517,659 - 6,253,503 914,890 7,228,447 3.1 Bonds 5,291,022 - 4,453,294 783,291 5,296,639 3.1.1 Structured 4,911,980 - 4,113,415 783,291 X 3.1.2 Other 379,042 - 339,879 - X 3.2 Other securities 1,226,637 - 1,800,209 131,599 1,931,808 3.2.1 Structured 1,226,637 - 1,800,209 131,599 X 3.2.2 Other - - - - X Total A 9,769,704 12,999,004 9,828,201 977,184 23,804,132 B. Derivatives instruments 1. Financial derivatives X 1,983,595 28,754,334 880,604 X 1.1 Trading X 1,983,595 28,487,256 819,149 X 1.2 Related to fair value option X - 134,565 - X 1.3 Other X - 132,513 61,455 X 2. Credit derivatives X 11,888 292,143 56,772 X 2.1 Trading derivatives X 11,888 291,615 56,772 X 2.2 Related to fair value option X - - - X 2.3 Other X - 528 - X Total B X 1,995,483 29,046,477 937,376 X Total A+B X 14,994,487 38,874,678 1,914,560 X Total Level 1, Level 2 and Level 3 55,783,725 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. 4.2 Breakdown of item 40 "Financial liabilities held for trading": subordinanted liabilities (€ '000) AMOUNTS AS AT 12.31.2017 Financial liabilities held for trading: subordinated liabilities 47,027 4.3 Breakdown of item 40 "Financial liabilities held for trading": structured debts There were no amounts to be shown. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 234 2018 Annual Report and Accounts · UniCredit 2.3 Breakdown of "Financial liabilities held for trading": structured debts (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks 22,350 Deposits from customers - Debt securities 3,374,990 Total 3,397,340 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 4.1 Financial liabilities held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF OPERATIONS/GROUP COMPONENTS NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Financial liabilities 1. Deposits from banks 266,135 1,513,171 484,213 - 1,992,134 2. Deposits from customers 2,985,910 11,485,833 3,090,485 62,294 14,583,551 3. Debt securities 6,517,659 - 6,253,503 914,890 7,228,447 3.1 Bonds 5,291,022 - 4,453,294 783,291 5,296,639 3.1.1 Structured 4,911,980 - 4,113,415 783,291 X 3.1.2 Other 379,042 - 339,879 - X 3.2 Other securities 1,226,637 - 1,800,209 131,599 1,931,808 3.2.1 Structured 1,226,637 - 1,800,209 131,599 X 3.2.2 Other - - - - X Total A 9,769,704 12,999,004 9,828,201 977,184 23,804,132 B. Derivatives instruments 1. Financial derivatives X 1,983,595 28,754,334 880,604 X 1.1 Trading X 1,983,595 28,487,256 819,149 X 1.2 Related to fair value option X - 134,565 - X 1.3 Other X - 132,513 61,455 X 2. Credit derivatives X 11,888 292,143 56,772 X 2.1 Trading derivatives X 11,888 291,615 56,772 X 2.2 Related to fair value option X - - - X 2.3 Other X - 528 - X Total B X 1,995,483 29,046,477 937,376 X Total A+B X 14,994,487 38,874,678 1,914,560 X Total Level 1, Level 2 and Level 3 55,783,725 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. 4.2 Breakdown of item 40 "Financial liabilities held for trading": subordinanted liabilities (€ '000) AMOUNTS AS AT 12.31.2017 Financial liabilities held for trading: subordinated liabilities 47,027 4.3 Breakdown of item 40 "Financial liabilities held for trading": structured debts There were no amounts to be shown. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 234 2018 Annual Report and Accounts · UniCredit 2.3 Breakdown of "Financial liabilities held for trading": structured debts (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks 22,350 Deposits from customers - Debt securities 3,374,990 Total 3,397,340 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 4.1 Financial liabilities held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF OPERATIONS/GROUP COMPONENTS NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Financial liabilities 1. Deposits from banks 266,135 1,513,171 484,213 - 1,992,134 2. Deposits from customers 2,985,910 11,485,833 3,090,485 62,294 14,583,551 3. Debt securities 6,517,659 - 6,253,503 914,890 7,228,447 3.1 Bonds 5,291,022 - 4,453,294 783,291 5,296,639 3.1.1 Structured 4,911,980 - 4,113,415 783,291 X 3.1.2 Other 379,042 - 339,879 - X 3.2 Other securities 1,226,637 - 1,800,209 131,599 1,931,808 3.2.1 Structured 1,226,637 - 1,800,209 131,599 X 3.2.2 Other - - - - X Total A 9,769,704 12,999,004 9,828,201 977,184 23,804,132 B. Derivatives instruments 1. Financial derivatives X 1,983,595 28,754,334 880,604 X 1.1 Trading X 1,983,595 28,487,256 819,149 X 1.2 Related to fair value option X - 134,565 - X 1.3 Other X - 132,513 61,455 X 2. Credit derivatives X 11,888 292,143 56,772 X 2.1 Trading derivatives X 11,888 291,615 56,772 X 2.2 Related to fair value option X - - - X 2.3 Other X - 528 - X Total B X 1,995,483 29,046,477 937,376 X Total A+B X 14,994,487 38,874,678 1,914,560 X Total Level 1, Level 2 and Level 3 55,783,725 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. 4.2 Breakdown of item 40 "Financial liabilities held for trading": subordinanted liabilities (€ '000) AMOUNTS AS AT 12.31.2017 Financial liabilities held for trading: subordinated liabilities 47,027 4.3 Breakdown of item 40 "Financial liabilities held for trading": structured debts There were no amounts to be shown. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 234 2018 Annual Report and Accounts · UniCredit 2.3 Breakdown of "Financial liabilities held for trading": structured debts (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks 22,350 Deposits from customers - Debt securities 3,374,990 Total 3,397,340 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 4.1 Financial liabilities held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF OPERATIONS/GROUP COMPONENTS NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Financial liabilities 1. Deposits from banks 266,135 1,513,171 484,213 - 1,992,134 2. Deposits from customers 2,985,910 11,485,833 3,090,485 62,294 14,583,551 3. Debt securities 6,517,659 - 6,253,503 914,890 7,228,447 3.1 Bonds 5,291,022 - 4,453,294 783,291 5,296,639 3.1.1 Structured 4,911,980 - 4,113,415 783,291 X 3.1.2 Other 379,042 - 339,879 - X 3.2 Other securities 1,226,637 - 1,800,209 131,599 1,931,808 3.2.1 Structured 1,226,637 - 1,800,209 131,599 X 3.2.2 Other - - - - X Total A 9,769,704 12,999,004 9,828,201 977,184 23,804,132 B. Derivatives instruments 1. Financial derivatives X 1,983,595 28,754,334 880,604 X 1.1 Trading X 1,983,595 28,487,256 819,149 X 1.2 Related to fair value option X - 134,565 - X 1.3 Other X - 132,513 61,455 X 2. Credit derivatives X 11,888 292,143 56,772 X 2.1 Trading derivatives X 11,888 291,615 56,772 X 2.2 Related to fair value option X - - - X 2.3 Other X - 528 - X Total B X 1,995,483 29,046,477 937,376 X Total A+B X 14,994,487 38,874,678 1,914,560 X Total Level 1, Level 2 and Level 3 55,783,725 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. 4.2 Breakdown of item 40 "Financial liabilities held for trading": subordinanted liabilities (€ '000) AMOUNTS AS AT 12.31.2017 Financial liabilities held for trading: subordinated liabilities 47,027 4.3 Breakdown of item 40 "Financial liabilities held for trading": structured debts There were no amounts to be shown. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 235 Section 3 - Financial liabilities designated at fair value - Item 30 3.1 Financial liabilities designated at fair value: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks 5,152 - 4,226 1,152 5,359 1.1 Structured - - - - X 1.2 Other 5,152 - 4,226 1,152 X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 2. Deposits from customers 566,250 - 534,362 44,927 582,908 2.1 Structured - - - - X 2.2 Other 566,250 - 534,362 44,927 X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 3. Debt securities 9,099,541 427,415 8,125,160 180,489 8,780,630 3.1 Structured 8,356,455 - 7,796,270 160,107 X 3.2 Other 743,086 427,415 328,890 20,382 X Total 9,670,943 427,415 8,663,748 226,568 9,368,897 Total Level 1, Level 2 and Level 3 9,317,731 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Liabilities are recognised in this item to reduce the accounting mismatch arising from financial instruments measured with changes in fair value in the income statement in order to manage the risk profile. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting policies - A.4 Information on fair value. The sub-item “3.1 Debt securities - Structured” includes “Certificates”, structured debt securities, issued by UniCredit S.p.A. and by other Group’s legal entities; further the item contains €396 million of “Secured mandatorily exchangeable equity-linked certificate” referred to the residual shares in Bank Pekao S.A., after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. occurred in June 2017. These securities are classified as measured at fair value not being separable their embedded derivative component. 3.2 Breakdown of "Financial liabilities designated at fair value": subordinated liabilities (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks - Deposits from customers - Debt securities 472,421 Total 472,421 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 235 Section 3 - Financial liabilities designated at fair value - Item 30 3.1 Financial liabilities designated at fair value: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks 5,152 - 4,226 1,152 5,359 1.1 Structured - - - - X 1.2 Other 5,152 - 4,226 1,152 X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 2. Deposits from customers 566,250 - 534,362 44,927 582,908 2.1 Structured - - - - X 2.2 Other 566,250 - 534,362 44,927 X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 3. Debt securities 9,099,541 427,415 8,125,160 180,489 8,780,630 3.1 Structured 8,356,455 - 7,796,270 160,107 X 3.2 Other 743,086 427,415 328,890 20,382 X Total 9,670,943 427,415 8,663,748 226,568 9,368,897 Total Level 1, Level 2 and Level 3 9,317,731 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Liabilities are recognised in this item to reduce the accounting mismatch arising from financial instruments measured with changes in fair value in the income statement in order to manage the risk profile. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting policies - A.4 Information on fair value. The sub-item “3.1 Debt securities - Structured” includes “Certificates”, structured debt securities, issued by UniCredit S.p.A. and by other Group’s legal entities; further the item contains €396 million of “Secured mandatorily exchangeable equity-linked certificate” referred to the residual shares in Bank Pekao S.A., after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. occurred in June 2017. These securities are classified as measured at fair value not being separable their embedded derivative component. 3.2 Breakdown of "Financial liabilities designated at fair value": subordinated liabilities (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks - Deposits from customers - Debt securities 472,421 Total 472,421 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 235 Section 3 - Financial liabilities designated at fair value - Item 30 3.1 Financial liabilities designated at fair value: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks 5,152 - 4,226 1,152 5,359 1.1 Structured - - - - X 1.2 Other 5,152 - 4,226 1,152 X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 2. Deposits from customers 566,250 - 534,362 44,927 582,908 2.1 Structured - - - - X 2.2 Other 566,250 - 534,362 44,927 X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 3. Debt securities 9,099,541 427,415 8,125,160 180,489 8,780,630 3.1 Structured 8,356,455 - 7,796,270 160,107 X 3.2 Other 743,086 427,415 328,890 20,382 X Total 9,670,943 427,415 8,663,748 226,568 9,368,897 Total Level 1, Level 2 and Level 3 9,317,731 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Liabilities are recognised in this item to reduce the accounting mismatch arising from financial instruments measured with changes in fair value in the income statement in order to manage the risk profile. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting policies - A.4 Information on fair value. The sub-item “3.1 Debt securities - Structured” includes “Certificates”, structured debt securities, issued by UniCredit S.p.A. and by other Group’s legal entities; further the item contains €396 million of “Secured mandatorily exchangeable equity-linked certificate” referred to the residual shares in Bank Pekao S.A., after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. occurred in June 2017. These securities are classified as measured at fair value not being separable their embedded derivative component. 3.2 Breakdown of "Financial liabilities designated at fair value": subordinated liabilities (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks - Deposits from customers - Debt securities 472,421 Total 472,421 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 235 Section 3 - Financial liabilities designated at fair value - Item 30 3.1 Financial liabilities designated at fair value: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks 5,152 - 4,226 1,152 5,359 1.1 Structured - - - - X 1.2 Other 5,152 - 4,226 1,152 X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 2. Deposits from customers 566,250 - 534,362 44,927 582,908 2.1 Structured - - - - X 2.2 Other 566,250 - 534,362 44,927 X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 3. Debt securities 9,099,541 427,415 8,125,160 180,489 8,780,630 3.1 Structured 8,356,455 - 7,796,270 160,107 X 3.2 Other 743,086 427,415 328,890 20,382 X Total 9,670,943 427,415 8,663,748 226,568 9,368,897 Total Level 1, Level 2 and Level 3 9,317,731 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Liabilities are recognised in this item to reduce the accounting mismatch arising from financial instruments measured with changes in fair value in the income statement in order to manage the risk profile. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting policies - A.4 Information on fair value. The sub-item “3.1 Debt securities - Structured” includes “Certificates”, structured debt securities, issued by UniCredit S.p.A. and by other Group’s legal entities; further the item contains €396 million of “Secured mandatorily exchangeable equity-linked certificate” referred to the residual shares in Bank Pekao S.A., after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. occurred in June 2017. These securities are classified as measured at fair value not being separable their embedded derivative component. 3.2 Breakdown of "Financial liabilities designated at fair value": subordinated liabilities (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks - Deposits from customers - Debt securities 472,421 Total 472,421 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 235 Section 3 - Financial liabilities designated at fair value - Item 30 3.1 Financial liabilities designated at fair value: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks 5,152 - 4,226 1,152 5,359 1.1 Structured - - - - X 1.2 Other 5,152 - 4,226 1,152 X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 2. Deposits from customers 566,250 - 534,362 44,927 582,908 2.1 Structured - - - - X 2.2 Other 566,250 - 534,362 44,927 X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 3. Debt securities 9,099,541 427,415 8,125,160 180,489 8,780,630 3.1 Structured 8,356,455 - 7,796,270 160,107 X 3.2 Other 743,086 427,415 328,890 20,382 X Total 9,670,943 427,415 8,663,748 226,568 9,368,897 Total Level 1, Level 2 and Level 3 9,317,731 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Liabilities are recognised in this item to reduce the accounting mismatch arising from financial instruments measured with changes in fair value in the income statement in order to manage the risk profile. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting policies - A.4 Information on fair value. The sub-item “3.1 Debt securities - Structured” includes “Certificates”, structured debt securities, issued by UniCredit S.p.A. and by other Group’s legal entities; further the item contains €396 million of “Secured mandatorily exchangeable equity-linked certificate” referred to the residual shares in Bank Pekao S.A., after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. occurred in June 2017. These securities are classified as measured at fair value not being separable their embedded derivative component. 3.2 Breakdown of "Financial liabilities designated at fair value": subordinated liabilities (€ '000) AMOUNTS AS AT 12.31.2018 Deposits from banks - Deposits from customers - Debt securities 472,421 Total 472,421 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 236 2018 Annual Report and Accounts · UniCredit The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 5.1 Financial liabilities at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF OPERATIONS/GROUP COMPONENT NOMINAL VALUE FAIR VALUE FAIR VALUE(*) LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X 2. Deposits from customers 28,838 - - 28,838 28,838 2.1 Structured - - - - X 2.2 Other 28,838 - - 28,838 X 3. Debt securities 2,892,483 - 2,980,270 1,421 2,922,524 3.1 Structured 2,891,062 - 2,980,270 - X 3.2 Other 1,421 - - 1,421 X Total 2,921,321 - 2,980,270 30,259 2,951,362 Total Level 1, Level 2 and Level 3 3,010,529 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. 5.2 Breakdown of item 50 “Financial liabilities at fair value through profit or loss”: subordinated liabilities There were no subordinated liabilities. Section 4 - Hedging derivatives - Item 40 4.1 Hedging derivatives: breakdown by type of hedging and by levels (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 200,237,636 100,445 5,906,926 24,658 153,222,035 79 3,509,219 58,547 1) Fair value 189,840,313 100,445 5,607,065 17,091 142,627,506 78 3,156,158 52,618 2) Cash flows 10,397,323 - 299,861 7,567 10,594,529 1 353,061 5,929 3) Net investment in foreign - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 200,237,636 100,445 5,906,926 24,658 153,222,035 79 3,509,219 58,547 Total Level 1, Level 2 and Level 3 6,032,029 3,567,845 Valuations at fair value were classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 236 2018 Annual Report and Accounts · UniCredit The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 5.1 Financial liabilities at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF OPERATIONS/GROUP COMPONENT NOMINAL VALUE FAIR VALUE FAIR VALUE(*) LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X 2. Deposits from customers 28,838 - - 28,838 28,838 2.1 Structured - - - - X 2.2 Other 28,838 - - 28,838 X 3. Debt securities 2,892,483 - 2,980,270 1,421 2,922,524 3.1 Structured 2,891,062 - 2,980,270 - X 3.2 Other 1,421 - - 1,421 X Total 2,921,321 - 2,980,270 30,259 2,951,362 Total Level 1, Level 2 and Level 3 3,010,529 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. 5.2 Breakdown of item 50 “Financial liabilities at fair value through profit or loss”: subordinated liabilities There were no subordinated liabilities. Section 4 - Hedging derivatives - Item 40 4.1 Hedging derivatives: breakdown by type of hedging and by levels (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 200,237,636 100,445 5,906,926 24,658 153,222,035 79 3,509,219 58,547 1) Fair value 189,840,313 100,445 5,607,065 17,091 142,627,506 78 3,156,158 52,618 2) Cash flows 10,397,323 - 299,861 7,567 10,594,529 1 353,061 5,929 3) Net investment in foreign - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 200,237,636 100,445 5,906,926 24,658 153,222,035 79 3,509,219 58,547 Total Level 1, Level 2 and Level 3 6,032,029 3,567,845 Valuations at fair value were classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 236 2018 Annual Report and Accounts · UniCredit The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 5.1 Financial liabilities at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF OPERATIONS/GROUP COMPONENT NOMINAL VALUE FAIR VALUE FAIR VALUE(*) LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X 2. Deposits from customers 28,838 - - 28,838 28,838 2.1 Structured - - - - X 2.2 Other 28,838 - - 28,838 X 3. Debt securities 2,892,483 - 2,980,270 1,421 2,922,524 3.1 Structured 2,891,062 - 2,980,270 - X 3.2 Other 1,421 - - 1,421 X Total 2,921,321 - 2,980,270 30,259 2,951,362 Total Level 1, Level 2 and Level 3 3,010,529 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. 5.2 Breakdown of item 50 “Financial liabilities at fair value through profit or loss”: subordinated liabilities There were no subordinated liabilities. Section 4 - Hedging derivatives - Item 40 4.1 Hedging derivatives: breakdown by type of hedging and by levels (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 200,237,636 100,445 5,906,926 24,658 153,222,035 79 3,509,219 58,547 1) Fair value 189,840,313 100,445 5,607,065 17,091 142,627,506 78 3,156,158 52,618 2) Cash flows 10,397,323 - 299,861 7,567 10,594,529 1 353,061 5,929 3) Net investment in foreign - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 200,237,636 100,445 5,906,926 24,658 153,222,035 79 3,509,219 58,547 Total Level 1, Level 2 and Level 3 6,032,029 3,567,845 Valuations at fair value were classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 236 2018 Annual Report and Accounts · UniCredit The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 5.1 Financial liabilities at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF OPERATIONS/GROUP COMPONENT NOMINAL VALUE FAIR VALUE FAIR VALUE(*) LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X 2. Deposits from customers 28,838 - - 28,838 28,838 2.1 Structured - - - - X 2.2 Other 28,838 - - 28,838 X 3. Debt securities 2,892,483 - 2,980,270 1,421 2,922,524 3.1 Structured 2,891,062 - 2,980,270 - X 3.2 Other 1,421 - - 1,421 X Total 2,921,321 - 2,980,270 30,259 2,951,362 Total Level 1, Level 2 and Level 3 3,010,529 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. 5.2 Breakdown of item 50 “Financial liabilities at fair value through profit or loss”: subordinated liabilities There were no subordinated liabilities. Section 4 - Hedging derivatives - Item 40 4.1 Hedging derivatives: breakdown by type of hedging and by levels (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 200,237,636 100,445 5,906,926 24,658 153,222,035 79 3,509,219 58,547 1) Fair value 189,840,313 100,445 5,607,065 17,091 142,627,506 78 3,156,158 52,618 2) Cash flows 10,397,323 - 299,861 7,567 10,594,529 1 353,061 5,929 3) Net investment in foreign - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 200,237,636 100,445 5,906,926 24,658 153,222,035 79 3,509,219 58,547 Total Level 1, Level 2 and Level 3 6,032,029 3,567,845 Valuations at fair value were classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 236 2018 Annual Report and Accounts · UniCredit The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 5.1 Financial liabilities at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF OPERATIONS/GROUP COMPONENT NOMINAL VALUE FAIR VALUE FAIR VALUE(*) LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X 2. Deposits from customers 28,838 - - 28,838 28,838 2.1 Structured - - - - X 2.2 Other 28,838 - - 28,838 X 3. Debt securities 2,892,483 - 2,980,270 1,421 2,922,524 3.1 Structured 2,891,062 - 2,980,270 - X 3.2 Other 1,421 - - 1,421 X Total 2,921,321 - 2,980,270 30,259 2,951,362 Total Level 1, Level 2 and Level 3 3,010,529 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. 5.2 Breakdown of item 50 “Financial liabilities at fair value through profit or loss”: subordinated liabilities There were no subordinated liabilities. Section 4 - Hedging derivatives - Item 40 4.1 Hedging derivatives: breakdown by type of hedging and by levels (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 200,237,636 100,445 5,906,926 24,658 153,222,035 79 3,509,219 58,547 1) Fair value 189,840,313 100,445 5,607,065 17,091 142,627,506 78 3,156,158 52,618 2) Cash flows 10,397,323 - 299,861 7,567 10,594,529 1 353,061 5,929 3) Net investment in foreign - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 200,237,636 100,445 5,906,926 24,658 153,222,035 79 3,509,219 58,547 Total Level 1, Level 2 and Level 3 6,032,029 3,567,845 Valuations at fair value were classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 237 4.2 Hedging derivatives: breakdown by hedged portfolios and type of hedging (€ '000) AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW MICRO-HEDGE TRANSACTIONS/HEDGE TYPES DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHER MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE FOREIGN INVESTMENTS 1. Financial assets at fair value through other comprehensive income 302,650 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 9,154 X 85,999 X 4. Other transactions 52,395 - - - - - X - X - Total assets 355,045 - - - - - 9,154 - 85,999 - 1. Financial liabilities 3,106,002 X 1,007 - - - X 89,904 X X 2. Portfolio X X X X X X 1,747,165 X 123,958 X Total liabilities 3,106,002 - 1,007 - - - 1,747,165 89,904 123,958 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X 506,228 X 7,567 - Section 5 - Value adjustment of hedged financial liabilities - Item 50 5.1 Changes to hedged financial liabilities (€ '000) AMOUNTS AS AT CHANGES TO HEDGED LIABILITIES/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes to financial liabilities 5,847,663 4,439,009 2. Negative changes to financial liabilities (2,617,867) (1,397,019) Total 3,229,796 3,041,990 Section 6 - Tax liabilities - Item 60 See Section 11 of Assets. Section 7 - Liabilities associated with assets classified as held for sale - Item 70 See Section 12 of Assets. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 237 4.2 Hedging derivatives: breakdown by hedged portfolios and type of hedging (€ '000) AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW MICRO-HEDGE TRANSACTIONS/HEDGE TYPES DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHER MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE FOREIGN INVESTMENTS 1. Financial assets at fair value through other comprehensive income 302,650 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 9,154 X 85,999 X 4. Other transactions 52,395 - - - - - X - X - Total assets 355,045 - - - - - 9,154 - 85,999 - 1. Financial liabilities 3,106,002 X 1,007 - - - X 89,904 X X 2. Portfolio X X X X X X 1,747,165 X 123,958 X Total liabilities 3,106,002 - 1,007 - - - 1,747,165 89,904 123,958 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X 506,228 X 7,567 - Section 5 - Value adjustment of hedged financial liabilities - Item 50 5.1 Changes to hedged financial liabilities (€ '000) AMOUNTS AS AT CHANGES TO HEDGED LIABILITIES/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes to financial liabilities 5,847,663 4,439,009 2. Negative changes to financial liabilities (2,617,867) (1,397,019) Total 3,229,796 3,041,990 Section 6 - Tax liabilities - Item 60 See Section 11 of Assets. Section 7 - Liabilities associated with assets classified as held for sale - Item 70 See Section 12 of Assets. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 237 4.2 Hedging derivatives: breakdown by hedged portfolios and type of hedging (€ '000) AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW MICRO-HEDGE TRANSACTIONS/HEDGE TYPES DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHER MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE FOREIGN INVESTMENTS 1. Financial assets at fair value through other comprehensive income 302,650 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 9,154 X 85,999 X 4. Other transactions 52,395 - - - - - X - X - Total assets 355,045 - - - - - 9,154 - 85,999 - 1. Financial liabilities 3,106,002 X 1,007 - - - X 89,904 X X 2. Portfolio X X X X X X 1,747,165 X 123,958 X Total liabilities 3,106,002 - 1,007 - - - 1,747,165 89,904 123,958 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X 506,228 X 7,567 - Section 5 - Value adjustment of hedged financial liabilities - Item 50 5.1 Changes to hedged financial liabilities (€ '000) AMOUNTS AS AT CHANGES TO HEDGED LIABILITIES/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes to financial liabilities 5,847,663 4,439,009 2. Negative changes to financial liabilities (2,617,867) (1,397,019) Total 3,229,796 3,041,990 Section 6 - Tax liabilities - Item 60 See Section 11 of Assets. Section 7 - Liabilities associated with assets classified as held for sale - Item 70 See Section 12 of Assets. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 237 4.2 Hedging derivatives: breakdown by hedged portfolios and type of hedging (€ '000) AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW MICRO-HEDGE TRANSACTIONS/HEDGE TYPES DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHER MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE FOREIGN INVESTMENTS 1. Financial assets at fair value through other comprehensive income 302,650 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 9,154 X 85,999 X 4. Other transactions 52,395 - - - - - X - X - Total assets 355,045 - - - - - 9,154 - 85,999 - 1. Financial liabilities 3,106,002 X 1,007 - - - X 89,904 X X 2. Portfolio X X X X X X 1,747,165 X 123,958 X Total liabilities 3,106,002 - 1,007 - - - 1,747,165 89,904 123,958 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X 506,228 X 7,567 - Section 5 - Value adjustment of hedged financial liabilities - Item 50 5.1 Changes to hedged financial liabilities (€ '000) AMOUNTS AS AT CHANGES TO HEDGED LIABILITIES/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes to financial liabilities 5,847,663 4,439,009 2. Negative changes to financial liabilities (2,617,867) (1,397,019) Total 3,229,796 3,041,990 Section 6 - Tax liabilities - Item 60 See Section 11 of Assets. Section 7 - Liabilities associated with assets classified as held for sale - Item 70 See Section 12 of Assets. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 237 4.2 Hedging derivatives: breakdown by hedged portfolios and type of hedging (€ '000) AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW MICRO-HEDGE TRANSACTIONS/HEDGE TYPES DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHER MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE FOREIGN INVESTMENTS 1. Financial assets at fair value through other comprehensive income 302,650 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 9,154 X 85,999 X 4. Other transactions 52,395 - - - - - X - X - Total assets 355,045 - - - - - 9,154 - 85,999 - 1. Financial liabilities 3,106,002 X 1,007 - - - X 89,904 X X 2. Portfolio X X X X X X 1,747,165 X 123,958 X Total liabilities 3,106,002 - 1,007 - - - 1,747,165 89,904 123,958 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X 506,228 X 7,567 - Section 5 - Value adjustment of hedged financial liabilities - Item 50 5.1 Changes to hedged financial liabilities (€ '000) AMOUNTS AS AT CHANGES TO HEDGED LIABILITIES/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes to financial liabilities 5,847,663 4,439,009 2. Negative changes to financial liabilities (2,617,867) (1,397,019) Total 3,229,796 3,041,990 Section 6 - Tax liabilities - Item 60 See Section 11 of Assets. Section 7 - Liabilities associated with assets classified as held for sale - Item 70 See Section 12 of Assets. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 238 2018 Annual Report and Accounts · UniCredit Section 8 - Other liabilities - Item 80 8.1 Other liabilities: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Liabilities in respect of financial guarantees issued 5,219 5,669 Impairment: of financial guarantees issued, of credit derivatives, of irrevocable commitments to distribute funds 789,458 Obligations for irrevocable commitments to distribute funds - Accrued expenses and deferred income other than those to be capitalised for the financial liabilities 534,448 468,269 Negative value of management agreements (so-called servicing assets) - Payment agreements based on the value of own capital instruments classified as deposits pursuant to IFRS2 3,269 2,918 Other liabilities due to employees 2,494,516 3,034,472 Other liabilities due to other staff 39,770 41,832 Other liabilities due to Directors and Statutory Auditors 13,534 5,053 Interest and amounts to be credited to 270,986 245,508 - Customers 220,599 198,161 - Banks 50,387 47,347 Items in transit between branches and not yet allocated to destination accounts 40,028 36,016 Available amounts to be paid to others 371,132 425,199 Items in processing 974,237 1,242,270 Entries relating to securities transactions 99,051 257,808 Items deemed definitive but not attributable to other lines 4,251,352 4,533,006 - Accounts payable - suppliers 1,126,714 1,121,692 - Provisions for tax withholding on accrued interest, bond coupon payments or dividends 3,253 3,115 - Other entries 3,121,385 3,408,199 Liabilities for miscellaneous entries related to tax collection service 10 105 Adjustments for unpaid portfolio entries 954,881 19,539 Tax items different from those included in item 60 1,167,407 1,207,632 Other entries 2,730,767 3,258,722 Total 13,950,607 15,573,476 Item “Accrued expenses and deferred income other than those to be capitalised for the financial liabilities” includes the contract liabilities recognized in accordance with IFRS15. In this context, deferred income represents the portion of performance obligations not yet satisfied through the services provided by the Group but already settled during the period or in previous periods. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Refer to Section 13 - Other assets for information about the changes in deferred income and accrued expenses occurred in the period. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 238 2018 Annual Report and Accounts · UniCredit Section 8 - Other liabilities - Item 80 8.1 Other liabilities: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Liabilities in respect of financial guarantees issued 5,219 5,669 Impairment: of financial guarantees issued, of credit derivatives, of irrevocable commitments to distribute funds 789,458 Obligations for irrevocable commitments to distribute funds - Accrued expenses and deferred income other than those to be capitalised for the financial liabilities 534,448 468,269 Negative value of management agreements (so-called servicing assets) - Payment agreements based on the value of own capital instruments classified as deposits pursuant to IFRS2 3,269 2,918 Other liabilities due to employees 2,494,516 3,034,472 Other liabilities due to other staff 39,770 41,832 Other liabilities due to Directors and Statutory Auditors 13,534 5,053 Interest and amounts to be credited to 270,986 245,508 - Customers 220,599 198,161 - Banks 50,387 47,347 Items in transit between branches and not yet allocated to destination accounts 40,028 36,016 Available amounts to be paid to others 371,132 425,199 Items in processing 974,237 1,242,270 Entries relating to securities transactions 99,051 257,808 Items deemed definitive but not attributable to other lines 4,251,352 4,533,006 - Accounts payable - suppliers 1,126,714 1,121,692 - Provisions for tax withholding on accrued interest, bond coupon payments or dividends 3,253 3,115 - Other entries 3,121,385 3,408,199 Liabilities for miscellaneous entries related to tax collection service 10 105 Adjustments for unpaid portfolio entries 954,881 19,539 Tax items different from those included in item 60 1,167,407 1,207,632 Other entries 2,730,767 3,258,722 Total 13,950,607 15,573,476 Item “Accrued expenses and deferred income other than those to be capitalised for the financial liabilities” includes the contract liabilities recognized in accordance with IFRS15. In this context, deferred income represents the portion of performance obligations not yet satisfied through the services provided by the Group but already settled during the period or in previous periods. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Refer to Section 13 - Other assets for information about the changes in deferred income and accrued expenses occurred in the period. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 238 2018 Annual Report and Accounts · UniCredit Section 8 - Other liabilities - Item 80 8.1 Other liabilities: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Liabilities in respect of financial guarantees issued 5,219 5,669 Impairment: of financial guarantees issued, of credit derivatives, of irrevocable commitments to distribute funds 789,458 Obligations for irrevocable commitments to distribute funds - Accrued expenses and deferred income other than those to be capitalised for the financial liabilities 534,448 468,269 Negative value of management agreements (so-called servicing assets) - Payment agreements based on the value of own capital instruments classified as deposits pursuant to IFRS2 3,269 2,918 Other liabilities due to employees 2,494,516 3,034,472 Other liabilities due to other staff 39,770 41,832 Other liabilities due to Directors and Statutory Auditors 13,534 5,053 Interest and amounts to be credited to 270,986 245,508 - Customers 220,599 198,161 - Banks 50,387 47,347 Items in transit between branches and not yet allocated to destination accounts 40,028 36,016 Available amounts to be paid to others 371,132 425,199 Items in processing 974,237 1,242,270 Entries relating to securities transactions 99,051 257,808 Items deemed definitive but not attributable to other lines 4,251,352 4,533,006 - Accounts payable - suppliers 1,126,714 1,121,692 - Provisions for tax withholding on accrued interest, bond coupon payments or dividends 3,253 3,115 - Other entries 3,121,385 3,408,199 Liabilities for miscellaneous entries related to tax collection service 10 105 Adjustments for unpaid portfolio entries 954,881 19,539 Tax items different from those included in item 60 1,167,407 1,207,632 Other entries 2,730,767 3,258,722 Total 13,950,607 15,573,476 Item “Accrued expenses and deferred income other than those to be capitalised for the financial liabilities” includes the contract liabilities recognized in accordance with IFRS15. In this context, deferred income represents the portion of performance obligations not yet satisfied through the services provided by the Group but already settled during the period or in previous periods. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Refer to Section 13 - Other assets for information about the changes in deferred income and accrued expenses occurred in the period. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 238 2018 Annual Report and Accounts · UniCredit Section 8 - Other liabilities - Item 80 8.1 Other liabilities: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Liabilities in respect of financial guarantees issued 5,219 5,669 Impairment: of financial guarantees issued, of credit derivatives, of irrevocable commitments to distribute funds 789,458 Obligations for irrevocable commitments to distribute funds - Accrued expenses and deferred income other than those to be capitalised for the financial liabilities 534,448 468,269 Negative value of management agreements (so-called servicing assets) - Payment agreements based on the value of own capital instruments classified as deposits pursuant to IFRS2 3,269 2,918 Other liabilities due to employees 2,494,516 3,034,472 Other liabilities due to other staff 39,770 41,832 Other liabilities due to Directors and Statutory Auditors 13,534 5,053 Interest and amounts to be credited to 270,986 245,508 - Customers 220,599 198,161 - Banks 50,387 47,347 Items in transit between branches and not yet allocated to destination accounts 40,028 36,016 Available amounts to be paid to others 371,132 425,199 Items in processing 974,237 1,242,270 Entries relating to securities transactions 99,051 257,808 Items deemed definitive but not attributable to other lines 4,251,352 4,533,006 - Accounts payable - suppliers 1,126,714 1,121,692 - Provisions for tax withholding on accrued interest, bond coupon payments or dividends 3,253 3,115 - Other entries 3,121,385 3,408,199 Liabilities for miscellaneous entries related to tax collection service 10 105 Adjustments for unpaid portfolio entries 954,881 19,539 Tax items different from those included in item 60 1,167,407 1,207,632 Other entries 2,730,767 3,258,722 Total 13,950,607 15,573,476 Item “Accrued expenses and deferred income other than those to be capitalised for the financial liabilities” includes the contract liabilities recognized in accordance with IFRS15. In this context, deferred income represents the portion of performance obligations not yet satisfied through the services provided by the Group but already settled during the period or in previous periods. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Refer to Section 13 - Other assets for information about the changes in deferred income and accrued expenses occurred in the period. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 238 2018 Annual Report and Accounts · UniCredit Section 8 - Other liabilities - Item 80 8.1 Other liabilities: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Liabilities in respect of financial guarantees issued 5,219 5,669 Impairment: of financial guarantees issued, of credit derivatives, of irrevocable commitments to distribute funds 789,458 Obligations for irrevocable commitments to distribute funds - Accrued expenses and deferred income other than those to be capitalised for the financial liabilities 534,448 468,269 Negative value of management agreements (so-called servicing assets) - Payment agreements based on the value of own capital instruments classified as deposits pursuant to IFRS2 3,269 2,918 Other liabilities due to employees 2,494,516 3,034,472 Other liabilities due to other staff 39,770 41,832 Other liabilities due to Directors and Statutory Auditors 13,534 5,053 Interest and amounts to be credited to 270,986 245,508 - Customers 220,599 198,161 - Banks 50,387 47,347 Items in transit between branches and not yet allocated to destination accounts 40,028 36,016 Available amounts to be paid to others 371,132 425,199 Items in processing 974,237 1,242,270 Entries relating to securities transactions 99,051 257,808 Items deemed definitive but not attributable to other lines 4,251,352 4,533,006 - Accounts payable - suppliers 1,126,714 1,121,692 - Provisions for tax withholding on accrued interest, bond coupon payments or dividends 3,253 3,115 - Other entries 3,121,385 3,408,199 Liabilities for miscellaneous entries related to tax collection service 10 105 Adjustments for unpaid portfolio entries 954,881 19,539 Tax items different from those included in item 60 1,167,407 1,207,632 Other entries 2,730,767 3,258,722 Total 13,950,607 15,573,476 Item “Accrued expenses and deferred income other than those to be capitalised for the financial liabilities” includes the contract liabilities recognized in accordance with IFRS15. In this context, deferred income represents the portion of performance obligations not yet satisfied through the services provided by the Group but already settled during the period or in previous periods. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Refer to Section 13 - Other assets for information about the changes in deferred income and accrued expenses occurred in the period. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 239 Section 9 - Provision for employee severance pay - Item 90 The “TFR” provision for Italy-based employee benefits is to be construed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using the ”projected unit credit” method (see Part A.2 - Main Items of the Accounts). 9.1 Provisions for employee severance pay: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 917,284 1,125,758 B. Increases 15,991 17,652 B.1 Provisions for the year 12,751 14,458 B.2 Other increases 3,240 3,194 of which: business combinations - - C. Reductions 235,683 226,126 C.1 Severance payments 213,855 200,460 C.2 Other decreases 21,828 25,666 of which: business combinations 3,406 - D. Closing Balance 697,592 917,284 9.2 Provisions for employee severance pay: other information (€ '000) CHANGES IN 2018 2017 Cost Recognised in P&L: 12,751 14,458 - Current Service Cost 501 445 - Interest Cost on the DBO 12,255 14,013 - Settlement (gains)/losses (5) - - Past Service Cost - - Remeasurement Effects (Gains) Losses Recognised in OCI (16,077) (22,492) Annual weighted average assumptions - Discount rate 1.60% 1.45% - Price inflation 1.20% 1.40% Duration of defined benefit obligation equals to 8.6 years; Valuation Reserve negative balance (net of tax) move from -€138 million as at 31 December 2017 to -€126 million as at 31 December 2018. A change of -25 basis points of Discount Rate would result in an increase of the liability of €15,192 thousand (+2.18%); a correspondent increase would result in a reduction in the liability of €14,830 thousand (-2.13%). A change of -25 basis points of Price Inflation rate would result in a reduction of the liability of €9,252 thousand (-1.33%); a correspondent increase would result in an increase of the liability of €9,363 thousand (+1.34%). Section 10 - Provisions for risks and charges - Item 100 10.1 Provisions for risks and charges: breakdown (€ '000) AMOUNTS AS AT ITEMS/COMPONENTS 12.31.2018 12.31.2017 1. Provisions for credit risk on commitments and financial guarantees given 1,083,315 - 2. Provisions for other commitments and other guarantees given 56,742 - 3. Pensions and other post-retirement benefit obligations 4,767,399 4,522,188 4. Other provisions for risks and charges 5,053,527 4,128,280 4.1 Legal and tax disputes 2,475,757 1,427,647 4.2 Staff expenses 945,794 1,127,314 4.3 Other 1,631,976 1,573,319 Total 10,960,983 8,650,468 The data of the previous period have been restated for the purpose of comparison. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 239 Section 9 - Provision for employee severance pay - Item 90 The “TFR” provision for Italy-based employee benefits is to be construed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using the ”projected unit credit” method (see Part A.2 - Main Items of the Accounts). 9.1 Provisions for employee severance pay: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 917,284 1,125,758 B. Increases 15,991 17,652 B.1 Provisions for the year 12,751 14,458 B.2 Other increases 3,240 3,194 of which: business combinations - - C. Reductions 235,683 226,126 C.1 Severance payments 213,855 200,460 C.2 Other decreases 21,828 25,666 of which: business combinations 3,406 - D. Closing Balance 697,592 917,284 9.2 Provisions for employee severance pay: other information (€ '000) CHANGES IN 2018 2017 Cost Recognised in P&L: 12,751 14,458 - Current Service Cost 501 445 - Interest Cost on the DBO 12,255 14,013 - Settlement (gains)/losses (5) - - Past Service Cost - - Remeasurement Effects (Gains) Losses Recognised in OCI (16,077) (22,492) Annual weighted average assumptions - Discount rate 1.60% 1.45% - Price inflation 1.20% 1.40% Duration of defined benefit obligation equals to 8.6 years; Valuation Reserve negative balance (net of tax) move from -€138 million as at 31 December 2017 to -€126 million as at 31 December 2018. A change of -25 basis points of Discount Rate would result in an increase of the liability of €15,192 thousand (+2.18%); a correspondent increase would result in a reduction in the liability of €14,830 thousand (-2.13%). A change of -25 basis points of Price Inflation rate would result in a reduction of the liability of €9,252 thousand (-1.33%); a correspondent increase would result in an increase of the liability of €9,363 thousand (+1.34%). Section 10 - Provisions for risks and charges - Item 100 10.1 Provisions for risks and charges: breakdown (€ '000) AMOUNTS AS AT ITEMS/COMPONENTS 12.31.2018 12.31.2017 1. Provisions for credit risk on commitments and financial guarantees given 1,083,315 - 2. Provisions for other commitments and other guarantees given 56,742 - 3. Pensions and other post-retirement benefit obligations 4,767,399 4,522,188 4. Other provisions for risks and charges 5,053,527 4,128,280 4.1 Legal and tax disputes 2,475,757 1,427,647 4.2 Staff expenses 945,794 1,127,314 4.3 Other 1,631,976 1,573,319 Total 10,960,983 8,650,468 The data of the previous period have been restated for the purpose of comparison. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 239 Section 9 - Provision for employee severance pay - Item 90 The “TFR” provision for Italy-based employee benefits is to be construed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using the ”projected unit credit” method (see Part A.2 - Main Items of the Accounts). 9.1 Provisions for employee severance pay: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 917,284 1,125,758 B. Increases 15,991 17,652 B.1 Provisions for the year 12,751 14,458 B.2 Other increases 3,240 3,194 of which: business combinations - - C. Reductions 235,683 226,126 C.1 Severance payments 213,855 200,460 C.2 Other decreases 21,828 25,666 of which: business combinations 3,406 - D. Closing Balance 697,592 917,284 9.2 Provisions for employee severance pay: other information (€ '000) CHANGES IN 2018 2017 Cost Recognised in P&L: 12,751 14,458 - Current Service Cost 501 445 - Interest Cost on the DBO 12,255 14,013 - Settlement (gains)/losses (5) - - Past Service Cost - - Remeasurement Effects (Gains) Losses Recognised in OCI (16,077) (22,492) Annual weighted average assumptions - Discount rate 1.60% 1.45% - Price inflation 1.20% 1.40% Duration of defined benefit obligation equals to 8.6 years; Valuation Reserve negative balance (net of tax) move from -€138 million as at 31 December 2017 to -€126 million as at 31 December 2018. A change of -25 basis points of Discount Rate would result in an increase of the liability of €15,192 thousand (+2.18%); a correspondent increase would result in a reduction in the liability of €14,830 thousand (-2.13%). A change of -25 basis points of Price Inflation rate would result in a reduction of the liability of €9,252 thousand (-1.33%); a correspondent increase would result in an increase of the liability of €9,363 thousand (+1.34%). Section 10 - Provisions for risks and charges - Item 100 10.1 Provisions for risks and charges: breakdown (€ '000) AMOUNTS AS AT ITEMS/COMPONENTS 12.31.2018 12.31.2017 1. Provisions for credit risk on commitments and financial guarantees given 1,083,315 - 2. Provisions for other commitments and other guarantees given 56,742 - 3. Pensions and other post-retirement benefit obligations 4,767,399 4,522,188 4. Other provisions for risks and charges 5,053,527 4,128,280 4.1 Legal and tax disputes 2,475,757 1,427,647 4.2 Staff expenses 945,794 1,127,314 4.3 Other 1,631,976 1,573,319 Total 10,960,983 8,650,468 The data of the previous period have been restated for the purpose of comparison. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 239 Section 9 - Provision for employee severance pay - Item 90 The “TFR” provision for Italy-based employee benefits is to be construed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using the ”projected unit credit” method (see Part A.2 - Main Items of the Accounts). 9.1 Provisions for employee severance pay: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 917,284 1,125,758 B. Increases 15,991 17,652 B.1 Provisions for the year 12,751 14,458 B.2 Other increases 3,240 3,194 of which: business combinations - - C. Reductions 235,683 226,126 C.1 Severance payments 213,855 200,460 C.2 Other decreases 21,828 25,666 of which: business combinations 3,406 - D. Closing Balance 697,592 917,284 9.2 Provisions for employee severance pay: other information (€ '000) CHANGES IN 2018 2017 Cost Recognised in P&L: 12,751 14,458 - Current Service Cost 501 445 - Interest Cost on the DBO 12,255 14,013 - Settlement (gains)/losses (5) - - Past Service Cost - - Remeasurement Effects (Gains) Losses Recognised in OCI (16,077) (22,492) Annual weighted average assumptions - Discount rate 1.60% 1.45% - Price inflation 1.20% 1.40% Duration of defined benefit obligation equals to 8.6 years; Valuation Reserve negative balance (net of tax) move from -€138 million as at 31 December 2017 to -€126 million as at 31 December 2018. A change of -25 basis points of Discount Rate would result in an increase of the liability of €15,192 thousand (+2.18%); a correspondent increase would result in a reduction in the liability of €14,830 thousand (-2.13%). A change of -25 basis points of Price Inflation rate would result in a reduction of the liability of €9,252 thousand (-1.33%); a correspondent increase would result in an increase of the liability of €9,363 thousand (+1.34%). Section 10 - Provisions for risks and charges - Item 100 10.1 Provisions for risks and charges: breakdown (€ '000) AMOUNTS AS AT ITEMS/COMPONENTS 12.31.2018 12.31.2017 1. Provisions for credit risk on commitments and financial guarantees given 1,083,315 - 2. Provisions for other commitments and other guarantees given 56,742 - 3. Pensions and other post-retirement benefit obligations 4,767,399 4,522,188 4. Other provisions for risks and charges 5,053,527 4,128,280 4.1 Legal and tax disputes 2,475,757 1,427,647 4.2 Staff expenses 945,794 1,127,314 4.3 Other 1,631,976 1,573,319 Total 10,960,983 8,650,468 The data of the previous period have been restated for the purpose of comparison. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 239 Section 9 - Provision for employee severance pay - Item 90 The “TFR” provision for Italy-based employee benefits is to be construed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using the ”projected unit credit” method (see Part A.2 - Main Items of the Accounts). 9.1 Provisions for employee severance pay: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 917,284 1,125,758 B. Increases 15,991 17,652 B.1 Provisions for the year 12,751 14,458 B.2 Other increases 3,240 3,194 of which: business combinations - - C. Reductions 235,683 226,126 C.1 Severance payments 213,855 200,460 C.2 Other decreases 21,828 25,666 of which: business combinations 3,406 - D. Closing Balance 697,592 917,284 9.2 Provisions for employee severance pay: other information (€ '000) CHANGES IN 2018 2017 Cost Recognised in P&L: 12,751 14,458 - Current Service Cost 501 445 - Interest Cost on the DBO 12,255 14,013 - Settlement (gains)/losses (5) - - Past Service Cost - - Remeasurement Effects (Gains) Losses Recognised in OCI (16,077) (22,492) Annual weighted average assumptions - Discount rate 1.60% 1.45% - Price inflation 1.20% 1.40% Duration of defined benefit obligation equals to 8.6 years; Valuation Reserve negative balance (net of tax) move from -€138 million as at 31 December 2017 to -€126 million as at 31 December 2018. A change of -25 basis points of Discount Rate would result in an increase of the liability of €15,192 thousand (+2.18%); a correspondent increase would result in a reduction in the liability of €14,830 thousand (-2.13%). A change of -25 basis points of Price Inflation rate would result in a reduction of the liability of €9,252 thousand (-1.33%); a correspondent increase would result in an increase of the liability of €9,363 thousand (+1.34%). Section 10 - Provisions for risks and charges - Item 100 10.1 Provisions for risks and charges: breakdown (€ '000) AMOUNTS AS AT ITEMS/COMPONENTS 12.31.2018 12.31.2017 1. Provisions for credit risk on commitments and financial guarantees given 1,083,315 - 2. Provisions for other commitments and other guarantees given 56,742 - 3. Pensions and other post-retirement benefit obligations 4,767,399 4,522,188 4. Other provisions for risks and charges 5,053,527 4,128,280 4.1 Legal and tax disputes 2,475,757 1,427,647 4.2 Staff expenses 945,794 1,127,314 4.3 Other 1,631,976 1,573,319 Total 10,960,983 8,650,468 The data of the previous period have been restated for the purpose of comparison. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 240 2018 Annual Report and Accounts · UniCredit As at 31 December 2018 Provision for risks and charges amounted to € 10,961 million, of which about € 1,140 million related to total impairment losses on off-balance sheet exposures recognised in this item following the application of IFRS9 and 5th update of the Banca d’Italia Circular 262. The item "4. Other provisions for risks and charges" consists of: • legal disputes: cases in which the Group is a defendant, and post-insolvency clawback petitions (more information on litigation is set out in Part E - section 2 “Risks of the prudential consolidated perimeter” - 1.5 Operational risks - B. Legal risks); • staff expenses including also the expenses related to the implementation of the Strategic Plan 2016-2019; • other: provisions for risks and charges not attributable to the above items, whose details are illustrated in the table 10.6 below. 10.2 Provisions for risks and charges: annual changes (€ '000) CHANGES IN 2018 PROVISIONS FOR OTHER OFF-BALANCE SHEET COMMITMENTS AND OTHER GUARANTEES GIVEN PENSION AND POST-RETIREMENT BENEFIT OBLIGATIONS OTHER PROVISIONS FOR RISKS AND CHARGES TOTAL A. Opening Balance 77,998 4,522,188 4,128,502 8,728,688 B. Increases (12,156) 610,584 1,873,758 2,472,186 B.1 Provisions for the year (12,162) 95,151 1,757,205 1,840,194 B.2 Changes due to the passing time - 81,487 3,023 84,510 B.3 Differences due to discount-rate changes - - 1,074 1,074 B.4 Other changes 6 433,946 112,456 546,408 of which: business combinations - 1 - 1 C. Decreases 9,100 365,373 948,733 1,323,206 C.1 Use during the year - 234,020 607,304 841,324 C.2 Differences due to discount-rate changes - - 809 809 C.3 Other changes 9,100 131,353 340,620 481,073 of which: business combinations - 648 - 648 D. Closing balance 56,742 4,767,399 5,053,527 9,877,668 10.3 Provisions for credit risk on commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 PROVISIONS FOR CREDIT RISK ON COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL Loan commitments given 112,738 49,629 204,224 366,591 Financial guarantees given 65,090 27,744 623,890 716,724 Total 177,828 77,373 828,114 1,083,315 10.4 Provisions on other commitments and other issued guarantees (€ '000) AMOUNTS AS AT 12.31.2018 1. Other issued guarantees 56,656 2. Other commitments 86 Total 56,742 10.5 Pensions and other post-retirement defined-benefit obligations 1. Pensions and other post-retirement benefit obligations There are several defined-benefit plans within the Group, i.e., plans whose benefit is linked to salary and employee length of service both in Italy and abroad. The Austrian, German and Italian plans account for over 90% of the Group’s pension obligations. The 50% of the total obligations for defined benefit plans are financed with segregated assets. These plans are established in (i) Germany, the "Direct Pension Plan" (i.e. an external fund managed by independent trustees), the "HVB Trust Pensionfonds AG" and the "Pensionkasse der Hypovereinsbank WaG", all created by UniCredit Bank AG (UCB AG), and (ii) in the United Kingdom, Italy and Luxembourg created by UCB AG and UniCredit S.p.A. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 240 2018 Annual Report and Accounts · UniCredit As at 31 December 2018 Provision for risks and charges amounted to € 10,961 million, of which about € 1,140 million related to total impairment losses on off-balance sheet exposures recognised in this item following the application of IFRS9 and 5th update of the Banca d’Italia Circular 262. The item "4. Other provisions for risks and charges" consists of: • legal disputes: cases in which the Group is a defendant, and post-insolvency clawback petitions (more information on litigation is set out in Part E - section 2 “Risks of the prudential consolidated perimeter” - 1.5 Operational risks - B. Legal risks); • staff expenses including also the expenses related to the implementation of the Strategic Plan 2016-2019; • other: provisions for risks and charges not attributable to the above items, whose details are illustrated in the table 10.6 below. 10.2 Provisions for risks and charges: annual changes (€ '000) CHANGES IN 2018 PROVISIONS FOR OTHER OFF-BALANCE SHEET COMMITMENTS AND OTHER GUARANTEES GIVEN PENSION AND POST-RETIREMENT BENEFIT OBLIGATIONS OTHER PROVISIONS FOR RISKS AND CHARGES TOTAL A. Opening Balance 77,998 4,522,188 4,128,502 8,728,688 B. Increases (12,156) 610,584 1,873,758 2,472,186 B.1 Provisions for the year (12,162) 95,151 1,757,205 1,840,194 B.2 Changes due to the passing time - 81,487 3,023 84,510 B.3 Differences due to discount-rate changes - - 1,074 1,074 B.4 Other changes 6 433,946 112,456 546,408 of which: business combinations - 1 - 1 C. Decreases 9,100 365,373 948,733 1,323,206 C.1 Use during the year - 234,020 607,304 841,324 C.2 Differences due to discount-rate changes - - 809 809 C.3 Other changes 9,100 131,353 340,620 481,073 of which: business combinations - 648 - 648 D. Closing balance 56,742 4,767,399 5,053,527 9,877,668 10.3 Provisions for credit risk on commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 PROVISIONS FOR CREDIT RISK ON COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL Loan commitments given 112,738 49,629 204,224 366,591 Financial guarantees given 65,090 27,744 623,890 716,724 Total 177,828 77,373 828,114 1,083,315 10.4 Provisions on other commitments and other issued guarantees (€ '000) AMOUNTS AS AT 12.31.2018 1. Other issued guarantees 56,656 2. Other commitments 86 Total 56,742 10.5 Pensions and other post-retirement defined-benefit obligations 1. Pensions and other post-retirement benefit obligations There are several defined-benefit plans within the Group, i.e., plans whose benefit is linked to salary and employee length of service both in Italy and abroad. The Austrian, German and Italian plans account for over 90% of the Group’s pension obligations. The 50% of the total obligations for defined benefit plans are financed with segregated assets. These plans are established in (i) Germany, the "Direct Pension Plan" (i.e. an external fund managed by independent trustees), the "HVB Trust Pensionfonds AG" and the "Pensionkasse der Hypovereinsbank WaG", all created by UniCredit Bank AG (UCB AG), and (ii) in the United Kingdom, Italy and Luxembourg created by UCB AG and UniCredit S.p.A. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 240 2018 Annual Report and Accounts · UniCredit As at 31 December 2018 Provision for risks and charges amounted to € 10,961 million, of which about € 1,140 million related to total impairment losses on off-balance sheet exposures recognised in this item following the application of IFRS9 and 5th update of the Banca d’Italia Circular 262. The item "4. Other provisions for risks and charges" consists of: • legal disputes: cases in which the Group is a defendant, and post-insolvency clawback petitions (more information on litigation is set out in Part E - section 2 “Risks of the prudential consolidated perimeter” - 1.5 Operational risks - B. Legal risks); • staff expenses including also the expenses related to the implementation of the Strategic Plan 2016-2019; • other: provisions for risks and charges not attributable to the above items, whose details are illustrated in the table 10.6 below. 10.2 Provisions for risks and charges: annual changes (€ '000) CHANGES IN 2018 PROVISIONS FOR OTHER OFF-BALANCE SHEET COMMITMENTS AND OTHER GUARANTEES GIVEN PENSION AND POST-RETIREMENT BENEFIT OBLIGATIONS OTHER PROVISIONS FOR RISKS AND CHARGES TOTAL A. Opening Balance 77,998 4,522,188 4,128,502 8,728,688 B. Increases (12,156) 610,584 1,873,758 2,472,186 B.1 Provisions for the year (12,162) 95,151 1,757,205 1,840,194 B.2 Changes due to the passing time - 81,487 3,023 84,510 B.3 Differences due to discount-rate changes - - 1,074 1,074 B.4 Other changes 6 433,946 112,456 546,408 of which: business combinations - 1 - 1 C. Decreases 9,100 365,373 948,733 1,323,206 C.1 Use during the year - 234,020 607,304 841,324 C.2 Differences due to discount-rate changes - - 809 809 C.3 Other changes 9,100 131,353 340,620 481,073 of which: business combinations - 648 - 648 D. Closing balance 56,742 4,767,399 5,053,527 9,877,668 10.3 Provisions for credit risk on commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 PROVISIONS FOR CREDIT RISK ON COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL Loan commitments given 112,738 49,629 204,224 366,591 Financial guarantees given 65,090 27,744 623,890 716,724 Total 177,828 77,373 828,114 1,083,315 10.4 Provisions on other commitments and other issued guarantees (€ '000) AMOUNTS AS AT 12.31.2018 1. Other issued guarantees 56,656 2. Other commitments 86 Total 56,742 10.5 Pensions and other post-retirement defined-benefit obligations 1. Pensions and other post-retirement benefit obligations There are several defined-benefit plans within the Group, i.e., plans whose benefit is linked to salary and employee length of service both in Italy and abroad. The Austrian, German and Italian plans account for over 90% of the Group’s pension obligations. The 50% of the total obligations for defined benefit plans are financed with segregated assets. These plans are established in (i) Germany, the "Direct Pension Plan" (i.e. an external fund managed by independent trustees), the "HVB Trust Pensionfonds AG" and the "Pensionkasse der Hypovereinsbank WaG", all created by UniCredit Bank AG (UCB AG), and (ii) in the United Kingdom, Italy and Luxembourg created by UCB AG and UniCredit S.p.A. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 240 2018 Annual Report and Accounts · UniCredit As at 31 December 2018 Provision for risks and charges amounted to € 10,961 million, of which about € 1,140 million related to total impairment losses on off-balance sheet exposures recognised in this item following the application of IFRS9 and 5th update of the Banca d’Italia Circular 262. The item "4. Other provisions for risks and charges" consists of: • legal disputes: cases in which the Group is a defendant, and post-insolvency clawback petitions (more information on litigation is set out in Part E - section 2 “Risks of the prudential consolidated perimeter” - 1.5 Operational risks - B. Legal risks); • staff expenses including also the expenses related to the implementation of the Strategic Plan 2016-2019; • other: provisions for risks and charges not attributable to the above items, whose details are illustrated in the table 10.6 below. 10.2 Provisions for risks and charges: annual changes (€ '000) CHANGES IN 2018 PROVISIONS FOR OTHER OFF-BALANCE SHEET COMMITMENTS AND OTHER GUARANTEES GIVEN PENSION AND POST-RETIREMENT BENEFIT OBLIGATIONS OTHER PROVISIONS FOR RISKS AND CHARGES TOTAL A. Opening Balance 77,998 4,522,188 4,128,502 8,728,688 B. Increases (12,156) 610,584 1,873,758 2,472,186 B.1 Provisions for the year (12,162) 95,151 1,757,205 1,840,194 B.2 Changes due to the passing time - 81,487 3,023 84,510 B.3 Differences due to discount-rate changes - - 1,074 1,074 B.4 Other changes 6 433,946 112,456 546,408 of which: business combinations - 1 - 1 C. Decreases 9,100 365,373 948,733 1,323,206 C.1 Use during the year - 234,020 607,304 841,324 C.2 Differences due to discount-rate changes - - 809 809 C.3 Other changes 9,100 131,353 340,620 481,073 of which: business combinations - 648 - 648 D. Closing balance 56,742 4,767,399 5,053,527 9,877,668 10.3 Provisions for credit risk on commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 PROVISIONS FOR CREDIT RISK ON COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL Loan commitments given 112,738 49,629 204,224 366,591 Financial guarantees given 65,090 27,744 623,890 716,724 Total 177,828 77,373 828,114 1,083,315 10.4 Provisions on other commitments and other issued guarantees (€ '000) AMOUNTS AS AT 12.31.2018 1. Other issued guarantees 56,656 2. Other commitments 86 Total 56,742 10.5 Pensions and other post-retirement defined-benefit obligations 1. Pensions and other post-retirement benefit obligations There are several defined-benefit plans within the Group, i.e., plans whose benefit is linked to salary and employee length of service both in Italy and abroad. The Austrian, German and Italian plans account for over 90% of the Group’s pension obligations. The 50% of the total obligations for defined benefit plans are financed with segregated assets. These plans are established in (i) Germany, the "Direct Pension Plan" (i.e. an external fund managed by independent trustees), the "HVB Trust Pensionfonds AG" and the "Pensionkasse der Hypovereinsbank WaG", all created by UniCredit Bank AG (UCB AG), and (ii) in the United Kingdom, Italy and Luxembourg created by UCB AG and UniCredit S.p.A. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 240 2018 Annual Report and Accounts · UniCredit As at 31 December 2018 Provision for risks and charges amounted to € 10,961 million, of which about € 1,140 million related to total impairment losses on off-balance sheet exposures recognised in this item following the application of IFRS9 and 5th update of the Banca d’Italia Circular 262. The item "4. Other provisions for risks and charges" consists of: • legal disputes: cases in which the Group is a defendant, and post-insolvency clawback petitions (more information on litigation is set out in Part E - section 2 “Risks of the prudential consolidated perimeter” - 1.5 Operational risks - B. Legal risks); • staff expenses including also the expenses related to the implementation of the Strategic Plan 2016-2019; • other: provisions for risks and charges not attributable to the above items, whose details are illustrated in the table 10.6 below. 10.2 Provisions for risks and charges: annual changes (€ '000) CHANGES IN 2018 PROVISIONS FOR OTHER OFF-BALANCE SHEET COMMITMENTS AND OTHER GUARANTEES GIVEN PENSION AND POST-RETIREMENT BENEFIT OBLIGATIONS OTHER PROVISIONS FOR RISKS AND CHARGES TOTAL A. Opening Balance 77,998 4,522,188 4,128,502 8,728,688 B. Increases (12,156) 610,584 1,873,758 2,472,186 B.1 Provisions for the year (12,162) 95,151 1,757,205 1,840,194 B.2 Changes due to the passing time - 81,487 3,023 84,510 B.3 Differences due to discount-rate changes - - 1,074 1,074 B.4 Other changes 6 433,946 112,456 546,408 of which: business combinations - 1 - 1 C. Decreases 9,100 365,373 948,733 1,323,206 C.1 Use during the year - 234,020 607,304 841,324 C.2 Differences due to discount-rate changes - - 809 809 C.3 Other changes 9,100 131,353 340,620 481,073 of which: business combinations - 648 - 648 D. Closing balance 56,742 4,767,399 5,053,527 9,877,668 10.3 Provisions for credit risk on commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 PROVISIONS FOR CREDIT RISK ON COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL Loan commitments given 112,738 49,629 204,224 366,591 Financial guarantees given 65,090 27,744 623,890 716,724 Total 177,828 77,373 828,114 1,083,315 10.4 Provisions on other commitments and other issued guarantees (€ '000) AMOUNTS AS AT 12.31.2018 1. Other issued guarantees 56,656 2. Other commitments 86 Total 56,742 10.5 Pensions and other post-retirement defined-benefit obligations 1. Pensions and other post-retirement benefit obligations There are several defined-benefit plans within the Group, i.e., plans whose benefit is linked to salary and employee length of service both in Italy and abroad. The Austrian, German and Italian plans account for over 90% of the Group’s pension obligations. The 50% of the total obligations for defined benefit plans are financed with segregated assets. These plans are established in (i) Germany, the "Direct Pension Plan" (i.e. an external fund managed by independent trustees), the "HVB Trust Pensionfonds AG" and the "Pensionkasse der Hypovereinsbank WaG", all created by UniCredit Bank AG (UCB AG), and (ii) in the United Kingdom, Italy and Luxembourg created by UCB AG and UniCredit S.p.A. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 241 The Group’s defined-benefit plans are mainly closed to new recruits (for example in Germany, Austria and Italy, where most new recruits join defined-contribution plans instead and the related contributions are charged to the income statement). According to IAS19, obligations arising from defined-benefit plans are determined using the “projected unit credit” method, while segregated assets are measured at fair value. The balance sheet obligation is the result of the deficit/surplus (i.e., the difference between obligations and assets) net of any impacts of the asset ceiling; actuarial gains and losses are recognised in shareholders’ equity and shown in a specific item of revaluation reserves in the financial year in which they are recorded. The actuarial assumptions used to determine obligations vary from country to country and from plan to plan, new mortality table has been introduced for Austrian (AVÖ 2018) and Germany (Heubeck2018 adjusted to reflect longer “population specific” longevity); the discount rate is determined, depending on the currency of denomination of the commitments and the maturity of the liability, by reference to market yields at the balance sheet date on a basket of high quality corporate bonds. In the light of evolving common interpretation about “high quality corporate bonds” identification and persisting interest rates decreasing trend, UCG refined its Discount Rate setting methodology by limiting the number of “investment grade” bonds whose rating is lower than AA (No.11 securities ranging in 15-30y maturity), for which an adjustment is made to reduce the excess-return. In addition, a Nelson Siegel methodology has been applied in modelling the yield-curve expressed by the basket of securities (adjusted above 25 years in order to stick the long-term maturity segments of the curve to the Euribor implied-forward rate). The remeasurement of commitments as at 31 December 2018 leads to an increase in the negative balance of the valuation reserve relating to actuarial gains/losses on defined benefit plans of €314 million, net of taxes (for a negative balance which move from -€2,270 million as at 31 December 2017 to -€2,584 million as at 31 December 2018). 2. Changes of net defined benefit liability/asset and any reimbursement rights 2.1 Breakdown of defined benefit net obligation (€ '000) 12.31.2018 12.31.2017 Current value of the defined benefit obligation 9,356,411 9,172,764 Current value of the plan assets (4,609,336) (4,671,480) Deficit/(Surplus) 4,747,075 4,501,284 Irrecoverable surplus (effect of asset ceiling) - - Net defined benefit liability/(asset) as of the period end date 4,747,075 4,501,284 2.2 Changes in defined benefit obligations (€ '000) 12.31.2018 12.31.2017 Initial defined benefit obligation 9,172,764 9,598,722 Current service cost 89,151 99,419 Settlement (gain)/loss 739 - Past service cost 3,262 1,284 Interest expense on the defined benefit obligation 179,231 166,233 Write-downs for actuarial (gains)/losses on defined benefit plans 318,358 (288,867) Employees' contributions for defined benefit plans 7,762 8,277 Disbursements from plan assets (170,638) (169,299) Disbursements directly paid by the fund (233,809) (238,018) Settlements (4,749) - Other increases (decreases) (5,660) (4,987) Net defined benefit liability/(asset) as of the period end date 9,356,411 9,172,764 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 241 The Group’s defined-benefit plans are mainly closed to new recruits (for example in Germany, Austria and Italy, where most new recruits join defined-contribution plans instead and the related contributions are charged to the income statement). According to IAS19, obligations arising from defined-benefit plans are determined using the “projected unit credit” method, while segregated assets are measured at fair value. The balance sheet obligation is the result of the deficit/surplus (i.e., the difference between obligations and assets) net of any impacts of the asset ceiling; actuarial gains and losses are recognised in shareholders’ equity and shown in a specific item of revaluation reserves in the financial year in which they are recorded. The actuarial assumptions used to determine obligations vary from country to country and from plan to plan, new mortality table has been introduced for Austrian (AVÖ 2018) and Germany (Heubeck2018 adjusted to reflect longer “population specific” longevity); the discount rate is determined, depending on the currency of denomination of the commitments and the maturity of the liability, by reference to market yields at the balance sheet date on a basket of high quality corporate bonds. In the light of evolving common interpretation about “high quality corporate bonds” identification and persisting interest rates decreasing trend, UCG refined its Discount Rate setting methodology by limiting the number of “investment grade” bonds whose rating is lower than AA (No.11 securities ranging in 15-30y maturity), for which an adjustment is made to reduce the excess-return. In addition, a Nelson Siegel methodology has been applied in modelling the yield-curve expressed by the basket of securities (adjusted above 25 years in order to stick the long-term maturity segments of the curve to the Euribor implied-forward rate). The remeasurement of commitments as at 31 December 2018 leads to an increase in the negative balance of the valuation reserve relating to actuarial gains/losses on defined benefit plans of €314 million, net of taxes (for a negative balance which move from -€2,270 million as at 31 December 2017 to -€2,584 million as at 31 December 2018). 2. Changes of net defined benefit liability/asset and any reimbursement rights 2.1 Breakdown of defined benefit net obligation (€ '000) 12.31.2018 12.31.2017 Current value of the defined benefit obligation 9,356,411 9,172,764 Current value of the plan assets (4,609,336) (4,671,480) Deficit/(Surplus) 4,747,075 4,501,284 Irrecoverable surplus (effect of asset ceiling) - - Net defined benefit liability/(asset) as of the period end date 4,747,075 4,501,284 2.2 Changes in defined benefit obligations (€ '000) 12.31.2018 12.31.2017 Initial defined benefit obligation 9,172,764 9,598,722 Current service cost 89,151 99,419 Settlement (gain)/loss 739 - Past service cost 3,262 1,284 Interest expense on the defined benefit obligation 179,231 166,233 Write-downs for actuarial (gains)/losses on defined benefit plans 318,358 (288,867) Employees' contributions for defined benefit plans 7,762 8,277 Disbursements from plan assets (170,638) (169,299) Disbursements directly paid by the fund (233,809) (238,018) Settlements (4,749) - Other increases (decreases) (5,660) (4,987) Net defined benefit liability/(asset) as of the period end date 9,356,411 9,172,764 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 241 The Group’s defined-benefit plans are mainly closed to new recruits (for example in Germany, Austria and Italy, where most new recruits join defined-contribution plans instead and the related contributions are charged to the income statement). According to IAS19, obligations arising from defined-benefit plans are determined using the “projected unit credit” method, while segregated assets are measured at fair value. The balance sheet obligation is the result of the deficit/surplus (i.e., the difference between obligations and assets) net of any impacts of the asset ceiling; actuarial gains and losses are recognised in shareholders’ equity and shown in a specific item of revaluation reserves in the financial year in which they are recorded. The actuarial assumptions used to determine obligations vary from country to country and from plan to plan, new mortality table has been introduced for Austrian (AVÖ 2018) and Germany (Heubeck2018 adjusted to reflect longer “population specific” longevity); the discount rate is determined, depending on the currency of denomination of the commitments and the maturity of the liability, by reference to market yields at the balance sheet date on a basket of high quality corporate bonds. In the light of evolving common interpretation about “high quality corporate bonds” identification and persisting interest rates decreasing trend, UCG refined its Discount Rate setting methodology by limiting the number of “investment grade” bonds whose rating is lower than AA (No.11 securities ranging in 15-30y maturity), for which an adjustment is made to reduce the excess-return. In addition, a Nelson Siegel methodology has been applied in modelling the yield-curve expressed by the basket of securities (adjusted above 25 years in order to stick the long-term maturity segments of the curve to the Euribor implied-forward rate). The remeasurement of commitments as at 31 December 2018 leads to an increase in the negative balance of the valuation reserve relating to actuarial gains/losses on defined benefit plans of €314 million, net of taxes (for a negative balance which move from -€2,270 million as at 31 December 2017 to -€2,584 million as at 31 December 2018). 2. Changes of net defined benefit liability/asset and any reimbursement rights 2.1 Breakdown of defined benefit net obligation (€ '000) 12.31.2018 12.31.2017 Current value of the defined benefit obligation 9,356,411 9,172,764 Current value of the plan assets (4,609,336) (4,671,480) Deficit/(Surplus) 4,747,075 4,501,284 Irrecoverable surplus (effect of asset ceiling) - - Net defined benefit liability/(asset) as of the period end date 4,747,075 4,501,284 2.2 Changes in defined benefit obligations (€ '000) 12.31.2018 12.31.2017 Initial defined benefit obligation 9,172,764 9,598,722 Current service cost 89,151 99,419 Settlement (gain)/loss 739 - Past service cost 3,262 1,284 Interest expense on the defined benefit obligation 179,231 166,233 Write-downs for actuarial (gains)/losses on defined benefit plans 318,358 (288,867) Employees' contributions for defined benefit plans 7,762 8,277 Disbursements from plan assets (170,638) (169,299) Disbursements directly paid by the fund (233,809) (238,018) Settlements (4,749) - Other increases (decreases) (5,660) (4,987) Net defined benefit liability/(asset) as of the period end date 9,356,411 9,172,764 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 241 The Group’s defined-benefit plans are mainly closed to new recruits (for example in Germany, Austria and Italy, where most new recruits join defined-contribution plans instead and the related contributions are charged to the income statement). According to IAS19, obligations arising from defined-benefit plans are determined using the “projected unit credit” method, while segregated assets are measured at fair value. The balance sheet obligation is the result of the deficit/surplus (i.e., the difference between obligations and assets) net of any impacts of the asset ceiling; actuarial gains and losses are recognised in shareholders’ equity and shown in a specific item of revaluation reserves in the financial year in which they are recorded. The actuarial assumptions used to determine obligations vary from country to country and from plan to plan, new mortality table has been introduced for Austrian (AVÖ 2018) and Germany (Heubeck2018 adjusted to reflect longer “population specific” longevity); the discount rate is determined, depending on the currency of denomination of the commitments and the maturity of the liability, by reference to market yields at the balance sheet date on a basket of high quality corporate bonds. In the light of evolving common interpretation about “high quality corporate bonds” identification and persisting interest rates decreasing trend, UCG refined its Discount Rate setting methodology by limiting the number of “investment grade” bonds whose rating is lower than AA (No.11 securities ranging in 15-30y maturity), for which an adjustment is made to reduce the excess-return. In addition, a Nelson Siegel methodology has been applied in modelling the yield-curve expressed by the basket of securities (adjusted above 25 years in order to stick the long-term maturity segments of the curve to the Euribor implied-forward rate). The remeasurement of commitments as at 31 December 2018 leads to an increase in the negative balance of the valuation reserve relating to actuarial gains/losses on defined benefit plans of €314 million, net of taxes (for a negative balance which move from -€2,270 million as at 31 December 2017 to -€2,584 million as at 31 December 2018). 2. Changes of net defined benefit liability/asset and any reimbursement rights 2.1 Breakdown of defined benefit net obligation (€ '000) 12.31.2018 12.31.2017 Current value of the defined benefit obligation 9,356,411 9,172,764 Current value of the plan assets (4,609,336) (4,671,480) Deficit/(Surplus) 4,747,075 4,501,284 Irrecoverable surplus (effect of asset ceiling) - - Net defined benefit liability/(asset) as of the period end date 4,747,075 4,501,284 2.2 Changes in defined benefit obligations (€ '000) 12.31.2018 12.31.2017 Initial defined benefit obligation 9,172,764 9,598,722 Current service cost 89,151 99,419 Settlement (gain)/loss 739 - Past service cost 3,262 1,284 Interest expense on the defined benefit obligation 179,231 166,233 Write-downs for actuarial (gains)/losses on defined benefit plans 318,358 (288,867) Employees' contributions for defined benefit plans 7,762 8,277 Disbursements from plan assets (170,638) (169,299) Disbursements directly paid by the fund (233,809) (238,018) Settlements (4,749) - Other increases (decreases) (5,660) (4,987) Net defined benefit liability/(asset) as of the period end date 9,356,411 9,172,764 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 241 The Group’s defined-benefit plans are mainly closed to new recruits (for example in Germany, Austria and Italy, where most new recruits join defined-contribution plans instead and the related contributions are charged to the income statement). According to IAS19, obligations arising from defined-benefit plans are determined using the “projected unit credit” method, while segregated assets are measured at fair value. The balance sheet obligation is the result of the deficit/surplus (i.e., the difference between obligations and assets) net of any impacts of the asset ceiling; actuarial gains and losses are recognised in shareholders’ equity and shown in a specific item of revaluation reserves in the financial year in which they are recorded. The actuarial assumptions used to determine obligations vary from country to country and from plan to plan, new mortality table has been introduced for Austrian (AVÖ 2018) and Germany (Heubeck2018 adjusted to reflect longer “population specific” longevity); the discount rate is determined, depending on the currency of denomination of the commitments and the maturity of the liability, by reference to market yields at the balance sheet date on a basket of high quality corporate bonds. In the light of evolving common interpretation about “high quality corporate bonds” identification and persisting interest rates decreasing trend, UCG refined its Discount Rate setting methodology by limiting the number of “investment grade” bonds whose rating is lower than AA (No.11 securities ranging in 15-30y maturity), for which an adjustment is made to reduce the excess-return. In addition, a Nelson Siegel methodology has been applied in modelling the yield-curve expressed by the basket of securities (adjusted above 25 years in order to stick the long-term maturity segments of the curve to the Euribor implied-forward rate). The remeasurement of commitments as at 31 December 2018 leads to an increase in the negative balance of the valuation reserve relating to actuarial gains/losses on defined benefit plans of €314 million, net of taxes (for a negative balance which move from -€2,270 million as at 31 December 2017 to -€2,584 million as at 31 December 2018). 2. Changes of net defined benefit liability/asset and any reimbursement rights 2.1 Breakdown of defined benefit net obligation (€ '000) 12.31.2018 12.31.2017 Current value of the defined benefit obligation 9,356,411 9,172,764 Current value of the plan assets (4,609,336) (4,671,480) Deficit/(Surplus) 4,747,075 4,501,284 Irrecoverable surplus (effect of asset ceiling) - - Net defined benefit liability/(asset) as of the period end date 4,747,075 4,501,284 2.2 Changes in defined benefit obligations (€ '000) 12.31.2018 12.31.2017 Initial defined benefit obligation 9,172,764 9,598,722 Current service cost 89,151 99,419 Settlement (gain)/loss 739 - Past service cost 3,262 1,284 Interest expense on the defined benefit obligation 179,231 166,233 Write-downs for actuarial (gains)/losses on defined benefit plans 318,358 (288,867) Employees' contributions for defined benefit plans 7,762 8,277 Disbursements from plan assets (170,638) (169,299) Disbursements directly paid by the fund (233,809) (238,018) Settlements (4,749) - Other increases (decreases) (5,660) (4,987) Net defined benefit liability/(asset) as of the period end date 9,356,411 9,172,764 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 242 2018 Annual Report and Accounts · UniCredit 2.3 Changes to plan assets (€ '000) 12.31.2018 12.31.2017 Initial fair value of plan assets 4,671,480 4,377,037 Interest income on plan assets 97,813 86,929 Administrative expenses paid from plan assets (69) 30,988 Write-downs on the fair value of plan assets for actuarial gains (losses) on the discount rate (101,482) 350,806 Employer contributions 116,496 (169,307) Disbursements from plan assets (170,638) - Settlements (4,538) (4,973) Other increases (decreases) 274 - Final fair value of plan assets 4,609,336 4,671,480 3. Main plan asset classes (€ '000) 12.31.2018 12.31.2017 1. Shares 97,157 100,469 2. Bonds 448,029 449,106 3. Units in investment funds 3,718,375 3,431,825 4. Real estate properties 235,117 518,343 5. Derivative instruments - - 6. Other assets 110,658 171,737 Total 4,609,336 4,671,480 4. Significant actuarial assumptions used to determine the current value of defined benefit obligation (€ '000) 12.31.2018 12.31.2017 % % Discount rate 1.99 1.99 Expected return on plan assets 1.99 1.99 Expected compensation increase rate 2.05 1.59 Future increases relating to pension treatments 1.84 2.01 Expected inflation rate 1.59 1.60 5. Impact of changes in financial/demographic assumptions on DBOs and financial duration (€ '000) 12.31.2018 - Impact of changes in financial/demographic assumptions on DBOs A. Discount rate A1. -25 basis points 366,869 3.92% A2. +25 basis points (344,777) -3.68% B. Future increase rate relating to pension treatments B1. -25 basis points (244,773) -2.62% B2. +25 basis points 255,804 2.73% C. Mortality C.1 Life expectancy + 1 year 297,255 3.18% - Financial duration (years) 15.2 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 242 2018 Annual Report and Accounts · UniCredit 2.3 Changes to plan assets (€ '000) 12.31.2018 12.31.2017 Initial fair value of plan assets 4,671,480 4,377,037 Interest income on plan assets 97,813 86,929 Administrative expenses paid from plan assets (69) 30,988 Write-downs on the fair value of plan assets for actuarial gains (losses) on the discount rate (101,482) 350,806 Employer contributions 116,496 (169,307) Disbursements from plan assets (170,638) - Settlements (4,538) (4,973) Other increases (decreases) 274 - Final fair value of plan assets 4,609,336 4,671,480 3. Main plan asset classes (€ '000) 12.31.2018 12.31.2017 1. Shares 97,157 100,469 2. Bonds 448,029 449,106 3. Units in investment funds 3,718,375 3,431,825 4. Real estate properties 235,117 518,343 5. Derivative instruments - - 6. Other assets 110,658 171,737 Total 4,609,336 4,671,480 4. Significant actuarial assumptions used to determine the current value of defined benefit obligation (€ '000) 12.31.2018 12.31.2017 % % Discount rate 1.99 1.99 Expected return on plan assets 1.99 1.99 Expected compensation increase rate 2.05 1.59 Future increases relating to pension treatments 1.84 2.01 Expected inflation rate 1.59 1.60 5. Impact of changes in financial/demographic assumptions on DBOs and financial duration (€ '000) 12.31.2018 - Impact of changes in financial/demographic assumptions on DBOs A. Discount rate A1. -25 basis points 366,869 3.92% A2. +25 basis points (344,777) -3.68% B. Future increase rate relating to pension treatments B1. -25 basis points (244,773) -2.62% B2. +25 basis points 255,804 2.73% C. Mortality C.1 Life expectancy + 1 year 297,255 3.18% - Financial duration (years) 15.2 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 242 2018 Annual Report and Accounts · UniCredit 2.3 Changes to plan assets (€ '000) 12.31.2018 12.31.2017 Initial fair value of plan assets 4,671,480 4,377,037 Interest income on plan assets 97,813 86,929 Administrative expenses paid from plan assets (69) 30,988 Write-downs on the fair value of plan assets for actuarial gains (losses) on the discount rate (101,482) 350,806 Employer contributions 116,496 (169,307) Disbursements from plan assets (170,638) - Settlements (4,538) (4,973) Other increases (decreases) 274 - Final fair value of plan assets 4,609,336 4,671,480 3. Main plan asset classes (€ '000) 12.31.2018 12.31.2017 1. Shares 97,157 100,469 2. Bonds 448,029 449,106 3. Units in investment funds 3,718,375 3,431,825 4. Real estate properties 235,117 518,343 5. Derivative instruments - - 6. Other assets 110,658 171,737 Total 4,609,336 4,671,480 4. Significant actuarial assumptions used to determine the current value of defined benefit obligation (€ '000) 12.31.2018 12.31.2017 % % Discount rate 1.99 1.99 Expected return on plan assets 1.99 1.99 Expected compensation increase rate 2.05 1.59 Future increases relating to pension treatments 1.84 2.01 Expected inflation rate 1.59 1.60 5. Impact of changes in financial/demographic assumptions on DBOs and financial duration (€ '000) 12.31.2018 - Impact of changes in financial/demographic assumptions on DBOs A. Discount rate A1. -25 basis points 366,869 3.92% A2. +25 basis points (344,777) -3.68% B. Future increase rate relating to pension treatments B1. -25 basis points (244,773) -2.62% B2. +25 basis points 255,804 2.73% C. Mortality C.1 Life expectancy + 1 year 297,255 3.18% - Financial duration (years) 15.2 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 242 2018 Annual Report and Accounts · UniCredit 2.3 Changes to plan assets (€ '000) 12.31.2018 12.31.2017 Initial fair value of plan assets 4,671,480 4,377,037 Interest income on plan assets 97,813 86,929 Administrative expenses paid from plan assets (69) 30,988 Write-downs on the fair value of plan assets for actuarial gains (losses) on the discount rate (101,482) 350,806 Employer contributions 116,496 (169,307) Disbursements from plan assets (170,638) - Settlements (4,538) (4,973) Other increases (decreases) 274 - Final fair value of plan assets 4,609,336 4,671,480 3. Main plan asset classes (€ '000) 12.31.2018 12.31.2017 1. Shares 97,157 100,469 2. Bonds 448,029 449,106 3. Units in investment funds 3,718,375 3,431,825 4. Real estate properties 235,117 518,343 5. Derivative instruments - - 6. Other assets 110,658 171,737 Total 4,609,336 4,671,480 4. Significant actuarial assumptions used to determine the current value of defined benefit obligation (€ '000) 12.31.2018 12.31.2017 % % Discount rate 1.99 1.99 Expected return on plan assets 1.99 1.99 Expected compensation increase rate 2.05 1.59 Future increases relating to pension treatments 1.84 2.01 Expected inflation rate 1.59 1.60 5. Impact of changes in financial/demographic assumptions on DBOs and financial duration (€ '000) 12.31.2018 - Impact of changes in financial/demographic assumptions on DBOs A. Discount rate A1. -25 basis points 366,869 3.92% A2. +25 basis points (344,777) -3.68% B. Future increase rate relating to pension treatments B1. -25 basis points (244,773) -2.62% B2. +25 basis points 255,804 2.73% C. Mortality C.1 Life expectancy + 1 year 297,255 3.18% - Financial duration (years) 15.2 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 242 2018 Annual Report and Accounts · UniCredit 2.3 Changes to plan assets (€ '000) 12.31.2018 12.31.2017 Initial fair value of plan assets 4,671,480 4,377,037 Interest income on plan assets 97,813 86,929 Administrative expenses paid from plan assets (69) 30,988 Write-downs on the fair value of plan assets for actuarial gains (losses) on the discount rate (101,482) 350,806 Employer contributions 116,496 (169,307) Disbursements from plan assets (170,638) - Settlements (4,538) (4,973) Other increases (decreases) 274 - Final fair value of plan assets 4,609,336 4,671,480 3. Main plan asset classes (€ '000) 12.31.2018 12.31.2017 1. Shares 97,157 100,469 2. Bonds 448,029 449,106 3. Units in investment funds 3,718,375 3,431,825 4. Real estate properties 235,117 518,343 5. Derivative instruments - - 6. Other assets 110,658 171,737 Total 4,609,336 4,671,480 4. Significant actuarial assumptions used to determine the current value of defined benefit obligation (€ '000) 12.31.2018 12.31.2017 % % Discount rate 1.99 1.99 Expected return on plan assets 1.99 1.99 Expected compensation increase rate 2.05 1.59 Future increases relating to pension treatments 1.84 2.01 Expected inflation rate 1.59 1.60 5. Impact of changes in financial/demographic assumptions on DBOs and financial duration (€ '000) 12.31.2018 - Impact of changes in financial/demographic assumptions on DBOs A. Discount rate A1. -25 basis points 366,869 3.92% A2. +25 basis points (344,777) -3.68% B. Future increase rate relating to pension treatments B1. -25 basis points (244,773) -2.62% B2. +25 basis points 255,804 2.73% C. Mortality C.1 Life expectancy + 1 year 297,255 3.18% - Financial duration (years) 15.2 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 243 10.6 Provisions for risks and charges - other provisions (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 4.3 Other provisions for risks and charges - other Real estate risks/charges 157,984 68,021 Restructuring costs 73,932 94,413 Allowances payable to agents 161,999 167,947 Disputes regarding financial instruments and derivatives 84,532 93,835 Costs for liabilities arising from equity investment disposals 183,902 163,322 Other 969,627 985,781 Total 1,631,976 1,573,319 The data of the previous period have been restated for the purpose of comparison. The sub items: • “Real estate risks and costs” is increased following the reclassification of funds of the subsidiaries UniCredit Bank AG and Ocean Breeze Energy GMBH & CO. KG from the sub-item "others" in this category that represents better the nature of these funds; • “Restructuring costs” reduces mainly due to utilizations made by the subsidiary UniCredit Bank Austria; • “Ohers” includes the amounts to cover the risks related to certain standard contractual terms contained in the documentary frameworks (i.e. reps & warranties), including securitization transactions signed with the SPVs, of which UniCredit is Originator, pending the analysis and assessments to be completed within the deadlines established. Section 11 - Technical reserves - Item 110 No data to be disclosed. Section 12 - Redeemable shares - Item 130 No data to be disclosed. Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 At 31 December 2018 the Group shareholders’ equity, including the profit for the period of €3,892 million, amounted to €55,841 million, against €59,331 million at the end of 2017. The table below shows a breakdown of Group equity and the changes over the previous year. Group Shareholders' Equity: breakdown (€ '000) AMOUNTS AS AT CHANGES 12.31.2018 12.31.2017 AMOUNT % 1. Share capital 20,940,398 20,880,550 59,848 0.3% 2. Share premium reserve 13,392,918 13,399,799 -6,881 -0.1% 3. Reserves 20,502,728 19,296,907 1,205,821 6.3% 4. Treasury shares (8,826) (2,695) -6,131 227.5% a. Parent Company (2,440) (2,440) - - b. Subsidiaries (6,386) (255) -6,131 n.m. 5. Revaluation reserve (7,489,131) (4,327,092) -3,162,039 73.1% 6. Equity instruments 4,610,073 4,610,073 - - 7. Net profit (loss) 3,892,439 5,473,075 -1,580,636 -28.9% Total 55,840,599 59,330,617 -3,490,018 -5.9% Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 243 10.6 Provisions for risks and charges - other provisions (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 4.3 Other provisions for risks and charges - other Real estate risks/charges 157,984 68,021 Restructuring costs 73,932 94,413 Allowances payable to agents 161,999 167,947 Disputes regarding financial instruments and derivatives 84,532 93,835 Costs for liabilities arising from equity investment disposals 183,902 163,322 Other 969,627 985,781 Total 1,631,976 1,573,319 The data of the previous period have been restated for the purpose of comparison. The sub items: • “Real estate risks and costs” is increased following the reclassification of funds of the subsidiaries UniCredit Bank AG and Ocean Breeze Energy GMBH & CO. KG from the sub-item "others" in this category that represents better the nature of these funds; • “Restructuring costs” reduces mainly due to utilizations made by the subsidiary UniCredit Bank Austria; • “Ohers” includes the amounts to cover the risks related to certain standard contractual terms contained in the documentary frameworks (i.e. reps & warranties), including securitization transactions signed with the SPVs, of which UniCredit is Originator, pending the analysis and assessments to be completed within the deadlines established. Section 11 - Technical reserves - Item 110 No data to be disclosed. Section 12 - Redeemable shares - Item 130 No data to be disclosed. Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 At 31 December 2018 the Group shareholders’ equity, including the profit for the period of €3,892 million, amounted to €55,841 million, against €59,331 million at the end of 2017. The table below shows a breakdown of Group equity and the changes over the previous year. Group Shareholders' Equity: breakdown (€ '000) AMOUNTS AS AT CHANGES 12.31.2018 12.31.2017 AMOUNT % 1. Share capital 20,940,398 20,880,550 59,848 0.3% 2. Share premium reserve 13,392,918 13,399,799 -6,881 -0.1% 3. Reserves 20,502,728 19,296,907 1,205,821 6.3% 4. Treasury shares (8,826) (2,695) -6,131 227.5% a. Parent Company (2,440) (2,440) - - b. Subsidiaries (6,386) (255) -6,131 n.m. 5. Revaluation reserve (7,489,131) (4,327,092) -3,162,039 73.1% 6. Equity instruments 4,610,073 4,610,073 - - 7. Net profit (loss) 3,892,439 5,473,075 -1,580,636 -28.9% Total 55,840,599 59,330,617 -3,490,018 -5.9% Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 243 10.6 Provisions for risks and charges - other provisions (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 4.3 Other provisions for risks and charges - other Real estate risks/charges 157,984 68,021 Restructuring costs 73,932 94,413 Allowances payable to agents 161,999 167,947 Disputes regarding financial instruments and derivatives 84,532 93,835 Costs for liabilities arising from equity investment disposals 183,902 163,322 Other 969,627 985,781 Total 1,631,976 1,573,319 The data of the previous period have been restated for the purpose of comparison. The sub items: • “Real estate risks and costs” is increased following the reclassification of funds of the subsidiaries UniCredit Bank AG and Ocean Breeze Energy GMBH & CO. KG from the sub-item "others" in this category that represents better the nature of these funds; • “Restructuring costs” reduces mainly due to utilizations made by the subsidiary UniCredit Bank Austria; • “Ohers” includes the amounts to cover the risks related to certain standard contractual terms contained in the documentary frameworks (i.e. reps & warranties), including securitization transactions signed with the SPVs, of which UniCredit is Originator, pending the analysis and assessments to be completed within the deadlines established. Section 11 - Technical reserves - Item 110 No data to be disclosed. Section 12 - Redeemable shares - Item 130 No data to be disclosed. Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 At 31 December 2018 the Group shareholders’ equity, including the profit for the period of €3,892 million, amounted to €55,841 million, against €59,331 million at the end of 2017. The table below shows a breakdown of Group equity and the changes over the previous year. Group Shareholders' Equity: breakdown (€ '000) AMOUNTS AS AT CHANGES 12.31.2018 12.31.2017 AMOUNT % 1. Share capital 20,940,398 20,880,550 59,848 0.3% 2. Share premium reserve 13,392,918 13,399,799 -6,881 -0.1% 3. Reserves 20,502,728 19,296,907 1,205,821 6.3% 4. Treasury shares (8,826) (2,695) -6,131 227.5% a. Parent Company (2,440) (2,440) - - b. Subsidiaries (6,386) (255) -6,131 n.m. 5. Revaluation reserve (7,489,131) (4,327,092) -3,162,039 73.1% 6. Equity instruments 4,610,073 4,610,073 - - 7. Net profit (loss) 3,892,439 5,473,075 -1,580,636 -28.9% Total 55,840,599 59,330,617 -3,490,018 -5.9% Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 243 10.6 Provisions for risks and charges - other provisions (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 4.3 Other provisions for risks and charges - other Real estate risks/charges 157,984 68,021 Restructuring costs 73,932 94,413 Allowances payable to agents 161,999 167,947 Disputes regarding financial instruments and derivatives 84,532 93,835 Costs for liabilities arising from equity investment disposals 183,902 163,322 Other 969,627 985,781 Total 1,631,976 1,573,319 The data of the previous period have been restated for the purpose of comparison. The sub items: • “Real estate risks and costs” is increased following the reclassification of funds of the subsidiaries UniCredit Bank AG and Ocean Breeze Energy GMBH & CO. KG from the sub-item "others" in this category that represents better the nature of these funds; • “Restructuring costs” reduces mainly due to utilizations made by the subsidiary UniCredit Bank Austria; • “Ohers” includes the amounts to cover the risks related to certain standard contractual terms contained in the documentary frameworks (i.e. reps & warranties), including securitization transactions signed with the SPVs, of which UniCredit is Originator, pending the analysis and assessments to be completed within the deadlines established. Section 11 - Technical reserves - Item 110 No data to be disclosed. Section 12 - Redeemable shares - Item 130 No data to be disclosed. Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 At 31 December 2018 the Group shareholders’ equity, including the profit for the period of €3,892 million, amounted to €55,841 million, against €59,331 million at the end of 2017. The table below shows a breakdown of Group equity and the changes over the previous year. Group Shareholders' Equity: breakdown (€ '000) AMOUNTS AS AT CHANGES 12.31.2018 12.31.2017 AMOUNT % 1. Share capital 20,940,398 20,880,550 59,848 0.3% 2. Share premium reserve 13,392,918 13,399,799 -6,881 -0.1% 3. Reserves 20,502,728 19,296,907 1,205,821 6.3% 4. Treasury shares (8,826) (2,695) -6,131 227.5% a. Parent Company (2,440) (2,440) - - b. Subsidiaries (6,386) (255) -6,131 n.m. 5. Revaluation reserve (7,489,131) (4,327,092) -3,162,039 73.1% 6. Equity instruments 4,610,073 4,610,073 - - 7. Net profit (loss) 3,892,439 5,473,075 -1,580,636 -28.9% Total 55,840,599 59,330,617 -3,490,018 -5.9% Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 243 10.6 Provisions for risks and charges - other provisions (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 4.3 Other provisions for risks and charges - other Real estate risks/charges 157,984 68,021 Restructuring costs 73,932 94,413 Allowances payable to agents 161,999 167,947 Disputes regarding financial instruments and derivatives 84,532 93,835 Costs for liabilities arising from equity investment disposals 183,902 163,322 Other 969,627 985,781 Total 1,631,976 1,573,319 The data of the previous period have been restated for the purpose of comparison. The sub items: • “Real estate risks and costs” is increased following the reclassification of funds of the subsidiaries UniCredit Bank AG and Ocean Breeze Energy GMBH & CO. KG from the sub-item "others" in this category that represents better the nature of these funds; • “Restructuring costs” reduces mainly due to utilizations made by the subsidiary UniCredit Bank Austria; • “Ohers” includes the amounts to cover the risks related to certain standard contractual terms contained in the documentary frameworks (i.e. reps & warranties), including securitization transactions signed with the SPVs, of which UniCredit is Originator, pending the analysis and assessments to be completed within the deadlines established. Section 11 - Technical reserves - Item 110 No data to be disclosed. Section 12 - Redeemable shares - Item 130 No data to be disclosed. Section 13 - Group shareholders’ equity - Items 120, 130, 140, 150, 160, 170 and 180 At 31 December 2018 the Group shareholders’ equity, including the profit for the period of €3,892 million, amounted to €55,841 million, against €59,331 million at the end of 2017. The table below shows a breakdown of Group equity and the changes over the previous year. Group Shareholders' Equity: breakdown (€ '000) AMOUNTS AS AT CHANGES 12.31.2018 12.31.2017 AMOUNT % 1. Share capital 20,940,398 20,880,550 59,848 0.3% 2. Share premium reserve 13,392,918 13,399,799 -6,881 -0.1% 3. Reserves 20,502,728 19,296,907 1,205,821 6.3% 4. Treasury shares (8,826) (2,695) -6,131 227.5% a. Parent Company (2,440) (2,440) - - b. Subsidiaries (6,386) (255) -6,131 n.m. 5. Revaluation reserve (7,489,131) (4,327,092) -3,162,039 73.1% 6. Equity instruments 4,610,073 4,610,073 - - 7. Net profit (loss) 3,892,439 5,473,075 -1,580,636 -28.9% Total 55,840,599 59,330,617 -3,490,018 -5.9% Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 244 2018 Annual Report and Accounts · UniCredit The €3,490 million decrease in Group Equity resulted from: (€ million) Capital increase: the increase of €60 million in share capital following the resolution of the Board of Directors of 7 February 2018 executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel 60 Use of "Share premium reserve": for the payment of premium for saving shares conversion (7) The increase in the reserves, including the change in treasury shares arising from: 1,200 · the attribution to the reserve, net of dividends and other allocations, of the result of the previous year 4,759 · inclusion of equity reserves deriving from the first time adoption of accounting standard IFRS9 Financial Instruments (net of taxes) (3,004) · the impact arising from valuation of the companies valued at net equity method mainly arising from the first time adoption of accounting standard IFRS9 76 · an increase in the reserves connected to Share Based Payments 70 · the allocation to the reserve of the coupon paid to subscribers of the Additional Tier 1 instruments, net of the related taxes and fees paid to legal entities belonging to UniCredit group (242) · reserve for the unsustainable amount of Deferred Tax Assets relating to tax losses carried forward linked to shareholders' equity items (275) · the charge to reserves for the disbursements made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (93) · recognition in reserves from allocation of profit of the cumulated gains (losses) arising from the disposal of equities measured at fair value through Other Comprehensive Income and from the repurchase of financial liabilities designated at fair value occurred during the period. This amount includes also the recycling to reserves from allocation of profit of the amount previously reported in revaluation reserve (51) · withdrawal from reserves, for the capital increase connected to the medium term incentive plan for Group personnel following the resolution of the Board of Directors of 7 February 2018 (60) · other changes of reserves 19 The change in valuation reserves due to: (3,162) · inclusion of valuation reserves deriving from the first time adoption of accounting standard IFRS9 Financial Instruments (net of taxes) (324) · decrease of valuation reserves related to financial assets and liabilities valued at fair value (1,181) · decrease in the value of the valuation reserve of companies carried at equity (838) · decrease in reserves for exchange rate differences (388) · decrease in the value of the reserve for financial risks hedging (130) · decrease in the value of the reserve on actuarial gains (losses) on defined-benefit plans (302) The change of the profit for the period compared with that of 31 December 2017 (1,581) 13.1 "Share capital" and "treasury shares": breakdown (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT 12.31.2017 ISSUED SHARES UNDERWRITTEN AND NOT YET FULLY PAID SHARES ISSUED SHARES UNDERWRITTEN AND NOT YET FULLY PAID SHARES A. Share Capital A.1 Ordinary shares 20,940,398 - 20,878,182 - A.2 Savings shares - - 2,368 - Total A 20,940,398 - 20,880,550 - B. Treasury Shares (8,826) - (2,695) - Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.1 "Share capital" and "treasury shares": breakdown which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 244 2018 Annual Report and Accounts · UniCredit The €3,490 million decrease in Group Equity resulted from: (€ million) Capital increase: the increase of €60 million in share capital following the resolution of the Board of Directors of 7 February 2018 executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel 60 Use of "Share premium reserve": for the payment of premium for saving shares conversion (7) The increase in the reserves, including the change in treasury shares arising from: 1,200 · the attribution to the reserve, net of dividends and other allocations, of the result of the previous year 4,759 · inclusion of equity reserves deriving from the first time adoption of accounting standard IFRS9 Financial Instruments (net of taxes) (3,004) · the impact arising from valuation of the companies valued at net equity method mainly arising from the first time adoption of accounting standard IFRS9 76 · an increase in the reserves connected to Share Based Payments 70 · the allocation to the reserve of the coupon paid to subscribers of the Additional Tier 1 instruments, net of the related taxes and fees paid to legal entities belonging to UniCredit group (242) · reserve for the unsustainable amount of Deferred Tax Assets relating to tax losses carried forward linked to shareholders' equity items (275) · the charge to reserves for the disbursements made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (93) · recognition in reserves from allocation of profit of the cumulated gains (losses) arising from the disposal of equities measured at fair value through Other Comprehensive Income and from the repurchase of financial liabilities designated at fair value occurred during the period. This amount includes also the recycling to reserves from allocation of profit of the amount previously reported in revaluation reserve (51) · withdrawal from reserves, for the capital increase connected to the medium term incentive plan for Group personnel following the resolution of the Board of Directors of 7 February 2018 (60) · other changes of reserves 19 The change in valuation reserves due to: (3,162) · inclusion of valuation reserves deriving from the first time adoption of accounting standard IFRS9 Financial Instruments (net of taxes) (324) · decrease of valuation reserves related to financial assets and liabilities valued at fair value (1,181) · decrease in the value of the valuation reserve of companies carried at equity (838) · decrease in reserves for exchange rate differences (388) · decrease in the value of the reserve for financial risks hedging (130) · decrease in the value of the reserve on actuarial gains (losses) on defined-benefit plans (302) The change of the profit for the period compared with that of 31 December 2017 (1,581) 13.1 "Share capital" and "treasury shares": breakdown (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT 12.31.2017 ISSUED SHARES UNDERWRITTEN AND NOT YET FULLY PAID SHARES ISSUED SHARES UNDERWRITTEN AND NOT YET FULLY PAID SHARES A. Share Capital A.1 Ordinary shares 20,940,398 - 20,878,182 - A.2 Savings shares - - 2,368 - Total A 20,940,398 - 20,880,550 - B. Treasury Shares (8,826) - (2,695) - Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.1 "Share capital" and "treasury shares": breakdown which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 244 2018 Annual Report and Accounts · UniCredit The €3,490 million decrease in Group Equity resulted from: (€ million) Capital increase: the increase of €60 million in share capital following the resolution of the Board of Directors of 7 February 2018 executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel 60 Use of "Share premium reserve": for the payment of premium for saving shares conversion (7) The increase in the reserves, including the change in treasury shares arising from: 1,200 · the attribution to the reserve, net of dividends and other allocations, of the result of the previous year 4,759 · inclusion of equity reserves deriving from the first time adoption of accounting standard IFRS9 Financial Instruments (net of taxes) (3,004) · the impact arising from valuation of the companies valued at net equity method mainly arising from the first time adoption of accounting standard IFRS9 76 · an increase in the reserves connected to Share Based Payments 70 · the allocation to the reserve of the coupon paid to subscribers of the Additional Tier 1 instruments, net of the related taxes and fees paid to legal entities belonging to UniCredit group (242) · reserve for the unsustainable amount of Deferred Tax Assets relating to tax losses carried forward linked to shareholders' equity items (275) · the charge to reserves for the disbursements made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (93) · recognition in reserves from allocation of profit of the cumulated gains (losses) arising from the disposal of equities measured at fair value through Other Comprehensive Income and from the repurchase of financial liabilities designated at fair value occurred during the period. This amount includes also the recycling to reserves from allocation of profit of the amount previously reported in revaluation reserve (51) · withdrawal from reserves, for the capital increase connected to the medium term incentive plan for Group personnel following the resolution of the Board of Directors of 7 February 2018 (60) · other changes of reserves 19 The change in valuation reserves due to: (3,162) · inclusion of valuation reserves deriving from the first time adoption of accounting standard IFRS9 Financial Instruments (net of taxes) (324) · decrease of valuation reserves related to financial assets and liabilities valued at fair value (1,181) · decrease in the value of the valuation reserve of companies carried at equity (838) · decrease in reserves for exchange rate differences (388) · decrease in the value of the reserve for financial risks hedging (130) · decrease in the value of the reserve on actuarial gains (losses) on defined-benefit plans (302) The change of the profit for the period compared with that of 31 December 2017 (1,581) 13.1 "Share capital" and "treasury shares": breakdown (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT 12.31.2017 ISSUED SHARES UNDERWRITTEN AND NOT YET FULLY PAID SHARES ISSUED SHARES UNDERWRITTEN AND NOT YET FULLY PAID SHARES A. Share Capital A.1 Ordinary shares 20,940,398 - 20,878,182 - A.2 Savings shares - - 2,368 - Total A 20,940,398 - 20,880,550 - B. Treasury Shares (8,826) - (2,695) - Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.1 "Share capital" and "treasury shares": breakdown which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 244 2018 Annual Report and Accounts · UniCredit The €3,490 million decrease in Group Equity resulted from: (€ million) Capital increase: the increase of €60 million in share capital following the resolution of the Board of Directors of 7 February 2018 executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel 60 Use of "Share premium reserve": for the payment of premium for saving shares conversion (7) The increase in the reserves, including the change in treasury shares arising from: 1,200 · the attribution to the reserve, net of dividends and other allocations, of the result of the previous year 4,759 · inclusion of equity reserves deriving from the first time adoption of accounting standard IFRS9 Financial Instruments (net of taxes) (3,004) · the impact arising from valuation of the companies valued at net equity method mainly arising from the first time adoption of accounting standard IFRS9 76 · an increase in the reserves connected to Share Based Payments 70 · the allocation to the reserve of the coupon paid to subscribers of the Additional Tier 1 instruments, net of the related taxes and fees paid to legal entities belonging to UniCredit group (242) · reserve for the unsustainable amount of Deferred Tax Assets relating to tax losses carried forward linked to shareholders' equity items (275) · the charge to reserves for the disbursements made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (93) · recognition in reserves from allocation of profit of the cumulated gains (losses) arising from the disposal of equities measured at fair value through Other Comprehensive Income and from the repurchase of financial liabilities designated at fair value occurred during the period. This amount includes also the recycling to reserves from allocation of profit of the amount previously reported in revaluation reserve (51) · withdrawal from reserves, for the capital increase connected to the medium term incentive plan for Group personnel following the resolution of the Board of Directors of 7 February 2018 (60) · other changes of reserves 19 The change in valuation reserves due to: (3,162) · inclusion of valuation reserves deriving from the first time adoption of accounting standard IFRS9 Financial Instruments (net of taxes) (324) · decrease of valuation reserves related to financial assets and liabilities valued at fair value (1,181) · decrease in the value of the valuation reserve of companies carried at equity (838) · decrease in reserves for exchange rate differences (388) · decrease in the value of the reserve for financial risks hedging (130) · decrease in the value of the reserve on actuarial gains (losses) on defined-benefit plans (302) The change of the profit for the period compared with that of 31 December 2017 (1,581) 13.1 "Share capital" and "treasury shares": breakdown (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT 12.31.2017 ISSUED SHARES UNDERWRITTEN AND NOT YET FULLY PAID SHARES ISSUED SHARES UNDERWRITTEN AND NOT YET FULLY PAID SHARES A. Share Capital A.1 Ordinary shares 20,940,398 - 20,878,182 - A.2 Savings shares - - 2,368 - Total A 20,940,398 - 20,880,550 - B. Treasury Shares (8,826) - (2,695) - Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.1 "Share capital" and "treasury shares": breakdown which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 244 2018 Annual Report and Accounts · UniCredit The €3,490 million decrease in Group Equity resulted from: (€ million) Capital increase: the increase of €60 million in share capital following the resolution of the Board of Directors of 7 February 2018 executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel 60 Use of "Share premium reserve": for the payment of premium for saving shares conversion (7) The increase in the reserves, including the change in treasury shares arising from: 1,200 · the attribution to the reserve, net of dividends and other allocations, of the result of the previous year 4,759 · inclusion of equity reserves deriving from the first time adoption of accounting standard IFRS9 Financial Instruments (net of taxes) (3,004) · the impact arising from valuation of the companies valued at net equity method mainly arising from the first time adoption of accounting standard IFRS9 76 · an increase in the reserves connected to Share Based Payments 70 · the allocation to the reserve of the coupon paid to subscribers of the Additional Tier 1 instruments, net of the related taxes and fees paid to legal entities belonging to UniCredit group (242) · reserve for the unsustainable amount of Deferred Tax Assets relating to tax losses carried forward linked to shareholders' equity items (275) · the charge to reserves for the disbursements made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (93) · recognition in reserves from allocation of profit of the cumulated gains (losses) arising from the disposal of equities measured at fair value through Other Comprehensive Income and from the repurchase of financial liabilities designated at fair value occurred during the period. This amount includes also the recycling to reserves from allocation of profit of the amount previously reported in revaluation reserve (51) · withdrawal from reserves, for the capital increase connected to the medium term incentive plan for Group personnel following the resolution of the Board of Directors of 7 February 2018 (60) · other changes of reserves 19 The change in valuation reserves due to: (3,162) · inclusion of valuation reserves deriving from the first time adoption of accounting standard IFRS9 Financial Instruments (net of taxes) (324) · decrease of valuation reserves related to financial assets and liabilities valued at fair value (1,181) · decrease in the value of the valuation reserve of companies carried at equity (838) · decrease in reserves for exchange rate differences (388) · decrease in the value of the reserve for financial risks hedging (130) · decrease in the value of the reserve on actuarial gains (losses) on defined-benefit plans (302) The change of the profit for the period compared with that of 31 December 2017 (1,581) 13.1 "Share capital" and "treasury shares": breakdown (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT 12.31.2017 ISSUED SHARES UNDERWRITTEN AND NOT YET FULLY PAID SHARES ISSUED SHARES UNDERWRITTEN AND NOT YET FULLY PAID SHARES A. Share Capital A.1 Ordinary shares 20,940,398 - 20,878,182 - A.2 Savings shares - - 2,368 - Total A 20,940,398 - 20,880,550 - B. Treasury Shares (8,826) - (2,695) - Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.1 "Share capital" and "treasury shares": breakdown which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 245 13.2 Share capital - number of shares owned by the Parent Company: annual changes CHANGES IN 2018 ITEMS/TYPES ORDINARY SAVINGS A. Issued shares as at the beginning of the year 2,225,692,806 252,489 - Fully paid 2,225,692,806 252,489 - Not fully paid - - A.1 Treasury shares (-) (4,760) - A.2 Shares outstanding: opening balance 2,225,688,046 252,489 B. Increases 4,483,859 - B.1 New issues 4,483,859 - - Against payment - - - Business combinations - - - Bonds converted - - - Warrants exercised - - - Other - - - Free 4,483,859 - - To employees 3,519,352 - - To directors - - - Other 964,507 - B.2 Sales of treasury shares - - B.3 Other changes - - C. Decreases - 252,489 C.1 Cancellation - - C.2 Purchase of treasury shares - 252,489 C.3 Business tranferred - - C.4 Other changes - - of which: business combinations - - D. Shares outstanding: closing balance 2,230,171,905 - D.1 Treasury shares (+) 4,760 - D.2 Shares outstanding as at the end of the year 2,230,176,665 - - Fully paid 2,230,176,665 - - Not fully paid - - Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.2 Share capital - Number of shares: annual changes which is herewith quoted entirely. 13.3 Share capital: other information Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.3 Capital: other information which is herewith quoted entirely. 13.4 Reserves from allocation of profit: other information (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Legal Reserve 1,517,514 1,517,514 Statutory Reserve 6,160,551 679,464 Other Reserves 6,511,448 9,276,270 Total 14,189,513 11,473,248 The Legal Reserve of UniCredit S.p.A. also includes €2,683,391 thousand deriving from usage of resources, as resolved by the Shareholders’ Meeting of 11 May 2013, 13 May 2014 and 14 April 2016 through a withdrawal from the Share premium reserve and therefore not classified among reserves from allocation of profit from previous year. Following the resolutions of the Shareholders' Meeting of 12 April 2018 on allocation of the net profit of the year 2017 occurred +€5,481 million allocated to the Statutory reserve. 13.5 Equity instruments: breakdown and annual changes Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.5 Equity instruments: breakdown and annual changes which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 245 13.2 Share capital - number of shares owned by the Parent Company: annual changes CHANGES IN 2018 ITEMS/TYPES ORDINARY SAVINGS A. Issued shares as at the beginning of the year 2,225,692,806 252,489 - Fully paid 2,225,692,806 252,489 - Not fully paid - - A.1 Treasury shares (-) (4,760) - A.2 Shares outstanding: opening balance 2,225,688,046 252,489 B. Increases 4,483,859 - B.1 New issues 4,483,859 - - Against payment - - - Business combinations - - - Bonds converted - - - Warrants exercised - - - Other - - - Free 4,483,859 - - To employees 3,519,352 - - To directors - - - Other 964,507 - B.2 Sales of treasury shares - - B.3 Other changes - - C. Decreases - 252,489 C.1 Cancellation - - C.2 Purchase of treasury shares - 252,489 C.3 Business tranferred - - C.4 Other changes - - of which: business combinations - - D. Shares outstanding: closing balance 2,230,171,905 - D.1 Treasury shares (+) 4,760 - D.2 Shares outstanding as at the end of the year 2,230,176,665 - - Fully paid 2,230,176,665 - - Not fully paid - - Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.2 Share capital - Number of shares: annual changes which is herewith quoted entirely. 13.3 Share capital: other information Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.3 Capital: other information which is herewith quoted entirely. 13.4 Reserves from allocation of profit: other information (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Legal Reserve 1,517,514 1,517,514 Statutory Reserve 6,160,551 679,464 Other Reserves 6,511,448 9,276,270 Total 14,189,513 11,473,248 The Legal Reserve of UniCredit S.p.A. also includes €2,683,391 thousand deriving from usage of resources, as resolved by the Shareholders’ Meeting of 11 May 2013, 13 May 2014 and 14 April 2016 through a withdrawal from the Share premium reserve and therefore not classified among reserves from allocation of profit from previous year. Following the resolutions of the Shareholders' Meeting of 12 April 2018 on allocation of the net profit of the year 2017 occurred +€5,481 million allocated to the Statutory reserve. 13.5 Equity instruments: breakdown and annual changes Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.5 Equity instruments: breakdown and annual changes which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 245 13.2 Share capital - number of shares owned by the Parent Company: annual changes CHANGES IN 2018 ITEMS/TYPES ORDINARY SAVINGS A. Issued shares as at the beginning of the year 2,225,692,806 252,489 - Fully paid 2,225,692,806 252,489 - Not fully paid - - A.1 Treasury shares (-) (4,760) - A.2 Shares outstanding: opening balance 2,225,688,046 252,489 B. Increases 4,483,859 - B.1 New issues 4,483,859 - - Against payment - - - Business combinations - - - Bonds converted - - - Warrants exercised - - - Other - - - Free 4,483,859 - - To employees 3,519,352 - - To directors - - - Other 964,507 - B.2 Sales of treasury shares - - B.3 Other changes - - C. Decreases - 252,489 C.1 Cancellation - - C.2 Purchase of treasury shares - 252,489 C.3 Business tranferred - - C.4 Other changes - - of which: business combinations - - D. Shares outstanding: closing balance 2,230,171,905 - D.1 Treasury shares (+) 4,760 - D.2 Shares outstanding as at the end of the year 2,230,176,665 - - Fully paid 2,230,176,665 - - Not fully paid - - Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.2 Share capital - Number of shares: annual changes which is herewith quoted entirely. 13.3 Share capital: other information Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.3 Capital: other information which is herewith quoted entirely. 13.4 Reserves from allocation of profit: other information (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Legal Reserve 1,517,514 1,517,514 Statutory Reserve 6,160,551 679,464 Other Reserves 6,511,448 9,276,270 Total 14,189,513 11,473,248 The Legal Reserve of UniCredit S.p.A. also includes €2,683,391 thousand deriving from usage of resources, as resolved by the Shareholders’ Meeting of 11 May 2013, 13 May 2014 and 14 April 2016 through a withdrawal from the Share premium reserve and therefore not classified among reserves from allocation of profit from previous year. Following the resolutions of the Shareholders' Meeting of 12 April 2018 on allocation of the net profit of the year 2017 occurred +€5,481 million allocated to the Statutory reserve. 13.5 Equity instruments: breakdown and annual changes Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.5 Equity instruments: breakdown and annual changes which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 245 13.2 Share capital - number of shares owned by the Parent Company: annual changes CHANGES IN 2018 ITEMS/TYPES ORDINARY SAVINGS A. Issued shares as at the beginning of the year 2,225,692,806 252,489 - Fully paid 2,225,692,806 252,489 - Not fully paid - - A.1 Treasury shares (-) (4,760) - A.2 Shares outstanding: opening balance 2,225,688,046 252,489 B. Increases 4,483,859 - B.1 New issues 4,483,859 - - Against payment - - - Business combinations - - - Bonds converted - - - Warrants exercised - - - Other - - - Free 4,483,859 - - To employees 3,519,352 - - To directors - - - Other 964,507 - B.2 Sales of treasury shares - - B.3 Other changes - - C. Decreases - 252,489 C.1 Cancellation - - C.2 Purchase of treasury shares - 252,489 C.3 Business tranferred - - C.4 Other changes - - of which: business combinations - - D. Shares outstanding: closing balance 2,230,171,905 - D.1 Treasury shares (+) 4,760 - D.2 Shares outstanding as at the end of the year 2,230,176,665 - - Fully paid 2,230,176,665 - - Not fully paid - - Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.2 Share capital - Number of shares: annual changes which is herewith quoted entirely. 13.3 Share capital: other information Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.3 Capital: other information which is herewith quoted entirely. 13.4 Reserves from allocation of profit: other information (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Legal Reserve 1,517,514 1,517,514 Statutory Reserve 6,160,551 679,464 Other Reserves 6,511,448 9,276,270 Total 14,189,513 11,473,248 The Legal Reserve of UniCredit S.p.A. also includes €2,683,391 thousand deriving from usage of resources, as resolved by the Shareholders’ Meeting of 11 May 2013, 13 May 2014 and 14 April 2016 through a withdrawal from the Share premium reserve and therefore not classified among reserves from allocation of profit from previous year. Following the resolutions of the Shareholders' Meeting of 12 April 2018 on allocation of the net profit of the year 2017 occurred +€5,481 million allocated to the Statutory reserve. 13.5 Equity instruments: breakdown and annual changes Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.5 Equity instruments: breakdown and annual changes which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 245 13.2 Share capital - number of shares owned by the Parent Company: annual changes CHANGES IN 2018 ITEMS/TYPES ORDINARY SAVINGS A. Issued shares as at the beginning of the year 2,225,692,806 252,489 - Fully paid 2,225,692,806 252,489 - Not fully paid - - A.1 Treasury shares (-) (4,760) - A.2 Shares outstanding: opening balance 2,225,688,046 252,489 B. Increases 4,483,859 - B.1 New issues 4,483,859 - - Against payment - - - Business combinations - - - Bonds converted - - - Warrants exercised - - - Other - - - Free 4,483,859 - - To employees 3,519,352 - - To directors - - - Other 964,507 - B.2 Sales of treasury shares - - B.3 Other changes - - C. Decreases - 252,489 C.1 Cancellation - - C.2 Purchase of treasury shares - 252,489 C.3 Business tranferred - - C.4 Other changes - - of which: business combinations - - D. Shares outstanding: closing balance 2,230,171,905 - D.1 Treasury shares (+) 4,760 - D.2 Shares outstanding as at the end of the year 2,230,176,665 - - Fully paid 2,230,176,665 - - Not fully paid - - Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.2 Share capital - Number of shares: annual changes which is herewith quoted entirely. 13.3 Share capital: other information Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.3 Capital: other information which is herewith quoted entirely. 13.4 Reserves from allocation of profit: other information (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Legal Reserve 1,517,514 1,517,514 Statutory Reserve 6,160,551 679,464 Other Reserves 6,511,448 9,276,270 Total 14,189,513 11,473,248 The Legal Reserve of UniCredit S.p.A. also includes €2,683,391 thousand deriving from usage of resources, as resolved by the Shareholders’ Meeting of 11 May 2013, 13 May 2014 and 14 April 2016 through a withdrawal from the Share premium reserve and therefore not classified among reserves from allocation of profit from previous year. Following the resolutions of the Shareholders' Meeting of 12 April 2018 on allocation of the net profit of the year 2017 occurred +€5,481 million allocated to the Statutory reserve. 13.5 Equity instruments: breakdown and annual changes Reference is made to the paragraph of Part B - Notes to the accounts of the parent company UniCredit S.p.A. - Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 - 12.5 Equity instruments: breakdown and annual changes which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 246 2018 Annual Report and Accounts · UniCredit 13.6 Other Information Revaluation reserve: breakdown (€ '000) AMOUNTS AS AT ITEM/TYPES 12.31.2018 12.31.2017 1. Equity instruments designated at fair value through other comprehensive income (265,206) 2. Financial Assets (other than equity instruments) at fair value through other comprehensive income 183,130 Available for sale financial assets (ex IAS39) 1,474,818 3. Hedging of equity instruments at fair value through other comprehensive income - 4. Financial liabilities at fair value through profit or loss (changes in own credit risk) 41,377 5. Hedging instruments (non-designated elements) - 6. Property, plant and equipment - - 7. Intangible assets - - 8. Hedges of foreign investments - - 9. Cash-flow hedges 72,709 202,846 10. Exchange differences (2,326,001) (1,938,330) 11. Non-current assets classified as held for sale (113) (100) 12. Actuarial gains (losses) on defined-benefit plans (2,710,205) (2,408,473) 13. Revaluation reserves of investments valued at net equity (2,761,842) (1,934,873) 14. Special revaluation laws 277,020 277,020 Total (7,489,131) (4,327,092) The FX currency reserves as at 31 December 2018 mainly refer to the following currencies: • Turkish Lira: €2,808 million (negative), included in the share of the item “Revaluation reserves of investments valued at net equity” in accordance with IFRS11; • Ruble: €2,118 million (negative), included in the item “Exchange differences” and 35 (negative) included in the item “Revaluation reserves of investments valued at net equity”. The main variations in comparison to 31 December 2017 refer to: • negative variation of financial assets at fair value through other comprehensive income (available for sale financial assets ex IAS39) for €1.557million mainly due to Government securities; • negative change of Turkish Lira for €712 million included in the item “Revaluation reserves of investments valued at net equity”; • negative change of Ruble for €363 million included in the item “Exchange differences”. Section 14 - Minority shareholders‘ equity - Item 190 The table below shows a breakdown of minorities as at 31 December 2018. 14.1 Breakdown of item 190 "Shareholders' equity: minorities" (€ '000) 2018 2017 Equity investments in consolidated companies with minority interests 1,002,289 946,686 Fineco Bank S.p.A 516,594 492,790 Fineco Asset Management Designated Activity Company 10,416 218 Zagrebacka Banka D.D. 346,245 329,082 UniCredit Bank D.D. 65,112 62,740 UniCredit Bank Austria AG Group 63,922 61,856 Other equity investments and other consolidation adjustments (75,107) (52,603) Total 927,182 894,083 The shareholders' equity attributable to minority interests for 2018 amounted to €927 million. There are the following largest contributions attributable to the minority shareholders of Finecobank S.p.A, Zagrebacka Banka D.D. and its subsidiary UniCredit Bank D.D. and UniCredit Bank Austria AG Group, mainly referring to the minority shareholders of Card Complete Service Bank AG. 14.2 Capital instruments:breakdown and annual changes There are no equity instruments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 246 2018 Annual Report and Accounts · UniCredit 13.6 Other Information Revaluation reserve: breakdown (€ '000) AMOUNTS AS AT ITEM/TYPES 12.31.2018 12.31.2017 1. Equity instruments designated at fair value through other comprehensive income (265,206) 2. Financial Assets (other than equity instruments) at fair value through other comprehensive income 183,130 Available for sale financial assets (ex IAS39) 1,474,818 3. Hedging of equity instruments at fair value through other comprehensive income - 4. Financial liabilities at fair value through profit or loss (changes in own credit risk) 41,377 5. Hedging instruments (non-designated elements) - 6. Property, plant and equipment - - 7. Intangible assets - - 8. Hedges of foreign investments - - 9. Cash-flow hedges 72,709 202,846 10. Exchange differences (2,326,001) (1,938,330) 11. Non-current assets classified as held for sale (113) (100) 12. Actuarial gains (losses) on defined-benefit plans (2,710,205) (2,408,473) 13. Revaluation reserves of investments valued at net equity (2,761,842) (1,934,873) 14. Special revaluation laws 277,020 277,020 Total (7,489,131) (4,327,092) The FX currency reserves as at 31 December 2018 mainly refer to the following currencies: • Turkish Lira: €2,808 million (negative), included in the share of the item “Revaluation reserves of investments valued at net equity” in accordance with IFRS11; • Ruble: €2,118 million (negative), included in the item “Exchange differences” and 35 (negative) included in the item “Revaluation reserves of investments valued at net equity”. The main variations in comparison to 31 December 2017 refer to: • negative variation of financial assets at fair value through other comprehensive income (available for sale financial assets ex IAS39) for €1.557million mainly due to Government securities; • negative change of Turkish Lira for €712 million included in the item “Revaluation reserves of investments valued at net equity”; • negative change of Ruble for €363 million included in the item “Exchange differences”. Section 14 - Minority shareholders‘ equity - Item 190 The table below shows a breakdown of minorities as at 31 December 2018. 14.1 Breakdown of item 190 "Shareholders' equity: minorities" (€ '000) 2018 2017 Equity investments in consolidated companies with minority interests 1,002,289 946,686 Fineco Bank S.p.A 516,594 492,790 Fineco Asset Management Designated Activity Company 10,416 218 Zagrebacka Banka D.D. 346,245 329,082 UniCredit Bank D.D. 65,112 62,740 UniCredit Bank Austria AG Group 63,922 61,856 Other equity investments and other consolidation adjustments (75,107) (52,603) Total 927,182 894,083 The shareholders' equity attributable to minority interests for 2018 amounted to €927 million. There are the following largest contributions attributable to the minority shareholders of Finecobank S.p.A, Zagrebacka Banka D.D. and its subsidiary UniCredit Bank D.D. and UniCredit Bank Austria AG Group, mainly referring to the minority shareholders of Card Complete Service Bank AG. 14.2 Capital instruments:breakdown and annual changes There are no equity instruments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 246 2018 Annual Report and Accounts · UniCredit 13.6 Other Information Revaluation reserve: breakdown (€ '000) AMOUNTS AS AT ITEM/TYPES 12.31.2018 12.31.2017 1. Equity instruments designated at fair value through other comprehensive income (265,206) 2. Financial Assets (other than equity instruments) at fair value through other comprehensive income 183,130 Available for sale financial assets (ex IAS39) 1,474,818 3. Hedging of equity instruments at fair value through other comprehensive income - 4. Financial liabilities at fair value through profit or loss (changes in own credit risk) 41,377 5. Hedging instruments (non-designated elements) - 6. Property, plant and equipment - - 7. Intangible assets - - 8. Hedges of foreign investments - - 9. Cash-flow hedges 72,709 202,846 10. Exchange differences (2,326,001) (1,938,330) 11. Non-current assets classified as held for sale (113) (100) 12. Actuarial gains (losses) on defined-benefit plans (2,710,205) (2,408,473) 13. Revaluation reserves of investments valued at net equity (2,761,842) (1,934,873) 14. Special revaluation laws 277,020 277,020 Total (7,489,131) (4,327,092) The FX currency reserves as at 31 December 2018 mainly refer to the following currencies: • Turkish Lira: €2,808 million (negative), included in the share of the item “Revaluation reserves of investments valued at net equity” in accordance with IFRS11; • Ruble: €2,118 million (negative), included in the item “Exchange differences” and 35 (negative) included in the item “Revaluation reserves of investments valued at net equity”. The main variations in comparison to 31 December 2017 refer to: • negative variation of financial assets at fair value through other comprehensive income (available for sale financial assets ex IAS39) for €1.557million mainly due to Government securities; • negative change of Turkish Lira for €712 million included in the item “Revaluation reserves of investments valued at net equity”; • negative change of Ruble for €363 million included in the item “Exchange differences”. Section 14 - Minority shareholders‘ equity - Item 190 The table below shows a breakdown of minorities as at 31 December 2018. 14.1 Breakdown of item 190 "Shareholders' equity: minorities" (€ '000) 2018 2017 Equity investments in consolidated companies with minority interests 1,002,289 946,686 Fineco Bank S.p.A 516,594 492,790 Fineco Asset Management Designated Activity Company 10,416 218 Zagrebacka Banka D.D. 346,245 329,082 UniCredit Bank D.D. 65,112 62,740 UniCredit Bank Austria AG Group 63,922 61,856 Other equity investments and other consolidation adjustments (75,107) (52,603) Total 927,182 894,083 The shareholders' equity attributable to minority interests for 2018 amounted to €927 million. There are the following largest contributions attributable to the minority shareholders of Finecobank S.p.A, Zagrebacka Banka D.D. and its subsidiary UniCredit Bank D.D. and UniCredit Bank Austria AG Group, mainly referring to the minority shareholders of Card Complete Service Bank AG. 14.2 Capital instruments:breakdown and annual changes There are no equity instruments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 246 2018 Annual Report and Accounts · UniCredit 13.6 Other Information Revaluation reserve: breakdown (€ '000) AMOUNTS AS AT ITEM/TYPES 12.31.2018 12.31.2017 1. Equity instruments designated at fair value through other comprehensive income (265,206) 2. Financial Assets (other than equity instruments) at fair value through other comprehensive income 183,130 Available for sale financial assets (ex IAS39) 1,474,818 3. Hedging of equity instruments at fair value through other comprehensive income - 4. Financial liabilities at fair value through profit or loss (changes in own credit risk) 41,377 5. Hedging instruments (non-designated elements) - 6. Property, plant and equipment - - 7. Intangible assets - - 8. Hedges of foreign investments - - 9. Cash-flow hedges 72,709 202,846 10. Exchange differences (2,326,001) (1,938,330) 11. Non-current assets classified as held for sale (113) (100) 12. Actuarial gains (losses) on defined-benefit plans (2,710,205) (2,408,473) 13. Revaluation reserves of investments valued at net equity (2,761,842) (1,934,873) 14. Special revaluation laws 277,020 277,020 Total (7,489,131) (4,327,092) The FX currency reserves as at 31 December 2018 mainly refer to the following currencies: • Turkish Lira: €2,808 million (negative), included in the share of the item “Revaluation reserves of investments valued at net equity” in accordance with IFRS11; • Ruble: €2,118 million (negative), included in the item “Exchange differences” and 35 (negative) included in the item “Revaluation reserves of investments valued at net equity”. The main variations in comparison to 31 December 2017 refer to: • negative variation of financial assets at fair value through other comprehensive income (available for sale financial assets ex IAS39) for €1.557million mainly due to Government securities; • negative change of Turkish Lira for €712 million included in the item “Revaluation reserves of investments valued at net equity”; • negative change of Ruble for €363 million included in the item “Exchange differences”. Section 14 - Minority shareholders‘ equity - Item 190 The table below shows a breakdown of minorities as at 31 December 2018. 14.1 Breakdown of item 190 "Shareholders' equity: minorities" (€ '000) 2018 2017 Equity investments in consolidated companies with minority interests 1,002,289 946,686 Fineco Bank S.p.A 516,594 492,790 Fineco Asset Management Designated Activity Company 10,416 218 Zagrebacka Banka D.D. 346,245 329,082 UniCredit Bank D.D. 65,112 62,740 UniCredit Bank Austria AG Group 63,922 61,856 Other equity investments and other consolidation adjustments (75,107) (52,603) Total 927,182 894,083 The shareholders' equity attributable to minority interests for 2018 amounted to €927 million. There are the following largest contributions attributable to the minority shareholders of Finecobank S.p.A, Zagrebacka Banka D.D. and its subsidiary UniCredit Bank D.D. and UniCredit Bank Austria AG Group, mainly referring to the minority shareholders of Card Complete Service Bank AG. 14.2 Capital instruments:breakdown and annual changes There are no equity instruments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 246 2018 Annual Report and Accounts · UniCredit 13.6 Other Information Revaluation reserve: breakdown (€ '000) AMOUNTS AS AT ITEM/TYPES 12.31.2018 12.31.2017 1. Equity instruments designated at fair value through other comprehensive income (265,206) 2. Financial Assets (other than equity instruments) at fair value through other comprehensive income 183,130 Available for sale financial assets (ex IAS39) 1,474,818 3. Hedging of equity instruments at fair value through other comprehensive income - 4. Financial liabilities at fair value through profit or loss (changes in own credit risk) 41,377 5. Hedging instruments (non-designated elements) - 6. Property, plant and equipment - - 7. Intangible assets - - 8. Hedges of foreign investments - - 9. Cash-flow hedges 72,709 202,846 10. Exchange differences (2,326,001) (1,938,330) 11. Non-current assets classified as held for sale (113) (100) 12. Actuarial gains (losses) on defined-benefit plans (2,710,205) (2,408,473) 13. Revaluation reserves of investments valued at net equity (2,761,842) (1,934,873) 14. Special revaluation laws 277,020 277,020 Total (7,489,131) (4,327,092) The FX currency reserves as at 31 December 2018 mainly refer to the following currencies: • Turkish Lira: €2,808 million (negative), included in the share of the item “Revaluation reserves of investments valued at net equity” in accordance with IFRS11; • Ruble: €2,118 million (negative), included in the item “Exchange differences” and 35 (negative) included in the item “Revaluation reserves of investments valued at net equity”. The main variations in comparison to 31 December 2017 refer to: • negative variation of financial assets at fair value through other comprehensive income (available for sale financial assets ex IAS39) for €1.557million mainly due to Government securities; • negative change of Turkish Lira for €712 million included in the item “Revaluation reserves of investments valued at net equity”; • negative change of Ruble for €363 million included in the item “Exchange differences”. Section 14 - Minority shareholders‘ equity - Item 190 The table below shows a breakdown of minorities as at 31 December 2018. 14.1 Breakdown of item 190 "Shareholders' equity: minorities" (€ '000) 2018 2017 Equity investments in consolidated companies with minority interests 1,002,289 946,686 Fineco Bank S.p.A 516,594 492,790 Fineco Asset Management Designated Activity Company 10,416 218 Zagrebacka Banka D.D. 346,245 329,082 UniCredit Bank D.D. 65,112 62,740 UniCredit Bank Austria AG Group 63,922 61,856 Other equity investments and other consolidation adjustments (75,107) (52,603) Total 927,182 894,083 The shareholders' equity attributable to minority interests for 2018 amounted to €927 million. There are the following largest contributions attributable to the minority shareholders of Finecobank S.p.A, Zagrebacka Banka D.D. and its subsidiary UniCredit Bank D.D. and UniCredit Bank Austria AG Group, mainly referring to the minority shareholders of Card Complete Service Bank AG. 14.2 Capital instruments:breakdown and annual changes There are no equity instruments. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 247 Other information 1. Commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS OF COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL 1. Loan commitments given 143,937,806 11,053,271 918,892 155,909,969 a) Central Banks 235 - - 235 b) Governments and other Public Sector Entities 6,387,089 1,279,232 2,454 7,668,775 c) Banks 2,317,968 185,974 254 2,504,196 d) Other financial companies 25,387,034 595,400 115,138 26,097,572 e) Non-financial companies 100,395,487 5,774,538 780,347 106,950,372 f) Households 9,449,993 3,218,127 20,699 12,688,819 2. Financial guarantees given 48,597,590 2,716,786 1,563,742 52,878,118 a) Central Banks 5,818 - - 5,818 b) Governments and other Public Sector Entities 322,171 10,581 30 332,782 c) Banks 8,998,386 169,787 - 9,168,173 d) Other financial companies 6,107,060 107,280 10,705 6,225,045 e) Non-financial companies 32,795,639 2,366,640 1,546,977 36,709,256 f) Households 368,516 62,498 6,030 437,044 2. Others commitments and others guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS 1. Others guarantees given 20,800,877 of which: non-performing loans 176,810 a) Central Banks - b) Governments and other Public Sector Entities 4,311 c) Banks 1,934,058 d) Other financial companies 4,621,511 e) Non-financial companies 14,212,280 f) Households 28,717 2. Others commitments 93,434,655 of which: non-performing loans 1,798,699 a) Central Banks 1,581,586 b) Governments and other Public Sector Entities 1,360,840 c) Banks 17,593,209 d) Other financial companies 9,138,074 e) Non-financial companies 58,361,706 f) Households 5,399,240 Table “1. Commitments and financial guarantees given” shows commitments and guarantees evaluated according to the IFRS9 requirements. Table “2. Others commitments and others guarantees given” shows commitments and guarantees that are not evaluated according to the IFRS9 requirements. Note that starting from 31 December 2018, according of the 5th update of Banca d’Italia Circular 262, the tables also include the revocable commitments and the item “financial guarantees” also includes the commercial ones. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 247 Other information 1. Commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS OF COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL 1. Loan commitments given 143,937,806 11,053,271 918,892 155,909,969 a) Central Banks 235 - - 235 b) Governments and other Public Sector Entities 6,387,089 1,279,232 2,454 7,668,775 c) Banks 2,317,968 185,974 254 2,504,196 d) Other financial companies 25,387,034 595,400 115,138 26,097,572 e) Non-financial companies 100,395,487 5,774,538 780,347 106,950,372 f) Households 9,449,993 3,218,127 20,699 12,688,819 2. Financial guarantees given 48,597,590 2,716,786 1,563,742 52,878,118 a) Central Banks 5,818 - - 5,818 b) Governments and other Public Sector Entities 322,171 10,581 30 332,782 c) Banks 8,998,386 169,787 - 9,168,173 d) Other financial companies 6,107,060 107,280 10,705 6,225,045 e) Non-financial companies 32,795,639 2,366,640 1,546,977 36,709,256 f) Households 368,516 62,498 6,030 437,044 2. Others commitments and others guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS 1. Others guarantees given 20,800,877 of which: non-performing loans 176,810 a) Central Banks - b) Governments and other Public Sector Entities 4,311 c) Banks 1,934,058 d) Other financial companies 4,621,511 e) Non-financial companies 14,212,280 f) Households 28,717 2. Others commitments 93,434,655 of which: non-performing loans 1,798,699 a) Central Banks 1,581,586 b) Governments and other Public Sector Entities 1,360,840 c) Banks 17,593,209 d) Other financial companies 9,138,074 e) Non-financial companies 58,361,706 f) Households 5,399,240 Table “1. Commitments and financial guarantees given” shows commitments and guarantees evaluated according to the IFRS9 requirements. Table “2. Others commitments and others guarantees given” shows commitments and guarantees that are not evaluated according to the IFRS9 requirements. Note that starting from 31 December 2018, according of the 5th update of Banca d’Italia Circular 262, the tables also include the revocable commitments and the item “financial guarantees” also includes the commercial ones. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 247 Other information 1. Commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS OF COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL 1. Loan commitments given 143,937,806 11,053,271 918,892 155,909,969 a) Central Banks 235 - - 235 b) Governments and other Public Sector Entities 6,387,089 1,279,232 2,454 7,668,775 c) Banks 2,317,968 185,974 254 2,504,196 d) Other financial companies 25,387,034 595,400 115,138 26,097,572 e) Non-financial companies 100,395,487 5,774,538 780,347 106,950,372 f) Households 9,449,993 3,218,127 20,699 12,688,819 2. Financial guarantees given 48,597,590 2,716,786 1,563,742 52,878,118 a) Central Banks 5,818 - - 5,818 b) Governments and other Public Sector Entities 322,171 10,581 30 332,782 c) Banks 8,998,386 169,787 - 9,168,173 d) Other financial companies 6,107,060 107,280 10,705 6,225,045 e) Non-financial companies 32,795,639 2,366,640 1,546,977 36,709,256 f) Households 368,516 62,498 6,030 437,044 2. Others commitments and others guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS 1. Others guarantees given 20,800,877 of which: non-performing loans 176,810 a) Central Banks - b) Governments and other Public Sector Entities 4,311 c) Banks 1,934,058 d) Other financial companies 4,621,511 e) Non-financial companies 14,212,280 f) Households 28,717 2. Others commitments 93,434,655 of which: non-performing loans 1,798,699 a) Central Banks 1,581,586 b) Governments and other Public Sector Entities 1,360,840 c) Banks 17,593,209 d) Other financial companies 9,138,074 e) Non-financial companies 58,361,706 f) Households 5,399,240 Table “1. Commitments and financial guarantees given” shows commitments and guarantees evaluated according to the IFRS9 requirements. Table “2. Others commitments and others guarantees given” shows commitments and guarantees that are not evaluated according to the IFRS9 requirements. Note that starting from 31 December 2018, according of the 5th update of Banca d’Italia Circular 262, the tables also include the revocable commitments and the item “financial guarantees” also includes the commercial ones. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 247 Other information 1. Commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS OF COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL 1. Loan commitments given 143,937,806 11,053,271 918,892 155,909,969 a) Central Banks 235 - - 235 b) Governments and other Public Sector Entities 6,387,089 1,279,232 2,454 7,668,775 c) Banks 2,317,968 185,974 254 2,504,196 d) Other financial companies 25,387,034 595,400 115,138 26,097,572 e) Non-financial companies 100,395,487 5,774,538 780,347 106,950,372 f) Households 9,449,993 3,218,127 20,699 12,688,819 2. Financial guarantees given 48,597,590 2,716,786 1,563,742 52,878,118 a) Central Banks 5,818 - - 5,818 b) Governments and other Public Sector Entities 322,171 10,581 30 332,782 c) Banks 8,998,386 169,787 - 9,168,173 d) Other financial companies 6,107,060 107,280 10,705 6,225,045 e) Non-financial companies 32,795,639 2,366,640 1,546,977 36,709,256 f) Households 368,516 62,498 6,030 437,044 2. Others commitments and others guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS 1. Others guarantees given 20,800,877 of which: non-performing loans 176,810 a) Central Banks - b) Governments and other Public Sector Entities 4,311 c) Banks 1,934,058 d) Other financial companies 4,621,511 e) Non-financial companies 14,212,280 f) Households 28,717 2. Others commitments 93,434,655 of which: non-performing loans 1,798,699 a) Central Banks 1,581,586 b) Governments and other Public Sector Entities 1,360,840 c) Banks 17,593,209 d) Other financial companies 9,138,074 e) Non-financial companies 58,361,706 f) Households 5,399,240 Table “1. Commitments and financial guarantees given” shows commitments and guarantees evaluated according to the IFRS9 requirements. Table “2. Others commitments and others guarantees given” shows commitments and guarantees that are not evaluated according to the IFRS9 requirements. Note that starting from 31 December 2018, according of the 5th update of Banca d’Italia Circular 262, the tables also include the revocable commitments and the item “financial guarantees” also includes the commercial ones. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 247 Other information 1. Commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS OF COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL 1. Loan commitments given 143,937,806 11,053,271 918,892 155,909,969 a) Central Banks 235 - - 235 b) Governments and other Public Sector Entities 6,387,089 1,279,232 2,454 7,668,775 c) Banks 2,317,968 185,974 254 2,504,196 d) Other financial companies 25,387,034 595,400 115,138 26,097,572 e) Non-financial companies 100,395,487 5,774,538 780,347 106,950,372 f) Households 9,449,993 3,218,127 20,699 12,688,819 2. Financial guarantees given 48,597,590 2,716,786 1,563,742 52,878,118 a) Central Banks 5,818 - - 5,818 b) Governments and other Public Sector Entities 322,171 10,581 30 332,782 c) Banks 8,998,386 169,787 - 9,168,173 d) Other financial companies 6,107,060 107,280 10,705 6,225,045 e) Non-financial companies 32,795,639 2,366,640 1,546,977 36,709,256 f) Households 368,516 62,498 6,030 437,044 2. Others commitments and others guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS 1. Others guarantees given 20,800,877 of which: non-performing loans 176,810 a) Central Banks - b) Governments and other Public Sector Entities 4,311 c) Banks 1,934,058 d) Other financial companies 4,621,511 e) Non-financial companies 14,212,280 f) Households 28,717 2. Others commitments 93,434,655 of which: non-performing loans 1,798,699 a) Central Banks 1,581,586 b) Governments and other Public Sector Entities 1,360,840 c) Banks 17,593,209 d) Other financial companies 9,138,074 e) Non-financial companies 58,361,706 f) Households 5,399,240 Table “1. Commitments and financial guarantees given” shows commitments and guarantees evaluated according to the IFRS9 requirements. Table “2. Others commitments and others guarantees given” shows commitments and guarantees that are not evaluated according to the IFRS9 requirements. Note that starting from 31 December 2018, according of the 5th update of Banca d’Italia Circular 262, the tables also include the revocable commitments and the item “financial guarantees” also includes the commercial ones. Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 248 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1. Guarantees given and commitments (€ '000) AMOUNTS AS AT TRANSACTIONS 12.31.2017 1) Financial guarantees given to 17,287,523 a) Banks 7,606,760 b) Customers 9,680,763 2) Commercial guarantees given to 52,108,347 a) Banks 6,621,317 b) Customers 45,487,030 3) Other irrevocable commitments to disburse funds 102,475,548 a) Banks: 4,964,213 i) usage certain 3,578,944 ii) usage uncertain 1,385,269 b) Customers: 97,511,335 i) usage certain 26,035,690 ii) usage uncertain 71,475,645 4) Underlying obligations for credit derivatives: sales of protection - 5) Assets used to guarantee others' obligations 3,351 6) Other commitments 1,770,171 Total 173,644,940 3. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2018 1. Financial assets at fair value through profit or loss 18,936,898 2. Financial assets at fair value through other comprehensive income 39,909,906 3. Financial assets at amortised cost 115,324,765 4. Property, plant and equipment 44,471 of which: inventories of property, plant and equipment 2,023 Deposits from Banks include €55,329 million related to Central Banks' refinancing operations collateralized by securities and loans respectively amounting to nominal €47,553 million and €17,955 million. Regarding collateral securities, those not recognized on balance-sheet, since they represent repurchased or retained Group's financial liabilities, amount to nominal €25,092 million. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2017 1. Financial assets held for trading 18,802,509 2. Financial assets designated at fair value 7,817,814 3. Financial assets available for sale 51,594,634 4. Financial assets held to maturity 930,606 5. Loans and receivables with banks 1,042,497 6. Loans and receivables with customers 91,166,759 7. Property, plant and equipment 3,113 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 248 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1. Guarantees given and commitments (€ '000) AMOUNTS AS AT TRANSACTIONS 12.31.2017 1) Financial guarantees given to 17,287,523 a) Banks 7,606,760 b) Customers 9,680,763 2) Commercial guarantees given to 52,108,347 a) Banks 6,621,317 b) Customers 45,487,030 3) Other irrevocable commitments to disburse funds 102,475,548 a) Banks: 4,964,213 i) usage certain 3,578,944 ii) usage uncertain 1,385,269 b) Customers: 97,511,335 i) usage certain 26,035,690 ii) usage uncertain 71,475,645 4) Underlying obligations for credit derivatives: sales of protection - 5) Assets used to guarantee others' obligations 3,351 6) Other commitments 1,770,171 Total 173,644,940 3. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2018 1. Financial assets at fair value through profit or loss 18,936,898 2. Financial assets at fair value through other comprehensive income 39,909,906 3. Financial assets at amortised cost 115,324,765 4. Property, plant and equipment 44,471 of which: inventories of property, plant and equipment 2,023 Deposits from Banks include €55,329 million related to Central Banks' refinancing operations collateralized by securities and loans respectively amounting to nominal €47,553 million and €17,955 million. Regarding collateral securities, those not recognized on balance-sheet, since they represent repurchased or retained Group's financial liabilities, amount to nominal €25,092 million. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2017 1. Financial assets held for trading 18,802,509 2. Financial assets designated at fair value 7,817,814 3. Financial assets available for sale 51,594,634 4. Financial assets held to maturity 930,606 5. Loans and receivables with banks 1,042,497 6. Loans and receivables with customers 91,166,759 7. Property, plant and equipment 3,113 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 248 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1. Guarantees given and commitments (€ '000) AMOUNTS AS AT TRANSACTIONS 12.31.2017 1) Financial guarantees given to 17,287,523 a) Banks 7,606,760 b) Customers 9,680,763 2) Commercial guarantees given to 52,108,347 a) Banks 6,621,317 b) Customers 45,487,030 3) Other irrevocable commitments to disburse funds 102,475,548 a) Banks: 4,964,213 i) usage certain 3,578,944 ii) usage uncertain 1,385,269 b) Customers: 97,511,335 i) usage certain 26,035,690 ii) usage uncertain 71,475,645 4) Underlying obligations for credit derivatives: sales of protection - 5) Assets used to guarantee others' obligations 3,351 6) Other commitments 1,770,171 Total 173,644,940 3. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2018 1. Financial assets at fair value through profit or loss 18,936,898 2. Financial assets at fair value through other comprehensive income 39,909,906 3. Financial assets at amortised cost 115,324,765 4. Property, plant and equipment 44,471 of which: inventories of property, plant and equipment 2,023 Deposits from Banks include €55,329 million related to Central Banks' refinancing operations collateralized by securities and loans respectively amounting to nominal €47,553 million and €17,955 million. Regarding collateral securities, those not recognized on balance-sheet, since they represent repurchased or retained Group's financial liabilities, amount to nominal €25,092 million. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2017 1. Financial assets held for trading 18,802,509 2. Financial assets designated at fair value 7,817,814 3. Financial assets available for sale 51,594,634 4. Financial assets held to maturity 930,606 5. Loans and receivables with banks 1,042,497 6. Loans and receivables with customers 91,166,759 7. Property, plant and equipment 3,113 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 248 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1. Guarantees given and commitments (€ '000) AMOUNTS AS AT TRANSACTIONS 12.31.2017 1) Financial guarantees given to 17,287,523 a) Banks 7,606,760 b) Customers 9,680,763 2) Commercial guarantees given to 52,108,347 a) Banks 6,621,317 b) Customers 45,487,030 3) Other irrevocable commitments to disburse funds 102,475,548 a) Banks: 4,964,213 i) usage certain 3,578,944 ii) usage uncertain 1,385,269 b) Customers: 97,511,335 i) usage certain 26,035,690 ii) usage uncertain 71,475,645 4) Underlying obligations for credit derivatives: sales of protection - 5) Assets used to guarantee others' obligations 3,351 6) Other commitments 1,770,171 Total 173,644,940 3. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2018 1. Financial assets at fair value through profit or loss 18,936,898 2. Financial assets at fair value through other comprehensive income 39,909,906 3. Financial assets at amortised cost 115,324,765 4. Property, plant and equipment 44,471 of which: inventories of property, plant and equipment 2,023 Deposits from Banks include €55,329 million related to Central Banks' refinancing operations collateralized by securities and loans respectively amounting to nominal €47,553 million and €17,955 million. Regarding collateral securities, those not recognized on balance-sheet, since they represent repurchased or retained Group's financial liabilities, amount to nominal €25,092 million. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2017 1. Financial assets held for trading 18,802,509 2. Financial assets designated at fair value 7,817,814 3. Financial assets available for sale 51,594,634 4. Financial assets held to maturity 930,606 5. Loans and receivables with banks 1,042,497 6. Loans and receivables with customers 91,166,759 7. Property, plant and equipment 3,113 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 248 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1. Guarantees given and commitments (€ '000) AMOUNTS AS AT TRANSACTIONS 12.31.2017 1) Financial guarantees given to 17,287,523 a) Banks 7,606,760 b) Customers 9,680,763 2) Commercial guarantees given to 52,108,347 a) Banks 6,621,317 b) Customers 45,487,030 3) Other irrevocable commitments to disburse funds 102,475,548 a) Banks: 4,964,213 i) usage certain 3,578,944 ii) usage uncertain 1,385,269 b) Customers: 97,511,335 i) usage certain 26,035,690 ii) usage uncertain 71,475,645 4) Underlying obligations for credit derivatives: sales of protection - 5) Assets used to guarantee others' obligations 3,351 6) Other commitments 1,770,171 Total 173,644,940 3. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2018 1. Financial assets at fair value through profit or loss 18,936,898 2. Financial assets at fair value through other comprehensive income 39,909,906 3. Financial assets at amortised cost 115,324,765 4. Property, plant and equipment 44,471 of which: inventories of property, plant and equipment 2,023 Deposits from Banks include €55,329 million related to Central Banks' refinancing operations collateralized by securities and loans respectively amounting to nominal €47,553 million and €17,955 million. Regarding collateral securities, those not recognized on balance-sheet, since they represent repurchased or retained Group's financial liabilities, amount to nominal €25,092 million. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2017 1. Financial assets held for trading 18,802,509 2. Financial assets designated at fair value 7,817,814 3. Financial assets available for sale 51,594,634 4. Financial assets held to maturity 930,606 5. Loans and receivables with banks 1,042,497 6. Loans and receivables with customers 91,166,759 7. Property, plant and equipment 3,113 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 249 4. Operating leases (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Lessee information Operating leases Future minimum non-cancellable lease payments - Up to 12 months 80,464 103,952 - 1 to 5 years 211,445 232,639 - Over 5 years 68,726 33,772 Total amounts 360,635 370,363 Future minimum non-cancellable lease payments (to be received) Total payments 16,158 - Lessor information Operating leases Future minimum non-cancellable lease payments (to be received) - Up to 12 months 72,143 74,197 - 1 to 5 years 138,051 236,102 - Over 5 years 100,868 117,863 Total amounts 311,062 428,162 5.Breakdown of investments relating to unit-linked and index-linked policies There were no transactions concerning unit-linked and index-linked policies. 6. Asset management and trading on behalf of third parties (€ '000) AMOUNTS AS AT TYPE OF SERVICES 12.31.2018 12.31.2017 1. Execution of orders on behalf of customers a) Purchases 262,632,345 244,431,921 1. Settled 262,082,758 243,669,820 2. Unsettled 549,587 762,101 b) Sales 242,723,828 243,890,342 1. Settled 242,144,087 243,219,250 2. Unsettled 579,741 671,092 2. Portfolio management a) Individual 39,376,541 25,002,951 b) Collective 59,197,495 44,191,074 3. Custody and administration of securities a) Third party securities on deposits: relating to depositary bank activities (excluding portfolio management) 13,386,818 20,008,705 1. Securities issued by companies included in consolidation 9,029,947 13,697,178 2. Other securities 4,356,871 6,311,527 b) Third party securities held in deposits (excluding portfolio management): other 235,430,016 337,489,379 1. Securities issued by companies included in consolidation 10,287,426 15,821,275 2. Other securities 225,142,590 321,668,104 c) Third party securities deposited with third parties 195,124,371 226,935,726 d) Property securities deposited with third parties 101,048,094 93,362,677 4. Other transactions 9,775,709 15,000,953 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 249 4. Operating leases (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Lessee information Operating leases Future minimum non-cancellable lease payments - Up to 12 months 80,464 103,952 - 1 to 5 years 211,445 232,639 - Over 5 years 68,726 33,772 Total amounts 360,635 370,363 Future minimum non-cancellable lease payments (to be received) Total payments 16,158 - Lessor information Operating leases Future minimum non-cancellable lease payments (to be received) - Up to 12 months 72,143 74,197 - 1 to 5 years 138,051 236,102 - Over 5 years 100,868 117,863 Total amounts 311,062 428,162 5.Breakdown of investments relating to unit-linked and index-linked policies There were no transactions concerning unit-linked and index-linked policies. 6. Asset management and trading on behalf of third parties (€ '000) AMOUNTS AS AT TYPE OF SERVICES 12.31.2018 12.31.2017 1. Execution of orders on behalf of customers a) Purchases 262,632,345 244,431,921 1. Settled 262,082,758 243,669,820 2. Unsettled 549,587 762,101 b) Sales 242,723,828 243,890,342 1. Settled 242,144,087 243,219,250 2. Unsettled 579,741 671,092 2. Portfolio management a) Individual 39,376,541 25,002,951 b) Collective 59,197,495 44,191,074 3. Custody and administration of securities a) Third party securities on deposits: relating to depositary bank activities (excluding portfolio management) 13,386,818 20,008,705 1. Securities issued by companies included in consolidation 9,029,947 13,697,178 2. Other securities 4,356,871 6,311,527 b) Third party securities held in deposits (excluding portfolio management): other 235,430,016 337,489,379 1. Securities issued by companies included in consolidation 10,287,426 15,821,275 2. Other securities 225,142,590 321,668,104 c) Third party securities deposited with third parties 195,124,371 226,935,726 d) Property securities deposited with third parties 101,048,094 93,362,677 4. Other transactions 9,775,709 15,000,953 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 249 4. Operating leases (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Lessee information Operating leases Future minimum non-cancellable lease payments - Up to 12 months 80,464 103,952 - 1 to 5 years 211,445 232,639 - Over 5 years 68,726 33,772 Total amounts 360,635 370,363 Future minimum non-cancellable lease payments (to be received) Total payments 16,158 - Lessor information Operating leases Future minimum non-cancellable lease payments (to be received) - Up to 12 months 72,143 74,197 - 1 to 5 years 138,051 236,102 - Over 5 years 100,868 117,863 Total amounts 311,062 428,162 5.Breakdown of investments relating to unit-linked and index-linked policies There were no transactions concerning unit-linked and index-linked policies. 6. Asset management and trading on behalf of third parties (€ '000) AMOUNTS AS AT TYPE OF SERVICES 12.31.2018 12.31.2017 1. Execution of orders on behalf of customers a) Purchases 262,632,345 244,431,921 1. Settled 262,082,758 243,669,820 2. Unsettled 549,587 762,101 b) Sales 242,723,828 243,890,342 1. Settled 242,144,087 243,219,250 2. Unsettled 579,741 671,092 2. Portfolio management a) Individual 39,376,541 25,002,951 b) Collective 59,197,495 44,191,074 3. Custody and administration of securities a) Third party securities on deposits: relating to depositary bank activities (excluding portfolio management) 13,386,818 20,008,705 1. Securities issued by companies included in consolidation 9,029,947 13,697,178 2. Other securities 4,356,871 6,311,527 b) Third party securities held in deposits (excluding portfolio management): other 235,430,016 337,489,379 1. Securities issued by companies included in consolidation 10,287,426 15,821,275 2. Other securities 225,142,590 321,668,104 c) Third party securities deposited with third parties 195,124,371 226,935,726 d) Property securities deposited with third parties 101,048,094 93,362,677 4. Other transactions 9,775,709 15,000,953 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 249 4. Operating leases (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Lessee information Operating leases Future minimum non-cancellable lease payments - Up to 12 months 80,464 103,952 - 1 to 5 years 211,445 232,639 - Over 5 years 68,726 33,772 Total amounts 360,635 370,363 Future minimum non-cancellable lease payments (to be received) Total payments 16,158 - Lessor information Operating leases Future minimum non-cancellable lease payments (to be received) - Up to 12 months 72,143 74,197 - 1 to 5 years 138,051 236,102 - Over 5 years 100,868 117,863 Total amounts 311,062 428,162 5.Breakdown of investments relating to unit-linked and index-linked policies There were no transactions concerning unit-linked and index-linked policies. 6. Asset management and trading on behalf of third parties (€ '000) AMOUNTS AS AT TYPE OF SERVICES 12.31.2018 12.31.2017 1. Execution of orders on behalf of customers a) Purchases 262,632,345 244,431,921 1. Settled 262,082,758 243,669,820 2. Unsettled 549,587 762,101 b) Sales 242,723,828 243,890,342 1. Settled 242,144,087 243,219,250 2. Unsettled 579,741 671,092 2. Portfolio management a) Individual 39,376,541 25,002,951 b) Collective 59,197,495 44,191,074 3. Custody and administration of securities a) Third party securities on deposits: relating to depositary bank activities (excluding portfolio management) 13,386,818 20,008,705 1. Securities issued by companies included in consolidation 9,029,947 13,697,178 2. Other securities 4,356,871 6,311,527 b) Third party securities held in deposits (excluding portfolio management): other 235,430,016 337,489,379 1. Securities issued by companies included in consolidation 10,287,426 15,821,275 2. Other securities 225,142,590 321,668,104 c) Third party securities deposited with third parties 195,124,371 226,935,726 d) Property securities deposited with third parties 101,048,094 93,362,677 4. Other transactions 9,775,709 15,000,953 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 249 4. Operating leases (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Lessee information Operating leases Future minimum non-cancellable lease payments - Up to 12 months 80,464 103,952 - 1 to 5 years 211,445 232,639 - Over 5 years 68,726 33,772 Total amounts 360,635 370,363 Future minimum non-cancellable lease payments (to be received) Total payments 16,158 - Lessor information Operating leases Future minimum non-cancellable lease payments (to be received) - Up to 12 months 72,143 74,197 - 1 to 5 years 138,051 236,102 - Over 5 years 100,868 117,863 Total amounts 311,062 428,162 5.Breakdown of investments relating to unit-linked and index-linked policies There were no transactions concerning unit-linked and index-linked policies. 6. Asset management and trading on behalf of third parties (€ '000) AMOUNTS AS AT TYPE OF SERVICES 12.31.2018 12.31.2017 1. Execution of orders on behalf of customers a) Purchases 262,632,345 244,431,921 1. Settled 262,082,758 243,669,820 2. Unsettled 549,587 762,101 b) Sales 242,723,828 243,890,342 1. Settled 242,144,087 243,219,250 2. Unsettled 579,741 671,092 2. Portfolio management a) Individual 39,376,541 25,002,951 b) Collective 59,197,495 44,191,074 3. Custody and administration of securities a) Third party securities on deposits: relating to depositary bank activities (excluding portfolio management) 13,386,818 20,008,705 1. Securities issued by companies included in consolidation 9,029,947 13,697,178 2. Other securities 4,356,871 6,311,527 b) Third party securities held in deposits (excluding portfolio management): other 235,430,016 337,489,379 1. Securities issued by companies included in consolidation 10,287,426 15,821,275 2. Other securities 225,142,590 321,668,104 c) Third party securities deposited with third parties 195,124,371 226,935,726 d) Property securities deposited with third parties 101,048,094 93,362,677 4. Other transactions 9,775,709 15,000,953 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 250 2018 Annual Report and Accounts · UniCredit 7. Financial assets subject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL ASSETS FINANCIAL LIABILITIES OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL ASSETS RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 49,544,772 16,198,749 33,346,023 19,735,083 6,414,738 7,196,202 9,314,917 2. Reverse repos 68,344,477 4,487,942 63,856,535 46,752,500 129,423 16,974,612 (2,343,707) 3. Securities lending 444 - 444 443 - 1 179 4. Others 127,539,740 3,581,679 123,958,061 - - 123,958,061 55,293,936 Total 12.31.2018 245,429,433 24,268,370 221,161,063 66,488,026 6,544,161 148,128,876 X Total 12.31.2017 133,807,076 22,729,887 111,077,189 41,305,115 7,506,749 X 62,265,325 Financial derivative assets offset in balance sheet by financial liabilities (column “B” item 1. Derivatives) mainly refers to derivative contracts settled with Central Clearing Counterparts (CCPs). 8. Financial liabilities aubject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL LIABILITIES FINANCIAL ASSETS OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL LIABILITIES RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 51,624,658 18,130,728 33,493,930 19,875,521 8,845,798 4,772,611 5,933,042 2. Reverse repos 89,000,469 4,487,942 84,512,527 46,594,864 302,854 37,614,809 256,499 3. Securities lending 208,706 - 208,706 200,314 - 8,392 177,878 4. Others 166,340,842 1,649,702 164,691,140 - - 164,691,140 84,106,161 Total 12.31.2018 307,174,675 24,268,372 282,906,303 66,670,699 9,148,652 207,086,952 X Total 12.31.2017 168,431,673 22,729,886 145,701,787 46,827,884 8,400,323 X 90,473,580 Financial derivative liabilities offset in balance sheet by financial assets (column “B” item 1.Derivatives) mainly refers to derivative contracts settled with Central Clearing Counterparts (CCPs). 9. Security borrowing transactions (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS OF THE SECURITIES BORROWED/TRANSACTION PURPOSES TYPE OF LENDER GIVEN AS COLLATERAL IN OWN FUNDING TRANSACTIONS SOLD SOLD IN REPO TRANSACTIONS OTHER PURPOSES A. Banks 31,766 948,982 4,457,154 2,104,786 B. Financial companies 1,016 75,810 1,691,016 576,240 C. Insurance companies - - 314,630 34,075 D. Non-financial companies - 2,651 43,836 17,013 E. Others - 7,900 1,317,352 30,078 Total 32,782 1,035,343 7,823,988 2,762,192 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 250 2018 Annual Report and Accounts · UniCredit 7. Financial assets subject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL ASSETS FINANCIAL LIABILITIES OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL ASSETS RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 49,544,772 16,198,749 33,346,023 19,735,083 6,414,738 7,196,202 9,314,917 2. Reverse repos 68,344,477 4,487,942 63,856,535 46,752,500 129,423 16,974,612 (2,343,707) 3. Securities lending 444 - 444 443 - 1 179 4. Others 127,539,740 3,581,679 123,958,061 - - 123,958,061 55,293,936 Total 12.31.2018 245,429,433 24,268,370 221,161,063 66,488,026 6,544,161 148,128,876 X Total 12.31.2017 133,807,076 22,729,887 111,077,189 41,305,115 7,506,749 X 62,265,325 Financial derivative assets offset in balance sheet by financial liabilities (column “B” item 1. Derivatives) mainly refers to derivative contracts settled with Central Clearing Counterparts (CCPs). 8. Financial liabilities aubject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL LIABILITIES FINANCIAL ASSETS OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL LIABILITIES RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 51,624,658 18,130,728 33,493,930 19,875,521 8,845,798 4,772,611 5,933,042 2. Reverse repos 89,000,469 4,487,942 84,512,527 46,594,864 302,854 37,614,809 256,499 3. Securities lending 208,706 - 208,706 200,314 - 8,392 177,878 4. Others 166,340,842 1,649,702 164,691,140 - - 164,691,140 84,106,161 Total 12.31.2018 307,174,675 24,268,372 282,906,303 66,670,699 9,148,652 207,086,952 X Total 12.31.2017 168,431,673 22,729,886 145,701,787 46,827,884 8,400,323 X 90,473,580 Financial derivative liabilities offset in balance sheet by financial assets (column “B” item 1.Derivatives) mainly refers to derivative contracts settled with Central Clearing Counterparts (CCPs). 9. Security borrowing transactions (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS OF THE SECURITIES BORROWED/TRANSACTION PURPOSES TYPE OF LENDER GIVEN AS COLLATERAL IN OWN FUNDING TRANSACTIONS SOLD SOLD IN REPO TRANSACTIONS OTHER PURPOSES A. Banks 31,766 948,982 4,457,154 2,104,786 B. Financial companies 1,016 75,810 1,691,016 576,240 C. Insurance companies - - 314,630 34,075 D. Non-financial companies - 2,651 43,836 17,013 E. Others - 7,900 1,317,352 30,078 Total 32,782 1,035,343 7,823,988 2,762,192 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 250 2018 Annual Report and Accounts · UniCredit 7. Financial assets subject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL ASSETS FINANCIAL LIABILITIES OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL ASSETS RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 49,544,772 16,198,749 33,346,023 19,735,083 6,414,738 7,196,202 9,314,917 2. Reverse repos 68,344,477 4,487,942 63,856,535 46,752,500 129,423 16,974,612 (2,343,707) 3. Securities lending 444 - 444 443 - 1 179 4. Others 127,539,740 3,581,679 123,958,061 - - 123,958,061 55,293,936 Total 12.31.2018 245,429,433 24,268,370 221,161,063 66,488,026 6,544,161 148,128,876 X Total 12.31.2017 133,807,076 22,729,887 111,077,189 41,305,115 7,506,749 X 62,265,325 Financial derivative assets offset in balance sheet by financial liabilities (column “B” item 1. Derivatives) mainly refers to derivative contracts settled with Central Clearing Counterparts (CCPs). 8. Financial liabilities aubject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL LIABILITIES FINANCIAL ASSETS OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL LIABILITIES RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 51,624,658 18,130,728 33,493,930 19,875,521 8,845,798 4,772,611 5,933,042 2. Reverse repos 89,000,469 4,487,942 84,512,527 46,594,864 302,854 37,614,809 256,499 3. Securities lending 208,706 - 208,706 200,314 - 8,392 177,878 4. Others 166,340,842 1,649,702 164,691,140 - - 164,691,140 84,106,161 Total 12.31.2018 307,174,675 24,268,372 282,906,303 66,670,699 9,148,652 207,086,952 X Total 12.31.2017 168,431,673 22,729,886 145,701,787 46,827,884 8,400,323 X 90,473,580 Financial derivative liabilities offset in balance sheet by financial assets (column “B” item 1.Derivatives) mainly refers to derivative contracts settled with Central Clearing Counterparts (CCPs). 9. Security borrowing transactions (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS OF THE SECURITIES BORROWED/TRANSACTION PURPOSES TYPE OF LENDER GIVEN AS COLLATERAL IN OWN FUNDING TRANSACTIONS SOLD SOLD IN REPO TRANSACTIONS OTHER PURPOSES A. Banks 31,766 948,982 4,457,154 2,104,786 B. Financial companies 1,016 75,810 1,691,016 576,240 C. Insurance companies - - 314,630 34,075 D. Non-financial companies - 2,651 43,836 17,013 E. Others - 7,900 1,317,352 30,078 Total 32,782 1,035,343 7,823,988 2,762,192 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 250 2018 Annual Report and Accounts · UniCredit 7. Financial assets subject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL ASSETS FINANCIAL LIABILITIES OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL ASSETS RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 49,544,772 16,198,749 33,346,023 19,735,083 6,414,738 7,196,202 9,314,917 2. Reverse repos 68,344,477 4,487,942 63,856,535 46,752,500 129,423 16,974,612 (2,343,707) 3. Securities lending 444 - 444 443 - 1 179 4. Others 127,539,740 3,581,679 123,958,061 - - 123,958,061 55,293,936 Total 12.31.2018 245,429,433 24,268,370 221,161,063 66,488,026 6,544,161 148,128,876 X Total 12.31.2017 133,807,076 22,729,887 111,077,189 41,305,115 7,506,749 X 62,265,325 Financial derivative assets offset in balance sheet by financial liabilities (column “B” item 1. Derivatives) mainly refers to derivative contracts settled with Central Clearing Counterparts (CCPs). 8. Financial liabilities aubject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL LIABILITIES FINANCIAL ASSETS OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL LIABILITIES RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 51,624,658 18,130,728 33,493,930 19,875,521 8,845,798 4,772,611 5,933,042 2. Reverse repos 89,000,469 4,487,942 84,512,527 46,594,864 302,854 37,614,809 256,499 3. Securities lending 208,706 - 208,706 200,314 - 8,392 177,878 4. Others 166,340,842 1,649,702 164,691,140 - - 164,691,140 84,106,161 Total 12.31.2018 307,174,675 24,268,372 282,906,303 66,670,699 9,148,652 207,086,952 X Total 12.31.2017 168,431,673 22,729,886 145,701,787 46,827,884 8,400,323 X 90,473,580 Financial derivative liabilities offset in balance sheet by financial assets (column “B” item 1.Derivatives) mainly refers to derivative contracts settled with Central Clearing Counterparts (CCPs). 9. Security borrowing transactions (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS OF THE SECURITIES BORROWED/TRANSACTION PURPOSES TYPE OF LENDER GIVEN AS COLLATERAL IN OWN FUNDING TRANSACTIONS SOLD SOLD IN REPO TRANSACTIONS OTHER PURPOSES A. Banks 31,766 948,982 4,457,154 2,104,786 B. Financial companies 1,016 75,810 1,691,016 576,240 C. Insurance companies - - 314,630 34,075 D. Non-financial companies - 2,651 43,836 17,013 E. Others - 7,900 1,317,352 30,078 Total 32,782 1,035,343 7,823,988 2,762,192 Consolidated financial statements | Notes to the consolidated accounts Part B - Consolidated Balance Sheet - Liabilities 250 2018 Annual Report and Accounts · UniCredit 7. Financial assets subject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL ASSETS FINANCIAL LIABILITIES OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL ASSETS RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 49,544,772 16,198,749 33,346,023 19,735,083 6,414,738 7,196,202 9,314,917 2. Reverse repos 68,344,477 4,487,942 63,856,535 46,752,500 129,423 16,974,612 (2,343,707) 3. Securities lending 444 - 444 443 - 1 179 4. Others 127,539,740 3,581,679 123,958,061 - - 123,958,061 55,293,936 Total 12.31.2018 245,429,433 24,268,370 221,161,063 66,488,026 6,544,161 148,128,876 X Total 12.31.2017 133,807,076 22,729,887 111,077,189 41,305,115 7,506,749 X 62,265,325 Financial derivative assets offset in balance sheet by financial liabilities (column “B” item 1. Derivatives) mainly refers to derivative contracts settled with Central Clearing Counterparts (CCPs). 8. Financial liabilities aubject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL LIABILITIES FINANCIAL ASSETS OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL LIABILITIES RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 51,624,658 18,130,728 33,493,930 19,875,521 8,845,798 4,772,611 5,933,042 2. Reverse repos 89,000,469 4,487,942 84,512,527 46,594,864 302,854 37,614,809 256,499 3. Securities lending 208,706 - 208,706 200,314 - 8,392 177,878 4. Others 166,340,842 1,649,702 164,691,140 - - 164,691,140 84,106,161 Total 12.31.2018 307,174,675 24,268,372 282,906,303 66,670,699 9,148,652 207,086,952 X Total 12.31.2017 168,431,673 22,729,886 145,701,787 46,827,884 8,400,323 X 90,473,580 Financial derivative liabilities offset in balance sheet by financial assets (column “B” item 1.Derivatives) mainly refers to derivative contracts settled with Central Clearing Counterparts (CCPs). 9. Security borrowing transactions (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS OF THE SECURITIES BORROWED/TRANSACTION PURPOSES TYPE OF LENDER GIVEN AS COLLATERAL IN OWN FUNDING TRANSACTIONS SOLD SOLD IN REPO TRANSACTIONS OTHER PURPOSES A. Banks 31,766 948,982 4,457,154 2,104,786 B. Financial companies 1,016 75,810 1,691,016 576,240 C. Insurance companies - - 314,630 34,075 D. Non-financial companies - 2,651 43,836 17,013 E. Others - 7,900 1,317,352 30,078 Total 32,782 1,035,343 7,823,988 2,762,192 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 251 Part C - Consolidated income statement Section 1 - Interests - Items 10 and 20 1.1 Interest income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBT SECURITIES LOANS OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial assets at fair value through profit or loss 322,992 96,880 562,316 982,188 1.1 Financial assets held for trading 167,601 3,338 562,316 733,255 1.2 Financial assets designated at fair value 22 1 - 23 1.3 Other financial assets mandatorily at fair value 155,369 93,541 - 248,910 Financial assets held for trading (ex IAS39) 648,935 Financial assets at fair value through profit or loss (ex IAS39) 170,581 2. Financial assets at fair value through other comprehensive income 1,150,751 - X 1,150,751 Available-for-sale financial assets (ex IAS39) 1,533,115 3. Financial assets at amortised cost 370,581 11,467,962 X 11,838,543 3.1 Loans and advances to banks 28,296 654,653 X 682,949 3.2 Loans and advances to customers 342,285 10,813,309 X 11,155,594 Held-to-maturity investments (ex IAS39) 65,507 Loans and receivables with banks (ex IAS39) 266,741 Loans and receivables with customers (ex IAS39) 11,021,190 4. Hedging derivatives X X 392,370 392,370 902,321 5. Other assets X X 182,135 182,135 151,321 6. Other financial liabilities X X X 673,806 Total 1,844,324 11,564,842 1,136,821 15,219,793 14,759,711 of which: interest income on credit impaired financial assets 1,516 651,372 - 652,888 1.2.1 Interest income from financial assets denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Assets denominated in currency 4,192,718 3,983,853 1.2.2 Interest income from finance leases (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Financial lease transactions: potential rents recognised as income in the year 594,325 393,672 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 251 Part C - Consolidated income statement Section 1 - Interests - Items 10 and 20 1.1 Interest income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBT SECURITIES LOANS OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial assets at fair value through profit or loss 322,992 96,880 562,316 982,188 1.1 Financial assets held for trading 167,601 3,338 562,316 733,255 1.2 Financial assets designated at fair value 22 1 - 23 1.3 Other financial assets mandatorily at fair value 155,369 93,541 - 248,910 Financial assets held for trading (ex IAS39) 648,935 Financial assets at fair value through profit or loss (ex IAS39) 170,581 2. Financial assets at fair value through other comprehensive income 1,150,751 - X 1,150,751 Available-for-sale financial assets (ex IAS39) 1,533,115 3. Financial assets at amortised cost 370,581 11,467,962 X 11,838,543 3.1 Loans and advances to banks 28,296 654,653 X 682,949 3.2 Loans and advances to customers 342,285 10,813,309 X 11,155,594 Held-to-maturity investments (ex IAS39) 65,507 Loans and receivables with banks (ex IAS39) 266,741 Loans and receivables with customers (ex IAS39) 11,021,190 4. Hedging derivatives X X 392,370 392,370 902,321 5. Other assets X X 182,135 182,135 151,321 6. Other financial liabilities X X X 673,806 Total 1,844,324 11,564,842 1,136,821 15,219,793 14,759,711 of which: interest income on credit impaired financial assets 1,516 651,372 - 652,888 1.2.1 Interest income from financial assets denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Assets denominated in currency 4,192,718 3,983,853 1.2.2 Interest income from finance leases (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Financial lease transactions: potential rents recognised as income in the year 594,325 393,672 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 251 Part C - Consolidated income statement Section 1 - Interests - Items 10 and 20 1.1 Interest income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBT SECURITIES LOANS OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial assets at fair value through profit or loss 322,992 96,880 562,316 982,188 1.1 Financial assets held for trading 167,601 3,338 562,316 733,255 1.2 Financial assets designated at fair value 22 1 - 23 1.3 Other financial assets mandatorily at fair value 155,369 93,541 - 248,910 Financial assets held for trading (ex IAS39) 648,935 Financial assets at fair value through profit or loss (ex IAS39) 170,581 2. Financial assets at fair value through other comprehensive income 1,150,751 - X 1,150,751 Available-for-sale financial assets (ex IAS39) 1,533,115 3. Financial assets at amortised cost 370,581 11,467,962 X 11,838,543 3.1 Loans and advances to banks 28,296 654,653 X 682,949 3.2 Loans and advances to customers 342,285 10,813,309 X 11,155,594 Held-to-maturity investments (ex IAS39) 65,507 Loans and receivables with banks (ex IAS39) 266,741 Loans and receivables with customers (ex IAS39) 11,021,190 4. Hedging derivatives X X 392,370 392,370 902,321 5. Other assets X X 182,135 182,135 151,321 6. Other financial liabilities X X X 673,806 Total 1,844,324 11,564,842 1,136,821 15,219,793 14,759,711 of which: interest income on credit impaired financial assets 1,516 651,372 - 652,888 1.2.1 Interest income from financial assets denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Assets denominated in currency 4,192,718 3,983,853 1.2.2 Interest income from finance leases (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Financial lease transactions: potential rents recognised as income in the year 594,325 393,672 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 251 Part C - Consolidated income statement Section 1 - Interests - Items 10 and 20 1.1 Interest income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBT SECURITIES LOANS OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial assets at fair value through profit or loss 322,992 96,880 562,316 982,188 1.1 Financial assets held for trading 167,601 3,338 562,316 733,255 1.2 Financial assets designated at fair value 22 1 - 23 1.3 Other financial assets mandatorily at fair value 155,369 93,541 - 248,910 Financial assets held for trading (ex IAS39) 648,935 Financial assets at fair value through profit or loss (ex IAS39) 170,581 2. Financial assets at fair value through other comprehensive income 1,150,751 - X 1,150,751 Available-for-sale financial assets (ex IAS39) 1,533,115 3. Financial assets at amortised cost 370,581 11,467,962 X 11,838,543 3.1 Loans and advances to banks 28,296 654,653 X 682,949 3.2 Loans and advances to customers 342,285 10,813,309 X 11,155,594 Held-to-maturity investments (ex IAS39) 65,507 Loans and receivables with banks (ex IAS39) 266,741 Loans and receivables with customers (ex IAS39) 11,021,190 4. Hedging derivatives X X 392,370 392,370 902,321 5. Other assets X X 182,135 182,135 151,321 6. Other financial liabilities X X X 673,806 Total 1,844,324 11,564,842 1,136,821 15,219,793 14,759,711 of which: interest income on credit impaired financial assets 1,516 651,372 - 652,888 1.2.1 Interest income from financial assets denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Assets denominated in currency 4,192,718 3,983,853 1.2.2 Interest income from finance leases (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Financial lease transactions: potential rents recognised as income in the year 594,325 393,672 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 251 Part C - Consolidated income statement Section 1 - Interests - Items 10 and 20 1.1 Interest income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBT SECURITIES LOANS OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial assets at fair value through profit or loss 322,992 96,880 562,316 982,188 1.1 Financial assets held for trading 167,601 3,338 562,316 733,255 1.2 Financial assets designated at fair value 22 1 - 23 1.3 Other financial assets mandatorily at fair value 155,369 93,541 - 248,910 Financial assets held for trading (ex IAS39) 648,935 Financial assets at fair value through profit or loss (ex IAS39) 170,581 2. Financial assets at fair value through other comprehensive income 1,150,751 - X 1,150,751 Available-for-sale financial assets (ex IAS39) 1,533,115 3. Financial assets at amortised cost 370,581 11,467,962 X 11,838,543 3.1 Loans and advances to banks 28,296 654,653 X 682,949 3.2 Loans and advances to customers 342,285 10,813,309 X 11,155,594 Held-to-maturity investments (ex IAS39) 65,507 Loans and receivables with banks (ex IAS39) 266,741 Loans and receivables with customers (ex IAS39) 11,021,190 4. Hedging derivatives X X 392,370 392,370 902,321 5. Other assets X X 182,135 182,135 151,321 6. Other financial liabilities X X X 673,806 Total 1,844,324 11,564,842 1,136,821 15,219,793 14,759,711 of which: interest income on credit impaired financial assets 1,516 651,372 - 652,888 1.2.1 Interest income from financial assets denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Assets denominated in currency 4,192,718 3,983,853 1.2.2 Interest income from finance leases (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Financial lease transactions: potential rents recognised as income in the year 594,325 393,672 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 252 2018 Annual Report and Accounts · UniCredit 1.3 Interest expenses and similar charges: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBTS SECURITIES OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial liabilities at amortised cost (1,415,687) (2,095,364) X (3,511,051) 1.1 Deposits from central banks (70,543) X X (70,543) 1.2 Deposits from banks (373,843) X X (373,843) 1.3 Deposits from customers (971,301) X X (971,301) 1.4 Debt securities in issue X (2,095,364) X (2,095,364) Deposits from central banks (ex IAS39) 155,050 Deposits from banks (ex IAS39) (238,918) Deposits from customers (ex IAS39) (755,538) Debt securities in issue (ex IAS39) (2,744,181) 2. Financial liabilities held for trading (995) (37,174) (868,548) (906,717) Financial liabilities held for trading (ex IAS39) (855,768) 3. Financial liabilities designated at fair value (9,117) (102,155) - (111,272) Financial liabilities at fair value through profit or loss (ex IAS39) (4,327) 4. Other liabilities and funds X X (19,698) (19,698) (17,968) 5. Hedging derivatives X X 527,097 527,097 - 6. Financial assets X X X (345,025) Total (1,425,799) (2,234,693) (361,149) (4,366,666) (4,461,650) 1.4.1 Interest expenses on liabilities denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Liabilities denominated in currency (1,573,724) (1,738,965) 1.4.2 Interest expenses on finance leases (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Financial lease transaction: contingent rents recognised as expense in the period (3,152) - 1.5 Differentials relating to hedging operations (€ '000) ITEMS YEAR 2018 YEAR 2017 A. Positive differentials relating to hedging operations 4,022,714 4,784,386 B. Negative differentials relating to hedging operations (3,103,247) (3,882,065) C. Net differential (A-B) 919,467 902,321 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 252 2018 Annual Report and Accounts · UniCredit 1.3 Interest expenses and similar charges: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBTS SECURITIES OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial liabilities at amortised cost (1,415,687) (2,095,364) X (3,511,051) 1.1 Deposits from central banks (70,543) X X (70,543) 1.2 Deposits from banks (373,843) X X (373,843) 1.3 Deposits from customers (971,301) X X (971,301) 1.4 Debt securities in issue X (2,095,364) X (2,095,364) Deposits from central banks (ex IAS39) 155,050 Deposits from banks (ex IAS39) (238,918) Deposits from customers (ex IAS39) (755,538) Debt securities in issue (ex IAS39) (2,744,181) 2. Financial liabilities held for trading (995) (37,174) (868,548) (906,717) Financial liabilities held for trading (ex IAS39) (855,768) 3. Financial liabilities designated at fair value (9,117) (102,155) - (111,272) Financial liabilities at fair value through profit or loss (ex IAS39) (4,327) 4. Other liabilities and funds X X (19,698) (19,698) (17,968) 5. Hedging derivatives X X 527,097 527,097 - 6. Financial assets X X X (345,025) Total (1,425,799) (2,234,693) (361,149) (4,366,666) (4,461,650) 1.4.1 Interest expenses on liabilities denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Liabilities denominated in currency (1,573,724) (1,738,965) 1.4.2 Interest expenses on finance leases (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Financial lease transaction: contingent rents recognised as expense in the period (3,152) - 1.5 Differentials relating to hedging operations (€ '000) ITEMS YEAR 2018 YEAR 2017 A. Positive differentials relating to hedging operations 4,022,714 4,784,386 B. Negative differentials relating to hedging operations (3,103,247) (3,882,065) C. Net differential (A-B) 919,467 902,321 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 252 2018 Annual Report and Accounts · UniCredit 1.3 Interest expenses and similar charges: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBTS SECURITIES OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial liabilities at amortised cost (1,415,687) (2,095,364) X (3,511,051) 1.1 Deposits from central banks (70,543) X X (70,543) 1.2 Deposits from banks (373,843) X X (373,843) 1.3 Deposits from customers (971,301) X X (971,301) 1.4 Debt securities in issue X (2,095,364) X (2,095,364) Deposits from central banks (ex IAS39) 155,050 Deposits from banks (ex IAS39) (238,918) Deposits from customers (ex IAS39) (755,538) Debt securities in issue (ex IAS39) (2,744,181) 2. Financial liabilities held for trading (995) (37,174) (868,548) (906,717) Financial liabilities held for trading (ex IAS39) (855,768) 3. Financial liabilities designated at fair value (9,117) (102,155) - (111,272) Financial liabilities at fair value through profit or loss (ex IAS39) (4,327) 4. Other liabilities and funds X X (19,698) (19,698) (17,968) 5. Hedging derivatives X X 527,097 527,097 - 6. Financial assets X X X (345,025) Total (1,425,799) (2,234,693) (361,149) (4,366,666) (4,461,650) 1.4.1 Interest expenses on liabilities denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Liabilities denominated in currency (1,573,724) (1,738,965) 1.4.2 Interest expenses on finance leases (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Financial lease transaction: contingent rents recognised as expense in the period (3,152) - 1.5 Differentials relating to hedging operations (€ '000) ITEMS YEAR 2018 YEAR 2017 A. Positive differentials relating to hedging operations 4,022,714 4,784,386 B. Negative differentials relating to hedging operations (3,103,247) (3,882,065) C. Net differential (A-B) 919,467 902,321 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 252 2018 Annual Report and Accounts · UniCredit 1.3 Interest expenses and similar charges: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBTS SECURITIES OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial liabilities at amortised cost (1,415,687) (2,095,364) X (3,511,051) 1.1 Deposits from central banks (70,543) X X (70,543) 1.2 Deposits from banks (373,843) X X (373,843) 1.3 Deposits from customers (971,301) X X (971,301) 1.4 Debt securities in issue X (2,095,364) X (2,095,364) Deposits from central banks (ex IAS39) 155,050 Deposits from banks (ex IAS39) (238,918) Deposits from customers (ex IAS39) (755,538) Debt securities in issue (ex IAS39) (2,744,181) 2. Financial liabilities held for trading (995) (37,174) (868,548) (906,717) Financial liabilities held for trading (ex IAS39) (855,768) 3. Financial liabilities designated at fair value (9,117) (102,155) - (111,272) Financial liabilities at fair value through profit or loss (ex IAS39) (4,327) 4. Other liabilities and funds X X (19,698) (19,698) (17,968) 5. Hedging derivatives X X 527,097 527,097 - 6. Financial assets X X X (345,025) Total (1,425,799) (2,234,693) (361,149) (4,366,666) (4,461,650) 1.4.1 Interest expenses on liabilities denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Liabilities denominated in currency (1,573,724) (1,738,965) 1.4.2 Interest expenses on finance leases (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Financial lease transaction: contingent rents recognised as expense in the period (3,152) - 1.5 Differentials relating to hedging operations (€ '000) ITEMS YEAR 2018 YEAR 2017 A. Positive differentials relating to hedging operations 4,022,714 4,784,386 B. Negative differentials relating to hedging operations (3,103,247) (3,882,065) C. Net differential (A-B) 919,467 902,321 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 252 2018 Annual Report and Accounts · UniCredit 1.3 Interest expenses and similar charges: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBTS SECURITIES OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial liabilities at amortised cost (1,415,687) (2,095,364) X (3,511,051) 1.1 Deposits from central banks (70,543) X X (70,543) 1.2 Deposits from banks (373,843) X X (373,843) 1.3 Deposits from customers (971,301) X X (971,301) 1.4 Debt securities in issue X (2,095,364) X (2,095,364) Deposits from central banks (ex IAS39) 155,050 Deposits from banks (ex IAS39) (238,918) Deposits from customers (ex IAS39) (755,538) Debt securities in issue (ex IAS39) (2,744,181) 2. Financial liabilities held for trading (995) (37,174) (868,548) (906,717) Financial liabilities held for trading (ex IAS39) (855,768) 3. Financial liabilities designated at fair value (9,117) (102,155) - (111,272) Financial liabilities at fair value through profit or loss (ex IAS39) (4,327) 4. Other liabilities and funds X X (19,698) (19,698) (17,968) 5. Hedging derivatives X X 527,097 527,097 - 6. Financial assets X X X (345,025) Total (1,425,799) (2,234,693) (361,149) (4,366,666) (4,461,650) 1.4.1 Interest expenses on liabilities denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Liabilities denominated in currency (1,573,724) (1,738,965) 1.4.2 Interest expenses on finance leases (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Financial lease transaction: contingent rents recognised as expense in the period (3,152) - 1.5 Differentials relating to hedging operations (€ '000) ITEMS YEAR 2018 YEAR 2017 A. Positive differentials relating to hedging operations 4,022,714 4,784,386 B. Negative differentials relating to hedging operations (3,103,247) (3,882,065) C. Net differential (A-B) 919,467 902,321 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 253 Section 2 - Fees and commissions - Items 40 and 50 2.1 Fees and commissions income: breakdown (€ '000) TYPE OF SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees given 488,208 508,968 b) Credit derivatives 1,790 (69) c) Management, brokerage and consultancy services 3,736,411 3,425,804 1. Securities trading 230,129 235,066 2. Currency trading 93,109 100,504 3. Portfolio management 450,795 361,444 3.1 Individual 161,220 150,210 3.2 Collective 289,575 211,234 4. Custody and administration of securities 209,708 195,424 5. Custodian bank 32,615 34,159 6. Placement of securities 549,363 755,682 7. Reception and transmission of orders 105,683 128,748 8. Advisory services 181,001 130,117 8.1 Relating to investments 143,944 100,207 8.2 Relating to financial structure 37,057 29,910 9. Distribution of third party services 1,884,008 1,484,660 9.1 Portfolio management 819,809 596,336 9.1.1 Individual 2,942 2,078 9.1.2 Collective 816,867 594,258 9.2 Insurance products 1,039,580 857,273 9.3 Other products 24,619 31,051 d) Collection and payment services 1,428,439 1,548,549 e) Securitisation servicing 3,654 3,198 f) Factoring 81,555 75,496 g) Tax collection services - - h) Management of multilateral trading facilities 103 - i) Management of current accounts 1,306,347 1,219,277 j) Other services 1,078,774 859,794 k) Security lending 40,160 22,437 Total 8,165,441 7,663,454 Item “j) Other services” mainly comprise: • fees on loans granted: €410 million in 2018, €523 million in 2017 (-21.6%); • fees for foreign transactions and services of €76 million in 2018, €74 million in 2017 (+3.0%); • fees for various services provided to customers (e.g. treasury, merchant banking, etc.) of €67 million in 2018, €68 million in 2017 (-1.4%); • fees for ATM and credit card services not included in collection and payment services, amounting to €300 million in 2018, €76 million in 2017 (+294.7%). The increase is mainly attributable to the better allocation in 2018 of commissions which in 2017 (for an amount of €166 million) were shown in the sub-item “d) Collection and payment services”. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 253 Section 2 - Fees and commissions - Items 40 and 50 2.1 Fees and commissions income: breakdown (€ '000) TYPE OF SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees given 488,208 508,968 b) Credit derivatives 1,790 (69) c) Management, brokerage and consultancy services 3,736,411 3,425,804 1. Securities trading 230,129 235,066 2. Currency trading 93,109 100,504 3. Portfolio management 450,795 361,444 3.1 Individual 161,220 150,210 3.2 Collective 289,575 211,234 4. Custody and administration of securities 209,708 195,424 5. Custodian bank 32,615 34,159 6. Placement of securities 549,363 755,682 7. Reception and transmission of orders 105,683 128,748 8. Advisory services 181,001 130,117 8.1 Relating to investments 143,944 100,207 8.2 Relating to financial structure 37,057 29,910 9. Distribution of third party services 1,884,008 1,484,660 9.1 Portfolio management 819,809 596,336 9.1.1 Individual 2,942 2,078 9.1.2 Collective 816,867 594,258 9.2 Insurance products 1,039,580 857,273 9.3 Other products 24,619 31,051 d) Collection and payment services 1,428,439 1,548,549 e) Securitisation servicing 3,654 3,198 f) Factoring 81,555 75,496 g) Tax collection services - - h) Management of multilateral trading facilities 103 - i) Management of current accounts 1,306,347 1,219,277 j) Other services 1,078,774 859,794 k) Security lending 40,160 22,437 Total 8,165,441 7,663,454 Item “j) Other services” mainly comprise: • fees on loans granted: €410 million in 2018, €523 million in 2017 (-21.6%); • fees for foreign transactions and services of €76 million in 2018, €74 million in 2017 (+3.0%); • fees for various services provided to customers (e.g. treasury, merchant banking, etc.) of €67 million in 2018, €68 million in 2017 (-1.4%); • fees for ATM and credit card services not included in collection and payment services, amounting to €300 million in 2018, €76 million in 2017 (+294.7%). The increase is mainly attributable to the better allocation in 2018 of commissions which in 2017 (for an amount of €166 million) were shown in the sub-item “d) Collection and payment services”. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 253 Section 2 - Fees and commissions - Items 40 and 50 2.1 Fees and commissions income: breakdown (€ '000) TYPE OF SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees given 488,208 508,968 b) Credit derivatives 1,790 (69) c) Management, brokerage and consultancy services 3,736,411 3,425,804 1. Securities trading 230,129 235,066 2. Currency trading 93,109 100,504 3. Portfolio management 450,795 361,444 3.1 Individual 161,220 150,210 3.2 Collective 289,575 211,234 4. Custody and administration of securities 209,708 195,424 5. Custodian bank 32,615 34,159 6. Placement of securities 549,363 755,682 7. Reception and transmission of orders 105,683 128,748 8. Advisory services 181,001 130,117 8.1 Relating to investments 143,944 100,207 8.2 Relating to financial structure 37,057 29,910 9. Distribution of third party services 1,884,008 1,484,660 9.1 Portfolio management 819,809 596,336 9.1.1 Individual 2,942 2,078 9.1.2 Collective 816,867 594,258 9.2 Insurance products 1,039,580 857,273 9.3 Other products 24,619 31,051 d) Collection and payment services 1,428,439 1,548,549 e) Securitisation servicing 3,654 3,198 f) Factoring 81,555 75,496 g) Tax collection services - - h) Management of multilateral trading facilities 103 - i) Management of current accounts 1,306,347 1,219,277 j) Other services 1,078,774 859,794 k) Security lending 40,160 22,437 Total 8,165,441 7,663,454 Item “j) Other services” mainly comprise: • fees on loans granted: €410 million in 2018, €523 million in 2017 (-21.6%); • fees for foreign transactions and services of €76 million in 2018, €74 million in 2017 (+3.0%); • fees for various services provided to customers (e.g. treasury, merchant banking, etc.) of €67 million in 2018, €68 million in 2017 (-1.4%); • fees for ATM and credit card services not included in collection and payment services, amounting to €300 million in 2018, €76 million in 2017 (+294.7%). The increase is mainly attributable to the better allocation in 2018 of commissions which in 2017 (for an amount of €166 million) were shown in the sub-item “d) Collection and payment services”. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 253 Section 2 - Fees and commissions - Items 40 and 50 2.1 Fees and commissions income: breakdown (€ '000) TYPE OF SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees given 488,208 508,968 b) Credit derivatives 1,790 (69) c) Management, brokerage and consultancy services 3,736,411 3,425,804 1. Securities trading 230,129 235,066 2. Currency trading 93,109 100,504 3. Portfolio management 450,795 361,444 3.1 Individual 161,220 150,210 3.2 Collective 289,575 211,234 4. Custody and administration of securities 209,708 195,424 5. Custodian bank 32,615 34,159 6. Placement of securities 549,363 755,682 7. Reception and transmission of orders 105,683 128,748 8. Advisory services 181,001 130,117 8.1 Relating to investments 143,944 100,207 8.2 Relating to financial structure 37,057 29,910 9. Distribution of third party services 1,884,008 1,484,660 9.1 Portfolio management 819,809 596,336 9.1.1 Individual 2,942 2,078 9.1.2 Collective 816,867 594,258 9.2 Insurance products 1,039,580 857,273 9.3 Other products 24,619 31,051 d) Collection and payment services 1,428,439 1,548,549 e) Securitisation servicing 3,654 3,198 f) Factoring 81,555 75,496 g) Tax collection services - - h) Management of multilateral trading facilities 103 - i) Management of current accounts 1,306,347 1,219,277 j) Other services 1,078,774 859,794 k) Security lending 40,160 22,437 Total 8,165,441 7,663,454 Item “j) Other services” mainly comprise: • fees on loans granted: €410 million in 2018, €523 million in 2017 (-21.6%); • fees for foreign transactions and services of €76 million in 2018, €74 million in 2017 (+3.0%); • fees for various services provided to customers (e.g. treasury, merchant banking, etc.) of €67 million in 2018, €68 million in 2017 (-1.4%); • fees for ATM and credit card services not included in collection and payment services, amounting to €300 million in 2018, €76 million in 2017 (+294.7%). The increase is mainly attributable to the better allocation in 2018 of commissions which in 2017 (for an amount of €166 million) were shown in the sub-item “d) Collection and payment services”. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 253 Section 2 - Fees and commissions - Items 40 and 50 2.1 Fees and commissions income: breakdown (€ '000) TYPE OF SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees given 488,208 508,968 b) Credit derivatives 1,790 (69) c) Management, brokerage and consultancy services 3,736,411 3,425,804 1. Securities trading 230,129 235,066 2. Currency trading 93,109 100,504 3. Portfolio management 450,795 361,444 3.1 Individual 161,220 150,210 3.2 Collective 289,575 211,234 4. Custody and administration of securities 209,708 195,424 5. Custodian bank 32,615 34,159 6. Placement of securities 549,363 755,682 7. Reception and transmission of orders 105,683 128,748 8. Advisory services 181,001 130,117 8.1 Relating to investments 143,944 100,207 8.2 Relating to financial structure 37,057 29,910 9. Distribution of third party services 1,884,008 1,484,660 9.1 Portfolio management 819,809 596,336 9.1.1 Individual 2,942 2,078 9.1.2 Collective 816,867 594,258 9.2 Insurance products 1,039,580 857,273 9.3 Other products 24,619 31,051 d) Collection and payment services 1,428,439 1,548,549 e) Securitisation servicing 3,654 3,198 f) Factoring 81,555 75,496 g) Tax collection services - - h) Management of multilateral trading facilities 103 - i) Management of current accounts 1,306,347 1,219,277 j) Other services 1,078,774 859,794 k) Security lending 40,160 22,437 Total 8,165,441 7,663,454 Item “j) Other services” mainly comprise: • fees on loans granted: €410 million in 2018, €523 million in 2017 (-21.6%); • fees for foreign transactions and services of €76 million in 2018, €74 million in 2017 (+3.0%); • fees for various services provided to customers (e.g. treasury, merchant banking, etc.) of €67 million in 2018, €68 million in 2017 (-1.4%); • fees for ATM and credit card services not included in collection and payment services, amounting to €300 million in 2018, €76 million in 2017 (+294.7%). The increase is mainly attributable to the better allocation in 2018 of commissions which in 2017 (for an amount of €166 million) were shown in the sub-item “d) Collection and payment services”. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 254 2018 Annual Report and Accounts · UniCredit 2.2 Fees and commissions expenses: breakdown (€ '000) SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees received (135,709) (142,944) b) Credit derivatives (92) - c) Management, brokerage and consultancy services (551,224) (550,694) 1. Trading financial instruments (61,122) (58,344) 2. Currency trading (11,390) (11,587) 3. Portfolio management (31,184) (23,678) 3.1 Own portfolio (16,605) (10,199) 3.2 Third party portfolio (14,579) (13,479) 4. Custody and administration of securities (162,653) (154,281) 5. Placement of financial instruments (17,800) (31,734) 6. Off-site distribution of financial instruments, products and services (267,075) (271,070) d) Collection and payment services (476,148) (429,447) e) Other services (104,612) (119,583) f) Security lending (27,585) (28,361) Total (1,295,370) (1,271,029) Section 3 - Dividend income and similar revenue - Item 70 Dividends are recognised in the income statement when distribution is approved. In 2018 dividend income and similar revenues totaled €413 million, as against overall €315 million for the previous period. 3.1 Dividend income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT 12.31.2017 ITEMS/REVENUES DIVIDENDS SIMILAR REVENUES DIVIDENDS SIMILAR REVENUES A. Financial assets held for trading 319,633 - Financial assets held for trading (ex IAS39) 243,857 14,532 B. Other financial assets mandatorily at fair value 54,687 10,701 Financial assets at fair value through profit or loss (ex IAS39) - - C. Financial assets at fair value through other comprehensive income 22,524 - Available for sale financial assets (ex IAS39) 33,584 17,264 D. Equity investments 5,394 - 5,570 X Total 402,238 10,701 283,011 31,796 Total dividends and similar revenues 412,939 314,807 The item “A. Financial assets held for trading” includes mainly the dividends received relating to the following equity securities: Daimler Ag. NA O.N. (€35 million), Allianz SE NA O.N. (€19 million), Siemens Ag. NA (€17 million), BASF SE NA O.N. (€16 million), DT. Telekom AG NA (€14 million), Bayer AG NA O.N. (€13 million). In 2017 the item “Financial assets held for trading (ex IAS39)” includes mainly the dividends received relating to the following equity securities: Daimler Ag. NA O.N. (€29 million), Allianz SE NA O.N. (€18 million), Siemens Ag. NA (€16 million), BASF SE NA O.N. (€15 million), Bayer AG NA O.N. (€11 million), ENI SPA (€11 million). The item “B. Oher financial assets mandatorily at fair value” includes dividends received relating to the shareholding in Bank Pekao SA (€30 million). The item “C. Financial assets at fair value through other comprehensive income” includes €10 million in dividends received relating to the shareholding in Banca d’Italia (€10 million in 2017 as well in the item “Available for sale financial assets (ex IAS39)”). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 254 2018 Annual Report and Accounts · UniCredit 2.2 Fees and commissions expenses: breakdown (€ '000) SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees received (135,709) (142,944) b) Credit derivatives (92) - c) Management, brokerage and consultancy services (551,224) (550,694) 1. Trading financial instruments (61,122) (58,344) 2. Currency trading (11,390) (11,587) 3. Portfolio management (31,184) (23,678) 3.1 Own portfolio (16,605) (10,199) 3.2 Third party portfolio (14,579) (13,479) 4. Custody and administration of securities (162,653) (154,281) 5. Placement of financial instruments (17,800) (31,734) 6. Off-site distribution of financial instruments, products and services (267,075) (271,070) d) Collection and payment services (476,148) (429,447) e) Other services (104,612) (119,583) f) Security lending (27,585) (28,361) Total (1,295,370) (1,271,029) Section 3 - Dividend income and similar revenue - Item 70 Dividends are recognised in the income statement when distribution is approved. In 2018 dividend income and similar revenues totaled €413 million, as against overall €315 million for the previous period. 3.1 Dividend income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT 12.31.2017 ITEMS/REVENUES DIVIDENDS SIMILAR REVENUES DIVIDENDS SIMILAR REVENUES A. Financial assets held for trading 319,633 - Financial assets held for trading (ex IAS39) 243,857 14,532 B. Other financial assets mandatorily at fair value 54,687 10,701 Financial assets at fair value through profit or loss (ex IAS39) - - C. Financial assets at fair value through other comprehensive income 22,524 - Available for sale financial assets (ex IAS39) 33,584 17,264 D. Equity investments 5,394 - 5,570 X Total 402,238 10,701 283,011 31,796 Total dividends and similar revenues 412,939 314,807 The item “A. Financial assets held for trading” includes mainly the dividends received relating to the following equity securities: Daimler Ag. NA O.N. (€35 million), Allianz SE NA O.N. (€19 million), Siemens Ag. NA (€17 million), BASF SE NA O.N. (€16 million), DT. Telekom AG NA (€14 million), Bayer AG NA O.N. (€13 million). In 2017 the item “Financial assets held for trading (ex IAS39)” includes mainly the dividends received relating to the following equity securities: Daimler Ag. NA O.N. (€29 million), Allianz SE NA O.N. (€18 million), Siemens Ag. NA (€16 million), BASF SE NA O.N. (€15 million), Bayer AG NA O.N. (€11 million), ENI SPA (€11 million). The item “B. Oher financial assets mandatorily at fair value” includes dividends received relating to the shareholding in Bank Pekao SA (€30 million). The item “C. Financial assets at fair value through other comprehensive income” includes €10 million in dividends received relating to the shareholding in Banca d’Italia (€10 million in 2017 as well in the item “Available for sale financial assets (ex IAS39)”). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 254 2018 Annual Report and Accounts · UniCredit 2.2 Fees and commissions expenses: breakdown (€ '000) SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees received (135,709) (142,944) b) Credit derivatives (92) - c) Management, brokerage and consultancy services (551,224) (550,694) 1. Trading financial instruments (61,122) (58,344) 2. Currency trading (11,390) (11,587) 3. Portfolio management (31,184) (23,678) 3.1 Own portfolio (16,605) (10,199) 3.2 Third party portfolio (14,579) (13,479) 4. Custody and administration of securities (162,653) (154,281) 5. Placement of financial instruments (17,800) (31,734) 6. Off-site distribution of financial instruments, products and services (267,075) (271,070) d) Collection and payment services (476,148) (429,447) e) Other services (104,612) (119,583) f) Security lending (27,585) (28,361) Total (1,295,370) (1,271,029) Section 3 - Dividend income and similar revenue - Item 70 Dividends are recognised in the income statement when distribution is approved. In 2018 dividend income and similar revenues totaled €413 million, as against overall €315 million for the previous period. 3.1 Dividend income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT 12.31.2017 ITEMS/REVENUES DIVIDENDS SIMILAR REVENUES DIVIDENDS SIMILAR REVENUES A. Financial assets held for trading 319,633 - Financial assets held for trading (ex IAS39) 243,857 14,532 B. Other financial assets mandatorily at fair value 54,687 10,701 Financial assets at fair value through profit or loss (ex IAS39) - - C. Financial assets at fair value through other comprehensive income 22,524 - Available for sale financial assets (ex IAS39) 33,584 17,264 D. Equity investments 5,394 - 5,570 X Total 402,238 10,701 283,011 31,796 Total dividends and similar revenues 412,939 314,807 The item “A. Financial assets held for trading” includes mainly the dividends received relating to the following equity securities: Daimler Ag. NA O.N. (€35 million), Allianz SE NA O.N. (€19 million), Siemens Ag. NA (€17 million), BASF SE NA O.N. (€16 million), DT. Telekom AG NA (€14 million), Bayer AG NA O.N. (€13 million). In 2017 the item “Financial assets held for trading (ex IAS39)” includes mainly the dividends received relating to the following equity securities: Daimler Ag. NA O.N. (€29 million), Allianz SE NA O.N. (€18 million), Siemens Ag. NA (€16 million), BASF SE NA O.N. (€15 million), Bayer AG NA O.N. (€11 million), ENI SPA (€11 million). The item “B. Oher financial assets mandatorily at fair value” includes dividends received relating to the shareholding in Bank Pekao SA (€30 million). The item “C. Financial assets at fair value through other comprehensive income” includes €10 million in dividends received relating to the shareholding in Banca d’Italia (€10 million in 2017 as well in the item “Available for sale financial assets (ex IAS39)”). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 254 2018 Annual Report and Accounts · UniCredit 2.2 Fees and commissions expenses: breakdown (€ '000) SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees received (135,709) (142,944) b) Credit derivatives (92) - c) Management, brokerage and consultancy services (551,224) (550,694) 1. Trading financial instruments (61,122) (58,344) 2. Currency trading (11,390) (11,587) 3. Portfolio management (31,184) (23,678) 3.1 Own portfolio (16,605) (10,199) 3.2 Third party portfolio (14,579) (13,479) 4. Custody and administration of securities (162,653) (154,281) 5. Placement of financial instruments (17,800) (31,734) 6. Off-site distribution of financial instruments, products and services (267,075) (271,070) d) Collection and payment services (476,148) (429,447) e) Other services (104,612) (119,583) f) Security lending (27,585) (28,361) Total (1,295,370) (1,271,029) Section 3 - Dividend income and similar revenue - Item 70 Dividends are recognised in the income statement when distribution is approved. In 2018 dividend income and similar revenues totaled €413 million, as against overall €315 million for the previous period. 3.1 Dividend income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT 12.31.2017 ITEMS/REVENUES DIVIDENDS SIMILAR REVENUES DIVIDENDS SIMILAR REVENUES A. Financial assets held for trading 319,633 - Financial assets held for trading (ex IAS39) 243,857 14,532 B. Other financial assets mandatorily at fair value 54,687 10,701 Financial assets at fair value through profit or loss (ex IAS39) - - C. Financial assets at fair value through other comprehensive income 22,524 - Available for sale financial assets (ex IAS39) 33,584 17,264 D. Equity investments 5,394 - 5,570 X Total 402,238 10,701 283,011 31,796 Total dividends and similar revenues 412,939 314,807 The item “A. Financial assets held for trading” includes mainly the dividends received relating to the following equity securities: Daimler Ag. NA O.N. (€35 million), Allianz SE NA O.N. (€19 million), Siemens Ag. NA (€17 million), BASF SE NA O.N. (€16 million), DT. Telekom AG NA (€14 million), Bayer AG NA O.N. (€13 million). In 2017 the item “Financial assets held for trading (ex IAS39)” includes mainly the dividends received relating to the following equity securities: Daimler Ag. NA O.N. (€29 million), Allianz SE NA O.N. (€18 million), Siemens Ag. NA (€16 million), BASF SE NA O.N. (€15 million), Bayer AG NA O.N. (€11 million), ENI SPA (€11 million). The item “B. Oher financial assets mandatorily at fair value” includes dividends received relating to the shareholding in Bank Pekao SA (€30 million). The item “C. Financial assets at fair value through other comprehensive income” includes €10 million in dividends received relating to the shareholding in Banca d’Italia (€10 million in 2017 as well in the item “Available for sale financial assets (ex IAS39)”). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 254 2018 Annual Report and Accounts · UniCredit 2.2 Fees and commissions expenses: breakdown (€ '000) SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees received (135,709) (142,944) b) Credit derivatives (92) - c) Management, brokerage and consultancy services (551,224) (550,694) 1. Trading financial instruments (61,122) (58,344) 2. Currency trading (11,390) (11,587) 3. Portfolio management (31,184) (23,678) 3.1 Own portfolio (16,605) (10,199) 3.2 Third party portfolio (14,579) (13,479) 4. Custody and administration of securities (162,653) (154,281) 5. Placement of financial instruments (17,800) (31,734) 6. Off-site distribution of financial instruments, products and services (267,075) (271,070) d) Collection and payment services (476,148) (429,447) e) Other services (104,612) (119,583) f) Security lending (27,585) (28,361) Total (1,295,370) (1,271,029) Section 3 - Dividend income and similar revenue - Item 70 Dividends are recognised in the income statement when distribution is approved. In 2018 dividend income and similar revenues totaled €413 million, as against overall €315 million for the previous period. 3.1 Dividend income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT 12.31.2017 ITEMS/REVENUES DIVIDENDS SIMILAR REVENUES DIVIDENDS SIMILAR REVENUES A. Financial assets held for trading 319,633 - Financial assets held for trading (ex IAS39) 243,857 14,532 B. Other financial assets mandatorily at fair value 54,687 10,701 Financial assets at fair value through profit or loss (ex IAS39) - - C. Financial assets at fair value through other comprehensive income 22,524 - Available for sale financial assets (ex IAS39) 33,584 17,264 D. Equity investments 5,394 - 5,570 X Total 402,238 10,701 283,011 31,796 Total dividends and similar revenues 412,939 314,807 The item “A. Financial assets held for trading” includes mainly the dividends received relating to the following equity securities: Daimler Ag. NA O.N. (€35 million), Allianz SE NA O.N. (€19 million), Siemens Ag. NA (€17 million), BASF SE NA O.N. (€16 million), DT. Telekom AG NA (€14 million), Bayer AG NA O.N. (€13 million). In 2017 the item “Financial assets held for trading (ex IAS39)” includes mainly the dividends received relating to the following equity securities: Daimler Ag. NA O.N. (€29 million), Allianz SE NA O.N. (€18 million), Siemens Ag. NA (€16 million), BASF SE NA O.N. (€15 million), Bayer AG NA O.N. (€11 million), ENI SPA (€11 million). The item “B. Oher financial assets mandatorily at fair value” includes dividends received relating to the shareholding in Bank Pekao SA (€30 million). The item “C. Financial assets at fair value through other comprehensive income” includes €10 million in dividends received relating to the shareholding in Banca d’Italia (€10 million in 2017 as well in the item “Available for sale financial assets (ex IAS39)”). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 255 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets held for trading 3,629,092 3,937,203 (1,604,232) (4,528,230) 1,433,833 1.1 Debt securities 200,457 699,374 (350,355) (978,013) (428,537) 1.2 Equity instruments 472,999 954,753 (674,967) (2,533,064) (1,780,279) 1.3 Units in investment funds 22,817 118,031 (128,924) (110,920) (98,996) 1.4 Loans 635,433 1,982,405 (91,842) (1,700) 2,524,296 1.5 Other 2,297,386 182,640 (358,144) (904,533) 1,217,349 2. Financial liabilities held for trading 766,315 395,972 (173,977) (482,136) 506,174 2.1 Debt securities 600,515 181,317 (102,652) (108,763) 570,417 2.2 Deposits 277 - (51) (4,667) (4,441) 2.3 Other 165,523 214,655 (71,274) (368,706) (59,802) 3. Financial assets and liabilities: exchange differences X X X X 181,413 4. Derivatives 34,004,786 47,605,098 (34,941,328) (48,710,416) (1,704,787) 4.1 Financial derivatives 33,474,362 46,859,651 (34,331,441) (48,057,241) (2,054,669) - On debt securities and interest rates 25,912,794 36,786,456 (25,911,978) (36,486,001) 301,271 - On equity securities and share indices 4,936,964 7,687,372 (3,806,878) (7,479,500) 1,337,958 - On currency and gold X X X X 337,073 - Other 2,624,604 2,385,823 (4,612,585) (4,091,740) (3,693,898) 4.2 Credit derivatives 530,424 745,447 (609,887) (653,175) 12,809 of which: economic hedges linked to the fair value option X X X X - Total 38,400,193 51,938,273 (36,719,537) (53,720,782) 416,633 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets held for trading 2,048,393 3,527,220 (1,773,309) (2,570,496) 1,231,808 1.1 Debt securities 327,733 800,631 (333,919) (805,404) (10,959) 1.2 Equity instruments 261,529 2,403,041 (1,304,225) (553,639) 806,706 1.3 Units in investment funds 65,497 107,499 (37,461) (26,509) 109,026 1.4 Loans 1,015,061 176,287 (96,607) (18,510) 1,076,231 1.5 Other 378,573 39,762 (1,097) (1,166,434) (749,196) 2. Financial liabilities held for trading 324,116 562,120 (440,254) (614,367) (168,385) 2.1 Debt securities 183,943 154,779 (330,357) (266,567) (258,202) 2.2 Deposits 7 - (94) (3,849) (3,936) 2.3 Other 140,166 407,341 (109,803) (343,951) 93,753 3. Financial assets and liabilities: exchange differences X X X X 640,090 4. Derivatives 55,426,606 39,895,372 (55,730,322) (40,081,689) (628,078) 4.1 Financial derivatives: 53,552,775 39,340,121 (53,852,972) (39,512,599) (610,720) - on debt securities and interest rates 43,887,923 33,595,853 (44,515,823) (32,502,827) 465,126 - on equity securities and share indices 8,435,533 4,069,639 (7,805,246) (5,311,520) (611,594) - on currency and gold X X X X (138,045) - other 1,229,319 1,674,629 (1,531,903) (1,698,252) (326,207) 4.2 Credit derivatives 1,873,831 555,251 (1,877,350) (569,090) (17,358) Total 57,799,115 43,984,712 (57,943,885) (43,266,552) 1,075,435 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 255 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets held for trading 3,629,092 3,937,203 (1,604,232) (4,528,230) 1,433,833 1.1 Debt securities 200,457 699,374 (350,355) (978,013) (428,537) 1.2 Equity instruments 472,999 954,753 (674,967) (2,533,064) (1,780,279) 1.3 Units in investment funds 22,817 118,031 (128,924) (110,920) (98,996) 1.4 Loans 635,433 1,982,405 (91,842) (1,700) 2,524,296 1.5 Other 2,297,386 182,640 (358,144) (904,533) 1,217,349 2. Financial liabilities held for trading 766,315 395,972 (173,977) (482,136) 506,174 2.1 Debt securities 600,515 181,317 (102,652) (108,763) 570,417 2.2 Deposits 277 - (51) (4,667) (4,441) 2.3 Other 165,523 214,655 (71,274) (368,706) (59,802) 3. Financial assets and liabilities: exchange differences X X X X 181,413 4. Derivatives 34,004,786 47,605,098 (34,941,328) (48,710,416) (1,704,787) 4.1 Financial derivatives 33,474,362 46,859,651 (34,331,441) (48,057,241) (2,054,669) - On debt securities and interest rates 25,912,794 36,786,456 (25,911,978) (36,486,001) 301,271 - On equity securities and share indices 4,936,964 7,687,372 (3,806,878) (7,479,500) 1,337,958 - On currency and gold X X X X 337,073 - Other 2,624,604 2,385,823 (4,612,585) (4,091,740) (3,693,898) 4.2 Credit derivatives 530,424 745,447 (609,887) (653,175) 12,809 of which: economic hedges linked to the fair value option X X X X - Total 38,400,193 51,938,273 (36,719,537) (53,720,782) 416,633 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets held for trading 2,048,393 3,527,220 (1,773,309) (2,570,496) 1,231,808 1.1 Debt securities 327,733 800,631 (333,919) (805,404) (10,959) 1.2 Equity instruments 261,529 2,403,041 (1,304,225) (553,639) 806,706 1.3 Units in investment funds 65,497 107,499 (37,461) (26,509) 109,026 1.4 Loans 1,015,061 176,287 (96,607) (18,510) 1,076,231 1.5 Other 378,573 39,762 (1,097) (1,166,434) (749,196) 2. Financial liabilities held for trading 324,116 562,120 (440,254) (614,367) (168,385) 2.1 Debt securities 183,943 154,779 (330,357) (266,567) (258,202) 2.2 Deposits 7 - (94) (3,849) (3,936) 2.3 Other 140,166 407,341 (109,803) (343,951) 93,753 3. Financial assets and liabilities: exchange differences X X X X 640,090 4. Derivatives 55,426,606 39,895,372 (55,730,322) (40,081,689) (628,078) 4.1 Financial derivatives: 53,552,775 39,340,121 (53,852,972) (39,512,599) (610,720) - on debt securities and interest rates 43,887,923 33,595,853 (44,515,823) (32,502,827) 465,126 - on equity securities and share indices 8,435,533 4,069,639 (7,805,246) (5,311,520) (611,594) - on currency and gold X X X X (138,045) - other 1,229,319 1,674,629 (1,531,903) (1,698,252) (326,207) 4.2 Credit derivatives 1,873,831 555,251 (1,877,350) (569,090) (17,358) Total 57,799,115 43,984,712 (57,943,885) (43,266,552) 1,075,435 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 255 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets held for trading 3,629,092 3,937,203 (1,604,232) (4,528,230) 1,433,833 1.1 Debt securities 200,457 699,374 (350,355) (978,013) (428,537) 1.2 Equity instruments 472,999 954,753 (674,967) (2,533,064) (1,780,279) 1.3 Units in investment funds 22,817 118,031 (128,924) (110,920) (98,996) 1.4 Loans 635,433 1,982,405 (91,842) (1,700) 2,524,296 1.5 Other 2,297,386 182,640 (358,144) (904,533) 1,217,349 2. Financial liabilities held for trading 766,315 395,972 (173,977) (482,136) 506,174 2.1 Debt securities 600,515 181,317 (102,652) (108,763) 570,417 2.2 Deposits 277 - (51) (4,667) (4,441) 2.3 Other 165,523 214,655 (71,274) (368,706) (59,802) 3. Financial assets and liabilities: exchange differences X X X X 181,413 4. Derivatives 34,004,786 47,605,098 (34,941,328) (48,710,416) (1,704,787) 4.1 Financial derivatives 33,474,362 46,859,651 (34,331,441) (48,057,241) (2,054,669) - On debt securities and interest rates 25,912,794 36,786,456 (25,911,978) (36,486,001) 301,271 - On equity securities and share indices 4,936,964 7,687,372 (3,806,878) (7,479,500) 1,337,958 - On currency and gold X X X X 337,073 - Other 2,624,604 2,385,823 (4,612,585) (4,091,740) (3,693,898) 4.2 Credit derivatives 530,424 745,447 (609,887) (653,175) 12,809 of which: economic hedges linked to the fair value option X X X X - Total 38,400,193 51,938,273 (36,719,537) (53,720,782) 416,633 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets held for trading 2,048,393 3,527,220 (1,773,309) (2,570,496) 1,231,808 1.1 Debt securities 327,733 800,631 (333,919) (805,404) (10,959) 1.2 Equity instruments 261,529 2,403,041 (1,304,225) (553,639) 806,706 1.3 Units in investment funds 65,497 107,499 (37,461) (26,509) 109,026 1.4 Loans 1,015,061 176,287 (96,607) (18,510) 1,076,231 1.5 Other 378,573 39,762 (1,097) (1,166,434) (749,196) 2. Financial liabilities held for trading 324,116 562,120 (440,254) (614,367) (168,385) 2.1 Debt securities 183,943 154,779 (330,357) (266,567) (258,202) 2.2 Deposits 7 - (94) (3,849) (3,936) 2.3 Other 140,166 407,341 (109,803) (343,951) 93,753 3. Financial assets and liabilities: exchange differences X X X X 640,090 4. Derivatives 55,426,606 39,895,372 (55,730,322) (40,081,689) (628,078) 4.1 Financial derivatives: 53,552,775 39,340,121 (53,852,972) (39,512,599) (610,720) - on debt securities and interest rates 43,887,923 33,595,853 (44,515,823) (32,502,827) 465,126 - on equity securities and share indices 8,435,533 4,069,639 (7,805,246) (5,311,520) (611,594) - on currency and gold X X X X (138,045) - other 1,229,319 1,674,629 (1,531,903) (1,698,252) (326,207) 4.2 Credit derivatives 1,873,831 555,251 (1,877,350) (569,090) (17,358) Total 57,799,115 43,984,712 (57,943,885) (43,266,552) 1,075,435 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 255 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets held for trading 3,629,092 3,937,203 (1,604,232) (4,528,230) 1,433,833 1.1 Debt securities 200,457 699,374 (350,355) (978,013) (428,537) 1.2 Equity instruments 472,999 954,753 (674,967) (2,533,064) (1,780,279) 1.3 Units in investment funds 22,817 118,031 (128,924) (110,920) (98,996) 1.4 Loans 635,433 1,982,405 (91,842) (1,700) 2,524,296 1.5 Other 2,297,386 182,640 (358,144) (904,533) 1,217,349 2. Financial liabilities held for trading 766,315 395,972 (173,977) (482,136) 506,174 2.1 Debt securities 600,515 181,317 (102,652) (108,763) 570,417 2.2 Deposits 277 - (51) (4,667) (4,441) 2.3 Other 165,523 214,655 (71,274) (368,706) (59,802) 3. Financial assets and liabilities: exchange differences X X X X 181,413 4. Derivatives 34,004,786 47,605,098 (34,941,328) (48,710,416) (1,704,787) 4.1 Financial derivatives 33,474,362 46,859,651 (34,331,441) (48,057,241) (2,054,669) - On debt securities and interest rates 25,912,794 36,786,456 (25,911,978) (36,486,001) 301,271 - On equity securities and share indices 4,936,964 7,687,372 (3,806,878) (7,479,500) 1,337,958 - On currency and gold X X X X 337,073 - Other 2,624,604 2,385,823 (4,612,585) (4,091,740) (3,693,898) 4.2 Credit derivatives 530,424 745,447 (609,887) (653,175) 12,809 of which: economic hedges linked to the fair value option X X X X - Total 38,400,193 51,938,273 (36,719,537) (53,720,782) 416,633 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets held for trading 2,048,393 3,527,220 (1,773,309) (2,570,496) 1,231,808 1.1 Debt securities 327,733 800,631 (333,919) (805,404) (10,959) 1.2 Equity instruments 261,529 2,403,041 (1,304,225) (553,639) 806,706 1.3 Units in investment funds 65,497 107,499 (37,461) (26,509) 109,026 1.4 Loans 1,015,061 176,287 (96,607) (18,510) 1,076,231 1.5 Other 378,573 39,762 (1,097) (1,166,434) (749,196) 2. Financial liabilities held for trading 324,116 562,120 (440,254) (614,367) (168,385) 2.1 Debt securities 183,943 154,779 (330,357) (266,567) (258,202) 2.2 Deposits 7 - (94) (3,849) (3,936) 2.3 Other 140,166 407,341 (109,803) (343,951) 93,753 3. Financial assets and liabilities: exchange differences X X X X 640,090 4. Derivatives 55,426,606 39,895,372 (55,730,322) (40,081,689) (628,078) 4.1 Financial derivatives: 53,552,775 39,340,121 (53,852,972) (39,512,599) (610,720) - on debt securities and interest rates 43,887,923 33,595,853 (44,515,823) (32,502,827) 465,126 - on equity securities and share indices 8,435,533 4,069,639 (7,805,246) (5,311,520) (611,594) - on currency and gold X X X X (138,045) - other 1,229,319 1,674,629 (1,531,903) (1,698,252) (326,207) 4.2 Credit derivatives 1,873,831 555,251 (1,877,350) (569,090) (17,358) Total 57,799,115 43,984,712 (57,943,885) (43,266,552) 1,075,435 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 255 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets held for trading 3,629,092 3,937,203 (1,604,232) (4,528,230) 1,433,833 1.1 Debt securities 200,457 699,374 (350,355) (978,013) (428,537) 1.2 Equity instruments 472,999 954,753 (674,967) (2,533,064) (1,780,279) 1.3 Units in investment funds 22,817 118,031 (128,924) (110,920) (98,996) 1.4 Loans 635,433 1,982,405 (91,842) (1,700) 2,524,296 1.5 Other 2,297,386 182,640 (358,144) (904,533) 1,217,349 2. Financial liabilities held for trading 766,315 395,972 (173,977) (482,136) 506,174 2.1 Debt securities 600,515 181,317 (102,652) (108,763) 570,417 2.2 Deposits 277 - (51) (4,667) (4,441) 2.3 Other 165,523 214,655 (71,274) (368,706) (59,802) 3. Financial assets and liabilities: exchange differences X X X X 181,413 4. Derivatives 34,004,786 47,605,098 (34,941,328) (48,710,416) (1,704,787) 4.1 Financial derivatives 33,474,362 46,859,651 (34,331,441) (48,057,241) (2,054,669) - On debt securities and interest rates 25,912,794 36,786,456 (25,911,978) (36,486,001) 301,271 - On equity securities and share indices 4,936,964 7,687,372 (3,806,878) (7,479,500) 1,337,958 - On currency and gold X X X X 337,073 - Other 2,624,604 2,385,823 (4,612,585) (4,091,740) (3,693,898) 4.2 Credit derivatives 530,424 745,447 (609,887) (653,175) 12,809 of which: economic hedges linked to the fair value option X X X X - Total 38,400,193 51,938,273 (36,719,537) (53,720,782) 416,633 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets held for trading 2,048,393 3,527,220 (1,773,309) (2,570,496) 1,231,808 1.1 Debt securities 327,733 800,631 (333,919) (805,404) (10,959) 1.2 Equity instruments 261,529 2,403,041 (1,304,225) (553,639) 806,706 1.3 Units in investment funds 65,497 107,499 (37,461) (26,509) 109,026 1.4 Loans 1,015,061 176,287 (96,607) (18,510) 1,076,231 1.5 Other 378,573 39,762 (1,097) (1,166,434) (749,196) 2. Financial liabilities held for trading 324,116 562,120 (440,254) (614,367) (168,385) 2.1 Debt securities 183,943 154,779 (330,357) (266,567) (258,202) 2.2 Deposits 7 - (94) (3,849) (3,936) 2.3 Other 140,166 407,341 (109,803) (343,951) 93,753 3. Financial assets and liabilities: exchange differences X X X X 640,090 4. Derivatives 55,426,606 39,895,372 (55,730,322) (40,081,689) (628,078) 4.1 Financial derivatives: 53,552,775 39,340,121 (53,852,972) (39,512,599) (610,720) - on debt securities and interest rates 43,887,923 33,595,853 (44,515,823) (32,502,827) 465,126 - on equity securities and share indices 8,435,533 4,069,639 (7,805,246) (5,311,520) (611,594) - on currency and gold X X X X (138,045) - other 1,229,319 1,674,629 (1,531,903) (1,698,252) (326,207) 4.2 Credit derivatives 1,873,831 555,251 (1,877,350) (569,090) (17,358) Total 57,799,115 43,984,712 (57,943,885) (43,266,552) 1,075,435 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 256 2018 Annual Report and Accounts · UniCredit Section 5 - Fair value adjustments in hedge accounting - Item 90 5.1 Fair value adjustments in hedge accounting: breakdown (€ '000) P&L COMPONENT/VALUES YEAR 2018 YEAR 2017 A. Gains on A.1 Fair value hedging instruments 4,989,045 10,422,956 A.2 Hedged financial assets (in fair value hedge relationship) 684,300 690,901 A.3 Hedged financial liabilities (in fair value hedge relationship) 195,263 1,690,055 A.4 Cash-flow hedging derivatives 3,851 6,344 A.5 Assets and liabilities denominated in currency 35 1,961 Total gains on hedging activities (A) 5,872,494 12,812,217 B. Losses on B.1 Fair value hedging instruments (5,101,940) (10,923,528) B.2 Hedged financial assets (in fair value hedge relationship) (562,198) (1,836,690) B.3 Hedged financial liabilities (in fair value hedge relationship) (187,608) 19,716 B.4 Cash-flow hedging derivatives (3,550) (14,371) B.5 Assets and liabilities denominated in currency (35) - Total losses on hedging activities (B) (5,855,331) (12,754,873) C. Net hedging result (A – B) 17,163 57,344 of which: net gains (losses) of hedge accounting on net positions - - Section 6 - Gains (Losses) on disposals/repurchases - Item 100 As at 31 December 2018 the disposal/repurchase of financial assets/liabilities generates net gains in the amount of +€308 million (+€99 million in 2017), of which +€305 million on financial assets and +€3 million on financial liabilities. In 2018 net result recognised under sub-item “1. Financial assets at amortised cost” equal to +€129 million, is mainly due to disposal of loan and advances to customers carried out by UniCredit Bank AG (+€73 million), Zagrebacka Banka D.d. (+€29 million), UniCredit Bulbank Ad (€27 million), UniCredit Bank Serbia Jsc (+€18 million), partially rectified by losses carried out by UniCredit S.p.A. (-€30 million). The sub-item “2. Financial assets at fair value through other comprehensive income - 2.1 Debt securities” is equal to +€176 million and includes gains on disposal of UniCredit S.p.A. (+€89 million, mainly due to disposal of Italian Government securities), AO UniCredit Bank (+€20 million, mainly due to disposal of Russian Government securities), UniCredit Bank Ireland Plc (+€16 million, mainly due to disposal of Italian and Spanish Government securities), UniCredit Bank Austria AG (+€14 million, mainly due to disposal of Spanish and Austrian Government securities), UniCredit Bulbank Ad (+€13 million, mainly due to disposal of Bulgarian Government securities). 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) YEAR 2018 ITEMS/P&L ITEMS GAINS LOSSES NET PROFIT A. Financial assets 1. Financial assets at amortised cost 329,622 (200,972) 128,650 1.1 Loans and advances to banks 4,280 (8,358) (4,078) 1.2 Loans and advances to customers 325,342 (192,614) 132,728 2. Financial assets at fair value through other comprehensive income 457,745 (281,740) 176,005 2.1 Debt securities 457,745 (281,740) 176,005 2.2 Loans - - - Total assets (A) 787,367 (482,712) 304,655 B. Financial liabilities at amortised cost 1. Deposits from banks - - - 2. Deposits from customers 2 - 2 3. Debt securities in issue 13,709 (10,318) 3,391 Total liabilities (B) 13,711 (10,318) 3,393 Total financial assets/liabilities 308,048 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 256 2018 Annual Report and Accounts · UniCredit Section 5 - Fair value adjustments in hedge accounting - Item 90 5.1 Fair value adjustments in hedge accounting: breakdown (€ '000) P&L COMPONENT/VALUES YEAR 2018 YEAR 2017 A. Gains on A.1 Fair value hedging instruments 4,989,045 10,422,956 A.2 Hedged financial assets (in fair value hedge relationship) 684,300 690,901 A.3 Hedged financial liabilities (in fair value hedge relationship) 195,263 1,690,055 A.4 Cash-flow hedging derivatives 3,851 6,344 A.5 Assets and liabilities denominated in currency 35 1,961 Total gains on hedging activities (A) 5,872,494 12,812,217 B. Losses on B.1 Fair value hedging instruments (5,101,940) (10,923,528) B.2 Hedged financial assets (in fair value hedge relationship) (562,198) (1,836,690) B.3 Hedged financial liabilities (in fair value hedge relationship) (187,608) 19,716 B.4 Cash-flow hedging derivatives (3,550) (14,371) B.5 Assets and liabilities denominated in currency (35) - Total losses on hedging activities (B) (5,855,331) (12,754,873) C. Net hedging result (A – B) 17,163 57,344 of which: net gains (losses) of hedge accounting on net positions - - Section 6 - Gains (Losses) on disposals/repurchases - Item 100 As at 31 December 2018 the disposal/repurchase of financial assets/liabilities generates net gains in the amount of +€308 million (+€99 million in 2017), of which +€305 million on financial assets and +€3 million on financial liabilities. In 2018 net result recognised under sub-item “1. Financial assets at amortised cost” equal to +€129 million, is mainly due to disposal of loan and advances to customers carried out by UniCredit Bank AG (+€73 million), Zagrebacka Banka D.d. (+€29 million), UniCredit Bulbank Ad (€27 million), UniCredit Bank Serbia Jsc (+€18 million), partially rectified by losses carried out by UniCredit S.p.A. (-€30 million). The sub-item “2. Financial assets at fair value through other comprehensive income - 2.1 Debt securities” is equal to +€176 million and includes gains on disposal of UniCredit S.p.A. (+€89 million, mainly due to disposal of Italian Government securities), AO UniCredit Bank (+€20 million, mainly due to disposal of Russian Government securities), UniCredit Bank Ireland Plc (+€16 million, mainly due to disposal of Italian and Spanish Government securities), UniCredit Bank Austria AG (+€14 million, mainly due to disposal of Spanish and Austrian Government securities), UniCredit Bulbank Ad (+€13 million, mainly due to disposal of Bulgarian Government securities). 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) YEAR 2018 ITEMS/P&L ITEMS GAINS LOSSES NET PROFIT A. Financial assets 1. Financial assets at amortised cost 329,622 (200,972) 128,650 1.1 Loans and advances to banks 4,280 (8,358) (4,078) 1.2 Loans and advances to customers 325,342 (192,614) 132,728 2. Financial assets at fair value through other comprehensive income 457,745 (281,740) 176,005 2.1 Debt securities 457,745 (281,740) 176,005 2.2 Loans - - - Total assets (A) 787,367 (482,712) 304,655 B. Financial liabilities at amortised cost 1. Deposits from banks - - - 2. Deposits from customers 2 - 2 3. Debt securities in issue 13,709 (10,318) 3,391 Total liabilities (B) 13,711 (10,318) 3,393 Total financial assets/liabilities 308,048 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 256 2018 Annual Report and Accounts · UniCredit Section 5 - Fair value adjustments in hedge accounting - Item 90 5.1 Fair value adjustments in hedge accounting: breakdown (€ '000) P&L COMPONENT/VALUES YEAR 2018 YEAR 2017 A. Gains on A.1 Fair value hedging instruments 4,989,045 10,422,956 A.2 Hedged financial assets (in fair value hedge relationship) 684,300 690,901 A.3 Hedged financial liabilities (in fair value hedge relationship) 195,263 1,690,055 A.4 Cash-flow hedging derivatives 3,851 6,344 A.5 Assets and liabilities denominated in currency 35 1,961 Total gains on hedging activities (A) 5,872,494 12,812,217 B. Losses on B.1 Fair value hedging instruments (5,101,940) (10,923,528) B.2 Hedged financial assets (in fair value hedge relationship) (562,198) (1,836,690) B.3 Hedged financial liabilities (in fair value hedge relationship) (187,608) 19,716 B.4 Cash-flow hedging derivatives (3,550) (14,371) B.5 Assets and liabilities denominated in currency (35) - Total losses on hedging activities (B) (5,855,331) (12,754,873) C. Net hedging result (A – B) 17,163 57,344 of which: net gains (losses) of hedge accounting on net positions - - Section 6 - Gains (Losses) on disposals/repurchases - Item 100 As at 31 December 2018 the disposal/repurchase of financial assets/liabilities generates net gains in the amount of +€308 million (+€99 million in 2017), of which +€305 million on financial assets and +€3 million on financial liabilities. In 2018 net result recognised under sub-item “1. Financial assets at amortised cost” equal to +€129 million, is mainly due to disposal of loan and advances to customers carried out by UniCredit Bank AG (+€73 million), Zagrebacka Banka D.d. (+€29 million), UniCredit Bulbank Ad (€27 million), UniCredit Bank Serbia Jsc (+€18 million), partially rectified by losses carried out by UniCredit S.p.A. (-€30 million). The sub-item “2. Financial assets at fair value through other comprehensive income - 2.1 Debt securities” is equal to +€176 million and includes gains on disposal of UniCredit S.p.A. (+€89 million, mainly due to disposal of Italian Government securities), AO UniCredit Bank (+€20 million, mainly due to disposal of Russian Government securities), UniCredit Bank Ireland Plc (+€16 million, mainly due to disposal of Italian and Spanish Government securities), UniCredit Bank Austria AG (+€14 million, mainly due to disposal of Spanish and Austrian Government securities), UniCredit Bulbank Ad (+€13 million, mainly due to disposal of Bulgarian Government securities). 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) YEAR 2018 ITEMS/P&L ITEMS GAINS LOSSES NET PROFIT A. Financial assets 1. Financial assets at amortised cost 329,622 (200,972) 128,650 1.1 Loans and advances to banks 4,280 (8,358) (4,078) 1.2 Loans and advances to customers 325,342 (192,614) 132,728 2. Financial assets at fair value through other comprehensive income 457,745 (281,740) 176,005 2.1 Debt securities 457,745 (281,740) 176,005 2.2 Loans - - - Total assets (A) 787,367 (482,712) 304,655 B. Financial liabilities at amortised cost 1. Deposits from banks - - - 2. Deposits from customers 2 - 2 3. Debt securities in issue 13,709 (10,318) 3,391 Total liabilities (B) 13,711 (10,318) 3,393 Total financial assets/liabilities 308,048 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 256 2018 Annual Report and Accounts · UniCredit Section 5 - Fair value adjustments in hedge accounting - Item 90 5.1 Fair value adjustments in hedge accounting: breakdown (€ '000) P&L COMPONENT/VALUES YEAR 2018 YEAR 2017 A. Gains on A.1 Fair value hedging instruments 4,989,045 10,422,956 A.2 Hedged financial assets (in fair value hedge relationship) 684,300 690,901 A.3 Hedged financial liabilities (in fair value hedge relationship) 195,263 1,690,055 A.4 Cash-flow hedging derivatives 3,851 6,344 A.5 Assets and liabilities denominated in currency 35 1,961 Total gains on hedging activities (A) 5,872,494 12,812,217 B. Losses on B.1 Fair value hedging instruments (5,101,940) (10,923,528) B.2 Hedged financial assets (in fair value hedge relationship) (562,198) (1,836,690) B.3 Hedged financial liabilities (in fair value hedge relationship) (187,608) 19,716 B.4 Cash-flow hedging derivatives (3,550) (14,371) B.5 Assets and liabilities denominated in currency (35) - Total losses on hedging activities (B) (5,855,331) (12,754,873) C. Net hedging result (A – B) 17,163 57,344 of which: net gains (losses) of hedge accounting on net positions - - Section 6 - Gains (Losses) on disposals/repurchases - Item 100 As at 31 December 2018 the disposal/repurchase of financial assets/liabilities generates net gains in the amount of +€308 million (+€99 million in 2017), of which +€305 million on financial assets and +€3 million on financial liabilities. In 2018 net result recognised under sub-item “1. Financial assets at amortised cost” equal to +€129 million, is mainly due to disposal of loan and advances to customers carried out by UniCredit Bank AG (+€73 million), Zagrebacka Banka D.d. (+€29 million), UniCredit Bulbank Ad (€27 million), UniCredit Bank Serbia Jsc (+€18 million), partially rectified by losses carried out by UniCredit S.p.A. (-€30 million). The sub-item “2. Financial assets at fair value through other comprehensive income - 2.1 Debt securities” is equal to +€176 million and includes gains on disposal of UniCredit S.p.A. (+€89 million, mainly due to disposal of Italian Government securities), AO UniCredit Bank (+€20 million, mainly due to disposal of Russian Government securities), UniCredit Bank Ireland Plc (+€16 million, mainly due to disposal of Italian and Spanish Government securities), UniCredit Bank Austria AG (+€14 million, mainly due to disposal of Spanish and Austrian Government securities), UniCredit Bulbank Ad (+€13 million, mainly due to disposal of Bulgarian Government securities). 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) YEAR 2018 ITEMS/P&L ITEMS GAINS LOSSES NET PROFIT A. Financial assets 1. Financial assets at amortised cost 329,622 (200,972) 128,650 1.1 Loans and advances to banks 4,280 (8,358) (4,078) 1.2 Loans and advances to customers 325,342 (192,614) 132,728 2. Financial assets at fair value through other comprehensive income 457,745 (281,740) 176,005 2.1 Debt securities 457,745 (281,740) 176,005 2.2 Loans - - - Total assets (A) 787,367 (482,712) 304,655 B. Financial liabilities at amortised cost 1. Deposits from banks - - - 2. Deposits from customers 2 - 2 3. Debt securities in issue 13,709 (10,318) 3,391 Total liabilities (B) 13,711 (10,318) 3,393 Total financial assets/liabilities 308,048 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 256 2018 Annual Report and Accounts · UniCredit Section 5 - Fair value adjustments in hedge accounting - Item 90 5.1 Fair value adjustments in hedge accounting: breakdown (€ '000) P&L COMPONENT/VALUES YEAR 2018 YEAR 2017 A. Gains on A.1 Fair value hedging instruments 4,989,045 10,422,956 A.2 Hedged financial assets (in fair value hedge relationship) 684,300 690,901 A.3 Hedged financial liabilities (in fair value hedge relationship) 195,263 1,690,055 A.4 Cash-flow hedging derivatives 3,851 6,344 A.5 Assets and liabilities denominated in currency 35 1,961 Total gains on hedging activities (A) 5,872,494 12,812,217 B. Losses on B.1 Fair value hedging instruments (5,101,940) (10,923,528) B.2 Hedged financial assets (in fair value hedge relationship) (562,198) (1,836,690) B.3 Hedged financial liabilities (in fair value hedge relationship) (187,608) 19,716 B.4 Cash-flow hedging derivatives (3,550) (14,371) B.5 Assets and liabilities denominated in currency (35) - Total losses on hedging activities (B) (5,855,331) (12,754,873) C. Net hedging result (A – B) 17,163 57,344 of which: net gains (losses) of hedge accounting on net positions - - Section 6 - Gains (Losses) on disposals/repurchases - Item 100 As at 31 December 2018 the disposal/repurchase of financial assets/liabilities generates net gains in the amount of +€308 million (+€99 million in 2017), of which +€305 million on financial assets and +€3 million on financial liabilities. In 2018 net result recognised under sub-item “1. Financial assets at amortised cost” equal to +€129 million, is mainly due to disposal of loan and advances to customers carried out by UniCredit Bank AG (+€73 million), Zagrebacka Banka D.d. (+€29 million), UniCredit Bulbank Ad (€27 million), UniCredit Bank Serbia Jsc (+€18 million), partially rectified by losses carried out by UniCredit S.p.A. (-€30 million). The sub-item “2. Financial assets at fair value through other comprehensive income - 2.1 Debt securities” is equal to +€176 million and includes gains on disposal of UniCredit S.p.A. (+€89 million, mainly due to disposal of Italian Government securities), AO UniCredit Bank (+€20 million, mainly due to disposal of Russian Government securities), UniCredit Bank Ireland Plc (+€16 million, mainly due to disposal of Italian and Spanish Government securities), UniCredit Bank Austria AG (+€14 million, mainly due to disposal of Spanish and Austrian Government securities), UniCredit Bulbank Ad (+€13 million, mainly due to disposal of Bulgarian Government securities). 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) YEAR 2018 ITEMS/P&L ITEMS GAINS LOSSES NET PROFIT A. Financial assets 1. Financial assets at amortised cost 329,622 (200,972) 128,650 1.1 Loans and advances to banks 4,280 (8,358) (4,078) 1.2 Loans and advances to customers 325,342 (192,614) 132,728 2. Financial assets at fair value through other comprehensive income 457,745 (281,740) 176,005 2.1 Debt securities 457,745 (281,740) 176,005 2.2 Loans - - - Total assets (A) 787,367 (482,712) 304,655 B. Financial liabilities at amortised cost 1. Deposits from banks - - - 2. Deposits from customers 2 - 2 3. Debt securities in issue 13,709 (10,318) 3,391 Total liabilities (B) 13,711 (10,318) 3,393 Total financial assets/liabilities 308,048 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 257 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) ITEMS/P&L ITEMS YEAR 2017 GAINS LOSSES NET PROFIT Financial assets 1. Loans and receivables with banks 2,236 - 2,236 2. Loans and receivables with customers 621,437 (1,057,405) (435,968) 3. Available-for-sale financial assets 1,015,209 (481,856) 533,353 3.1 Debt securities 784,751 (478,206) 306,545 3.2 Equity instruments 119,368 (3,650) 115,718 3.3 Units in Investment funds 111,090 - 111,090 3.4 Loans - - - 4. Held-to-maturity investments 10 - 10 Total assets 1,638,892 (1,539,261) 99,631 Financial liabilities 1. Deposits with banks 19,989 (10,463) 9,526 2. Deposits with customers 596 (6,849) (6,253) 3. Debt securities in issue 61,945 (65,886) (3,941) Total liabilities 82,530 (83,198) (668) Total financial assets and liabilities 98,963 As at 31 December 2017 the disposal/repurchase of financial assets/liabilities generates net gains in the amount of +€99 million, of which +€100 million on financial assets and -€1 million on financial liabilities. In 2017 net result recognised under sub-item “2.Loans and receivables with customers” equal to -€436 million, is mainly due to losses on loan disposal realised by UniCredit S.p.A. and to gains from the mortgage loans sale realised by Redstone Mortgages Limited (+€40 million netted by transactional costs). In particular gains and losses on disposal booked in full year 2017 include those underlying the FINO Portfolio sale, classified (until the time of transfer) in item " Non-current assets and disposal groups classified as held for sale", and amount to approximately €350 million and €714 million respectively, with a negative net amount for approximately €364 million. This net result, technically booked following the transfer of the assets occurred in July 2017, has been almost entirely absorbed and covered by the positive economic effects, as, among others, write-backs from recoveries associated with the dynamic of the Portfolio during the first half 2017, and by the derecognition of liabilities recorded as of 31 December 2016 on commitments for other transactions, in the context of the valuation made of the Portfolio in that year. The sub-item “3. Available-for-sale financial assets - 3.1 Debt securities” is equal to +€307 million and includes gains on disposal of UniCredit S.p.A. (+€226 million, mainly due to disposal of Italian Government securities +€158 million, Spanish Government securities +€30 million, French Government securities +€12 million and Corporate bonds +€15 million), AO UniCredit Bank (+€18 million, mainly due to disposal of Russian Government securities), UniCredit Bank Austria AG (+€14 million, mainly due to disposal of French and Spanish Government securities), UniCredit Bank Czech Republic and Slovakia A.S.(+€12 million, mainly due to disposal of Czech Government securities), UniCredit Bank Ireland PLC. (+€9 million, mainly due to disposal of Russian and Spanish Government securities), UniCredit Bank AG (+€8 million, mainly due to disposal of Italian and Spanish Government securities). Net results of sub-item “3. Available-for-sale financial assets - 3.2 Equity Instruments” equal to +€116 million mainly includes gain on disposal of equity investment in Concardis GMBH (+€39 million), Istituto Europeo di Oncologia S.r.l. (+€20 million), Bayerische Immobilien-Leasing GMBH & CO Verwaltungs- KG (+€19 million), Eramet SA (+€18 million). The sub-item “3. Available-for-sale financial assets - 3.3 Units in Investment funds”, equal to +€111 million, refers to UniCredit S.p.A.(+€44 million due to sales of F2I +€23 million and Fondo Italiano d’investimento +€20 million) and to UniCredit Bank AG (+€64 million due to disposal of F2I). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 257 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) ITEMS/P&L ITEMS YEAR 2017 GAINS LOSSES NET PROFIT Financial assets 1. Loans and receivables with banks 2,236 - 2,236 2. Loans and receivables with customers 621,437 (1,057,405) (435,968) 3. Available-for-sale financial assets 1,015,209 (481,856) 533,353 3.1 Debt securities 784,751 (478,206) 306,545 3.2 Equity instruments 119,368 (3,650) 115,718 3.3 Units in Investment funds 111,090 - 111,090 3.4 Loans - - - 4. Held-to-maturity investments 10 - 10 Total assets 1,638,892 (1,539,261) 99,631 Financial liabilities 1. Deposits with banks 19,989 (10,463) 9,526 2. Deposits with customers 596 (6,849) (6,253) 3. Debt securities in issue 61,945 (65,886) (3,941) Total liabilities 82,530 (83,198) (668) Total financial assets and liabilities 98,963 As at 31 December 2017 the disposal/repurchase of financial assets/liabilities generates net gains in the amount of +€99 million, of which +€100 million on financial assets and -€1 million on financial liabilities. In 2017 net result recognised under sub-item “2.Loans and receivables with customers” equal to -€436 million, is mainly due to losses on loan disposal realised by UniCredit S.p.A. and to gains from the mortgage loans sale realised by Redstone Mortgages Limited (+€40 million netted by transactional costs). In particular gains and losses on disposal booked in full year 2017 include those underlying the FINO Portfolio sale, classified (until the time of transfer) in item " Non-current assets and disposal groups classified as held for sale", and amount to approximately €350 million and €714 million respectively, with a negative net amount for approximately €364 million. This net result, technically booked following the transfer of the assets occurred in July 2017, has been almost entirely absorbed and covered by the positive economic effects, as, among others, write-backs from recoveries associated with the dynamic of the Portfolio during the first half 2017, and by the derecognition of liabilities recorded as of 31 December 2016 on commitments for other transactions, in the context of the valuation made of the Portfolio in that year. The sub-item “3. Available-for-sale financial assets - 3.1 Debt securities” is equal to +€307 million and includes gains on disposal of UniCredit S.p.A. (+€226 million, mainly due to disposal of Italian Government securities +€158 million, Spanish Government securities +€30 million, French Government securities +€12 million and Corporate bonds +€15 million), AO UniCredit Bank (+€18 million, mainly due to disposal of Russian Government securities), UniCredit Bank Austria AG (+€14 million, mainly due to disposal of French and Spanish Government securities), UniCredit Bank Czech Republic and Slovakia A.S.(+€12 million, mainly due to disposal of Czech Government securities), UniCredit Bank Ireland PLC. (+€9 million, mainly due to disposal of Russian and Spanish Government securities), UniCredit Bank AG (+€8 million, mainly due to disposal of Italian and Spanish Government securities). Net results of sub-item “3. Available-for-sale financial assets - 3.2 Equity Instruments” equal to +€116 million mainly includes gain on disposal of equity investment in Concardis GMBH (+€39 million), Istituto Europeo di Oncologia S.r.l. (+€20 million), Bayerische Immobilien-Leasing GMBH & CO Verwaltungs- KG (+€19 million), Eramet SA (+€18 million). The sub-item “3. Available-for-sale financial assets - 3.3 Units in Investment funds”, equal to +€111 million, refers to UniCredit S.p.A.(+€44 million due to sales of F2I +€23 million and Fondo Italiano d’investimento +€20 million) and to UniCredit Bank AG (+€64 million due to disposal of F2I). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 257 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) ITEMS/P&L ITEMS YEAR 2017 GAINS LOSSES NET PROFIT Financial assets 1. Loans and receivables with banks 2,236 - 2,236 2. Loans and receivables with customers 621,437 (1,057,405) (435,968) 3. Available-for-sale financial assets 1,015,209 (481,856) 533,353 3.1 Debt securities 784,751 (478,206) 306,545 3.2 Equity instruments 119,368 (3,650) 115,718 3.3 Units in Investment funds 111,090 - 111,090 3.4 Loans - - - 4. Held-to-maturity investments 10 - 10 Total assets 1,638,892 (1,539,261) 99,631 Financial liabilities 1. Deposits with banks 19,989 (10,463) 9,526 2. Deposits with customers 596 (6,849) (6,253) 3. Debt securities in issue 61,945 (65,886) (3,941) Total liabilities 82,530 (83,198) (668) Total financial assets and liabilities 98,963 As at 31 December 2017 the disposal/repurchase of financial assets/liabilities generates net gains in the amount of +€99 million, of which +€100 million on financial assets and -€1 million on financial liabilities. In 2017 net result recognised under sub-item “2.Loans and receivables with customers” equal to -€436 million, is mainly due to losses on loan disposal realised by UniCredit S.p.A. and to gains from the mortgage loans sale realised by Redstone Mortgages Limited (+€40 million netted by transactional costs). In particular gains and losses on disposal booked in full year 2017 include those underlying the FINO Portfolio sale, classified (until the time of transfer) in item " Non-current assets and disposal groups classified as held for sale", and amount to approximately €350 million and €714 million respectively, with a negative net amount for approximately €364 million. This net result, technically booked following the transfer of the assets occurred in July 2017, has been almost entirely absorbed and covered by the positive economic effects, as, among others, write-backs from recoveries associated with the dynamic of the Portfolio during the first half 2017, and by the derecognition of liabilities recorded as of 31 December 2016 on commitments for other transactions, in the context of the valuation made of the Portfolio in that year. The sub-item “3. Available-for-sale financial assets - 3.1 Debt securities” is equal to +€307 million and includes gains on disposal of UniCredit S.p.A. (+€226 million, mainly due to disposal of Italian Government securities +€158 million, Spanish Government securities +€30 million, French Government securities +€12 million and Corporate bonds +€15 million), AO UniCredit Bank (+€18 million, mainly due to disposal of Russian Government securities), UniCredit Bank Austria AG (+€14 million, mainly due to disposal of French and Spanish Government securities), UniCredit Bank Czech Republic and Slovakia A.S.(+€12 million, mainly due to disposal of Czech Government securities), UniCredit Bank Ireland PLC. (+€9 million, mainly due to disposal of Russian and Spanish Government securities), UniCredit Bank AG (+€8 million, mainly due to disposal of Italian and Spanish Government securities). Net results of sub-item “3. Available-for-sale financial assets - 3.2 Equity Instruments” equal to +€116 million mainly includes gain on disposal of equity investment in Concardis GMBH (+€39 million), Istituto Europeo di Oncologia S.r.l. (+€20 million), Bayerische Immobilien-Leasing GMBH & CO Verwaltungs- KG (+€19 million), Eramet SA (+€18 million). The sub-item “3. Available-for-sale financial assets - 3.3 Units in Investment funds”, equal to +€111 million, refers to UniCredit S.p.A.(+€44 million due to sales of F2I +€23 million and Fondo Italiano d’investimento +€20 million) and to UniCredit Bank AG (+€64 million due to disposal of F2I). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 257 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) ITEMS/P&L ITEMS YEAR 2017 GAINS LOSSES NET PROFIT Financial assets 1. Loans and receivables with banks 2,236 - 2,236 2. Loans and receivables with customers 621,437 (1,057,405) (435,968) 3. Available-for-sale financial assets 1,015,209 (481,856) 533,353 3.1 Debt securities 784,751 (478,206) 306,545 3.2 Equity instruments 119,368 (3,650) 115,718 3.3 Units in Investment funds 111,090 - 111,090 3.4 Loans - - - 4. Held-to-maturity investments 10 - 10 Total assets 1,638,892 (1,539,261) 99,631 Financial liabilities 1. Deposits with banks 19,989 (10,463) 9,526 2. Deposits with customers 596 (6,849) (6,253) 3. Debt securities in issue 61,945 (65,886) (3,941) Total liabilities 82,530 (83,198) (668) Total financial assets and liabilities 98,963 As at 31 December 2017 the disposal/repurchase of financial assets/liabilities generates net gains in the amount of +€99 million, of which +€100 million on financial assets and -€1 million on financial liabilities. In 2017 net result recognised under sub-item “2.Loans and receivables with customers” equal to -€436 million, is mainly due to losses on loan disposal realised by UniCredit S.p.A. and to gains from the mortgage loans sale realised by Redstone Mortgages Limited (+€40 million netted by transactional costs). In particular gains and losses on disposal booked in full year 2017 include those underlying the FINO Portfolio sale, classified (until the time of transfer) in item " Non-current assets and disposal groups classified as held for sale", and amount to approximately €350 million and €714 million respectively, with a negative net amount for approximately €364 million. This net result, technically booked following the transfer of the assets occurred in July 2017, has been almost entirely absorbed and covered by the positive economic effects, as, among others, write-backs from recoveries associated with the dynamic of the Portfolio during the first half 2017, and by the derecognition of liabilities recorded as of 31 December 2016 on commitments for other transactions, in the context of the valuation made of the Portfolio in that year. The sub-item “3. Available-for-sale financial assets - 3.1 Debt securities” is equal to +€307 million and includes gains on disposal of UniCredit S.p.A. (+€226 million, mainly due to disposal of Italian Government securities +€158 million, Spanish Government securities +€30 million, French Government securities +€12 million and Corporate bonds +€15 million), AO UniCredit Bank (+€18 million, mainly due to disposal of Russian Government securities), UniCredit Bank Austria AG (+€14 million, mainly due to disposal of French and Spanish Government securities), UniCredit Bank Czech Republic and Slovakia A.S.(+€12 million, mainly due to disposal of Czech Government securities), UniCredit Bank Ireland PLC. (+€9 million, mainly due to disposal of Russian and Spanish Government securities), UniCredit Bank AG (+€8 million, mainly due to disposal of Italian and Spanish Government securities). Net results of sub-item “3. Available-for-sale financial assets - 3.2 Equity Instruments” equal to +€116 million mainly includes gain on disposal of equity investment in Concardis GMBH (+€39 million), Istituto Europeo di Oncologia S.r.l. (+€20 million), Bayerische Immobilien-Leasing GMBH & CO Verwaltungs- KG (+€19 million), Eramet SA (+€18 million). The sub-item “3. Available-for-sale financial assets - 3.3 Units in Investment funds”, equal to +€111 million, refers to UniCredit S.p.A.(+€44 million due to sales of F2I +€23 million and Fondo Italiano d’investimento +€20 million) and to UniCredit Bank AG (+€64 million due to disposal of F2I). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 257 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) ITEMS/P&L ITEMS YEAR 2017 GAINS LOSSES NET PROFIT Financial assets 1. Loans and receivables with banks 2,236 - 2,236 2. Loans and receivables with customers 621,437 (1,057,405) (435,968) 3. Available-for-sale financial assets 1,015,209 (481,856) 533,353 3.1 Debt securities 784,751 (478,206) 306,545 3.2 Equity instruments 119,368 (3,650) 115,718 3.3 Units in Investment funds 111,090 - 111,090 3.4 Loans - - - 4. Held-to-maturity investments 10 - 10 Total assets 1,638,892 (1,539,261) 99,631 Financial liabilities 1. Deposits with banks 19,989 (10,463) 9,526 2. Deposits with customers 596 (6,849) (6,253) 3. Debt securities in issue 61,945 (65,886) (3,941) Total liabilities 82,530 (83,198) (668) Total financial assets and liabilities 98,963 As at 31 December 2017 the disposal/repurchase of financial assets/liabilities generates net gains in the amount of +€99 million, of which +€100 million on financial assets and -€1 million on financial liabilities. In 2017 net result recognised under sub-item “2.Loans and receivables with customers” equal to -€436 million, is mainly due to losses on loan disposal realised by UniCredit S.p.A. and to gains from the mortgage loans sale realised by Redstone Mortgages Limited (+€40 million netted by transactional costs). In particular gains and losses on disposal booked in full year 2017 include those underlying the FINO Portfolio sale, classified (until the time of transfer) in item " Non-current assets and disposal groups classified as held for sale", and amount to approximately €350 million and €714 million respectively, with a negative net amount for approximately €364 million. This net result, technically booked following the transfer of the assets occurred in July 2017, has been almost entirely absorbed and covered by the positive economic effects, as, among others, write-backs from recoveries associated with the dynamic of the Portfolio during the first half 2017, and by the derecognition of liabilities recorded as of 31 December 2016 on commitments for other transactions, in the context of the valuation made of the Portfolio in that year. The sub-item “3. Available-for-sale financial assets - 3.1 Debt securities” is equal to +€307 million and includes gains on disposal of UniCredit S.p.A. (+€226 million, mainly due to disposal of Italian Government securities +€158 million, Spanish Government securities +€30 million, French Government securities +€12 million and Corporate bonds +€15 million), AO UniCredit Bank (+€18 million, mainly due to disposal of Russian Government securities), UniCredit Bank Austria AG (+€14 million, mainly due to disposal of French and Spanish Government securities), UniCredit Bank Czech Republic and Slovakia A.S.(+€12 million, mainly due to disposal of Czech Government securities), UniCredit Bank Ireland PLC. (+€9 million, mainly due to disposal of Russian and Spanish Government securities), UniCredit Bank AG (+€8 million, mainly due to disposal of Italian and Spanish Government securities). Net results of sub-item “3. Available-for-sale financial assets - 3.2 Equity Instruments” equal to +€116 million mainly includes gain on disposal of equity investment in Concardis GMBH (+€39 million), Istituto Europeo di Oncologia S.r.l. (+€20 million), Bayerische Immobilien-Leasing GMBH & CO Verwaltungs- KG (+€19 million), Eramet SA (+€18 million). The sub-item “3. Available-for-sale financial assets - 3.3 Units in Investment funds”, equal to +€111 million, refers to UniCredit S.p.A.(+€44 million due to sales of F2I +€23 million and Fondo Italiano d’investimento +€20 million) and to UniCredit Bank AG (+€64 million due to disposal of F2I). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 258 2018 Annual Report and Accounts · UniCredit Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 7.1 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 6 - - - 6 1.1 Debt securities - - - - - 1.2 Loans 6 - - - 6 2. Financial liabilities 836,182 82,759 (362,829) (144,870) 411,242 2.1 Debt securities 802,704 82,759 (359,117) (138,478) 387,868 2.2 Deposits from banks 15,233 - - - 15,233 2.3 Deposits from customers 18,245 - (3,712) (6,392) 8,141 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - Total 836,188 82,759 (362,829) (144,870) 411,248 Debt securities into financial liabilities include the bond “Secured mandatorily exchangeable equity-linked certificate” issued in the contest of the sale of Bank Pekao S.A. which has contributed for €51 million to the result for the period. Some financial derivatives entered into for economic hedge purposes are linked to financial liabilities represented by debt securities and their economic results are included into table 4.1 Trading result in Part C - Section 4. 7.2 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of other financial assets mandatorily at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 333,179 98,208 (386,706) (166,915) (122,234) 1.1 Debt securities 155,858 72,242 (215,017) (156,302) (143,219) 1.2 Equity securities 48,653 18,227 (123,731) (272) (57,123) 1.3 Units in investment funds 69,256 6,236 (19,114) (887) 55,491 1.4 Loans 59,412 1,503 (28,844) (9,454) 22,617 2. Financial assets: exchange differences X X X X - Total 333,179 98,208 (386,706) (166,915) (122,234) Equity securities into financial assets include effects of the evaluation of residual interests in Bank Pekao S.A. (- €93 million) which has been reclassified into fair value option assets in June 2017 after loose of control due to the closing of the sale process and into assets mandatory at fair value following IFRS9 adoption in 2018. OICR quotes include economic effects from Atlante fund and Italian Recovery Fund, for which refer to specific comment in table 2.5 Financial assets mandatory at fair value in Part B - Section 2. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 258 2018 Annual Report and Accounts · UniCredit Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 7.1 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 6 - - - 6 1.1 Debt securities - - - - - 1.2 Loans 6 - - - 6 2. Financial liabilities 836,182 82,759 (362,829) (144,870) 411,242 2.1 Debt securities 802,704 82,759 (359,117) (138,478) 387,868 2.2 Deposits from banks 15,233 - - - 15,233 2.3 Deposits from customers 18,245 - (3,712) (6,392) 8,141 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - Total 836,188 82,759 (362,829) (144,870) 411,248 Debt securities into financial liabilities include the bond “Secured mandatorily exchangeable equity-linked certificate” issued in the contest of the sale of Bank Pekao S.A. which has contributed for €51 million to the result for the period. Some financial derivatives entered into for economic hedge purposes are linked to financial liabilities represented by debt securities and their economic results are included into table 4.1 Trading result in Part C - Section 4. 7.2 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of other financial assets mandatorily at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 333,179 98,208 (386,706) (166,915) (122,234) 1.1 Debt securities 155,858 72,242 (215,017) (156,302) (143,219) 1.2 Equity securities 48,653 18,227 (123,731) (272) (57,123) 1.3 Units in investment funds 69,256 6,236 (19,114) (887) 55,491 1.4 Loans 59,412 1,503 (28,844) (9,454) 22,617 2. Financial assets: exchange differences X X X X - Total 333,179 98,208 (386,706) (166,915) (122,234) Equity securities into financial assets include effects of the evaluation of residual interests in Bank Pekao S.A. (- €93 million) which has been reclassified into fair value option assets in June 2017 after loose of control due to the closing of the sale process and into assets mandatory at fair value following IFRS9 adoption in 2018. OICR quotes include economic effects from Atlante fund and Italian Recovery Fund, for which refer to specific comment in table 2.5 Financial assets mandatory at fair value in Part B - Section 2. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 258 2018 Annual Report and Accounts · UniCredit Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 7.1 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 6 - - - 6 1.1 Debt securities - - - - - 1.2 Loans 6 - - - 6 2. Financial liabilities 836,182 82,759 (362,829) (144,870) 411,242 2.1 Debt securities 802,704 82,759 (359,117) (138,478) 387,868 2.2 Deposits from banks 15,233 - - - 15,233 2.3 Deposits from customers 18,245 - (3,712) (6,392) 8,141 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - Total 836,188 82,759 (362,829) (144,870) 411,248 Debt securities into financial liabilities include the bond “Secured mandatorily exchangeable equity-linked certificate” issued in the contest of the sale of Bank Pekao S.A. which has contributed for €51 million to the result for the period. Some financial derivatives entered into for economic hedge purposes are linked to financial liabilities represented by debt securities and their economic results are included into table 4.1 Trading result in Part C - Section 4. 7.2 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of other financial assets mandatorily at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 333,179 98,208 (386,706) (166,915) (122,234) 1.1 Debt securities 155,858 72,242 (215,017) (156,302) (143,219) 1.2 Equity securities 48,653 18,227 (123,731) (272) (57,123) 1.3 Units in investment funds 69,256 6,236 (19,114) (887) 55,491 1.4 Loans 59,412 1,503 (28,844) (9,454) 22,617 2. Financial assets: exchange differences X X X X - Total 333,179 98,208 (386,706) (166,915) (122,234) Equity securities into financial assets include effects of the evaluation of residual interests in Bank Pekao S.A. (- €93 million) which has been reclassified into fair value option assets in June 2017 after loose of control due to the closing of the sale process and into assets mandatory at fair value following IFRS9 adoption in 2018. OICR quotes include economic effects from Atlante fund and Italian Recovery Fund, for which refer to specific comment in table 2.5 Financial assets mandatory at fair value in Part B - Section 2. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 258 2018 Annual Report and Accounts · UniCredit Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 7.1 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 6 - - - 6 1.1 Debt securities - - - - - 1.2 Loans 6 - - - 6 2. Financial liabilities 836,182 82,759 (362,829) (144,870) 411,242 2.1 Debt securities 802,704 82,759 (359,117) (138,478) 387,868 2.2 Deposits from banks 15,233 - - - 15,233 2.3 Deposits from customers 18,245 - (3,712) (6,392) 8,141 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - Total 836,188 82,759 (362,829) (144,870) 411,248 Debt securities into financial liabilities include the bond “Secured mandatorily exchangeable equity-linked certificate” issued in the contest of the sale of Bank Pekao S.A. which has contributed for €51 million to the result for the period. Some financial derivatives entered into for economic hedge purposes are linked to financial liabilities represented by debt securities and their economic results are included into table 4.1 Trading result in Part C - Section 4. 7.2 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of other financial assets mandatorily at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 333,179 98,208 (386,706) (166,915) (122,234) 1.1 Debt securities 155,858 72,242 (215,017) (156,302) (143,219) 1.2 Equity securities 48,653 18,227 (123,731) (272) (57,123) 1.3 Units in investment funds 69,256 6,236 (19,114) (887) 55,491 1.4 Loans 59,412 1,503 (28,844) (9,454) 22,617 2. Financial assets: exchange differences X X X X - Total 333,179 98,208 (386,706) (166,915) (122,234) Equity securities into financial assets include effects of the evaluation of residual interests in Bank Pekao S.A. (- €93 million) which has been reclassified into fair value option assets in June 2017 after loose of control due to the closing of the sale process and into assets mandatory at fair value following IFRS9 adoption in 2018. OICR quotes include economic effects from Atlante fund and Italian Recovery Fund, for which refer to specific comment in table 2.5 Financial assets mandatory at fair value in Part B - Section 2. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 258 2018 Annual Report and Accounts · UniCredit Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 7.1 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 6 - - - 6 1.1 Debt securities - - - - - 1.2 Loans 6 - - - 6 2. Financial liabilities 836,182 82,759 (362,829) (144,870) 411,242 2.1 Debt securities 802,704 82,759 (359,117) (138,478) 387,868 2.2 Deposits from banks 15,233 - - - 15,233 2.3 Deposits from customers 18,245 - (3,712) (6,392) 8,141 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - Total 836,188 82,759 (362,829) (144,870) 411,248 Debt securities into financial liabilities include the bond “Secured mandatorily exchangeable equity-linked certificate” issued in the contest of the sale of Bank Pekao S.A. which has contributed for €51 million to the result for the period. Some financial derivatives entered into for economic hedge purposes are linked to financial liabilities represented by debt securities and their economic results are included into table 4.1 Trading result in Part C - Section 4. 7.2 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of other financial assets mandatorily at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 333,179 98,208 (386,706) (166,915) (122,234) 1.1 Debt securities 155,858 72,242 (215,017) (156,302) (143,219) 1.2 Equity securities 48,653 18,227 (123,731) (272) (57,123) 1.3 Units in investment funds 69,256 6,236 (19,114) (887) 55,491 1.4 Loans 59,412 1,503 (28,844) (9,454) 22,617 2. Financial assets: exchange differences X X X X - Total 333,179 98,208 (386,706) (166,915) (122,234) Equity securities into financial assets include effects of the evaluation of residual interests in Bank Pekao S.A. (- €93 million) which has been reclassified into fair value option assets in June 2017 after loose of control due to the closing of the sale process and into assets mandatory at fair value following IFRS9 adoption in 2018. OICR quotes include economic effects from Atlante fund and Italian Recovery Fund, for which refer to specific comment in table 2.5 Financial assets mandatory at fair value in Part B - Section 2. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 259 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 7.1 Net change in financial assets and liabilities at fair value through profit or loss: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALIZED PROFITS REALIZED PROFITS UNREALIZED LOSSES REALIZED LOSSES NET PROFIT 1. Financial assets 91,471 64,543 (299,688) (80,041) (223,715) 1.1 Debt securities 66,769 62,477 (257,001) (78,209) (205,964) 1.2 Equity securities 21,874 500 (2) - 22,372 1.3 Units in investment funds 1,044 1,566 (874) (34) 1,702 1.4 Loans 1,784 - (41,811) (1,798) (41,825) 2. Financial liabilities 60,285 152 (163,104) (45,252) (147,919) 2.1 Debt securities 46,909 152 (163,104) (45,252) (161,295) 2.2 Deposits from banks - - - - - 2.3 Deposits from customers 13,376 - - - 13,376 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - 4. Credit and financial derivatives 553,617 56,368 (310,673) (18,685) 280,627 Total 705,373 121,063 (773,465) (143,978) (91,007) Section 8 - Net losses/recoveries on credit impairment - Item 130 8.1 Net impairment losses for credit risk relating to financial assets at amortised cost: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS - - A. Loans and advances to banks (29,569) (1) (4,807) 33,634 3,175 2,432 - Loans (28,301) (1) (4,807) 33,037 3,175 3,103 - Debt securities (1,268) - - 597 - (671) of which: acquired or originated impaired loans - - - - - - B. Loans and advances to customers (1,481,322) (367,784) (5,973,123) 1,699,181 3,459,053 (2,663,995) - Loans (1,460,142) (367,784) (5,973,123) 1,661,106 3,459,046 (2,680,897) - Debt securities (21,180) - - 38,075 7 16,902 of which: acquired or originated impaired loans (7,270) (1,762) (12,298) 3,281 5,595 (12,454) Total (1,510,891) (367,785) (5,977,930) 1,732,815 3,462,228 (2,661,563) 8.2 Net change for credit risk relating to financial assets at fair value through other comprehensive income: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS - - A. Debt securities (27,514) - - 8,089 43 (19,382) B. Loans (75) - - 61 - (14) - Loans and advances to customers (22) - - 61 - 39 - Loans and advances to banks (53) - - - - (53) of which: acquired or originated impaired financial assets - - - - - - Total (27,589) - - 8,150 43 (19,396) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 259 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 7.1 Net change in financial assets and liabilities at fair value through profit or loss: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALIZED PROFITS REALIZED PROFITS UNREALIZED LOSSES REALIZED LOSSES NET PROFIT 1. Financial assets 91,471 64,543 (299,688) (80,041) (223,715) 1.1 Debt securities 66,769 62,477 (257,001) (78,209) (205,964) 1.2 Equity securities 21,874 500 (2) - 22,372 1.3 Units in investment funds 1,044 1,566 (874) (34) 1,702 1.4 Loans 1,784 - (41,811) (1,798) (41,825) 2. Financial liabilities 60,285 152 (163,104) (45,252) (147,919) 2.1 Debt securities 46,909 152 (163,104) (45,252) (161,295) 2.2 Deposits from banks - - - - - 2.3 Deposits from customers 13,376 - - - 13,376 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - 4. Credit and financial derivatives 553,617 56,368 (310,673) (18,685) 280,627 Total 705,373 121,063 (773,465) (143,978) (91,007) Section 8 - Net losses/recoveries on credit impairment - Item 130 8.1 Net impairment losses for credit risk relating to financial assets at amortised cost: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS - - A. Loans and advances to banks (29,569) (1) (4,807) 33,634 3,175 2,432 - Loans (28,301) (1) (4,807) 33,037 3,175 3,103 - Debt securities (1,268) - - 597 - (671) of which: acquired or originated impaired loans - - - - - - B. Loans and advances to customers (1,481,322) (367,784) (5,973,123) 1,699,181 3,459,053 (2,663,995) - Loans (1,460,142) (367,784) (5,973,123) 1,661,106 3,459,046 (2,680,897) - Debt securities (21,180) - - 38,075 7 16,902 of which: acquired or originated impaired loans (7,270) (1,762) (12,298) 3,281 5,595 (12,454) Total (1,510,891) (367,785) (5,977,930) 1,732,815 3,462,228 (2,661,563) 8.2 Net change for credit risk relating to financial assets at fair value through other comprehensive income: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS - - A. Debt securities (27,514) - - 8,089 43 (19,382) B. Loans (75) - - 61 - (14) - Loans and advances to customers (22) - - 61 - 39 - Loans and advances to banks (53) - - - - (53) of which: acquired or originated impaired financial assets - - - - - - Total (27,589) - - 8,150 43 (19,396) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 259 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 7.1 Net change in financial assets and liabilities at fair value through profit or loss: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALIZED PROFITS REALIZED PROFITS UNREALIZED LOSSES REALIZED LOSSES NET PROFIT 1. Financial assets 91,471 64,543 (299,688) (80,041) (223,715) 1.1 Debt securities 66,769 62,477 (257,001) (78,209) (205,964) 1.2 Equity securities 21,874 500 (2) - 22,372 1.3 Units in investment funds 1,044 1,566 (874) (34) 1,702 1.4 Loans 1,784 - (41,811) (1,798) (41,825) 2. Financial liabilities 60,285 152 (163,104) (45,252) (147,919) 2.1 Debt securities 46,909 152 (163,104) (45,252) (161,295) 2.2 Deposits from banks - - - - - 2.3 Deposits from customers 13,376 - - - 13,376 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - 4. Credit and financial derivatives 553,617 56,368 (310,673) (18,685) 280,627 Total 705,373 121,063 (773,465) (143,978) (91,007) Section 8 - Net losses/recoveries on credit impairment - Item 130 8.1 Net impairment losses for credit risk relating to financial assets at amortised cost: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS - - A. Loans and advances to banks (29,569) (1) (4,807) 33,634 3,175 2,432 - Loans (28,301) (1) (4,807) 33,037 3,175 3,103 - Debt securities (1,268) - - 597 - (671) of which: acquired or originated impaired loans - - - - - - B. Loans and advances to customers (1,481,322) (367,784) (5,973,123) 1,699,181 3,459,053 (2,663,995) - Loans (1,460,142) (367,784) (5,973,123) 1,661,106 3,459,046 (2,680,897) - Debt securities (21,180) - - 38,075 7 16,902 of which: acquired or originated impaired loans (7,270) (1,762) (12,298) 3,281 5,595 (12,454) Total (1,510,891) (367,785) (5,977,930) 1,732,815 3,462,228 (2,661,563) 8.2 Net change for credit risk relating to financial assets at fair value through other comprehensive income: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS - - A. Debt securities (27,514) - - 8,089 43 (19,382) B. Loans (75) - - 61 - (14) - Loans and advances to customers (22) - - 61 - 39 - Loans and advances to banks (53) - - - - (53) of which: acquired or originated impaired financial assets - - - - - - Total (27,589) - - 8,150 43 (19,396) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 259 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 7.1 Net change in financial assets and liabilities at fair value through profit or loss: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALIZED PROFITS REALIZED PROFITS UNREALIZED LOSSES REALIZED LOSSES NET PROFIT 1. Financial assets 91,471 64,543 (299,688) (80,041) (223,715) 1.1 Debt securities 66,769 62,477 (257,001) (78,209) (205,964) 1.2 Equity securities 21,874 500 (2) - 22,372 1.3 Units in investment funds 1,044 1,566 (874) (34) 1,702 1.4 Loans 1,784 - (41,811) (1,798) (41,825) 2. Financial liabilities 60,285 152 (163,104) (45,252) (147,919) 2.1 Debt securities 46,909 152 (163,104) (45,252) (161,295) 2.2 Deposits from banks - - - - - 2.3 Deposits from customers 13,376 - - - 13,376 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - 4. Credit and financial derivatives 553,617 56,368 (310,673) (18,685) 280,627 Total 705,373 121,063 (773,465) (143,978) (91,007) Section 8 - Net losses/recoveries on credit impairment - Item 130 8.1 Net impairment losses for credit risk relating to financial assets at amortised cost: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS - - A. Loans and advances to banks (29,569) (1) (4,807) 33,634 3,175 2,432 - Loans (28,301) (1) (4,807) 33,037 3,175 3,103 - Debt securities (1,268) - - 597 - (671) of which: acquired or originated impaired loans - - - - - - B. Loans and advances to customers (1,481,322) (367,784) (5,973,123) 1,699,181 3,459,053 (2,663,995) - Loans (1,460,142) (367,784) (5,973,123) 1,661,106 3,459,046 (2,680,897) - Debt securities (21,180) - - 38,075 7 16,902 of which: acquired or originated impaired loans (7,270) (1,762) (12,298) 3,281 5,595 (12,454) Total (1,510,891) (367,785) (5,977,930) 1,732,815 3,462,228 (2,661,563) 8.2 Net change for credit risk relating to financial assets at fair value through other comprehensive income: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS - - A. Debt securities (27,514) - - 8,089 43 (19,382) B. Loans (75) - - 61 - (14) - Loans and advances to customers (22) - - 61 - 39 - Loans and advances to banks (53) - - - - (53) of which: acquired or originated impaired financial assets - - - - - - Total (27,589) - - 8,150 43 (19,396) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 259 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 7.1 Net change in financial assets and liabilities at fair value through profit or loss: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALIZED PROFITS REALIZED PROFITS UNREALIZED LOSSES REALIZED LOSSES NET PROFIT 1. Financial assets 91,471 64,543 (299,688) (80,041) (223,715) 1.1 Debt securities 66,769 62,477 (257,001) (78,209) (205,964) 1.2 Equity securities 21,874 500 (2) - 22,372 1.3 Units in investment funds 1,044 1,566 (874) (34) 1,702 1.4 Loans 1,784 - (41,811) (1,798) (41,825) 2. Financial liabilities 60,285 152 (163,104) (45,252) (147,919) 2.1 Debt securities 46,909 152 (163,104) (45,252) (161,295) 2.2 Deposits from banks - - - - - 2.3 Deposits from customers 13,376 - - - 13,376 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - 4. Credit and financial derivatives 553,617 56,368 (310,673) (18,685) 280,627 Total 705,373 121,063 (773,465) (143,978) (91,007) Section 8 - Net losses/recoveries on credit impairment - Item 130 8.1 Net impairment losses for credit risk relating to financial assets at amortised cost: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS - - A. Loans and advances to banks (29,569) (1) (4,807) 33,634 3,175 2,432 - Loans (28,301) (1) (4,807) 33,037 3,175 3,103 - Debt securities (1,268) - - 597 - (671) of which: acquired or originated impaired loans - - - - - - B. Loans and advances to customers (1,481,322) (367,784) (5,973,123) 1,699,181 3,459,053 (2,663,995) - Loans (1,460,142) (367,784) (5,973,123) 1,661,106 3,459,046 (2,680,897) - Debt securities (21,180) - - 38,075 7 16,902 of which: acquired or originated impaired loans (7,270) (1,762) (12,298) 3,281 5,595 (12,454) Total (1,510,891) (367,785) (5,977,930) 1,732,815 3,462,228 (2,661,563) 8.2 Net change for credit risk relating to financial assets at fair value through other comprehensive income: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS - - A. Debt securities (27,514) - - 8,089 43 (19,382) B. Loans (75) - - 61 - (14) - Loans and advances to customers (22) - - 61 - 39 - Loans and advances to banks (53) - - - - (53) of which: acquired or originated impaired financial assets - - - - - - Total (27,589) - - 8,150 43 (19,396) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 260 2018 Annual Report and Accounts · UniCredit The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 8.1 Net impairment losses on loans and receivables: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC PORTFOLIO TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER PORTFOLIO INTEREST OTHER INTEREST OTHER TOTAL A. Loans and receivables with banks (656) (1,245) (6,930) 1 1,195 - 14,042 6,407 - Loans (656) (1,245) (6,930) 1 1,195 - 13,671 6,036 - Debt securities - - - - - - 371 371 B. Loans and receivables with customers (414,955) (5,578,457) (704,301) 488,832 3,098,463 73 1,013,331 (2,097,014) Impaired related to purchase agreements (1,584) (8,080) - 970 6,925 - - (1,769) - Loans (1,584) (8,080) X 970 6,925 X X (1,769) - Debt securities - - X - - X X - Other loans (413,371) (5,570,377) (704,301) 487,862 3,091,538 73 1,013,331 (2,095,245) - Loans (405,210) (5,434,405) (696,874) 487,862 3,073,606 73 1,006,462 (1,968,486) - Debt securities (8,161) (135,972) (7,427) - 17,932 - 6,869 (126,759) C. Total (415,611) (5,579,702) (711,231) 488,833 3,099,658 73 1,027,373 (2,090,607) 8.2 Net impairment losses on available for sale financial assets: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER INTEREST OTHER TOTAL A. Debt securities (78) (26,806) - 2,162 (24,722) B. Equity instruments (62,864) (97,405) X X (160,269) C. Units in investment funds - (149,687) X 36 (149,651) D. Loans to banks - - - - - E. Loans to customers - - - - - F. Total (62,942) (273,898) - 2,198 (334,642) Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 9.1 Gains (Losses) from contractual changes: breakdown (€ '000) YEAR 2018 GAINS LOSSES TOTAL A. Financial assets at amortised costs A.1 Debt securities - - - A.2 Loans to banks - - - A.3 Loans to customers 2,634 (5,636) (3,002) Total (A) 2,634 (5,636) (3,002) B. Financial assets at fair value through other comprehensive income B.1 Debt securities - - - B.2 Loans to banks - - - B.3 Loans to customers - - - Total (B) - - - Total (A+B) 2,634 (5,636) (3,002) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 260 2018 Annual Report and Accounts · UniCredit The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 8.1 Net impairment losses on loans and receivables: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC PORTFOLIO TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER PORTFOLIO INTEREST OTHER INTEREST OTHER TOTAL A. Loans and receivables with banks (656) (1,245) (6,930) 1 1,195 - 14,042 6,407 - Loans (656) (1,245) (6,930) 1 1,195 - 13,671 6,036 - Debt securities - - - - - - 371 371 B. Loans and receivables with customers (414,955) (5,578,457) (704,301) 488,832 3,098,463 73 1,013,331 (2,097,014) Impaired related to purchase agreements (1,584) (8,080) - 970 6,925 - - (1,769) - Loans (1,584) (8,080) X 970 6,925 X X (1,769) - Debt securities - - X - - X X - Other loans (413,371) (5,570,377) (704,301) 487,862 3,091,538 73 1,013,331 (2,095,245) - Loans (405,210) (5,434,405) (696,874) 487,862 3,073,606 73 1,006,462 (1,968,486) - Debt securities (8,161) (135,972) (7,427) - 17,932 - 6,869 (126,759) C. Total (415,611) (5,579,702) (711,231) 488,833 3,099,658 73 1,027,373 (2,090,607) 8.2 Net impairment losses on available for sale financial assets: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER INTEREST OTHER TOTAL A. Debt securities (78) (26,806) - 2,162 (24,722) B. Equity instruments (62,864) (97,405) X X (160,269) C. Units in investment funds - (149,687) X 36 (149,651) D. Loans to banks - - - - - E. Loans to customers - - - - - F. Total (62,942) (273,898) - 2,198 (334,642) Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 9.1 Gains (Losses) from contractual changes: breakdown (€ '000) YEAR 2018 GAINS LOSSES TOTAL A. Financial assets at amortised costs A.1 Debt securities - - - A.2 Loans to banks - - - A.3 Loans to customers 2,634 (5,636) (3,002) Total (A) 2,634 (5,636) (3,002) B. Financial assets at fair value through other comprehensive income B.1 Debt securities - - - B.2 Loans to banks - - - B.3 Loans to customers - - - Total (B) - - - Total (A+B) 2,634 (5,636) (3,002) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 260 2018 Annual Report and Accounts · UniCredit The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 8.1 Net impairment losses on loans and receivables: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC PORTFOLIO TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER PORTFOLIO INTEREST OTHER INTEREST OTHER TOTAL A. Loans and receivables with banks (656) (1,245) (6,930) 1 1,195 - 14,042 6,407 - Loans (656) (1,245) (6,930) 1 1,195 - 13,671 6,036 - Debt securities - - - - - - 371 371 B. Loans and receivables with customers (414,955) (5,578,457) (704,301) 488,832 3,098,463 73 1,013,331 (2,097,014) Impaired related to purchase agreements (1,584) (8,080) - 970 6,925 - - (1,769) - Loans (1,584) (8,080) X 970 6,925 X X (1,769) - Debt securities - - X - - X X - Other loans (413,371) (5,570,377) (704,301) 487,862 3,091,538 73 1,013,331 (2,095,245) - Loans (405,210) (5,434,405) (696,874) 487,862 3,073,606 73 1,006,462 (1,968,486) - Debt securities (8,161) (135,972) (7,427) - 17,932 - 6,869 (126,759) C. Total (415,611) (5,579,702) (711,231) 488,833 3,099,658 73 1,027,373 (2,090,607) 8.2 Net impairment losses on available for sale financial assets: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER INTEREST OTHER TOTAL A. Debt securities (78) (26,806) - 2,162 (24,722) B. Equity instruments (62,864) (97,405) X X (160,269) C. Units in investment funds - (149,687) X 36 (149,651) D. Loans to banks - - - - - E. Loans to customers - - - - - F. Total (62,942) (273,898) - 2,198 (334,642) Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 9.1 Gains (Losses) from contractual changes: breakdown (€ '000) YEAR 2018 GAINS LOSSES TOTAL A. Financial assets at amortised costs A.1 Debt securities - - - A.2 Loans to banks - - - A.3 Loans to customers 2,634 (5,636) (3,002) Total (A) 2,634 (5,636) (3,002) B. Financial assets at fair value through other comprehensive income B.1 Debt securities - - - B.2 Loans to banks - - - B.3 Loans to customers - - - Total (B) - - - Total (A+B) 2,634 (5,636) (3,002) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 260 2018 Annual Report and Accounts · UniCredit The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 8.1 Net impairment losses on loans and receivables: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC PORTFOLIO TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER PORTFOLIO INTEREST OTHER INTEREST OTHER TOTAL A. Loans and receivables with banks (656) (1,245) (6,930) 1 1,195 - 14,042 6,407 - Loans (656) (1,245) (6,930) 1 1,195 - 13,671 6,036 - Debt securities - - - - - - 371 371 B. Loans and receivables with customers (414,955) (5,578,457) (704,301) 488,832 3,098,463 73 1,013,331 (2,097,014) Impaired related to purchase agreements (1,584) (8,080) - 970 6,925 - - (1,769) - Loans (1,584) (8,080) X 970 6,925 X X (1,769) - Debt securities - - X - - X X - Other loans (413,371) (5,570,377) (704,301) 487,862 3,091,538 73 1,013,331 (2,095,245) - Loans (405,210) (5,434,405) (696,874) 487,862 3,073,606 73 1,006,462 (1,968,486) - Debt securities (8,161) (135,972) (7,427) - 17,932 - 6,869 (126,759) C. Total (415,611) (5,579,702) (711,231) 488,833 3,099,658 73 1,027,373 (2,090,607) 8.2 Net impairment losses on available for sale financial assets: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER INTEREST OTHER TOTAL A. Debt securities (78) (26,806) - 2,162 (24,722) B. Equity instruments (62,864) (97,405) X X (160,269) C. Units in investment funds - (149,687) X 36 (149,651) D. Loans to banks - - - - - E. Loans to customers - - - - - F. Total (62,942) (273,898) - 2,198 (334,642) Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 9.1 Gains (Losses) from contractual changes: breakdown (€ '000) YEAR 2018 GAINS LOSSES TOTAL A. Financial assets at amortised costs A.1 Debt securities - - - A.2 Loans to banks - - - A.3 Loans to customers 2,634 (5,636) (3,002) Total (A) 2,634 (5,636) (3,002) B. Financial assets at fair value through other comprehensive income B.1 Debt securities - - - B.2 Loans to banks - - - B.3 Loans to customers - - - Total (B) - - - Total (A+B) 2,634 (5,636) (3,002) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 260 2018 Annual Report and Accounts · UniCredit The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. 8.1 Net impairment losses on loans and receivables: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC PORTFOLIO TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER PORTFOLIO INTEREST OTHER INTEREST OTHER TOTAL A. Loans and receivables with banks (656) (1,245) (6,930) 1 1,195 - 14,042 6,407 - Loans (656) (1,245) (6,930) 1 1,195 - 13,671 6,036 - Debt securities - - - - - - 371 371 B. Loans and receivables with customers (414,955) (5,578,457) (704,301) 488,832 3,098,463 73 1,013,331 (2,097,014) Impaired related to purchase agreements (1,584) (8,080) - 970 6,925 - - (1,769) - Loans (1,584) (8,080) X 970 6,925 X X (1,769) - Debt securities - - X - - X X - Other loans (413,371) (5,570,377) (704,301) 487,862 3,091,538 73 1,013,331 (2,095,245) - Loans (405,210) (5,434,405) (696,874) 487,862 3,073,606 73 1,006,462 (1,968,486) - Debt securities (8,161) (135,972) (7,427) - 17,932 - 6,869 (126,759) C. Total (415,611) (5,579,702) (711,231) 488,833 3,099,658 73 1,027,373 (2,090,607) 8.2 Net impairment losses on available for sale financial assets: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER INTEREST OTHER TOTAL A. Debt securities (78) (26,806) - 2,162 (24,722) B. Equity instruments (62,864) (97,405) X X (160,269) C. Units in investment funds - (149,687) X 36 (149,651) D. Loans to banks - - - - - E. Loans to customers - - - - - F. Total (62,942) (273,898) - 2,198 (334,642) Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 9.1 Gains (Losses) from contractual changes: breakdown (€ '000) YEAR 2018 GAINS LOSSES TOTAL A. Financial assets at amortised costs A.1 Debt securities - - - A.2 Loans to banks - - - A.3 Loans to customers 2,634 (5,636) (3,002) Total (A) 2,634 (5,636) (3,002) B. Financial assets at fair value through other comprehensive income B.1 Debt securities - - - B.2 Loans to banks - - - B.3 Loans to customers - - - Total (B) - - - Total (A+B) 2,634 (5,636) (3,002) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 261 Section 10 - Net premiums - Item 160 There are no amounts to be shown. Section 11 - Other net insurance income/expenses - Item 170 There are no amounts to be shown. Section 12 - Administrative expenses - Item 190 12.1 Staff expenses: breakdown (€ '000) TYPE OF EXPENSES/VALUES YEAR 2018 YEAR 2017 1) Employees (6,404,572) (6,897,184) a) Wages and salaries (4,544,137) (4,891,015) b) Social charges (1,071,182) (1,163,351) c) Severance pay (32,654) (47,191) d) Social security costs - - e) Allocation to employee severance pay provision (17,385) (18,222) f) Provision for retirements and similar provisions (176,638) (181,048) - Defined contribution (3,102) (1,240) - Defined benefit (173,536) (179,808) g) Payments to external pension funds (233,220) (249,622) - Defined contribution (232,143) (247,617) - Defined benefit (1,077) (2,005) h) Costs arising from share-based payments (77,227) (77,133) i) Other employee benefits (252,129) (269,602) 2) Other staff (17,272) (17,716) 3) Directors and Statutory Auditors (8,844) (9,758) 4) Early retirement costs - - 5) Recoveries of payments for second employees to other companies 24,253 22,070 4) Early retirement costs (30,477) (27,544) Total (6,436,912) (6,930,132) The data of the previous period have been restated for the purpose of comparison. The sub-item h) costs related to share-based payments includes also costs for plans referred to equity instruments of other Group’s entities (e.g. FinecoBank S.p.A.). 12.2 Average number of employees by category (€ '000) YEAR 2018 YEAR 2017 Employees 99,332 115,567 a) Senior managers 1,152 1,470 b) Managers 28,024 30,885 c) Remaining employees staff 70,156 83,212 Other Staff 1,442 1,785 Total 100,774 117,352 Employees by category at year end (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Employees 96,348 102,315 a) Senior managers 1,094 1,209 b) Managers 27,032 29,016 c) Remaining employees staff 68,222 72,090 Other Staff 1,427 1,456 Total 97,775 103,771 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 261 Section 10 - Net premiums - Item 160 There are no amounts to be shown. Section 11 - Other net insurance income/expenses - Item 170 There are no amounts to be shown. Section 12 - Administrative expenses - Item 190 12.1 Staff expenses: breakdown (€ '000) TYPE OF EXPENSES/VALUES YEAR 2018 YEAR 2017 1) Employees (6,404,572) (6,897,184) a) Wages and salaries (4,544,137) (4,891,015) b) Social charges (1,071,182) (1,163,351) c) Severance pay (32,654) (47,191) d) Social security costs - - e) Allocation to employee severance pay provision (17,385) (18,222) f) Provision for retirements and similar provisions (176,638) (181,048) - Defined contribution (3,102) (1,240) - Defined benefit (173,536) (179,808) g) Payments to external pension funds (233,220) (249,622) - Defined contribution (232,143) (247,617) - Defined benefit (1,077) (2,005) h) Costs arising from share-based payments (77,227) (77,133) i) Other employee benefits (252,129) (269,602) 2) Other staff (17,272) (17,716) 3) Directors and Statutory Auditors (8,844) (9,758) 4) Early retirement costs - - 5) Recoveries of payments for second employees to other companies 24,253 22,070 4) Early retirement costs (30,477) (27,544) Total (6,436,912) (6,930,132) The data of the previous period have been restated for the purpose of comparison. The sub-item h) costs related to share-based payments includes also costs for plans referred to equity instruments of other Group’s entities (e.g. FinecoBank S.p.A.). 12.2 Average number of employees by category (€ '000) YEAR 2018 YEAR 2017 Employees 99,332 115,567 a) Senior managers 1,152 1,470 b) Managers 28,024 30,885 c) Remaining employees staff 70,156 83,212 Other Staff 1,442 1,785 Total 100,774 117,352 Employees by category at year end (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Employees 96,348 102,315 a) Senior managers 1,094 1,209 b) Managers 27,032 29,016 c) Remaining employees staff 68,222 72,090 Other Staff 1,427 1,456 Total 97,775 103,771 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 261 Section 10 - Net premiums - Item 160 There are no amounts to be shown. Section 11 - Other net insurance income/expenses - Item 170 There are no amounts to be shown. Section 12 - Administrative expenses - Item 190 12.1 Staff expenses: breakdown (€ '000) TYPE OF EXPENSES/VALUES YEAR 2018 YEAR 2017 1) Employees (6,404,572) (6,897,184) a) Wages and salaries (4,544,137) (4,891,015) b) Social charges (1,071,182) (1,163,351) c) Severance pay (32,654) (47,191) d) Social security costs - - e) Allocation to employee severance pay provision (17,385) (18,222) f) Provision for retirements and similar provisions (176,638) (181,048) - Defined contribution (3,102) (1,240) - Defined benefit (173,536) (179,808) g) Payments to external pension funds (233,220) (249,622) - Defined contribution (232,143) (247,617) - Defined benefit (1,077) (2,005) h) Costs arising from share-based payments (77,227) (77,133) i) Other employee benefits (252,129) (269,602) 2) Other staff (17,272) (17,716) 3) Directors and Statutory Auditors (8,844) (9,758) 4) Early retirement costs - - 5) Recoveries of payments for second employees to other companies 24,253 22,070 4) Early retirement costs (30,477) (27,544) Total (6,436,912) (6,930,132) The data of the previous period have been restated for the purpose of comparison. The sub-item h) costs related to share-based payments includes also costs for plans referred to equity instruments of other Group’s entities (e.g. FinecoBank S.p.A.). 12.2 Average number of employees by category (€ '000) YEAR 2018 YEAR 2017 Employees 99,332 115,567 a) Senior managers 1,152 1,470 b) Managers 28,024 30,885 c) Remaining employees staff 70,156 83,212 Other Staff 1,442 1,785 Total 100,774 117,352 Employees by category at year end (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Employees 96,348 102,315 a) Senior managers 1,094 1,209 b) Managers 27,032 29,016 c) Remaining employees staff 68,222 72,090 Other Staff 1,427 1,456 Total 97,775 103,771 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 261 Section 10 - Net premiums - Item 160 There are no amounts to be shown. Section 11 - Other net insurance income/expenses - Item 170 There are no amounts to be shown. Section 12 - Administrative expenses - Item 190 12.1 Staff expenses: breakdown (€ '000) TYPE OF EXPENSES/VALUES YEAR 2018 YEAR 2017 1) Employees (6,404,572) (6,897,184) a) Wages and salaries (4,544,137) (4,891,015) b) Social charges (1,071,182) (1,163,351) c) Severance pay (32,654) (47,191) d) Social security costs - - e) Allocation to employee severance pay provision (17,385) (18,222) f) Provision for retirements and similar provisions (176,638) (181,048) - Defined contribution (3,102) (1,240) - Defined benefit (173,536) (179,808) g) Payments to external pension funds (233,220) (249,622) - Defined contribution (232,143) (247,617) - Defined benefit (1,077) (2,005) h) Costs arising from share-based payments (77,227) (77,133) i) Other employee benefits (252,129) (269,602) 2) Other staff (17,272) (17,716) 3) Directors and Statutory Auditors (8,844) (9,758) 4) Early retirement costs - - 5) Recoveries of payments for second employees to other companies 24,253 22,070 4) Early retirement costs (30,477) (27,544) Total (6,436,912) (6,930,132) The data of the previous period have been restated for the purpose of comparison. The sub-item h) costs related to share-based payments includes also costs for plans referred to equity instruments of other Group’s entities (e.g. FinecoBank S.p.A.). 12.2 Average number of employees by category (€ '000) YEAR 2018 YEAR 2017 Employees 99,332 115,567 a) Senior managers 1,152 1,470 b) Managers 28,024 30,885 c) Remaining employees staff 70,156 83,212 Other Staff 1,442 1,785 Total 100,774 117,352 Employees by category at year end (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Employees 96,348 102,315 a) Senior managers 1,094 1,209 b) Managers 27,032 29,016 c) Remaining employees staff 68,222 72,090 Other Staff 1,427 1,456 Total 97,775 103,771 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 261 Section 10 - Net premiums - Item 160 There are no amounts to be shown. Section 11 - Other net insurance income/expenses - Item 170 There are no amounts to be shown. Section 12 - Administrative expenses - Item 190 12.1 Staff expenses: breakdown (€ '000) TYPE OF EXPENSES/VALUES YEAR 2018 YEAR 2017 1) Employees (6,404,572) (6,897,184) a) Wages and salaries (4,544,137) (4,891,015) b) Social charges (1,071,182) (1,163,351) c) Severance pay (32,654) (47,191) d) Social security costs - - e) Allocation to employee severance pay provision (17,385) (18,222) f) Provision for retirements and similar provisions (176,638) (181,048) - Defined contribution (3,102) (1,240) - Defined benefit (173,536) (179,808) g) Payments to external pension funds (233,220) (249,622) - Defined contribution (232,143) (247,617) - Defined benefit (1,077) (2,005) h) Costs arising from share-based payments (77,227) (77,133) i) Other employee benefits (252,129) (269,602) 2) Other staff (17,272) (17,716) 3) Directors and Statutory Auditors (8,844) (9,758) 4) Early retirement costs - - 5) Recoveries of payments for second employees to other companies 24,253 22,070 4) Early retirement costs (30,477) (27,544) Total (6,436,912) (6,930,132) The data of the previous period have been restated for the purpose of comparison. The sub-item h) costs related to share-based payments includes also costs for plans referred to equity instruments of other Group’s entities (e.g. FinecoBank S.p.A.). 12.2 Average number of employees by category (€ '000) YEAR 2018 YEAR 2017 Employees 99,332 115,567 a) Senior managers 1,152 1,470 b) Managers 28,024 30,885 c) Remaining employees staff 70,156 83,212 Other Staff 1,442 1,785 Total 100,774 117,352 Employees by category at year end (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Employees 96,348 102,315 a) Senior managers 1,094 1,209 b) Managers 27,032 29,016 c) Remaining employees staff 68,222 72,090 Other Staff 1,427 1,456 Total 97,775 103,771 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 262 2018 Annual Report and Accounts · UniCredit 12.3 Defined benefit company retirement funds: costs and revenues (€ '000) YEAR 2018 YEAR 2017 Current service cost (88,432) (99,414) Settlement gains (losses) (808) - Past service cost (3,323) (1,285) Interest cost on the DBO (178,531) (166,232) Interest income on plan assets 97,815 86,930 Other costs/revenues (257) 193 Administrative expenses paid through plan assets - - Total recognised in profit or loss (173,536) (179,808) 12.4 Other employee benefits (€ '000) YEAR 2018 YEAR 2017 - Seniority premiums (6,284) (4,746) - Leaving incentives (14,227) (18,503) - Other (231,618) (246,353) Total (252,129) (269,602) 12.5 Other administrative expenses: breakdown (€ '000) TYPE OF EXPENSES/SECTORS YEAR 2018 YEAR 2017 1) Indirect taxes and duties (746,131) (746,094) 1a. Settled (743,717) (744,881) 1b. Unsettled (2,414) (1,213) 2) Contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) (614,332) (513,262) 3) Guarantee fee for DTA conversion (115,595) 10,062 4) Miscellaneous costs and expenses (3,575,811) (3,889,853) a) Advertising marketing and communication (206,596) (248,959) b) Expenses relating to credit risk (297,895) (351,028) c) Indirect expenses relating to personnel (169,509) (159,525) d) Information & Communication Technology expenses (1,234,744) (1,248,430) Lease of ICT equipment and software (74,354) (74,637) Software expenses: lease and maintenance (221,650) (215,649) ICT communication systems (74,988) (70,973) Services ICT in outsourcing (736,529) (767,261) Financial information providers (127,223) (119,910) e) Consulting and professionals services (258,372) (315,938) Consulting (209,377) (244,555) Legal expenses (48,995) (71,383) f) Real estate expenses (785,225) (847,367) Premises rentals (417,311) (468,737) Utilities (149,953) (152,003) Other real estate expenses (217,961) (226,627) g) Operating costs (623,470) (718,606) Surveillance and security services (49,067) (52,847) Money counting services and transport (54,739) (56,413) Printing and stationery (35,523) (39,264) Postage and transport of documents (83,535) (86,526) Administrative and logistic services (221,644) (243,251) Insurance (74,666) (78,734) Association dues and fees and contributions to the administrative expenses deposit guarantee funds (62,990) (63,194) Other administrative expenses - other (41,306) (98,377) Total (1+2+3+4) (5,051,869) (5,139,147) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 262 2018 Annual Report and Accounts · UniCredit 12.3 Defined benefit company retirement funds: costs and revenues (€ '000) YEAR 2018 YEAR 2017 Current service cost (88,432) (99,414) Settlement gains (losses) (808) - Past service cost (3,323) (1,285) Interest cost on the DBO (178,531) (166,232) Interest income on plan assets 97,815 86,930 Other costs/revenues (257) 193 Administrative expenses paid through plan assets - - Total recognised in profit or loss (173,536) (179,808) 12.4 Other employee benefits (€ '000) YEAR 2018 YEAR 2017 - Seniority premiums (6,284) (4,746) - Leaving incentives (14,227) (18,503) - Other (231,618) (246,353) Total (252,129) (269,602) 12.5 Other administrative expenses: breakdown (€ '000) TYPE OF EXPENSES/SECTORS YEAR 2018 YEAR 2017 1) Indirect taxes and duties (746,131) (746,094) 1a. Settled (743,717) (744,881) 1b. Unsettled (2,414) (1,213) 2) Contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) (614,332) (513,262) 3) Guarantee fee for DTA conversion (115,595) 10,062 4) Miscellaneous costs and expenses (3,575,811) (3,889,853) a) Advertising marketing and communication (206,596) (248,959) b) Expenses relating to credit risk (297,895) (351,028) c) Indirect expenses relating to personnel (169,509) (159,525) d) Information & Communication Technology expenses (1,234,744) (1,248,430) Lease of ICT equipment and software (74,354) (74,637) Software expenses: lease and maintenance (221,650) (215,649) ICT communication systems (74,988) (70,973) Services ICT in outsourcing (736,529) (767,261) Financial information providers (127,223) (119,910) e) Consulting and professionals services (258,372) (315,938) Consulting (209,377) (244,555) Legal expenses (48,995) (71,383) f) Real estate expenses (785,225) (847,367) Premises rentals (417,311) (468,737) Utilities (149,953) (152,003) Other real estate expenses (217,961) (226,627) g) Operating costs (623,470) (718,606) Surveillance and security services (49,067) (52,847) Money counting services and transport (54,739) (56,413) Printing and stationery (35,523) (39,264) Postage and transport of documents (83,535) (86,526) Administrative and logistic services (221,644) (243,251) Insurance (74,666) (78,734) Association dues and fees and contributions to the administrative expenses deposit guarantee funds (62,990) (63,194) Other administrative expenses - other (41,306) (98,377) Total (1+2+3+4) (5,051,869) (5,139,147) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 262 2018 Annual Report and Accounts · UniCredit 12.3 Defined benefit company retirement funds: costs and revenues (€ '000) YEAR 2018 YEAR 2017 Current service cost (88,432) (99,414) Settlement gains (losses) (808) - Past service cost (3,323) (1,285) Interest cost on the DBO (178,531) (166,232) Interest income on plan assets 97,815 86,930 Other costs/revenues (257) 193 Administrative expenses paid through plan assets - - Total recognised in profit or loss (173,536) (179,808) 12.4 Other employee benefits (€ '000) YEAR 2018 YEAR 2017 - Seniority premiums (6,284) (4,746) - Leaving incentives (14,227) (18,503) - Other (231,618) (246,353) Total (252,129) (269,602) 12.5 Other administrative expenses: breakdown (€ '000) TYPE OF EXPENSES/SECTORS YEAR 2018 YEAR 2017 1) Indirect taxes and duties (746,131) (746,094) 1a. Settled (743,717) (744,881) 1b. Unsettled (2,414) (1,213) 2) Contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) (614,332) (513,262) 3) Guarantee fee for DTA conversion (115,595) 10,062 4) Miscellaneous costs and expenses (3,575,811) (3,889,853) a) Advertising marketing and communication (206,596) (248,959) b) Expenses relating to credit risk (297,895) (351,028) c) Indirect expenses relating to personnel (169,509) (159,525) d) Information & Communication Technology expenses (1,234,744) (1,248,430) Lease of ICT equipment and software (74,354) (74,637) Software expenses: lease and maintenance (221,650) (215,649) ICT communication systems (74,988) (70,973) Services ICT in outsourcing (736,529) (767,261) Financial information providers (127,223) (119,910) e) Consulting and professionals services (258,372) (315,938) Consulting (209,377) (244,555) Legal expenses (48,995) (71,383) f) Real estate expenses (785,225) (847,367) Premises rentals (417,311) (468,737) Utilities (149,953) (152,003) Other real estate expenses (217,961) (226,627) g) Operating costs (623,470) (718,606) Surveillance and security services (49,067) (52,847) Money counting services and transport (54,739) (56,413) Printing and stationery (35,523) (39,264) Postage and transport of documents (83,535) (86,526) Administrative and logistic services (221,644) (243,251) Insurance (74,666) (78,734) Association dues and fees and contributions to the administrative expenses deposit guarantee funds (62,990) (63,194) Other administrative expenses - other (41,306) (98,377) Total (1+2+3+4) (5,051,869) (5,139,147) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 262 2018 Annual Report and Accounts · UniCredit 12.3 Defined benefit company retirement funds: costs and revenues (€ '000) YEAR 2018 YEAR 2017 Current service cost (88,432) (99,414) Settlement gains (losses) (808) - Past service cost (3,323) (1,285) Interest cost on the DBO (178,531) (166,232) Interest income on plan assets 97,815 86,930 Other costs/revenues (257) 193 Administrative expenses paid through plan assets - - Total recognised in profit or loss (173,536) (179,808) 12.4 Other employee benefits (€ '000) YEAR 2018 YEAR 2017 - Seniority premiums (6,284) (4,746) - Leaving incentives (14,227) (18,503) - Other (231,618) (246,353) Total (252,129) (269,602) 12.5 Other administrative expenses: breakdown (€ '000) TYPE OF EXPENSES/SECTORS YEAR 2018 YEAR 2017 1) Indirect taxes and duties (746,131) (746,094) 1a. Settled (743,717) (744,881) 1b. Unsettled (2,414) (1,213) 2) Contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) (614,332) (513,262) 3) Guarantee fee for DTA conversion (115,595) 10,062 4) Miscellaneous costs and expenses (3,575,811) (3,889,853) a) Advertising marketing and communication (206,596) (248,959) b) Expenses relating to credit risk (297,895) (351,028) c) Indirect expenses relating to personnel (169,509) (159,525) d) Information & Communication Technology expenses (1,234,744) (1,248,430) Lease of ICT equipment and software (74,354) (74,637) Software expenses: lease and maintenance (221,650) (215,649) ICT communication systems (74,988) (70,973) Services ICT in outsourcing (736,529) (767,261) Financial information providers (127,223) (119,910) e) Consulting and professionals services (258,372) (315,938) Consulting (209,377) (244,555) Legal expenses (48,995) (71,383) f) Real estate expenses (785,225) (847,367) Premises rentals (417,311) (468,737) Utilities (149,953) (152,003) Other real estate expenses (217,961) (226,627) g) Operating costs (623,470) (718,606) Surveillance and security services (49,067) (52,847) Money counting services and transport (54,739) (56,413) Printing and stationery (35,523) (39,264) Postage and transport of documents (83,535) (86,526) Administrative and logistic services (221,644) (243,251) Insurance (74,666) (78,734) Association dues and fees and contributions to the administrative expenses deposit guarantee funds (62,990) (63,194) Other administrative expenses - other (41,306) (98,377) Total (1+2+3+4) (5,051,869) (5,139,147) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 262 2018 Annual Report and Accounts · UniCredit 12.3 Defined benefit company retirement funds: costs and revenues (€ '000) YEAR 2018 YEAR 2017 Current service cost (88,432) (99,414) Settlement gains (losses) (808) - Past service cost (3,323) (1,285) Interest cost on the DBO (178,531) (166,232) Interest income on plan assets 97,815 86,930 Other costs/revenues (257) 193 Administrative expenses paid through plan assets - - Total recognised in profit or loss (173,536) (179,808) 12.4 Other employee benefits (€ '000) YEAR 2018 YEAR 2017 - Seniority premiums (6,284) (4,746) - Leaving incentives (14,227) (18,503) - Other (231,618) (246,353) Total (252,129) (269,602) 12.5 Other administrative expenses: breakdown (€ '000) TYPE OF EXPENSES/SECTORS YEAR 2018 YEAR 2017 1) Indirect taxes and duties (746,131) (746,094) 1a. Settled (743,717) (744,881) 1b. Unsettled (2,414) (1,213) 2) Contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) (614,332) (513,262) 3) Guarantee fee for DTA conversion (115,595) 10,062 4) Miscellaneous costs and expenses (3,575,811) (3,889,853) a) Advertising marketing and communication (206,596) (248,959) b) Expenses relating to credit risk (297,895) (351,028) c) Indirect expenses relating to personnel (169,509) (159,525) d) Information & Communication Technology expenses (1,234,744) (1,248,430) Lease of ICT equipment and software (74,354) (74,637) Software expenses: lease and maintenance (221,650) (215,649) ICT communication systems (74,988) (70,973) Services ICT in outsourcing (736,529) (767,261) Financial information providers (127,223) (119,910) e) Consulting and professionals services (258,372) (315,938) Consulting (209,377) (244,555) Legal expenses (48,995) (71,383) f) Real estate expenses (785,225) (847,367) Premises rentals (417,311) (468,737) Utilities (149,953) (152,003) Other real estate expenses (217,961) (226,627) g) Operating costs (623,470) (718,606) Surveillance and security services (49,067) (52,847) Money counting services and transport (54,739) (56,413) Printing and stationery (35,523) (39,264) Postage and transport of documents (83,535) (86,526) Administrative and logistic services (221,644) (243,251) Insurance (74,666) (78,734) Association dues and fees and contributions to the administrative expenses deposit guarantee funds (62,990) (63,194) Other administrative expenses - other (41,306) (98,377) Total (1+2+3+4) (5,051,869) (5,139,147) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 263 Contributions to Resolution and Guarantee Funds The item Other administrative expenses holds the contributions to resolution funds (“SRF”) and guarantee funds (“DGS”), harmonised and non-harmonised, respectively equal to €400 million (of which €192 from UniCredit S.p.A.) and €215 million (of which €81 from UniCredit S.p.A.). With reference to the harmonised funds, the ordinary annual contributions due pursuant to the Directives No.49 and No.59 of 2014 are accounted for in full when the legal condition of the obligation to make payment and the application of IFRIC21 does not allow the pro-rata attribution to the interim periods. In relation to the contribution obligations described below, such schemes have led to expenses during the period and will result in expenses in future periods as ordinary contribution scheme and potential extraordinary contributions. • With the introduction of the European Directive 2014/59/EU, the Regulation on the Single Resolution Mechanism (“BRRD Directive” Regulation (EU) No.806/2014 of the European Parliament and of the Council dated 15 July 2014) established a framework for the recovery and resolution of crises in credit institutions, by setting up a single resolution committee and a single resolution fund for banks (Single Resolution Fund, “SRF”). The Directive provides for the launch of a compulsory contribution mechanism that entails the collection of the target level of resources by 31 December 2023, equal to 1% of the covered deposits of all the authorised institutions acting in the European territory. The accumulation period may be extended for a further four years if the funding mechanisms have made cumulative disbursements for a percentage higher than 0.5% of the covered deposits. If, after the accumulation period, the available financial resources fall below the target level, the collection of contributions shall resume until that level has been recovered. Additionally, having reached the target level for the first time and, in the event that the available financial resources fall to less than two thirds of the target level, these contributions are set at the level which allows the target level to be reached within a period of six years. The contribution mechanism provides for ordinary annual contributions, with the aim of distributing the costs evenly over time for the contributing banks, and extraordinary additional contributions, of up to three times the expected annual contributions, when the available financial resources are not sufficient to cover the losses and costs of the interventions. A transitional phase of contributions to the national compartments of the SRF and a progressive mutualisation of these are expected. • The Directive 2014/49/EU of 16 April 2014, in relation to the DGS, aims to enhance the protection of depositors through the harmonisation of the related national legislation. The Directive provides for the launch of a mandatory national contribution mechanism that will allow a target level of 0.8% of the amount of its members' covered deposits to be collected by 3 July 2024. The contribution resumes when the financing capacity is below the target level, at least until the target level is reached. If, after the target level has been reached for the first time, the available financial resources have been reduced to below two thirds of the target level, the regular contribution shall be set at a level to achieve the target level within six years. The contribution mechanism provides for ordinary annual contribution instalments, with the aim of distributing the costs evenly over time for the contributing banks, and also extraordinary contributions, if the available financial resources of a DGS are insufficient to repay depositors; the extraordinary contributions cannot exceed 0.5% of covered deposits per calendar year, but in exceptional cases and with the consent of the competent authority, the DGS may demand even higher contributions. The Directives No.49 and No.59 specify the possibility of introducing irrevocable payment commitments as an alternative to collection of fund contributions lost through cash, up to a maximum of 30% of the total resources target. With reference to Directive No.59 (SRF contributions), ordinary contribution sum up to €348 million, extraordinary ones to €52 million (entirely from UniCredit S.p.A.). • Specifically referring to UniCredit S.p.A.: - 2018 ordinary contribution amounts to €140 million. For years 2015, 2016 and 2017 contributions have been respectively €73 million, €107 million and €109 million; - In its capacity as National Resolution Authority (“NRA”), Banca d’Italia, with its Provisions dated 21 November 2015, approved by the Italian Minister of Economy and Finance on 22 November 2015, ordered the launch of a resolution programme (for Banca delle Marche, Banca Popolare dell'Etruria e del Lazio, Cassa di Risparmio di Ferrara, Cassa di Risparmio della Provincia di Chieti). In particular, this related to a restructuring process which resulted in the separation of the non-performing assets of the four banks concerned, which flowed into a “bad bank”, from the rest of the assets and liabilities, that flowed into four new “bridge banks”, held to be sold through a competitive selling procedure on the market. As a result of this intervention, the aforementioned ministerial measures led to a request for extraordinary contributions for 2015, in accordance with Directive 59, established at the maximum rate of three times the ordinary contribution due for 2015. Therefore, UniCredit S.p.A. made an extraordinary contribution of €219 million (equal to 3 times the ordinary annual contribution due in 2015 for the Single Resolution Fund). Further, Italian Legislative Decree 183/2015 (converted into Law 208/2015) also introduced an additional payment commitment for 2016, due to the National Resolution Fund, for the payment of contributions of up to twice the ordinary contribution quotas to the Single Resolution Fund, which could be activated if the funds available to the National Resolution Fund net of recoveries arising from the disposal transactions carried out by the Fund from the assets of the four banks mentioned above were not sufficient to cover the bonds, losses and costs payable by the Fund in relation to the measures provided for by the Provisions launching the resolution. In application of this faculty, in December 2016 additional €214 million (two times the ordinary contribution) have been requested by Banca d’Italia and posted into UniCredit S.p.A. profit and loss and subsequently paid during 2017. The liquidity needed to fund this intervention was provided through a loan in which UniCredit participated. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 263 Contributions to Resolution and Guarantee Funds The item Other administrative expenses holds the contributions to resolution funds (“SRF”) and guarantee funds (“DGS”), harmonised and non-harmonised, respectively equal to €400 million (of which €192 from UniCredit S.p.A.) and €215 million (of which €81 from UniCredit S.p.A.). With reference to the harmonised funds, the ordinary annual contributions due pursuant to the Directives No.49 and No.59 of 2014 are accounted for in full when the legal condition of the obligation to make payment and the application of IFRIC21 does not allow the pro-rata attribution to the interim periods. In relation to the contribution obligations described below, such schemes have led to expenses during the period and will result in expenses in future periods as ordinary contribution scheme and potential extraordinary contributions. • With the introduction of the European Directive 2014/59/EU, the Regulation on the Single Resolution Mechanism (“BRRD Directive” Regulation (EU) No.806/2014 of the European Parliament and of the Council dated 15 July 2014) established a framework for the recovery and resolution of crises in credit institutions, by setting up a single resolution committee and a single resolution fund for banks (Single Resolution Fund, “SRF”). The Directive provides for the launch of a compulsory contribution mechanism that entails the collection of the target level of resources by 31 December 2023, equal to 1% of the covered deposits of all the authorised institutions acting in the European territory. The accumulation period may be extended for a further four years if the funding mechanisms have made cumulative disbursements for a percentage higher than 0.5% of the covered deposits. If, after the accumulation period, the available financial resources fall below the target level, the collection of contributions shall resume until that level has been recovered. Additionally, having reached the target level for the first time and, in the event that the available financial resources fall to less than two thirds of the target level, these contributions are set at the level which allows the target level to be reached within a period of six years. The contribution mechanism provides for ordinary annual contributions, with the aim of distributing the costs evenly over time for the contributing banks, and extraordinary additional contributions, of up to three times the expected annual contributions, when the available financial resources are not sufficient to cover the losses and costs of the interventions. A transitional phase of contributions to the national compartments of the SRF and a progressive mutualisation of these are expected. • The Directive 2014/49/EU of 16 April 2014, in relation to the DGS, aims to enhance the protection of depositors through the harmonisation of the related national legislation. The Directive provides for the launch of a mandatory national contribution mechanism that will allow a target level of 0.8% of the amount of its members' covered deposits to be collected by 3 July 2024. The contribution resumes when the financing capacity is below the target level, at least until the target level is reached. If, after the target level has been reached for the first time, the available financial resources have been reduced to below two thirds of the target level, the regular contribution shall be set at a level to achieve the target level within six years. The contribution mechanism provides for ordinary annual contribution instalments, with the aim of distributing the costs evenly over time for the contributing banks, and also extraordinary contributions, if the available financial resources of a DGS are insufficient to repay depositors; the extraordinary contributions cannot exceed 0.5% of covered deposits per calendar year, but in exceptional cases and with the consent of the competent authority, the DGS may demand even higher contributions. The Directives No.49 and No.59 specify the possibility of introducing irrevocable payment commitments as an alternative to collection of fund contributions lost through cash, up to a maximum of 30% of the total resources target. With reference to Directive No.59 (SRF contributions), ordinary contribution sum up to €348 million, extraordinary ones to €52 million (entirely from UniCredit S.p.A.). • Specifically referring to UniCredit S.p.A.: - 2018 ordinary contribution amounts to €140 million. For years 2015, 2016 and 2017 contributions have been respectively €73 million, €107 million and €109 million; - In its capacity as National Resolution Authority (“NRA”), Banca d’Italia, with its Provisions dated 21 November 2015, approved by the Italian Minister of Economy and Finance on 22 November 2015, ordered the launch of a resolution programme (for Banca delle Marche, Banca Popolare dell'Etruria e del Lazio, Cassa di Risparmio di Ferrara, Cassa di Risparmio della Provincia di Chieti). In particular, this related to a restructuring process which resulted in the separation of the non-performing assets of the four banks concerned, which flowed into a “bad bank”, from the rest of the assets and liabilities, that flowed into four new “bridge banks”, held to be sold through a competitive selling procedure on the market. As a result of this intervention, the aforementioned ministerial measures led to a request for extraordinary contributions for 2015, in accordance with Directive 59, established at the maximum rate of three times the ordinary contribution due for 2015. Therefore, UniCredit S.p.A. made an extraordinary contribution of €219 million (equal to 3 times the ordinary annual contribution due in 2015 for the Single Resolution Fund). Further, Italian Legislative Decree 183/2015 (converted into Law 208/2015) also introduced an additional payment commitment for 2016, due to the National Resolution Fund, for the payment of contributions of up to twice the ordinary contribution quotas to the Single Resolution Fund, which could be activated if the funds available to the National Resolution Fund net of recoveries arising from the disposal transactions carried out by the Fund from the assets of the four banks mentioned above were not sufficient to cover the bonds, losses and costs payable by the Fund in relation to the measures provided for by the Provisions launching the resolution. In application of this faculty, in December 2016 additional €214 million (two times the ordinary contribution) have been requested by Banca d’Italia and posted into UniCredit S.p.A. profit and loss and subsequently paid during 2017. The liquidity needed to fund this intervention was provided through a loan in which UniCredit participated. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 263 Contributions to Resolution and Guarantee Funds The item Other administrative expenses holds the contributions to resolution funds (“SRF”) and guarantee funds (“DGS”), harmonised and non-harmonised, respectively equal to €400 million (of which €192 from UniCredit S.p.A.) and €215 million (of which €81 from UniCredit S.p.A.). With reference to the harmonised funds, the ordinary annual contributions due pursuant to the Directives No.49 and No.59 of 2014 are accounted for in full when the legal condition of the obligation to make payment and the application of IFRIC21 does not allow the pro-rata attribution to the interim periods. In relation to the contribution obligations described below, such schemes have led to expenses during the period and will result in expenses in future periods as ordinary contribution scheme and potential extraordinary contributions. • With the introduction of the European Directive 2014/59/EU, the Regulation on the Single Resolution Mechanism (“BRRD Directive” Regulation (EU) No.806/2014 of the European Parliament and of the Council dated 15 July 2014) established a framework for the recovery and resolution of crises in credit institutions, by setting up a single resolution committee and a single resolution fund for banks (Single Resolution Fund, “SRF”). The Directive provides for the launch of a compulsory contribution mechanism that entails the collection of the target level of resources by 31 December 2023, equal to 1% of the covered deposits of all the authorised institutions acting in the European territory. The accumulation period may be extended for a further four years if the funding mechanisms have made cumulative disbursements for a percentage higher than 0.5% of the covered deposits. If, after the accumulation period, the available financial resources fall below the target level, the collection of contributions shall resume until that level has been recovered. Additionally, having reached the target level for the first time and, in the event that the available financial resources fall to less than two thirds of the target level, these contributions are set at the level which allows the target level to be reached within a period of six years. The contribution mechanism provides for ordinary annual contributions, with the aim of distributing the costs evenly over time for the contributing banks, and extraordinary additional contributions, of up to three times the expected annual contributions, when the available financial resources are not sufficient to cover the losses and costs of the interventions. A transitional phase of contributions to the national compartments of the SRF and a progressive mutualisation of these are expected. • The Directive 2014/49/EU of 16 April 2014, in relation to the DGS, aims to enhance the protection of depositors through the harmonisation of the related national legislation. The Directive provides for the launch of a mandatory national contribution mechanism that will allow a target level of 0.8% of the amount of its members' covered deposits to be collected by 3 July 2024. The contribution resumes when the financing capacity is below the target level, at least until the target level is reached. If, after the target level has been reached for the first time, the available financial resources have been reduced to below two thirds of the target level, the regular contribution shall be set at a level to achieve the target level within six years. The contribution mechanism provides for ordinary annual contribution instalments, with the aim of distributing the costs evenly over time for the contributing banks, and also extraordinary contributions, if the available financial resources of a DGS are insufficient to repay depositors; the extraordinary contributions cannot exceed 0.5% of covered deposits per calendar year, but in exceptional cases and with the consent of the competent authority, the DGS may demand even higher contributions. The Directives No.49 and No.59 specify the possibility of introducing irrevocable payment commitments as an alternative to collection of fund contributions lost through cash, up to a maximum of 30% of the total resources target. With reference to Directive No.59 (SRF contributions), ordinary contribution sum up to €348 million, extraordinary ones to €52 million (entirely from UniCredit S.p.A.). • Specifically referring to UniCredit S.p.A.: - 2018 ordinary contribution amounts to €140 million. For years 2015, 2016 and 2017 contributions have been respectively €73 million, €107 million and €109 million; - In its capacity as National Resolution Authority (“NRA”), Banca d’Italia, with its Provisions dated 21 November 2015, approved by the Italian Minister of Economy and Finance on 22 November 2015, ordered the launch of a resolution programme (for Banca delle Marche, Banca Popolare dell'Etruria e del Lazio, Cassa di Risparmio di Ferrara, Cassa di Risparmio della Provincia di Chieti). In particular, this related to a restructuring process which resulted in the separation of the non-performing assets of the four banks concerned, which flowed into a “bad bank”, from the rest of the assets and liabilities, that flowed into four new “bridge banks”, held to be sold through a competitive selling procedure on the market. As a result of this intervention, the aforementioned ministerial measures led to a request for extraordinary contributions for 2015, in accordance with Directive 59, established at the maximum rate of three times the ordinary contribution due for 2015. Therefore, UniCredit S.p.A. made an extraordinary contribution of €219 million (equal to 3 times the ordinary annual contribution due in 2015 for the Single Resolution Fund). Further, Italian Legislative Decree 183/2015 (converted into Law 208/2015) also introduced an additional payment commitment for 2016, due to the National Resolution Fund, for the payment of contributions of up to twice the ordinary contribution quotas to the Single Resolution Fund, which could be activated if the funds available to the National Resolution Fund net of recoveries arising from the disposal transactions carried out by the Fund from the assets of the four banks mentioned above were not sufficient to cover the bonds, losses and costs payable by the Fund in relation to the measures provided for by the Provisions launching the resolution. In application of this faculty, in December 2016 additional €214 million (two times the ordinary contribution) have been requested by Banca d’Italia and posted into UniCredit S.p.A. profit and loss and subsequently paid during 2017. The liquidity needed to fund this intervention was provided through a loan in which UniCredit participated. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 263 Contributions to Resolution and Guarantee Funds The item Other administrative expenses holds the contributions to resolution funds (“SRF”) and guarantee funds (“DGS”), harmonised and non-harmonised, respectively equal to €400 million (of which €192 from UniCredit S.p.A.) and €215 million (of which €81 from UniCredit S.p.A.). With reference to the harmonised funds, the ordinary annual contributions due pursuant to the Directives No.49 and No.59 of 2014 are accounted for in full when the legal condition of the obligation to make payment and the application of IFRIC21 does not allow the pro-rata attribution to the interim periods. In relation to the contribution obligations described below, such schemes have led to expenses during the period and will result in expenses in future periods as ordinary contribution scheme and potential extraordinary contributions. • With the introduction of the European Directive 2014/59/EU, the Regulation on the Single Resolution Mechanism (“BRRD Directive” Regulation (EU) No.806/2014 of the European Parliament and of the Council dated 15 July 2014) established a framework for the recovery and resolution of crises in credit institutions, by setting up a single resolution committee and a single resolution fund for banks (Single Resolution Fund, “SRF”). The Directive provides for the launch of a compulsory contribution mechanism that entails the collection of the target level of resources by 31 December 2023, equal to 1% of the covered deposits of all the authorised institutions acting in the European territory. The accumulation period may be extended for a further four years if the funding mechanisms have made cumulative disbursements for a percentage higher than 0.5% of the covered deposits. If, after the accumulation period, the available financial resources fall below the target level, the collection of contributions shall resume until that level has been recovered. Additionally, having reached the target level for the first time and, in the event that the available financial resources fall to less than two thirds of the target level, these contributions are set at the level which allows the target level to be reached within a period of six years. The contribution mechanism provides for ordinary annual contributions, with the aim of distributing the costs evenly over time for the contributing banks, and extraordinary additional contributions, of up to three times the expected annual contributions, when the available financial resources are not sufficient to cover the losses and costs of the interventions. A transitional phase of contributions to the national compartments of the SRF and a progressive mutualisation of these are expected. • The Directive 2014/49/EU of 16 April 2014, in relation to the DGS, aims to enhance the protection of depositors through the harmonisation of the related national legislation. The Directive provides for the launch of a mandatory national contribution mechanism that will allow a target level of 0.8% of the amount of its members' covered deposits to be collected by 3 July 2024. The contribution resumes when the financing capacity is below the target level, at least until the target level is reached. If, after the target level has been reached for the first time, the available financial resources have been reduced to below two thirds of the target level, the regular contribution shall be set at a level to achieve the target level within six years. The contribution mechanism provides for ordinary annual contribution instalments, with the aim of distributing the costs evenly over time for the contributing banks, and also extraordinary contributions, if the available financial resources of a DGS are insufficient to repay depositors; the extraordinary contributions cannot exceed 0.5% of covered deposits per calendar year, but in exceptional cases and with the consent of the competent authority, the DGS may demand even higher contributions. The Directives No.49 and No.59 specify the possibility of introducing irrevocable payment commitments as an alternative to collection of fund contributions lost through cash, up to a maximum of 30% of the total resources target. With reference to Directive No.59 (SRF contributions), ordinary contribution sum up to €348 million, extraordinary ones to €52 million (entirely from UniCredit S.p.A.). • Specifically referring to UniCredit S.p.A.: - 2018 ordinary contribution amounts to €140 million. For years 2015, 2016 and 2017 contributions have been respectively €73 million, €107 million and €109 million; - In its capacity as National Resolution Authority (“NRA”), Banca d’Italia, with its Provisions dated 21 November 2015, approved by the Italian Minister of Economy and Finance on 22 November 2015, ordered the launch of a resolution programme (for Banca delle Marche, Banca Popolare dell'Etruria e del Lazio, Cassa di Risparmio di Ferrara, Cassa di Risparmio della Provincia di Chieti). In particular, this related to a restructuring process which resulted in the separation of the non-performing assets of the four banks concerned, which flowed into a “bad bank”, from the rest of the assets and liabilities, that flowed into four new “bridge banks”, held to be sold through a competitive selling procedure on the market. As a result of this intervention, the aforementioned ministerial measures led to a request for extraordinary contributions for 2015, in accordance with Directive 59, established at the maximum rate of three times the ordinary contribution due for 2015. Therefore, UniCredit S.p.A. made an extraordinary contribution of €219 million (equal to 3 times the ordinary annual contribution due in 2015 for the Single Resolution Fund). Further, Italian Legislative Decree 183/2015 (converted into Law 208/2015) also introduced an additional payment commitment for 2016, due to the National Resolution Fund, for the payment of contributions of up to twice the ordinary contribution quotas to the Single Resolution Fund, which could be activated if the funds available to the National Resolution Fund net of recoveries arising from the disposal transactions carried out by the Fund from the assets of the four banks mentioned above were not sufficient to cover the bonds, losses and costs payable by the Fund in relation to the measures provided for by the Provisions launching the resolution. In application of this faculty, in December 2016 additional €214 million (two times the ordinary contribution) have been requested by Banca d’Italia and posted into UniCredit S.p.A. profit and loss and subsequently paid during 2017. The liquidity needed to fund this intervention was provided through a loan in which UniCredit participated. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 263 Contributions to Resolution and Guarantee Funds The item Other administrative expenses holds the contributions to resolution funds (“SRF”) and guarantee funds (“DGS”), harmonised and non-harmonised, respectively equal to €400 million (of which €192 from UniCredit S.p.A.) and €215 million (of which €81 from UniCredit S.p.A.). With reference to the harmonised funds, the ordinary annual contributions due pursuant to the Directives No.49 and No.59 of 2014 are accounted for in full when the legal condition of the obligation to make payment and the application of IFRIC21 does not allow the pro-rata attribution to the interim periods. In relation to the contribution obligations described below, such schemes have led to expenses during the period and will result in expenses in future periods as ordinary contribution scheme and potential extraordinary contributions. • With the introduction of the European Directive 2014/59/EU, the Regulation on the Single Resolution Mechanism (“BRRD Directive” Regulation (EU) No.806/2014 of the European Parliament and of the Council dated 15 July 2014) established a framework for the recovery and resolution of crises in credit institutions, by setting up a single resolution committee and a single resolution fund for banks (Single Resolution Fund, “SRF”). The Directive provides for the launch of a compulsory contribution mechanism that entails the collection of the target level of resources by 31 December 2023, equal to 1% of the covered deposits of all the authorised institutions acting in the European territory. The accumulation period may be extended for a further four years if the funding mechanisms have made cumulative disbursements for a percentage higher than 0.5% of the covered deposits. If, after the accumulation period, the available financial resources fall below the target level, the collection of contributions shall resume until that level has been recovered. Additionally, having reached the target level for the first time and, in the event that the available financial resources fall to less than two thirds of the target level, these contributions are set at the level which allows the target level to be reached within a period of six years. The contribution mechanism provides for ordinary annual contributions, with the aim of distributing the costs evenly over time for the contributing banks, and extraordinary additional contributions, of up to three times the expected annual contributions, when the available financial resources are not sufficient to cover the losses and costs of the interventions. A transitional phase of contributions to the national compartments of the SRF and a progressive mutualisation of these are expected. • The Directive 2014/49/EU of 16 April 2014, in relation to the DGS, aims to enhance the protection of depositors through the harmonisation of the related national legislation. The Directive provides for the launch of a mandatory national contribution mechanism that will allow a target level of 0.8% of the amount of its members' covered deposits to be collected by 3 July 2024. The contribution resumes when the financing capacity is below the target level, at least until the target level is reached. If, after the target level has been reached for the first time, the available financial resources have been reduced to below two thirds of the target level, the regular contribution shall be set at a level to achieve the target level within six years. The contribution mechanism provides for ordinary annual contribution instalments, with the aim of distributing the costs evenly over time for the contributing banks, and also extraordinary contributions, if the available financial resources of a DGS are insufficient to repay depositors; the extraordinary contributions cannot exceed 0.5% of covered deposits per calendar year, but in exceptional cases and with the consent of the competent authority, the DGS may demand even higher contributions. The Directives No.49 and No.59 specify the possibility of introducing irrevocable payment commitments as an alternative to collection of fund contributions lost through cash, up to a maximum of 30% of the total resources target. With reference to Directive No.59 (SRF contributions), ordinary contribution sum up to €348 million, extraordinary ones to €52 million (entirely from UniCredit S.p.A.). • Specifically referring to UniCredit S.p.A.: - 2018 ordinary contribution amounts to €140 million. For years 2015, 2016 and 2017 contributions have been respectively €73 million, €107 million and €109 million; - In its capacity as National Resolution Authority (“NRA”), Banca d’Italia, with its Provisions dated 21 November 2015, approved by the Italian Minister of Economy and Finance on 22 November 2015, ordered the launch of a resolution programme (for Banca delle Marche, Banca Popolare dell'Etruria e del Lazio, Cassa di Risparmio di Ferrara, Cassa di Risparmio della Provincia di Chieti). In particular, this related to a restructuring process which resulted in the separation of the non-performing assets of the four banks concerned, which flowed into a “bad bank”, from the rest of the assets and liabilities, that flowed into four new “bridge banks”, held to be sold through a competitive selling procedure on the market. As a result of this intervention, the aforementioned ministerial measures led to a request for extraordinary contributions for 2015, in accordance with Directive 59, established at the maximum rate of three times the ordinary contribution due for 2015. Therefore, UniCredit S.p.A. made an extraordinary contribution of €219 million (equal to 3 times the ordinary annual contribution due in 2015 for the Single Resolution Fund). Further, Italian Legislative Decree 183/2015 (converted into Law 208/2015) also introduced an additional payment commitment for 2016, due to the National Resolution Fund, for the payment of contributions of up to twice the ordinary contribution quotas to the Single Resolution Fund, which could be activated if the funds available to the National Resolution Fund net of recoveries arising from the disposal transactions carried out by the Fund from the assets of the four banks mentioned above were not sufficient to cover the bonds, losses and costs payable by the Fund in relation to the measures provided for by the Provisions launching the resolution. In application of this faculty, in December 2016 additional €214 million (two times the ordinary contribution) have been requested by Banca d’Italia and posted into UniCredit S.p.A. profit and loss and subsequently paid during 2017. The liquidity needed to fund this intervention was provided through a loan in which UniCredit participated. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 264 2018 Annual Report and Accounts · UniCredit In particular, the intervention of UniCredit entailed: • the provision of a loan in favour of the National Resolution Fund for about €783 million (portion of a total loan of €2,350 million disbursed together with other banks), fully repaid on 21 December 2015 through the liquidity inflow from the ordinary and extraordinary contributions of 2015; • the provision of a further tranche of the loan in favour of the National Resolution Fund for a numina equal to €516 million (portion of a total loan of €1,550 million disbursed together with other banks) and the payment commitment to the National Resolution Fund for an amount of €33 million (portion of a total commitment of €100 million for a further tranche of the loan together with other banks), both closed in June 2017; • the provision of a loan in favour of the National Resolution Fund for about €210 million (portion of a total loan of €1,240 million disbursed together with other banks) maturing in 2021. - In respect of the loan and the commitment, Cassa Depositi e Prestiti has assumed a commitment of financial support in favour of National Resolution Fund in the event of insufficient liquidity to the date of loan maturity, while awaiting that the National Resolution Fund finds the necessary resources through ordinary and/or extraordinary contributions. For facing the reimbursement commitments of capital and interests’ payment, in 2018 €52 million were required as extraordinary contributions. • the instrument of the irrevocable payment commitments has been used by UniCredit S.p.A and its subsidiary UniCredit Bank AG for an amount equal to 15% of full contributions paid in May 2016, resulting in the payment of guarantees in the form of cash amounting respectively to €16 million and €12 million. Referring to ordinary contribution for 2017 and 2018, only UniCredit Bank AG has adopted this faculty for an amount of respectively €14 million and €16 million. The cash collateral has been recognised in the balance sheet as an asset and its contractual characteristics have been taken into account in its measurement. With reference to ordinary contribution for year 2017, UniCredit S.p.A. has not adopted this faculty. With reference to Directive No.49 (DGS contribution), the entire amount refers to ordinary contribution. Guarantee fees for DTA conversion Guarantee fee for DTA conversion, introduced by D.L. 3 May 2016 No.59, Art.11 (“Decreto Banche”, converted into Law No.119 of 30 June 2016), allows, under certain conditions, the possibility to convert into tax credits certain deferred tax assets (“Convertible DTAs”) provided that an irrevocable election for such regime is exercised via the payment of an annual fee (“DTA fee”). According to the original wording of the law, the DTA fee had to be corresponded annually for the period 2015-2029, subsequently the D.L. No.237 of 23 December 2016 (“Decreto salva-risparmio”), converted into Law No.15 of 17 February 2017, modified such period to 2016-2030. In respect of financial year 2018 the fees, paid on 27 June 2018, were accounted for an amount of €115.8 million for the whole Italian Tax Group, out of which €111 million for UniCredit S.p.A., €4.5 million for UniCredit Leasing S.p.A. and €0.3 million for UniCredit Factoring S.p.A. Pursuant to article 2427, first paragraph of the Italian Civil Code, the fees paid to the auditing firm Deloitte & Touche S.p.A. (and firms in its network) by UniCredit S.p.A and the Italian entities of the UniCredit group relating to financial year 2018 were as follows: • legal audit of annual accounts (including the audit of the first half financial report): €5,041 thousand; • other checks: €2,443 thousand; • other non-audit services: €4,295 thousand. The above amounts are net of VAT and expenses. Section 13 - Net provisions for risks and charges - Item 200 13.1 Net provisions for credit risk from loans commitments and financial guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Loan committments (257,460) 288,992 31,532 Financial guarantees given (499,196) 436,465 (62,731) 13.2 Net provisions for other commitments and guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Other committments (9,232) 21,394 12,162 Other guarantees given - - - Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 264 2018 Annual Report and Accounts · UniCredit In particular, the intervention of UniCredit entailed: • the provision of a loan in favour of the National Resolution Fund for about €783 million (portion of a total loan of €2,350 million disbursed together with other banks), fully repaid on 21 December 2015 through the liquidity inflow from the ordinary and extraordinary contributions of 2015; • the provision of a further tranche of the loan in favour of the National Resolution Fund for a numina equal to €516 million (portion of a total loan of €1,550 million disbursed together with other banks) and the payment commitment to the National Resolution Fund for an amount of €33 million (portion of a total commitment of €100 million for a further tranche of the loan together with other banks), both closed in June 2017; • the provision of a loan in favour of the National Resolution Fund for about €210 million (portion of a total loan of €1,240 million disbursed together with other banks) maturing in 2021. - In respect of the loan and the commitment, Cassa Depositi e Prestiti has assumed a commitment of financial support in favour of National Resolution Fund in the event of insufficient liquidity to the date of loan maturity, while awaiting that the National Resolution Fund finds the necessary resources through ordinary and/or extraordinary contributions. For facing the reimbursement commitments of capital and interests’ payment, in 2018 €52 million were required as extraordinary contributions. • the instrument of the irrevocable payment commitments has been used by UniCredit S.p.A and its subsidiary UniCredit Bank AG for an amount equal to 15% of full contributions paid in May 2016, resulting in the payment of guarantees in the form of cash amounting respectively to €16 million and €12 million. Referring to ordinary contribution for 2017 and 2018, only UniCredit Bank AG has adopted this faculty for an amount of respectively €14 million and €16 million. The cash collateral has been recognised in the balance sheet as an asset and its contractual characteristics have been taken into account in its measurement. With reference to ordinary contribution for year 2017, UniCredit S.p.A. has not adopted this faculty. With reference to Directive No.49 (DGS contribution), the entire amount refers to ordinary contribution. Guarantee fees for DTA conversion Guarantee fee for DTA conversion, introduced by D.L. 3 May 2016 No.59, Art.11 (“Decreto Banche”, converted into Law No.119 of 30 June 2016), allows, under certain conditions, the possibility to convert into tax credits certain deferred tax assets (“Convertible DTAs”) provided that an irrevocable election for such regime is exercised via the payment of an annual fee (“DTA fee”). According to the original wording of the law, the DTA fee had to be corresponded annually for the period 2015-2029, subsequently the D.L. No.237 of 23 December 2016 (“Decreto salva-risparmio”), converted into Law No.15 of 17 February 2017, modified such period to 2016-2030. In respect of financial year 2018 the fees, paid on 27 June 2018, were accounted for an amount of €115.8 million for the whole Italian Tax Group, out of which €111 million for UniCredit S.p.A., €4.5 million for UniCredit Leasing S.p.A. and €0.3 million for UniCredit Factoring S.p.A. Pursuant to article 2427, first paragraph of the Italian Civil Code, the fees paid to the auditing firm Deloitte & Touche S.p.A. (and firms in its network) by UniCredit S.p.A and the Italian entities of the UniCredit group relating to financial year 2018 were as follows: • legal audit of annual accounts (including the audit of the first half financial report): €5,041 thousand; • other checks: €2,443 thousand; • other non-audit services: €4,295 thousand. The above amounts are net of VAT and expenses. Section 13 - Net provisions for risks and charges - Item 200 13.1 Net provisions for credit risk from loans commitments and financial guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Loan committments (257,460) 288,992 31,532 Financial guarantees given (499,196) 436,465 (62,731) 13.2 Net provisions for other commitments and guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Other committments (9,232) 21,394 12,162 Other guarantees given - - - Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 264 2018 Annual Report and Accounts · UniCredit In particular, the intervention of UniCredit entailed: • the provision of a loan in favour of the National Resolution Fund for about €783 million (portion of a total loan of €2,350 million disbursed together with other banks), fully repaid on 21 December 2015 through the liquidity inflow from the ordinary and extraordinary contributions of 2015; • the provision of a further tranche of the loan in favour of the National Resolution Fund for a numina equal to €516 million (portion of a total loan of €1,550 million disbursed together with other banks) and the payment commitment to the National Resolution Fund for an amount of €33 million (portion of a total commitment of €100 million for a further tranche of the loan together with other banks), both closed in June 2017; • the provision of a loan in favour of the National Resolution Fund for about €210 million (portion of a total loan of €1,240 million disbursed together with other banks) maturing in 2021. - In respect of the loan and the commitment, Cassa Depositi e Prestiti has assumed a commitment of financial support in favour of National Resolution Fund in the event of insufficient liquidity to the date of loan maturity, while awaiting that the National Resolution Fund finds the necessary resources through ordinary and/or extraordinary contributions. For facing the reimbursement commitments of capital and interests’ payment, in 2018 €52 million were required as extraordinary contributions. • the instrument of the irrevocable payment commitments has been used by UniCredit S.p.A and its subsidiary UniCredit Bank AG for an amount equal to 15% of full contributions paid in May 2016, resulting in the payment of guarantees in the form of cash amounting respectively to €16 million and €12 million. Referring to ordinary contribution for 2017 and 2018, only UniCredit Bank AG has adopted this faculty for an amount of respectively €14 million and €16 million. The cash collateral has been recognised in the balance sheet as an asset and its contractual characteristics have been taken into account in its measurement. With reference to ordinary contribution for year 2017, UniCredit S.p.A. has not adopted this faculty. With reference to Directive No.49 (DGS contribution), the entire amount refers to ordinary contribution. Guarantee fees for DTA conversion Guarantee fee for DTA conversion, introduced by D.L. 3 May 2016 No.59, Art.11 (“Decreto Banche”, converted into Law No.119 of 30 June 2016), allows, under certain conditions, the possibility to convert into tax credits certain deferred tax assets (“Convertible DTAs”) provided that an irrevocable election for such regime is exercised via the payment of an annual fee (“DTA fee”). According to the original wording of the law, the DTA fee had to be corresponded annually for the period 2015-2029, subsequently the D.L. No.237 of 23 December 2016 (“Decreto salva-risparmio”), converted into Law No.15 of 17 February 2017, modified such period to 2016-2030. In respect of financial year 2018 the fees, paid on 27 June 2018, were accounted for an amount of €115.8 million for the whole Italian Tax Group, out of which €111 million for UniCredit S.p.A., €4.5 million for UniCredit Leasing S.p.A. and €0.3 million for UniCredit Factoring S.p.A. Pursuant to article 2427, first paragraph of the Italian Civil Code, the fees paid to the auditing firm Deloitte & Touche S.p.A. (and firms in its network) by UniCredit S.p.A and the Italian entities of the UniCredit group relating to financial year 2018 were as follows: • legal audit of annual accounts (including the audit of the first half financial report): €5,041 thousand; • other checks: €2,443 thousand; • other non-audit services: €4,295 thousand. The above amounts are net of VAT and expenses. Section 13 - Net provisions for risks and charges - Item 200 13.1 Net provisions for credit risk from loans commitments and financial guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Loan committments (257,460) 288,992 31,532 Financial guarantees given (499,196) 436,465 (62,731) 13.2 Net provisions for other commitments and guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Other committments (9,232) 21,394 12,162 Other guarantees given - - - Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 264 2018 Annual Report and Accounts · UniCredit In particular, the intervention of UniCredit entailed: • the provision of a loan in favour of the National Resolution Fund for about €783 million (portion of a total loan of €2,350 million disbursed together with other banks), fully repaid on 21 December 2015 through the liquidity inflow from the ordinary and extraordinary contributions of 2015; • the provision of a further tranche of the loan in favour of the National Resolution Fund for a numina equal to €516 million (portion of a total loan of €1,550 million disbursed together with other banks) and the payment commitment to the National Resolution Fund for an amount of €33 million (portion of a total commitment of €100 million for a further tranche of the loan together with other banks), both closed in June 2017; • the provision of a loan in favour of the National Resolution Fund for about €210 million (portion of a total loan of €1,240 million disbursed together with other banks) maturing in 2021. - In respect of the loan and the commitment, Cassa Depositi e Prestiti has assumed a commitment of financial support in favour of National Resolution Fund in the event of insufficient liquidity to the date of loan maturity, while awaiting that the National Resolution Fund finds the necessary resources through ordinary and/or extraordinary contributions. For facing the reimbursement commitments of capital and interests’ payment, in 2018 €52 million were required as extraordinary contributions. • the instrument of the irrevocable payment commitments has been used by UniCredit S.p.A and its subsidiary UniCredit Bank AG for an amount equal to 15% of full contributions paid in May 2016, resulting in the payment of guarantees in the form of cash amounting respectively to €16 million and €12 million. Referring to ordinary contribution for 2017 and 2018, only UniCredit Bank AG has adopted this faculty for an amount of respectively €14 million and €16 million. The cash collateral has been recognised in the balance sheet as an asset and its contractual characteristics have been taken into account in its measurement. With reference to ordinary contribution for year 2017, UniCredit S.p.A. has not adopted this faculty. With reference to Directive No.49 (DGS contribution), the entire amount refers to ordinary contribution. Guarantee fees for DTA conversion Guarantee fee for DTA conversion, introduced by D.L. 3 May 2016 No.59, Art.11 (“Decreto Banche”, converted into Law No.119 of 30 June 2016), allows, under certain conditions, the possibility to convert into tax credits certain deferred tax assets (“Convertible DTAs”) provided that an irrevocable election for such regime is exercised via the payment of an annual fee (“DTA fee”). According to the original wording of the law, the DTA fee had to be corresponded annually for the period 2015-2029, subsequently the D.L. No.237 of 23 December 2016 (“Decreto salva-risparmio”), converted into Law No.15 of 17 February 2017, modified such period to 2016-2030. In respect of financial year 2018 the fees, paid on 27 June 2018, were accounted for an amount of €115.8 million for the whole Italian Tax Group, out of which €111 million for UniCredit S.p.A., €4.5 million for UniCredit Leasing S.p.A. and €0.3 million for UniCredit Factoring S.p.A. Pursuant to article 2427, first paragraph of the Italian Civil Code, the fees paid to the auditing firm Deloitte & Touche S.p.A. (and firms in its network) by UniCredit S.p.A and the Italian entities of the UniCredit group relating to financial year 2018 were as follows: • legal audit of annual accounts (including the audit of the first half financial report): €5,041 thousand; • other checks: €2,443 thousand; • other non-audit services: €4,295 thousand. The above amounts are net of VAT and expenses. Section 13 - Net provisions for risks and charges - Item 200 13.1 Net provisions for credit risk from loans commitments and financial guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Loan committments (257,460) 288,992 31,532 Financial guarantees given (499,196) 436,465 (62,731) 13.2 Net provisions for other commitments and guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Other committments (9,232) 21,394 12,162 Other guarantees given - - - Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 264 2018 Annual Report and Accounts · UniCredit In particular, the intervention of UniCredit entailed: • the provision of a loan in favour of the National Resolution Fund for about €783 million (portion of a total loan of €2,350 million disbursed together with other banks), fully repaid on 21 December 2015 through the liquidity inflow from the ordinary and extraordinary contributions of 2015; • the provision of a further tranche of the loan in favour of the National Resolution Fund for a numina equal to €516 million (portion of a total loan of €1,550 million disbursed together with other banks) and the payment commitment to the National Resolution Fund for an amount of €33 million (portion of a total commitment of €100 million for a further tranche of the loan together with other banks), both closed in June 2017; • the provision of a loan in favour of the National Resolution Fund for about €210 million (portion of a total loan of €1,240 million disbursed together with other banks) maturing in 2021. - In respect of the loan and the commitment, Cassa Depositi e Prestiti has assumed a commitment of financial support in favour of National Resolution Fund in the event of insufficient liquidity to the date of loan maturity, while awaiting that the National Resolution Fund finds the necessary resources through ordinary and/or extraordinary contributions. For facing the reimbursement commitments of capital and interests’ payment, in 2018 €52 million were required as extraordinary contributions. • the instrument of the irrevocable payment commitments has been used by UniCredit S.p.A and its subsidiary UniCredit Bank AG for an amount equal to 15% of full contributions paid in May 2016, resulting in the payment of guarantees in the form of cash amounting respectively to €16 million and €12 million. Referring to ordinary contribution for 2017 and 2018, only UniCredit Bank AG has adopted this faculty for an amount of respectively €14 million and €16 million. The cash collateral has been recognised in the balance sheet as an asset and its contractual characteristics have been taken into account in its measurement. With reference to ordinary contribution for year 2017, UniCredit S.p.A. has not adopted this faculty. With reference to Directive No.49 (DGS contribution), the entire amount refers to ordinary contribution. Guarantee fees for DTA conversion Guarantee fee for DTA conversion, introduced by D.L. 3 May 2016 No.59, Art.11 (“Decreto Banche”, converted into Law No.119 of 30 June 2016), allows, under certain conditions, the possibility to convert into tax credits certain deferred tax assets (“Convertible DTAs”) provided that an irrevocable election for such regime is exercised via the payment of an annual fee (“DTA fee”). According to the original wording of the law, the DTA fee had to be corresponded annually for the period 2015-2029, subsequently the D.L. No.237 of 23 December 2016 (“Decreto salva-risparmio”), converted into Law No.15 of 17 February 2017, modified such period to 2016-2030. In respect of financial year 2018 the fees, paid on 27 June 2018, were accounted for an amount of €115.8 million for the whole Italian Tax Group, out of which €111 million for UniCredit S.p.A., €4.5 million for UniCredit Leasing S.p.A. and €0.3 million for UniCredit Factoring S.p.A. Pursuant to article 2427, first paragraph of the Italian Civil Code, the fees paid to the auditing firm Deloitte & Touche S.p.A. (and firms in its network) by UniCredit S.p.A and the Italian entities of the UniCredit group relating to financial year 2018 were as follows: • legal audit of annual accounts (including the audit of the first half financial report): €5,041 thousand; • other checks: €2,443 thousand; • other non-audit services: €4,295 thousand. The above amounts are net of VAT and expenses. Section 13 - Net provisions for risks and charges - Item 200 13.1 Net provisions for credit risk from loans commitments and financial guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Loan committments (257,460) 288,992 31,532 Financial guarantees given (499,196) 436,465 (62,731) 13.2 Net provisions for other commitments and guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Other committments (9,232) 21,394 12,162 Other guarantees given - - - Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 265 13.3 Net provisions for risks and charges: breakdown (€ '000) YEAR 2018 YEAR ASSETS/P&L ITEMS PROVISIONS REALLOCATION SURPLUS TOTAL 2017 TOTAL 1. Other provisions 1.1 Legal disputes (1,351,769) 108,304 (1,243,465) (129,678) 1.2 Staff costs (1,743) 546 (1,197) (1,752) 1.3 Other (526,890) 267,586 (259,304) (377,146) Total (1,880,402) 376,436 (1,503,966) (508,576) Net provisions for risks and charges are referred to revocatory action, claims for compensation, legal and other disputes, and are updated on the basis of the evolution of cases in progress and to the assessment of their foreseen outcomes. The item “1.1 Legal disputes” is mainly contributed by provisions made by holding UniCredit S.p.A. and its subsidiary UniCredit Bank AG (see Part E- Section 2 “Risks of the prudential consolidated perimeter” - 1.5 Operational risks - B. Legal risks for further information). The item “1.3 Other” is mainly contributed by provisions made by holding UniCredit S.p.A.for various type of risks for which refer to Part E - Section 2 “Risks of the prudential consolidated” - 1.5 Operational risks - F. Other claims by customers. Section 14 - Net value adjustments/write-backs on property, plant and equipment - Item 210 In 2018 impairment/write-backs on property, plant and equipment amount to -€606 million (as against -€760 million in 2017). The amount of 2018 includes -25 million related to impairment losses/write-backs of inventories evaluated in accordance with IAS2 and recognised in this item following the application of 5th update of the Banca d’Italia Circular 262. The breakdown is provided in the table below: 14.1 Net value adjustments/write-backs on property, plant and equipment: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS DEPRECIATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Property, plant and equipment A.1 Owned (647,121) (94,628) 99,017 (642,732) - Used in the business (602,713) (32,845) 22,595 (612,963) - Held for investment (44,408) (36,658) 76,019 (5,047) - Inventories X (25,125) 403 (24,722) A.2 Finance lease (359) (933) 36,283 34,991 - Used in the business - (933) - (933) - Held for investment (359) - 36,283 35,924 Total A (647,480) (95,561) 135,300 (607,741) B. Non-current assets and groups of assets held for sale X (11,760) 13,427 1,667 - Used in the business X (4,448) 12,850 8,402 - Held for investments X (7,312) 577 (6,735) - Inventories X - - - Total A + B (647,480) (107,321) 148,727 (606,074) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 265 13.3 Net provisions for risks and charges: breakdown (€ '000) YEAR 2018 YEAR ASSETS/P&L ITEMS PROVISIONS REALLOCATION SURPLUS TOTAL 2017 TOTAL 1. Other provisions 1.1 Legal disputes (1,351,769) 108,304 (1,243,465) (129,678) 1.2 Staff costs (1,743) 546 (1,197) (1,752) 1.3 Other (526,890) 267,586 (259,304) (377,146) Total (1,880,402) 376,436 (1,503,966) (508,576) Net provisions for risks and charges are referred to revocatory action, claims for compensation, legal and other disputes, and are updated on the basis of the evolution of cases in progress and to the assessment of their foreseen outcomes. The item “1.1 Legal disputes” is mainly contributed by provisions made by holding UniCredit S.p.A. and its subsidiary UniCredit Bank AG (see Part E- Section 2 “Risks of the prudential consolidated perimeter” - 1.5 Operational risks - B. Legal risks for further information). The item “1.3 Other” is mainly contributed by provisions made by holding UniCredit S.p.A.for various type of risks for which refer to Part E - Section 2 “Risks of the prudential consolidated” - 1.5 Operational risks - F. Other claims by customers. Section 14 - Net value adjustments/write-backs on property, plant and equipment - Item 210 In 2018 impairment/write-backs on property, plant and equipment amount to -€606 million (as against -€760 million in 2017). The amount of 2018 includes -25 million related to impairment losses/write-backs of inventories evaluated in accordance with IAS2 and recognised in this item following the application of 5th update of the Banca d’Italia Circular 262. The breakdown is provided in the table below: 14.1 Net value adjustments/write-backs on property, plant and equipment: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS DEPRECIATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Property, plant and equipment A.1 Owned (647,121) (94,628) 99,017 (642,732) - Used in the business (602,713) (32,845) 22,595 (612,963) - Held for investment (44,408) (36,658) 76,019 (5,047) - Inventories X (25,125) 403 (24,722) A.2 Finance lease (359) (933) 36,283 34,991 - Used in the business - (933) - (933) - Held for investment (359) - 36,283 35,924 Total A (647,480) (95,561) 135,300 (607,741) B. Non-current assets and groups of assets held for sale X (11,760) 13,427 1,667 - Used in the business X (4,448) 12,850 8,402 - Held for investments X (7,312) 577 (6,735) - Inventories X - - - Total A + B (647,480) (107,321) 148,727 (606,074) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 265 13.3 Net provisions for risks and charges: breakdown (€ '000) YEAR 2018 YEAR ASSETS/P&L ITEMS PROVISIONS REALLOCATION SURPLUS TOTAL 2017 TOTAL 1. Other provisions 1.1 Legal disputes (1,351,769) 108,304 (1,243,465) (129,678) 1.2 Staff costs (1,743) 546 (1,197) (1,752) 1.3 Other (526,890) 267,586 (259,304) (377,146) Total (1,880,402) 376,436 (1,503,966) (508,576) Net provisions for risks and charges are referred to revocatory action, claims for compensation, legal and other disputes, and are updated on the basis of the evolution of cases in progress and to the assessment of their foreseen outcomes. The item “1.1 Legal disputes” is mainly contributed by provisions made by holding UniCredit S.p.A. and its subsidiary UniCredit Bank AG (see Part E- Section 2 “Risks of the prudential consolidated perimeter” - 1.5 Operational risks - B. Legal risks for further information). The item “1.3 Other” is mainly contributed by provisions made by holding UniCredit S.p.A.for various type of risks for which refer to Part E - Section 2 “Risks of the prudential consolidated” - 1.5 Operational risks - F. Other claims by customers. Section 14 - Net value adjustments/write-backs on property, plant and equipment - Item 210 In 2018 impairment/write-backs on property, plant and equipment amount to -€606 million (as against -€760 million in 2017). The amount of 2018 includes -25 million related to impairment losses/write-backs of inventories evaluated in accordance with IAS2 and recognised in this item following the application of 5th update of the Banca d’Italia Circular 262. The breakdown is provided in the table below: 14.1 Net value adjustments/write-backs on property, plant and equipment: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS DEPRECIATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Property, plant and equipment A.1 Owned (647,121) (94,628) 99,017 (642,732) - Used in the business (602,713) (32,845) 22,595 (612,963) - Held for investment (44,408) (36,658) 76,019 (5,047) - Inventories X (25,125) 403 (24,722) A.2 Finance lease (359) (933) 36,283 34,991 - Used in the business - (933) - (933) - Held for investment (359) - 36,283 35,924 Total A (647,480) (95,561) 135,300 (607,741) B. Non-current assets and groups of assets held for sale X (11,760) 13,427 1,667 - Used in the business X (4,448) 12,850 8,402 - Held for investments X (7,312) 577 (6,735) - Inventories X - - - Total A + B (647,480) (107,321) 148,727 (606,074) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 265 13.3 Net provisions for risks and charges: breakdown (€ '000) YEAR 2018 YEAR ASSETS/P&L ITEMS PROVISIONS REALLOCATION SURPLUS TOTAL 2017 TOTAL 1. Other provisions 1.1 Legal disputes (1,351,769) 108,304 (1,243,465) (129,678) 1.2 Staff costs (1,743) 546 (1,197) (1,752) 1.3 Other (526,890) 267,586 (259,304) (377,146) Total (1,880,402) 376,436 (1,503,966) (508,576) Net provisions for risks and charges are referred to revocatory action, claims for compensation, legal and other disputes, and are updated on the basis of the evolution of cases in progress and to the assessment of their foreseen outcomes. The item “1.1 Legal disputes” is mainly contributed by provisions made by holding UniCredit S.p.A. and its subsidiary UniCredit Bank AG (see Part E- Section 2 “Risks of the prudential consolidated perimeter” - 1.5 Operational risks - B. Legal risks for further information). The item “1.3 Other” is mainly contributed by provisions made by holding UniCredit S.p.A.for various type of risks for which refer to Part E - Section 2 “Risks of the prudential consolidated” - 1.5 Operational risks - F. Other claims by customers. Section 14 - Net value adjustments/write-backs on property, plant and equipment - Item 210 In 2018 impairment/write-backs on property, plant and equipment amount to -€606 million (as against -€760 million in 2017). The amount of 2018 includes -25 million related to impairment losses/write-backs of inventories evaluated in accordance with IAS2 and recognised in this item following the application of 5th update of the Banca d’Italia Circular 262. The breakdown is provided in the table below: 14.1 Net value adjustments/write-backs on property, plant and equipment: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS DEPRECIATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Property, plant and equipment A.1 Owned (647,121) (94,628) 99,017 (642,732) - Used in the business (602,713) (32,845) 22,595 (612,963) - Held for investment (44,408) (36,658) 76,019 (5,047) - Inventories X (25,125) 403 (24,722) A.2 Finance lease (359) (933) 36,283 34,991 - Used in the business - (933) - (933) - Held for investment (359) - 36,283 35,924 Total A (647,480) (95,561) 135,300 (607,741) B. Non-current assets and groups of assets held for sale X (11,760) 13,427 1,667 - Used in the business X (4,448) 12,850 8,402 - Held for investments X (7,312) 577 (6,735) - Inventories X - - - Total A + B (647,480) (107,321) 148,727 (606,074) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 265 13.3 Net provisions for risks and charges: breakdown (€ '000) YEAR 2018 YEAR ASSETS/P&L ITEMS PROVISIONS REALLOCATION SURPLUS TOTAL 2017 TOTAL 1. Other provisions 1.1 Legal disputes (1,351,769) 108,304 (1,243,465) (129,678) 1.2 Staff costs (1,743) 546 (1,197) (1,752) 1.3 Other (526,890) 267,586 (259,304) (377,146) Total (1,880,402) 376,436 (1,503,966) (508,576) Net provisions for risks and charges are referred to revocatory action, claims for compensation, legal and other disputes, and are updated on the basis of the evolution of cases in progress and to the assessment of their foreseen outcomes. The item “1.1 Legal disputes” is mainly contributed by provisions made by holding UniCredit S.p.A. and its subsidiary UniCredit Bank AG (see Part E- Section 2 “Risks of the prudential consolidated perimeter” - 1.5 Operational risks - B. Legal risks for further information). The item “1.3 Other” is mainly contributed by provisions made by holding UniCredit S.p.A.for various type of risks for which refer to Part E - Section 2 “Risks of the prudential consolidated” - 1.5 Operational risks - F. Other claims by customers. Section 14 - Net value adjustments/write-backs on property, plant and equipment - Item 210 In 2018 impairment/write-backs on property, plant and equipment amount to -€606 million (as against -€760 million in 2017). The amount of 2018 includes -25 million related to impairment losses/write-backs of inventories evaluated in accordance with IAS2 and recognised in this item following the application of 5th update of the Banca d’Italia Circular 262. The breakdown is provided in the table below: 14.1 Net value adjustments/write-backs on property, plant and equipment: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS DEPRECIATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Property, plant and equipment A.1 Owned (647,121) (94,628) 99,017 (642,732) - Used in the business (602,713) (32,845) 22,595 (612,963) - Held for investment (44,408) (36,658) 76,019 (5,047) - Inventories X (25,125) 403 (24,722) A.2 Finance lease (359) (933) 36,283 34,991 - Used in the business - (933) - (933) - Held for investment (359) - 36,283 35,924 Total A (647,480) (95,561) 135,300 (607,741) B. Non-current assets and groups of assets held for sale X (11,760) 13,427 1,667 - Used in the business X (4,448) 12,850 8,402 - Held for investments X (7,312) 577 (6,735) - Inventories X - - - Total A + B (647,480) (107,321) 148,727 (606,074) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 266 2018 Annual Report and Accounts · UniCredit Section 15 - Net value adjustments/write-backs on intangible assets - Item 220 In 2018 impairments/write-backs on intangible assets were -€425 million, against -€407 million in the previous year. Apart from depreciation, in 2018 the impairment of the other intangible assets with finite life was approximately -€13 million, mainly referred to the subsidiary UniCredit Services S.C.p.A. The breakdown is set out in the table below: 15.1 Net value adjustments/write-backs on intangible assets: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS AMORTISATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Intangible assets A.1 Owned (411,841) (13,376) - (425,217) - Generated internally by the company (288,782) (10,142) - (298,924) - Other (123,059) (3,234) - (126,293) A.2 Finance leases - - - - B. Non-current assets and disposal group classified as held for sale X - - - Total (411,841) (13,376) - (425,217) With reference to the Impairment losses of intangible assets - other, see Part B - Consolidated Balance Sheet - Asset - Section 10 - Intangible Assets. Section 16 - Other operating expenses/income - Item 230 Other net operating income: breakdown (€ '000) P&L ITEMS/VALUE YEAR 2018 YEAR 2017 Total of other operating expenses (707,268) (744,399) Total of other operating income 1,725,757 1,780,050 Other net operating income 1,018,489 1,035,651 16.1 Other operating expenses: breakdown (€ '000) TYPE OF EXPENSE/VALUE YEAR 2018 YEAR 2017 Costs for operating leases (4,291) (5,180) Non-deductible tax and other fiscal charges (1,478) (2,296) Write-downs on leasehold improvements (62,043) (78,243) Costs relating to the specific service of financial leasing (93,475) (85,462) Other (545,981) (573,218) Total of other operating expenses (707,268) (744,399) The item “Other” includes: • various settlements and indemnities of €151 million, €190 million in 2017; • additional costs for the leasing business of €19 million, €39 million in 2017; • non-banking business costs €224 million, €102 million in 2017; • charges relating to Group property of €4 million, €21 million in 2017; • additional costs relating to customer accounts of €32 million, €22 million in 2017. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 266 2018 Annual Report and Accounts · UniCredit Section 15 - Net value adjustments/write-backs on intangible assets - Item 220 In 2018 impairments/write-backs on intangible assets were -€425 million, against -€407 million in the previous year. Apart from depreciation, in 2018 the impairment of the other intangible assets with finite life was approximately -€13 million, mainly referred to the subsidiary UniCredit Services S.C.p.A. The breakdown is set out in the table below: 15.1 Net value adjustments/write-backs on intangible assets: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS AMORTISATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Intangible assets A.1 Owned (411,841) (13,376) - (425,217) - Generated internally by the company (288,782) (10,142) - (298,924) - Other (123,059) (3,234) - (126,293) A.2 Finance leases - - - - B. Non-current assets and disposal group classified as held for sale X - - - Total (411,841) (13,376) - (425,217) With reference to the Impairment losses of intangible assets - other, see Part B - Consolidated Balance Sheet - Asset - Section 10 - Intangible Assets. Section 16 - Other operating expenses/income - Item 230 Other net operating income: breakdown (€ '000) P&L ITEMS/VALUE YEAR 2018 YEAR 2017 Total of other operating expenses (707,268) (744,399) Total of other operating income 1,725,757 1,780,050 Other net operating income 1,018,489 1,035,651 16.1 Other operating expenses: breakdown (€ '000) TYPE OF EXPENSE/VALUE YEAR 2018 YEAR 2017 Costs for operating leases (4,291) (5,180) Non-deductible tax and other fiscal charges (1,478) (2,296) Write-downs on leasehold improvements (62,043) (78,243) Costs relating to the specific service of financial leasing (93,475) (85,462) Other (545,981) (573,218) Total of other operating expenses (707,268) (744,399) The item “Other” includes: • various settlements and indemnities of €151 million, €190 million in 2017; • additional costs for the leasing business of €19 million, €39 million in 2017; • non-banking business costs €224 million, €102 million in 2017; • charges relating to Group property of €4 million, €21 million in 2017; • additional costs relating to customer accounts of €32 million, €22 million in 2017. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 266 2018 Annual Report and Accounts · UniCredit Section 15 - Net value adjustments/write-backs on intangible assets - Item 220 In 2018 impairments/write-backs on intangible assets were -€425 million, against -€407 million in the previous year. Apart from depreciation, in 2018 the impairment of the other intangible assets with finite life was approximately -€13 million, mainly referred to the subsidiary UniCredit Services S.C.p.A. The breakdown is set out in the table below: 15.1 Net value adjustments/write-backs on intangible assets: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS AMORTISATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Intangible assets A.1 Owned (411,841) (13,376) - (425,217) - Generated internally by the company (288,782) (10,142) - (298,924) - Other (123,059) (3,234) - (126,293) A.2 Finance leases - - - - B. Non-current assets and disposal group classified as held for sale X - - - Total (411,841) (13,376) - (425,217) With reference to the Impairment losses of intangible assets - other, see Part B - Consolidated Balance Sheet - Asset - Section 10 - Intangible Assets. Section 16 - Other operating expenses/income - Item 230 Other net operating income: breakdown (€ '000) P&L ITEMS/VALUE YEAR 2018 YEAR 2017 Total of other operating expenses (707,268) (744,399) Total of other operating income 1,725,757 1,780,050 Other net operating income 1,018,489 1,035,651 16.1 Other operating expenses: breakdown (€ '000) TYPE OF EXPENSE/VALUE YEAR 2018 YEAR 2017 Costs for operating leases (4,291) (5,180) Non-deductible tax and other fiscal charges (1,478) (2,296) Write-downs on leasehold improvements (62,043) (78,243) Costs relating to the specific service of financial leasing (93,475) (85,462) Other (545,981) (573,218) Total of other operating expenses (707,268) (744,399) The item “Other” includes: • various settlements and indemnities of €151 million, €190 million in 2017; • additional costs for the leasing business of €19 million, €39 million in 2017; • non-banking business costs €224 million, €102 million in 2017; • charges relating to Group property of €4 million, €21 million in 2017; • additional costs relating to customer accounts of €32 million, €22 million in 2017. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 266 2018 Annual Report and Accounts · UniCredit Section 15 - Net value adjustments/write-backs on intangible assets - Item 220 In 2018 impairments/write-backs on intangible assets were -€425 million, against -€407 million in the previous year. Apart from depreciation, in 2018 the impairment of the other intangible assets with finite life was approximately -€13 million, mainly referred to the subsidiary UniCredit Services S.C.p.A. The breakdown is set out in the table below: 15.1 Net value adjustments/write-backs on intangible assets: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS AMORTISATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Intangible assets A.1 Owned (411,841) (13,376) - (425,217) - Generated internally by the company (288,782) (10,142) - (298,924) - Other (123,059) (3,234) - (126,293) A.2 Finance leases - - - - B. Non-current assets and disposal group classified as held for sale X - - - Total (411,841) (13,376) - (425,217) With reference to the Impairment losses of intangible assets - other, see Part B - Consolidated Balance Sheet - Asset - Section 10 - Intangible Assets. Section 16 - Other operating expenses/income - Item 230 Other net operating income: breakdown (€ '000) P&L ITEMS/VALUE YEAR 2018 YEAR 2017 Total of other operating expenses (707,268) (744,399) Total of other operating income 1,725,757 1,780,050 Other net operating income 1,018,489 1,035,651 16.1 Other operating expenses: breakdown (€ '000) TYPE OF EXPENSE/VALUE YEAR 2018 YEAR 2017 Costs for operating leases (4,291) (5,180) Non-deductible tax and other fiscal charges (1,478) (2,296) Write-downs on leasehold improvements (62,043) (78,243) Costs relating to the specific service of financial leasing (93,475) (85,462) Other (545,981) (573,218) Total of other operating expenses (707,268) (744,399) The item “Other” includes: • various settlements and indemnities of €151 million, €190 million in 2017; • additional costs for the leasing business of €19 million, €39 million in 2017; • non-banking business costs €224 million, €102 million in 2017; • charges relating to Group property of €4 million, €21 million in 2017; • additional costs relating to customer accounts of €32 million, €22 million in 2017. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 266 2018 Annual Report and Accounts · UniCredit Section 15 - Net value adjustments/write-backs on intangible assets - Item 220 In 2018 impairments/write-backs on intangible assets were -€425 million, against -€407 million in the previous year. Apart from depreciation, in 2018 the impairment of the other intangible assets with finite life was approximately -€13 million, mainly referred to the subsidiary UniCredit Services S.C.p.A. The breakdown is set out in the table below: 15.1 Net value adjustments/write-backs on intangible assets: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS AMORTISATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Intangible assets A.1 Owned (411,841) (13,376) - (425,217) - Generated internally by the company (288,782) (10,142) - (298,924) - Other (123,059) (3,234) - (126,293) A.2 Finance leases - - - - B. Non-current assets and disposal group classified as held for sale X - - - Total (411,841) (13,376) - (425,217) With reference to the Impairment losses of intangible assets - other, see Part B - Consolidated Balance Sheet - Asset - Section 10 - Intangible Assets. Section 16 - Other operating expenses/income - Item 230 Other net operating income: breakdown (€ '000) P&L ITEMS/VALUE YEAR 2018 YEAR 2017 Total of other operating expenses (707,268) (744,399) Total of other operating income 1,725,757 1,780,050 Other net operating income 1,018,489 1,035,651 16.1 Other operating expenses: breakdown (€ '000) TYPE OF EXPENSE/VALUE YEAR 2018 YEAR 2017 Costs for operating leases (4,291) (5,180) Non-deductible tax and other fiscal charges (1,478) (2,296) Write-downs on leasehold improvements (62,043) (78,243) Costs relating to the specific service of financial leasing (93,475) (85,462) Other (545,981) (573,218) Total of other operating expenses (707,268) (744,399) The item “Other” includes: • various settlements and indemnities of €151 million, €190 million in 2017; • additional costs for the leasing business of €19 million, €39 million in 2017; • non-banking business costs €224 million, €102 million in 2017; • charges relating to Group property of €4 million, €21 million in 2017; • additional costs relating to customer accounts of €32 million, €22 million in 2017. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 267 16.2 Other operating income: breakdown (€ '000) TYPE OF REVENUE/VALUES YEAR 2018 YEAR 2017 A) Recovery of costs 638,863 687,396 B) Other revenues 1,086,894 1,092,654 Revenues from administrative services 47,938 52,500 Revenues on rentals Real Estate investments (net of operating direct costs) 123,014 117,862 Revenues from operating leases 176,498 165,593 Recovery of miscellaneous costs paid in previous years 12,439 7,949 Revenues on financial leases activities 96,752 106,645 Other 630,253 642,105 Total operating income (A+B) 1,725,757 1,780,050 The sub-item “Others” includes: • additional income received from leasing business of €44 million, €47 million in 2017; • income from non-banking business of €364 million, €321 million in 2017; • various income from Group property of €3 million, €11 million in 2017; • payments of indemnities and compensation of €21 million, €43 million in 2017. Section 17 - Gains (Losses) of equity investments - Item 250 In 2018 profit (loss) of associates amounts to -€97 million (+€576 million in 2017), attributable to jointly owned companies for -€545 million and to companies subject to significant influence for +€447 million. The negative variation compared with the previous year, equal to -€674 million is mainly due to the impairment of Koc Group, -€851 million, booked in the 2018. This result consists of “A. Income” of +€807 million and “B. Expense” of -€905 million. In more detail: • sub-item “A. Income” includes: - +€650 million gains related to gains on companies valued at Equity method: Koc Finansal Hizmetler As (+€299 million),Mediobanca Banca Di Credito Finanziario S.p.A. (+€68 million), Oberbank Ag (+€61 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (+€44 million), Creditras Vita S.p.A. (+€42 million), Camfin S.p.A. (+€29 million), Bks Bank Ag (+€21 million), Oesterreichische Kontrollbank Aktiengesellschaft (+€20 million), Aviva S.p.A. (+€18 million), Barn Bv (+€14 million), Cnp UniCredit Vita S.p.A. (+€10 million); - +€130 million of gain on disposal mainly attributable to Custodia Valore - Credito su Pegno S.r.l. (+€114 million), Megapark Ood. (+€8 million), Marina Tower Holding Gmbh (+€5 million); - +€27 million of write-backs mainly due to Bks Bank Ag (+€27 million). • sub-item “B. Expense” includes: - -€5 million of write-downs mainly referred to losses on companies valued at Equity method: Da Vinci S.r.l. (-€2 million), Cbd International Sp.Zo.O. (-€1 million), Paydirekt Beteiligungsgesellschaft Privater Banken Mbh (-€1 million); - -€897 million of impairment losses, mainly attributable to write-downs on investments valued at Equity method, as Koc Finansal Hizmetler As (-€851 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (-€28 million), Risanamento S.p.A. (-€6 million) and to permanent write-downs on positive differences in net equity, related to Cbd International Sp.Zo.O. (-€4 million); - -€2 million of loss on disposal, mainly due to the impact arising from the dilution of holding percentage of Mediobanca Banca Di Credito Finanziario S.p.A. (-€2 million). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 267 16.2 Other operating income: breakdown (€ '000) TYPE OF REVENUE/VALUES YEAR 2018 YEAR 2017 A) Recovery of costs 638,863 687,396 B) Other revenues 1,086,894 1,092,654 Revenues from administrative services 47,938 52,500 Revenues on rentals Real Estate investments (net of operating direct costs) 123,014 117,862 Revenues from operating leases 176,498 165,593 Recovery of miscellaneous costs paid in previous years 12,439 7,949 Revenues on financial leases activities 96,752 106,645 Other 630,253 642,105 Total operating income (A+B) 1,725,757 1,780,050 The sub-item “Others” includes: • additional income received from leasing business of €44 million, €47 million in 2017; • income from non-banking business of €364 million, €321 million in 2017; • various income from Group property of €3 million, €11 million in 2017; • payments of indemnities and compensation of €21 million, €43 million in 2017. Section 17 - Gains (Losses) of equity investments - Item 250 In 2018 profit (loss) of associates amounts to -€97 million (+€576 million in 2017), attributable to jointly owned companies for -€545 million and to companies subject to significant influence for +€447 million. The negative variation compared with the previous year, equal to -€674 million is mainly due to the impairment of Koc Group, -€851 million, booked in the 2018. This result consists of “A. Income” of +€807 million and “B. Expense” of -€905 million. In more detail: • sub-item “A. Income” includes: - +€650 million gains related to gains on companies valued at Equity method: Koc Finansal Hizmetler As (+€299 million),Mediobanca Banca Di Credito Finanziario S.p.A. (+€68 million), Oberbank Ag (+€61 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (+€44 million), Creditras Vita S.p.A. (+€42 million), Camfin S.p.A. (+€29 million), Bks Bank Ag (+€21 million), Oesterreichische Kontrollbank Aktiengesellschaft (+€20 million), Aviva S.p.A. (+€18 million), Barn Bv (+€14 million), Cnp UniCredit Vita S.p.A. (+€10 million); - +€130 million of gain on disposal mainly attributable to Custodia Valore - Credito su Pegno S.r.l. (+€114 million), Megapark Ood. (+€8 million), Marina Tower Holding Gmbh (+€5 million); - +€27 million of write-backs mainly due to Bks Bank Ag (+€27 million). • sub-item “B. Expense” includes: - -€5 million of write-downs mainly referred to losses on companies valued at Equity method: Da Vinci S.r.l. (-€2 million), Cbd International Sp.Zo.O. (-€1 million), Paydirekt Beteiligungsgesellschaft Privater Banken Mbh (-€1 million); - -€897 million of impairment losses, mainly attributable to write-downs on investments valued at Equity method, as Koc Finansal Hizmetler As (-€851 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (-€28 million), Risanamento S.p.A. (-€6 million) and to permanent write-downs on positive differences in net equity, related to Cbd International Sp.Zo.O. (-€4 million); - -€2 million of loss on disposal, mainly due to the impact arising from the dilution of holding percentage of Mediobanca Banca Di Credito Finanziario S.p.A. (-€2 million). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 267 16.2 Other operating income: breakdown (€ '000) TYPE OF REVENUE/VALUES YEAR 2018 YEAR 2017 A) Recovery of costs 638,863 687,396 B) Other revenues 1,086,894 1,092,654 Revenues from administrative services 47,938 52,500 Revenues on rentals Real Estate investments (net of operating direct costs) 123,014 117,862 Revenues from operating leases 176,498 165,593 Recovery of miscellaneous costs paid in previous years 12,439 7,949 Revenues on financial leases activities 96,752 106,645 Other 630,253 642,105 Total operating income (A+B) 1,725,757 1,780,050 The sub-item “Others” includes: • additional income received from leasing business of €44 million, €47 million in 2017; • income from non-banking business of €364 million, €321 million in 2017; • various income from Group property of €3 million, €11 million in 2017; • payments of indemnities and compensation of €21 million, €43 million in 2017. Section 17 - Gains (Losses) of equity investments - Item 250 In 2018 profit (loss) of associates amounts to -€97 million (+€576 million in 2017), attributable to jointly owned companies for -€545 million and to companies subject to significant influence for +€447 million. The negative variation compared with the previous year, equal to -€674 million is mainly due to the impairment of Koc Group, -€851 million, booked in the 2018. This result consists of “A. Income” of +€807 million and “B. Expense” of -€905 million. In more detail: • sub-item “A. Income” includes: - +€650 million gains related to gains on companies valued at Equity method: Koc Finansal Hizmetler As (+€299 million),Mediobanca Banca Di Credito Finanziario S.p.A. (+€68 million), Oberbank Ag (+€61 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (+€44 million), Creditras Vita S.p.A. (+€42 million), Camfin S.p.A. (+€29 million), Bks Bank Ag (+€21 million), Oesterreichische Kontrollbank Aktiengesellschaft (+€20 million), Aviva S.p.A. (+€18 million), Barn Bv (+€14 million), Cnp UniCredit Vita S.p.A. (+€10 million); - +€130 million of gain on disposal mainly attributable to Custodia Valore - Credito su Pegno S.r.l. (+€114 million), Megapark Ood. (+€8 million), Marina Tower Holding Gmbh (+€5 million); - +€27 million of write-backs mainly due to Bks Bank Ag (+€27 million). • sub-item “B. Expense” includes: - -€5 million of write-downs mainly referred to losses on companies valued at Equity method: Da Vinci S.r.l. (-€2 million), Cbd International Sp.Zo.O. (-€1 million), Paydirekt Beteiligungsgesellschaft Privater Banken Mbh (-€1 million); - -€897 million of impairment losses, mainly attributable to write-downs on investments valued at Equity method, as Koc Finansal Hizmetler As (-€851 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (-€28 million), Risanamento S.p.A. (-€6 million) and to permanent write-downs on positive differences in net equity, related to Cbd International Sp.Zo.O. (-€4 million); - -€2 million of loss on disposal, mainly due to the impact arising from the dilution of holding percentage of Mediobanca Banca Di Credito Finanziario S.p.A. (-€2 million). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 267 16.2 Other operating income: breakdown (€ '000) TYPE OF REVENUE/VALUES YEAR 2018 YEAR 2017 A) Recovery of costs 638,863 687,396 B) Other revenues 1,086,894 1,092,654 Revenues from administrative services 47,938 52,500 Revenues on rentals Real Estate investments (net of operating direct costs) 123,014 117,862 Revenues from operating leases 176,498 165,593 Recovery of miscellaneous costs paid in previous years 12,439 7,949 Revenues on financial leases activities 96,752 106,645 Other 630,253 642,105 Total operating income (A+B) 1,725,757 1,780,050 The sub-item “Others” includes: • additional income received from leasing business of €44 million, €47 million in 2017; • income from non-banking business of €364 million, €321 million in 2017; • various income from Group property of €3 million, €11 million in 2017; • payments of indemnities and compensation of €21 million, €43 million in 2017. Section 17 - Gains (Losses) of equity investments - Item 250 In 2018 profit (loss) of associates amounts to -€97 million (+€576 million in 2017), attributable to jointly owned companies for -€545 million and to companies subject to significant influence for +€447 million. The negative variation compared with the previous year, equal to -€674 million is mainly due to the impairment of Koc Group, -€851 million, booked in the 2018. This result consists of “A. Income” of +€807 million and “B. Expense” of -€905 million. In more detail: • sub-item “A. Income” includes: - +€650 million gains related to gains on companies valued at Equity method: Koc Finansal Hizmetler As (+€299 million),Mediobanca Banca Di Credito Finanziario S.p.A. (+€68 million), Oberbank Ag (+€61 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (+€44 million), Creditras Vita S.p.A. (+€42 million), Camfin S.p.A. (+€29 million), Bks Bank Ag (+€21 million), Oesterreichische Kontrollbank Aktiengesellschaft (+€20 million), Aviva S.p.A. (+€18 million), Barn Bv (+€14 million), Cnp UniCredit Vita S.p.A. (+€10 million); - +€130 million of gain on disposal mainly attributable to Custodia Valore - Credito su Pegno S.r.l. (+€114 million), Megapark Ood. (+€8 million), Marina Tower Holding Gmbh (+€5 million); - +€27 million of write-backs mainly due to Bks Bank Ag (+€27 million). • sub-item “B. Expense” includes: - -€5 million of write-downs mainly referred to losses on companies valued at Equity method: Da Vinci S.r.l. (-€2 million), Cbd International Sp.Zo.O. (-€1 million), Paydirekt Beteiligungsgesellschaft Privater Banken Mbh (-€1 million); - -€897 million of impairment losses, mainly attributable to write-downs on investments valued at Equity method, as Koc Finansal Hizmetler As (-€851 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (-€28 million), Risanamento S.p.A. (-€6 million) and to permanent write-downs on positive differences in net equity, related to Cbd International Sp.Zo.O. (-€4 million); - -€2 million of loss on disposal, mainly due to the impact arising from the dilution of holding percentage of Mediobanca Banca Di Credito Finanziario S.p.A. (-€2 million). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 267 16.2 Other operating income: breakdown (€ '000) TYPE OF REVENUE/VALUES YEAR 2018 YEAR 2017 A) Recovery of costs 638,863 687,396 B) Other revenues 1,086,894 1,092,654 Revenues from administrative services 47,938 52,500 Revenues on rentals Real Estate investments (net of operating direct costs) 123,014 117,862 Revenues from operating leases 176,498 165,593 Recovery of miscellaneous costs paid in previous years 12,439 7,949 Revenues on financial leases activities 96,752 106,645 Other 630,253 642,105 Total operating income (A+B) 1,725,757 1,780,050 The sub-item “Others” includes: • additional income received from leasing business of €44 million, €47 million in 2017; • income from non-banking business of €364 million, €321 million in 2017; • various income from Group property of €3 million, €11 million in 2017; • payments of indemnities and compensation of €21 million, €43 million in 2017. Section 17 - Gains (Losses) of equity investments - Item 250 In 2018 profit (loss) of associates amounts to -€97 million (+€576 million in 2017), attributable to jointly owned companies for -€545 million and to companies subject to significant influence for +€447 million. The negative variation compared with the previous year, equal to -€674 million is mainly due to the impairment of Koc Group, -€851 million, booked in the 2018. This result consists of “A. Income” of +€807 million and “B. Expense” of -€905 million. In more detail: • sub-item “A. Income” includes: - +€650 million gains related to gains on companies valued at Equity method: Koc Finansal Hizmetler As (+€299 million),Mediobanca Banca Di Credito Finanziario S.p.A. (+€68 million), Oberbank Ag (+€61 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (+€44 million), Creditras Vita S.p.A. (+€42 million), Camfin S.p.A. (+€29 million), Bks Bank Ag (+€21 million), Oesterreichische Kontrollbank Aktiengesellschaft (+€20 million), Aviva S.p.A. (+€18 million), Barn Bv (+€14 million), Cnp UniCredit Vita S.p.A. (+€10 million); - +€130 million of gain on disposal mainly attributable to Custodia Valore - Credito su Pegno S.r.l. (+€114 million), Megapark Ood. (+€8 million), Marina Tower Holding Gmbh (+€5 million); - +€27 million of write-backs mainly due to Bks Bank Ag (+€27 million). • sub-item “B. Expense” includes: - -€5 million of write-downs mainly referred to losses on companies valued at Equity method: Da Vinci S.r.l. (-€2 million), Cbd International Sp.Zo.O. (-€1 million), Paydirekt Beteiligungsgesellschaft Privater Banken Mbh (-€1 million); - -€897 million of impairment losses, mainly attributable to write-downs on investments valued at Equity method, as Koc Finansal Hizmetler As (-€851 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (-€28 million), Risanamento S.p.A. (-€6 million) and to permanent write-downs on positive differences in net equity, related to Cbd International Sp.Zo.O. (-€4 million); - -€2 million of loss on disposal, mainly due to the impact arising from the dilution of holding percentage of Mediobanca Banca Di Credito Finanziario S.p.A. (-€2 million). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 268 2018 Annual Report and Accounts · UniCredit During 2018 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. 17.1 Gains (Losses) of equity investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1) Jointly owned companies - Equity A. Income 306,155 293,741 1. Revaluations 298,927 285,289 2. Gains on disposal 7,228 - 3. Write-backs - 8,452 4. Other gains - - B. Expenses (850,741) (17) 1. Write-downs (28) (17) 2. Impairment losses (850,713) - 3. Losses on disposal - - 4. Other expenses - - Net profit (544,586) 293,724 2) Companies under significant influence A. Income 500,982 305,465 1. Revaluations 350,786 303,100 2. Gains on disposal 123,097 171 3. Write-backs 27,099 2,194 4. Other gains - - B. Expenses (53,848) (22,863) 1. Write-downs (5,468) (6,879) 2. Impairment losses (45,924) (8,328) 3. Losses on disposal (2,456) (7,656) 4. Other expenses - - Net profit 447,134 282,602 Total (97,452) 576,326 In 2017 profit (loss) of associates amounts to +€576 million, attributable to jointly owned companies for +€294 million and to companies subject to significant influence for +€283 million. This result consists of “A. Income” of +€599 million and “B. Expense” of -€23 million. In more detail: • sub-item “A. Income” includes: - +€588 million gains related to gains on companies valued at Equity method: Koc Finansal Hizmetler As (+€285 million),Mediobanca Banca Di Credito Finanziario S.p.A. (+€66 million), Oberbank Ag (+€55 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (+€34 million), Creditras Vita S.p.A. (+€27 million), Aviva S.p.A. (+€23 million), Cnp UniCredit Vita S.p.A. (+€20 million), Oesterreichische Kontrollbank Aktiengesellschaft (+€19 million), Bks Bank Ag (+€18 million), Barn Bv (+€11 million); Incontra Assicurazioni S.p.A.(+€6 million); - +€11 million write-backs mainly due to Koc Finansal Hizmetler As (+€8 million) e a Fenice S.r.l. (+€2 million); • sub-item “B. Expense” includes: - -€7 million of write-downs mainly referred to losses on companies valued at Equity method: Torre S.g.r S.p.A. (-€3 million) e Da Vinci S.r.l. (-€2 million); - -€8 million of impairment losses, mainly attributable to write-downs on investments valued at Equity method, as Compagnia Aerea Italiana S.p.A. (-€5 million) and on investment valued at cost Moneymap GMBH (-€3 million); - -€8 million loss on disposal, mainly attributable to the impact arising from the dilution of holding percentage of Mediobanca Banca Di Credito Finanziario S.p.A. (-€8 million). During 2017 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 268 2018 Annual Report and Accounts · UniCredit During 2018 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. 17.1 Gains (Losses) of equity investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1) Jointly owned companies - Equity A. Income 306,155 293,741 1. Revaluations 298,927 285,289 2. Gains on disposal 7,228 - 3. Write-backs - 8,452 4. Other gains - - B. Expenses (850,741) (17) 1. Write-downs (28) (17) 2. Impairment losses (850,713) - 3. Losses on disposal - - 4. Other expenses - - Net profit (544,586) 293,724 2) Companies under significant influence A. Income 500,982 305,465 1. Revaluations 350,786 303,100 2. Gains on disposal 123,097 171 3. Write-backs 27,099 2,194 4. Other gains - - B. Expenses (53,848) (22,863) 1. Write-downs (5,468) (6,879) 2. Impairment losses (45,924) (8,328) 3. Losses on disposal (2,456) (7,656) 4. Other expenses - - Net profit 447,134 282,602 Total (97,452) 576,326 In 2017 profit (loss) of associates amounts to +€576 million, attributable to jointly owned companies for +€294 million and to companies subject to significant influence for +€283 million. This result consists of “A. Income” of +€599 million and “B. Expense” of -€23 million. In more detail: • sub-item “A. Income” includes: - +€588 million gains related to gains on companies valued at Equity method: Koc Finansal Hizmetler As (+€285 million),Mediobanca Banca Di Credito Finanziario S.p.A. (+€66 million), Oberbank Ag (+€55 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (+€34 million), Creditras Vita S.p.A. (+€27 million), Aviva S.p.A. (+€23 million), Cnp UniCredit Vita S.p.A. (+€20 million), Oesterreichische Kontrollbank Aktiengesellschaft (+€19 million), Bks Bank Ag (+€18 million), Barn Bv (+€11 million); Incontra Assicurazioni S.p.A.(+€6 million); - +€11 million write-backs mainly due to Koc Finansal Hizmetler As (+€8 million) e a Fenice S.r.l. (+€2 million); • sub-item “B. Expense” includes: - -€7 million of write-downs mainly referred to losses on companies valued at Equity method: Torre S.g.r S.p.A. (-€3 million) e Da Vinci S.r.l. (-€2 million); - -€8 million of impairment losses, mainly attributable to write-downs on investments valued at Equity method, as Compagnia Aerea Italiana S.p.A. (-€5 million) and on investment valued at cost Moneymap GMBH (-€3 million); - -€8 million loss on disposal, mainly attributable to the impact arising from the dilution of holding percentage of Mediobanca Banca Di Credito Finanziario S.p.A. (-€8 million). During 2017 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 268 2018 Annual Report and Accounts · UniCredit During 2018 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. 17.1 Gains (Losses) of equity investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1) Jointly owned companies - Equity A. Income 306,155 293,741 1. Revaluations 298,927 285,289 2. Gains on disposal 7,228 - 3. Write-backs - 8,452 4. Other gains - - B. Expenses (850,741) (17) 1. Write-downs (28) (17) 2. Impairment losses (850,713) - 3. Losses on disposal - - 4. Other expenses - - Net profit (544,586) 293,724 2) Companies under significant influence A. Income 500,982 305,465 1. Revaluations 350,786 303,100 2. Gains on disposal 123,097 171 3. Write-backs 27,099 2,194 4. Other gains - - B. Expenses (53,848) (22,863) 1. Write-downs (5,468) (6,879) 2. Impairment losses (45,924) (8,328) 3. Losses on disposal (2,456) (7,656) 4. Other expenses - - Net profit 447,134 282,602 Total (97,452) 576,326 In 2017 profit (loss) of associates amounts to +€576 million, attributable to jointly owned companies for +€294 million and to companies subject to significant influence for +€283 million. This result consists of “A. Income” of +€599 million and “B. Expense” of -€23 million. In more detail: • sub-item “A. Income” includes: - +€588 million gains related to gains on companies valued at Equity method: Koc Finansal Hizmetler As (+€285 million),Mediobanca Banca Di Credito Finanziario S.p.A. (+€66 million), Oberbank Ag (+€55 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (+€34 million), Creditras Vita S.p.A. (+€27 million), Aviva S.p.A. (+€23 million), Cnp UniCredit Vita S.p.A. (+€20 million), Oesterreichische Kontrollbank Aktiengesellschaft (+€19 million), Bks Bank Ag (+€18 million), Barn Bv (+€11 million); Incontra Assicurazioni S.p.A.(+€6 million); - +€11 million write-backs mainly due to Koc Finansal Hizmetler As (+€8 million) e a Fenice S.r.l. (+€2 million); • sub-item “B. Expense” includes: - -€7 million of write-downs mainly referred to losses on companies valued at Equity method: Torre S.g.r S.p.A. (-€3 million) e Da Vinci S.r.l. (-€2 million); - -€8 million of impairment losses, mainly attributable to write-downs on investments valued at Equity method, as Compagnia Aerea Italiana S.p.A. (-€5 million) and on investment valued at cost Moneymap GMBH (-€3 million); - -€8 million loss on disposal, mainly attributable to the impact arising from the dilution of holding percentage of Mediobanca Banca Di Credito Finanziario S.p.A. (-€8 million). During 2017 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 268 2018 Annual Report and Accounts · UniCredit During 2018 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. 17.1 Gains (Losses) of equity investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1) Jointly owned companies - Equity A. Income 306,155 293,741 1. Revaluations 298,927 285,289 2. Gains on disposal 7,228 - 3. Write-backs - 8,452 4. Other gains - - B. Expenses (850,741) (17) 1. Write-downs (28) (17) 2. Impairment losses (850,713) - 3. Losses on disposal - - 4. Other expenses - - Net profit (544,586) 293,724 2) Companies under significant influence A. Income 500,982 305,465 1. Revaluations 350,786 303,100 2. Gains on disposal 123,097 171 3. Write-backs 27,099 2,194 4. Other gains - - B. Expenses (53,848) (22,863) 1. Write-downs (5,468) (6,879) 2. Impairment losses (45,924) (8,328) 3. Losses on disposal (2,456) (7,656) 4. Other expenses - - Net profit 447,134 282,602 Total (97,452) 576,326 In 2017 profit (loss) of associates amounts to +€576 million, attributable to jointly owned companies for +€294 million and to companies subject to significant influence for +€283 million. This result consists of “A. Income” of +€599 million and “B. Expense” of -€23 million. In more detail: • sub-item “A. Income” includes: - +€588 million gains related to gains on companies valued at Equity method: Koc Finansal Hizmetler As (+€285 million),Mediobanca Banca Di Credito Finanziario S.p.A. (+€66 million), Oberbank Ag (+€55 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (+€34 million), Creditras Vita S.p.A. (+€27 million), Aviva S.p.A. (+€23 million), Cnp UniCredit Vita S.p.A. (+€20 million), Oesterreichische Kontrollbank Aktiengesellschaft (+€19 million), Bks Bank Ag (+€18 million), Barn Bv (+€11 million); Incontra Assicurazioni S.p.A.(+€6 million); - +€11 million write-backs mainly due to Koc Finansal Hizmetler As (+€8 million) e a Fenice S.r.l. (+€2 million); • sub-item “B. Expense” includes: - -€7 million of write-downs mainly referred to losses on companies valued at Equity method: Torre S.g.r S.p.A. (-€3 million) e Da Vinci S.r.l. (-€2 million); - -€8 million of impairment losses, mainly attributable to write-downs on investments valued at Equity method, as Compagnia Aerea Italiana S.p.A. (-€5 million) and on investment valued at cost Moneymap GMBH (-€3 million); - -€8 million loss on disposal, mainly attributable to the impact arising from the dilution of holding percentage of Mediobanca Banca Di Credito Finanziario S.p.A. (-€8 million). During 2017 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 268 2018 Annual Report and Accounts · UniCredit During 2018 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. 17.1 Gains (Losses) of equity investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1) Jointly owned companies - Equity A. Income 306,155 293,741 1. Revaluations 298,927 285,289 2. Gains on disposal 7,228 - 3. Write-backs - 8,452 4. Other gains - - B. Expenses (850,741) (17) 1. Write-downs (28) (17) 2. Impairment losses (850,713) - 3. Losses on disposal - - 4. Other expenses - - Net profit (544,586) 293,724 2) Companies under significant influence A. Income 500,982 305,465 1. Revaluations 350,786 303,100 2. Gains on disposal 123,097 171 3. Write-backs 27,099 2,194 4. Other gains - - B. Expenses (53,848) (22,863) 1. Write-downs (5,468) (6,879) 2. Impairment losses (45,924) (8,328) 3. Losses on disposal (2,456) (7,656) 4. Other expenses - - Net profit 447,134 282,602 Total (97,452) 576,326 In 2017 profit (loss) of associates amounts to +€576 million, attributable to jointly owned companies for +€294 million and to companies subject to significant influence for +€283 million. This result consists of “A. Income” of +€599 million and “B. Expense” of -€23 million. In more detail: • sub-item “A. Income” includes: - +€588 million gains related to gains on companies valued at Equity method: Koc Finansal Hizmetler As (+€285 million),Mediobanca Banca Di Credito Finanziario S.p.A. (+€66 million), Oberbank Ag (+€55 million), Bank Fuer Tirol Und Vorarlberg Aktiengesellschaft (+€34 million), Creditras Vita S.p.A. (+€27 million), Aviva S.p.A. (+€23 million), Cnp UniCredit Vita S.p.A. (+€20 million), Oesterreichische Kontrollbank Aktiengesellschaft (+€19 million), Bks Bank Ag (+€18 million), Barn Bv (+€11 million); Incontra Assicurazioni S.p.A.(+€6 million); - +€11 million write-backs mainly due to Koc Finansal Hizmetler As (+€8 million) e a Fenice S.r.l. (+€2 million); • sub-item “B. Expense” includes: - -€7 million of write-downs mainly referred to losses on companies valued at Equity method: Torre S.g.r S.p.A. (-€3 million) e Da Vinci S.r.l. (-€2 million); - -€8 million of impairment losses, mainly attributable to write-downs on investments valued at Equity method, as Compagnia Aerea Italiana S.p.A. (-€5 million) and on investment valued at cost Moneymap GMBH (-€3 million); - -€8 million loss on disposal, mainly attributable to the impact arising from the dilution of holding percentage of Mediobanca Banca Di Credito Finanziario S.p.A. (-€8 million). During 2017 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 269 Section 18 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 260 18.1 Net gains (losses) on property, plant and equipment and intangible assets measured at fair value: breakdown (€ '000) YEAR 2018 EXCHANGE DIFFERENCES NET PROFIT (A-B+C-D) ASSETS/P&L COMPONENTS REVALUATIONS (A) WRITEDOWNS (B) POSITIVE (C) NEGATIVE (D) A. Property, plant and equipment 621 (623) 958 - 956 A.1 Owned 621 (623) 958 - 956 - Used in the business - - - - - - Held for investment 621 (623) 958 - 956 - Inventories - - - - - A.2 Held by finance leases - - - - - - Used in the business - - - - - - Held for investment - - - - - B. Intangible assets - - - - - B.1 Owned - - - - - - Generated internally by the company - - - - - - Other - - - - - B.2 Held by finance leases - - - - - Total 621 (623) 958 - 956 Section 19 - Goodwill impairment - Item 270 There is no impairment of goodwill in 2018. See Part A - Accounting Policies for a description of the methods used to measure impairment of goodwill. See Part B - Consolidated Balance Sheet for a description of goodwill impairment testing procedures and results. Section 20 - Gains (Losses) on disposals on investments - Item 280 At 31 December 2018 gains (losses) on disposals of investments are +€231 million (+€100 million in 2017) and refer to: A. Property Net gains of +€136 million (+€42 million in 2017). This item includes the results of the property rationalisation carried out by the following companies: Visconti Srl (+€30 million), Hvb Gesellschaft fur Gebaude Mbh & Co Kg (+€29 million), European Office Fonds (+€20 million), Ba Betriebsobjekte Gmbh (+€10 million), Wealthcap Objekt Vorrat 20 Gmbh & Co Kg (+€10 million), UniCredit S.p.A. (+€7 million), Nuova Compagnia di Partecipazioni S.p.A. (+€6 million), UniCredit Bulbank Ad (+€5 million). B. Other assets Net gains of +€95 million (+€57 million in 2017). This item mainly includes gains from disposal of some equity investments as Mobility Concept Gmbh (+€28 million) and Ramses Immobilien Gesellschaft Mbh & Co Og (+€14 million). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 269 Section 18 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 260 18.1 Net gains (losses) on property, plant and equipment and intangible assets measured at fair value: breakdown (€ '000) YEAR 2018 EXCHANGE DIFFERENCES NET PROFIT (A-B+C-D) ASSETS/P&L COMPONENTS REVALUATIONS (A) WRITEDOWNS (B) POSITIVE (C) NEGATIVE (D) A. Property, plant and equipment 621 (623) 958 - 956 A.1 Owned 621 (623) 958 - 956 - Used in the business - - - - - - Held for investment 621 (623) 958 - 956 - Inventories - - - - - A.2 Held by finance leases - - - - - - Used in the business - - - - - - Held for investment - - - - - B. Intangible assets - - - - - B.1 Owned - - - - - - Generated internally by the company - - - - - - Other - - - - - B.2 Held by finance leases - - - - - Total 621 (623) 958 - 956 Section 19 - Goodwill impairment - Item 270 There is no impairment of goodwill in 2018. See Part A - Accounting Policies for a description of the methods used to measure impairment of goodwill. See Part B - Consolidated Balance Sheet for a description of goodwill impairment testing procedures and results. Section 20 - Gains (Losses) on disposals on investments - Item 280 At 31 December 2018 gains (losses) on disposals of investments are +€231 million (+€100 million in 2017) and refer to: A. Property Net gains of +€136 million (+€42 million in 2017). This item includes the results of the property rationalisation carried out by the following companies: Visconti Srl (+€30 million), Hvb Gesellschaft fur Gebaude Mbh & Co Kg (+€29 million), European Office Fonds (+€20 million), Ba Betriebsobjekte Gmbh (+€10 million), Wealthcap Objekt Vorrat 20 Gmbh & Co Kg (+€10 million), UniCredit S.p.A. (+€7 million), Nuova Compagnia di Partecipazioni S.p.A. (+€6 million), UniCredit Bulbank Ad (+€5 million). B. Other assets Net gains of +€95 million (+€57 million in 2017). This item mainly includes gains from disposal of some equity investments as Mobility Concept Gmbh (+€28 million) and Ramses Immobilien Gesellschaft Mbh & Co Og (+€14 million). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 269 Section 18 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 260 18.1 Net gains (losses) on property, plant and equipment and intangible assets measured at fair value: breakdown (€ '000) YEAR 2018 EXCHANGE DIFFERENCES NET PROFIT (A-B+C-D) ASSETS/P&L COMPONENTS REVALUATIONS (A) WRITEDOWNS (B) POSITIVE (C) NEGATIVE (D) A. Property, plant and equipment 621 (623) 958 - 956 A.1 Owned 621 (623) 958 - 956 - Used in the business - - - - - - Held for investment 621 (623) 958 - 956 - Inventories - - - - - A.2 Held by finance leases - - - - - - Used in the business - - - - - - Held for investment - - - - - B. Intangible assets - - - - - B.1 Owned - - - - - - Generated internally by the company - - - - - - Other - - - - - B.2 Held by finance leases - - - - - Total 621 (623) 958 - 956 Section 19 - Goodwill impairment - Item 270 There is no impairment of goodwill in 2018. See Part A - Accounting Policies for a description of the methods used to measure impairment of goodwill. See Part B - Consolidated Balance Sheet for a description of goodwill impairment testing procedures and results. Section 20 - Gains (Losses) on disposals on investments - Item 280 At 31 December 2018 gains (losses) on disposals of investments are +€231 million (+€100 million in 2017) and refer to: A. Property Net gains of +€136 million (+€42 million in 2017). This item includes the results of the property rationalisation carried out by the following companies: Visconti Srl (+€30 million), Hvb Gesellschaft fur Gebaude Mbh & Co Kg (+€29 million), European Office Fonds (+€20 million), Ba Betriebsobjekte Gmbh (+€10 million), Wealthcap Objekt Vorrat 20 Gmbh & Co Kg (+€10 million), UniCredit S.p.A. (+€7 million), Nuova Compagnia di Partecipazioni S.p.A. (+€6 million), UniCredit Bulbank Ad (+€5 million). B. Other assets Net gains of +€95 million (+€57 million in 2017). This item mainly includes gains from disposal of some equity investments as Mobility Concept Gmbh (+€28 million) and Ramses Immobilien Gesellschaft Mbh & Co Og (+€14 million). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 269 Section 18 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 260 18.1 Net gains (losses) on property, plant and equipment and intangible assets measured at fair value: breakdown (€ '000) YEAR 2018 EXCHANGE DIFFERENCES NET PROFIT (A-B+C-D) ASSETS/P&L COMPONENTS REVALUATIONS (A) WRITEDOWNS (B) POSITIVE (C) NEGATIVE (D) A. Property, plant and equipment 621 (623) 958 - 956 A.1 Owned 621 (623) 958 - 956 - Used in the business - - - - - - Held for investment 621 (623) 958 - 956 - Inventories - - - - - A.2 Held by finance leases - - - - - - Used in the business - - - - - - Held for investment - - - - - B. Intangible assets - - - - - B.1 Owned - - - - - - Generated internally by the company - - - - - - Other - - - - - B.2 Held by finance leases - - - - - Total 621 (623) 958 - 956 Section 19 - Goodwill impairment - Item 270 There is no impairment of goodwill in 2018. See Part A - Accounting Policies for a description of the methods used to measure impairment of goodwill. See Part B - Consolidated Balance Sheet for a description of goodwill impairment testing procedures and results. Section 20 - Gains (Losses) on disposals on investments - Item 280 At 31 December 2018 gains (losses) on disposals of investments are +€231 million (+€100 million in 2017) and refer to: A. Property Net gains of +€136 million (+€42 million in 2017). This item includes the results of the property rationalisation carried out by the following companies: Visconti Srl (+€30 million), Hvb Gesellschaft fur Gebaude Mbh & Co Kg (+€29 million), European Office Fonds (+€20 million), Ba Betriebsobjekte Gmbh (+€10 million), Wealthcap Objekt Vorrat 20 Gmbh & Co Kg (+€10 million), UniCredit S.p.A. (+€7 million), Nuova Compagnia di Partecipazioni S.p.A. (+€6 million), UniCredit Bulbank Ad (+€5 million). B. Other assets Net gains of +€95 million (+€57 million in 2017). This item mainly includes gains from disposal of some equity investments as Mobility Concept Gmbh (+€28 million) and Ramses Immobilien Gesellschaft Mbh & Co Og (+€14 million). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 269 Section 18 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 260 18.1 Net gains (losses) on property, plant and equipment and intangible assets measured at fair value: breakdown (€ '000) YEAR 2018 EXCHANGE DIFFERENCES NET PROFIT (A-B+C-D) ASSETS/P&L COMPONENTS REVALUATIONS (A) WRITEDOWNS (B) POSITIVE (C) NEGATIVE (D) A. Property, plant and equipment 621 (623) 958 - 956 A.1 Owned 621 (623) 958 - 956 - Used in the business - - - - - - Held for investment 621 (623) 958 - 956 - Inventories - - - - - A.2 Held by finance leases - - - - - - Used in the business - - - - - - Held for investment - - - - - B. Intangible assets - - - - - B.1 Owned - - - - - - Generated internally by the company - - - - - - Other - - - - - B.2 Held by finance leases - - - - - Total 621 (623) 958 - 956 Section 19 - Goodwill impairment - Item 270 There is no impairment of goodwill in 2018. See Part A - Accounting Policies for a description of the methods used to measure impairment of goodwill. See Part B - Consolidated Balance Sheet for a description of goodwill impairment testing procedures and results. Section 20 - Gains (Losses) on disposals on investments - Item 280 At 31 December 2018 gains (losses) on disposals of investments are +€231 million (+€100 million in 2017) and refer to: A. Property Net gains of +€136 million (+€42 million in 2017). This item includes the results of the property rationalisation carried out by the following companies: Visconti Srl (+€30 million), Hvb Gesellschaft fur Gebaude Mbh & Co Kg (+€29 million), European Office Fonds (+€20 million), Ba Betriebsobjekte Gmbh (+€10 million), Wealthcap Objekt Vorrat 20 Gmbh & Co Kg (+€10 million), UniCredit S.p.A. (+€7 million), Nuova Compagnia di Partecipazioni S.p.A. (+€6 million), UniCredit Bulbank Ad (+€5 million). B. Other assets Net gains of +€95 million (+€57 million in 2017). This item mainly includes gains from disposal of some equity investments as Mobility Concept Gmbh (+€28 million) and Ramses Immobilien Gesellschaft Mbh & Co Og (+€14 million). Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 270 2018 Annual Report and Accounts · UniCredit During 2018 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. 20.1 Gains and losses on disposal of investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 A. Property - Gains on disposal 141,564 44,682 - Losses on disposal (5,224) (2,277) B. Other assets - Gains on disposal 116,149 83,007 - Losses on disposal (21,068) (25,577) Net Profit 231,421 99,835 At 31 December 2017 gains (losses) on disposals of investments are +€100 million and refer to: A. Property Net gains of +€42 million. This item includes the results of the property rationalisation carried out by the following companies: UniCredit S.p.A. (+€11 million), UniCredit Bank Austria AG (+€8 million), UniCredit Bulbank AD (+€7 million), Zagrebacka Banka D.D. (+€6 million), Uctam Upravljanje D.O.O. (+€2 million), Merkurhof Grundstucksgesellschaft mit Beschrankter Haftung (+€2 million), Golf- und Country Club Seddiner See Immobilien GMBH (+€1 million). B. Other assets Net gains of +€57 million. This item mainly includes net gains on disposal of equity investments Ows Off-Shore Wind Solutions GMBH (+€8 million), UniCredit Leasing TOB and Redstone Mortgages Limited (respectively +€58 million and -€12 million, both related to the negative revaluation exchange reserve reported in 2017 income statement). We can note that during 2017 the disposal of Bank Pekao SA were carried out. This caused the loss of control that would have recognised in the Income Statement under the item “Profit (Loss) after tax from discontinued operations”. Here an income equal to +€5 million has been accounted, due to the valuation at fair value of the remaining share (6.26%) classified in the portfolio “Financial assets at fair value through profit or loss“. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 270 2018 Annual Report and Accounts · UniCredit During 2018 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. 20.1 Gains and losses on disposal of investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 A. Property - Gains on disposal 141,564 44,682 - Losses on disposal (5,224) (2,277) B. Other assets - Gains on disposal 116,149 83,007 - Losses on disposal (21,068) (25,577) Net Profit 231,421 99,835 At 31 December 2017 gains (losses) on disposals of investments are +€100 million and refer to: A. Property Net gains of +€42 million. This item includes the results of the property rationalisation carried out by the following companies: UniCredit S.p.A. (+€11 million), UniCredit Bank Austria AG (+€8 million), UniCredit Bulbank AD (+€7 million), Zagrebacka Banka D.D. (+€6 million), Uctam Upravljanje D.O.O. (+€2 million), Merkurhof Grundstucksgesellschaft mit Beschrankter Haftung (+€2 million), Golf- und Country Club Seddiner See Immobilien GMBH (+€1 million). B. Other assets Net gains of +€57 million. This item mainly includes net gains on disposal of equity investments Ows Off-Shore Wind Solutions GMBH (+€8 million), UniCredit Leasing TOB and Redstone Mortgages Limited (respectively +€58 million and -€12 million, both related to the negative revaluation exchange reserve reported in 2017 income statement). We can note that during 2017 the disposal of Bank Pekao SA were carried out. This caused the loss of control that would have recognised in the Income Statement under the item “Profit (Loss) after tax from discontinued operations”. Here an income equal to +€5 million has been accounted, due to the valuation at fair value of the remaining share (6.26%) classified in the portfolio “Financial assets at fair value through profit or loss“. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 270 2018 Annual Report and Accounts · UniCredit During 2018 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. 20.1 Gains and losses on disposal of investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 A. Property - Gains on disposal 141,564 44,682 - Losses on disposal (5,224) (2,277) B. Other assets - Gains on disposal 116,149 83,007 - Losses on disposal (21,068) (25,577) Net Profit 231,421 99,835 At 31 December 2017 gains (losses) on disposals of investments are +€100 million and refer to: A. Property Net gains of +€42 million. This item includes the results of the property rationalisation carried out by the following companies: UniCredit S.p.A. (+€11 million), UniCredit Bank Austria AG (+€8 million), UniCredit Bulbank AD (+€7 million), Zagrebacka Banka D.D. (+€6 million), Uctam Upravljanje D.O.O. (+€2 million), Merkurhof Grundstucksgesellschaft mit Beschrankter Haftung (+€2 million), Golf- und Country Club Seddiner See Immobilien GMBH (+€1 million). B. Other assets Net gains of +€57 million. This item mainly includes net gains on disposal of equity investments Ows Off-Shore Wind Solutions GMBH (+€8 million), UniCredit Leasing TOB and Redstone Mortgages Limited (respectively +€58 million and -€12 million, both related to the negative revaluation exchange reserve reported in 2017 income statement). We can note that during 2017 the disposal of Bank Pekao SA were carried out. This caused the loss of control that would have recognised in the Income Statement under the item “Profit (Loss) after tax from discontinued operations”. Here an income equal to +€5 million has been accounted, due to the valuation at fair value of the remaining share (6.26%) classified in the portfolio “Financial assets at fair value through profit or loss“. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 270 2018 Annual Report and Accounts · UniCredit During 2018 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. 20.1 Gains and losses on disposal of investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 A. Property - Gains on disposal 141,564 44,682 - Losses on disposal (5,224) (2,277) B. Other assets - Gains on disposal 116,149 83,007 - Losses on disposal (21,068) (25,577) Net Profit 231,421 99,835 At 31 December 2017 gains (losses) on disposals of investments are +€100 million and refer to: A. Property Net gains of +€42 million. This item includes the results of the property rationalisation carried out by the following companies: UniCredit S.p.A. (+€11 million), UniCredit Bank Austria AG (+€8 million), UniCredit Bulbank AD (+€7 million), Zagrebacka Banka D.D. (+€6 million), Uctam Upravljanje D.O.O. (+€2 million), Merkurhof Grundstucksgesellschaft mit Beschrankter Haftung (+€2 million), Golf- und Country Club Seddiner See Immobilien GMBH (+€1 million). B. Other assets Net gains of +€57 million. This item mainly includes net gains on disposal of equity investments Ows Off-Shore Wind Solutions GMBH (+€8 million), UniCredit Leasing TOB and Redstone Mortgages Limited (respectively +€58 million and -€12 million, both related to the negative revaluation exchange reserve reported in 2017 income statement). We can note that during 2017 the disposal of Bank Pekao SA were carried out. This caused the loss of control that would have recognised in the Income Statement under the item “Profit (Loss) after tax from discontinued operations”. Here an income equal to +€5 million has been accounted, due to the valuation at fair value of the remaining share (6.26%) classified in the portfolio “Financial assets at fair value through profit or loss“. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 270 2018 Annual Report and Accounts · UniCredit During 2018 no transactions were carried out that would have entailed significant recognitions of gains and losses attributable to measurement at fair value of any equity interests retained at the date of losing control. 20.1 Gains and losses on disposal of investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 A. Property - Gains on disposal 141,564 44,682 - Losses on disposal (5,224) (2,277) B. Other assets - Gains on disposal 116,149 83,007 - Losses on disposal (21,068) (25,577) Net Profit 231,421 99,835 At 31 December 2017 gains (losses) on disposals of investments are +€100 million and refer to: A. Property Net gains of +€42 million. This item includes the results of the property rationalisation carried out by the following companies: UniCredit S.p.A. (+€11 million), UniCredit Bank Austria AG (+€8 million), UniCredit Bulbank AD (+€7 million), Zagrebacka Banka D.D. (+€6 million), Uctam Upravljanje D.O.O. (+€2 million), Merkurhof Grundstucksgesellschaft mit Beschrankter Haftung (+€2 million), Golf- und Country Club Seddiner See Immobilien GMBH (+€1 million). B. Other assets Net gains of +€57 million. This item mainly includes net gains on disposal of equity investments Ows Off-Shore Wind Solutions GMBH (+€8 million), UniCredit Leasing TOB and Redstone Mortgages Limited (respectively +€58 million and -€12 million, both related to the negative revaluation exchange reserve reported in 2017 income statement). We can note that during 2017 the disposal of Bank Pekao SA were carried out. This caused the loss of control that would have recognised in the Income Statement under the item “Profit (Loss) after tax from discontinued operations”. Here an income equal to +€5 million has been accounted, due to the valuation at fair value of the remaining share (6.26%) classified in the portfolio “Financial assets at fair value through profit or loss“. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 271 Section 21 - Tax expenses (income) for the period from continuing operations - Item 300 Each Country has an autonomous tax system where the determination of the tax base, the level of tax rates, nature, type and timing of tax obligations might differ, even significantly. Such differences also exist amongst EU Member States. In respect of the main Countries where UniCredit Group operates, Italy, Germany, Austria and the United States, all have domestic income tax consolidation regimes. While the United Kingdom does not have a domestic income tax consolidation regime, tax losses can nonetheless be transferred between entities of the same Group. Tax consolidation rules also differ from Country to Country, sometimes markedly. Generally speaking, the main and common benefit of a domestic tax consolidation regime is the offsetting of profits and losses of companies and entities belonging to the same tax consolidation perimeter. The requirements to be included in a domestic tax consolidation regime can be very different from those set for the purpose of accounting consolidation for a banking group according to the international IAS/IFRS or local accounting standards. As for tax rates, and with reference to the Group’s key Countries, the nominal corporate income tax rate is 31.4% in Germany (also taking into account the “solidarity surcharge” and the municipal trade tax), 25% in Austria, 19% in Poland, 10% in Bulgaria, 16% in Romania, 22% in Turkey, 19% in the Czech Republic, 20% in Russia, 9% in Hungary. In addition, the corporate income tax rate is 27% in the United Kingdom (also taking into account the 8% surcharge provided for banks), 12.5% in Ireland, 26.01% in Luxembourg, 21% of federal tax in the United States and 25% in China. In Italy the standard corporate income tax rate is equal to 24%, which is increased by a 3.5% surcharge applicable to banks and other financial entities only. Therefore, for UniCredit S.p.A. and for the other Group banks and financial entities, the applicable tax rate is equal to 27.5%. Further to the corporate income tax (IRES), the Italian Regional Tax on Productive Activities (IRAP) levied at a rate of 4.65% for the banking sector must be considered (each Region is entitled to autonomously increase the rate by a surcharge of 0.92% up to a maximum nominal rate of 5.57%, plus an additional surcharge of 0.15% provided for Regions that have a healthcare deficit status); IRAP has a slightly different taxable base from the one provided for in respect of IRES, obviously it has different rules, among which no tax loss carried forward. For Tax expenses (income) for the period of the Parent company refer to paragraph of Part C - Notes to the accounts of UniCredit S.p.A. - Section 19 -Tax expenses (income) for the period from continuing operations - Item 270 which is herewith quoted entirely. 21.1 Tax expense (income) relating to profit or loss from continuing operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Current taxes (-) (819,184) (853,968) 2. Change of current taxes of previous years (+/-) 260,391 199,237 3. Reduction of current taxes for the year (+) 43,032 58,749 3.bis Reduction of current taxes for the year due tax credit under Law 214/2011 (+) - 3,018,939 4. Change of deferred tax assets (+/-) 962,637 (3,367,300) 5. Change of deferred tax liabilities (+/-) 54,818 348,681 6. Tax expenses for the year (-) (-1+/-2+3+3bis+/-4+/-5) 501,694 (595,662) Sub-item “4. Change of deferred tax assets (+/-)” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 271 Section 21 - Tax expenses (income) for the period from continuing operations - Item 300 Each Country has an autonomous tax system where the determination of the tax base, the level of tax rates, nature, type and timing of tax obligations might differ, even significantly. Such differences also exist amongst EU Member States. In respect of the main Countries where UniCredit Group operates, Italy, Germany, Austria and the United States, all have domestic income tax consolidation regimes. While the United Kingdom does not have a domestic income tax consolidation regime, tax losses can nonetheless be transferred between entities of the same Group. Tax consolidation rules also differ from Country to Country, sometimes markedly. Generally speaking, the main and common benefit of a domestic tax consolidation regime is the offsetting of profits and losses of companies and entities belonging to the same tax consolidation perimeter. The requirements to be included in a domestic tax consolidation regime can be very different from those set for the purpose of accounting consolidation for a banking group according to the international IAS/IFRS or local accounting standards. As for tax rates, and with reference to the Group’s key Countries, the nominal corporate income tax rate is 31.4% in Germany (also taking into account the “solidarity surcharge” and the municipal trade tax), 25% in Austria, 19% in Poland, 10% in Bulgaria, 16% in Romania, 22% in Turkey, 19% in the Czech Republic, 20% in Russia, 9% in Hungary. In addition, the corporate income tax rate is 27% in the United Kingdom (also taking into account the 8% surcharge provided for banks), 12.5% in Ireland, 26.01% in Luxembourg, 21% of federal tax in the United States and 25% in China. In Italy the standard corporate income tax rate is equal to 24%, which is increased by a 3.5% surcharge applicable to banks and other financial entities only. Therefore, for UniCredit S.p.A. and for the other Group banks and financial entities, the applicable tax rate is equal to 27.5%. Further to the corporate income tax (IRES), the Italian Regional Tax on Productive Activities (IRAP) levied at a rate of 4.65% for the banking sector must be considered (each Region is entitled to autonomously increase the rate by a surcharge of 0.92% up to a maximum nominal rate of 5.57%, plus an additional surcharge of 0.15% provided for Regions that have a healthcare deficit status); IRAP has a slightly different taxable base from the one provided for in respect of IRES, obviously it has different rules, among which no tax loss carried forward. For Tax expenses (income) for the period of the Parent company refer to paragraph of Part C - Notes to the accounts of UniCredit S.p.A. - Section 19 -Tax expenses (income) for the period from continuing operations - Item 270 which is herewith quoted entirely. 21.1 Tax expense (income) relating to profit or loss from continuing operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Current taxes (-) (819,184) (853,968) 2. Change of current taxes of previous years (+/-) 260,391 199,237 3. Reduction of current taxes for the year (+) 43,032 58,749 3.bis Reduction of current taxes for the year due tax credit under Law 214/2011 (+) - 3,018,939 4. Change of deferred tax assets (+/-) 962,637 (3,367,300) 5. Change of deferred tax liabilities (+/-) 54,818 348,681 6. Tax expenses for the year (-) (-1+/-2+3+3bis+/-4+/-5) 501,694 (595,662) Sub-item “4. Change of deferred tax assets (+/-)” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 271 Section 21 - Tax expenses (income) for the period from continuing operations - Item 300 Each Country has an autonomous tax system where the determination of the tax base, the level of tax rates, nature, type and timing of tax obligations might differ, even significantly. Such differences also exist amongst EU Member States. In respect of the main Countries where UniCredit Group operates, Italy, Germany, Austria and the United States, all have domestic income tax consolidation regimes. While the United Kingdom does not have a domestic income tax consolidation regime, tax losses can nonetheless be transferred between entities of the same Group. Tax consolidation rules also differ from Country to Country, sometimes markedly. Generally speaking, the main and common benefit of a domestic tax consolidation regime is the offsetting of profits and losses of companies and entities belonging to the same tax consolidation perimeter. The requirements to be included in a domestic tax consolidation regime can be very different from those set for the purpose of accounting consolidation for a banking group according to the international IAS/IFRS or local accounting standards. As for tax rates, and with reference to the Group’s key Countries, the nominal corporate income tax rate is 31.4% in Germany (also taking into account the “solidarity surcharge” and the municipal trade tax), 25% in Austria, 19% in Poland, 10% in Bulgaria, 16% in Romania, 22% in Turkey, 19% in the Czech Republic, 20% in Russia, 9% in Hungary. In addition, the corporate income tax rate is 27% in the United Kingdom (also taking into account the 8% surcharge provided for banks), 12.5% in Ireland, 26.01% in Luxembourg, 21% of federal tax in the United States and 25% in China. In Italy the standard corporate income tax rate is equal to 24%, which is increased by a 3.5% surcharge applicable to banks and other financial entities only. Therefore, for UniCredit S.p.A. and for the other Group banks and financial entities, the applicable tax rate is equal to 27.5%. Further to the corporate income tax (IRES), the Italian Regional Tax on Productive Activities (IRAP) levied at a rate of 4.65% for the banking sector must be considered (each Region is entitled to autonomously increase the rate by a surcharge of 0.92% up to a maximum nominal rate of 5.57%, plus an additional surcharge of 0.15% provided for Regions that have a healthcare deficit status); IRAP has a slightly different taxable base from the one provided for in respect of IRES, obviously it has different rules, among which no tax loss carried forward. For Tax expenses (income) for the period of the Parent company refer to paragraph of Part C - Notes to the accounts of UniCredit S.p.A. - Section 19 -Tax expenses (income) for the period from continuing operations - Item 270 which is herewith quoted entirely. 21.1 Tax expense (income) relating to profit or loss from continuing operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Current taxes (-) (819,184) (853,968) 2. Change of current taxes of previous years (+/-) 260,391 199,237 3. Reduction of current taxes for the year (+) 43,032 58,749 3.bis Reduction of current taxes for the year due tax credit under Law 214/2011 (+) - 3,018,939 4. Change of deferred tax assets (+/-) 962,637 (3,367,300) 5. Change of deferred tax liabilities (+/-) 54,818 348,681 6. Tax expenses for the year (-) (-1+/-2+3+3bis+/-4+/-5) 501,694 (595,662) Sub-item “4. Change of deferred tax assets (+/-)” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 271 Section 21 - Tax expenses (income) for the period from continuing operations - Item 300 Each Country has an autonomous tax system where the determination of the tax base, the level of tax rates, nature, type and timing of tax obligations might differ, even significantly. Such differences also exist amongst EU Member States. In respect of the main Countries where UniCredit Group operates, Italy, Germany, Austria and the United States, all have domestic income tax consolidation regimes. While the United Kingdom does not have a domestic income tax consolidation regime, tax losses can nonetheless be transferred between entities of the same Group. Tax consolidation rules also differ from Country to Country, sometimes markedly. Generally speaking, the main and common benefit of a domestic tax consolidation regime is the offsetting of profits and losses of companies and entities belonging to the same tax consolidation perimeter. The requirements to be included in a domestic tax consolidation regime can be very different from those set for the purpose of accounting consolidation for a banking group according to the international IAS/IFRS or local accounting standards. As for tax rates, and with reference to the Group’s key Countries, the nominal corporate income tax rate is 31.4% in Germany (also taking into account the “solidarity surcharge” and the municipal trade tax), 25% in Austria, 19% in Poland, 10% in Bulgaria, 16% in Romania, 22% in Turkey, 19% in the Czech Republic, 20% in Russia, 9% in Hungary. In addition, the corporate income tax rate is 27% in the United Kingdom (also taking into account the 8% surcharge provided for banks), 12.5% in Ireland, 26.01% in Luxembourg, 21% of federal tax in the United States and 25% in China. In Italy the standard corporate income tax rate is equal to 24%, which is increased by a 3.5% surcharge applicable to banks and other financial entities only. Therefore, for UniCredit S.p.A. and for the other Group banks and financial entities, the applicable tax rate is equal to 27.5%. Further to the corporate income tax (IRES), the Italian Regional Tax on Productive Activities (IRAP) levied at a rate of 4.65% for the banking sector must be considered (each Region is entitled to autonomously increase the rate by a surcharge of 0.92% up to a maximum nominal rate of 5.57%, plus an additional surcharge of 0.15% provided for Regions that have a healthcare deficit status); IRAP has a slightly different taxable base from the one provided for in respect of IRES, obviously it has different rules, among which no tax loss carried forward. For Tax expenses (income) for the period of the Parent company refer to paragraph of Part C - Notes to the accounts of UniCredit S.p.A. - Section 19 -Tax expenses (income) for the period from continuing operations - Item 270 which is herewith quoted entirely. 21.1 Tax expense (income) relating to profit or loss from continuing operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Current taxes (-) (819,184) (853,968) 2. Change of current taxes of previous years (+/-) 260,391 199,237 3. Reduction of current taxes for the year (+) 43,032 58,749 3.bis Reduction of current taxes for the year due tax credit under Law 214/2011 (+) - 3,018,939 4. Change of deferred tax assets (+/-) 962,637 (3,367,300) 5. Change of deferred tax liabilities (+/-) 54,818 348,681 6. Tax expenses for the year (-) (-1+/-2+3+3bis+/-4+/-5) 501,694 (595,662) Sub-item “4. Change of deferred tax assets (+/-)” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 271 Section 21 - Tax expenses (income) for the period from continuing operations - Item 300 Each Country has an autonomous tax system where the determination of the tax base, the level of tax rates, nature, type and timing of tax obligations might differ, even significantly. Such differences also exist amongst EU Member States. In respect of the main Countries where UniCredit Group operates, Italy, Germany, Austria and the United States, all have domestic income tax consolidation regimes. While the United Kingdom does not have a domestic income tax consolidation regime, tax losses can nonetheless be transferred between entities of the same Group. Tax consolidation rules also differ from Country to Country, sometimes markedly. Generally speaking, the main and common benefit of a domestic tax consolidation regime is the offsetting of profits and losses of companies and entities belonging to the same tax consolidation perimeter. The requirements to be included in a domestic tax consolidation regime can be very different from those set for the purpose of accounting consolidation for a banking group according to the international IAS/IFRS or local accounting standards. As for tax rates, and with reference to the Group’s key Countries, the nominal corporate income tax rate is 31.4% in Germany (also taking into account the “solidarity surcharge” and the municipal trade tax), 25% in Austria, 19% in Poland, 10% in Bulgaria, 16% in Romania, 22% in Turkey, 19% in the Czech Republic, 20% in Russia, 9% in Hungary. In addition, the corporate income tax rate is 27% in the United Kingdom (also taking into account the 8% surcharge provided for banks), 12.5% in Ireland, 26.01% in Luxembourg, 21% of federal tax in the United States and 25% in China. In Italy the standard corporate income tax rate is equal to 24%, which is increased by a 3.5% surcharge applicable to banks and other financial entities only. Therefore, for UniCredit S.p.A. and for the other Group banks and financial entities, the applicable tax rate is equal to 27.5%. Further to the corporate income tax (IRES), the Italian Regional Tax on Productive Activities (IRAP) levied at a rate of 4.65% for the banking sector must be considered (each Region is entitled to autonomously increase the rate by a surcharge of 0.92% up to a maximum nominal rate of 5.57%, plus an additional surcharge of 0.15% provided for Regions that have a healthcare deficit status); IRAP has a slightly different taxable base from the one provided for in respect of IRES, obviously it has different rules, among which no tax loss carried forward. For Tax expenses (income) for the period of the Parent company refer to paragraph of Part C - Notes to the accounts of UniCredit S.p.A. - Section 19 -Tax expenses (income) for the period from continuing operations - Item 270 which is herewith quoted entirely. 21.1 Tax expense (income) relating to profit or loss from continuing operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Current taxes (-) (819,184) (853,968) 2. Change of current taxes of previous years (+/-) 260,391 199,237 3. Reduction of current taxes for the year (+) 43,032 58,749 3.bis Reduction of current taxes for the year due tax credit under Law 214/2011 (+) - 3,018,939 4. Change of deferred tax assets (+/-) 962,637 (3,367,300) 5. Change of deferred tax liabilities (+/-) 54,818 348,681 6. Tax expenses for the year (-) (-1+/-2+3+3bis+/-4+/-5) 501,694 (595,662) Sub-item “4. Change of deferred tax assets (+/-)” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 272 2018 Annual Report and Accounts · UniCredit 21.2 Reconciliation of theoretical tax charge to actual tax charge (€ '000) YEAR 2018 YEAR 2017 Profit (Loss) before tax from continuing operations (income statement item) 3,593,373 3,699,640 Theoretical tax rate 27.5% 27.5% Theoretical computed taxes on income (988,178) (1,017,401) 1. Different tax rates 186,157 159,696 2. Non-taxable income - permanent differences 210,365 704,750 3. Non-deductible expenses - permanent differences (384,386) (597,757) 4. Different fiscal laws/IRAP (25,786) (161,610) a) IRAP (italian companies) 57,821 (112,271) b) Other taxes (foreign companies) (83,607) (49,339) 5. Previous years and changes in tax rates 259,923 239,400 a) Effects on current taxes 287,358 319,215 - Tax loss carryforward/unused Tax credit 43,032 58,749 - Other effects of previous periods 244,326 260,466 b) Effects on deferred taxes (27,435) (79,815) - Changes in tax rates - (11,260) - New taxes incurred (+) previous taxes revocation (-) (38) (56) - True-ups/adjustments of the calculated deferred taxes (27,397) (68,499) 6. Valuation adjustments and non-recognition of deferred taxes 1,102,002 79,939 a) Deferred tax assets write-down (156,271) (56,784) b) Deferred tax assets recognition 761,212 169,647 c) Deferred tax assets non-recognition 37,038 (98,783) d) Deferred tax assets non-recognition according to IAS12.39 and 12.44 8,693 43,609 e) Other 451,330 22,250 7. Amortisation of goodwill 754 - 8. Non-taxable foreign income 14,496 28,054 9. Other differences 126,346 (30,733) Recognised taxes on income 501,694 (595,662) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 272 2018 Annual Report and Accounts · UniCredit 21.2 Reconciliation of theoretical tax charge to actual tax charge (€ '000) YEAR 2018 YEAR 2017 Profit (Loss) before tax from continuing operations (income statement item) 3,593,373 3,699,640 Theoretical tax rate 27.5% 27.5% Theoretical computed taxes on income (988,178) (1,017,401) 1. Different tax rates 186,157 159,696 2. Non-taxable income - permanent differences 210,365 704,750 3. Non-deductible expenses - permanent differences (384,386) (597,757) 4. Different fiscal laws/IRAP (25,786) (161,610) a) IRAP (italian companies) 57,821 (112,271) b) Other taxes (foreign companies) (83,607) (49,339) 5. Previous years and changes in tax rates 259,923 239,400 a) Effects on current taxes 287,358 319,215 - Tax loss carryforward/unused Tax credit 43,032 58,749 - Other effects of previous periods 244,326 260,466 b) Effects on deferred taxes (27,435) (79,815) - Changes in tax rates - (11,260) - New taxes incurred (+) previous taxes revocation (-) (38) (56) - True-ups/adjustments of the calculated deferred taxes (27,397) (68,499) 6. Valuation adjustments and non-recognition of deferred taxes 1,102,002 79,939 a) Deferred tax assets write-down (156,271) (56,784) b) Deferred tax assets recognition 761,212 169,647 c) Deferred tax assets non-recognition 37,038 (98,783) d) Deferred tax assets non-recognition according to IAS12.39 and 12.44 8,693 43,609 e) Other 451,330 22,250 7. Amortisation of goodwill 754 - 8. Non-taxable foreign income 14,496 28,054 9. Other differences 126,346 (30,733) Recognised taxes on income 501,694 (595,662) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 272 2018 Annual Report and Accounts · UniCredit 21.2 Reconciliation of theoretical tax charge to actual tax charge (€ '000) YEAR 2018 YEAR 2017 Profit (Loss) before tax from continuing operations (income statement item) 3,593,373 3,699,640 Theoretical tax rate 27.5% 27.5% Theoretical computed taxes on income (988,178) (1,017,401) 1. Different tax rates 186,157 159,696 2. Non-taxable income - permanent differences 210,365 704,750 3. Non-deductible expenses - permanent differences (384,386) (597,757) 4. Different fiscal laws/IRAP (25,786) (161,610) a) IRAP (italian companies) 57,821 (112,271) b) Other taxes (foreign companies) (83,607) (49,339) 5. Previous years and changes in tax rates 259,923 239,400 a) Effects on current taxes 287,358 319,215 - Tax loss carryforward/unused Tax credit 43,032 58,749 - Other effects of previous periods 244,326 260,466 b) Effects on deferred taxes (27,435) (79,815) - Changes in tax rates - (11,260) - New taxes incurred (+) previous taxes revocation (-) (38) (56) - True-ups/adjustments of the calculated deferred taxes (27,397) (68,499) 6. Valuation adjustments and non-recognition of deferred taxes 1,102,002 79,939 a) Deferred tax assets write-down (156,271) (56,784) b) Deferred tax assets recognition 761,212 169,647 c) Deferred tax assets non-recognition 37,038 (98,783) d) Deferred tax assets non-recognition according to IAS12.39 and 12.44 8,693 43,609 e) Other 451,330 22,250 7. Amortisation of goodwill 754 - 8. Non-taxable foreign income 14,496 28,054 9. Other differences 126,346 (30,733) Recognised taxes on income 501,694 (595,662) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 272 2018 Annual Report and Accounts · UniCredit 21.2 Reconciliation of theoretical tax charge to actual tax charge (€ '000) YEAR 2018 YEAR 2017 Profit (Loss) before tax from continuing operations (income statement item) 3,593,373 3,699,640 Theoretical tax rate 27.5% 27.5% Theoretical computed taxes on income (988,178) (1,017,401) 1. Different tax rates 186,157 159,696 2. Non-taxable income - permanent differences 210,365 704,750 3. Non-deductible expenses - permanent differences (384,386) (597,757) 4. Different fiscal laws/IRAP (25,786) (161,610) a) IRAP (italian companies) 57,821 (112,271) b) Other taxes (foreign companies) (83,607) (49,339) 5. Previous years and changes in tax rates 259,923 239,400 a) Effects on current taxes 287,358 319,215 - Tax loss carryforward/unused Tax credit 43,032 58,749 - Other effects of previous periods 244,326 260,466 b) Effects on deferred taxes (27,435) (79,815) - Changes in tax rates - (11,260) - New taxes incurred (+) previous taxes revocation (-) (38) (56) - True-ups/adjustments of the calculated deferred taxes (27,397) (68,499) 6. Valuation adjustments and non-recognition of deferred taxes 1,102,002 79,939 a) Deferred tax assets write-down (156,271) (56,784) b) Deferred tax assets recognition 761,212 169,647 c) Deferred tax assets non-recognition 37,038 (98,783) d) Deferred tax assets non-recognition according to IAS12.39 and 12.44 8,693 43,609 e) Other 451,330 22,250 7. Amortisation of goodwill 754 - 8. Non-taxable foreign income 14,496 28,054 9. Other differences 126,346 (30,733) Recognised taxes on income 501,694 (595,662) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 272 2018 Annual Report and Accounts · UniCredit 21.2 Reconciliation of theoretical tax charge to actual tax charge (€ '000) YEAR 2018 YEAR 2017 Profit (Loss) before tax from continuing operations (income statement item) 3,593,373 3,699,640 Theoretical tax rate 27.5% 27.5% Theoretical computed taxes on income (988,178) (1,017,401) 1. Different tax rates 186,157 159,696 2. Non-taxable income - permanent differences 210,365 704,750 3. Non-deductible expenses - permanent differences (384,386) (597,757) 4. Different fiscal laws/IRAP (25,786) (161,610) a) IRAP (italian companies) 57,821 (112,271) b) Other taxes (foreign companies) (83,607) (49,339) 5. Previous years and changes in tax rates 259,923 239,400 a) Effects on current taxes 287,358 319,215 - Tax loss carryforward/unused Tax credit 43,032 58,749 - Other effects of previous periods 244,326 260,466 b) Effects on deferred taxes (27,435) (79,815) - Changes in tax rates - (11,260) - New taxes incurred (+) previous taxes revocation (-) (38) (56) - True-ups/adjustments of the calculated deferred taxes (27,397) (68,499) 6. Valuation adjustments and non-recognition of deferred taxes 1,102,002 79,939 a) Deferred tax assets write-down (156,271) (56,784) b) Deferred tax assets recognition 761,212 169,647 c) Deferred tax assets non-recognition 37,038 (98,783) d) Deferred tax assets non-recognition according to IAS12.39 and 12.44 8,693 43,609 e) Other 451,330 22,250 7. Amortisation of goodwill 754 - 8. Non-taxable foreign income 14,496 28,054 9. Other differences 126,346 (30,733) Recognised taxes on income 501,694 (595,662) Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 273 Section 22 - Profit (Loss) after tax from discontinued operations - Item 320 22.1 Profit (Loss) after tax from discontinued operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Income 25,269 2,076,535 2. Expenses (31,164) (1,160,981) 3. Valuation of discontinued operations and related liabilities - (50,710) 4. Profit (Loss) on disposal 20,032 1,928,363 5. Tax (622) (111,609) Profit (Loss) 13,515 2,681,598 In comparison to year 2017 there were not recognized any new group in the item during 2018. As at 31 December 2018 the “Profit (Loss) on disposal” mainly includes the sale of a company belonging to Immoholding group. The variance of the item compared to the previous period is mainly due to the sale of Pekao and Pioneer groups completed during 2017, except for the companies Baroda Pioneer Asset Management Company LTD e Baroda Pioneer Trustee Company PVT LTD, completed in 2018. 22.2 Breakdown of tax on discontinued operations (€ '000) YEAR 2018 YEAR 2017 1. Current taxes (-) (3,622) (99,354) 2. Changes in deferred tax assets (+/-) 423 (8,334) 3. Changes in deferred tax liabilities (+/-) 2,577 (3,921) 4. Income tax (-1+/-2+/-3) (622) (111,609) Section 23 - Minority profit (loss) of the year - Item 340 The profit for 2018 attributable to minority interests amounted to €216 million. There are the following largest contributions attributable to the minority shareholders of Finecobank S.p.A, Zagrebacka Banka D.D. and UniCredit Bank Austria AG group, mainly referring to the minority shareholders of Card Complete Service Bank AG. The profit for 2017 attributable to minority interests was equal to €313 million. 23.1 Breakdown of item 340 "Minority gains (losses)" (€ '000) 2018 2017 Consolidated equity investments with significant minority interests 216,921 301,697 Fineco Bank S.p.A. 145,004 138,451 Fineco Asset Management Designated Activity Company 13,753 (105) Zagrebacka Banka D.D. 34,184 22,186 UniCredit Bank D.D. 7,988 7,349 UniCredit Bank Austria AG Group 15,992 19,395 Bank Pekao SA Group - 114,421 Other equity investments and consolidation adjustments (778) 10,804 Total 216,143 312,501 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 273 Section 22 - Profit (Loss) after tax from discontinued operations - Item 320 22.1 Profit (Loss) after tax from discontinued operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Income 25,269 2,076,535 2. Expenses (31,164) (1,160,981) 3. Valuation of discontinued operations and related liabilities - (50,710) 4. Profit (Loss) on disposal 20,032 1,928,363 5. Tax (622) (111,609) Profit (Loss) 13,515 2,681,598 In comparison to year 2017 there were not recognized any new group in the item during 2018. As at 31 December 2018 the “Profit (Loss) on disposal” mainly includes the sale of a company belonging to Immoholding group. The variance of the item compared to the previous period is mainly due to the sale of Pekao and Pioneer groups completed during 2017, except for the companies Baroda Pioneer Asset Management Company LTD e Baroda Pioneer Trustee Company PVT LTD, completed in 2018. 22.2 Breakdown of tax on discontinued operations (€ '000) YEAR 2018 YEAR 2017 1. Current taxes (-) (3,622) (99,354) 2. Changes in deferred tax assets (+/-) 423 (8,334) 3. Changes in deferred tax liabilities (+/-) 2,577 (3,921) 4. Income tax (-1+/-2+/-3) (622) (111,609) Section 23 - Minority profit (loss) of the year - Item 340 The profit for 2018 attributable to minority interests amounted to €216 million. There are the following largest contributions attributable to the minority shareholders of Finecobank S.p.A, Zagrebacka Banka D.D. and UniCredit Bank Austria AG group, mainly referring to the minority shareholders of Card Complete Service Bank AG. The profit for 2017 attributable to minority interests was equal to €313 million. 23.1 Breakdown of item 340 "Minority gains (losses)" (€ '000) 2018 2017 Consolidated equity investments with significant minority interests 216,921 301,697 Fineco Bank S.p.A. 145,004 138,451 Fineco Asset Management Designated Activity Company 13,753 (105) Zagrebacka Banka D.D. 34,184 22,186 UniCredit Bank D.D. 7,988 7,349 UniCredit Bank Austria AG Group 15,992 19,395 Bank Pekao SA Group - 114,421 Other equity investments and consolidation adjustments (778) 10,804 Total 216,143 312,501 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 273 Section 22 - Profit (Loss) after tax from discontinued operations - Item 320 22.1 Profit (Loss) after tax from discontinued operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Income 25,269 2,076,535 2. Expenses (31,164) (1,160,981) 3. Valuation of discontinued operations and related liabilities - (50,710) 4. Profit (Loss) on disposal 20,032 1,928,363 5. Tax (622) (111,609) Profit (Loss) 13,515 2,681,598 In comparison to year 2017 there were not recognized any new group in the item during 2018. As at 31 December 2018 the “Profit (Loss) on disposal” mainly includes the sale of a company belonging to Immoholding group. The variance of the item compared to the previous period is mainly due to the sale of Pekao and Pioneer groups completed during 2017, except for the companies Baroda Pioneer Asset Management Company LTD e Baroda Pioneer Trustee Company PVT LTD, completed in 2018. 22.2 Breakdown of tax on discontinued operations (€ '000) YEAR 2018 YEAR 2017 1. Current taxes (-) (3,622) (99,354) 2. Changes in deferred tax assets (+/-) 423 (8,334) 3. Changes in deferred tax liabilities (+/-) 2,577 (3,921) 4. Income tax (-1+/-2+/-3) (622) (111,609) Section 23 - Minority profit (loss) of the year - Item 340 The profit for 2018 attributable to minority interests amounted to €216 million. There are the following largest contributions attributable to the minority shareholders of Finecobank S.p.A, Zagrebacka Banka D.D. and UniCredit Bank Austria AG group, mainly referring to the minority shareholders of Card Complete Service Bank AG. The profit for 2017 attributable to minority interests was equal to €313 million. 23.1 Breakdown of item 340 "Minority gains (losses)" (€ '000) 2018 2017 Consolidated equity investments with significant minority interests 216,921 301,697 Fineco Bank S.p.A. 145,004 138,451 Fineco Asset Management Designated Activity Company 13,753 (105) Zagrebacka Banka D.D. 34,184 22,186 UniCredit Bank D.D. 7,988 7,349 UniCredit Bank Austria AG Group 15,992 19,395 Bank Pekao SA Group - 114,421 Other equity investments and consolidation adjustments (778) 10,804 Total 216,143 312,501 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 273 Section 22 - Profit (Loss) after tax from discontinued operations - Item 320 22.1 Profit (Loss) after tax from discontinued operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Income 25,269 2,076,535 2. Expenses (31,164) (1,160,981) 3. Valuation of discontinued operations and related liabilities - (50,710) 4. Profit (Loss) on disposal 20,032 1,928,363 5. Tax (622) (111,609) Profit (Loss) 13,515 2,681,598 In comparison to year 2017 there were not recognized any new group in the item during 2018. As at 31 December 2018 the “Profit (Loss) on disposal” mainly includes the sale of a company belonging to Immoholding group. The variance of the item compared to the previous period is mainly due to the sale of Pekao and Pioneer groups completed during 2017, except for the companies Baroda Pioneer Asset Management Company LTD e Baroda Pioneer Trustee Company PVT LTD, completed in 2018. 22.2 Breakdown of tax on discontinued operations (€ '000) YEAR 2018 YEAR 2017 1. Current taxes (-) (3,622) (99,354) 2. Changes in deferred tax assets (+/-) 423 (8,334) 3. Changes in deferred tax liabilities (+/-) 2,577 (3,921) 4. Income tax (-1+/-2+/-3) (622) (111,609) Section 23 - Minority profit (loss) of the year - Item 340 The profit for 2018 attributable to minority interests amounted to €216 million. There are the following largest contributions attributable to the minority shareholders of Finecobank S.p.A, Zagrebacka Banka D.D. and UniCredit Bank Austria AG group, mainly referring to the minority shareholders of Card Complete Service Bank AG. The profit for 2017 attributable to minority interests was equal to €313 million. 23.1 Breakdown of item 340 "Minority gains (losses)" (€ '000) 2018 2017 Consolidated equity investments with significant minority interests 216,921 301,697 Fineco Bank S.p.A. 145,004 138,451 Fineco Asset Management Designated Activity Company 13,753 (105) Zagrebacka Banka D.D. 34,184 22,186 UniCredit Bank D.D. 7,988 7,349 UniCredit Bank Austria AG Group 15,992 19,395 Bank Pekao SA Group - 114,421 Other equity investments and consolidation adjustments (778) 10,804 Total 216,143 312,501 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 273 Section 22 - Profit (Loss) after tax from discontinued operations - Item 320 22.1 Profit (Loss) after tax from discontinued operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Income 25,269 2,076,535 2. Expenses (31,164) (1,160,981) 3. Valuation of discontinued operations and related liabilities - (50,710) 4. Profit (Loss) on disposal 20,032 1,928,363 5. Tax (622) (111,609) Profit (Loss) 13,515 2,681,598 In comparison to year 2017 there were not recognized any new group in the item during 2018. As at 31 December 2018 the “Profit (Loss) on disposal” mainly includes the sale of a company belonging to Immoholding group. The variance of the item compared to the previous period is mainly due to the sale of Pekao and Pioneer groups completed during 2017, except for the companies Baroda Pioneer Asset Management Company LTD e Baroda Pioneer Trustee Company PVT LTD, completed in 2018. 22.2 Breakdown of tax on discontinued operations (€ '000) YEAR 2018 YEAR 2017 1. Current taxes (-) (3,622) (99,354) 2. Changes in deferred tax assets (+/-) 423 (8,334) 3. Changes in deferred tax liabilities (+/-) 2,577 (3,921) 4. Income tax (-1+/-2+/-3) (622) (111,609) Section 23 - Minority profit (loss) of the year - Item 340 The profit for 2018 attributable to minority interests amounted to €216 million. There are the following largest contributions attributable to the minority shareholders of Finecobank S.p.A, Zagrebacka Banka D.D. and UniCredit Bank Austria AG group, mainly referring to the minority shareholders of Card Complete Service Bank AG. The profit for 2017 attributable to minority interests was equal to €313 million. 23.1 Breakdown of item 340 "Minority gains (losses)" (€ '000) 2018 2017 Consolidated equity investments with significant minority interests 216,921 301,697 Fineco Bank S.p.A. 145,004 138,451 Fineco Asset Management Designated Activity Company 13,753 (105) Zagrebacka Banka D.D. 34,184 22,186 UniCredit Bank D.D. 7,988 7,349 UniCredit Bank Austria AG Group 15,992 19,395 Bank Pekao SA Group - 114,421 Other equity investments and consolidation adjustments (778) 10,804 Total 216,143 312,501 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 274 2018 Annual Report and Accounts · UniCredit Section 24 - Other information Disclosure regarding the transparency of public funding required by article 1, paragraph 125 of the law 124/2017 Pursuant to article 1, paragraph 125 of law 124/2017, during 2018 the UniCredit group collected the following public contributions granted by Italian entities: Reduction of the extraordinary contribution pursuant to art.1, paragraph 235 of Law 232 of 11 December 2016 charged to the management of welfare interventions and pension support (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 55,293 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 4,910 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 299 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 47 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 123 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 21 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 31 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 131 Total 60,853 Contributions for the recruitment/stabilization of personnel deriving from the application of the CCNL of the Credit in force from time to time (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT S.P.A. 2,959 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT SERVICES S.C.P.A. 510 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito CORDUSIO SIM S.P.A. 4 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT BANK AG (Milan Branch) 5 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito FINECOBANK S.P.A. 225 Total 3,703 Contributions for new recruits/stabilisations, introduced by the stability law 2018 (law No.205/2017) (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 248 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 224 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 7 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 1 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 17 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 292 Total 790 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 274 2018 Annual Report and Accounts · UniCredit Section 24 - Other information Disclosure regarding the transparency of public funding required by article 1, paragraph 125 of the law 124/2017 Pursuant to article 1, paragraph 125 of law 124/2017, during 2018 the UniCredit group collected the following public contributions granted by Italian entities: Reduction of the extraordinary contribution pursuant to art.1, paragraph 235 of Law 232 of 11 December 2016 charged to the management of welfare interventions and pension support (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 55,293 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 4,910 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 299 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 47 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 123 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 21 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 31 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 131 Total 60,853 Contributions for the recruitment/stabilization of personnel deriving from the application of the CCNL of the Credit in force from time to time (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT S.P.A. 2,959 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT SERVICES S.C.P.A. 510 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito CORDUSIO SIM S.P.A. 4 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT BANK AG (Milan Branch) 5 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito FINECOBANK S.P.A. 225 Total 3,703 Contributions for new recruits/stabilisations, introduced by the stability law 2018 (law No.205/2017) (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 248 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 224 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 7 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 1 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 17 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 292 Total 790 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 274 2018 Annual Report and Accounts · UniCredit Section 24 - Other information Disclosure regarding the transparency of public funding required by article 1, paragraph 125 of the law 124/2017 Pursuant to article 1, paragraph 125 of law 124/2017, during 2018 the UniCredit group collected the following public contributions granted by Italian entities: Reduction of the extraordinary contribution pursuant to art.1, paragraph 235 of Law 232 of 11 December 2016 charged to the management of welfare interventions and pension support (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 55,293 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 4,910 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 299 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 47 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 123 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 21 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 31 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 131 Total 60,853 Contributions for the recruitment/stabilization of personnel deriving from the application of the CCNL of the Credit in force from time to time (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT S.P.A. 2,959 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT SERVICES S.C.P.A. 510 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito CORDUSIO SIM S.P.A. 4 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT BANK AG (Milan Branch) 5 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito FINECOBANK S.P.A. 225 Total 3,703 Contributions for new recruits/stabilisations, introduced by the stability law 2018 (law No.205/2017) (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 248 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 224 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 7 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 1 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 17 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 292 Total 790 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 274 2018 Annual Report and Accounts · UniCredit Section 24 - Other information Disclosure regarding the transparency of public funding required by article 1, paragraph 125 of the law 124/2017 Pursuant to article 1, paragraph 125 of law 124/2017, during 2018 the UniCredit group collected the following public contributions granted by Italian entities: Reduction of the extraordinary contribution pursuant to art.1, paragraph 235 of Law 232 of 11 December 2016 charged to the management of welfare interventions and pension support (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 55,293 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 4,910 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 299 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 47 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 123 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 21 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 31 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 131 Total 60,853 Contributions for the recruitment/stabilization of personnel deriving from the application of the CCNL of the Credit in force from time to time (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT S.P.A. 2,959 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT SERVICES S.C.P.A. 510 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito CORDUSIO SIM S.P.A. 4 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT BANK AG (Milan Branch) 5 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito FINECOBANK S.P.A. 225 Total 3,703 Contributions for new recruits/stabilisations, introduced by the stability law 2018 (law No.205/2017) (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 248 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 224 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 7 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 1 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 17 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 292 Total 790 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement 274 2018 Annual Report and Accounts · UniCredit Section 24 - Other information Disclosure regarding the transparency of public funding required by article 1, paragraph 125 of the law 124/2017 Pursuant to article 1, paragraph 125 of law 124/2017, during 2018 the UniCredit group collected the following public contributions granted by Italian entities: Reduction of the extraordinary contribution pursuant to art.1, paragraph 235 of Law 232 of 11 December 2016 charged to the management of welfare interventions and pension support (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 55,293 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 4,910 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 299 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 47 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 123 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 21 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 31 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 131 Total 60,853 Contributions for the recruitment/stabilization of personnel deriving from the application of the CCNL of the Credit in force from time to time (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT S.P.A. 2,959 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT SERVICES S.C.P.A. 510 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito CORDUSIO SIM S.P.A. 4 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT BANK AG (Milan Branch) 5 Fondo Nazionale per il sostegno dell'occupazione nel settore del credito FINECOBANK S.P.A. 225 Total 3,703 Contributions for new recruits/stabilisations, introduced by the stability law 2018 (law No.205/2017) (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 248 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 224 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 7 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 1 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 17 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 292 Total 790 Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 275 Contributions for the Ordinary section of the Solidarity Fund - benefits: Interministerial Decree 83486 of 28/07/2014 - article 10, paragraph 2 (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 3,936 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 449 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 31 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 15 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 5 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 3 Total 4,439 Article 8 of Legislative Decree 30/9/2005, n.203 converted, with modifications, from the law 2 December 2005, n.248. Compensatory measures for companies that assign the TFR to supplementary pension schemes and/or to the Fund for the payment of the TFR (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 9,286 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 859 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 137 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 133 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 72 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 12 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 146 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 260 Total 10,904 For further information, refer to the National State Aid Register "Transparency. Section 25 - Earnings per share 25.1 and 25.2 Average number of diluted shares and other information YEAR 2018 YEAR 2017 Net profit (loss) attributable to the Group (thousand of €)(1) 3,799,252 5,440,944 Average number of outstanding shares 2,219,405,841 1,947,449,190 Average number of potential dilutive shares 9,835,058 10,695,178 Average number of diluted shares 2,229,240,899 1,958,144,368 Earnings per share (€) 1.712 2.794 Diluted earnings per share (€) 1.704 2.779 Note: (1) €93 million has been deducted from 2018 net profit attributable to the Group of €3,892 million due to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (€32 million was deducted from 2017 net profit attributable to the Group). Net of the average number of treasury shares and of further No.9,675,640 shares held under a contract of usufruct. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 275 Contributions for the Ordinary section of the Solidarity Fund - benefits: Interministerial Decree 83486 of 28/07/2014 - article 10, paragraph 2 (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 3,936 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 449 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 31 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 15 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 5 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 3 Total 4,439 Article 8 of Legislative Decree 30/9/2005, n.203 converted, with modifications, from the law 2 December 2005, n.248. Compensatory measures for companies that assign the TFR to supplementary pension schemes and/or to the Fund for the payment of the TFR (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 9,286 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 859 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 137 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 133 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 72 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 12 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 146 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 260 Total 10,904 For further information, refer to the National State Aid Register "Transparency. Section 25 - Earnings per share 25.1 and 25.2 Average number of diluted shares and other information YEAR 2018 YEAR 2017 Net profit (loss) attributable to the Group (thousand of €)(1) 3,799,252 5,440,944 Average number of outstanding shares 2,219,405,841 1,947,449,190 Average number of potential dilutive shares 9,835,058 10,695,178 Average number of diluted shares 2,229,240,899 1,958,144,368 Earnings per share (€) 1.712 2.794 Diluted earnings per share (€) 1.704 2.779 Note: (1) €93 million has been deducted from 2018 net profit attributable to the Group of €3,892 million due to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (€32 million was deducted from 2017 net profit attributable to the Group). Net of the average number of treasury shares and of further No.9,675,640 shares held under a contract of usufruct. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 275 Contributions for the Ordinary section of the Solidarity Fund - benefits: Interministerial Decree 83486 of 28/07/2014 - article 10, paragraph 2 (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 3,936 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 449 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 31 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 15 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 5 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 3 Total 4,439 Article 8 of Legislative Decree 30/9/2005, n.203 converted, with modifications, from the law 2 December 2005, n.248. Compensatory measures for companies that assign the TFR to supplementary pension schemes and/or to the Fund for the payment of the TFR (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 9,286 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 859 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 137 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 133 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 72 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 12 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 146 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 260 Total 10,904 For further information, refer to the National State Aid Register "Transparency. Section 25 - Earnings per share 25.1 and 25.2 Average number of diluted shares and other information YEAR 2018 YEAR 2017 Net profit (loss) attributable to the Group (thousand of €)(1) 3,799,252 5,440,944 Average number of outstanding shares 2,219,405,841 1,947,449,190 Average number of potential dilutive shares 9,835,058 10,695,178 Average number of diluted shares 2,229,240,899 1,958,144,368 Earnings per share (€) 1.712 2.794 Diluted earnings per share (€) 1.704 2.779 Note: (1) €93 million has been deducted from 2018 net profit attributable to the Group of €3,892 million due to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (€32 million was deducted from 2017 net profit attributable to the Group). Net of the average number of treasury shares and of further No.9,675,640 shares held under a contract of usufruct. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 275 Contributions for the Ordinary section of the Solidarity Fund - benefits: Interministerial Decree 83486 of 28/07/2014 - article 10, paragraph 2 (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 3,936 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 449 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 31 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 15 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 5 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 3 Total 4,439 Article 8 of Legislative Decree 30/9/2005, n.203 converted, with modifications, from the law 2 December 2005, n.248. Compensatory measures for companies that assign the TFR to supplementary pension schemes and/or to the Fund for the payment of the TFR (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 9,286 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 859 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 137 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 133 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 72 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 12 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 146 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 260 Total 10,904 For further information, refer to the National State Aid Register "Transparency. Section 25 - Earnings per share 25.1 and 25.2 Average number of diluted shares and other information YEAR 2018 YEAR 2017 Net profit (loss) attributable to the Group (thousand of €)(1) 3,799,252 5,440,944 Average number of outstanding shares 2,219,405,841 1,947,449,190 Average number of potential dilutive shares 9,835,058 10,695,178 Average number of diluted shares 2,229,240,899 1,958,144,368 Earnings per share (€) 1.712 2.794 Diluted earnings per share (€) 1.704 2.779 Note: (1) €93 million has been deducted from 2018 net profit attributable to the Group of €3,892 million due to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (€32 million was deducted from 2017 net profit attributable to the Group). Net of the average number of treasury shares and of further No.9,675,640 shares held under a contract of usufruct. Consolidated financial statements | Notes to the consolidated accounts Part C - Consolidated income statement UniCredit ·2018 Annual Report and Accounts 275 Contributions for the Ordinary section of the Solidarity Fund - benefits: Interministerial Decree 83486 of 28/07/2014 - article 10, paragraph 2 (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 3,936 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 449 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 31 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 15 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 5 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 3 Total 4,439 Article 8 of Legislative Decree 30/9/2005, n.203 converted, with modifications, from the law 2 December 2005, n.248. Compensatory measures for companies that assign the TFR to supplementary pension schemes and/or to the Fund for the payment of the TFR (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 9,286 Istituto Nazionale della Previdenza Sociale UNICREDIT SERVICES S.C.P.A. 859 Istituto Nazionale della Previdenza Sociale UNICREDIT LEASING S.P.A. 137 Istituto Nazionale della Previdenza Sociale CORDUSIO SIM S.P.A. 133 Istituto Nazionale della Previdenza Sociale UNICREDIT FACTORING S.P.A. 72 Istituto Nazionale della Previdenza Sociale CORDUSIO SOCIETA' FIDUCIARIA PER AZIONI 12 Istituto Nazionale della Previdenza Sociale UNICREDIT BANK AG (Milan Branch) 146 Istituto Nazionale della Previdenza Sociale FINECOBANK S.P.A. 260 Total 10,904 For further information, refer to the National State Aid Register "Transparency. Section 25 - Earnings per share 25.1 and 25.2 Average number of diluted shares and other information YEAR 2018 YEAR 2017 Net profit (loss) attributable to the Group (thousand of €)(1) 3,799,252 5,440,944 Average number of outstanding shares 2,219,405,841 1,947,449,190 Average number of potential dilutive shares 9,835,058 10,695,178 Average number of diluted shares 2,229,240,899 1,958,144,368 Earnings per share (€) 1.712 2.794 Diluted earnings per share (€) 1.704 2.779 Note: (1) €93 million has been deducted from 2018 net profit attributable to the Group of €3,892 million due to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (€32 million was deducted from 2017 net profit attributable to the Group). Net of the average number of treasury shares and of further No.9,675,640 shares held under a contract of usufruct.  Consolidated financial statements | Notes to the consolidated accounts Part D - Consolidated comprehensive income 276 2018 Annual Report and Accounts · UniCredit Consolidated analytical statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Profit (Loss) of the year 4,108,582 5,785,576 Other comprehensive income not reclassified to profit or loss - - 20. Equity instruments designated at fair value through other comprehensive income: 7,997 - a) fair value changes (40,841) - b) tranfers to other shareholders' equity items 48,838 - 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes): 145,593 - a) fair value changes 135,429 - b) tranfers to other shareholders' equity items 10,164 - 40. Hedge accounting of equity instruments measured at fair value through other comprehensive income: - - a) fair value change (hedged instrument) - - b) fair value change (hedging instrument) - - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined benefit plans (392,448) 336,141 80. Non-current assets and disposal groups classified as held for sale - (45) 90. Part of valuation reserves from investments valued at equity method (3,460) (22,427) 100. Tax expenses (income) relating to items not reclassified to profit or loss 78,339 (92,956) Other comprehensive income reclassified to profit or loss - - 110. Foreign investments hedging: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 120. Foreign exchange differences: (386,090) 306,928 a) value changes - - b) reclassification to profit or loss - - c) other changes (386,090) 306,928 130. Cash flow hedging: (173,837) (173,275) a) fair value changes (148,086) (174,940) b) reclassification to profit or loss (1,502) (2,540) c) other changes (24,249) 4,205 of which: net position - - 140. Hedging instruments (non-designated items): - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - Part D - Consolidated comprehensive income Consolidated financial statements | Notes to the consolidated accounts Part D - Consolidated comprehensive income 276 2018 Annual Report and Accounts · UniCredit Consolidated analytical statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Profit (Loss) of the year 4,108,582 5,785,576 Other comprehensive income not reclassified to profit or loss - - 20. Equity instruments designated at fair value through other comprehensive income: 7,997 - a) fair value changes (40,841) - b) tranfers to other shareholders' equity items 48,838 - 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes): 145,593 - a) fair value changes 135,429 - b) tranfers to other shareholders' equity items 10,164 - 40. Hedge accounting of equity instruments measured at fair value through other comprehensive income: - - a) fair value change (hedged instrument) - - b) fair value change (hedging instrument) - - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined benefit plans (392,448) 336,141 80. Non-current assets and disposal groups classified as held for sale - (45) 90. Part of valuation reserves from investments valued at equity method (3,460) (22,427) 100. Tax expenses (income) relating to items not reclassified to profit or loss 78,339 (92,956) Other comprehensive income reclassified to profit or loss - - 110. Foreign investments hedging: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 120. Foreign exchange differences: (386,090) 306,928 a) value changes - - b) reclassification to profit or loss - - c) other changes (386,090) 306,928 130. Cash flow hedging: (173,837) (173,275) a) fair value changes (148,086) (174,940) b) reclassification to profit or loss (1,502) (2,540) c) other changes (24,249) 4,205 of which: net position - - 140. Hedging instruments (non-designated items): - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - Part D - Consolidated comprehensive income Consolidated financial statements | Notes to the consolidated accounts Part D - Consolidated comprehensive income 276 2018 Annual Report and Accounts · UniCredit Consolidated analytical statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Profit (Loss) of the year 4,108,582 5,785,576 Other comprehensive income not reclassified to profit or loss - - 20. Equity instruments designated at fair value through other comprehensive income: 7,997 - a) fair value changes (40,841) - b) tranfers to other shareholders' equity items 48,838 - 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes): 145,593 - a) fair value changes 135,429 - b) tranfers to other shareholders' equity items 10,164 - 40. Hedge accounting of equity instruments measured at fair value through other comprehensive income: - - a) fair value change (hedged instrument) - - b) fair value change (hedging instrument) - - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined benefit plans (392,448) 336,141 80. Non-current assets and disposal groups classified as held for sale - (45) 90. Part of valuation reserves from investments valued at equity method (3,460) (22,427) 100. Tax expenses (income) relating to items not reclassified to profit or loss 78,339 (92,956) Other comprehensive income reclassified to profit or loss - - 110. Foreign investments hedging: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 120. Foreign exchange differences: (386,090) 306,928 a) value changes - - b) reclassification to profit or loss - - c) other changes (386,090) 306,928 130. Cash flow hedging: (173,837) (173,275) a) fair value changes (148,086) (174,940) b) reclassification to profit or loss (1,502) (2,540) c) other changes (24,249) 4,205 of which: net position - - 140. Hedging instruments (non-designated items): - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - Part D - Consolidated comprehensive income Consolidated financial statements | Notes to the consolidated accounts Part D - Consolidated comprehensive income 276 2018 Annual Report and Accounts · UniCredit Consolidated analytical statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Profit (Loss) of the year 4,108,582 5,785,576 Other comprehensive income not reclassified to profit or loss - - 20. Equity instruments designated at fair value through other comprehensive income: 7,997 - a) fair value changes (40,841) - b) tranfers to other shareholders' equity items 48,838 - 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes): 145,593 - a) fair value changes 135,429 - b) tranfers to other shareholders' equity items 10,164 - 40. Hedge accounting of equity instruments measured at fair value through other comprehensive income: - - a) fair value change (hedged instrument) - - b) fair value change (hedging instrument) - - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined benefit plans (392,448) 336,141 80. Non-current assets and disposal groups classified as held for sale - (45) 90. Part of valuation reserves from investments valued at equity method (3,460) (22,427) 100. Tax expenses (income) relating to items not reclassified to profit or loss 78,339 (92,956) Other comprehensive income reclassified to profit or loss - - 110. Foreign investments hedging: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 120. Foreign exchange differences: (386,090) 306,928 a) value changes - - b) reclassification to profit or loss - - c) other changes (386,090) 306,928 130. Cash flow hedging: (173,837) (173,275) a) fair value changes (148,086) (174,940) b) reclassification to profit or loss (1,502) (2,540) c) other changes (24,249) 4,205 of which: net position - - 140. Hedging instruments (non-designated items): - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - Part D - Consolidated comprehensive income Consolidated financial statements | Notes to the consolidated accounts Part D - Consolidated comprehensive income 276 2018 Annual Report and Accounts · UniCredit Consolidated analytical statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 10. Profit (Loss) of the year 4,108,582 5,785,576 Other comprehensive income not reclassified to profit or loss - - 20. Equity instruments designated at fair value through other comprehensive income: 7,997 - a) fair value changes (40,841) - b) tranfers to other shareholders' equity items 48,838 - 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes): 145,593 - a) fair value changes 135,429 - b) tranfers to other shareholders' equity items 10,164 - 40. Hedge accounting of equity instruments measured at fair value through other comprehensive income: - - a) fair value change (hedged instrument) - - b) fair value change (hedging instrument) - - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined benefit plans (392,448) 336,141 80. Non-current assets and disposal groups classified as held for sale - (45) 90. Part of valuation reserves from investments valued at equity method (3,460) (22,427) 100. Tax expenses (income) relating to items not reclassified to profit or loss 78,339 (92,956) Other comprehensive income reclassified to profit or loss - - 110. Foreign investments hedging: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 120. Foreign exchange differences: (386,090) 306,928 a) value changes - - b) reclassification to profit or loss - - c) other changes (386,090) 306,928 130. Cash flow hedging: (173,837) (173,275) a) fair value changes (148,086) (174,940) b) reclassification to profit or loss (1,502) (2,540) c) other changes (24,249) 4,205 of which: net position - - 140. Hedging instruments (non-designated items): - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - Part D - Consolidated comprehensive income Consolidated financial statements | Notes to the consolidated accounts Part D - Consolidated comprehensive income UniCredit ·2018 Annual Report and Accounts 277 continued: Consolidated analytical statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 150. Financial assets (different from equity instruments) at fair value through other comprehensive income: (1,704,852) - a) fair value changes (1,527,342) - b) reclassification to profit or loss: (172,994) - - impairment losses 11,859 - - gains/losses on disposals (184,853) - c) other changes (4,516) - Available-for-sale financial assets:(ex IAS39 Item N. 100) - (170,718) a) fair value changes - 121,246 b) reclassification to profit or loss - (301,118) - impairment losses - 3,807 - gains/losses on disposals - (304,925) c) other changes - 9,154 160. Non-current assets and disposal groups classified as held for sale: - 50,497 a) fair value changes - 53,585 b) reclassification to profit or loss - (268) c) other changes - (2,820) 170. Part of valuation reserves from investments valued at equity method: (854,798) (441,875) a) fair value changes (117,891) 23,894 b) reclassification to profit or loss: (7,658) (40,943) - impairment losses 196 - - gains/losses on disposals (7,854) (40,943) c) other changes (729,249) (424,826) 180. Tax expenses (income) relating to items reclassified to profit or loss 484,662 108,913 190. Total other comprehensive income (2,798,894) (98,817) 200. Other comprehensive income (Item 10+190) 1,309,688 5,686,759 210. Minority consolidated other comprehensive income (214,741) (522,041) 220. Parent Company's consolidated other comprehensive income 1,094,947 5,164,718 Consolidated financial statements | Notes to the consolidated accounts Part D - Consolidated comprehensive income UniCredit ·2018 Annual Report and Accounts 277 continued: Consolidated analytical statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 150. Financial assets (different from equity instruments) at fair value through other comprehensive income: (1,704,852) - a) fair value changes (1,527,342) - b) reclassification to profit or loss: (172,994) - - impairment losses 11,859 - - gains/losses on disposals (184,853) - c) other changes (4,516) - Available-for-sale financial assets:(ex IAS39 Item N. 100) - (170,718) a) fair value changes - 121,246 b) reclassification to profit or loss - (301,118) - impairment losses - 3,807 - gains/losses on disposals - (304,925) c) other changes - 9,154 160. Non-current assets and disposal groups classified as held for sale: - 50,497 a) fair value changes - 53,585 b) reclassification to profit or loss - (268) c) other changes - (2,820) 170. Part of valuation reserves from investments valued at equity method: (854,798) (441,875) a) fair value changes (117,891) 23,894 b) reclassification to profit or loss: (7,658) (40,943) - impairment losses 196 - - gains/losses on disposals (7,854) (40,943) c) other changes (729,249) (424,826) 180. Tax expenses (income) relating to items reclassified to profit or loss 484,662 108,913 190. Total other comprehensive income (2,798,894) (98,817) 200. Other comprehensive income (Item 10+190) 1,309,688 5,686,759 210. Minority consolidated other comprehensive income (214,741) (522,041) 220. Parent Company's consolidated other comprehensive income 1,094,947 5,164,718 Consolidated financial statements | Notes to the consolidated accounts Part D - Consolidated comprehensive income UniCredit ·2018 Annual Report and Accounts 277 continued: Consolidated analytical statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 150. Financial assets (different from equity instruments) at fair value through other comprehensive income: (1,704,852) - a) fair value changes (1,527,342) - b) reclassification to profit or loss: (172,994) - - impairment losses 11,859 - - gains/losses on disposals (184,853) - c) other changes (4,516) - Available-for-sale financial assets:(ex IAS39 Item N. 100) - (170,718) a) fair value changes - 121,246 b) reclassification to profit or loss - (301,118) - impairment losses - 3,807 - gains/losses on disposals - (304,925) c) other changes - 9,154 160. Non-current assets and disposal groups classified as held for sale: - 50,497 a) fair value changes - 53,585 b) reclassification to profit or loss - (268) c) other changes - (2,820) 170. Part of valuation reserves from investments valued at equity method: (854,798) (441,875) a) fair value changes (117,891) 23,894 b) reclassification to profit or loss: (7,658) (40,943) - impairment losses 196 - - gains/losses on disposals (7,854) (40,943) c) other changes (729,249) (424,826) 180. Tax expenses (income) relating to items reclassified to profit or loss 484,662 108,913 190. Total other comprehensive income (2,798,894) (98,817) 200. Other comprehensive income (Item 10+190) 1,309,688 5,686,759 210. Minority consolidated other comprehensive income (214,741) (522,041) 220. Parent Company's consolidated other comprehensive income 1,094,947 5,164,718 Consolidated financial statements | Notes to the consolidated accounts Part D - Consolidated comprehensive income UniCredit ·2018 Annual Report and Accounts 277 continued: Consolidated analytical statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 150. Financial assets (different from equity instruments) at fair value through other comprehensive income: (1,704,852) - a) fair value changes (1,527,342) - b) reclassification to profit or loss: (172,994) - - impairment losses 11,859 - - gains/losses on disposals (184,853) - c) other changes (4,516) - Available-for-sale financial assets:(ex IAS39 Item N. 100) - (170,718) a) fair value changes - 121,246 b) reclassification to profit or loss - (301,118) - impairment losses - 3,807 - gains/losses on disposals - (304,925) c) other changes - 9,154 160. Non-current assets and disposal groups classified as held for sale: - 50,497 a) fair value changes - 53,585 b) reclassification to profit or loss - (268) c) other changes - (2,820) 170. Part of valuation reserves from investments valued at equity method: (854,798) (441,875) a) fair value changes (117,891) 23,894 b) reclassification to profit or loss: (7,658) (40,943) - impairment losses 196 - - gains/losses on disposals (7,854) (40,943) c) other changes (729,249) (424,826) 180. Tax expenses (income) relating to items reclassified to profit or loss 484,662 108,913 190. Total other comprehensive income (2,798,894) (98,817) 200. Other comprehensive income (Item 10+190) 1,309,688 5,686,759 210. Minority consolidated other comprehensive income (214,741) (522,041) 220. Parent Company's consolidated other comprehensive income 1,094,947 5,164,718 Consolidated financial statements | Notes to the consolidated accounts Part D - Consolidated comprehensive income UniCredit ·2018 Annual Report and Accounts 277 continued: Consolidated analytical statement of other comprehensive income (€ '000) AS AT ITEMS 12.31.2018 12.31.2017 150. Financial assets (different from equity instruments) at fair value through other comprehensive income: (1,704,852) - a) fair value changes (1,527,342) - b) reclassification to profit or loss: (172,994) - - impairment losses 11,859 - - gains/losses on disposals (184,853) - c) other changes (4,516) - Available-for-sale financial assets:(ex IAS39 Item N. 100) - (170,718) a) fair value changes - 121,246 b) reclassification to profit or loss - (301,118) - impairment losses - 3,807 - gains/losses on disposals - (304,925) c) other changes - 9,154 160. Non-current assets and disposal groups classified as held for sale: - 50,497 a) fair value changes - 53,585 b) reclassification to profit or loss - (268) c) other changes - (2,820) 170. Part of valuation reserves from investments valued at equity method: (854,798) (441,875) a) fair value changes (117,891) 23,894 b) reclassification to profit or loss: (7,658) (40,943) - impairment losses 196 - - gains/losses on disposals (7,854) (40,943) c) other changes (729,249) (424,826) 180. Tax expenses (income) relating to items reclassified to profit or loss 484,662 108,913 190. Total other comprehensive income (2,798,894) (98,817) 200. Other comprehensive income (Item 10+190) 1,309,688 5,686,759 210. Minority consolidated other comprehensive income (214,741) (522,041) 220. Parent Company's consolidated other comprehensive income 1,094,947 5,164,718 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 278 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies Introduction UniCredit group monitors and manages its risks through tight methodologies and procedures proving to be effective through all phases of the economic cycle. The steering, coordination and control role of the Group’s risks is performed by the Parent Company’s Group Risk Management function. The Group Lending Office, set up since 2 February 2018, is responsible for the credit activities, following Group Risk Management strategies, policies and guidelines. In particular, the Group Risk Management function is responsible for the following tasks: • optimise the quality of the Group's assets, minimising the risk cost in accordance with the risk/profitability goals set for the business areas; • ensure the strategic steering and definition of the Group's risk management policies; • define and supply the Heads of the Business Functions and Entities with the criteria for assessing, managing, measuring, monitoring and communicating risk, ensuring that the procedures and systems designed to control risk at Group and individual Entity level are coherent; • help build a risk culture across the Group by training and developing highly qualified staff, in conjunction with the competent COOs functions; • help to find ways to rectify asset imbalances, where needed in conjunction with Group Planning, Finance, Shareholding and Investor Relations; • help the Business Functions achieve their goals, including by assisting in the development of products and businesses (e.g. innovation of credit products, competitive opportunities linked to Basel accord, etc.); • support the CEO in defining the Group Risk Appetite proposal, to be shared in the Group Risk & Internal Control Committee and submitted for approval to the Board of Directors, as preliminary and preparatory step for the yearly and multi-yearly budget plan pertaining to the Group Planning, Finance, Shareholding and Investor Relations structure. The Group Risk Appetite will include a series of parameters defined by the CRO, with the contribution of Group Planning, Finance, Shareholding and Investor Relations and other relevant functions; each parameter can be complemented by limits and triggers proposed by the CRO19 and targets proposed by the Group Planning, Finance, Shareholding and Investor Relations and/or by the relevant Group functions, each respecting their mission and internal regulations. The Group CRO is responsible for ensuring the overall coherence of the proposed parameters and values. Furthermore, Group CRO is responsible for ensuring the CEO and the Board of Directors the coherence of the Group Risk Appetite with the Group strategic guidelines, as well as the coherence of the budget goals with the Group Risk Appetite setting and the periodical monitoring of the RAF. Group Planning, Finance, Shareholding and Investor Relations remains responsible for monitoring the performances of the Group and of the business functions, in order to identify possible underperforming areas and the related corrective measures. Such mission is accomplished by coordinating the Group's risk management as a whole. More specifically, it involves carrying out the following macro-functions20: • governing and checking credit, cross-border, market, balance sheet, liquidity, operational and reputational risks for the Group as well as any other risks relating to Basel II Pillar II (e.g. strategic, real estate, financial investment, business risks), by defining risk strategies and limits, developing risk measurement methodologies21, performing stress tests and portfolio analysis; • supervising, on a Group level and for UniCredit S.p.A, Basel accords related activities; • coordinating the internal capital measurement process within the “Internal Capital Adequacy Assessment Process” (“ICAAP”) and coordinating activities for drawing up the “ICAAP Regulatory Report”; • assigning ratings for banks and for the Group's major exposures, carrying out the relevant mapping, at Group level, and managing the "rating override" process with regard to Group-wide rating systems as well as those for measuring the credit risk of UniCredit S.p.A’s counterparts; • defining the minimum standards and guidelines for validating IT infrastructures and data quality, credit risks, operating risks and Pillar II risks, for feeding Group and Parent company reports on credit risk and for feeding credit risk measurement models; • performing internal validation activities, at Group level22, on systems for measuring, credit, operating and market risks, or Pillar II risks23, on related processes and data quality and IT components, as well as on models for pricing financial instruments, in order to check that they conform to regulatory requirements and in-house standards, overseeing consequently the non-compliance risk regarding to such regulatory requirements; • ensuring that the competent Bodies/Functions get adequate reports; • develop the strategy and oversee the management, process, targets and disposals of Non-Performing Exposures/NPE, repossessed assets and any other distressed assets for the entire Group24. The Group CRO define jointly with CLO the criteria/rules for identifying the exposures and assets for sale and portfolio targets; • drafting and managing risk policies, both at Group level (Group Rules) and at Parent company level, on the performance of risk-related activities for which UniCredit S.p.A. is competent as well as ensuring the monitoring; 19 Possible triggers and limits on profitability parameters must be agreed between CRO and Group CFO. 20 Where applicable, the below listed responsibilities are inclusive of the Foreign Branches of UniCredit S.p.A., as detailed in the Organizational Book - Application. 21 Directly or by issuing guidelines to Group Entities to be developed depending on type of methodology (direct supervision of Group-wide methodologies and risk measurement methodologies for the counterparties of UniCredit S.p.A, through guidelines on methodologies developed locally. 22 Directly validating with direct supervision on group-wide methodologies/ for which UniCredit S.p.A is competent, indirect on local methodologies. 23Liquidity, Business, Real Estate, Financial Investments, Reputational, Strategic 24 “Non-Performing Exposure: exposures (loans, debt securities, off-balance-sheet items) other than held for trading that satisfy either or both of the following criteria: (a) material exposures which are more than 90 days past-due; (b) the debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or the number of days past due. Non-performing exposures include the defaulted and impaired exposures. The total NPE is given by the sum of non-performing loans, non-performing debt securities and nonperforming off-balance-sheet items” (Source: ECB NPL GUIDANCE). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 278 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies Introduction UniCredit group monitors and manages its risks through tight methodologies and procedures proving to be effective through all phases of the economic cycle. The steering, coordination and control role of the Group’s risks is performed by the Parent Company’s Group Risk Management function. The Group Lending Office, set up since 2 February 2018, is responsible for the credit activities, following Group Risk Management strategies, policies and guidelines. In particular, the Group Risk Management function is responsible for the following tasks: • optimise the quality of the Group's assets, minimising the risk cost in accordance with the risk/profitability goals set for the business areas; • ensure the strategic steering and definition of the Group's risk management policies; • define and supply the Heads of the Business Functions and Entities with the criteria for assessing, managing, measuring, monitoring and communicating risk, ensuring that the procedures and systems designed to control risk at Group and individual Entity level are coherent; • help build a risk culture across the Group by training and developing highly qualified staff, in conjunction with the competent COOs functions; • help to find ways to rectify asset imbalances, where needed in conjunction with Group Planning, Finance, Shareholding and Investor Relations; • help the Business Functions achieve their goals, including by assisting in the development of products and businesses (e.g. innovation of credit products, competitive opportunities linked to Basel accord, etc.); • support the CEO in defining the Group Risk Appetite proposal, to be shared in the Group Risk & Internal Control Committee and submitted for approval to the Board of Directors, as preliminary and preparatory step for the yearly and multi-yearly budget plan pertaining to the Group Planning, Finance, Shareholding and Investor Relations structure. The Group Risk Appetite will include a series of parameters defined by the CRO, with the contribution of Group Planning, Finance, Shareholding and Investor Relations and other relevant functions; each parameter can be complemented by limits and triggers proposed by the CRO19 and targets proposed by the Group Planning, Finance, Shareholding and Investor Relations and/or by the relevant Group functions, each respecting their mission and internal regulations. The Group CRO is responsible for ensuring the overall coherence of the proposed parameters and values. Furthermore, Group CRO is responsible for ensuring the CEO and the Board of Directors the coherence of the Group Risk Appetite with the Group strategic guidelines, as well as the coherence of the budget goals with the Group Risk Appetite setting and the periodical monitoring of the RAF. Group Planning, Finance, Shareholding and Investor Relations remains responsible for monitoring the performances of the Group and of the business functions, in order to identify possible underperforming areas and the related corrective measures. Such mission is accomplished by coordinating the Group's risk management as a whole. More specifically, it involves carrying out the following macro-functions20: • governing and checking credit, cross-border, market, balance sheet, liquidity, operational and reputational risks for the Group as well as any other risks relating to Basel II Pillar II (e.g. strategic, real estate, financial investment, business risks), by defining risk strategies and limits, developing risk measurement methodologies21, performing stress tests and portfolio analysis; • supervising, on a Group level and for UniCredit S.p.A, Basel accords related activities; • coordinating the internal capital measurement process within the “Internal Capital Adequacy Assessment Process” (“ICAAP”) and coordinating activities for drawing up the “ICAAP Regulatory Report”; • assigning ratings for banks and for the Group's major exposures, carrying out the relevant mapping, at Group level, and managing the "rating override" process with regard to Group-wide rating systems as well as those for measuring the credit risk of UniCredit S.p.A’s counterparts; • defining the minimum standards and guidelines for validating IT infrastructures and data quality, credit risks, operating risks and Pillar II risks, for feeding Group and Parent company reports on credit risk and for feeding credit risk measurement models; • performing internal validation activities, at Group level22, on systems for measuring, credit, operating and market risks, or Pillar II risks23, on related processes and data quality and IT components, as well as on models for pricing financial instruments, in order to check that they conform to regulatory requirements and in-house standards, overseeing consequently the non-compliance risk regarding to such regulatory requirements; • ensuring that the competent Bodies/Functions get adequate reports; • develop the strategy and oversee the management, process, targets and disposals of Non-Performing Exposures/NPE, repossessed assets and any other distressed assets for the entire Group24. The Group CRO define jointly with CLO the criteria/rules for identifying the exposures and assets for sale and portfolio targets; • drafting and managing risk policies, both at Group level (Group Rules) and at Parent company level, on the performance of risk-related activities for which UniCredit S.p.A. is competent as well as ensuring the monitoring; 19 Possible triggers and limits on profitability parameters must be agreed between CRO and Group CFO. 20 Where applicable, the below listed responsibilities are inclusive of the Foreign Branches of UniCredit S.p.A., as detailed in the Organizational Book - Application. 21 Directly or by issuing guidelines to Group Entities to be developed depending on type of methodology (direct supervision of Group-wide methodologies and risk measurement methodologies for the counterparties of UniCredit S.p.A, through guidelines on methodologies developed locally. 22 Directly validating with direct supervision on group-wide methodologies/ for which UniCredit S.p.A is competent, indirect on local methodologies. 23Liquidity, Business, Real Estate, Financial Investments, Reputational, Strategic 24 “Non-Performing Exposure: exposures (loans, debt securities, off-balance-sheet items) other than held for trading that satisfy either or both of the following criteria: (a) material exposures which are more than 90 days past-due; (b) the debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or the number of days past due. Non-performing exposures include the defaulted and impaired exposures. The total NPE is given by the sum of non-performing loans, non-performing debt securities and nonperforming off-balance-sheet items” (Source: ECB NPL GUIDANCE). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 278 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies Introduction UniCredit group monitors and manages its risks through tight methodologies and procedures proving to be effective through all phases of the economic cycle. The steering, coordination and control role of the Group’s risks is performed by the Parent Company’s Group Risk Management function. The Group Lending Office, set up since 2 February 2018, is responsible for the credit activities, following Group Risk Management strategies, policies and guidelines. In particular, the Group Risk Management function is responsible for the following tasks: • optimise the quality of the Group's assets, minimising the risk cost in accordance with the risk/profitability goals set for the business areas; • ensure the strategic steering and definition of the Group's risk management policies; • define and supply the Heads of the Business Functions and Entities with the criteria for assessing, managing, measuring, monitoring and communicating risk, ensuring that the procedures and systems designed to control risk at Group and individual Entity level are coherent; • help build a risk culture across the Group by training and developing highly qualified staff, in conjunction with the competent COOs functions; • help to find ways to rectify asset imbalances, where needed in conjunction with Group Planning, Finance, Shareholding and Investor Relations; • help the Business Functions achieve their goals, including by assisting in the development of products and businesses (e.g. innovation of credit products, competitive opportunities linked to Basel accord, etc.); • support the CEO in defining the Group Risk Appetite proposal, to be shared in the Group Risk & Internal Control Committee and submitted for approval to the Board of Directors, as preliminary and preparatory step for the yearly and multi-yearly budget plan pertaining to the Group Planning, Finance, Shareholding and Investor Relations structure. The Group Risk Appetite will include a series of parameters defined by the CRO, with the contribution of Group Planning, Finance, Shareholding and Investor Relations and other relevant functions; each parameter can be complemented by limits and triggers proposed by the CRO19 and targets proposed by the Group Planning, Finance, Shareholding and Investor Relations and/or by the relevant Group functions, each respecting their mission and internal regulations. The Group CRO is responsible for ensuring the overall coherence of the proposed parameters and values. Furthermore, Group CRO is responsible for ensuring the CEO and the Board of Directors the coherence of the Group Risk Appetite with the Group strategic guidelines, as well as the coherence of the budget goals with the Group Risk Appetite setting and the periodical monitoring of the RAF. Group Planning, Finance, Shareholding and Investor Relations remains responsible for monitoring the performances of the Group and of the business functions, in order to identify possible underperforming areas and the related corrective measures. Such mission is accomplished by coordinating the Group's risk management as a whole. More specifically, it involves carrying out the following macro-functions20: • governing and checking credit, cross-border, market, balance sheet, liquidity, operational and reputational risks for the Group as well as any other risks relating to Basel II Pillar II (e.g. strategic, real estate, financial investment, business risks), by defining risk strategies and limits, developing risk measurement methodologies21, performing stress tests and portfolio analysis; • supervising, on a Group level and for UniCredit S.p.A, Basel accords related activities; • coordinating the internal capital measurement process within the “Internal Capital Adequacy Assessment Process” (“ICAAP”) and coordinating activities for drawing up the “ICAAP Regulatory Report”; • assigning ratings for banks and for the Group's major exposures, carrying out the relevant mapping, at Group level, and managing the "rating override" process with regard to Group-wide rating systems as well as those for measuring the credit risk of UniCredit S.p.A’s counterparts; • defining the minimum standards and guidelines for validating IT infrastructures and data quality, credit risks, operating risks and Pillar II risks, for feeding Group and Parent company reports on credit risk and for feeding credit risk measurement models; • performing internal validation activities, at Group level22, on systems for measuring, credit, operating and market risks, or Pillar II risks23, on related processes and data quality and IT components, as well as on models for pricing financial instruments, in order to check that they conform to regulatory requirements and in-house standards, overseeing consequently the non-compliance risk regarding to such regulatory requirements; • ensuring that the competent Bodies/Functions get adequate reports; • develop the strategy and oversee the management, process, targets and disposals of Non-Performing Exposures/NPE, repossessed assets and any other distressed assets for the entire Group24. The Group CRO define jointly with CLO the criteria/rules for identifying the exposures and assets for sale and portfolio targets; • drafting and managing risk policies, both at Group level (Group Rules) and at Parent company level, on the performance of risk-related activities for which UniCredit S.p.A. is competent as well as ensuring the monitoring; 19 Possible triggers and limits on profitability parameters must be agreed between CRO and Group CFO. 20 Where applicable, the below listed responsibilities are inclusive of the Foreign Branches of UniCredit S.p.A., as detailed in the Organizational Book - Application. 21 Directly or by issuing guidelines to Group Entities to be developed depending on type of methodology (direct supervision of Group-wide methodologies and risk measurement methodologies for the counterparties of UniCredit S.p.A, through guidelines on methodologies developed locally. 22 Directly validating with direct supervision on group-wide methodologies/ for which UniCredit S.p.A is competent, indirect on local methodologies. 23Liquidity, Business, Real Estate, Financial Investments, Reputational, Strategic 24 “Non-Performing Exposure: exposures (loans, debt securities, off-balance-sheet items) other than held for trading that satisfy either or both of the following criteria: (a) material exposures which are more than 90 days past-due; (b) the debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or the number of days past due. Non-performing exposures include the defaulted and impaired exposures. The total NPE is given by the sum of non-performing loans, non-performing debt securities and nonperforming off-balance-sheet items” (Source: ECB NPL GUIDANCE). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 278 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies Introduction UniCredit group monitors and manages its risks through tight methodologies and procedures proving to be effective through all phases of the economic cycle. The steering, coordination and control role of the Group’s risks is performed by the Parent Company’s Group Risk Management function. The Group Lending Office, set up since 2 February 2018, is responsible for the credit activities, following Group Risk Management strategies, policies and guidelines. In particular, the Group Risk Management function is responsible for the following tasks: • optimise the quality of the Group's assets, minimising the risk cost in accordance with the risk/profitability goals set for the business areas; • ensure the strategic steering and definition of the Group's risk management policies; • define and supply the Heads of the Business Functions and Entities with the criteria for assessing, managing, measuring, monitoring and communicating risk, ensuring that the procedures and systems designed to control risk at Group and individual Entity level are coherent; • help build a risk culture across the Group by training and developing highly qualified staff, in conjunction with the competent COOs functions; • help to find ways to rectify asset imbalances, where needed in conjunction with Group Planning, Finance, Shareholding and Investor Relations; • help the Business Functions achieve their goals, including by assisting in the development of products and businesses (e.g. innovation of credit products, competitive opportunities linked to Basel accord, etc.); • support the CEO in defining the Group Risk Appetite proposal, to be shared in the Group Risk & Internal Control Committee and submitted for approval to the Board of Directors, as preliminary and preparatory step for the yearly and multi-yearly budget plan pertaining to the Group Planning, Finance, Shareholding and Investor Relations structure. The Group Risk Appetite will include a series of parameters defined by the CRO, with the contribution of Group Planning, Finance, Shareholding and Investor Relations and other relevant functions; each parameter can be complemented by limits and triggers proposed by the CRO19 and targets proposed by the Group Planning, Finance, Shareholding and Investor Relations and/or by the relevant Group functions, each respecting their mission and internal regulations. The Group CRO is responsible for ensuring the overall coherence of the proposed parameters and values. Furthermore, Group CRO is responsible for ensuring the CEO and the Board of Directors the coherence of the Group Risk Appetite with the Group strategic guidelines, as well as the coherence of the budget goals with the Group Risk Appetite setting and the periodical monitoring of the RAF. Group Planning, Finance, Shareholding and Investor Relations remains responsible for monitoring the performances of the Group and of the business functions, in order to identify possible underperforming areas and the related corrective measures. Such mission is accomplished by coordinating the Group's risk management as a whole. More specifically, it involves carrying out the following macro-functions20: • governing and checking credit, cross-border, market, balance sheet, liquidity, operational and reputational risks for the Group as well as any other risks relating to Basel II Pillar II (e.g. strategic, real estate, financial investment, business risks), by defining risk strategies and limits, developing risk measurement methodologies21, performing stress tests and portfolio analysis; • supervising, on a Group level and for UniCredit S.p.A, Basel accords related activities; • coordinating the internal capital measurement process within the “Internal Capital Adequacy Assessment Process” (“ICAAP”) and coordinating activities for drawing up the “ICAAP Regulatory Report”; • assigning ratings for banks and for the Group's major exposures, carrying out the relevant mapping, at Group level, and managing the "rating override" process with regard to Group-wide rating systems as well as those for measuring the credit risk of UniCredit S.p.A’s counterparts; • defining the minimum standards and guidelines for validating IT infrastructures and data quality, credit risks, operating risks and Pillar II risks, for feeding Group and Parent company reports on credit risk and for feeding credit risk measurement models; • performing internal validation activities, at Group level22, on systems for measuring, credit, operating and market risks, or Pillar II risks23, on related processes and data quality and IT components, as well as on models for pricing financial instruments, in order to check that they conform to regulatory requirements and in-house standards, overseeing consequently the non-compliance risk regarding to such regulatory requirements; • ensuring that the competent Bodies/Functions get adequate reports; • develop the strategy and oversee the management, process, targets and disposals of Non-Performing Exposures/NPE, repossessed assets and any other distressed assets for the entire Group24. The Group CRO define jointly with CLO the criteria/rules for identifying the exposures and assets for sale and portfolio targets; • drafting and managing risk policies, both at Group level (Group Rules) and at Parent company level, on the performance of risk-related activities for which UniCredit S.p.A. is competent as well as ensuring the monitoring; 19 Possible triggers and limits on profitability parameters must be agreed between CRO and Group CFO. 20 Where applicable, the below listed responsibilities are inclusive of the Foreign Branches of UniCredit S.p.A., as detailed in the Organizational Book - Application. 21 Directly or by issuing guidelines to Group Entities to be developed depending on type of methodology (direct supervision of Group-wide methodologies and risk measurement methodologies for the counterparties of UniCredit S.p.A, through guidelines on methodologies developed locally. 22 Directly validating with direct supervision on group-wide methodologies/ for which UniCredit S.p.A is competent, indirect on local methodologies. 23Liquidity, Business, Real Estate, Financial Investments, Reputational, Strategic 24 “Non-Performing Exposure: exposures (loans, debt securities, off-balance-sheet items) other than held for trading that satisfy either or both of the following criteria: (a) material exposures which are more than 90 days past-due; (b) the debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or the number of days past due. Non-performing exposures include the defaulted and impaired exposures. The total NPE is given by the sum of non-performing loans, non-performing debt securities and nonperforming off-balance-sheet items” (Source: ECB NPL GUIDANCE). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 278 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies Introduction UniCredit group monitors and manages its risks through tight methodologies and procedures proving to be effective through all phases of the economic cycle. The steering, coordination and control role of the Group’s risks is performed by the Parent Company’s Group Risk Management function. The Group Lending Office, set up since 2 February 2018, is responsible for the credit activities, following Group Risk Management strategies, policies and guidelines. In particular, the Group Risk Management function is responsible for the following tasks: • optimise the quality of the Group's assets, minimising the risk cost in accordance with the risk/profitability goals set for the business areas; • ensure the strategic steering and definition of the Group's risk management policies; • define and supply the Heads of the Business Functions and Entities with the criteria for assessing, managing, measuring, monitoring and communicating risk, ensuring that the procedures and systems designed to control risk at Group and individual Entity level are coherent; • help build a risk culture across the Group by training and developing highly qualified staff, in conjunction with the competent COOs functions; • help to find ways to rectify asset imbalances, where needed in conjunction with Group Planning, Finance, Shareholding and Investor Relations; • help the Business Functions achieve their goals, including by assisting in the development of products and businesses (e.g. innovation of credit products, competitive opportunities linked to Basel accord, etc.); • support the CEO in defining the Group Risk Appetite proposal, to be shared in the Group Risk & Internal Control Committee and submitted for approval to the Board of Directors, as preliminary and preparatory step for the yearly and multi-yearly budget plan pertaining to the Group Planning, Finance, Shareholding and Investor Relations structure. The Group Risk Appetite will include a series of parameters defined by the CRO, with the contribution of Group Planning, Finance, Shareholding and Investor Relations and other relevant functions; each parameter can be complemented by limits and triggers proposed by the CRO19 and targets proposed by the Group Planning, Finance, Shareholding and Investor Relations and/or by the relevant Group functions, each respecting their mission and internal regulations. The Group CRO is responsible for ensuring the overall coherence of the proposed parameters and values. Furthermore, Group CRO is responsible for ensuring the CEO and the Board of Directors the coherence of the Group Risk Appetite with the Group strategic guidelines, as well as the coherence of the budget goals with the Group Risk Appetite setting and the periodical monitoring of the RAF. Group Planning, Finance, Shareholding and Investor Relations remains responsible for monitoring the performances of the Group and of the business functions, in order to identify possible underperforming areas and the related corrective measures. Such mission is accomplished by coordinating the Group's risk management as a whole. More specifically, it involves carrying out the following macro-functions20: • governing and checking credit, cross-border, market, balance sheet, liquidity, operational and reputational risks for the Group as well as any other risks relating to Basel II Pillar II (e.g. strategic, real estate, financial investment, business risks), by defining risk strategies and limits, developing risk measurement methodologies21, performing stress tests and portfolio analysis; • supervising, on a Group level and for UniCredit S.p.A, Basel accords related activities; • coordinating the internal capital measurement process within the “Internal Capital Adequacy Assessment Process” (“ICAAP”) and coordinating activities for drawing up the “ICAAP Regulatory Report”; • assigning ratings for banks and for the Group's major exposures, carrying out the relevant mapping, at Group level, and managing the "rating override" process with regard to Group-wide rating systems as well as those for measuring the credit risk of UniCredit S.p.A’s counterparts; • defining the minimum standards and guidelines for validating IT infrastructures and data quality, credit risks, operating risks and Pillar II risks, for feeding Group and Parent company reports on credit risk and for feeding credit risk measurement models; • performing internal validation activities, at Group level22, on systems for measuring, credit, operating and market risks, or Pillar II risks23, on related processes and data quality and IT components, as well as on models for pricing financial instruments, in order to check that they conform to regulatory requirements and in-house standards, overseeing consequently the non-compliance risk regarding to such regulatory requirements; • ensuring that the competent Bodies/Functions get adequate reports; • develop the strategy and oversee the management, process, targets and disposals of Non-Performing Exposures/NPE, repossessed assets and any other distressed assets for the entire Group24. The Group CRO define jointly with CLO the criteria/rules for identifying the exposures and assets for sale and portfolio targets; • drafting and managing risk policies, both at Group level (Group Rules) and at Parent company level, on the performance of risk-related activities for which UniCredit S.p.A. is competent as well as ensuring the monitoring; 19 Possible triggers and limits on profitability parameters must be agreed between CRO and Group CFO. 20 Where applicable, the below listed responsibilities are inclusive of the Foreign Branches of UniCredit S.p.A., as detailed in the Organizational Book - Application. 21 Directly or by issuing guidelines to Group Entities to be developed depending on type of methodology (direct supervision of Group-wide methodologies and risk measurement methodologies for the counterparties of UniCredit S.p.A, through guidelines on methodologies developed locally. 22 Directly validating with direct supervision on group-wide methodologies/ for which UniCredit S.p.A is competent, indirect on local methodologies. 23Liquidity, Business, Real Estate, Financial Investments, Reputational, Strategic 24 “Non-Performing Exposure: exposures (loans, debt securities, off-balance-sheet items) other than held for trading that satisfy either or both of the following criteria: (a) material exposures which are more than 90 days past-due; (b) the debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or the number of days past due. Non-performing exposures include the defaulted and impaired exposures. The total NPE is given by the sum of non-performing loans, non-performing debt securities and nonperforming off-balance-sheet items” (Source: ECB NPL GUIDANCE). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 279 • performing second-level checks on the risks of the treasury and credit treasury portfolios within the Group and the Parent company; • analyzing and controlling, at Italian perimeter level, credit, operating and reputational risks generated by the activities of Italy Network and of the CIB Italy; • carrying out the functional coordination of Legal Entities in its area of competence. In order to strengthen the capacity of independent steering, coordination and control of Group risks, to improve the efficiency and the flexibility on the risk decision process and to address the interaction among the relevant risk stakeholders, specific Committees are in place: • Risks and Controls Committees: - Group Risk & Internal Control Committee (“GR&ICC”), responsible for the Group strategic risk decisions: establishing policies, guidelines, operational limits and the methodologies for the measurement, management and control of risks. It is, moreover, supporting the Group CEO in the management and oversight of the Internal Control System ("ICS"); - Group Credit Committee (“GCC”), responsible for credit proposals, accordingly to delegated powers, and status classification. • Group Portfolio Risks Committees: - Group Market Risk Committee (“GMRC”), responsible for monitoring market risks at Group level; - Group Operational & Reputational Risks Committee (“GORRIC”), responsible for monitoring operational and reputational risks at Group level, ensuring consistency among the Parent company and the different Group Legal Entities; - Italian Operational & Reputational Risks Committee (“IORRIC”), responsible for monitoring and evaluating operational and reputational risks within UniCredit S.p.A. perimeter and Italian Legal Entities; - Group Assets & Liabilities Committee (“GALCO”), is involved in the process of defining strategies, policies, methodologies and limits (where applicable) for liquidity risk, FX and banking book interest rate risks, transfer pricing, Funding Plan and Contingency Funding Plan and in monitoring activities; - Group Credit Risk Governance Committee (“GCRGC”), responsible for ensuring steering, coordination and control on credit risk topics (focusing on Credit risk Pillar I, Pillar II, limited to Credit Portfolio Model, CPM and managerial models), as well as ensuring consistency among the Parent company and the different Group legal entities; - Group NPE Governance Committee (“GNGC”), responsible for ensuring, at Group level, a steering, coordination and control of Non-performing exposures/NPE strategy and targets as well as an effective alignment on common goals between the Parent company and different Legal Entities. • Transactional Committees in charge of evaluating and approving the single counterparties/transactions that impact the overall portfolio risk profile: - Group Transactional Credit Committee (“GTCC”); - Italian Transactional Credit Committee (“ITCC”); - Italian Special & Transactional Credit Committee (“IS&TCC”); - Debt Capital Markets Commitment Committee (“DCMCC”); - Group Rating Committee (“GRaC”). The Board of Directors, pursuant to the provisions of the Self-Regulatory Code, and under Banca d’Italia supervisory provisions, is supported by the Internal Control & Risk Committee, established among Board members, in order to foster an efficient information and advisory system that enables it to better assess risk related topics for which it is responsible. Further information on corporate governance, inclusive of the Internal Control & Risk Committee and the number of times this committee has met, is included in the document “Corporate Governance Report”, published on the Group internet site in the section: Governance » Governance system & policies » Corporate Governance report (https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html). Internal Capital Adequacy Assessment Process (“ICAAP”) and Risk Appetite UniCredit group assesses its capital adequacy on a going concern approach, ensuring that an adequate level of capital is maintained to continue business activities as usual even under severe loss events, like those caused by an economic downturn. The Group’s approach to ICAAP consists of the following phases: 1. Risk identification and mapping; 2. Risk measurement and stress testing; 3. Risk appetite setting and capital allocation; 4. Monitoring and reporting. 1. Risk identification and mapping The first step is the identification and mapping of all risks embedded in the Group and relevant Legal Entities, with particular focus on the risks not explicitly covered by the Pillar 1 framework. The output of this activity is the Group Risk Map which includes all the risk types quantifiable by Internal Capital. 2. Risk measurement and Stress Testing The second phase is the identification of the internal methodologies for measurement and quantification of the different risk profiles, resulting into the calculation of Group Internal Capital. Firm-wide stress tests are also performed as a fundamental part of a sound risk management process. The Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 279 • performing second-level checks on the risks of the treasury and credit treasury portfolios within the Group and the Parent company; • analyzing and controlling, at Italian perimeter level, credit, operating and reputational risks generated by the activities of Italy Network and of the CIB Italy; • carrying out the functional coordination of Legal Entities in its area of competence. In order to strengthen the capacity of independent steering, coordination and control of Group risks, to improve the efficiency and the flexibility on the risk decision process and to address the interaction among the relevant risk stakeholders, specific Committees are in place: • Risks and Controls Committees: - Group Risk & Internal Control Committee (“GR&ICC”), responsible for the Group strategic risk decisions: establishing policies, guidelines, operational limits and the methodologies for the measurement, management and control of risks. It is, moreover, supporting the Group CEO in the management and oversight of the Internal Control System ("ICS"); - Group Credit Committee (“GCC”), responsible for credit proposals, accordingly to delegated powers, and status classification. • Group Portfolio Risks Committees: - Group Market Risk Committee (“GMRC”), responsible for monitoring market risks at Group level; - Group Operational & Reputational Risks Committee (“GORRIC”), responsible for monitoring operational and reputational risks at Group level, ensuring consistency among the Parent company and the different Group Legal Entities; - Italian Operational & Reputational Risks Committee (“IORRIC”), responsible for monitoring and evaluating operational and reputational risks within UniCredit S.p.A. perimeter and Italian Legal Entities; - Group Assets & Liabilities Committee (“GALCO”), is involved in the process of defining strategies, policies, methodologies and limits (where applicable) for liquidity risk, FX and banking book interest rate risks, transfer pricing, Funding Plan and Contingency Funding Plan and in monitoring activities; - Group Credit Risk Governance Committee (“GCRGC”), responsible for ensuring steering, coordination and control on credit risk topics (focusing on Credit risk Pillar I, Pillar II, limited to Credit Portfolio Model, CPM and managerial models), as well as ensuring consistency among the Parent company and the different Group legal entities; - Group NPE Governance Committee (“GNGC”), responsible for ensuring, at Group level, a steering, coordination and control of Non-performing exposures/NPE strategy and targets as well as an effective alignment on common goals between the Parent company and different Legal Entities. • Transactional Committees in charge of evaluating and approving the single counterparties/transactions that impact the overall portfolio risk profile: - Group Transactional Credit Committee (“GTCC”); - Italian Transactional Credit Committee (“ITCC”); - Italian Special & Transactional Credit Committee (“IS&TCC”); - Debt Capital Markets Commitment Committee (“DCMCC”); - Group Rating Committee (“GRaC”). The Board of Directors, pursuant to the provisions of the Self-Regulatory Code, and under Banca d’Italia supervisory provisions, is supported by the Internal Control & Risk Committee, established among Board members, in order to foster an efficient information and advisory system that enables it to better assess risk related topics for which it is responsible. Further information on corporate governance, inclusive of the Internal Control & Risk Committee and the number of times this committee has met, is included in the document “Corporate Governance Report”, published on the Group internet site in the section: Governance » Governance system & policies » Corporate Governance report (https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html). Internal Capital Adequacy Assessment Process (“ICAAP”) and Risk Appetite UniCredit group assesses its capital adequacy on a going concern approach, ensuring that an adequate level of capital is maintained to continue business activities as usual even under severe loss events, like those caused by an economic downturn. The Group’s approach to ICAAP consists of the following phases: 1. Risk identification and mapping; 2. Risk measurement and stress testing; 3. Risk appetite setting and capital allocation; 4. Monitoring and reporting. 1. Risk identification and mapping The first step is the identification and mapping of all risks embedded in the Group and relevant Legal Entities, with particular focus on the risks not explicitly covered by the Pillar 1 framework. The output of this activity is the Group Risk Map which includes all the risk types quantifiable by Internal Capital. 2. Risk measurement and Stress Testing The second phase is the identification of the internal methodologies for measurement and quantification of the different risk profiles, resulting into the calculation of Group Internal Capital. Firm-wide stress tests are also performed as a fundamental part of a sound risk management process. The Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 279 • performing second-level checks on the risks of the treasury and credit treasury portfolios within the Group and the Parent company; • analyzing and controlling, at Italian perimeter level, credit, operating and reputational risks generated by the activities of Italy Network and of the CIB Italy; • carrying out the functional coordination of Legal Entities in its area of competence. In order to strengthen the capacity of independent steering, coordination and control of Group risks, to improve the efficiency and the flexibility on the risk decision process and to address the interaction among the relevant risk stakeholders, specific Committees are in place: • Risks and Controls Committees: - Group Risk & Internal Control Committee (“GR&ICC”), responsible for the Group strategic risk decisions: establishing policies, guidelines, operational limits and the methodologies for the measurement, management and control of risks. It is, moreover, supporting the Group CEO in the management and oversight of the Internal Control System ("ICS"); - Group Credit Committee (“GCC”), responsible for credit proposals, accordingly to delegated powers, and status classification. • Group Portfolio Risks Committees: - Group Market Risk Committee (“GMRC”), responsible for monitoring market risks at Group level; - Group Operational & Reputational Risks Committee (“GORRIC”), responsible for monitoring operational and reputational risks at Group level, ensuring consistency among the Parent company and the different Group Legal Entities; - Italian Operational & Reputational Risks Committee (“IORRIC”), responsible for monitoring and evaluating operational and reputational risks within UniCredit S.p.A. perimeter and Italian Legal Entities; - Group Assets & Liabilities Committee (“GALCO”), is involved in the process of defining strategies, policies, methodologies and limits (where applicable) for liquidity risk, FX and banking book interest rate risks, transfer pricing, Funding Plan and Contingency Funding Plan and in monitoring activities; - Group Credit Risk Governance Committee (“GCRGC”), responsible for ensuring steering, coordination and control on credit risk topics (focusing on Credit risk Pillar I, Pillar II, limited to Credit Portfolio Model, CPM and managerial models), as well as ensuring consistency among the Parent company and the different Group legal entities; - Group NPE Governance Committee (“GNGC”), responsible for ensuring, at Group level, a steering, coordination and control of Non-performing exposures/NPE strategy and targets as well as an effective alignment on common goals between the Parent company and different Legal Entities. • Transactional Committees in charge of evaluating and approving the single counterparties/transactions that impact the overall portfolio risk profile: - Group Transactional Credit Committee (“GTCC”); - Italian Transactional Credit Committee (“ITCC”); - Italian Special & Transactional Credit Committee (“IS&TCC”); - Debt Capital Markets Commitment Committee (“DCMCC”); - Group Rating Committee (“GRaC”). The Board of Directors, pursuant to the provisions of the Self-Regulatory Code, and under Banca d’Italia supervisory provisions, is supported by the Internal Control & Risk Committee, established among Board members, in order to foster an efficient information and advisory system that enables it to better assess risk related topics for which it is responsible. Further information on corporate governance, inclusive of the Internal Control & Risk Committee and the number of times this committee has met, is included in the document “Corporate Governance Report”, published on the Group internet site in the section: Governance » Governance system & policies » Corporate Governance report (https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html). Internal Capital Adequacy Assessment Process (“ICAAP”) and Risk Appetite UniCredit group assesses its capital adequacy on a going concern approach, ensuring that an adequate level of capital is maintained to continue business activities as usual even under severe loss events, like those caused by an economic downturn. The Group’s approach to ICAAP consists of the following phases: 1. Risk identification and mapping; 2. Risk measurement and stress testing; 3. Risk appetite setting and capital allocation; 4. Monitoring and reporting. 1. Risk identification and mapping The first step is the identification and mapping of all risks embedded in the Group and relevant Legal Entities, with particular focus on the risks not explicitly covered by the Pillar 1 framework. The output of this activity is the Group Risk Map which includes all the risk types quantifiable by Internal Capital. 2. Risk measurement and Stress Testing The second phase is the identification of the internal methodologies for measurement and quantification of the different risk profiles, resulting into the calculation of Group Internal Capital. Firm-wide stress tests are also performed as a fundamental part of a sound risk management process. The Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 279 • performing second-level checks on the risks of the treasury and credit treasury portfolios within the Group and the Parent company; • analyzing and controlling, at Italian perimeter level, credit, operating and reputational risks generated by the activities of Italy Network and of the CIB Italy; • carrying out the functional coordination of Legal Entities in its area of competence. In order to strengthen the capacity of independent steering, coordination and control of Group risks, to improve the efficiency and the flexibility on the risk decision process and to address the interaction among the relevant risk stakeholders, specific Committees are in place: • Risks and Controls Committees: - Group Risk & Internal Control Committee (“GR&ICC”), responsible for the Group strategic risk decisions: establishing policies, guidelines, operational limits and the methodologies for the measurement, management and control of risks. It is, moreover, supporting the Group CEO in the management and oversight of the Internal Control System ("ICS"); - Group Credit Committee (“GCC”), responsible for credit proposals, accordingly to delegated powers, and status classification. • Group Portfolio Risks Committees: - Group Market Risk Committee (“GMRC”), responsible for monitoring market risks at Group level; - Group Operational & Reputational Risks Committee (“GORRIC”), responsible for monitoring operational and reputational risks at Group level, ensuring consistency among the Parent company and the different Group Legal Entities; - Italian Operational & Reputational Risks Committee (“IORRIC”), responsible for monitoring and evaluating operational and reputational risks within UniCredit S.p.A. perimeter and Italian Legal Entities; - Group Assets & Liabilities Committee (“GALCO”), is involved in the process of defining strategies, policies, methodologies and limits (where applicable) for liquidity risk, FX and banking book interest rate risks, transfer pricing, Funding Plan and Contingency Funding Plan and in monitoring activities; - Group Credit Risk Governance Committee (“GCRGC”), responsible for ensuring steering, coordination and control on credit risk topics (focusing on Credit risk Pillar I, Pillar II, limited to Credit Portfolio Model, CPM and managerial models), as well as ensuring consistency among the Parent company and the different Group legal entities; - Group NPE Governance Committee (“GNGC”), responsible for ensuring, at Group level, a steering, coordination and control of Non-performing exposures/NPE strategy and targets as well as an effective alignment on common goals between the Parent company and different Legal Entities. • Transactional Committees in charge of evaluating and approving the single counterparties/transactions that impact the overall portfolio risk profile: - Group Transactional Credit Committee (“GTCC”); - Italian Transactional Credit Committee (“ITCC”); - Italian Special & Transactional Credit Committee (“IS&TCC”); - Debt Capital Markets Commitment Committee (“DCMCC”); - Group Rating Committee (“GRaC”). The Board of Directors, pursuant to the provisions of the Self-Regulatory Code, and under Banca d’Italia supervisory provisions, is supported by the Internal Control & Risk Committee, established among Board members, in order to foster an efficient information and advisory system that enables it to better assess risk related topics for which it is responsible. Further information on corporate governance, inclusive of the Internal Control & Risk Committee and the number of times this committee has met, is included in the document “Corporate Governance Report”, published on the Group internet site in the section: Governance » Governance system & policies » Corporate Governance report (https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html). Internal Capital Adequacy Assessment Process (“ICAAP”) and Risk Appetite UniCredit group assesses its capital adequacy on a going concern approach, ensuring that an adequate level of capital is maintained to continue business activities as usual even under severe loss events, like those caused by an economic downturn. The Group’s approach to ICAAP consists of the following phases: 1. Risk identification and mapping; 2. Risk measurement and stress testing; 3. Risk appetite setting and capital allocation; 4. Monitoring and reporting. 1. Risk identification and mapping The first step is the identification and mapping of all risks embedded in the Group and relevant Legal Entities, with particular focus on the risks not explicitly covered by the Pillar 1 framework. The output of this activity is the Group Risk Map which includes all the risk types quantifiable by Internal Capital. 2. Risk measurement and Stress Testing The second phase is the identification of the internal methodologies for measurement and quantification of the different risk profiles, resulting into the calculation of Group Internal Capital. Firm-wide stress tests are also performed as a fundamental part of a sound risk management process. The Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 279 • performing second-level checks on the risks of the treasury and credit treasury portfolios within the Group and the Parent company; • analyzing and controlling, at Italian perimeter level, credit, operating and reputational risks generated by the activities of Italy Network and of the CIB Italy; • carrying out the functional coordination of Legal Entities in its area of competence. In order to strengthen the capacity of independent steering, coordination and control of Group risks, to improve the efficiency and the flexibility on the risk decision process and to address the interaction among the relevant risk stakeholders, specific Committees are in place: • Risks and Controls Committees: - Group Risk & Internal Control Committee (“GR&ICC”), responsible for the Group strategic risk decisions: establishing policies, guidelines, operational limits and the methodologies for the measurement, management and control of risks. It is, moreover, supporting the Group CEO in the management and oversight of the Internal Control System ("ICS"); - Group Credit Committee (“GCC”), responsible for credit proposals, accordingly to delegated powers, and status classification. • Group Portfolio Risks Committees: - Group Market Risk Committee (“GMRC”), responsible for monitoring market risks at Group level; - Group Operational & Reputational Risks Committee (“GORRIC”), responsible for monitoring operational and reputational risks at Group level, ensuring consistency among the Parent company and the different Group Legal Entities; - Italian Operational & Reputational Risks Committee (“IORRIC”), responsible for monitoring and evaluating operational and reputational risks within UniCredit S.p.A. perimeter and Italian Legal Entities; - Group Assets & Liabilities Committee (“GALCO”), is involved in the process of defining strategies, policies, methodologies and limits (where applicable) for liquidity risk, FX and banking book interest rate risks, transfer pricing, Funding Plan and Contingency Funding Plan and in monitoring activities; - Group Credit Risk Governance Committee (“GCRGC”), responsible for ensuring steering, coordination and control on credit risk topics (focusing on Credit risk Pillar I, Pillar II, limited to Credit Portfolio Model, CPM and managerial models), as well as ensuring consistency among the Parent company and the different Group legal entities; - Group NPE Governance Committee (“GNGC”), responsible for ensuring, at Group level, a steering, coordination and control of Non-performing exposures/NPE strategy and targets as well as an effective alignment on common goals between the Parent company and different Legal Entities. • Transactional Committees in charge of evaluating and approving the single counterparties/transactions that impact the overall portfolio risk profile: - Group Transactional Credit Committee (“GTCC”); - Italian Transactional Credit Committee (“ITCC”); - Italian Special & Transactional Credit Committee (“IS&TCC”); - Debt Capital Markets Commitment Committee (“DCMCC”); - Group Rating Committee (“GRaC”). The Board of Directors, pursuant to the provisions of the Self-Regulatory Code, and under Banca d’Italia supervisory provisions, is supported by the Internal Control & Risk Committee, established among Board members, in order to foster an efficient information and advisory system that enables it to better assess risk related topics for which it is responsible. Further information on corporate governance, inclusive of the Internal Control & Risk Committee and the number of times this committee has met, is included in the document “Corporate Governance Report”, published on the Group internet site in the section: Governance » Governance system & policies » Corporate Governance report (https://www.unicreditgroup.eu/en/governance/governance-system-and-policies.html). Internal Capital Adequacy Assessment Process (“ICAAP”) and Risk Appetite UniCredit group assesses its capital adequacy on a going concern approach, ensuring that an adequate level of capital is maintained to continue business activities as usual even under severe loss events, like those caused by an economic downturn. The Group’s approach to ICAAP consists of the following phases: 1. Risk identification and mapping; 2. Risk measurement and stress testing; 3. Risk appetite setting and capital allocation; 4. Monitoring and reporting. 1. Risk identification and mapping The first step is the identification and mapping of all risks embedded in the Group and relevant Legal Entities, with particular focus on the risks not explicitly covered by the Pillar 1 framework. The output of this activity is the Group Risk Map which includes all the risk types quantifiable by Internal Capital. 2. Risk measurement and Stress Testing The second phase is the identification of the internal methodologies for measurement and quantification of the different risk profiles, resulting into the calculation of Group Internal Capital. Firm-wide stress tests are also performed as a fundamental part of a sound risk management process. The Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 280 2018 Annual Report and Accounts · UniCredit aim of stress testing is to assess the bank's viability with respect to exceptional but plausible events. The impact of adverse economic scenarios is assessed on the capital position (solvency stress test) and/or the liquidity position (liquidity stress test) of the Group. 3. Risk Appetite setting and capital allocation Risk Appetite is a key managerial tool used with the purpose of setting the adequate levels of risk the Bank is willing to have and consistently steering its business evolution (see the RAF section below for details). The Group capital plays a crucial role in the main corporate governance processes that drive strategic decisions, as target and risk tolerance thresholds, in terms of regulatory and internal capital, are key elements of the Risk Appetite Framework of the Group. 4. Monitoring and Reporting Capital adequacy evaluation is a dynamic process that requires a regular monitoring to support the decision making process. The Bank monitors its main risk profile with a frequency coherent with the nature of each single risk; on top of this, a quarterly reporting of integrated risks and Risk Appetite evolution is performed and reported to the relevant Risk Committees and Governing Bodies, in order to set and implement and efficient and effective ICAAP framework. Capital adequacy is assessed considering the balance between the assumed risks and the available capital both in a regulatory and in an economic perspective. With respect to economic perspective, capital adequacy is assessed by comparing the amount of financial resources available to absorb losses and keep the Group solvent, the so-called Available Financial Resources (“AFR”), with the amount of capital the Group needs to support its business activities, i.e. Internal Capital (“IC”). The decision to include components in AFR is based on three main criteria: • loss absorbency; • permanence; • flexibility of payments. Since these criteria are the same identified by Regulators to calculate regulatory Own Funds, the amount of regulatory Own Funds is the natural basis for the quantification of AFR. Under Going Concern approach, AFR are computed under the assumption that the Bank remains compliant with all the accounting and regulatory standards. The ratio between AFR and IC is the Risk Taking Capacity (“RTC”). This ratio must be above 100% (AFR>IC) in order to avoid that risk exposures are not higher than the Available Financial Resources. RTC is one of the key indicators included in the Group RAF dashboard on which the Bank leverages to guide the selection of the desired risk-return profile in alignment with its business strategies. A milestone of the ICAAP is the Risk Appetite, which in UniCredit group is defined as the level of risk that the Group is willing to take and the risk-return profile it fixes to achieve in pursuit of its strategic objectives and business plan, taking into account the interest of its stakeholders (e.g. customers, policymakers, regulators, shareholders) as well as capital and other regulatory and law requirements. The Group Risk Appetite is approved on an annual basis by the Board of Directors and is regularly monitored and reported, at least quarterly, to the relevant committees, with the aim to ensure that the Group develops within the desired risk return profile set by the Board. At local level, the risk appetite is set for the main Legal Entities and Subgroups and approved by the local competent functions. The main goals of UniCredit group’s Risk Appetite are: • to assess explicitly the risks and their interconnections UniCredit group is willing to accept or should avoid in one year horizon; Risk Appetite targets should be consistent with the ones defined in the strategic multi-year plan; • to specify the types of risk UniCredit group intends to assume by setting the targets, triggers and limits, under both normal and stressed operating conditions; • to ensure an “ex ante” risk-return profile consistent with long term sustainability, in coherence with multi-year strategic plan/ budget; • to ensure that the business develops within the risk tolerance set by the Parent company Board of Directors, also in respect of national and international regulations; • to support the evaluation of future strategic options with reference to risk profile; • to address internal and external stakeholders’ view on risk profile coherent with strategic positioning; • to provide qualitative statements concerning not quantifiable risks (e.g. strategic, reputational) in order to strategically guide the relevant processes and the internal control system. The Group Risk Appetite is defined consistently with UniCredit group business model. For this purpose, Group Risk Appetite is integrated in the budget process, in order to guide the selection of the desired risk-return profile in alignment with the Strategic Plan guidelines and at inception of the budget process. UniCredit Compensation Policy is consistent with Group Risk Appetite to allow the effective implementation of risk reward remuneration for bonus definition and payments. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 280 2018 Annual Report and Accounts · UniCredit aim of stress testing is to assess the bank's viability with respect to exceptional but plausible events. The impact of adverse economic scenarios is assessed on the capital position (solvency stress test) and/or the liquidity position (liquidity stress test) of the Group. 3. Risk Appetite setting and capital allocation Risk Appetite is a key managerial tool used with the purpose of setting the adequate levels of risk the Bank is willing to have and consistently steering its business evolution (see the RAF section below for details). The Group capital plays a crucial role in the main corporate governance processes that drive strategic decisions, as target and risk tolerance thresholds, in terms of regulatory and internal capital, are key elements of the Risk Appetite Framework of the Group. 4. Monitoring and Reporting Capital adequacy evaluation is a dynamic process that requires a regular monitoring to support the decision making process. The Bank monitors its main risk profile with a frequency coherent with the nature of each single risk; on top of this, a quarterly reporting of integrated risks and Risk Appetite evolution is performed and reported to the relevant Risk Committees and Governing Bodies, in order to set and implement and efficient and effective ICAAP framework. Capital adequacy is assessed considering the balance between the assumed risks and the available capital both in a regulatory and in an economic perspective. With respect to economic perspective, capital adequacy is assessed by comparing the amount of financial resources available to absorb losses and keep the Group solvent, the so-called Available Financial Resources (“AFR”), with the amount of capital the Group needs to support its business activities, i.e. Internal Capital (“IC”). The decision to include components in AFR is based on three main criteria: • loss absorbency; • permanence; • flexibility of payments. Since these criteria are the same identified by Regulators to calculate regulatory Own Funds, the amount of regulatory Own Funds is the natural basis for the quantification of AFR. Under Going Concern approach, AFR are computed under the assumption that the Bank remains compliant with all the accounting and regulatory standards. The ratio between AFR and IC is the Risk Taking Capacity (“RTC”). This ratio must be above 100% (AFR>IC) in order to avoid that risk exposures are not higher than the Available Financial Resources. RTC is one of the key indicators included in the Group RAF dashboard on which the Bank leverages to guide the selection of the desired risk-return profile in alignment with its business strategies. A milestone of the ICAAP is the Risk Appetite, which in UniCredit group is defined as the level of risk that the Group is willing to take and the risk-return profile it fixes to achieve in pursuit of its strategic objectives and business plan, taking into account the interest of its stakeholders (e.g. customers, policymakers, regulators, shareholders) as well as capital and other regulatory and law requirements. The Group Risk Appetite is approved on an annual basis by the Board of Directors and is regularly monitored and reported, at least quarterly, to the relevant committees, with the aim to ensure that the Group develops within the desired risk return profile set by the Board. At local level, the risk appetite is set for the main Legal Entities and Subgroups and approved by the local competent functions. The main goals of UniCredit group’s Risk Appetite are: • to assess explicitly the risks and their interconnections UniCredit group is willing to accept or should avoid in one year horizon; Risk Appetite targets should be consistent with the ones defined in the strategic multi-year plan; • to specify the types of risk UniCredit group intends to assume by setting the targets, triggers and limits, under both normal and stressed operating conditions; • to ensure an “ex ante” risk-return profile consistent with long term sustainability, in coherence with multi-year strategic plan/ budget; • to ensure that the business develops within the risk tolerance set by the Parent company Board of Directors, also in respect of national and international regulations; • to support the evaluation of future strategic options with reference to risk profile; • to address internal and external stakeholders’ view on risk profile coherent with strategic positioning; • to provide qualitative statements concerning not quantifiable risks (e.g. strategic, reputational) in order to strategically guide the relevant processes and the internal control system. The Group Risk Appetite is defined consistently with UniCredit group business model. For this purpose, Group Risk Appetite is integrated in the budget process, in order to guide the selection of the desired risk-return profile in alignment with the Strategic Plan guidelines and at inception of the budget process. UniCredit Compensation Policy is consistent with Group Risk Appetite to allow the effective implementation of risk reward remuneration for bonus definition and payments. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 280 2018 Annual Report and Accounts · UniCredit aim of stress testing is to assess the bank's viability with respect to exceptional but plausible events. The impact of adverse economic scenarios is assessed on the capital position (solvency stress test) and/or the liquidity position (liquidity stress test) of the Group. 3. Risk Appetite setting and capital allocation Risk Appetite is a key managerial tool used with the purpose of setting the adequate levels of risk the Bank is willing to have and consistently steering its business evolution (see the RAF section below for details). The Group capital plays a crucial role in the main corporate governance processes that drive strategic decisions, as target and risk tolerance thresholds, in terms of regulatory and internal capital, are key elements of the Risk Appetite Framework of the Group. 4. Monitoring and Reporting Capital adequacy evaluation is a dynamic process that requires a regular monitoring to support the decision making process. The Bank monitors its main risk profile with a frequency coherent with the nature of each single risk; on top of this, a quarterly reporting of integrated risks and Risk Appetite evolution is performed and reported to the relevant Risk Committees and Governing Bodies, in order to set and implement and efficient and effective ICAAP framework. Capital adequacy is assessed considering the balance between the assumed risks and the available capital both in a regulatory and in an economic perspective. With respect to economic perspective, capital adequacy is assessed by comparing the amount of financial resources available to absorb losses and keep the Group solvent, the so-called Available Financial Resources (“AFR”), with the amount of capital the Group needs to support its business activities, i.e. Internal Capital (“IC”). The decision to include components in AFR is based on three main criteria: • loss absorbency; • permanence; • flexibility of payments. Since these criteria are the same identified by Regulators to calculate regulatory Own Funds, the amount of regulatory Own Funds is the natural basis for the quantification of AFR. Under Going Concern approach, AFR are computed under the assumption that the Bank remains compliant with all the accounting and regulatory standards. The ratio between AFR and IC is the Risk Taking Capacity (“RTC”). This ratio must be above 100% (AFR>IC) in order to avoid that risk exposures are not higher than the Available Financial Resources. RTC is one of the key indicators included in the Group RAF dashboard on which the Bank leverages to guide the selection of the desired risk-return profile in alignment with its business strategies. A milestone of the ICAAP is the Risk Appetite, which in UniCredit group is defined as the level of risk that the Group is willing to take and the risk-return profile it fixes to achieve in pursuit of its strategic objectives and business plan, taking into account the interest of its stakeholders (e.g. customers, policymakers, regulators, shareholders) as well as capital and other regulatory and law requirements. The Group Risk Appetite is approved on an annual basis by the Board of Directors and is regularly monitored and reported, at least quarterly, to the relevant committees, with the aim to ensure that the Group develops within the desired risk return profile set by the Board. At local level, the risk appetite is set for the main Legal Entities and Subgroups and approved by the local competent functions. The main goals of UniCredit group’s Risk Appetite are: • to assess explicitly the risks and their interconnections UniCredit group is willing to accept or should avoid in one year horizon; Risk Appetite targets should be consistent with the ones defined in the strategic multi-year plan; • to specify the types of risk UniCredit group intends to assume by setting the targets, triggers and limits, under both normal and stressed operating conditions; • to ensure an “ex ante” risk-return profile consistent with long term sustainability, in coherence with multi-year strategic plan/ budget; • to ensure that the business develops within the risk tolerance set by the Parent company Board of Directors, also in respect of national and international regulations; • to support the evaluation of future strategic options with reference to risk profile; • to address internal and external stakeholders’ view on risk profile coherent with strategic positioning; • to provide qualitative statements concerning not quantifiable risks (e.g. strategic, reputational) in order to strategically guide the relevant processes and the internal control system. The Group Risk Appetite is defined consistently with UniCredit group business model. For this purpose, Group Risk Appetite is integrated in the budget process, in order to guide the selection of the desired risk-return profile in alignment with the Strategic Plan guidelines and at inception of the budget process. UniCredit Compensation Policy is consistent with Group Risk Appetite to allow the effective implementation of risk reward remuneration for bonus definition and payments. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 280 2018 Annual Report and Accounts · UniCredit aim of stress testing is to assess the bank's viability with respect to exceptional but plausible events. The impact of adverse economic scenarios is assessed on the capital position (solvency stress test) and/or the liquidity position (liquidity stress test) of the Group. 3. Risk Appetite setting and capital allocation Risk Appetite is a key managerial tool used with the purpose of setting the adequate levels of risk the Bank is willing to have and consistently steering its business evolution (see the RAF section below for details). The Group capital plays a crucial role in the main corporate governance processes that drive strategic decisions, as target and risk tolerance thresholds, in terms of regulatory and internal capital, are key elements of the Risk Appetite Framework of the Group. 4. Monitoring and Reporting Capital adequacy evaluation is a dynamic process that requires a regular monitoring to support the decision making process. The Bank monitors its main risk profile with a frequency coherent with the nature of each single risk; on top of this, a quarterly reporting of integrated risks and Risk Appetite evolution is performed and reported to the relevant Risk Committees and Governing Bodies, in order to set and implement and efficient and effective ICAAP framework. Capital adequacy is assessed considering the balance between the assumed risks and the available capital both in a regulatory and in an economic perspective. With respect to economic perspective, capital adequacy is assessed by comparing the amount of financial resources available to absorb losses and keep the Group solvent, the so-called Available Financial Resources (“AFR”), with the amount of capital the Group needs to support its business activities, i.e. Internal Capital (“IC”). The decision to include components in AFR is based on three main criteria: • loss absorbency; • permanence; • flexibility of payments. Since these criteria are the same identified by Regulators to calculate regulatory Own Funds, the amount of regulatory Own Funds is the natural basis for the quantification of AFR. Under Going Concern approach, AFR are computed under the assumption that the Bank remains compliant with all the accounting and regulatory standards. The ratio between AFR and IC is the Risk Taking Capacity (“RTC”). This ratio must be above 100% (AFR>IC) in order to avoid that risk exposures are not higher than the Available Financial Resources. RTC is one of the key indicators included in the Group RAF dashboard on which the Bank leverages to guide the selection of the desired risk-return profile in alignment with its business strategies. A milestone of the ICAAP is the Risk Appetite, which in UniCredit group is defined as the level of risk that the Group is willing to take and the risk-return profile it fixes to achieve in pursuit of its strategic objectives and business plan, taking into account the interest of its stakeholders (e.g. customers, policymakers, regulators, shareholders) as well as capital and other regulatory and law requirements. The Group Risk Appetite is approved on an annual basis by the Board of Directors and is regularly monitored and reported, at least quarterly, to the relevant committees, with the aim to ensure that the Group develops within the desired risk return profile set by the Board. At local level, the risk appetite is set for the main Legal Entities and Subgroups and approved by the local competent functions. The main goals of UniCredit group’s Risk Appetite are: • to assess explicitly the risks and their interconnections UniCredit group is willing to accept or should avoid in one year horizon; Risk Appetite targets should be consistent with the ones defined in the strategic multi-year plan; • to specify the types of risk UniCredit group intends to assume by setting the targets, triggers and limits, under both normal and stressed operating conditions; • to ensure an “ex ante” risk-return profile consistent with long term sustainability, in coherence with multi-year strategic plan/ budget; • to ensure that the business develops within the risk tolerance set by the Parent company Board of Directors, also in respect of national and international regulations; • to support the evaluation of future strategic options with reference to risk profile; • to address internal and external stakeholders’ view on risk profile coherent with strategic positioning; • to provide qualitative statements concerning not quantifiable risks (e.g. strategic, reputational) in order to strategically guide the relevant processes and the internal control system. The Group Risk Appetite is defined consistently with UniCredit group business model. For this purpose, Group Risk Appetite is integrated in the budget process, in order to guide the selection of the desired risk-return profile in alignment with the Strategic Plan guidelines and at inception of the budget process. UniCredit Compensation Policy is consistent with Group Risk Appetite to allow the effective implementation of risk reward remuneration for bonus definition and payments. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 280 2018 Annual Report and Accounts · UniCredit aim of stress testing is to assess the bank's viability with respect to exceptional but plausible events. The impact of adverse economic scenarios is assessed on the capital position (solvency stress test) and/or the liquidity position (liquidity stress test) of the Group. 3. Risk Appetite setting and capital allocation Risk Appetite is a key managerial tool used with the purpose of setting the adequate levels of risk the Bank is willing to have and consistently steering its business evolution (see the RAF section below for details). The Group capital plays a crucial role in the main corporate governance processes that drive strategic decisions, as target and risk tolerance thresholds, in terms of regulatory and internal capital, are key elements of the Risk Appetite Framework of the Group. 4. Monitoring and Reporting Capital adequacy evaluation is a dynamic process that requires a regular monitoring to support the decision making process. The Bank monitors its main risk profile with a frequency coherent with the nature of each single risk; on top of this, a quarterly reporting of integrated risks and Risk Appetite evolution is performed and reported to the relevant Risk Committees and Governing Bodies, in order to set and implement and efficient and effective ICAAP framework. Capital adequacy is assessed considering the balance between the assumed risks and the available capital both in a regulatory and in an economic perspective. With respect to economic perspective, capital adequacy is assessed by comparing the amount of financial resources available to absorb losses and keep the Group solvent, the so-called Available Financial Resources (“AFR”), with the amount of capital the Group needs to support its business activities, i.e. Internal Capital (“IC”). The decision to include components in AFR is based on three main criteria: • loss absorbency; • permanence; • flexibility of payments. Since these criteria are the same identified by Regulators to calculate regulatory Own Funds, the amount of regulatory Own Funds is the natural basis for the quantification of AFR. Under Going Concern approach, AFR are computed under the assumption that the Bank remains compliant with all the accounting and regulatory standards. The ratio between AFR and IC is the Risk Taking Capacity (“RTC”). This ratio must be above 100% (AFR>IC) in order to avoid that risk exposures are not higher than the Available Financial Resources. RTC is one of the key indicators included in the Group RAF dashboard on which the Bank leverages to guide the selection of the desired risk-return profile in alignment with its business strategies. A milestone of the ICAAP is the Risk Appetite, which in UniCredit group is defined as the level of risk that the Group is willing to take and the risk-return profile it fixes to achieve in pursuit of its strategic objectives and business plan, taking into account the interest of its stakeholders (e.g. customers, policymakers, regulators, shareholders) as well as capital and other regulatory and law requirements. The Group Risk Appetite is approved on an annual basis by the Board of Directors and is regularly monitored and reported, at least quarterly, to the relevant committees, with the aim to ensure that the Group develops within the desired risk return profile set by the Board. At local level, the risk appetite is set for the main Legal Entities and Subgroups and approved by the local competent functions. The main goals of UniCredit group’s Risk Appetite are: • to assess explicitly the risks and their interconnections UniCredit group is willing to accept or should avoid in one year horizon; Risk Appetite targets should be consistent with the ones defined in the strategic multi-year plan; • to specify the types of risk UniCredit group intends to assume by setting the targets, triggers and limits, under both normal and stressed operating conditions; • to ensure an “ex ante” risk-return profile consistent with long term sustainability, in coherence with multi-year strategic plan/ budget; • to ensure that the business develops within the risk tolerance set by the Parent company Board of Directors, also in respect of national and international regulations; • to support the evaluation of future strategic options with reference to risk profile; • to address internal and external stakeholders’ view on risk profile coherent with strategic positioning; • to provide qualitative statements concerning not quantifiable risks (e.g. strategic, reputational) in order to strategically guide the relevant processes and the internal control system. The Group Risk Appetite is defined consistently with UniCredit group business model. For this purpose, Group Risk Appetite is integrated in the budget process, in order to guide the selection of the desired risk-return profile in alignment with the Strategic Plan guidelines and at inception of the budget process. UniCredit Compensation Policy is consistent with Group Risk Appetite to allow the effective implementation of risk reward remuneration for bonus definition and payments. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 281 The structure of the Risk Appetite in UniCredit includes the Group Risk Appetite Statement and the Group Risk Appetite KPIs Dashboard. The Risk Appetite Statement defines the positioning of the bank in terms of strategic targets and related risk profiles to address internal and external stakeholders’ expectations and includes: • a guidance on the overall key boundaries for the Group in terms of focus of activity; • a definition of the desired risk-return profile, in coherence with the Group’s overall strategy; • an indication on strategies to manage key risks within the perimeter of the Group; • qualitative statements for not quantifiable risks (e.g. reputational) in order to ensure prevention/early intervention on emerging risks. The quantitative elements of the Risk Appetite Framework instead are represented by a Dashboard, composed by a set of KPIs, based on the analysis of the expectations of UniCredit group internal and external stakeholders, which addresses the following dimensions, including material risks to which the Group is exposed to: • Pillar 1 KPIs: to guarantee at any time the fulfilment of the KPIs requested by Regulators (e.g. Common Equity Tier 1 Ratio, Risk Taking Capacity, Liquidity Coverage Ratio), including KPIs which are of primary importance for steering the Group B&S; • Managerial KPIs: to include KPIs which are key from strategic and Risk Appetite standpoint; consistently with lean Parent Company steering (e.g. Credit Risk, Liquidity Risk and Profitability); • Specific Risks KPI: complementary with the above categories, to ensure steering of all key risks (e.g. Market Risk, Operational Risk, Interest Rate Risk, Shadow Banking, Risk Culture). For each of the above dimensions, one or more KPIs are identified, in order to quantitatively measure the position of the Group in different ways: absolute values, ratios, sensitivities to defined parameters. Various levels of thresholds are defined such to act as early warning indicators anticipating potential risk situations that will be promptly escalated at relevant organisational level. In the event that specific Risk Appetite thresholds are met, the necessary management measures have to be adopted for effectively adjusting the risk profile. The following thresholds are identified (on certain KPIs, not all the thresholds may be meaningful): • Targets represent the amount of risk the Group is willing to take on in normal conditions in coherence with Group Ambition. They are the reference thresholds for the development and steering of the business; • Triggers represent, from a managerial standpoint, the maximum acceptable level of deviation from the defined target thresholds, or more generally a Warning Level, and are set consistently to assure that the Group can operate, even under stress conditions; • Limits are hard points that represent, from a statutory standpoint, the maximum acceptable level of risk for the Group. Thresholds setting is evaluated by the relevant competent functions, also through managerial decision by the Board of Directors, respecting regulatory and supervisory requirements and also taking into account stakeholders’ expectations and positioning versus peers. In addition, the Group has a series of transversal operative limits and metrics that cover the main risk profiles in order to supplement the Risk Appetite Framework. According to the EBA guidelines, every year ICAAP information are collected for SREP purposes and sent to the Regulator. The Board of Directors, that authorises the sending of this information to the Authorities, also acknowledges that the risk governance of the Group is deemed adequate, guaranteeing that the risk management system in place is in line with the risk profile and strategy of the Group. Moreover, the Chairman of the Board of Directors, the CEO, the Co-Chief Operating Officer and the Chief Risk Officer declared in the Capital Adequacy Statement submitted to the last Board of Directors held on 11 April 2018 that the current Capital of the Group is adequate to cover its risk profile and the operation of its business model, which is also grounded on the actions planned within the MYP “Transform 2019”. In addition the usage of the RAF as a key tool and cornerstone for risk strategy appraisal will continue to represent a fundamental pillar of the ICAAP and allow to activate prompt actions in case of regulatory and/or internal capital trigger/limit breaches. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 281 The structure of the Risk Appetite in UniCredit includes the Group Risk Appetite Statement and the Group Risk Appetite KPIs Dashboard. The Risk Appetite Statement defines the positioning of the bank in terms of strategic targets and related risk profiles to address internal and external stakeholders’ expectations and includes: • a guidance on the overall key boundaries for the Group in terms of focus of activity; • a definition of the desired risk-return profile, in coherence with the Group’s overall strategy; • an indication on strategies to manage key risks within the perimeter of the Group; • qualitative statements for not quantifiable risks (e.g. reputational) in order to ensure prevention/early intervention on emerging risks. The quantitative elements of the Risk Appetite Framework instead are represented by a Dashboard, composed by a set of KPIs, based on the analysis of the expectations of UniCredit group internal and external stakeholders, which addresses the following dimensions, including material risks to which the Group is exposed to: • Pillar 1 KPIs: to guarantee at any time the fulfilment of the KPIs requested by Regulators (e.g. Common Equity Tier 1 Ratio, Risk Taking Capacity, Liquidity Coverage Ratio), including KPIs which are of primary importance for steering the Group B&S; • Managerial KPIs: to include KPIs which are key from strategic and Risk Appetite standpoint; consistently with lean Parent Company steering (e.g. Credit Risk, Liquidity Risk and Profitability); • Specific Risks KPI: complementary with the above categories, to ensure steering of all key risks (e.g. Market Risk, Operational Risk, Interest Rate Risk, Shadow Banking, Risk Culture). For each of the above dimensions, one or more KPIs are identified, in order to quantitatively measure the position of the Group in different ways: absolute values, ratios, sensitivities to defined parameters. Various levels of thresholds are defined such to act as early warning indicators anticipating potential risk situations that will be promptly escalated at relevant organisational level. In the event that specific Risk Appetite thresholds are met, the necessary management measures have to be adopted for effectively adjusting the risk profile. The following thresholds are identified (on certain KPIs, not all the thresholds may be meaningful): • Targets represent the amount of risk the Group is willing to take on in normal conditions in coherence with Group Ambition. They are the reference thresholds for the development and steering of the business; • Triggers represent, from a managerial standpoint, the maximum acceptable level of deviation from the defined target thresholds, or more generally a Warning Level, and are set consistently to assure that the Group can operate, even under stress conditions; • Limits are hard points that represent, from a statutory standpoint, the maximum acceptable level of risk for the Group. Thresholds setting is evaluated by the relevant competent functions, also through managerial decision by the Board of Directors, respecting regulatory and supervisory requirements and also taking into account stakeholders’ expectations and positioning versus peers. In addition, the Group has a series of transversal operative limits and metrics that cover the main risk profiles in order to supplement the Risk Appetite Framework. According to the EBA guidelines, every year ICAAP information are collected for SREP purposes and sent to the Regulator. The Board of Directors, that authorises the sending of this information to the Authorities, also acknowledges that the risk governance of the Group is deemed adequate, guaranteeing that the risk management system in place is in line with the risk profile and strategy of the Group. Moreover, the Chairman of the Board of Directors, the CEO, the Co-Chief Operating Officer and the Chief Risk Officer declared in the Capital Adequacy Statement submitted to the last Board of Directors held on 11 April 2018 that the current Capital of the Group is adequate to cover its risk profile and the operation of its business model, which is also grounded on the actions planned within the MYP “Transform 2019”. In addition the usage of the RAF as a key tool and cornerstone for risk strategy appraisal will continue to represent a fundamental pillar of the ICAAP and allow to activate prompt actions in case of regulatory and/or internal capital trigger/limit breaches. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 281 The structure of the Risk Appetite in UniCredit includes the Group Risk Appetite Statement and the Group Risk Appetite KPIs Dashboard. The Risk Appetite Statement defines the positioning of the bank in terms of strategic targets and related risk profiles to address internal and external stakeholders’ expectations and includes: • a guidance on the overall key boundaries for the Group in terms of focus of activity; • a definition of the desired risk-return profile, in coherence with the Group’s overall strategy; • an indication on strategies to manage key risks within the perimeter of the Group; • qualitative statements for not quantifiable risks (e.g. reputational) in order to ensure prevention/early intervention on emerging risks. The quantitative elements of the Risk Appetite Framework instead are represented by a Dashboard, composed by a set of KPIs, based on the analysis of the expectations of UniCredit group internal and external stakeholders, which addresses the following dimensions, including material risks to which the Group is exposed to: • Pillar 1 KPIs: to guarantee at any time the fulfilment of the KPIs requested by Regulators (e.g. Common Equity Tier 1 Ratio, Risk Taking Capacity, Liquidity Coverage Ratio), including KPIs which are of primary importance for steering the Group B&S; • Managerial KPIs: to include KPIs which are key from strategic and Risk Appetite standpoint; consistently with lean Parent Company steering (e.g. Credit Risk, Liquidity Risk and Profitability); • Specific Risks KPI: complementary with the above categories, to ensure steering of all key risks (e.g. Market Risk, Operational Risk, Interest Rate Risk, Shadow Banking, Risk Culture). For each of the above dimensions, one or more KPIs are identified, in order to quantitatively measure the position of the Group in different ways: absolute values, ratios, sensitivities to defined parameters. Various levels of thresholds are defined such to act as early warning indicators anticipating potential risk situations that will be promptly escalated at relevant organisational level. In the event that specific Risk Appetite thresholds are met, the necessary management measures have to be adopted for effectively adjusting the risk profile. The following thresholds are identified (on certain KPIs, not all the thresholds may be meaningful): • Targets represent the amount of risk the Group is willing to take on in normal conditions in coherence with Group Ambition. They are the reference thresholds for the development and steering of the business; • Triggers represent, from a managerial standpoint, the maximum acceptable level of deviation from the defined target thresholds, or more generally a Warning Level, and are set consistently to assure that the Group can operate, even under stress conditions; • Limits are hard points that represent, from a statutory standpoint, the maximum acceptable level of risk for the Group. Thresholds setting is evaluated by the relevant competent functions, also through managerial decision by the Board of Directors, respecting regulatory and supervisory requirements and also taking into account stakeholders’ expectations and positioning versus peers. In addition, the Group has a series of transversal operative limits and metrics that cover the main risk profiles in order to supplement the Risk Appetite Framework. According to the EBA guidelines, every year ICAAP information are collected for SREP purposes and sent to the Regulator. The Board of Directors, that authorises the sending of this information to the Authorities, also acknowledges that the risk governance of the Group is deemed adequate, guaranteeing that the risk management system in place is in line with the risk profile and strategy of the Group. Moreover, the Chairman of the Board of Directors, the CEO, the Co-Chief Operating Officer and the Chief Risk Officer declared in the Capital Adequacy Statement submitted to the last Board of Directors held on 11 April 2018 that the current Capital of the Group is adequate to cover its risk profile and the operation of its business model, which is also grounded on the actions planned within the MYP “Transform 2019”. In addition the usage of the RAF as a key tool and cornerstone for risk strategy appraisal will continue to represent a fundamental pillar of the ICAAP and allow to activate prompt actions in case of regulatory and/or internal capital trigger/limit breaches. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 281 The structure of the Risk Appetite in UniCredit includes the Group Risk Appetite Statement and the Group Risk Appetite KPIs Dashboard. The Risk Appetite Statement defines the positioning of the bank in terms of strategic targets and related risk profiles to address internal and external stakeholders’ expectations and includes: • a guidance on the overall key boundaries for the Group in terms of focus of activity; • a definition of the desired risk-return profile, in coherence with the Group’s overall strategy; • an indication on strategies to manage key risks within the perimeter of the Group; • qualitative statements for not quantifiable risks (e.g. reputational) in order to ensure prevention/early intervention on emerging risks. The quantitative elements of the Risk Appetite Framework instead are represented by a Dashboard, composed by a set of KPIs, based on the analysis of the expectations of UniCredit group internal and external stakeholders, which addresses the following dimensions, including material risks to which the Group is exposed to: • Pillar 1 KPIs: to guarantee at any time the fulfilment of the KPIs requested by Regulators (e.g. Common Equity Tier 1 Ratio, Risk Taking Capacity, Liquidity Coverage Ratio), including KPIs which are of primary importance for steering the Group B&S; • Managerial KPIs: to include KPIs which are key from strategic and Risk Appetite standpoint; consistently with lean Parent Company steering (e.g. Credit Risk, Liquidity Risk and Profitability); • Specific Risks KPI: complementary with the above categories, to ensure steering of all key risks (e.g. Market Risk, Operational Risk, Interest Rate Risk, Shadow Banking, Risk Culture). For each of the above dimensions, one or more KPIs are identified, in order to quantitatively measure the position of the Group in different ways: absolute values, ratios, sensitivities to defined parameters. Various levels of thresholds are defined such to act as early warning indicators anticipating potential risk situations that will be promptly escalated at relevant organisational level. In the event that specific Risk Appetite thresholds are met, the necessary management measures have to be adopted for effectively adjusting the risk profile. The following thresholds are identified (on certain KPIs, not all the thresholds may be meaningful): • Targets represent the amount of risk the Group is willing to take on in normal conditions in coherence with Group Ambition. They are the reference thresholds for the development and steering of the business; • Triggers represent, from a managerial standpoint, the maximum acceptable level of deviation from the defined target thresholds, or more generally a Warning Level, and are set consistently to assure that the Group can operate, even under stress conditions; • Limits are hard points that represent, from a statutory standpoint, the maximum acceptable level of risk for the Group. Thresholds setting is evaluated by the relevant competent functions, also through managerial decision by the Board of Directors, respecting regulatory and supervisory requirements and also taking into account stakeholders’ expectations and positioning versus peers. In addition, the Group has a series of transversal operative limits and metrics that cover the main risk profiles in order to supplement the Risk Appetite Framework. According to the EBA guidelines, every year ICAAP information are collected for SREP purposes and sent to the Regulator. The Board of Directors, that authorises the sending of this information to the Authorities, also acknowledges that the risk governance of the Group is deemed adequate, guaranteeing that the risk management system in place is in line with the risk profile and strategy of the Group. Moreover, the Chairman of the Board of Directors, the CEO, the Co-Chief Operating Officer and the Chief Risk Officer declared in the Capital Adequacy Statement submitted to the last Board of Directors held on 11 April 2018 that the current Capital of the Group is adequate to cover its risk profile and the operation of its business model, which is also grounded on the actions planned within the MYP “Transform 2019”. In addition the usage of the RAF as a key tool and cornerstone for risk strategy appraisal will continue to represent a fundamental pillar of the ICAAP and allow to activate prompt actions in case of regulatory and/or internal capital trigger/limit breaches. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 281 The structure of the Risk Appetite in UniCredit includes the Group Risk Appetite Statement and the Group Risk Appetite KPIs Dashboard. The Risk Appetite Statement defines the positioning of the bank in terms of strategic targets and related risk profiles to address internal and external stakeholders’ expectations and includes: • a guidance on the overall key boundaries for the Group in terms of focus of activity; • a definition of the desired risk-return profile, in coherence with the Group’s overall strategy; • an indication on strategies to manage key risks within the perimeter of the Group; • qualitative statements for not quantifiable risks (e.g. reputational) in order to ensure prevention/early intervention on emerging risks. The quantitative elements of the Risk Appetite Framework instead are represented by a Dashboard, composed by a set of KPIs, based on the analysis of the expectations of UniCredit group internal and external stakeholders, which addresses the following dimensions, including material risks to which the Group is exposed to: • Pillar 1 KPIs: to guarantee at any time the fulfilment of the KPIs requested by Regulators (e.g. Common Equity Tier 1 Ratio, Risk Taking Capacity, Liquidity Coverage Ratio), including KPIs which are of primary importance for steering the Group B&S; • Managerial KPIs: to include KPIs which are key from strategic and Risk Appetite standpoint; consistently with lean Parent Company steering (e.g. Credit Risk, Liquidity Risk and Profitability); • Specific Risks KPI: complementary with the above categories, to ensure steering of all key risks (e.g. Market Risk, Operational Risk, Interest Rate Risk, Shadow Banking, Risk Culture). For each of the above dimensions, one or more KPIs are identified, in order to quantitatively measure the position of the Group in different ways: absolute values, ratios, sensitivities to defined parameters. Various levels of thresholds are defined such to act as early warning indicators anticipating potential risk situations that will be promptly escalated at relevant organisational level. In the event that specific Risk Appetite thresholds are met, the necessary management measures have to be adopted for effectively adjusting the risk profile. The following thresholds are identified (on certain KPIs, not all the thresholds may be meaningful): • Targets represent the amount of risk the Group is willing to take on in normal conditions in coherence with Group Ambition. They are the reference thresholds for the development and steering of the business; • Triggers represent, from a managerial standpoint, the maximum acceptable level of deviation from the defined target thresholds, or more generally a Warning Level, and are set consistently to assure that the Group can operate, even under stress conditions; • Limits are hard points that represent, from a statutory standpoint, the maximum acceptable level of risk for the Group. Thresholds setting is evaluated by the relevant competent functions, also through managerial decision by the Board of Directors, respecting regulatory and supervisory requirements and also taking into account stakeholders’ expectations and positioning versus peers. In addition, the Group has a series of transversal operative limits and metrics that cover the main risk profiles in order to supplement the Risk Appetite Framework. According to the EBA guidelines, every year ICAAP information are collected for SREP purposes and sent to the Regulator. The Board of Directors, that authorises the sending of this information to the Authorities, also acknowledges that the risk governance of the Group is deemed adequate, guaranteeing that the risk management system in place is in line with the risk profile and strategy of the Group. Moreover, the Chairman of the Board of Directors, the CEO, the Co-Chief Operating Officer and the Chief Risk Officer declared in the Capital Adequacy Statement submitted to the last Board of Directors held on 11 April 2018 that the current Capital of the Group is adequate to cover its risk profile and the operation of its business model, which is also grounded on the actions planned within the MYP “Transform 2019”. In addition the usage of the RAF as a key tool and cornerstone for risk strategy appraisal will continue to represent a fundamental pillar of the ICAAP and allow to activate prompt actions in case of regulatory and/or internal capital trigger/limit breaches. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 282 2018 Annual Report and Accounts · UniCredit The following table contains the reconciliation between the balance sheet according IFRS and Regulatory scope of consolidation. (€ '000) AMOUNTS AS AT 31.12.2018 ASSETS IFRS Regulatory Delta(*) 10. Cash and cash balances 30,991,361 31,348,832 357,471 20. Financial assets at fair value through profit or loss: 86,137,755 86,474,140 336,385 a) financial assets held for trading 65,231,474 65,584,737 353,263 b) financial assets designated at fair value 106 106 - c) other financial assets mandatorily at fair value 20,906,175 20,889,297 (16,878) 30. Financial assets at fair value through other comprehensive income 88,280,157 90,046,795 1,766,638 40. Financial assets at amortised cost: 579,310,842 600,214,380 20,903,538 a) loans and advances to banks 73,642,827 76,607,113 2,964,286 b) loans and advances to customers 505,668,015 523,607,267 17,939,252 50. Hedging derivatives 4,681,517 4,901,190 219,673 60. Changes in fair value of portfolio hedged items (+/-) 2,438,598 2,440,437 1,839 70. Equity investments 5,501,533 4,498,318 (1,003,215) 80. Insurance reserves charged to reinsurers - - - 90. Property. plant and equipment 8,408,356 7,073,586 (1,334,770) 100. Intangible assets 3,507,246 3,562,507 55,261 of which: goodwill 1,483,721 1,483,721 - 110. Tax assets: 13,077,671 13,118,149 40,478 a) current 1,031,863 1,011,376 (20,487) b) deferred 12,045,808 12,106,773 60,965 120. Non-current assets and disposal groups classified as held for sale 1,799,936 1,680,643 (119,293) 130. Other assets 7,333,752 9,009,800 1,676,048 Total assets 831,468,724 854,368,777 22,900,053 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 282 2018 Annual Report and Accounts · UniCredit The following table contains the reconciliation between the balance sheet according IFRS and Regulatory scope of consolidation. (€ '000) AMOUNTS AS AT 31.12.2018 ASSETS IFRS Regulatory Delta(*) 10. Cash and cash balances 30,991,361 31,348,832 357,471 20. Financial assets at fair value through profit or loss: 86,137,755 86,474,140 336,385 a) financial assets held for trading 65,231,474 65,584,737 353,263 b) financial assets designated at fair value 106 106 - c) other financial assets mandatorily at fair value 20,906,175 20,889,297 (16,878) 30. Financial assets at fair value through other comprehensive income 88,280,157 90,046,795 1,766,638 40. Financial assets at amortised cost: 579,310,842 600,214,380 20,903,538 a) loans and advances to banks 73,642,827 76,607,113 2,964,286 b) loans and advances to customers 505,668,015 523,607,267 17,939,252 50. Hedging derivatives 4,681,517 4,901,190 219,673 60. Changes in fair value of portfolio hedged items (+/-) 2,438,598 2,440,437 1,839 70. Equity investments 5,501,533 4,498,318 (1,003,215) 80. Insurance reserves charged to reinsurers - - - 90. Property. plant and equipment 8,408,356 7,073,586 (1,334,770) 100. Intangible assets 3,507,246 3,562,507 55,261 of which: goodwill 1,483,721 1,483,721 - 110. Tax assets: 13,077,671 13,118,149 40,478 a) current 1,031,863 1,011,376 (20,487) b) deferred 12,045,808 12,106,773 60,965 120. Non-current assets and disposal groups classified as held for sale 1,799,936 1,680,643 (119,293) 130. Other assets 7,333,752 9,009,800 1,676,048 Total assets 831,468,724 854,368,777 22,900,053 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 282 2018 Annual Report and Accounts · UniCredit The following table contains the reconciliation between the balance sheet according IFRS and Regulatory scope of consolidation. (€ '000) AMOUNTS AS AT 31.12.2018 ASSETS IFRS Regulatory Delta(*) 10. Cash and cash balances 30,991,361 31,348,832 357,471 20. Financial assets at fair value through profit or loss: 86,137,755 86,474,140 336,385 a) financial assets held for trading 65,231,474 65,584,737 353,263 b) financial assets designated at fair value 106 106 - c) other financial assets mandatorily at fair value 20,906,175 20,889,297 (16,878) 30. Financial assets at fair value through other comprehensive income 88,280,157 90,046,795 1,766,638 40. Financial assets at amortised cost: 579,310,842 600,214,380 20,903,538 a) loans and advances to banks 73,642,827 76,607,113 2,964,286 b) loans and advances to customers 505,668,015 523,607,267 17,939,252 50. Hedging derivatives 4,681,517 4,901,190 219,673 60. Changes in fair value of portfolio hedged items (+/-) 2,438,598 2,440,437 1,839 70. Equity investments 5,501,533 4,498,318 (1,003,215) 80. Insurance reserves charged to reinsurers - - - 90. Property. plant and equipment 8,408,356 7,073,586 (1,334,770) 100. Intangible assets 3,507,246 3,562,507 55,261 of which: goodwill 1,483,721 1,483,721 - 110. Tax assets: 13,077,671 13,118,149 40,478 a) current 1,031,863 1,011,376 (20,487) b) deferred 12,045,808 12,106,773 60,965 120. Non-current assets and disposal groups classified as held for sale 1,799,936 1,680,643 (119,293) 130. Other assets 7,333,752 9,009,800 1,676,048 Total assets 831,468,724 854,368,777 22,900,053 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 282 2018 Annual Report and Accounts · UniCredit The following table contains the reconciliation between the balance sheet according IFRS and Regulatory scope of consolidation. (€ '000) AMOUNTS AS AT 31.12.2018 ASSETS IFRS Regulatory Delta(*) 10. Cash and cash balances 30,991,361 31,348,832 357,471 20. Financial assets at fair value through profit or loss: 86,137,755 86,474,140 336,385 a) financial assets held for trading 65,231,474 65,584,737 353,263 b) financial assets designated at fair value 106 106 - c) other financial assets mandatorily at fair value 20,906,175 20,889,297 (16,878) 30. Financial assets at fair value through other comprehensive income 88,280,157 90,046,795 1,766,638 40. Financial assets at amortised cost: 579,310,842 600,214,380 20,903,538 a) loans and advances to banks 73,642,827 76,607,113 2,964,286 b) loans and advances to customers 505,668,015 523,607,267 17,939,252 50. Hedging derivatives 4,681,517 4,901,190 219,673 60. Changes in fair value of portfolio hedged items (+/-) 2,438,598 2,440,437 1,839 70. Equity investments 5,501,533 4,498,318 (1,003,215) 80. Insurance reserves charged to reinsurers - - - 90. Property. plant and equipment 8,408,356 7,073,586 (1,334,770) 100. Intangible assets 3,507,246 3,562,507 55,261 of which: goodwill 1,483,721 1,483,721 - 110. Tax assets: 13,077,671 13,118,149 40,478 a) current 1,031,863 1,011,376 (20,487) b) deferred 12,045,808 12,106,773 60,965 120. Non-current assets and disposal groups classified as held for sale 1,799,936 1,680,643 (119,293) 130. Other assets 7,333,752 9,009,800 1,676,048 Total assets 831,468,724 854,368,777 22,900,053 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 282 2018 Annual Report and Accounts · UniCredit The following table contains the reconciliation between the balance sheet according IFRS and Regulatory scope of consolidation. (€ '000) AMOUNTS AS AT 31.12.2018 ASSETS IFRS Regulatory Delta(*) 10. Cash and cash balances 30,991,361 31,348,832 357,471 20. Financial assets at fair value through profit or loss: 86,137,755 86,474,140 336,385 a) financial assets held for trading 65,231,474 65,584,737 353,263 b) financial assets designated at fair value 106 106 - c) other financial assets mandatorily at fair value 20,906,175 20,889,297 (16,878) 30. Financial assets at fair value through other comprehensive income 88,280,157 90,046,795 1,766,638 40. Financial assets at amortised cost: 579,310,842 600,214,380 20,903,538 a) loans and advances to banks 73,642,827 76,607,113 2,964,286 b) loans and advances to customers 505,668,015 523,607,267 17,939,252 50. Hedging derivatives 4,681,517 4,901,190 219,673 60. Changes in fair value of portfolio hedged items (+/-) 2,438,598 2,440,437 1,839 70. Equity investments 5,501,533 4,498,318 (1,003,215) 80. Insurance reserves charged to reinsurers - - - 90. Property. plant and equipment 8,408,356 7,073,586 (1,334,770) 100. Intangible assets 3,507,246 3,562,507 55,261 of which: goodwill 1,483,721 1,483,721 - 110. Tax assets: 13,077,671 13,118,149 40,478 a) current 1,031,863 1,011,376 (20,487) b) deferred 12,045,808 12,106,773 60,965 120. Non-current assets and disposal groups classified as held for sale 1,799,936 1,680,643 (119,293) 130. Other assets 7,333,752 9,009,800 1,676,048 Total assets 831,468,724 854,368,777 22,900,053 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 283 AMOUNTS AS AT 31.12.2018 LIABILITIES AND SHAREHOLDERS' EQUITY IFRS Regulatory Delta(*) 10. Financial liabilities at amortised cost: 686,036,242 704,610,892 18,574,650 a) deposit from banks 125,895,243 128,584,820 2,689,577 b) deposit from customers 478,987,709 492,901,729 13,914,020 c) debt securities in issue 81,153,290 83,124,343 1,971,053 20. Financial liabilities held for trading 43,111,236 43,532,706 421,470 30. Financial liabilities designated at fair value 9,317,731 9,815,950 498,219 40. Hedging derivatives 6,032,029 6,094,938 62,909 50. Value adjustment of hedged financial liabilities (+/-) 3,229,796 3,229,796 - 60. Tax liabilities: 824,740 837,101 12,361 a) current 401,717 437,527 35,810 b) deferred 423,023 399,574 (23,449) 70. Liabilities associated with non-current assets held for sale 539,987 500,774 (39,213) 80. Other liabilities 13,950,607 16,149,582 2,198,975 90. Provision for employee severance pay 697,592 697,199 (393) 100. Provision for risks and charges: 10,960,983 12,124,289 1,163,306 a) committments and guarantees given 1,140,057 1,198,447 58,390 b) post retirement benefit obligations 4,767,399 4,794,147 26,748 c) other provisions for risks and charges 5,053,527 6,131,695 1,078,168 110.Technical reserves - - - 120. Valuation reserves (7,489,131) (7,489,131) - 130. Redeemable shares - - - 140. Equity instruments 4,610,073 4,610,073 - 150. Reserves 20,502,728 20,502,728 - 160. Share premium 13,392,918 13,392,918 - 170. Share capital 20,940,398 20,940,398 - 180. Treasury shares (-) (8,826) (8,826) - 190. Minority shareholders' equity (+/-) 927,182 934,951 7,769 200. Net profit (Loss) for the year (+/-) 3,892,439 3,892,439 - Total liabilities and shareholders' equity 831,468,724 854,368,777 22,900,053 Note: (*) Effects of the deconsolidation and consolidation of counterparties other than those in the banking group the effects are attributable to: • deconsolidation of companies that are not part of the Regulatory banking group; • proportional consolidation of the jointly controlled companies in Regulatory scope of consolidation and consolidated at equity in the IFRS. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 283 AMOUNTS AS AT 31.12.2018 LIABILITIES AND SHAREHOLDERS' EQUITY IFRS Regulatory Delta(*) 10. Financial liabilities at amortised cost: 686,036,242 704,610,892 18,574,650 a) deposit from banks 125,895,243 128,584,820 2,689,577 b) deposit from customers 478,987,709 492,901,729 13,914,020 c) debt securities in issue 81,153,290 83,124,343 1,971,053 20. Financial liabilities held for trading 43,111,236 43,532,706 421,470 30. Financial liabilities designated at fair value 9,317,731 9,815,950 498,219 40. Hedging derivatives 6,032,029 6,094,938 62,909 50. Value adjustment of hedged financial liabilities (+/-) 3,229,796 3,229,796 - 60. Tax liabilities: 824,740 837,101 12,361 a) current 401,717 437,527 35,810 b) deferred 423,023 399,574 (23,449) 70. Liabilities associated with non-current assets held for sale 539,987 500,774 (39,213) 80. Other liabilities 13,950,607 16,149,582 2,198,975 90. Provision for employee severance pay 697,592 697,199 (393) 100. Provision for risks and charges: 10,960,983 12,124,289 1,163,306 a) committments and guarantees given 1,140,057 1,198,447 58,390 b) post retirement benefit obligations 4,767,399 4,794,147 26,748 c) other provisions for risks and charges 5,053,527 6,131,695 1,078,168 110.Technical reserves - - - 120. Valuation reserves (7,489,131) (7,489,131) - 130. Redeemable shares - - - 140. Equity instruments 4,610,073 4,610,073 - 150. Reserves 20,502,728 20,502,728 - 160. Share premium 13,392,918 13,392,918 - 170. Share capital 20,940,398 20,940,398 - 180. Treasury shares (-) (8,826) (8,826) - 190. Minority shareholders' equity (+/-) 927,182 934,951 7,769 200. Net profit (Loss) for the year (+/-) 3,892,439 3,892,439 - Total liabilities and shareholders' equity 831,468,724 854,368,777 22,900,053 Note: (*) Effects of the deconsolidation and consolidation of counterparties other than those in the banking group the effects are attributable to: • deconsolidation of companies that are not part of the Regulatory banking group; • proportional consolidation of the jointly controlled companies in Regulatory scope of consolidation and consolidated at equity in the IFRS. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 283 AMOUNTS AS AT 31.12.2018 LIABILITIES AND SHAREHOLDERS' EQUITY IFRS Regulatory Delta(*) 10. Financial liabilities at amortised cost: 686,036,242 704,610,892 18,574,650 a) deposit from banks 125,895,243 128,584,820 2,689,577 b) deposit from customers 478,987,709 492,901,729 13,914,020 c) debt securities in issue 81,153,290 83,124,343 1,971,053 20. Financial liabilities held for trading 43,111,236 43,532,706 421,470 30. Financial liabilities designated at fair value 9,317,731 9,815,950 498,219 40. Hedging derivatives 6,032,029 6,094,938 62,909 50. Value adjustment of hedged financial liabilities (+/-) 3,229,796 3,229,796 - 60. Tax liabilities: 824,740 837,101 12,361 a) current 401,717 437,527 35,810 b) deferred 423,023 399,574 (23,449) 70. Liabilities associated with non-current assets held for sale 539,987 500,774 (39,213) 80. Other liabilities 13,950,607 16,149,582 2,198,975 90. Provision for employee severance pay 697,592 697,199 (393) 100. Provision for risks and charges: 10,960,983 12,124,289 1,163,306 a) committments and guarantees given 1,140,057 1,198,447 58,390 b) post retirement benefit obligations 4,767,399 4,794,147 26,748 c) other provisions for risks and charges 5,053,527 6,131,695 1,078,168 110.Technical reserves - - - 120. Valuation reserves (7,489,131) (7,489,131) - 130. Redeemable shares - - - 140. Equity instruments 4,610,073 4,610,073 - 150. Reserves 20,502,728 20,502,728 - 160. Share premium 13,392,918 13,392,918 - 170. Share capital 20,940,398 20,940,398 - 180. Treasury shares (-) (8,826) (8,826) - 190. Minority shareholders' equity (+/-) 927,182 934,951 7,769 200. Net profit (Loss) for the year (+/-) 3,892,439 3,892,439 - Total liabilities and shareholders' equity 831,468,724 854,368,777 22,900,053 Note: (*) Effects of the deconsolidation and consolidation of counterparties other than those in the banking group the effects are attributable to: • deconsolidation of companies that are not part of the Regulatory banking group; • proportional consolidation of the jointly controlled companies in Regulatory scope of consolidation and consolidated at equity in the IFRS. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 283 AMOUNTS AS AT 31.12.2018 LIABILITIES AND SHAREHOLDERS' EQUITY IFRS Regulatory Delta(*) 10. Financial liabilities at amortised cost: 686,036,242 704,610,892 18,574,650 a) deposit from banks 125,895,243 128,584,820 2,689,577 b) deposit from customers 478,987,709 492,901,729 13,914,020 c) debt securities in issue 81,153,290 83,124,343 1,971,053 20. Financial liabilities held for trading 43,111,236 43,532,706 421,470 30. Financial liabilities designated at fair value 9,317,731 9,815,950 498,219 40. Hedging derivatives 6,032,029 6,094,938 62,909 50. Value adjustment of hedged financial liabilities (+/-) 3,229,796 3,229,796 - 60. Tax liabilities: 824,740 837,101 12,361 a) current 401,717 437,527 35,810 b) deferred 423,023 399,574 (23,449) 70. Liabilities associated with non-current assets held for sale 539,987 500,774 (39,213) 80. Other liabilities 13,950,607 16,149,582 2,198,975 90. Provision for employee severance pay 697,592 697,199 (393) 100. Provision for risks and charges: 10,960,983 12,124,289 1,163,306 a) committments and guarantees given 1,140,057 1,198,447 58,390 b) post retirement benefit obligations 4,767,399 4,794,147 26,748 c) other provisions for risks and charges 5,053,527 6,131,695 1,078,168 110.Technical reserves - - - 120. Valuation reserves (7,489,131) (7,489,131) - 130. Redeemable shares - - - 140. Equity instruments 4,610,073 4,610,073 - 150. Reserves 20,502,728 20,502,728 - 160. Share premium 13,392,918 13,392,918 - 170. Share capital 20,940,398 20,940,398 - 180. Treasury shares (-) (8,826) (8,826) - 190. Minority shareholders' equity (+/-) 927,182 934,951 7,769 200. Net profit (Loss) for the year (+/-) 3,892,439 3,892,439 - Total liabilities and shareholders' equity 831,468,724 854,368,777 22,900,053 Note: (*) Effects of the deconsolidation and consolidation of counterparties other than those in the banking group the effects are attributable to: • deconsolidation of companies that are not part of the Regulatory banking group; • proportional consolidation of the jointly controlled companies in Regulatory scope of consolidation and consolidated at equity in the IFRS. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 283 AMOUNTS AS AT 31.12.2018 LIABILITIES AND SHAREHOLDERS' EQUITY IFRS Regulatory Delta(*) 10. Financial liabilities at amortised cost: 686,036,242 704,610,892 18,574,650 a) deposit from banks 125,895,243 128,584,820 2,689,577 b) deposit from customers 478,987,709 492,901,729 13,914,020 c) debt securities in issue 81,153,290 83,124,343 1,971,053 20. Financial liabilities held for trading 43,111,236 43,532,706 421,470 30. Financial liabilities designated at fair value 9,317,731 9,815,950 498,219 40. Hedging derivatives 6,032,029 6,094,938 62,909 50. Value adjustment of hedged financial liabilities (+/-) 3,229,796 3,229,796 - 60. Tax liabilities: 824,740 837,101 12,361 a) current 401,717 437,527 35,810 b) deferred 423,023 399,574 (23,449) 70. Liabilities associated with non-current assets held for sale 539,987 500,774 (39,213) 80. Other liabilities 13,950,607 16,149,582 2,198,975 90. Provision for employee severance pay 697,592 697,199 (393) 100. Provision for risks and charges: 10,960,983 12,124,289 1,163,306 a) committments and guarantees given 1,140,057 1,198,447 58,390 b) post retirement benefit obligations 4,767,399 4,794,147 26,748 c) other provisions for risks and charges 5,053,527 6,131,695 1,078,168 110.Technical reserves - - - 120. Valuation reserves (7,489,131) (7,489,131) - 130. Redeemable shares - - - 140. Equity instruments 4,610,073 4,610,073 - 150. Reserves 20,502,728 20,502,728 - 160. Share premium 13,392,918 13,392,918 - 170. Share capital 20,940,398 20,940,398 - 180. Treasury shares (-) (8,826) (8,826) - 190. Minority shareholders' equity (+/-) 927,182 934,951 7,769 200. Net profit (Loss) for the year (+/-) 3,892,439 3,892,439 - Total liabilities and shareholders' equity 831,468,724 854,368,777 22,900,053 Note: (*) Effects of the deconsolidation and consolidation of counterparties other than those in the banking group the effects are attributable to: • deconsolidation of companies that are not part of the Regulatory banking group; • proportional consolidation of the jointly controlled companies in Regulatory scope of consolidation and consolidated at equity in the IFRS. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 284 2018 Annual Report and Accounts · UniCredit Section 1 - Risks of the accounting consolidated perimeter Quantitative information In the following tables, the volume of impaired assets according to the IFRS definition is substantially equivalent to the one for non-performing exposures referred to in the EBA standards. A. Credit quality For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds except for table A.2.1 - Banking group - Balance Sheet and off-Balance Sheet credit exposure by external rating class, in which units in investment funds are included. A.1 Impaired and non performing credit exposures: stocks, value adjustments, dynamics and economic For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds. A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES PERFORMING EXPOSURES TOTAL 1. Financial assets at amortised cost 5,800,228 8,532,518 576,943 13,192,039 551,209,114 579,310,842 2. Financial assets at fair value through other comprehensive income 41 - - - 86,448,983 86,449,024 3. Financial assets designated at fair value - - - - 106 106 4. Other financial assets mandatorily at fair value 15,497 71,472 32 550 18,989,688 19,077,239 5. Financial instruments classified as held for sale 6,201 54,376 384 56,295 593,550 710,806 Total 12.31.2018 5,821,967 8,658,366 577,359 13,248,884 657,241,441 685,548,017 Total 12.31.2017 - - - - - - The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES OTHER NON-PERFORMING EXPOSURES PERFORMING EXPOSURES TOTAL 1. Available-for-sale financial assets 4,830 26,318 - - 101,089,212 101,120,360 2. Held-to-maturity financial instruments - 7,077 - - 6,269,945 6,277,022 3. Loans and receivables with banks 186 4,999 1 - 70,977,557 70,982,743 4. Loans and receivables with customers 9,498,270 11,023,722 660,247 9,372 426,535,302 447,726,913 5. Financial assets at fair value - 22,374 - - 21,519,228 21,541,602 6. Financial instruments classified as held for sale 432 102,114 - - 204,395 306,941 Total 12.31.2017 9,503,718 11,186,604 660,248 9,372 626,595,639 647,955,581 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 284 2018 Annual Report and Accounts · UniCredit Section 1 - Risks of the accounting consolidated perimeter Quantitative information In the following tables, the volume of impaired assets according to the IFRS definition is substantially equivalent to the one for non-performing exposures referred to in the EBA standards. A. Credit quality For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds except for table A.2.1 - Banking group - Balance Sheet and off-Balance Sheet credit exposure by external rating class, in which units in investment funds are included. A.1 Impaired and non performing credit exposures: stocks, value adjustments, dynamics and economic For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds. A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES PERFORMING EXPOSURES TOTAL 1. Financial assets at amortised cost 5,800,228 8,532,518 576,943 13,192,039 551,209,114 579,310,842 2. Financial assets at fair value through other comprehensive income 41 - - - 86,448,983 86,449,024 3. Financial assets designated at fair value - - - - 106 106 4. Other financial assets mandatorily at fair value 15,497 71,472 32 550 18,989,688 19,077,239 5. Financial instruments classified as held for sale 6,201 54,376 384 56,295 593,550 710,806 Total 12.31.2018 5,821,967 8,658,366 577,359 13,248,884 657,241,441 685,548,017 Total 12.31.2017 - - - - - - The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES OTHER NON-PERFORMING EXPOSURES PERFORMING EXPOSURES TOTAL 1. Available-for-sale financial assets 4,830 26,318 - - 101,089,212 101,120,360 2. Held-to-maturity financial instruments - 7,077 - - 6,269,945 6,277,022 3. Loans and receivables with banks 186 4,999 1 - 70,977,557 70,982,743 4. Loans and receivables with customers 9,498,270 11,023,722 660,247 9,372 426,535,302 447,726,913 5. Financial assets at fair value - 22,374 - - 21,519,228 21,541,602 6. Financial instruments classified as held for sale 432 102,114 - - 204,395 306,941 Total 12.31.2017 9,503,718 11,186,604 660,248 9,372 626,595,639 647,955,581 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 284 2018 Annual Report and Accounts · UniCredit Section 1 - Risks of the accounting consolidated perimeter Quantitative information In the following tables, the volume of impaired assets according to the IFRS definition is substantially equivalent to the one for non-performing exposures referred to in the EBA standards. A. Credit quality For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds except for table A.2.1 - Banking group - Balance Sheet and off-Balance Sheet credit exposure by external rating class, in which units in investment funds are included. A.1 Impaired and non performing credit exposures: stocks, value adjustments, dynamics and economic For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds. A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES PERFORMING EXPOSURES TOTAL 1. Financial assets at amortised cost 5,800,228 8,532,518 576,943 13,192,039 551,209,114 579,310,842 2. Financial assets at fair value through other comprehensive income 41 - - - 86,448,983 86,449,024 3. Financial assets designated at fair value - - - - 106 106 4. Other financial assets mandatorily at fair value 15,497 71,472 32 550 18,989,688 19,077,239 5. Financial instruments classified as held for sale 6,201 54,376 384 56,295 593,550 710,806 Total 12.31.2018 5,821,967 8,658,366 577,359 13,248,884 657,241,441 685,548,017 Total 12.31.2017 - - - - - - The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES OTHER NON-PERFORMING EXPOSURES PERFORMING EXPOSURES TOTAL 1. Available-for-sale financial assets 4,830 26,318 - - 101,089,212 101,120,360 2. Held-to-maturity financial instruments - 7,077 - - 6,269,945 6,277,022 3. Loans and receivables with banks 186 4,999 1 - 70,977,557 70,982,743 4. Loans and receivables with customers 9,498,270 11,023,722 660,247 9,372 426,535,302 447,726,913 5. Financial assets at fair value - 22,374 - - 21,519,228 21,541,602 6. Financial instruments classified as held for sale 432 102,114 - - 204,395 306,941 Total 12.31.2017 9,503,718 11,186,604 660,248 9,372 626,595,639 647,955,581 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 284 2018 Annual Report and Accounts · UniCredit Section 1 - Risks of the accounting consolidated perimeter Quantitative information In the following tables, the volume of impaired assets according to the IFRS definition is substantially equivalent to the one for non-performing exposures referred to in the EBA standards. A. Credit quality For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds except for table A.2.1 - Banking group - Balance Sheet and off-Balance Sheet credit exposure by external rating class, in which units in investment funds are included. A.1 Impaired and non performing credit exposures: stocks, value adjustments, dynamics and economic For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds. A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES PERFORMING EXPOSURES TOTAL 1. Financial assets at amortised cost 5,800,228 8,532,518 576,943 13,192,039 551,209,114 579,310,842 2. Financial assets at fair value through other comprehensive income 41 - - - 86,448,983 86,449,024 3. Financial assets designated at fair value - - - - 106 106 4. Other financial assets mandatorily at fair value 15,497 71,472 32 550 18,989,688 19,077,239 5. Financial instruments classified as held for sale 6,201 54,376 384 56,295 593,550 710,806 Total 12.31.2018 5,821,967 8,658,366 577,359 13,248,884 657,241,441 685,548,017 Total 12.31.2017 - - - - - - The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES OTHER NON-PERFORMING EXPOSURES PERFORMING EXPOSURES TOTAL 1. Available-for-sale financial assets 4,830 26,318 - - 101,089,212 101,120,360 2. Held-to-maturity financial instruments - 7,077 - - 6,269,945 6,277,022 3. Loans and receivables with banks 186 4,999 1 - 70,977,557 70,982,743 4. Loans and receivables with customers 9,498,270 11,023,722 660,247 9,372 426,535,302 447,726,913 5. Financial assets at fair value - 22,374 - - 21,519,228 21,541,602 6. Financial instruments classified as held for sale 432 102,114 - - 204,395 306,941 Total 12.31.2017 9,503,718 11,186,604 660,248 9,372 626,595,639 647,955,581 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 284 2018 Annual Report and Accounts · UniCredit Section 1 - Risks of the accounting consolidated perimeter Quantitative information In the following tables, the volume of impaired assets according to the IFRS definition is substantially equivalent to the one for non-performing exposures referred to in the EBA standards. A. Credit quality For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds except for table A.2.1 - Banking group - Balance Sheet and off-Balance Sheet credit exposure by external rating class, in which units in investment funds are included. A.1 Impaired and non performing credit exposures: stocks, value adjustments, dynamics and economic For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds. A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES PERFORMING EXPOSURES TOTAL 1. Financial assets at amortised cost 5,800,228 8,532,518 576,943 13,192,039 551,209,114 579,310,842 2. Financial assets at fair value through other comprehensive income 41 - - - 86,448,983 86,449,024 3. Financial assets designated at fair value - - - - 106 106 4. Other financial assets mandatorily at fair value 15,497 71,472 32 550 18,989,688 19,077,239 5. Financial instruments classified as held for sale 6,201 54,376 384 56,295 593,550 710,806 Total 12.31.2018 5,821,967 8,658,366 577,359 13,248,884 657,241,441 685,548,017 Total 12.31.2017 - - - - - - The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES OTHER NON-PERFORMING EXPOSURES PERFORMING EXPOSURES TOTAL 1. Available-for-sale financial assets 4,830 26,318 - - 101,089,212 101,120,360 2. Held-to-maturity financial instruments - 7,077 - - 6,269,945 6,277,022 3. Loans and receivables with banks 186 4,999 1 - 70,977,557 70,982,743 4. Loans and receivables with customers 9,498,270 11,023,722 660,247 9,372 426,535,302 447,726,913 5. Financial assets at fair value - 22,374 - - 21,519,228 21,541,602 6. Financial instruments classified as held for sale 432 102,114 - - 204,395 306,941 Total 12.31.2017 9,503,718 11,186,604 660,248 9,372 626,595,639 647,955,581 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 285 A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Financial assets at amortised cost 38,163,140 23,253,451 14,909,689 2,766,103 567,004,696 2,603,543 564,401,153 579,310,842 2. Financial assets at fair value through other comprehensive income 69 28 41 - 86,489,336 40,353 86,448,983 86,449,024 3. Financial assets designated at fair value - - - - X X 106 106 4. Other financial assets mandatorily at fair value 198,772 111,771 87,001 - X X 18,990,238 19,077,239 5. Financial instruments classified as held for sale 95,645 34,684 60,961 79 654,037 4,192 649,845 710,806 Total 12.31.2018 38,457,626 23,399,934 15,057,692 2,766,182 654,148,069 2,648,088 670,490,325 685,548,017 Total 12.31.2017 - - - - - - - - Note: (*) Value shown for information purposes. (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 147,957 94,406 55,747,087 2. Hedging derivatives - - 4,681,517 Total 12.31.2018 147,957 94,406 60,428,604 Total 12.31.2017 - - - The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.1.2 Breakdown of credit exposures by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY GROSS EXPOSURE SPECIFIC WRITEDOWNS NET EXPOSURE GROSS EXPOSURE PORTFOLIO ADJUSTMENTS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Available-for-sale financial assets 55,898 24,750 31,148 101,089,212 - 101,089,212 101,120,360 2. Held-to-maturity financial instruments 8,197 1,120 7,077 6,269,945 - 6,269,945 6,277,022 3. Loans and receivables with banks 55,469 50,283 5,186 71,002,851 25,294 70,977,557 70,982,743 4. Loans and receivables with customers 48,431,952 27,240,341 21,191,611 428,550,015 2,014,713 426,535,302 447,726,913 5. Financial assets at fair value 23,469 1,095 22,374 X X 21,519,228 21,541,602 6. Financial instruments classified as held for sale 173,698 71,152 102,546 204,834 439 204,395 306,941 Total 12.31.2017 48,748,683 27,388,741 21,359,942 607,116,857 2,040,446 626,595,639 647,955,581 Breakdown of credit exposures by portfolio and credit quality - Financial assets held for trading and Hedging instruments (gross and net values) (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 214,774 311,534 59,065,991 2. Hedging derivatives - - 3,431,070 Total 12.31.2017 214,774 311,534 62,497,061 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 285 A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Financial assets at amortised cost 38,163,140 23,253,451 14,909,689 2,766,103 567,004,696 2,603,543 564,401,153 579,310,842 2. Financial assets at fair value through other comprehensive income 69 28 41 - 86,489,336 40,353 86,448,983 86,449,024 3. Financial assets designated at fair value - - - - X X 106 106 4. Other financial assets mandatorily at fair value 198,772 111,771 87,001 - X X 18,990,238 19,077,239 5. Financial instruments classified as held for sale 95,645 34,684 60,961 79 654,037 4,192 649,845 710,806 Total 12.31.2018 38,457,626 23,399,934 15,057,692 2,766,182 654,148,069 2,648,088 670,490,325 685,548,017 Total 12.31.2017 - - - - - - - - Note: (*) Value shown for information purposes. (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 147,957 94,406 55,747,087 2. Hedging derivatives - - 4,681,517 Total 12.31.2018 147,957 94,406 60,428,604 Total 12.31.2017 - - - The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.1.2 Breakdown of credit exposures by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY GROSS EXPOSURE SPECIFIC WRITEDOWNS NET EXPOSURE GROSS EXPOSURE PORTFOLIO ADJUSTMENTS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Available-for-sale financial assets 55,898 24,750 31,148 101,089,212 - 101,089,212 101,120,360 2. Held-to-maturity financial instruments 8,197 1,120 7,077 6,269,945 - 6,269,945 6,277,022 3. Loans and receivables with banks 55,469 50,283 5,186 71,002,851 25,294 70,977,557 70,982,743 4. Loans and receivables with customers 48,431,952 27,240,341 21,191,611 428,550,015 2,014,713 426,535,302 447,726,913 5. Financial assets at fair value 23,469 1,095 22,374 X X 21,519,228 21,541,602 6. Financial instruments classified as held for sale 173,698 71,152 102,546 204,834 439 204,395 306,941 Total 12.31.2017 48,748,683 27,388,741 21,359,942 607,116,857 2,040,446 626,595,639 647,955,581 Breakdown of credit exposures by portfolio and credit quality - Financial assets held for trading and Hedging instruments (gross and net values) (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 214,774 311,534 59,065,991 2. Hedging derivatives - - 3,431,070 Total 12.31.2017 214,774 311,534 62,497,061 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 285 A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Financial assets at amortised cost 38,163,140 23,253,451 14,909,689 2,766,103 567,004,696 2,603,543 564,401,153 579,310,842 2. Financial assets at fair value through other comprehensive income 69 28 41 - 86,489,336 40,353 86,448,983 86,449,024 3. Financial assets designated at fair value - - - - X X 106 106 4. Other financial assets mandatorily at fair value 198,772 111,771 87,001 - X X 18,990,238 19,077,239 5. Financial instruments classified as held for sale 95,645 34,684 60,961 79 654,037 4,192 649,845 710,806 Total 12.31.2018 38,457,626 23,399,934 15,057,692 2,766,182 654,148,069 2,648,088 670,490,325 685,548,017 Total 12.31.2017 - - - - - - - - Note: (*) Value shown for information purposes. (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 147,957 94,406 55,747,087 2. Hedging derivatives - - 4,681,517 Total 12.31.2018 147,957 94,406 60,428,604 Total 12.31.2017 - - - The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.1.2 Breakdown of credit exposures by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY GROSS EXPOSURE SPECIFIC WRITEDOWNS NET EXPOSURE GROSS EXPOSURE PORTFOLIO ADJUSTMENTS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Available-for-sale financial assets 55,898 24,750 31,148 101,089,212 - 101,089,212 101,120,360 2. Held-to-maturity financial instruments 8,197 1,120 7,077 6,269,945 - 6,269,945 6,277,022 3. Loans and receivables with banks 55,469 50,283 5,186 71,002,851 25,294 70,977,557 70,982,743 4. Loans and receivables with customers 48,431,952 27,240,341 21,191,611 428,550,015 2,014,713 426,535,302 447,726,913 5. Financial assets at fair value 23,469 1,095 22,374 X X 21,519,228 21,541,602 6. Financial instruments classified as held for sale 173,698 71,152 102,546 204,834 439 204,395 306,941 Total 12.31.2017 48,748,683 27,388,741 21,359,942 607,116,857 2,040,446 626,595,639 647,955,581 Breakdown of credit exposures by portfolio and credit quality - Financial assets held for trading and Hedging instruments (gross and net values) (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 214,774 311,534 59,065,991 2. Hedging derivatives - - 3,431,070 Total 12.31.2017 214,774 311,534 62,497,061 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 285 A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Financial assets at amortised cost 38,163,140 23,253,451 14,909,689 2,766,103 567,004,696 2,603,543 564,401,153 579,310,842 2. Financial assets at fair value through other comprehensive income 69 28 41 - 86,489,336 40,353 86,448,983 86,449,024 3. Financial assets designated at fair value - - - - X X 106 106 4. Other financial assets mandatorily at fair value 198,772 111,771 87,001 - X X 18,990,238 19,077,239 5. Financial instruments classified as held for sale 95,645 34,684 60,961 79 654,037 4,192 649,845 710,806 Total 12.31.2018 38,457,626 23,399,934 15,057,692 2,766,182 654,148,069 2,648,088 670,490,325 685,548,017 Total 12.31.2017 - - - - - - - - Note: (*) Value shown for information purposes. (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 147,957 94,406 55,747,087 2. Hedging derivatives - - 4,681,517 Total 12.31.2018 147,957 94,406 60,428,604 Total 12.31.2017 - - - The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.1.2 Breakdown of credit exposures by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY GROSS EXPOSURE SPECIFIC WRITEDOWNS NET EXPOSURE GROSS EXPOSURE PORTFOLIO ADJUSTMENTS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Available-for-sale financial assets 55,898 24,750 31,148 101,089,212 - 101,089,212 101,120,360 2. Held-to-maturity financial instruments 8,197 1,120 7,077 6,269,945 - 6,269,945 6,277,022 3. Loans and receivables with banks 55,469 50,283 5,186 71,002,851 25,294 70,977,557 70,982,743 4. Loans and receivables with customers 48,431,952 27,240,341 21,191,611 428,550,015 2,014,713 426,535,302 447,726,913 5. Financial assets at fair value 23,469 1,095 22,374 X X 21,519,228 21,541,602 6. Financial instruments classified as held for sale 173,698 71,152 102,546 204,834 439 204,395 306,941 Total 12.31.2017 48,748,683 27,388,741 21,359,942 607,116,857 2,040,446 626,595,639 647,955,581 Breakdown of credit exposures by portfolio and credit quality - Financial assets held for trading and Hedging instruments (gross and net values) (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 214,774 311,534 59,065,991 2. Hedging derivatives - - 3,431,070 Total 12.31.2017 214,774 311,534 62,497,061 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 285 A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Financial assets at amortised cost 38,163,140 23,253,451 14,909,689 2,766,103 567,004,696 2,603,543 564,401,153 579,310,842 2. Financial assets at fair value through other comprehensive income 69 28 41 - 86,489,336 40,353 86,448,983 86,449,024 3. Financial assets designated at fair value - - - - X X 106 106 4. Other financial assets mandatorily at fair value 198,772 111,771 87,001 - X X 18,990,238 19,077,239 5. Financial instruments classified as held for sale 95,645 34,684 60,961 79 654,037 4,192 649,845 710,806 Total 12.31.2018 38,457,626 23,399,934 15,057,692 2,766,182 654,148,069 2,648,088 670,490,325 685,548,017 Total 12.31.2017 - - - - - - - - Note: (*) Value shown for information purposes. (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 147,957 94,406 55,747,087 2. Hedging derivatives - - 4,681,517 Total 12.31.2018 147,957 94,406 60,428,604 Total 12.31.2017 - - - The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.1.2 Breakdown of credit exposures by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY GROSS EXPOSURE SPECIFIC WRITEDOWNS NET EXPOSURE GROSS EXPOSURE PORTFOLIO ADJUSTMENTS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Available-for-sale financial assets 55,898 24,750 31,148 101,089,212 - 101,089,212 101,120,360 2. Held-to-maturity financial instruments 8,197 1,120 7,077 6,269,945 - 6,269,945 6,277,022 3. Loans and receivables with banks 55,469 50,283 5,186 71,002,851 25,294 70,977,557 70,982,743 4. Loans and receivables with customers 48,431,952 27,240,341 21,191,611 428,550,015 2,014,713 426,535,302 447,726,913 5. Financial assets at fair value 23,469 1,095 22,374 X X 21,519,228 21,541,602 6. Financial instruments classified as held for sale 173,698 71,152 102,546 204,834 439 204,395 306,941 Total 12.31.2017 48,748,683 27,388,741 21,359,942 607,116,857 2,040,446 626,595,639 647,955,581 Breakdown of credit exposures by portfolio and credit quality - Financial assets held for trading and Hedging instruments (gross and net values) (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 214,774 311,534 59,065,991 2. Hedging derivatives - - 3,431,070 Total 12.31.2017 214,774 311,534 62,497,061 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 286 2018 Annual Report and Accounts · UniCredit B. Structured entities (other than entities for securitisation transaction) B.1 Consolidated structured entities The Group has involvements in structured entities that are consolidated because it has both power on the underlying assets and exposure to variability of returns arising from the structured entities activities as a result of the financial instruments subscribed. The consolidated structured entities of the Group belong to one of the following categories: • Leasing SPV: these structured entities are set-up by the Group in order to meet the needs of customers interested into entering into finance leasing. The Group provides funding to these structured entities, both in form of equity and in form of loans. Such funding is used by structured entities to buy assets (real estate, equipment, etc.) that are leased to a customer under a finance leasing contract; • Project finance SPV: these structured entities are set-up in order to finance capital intensive projects according to the need of specific customers. Typically the funds needed to develop the project are provided by the customer, in form of equity and by the Group in form of loans. The Group consolidates such structured entities as a result of deterioration of the credit worthiness of the customer and subsequent acquisition of the right to manage the project; • Real estate SPV: these structured entities are entities that have been set-up in order to fund real estate projects used in the business by the Group or that have been acquired it the course of credit recovery processes; • Funding SPV: these structured entities are set-up by the Group so to gather funding in specific markets that is guaranteed by a Group Legal entity. This funding is then transferred to the group legal entity that guarantees it; • Investment funds: these structured entities are open ended and closed ended investment funds that the Group controls under IFRS10 having acquired enough quotas to expose it to variability of returns and the ability to manage, directly and indirectly, the underlying portfolio; • Warehousing SPV: these structured entities are set-up in order to subsequently perform securitisation transactions. In particular they purchase mortgages in specific markets and from different originators until a “critical mass” that allow to perform securitisation is reached. The purchases of mortgages are funded through loans provided by the Group. During the period the Group has not provided financial support to consolidated structured entities, other than those for securitisation transactions, in absence of contractual obligation to do so and it doesn’t have current intention to provide such support. The following table provides on balance sheet and off balance sheet, non revocable credit line and financial guarantees, provided by Group companies to consolidated structured entities. These exposures are eliminated in the consolidation process. (€ '000) BALANCE SHEET ITEM/SPV TYPE TOTAL ASSETS (A) OFF BALANCE SHEET EXPOSURES Leasing SPV 1,982,387 - Project Finance SPV 1,310,453 - Real Estate SPV 24,159 10,050 Funding SPV 306,688 - Investment funds 968,752 - Warehousing SPV - - Total 4,592,439 10,050 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 286 2018 Annual Report and Accounts · UniCredit B. Structured entities (other than entities for securitisation transaction) B.1 Consolidated structured entities The Group has involvements in structured entities that are consolidated because it has both power on the underlying assets and exposure to variability of returns arising from the structured entities activities as a result of the financial instruments subscribed. The consolidated structured entities of the Group belong to one of the following categories: • Leasing SPV: these structured entities are set-up by the Group in order to meet the needs of customers interested into entering into finance leasing. The Group provides funding to these structured entities, both in form of equity and in form of loans. Such funding is used by structured entities to buy assets (real estate, equipment, etc.) that are leased to a customer under a finance leasing contract; • Project finance SPV: these structured entities are set-up in order to finance capital intensive projects according to the need of specific customers. Typically the funds needed to develop the project are provided by the customer, in form of equity and by the Group in form of loans. The Group consolidates such structured entities as a result of deterioration of the credit worthiness of the customer and subsequent acquisition of the right to manage the project; • Real estate SPV: these structured entities are entities that have been set-up in order to fund real estate projects used in the business by the Group or that have been acquired it the course of credit recovery processes; • Funding SPV: these structured entities are set-up by the Group so to gather funding in specific markets that is guaranteed by a Group Legal entity. This funding is then transferred to the group legal entity that guarantees it; • Investment funds: these structured entities are open ended and closed ended investment funds that the Group controls under IFRS10 having acquired enough quotas to expose it to variability of returns and the ability to manage, directly and indirectly, the underlying portfolio; • Warehousing SPV: these structured entities are set-up in order to subsequently perform securitisation transactions. In particular they purchase mortgages in specific markets and from different originators until a “critical mass” that allow to perform securitisation is reached. The purchases of mortgages are funded through loans provided by the Group. During the period the Group has not provided financial support to consolidated structured entities, other than those for securitisation transactions, in absence of contractual obligation to do so and it doesn’t have current intention to provide such support. The following table provides on balance sheet and off balance sheet, non revocable credit line and financial guarantees, provided by Group companies to consolidated structured entities. These exposures are eliminated in the consolidation process. (€ '000) BALANCE SHEET ITEM/SPV TYPE TOTAL ASSETS (A) OFF BALANCE SHEET EXPOSURES Leasing SPV 1,982,387 - Project Finance SPV 1,310,453 - Real Estate SPV 24,159 10,050 Funding SPV 306,688 - Investment funds 968,752 - Warehousing SPV - - Total 4,592,439 10,050 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 286 2018 Annual Report and Accounts · UniCredit B. Structured entities (other than entities for securitisation transaction) B.1 Consolidated structured entities The Group has involvements in structured entities that are consolidated because it has both power on the underlying assets and exposure to variability of returns arising from the structured entities activities as a result of the financial instruments subscribed. The consolidated structured entities of the Group belong to one of the following categories: • Leasing SPV: these structured entities are set-up by the Group in order to meet the needs of customers interested into entering into finance leasing. The Group provides funding to these structured entities, both in form of equity and in form of loans. Such funding is used by structured entities to buy assets (real estate, equipment, etc.) that are leased to a customer under a finance leasing contract; • Project finance SPV: these structured entities are set-up in order to finance capital intensive projects according to the need of specific customers. Typically the funds needed to develop the project are provided by the customer, in form of equity and by the Group in form of loans. The Group consolidates such structured entities as a result of deterioration of the credit worthiness of the customer and subsequent acquisition of the right to manage the project; • Real estate SPV: these structured entities are entities that have been set-up in order to fund real estate projects used in the business by the Group or that have been acquired it the course of credit recovery processes; • Funding SPV: these structured entities are set-up by the Group so to gather funding in specific markets that is guaranteed by a Group Legal entity. This funding is then transferred to the group legal entity that guarantees it; • Investment funds: these structured entities are open ended and closed ended investment funds that the Group controls under IFRS10 having acquired enough quotas to expose it to variability of returns and the ability to manage, directly and indirectly, the underlying portfolio; • Warehousing SPV: these structured entities are set-up in order to subsequently perform securitisation transactions. In particular they purchase mortgages in specific markets and from different originators until a “critical mass” that allow to perform securitisation is reached. The purchases of mortgages are funded through loans provided by the Group. During the period the Group has not provided financial support to consolidated structured entities, other than those for securitisation transactions, in absence of contractual obligation to do so and it doesn’t have current intention to provide such support. The following table provides on balance sheet and off balance sheet, non revocable credit line and financial guarantees, provided by Group companies to consolidated structured entities. These exposures are eliminated in the consolidation process. (€ '000) BALANCE SHEET ITEM/SPV TYPE TOTAL ASSETS (A) OFF BALANCE SHEET EXPOSURES Leasing SPV 1,982,387 - Project Finance SPV 1,310,453 - Real Estate SPV 24,159 10,050 Funding SPV 306,688 - Investment funds 968,752 - Warehousing SPV - - Total 4,592,439 10,050 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 286 2018 Annual Report and Accounts · UniCredit B. Structured entities (other than entities for securitisation transaction) B.1 Consolidated structured entities The Group has involvements in structured entities that are consolidated because it has both power on the underlying assets and exposure to variability of returns arising from the structured entities activities as a result of the financial instruments subscribed. The consolidated structured entities of the Group belong to one of the following categories: • Leasing SPV: these structured entities are set-up by the Group in order to meet the needs of customers interested into entering into finance leasing. The Group provides funding to these structured entities, both in form of equity and in form of loans. Such funding is used by structured entities to buy assets (real estate, equipment, etc.) that are leased to a customer under a finance leasing contract; • Project finance SPV: these structured entities are set-up in order to finance capital intensive projects according to the need of specific customers. Typically the funds needed to develop the project are provided by the customer, in form of equity and by the Group in form of loans. The Group consolidates such structured entities as a result of deterioration of the credit worthiness of the customer and subsequent acquisition of the right to manage the project; • Real estate SPV: these structured entities are entities that have been set-up in order to fund real estate projects used in the business by the Group or that have been acquired it the course of credit recovery processes; • Funding SPV: these structured entities are set-up by the Group so to gather funding in specific markets that is guaranteed by a Group Legal entity. This funding is then transferred to the group legal entity that guarantees it; • Investment funds: these structured entities are open ended and closed ended investment funds that the Group controls under IFRS10 having acquired enough quotas to expose it to variability of returns and the ability to manage, directly and indirectly, the underlying portfolio; • Warehousing SPV: these structured entities are set-up in order to subsequently perform securitisation transactions. In particular they purchase mortgages in specific markets and from different originators until a “critical mass” that allow to perform securitisation is reached. The purchases of mortgages are funded through loans provided by the Group. During the period the Group has not provided financial support to consolidated structured entities, other than those for securitisation transactions, in absence of contractual obligation to do so and it doesn’t have current intention to provide such support. The following table provides on balance sheet and off balance sheet, non revocable credit line and financial guarantees, provided by Group companies to consolidated structured entities. These exposures are eliminated in the consolidation process. (€ '000) BALANCE SHEET ITEM/SPV TYPE TOTAL ASSETS (A) OFF BALANCE SHEET EXPOSURES Leasing SPV 1,982,387 - Project Finance SPV 1,310,453 - Real Estate SPV 24,159 10,050 Funding SPV 306,688 - Investment funds 968,752 - Warehousing SPV - - Total 4,592,439 10,050 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 286 2018 Annual Report and Accounts · UniCredit B. Structured entities (other than entities for securitisation transaction) B.1 Consolidated structured entities The Group has involvements in structured entities that are consolidated because it has both power on the underlying assets and exposure to variability of returns arising from the structured entities activities as a result of the financial instruments subscribed. The consolidated structured entities of the Group belong to one of the following categories: • Leasing SPV: these structured entities are set-up by the Group in order to meet the needs of customers interested into entering into finance leasing. The Group provides funding to these structured entities, both in form of equity and in form of loans. Such funding is used by structured entities to buy assets (real estate, equipment, etc.) that are leased to a customer under a finance leasing contract; • Project finance SPV: these structured entities are set-up in order to finance capital intensive projects according to the need of specific customers. Typically the funds needed to develop the project are provided by the customer, in form of equity and by the Group in form of loans. The Group consolidates such structured entities as a result of deterioration of the credit worthiness of the customer and subsequent acquisition of the right to manage the project; • Real estate SPV: these structured entities are entities that have been set-up in order to fund real estate projects used in the business by the Group or that have been acquired it the course of credit recovery processes; • Funding SPV: these structured entities are set-up by the Group so to gather funding in specific markets that is guaranteed by a Group Legal entity. This funding is then transferred to the group legal entity that guarantees it; • Investment funds: these structured entities are open ended and closed ended investment funds that the Group controls under IFRS10 having acquired enough quotas to expose it to variability of returns and the ability to manage, directly and indirectly, the underlying portfolio; • Warehousing SPV: these structured entities are set-up in order to subsequently perform securitisation transactions. In particular they purchase mortgages in specific markets and from different originators until a “critical mass” that allow to perform securitisation is reached. The purchases of mortgages are funded through loans provided by the Group. During the period the Group has not provided financial support to consolidated structured entities, other than those for securitisation transactions, in absence of contractual obligation to do so and it doesn’t have current intention to provide such support. The following table provides on balance sheet and off balance sheet, non revocable credit line and financial guarantees, provided by Group companies to consolidated structured entities. These exposures are eliminated in the consolidation process. (€ '000) BALANCE SHEET ITEM/SPV TYPE TOTAL ASSETS (A) OFF BALANCE SHEET EXPOSURES Leasing SPV 1,982,387 - Project Finance SPV 1,310,453 - Real Estate SPV 24,159 10,050 Funding SPV 306,688 - Investment funds 968,752 - Warehousing SPV - - Total 4,592,439 10,050 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 287 B.2 Non-consolidated for accounting purposes structured entities B.2.1. Consolidated for regulatory purposes structured entities The Group has not exposure toward structured entities consolidated for regulatory purpose but that are not consolidated for accounting purpose. B.2.2. Other structured entities Qualitative information The Group has exposure toward unconsolidated structured entities either as a result of its lending activities or through the investments in quotas issued by funds that are structured entities under IFRS12 definition. In particular, unconsolidated structured entities in which the Group is exposed to belong to the following categories: • Acquisition and Leveraged Finance structured entities are set up for providing funding for the acquisition of a target business, where sponsors participate with equity contribution and lenders structure their facilities according to the cash flow profile of the target. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the sponsor. The Group has no control over these structured entities because it neither manages the company whose acquisition is being financed nor is significantly exposed to the associated variability of returns; • Leasing structured entities are set-up to buy an asset and rent it to customers (based on a financial leasing contract). The funding is provided through loans, and the structured entities are the owner of the asset. At the end of the contract the asset is usually sold to the customer at a price usually equal to the residual value defined by the contract. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1. In particular, the contracts ruling such transactions and associated guarantees ensure that the Group has no control over these structured entities because it neither manages the activities of the structured entities nor is significantly exposed to variability of returns of the leased assets; • Market Related structured entities are set-up in order to allow customers to invest into financial instruments having features, in term of currency of denomination or interest rate, different from those offered in the market. In this context the Group maintains exposures against these vehicles that, however, do not transfer to the Group the main risks of the underlying; • Notes issuing structured entities are structured entities that issue security different from ABS that are backed up by certain type of assets. These include covered bonds issued by third parties. The Group does not control these structured entities as it has neither the ability to manage the underlying assets nor retains significant exposures to its variability of returns; • Project Finance structured entities are structured entities set up for the financing capital intensive business initiatives, where customers participate with equity contribution. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Real Estate structured entities are set-up for the financing of specific real estate initiatives. In these structures the customers, typically commercial and residential development companies and institutional investors set up the structured entities and provides the equity. The Group provides funding according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Shipping and Aircraft structured entities are set up for the building or the acquisition of a ship or an aircraft that is then used by the customers in the context of their business activities. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Warehousing structured entities support subsequent securitisation transactions through the purchase of mortgages in specific markets and from different originators until a “critical mass” that allows to perform such securitisation is reached; • Investments funds comprise open ended and closed ended investment funds in which the Group has subscribed quotas or provided loans. Quantitative information The following table provides indication on assets, liabilities and off-balance sheet exposures recognised in the balance sheet of the Group held towards SPVs different from non-consolidated securitisation vehicles and broken down by role of the Group. The maximum exposure to loss has been calculated by grossing up the difference between assets and liabilities with off balance sheet positions (irrevocable credit lines and financial guarantees) held toward these vehicles reported in column “difference between maximum exposure to loss and accounting value”. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 287 B.2 Non-consolidated for accounting purposes structured entities B.2.1. Consolidated for regulatory purposes structured entities The Group has not exposure toward structured entities consolidated for regulatory purpose but that are not consolidated for accounting purpose. B.2.2. Other structured entities Qualitative information The Group has exposure toward unconsolidated structured entities either as a result of its lending activities or through the investments in quotas issued by funds that are structured entities under IFRS12 definition. In particular, unconsolidated structured entities in which the Group is exposed to belong to the following categories: • Acquisition and Leveraged Finance structured entities are set up for providing funding for the acquisition of a target business, where sponsors participate with equity contribution and lenders structure their facilities according to the cash flow profile of the target. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the sponsor. The Group has no control over these structured entities because it neither manages the company whose acquisition is being financed nor is significantly exposed to the associated variability of returns; • Leasing structured entities are set-up to buy an asset and rent it to customers (based on a financial leasing contract). The funding is provided through loans, and the structured entities are the owner of the asset. At the end of the contract the asset is usually sold to the customer at a price usually equal to the residual value defined by the contract. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1. In particular, the contracts ruling such transactions and associated guarantees ensure that the Group has no control over these structured entities because it neither manages the activities of the structured entities nor is significantly exposed to variability of returns of the leased assets; • Market Related structured entities are set-up in order to allow customers to invest into financial instruments having features, in term of currency of denomination or interest rate, different from those offered in the market. In this context the Group maintains exposures against these vehicles that, however, do not transfer to the Group the main risks of the underlying; • Notes issuing structured entities are structured entities that issue security different from ABS that are backed up by certain type of assets. These include covered bonds issued by third parties. The Group does not control these structured entities as it has neither the ability to manage the underlying assets nor retains significant exposures to its variability of returns; • Project Finance structured entities are structured entities set up for the financing capital intensive business initiatives, where customers participate with equity contribution. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Real Estate structured entities are set-up for the financing of specific real estate initiatives. In these structures the customers, typically commercial and residential development companies and institutional investors set up the structured entities and provides the equity. The Group provides funding according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Shipping and Aircraft structured entities are set up for the building or the acquisition of a ship or an aircraft that is then used by the customers in the context of their business activities. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Warehousing structured entities support subsequent securitisation transactions through the purchase of mortgages in specific markets and from different originators until a “critical mass” that allows to perform such securitisation is reached; • Investments funds comprise open ended and closed ended investment funds in which the Group has subscribed quotas or provided loans. Quantitative information The following table provides indication on assets, liabilities and off-balance sheet exposures recognised in the balance sheet of the Group held towards SPVs different from non-consolidated securitisation vehicles and broken down by role of the Group. The maximum exposure to loss has been calculated by grossing up the difference between assets and liabilities with off balance sheet positions (irrevocable credit lines and financial guarantees) held toward these vehicles reported in column “difference between maximum exposure to loss and accounting value”. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 287 B.2 Non-consolidated for accounting purposes structured entities B.2.1. Consolidated for regulatory purposes structured entities The Group has not exposure toward structured entities consolidated for regulatory purpose but that are not consolidated for accounting purpose. B.2.2. Other structured entities Qualitative information The Group has exposure toward unconsolidated structured entities either as a result of its lending activities or through the investments in quotas issued by funds that are structured entities under IFRS12 definition. In particular, unconsolidated structured entities in which the Group is exposed to belong to the following categories: • Acquisition and Leveraged Finance structured entities are set up for providing funding for the acquisition of a target business, where sponsors participate with equity contribution and lenders structure their facilities according to the cash flow profile of the target. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the sponsor. The Group has no control over these structured entities because it neither manages the company whose acquisition is being financed nor is significantly exposed to the associated variability of returns; • Leasing structured entities are set-up to buy an asset and rent it to customers (based on a financial leasing contract). The funding is provided through loans, and the structured entities are the owner of the asset. At the end of the contract the asset is usually sold to the customer at a price usually equal to the residual value defined by the contract. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1. In particular, the contracts ruling such transactions and associated guarantees ensure that the Group has no control over these structured entities because it neither manages the activities of the structured entities nor is significantly exposed to variability of returns of the leased assets; • Market Related structured entities are set-up in order to allow customers to invest into financial instruments having features, in term of currency of denomination or interest rate, different from those offered in the market. In this context the Group maintains exposures against these vehicles that, however, do not transfer to the Group the main risks of the underlying; • Notes issuing structured entities are structured entities that issue security different from ABS that are backed up by certain type of assets. These include covered bonds issued by third parties. The Group does not control these structured entities as it has neither the ability to manage the underlying assets nor retains significant exposures to its variability of returns; • Project Finance structured entities are structured entities set up for the financing capital intensive business initiatives, where customers participate with equity contribution. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Real Estate structured entities are set-up for the financing of specific real estate initiatives. In these structures the customers, typically commercial and residential development companies and institutional investors set up the structured entities and provides the equity. The Group provides funding according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Shipping and Aircraft structured entities are set up for the building or the acquisition of a ship or an aircraft that is then used by the customers in the context of their business activities. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Warehousing structured entities support subsequent securitisation transactions through the purchase of mortgages in specific markets and from different originators until a “critical mass” that allows to perform such securitisation is reached; • Investments funds comprise open ended and closed ended investment funds in which the Group has subscribed quotas or provided loans. Quantitative information The following table provides indication on assets, liabilities and off-balance sheet exposures recognised in the balance sheet of the Group held towards SPVs different from non-consolidated securitisation vehicles and broken down by role of the Group. The maximum exposure to loss has been calculated by grossing up the difference between assets and liabilities with off balance sheet positions (irrevocable credit lines and financial guarantees) held toward these vehicles reported in column “difference between maximum exposure to loss and accounting value”. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 287 B.2 Non-consolidated for accounting purposes structured entities B.2.1. Consolidated for regulatory purposes structured entities The Group has not exposure toward structured entities consolidated for regulatory purpose but that are not consolidated for accounting purpose. B.2.2. Other structured entities Qualitative information The Group has exposure toward unconsolidated structured entities either as a result of its lending activities or through the investments in quotas issued by funds that are structured entities under IFRS12 definition. In particular, unconsolidated structured entities in which the Group is exposed to belong to the following categories: • Acquisition and Leveraged Finance structured entities are set up for providing funding for the acquisition of a target business, where sponsors participate with equity contribution and lenders structure their facilities according to the cash flow profile of the target. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the sponsor. The Group has no control over these structured entities because it neither manages the company whose acquisition is being financed nor is significantly exposed to the associated variability of returns; • Leasing structured entities are set-up to buy an asset and rent it to customers (based on a financial leasing contract). The funding is provided through loans, and the structured entities are the owner of the asset. At the end of the contract the asset is usually sold to the customer at a price usually equal to the residual value defined by the contract. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1. In particular, the contracts ruling such transactions and associated guarantees ensure that the Group has no control over these structured entities because it neither manages the activities of the structured entities nor is significantly exposed to variability of returns of the leased assets; • Market Related structured entities are set-up in order to allow customers to invest into financial instruments having features, in term of currency of denomination or interest rate, different from those offered in the market. In this context the Group maintains exposures against these vehicles that, however, do not transfer to the Group the main risks of the underlying; • Notes issuing structured entities are structured entities that issue security different from ABS that are backed up by certain type of assets. These include covered bonds issued by third parties. The Group does not control these structured entities as it has neither the ability to manage the underlying assets nor retains significant exposures to its variability of returns; • Project Finance structured entities are structured entities set up for the financing capital intensive business initiatives, where customers participate with equity contribution. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Real Estate structured entities are set-up for the financing of specific real estate initiatives. In these structures the customers, typically commercial and residential development companies and institutional investors set up the structured entities and provides the equity. The Group provides funding according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Shipping and Aircraft structured entities are set up for the building or the acquisition of a ship or an aircraft that is then used by the customers in the context of their business activities. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Warehousing structured entities support subsequent securitisation transactions through the purchase of mortgages in specific markets and from different originators until a “critical mass” that allows to perform such securitisation is reached; • Investments funds comprise open ended and closed ended investment funds in which the Group has subscribed quotas or provided loans. Quantitative information The following table provides indication on assets, liabilities and off-balance sheet exposures recognised in the balance sheet of the Group held towards SPVs different from non-consolidated securitisation vehicles and broken down by role of the Group. The maximum exposure to loss has been calculated by grossing up the difference between assets and liabilities with off balance sheet positions (irrevocable credit lines and financial guarantees) held toward these vehicles reported in column “difference between maximum exposure to loss and accounting value”. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 287 B.2 Non-consolidated for accounting purposes structured entities B.2.1. Consolidated for regulatory purposes structured entities The Group has not exposure toward structured entities consolidated for regulatory purpose but that are not consolidated for accounting purpose. B.2.2. Other structured entities Qualitative information The Group has exposure toward unconsolidated structured entities either as a result of its lending activities or through the investments in quotas issued by funds that are structured entities under IFRS12 definition. In particular, unconsolidated structured entities in which the Group is exposed to belong to the following categories: • Acquisition and Leveraged Finance structured entities are set up for providing funding for the acquisition of a target business, where sponsors participate with equity contribution and lenders structure their facilities according to the cash flow profile of the target. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the sponsor. The Group has no control over these structured entities because it neither manages the company whose acquisition is being financed nor is significantly exposed to the associated variability of returns; • Leasing structured entities are set-up to buy an asset and rent it to customers (based on a financial leasing contract). The funding is provided through loans, and the structured entities are the owner of the asset. At the end of the contract the asset is usually sold to the customer at a price usually equal to the residual value defined by the contract. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1. In particular, the contracts ruling such transactions and associated guarantees ensure that the Group has no control over these structured entities because it neither manages the activities of the structured entities nor is significantly exposed to variability of returns of the leased assets; • Market Related structured entities are set-up in order to allow customers to invest into financial instruments having features, in term of currency of denomination or interest rate, different from those offered in the market. In this context the Group maintains exposures against these vehicles that, however, do not transfer to the Group the main risks of the underlying; • Notes issuing structured entities are structured entities that issue security different from ABS that are backed up by certain type of assets. These include covered bonds issued by third parties. The Group does not control these structured entities as it has neither the ability to manage the underlying assets nor retains significant exposures to its variability of returns; • Project Finance structured entities are structured entities set up for the financing capital intensive business initiatives, where customers participate with equity contribution. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Real Estate structured entities are set-up for the financing of specific real estate initiatives. In these structures the customers, typically commercial and residential development companies and institutional investors set up the structured entities and provides the equity. The Group provides funding according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Shipping and Aircraft structured entities are set up for the building or the acquisition of a ship or an aircraft that is then used by the customers in the context of their business activities. The Group provides funding to these structured entities according to the applicable internal credit policies described in Part E - Section 1 that also define the level of equity that has to be provided by the customers. The Group has no control over these structured entities because it neither manages the assets being financed nor is significantly exposed to the resulting variability of returns; • Warehousing structured entities support subsequent securitisation transactions through the purchase of mortgages in specific markets and from different originators until a “critical mass” that allows to perform such securitisation is reached; • Investments funds comprise open ended and closed ended investment funds in which the Group has subscribed quotas or provided loans. Quantitative information The following table provides indication on assets, liabilities and off-balance sheet exposures recognised in the balance sheet of the Group held towards SPVs different from non-consolidated securitisation vehicles and broken down by role of the Group. The maximum exposure to loss has been calculated by grossing up the difference between assets and liabilities with off balance sheet positions (irrevocable credit lines and financial guarantees) held toward these vehicles reported in column “difference between maximum exposure to loss and accounting value”. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 288 2018 Annual Report and Accounts · UniCredit Exposure to structured entities different from Securitisation SPV not consolidated for accounting purposes (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) Acquisition and Leverage Finance SPV 261,521 24,266 237,255 282,922 45,667 HFT - Deposits 24,266 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 261,521 - Leasing SPV 103,322 559 102,763 102,980 217 HFT - Deposits 559 DFV - Securities - MFV 5,511 HFT - FVOCI - DFV - AC 97,811 - Market Related SPV 931,386 4,130 927,256 942,398 15,142 HFT 3,095 Deposits 4,130 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 928,291 - Notes Issuing Vehicles 63,435 - 63,435 78,991 15,556 HFT 5,277 Deposits - DFV - Securities - MFV - HFT - FVOCI - DFV - AC 58,158 - Project Finance SPV 1,310,389 327,006 983,383 1,091,721 108,338 HFT - Deposits 327,006 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 1,310,389 - Real Estate SPV 4,188,751 463,251 3,725,500 4,063,270 337,770 HFT - Deposits 463,251 DFV - Securities - MFV - HFT - FVOCI 52,621 DFV - AC 4,136,130 - Shipping Aircraft SPV 130,403 121 130,282 138,825 8,543 HFT - Deposits 121 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 130,403 - Warehousing SPV 111 - 111 111 - HFT - Deposits - DFV - Securities - MFV 111 HFT - FVOCI - DFV - AC - - Total 6,989,318 819,333 6,169,985 6,701,218 531,233 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost The following table provides indication on assets, liabilities and off-balance sheet exposures recognised in the balance sheet of the Group held towards not consolidated investment funds. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 288 2018 Annual Report and Accounts · UniCredit Exposure to structured entities different from Securitisation SPV not consolidated for accounting purposes (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) Acquisition and Leverage Finance SPV 261,521 24,266 237,255 282,922 45,667 HFT - Deposits 24,266 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 261,521 - Leasing SPV 103,322 559 102,763 102,980 217 HFT - Deposits 559 DFV - Securities - MFV 5,511 HFT - FVOCI - DFV - AC 97,811 - Market Related SPV 931,386 4,130 927,256 942,398 15,142 HFT 3,095 Deposits 4,130 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 928,291 - Notes Issuing Vehicles 63,435 - 63,435 78,991 15,556 HFT 5,277 Deposits - DFV - Securities - MFV - HFT - FVOCI - DFV - AC 58,158 - Project Finance SPV 1,310,389 327,006 983,383 1,091,721 108,338 HFT - Deposits 327,006 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 1,310,389 - Real Estate SPV 4,188,751 463,251 3,725,500 4,063,270 337,770 HFT - Deposits 463,251 DFV - Securities - MFV - HFT - FVOCI 52,621 DFV - AC 4,136,130 - Shipping Aircraft SPV 130,403 121 130,282 138,825 8,543 HFT - Deposits 121 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 130,403 - Warehousing SPV 111 - 111 111 - HFT - Deposits - DFV - Securities - MFV 111 HFT - FVOCI - DFV - AC - - Total 6,989,318 819,333 6,169,985 6,701,218 531,233 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost The following table provides indication on assets, liabilities and off-balance sheet exposures recognised in the balance sheet of the Group held towards not consolidated investment funds. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 288 2018 Annual Report and Accounts · UniCredit Exposure to structured entities different from Securitisation SPV not consolidated for accounting purposes (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) Acquisition and Leverage Finance SPV 261,521 24,266 237,255 282,922 45,667 HFT - Deposits 24,266 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 261,521 - Leasing SPV 103,322 559 102,763 102,980 217 HFT - Deposits 559 DFV - Securities - MFV 5,511 HFT - FVOCI - DFV - AC 97,811 - Market Related SPV 931,386 4,130 927,256 942,398 15,142 HFT 3,095 Deposits 4,130 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 928,291 - Notes Issuing Vehicles 63,435 - 63,435 78,991 15,556 HFT 5,277 Deposits - DFV - Securities - MFV - HFT - FVOCI - DFV - AC 58,158 - Project Finance SPV 1,310,389 327,006 983,383 1,091,721 108,338 HFT - Deposits 327,006 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 1,310,389 - Real Estate SPV 4,188,751 463,251 3,725,500 4,063,270 337,770 HFT - Deposits 463,251 DFV - Securities - MFV - HFT - FVOCI 52,621 DFV - AC 4,136,130 - Shipping Aircraft SPV 130,403 121 130,282 138,825 8,543 HFT - Deposits 121 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 130,403 - Warehousing SPV 111 - 111 111 - HFT - Deposits - DFV - Securities - MFV 111 HFT - FVOCI - DFV - AC - - Total 6,989,318 819,333 6,169,985 6,701,218 531,233 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost The following table provides indication on assets, liabilities and off-balance sheet exposures recognised in the balance sheet of the Group held towards not consolidated investment funds. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 288 2018 Annual Report and Accounts · UniCredit Exposure to structured entities different from Securitisation SPV not consolidated for accounting purposes (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) Acquisition and Leverage Finance SPV 261,521 24,266 237,255 282,922 45,667 HFT - Deposits 24,266 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 261,521 - Leasing SPV 103,322 559 102,763 102,980 217 HFT - Deposits 559 DFV - Securities - MFV 5,511 HFT - FVOCI - DFV - AC 97,811 - Market Related SPV 931,386 4,130 927,256 942,398 15,142 HFT 3,095 Deposits 4,130 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 928,291 - Notes Issuing Vehicles 63,435 - 63,435 78,991 15,556 HFT 5,277 Deposits - DFV - Securities - MFV - HFT - FVOCI - DFV - AC 58,158 - Project Finance SPV 1,310,389 327,006 983,383 1,091,721 108,338 HFT - Deposits 327,006 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 1,310,389 - Real Estate SPV 4,188,751 463,251 3,725,500 4,063,270 337,770 HFT - Deposits 463,251 DFV - Securities - MFV - HFT - FVOCI 52,621 DFV - AC 4,136,130 - Shipping Aircraft SPV 130,403 121 130,282 138,825 8,543 HFT - Deposits 121 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 130,403 - Warehousing SPV 111 - 111 111 - HFT - Deposits - DFV - Securities - MFV 111 HFT - FVOCI - DFV - AC - - Total 6,989,318 819,333 6,169,985 6,701,218 531,233 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost The following table provides indication on assets, liabilities and off-balance sheet exposures recognised in the balance sheet of the Group held towards not consolidated investment funds. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 288 2018 Annual Report and Accounts · UniCredit Exposure to structured entities different from Securitisation SPV not consolidated for accounting purposes (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) Acquisition and Leverage Finance SPV 261,521 24,266 237,255 282,922 45,667 HFT - Deposits 24,266 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 261,521 - Leasing SPV 103,322 559 102,763 102,980 217 HFT - Deposits 559 DFV - Securities - MFV 5,511 HFT - FVOCI - DFV - AC 97,811 - Market Related SPV 931,386 4,130 927,256 942,398 15,142 HFT 3,095 Deposits 4,130 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 928,291 - Notes Issuing Vehicles 63,435 - 63,435 78,991 15,556 HFT 5,277 Deposits - DFV - Securities - MFV - HFT - FVOCI - DFV - AC 58,158 - Project Finance SPV 1,310,389 327,006 983,383 1,091,721 108,338 HFT - Deposits 327,006 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 1,310,389 - Real Estate SPV 4,188,751 463,251 3,725,500 4,063,270 337,770 HFT - Deposits 463,251 DFV - Securities - MFV - HFT - FVOCI 52,621 DFV - AC 4,136,130 - Shipping Aircraft SPV 130,403 121 130,282 138,825 8,543 HFT - Deposits 121 DFV - Securities - MFV - HFT - FVOCI - DFV - AC 130,403 - Warehousing SPV 111 - 111 111 - HFT - Deposits - DFV - Securities - MFV 111 HFT - FVOCI - DFV - AC - - Total 6,989,318 819,333 6,169,985 6,701,218 531,233 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost The following table provides indication on assets, liabilities and off-balance sheet exposures recognised in the balance sheet of the Group held towards not consolidated investment funds. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 289 Exposure to structured entites different from Securitization SPV not consolidated for accounting purposes - Investment funds (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) Real Estate investment funds 4,358,459 1,551,419 2,807,040 3,491,071 684,031 HFT 29,401 Deposits 1,551,419 DFV - Securities - MFV 191,049 HFT - FVOCI - DFV - AC 4,138,009 - Mixed Asset investment funds 798,997 805,919 -6,922 -5,022 1,900 HFT 603,111 Deposits 800,779 DFV - Securities - MFV 27,056 HFT 5,140 FVOCI - DFV - AC 168,830 - Equity investment funds 858,088 311,355 546,733 562,276 15,543 HFT 508,339 Deposits 306,257 DFV - Securities - MFV 19,638 HFT 5,098 FVOCI - DFV - AC 330,111 - Private Equity / Debt investment funds 683,272 36,110 647,162 653,407 6,245 HFT 338 Deposits 36,110 DFV - Securities - MFV 682,926 HFT - FVOCI - DFV - AC 8 - Fixed Income investment funds 778,059 510,168 267,891 267,891 - HFT 713,357 Deposits 506,526 DFV - Securities - MFV 44,402 HFT 3,642 FVOCI - DFV - AC 20,300 - Other investment funds 257,315 731,566 -474,251 -341,628 132,623 HFT 20,596 Deposits 709,668 DFV - Securities 2,027 MFV 5,029 HFT 19,871 FVOCI - DFV - AC 231,690 - Total 7,734,190 3,946,537 3,787,653 4,627,995 840,342 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 289 Exposure to structured entites different from Securitization SPV not consolidated for accounting purposes - Investment funds (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) Real Estate investment funds 4,358,459 1,551,419 2,807,040 3,491,071 684,031 HFT 29,401 Deposits 1,551,419 DFV - Securities - MFV 191,049 HFT - FVOCI - DFV - AC 4,138,009 - Mixed Asset investment funds 798,997 805,919 -6,922 -5,022 1,900 HFT 603,111 Deposits 800,779 DFV - Securities - MFV 27,056 HFT 5,140 FVOCI - DFV - AC 168,830 - Equity investment funds 858,088 311,355 546,733 562,276 15,543 HFT 508,339 Deposits 306,257 DFV - Securities - MFV 19,638 HFT 5,098 FVOCI - DFV - AC 330,111 - Private Equity / Debt investment funds 683,272 36,110 647,162 653,407 6,245 HFT 338 Deposits 36,110 DFV - Securities - MFV 682,926 HFT - FVOCI - DFV - AC 8 - Fixed Income investment funds 778,059 510,168 267,891 267,891 - HFT 713,357 Deposits 506,526 DFV - Securities - MFV 44,402 HFT 3,642 FVOCI - DFV - AC 20,300 - Other investment funds 257,315 731,566 -474,251 -341,628 132,623 HFT 20,596 Deposits 709,668 DFV - Securities 2,027 MFV 5,029 HFT 19,871 FVOCI - DFV - AC 231,690 - Total 7,734,190 3,946,537 3,787,653 4,627,995 840,342 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 289 Exposure to structured entites different from Securitization SPV not consolidated for accounting purposes - Investment funds (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) Real Estate investment funds 4,358,459 1,551,419 2,807,040 3,491,071 684,031 HFT 29,401 Deposits 1,551,419 DFV - Securities - MFV 191,049 HFT - FVOCI - DFV - AC 4,138,009 - Mixed Asset investment funds 798,997 805,919 -6,922 -5,022 1,900 HFT 603,111 Deposits 800,779 DFV - Securities - MFV 27,056 HFT 5,140 FVOCI - DFV - AC 168,830 - Equity investment funds 858,088 311,355 546,733 562,276 15,543 HFT 508,339 Deposits 306,257 DFV - Securities - MFV 19,638 HFT 5,098 FVOCI - DFV - AC 330,111 - Private Equity / Debt investment funds 683,272 36,110 647,162 653,407 6,245 HFT 338 Deposits 36,110 DFV - Securities - MFV 682,926 HFT - FVOCI - DFV - AC 8 - Fixed Income investment funds 778,059 510,168 267,891 267,891 - HFT 713,357 Deposits 506,526 DFV - Securities - MFV 44,402 HFT 3,642 FVOCI - DFV - AC 20,300 - Other investment funds 257,315 731,566 -474,251 -341,628 132,623 HFT 20,596 Deposits 709,668 DFV - Securities 2,027 MFV 5,029 HFT 19,871 FVOCI - DFV - AC 231,690 - Total 7,734,190 3,946,537 3,787,653 4,627,995 840,342 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 289 Exposure to structured entites different from Securitization SPV not consolidated for accounting purposes - Investment funds (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) Real Estate investment funds 4,358,459 1,551,419 2,807,040 3,491,071 684,031 HFT 29,401 Deposits 1,551,419 DFV - Securities - MFV 191,049 HFT - FVOCI - DFV - AC 4,138,009 - Mixed Asset investment funds 798,997 805,919 -6,922 -5,022 1,900 HFT 603,111 Deposits 800,779 DFV - Securities - MFV 27,056 HFT 5,140 FVOCI - DFV - AC 168,830 - Equity investment funds 858,088 311,355 546,733 562,276 15,543 HFT 508,339 Deposits 306,257 DFV - Securities - MFV 19,638 HFT 5,098 FVOCI - DFV - AC 330,111 - Private Equity / Debt investment funds 683,272 36,110 647,162 653,407 6,245 HFT 338 Deposits 36,110 DFV - Securities - MFV 682,926 HFT - FVOCI - DFV - AC 8 - Fixed Income investment funds 778,059 510,168 267,891 267,891 - HFT 713,357 Deposits 506,526 DFV - Securities - MFV 44,402 HFT 3,642 FVOCI - DFV - AC 20,300 - Other investment funds 257,315 731,566 -474,251 -341,628 132,623 HFT 20,596 Deposits 709,668 DFV - Securities 2,027 MFV 5,029 HFT 19,871 FVOCI - DFV - AC 231,690 - Total 7,734,190 3,946,537 3,787,653 4,627,995 840,342 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 289 Exposure to structured entites different from Securitization SPV not consolidated for accounting purposes - Investment funds (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) Real Estate investment funds 4,358,459 1,551,419 2,807,040 3,491,071 684,031 HFT 29,401 Deposits 1,551,419 DFV - Securities - MFV 191,049 HFT - FVOCI - DFV - AC 4,138,009 - Mixed Asset investment funds 798,997 805,919 -6,922 -5,022 1,900 HFT 603,111 Deposits 800,779 DFV - Securities - MFV 27,056 HFT 5,140 FVOCI - DFV - AC 168,830 - Equity investment funds 858,088 311,355 546,733 562,276 15,543 HFT 508,339 Deposits 306,257 DFV - Securities - MFV 19,638 HFT 5,098 FVOCI - DFV - AC 330,111 - Private Equity / Debt investment funds 683,272 36,110 647,162 653,407 6,245 HFT 338 Deposits 36,110 DFV - Securities - MFV 682,926 HFT - FVOCI - DFV - AC 8 - Fixed Income investment funds 778,059 510,168 267,891 267,891 - HFT 713,357 Deposits 506,526 DFV - Securities - MFV 44,402 HFT 3,642 FVOCI - DFV - AC 20,300 - Other investment funds 257,315 731,566 -474,251 -341,628 132,623 HFT 20,596 Deposits 709,668 DFV - Securities 2,027 MFV 5,029 HFT 19,871 FVOCI - DFV - AC 231,690 - Total 7,734,190 3,946,537 3,787,653 4,627,995 840,342 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 290 2018 Annual Report and Accounts · UniCredit The Group acts, through its subsidiaries, as manager of investment funds that are considered structured entities and in which it has no exposure at the reporting date. The following table reports the income recognised during the period on this business. Nature of income from sponsored unconsolidated Structured Entities (different from securitization and covered bond): breakdown by entity type (€ '000) YEAR 2018 ENTITY TYPE INTEREST INCOME FEES AND COMMISSIONS GAIN (LOSS) ARISING FROM DISPOSAL OTHER INCOME Acquisitions and leveraged finance SPVs - - - - Leasing SPVs - - - - Market Related structuring SPVs - - - - Note Issuing Vehicles - - - - Project finance SPVs - - - - Real estate SPVs - - - - Shipping/Aircraft SPVs - - - - Investment funds 131 51,189 269 857 Total 131 51,189 269 857 Assets transferred to sponsored unconsolidated Structured Entities (different from securitization and covered bond): breakdown by entity type No data to be disclosed. Section 2 - Risks of the prudential consolidated 2.1 Credit risk Qualitative information 1. General aspects In UniCredit, the current governance model of credit risk, intended as risk of impairment of a credit exposure deriving from an unexpected deterioration of the counterparty’s creditworthiness, has two levels of control: • on one side, the supervision of the Group Risk Governance functions which steer and control the credit risk and which perform a managerial coordination with respect to the relevant Group legal entities’ functions; • on the other one, the supervision of the relevant Group legal entities’ functions which perform the control and the management of the risks portfolio at Country level. This model also leverages the current governance structure which provides the organisational separation between the functions responsible for the credit operational management (i.e. Group Lending Office) and the control functions (within Group Risk Management). With reference to credit risk management topics, the mechanisms of interaction between the Parent company and the Group Legal Entities are defined by specific credit governance rules that, on one side, regulate the respective responsibilities and, on the other, ensure the compliance of the overall credit risk framework with the regulatory context which the Parent Company is subject to. Within its role of guidance, support and control, the Parent company acts in the following areas: credit rules (principles, policies and processes), credit strategies and credit risk limits, models development, rating systems validation, large exposures management, issuance of credit products, monitoring and reporting portfolio credit risk. In line with such credit governance rules, the legal entities request the Group Lending Office’s opinion before granting new or reviewing existing credit lines to individual borrowers or economic groups whenever these credit lines exceed defined thresholds, also with reference to compliance with the credit risk concentration limits being measured with respect to the regulatory capital. The monitoring of major industrial and financial economic groups (called “Top Group”), identified as those groups having an exposure exceeding 2% of the consolidated eligible capital (as stated in the Banca d’Italia Circular No.285 “Supervisory provisions for banks), is carried out by a dedicated central unit within the Group Risk Management. The Group mapping, whose purpose is to identify and assess both juridical and economic connections among the bank’s clients, is performed according to principles and rules applying to the whole Group, in line with the most recent regulatory guidelines (EBA Guidelines on Connected Clients - EBA/GL/2017/15) as well as the bank’s best practices. According to the role assigned by the Group governance to the Parent company, specifically to the Group Risk Management function, general provisions are established (“General principles for credit activities”) defining Group-wide rules and principles for guiding, governing and Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 290 2018 Annual Report and Accounts · UniCredit The Group acts, through its subsidiaries, as manager of investment funds that are considered structured entities and in which it has no exposure at the reporting date. The following table reports the income recognised during the period on this business. Nature of income from sponsored unconsolidated Structured Entities (different from securitization and covered bond): breakdown by entity type (€ '000) YEAR 2018 ENTITY TYPE INTEREST INCOME FEES AND COMMISSIONS GAIN (LOSS) ARISING FROM DISPOSAL OTHER INCOME Acquisitions and leveraged finance SPVs - - - - Leasing SPVs - - - - Market Related structuring SPVs - - - - Note Issuing Vehicles - - - - Project finance SPVs - - - - Real estate SPVs - - - - Shipping/Aircraft SPVs - - - - Investment funds 131 51,189 269 857 Total 131 51,189 269 857 Assets transferred to sponsored unconsolidated Structured Entities (different from securitization and covered bond): breakdown by entity type No data to be disclosed. Section 2 - Risks of the prudential consolidated 2.1 Credit risk Qualitative information 1. General aspects In UniCredit, the current governance model of credit risk, intended as risk of impairment of a credit exposure deriving from an unexpected deterioration of the counterparty’s creditworthiness, has two levels of control: • on one side, the supervision of the Group Risk Governance functions which steer and control the credit risk and which perform a managerial coordination with respect to the relevant Group legal entities’ functions; • on the other one, the supervision of the relevant Group legal entities’ functions which perform the control and the management of the risks portfolio at Country level. This model also leverages the current governance structure which provides the organisational separation between the functions responsible for the credit operational management (i.e. Group Lending Office) and the control functions (within Group Risk Management). With reference to credit risk management topics, the mechanisms of interaction between the Parent company and the Group Legal Entities are defined by specific credit governance rules that, on one side, regulate the respective responsibilities and, on the other, ensure the compliance of the overall credit risk framework with the regulatory context which the Parent Company is subject to. Within its role of guidance, support and control, the Parent company acts in the following areas: credit rules (principles, policies and processes), credit strategies and credit risk limits, models development, rating systems validation, large exposures management, issuance of credit products, monitoring and reporting portfolio credit risk. In line with such credit governance rules, the legal entities request the Group Lending Office’s opinion before granting new or reviewing existing credit lines to individual borrowers or economic groups whenever these credit lines exceed defined thresholds, also with reference to compliance with the credit risk concentration limits being measured with respect to the regulatory capital. The monitoring of major industrial and financial economic groups (called “Top Group”), identified as those groups having an exposure exceeding 2% of the consolidated eligible capital (as stated in the Banca d’Italia Circular No.285 “Supervisory provisions for banks), is carried out by a dedicated central unit within the Group Risk Management. The Group mapping, whose purpose is to identify and assess both juridical and economic connections among the bank’s clients, is performed according to principles and rules applying to the whole Group, in line with the most recent regulatory guidelines (EBA Guidelines on Connected Clients - EBA/GL/2017/15) as well as the bank’s best practices. According to the role assigned by the Group governance to the Parent company, specifically to the Group Risk Management function, general provisions are established (“General principles for credit activities”) defining Group-wide rules and principles for guiding, governing and Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 290 2018 Annual Report and Accounts · UniCredit The Group acts, through its subsidiaries, as manager of investment funds that are considered structured entities and in which it has no exposure at the reporting date. The following table reports the income recognised during the period on this business. Nature of income from sponsored unconsolidated Structured Entities (different from securitization and covered bond): breakdown by entity type (€ '000) YEAR 2018 ENTITY TYPE INTEREST INCOME FEES AND COMMISSIONS GAIN (LOSS) ARISING FROM DISPOSAL OTHER INCOME Acquisitions and leveraged finance SPVs - - - - Leasing SPVs - - - - Market Related structuring SPVs - - - - Note Issuing Vehicles - - - - Project finance SPVs - - - - Real estate SPVs - - - - Shipping/Aircraft SPVs - - - - Investment funds 131 51,189 269 857 Total 131 51,189 269 857 Assets transferred to sponsored unconsolidated Structured Entities (different from securitization and covered bond): breakdown by entity type No data to be disclosed. Section 2 - Risks of the prudential consolidated 2.1 Credit risk Qualitative information 1. General aspects In UniCredit, the current governance model of credit risk, intended as risk of impairment of a credit exposure deriving from an unexpected deterioration of the counterparty’s creditworthiness, has two levels of control: • on one side, the supervision of the Group Risk Governance functions which steer and control the credit risk and which perform a managerial coordination with respect to the relevant Group legal entities’ functions; • on the other one, the supervision of the relevant Group legal entities’ functions which perform the control and the management of the risks portfolio at Country level. This model also leverages the current governance structure which provides the organisational separation between the functions responsible for the credit operational management (i.e. Group Lending Office) and the control functions (within Group Risk Management). With reference to credit risk management topics, the mechanisms of interaction between the Parent company and the Group Legal Entities are defined by specific credit governance rules that, on one side, regulate the respective responsibilities and, on the other, ensure the compliance of the overall credit risk framework with the regulatory context which the Parent Company is subject to. Within its role of guidance, support and control, the Parent company acts in the following areas: credit rules (principles, policies and processes), credit strategies and credit risk limits, models development, rating systems validation, large exposures management, issuance of credit products, monitoring and reporting portfolio credit risk. In line with such credit governance rules, the legal entities request the Group Lending Office’s opinion before granting new or reviewing existing credit lines to individual borrowers or economic groups whenever these credit lines exceed defined thresholds, also with reference to compliance with the credit risk concentration limits being measured with respect to the regulatory capital. The monitoring of major industrial and financial economic groups (called “Top Group”), identified as those groups having an exposure exceeding 2% of the consolidated eligible capital (as stated in the Banca d’Italia Circular No.285 “Supervisory provisions for banks), is carried out by a dedicated central unit within the Group Risk Management. The Group mapping, whose purpose is to identify and assess both juridical and economic connections among the bank’s clients, is performed according to principles and rules applying to the whole Group, in line with the most recent regulatory guidelines (EBA Guidelines on Connected Clients - EBA/GL/2017/15) as well as the bank’s best practices. According to the role assigned by the Group governance to the Parent company, specifically to the Group Risk Management function, general provisions are established (“General principles for credit activities”) defining Group-wide rules and principles for guiding, governing and Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 290 2018 Annual Report and Accounts · UniCredit The Group acts, through its subsidiaries, as manager of investment funds that are considered structured entities and in which it has no exposure at the reporting date. The following table reports the income recognised during the period on this business. Nature of income from sponsored unconsolidated Structured Entities (different from securitization and covered bond): breakdown by entity type (€ '000) YEAR 2018 ENTITY TYPE INTEREST INCOME FEES AND COMMISSIONS GAIN (LOSS) ARISING FROM DISPOSAL OTHER INCOME Acquisitions and leveraged finance SPVs - - - - Leasing SPVs - - - - Market Related structuring SPVs - - - - Note Issuing Vehicles - - - - Project finance SPVs - - - - Real estate SPVs - - - - Shipping/Aircraft SPVs - - - - Investment funds 131 51,189 269 857 Total 131 51,189 269 857 Assets transferred to sponsored unconsolidated Structured Entities (different from securitization and covered bond): breakdown by entity type No data to be disclosed. Section 2 - Risks of the prudential consolidated 2.1 Credit risk Qualitative information 1. General aspects In UniCredit, the current governance model of credit risk, intended as risk of impairment of a credit exposure deriving from an unexpected deterioration of the counterparty’s creditworthiness, has two levels of control: • on one side, the supervision of the Group Risk Governance functions which steer and control the credit risk and which perform a managerial coordination with respect to the relevant Group legal entities’ functions; • on the other one, the supervision of the relevant Group legal entities’ functions which perform the control and the management of the risks portfolio at Country level. This model also leverages the current governance structure which provides the organisational separation between the functions responsible for the credit operational management (i.e. Group Lending Office) and the control functions (within Group Risk Management). With reference to credit risk management topics, the mechanisms of interaction between the Parent company and the Group Legal Entities are defined by specific credit governance rules that, on one side, regulate the respective responsibilities and, on the other, ensure the compliance of the overall credit risk framework with the regulatory context which the Parent Company is subject to. Within its role of guidance, support and control, the Parent company acts in the following areas: credit rules (principles, policies and processes), credit strategies and credit risk limits, models development, rating systems validation, large exposures management, issuance of credit products, monitoring and reporting portfolio credit risk. In line with such credit governance rules, the legal entities request the Group Lending Office’s opinion before granting new or reviewing existing credit lines to individual borrowers or economic groups whenever these credit lines exceed defined thresholds, also with reference to compliance with the credit risk concentration limits being measured with respect to the regulatory capital. The monitoring of major industrial and financial economic groups (called “Top Group”), identified as those groups having an exposure exceeding 2% of the consolidated eligible capital (as stated in the Banca d’Italia Circular No.285 “Supervisory provisions for banks), is carried out by a dedicated central unit within the Group Risk Management. The Group mapping, whose purpose is to identify and assess both juridical and economic connections among the bank’s clients, is performed according to principles and rules applying to the whole Group, in line with the most recent regulatory guidelines (EBA Guidelines on Connected Clients - EBA/GL/2017/15) as well as the bank’s best practices. According to the role assigned by the Group governance to the Parent company, specifically to the Group Risk Management function, general provisions are established (“General principles for credit activities”) defining Group-wide rules and principles for guiding, governing and Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 290 2018 Annual Report and Accounts · UniCredit The Group acts, through its subsidiaries, as manager of investment funds that are considered structured entities and in which it has no exposure at the reporting date. The following table reports the income recognised during the period on this business. Nature of income from sponsored unconsolidated Structured Entities (different from securitization and covered bond): breakdown by entity type (€ '000) YEAR 2018 ENTITY TYPE INTEREST INCOME FEES AND COMMISSIONS GAIN (LOSS) ARISING FROM DISPOSAL OTHER INCOME Acquisitions and leveraged finance SPVs - - - - Leasing SPVs - - - - Market Related structuring SPVs - - - - Note Issuing Vehicles - - - - Project finance SPVs - - - - Real estate SPVs - - - - Shipping/Aircraft SPVs - - - - Investment funds 131 51,189 269 857 Total 131 51,189 269 857 Assets transferred to sponsored unconsolidated Structured Entities (different from securitization and covered bond): breakdown by entity type No data to be disclosed. Section 2 - Risks of the prudential consolidated 2.1 Credit risk Qualitative information 1. General aspects In UniCredit, the current governance model of credit risk, intended as risk of impairment of a credit exposure deriving from an unexpected deterioration of the counterparty’s creditworthiness, has two levels of control: • on one side, the supervision of the Group Risk Governance functions which steer and control the credit risk and which perform a managerial coordination with respect to the relevant Group legal entities’ functions; • on the other one, the supervision of the relevant Group legal entities’ functions which perform the control and the management of the risks portfolio at Country level. This model also leverages the current governance structure which provides the organisational separation between the functions responsible for the credit operational management (i.e. Group Lending Office) and the control functions (within Group Risk Management). With reference to credit risk management topics, the mechanisms of interaction between the Parent company and the Group Legal Entities are defined by specific credit governance rules that, on one side, regulate the respective responsibilities and, on the other, ensure the compliance of the overall credit risk framework with the regulatory context which the Parent Company is subject to. Within its role of guidance, support and control, the Parent company acts in the following areas: credit rules (principles, policies and processes), credit strategies and credit risk limits, models development, rating systems validation, large exposures management, issuance of credit products, monitoring and reporting portfolio credit risk. In line with such credit governance rules, the legal entities request the Group Lending Office’s opinion before granting new or reviewing existing credit lines to individual borrowers or economic groups whenever these credit lines exceed defined thresholds, also with reference to compliance with the credit risk concentration limits being measured with respect to the regulatory capital. The monitoring of major industrial and financial economic groups (called “Top Group”), identified as those groups having an exposure exceeding 2% of the consolidated eligible capital (as stated in the Banca d’Italia Circular No.285 “Supervisory provisions for banks), is carried out by a dedicated central unit within the Group Risk Management. The Group mapping, whose purpose is to identify and assess both juridical and economic connections among the bank’s clients, is performed according to principles and rules applying to the whole Group, in line with the most recent regulatory guidelines (EBA Guidelines on Connected Clients - EBA/GL/2017/15) as well as the bank’s best practices. According to the role assigned by the Group governance to the Parent company, specifically to the Group Risk Management function, general provisions are established (“General principles for credit activities”) defining Group-wide rules and principles for guiding, governing and Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 291 standardising the credit risk assessment and management, in line with the regulatory requirements and the Group best practice. Such general provisions are further supplemented by policies which, regulating specific topics (e.g. business areas, segment activities, type of counterpart/transaction), are divided into two categories: • policies on Group-wide topics, drafted and issued by the Parent company and sent to all the legal entities. Some examples are the policies on FIBS counterparties (Financial Institutions, Banks and Sovereigns), on Country Risk Limits, on Project Finance and Acquisition & Leveraged Finance transactions, on underwriting risk limits for Syndicated Loan portfolio, on Commercial Real Estate Financing (CREF) and on Structured Trade and Export Finance (STEF); • policies locally developed by single legal entities, fully in line with the guidelines defined at Parent company level, that regulate credit practices related to rules and peculiarities of the local market and that are, therefore, applicable only within the respective perimeter. At both legal entity and Parent company level, the policies (if necessary) are further detailed through operating instructions that describe specific rules supporting the execution of day-by-day activities. Credit Policies, which usually have a static approach and are revised when necessary (e.g. in case of evolution of the external regulatory framework), are supplemented by Credit Risk Strategies (approved by UniCredit Board of Directors in the context of the Risk Appetite Framework) which, instead, are updated at least once a year and define with which customers/products, industry segments and geographical areas the Group and the Group legal entities intend to develop their credit business. More in general, the Group Credit Strategies are an effective tool for managing credit risk, contributing to the definition of the budget objectives in line with the Group's Risk Appetite, of which they are an integral part. They also constitute a management tool as they translate the metrics defined within the Risk Appetite into concrete form. On the basis of the macroeconomic and credit scenario, the outlook at the economic sector level, as well as the business initiatives/strategies, the Credit Strategies provide a set of guidelines and operational targets aimed at the countries and business segments in which the Group work and are performed on the operating structures of each Group company and included in their respective commercial policies. The ultimate goal is to ensure sustainable commercial growth, consistent with the risk profile of each company, remaining within the limits defined by the Group risk appetite framework. Within the framework of the strategies underlying credit activity, concentration risk is considered of particular importance. This is the risk associated with losses generated by a single exposure or group of related exposures that (in relation to the capital of a bank, total assets or the overall risk level) can generate potentially serious effects on the solidity and operation "Core" of the Group. In compliance with the relevant regulatory framework, UniCredit group manages the credit risk of concentration through specific limits that represent the maximum risk that the Group intends to accept with regard to: • Individual counterparties or groups of connected counterparties (Single Name Bulk Risk); • Counterparties belonging to the same economic sector (Industry Concentration Risk). The results of stress test simulations related to Expected Loss are an integrated part of the definition of Credit Strategies. With specific reference to governance issues, commercial policies and credit strategies relating to the UniCredit S.p.A. perimeter, useful for integrating the general contents valid at Group level, refer to paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 1. General Aspects which is herewith quoted entirely. 2. Credit risk management policies 2.1 Organisational Aspects Factors that generate credit risk During the ongoing credit and business activities, the Group is exposed to the risk that an unexpected change in a counterparty's creditworthiness may generate a corresponding unexpected change in the value of the associated credit exposure and may thus result in a partial or full write-off. This risk is always associated to the traditional lending practice, regardless of the form of the credit facility (whether cash or credit commitments, secured or unsecured, etc.). The main reasons of a default lie in the borrower’s failure to fulfil its credit obligation (due to a lack of liquidity, for insolvency reasons, etc.), as well as the occurrence of macro-economic and political events that are affecting the debtor’s operating and financial condition. Other banking operations, in addition to traditional lending and deposit activities, can constitute other credit risk factors. In this view, 'non-traditional' credit risk may arise from: • subscription of derivative contracts; • purchase and selling of securities, futures, currencies or commodities; • holding third-party securities. The counterparties in these transactions or issuers of securities held by Group legal entities could default as a result of insolvency, political and economic events, lack of liquidity, operative deficiencies or other reasons. Defaults of a large number of transactions, or one or more large transactions, could have a material adverse impact on the Group’s activities, financial condition and operating profits. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 291 standardising the credit risk assessment and management, in line with the regulatory requirements and the Group best practice. Such general provisions are further supplemented by policies which, regulating specific topics (e.g. business areas, segment activities, type of counterpart/transaction), are divided into two categories: • policies on Group-wide topics, drafted and issued by the Parent company and sent to all the legal entities. Some examples are the policies on FIBS counterparties (Financial Institutions, Banks and Sovereigns), on Country Risk Limits, on Project Finance and Acquisition & Leveraged Finance transactions, on underwriting risk limits for Syndicated Loan portfolio, on Commercial Real Estate Financing (CREF) and on Structured Trade and Export Finance (STEF); • policies locally developed by single legal entities, fully in line with the guidelines defined at Parent company level, that regulate credit practices related to rules and peculiarities of the local market and that are, therefore, applicable only within the respective perimeter. At both legal entity and Parent company level, the policies (if necessary) are further detailed through operating instructions that describe specific rules supporting the execution of day-by-day activities. Credit Policies, which usually have a static approach and are revised when necessary (e.g. in case of evolution of the external regulatory framework), are supplemented by Credit Risk Strategies (approved by UniCredit Board of Directors in the context of the Risk Appetite Framework) which, instead, are updated at least once a year and define with which customers/products, industry segments and geographical areas the Group and the Group legal entities intend to develop their credit business. More in general, the Group Credit Strategies are an effective tool for managing credit risk, contributing to the definition of the budget objectives in line with the Group's Risk Appetite, of which they are an integral part. They also constitute a management tool as they translate the metrics defined within the Risk Appetite into concrete form. On the basis of the macroeconomic and credit scenario, the outlook at the economic sector level, as well as the business initiatives/strategies, the Credit Strategies provide a set of guidelines and operational targets aimed at the countries and business segments in which the Group work and are performed on the operating structures of each Group company and included in their respective commercial policies. The ultimate goal is to ensure sustainable commercial growth, consistent with the risk profile of each company, remaining within the limits defined by the Group risk appetite framework. Within the framework of the strategies underlying credit activity, concentration risk is considered of particular importance. This is the risk associated with losses generated by a single exposure or group of related exposures that (in relation to the capital of a bank, total assets or the overall risk level) can generate potentially serious effects on the solidity and operation "Core" of the Group. In compliance with the relevant regulatory framework, UniCredit group manages the credit risk of concentration through specific limits that represent the maximum risk that the Group intends to accept with regard to: • Individual counterparties or groups of connected counterparties (Single Name Bulk Risk); • Counterparties belonging to the same economic sector (Industry Concentration Risk). The results of stress test simulations related to Expected Loss are an integrated part of the definition of Credit Strategies. With specific reference to governance issues, commercial policies and credit strategies relating to the UniCredit S.p.A. perimeter, useful for integrating the general contents valid at Group level, refer to paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 1. General Aspects which is herewith quoted entirely. 2. Credit risk management policies 2.1 Organisational Aspects Factors that generate credit risk During the ongoing credit and business activities, the Group is exposed to the risk that an unexpected change in a counterparty's creditworthiness may generate a corresponding unexpected change in the value of the associated credit exposure and may thus result in a partial or full write-off. This risk is always associated to the traditional lending practice, regardless of the form of the credit facility (whether cash or credit commitments, secured or unsecured, etc.). The main reasons of a default lie in the borrower’s failure to fulfil its credit obligation (due to a lack of liquidity, for insolvency reasons, etc.), as well as the occurrence of macro-economic and political events that are affecting the debtor’s operating and financial condition. Other banking operations, in addition to traditional lending and deposit activities, can constitute other credit risk factors. In this view, 'non-traditional' credit risk may arise from: • subscription of derivative contracts; • purchase and selling of securities, futures, currencies or commodities; • holding third-party securities. The counterparties in these transactions or issuers of securities held by Group legal entities could default as a result of insolvency, political and economic events, lack of liquidity, operative deficiencies or other reasons. Defaults of a large number of transactions, or one or more large transactions, could have a material adverse impact on the Group’s activities, financial condition and operating profits. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 291 standardising the credit risk assessment and management, in line with the regulatory requirements and the Group best practice. Such general provisions are further supplemented by policies which, regulating specific topics (e.g. business areas, segment activities, type of counterpart/transaction), are divided into two categories: • policies on Group-wide topics, drafted and issued by the Parent company and sent to all the legal entities. Some examples are the policies on FIBS counterparties (Financial Institutions, Banks and Sovereigns), on Country Risk Limits, on Project Finance and Acquisition & Leveraged Finance transactions, on underwriting risk limits for Syndicated Loan portfolio, on Commercial Real Estate Financing (CREF) and on Structured Trade and Export Finance (STEF); • policies locally developed by single legal entities, fully in line with the guidelines defined at Parent company level, that regulate credit practices related to rules and peculiarities of the local market and that are, therefore, applicable only within the respective perimeter. At both legal entity and Parent company level, the policies (if necessary) are further detailed through operating instructions that describe specific rules supporting the execution of day-by-day activities. Credit Policies, which usually have a static approach and are revised when necessary (e.g. in case of evolution of the external regulatory framework), are supplemented by Credit Risk Strategies (approved by UniCredit Board of Directors in the context of the Risk Appetite Framework) which, instead, are updated at least once a year and define with which customers/products, industry segments and geographical areas the Group and the Group legal entities intend to develop their credit business. More in general, the Group Credit Strategies are an effective tool for managing credit risk, contributing to the definition of the budget objectives in line with the Group's Risk Appetite, of which they are an integral part. They also constitute a management tool as they translate the metrics defined within the Risk Appetite into concrete form. On the basis of the macroeconomic and credit scenario, the outlook at the economic sector level, as well as the business initiatives/strategies, the Credit Strategies provide a set of guidelines and operational targets aimed at the countries and business segments in which the Group work and are performed on the operating structures of each Group company and included in their respective commercial policies. The ultimate goal is to ensure sustainable commercial growth, consistent with the risk profile of each company, remaining within the limits defined by the Group risk appetite framework. Within the framework of the strategies underlying credit activity, concentration risk is considered of particular importance. This is the risk associated with losses generated by a single exposure or group of related exposures that (in relation to the capital of a bank, total assets or the overall risk level) can generate potentially serious effects on the solidity and operation "Core" of the Group. In compliance with the relevant regulatory framework, UniCredit group manages the credit risk of concentration through specific limits that represent the maximum risk that the Group intends to accept with regard to: • Individual counterparties or groups of connected counterparties (Single Name Bulk Risk); • Counterparties belonging to the same economic sector (Industry Concentration Risk). The results of stress test simulations related to Expected Loss are an integrated part of the definition of Credit Strategies. With specific reference to governance issues, commercial policies and credit strategies relating to the UniCredit S.p.A. perimeter, useful for integrating the general contents valid at Group level, refer to paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 1. General Aspects which is herewith quoted entirely. 2. Credit risk management policies 2.1 Organisational Aspects Factors that generate credit risk During the ongoing credit and business activities, the Group is exposed to the risk that an unexpected change in a counterparty's creditworthiness may generate a corresponding unexpected change in the value of the associated credit exposure and may thus result in a partial or full write-off. This risk is always associated to the traditional lending practice, regardless of the form of the credit facility (whether cash or credit commitments, secured or unsecured, etc.). The main reasons of a default lie in the borrower’s failure to fulfil its credit obligation (due to a lack of liquidity, for insolvency reasons, etc.), as well as the occurrence of macro-economic and political events that are affecting the debtor’s operating and financial condition. Other banking operations, in addition to traditional lending and deposit activities, can constitute other credit risk factors. In this view, 'non-traditional' credit risk may arise from: • subscription of derivative contracts; • purchase and selling of securities, futures, currencies or commodities; • holding third-party securities. The counterparties in these transactions or issuers of securities held by Group legal entities could default as a result of insolvency, political and economic events, lack of liquidity, operative deficiencies or other reasons. Defaults of a large number of transactions, or one or more large transactions, could have a material adverse impact on the Group’s activities, financial condition and operating profits. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 291 standardising the credit risk assessment and management, in line with the regulatory requirements and the Group best practice. Such general provisions are further supplemented by policies which, regulating specific topics (e.g. business areas, segment activities, type of counterpart/transaction), are divided into two categories: • policies on Group-wide topics, drafted and issued by the Parent company and sent to all the legal entities. Some examples are the policies on FIBS counterparties (Financial Institutions, Banks and Sovereigns), on Country Risk Limits, on Project Finance and Acquisition & Leveraged Finance transactions, on underwriting risk limits for Syndicated Loan portfolio, on Commercial Real Estate Financing (CREF) and on Structured Trade and Export Finance (STEF); • policies locally developed by single legal entities, fully in line with the guidelines defined at Parent company level, that regulate credit practices related to rules and peculiarities of the local market and that are, therefore, applicable only within the respective perimeter. At both legal entity and Parent company level, the policies (if necessary) are further detailed through operating instructions that describe specific rules supporting the execution of day-by-day activities. Credit Policies, which usually have a static approach and are revised when necessary (e.g. in case of evolution of the external regulatory framework), are supplemented by Credit Risk Strategies (approved by UniCredit Board of Directors in the context of the Risk Appetite Framework) which, instead, are updated at least once a year and define with which customers/products, industry segments and geographical areas the Group and the Group legal entities intend to develop their credit business. More in general, the Group Credit Strategies are an effective tool for managing credit risk, contributing to the definition of the budget objectives in line with the Group's Risk Appetite, of which they are an integral part. They also constitute a management tool as they translate the metrics defined within the Risk Appetite into concrete form. On the basis of the macroeconomic and credit scenario, the outlook at the economic sector level, as well as the business initiatives/strategies, the Credit Strategies provide a set of guidelines and operational targets aimed at the countries and business segments in which the Group work and are performed on the operating structures of each Group company and included in their respective commercial policies. The ultimate goal is to ensure sustainable commercial growth, consistent with the risk profile of each company, remaining within the limits defined by the Group risk appetite framework. Within the framework of the strategies underlying credit activity, concentration risk is considered of particular importance. This is the risk associated with losses generated by a single exposure or group of related exposures that (in relation to the capital of a bank, total assets or the overall risk level) can generate potentially serious effects on the solidity and operation "Core" of the Group. In compliance with the relevant regulatory framework, UniCredit group manages the credit risk of concentration through specific limits that represent the maximum risk that the Group intends to accept with regard to: • Individual counterparties or groups of connected counterparties (Single Name Bulk Risk); • Counterparties belonging to the same economic sector (Industry Concentration Risk). The results of stress test simulations related to Expected Loss are an integrated part of the definition of Credit Strategies. With specific reference to governance issues, commercial policies and credit strategies relating to the UniCredit S.p.A. perimeter, useful for integrating the general contents valid at Group level, refer to paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 1. General Aspects which is herewith quoted entirely. 2. Credit risk management policies 2.1 Organisational Aspects Factors that generate credit risk During the ongoing credit and business activities, the Group is exposed to the risk that an unexpected change in a counterparty's creditworthiness may generate a corresponding unexpected change in the value of the associated credit exposure and may thus result in a partial or full write-off. This risk is always associated to the traditional lending practice, regardless of the form of the credit facility (whether cash or credit commitments, secured or unsecured, etc.). The main reasons of a default lie in the borrower’s failure to fulfil its credit obligation (due to a lack of liquidity, for insolvency reasons, etc.), as well as the occurrence of macro-economic and political events that are affecting the debtor’s operating and financial condition. Other banking operations, in addition to traditional lending and deposit activities, can constitute other credit risk factors. In this view, 'non-traditional' credit risk may arise from: • subscription of derivative contracts; • purchase and selling of securities, futures, currencies or commodities; • holding third-party securities. The counterparties in these transactions or issuers of securities held by Group legal entities could default as a result of insolvency, political and economic events, lack of liquidity, operative deficiencies or other reasons. Defaults of a large number of transactions, or one or more large transactions, could have a material adverse impact on the Group’s activities, financial condition and operating profits. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 291 standardising the credit risk assessment and management, in line with the regulatory requirements and the Group best practice. Such general provisions are further supplemented by policies which, regulating specific topics (e.g. business areas, segment activities, type of counterpart/transaction), are divided into two categories: • policies on Group-wide topics, drafted and issued by the Parent company and sent to all the legal entities. Some examples are the policies on FIBS counterparties (Financial Institutions, Banks and Sovereigns), on Country Risk Limits, on Project Finance and Acquisition & Leveraged Finance transactions, on underwriting risk limits for Syndicated Loan portfolio, on Commercial Real Estate Financing (CREF) and on Structured Trade and Export Finance (STEF); • policies locally developed by single legal entities, fully in line with the guidelines defined at Parent company level, that regulate credit practices related to rules and peculiarities of the local market and that are, therefore, applicable only within the respective perimeter. At both legal entity and Parent company level, the policies (if necessary) are further detailed through operating instructions that describe specific rules supporting the execution of day-by-day activities. Credit Policies, which usually have a static approach and are revised when necessary (e.g. in case of evolution of the external regulatory framework), are supplemented by Credit Risk Strategies (approved by UniCredit Board of Directors in the context of the Risk Appetite Framework) which, instead, are updated at least once a year and define with which customers/products, industry segments and geographical areas the Group and the Group legal entities intend to develop their credit business. More in general, the Group Credit Strategies are an effective tool for managing credit risk, contributing to the definition of the budget objectives in line with the Group's Risk Appetite, of which they are an integral part. They also constitute a management tool as they translate the metrics defined within the Risk Appetite into concrete form. On the basis of the macroeconomic and credit scenario, the outlook at the economic sector level, as well as the business initiatives/strategies, the Credit Strategies provide a set of guidelines and operational targets aimed at the countries and business segments in which the Group work and are performed on the operating structures of each Group company and included in their respective commercial policies. The ultimate goal is to ensure sustainable commercial growth, consistent with the risk profile of each company, remaining within the limits defined by the Group risk appetite framework. Within the framework of the strategies underlying credit activity, concentration risk is considered of particular importance. This is the risk associated with losses generated by a single exposure or group of related exposures that (in relation to the capital of a bank, total assets or the overall risk level) can generate potentially serious effects on the solidity and operation "Core" of the Group. In compliance with the relevant regulatory framework, UniCredit group manages the credit risk of concentration through specific limits that represent the maximum risk that the Group intends to accept with regard to: • Individual counterparties or groups of connected counterparties (Single Name Bulk Risk); • Counterparties belonging to the same economic sector (Industry Concentration Risk). The results of stress test simulations related to Expected Loss are an integrated part of the definition of Credit Strategies. With specific reference to governance issues, commercial policies and credit strategies relating to the UniCredit S.p.A. perimeter, useful for integrating the general contents valid at Group level, refer to paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 1. General Aspects which is herewith quoted entirely. 2. Credit risk management policies 2.1 Organisational Aspects Factors that generate credit risk During the ongoing credit and business activities, the Group is exposed to the risk that an unexpected change in a counterparty's creditworthiness may generate a corresponding unexpected change in the value of the associated credit exposure and may thus result in a partial or full write-off. This risk is always associated to the traditional lending practice, regardless of the form of the credit facility (whether cash or credit commitments, secured or unsecured, etc.). The main reasons of a default lie in the borrower’s failure to fulfil its credit obligation (due to a lack of liquidity, for insolvency reasons, etc.), as well as the occurrence of macro-economic and political events that are affecting the debtor’s operating and financial condition. Other banking operations, in addition to traditional lending and deposit activities, can constitute other credit risk factors. In this view, 'non-traditional' credit risk may arise from: • subscription of derivative contracts; • purchase and selling of securities, futures, currencies or commodities; • holding third-party securities. The counterparties in these transactions or issuers of securities held by Group legal entities could default as a result of insolvency, political and economic events, lack of liquidity, operative deficiencies or other reasons. Defaults of a large number of transactions, or one or more large transactions, could have a material adverse impact on the Group’s activities, financial condition and operating profits. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 292 2018 Annual Report and Accounts · UniCredit The Group therefore monitors and manages the specific risk of each counterparty as well as the overall risk of loan portfolios through procedures, functions and rules that steer, govern and standardise the assessment and management of credit risk, in line with the Group principles and best practice. Organisational structure As highlighted in the previously paragraph “General aspects”, the credit risk management in Parent company breaks down into two structures: • Group Risk Management, responsible for steering, governance and control of credit risk; • Group Lending Office, responsible for the operational credit management; which internally have different organisational levels: • functions with responsibilities at Group level; • functions with responsibilities at Country level. Regarding Group Risk Management, Holding Functions with responsibilities at Group level include: • the “Group Credit & Integrated Risks” structure responsible, at Group level, for credit risk strategies definition, monitoring and controlling the credit risk of Group portfolio as well as ensuring an integrated view across Pillar One and Two risks to Top Management; furthermore ensures that risk control activities, relating to risk assumed in UniCredit S.p.A. Foreign Branches and Special Entities (e.g. Special Purpose Vehicles/SPV, Obbligazioni bancarie Garantite/OBG) are monitored and reported to the Group Credit risk Officer and to Top Management; • the "Group Risk Models & Credit Risk Governance" structure responsible for guaranteeing at Group level the coordination and steering of the overall landscape of Pillar One Credit and Financial risk models as well as the related methodologies. Furthermore, it is responsible for defining credit risk processes standards and cooperating with other Group competent functions on Risk Weighted Assets/RWA contents; • the “Group Internal Validation” structure responsible for validating, at Group level, the risk measurement methodologies, the related processes, the IT components and the data quality, for Pillar One and Pillar Two risks, the main managerial models and the Group Risk reporting, as defined in the Internal Validation Global Policy, providing adequate reporting for Company Bodies and Supervisory Authority. Furthermore, it is responsible to: coordinate the issuing of Global rules in perimeter, checking their approval and implementation in Group legal entities; manage the Group monitoring process for the recommendation issued following validation activities; check, in its competence area, the consistency and implementation of adopted corrective measures based on Supervisory Authority requests on IRB models; coordinate the preparation and update of the Group Validation plan, and monitor its execution; coordinate and prepare the reporting on validation activities outcomes; • the “CRO CEE” structure, responsible for the management and control of credit operations activities and for credit risk steering of “CEE Division” and for the comprehensive view and the coordination in the management of different types of risks (e.g. credit, financial, operational, reputational risks) in CEE Division and CEE legal entities, together with the risk management responsible functions. It is responsible for credit operation activities for the “CEE Division” files booked in UniCredit S.p.A.as well as for credit risk steering and control activities over the “CEE Division” with regard to credit risk retail and corporate topics; • the “Group NPE” structure, responsible for developing the strategy and overseeing the management, process, targets and disposals of Non-Performing Exposures/NPE, repossessed assets and any other distressed assets for the whole Group. Regarding Group Lending Office, Functions with responsibilities at Group level include: • the “Group Credit Transactions” structure, responsible for the Group-wide assessment, monitoring and oversight of large credit transactions and financial institutions, banks and sovereigns (FIBS) global credit model management, as well as the assessment, approval and daily management of Country risks and cross-border credit risk-taking; • the Asia & Pacific Risks officer structure, responsible for ensuring risk control activities in the Asia and Pacific Area by coordinating, evaluating and approving the credit proposals submitted by UniCredit S.p.A.'s Foreign Branches based in the Asia & Pacific area, ensuring the implementation of the Group risk management strategies, ensuring the production of reports on the risks of the area and the coherence of risk transactions and reporting activity for all the risk typologies, and collaborating with the competent counterparts in the development of a regional strategy that is consistent with the risk appetite of the area. At Country level, steering and credit risk control activities, as well as the conducting of operational activities (e.g. credit underwriting and renewal, monitoring, restructuring, workout, etc.) falls under the responsibility of the CRO function of the controlled subsidiaries. With reference to the Italian perimeter of UniCredit S.p.A., reporting to the “Group Lending Office”, please refers to the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 292 2018 Annual Report and Accounts · UniCredit The Group therefore monitors and manages the specific risk of each counterparty as well as the overall risk of loan portfolios through procedures, functions and rules that steer, govern and standardise the assessment and management of credit risk, in line with the Group principles and best practice. Organisational structure As highlighted in the previously paragraph “General aspects”, the credit risk management in Parent company breaks down into two structures: • Group Risk Management, responsible for steering, governance and control of credit risk; • Group Lending Office, responsible for the operational credit management; which internally have different organisational levels: • functions with responsibilities at Group level; • functions with responsibilities at Country level. Regarding Group Risk Management, Holding Functions with responsibilities at Group level include: • the “Group Credit & Integrated Risks” structure responsible, at Group level, for credit risk strategies definition, monitoring and controlling the credit risk of Group portfolio as well as ensuring an integrated view across Pillar One and Two risks to Top Management; furthermore ensures that risk control activities, relating to risk assumed in UniCredit S.p.A. Foreign Branches and Special Entities (e.g. Special Purpose Vehicles/SPV, Obbligazioni bancarie Garantite/OBG) are monitored and reported to the Group Credit risk Officer and to Top Management; • the "Group Risk Models & Credit Risk Governance" structure responsible for guaranteeing at Group level the coordination and steering of the overall landscape of Pillar One Credit and Financial risk models as well as the related methodologies. Furthermore, it is responsible for defining credit risk processes standards and cooperating with other Group competent functions on Risk Weighted Assets/RWA contents; • the “Group Internal Validation” structure responsible for validating, at Group level, the risk measurement methodologies, the related processes, the IT components and the data quality, for Pillar One and Pillar Two risks, the main managerial models and the Group Risk reporting, as defined in the Internal Validation Global Policy, providing adequate reporting for Company Bodies and Supervisory Authority. Furthermore, it is responsible to: coordinate the issuing of Global rules in perimeter, checking their approval and implementation in Group legal entities; manage the Group monitoring process for the recommendation issued following validation activities; check, in its competence area, the consistency and implementation of adopted corrective measures based on Supervisory Authority requests on IRB models; coordinate the preparation and update of the Group Validation plan, and monitor its execution; coordinate and prepare the reporting on validation activities outcomes; • the “CRO CEE” structure, responsible for the management and control of credit operations activities and for credit risk steering of “CEE Division” and for the comprehensive view and the coordination in the management of different types of risks (e.g. credit, financial, operational, reputational risks) in CEE Division and CEE legal entities, together with the risk management responsible functions. It is responsible for credit operation activities for the “CEE Division” files booked in UniCredit S.p.A.as well as for credit risk steering and control activities over the “CEE Division” with regard to credit risk retail and corporate topics; • the “Group NPE” structure, responsible for developing the strategy and overseeing the management, process, targets and disposals of Non-Performing Exposures/NPE, repossessed assets and any other distressed assets for the whole Group. Regarding Group Lending Office, Functions with responsibilities at Group level include: • the “Group Credit Transactions” structure, responsible for the Group-wide assessment, monitoring and oversight of large credit transactions and financial institutions, banks and sovereigns (FIBS) global credit model management, as well as the assessment, approval and daily management of Country risks and cross-border credit risk-taking; • the Asia & Pacific Risks officer structure, responsible for ensuring risk control activities in the Asia and Pacific Area by coordinating, evaluating and approving the credit proposals submitted by UniCredit S.p.A.'s Foreign Branches based in the Asia & Pacific area, ensuring the implementation of the Group risk management strategies, ensuring the production of reports on the risks of the area and the coherence of risk transactions and reporting activity for all the risk typologies, and collaborating with the competent counterparts in the development of a regional strategy that is consistent with the risk appetite of the area. At Country level, steering and credit risk control activities, as well as the conducting of operational activities (e.g. credit underwriting and renewal, monitoring, restructuring, workout, etc.) falls under the responsibility of the CRO function of the controlled subsidiaries. With reference to the Italian perimeter of UniCredit S.p.A., reporting to the “Group Lending Office”, please refers to the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 292 2018 Annual Report and Accounts · UniCredit The Group therefore monitors and manages the specific risk of each counterparty as well as the overall risk of loan portfolios through procedures, functions and rules that steer, govern and standardise the assessment and management of credit risk, in line with the Group principles and best practice. Organisational structure As highlighted in the previously paragraph “General aspects”, the credit risk management in Parent company breaks down into two structures: • Group Risk Management, responsible for steering, governance and control of credit risk; • Group Lending Office, responsible for the operational credit management; which internally have different organisational levels: • functions with responsibilities at Group level; • functions with responsibilities at Country level. Regarding Group Risk Management, Holding Functions with responsibilities at Group level include: • the “Group Credit & Integrated Risks” structure responsible, at Group level, for credit risk strategies definition, monitoring and controlling the credit risk of Group portfolio as well as ensuring an integrated view across Pillar One and Two risks to Top Management; furthermore ensures that risk control activities, relating to risk assumed in UniCredit S.p.A. Foreign Branches and Special Entities (e.g. Special Purpose Vehicles/SPV, Obbligazioni bancarie Garantite/OBG) are monitored and reported to the Group Credit risk Officer and to Top Management; • the "Group Risk Models & Credit Risk Governance" structure responsible for guaranteeing at Group level the coordination and steering of the overall landscape of Pillar One Credit and Financial risk models as well as the related methodologies. Furthermore, it is responsible for defining credit risk processes standards and cooperating with other Group competent functions on Risk Weighted Assets/RWA contents; • the “Group Internal Validation” structure responsible for validating, at Group level, the risk measurement methodologies, the related processes, the IT components and the data quality, for Pillar One and Pillar Two risks, the main managerial models and the Group Risk reporting, as defined in the Internal Validation Global Policy, providing adequate reporting for Company Bodies and Supervisory Authority. Furthermore, it is responsible to: coordinate the issuing of Global rules in perimeter, checking their approval and implementation in Group legal entities; manage the Group monitoring process for the recommendation issued following validation activities; check, in its competence area, the consistency and implementation of adopted corrective measures based on Supervisory Authority requests on IRB models; coordinate the preparation and update of the Group Validation plan, and monitor its execution; coordinate and prepare the reporting on validation activities outcomes; • the “CRO CEE” structure, responsible for the management and control of credit operations activities and for credit risk steering of “CEE Division” and for the comprehensive view and the coordination in the management of different types of risks (e.g. credit, financial, operational, reputational risks) in CEE Division and CEE legal entities, together with the risk management responsible functions. It is responsible for credit operation activities for the “CEE Division” files booked in UniCredit S.p.A.as well as for credit risk steering and control activities over the “CEE Division” with regard to credit risk retail and corporate topics; • the “Group NPE” structure, responsible for developing the strategy and overseeing the management, process, targets and disposals of Non-Performing Exposures/NPE, repossessed assets and any other distressed assets for the whole Group. Regarding Group Lending Office, Functions with responsibilities at Group level include: • the “Group Credit Transactions” structure, responsible for the Group-wide assessment, monitoring and oversight of large credit transactions and financial institutions, banks and sovereigns (FIBS) global credit model management, as well as the assessment, approval and daily management of Country risks and cross-border credit risk-taking; • the Asia & Pacific Risks officer structure, responsible for ensuring risk control activities in the Asia and Pacific Area by coordinating, evaluating and approving the credit proposals submitted by UniCredit S.p.A.'s Foreign Branches based in the Asia & Pacific area, ensuring the implementation of the Group risk management strategies, ensuring the production of reports on the risks of the area and the coherence of risk transactions and reporting activity for all the risk typologies, and collaborating with the competent counterparts in the development of a regional strategy that is consistent with the risk appetite of the area. At Country level, steering and credit risk control activities, as well as the conducting of operational activities (e.g. credit underwriting and renewal, monitoring, restructuring, workout, etc.) falls under the responsibility of the CRO function of the controlled subsidiaries. With reference to the Italian perimeter of UniCredit S.p.A., reporting to the “Group Lending Office”, please refers to the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 292 2018 Annual Report and Accounts · UniCredit The Group therefore monitors and manages the specific risk of each counterparty as well as the overall risk of loan portfolios through procedures, functions and rules that steer, govern and standardise the assessment and management of credit risk, in line with the Group principles and best practice. Organisational structure As highlighted in the previously paragraph “General aspects”, the credit risk management in Parent company breaks down into two structures: • Group Risk Management, responsible for steering, governance and control of credit risk; • Group Lending Office, responsible for the operational credit management; which internally have different organisational levels: • functions with responsibilities at Group level; • functions with responsibilities at Country level. Regarding Group Risk Management, Holding Functions with responsibilities at Group level include: • the “Group Credit & Integrated Risks” structure responsible, at Group level, for credit risk strategies definition, monitoring and controlling the credit risk of Group portfolio as well as ensuring an integrated view across Pillar One and Two risks to Top Management; furthermore ensures that risk control activities, relating to risk assumed in UniCredit S.p.A. Foreign Branches and Special Entities (e.g. Special Purpose Vehicles/SPV, Obbligazioni bancarie Garantite/OBG) are monitored and reported to the Group Credit risk Officer and to Top Management; • the "Group Risk Models & Credit Risk Governance" structure responsible for guaranteeing at Group level the coordination and steering of the overall landscape of Pillar One Credit and Financial risk models as well as the related methodologies. Furthermore, it is responsible for defining credit risk processes standards and cooperating with other Group competent functions on Risk Weighted Assets/RWA contents; • the “Group Internal Validation” structure responsible for validating, at Group level, the risk measurement methodologies, the related processes, the IT components and the data quality, for Pillar One and Pillar Two risks, the main managerial models and the Group Risk reporting, as defined in the Internal Validation Global Policy, providing adequate reporting for Company Bodies and Supervisory Authority. Furthermore, it is responsible to: coordinate the issuing of Global rules in perimeter, checking their approval and implementation in Group legal entities; manage the Group monitoring process for the recommendation issued following validation activities; check, in its competence area, the consistency and implementation of adopted corrective measures based on Supervisory Authority requests on IRB models; coordinate the preparation and update of the Group Validation plan, and monitor its execution; coordinate and prepare the reporting on validation activities outcomes; • the “CRO CEE” structure, responsible for the management and control of credit operations activities and for credit risk steering of “CEE Division” and for the comprehensive view and the coordination in the management of different types of risks (e.g. credit, financial, operational, reputational risks) in CEE Division and CEE legal entities, together with the risk management responsible functions. It is responsible for credit operation activities for the “CEE Division” files booked in UniCredit S.p.A.as well as for credit risk steering and control activities over the “CEE Division” with regard to credit risk retail and corporate topics; • the “Group NPE” structure, responsible for developing the strategy and overseeing the management, process, targets and disposals of Non-Performing Exposures/NPE, repossessed assets and any other distressed assets for the whole Group. Regarding Group Lending Office, Functions with responsibilities at Group level include: • the “Group Credit Transactions” structure, responsible for the Group-wide assessment, monitoring and oversight of large credit transactions and financial institutions, banks and sovereigns (FIBS) global credit model management, as well as the assessment, approval and daily management of Country risks and cross-border credit risk-taking; • the Asia & Pacific Risks officer structure, responsible for ensuring risk control activities in the Asia and Pacific Area by coordinating, evaluating and approving the credit proposals submitted by UniCredit S.p.A.'s Foreign Branches based in the Asia & Pacific area, ensuring the implementation of the Group risk management strategies, ensuring the production of reports on the risks of the area and the coherence of risk transactions and reporting activity for all the risk typologies, and collaborating with the competent counterparts in the development of a regional strategy that is consistent with the risk appetite of the area. At Country level, steering and credit risk control activities, as well as the conducting of operational activities (e.g. credit underwriting and renewal, monitoring, restructuring, workout, etc.) falls under the responsibility of the CRO function of the controlled subsidiaries. With reference to the Italian perimeter of UniCredit S.p.A., reporting to the “Group Lending Office”, please refers to the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 292 2018 Annual Report and Accounts · UniCredit The Group therefore monitors and manages the specific risk of each counterparty as well as the overall risk of loan portfolios through procedures, functions and rules that steer, govern and standardise the assessment and management of credit risk, in line with the Group principles and best practice. Organisational structure As highlighted in the previously paragraph “General aspects”, the credit risk management in Parent company breaks down into two structures: • Group Risk Management, responsible for steering, governance and control of credit risk; • Group Lending Office, responsible for the operational credit management; which internally have different organisational levels: • functions with responsibilities at Group level; • functions with responsibilities at Country level. Regarding Group Risk Management, Holding Functions with responsibilities at Group level include: • the “Group Credit & Integrated Risks” structure responsible, at Group level, for credit risk strategies definition, monitoring and controlling the credit risk of Group portfolio as well as ensuring an integrated view across Pillar One and Two risks to Top Management; furthermore ensures that risk control activities, relating to risk assumed in UniCredit S.p.A. Foreign Branches and Special Entities (e.g. Special Purpose Vehicles/SPV, Obbligazioni bancarie Garantite/OBG) are monitored and reported to the Group Credit risk Officer and to Top Management; • the "Group Risk Models & Credit Risk Governance" structure responsible for guaranteeing at Group level the coordination and steering of the overall landscape of Pillar One Credit and Financial risk models as well as the related methodologies. Furthermore, it is responsible for defining credit risk processes standards and cooperating with other Group competent functions on Risk Weighted Assets/RWA contents; • the “Group Internal Validation” structure responsible for validating, at Group level, the risk measurement methodologies, the related processes, the IT components and the data quality, for Pillar One and Pillar Two risks, the main managerial models and the Group Risk reporting, as defined in the Internal Validation Global Policy, providing adequate reporting for Company Bodies and Supervisory Authority. Furthermore, it is responsible to: coordinate the issuing of Global rules in perimeter, checking their approval and implementation in Group legal entities; manage the Group monitoring process for the recommendation issued following validation activities; check, in its competence area, the consistency and implementation of adopted corrective measures based on Supervisory Authority requests on IRB models; coordinate the preparation and update of the Group Validation plan, and monitor its execution; coordinate and prepare the reporting on validation activities outcomes; • the “CRO CEE” structure, responsible for the management and control of credit operations activities and for credit risk steering of “CEE Division” and for the comprehensive view and the coordination in the management of different types of risks (e.g. credit, financial, operational, reputational risks) in CEE Division and CEE legal entities, together with the risk management responsible functions. It is responsible for credit operation activities for the “CEE Division” files booked in UniCredit S.p.A.as well as for credit risk steering and control activities over the “CEE Division” with regard to credit risk retail and corporate topics; • the “Group NPE” structure, responsible for developing the strategy and overseeing the management, process, targets and disposals of Non-Performing Exposures/NPE, repossessed assets and any other distressed assets for the whole Group. Regarding Group Lending Office, Functions with responsibilities at Group level include: • the “Group Credit Transactions” structure, responsible for the Group-wide assessment, monitoring and oversight of large credit transactions and financial institutions, banks and sovereigns (FIBS) global credit model management, as well as the assessment, approval and daily management of Country risks and cross-border credit risk-taking; • the Asia & Pacific Risks officer structure, responsible for ensuring risk control activities in the Asia and Pacific Area by coordinating, evaluating and approving the credit proposals submitted by UniCredit S.p.A.'s Foreign Branches based in the Asia & Pacific area, ensuring the implementation of the Group risk management strategies, ensuring the production of reports on the risks of the area and the coherence of risk transactions and reporting activity for all the risk typologies, and collaborating with the competent counterparts in the development of a regional strategy that is consistent with the risk appetite of the area. At Country level, steering and credit risk control activities, as well as the conducting of operational activities (e.g. credit underwriting and renewal, monitoring, restructuring, workout, etc.) falls under the responsibility of the CRO function of the controlled subsidiaries. With reference to the Italian perimeter of UniCredit S.p.A., reporting to the “Group Lending Office”, please refers to the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 293 With respect to credit risk, the following specific Committees are active: • the “Group Risk & Internal Control Committee” supports the CEO in the role of steering, coordinating and monitoring the risks at Group level in the management and oversight of the Group’s and UC S.p.A.’s internal control system, with specific reference to: establishing policies, guidelines, operational limits and methodologies for the measurement, management and control of the risks as well as for the definition of the methodologies for the measurement and control of internal capital and for the evaluation of risks reporting and estimates of provisions on risks. In this scope, the Committee has consulting and suggestion functions for the definition and periodic review of the Group’s Risk Appetite Framework (RAF), special reference for the overall risk control framework, in order to ensure their consistency with the strategic guidelines and risk appetite established and their capacity to track the evolution of risks and their interaction; • the “Group Credit Committee”, in charge of evaluating and approving competent credit proposals referring to all files, including restructuring/workout ones, status classification of files, relevant strategies and corrective actions to be taken for watch list files, specific limits for transactions relating to Debt Capital Markets on trading book, single issuer exposures limits on trading book, Debt to Equity transactions and transactions relating to Equity participations deriving from Debt to Equity transactions; • the “Group Credit Risk Governance Committee” responsible for ensuring, at Group level, a steering, coordination and control of Credit Risk Governance (focusing on Credit risk Pillar I, Pillar II, limited to Credit Portfolio Model/CPM, and managerial models) as well as a consistency among the Parent company and the different legal entities, including the management of possible issues raised by legal entities to Group CRO; • the “Group NPE Governance Committee”, responsible for supporting the Group Chief Risk Officer in ensuring, at Group level, a steering, coordination and control of Non-Performing Exposures/NPE strategy and targets as well as an effective alignment on common goals between the Parent company and different legal entities; • the "Group Transactional Credit Committee" responsible with approval function within the delegated powers (decision-making and/or issuing of non-binding opinions to the Group legal entities) and/or consulting function for files to be approved by upper Bodies, for credit proposals referring to all files, including restructuring, INC or workout ones, status classification of files relevant strategies and corrective actions to be taken for watching list files, single issuer exposure limits on trading book, Debt-to-Equity transactions and/or actions/rights-execution relating to equity participations resulting from Debt-to-Equity transactions, Debt-to-Assets transactions and/or actions/rights execution related to asset resulting from Debt-to-Asset transactions, proposal of distressed asset disposal, in accordance with the regulated specifications and limitations; • the “Group Rating Committee” responsible, within its perimeter of competence and its delegated powers, for approving rating overrides. Specific Committees related to UniCredit S.p.A. are described in the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects which is herewith quoted entirely. 2.2 Credit Risk Management, Measurement and Control The credit risk, associated to the potential loss arising either from a default of the borrower/issuer or from a decrease in the market value of a financial obligation due to a deterioration in its credit quality25, is measured at both single borrower/transaction and at whole portfolio level. Credit lending to single customers, during both the approval and monitoring phases, is supported by a credit rating process, differentiated by customer segment and product. The assessment of a counterpart’s creditworthiness, within the credit proposal evaluation, begins with an analysis of the financial statements and the qualitative data (competitive positioning, corporate and organisational structure, etc.), regional and industry factors and counterpart behaviour within the Entity or the banking system (e.g. Centrale dei rischi), and results in a rating, i.e. the counterpart’s probability of default (“PD”) on a one-year time horizon. Each borrower’s credit rating is reviewed at least annually on the basis of new information acquired. Each borrower is also assessed in the context of any economic group it is affiliated with by taking into account, when needed, the risk for the entire group. The internal rating assigned to each borrower and its economic group exposure both contribute to the lending decision calculation, defined so that, at a constant credit amount, the approval powers granted to each decision-making corporate body are gradually reduced in proportion to the increased borrower/related risk level. The organisational model in use includes also a dedicated function, which is separated from loan approval and business functions and is responsible for the management of the so-called rating “overrides”, i.e. any changes to the automatic rating calculated by the rating system. Regular monitoring of the rating focuses on the borrower’s performance management, using all available internal and external information in order to get to a score representing a synthetic assessment of the risk associated. This score is obtained using a statistical function that summarises available information using a set of significant variables that are predictors of an event of default within a 12 months horizon. In addition to the usual estimation of risk parameters over a one-year time horizon, multi-period risk parameters are estimated to provide a more robust assessment of the risk-adjusted performance in compliance with the accounting standards requirements. 25 On this topic UniCredit group is exploring new approaches to cover also the market value component of Banking Book credit risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 293 With respect to credit risk, the following specific Committees are active: • the “Group Risk & Internal Control Committee” supports the CEO in the role of steering, coordinating and monitoring the risks at Group level in the management and oversight of the Group’s and UC S.p.A.’s internal control system, with specific reference to: establishing policies, guidelines, operational limits and methodologies for the measurement, management and control of the risks as well as for the definition of the methodologies for the measurement and control of internal capital and for the evaluation of risks reporting and estimates of provisions on risks. In this scope, the Committee has consulting and suggestion functions for the definition and periodic review of the Group’s Risk Appetite Framework (RAF), special reference for the overall risk control framework, in order to ensure their consistency with the strategic guidelines and risk appetite established and their capacity to track the evolution of risks and their interaction; • the “Group Credit Committee”, in charge of evaluating and approving competent credit proposals referring to all files, including restructuring/workout ones, status classification of files, relevant strategies and corrective actions to be taken for watch list files, specific limits for transactions relating to Debt Capital Markets on trading book, single issuer exposures limits on trading book, Debt to Equity transactions and transactions relating to Equity participations deriving from Debt to Equity transactions; • the “Group Credit Risk Governance Committee” responsible for ensuring, at Group level, a steering, coordination and control of Credit Risk Governance (focusing on Credit risk Pillar I, Pillar II, limited to Credit Portfolio Model/CPM, and managerial models) as well as a consistency among the Parent company and the different legal entities, including the management of possible issues raised by legal entities to Group CRO; • the “Group NPE Governance Committee”, responsible for supporting the Group Chief Risk Officer in ensuring, at Group level, a steering, coordination and control of Non-Performing Exposures/NPE strategy and targets as well as an effective alignment on common goals between the Parent company and different legal entities; • the "Group Transactional Credit Committee" responsible with approval function within the delegated powers (decision-making and/or issuing of non-binding opinions to the Group legal entities) and/or consulting function for files to be approved by upper Bodies, for credit proposals referring to all files, including restructuring, INC or workout ones, status classification of files relevant strategies and corrective actions to be taken for watching list files, single issuer exposure limits on trading book, Debt-to-Equity transactions and/or actions/rights-execution relating to equity participations resulting from Debt-to-Equity transactions, Debt-to-Assets transactions and/or actions/rights execution related to asset resulting from Debt-to-Asset transactions, proposal of distressed asset disposal, in accordance with the regulated specifications and limitations; • the “Group Rating Committee” responsible, within its perimeter of competence and its delegated powers, for approving rating overrides. Specific Committees related to UniCredit S.p.A. are described in the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects which is herewith quoted entirely. 2.2 Credit Risk Management, Measurement and Control The credit risk, associated to the potential loss arising either from a default of the borrower/issuer or from a decrease in the market value of a financial obligation due to a deterioration in its credit quality25, is measured at both single borrower/transaction and at whole portfolio level. Credit lending to single customers, during both the approval and monitoring phases, is supported by a credit rating process, differentiated by customer segment and product. The assessment of a counterpart’s creditworthiness, within the credit proposal evaluation, begins with an analysis of the financial statements and the qualitative data (competitive positioning, corporate and organisational structure, etc.), regional and industry factors and counterpart behaviour within the Entity or the banking system (e.g. Centrale dei rischi), and results in a rating, i.e. the counterpart’s probability of default (“PD”) on a one-year time horizon. Each borrower’s credit rating is reviewed at least annually on the basis of new information acquired. Each borrower is also assessed in the context of any economic group it is affiliated with by taking into account, when needed, the risk for the entire group. The internal rating assigned to each borrower and its economic group exposure both contribute to the lending decision calculation, defined so that, at a constant credit amount, the approval powers granted to each decision-making corporate body are gradually reduced in proportion to the increased borrower/related risk level. The organisational model in use includes also a dedicated function, which is separated from loan approval and business functions and is responsible for the management of the so-called rating “overrides”, i.e. any changes to the automatic rating calculated by the rating system. Regular monitoring of the rating focuses on the borrower’s performance management, using all available internal and external information in order to get to a score representing a synthetic assessment of the risk associated. This score is obtained using a statistical function that summarises available information using a set of significant variables that are predictors of an event of default within a 12 months horizon. In addition to the usual estimation of risk parameters over a one-year time horizon, multi-period risk parameters are estimated to provide a more robust assessment of the risk-adjusted performance in compliance with the accounting standards requirements. 25 On this topic UniCredit group is exploring new approaches to cover also the market value component of Banking Book credit risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 293 With respect to credit risk, the following specific Committees are active: • the “Group Risk & Internal Control Committee” supports the CEO in the role of steering, coordinating and monitoring the risks at Group level in the management and oversight of the Group’s and UC S.p.A.’s internal control system, with specific reference to: establishing policies, guidelines, operational limits and methodologies for the measurement, management and control of the risks as well as for the definition of the methodologies for the measurement and control of internal capital and for the evaluation of risks reporting and estimates of provisions on risks. In this scope, the Committee has consulting and suggestion functions for the definition and periodic review of the Group’s Risk Appetite Framework (RAF), special reference for the overall risk control framework, in order to ensure their consistency with the strategic guidelines and risk appetite established and their capacity to track the evolution of risks and their interaction; • the “Group Credit Committee”, in charge of evaluating and approving competent credit proposals referring to all files, including restructuring/workout ones, status classification of files, relevant strategies and corrective actions to be taken for watch list files, specific limits for transactions relating to Debt Capital Markets on trading book, single issuer exposures limits on trading book, Debt to Equity transactions and transactions relating to Equity participations deriving from Debt to Equity transactions; • the “Group Credit Risk Governance Committee” responsible for ensuring, at Group level, a steering, coordination and control of Credit Risk Governance (focusing on Credit risk Pillar I, Pillar II, limited to Credit Portfolio Model/CPM, and managerial models) as well as a consistency among the Parent company and the different legal entities, including the management of possible issues raised by legal entities to Group CRO; • the “Group NPE Governance Committee”, responsible for supporting the Group Chief Risk Officer in ensuring, at Group level, a steering, coordination and control of Non-Performing Exposures/NPE strategy and targets as well as an effective alignment on common goals between the Parent company and different legal entities; • the "Group Transactional Credit Committee" responsible with approval function within the delegated powers (decision-making and/or issuing of non-binding opinions to the Group legal entities) and/or consulting function for files to be approved by upper Bodies, for credit proposals referring to all files, including restructuring, INC or workout ones, status classification of files relevant strategies and corrective actions to be taken for watching list files, single issuer exposure limits on trading book, Debt-to-Equity transactions and/or actions/rights-execution relating to equity participations resulting from Debt-to-Equity transactions, Debt-to-Assets transactions and/or actions/rights execution related to asset resulting from Debt-to-Asset transactions, proposal of distressed asset disposal, in accordance with the regulated specifications and limitations; • the “Group Rating Committee” responsible, within its perimeter of competence and its delegated powers, for approving rating overrides. Specific Committees related to UniCredit S.p.A. are described in the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects which is herewith quoted entirely. 2.2 Credit Risk Management, Measurement and Control The credit risk, associated to the potential loss arising either from a default of the borrower/issuer or from a decrease in the market value of a financial obligation due to a deterioration in its credit quality25, is measured at both single borrower/transaction and at whole portfolio level. Credit lending to single customers, during both the approval and monitoring phases, is supported by a credit rating process, differentiated by customer segment and product. The assessment of a counterpart’s creditworthiness, within the credit proposal evaluation, begins with an analysis of the financial statements and the qualitative data (competitive positioning, corporate and organisational structure, etc.), regional and industry factors and counterpart behaviour within the Entity or the banking system (e.g. Centrale dei rischi), and results in a rating, i.e. the counterpart’s probability of default (“PD”) on a one-year time horizon. Each borrower’s credit rating is reviewed at least annually on the basis of new information acquired. Each borrower is also assessed in the context of any economic group it is affiliated with by taking into account, when needed, the risk for the entire group. The internal rating assigned to each borrower and its economic group exposure both contribute to the lending decision calculation, defined so that, at a constant credit amount, the approval powers granted to each decision-making corporate body are gradually reduced in proportion to the increased borrower/related risk level. The organisational model in use includes also a dedicated function, which is separated from loan approval and business functions and is responsible for the management of the so-called rating “overrides”, i.e. any changes to the automatic rating calculated by the rating system. Regular monitoring of the rating focuses on the borrower’s performance management, using all available internal and external information in order to get to a score representing a synthetic assessment of the risk associated. This score is obtained using a statistical function that summarises available information using a set of significant variables that are predictors of an event of default within a 12 months horizon. In addition to the usual estimation of risk parameters over a one-year time horizon, multi-period risk parameters are estimated to provide a more robust assessment of the risk-adjusted performance in compliance with the accounting standards requirements. 25 On this topic UniCredit group is exploring new approaches to cover also the market value component of Banking Book credit risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 293 With respect to credit risk, the following specific Committees are active: • the “Group Risk & Internal Control Committee” supports the CEO in the role of steering, coordinating and monitoring the risks at Group level in the management and oversight of the Group’s and UC S.p.A.’s internal control system, with specific reference to: establishing policies, guidelines, operational limits and methodologies for the measurement, management and control of the risks as well as for the definition of the methodologies for the measurement and control of internal capital and for the evaluation of risks reporting and estimates of provisions on risks. In this scope, the Committee has consulting and suggestion functions for the definition and periodic review of the Group’s Risk Appetite Framework (RAF), special reference for the overall risk control framework, in order to ensure their consistency with the strategic guidelines and risk appetite established and their capacity to track the evolution of risks and their interaction; • the “Group Credit Committee”, in charge of evaluating and approving competent credit proposals referring to all files, including restructuring/workout ones, status classification of files, relevant strategies and corrective actions to be taken for watch list files, specific limits for transactions relating to Debt Capital Markets on trading book, single issuer exposures limits on trading book, Debt to Equity transactions and transactions relating to Equity participations deriving from Debt to Equity transactions; • the “Group Credit Risk Governance Committee” responsible for ensuring, at Group level, a steering, coordination and control of Credit Risk Governance (focusing on Credit risk Pillar I, Pillar II, limited to Credit Portfolio Model/CPM, and managerial models) as well as a consistency among the Parent company and the different legal entities, including the management of possible issues raised by legal entities to Group CRO; • the “Group NPE Governance Committee”, responsible for supporting the Group Chief Risk Officer in ensuring, at Group level, a steering, coordination and control of Non-Performing Exposures/NPE strategy and targets as well as an effective alignment on common goals between the Parent company and different legal entities; • the "Group Transactional Credit Committee" responsible with approval function within the delegated powers (decision-making and/or issuing of non-binding opinions to the Group legal entities) and/or consulting function for files to be approved by upper Bodies, for credit proposals referring to all files, including restructuring, INC or workout ones, status classification of files relevant strategies and corrective actions to be taken for watching list files, single issuer exposure limits on trading book, Debt-to-Equity transactions and/or actions/rights-execution relating to equity participations resulting from Debt-to-Equity transactions, Debt-to-Assets transactions and/or actions/rights execution related to asset resulting from Debt-to-Asset transactions, proposal of distressed asset disposal, in accordance with the regulated specifications and limitations; • the “Group Rating Committee” responsible, within its perimeter of competence and its delegated powers, for approving rating overrides. Specific Committees related to UniCredit S.p.A. are described in the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects which is herewith quoted entirely. 2.2 Credit Risk Management, Measurement and Control The credit risk, associated to the potential loss arising either from a default of the borrower/issuer or from a decrease in the market value of a financial obligation due to a deterioration in its credit quality25, is measured at both single borrower/transaction and at whole portfolio level. Credit lending to single customers, during both the approval and monitoring phases, is supported by a credit rating process, differentiated by customer segment and product. The assessment of a counterpart’s creditworthiness, within the credit proposal evaluation, begins with an analysis of the financial statements and the qualitative data (competitive positioning, corporate and organisational structure, etc.), regional and industry factors and counterpart behaviour within the Entity or the banking system (e.g. Centrale dei rischi), and results in a rating, i.e. the counterpart’s probability of default (“PD”) on a one-year time horizon. Each borrower’s credit rating is reviewed at least annually on the basis of new information acquired. Each borrower is also assessed in the context of any economic group it is affiliated with by taking into account, when needed, the risk for the entire group. The internal rating assigned to each borrower and its economic group exposure both contribute to the lending decision calculation, defined so that, at a constant credit amount, the approval powers granted to each decision-making corporate body are gradually reduced in proportion to the increased borrower/related risk level. The organisational model in use includes also a dedicated function, which is separated from loan approval and business functions and is responsible for the management of the so-called rating “overrides”, i.e. any changes to the automatic rating calculated by the rating system. Regular monitoring of the rating focuses on the borrower’s performance management, using all available internal and external information in order to get to a score representing a synthetic assessment of the risk associated. This score is obtained using a statistical function that summarises available information using a set of significant variables that are predictors of an event of default within a 12 months horizon. In addition to the usual estimation of risk parameters over a one-year time horizon, multi-period risk parameters are estimated to provide a more robust assessment of the risk-adjusted performance in compliance with the accounting standards requirements. 25 On this topic UniCredit group is exploring new approaches to cover also the market value component of Banking Book credit risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 293 With respect to credit risk, the following specific Committees are active: • the “Group Risk & Internal Control Committee” supports the CEO in the role of steering, coordinating and monitoring the risks at Group level in the management and oversight of the Group’s and UC S.p.A.’s internal control system, with specific reference to: establishing policies, guidelines, operational limits and methodologies for the measurement, management and control of the risks as well as for the definition of the methodologies for the measurement and control of internal capital and for the evaluation of risks reporting and estimates of provisions on risks. In this scope, the Committee has consulting and suggestion functions for the definition and periodic review of the Group’s Risk Appetite Framework (RAF), special reference for the overall risk control framework, in order to ensure their consistency with the strategic guidelines and risk appetite established and their capacity to track the evolution of risks and their interaction; • the “Group Credit Committee”, in charge of evaluating and approving competent credit proposals referring to all files, including restructuring/workout ones, status classification of files, relevant strategies and corrective actions to be taken for watch list files, specific limits for transactions relating to Debt Capital Markets on trading book, single issuer exposures limits on trading book, Debt to Equity transactions and transactions relating to Equity participations deriving from Debt to Equity transactions; • the “Group Credit Risk Governance Committee” responsible for ensuring, at Group level, a steering, coordination and control of Credit Risk Governance (focusing on Credit risk Pillar I, Pillar II, limited to Credit Portfolio Model/CPM, and managerial models) as well as a consistency among the Parent company and the different legal entities, including the management of possible issues raised by legal entities to Group CRO; • the “Group NPE Governance Committee”, responsible for supporting the Group Chief Risk Officer in ensuring, at Group level, a steering, coordination and control of Non-Performing Exposures/NPE strategy and targets as well as an effective alignment on common goals between the Parent company and different legal entities; • the "Group Transactional Credit Committee" responsible with approval function within the delegated powers (decision-making and/or issuing of non-binding opinions to the Group legal entities) and/or consulting function for files to be approved by upper Bodies, for credit proposals referring to all files, including restructuring, INC or workout ones, status classification of files relevant strategies and corrective actions to be taken for watching list files, single issuer exposure limits on trading book, Debt-to-Equity transactions and/or actions/rights-execution relating to equity participations resulting from Debt-to-Equity transactions, Debt-to-Assets transactions and/or actions/rights execution related to asset resulting from Debt-to-Asset transactions, proposal of distressed asset disposal, in accordance with the regulated specifications and limitations; • the “Group Rating Committee” responsible, within its perimeter of competence and its delegated powers, for approving rating overrides. Specific Committees related to UniCredit S.p.A. are described in the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section 1 - Credit Risk - Qualitative information - 2. Credit risk management policies - 2.1 Organizational aspects which is herewith quoted entirely. 2.2 Credit Risk Management, Measurement and Control The credit risk, associated to the potential loss arising either from a default of the borrower/issuer or from a decrease in the market value of a financial obligation due to a deterioration in its credit quality25, is measured at both single borrower/transaction and at whole portfolio level. Credit lending to single customers, during both the approval and monitoring phases, is supported by a credit rating process, differentiated by customer segment and product. The assessment of a counterpart’s creditworthiness, within the credit proposal evaluation, begins with an analysis of the financial statements and the qualitative data (competitive positioning, corporate and organisational structure, etc.), regional and industry factors and counterpart behaviour within the Entity or the banking system (e.g. Centrale dei rischi), and results in a rating, i.e. the counterpart’s probability of default (“PD”) on a one-year time horizon. Each borrower’s credit rating is reviewed at least annually on the basis of new information acquired. Each borrower is also assessed in the context of any economic group it is affiliated with by taking into account, when needed, the risk for the entire group. The internal rating assigned to each borrower and its economic group exposure both contribute to the lending decision calculation, defined so that, at a constant credit amount, the approval powers granted to each decision-making corporate body are gradually reduced in proportion to the increased borrower/related risk level. The organisational model in use includes also a dedicated function, which is separated from loan approval and business functions and is responsible for the management of the so-called rating “overrides”, i.e. any changes to the automatic rating calculated by the rating system. Regular monitoring of the rating focuses on the borrower’s performance management, using all available internal and external information in order to get to a score representing a synthetic assessment of the risk associated. This score is obtained using a statistical function that summarises available information using a set of significant variables that are predictors of an event of default within a 12 months horizon. In addition to the usual estimation of risk parameters over a one-year time horizon, multi-period risk parameters are estimated to provide a more robust assessment of the risk-adjusted performance in compliance with the accounting standards requirements. 25 On this topic UniCredit group is exploring new approaches to cover also the market value component of Banking Book credit risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 294 2018 Annual Report and Accounts · UniCredit Besides the methodologies summarised in the rating systems, the Group risk management function leverages on portfolio models enabled to measure credit risk on an aggregated basis and to identify the contribution of single sub-portfolio or obligor to the overall risk. There are three fundamental portfolio credit risk measures which are calculated and evaluated on a one year time horizon: • Expected Loss (“EL”); • Credit Value at Risk (Credit “VaR”); • Expected Shortfall (“ES”). The estimate of Credit VaR at overall portfolio level is derived from the distribution of losses obtained by Monte Carlo simulation on the horizon of one year, considering the correlations among counterparties. The total loss in each default scenario is the sum of the individual losses, being defined as the product of LGD (Loss Given Default) and EAD (Exposure At Default) for transactions related to defaulted counterparts. The Expected Loss (EL) at portfolio level represents the average loss of the portfolio due to potential defaults of the obligors. The EL of the portfolio corresponds to the sum of single obligors EL, which can be evaluated as the product of PD, LGD and EAD, and is independent from the default correlations in the portfolio. EL is typically charged as a cost component. Value at Risk (VaR) represents the monetary threshold which is overcome only with a given probability level (a 99.9% confidence level VaR implies that the loss threshold is exceeded in 1 case out of 1,000). Economic Capital is derived from Value at Risk subtracting the Expected Loss and is an input for determining Internal Capital set up to cover potential losses from all sources of risk. The Expected Shortfall (ES) represents the expected value of losses that exceed the VaR. Portfolio Credit VaR and ES depend significantly on the correlations among the defaults and can be reduced by portfolio diversification at sector and country level, and limiting the concentration of each counterpart. The measures of Economic Capital based on Credit VaR are also a fundamental input for the design and application of credit strategies, the analysis of credit limits and risk concentration. The Economic Capital calculation engine is also one of the instruments used for the analysis of stress testing of the credit portfolio. All the above mentioned risk parameters are subject to an initial validation and a regular monitoring process for each rating system in all its components: models, processes, IT architecture and data quality. The aim is to give evidence of the systems compliance, highlighting improvement areas as well as possible misalignments in the methodologies, which could limit the full comparability among the resulting risk measures. The internal Credit VaR model is also subject to assessment in the context of Basel - Pillar II validation. The calculation of the credit economic capital is available on a single technological platform (Group Credit Portfolio Model, GCPM), with a shared methodology for the structures of UniCredit S.p.A. and the main entities of the Group. In order to assess the credit risk transfer created by securitisation transactions originated by the Group, an engine (Structured Credit Analyser) has also been developed, which simulates the loss distribution of the securitised portfolio and of the tranches, both for synthetic securitisations (in which the risk is transferred through guarantees/credit derivatives), and for traditional ones (where the assets are sold to a special purpose vehicle). In order to determine capital requirements for credit and operational risks, UniCredit Group uses the IRB Advanced approach, as stated by Banca d’Italia act No.365138 dated 28 March 2008. With reference to credit risk, the Group has been authorized to use internal estimations of PD, LGD and EAD parameters for Group wide credit portfolios (Sovereign, Banks, Multinationals and Global Project Finance) and for local credit portfolios of relevant subsidiaries (corporate and retail). With reference to Italian mid-corporate and small business portfolios, regulatory EAD parameters are currently used. The mentioned approach has been adopted by UniCredit S.p.A. (UCI), by UniCredit Bank AG (UCB AG) and UniCredit Bank Austria AG (UCBA AG). According to the Roll-out plan, providing a progressive extension of the IRB rating system, approved by the Group and shared with the Supervisory Authorities, these methods have been extended starting from 2008 to other Group entities currently named, UniCredit Luxembourg S.A. (merged with UCB AG since July 2018), UniCredit Leasing GMBH and Subsidiaries, UniCredit Banka Slovenija dd, UniCredit Bulbank AD, UniCredit Bank Czech Republic a.s. (both for Czech Republic and Slovakia), UniCredit Bank Ireland plc., UniCredit Bank Hungary, UniCredit Bank Romania a.s. and Ao UniCredit Bank in Russia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 294 2018 Annual Report and Accounts · UniCredit Besides the methodologies summarised in the rating systems, the Group risk management function leverages on portfolio models enabled to measure credit risk on an aggregated basis and to identify the contribution of single sub-portfolio or obligor to the overall risk. There are three fundamental portfolio credit risk measures which are calculated and evaluated on a one year time horizon: • Expected Loss (“EL”); • Credit Value at Risk (Credit “VaR”); • Expected Shortfall (“ES”). The estimate of Credit VaR at overall portfolio level is derived from the distribution of losses obtained by Monte Carlo simulation on the horizon of one year, considering the correlations among counterparties. The total loss in each default scenario is the sum of the individual losses, being defined as the product of LGD (Loss Given Default) and EAD (Exposure At Default) for transactions related to defaulted counterparts. The Expected Loss (EL) at portfolio level represents the average loss of the portfolio due to potential defaults of the obligors. The EL of the portfolio corresponds to the sum of single obligors EL, which can be evaluated as the product of PD, LGD and EAD, and is independent from the default correlations in the portfolio. EL is typically charged as a cost component. Value at Risk (VaR) represents the monetary threshold which is overcome only with a given probability level (a 99.9% confidence level VaR implies that the loss threshold is exceeded in 1 case out of 1,000). Economic Capital is derived from Value at Risk subtracting the Expected Loss and is an input for determining Internal Capital set up to cover potential losses from all sources of risk. The Expected Shortfall (ES) represents the expected value of losses that exceed the VaR. Portfolio Credit VaR and ES depend significantly on the correlations among the defaults and can be reduced by portfolio diversification at sector and country level, and limiting the concentration of each counterpart. The measures of Economic Capital based on Credit VaR are also a fundamental input for the design and application of credit strategies, the analysis of credit limits and risk concentration. The Economic Capital calculation engine is also one of the instruments used for the analysis of stress testing of the credit portfolio. All the above mentioned risk parameters are subject to an initial validation and a regular monitoring process for each rating system in all its components: models, processes, IT architecture and data quality. The aim is to give evidence of the systems compliance, highlighting improvement areas as well as possible misalignments in the methodologies, which could limit the full comparability among the resulting risk measures. The internal Credit VaR model is also subject to assessment in the context of Basel - Pillar II validation. The calculation of the credit economic capital is available on a single technological platform (Group Credit Portfolio Model, GCPM), with a shared methodology for the structures of UniCredit S.p.A. and the main entities of the Group. In order to assess the credit risk transfer created by securitisation transactions originated by the Group, an engine (Structured Credit Analyser) has also been developed, which simulates the loss distribution of the securitised portfolio and of the tranches, both for synthetic securitisations (in which the risk is transferred through guarantees/credit derivatives), and for traditional ones (where the assets are sold to a special purpose vehicle). In order to determine capital requirements for credit and operational risks, UniCredit Group uses the IRB Advanced approach, as stated by Banca d’Italia act No.365138 dated 28 March 2008. With reference to credit risk, the Group has been authorized to use internal estimations of PD, LGD and EAD parameters for Group wide credit portfolios (Sovereign, Banks, Multinationals and Global Project Finance) and for local credit portfolios of relevant subsidiaries (corporate and retail). With reference to Italian mid-corporate and small business portfolios, regulatory EAD parameters are currently used. The mentioned approach has been adopted by UniCredit S.p.A. (UCI), by UniCredit Bank AG (UCB AG) and UniCredit Bank Austria AG (UCBA AG). According to the Roll-out plan, providing a progressive extension of the IRB rating system, approved by the Group and shared with the Supervisory Authorities, these methods have been extended starting from 2008 to other Group entities currently named, UniCredit Luxembourg S.A. (merged with UCB AG since July 2018), UniCredit Leasing GMBH and Subsidiaries, UniCredit Banka Slovenija dd, UniCredit Bulbank AD, UniCredit Bank Czech Republic a.s. (both for Czech Republic and Slovakia), UniCredit Bank Ireland plc., UniCredit Bank Hungary, UniCredit Bank Romania a.s. and Ao UniCredit Bank in Russia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 294 2018 Annual Report and Accounts · UniCredit Besides the methodologies summarised in the rating systems, the Group risk management function leverages on portfolio models enabled to measure credit risk on an aggregated basis and to identify the contribution of single sub-portfolio or obligor to the overall risk. There are three fundamental portfolio credit risk measures which are calculated and evaluated on a one year time horizon: • Expected Loss (“EL”); • Credit Value at Risk (Credit “VaR”); • Expected Shortfall (“ES”). The estimate of Credit VaR at overall portfolio level is derived from the distribution of losses obtained by Monte Carlo simulation on the horizon of one year, considering the correlations among counterparties. The total loss in each default scenario is the sum of the individual losses, being defined as the product of LGD (Loss Given Default) and EAD (Exposure At Default) for transactions related to defaulted counterparts. The Expected Loss (EL) at portfolio level represents the average loss of the portfolio due to potential defaults of the obligors. The EL of the portfolio corresponds to the sum of single obligors EL, which can be evaluated as the product of PD, LGD and EAD, and is independent from the default correlations in the portfolio. EL is typically charged as a cost component. Value at Risk (VaR) represents the monetary threshold which is overcome only with a given probability level (a 99.9% confidence level VaR implies that the loss threshold is exceeded in 1 case out of 1,000). Economic Capital is derived from Value at Risk subtracting the Expected Loss and is an input for determining Internal Capital set up to cover potential losses from all sources of risk. The Expected Shortfall (ES) represents the expected value of losses that exceed the VaR. Portfolio Credit VaR and ES depend significantly on the correlations among the defaults and can be reduced by portfolio diversification at sector and country level, and limiting the concentration of each counterpart. The measures of Economic Capital based on Credit VaR are also a fundamental input for the design and application of credit strategies, the analysis of credit limits and risk concentration. The Economic Capital calculation engine is also one of the instruments used for the analysis of stress testing of the credit portfolio. All the above mentioned risk parameters are subject to an initial validation and a regular monitoring process for each rating system in all its components: models, processes, IT architecture and data quality. The aim is to give evidence of the systems compliance, highlighting improvement areas as well as possible misalignments in the methodologies, which could limit the full comparability among the resulting risk measures. The internal Credit VaR model is also subject to assessment in the context of Basel - Pillar II validation. The calculation of the credit economic capital is available on a single technological platform (Group Credit Portfolio Model, GCPM), with a shared methodology for the structures of UniCredit S.p.A. and the main entities of the Group. In order to assess the credit risk transfer created by securitisation transactions originated by the Group, an engine (Structured Credit Analyser) has also been developed, which simulates the loss distribution of the securitised portfolio and of the tranches, both for synthetic securitisations (in which the risk is transferred through guarantees/credit derivatives), and for traditional ones (where the assets are sold to a special purpose vehicle). In order to determine capital requirements for credit and operational risks, UniCredit Group uses the IRB Advanced approach, as stated by Banca d’Italia act No.365138 dated 28 March 2008. With reference to credit risk, the Group has been authorized to use internal estimations of PD, LGD and EAD parameters for Group wide credit portfolios (Sovereign, Banks, Multinationals and Global Project Finance) and for local credit portfolios of relevant subsidiaries (corporate and retail). With reference to Italian mid-corporate and small business portfolios, regulatory EAD parameters are currently used. The mentioned approach has been adopted by UniCredit S.p.A. (UCI), by UniCredit Bank AG (UCB AG) and UniCredit Bank Austria AG (UCBA AG). According to the Roll-out plan, providing a progressive extension of the IRB rating system, approved by the Group and shared with the Supervisory Authorities, these methods have been extended starting from 2008 to other Group entities currently named, UniCredit Luxembourg S.A. (merged with UCB AG since July 2018), UniCredit Leasing GMBH and Subsidiaries, UniCredit Banka Slovenija dd, UniCredit Bulbank AD, UniCredit Bank Czech Republic a.s. (both for Czech Republic and Slovakia), UniCredit Bank Ireland plc., UniCredit Bank Hungary, UniCredit Bank Romania a.s. and Ao UniCredit Bank in Russia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 294 2018 Annual Report and Accounts · UniCredit Besides the methodologies summarised in the rating systems, the Group risk management function leverages on portfolio models enabled to measure credit risk on an aggregated basis and to identify the contribution of single sub-portfolio or obligor to the overall risk. There are three fundamental portfolio credit risk measures which are calculated and evaluated on a one year time horizon: • Expected Loss (“EL”); • Credit Value at Risk (Credit “VaR”); • Expected Shortfall (“ES”). The estimate of Credit VaR at overall portfolio level is derived from the distribution of losses obtained by Monte Carlo simulation on the horizon of one year, considering the correlations among counterparties. The total loss in each default scenario is the sum of the individual losses, being defined as the product of LGD (Loss Given Default) and EAD (Exposure At Default) for transactions related to defaulted counterparts. The Expected Loss (EL) at portfolio level represents the average loss of the portfolio due to potential defaults of the obligors. The EL of the portfolio corresponds to the sum of single obligors EL, which can be evaluated as the product of PD, LGD and EAD, and is independent from the default correlations in the portfolio. EL is typically charged as a cost component. Value at Risk (VaR) represents the monetary threshold which is overcome only with a given probability level (a 99.9% confidence level VaR implies that the loss threshold is exceeded in 1 case out of 1,000). Economic Capital is derived from Value at Risk subtracting the Expected Loss and is an input for determining Internal Capital set up to cover potential losses from all sources of risk. The Expected Shortfall (ES) represents the expected value of losses that exceed the VaR. Portfolio Credit VaR and ES depend significantly on the correlations among the defaults and can be reduced by portfolio diversification at sector and country level, and limiting the concentration of each counterpart. The measures of Economic Capital based on Credit VaR are also a fundamental input for the design and application of credit strategies, the analysis of credit limits and risk concentration. The Economic Capital calculation engine is also one of the instruments used for the analysis of stress testing of the credit portfolio. All the above mentioned risk parameters are subject to an initial validation and a regular monitoring process for each rating system in all its components: models, processes, IT architecture and data quality. The aim is to give evidence of the systems compliance, highlighting improvement areas as well as possible misalignments in the methodologies, which could limit the full comparability among the resulting risk measures. The internal Credit VaR model is also subject to assessment in the context of Basel - Pillar II validation. The calculation of the credit economic capital is available on a single technological platform (Group Credit Portfolio Model, GCPM), with a shared methodology for the structures of UniCredit S.p.A. and the main entities of the Group. In order to assess the credit risk transfer created by securitisation transactions originated by the Group, an engine (Structured Credit Analyser) has also been developed, which simulates the loss distribution of the securitised portfolio and of the tranches, both for synthetic securitisations (in which the risk is transferred through guarantees/credit derivatives), and for traditional ones (where the assets are sold to a special purpose vehicle). In order to determine capital requirements for credit and operational risks, UniCredit Group uses the IRB Advanced approach, as stated by Banca d’Italia act No.365138 dated 28 March 2008. With reference to credit risk, the Group has been authorized to use internal estimations of PD, LGD and EAD parameters for Group wide credit portfolios (Sovereign, Banks, Multinationals and Global Project Finance) and for local credit portfolios of relevant subsidiaries (corporate and retail). With reference to Italian mid-corporate and small business portfolios, regulatory EAD parameters are currently used. The mentioned approach has been adopted by UniCredit S.p.A. (UCI), by UniCredit Bank AG (UCB AG) and UniCredit Bank Austria AG (UCBA AG). According to the Roll-out plan, providing a progressive extension of the IRB rating system, approved by the Group and shared with the Supervisory Authorities, these methods have been extended starting from 2008 to other Group entities currently named, UniCredit Luxembourg S.A. (merged with UCB AG since July 2018), UniCredit Leasing GMBH and Subsidiaries, UniCredit Banka Slovenija dd, UniCredit Bulbank AD, UniCredit Bank Czech Republic a.s. (both for Czech Republic and Slovakia), UniCredit Bank Ireland plc., UniCredit Bank Hungary, UniCredit Bank Romania a.s. and Ao UniCredit Bank in Russia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 294 2018 Annual Report and Accounts · UniCredit Besides the methodologies summarised in the rating systems, the Group risk management function leverages on portfolio models enabled to measure credit risk on an aggregated basis and to identify the contribution of single sub-portfolio or obligor to the overall risk. There are three fundamental portfolio credit risk measures which are calculated and evaluated on a one year time horizon: • Expected Loss (“EL”); • Credit Value at Risk (Credit “VaR”); • Expected Shortfall (“ES”). The estimate of Credit VaR at overall portfolio level is derived from the distribution of losses obtained by Monte Carlo simulation on the horizon of one year, considering the correlations among counterparties. The total loss in each default scenario is the sum of the individual losses, being defined as the product of LGD (Loss Given Default) and EAD (Exposure At Default) for transactions related to defaulted counterparts. The Expected Loss (EL) at portfolio level represents the average loss of the portfolio due to potential defaults of the obligors. The EL of the portfolio corresponds to the sum of single obligors EL, which can be evaluated as the product of PD, LGD and EAD, and is independent from the default correlations in the portfolio. EL is typically charged as a cost component. Value at Risk (VaR) represents the monetary threshold which is overcome only with a given probability level (a 99.9% confidence level VaR implies that the loss threshold is exceeded in 1 case out of 1,000). Economic Capital is derived from Value at Risk subtracting the Expected Loss and is an input for determining Internal Capital set up to cover potential losses from all sources of risk. The Expected Shortfall (ES) represents the expected value of losses that exceed the VaR. Portfolio Credit VaR and ES depend significantly on the correlations among the defaults and can be reduced by portfolio diversification at sector and country level, and limiting the concentration of each counterpart. The measures of Economic Capital based on Credit VaR are also a fundamental input for the design and application of credit strategies, the analysis of credit limits and risk concentration. The Economic Capital calculation engine is also one of the instruments used for the analysis of stress testing of the credit portfolio. All the above mentioned risk parameters are subject to an initial validation and a regular monitoring process for each rating system in all its components: models, processes, IT architecture and data quality. The aim is to give evidence of the systems compliance, highlighting improvement areas as well as possible misalignments in the methodologies, which could limit the full comparability among the resulting risk measures. The internal Credit VaR model is also subject to assessment in the context of Basel - Pillar II validation. The calculation of the credit economic capital is available on a single technological platform (Group Credit Portfolio Model, GCPM), with a shared methodology for the structures of UniCredit S.p.A. and the main entities of the Group. In order to assess the credit risk transfer created by securitisation transactions originated by the Group, an engine (Structured Credit Analyser) has also been developed, which simulates the loss distribution of the securitised portfolio and of the tranches, both for synthetic securitisations (in which the risk is transferred through guarantees/credit derivatives), and for traditional ones (where the assets are sold to a special purpose vehicle). In order to determine capital requirements for credit and operational risks, UniCredit Group uses the IRB Advanced approach, as stated by Banca d’Italia act No.365138 dated 28 March 2008. With reference to credit risk, the Group has been authorized to use internal estimations of PD, LGD and EAD parameters for Group wide credit portfolios (Sovereign, Banks, Multinationals and Global Project Finance) and for local credit portfolios of relevant subsidiaries (corporate and retail). With reference to Italian mid-corporate and small business portfolios, regulatory EAD parameters are currently used. The mentioned approach has been adopted by UniCredit S.p.A. (UCI), by UniCredit Bank AG (UCB AG) and UniCredit Bank Austria AG (UCBA AG). According to the Roll-out plan, providing a progressive extension of the IRB rating system, approved by the Group and shared with the Supervisory Authorities, these methods have been extended starting from 2008 to other Group entities currently named, UniCredit Luxembourg S.A. (merged with UCB AG since July 2018), UniCredit Leasing GMBH and Subsidiaries, UniCredit Banka Slovenija dd, UniCredit Bulbank AD, UniCredit Bank Czech Republic a.s. (both for Czech Republic and Slovakia), UniCredit Bank Ireland plc., UniCredit Bank Hungary, UniCredit Bank Romania a.s. and Ao UniCredit Bank in Russia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 295 The following table summarizes the rating systems used by the Group with an indication of the related relevant asset class and the entities where they are used. Prevailing asset class Rating system Legal entity Central governments and central banks Groupwide Sovereign (PD, LGD,EAD) UCI, UCB AG, UCBA AG, UCB CZ, UCB SK, UCB RO(*) Institutions subjected to supervision Financial Institutions & Banks (PD, LGD,EAD) UCI, UCB AG, UCBA AG, UCB Slo(*), UCB IE(*), UCB BG(*), UCB CZ, UCB HU(*) (**), UCB SK, UCB RO(*), UCL GMBH Corporates Multinational (PD, LGD,EAD) UCI(***), UCB AG, UCBA AG, UCB Slo(*), UCB BG, UCB CZ, UCB HU(*), UCB SK, UCB RO(*), UCL GMBH, AO UCB(*) Global Project Finance (PD, LGD, EAD) UCI, UCB AG, UCBA AG, UCB CZ, UCB SK Local Integrated Corporate Rating RIC (PD, LGD) UCI Mid Corporate (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ,UCL GMBH, UCB BG Foreign Small and Medium Sized Enterprises (PD, LGD, EAD) UCB AG Income Producing Real Estate (IPRE) (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ Acquisition and Leverage Finance (PD, LGD, EAD) UCB AG Global Shipping (PD, LGD, EAD) UCB AG Wind Project Finance (PD, LGD, EAD) UCB AG Commercial Real Estate Finance (PD, LGD, EAD) UCB AG Non Profit (PD, LGD, EAD) UCBA AG Real Estate Customers (PD, LGD, EAD) UCBA AG Mid-Corporate (PD) UCB HU(*), UCB Slo(*), UCB SK(*), UCB RO(*) Aircraft Finance (PD) UCB AG Income Producing Real Estate (IPRE) (Slotting criteria) UCB BG; UCB SK Object Finance and Project Finance (Slotting criteria) UCL GMBH Project Finance (Slotting Criteria) UCB BG Institutions subjected to supervision, Corporates Other minor rating systems (Public Sector Entities, Municipalities, Religious Companies, Leasing) (PD, LDG, EAD) UCB CZ Retail exposures Integrated Small Business Rating RISB (PD, LGD) UCI Integrated Private Rating (RIP) Mortgages (PD, LGD, EAD) UCI Overdraft and credit cards (PD, LGD, EAD)(****) UCI Personal Loan (PD, LGD, EAD)(****) UCI Small Business (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ, UCL GMBH,UCB BG Private Individuals (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ, UCB BG Securitization Asset Backed Commercial Paper (PD, LGD, EAD) UCB AG Notes: (*) These entities are currently authorized only to use the IRB Foundation, therefore use only PD internal estimations for determination of capital requirements. (**) This entity has been authorized to adopt the Group Wide model Financial Institution & Banks (GW BANKS) only for Commercial Bank segment with the exclusion of the Securities Industry segment. (***) Starting from 2012, the Group Wide Multinational Corporate (GW MNC) rating system (for the estimation of parameters PD, LGD and EAD) is also adopted for the Italian Large Corporate (ILC) portfolio, which includes Italian companies with an operating revenues/value between €250 and €500 million. (****) Systems authorized since 2010 which IRB regulatory use is prudentially planned after the completion of models’ revision. Keywords: UCI: UniCredit S.p.A. UCB AG: UniCredit Bank AG (including UniCredit Luxembourg S.A. that has been merged with UCB AG since July 2018) UCBA AG: UniCredit Bank Austria AG UCB IE: UniCredit Bank Ireland p.l.c. UCL GMBH: UniCredit Leasing GMBH and Subsidiaries (Unicredit Leasing Finance GMBH, UniCredit Leasing Aviation GMBH) UCB Slo: UniCredit Banka Slovenija d.d. UCB BG: UniCredit Bulbank AD UCB CZ: UniCredit Bank Czech Republic, a.s. UCB HU: UniCredit Hungary UCB SK: former UniCredit Bank Slovakia a.s branch of UniCredit Bank Czech Republic, a.s. since December 2013 UCB RO: UniCredit Bank Romania a.s. AO UCB: Ao UniCredit Bank (Russia) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 295 The following table summarizes the rating systems used by the Group with an indication of the related relevant asset class and the entities where they are used. Prevailing asset class Rating system Legal entity Central governments and central banks Groupwide Sovereign (PD, LGD,EAD) UCI, UCB AG, UCBA AG, UCB CZ, UCB SK, UCB RO(*) Institutions subjected to supervision Financial Institutions & Banks (PD, LGD,EAD) UCI, UCB AG, UCBA AG, UCB Slo(*), UCB IE(*), UCB BG(*), UCB CZ, UCB HU(*) (**), UCB SK, UCB RO(*), UCL GMBH Corporates Multinational (PD, LGD,EAD) UCI(***), UCB AG, UCBA AG, UCB Slo(*), UCB BG, UCB CZ, UCB HU(*), UCB SK, UCB RO(*), UCL GMBH, AO UCB(*) Global Project Finance (PD, LGD, EAD) UCI, UCB AG, UCBA AG, UCB CZ, UCB SK Local Integrated Corporate Rating RIC (PD, LGD) UCI Mid Corporate (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ,UCL GMBH, UCB BG Foreign Small and Medium Sized Enterprises (PD, LGD, EAD) UCB AG Income Producing Real Estate (IPRE) (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ Acquisition and Leverage Finance (PD, LGD, EAD) UCB AG Global Shipping (PD, LGD, EAD) UCB AG Wind Project Finance (PD, LGD, EAD) UCB AG Commercial Real Estate Finance (PD, LGD, EAD) UCB AG Non Profit (PD, LGD, EAD) UCBA AG Real Estate Customers (PD, LGD, EAD) UCBA AG Mid-Corporate (PD) UCB HU(*), UCB Slo(*), UCB SK(*), UCB RO(*) Aircraft Finance (PD) UCB AG Income Producing Real Estate (IPRE) (Slotting criteria) UCB BG; UCB SK Object Finance and Project Finance (Slotting criteria) UCL GMBH Project Finance (Slotting Criteria) UCB BG Institutions subjected to supervision, Corporates Other minor rating systems (Public Sector Entities, Municipalities, Religious Companies, Leasing) (PD, LDG, EAD) UCB CZ Retail exposures Integrated Small Business Rating RISB (PD, LGD) UCI Integrated Private Rating (RIP) Mortgages (PD, LGD, EAD) UCI Overdraft and credit cards (PD, LGD, EAD)(****) UCI Personal Loan (PD, LGD, EAD)(****) UCI Small Business (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ, UCL GMBH,UCB BG Private Individuals (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ, UCB BG Securitization Asset Backed Commercial Paper (PD, LGD, EAD) UCB AG Notes: (*) These entities are currently authorized only to use the IRB Foundation, therefore use only PD internal estimations for determination of capital requirements. (**) This entity has been authorized to adopt the Group Wide model Financial Institution & Banks (GW BANKS) only for Commercial Bank segment with the exclusion of the Securities Industry segment. (***) Starting from 2012, the Group Wide Multinational Corporate (GW MNC) rating system (for the estimation of parameters PD, LGD and EAD) is also adopted for the Italian Large Corporate (ILC) portfolio, which includes Italian companies with an operating revenues/value between €250 and €500 million. (****) Systems authorized since 2010 which IRB regulatory use is prudentially planned after the completion of models’ revision. Keywords: UCI: UniCredit S.p.A. UCB AG: UniCredit Bank AG (including UniCredit Luxembourg S.A. that has been merged with UCB AG since July 2018) UCBA AG: UniCredit Bank Austria AG UCB IE: UniCredit Bank Ireland p.l.c. UCL GMBH: UniCredit Leasing GMBH and Subsidiaries (Unicredit Leasing Finance GMBH, UniCredit Leasing Aviation GMBH) UCB Slo: UniCredit Banka Slovenija d.d. UCB BG: UniCredit Bulbank AD UCB CZ: UniCredit Bank Czech Republic, a.s. UCB HU: UniCredit Hungary UCB SK: former UniCredit Bank Slovakia a.s branch of UniCredit Bank Czech Republic, a.s. since December 2013 UCB RO: UniCredit Bank Romania a.s. AO UCB: Ao UniCredit Bank (Russia) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 295 The following table summarizes the rating systems used by the Group with an indication of the related relevant asset class and the entities where they are used. Prevailing asset class Rating system Legal entity Central governments and central banks Groupwide Sovereign (PD, LGD,EAD) UCI, UCB AG, UCBA AG, UCB CZ, UCB SK, UCB RO(*) Institutions subjected to supervision Financial Institutions & Banks (PD, LGD,EAD) UCI, UCB AG, UCBA AG, UCB Slo(*), UCB IE(*), UCB BG(*), UCB CZ, UCB HU(*) (**), UCB SK, UCB RO(*), UCL GMBH Corporates Multinational (PD, LGD,EAD) UCI(***), UCB AG, UCBA AG, UCB Slo(*), UCB BG, UCB CZ, UCB HU(*), UCB SK, UCB RO(*), UCL GMBH, AO UCB(*) Global Project Finance (PD, LGD, EAD) UCI, UCB AG, UCBA AG, UCB CZ, UCB SK Local Integrated Corporate Rating RIC (PD, LGD) UCI Mid Corporate (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ,UCL GMBH, UCB BG Foreign Small and Medium Sized Enterprises (PD, LGD, EAD) UCB AG Income Producing Real Estate (IPRE) (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ Acquisition and Leverage Finance (PD, LGD, EAD) UCB AG Global Shipping (PD, LGD, EAD) UCB AG Wind Project Finance (PD, LGD, EAD) UCB AG Commercial Real Estate Finance (PD, LGD, EAD) UCB AG Non Profit (PD, LGD, EAD) UCBA AG Real Estate Customers (PD, LGD, EAD) UCBA AG Mid-Corporate (PD) UCB HU(*), UCB Slo(*), UCB SK(*), UCB RO(*) Aircraft Finance (PD) UCB AG Income Producing Real Estate (IPRE) (Slotting criteria) UCB BG; UCB SK Object Finance and Project Finance (Slotting criteria) UCL GMBH Project Finance (Slotting Criteria) UCB BG Institutions subjected to supervision, Corporates Other minor rating systems (Public Sector Entities, Municipalities, Religious Companies, Leasing) (PD, LDG, EAD) UCB CZ Retail exposures Integrated Small Business Rating RISB (PD, LGD) UCI Integrated Private Rating (RIP) Mortgages (PD, LGD, EAD) UCI Overdraft and credit cards (PD, LGD, EAD)(****) UCI Personal Loan (PD, LGD, EAD)(****) UCI Small Business (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ, UCL GMBH,UCB BG Private Individuals (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ, UCB BG Securitization Asset Backed Commercial Paper (PD, LGD, EAD) UCB AG Notes: (*) These entities are currently authorized only to use the IRB Foundation, therefore use only PD internal estimations for determination of capital requirements. (**) This entity has been authorized to adopt the Group Wide model Financial Institution & Banks (GW BANKS) only for Commercial Bank segment with the exclusion of the Securities Industry segment. (***) Starting from 2012, the Group Wide Multinational Corporate (GW MNC) rating system (for the estimation of parameters PD, LGD and EAD) is also adopted for the Italian Large Corporate (ILC) portfolio, which includes Italian companies with an operating revenues/value between €250 and €500 million. (****) Systems authorized since 2010 which IRB regulatory use is prudentially planned after the completion of models’ revision. Keywords: UCI: UniCredit S.p.A. UCB AG: UniCredit Bank AG (including UniCredit Luxembourg S.A. that has been merged with UCB AG since July 2018) UCBA AG: UniCredit Bank Austria AG UCB IE: UniCredit Bank Ireland p.l.c. UCL GMBH: UniCredit Leasing GMBH and Subsidiaries (Unicredit Leasing Finance GMBH, UniCredit Leasing Aviation GMBH) UCB Slo: UniCredit Banka Slovenija d.d. UCB BG: UniCredit Bulbank AD UCB CZ: UniCredit Bank Czech Republic, a.s. UCB HU: UniCredit Hungary UCB SK: former UniCredit Bank Slovakia a.s branch of UniCredit Bank Czech Republic, a.s. since December 2013 UCB RO: UniCredit Bank Romania a.s. AO UCB: Ao UniCredit Bank (Russia) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 295 The following table summarizes the rating systems used by the Group with an indication of the related relevant asset class and the entities where they are used. Prevailing asset class Rating system Legal entity Central governments and central banks Groupwide Sovereign (PD, LGD,EAD) UCI, UCB AG, UCBA AG, UCB CZ, UCB SK, UCB RO(*) Institutions subjected to supervision Financial Institutions & Banks (PD, LGD,EAD) UCI, UCB AG, UCBA AG, UCB Slo(*), UCB IE(*), UCB BG(*), UCB CZ, UCB HU(*) (**), UCB SK, UCB RO(*), UCL GMBH Corporates Multinational (PD, LGD,EAD) UCI(***), UCB AG, UCBA AG, UCB Slo(*), UCB BG, UCB CZ, UCB HU(*), UCB SK, UCB RO(*), UCL GMBH, AO UCB(*) Global Project Finance (PD, LGD, EAD) UCI, UCB AG, UCBA AG, UCB CZ, UCB SK Local Integrated Corporate Rating RIC (PD, LGD) UCI Mid Corporate (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ,UCL GMBH, UCB BG Foreign Small and Medium Sized Enterprises (PD, LGD, EAD) UCB AG Income Producing Real Estate (IPRE) (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ Acquisition and Leverage Finance (PD, LGD, EAD) UCB AG Global Shipping (PD, LGD, EAD) UCB AG Wind Project Finance (PD, LGD, EAD) UCB AG Commercial Real Estate Finance (PD, LGD, EAD) UCB AG Non Profit (PD, LGD, EAD) UCBA AG Real Estate Customers (PD, LGD, EAD) UCBA AG Mid-Corporate (PD) UCB HU(*), UCB Slo(*), UCB SK(*), UCB RO(*) Aircraft Finance (PD) UCB AG Income Producing Real Estate (IPRE) (Slotting criteria) UCB BG; UCB SK Object Finance and Project Finance (Slotting criteria) UCL GMBH Project Finance (Slotting Criteria) UCB BG Institutions subjected to supervision, Corporates Other minor rating systems (Public Sector Entities, Municipalities, Religious Companies, Leasing) (PD, LDG, EAD) UCB CZ Retail exposures Integrated Small Business Rating RISB (PD, LGD) UCI Integrated Private Rating (RIP) Mortgages (PD, LGD, EAD) UCI Overdraft and credit cards (PD, LGD, EAD)(****) UCI Personal Loan (PD, LGD, EAD)(****) UCI Small Business (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ, UCL GMBH,UCB BG Private Individuals (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ, UCB BG Securitization Asset Backed Commercial Paper (PD, LGD, EAD) UCB AG Notes: (*) These entities are currently authorized only to use the IRB Foundation, therefore use only PD internal estimations for determination of capital requirements. (**) This entity has been authorized to adopt the Group Wide model Financial Institution & Banks (GW BANKS) only for Commercial Bank segment with the exclusion of the Securities Industry segment. (***) Starting from 2012, the Group Wide Multinational Corporate (GW MNC) rating system (for the estimation of parameters PD, LGD and EAD) is also adopted for the Italian Large Corporate (ILC) portfolio, which includes Italian companies with an operating revenues/value between €250 and €500 million. (****) Systems authorized since 2010 which IRB regulatory use is prudentially planned after the completion of models’ revision. Keywords: UCI: UniCredit S.p.A. UCB AG: UniCredit Bank AG (including UniCredit Luxembourg S.A. that has been merged with UCB AG since July 2018) UCBA AG: UniCredit Bank Austria AG UCB IE: UniCredit Bank Ireland p.l.c. UCL GMBH: UniCredit Leasing GMBH and Subsidiaries (Unicredit Leasing Finance GMBH, UniCredit Leasing Aviation GMBH) UCB Slo: UniCredit Banka Slovenija d.d. UCB BG: UniCredit Bulbank AD UCB CZ: UniCredit Bank Czech Republic, a.s. UCB HU: UniCredit Hungary UCB SK: former UniCredit Bank Slovakia a.s branch of UniCredit Bank Czech Republic, a.s. since December 2013 UCB RO: UniCredit Bank Romania a.s. AO UCB: Ao UniCredit Bank (Russia) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 295 The following table summarizes the rating systems used by the Group with an indication of the related relevant asset class and the entities where they are used. Prevailing asset class Rating system Legal entity Central governments and central banks Groupwide Sovereign (PD, LGD,EAD) UCI, UCB AG, UCBA AG, UCB CZ, UCB SK, UCB RO(*) Institutions subjected to supervision Financial Institutions & Banks (PD, LGD,EAD) UCI, UCB AG, UCBA AG, UCB Slo(*), UCB IE(*), UCB BG(*), UCB CZ, UCB HU(*) (**), UCB SK, UCB RO(*), UCL GMBH Corporates Multinational (PD, LGD,EAD) UCI(***), UCB AG, UCBA AG, UCB Slo(*), UCB BG, UCB CZ, UCB HU(*), UCB SK, UCB RO(*), UCL GMBH, AO UCB(*) Global Project Finance (PD, LGD, EAD) UCI, UCB AG, UCBA AG, UCB CZ, UCB SK Local Integrated Corporate Rating RIC (PD, LGD) UCI Mid Corporate (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ,UCL GMBH, UCB BG Foreign Small and Medium Sized Enterprises (PD, LGD, EAD) UCB AG Income Producing Real Estate (IPRE) (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ Acquisition and Leverage Finance (PD, LGD, EAD) UCB AG Global Shipping (PD, LGD, EAD) UCB AG Wind Project Finance (PD, LGD, EAD) UCB AG Commercial Real Estate Finance (PD, LGD, EAD) UCB AG Non Profit (PD, LGD, EAD) UCBA AG Real Estate Customers (PD, LGD, EAD) UCBA AG Mid-Corporate (PD) UCB HU(*), UCB Slo(*), UCB SK(*), UCB RO(*) Aircraft Finance (PD) UCB AG Income Producing Real Estate (IPRE) (Slotting criteria) UCB BG; UCB SK Object Finance and Project Finance (Slotting criteria) UCL GMBH Project Finance (Slotting Criteria) UCB BG Institutions subjected to supervision, Corporates Other minor rating systems (Public Sector Entities, Municipalities, Religious Companies, Leasing) (PD, LDG, EAD) UCB CZ Retail exposures Integrated Small Business Rating RISB (PD, LGD) UCI Integrated Private Rating (RIP) Mortgages (PD, LGD, EAD) UCI Overdraft and credit cards (PD, LGD, EAD)(****) UCI Personal Loan (PD, LGD, EAD)(****) UCI Small Business (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ, UCL GMBH,UCB BG Private Individuals (PD, LGD, EAD) UCB AG, UCBA AG, UCB CZ, UCB BG Securitization Asset Backed Commercial Paper (PD, LGD, EAD) UCB AG Notes: (*) These entities are currently authorized only to use the IRB Foundation, therefore use only PD internal estimations for determination of capital requirements. (**) This entity has been authorized to adopt the Group Wide model Financial Institution & Banks (GW BANKS) only for Commercial Bank segment with the exclusion of the Securities Industry segment. (***) Starting from 2012, the Group Wide Multinational Corporate (GW MNC) rating system (for the estimation of parameters PD, LGD and EAD) is also adopted for the Italian Large Corporate (ILC) portfolio, which includes Italian companies with an operating revenues/value between €250 and €500 million. (****) Systems authorized since 2010 which IRB regulatory use is prudentially planned after the completion of models’ revision. Keywords: UCI: UniCredit S.p.A. UCB AG: UniCredit Bank AG (including UniCredit Luxembourg S.A. that has been merged with UCB AG since July 2018) UCBA AG: UniCredit Bank Austria AG UCB IE: UniCredit Bank Ireland p.l.c. UCL GMBH: UniCredit Leasing GMBH and Subsidiaries (Unicredit Leasing Finance GMBH, UniCredit Leasing Aviation GMBH) UCB Slo: UniCredit Banka Slovenija d.d. UCB BG: UniCredit Bulbank AD UCB CZ: UniCredit Bank Czech Republic, a.s. UCB HU: UniCredit Hungary UCB SK: former UniCredit Bank Slovakia a.s branch of UniCredit Bank Czech Republic, a.s. since December 2013 UCB RO: UniCredit Bank Romania a.s. AO UCB: Ao UniCredit Bank (Russia) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 296 2018 Annual Report and Accounts · UniCredit With reference to the strategies of credit risk management, the use of Credit Risk Stress Test is considered of particular importance because its objective is to analyse portfolio vulnerability in case of an economic downturn or a structural change of the macroeconomic framework. In performing the stress test exercise, different scenarios are considered, based on increasing levels of severity. In addition, scenarios may also be defined based on specific economic hypotheses. The credit stress test models (or satellite models) are set of models aimed at translating the macro-economic conditions into credit risk parameters (PD/LGD). Within the wider stress testing framework the models serve as basis for calculating the stressed PD/LGD projections under the Adverse Scenarios. They are used as well for the estimation of Forward Looking component within IFRS9 framework. As regards the modelling methodology the current framework envisages two different approaches for High and Low default portfolios. Notably for high default portfolios (Retail, SME and Mid corporate) the internal historical data have been used to estimate, at cluster level (Country/Asset Class) direct relationship between default and recovery rate and macro-economic factors. However with regard the low default portfolios (e.g. Multinational, Banks, Sovereigns) for which no enough internal data are available, the historical financial statements are used to model a relationship between key financial items (which are inputs of the rating systems) and macro-economic factors. The projected key rating drivers, based on the macro-economic factors, are then used as input of the Internal Rating System in order to obtain the final stressed PD/LGD at counterpart level. Stress testing exercises is performed twice a year based on three scenarios both for normative (Pillar I) and economic (Pillar II) perspective. Pillar 1 stressed metrics (LLP and RWA) are calculated according to the EBA methodology. Pillar II stress metrics (EC and AFR) are calculated according to the following methodology: • Credit Economic Capital: Stressed PDs and LGDs are used as a basis to recalculate VaR and Economic Capital with CPM tool in each of the stressed scenarios. The Stressed Value at Risk refers to a VaR simulation where the underlying risk factors are stressed from normal to adverse case. In particular, the Stressed Value at Risk is intended to replicate a Value at Risk calculation that would be generated on the bank’s current portfolio if the relevant risk factors were experiencing a period of stress. • AFR: the amount stemming from the difference between the Stressed Expected Loss (calculated based on PD-TTC and LGD-TTC) and the actual Expected losses is deducted from AFR. 2.3 Measurement methods for expected losses Risk management practices The Credit Risk Management, Measurement and Control processes described in the previous paragraph, are also reference for the calculation of impairment of Loans and debt securities classified as financial assets at amortized cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures as required by IFRS9. For this purpose the calculation of impairment in accordance with expected credit losses is based on two main pillars: • the stage allocation of the credit exposure; • the associated calculation of expected credit loss In UniCredit group the Stage Allocation is based on a combination of relative and absolute elements; the main are: • comparison for each transaction between PD as measured at the time of origination and PD as at the reporting date, both calculated according to internal models, through thresholds set in such a way as to consider all key variables of each transaction that can affect the bank's expectation of PD changes over time (e.g. age, maturity, PD level at the time of origination); • absolute elements such as the backstops required by law (e.g. 30 days past-due). In this case UniCredit group has chosen not to reject the significant deterioration presumption after 30days past-due by allocating always in stage 2 transactions with more than 30 days past due; • additional internal evidence, including renegotiations of financial instruments due to financial difficulties met by the counterpart (e.g. Forborne classification). With regard to debt securities, UniCredit group is opting for application of the low credit risk exemption on investment grade securities, in full compliance with the accounting standard. The outcome of the stage allocation is the classification of credit exposure in Stage 1, Stage 2 or Stage 3 according to their absolute or relative credit quality with respect to the initial disbursement. Specifically: • the Stage 1 includes: - newly issued or acquired credit exposures - exposures for which credit risk has not significantly deteriorated since initial recognition; and - exposures having low credit risk (low credit risk exemption); • the Stage 2 includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • the Stage 3 includes impaired credit exposures. With reference to stage 3, it should be noted that it includes impaired exposures corresponding in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates, to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 24 July 2014). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 296 2018 Annual Report and Accounts · UniCredit With reference to the strategies of credit risk management, the use of Credit Risk Stress Test is considered of particular importance because its objective is to analyse portfolio vulnerability in case of an economic downturn or a structural change of the macroeconomic framework. In performing the stress test exercise, different scenarios are considered, based on increasing levels of severity. In addition, scenarios may also be defined based on specific economic hypotheses. The credit stress test models (or satellite models) are set of models aimed at translating the macro-economic conditions into credit risk parameters (PD/LGD). Within the wider stress testing framework the models serve as basis for calculating the stressed PD/LGD projections under the Adverse Scenarios. They are used as well for the estimation of Forward Looking component within IFRS9 framework. As regards the modelling methodology the current framework envisages two different approaches for High and Low default portfolios. Notably for high default portfolios (Retail, SME and Mid corporate) the internal historical data have been used to estimate, at cluster level (Country/Asset Class) direct relationship between default and recovery rate and macro-economic factors. However with regard the low default portfolios (e.g. Multinational, Banks, Sovereigns) for which no enough internal data are available, the historical financial statements are used to model a relationship between key financial items (which are inputs of the rating systems) and macro-economic factors. The projected key rating drivers, based on the macro-economic factors, are then used as input of the Internal Rating System in order to obtain the final stressed PD/LGD at counterpart level. Stress testing exercises is performed twice a year based on three scenarios both for normative (Pillar I) and economic (Pillar II) perspective. Pillar 1 stressed metrics (LLP and RWA) are calculated according to the EBA methodology. Pillar II stress metrics (EC and AFR) are calculated according to the following methodology: • Credit Economic Capital: Stressed PDs and LGDs are used as a basis to recalculate VaR and Economic Capital with CPM tool in each of the stressed scenarios. The Stressed Value at Risk refers to a VaR simulation where the underlying risk factors are stressed from normal to adverse case. In particular, the Stressed Value at Risk is intended to replicate a Value at Risk calculation that would be generated on the bank’s current portfolio if the relevant risk factors were experiencing a period of stress. • AFR: the amount stemming from the difference between the Stressed Expected Loss (calculated based on PD-TTC and LGD-TTC) and the actual Expected losses is deducted from AFR. 2.3 Measurement methods for expected losses Risk management practices The Credit Risk Management, Measurement and Control processes described in the previous paragraph, are also reference for the calculation of impairment of Loans and debt securities classified as financial assets at amortized cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures as required by IFRS9. For this purpose the calculation of impairment in accordance with expected credit losses is based on two main pillars: • the stage allocation of the credit exposure; • the associated calculation of expected credit loss In UniCredit group the Stage Allocation is based on a combination of relative and absolute elements; the main are: • comparison for each transaction between PD as measured at the time of origination and PD as at the reporting date, both calculated according to internal models, through thresholds set in such a way as to consider all key variables of each transaction that can affect the bank's expectation of PD changes over time (e.g. age, maturity, PD level at the time of origination); • absolute elements such as the backstops required by law (e.g. 30 days past-due). In this case UniCredit group has chosen not to reject the significant deterioration presumption after 30days past-due by allocating always in stage 2 transactions with more than 30 days past due; • additional internal evidence, including renegotiations of financial instruments due to financial difficulties met by the counterpart (e.g. Forborne classification). With regard to debt securities, UniCredit group is opting for application of the low credit risk exemption on investment grade securities, in full compliance with the accounting standard. The outcome of the stage allocation is the classification of credit exposure in Stage 1, Stage 2 or Stage 3 according to their absolute or relative credit quality with respect to the initial disbursement. Specifically: • the Stage 1 includes: - newly issued or acquired credit exposures - exposures for which credit risk has not significantly deteriorated since initial recognition; and - exposures having low credit risk (low credit risk exemption); • the Stage 2 includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • the Stage 3 includes impaired credit exposures. With reference to stage 3, it should be noted that it includes impaired exposures corresponding in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates, to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 24 July 2014). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 296 2018 Annual Report and Accounts · UniCredit With reference to the strategies of credit risk management, the use of Credit Risk Stress Test is considered of particular importance because its objective is to analyse portfolio vulnerability in case of an economic downturn or a structural change of the macroeconomic framework. In performing the stress test exercise, different scenarios are considered, based on increasing levels of severity. In addition, scenarios may also be defined based on specific economic hypotheses. The credit stress test models (or satellite models) are set of models aimed at translating the macro-economic conditions into credit risk parameters (PD/LGD). Within the wider stress testing framework the models serve as basis for calculating the stressed PD/LGD projections under the Adverse Scenarios. They are used as well for the estimation of Forward Looking component within IFRS9 framework. As regards the modelling methodology the current framework envisages two different approaches for High and Low default portfolios. Notably for high default portfolios (Retail, SME and Mid corporate) the internal historical data have been used to estimate, at cluster level (Country/Asset Class) direct relationship between default and recovery rate and macro-economic factors. However with regard the low default portfolios (e.g. Multinational, Banks, Sovereigns) for which no enough internal data are available, the historical financial statements are used to model a relationship between key financial items (which are inputs of the rating systems) and macro-economic factors. The projected key rating drivers, based on the macro-economic factors, are then used as input of the Internal Rating System in order to obtain the final stressed PD/LGD at counterpart level. Stress testing exercises is performed twice a year based on three scenarios both for normative (Pillar I) and economic (Pillar II) perspective. Pillar 1 stressed metrics (LLP and RWA) are calculated according to the EBA methodology. Pillar II stress metrics (EC and AFR) are calculated according to the following methodology: • Credit Economic Capital: Stressed PDs and LGDs are used as a basis to recalculate VaR and Economic Capital with CPM tool in each of the stressed scenarios. The Stressed Value at Risk refers to a VaR simulation where the underlying risk factors are stressed from normal to adverse case. In particular, the Stressed Value at Risk is intended to replicate a Value at Risk calculation that would be generated on the bank’s current portfolio if the relevant risk factors were experiencing a period of stress. • AFR: the amount stemming from the difference between the Stressed Expected Loss (calculated based on PD-TTC and LGD-TTC) and the actual Expected losses is deducted from AFR. 2.3 Measurement methods for expected losses Risk management practices The Credit Risk Management, Measurement and Control processes described in the previous paragraph, are also reference for the calculation of impairment of Loans and debt securities classified as financial assets at amortized cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures as required by IFRS9. For this purpose the calculation of impairment in accordance with expected credit losses is based on two main pillars: • the stage allocation of the credit exposure; • the associated calculation of expected credit loss In UniCredit group the Stage Allocation is based on a combination of relative and absolute elements; the main are: • comparison for each transaction between PD as measured at the time of origination and PD as at the reporting date, both calculated according to internal models, through thresholds set in such a way as to consider all key variables of each transaction that can affect the bank's expectation of PD changes over time (e.g. age, maturity, PD level at the time of origination); • absolute elements such as the backstops required by law (e.g. 30 days past-due). In this case UniCredit group has chosen not to reject the significant deterioration presumption after 30days past-due by allocating always in stage 2 transactions with more than 30 days past due; • additional internal evidence, including renegotiations of financial instruments due to financial difficulties met by the counterpart (e.g. Forborne classification). With regard to debt securities, UniCredit group is opting for application of the low credit risk exemption on investment grade securities, in full compliance with the accounting standard. The outcome of the stage allocation is the classification of credit exposure in Stage 1, Stage 2 or Stage 3 according to their absolute or relative credit quality with respect to the initial disbursement. Specifically: • the Stage 1 includes: - newly issued or acquired credit exposures - exposures for which credit risk has not significantly deteriorated since initial recognition; and - exposures having low credit risk (low credit risk exemption); • the Stage 2 includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • the Stage 3 includes impaired credit exposures. With reference to stage 3, it should be noted that it includes impaired exposures corresponding in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates, to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 24 July 2014). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 296 2018 Annual Report and Accounts · UniCredit With reference to the strategies of credit risk management, the use of Credit Risk Stress Test is considered of particular importance because its objective is to analyse portfolio vulnerability in case of an economic downturn or a structural change of the macroeconomic framework. In performing the stress test exercise, different scenarios are considered, based on increasing levels of severity. In addition, scenarios may also be defined based on specific economic hypotheses. The credit stress test models (or satellite models) are set of models aimed at translating the macro-economic conditions into credit risk parameters (PD/LGD). Within the wider stress testing framework the models serve as basis for calculating the stressed PD/LGD projections under the Adverse Scenarios. They are used as well for the estimation of Forward Looking component within IFRS9 framework. As regards the modelling methodology the current framework envisages two different approaches for High and Low default portfolios. Notably for high default portfolios (Retail, SME and Mid corporate) the internal historical data have been used to estimate, at cluster level (Country/Asset Class) direct relationship between default and recovery rate and macro-economic factors. However with regard the low default portfolios (e.g. Multinational, Banks, Sovereigns) for which no enough internal data are available, the historical financial statements are used to model a relationship between key financial items (which are inputs of the rating systems) and macro-economic factors. The projected key rating drivers, based on the macro-economic factors, are then used as input of the Internal Rating System in order to obtain the final stressed PD/LGD at counterpart level. Stress testing exercises is performed twice a year based on three scenarios both for normative (Pillar I) and economic (Pillar II) perspective. Pillar 1 stressed metrics (LLP and RWA) are calculated according to the EBA methodology. Pillar II stress metrics (EC and AFR) are calculated according to the following methodology: • Credit Economic Capital: Stressed PDs and LGDs are used as a basis to recalculate VaR and Economic Capital with CPM tool in each of the stressed scenarios. The Stressed Value at Risk refers to a VaR simulation where the underlying risk factors are stressed from normal to adverse case. In particular, the Stressed Value at Risk is intended to replicate a Value at Risk calculation that would be generated on the bank’s current portfolio if the relevant risk factors were experiencing a period of stress. • AFR: the amount stemming from the difference between the Stressed Expected Loss (calculated based on PD-TTC and LGD-TTC) and the actual Expected losses is deducted from AFR. 2.3 Measurement methods for expected losses Risk management practices The Credit Risk Management, Measurement and Control processes described in the previous paragraph, are also reference for the calculation of impairment of Loans and debt securities classified as financial assets at amortized cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures as required by IFRS9. For this purpose the calculation of impairment in accordance with expected credit losses is based on two main pillars: • the stage allocation of the credit exposure; • the associated calculation of expected credit loss In UniCredit group the Stage Allocation is based on a combination of relative and absolute elements; the main are: • comparison for each transaction between PD as measured at the time of origination and PD as at the reporting date, both calculated according to internal models, through thresholds set in such a way as to consider all key variables of each transaction that can affect the bank's expectation of PD changes over time (e.g. age, maturity, PD level at the time of origination); • absolute elements such as the backstops required by law (e.g. 30 days past-due). In this case UniCredit group has chosen not to reject the significant deterioration presumption after 30days past-due by allocating always in stage 2 transactions with more than 30 days past due; • additional internal evidence, including renegotiations of financial instruments due to financial difficulties met by the counterpart (e.g. Forborne classification). With regard to debt securities, UniCredit group is opting for application of the low credit risk exemption on investment grade securities, in full compliance with the accounting standard. The outcome of the stage allocation is the classification of credit exposure in Stage 1, Stage 2 or Stage 3 according to their absolute or relative credit quality with respect to the initial disbursement. Specifically: • the Stage 1 includes: - newly issued or acquired credit exposures - exposures for which credit risk has not significantly deteriorated since initial recognition; and - exposures having low credit risk (low credit risk exemption); • the Stage 2 includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • the Stage 3 includes impaired credit exposures. With reference to stage 3, it should be noted that it includes impaired exposures corresponding in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates, to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 24 July 2014). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 296 2018 Annual Report and Accounts · UniCredit With reference to the strategies of credit risk management, the use of Credit Risk Stress Test is considered of particular importance because its objective is to analyse portfolio vulnerability in case of an economic downturn or a structural change of the macroeconomic framework. In performing the stress test exercise, different scenarios are considered, based on increasing levels of severity. In addition, scenarios may also be defined based on specific economic hypotheses. The credit stress test models (or satellite models) are set of models aimed at translating the macro-economic conditions into credit risk parameters (PD/LGD). Within the wider stress testing framework the models serve as basis for calculating the stressed PD/LGD projections under the Adverse Scenarios. They are used as well for the estimation of Forward Looking component within IFRS9 framework. As regards the modelling methodology the current framework envisages two different approaches for High and Low default portfolios. Notably for high default portfolios (Retail, SME and Mid corporate) the internal historical data have been used to estimate, at cluster level (Country/Asset Class) direct relationship between default and recovery rate and macro-economic factors. However with regard the low default portfolios (e.g. Multinational, Banks, Sovereigns) for which no enough internal data are available, the historical financial statements are used to model a relationship between key financial items (which are inputs of the rating systems) and macro-economic factors. The projected key rating drivers, based on the macro-economic factors, are then used as input of the Internal Rating System in order to obtain the final stressed PD/LGD at counterpart level. Stress testing exercises is performed twice a year based on three scenarios both for normative (Pillar I) and economic (Pillar II) perspective. Pillar 1 stressed metrics (LLP and RWA) are calculated according to the EBA methodology. Pillar II stress metrics (EC and AFR) are calculated according to the following methodology: • Credit Economic Capital: Stressed PDs and LGDs are used as a basis to recalculate VaR and Economic Capital with CPM tool in each of the stressed scenarios. The Stressed Value at Risk refers to a VaR simulation where the underlying risk factors are stressed from normal to adverse case. In particular, the Stressed Value at Risk is intended to replicate a Value at Risk calculation that would be generated on the bank’s current portfolio if the relevant risk factors were experiencing a period of stress. • AFR: the amount stemming from the difference between the Stressed Expected Loss (calculated based on PD-TTC and LGD-TTC) and the actual Expected losses is deducted from AFR. 2.3 Measurement methods for expected losses Risk management practices The Credit Risk Management, Measurement and Control processes described in the previous paragraph, are also reference for the calculation of impairment of Loans and debt securities classified as financial assets at amortized cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures as required by IFRS9. For this purpose the calculation of impairment in accordance with expected credit losses is based on two main pillars: • the stage allocation of the credit exposure; • the associated calculation of expected credit loss In UniCredit group the Stage Allocation is based on a combination of relative and absolute elements; the main are: • comparison for each transaction between PD as measured at the time of origination and PD as at the reporting date, both calculated according to internal models, through thresholds set in such a way as to consider all key variables of each transaction that can affect the bank's expectation of PD changes over time (e.g. age, maturity, PD level at the time of origination); • absolute elements such as the backstops required by law (e.g. 30 days past-due). In this case UniCredit group has chosen not to reject the significant deterioration presumption after 30days past-due by allocating always in stage 2 transactions with more than 30 days past due; • additional internal evidence, including renegotiations of financial instruments due to financial difficulties met by the counterpart (e.g. Forborne classification). With regard to debt securities, UniCredit group is opting for application of the low credit risk exemption on investment grade securities, in full compliance with the accounting standard. The outcome of the stage allocation is the classification of credit exposure in Stage 1, Stage 2 or Stage 3 according to their absolute or relative credit quality with respect to the initial disbursement. Specifically: • the Stage 1 includes: - newly issued or acquired credit exposures - exposures for which credit risk has not significantly deteriorated since initial recognition; and - exposures having low credit risk (low credit risk exemption); • the Stage 2 includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • the Stage 3 includes impaired credit exposures. With reference to stage 3, it should be noted that it includes impaired exposures corresponding in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates, to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 24 July 2014). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 297 In particular, EBA26 has defined as “Non-Performing” exposures that meet one or both of the following criteria: • material exposures more than 90 days past due; • exposures for which the bank assesses that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. With reference to the quantitative component of the stage allocation model, the Group has adopted a statistic approach based on a quantile regression whose goal is to define a threshold in in terms of maximum variation acceptable between the PD measure at the disbursement and the one at the reference date. Fundamental part of the model is the definition of the quantile which identifies the stage 2 quota expected on average in the long time horizon. The medium long term quantile is determined based on the average expectation of portfolio deterioration calculated considering the default rate as well as one of the other deterioration stages of deterioration (e.g.: past-due 30 days). The exposures amount classified in stage 2 for each reporting date will fluctuate around the long term quantile on the basis of the current economic conditions as well as expectations about the future economic cycle. Stage Allocation model is tested at each reporting date, in order to timely capture both significant deterioration and its reverse in a symmetric way and to correctly allocate each transaction within the proper stage and related expected loss calculation model. The result of stage allocation affects the amount of expected credit losses recognized in financial statements. Indeed for exposures in Stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in Stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. To calculate expected loss, the Group has developed specific models based on PD, LGD and EAD parameters and the effective interest rate. In particular: • PD (Probability of Default),which expresses the exposure probability of default in a given time horizon (e.g.: 1 year); • LGD (Loss Given Default), which expresses the estimated loss percentage and therefore the expected recovery rate when a default event occurs; • EAD (Exposure at Default), expresses the level of the exposure at the time of default event; • the effective interest rate is the base rate which expresses the time value of money. Such parameters are calculated starting from the same parameters applied for regulatory purposes specifically adjusted in order to guarantee full consistency, a part from the different requirements, between accounting and regulatory treatment. Main adjustments are aimed at: • removing the conservativism required purely for regulatory purposes; • introducing “point in time” adjustments substituting the “through-the-cycle” view required by the regulation; • including “forward looking” information; • extending credit risks parameters to a multi years horizon. With reference to “lifetime” PD, PD curves calculated through-the-cycle are calibrated to reflect the point-in-time and forward-looking expectation with reference to the portfolio default rate. The recovery rate embedded in the LGD calculated along the economic cycle ("through-the-cycle") is adjusted in order to remove the margin of conservatism and reflect the current trends in recovery rates as well as expectations about future trends discounted to the effective interest rate or its best approximation. The EAD calculated along the instrument lifetime is determined by extending the prudential or managerial one-year model, removing the margin of conservatism and including expectations related to future average withdrawal levels of existing credit lines. The forecast in terms of default rate and recovery rate provided by the Stress Test function are embedded in the PD and LGD parameters during the calibration phase. The credit parameters, in fact, are normally calibrated on a horizon that considers the entire economic cycle (“Through-the-cycle - TTC"), so it is necessary to calibrate them "Point-in-time" - PIT" and "Forward-looking - FL" allowing to reflect in these credit parameters the current situation as well as expectations about the future evolution of the economic cycle. 26 The regulatory framework for the new definition of default will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as of 1 January 2021. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 297 In particular, EBA26 has defined as “Non-Performing” exposures that meet one or both of the following criteria: • material exposures more than 90 days past due; • exposures for which the bank assesses that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. With reference to the quantitative component of the stage allocation model, the Group has adopted a statistic approach based on a quantile regression whose goal is to define a threshold in in terms of maximum variation acceptable between the PD measure at the disbursement and the one at the reference date. Fundamental part of the model is the definition of the quantile which identifies the stage 2 quota expected on average in the long time horizon. The medium long term quantile is determined based on the average expectation of portfolio deterioration calculated considering the default rate as well as one of the other deterioration stages of deterioration (e.g.: past-due 30 days). The exposures amount classified in stage 2 for each reporting date will fluctuate around the long term quantile on the basis of the current economic conditions as well as expectations about the future economic cycle. Stage Allocation model is tested at each reporting date, in order to timely capture both significant deterioration and its reverse in a symmetric way and to correctly allocate each transaction within the proper stage and related expected loss calculation model. The result of stage allocation affects the amount of expected credit losses recognized in financial statements. Indeed for exposures in Stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in Stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. To calculate expected loss, the Group has developed specific models based on PD, LGD and EAD parameters and the effective interest rate. In particular: • PD (Probability of Default),which expresses the exposure probability of default in a given time horizon (e.g.: 1 year); • LGD (Loss Given Default), which expresses the estimated loss percentage and therefore the expected recovery rate when a default event occurs; • EAD (Exposure at Default), expresses the level of the exposure at the time of default event; • the effective interest rate is the base rate which expresses the time value of money. Such parameters are calculated starting from the same parameters applied for regulatory purposes specifically adjusted in order to guarantee full consistency, a part from the different requirements, between accounting and regulatory treatment. Main adjustments are aimed at: • removing the conservativism required purely for regulatory purposes; • introducing “point in time” adjustments substituting the “through-the-cycle” view required by the regulation; • including “forward looking” information; • extending credit risks parameters to a multi years horizon. With reference to “lifetime” PD, PD curves calculated through-the-cycle are calibrated to reflect the point-in-time and forward-looking expectation with reference to the portfolio default rate. The recovery rate embedded in the LGD calculated along the economic cycle ("through-the-cycle") is adjusted in order to remove the margin of conservatism and reflect the current trends in recovery rates as well as expectations about future trends discounted to the effective interest rate or its best approximation. The EAD calculated along the instrument lifetime is determined by extending the prudential or managerial one-year model, removing the margin of conservatism and including expectations related to future average withdrawal levels of existing credit lines. The forecast in terms of default rate and recovery rate provided by the Stress Test function are embedded in the PD and LGD parameters during the calibration phase. The credit parameters, in fact, are normally calibrated on a horizon that considers the entire economic cycle (“Through-the-cycle - TTC"), so it is necessary to calibrate them "Point-in-time" - PIT" and "Forward-looking - FL" allowing to reflect in these credit parameters the current situation as well as expectations about the future evolution of the economic cycle. 26 The regulatory framework for the new definition of default will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as of 1 January 2021. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 297 In particular, EBA26 has defined as “Non-Performing” exposures that meet one or both of the following criteria: • material exposures more than 90 days past due; • exposures for which the bank assesses that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. With reference to the quantitative component of the stage allocation model, the Group has adopted a statistic approach based on a quantile regression whose goal is to define a threshold in in terms of maximum variation acceptable between the PD measure at the disbursement and the one at the reference date. Fundamental part of the model is the definition of the quantile which identifies the stage 2 quota expected on average in the long time horizon. The medium long term quantile is determined based on the average expectation of portfolio deterioration calculated considering the default rate as well as one of the other deterioration stages of deterioration (e.g.: past-due 30 days). The exposures amount classified in stage 2 for each reporting date will fluctuate around the long term quantile on the basis of the current economic conditions as well as expectations about the future economic cycle. Stage Allocation model is tested at each reporting date, in order to timely capture both significant deterioration and its reverse in a symmetric way and to correctly allocate each transaction within the proper stage and related expected loss calculation model. The result of stage allocation affects the amount of expected credit losses recognized in financial statements. Indeed for exposures in Stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in Stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. To calculate expected loss, the Group has developed specific models based on PD, LGD and EAD parameters and the effective interest rate. In particular: • PD (Probability of Default),which expresses the exposure probability of default in a given time horizon (e.g.: 1 year); • LGD (Loss Given Default), which expresses the estimated loss percentage and therefore the expected recovery rate when a default event occurs; • EAD (Exposure at Default), expresses the level of the exposure at the time of default event; • the effective interest rate is the base rate which expresses the time value of money. Such parameters are calculated starting from the same parameters applied for regulatory purposes specifically adjusted in order to guarantee full consistency, a part from the different requirements, between accounting and regulatory treatment. Main adjustments are aimed at: • removing the conservativism required purely for regulatory purposes; • introducing “point in time” adjustments substituting the “through-the-cycle” view required by the regulation; • including “forward looking” information; • extending credit risks parameters to a multi years horizon. With reference to “lifetime” PD, PD curves calculated through-the-cycle are calibrated to reflect the point-in-time and forward-looking expectation with reference to the portfolio default rate. The recovery rate embedded in the LGD calculated along the economic cycle ("through-the-cycle") is adjusted in order to remove the margin of conservatism and reflect the current trends in recovery rates as well as expectations about future trends discounted to the effective interest rate or its best approximation. The EAD calculated along the instrument lifetime is determined by extending the prudential or managerial one-year model, removing the margin of conservatism and including expectations related to future average withdrawal levels of existing credit lines. The forecast in terms of default rate and recovery rate provided by the Stress Test function are embedded in the PD and LGD parameters during the calibration phase. The credit parameters, in fact, are normally calibrated on a horizon that considers the entire economic cycle (“Through-the-cycle - TTC"), so it is necessary to calibrate them "Point-in-time" - PIT" and "Forward-looking - FL" allowing to reflect in these credit parameters the current situation as well as expectations about the future evolution of the economic cycle. 26 The regulatory framework for the new definition of default will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as of 1 January 2021. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 297 In particular, EBA26 has defined as “Non-Performing” exposures that meet one or both of the following criteria: • material exposures more than 90 days past due; • exposures for which the bank assesses that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. With reference to the quantitative component of the stage allocation model, the Group has adopted a statistic approach based on a quantile regression whose goal is to define a threshold in in terms of maximum variation acceptable between the PD measure at the disbursement and the one at the reference date. Fundamental part of the model is the definition of the quantile which identifies the stage 2 quota expected on average in the long time horizon. The medium long term quantile is determined based on the average expectation of portfolio deterioration calculated considering the default rate as well as one of the other deterioration stages of deterioration (e.g.: past-due 30 days). The exposures amount classified in stage 2 for each reporting date will fluctuate around the long term quantile on the basis of the current economic conditions as well as expectations about the future economic cycle. Stage Allocation model is tested at each reporting date, in order to timely capture both significant deterioration and its reverse in a symmetric way and to correctly allocate each transaction within the proper stage and related expected loss calculation model. The result of stage allocation affects the amount of expected credit losses recognized in financial statements. Indeed for exposures in Stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in Stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. To calculate expected loss, the Group has developed specific models based on PD, LGD and EAD parameters and the effective interest rate. In particular: • PD (Probability of Default),which expresses the exposure probability of default in a given time horizon (e.g.: 1 year); • LGD (Loss Given Default), which expresses the estimated loss percentage and therefore the expected recovery rate when a default event occurs; • EAD (Exposure at Default), expresses the level of the exposure at the time of default event; • the effective interest rate is the base rate which expresses the time value of money. Such parameters are calculated starting from the same parameters applied for regulatory purposes specifically adjusted in order to guarantee full consistency, a part from the different requirements, between accounting and regulatory treatment. Main adjustments are aimed at: • removing the conservativism required purely for regulatory purposes; • introducing “point in time” adjustments substituting the “through-the-cycle” view required by the regulation; • including “forward looking” information; • extending credit risks parameters to a multi years horizon. With reference to “lifetime” PD, PD curves calculated through-the-cycle are calibrated to reflect the point-in-time and forward-looking expectation with reference to the portfolio default rate. The recovery rate embedded in the LGD calculated along the economic cycle ("through-the-cycle") is adjusted in order to remove the margin of conservatism and reflect the current trends in recovery rates as well as expectations about future trends discounted to the effective interest rate or its best approximation. The EAD calculated along the instrument lifetime is determined by extending the prudential or managerial one-year model, removing the margin of conservatism and including expectations related to future average withdrawal levels of existing credit lines. The forecast in terms of default rate and recovery rate provided by the Stress Test function are embedded in the PD and LGD parameters during the calibration phase. The credit parameters, in fact, are normally calibrated on a horizon that considers the entire economic cycle (“Through-the-cycle - TTC"), so it is necessary to calibrate them "Point-in-time" - PIT" and "Forward-looking - FL" allowing to reflect in these credit parameters the current situation as well as expectations about the future evolution of the economic cycle. 26 The regulatory framework for the new definition of default will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as of 1 January 2021. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 297 In particular, EBA26 has defined as “Non-Performing” exposures that meet one or both of the following criteria: • material exposures more than 90 days past due; • exposures for which the bank assesses that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. With reference to the quantitative component of the stage allocation model, the Group has adopted a statistic approach based on a quantile regression whose goal is to define a threshold in in terms of maximum variation acceptable between the PD measure at the disbursement and the one at the reference date. Fundamental part of the model is the definition of the quantile which identifies the stage 2 quota expected on average in the long time horizon. The medium long term quantile is determined based on the average expectation of portfolio deterioration calculated considering the default rate as well as one of the other deterioration stages of deterioration (e.g.: past-due 30 days). The exposures amount classified in stage 2 for each reporting date will fluctuate around the long term quantile on the basis of the current economic conditions as well as expectations about the future economic cycle. Stage Allocation model is tested at each reporting date, in order to timely capture both significant deterioration and its reverse in a symmetric way and to correctly allocate each transaction within the proper stage and related expected loss calculation model. The result of stage allocation affects the amount of expected credit losses recognized in financial statements. Indeed for exposures in Stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in Stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. To calculate expected loss, the Group has developed specific models based on PD, LGD and EAD parameters and the effective interest rate. In particular: • PD (Probability of Default),which expresses the exposure probability of default in a given time horizon (e.g.: 1 year); • LGD (Loss Given Default), which expresses the estimated loss percentage and therefore the expected recovery rate when a default event occurs; • EAD (Exposure at Default), expresses the level of the exposure at the time of default event; • the effective interest rate is the base rate which expresses the time value of money. Such parameters are calculated starting from the same parameters applied for regulatory purposes specifically adjusted in order to guarantee full consistency, a part from the different requirements, between accounting and regulatory treatment. Main adjustments are aimed at: • removing the conservativism required purely for regulatory purposes; • introducing “point in time” adjustments substituting the “through-the-cycle” view required by the regulation; • including “forward looking” information; • extending credit risks parameters to a multi years horizon. With reference to “lifetime” PD, PD curves calculated through-the-cycle are calibrated to reflect the point-in-time and forward-looking expectation with reference to the portfolio default rate. The recovery rate embedded in the LGD calculated along the economic cycle ("through-the-cycle") is adjusted in order to remove the margin of conservatism and reflect the current trends in recovery rates as well as expectations about future trends discounted to the effective interest rate or its best approximation. The EAD calculated along the instrument lifetime is determined by extending the prudential or managerial one-year model, removing the margin of conservatism and including expectations related to future average withdrawal levels of existing credit lines. The forecast in terms of default rate and recovery rate provided by the Stress Test function are embedded in the PD and LGD parameters during the calibration phase. The credit parameters, in fact, are normally calibrated on a horizon that considers the entire economic cycle (“Through-the-cycle - TTC"), so it is necessary to calibrate them "Point-in-time" - PIT" and "Forward-looking - FL" allowing to reflect in these credit parameters the current situation as well as expectations about the future evolution of the economic cycle. 26 The regulatory framework for the new definition of default will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as of 1 January 2021. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 298 2018 Annual Report and Accounts · UniCredit The expected credit loss deriving from the parameters previously described considers macroeconomic forecasts through the application of multiple scenarios to the forward looking components in order to compensate the partial non-linearity that is naturally embedded in the correlation between the macroeconomic changes and expected credit loss. Specifically, the non-linearity effect is incorporated by estimating a correction factor applied directly to the expected credit loss ("ECL") of the portfolio. The process defined to include macroeconomic scenarios is fully consistent with forecast processes used by UniCredit Group for additional risk management purposes (as for example processes adopted to calculate expected credit losses from macroeconomic forecasts based on EBA stress test and ICAAP Framework) and also takes advantage of independent UniCredit Research function. Specifically, the Group has selected three macroeconomic scenarios to determine the forward looking component, the baseline scenario, one positive scenario and one adverse scenario. The baseline scenario is the reference central scenario and therefore is considered to be the most probable realization. Positive and adverse scenarios represent possible alternative realizations, respectively better and worst compared to the baseline in terms of evolution of the economies of the countries in which the Group operates: • the Baseline Scenario reflects the macroeconomic evolution expected from the Group. It envisages a positive and stable economic growth, although in a slowing trend compared to 2018, both for the Eurozone and for most of the CEE countries, in a context where the short term interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. In detail, the annual real GDP growth for the Eurozone is foreseen at +1.7% for 2019, +1.1% for 2020 and +1.3% for 2021 (with Italy at +0.8%, +0.5% and +0.7% and Germany at +1.7%, +1.5% and +1.7%, respectively); among CEE countries, with the exception of Turkey (whose GDP is expected in significant contraction in 2019), economic growth is expected between +2.8% and +3.9% in 2019. The Scenario implies that the 3 months Euribor stays slightly negative in 2019 and goes back to positive in 2020; • the Positive Scenario is based on the hypothesis that the positive economic growth of 2018 both at global level and at European level only goes through a mild slowdown in 2019, sustained by the trend in the global commerce and by still accommodating economic policies. In this scenario, Eurozone would consolidate its growth results mainly due to the contribution of Germany, in acceleration until 2020, that would translate in a faster annual real GDP growth (with respect to the baseline scenario) between +0.2% and +0.6% in the 2019-2021 three-years horizon. More in detail, the annual growth of real GDP for the Eurozone would stay at +2% in 2019, slowing to +1.7% in 2020 and to +1.5% in 2021 (with Italy stable at +1% in 2019 and slowing to +0.9% in the subsequent two years) in a context of short term rates (3 months Euribor) still negative in 2019 and in continuous but slow increase in the 2020-2021 period, driven by a monetary policy tightening more aggressive than in the baseline scenario. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a trend of the economy better than the one assumed in the Baseline scenario; • the Adverse Scenario reflects one of the scenarios used in the assessment process of capital adequacy (ICAAP). In coherence with ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks within the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tensions between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for various asset classes and to a slowdown of the economic growth both in the Eurozone (lower of about one and a half percentage point per year with respect to the baseline scenario, in terms of real GDP growth in the three-years horizon) and in CEE countries. More in detail, the annual real GDP growth in the Eurozone would be +0.3% in 2019, -0.5% in 2020 and +0.5% in 2021 (with Italy at -0.6%, -1.6% and -0.5% respectively) in a context of short term rates (3 months Euribor) that would stay negative for the whole three-years horizon, based on the hypothesis that the ECB would prolong in such a market environment the liquidity support to markets. The occurrence of such scenario, at the time of its definition, is considered plausible and appropriate to quantify a potential adverse trend of the economy. In coherence with the scenario and with the magnitude of deviations from the baseline scenario, it is assumed that the Adverse scenario is less likely than the positive scenario. With reference to impaired exposures (Stage 3) the expected recoverable amount, and therefore the expected credit loss, is the present value of future cash flows expected to be recovered, discounted at the orginal interest rate. Therefore the main determinants of this value are: • the expected cash flows; • the expected timing of payments of these cash flows; • the effective interest rate used for discounting. Expected cash flows on defaulted exposures shall be calculated on an individual basis for “individually significant exposures”. Expected cash flows on already defaulted exposures that are not individually significant may be calculated either on an individual or a collective basis. Where a legal entity has a number of individually significant exposures towards one single counterparty, each loan is individually assessed while also considering the overall position of the counterparty. Future cash flows must be estimated considering the historical trend of recovery for exposures having similar credit risk features. The historical trend in any case is adjusted so to embeds the current economic environment and the expected economic outlooks. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 298 2018 Annual Report and Accounts · UniCredit The expected credit loss deriving from the parameters previously described considers macroeconomic forecasts through the application of multiple scenarios to the forward looking components in order to compensate the partial non-linearity that is naturally embedded in the correlation between the macroeconomic changes and expected credit loss. Specifically, the non-linearity effect is incorporated by estimating a correction factor applied directly to the expected credit loss ("ECL") of the portfolio. The process defined to include macroeconomic scenarios is fully consistent with forecast processes used by UniCredit Group for additional risk management purposes (as for example processes adopted to calculate expected credit losses from macroeconomic forecasts based on EBA stress test and ICAAP Framework) and also takes advantage of independent UniCredit Research function. Specifically, the Group has selected three macroeconomic scenarios to determine the forward looking component, the baseline scenario, one positive scenario and one adverse scenario. The baseline scenario is the reference central scenario and therefore is considered to be the most probable realization. Positive and adverse scenarios represent possible alternative realizations, respectively better and worst compared to the baseline in terms of evolution of the economies of the countries in which the Group operates: • the Baseline Scenario reflects the macroeconomic evolution expected from the Group. It envisages a positive and stable economic growth, although in a slowing trend compared to 2018, both for the Eurozone and for most of the CEE countries, in a context where the short term interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. In detail, the annual real GDP growth for the Eurozone is foreseen at +1.7% for 2019, +1.1% for 2020 and +1.3% for 2021 (with Italy at +0.8%, +0.5% and +0.7% and Germany at +1.7%, +1.5% and +1.7%, respectively); among CEE countries, with the exception of Turkey (whose GDP is expected in significant contraction in 2019), economic growth is expected between +2.8% and +3.9% in 2019. The Scenario implies that the 3 months Euribor stays slightly negative in 2019 and goes back to positive in 2020; • the Positive Scenario is based on the hypothesis that the positive economic growth of 2018 both at global level and at European level only goes through a mild slowdown in 2019, sustained by the trend in the global commerce and by still accommodating economic policies. In this scenario, Eurozone would consolidate its growth results mainly due to the contribution of Germany, in acceleration until 2020, that would translate in a faster annual real GDP growth (with respect to the baseline scenario) between +0.2% and +0.6% in the 2019-2021 three-years horizon. More in detail, the annual growth of real GDP for the Eurozone would stay at +2% in 2019, slowing to +1.7% in 2020 and to +1.5% in 2021 (with Italy stable at +1% in 2019 and slowing to +0.9% in the subsequent two years) in a context of short term rates (3 months Euribor) still negative in 2019 and in continuous but slow increase in the 2020-2021 period, driven by a monetary policy tightening more aggressive than in the baseline scenario. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a trend of the economy better than the one assumed in the Baseline scenario; • the Adverse Scenario reflects one of the scenarios used in the assessment process of capital adequacy (ICAAP). In coherence with ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks within the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tensions between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for various asset classes and to a slowdown of the economic growth both in the Eurozone (lower of about one and a half percentage point per year with respect to the baseline scenario, in terms of real GDP growth in the three-years horizon) and in CEE countries. More in detail, the annual real GDP growth in the Eurozone would be +0.3% in 2019, -0.5% in 2020 and +0.5% in 2021 (with Italy at -0.6%, -1.6% and -0.5% respectively) in a context of short term rates (3 months Euribor) that would stay negative for the whole three-years horizon, based on the hypothesis that the ECB would prolong in such a market environment the liquidity support to markets. The occurrence of such scenario, at the time of its definition, is considered plausible and appropriate to quantify a potential adverse trend of the economy. In coherence with the scenario and with the magnitude of deviations from the baseline scenario, it is assumed that the Adverse scenario is less likely than the positive scenario. With reference to impaired exposures (Stage 3) the expected recoverable amount, and therefore the expected credit loss, is the present value of future cash flows expected to be recovered, discounted at the orginal interest rate. Therefore the main determinants of this value are: • the expected cash flows; • the expected timing of payments of these cash flows; • the effective interest rate used for discounting. Expected cash flows on defaulted exposures shall be calculated on an individual basis for “individually significant exposures”. Expected cash flows on already defaulted exposures that are not individually significant may be calculated either on an individual or a collective basis. Where a legal entity has a number of individually significant exposures towards one single counterparty, each loan is individually assessed while also considering the overall position of the counterparty. Future cash flows must be estimated considering the historical trend of recovery for exposures having similar credit risk features. The historical trend in any case is adjusted so to embeds the current economic environment and the expected economic outlooks. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 298 2018 Annual Report and Accounts · UniCredit The expected credit loss deriving from the parameters previously described considers macroeconomic forecasts through the application of multiple scenarios to the forward looking components in order to compensate the partial non-linearity that is naturally embedded in the correlation between the macroeconomic changes and expected credit loss. Specifically, the non-linearity effect is incorporated by estimating a correction factor applied directly to the expected credit loss ("ECL") of the portfolio. The process defined to include macroeconomic scenarios is fully consistent with forecast processes used by UniCredit Group for additional risk management purposes (as for example processes adopted to calculate expected credit losses from macroeconomic forecasts based on EBA stress test and ICAAP Framework) and also takes advantage of independent UniCredit Research function. Specifically, the Group has selected three macroeconomic scenarios to determine the forward looking component, the baseline scenario, one positive scenario and one adverse scenario. The baseline scenario is the reference central scenario and therefore is considered to be the most probable realization. Positive and adverse scenarios represent possible alternative realizations, respectively better and worst compared to the baseline in terms of evolution of the economies of the countries in which the Group operates: • the Baseline Scenario reflects the macroeconomic evolution expected from the Group. It envisages a positive and stable economic growth, although in a slowing trend compared to 2018, both for the Eurozone and for most of the CEE countries, in a context where the short term interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. In detail, the annual real GDP growth for the Eurozone is foreseen at +1.7% for 2019, +1.1% for 2020 and +1.3% for 2021 (with Italy at +0.8%, +0.5% and +0.7% and Germany at +1.7%, +1.5% and +1.7%, respectively); among CEE countries, with the exception of Turkey (whose GDP is expected in significant contraction in 2019), economic growth is expected between +2.8% and +3.9% in 2019. The Scenario implies that the 3 months Euribor stays slightly negative in 2019 and goes back to positive in 2020; • the Positive Scenario is based on the hypothesis that the positive economic growth of 2018 both at global level and at European level only goes through a mild slowdown in 2019, sustained by the trend in the global commerce and by still accommodating economic policies. In this scenario, Eurozone would consolidate its growth results mainly due to the contribution of Germany, in acceleration until 2020, that would translate in a faster annual real GDP growth (with respect to the baseline scenario) between +0.2% and +0.6% in the 2019-2021 three-years horizon. More in detail, the annual growth of real GDP for the Eurozone would stay at +2% in 2019, slowing to +1.7% in 2020 and to +1.5% in 2021 (with Italy stable at +1% in 2019 and slowing to +0.9% in the subsequent two years) in a context of short term rates (3 months Euribor) still negative in 2019 and in continuous but slow increase in the 2020-2021 period, driven by a monetary policy tightening more aggressive than in the baseline scenario. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a trend of the economy better than the one assumed in the Baseline scenario; • the Adverse Scenario reflects one of the scenarios used in the assessment process of capital adequacy (ICAAP). In coherence with ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks within the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tensions between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for various asset classes and to a slowdown of the economic growth both in the Eurozone (lower of about one and a half percentage point per year with respect to the baseline scenario, in terms of real GDP growth in the three-years horizon) and in CEE countries. More in detail, the annual real GDP growth in the Eurozone would be +0.3% in 2019, -0.5% in 2020 and +0.5% in 2021 (with Italy at -0.6%, -1.6% and -0.5% respectively) in a context of short term rates (3 months Euribor) that would stay negative for the whole three-years horizon, based on the hypothesis that the ECB would prolong in such a market environment the liquidity support to markets. The occurrence of such scenario, at the time of its definition, is considered plausible and appropriate to quantify a potential adverse trend of the economy. In coherence with the scenario and with the magnitude of deviations from the baseline scenario, it is assumed that the Adverse scenario is less likely than the positive scenario. With reference to impaired exposures (Stage 3) the expected recoverable amount, and therefore the expected credit loss, is the present value of future cash flows expected to be recovered, discounted at the orginal interest rate. Therefore the main determinants of this value are: • the expected cash flows; • the expected timing of payments of these cash flows; • the effective interest rate used for discounting. Expected cash flows on defaulted exposures shall be calculated on an individual basis for “individually significant exposures”. Expected cash flows on already defaulted exposures that are not individually significant may be calculated either on an individual or a collective basis. Where a legal entity has a number of individually significant exposures towards one single counterparty, each loan is individually assessed while also considering the overall position of the counterparty. Future cash flows must be estimated considering the historical trend of recovery for exposures having similar credit risk features. The historical trend in any case is adjusted so to embeds the current economic environment and the expected economic outlooks. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 298 2018 Annual Report and Accounts · UniCredit The expected credit loss deriving from the parameters previously described considers macroeconomic forecasts through the application of multiple scenarios to the forward looking components in order to compensate the partial non-linearity that is naturally embedded in the correlation between the macroeconomic changes and expected credit loss. Specifically, the non-linearity effect is incorporated by estimating a correction factor applied directly to the expected credit loss ("ECL") of the portfolio. The process defined to include macroeconomic scenarios is fully consistent with forecast processes used by UniCredit Group for additional risk management purposes (as for example processes adopted to calculate expected credit losses from macroeconomic forecasts based on EBA stress test and ICAAP Framework) and also takes advantage of independent UniCredit Research function. Specifically, the Group has selected three macroeconomic scenarios to determine the forward looking component, the baseline scenario, one positive scenario and one adverse scenario. The baseline scenario is the reference central scenario and therefore is considered to be the most probable realization. Positive and adverse scenarios represent possible alternative realizations, respectively better and worst compared to the baseline in terms of evolution of the economies of the countries in which the Group operates: • the Baseline Scenario reflects the macroeconomic evolution expected from the Group. It envisages a positive and stable economic growth, although in a slowing trend compared to 2018, both for the Eurozone and for most of the CEE countries, in a context where the short term interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. In detail, the annual real GDP growth for the Eurozone is foreseen at +1.7% for 2019, +1.1% for 2020 and +1.3% for 2021 (with Italy at +0.8%, +0.5% and +0.7% and Germany at +1.7%, +1.5% and +1.7%, respectively); among CEE countries, with the exception of Turkey (whose GDP is expected in significant contraction in 2019), economic growth is expected between +2.8% and +3.9% in 2019. The Scenario implies that the 3 months Euribor stays slightly negative in 2019 and goes back to positive in 2020; • the Positive Scenario is based on the hypothesis that the positive economic growth of 2018 both at global level and at European level only goes through a mild slowdown in 2019, sustained by the trend in the global commerce and by still accommodating economic policies. In this scenario, Eurozone would consolidate its growth results mainly due to the contribution of Germany, in acceleration until 2020, that would translate in a faster annual real GDP growth (with respect to the baseline scenario) between +0.2% and +0.6% in the 2019-2021 three-years horizon. More in detail, the annual growth of real GDP for the Eurozone would stay at +2% in 2019, slowing to +1.7% in 2020 and to +1.5% in 2021 (with Italy stable at +1% in 2019 and slowing to +0.9% in the subsequent two years) in a context of short term rates (3 months Euribor) still negative in 2019 and in continuous but slow increase in the 2020-2021 period, driven by a monetary policy tightening more aggressive than in the baseline scenario. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a trend of the economy better than the one assumed in the Baseline scenario; • the Adverse Scenario reflects one of the scenarios used in the assessment process of capital adequacy (ICAAP). In coherence with ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks within the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tensions between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for various asset classes and to a slowdown of the economic growth both in the Eurozone (lower of about one and a half percentage point per year with respect to the baseline scenario, in terms of real GDP growth in the three-years horizon) and in CEE countries. More in detail, the annual real GDP growth in the Eurozone would be +0.3% in 2019, -0.5% in 2020 and +0.5% in 2021 (with Italy at -0.6%, -1.6% and -0.5% respectively) in a context of short term rates (3 months Euribor) that would stay negative for the whole three-years horizon, based on the hypothesis that the ECB would prolong in such a market environment the liquidity support to markets. The occurrence of such scenario, at the time of its definition, is considered plausible and appropriate to quantify a potential adverse trend of the economy. In coherence with the scenario and with the magnitude of deviations from the baseline scenario, it is assumed that the Adverse scenario is less likely than the positive scenario. With reference to impaired exposures (Stage 3) the expected recoverable amount, and therefore the expected credit loss, is the present value of future cash flows expected to be recovered, discounted at the orginal interest rate. Therefore the main determinants of this value are: • the expected cash flows; • the expected timing of payments of these cash flows; • the effective interest rate used for discounting. Expected cash flows on defaulted exposures shall be calculated on an individual basis for “individually significant exposures”. Expected cash flows on already defaulted exposures that are not individually significant may be calculated either on an individual or a collective basis. Where a legal entity has a number of individually significant exposures towards one single counterparty, each loan is individually assessed while also considering the overall position of the counterparty. Future cash flows must be estimated considering the historical trend of recovery for exposures having similar credit risk features. The historical trend in any case is adjusted so to embeds the current economic environment and the expected economic outlooks. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 298 2018 Annual Report and Accounts · UniCredit The expected credit loss deriving from the parameters previously described considers macroeconomic forecasts through the application of multiple scenarios to the forward looking components in order to compensate the partial non-linearity that is naturally embedded in the correlation between the macroeconomic changes and expected credit loss. Specifically, the non-linearity effect is incorporated by estimating a correction factor applied directly to the expected credit loss ("ECL") of the portfolio. The process defined to include macroeconomic scenarios is fully consistent with forecast processes used by UniCredit Group for additional risk management purposes (as for example processes adopted to calculate expected credit losses from macroeconomic forecasts based on EBA stress test and ICAAP Framework) and also takes advantage of independent UniCredit Research function. Specifically, the Group has selected three macroeconomic scenarios to determine the forward looking component, the baseline scenario, one positive scenario and one adverse scenario. The baseline scenario is the reference central scenario and therefore is considered to be the most probable realization. Positive and adverse scenarios represent possible alternative realizations, respectively better and worst compared to the baseline in terms of evolution of the economies of the countries in which the Group operates: • the Baseline Scenario reflects the macroeconomic evolution expected from the Group. It envisages a positive and stable economic growth, although in a slowing trend compared to 2018, both for the Eurozone and for most of the CEE countries, in a context where the short term interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. In detail, the annual real GDP growth for the Eurozone is foreseen at +1.7% for 2019, +1.1% for 2020 and +1.3% for 2021 (with Italy at +0.8%, +0.5% and +0.7% and Germany at +1.7%, +1.5% and +1.7%, respectively); among CEE countries, with the exception of Turkey (whose GDP is expected in significant contraction in 2019), economic growth is expected between +2.8% and +3.9% in 2019. The Scenario implies that the 3 months Euribor stays slightly negative in 2019 and goes back to positive in 2020; • the Positive Scenario is based on the hypothesis that the positive economic growth of 2018 both at global level and at European level only goes through a mild slowdown in 2019, sustained by the trend in the global commerce and by still accommodating economic policies. In this scenario, Eurozone would consolidate its growth results mainly due to the contribution of Germany, in acceleration until 2020, that would translate in a faster annual real GDP growth (with respect to the baseline scenario) between +0.2% and +0.6% in the 2019-2021 three-years horizon. More in detail, the annual growth of real GDP for the Eurozone would stay at +2% in 2019, slowing to +1.7% in 2020 and to +1.5% in 2021 (with Italy stable at +1% in 2019 and slowing to +0.9% in the subsequent two years) in a context of short term rates (3 months Euribor) still negative in 2019 and in continuous but slow increase in the 2020-2021 period, driven by a monetary policy tightening more aggressive than in the baseline scenario. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a trend of the economy better than the one assumed in the Baseline scenario; • the Adverse Scenario reflects one of the scenarios used in the assessment process of capital adequacy (ICAAP). In coherence with ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks within the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tensions between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for various asset classes and to a slowdown of the economic growth both in the Eurozone (lower of about one and a half percentage point per year with respect to the baseline scenario, in terms of real GDP growth in the three-years horizon) and in CEE countries. More in detail, the annual real GDP growth in the Eurozone would be +0.3% in 2019, -0.5% in 2020 and +0.5% in 2021 (with Italy at -0.6%, -1.6% and -0.5% respectively) in a context of short term rates (3 months Euribor) that would stay negative for the whole three-years horizon, based on the hypothesis that the ECB would prolong in such a market environment the liquidity support to markets. The occurrence of such scenario, at the time of its definition, is considered plausible and appropriate to quantify a potential adverse trend of the economy. In coherence with the scenario and with the magnitude of deviations from the baseline scenario, it is assumed that the Adverse scenario is less likely than the positive scenario. With reference to impaired exposures (Stage 3) the expected recoverable amount, and therefore the expected credit loss, is the present value of future cash flows expected to be recovered, discounted at the orginal interest rate. Therefore the main determinants of this value are: • the expected cash flows; • the expected timing of payments of these cash flows; • the effective interest rate used for discounting. Expected cash flows on defaulted exposures shall be calculated on an individual basis for “individually significant exposures”. Expected cash flows on already defaulted exposures that are not individually significant may be calculated either on an individual or a collective basis. Where a legal entity has a number of individually significant exposures towards one single counterparty, each loan is individually assessed while also considering the overall position of the counterparty. Future cash flows must be estimated considering the historical trend of recovery for exposures having similar credit risk features. The historical trend in any case is adjusted so to embeds the current economic environment and the expected economic outlooks. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 299 Expectations for the recovery of positions classified as "Default" or Non Performing are based on: • analytical business plans, for companies with Group exposure > €1 million; • statistical grids differentiated by product type and vintage classification, for other positions. In the assessment of impaired exposures (Stage 3), possible sales scenarios are also considered where the Group's NPL strategy envisages experiencing recovery through their sale to the market. For this purpose, the presumed recovery value of credit exposures is determined as weighted average between two scenarios: • internal recovery scenario, whose expected recovery value is estimated assuming an internal work-out process according to what has previously been described; • sale scenario, whose expected recovery value is estimated assuming the sale of the exposures on the market. The expected sale price is determined considering market or internal information based on the following hierarchy: - prices deriving from past sales of impaired loans with homogeneous characteristics with those evaluated; - prices observable on the market for impaired loans with homogeneous characteristics with those evaluated; - internal evaluation models. In order to calculate the weighted average, the probability of sale of credit exposures is defined by the appropriate Group structures on the basis of the volume of the sales forecasted by the aforementioned Non-Performing Asset Strategy compared to the total gross exposure of the portfolio being valued. The probability of internal recovery is equal to the complement to 1 of probability of sale. 2.4 Credit Risk Mitigation Techniques UniCredit group uses various credit risk mitigation techniques to reduce potential credit losses in case of the obligor default. Consistent with the ”Regulation (EU) No.575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR) and amending Regulation (EU) No.648/2012”, UniCredit group is firmly committed to satisfy the requirements for recognition of credit risk mitigation techniques, according to the different approaches adopted (Standardised, Foundation IRB or Advanced IRB), both for internal use in operations and for regulatory capital purposes as necessary for the calculation of credit risk capital requirement. At the moment specific Group guidelines are in force, issued by the Parent company, defining group-wide rules and principles with the aim to guide, govern and standardise the credit risk mitigation management, best practice, as well as in accordance with the relevant regulatory requirements. Integrating these guidelines, all legal entities have adopted internal regulations, specifying processes, strategies and procedures for collateral management. In particular, such internal regulations detail, according to each Country's local legal system, collateral eligibility, valuation and monitoring rules and ensure the soundness, legal enforceability and timely liquidation of valuable collateral. Collateral management assessments and credit risk mitigation compliance verification have been performed by the Group’s legal entities, specifically as part of Internal Rating System applications, in order to assess the presence of adequate documentation and procedure concerning the credit risk mitigation instruments used for supervisory capital. In particular, according to the current credit policy, collaterals or guarantees can be accepted only to support loans but cannot serve as a substitute for the borrower’s ability to meet its obligations. For this reason, in addition to the overall analysis of the borrowers’ credit worthiness and of his repayment capacity, collaterals are subject to specific evaluation and analysis with the aim to verify their viability to support the repayment of the exposure. Collaterals accepted in support of credit lines granted by the Group’s legal entities, primarily include: • real estate, both residential and commercial, • financial collateral (including cash deposits, debt securities, equities, and units of Undertakings for Collective Investment in Transferable Securities (UCITS). Other types of collateral (pledged goods or pledged loans and life insurance policies) are less common. UniCredit group also makes use of bilateral netting agreements for OTC derivatives (by means of ISDA and CSA agreements), Repos and securities lending. In relation to guarantees, their use is widespread within UniCredit group, though their characteristics differ among the different local markets; they can be accepted as complementary and accessory to the granting of loans, for which the risk mitigation serves as additional security for repayment. At consolidated level, personal guarantees are provided by banks, government, central banks and other public entities and others. The last category includes the personal guarantees provided by natural persons, whose eligibility for CRM depends on the approach used by the different legal entities. In case the guarantee is represented by credit derivatives, the protection providers are mainly banks and institutional counterparties. As already highlighted, the list of eligible protection providers depends on the specific approach adopted by each single legal entity. Specifically: • under the Standardized approach, eligible protection providers pertain to a restricted list of counterparts, such as Central Government and Central Banks, public sector entities and regional and local authorities, multilateral development banks, supervised institutions and corporate entities that have a credit assessment by an eligible ECAI; • legal entities adopting IRB-A may recognize guarantees provided that the relevant minimum requirements are satisfied and, furthermore, the legal Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 299 Expectations for the recovery of positions classified as "Default" or Non Performing are based on: • analytical business plans, for companies with Group exposure > €1 million; • statistical grids differentiated by product type and vintage classification, for other positions. In the assessment of impaired exposures (Stage 3), possible sales scenarios are also considered where the Group's NPL strategy envisages experiencing recovery through their sale to the market. For this purpose, the presumed recovery value of credit exposures is determined as weighted average between two scenarios: • internal recovery scenario, whose expected recovery value is estimated assuming an internal work-out process according to what has previously been described; • sale scenario, whose expected recovery value is estimated assuming the sale of the exposures on the market. The expected sale price is determined considering market or internal information based on the following hierarchy: - prices deriving from past sales of impaired loans with homogeneous characteristics with those evaluated; - prices observable on the market for impaired loans with homogeneous characteristics with those evaluated; - internal evaluation models. In order to calculate the weighted average, the probability of sale of credit exposures is defined by the appropriate Group structures on the basis of the volume of the sales forecasted by the aforementioned Non-Performing Asset Strategy compared to the total gross exposure of the portfolio being valued. The probability of internal recovery is equal to the complement to 1 of probability of sale. 2.4 Credit Risk Mitigation Techniques UniCredit group uses various credit risk mitigation techniques to reduce potential credit losses in case of the obligor default. Consistent with the ”Regulation (EU) No.575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR) and amending Regulation (EU) No.648/2012”, UniCredit group is firmly committed to satisfy the requirements for recognition of credit risk mitigation techniques, according to the different approaches adopted (Standardised, Foundation IRB or Advanced IRB), both for internal use in operations and for regulatory capital purposes as necessary for the calculation of credit risk capital requirement. At the moment specific Group guidelines are in force, issued by the Parent company, defining group-wide rules and principles with the aim to guide, govern and standardise the credit risk mitigation management, best practice, as well as in accordance with the relevant regulatory requirements. Integrating these guidelines, all legal entities have adopted internal regulations, specifying processes, strategies and procedures for collateral management. In particular, such internal regulations detail, according to each Country's local legal system, collateral eligibility, valuation and monitoring rules and ensure the soundness, legal enforceability and timely liquidation of valuable collateral. Collateral management assessments and credit risk mitigation compliance verification have been performed by the Group’s legal entities, specifically as part of Internal Rating System applications, in order to assess the presence of adequate documentation and procedure concerning the credit risk mitigation instruments used for supervisory capital. In particular, according to the current credit policy, collaterals or guarantees can be accepted only to support loans but cannot serve as a substitute for the borrower’s ability to meet its obligations. For this reason, in addition to the overall analysis of the borrowers’ credit worthiness and of his repayment capacity, collaterals are subject to specific evaluation and analysis with the aim to verify their viability to support the repayment of the exposure. Collaterals accepted in support of credit lines granted by the Group’s legal entities, primarily include: • real estate, both residential and commercial, • financial collateral (including cash deposits, debt securities, equities, and units of Undertakings for Collective Investment in Transferable Securities (UCITS). Other types of collateral (pledged goods or pledged loans and life insurance policies) are less common. UniCredit group also makes use of bilateral netting agreements for OTC derivatives (by means of ISDA and CSA agreements), Repos and securities lending. In relation to guarantees, their use is widespread within UniCredit group, though their characteristics differ among the different local markets; they can be accepted as complementary and accessory to the granting of loans, for which the risk mitigation serves as additional security for repayment. At consolidated level, personal guarantees are provided by banks, government, central banks and other public entities and others. The last category includes the personal guarantees provided by natural persons, whose eligibility for CRM depends on the approach used by the different legal entities. In case the guarantee is represented by credit derivatives, the protection providers are mainly banks and institutional counterparties. As already highlighted, the list of eligible protection providers depends on the specific approach adopted by each single legal entity. Specifically: • under the Standardized approach, eligible protection providers pertain to a restricted list of counterparts, such as Central Government and Central Banks, public sector entities and regional and local authorities, multilateral development banks, supervised institutions and corporate entities that have a credit assessment by an eligible ECAI; • legal entities adopting IRB-A may recognize guarantees provided that the relevant minimum requirements are satisfied and, furthermore, the legal Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 299 Expectations for the recovery of positions classified as "Default" or Non Performing are based on: • analytical business plans, for companies with Group exposure > €1 million; • statistical grids differentiated by product type and vintage classification, for other positions. In the assessment of impaired exposures (Stage 3), possible sales scenarios are also considered where the Group's NPL strategy envisages experiencing recovery through their sale to the market. For this purpose, the presumed recovery value of credit exposures is determined as weighted average between two scenarios: • internal recovery scenario, whose expected recovery value is estimated assuming an internal work-out process according to what has previously been described; • sale scenario, whose expected recovery value is estimated assuming the sale of the exposures on the market. The expected sale price is determined considering market or internal information based on the following hierarchy: - prices deriving from past sales of impaired loans with homogeneous characteristics with those evaluated; - prices observable on the market for impaired loans with homogeneous characteristics with those evaluated; - internal evaluation models. In order to calculate the weighted average, the probability of sale of credit exposures is defined by the appropriate Group structures on the basis of the volume of the sales forecasted by the aforementioned Non-Performing Asset Strategy compared to the total gross exposure of the portfolio being valued. The probability of internal recovery is equal to the complement to 1 of probability of sale. 2.4 Credit Risk Mitigation Techniques UniCredit group uses various credit risk mitigation techniques to reduce potential credit losses in case of the obligor default. Consistent with the ”Regulation (EU) No.575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR) and amending Regulation (EU) No.648/2012”, UniCredit group is firmly committed to satisfy the requirements for recognition of credit risk mitigation techniques, according to the different approaches adopted (Standardised, Foundation IRB or Advanced IRB), both for internal use in operations and for regulatory capital purposes as necessary for the calculation of credit risk capital requirement. At the moment specific Group guidelines are in force, issued by the Parent company, defining group-wide rules and principles with the aim to guide, govern and standardise the credit risk mitigation management, best practice, as well as in accordance with the relevant regulatory requirements. Integrating these guidelines, all legal entities have adopted internal regulations, specifying processes, strategies and procedures for collateral management. In particular, such internal regulations detail, according to each Country's local legal system, collateral eligibility, valuation and monitoring rules and ensure the soundness, legal enforceability and timely liquidation of valuable collateral. Collateral management assessments and credit risk mitigation compliance verification have been performed by the Group’s legal entities, specifically as part of Internal Rating System applications, in order to assess the presence of adequate documentation and procedure concerning the credit risk mitigation instruments used for supervisory capital. In particular, according to the current credit policy, collaterals or guarantees can be accepted only to support loans but cannot serve as a substitute for the borrower’s ability to meet its obligations. For this reason, in addition to the overall analysis of the borrowers’ credit worthiness and of his repayment capacity, collaterals are subject to specific evaluation and analysis with the aim to verify their viability to support the repayment of the exposure. Collaterals accepted in support of credit lines granted by the Group’s legal entities, primarily include: • real estate, both residential and commercial, • financial collateral (including cash deposits, debt securities, equities, and units of Undertakings for Collective Investment in Transferable Securities (UCITS). Other types of collateral (pledged goods or pledged loans and life insurance policies) are less common. UniCredit group also makes use of bilateral netting agreements for OTC derivatives (by means of ISDA and CSA agreements), Repos and securities lending. In relation to guarantees, their use is widespread within UniCredit group, though their characteristics differ among the different local markets; they can be accepted as complementary and accessory to the granting of loans, for which the risk mitigation serves as additional security for repayment. At consolidated level, personal guarantees are provided by banks, government, central banks and other public entities and others. The last category includes the personal guarantees provided by natural persons, whose eligibility for CRM depends on the approach used by the different legal entities. In case the guarantee is represented by credit derivatives, the protection providers are mainly banks and institutional counterparties. As already highlighted, the list of eligible protection providers depends on the specific approach adopted by each single legal entity. Specifically: • under the Standardized approach, eligible protection providers pertain to a restricted list of counterparts, such as Central Government and Central Banks, public sector entities and regional and local authorities, multilateral development banks, supervised institutions and corporate entities that have a credit assessment by an eligible ECAI; • legal entities adopting IRB-A may recognize guarantees provided that the relevant minimum requirements are satisfied and, furthermore, the legal Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 299 Expectations for the recovery of positions classified as "Default" or Non Performing are based on: • analytical business plans, for companies with Group exposure > €1 million; • statistical grids differentiated by product type and vintage classification, for other positions. In the assessment of impaired exposures (Stage 3), possible sales scenarios are also considered where the Group's NPL strategy envisages experiencing recovery through their sale to the market. For this purpose, the presumed recovery value of credit exposures is determined as weighted average between two scenarios: • internal recovery scenario, whose expected recovery value is estimated assuming an internal work-out process according to what has previously been described; • sale scenario, whose expected recovery value is estimated assuming the sale of the exposures on the market. The expected sale price is determined considering market or internal information based on the following hierarchy: - prices deriving from past sales of impaired loans with homogeneous characteristics with those evaluated; - prices observable on the market for impaired loans with homogeneous characteristics with those evaluated; - internal evaluation models. In order to calculate the weighted average, the probability of sale of credit exposures is defined by the appropriate Group structures on the basis of the volume of the sales forecasted by the aforementioned Non-Performing Asset Strategy compared to the total gross exposure of the portfolio being valued. The probability of internal recovery is equal to the complement to 1 of probability of sale. 2.4 Credit Risk Mitigation Techniques UniCredit group uses various credit risk mitigation techniques to reduce potential credit losses in case of the obligor default. Consistent with the ”Regulation (EU) No.575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR) and amending Regulation (EU) No.648/2012”, UniCredit group is firmly committed to satisfy the requirements for recognition of credit risk mitigation techniques, according to the different approaches adopted (Standardised, Foundation IRB or Advanced IRB), both for internal use in operations and for regulatory capital purposes as necessary for the calculation of credit risk capital requirement. At the moment specific Group guidelines are in force, issued by the Parent company, defining group-wide rules and principles with the aim to guide, govern and standardise the credit risk mitigation management, best practice, as well as in accordance with the relevant regulatory requirements. Integrating these guidelines, all legal entities have adopted internal regulations, specifying processes, strategies and procedures for collateral management. In particular, such internal regulations detail, according to each Country's local legal system, collateral eligibility, valuation and monitoring rules and ensure the soundness, legal enforceability and timely liquidation of valuable collateral. Collateral management assessments and credit risk mitigation compliance verification have been performed by the Group’s legal entities, specifically as part of Internal Rating System applications, in order to assess the presence of adequate documentation and procedure concerning the credit risk mitigation instruments used for supervisory capital. In particular, according to the current credit policy, collaterals or guarantees can be accepted only to support loans but cannot serve as a substitute for the borrower’s ability to meet its obligations. For this reason, in addition to the overall analysis of the borrowers’ credit worthiness and of his repayment capacity, collaterals are subject to specific evaluation and analysis with the aim to verify their viability to support the repayment of the exposure. Collaterals accepted in support of credit lines granted by the Group’s legal entities, primarily include: • real estate, both residential and commercial, • financial collateral (including cash deposits, debt securities, equities, and units of Undertakings for Collective Investment in Transferable Securities (UCITS). Other types of collateral (pledged goods or pledged loans and life insurance policies) are less common. UniCredit group also makes use of bilateral netting agreements for OTC derivatives (by means of ISDA and CSA agreements), Repos and securities lending. In relation to guarantees, their use is widespread within UniCredit group, though their characteristics differ among the different local markets; they can be accepted as complementary and accessory to the granting of loans, for which the risk mitigation serves as additional security for repayment. At consolidated level, personal guarantees are provided by banks, government, central banks and other public entities and others. The last category includes the personal guarantees provided by natural persons, whose eligibility for CRM depends on the approach used by the different legal entities. In case the guarantee is represented by credit derivatives, the protection providers are mainly banks and institutional counterparties. As already highlighted, the list of eligible protection providers depends on the specific approach adopted by each single legal entity. Specifically: • under the Standardized approach, eligible protection providers pertain to a restricted list of counterparts, such as Central Government and Central Banks, public sector entities and regional and local authorities, multilateral development banks, supervised institutions and corporate entities that have a credit assessment by an eligible ECAI; • legal entities adopting IRB-A may recognize guarantees provided that the relevant minimum requirements are satisfied and, furthermore, the legal Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 299 Expectations for the recovery of positions classified as "Default" or Non Performing are based on: • analytical business plans, for companies with Group exposure > €1 million; • statistical grids differentiated by product type and vintage classification, for other positions. In the assessment of impaired exposures (Stage 3), possible sales scenarios are also considered where the Group's NPL strategy envisages experiencing recovery through their sale to the market. For this purpose, the presumed recovery value of credit exposures is determined as weighted average between two scenarios: • internal recovery scenario, whose expected recovery value is estimated assuming an internal work-out process according to what has previously been described; • sale scenario, whose expected recovery value is estimated assuming the sale of the exposures on the market. The expected sale price is determined considering market or internal information based on the following hierarchy: - prices deriving from past sales of impaired loans with homogeneous characteristics with those evaluated; - prices observable on the market for impaired loans with homogeneous characteristics with those evaluated; - internal evaluation models. In order to calculate the weighted average, the probability of sale of credit exposures is defined by the appropriate Group structures on the basis of the volume of the sales forecasted by the aforementioned Non-Performing Asset Strategy compared to the total gross exposure of the portfolio being valued. The probability of internal recovery is equal to the complement to 1 of probability of sale. 2.4 Credit Risk Mitigation Techniques UniCredit group uses various credit risk mitigation techniques to reduce potential credit losses in case of the obligor default. Consistent with the ”Regulation (EU) No.575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR) and amending Regulation (EU) No.648/2012”, UniCredit group is firmly committed to satisfy the requirements for recognition of credit risk mitigation techniques, according to the different approaches adopted (Standardised, Foundation IRB or Advanced IRB), both for internal use in operations and for regulatory capital purposes as necessary for the calculation of credit risk capital requirement. At the moment specific Group guidelines are in force, issued by the Parent company, defining group-wide rules and principles with the aim to guide, govern and standardise the credit risk mitigation management, best practice, as well as in accordance with the relevant regulatory requirements. Integrating these guidelines, all legal entities have adopted internal regulations, specifying processes, strategies and procedures for collateral management. In particular, such internal regulations detail, according to each Country's local legal system, collateral eligibility, valuation and monitoring rules and ensure the soundness, legal enforceability and timely liquidation of valuable collateral. Collateral management assessments and credit risk mitigation compliance verification have been performed by the Group’s legal entities, specifically as part of Internal Rating System applications, in order to assess the presence of adequate documentation and procedure concerning the credit risk mitigation instruments used for supervisory capital. In particular, according to the current credit policy, collaterals or guarantees can be accepted only to support loans but cannot serve as a substitute for the borrower’s ability to meet its obligations. For this reason, in addition to the overall analysis of the borrowers’ credit worthiness and of his repayment capacity, collaterals are subject to specific evaluation and analysis with the aim to verify their viability to support the repayment of the exposure. Collaterals accepted in support of credit lines granted by the Group’s legal entities, primarily include: • real estate, both residential and commercial, • financial collateral (including cash deposits, debt securities, equities, and units of Undertakings for Collective Investment in Transferable Securities (UCITS). Other types of collateral (pledged goods or pledged loans and life insurance policies) are less common. UniCredit group also makes use of bilateral netting agreements for OTC derivatives (by means of ISDA and CSA agreements), Repos and securities lending. In relation to guarantees, their use is widespread within UniCredit group, though their characteristics differ among the different local markets; they can be accepted as complementary and accessory to the granting of loans, for which the risk mitigation serves as additional security for repayment. At consolidated level, personal guarantees are provided by banks, government, central banks and other public entities and others. The last category includes the personal guarantees provided by natural persons, whose eligibility for CRM depends on the approach used by the different legal entities. In case the guarantee is represented by credit derivatives, the protection providers are mainly banks and institutional counterparties. As already highlighted, the list of eligible protection providers depends on the specific approach adopted by each single legal entity. Specifically: • under the Standardized approach, eligible protection providers pertain to a restricted list of counterparts, such as Central Government and Central Banks, public sector entities and regional and local authorities, multilateral development banks, supervised institutions and corporate entities that have a credit assessment by an eligible ECAI; • legal entities adopting IRB-A may recognize guarantees provided that the relevant minimum requirements are satisfied and, furthermore, the legal Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 300 2018 Annual Report and Accounts · UniCredit entity can evaluate the protection provider risk profile, through an internal rating system, at the time the guarantee is provided and over its entire duration. For what concerns netting agreements of reciprocal credit exposures between the Bank and its counterparty are considered eligible if they are legally effective and enforceable in all relevant jurisdictions, including in the event of default or bankruptcy of counterparty, and if they meet the following operational conditions: • provide for the netting of gains and losses on transactions cleared under the master agreement; • fulfil the minimum requirements for recognition of financial collateral (valuation requirements and monitoring). Group legal entities can apply netting agreements only if they are able at any time to determine the position netting value (assets and liabilities with the same counterparty that are subject to the netting agreement), monitoring and controlling debts, credit and netting value. UniCredit group makes use of netting instruments mainly for OTC derivatives, repos and securities lending transactions where the counterparties are, generally, Financial Institutions. The management system of credit risk mitigation techniques is embedded in the credit approval process and in the credit risk monitoring process, to support the evaluation and data quality checks of collaterals/guarantees and their appropriate linking to the categories defined for LGD estimates purposes. Controls and related responsibilities are duly formalised and documented in internal rules. Furthermore processes are implemented to control that all the relevant information regarding the identification and evaluation of the credit protection are correctly registered in the system. In the collateral acquisition phase, UniCredit group emphasises the importance of processes and controls of the legal certainty requirements of the protection, as well as the assessment of the suitability of the collateral or guarantee. In case of personal guarantees, the protection provider (or the protection seller in case of credit default swap) has to be assessed in order to measure his/her credit worthiness and risk profile. Monitoring processes of credit risk mitigation techniques ensure that general and specific requirements set by credit policies, internal and regulatory rules are met over the time. Among such processes it is pointed out that one connected to concentration risk, which occurs when the major part of Group-wide collateral financial assets (at portfolio level) are concentrated in a small number of collateral types, protection instruments, or specific providers of collaterals. Such concentration is monitored and controlled by the following processes/mechanisms: • in case of personal guarantees/credit derivatives, a contingent liability (indirect risk) is charged to the protection provider. In the evaluation of the credit application, a secondary commitment is added to the guarantor and it is reflected in the guarantor’s total credit exposure as deemed competent and approved in accordance with the bank’s system of authority; • in case the protection provider, directly or indirectly, is a Central Bank or a Sovereign country, a specific credit limit has to be instructed and, if the guarantor is a foreign subject, it is necessary to evaluate case by case the definition of a country limit. 3. Non-performing credit exposures 3.1 Management strategies and policies In order to ensure a homogeneous approach in the classification of credit exposures for regulatory and reporting purposes, UniCredit has defined group-wide guidelines for the classification of non-performing exposures that refer to the principles reported in the Implementing Technical Standards issued by the Authority European Banking in 2014. With regard to this definition (which includes the concept of "default" ruled by Art.178 EU Regulation No.575/2013 and the "impaired" definition reported in accounting standard IFRS9) at operative level UniCredit group has pursued a substantial alignment between the three definitions. Furthermore, in accordance with the provisions of Banca d’Italia Circular 272/2008, credit exposures of each group entity must be classified in one of the following risk classes: • past-due and/or overdue exposures: problematic exposures that are more than 90 days past due on any material obligation (the latter assessed in line with article 178 (2d) of EU Regulation No.575/2013 and the Technical Standards of the 'EBA); • unlikely to pay: the classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realizing collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any (or rate) past due and unpaid amount; • bad loans: exposures to borrowers in a state of insolvency (even when not recognized in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank. According to the group rules, all debtors in the Bank's portfolio must be mapped in the classes defined by the Banca d’Italia, regardless of local reporting which has to be performed according to local accounting standards and/or local supervisory regulations or instructions the instructions. These classification rules are further integrated by accounting principles defined in IFRS9, according to which credit exposures must be allocated in three "Stages" (for details, see the section "Expected loss measurement method” - Section 2). With regard to non-performing exposures, the allocation to "Stage 3" occurs when the customer's status changes into "non-performing". This is a classification at the counterparty and not at transaction level basing on specific regulations on the classification of non-performing exposures. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 300 2018 Annual Report and Accounts · UniCredit entity can evaluate the protection provider risk profile, through an internal rating system, at the time the guarantee is provided and over its entire duration. For what concerns netting agreements of reciprocal credit exposures between the Bank and its counterparty are considered eligible if they are legally effective and enforceable in all relevant jurisdictions, including in the event of default or bankruptcy of counterparty, and if they meet the following operational conditions: • provide for the netting of gains and losses on transactions cleared under the master agreement; • fulfil the minimum requirements for recognition of financial collateral (valuation requirements and monitoring). Group legal entities can apply netting agreements only if they are able at any time to determine the position netting value (assets and liabilities with the same counterparty that are subject to the netting agreement), monitoring and controlling debts, credit and netting value. UniCredit group makes use of netting instruments mainly for OTC derivatives, repos and securities lending transactions where the counterparties are, generally, Financial Institutions. The management system of credit risk mitigation techniques is embedded in the credit approval process and in the credit risk monitoring process, to support the evaluation and data quality checks of collaterals/guarantees and their appropriate linking to the categories defined for LGD estimates purposes. Controls and related responsibilities are duly formalised and documented in internal rules. Furthermore processes are implemented to control that all the relevant information regarding the identification and evaluation of the credit protection are correctly registered in the system. In the collateral acquisition phase, UniCredit group emphasises the importance of processes and controls of the legal certainty requirements of the protection, as well as the assessment of the suitability of the collateral or guarantee. In case of personal guarantees, the protection provider (or the protection seller in case of credit default swap) has to be assessed in order to measure his/her credit worthiness and risk profile. Monitoring processes of credit risk mitigation techniques ensure that general and specific requirements set by credit policies, internal and regulatory rules are met over the time. Among such processes it is pointed out that one connected to concentration risk, which occurs when the major part of Group-wide collateral financial assets (at portfolio level) are concentrated in a small number of collateral types, protection instruments, or specific providers of collaterals. Such concentration is monitored and controlled by the following processes/mechanisms: • in case of personal guarantees/credit derivatives, a contingent liability (indirect risk) is charged to the protection provider. In the evaluation of the credit application, a secondary commitment is added to the guarantor and it is reflected in the guarantor’s total credit exposure as deemed competent and approved in accordance with the bank’s system of authority; • in case the protection provider, directly or indirectly, is a Central Bank or a Sovereign country, a specific credit limit has to be instructed and, if the guarantor is a foreign subject, it is necessary to evaluate case by case the definition of a country limit. 3. Non-performing credit exposures 3.1 Management strategies and policies In order to ensure a homogeneous approach in the classification of credit exposures for regulatory and reporting purposes, UniCredit has defined group-wide guidelines for the classification of non-performing exposures that refer to the principles reported in the Implementing Technical Standards issued by the Authority European Banking in 2014. With regard to this definition (which includes the concept of "default" ruled by Art.178 EU Regulation No.575/2013 and the "impaired" definition reported in accounting standard IFRS9) at operative level UniCredit group has pursued a substantial alignment between the three definitions. Furthermore, in accordance with the provisions of Banca d’Italia Circular 272/2008, credit exposures of each group entity must be classified in one of the following risk classes: • past-due and/or overdue exposures: problematic exposures that are more than 90 days past due on any material obligation (the latter assessed in line with article 178 (2d) of EU Regulation No.575/2013 and the Technical Standards of the 'EBA); • unlikely to pay: the classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realizing collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any (or rate) past due and unpaid amount; • bad loans: exposures to borrowers in a state of insolvency (even when not recognized in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank. According to the group rules, all debtors in the Bank's portfolio must be mapped in the classes defined by the Banca d’Italia, regardless of local reporting which has to be performed according to local accounting standards and/or local supervisory regulations or instructions the instructions. These classification rules are further integrated by accounting principles defined in IFRS9, according to which credit exposures must be allocated in three "Stages" (for details, see the section "Expected loss measurement method” - Section 2). With regard to non-performing exposures, the allocation to "Stage 3" occurs when the customer's status changes into "non-performing". This is a classification at the counterparty and not at transaction level basing on specific regulations on the classification of non-performing exposures. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 300 2018 Annual Report and Accounts · UniCredit entity can evaluate the protection provider risk profile, through an internal rating system, at the time the guarantee is provided and over its entire duration. For what concerns netting agreements of reciprocal credit exposures between the Bank and its counterparty are considered eligible if they are legally effective and enforceable in all relevant jurisdictions, including in the event of default or bankruptcy of counterparty, and if they meet the following operational conditions: • provide for the netting of gains and losses on transactions cleared under the master agreement; • fulfil the minimum requirements for recognition of financial collateral (valuation requirements and monitoring). Group legal entities can apply netting agreements only if they are able at any time to determine the position netting value (assets and liabilities with the same counterparty that are subject to the netting agreement), monitoring and controlling debts, credit and netting value. UniCredit group makes use of netting instruments mainly for OTC derivatives, repos and securities lending transactions where the counterparties are, generally, Financial Institutions. The management system of credit risk mitigation techniques is embedded in the credit approval process and in the credit risk monitoring process, to support the evaluation and data quality checks of collaterals/guarantees and their appropriate linking to the categories defined for LGD estimates purposes. Controls and related responsibilities are duly formalised and documented in internal rules. Furthermore processes are implemented to control that all the relevant information regarding the identification and evaluation of the credit protection are correctly registered in the system. In the collateral acquisition phase, UniCredit group emphasises the importance of processes and controls of the legal certainty requirements of the protection, as well as the assessment of the suitability of the collateral or guarantee. In case of personal guarantees, the protection provider (or the protection seller in case of credit default swap) has to be assessed in order to measure his/her credit worthiness and risk profile. Monitoring processes of credit risk mitigation techniques ensure that general and specific requirements set by credit policies, internal and regulatory rules are met over the time. Among such processes it is pointed out that one connected to concentration risk, which occurs when the major part of Group-wide collateral financial assets (at portfolio level) are concentrated in a small number of collateral types, protection instruments, or specific providers of collaterals. Such concentration is monitored and controlled by the following processes/mechanisms: • in case of personal guarantees/credit derivatives, a contingent liability (indirect risk) is charged to the protection provider. In the evaluation of the credit application, a secondary commitment is added to the guarantor and it is reflected in the guarantor’s total credit exposure as deemed competent and approved in accordance with the bank’s system of authority; • in case the protection provider, directly or indirectly, is a Central Bank or a Sovereign country, a specific credit limit has to be instructed and, if the guarantor is a foreign subject, it is necessary to evaluate case by case the definition of a country limit. 3. Non-performing credit exposures 3.1 Management strategies and policies In order to ensure a homogeneous approach in the classification of credit exposures for regulatory and reporting purposes, UniCredit has defined group-wide guidelines for the classification of non-performing exposures that refer to the principles reported in the Implementing Technical Standards issued by the Authority European Banking in 2014. With regard to this definition (which includes the concept of "default" ruled by Art.178 EU Regulation No.575/2013 and the "impaired" definition reported in accounting standard IFRS9) at operative level UniCredit group has pursued a substantial alignment between the three definitions. Furthermore, in accordance with the provisions of Banca d’Italia Circular 272/2008, credit exposures of each group entity must be classified in one of the following risk classes: • past-due and/or overdue exposures: problematic exposures that are more than 90 days past due on any material obligation (the latter assessed in line with article 178 (2d) of EU Regulation No.575/2013 and the Technical Standards of the 'EBA); • unlikely to pay: the classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realizing collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any (or rate) past due and unpaid amount; • bad loans: exposures to borrowers in a state of insolvency (even when not recognized in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank. According to the group rules, all debtors in the Bank's portfolio must be mapped in the classes defined by the Banca d’Italia, regardless of local reporting which has to be performed according to local accounting standards and/or local supervisory regulations or instructions the instructions. These classification rules are further integrated by accounting principles defined in IFRS9, according to which credit exposures must be allocated in three "Stages" (for details, see the section "Expected loss measurement method” - Section 2). With regard to non-performing exposures, the allocation to "Stage 3" occurs when the customer's status changes into "non-performing". This is a classification at the counterparty and not at transaction level basing on specific regulations on the classification of non-performing exposures. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 300 2018 Annual Report and Accounts · UniCredit entity can evaluate the protection provider risk profile, through an internal rating system, at the time the guarantee is provided and over its entire duration. For what concerns netting agreements of reciprocal credit exposures between the Bank and its counterparty are considered eligible if they are legally effective and enforceable in all relevant jurisdictions, including in the event of default or bankruptcy of counterparty, and if they meet the following operational conditions: • provide for the netting of gains and losses on transactions cleared under the master agreement; • fulfil the minimum requirements for recognition of financial collateral (valuation requirements and monitoring). Group legal entities can apply netting agreements only if they are able at any time to determine the position netting value (assets and liabilities with the same counterparty that are subject to the netting agreement), monitoring and controlling debts, credit and netting value. UniCredit group makes use of netting instruments mainly for OTC derivatives, repos and securities lending transactions where the counterparties are, generally, Financial Institutions. The management system of credit risk mitigation techniques is embedded in the credit approval process and in the credit risk monitoring process, to support the evaluation and data quality checks of collaterals/guarantees and their appropriate linking to the categories defined for LGD estimates purposes. Controls and related responsibilities are duly formalised and documented in internal rules. Furthermore processes are implemented to control that all the relevant information regarding the identification and evaluation of the credit protection are correctly registered in the system. In the collateral acquisition phase, UniCredit group emphasises the importance of processes and controls of the legal certainty requirements of the protection, as well as the assessment of the suitability of the collateral or guarantee. In case of personal guarantees, the protection provider (or the protection seller in case of credit default swap) has to be assessed in order to measure his/her credit worthiness and risk profile. Monitoring processes of credit risk mitigation techniques ensure that general and specific requirements set by credit policies, internal and regulatory rules are met over the time. Among such processes it is pointed out that one connected to concentration risk, which occurs when the major part of Group-wide collateral financial assets (at portfolio level) are concentrated in a small number of collateral types, protection instruments, or specific providers of collaterals. Such concentration is monitored and controlled by the following processes/mechanisms: • in case of personal guarantees/credit derivatives, a contingent liability (indirect risk) is charged to the protection provider. In the evaluation of the credit application, a secondary commitment is added to the guarantor and it is reflected in the guarantor’s total credit exposure as deemed competent and approved in accordance with the bank’s system of authority; • in case the protection provider, directly or indirectly, is a Central Bank or a Sovereign country, a specific credit limit has to be instructed and, if the guarantor is a foreign subject, it is necessary to evaluate case by case the definition of a country limit. 3. Non-performing credit exposures 3.1 Management strategies and policies In order to ensure a homogeneous approach in the classification of credit exposures for regulatory and reporting purposes, UniCredit has defined group-wide guidelines for the classification of non-performing exposures that refer to the principles reported in the Implementing Technical Standards issued by the Authority European Banking in 2014. With regard to this definition (which includes the concept of "default" ruled by Art.178 EU Regulation No.575/2013 and the "impaired" definition reported in accounting standard IFRS9) at operative level UniCredit group has pursued a substantial alignment between the three definitions. Furthermore, in accordance with the provisions of Banca d’Italia Circular 272/2008, credit exposures of each group entity must be classified in one of the following risk classes: • past-due and/or overdue exposures: problematic exposures that are more than 90 days past due on any material obligation (the latter assessed in line with article 178 (2d) of EU Regulation No.575/2013 and the Technical Standards of the 'EBA); • unlikely to pay: the classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realizing collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any (or rate) past due and unpaid amount; • bad loans: exposures to borrowers in a state of insolvency (even when not recognized in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank. According to the group rules, all debtors in the Bank's portfolio must be mapped in the classes defined by the Banca d’Italia, regardless of local reporting which has to be performed according to local accounting standards and/or local supervisory regulations or instructions the instructions. These classification rules are further integrated by accounting principles defined in IFRS9, according to which credit exposures must be allocated in three "Stages" (for details, see the section "Expected loss measurement method” - Section 2). With regard to non-performing exposures, the allocation to "Stage 3" occurs when the customer's status changes into "non-performing". This is a classification at the counterparty and not at transaction level basing on specific regulations on the classification of non-performing exposures. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 300 2018 Annual Report and Accounts · UniCredit entity can evaluate the protection provider risk profile, through an internal rating system, at the time the guarantee is provided and over its entire duration. For what concerns netting agreements of reciprocal credit exposures between the Bank and its counterparty are considered eligible if they are legally effective and enforceable in all relevant jurisdictions, including in the event of default or bankruptcy of counterparty, and if they meet the following operational conditions: • provide for the netting of gains and losses on transactions cleared under the master agreement; • fulfil the minimum requirements for recognition of financial collateral (valuation requirements and monitoring). Group legal entities can apply netting agreements only if they are able at any time to determine the position netting value (assets and liabilities with the same counterparty that are subject to the netting agreement), monitoring and controlling debts, credit and netting value. UniCredit group makes use of netting instruments mainly for OTC derivatives, repos and securities lending transactions where the counterparties are, generally, Financial Institutions. The management system of credit risk mitigation techniques is embedded in the credit approval process and in the credit risk monitoring process, to support the evaluation and data quality checks of collaterals/guarantees and their appropriate linking to the categories defined for LGD estimates purposes. Controls and related responsibilities are duly formalised and documented in internal rules. Furthermore processes are implemented to control that all the relevant information regarding the identification and evaluation of the credit protection are correctly registered in the system. In the collateral acquisition phase, UniCredit group emphasises the importance of processes and controls of the legal certainty requirements of the protection, as well as the assessment of the suitability of the collateral or guarantee. In case of personal guarantees, the protection provider (or the protection seller in case of credit default swap) has to be assessed in order to measure his/her credit worthiness and risk profile. Monitoring processes of credit risk mitigation techniques ensure that general and specific requirements set by credit policies, internal and regulatory rules are met over the time. Among such processes it is pointed out that one connected to concentration risk, which occurs when the major part of Group-wide collateral financial assets (at portfolio level) are concentrated in a small number of collateral types, protection instruments, or specific providers of collaterals. Such concentration is monitored and controlled by the following processes/mechanisms: • in case of personal guarantees/credit derivatives, a contingent liability (indirect risk) is charged to the protection provider. In the evaluation of the credit application, a secondary commitment is added to the guarantor and it is reflected in the guarantor’s total credit exposure as deemed competent and approved in accordance with the bank’s system of authority; • in case the protection provider, directly or indirectly, is a Central Bank or a Sovereign country, a specific credit limit has to be instructed and, if the guarantor is a foreign subject, it is necessary to evaluate case by case the definition of a country limit. 3. Non-performing credit exposures 3.1 Management strategies and policies In order to ensure a homogeneous approach in the classification of credit exposures for regulatory and reporting purposes, UniCredit has defined group-wide guidelines for the classification of non-performing exposures that refer to the principles reported in the Implementing Technical Standards issued by the Authority European Banking in 2014. With regard to this definition (which includes the concept of "default" ruled by Art.178 EU Regulation No.575/2013 and the "impaired" definition reported in accounting standard IFRS9) at operative level UniCredit group has pursued a substantial alignment between the three definitions. Furthermore, in accordance with the provisions of Banca d’Italia Circular 272/2008, credit exposures of each group entity must be classified in one of the following risk classes: • past-due and/or overdue exposures: problematic exposures that are more than 90 days past due on any material obligation (the latter assessed in line with article 178 (2d) of EU Regulation No.575/2013 and the Technical Standards of the 'EBA); • unlikely to pay: the classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realizing collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any (or rate) past due and unpaid amount; • bad loans: exposures to borrowers in a state of insolvency (even when not recognized in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank. According to the group rules, all debtors in the Bank's portfolio must be mapped in the classes defined by the Banca d’Italia, regardless of local reporting which has to be performed according to local accounting standards and/or local supervisory regulations or instructions the instructions. These classification rules are further integrated by accounting principles defined in IFRS9, according to which credit exposures must be allocated in three "Stages" (for details, see the section "Expected loss measurement method” - Section 2). With regard to non-performing exposures, the allocation to "Stage 3" occurs when the customer's status changes into "non-performing". This is a classification at the counterparty and not at transaction level basing on specific regulations on the classification of non-performing exposures. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 301 In accordance with Article 156 EBA ITS, an exposure must remain classified as non-performing27 as long as the following criteria (exit criteria) are not met simultaneously: • the situation of the debtor has improved to the extent that full repayment of the original due amount is likely to be made; • the debtor does not have any amount past-due by more than 90 days. Specific exit criteria must be applied in case the forbearance measures are extended to non-performing exposures, listed below: • the starting date of the observation period of one year is the latest between the adoption of Forbearance measures and the classification as non-performing; • any past due amount is verified if no past due occurs at debtor level; • concerns regarding the “full repayment" refer to a judgmental evaluation by the empowered Bodies. In the non-performing credit exposures management, the Unicredit group adopts certain strategies that operationally define the activities necessary to achieve the targets defined yearly. The aforementioned strategies concerning impaired loans include: • an effective internal restructuring activity, supported by qualified resources with specific skills dedicated to the management of loans classified as unlikely to pay; within these activities, ad-hoc approaches are then envisaged for positions considered strategic or referring to the Corporate and Real Estate segment; • proactive portfolio management through judicial and extra-judicial procedures managed by internal Workout professionals or assigned to external agencies specialized in credit recovery; • the recourse of alternative recovery strategies (which UniCredit was one of the first banks to use) based on formalized partnerships aimed at managing positions in the industrial or Real Estate sector; • proactive management of the Leasing portfolio aimed at speeding up the negotiation times of agreements with counterparties in order to obtain a more effective remarketing process; • disposal of impaired loans as a further strategy for internal recovery both for individual positions and for portfolios of impaired loans, already classified as bad loans and unlikely to pay. These strategies reflect the main levers for reducing the amount of impaired loans and have led to an important result during 2018, highlighting: • write-off for €3,609 million (133% of the total planned in Transform 2019 for 2018 year); • recoveries of €5,581 million (157% of the total planned in Transform 2019 for 2018 year); • total non-performing loans sold for €4,122 million (115% of the total planned in Transform 2019 for 2018 year). The decrease amount of the stock of impaired loans to Group customers was therefore in line with the reduction targets set in the Transform 2019 plan for the year 2018, achieving an improvement in asset quality. This result was possible thanks also to an acceleration of the reduction times of the "Non Core" portfolio. Therefore, the UniCredit group can confirm the complete closure of its Non Core legacy by 2021, thanks also to the activation of a coordinated set of levers aimed at reducing the stock. A successful NPE Strategy execution requires effective interaction between the Group Risk Management structure and the functions dedicated to the management of impaired exposures directly reporting the local CLOs of the Legal Entities. More specifically, within Group Risk Management, the Group NPE structure was set-up in order to ensure on the one hand an adequate control over the execution and monitoring of the NPE Strategy (which includes the sale of non-performing loans through "Group Distressed Asset Solutions" and the proactive management of the collateral for the properties acquired through "Group Repossessed Assets") and, on the other hand, an effective cooperation thanks the joint work carried out with the other Group Risk Management functions. In all Legal entities dedicated functions to the management of non-performing exposures are in place; they cover all phases of the NPEs life cycle, take into account local regulations and the specific characteristics of portfolios, monitor and manage the amount of NPEs coherently with both European Central Bank Guidelines and Group organizational model. The structures dedicated to the operational management of non-performing exposures are therefore tailored to each state of the life cycle of non-performing loans, starting from a careful monitoring of the performing portfolio, up to the recovery activity that includes the disposal of credit or the “repossession” of the collateral. In particular, the monitoring activity is aimed at preventing flows to default and reducing the amount of past due exposures by detecting signals of risk of deterioration and early warning, as well as identifying the needed corrective measures to manage the potential deterioration of exposures starting from the early signs of worsening of the counterparties’ credit quality. Soft collection, door-to-door and re-management activities which pertains both performing (though already overdue) counterparties and already defaulted clients are carried out through the use of multiple channels, also using outsourcing solutions to third-party companies (in particular for door-to-door recovery activities). These activities are also aimed at preventing flows to default and facilitating the back-to-performing classification (main focus), thus contributing to a reduction of the overall amount of impaired exposures. 27The regulatory framework for the transition from impaired to non-deteriorated exposures ("criteria for a return to a non-defaulted status ") will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as of 1 January 2021. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 301 In accordance with Article 156 EBA ITS, an exposure must remain classified as non-performing27 as long as the following criteria (exit criteria) are not met simultaneously: • the situation of the debtor has improved to the extent that full repayment of the original due amount is likely to be made; • the debtor does not have any amount past-due by more than 90 days. Specific exit criteria must be applied in case the forbearance measures are extended to non-performing exposures, listed below: • the starting date of the observation period of one year is the latest between the adoption of Forbearance measures and the classification as non-performing; • any past due amount is verified if no past due occurs at debtor level; • concerns regarding the “full repayment" refer to a judgmental evaluation by the empowered Bodies. In the non-performing credit exposures management, the Unicredit group adopts certain strategies that operationally define the activities necessary to achieve the targets defined yearly. The aforementioned strategies concerning impaired loans include: • an effective internal restructuring activity, supported by qualified resources with specific skills dedicated to the management of loans classified as unlikely to pay; within these activities, ad-hoc approaches are then envisaged for positions considered strategic or referring to the Corporate and Real Estate segment; • proactive portfolio management through judicial and extra-judicial procedures managed by internal Workout professionals or assigned to external agencies specialized in credit recovery; • the recourse of alternative recovery strategies (which UniCredit was one of the first banks to use) based on formalized partnerships aimed at managing positions in the industrial or Real Estate sector; • proactive management of the Leasing portfolio aimed at speeding up the negotiation times of agreements with counterparties in order to obtain a more effective remarketing process; • disposal of impaired loans as a further strategy for internal recovery both for individual positions and for portfolios of impaired loans, already classified as bad loans and unlikely to pay. These strategies reflect the main levers for reducing the amount of impaired loans and have led to an important result during 2018, highlighting: • write-off for €3,609 million (133% of the total planned in Transform 2019 for 2018 year); • recoveries of €5,581 million (157% of the total planned in Transform 2019 for 2018 year); • total non-performing loans sold for €4,122 million (115% of the total planned in Transform 2019 for 2018 year). The decrease amount of the stock of impaired loans to Group customers was therefore in line with the reduction targets set in the Transform 2019 plan for the year 2018, achieving an improvement in asset quality. This result was possible thanks also to an acceleration of the reduction times of the "Non Core" portfolio. Therefore, the UniCredit group can confirm the complete closure of its Non Core legacy by 2021, thanks also to the activation of a coordinated set of levers aimed at reducing the stock. A successful NPE Strategy execution requires effective interaction between the Group Risk Management structure and the functions dedicated to the management of impaired exposures directly reporting the local CLOs of the Legal Entities. More specifically, within Group Risk Management, the Group NPE structure was set-up in order to ensure on the one hand an adequate control over the execution and monitoring of the NPE Strategy (which includes the sale of non-performing loans through "Group Distressed Asset Solutions" and the proactive management of the collateral for the properties acquired through "Group Repossessed Assets") and, on the other hand, an effective cooperation thanks the joint work carried out with the other Group Risk Management functions. In all Legal entities dedicated functions to the management of non-performing exposures are in place; they cover all phases of the NPEs life cycle, take into account local regulations and the specific characteristics of portfolios, monitor and manage the amount of NPEs coherently with both European Central Bank Guidelines and Group organizational model. The structures dedicated to the operational management of non-performing exposures are therefore tailored to each state of the life cycle of non-performing loans, starting from a careful monitoring of the performing portfolio, up to the recovery activity that includes the disposal of credit or the “repossession” of the collateral. In particular, the monitoring activity is aimed at preventing flows to default and reducing the amount of past due exposures by detecting signals of risk of deterioration and early warning, as well as identifying the needed corrective measures to manage the potential deterioration of exposures starting from the early signs of worsening of the counterparties’ credit quality. Soft collection, door-to-door and re-management activities which pertains both performing (though already overdue) counterparties and already defaulted clients are carried out through the use of multiple channels, also using outsourcing solutions to third-party companies (in particular for door-to-door recovery activities). These activities are also aimed at preventing flows to default and facilitating the back-to-performing classification (main focus), thus contributing to a reduction of the overall amount of impaired exposures. 27The regulatory framework for the transition from impaired to non-deteriorated exposures ("criteria for a return to a non-defaulted status ") will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as of 1 January 2021. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 301 In accordance with Article 156 EBA ITS, an exposure must remain classified as non-performing27 as long as the following criteria (exit criteria) are not met simultaneously: • the situation of the debtor has improved to the extent that full repayment of the original due amount is likely to be made; • the debtor does not have any amount past-due by more than 90 days. Specific exit criteria must be applied in case the forbearance measures are extended to non-performing exposures, listed below: • the starting date of the observation period of one year is the latest between the adoption of Forbearance measures and the classification as non-performing; • any past due amount is verified if no past due occurs at debtor level; • concerns regarding the “full repayment" refer to a judgmental evaluation by the empowered Bodies. In the non-performing credit exposures management, the Unicredit group adopts certain strategies that operationally define the activities necessary to achieve the targets defined yearly. The aforementioned strategies concerning impaired loans include: • an effective internal restructuring activity, supported by qualified resources with specific skills dedicated to the management of loans classified as unlikely to pay; within these activities, ad-hoc approaches are then envisaged for positions considered strategic or referring to the Corporate and Real Estate segment; • proactive portfolio management through judicial and extra-judicial procedures managed by internal Workout professionals or assigned to external agencies specialized in credit recovery; • the recourse of alternative recovery strategies (which UniCredit was one of the first banks to use) based on formalized partnerships aimed at managing positions in the industrial or Real Estate sector; • proactive management of the Leasing portfolio aimed at speeding up the negotiation times of agreements with counterparties in order to obtain a more effective remarketing process; • disposal of impaired loans as a further strategy for internal recovery both for individual positions and for portfolios of impaired loans, already classified as bad loans and unlikely to pay. These strategies reflect the main levers for reducing the amount of impaired loans and have led to an important result during 2018, highlighting: • write-off for €3,609 million (133% of the total planned in Transform 2019 for 2018 year); • recoveries of €5,581 million (157% of the total planned in Transform 2019 for 2018 year); • total non-performing loans sold for €4,122 million (115% of the total planned in Transform 2019 for 2018 year). The decrease amount of the stock of impaired loans to Group customers was therefore in line with the reduction targets set in the Transform 2019 plan for the year 2018, achieving an improvement in asset quality. This result was possible thanks also to an acceleration of the reduction times of the "Non Core" portfolio. Therefore, the UniCredit group can confirm the complete closure of its Non Core legacy by 2021, thanks also to the activation of a coordinated set of levers aimed at reducing the stock. A successful NPE Strategy execution requires effective interaction between the Group Risk Management structure and the functions dedicated to the management of impaired exposures directly reporting the local CLOs of the Legal Entities. More specifically, within Group Risk Management, the Group NPE structure was set-up in order to ensure on the one hand an adequate control over the execution and monitoring of the NPE Strategy (which includes the sale of non-performing loans through "Group Distressed Asset Solutions" and the proactive management of the collateral for the properties acquired through "Group Repossessed Assets") and, on the other hand, an effective cooperation thanks the joint work carried out with the other Group Risk Management functions. In all Legal entities dedicated functions to the management of non-performing exposures are in place; they cover all phases of the NPEs life cycle, take into account local regulations and the specific characteristics of portfolios, monitor and manage the amount of NPEs coherently with both European Central Bank Guidelines and Group organizational model. The structures dedicated to the operational management of non-performing exposures are therefore tailored to each state of the life cycle of non-performing loans, starting from a careful monitoring of the performing portfolio, up to the recovery activity that includes the disposal of credit or the “repossession” of the collateral. In particular, the monitoring activity is aimed at preventing flows to default and reducing the amount of past due exposures by detecting signals of risk of deterioration and early warning, as well as identifying the needed corrective measures to manage the potential deterioration of exposures starting from the early signs of worsening of the counterparties’ credit quality. Soft collection, door-to-door and re-management activities which pertains both performing (though already overdue) counterparties and already defaulted clients are carried out through the use of multiple channels, also using outsourcing solutions to third-party companies (in particular for door-to-door recovery activities). These activities are also aimed at preventing flows to default and facilitating the back-to-performing classification (main focus), thus contributing to a reduction of the overall amount of impaired exposures. 27The regulatory framework for the transition from impaired to non-deteriorated exposures ("criteria for a return to a non-defaulted status ") will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as of 1 January 2021. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 301 In accordance with Article 156 EBA ITS, an exposure must remain classified as non-performing27 as long as the following criteria (exit criteria) are not met simultaneously: • the situation of the debtor has improved to the extent that full repayment of the original due amount is likely to be made; • the debtor does not have any amount past-due by more than 90 days. Specific exit criteria must be applied in case the forbearance measures are extended to non-performing exposures, listed below: • the starting date of the observation period of one year is the latest between the adoption of Forbearance measures and the classification as non-performing; • any past due amount is verified if no past due occurs at debtor level; • concerns regarding the “full repayment" refer to a judgmental evaluation by the empowered Bodies. In the non-performing credit exposures management, the Unicredit group adopts certain strategies that operationally define the activities necessary to achieve the targets defined yearly. The aforementioned strategies concerning impaired loans include: • an effective internal restructuring activity, supported by qualified resources with specific skills dedicated to the management of loans classified as unlikely to pay; within these activities, ad-hoc approaches are then envisaged for positions considered strategic or referring to the Corporate and Real Estate segment; • proactive portfolio management through judicial and extra-judicial procedures managed by internal Workout professionals or assigned to external agencies specialized in credit recovery; • the recourse of alternative recovery strategies (which UniCredit was one of the first banks to use) based on formalized partnerships aimed at managing positions in the industrial or Real Estate sector; • proactive management of the Leasing portfolio aimed at speeding up the negotiation times of agreements with counterparties in order to obtain a more effective remarketing process; • disposal of impaired loans as a further strategy for internal recovery both for individual positions and for portfolios of impaired loans, already classified as bad loans and unlikely to pay. These strategies reflect the main levers for reducing the amount of impaired loans and have led to an important result during 2018, highlighting: • write-off for €3,609 million (133% of the total planned in Transform 2019 for 2018 year); • recoveries of €5,581 million (157% of the total planned in Transform 2019 for 2018 year); • total non-performing loans sold for €4,122 million (115% of the total planned in Transform 2019 for 2018 year). The decrease amount of the stock of impaired loans to Group customers was therefore in line with the reduction targets set in the Transform 2019 plan for the year 2018, achieving an improvement in asset quality. This result was possible thanks also to an acceleration of the reduction times of the "Non Core" portfolio. Therefore, the UniCredit group can confirm the complete closure of its Non Core legacy by 2021, thanks also to the activation of a coordinated set of levers aimed at reducing the stock. A successful NPE Strategy execution requires effective interaction between the Group Risk Management structure and the functions dedicated to the management of impaired exposures directly reporting the local CLOs of the Legal Entities. More specifically, within Group Risk Management, the Group NPE structure was set-up in order to ensure on the one hand an adequate control over the execution and monitoring of the NPE Strategy (which includes the sale of non-performing loans through "Group Distressed Asset Solutions" and the proactive management of the collateral for the properties acquired through "Group Repossessed Assets") and, on the other hand, an effective cooperation thanks the joint work carried out with the other Group Risk Management functions. In all Legal entities dedicated functions to the management of non-performing exposures are in place; they cover all phases of the NPEs life cycle, take into account local regulations and the specific characteristics of portfolios, monitor and manage the amount of NPEs coherently with both European Central Bank Guidelines and Group organizational model. The structures dedicated to the operational management of non-performing exposures are therefore tailored to each state of the life cycle of non-performing loans, starting from a careful monitoring of the performing portfolio, up to the recovery activity that includes the disposal of credit or the “repossession” of the collateral. In particular, the monitoring activity is aimed at preventing flows to default and reducing the amount of past due exposures by detecting signals of risk of deterioration and early warning, as well as identifying the needed corrective measures to manage the potential deterioration of exposures starting from the early signs of worsening of the counterparties’ credit quality. Soft collection, door-to-door and re-management activities which pertains both performing (though already overdue) counterparties and already defaulted clients are carried out through the use of multiple channels, also using outsourcing solutions to third-party companies (in particular for door-to-door recovery activities). These activities are also aimed at preventing flows to default and facilitating the back-to-performing classification (main focus), thus contributing to a reduction of the overall amount of impaired exposures. 27The regulatory framework for the transition from impaired to non-deteriorated exposures ("criteria for a return to a non-defaulted status ") will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as of 1 January 2021. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 301 In accordance with Article 156 EBA ITS, an exposure must remain classified as non-performing27 as long as the following criteria (exit criteria) are not met simultaneously: • the situation of the debtor has improved to the extent that full repayment of the original due amount is likely to be made; • the debtor does not have any amount past-due by more than 90 days. Specific exit criteria must be applied in case the forbearance measures are extended to non-performing exposures, listed below: • the starting date of the observation period of one year is the latest between the adoption of Forbearance measures and the classification as non-performing; • any past due amount is verified if no past due occurs at debtor level; • concerns regarding the “full repayment" refer to a judgmental evaluation by the empowered Bodies. In the non-performing credit exposures management, the Unicredit group adopts certain strategies that operationally define the activities necessary to achieve the targets defined yearly. The aforementioned strategies concerning impaired loans include: • an effective internal restructuring activity, supported by qualified resources with specific skills dedicated to the management of loans classified as unlikely to pay; within these activities, ad-hoc approaches are then envisaged for positions considered strategic or referring to the Corporate and Real Estate segment; • proactive portfolio management through judicial and extra-judicial procedures managed by internal Workout professionals or assigned to external agencies specialized in credit recovery; • the recourse of alternative recovery strategies (which UniCredit was one of the first banks to use) based on formalized partnerships aimed at managing positions in the industrial or Real Estate sector; • proactive management of the Leasing portfolio aimed at speeding up the negotiation times of agreements with counterparties in order to obtain a more effective remarketing process; • disposal of impaired loans as a further strategy for internal recovery both for individual positions and for portfolios of impaired loans, already classified as bad loans and unlikely to pay. These strategies reflect the main levers for reducing the amount of impaired loans and have led to an important result during 2018, highlighting: • write-off for €3,609 million (133% of the total planned in Transform 2019 for 2018 year); • recoveries of €5,581 million (157% of the total planned in Transform 2019 for 2018 year); • total non-performing loans sold for €4,122 million (115% of the total planned in Transform 2019 for 2018 year). The decrease amount of the stock of impaired loans to Group customers was therefore in line with the reduction targets set in the Transform 2019 plan for the year 2018, achieving an improvement in asset quality. This result was possible thanks also to an acceleration of the reduction times of the "Non Core" portfolio. Therefore, the UniCredit group can confirm the complete closure of its Non Core legacy by 2021, thanks also to the activation of a coordinated set of levers aimed at reducing the stock. A successful NPE Strategy execution requires effective interaction between the Group Risk Management structure and the functions dedicated to the management of impaired exposures directly reporting the local CLOs of the Legal Entities. More specifically, within Group Risk Management, the Group NPE structure was set-up in order to ensure on the one hand an adequate control over the execution and monitoring of the NPE Strategy (which includes the sale of non-performing loans through "Group Distressed Asset Solutions" and the proactive management of the collateral for the properties acquired through "Group Repossessed Assets") and, on the other hand, an effective cooperation thanks the joint work carried out with the other Group Risk Management functions. In all Legal entities dedicated functions to the management of non-performing exposures are in place; they cover all phases of the NPEs life cycle, take into account local regulations and the specific characteristics of portfolios, monitor and manage the amount of NPEs coherently with both European Central Bank Guidelines and Group organizational model. The structures dedicated to the operational management of non-performing exposures are therefore tailored to each state of the life cycle of non-performing loans, starting from a careful monitoring of the performing portfolio, up to the recovery activity that includes the disposal of credit or the “repossession” of the collateral. In particular, the monitoring activity is aimed at preventing flows to default and reducing the amount of past due exposures by detecting signals of risk of deterioration and early warning, as well as identifying the needed corrective measures to manage the potential deterioration of exposures starting from the early signs of worsening of the counterparties’ credit quality. Soft collection, door-to-door and re-management activities which pertains both performing (though already overdue) counterparties and already defaulted clients are carried out through the use of multiple channels, also using outsourcing solutions to third-party companies (in particular for door-to-door recovery activities). These activities are also aimed at preventing flows to default and facilitating the back-to-performing classification (main focus), thus contributing to a reduction of the overall amount of impaired exposures. 27The regulatory framework for the transition from impaired to non-deteriorated exposures ("criteria for a return to a non-defaulted status ") will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as of 1 January 2021. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 302 2018 Annual Report and Accounts · UniCredit In some Legal entity, the aforementioned activities can be managed within either the Monitoring, or Restructuring or Workout units; with reference to UniCredit S.p.A. these responsibilities are allocated to the Special Credit unit within which an ad hoc department was created (i.e. Customer Recovery), exclusively dedicated to soft collection and re-management for retail portfolio. As part of the overall management of deteriorated exposures, the Restructuring activity is aimed at mitigating the risk of insolvency and the quality of exposures with restructuring agreements and company reorganization plans as well as reducing the amount of unlikely to pay with recoveries and performing re-classification, by means of forbearance measures. Specifically, among the strategies for managing unlikely to pay loans to corporate counterparties, there are also restructuring platforms (up to now limited to the Italian market), the disposal of individual exposures and extraordinary finance transactions. The coordination and implementation of recovery strategy on positions classified as Bad Loans fall instead within the responsibility of "Workout" Unit, whose reporting structures identify the optimal strategies for maximizing recoveries, including the timely enforcement of collaterals. In some legal entity of the Group, the activity is also implemented by leveraging on service agreements with external agencies. As pertains the disposal activities, these refer to the organization, management and execution of sales processes (both credit portfolios and individual positions), through the application of a transparent and competitive methodology based on market criteria. At Group level, these activities are performed by a dedicated department within UniCredit S.p.A. (Group Distressed Asset Solutions), which evaluates various disposal options alternatives, in cooperation with the legal entity’s peer function where deemed necessary to handle specific local cases. The proactive management of real estate guarantees is coordinated at the Parent company level by a dedicated department (Group Repossessed Assets), which oversees the strategy of repossession of the collateral and the specific activities carried out within the Group, particularly in those entities specialized in the acquisition of collateral (for example the UCTAM company). The aforementioned function also oversees the possible creation of a "Real Estate Owned Company" (ReoCo) in Italy. Beyond the operational responsibilities in the non-performing exposures management, from a governance and strategic coordination standpoint, the Group NPE Governance Committee (“GNGC”) has been set up in order to ensure the effective steering, coordination and control of the non-performing loans reduction plan, ensuring an effective alignment of the common objectives between the Parent company and the various legal entity, also through the involvement of both "Group Risk Management" and "Group Lending Officer" functions according to the instructions of the Banca d’Italia (Circular No.272/2008 and subsequent updates). 3.2 Write-off Group guidelines for write-offs on financial assets provides that whenever a loan is deemed to be uncollectable/unrecoverable it needs to be identified at the earliest possible opportunity and properly dealt with in accordance with financial regulations. Write-offs can relate to a financial asset in its entirety, or to a portion of it. In assessing the recoverability of non-performing exposures (NPE) and in determining internal NPE write-off approaches, the following cases, in particular, are taken into account: • exposures with prolonged arrears: it is assessed the recoverability of an exposure that presents arrears for a prolonged period of time. If, following this assessment, an exposure or part of an exposure is deemed as non-recoverable, it should be written-off in a timely manner, adopting different thresholds predefined on the basis of the different portfolios; • exposures under insolvency procedure: where the collateralisation of the exposure is low, legal expenses often absorb a significant portion of the proceeds from the bankruptcy procedure and therefore estimated recoveries are expected to be very low; • a partial write off may be warranted where there are reasonable elements to demonstrate the debtor's inability to repay the full amount of the debt, i.e. a significant level of debt, even following the implementation of a forbearance treatment and/or the execution of collateral. Below a non-exhaustive list of hard evidences implying, with high likelihood, the not recoverability of the exposure, to be assessed, for the potential (total or partial) write-off: • the Bank cannot call the guarantor(s), or his assets are not sufficient for the recovery of the debtor’s exposures; • negative outcome of the judicial and/or out-of-court initiatives with absence of other assets that can be called in the event of un-recoverability of the debtor’s exposures; • impossibility to initiate actions to recover credit; • current insolvency procedure, from which the procedure itself states that the unsecured exposures will not have redress; • loans not backed by mortgage security older than 3 years that have not registered repayments/collections during the first 3 years after the NPE classification; • mortgage loans to private individuals with collaterals already executed or not recoverable (because of legal or administrative defects and if execution is considered not economically viable), if they have been classified as non-performing for more than 7 years, or between 2 and 7 years if the residual debt is less than €110,000. The amount of write-offs on financial assets still subject to the enforcement procedure amounts to €2,796.8 million at 31 December 2008, of which the write-offs for the 2018 financial year amounted to €2,381.4 million. The write-offs component recorded during the year does not correspond to the write-offs recorded in the dynamics of non-performing exposures, as the latter also include cancellations with "debt forgiveness". Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 302 2018 Annual Report and Accounts · UniCredit In some Legal entity, the aforementioned activities can be managed within either the Monitoring, or Restructuring or Workout units; with reference to UniCredit S.p.A. these responsibilities are allocated to the Special Credit unit within which an ad hoc department was created (i.e. Customer Recovery), exclusively dedicated to soft collection and re-management for retail portfolio. As part of the overall management of deteriorated exposures, the Restructuring activity is aimed at mitigating the risk of insolvency and the quality of exposures with restructuring agreements and company reorganization plans as well as reducing the amount of unlikely to pay with recoveries and performing re-classification, by means of forbearance measures. Specifically, among the strategies for managing unlikely to pay loans to corporate counterparties, there are also restructuring platforms (up to now limited to the Italian market), the disposal of individual exposures and extraordinary finance transactions. The coordination and implementation of recovery strategy on positions classified as Bad Loans fall instead within the responsibility of "Workout" Unit, whose reporting structures identify the optimal strategies for maximizing recoveries, including the timely enforcement of collaterals. In some legal entity of the Group, the activity is also implemented by leveraging on service agreements with external agencies. As pertains the disposal activities, these refer to the organization, management and execution of sales processes (both credit portfolios and individual positions), through the application of a transparent and competitive methodology based on market criteria. At Group level, these activities are performed by a dedicated department within UniCredit S.p.A. (Group Distressed Asset Solutions), which evaluates various disposal options alternatives, in cooperation with the legal entity’s peer function where deemed necessary to handle specific local cases. The proactive management of real estate guarantees is coordinated at the Parent company level by a dedicated department (Group Repossessed Assets), which oversees the strategy of repossession of the collateral and the specific activities carried out within the Group, particularly in those entities specialized in the acquisition of collateral (for example the UCTAM company). The aforementioned function also oversees the possible creation of a "Real Estate Owned Company" (ReoCo) in Italy. Beyond the operational responsibilities in the non-performing exposures management, from a governance and strategic coordination standpoint, the Group NPE Governance Committee (“GNGC”) has been set up in order to ensure the effective steering, coordination and control of the non-performing loans reduction plan, ensuring an effective alignment of the common objectives between the Parent company and the various legal entity, also through the involvement of both "Group Risk Management" and "Group Lending Officer" functions according to the instructions of the Banca d’Italia (Circular No.272/2008 and subsequent updates). 3.2 Write-off Group guidelines for write-offs on financial assets provides that whenever a loan is deemed to be uncollectable/unrecoverable it needs to be identified at the earliest possible opportunity and properly dealt with in accordance with financial regulations. Write-offs can relate to a financial asset in its entirety, or to a portion of it. In assessing the recoverability of non-performing exposures (NPE) and in determining internal NPE write-off approaches, the following cases, in particular, are taken into account: • exposures with prolonged arrears: it is assessed the recoverability of an exposure that presents arrears for a prolonged period of time. If, following this assessment, an exposure or part of an exposure is deemed as non-recoverable, it should be written-off in a timely manner, adopting different thresholds predefined on the basis of the different portfolios; • exposures under insolvency procedure: where the collateralisation of the exposure is low, legal expenses often absorb a significant portion of the proceeds from the bankruptcy procedure and therefore estimated recoveries are expected to be very low; • a partial write off may be warranted where there are reasonable elements to demonstrate the debtor's inability to repay the full amount of the debt, i.e. a significant level of debt, even following the implementation of a forbearance treatment and/or the execution of collateral. Below a non-exhaustive list of hard evidences implying, with high likelihood, the not recoverability of the exposure, to be assessed, for the potential (total or partial) write-off: • the Bank cannot call the guarantor(s), or his assets are not sufficient for the recovery of the debtor’s exposures; • negative outcome of the judicial and/or out-of-court initiatives with absence of other assets that can be called in the event of un-recoverability of the debtor’s exposures; • impossibility to initiate actions to recover credit; • current insolvency procedure, from which the procedure itself states that the unsecured exposures will not have redress; • loans not backed by mortgage security older than 3 years that have not registered repayments/collections during the first 3 years after the NPE classification; • mortgage loans to private individuals with collaterals already executed or not recoverable (because of legal or administrative defects and if execution is considered not economically viable), if they have been classified as non-performing for more than 7 years, or between 2 and 7 years if the residual debt is less than €110,000. The amount of write-offs on financial assets still subject to the enforcement procedure amounts to €2,796.8 million at 31 December 2008, of which the write-offs for the 2018 financial year amounted to €2,381.4 million. The write-offs component recorded during the year does not correspond to the write-offs recorded in the dynamics of non-performing exposures, as the latter also include cancellations with "debt forgiveness". Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 302 2018 Annual Report and Accounts · UniCredit In some Legal entity, the aforementioned activities can be managed within either the Monitoring, or Restructuring or Workout units; with reference to UniCredit S.p.A. these responsibilities are allocated to the Special Credit unit within which an ad hoc department was created (i.e. Customer Recovery), exclusively dedicated to soft collection and re-management for retail portfolio. As part of the overall management of deteriorated exposures, the Restructuring activity is aimed at mitigating the risk of insolvency and the quality of exposures with restructuring agreements and company reorganization plans as well as reducing the amount of unlikely to pay with recoveries and performing re-classification, by means of forbearance measures. Specifically, among the strategies for managing unlikely to pay loans to corporate counterparties, there are also restructuring platforms (up to now limited to the Italian market), the disposal of individual exposures and extraordinary finance transactions. The coordination and implementation of recovery strategy on positions classified as Bad Loans fall instead within the responsibility of "Workout" Unit, whose reporting structures identify the optimal strategies for maximizing recoveries, including the timely enforcement of collaterals. In some legal entity of the Group, the activity is also implemented by leveraging on service agreements with external agencies. As pertains the disposal activities, these refer to the organization, management and execution of sales processes (both credit portfolios and individual positions), through the application of a transparent and competitive methodology based on market criteria. At Group level, these activities are performed by a dedicated department within UniCredit S.p.A. (Group Distressed Asset Solutions), which evaluates various disposal options alternatives, in cooperation with the legal entity’s peer function where deemed necessary to handle specific local cases. The proactive management of real estate guarantees is coordinated at the Parent company level by a dedicated department (Group Repossessed Assets), which oversees the strategy of repossession of the collateral and the specific activities carried out within the Group, particularly in those entities specialized in the acquisition of collateral (for example the UCTAM company). The aforementioned function also oversees the possible creation of a "Real Estate Owned Company" (ReoCo) in Italy. Beyond the operational responsibilities in the non-performing exposures management, from a governance and strategic coordination standpoint, the Group NPE Governance Committee (“GNGC”) has been set up in order to ensure the effective steering, coordination and control of the non-performing loans reduction plan, ensuring an effective alignment of the common objectives between the Parent company and the various legal entity, also through the involvement of both "Group Risk Management" and "Group Lending Officer" functions according to the instructions of the Banca d’Italia (Circular No.272/2008 and subsequent updates). 3.2 Write-off Group guidelines for write-offs on financial assets provides that whenever a loan is deemed to be uncollectable/unrecoverable it needs to be identified at the earliest possible opportunity and properly dealt with in accordance with financial regulations. Write-offs can relate to a financial asset in its entirety, or to a portion of it. In assessing the recoverability of non-performing exposures (NPE) and in determining internal NPE write-off approaches, the following cases, in particular, are taken into account: • exposures with prolonged arrears: it is assessed the recoverability of an exposure that presents arrears for a prolonged period of time. If, following this assessment, an exposure or part of an exposure is deemed as non-recoverable, it should be written-off in a timely manner, adopting different thresholds predefined on the basis of the different portfolios; • exposures under insolvency procedure: where the collateralisation of the exposure is low, legal expenses often absorb a significant portion of the proceeds from the bankruptcy procedure and therefore estimated recoveries are expected to be very low; • a partial write off may be warranted where there are reasonable elements to demonstrate the debtor's inability to repay the full amount of the debt, i.e. a significant level of debt, even following the implementation of a forbearance treatment and/or the execution of collateral. Below a non-exhaustive list of hard evidences implying, with high likelihood, the not recoverability of the exposure, to be assessed, for the potential (total or partial) write-off: • the Bank cannot call the guarantor(s), or his assets are not sufficient for the recovery of the debtor’s exposures; • negative outcome of the judicial and/or out-of-court initiatives with absence of other assets that can be called in the event of un-recoverability of the debtor’s exposures; • impossibility to initiate actions to recover credit; • current insolvency procedure, from which the procedure itself states that the unsecured exposures will not have redress; • loans not backed by mortgage security older than 3 years that have not registered repayments/collections during the first 3 years after the NPE classification; • mortgage loans to private individuals with collaterals already executed or not recoverable (because of legal or administrative defects and if execution is considered not economically viable), if they have been classified as non-performing for more than 7 years, or between 2 and 7 years if the residual debt is less than €110,000. The amount of write-offs on financial assets still subject to the enforcement procedure amounts to €2,796.8 million at 31 December 2008, of which the write-offs for the 2018 financial year amounted to €2,381.4 million. The write-offs component recorded during the year does not correspond to the write-offs recorded in the dynamics of non-performing exposures, as the latter also include cancellations with "debt forgiveness". Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 302 2018 Annual Report and Accounts · UniCredit In some Legal entity, the aforementioned activities can be managed within either the Monitoring, or Restructuring or Workout units; with reference to UniCredit S.p.A. these responsibilities are allocated to the Special Credit unit within which an ad hoc department was created (i.e. Customer Recovery), exclusively dedicated to soft collection and re-management for retail portfolio. As part of the overall management of deteriorated exposures, the Restructuring activity is aimed at mitigating the risk of insolvency and the quality of exposures with restructuring agreements and company reorganization plans as well as reducing the amount of unlikely to pay with recoveries and performing re-classification, by means of forbearance measures. Specifically, among the strategies for managing unlikely to pay loans to corporate counterparties, there are also restructuring platforms (up to now limited to the Italian market), the disposal of individual exposures and extraordinary finance transactions. The coordination and implementation of recovery strategy on positions classified as Bad Loans fall instead within the responsibility of "Workout" Unit, whose reporting structures identify the optimal strategies for maximizing recoveries, including the timely enforcement of collaterals. In some legal entity of the Group, the activity is also implemented by leveraging on service agreements with external agencies. As pertains the disposal activities, these refer to the organization, management and execution of sales processes (both credit portfolios and individual positions), through the application of a transparent and competitive methodology based on market criteria. At Group level, these activities are performed by a dedicated department within UniCredit S.p.A. (Group Distressed Asset Solutions), which evaluates various disposal options alternatives, in cooperation with the legal entity’s peer function where deemed necessary to handle specific local cases. The proactive management of real estate guarantees is coordinated at the Parent company level by a dedicated department (Group Repossessed Assets), which oversees the strategy of repossession of the collateral and the specific activities carried out within the Group, particularly in those entities specialized in the acquisition of collateral (for example the UCTAM company). The aforementioned function also oversees the possible creation of a "Real Estate Owned Company" (ReoCo) in Italy. Beyond the operational responsibilities in the non-performing exposures management, from a governance and strategic coordination standpoint, the Group NPE Governance Committee (“GNGC”) has been set up in order to ensure the effective steering, coordination and control of the non-performing loans reduction plan, ensuring an effective alignment of the common objectives between the Parent company and the various legal entity, also through the involvement of both "Group Risk Management" and "Group Lending Officer" functions according to the instructions of the Banca d’Italia (Circular No.272/2008 and subsequent updates). 3.2 Write-off Group guidelines for write-offs on financial assets provides that whenever a loan is deemed to be uncollectable/unrecoverable it needs to be identified at the earliest possible opportunity and properly dealt with in accordance with financial regulations. Write-offs can relate to a financial asset in its entirety, or to a portion of it. In assessing the recoverability of non-performing exposures (NPE) and in determining internal NPE write-off approaches, the following cases, in particular, are taken into account: • exposures with prolonged arrears: it is assessed the recoverability of an exposure that presents arrears for a prolonged period of time. If, following this assessment, an exposure or part of an exposure is deemed as non-recoverable, it should be written-off in a timely manner, adopting different thresholds predefined on the basis of the different portfolios; • exposures under insolvency procedure: where the collateralisation of the exposure is low, legal expenses often absorb a significant portion of the proceeds from the bankruptcy procedure and therefore estimated recoveries are expected to be very low; • a partial write off may be warranted where there are reasonable elements to demonstrate the debtor's inability to repay the full amount of the debt, i.e. a significant level of debt, even following the implementation of a forbearance treatment and/or the execution of collateral. Below a non-exhaustive list of hard evidences implying, with high likelihood, the not recoverability of the exposure, to be assessed, for the potential (total or partial) write-off: • the Bank cannot call the guarantor(s), or his assets are not sufficient for the recovery of the debtor’s exposures; • negative outcome of the judicial and/or out-of-court initiatives with absence of other assets that can be called in the event of un-recoverability of the debtor’s exposures; • impossibility to initiate actions to recover credit; • current insolvency procedure, from which the procedure itself states that the unsecured exposures will not have redress; • loans not backed by mortgage security older than 3 years that have not registered repayments/collections during the first 3 years after the NPE classification; • mortgage loans to private individuals with collaterals already executed or not recoverable (because of legal or administrative defects and if execution is considered not economically viable), if they have been classified as non-performing for more than 7 years, or between 2 and 7 years if the residual debt is less than €110,000. The amount of write-offs on financial assets still subject to the enforcement procedure amounts to €2,796.8 million at 31 December 2008, of which the write-offs for the 2018 financial year amounted to €2,381.4 million. The write-offs component recorded during the year does not correspond to the write-offs recorded in the dynamics of non-performing exposures, as the latter also include cancellations with "debt forgiveness". Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 302 2018 Annual Report and Accounts · UniCredit In some Legal entity, the aforementioned activities can be managed within either the Monitoring, or Restructuring or Workout units; with reference to UniCredit S.p.A. these responsibilities are allocated to the Special Credit unit within which an ad hoc department was created (i.e. Customer Recovery), exclusively dedicated to soft collection and re-management for retail portfolio. As part of the overall management of deteriorated exposures, the Restructuring activity is aimed at mitigating the risk of insolvency and the quality of exposures with restructuring agreements and company reorganization plans as well as reducing the amount of unlikely to pay with recoveries and performing re-classification, by means of forbearance measures. Specifically, among the strategies for managing unlikely to pay loans to corporate counterparties, there are also restructuring platforms (up to now limited to the Italian market), the disposal of individual exposures and extraordinary finance transactions. The coordination and implementation of recovery strategy on positions classified as Bad Loans fall instead within the responsibility of "Workout" Unit, whose reporting structures identify the optimal strategies for maximizing recoveries, including the timely enforcement of collaterals. In some legal entity of the Group, the activity is also implemented by leveraging on service agreements with external agencies. As pertains the disposal activities, these refer to the organization, management and execution of sales processes (both credit portfolios and individual positions), through the application of a transparent and competitive methodology based on market criteria. At Group level, these activities are performed by a dedicated department within UniCredit S.p.A. (Group Distressed Asset Solutions), which evaluates various disposal options alternatives, in cooperation with the legal entity’s peer function where deemed necessary to handle specific local cases. The proactive management of real estate guarantees is coordinated at the Parent company level by a dedicated department (Group Repossessed Assets), which oversees the strategy of repossession of the collateral and the specific activities carried out within the Group, particularly in those entities specialized in the acquisition of collateral (for example the UCTAM company). The aforementioned function also oversees the possible creation of a "Real Estate Owned Company" (ReoCo) in Italy. Beyond the operational responsibilities in the non-performing exposures management, from a governance and strategic coordination standpoint, the Group NPE Governance Committee (“GNGC”) has been set up in order to ensure the effective steering, coordination and control of the non-performing loans reduction plan, ensuring an effective alignment of the common objectives between the Parent company and the various legal entity, also through the involvement of both "Group Risk Management" and "Group Lending Officer" functions according to the instructions of the Banca d’Italia (Circular No.272/2008 and subsequent updates). 3.2 Write-off Group guidelines for write-offs on financial assets provides that whenever a loan is deemed to be uncollectable/unrecoverable it needs to be identified at the earliest possible opportunity and properly dealt with in accordance with financial regulations. Write-offs can relate to a financial asset in its entirety, or to a portion of it. In assessing the recoverability of non-performing exposures (NPE) and in determining internal NPE write-off approaches, the following cases, in particular, are taken into account: • exposures with prolonged arrears: it is assessed the recoverability of an exposure that presents arrears for a prolonged period of time. If, following this assessment, an exposure or part of an exposure is deemed as non-recoverable, it should be written-off in a timely manner, adopting different thresholds predefined on the basis of the different portfolios; • exposures under insolvency procedure: where the collateralisation of the exposure is low, legal expenses often absorb a significant portion of the proceeds from the bankruptcy procedure and therefore estimated recoveries are expected to be very low; • a partial write off may be warranted where there are reasonable elements to demonstrate the debtor's inability to repay the full amount of the debt, i.e. a significant level of debt, even following the implementation of a forbearance treatment and/or the execution of collateral. Below a non-exhaustive list of hard evidences implying, with high likelihood, the not recoverability of the exposure, to be assessed, for the potential (total or partial) write-off: • the Bank cannot call the guarantor(s), or his assets are not sufficient for the recovery of the debtor’s exposures; • negative outcome of the judicial and/or out-of-court initiatives with absence of other assets that can be called in the event of un-recoverability of the debtor’s exposures; • impossibility to initiate actions to recover credit; • current insolvency procedure, from which the procedure itself states that the unsecured exposures will not have redress; • loans not backed by mortgage security older than 3 years that have not registered repayments/collections during the first 3 years after the NPE classification; • mortgage loans to private individuals with collaterals already executed or not recoverable (because of legal or administrative defects and if execution is considered not economically viable), if they have been classified as non-performing for more than 7 years, or between 2 and 7 years if the residual debt is less than €110,000. The amount of write-offs on financial assets still subject to the enforcement procedure amounts to €2,796.8 million at 31 December 2008, of which the write-offs for the 2018 financial year amounted to €2,381.4 million. The write-offs component recorded during the year does not correspond to the write-offs recorded in the dynamics of non-performing exposures, as the latter also include cancellations with "debt forgiveness". Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 303 3.3 Acquired or originated impaired financial assets Purchased or Originated Credit Impaired (“POCI”) are credit exposures that are already impaired on initial recognition. These credit exposures might be recognised either as a result of a purchase of non-performing exposures from third parties or as a result of the restructuring of impaired exposures which has led to the provision of significant new finance, either in absolute terms or in relative terms, compared with the amount of the original exposure. These exposures are subject to management, measurement and control according to the principles described in the paragraph of Part E - Consolidated explanatory notes of the UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk Policies Management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. In particular, the expected credit losses recorded at initial recognition within the carrying amount of the instrument are periodically reviewed on the basis of the processes described in the previous paragraphs. The expected credit loss calculated for these credit exposures is always determined considering their residual life, and such exposure are conventionally allocated into Stage 3, or in Stage 2 if, as a result of an improvement in the creditworthiness of the counterparty following the initial recognition, the assets are performing. These assets are never classified under Stage 1 because the expected credit loss must always be calculated considering a time horizon equal to the residual duration. 4. Commercial renegotiation financial assets and forborne exposures Changes in existing financial instruments which determine a modification of contractual conditions might be the result of either: • commercial initiatives, which may be specific for each customer or applied to portfolio of customers also as a result of dedicated initiatives sponsored by public authorities or banking associations; or • concessions granted in light of debtor’s financial difficulties (Forbearance). Such changes are accounted on the basis of whether the modification is considered significant or not. In this regard, reference is made to the Part A - A.2 - Main items of the accounts. The concessions granted due to debtor’s financial difficulties, so called Forbearance initiatives, are usually considered not significant from an accounting perspective. 4.1 Loan Categorisation in the risk categories and forborne exposures In July 2014, the European Banking Authorities issued the “Implementing Technical Standards” (“ITS”) on non-performing and Forborne exposures, with the aim to allow, with a comparable basis across EU institutions, a closer supervisory monitoring of banking forbearance practice. In line with the mentioned ITS, a transaction has to be considered as forborne when both of the following conditions are simultaneously met: • a concession in favour of the debtor exits, either (i) as contractual modification or (ii) as refinancing aimed at ensuring the repayment of pre-existing obligation; • the debtor is facing or about to face financial difficulties. To comply with EBA ITS, since 2015 UniCredit S.p.A. has worked on the definition of a common methodological framework for forbearance process, issuing group’s guidelines on forbearance management and setting up a shared IT infrastructure (i.e. Forbearance engine). Though in coherency with the overall solution, fine tunings have been applied by the different Group’s legal entities to adapt the Group’s framework to the local IT tools and credit practices. More in details, the progressive convergence to the above mentioned regulatory provisions has been achieved leveraging on the following steps: • launch of a series of activities to align the current credit process to the new classification rules; • definition of a monitoring process of the dynamics of Forborne Exposures; • delivery of necessary Reporting to the Supervisory Authority. To assess the existence of a concession, the approach adopted by UniCredit has enabled the tracking of a concession when: • the loan is renegotiated through collective agreements, or through internal initiatives supporting certain debtors categories, or through initiatives designed to support the debtor in case of natural disasters; • the installment/repayment plan of a loan is changed and a change of interest rate is applied; • different debts belonging to the same debtors are repackaged into a new loan with more favourable conditions than the original ones; • pool loans are subject to re-negotiation; • the loan is subject to a refinancing practice. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 303 3.3 Acquired or originated impaired financial assets Purchased or Originated Credit Impaired (“POCI”) are credit exposures that are already impaired on initial recognition. These credit exposures might be recognised either as a result of a purchase of non-performing exposures from third parties or as a result of the restructuring of impaired exposures which has led to the provision of significant new finance, either in absolute terms or in relative terms, compared with the amount of the original exposure. These exposures are subject to management, measurement and control according to the principles described in the paragraph of Part E - Consolidated explanatory notes of the UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk Policies Management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. In particular, the expected credit losses recorded at initial recognition within the carrying amount of the instrument are periodically reviewed on the basis of the processes described in the previous paragraphs. The expected credit loss calculated for these credit exposures is always determined considering their residual life, and such exposure are conventionally allocated into Stage 3, or in Stage 2 if, as a result of an improvement in the creditworthiness of the counterparty following the initial recognition, the assets are performing. These assets are never classified under Stage 1 because the expected credit loss must always be calculated considering a time horizon equal to the residual duration. 4. Commercial renegotiation financial assets and forborne exposures Changes in existing financial instruments which determine a modification of contractual conditions might be the result of either: • commercial initiatives, which may be specific for each customer or applied to portfolio of customers also as a result of dedicated initiatives sponsored by public authorities or banking associations; or • concessions granted in light of debtor’s financial difficulties (Forbearance). Such changes are accounted on the basis of whether the modification is considered significant or not. In this regard, reference is made to the Part A - A.2 - Main items of the accounts. The concessions granted due to debtor’s financial difficulties, so called Forbearance initiatives, are usually considered not significant from an accounting perspective. 4.1 Loan Categorisation in the risk categories and forborne exposures In July 2014, the European Banking Authorities issued the “Implementing Technical Standards” (“ITS”) on non-performing and Forborne exposures, with the aim to allow, with a comparable basis across EU institutions, a closer supervisory monitoring of banking forbearance practice. In line with the mentioned ITS, a transaction has to be considered as forborne when both of the following conditions are simultaneously met: • a concession in favour of the debtor exits, either (i) as contractual modification or (ii) as refinancing aimed at ensuring the repayment of pre-existing obligation; • the debtor is facing or about to face financial difficulties. To comply with EBA ITS, since 2015 UniCredit S.p.A. has worked on the definition of a common methodological framework for forbearance process, issuing group’s guidelines on forbearance management and setting up a shared IT infrastructure (i.e. Forbearance engine). Though in coherency with the overall solution, fine tunings have been applied by the different Group’s legal entities to adapt the Group’s framework to the local IT tools and credit practices. More in details, the progressive convergence to the above mentioned regulatory provisions has been achieved leveraging on the following steps: • launch of a series of activities to align the current credit process to the new classification rules; • definition of a monitoring process of the dynamics of Forborne Exposures; • delivery of necessary Reporting to the Supervisory Authority. To assess the existence of a concession, the approach adopted by UniCredit has enabled the tracking of a concession when: • the loan is renegotiated through collective agreements, or through internal initiatives supporting certain debtors categories, or through initiatives designed to support the debtor in case of natural disasters; • the installment/repayment plan of a loan is changed and a change of interest rate is applied; • different debts belonging to the same debtors are repackaged into a new loan with more favourable conditions than the original ones; • pool loans are subject to re-negotiation; • the loan is subject to a refinancing practice. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 303 3.3 Acquired or originated impaired financial assets Purchased or Originated Credit Impaired (“POCI”) are credit exposures that are already impaired on initial recognition. These credit exposures might be recognised either as a result of a purchase of non-performing exposures from third parties or as a result of the restructuring of impaired exposures which has led to the provision of significant new finance, either in absolute terms or in relative terms, compared with the amount of the original exposure. These exposures are subject to management, measurement and control according to the principles described in the paragraph of Part E - Consolidated explanatory notes of the UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk Policies Management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. In particular, the expected credit losses recorded at initial recognition within the carrying amount of the instrument are periodically reviewed on the basis of the processes described in the previous paragraphs. The expected credit loss calculated for these credit exposures is always determined considering their residual life, and such exposure are conventionally allocated into Stage 3, or in Stage 2 if, as a result of an improvement in the creditworthiness of the counterparty following the initial recognition, the assets are performing. These assets are never classified under Stage 1 because the expected credit loss must always be calculated considering a time horizon equal to the residual duration. 4. Commercial renegotiation financial assets and forborne exposures Changes in existing financial instruments which determine a modification of contractual conditions might be the result of either: • commercial initiatives, which may be specific for each customer or applied to portfolio of customers also as a result of dedicated initiatives sponsored by public authorities or banking associations; or • concessions granted in light of debtor’s financial difficulties (Forbearance). Such changes are accounted on the basis of whether the modification is considered significant or not. In this regard, reference is made to the Part A - A.2 - Main items of the accounts. The concessions granted due to debtor’s financial difficulties, so called Forbearance initiatives, are usually considered not significant from an accounting perspective. 4.1 Loan Categorisation in the risk categories and forborne exposures In July 2014, the European Banking Authorities issued the “Implementing Technical Standards” (“ITS”) on non-performing and Forborne exposures, with the aim to allow, with a comparable basis across EU institutions, a closer supervisory monitoring of banking forbearance practice. In line with the mentioned ITS, a transaction has to be considered as forborne when both of the following conditions are simultaneously met: • a concession in favour of the debtor exits, either (i) as contractual modification or (ii) as refinancing aimed at ensuring the repayment of pre-existing obligation; • the debtor is facing or about to face financial difficulties. To comply with EBA ITS, since 2015 UniCredit S.p.A. has worked on the definition of a common methodological framework for forbearance process, issuing group’s guidelines on forbearance management and setting up a shared IT infrastructure (i.e. Forbearance engine). Though in coherency with the overall solution, fine tunings have been applied by the different Group’s legal entities to adapt the Group’s framework to the local IT tools and credit practices. More in details, the progressive convergence to the above mentioned regulatory provisions has been achieved leveraging on the following steps: • launch of a series of activities to align the current credit process to the new classification rules; • definition of a monitoring process of the dynamics of Forborne Exposures; • delivery of necessary Reporting to the Supervisory Authority. To assess the existence of a concession, the approach adopted by UniCredit has enabled the tracking of a concession when: • the loan is renegotiated through collective agreements, or through internal initiatives supporting certain debtors categories, or through initiatives designed to support the debtor in case of natural disasters; • the installment/repayment plan of a loan is changed and a change of interest rate is applied; • different debts belonging to the same debtors are repackaged into a new loan with more favourable conditions than the original ones; • pool loans are subject to re-negotiation; • the loan is subject to a refinancing practice. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 303 3.3 Acquired or originated impaired financial assets Purchased or Originated Credit Impaired (“POCI”) are credit exposures that are already impaired on initial recognition. These credit exposures might be recognised either as a result of a purchase of non-performing exposures from third parties or as a result of the restructuring of impaired exposures which has led to the provision of significant new finance, either in absolute terms or in relative terms, compared with the amount of the original exposure. These exposures are subject to management, measurement and control according to the principles described in the paragraph of Part E - Consolidated explanatory notes of the UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk Policies Management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. In particular, the expected credit losses recorded at initial recognition within the carrying amount of the instrument are periodically reviewed on the basis of the processes described in the previous paragraphs. The expected credit loss calculated for these credit exposures is always determined considering their residual life, and such exposure are conventionally allocated into Stage 3, or in Stage 2 if, as a result of an improvement in the creditworthiness of the counterparty following the initial recognition, the assets are performing. These assets are never classified under Stage 1 because the expected credit loss must always be calculated considering a time horizon equal to the residual duration. 4. Commercial renegotiation financial assets and forborne exposures Changes in existing financial instruments which determine a modification of contractual conditions might be the result of either: • commercial initiatives, which may be specific for each customer or applied to portfolio of customers also as a result of dedicated initiatives sponsored by public authorities or banking associations; or • concessions granted in light of debtor’s financial difficulties (Forbearance). Such changes are accounted on the basis of whether the modification is considered significant or not. In this regard, reference is made to the Part A - A.2 - Main items of the accounts. The concessions granted due to debtor’s financial difficulties, so called Forbearance initiatives, are usually considered not significant from an accounting perspective. 4.1 Loan Categorisation in the risk categories and forborne exposures In July 2014, the European Banking Authorities issued the “Implementing Technical Standards” (“ITS”) on non-performing and Forborne exposures, with the aim to allow, with a comparable basis across EU institutions, a closer supervisory monitoring of banking forbearance practice. In line with the mentioned ITS, a transaction has to be considered as forborne when both of the following conditions are simultaneously met: • a concession in favour of the debtor exits, either (i) as contractual modification or (ii) as refinancing aimed at ensuring the repayment of pre-existing obligation; • the debtor is facing or about to face financial difficulties. To comply with EBA ITS, since 2015 UniCredit S.p.A. has worked on the definition of a common methodological framework for forbearance process, issuing group’s guidelines on forbearance management and setting up a shared IT infrastructure (i.e. Forbearance engine). Though in coherency with the overall solution, fine tunings have been applied by the different Group’s legal entities to adapt the Group’s framework to the local IT tools and credit practices. More in details, the progressive convergence to the above mentioned regulatory provisions has been achieved leveraging on the following steps: • launch of a series of activities to align the current credit process to the new classification rules; • definition of a monitoring process of the dynamics of Forborne Exposures; • delivery of necessary Reporting to the Supervisory Authority. To assess the existence of a concession, the approach adopted by UniCredit has enabled the tracking of a concession when: • the loan is renegotiated through collective agreements, or through internal initiatives supporting certain debtors categories, or through initiatives designed to support the debtor in case of natural disasters; • the installment/repayment plan of a loan is changed and a change of interest rate is applied; • different debts belonging to the same debtors are repackaged into a new loan with more favourable conditions than the original ones; • pool loans are subject to re-negotiation; • the loan is subject to a refinancing practice. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 303 3.3 Acquired or originated impaired financial assets Purchased or Originated Credit Impaired (“POCI”) are credit exposures that are already impaired on initial recognition. These credit exposures might be recognised either as a result of a purchase of non-performing exposures from third parties or as a result of the restructuring of impaired exposures which has led to the provision of significant new finance, either in absolute terms or in relative terms, compared with the amount of the original exposure. These exposures are subject to management, measurement and control according to the principles described in the paragraph of Part E - Consolidated explanatory notes of the UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk Policies Management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. In particular, the expected credit losses recorded at initial recognition within the carrying amount of the instrument are periodically reviewed on the basis of the processes described in the previous paragraphs. The expected credit loss calculated for these credit exposures is always determined considering their residual life, and such exposure are conventionally allocated into Stage 3, or in Stage 2 if, as a result of an improvement in the creditworthiness of the counterparty following the initial recognition, the assets are performing. These assets are never classified under Stage 1 because the expected credit loss must always be calculated considering a time horizon equal to the residual duration. 4. Commercial renegotiation financial assets and forborne exposures Changes in existing financial instruments which determine a modification of contractual conditions might be the result of either: • commercial initiatives, which may be specific for each customer or applied to portfolio of customers also as a result of dedicated initiatives sponsored by public authorities or banking associations; or • concessions granted in light of debtor’s financial difficulties (Forbearance). Such changes are accounted on the basis of whether the modification is considered significant or not. In this regard, reference is made to the Part A - A.2 - Main items of the accounts. The concessions granted due to debtor’s financial difficulties, so called Forbearance initiatives, are usually considered not significant from an accounting perspective. 4.1 Loan Categorisation in the risk categories and forborne exposures In July 2014, the European Banking Authorities issued the “Implementing Technical Standards” (“ITS”) on non-performing and Forborne exposures, with the aim to allow, with a comparable basis across EU institutions, a closer supervisory monitoring of banking forbearance practice. In line with the mentioned ITS, a transaction has to be considered as forborne when both of the following conditions are simultaneously met: • a concession in favour of the debtor exits, either (i) as contractual modification or (ii) as refinancing aimed at ensuring the repayment of pre-existing obligation; • the debtor is facing or about to face financial difficulties. To comply with EBA ITS, since 2015 UniCredit S.p.A. has worked on the definition of a common methodological framework for forbearance process, issuing group’s guidelines on forbearance management and setting up a shared IT infrastructure (i.e. Forbearance engine). Though in coherency with the overall solution, fine tunings have been applied by the different Group’s legal entities to adapt the Group’s framework to the local IT tools and credit practices. More in details, the progressive convergence to the above mentioned regulatory provisions has been achieved leveraging on the following steps: • launch of a series of activities to align the current credit process to the new classification rules; • definition of a monitoring process of the dynamics of Forborne Exposures; • delivery of necessary Reporting to the Supervisory Authority. To assess the existence of a concession, the approach adopted by UniCredit has enabled the tracking of a concession when: • the loan is renegotiated through collective agreements, or through internal initiatives supporting certain debtors categories, or through initiatives designed to support the debtor in case of natural disasters; • the installment/repayment plan of a loan is changed and a change of interest rate is applied; • different debts belonging to the same debtors are repackaged into a new loan with more favourable conditions than the original ones; • pool loans are subject to re-negotiation; • the loan is subject to a refinancing practice. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 304 2018 Annual Report and Accounts · UniCredit If the mentioned concessions are granted to a counterparty in financial difficulty the classification of the exposure as forborne is activated. The overall financial difficulty assessment is performed according to a set of a pre-defined criteria (i.e. Troubled debt test) which might be checked either automatically by the Forbearance engine or by the responsible risk management function. The regulatory framework relating to the management of Forborne exposures has been integrated with new Guidelines following the publication of the ECB “Guidance to Banks on Non-Performing Loans” in March 2017. The Paper, that has become effective starting from 2018, provides specific recommendations to Banks for the definition of a clear NPL Strategy which, consistently with the industrial plan, ultimately aims at the reduction of NPE Stock, by means of ad hoc risk management initiatives. Among a broader spectrum of activities, Banks are required to provide a detailed reporting on the NPE Forborne Portfolio through a new Quarterly Reporting Template which includes information of the credit quality of Forborne exposures and on the effectiveness of Forbearance measures granted. On top of the Supervisory expectations provided by the ECB, the European Banking Authorities issued two further papers: • “Guidelines on management of non-performing and forborne exposures” (October 2018) that recalls the ECB “Guidance” issued in March 2017; • “Guidelines on disclosure of non-performing and forborne exposures” (December 2018) which is more focused on the disclosure templates to be used for Group’s supervisory reporting. In order to ensure ongoing alignment to the Forbearance practices required by the above mentioned supervisory and regulatory guidelines, UniCredit finalised the following activities: • review of the list of the potential Forbearance measures to acknowledge (i) the split between short-term measures (duration less than 24 months) and long-term measures (duration higher than or equal to 24 months) and (ii) the possibility of granting combinations of short and long-term FBE measures; • collection and monitoring of the relevant information of the new Quarterly Template with disclosure on: - performing and non-performing portfolio; - guarantees; - default inflows and outflows; - list of the FBE Measures granted including the indication of their effectiveness. With reference to the monitoring and reporting activity on forborne exposures, as at 31 December 2018 the number of instruments (loans and advances at amortized cost) with forbearance measures amounts to 402,454 (147,688 for UniCredit S.p.A. perimeter). Specifically, on a consolidated level: • forbearance measures granted during the period represent 10% of the total (21% considering only UniCredit S.p.A.); • forbearance measures granted on the non performing portfolio represent the 52% of the total (48% considering only UniCredit S.p.A.). As regards the vintage of classification of forborne exposures, the information reported below pertain to loan and advances at amortized cost, as financial assets at fair value and off-balance sheet exposures do not represent (out of the overall forborne portfolio) a materially significant relevance. More in details, at consolidated level, 54% of forborne performing exposures has a vintage of classification <= 24 months (37% for UniCredit S.p.A.) while in terms of forborne non-performing loans, 40% of consolidated exposures fall within a classification vintage <=24 months (30% for UniCredit S.p.A. portfolio). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 304 2018 Annual Report and Accounts · UniCredit If the mentioned concessions are granted to a counterparty in financial difficulty the classification of the exposure as forborne is activated. The overall financial difficulty assessment is performed according to a set of a pre-defined criteria (i.e. Troubled debt test) which might be checked either automatically by the Forbearance engine or by the responsible risk management function. The regulatory framework relating to the management of Forborne exposures has been integrated with new Guidelines following the publication of the ECB “Guidance to Banks on Non-Performing Loans” in March 2017. The Paper, that has become effective starting from 2018, provides specific recommendations to Banks for the definition of a clear NPL Strategy which, consistently with the industrial plan, ultimately aims at the reduction of NPE Stock, by means of ad hoc risk management initiatives. Among a broader spectrum of activities, Banks are required to provide a detailed reporting on the NPE Forborne Portfolio through a new Quarterly Reporting Template which includes information of the credit quality of Forborne exposures and on the effectiveness of Forbearance measures granted. On top of the Supervisory expectations provided by the ECB, the European Banking Authorities issued two further papers: • “Guidelines on management of non-performing and forborne exposures” (October 2018) that recalls the ECB “Guidance” issued in March 2017; • “Guidelines on disclosure of non-performing and forborne exposures” (December 2018) which is more focused on the disclosure templates to be used for Group’s supervisory reporting. In order to ensure ongoing alignment to the Forbearance practices required by the above mentioned supervisory and regulatory guidelines, UniCredit finalised the following activities: • review of the list of the potential Forbearance measures to acknowledge (i) the split between short-term measures (duration less than 24 months) and long-term measures (duration higher than or equal to 24 months) and (ii) the possibility of granting combinations of short and long-term FBE measures; • collection and monitoring of the relevant information of the new Quarterly Template with disclosure on: - performing and non-performing portfolio; - guarantees; - default inflows and outflows; - list of the FBE Measures granted including the indication of their effectiveness. With reference to the monitoring and reporting activity on forborne exposures, as at 31 December 2018 the number of instruments (loans and advances at amortized cost) with forbearance measures amounts to 402,454 (147,688 for UniCredit S.p.A. perimeter). Specifically, on a consolidated level: • forbearance measures granted during the period represent 10% of the total (21% considering only UniCredit S.p.A.); • forbearance measures granted on the non performing portfolio represent the 52% of the total (48% considering only UniCredit S.p.A.). As regards the vintage of classification of forborne exposures, the information reported below pertain to loan and advances at amortized cost, as financial assets at fair value and off-balance sheet exposures do not represent (out of the overall forborne portfolio) a materially significant relevance. More in details, at consolidated level, 54% of forborne performing exposures has a vintage of classification <= 24 months (37% for UniCredit S.p.A.) while in terms of forborne non-performing loans, 40% of consolidated exposures fall within a classification vintage <=24 months (30% for UniCredit S.p.A. portfolio). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 304 2018 Annual Report and Accounts · UniCredit If the mentioned concessions are granted to a counterparty in financial difficulty the classification of the exposure as forborne is activated. The overall financial difficulty assessment is performed according to a set of a pre-defined criteria (i.e. Troubled debt test) which might be checked either automatically by the Forbearance engine or by the responsible risk management function. The regulatory framework relating to the management of Forborne exposures has been integrated with new Guidelines following the publication of the ECB “Guidance to Banks on Non-Performing Loans” in March 2017. The Paper, that has become effective starting from 2018, provides specific recommendations to Banks for the definition of a clear NPL Strategy which, consistently with the industrial plan, ultimately aims at the reduction of NPE Stock, by means of ad hoc risk management initiatives. Among a broader spectrum of activities, Banks are required to provide a detailed reporting on the NPE Forborne Portfolio through a new Quarterly Reporting Template which includes information of the credit quality of Forborne exposures and on the effectiveness of Forbearance measures granted. On top of the Supervisory expectations provided by the ECB, the European Banking Authorities issued two further papers: • “Guidelines on management of non-performing and forborne exposures” (October 2018) that recalls the ECB “Guidance” issued in March 2017; • “Guidelines on disclosure of non-performing and forborne exposures” (December 2018) which is more focused on the disclosure templates to be used for Group’s supervisory reporting. In order to ensure ongoing alignment to the Forbearance practices required by the above mentioned supervisory and regulatory guidelines, UniCredit finalised the following activities: • review of the list of the potential Forbearance measures to acknowledge (i) the split between short-term measures (duration less than 24 months) and long-term measures (duration higher than or equal to 24 months) and (ii) the possibility of granting combinations of short and long-term FBE measures; • collection and monitoring of the relevant information of the new Quarterly Template with disclosure on: - performing and non-performing portfolio; - guarantees; - default inflows and outflows; - list of the FBE Measures granted including the indication of their effectiveness. With reference to the monitoring and reporting activity on forborne exposures, as at 31 December 2018 the number of instruments (loans and advances at amortized cost) with forbearance measures amounts to 402,454 (147,688 for UniCredit S.p.A. perimeter). Specifically, on a consolidated level: • forbearance measures granted during the period represent 10% of the total (21% considering only UniCredit S.p.A.); • forbearance measures granted on the non performing portfolio represent the 52% of the total (48% considering only UniCredit S.p.A.). As regards the vintage of classification of forborne exposures, the information reported below pertain to loan and advances at amortized cost, as financial assets at fair value and off-balance sheet exposures do not represent (out of the overall forborne portfolio) a materially significant relevance. More in details, at consolidated level, 54% of forborne performing exposures has a vintage of classification <= 24 months (37% for UniCredit S.p.A.) while in terms of forborne non-performing loans, 40% of consolidated exposures fall within a classification vintage <=24 months (30% for UniCredit S.p.A. portfolio). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 304 2018 Annual Report and Accounts · UniCredit If the mentioned concessions are granted to a counterparty in financial difficulty the classification of the exposure as forborne is activated. The overall financial difficulty assessment is performed according to a set of a pre-defined criteria (i.e. Troubled debt test) which might be checked either automatically by the Forbearance engine or by the responsible risk management function. The regulatory framework relating to the management of Forborne exposures has been integrated with new Guidelines following the publication of the ECB “Guidance to Banks on Non-Performing Loans” in March 2017. The Paper, that has become effective starting from 2018, provides specific recommendations to Banks for the definition of a clear NPL Strategy which, consistently with the industrial plan, ultimately aims at the reduction of NPE Stock, by means of ad hoc risk management initiatives. Among a broader spectrum of activities, Banks are required to provide a detailed reporting on the NPE Forborne Portfolio through a new Quarterly Reporting Template which includes information of the credit quality of Forborne exposures and on the effectiveness of Forbearance measures granted. On top of the Supervisory expectations provided by the ECB, the European Banking Authorities issued two further papers: • “Guidelines on management of non-performing and forborne exposures” (October 2018) that recalls the ECB “Guidance” issued in March 2017; • “Guidelines on disclosure of non-performing and forborne exposures” (December 2018) which is more focused on the disclosure templates to be used for Group’s supervisory reporting. In order to ensure ongoing alignment to the Forbearance practices required by the above mentioned supervisory and regulatory guidelines, UniCredit finalised the following activities: • review of the list of the potential Forbearance measures to acknowledge (i) the split between short-term measures (duration less than 24 months) and long-term measures (duration higher than or equal to 24 months) and (ii) the possibility of granting combinations of short and long-term FBE measures; • collection and monitoring of the relevant information of the new Quarterly Template with disclosure on: - performing and non-performing portfolio; - guarantees; - default inflows and outflows; - list of the FBE Measures granted including the indication of their effectiveness. With reference to the monitoring and reporting activity on forborne exposures, as at 31 December 2018 the number of instruments (loans and advances at amortized cost) with forbearance measures amounts to 402,454 (147,688 for UniCredit S.p.A. perimeter). Specifically, on a consolidated level: • forbearance measures granted during the period represent 10% of the total (21% considering only UniCredit S.p.A.); • forbearance measures granted on the non performing portfolio represent the 52% of the total (48% considering only UniCredit S.p.A.). As regards the vintage of classification of forborne exposures, the information reported below pertain to loan and advances at amortized cost, as financial assets at fair value and off-balance sheet exposures do not represent (out of the overall forborne portfolio) a materially significant relevance. More in details, at consolidated level, 54% of forborne performing exposures has a vintage of classification <= 24 months (37% for UniCredit S.p.A.) while in terms of forborne non-performing loans, 40% of consolidated exposures fall within a classification vintage <=24 months (30% for UniCredit S.p.A. portfolio). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 304 2018 Annual Report and Accounts · UniCredit If the mentioned concessions are granted to a counterparty in financial difficulty the classification of the exposure as forborne is activated. The overall financial difficulty assessment is performed according to a set of a pre-defined criteria (i.e. Troubled debt test) which might be checked either automatically by the Forbearance engine or by the responsible risk management function. The regulatory framework relating to the management of Forborne exposures has been integrated with new Guidelines following the publication of the ECB “Guidance to Banks on Non-Performing Loans” in March 2017. The Paper, that has become effective starting from 2018, provides specific recommendations to Banks for the definition of a clear NPL Strategy which, consistently with the industrial plan, ultimately aims at the reduction of NPE Stock, by means of ad hoc risk management initiatives. Among a broader spectrum of activities, Banks are required to provide a detailed reporting on the NPE Forborne Portfolio through a new Quarterly Reporting Template which includes information of the credit quality of Forborne exposures and on the effectiveness of Forbearance measures granted. On top of the Supervisory expectations provided by the ECB, the European Banking Authorities issued two further papers: • “Guidelines on management of non-performing and forborne exposures” (October 2018) that recalls the ECB “Guidance” issued in March 2017; • “Guidelines on disclosure of non-performing and forborne exposures” (December 2018) which is more focused on the disclosure templates to be used for Group’s supervisory reporting. In order to ensure ongoing alignment to the Forbearance practices required by the above mentioned supervisory and regulatory guidelines, UniCredit finalised the following activities: • review of the list of the potential Forbearance measures to acknowledge (i) the split between short-term measures (duration less than 24 months) and long-term measures (duration higher than or equal to 24 months) and (ii) the possibility of granting combinations of short and long-term FBE measures; • collection and monitoring of the relevant information of the new Quarterly Template with disclosure on: - performing and non-performing portfolio; - guarantees; - default inflows and outflows; - list of the FBE Measures granted including the indication of their effectiveness. With reference to the monitoring and reporting activity on forborne exposures, as at 31 December 2018 the number of instruments (loans and advances at amortized cost) with forbearance measures amounts to 402,454 (147,688 for UniCredit S.p.A. perimeter). Specifically, on a consolidated level: • forbearance measures granted during the period represent 10% of the total (21% considering only UniCredit S.p.A.); • forbearance measures granted on the non performing portfolio represent the 52% of the total (48% considering only UniCredit S.p.A.). As regards the vintage of classification of forborne exposures, the information reported below pertain to loan and advances at amortized cost, as financial assets at fair value and off-balance sheet exposures do not represent (out of the overall forborne portfolio) a materially significant relevance. More in details, at consolidated level, 54% of forborne performing exposures has a vintage of classification <= 24 months (37% for UniCredit S.p.A.) while in terms of forborne non-performing loans, 40% of consolidated exposures fall within a classification vintage <=24 months (30% for UniCredit S.p.A. portfolio). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 305 Quantitative information In the following tables, the volume of impaired assets according to the IFRS definition is substantially equivalent to the one for non-performing exposures referred to in the EBA standards. A. Credit quality For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds except for table A.2.1 - Banking group - Balance Sheet and off-Balance Sheet credit exposure by external rating class, in which units in investment funds are included. A.1 Non-Performing and performing credit exposure: amounts, writedowns, changes, distribution by business activity A.1.1 Regulatory consolidation - Breakdown of financial assets by past-due buckets (carrying value) (€ '000) PORTFOLIOS/RISK STAGES STAGE 1 STAGE 2 STAGE 3 FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS 1. Financial assets at amortised cost 6,756,960 354,093 150,585 1,314,451 1,337,100 940,209 3,931,197 542,394 8,515,568 2. Financial assets at fair value through other comprehensive income - - - - - - 42 - - Total 12.31.2018 6,756,960 354,093 150,585 1,314,451 1,337,100 940,209 3,931,239 542,394 8,515,568 The amounts past due over 90 days and related to Stage 1 and Stage 2 exposures refer to loans that do not meet the definition of Non-performing past due (below the materiality threshold). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 305 Quantitative information In the following tables, the volume of impaired assets according to the IFRS definition is substantially equivalent to the one for non-performing exposures referred to in the EBA standards. A. Credit quality For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds except for table A.2.1 - Banking group - Balance Sheet and off-Balance Sheet credit exposure by external rating class, in which units in investment funds are included. A.1 Non-Performing and performing credit exposure: amounts, writedowns, changes, distribution by business activity A.1.1 Regulatory consolidation - Breakdown of financial assets by past-due buckets (carrying value) (€ '000) PORTFOLIOS/RISK STAGES STAGE 1 STAGE 2 STAGE 3 FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS 1. Financial assets at amortised cost 6,756,960 354,093 150,585 1,314,451 1,337,100 940,209 3,931,197 542,394 8,515,568 2. Financial assets at fair value through other comprehensive income - - - - - - 42 - - Total 12.31.2018 6,756,960 354,093 150,585 1,314,451 1,337,100 940,209 3,931,239 542,394 8,515,568 The amounts past due over 90 days and related to Stage 1 and Stage 2 exposures refer to loans that do not meet the definition of Non-performing past due (below the materiality threshold). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 305 Quantitative information In the following tables, the volume of impaired assets according to the IFRS definition is substantially equivalent to the one for non-performing exposures referred to in the EBA standards. A. Credit quality For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds except for table A.2.1 - Banking group - Balance Sheet and off-Balance Sheet credit exposure by external rating class, in which units in investment funds are included. A.1 Non-Performing and performing credit exposure: amounts, writedowns, changes, distribution by business activity A.1.1 Regulatory consolidation - Breakdown of financial assets by past-due buckets (carrying value) (€ '000) PORTFOLIOS/RISK STAGES STAGE 1 STAGE 2 STAGE 3 FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS 1. Financial assets at amortised cost 6,756,960 354,093 150,585 1,314,451 1,337,100 940,209 3,931,197 542,394 8,515,568 2. Financial assets at fair value through other comprehensive income - - - - - - 42 - - Total 12.31.2018 6,756,960 354,093 150,585 1,314,451 1,337,100 940,209 3,931,239 542,394 8,515,568 The amounts past due over 90 days and related to Stage 1 and Stage 2 exposures refer to loans that do not meet the definition of Non-performing past due (below the materiality threshold). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 305 Quantitative information In the following tables, the volume of impaired assets according to the IFRS definition is substantially equivalent to the one for non-performing exposures referred to in the EBA standards. A. Credit quality For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds except for table A.2.1 - Banking group - Balance Sheet and off-Balance Sheet credit exposure by external rating class, in which units in investment funds are included. A.1 Non-Performing and performing credit exposure: amounts, writedowns, changes, distribution by business activity A.1.1 Regulatory consolidation - Breakdown of financial assets by past-due buckets (carrying value) (€ '000) PORTFOLIOS/RISK STAGES STAGE 1 STAGE 2 STAGE 3 FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS 1. Financial assets at amortised cost 6,756,960 354,093 150,585 1,314,451 1,337,100 940,209 3,931,197 542,394 8,515,568 2. Financial assets at fair value through other comprehensive income - - - - - - 42 - - Total 12.31.2018 6,756,960 354,093 150,585 1,314,451 1,337,100 940,209 3,931,239 542,394 8,515,568 The amounts past due over 90 days and related to Stage 1 and Stage 2 exposures refer to loans that do not meet the definition of Non-performing past due (below the materiality threshold). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 305 Quantitative information In the following tables, the volume of impaired assets according to the IFRS definition is substantially equivalent to the one for non-performing exposures referred to in the EBA standards. A. Credit quality For the purposes of the disclosure of quantitative information about credit quality, the term “credit exposures” does not include equity instruments and units in investment funds except for table A.2.1 - Banking group - Balance Sheet and off-Balance Sheet credit exposure by external rating class, in which units in investment funds are included. A.1 Non-Performing and performing credit exposure: amounts, writedowns, changes, distribution by business activity A.1.1 Regulatory consolidation - Breakdown of financial assets by past-due buckets (carrying value) (€ '000) PORTFOLIOS/RISK STAGES STAGE 1 STAGE 2 STAGE 3 FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS 1. Financial assets at amortised cost 6,756,960 354,093 150,585 1,314,451 1,337,100 940,209 3,931,197 542,394 8,515,568 2. Financial assets at fair value through other comprehensive income - - - - - - 42 - - Total 12.31.2018 6,756,960 354,093 150,585 1,314,451 1,337,100 940,209 3,931,239 542,394 8,515,568 The amounts past due over 90 days and related to Stage 1 and Stage 2 exposures refer to loans that do not meet the definition of Non-performing past due (below the materiality threshold). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 306 2018 Annual Report and Accounts · UniCredit A.1.2 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) OVERALL WRITE-DOWNS FINANCIAL ASSETS CLASSIFIED IN STAGE 1 FINANCIAL ASSETS CLASSIFIED IN STAGE 2 SOURCES/RISK STAGES FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT Opening balance (gross amount) 1,218,679 21,083 166,409 1,687,951 1,845,020 9,340 166,409 1,687,951 Increases in acquired or originated financial assets 265,675 1,018 1,508 227,028 228,536 - 1,508 227,028 Reversals different from write-offs (208,832) (2,616) (19,324) (149,586) (168,882) (28) (19,324) (149,586) Net losses/recoveries on credit impairment (500,157) 18,857 (588) 120,351 120,133 (370) (588) 120,351 Contractual changes without cancellation (2,080) - - 65 65 - - 65 Changes in estimation methodology 1,527 - - 1,082 1,082 - - 1,082 Write-off (1,862) - (1) (296) (297) - (1) (296) Other changes 362,797 (1,910) 119,567 (388,002) (267,191) (1,244) 119,567 (388,002) Closing balance (gross amount) 1,135,747 36,432 267,571 1,498,593 1,758,466 7,698 267,571 1,498,593 Recoveries from financial assets subject to write-off 49 - - 11 11 - - 11 Write-off are not recognised directly in profit or loss (329) - (161) (25,881) (26,042) - (161) (25,881) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 306 2018 Annual Report and Accounts · UniCredit A.1.2 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) OVERALL WRITE-DOWNS FINANCIAL ASSETS CLASSIFIED IN STAGE 1 FINANCIAL ASSETS CLASSIFIED IN STAGE 2 SOURCES/RISK STAGES FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT Opening balance (gross amount) 1,218,679 21,083 166,409 1,687,951 1,845,020 9,340 166,409 1,687,951 Increases in acquired or originated financial assets 265,675 1,018 1,508 227,028 228,536 - 1,508 227,028 Reversals different from write-offs (208,832) (2,616) (19,324) (149,586) (168,882) (28) (19,324) (149,586) Net losses/recoveries on credit impairment (500,157) 18,857 (588) 120,351 120,133 (370) (588) 120,351 Contractual changes without cancellation (2,080) - - 65 65 - - 65 Changes in estimation methodology 1,527 - - 1,082 1,082 - - 1,082 Write-off (1,862) - (1) (296) (297) - (1) (296) Other changes 362,797 (1,910) 119,567 (388,002) (267,191) (1,244) 119,567 (388,002) Closing balance (gross amount) 1,135,747 36,432 267,571 1,498,593 1,758,466 7,698 267,571 1,498,593 Recoveries from financial assets subject to write-off 49 - - 11 11 - - 11 Write-off are not recognised directly in profit or loss (329) - (161) (25,881) (26,042) - (161) (25,881) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 306 2018 Annual Report and Accounts · UniCredit A.1.2 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) OVERALL WRITE-DOWNS FINANCIAL ASSETS CLASSIFIED IN STAGE 1 FINANCIAL ASSETS CLASSIFIED IN STAGE 2 SOURCES/RISK STAGES FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT Opening balance (gross amount) 1,218,679 21,083 166,409 1,687,951 1,845,020 9,340 166,409 1,687,951 Increases in acquired or originated financial assets 265,675 1,018 1,508 227,028 228,536 - 1,508 227,028 Reversals different from write-offs (208,832) (2,616) (19,324) (149,586) (168,882) (28) (19,324) (149,586) Net losses/recoveries on credit impairment (500,157) 18,857 (588) 120,351 120,133 (370) (588) 120,351 Contractual changes without cancellation (2,080) - - 65 65 - - 65 Changes in estimation methodology 1,527 - - 1,082 1,082 - - 1,082 Write-off (1,862) - (1) (296) (297) - (1) (296) Other changes 362,797 (1,910) 119,567 (388,002) (267,191) (1,244) 119,567 (388,002) Closing balance (gross amount) 1,135,747 36,432 267,571 1,498,593 1,758,466 7,698 267,571 1,498,593 Recoveries from financial assets subject to write-off 49 - - 11 11 - - 11 Write-off are not recognised directly in profit or loss (329) - (161) (25,881) (26,042) - (161) (25,881) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 306 2018 Annual Report and Accounts · UniCredit A.1.2 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) OVERALL WRITE-DOWNS FINANCIAL ASSETS CLASSIFIED IN STAGE 1 FINANCIAL ASSETS CLASSIFIED IN STAGE 2 SOURCES/RISK STAGES FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT Opening balance (gross amount) 1,218,679 21,083 166,409 1,687,951 1,845,020 9,340 166,409 1,687,951 Increases in acquired or originated financial assets 265,675 1,018 1,508 227,028 228,536 - 1,508 227,028 Reversals different from write-offs (208,832) (2,616) (19,324) (149,586) (168,882) (28) (19,324) (149,586) Net losses/recoveries on credit impairment (500,157) 18,857 (588) 120,351 120,133 (370) (588) 120,351 Contractual changes without cancellation (2,080) - - 65 65 - - 65 Changes in estimation methodology 1,527 - - 1,082 1,082 - - 1,082 Write-off (1,862) - (1) (296) (297) - (1) (296) Other changes 362,797 (1,910) 119,567 (388,002) (267,191) (1,244) 119,567 (388,002) Closing balance (gross amount) 1,135,747 36,432 267,571 1,498,593 1,758,466 7,698 267,571 1,498,593 Recoveries from financial assets subject to write-off 49 - - 11 11 - - 11 Write-off are not recognised directly in profit or loss (329) - (161) (25,881) (26,042) - (161) (25,881) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 306 2018 Annual Report and Accounts · UniCredit A.1.2 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) OVERALL WRITE-DOWNS FINANCIAL ASSETS CLASSIFIED IN STAGE 1 FINANCIAL ASSETS CLASSIFIED IN STAGE 2 SOURCES/RISK STAGES FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT Opening balance (gross amount) 1,218,679 21,083 166,409 1,687,951 1,845,020 9,340 166,409 1,687,951 Increases in acquired or originated financial assets 265,675 1,018 1,508 227,028 228,536 - 1,508 227,028 Reversals different from write-offs (208,832) (2,616) (19,324) (149,586) (168,882) (28) (19,324) (149,586) Net losses/recoveries on credit impairment (500,157) 18,857 (588) 120,351 120,133 (370) (588) 120,351 Contractual changes without cancellation (2,080) - - 65 65 - - 65 Changes in estimation methodology 1,527 - - 1,082 1,082 - - 1,082 Write-off (1,862) - (1) (296) (297) - (1) (296) Other changes 362,797 (1,910) 119,567 (388,002) (267,191) (1,244) 119,567 (388,002) Closing balance (gross amount) 1,135,747 36,432 267,571 1,498,593 1,758,466 7,698 267,571 1,498,593 Recoveries from financial assets subject to write-off 49 - - 11 11 - - 11 Write-off are not recognised directly in profit or loss (329) - (161) (25,881) (26,042) - (161) (25,881) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 307 continued: A.1.2 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) SOURCES/RISK STAGES OVERALL WRITE-DOWNS TOTAL ASSETS BELONGING TO THIRD STAGE OF WHICH: ACQUIRED OR ORIGINATED IMPAIRED FINANCIAL ASSETS FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT TOTAL PROVISIONS ON LOANS COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 Opening balance (gross amount) 28,068,224 - 18,936,769 9,131,455 67,004 236,584 78,419 865,646 32,342,995 Increases in acquired or originated financial assets 563,695 - 466,915 96,780 8,041 66,150 19,085 78,260 1,222,419 Reversals different from write-offs (820,219) - (574,842) (245,377) (4,044) (24,309) (16,676) (167,023) (1,408,585) Net losses/recoveries on credit impairment 2,694,012 (43) 2,096,165 597,804 980 (122,063) (2,426) 203,785 2,411,728 Contractual changes without cancellation 4,700 - 6,822 (2,122) - (97) 10 331 2,929 Changes in estimation methodology - - - - - 37 15 - 2,661 Write-off (5,778,556) - (2,267,527) (3,511,029) (40,126) (75) (9) (86) (5,780,885) Other changes (527,372) 71 (1,863,275) 1,336,008 (5,717) 27,285 (528) (100,610) (508,702) Closing balance (gross amount) 24,204,484 28 16,801,027 7,403,519 26,138 183,512 77,890 880,303 28,284,560 Recoveries from financial assets subject to write-off 191,801 - 139,239 52,562 189 - - - 191,861 Write-off are not recognised directly in profit or loss (455,076) - (115,912) (339,164) (7,436) - - - (481,447) A.1.3 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: transfers between risk stages (gross values and nominal values) (€ '000) PORTFOLIOS/RISK STAGES GROSS VALUES/NOMINAL VALUES TRANSFERS BETWEEN STAGE 1 AND STAGE 2 TRANSFERS BETWEEN STAGE 2 AND STAGE 3 TRANSFERS BETWEEN STAGE 1 AND STAGE 3 FROM STAGE 1 TO STAGE 2 FROM STAGE 2 TO STAGE 1 FROM STAGE 2 TO STAGE 3 FROM STAGE 3 TO STAGE 2 FROM STAGE 1 TO STAGE 3 FROM STAGE 3 TO STAGE 1 1. Financial assets at amortised cost 13,012,172 13,024,579 1,718,231 565,220 2,184,936 625,986 2. Financial assets at fair value through other comprehensive income 1,966 45,410 42 - - - 3. Loan commitments and financial guarantees given 3,946,616 6,142,946 168,181 19,182 531,556 233,838 Total 12.31.2018 16,960,754 19,212,935 1,886,454 584,402 2,716,492 859,824 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 307 continued: A.1.2 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) SOURCES/RISK STAGES OVERALL WRITE-DOWNS TOTAL ASSETS BELONGING TO THIRD STAGE OF WHICH: ACQUIRED OR ORIGINATED IMPAIRED FINANCIAL ASSETS FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT TOTAL PROVISIONS ON LOANS COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 Opening balance (gross amount) 28,068,224 - 18,936,769 9,131,455 67,004 236,584 78,419 865,646 32,342,995 Increases in acquired or originated financial assets 563,695 - 466,915 96,780 8,041 66,150 19,085 78,260 1,222,419 Reversals different from write-offs (820,219) - (574,842) (245,377) (4,044) (24,309) (16,676) (167,023) (1,408,585) Net losses/recoveries on credit impairment 2,694,012 (43) 2,096,165 597,804 980 (122,063) (2,426) 203,785 2,411,728 Contractual changes without cancellation 4,700 - 6,822 (2,122) - (97) 10 331 2,929 Changes in estimation methodology - - - - - 37 15 - 2,661 Write-off (5,778,556) - (2,267,527) (3,511,029) (40,126) (75) (9) (86) (5,780,885) Other changes (527,372) 71 (1,863,275) 1,336,008 (5,717) 27,285 (528) (100,610) (508,702) Closing balance (gross amount) 24,204,484 28 16,801,027 7,403,519 26,138 183,512 77,890 880,303 28,284,560 Recoveries from financial assets subject to write-off 191,801 - 139,239 52,562 189 - - - 191,861 Write-off are not recognised directly in profit or loss (455,076) - (115,912) (339,164) (7,436) - - - (481,447) A.1.3 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: transfers between risk stages (gross values and nominal values) (€ '000) PORTFOLIOS/RISK STAGES GROSS VALUES/NOMINAL VALUES TRANSFERS BETWEEN STAGE 1 AND STAGE 2 TRANSFERS BETWEEN STAGE 2 AND STAGE 3 TRANSFERS BETWEEN STAGE 1 AND STAGE 3 FROM STAGE 1 TO STAGE 2 FROM STAGE 2 TO STAGE 1 FROM STAGE 2 TO STAGE 3 FROM STAGE 3 TO STAGE 2 FROM STAGE 1 TO STAGE 3 FROM STAGE 3 TO STAGE 1 1. Financial assets at amortised cost 13,012,172 13,024,579 1,718,231 565,220 2,184,936 625,986 2. Financial assets at fair value through other comprehensive income 1,966 45,410 42 - - - 3. Loan commitments and financial guarantees given 3,946,616 6,142,946 168,181 19,182 531,556 233,838 Total 12.31.2018 16,960,754 19,212,935 1,886,454 584,402 2,716,492 859,824 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 307 continued: A.1.2 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) SOURCES/RISK STAGES OVERALL WRITE-DOWNS TOTAL ASSETS BELONGING TO THIRD STAGE OF WHICH: ACQUIRED OR ORIGINATED IMPAIRED FINANCIAL ASSETS FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT TOTAL PROVISIONS ON LOANS COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 Opening balance (gross amount) 28,068,224 - 18,936,769 9,131,455 67,004 236,584 78,419 865,646 32,342,995 Increases in acquired or originated financial assets 563,695 - 466,915 96,780 8,041 66,150 19,085 78,260 1,222,419 Reversals different from write-offs (820,219) - (574,842) (245,377) (4,044) (24,309) (16,676) (167,023) (1,408,585) Net losses/recoveries on credit impairment 2,694,012 (43) 2,096,165 597,804 980 (122,063) (2,426) 203,785 2,411,728 Contractual changes without cancellation 4,700 - 6,822 (2,122) - (97) 10 331 2,929 Changes in estimation methodology - - - - - 37 15 - 2,661 Write-off (5,778,556) - (2,267,527) (3,511,029) (40,126) (75) (9) (86) (5,780,885) Other changes (527,372) 71 (1,863,275) 1,336,008 (5,717) 27,285 (528) (100,610) (508,702) Closing balance (gross amount) 24,204,484 28 16,801,027 7,403,519 26,138 183,512 77,890 880,303 28,284,560 Recoveries from financial assets subject to write-off 191,801 - 139,239 52,562 189 - - - 191,861 Write-off are not recognised directly in profit or loss (455,076) - (115,912) (339,164) (7,436) - - - (481,447) A.1.3 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: transfers between risk stages (gross values and nominal values) (€ '000) PORTFOLIOS/RISK STAGES GROSS VALUES/NOMINAL VALUES TRANSFERS BETWEEN STAGE 1 AND STAGE 2 TRANSFERS BETWEEN STAGE 2 AND STAGE 3 TRANSFERS BETWEEN STAGE 1 AND STAGE 3 FROM STAGE 1 TO STAGE 2 FROM STAGE 2 TO STAGE 1 FROM STAGE 2 TO STAGE 3 FROM STAGE 3 TO STAGE 2 FROM STAGE 1 TO STAGE 3 FROM STAGE 3 TO STAGE 1 1. Financial assets at amortised cost 13,012,172 13,024,579 1,718,231 565,220 2,184,936 625,986 2. Financial assets at fair value through other comprehensive income 1,966 45,410 42 - - - 3. Loan commitments and financial guarantees given 3,946,616 6,142,946 168,181 19,182 531,556 233,838 Total 12.31.2018 16,960,754 19,212,935 1,886,454 584,402 2,716,492 859,824 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 307 continued: A.1.2 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) SOURCES/RISK STAGES OVERALL WRITE-DOWNS TOTAL ASSETS BELONGING TO THIRD STAGE OF WHICH: ACQUIRED OR ORIGINATED IMPAIRED FINANCIAL ASSETS FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT TOTAL PROVISIONS ON LOANS COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 Opening balance (gross amount) 28,068,224 - 18,936,769 9,131,455 67,004 236,584 78,419 865,646 32,342,995 Increases in acquired or originated financial assets 563,695 - 466,915 96,780 8,041 66,150 19,085 78,260 1,222,419 Reversals different from write-offs (820,219) - (574,842) (245,377) (4,044) (24,309) (16,676) (167,023) (1,408,585) Net losses/recoveries on credit impairment 2,694,012 (43) 2,096,165 597,804 980 (122,063) (2,426) 203,785 2,411,728 Contractual changes without cancellation 4,700 - 6,822 (2,122) - (97) 10 331 2,929 Changes in estimation methodology - - - - - 37 15 - 2,661 Write-off (5,778,556) - (2,267,527) (3,511,029) (40,126) (75) (9) (86) (5,780,885) Other changes (527,372) 71 (1,863,275) 1,336,008 (5,717) 27,285 (528) (100,610) (508,702) Closing balance (gross amount) 24,204,484 28 16,801,027 7,403,519 26,138 183,512 77,890 880,303 28,284,560 Recoveries from financial assets subject to write-off 191,801 - 139,239 52,562 189 - - - 191,861 Write-off are not recognised directly in profit or loss (455,076) - (115,912) (339,164) (7,436) - - - (481,447) A.1.3 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: transfers between risk stages (gross values and nominal values) (€ '000) PORTFOLIOS/RISK STAGES GROSS VALUES/NOMINAL VALUES TRANSFERS BETWEEN STAGE 1 AND STAGE 2 TRANSFERS BETWEEN STAGE 2 AND STAGE 3 TRANSFERS BETWEEN STAGE 1 AND STAGE 3 FROM STAGE 1 TO STAGE 2 FROM STAGE 2 TO STAGE 1 FROM STAGE 2 TO STAGE 3 FROM STAGE 3 TO STAGE 2 FROM STAGE 1 TO STAGE 3 FROM STAGE 3 TO STAGE 1 1. Financial assets at amortised cost 13,012,172 13,024,579 1,718,231 565,220 2,184,936 625,986 2. Financial assets at fair value through other comprehensive income 1,966 45,410 42 - - - 3. Loan commitments and financial guarantees given 3,946,616 6,142,946 168,181 19,182 531,556 233,838 Total 12.31.2018 16,960,754 19,212,935 1,886,454 584,402 2,716,492 859,824 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 307 continued: A.1.2 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) SOURCES/RISK STAGES OVERALL WRITE-DOWNS TOTAL ASSETS BELONGING TO THIRD STAGE OF WHICH: ACQUIRED OR ORIGINATED IMPAIRED FINANCIAL ASSETS FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT TOTAL PROVISIONS ON LOANS COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 Opening balance (gross amount) 28,068,224 - 18,936,769 9,131,455 67,004 236,584 78,419 865,646 32,342,995 Increases in acquired or originated financial assets 563,695 - 466,915 96,780 8,041 66,150 19,085 78,260 1,222,419 Reversals different from write-offs (820,219) - (574,842) (245,377) (4,044) (24,309) (16,676) (167,023) (1,408,585) Net losses/recoveries on credit impairment 2,694,012 (43) 2,096,165 597,804 980 (122,063) (2,426) 203,785 2,411,728 Contractual changes without cancellation 4,700 - 6,822 (2,122) - (97) 10 331 2,929 Changes in estimation methodology - - - - - 37 15 - 2,661 Write-off (5,778,556) - (2,267,527) (3,511,029) (40,126) (75) (9) (86) (5,780,885) Other changes (527,372) 71 (1,863,275) 1,336,008 (5,717) 27,285 (528) (100,610) (508,702) Closing balance (gross amount) 24,204,484 28 16,801,027 7,403,519 26,138 183,512 77,890 880,303 28,284,560 Recoveries from financial assets subject to write-off 191,801 - 139,239 52,562 189 - - - 191,861 Write-off are not recognised directly in profit or loss (455,076) - (115,912) (339,164) (7,436) - - - (481,447) A.1.3 Regulatory consolidation - Financial assets, loan commitments and financial guarantees given: transfers between risk stages (gross values and nominal values) (€ '000) PORTFOLIOS/RISK STAGES GROSS VALUES/NOMINAL VALUES TRANSFERS BETWEEN STAGE 1 AND STAGE 2 TRANSFERS BETWEEN STAGE 2 AND STAGE 3 TRANSFERS BETWEEN STAGE 1 AND STAGE 3 FROM STAGE 1 TO STAGE 2 FROM STAGE 2 TO STAGE 1 FROM STAGE 2 TO STAGE 3 FROM STAGE 3 TO STAGE 2 FROM STAGE 1 TO STAGE 3 FROM STAGE 3 TO STAGE 1 1. Financial assets at amortised cost 13,012,172 13,024,579 1,718,231 565,220 2,184,936 625,986 2. Financial assets at fair value through other comprehensive income 1,966 45,410 42 - - - 3. Loan commitments and financial guarantees given 3,946,616 6,142,946 168,181 19,182 531,556 233,838 Total 12.31.2018 16,960,754 19,212,935 1,886,454 584,402 2,716,492 859,824 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 308 2018 Annual Report and Accounts · UniCredit A.1.4 Regulatory consolidation - On- and off-balance sheet credit exposures with banks: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 41,056 X 40,710 346 - of which: forborne exposures 4,302 X 4,298 4 - b) Unlikely to pay 3,508 X 3,508 - - of which: forborne exposures - X - - - c) Non-performing past due 26 X 26 - - of which: forborne exposures - X - - - d) Performing past due X 303,839 49 303,790 - of which: forborne exposures X - - - - e) Other performing exposures X 91,500,522 36,945 91,463,577 3 of which: forborne exposures X - - - - Total (A) 44,590 91,804,361 81,238 91,767,713 3 B. Off-balance sheet credit exposures a) Non-performing 254 X - 254 - b) Performing X 37,207,803 10,692 37,197,111 - Total (B) 254 37,207,803 10,692 37,197,365 - Total (A+B) 44,844 129,012,164 91,930 128,965,078 3 Note: (*) Value shown for information purposes. On-balance sheet exposures to banks include all balance-sheet assets regardless of their belonging portfolio (held-for-trading, assets designed and mandatorily at fair value through profit or loss, assets at fair value through other comprehensive income, assets at amortised cost and assets held for sale). Off-balance sheet exposures to banks comprise guarantees given, irrevocable commitments, derivatives regardless of each transaction’s classification category and the revocable commitments to disburse funds. A.1.5 Regulatory consolidation - On- and off-balance sheet credit exposures with customers: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 21,883,190 X 15,944,962 5,938,228 2,742,815 of which: forborne exposures 4,136,736 X 2,857,337 1,279,399 154,606 b) Unlikely to pay 16,984,253 X 7,952,675 9,031,578 49,227 of which: forborne exposures 9,988,549 X 4,578,661 5,409,888 25,300 c) Non-performing past due 1,374,406 X 409,086 965,320 3,468 of which: forborne exposures 228,177 X 45,426 182,751 2,999 d) Performing past due X 13,693,717 488,421 13,205,296 17 of which: forborne exposures X 1,223,289 144,441 1,078,848 - e) Other performing exposures X 613,431,846 2,417,079 611,014,767 1,408 of which: forborne exposures X 4,354,031 244,240 4,109,791 - Total (A) 40,241,849 627,125,563 27,212,223 640,155,189 2,796,935 B. Off-balance sheet credit exposures a) Non-performing 4,678,867 X 930,853 3,748,014 - b) Performing X 308,343,610 257,017 308,086,593 - Total (B) 4,678,867 308,343,610 1,187,870 311,834,607 - Total (A+B) 44,920,716 935,469,173 28,400,093 951,989,796 2,796,935 Note: (*) Value shown for information purposes. On-balance sheet exposures to customers include all balance-sheet assets regardless of their belonging portfolio (held-for-trading, assets designed and mandatorily at fair value through profit or loss, assets at fair value through other comprehensive income, assets at amortised cost and assets held for sale). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 308 2018 Annual Report and Accounts · UniCredit A.1.4 Regulatory consolidation - On- and off-balance sheet credit exposures with banks: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 41,056 X 40,710 346 - of which: forborne exposures 4,302 X 4,298 4 - b) Unlikely to pay 3,508 X 3,508 - - of which: forborne exposures - X - - - c) Non-performing past due 26 X 26 - - of which: forborne exposures - X - - - d) Performing past due X 303,839 49 303,790 - of which: forborne exposures X - - - - e) Other performing exposures X 91,500,522 36,945 91,463,577 3 of which: forborne exposures X - - - - Total (A) 44,590 91,804,361 81,238 91,767,713 3 B. Off-balance sheet credit exposures a) Non-performing 254 X - 254 - b) Performing X 37,207,803 10,692 37,197,111 - Total (B) 254 37,207,803 10,692 37,197,365 - Total (A+B) 44,844 129,012,164 91,930 128,965,078 3 Note: (*) Value shown for information purposes. On-balance sheet exposures to banks include all balance-sheet assets regardless of their belonging portfolio (held-for-trading, assets designed and mandatorily at fair value through profit or loss, assets at fair value through other comprehensive income, assets at amortised cost and assets held for sale). Off-balance sheet exposures to banks comprise guarantees given, irrevocable commitments, derivatives regardless of each transaction’s classification category and the revocable commitments to disburse funds. A.1.5 Regulatory consolidation - On- and off-balance sheet credit exposures with customers: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 21,883,190 X 15,944,962 5,938,228 2,742,815 of which: forborne exposures 4,136,736 X 2,857,337 1,279,399 154,606 b) Unlikely to pay 16,984,253 X 7,952,675 9,031,578 49,227 of which: forborne exposures 9,988,549 X 4,578,661 5,409,888 25,300 c) Non-performing past due 1,374,406 X 409,086 965,320 3,468 of which: forborne exposures 228,177 X 45,426 182,751 2,999 d) Performing past due X 13,693,717 488,421 13,205,296 17 of which: forborne exposures X 1,223,289 144,441 1,078,848 - e) Other performing exposures X 613,431,846 2,417,079 611,014,767 1,408 of which: forborne exposures X 4,354,031 244,240 4,109,791 - Total (A) 40,241,849 627,125,563 27,212,223 640,155,189 2,796,935 B. Off-balance sheet credit exposures a) Non-performing 4,678,867 X 930,853 3,748,014 - b) Performing X 308,343,610 257,017 308,086,593 - Total (B) 4,678,867 308,343,610 1,187,870 311,834,607 - Total (A+B) 44,920,716 935,469,173 28,400,093 951,989,796 2,796,935 Note: (*) Value shown for information purposes. On-balance sheet exposures to customers include all balance-sheet assets regardless of their belonging portfolio (held-for-trading, assets designed and mandatorily at fair value through profit or loss, assets at fair value through other comprehensive income, assets at amortised cost and assets held for sale). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 308 2018 Annual Report and Accounts · UniCredit A.1.4 Regulatory consolidation - On- and off-balance sheet credit exposures with banks: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 41,056 X 40,710 346 - of which: forborne exposures 4,302 X 4,298 4 - b) Unlikely to pay 3,508 X 3,508 - - of which: forborne exposures - X - - - c) Non-performing past due 26 X 26 - - of which: forborne exposures - X - - - d) Performing past due X 303,839 49 303,790 - of which: forborne exposures X - - - - e) Other performing exposures X 91,500,522 36,945 91,463,577 3 of which: forborne exposures X - - - - Total (A) 44,590 91,804,361 81,238 91,767,713 3 B. Off-balance sheet credit exposures a) Non-performing 254 X - 254 - b) Performing X 37,207,803 10,692 37,197,111 - Total (B) 254 37,207,803 10,692 37,197,365 - Total (A+B) 44,844 129,012,164 91,930 128,965,078 3 Note: (*) Value shown for information purposes. On-balance sheet exposures to banks include all balance-sheet assets regardless of their belonging portfolio (held-for-trading, assets designed and mandatorily at fair value through profit or loss, assets at fair value through other comprehensive income, assets at amortised cost and assets held for sale). Off-balance sheet exposures to banks comprise guarantees given, irrevocable commitments, derivatives regardless of each transaction’s classification category and the revocable commitments to disburse funds. A.1.5 Regulatory consolidation - On- and off-balance sheet credit exposures with customers: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 21,883,190 X 15,944,962 5,938,228 2,742,815 of which: forborne exposures 4,136,736 X 2,857,337 1,279,399 154,606 b) Unlikely to pay 16,984,253 X 7,952,675 9,031,578 49,227 of which: forborne exposures 9,988,549 X 4,578,661 5,409,888 25,300 c) Non-performing past due 1,374,406 X 409,086 965,320 3,468 of which: forborne exposures 228,177 X 45,426 182,751 2,999 d) Performing past due X 13,693,717 488,421 13,205,296 17 of which: forborne exposures X 1,223,289 144,441 1,078,848 - e) Other performing exposures X 613,431,846 2,417,079 611,014,767 1,408 of which: forborne exposures X 4,354,031 244,240 4,109,791 - Total (A) 40,241,849 627,125,563 27,212,223 640,155,189 2,796,935 B. Off-balance sheet credit exposures a) Non-performing 4,678,867 X 930,853 3,748,014 - b) Performing X 308,343,610 257,017 308,086,593 - Total (B) 4,678,867 308,343,610 1,187,870 311,834,607 - Total (A+B) 44,920,716 935,469,173 28,400,093 951,989,796 2,796,935 Note: (*) Value shown for information purposes. On-balance sheet exposures to customers include all balance-sheet assets regardless of their belonging portfolio (held-for-trading, assets designed and mandatorily at fair value through profit or loss, assets at fair value through other comprehensive income, assets at amortised cost and assets held for sale). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 308 2018 Annual Report and Accounts · UniCredit A.1.4 Regulatory consolidation - On- and off-balance sheet credit exposures with banks: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 41,056 X 40,710 346 - of which: forborne exposures 4,302 X 4,298 4 - b) Unlikely to pay 3,508 X 3,508 - - of which: forborne exposures - X - - - c) Non-performing past due 26 X 26 - - of which: forborne exposures - X - - - d) Performing past due X 303,839 49 303,790 - of which: forborne exposures X - - - - e) Other performing exposures X 91,500,522 36,945 91,463,577 3 of which: forborne exposures X - - - - Total (A) 44,590 91,804,361 81,238 91,767,713 3 B. Off-balance sheet credit exposures a) Non-performing 254 X - 254 - b) Performing X 37,207,803 10,692 37,197,111 - Total (B) 254 37,207,803 10,692 37,197,365 - Total (A+B) 44,844 129,012,164 91,930 128,965,078 3 Note: (*) Value shown for information purposes. On-balance sheet exposures to banks include all balance-sheet assets regardless of their belonging portfolio (held-for-trading, assets designed and mandatorily at fair value through profit or loss, assets at fair value through other comprehensive income, assets at amortised cost and assets held for sale). Off-balance sheet exposures to banks comprise guarantees given, irrevocable commitments, derivatives regardless of each transaction’s classification category and the revocable commitments to disburse funds. A.1.5 Regulatory consolidation - On- and off-balance sheet credit exposures with customers: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 21,883,190 X 15,944,962 5,938,228 2,742,815 of which: forborne exposures 4,136,736 X 2,857,337 1,279,399 154,606 b) Unlikely to pay 16,984,253 X 7,952,675 9,031,578 49,227 of which: forborne exposures 9,988,549 X 4,578,661 5,409,888 25,300 c) Non-performing past due 1,374,406 X 409,086 965,320 3,468 of which: forborne exposures 228,177 X 45,426 182,751 2,999 d) Performing past due X 13,693,717 488,421 13,205,296 17 of which: forborne exposures X 1,223,289 144,441 1,078,848 - e) Other performing exposures X 613,431,846 2,417,079 611,014,767 1,408 of which: forborne exposures X 4,354,031 244,240 4,109,791 - Total (A) 40,241,849 627,125,563 27,212,223 640,155,189 2,796,935 B. Off-balance sheet credit exposures a) Non-performing 4,678,867 X 930,853 3,748,014 - b) Performing X 308,343,610 257,017 308,086,593 - Total (B) 4,678,867 308,343,610 1,187,870 311,834,607 - Total (A+B) 44,920,716 935,469,173 28,400,093 951,989,796 2,796,935 Note: (*) Value shown for information purposes. On-balance sheet exposures to customers include all balance-sheet assets regardless of their belonging portfolio (held-for-trading, assets designed and mandatorily at fair value through profit or loss, assets at fair value through other comprehensive income, assets at amortised cost and assets held for sale). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 308 2018 Annual Report and Accounts · UniCredit A.1.4 Regulatory consolidation - On- and off-balance sheet credit exposures with banks: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 41,056 X 40,710 346 - of which: forborne exposures 4,302 X 4,298 4 - b) Unlikely to pay 3,508 X 3,508 - - of which: forborne exposures - X - - - c) Non-performing past due 26 X 26 - - of which: forborne exposures - X - - - d) Performing past due X 303,839 49 303,790 - of which: forborne exposures X - - - - e) Other performing exposures X 91,500,522 36,945 91,463,577 3 of which: forborne exposures X - - - - Total (A) 44,590 91,804,361 81,238 91,767,713 3 B. Off-balance sheet credit exposures a) Non-performing 254 X - 254 - b) Performing X 37,207,803 10,692 37,197,111 - Total (B) 254 37,207,803 10,692 37,197,365 - Total (A+B) 44,844 129,012,164 91,930 128,965,078 3 Note: (*) Value shown for information purposes. On-balance sheet exposures to banks include all balance-sheet assets regardless of their belonging portfolio (held-for-trading, assets designed and mandatorily at fair value through profit or loss, assets at fair value through other comprehensive income, assets at amortised cost and assets held for sale). Off-balance sheet exposures to banks comprise guarantees given, irrevocable commitments, derivatives regardless of each transaction’s classification category and the revocable commitments to disburse funds. A.1.5 Regulatory consolidation - On- and off-balance sheet credit exposures with customers: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 21,883,190 X 15,944,962 5,938,228 2,742,815 of which: forborne exposures 4,136,736 X 2,857,337 1,279,399 154,606 b) Unlikely to pay 16,984,253 X 7,952,675 9,031,578 49,227 of which: forborne exposures 9,988,549 X 4,578,661 5,409,888 25,300 c) Non-performing past due 1,374,406 X 409,086 965,320 3,468 of which: forborne exposures 228,177 X 45,426 182,751 2,999 d) Performing past due X 13,693,717 488,421 13,205,296 17 of which: forborne exposures X 1,223,289 144,441 1,078,848 - e) Other performing exposures X 613,431,846 2,417,079 611,014,767 1,408 of which: forborne exposures X 4,354,031 244,240 4,109,791 - Total (A) 40,241,849 627,125,563 27,212,223 640,155,189 2,796,935 B. Off-balance sheet credit exposures a) Non-performing 4,678,867 X 930,853 3,748,014 - b) Performing X 308,343,610 257,017 308,086,593 - Total (B) 4,678,867 308,343,610 1,187,870 311,834,607 - Total (A+B) 44,920,716 935,469,173 28,400,093 951,989,796 2,796,935 Note: (*) Value shown for information purposes. On-balance sheet exposures to customers include all balance-sheet assets regardless of their belonging portfolio (held-for-trading, assets designed and mandatorily at fair value through profit or loss, assets at fair value through other comprehensive income, assets at amortised cost and assets held for sale). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 309 A.1.6 Regulatory consolidation - On-balance sheet exposures with banks: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 50,526 6,190 27 of which sold non-cancelled exposures - - - B. Increases 5,277 4,670 - B.1 Transfers from performing loans - - - B.2 Transfers from acquired or originated impaired financial assets - - - of which: business combinations - - - B.3 Transfers from other categories of non-perforiming exposures - - - B.4 Contractual changes with no cancellations - - - B.5 Other increases 5,277 4,670 - of which: business combinations - mergers - - - C. Reductions 14,747 7,352 1 C.1 Transfers to performing loans - - 1 C.2 Write-offs 6,884 18 - C.3 Collections 4,019 2,667 - C.4 Sale proceeds - - - C.5 Losses on disposal - - - C.6 Transfers to other non-performing exposures - - - C.7 Contractual changes with no cancellations - - - C.8 Other decreases 3,844 4,667 - of which: business combinations - - - D. Closing balance (gross amount) 41,056 3,508 26 of which sold non-cancelled exposures - - - Sub-items “B.5 Other increases” and “C.3 Collections” include amounts recovered during the year concerning impaired exposures which were derecognised in their entirety. A.1.6bis Regulatory consolidation - On-balance sheet exposures with banks: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 4,107 5,479 of which sold non-cancelled exposures - - B. Increases 195 221 B.1 Transfers from performing non-forborne exposures - - B.2 Transfers from performing forbone exposures - X B.3 Transfers from non-performing forborne exposures X - of which: business combinations X - B.4 Other increases 195 221 of which: business combinations - mergers - - C. Reductions - 5,700 C.1 Transfers to performing non-forborne exposures X - C.2 Transfers to performing forbone exposures - X C.3 Transfers to non-performing forborne exposures X - C.4 Write-offs - - C.5 Collections - - C.6 Sale proceeds - - C.7 Losses from disposal - - C.8 Other reductions - 5,700 of which: business combinations - - D. Closing balance (gross amount) 4,302 - of which sold non-cancelled exposures - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 309 A.1.6 Regulatory consolidation - On-balance sheet exposures with banks: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 50,526 6,190 27 of which sold non-cancelled exposures - - - B. Increases 5,277 4,670 - B.1 Transfers from performing loans - - - B.2 Transfers from acquired or originated impaired financial assets - - - of which: business combinations - - - B.3 Transfers from other categories of non-perforiming exposures - - - B.4 Contractual changes with no cancellations - - - B.5 Other increases 5,277 4,670 - of which: business combinations - mergers - - - C. Reductions 14,747 7,352 1 C.1 Transfers to performing loans - - 1 C.2 Write-offs 6,884 18 - C.3 Collections 4,019 2,667 - C.4 Sale proceeds - - - C.5 Losses on disposal - - - C.6 Transfers to other non-performing exposures - - - C.7 Contractual changes with no cancellations - - - C.8 Other decreases 3,844 4,667 - of which: business combinations - - - D. Closing balance (gross amount) 41,056 3,508 26 of which sold non-cancelled exposures - - - Sub-items “B.5 Other increases” and “C.3 Collections” include amounts recovered during the year concerning impaired exposures which were derecognised in their entirety. A.1.6bis Regulatory consolidation - On-balance sheet exposures with banks: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 4,107 5,479 of which sold non-cancelled exposures - - B. Increases 195 221 B.1 Transfers from performing non-forborne exposures - - B.2 Transfers from performing forbone exposures - X B.3 Transfers from non-performing forborne exposures X - of which: business combinations X - B.4 Other increases 195 221 of which: business combinations - mergers - - C. Reductions - 5,700 C.1 Transfers to performing non-forborne exposures X - C.2 Transfers to performing forbone exposures - X C.3 Transfers to non-performing forborne exposures X - C.4 Write-offs - - C.5 Collections - - C.6 Sale proceeds - - C.7 Losses from disposal - - C.8 Other reductions - 5,700 of which: business combinations - - D. Closing balance (gross amount) 4,302 - of which sold non-cancelled exposures - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 309 A.1.6 Regulatory consolidation - On-balance sheet exposures with banks: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 50,526 6,190 27 of which sold non-cancelled exposures - - - B. Increases 5,277 4,670 - B.1 Transfers from performing loans - - - B.2 Transfers from acquired or originated impaired financial assets - - - of which: business combinations - - - B.3 Transfers from other categories of non-perforiming exposures - - - B.4 Contractual changes with no cancellations - - - B.5 Other increases 5,277 4,670 - of which: business combinations - mergers - - - C. Reductions 14,747 7,352 1 C.1 Transfers to performing loans - - 1 C.2 Write-offs 6,884 18 - C.3 Collections 4,019 2,667 - C.4 Sale proceeds - - - C.5 Losses on disposal - - - C.6 Transfers to other non-performing exposures - - - C.7 Contractual changes with no cancellations - - - C.8 Other decreases 3,844 4,667 - of which: business combinations - - - D. Closing balance (gross amount) 41,056 3,508 26 of which sold non-cancelled exposures - - - Sub-items “B.5 Other increases” and “C.3 Collections” include amounts recovered during the year concerning impaired exposures which were derecognised in their entirety. A.1.6bis Regulatory consolidation - On-balance sheet exposures with banks: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 4,107 5,479 of which sold non-cancelled exposures - - B. Increases 195 221 B.1 Transfers from performing non-forborne exposures - - B.2 Transfers from performing forbone exposures - X B.3 Transfers from non-performing forborne exposures X - of which: business combinations X - B.4 Other increases 195 221 of which: business combinations - mergers - - C. Reductions - 5,700 C.1 Transfers to performing non-forborne exposures X - C.2 Transfers to performing forbone exposures - X C.3 Transfers to non-performing forborne exposures X - C.4 Write-offs - - C.5 Collections - - C.6 Sale proceeds - - C.7 Losses from disposal - - C.8 Other reductions - 5,700 of which: business combinations - - D. Closing balance (gross amount) 4,302 - of which sold non-cancelled exposures - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 309 A.1.6 Regulatory consolidation - On-balance sheet exposures with banks: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 50,526 6,190 27 of which sold non-cancelled exposures - - - B. Increases 5,277 4,670 - B.1 Transfers from performing loans - - - B.2 Transfers from acquired or originated impaired financial assets - - - of which: business combinations - - - B.3 Transfers from other categories of non-perforiming exposures - - - B.4 Contractual changes with no cancellations - - - B.5 Other increases 5,277 4,670 - of which: business combinations - mergers - - - C. Reductions 14,747 7,352 1 C.1 Transfers to performing loans - - 1 C.2 Write-offs 6,884 18 - C.3 Collections 4,019 2,667 - C.4 Sale proceeds - - - C.5 Losses on disposal - - - C.6 Transfers to other non-performing exposures - - - C.7 Contractual changes with no cancellations - - - C.8 Other decreases 3,844 4,667 - of which: business combinations - - - D. Closing balance (gross amount) 41,056 3,508 26 of which sold non-cancelled exposures - - - Sub-items “B.5 Other increases” and “C.3 Collections” include amounts recovered during the year concerning impaired exposures which were derecognised in their entirety. A.1.6bis Regulatory consolidation - On-balance sheet exposures with banks: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 4,107 5,479 of which sold non-cancelled exposures - - B. Increases 195 221 B.1 Transfers from performing non-forborne exposures - - B.2 Transfers from performing forbone exposures - X B.3 Transfers from non-performing forborne exposures X - of which: business combinations X - B.4 Other increases 195 221 of which: business combinations - mergers - - C. Reductions - 5,700 C.1 Transfers to performing non-forborne exposures X - C.2 Transfers to performing forbone exposures - X C.3 Transfers to non-performing forborne exposures X - C.4 Write-offs - - C.5 Collections - - C.6 Sale proceeds - - C.7 Losses from disposal - - C.8 Other reductions - 5,700 of which: business combinations - - D. Closing balance (gross amount) 4,302 - of which sold non-cancelled exposures - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 309 A.1.6 Regulatory consolidation - On-balance sheet exposures with banks: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 50,526 6,190 27 of which sold non-cancelled exposures - - - B. Increases 5,277 4,670 - B.1 Transfers from performing loans - - - B.2 Transfers from acquired or originated impaired financial assets - - - of which: business combinations - - - B.3 Transfers from other categories of non-perforiming exposures - - - B.4 Contractual changes with no cancellations - - - B.5 Other increases 5,277 4,670 - of which: business combinations - mergers - - - C. Reductions 14,747 7,352 1 C.1 Transfers to performing loans - - 1 C.2 Write-offs 6,884 18 - C.3 Collections 4,019 2,667 - C.4 Sale proceeds - - - C.5 Losses on disposal - - - C.6 Transfers to other non-performing exposures - - - C.7 Contractual changes with no cancellations - - - C.8 Other decreases 3,844 4,667 - of which: business combinations - - - D. Closing balance (gross amount) 41,056 3,508 26 of which sold non-cancelled exposures - - - Sub-items “B.5 Other increases” and “C.3 Collections” include amounts recovered during the year concerning impaired exposures which were derecognised in their entirety. A.1.6bis Regulatory consolidation - On-balance sheet exposures with banks: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 4,107 5,479 of which sold non-cancelled exposures - - B. Increases 195 221 B.1 Transfers from performing non-forborne exposures - - B.2 Transfers from performing forbone exposures - X B.3 Transfers from non-performing forborne exposures X - of which: business combinations X - B.4 Other increases 195 221 of which: business combinations - mergers - - C. Reductions - 5,700 C.1 Transfers to performing non-forborne exposures X - C.2 Transfers to performing forbone exposures - X C.3 Transfers to non-performing forborne exposures X - C.4 Write-offs - - C.5 Collections - - C.6 Sale proceeds - - C.7 Losses from disposal - - C.8 Other reductions - 5,700 of which: business combinations - - D. Closing balance (gross amount) 4,302 - of which sold non-cancelled exposures - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 310 2018 Annual Report and Accounts · UniCredit Off-balance sheet exposures to customers comprises guarantees given, irrevocable commitments, derivatives regardless of each transaction’s classification category and the revocable commitments to disburse funds. The total amount of forborne exposures (net of those belonging to disposal groups/held for sale) is €20 billion (€14.4 billion non performing and €5.6 billion performing). These exposures refers for 69% to the Italian perimeter, while the remaining amount refer for 16% to CEE countries, to Germany for 11% and for the 4% to Austria. For a description of the rules for identification of forborne exposures please refer to Part E - Information on risks and hedging policies - Section 1 Credit Risk, Paragraph 2.5 (Non-performing exposures). On-balance sheet impaired gross exposures connected to the proposals for recourse to an arrangement with creditors made by the debtor, for the positions that have been converted into a Debt restructuring agreement pursuant to article 182-bis of the Bankruptcy Law or continuity of business, as well as the positions not yet assigned or with liquidatory purposes, amounted to a total of €2,780 million at 31 December 2018, against which specific impairments have been made for €1,910 million, with a total coverage level of 69%. A.1.7 Regulatory consolidation - On-balance sheet credit exposures with customers: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 26,249,784 20,128,710 1,103,886 of which sold non-cancelled exposures 696,643 1,339,986 22,183 B. Increases 5,737,361 6,921,959 1,768,633 B.1 Transfer from performing loans 1,493,045 3,254,639 1,648,657 B.2 Transfer from acquired or originated impaired financial assets 15 4,463 - of which: business combinations - - - B.3 Transfer from other non-performing exposures 2,405,118 493,673 24,590 B.4 Contractual changes with no cancellations - 2,096 - B.5 Other increases 1,839,183 3,167,088 95,386 of which: business combinations - mergers - - - C. Decreases 10,103,955 10,066,416 1,498,113 C.1 Transfers to performing loans 374,215 1,176,024 179,173 C.2 Write-offs 2,846,016 736,109 23,066 C.3 Collections 2,375,566 2,951,065 403,916 C.4 Sale proceeds 991,887 336,131 15,366 C.5 Losses on disposals 99,812 61,205 108 C.6 Transfers to other non-performing exposures 69,299 2,252,470 601,612 C.7 Contractual changes with no cancellations 5 4,055 - C.8 Other decreases 3,347,155 2,549,357 274,872 of which: business combinations - - - D. Closing balance (gross amount) 21,883,190 16,984,253 1,374,406 of which sold non-cancelled exposures 460,642 1,033,694 9,518 Sub-items “B.5 Other increases” and “C.3 Collections” include amounts recovered during the year concerning impaired exposures which were derecognised in their entirety. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 310 2018 Annual Report and Accounts · UniCredit Off-balance sheet exposures to customers comprises guarantees given, irrevocable commitments, derivatives regardless of each transaction’s classification category and the revocable commitments to disburse funds. The total amount of forborne exposures (net of those belonging to disposal groups/held for sale) is €20 billion (€14.4 billion non performing and €5.6 billion performing). These exposures refers for 69% to the Italian perimeter, while the remaining amount refer for 16% to CEE countries, to Germany for 11% and for the 4% to Austria. For a description of the rules for identification of forborne exposures please refer to Part E - Information on risks and hedging policies - Section 1 Credit Risk, Paragraph 2.5 (Non-performing exposures). On-balance sheet impaired gross exposures connected to the proposals for recourse to an arrangement with creditors made by the debtor, for the positions that have been converted into a Debt restructuring agreement pursuant to article 182-bis of the Bankruptcy Law or continuity of business, as well as the positions not yet assigned or with liquidatory purposes, amounted to a total of €2,780 million at 31 December 2018, against which specific impairments have been made for €1,910 million, with a total coverage level of 69%. A.1.7 Regulatory consolidation - On-balance sheet credit exposures with customers: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 26,249,784 20,128,710 1,103,886 of which sold non-cancelled exposures 696,643 1,339,986 22,183 B. Increases 5,737,361 6,921,959 1,768,633 B.1 Transfer from performing loans 1,493,045 3,254,639 1,648,657 B.2 Transfer from acquired or originated impaired financial assets 15 4,463 - of which: business combinations - - - B.3 Transfer from other non-performing exposures 2,405,118 493,673 24,590 B.4 Contractual changes with no cancellations - 2,096 - B.5 Other increases 1,839,183 3,167,088 95,386 of which: business combinations - mergers - - - C. Decreases 10,103,955 10,066,416 1,498,113 C.1 Transfers to performing loans 374,215 1,176,024 179,173 C.2 Write-offs 2,846,016 736,109 23,066 C.3 Collections 2,375,566 2,951,065 403,916 C.4 Sale proceeds 991,887 336,131 15,366 C.5 Losses on disposals 99,812 61,205 108 C.6 Transfers to other non-performing exposures 69,299 2,252,470 601,612 C.7 Contractual changes with no cancellations 5 4,055 - C.8 Other decreases 3,347,155 2,549,357 274,872 of which: business combinations - - - D. Closing balance (gross amount) 21,883,190 16,984,253 1,374,406 of which sold non-cancelled exposures 460,642 1,033,694 9,518 Sub-items “B.5 Other increases” and “C.3 Collections” include amounts recovered during the year concerning impaired exposures which were derecognised in their entirety. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 310 2018 Annual Report and Accounts · UniCredit Off-balance sheet exposures to customers comprises guarantees given, irrevocable commitments, derivatives regardless of each transaction’s classification category and the revocable commitments to disburse funds. The total amount of forborne exposures (net of those belonging to disposal groups/held for sale) is €20 billion (€14.4 billion non performing and €5.6 billion performing). These exposures refers for 69% to the Italian perimeter, while the remaining amount refer for 16% to CEE countries, to Germany for 11% and for the 4% to Austria. For a description of the rules for identification of forborne exposures please refer to Part E - Information on risks and hedging policies - Section 1 Credit Risk, Paragraph 2.5 (Non-performing exposures). On-balance sheet impaired gross exposures connected to the proposals for recourse to an arrangement with creditors made by the debtor, for the positions that have been converted into a Debt restructuring agreement pursuant to article 182-bis of the Bankruptcy Law or continuity of business, as well as the positions not yet assigned or with liquidatory purposes, amounted to a total of €2,780 million at 31 December 2018, against which specific impairments have been made for €1,910 million, with a total coverage level of 69%. A.1.7 Regulatory consolidation - On-balance sheet credit exposures with customers: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 26,249,784 20,128,710 1,103,886 of which sold non-cancelled exposures 696,643 1,339,986 22,183 B. Increases 5,737,361 6,921,959 1,768,633 B.1 Transfer from performing loans 1,493,045 3,254,639 1,648,657 B.2 Transfer from acquired or originated impaired financial assets 15 4,463 - of which: business combinations - - - B.3 Transfer from other non-performing exposures 2,405,118 493,673 24,590 B.4 Contractual changes with no cancellations - 2,096 - B.5 Other increases 1,839,183 3,167,088 95,386 of which: business combinations - mergers - - - C. Decreases 10,103,955 10,066,416 1,498,113 C.1 Transfers to performing loans 374,215 1,176,024 179,173 C.2 Write-offs 2,846,016 736,109 23,066 C.3 Collections 2,375,566 2,951,065 403,916 C.4 Sale proceeds 991,887 336,131 15,366 C.5 Losses on disposals 99,812 61,205 108 C.6 Transfers to other non-performing exposures 69,299 2,252,470 601,612 C.7 Contractual changes with no cancellations 5 4,055 - C.8 Other decreases 3,347,155 2,549,357 274,872 of which: business combinations - - - D. Closing balance (gross amount) 21,883,190 16,984,253 1,374,406 of which sold non-cancelled exposures 460,642 1,033,694 9,518 Sub-items “B.5 Other increases” and “C.3 Collections” include amounts recovered during the year concerning impaired exposures which were derecognised in their entirety. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 310 2018 Annual Report and Accounts · UniCredit Off-balance sheet exposures to customers comprises guarantees given, irrevocable commitments, derivatives regardless of each transaction’s classification category and the revocable commitments to disburse funds. The total amount of forborne exposures (net of those belonging to disposal groups/held for sale) is €20 billion (€14.4 billion non performing and €5.6 billion performing). These exposures refers for 69% to the Italian perimeter, while the remaining amount refer for 16% to CEE countries, to Germany for 11% and for the 4% to Austria. For a description of the rules for identification of forborne exposures please refer to Part E - Information on risks and hedging policies - Section 1 Credit Risk, Paragraph 2.5 (Non-performing exposures). On-balance sheet impaired gross exposures connected to the proposals for recourse to an arrangement with creditors made by the debtor, for the positions that have been converted into a Debt restructuring agreement pursuant to article 182-bis of the Bankruptcy Law or continuity of business, as well as the positions not yet assigned or with liquidatory purposes, amounted to a total of €2,780 million at 31 December 2018, against which specific impairments have been made for €1,910 million, with a total coverage level of 69%. A.1.7 Regulatory consolidation - On-balance sheet credit exposures with customers: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 26,249,784 20,128,710 1,103,886 of which sold non-cancelled exposures 696,643 1,339,986 22,183 B. Increases 5,737,361 6,921,959 1,768,633 B.1 Transfer from performing loans 1,493,045 3,254,639 1,648,657 B.2 Transfer from acquired or originated impaired financial assets 15 4,463 - of which: business combinations - - - B.3 Transfer from other non-performing exposures 2,405,118 493,673 24,590 B.4 Contractual changes with no cancellations - 2,096 - B.5 Other increases 1,839,183 3,167,088 95,386 of which: business combinations - mergers - - - C. Decreases 10,103,955 10,066,416 1,498,113 C.1 Transfers to performing loans 374,215 1,176,024 179,173 C.2 Write-offs 2,846,016 736,109 23,066 C.3 Collections 2,375,566 2,951,065 403,916 C.4 Sale proceeds 991,887 336,131 15,366 C.5 Losses on disposals 99,812 61,205 108 C.6 Transfers to other non-performing exposures 69,299 2,252,470 601,612 C.7 Contractual changes with no cancellations 5 4,055 - C.8 Other decreases 3,347,155 2,549,357 274,872 of which: business combinations - - - D. Closing balance (gross amount) 21,883,190 16,984,253 1,374,406 of which sold non-cancelled exposures 460,642 1,033,694 9,518 Sub-items “B.5 Other increases” and “C.3 Collections” include amounts recovered during the year concerning impaired exposures which were derecognised in their entirety. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 310 2018 Annual Report and Accounts · UniCredit Off-balance sheet exposures to customers comprises guarantees given, irrevocable commitments, derivatives regardless of each transaction’s classification category and the revocable commitments to disburse funds. The total amount of forborne exposures (net of those belonging to disposal groups/held for sale) is €20 billion (€14.4 billion non performing and €5.6 billion performing). These exposures refers for 69% to the Italian perimeter, while the remaining amount refer for 16% to CEE countries, to Germany for 11% and for the 4% to Austria. For a description of the rules for identification of forborne exposures please refer to Part E - Information on risks and hedging policies - Section 1 Credit Risk, Paragraph 2.5 (Non-performing exposures). On-balance sheet impaired gross exposures connected to the proposals for recourse to an arrangement with creditors made by the debtor, for the positions that have been converted into a Debt restructuring agreement pursuant to article 182-bis of the Bankruptcy Law or continuity of business, as well as the positions not yet assigned or with liquidatory purposes, amounted to a total of €2,780 million at 31 December 2018, against which specific impairments have been made for €1,910 million, with a total coverage level of 69%. A.1.7 Regulatory consolidation - On-balance sheet credit exposures with customers: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 26,249,784 20,128,710 1,103,886 of which sold non-cancelled exposures 696,643 1,339,986 22,183 B. Increases 5,737,361 6,921,959 1,768,633 B.1 Transfer from performing loans 1,493,045 3,254,639 1,648,657 B.2 Transfer from acquired or originated impaired financial assets 15 4,463 - of which: business combinations - - - B.3 Transfer from other non-performing exposures 2,405,118 493,673 24,590 B.4 Contractual changes with no cancellations - 2,096 - B.5 Other increases 1,839,183 3,167,088 95,386 of which: business combinations - mergers - - - C. Decreases 10,103,955 10,066,416 1,498,113 C.1 Transfers to performing loans 374,215 1,176,024 179,173 C.2 Write-offs 2,846,016 736,109 23,066 C.3 Collections 2,375,566 2,951,065 403,916 C.4 Sale proceeds 991,887 336,131 15,366 C.5 Losses on disposals 99,812 61,205 108 C.6 Transfers to other non-performing exposures 69,299 2,252,470 601,612 C.7 Contractual changes with no cancellations 5 4,055 - C.8 Other decreases 3,347,155 2,549,357 274,872 of which: business combinations - - - D. Closing balance (gross amount) 21,883,190 16,984,253 1,374,406 of which sold non-cancelled exposures 460,642 1,033,694 9,518 Sub-items “B.5 Other increases” and “C.3 Collections” include amounts recovered during the year concerning impaired exposures which were derecognised in their entirety. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 311 A.1.7bis Regulatory consolidation - On-balance sheet exposures with customers: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON-PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 16,324,527 6,326,058 of which sold non-cancelled exposures 842,550 323,104 B. Increases 5,846,827 3,122,555 B.1 Transfers from performing non-forborne exposures 879,837 1,519,313 B.2 Transfers from performing forbone exposures 482,575 X B.3 Transfers from non-performing forborne exposures X 893,230 of which: business combinations X - B.4 Other increases 4,484,415 710,012 of which: business combinations - mergers - - C. Reductions 7,817,892 3,871,293 C.1 Transfers to performing non-forborne exposures X 1,503,320 C.2 Transfers to performing forbone exposures 893,230 X C.3 Transfers to non-performing forborne exposures X 482,575 C.4 Write-offs 941,503 60 C.5 Collections 2,829,156 1,138,284 C.6 Sale proceeds 406,605 20,760 C.7 Losses from disposal 50,741 - C.8 Other reductions 2,696,657 726,294 of which: business combinations - - D. Closing balance (gross amount) 14,353,462 5,577,320 of which sold non-cancelled exposures 729,542 224,146 A.1.8 Regulatory consolidation - On-balance sheet non-performing credit exposures with banks: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 50,025 4,103 1,192 - 26 - of which sold non-cancelled exposures - - - - - - B. Increases 4,593 199 2,334 - - - B.1 Write-downs of acquired or originated impaired financial assets 5 X 2,334 X - X of which: business combinations 5 - - - - - B.2. Other write-downs 2,473 - - - - - B.3 Losses on disposal - - - - - - B.4 Transfers from other categories of non-performing exposures - - - - - - B.5 Contractual changes with no cancellations - X - X - X B.6 Other increases 2,115 199 - - - - of which: business combinations - mergers - - - - - - C. Reductions 13,908 4 18 - - - C.1 Write-backs from valuation - - - - - - C.2. Write-backs from collections 3,182 4 - - - - C.3 Gains from disposals - - - - - - C.4 Write-offs 6,884 - 18 - - - C.5 Transfers to other categories of non-performing exposures - - - - - - C.6 Contractual changes with no cancellations - X - X - X C.7 Other decreases 3,842 - - - - - of which: business combinations - - - - - - D. Closing balance (gross amount) 40,710 4,298 3,508 - 26 - of which sold non-cancelled exposures - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 311 A.1.7bis Regulatory consolidation - On-balance sheet exposures with customers: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON-PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 16,324,527 6,326,058 of which sold non-cancelled exposures 842,550 323,104 B. Increases 5,846,827 3,122,555 B.1 Transfers from performing non-forborne exposures 879,837 1,519,313 B.2 Transfers from performing forbone exposures 482,575 X B.3 Transfers from non-performing forborne exposures X 893,230 of which: business combinations X - B.4 Other increases 4,484,415 710,012 of which: business combinations - mergers - - C. Reductions 7,817,892 3,871,293 C.1 Transfers to performing non-forborne exposures X 1,503,320 C.2 Transfers to performing forbone exposures 893,230 X C.3 Transfers to non-performing forborne exposures X 482,575 C.4 Write-offs 941,503 60 C.5 Collections 2,829,156 1,138,284 C.6 Sale proceeds 406,605 20,760 C.7 Losses from disposal 50,741 - C.8 Other reductions 2,696,657 726,294 of which: business combinations - - D. Closing balance (gross amount) 14,353,462 5,577,320 of which sold non-cancelled exposures 729,542 224,146 A.1.8 Regulatory consolidation - On-balance sheet non-performing credit exposures with banks: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 50,025 4,103 1,192 - 26 - of which sold non-cancelled exposures - - - - - - B. Increases 4,593 199 2,334 - - - B.1 Write-downs of acquired or originated impaired financial assets 5 X 2,334 X - X of which: business combinations 5 - - - - - B.2. Other write-downs 2,473 - - - - - B.3 Losses on disposal - - - - - - B.4 Transfers from other categories of non-performing exposures - - - - - - B.5 Contractual changes with no cancellations - X - X - X B.6 Other increases 2,115 199 - - - - of which: business combinations - mergers - - - - - - C. Reductions 13,908 4 18 - - - C.1 Write-backs from valuation - - - - - - C.2. Write-backs from collections 3,182 4 - - - - C.3 Gains from disposals - - - - - - C.4 Write-offs 6,884 - 18 - - - C.5 Transfers to other categories of non-performing exposures - - - - - - C.6 Contractual changes with no cancellations - X - X - X C.7 Other decreases 3,842 - - - - - of which: business combinations - - - - - - D. Closing balance (gross amount) 40,710 4,298 3,508 - 26 - of which sold non-cancelled exposures - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 311 A.1.7bis Regulatory consolidation - On-balance sheet exposures with customers: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON-PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 16,324,527 6,326,058 of which sold non-cancelled exposures 842,550 323,104 B. Increases 5,846,827 3,122,555 B.1 Transfers from performing non-forborne exposures 879,837 1,519,313 B.2 Transfers from performing forbone exposures 482,575 X B.3 Transfers from non-performing forborne exposures X 893,230 of which: business combinations X - B.4 Other increases 4,484,415 710,012 of which: business combinations - mergers - - C. Reductions 7,817,892 3,871,293 C.1 Transfers to performing non-forborne exposures X 1,503,320 C.2 Transfers to performing forbone exposures 893,230 X C.3 Transfers to non-performing forborne exposures X 482,575 C.4 Write-offs 941,503 60 C.5 Collections 2,829,156 1,138,284 C.6 Sale proceeds 406,605 20,760 C.7 Losses from disposal 50,741 - C.8 Other reductions 2,696,657 726,294 of which: business combinations - - D. Closing balance (gross amount) 14,353,462 5,577,320 of which sold non-cancelled exposures 729,542 224,146 A.1.8 Regulatory consolidation - On-balance sheet non-performing credit exposures with banks: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 50,025 4,103 1,192 - 26 - of which sold non-cancelled exposures - - - - - - B. Increases 4,593 199 2,334 - - - B.1 Write-downs of acquired or originated impaired financial assets 5 X 2,334 X - X of which: business combinations 5 - - - - - B.2. Other write-downs 2,473 - - - - - B.3 Losses on disposal - - - - - - B.4 Transfers from other categories of non-performing exposures - - - - - - B.5 Contractual changes with no cancellations - X - X - X B.6 Other increases 2,115 199 - - - - of which: business combinations - mergers - - - - - - C. Reductions 13,908 4 18 - - - C.1 Write-backs from valuation - - - - - - C.2. Write-backs from collections 3,182 4 - - - - C.3 Gains from disposals - - - - - - C.4 Write-offs 6,884 - 18 - - - C.5 Transfers to other categories of non-performing exposures - - - - - - C.6 Contractual changes with no cancellations - X - X - X C.7 Other decreases 3,842 - - - - - of which: business combinations - - - - - - D. Closing balance (gross amount) 40,710 4,298 3,508 - 26 - of which sold non-cancelled exposures - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 311 A.1.7bis Regulatory consolidation - On-balance sheet exposures with customers: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON-PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 16,324,527 6,326,058 of which sold non-cancelled exposures 842,550 323,104 B. Increases 5,846,827 3,122,555 B.1 Transfers from performing non-forborne exposures 879,837 1,519,313 B.2 Transfers from performing forbone exposures 482,575 X B.3 Transfers from non-performing forborne exposures X 893,230 of which: business combinations X - B.4 Other increases 4,484,415 710,012 of which: business combinations - mergers - - C. Reductions 7,817,892 3,871,293 C.1 Transfers to performing non-forborne exposures X 1,503,320 C.2 Transfers to performing forbone exposures 893,230 X C.3 Transfers to non-performing forborne exposures X 482,575 C.4 Write-offs 941,503 60 C.5 Collections 2,829,156 1,138,284 C.6 Sale proceeds 406,605 20,760 C.7 Losses from disposal 50,741 - C.8 Other reductions 2,696,657 726,294 of which: business combinations - - D. Closing balance (gross amount) 14,353,462 5,577,320 of which sold non-cancelled exposures 729,542 224,146 A.1.8 Regulatory consolidation - On-balance sheet non-performing credit exposures with banks: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 50,025 4,103 1,192 - 26 - of which sold non-cancelled exposures - - - - - - B. Increases 4,593 199 2,334 - - - B.1 Write-downs of acquired or originated impaired financial assets 5 X 2,334 X - X of which: business combinations 5 - - - - - B.2. Other write-downs 2,473 - - - - - B.3 Losses on disposal - - - - - - B.4 Transfers from other categories of non-performing exposures - - - - - - B.5 Contractual changes with no cancellations - X - X - X B.6 Other increases 2,115 199 - - - - of which: business combinations - mergers - - - - - - C. Reductions 13,908 4 18 - - - C.1 Write-backs from valuation - - - - - - C.2. Write-backs from collections 3,182 4 - - - - C.3 Gains from disposals - - - - - - C.4 Write-offs 6,884 - 18 - - - C.5 Transfers to other categories of non-performing exposures - - - - - - C.6 Contractual changes with no cancellations - X - X - X C.7 Other decreases 3,842 - - - - - of which: business combinations - - - - - - D. Closing balance (gross amount) 40,710 4,298 3,508 - 26 - of which sold non-cancelled exposures - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 311 A.1.7bis Regulatory consolidation - On-balance sheet exposures with customers: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON-PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 16,324,527 6,326,058 of which sold non-cancelled exposures 842,550 323,104 B. Increases 5,846,827 3,122,555 B.1 Transfers from performing non-forborne exposures 879,837 1,519,313 B.2 Transfers from performing forbone exposures 482,575 X B.3 Transfers from non-performing forborne exposures X 893,230 of which: business combinations X - B.4 Other increases 4,484,415 710,012 of which: business combinations - mergers - - C. Reductions 7,817,892 3,871,293 C.1 Transfers to performing non-forborne exposures X 1,503,320 C.2 Transfers to performing forbone exposures 893,230 X C.3 Transfers to non-performing forborne exposures X 482,575 C.4 Write-offs 941,503 60 C.5 Collections 2,829,156 1,138,284 C.6 Sale proceeds 406,605 20,760 C.7 Losses from disposal 50,741 - C.8 Other reductions 2,696,657 726,294 of which: business combinations - - D. Closing balance (gross amount) 14,353,462 5,577,320 of which sold non-cancelled exposures 729,542 224,146 A.1.8 Regulatory consolidation - On-balance sheet non-performing credit exposures with banks: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 50,025 4,103 1,192 - 26 - of which sold non-cancelled exposures - - - - - - B. Increases 4,593 199 2,334 - - - B.1 Write-downs of acquired or originated impaired financial assets 5 X 2,334 X - X of which: business combinations 5 - - - - - B.2. Other write-downs 2,473 - - - - - B.3 Losses on disposal - - - - - - B.4 Transfers from other categories of non-performing exposures - - - - - - B.5 Contractual changes with no cancellations - X - X - X B.6 Other increases 2,115 199 - - - - of which: business combinations - mergers - - - - - - C. Reductions 13,908 4 18 - - - C.1 Write-backs from valuation - - - - - - C.2. Write-backs from collections 3,182 4 - - - - C.3 Gains from disposals - - - - - - C.4 Write-offs 6,884 - 18 - - - C.5 Transfers to other categories of non-performing exposures - - - - - - C.6 Contractual changes with no cancellations - X - X - X C.7 Other decreases 3,842 - - - - - of which: business combinations - - - - - - D. Closing balance (gross amount) 40,710 4,298 3,508 - 26 - of which sold non-cancelled exposures - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 312 2018 Annual Report and Accounts · UniCredit A.1.9 Regulatory consolidation - On-balance sheet non-performing credit exposures with customers: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 19,003,519 2,543,162 8,718,027 4,936,489 418,849 38,695 of which sold non-cancelled exposures 439,256 439,256 594,816 594,816 6,876 6,876 B. Increases 4,954,895 1,526,548 3,624,733 1,894,221 629,772 47,318 B.1 Write-downs of acquired or originated impaired financial assets 112,738 X 389,158 X 8,148 X of which: business combinations - - - - - - B.2. Other write-downs 3,081,645 835,380 2,594,542 1,311,612 200,682 8,064 B.3 Losses on disposal 99,812 17,323 61,205 33,418 108 - B.4 Transfers from other categories of non-performing exposures 1,206,594 417,147 313,459 29,239 8,458 2,480 B.5 Contractual changes with no cancellations 10 X 4,054 X - X B.6 Other increases 454,096 256,698 262,315 519,952 412,376 36,774 of which: business combinations - mergers - - - - - - C. Reductions 8,013,452 1,212,373 4,390,085 2,252,049 639,535 40,587 C.1 Write-backs from valuation 577,032 137,072 1,151,358 585,046 27,950 4,961 C.2. Write-backs from collections 1,218,299 268,705 477,663 257,725 90,166 7,324 C.3 Gains from disposals 157,028 25,564 61,565 37,375 6 5 C.4 Write-offs 2,846,016 502,550 736,109 425,586 23,066 13,367 C.5 Transfers to other categories of non-performing exposures 47,155 20,912 1,136,159 415,359 345,197 12,595 C.6 Contractual changes with no cancellations 2 X 2,096 X - X C.7 Other decreases 3,167,920 257,570 825,135 530,958 153,150 2,335 of which: business combinations - - - - - - D. Closing balance (gross amount) 15,944,962 2,857,337 7,952,675 4,578,661 409,086 45,426 of which sold non-cancelled exposures 294,614 39,187 421,430 361,920 2,437 188 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 312 2018 Annual Report and Accounts · UniCredit A.1.9 Regulatory consolidation - On-balance sheet non-performing credit exposures with customers: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 19,003,519 2,543,162 8,718,027 4,936,489 418,849 38,695 of which sold non-cancelled exposures 439,256 439,256 594,816 594,816 6,876 6,876 B. Increases 4,954,895 1,526,548 3,624,733 1,894,221 629,772 47,318 B.1 Write-downs of acquired or originated impaired financial assets 112,738 X 389,158 X 8,148 X of which: business combinations - - - - - - B.2. Other write-downs 3,081,645 835,380 2,594,542 1,311,612 200,682 8,064 B.3 Losses on disposal 99,812 17,323 61,205 33,418 108 - B.4 Transfers from other categories of non-performing exposures 1,206,594 417,147 313,459 29,239 8,458 2,480 B.5 Contractual changes with no cancellations 10 X 4,054 X - X B.6 Other increases 454,096 256,698 262,315 519,952 412,376 36,774 of which: business combinations - mergers - - - - - - C. Reductions 8,013,452 1,212,373 4,390,085 2,252,049 639,535 40,587 C.1 Write-backs from valuation 577,032 137,072 1,151,358 585,046 27,950 4,961 C.2. Write-backs from collections 1,218,299 268,705 477,663 257,725 90,166 7,324 C.3 Gains from disposals 157,028 25,564 61,565 37,375 6 5 C.4 Write-offs 2,846,016 502,550 736,109 425,586 23,066 13,367 C.5 Transfers to other categories of non-performing exposures 47,155 20,912 1,136,159 415,359 345,197 12,595 C.6 Contractual changes with no cancellations 2 X 2,096 X - X C.7 Other decreases 3,167,920 257,570 825,135 530,958 153,150 2,335 of which: business combinations - - - - - - D. Closing balance (gross amount) 15,944,962 2,857,337 7,952,675 4,578,661 409,086 45,426 of which sold non-cancelled exposures 294,614 39,187 421,430 361,920 2,437 188 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 312 2018 Annual Report and Accounts · UniCredit A.1.9 Regulatory consolidation - On-balance sheet non-performing credit exposures with customers: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 19,003,519 2,543,162 8,718,027 4,936,489 418,849 38,695 of which sold non-cancelled exposures 439,256 439,256 594,816 594,816 6,876 6,876 B. Increases 4,954,895 1,526,548 3,624,733 1,894,221 629,772 47,318 B.1 Write-downs of acquired or originated impaired financial assets 112,738 X 389,158 X 8,148 X of which: business combinations - - - - - - B.2. Other write-downs 3,081,645 835,380 2,594,542 1,311,612 200,682 8,064 B.3 Losses on disposal 99,812 17,323 61,205 33,418 108 - B.4 Transfers from other categories of non-performing exposures 1,206,594 417,147 313,459 29,239 8,458 2,480 B.5 Contractual changes with no cancellations 10 X 4,054 X - X B.6 Other increases 454,096 256,698 262,315 519,952 412,376 36,774 of which: business combinations - mergers - - - - - - C. Reductions 8,013,452 1,212,373 4,390,085 2,252,049 639,535 40,587 C.1 Write-backs from valuation 577,032 137,072 1,151,358 585,046 27,950 4,961 C.2. Write-backs from collections 1,218,299 268,705 477,663 257,725 90,166 7,324 C.3 Gains from disposals 157,028 25,564 61,565 37,375 6 5 C.4 Write-offs 2,846,016 502,550 736,109 425,586 23,066 13,367 C.5 Transfers to other categories of non-performing exposures 47,155 20,912 1,136,159 415,359 345,197 12,595 C.6 Contractual changes with no cancellations 2 X 2,096 X - X C.7 Other decreases 3,167,920 257,570 825,135 530,958 153,150 2,335 of which: business combinations - - - - - - D. Closing balance (gross amount) 15,944,962 2,857,337 7,952,675 4,578,661 409,086 45,426 of which sold non-cancelled exposures 294,614 39,187 421,430 361,920 2,437 188 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 312 2018 Annual Report and Accounts · UniCredit A.1.9 Regulatory consolidation - On-balance sheet non-performing credit exposures with customers: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 19,003,519 2,543,162 8,718,027 4,936,489 418,849 38,695 of which sold non-cancelled exposures 439,256 439,256 594,816 594,816 6,876 6,876 B. Increases 4,954,895 1,526,548 3,624,733 1,894,221 629,772 47,318 B.1 Write-downs of acquired or originated impaired financial assets 112,738 X 389,158 X 8,148 X of which: business combinations - - - - - - B.2. Other write-downs 3,081,645 835,380 2,594,542 1,311,612 200,682 8,064 B.3 Losses on disposal 99,812 17,323 61,205 33,418 108 - B.4 Transfers from other categories of non-performing exposures 1,206,594 417,147 313,459 29,239 8,458 2,480 B.5 Contractual changes with no cancellations 10 X 4,054 X - X B.6 Other increases 454,096 256,698 262,315 519,952 412,376 36,774 of which: business combinations - mergers - - - - - - C. Reductions 8,013,452 1,212,373 4,390,085 2,252,049 639,535 40,587 C.1 Write-backs from valuation 577,032 137,072 1,151,358 585,046 27,950 4,961 C.2. Write-backs from collections 1,218,299 268,705 477,663 257,725 90,166 7,324 C.3 Gains from disposals 157,028 25,564 61,565 37,375 6 5 C.4 Write-offs 2,846,016 502,550 736,109 425,586 23,066 13,367 C.5 Transfers to other categories of non-performing exposures 47,155 20,912 1,136,159 415,359 345,197 12,595 C.6 Contractual changes with no cancellations 2 X 2,096 X - X C.7 Other decreases 3,167,920 257,570 825,135 530,958 153,150 2,335 of which: business combinations - - - - - - D. Closing balance (gross amount) 15,944,962 2,857,337 7,952,675 4,578,661 409,086 45,426 of which sold non-cancelled exposures 294,614 39,187 421,430 361,920 2,437 188 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 312 2018 Annual Report and Accounts · UniCredit A.1.9 Regulatory consolidation - On-balance sheet non-performing credit exposures with customers: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 19,003,519 2,543,162 8,718,027 4,936,489 418,849 38,695 of which sold non-cancelled exposures 439,256 439,256 594,816 594,816 6,876 6,876 B. Increases 4,954,895 1,526,548 3,624,733 1,894,221 629,772 47,318 B.1 Write-downs of acquired or originated impaired financial assets 112,738 X 389,158 X 8,148 X of which: business combinations - - - - - - B.2. Other write-downs 3,081,645 835,380 2,594,542 1,311,612 200,682 8,064 B.3 Losses on disposal 99,812 17,323 61,205 33,418 108 - B.4 Transfers from other categories of non-performing exposures 1,206,594 417,147 313,459 29,239 8,458 2,480 B.5 Contractual changes with no cancellations 10 X 4,054 X - X B.6 Other increases 454,096 256,698 262,315 519,952 412,376 36,774 of which: business combinations - mergers - - - - - - C. Reductions 8,013,452 1,212,373 4,390,085 2,252,049 639,535 40,587 C.1 Write-backs from valuation 577,032 137,072 1,151,358 585,046 27,950 4,961 C.2. Write-backs from collections 1,218,299 268,705 477,663 257,725 90,166 7,324 C.3 Gains from disposals 157,028 25,564 61,565 37,375 6 5 C.4 Write-offs 2,846,016 502,550 736,109 425,586 23,066 13,367 C.5 Transfers to other categories of non-performing exposures 47,155 20,912 1,136,159 415,359 345,197 12,595 C.6 Contractual changes with no cancellations 2 X 2,096 X - X C.7 Other decreases 3,167,920 257,570 825,135 530,958 153,150 2,335 of which: business combinations - - - - - - D. Closing balance (gross amount) 15,944,962 2,857,337 7,952,675 4,578,661 409,086 45,426 of which sold non-cancelled exposures 294,614 39,187 421,430 361,920 2,437 188 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 313 A,2 Classification of credit exposure based on internal and external ratings A.2.1 Regulatory consolidation - Breakdown of financial assets, loan commitments and financial guarantees given by external rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 EXTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES CLASS 1 CLASS 2 CLASS 3 CLASS 4 CLASS 5 CLASS 6 A. Financial assets at amortised cost - Stage 1 23,559,156 46,809,218 60,523,391 13,131,533 6,456,507 3,686,540 385,879,158 540,045,503 - Stage 2 200,565 546,851 1,250,805 2,411,020 896,498 770,101 41,220,026 47,295,866 - Stage 3 - - - - - - 39,971,746 39,971,746 B. Financial assets at fair value through other comprehensive income - Stage 1 17,021,796 14,828,995 50,914,420 3,043,095 86,064 - 1,956,142 87,850,512 - Stage 2 - - 42,597 167,430 140,584 - 85,390 436,001 - Stage 3 - - - - - - 71 71 Total (A + B) 40,781,517 62,185,064 112,731,213 18,753,078 7,579,653 4,456,641 469,112,533 715,599,699 of which: acquired or originated impaired financial assets - - 23,190 - - 5,577 37,075 65,842 C. Loan commitments and financial guarantees given - Stage 1 3,875,594 8,644,706 28,564,931 9,154,640 3,103,662 177,614 150,721,425 204,242,572 - Stage 2 40,621 53,199 700,978 162,911 559,094 10,585 12,397,993 13,925,381 - Stage 3 - - - - - - 2,703,652 2,703,652 Total (C) 3,916,215 8,697,905 29,265,909 9,317,551 3,662,756 188,199 165,823,070 220,871,605 Total (A + B + C) 44,697,732 70,882,969 141,997,122 28,070,629 11,242,409 4,644,840 634,935,603 936,471,304 The table details on- and off-balance sheet credits granted to counterparties rated by external rating agencies, which provide brief assessments of the creditworthiness of different classes of borrowers such as Sovereigns, Banks, Public-Sector Entities, Insurance Companies and (usually large) Enterprises. The table refers to classification of 262/2005 Banca d’Italia Circular (5th update dated 22 December 2017); then it provides, for external ratings, 6 classes of creditworthiness. Rating Agencies utilised to fill the table are: Moody’s, S&Ps, Fitch and DBRS. Where more than one agency rating is available, the most prudential rating is assigned. The 84.8% of rated counterparties were investment grade (from Class 1 to Class 3), referring to highly-rated borrowers. Unrated exposures, i.e. those with no external rating, were 69.2% of the portfolio, due to the fact that a considerable proportion of borrowers were private individuals or SMEs, which are not externally rated. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 313 A,2 Classification of credit exposure based on internal and external ratings A.2.1 Regulatory consolidation - Breakdown of financial assets, loan commitments and financial guarantees given by external rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 EXTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES CLASS 1 CLASS 2 CLASS 3 CLASS 4 CLASS 5 CLASS 6 A. Financial assets at amortised cost - Stage 1 23,559,156 46,809,218 60,523,391 13,131,533 6,456,507 3,686,540 385,879,158 540,045,503 - Stage 2 200,565 546,851 1,250,805 2,411,020 896,498 770,101 41,220,026 47,295,866 - Stage 3 - - - - - - 39,971,746 39,971,746 B. Financial assets at fair value through other comprehensive income - Stage 1 17,021,796 14,828,995 50,914,420 3,043,095 86,064 - 1,956,142 87,850,512 - Stage 2 - - 42,597 167,430 140,584 - 85,390 436,001 - Stage 3 - - - - - - 71 71 Total (A + B) 40,781,517 62,185,064 112,731,213 18,753,078 7,579,653 4,456,641 469,112,533 715,599,699 of which: acquired or originated impaired financial assets - - 23,190 - - 5,577 37,075 65,842 C. Loan commitments and financial guarantees given - Stage 1 3,875,594 8,644,706 28,564,931 9,154,640 3,103,662 177,614 150,721,425 204,242,572 - Stage 2 40,621 53,199 700,978 162,911 559,094 10,585 12,397,993 13,925,381 - Stage 3 - - - - - - 2,703,652 2,703,652 Total (C) 3,916,215 8,697,905 29,265,909 9,317,551 3,662,756 188,199 165,823,070 220,871,605 Total (A + B + C) 44,697,732 70,882,969 141,997,122 28,070,629 11,242,409 4,644,840 634,935,603 936,471,304 The table details on- and off-balance sheet credits granted to counterparties rated by external rating agencies, which provide brief assessments of the creditworthiness of different classes of borrowers such as Sovereigns, Banks, Public-Sector Entities, Insurance Companies and (usually large) Enterprises. The table refers to classification of 262/2005 Banca d’Italia Circular (5th update dated 22 December 2017); then it provides, for external ratings, 6 classes of creditworthiness. Rating Agencies utilised to fill the table are: Moody’s, S&Ps, Fitch and DBRS. Where more than one agency rating is available, the most prudential rating is assigned. The 84.8% of rated counterparties were investment grade (from Class 1 to Class 3), referring to highly-rated borrowers. Unrated exposures, i.e. those with no external rating, were 69.2% of the portfolio, due to the fact that a considerable proportion of borrowers were private individuals or SMEs, which are not externally rated. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 313 A,2 Classification of credit exposure based on internal and external ratings A.2.1 Regulatory consolidation - Breakdown of financial assets, loan commitments and financial guarantees given by external rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 EXTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES CLASS 1 CLASS 2 CLASS 3 CLASS 4 CLASS 5 CLASS 6 A. Financial assets at amortised cost - Stage 1 23,559,156 46,809,218 60,523,391 13,131,533 6,456,507 3,686,540 385,879,158 540,045,503 - Stage 2 200,565 546,851 1,250,805 2,411,020 896,498 770,101 41,220,026 47,295,866 - Stage 3 - - - - - - 39,971,746 39,971,746 B. Financial assets at fair value through other comprehensive income - Stage 1 17,021,796 14,828,995 50,914,420 3,043,095 86,064 - 1,956,142 87,850,512 - Stage 2 - - 42,597 167,430 140,584 - 85,390 436,001 - Stage 3 - - - - - - 71 71 Total (A + B) 40,781,517 62,185,064 112,731,213 18,753,078 7,579,653 4,456,641 469,112,533 715,599,699 of which: acquired or originated impaired financial assets - - 23,190 - - 5,577 37,075 65,842 C. Loan commitments and financial guarantees given - Stage 1 3,875,594 8,644,706 28,564,931 9,154,640 3,103,662 177,614 150,721,425 204,242,572 - Stage 2 40,621 53,199 700,978 162,911 559,094 10,585 12,397,993 13,925,381 - Stage 3 - - - - - - 2,703,652 2,703,652 Total (C) 3,916,215 8,697,905 29,265,909 9,317,551 3,662,756 188,199 165,823,070 220,871,605 Total (A + B + C) 44,697,732 70,882,969 141,997,122 28,070,629 11,242,409 4,644,840 634,935,603 936,471,304 The table details on- and off-balance sheet credits granted to counterparties rated by external rating agencies, which provide brief assessments of the creditworthiness of different classes of borrowers such as Sovereigns, Banks, Public-Sector Entities, Insurance Companies and (usually large) Enterprises. The table refers to classification of 262/2005 Banca d’Italia Circular (5th update dated 22 December 2017); then it provides, for external ratings, 6 classes of creditworthiness. Rating Agencies utilised to fill the table are: Moody’s, S&Ps, Fitch and DBRS. Where more than one agency rating is available, the most prudential rating is assigned. The 84.8% of rated counterparties were investment grade (from Class 1 to Class 3), referring to highly-rated borrowers. Unrated exposures, i.e. those with no external rating, were 69.2% of the portfolio, due to the fact that a considerable proportion of borrowers were private individuals or SMEs, which are not externally rated. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 313 A,2 Classification of credit exposure based on internal and external ratings A.2.1 Regulatory consolidation - Breakdown of financial assets, loan commitments and financial guarantees given by external rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 EXTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES CLASS 1 CLASS 2 CLASS 3 CLASS 4 CLASS 5 CLASS 6 A. Financial assets at amortised cost - Stage 1 23,559,156 46,809,218 60,523,391 13,131,533 6,456,507 3,686,540 385,879,158 540,045,503 - Stage 2 200,565 546,851 1,250,805 2,411,020 896,498 770,101 41,220,026 47,295,866 - Stage 3 - - - - - - 39,971,746 39,971,746 B. Financial assets at fair value through other comprehensive income - Stage 1 17,021,796 14,828,995 50,914,420 3,043,095 86,064 - 1,956,142 87,850,512 - Stage 2 - - 42,597 167,430 140,584 - 85,390 436,001 - Stage 3 - - - - - - 71 71 Total (A + B) 40,781,517 62,185,064 112,731,213 18,753,078 7,579,653 4,456,641 469,112,533 715,599,699 of which: acquired or originated impaired financial assets - - 23,190 - - 5,577 37,075 65,842 C. Loan commitments and financial guarantees given - Stage 1 3,875,594 8,644,706 28,564,931 9,154,640 3,103,662 177,614 150,721,425 204,242,572 - Stage 2 40,621 53,199 700,978 162,911 559,094 10,585 12,397,993 13,925,381 - Stage 3 - - - - - - 2,703,652 2,703,652 Total (C) 3,916,215 8,697,905 29,265,909 9,317,551 3,662,756 188,199 165,823,070 220,871,605 Total (A + B + C) 44,697,732 70,882,969 141,997,122 28,070,629 11,242,409 4,644,840 634,935,603 936,471,304 The table details on- and off-balance sheet credits granted to counterparties rated by external rating agencies, which provide brief assessments of the creditworthiness of different classes of borrowers such as Sovereigns, Banks, Public-Sector Entities, Insurance Companies and (usually large) Enterprises. The table refers to classification of 262/2005 Banca d’Italia Circular (5th update dated 22 December 2017); then it provides, for external ratings, 6 classes of creditworthiness. Rating Agencies utilised to fill the table are: Moody’s, S&Ps, Fitch and DBRS. Where more than one agency rating is available, the most prudential rating is assigned. The 84.8% of rated counterparties were investment grade (from Class 1 to Class 3), referring to highly-rated borrowers. Unrated exposures, i.e. those with no external rating, were 69.2% of the portfolio, due to the fact that a considerable proportion of borrowers were private individuals or SMEs, which are not externally rated. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 313 A,2 Classification of credit exposure based on internal and external ratings A.2.1 Regulatory consolidation - Breakdown of financial assets, loan commitments and financial guarantees given by external rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 EXTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES CLASS 1 CLASS 2 CLASS 3 CLASS 4 CLASS 5 CLASS 6 A. Financial assets at amortised cost - Stage 1 23,559,156 46,809,218 60,523,391 13,131,533 6,456,507 3,686,540 385,879,158 540,045,503 - Stage 2 200,565 546,851 1,250,805 2,411,020 896,498 770,101 41,220,026 47,295,866 - Stage 3 - - - - - - 39,971,746 39,971,746 B. Financial assets at fair value through other comprehensive income - Stage 1 17,021,796 14,828,995 50,914,420 3,043,095 86,064 - 1,956,142 87,850,512 - Stage 2 - - 42,597 167,430 140,584 - 85,390 436,001 - Stage 3 - - - - - - 71 71 Total (A + B) 40,781,517 62,185,064 112,731,213 18,753,078 7,579,653 4,456,641 469,112,533 715,599,699 of which: acquired or originated impaired financial assets - - 23,190 - - 5,577 37,075 65,842 C. Loan commitments and financial guarantees given - Stage 1 3,875,594 8,644,706 28,564,931 9,154,640 3,103,662 177,614 150,721,425 204,242,572 - Stage 2 40,621 53,199 700,978 162,911 559,094 10,585 12,397,993 13,925,381 - Stage 3 - - - - - - 2,703,652 2,703,652 Total (C) 3,916,215 8,697,905 29,265,909 9,317,551 3,662,756 188,199 165,823,070 220,871,605 Total (A + B + C) 44,697,732 70,882,969 141,997,122 28,070,629 11,242,409 4,644,840 634,935,603 936,471,304 The table details on- and off-balance sheet credits granted to counterparties rated by external rating agencies, which provide brief assessments of the creditworthiness of different classes of borrowers such as Sovereigns, Banks, Public-Sector Entities, Insurance Companies and (usually large) Enterprises. The table refers to classification of 262/2005 Banca d’Italia Circular (5th update dated 22 December 2017); then it provides, for external ratings, 6 classes of creditworthiness. Rating Agencies utilised to fill the table are: Moody’s, S&Ps, Fitch and DBRS. Where more than one agency rating is available, the most prudential rating is assigned. The 84.8% of rated counterparties were investment grade (from Class 1 to Class 3), referring to highly-rated borrowers. Unrated exposures, i.e. those with no external rating, were 69.2% of the portfolio, due to the fact that a considerable proportion of borrowers were private individuals or SMEs, which are not externally rated. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 314 2018 Annual Report and Accounts · UniCredit A.2.2 Regulatory consolidation - Breakdown of financial assets, loan commitments and financial guarantees given by internal rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 INTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES 1 2 3 4 5 6 7 8 9 A. Financial assets at amortised cost - Stage 1 13,505,295 15,507,598 117,692,750 204,253,321 66,476,944 43,161,190 18,726,662 3,966,051 1,046,868 55,708,824 540,045,503 - Stage 2 107,787 1,068,701 4,150,939 6,874,893 7,750,683 7,679,550 6,592,839 4,193,337 3,869,437 5,007,700 47,295,866 - Stage 3 - - - - - - - 233,980 113,177 39,624,589 39,971,746 B. Financial assets at fair value through other comprehensive income - Stage 1 10,947,785 3,701,635 51,616,743 10,415,044 44,540 120,353 71,999 - - 10,932,413 87,850,512 - Stage 2 - - - - 200,275 230,959 2,588 - 702 1,477 436,001 - Stage 3 - - - - - - - - - 71 71 Total (A + B) 24,560,867 20,277,934 173,460,432 221,543,258 74,472,442 51,192,052 25,394,088 8,393,368 5,030,184 111,275,074 715,599,699 of which: acquired or originated impaired financial assets - - 28 949 1,520 9,195 4,087 4,145 10,277 35,641 65,842 C. Loan commitments and financial guarantees given - Stage 1 1,247,141 11,661,881 54,864,339 73,387,454 21,096,937 12,243,030 4,668,485 1,190,753 236,986 23,645,566 204,242,572 - Stage 2 27,483 1,630,530 2,573,129 3,243,921 1,322,924 1,219,017 1,171,115 761,950 246,994 1,728,318 13,925,381 - Stage 3 - - - - - - - 14 48,837 2,654,801 2,703,652 Total (C) 1,274,624 13,292,411 57,437,468 76,631,375 22,419,861 13,462,047 5,839,600 1,952,717 532,817 28,028,685 220,871,605 Total (A + B + C) 25,835,491 33,570,345 230,897,900 298,174,633 96,892,303 64,654,099 31,233,688 10,346,085 5,563,001 139,303,759 936,471,304 The table contains exposures grouped according to the counterparties’ internal rating. Ratings are assigned to individual counterparties using Group banks’ internally-developed models included in their credit risk management processes. The internal models validated by the regulators are either ‘Group-wide’ (e.g. for banks, multinationals and sovereigns) or bank-specific, by segment (e.g. retail or corporate). The various rating scales of these models are mapped onto a single master-scale of 9 classes based on Probability of Default (PD). 73.4% of internally-rated exposures were investment grade (classes 1 to 4), while exposures towards unrated counterparties were 13.2% of the total. No rating is assigned to these counterparties as either they belong to a segment not yet covered by the models, or the appropriate model is still in the roll-out phase. Internal Ratings are used for Capital Requirements calculation by the Legal Entities/portfolios that were authorised for the IRB approach from Central bank. Legal Entities currently authorised are: UniCredit S.p.A., UniCredit Bank AG, UniCredit Bank Austria AG, UniCredit Bank Ireland p.l.c., UniCredit Banka Slovenija d.d., UniCredit Bulbank AD, UniCredit Bank Czech Republic and Slovakia a.s., UniCredit Bank Hungary zrt, UniCredit Bank S.A., AO UniCredit Bank and UniCredit Leasing GmbH and related subsidiaries UniCredit Leasing Finance GMBH, UniCredit Leasing Aviation GMBH. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 314 2018 Annual Report and Accounts · UniCredit A.2.2 Regulatory consolidation - Breakdown of financial assets, loan commitments and financial guarantees given by internal rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 INTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES 1 2 3 4 5 6 7 8 9 A. Financial assets at amortised cost - Stage 1 13,505,295 15,507,598 117,692,750 204,253,321 66,476,944 43,161,190 18,726,662 3,966,051 1,046,868 55,708,824 540,045,503 - Stage 2 107,787 1,068,701 4,150,939 6,874,893 7,750,683 7,679,550 6,592,839 4,193,337 3,869,437 5,007,700 47,295,866 - Stage 3 - - - - - - - 233,980 113,177 39,624,589 39,971,746 B. Financial assets at fair value through other comprehensive income - Stage 1 10,947,785 3,701,635 51,616,743 10,415,044 44,540 120,353 71,999 - - 10,932,413 87,850,512 - Stage 2 - - - - 200,275 230,959 2,588 - 702 1,477 436,001 - Stage 3 - - - - - - - - - 71 71 Total (A + B) 24,560,867 20,277,934 173,460,432 221,543,258 74,472,442 51,192,052 25,394,088 8,393,368 5,030,184 111,275,074 715,599,699 of which: acquired or originated impaired financial assets - - 28 949 1,520 9,195 4,087 4,145 10,277 35,641 65,842 C. Loan commitments and financial guarantees given - Stage 1 1,247,141 11,661,881 54,864,339 73,387,454 21,096,937 12,243,030 4,668,485 1,190,753 236,986 23,645,566 204,242,572 - Stage 2 27,483 1,630,530 2,573,129 3,243,921 1,322,924 1,219,017 1,171,115 761,950 246,994 1,728,318 13,925,381 - Stage 3 - - - - - - - 14 48,837 2,654,801 2,703,652 Total (C) 1,274,624 13,292,411 57,437,468 76,631,375 22,419,861 13,462,047 5,839,600 1,952,717 532,817 28,028,685 220,871,605 Total (A + B + C) 25,835,491 33,570,345 230,897,900 298,174,633 96,892,303 64,654,099 31,233,688 10,346,085 5,563,001 139,303,759 936,471,304 The table contains exposures grouped according to the counterparties’ internal rating. Ratings are assigned to individual counterparties using Group banks’ internally-developed models included in their credit risk management processes. The internal models validated by the regulators are either ‘Group-wide’ (e.g. for banks, multinationals and sovereigns) or bank-specific, by segment (e.g. retail or corporate). The various rating scales of these models are mapped onto a single master-scale of 9 classes based on Probability of Default (PD). 73.4% of internally-rated exposures were investment grade (classes 1 to 4), while exposures towards unrated counterparties were 13.2% of the total. No rating is assigned to these counterparties as either they belong to a segment not yet covered by the models, or the appropriate model is still in the roll-out phase. Internal Ratings are used for Capital Requirements calculation by the Legal Entities/portfolios that were authorised for the IRB approach from Central bank. Legal Entities currently authorised are: UniCredit S.p.A., UniCredit Bank AG, UniCredit Bank Austria AG, UniCredit Bank Ireland p.l.c., UniCredit Banka Slovenija d.d., UniCredit Bulbank AD, UniCredit Bank Czech Republic and Slovakia a.s., UniCredit Bank Hungary zrt, UniCredit Bank S.A., AO UniCredit Bank and UniCredit Leasing GmbH and related subsidiaries UniCredit Leasing Finance GMBH, UniCredit Leasing Aviation GMBH. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 314 2018 Annual Report and Accounts · UniCredit A.2.2 Regulatory consolidation - Breakdown of financial assets, loan commitments and financial guarantees given by internal rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 INTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES 1 2 3 4 5 6 7 8 9 A. Financial assets at amortised cost - Stage 1 13,505,295 15,507,598 117,692,750 204,253,321 66,476,944 43,161,190 18,726,662 3,966,051 1,046,868 55,708,824 540,045,503 - Stage 2 107,787 1,068,701 4,150,939 6,874,893 7,750,683 7,679,550 6,592,839 4,193,337 3,869,437 5,007,700 47,295,866 - Stage 3 - - - - - - - 233,980 113,177 39,624,589 39,971,746 B. Financial assets at fair value through other comprehensive income - Stage 1 10,947,785 3,701,635 51,616,743 10,415,044 44,540 120,353 71,999 - - 10,932,413 87,850,512 - Stage 2 - - - - 200,275 230,959 2,588 - 702 1,477 436,001 - Stage 3 - - - - - - - - - 71 71 Total (A + B) 24,560,867 20,277,934 173,460,432 221,543,258 74,472,442 51,192,052 25,394,088 8,393,368 5,030,184 111,275,074 715,599,699 of which: acquired or originated impaired financial assets - - 28 949 1,520 9,195 4,087 4,145 10,277 35,641 65,842 C. Loan commitments and financial guarantees given - Stage 1 1,247,141 11,661,881 54,864,339 73,387,454 21,096,937 12,243,030 4,668,485 1,190,753 236,986 23,645,566 204,242,572 - Stage 2 27,483 1,630,530 2,573,129 3,243,921 1,322,924 1,219,017 1,171,115 761,950 246,994 1,728,318 13,925,381 - Stage 3 - - - - - - - 14 48,837 2,654,801 2,703,652 Total (C) 1,274,624 13,292,411 57,437,468 76,631,375 22,419,861 13,462,047 5,839,600 1,952,717 532,817 28,028,685 220,871,605 Total (A + B + C) 25,835,491 33,570,345 230,897,900 298,174,633 96,892,303 64,654,099 31,233,688 10,346,085 5,563,001 139,303,759 936,471,304 The table contains exposures grouped according to the counterparties’ internal rating. Ratings are assigned to individual counterparties using Group banks’ internally-developed models included in their credit risk management processes. The internal models validated by the regulators are either ‘Group-wide’ (e.g. for banks, multinationals and sovereigns) or bank-specific, by segment (e.g. retail or corporate). The various rating scales of these models are mapped onto a single master-scale of 9 classes based on Probability of Default (PD). 73.4% of internally-rated exposures were investment grade (classes 1 to 4), while exposures towards unrated counterparties were 13.2% of the total. No rating is assigned to these counterparties as either they belong to a segment not yet covered by the models, or the appropriate model is still in the roll-out phase. Internal Ratings are used for Capital Requirements calculation by the Legal Entities/portfolios that were authorised for the IRB approach from Central bank. Legal Entities currently authorised are: UniCredit S.p.A., UniCredit Bank AG, UniCredit Bank Austria AG, UniCredit Bank Ireland p.l.c., UniCredit Banka Slovenija d.d., UniCredit Bulbank AD, UniCredit Bank Czech Republic and Slovakia a.s., UniCredit Bank Hungary zrt, UniCredit Bank S.A., AO UniCredit Bank and UniCredit Leasing GmbH and related subsidiaries UniCredit Leasing Finance GMBH, UniCredit Leasing Aviation GMBH. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 314 2018 Annual Report and Accounts · UniCredit A.2.2 Regulatory consolidation - Breakdown of financial assets, loan commitments and financial guarantees given by internal rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 INTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES 1 2 3 4 5 6 7 8 9 A. Financial assets at amortised cost - Stage 1 13,505,295 15,507,598 117,692,750 204,253,321 66,476,944 43,161,190 18,726,662 3,966,051 1,046,868 55,708,824 540,045,503 - Stage 2 107,787 1,068,701 4,150,939 6,874,893 7,750,683 7,679,550 6,592,839 4,193,337 3,869,437 5,007,700 47,295,866 - Stage 3 - - - - - - - 233,980 113,177 39,624,589 39,971,746 B. Financial assets at fair value through other comprehensive income - Stage 1 10,947,785 3,701,635 51,616,743 10,415,044 44,540 120,353 71,999 - - 10,932,413 87,850,512 - Stage 2 - - - - 200,275 230,959 2,588 - 702 1,477 436,001 - Stage 3 - - - - - - - - - 71 71 Total (A + B) 24,560,867 20,277,934 173,460,432 221,543,258 74,472,442 51,192,052 25,394,088 8,393,368 5,030,184 111,275,074 715,599,699 of which: acquired or originated impaired financial assets - - 28 949 1,520 9,195 4,087 4,145 10,277 35,641 65,842 C. Loan commitments and financial guarantees given - Stage 1 1,247,141 11,661,881 54,864,339 73,387,454 21,096,937 12,243,030 4,668,485 1,190,753 236,986 23,645,566 204,242,572 - Stage 2 27,483 1,630,530 2,573,129 3,243,921 1,322,924 1,219,017 1,171,115 761,950 246,994 1,728,318 13,925,381 - Stage 3 - - - - - - - 14 48,837 2,654,801 2,703,652 Total (C) 1,274,624 13,292,411 57,437,468 76,631,375 22,419,861 13,462,047 5,839,600 1,952,717 532,817 28,028,685 220,871,605 Total (A + B + C) 25,835,491 33,570,345 230,897,900 298,174,633 96,892,303 64,654,099 31,233,688 10,346,085 5,563,001 139,303,759 936,471,304 The table contains exposures grouped according to the counterparties’ internal rating. Ratings are assigned to individual counterparties using Group banks’ internally-developed models included in their credit risk management processes. The internal models validated by the regulators are either ‘Group-wide’ (e.g. for banks, multinationals and sovereigns) or bank-specific, by segment (e.g. retail or corporate). The various rating scales of these models are mapped onto a single master-scale of 9 classes based on Probability of Default (PD). 73.4% of internally-rated exposures were investment grade (classes 1 to 4), while exposures towards unrated counterparties were 13.2% of the total. No rating is assigned to these counterparties as either they belong to a segment not yet covered by the models, or the appropriate model is still in the roll-out phase. Internal Ratings are used for Capital Requirements calculation by the Legal Entities/portfolios that were authorised for the IRB approach from Central bank. Legal Entities currently authorised are: UniCredit S.p.A., UniCredit Bank AG, UniCredit Bank Austria AG, UniCredit Bank Ireland p.l.c., UniCredit Banka Slovenija d.d., UniCredit Bulbank AD, UniCredit Bank Czech Republic and Slovakia a.s., UniCredit Bank Hungary zrt, UniCredit Bank S.A., AO UniCredit Bank and UniCredit Leasing GmbH and related subsidiaries UniCredit Leasing Finance GMBH, UniCredit Leasing Aviation GMBH. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 314 2018 Annual Report and Accounts · UniCredit A.2.2 Regulatory consolidation - Breakdown of financial assets, loan commitments and financial guarantees given by internal rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 INTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES 1 2 3 4 5 6 7 8 9 A. Financial assets at amortised cost - Stage 1 13,505,295 15,507,598 117,692,750 204,253,321 66,476,944 43,161,190 18,726,662 3,966,051 1,046,868 55,708,824 540,045,503 - Stage 2 107,787 1,068,701 4,150,939 6,874,893 7,750,683 7,679,550 6,592,839 4,193,337 3,869,437 5,007,700 47,295,866 - Stage 3 - - - - - - - 233,980 113,177 39,624,589 39,971,746 B. Financial assets at fair value through other comprehensive income - Stage 1 10,947,785 3,701,635 51,616,743 10,415,044 44,540 120,353 71,999 - - 10,932,413 87,850,512 - Stage 2 - - - - 200,275 230,959 2,588 - 702 1,477 436,001 - Stage 3 - - - - - - - - - 71 71 Total (A + B) 24,560,867 20,277,934 173,460,432 221,543,258 74,472,442 51,192,052 25,394,088 8,393,368 5,030,184 111,275,074 715,599,699 of which: acquired or originated impaired financial assets - - 28 949 1,520 9,195 4,087 4,145 10,277 35,641 65,842 C. Loan commitments and financial guarantees given - Stage 1 1,247,141 11,661,881 54,864,339 73,387,454 21,096,937 12,243,030 4,668,485 1,190,753 236,986 23,645,566 204,242,572 - Stage 2 27,483 1,630,530 2,573,129 3,243,921 1,322,924 1,219,017 1,171,115 761,950 246,994 1,728,318 13,925,381 - Stage 3 - - - - - - - 14 48,837 2,654,801 2,703,652 Total (C) 1,274,624 13,292,411 57,437,468 76,631,375 22,419,861 13,462,047 5,839,600 1,952,717 532,817 28,028,685 220,871,605 Total (A + B + C) 25,835,491 33,570,345 230,897,900 298,174,633 96,892,303 64,654,099 31,233,688 10,346,085 5,563,001 139,303,759 936,471,304 The table contains exposures grouped according to the counterparties’ internal rating. Ratings are assigned to individual counterparties using Group banks’ internally-developed models included in their credit risk management processes. The internal models validated by the regulators are either ‘Group-wide’ (e.g. for banks, multinationals and sovereigns) or bank-specific, by segment (e.g. retail or corporate). The various rating scales of these models are mapped onto a single master-scale of 9 classes based on Probability of Default (PD). 73.4% of internally-rated exposures were investment grade (classes 1 to 4), while exposures towards unrated counterparties were 13.2% of the total. No rating is assigned to these counterparties as either they belong to a segment not yet covered by the models, or the appropriate model is still in the roll-out phase. Internal Ratings are used for Capital Requirements calculation by the Legal Entities/portfolios that were authorised for the IRB approach from Central bank. Legal Entities currently authorised are: UniCredit S.p.A., UniCredit Bank AG, UniCredit Bank Austria AG, UniCredit Bank Ireland p.l.c., UniCredit Banka Slovenija d.d., UniCredit Bulbank AD, UniCredit Bank Czech Republic and Slovakia a.s., UniCredit Bank Hungary zrt, UniCredit Bank S.A., AO UniCredit Bank and UniCredit Leasing GmbH and related subsidiaries UniCredit Leasing Finance GMBH, UniCredit Leasing Aviation GMBH. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 315 A.3 Distribution of secured credit exposures by type of security A.3.1 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 15,815,050 15,812,041 - 915 14,895,351 189,221 of which non-performing - - - - - - 1.2 Partially secured 893,403 891,522 - - 16,622 107,153 of which non-performing - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured 1,294,840 1,293,577 - - 308,473 771,584 of which non-performing - - - - - - 2.2 Partially secured 480,681 479,841 - - 15,713 7,900 of which non-performing - - - - - - continued: A.3.1 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIESBANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 47,494 379,870 - - 15,512,851 of which non-performing - - - - - - - - - - 1.2 Partially secured - - - - - 319,773 102,813 52,770 49,844 648,975 of which non-performing - - - - - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - - 65,894 - 147,576 1,293,527 of which non-performing - - - - - - - - - - 2.2 Partially secured - - - - - 87,528 111,289 9,607 137,533 369,570 of which non-performing - - - - - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 315 A.3 Distribution of secured credit exposures by type of security A.3.1 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 15,815,050 15,812,041 - 915 14,895,351 189,221 of which non-performing - - - - - - 1.2 Partially secured 893,403 891,522 - - 16,622 107,153 of which non-performing - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured 1,294,840 1,293,577 - - 308,473 771,584 of which non-performing - - - - - - 2.2 Partially secured 480,681 479,841 - - 15,713 7,900 of which non-performing - - - - - - continued: A.3.1 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIESBANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 47,494 379,870 - - 15,512,851 of which non-performing - - - - - - - - - - 1.2 Partially secured - - - - - 319,773 102,813 52,770 49,844 648,975 of which non-performing - - - - - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - - 65,894 - 147,576 1,293,527 of which non-performing - - - - - - - - - - 2.2 Partially secured - - - - - 87,528 111,289 9,607 137,533 369,570 of which non-performing - - - - - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 315 A.3 Distribution of secured credit exposures by type of security A.3.1 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 15,815,050 15,812,041 - 915 14,895,351 189,221 of which non-performing - - - - - - 1.2 Partially secured 893,403 891,522 - - 16,622 107,153 of which non-performing - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured 1,294,840 1,293,577 - - 308,473 771,584 of which non-performing - - - - - - 2.2 Partially secured 480,681 479,841 - - 15,713 7,900 of which non-performing - - - - - - continued: A.3.1 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIESBANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 47,494 379,870 - - 15,512,851 of which non-performing - - - - - - - - - - 1.2 Partially secured - - - - - 319,773 102,813 52,770 49,844 648,975 of which non-performing - - - - - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - - 65,894 - 147,576 1,293,527 of which non-performing - - - - - - - - - - 2.2 Partially secured - - - - - 87,528 111,289 9,607 137,533 369,570 of which non-performing - - - - - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 315 A.3 Distribution of secured credit exposures by type of security A.3.1 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 15,815,050 15,812,041 - 915 14,895,351 189,221 of which non-performing - - - - - - 1.2 Partially secured 893,403 891,522 - - 16,622 107,153 of which non-performing - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured 1,294,840 1,293,577 - - 308,473 771,584 of which non-performing - - - - - - 2.2 Partially secured 480,681 479,841 - - 15,713 7,900 of which non-performing - - - - - - continued: A.3.1 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIESBANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 47,494 379,870 - - 15,512,851 of which non-performing - - - - - - - - - - 1.2 Partially secured - - - - - 319,773 102,813 52,770 49,844 648,975 of which non-performing - - - - - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - - 65,894 - 147,576 1,293,527 of which non-performing - - - - - - - - - - 2.2 Partially secured - - - - - 87,528 111,289 9,607 137,533 369,570 of which non-performing - - - - - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 315 A.3 Distribution of secured credit exposures by type of security A.3.1 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 15,815,050 15,812,041 - 915 14,895,351 189,221 of which non-performing - - - - - - 1.2 Partially secured 893,403 891,522 - - 16,622 107,153 of which non-performing - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured 1,294,840 1,293,577 - - 308,473 771,584 of which non-performing - - - - - - 2.2 Partially secured 480,681 479,841 - - 15,713 7,900 of which non-performing - - - - - - continued: A.3.1 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIESBANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 47,494 379,870 - - 15,512,851 of which non-performing - - - - - - - - - - 1.2 Partially secured - - - - - 319,773 102,813 52,770 49,844 648,975 of which non-performing - - - - - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - - 65,894 - 147,576 1,293,527 of which non-performing - - - - - - - - - - 2.2 Partially secured - - - - - 87,528 111,289 9,607 137,533 369,570 of which non-performing - - - - - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 316 2018 Annual Report and Accounts · UniCredit A.3.2 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASESSECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 193,330,195 179,300,121 84,964,335 12,530,066 37,226,287 13,247,254 of which non-performing 23,576,428 10,559,877 5,938,480 1,976,488 43,372 964,740 1.2 Partially secured 144,490,923 142,069,733 58,551,048 239,362 2,028,007 26,455,664 of which non-performing 3,351,324 1,730,392 604,636 47,241 26,693 177,151 2. Secured off-balance sheet credit exposures 2.1 Totally secured 43,682,821 43,450,542 2,617,400 - 6,502,085 12,776,339 of which non-performing 1,269,360 1,076,228 389,981 - 3,590 74,198 2.2 Partially secured 36,694,568 36,625,181 2,091,640 - 477,945 2,022,429 of which non-performing 382,298 326,966 29,784 - 41,190 39,754 continued: A.3.2 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 5,195,665 342,368 1,091,963 23,154,533 177,752,471 of which non-performing - - - - - 76,465 5,902 51,051 1,109,803 10,166,301 1.2 Partially secured - - - - - 9,320,779 694,158 633,569 2,906,857 100,829,444 of which non-performing - - - - - 248,542 46,890 24,479 110,301 1,285,933 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - 1,309,035 522,279 1,710,820 17,833,064 43,271,022 of which non-performing - - - - - 6,400 45,335 981 513,551 1,034,036 2.2 Partially secured - - - - - 1,270,985 452,544 22,523 2,732,760 9,070,826 of which non-performing - - - - - 3,112 4,011 85 30,085 148,021 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 316 2018 Annual Report and Accounts · UniCredit A.3.2 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASESSECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 193,330,195 179,300,121 84,964,335 12,530,066 37,226,287 13,247,254 of which non-performing 23,576,428 10,559,877 5,938,480 1,976,488 43,372 964,740 1.2 Partially secured 144,490,923 142,069,733 58,551,048 239,362 2,028,007 26,455,664 of which non-performing 3,351,324 1,730,392 604,636 47,241 26,693 177,151 2. Secured off-balance sheet credit exposures 2.1 Totally secured 43,682,821 43,450,542 2,617,400 - 6,502,085 12,776,339 of which non-performing 1,269,360 1,076,228 389,981 - 3,590 74,198 2.2 Partially secured 36,694,568 36,625,181 2,091,640 - 477,945 2,022,429 of which non-performing 382,298 326,966 29,784 - 41,190 39,754 continued: A.3.2 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 5,195,665 342,368 1,091,963 23,154,533 177,752,471 of which non-performing - - - - - 76,465 5,902 51,051 1,109,803 10,166,301 1.2 Partially secured - - - - - 9,320,779 694,158 633,569 2,906,857 100,829,444 of which non-performing - - - - - 248,542 46,890 24,479 110,301 1,285,933 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - 1,309,035 522,279 1,710,820 17,833,064 43,271,022 of which non-performing - - - - - 6,400 45,335 981 513,551 1,034,036 2.2 Partially secured - - - - - 1,270,985 452,544 22,523 2,732,760 9,070,826 of which non-performing - - - - - 3,112 4,011 85 30,085 148,021 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 316 2018 Annual Report and Accounts · UniCredit A.3.2 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASESSECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 193,330,195 179,300,121 84,964,335 12,530,066 37,226,287 13,247,254 of which non-performing 23,576,428 10,559,877 5,938,480 1,976,488 43,372 964,740 1.2 Partially secured 144,490,923 142,069,733 58,551,048 239,362 2,028,007 26,455,664 of which non-performing 3,351,324 1,730,392 604,636 47,241 26,693 177,151 2. Secured off-balance sheet credit exposures 2.1 Totally secured 43,682,821 43,450,542 2,617,400 - 6,502,085 12,776,339 of which non-performing 1,269,360 1,076,228 389,981 - 3,590 74,198 2.2 Partially secured 36,694,568 36,625,181 2,091,640 - 477,945 2,022,429 of which non-performing 382,298 326,966 29,784 - 41,190 39,754 continued: A.3.2 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 5,195,665 342,368 1,091,963 23,154,533 177,752,471 of which non-performing - - - - - 76,465 5,902 51,051 1,109,803 10,166,301 1.2 Partially secured - - - - - 9,320,779 694,158 633,569 2,906,857 100,829,444 of which non-performing - - - - - 248,542 46,890 24,479 110,301 1,285,933 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - 1,309,035 522,279 1,710,820 17,833,064 43,271,022 of which non-performing - - - - - 6,400 45,335 981 513,551 1,034,036 2.2 Partially secured - - - - - 1,270,985 452,544 22,523 2,732,760 9,070,826 of which non-performing - - - - - 3,112 4,011 85 30,085 148,021 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 316 2018 Annual Report and Accounts · UniCredit A.3.2 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASESSECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 193,330,195 179,300,121 84,964,335 12,530,066 37,226,287 13,247,254 of which non-performing 23,576,428 10,559,877 5,938,480 1,976,488 43,372 964,740 1.2 Partially secured 144,490,923 142,069,733 58,551,048 239,362 2,028,007 26,455,664 of which non-performing 3,351,324 1,730,392 604,636 47,241 26,693 177,151 2. Secured off-balance sheet credit exposures 2.1 Totally secured 43,682,821 43,450,542 2,617,400 - 6,502,085 12,776,339 of which non-performing 1,269,360 1,076,228 389,981 - 3,590 74,198 2.2 Partially secured 36,694,568 36,625,181 2,091,640 - 477,945 2,022,429 of which non-performing 382,298 326,966 29,784 - 41,190 39,754 continued: A.3.2 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 5,195,665 342,368 1,091,963 23,154,533 177,752,471 of which non-performing - - - - - 76,465 5,902 51,051 1,109,803 10,166,301 1.2 Partially secured - - - - - 9,320,779 694,158 633,569 2,906,857 100,829,444 of which non-performing - - - - - 248,542 46,890 24,479 110,301 1,285,933 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - 1,309,035 522,279 1,710,820 17,833,064 43,271,022 of which non-performing - - - - - 6,400 45,335 981 513,551 1,034,036 2.2 Partially secured - - - - - 1,270,985 452,544 22,523 2,732,760 9,070,826 of which non-performing - - - - - 3,112 4,011 85 30,085 148,021 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 316 2018 Annual Report and Accounts · UniCredit A.3.2 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASESSECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 193,330,195 179,300,121 84,964,335 12,530,066 37,226,287 13,247,254 of which non-performing 23,576,428 10,559,877 5,938,480 1,976,488 43,372 964,740 1.2 Partially secured 144,490,923 142,069,733 58,551,048 239,362 2,028,007 26,455,664 of which non-performing 3,351,324 1,730,392 604,636 47,241 26,693 177,151 2. Secured off-balance sheet credit exposures 2.1 Totally secured 43,682,821 43,450,542 2,617,400 - 6,502,085 12,776,339 of which non-performing 1,269,360 1,076,228 389,981 - 3,590 74,198 2.2 Partially secured 36,694,568 36,625,181 2,091,640 - 477,945 2,022,429 of which non-performing 382,298 326,966 29,784 - 41,190 39,754 continued: A.3.2 Regulatory consolidation - Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 5,195,665 342,368 1,091,963 23,154,533 177,752,471 of which non-performing - - - - - 76,465 5,902 51,051 1,109,803 10,166,301 1.2 Partially secured - - - - - 9,320,779 694,158 633,569 2,906,857 100,829,444 of which non-performing - - - - - 248,542 46,890 24,479 110,301 1,285,933 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - 1,309,035 522,279 1,710,820 17,833,064 43,271,022 of which non-performing - - - - - 6,400 45,335 981 513,551 1,034,036 2.2 Partially secured - - - - - 1,270,985 452,544 22,523 2,732,760 9,070,826 of which non-performing - - - - - 3,112 4,011 85 30,085 148,021 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 317 A.4 Regulatory consolidation - Financial and non-financial assets obtained by taking possession of collaterals (€ '000) CANCELLED CREDIT EXPOSURE GROSS AMOUNT OVERALL WRITE-DOWNS CARRYING VALUE OF WHICH OBTAINED DURING THE YEAR A. Property, plant and equipment 401,839 393,725 77,600 316,125 183,734 A.1 Used in business 1,082 1,220 497 723 - A.2 Held for investment 29,351 41,192 20,617 20,575 3,292 A.3 Inventories 371,406 351,313 56,486 294,827 180,442 B. Equity instruments and debt securities - 4,500 4,074 426 - C. Other assets - 1,505 - 1,505 - D. Non-current assets and disposal groups classified as held for sale - - - - 8,590 D.1 Property, plant and equipment - - - - 8,590 D.2 Other assets - - - - - Total 12.31.2018 401,839 399,730 81,674 318,056 192,324 B. Distribution and concentration of credit exposures B.1 Regulatory consolidation - Distribution by segment of on-balance and off-balance sheet credit exposures with customers (€ '000) GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES FINANCIAL COMPANIES FINANCIAL COMPANIES (OF WHICH INSURANCE COMPANIES) NON-FINANCIAL COMPANIES HOUSEHOLDS EXPOSURES/COUNTERPARTIES NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 56,860 108,564 155,893 437,658 4,904 3,929 3,926,514 10,355,151 1,798,961 5,043,589 of which: forborne exposures - 1,648 62,400 110,378 3,709 3,409 860,540 2,033,440 356,459 711,871 A.2 Unlikely to pay 206,373 19,991 759,613 454,551 1,022 448 6,552,915 6,654,156 1,512,677 823,977 of which: forborne exposures 166 311 524,608 360,201 1,022 448 4,017,426 3,767,177 867,688 450,972 A.3 Non-performing past-due 3,535 717 4,731 3,936 1 1 596,480 190,673 360,574 213,760 of which: forborne exposures - - 20 12 - - 158,458 31,597 24,273 13,817 A.4 Performing exposures 153,599,324 100,791 82,602,754 154,729 3,612,889 1,151 261,162,122 1,471,424 126,855,863 1,178,556 of which: forborne exposures 1,055 1 74,536 3,521 2,354 - 3,103,754 160,642 2,009,294 224,517 Total (A) 153,866,092 230,063 83,522,991 1,050,874 3,618,816 5,529 272,238,031 18,671,404 130,528,075 7,259,882 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,638 3 92,885 39,589 368 137 3,587,440 885,335 65,051 5,926 B.2 Performing exsposures 14,517,468 5,422 46,821,035 25,870 1,517,081 523 225,104,562 200,124 20,701,407 25,601 Total (B) 14,520,106 5,425 46,913,920 65,459 1,517,449 660 228,692,002 1,085,459 20,766,458 31,527 Total (A + B) 12.31.2018 168,386,198 235,488 130,436,911 1,116,333 5,136,265 6,189 500,930,033 19,756,863 151,294,533 7,291,409 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 317 A.4 Regulatory consolidation - Financial and non-financial assets obtained by taking possession of collaterals (€ '000) CANCELLED CREDIT EXPOSURE GROSS AMOUNT OVERALL WRITE-DOWNS CARRYING VALUE OF WHICH OBTAINED DURING THE YEAR A. Property, plant and equipment 401,839 393,725 77,600 316,125 183,734 A.1 Used in business 1,082 1,220 497 723 - A.2 Held for investment 29,351 41,192 20,617 20,575 3,292 A.3 Inventories 371,406 351,313 56,486 294,827 180,442 B. Equity instruments and debt securities - 4,500 4,074 426 - C. Other assets - 1,505 - 1,505 - D. Non-current assets and disposal groups classified as held for sale - - - - 8,590 D.1 Property, plant and equipment - - - - 8,590 D.2 Other assets - - - - - Total 12.31.2018 401,839 399,730 81,674 318,056 192,324 B. Distribution and concentration of credit exposures B.1 Regulatory consolidation - Distribution by segment of on-balance and off-balance sheet credit exposures with customers (€ '000) GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES FINANCIAL COMPANIES FINANCIAL COMPANIES (OF WHICH INSURANCE COMPANIES) NON-FINANCIAL COMPANIES HOUSEHOLDS EXPOSURES/COUNTERPARTIES NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 56,860 108,564 155,893 437,658 4,904 3,929 3,926,514 10,355,151 1,798,961 5,043,589 of which: forborne exposures - 1,648 62,400 110,378 3,709 3,409 860,540 2,033,440 356,459 711,871 A.2 Unlikely to pay 206,373 19,991 759,613 454,551 1,022 448 6,552,915 6,654,156 1,512,677 823,977 of which: forborne exposures 166 311 524,608 360,201 1,022 448 4,017,426 3,767,177 867,688 450,972 A.3 Non-performing past-due 3,535 717 4,731 3,936 1 1 596,480 190,673 360,574 213,760 of which: forborne exposures - - 20 12 - - 158,458 31,597 24,273 13,817 A.4 Performing exposures 153,599,324 100,791 82,602,754 154,729 3,612,889 1,151 261,162,122 1,471,424 126,855,863 1,178,556 of which: forborne exposures 1,055 1 74,536 3,521 2,354 - 3,103,754 160,642 2,009,294 224,517 Total (A) 153,866,092 230,063 83,522,991 1,050,874 3,618,816 5,529 272,238,031 18,671,404 130,528,075 7,259,882 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,638 3 92,885 39,589 368 137 3,587,440 885,335 65,051 5,926 B.2 Performing exsposures 14,517,468 5,422 46,821,035 25,870 1,517,081 523 225,104,562 200,124 20,701,407 25,601 Total (B) 14,520,106 5,425 46,913,920 65,459 1,517,449 660 228,692,002 1,085,459 20,766,458 31,527 Total (A + B) 12.31.2018 168,386,198 235,488 130,436,911 1,116,333 5,136,265 6,189 500,930,033 19,756,863 151,294,533 7,291,409 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 317 A.4 Regulatory consolidation - Financial and non-financial assets obtained by taking possession of collaterals (€ '000) CANCELLED CREDIT EXPOSURE GROSS AMOUNT OVERALL WRITE-DOWNS CARRYING VALUE OF WHICH OBTAINED DURING THE YEAR A. Property, plant and equipment 401,839 393,725 77,600 316,125 183,734 A.1 Used in business 1,082 1,220 497 723 - A.2 Held for investment 29,351 41,192 20,617 20,575 3,292 A.3 Inventories 371,406 351,313 56,486 294,827 180,442 B. Equity instruments and debt securities - 4,500 4,074 426 - C. Other assets - 1,505 - 1,505 - D. Non-current assets and disposal groups classified as held for sale - - - - 8,590 D.1 Property, plant and equipment - - - - 8,590 D.2 Other assets - - - - - Total 12.31.2018 401,839 399,730 81,674 318,056 192,324 B. Distribution and concentration of credit exposures B.1 Regulatory consolidation - Distribution by segment of on-balance and off-balance sheet credit exposures with customers (€ '000) GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES FINANCIAL COMPANIES FINANCIAL COMPANIES (OF WHICH INSURANCE COMPANIES) NON-FINANCIAL COMPANIES HOUSEHOLDS EXPOSURES/COUNTERPARTIES NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 56,860 108,564 155,893 437,658 4,904 3,929 3,926,514 10,355,151 1,798,961 5,043,589 of which: forborne exposures - 1,648 62,400 110,378 3,709 3,409 860,540 2,033,440 356,459 711,871 A.2 Unlikely to pay 206,373 19,991 759,613 454,551 1,022 448 6,552,915 6,654,156 1,512,677 823,977 of which: forborne exposures 166 311 524,608 360,201 1,022 448 4,017,426 3,767,177 867,688 450,972 A.3 Non-performing past-due 3,535 717 4,731 3,936 1 1 596,480 190,673 360,574 213,760 of which: forborne exposures - - 20 12 - - 158,458 31,597 24,273 13,817 A.4 Performing exposures 153,599,324 100,791 82,602,754 154,729 3,612,889 1,151 261,162,122 1,471,424 126,855,863 1,178,556 of which: forborne exposures 1,055 1 74,536 3,521 2,354 - 3,103,754 160,642 2,009,294 224,517 Total (A) 153,866,092 230,063 83,522,991 1,050,874 3,618,816 5,529 272,238,031 18,671,404 130,528,075 7,259,882 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,638 3 92,885 39,589 368 137 3,587,440 885,335 65,051 5,926 B.2 Performing exsposures 14,517,468 5,422 46,821,035 25,870 1,517,081 523 225,104,562 200,124 20,701,407 25,601 Total (B) 14,520,106 5,425 46,913,920 65,459 1,517,449 660 228,692,002 1,085,459 20,766,458 31,527 Total (A + B) 12.31.2018 168,386,198 235,488 130,436,911 1,116,333 5,136,265 6,189 500,930,033 19,756,863 151,294,533 7,291,409 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 317 A.4 Regulatory consolidation - Financial and non-financial assets obtained by taking possession of collaterals (€ '000) CANCELLED CREDIT EXPOSURE GROSS AMOUNT OVERALL WRITE-DOWNS CARRYING VALUE OF WHICH OBTAINED DURING THE YEAR A. Property, plant and equipment 401,839 393,725 77,600 316,125 183,734 A.1 Used in business 1,082 1,220 497 723 - A.2 Held for investment 29,351 41,192 20,617 20,575 3,292 A.3 Inventories 371,406 351,313 56,486 294,827 180,442 B. Equity instruments and debt securities - 4,500 4,074 426 - C. Other assets - 1,505 - 1,505 - D. Non-current assets and disposal groups classified as held for sale - - - - 8,590 D.1 Property, plant and equipment - - - - 8,590 D.2 Other assets - - - - - Total 12.31.2018 401,839 399,730 81,674 318,056 192,324 B. Distribution and concentration of credit exposures B.1 Regulatory consolidation - Distribution by segment of on-balance and off-balance sheet credit exposures with customers (€ '000) GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES FINANCIAL COMPANIES FINANCIAL COMPANIES (OF WHICH INSURANCE COMPANIES) NON-FINANCIAL COMPANIES HOUSEHOLDS EXPOSURES/COUNTERPARTIES NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 56,860 108,564 155,893 437,658 4,904 3,929 3,926,514 10,355,151 1,798,961 5,043,589 of which: forborne exposures - 1,648 62,400 110,378 3,709 3,409 860,540 2,033,440 356,459 711,871 A.2 Unlikely to pay 206,373 19,991 759,613 454,551 1,022 448 6,552,915 6,654,156 1,512,677 823,977 of which: forborne exposures 166 311 524,608 360,201 1,022 448 4,017,426 3,767,177 867,688 450,972 A.3 Non-performing past-due 3,535 717 4,731 3,936 1 1 596,480 190,673 360,574 213,760 of which: forborne exposures - - 20 12 - - 158,458 31,597 24,273 13,817 A.4 Performing exposures 153,599,324 100,791 82,602,754 154,729 3,612,889 1,151 261,162,122 1,471,424 126,855,863 1,178,556 of which: forborne exposures 1,055 1 74,536 3,521 2,354 - 3,103,754 160,642 2,009,294 224,517 Total (A) 153,866,092 230,063 83,522,991 1,050,874 3,618,816 5,529 272,238,031 18,671,404 130,528,075 7,259,882 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,638 3 92,885 39,589 368 137 3,587,440 885,335 65,051 5,926 B.2 Performing exsposures 14,517,468 5,422 46,821,035 25,870 1,517,081 523 225,104,562 200,124 20,701,407 25,601 Total (B) 14,520,106 5,425 46,913,920 65,459 1,517,449 660 228,692,002 1,085,459 20,766,458 31,527 Total (A + B) 12.31.2018 168,386,198 235,488 130,436,911 1,116,333 5,136,265 6,189 500,930,033 19,756,863 151,294,533 7,291,409 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 317 A.4 Regulatory consolidation - Financial and non-financial assets obtained by taking possession of collaterals (€ '000) CANCELLED CREDIT EXPOSURE GROSS AMOUNT OVERALL WRITE-DOWNS CARRYING VALUE OF WHICH OBTAINED DURING THE YEAR A. Property, plant and equipment 401,839 393,725 77,600 316,125 183,734 A.1 Used in business 1,082 1,220 497 723 - A.2 Held for investment 29,351 41,192 20,617 20,575 3,292 A.3 Inventories 371,406 351,313 56,486 294,827 180,442 B. Equity instruments and debt securities - 4,500 4,074 426 - C. Other assets - 1,505 - 1,505 - D. Non-current assets and disposal groups classified as held for sale - - - - 8,590 D.1 Property, plant and equipment - - - - 8,590 D.2 Other assets - - - - - Total 12.31.2018 401,839 399,730 81,674 318,056 192,324 B. Distribution and concentration of credit exposures B.1 Regulatory consolidation - Distribution by segment of on-balance and off-balance sheet credit exposures with customers (€ '000) GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES FINANCIAL COMPANIES FINANCIAL COMPANIES (OF WHICH INSURANCE COMPANIES) NON-FINANCIAL COMPANIES HOUSEHOLDS EXPOSURES/COUNTERPARTIES NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 56,860 108,564 155,893 437,658 4,904 3,929 3,926,514 10,355,151 1,798,961 5,043,589 of which: forborne exposures - 1,648 62,400 110,378 3,709 3,409 860,540 2,033,440 356,459 711,871 A.2 Unlikely to pay 206,373 19,991 759,613 454,551 1,022 448 6,552,915 6,654,156 1,512,677 823,977 of which: forborne exposures 166 311 524,608 360,201 1,022 448 4,017,426 3,767,177 867,688 450,972 A.3 Non-performing past-due 3,535 717 4,731 3,936 1 1 596,480 190,673 360,574 213,760 of which: forborne exposures - - 20 12 - - 158,458 31,597 24,273 13,817 A.4 Performing exposures 153,599,324 100,791 82,602,754 154,729 3,612,889 1,151 261,162,122 1,471,424 126,855,863 1,178,556 of which: forborne exposures 1,055 1 74,536 3,521 2,354 - 3,103,754 160,642 2,009,294 224,517 Total (A) 153,866,092 230,063 83,522,991 1,050,874 3,618,816 5,529 272,238,031 18,671,404 130,528,075 7,259,882 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,638 3 92,885 39,589 368 137 3,587,440 885,335 65,051 5,926 B.2 Performing exsposures 14,517,468 5,422 46,821,035 25,870 1,517,081 523 225,104,562 200,124 20,701,407 25,601 Total (B) 14,520,106 5,425 46,913,920 65,459 1,517,449 660 228,692,002 1,085,459 20,766,458 31,527 Total (A + B) 12.31.2018 168,386,198 235,488 130,436,911 1,116,333 5,136,265 6,189 500,930,033 19,756,863 151,294,533 7,291,409 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 318 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.1 Banking Group - Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES GOVERNMENTS OTHER PUBLIC ENTITIES FINANCIAL COMPANIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 4,259 20,805 X 73,563 65,432 X 193,097 579,832 X - of which: forborne exposures 19 36 X 2 2,695 X 69,786 72,923 X A.2 Unlikely to pay 158,534 9,357 X 25,278 10,268 X 734,146 439,456 X - of which: forborne exposures - - X 299 888 X 515,562 284,104 X A.3 Non-Performing past-due 1,019 269 X 8,002 1,502 X 1,576 1,328 X - of which: forborne exposures - - X - - X 126 53 X A.4 Performing exposures 120,616,140 X 9,378 29,027,381 X 53,654 64,466,686 X 112,046 - of which: forborne exposures 266 X - - X - 157,860 X 987 Total A 120,779,952 30,431 9,378 29,134,224 77,202 53,654 65,395,505 1,020,616 112,046 B. Off-balance sheet exposures B.1 Bad exposures - - X 149 - X 23,716 2,789 X B.2. Unlikely to pay 603 - X - - X 111,896 1,384 X B.3 Other Non-Performing exposures 21 2 X 559 33 X - - X B.4 Performing exposures 7,902,168 X 579 8,836,687 X 1,721 28,846,192 X 6,976 Total B 7,902,792 2 579 8,837,395 33 1,721 28,981,804 4,173 6,976 Total (A+B) 12.31.2017 128,682,744 30,433 9,957 37,971,619 77,235 55,375 94,377,309 1,024,789 119,022 Continued: B.1 Banking Group - Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES INSURANCE COMPANIES NON-FINANCIAL COMPANIES OTHER ENTITIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 3,746 4,232 X 5,750,459 13,229,621 X 3,659,011 5,057,152 X - of which: forborne exposures 3,727 4,171 X 1,671,597 2,105,083 X 371,011 378,980 X A.2 Unlikely to pay 1,527 97 X 8,952,469 7,515,349 X 1,684,686 808,197 X - of which: forborne exposures 1,527 97 X 5,472,708 4,267,957 X 1,001,717 426,885 X A.3 Non-Performing past-due - - X 325,285 135,295 X 464,617 334,665 X - of which: forborne exposures - - X 31,002 27,209 X 22,830 8,569 X A.4 Performing exposures 1,850,282 X 982 255,557,098 X 1,351,803 114,691,932 X 566,825 - of which: forborne exposures 9,397 X 69 3,419,065 X 109,134 2,505,594 X 154,576 Total A 1,855,555 4,329 982 270,585,311 20,880,265 1,351,803 120,500,246 6,200,014 566,825 B. Off-balance sheet exposures B.1 Bad exposures 348 22 X 468,911 199,732 X 2,807 560 X B.2. Unlikely to pay 11 144 X 1,276,760 414,604 X 2,790 936 X B.3 Other Non-Performing exposures - - X 14,271 1,780 X 51,166 33,609 X B.4 Performing exposures 2,216,390 X 518 121,489,709 X 95,904 22,847,023 X 12,684 Total B 2,216,749 166 518 123,249,651 616,116 95,904 22,903,786 35,105 12,684 Total (A+B) 12.31.2017 4,072,304 4,495 1,500 393,834,962 21,496,381 1,447,707 143,404,032 6,235,119 579,509 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 318 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.1 Banking Group - Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES GOVERNMENTS OTHER PUBLIC ENTITIES FINANCIAL COMPANIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 4,259 20,805 X 73,563 65,432 X 193,097 579,832 X - of which: forborne exposures 19 36 X 2 2,695 X 69,786 72,923 X A.2 Unlikely to pay 158,534 9,357 X 25,278 10,268 X 734,146 439,456 X - of which: forborne exposures - - X 299 888 X 515,562 284,104 X A.3 Non-Performing past-due 1,019 269 X 8,002 1,502 X 1,576 1,328 X - of which: forborne exposures - - X - - X 126 53 X A.4 Performing exposures 120,616,140 X 9,378 29,027,381 X 53,654 64,466,686 X 112,046 - of which: forborne exposures 266 X - - X - 157,860 X 987 Total A 120,779,952 30,431 9,378 29,134,224 77,202 53,654 65,395,505 1,020,616 112,046 B. Off-balance sheet exposures B.1 Bad exposures - - X 149 - X 23,716 2,789 X B.2. Unlikely to pay 603 - X - - X 111,896 1,384 X B.3 Other Non-Performing exposures 21 2 X 559 33 X - - X B.4 Performing exposures 7,902,168 X 579 8,836,687 X 1,721 28,846,192 X 6,976 Total B 7,902,792 2 579 8,837,395 33 1,721 28,981,804 4,173 6,976 Total (A+B) 12.31.2017 128,682,744 30,433 9,957 37,971,619 77,235 55,375 94,377,309 1,024,789 119,022 Continued: B.1 Banking Group - Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES INSURANCE COMPANIES NON-FINANCIAL COMPANIES OTHER ENTITIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 3,746 4,232 X 5,750,459 13,229,621 X 3,659,011 5,057,152 X - of which: forborne exposures 3,727 4,171 X 1,671,597 2,105,083 X 371,011 378,980 X A.2 Unlikely to pay 1,527 97 X 8,952,469 7,515,349 X 1,684,686 808,197 X - of which: forborne exposures 1,527 97 X 5,472,708 4,267,957 X 1,001,717 426,885 X A.3 Non-Performing past-due - - X 325,285 135,295 X 464,617 334,665 X - of which: forborne exposures - - X 31,002 27,209 X 22,830 8,569 X A.4 Performing exposures 1,850,282 X 982 255,557,098 X 1,351,803 114,691,932 X 566,825 - of which: forborne exposures 9,397 X 69 3,419,065 X 109,134 2,505,594 X 154,576 Total A 1,855,555 4,329 982 270,585,311 20,880,265 1,351,803 120,500,246 6,200,014 566,825 B. Off-balance sheet exposures B.1 Bad exposures 348 22 X 468,911 199,732 X 2,807 560 X B.2. Unlikely to pay 11 144 X 1,276,760 414,604 X 2,790 936 X B.3 Other Non-Performing exposures - - X 14,271 1,780 X 51,166 33,609 X B.4 Performing exposures 2,216,390 X 518 121,489,709 X 95,904 22,847,023 X 12,684 Total B 2,216,749 166 518 123,249,651 616,116 95,904 22,903,786 35,105 12,684 Total (A+B) 12.31.2017 4,072,304 4,495 1,500 393,834,962 21,496,381 1,447,707 143,404,032 6,235,119 579,509 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 318 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.1 Banking Group - Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES GOVERNMENTS OTHER PUBLIC ENTITIES FINANCIAL COMPANIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 4,259 20,805 X 73,563 65,432 X 193,097 579,832 X - of which: forborne exposures 19 36 X 2 2,695 X 69,786 72,923 X A.2 Unlikely to pay 158,534 9,357 X 25,278 10,268 X 734,146 439,456 X - of which: forborne exposures - - X 299 888 X 515,562 284,104 X A.3 Non-Performing past-due 1,019 269 X 8,002 1,502 X 1,576 1,328 X - of which: forborne exposures - - X - - X 126 53 X A.4 Performing exposures 120,616,140 X 9,378 29,027,381 X 53,654 64,466,686 X 112,046 - of which: forborne exposures 266 X - - X - 157,860 X 987 Total A 120,779,952 30,431 9,378 29,134,224 77,202 53,654 65,395,505 1,020,616 112,046 B. Off-balance sheet exposures B.1 Bad exposures - - X 149 - X 23,716 2,789 X B.2. Unlikely to pay 603 - X - - X 111,896 1,384 X B.3 Other Non-Performing exposures 21 2 X 559 33 X - - X B.4 Performing exposures 7,902,168 X 579 8,836,687 X 1,721 28,846,192 X 6,976 Total B 7,902,792 2 579 8,837,395 33 1,721 28,981,804 4,173 6,976 Total (A+B) 12.31.2017 128,682,744 30,433 9,957 37,971,619 77,235 55,375 94,377,309 1,024,789 119,022 Continued: B.1 Banking Group - Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES INSURANCE COMPANIES NON-FINANCIAL COMPANIES OTHER ENTITIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 3,746 4,232 X 5,750,459 13,229,621 X 3,659,011 5,057,152 X - of which: forborne exposures 3,727 4,171 X 1,671,597 2,105,083 X 371,011 378,980 X A.2 Unlikely to pay 1,527 97 X 8,952,469 7,515,349 X 1,684,686 808,197 X - of which: forborne exposures 1,527 97 X 5,472,708 4,267,957 X 1,001,717 426,885 X A.3 Non-Performing past-due - - X 325,285 135,295 X 464,617 334,665 X - of which: forborne exposures - - X 31,002 27,209 X 22,830 8,569 X A.4 Performing exposures 1,850,282 X 982 255,557,098 X 1,351,803 114,691,932 X 566,825 - of which: forborne exposures 9,397 X 69 3,419,065 X 109,134 2,505,594 X 154,576 Total A 1,855,555 4,329 982 270,585,311 20,880,265 1,351,803 120,500,246 6,200,014 566,825 B. Off-balance sheet exposures B.1 Bad exposures 348 22 X 468,911 199,732 X 2,807 560 X B.2. Unlikely to pay 11 144 X 1,276,760 414,604 X 2,790 936 X B.3 Other Non-Performing exposures - - X 14,271 1,780 X 51,166 33,609 X B.4 Performing exposures 2,216,390 X 518 121,489,709 X 95,904 22,847,023 X 12,684 Total B 2,216,749 166 518 123,249,651 616,116 95,904 22,903,786 35,105 12,684 Total (A+B) 12.31.2017 4,072,304 4,495 1,500 393,834,962 21,496,381 1,447,707 143,404,032 6,235,119 579,509 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 318 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.1 Banking Group - Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES GOVERNMENTS OTHER PUBLIC ENTITIES FINANCIAL COMPANIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 4,259 20,805 X 73,563 65,432 X 193,097 579,832 X - of which: forborne exposures 19 36 X 2 2,695 X 69,786 72,923 X A.2 Unlikely to pay 158,534 9,357 X 25,278 10,268 X 734,146 439,456 X - of which: forborne exposures - - X 299 888 X 515,562 284,104 X A.3 Non-Performing past-due 1,019 269 X 8,002 1,502 X 1,576 1,328 X - of which: forborne exposures - - X - - X 126 53 X A.4 Performing exposures 120,616,140 X 9,378 29,027,381 X 53,654 64,466,686 X 112,046 - of which: forborne exposures 266 X - - X - 157,860 X 987 Total A 120,779,952 30,431 9,378 29,134,224 77,202 53,654 65,395,505 1,020,616 112,046 B. Off-balance sheet exposures B.1 Bad exposures - - X 149 - X 23,716 2,789 X B.2. Unlikely to pay 603 - X - - X 111,896 1,384 X B.3 Other Non-Performing exposures 21 2 X 559 33 X - - X B.4 Performing exposures 7,902,168 X 579 8,836,687 X 1,721 28,846,192 X 6,976 Total B 7,902,792 2 579 8,837,395 33 1,721 28,981,804 4,173 6,976 Total (A+B) 12.31.2017 128,682,744 30,433 9,957 37,971,619 77,235 55,375 94,377,309 1,024,789 119,022 Continued: B.1 Banking Group - Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES INSURANCE COMPANIES NON-FINANCIAL COMPANIES OTHER ENTITIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 3,746 4,232 X 5,750,459 13,229,621 X 3,659,011 5,057,152 X - of which: forborne exposures 3,727 4,171 X 1,671,597 2,105,083 X 371,011 378,980 X A.2 Unlikely to pay 1,527 97 X 8,952,469 7,515,349 X 1,684,686 808,197 X - of which: forborne exposures 1,527 97 X 5,472,708 4,267,957 X 1,001,717 426,885 X A.3 Non-Performing past-due - - X 325,285 135,295 X 464,617 334,665 X - of which: forborne exposures - - X 31,002 27,209 X 22,830 8,569 X A.4 Performing exposures 1,850,282 X 982 255,557,098 X 1,351,803 114,691,932 X 566,825 - of which: forborne exposures 9,397 X 69 3,419,065 X 109,134 2,505,594 X 154,576 Total A 1,855,555 4,329 982 270,585,311 20,880,265 1,351,803 120,500,246 6,200,014 566,825 B. Off-balance sheet exposures B.1 Bad exposures 348 22 X 468,911 199,732 X 2,807 560 X B.2. Unlikely to pay 11 144 X 1,276,760 414,604 X 2,790 936 X B.3 Other Non-Performing exposures - - X 14,271 1,780 X 51,166 33,609 X B.4 Performing exposures 2,216,390 X 518 121,489,709 X 95,904 22,847,023 X 12,684 Total B 2,216,749 166 518 123,249,651 616,116 95,904 22,903,786 35,105 12,684 Total (A+B) 12.31.2017 4,072,304 4,495 1,500 393,834,962 21,496,381 1,447,707 143,404,032 6,235,119 579,509 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 318 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.1 Banking Group - Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES GOVERNMENTS OTHER PUBLIC ENTITIES FINANCIAL COMPANIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 4,259 20,805 X 73,563 65,432 X 193,097 579,832 X - of which: forborne exposures 19 36 X 2 2,695 X 69,786 72,923 X A.2 Unlikely to pay 158,534 9,357 X 25,278 10,268 X 734,146 439,456 X - of which: forborne exposures - - X 299 888 X 515,562 284,104 X A.3 Non-Performing past-due 1,019 269 X 8,002 1,502 X 1,576 1,328 X - of which: forborne exposures - - X - - X 126 53 X A.4 Performing exposures 120,616,140 X 9,378 29,027,381 X 53,654 64,466,686 X 112,046 - of which: forborne exposures 266 X - - X - 157,860 X 987 Total A 120,779,952 30,431 9,378 29,134,224 77,202 53,654 65,395,505 1,020,616 112,046 B. Off-balance sheet exposures B.1 Bad exposures - - X 149 - X 23,716 2,789 X B.2. Unlikely to pay 603 - X - - X 111,896 1,384 X B.3 Other Non-Performing exposures 21 2 X 559 33 X - - X B.4 Performing exposures 7,902,168 X 579 8,836,687 X 1,721 28,846,192 X 6,976 Total B 7,902,792 2 579 8,837,395 33 1,721 28,981,804 4,173 6,976 Total (A+B) 12.31.2017 128,682,744 30,433 9,957 37,971,619 77,235 55,375 94,377,309 1,024,789 119,022 Continued: B.1 Banking Group - Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES INSURANCE COMPANIES NON-FINANCIAL COMPANIES OTHER ENTITIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 3,746 4,232 X 5,750,459 13,229,621 X 3,659,011 5,057,152 X - of which: forborne exposures 3,727 4,171 X 1,671,597 2,105,083 X 371,011 378,980 X A.2 Unlikely to pay 1,527 97 X 8,952,469 7,515,349 X 1,684,686 808,197 X - of which: forborne exposures 1,527 97 X 5,472,708 4,267,957 X 1,001,717 426,885 X A.3 Non-Performing past-due - - X 325,285 135,295 X 464,617 334,665 X - of which: forborne exposures - - X 31,002 27,209 X 22,830 8,569 X A.4 Performing exposures 1,850,282 X 982 255,557,098 X 1,351,803 114,691,932 X 566,825 - of which: forborne exposures 9,397 X 69 3,419,065 X 109,134 2,505,594 X 154,576 Total A 1,855,555 4,329 982 270,585,311 20,880,265 1,351,803 120,500,246 6,200,014 566,825 B. Off-balance sheet exposures B.1 Bad exposures 348 22 X 468,911 199,732 X 2,807 560 X B.2. Unlikely to pay 11 144 X 1,276,760 414,604 X 2,790 936 X B.3 Other Non-Performing exposures - - X 14,271 1,780 X 51,166 33,609 X B.4 Performing exposures 2,216,390 X 518 121,489,709 X 95,904 22,847,023 X 12,684 Total B 2,216,749 166 518 123,249,651 616,116 95,904 22,903,786 35,105 12,684 Total (A+B) 12.31.2017 4,072,304 4,495 1,500 393,834,962 21,496,381 1,447,707 143,404,032 6,235,119 579,509 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 319 B.2 Regulatory consolidation - Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 4,327,772 11,826,651 1,451,687 3,939,243 60,849 89,959 32,463 32,771 65,457 56,338 A.2 Unlikely to pay 6,587,248 5,848,115 2,149,995 2,016,966 97,163 52,000 2,977 426 194,195 35,168 A.3 Non-performing past-due 398,660 163,575 560,952 244,415 4,000 434 285 301 1,423 361 A.4 Performing exposures 268,967,656 1,356,024 327,137,300 1,487,444 10,402,814 28,051 12,145,348 16,926 5,566,945 17,055 Total (A) 280,281,336 19,194,365 331,299,934 7,688,068 10,564,826 170,444 12,181,073 50,424 5,828,020 108,922 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,908,681 396,903 754,298 514,126 83,098 18,270 483 153 1,454 1,401 B.2 Performing exposures 116,918,692 70,569 169,832,849 172,940 15,948,434 7,442 3,935,574 5,333 508,923 733 Total (B) 119,827,373 467,472 170,587,147 687,066 16,031,532 25,712 3,936,057 5,486 510,377 2,134 Total (A+B) 12.31.2018 400,108,709 19,661,837 501,887,081 8,375,134 26,596,358 196,156 16,117,130 55,910 6,338,397 111,056 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.2 Banking group - Distribution of On- and off-balance sheet credit exposures with customers by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures 7,618,371 14,038,581 1,733,532 4,280,123 60,228 48,191 45,960 22,522 226,044 567,657 A.2 Unlileky to pay 8,398,603 6,601,358 2,770,013 2,009,406 65,063 48,618 13,372 428 309,589 122,914 A.3 Non-Performing past-due exposures 440,289 260,149 210,883 150,233 8,441 789 143 392 140,743 61,496 A.4 Performing exposures 248,477,128 949,122 298,761,367 953,946 8,199,177 41,756 6,931,256 29,167 23,840,591 120,697 Total A 264,934,391 21,849,210 303,475,795 7,393,708 8,332,909 139,354 6,990,731 52,509 24,516,967 872,764 B. Off-balance sheet exposures B.1 Bad exposures 104,108 39,374 312,126 159,487 73,758 4,211 5,747 - 198 29 B.2 Unlikely to pay 1,087,059 217,933 296,065 186,339 5,270 10,491 2,562 - 1,104 2,305 B.3 Other Non-Performing exposures 10,486 855 5,645 1,210 18 - - - 49,862 33,361 B.4 Performing exposures 53,755,582 28,418 104,042,217 71,596 12,910,557 6,116 2,410,542 5,135 19,019,271 7,117 Total B 54,957,235 286,580 104,656,053 418,632 12,989,603 20,818 2,418,851 5,135 19,070,435 42,812 Total A+B 12.31.2017 319,891,626 22,135,790 408,131,848 7,812,340 21,322,512 160,172 9,409,582 57,644 43,587,402 915,576 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 319 B.2 Regulatory consolidation - Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 4,327,772 11,826,651 1,451,687 3,939,243 60,849 89,959 32,463 32,771 65,457 56,338 A.2 Unlikely to pay 6,587,248 5,848,115 2,149,995 2,016,966 97,163 52,000 2,977 426 194,195 35,168 A.3 Non-performing past-due 398,660 163,575 560,952 244,415 4,000 434 285 301 1,423 361 A.4 Performing exposures 268,967,656 1,356,024 327,137,300 1,487,444 10,402,814 28,051 12,145,348 16,926 5,566,945 17,055 Total (A) 280,281,336 19,194,365 331,299,934 7,688,068 10,564,826 170,444 12,181,073 50,424 5,828,020 108,922 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,908,681 396,903 754,298 514,126 83,098 18,270 483 153 1,454 1,401 B.2 Performing exposures 116,918,692 70,569 169,832,849 172,940 15,948,434 7,442 3,935,574 5,333 508,923 733 Total (B) 119,827,373 467,472 170,587,147 687,066 16,031,532 25,712 3,936,057 5,486 510,377 2,134 Total (A+B) 12.31.2018 400,108,709 19,661,837 501,887,081 8,375,134 26,596,358 196,156 16,117,130 55,910 6,338,397 111,056 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.2 Banking group - Distribution of On- and off-balance sheet credit exposures with customers by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures 7,618,371 14,038,581 1,733,532 4,280,123 60,228 48,191 45,960 22,522 226,044 567,657 A.2 Unlileky to pay 8,398,603 6,601,358 2,770,013 2,009,406 65,063 48,618 13,372 428 309,589 122,914 A.3 Non-Performing past-due exposures 440,289 260,149 210,883 150,233 8,441 789 143 392 140,743 61,496 A.4 Performing exposures 248,477,128 949,122 298,761,367 953,946 8,199,177 41,756 6,931,256 29,167 23,840,591 120,697 Total A 264,934,391 21,849,210 303,475,795 7,393,708 8,332,909 139,354 6,990,731 52,509 24,516,967 872,764 B. Off-balance sheet exposures B.1 Bad exposures 104,108 39,374 312,126 159,487 73,758 4,211 5,747 - 198 29 B.2 Unlikely to pay 1,087,059 217,933 296,065 186,339 5,270 10,491 2,562 - 1,104 2,305 B.3 Other Non-Performing exposures 10,486 855 5,645 1,210 18 - - - 49,862 33,361 B.4 Performing exposures 53,755,582 28,418 104,042,217 71,596 12,910,557 6,116 2,410,542 5,135 19,019,271 7,117 Total B 54,957,235 286,580 104,656,053 418,632 12,989,603 20,818 2,418,851 5,135 19,070,435 42,812 Total A+B 12.31.2017 319,891,626 22,135,790 408,131,848 7,812,340 21,322,512 160,172 9,409,582 57,644 43,587,402 915,576 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 319 B.2 Regulatory consolidation - Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 4,327,772 11,826,651 1,451,687 3,939,243 60,849 89,959 32,463 32,771 65,457 56,338 A.2 Unlikely to pay 6,587,248 5,848,115 2,149,995 2,016,966 97,163 52,000 2,977 426 194,195 35,168 A.3 Non-performing past-due 398,660 163,575 560,952 244,415 4,000 434 285 301 1,423 361 A.4 Performing exposures 268,967,656 1,356,024 327,137,300 1,487,444 10,402,814 28,051 12,145,348 16,926 5,566,945 17,055 Total (A) 280,281,336 19,194,365 331,299,934 7,688,068 10,564,826 170,444 12,181,073 50,424 5,828,020 108,922 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,908,681 396,903 754,298 514,126 83,098 18,270 483 153 1,454 1,401 B.2 Performing exposures 116,918,692 70,569 169,832,849 172,940 15,948,434 7,442 3,935,574 5,333 508,923 733 Total (B) 119,827,373 467,472 170,587,147 687,066 16,031,532 25,712 3,936,057 5,486 510,377 2,134 Total (A+B) 12.31.2018 400,108,709 19,661,837 501,887,081 8,375,134 26,596,358 196,156 16,117,130 55,910 6,338,397 111,056 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.2 Banking group - Distribution of On- and off-balance sheet credit exposures with customers by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures 7,618,371 14,038,581 1,733,532 4,280,123 60,228 48,191 45,960 22,522 226,044 567,657 A.2 Unlileky to pay 8,398,603 6,601,358 2,770,013 2,009,406 65,063 48,618 13,372 428 309,589 122,914 A.3 Non-Performing past-due exposures 440,289 260,149 210,883 150,233 8,441 789 143 392 140,743 61,496 A.4 Performing exposures 248,477,128 949,122 298,761,367 953,946 8,199,177 41,756 6,931,256 29,167 23,840,591 120,697 Total A 264,934,391 21,849,210 303,475,795 7,393,708 8,332,909 139,354 6,990,731 52,509 24,516,967 872,764 B. Off-balance sheet exposures B.1 Bad exposures 104,108 39,374 312,126 159,487 73,758 4,211 5,747 - 198 29 B.2 Unlikely to pay 1,087,059 217,933 296,065 186,339 5,270 10,491 2,562 - 1,104 2,305 B.3 Other Non-Performing exposures 10,486 855 5,645 1,210 18 - - - 49,862 33,361 B.4 Performing exposures 53,755,582 28,418 104,042,217 71,596 12,910,557 6,116 2,410,542 5,135 19,019,271 7,117 Total B 54,957,235 286,580 104,656,053 418,632 12,989,603 20,818 2,418,851 5,135 19,070,435 42,812 Total A+B 12.31.2017 319,891,626 22,135,790 408,131,848 7,812,340 21,322,512 160,172 9,409,582 57,644 43,587,402 915,576 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 319 B.2 Regulatory consolidation - Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 4,327,772 11,826,651 1,451,687 3,939,243 60,849 89,959 32,463 32,771 65,457 56,338 A.2 Unlikely to pay 6,587,248 5,848,115 2,149,995 2,016,966 97,163 52,000 2,977 426 194,195 35,168 A.3 Non-performing past-due 398,660 163,575 560,952 244,415 4,000 434 285 301 1,423 361 A.4 Performing exposures 268,967,656 1,356,024 327,137,300 1,487,444 10,402,814 28,051 12,145,348 16,926 5,566,945 17,055 Total (A) 280,281,336 19,194,365 331,299,934 7,688,068 10,564,826 170,444 12,181,073 50,424 5,828,020 108,922 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,908,681 396,903 754,298 514,126 83,098 18,270 483 153 1,454 1,401 B.2 Performing exposures 116,918,692 70,569 169,832,849 172,940 15,948,434 7,442 3,935,574 5,333 508,923 733 Total (B) 119,827,373 467,472 170,587,147 687,066 16,031,532 25,712 3,936,057 5,486 510,377 2,134 Total (A+B) 12.31.2018 400,108,709 19,661,837 501,887,081 8,375,134 26,596,358 196,156 16,117,130 55,910 6,338,397 111,056 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.2 Banking group - Distribution of On- and off-balance sheet credit exposures with customers by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures 7,618,371 14,038,581 1,733,532 4,280,123 60,228 48,191 45,960 22,522 226,044 567,657 A.2 Unlileky to pay 8,398,603 6,601,358 2,770,013 2,009,406 65,063 48,618 13,372 428 309,589 122,914 A.3 Non-Performing past-due exposures 440,289 260,149 210,883 150,233 8,441 789 143 392 140,743 61,496 A.4 Performing exposures 248,477,128 949,122 298,761,367 953,946 8,199,177 41,756 6,931,256 29,167 23,840,591 120,697 Total A 264,934,391 21,849,210 303,475,795 7,393,708 8,332,909 139,354 6,990,731 52,509 24,516,967 872,764 B. Off-balance sheet exposures B.1 Bad exposures 104,108 39,374 312,126 159,487 73,758 4,211 5,747 - 198 29 B.2 Unlikely to pay 1,087,059 217,933 296,065 186,339 5,270 10,491 2,562 - 1,104 2,305 B.3 Other Non-Performing exposures 10,486 855 5,645 1,210 18 - - - 49,862 33,361 B.4 Performing exposures 53,755,582 28,418 104,042,217 71,596 12,910,557 6,116 2,410,542 5,135 19,019,271 7,117 Total B 54,957,235 286,580 104,656,053 418,632 12,989,603 20,818 2,418,851 5,135 19,070,435 42,812 Total A+B 12.31.2017 319,891,626 22,135,790 408,131,848 7,812,340 21,322,512 160,172 9,409,582 57,644 43,587,402 915,576 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 319 B.2 Regulatory consolidation - Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 4,327,772 11,826,651 1,451,687 3,939,243 60,849 89,959 32,463 32,771 65,457 56,338 A.2 Unlikely to pay 6,587,248 5,848,115 2,149,995 2,016,966 97,163 52,000 2,977 426 194,195 35,168 A.3 Non-performing past-due 398,660 163,575 560,952 244,415 4,000 434 285 301 1,423 361 A.4 Performing exposures 268,967,656 1,356,024 327,137,300 1,487,444 10,402,814 28,051 12,145,348 16,926 5,566,945 17,055 Total (A) 280,281,336 19,194,365 331,299,934 7,688,068 10,564,826 170,444 12,181,073 50,424 5,828,020 108,922 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,908,681 396,903 754,298 514,126 83,098 18,270 483 153 1,454 1,401 B.2 Performing exposures 116,918,692 70,569 169,832,849 172,940 15,948,434 7,442 3,935,574 5,333 508,923 733 Total (B) 119,827,373 467,472 170,587,147 687,066 16,031,532 25,712 3,936,057 5,486 510,377 2,134 Total (A+B) 12.31.2018 400,108,709 19,661,837 501,887,081 8,375,134 26,596,358 196,156 16,117,130 55,910 6,338,397 111,056 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.2 Banking group - Distribution of On- and off-balance sheet credit exposures with customers by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures 7,618,371 14,038,581 1,733,532 4,280,123 60,228 48,191 45,960 22,522 226,044 567,657 A.2 Unlileky to pay 8,398,603 6,601,358 2,770,013 2,009,406 65,063 48,618 13,372 428 309,589 122,914 A.3 Non-Performing past-due exposures 440,289 260,149 210,883 150,233 8,441 789 143 392 140,743 61,496 A.4 Performing exposures 248,477,128 949,122 298,761,367 953,946 8,199,177 41,756 6,931,256 29,167 23,840,591 120,697 Total A 264,934,391 21,849,210 303,475,795 7,393,708 8,332,909 139,354 6,990,731 52,509 24,516,967 872,764 B. Off-balance sheet exposures B.1 Bad exposures 104,108 39,374 312,126 159,487 73,758 4,211 5,747 - 198 29 B.2 Unlikely to pay 1,087,059 217,933 296,065 186,339 5,270 10,491 2,562 - 1,104 2,305 B.3 Other Non-Performing exposures 10,486 855 5,645 1,210 18 - - - 49,862 33,361 B.4 Performing exposures 53,755,582 28,418 104,042,217 71,596 12,910,557 6,116 2,410,542 5,135 19,019,271 7,117 Total B 54,957,235 286,580 104,656,053 418,632 12,989,603 20,818 2,418,851 5,135 19,070,435 42,812 Total A+B 12.31.2017 319,891,626 22,135,790 408,131,848 7,812,340 21,322,512 160,172 9,409,582 57,644 43,587,402 915,576 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 320 2018 Annual Report and Accounts · UniCredit B.3 Regulatory consolidation - Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - 5,590 - - 346 35,120 - - A.2 Unlikely to pay - - - - - 3,508 - - - - A.3 Non-performing past-due - - - - - - - 26 - - A.4 Performing exposures 11,177,468 2,605 71,829,382 27,097 3,399,112 676 4,110,081 6,105 1,251,324 511 Total (A) 11,177,468 2,605 71,829,382 32,687 3,399,112 4,184 4,110,427 41,251 1,251,324 511 B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - 254 - - - B.2 Performing exposures 1,744,312 721 23,692,591 5,634 1,310,748 140 6,270,611 3,408 1,612,539 789 Total (B) 1,744,312 721 23,692,591 5,634 1,310,748 140 6,270,865 3,408 1,612,539 789 Total (A+B) 12.31.2018 12,921,780 3,326 95,521,973 38,321 4,709,860 4,324 10,381,292 44,659 2,863,863 1,300 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.3 Banking Group - Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - 20 9,727 158 5,432 - 33,912 - - A.2 Unlikely to pay - - - - 4,995 1,174 - 17 - - A.3 Non-Performing past-due - - 5 - - - - 26 - - A.4 Performing exposures 9,596,806 3,361 68,942,785 12,617 3,143,676 530 2,833,404 7,806 5,994,335 980 Total A 9,596,806 3,361 68,942,810 22,344 3,148,829 7,136 2,833,404 41,761 5,994,335 980 B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - - - B.2 Unlikely to pay - - 117 - 2,333 2,334 - - - - B.3 Other Non-Performing exposures - - - - - - - - - - B.4 Performing exposures 1,825,613 306 25,655,756 4,808 2,987,399 292 2,312,188 4,444 1,219,364 1,605 Total B 1,825,613 306 25,655,873 4,808 2,989,732 2,626 2,312,188 4,444 1,219,364 1,605 Total A+B 12.31.2017 11,422,419 3,667 94,598,683 27,152 6,138,561 9,762 5,145,592 46,205 7,213,699 2,585 B.4 Large exposures 12.31.2018 a) Amount book value (€ million) 251,920 b) Amount weighted value (€ million) 10,989 c) Number 9 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 320 2018 Annual Report and Accounts · UniCredit B.3 Regulatory consolidation - Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - 5,590 - - 346 35,120 - - A.2 Unlikely to pay - - - - - 3,508 - - - - A.3 Non-performing past-due - - - - - - - 26 - - A.4 Performing exposures 11,177,468 2,605 71,829,382 27,097 3,399,112 676 4,110,081 6,105 1,251,324 511 Total (A) 11,177,468 2,605 71,829,382 32,687 3,399,112 4,184 4,110,427 41,251 1,251,324 511 B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - 254 - - - B.2 Performing exposures 1,744,312 721 23,692,591 5,634 1,310,748 140 6,270,611 3,408 1,612,539 789 Total (B) 1,744,312 721 23,692,591 5,634 1,310,748 140 6,270,865 3,408 1,612,539 789 Total (A+B) 12.31.2018 12,921,780 3,326 95,521,973 38,321 4,709,860 4,324 10,381,292 44,659 2,863,863 1,300 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.3 Banking Group - Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - 20 9,727 158 5,432 - 33,912 - - A.2 Unlikely to pay - - - - 4,995 1,174 - 17 - - A.3 Non-Performing past-due - - 5 - - - - 26 - - A.4 Performing exposures 9,596,806 3,361 68,942,785 12,617 3,143,676 530 2,833,404 7,806 5,994,335 980 Total A 9,596,806 3,361 68,942,810 22,344 3,148,829 7,136 2,833,404 41,761 5,994,335 980 B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - - - B.2 Unlikely to pay - - 117 - 2,333 2,334 - - - - B.3 Other Non-Performing exposures - - - - - - - - - - B.4 Performing exposures 1,825,613 306 25,655,756 4,808 2,987,399 292 2,312,188 4,444 1,219,364 1,605 Total B 1,825,613 306 25,655,873 4,808 2,989,732 2,626 2,312,188 4,444 1,219,364 1,605 Total A+B 12.31.2017 11,422,419 3,667 94,598,683 27,152 6,138,561 9,762 5,145,592 46,205 7,213,699 2,585 B.4 Large exposures 12.31.2018 a) Amount book value (€ million) 251,920 b) Amount weighted value (€ million) 10,989 c) Number 9 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 320 2018 Annual Report and Accounts · UniCredit B.3 Regulatory consolidation - Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - 5,590 - - 346 35,120 - - A.2 Unlikely to pay - - - - - 3,508 - - - - A.3 Non-performing past-due - - - - - - - 26 - - A.4 Performing exposures 11,177,468 2,605 71,829,382 27,097 3,399,112 676 4,110,081 6,105 1,251,324 511 Total (A) 11,177,468 2,605 71,829,382 32,687 3,399,112 4,184 4,110,427 41,251 1,251,324 511 B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - 254 - - - B.2 Performing exposures 1,744,312 721 23,692,591 5,634 1,310,748 140 6,270,611 3,408 1,612,539 789 Total (B) 1,744,312 721 23,692,591 5,634 1,310,748 140 6,270,865 3,408 1,612,539 789 Total (A+B) 12.31.2018 12,921,780 3,326 95,521,973 38,321 4,709,860 4,324 10,381,292 44,659 2,863,863 1,300 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.3 Banking Group - Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - 20 9,727 158 5,432 - 33,912 - - A.2 Unlikely to pay - - - - 4,995 1,174 - 17 - - A.3 Non-Performing past-due - - 5 - - - - 26 - - A.4 Performing exposures 9,596,806 3,361 68,942,785 12,617 3,143,676 530 2,833,404 7,806 5,994,335 980 Total A 9,596,806 3,361 68,942,810 22,344 3,148,829 7,136 2,833,404 41,761 5,994,335 980 B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - - - B.2 Unlikely to pay - - 117 - 2,333 2,334 - - - - B.3 Other Non-Performing exposures - - - - - - - - - - B.4 Performing exposures 1,825,613 306 25,655,756 4,808 2,987,399 292 2,312,188 4,444 1,219,364 1,605 Total B 1,825,613 306 25,655,873 4,808 2,989,732 2,626 2,312,188 4,444 1,219,364 1,605 Total A+B 12.31.2017 11,422,419 3,667 94,598,683 27,152 6,138,561 9,762 5,145,592 46,205 7,213,699 2,585 B.4 Large exposures 12.31.2018 a) Amount book value (€ million) 251,920 b) Amount weighted value (€ million) 10,989 c) Number 9 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 320 2018 Annual Report and Accounts · UniCredit B.3 Regulatory consolidation - Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - 5,590 - - 346 35,120 - - A.2 Unlikely to pay - - - - - 3,508 - - - - A.3 Non-performing past-due - - - - - - - 26 - - A.4 Performing exposures 11,177,468 2,605 71,829,382 27,097 3,399,112 676 4,110,081 6,105 1,251,324 511 Total (A) 11,177,468 2,605 71,829,382 32,687 3,399,112 4,184 4,110,427 41,251 1,251,324 511 B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - 254 - - - B.2 Performing exposures 1,744,312 721 23,692,591 5,634 1,310,748 140 6,270,611 3,408 1,612,539 789 Total (B) 1,744,312 721 23,692,591 5,634 1,310,748 140 6,270,865 3,408 1,612,539 789 Total (A+B) 12.31.2018 12,921,780 3,326 95,521,973 38,321 4,709,860 4,324 10,381,292 44,659 2,863,863 1,300 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.3 Banking Group - Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - 20 9,727 158 5,432 - 33,912 - - A.2 Unlikely to pay - - - - 4,995 1,174 - 17 - - A.3 Non-Performing past-due - - 5 - - - - 26 - - A.4 Performing exposures 9,596,806 3,361 68,942,785 12,617 3,143,676 530 2,833,404 7,806 5,994,335 980 Total A 9,596,806 3,361 68,942,810 22,344 3,148,829 7,136 2,833,404 41,761 5,994,335 980 B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - - - B.2 Unlikely to pay - - 117 - 2,333 2,334 - - - - B.3 Other Non-Performing exposures - - - - - - - - - - B.4 Performing exposures 1,825,613 306 25,655,756 4,808 2,987,399 292 2,312,188 4,444 1,219,364 1,605 Total B 1,825,613 306 25,655,873 4,808 2,989,732 2,626 2,312,188 4,444 1,219,364 1,605 Total A+B 12.31.2017 11,422,419 3,667 94,598,683 27,152 6,138,561 9,762 5,145,592 46,205 7,213,699 2,585 B.4 Large exposures 12.31.2018 a) Amount book value (€ million) 251,920 b) Amount weighted value (€ million) 10,989 c) Number 9 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 320 2018 Annual Report and Accounts · UniCredit B.3 Regulatory consolidation - Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - 5,590 - - 346 35,120 - - A.2 Unlikely to pay - - - - - 3,508 - - - - A.3 Non-performing past-due - - - - - - - 26 - - A.4 Performing exposures 11,177,468 2,605 71,829,382 27,097 3,399,112 676 4,110,081 6,105 1,251,324 511 Total (A) 11,177,468 2,605 71,829,382 32,687 3,399,112 4,184 4,110,427 41,251 1,251,324 511 B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - 254 - - - B.2 Performing exposures 1,744,312 721 23,692,591 5,634 1,310,748 140 6,270,611 3,408 1,612,539 789 Total (B) 1,744,312 721 23,692,591 5,634 1,310,748 140 6,270,865 3,408 1,612,539 789 Total (A+B) 12.31.2018 12,921,780 3,326 95,521,973 38,321 4,709,860 4,324 10,381,292 44,659 2,863,863 1,300 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.3 Banking Group - Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - 20 9,727 158 5,432 - 33,912 - - A.2 Unlikely to pay - - - - 4,995 1,174 - 17 - - A.3 Non-Performing past-due - - 5 - - - - 26 - - A.4 Performing exposures 9,596,806 3,361 68,942,785 12,617 3,143,676 530 2,833,404 7,806 5,994,335 980 Total A 9,596,806 3,361 68,942,810 22,344 3,148,829 7,136 2,833,404 41,761 5,994,335 980 B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - - - B.2 Unlikely to pay - - 117 - 2,333 2,334 - - - - B.3 Other Non-Performing exposures - - - - - - - - - - B.4 Performing exposures 1,825,613 306 25,655,756 4,808 2,987,399 292 2,312,188 4,444 1,219,364 1,605 Total B 1,825,613 306 25,655,873 4,808 2,989,732 2,626 2,312,188 4,444 1,219,364 1,605 Total A+B 12.31.2017 11,422,419 3,667 94,598,683 27,152 6,138,561 9,762 5,145,592 46,205 7,213,699 2,585 B.4 Large exposures 12.31.2018 a) Amount book value (€ million) 251,920 b) Amount weighted value (€ million) 10,989 c) Number 9 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 321 C. Securitisation transactions Qualitative information In securitisation transactions the Group plays, as the case may be, the role of originator, sponsor or investor. The Group as originator The Group’s origination of traditional transactions consists in the sale of on-balance sheet receivables portfolios to vehicles set up as securitisation companies under Law 130/99 or similar non-Italian legislation. The transferee company finances the purchase of the receivables portfolios by issuing bonds of varying seniority and transfers its issue proceeds to the Group. The yield and maturity of the bonds issued by the buyer therefore mainly depend on the cash flow expected from the assets being sold. As a further form of security to bondholders, these transactions may include special types of credit enhancement, e.g., subordinated loans, financial guarantees, standby letters of credit, etc. The Group’s objectives when carrying out these transactions are usually the following: • to originate securities that can be used to secure repos with Banca d’Italia and the ECB (i.e. counterbalancing capacity); • to obtain funding through the placement of securities on the market. This also allows a diversification of the funding sources and of the investors’ basis with improvements in reducing the cost of Group’s funding; • to free up economic and regulatory capital by carrying out transactions that reduce capital requirements under current rules by reducing credit risk of the underlying portfolio; • to reduce the exposures towards non-performing customers; • to optimise the recoveries of exposures portfolios towards non-performing customers, referring to specific asset classes (e.g. Pillarstone and Sandokan transactions). The Group carries out both traditional securitisations whereby the receivables portfolio is sold to the SPV and synthetic securitisations which use financial guarantees to purchase protection over all or part of the underlying credit risk of the portfolio. The latter, on the contrary to traditional securitisations, is not sold to vehicles but remains also legally within the Group. Under traditional securitisations generally the Group, in addition to provide servicing role, retains the first loss in the form of junior bonds or similar exposure and in some cases provides further credit enhancement as described above. This enables the Group to benefit from the portion of the sold receivables’ yield in excess of the yield due to the senior and mezzanine tranches. Retention by the Group of the first loss risk and the corresponding yield means that most of the risk and return on the portfolio is retained. Consequently these transactions are recognised in the accounts as loans and no profits arising out of the transfer of the assets are recognised and the sold receivables are not derecognised. In the consolidated financial statements, exposure to the variability deriving from maintenance of the risk of first loss together with the role of servicer of the underlying assets determines control by the Group over these securitisation vehicles. Therefore they are subject to full consolidation. Differently, in order to improve the quality of its assets and optimise the capital allocation, the Group also carries out transactions that involve the portfolios’ derecognition and the related significant risk transfer, by subscribing a limited portion of securities issued by vehicles of securitisation, in compliance with the rules for maintaining a net economic interest in the securitisation transaction according to the current regulatory requirements (Retention Rule). Eventually, synthetic securitisations also entail retention of the receivables subject to credit default protection on the balance sheet. Moreover, the financial guarantees purchased as protection of such receivables are also booked on the balance sheet as well as the impacts on the income statement related to them. The Group's main objectives in its securitisation transactions (whether traditional or synthetic) are the optimisation of the loan portfolio by freeing up regulatory and economic capital and obtaining fresh liquidity together with greater diversification of its sources of funding. The crisis in the markets experienced since the second half of 2007 made it advisable to use securitisation as a means of increasing counterbalancing capacity, i.e. the availability of assets that can be readily used to create liquidity, by retaining the securities issued by the vehicle within the Group. Eventually traditional securitisations have been used also for corporate re-organisation’s purposes, for assets deleveraging, for business projects’ purposes or for recovery’s activity and sale of non-performing loans as well. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 321 C. Securitisation transactions Qualitative information In securitisation transactions the Group plays, as the case may be, the role of originator, sponsor or investor. The Group as originator The Group’s origination of traditional transactions consists in the sale of on-balance sheet receivables portfolios to vehicles set up as securitisation companies under Law 130/99 or similar non-Italian legislation. The transferee company finances the purchase of the receivables portfolios by issuing bonds of varying seniority and transfers its issue proceeds to the Group. The yield and maturity of the bonds issued by the buyer therefore mainly depend on the cash flow expected from the assets being sold. As a further form of security to bondholders, these transactions may include special types of credit enhancement, e.g., subordinated loans, financial guarantees, standby letters of credit, etc. The Group’s objectives when carrying out these transactions are usually the following: • to originate securities that can be used to secure repos with Banca d’Italia and the ECB (i.e. counterbalancing capacity); • to obtain funding through the placement of securities on the market. This also allows a diversification of the funding sources and of the investors’ basis with improvements in reducing the cost of Group’s funding; • to free up economic and regulatory capital by carrying out transactions that reduce capital requirements under current rules by reducing credit risk of the underlying portfolio; • to reduce the exposures towards non-performing customers; • to optimise the recoveries of exposures portfolios towards non-performing customers, referring to specific asset classes (e.g. Pillarstone and Sandokan transactions). The Group carries out both traditional securitisations whereby the receivables portfolio is sold to the SPV and synthetic securitisations which use financial guarantees to purchase protection over all or part of the underlying credit risk of the portfolio. The latter, on the contrary to traditional securitisations, is not sold to vehicles but remains also legally within the Group. Under traditional securitisations generally the Group, in addition to provide servicing role, retains the first loss in the form of junior bonds or similar exposure and in some cases provides further credit enhancement as described above. This enables the Group to benefit from the portion of the sold receivables’ yield in excess of the yield due to the senior and mezzanine tranches. Retention by the Group of the first loss risk and the corresponding yield means that most of the risk and return on the portfolio is retained. Consequently these transactions are recognised in the accounts as loans and no profits arising out of the transfer of the assets are recognised and the sold receivables are not derecognised. In the consolidated financial statements, exposure to the variability deriving from maintenance of the risk of first loss together with the role of servicer of the underlying assets determines control by the Group over these securitisation vehicles. Therefore they are subject to full consolidation. Differently, in order to improve the quality of its assets and optimise the capital allocation, the Group also carries out transactions that involve the portfolios’ derecognition and the related significant risk transfer, by subscribing a limited portion of securities issued by vehicles of securitisation, in compliance with the rules for maintaining a net economic interest in the securitisation transaction according to the current regulatory requirements (Retention Rule). Eventually, synthetic securitisations also entail retention of the receivables subject to credit default protection on the balance sheet. Moreover, the financial guarantees purchased as protection of such receivables are also booked on the balance sheet as well as the impacts on the income statement related to them. The Group's main objectives in its securitisation transactions (whether traditional or synthetic) are the optimisation of the loan portfolio by freeing up regulatory and economic capital and obtaining fresh liquidity together with greater diversification of its sources of funding. The crisis in the markets experienced since the second half of 2007 made it advisable to use securitisation as a means of increasing counterbalancing capacity, i.e. the availability of assets that can be readily used to create liquidity, by retaining the securities issued by the vehicle within the Group. Eventually traditional securitisations have been used also for corporate re-organisation’s purposes, for assets deleveraging, for business projects’ purposes or for recovery’s activity and sale of non-performing loans as well. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 321 C. Securitisation transactions Qualitative information In securitisation transactions the Group plays, as the case may be, the role of originator, sponsor or investor. The Group as originator The Group’s origination of traditional transactions consists in the sale of on-balance sheet receivables portfolios to vehicles set up as securitisation companies under Law 130/99 or similar non-Italian legislation. The transferee company finances the purchase of the receivables portfolios by issuing bonds of varying seniority and transfers its issue proceeds to the Group. The yield and maturity of the bonds issued by the buyer therefore mainly depend on the cash flow expected from the assets being sold. As a further form of security to bondholders, these transactions may include special types of credit enhancement, e.g., subordinated loans, financial guarantees, standby letters of credit, etc. The Group’s objectives when carrying out these transactions are usually the following: • to originate securities that can be used to secure repos with Banca d’Italia and the ECB (i.e. counterbalancing capacity); • to obtain funding through the placement of securities on the market. This also allows a diversification of the funding sources and of the investors’ basis with improvements in reducing the cost of Group’s funding; • to free up economic and regulatory capital by carrying out transactions that reduce capital requirements under current rules by reducing credit risk of the underlying portfolio; • to reduce the exposures towards non-performing customers; • to optimise the recoveries of exposures portfolios towards non-performing customers, referring to specific asset classes (e.g. Pillarstone and Sandokan transactions). The Group carries out both traditional securitisations whereby the receivables portfolio is sold to the SPV and synthetic securitisations which use financial guarantees to purchase protection over all or part of the underlying credit risk of the portfolio. The latter, on the contrary to traditional securitisations, is not sold to vehicles but remains also legally within the Group. Under traditional securitisations generally the Group, in addition to provide servicing role, retains the first loss in the form of junior bonds or similar exposure and in some cases provides further credit enhancement as described above. This enables the Group to benefit from the portion of the sold receivables’ yield in excess of the yield due to the senior and mezzanine tranches. Retention by the Group of the first loss risk and the corresponding yield means that most of the risk and return on the portfolio is retained. Consequently these transactions are recognised in the accounts as loans and no profits arising out of the transfer of the assets are recognised and the sold receivables are not derecognised. In the consolidated financial statements, exposure to the variability deriving from maintenance of the risk of first loss together with the role of servicer of the underlying assets determines control by the Group over these securitisation vehicles. Therefore they are subject to full consolidation. Differently, in order to improve the quality of its assets and optimise the capital allocation, the Group also carries out transactions that involve the portfolios’ derecognition and the related significant risk transfer, by subscribing a limited portion of securities issued by vehicles of securitisation, in compliance with the rules for maintaining a net economic interest in the securitisation transaction according to the current regulatory requirements (Retention Rule). Eventually, synthetic securitisations also entail retention of the receivables subject to credit default protection on the balance sheet. Moreover, the financial guarantees purchased as protection of such receivables are also booked on the balance sheet as well as the impacts on the income statement related to them. The Group's main objectives in its securitisation transactions (whether traditional or synthetic) are the optimisation of the loan portfolio by freeing up regulatory and economic capital and obtaining fresh liquidity together with greater diversification of its sources of funding. The crisis in the markets experienced since the second half of 2007 made it advisable to use securitisation as a means of increasing counterbalancing capacity, i.e. the availability of assets that can be readily used to create liquidity, by retaining the securities issued by the vehicle within the Group. Eventually traditional securitisations have been used also for corporate re-organisation’s purposes, for assets deleveraging, for business projects’ purposes or for recovery’s activity and sale of non-performing loans as well. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 321 C. Securitisation transactions Qualitative information In securitisation transactions the Group plays, as the case may be, the role of originator, sponsor or investor. The Group as originator The Group’s origination of traditional transactions consists in the sale of on-balance sheet receivables portfolios to vehicles set up as securitisation companies under Law 130/99 or similar non-Italian legislation. The transferee company finances the purchase of the receivables portfolios by issuing bonds of varying seniority and transfers its issue proceeds to the Group. The yield and maturity of the bonds issued by the buyer therefore mainly depend on the cash flow expected from the assets being sold. As a further form of security to bondholders, these transactions may include special types of credit enhancement, e.g., subordinated loans, financial guarantees, standby letters of credit, etc. The Group’s objectives when carrying out these transactions are usually the following: • to originate securities that can be used to secure repos with Banca d’Italia and the ECB (i.e. counterbalancing capacity); • to obtain funding through the placement of securities on the market. This also allows a diversification of the funding sources and of the investors’ basis with improvements in reducing the cost of Group’s funding; • to free up economic and regulatory capital by carrying out transactions that reduce capital requirements under current rules by reducing credit risk of the underlying portfolio; • to reduce the exposures towards non-performing customers; • to optimise the recoveries of exposures portfolios towards non-performing customers, referring to specific asset classes (e.g. Pillarstone and Sandokan transactions). The Group carries out both traditional securitisations whereby the receivables portfolio is sold to the SPV and synthetic securitisations which use financial guarantees to purchase protection over all or part of the underlying credit risk of the portfolio. The latter, on the contrary to traditional securitisations, is not sold to vehicles but remains also legally within the Group. Under traditional securitisations generally the Group, in addition to provide servicing role, retains the first loss in the form of junior bonds or similar exposure and in some cases provides further credit enhancement as described above. This enables the Group to benefit from the portion of the sold receivables’ yield in excess of the yield due to the senior and mezzanine tranches. Retention by the Group of the first loss risk and the corresponding yield means that most of the risk and return on the portfolio is retained. Consequently these transactions are recognised in the accounts as loans and no profits arising out of the transfer of the assets are recognised and the sold receivables are not derecognised. In the consolidated financial statements, exposure to the variability deriving from maintenance of the risk of first loss together with the role of servicer of the underlying assets determines control by the Group over these securitisation vehicles. Therefore they are subject to full consolidation. Differently, in order to improve the quality of its assets and optimise the capital allocation, the Group also carries out transactions that involve the portfolios’ derecognition and the related significant risk transfer, by subscribing a limited portion of securities issued by vehicles of securitisation, in compliance with the rules for maintaining a net economic interest in the securitisation transaction according to the current regulatory requirements (Retention Rule). Eventually, synthetic securitisations also entail retention of the receivables subject to credit default protection on the balance sheet. Moreover, the financial guarantees purchased as protection of such receivables are also booked on the balance sheet as well as the impacts on the income statement related to them. The Group's main objectives in its securitisation transactions (whether traditional or synthetic) are the optimisation of the loan portfolio by freeing up regulatory and economic capital and obtaining fresh liquidity together with greater diversification of its sources of funding. The crisis in the markets experienced since the second half of 2007 made it advisable to use securitisation as a means of increasing counterbalancing capacity, i.e. the availability of assets that can be readily used to create liquidity, by retaining the securities issued by the vehicle within the Group. Eventually traditional securitisations have been used also for corporate re-organisation’s purposes, for assets deleveraging, for business projects’ purposes or for recovery’s activity and sale of non-performing loans as well. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 321 C. Securitisation transactions Qualitative information In securitisation transactions the Group plays, as the case may be, the role of originator, sponsor or investor. The Group as originator The Group’s origination of traditional transactions consists in the sale of on-balance sheet receivables portfolios to vehicles set up as securitisation companies under Law 130/99 or similar non-Italian legislation. The transferee company finances the purchase of the receivables portfolios by issuing bonds of varying seniority and transfers its issue proceeds to the Group. The yield and maturity of the bonds issued by the buyer therefore mainly depend on the cash flow expected from the assets being sold. As a further form of security to bondholders, these transactions may include special types of credit enhancement, e.g., subordinated loans, financial guarantees, standby letters of credit, etc. The Group’s objectives when carrying out these transactions are usually the following: • to originate securities that can be used to secure repos with Banca d’Italia and the ECB (i.e. counterbalancing capacity); • to obtain funding through the placement of securities on the market. This also allows a diversification of the funding sources and of the investors’ basis with improvements in reducing the cost of Group’s funding; • to free up economic and regulatory capital by carrying out transactions that reduce capital requirements under current rules by reducing credit risk of the underlying portfolio; • to reduce the exposures towards non-performing customers; • to optimise the recoveries of exposures portfolios towards non-performing customers, referring to specific asset classes (e.g. Pillarstone and Sandokan transactions). The Group carries out both traditional securitisations whereby the receivables portfolio is sold to the SPV and synthetic securitisations which use financial guarantees to purchase protection over all or part of the underlying credit risk of the portfolio. The latter, on the contrary to traditional securitisations, is not sold to vehicles but remains also legally within the Group. Under traditional securitisations generally the Group, in addition to provide servicing role, retains the first loss in the form of junior bonds or similar exposure and in some cases provides further credit enhancement as described above. This enables the Group to benefit from the portion of the sold receivables’ yield in excess of the yield due to the senior and mezzanine tranches. Retention by the Group of the first loss risk and the corresponding yield means that most of the risk and return on the portfolio is retained. Consequently these transactions are recognised in the accounts as loans and no profits arising out of the transfer of the assets are recognised and the sold receivables are not derecognised. In the consolidated financial statements, exposure to the variability deriving from maintenance of the risk of first loss together with the role of servicer of the underlying assets determines control by the Group over these securitisation vehicles. Therefore they are subject to full consolidation. Differently, in order to improve the quality of its assets and optimise the capital allocation, the Group also carries out transactions that involve the portfolios’ derecognition and the related significant risk transfer, by subscribing a limited portion of securities issued by vehicles of securitisation, in compliance with the rules for maintaining a net economic interest in the securitisation transaction according to the current regulatory requirements (Retention Rule). Eventually, synthetic securitisations also entail retention of the receivables subject to credit default protection on the balance sheet. Moreover, the financial guarantees purchased as protection of such receivables are also booked on the balance sheet as well as the impacts on the income statement related to them. The Group's main objectives in its securitisation transactions (whether traditional or synthetic) are the optimisation of the loan portfolio by freeing up regulatory and economic capital and obtaining fresh liquidity together with greater diversification of its sources of funding. The crisis in the markets experienced since the second half of 2007 made it advisable to use securitisation as a means of increasing counterbalancing capacity, i.e. the availability of assets that can be readily used to create liquidity, by retaining the securities issued by the vehicle within the Group. Eventually traditional securitisations have been used also for corporate re-organisation’s purposes, for assets deleveraging, for business projects’ purposes or for recovery’s activity and sale of non-performing loans as well. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 322 2018 Annual Report and Accounts · UniCredit Analysis and realisation of securitisation transactions are carried out within the Parent in close cooperation with the Group originator entities involved and with UniCredit Bank AG, as preferred counterparty, as Arranger and potential Investment Banking. This process requires an economic feasibility study to assess the impact of transactions (according to their nature and aims), on regulatory and economic capital, on risk-adjusted profitability measures and on the level of Group’s liquidity. If this initial phase produces a positive result, a technical and operational feasibility study is carried out to identify the assets to be securitised and define the structure of the transaction. Once technical feasibility has been established, the transaction is realised. Eventually it should be noted that "self-securitisations" and transactions in warehousing phase are not included in the quantitative tables of Part C, as required by regulations. Developments of the period The Group makes limited use of this type of transactions. The amount of securitised loans28, net of the transactions in which the Group has acquired all the liabilities issued by the SPVs (the so-called self-securitisations), accounts for 2.02% of the Group’s credit portfolio. Self-securitisations in turn account for 3.08% of the loan portfolio. During 2018 the Group carried out four new synthetic transactions by UniCredit S.p.A.: • Agribond 2; • Bond del Mezzogiorno 1; • Bond Italia 5 bis; • Puglia Sviluppo 1. Details are given in the tables published in the “Annexes”, which also describe transactions, traditional and synthetic, carried out in previous financial years. It should also be noted that, again during 2018: • the transactions Locat SV - Serie 2006, Geldilux-TS-2013 and Caesar Finance, all traditional transactions, were closed; • on November, UniCredit S.p.A. increased the amount of Consumer Three transaction, “self-securitisation” issued in 2016 for counterbalance capacity purpose, with the sale of a new portfolio and the issue of new notes by the vehicle amounting to €2 billion. The Group as sponsor The Group defines the role of sponsor as that performed by an entity, other than the transferor, which organises and administers a securitisation or asset-backed commercial paper structure in which financial assets are purchased from third parties. The Group acts as sponsor of asset backed commercial paper vehicles (i.e. commercial paper issuing conduits) set up in order to allow customers the access to the securitisations’ market (multi-seller Customer conduits). Customer conduits require the formation and management of a bankruptcy-remote company (i.e., one that would be immune from any financial difficulties of the originator) which directly or indirectly buys receivables created by companies outside the Group. The receivables underlying these transactions are not bought directly by the conduit set up by the Group, but by a purchase company which in turn is wholly funded by the conduit by means of commercial paper or medium term notes. In some circumstances purchase companies fund further SPVs which buy loan portfolio. The main purpose of these transactions is to give corporate customers access to the securitisation market and thus to lower funding costs than would be borne with direct funding. The conduits’ purchase of assets is financed by short-term commercial paper and medium-term note issues. Payment of interest and redemption of the securities issued by the conduit therefore depends on cash flow from the receivables purchased (credit risk) and the ability of the conduit to roll over or replace its market funding on maturity (liquidity risk). To guarantee prompt redemption of the securities issued by the conduit, these transactions are guaranteed by a standby letter of credit covering the risk of default both of specific assets and of the whole programme. The underwriters of issued securities also benefit from security provided by specific liquidity lines which the conduit may use if it unable to place new commercial paper to repay maturing paper, e.g. during market turmoil. These liquidity lines may not however be used to guarantee redemption of securities issued by the conduit in the event of default by the underlying assets. 28 We refer to loans sold, also synthetically, but not derecognised from balance sheet. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 322 2018 Annual Report and Accounts · UniCredit Analysis and realisation of securitisation transactions are carried out within the Parent in close cooperation with the Group originator entities involved and with UniCredit Bank AG, as preferred counterparty, as Arranger and potential Investment Banking. This process requires an economic feasibility study to assess the impact of transactions (according to their nature and aims), on regulatory and economic capital, on risk-adjusted profitability measures and on the level of Group’s liquidity. If this initial phase produces a positive result, a technical and operational feasibility study is carried out to identify the assets to be securitised and define the structure of the transaction. Once technical feasibility has been established, the transaction is realised. Eventually it should be noted that "self-securitisations" and transactions in warehousing phase are not included in the quantitative tables of Part C, as required by regulations. Developments of the period The Group makes limited use of this type of transactions. The amount of securitised loans28, net of the transactions in which the Group has acquired all the liabilities issued by the SPVs (the so-called self-securitisations), accounts for 2.02% of the Group’s credit portfolio. Self-securitisations in turn account for 3.08% of the loan portfolio. During 2018 the Group carried out four new synthetic transactions by UniCredit S.p.A.: • Agribond 2; • Bond del Mezzogiorno 1; • Bond Italia 5 bis; • Puglia Sviluppo 1. Details are given in the tables published in the “Annexes”, which also describe transactions, traditional and synthetic, carried out in previous financial years. It should also be noted that, again during 2018: • the transactions Locat SV - Serie 2006, Geldilux-TS-2013 and Caesar Finance, all traditional transactions, were closed; • on November, UniCredit S.p.A. increased the amount of Consumer Three transaction, “self-securitisation” issued in 2016 for counterbalance capacity purpose, with the sale of a new portfolio and the issue of new notes by the vehicle amounting to €2 billion. The Group as sponsor The Group defines the role of sponsor as that performed by an entity, other than the transferor, which organises and administers a securitisation or asset-backed commercial paper structure in which financial assets are purchased from third parties. The Group acts as sponsor of asset backed commercial paper vehicles (i.e. commercial paper issuing conduits) set up in order to allow customers the access to the securitisations’ market (multi-seller Customer conduits). Customer conduits require the formation and management of a bankruptcy-remote company (i.e., one that would be immune from any financial difficulties of the originator) which directly or indirectly buys receivables created by companies outside the Group. The receivables underlying these transactions are not bought directly by the conduit set up by the Group, but by a purchase company which in turn is wholly funded by the conduit by means of commercial paper or medium term notes. In some circumstances purchase companies fund further SPVs which buy loan portfolio. The main purpose of these transactions is to give corporate customers access to the securitisation market and thus to lower funding costs than would be borne with direct funding. The conduits’ purchase of assets is financed by short-term commercial paper and medium-term note issues. Payment of interest and redemption of the securities issued by the conduit therefore depends on cash flow from the receivables purchased (credit risk) and the ability of the conduit to roll over or replace its market funding on maturity (liquidity risk). To guarantee prompt redemption of the securities issued by the conduit, these transactions are guaranteed by a standby letter of credit covering the risk of default both of specific assets and of the whole programme. The underwriters of issued securities also benefit from security provided by specific liquidity lines which the conduit may use if it unable to place new commercial paper to repay maturing paper, e.g. during market turmoil. These liquidity lines may not however be used to guarantee redemption of securities issued by the conduit in the event of default by the underlying assets. 28 We refer to loans sold, also synthetically, but not derecognised from balance sheet. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 322 2018 Annual Report and Accounts · UniCredit Analysis and realisation of securitisation transactions are carried out within the Parent in close cooperation with the Group originator entities involved and with UniCredit Bank AG, as preferred counterparty, as Arranger and potential Investment Banking. This process requires an economic feasibility study to assess the impact of transactions (according to their nature and aims), on regulatory and economic capital, on risk-adjusted profitability measures and on the level of Group’s liquidity. If this initial phase produces a positive result, a technical and operational feasibility study is carried out to identify the assets to be securitised and define the structure of the transaction. Once technical feasibility has been established, the transaction is realised. Eventually it should be noted that "self-securitisations" and transactions in warehousing phase are not included in the quantitative tables of Part C, as required by regulations. Developments of the period The Group makes limited use of this type of transactions. The amount of securitised loans28, net of the transactions in which the Group has acquired all the liabilities issued by the SPVs (the so-called self-securitisations), accounts for 2.02% of the Group’s credit portfolio. Self-securitisations in turn account for 3.08% of the loan portfolio. During 2018 the Group carried out four new synthetic transactions by UniCredit S.p.A.: • Agribond 2; • Bond del Mezzogiorno 1; • Bond Italia 5 bis; • Puglia Sviluppo 1. Details are given in the tables published in the “Annexes”, which also describe transactions, traditional and synthetic, carried out in previous financial years. It should also be noted that, again during 2018: • the transactions Locat SV - Serie 2006, Geldilux-TS-2013 and Caesar Finance, all traditional transactions, were closed; • on November, UniCredit S.p.A. increased the amount of Consumer Three transaction, “self-securitisation” issued in 2016 for counterbalance capacity purpose, with the sale of a new portfolio and the issue of new notes by the vehicle amounting to €2 billion. The Group as sponsor The Group defines the role of sponsor as that performed by an entity, other than the transferor, which organises and administers a securitisation or asset-backed commercial paper structure in which financial assets are purchased from third parties. The Group acts as sponsor of asset backed commercial paper vehicles (i.e. commercial paper issuing conduits) set up in order to allow customers the access to the securitisations’ market (multi-seller Customer conduits). Customer conduits require the formation and management of a bankruptcy-remote company (i.e., one that would be immune from any financial difficulties of the originator) which directly or indirectly buys receivables created by companies outside the Group. The receivables underlying these transactions are not bought directly by the conduit set up by the Group, but by a purchase company which in turn is wholly funded by the conduit by means of commercial paper or medium term notes. In some circumstances purchase companies fund further SPVs which buy loan portfolio. The main purpose of these transactions is to give corporate customers access to the securitisation market and thus to lower funding costs than would be borne with direct funding. The conduits’ purchase of assets is financed by short-term commercial paper and medium-term note issues. Payment of interest and redemption of the securities issued by the conduit therefore depends on cash flow from the receivables purchased (credit risk) and the ability of the conduit to roll over or replace its market funding on maturity (liquidity risk). To guarantee prompt redemption of the securities issued by the conduit, these transactions are guaranteed by a standby letter of credit covering the risk of default both of specific assets and of the whole programme. The underwriters of issued securities also benefit from security provided by specific liquidity lines which the conduit may use if it unable to place new commercial paper to repay maturing paper, e.g. during market turmoil. These liquidity lines may not however be used to guarantee redemption of securities issued by the conduit in the event of default by the underlying assets. 28 We refer to loans sold, also synthetically, but not derecognised from balance sheet. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 322 2018 Annual Report and Accounts · UniCredit Analysis and realisation of securitisation transactions are carried out within the Parent in close cooperation with the Group originator entities involved and with UniCredit Bank AG, as preferred counterparty, as Arranger and potential Investment Banking. This process requires an economic feasibility study to assess the impact of transactions (according to their nature and aims), on regulatory and economic capital, on risk-adjusted profitability measures and on the level of Group’s liquidity. If this initial phase produces a positive result, a technical and operational feasibility study is carried out to identify the assets to be securitised and define the structure of the transaction. Once technical feasibility has been established, the transaction is realised. Eventually it should be noted that "self-securitisations" and transactions in warehousing phase are not included in the quantitative tables of Part C, as required by regulations. Developments of the period The Group makes limited use of this type of transactions. The amount of securitised loans28, net of the transactions in which the Group has acquired all the liabilities issued by the SPVs (the so-called self-securitisations), accounts for 2.02% of the Group’s credit portfolio. Self-securitisations in turn account for 3.08% of the loan portfolio. During 2018 the Group carried out four new synthetic transactions by UniCredit S.p.A.: • Agribond 2; • Bond del Mezzogiorno 1; • Bond Italia 5 bis; • Puglia Sviluppo 1. Details are given in the tables published in the “Annexes”, which also describe transactions, traditional and synthetic, carried out in previous financial years. It should also be noted that, again during 2018: • the transactions Locat SV - Serie 2006, Geldilux-TS-2013 and Caesar Finance, all traditional transactions, were closed; • on November, UniCredit S.p.A. increased the amount of Consumer Three transaction, “self-securitisation” issued in 2016 for counterbalance capacity purpose, with the sale of a new portfolio and the issue of new notes by the vehicle amounting to €2 billion. The Group as sponsor The Group defines the role of sponsor as that performed by an entity, other than the transferor, which organises and administers a securitisation or asset-backed commercial paper structure in which financial assets are purchased from third parties. The Group acts as sponsor of asset backed commercial paper vehicles (i.e. commercial paper issuing conduits) set up in order to allow customers the access to the securitisations’ market (multi-seller Customer conduits). Customer conduits require the formation and management of a bankruptcy-remote company (i.e., one that would be immune from any financial difficulties of the originator) which directly or indirectly buys receivables created by companies outside the Group. The receivables underlying these transactions are not bought directly by the conduit set up by the Group, but by a purchase company which in turn is wholly funded by the conduit by means of commercial paper or medium term notes. In some circumstances purchase companies fund further SPVs which buy loan portfolio. The main purpose of these transactions is to give corporate customers access to the securitisation market and thus to lower funding costs than would be borne with direct funding. The conduits’ purchase of assets is financed by short-term commercial paper and medium-term note issues. Payment of interest and redemption of the securities issued by the conduit therefore depends on cash flow from the receivables purchased (credit risk) and the ability of the conduit to roll over or replace its market funding on maturity (liquidity risk). To guarantee prompt redemption of the securities issued by the conduit, these transactions are guaranteed by a standby letter of credit covering the risk of default both of specific assets and of the whole programme. The underwriters of issued securities also benefit from security provided by specific liquidity lines which the conduit may use if it unable to place new commercial paper to repay maturing paper, e.g. during market turmoil. These liquidity lines may not however be used to guarantee redemption of securities issued by the conduit in the event of default by the underlying assets. 28 We refer to loans sold, also synthetically, but not derecognised from balance sheet. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 322 2018 Annual Report and Accounts · UniCredit Analysis and realisation of securitisation transactions are carried out within the Parent in close cooperation with the Group originator entities involved and with UniCredit Bank AG, as preferred counterparty, as Arranger and potential Investment Banking. This process requires an economic feasibility study to assess the impact of transactions (according to their nature and aims), on regulatory and economic capital, on risk-adjusted profitability measures and on the level of Group’s liquidity. If this initial phase produces a positive result, a technical and operational feasibility study is carried out to identify the assets to be securitised and define the structure of the transaction. Once technical feasibility has been established, the transaction is realised. Eventually it should be noted that "self-securitisations" and transactions in warehousing phase are not included in the quantitative tables of Part C, as required by regulations. Developments of the period The Group makes limited use of this type of transactions. The amount of securitised loans28, net of the transactions in which the Group has acquired all the liabilities issued by the SPVs (the so-called self-securitisations), accounts for 2.02% of the Group’s credit portfolio. Self-securitisations in turn account for 3.08% of the loan portfolio. During 2018 the Group carried out four new synthetic transactions by UniCredit S.p.A.: • Agribond 2; • Bond del Mezzogiorno 1; • Bond Italia 5 bis; • Puglia Sviluppo 1. Details are given in the tables published in the “Annexes”, which also describe transactions, traditional and synthetic, carried out in previous financial years. It should also be noted that, again during 2018: • the transactions Locat SV - Serie 2006, Geldilux-TS-2013 and Caesar Finance, all traditional transactions, were closed; • on November, UniCredit S.p.A. increased the amount of Consumer Three transaction, “self-securitisation” issued in 2016 for counterbalance capacity purpose, with the sale of a new portfolio and the issue of new notes by the vehicle amounting to €2 billion. The Group as sponsor The Group defines the role of sponsor as that performed by an entity, other than the transferor, which organises and administers a securitisation or asset-backed commercial paper structure in which financial assets are purchased from third parties. The Group acts as sponsor of asset backed commercial paper vehicles (i.e. commercial paper issuing conduits) set up in order to allow customers the access to the securitisations’ market (multi-seller Customer conduits). Customer conduits require the formation and management of a bankruptcy-remote company (i.e., one that would be immune from any financial difficulties of the originator) which directly or indirectly buys receivables created by companies outside the Group. The receivables underlying these transactions are not bought directly by the conduit set up by the Group, but by a purchase company which in turn is wholly funded by the conduit by means of commercial paper or medium term notes. In some circumstances purchase companies fund further SPVs which buy loan portfolio. The main purpose of these transactions is to give corporate customers access to the securitisation market and thus to lower funding costs than would be borne with direct funding. The conduits’ purchase of assets is financed by short-term commercial paper and medium-term note issues. Payment of interest and redemption of the securities issued by the conduit therefore depends on cash flow from the receivables purchased (credit risk) and the ability of the conduit to roll over or replace its market funding on maturity (liquidity risk). To guarantee prompt redemption of the securities issued by the conduit, these transactions are guaranteed by a standby letter of credit covering the risk of default both of specific assets and of the whole programme. The underwriters of issued securities also benefit from security provided by specific liquidity lines which the conduit may use if it unable to place new commercial paper to repay maturing paper, e.g. during market turmoil. These liquidity lines may not however be used to guarantee redemption of securities issued by the conduit in the event of default by the underlying assets. 28 We refer to loans sold, also synthetically, but not derecognised from balance sheet. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 323 In its role as sponsor, the Group selects the asset portfolios purchased by conduits or purchase companies, provides administration of the assets and both standby letters of credit and liquidity lines and purchases commercial papers issued when required by market conditions. For these services the Group receives fees and also benefits from the spread between the return on the assets purchased by the SPV and the securities issued. These circumstances put the Group in the condition of having the power over the assets of the conduits and being at the same time exposed to the variability deriving from such assets. Therefore the conduits sponsored by the Group have come within the perimeter of consolidation starting from 2007, in application of the conditions provided for in IFRS10 and previously by SIC12. In addition to the Customer Conduits, purchase companies may also be consolidated if the Group is exposed to the variability of yields deriving from funding provided directly or indirectly, through the conduit, and also has the power to manage the underlying assets. The Group as investor The Group also invests in structured credit products issued by special-purpose entities that are not consolidated pursuant to the accounting rules in force, insofar as such instruments do not bear most of the risk or receive most of the returns associated with the activity carried out by these special-purpose entities. With regard to these activities, the Group holds within the Global ABS portfolio exposures of securitisations established by third-parties such as RMBS, CMBS, CDO, CBO/CLO and other ABS. In line with the development of the financial markets and, specifically, the securitisation market, the Global ABS Portfolio was transformed from a separate portfolio in liquidation to strategic investment portfolio for the Group in 2011 and was integrated into the Markets Strategic Portfolio ("MSP"), managed with a view to generating a profit margin and creating an appreciable capital return through long-term investments in fixed-income securities. The development of client-related operations is also an integral part of MSP activities and includes actions to strengthen the customer base and support securitisations. This portfolio is subject to monitoring and reporting by the business and risk management functions. All activities relating to the MSP are carried out in conformity with established policies and procedures, specifically credit approval procedures. The analysis of investments in ABS focuses specifically on the following elements: • structural analysis of all internal and external risks inherent to a similar investment, e.g. Default Risk, Dilution Risk, Residual Value Risk, Servicer Risk, Interest Rate Risk, Liquidity Risk, Commingling Risk, Legal Risk, Adequacy of performance triggers, etc. These risks may differ according to the underlying assets class; • analysis of the underlying portfolio, including the analysis of all performance indicators significant for each underlying asset class; • cash flows/quantitative analysis/modelling; • credit rating and experience of the participants e.g. vendor/servicer - financial soundness, capacity and availability to service assets. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 323 In its role as sponsor, the Group selects the asset portfolios purchased by conduits or purchase companies, provides administration of the assets and both standby letters of credit and liquidity lines and purchases commercial papers issued when required by market conditions. For these services the Group receives fees and also benefits from the spread between the return on the assets purchased by the SPV and the securities issued. These circumstances put the Group in the condition of having the power over the assets of the conduits and being at the same time exposed to the variability deriving from such assets. Therefore the conduits sponsored by the Group have come within the perimeter of consolidation starting from 2007, in application of the conditions provided for in IFRS10 and previously by SIC12. In addition to the Customer Conduits, purchase companies may also be consolidated if the Group is exposed to the variability of yields deriving from funding provided directly or indirectly, through the conduit, and also has the power to manage the underlying assets. The Group as investor The Group also invests in structured credit products issued by special-purpose entities that are not consolidated pursuant to the accounting rules in force, insofar as such instruments do not bear most of the risk or receive most of the returns associated with the activity carried out by these special-purpose entities. With regard to these activities, the Group holds within the Global ABS portfolio exposures of securitisations established by third-parties such as RMBS, CMBS, CDO, CBO/CLO and other ABS. In line with the development of the financial markets and, specifically, the securitisation market, the Global ABS Portfolio was transformed from a separate portfolio in liquidation to strategic investment portfolio for the Group in 2011 and was integrated into the Markets Strategic Portfolio ("MSP"), managed with a view to generating a profit margin and creating an appreciable capital return through long-term investments in fixed-income securities. The development of client-related operations is also an integral part of MSP activities and includes actions to strengthen the customer base and support securitisations. This portfolio is subject to monitoring and reporting by the business and risk management functions. All activities relating to the MSP are carried out in conformity with established policies and procedures, specifically credit approval procedures. The analysis of investments in ABS focuses specifically on the following elements: • structural analysis of all internal and external risks inherent to a similar investment, e.g. Default Risk, Dilution Risk, Residual Value Risk, Servicer Risk, Interest Rate Risk, Liquidity Risk, Commingling Risk, Legal Risk, Adequacy of performance triggers, etc. These risks may differ according to the underlying assets class; • analysis of the underlying portfolio, including the analysis of all performance indicators significant for each underlying asset class; • cash flows/quantitative analysis/modelling; • credit rating and experience of the participants e.g. vendor/servicer - financial soundness, capacity and availability to service assets. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 323 In its role as sponsor, the Group selects the asset portfolios purchased by conduits or purchase companies, provides administration of the assets and both standby letters of credit and liquidity lines and purchases commercial papers issued when required by market conditions. For these services the Group receives fees and also benefits from the spread between the return on the assets purchased by the SPV and the securities issued. These circumstances put the Group in the condition of having the power over the assets of the conduits and being at the same time exposed to the variability deriving from such assets. Therefore the conduits sponsored by the Group have come within the perimeter of consolidation starting from 2007, in application of the conditions provided for in IFRS10 and previously by SIC12. In addition to the Customer Conduits, purchase companies may also be consolidated if the Group is exposed to the variability of yields deriving from funding provided directly or indirectly, through the conduit, and also has the power to manage the underlying assets. The Group as investor The Group also invests in structured credit products issued by special-purpose entities that are not consolidated pursuant to the accounting rules in force, insofar as such instruments do not bear most of the risk or receive most of the returns associated with the activity carried out by these special-purpose entities. With regard to these activities, the Group holds within the Global ABS portfolio exposures of securitisations established by third-parties such as RMBS, CMBS, CDO, CBO/CLO and other ABS. In line with the development of the financial markets and, specifically, the securitisation market, the Global ABS Portfolio was transformed from a separate portfolio in liquidation to strategic investment portfolio for the Group in 2011 and was integrated into the Markets Strategic Portfolio ("MSP"), managed with a view to generating a profit margin and creating an appreciable capital return through long-term investments in fixed-income securities. The development of client-related operations is also an integral part of MSP activities and includes actions to strengthen the customer base and support securitisations. This portfolio is subject to monitoring and reporting by the business and risk management functions. All activities relating to the MSP are carried out in conformity with established policies and procedures, specifically credit approval procedures. The analysis of investments in ABS focuses specifically on the following elements: • structural analysis of all internal and external risks inherent to a similar investment, e.g. Default Risk, Dilution Risk, Residual Value Risk, Servicer Risk, Interest Rate Risk, Liquidity Risk, Commingling Risk, Legal Risk, Adequacy of performance triggers, etc. These risks may differ according to the underlying assets class; • analysis of the underlying portfolio, including the analysis of all performance indicators significant for each underlying asset class; • cash flows/quantitative analysis/modelling; • credit rating and experience of the participants e.g. vendor/servicer - financial soundness, capacity and availability to service assets. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 323 In its role as sponsor, the Group selects the asset portfolios purchased by conduits or purchase companies, provides administration of the assets and both standby letters of credit and liquidity lines and purchases commercial papers issued when required by market conditions. For these services the Group receives fees and also benefits from the spread between the return on the assets purchased by the SPV and the securities issued. These circumstances put the Group in the condition of having the power over the assets of the conduits and being at the same time exposed to the variability deriving from such assets. Therefore the conduits sponsored by the Group have come within the perimeter of consolidation starting from 2007, in application of the conditions provided for in IFRS10 and previously by SIC12. In addition to the Customer Conduits, purchase companies may also be consolidated if the Group is exposed to the variability of yields deriving from funding provided directly or indirectly, through the conduit, and also has the power to manage the underlying assets. The Group as investor The Group also invests in structured credit products issued by special-purpose entities that are not consolidated pursuant to the accounting rules in force, insofar as such instruments do not bear most of the risk or receive most of the returns associated with the activity carried out by these special-purpose entities. With regard to these activities, the Group holds within the Global ABS portfolio exposures of securitisations established by third-parties such as RMBS, CMBS, CDO, CBO/CLO and other ABS. In line with the development of the financial markets and, specifically, the securitisation market, the Global ABS Portfolio was transformed from a separate portfolio in liquidation to strategic investment portfolio for the Group in 2011 and was integrated into the Markets Strategic Portfolio ("MSP"), managed with a view to generating a profit margin and creating an appreciable capital return through long-term investments in fixed-income securities. The development of client-related operations is also an integral part of MSP activities and includes actions to strengthen the customer base and support securitisations. This portfolio is subject to monitoring and reporting by the business and risk management functions. All activities relating to the MSP are carried out in conformity with established policies and procedures, specifically credit approval procedures. The analysis of investments in ABS focuses specifically on the following elements: • structural analysis of all internal and external risks inherent to a similar investment, e.g. Default Risk, Dilution Risk, Residual Value Risk, Servicer Risk, Interest Rate Risk, Liquidity Risk, Commingling Risk, Legal Risk, Adequacy of performance triggers, etc. These risks may differ according to the underlying assets class; • analysis of the underlying portfolio, including the analysis of all performance indicators significant for each underlying asset class; • cash flows/quantitative analysis/modelling; • credit rating and experience of the participants e.g. vendor/servicer - financial soundness, capacity and availability to service assets. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 323 In its role as sponsor, the Group selects the asset portfolios purchased by conduits or purchase companies, provides administration of the assets and both standby letters of credit and liquidity lines and purchases commercial papers issued when required by market conditions. For these services the Group receives fees and also benefits from the spread between the return on the assets purchased by the SPV and the securities issued. These circumstances put the Group in the condition of having the power over the assets of the conduits and being at the same time exposed to the variability deriving from such assets. Therefore the conduits sponsored by the Group have come within the perimeter of consolidation starting from 2007, in application of the conditions provided for in IFRS10 and previously by SIC12. In addition to the Customer Conduits, purchase companies may also be consolidated if the Group is exposed to the variability of yields deriving from funding provided directly or indirectly, through the conduit, and also has the power to manage the underlying assets. The Group as investor The Group also invests in structured credit products issued by special-purpose entities that are not consolidated pursuant to the accounting rules in force, insofar as such instruments do not bear most of the risk or receive most of the returns associated with the activity carried out by these special-purpose entities. With regard to these activities, the Group holds within the Global ABS portfolio exposures of securitisations established by third-parties such as RMBS, CMBS, CDO, CBO/CLO and other ABS. In line with the development of the financial markets and, specifically, the securitisation market, the Global ABS Portfolio was transformed from a separate portfolio in liquidation to strategic investment portfolio for the Group in 2011 and was integrated into the Markets Strategic Portfolio ("MSP"), managed with a view to generating a profit margin and creating an appreciable capital return through long-term investments in fixed-income securities. The development of client-related operations is also an integral part of MSP activities and includes actions to strengthen the customer base and support securitisations. This portfolio is subject to monitoring and reporting by the business and risk management functions. All activities relating to the MSP are carried out in conformity with established policies and procedures, specifically credit approval procedures. The analysis of investments in ABS focuses specifically on the following elements: • structural analysis of all internal and external risks inherent to a similar investment, e.g. Default Risk, Dilution Risk, Residual Value Risk, Servicer Risk, Interest Rate Risk, Liquidity Risk, Commingling Risk, Legal Risk, Adequacy of performance triggers, etc. These risks may differ according to the underlying assets class; • analysis of the underlying portfolio, including the analysis of all performance indicators significant for each underlying asset class; • cash flows/quantitative analysis/modelling; • credit rating and experience of the participants e.g. vendor/servicer - financial soundness, capacity and availability to service assets. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 324 2018 Annual Report and Accounts · UniCredit Quantitative information The tables below do not include information on the so-called “self-securitisations”, i.e. securitisation transactions in which the Group has acquired all the liabilities issued by the SPVs, and transactions in warehousing phase. C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS /EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised 493,544 - 250,688 - 95,715 - A.1 CLO/CBO OTHERS 493,544 - 250,688 - 95,715 - B. Partially derecognised - - 32,701 - - -3,872 B.1 CLO/CBO Others - - 32,701 - - -3,872 C. Not-derecognised 5,866,022 - 376,946 - 1,014,554 -205,585 C.1 RMBS Prime 626,908 - 199,522 - 334,465 -163,163 C.2 CLO/SME 467,821 - - - 8,559 - C.3 CLO/CBO Others 4,771,293 - 177,424 - 572,512 -42,422 C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - 99,018 - C.6 OTHERS - - - - - - continued C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised - - - - - - A.1 CLO/CBO OTHERS - - - - - - B. Partially derecognised - - - - - - B.1 CLO/CBO Others - - - - - - C. Not-derecognised 304,000 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO/SME - - - - - - C.3 CLO/CBO Others 304,000 - - - - - C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - - - C.6 OTHERS - - - - - - continued C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised - - - - - - A.1 CLO/CBO OTHERS - - - - - - B. Partially derecognised - - - - - - B.1 CLO/CBO Others - - - - - - C. Not-derecognised 11,017 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO/SME - - - - - - C.3 CLO/CBO Others 11,017 - - - - - C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - - - C.6 OTHERS - - - - - - Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 324 2018 Annual Report and Accounts · UniCredit Quantitative information The tables below do not include information on the so-called “self-securitisations”, i.e. securitisation transactions in which the Group has acquired all the liabilities issued by the SPVs, and transactions in warehousing phase. C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS /EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised 493,544 - 250,688 - 95,715 - A.1 CLO/CBO OTHERS 493,544 - 250,688 - 95,715 - B. Partially derecognised - - 32,701 - - -3,872 B.1 CLO/CBO Others - - 32,701 - - -3,872 C. Not-derecognised 5,866,022 - 376,946 - 1,014,554 -205,585 C.1 RMBS Prime 626,908 - 199,522 - 334,465 -163,163 C.2 CLO/SME 467,821 - - - 8,559 - C.3 CLO/CBO Others 4,771,293 - 177,424 - 572,512 -42,422 C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - 99,018 - C.6 OTHERS - - - - - - continued C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised - - - - - - A.1 CLO/CBO OTHERS - - - - - - B. Partially derecognised - - - - - - B.1 CLO/CBO Others - - - - - - C. Not-derecognised 304,000 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO/SME - - - - - - C.3 CLO/CBO Others 304,000 - - - - - C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - - - C.6 OTHERS - - - - - - continued C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised - - - - - - A.1 CLO/CBO OTHERS - - - - - - B. Partially derecognised - - - - - - B.1 CLO/CBO Others - - - - - - C. Not-derecognised 11,017 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO/SME - - - - - - C.3 CLO/CBO Others 11,017 - - - - - C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - - - C.6 OTHERS - - - - - - Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 324 2018 Annual Report and Accounts · UniCredit Quantitative information The tables below do not include information on the so-called “self-securitisations”, i.e. securitisation transactions in which the Group has acquired all the liabilities issued by the SPVs, and transactions in warehousing phase. C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS /EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised 493,544 - 250,688 - 95,715 - A.1 CLO/CBO OTHERS 493,544 - 250,688 - 95,715 - B. Partially derecognised - - 32,701 - - -3,872 B.1 CLO/CBO Others - - 32,701 - - -3,872 C. Not-derecognised 5,866,022 - 376,946 - 1,014,554 -205,585 C.1 RMBS Prime 626,908 - 199,522 - 334,465 -163,163 C.2 CLO/SME 467,821 - - - 8,559 - C.3 CLO/CBO Others 4,771,293 - 177,424 - 572,512 -42,422 C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - 99,018 - C.6 OTHERS - - - - - - continued C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised - - - - - - A.1 CLO/CBO OTHERS - - - - - - B. Partially derecognised - - - - - - B.1 CLO/CBO Others - - - - - - C. Not-derecognised 304,000 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO/SME - - - - - - C.3 CLO/CBO Others 304,000 - - - - - C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - - - C.6 OTHERS - - - - - - continued C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised - - - - - - A.1 CLO/CBO OTHERS - - - - - - B. Partially derecognised - - - - - - B.1 CLO/CBO Others - - - - - - C. Not-derecognised 11,017 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO/SME - - - - - - C.3 CLO/CBO Others 11,017 - - - - - C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - - - C.6 OTHERS - - - - - - Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 324 2018 Annual Report and Accounts · UniCredit Quantitative information The tables below do not include information on the so-called “self-securitisations”, i.e. securitisation transactions in which the Group has acquired all the liabilities issued by the SPVs, and transactions in warehousing phase. C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS /EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised 493,544 - 250,688 - 95,715 - A.1 CLO/CBO OTHERS 493,544 - 250,688 - 95,715 - B. Partially derecognised - - 32,701 - - -3,872 B.1 CLO/CBO Others - - 32,701 - - -3,872 C. Not-derecognised 5,866,022 - 376,946 - 1,014,554 -205,585 C.1 RMBS Prime 626,908 - 199,522 - 334,465 -163,163 C.2 CLO/SME 467,821 - - - 8,559 - C.3 CLO/CBO Others 4,771,293 - 177,424 - 572,512 -42,422 C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - 99,018 - C.6 OTHERS - - - - - - continued C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised - - - - - - A.1 CLO/CBO OTHERS - - - - - - B. Partially derecognised - - - - - - B.1 CLO/CBO Others - - - - - - C. Not-derecognised 304,000 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO/SME - - - - - - C.3 CLO/CBO Others 304,000 - - - - - C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - - - C.6 OTHERS - - - - - - continued C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised - - - - - - A.1 CLO/CBO OTHERS - - - - - - B. Partially derecognised - - - - - - B.1 CLO/CBO Others - - - - - - C. Not-derecognised 11,017 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO/SME - - - - - - C.3 CLO/CBO Others 11,017 - - - - - C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - - - C.6 OTHERS - - - - - - Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 324 2018 Annual Report and Accounts · UniCredit Quantitative information The tables below do not include information on the so-called “self-securitisations”, i.e. securitisation transactions in which the Group has acquired all the liabilities issued by the SPVs, and transactions in warehousing phase. C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS /EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised 493,544 - 250,688 - 95,715 - A.1 CLO/CBO OTHERS 493,544 - 250,688 - 95,715 - B. Partially derecognised - - 32,701 - - -3,872 B.1 CLO/CBO Others - - 32,701 - - -3,872 C. Not-derecognised 5,866,022 - 376,946 - 1,014,554 -205,585 C.1 RMBS Prime 626,908 - 199,522 - 334,465 -163,163 C.2 CLO/SME 467,821 - - - 8,559 - C.3 CLO/CBO Others 4,771,293 - 177,424 - 572,512 -42,422 C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - 99,018 - C.6 OTHERS - - - - - - continued C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised - - - - - - A.1 CLO/CBO OTHERS - - - - - - B. Partially derecognised - - - - - - B.1 CLO/CBO Others - - - - - - C. Not-derecognised 304,000 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO/SME - - - - - - C.3 CLO/CBO Others 304,000 - - - - - C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - - - C.6 OTHERS - - - - - - continued C.1 Regulatory consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A. Totally derecognised - - - - - - A.1 CLO/CBO OTHERS - - - - - - B. Partially derecognised - - - - - - B.1 CLO/CBO Others - - - - - - C. Not-derecognised 11,017 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO/SME - - - - - - C.3 CLO/CBO Others 11,017 - - - - - C.4 CONSUMER LOANS - - - - - - C.5 LEASES - - - - - - C.6 OTHERS - - - - - - Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 325 With reference to transactions with own underlying assets it should be noted that the decrease in balance-sheet net exposures relating to transactions not derecognised and partially derecognised to €1,998 million as at December 2018 from €2,616 million as at December 2017 was due to the natural development of the transactions. Moreover, the decrease in balance-sheet net exposures concerning synthetic transactions from €8,403 million in December 2017 to €5,292 million in December 2018 was due to the natural development of the transactions, only partially offset by four new transactions called Agribond 2, Bond del Mezzogiorno 1, Bond Italia 5 bis and Puglia Sviluppo 1. Finally, it should be noted that: • the net balance-sheet exposure totally derecognised almost entirely refers to the securitisations of FINO Project, for which see the information provided in Consolidated Report on Operations - Other information; • the net balance-sheet exposure partially derecognised refers to the transaction Pillarstone Italy - Premuda. C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME 2,110,945 - 6,834 - - - A.2 RMBS NON CONFORMING 44,276 - 21,834 - - - A.3 RMBS US SUBPRIME 484 - - - - - A.4 CMBS 33,412 - 25,287 - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET 21,020 - - - - - A.7 CDO - PREFERRED STOCK 20,730 - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME 86,486 - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER 2,836,584 - 12,179 - - - A.12 CONSUMER LOANS 1,420,220 - 55,235 - - - A.13 STUDENT LOANS 60,734 - - - 722 - A.14 LEASES - - - - - - A.15 OTHER 31,155 - 3,902 - 30,794 1,153 A.16 CONDUITS(*) 2,698,098 - - - - - Note: (*) Exposure of subsidiaries included in the scope of consolidation, but not belonging to the banking group. Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 325 With reference to transactions with own underlying assets it should be noted that the decrease in balance-sheet net exposures relating to transactions not derecognised and partially derecognised to €1,998 million as at December 2018 from €2,616 million as at December 2017 was due to the natural development of the transactions. Moreover, the decrease in balance-sheet net exposures concerning synthetic transactions from €8,403 million in December 2017 to €5,292 million in December 2018 was due to the natural development of the transactions, only partially offset by four new transactions called Agribond 2, Bond del Mezzogiorno 1, Bond Italia 5 bis and Puglia Sviluppo 1. Finally, it should be noted that: • the net balance-sheet exposure totally derecognised almost entirely refers to the securitisations of FINO Project, for which see the information provided in Consolidated Report on Operations - Other information; • the net balance-sheet exposure partially derecognised refers to the transaction Pillarstone Italy - Premuda. C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME 2,110,945 - 6,834 - - - A.2 RMBS NON CONFORMING 44,276 - 21,834 - - - A.3 RMBS US SUBPRIME 484 - - - - - A.4 CMBS 33,412 - 25,287 - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET 21,020 - - - - - A.7 CDO - PREFERRED STOCK 20,730 - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME 86,486 - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER 2,836,584 - 12,179 - - - A.12 CONSUMER LOANS 1,420,220 - 55,235 - - - A.13 STUDENT LOANS 60,734 - - - 722 - A.14 LEASES - - - - - - A.15 OTHER 31,155 - 3,902 - 30,794 1,153 A.16 CONDUITS(*) 2,698,098 - - - - - Note: (*) Exposure of subsidiaries included in the scope of consolidation, but not belonging to the banking group. Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 325 With reference to transactions with own underlying assets it should be noted that the decrease in balance-sheet net exposures relating to transactions not derecognised and partially derecognised to €1,998 million as at December 2018 from €2,616 million as at December 2017 was due to the natural development of the transactions. Moreover, the decrease in balance-sheet net exposures concerning synthetic transactions from €8,403 million in December 2017 to €5,292 million in December 2018 was due to the natural development of the transactions, only partially offset by four new transactions called Agribond 2, Bond del Mezzogiorno 1, Bond Italia 5 bis and Puglia Sviluppo 1. Finally, it should be noted that: • the net balance-sheet exposure totally derecognised almost entirely refers to the securitisations of FINO Project, for which see the information provided in Consolidated Report on Operations - Other information; • the net balance-sheet exposure partially derecognised refers to the transaction Pillarstone Italy - Premuda. C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME 2,110,945 - 6,834 - - - A.2 RMBS NON CONFORMING 44,276 - 21,834 - - - A.3 RMBS US SUBPRIME 484 - - - - - A.4 CMBS 33,412 - 25,287 - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET 21,020 - - - - - A.7 CDO - PREFERRED STOCK 20,730 - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME 86,486 - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER 2,836,584 - 12,179 - - - A.12 CONSUMER LOANS 1,420,220 - 55,235 - - - A.13 STUDENT LOANS 60,734 - - - 722 - A.14 LEASES - - - - - - A.15 OTHER 31,155 - 3,902 - 30,794 1,153 A.16 CONDUITS(*) 2,698,098 - - - - - Note: (*) Exposure of subsidiaries included in the scope of consolidation, but not belonging to the banking group. Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 325 With reference to transactions with own underlying assets it should be noted that the decrease in balance-sheet net exposures relating to transactions not derecognised and partially derecognised to €1,998 million as at December 2018 from €2,616 million as at December 2017 was due to the natural development of the transactions. Moreover, the decrease in balance-sheet net exposures concerning synthetic transactions from €8,403 million in December 2017 to €5,292 million in December 2018 was due to the natural development of the transactions, only partially offset by four new transactions called Agribond 2, Bond del Mezzogiorno 1, Bond Italia 5 bis and Puglia Sviluppo 1. Finally, it should be noted that: • the net balance-sheet exposure totally derecognised almost entirely refers to the securitisations of FINO Project, for which see the information provided in Consolidated Report on Operations - Other information; • the net balance-sheet exposure partially derecognised refers to the transaction Pillarstone Italy - Premuda. C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME 2,110,945 - 6,834 - - - A.2 RMBS NON CONFORMING 44,276 - 21,834 - - - A.3 RMBS US SUBPRIME 484 - - - - - A.4 CMBS 33,412 - 25,287 - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET 21,020 - - - - - A.7 CDO - PREFERRED STOCK 20,730 - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME 86,486 - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER 2,836,584 - 12,179 - - - A.12 CONSUMER LOANS 1,420,220 - 55,235 - - - A.13 STUDENT LOANS 60,734 - - - 722 - A.14 LEASES - - - - - - A.15 OTHER 31,155 - 3,902 - 30,794 1,153 A.16 CONDUITS(*) 2,698,098 - - - - - Note: (*) Exposure of subsidiaries included in the scope of consolidation, but not belonging to the banking group. Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 325 With reference to transactions with own underlying assets it should be noted that the decrease in balance-sheet net exposures relating to transactions not derecognised and partially derecognised to €1,998 million as at December 2018 from €2,616 million as at December 2017 was due to the natural development of the transactions. Moreover, the decrease in balance-sheet net exposures concerning synthetic transactions from €8,403 million in December 2017 to €5,292 million in December 2018 was due to the natural development of the transactions, only partially offset by four new transactions called Agribond 2, Bond del Mezzogiorno 1, Bond Italia 5 bis and Puglia Sviluppo 1. Finally, it should be noted that: • the net balance-sheet exposure totally derecognised almost entirely refers to the securitisations of FINO Project, for which see the information provided in Consolidated Report on Operations - Other information; • the net balance-sheet exposure partially derecognised refers to the transaction Pillarstone Italy - Premuda. C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS CARRYING VALUE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME 2,110,945 - 6,834 - - - A.2 RMBS NON CONFORMING 44,276 - 21,834 - - - A.3 RMBS US SUBPRIME 484 - - - - - A.4 CMBS 33,412 - 25,287 - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET 21,020 - - - - - A.7 CDO - PREFERRED STOCK 20,730 - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME 86,486 - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER 2,836,584 - 12,179 - - - A.12 CONSUMER LOANS 1,420,220 - 55,235 - - - A.13 STUDENT LOANS 60,734 - - - 722 - A.14 LEASES - - - - - - A.15 OTHER 31,155 - 3,902 - 30,794 1,153 A.16 CONDUITS(*) 2,698,098 - - - - - Note: (*) Exposure of subsidiaries included in the scope of consolidation, but not belonging to the banking group. Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 326 2018 Annual Report and Accounts · UniCredit continued C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME - - - - - - A.2 RMBS NON CONFORMING - - - - - - A.3 RMBS US SUBPRIME - - - - - - A.4 CMBS - - - - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET - - - - - - A.7 CDO - PREFERRED STOCK - - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME - - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER - - - - - - A.12 CONSUMER LOANS - - - - - - A.13 STUDENT LOANS - - - - - - A.14 LEASES - - - - - - A.15 OTHER - - - - - - A.16 CONDUITS - - - - - - continued C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME - - - - - - A.2 RMBS NON CONFORMING - - - - - - A.3 RMBS US SUBPRIME - - - - - - A.4 CMBS - - - - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET - - - - - - A.7 CDO - PREFERRED STOCK - - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME - - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER - - - - - - A.12 CONSUMER LOANS - - - - - - A.13 STUDENT LOANS 21,995 - - - - - A.14 LEASES - - - - - - A.15 OTHER - - - - 1,411 - A.16 CONDUITS 3,158,348 - 18,707 - - - The transactions with third-party underlying assets are those in which the group acts as sponsor or investor. With reference to transactions in which the Group acts as sponsor, the total amount of net exposure is equal to €5,875 million (€6,287 million as of 31 December 2017), broken down into asset backed commercial paper and loans for €2,698 million and undrawn credit lines for €3,177 million. It should be noted that the lines of credit shown are the difference between total credit lines granted and the amount of commercial paper underwritten by the Group. This figure is the additional risk exposure incurred by the Group in addition to the underwritten commercial paper. With reference to transactions in which the Group acts as investor, please refer to the subsequent tables ‘Exposures toward other consolidated SPVs’ and “C.4 Banking Group - Non consolidated Securitisation Vehicles” that shows the exposure of the Group toward these SPVs. With reference to sponsor exposures the following table provides information about exposures held toward conduits in which the Group acts as sponsor. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 326 2018 Annual Report and Accounts · UniCredit continued C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME - - - - - - A.2 RMBS NON CONFORMING - - - - - - A.3 RMBS US SUBPRIME - - - - - - A.4 CMBS - - - - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET - - - - - - A.7 CDO - PREFERRED STOCK - - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME - - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER - - - - - - A.12 CONSUMER LOANS - - - - - - A.13 STUDENT LOANS - - - - - - A.14 LEASES - - - - - - A.15 OTHER - - - - - - A.16 CONDUITS - - - - - - continued C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME - - - - - - A.2 RMBS NON CONFORMING - - - - - - A.3 RMBS US SUBPRIME - - - - - - A.4 CMBS - - - - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET - - - - - - A.7 CDO - PREFERRED STOCK - - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME - - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER - - - - - - A.12 CONSUMER LOANS - - - - - - A.13 STUDENT LOANS 21,995 - - - - - A.14 LEASES - - - - - - A.15 OTHER - - - - 1,411 - A.16 CONDUITS 3,158,348 - 18,707 - - - The transactions with third-party underlying assets are those in which the group acts as sponsor or investor. With reference to transactions in which the Group acts as sponsor, the total amount of net exposure is equal to €5,875 million (€6,287 million as of 31 December 2017), broken down into asset backed commercial paper and loans for €2,698 million and undrawn credit lines for €3,177 million. It should be noted that the lines of credit shown are the difference between total credit lines granted and the amount of commercial paper underwritten by the Group. This figure is the additional risk exposure incurred by the Group in addition to the underwritten commercial paper. With reference to transactions in which the Group acts as investor, please refer to the subsequent tables ‘Exposures toward other consolidated SPVs’ and “C.4 Banking Group - Non consolidated Securitisation Vehicles” that shows the exposure of the Group toward these SPVs. With reference to sponsor exposures the following table provides information about exposures held toward conduits in which the Group acts as sponsor. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 326 2018 Annual Report and Accounts · UniCredit continued C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME - - - - - - A.2 RMBS NON CONFORMING - - - - - - A.3 RMBS US SUBPRIME - - - - - - A.4 CMBS - - - - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET - - - - - - A.7 CDO - PREFERRED STOCK - - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME - - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER - - - - - - A.12 CONSUMER LOANS - - - - - - A.13 STUDENT LOANS - - - - - - A.14 LEASES - - - - - - A.15 OTHER - - - - - - A.16 CONDUITS - - - - - - continued C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME - - - - - - A.2 RMBS NON CONFORMING - - - - - - A.3 RMBS US SUBPRIME - - - - - - A.4 CMBS - - - - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET - - - - - - A.7 CDO - PREFERRED STOCK - - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME - - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER - - - - - - A.12 CONSUMER LOANS - - - - - - A.13 STUDENT LOANS 21,995 - - - - - A.14 LEASES - - - - - - A.15 OTHER - - - - 1,411 - A.16 CONDUITS 3,158,348 - 18,707 - - - The transactions with third-party underlying assets are those in which the group acts as sponsor or investor. With reference to transactions in which the Group acts as sponsor, the total amount of net exposure is equal to €5,875 million (€6,287 million as of 31 December 2017), broken down into asset backed commercial paper and loans for €2,698 million and undrawn credit lines for €3,177 million. It should be noted that the lines of credit shown are the difference between total credit lines granted and the amount of commercial paper underwritten by the Group. This figure is the additional risk exposure incurred by the Group in addition to the underwritten commercial paper. With reference to transactions in which the Group acts as investor, please refer to the subsequent tables ‘Exposures toward other consolidated SPVs’ and “C.4 Banking Group - Non consolidated Securitisation Vehicles” that shows the exposure of the Group toward these SPVs. With reference to sponsor exposures the following table provides information about exposures held toward conduits in which the Group acts as sponsor. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 326 2018 Annual Report and Accounts · UniCredit continued C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME - - - - - - A.2 RMBS NON CONFORMING - - - - - - A.3 RMBS US SUBPRIME - - - - - - A.4 CMBS - - - - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET - - - - - - A.7 CDO - PREFERRED STOCK - - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME - - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER - - - - - - A.12 CONSUMER LOANS - - - - - - A.13 STUDENT LOANS - - - - - - A.14 LEASES - - - - - - A.15 OTHER - - - - - - A.16 CONDUITS - - - - - - continued C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME - - - - - - A.2 RMBS NON CONFORMING - - - - - - A.3 RMBS US SUBPRIME - - - - - - A.4 CMBS - - - - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET - - - - - - A.7 CDO - PREFERRED STOCK - - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME - - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER - - - - - - A.12 CONSUMER LOANS - - - - - - A.13 STUDENT LOANS 21,995 - - - - - A.14 LEASES - - - - - - A.15 OTHER - - - - 1,411 - A.16 CONDUITS 3,158,348 - 18,707 - - - The transactions with third-party underlying assets are those in which the group acts as sponsor or investor. With reference to transactions in which the Group acts as sponsor, the total amount of net exposure is equal to €5,875 million (€6,287 million as of 31 December 2017), broken down into asset backed commercial paper and loans for €2,698 million and undrawn credit lines for €3,177 million. It should be noted that the lines of credit shown are the difference between total credit lines granted and the amount of commercial paper underwritten by the Group. This figure is the additional risk exposure incurred by the Group in addition to the underwritten commercial paper. With reference to transactions in which the Group acts as investor, please refer to the subsequent tables ‘Exposures toward other consolidated SPVs’ and “C.4 Banking Group - Non consolidated Securitisation Vehicles” that shows the exposure of the Group toward these SPVs. With reference to sponsor exposures the following table provides information about exposures held toward conduits in which the Group acts as sponsor. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 326 2018 Annual Report and Accounts · UniCredit continued C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME - - - - - - A.2 RMBS NON CONFORMING - - - - - - A.3 RMBS US SUBPRIME - - - - - - A.4 CMBS - - - - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET - - - - - - A.7 CDO - PREFERRED STOCK - - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME - - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER - - - - - - A.12 CONSUMER LOANS - - - - - - A.13 STUDENT LOANS - - - - - - A.14 LEASES - - - - - - A.15 OTHER - - - - - - A.16 CONDUITS - - - - - - continued C.2 Regulatory consolidation - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS /EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS NET EXPOSURE WRITE-DOWNS/ WRITE-BACKS A.1 RMBS PRIME - - - - - - A.2 RMBS NON CONFORMING - - - - - - A.3 RMBS US SUBPRIME - - - - - - A.4 CMBS - - - - - - A.5 CDO OF ABS - - - - - - A.6 CDO - BALANCE SHEET - - - - - - A.7 CDO - PREFERRED STOCK - - - - - - A.8 CDO OTHER - - - - - - A.9 CLO SME - - - - - - A.10 CLO ARBITRAGE/BALANCE SHEET - - - - - - A.11 CLO OTHER - - - - - - A.12 CONSUMER LOANS - - - - - - A.13 STUDENT LOANS 21,995 - - - - - A.14 LEASES - - - - - - A.15 OTHER - - - - 1,411 - A.16 CONDUITS 3,158,348 - 18,707 - - - The transactions with third-party underlying assets are those in which the group acts as sponsor or investor. With reference to transactions in which the Group acts as sponsor, the total amount of net exposure is equal to €5,875 million (€6,287 million as of 31 December 2017), broken down into asset backed commercial paper and loans for €2,698 million and undrawn credit lines for €3,177 million. It should be noted that the lines of credit shown are the difference between total credit lines granted and the amount of commercial paper underwritten by the Group. This figure is the additional risk exposure incurred by the Group in addition to the underwritten commercial paper. With reference to transactions in which the Group acts as investor, please refer to the subsequent tables ‘Exposures toward other consolidated SPVs’ and “C.4 Banking Group - Non consolidated Securitisation Vehicles” that shows the exposure of the Group toward these SPVs. With reference to sponsor exposures the following table provides information about exposures held toward conduits in which the Group acts as sponsor. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 327 Exposures sponsored by the Group (€ '000) AMOUNTS AS AT 12.31.2018 Asset Backed Commercial Paper 2,698,098 - Arabella Finance DAC 1,698,058 - Elektra Purchase No. 28 DAC - - Elektra Purchase No. 31 DAC - - Elektra Purchase No. 32 S.A. - Compartment 1 - - Elektra Purchase No. 32 S.A. - Compartment 2 - - Elektra Purchase No. 33 DAC - - Elektra Purchase No. 34 DAC - - Elektra Purchase No. 36 DAC - - Elektra Purchase No. 37 DAC - - Elektra Purchase No. 38 DAC - - Elektra Purchase No. 39 DAC 410,000 - Elektra Purchase No. 41 DAC - - Elektra Purchase No. 43 DAC - - Elektra Purchase No. 44 DAC - - Elektra Purchase No. 46 DAC - - Elektra Purchase No. 48 DAC - - Elektra Purchase No. 54 DAC - - Elektra Purchase No. 55 DAC - - Elektra Purchase No. 56 DAC - - Elektra Purchase No. 57 DAC - - Elektra Purchase No. 63 DAC - - Elektra Purchase No. 718 DAC 590,041 - Elektra Purchase No. 911 Ltd - Credit facilities 3,177,055 - Arabella Finance DAC - - Elektra Purchase No. 28 DAC 116,026 - Elektra Purchase No. 31 DAC 57,210 - Elektra Purchase No. 32 S.A. - Compartment 1 294,772 - Elektra Purchase No. 32 S.A. - Compartment 2 196,515 - Elektra Purchase No. 33 DAC 117,995 - Elektra Purchase No. 34 DAC 98,257 - Elektra Purchase No. 36 DAC 196,515 - Elektra Purchase No. 37 DAC 61,575 - Elektra Purchase No. 38 DAC 94,327 - Elektra Purchase No. 39 DAC 268,570 - Elektra Purchase No. 41 DAC 30,624 - Elektra Purchase No. 43 DAC 163,762 - Elektra Purchase No. 44 DAC 65,505 - Elektra Purchase No. 46 DAC 45,853 - Elektra Purchase No. 48 DAC 11,154 - Elektra Purchase No. 54 DAC 29,477 - Elektra Purchase No. 55 DAC 98,257 - Elektra Purchase No. 56 DAC 171,629 - Elektra Purchase No. 57 DAC 289,270 - Elektra Purchase No. 63 DAC 150,661 - Elektra Purchase No. 718 DAC 386,506 - Elektra Purchase No. 911 Ltd 232,595 The lines of credit shown are the difference between total credit lines granted and the amount of commercial paper underwritten by the Group. This figure is the additional risk exposure incurred by the Group in addition to the underwritten commercial paper. Moreover, it should be noted that as at 31 December 2018 there were no SPVs of third parties securitisations, where the group acts as investor, subject to consolidation. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 327 Exposures sponsored by the Group (€ '000) AMOUNTS AS AT 12.31.2018 Asset Backed Commercial Paper 2,698,098 - Arabella Finance DAC 1,698,058 - Elektra Purchase No. 28 DAC - - Elektra Purchase No. 31 DAC - - Elektra Purchase No. 32 S.A. - Compartment 1 - - Elektra Purchase No. 32 S.A. - Compartment 2 - - Elektra Purchase No. 33 DAC - - Elektra Purchase No. 34 DAC - - Elektra Purchase No. 36 DAC - - Elektra Purchase No. 37 DAC - - Elektra Purchase No. 38 DAC - - Elektra Purchase No. 39 DAC 410,000 - Elektra Purchase No. 41 DAC - - Elektra Purchase No. 43 DAC - - Elektra Purchase No. 44 DAC - - Elektra Purchase No. 46 DAC - - Elektra Purchase No. 48 DAC - - Elektra Purchase No. 54 DAC - - Elektra Purchase No. 55 DAC - - Elektra Purchase No. 56 DAC - - Elektra Purchase No. 57 DAC - - Elektra Purchase No. 63 DAC - - Elektra Purchase No. 718 DAC 590,041 - Elektra Purchase No. 911 Ltd - Credit facilities 3,177,055 - Arabella Finance DAC - - Elektra Purchase No. 28 DAC 116,026 - Elektra Purchase No. 31 DAC 57,210 - Elektra Purchase No. 32 S.A. - Compartment 1 294,772 - Elektra Purchase No. 32 S.A. - Compartment 2 196,515 - Elektra Purchase No. 33 DAC 117,995 - Elektra Purchase No. 34 DAC 98,257 - Elektra Purchase No. 36 DAC 196,515 - Elektra Purchase No. 37 DAC 61,575 - Elektra Purchase No. 38 DAC 94,327 - Elektra Purchase No. 39 DAC 268,570 - Elektra Purchase No. 41 DAC 30,624 - Elektra Purchase No. 43 DAC 163,762 - Elektra Purchase No. 44 DAC 65,505 - Elektra Purchase No. 46 DAC 45,853 - Elektra Purchase No. 48 DAC 11,154 - Elektra Purchase No. 54 DAC 29,477 - Elektra Purchase No. 55 DAC 98,257 - Elektra Purchase No. 56 DAC 171,629 - Elektra Purchase No. 57 DAC 289,270 - Elektra Purchase No. 63 DAC 150,661 - Elektra Purchase No. 718 DAC 386,506 - Elektra Purchase No. 911 Ltd 232,595 The lines of credit shown are the difference between total credit lines granted and the amount of commercial paper underwritten by the Group. This figure is the additional risk exposure incurred by the Group in addition to the underwritten commercial paper. Moreover, it should be noted that as at 31 December 2018 there were no SPVs of third parties securitisations, where the group acts as investor, subject to consolidation. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 327 Exposures sponsored by the Group (€ '000) AMOUNTS AS AT 12.31.2018 Asset Backed Commercial Paper 2,698,098 - Arabella Finance DAC 1,698,058 - Elektra Purchase No. 28 DAC - - Elektra Purchase No. 31 DAC - - Elektra Purchase No. 32 S.A. - Compartment 1 - - Elektra Purchase No. 32 S.A. - Compartment 2 - - Elektra Purchase No. 33 DAC - - Elektra Purchase No. 34 DAC - - Elektra Purchase No. 36 DAC - - Elektra Purchase No. 37 DAC - - Elektra Purchase No. 38 DAC - - Elektra Purchase No. 39 DAC 410,000 - Elektra Purchase No. 41 DAC - - Elektra Purchase No. 43 DAC - - Elektra Purchase No. 44 DAC - - Elektra Purchase No. 46 DAC - - Elektra Purchase No. 48 DAC - - Elektra Purchase No. 54 DAC - - Elektra Purchase No. 55 DAC - - Elektra Purchase No. 56 DAC - - Elektra Purchase No. 57 DAC - - Elektra Purchase No. 63 DAC - - Elektra Purchase No. 718 DAC 590,041 - Elektra Purchase No. 911 Ltd - Credit facilities 3,177,055 - Arabella Finance DAC - - Elektra Purchase No. 28 DAC 116,026 - Elektra Purchase No. 31 DAC 57,210 - Elektra Purchase No. 32 S.A. - Compartment 1 294,772 - Elektra Purchase No. 32 S.A. - Compartment 2 196,515 - Elektra Purchase No. 33 DAC 117,995 - Elektra Purchase No. 34 DAC 98,257 - Elektra Purchase No. 36 DAC 196,515 - Elektra Purchase No. 37 DAC 61,575 - Elektra Purchase No. 38 DAC 94,327 - Elektra Purchase No. 39 DAC 268,570 - Elektra Purchase No. 41 DAC 30,624 - Elektra Purchase No. 43 DAC 163,762 - Elektra Purchase No. 44 DAC 65,505 - Elektra Purchase No. 46 DAC 45,853 - Elektra Purchase No. 48 DAC 11,154 - Elektra Purchase No. 54 DAC 29,477 - Elektra Purchase No. 55 DAC 98,257 - Elektra Purchase No. 56 DAC 171,629 - Elektra Purchase No. 57 DAC 289,270 - Elektra Purchase No. 63 DAC 150,661 - Elektra Purchase No. 718 DAC 386,506 - Elektra Purchase No. 911 Ltd 232,595 The lines of credit shown are the difference between total credit lines granted and the amount of commercial paper underwritten by the Group. This figure is the additional risk exposure incurred by the Group in addition to the underwritten commercial paper. Moreover, it should be noted that as at 31 December 2018 there were no SPVs of third parties securitisations, where the group acts as investor, subject to consolidation. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 327 Exposures sponsored by the Group (€ '000) AMOUNTS AS AT 12.31.2018 Asset Backed Commercial Paper 2,698,098 - Arabella Finance DAC 1,698,058 - Elektra Purchase No. 28 DAC - - Elektra Purchase No. 31 DAC - - Elektra Purchase No. 32 S.A. - Compartment 1 - - Elektra Purchase No. 32 S.A. - Compartment 2 - - Elektra Purchase No. 33 DAC - - Elektra Purchase No. 34 DAC - - Elektra Purchase No. 36 DAC - - Elektra Purchase No. 37 DAC - - Elektra Purchase No. 38 DAC - - Elektra Purchase No. 39 DAC 410,000 - Elektra Purchase No. 41 DAC - - Elektra Purchase No. 43 DAC - - Elektra Purchase No. 44 DAC - - Elektra Purchase No. 46 DAC - - Elektra Purchase No. 48 DAC - - Elektra Purchase No. 54 DAC - - Elektra Purchase No. 55 DAC - - Elektra Purchase No. 56 DAC - - Elektra Purchase No. 57 DAC - - Elektra Purchase No. 63 DAC - - Elektra Purchase No. 718 DAC 590,041 - Elektra Purchase No. 911 Ltd - Credit facilities 3,177,055 - Arabella Finance DAC - - Elektra Purchase No. 28 DAC 116,026 - Elektra Purchase No. 31 DAC 57,210 - Elektra Purchase No. 32 S.A. - Compartment 1 294,772 - Elektra Purchase No. 32 S.A. - Compartment 2 196,515 - Elektra Purchase No. 33 DAC 117,995 - Elektra Purchase No. 34 DAC 98,257 - Elektra Purchase No. 36 DAC 196,515 - Elektra Purchase No. 37 DAC 61,575 - Elektra Purchase No. 38 DAC 94,327 - Elektra Purchase No. 39 DAC 268,570 - Elektra Purchase No. 41 DAC 30,624 - Elektra Purchase No. 43 DAC 163,762 - Elektra Purchase No. 44 DAC 65,505 - Elektra Purchase No. 46 DAC 45,853 - Elektra Purchase No. 48 DAC 11,154 - Elektra Purchase No. 54 DAC 29,477 - Elektra Purchase No. 55 DAC 98,257 - Elektra Purchase No. 56 DAC 171,629 - Elektra Purchase No. 57 DAC 289,270 - Elektra Purchase No. 63 DAC 150,661 - Elektra Purchase No. 718 DAC 386,506 - Elektra Purchase No. 911 Ltd 232,595 The lines of credit shown are the difference between total credit lines granted and the amount of commercial paper underwritten by the Group. This figure is the additional risk exposure incurred by the Group in addition to the underwritten commercial paper. Moreover, it should be noted that as at 31 December 2018 there were no SPVs of third parties securitisations, where the group acts as investor, subject to consolidation. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 327 Exposures sponsored by the Group (€ '000) AMOUNTS AS AT 12.31.2018 Asset Backed Commercial Paper 2,698,098 - Arabella Finance DAC 1,698,058 - Elektra Purchase No. 28 DAC - - Elektra Purchase No. 31 DAC - - Elektra Purchase No. 32 S.A. - Compartment 1 - - Elektra Purchase No. 32 S.A. - Compartment 2 - - Elektra Purchase No. 33 DAC - - Elektra Purchase No. 34 DAC - - Elektra Purchase No. 36 DAC - - Elektra Purchase No. 37 DAC - - Elektra Purchase No. 38 DAC - - Elektra Purchase No. 39 DAC 410,000 - Elektra Purchase No. 41 DAC - - Elektra Purchase No. 43 DAC - - Elektra Purchase No. 44 DAC - - Elektra Purchase No. 46 DAC - - Elektra Purchase No. 48 DAC - - Elektra Purchase No. 54 DAC - - Elektra Purchase No. 55 DAC - - Elektra Purchase No. 56 DAC - - Elektra Purchase No. 57 DAC - - Elektra Purchase No. 63 DAC - - Elektra Purchase No. 718 DAC 590,041 - Elektra Purchase No. 911 Ltd - Credit facilities 3,177,055 - Arabella Finance DAC - - Elektra Purchase No. 28 DAC 116,026 - Elektra Purchase No. 31 DAC 57,210 - Elektra Purchase No. 32 S.A. - Compartment 1 294,772 - Elektra Purchase No. 32 S.A. - Compartment 2 196,515 - Elektra Purchase No. 33 DAC 117,995 - Elektra Purchase No. 34 DAC 98,257 - Elektra Purchase No. 36 DAC 196,515 - Elektra Purchase No. 37 DAC 61,575 - Elektra Purchase No. 38 DAC 94,327 - Elektra Purchase No. 39 DAC 268,570 - Elektra Purchase No. 41 DAC 30,624 - Elektra Purchase No. 43 DAC 163,762 - Elektra Purchase No. 44 DAC 65,505 - Elektra Purchase No. 46 DAC 45,853 - Elektra Purchase No. 48 DAC 11,154 - Elektra Purchase No. 54 DAC 29,477 - Elektra Purchase No. 55 DAC 98,257 - Elektra Purchase No. 56 DAC 171,629 - Elektra Purchase No. 57 DAC 289,270 - Elektra Purchase No. 63 DAC 150,661 - Elektra Purchase No. 718 DAC 386,506 - Elektra Purchase No. 911 Ltd 232,595 The lines of credit shown are the difference between total credit lines granted and the amount of commercial paper underwritten by the Group. This figure is the additional risk exposure incurred by the Group in addition to the underwritten commercial paper. Moreover, it should be noted that as at 31 December 2018 there were no SPVs of third parties securitisations, where the group acts as investor, subject to consolidation. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 328 2018 Annual Report and Accounts · UniCredit C.3 SPVs for securitisations (€ '000) NAME OF SECURITISATION/NAME OF VEHICLE COUNTRY OF INCORPORATION CONSOLIDATION ASSETS LIABILITIES LOANS AND RECEIVEBLES DEBT SECURITIES OTHERS SENIOR MEZZANINE JUNIOR Arabella Finance DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 4,314,629 - 1,930 4,312,211 - - Capital Mortgage S.r.l. Piazzetta Monte 1 - 37121 Verona Yes 649,413 - 34,032 495,744 74,000 67,592 Cordusio RMBS Securitisation S.r.l. - Serie 2006 Piazzetta Monte 1 - 37121 Verona Yes 233,578 - 10,834 72,290 141,700 10,686 Cordusio RMBS Securitisation S.r.l. - Serie 2007 Piazzetta Monte 1 - 37121 Verona Yes 840,671 - 24,523 554,353 236,400 2,004 Cordusio RMBS - UCFin S.r.l Piazzetta Monte 1 - 37121 Verona Yes 472,592 - 24,363 272,180 148,000 13,358 Elektra Purchase No. 28 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 176,488 - - 176,485 - - Elektra Purchase No. 31 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 57,069 - - 57,058 - - Elektra Purchase No. 32 S.A. - Compartment 1 52-54 avenue du X Septembre, L-2550 Luxembourg Yes 230,712 - - 230,602 - - Elektra Purchase No. 32 S.A. - Compartment 2 52-54 avenue du X Septembre, L-2550 Luxembourg Yes 300,116 - - 300,093 - - Elektra Purchase No. 33 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 169,847 - - 169,846 - - Elektra Purchase No. 34 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 98,661 - - 98,658 - - Elektra Purchase No. 36 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 300,002 - 313 300,000 - - Elektra Purchase No. 37 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 92,799 - 3 92,769 - - Elektra Purchase No. 38 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 119,235 - 11 119,233 - - Elektra Purchase No. 39 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 410,001 - 65 410,000 - - Elektra Purchase No. 41 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 46,752 - 4 46,750 - - Elektra Purchase No. 43 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 250,002 - - 250,000 - - Elektra Purchase No. 44 Designated Activity Company 11-12 Warrington Place; Dublin 2 Yes 100,001 - - 100,000 - - Elektra Purchase No. 46 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 25,694 - 6 25,692 - - Elektra Purchase No. 48 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 17,100 - 493 17,028 - - Elektra Purchase No. 54 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 42,999 - 20 42,969 - - Elektra Purchase No. 55 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 137,512 - 12 137,511 - - Elektra Purchase No. 56 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 233,019 - - 233,018 - - Elektra Purchase No. 57 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 429,745 - 7,098 436,833 - - Elektra Purchase No. 63 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 230,053 - - 230,000 - - Elektra Purchase No. 718 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 590,041 - 1 590,040 - - Elektra Purchase No. 911 Ltd OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey Yes 355,080 - - 355,079 - - F-E Mortgages S.r.l. - 2003 Piazzetta Monte 1 - 37121 Verona Yes 110,595 - 26,097 37,649 59,018 7,632 F-E Mortgages S.r.l. - 2005 Piazzetta Monte 1 - 37121 Verona Yes 181,441 - 14,061 86,154 36,864 32,311 Heliconus S.r.l Piazzetta Monte 1 - 37121 Verona Yes 55,230 - 12,905 15,678 30,829 8,990 LARGE CORPORATE ONE SRL Piazzetta Monte 1 - 37121 Verona Yes 234,272 - 53,484 255,446 - 36,364 SUCCESS 2015 B.V. Barbara Strozzilaan 101, 1083HN Amsterdam Yes 343,727 - 60 230,110 - 94,400 ARCOBALENO FINANCE SRL Foro Buonaparte,70 - 20121 Milano No 65,124 - 4,857 21,926 - 54,700 CREDIARC SPV SRL FORO BUONAPARTE,70 20121 MILANO No 31,779 - 2,186 27,766 - 26,411 Elektra Purchase No. 8 Limited OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey No 140,014 - - 140,000 - - Elektra Purchase 17 S.A. RE COMPARTMENT 14 52-54 avenue du X Septembre, L-2550 Luxembourg No 28,803 - - 28,800 - - Elektra Purchase No. 17 S.A. (Re Compartment 18) 52-54 avenue du X Septembre, L-2550 Luxembourg No 72,807 - - 72,800 - - Elektra Purchase No. 25 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 170,617 - - 170,600 - - Elektra Purchase No. 29 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 328,133 - - 328,100 - - Elektra Purchase No. 45 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 120,212 - - 120,200 - - FINO 1 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 657,520 - 113,128 545,019 69,640 50,311 FINO 2 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 594,570 - 37,499 323,036 200,600 39,554 ONIF FINANCE SRL Via Alessandro Pestalozza 12/14, 20131 Milano No 282,572 - 21,443 94,438 117,481 80,877 Pillarstone Italy SPV S.r.l. - Burgo Via Pietro Mascagni 14, 20122 MILANO No 182,581 - 8,464 6,959 132,225 27,078 Pillarstone Italy SPV S.r.l. - Premuda Via Pietro Mascagni 14, 20122 MILANO No 226,813 - 5,252 4,544 197,347 88,911 Pillarstone Italy SPV S.r.l. - Rainbow Via Pietro Mascagni 14, 20122 MILANO No 38,182 - 103 890 37,934 56,405 Sestante Finance S.r.l. Via Borromei, 5 - 20123 Milano No 233,586 - - 166,432 89,502 8,610 YANEZ SPV S.R.L. Via Vittorio Alfieri 1, 31015 Conegliano No 1,012,267 - 25,314 1,492 297,066 441,730 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 328 2018 Annual Report and Accounts · UniCredit C.3 SPVs for securitisations (€ '000) NAME OF SECURITISATION/NAME OF VEHICLE COUNTRY OF INCORPORATION CONSOLIDATION ASSETS LIABILITIES LOANS AND RECEIVEBLES DEBT SECURITIES OTHERS SENIOR MEZZANINE JUNIOR Arabella Finance DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 4,314,629 - 1,930 4,312,211 - - Capital Mortgage S.r.l. Piazzetta Monte 1 - 37121 Verona Yes 649,413 - 34,032 495,744 74,000 67,592 Cordusio RMBS Securitisation S.r.l. - Serie 2006 Piazzetta Monte 1 - 37121 Verona Yes 233,578 - 10,834 72,290 141,700 10,686 Cordusio RMBS Securitisation S.r.l. - Serie 2007 Piazzetta Monte 1 - 37121 Verona Yes 840,671 - 24,523 554,353 236,400 2,004 Cordusio RMBS - UCFin S.r.l Piazzetta Monte 1 - 37121 Verona Yes 472,592 - 24,363 272,180 148,000 13,358 Elektra Purchase No. 28 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 176,488 - - 176,485 - - Elektra Purchase No. 31 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 57,069 - - 57,058 - - Elektra Purchase No. 32 S.A. - Compartment 1 52-54 avenue du X Septembre, L-2550 Luxembourg Yes 230,712 - - 230,602 - - Elektra Purchase No. 32 S.A. - Compartment 2 52-54 avenue du X Septembre, L-2550 Luxembourg Yes 300,116 - - 300,093 - - Elektra Purchase No. 33 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 169,847 - - 169,846 - - Elektra Purchase No. 34 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 98,661 - - 98,658 - - Elektra Purchase No. 36 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 300,002 - 313 300,000 - - Elektra Purchase No. 37 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 92,799 - 3 92,769 - - Elektra Purchase No. 38 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 119,235 - 11 119,233 - - Elektra Purchase No. 39 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 410,001 - 65 410,000 - - Elektra Purchase No. 41 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 46,752 - 4 46,750 - - Elektra Purchase No. 43 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 250,002 - - 250,000 - - Elektra Purchase No. 44 Designated Activity Company 11-12 Warrington Place; Dublin 2 Yes 100,001 - - 100,000 - - Elektra Purchase No. 46 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 25,694 - 6 25,692 - - Elektra Purchase No. 48 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 17,100 - 493 17,028 - - Elektra Purchase No. 54 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 42,999 - 20 42,969 - - Elektra Purchase No. 55 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 137,512 - 12 137,511 - - Elektra Purchase No. 56 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 233,019 - - 233,018 - - Elektra Purchase No. 57 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 429,745 - 7,098 436,833 - - Elektra Purchase No. 63 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 230,053 - - 230,000 - - Elektra Purchase No. 718 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 590,041 - 1 590,040 - - Elektra Purchase No. 911 Ltd OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey Yes 355,080 - - 355,079 - - F-E Mortgages S.r.l. - 2003 Piazzetta Monte 1 - 37121 Verona Yes 110,595 - 26,097 37,649 59,018 7,632 F-E Mortgages S.r.l. - 2005 Piazzetta Monte 1 - 37121 Verona Yes 181,441 - 14,061 86,154 36,864 32,311 Heliconus S.r.l Piazzetta Monte 1 - 37121 Verona Yes 55,230 - 12,905 15,678 30,829 8,990 LARGE CORPORATE ONE SRL Piazzetta Monte 1 - 37121 Verona Yes 234,272 - 53,484 255,446 - 36,364 SUCCESS 2015 B.V. Barbara Strozzilaan 101, 1083HN Amsterdam Yes 343,727 - 60 230,110 - 94,400 ARCOBALENO FINANCE SRL Foro Buonaparte,70 - 20121 Milano No 65,124 - 4,857 21,926 - 54,700 CREDIARC SPV SRL FORO BUONAPARTE,70 20121 MILANO No 31,779 - 2,186 27,766 - 26,411 Elektra Purchase No. 8 Limited OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey No 140,014 - - 140,000 - - Elektra Purchase 17 S.A. RE COMPARTMENT 14 52-54 avenue du X Septembre, L-2550 Luxembourg No 28,803 - - 28,800 - - Elektra Purchase No. 17 S.A. (Re Compartment 18) 52-54 avenue du X Septembre, L-2550 Luxembourg No 72,807 - - 72,800 - - Elektra Purchase No. 25 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 170,617 - - 170,600 - - Elektra Purchase No. 29 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 328,133 - - 328,100 - - Elektra Purchase No. 45 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 120,212 - - 120,200 - - FINO 1 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 657,520 - 113,128 545,019 69,640 50,311 FINO 2 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 594,570 - 37,499 323,036 200,600 39,554 ONIF FINANCE SRL Via Alessandro Pestalozza 12/14, 20131 Milano No 282,572 - 21,443 94,438 117,481 80,877 Pillarstone Italy SPV S.r.l. - Burgo Via Pietro Mascagni 14, 20122 MILANO No 182,581 - 8,464 6,959 132,225 27,078 Pillarstone Italy SPV S.r.l. - Premuda Via Pietro Mascagni 14, 20122 MILANO No 226,813 - 5,252 4,544 197,347 88,911 Pillarstone Italy SPV S.r.l. - Rainbow Via Pietro Mascagni 14, 20122 MILANO No 38,182 - 103 890 37,934 56,405 Sestante Finance S.r.l. Via Borromei, 5 - 20123 Milano No 233,586 - - 166,432 89,502 8,610 YANEZ SPV S.R.L. Via Vittorio Alfieri 1, 31015 Conegliano No 1,012,267 - 25,314 1,492 297,066 441,730 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 328 2018 Annual Report and Accounts · UniCredit C.3 SPVs for securitisations (€ '000) NAME OF SECURITISATION/NAME OF VEHICLE COUNTRY OF INCORPORATION CONSOLIDATION ASSETS LIABILITIES LOANS AND RECEIVEBLES DEBT SECURITIES OTHERS SENIOR MEZZANINE JUNIOR Arabella Finance DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 4,314,629 - 1,930 4,312,211 - - Capital Mortgage S.r.l. Piazzetta Monte 1 - 37121 Verona Yes 649,413 - 34,032 495,744 74,000 67,592 Cordusio RMBS Securitisation S.r.l. - Serie 2006 Piazzetta Monte 1 - 37121 Verona Yes 233,578 - 10,834 72,290 141,700 10,686 Cordusio RMBS Securitisation S.r.l. - Serie 2007 Piazzetta Monte 1 - 37121 Verona Yes 840,671 - 24,523 554,353 236,400 2,004 Cordusio RMBS - UCFin S.r.l Piazzetta Monte 1 - 37121 Verona Yes 472,592 - 24,363 272,180 148,000 13,358 Elektra Purchase No. 28 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 176,488 - - 176,485 - - Elektra Purchase No. 31 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 57,069 - - 57,058 - - Elektra Purchase No. 32 S.A. - Compartment 1 52-54 avenue du X Septembre, L-2550 Luxembourg Yes 230,712 - - 230,602 - - Elektra Purchase No. 32 S.A. - Compartment 2 52-54 avenue du X Septembre, L-2550 Luxembourg Yes 300,116 - - 300,093 - - Elektra Purchase No. 33 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 169,847 - - 169,846 - - Elektra Purchase No. 34 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 98,661 - - 98,658 - - Elektra Purchase No. 36 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 300,002 - 313 300,000 - - Elektra Purchase No. 37 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 92,799 - 3 92,769 - - Elektra Purchase No. 38 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 119,235 - 11 119,233 - - Elektra Purchase No. 39 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 410,001 - 65 410,000 - - Elektra Purchase No. 41 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 46,752 - 4 46,750 - - Elektra Purchase No. 43 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 250,002 - - 250,000 - - Elektra Purchase No. 44 Designated Activity Company 11-12 Warrington Place; Dublin 2 Yes 100,001 - - 100,000 - - Elektra Purchase No. 46 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 25,694 - 6 25,692 - - Elektra Purchase No. 48 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 17,100 - 493 17,028 - - Elektra Purchase No. 54 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 42,999 - 20 42,969 - - Elektra Purchase No. 55 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 137,512 - 12 137,511 - - Elektra Purchase No. 56 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 233,019 - - 233,018 - - Elektra Purchase No. 57 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 429,745 - 7,098 436,833 - - Elektra Purchase No. 63 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 230,053 - - 230,000 - - Elektra Purchase No. 718 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 590,041 - 1 590,040 - - Elektra Purchase No. 911 Ltd OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey Yes 355,080 - - 355,079 - - F-E Mortgages S.r.l. - 2003 Piazzetta Monte 1 - 37121 Verona Yes 110,595 - 26,097 37,649 59,018 7,632 F-E Mortgages S.r.l. - 2005 Piazzetta Monte 1 - 37121 Verona Yes 181,441 - 14,061 86,154 36,864 32,311 Heliconus S.r.l Piazzetta Monte 1 - 37121 Verona Yes 55,230 - 12,905 15,678 30,829 8,990 LARGE CORPORATE ONE SRL Piazzetta Monte 1 - 37121 Verona Yes 234,272 - 53,484 255,446 - 36,364 SUCCESS 2015 B.V. Barbara Strozzilaan 101, 1083HN Amsterdam Yes 343,727 - 60 230,110 - 94,400 ARCOBALENO FINANCE SRL Foro Buonaparte,70 - 20121 Milano No 65,124 - 4,857 21,926 - 54,700 CREDIARC SPV SRL FORO BUONAPARTE,70 20121 MILANO No 31,779 - 2,186 27,766 - 26,411 Elektra Purchase No. 8 Limited OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey No 140,014 - - 140,000 - - Elektra Purchase 17 S.A. RE COMPARTMENT 14 52-54 avenue du X Septembre, L-2550 Luxembourg No 28,803 - - 28,800 - - Elektra Purchase No. 17 S.A. (Re Compartment 18) 52-54 avenue du X Septembre, L-2550 Luxembourg No 72,807 - - 72,800 - - Elektra Purchase No. 25 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 170,617 - - 170,600 - - Elektra Purchase No. 29 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 328,133 - - 328,100 - - Elektra Purchase No. 45 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 120,212 - - 120,200 - - FINO 1 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 657,520 - 113,128 545,019 69,640 50,311 FINO 2 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 594,570 - 37,499 323,036 200,600 39,554 ONIF FINANCE SRL Via Alessandro Pestalozza 12/14, 20131 Milano No 282,572 - 21,443 94,438 117,481 80,877 Pillarstone Italy SPV S.r.l. - Burgo Via Pietro Mascagni 14, 20122 MILANO No 182,581 - 8,464 6,959 132,225 27,078 Pillarstone Italy SPV S.r.l. - Premuda Via Pietro Mascagni 14, 20122 MILANO No 226,813 - 5,252 4,544 197,347 88,911 Pillarstone Italy SPV S.r.l. - Rainbow Via Pietro Mascagni 14, 20122 MILANO No 38,182 - 103 890 37,934 56,405 Sestante Finance S.r.l. Via Borromei, 5 - 20123 Milano No 233,586 - - 166,432 89,502 8,610 YANEZ SPV S.R.L. Via Vittorio Alfieri 1, 31015 Conegliano No 1,012,267 - 25,314 1,492 297,066 441,730 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 328 2018 Annual Report and Accounts · UniCredit C.3 SPVs for securitisations (€ '000) NAME OF SECURITISATION/NAME OF VEHICLE COUNTRY OF INCORPORATION CONSOLIDATION ASSETS LIABILITIES LOANS AND RECEIVEBLES DEBT SECURITIES OTHERS SENIOR MEZZANINE JUNIOR Arabella Finance DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 4,314,629 - 1,930 4,312,211 - - Capital Mortgage S.r.l. Piazzetta Monte 1 - 37121 Verona Yes 649,413 - 34,032 495,744 74,000 67,592 Cordusio RMBS Securitisation S.r.l. - Serie 2006 Piazzetta Monte 1 - 37121 Verona Yes 233,578 - 10,834 72,290 141,700 10,686 Cordusio RMBS Securitisation S.r.l. - Serie 2007 Piazzetta Monte 1 - 37121 Verona Yes 840,671 - 24,523 554,353 236,400 2,004 Cordusio RMBS - UCFin S.r.l Piazzetta Monte 1 - 37121 Verona Yes 472,592 - 24,363 272,180 148,000 13,358 Elektra Purchase No. 28 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 176,488 - - 176,485 - - Elektra Purchase No. 31 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 57,069 - - 57,058 - - Elektra Purchase No. 32 S.A. - Compartment 1 52-54 avenue du X Septembre, L-2550 Luxembourg Yes 230,712 - - 230,602 - - Elektra Purchase No. 32 S.A. - Compartment 2 52-54 avenue du X Septembre, L-2550 Luxembourg Yes 300,116 - - 300,093 - - Elektra Purchase No. 33 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 169,847 - - 169,846 - - Elektra Purchase No. 34 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 98,661 - - 98,658 - - Elektra Purchase No. 36 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 300,002 - 313 300,000 - - Elektra Purchase No. 37 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 92,799 - 3 92,769 - - Elektra Purchase No. 38 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 119,235 - 11 119,233 - - Elektra Purchase No. 39 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 410,001 - 65 410,000 - - Elektra Purchase No. 41 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 46,752 - 4 46,750 - - Elektra Purchase No. 43 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 250,002 - - 250,000 - - Elektra Purchase No. 44 Designated Activity Company 11-12 Warrington Place; Dublin 2 Yes 100,001 - - 100,000 - - Elektra Purchase No. 46 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 25,694 - 6 25,692 - - Elektra Purchase No. 48 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 17,100 - 493 17,028 - - Elektra Purchase No. 54 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 42,999 - 20 42,969 - - Elektra Purchase No. 55 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 137,512 - 12 137,511 - - Elektra Purchase No. 56 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 233,019 - - 233,018 - - Elektra Purchase No. 57 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 429,745 - 7,098 436,833 - - Elektra Purchase No. 63 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 230,053 - - 230,000 - - Elektra Purchase No. 718 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 590,041 - 1 590,040 - - Elektra Purchase No. 911 Ltd OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey Yes 355,080 - - 355,079 - - F-E Mortgages S.r.l. - 2003 Piazzetta Monte 1 - 37121 Verona Yes 110,595 - 26,097 37,649 59,018 7,632 F-E Mortgages S.r.l. - 2005 Piazzetta Monte 1 - 37121 Verona Yes 181,441 - 14,061 86,154 36,864 32,311 Heliconus S.r.l Piazzetta Monte 1 - 37121 Verona Yes 55,230 - 12,905 15,678 30,829 8,990 LARGE CORPORATE ONE SRL Piazzetta Monte 1 - 37121 Verona Yes 234,272 - 53,484 255,446 - 36,364 SUCCESS 2015 B.V. Barbara Strozzilaan 101, 1083HN Amsterdam Yes 343,727 - 60 230,110 - 94,400 ARCOBALENO FINANCE SRL Foro Buonaparte,70 - 20121 Milano No 65,124 - 4,857 21,926 - 54,700 CREDIARC SPV SRL FORO BUONAPARTE,70 20121 MILANO No 31,779 - 2,186 27,766 - 26,411 Elektra Purchase No. 8 Limited OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey No 140,014 - - 140,000 - - Elektra Purchase 17 S.A. RE COMPARTMENT 14 52-54 avenue du X Septembre, L-2550 Luxembourg No 28,803 - - 28,800 - - Elektra Purchase No. 17 S.A. (Re Compartment 18) 52-54 avenue du X Septembre, L-2550 Luxembourg No 72,807 - - 72,800 - - Elektra Purchase No. 25 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 170,617 - - 170,600 - - Elektra Purchase No. 29 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 328,133 - - 328,100 - - Elektra Purchase No. 45 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 120,212 - - 120,200 - - FINO 1 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 657,520 - 113,128 545,019 69,640 50,311 FINO 2 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 594,570 - 37,499 323,036 200,600 39,554 ONIF FINANCE SRL Via Alessandro Pestalozza 12/14, 20131 Milano No 282,572 - 21,443 94,438 117,481 80,877 Pillarstone Italy SPV S.r.l. - Burgo Via Pietro Mascagni 14, 20122 MILANO No 182,581 - 8,464 6,959 132,225 27,078 Pillarstone Italy SPV S.r.l. - Premuda Via Pietro Mascagni 14, 20122 MILANO No 226,813 - 5,252 4,544 197,347 88,911 Pillarstone Italy SPV S.r.l. - Rainbow Via Pietro Mascagni 14, 20122 MILANO No 38,182 - 103 890 37,934 56,405 Sestante Finance S.r.l. Via Borromei, 5 - 20123 Milano No 233,586 - - 166,432 89,502 8,610 YANEZ SPV S.R.L. Via Vittorio Alfieri 1, 31015 Conegliano No 1,012,267 - 25,314 1,492 297,066 441,730 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 328 2018 Annual Report and Accounts · UniCredit C.3 SPVs for securitisations (€ '000) NAME OF SECURITISATION/NAME OF VEHICLE COUNTRY OF INCORPORATION CONSOLIDATION ASSETS LIABILITIES LOANS AND RECEIVEBLES DEBT SECURITIES OTHERS SENIOR MEZZANINE JUNIOR Arabella Finance DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 4,314,629 - 1,930 4,312,211 - - Capital Mortgage S.r.l. Piazzetta Monte 1 - 37121 Verona Yes 649,413 - 34,032 495,744 74,000 67,592 Cordusio RMBS Securitisation S.r.l. - Serie 2006 Piazzetta Monte 1 - 37121 Verona Yes 233,578 - 10,834 72,290 141,700 10,686 Cordusio RMBS Securitisation S.r.l. - Serie 2007 Piazzetta Monte 1 - 37121 Verona Yes 840,671 - 24,523 554,353 236,400 2,004 Cordusio RMBS - UCFin S.r.l Piazzetta Monte 1 - 37121 Verona Yes 472,592 - 24,363 272,180 148,000 13,358 Elektra Purchase No. 28 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 176,488 - - 176,485 - - Elektra Purchase No. 31 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 57,069 - - 57,058 - - Elektra Purchase No. 32 S.A. - Compartment 1 52-54 avenue du X Septembre, L-2550 Luxembourg Yes 230,712 - - 230,602 - - Elektra Purchase No. 32 S.A. - Compartment 2 52-54 avenue du X Septembre, L-2550 Luxembourg Yes 300,116 - - 300,093 - - Elektra Purchase No. 33 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 169,847 - - 169,846 - - Elektra Purchase No. 34 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 98,661 - - 98,658 - - Elektra Purchase No. 36 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 300,002 - 313 300,000 - - Elektra Purchase No. 37 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 92,799 - 3 92,769 - - Elektra Purchase No. 38 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 119,235 - 11 119,233 - - Elektra Purchase No. 39 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 410,001 - 65 410,000 - - Elektra Purchase No. 41 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 46,752 - 4 46,750 - - Elektra Purchase No. 43 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 250,002 - - 250,000 - - Elektra Purchase No. 44 Designated Activity Company 11-12 Warrington Place; Dublin 2 Yes 100,001 - - 100,000 - - Elektra Purchase No. 46 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 25,694 - 6 25,692 - - Elektra Purchase No. 48 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 17,100 - 493 17,028 - - Elektra Purchase No. 54 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 42,999 - 20 42,969 - - Elektra Purchase No. 55 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 137,512 - 12 137,511 - - Elektra Purchase No. 56 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 233,019 - - 233,018 - - Elektra Purchase No. 57 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 429,745 - 7,098 436,833 - - Elektra Purchase No. 63 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 230,053 - - 230,000 - - Elektra Purchase No. 718 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Yes 590,041 - 1 590,040 - - Elektra Purchase No. 911 Ltd OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey Yes 355,080 - - 355,079 - - F-E Mortgages S.r.l. - 2003 Piazzetta Monte 1 - 37121 Verona Yes 110,595 - 26,097 37,649 59,018 7,632 F-E Mortgages S.r.l. - 2005 Piazzetta Monte 1 - 37121 Verona Yes 181,441 - 14,061 86,154 36,864 32,311 Heliconus S.r.l Piazzetta Monte 1 - 37121 Verona Yes 55,230 - 12,905 15,678 30,829 8,990 LARGE CORPORATE ONE SRL Piazzetta Monte 1 - 37121 Verona Yes 234,272 - 53,484 255,446 - 36,364 SUCCESS 2015 B.V. Barbara Strozzilaan 101, 1083HN Amsterdam Yes 343,727 - 60 230,110 - 94,400 ARCOBALENO FINANCE SRL Foro Buonaparte,70 - 20121 Milano No 65,124 - 4,857 21,926 - 54,700 CREDIARC SPV SRL FORO BUONAPARTE,70 20121 MILANO No 31,779 - 2,186 27,766 - 26,411 Elektra Purchase No. 8 Limited OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey No 140,014 - - 140,000 - - Elektra Purchase 17 S.A. RE COMPARTMENT 14 52-54 avenue du X Septembre, L-2550 Luxembourg No 28,803 - - 28,800 - - Elektra Purchase No. 17 S.A. (Re Compartment 18) 52-54 avenue du X Septembre, L-2550 Luxembourg No 72,807 - - 72,800 - - Elektra Purchase No. 25 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 170,617 - - 170,600 - - Elektra Purchase No. 29 DAC 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 328,133 - - 328,100 - - Elektra Purchase No. 45 Designated Activity Company 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland No 120,212 - - 120,200 - - FINO 1 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 657,520 - 113,128 545,019 69,640 50,311 FINO 2 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 594,570 - 37,499 323,036 200,600 39,554 ONIF FINANCE SRL Via Alessandro Pestalozza 12/14, 20131 Milano No 282,572 - 21,443 94,438 117,481 80,877 Pillarstone Italy SPV S.r.l. - Burgo Via Pietro Mascagni 14, 20122 MILANO No 182,581 - 8,464 6,959 132,225 27,078 Pillarstone Italy SPV S.r.l. - Premuda Via Pietro Mascagni 14, 20122 MILANO No 226,813 - 5,252 4,544 197,347 88,911 Pillarstone Italy SPV S.r.l. - Rainbow Via Pietro Mascagni 14, 20122 MILANO No 38,182 - 103 890 37,934 56,405 Sestante Finance S.r.l. Via Borromei, 5 - 20123 Milano No 233,586 - - 166,432 89,502 8,610 YANEZ SPV S.R.L. Via Vittorio Alfieri 1, 31015 Conegliano No 1,012,267 - 25,314 1,492 297,066 441,730 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 329 C.4 Regulatory consolidation - Special Purpose Vehicles for securitisation not subject to consolidation As mentioned before in the context of securitisation transactions the Group may operate as investor, sponsor and originator. The following table provides indication on assets and liabilities recognised in the balance sheet as well as off-balance exposures of the Group toward non-consolidated securitisation vehicles and broken down by role of the Group. The maximum exposure to loss has been calculated by grossing up the difference between assets and liabilities with off balance sheet positions, irrevocable credit lines and financial guarantees, held toward these vehicles and reported in column “difference between maximum exposure to loss and accounting value”. Exposures to Securitisation SPVs not subject to consolidation (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) ABS Issuing vehicles (Investor) 6,827,164 128,774 6,698,390 6,720,385 21,995 HFT 44,426 Deposits 121,686 DFV - Securities - MFV 71,738 HFT 7,088 FVOCI - DFV - AC 6,711,000 - Commercial Paper Conduits (Sponsor) - 40,961 (40,961) 887,092 928,053 HFT - Deposits 38,061 DFV - Securities - MFV - HFT 2,900 FVOCI - DFV - AC - - Own securitisations (Originator) 839,947 154,744 685,203 685,203 - HFT - Deposits 154,744 DFV - Securities - MFV 60,015 HFT - FVOCI 229,527 DFV - AC 550,405 - Total 7,667,111 324,479 7,342,632 8,292,680 950,048 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost Exposures toward ABS Issuing vehicles are constituted for the most part, €6,785,152 thousand, by exposures in Asset Backed Securities. The remaining part is constituted by loans. The good credit quality of this portfolio is borne out by the fact that over 98% of these instruments are rated A or better and over 69% of the portfolio is triple-A rated while at 31 December 2017 over 96% of these exposures were rated A and 65% of the portfolio was rated triple-A. Over 78% of the exposure is toward countries belonging to European Union. Exposure to Greece, Ireland, Portugal and Spain accounts for 14.94%, most of which concerns exposures to Spanish underlying assets (11.65%). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 329 C.4 Regulatory consolidation - Special Purpose Vehicles for securitisation not subject to consolidation As mentioned before in the context of securitisation transactions the Group may operate as investor, sponsor and originator. The following table provides indication on assets and liabilities recognised in the balance sheet as well as off-balance exposures of the Group toward non-consolidated securitisation vehicles and broken down by role of the Group. The maximum exposure to loss has been calculated by grossing up the difference between assets and liabilities with off balance sheet positions, irrevocable credit lines and financial guarantees, held toward these vehicles and reported in column “difference between maximum exposure to loss and accounting value”. Exposures to Securitisation SPVs not subject to consolidation (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) ABS Issuing vehicles (Investor) 6,827,164 128,774 6,698,390 6,720,385 21,995 HFT 44,426 Deposits 121,686 DFV - Securities - MFV 71,738 HFT 7,088 FVOCI - DFV - AC 6,711,000 - Commercial Paper Conduits (Sponsor) - 40,961 (40,961) 887,092 928,053 HFT - Deposits 38,061 DFV - Securities - MFV - HFT 2,900 FVOCI - DFV - AC - - Own securitisations (Originator) 839,947 154,744 685,203 685,203 - HFT - Deposits 154,744 DFV - Securities - MFV 60,015 HFT - FVOCI 229,527 DFV - AC 550,405 - Total 7,667,111 324,479 7,342,632 8,292,680 950,048 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost Exposures toward ABS Issuing vehicles are constituted for the most part, €6,785,152 thousand, by exposures in Asset Backed Securities. The remaining part is constituted by loans. The good credit quality of this portfolio is borne out by the fact that over 98% of these instruments are rated A or better and over 69% of the portfolio is triple-A rated while at 31 December 2017 over 96% of these exposures were rated A and 65% of the portfolio was rated triple-A. Over 78% of the exposure is toward countries belonging to European Union. Exposure to Greece, Ireland, Portugal and Spain accounts for 14.94%, most of which concerns exposures to Spanish underlying assets (11.65%). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 329 C.4 Regulatory consolidation - Special Purpose Vehicles for securitisation not subject to consolidation As mentioned before in the context of securitisation transactions the Group may operate as investor, sponsor and originator. The following table provides indication on assets and liabilities recognised in the balance sheet as well as off-balance exposures of the Group toward non-consolidated securitisation vehicles and broken down by role of the Group. The maximum exposure to loss has been calculated by grossing up the difference between assets and liabilities with off balance sheet positions, irrevocable credit lines and financial guarantees, held toward these vehicles and reported in column “difference between maximum exposure to loss and accounting value”. Exposures to Securitisation SPVs not subject to consolidation (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) ABS Issuing vehicles (Investor) 6,827,164 128,774 6,698,390 6,720,385 21,995 HFT 44,426 Deposits 121,686 DFV - Securities - MFV 71,738 HFT 7,088 FVOCI - DFV - AC 6,711,000 - Commercial Paper Conduits (Sponsor) - 40,961 (40,961) 887,092 928,053 HFT - Deposits 38,061 DFV - Securities - MFV - HFT 2,900 FVOCI - DFV - AC - - Own securitisations (Originator) 839,947 154,744 685,203 685,203 - HFT - Deposits 154,744 DFV - Securities - MFV 60,015 HFT - FVOCI 229,527 DFV - AC 550,405 - Total 7,667,111 324,479 7,342,632 8,292,680 950,048 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost Exposures toward ABS Issuing vehicles are constituted for the most part, €6,785,152 thousand, by exposures in Asset Backed Securities. The remaining part is constituted by loans. The good credit quality of this portfolio is borne out by the fact that over 98% of these instruments are rated A or better and over 69% of the portfolio is triple-A rated while at 31 December 2017 over 96% of these exposures were rated A and 65% of the portfolio was rated triple-A. Over 78% of the exposure is toward countries belonging to European Union. Exposure to Greece, Ireland, Portugal and Spain accounts for 14.94%, most of which concerns exposures to Spanish underlying assets (11.65%). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 329 C.4 Regulatory consolidation - Special Purpose Vehicles for securitisation not subject to consolidation As mentioned before in the context of securitisation transactions the Group may operate as investor, sponsor and originator. The following table provides indication on assets and liabilities recognised in the balance sheet as well as off-balance exposures of the Group toward non-consolidated securitisation vehicles and broken down by role of the Group. The maximum exposure to loss has been calculated by grossing up the difference between assets and liabilities with off balance sheet positions, irrevocable credit lines and financial guarantees, held toward these vehicles and reported in column “difference between maximum exposure to loss and accounting value”. Exposures to Securitisation SPVs not subject to consolidation (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) ABS Issuing vehicles (Investor) 6,827,164 128,774 6,698,390 6,720,385 21,995 HFT 44,426 Deposits 121,686 DFV - Securities - MFV 71,738 HFT 7,088 FVOCI - DFV - AC 6,711,000 - Commercial Paper Conduits (Sponsor) - 40,961 (40,961) 887,092 928,053 HFT - Deposits 38,061 DFV - Securities - MFV - HFT 2,900 FVOCI - DFV - AC - - Own securitisations (Originator) 839,947 154,744 685,203 685,203 - HFT - Deposits 154,744 DFV - Securities - MFV 60,015 HFT - FVOCI 229,527 DFV - AC 550,405 - Total 7,667,111 324,479 7,342,632 8,292,680 950,048 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost Exposures toward ABS Issuing vehicles are constituted for the most part, €6,785,152 thousand, by exposures in Asset Backed Securities. The remaining part is constituted by loans. The good credit quality of this portfolio is borne out by the fact that over 98% of these instruments are rated A or better and over 69% of the portfolio is triple-A rated while at 31 December 2017 over 96% of these exposures were rated A and 65% of the portfolio was rated triple-A. Over 78% of the exposure is toward countries belonging to European Union. Exposure to Greece, Ireland, Portugal and Spain accounts for 14.94%, most of which concerns exposures to Spanish underlying assets (11.65%). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 329 C.4 Regulatory consolidation - Special Purpose Vehicles for securitisation not subject to consolidation As mentioned before in the context of securitisation transactions the Group may operate as investor, sponsor and originator. The following table provides indication on assets and liabilities recognised in the balance sheet as well as off-balance exposures of the Group toward non-consolidated securitisation vehicles and broken down by role of the Group. The maximum exposure to loss has been calculated by grossing up the difference between assets and liabilities with off balance sheet positions, irrevocable credit lines and financial guarantees, held toward these vehicles and reported in column “difference between maximum exposure to loss and accounting value”. Exposures to Securitisation SPVs not subject to consolidation (€ '000) AMOUNTS AS AT 12.31.2018 BALANCE SHEET ITEM/SPV TYPE ACCOUNTING PORTFOLIO (ASSETS) TOTAL ASSETS (A) ACCOUNTING PORTFOLIO (LIABILITIES) TOTAL LIABILITIES (B) NET ACCOUNTING VALUE (C=A-B) MAXIMUM EXPOSURE TO LOSS (D) DIFFERENCE BETWEEN MAXIMUM EXPOSURE TO LOSS AND ACCOUNTING VALUE (E=D-C) ABS Issuing vehicles (Investor) 6,827,164 128,774 6,698,390 6,720,385 21,995 HFT 44,426 Deposits 121,686 DFV - Securities - MFV 71,738 HFT 7,088 FVOCI - DFV - AC 6,711,000 - Commercial Paper Conduits (Sponsor) - 40,961 (40,961) 887,092 928,053 HFT - Deposits 38,061 DFV - Securities - MFV - HFT 2,900 FVOCI - DFV - AC - - Own securitisations (Originator) 839,947 154,744 685,203 685,203 - HFT - Deposits 154,744 DFV - Securities - MFV 60,015 HFT - FVOCI 229,527 DFV - AC 550,405 - Total 7,667,111 324,479 7,342,632 8,292,680 950,048 Notes: HFT = Financial assets held for trading Deposits = Deposits from Customers DFV = Financial assets designated at fair value Securities = Debt securities in issue MFV = Financial assets mandatorily at fair value HFT = Financial liabilities held for trading FVOCI = Financial assets at fair value through other comprehensive income DFV = Financial liabilities designated at fair value AC = Financial assets at amortized cost Exposures toward ABS Issuing vehicles are constituted for the most part, €6,785,152 thousand, by exposures in Asset Backed Securities. The remaining part is constituted by loans. The good credit quality of this portfolio is borne out by the fact that over 98% of these instruments are rated A or better and over 69% of the portfolio is triple-A rated while at 31 December 2017 over 96% of these exposures were rated A and 65% of the portfolio was rated triple-A. Over 78% of the exposure is toward countries belonging to European Union. Exposure to Greece, Ireland, Portugal and Spain accounts for 14.94%, most of which concerns exposures to Spanish underlying assets (11.65%). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 330 2018 Annual Report and Accounts · UniCredit Structured credit product exposures broken down by rating class EXPOSURE TYPE AAA AA A BBB BB B CCC CC C NR RMBS 39.68% 52.44% 6.95% 0.62% 0.20% 0.11% 0.00% 0.00% 0.00% 0.00% CMBS 49.36% 20.84% 3.23% 26.57% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% CDO 0.00% 0.00% 84.86% 15.14% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% CLO/CBO 96.64% 3.36% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Other ABS 62.53% 30.00% 3.72% 0.54% 0.34% 0.12% 0.09% 0.00% 0.00% 2.66% Total 69.43% 25.44% 3.65% 0.65% 0.15% 0.06% 0.02% 0.00% 0.00% 0.60% Structured credit product exposures broken down by geographical area EXPOSURE TYPE ITALY OTHER UE COUNTRIES OTHER EUROPEAN COUNTRIES (NON UE) ASIA USA REST OF THE WORLD RMBS 20.80% 78.97% 0.00% 0.00% 0.05% 0.18% CMBS 0.00% 92.44% 0.00% 0.00% 7.56% 0.00% CDO 0.00% 0.00% 0.00% 0.00% 49.65% 50.35% CLO/CBO 2.95% 49.05% 0.00% 0.00% 30.82% 17.18% Other ABS 17.18% 81.88% 0.00% 0.00% 0.16% 0.78% Total 11.93% 66.33% 0.00% 0.00% 13.75% 7.99% The portfolio includes exposures to US Subprime and Alt-A mortgages, which amounted to €1,007 thousand as at 31 December 2018, reduced compared to 31 December 2017 (€1,123 thousand). Exposures toward Commercial Paper Conduit comprise credit line provided to the purchase companies that acquire the receivables from the originators external to the Group. These credit line are granted by credit enhancements (deferred purchase price and credit insurance) so that the Group does not bear the variability of the underlying portfolio. Exposures toward own securitisation comprise securities and off balance sheet exposure toward SPV that are not consolidated as the conditions required by IFRS10 are not fulfilled. Absent the conditions requested by IFRS9 the securitised loans have not been derecognised from the balance sheet of the originator. For further information on these securitisations please refer to the tables published in the “Annexes”. During the period the Group has not provided financial support to any non-consolidated securitisation vehicle in absence of contractual obligation to do so. The Group has not the current intention to provide such support. The Group does not act as sponsor of securitisation vehicles in which it has not exposures at the end of the reporting period. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 330 2018 Annual Report and Accounts · UniCredit Structured credit product exposures broken down by rating class EXPOSURE TYPE AAA AA A BBB BB B CCC CC C NR RMBS 39.68% 52.44% 6.95% 0.62% 0.20% 0.11% 0.00% 0.00% 0.00% 0.00% CMBS 49.36% 20.84% 3.23% 26.57% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% CDO 0.00% 0.00% 84.86% 15.14% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% CLO/CBO 96.64% 3.36% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Other ABS 62.53% 30.00% 3.72% 0.54% 0.34% 0.12% 0.09% 0.00% 0.00% 2.66% Total 69.43% 25.44% 3.65% 0.65% 0.15% 0.06% 0.02% 0.00% 0.00% 0.60% Structured credit product exposures broken down by geographical area EXPOSURE TYPE ITALY OTHER UE COUNTRIES OTHER EUROPEAN COUNTRIES (NON UE) ASIA USA REST OF THE WORLD RMBS 20.80% 78.97% 0.00% 0.00% 0.05% 0.18% CMBS 0.00% 92.44% 0.00% 0.00% 7.56% 0.00% CDO 0.00% 0.00% 0.00% 0.00% 49.65% 50.35% CLO/CBO 2.95% 49.05% 0.00% 0.00% 30.82% 17.18% Other ABS 17.18% 81.88% 0.00% 0.00% 0.16% 0.78% Total 11.93% 66.33% 0.00% 0.00% 13.75% 7.99% The portfolio includes exposures to US Subprime and Alt-A mortgages, which amounted to €1,007 thousand as at 31 December 2018, reduced compared to 31 December 2017 (€1,123 thousand). Exposures toward Commercial Paper Conduit comprise credit line provided to the purchase companies that acquire the receivables from the originators external to the Group. These credit line are granted by credit enhancements (deferred purchase price and credit insurance) so that the Group does not bear the variability of the underlying portfolio. Exposures toward own securitisation comprise securities and off balance sheet exposure toward SPV that are not consolidated as the conditions required by IFRS10 are not fulfilled. Absent the conditions requested by IFRS9 the securitised loans have not been derecognised from the balance sheet of the originator. For further information on these securitisations please refer to the tables published in the “Annexes”. During the period the Group has not provided financial support to any non-consolidated securitisation vehicle in absence of contractual obligation to do so. The Group has not the current intention to provide such support. The Group does not act as sponsor of securitisation vehicles in which it has not exposures at the end of the reporting period. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 330 2018 Annual Report and Accounts · UniCredit Structured credit product exposures broken down by rating class EXPOSURE TYPE AAA AA A BBB BB B CCC CC C NR RMBS 39.68% 52.44% 6.95% 0.62% 0.20% 0.11% 0.00% 0.00% 0.00% 0.00% CMBS 49.36% 20.84% 3.23% 26.57% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% CDO 0.00% 0.00% 84.86% 15.14% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% CLO/CBO 96.64% 3.36% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Other ABS 62.53% 30.00% 3.72% 0.54% 0.34% 0.12% 0.09% 0.00% 0.00% 2.66% Total 69.43% 25.44% 3.65% 0.65% 0.15% 0.06% 0.02% 0.00% 0.00% 0.60% Structured credit product exposures broken down by geographical area EXPOSURE TYPE ITALY OTHER UE COUNTRIES OTHER EUROPEAN COUNTRIES (NON UE) ASIA USA REST OF THE WORLD RMBS 20.80% 78.97% 0.00% 0.00% 0.05% 0.18% CMBS 0.00% 92.44% 0.00% 0.00% 7.56% 0.00% CDO 0.00% 0.00% 0.00% 0.00% 49.65% 50.35% CLO/CBO 2.95% 49.05% 0.00% 0.00% 30.82% 17.18% Other ABS 17.18% 81.88% 0.00% 0.00% 0.16% 0.78% Total 11.93% 66.33% 0.00% 0.00% 13.75% 7.99% The portfolio includes exposures to US Subprime and Alt-A mortgages, which amounted to €1,007 thousand as at 31 December 2018, reduced compared to 31 December 2017 (€1,123 thousand). Exposures toward Commercial Paper Conduit comprise credit line provided to the purchase companies that acquire the receivables from the originators external to the Group. These credit line are granted by credit enhancements (deferred purchase price and credit insurance) so that the Group does not bear the variability of the underlying portfolio. Exposures toward own securitisation comprise securities and off balance sheet exposure toward SPV that are not consolidated as the conditions required by IFRS10 are not fulfilled. Absent the conditions requested by IFRS9 the securitised loans have not been derecognised from the balance sheet of the originator. For further information on these securitisations please refer to the tables published in the “Annexes”. During the period the Group has not provided financial support to any non-consolidated securitisation vehicle in absence of contractual obligation to do so. The Group has not the current intention to provide such support. The Group does not act as sponsor of securitisation vehicles in which it has not exposures at the end of the reporting period. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 330 2018 Annual Report and Accounts · UniCredit Structured credit product exposures broken down by rating class EXPOSURE TYPE AAA AA A BBB BB B CCC CC C NR RMBS 39.68% 52.44% 6.95% 0.62% 0.20% 0.11% 0.00% 0.00% 0.00% 0.00% CMBS 49.36% 20.84% 3.23% 26.57% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% CDO 0.00% 0.00% 84.86% 15.14% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% CLO/CBO 96.64% 3.36% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Other ABS 62.53% 30.00% 3.72% 0.54% 0.34% 0.12% 0.09% 0.00% 0.00% 2.66% Total 69.43% 25.44% 3.65% 0.65% 0.15% 0.06% 0.02% 0.00% 0.00% 0.60% Structured credit product exposures broken down by geographical area EXPOSURE TYPE ITALY OTHER UE COUNTRIES OTHER EUROPEAN COUNTRIES (NON UE) ASIA USA REST OF THE WORLD RMBS 20.80% 78.97% 0.00% 0.00% 0.05% 0.18% CMBS 0.00% 92.44% 0.00% 0.00% 7.56% 0.00% CDO 0.00% 0.00% 0.00% 0.00% 49.65% 50.35% CLO/CBO 2.95% 49.05% 0.00% 0.00% 30.82% 17.18% Other ABS 17.18% 81.88% 0.00% 0.00% 0.16% 0.78% Total 11.93% 66.33% 0.00% 0.00% 13.75% 7.99% The portfolio includes exposures to US Subprime and Alt-A mortgages, which amounted to €1,007 thousand as at 31 December 2018, reduced compared to 31 December 2017 (€1,123 thousand). Exposures toward Commercial Paper Conduit comprise credit line provided to the purchase companies that acquire the receivables from the originators external to the Group. These credit line are granted by credit enhancements (deferred purchase price and credit insurance) so that the Group does not bear the variability of the underlying portfolio. Exposures toward own securitisation comprise securities and off balance sheet exposure toward SPV that are not consolidated as the conditions required by IFRS10 are not fulfilled. Absent the conditions requested by IFRS9 the securitised loans have not been derecognised from the balance sheet of the originator. For further information on these securitisations please refer to the tables published in the “Annexes”. During the period the Group has not provided financial support to any non-consolidated securitisation vehicle in absence of contractual obligation to do so. The Group has not the current intention to provide such support. The Group does not act as sponsor of securitisation vehicles in which it has not exposures at the end of the reporting period. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 330 2018 Annual Report and Accounts · UniCredit Structured credit product exposures broken down by rating class EXPOSURE TYPE AAA AA A BBB BB B CCC CC C NR RMBS 39.68% 52.44% 6.95% 0.62% 0.20% 0.11% 0.00% 0.00% 0.00% 0.00% CMBS 49.36% 20.84% 3.23% 26.57% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% CDO 0.00% 0.00% 84.86% 15.14% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% CLO/CBO 96.64% 3.36% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Other ABS 62.53% 30.00% 3.72% 0.54% 0.34% 0.12% 0.09% 0.00% 0.00% 2.66% Total 69.43% 25.44% 3.65% 0.65% 0.15% 0.06% 0.02% 0.00% 0.00% 0.60% Structured credit product exposures broken down by geographical area EXPOSURE TYPE ITALY OTHER UE COUNTRIES OTHER EUROPEAN COUNTRIES (NON UE) ASIA USA REST OF THE WORLD RMBS 20.80% 78.97% 0.00% 0.00% 0.05% 0.18% CMBS 0.00% 92.44% 0.00% 0.00% 7.56% 0.00% CDO 0.00% 0.00% 0.00% 0.00% 49.65% 50.35% CLO/CBO 2.95% 49.05% 0.00% 0.00% 30.82% 17.18% Other ABS 17.18% 81.88% 0.00% 0.00% 0.16% 0.78% Total 11.93% 66.33% 0.00% 0.00% 13.75% 7.99% The portfolio includes exposures to US Subprime and Alt-A mortgages, which amounted to €1,007 thousand as at 31 December 2018, reduced compared to 31 December 2017 (€1,123 thousand). Exposures toward Commercial Paper Conduit comprise credit line provided to the purchase companies that acquire the receivables from the originators external to the Group. These credit line are granted by credit enhancements (deferred purchase price and credit insurance) so that the Group does not bear the variability of the underlying portfolio. Exposures toward own securitisation comprise securities and off balance sheet exposure toward SPV that are not consolidated as the conditions required by IFRS10 are not fulfilled. Absent the conditions requested by IFRS9 the securitised loans have not been derecognised from the balance sheet of the originator. For further information on these securitisations please refer to the tables published in the “Annexes”. During the period the Group has not provided financial support to any non-consolidated securitisation vehicle in absence of contractual obligation to do so. The Group has not the current intention to provide such support. The Group does not act as sponsor of securitisation vehicles in which it has not exposures at the end of the reporting period. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 331 C.5 Regulatory consolidation - Servicer activity - “in-house” securitisations: collections of securitised loans and redemptions of securities issued by the securitisation’s vehicle C.5 Regulatory consolidation - Servicer activities – "In-house" securitisations: collections of securitised loans and redemptions of securities issued by the securitisation's vehicle (€ '000) SERVICER SPECIAL PURPOSE VEHICLE SECURITISED ASSETS (YEAR END FIGURES) LOANS COLLECTED DURING THE YEAR PERCENTAGE OF SECURITIES REDEEMED (YEAR END FIGURES) IMPAIRED PERFORMING IMPAIRED PERFORMING SENIOR MEZZANINE JUNIOR IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS UniCredit Leasing (Austria) GmbH SUCCESS 2015 B.V. 5,443 336,242 - 113,202 - - - - - - UniCredit S.p.A. Capital Mortgage S.r.l. 63,233 586,180 10,187 82,056 - 79.17% - - - - Cordusio RMBS Securitisation S.r.l. - SERIE 2006 15,656 217,921 5,293 87,730 - 96.98% - - - - Cordusio RMBS Securitisation S.r.l. - SERIE 2007 59,548 781,123 13,781 149,617 - 84.89% - - - - Cordusio RMBS UCFin S.r.l. 41,926 430,665 7,517 75,014 - 88.34% - - - - F-E Mortgage S.r.l. - SERIE 2003 8,382 102,214 1,780 17,139 - 97.85% - - - - F-E Mortgage S.r.l. - SERIE 2005 13,748 167,693 2,829 24,753 - 90.95% - 10.31% - 10.31% Heliconus S.r.l. 3,832 51,398 937 9,146 - 98.52% - - - - Large Corporate One S.r.l. - 234,272 - 189,516 - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 331 C.5 Regulatory consolidation - Servicer activity - “in-house” securitisations: collections of securitised loans and redemptions of securities issued by the securitisation’s vehicle C.5 Regulatory consolidation - Servicer activities – "In-house" securitisations: collections of securitised loans and redemptions of securities issued by the securitisation's vehicle (€ '000) SERVICER SPECIAL PURPOSE VEHICLE SECURITISED ASSETS (YEAR END FIGURES) LOANS COLLECTED DURING THE YEAR PERCENTAGE OF SECURITIES REDEEMED (YEAR END FIGURES) IMPAIRED PERFORMING IMPAIRED PERFORMING SENIOR MEZZANINE JUNIOR IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS UniCredit Leasing (Austria) GmbH SUCCESS 2015 B.V. 5,443 336,242 - 113,202 - - - - - - UniCredit S.p.A. Capital Mortgage S.r.l. 63,233 586,180 10,187 82,056 - 79.17% - - - - Cordusio RMBS Securitisation S.r.l. - SERIE 2006 15,656 217,921 5,293 87,730 - 96.98% - - - - Cordusio RMBS Securitisation S.r.l. - SERIE 2007 59,548 781,123 13,781 149,617 - 84.89% - - - - Cordusio RMBS UCFin S.r.l. 41,926 430,665 7,517 75,014 - 88.34% - - - - F-E Mortgage S.r.l. - SERIE 2003 8,382 102,214 1,780 17,139 - 97.85% - - - - F-E Mortgage S.r.l. - SERIE 2005 13,748 167,693 2,829 24,753 - 90.95% - 10.31% - 10.31% Heliconus S.r.l. 3,832 51,398 937 9,146 - 98.52% - - - - Large Corporate One S.r.l. - 234,272 - 189,516 - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 331 C.5 Regulatory consolidation - Servicer activity - “in-house” securitisations: collections of securitised loans and redemptions of securities issued by the securitisation’s vehicle C.5 Regulatory consolidation - Servicer activities – "In-house" securitisations: collections of securitised loans and redemptions of securities issued by the securitisation's vehicle (€ '000) SERVICER SPECIAL PURPOSE VEHICLE SECURITISED ASSETS (YEAR END FIGURES) LOANS COLLECTED DURING THE YEAR PERCENTAGE OF SECURITIES REDEEMED (YEAR END FIGURES) IMPAIRED PERFORMING IMPAIRED PERFORMING SENIOR MEZZANINE JUNIOR IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS UniCredit Leasing (Austria) GmbH SUCCESS 2015 B.V. 5,443 336,242 - 113,202 - - - - - - UniCredit S.p.A. Capital Mortgage S.r.l. 63,233 586,180 10,187 82,056 - 79.17% - - - - Cordusio RMBS Securitisation S.r.l. - SERIE 2006 15,656 217,921 5,293 87,730 - 96.98% - - - - Cordusio RMBS Securitisation S.r.l. - SERIE 2007 59,548 781,123 13,781 149,617 - 84.89% - - - - Cordusio RMBS UCFin S.r.l. 41,926 430,665 7,517 75,014 - 88.34% - - - - F-E Mortgage S.r.l. - SERIE 2003 8,382 102,214 1,780 17,139 - 97.85% - - - - F-E Mortgage S.r.l. - SERIE 2005 13,748 167,693 2,829 24,753 - 90.95% - 10.31% - 10.31% Heliconus S.r.l. 3,832 51,398 937 9,146 - 98.52% - - - - Large Corporate One S.r.l. - 234,272 - 189,516 - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 331 C.5 Regulatory consolidation - Servicer activity - “in-house” securitisations: collections of securitised loans and redemptions of securities issued by the securitisation’s vehicle C.5 Regulatory consolidation - Servicer activities – "In-house" securitisations: collections of securitised loans and redemptions of securities issued by the securitisation's vehicle (€ '000) SERVICER SPECIAL PURPOSE VEHICLE SECURITISED ASSETS (YEAR END FIGURES) LOANS COLLECTED DURING THE YEAR PERCENTAGE OF SECURITIES REDEEMED (YEAR END FIGURES) IMPAIRED PERFORMING IMPAIRED PERFORMING SENIOR MEZZANINE JUNIOR IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS UniCredit Leasing (Austria) GmbH SUCCESS 2015 B.V. 5,443 336,242 - 113,202 - - - - - - UniCredit S.p.A. Capital Mortgage S.r.l. 63,233 586,180 10,187 82,056 - 79.17% - - - - Cordusio RMBS Securitisation S.r.l. - SERIE 2006 15,656 217,921 5,293 87,730 - 96.98% - - - - Cordusio RMBS Securitisation S.r.l. - SERIE 2007 59,548 781,123 13,781 149,617 - 84.89% - - - - Cordusio RMBS UCFin S.r.l. 41,926 430,665 7,517 75,014 - 88.34% - - - - F-E Mortgage S.r.l. - SERIE 2003 8,382 102,214 1,780 17,139 - 97.85% - - - - F-E Mortgage S.r.l. - SERIE 2005 13,748 167,693 2,829 24,753 - 90.95% - 10.31% - 10.31% Heliconus S.r.l. 3,832 51,398 937 9,146 - 98.52% - - - - Large Corporate One S.r.l. - 234,272 - 189,516 - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 331 C.5 Regulatory consolidation - Servicer activity - “in-house” securitisations: collections of securitised loans and redemptions of securities issued by the securitisation’s vehicle C.5 Regulatory consolidation - Servicer activities – "In-house" securitisations: collections of securitised loans and redemptions of securities issued by the securitisation's vehicle (€ '000) SERVICER SPECIAL PURPOSE VEHICLE SECURITISED ASSETS (YEAR END FIGURES) LOANS COLLECTED DURING THE YEAR PERCENTAGE OF SECURITIES REDEEMED (YEAR END FIGURES) IMPAIRED PERFORMING IMPAIRED PERFORMING SENIOR MEZZANINE JUNIOR IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS UniCredit Leasing (Austria) GmbH SUCCESS 2015 B.V. 5,443 336,242 - 113,202 - - - - - - UniCredit S.p.A. Capital Mortgage S.r.l. 63,233 586,180 10,187 82,056 - 79.17% - - - - Cordusio RMBS Securitisation S.r.l. - SERIE 2006 15,656 217,921 5,293 87,730 - 96.98% - - - - Cordusio RMBS Securitisation S.r.l. - SERIE 2007 59,548 781,123 13,781 149,617 - 84.89% - - - - Cordusio RMBS UCFin S.r.l. 41,926 430,665 7,517 75,014 - 88.34% - - - - F-E Mortgage S.r.l. - SERIE 2003 8,382 102,214 1,780 17,139 - 97.85% - - - - F-E Mortgage S.r.l. - SERIE 2005 13,748 167,693 2,829 24,753 - 90.95% - 10.31% - 10.31% Heliconus S.r.l. 3,832 51,398 937 9,146 - 98.52% - - - - Large Corporate One S.r.l. - 234,272 - 189,516 - - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 332 2018 Annual Report and Accounts · UniCredit C.6 Regulatory consolidation - Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ARABELLA FINANCE DAC CAPITAL MORTGAGE S.R.L. CORDUSIO RMBS SECURITISATION S.R.L. - SERIE 2006 COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Piazzetta Monte 1 37121 Verona Piazzetta Monte 1 37121 Verona A. Securitised Assets 4,282,453 649,413 233,578 A.1 Loans 4,282,453 649,413 233,578 A.2 Bonds - - - B. Loans disbursed 32,176 - - C. Use of liquid assets resulting from loan operations - 20,054 4,551 C.1 Loans (including bank current account) - 20,054 4,551 C.2 Bonds - - - D. Other assets 1,930 13,978 6,283 D.1 Derivatives 1,930 - - D.2 Other assets - 13,978 6,283 TOTAL ASSETS (A+B+ C+D) 4,316,559 683,445 244,412 E. Bond issued 4,312,211 595,773 224,677 E.1 Senior 4,312,211 495,744 72,290 E.2 Mezzanine - 74,000 141,700 E.3 Junior - 26,029 10,686 F. Loans received - 41,563 - F.1 Senior - - - F.2 Mezzanine - - - F.3 Junior - 41,563 - G. Other liabilities 4,348 46,109 19,735 G.1 Derivatives - 378 1,537 G.2 Due to originator - 45,466 569 G.3 Other liabilities 4,169 265 17,629 G.4 Own funds 180 - - TOTAL LIABILITIES (E+F+G) 4,316,559 683,445 244,412 H. Interest expense 42,078 3,208 2,340 H.1 Interest expense on bond issued 42,078 309 893 H.2 Interest expense on loans received - - - H.3 Interest expense on derivatives - 2,899 1,446 I. Commissions and fees related to the transaction 21,700 688 2,301 I.1 for servicing 21,700 488 2,044 I.2 for other services - 200 257 J. Other charges 3,656 61,445 7,841 J.1 Additional positive returns for exposure junior - - - J.2 Other costs 3,656 61,445 7,841 TOTAL COSTS (H+I+J) 67,434 65,341 12,482 K. Interest generated by securitised assets 31,562 9,729 4,180 L. Interest income on derivatives - - - M. Other revenues 32,315 55,612 8,301 M.1 Additional returns for exposure junior - 53,060 7,791 M.2 Other revenues 32,315 2,553 510 TOTAL REVENUES (K+L+M) 63,877 65,341 12,482 PROFIT (LOSS) FOR THE PERIOD -3,557 - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 332 2018 Annual Report and Accounts · UniCredit C.6 Regulatory consolidation - Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ARABELLA FINANCE DAC CAPITAL MORTGAGE S.R.L. CORDUSIO RMBS SECURITISATION S.R.L. - SERIE 2006 COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Piazzetta Monte 1 37121 Verona Piazzetta Monte 1 37121 Verona A. Securitised Assets 4,282,453 649,413 233,578 A.1 Loans 4,282,453 649,413 233,578 A.2 Bonds - - - B. Loans disbursed 32,176 - - C. Use of liquid assets resulting from loan operations - 20,054 4,551 C.1 Loans (including bank current account) - 20,054 4,551 C.2 Bonds - - - D. Other assets 1,930 13,978 6,283 D.1 Derivatives 1,930 - - D.2 Other assets - 13,978 6,283 TOTAL ASSETS (A+B+ C+D) 4,316,559 683,445 244,412 E. Bond issued 4,312,211 595,773 224,677 E.1 Senior 4,312,211 495,744 72,290 E.2 Mezzanine - 74,000 141,700 E.3 Junior - 26,029 10,686 F. Loans received - 41,563 - F.1 Senior - - - F.2 Mezzanine - - - F.3 Junior - 41,563 - G. Other liabilities 4,348 46,109 19,735 G.1 Derivatives - 378 1,537 G.2 Due to originator - 45,466 569 G.3 Other liabilities 4,169 265 17,629 G.4 Own funds 180 - - TOTAL LIABILITIES (E+F+G) 4,316,559 683,445 244,412 H. Interest expense 42,078 3,208 2,340 H.1 Interest expense on bond issued 42,078 309 893 H.2 Interest expense on loans received - - - H.3 Interest expense on derivatives - 2,899 1,446 I. Commissions and fees related to the transaction 21,700 688 2,301 I.1 for servicing 21,700 488 2,044 I.2 for other services - 200 257 J. Other charges 3,656 61,445 7,841 J.1 Additional positive returns for exposure junior - - - J.2 Other costs 3,656 61,445 7,841 TOTAL COSTS (H+I+J) 67,434 65,341 12,482 K. Interest generated by securitised assets 31,562 9,729 4,180 L. Interest income on derivatives - - - M. Other revenues 32,315 55,612 8,301 M.1 Additional returns for exposure junior - 53,060 7,791 M.2 Other revenues 32,315 2,553 510 TOTAL REVENUES (K+L+M) 63,877 65,341 12,482 PROFIT (LOSS) FOR THE PERIOD -3,557 - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 332 2018 Annual Report and Accounts · UniCredit C.6 Regulatory consolidation - Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ARABELLA FINANCE DAC CAPITAL MORTGAGE S.R.L. CORDUSIO RMBS SECURITISATION S.R.L. - SERIE 2006 COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Piazzetta Monte 1 37121 Verona Piazzetta Monte 1 37121 Verona A. Securitised Assets 4,282,453 649,413 233,578 A.1 Loans 4,282,453 649,413 233,578 A.2 Bonds - - - B. Loans disbursed 32,176 - - C. Use of liquid assets resulting from loan operations - 20,054 4,551 C.1 Loans (including bank current account) - 20,054 4,551 C.2 Bonds - - - D. Other assets 1,930 13,978 6,283 D.1 Derivatives 1,930 - - D.2 Other assets - 13,978 6,283 TOTAL ASSETS (A+B+ C+D) 4,316,559 683,445 244,412 E. Bond issued 4,312,211 595,773 224,677 E.1 Senior 4,312,211 495,744 72,290 E.2 Mezzanine - 74,000 141,700 E.3 Junior - 26,029 10,686 F. Loans received - 41,563 - F.1 Senior - - - F.2 Mezzanine - - - F.3 Junior - 41,563 - G. Other liabilities 4,348 46,109 19,735 G.1 Derivatives - 378 1,537 G.2 Due to originator - 45,466 569 G.3 Other liabilities 4,169 265 17,629 G.4 Own funds 180 - - TOTAL LIABILITIES (E+F+G) 4,316,559 683,445 244,412 H. Interest expense 42,078 3,208 2,340 H.1 Interest expense on bond issued 42,078 309 893 H.2 Interest expense on loans received - - - H.3 Interest expense on derivatives - 2,899 1,446 I. Commissions and fees related to the transaction 21,700 688 2,301 I.1 for servicing 21,700 488 2,044 I.2 for other services - 200 257 J. Other charges 3,656 61,445 7,841 J.1 Additional positive returns for exposure junior - - - J.2 Other costs 3,656 61,445 7,841 TOTAL COSTS (H+I+J) 67,434 65,341 12,482 K. Interest generated by securitised assets 31,562 9,729 4,180 L. Interest income on derivatives - - - M. Other revenues 32,315 55,612 8,301 M.1 Additional returns for exposure junior - 53,060 7,791 M.2 Other revenues 32,315 2,553 510 TOTAL REVENUES (K+L+M) 63,877 65,341 12,482 PROFIT (LOSS) FOR THE PERIOD -3,557 - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 332 2018 Annual Report and Accounts · UniCredit C.6 Regulatory consolidation - Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ARABELLA FINANCE DAC CAPITAL MORTGAGE S.R.L. CORDUSIO RMBS SECURITISATION S.R.L. - SERIE 2006 COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Piazzetta Monte 1 37121 Verona Piazzetta Monte 1 37121 Verona A. Securitised Assets 4,282,453 649,413 233,578 A.1 Loans 4,282,453 649,413 233,578 A.2 Bonds - - - B. Loans disbursed 32,176 - - C. Use of liquid assets resulting from loan operations - 20,054 4,551 C.1 Loans (including bank current account) - 20,054 4,551 C.2 Bonds - - - D. Other assets 1,930 13,978 6,283 D.1 Derivatives 1,930 - - D.2 Other assets - 13,978 6,283 TOTAL ASSETS (A+B+ C+D) 4,316,559 683,445 244,412 E. Bond issued 4,312,211 595,773 224,677 E.1 Senior 4,312,211 495,744 72,290 E.2 Mezzanine - 74,000 141,700 E.3 Junior - 26,029 10,686 F. Loans received - 41,563 - F.1 Senior - - - F.2 Mezzanine - - - F.3 Junior - 41,563 - G. Other liabilities 4,348 46,109 19,735 G.1 Derivatives - 378 1,537 G.2 Due to originator - 45,466 569 G.3 Other liabilities 4,169 265 17,629 G.4 Own funds 180 - - TOTAL LIABILITIES (E+F+G) 4,316,559 683,445 244,412 H. Interest expense 42,078 3,208 2,340 H.1 Interest expense on bond issued 42,078 309 893 H.2 Interest expense on loans received - - - H.3 Interest expense on derivatives - 2,899 1,446 I. Commissions and fees related to the transaction 21,700 688 2,301 I.1 for servicing 21,700 488 2,044 I.2 for other services - 200 257 J. Other charges 3,656 61,445 7,841 J.1 Additional positive returns for exposure junior - - - J.2 Other costs 3,656 61,445 7,841 TOTAL COSTS (H+I+J) 67,434 65,341 12,482 K. Interest generated by securitised assets 31,562 9,729 4,180 L. Interest income on derivatives - - - M. Other revenues 32,315 55,612 8,301 M.1 Additional returns for exposure junior - 53,060 7,791 M.2 Other revenues 32,315 2,553 510 TOTAL REVENUES (K+L+M) 63,877 65,341 12,482 PROFIT (LOSS) FOR THE PERIOD -3,557 - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 332 2018 Annual Report and Accounts · UniCredit C.6 Regulatory consolidation - Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ARABELLA FINANCE DAC CAPITAL MORTGAGE S.R.L. CORDUSIO RMBS SECURITISATION S.R.L. - SERIE 2006 COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Piazzetta Monte 1 37121 Verona Piazzetta Monte 1 37121 Verona A. Securitised Assets 4,282,453 649,413 233,578 A.1 Loans 4,282,453 649,413 233,578 A.2 Bonds - - - B. Loans disbursed 32,176 - - C. Use of liquid assets resulting from loan operations - 20,054 4,551 C.1 Loans (including bank current account) - 20,054 4,551 C.2 Bonds - - - D. Other assets 1,930 13,978 6,283 D.1 Derivatives 1,930 - - D.2 Other assets - 13,978 6,283 TOTAL ASSETS (A+B+ C+D) 4,316,559 683,445 244,412 E. Bond issued 4,312,211 595,773 224,677 E.1 Senior 4,312,211 495,744 72,290 E.2 Mezzanine - 74,000 141,700 E.3 Junior - 26,029 10,686 F. Loans received - 41,563 - F.1 Senior - - - F.2 Mezzanine - - - F.3 Junior - 41,563 - G. Other liabilities 4,348 46,109 19,735 G.1 Derivatives - 378 1,537 G.2 Due to originator - 45,466 569 G.3 Other liabilities 4,169 265 17,629 G.4 Own funds 180 - - TOTAL LIABILITIES (E+F+G) 4,316,559 683,445 244,412 H. Interest expense 42,078 3,208 2,340 H.1 Interest expense on bond issued 42,078 309 893 H.2 Interest expense on loans received - - - H.3 Interest expense on derivatives - 2,899 1,446 I. Commissions and fees related to the transaction 21,700 688 2,301 I.1 for servicing 21,700 488 2,044 I.2 for other services - 200 257 J. Other charges 3,656 61,445 7,841 J.1 Additional positive returns for exposure junior - - - J.2 Other costs 3,656 61,445 7,841 TOTAL COSTS (H+I+J) 67,434 65,341 12,482 K. Interest generated by securitised assets 31,562 9,729 4,180 L. Interest income on derivatives - - - M. Other revenues 32,315 55,612 8,301 M.1 Additional returns for exposure junior - 53,060 7,791 M.2 Other revenues 32,315 2,553 510 TOTAL REVENUES (K+L+M) 63,877 65,341 12,482 PROFIT (LOSS) FOR THE PERIOD -3,557 - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 333 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE CORDUSIO RMBS SECURITISATION S.R.L. - SERIE 2007 CORDUSIO RMBS - UCFIN S.R.L ELEKTRA PURCHASE NO.28 DAC COUNTRY OF INCORPORATION Piazzetta Monte 1 37121 Verona Piazzetta Monte 1 37121 Verona 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 840,671 472,592 176,485 A.1 Loans 840,671 472,592 176,485 A.2 Bonds - - - B. Loans disbursed - - 2 C. Use of liquid assets resulting from loan operations 12,490 19,304 - C.1 Loans (including bank current account) 12,490 19,304 - C.2 Bonds - - - D. Other assets 12,033 5,059 - D.1 Derivatives - - - D.2 Other assets 12,033 5,059 - TOTAL ASSETS (A+B+ C+D) 865,194 496,955 176,488 E. Bond issued 792,757 433,538 - E.1 Senior 554,353 272,180 - E.2 Mezzanine 236,400 148,000 - E.3 Junior 2,004 13,358 - F. Loans received - - 176,485 F.1 Senior - - 176,485 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 72,437 63,417 2 G.1 Derivatives 3,606 2,875 - G.2 Due to originator 41,016 58,868 - G.3 Other liabilities 27,814 1,674 29 G.4 Own funds - - -27 TOTAL LIABILITIES (E+F+G) 865,194 496,955 176,488 H. Interest expense 5,751 3,396 419 H.1 Interest expense on bond issued 2,719 956 - H.2 Interest expense on loans received - - 419 H.3 Interest expense on derivatives 3,032 2,441 - I. Commissions and fees related to the transaction 3,576 2,738 263 I.1 for servicing 3,258 2,401 263 I.2 for other services 318 338 - J. Other charges 43,251 34,984 - J.1 Additional positive returns for exposure junior - - - J.2 Other costs 43,251 34,984 - TOTAL COSTS (H+I+J) 52,578 41,119 681 K. Interest generated by securitised assets 12,236 8,799 681 L. Interest income on derivatives - - - M. Other revenues 40,342 32,320 - M.1 Additional returns for exposure junior 38,469 31,406 - M.2 Other revenues 1,873 914 - TOTAL REVENUES (K+L+M) 52,578 41,119 681 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 333 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE CORDUSIO RMBS SECURITISATION S.R.L. - SERIE 2007 CORDUSIO RMBS - UCFIN S.R.L ELEKTRA PURCHASE NO.28 DAC COUNTRY OF INCORPORATION Piazzetta Monte 1 37121 Verona Piazzetta Monte 1 37121 Verona 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 840,671 472,592 176,485 A.1 Loans 840,671 472,592 176,485 A.2 Bonds - - - B. Loans disbursed - - 2 C. Use of liquid assets resulting from loan operations 12,490 19,304 - C.1 Loans (including bank current account) 12,490 19,304 - C.2 Bonds - - - D. Other assets 12,033 5,059 - D.1 Derivatives - - - D.2 Other assets 12,033 5,059 - TOTAL ASSETS (A+B+ C+D) 865,194 496,955 176,488 E. Bond issued 792,757 433,538 - E.1 Senior 554,353 272,180 - E.2 Mezzanine 236,400 148,000 - E.3 Junior 2,004 13,358 - F. Loans received - - 176,485 F.1 Senior - - 176,485 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 72,437 63,417 2 G.1 Derivatives 3,606 2,875 - G.2 Due to originator 41,016 58,868 - G.3 Other liabilities 27,814 1,674 29 G.4 Own funds - - -27 TOTAL LIABILITIES (E+F+G) 865,194 496,955 176,488 H. Interest expense 5,751 3,396 419 H.1 Interest expense on bond issued 2,719 956 - H.2 Interest expense on loans received - - 419 H.3 Interest expense on derivatives 3,032 2,441 - I. Commissions and fees related to the transaction 3,576 2,738 263 I.1 for servicing 3,258 2,401 263 I.2 for other services 318 338 - J. Other charges 43,251 34,984 - J.1 Additional positive returns for exposure junior - - - J.2 Other costs 43,251 34,984 - TOTAL COSTS (H+I+J) 52,578 41,119 681 K. Interest generated by securitised assets 12,236 8,799 681 L. Interest income on derivatives - - - M. Other revenues 40,342 32,320 - M.1 Additional returns for exposure junior 38,469 31,406 - M.2 Other revenues 1,873 914 - TOTAL REVENUES (K+L+M) 52,578 41,119 681 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 333 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE CORDUSIO RMBS SECURITISATION S.R.L. - SERIE 2007 CORDUSIO RMBS - UCFIN S.R.L ELEKTRA PURCHASE NO.28 DAC COUNTRY OF INCORPORATION Piazzetta Monte 1 37121 Verona Piazzetta Monte 1 37121 Verona 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 840,671 472,592 176,485 A.1 Loans 840,671 472,592 176,485 A.2 Bonds - - - B. Loans disbursed - - 2 C. Use of liquid assets resulting from loan operations 12,490 19,304 - C.1 Loans (including bank current account) 12,490 19,304 - C.2 Bonds - - - D. Other assets 12,033 5,059 - D.1 Derivatives - - - D.2 Other assets 12,033 5,059 - TOTAL ASSETS (A+B+ C+D) 865,194 496,955 176,488 E. Bond issued 792,757 433,538 - E.1 Senior 554,353 272,180 - E.2 Mezzanine 236,400 148,000 - E.3 Junior 2,004 13,358 - F. Loans received - - 176,485 F.1 Senior - - 176,485 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 72,437 63,417 2 G.1 Derivatives 3,606 2,875 - G.2 Due to originator 41,016 58,868 - G.3 Other liabilities 27,814 1,674 29 G.4 Own funds - - -27 TOTAL LIABILITIES (E+F+G) 865,194 496,955 176,488 H. Interest expense 5,751 3,396 419 H.1 Interest expense on bond issued 2,719 956 - H.2 Interest expense on loans received - - 419 H.3 Interest expense on derivatives 3,032 2,441 - I. Commissions and fees related to the transaction 3,576 2,738 263 I.1 for servicing 3,258 2,401 263 I.2 for other services 318 338 - J. Other charges 43,251 34,984 - J.1 Additional positive returns for exposure junior - - - J.2 Other costs 43,251 34,984 - TOTAL COSTS (H+I+J) 52,578 41,119 681 K. Interest generated by securitised assets 12,236 8,799 681 L. Interest income on derivatives - - - M. Other revenues 40,342 32,320 - M.1 Additional returns for exposure junior 38,469 31,406 - M.2 Other revenues 1,873 914 - TOTAL REVENUES (K+L+M) 52,578 41,119 681 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 333 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE CORDUSIO RMBS SECURITISATION S.R.L. - SERIE 2007 CORDUSIO RMBS - UCFIN S.R.L ELEKTRA PURCHASE NO.28 DAC COUNTRY OF INCORPORATION Piazzetta Monte 1 37121 Verona Piazzetta Monte 1 37121 Verona 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 840,671 472,592 176,485 A.1 Loans 840,671 472,592 176,485 A.2 Bonds - - - B. Loans disbursed - - 2 C. Use of liquid assets resulting from loan operations 12,490 19,304 - C.1 Loans (including bank current account) 12,490 19,304 - C.2 Bonds - - - D. Other assets 12,033 5,059 - D.1 Derivatives - - - D.2 Other assets 12,033 5,059 - TOTAL ASSETS (A+B+ C+D) 865,194 496,955 176,488 E. Bond issued 792,757 433,538 - E.1 Senior 554,353 272,180 - E.2 Mezzanine 236,400 148,000 - E.3 Junior 2,004 13,358 - F. Loans received - - 176,485 F.1 Senior - - 176,485 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 72,437 63,417 2 G.1 Derivatives 3,606 2,875 - G.2 Due to originator 41,016 58,868 - G.3 Other liabilities 27,814 1,674 29 G.4 Own funds - - -27 TOTAL LIABILITIES (E+F+G) 865,194 496,955 176,488 H. Interest expense 5,751 3,396 419 H.1 Interest expense on bond issued 2,719 956 - H.2 Interest expense on loans received - - 419 H.3 Interest expense on derivatives 3,032 2,441 - I. Commissions and fees related to the transaction 3,576 2,738 263 I.1 for servicing 3,258 2,401 263 I.2 for other services 318 338 - J. Other charges 43,251 34,984 - J.1 Additional positive returns for exposure junior - - - J.2 Other costs 43,251 34,984 - TOTAL COSTS (H+I+J) 52,578 41,119 681 K. Interest generated by securitised assets 12,236 8,799 681 L. Interest income on derivatives - - - M. Other revenues 40,342 32,320 - M.1 Additional returns for exposure junior 38,469 31,406 - M.2 Other revenues 1,873 914 - TOTAL REVENUES (K+L+M) 52,578 41,119 681 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 333 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE CORDUSIO RMBS SECURITISATION S.R.L. - SERIE 2007 CORDUSIO RMBS - UCFIN S.R.L ELEKTRA PURCHASE NO.28 DAC COUNTRY OF INCORPORATION Piazzetta Monte 1 37121 Verona Piazzetta Monte 1 37121 Verona 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 840,671 472,592 176,485 A.1 Loans 840,671 472,592 176,485 A.2 Bonds - - - B. Loans disbursed - - 2 C. Use of liquid assets resulting from loan operations 12,490 19,304 - C.1 Loans (including bank current account) 12,490 19,304 - C.2 Bonds - - - D. Other assets 12,033 5,059 - D.1 Derivatives - - - D.2 Other assets 12,033 5,059 - TOTAL ASSETS (A+B+ C+D) 865,194 496,955 176,488 E. Bond issued 792,757 433,538 - E.1 Senior 554,353 272,180 - E.2 Mezzanine 236,400 148,000 - E.3 Junior 2,004 13,358 - F. Loans received - - 176,485 F.1 Senior - - 176,485 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 72,437 63,417 2 G.1 Derivatives 3,606 2,875 - G.2 Due to originator 41,016 58,868 - G.3 Other liabilities 27,814 1,674 29 G.4 Own funds - - -27 TOTAL LIABILITIES (E+F+G) 865,194 496,955 176,488 H. Interest expense 5,751 3,396 419 H.1 Interest expense on bond issued 2,719 956 - H.2 Interest expense on loans received - - 419 H.3 Interest expense on derivatives 3,032 2,441 - I. Commissions and fees related to the transaction 3,576 2,738 263 I.1 for servicing 3,258 2,401 263 I.2 for other services 318 338 - J. Other charges 43,251 34,984 - J.1 Additional positive returns for exposure junior - - - J.2 Other costs 43,251 34,984 - TOTAL COSTS (H+I+J) 52,578 41,119 681 K. Interest generated by securitised assets 12,236 8,799 681 L. Interest income on derivatives - - - M. Other revenues 40,342 32,320 - M.1 Additional returns for exposure junior 38,469 31,406 - M.2 Other revenues 1,873 914 - TOTAL REVENUES (K+L+M) 52,578 41,119 681 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 334 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.31 DAC ELEKTRA PURCHASE NO.32 S.A. - COMPARTMENT 1 ELEKTRA PURCHASE NO.32 S.A. - COMPARTMENT 2 COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 52-54 Avenue du X Septembre, L-2550 Luxembourg 52-54 Avenue du X Septembre, L-2550 Luxembourg A. Securitised Assets 57,066 230,682 300,023 A.1 Loans 57,066 230,682 300,023 A.2 Bonds - - - B. Loans disbursed 3 29 93 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - - - D.1 Derivatives - - - D.2 Other assets - - - TOTAL ASSETS (A+B+ C+D) 57,069 230,712 300,116 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 57,058 230,602 300,093 F.1 Senior 57,058 230,602 300,093 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 11 109 23 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 9 78 23 G.4 Own funds 2 31 - TOTAL LIABILITIES (E+F+G) 57,069 230,712 300,116 H. Interest expense 1,430 602 477 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 1,430 602 477 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 1,066 1,200 347 I.1 for servicing 1,066 1,200 347 I.2 for other services - - - J. Other charges - 24 40 J.1 Additional positive returns for exposure junior - - - J.2 Other costs - 24 40 TOTAL COSTS (H+I+J) 2,497 1,826 864 K. Interest generated by securitised assets 2,497 1,826 864 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 2,497 1,826 864 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 334 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.31 DAC ELEKTRA PURCHASE NO.32 S.A. - COMPARTMENT 1 ELEKTRA PURCHASE NO.32 S.A. - COMPARTMENT 2 COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 52-54 Avenue du X Septembre, L-2550 Luxembourg 52-54 Avenue du X Septembre, L-2550 Luxembourg A. Securitised Assets 57,066 230,682 300,023 A.1 Loans 57,066 230,682 300,023 A.2 Bonds - - - B. Loans disbursed 3 29 93 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - - - D.1 Derivatives - - - D.2 Other assets - - - TOTAL ASSETS (A+B+ C+D) 57,069 230,712 300,116 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 57,058 230,602 300,093 F.1 Senior 57,058 230,602 300,093 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 11 109 23 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 9 78 23 G.4 Own funds 2 31 - TOTAL LIABILITIES (E+F+G) 57,069 230,712 300,116 H. Interest expense 1,430 602 477 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 1,430 602 477 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 1,066 1,200 347 I.1 for servicing 1,066 1,200 347 I.2 for other services - - - J. Other charges - 24 40 J.1 Additional positive returns for exposure junior - - - J.2 Other costs - 24 40 TOTAL COSTS (H+I+J) 2,497 1,826 864 K. Interest generated by securitised assets 2,497 1,826 864 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 2,497 1,826 864 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 334 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.31 DAC ELEKTRA PURCHASE NO.32 S.A. - COMPARTMENT 1 ELEKTRA PURCHASE NO.32 S.A. - COMPARTMENT 2 COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 52-54 Avenue du X Septembre, L-2550 Luxembourg 52-54 Avenue du X Septembre, L-2550 Luxembourg A. Securitised Assets 57,066 230,682 300,023 A.1 Loans 57,066 230,682 300,023 A.2 Bonds - - - B. Loans disbursed 3 29 93 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - - - D.1 Derivatives - - - D.2 Other assets - - - TOTAL ASSETS (A+B+ C+D) 57,069 230,712 300,116 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 57,058 230,602 300,093 F.1 Senior 57,058 230,602 300,093 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 11 109 23 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 9 78 23 G.4 Own funds 2 31 - TOTAL LIABILITIES (E+F+G) 57,069 230,712 300,116 H. Interest expense 1,430 602 477 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 1,430 602 477 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 1,066 1,200 347 I.1 for servicing 1,066 1,200 347 I.2 for other services - - - J. Other charges - 24 40 J.1 Additional positive returns for exposure junior - - - J.2 Other costs - 24 40 TOTAL COSTS (H+I+J) 2,497 1,826 864 K. Interest generated by securitised assets 2,497 1,826 864 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 2,497 1,826 864 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 334 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.31 DAC ELEKTRA PURCHASE NO.32 S.A. - COMPARTMENT 1 ELEKTRA PURCHASE NO.32 S.A. - COMPARTMENT 2 COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 52-54 Avenue du X Septembre, L-2550 Luxembourg 52-54 Avenue du X Septembre, L-2550 Luxembourg A. Securitised Assets 57,066 230,682 300,023 A.1 Loans 57,066 230,682 300,023 A.2 Bonds - - - B. Loans disbursed 3 29 93 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - - - D.1 Derivatives - - - D.2 Other assets - - - TOTAL ASSETS (A+B+ C+D) 57,069 230,712 300,116 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 57,058 230,602 300,093 F.1 Senior 57,058 230,602 300,093 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 11 109 23 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 9 78 23 G.4 Own funds 2 31 - TOTAL LIABILITIES (E+F+G) 57,069 230,712 300,116 H. Interest expense 1,430 602 477 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 1,430 602 477 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 1,066 1,200 347 I.1 for servicing 1,066 1,200 347 I.2 for other services - - - J. Other charges - 24 40 J.1 Additional positive returns for exposure junior - - - J.2 Other costs - 24 40 TOTAL COSTS (H+I+J) 2,497 1,826 864 K. Interest generated by securitised assets 2,497 1,826 864 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 2,497 1,826 864 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 334 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.31 DAC ELEKTRA PURCHASE NO.32 S.A. - COMPARTMENT 1 ELEKTRA PURCHASE NO.32 S.A. - COMPARTMENT 2 COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 52-54 Avenue du X Septembre, L-2550 Luxembourg 52-54 Avenue du X Septembre, L-2550 Luxembourg A. Securitised Assets 57,066 230,682 300,023 A.1 Loans 57,066 230,682 300,023 A.2 Bonds - - - B. Loans disbursed 3 29 93 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - - - D.1 Derivatives - - - D.2 Other assets - - - TOTAL ASSETS (A+B+ C+D) 57,069 230,712 300,116 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 57,058 230,602 300,093 F.1 Senior 57,058 230,602 300,093 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 11 109 23 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 9 78 23 G.4 Own funds 2 31 - TOTAL LIABILITIES (E+F+G) 57,069 230,712 300,116 H. Interest expense 1,430 602 477 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 1,430 602 477 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 1,066 1,200 347 I.1 for servicing 1,066 1,200 347 I.2 for other services - - - J. Other charges - 24 40 J.1 Additional positive returns for exposure junior - - - J.2 Other costs - 24 40 TOTAL COSTS (H+I+J) 2,497 1,826 864 K. Interest generated by securitised assets 2,497 1,826 864 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 2,497 1,826 864 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 335 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.33 DAC ELEKTRA PURCHASE NO.34 DAC ELEKTRA PURCHASE NO.36 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 169,779 98,659 300,000 A.1 Loans 169,779 98,659 300,000 A.2 Bonds - - - B. Loans disbursed 69 2 2 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - - 31 D.1 Derivatives - - - D.2 Other assets - - 31 TOTAL ASSETS (A+B+ C+D) 169,847 98,661 300,034 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 169,846 98,658 300,000 F.1 Senior 169,846 98,658 300,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 2 3 34 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities - 2 32 G.4 Own funds 2 2 2 TOTAL LIABILITIES (E+F+G) 169,847 98,661 300,034 H. Interest expense 3,548 382 380 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 3,548 382 380 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 1,883 2,046 676 I.1 for servicing 1,883 2,046 676 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 5,431 2,428 1,056 K. Interest generated by securitised assets 5,431 1,978 1,056 L. Interest income on derivatives - - - M. Other revenues - 450 - M.1 Additional returns for exposure junior - - - M.2 Other revenues - 450 - TOTAL REVENUES (K+L+M) 5,431 2,428 1,056 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 335 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.33 DAC ELEKTRA PURCHASE NO.34 DAC ELEKTRA PURCHASE NO.36 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 169,779 98,659 300,000 A.1 Loans 169,779 98,659 300,000 A.2 Bonds - - - B. Loans disbursed 69 2 2 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - - 31 D.1 Derivatives - - - D.2 Other assets - - 31 TOTAL ASSETS (A+B+ C+D) 169,847 98,661 300,034 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 169,846 98,658 300,000 F.1 Senior 169,846 98,658 300,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 2 3 34 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities - 2 32 G.4 Own funds 2 2 2 TOTAL LIABILITIES (E+F+G) 169,847 98,661 300,034 H. Interest expense 3,548 382 380 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 3,548 382 380 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 1,883 2,046 676 I.1 for servicing 1,883 2,046 676 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 5,431 2,428 1,056 K. Interest generated by securitised assets 5,431 1,978 1,056 L. Interest income on derivatives - - - M. Other revenues - 450 - M.1 Additional returns for exposure junior - - - M.2 Other revenues - 450 - TOTAL REVENUES (K+L+M) 5,431 2,428 1,056 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 335 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.33 DAC ELEKTRA PURCHASE NO.34 DAC ELEKTRA PURCHASE NO.36 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 169,779 98,659 300,000 A.1 Loans 169,779 98,659 300,000 A.2 Bonds - - - B. Loans disbursed 69 2 2 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - - 31 D.1 Derivatives - - - D.2 Other assets - - 31 TOTAL ASSETS (A+B+ C+D) 169,847 98,661 300,034 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 169,846 98,658 300,000 F.1 Senior 169,846 98,658 300,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 2 3 34 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities - 2 32 G.4 Own funds 2 2 2 TOTAL LIABILITIES (E+F+G) 169,847 98,661 300,034 H. Interest expense 3,548 382 380 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 3,548 382 380 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 1,883 2,046 676 I.1 for servicing 1,883 2,046 676 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 5,431 2,428 1,056 K. Interest generated by securitised assets 5,431 1,978 1,056 L. Interest income on derivatives - - - M. Other revenues - 450 - M.1 Additional returns for exposure junior - - - M.2 Other revenues - 450 - TOTAL REVENUES (K+L+M) 5,431 2,428 1,056 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 335 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.33 DAC ELEKTRA PURCHASE NO.34 DAC ELEKTRA PURCHASE NO.36 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 169,779 98,659 300,000 A.1 Loans 169,779 98,659 300,000 A.2 Bonds - - - B. Loans disbursed 69 2 2 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - - 31 D.1 Derivatives - - - D.2 Other assets - - 31 TOTAL ASSETS (A+B+ C+D) 169,847 98,661 300,034 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 169,846 98,658 300,000 F.1 Senior 169,846 98,658 300,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 2 3 34 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities - 2 32 G.4 Own funds 2 2 2 TOTAL LIABILITIES (E+F+G) 169,847 98,661 300,034 H. Interest expense 3,548 382 380 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 3,548 382 380 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 1,883 2,046 676 I.1 for servicing 1,883 2,046 676 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 5,431 2,428 1,056 K. Interest generated by securitised assets 5,431 1,978 1,056 L. Interest income on derivatives - - - M. Other revenues - 450 - M.1 Additional returns for exposure junior - - - M.2 Other revenues - 450 - TOTAL REVENUES (K+L+M) 5,431 2,428 1,056 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 335 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.33 DAC ELEKTRA PURCHASE NO.34 DAC ELEKTRA PURCHASE NO.36 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 169,779 98,659 300,000 A.1 Loans 169,779 98,659 300,000 A.2 Bonds - - - B. Loans disbursed 69 2 2 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - - 31 D.1 Derivatives - - - D.2 Other assets - - 31 TOTAL ASSETS (A+B+ C+D) 169,847 98,661 300,034 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 169,846 98,658 300,000 F.1 Senior 169,846 98,658 300,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 2 3 34 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities - 2 32 G.4 Own funds 2 2 2 TOTAL LIABILITIES (E+F+G) 169,847 98,661 300,034 H. Interest expense 3,548 382 380 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 3,548 382 380 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 1,883 2,046 676 I.1 for servicing 1,883 2,046 676 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 5,431 2,428 1,056 K. Interest generated by securitised assets 5,431 1,978 1,056 L. Interest income on derivatives - - - M. Other revenues - 450 - M.1 Additional returns for exposure junior - - - M.2 Other revenues - 450 - TOTAL REVENUES (K+L+M) 5,431 2,428 1,056 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 336 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.37 DAC ELEKTRA PURCHASE NO.38 DAC ELEKTRA PURCHASE NO.39 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 92,769 119,233 410,000 A.1 Loans 92,769 119,233 410,000 A.2 Bonds - - - B. Loans disbursed 31 2 1 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 3 11 65 D.1 Derivatives - - - D.2 Other assets 3 11 65 TOTAL ASSETS (A+B+ C+D) 92,802 119,246 410,066 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 92,769 119,233 410,000 F.1 Senior 92,769 119,233 410,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 33 13 66 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 32 12 65 G.4 Own funds 2 2 2 TOTAL LIABILITIES (E+F+G) 92,802 119,246 410,066 H. Interest expense 265 364 1,380 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 265 364 1,380 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 796 1,640 1,785 I.1 for servicing 796 1,640 1,785 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 1,061 2,004 3,165 K. Interest generated by securitised assets 1,062 2,005 3,167 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 1,062 2,005 3,167 PROFIT (LOSS) FOR THE PERIOD 1 1 2 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 336 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.37 DAC ELEKTRA PURCHASE NO.38 DAC ELEKTRA PURCHASE NO.39 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 92,769 119,233 410,000 A.1 Loans 92,769 119,233 410,000 A.2 Bonds - - - B. Loans disbursed 31 2 1 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 3 11 65 D.1 Derivatives - - - D.2 Other assets 3 11 65 TOTAL ASSETS (A+B+ C+D) 92,802 119,246 410,066 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 92,769 119,233 410,000 F.1 Senior 92,769 119,233 410,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 33 13 66 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 32 12 65 G.4 Own funds 2 2 2 TOTAL LIABILITIES (E+F+G) 92,802 119,246 410,066 H. Interest expense 265 364 1,380 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 265 364 1,380 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 796 1,640 1,785 I.1 for servicing 796 1,640 1,785 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 1,061 2,004 3,165 K. Interest generated by securitised assets 1,062 2,005 3,167 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 1,062 2,005 3,167 PROFIT (LOSS) FOR THE PERIOD 1 1 2 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 336 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.37 DAC ELEKTRA PURCHASE NO.38 DAC ELEKTRA PURCHASE NO.39 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 92,769 119,233 410,000 A.1 Loans 92,769 119,233 410,000 A.2 Bonds - - - B. Loans disbursed 31 2 1 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 3 11 65 D.1 Derivatives - - - D.2 Other assets 3 11 65 TOTAL ASSETS (A+B+ C+D) 92,802 119,246 410,066 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 92,769 119,233 410,000 F.1 Senior 92,769 119,233 410,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 33 13 66 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 32 12 65 G.4 Own funds 2 2 2 TOTAL LIABILITIES (E+F+G) 92,802 119,246 410,066 H. Interest expense 265 364 1,380 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 265 364 1,380 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 796 1,640 1,785 I.1 for servicing 796 1,640 1,785 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 1,061 2,004 3,165 K. Interest generated by securitised assets 1,062 2,005 3,167 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 1,062 2,005 3,167 PROFIT (LOSS) FOR THE PERIOD 1 1 2 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 336 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.37 DAC ELEKTRA PURCHASE NO.38 DAC ELEKTRA PURCHASE NO.39 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 92,769 119,233 410,000 A.1 Loans 92,769 119,233 410,000 A.2 Bonds - - - B. Loans disbursed 31 2 1 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 3 11 65 D.1 Derivatives - - - D.2 Other assets 3 11 65 TOTAL ASSETS (A+B+ C+D) 92,802 119,246 410,066 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 92,769 119,233 410,000 F.1 Senior 92,769 119,233 410,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 33 13 66 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 32 12 65 G.4 Own funds 2 2 2 TOTAL LIABILITIES (E+F+G) 92,802 119,246 410,066 H. Interest expense 265 364 1,380 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 265 364 1,380 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 796 1,640 1,785 I.1 for servicing 796 1,640 1,785 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 1,061 2,004 3,165 K. Interest generated by securitised assets 1,062 2,005 3,167 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 1,062 2,005 3,167 PROFIT (LOSS) FOR THE PERIOD 1 1 2 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 336 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.37 DAC ELEKTRA PURCHASE NO.38 DAC ELEKTRA PURCHASE NO.39 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland A. Securitised Assets 92,769 119,233 410,000 A.1 Loans 92,769 119,233 410,000 A.2 Bonds - - - B. Loans disbursed 31 2 1 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 3 11 65 D.1 Derivatives - - - D.2 Other assets 3 11 65 TOTAL ASSETS (A+B+ C+D) 92,802 119,246 410,066 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 92,769 119,233 410,000 F.1 Senior 92,769 119,233 410,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 33 13 66 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 32 12 65 G.4 Own funds 2 2 2 TOTAL LIABILITIES (E+F+G) 92,802 119,246 410,066 H. Interest expense 265 364 1,380 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 265 364 1,380 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 796 1,640 1,785 I.1 for servicing 796 1,640 1,785 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 1,061 2,004 3,165 K. Interest generated by securitised assets 1,062 2,005 3,167 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 1,062 2,005 3,167 PROFIT (LOSS) FOR THE PERIOD 1 1 2 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 337 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.41 DAC ELEKTRA PURCHASE NO.43 DAC ELEKTRA PURCHASE NO.44 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 11-12 Warrington Place; Dublin 2 A. Securitised Assets 46,750 250,000 100,000 A.1 Loans 46,750 250,000 100,000 A.2 Bonds - - - B. Loans disbursed 2 2 1 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 4 - - D.1 Derivatives - - - D.2 Other assets 4 - - TOTAL ASSETS (A+B+ C+D) 46,756 250,002 100,001 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 46,750 250,000 100,000 F.1 Senior 46,750 250,000 100,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 7 2 1 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 5 - - G.4 Own funds 2 2 1 TOTAL LIABILITIES (E+F+G) 46,756 250,002 100,001 H. Interest expense 119 320 204 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 119 320 204 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 477 929 457 I.1 for servicing 477 929 457 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 596 1,249 661 K. Interest generated by securitised assets 597 1,250 662 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 597 1,250 662 PROFIT (LOSS) FOR THE PERIOD 2 2 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 337 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.41 DAC ELEKTRA PURCHASE NO.43 DAC ELEKTRA PURCHASE NO.44 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 11-12 Warrington Place; Dublin 2 A. Securitised Assets 46,750 250,000 100,000 A.1 Loans 46,750 250,000 100,000 A.2 Bonds - - - B. Loans disbursed 2 2 1 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 4 - - D.1 Derivatives - - - D.2 Other assets 4 - - TOTAL ASSETS (A+B+ C+D) 46,756 250,002 100,001 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 46,750 250,000 100,000 F.1 Senior 46,750 250,000 100,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 7 2 1 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 5 - - G.4 Own funds 2 2 1 TOTAL LIABILITIES (E+F+G) 46,756 250,002 100,001 H. Interest expense 119 320 204 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 119 320 204 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 477 929 457 I.1 for servicing 477 929 457 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 596 1,249 661 K. Interest generated by securitised assets 597 1,250 662 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 597 1,250 662 PROFIT (LOSS) FOR THE PERIOD 2 2 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 337 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.41 DAC ELEKTRA PURCHASE NO.43 DAC ELEKTRA PURCHASE NO.44 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 11-12 Warrington Place; Dublin 2 A. Securitised Assets 46,750 250,000 100,000 A.1 Loans 46,750 250,000 100,000 A.2 Bonds - - - B. Loans disbursed 2 2 1 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 4 - - D.1 Derivatives - - - D.2 Other assets 4 - - TOTAL ASSETS (A+B+ C+D) 46,756 250,002 100,001 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 46,750 250,000 100,000 F.1 Senior 46,750 250,000 100,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 7 2 1 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 5 - - G.4 Own funds 2 2 1 TOTAL LIABILITIES (E+F+G) 46,756 250,002 100,001 H. Interest expense 119 320 204 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 119 320 204 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 477 929 457 I.1 for servicing 477 929 457 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 596 1,249 661 K. Interest generated by securitised assets 597 1,250 662 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 597 1,250 662 PROFIT (LOSS) FOR THE PERIOD 2 2 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 337 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.41 DAC ELEKTRA PURCHASE NO.43 DAC ELEKTRA PURCHASE NO.44 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 11-12 Warrington Place; Dublin 2 A. Securitised Assets 46,750 250,000 100,000 A.1 Loans 46,750 250,000 100,000 A.2 Bonds - - - B. Loans disbursed 2 2 1 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 4 - - D.1 Derivatives - - - D.2 Other assets 4 - - TOTAL ASSETS (A+B+ C+D) 46,756 250,002 100,001 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 46,750 250,000 100,000 F.1 Senior 46,750 250,000 100,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 7 2 1 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 5 - - G.4 Own funds 2 2 1 TOTAL LIABILITIES (E+F+G) 46,756 250,002 100,001 H. Interest expense 119 320 204 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 119 320 204 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 477 929 457 I.1 for servicing 477 929 457 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 596 1,249 661 K. Interest generated by securitised assets 597 1,250 662 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 597 1,250 662 PROFIT (LOSS) FOR THE PERIOD 2 2 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 337 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.41 DAC ELEKTRA PURCHASE NO.43 DAC ELEKTRA PURCHASE NO.44 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 11-12 Warrington Place; Dublin 2 A. Securitised Assets 46,750 250,000 100,000 A.1 Loans 46,750 250,000 100,000 A.2 Bonds - - - B. Loans disbursed 2 2 1 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 4 - - D.1 Derivatives - - - D.2 Other assets 4 - - TOTAL ASSETS (A+B+ C+D) 46,756 250,002 100,001 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 46,750 250,000 100,000 F.1 Senior 46,750 250,000 100,000 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 7 2 1 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 5 - - G.4 Own funds 2 2 1 TOTAL LIABILITIES (E+F+G) 46,756 250,002 100,001 H. Interest expense 119 320 204 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 119 320 204 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 477 929 457 I.1 for servicing 477 929 457 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 596 1,249 661 K. Interest generated by securitised assets 597 1,250 662 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 597 1,250 662 PROFIT (LOSS) FOR THE PERIOD 2 2 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 338 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.46 DAC ELEKTRA PURCHASE NO.48 DAC ELEKTRA PURCHASE NO.54 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Haddington Road, 1-2 Victoria Buildings, D04 XN32 Dublin A. Securitised Assets 25,600 17,028 42,969 A.1 Loans 25,600 17,028 42,969 A.2 Bonds - - - B. Loans disbursed 93 72 30 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 6 49 20 D.1 Derivatives - - - D.2 Other assets 6 49 20 TOTAL ASSETS (A+B+ C+D) 25,700 17,149 43,018 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 25,692 17,028 42,969 F.1 Senior 25,692 17,028 42,969 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 8 121 50 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 7 120 49 G.4 Own funds 2 2 1 TOTAL LIABILITIES (E+F+G) 25,700 17,149 43,018 H. Interest expense 351 153 127 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 351 153 127 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 432 281 500 I.1 for servicing 432 281 500 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 783 434 627 K. Interest generated by securitised assets 784 436 628 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 784 436 628 PROFIT (LOSS) FOR THE PERIOD 2 2 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 338 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.46 DAC ELEKTRA PURCHASE NO.48 DAC ELEKTRA PURCHASE NO.54 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Haddington Road, 1-2 Victoria Buildings, D04 XN32 Dublin A. Securitised Assets 25,600 17,028 42,969 A.1 Loans 25,600 17,028 42,969 A.2 Bonds - - - B. Loans disbursed 93 72 30 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 6 49 20 D.1 Derivatives - - - D.2 Other assets 6 49 20 TOTAL ASSETS (A+B+ C+D) 25,700 17,149 43,018 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 25,692 17,028 42,969 F.1 Senior 25,692 17,028 42,969 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 8 121 50 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 7 120 49 G.4 Own funds 2 2 1 TOTAL LIABILITIES (E+F+G) 25,700 17,149 43,018 H. Interest expense 351 153 127 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 351 153 127 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 432 281 500 I.1 for servicing 432 281 500 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 783 434 627 K. Interest generated by securitised assets 784 436 628 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 784 436 628 PROFIT (LOSS) FOR THE PERIOD 2 2 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 338 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.46 DAC ELEKTRA PURCHASE NO.48 DAC ELEKTRA PURCHASE NO.54 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Haddington Road, 1-2 Victoria Buildings, D04 XN32 Dublin A. Securitised Assets 25,600 17,028 42,969 A.1 Loans 25,600 17,028 42,969 A.2 Bonds - - - B. Loans disbursed 93 72 30 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 6 49 20 D.1 Derivatives - - - D.2 Other assets 6 49 20 TOTAL ASSETS (A+B+ C+D) 25,700 17,149 43,018 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 25,692 17,028 42,969 F.1 Senior 25,692 17,028 42,969 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 8 121 50 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 7 120 49 G.4 Own funds 2 2 1 TOTAL LIABILITIES (E+F+G) 25,700 17,149 43,018 H. Interest expense 351 153 127 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 351 153 127 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 432 281 500 I.1 for servicing 432 281 500 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 783 434 627 K. Interest generated by securitised assets 784 436 628 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 784 436 628 PROFIT (LOSS) FOR THE PERIOD 2 2 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 338 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.46 DAC ELEKTRA PURCHASE NO.48 DAC ELEKTRA PURCHASE NO.54 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Haddington Road, 1-2 Victoria Buildings, D04 XN32 Dublin A. Securitised Assets 25,600 17,028 42,969 A.1 Loans 25,600 17,028 42,969 A.2 Bonds - - - B. Loans disbursed 93 72 30 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 6 49 20 D.1 Derivatives - - - D.2 Other assets 6 49 20 TOTAL ASSETS (A+B+ C+D) 25,700 17,149 43,018 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 25,692 17,028 42,969 F.1 Senior 25,692 17,028 42,969 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 8 121 50 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 7 120 49 G.4 Own funds 2 2 1 TOTAL LIABILITIES (E+F+G) 25,700 17,149 43,018 H. Interest expense 351 153 127 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 351 153 127 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 432 281 500 I.1 for servicing 432 281 500 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 783 434 627 K. Interest generated by securitised assets 784 436 628 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 784 436 628 PROFIT (LOSS) FOR THE PERIOD 2 2 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 338 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.46 DAC ELEKTRA PURCHASE NO.48 DAC ELEKTRA PURCHASE NO.54 DAC COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland Haddington Road, 1-2 Victoria Buildings, D04 XN32 Dublin A. Securitised Assets 25,600 17,028 42,969 A.1 Loans 25,600 17,028 42,969 A.2 Bonds - - - B. Loans disbursed 93 72 30 C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 6 49 20 D.1 Derivatives - - - D.2 Other assets 6 49 20 TOTAL ASSETS (A+B+ C+D) 25,700 17,149 43,018 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 25,692 17,028 42,969 F.1 Senior 25,692 17,028 42,969 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 8 121 50 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 7 120 49 G.4 Own funds 2 2 1 TOTAL LIABILITIES (E+F+G) 25,700 17,149 43,018 H. Interest expense 351 153 127 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 351 153 127 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 432 281 500 I.1 for servicing 432 281 500 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 783 434 627 K. Interest generated by securitised assets 784 436 628 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 784 436 628 PROFIT (LOSS) FOR THE PERIOD 2 2 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 339 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.55 DAC ELEKTRA PURCHASE NO.56 DAC ELEKTRA PURCHASE NO.57 DAC COUNTRY OF INCORPORATION Haddington Road, 2 Victoria Buildings, D04 XN32, Dublin 4 1-2 Victoria Buildings, 4 Dublin 1-2 Victoria Buildings, 4 Dublin A. Securitised Assets 137,511 232,878 429,745 A.1 Loans 137,511 232,878 429,745 A.2 Bonds - - - B. Loans disbursed 1 141 - C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 12 - 7,098 D.1 Derivatives - - 7,098 D.2 Other assets 12 - - TOTAL ASSETS (A+B+ C+D) 137,524 233,019 436,843 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 137,511 233,018 436,833 F.1 Senior 137,511 233,018 436,833 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 13 1 11 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 12 - 10 G.4 Own funds 2 1 1 TOTAL LIABILITIES (E+F+G) 137,524 233,019 436,843 H. Interest expense 232 3,245 1,009 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 232 3,245 1,009 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 247 228 144 I.1 for servicing 247 228 144 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 480 3,474 1,153 K. Interest generated by securitised assets 481 3,475 1,154 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 481 3,475 1,154 PROFIT (LOSS) FOR THE PERIOD 2 1 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 339 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.55 DAC ELEKTRA PURCHASE NO.56 DAC ELEKTRA PURCHASE NO.57 DAC COUNTRY OF INCORPORATION Haddington Road, 2 Victoria Buildings, D04 XN32, Dublin 4 1-2 Victoria Buildings, 4 Dublin 1-2 Victoria Buildings, 4 Dublin A. Securitised Assets 137,511 232,878 429,745 A.1 Loans 137,511 232,878 429,745 A.2 Bonds - - - B. Loans disbursed 1 141 - C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 12 - 7,098 D.1 Derivatives - - 7,098 D.2 Other assets 12 - - TOTAL ASSETS (A+B+ C+D) 137,524 233,019 436,843 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 137,511 233,018 436,833 F.1 Senior 137,511 233,018 436,833 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 13 1 11 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 12 - 10 G.4 Own funds 2 1 1 TOTAL LIABILITIES (E+F+G) 137,524 233,019 436,843 H. Interest expense 232 3,245 1,009 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 232 3,245 1,009 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 247 228 144 I.1 for servicing 247 228 144 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 480 3,474 1,153 K. Interest generated by securitised assets 481 3,475 1,154 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 481 3,475 1,154 PROFIT (LOSS) FOR THE PERIOD 2 1 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 339 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.55 DAC ELEKTRA PURCHASE NO.56 DAC ELEKTRA PURCHASE NO.57 DAC COUNTRY OF INCORPORATION Haddington Road, 2 Victoria Buildings, D04 XN32, Dublin 4 1-2 Victoria Buildings, 4 Dublin 1-2 Victoria Buildings, 4 Dublin A. Securitised Assets 137,511 232,878 429,745 A.1 Loans 137,511 232,878 429,745 A.2 Bonds - - - B. Loans disbursed 1 141 - C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 12 - 7,098 D.1 Derivatives - - 7,098 D.2 Other assets 12 - - TOTAL ASSETS (A+B+ C+D) 137,524 233,019 436,843 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 137,511 233,018 436,833 F.1 Senior 137,511 233,018 436,833 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 13 1 11 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 12 - 10 G.4 Own funds 2 1 1 TOTAL LIABILITIES (E+F+G) 137,524 233,019 436,843 H. Interest expense 232 3,245 1,009 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 232 3,245 1,009 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 247 228 144 I.1 for servicing 247 228 144 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 480 3,474 1,153 K. Interest generated by securitised assets 481 3,475 1,154 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 481 3,475 1,154 PROFIT (LOSS) FOR THE PERIOD 2 1 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 339 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.55 DAC ELEKTRA PURCHASE NO.56 DAC ELEKTRA PURCHASE NO.57 DAC COUNTRY OF INCORPORATION Haddington Road, 2 Victoria Buildings, D04 XN32, Dublin 4 1-2 Victoria Buildings, 4 Dublin 1-2 Victoria Buildings, 4 Dublin A. Securitised Assets 137,511 232,878 429,745 A.1 Loans 137,511 232,878 429,745 A.2 Bonds - - - B. Loans disbursed 1 141 - C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 12 - 7,098 D.1 Derivatives - - 7,098 D.2 Other assets 12 - - TOTAL ASSETS (A+B+ C+D) 137,524 233,019 436,843 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 137,511 233,018 436,833 F.1 Senior 137,511 233,018 436,833 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 13 1 11 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 12 - 10 G.4 Own funds 2 1 1 TOTAL LIABILITIES (E+F+G) 137,524 233,019 436,843 H. Interest expense 232 3,245 1,009 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 232 3,245 1,009 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 247 228 144 I.1 for servicing 247 228 144 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 480 3,474 1,153 K. Interest generated by securitised assets 481 3,475 1,154 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 481 3,475 1,154 PROFIT (LOSS) FOR THE PERIOD 2 1 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 339 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.55 DAC ELEKTRA PURCHASE NO.56 DAC ELEKTRA PURCHASE NO.57 DAC COUNTRY OF INCORPORATION Haddington Road, 2 Victoria Buildings, D04 XN32, Dublin 4 1-2 Victoria Buildings, 4 Dublin 1-2 Victoria Buildings, 4 Dublin A. Securitised Assets 137,511 232,878 429,745 A.1 Loans 137,511 232,878 429,745 A.2 Bonds - - - B. Loans disbursed 1 141 - C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets 12 - 7,098 D.1 Derivatives - - 7,098 D.2 Other assets 12 - - TOTAL ASSETS (A+B+ C+D) 137,524 233,019 436,843 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 137,511 233,018 436,833 F.1 Senior 137,511 233,018 436,833 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 13 1 11 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 12 - 10 G.4 Own funds 2 1 1 TOTAL LIABILITIES (E+F+G) 137,524 233,019 436,843 H. Interest expense 232 3,245 1,009 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received 232 3,245 1,009 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction 247 228 144 I.1 for servicing 247 228 144 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) 480 3,474 1,153 K. Interest generated by securitised assets 481 3,475 1,154 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) 481 3,475 1,154 PROFIT (LOSS) FOR THE PERIOD 2 1 1 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 340 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.63 DAC ELEKTRA PURCHASE NO.718 DAC ELEKTRA PURCHASE NO.911 LTD COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey A. Securitised Assets 230,000 590,040 355,080 A.1 Loans 230,000 590,040 355,080 A.2 Bonds - - - B. Loans disbursed 53 1 - C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - 1 - D.1 Derivatives - - - D.2 Other assets - 1 - TOTAL ASSETS (A+B+ C+D) 230,053 590,042 355,080 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 230,000 590,040 355,079 F.1 Senior 230,000 590,040 355,079 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 53 2 1 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 53 - - G.4 Own funds - 2 1 TOTAL LIABILITIES (E+F+G) 230,053 590,042 355,080 H. Interest expense - 13,383 897 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received - 13,383 897 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction - 574 1,065 I.1 for servicing - 574 1,065 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) - 13,957 1,962 K. Interest generated by securitised assets - 13,958 1,962 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) - 13,958 1,962 PROFIT (LOSS) FOR THE PERIOD - 2 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 340 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.63 DAC ELEKTRA PURCHASE NO.718 DAC ELEKTRA PURCHASE NO.911 LTD COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey A. Securitised Assets 230,000 590,040 355,080 A.1 Loans 230,000 590,040 355,080 A.2 Bonds - - - B. Loans disbursed 53 1 - C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - 1 - D.1 Derivatives - - - D.2 Other assets - 1 - TOTAL ASSETS (A+B+ C+D) 230,053 590,042 355,080 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 230,000 590,040 355,079 F.1 Senior 230,000 590,040 355,079 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 53 2 1 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 53 - - G.4 Own funds - 2 1 TOTAL LIABILITIES (E+F+G) 230,053 590,042 355,080 H. Interest expense - 13,383 897 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received - 13,383 897 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction - 574 1,065 I.1 for servicing - 574 1,065 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) - 13,957 1,962 K. Interest generated by securitised assets - 13,958 1,962 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) - 13,958 1,962 PROFIT (LOSS) FOR THE PERIOD - 2 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 340 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.63 DAC ELEKTRA PURCHASE NO.718 DAC ELEKTRA PURCHASE NO.911 LTD COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey A. Securitised Assets 230,000 590,040 355,080 A.1 Loans 230,000 590,040 355,080 A.2 Bonds - - - B. Loans disbursed 53 1 - C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - 1 - D.1 Derivatives - - - D.2 Other assets - 1 - TOTAL ASSETS (A+B+ C+D) 230,053 590,042 355,080 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 230,000 590,040 355,079 F.1 Senior 230,000 590,040 355,079 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 53 2 1 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 53 - - G.4 Own funds - 2 1 TOTAL LIABILITIES (E+F+G) 230,053 590,042 355,080 H. Interest expense - 13,383 897 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received - 13,383 897 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction - 574 1,065 I.1 for servicing - 574 1,065 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) - 13,957 1,962 K. Interest generated by securitised assets - 13,958 1,962 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) - 13,958 1,962 PROFIT (LOSS) FOR THE PERIOD - 2 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 340 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.63 DAC ELEKTRA PURCHASE NO.718 DAC ELEKTRA PURCHASE NO.911 LTD COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey A. Securitised Assets 230,000 590,040 355,080 A.1 Loans 230,000 590,040 355,080 A.2 Bonds - - - B. Loans disbursed 53 1 - C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - 1 - D.1 Derivatives - - - D.2 Other assets - 1 - TOTAL ASSETS (A+B+ C+D) 230,053 590,042 355,080 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 230,000 590,040 355,079 F.1 Senior 230,000 590,040 355,079 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 53 2 1 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 53 - - G.4 Own funds - 2 1 TOTAL LIABILITIES (E+F+G) 230,053 590,042 355,080 H. Interest expense - 13,383 897 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received - 13,383 897 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction - 574 1,065 I.1 for servicing - 574 1,065 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) - 13,957 1,962 K. Interest generated by securitised assets - 13,958 1,962 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) - 13,958 1,962 PROFIT (LOSS) FOR THE PERIOD - 2 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 340 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE ELEKTRA PURCHASE NO.63 DAC ELEKTRA PURCHASE NO.718 DAC ELEKTRA PURCHASE NO.911 LTD COUNTRY OF INCORPORATION 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland 1-2 Victoria Buildings, Haddington Road, Dublin 4, D04 XN32, Ireland OGIER HOUSE, THE ESPLANADE, ST. HELIER, JE4 9WG - Jersey A. Securitised Assets 230,000 590,040 355,080 A.1 Loans 230,000 590,040 355,080 A.2 Bonds - - - B. Loans disbursed 53 1 - C. Use of liquid assets resulting from loan operations - - - C.1 Loans (including bank current account) - - - C.2 Bonds - - - D. Other assets - 1 - D.1 Derivatives - - - D.2 Other assets - 1 - TOTAL ASSETS (A+B+ C+D) 230,053 590,042 355,080 E. Bond issued - - - E.1 Senior - - - E.2 Mezzanine - - - E.3 Junior - - - F. Loans received 230,000 590,040 355,079 F.1 Senior 230,000 590,040 355,079 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 53 2 1 G.1 Derivatives - - - G.2 Due to originator - - - G.3 Other liabilities 53 - - G.4 Own funds - 2 1 TOTAL LIABILITIES (E+F+G) 230,053 590,042 355,080 H. Interest expense - 13,383 897 H.1 Interest expense on bond issued - - - H.2 Interest expense on loans received - 13,383 897 H.3 Interest expense on derivatives - - - I. Commissions and fees related to the transaction - 574 1,065 I.1 for servicing - 574 1,065 I.2 for other services - - - J. Other charges - - - J.1 Additional positive returns for exposure junior - - - J.2 Other costs - - - TOTAL COSTS (H+I+J) - 13,957 1,962 K. Interest generated by securitised assets - 13,958 1,962 L. Interest income on derivatives - - - M. Other revenues - - - M.1 Additional returns for exposure junior - - - M.2 Other revenues - - - TOTAL REVENUES (K+L+M) - 13,958 1,962 PROFIT (LOSS) FOR THE PERIOD - 2 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 341 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE F-E MORTGAGES S.R.L. - 2003 F-E MORTGAGES S.R.L. - 2005 HELICONUS S.R.L COUNTRY OF INCORPORATION Piazzetta Monte 1 - 37121 Verona Piazzetta Monte 1 - 37121 Verona Piazzetta Monte 1 - 37121 Verona A. Securitised Assets 110,595 181,441 55,230 A.1 Loans 110,595 181,441 55,230 A.2 Bonds - - - B. Loans disbursed - - - C. Use of liquid assets resulting from loan operations 25,921 13,882 12,790 C.1 Loans (including bank current account) 25,921 13,882 12,790 C.2 Bonds - - - D. Other assets 176 179 115 D.1 Derivatives 30 - 39 D.2 Other assets 146 179 76 TOTAL ASSETS (A+B+ C+D) 136,692 195,503 68,135 E. Bond issued 81,333 155,329 45,277 E.1 Senior 14,683 86,154 5,458 E.2 Mezzanine 59,018 36,864 30,829 E.3 Junior 7,632 32,311 8,990 F. Loans received 22,966 - 10,220 F.1 Senior 22,966 - 10,220 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 32,394 40,174 12,638 G.1 Derivatives - 10 - G.2 Due to originator 29,681 35,877 12,122 G.3 Other liabilities 2,712 4,287 516 G.4 Own funds - - - TOTAL LIABILITIES (E+F+G) 136,692 195,503 68,135 H. Interest expense 528 1,098 212 H.1 Interest expense on bond issued 522 161 211 H.2 Interest expense on loans received 6 - 2 H.3 Interest expense on derivatives - 936 - I. Commissions and fees related to the transaction 425 377 270 I.1 for servicing 198 289 95 I.2 for other services 226 88 176 J. Other charges 6,278 12,099 2,543 J.1 Additional positive returns for exposure junior - - - J.2 Other costs 6,278 12,099 2,543 TOTAL COSTS (H+I+J) 7,231 13,574 3,025 K. Interest generated by securitised assets 1,608 2,772 866 L. Interest income on derivatives 791 - 333 M. Other revenues 4,831 10,802 1,826 M.1 Additional returns for exposure junior 4,352 10,114 1,572 M.2 Other revenues 479 688 254 TOTAL REVENUES (K+L+M) 7,231 13,574 3,025 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 341 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE F-E MORTGAGES S.R.L. - 2003 F-E MORTGAGES S.R.L. - 2005 HELICONUS S.R.L COUNTRY OF INCORPORATION Piazzetta Monte 1 - 37121 Verona Piazzetta Monte 1 - 37121 Verona Piazzetta Monte 1 - 37121 Verona A. Securitised Assets 110,595 181,441 55,230 A.1 Loans 110,595 181,441 55,230 A.2 Bonds - - - B. Loans disbursed - - - C. Use of liquid assets resulting from loan operations 25,921 13,882 12,790 C.1 Loans (including bank current account) 25,921 13,882 12,790 C.2 Bonds - - - D. Other assets 176 179 115 D.1 Derivatives 30 - 39 D.2 Other assets 146 179 76 TOTAL ASSETS (A+B+ C+D) 136,692 195,503 68,135 E. Bond issued 81,333 155,329 45,277 E.1 Senior 14,683 86,154 5,458 E.2 Mezzanine 59,018 36,864 30,829 E.3 Junior 7,632 32,311 8,990 F. Loans received 22,966 - 10,220 F.1 Senior 22,966 - 10,220 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 32,394 40,174 12,638 G.1 Derivatives - 10 - G.2 Due to originator 29,681 35,877 12,122 G.3 Other liabilities 2,712 4,287 516 G.4 Own funds - - - TOTAL LIABILITIES (E+F+G) 136,692 195,503 68,135 H. Interest expense 528 1,098 212 H.1 Interest expense on bond issued 522 161 211 H.2 Interest expense on loans received 6 - 2 H.3 Interest expense on derivatives - 936 - I. Commissions and fees related to the transaction 425 377 270 I.1 for servicing 198 289 95 I.2 for other services 226 88 176 J. Other charges 6,278 12,099 2,543 J.1 Additional positive returns for exposure junior - - - J.2 Other costs 6,278 12,099 2,543 TOTAL COSTS (H+I+J) 7,231 13,574 3,025 K. Interest generated by securitised assets 1,608 2,772 866 L. Interest income on derivatives 791 - 333 M. Other revenues 4,831 10,802 1,826 M.1 Additional returns for exposure junior 4,352 10,114 1,572 M.2 Other revenues 479 688 254 TOTAL REVENUES (K+L+M) 7,231 13,574 3,025 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 341 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE F-E MORTGAGES S.R.L. - 2003 F-E MORTGAGES S.R.L. - 2005 HELICONUS S.R.L COUNTRY OF INCORPORATION Piazzetta Monte 1 - 37121 Verona Piazzetta Monte 1 - 37121 Verona Piazzetta Monte 1 - 37121 Verona A. Securitised Assets 110,595 181,441 55,230 A.1 Loans 110,595 181,441 55,230 A.2 Bonds - - - B. Loans disbursed - - - C. Use of liquid assets resulting from loan operations 25,921 13,882 12,790 C.1 Loans (including bank current account) 25,921 13,882 12,790 C.2 Bonds - - - D. Other assets 176 179 115 D.1 Derivatives 30 - 39 D.2 Other assets 146 179 76 TOTAL ASSETS (A+B+ C+D) 136,692 195,503 68,135 E. Bond issued 81,333 155,329 45,277 E.1 Senior 14,683 86,154 5,458 E.2 Mezzanine 59,018 36,864 30,829 E.3 Junior 7,632 32,311 8,990 F. Loans received 22,966 - 10,220 F.1 Senior 22,966 - 10,220 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 32,394 40,174 12,638 G.1 Derivatives - 10 - G.2 Due to originator 29,681 35,877 12,122 G.3 Other liabilities 2,712 4,287 516 G.4 Own funds - - - TOTAL LIABILITIES (E+F+G) 136,692 195,503 68,135 H. Interest expense 528 1,098 212 H.1 Interest expense on bond issued 522 161 211 H.2 Interest expense on loans received 6 - 2 H.3 Interest expense on derivatives - 936 - I. Commissions and fees related to the transaction 425 377 270 I.1 for servicing 198 289 95 I.2 for other services 226 88 176 J. Other charges 6,278 12,099 2,543 J.1 Additional positive returns for exposure junior - - - J.2 Other costs 6,278 12,099 2,543 TOTAL COSTS (H+I+J) 7,231 13,574 3,025 K. Interest generated by securitised assets 1,608 2,772 866 L. Interest income on derivatives 791 - 333 M. Other revenues 4,831 10,802 1,826 M.1 Additional returns for exposure junior 4,352 10,114 1,572 M.2 Other revenues 479 688 254 TOTAL REVENUES (K+L+M) 7,231 13,574 3,025 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 341 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE F-E MORTGAGES S.R.L. - 2003 F-E MORTGAGES S.R.L. - 2005 HELICONUS S.R.L COUNTRY OF INCORPORATION Piazzetta Monte 1 - 37121 Verona Piazzetta Monte 1 - 37121 Verona Piazzetta Monte 1 - 37121 Verona A. Securitised Assets 110,595 181,441 55,230 A.1 Loans 110,595 181,441 55,230 A.2 Bonds - - - B. Loans disbursed - - - C. Use of liquid assets resulting from loan operations 25,921 13,882 12,790 C.1 Loans (including bank current account) 25,921 13,882 12,790 C.2 Bonds - - - D. Other assets 176 179 115 D.1 Derivatives 30 - 39 D.2 Other assets 146 179 76 TOTAL ASSETS (A+B+ C+D) 136,692 195,503 68,135 E. Bond issued 81,333 155,329 45,277 E.1 Senior 14,683 86,154 5,458 E.2 Mezzanine 59,018 36,864 30,829 E.3 Junior 7,632 32,311 8,990 F. Loans received 22,966 - 10,220 F.1 Senior 22,966 - 10,220 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 32,394 40,174 12,638 G.1 Derivatives - 10 - G.2 Due to originator 29,681 35,877 12,122 G.3 Other liabilities 2,712 4,287 516 G.4 Own funds - - - TOTAL LIABILITIES (E+F+G) 136,692 195,503 68,135 H. Interest expense 528 1,098 212 H.1 Interest expense on bond issued 522 161 211 H.2 Interest expense on loans received 6 - 2 H.3 Interest expense on derivatives - 936 - I. Commissions and fees related to the transaction 425 377 270 I.1 for servicing 198 289 95 I.2 for other services 226 88 176 J. Other charges 6,278 12,099 2,543 J.1 Additional positive returns for exposure junior - - - J.2 Other costs 6,278 12,099 2,543 TOTAL COSTS (H+I+J) 7,231 13,574 3,025 K. Interest generated by securitised assets 1,608 2,772 866 L. Interest income on derivatives 791 - 333 M. Other revenues 4,831 10,802 1,826 M.1 Additional returns for exposure junior 4,352 10,114 1,572 M.2 Other revenues 479 688 254 TOTAL REVENUES (K+L+M) 7,231 13,574 3,025 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 341 continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles (€ '000) 12.31.2018 SPECIAL PURPOSE VEHICLE F-E MORTGAGES S.R.L. - 2003 F-E MORTGAGES S.R.L. - 2005 HELICONUS S.R.L COUNTRY OF INCORPORATION Piazzetta Monte 1 - 37121 Verona Piazzetta Monte 1 - 37121 Verona Piazzetta Monte 1 - 37121 Verona A. Securitised Assets 110,595 181,441 55,230 A.1 Loans 110,595 181,441 55,230 A.2 Bonds - - - B. Loans disbursed - - - C. Use of liquid assets resulting from loan operations 25,921 13,882 12,790 C.1 Loans (including bank current account) 25,921 13,882 12,790 C.2 Bonds - - - D. Other assets 176 179 115 D.1 Derivatives 30 - 39 D.2 Other assets 146 179 76 TOTAL ASSETS (A+B+ C+D) 136,692 195,503 68,135 E. Bond issued 81,333 155,329 45,277 E.1 Senior 14,683 86,154 5,458 E.2 Mezzanine 59,018 36,864 30,829 E.3 Junior 7,632 32,311 8,990 F. Loans received 22,966 - 10,220 F.1 Senior 22,966 - 10,220 F.2 Mezzanine - - - F.3 Junior - - - G. Other liabilities 32,394 40,174 12,638 G.1 Derivatives - 10 - G.2 Due to originator 29,681 35,877 12,122 G.3 Other liabilities 2,712 4,287 516 G.4 Own funds - - - TOTAL LIABILITIES (E+F+G) 136,692 195,503 68,135 H. Interest expense 528 1,098 212 H.1 Interest expense on bond issued 522 161 211 H.2 Interest expense on loans received 6 - 2 H.3 Interest expense on derivatives - 936 - I. Commissions and fees related to the transaction 425 377 270 I.1 for servicing 198 289 95 I.2 for other services 226 88 176 J. Other charges 6,278 12,099 2,543 J.1 Additional positive returns for exposure junior - - - J.2 Other costs 6,278 12,099 2,543 TOTAL COSTS (H+I+J) 7,231 13,574 3,025 K. Interest generated by securitised assets 1,608 2,772 866 L. Interest income on derivatives 791 - 333 M. Other revenues 4,831 10,802 1,826 M.1 Additional returns for exposure junior 4,352 10,114 1,572 M.2 Other revenues 479 688 254 TOTAL REVENUES (K+L+M) 7,231 13,574 3,025 PROFIT (LOSS) FOR THE PERIOD - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 342 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles 12.31.2018 SPECIAL PURPOSE VEHICLE LARGE CORPORATE ONE SRL SUCCESS 2015 B.V. COUNTRY OF INCORPORATION Piazzetta Monte 1 - 37121 Verona Barbara Strozzilaan 101, 1083HN Amsterdam A. Securitised Assets 234,272 343,727 A.1 Loans 234,272 343,727 A.2 Bonds - - B. Loans disbursed - - C. Use of liquid assets resulting from loan operations 37,202 - C.1 Loans (including bank current account) 37,202 - C.2 Bonds - - D. Other assets 16,283 60 D.1 Derivatives 783 - D.2 Other assets 15,499 60 TOTAL ASSETS (A+B+ C+D) 287,756 343,788 E. Bond issued 287,618 324,510 E.1 Senior 251,253 230,110 E.2 Mezzanine - - E.3 Junior 36,364 94,400 F. Loans received 4,192 - F.1 Senior 4,192 - F.2 Mezzanine - - F.3 Junior - - G. Other liabilities -4,054 19,278 G.1 Derivatives - - G.2 Due to originator -4,337 - G.3 Other liabilities 283 19,278 G.4 Own funds - - TOTAL LIABILITIES (E+F+G) 287,756 343,788 H. Interest expense 9,044 1,945 H.1 Interest expense on bond issued 8,861 1,945 H.2 Interest expense on loans received 183 - H.3 Interest expense on derivatives - - I. Commissions and fees related to the transaction 1,020 1,250 I.1 for servicing 611 1,250 I.2 for other services 409 - J. Other charges 57 4,732 J.1 Additional positive returns for exposure junior - 4,474 J.2 Other costs 57 257 TOTAL COSTS (H+I+J) 10,121 7,927 K. Interest generated by securitised assets 2,080 7,927 L. Interest income on derivatives 4,704 - M. Other revenues 3,336 - M.1 Additional returns for exposure junior 3,336 - M.2 Other revenues - - TOTAL REVENUES (K+L+M) 10,121 7,927 PROFIT (LOSS) FOR THE PERIOD - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 342 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles 12.31.2018 SPECIAL PURPOSE VEHICLE LARGE CORPORATE ONE SRL SUCCESS 2015 B.V. COUNTRY OF INCORPORATION Piazzetta Monte 1 - 37121 Verona Barbara Strozzilaan 101, 1083HN Amsterdam A. Securitised Assets 234,272 343,727 A.1 Loans 234,272 343,727 A.2 Bonds - - B. Loans disbursed - - C. Use of liquid assets resulting from loan operations 37,202 - C.1 Loans (including bank current account) 37,202 - C.2 Bonds - - D. Other assets 16,283 60 D.1 Derivatives 783 - D.2 Other assets 15,499 60 TOTAL ASSETS (A+B+ C+D) 287,756 343,788 E. Bond issued 287,618 324,510 E.1 Senior 251,253 230,110 E.2 Mezzanine - - E.3 Junior 36,364 94,400 F. Loans received 4,192 - F.1 Senior 4,192 - F.2 Mezzanine - - F.3 Junior - - G. Other liabilities -4,054 19,278 G.1 Derivatives - - G.2 Due to originator -4,337 - G.3 Other liabilities 283 19,278 G.4 Own funds - - TOTAL LIABILITIES (E+F+G) 287,756 343,788 H. Interest expense 9,044 1,945 H.1 Interest expense on bond issued 8,861 1,945 H.2 Interest expense on loans received 183 - H.3 Interest expense on derivatives - - I. Commissions and fees related to the transaction 1,020 1,250 I.1 for servicing 611 1,250 I.2 for other services 409 - J. Other charges 57 4,732 J.1 Additional positive returns for exposure junior - 4,474 J.2 Other costs 57 257 TOTAL COSTS (H+I+J) 10,121 7,927 K. Interest generated by securitised assets 2,080 7,927 L. Interest income on derivatives 4,704 - M. Other revenues 3,336 - M.1 Additional returns for exposure junior 3,336 - M.2 Other revenues - - TOTAL REVENUES (K+L+M) 10,121 7,927 PROFIT (LOSS) FOR THE PERIOD - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 342 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles 12.31.2018 SPECIAL PURPOSE VEHICLE LARGE CORPORATE ONE SRL SUCCESS 2015 B.V. COUNTRY OF INCORPORATION Piazzetta Monte 1 - 37121 Verona Barbara Strozzilaan 101, 1083HN Amsterdam A. Securitised Assets 234,272 343,727 A.1 Loans 234,272 343,727 A.2 Bonds - - B. Loans disbursed - - C. Use of liquid assets resulting from loan operations 37,202 - C.1 Loans (including bank current account) 37,202 - C.2 Bonds - - D. Other assets 16,283 60 D.1 Derivatives 783 - D.2 Other assets 15,499 60 TOTAL ASSETS (A+B+ C+D) 287,756 343,788 E. Bond issued 287,618 324,510 E.1 Senior 251,253 230,110 E.2 Mezzanine - - E.3 Junior 36,364 94,400 F. Loans received 4,192 - F.1 Senior 4,192 - F.2 Mezzanine - - F.3 Junior - - G. Other liabilities -4,054 19,278 G.1 Derivatives - - G.2 Due to originator -4,337 - G.3 Other liabilities 283 19,278 G.4 Own funds - - TOTAL LIABILITIES (E+F+G) 287,756 343,788 H. Interest expense 9,044 1,945 H.1 Interest expense on bond issued 8,861 1,945 H.2 Interest expense on loans received 183 - H.3 Interest expense on derivatives - - I. Commissions and fees related to the transaction 1,020 1,250 I.1 for servicing 611 1,250 I.2 for other services 409 - J. Other charges 57 4,732 J.1 Additional positive returns for exposure junior - 4,474 J.2 Other costs 57 257 TOTAL COSTS (H+I+J) 10,121 7,927 K. Interest generated by securitised assets 2,080 7,927 L. Interest income on derivatives 4,704 - M. Other revenues 3,336 - M.1 Additional returns for exposure junior 3,336 - M.2 Other revenues - - TOTAL REVENUES (K+L+M) 10,121 7,927 PROFIT (LOSS) FOR THE PERIOD - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 342 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles 12.31.2018 SPECIAL PURPOSE VEHICLE LARGE CORPORATE ONE SRL SUCCESS 2015 B.V. COUNTRY OF INCORPORATION Piazzetta Monte 1 - 37121 Verona Barbara Strozzilaan 101, 1083HN Amsterdam A. Securitised Assets 234,272 343,727 A.1 Loans 234,272 343,727 A.2 Bonds - - B. Loans disbursed - - C. Use of liquid assets resulting from loan operations 37,202 - C.1 Loans (including bank current account) 37,202 - C.2 Bonds - - D. Other assets 16,283 60 D.1 Derivatives 783 - D.2 Other assets 15,499 60 TOTAL ASSETS (A+B+ C+D) 287,756 343,788 E. Bond issued 287,618 324,510 E.1 Senior 251,253 230,110 E.2 Mezzanine - - E.3 Junior 36,364 94,400 F. Loans received 4,192 - F.1 Senior 4,192 - F.2 Mezzanine - - F.3 Junior - - G. Other liabilities -4,054 19,278 G.1 Derivatives - - G.2 Due to originator -4,337 - G.3 Other liabilities 283 19,278 G.4 Own funds - - TOTAL LIABILITIES (E+F+G) 287,756 343,788 H. Interest expense 9,044 1,945 H.1 Interest expense on bond issued 8,861 1,945 H.2 Interest expense on loans received 183 - H.3 Interest expense on derivatives - - I. Commissions and fees related to the transaction 1,020 1,250 I.1 for servicing 611 1,250 I.2 for other services 409 - J. Other charges 57 4,732 J.1 Additional positive returns for exposure junior - 4,474 J.2 Other costs 57 257 TOTAL COSTS (H+I+J) 10,121 7,927 K. Interest generated by securitised assets 2,080 7,927 L. Interest income on derivatives 4,704 - M. Other revenues 3,336 - M.1 Additional returns for exposure junior 3,336 - M.2 Other revenues - - TOTAL REVENUES (K+L+M) 10,121 7,927 PROFIT (LOSS) FOR THE PERIOD - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 342 2018 Annual Report and Accounts · UniCredit continued – C.6 Regulatory consolidation – Consolidated Securitisation Vehicles 12.31.2018 SPECIAL PURPOSE VEHICLE LARGE CORPORATE ONE SRL SUCCESS 2015 B.V. COUNTRY OF INCORPORATION Piazzetta Monte 1 - 37121 Verona Barbara Strozzilaan 101, 1083HN Amsterdam A. Securitised Assets 234,272 343,727 A.1 Loans 234,272 343,727 A.2 Bonds - - B. Loans disbursed - - C. Use of liquid assets resulting from loan operations 37,202 - C.1 Loans (including bank current account) 37,202 - C.2 Bonds - - D. Other assets 16,283 60 D.1 Derivatives 783 - D.2 Other assets 15,499 60 TOTAL ASSETS (A+B+ C+D) 287,756 343,788 E. Bond issued 287,618 324,510 E.1 Senior 251,253 230,110 E.2 Mezzanine - - E.3 Junior 36,364 94,400 F. Loans received 4,192 - F.1 Senior 4,192 - F.2 Mezzanine - - F.3 Junior - - G. Other liabilities -4,054 19,278 G.1 Derivatives - - G.2 Due to originator -4,337 - G.3 Other liabilities 283 19,278 G.4 Own funds - - TOTAL LIABILITIES (E+F+G) 287,756 343,788 H. Interest expense 9,044 1,945 H.1 Interest expense on bond issued 8,861 1,945 H.2 Interest expense on loans received 183 - H.3 Interest expense on derivatives - - I. Commissions and fees related to the transaction 1,020 1,250 I.1 for servicing 611 1,250 I.2 for other services 409 - J. Other charges 57 4,732 J.1 Additional positive returns for exposure junior - 4,474 J.2 Other costs 57 257 TOTAL COSTS (H+I+J) 10,121 7,927 K. Interest generated by securitised assets 2,080 7,927 L. Interest income on derivatives 4,704 - M. Other revenues 3,336 - M.1 Additional returns for exposure junior 3,336 - M.2 Other revenues - - TOTAL REVENUES (K+L+M) 10,121 7,927 PROFIT (LOSS) FOR THE PERIOD - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 343 D. Sales Transactions A. Financial assets sold and not fully derecognised Quantitative information D.1 Regulatory consolidation - Financial assets sold and fully recognised and associated financial liabilities: book value (migliaia di €) FINANCIAL ASSETS SOLD AND FULLY RECOGNISED ASSOCIATED FINANCIAL LIABILITIES BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION OF WHICH NON-PERFORMING BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION A. Financial assets held for trading 3,155,903 - 3,155,903 X 3,138,197 - 3,138,197 1. Debt securties 3,155,903 - 3,155,903 X 3,138,197 - 3,138,197 2. Equity instruments - - - X - - - 3. Loans - - - X - - - 4. Derivative instruments - - - X - - - B. Other financial assets mandatorily at fair value 1,844,563 333,835 1,510,066 4,341 1,570,909 - 1,570,909 1. Debt securties 1,821,671 310,943 1,510,066 - 1,570,909 - 1,570,909 2. Equity instruments - - - X - - - 3. Loans 22,892 22,892 - 4,341 - - - C. Financial assets designated at fair value - - - - - - - 1. Debt securties - - - - - - - 2. Loans - - - - - - - D. Financial assets at fair value through other comprehensive income 28,782,280 - 28,379,347 - 24,840,892 - 24,439,637 1. Debt securties 28,782,280 - 28,379,347 - 24,840,892 - 24,439,637 2. Equity instruments - - - X - - - 3. Loans - - - - - - - E. Financial assets at amortised cost 31,814,961 20,750,191 9,292,756 864,024 12,679,916 1,869,601 9,376,922 1. Debt securties 19,235,550 8,470,850 9,292,756 - 10,797,402 - 9,376,922 2. Loans 12,579,411 12,279,341 - 864,024 1,882,514 1,869,601 - Total 12.31.2018 65,597,707 21,084,026 42,338,072 868,365 42,229,914 1,869,601 38,525,665 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 343 D. Sales Transactions A. Financial assets sold and not fully derecognised Quantitative information D.1 Regulatory consolidation - Financial assets sold and fully recognised and associated financial liabilities: book value (migliaia di €) FINANCIAL ASSETS SOLD AND FULLY RECOGNISED ASSOCIATED FINANCIAL LIABILITIES BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION OF WHICH NON-PERFORMING BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION A. Financial assets held for trading 3,155,903 - 3,155,903 X 3,138,197 - 3,138,197 1. Debt securties 3,155,903 - 3,155,903 X 3,138,197 - 3,138,197 2. Equity instruments - - - X - - - 3. Loans - - - X - - - 4. Derivative instruments - - - X - - - B. Other financial assets mandatorily at fair value 1,844,563 333,835 1,510,066 4,341 1,570,909 - 1,570,909 1. Debt securties 1,821,671 310,943 1,510,066 - 1,570,909 - 1,570,909 2. Equity instruments - - - X - - - 3. Loans 22,892 22,892 - 4,341 - - - C. Financial assets designated at fair value - - - - - - - 1. Debt securties - - - - - - - 2. Loans - - - - - - - D. Financial assets at fair value through other comprehensive income 28,782,280 - 28,379,347 - 24,840,892 - 24,439,637 1. Debt securties 28,782,280 - 28,379,347 - 24,840,892 - 24,439,637 2. Equity instruments - - - X - - - 3. Loans - - - - - - - E. Financial assets at amortised cost 31,814,961 20,750,191 9,292,756 864,024 12,679,916 1,869,601 9,376,922 1. Debt securties 19,235,550 8,470,850 9,292,756 - 10,797,402 - 9,376,922 2. Loans 12,579,411 12,279,341 - 864,024 1,882,514 1,869,601 - Total 12.31.2018 65,597,707 21,084,026 42,338,072 868,365 42,229,914 1,869,601 38,525,665 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 343 D. Sales Transactions A. Financial assets sold and not fully derecognised Quantitative information D.1 Regulatory consolidation - Financial assets sold and fully recognised and associated financial liabilities: book value (migliaia di €) FINANCIAL ASSETS SOLD AND FULLY RECOGNISED ASSOCIATED FINANCIAL LIABILITIES BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION OF WHICH NON-PERFORMING BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION A. Financial assets held for trading 3,155,903 - 3,155,903 X 3,138,197 - 3,138,197 1. Debt securties 3,155,903 - 3,155,903 X 3,138,197 - 3,138,197 2. Equity instruments - - - X - - - 3. Loans - - - X - - - 4. Derivative instruments - - - X - - - B. Other financial assets mandatorily at fair value 1,844,563 333,835 1,510,066 4,341 1,570,909 - 1,570,909 1. Debt securties 1,821,671 310,943 1,510,066 - 1,570,909 - 1,570,909 2. Equity instruments - - - X - - - 3. Loans 22,892 22,892 - 4,341 - - - C. Financial assets designated at fair value - - - - - - - 1. Debt securties - - - - - - - 2. Loans - - - - - - - D. Financial assets at fair value through other comprehensive income 28,782,280 - 28,379,347 - 24,840,892 - 24,439,637 1. Debt securties 28,782,280 - 28,379,347 - 24,840,892 - 24,439,637 2. Equity instruments - - - X - - - 3. Loans - - - - - - - E. Financial assets at amortised cost 31,814,961 20,750,191 9,292,756 864,024 12,679,916 1,869,601 9,376,922 1. Debt securties 19,235,550 8,470,850 9,292,756 - 10,797,402 - 9,376,922 2. Loans 12,579,411 12,279,341 - 864,024 1,882,514 1,869,601 - Total 12.31.2018 65,597,707 21,084,026 42,338,072 868,365 42,229,914 1,869,601 38,525,665 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 343 D. Sales Transactions A. Financial assets sold and not fully derecognised Quantitative information D.1 Regulatory consolidation - Financial assets sold and fully recognised and associated financial liabilities: book value (migliaia di €) FINANCIAL ASSETS SOLD AND FULLY RECOGNISED ASSOCIATED FINANCIAL LIABILITIES BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION OF WHICH NON-PERFORMING BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION A. Financial assets held for trading 3,155,903 - 3,155,903 X 3,138,197 - 3,138,197 1. Debt securties 3,155,903 - 3,155,903 X 3,138,197 - 3,138,197 2. Equity instruments - - - X - - - 3. Loans - - - X - - - 4. Derivative instruments - - - X - - - B. Other financial assets mandatorily at fair value 1,844,563 333,835 1,510,066 4,341 1,570,909 - 1,570,909 1. Debt securties 1,821,671 310,943 1,510,066 - 1,570,909 - 1,570,909 2. Equity instruments - - - X - - - 3. Loans 22,892 22,892 - 4,341 - - - C. Financial assets designated at fair value - - - - - - - 1. Debt securties - - - - - - - 2. Loans - - - - - - - D. Financial assets at fair value through other comprehensive income 28,782,280 - 28,379,347 - 24,840,892 - 24,439,637 1. Debt securties 28,782,280 - 28,379,347 - 24,840,892 - 24,439,637 2. Equity instruments - - - X - - - 3. Loans - - - - - - - E. Financial assets at amortised cost 31,814,961 20,750,191 9,292,756 864,024 12,679,916 1,869,601 9,376,922 1. Debt securties 19,235,550 8,470,850 9,292,756 - 10,797,402 - 9,376,922 2. Loans 12,579,411 12,279,341 - 864,024 1,882,514 1,869,601 - Total 12.31.2018 65,597,707 21,084,026 42,338,072 868,365 42,229,914 1,869,601 38,525,665 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 343 D. Sales Transactions A. Financial assets sold and not fully derecognised Quantitative information D.1 Regulatory consolidation - Financial assets sold and fully recognised and associated financial liabilities: book value (migliaia di €) FINANCIAL ASSETS SOLD AND FULLY RECOGNISED ASSOCIATED FINANCIAL LIABILITIES BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION OF WHICH NON-PERFORMING BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION A. Financial assets held for trading 3,155,903 - 3,155,903 X 3,138,197 - 3,138,197 1. Debt securties 3,155,903 - 3,155,903 X 3,138,197 - 3,138,197 2. Equity instruments - - - X - - - 3. Loans - - - X - - - 4. Derivative instruments - - - X - - - B. Other financial assets mandatorily at fair value 1,844,563 333,835 1,510,066 4,341 1,570,909 - 1,570,909 1. Debt securties 1,821,671 310,943 1,510,066 - 1,570,909 - 1,570,909 2. Equity instruments - - - X - - - 3. Loans 22,892 22,892 - 4,341 - - - C. Financial assets designated at fair value - - - - - - - 1. Debt securties - - - - - - - 2. Loans - - - - - - - D. Financial assets at fair value through other comprehensive income 28,782,280 - 28,379,347 - 24,840,892 - 24,439,637 1. Debt securties 28,782,280 - 28,379,347 - 24,840,892 - 24,439,637 2. Equity instruments - - - X - - - 3. Loans - - - - - - - E. Financial assets at amortised cost 31,814,961 20,750,191 9,292,756 864,024 12,679,916 1,869,601 9,376,922 1. Debt securties 19,235,550 8,470,850 9,292,756 - 10,797,402 - 9,376,922 2. Loans 12,579,411 12,279,341 - 864,024 1,882,514 1,869,601 - Total 12.31.2018 65,597,707 21,084,026 42,338,072 868,365 42,229,914 1,869,601 38,525,665 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 344 2018 Annual Report and Accounts · UniCredit D.2 Regulatory consolidation - Financial assets sold and partially recognised and associated financial liabilities: book value (€ '000) ORIGINAL GROSS VALUE OF ASSETS BEFORE SALE BOOK VALUE OF ASSETS STILL PARTIALLY RECOGNISED OF WHICH NON-PERFORMING BOOK VALUE OF ASSOCIATED FINANCIAL LIABILITIES A. Financial assets held for trading - - X - 1. Debt securties - - X - 2. Equity instruments - - X - 3. Loans - - X - 4. Derivative instruments - - X - B. Other financial assets mandatory at fair value - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - C. Financial assets designated at fair value - - - - 1. Debt securties - - - - 2. Loans - - - - D. Financial assets at fair value through other comprehensive income - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - E. Financial assets at amortised cost 59,675 29,501 29,501 6,155 1. Debt securties - - - - 2. Loans 59,675 29,501 29,501 6,155 Total 12.31.2018 59,675 29,501 29,501 6,155 D.3 Regulatory consolidation - Sale transactions relating to financial liabilities with repayment exclusively based on assets sold and not fully derecognised: fair value (€ '000) FULLY RECOGNISED PARTIALLY RECOGNISED TOTAL 12.31.2018 A. Financial assets held for trading - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - 4. Derivative instruments - - - B. Other financial assets mandatorily at fair value 334,497 - 334,497 1. Debt securties 311,605 - 311,605 2. Equity instruments - - - 3. Loans 22,892 - 22,892 C. Financial assets designated at fair value - - - 1. Debt securties - - - 2. Loans - - - D. Financial assets at fair value through other comprehensive income 402,933 - 402,933 1. Debt securties 402,933 - 402,933 2. Equity instruments - - - 3. Loans - - - E. Financial assets at amortised cost (fair value) 21,321,095 28,038 21,349,133 1. Debt securties 8,470,850 - 8,470,850 2. Loans 12,850,245 28,038 12,878,283 Total associated financial assets 22,058,525 28,038 22,086,563 Total associated financial liabilities 3,704,249 6,155 X Total net amount 12.31.2018 18,354,276 21,883 18,376,159 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 344 2018 Annual Report and Accounts · UniCredit D.2 Regulatory consolidation - Financial assets sold and partially recognised and associated financial liabilities: book value (€ '000) ORIGINAL GROSS VALUE OF ASSETS BEFORE SALE BOOK VALUE OF ASSETS STILL PARTIALLY RECOGNISED OF WHICH NON-PERFORMING BOOK VALUE OF ASSOCIATED FINANCIAL LIABILITIES A. Financial assets held for trading - - X - 1. Debt securties - - X - 2. Equity instruments - - X - 3. Loans - - X - 4. Derivative instruments - - X - B. Other financial assets mandatory at fair value - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - C. Financial assets designated at fair value - - - - 1. Debt securties - - - - 2. Loans - - - - D. Financial assets at fair value through other comprehensive income - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - E. Financial assets at amortised cost 59,675 29,501 29,501 6,155 1. Debt securties - - - - 2. Loans 59,675 29,501 29,501 6,155 Total 12.31.2018 59,675 29,501 29,501 6,155 D.3 Regulatory consolidation - Sale transactions relating to financial liabilities with repayment exclusively based on assets sold and not fully derecognised: fair value (€ '000) FULLY RECOGNISED PARTIALLY RECOGNISED TOTAL 12.31.2018 A. Financial assets held for trading - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - 4. Derivative instruments - - - B. Other financial assets mandatorily at fair value 334,497 - 334,497 1. Debt securties 311,605 - 311,605 2. Equity instruments - - - 3. Loans 22,892 - 22,892 C. Financial assets designated at fair value - - - 1. Debt securties - - - 2. Loans - - - D. Financial assets at fair value through other comprehensive income 402,933 - 402,933 1. Debt securties 402,933 - 402,933 2. Equity instruments - - - 3. Loans - - - E. Financial assets at amortised cost (fair value) 21,321,095 28,038 21,349,133 1. Debt securties 8,470,850 - 8,470,850 2. Loans 12,850,245 28,038 12,878,283 Total associated financial assets 22,058,525 28,038 22,086,563 Total associated financial liabilities 3,704,249 6,155 X Total net amount 12.31.2018 18,354,276 21,883 18,376,159 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 344 2018 Annual Report and Accounts · UniCredit D.2 Regulatory consolidation - Financial assets sold and partially recognised and associated financial liabilities: book value (€ '000) ORIGINAL GROSS VALUE OF ASSETS BEFORE SALE BOOK VALUE OF ASSETS STILL PARTIALLY RECOGNISED OF WHICH NON-PERFORMING BOOK VALUE OF ASSOCIATED FINANCIAL LIABILITIES A. Financial assets held for trading - - X - 1. Debt securties - - X - 2. Equity instruments - - X - 3. Loans - - X - 4. Derivative instruments - - X - B. Other financial assets mandatory at fair value - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - C. Financial assets designated at fair value - - - - 1. Debt securties - - - - 2. Loans - - - - D. Financial assets at fair value through other comprehensive income - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - E. Financial assets at amortised cost 59,675 29,501 29,501 6,155 1. Debt securties - - - - 2. Loans 59,675 29,501 29,501 6,155 Total 12.31.2018 59,675 29,501 29,501 6,155 D.3 Regulatory consolidation - Sale transactions relating to financial liabilities with repayment exclusively based on assets sold and not fully derecognised: fair value (€ '000) FULLY RECOGNISED PARTIALLY RECOGNISED TOTAL 12.31.2018 A. Financial assets held for trading - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - 4. Derivative instruments - - - B. Other financial assets mandatorily at fair value 334,497 - 334,497 1. Debt securties 311,605 - 311,605 2. Equity instruments - - - 3. Loans 22,892 - 22,892 C. Financial assets designated at fair value - - - 1. Debt securties - - - 2. Loans - - - D. Financial assets at fair value through other comprehensive income 402,933 - 402,933 1. Debt securties 402,933 - 402,933 2. Equity instruments - - - 3. Loans - - - E. Financial assets at amortised cost (fair value) 21,321,095 28,038 21,349,133 1. Debt securties 8,470,850 - 8,470,850 2. Loans 12,850,245 28,038 12,878,283 Total associated financial assets 22,058,525 28,038 22,086,563 Total associated financial liabilities 3,704,249 6,155 X Total net amount 12.31.2018 18,354,276 21,883 18,376,159 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 344 2018 Annual Report and Accounts · UniCredit D.2 Regulatory consolidation - Financial assets sold and partially recognised and associated financial liabilities: book value (€ '000) ORIGINAL GROSS VALUE OF ASSETS BEFORE SALE BOOK VALUE OF ASSETS STILL PARTIALLY RECOGNISED OF WHICH NON-PERFORMING BOOK VALUE OF ASSOCIATED FINANCIAL LIABILITIES A. Financial assets held for trading - - X - 1. Debt securties - - X - 2. Equity instruments - - X - 3. Loans - - X - 4. Derivative instruments - - X - B. Other financial assets mandatory at fair value - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - C. Financial assets designated at fair value - - - - 1. Debt securties - - - - 2. Loans - - - - D. Financial assets at fair value through other comprehensive income - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - E. Financial assets at amortised cost 59,675 29,501 29,501 6,155 1. Debt securties - - - - 2. Loans 59,675 29,501 29,501 6,155 Total 12.31.2018 59,675 29,501 29,501 6,155 D.3 Regulatory consolidation - Sale transactions relating to financial liabilities with repayment exclusively based on assets sold and not fully derecognised: fair value (€ '000) FULLY RECOGNISED PARTIALLY RECOGNISED TOTAL 12.31.2018 A. Financial assets held for trading - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - 4. Derivative instruments - - - B. Other financial assets mandatorily at fair value 334,497 - 334,497 1. Debt securties 311,605 - 311,605 2. Equity instruments - - - 3. Loans 22,892 - 22,892 C. Financial assets designated at fair value - - - 1. Debt securties - - - 2. Loans - - - D. Financial assets at fair value through other comprehensive income 402,933 - 402,933 1. Debt securties 402,933 - 402,933 2. Equity instruments - - - 3. Loans - - - E. Financial assets at amortised cost (fair value) 21,321,095 28,038 21,349,133 1. Debt securties 8,470,850 - 8,470,850 2. Loans 12,850,245 28,038 12,878,283 Total associated financial assets 22,058,525 28,038 22,086,563 Total associated financial liabilities 3,704,249 6,155 X Total net amount 12.31.2018 18,354,276 21,883 18,376,159 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 344 2018 Annual Report and Accounts · UniCredit D.2 Regulatory consolidation - Financial assets sold and partially recognised and associated financial liabilities: book value (€ '000) ORIGINAL GROSS VALUE OF ASSETS BEFORE SALE BOOK VALUE OF ASSETS STILL PARTIALLY RECOGNISED OF WHICH NON-PERFORMING BOOK VALUE OF ASSOCIATED FINANCIAL LIABILITIES A. Financial assets held for trading - - X - 1. Debt securties - - X - 2. Equity instruments - - X - 3. Loans - - X - 4. Derivative instruments - - X - B. Other financial assets mandatory at fair value - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - C. Financial assets designated at fair value - - - - 1. Debt securties - - - - 2. Loans - - - - D. Financial assets at fair value through other comprehensive income - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - E. Financial assets at amortised cost 59,675 29,501 29,501 6,155 1. Debt securties - - - - 2. Loans 59,675 29,501 29,501 6,155 Total 12.31.2018 59,675 29,501 29,501 6,155 D.3 Regulatory consolidation - Sale transactions relating to financial liabilities with repayment exclusively based on assets sold and not fully derecognised: fair value (€ '000) FULLY RECOGNISED PARTIALLY RECOGNISED TOTAL 12.31.2018 A. Financial assets held for trading - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - 4. Derivative instruments - - - B. Other financial assets mandatorily at fair value 334,497 - 334,497 1. Debt securties 311,605 - 311,605 2. Equity instruments - - - 3. Loans 22,892 - 22,892 C. Financial assets designated at fair value - - - 1. Debt securties - - - 2. Loans - - - D. Financial assets at fair value through other comprehensive income 402,933 - 402,933 1. Debt securties 402,933 - 402,933 2. Equity instruments - - - 3. Loans - - - E. Financial assets at amortised cost (fair value) 21,321,095 28,038 21,349,133 1. Debt securties 8,470,850 - 8,470,850 2. Loans 12,850,245 28,038 12,878,283 Total associated financial assets 22,058,525 28,038 22,086,563 Total associated financial liabilities 3,704,249 6,155 X Total net amount 12.31.2018 18,354,276 21,883 18,376,159 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 345 B. Financial assets sold and fully deleted with recognition of continuous involvement Qualitative and quantitative information At the end of the year there were no disposals of financial assets that had been fully derecognised, which required the recognition of continuing involvement. D.4 Regulatory consolidation - Covered Bond Transactions In 2008 the Group initiated a Covered Bond (OBG or Obbligazioni Bancarie Garantite) Programme with residential mortgage loans as the underlying assets, in line with Law 130/99, the MEF decree dated 14 December 2006 and Banca d’Italia instructions dated 17 May 2007 as amended on 24 March 2010 and on 24 June 2014. Under this programme: • UniCredit S.p.A. is issuer and also acts as transferor of suitable assets and servicer; • UniCredit BpC Mortgage S.r.l. (a special purpose vehicle set up within the banking group as expressly authorised by Banca d’Italia) is guarantor of the OBG holders, within the limits of the cover pool; and • the auditing firm BDO S.p.A. is Asset Monitor. The Group’s main aims in issuing OBGs are to diversify its funding sources and fund at competitive rates. As with the securitisations, the difficulties in the markets made it advisable to use securitisation as a means of increasing the Group’s counterbalancing capacity by retaining with the Group part of the securities issued by the vehicle. An integral feature of OBG Programme management is maintaining a balance between the characteristics of the assets sold and the issues. This is necessary to maintain the efficacy of the guarantee given by the SPV to the bondholders. Given the complexity of the transaction, a system of first- and second-level controls and procedures has been set up, as required by Banca d’Italia instructions, to identify units, functions, duties and responsibilities, and specific policies have been issued to this end. The policies were as approved by the competent committees, the Statutory Auditors and the Board of Directors of UniCredit S.p.A. As required by Banca d’Italia instructions on controls: • UniCredit’s Risk Management function is charged with the management of the issuer’s risks and checks: - the quality, suitability and integrity of the assets sold to guarantee the OBGs; - that the maximum ratio of OBGs issued to assets sold to guarantee them is adhered to; - that limits on sales and supplementary sales procedures are followed; - the effectiveness and adequacy of the hedges provided by any derivatives contracts entered into in relation to the Programme; and - the trend in the balance between the cash flow arising from the cover pool and that absorbed by the OBGs in issue; • the Asset Monitor is an outside independent entity charged with checking at least annually the regularity of the transactions and the integrity of the guarantee to the bondholders; • UniCredit’s internal audit department is responsible for a complete audit (to be conducted at least once a year) of the adequacy of the controls performed; • the results of the audits performed by the Asset Monitor and the issuer’s internal audit department are submitted to the governing bodies. Moreover, in order to create counterbalancing capacity, at the end of January 2012 UniCredit S.p.A. initiated a new Covered Bonds (OBG or Obbligazioni Bancarie Garantite) programme ("New OBG Programme"), without specific ratings and having residential mortgage loans and commercial mortgage loans as underlyings. The contractual and supervisory structure and the counterparties of this programme are modeled on the pre-existing programme, with the exception of references to Ratings Agencies and the use of a new Special Purpose Vehicle, UniCredit OBG S.r.l. During 2014 the New OBG Programme was restructured after which the method of reimbursing OBGs was converted from Soft-bullet to Conditional Pass-through and a rating of AA+ was assigned by the rating agency Fitch. Starting from 2015 both issues placed to institutional investors and issues retained for counterbalancing capacity creation were executed on the New OBG Programme. During 2017 Fitch rating was substituted by Moody’s rating that assigned a rating of Aa2 to the New OBG Programme. In October 2018 Moody’s revised this rating to Aa3. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 345 B. Financial assets sold and fully deleted with recognition of continuous involvement Qualitative and quantitative information At the end of the year there were no disposals of financial assets that had been fully derecognised, which required the recognition of continuing involvement. D.4 Regulatory consolidation - Covered Bond Transactions In 2008 the Group initiated a Covered Bond (OBG or Obbligazioni Bancarie Garantite) Programme with residential mortgage loans as the underlying assets, in line with Law 130/99, the MEF decree dated 14 December 2006 and Banca d’Italia instructions dated 17 May 2007 as amended on 24 March 2010 and on 24 June 2014. Under this programme: • UniCredit S.p.A. is issuer and also acts as transferor of suitable assets and servicer; • UniCredit BpC Mortgage S.r.l. (a special purpose vehicle set up within the banking group as expressly authorised by Banca d’Italia) is guarantor of the OBG holders, within the limits of the cover pool; and • the auditing firm BDO S.p.A. is Asset Monitor. The Group’s main aims in issuing OBGs are to diversify its funding sources and fund at competitive rates. As with the securitisations, the difficulties in the markets made it advisable to use securitisation as a means of increasing the Group’s counterbalancing capacity by retaining with the Group part of the securities issued by the vehicle. An integral feature of OBG Programme management is maintaining a balance between the characteristics of the assets sold and the issues. This is necessary to maintain the efficacy of the guarantee given by the SPV to the bondholders. Given the complexity of the transaction, a system of first- and second-level controls and procedures has been set up, as required by Banca d’Italia instructions, to identify units, functions, duties and responsibilities, and specific policies have been issued to this end. The policies were as approved by the competent committees, the Statutory Auditors and the Board of Directors of UniCredit S.p.A. As required by Banca d’Italia instructions on controls: • UniCredit’s Risk Management function is charged with the management of the issuer’s risks and checks: - the quality, suitability and integrity of the assets sold to guarantee the OBGs; - that the maximum ratio of OBGs issued to assets sold to guarantee them is adhered to; - that limits on sales and supplementary sales procedures are followed; - the effectiveness and adequacy of the hedges provided by any derivatives contracts entered into in relation to the Programme; and - the trend in the balance between the cash flow arising from the cover pool and that absorbed by the OBGs in issue; • the Asset Monitor is an outside independent entity charged with checking at least annually the regularity of the transactions and the integrity of the guarantee to the bondholders; • UniCredit’s internal audit department is responsible for a complete audit (to be conducted at least once a year) of the adequacy of the controls performed; • the results of the audits performed by the Asset Monitor and the issuer’s internal audit department are submitted to the governing bodies. Moreover, in order to create counterbalancing capacity, at the end of January 2012 UniCredit S.p.A. initiated a new Covered Bonds (OBG or Obbligazioni Bancarie Garantite) programme ("New OBG Programme"), without specific ratings and having residential mortgage loans and commercial mortgage loans as underlyings. The contractual and supervisory structure and the counterparties of this programme are modeled on the pre-existing programme, with the exception of references to Ratings Agencies and the use of a new Special Purpose Vehicle, UniCredit OBG S.r.l. During 2014 the New OBG Programme was restructured after which the method of reimbursing OBGs was converted from Soft-bullet to Conditional Pass-through and a rating of AA+ was assigned by the rating agency Fitch. Starting from 2015 both issues placed to institutional investors and issues retained for counterbalancing capacity creation were executed on the New OBG Programme. During 2017 Fitch rating was substituted by Moody’s rating that assigned a rating of Aa2 to the New OBG Programme. In October 2018 Moody’s revised this rating to Aa3. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 345 B. Financial assets sold and fully deleted with recognition of continuous involvement Qualitative and quantitative information At the end of the year there were no disposals of financial assets that had been fully derecognised, which required the recognition of continuing involvement. D.4 Regulatory consolidation - Covered Bond Transactions In 2008 the Group initiated a Covered Bond (OBG or Obbligazioni Bancarie Garantite) Programme with residential mortgage loans as the underlying assets, in line with Law 130/99, the MEF decree dated 14 December 2006 and Banca d’Italia instructions dated 17 May 2007 as amended on 24 March 2010 and on 24 June 2014. Under this programme: • UniCredit S.p.A. is issuer and also acts as transferor of suitable assets and servicer; • UniCredit BpC Mortgage S.r.l. (a special purpose vehicle set up within the banking group as expressly authorised by Banca d’Italia) is guarantor of the OBG holders, within the limits of the cover pool; and • the auditing firm BDO S.p.A. is Asset Monitor. The Group’s main aims in issuing OBGs are to diversify its funding sources and fund at competitive rates. As with the securitisations, the difficulties in the markets made it advisable to use securitisation as a means of increasing the Group’s counterbalancing capacity by retaining with the Group part of the securities issued by the vehicle. An integral feature of OBG Programme management is maintaining a balance between the characteristics of the assets sold and the issues. This is necessary to maintain the efficacy of the guarantee given by the SPV to the bondholders. Given the complexity of the transaction, a system of first- and second-level controls and procedures has been set up, as required by Banca d’Italia instructions, to identify units, functions, duties and responsibilities, and specific policies have been issued to this end. The policies were as approved by the competent committees, the Statutory Auditors and the Board of Directors of UniCredit S.p.A. As required by Banca d’Italia instructions on controls: • UniCredit’s Risk Management function is charged with the management of the issuer’s risks and checks: - the quality, suitability and integrity of the assets sold to guarantee the OBGs; - that the maximum ratio of OBGs issued to assets sold to guarantee them is adhered to; - that limits on sales and supplementary sales procedures are followed; - the effectiveness and adequacy of the hedges provided by any derivatives contracts entered into in relation to the Programme; and - the trend in the balance between the cash flow arising from the cover pool and that absorbed by the OBGs in issue; • the Asset Monitor is an outside independent entity charged with checking at least annually the regularity of the transactions and the integrity of the guarantee to the bondholders; • UniCredit’s internal audit department is responsible for a complete audit (to be conducted at least once a year) of the adequacy of the controls performed; • the results of the audits performed by the Asset Monitor and the issuer’s internal audit department are submitted to the governing bodies. Moreover, in order to create counterbalancing capacity, at the end of January 2012 UniCredit S.p.A. initiated a new Covered Bonds (OBG or Obbligazioni Bancarie Garantite) programme ("New OBG Programme"), without specific ratings and having residential mortgage loans and commercial mortgage loans as underlyings. The contractual and supervisory structure and the counterparties of this programme are modeled on the pre-existing programme, with the exception of references to Ratings Agencies and the use of a new Special Purpose Vehicle, UniCredit OBG S.r.l. During 2014 the New OBG Programme was restructured after which the method of reimbursing OBGs was converted from Soft-bullet to Conditional Pass-through and a rating of AA+ was assigned by the rating agency Fitch. Starting from 2015 both issues placed to institutional investors and issues retained for counterbalancing capacity creation were executed on the New OBG Programme. During 2017 Fitch rating was substituted by Moody’s rating that assigned a rating of Aa2 to the New OBG Programme. In October 2018 Moody’s revised this rating to Aa3. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 345 B. Financial assets sold and fully deleted with recognition of continuous involvement Qualitative and quantitative information At the end of the year there were no disposals of financial assets that had been fully derecognised, which required the recognition of continuing involvement. D.4 Regulatory consolidation - Covered Bond Transactions In 2008 the Group initiated a Covered Bond (OBG or Obbligazioni Bancarie Garantite) Programme with residential mortgage loans as the underlying assets, in line with Law 130/99, the MEF decree dated 14 December 2006 and Banca d’Italia instructions dated 17 May 2007 as amended on 24 March 2010 and on 24 June 2014. Under this programme: • UniCredit S.p.A. is issuer and also acts as transferor of suitable assets and servicer; • UniCredit BpC Mortgage S.r.l. (a special purpose vehicle set up within the banking group as expressly authorised by Banca d’Italia) is guarantor of the OBG holders, within the limits of the cover pool; and • the auditing firm BDO S.p.A. is Asset Monitor. The Group’s main aims in issuing OBGs are to diversify its funding sources and fund at competitive rates. As with the securitisations, the difficulties in the markets made it advisable to use securitisation as a means of increasing the Group’s counterbalancing capacity by retaining with the Group part of the securities issued by the vehicle. An integral feature of OBG Programme management is maintaining a balance between the characteristics of the assets sold and the issues. This is necessary to maintain the efficacy of the guarantee given by the SPV to the bondholders. Given the complexity of the transaction, a system of first- and second-level controls and procedures has been set up, as required by Banca d’Italia instructions, to identify units, functions, duties and responsibilities, and specific policies have been issued to this end. The policies were as approved by the competent committees, the Statutory Auditors and the Board of Directors of UniCredit S.p.A. As required by Banca d’Italia instructions on controls: • UniCredit’s Risk Management function is charged with the management of the issuer’s risks and checks: - the quality, suitability and integrity of the assets sold to guarantee the OBGs; - that the maximum ratio of OBGs issued to assets sold to guarantee them is adhered to; - that limits on sales and supplementary sales procedures are followed; - the effectiveness and adequacy of the hedges provided by any derivatives contracts entered into in relation to the Programme; and - the trend in the balance between the cash flow arising from the cover pool and that absorbed by the OBGs in issue; • the Asset Monitor is an outside independent entity charged with checking at least annually the regularity of the transactions and the integrity of the guarantee to the bondholders; • UniCredit’s internal audit department is responsible for a complete audit (to be conducted at least once a year) of the adequacy of the controls performed; • the results of the audits performed by the Asset Monitor and the issuer’s internal audit department are submitted to the governing bodies. Moreover, in order to create counterbalancing capacity, at the end of January 2012 UniCredit S.p.A. initiated a new Covered Bonds (OBG or Obbligazioni Bancarie Garantite) programme ("New OBG Programme"), without specific ratings and having residential mortgage loans and commercial mortgage loans as underlyings. The contractual and supervisory structure and the counterparties of this programme are modeled on the pre-existing programme, with the exception of references to Ratings Agencies and the use of a new Special Purpose Vehicle, UniCredit OBG S.r.l. During 2014 the New OBG Programme was restructured after which the method of reimbursing OBGs was converted from Soft-bullet to Conditional Pass-through and a rating of AA+ was assigned by the rating agency Fitch. Starting from 2015 both issues placed to institutional investors and issues retained for counterbalancing capacity creation were executed on the New OBG Programme. During 2017 Fitch rating was substituted by Moody’s rating that assigned a rating of Aa2 to the New OBG Programme. In October 2018 Moody’s revised this rating to Aa3. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 345 B. Financial assets sold and fully deleted with recognition of continuous involvement Qualitative and quantitative information At the end of the year there were no disposals of financial assets that had been fully derecognised, which required the recognition of continuing involvement. D.4 Regulatory consolidation - Covered Bond Transactions In 2008 the Group initiated a Covered Bond (OBG or Obbligazioni Bancarie Garantite) Programme with residential mortgage loans as the underlying assets, in line with Law 130/99, the MEF decree dated 14 December 2006 and Banca d’Italia instructions dated 17 May 2007 as amended on 24 March 2010 and on 24 June 2014. Under this programme: • UniCredit S.p.A. is issuer and also acts as transferor of suitable assets and servicer; • UniCredit BpC Mortgage S.r.l. (a special purpose vehicle set up within the banking group as expressly authorised by Banca d’Italia) is guarantor of the OBG holders, within the limits of the cover pool; and • the auditing firm BDO S.p.A. is Asset Monitor. The Group’s main aims in issuing OBGs are to diversify its funding sources and fund at competitive rates. As with the securitisations, the difficulties in the markets made it advisable to use securitisation as a means of increasing the Group’s counterbalancing capacity by retaining with the Group part of the securities issued by the vehicle. An integral feature of OBG Programme management is maintaining a balance between the characteristics of the assets sold and the issues. This is necessary to maintain the efficacy of the guarantee given by the SPV to the bondholders. Given the complexity of the transaction, a system of first- and second-level controls and procedures has been set up, as required by Banca d’Italia instructions, to identify units, functions, duties and responsibilities, and specific policies have been issued to this end. The policies were as approved by the competent committees, the Statutory Auditors and the Board of Directors of UniCredit S.p.A. As required by Banca d’Italia instructions on controls: • UniCredit’s Risk Management function is charged with the management of the issuer’s risks and checks: - the quality, suitability and integrity of the assets sold to guarantee the OBGs; - that the maximum ratio of OBGs issued to assets sold to guarantee them is adhered to; - that limits on sales and supplementary sales procedures are followed; - the effectiveness and adequacy of the hedges provided by any derivatives contracts entered into in relation to the Programme; and - the trend in the balance between the cash flow arising from the cover pool and that absorbed by the OBGs in issue; • the Asset Monitor is an outside independent entity charged with checking at least annually the regularity of the transactions and the integrity of the guarantee to the bondholders; • UniCredit’s internal audit department is responsible for a complete audit (to be conducted at least once a year) of the adequacy of the controls performed; • the results of the audits performed by the Asset Monitor and the issuer’s internal audit department are submitted to the governing bodies. Moreover, in order to create counterbalancing capacity, at the end of January 2012 UniCredit S.p.A. initiated a new Covered Bonds (OBG or Obbligazioni Bancarie Garantite) programme ("New OBG Programme"), without specific ratings and having residential mortgage loans and commercial mortgage loans as underlyings. The contractual and supervisory structure and the counterparties of this programme are modeled on the pre-existing programme, with the exception of references to Ratings Agencies and the use of a new Special Purpose Vehicle, UniCredit OBG S.r.l. During 2014 the New OBG Programme was restructured after which the method of reimbursing OBGs was converted from Soft-bullet to Conditional Pass-through and a rating of AA+ was assigned by the rating agency Fitch. Starting from 2015 both issues placed to institutional investors and issues retained for counterbalancing capacity creation were executed on the New OBG Programme. During 2017 Fitch rating was substituted by Moody’s rating that assigned a rating of Aa2 to the New OBG Programme. In October 2018 Moody’s revised this rating to Aa3. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 346 2018 Annual Report and Accounts · UniCredit At 31 December 2018 the series of covered bonds issued under the two programmes totalled 35 and were worth €31,606 million, of which €21,250 million was repurchased by UniCredit S.p.A. NAME COVERED BONDS (OBBLIGAZIONI BANCARIE GARANTITE) Originator: UniCredit S.p.A. (formerly UniCredit Family Financing Bank S.p.A.) Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit Bank AG, London Branch Target transaction: Funding Type of asset: Private Mortgage loans Quality of Asset: performing Book value of the underlying assets at the end of accounting period (€): 9,660,860,766.36 Covered Bonds issued at the end of accounting period (€): 7,606,000,000.00 Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loans of total 10,245,370,819.11 euro. Rating Agencies: S & P - Moody's - Fitch Rating: A+ (since 07/26/2017) - Aa3 (since 10/23/2018) - AA (since 04/27/2017) NAME COVERED BONDS (OBBLIGAZIONI BANCARIE GARANTITE) II PROGRAMME Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit Bank AG, London Branch Target transaction: Funding - Counterbalancing Capacity Type of asset: Private Mortgage loans Quality of Asset: Performing Book value of the underlying assets at the end of accounting period (€): 24,768,554,499.33 Covered Bonds issued at the end of accounting period (€): 24,000,000,000.00 Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of total 27,031,139,584.46 euro. Rating Agencies: Moody's Rating: Aa3 (since 10/23/2018) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 346 2018 Annual Report and Accounts · UniCredit At 31 December 2018 the series of covered bonds issued under the two programmes totalled 35 and were worth €31,606 million, of which €21,250 million was repurchased by UniCredit S.p.A. NAME COVERED BONDS (OBBLIGAZIONI BANCARIE GARANTITE) Originator: UniCredit S.p.A. (formerly UniCredit Family Financing Bank S.p.A.) Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit Bank AG, London Branch Target transaction: Funding Type of asset: Private Mortgage loans Quality of Asset: performing Book value of the underlying assets at the end of accounting period (€): 9,660,860,766.36 Covered Bonds issued at the end of accounting period (€): 7,606,000,000.00 Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loans of total 10,245,370,819.11 euro. Rating Agencies: S & P - Moody's - Fitch Rating: A+ (since 07/26/2017) - Aa3 (since 10/23/2018) - AA (since 04/27/2017) NAME COVERED BONDS (OBBLIGAZIONI BANCARIE GARANTITE) II PROGRAMME Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit Bank AG, London Branch Target transaction: Funding - Counterbalancing Capacity Type of asset: Private Mortgage loans Quality of Asset: Performing Book value of the underlying assets at the end of accounting period (€): 24,768,554,499.33 Covered Bonds issued at the end of accounting period (€): 24,000,000,000.00 Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of total 27,031,139,584.46 euro. Rating Agencies: Moody's Rating: Aa3 (since 10/23/2018) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 346 2018 Annual Report and Accounts · UniCredit At 31 December 2018 the series of covered bonds issued under the two programmes totalled 35 and were worth €31,606 million, of which €21,250 million was repurchased by UniCredit S.p.A. NAME COVERED BONDS (OBBLIGAZIONI BANCARIE GARANTITE) Originator: UniCredit S.p.A. (formerly UniCredit Family Financing Bank S.p.A.) Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit Bank AG, London Branch Target transaction: Funding Type of asset: Private Mortgage loans Quality of Asset: performing Book value of the underlying assets at the end of accounting period (€): 9,660,860,766.36 Covered Bonds issued at the end of accounting period (€): 7,606,000,000.00 Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loans of total 10,245,370,819.11 euro. Rating Agencies: S & P - Moody's - Fitch Rating: A+ (since 07/26/2017) - Aa3 (since 10/23/2018) - AA (since 04/27/2017) NAME COVERED BONDS (OBBLIGAZIONI BANCARIE GARANTITE) II PROGRAMME Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit Bank AG, London Branch Target transaction: Funding - Counterbalancing Capacity Type of asset: Private Mortgage loans Quality of Asset: Performing Book value of the underlying assets at the end of accounting period (€): 24,768,554,499.33 Covered Bonds issued at the end of accounting period (€): 24,000,000,000.00 Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of total 27,031,139,584.46 euro. Rating Agencies: Moody's Rating: Aa3 (since 10/23/2018) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 346 2018 Annual Report and Accounts · UniCredit At 31 December 2018 the series of covered bonds issued under the two programmes totalled 35 and were worth €31,606 million, of which €21,250 million was repurchased by UniCredit S.p.A. NAME COVERED BONDS (OBBLIGAZIONI BANCARIE GARANTITE) Originator: UniCredit S.p.A. (formerly UniCredit Family Financing Bank S.p.A.) Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit Bank AG, London Branch Target transaction: Funding Type of asset: Private Mortgage loans Quality of Asset: performing Book value of the underlying assets at the end of accounting period (€): 9,660,860,766.36 Covered Bonds issued at the end of accounting period (€): 7,606,000,000.00 Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loans of total 10,245,370,819.11 euro. Rating Agencies: S & P - Moody's - Fitch Rating: A+ (since 07/26/2017) - Aa3 (since 10/23/2018) - AA (since 04/27/2017) NAME COVERED BONDS (OBBLIGAZIONI BANCARIE GARANTITE) II PROGRAMME Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit Bank AG, London Branch Target transaction: Funding - Counterbalancing Capacity Type of asset: Private Mortgage loans Quality of Asset: Performing Book value of the underlying assets at the end of accounting period (€): 24,768,554,499.33 Covered Bonds issued at the end of accounting period (€): 24,000,000,000.00 Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of total 27,031,139,584.46 euro. Rating Agencies: Moody's Rating: Aa3 (since 10/23/2018) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 346 2018 Annual Report and Accounts · UniCredit At 31 December 2018 the series of covered bonds issued under the two programmes totalled 35 and were worth €31,606 million, of which €21,250 million was repurchased by UniCredit S.p.A. NAME COVERED BONDS (OBBLIGAZIONI BANCARIE GARANTITE) Originator: UniCredit S.p.A. (formerly UniCredit Family Financing Bank S.p.A.) Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit Bank AG, London Branch Target transaction: Funding Type of asset: Private Mortgage loans Quality of Asset: performing Book value of the underlying assets at the end of accounting period (€): 9,660,860,766.36 Covered Bonds issued at the end of accounting period (€): 7,606,000,000.00 Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loans of total 10,245,370,819.11 euro. Rating Agencies: S & P - Moody's - Fitch Rating: A+ (since 07/26/2017) - Aa3 (since 10/23/2018) - AA (since 04/27/2017) NAME COVERED BONDS (OBBLIGAZIONI BANCARIE GARANTITE) II PROGRAMME Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit Bank AG, London Branch Target transaction: Funding - Counterbalancing Capacity Type of asset: Private Mortgage loans Quality of Asset: Performing Book value of the underlying assets at the end of accounting period (€): 24,768,554,499.33 Covered Bonds issued at the end of accounting period (€): 24,000,000,000.00 Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of total 27,031,139,584.46 euro. Rating Agencies: Moody's Rating: Aa3 (since 10/23/2018) Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 347 Information on Sovereign Exposure It should be noted that, as a result of IFRS9 adoption since 1 January 2018, Sovereign debt securities have been classified in the new categories specified by the standard in consideration of the business model followed and the related cash flow features (Solely Payment of Principal and Interests - SPPI Test). In particular, it should be noted that in the context of IFRS9 first time adoption: • most of the Sovereign debt securities classified as "Financial assets available for sale" have been reclassified as "Financial assets at fair value through other comprehensive income" in light of the persisting "held to collect and sell” business model; • most of the Sovereign debt securities classified as "Loans and Receivables with customers" and "Financial assets held to maturity" have been reclassified as "Financial assets at amortised cost" in light of the persisting “held to collect” business model; • Sovereign debt securities for which fair value option was applied continue to be measured at fair value through profit or loss as a result of the application of a business model other than “held to collect” or “held to collect and sell”; • the remaining portion of the Sovereign debt securities has not been classified in the mentioned categories even in presence of a "held to collect and sell" or "held to collect" business model since the related cash flow features have required these instruments to be measured at the fair value through profit or loss. For further information related to the classification options adopted in accounting standard first time application, please refer to the Notes to the Consolidated Accounts - Part A Accounting policies - Section 5 - Other matters. It should also be noted that during the year: • no changes have been made to the business models adopted on the 1 January and, consequently, the sovereign debt securities have not been subject to reclassification • the changed market circumstances also suggested the adoption of a "held to collect" business model for new purchases of Italian sovereign debt securities which, consequently, have to be measured at amortized cost subject to verification of the features of the related cash flows. With reference to the Group’s sovereign exposures29, the book value of sovereign debt securities as at 31 December 2018 amounted to €117,275 million30, of which about the 90% concentrated in eight countries; Italy, with €58,087 million, represents about 50% of the total. For each of the eight countries, the table below shows the nominal value, the book value and the fair value of the exposures broken down by portfolio as at 31 December 2018. 29 Sovereign exposures are bonds issued by and loans given to central and local governments and governamental bodies. ABSs are not included. 30 Information on Sovereign exposures refers to the scope of the UniCredit Consolidated Financial Statements as at 31 December 2018, determined under IAS/IFRS. Based on these accounting principles, the Koç/Yapi Kredi Group (Turkey), being subject to joint control, is consolidated using the equity method and therefore the Sovereign exposures of the mentioned Group are not included in this section. For information on Sovereign exposures with reference to the regulatory scope of consolidation see UniCredit Group Disclosure (Pillar III) as at 31 December 2018 – Credit Risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 347 Information on Sovereign Exposure It should be noted that, as a result of IFRS9 adoption since 1 January 2018, Sovereign debt securities have been classified in the new categories specified by the standard in consideration of the business model followed and the related cash flow features (Solely Payment of Principal and Interests - SPPI Test). In particular, it should be noted that in the context of IFRS9 first time adoption: • most of the Sovereign debt securities classified as "Financial assets available for sale" have been reclassified as "Financial assets at fair value through other comprehensive income" in light of the persisting "held to collect and sell” business model; • most of the Sovereign debt securities classified as "Loans and Receivables with customers" and "Financial assets held to maturity" have been reclassified as "Financial assets at amortised cost" in light of the persisting “held to collect” business model; • Sovereign debt securities for which fair value option was applied continue to be measured at fair value through profit or loss as a result of the application of a business model other than “held to collect” or “held to collect and sell”; • the remaining portion of the Sovereign debt securities has not been classified in the mentioned categories even in presence of a "held to collect and sell" or "held to collect" business model since the related cash flow features have required these instruments to be measured at the fair value through profit or loss. For further information related to the classification options adopted in accounting standard first time application, please refer to the Notes to the Consolidated Accounts - Part A Accounting policies - Section 5 - Other matters. It should also be noted that during the year: • no changes have been made to the business models adopted on the 1 January and, consequently, the sovereign debt securities have not been subject to reclassification • the changed market circumstances also suggested the adoption of a "held to collect" business model for new purchases of Italian sovereign debt securities which, consequently, have to be measured at amortized cost subject to verification of the features of the related cash flows. With reference to the Group’s sovereign exposures29, the book value of sovereign debt securities as at 31 December 2018 amounted to €117,275 million30, of which about the 90% concentrated in eight countries; Italy, with €58,087 million, represents about 50% of the total. For each of the eight countries, the table below shows the nominal value, the book value and the fair value of the exposures broken down by portfolio as at 31 December 2018. 29 Sovereign exposures are bonds issued by and loans given to central and local governments and governamental bodies. ABSs are not included. 30 Information on Sovereign exposures refers to the scope of the UniCredit Consolidated Financial Statements as at 31 December 2018, determined under IAS/IFRS. Based on these accounting principles, the Koç/Yapi Kredi Group (Turkey), being subject to joint control, is consolidated using the equity method and therefore the Sovereign exposures of the mentioned Group are not included in this section. For information on Sovereign exposures with reference to the regulatory scope of consolidation see UniCredit Group Disclosure (Pillar III) as at 31 December 2018 – Credit Risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 347 Information on Sovereign Exposure It should be noted that, as a result of IFRS9 adoption since 1 January 2018, Sovereign debt securities have been classified in the new categories specified by the standard in consideration of the business model followed and the related cash flow features (Solely Payment of Principal and Interests - SPPI Test). In particular, it should be noted that in the context of IFRS9 first time adoption: • most of the Sovereign debt securities classified as "Financial assets available for sale" have been reclassified as "Financial assets at fair value through other comprehensive income" in light of the persisting "held to collect and sell” business model; • most of the Sovereign debt securities classified as "Loans and Receivables with customers" and "Financial assets held to maturity" have been reclassified as "Financial assets at amortised cost" in light of the persisting “held to collect” business model; • Sovereign debt securities for which fair value option was applied continue to be measured at fair value through profit or loss as a result of the application of a business model other than “held to collect” or “held to collect and sell”; • the remaining portion of the Sovereign debt securities has not been classified in the mentioned categories even in presence of a "held to collect and sell" or "held to collect" business model since the related cash flow features have required these instruments to be measured at the fair value through profit or loss. For further information related to the classification options adopted in accounting standard first time application, please refer to the Notes to the Consolidated Accounts - Part A Accounting policies - Section 5 - Other matters. It should also be noted that during the year: • no changes have been made to the business models adopted on the 1 January and, consequently, the sovereign debt securities have not been subject to reclassification • the changed market circumstances also suggested the adoption of a "held to collect" business model for new purchases of Italian sovereign debt securities which, consequently, have to be measured at amortized cost subject to verification of the features of the related cash flows. With reference to the Group’s sovereign exposures29, the book value of sovereign debt securities as at 31 December 2018 amounted to €117,275 million30, of which about the 90% concentrated in eight countries; Italy, with €58,087 million, represents about 50% of the total. For each of the eight countries, the table below shows the nominal value, the book value and the fair value of the exposures broken down by portfolio as at 31 December 2018. 29 Sovereign exposures are bonds issued by and loans given to central and local governments and governamental bodies. ABSs are not included. 30 Information on Sovereign exposures refers to the scope of the UniCredit Consolidated Financial Statements as at 31 December 2018, determined under IAS/IFRS. Based on these accounting principles, the Koç/Yapi Kredi Group (Turkey), being subject to joint control, is consolidated using the equity method and therefore the Sovereign exposures of the mentioned Group are not included in this section. For information on Sovereign exposures with reference to the regulatory scope of consolidation see UniCredit Group Disclosure (Pillar III) as at 31 December 2018 – Credit Risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 347 Information on Sovereign Exposure It should be noted that, as a result of IFRS9 adoption since 1 January 2018, Sovereign debt securities have been classified in the new categories specified by the standard in consideration of the business model followed and the related cash flow features (Solely Payment of Principal and Interests - SPPI Test). In particular, it should be noted that in the context of IFRS9 first time adoption: • most of the Sovereign debt securities classified as "Financial assets available for sale" have been reclassified as "Financial assets at fair value through other comprehensive income" in light of the persisting "held to collect and sell” business model; • most of the Sovereign debt securities classified as "Loans and Receivables with customers" and "Financial assets held to maturity" have been reclassified as "Financial assets at amortised cost" in light of the persisting “held to collect” business model; • Sovereign debt securities for which fair value option was applied continue to be measured at fair value through profit or loss as a result of the application of a business model other than “held to collect” or “held to collect and sell”; • the remaining portion of the Sovereign debt securities has not been classified in the mentioned categories even in presence of a "held to collect and sell" or "held to collect" business model since the related cash flow features have required these instruments to be measured at the fair value through profit or loss. For further information related to the classification options adopted in accounting standard first time application, please refer to the Notes to the Consolidated Accounts - Part A Accounting policies - Section 5 - Other matters. It should also be noted that during the year: • no changes have been made to the business models adopted on the 1 January and, consequently, the sovereign debt securities have not been subject to reclassification • the changed market circumstances also suggested the adoption of a "held to collect" business model for new purchases of Italian sovereign debt securities which, consequently, have to be measured at amortized cost subject to verification of the features of the related cash flows. With reference to the Group’s sovereign exposures29, the book value of sovereign debt securities as at 31 December 2018 amounted to €117,275 million30, of which about the 90% concentrated in eight countries; Italy, with €58,087 million, represents about 50% of the total. For each of the eight countries, the table below shows the nominal value, the book value and the fair value of the exposures broken down by portfolio as at 31 December 2018. 29 Sovereign exposures are bonds issued by and loans given to central and local governments and governamental bodies. ABSs are not included. 30 Information on Sovereign exposures refers to the scope of the UniCredit Consolidated Financial Statements as at 31 December 2018, determined under IAS/IFRS. Based on these accounting principles, the Koç/Yapi Kredi Group (Turkey), being subject to joint control, is consolidated using the equity method and therefore the Sovereign exposures of the mentioned Group are not included in this section. For information on Sovereign exposures with reference to the regulatory scope of consolidation see UniCredit Group Disclosure (Pillar III) as at 31 December 2018 – Credit Risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 347 Information on Sovereign Exposure It should be noted that, as a result of IFRS9 adoption since 1 January 2018, Sovereign debt securities have been classified in the new categories specified by the standard in consideration of the business model followed and the related cash flow features (Solely Payment of Principal and Interests - SPPI Test). In particular, it should be noted that in the context of IFRS9 first time adoption: • most of the Sovereign debt securities classified as "Financial assets available for sale" have been reclassified as "Financial assets at fair value through other comprehensive income" in light of the persisting "held to collect and sell” business model; • most of the Sovereign debt securities classified as "Loans and Receivables with customers" and "Financial assets held to maturity" have been reclassified as "Financial assets at amortised cost" in light of the persisting “held to collect” business model; • Sovereign debt securities for which fair value option was applied continue to be measured at fair value through profit or loss as a result of the application of a business model other than “held to collect” or “held to collect and sell”; • the remaining portion of the Sovereign debt securities has not been classified in the mentioned categories even in presence of a "held to collect and sell" or "held to collect" business model since the related cash flow features have required these instruments to be measured at the fair value through profit or loss. For further information related to the classification options adopted in accounting standard first time application, please refer to the Notes to the Consolidated Accounts - Part A Accounting policies - Section 5 - Other matters. It should also be noted that during the year: • no changes have been made to the business models adopted on the 1 January and, consequently, the sovereign debt securities have not been subject to reclassification • the changed market circumstances also suggested the adoption of a "held to collect" business model for new purchases of Italian sovereign debt securities which, consequently, have to be measured at amortized cost subject to verification of the features of the related cash flows. With reference to the Group’s sovereign exposures29, the book value of sovereign debt securities as at 31 December 2018 amounted to €117,275 million30, of which about the 90% concentrated in eight countries; Italy, with €58,087 million, represents about 50% of the total. For each of the eight countries, the table below shows the nominal value, the book value and the fair value of the exposures broken down by portfolio as at 31 December 2018. 29 Sovereign exposures are bonds issued by and loans given to central and local governments and governamental bodies. ABSs are not included. 30 Information on Sovereign exposures refers to the scope of the UniCredit Consolidated Financial Statements as at 31 December 2018, determined under IAS/IFRS. Based on these accounting principles, the Koç/Yapi Kredi Group (Turkey), being subject to joint control, is consolidated using the equity method and therefore the Sovereign exposures of the mentioned Group are not included in this section. For information on Sovereign exposures with reference to the regulatory scope of consolidation see UniCredit Group Disclosure (Pillar III) as at 31 December 2018 – Credit Risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 348 2018 Annual Report and Accounts · UniCredit Breakdown of Sovereign Debt Securities by Country and Portfolio (€ '000) COUNTRY/PORTFOLIO AMOUNTS AS AT 12.31.2018 NOMINAL VALUE BOOK VALUE FAIR VALUE - Italy 56,847,484 58,086,680 58,174,028 financial assets/liabilities held for trading (net exposures *) 2,233,062 2,091,211 2,091,211 financial assets designated at fair value 3 3 3 financial assets mandatorily at fair value 799,685 806,766 806,766 financial assets at fair value through other comprehensive income 35,618,765 36,784,852 36,784,852 financial assets at amortised cost 18,195,969 18,403,848 18,491,196 - Spain 16,608,569 17,959,634 17,995,477 financial assets/liabilities held for trading (net exposures *) 61,168 63,774 63,774 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 13,469,287 14,445,107 14,445,107 financial assets at amortised cost 3,078,114 3,450,753 3,486,596 - Germany 11,076,061 11,239,705 11,276,295 financial assets/liabilities held for trading (net exposures *) 330,152 336,573 336,573 financial assets designated at fair value - - - financial assets mandatorily at fair value 8,599,909 8,708,862 8,708,862 financial assets at fair value through other comprehensive income 986,000 1,030,668 1,030,668 financial assets at amortised cost 1,160,000 1,163,602 1,200,192 - Austria 6,127,330 6,724,724 6,732,400 financial assets/liabilities held for trading (net exposures *) 156,722 183,566 183,566 financial assets designated at fair value - - - financial assets mandatorily at fair value 80,000 94,984 94,984 financial assets at fair value through other comprehensive income 5,588,690 6,139,787 6,139,787 financial assets at amortised cost 301,918 306,387 314,063 - Japan 5,689,324 5,785,255 5,791,406 financial assets/liabilities held for trading (net exposures *) 11 12 12 financial assets designated at fair value - - - financial assets mandatorily at fair value 79,460 79,653 79,653 financial assets at fair value through other comprehensive income 2,669,845 2,697,291 2,697,291 financial assets at amortised cost 2,940,008 3,008,299 3,014,450 - Hungary 1,747,730 1,920,018 1,919,503 financial assets/liabilities held for trading (net exposures *) 109,465 108,208 108,208 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,539,413 1,714,242 1,714,242 financial assets at amortised cost 98,852 97,568 97,053 - Romania 1,873,207 1,905,388 1,905,388 financial assets/liabilities held for trading (net exposures *) 134,997 138,037 138,037 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,738,210 1,767,351 1,767,351 financial assets at amortised cost - - - - Bulgaria 1,568,356 1,745,159 1,744,972 financial assets/liabilities held for trading (net exposures *) 2,733 3,019 3,019 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,563,805 1,740,308 1,740,308 financial assets at amortised cost 1,818 1,832 1,645 Total on-balance sheet exposures 101,538,061 105,366,563 105,539,469 Notes: (*) Including exposures in Credit Derivatives. Negative amount indicates the prevalence of liabilities positions. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 348 2018 Annual Report and Accounts · UniCredit Breakdown of Sovereign Debt Securities by Country and Portfolio (€ '000) COUNTRY/PORTFOLIO AMOUNTS AS AT 12.31.2018 NOMINAL VALUE BOOK VALUE FAIR VALUE - Italy 56,847,484 58,086,680 58,174,028 financial assets/liabilities held for trading (net exposures *) 2,233,062 2,091,211 2,091,211 financial assets designated at fair value 3 3 3 financial assets mandatorily at fair value 799,685 806,766 806,766 financial assets at fair value through other comprehensive income 35,618,765 36,784,852 36,784,852 financial assets at amortised cost 18,195,969 18,403,848 18,491,196 - Spain 16,608,569 17,959,634 17,995,477 financial assets/liabilities held for trading (net exposures *) 61,168 63,774 63,774 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 13,469,287 14,445,107 14,445,107 financial assets at amortised cost 3,078,114 3,450,753 3,486,596 - Germany 11,076,061 11,239,705 11,276,295 financial assets/liabilities held for trading (net exposures *) 330,152 336,573 336,573 financial assets designated at fair value - - - financial assets mandatorily at fair value 8,599,909 8,708,862 8,708,862 financial assets at fair value through other comprehensive income 986,000 1,030,668 1,030,668 financial assets at amortised cost 1,160,000 1,163,602 1,200,192 - Austria 6,127,330 6,724,724 6,732,400 financial assets/liabilities held for trading (net exposures *) 156,722 183,566 183,566 financial assets designated at fair value - - - financial assets mandatorily at fair value 80,000 94,984 94,984 financial assets at fair value through other comprehensive income 5,588,690 6,139,787 6,139,787 financial assets at amortised cost 301,918 306,387 314,063 - Japan 5,689,324 5,785,255 5,791,406 financial assets/liabilities held for trading (net exposures *) 11 12 12 financial assets designated at fair value - - - financial assets mandatorily at fair value 79,460 79,653 79,653 financial assets at fair value through other comprehensive income 2,669,845 2,697,291 2,697,291 financial assets at amortised cost 2,940,008 3,008,299 3,014,450 - Hungary 1,747,730 1,920,018 1,919,503 financial assets/liabilities held for trading (net exposures *) 109,465 108,208 108,208 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,539,413 1,714,242 1,714,242 financial assets at amortised cost 98,852 97,568 97,053 - Romania 1,873,207 1,905,388 1,905,388 financial assets/liabilities held for trading (net exposures *) 134,997 138,037 138,037 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,738,210 1,767,351 1,767,351 financial assets at amortised cost - - - - Bulgaria 1,568,356 1,745,159 1,744,972 financial assets/liabilities held for trading (net exposures *) 2,733 3,019 3,019 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,563,805 1,740,308 1,740,308 financial assets at amortised cost 1,818 1,832 1,645 Total on-balance sheet exposures 101,538,061 105,366,563 105,539,469 Notes: (*) Including exposures in Credit Derivatives. Negative amount indicates the prevalence of liabilities positions. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 348 2018 Annual Report and Accounts · UniCredit Breakdown of Sovereign Debt Securities by Country and Portfolio (€ '000) COUNTRY/PORTFOLIO AMOUNTS AS AT 12.31.2018 NOMINAL VALUE BOOK VALUE FAIR VALUE - Italy 56,847,484 58,086,680 58,174,028 financial assets/liabilities held for trading (net exposures *) 2,233,062 2,091,211 2,091,211 financial assets designated at fair value 3 3 3 financial assets mandatorily at fair value 799,685 806,766 806,766 financial assets at fair value through other comprehensive income 35,618,765 36,784,852 36,784,852 financial assets at amortised cost 18,195,969 18,403,848 18,491,196 - Spain 16,608,569 17,959,634 17,995,477 financial assets/liabilities held for trading (net exposures *) 61,168 63,774 63,774 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 13,469,287 14,445,107 14,445,107 financial assets at amortised cost 3,078,114 3,450,753 3,486,596 - Germany 11,076,061 11,239,705 11,276,295 financial assets/liabilities held for trading (net exposures *) 330,152 336,573 336,573 financial assets designated at fair value - - - financial assets mandatorily at fair value 8,599,909 8,708,862 8,708,862 financial assets at fair value through other comprehensive income 986,000 1,030,668 1,030,668 financial assets at amortised cost 1,160,000 1,163,602 1,200,192 - Austria 6,127,330 6,724,724 6,732,400 financial assets/liabilities held for trading (net exposures *) 156,722 183,566 183,566 financial assets designated at fair value - - - financial assets mandatorily at fair value 80,000 94,984 94,984 financial assets at fair value through other comprehensive income 5,588,690 6,139,787 6,139,787 financial assets at amortised cost 301,918 306,387 314,063 - Japan 5,689,324 5,785,255 5,791,406 financial assets/liabilities held for trading (net exposures *) 11 12 12 financial assets designated at fair value - - - financial assets mandatorily at fair value 79,460 79,653 79,653 financial assets at fair value through other comprehensive income 2,669,845 2,697,291 2,697,291 financial assets at amortised cost 2,940,008 3,008,299 3,014,450 - Hungary 1,747,730 1,920,018 1,919,503 financial assets/liabilities held for trading (net exposures *) 109,465 108,208 108,208 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,539,413 1,714,242 1,714,242 financial assets at amortised cost 98,852 97,568 97,053 - Romania 1,873,207 1,905,388 1,905,388 financial assets/liabilities held for trading (net exposures *) 134,997 138,037 138,037 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,738,210 1,767,351 1,767,351 financial assets at amortised cost - - - - Bulgaria 1,568,356 1,745,159 1,744,972 financial assets/liabilities held for trading (net exposures *) 2,733 3,019 3,019 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,563,805 1,740,308 1,740,308 financial assets at amortised cost 1,818 1,832 1,645 Total on-balance sheet exposures 101,538,061 105,366,563 105,539,469 Notes: (*) Including exposures in Credit Derivatives. Negative amount indicates the prevalence of liabilities positions. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 348 2018 Annual Report and Accounts · UniCredit Breakdown of Sovereign Debt Securities by Country and Portfolio (€ '000) COUNTRY/PORTFOLIO AMOUNTS AS AT 12.31.2018 NOMINAL VALUE BOOK VALUE FAIR VALUE - Italy 56,847,484 58,086,680 58,174,028 financial assets/liabilities held for trading (net exposures *) 2,233,062 2,091,211 2,091,211 financial assets designated at fair value 3 3 3 financial assets mandatorily at fair value 799,685 806,766 806,766 financial assets at fair value through other comprehensive income 35,618,765 36,784,852 36,784,852 financial assets at amortised cost 18,195,969 18,403,848 18,491,196 - Spain 16,608,569 17,959,634 17,995,477 financial assets/liabilities held for trading (net exposures *) 61,168 63,774 63,774 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 13,469,287 14,445,107 14,445,107 financial assets at amortised cost 3,078,114 3,450,753 3,486,596 - Germany 11,076,061 11,239,705 11,276,295 financial assets/liabilities held for trading (net exposures *) 330,152 336,573 336,573 financial assets designated at fair value - - - financial assets mandatorily at fair value 8,599,909 8,708,862 8,708,862 financial assets at fair value through other comprehensive income 986,000 1,030,668 1,030,668 financial assets at amortised cost 1,160,000 1,163,602 1,200,192 - Austria 6,127,330 6,724,724 6,732,400 financial assets/liabilities held for trading (net exposures *) 156,722 183,566 183,566 financial assets designated at fair value - - - financial assets mandatorily at fair value 80,000 94,984 94,984 financial assets at fair value through other comprehensive income 5,588,690 6,139,787 6,139,787 financial assets at amortised cost 301,918 306,387 314,063 - Japan 5,689,324 5,785,255 5,791,406 financial assets/liabilities held for trading (net exposures *) 11 12 12 financial assets designated at fair value - - - financial assets mandatorily at fair value 79,460 79,653 79,653 financial assets at fair value through other comprehensive income 2,669,845 2,697,291 2,697,291 financial assets at amortised cost 2,940,008 3,008,299 3,014,450 - Hungary 1,747,730 1,920,018 1,919,503 financial assets/liabilities held for trading (net exposures *) 109,465 108,208 108,208 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,539,413 1,714,242 1,714,242 financial assets at amortised cost 98,852 97,568 97,053 - Romania 1,873,207 1,905,388 1,905,388 financial assets/liabilities held for trading (net exposures *) 134,997 138,037 138,037 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,738,210 1,767,351 1,767,351 financial assets at amortised cost - - - - Bulgaria 1,568,356 1,745,159 1,744,972 financial assets/liabilities held for trading (net exposures *) 2,733 3,019 3,019 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,563,805 1,740,308 1,740,308 financial assets at amortised cost 1,818 1,832 1,645 Total on-balance sheet exposures 101,538,061 105,366,563 105,539,469 Notes: (*) Including exposures in Credit Derivatives. Negative amount indicates the prevalence of liabilities positions. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 348 2018 Annual Report and Accounts · UniCredit Breakdown of Sovereign Debt Securities by Country and Portfolio (€ '000) COUNTRY/PORTFOLIO AMOUNTS AS AT 12.31.2018 NOMINAL VALUE BOOK VALUE FAIR VALUE - Italy 56,847,484 58,086,680 58,174,028 financial assets/liabilities held for trading (net exposures *) 2,233,062 2,091,211 2,091,211 financial assets designated at fair value 3 3 3 financial assets mandatorily at fair value 799,685 806,766 806,766 financial assets at fair value through other comprehensive income 35,618,765 36,784,852 36,784,852 financial assets at amortised cost 18,195,969 18,403,848 18,491,196 - Spain 16,608,569 17,959,634 17,995,477 financial assets/liabilities held for trading (net exposures *) 61,168 63,774 63,774 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 13,469,287 14,445,107 14,445,107 financial assets at amortised cost 3,078,114 3,450,753 3,486,596 - Germany 11,076,061 11,239,705 11,276,295 financial assets/liabilities held for trading (net exposures *) 330,152 336,573 336,573 financial assets designated at fair value - - - financial assets mandatorily at fair value 8,599,909 8,708,862 8,708,862 financial assets at fair value through other comprehensive income 986,000 1,030,668 1,030,668 financial assets at amortised cost 1,160,000 1,163,602 1,200,192 - Austria 6,127,330 6,724,724 6,732,400 financial assets/liabilities held for trading (net exposures *) 156,722 183,566 183,566 financial assets designated at fair value - - - financial assets mandatorily at fair value 80,000 94,984 94,984 financial assets at fair value through other comprehensive income 5,588,690 6,139,787 6,139,787 financial assets at amortised cost 301,918 306,387 314,063 - Japan 5,689,324 5,785,255 5,791,406 financial assets/liabilities held for trading (net exposures *) 11 12 12 financial assets designated at fair value - - - financial assets mandatorily at fair value 79,460 79,653 79,653 financial assets at fair value through other comprehensive income 2,669,845 2,697,291 2,697,291 financial assets at amortised cost 2,940,008 3,008,299 3,014,450 - Hungary 1,747,730 1,920,018 1,919,503 financial assets/liabilities held for trading (net exposures *) 109,465 108,208 108,208 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,539,413 1,714,242 1,714,242 financial assets at amortised cost 98,852 97,568 97,053 - Romania 1,873,207 1,905,388 1,905,388 financial assets/liabilities held for trading (net exposures *) 134,997 138,037 138,037 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,738,210 1,767,351 1,767,351 financial assets at amortised cost - - - - Bulgaria 1,568,356 1,745,159 1,744,972 financial assets/liabilities held for trading (net exposures *) 2,733 3,019 3,019 financial assets designated at fair value - - - financial assets mandatorily at fair value - - - financial assets at fair value through other comprehensive income 1,563,805 1,740,308 1,740,308 financial assets at amortised cost 1,818 1,832 1,645 Total on-balance sheet exposures 101,538,061 105,366,563 105,539,469 Notes: (*) Including exposures in Credit Derivatives. Negative amount indicates the prevalence of liabilities positions. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 349 The weighted duration of the sovereign bonds shown in the table above, divided by the banking31 and trading book, is the following: Weighted duration (years) BANKING BOOK TRADING BOOK assets positions liabilities positions - Italy 3.25 3.22 3.71 - Spain 3.51 10.95 8.99 - Germany 3.02 4.81 4.89 - Austria 3.40 11.72 18.82 - Japan 4.01 1.91 - - Hungary 3.18 3.51 7.05 - Romania 3.93 4.30 5.80 - Bulgaria 4.96 4.77 6.15 The remaining 10% of the total of sovereign debt securities, amounting to €11,909 million with reference to the book values as at 31 December 2018, is divided into 35 countries, including Croatia (€1,391 million), Czech Republic (€1,184 million), Poland (€1,093 million), Serbia (€876 million), United States of America (€662 million), Slovakia (€605 million), Portugal (€573 million) and Russia (€561 million). The sovereign exposure to Greece is immaterial. With respect to these exposures, as at 31 December 2018 there were no indications that impairment may have occurred. It should moreover be noted that among the aforementioned remaining part of sovereign debt securities as at 31 December 2018 there are also debt securities towards Supranational Organizations such as the European Union, the European Financial Stability Facility and the European Stability Mechanism amounting to €2,778 million. The table below shows the classification of bonds belonging to the banking book and their percentage proportion of the total of the portfolio under which they are classified. Breakdown of Sovereign Debt Securities by Portfolio (€ '000) AMOUNTS AS AT 12.31.2018 FINANCIAL ASSETS DESIGNATED AT FAIR VALUE FINANCIAL ASSETS MANDATORILY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS AT AMORTISED COST TOTAL Book value 3 10,547,134 78,170,428 27,626,880 116,344,445 % Portfolio 2.83% 50.45% 88.55% 4.77% 16.90% 31 The banking book includes financial assets designated at fair value, those mandatorily at fair value, those at fair value through other comprehensive income and those at amortised cost. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 349 The weighted duration of the sovereign bonds shown in the table above, divided by the banking31 and trading book, is the following: Weighted duration (years) BANKING BOOK TRADING BOOK assets positions liabilities positions - Italy 3.25 3.22 3.71 - Spain 3.51 10.95 8.99 - Germany 3.02 4.81 4.89 - Austria 3.40 11.72 18.82 - Japan 4.01 1.91 - - Hungary 3.18 3.51 7.05 - Romania 3.93 4.30 5.80 - Bulgaria 4.96 4.77 6.15 The remaining 10% of the total of sovereign debt securities, amounting to €11,909 million with reference to the book values as at 31 December 2018, is divided into 35 countries, including Croatia (€1,391 million), Czech Republic (€1,184 million), Poland (€1,093 million), Serbia (€876 million), United States of America (€662 million), Slovakia (€605 million), Portugal (€573 million) and Russia (€561 million). The sovereign exposure to Greece is immaterial. With respect to these exposures, as at 31 December 2018 there were no indications that impairment may have occurred. It should moreover be noted that among the aforementioned remaining part of sovereign debt securities as at 31 December 2018 there are also debt securities towards Supranational Organizations such as the European Union, the European Financial Stability Facility and the European Stability Mechanism amounting to €2,778 million. The table below shows the classification of bonds belonging to the banking book and their percentage proportion of the total of the portfolio under which they are classified. Breakdown of Sovereign Debt Securities by Portfolio (€ '000) AMOUNTS AS AT 12.31.2018 FINANCIAL ASSETS DESIGNATED AT FAIR VALUE FINANCIAL ASSETS MANDATORILY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS AT AMORTISED COST TOTAL Book value 3 10,547,134 78,170,428 27,626,880 116,344,445 % Portfolio 2.83% 50.45% 88.55% 4.77% 16.90% 31 The banking book includes financial assets designated at fair value, those mandatorily at fair value, those at fair value through other comprehensive income and those at amortised cost. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 349 The weighted duration of the sovereign bonds shown in the table above, divided by the banking31 and trading book, is the following: Weighted duration (years) BANKING BOOK TRADING BOOK assets positions liabilities positions - Italy 3.25 3.22 3.71 - Spain 3.51 10.95 8.99 - Germany 3.02 4.81 4.89 - Austria 3.40 11.72 18.82 - Japan 4.01 1.91 - - Hungary 3.18 3.51 7.05 - Romania 3.93 4.30 5.80 - Bulgaria 4.96 4.77 6.15 The remaining 10% of the total of sovereign debt securities, amounting to €11,909 million with reference to the book values as at 31 December 2018, is divided into 35 countries, including Croatia (€1,391 million), Czech Republic (€1,184 million), Poland (€1,093 million), Serbia (€876 million), United States of America (€662 million), Slovakia (€605 million), Portugal (€573 million) and Russia (€561 million). The sovereign exposure to Greece is immaterial. With respect to these exposures, as at 31 December 2018 there were no indications that impairment may have occurred. It should moreover be noted that among the aforementioned remaining part of sovereign debt securities as at 31 December 2018 there are also debt securities towards Supranational Organizations such as the European Union, the European Financial Stability Facility and the European Stability Mechanism amounting to €2,778 million. The table below shows the classification of bonds belonging to the banking book and their percentage proportion of the total of the portfolio under which they are classified. Breakdown of Sovereign Debt Securities by Portfolio (€ '000) AMOUNTS AS AT 12.31.2018 FINANCIAL ASSETS DESIGNATED AT FAIR VALUE FINANCIAL ASSETS MANDATORILY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS AT AMORTISED COST TOTAL Book value 3 10,547,134 78,170,428 27,626,880 116,344,445 % Portfolio 2.83% 50.45% 88.55% 4.77% 16.90% 31 The banking book includes financial assets designated at fair value, those mandatorily at fair value, those at fair value through other comprehensive income and those at amortised cost. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 349 The weighted duration of the sovereign bonds shown in the table above, divided by the banking31 and trading book, is the following: Weighted duration (years) BANKING BOOK TRADING BOOK assets positions liabilities positions - Italy 3.25 3.22 3.71 - Spain 3.51 10.95 8.99 - Germany 3.02 4.81 4.89 - Austria 3.40 11.72 18.82 - Japan 4.01 1.91 - - Hungary 3.18 3.51 7.05 - Romania 3.93 4.30 5.80 - Bulgaria 4.96 4.77 6.15 The remaining 10% of the total of sovereign debt securities, amounting to €11,909 million with reference to the book values as at 31 December 2018, is divided into 35 countries, including Croatia (€1,391 million), Czech Republic (€1,184 million), Poland (€1,093 million), Serbia (€876 million), United States of America (€662 million), Slovakia (€605 million), Portugal (€573 million) and Russia (€561 million). The sovereign exposure to Greece is immaterial. With respect to these exposures, as at 31 December 2018 there were no indications that impairment may have occurred. It should moreover be noted that among the aforementioned remaining part of sovereign debt securities as at 31 December 2018 there are also debt securities towards Supranational Organizations such as the European Union, the European Financial Stability Facility and the European Stability Mechanism amounting to €2,778 million. The table below shows the classification of bonds belonging to the banking book and their percentage proportion of the total of the portfolio under which they are classified. Breakdown of Sovereign Debt Securities by Portfolio (€ '000) AMOUNTS AS AT 12.31.2018 FINANCIAL ASSETS DESIGNATED AT FAIR VALUE FINANCIAL ASSETS MANDATORILY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS AT AMORTISED COST TOTAL Book value 3 10,547,134 78,170,428 27,626,880 116,344,445 % Portfolio 2.83% 50.45% 88.55% 4.77% 16.90% 31 The banking book includes financial assets designated at fair value, those mandatorily at fair value, those at fair value through other comprehensive income and those at amortised cost. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 349 The weighted duration of the sovereign bonds shown in the table above, divided by the banking31 and trading book, is the following: Weighted duration (years) BANKING BOOK TRADING BOOK assets positions liabilities positions - Italy 3.25 3.22 3.71 - Spain 3.51 10.95 8.99 - Germany 3.02 4.81 4.89 - Austria 3.40 11.72 18.82 - Japan 4.01 1.91 - - Hungary 3.18 3.51 7.05 - Romania 3.93 4.30 5.80 - Bulgaria 4.96 4.77 6.15 The remaining 10% of the total of sovereign debt securities, amounting to €11,909 million with reference to the book values as at 31 December 2018, is divided into 35 countries, including Croatia (€1,391 million), Czech Republic (€1,184 million), Poland (€1,093 million), Serbia (€876 million), United States of America (€662 million), Slovakia (€605 million), Portugal (€573 million) and Russia (€561 million). The sovereign exposure to Greece is immaterial. With respect to these exposures, as at 31 December 2018 there were no indications that impairment may have occurred. It should moreover be noted that among the aforementioned remaining part of sovereign debt securities as at 31 December 2018 there are also debt securities towards Supranational Organizations such as the European Union, the European Financial Stability Facility and the European Stability Mechanism amounting to €2,778 million. The table below shows the classification of bonds belonging to the banking book and their percentage proportion of the total of the portfolio under which they are classified. Breakdown of Sovereign Debt Securities by Portfolio (€ '000) AMOUNTS AS AT 12.31.2018 FINANCIAL ASSETS DESIGNATED AT FAIR VALUE FINANCIAL ASSETS MANDATORILY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS AT AMORTISED COST TOTAL Book value 3 10,547,134 78,170,428 27,626,880 116,344,445 % Portfolio 2.83% 50.45% 88.55% 4.77% 16.90% 31 The banking book includes financial assets designated at fair value, those mandatorily at fair value, those at fair value through other comprehensive income and those at amortised cost. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 350 2018 Annual Report and Accounts · UniCredit In addition to the exposures to sovereign debt securities, loans32 given to central and local governments and governmental bodies must be taken into account. The table below shows the total amount as at 31 December 2018 of loans booked in financial assets at amortised cost portfolio given to countries towards which the overall exposure exceeds €130 million, representing over 94% of the total. Breakdown of Sovereign Loans by Country (€ '000) COUNTRY AMOUNTS AS AT 12.31.2018 BOOK VALUE - Germany (*) 6,467,589 - Austria (**) 6,384,774 - Italy 5,184,745 - Croatia 2,196,061 - Czech Republic 710,917 - Qatar 312,297 - Slovenia 240,777 - Indonesia 199,998 - Bulgaria 189,105 - Laos 169,378 - Bosnia and Herzegovina 169,011 - Turkey 160,521 - Kenia 147,175 - Hungary (***) 146,355 - Angola 139,260 - Gabon 135,824 - Oman 130,282 Total on-balance sheet exposures 23,084,069 Notes: (*) of which 2,114,056 thousands in financial assets held for trading and those mandatorily at fair value. (**) of which 292,642 thousands in financial assets held for trading and those mandatorily at fair value. (***) of which 2.889 thousands in financial assets mandatorily at fair value. Lastly, it should be noted that derivatives are traded within the ISDA master agreement and accompanied by Credit Support Annexes, which provide for the use of cash collaterals or low-risk eligible securities. For more details on the sensitivity analysis of credit spreads and on the results of stress tests see the "Widespread Contagion", "Protectionism, China slowdown & Turkey shock" and “Interest Rate Shock” scenarios in chapter Stress test of the Section 2.2 - Market risk below and for liquidity management policies see Section 2.4 Liquidity risk below. Other transactions With reference to the indications of Banca d’Italia/Consob/IVASS document No.6 of 8 March 2013 - Booking of "long-term structured repos" instructions, there are no transactions of this kind to report. In September 2016 the available-for-sale financial assets portfolio including investments in Italian and Spanish government bonds held by the Irish subsidiary UniCredit Bank Ireland P.l.c. simultaneously financed with maturity match repos (so-called “long-term structured repos") has entirely matured. The accounting treatment of these transactions, with respect to their individual contractual components (an investment in securities shown under item "Available-for-sale financial assets" of assets, a series of repos classified under item "Deposits from banks" of liabilities and derivative contracts shown under “Hedging derivatives”), was in line with the economic purpose, represented by the will to: • assume a sovereign risk exposure; • optimise the absorption of liquidity through a maturity match funding; • create a positive contribution for the duration of the transaction as difference between bond yield and repo funding cost, maximising the return on net interest margin; • maintain the right to change the funding structure of the position on sovereign risk according to any changes in market conditions or in the bank’s liquidity position. The changes in market values were not representative of the economic result that would be generated if all the individual contracts were analysed in terms of synthetic derivative, also in line with the business model that, providing for the dynamic and separate management of the individual components does not consider trading choices based on these variables. 32 Tax items are not included. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 350 2018 Annual Report and Accounts · UniCredit In addition to the exposures to sovereign debt securities, loans32 given to central and local governments and governmental bodies must be taken into account. The table below shows the total amount as at 31 December 2018 of loans booked in financial assets at amortised cost portfolio given to countries towards which the overall exposure exceeds €130 million, representing over 94% of the total. Breakdown of Sovereign Loans by Country (€ '000) COUNTRY AMOUNTS AS AT 12.31.2018 BOOK VALUE - Germany (*) 6,467,589 - Austria (**) 6,384,774 - Italy 5,184,745 - Croatia 2,196,061 - Czech Republic 710,917 - Qatar 312,297 - Slovenia 240,777 - Indonesia 199,998 - Bulgaria 189,105 - Laos 169,378 - Bosnia and Herzegovina 169,011 - Turkey 160,521 - Kenia 147,175 - Hungary (***) 146,355 - Angola 139,260 - Gabon 135,824 - Oman 130,282 Total on-balance sheet exposures 23,084,069 Notes: (*) of which 2,114,056 thousands in financial assets held for trading and those mandatorily at fair value. (**) of which 292,642 thousands in financial assets held for trading and those mandatorily at fair value. (***) of which 2.889 thousands in financial assets mandatorily at fair value. Lastly, it should be noted that derivatives are traded within the ISDA master agreement and accompanied by Credit Support Annexes, which provide for the use of cash collaterals or low-risk eligible securities. For more details on the sensitivity analysis of credit spreads and on the results of stress tests see the "Widespread Contagion", "Protectionism, China slowdown & Turkey shock" and “Interest Rate Shock” scenarios in chapter Stress test of the Section 2.2 - Market risk below and for liquidity management policies see Section 2.4 Liquidity risk below. Other transactions With reference to the indications of Banca d’Italia/Consob/IVASS document No.6 of 8 March 2013 - Booking of "long-term structured repos" instructions, there are no transactions of this kind to report. In September 2016 the available-for-sale financial assets portfolio including investments in Italian and Spanish government bonds held by the Irish subsidiary UniCredit Bank Ireland P.l.c. simultaneously financed with maturity match repos (so-called “long-term structured repos") has entirely matured. The accounting treatment of these transactions, with respect to their individual contractual components (an investment in securities shown under item "Available-for-sale financial assets" of assets, a series of repos classified under item "Deposits from banks" of liabilities and derivative contracts shown under “Hedging derivatives”), was in line with the economic purpose, represented by the will to: • assume a sovereign risk exposure; • optimise the absorption of liquidity through a maturity match funding; • create a positive contribution for the duration of the transaction as difference between bond yield and repo funding cost, maximising the return on net interest margin; • maintain the right to change the funding structure of the position on sovereign risk according to any changes in market conditions or in the bank’s liquidity position. The changes in market values were not representative of the economic result that would be generated if all the individual contracts were analysed in terms of synthetic derivative, also in line with the business model that, providing for the dynamic and separate management of the individual components does not consider trading choices based on these variables. 32 Tax items are not included. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 350 2018 Annual Report and Accounts · UniCredit In addition to the exposures to sovereign debt securities, loans32 given to central and local governments and governmental bodies must be taken into account. The table below shows the total amount as at 31 December 2018 of loans booked in financial assets at amortised cost portfolio given to countries towards which the overall exposure exceeds €130 million, representing over 94% of the total. Breakdown of Sovereign Loans by Country (€ '000) COUNTRY AMOUNTS AS AT 12.31.2018 BOOK VALUE - Germany (*) 6,467,589 - Austria (**) 6,384,774 - Italy 5,184,745 - Croatia 2,196,061 - Czech Republic 710,917 - Qatar 312,297 - Slovenia 240,777 - Indonesia 199,998 - Bulgaria 189,105 - Laos 169,378 - Bosnia and Herzegovina 169,011 - Turkey 160,521 - Kenia 147,175 - Hungary (***) 146,355 - Angola 139,260 - Gabon 135,824 - Oman 130,282 Total on-balance sheet exposures 23,084,069 Notes: (*) of which 2,114,056 thousands in financial assets held for trading and those mandatorily at fair value. (**) of which 292,642 thousands in financial assets held for trading and those mandatorily at fair value. (***) of which 2.889 thousands in financial assets mandatorily at fair value. Lastly, it should be noted that derivatives are traded within the ISDA master agreement and accompanied by Credit Support Annexes, which provide for the use of cash collaterals or low-risk eligible securities. For more details on the sensitivity analysis of credit spreads and on the results of stress tests see the "Widespread Contagion", "Protectionism, China slowdown & Turkey shock" and “Interest Rate Shock” scenarios in chapter Stress test of the Section 2.2 - Market risk below and for liquidity management policies see Section 2.4 Liquidity risk below. Other transactions With reference to the indications of Banca d’Italia/Consob/IVASS document No.6 of 8 March 2013 - Booking of "long-term structured repos" instructions, there are no transactions of this kind to report. In September 2016 the available-for-sale financial assets portfolio including investments in Italian and Spanish government bonds held by the Irish subsidiary UniCredit Bank Ireland P.l.c. simultaneously financed with maturity match repos (so-called “long-term structured repos") has entirely matured. The accounting treatment of these transactions, with respect to their individual contractual components (an investment in securities shown under item "Available-for-sale financial assets" of assets, a series of repos classified under item "Deposits from banks" of liabilities and derivative contracts shown under “Hedging derivatives”), was in line with the economic purpose, represented by the will to: • assume a sovereign risk exposure; • optimise the absorption of liquidity through a maturity match funding; • create a positive contribution for the duration of the transaction as difference between bond yield and repo funding cost, maximising the return on net interest margin; • maintain the right to change the funding structure of the position on sovereign risk according to any changes in market conditions or in the bank’s liquidity position. The changes in market values were not representative of the economic result that would be generated if all the individual contracts were analysed in terms of synthetic derivative, also in line with the business model that, providing for the dynamic and separate management of the individual components does not consider trading choices based on these variables. 32 Tax items are not included. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 350 2018 Annual Report and Accounts · UniCredit In addition to the exposures to sovereign debt securities, loans32 given to central and local governments and governmental bodies must be taken into account. The table below shows the total amount as at 31 December 2018 of loans booked in financial assets at amortised cost portfolio given to countries towards which the overall exposure exceeds €130 million, representing over 94% of the total. Breakdown of Sovereign Loans by Country (€ '000) COUNTRY AMOUNTS AS AT 12.31.2018 BOOK VALUE - Germany (*) 6,467,589 - Austria (**) 6,384,774 - Italy 5,184,745 - Croatia 2,196,061 - Czech Republic 710,917 - Qatar 312,297 - Slovenia 240,777 - Indonesia 199,998 - Bulgaria 189,105 - Laos 169,378 - Bosnia and Herzegovina 169,011 - Turkey 160,521 - Kenia 147,175 - Hungary (***) 146,355 - Angola 139,260 - Gabon 135,824 - Oman 130,282 Total on-balance sheet exposures 23,084,069 Notes: (*) of which 2,114,056 thousands in financial assets held for trading and those mandatorily at fair value. (**) of which 292,642 thousands in financial assets held for trading and those mandatorily at fair value. (***) of which 2.889 thousands in financial assets mandatorily at fair value. Lastly, it should be noted that derivatives are traded within the ISDA master agreement and accompanied by Credit Support Annexes, which provide for the use of cash collaterals or low-risk eligible securities. For more details on the sensitivity analysis of credit spreads and on the results of stress tests see the "Widespread Contagion", "Protectionism, China slowdown & Turkey shock" and “Interest Rate Shock” scenarios in chapter Stress test of the Section 2.2 - Market risk below and for liquidity management policies see Section 2.4 Liquidity risk below. Other transactions With reference to the indications of Banca d’Italia/Consob/IVASS document No.6 of 8 March 2013 - Booking of "long-term structured repos" instructions, there are no transactions of this kind to report. In September 2016 the available-for-sale financial assets portfolio including investments in Italian and Spanish government bonds held by the Irish subsidiary UniCredit Bank Ireland P.l.c. simultaneously financed with maturity match repos (so-called “long-term structured repos") has entirely matured. The accounting treatment of these transactions, with respect to their individual contractual components (an investment in securities shown under item "Available-for-sale financial assets" of assets, a series of repos classified under item "Deposits from banks" of liabilities and derivative contracts shown under “Hedging derivatives”), was in line with the economic purpose, represented by the will to: • assume a sovereign risk exposure; • optimise the absorption of liquidity through a maturity match funding; • create a positive contribution for the duration of the transaction as difference between bond yield and repo funding cost, maximising the return on net interest margin; • maintain the right to change the funding structure of the position on sovereign risk according to any changes in market conditions or in the bank’s liquidity position. The changes in market values were not representative of the economic result that would be generated if all the individual contracts were analysed in terms of synthetic derivative, also in line with the business model that, providing for the dynamic and separate management of the individual components does not consider trading choices based on these variables. 32 Tax items are not included. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 350 2018 Annual Report and Accounts · UniCredit In addition to the exposures to sovereign debt securities, loans32 given to central and local governments and governmental bodies must be taken into account. The table below shows the total amount as at 31 December 2018 of loans booked in financial assets at amortised cost portfolio given to countries towards which the overall exposure exceeds €130 million, representing over 94% of the total. Breakdown of Sovereign Loans by Country (€ '000) COUNTRY AMOUNTS AS AT 12.31.2018 BOOK VALUE - Germany (*) 6,467,589 - Austria (**) 6,384,774 - Italy 5,184,745 - Croatia 2,196,061 - Czech Republic 710,917 - Qatar 312,297 - Slovenia 240,777 - Indonesia 199,998 - Bulgaria 189,105 - Laos 169,378 - Bosnia and Herzegovina 169,011 - Turkey 160,521 - Kenia 147,175 - Hungary (***) 146,355 - Angola 139,260 - Gabon 135,824 - Oman 130,282 Total on-balance sheet exposures 23,084,069 Notes: (*) of which 2,114,056 thousands in financial assets held for trading and those mandatorily at fair value. (**) of which 292,642 thousands in financial assets held for trading and those mandatorily at fair value. (***) of which 2.889 thousands in financial assets mandatorily at fair value. Lastly, it should be noted that derivatives are traded within the ISDA master agreement and accompanied by Credit Support Annexes, which provide for the use of cash collaterals or low-risk eligible securities. For more details on the sensitivity analysis of credit spreads and on the results of stress tests see the "Widespread Contagion", "Protectionism, China slowdown & Turkey shock" and “Interest Rate Shock” scenarios in chapter Stress test of the Section 2.2 - Market risk below and for liquidity management policies see Section 2.4 Liquidity risk below. Other transactions With reference to the indications of Banca d’Italia/Consob/IVASS document No.6 of 8 March 2013 - Booking of "long-term structured repos" instructions, there are no transactions of this kind to report. In September 2016 the available-for-sale financial assets portfolio including investments in Italian and Spanish government bonds held by the Irish subsidiary UniCredit Bank Ireland P.l.c. simultaneously financed with maturity match repos (so-called “long-term structured repos") has entirely matured. The accounting treatment of these transactions, with respect to their individual contractual components (an investment in securities shown under item "Available-for-sale financial assets" of assets, a series of repos classified under item "Deposits from banks" of liabilities and derivative contracts shown under “Hedging derivatives”), was in line with the economic purpose, represented by the will to: • assume a sovereign risk exposure; • optimise the absorption of liquidity through a maturity match funding; • create a positive contribution for the duration of the transaction as difference between bond yield and repo funding cost, maximising the return on net interest margin; • maintain the right to change the funding structure of the position on sovereign risk according to any changes in market conditions or in the bank’s liquidity position. The changes in market values were not representative of the economic result that would be generated if all the individual contracts were analysed in terms of synthetic derivative, also in line with the business model that, providing for the dynamic and separate management of the individual components does not consider trading choices based on these variables. 32 Tax items are not included. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 351 In addition, with reference to an investment of UniCredit S.p.A. in a debt security issued by the Italian Republic maturing on 30 August 2019 (ITALY 19EUR FRN) subscribed for during placement for a nominal amount of €750 million and with a book value of €750 million at 31 December 2018 (classified in the “mandatorily-at-fair value” portfolio in accordance with SPPI test result), a term repo (conducted in two stages) for a total nominal amount of €750 million, with a book value of liabilities of €824 million at 31 December 2018, was completed in 2012. At the same time, a 4.25% BTP maturing in September 2019 was purchased under a term reverse repo (conducted in 2 stages) for a total nominal value of €750 million and a book value of €824 million at 31 December 2018, with the economic purpose of obtaining the availability of more liquid securities (compared with the security ITALY 19EUR FRN), with the same maturity and similar underlying risks, that can be therefore used more easily for refinancing operations. The term repo and the term reverse repo are subject to netting (whose value is collateralised by cash) in the event of the default of one of the two counterparties or of the Italian Republic. This clause is accounted for as a financial guarantee issued, in accordance with the nature of the commitments of the parties. The fair value at trade date, €22 million, was initially recorded in other liabilities and is amortised on a pro-rata basis according to the current accounting rules. Information on structured trading derivatives with customers and exposures in the renewable energy sector 1. OTC Trading derivatives with customers The business model governing OTC derivatives trading with customers provides for the centralisation of market risk in the CIB Division - Markets Area, while credit risk is assumed by the Group company which, under the divisional or geographical segmentation model, manages the relevant customer’s account. The Group’s operational model provides for customer trading derivatives business to be carried on, as part of each subsidiary’s operational independence: • by the commercial banks and divisions that close transaction in OTC derivatives in order to provide non-institutional clients with products to manage currency, interest-rate and price risk. Under these transactions, the commercial banks transfer their market risks to the CIB Division by means of equal and opposite contracts, retaining only the relevant counterparty risk. The commercial banks also place or collect orders on behalf of others for investment products with embedded derivatives (e.g. structured bonds); • by the CIB Division operating with large corporate and financial institutions, in respect of which it assumes and manages both market and counterparty risk; • by CEE Banks, which transact business directly with their customers. UniCredit group trades OTC derivatives on a wide range of underlying, e.g. interest rates, currency rates, share prices and indexes, commodities (precious metals, base metals, petroleum and energy materials) and credit rights. OTC derivatives offer considerable scope for personalisation: new payoff profiles can be constructed by combining several OTC derivatives (for example, a plain vanilla IRS with one or more plain vanilla or exotic options). The risk and the complexity of the structures obtained in this manner depend on the respective characteristics of the components (reference parameters and indexation mechanisms) and the way in which they are combined. Credit and market risk arising from OTC derivatives business is controlled by the Chief Risk Officer competence line (CRO) in the Parent and/or in the Division or subsidiary involved. This control is carried out by means of guidelines and policies covering risk management, measurement and controls in terms of principles, rules and processes, as well as by setting VaR limits. The business with non-institutional clients does not (usually) entail the use of margin calls, whereas with institutional counterparties (dealt with by the CIB Division) recourse may be made to ‘credit-risk mitigation’ (CRM) techniques, by using netting and/or collateral agreements. Write-downs and write-backs of derivatives to take account of counterparty risk are determined in line with the procedure used to assess other credit exposure, specifically: • performing exposure to customers are mapped by deriving EAD (Exposure at Default) that take into account the Wrong-Way Risk and measured with PD (Probability of Default) and LGD (Loss Given Default) implied by current market default rates obtained from credit & loan-credit default swaps, in order to obtain a value in terms of ‘expected loss’ (EL) to be used for items designated and measured at fair value maximising the usage of market’s inputs; • non-performing positions are valued in terms of estimated expected future cash flows according to specific indications of impairment (which are the basis for the calculation of the amount and timing of the cash flow). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 351 In addition, with reference to an investment of UniCredit S.p.A. in a debt security issued by the Italian Republic maturing on 30 August 2019 (ITALY 19EUR FRN) subscribed for during placement for a nominal amount of €750 million and with a book value of €750 million at 31 December 2018 (classified in the “mandatorily-at-fair value” portfolio in accordance with SPPI test result), a term repo (conducted in two stages) for a total nominal amount of €750 million, with a book value of liabilities of €824 million at 31 December 2018, was completed in 2012. At the same time, a 4.25% BTP maturing in September 2019 was purchased under a term reverse repo (conducted in 2 stages) for a total nominal value of €750 million and a book value of €824 million at 31 December 2018, with the economic purpose of obtaining the availability of more liquid securities (compared with the security ITALY 19EUR FRN), with the same maturity and similar underlying risks, that can be therefore used more easily for refinancing operations. The term repo and the term reverse repo are subject to netting (whose value is collateralised by cash) in the event of the default of one of the two counterparties or of the Italian Republic. This clause is accounted for as a financial guarantee issued, in accordance with the nature of the commitments of the parties. The fair value at trade date, €22 million, was initially recorded in other liabilities and is amortised on a pro-rata basis according to the current accounting rules. Information on structured trading derivatives with customers and exposures in the renewable energy sector 1. OTC Trading derivatives with customers The business model governing OTC derivatives trading with customers provides for the centralisation of market risk in the CIB Division - Markets Area, while credit risk is assumed by the Group company which, under the divisional or geographical segmentation model, manages the relevant customer’s account. The Group’s operational model provides for customer trading derivatives business to be carried on, as part of each subsidiary’s operational independence: • by the commercial banks and divisions that close transaction in OTC derivatives in order to provide non-institutional clients with products to manage currency, interest-rate and price risk. Under these transactions, the commercial banks transfer their market risks to the CIB Division by means of equal and opposite contracts, retaining only the relevant counterparty risk. The commercial banks also place or collect orders on behalf of others for investment products with embedded derivatives (e.g. structured bonds); • by the CIB Division operating with large corporate and financial institutions, in respect of which it assumes and manages both market and counterparty risk; • by CEE Banks, which transact business directly with their customers. UniCredit group trades OTC derivatives on a wide range of underlying, e.g. interest rates, currency rates, share prices and indexes, commodities (precious metals, base metals, petroleum and energy materials) and credit rights. OTC derivatives offer considerable scope for personalisation: new payoff profiles can be constructed by combining several OTC derivatives (for example, a plain vanilla IRS with one or more plain vanilla or exotic options). The risk and the complexity of the structures obtained in this manner depend on the respective characteristics of the components (reference parameters and indexation mechanisms) and the way in which they are combined. Credit and market risk arising from OTC derivatives business is controlled by the Chief Risk Officer competence line (CRO) in the Parent and/or in the Division or subsidiary involved. This control is carried out by means of guidelines and policies covering risk management, measurement and controls in terms of principles, rules and processes, as well as by setting VaR limits. The business with non-institutional clients does not (usually) entail the use of margin calls, whereas with institutional counterparties (dealt with by the CIB Division) recourse may be made to ‘credit-risk mitigation’ (CRM) techniques, by using netting and/or collateral agreements. Write-downs and write-backs of derivatives to take account of counterparty risk are determined in line with the procedure used to assess other credit exposure, specifically: • performing exposure to customers are mapped by deriving EAD (Exposure at Default) that take into account the Wrong-Way Risk and measured with PD (Probability of Default) and LGD (Loss Given Default) implied by current market default rates obtained from credit & loan-credit default swaps, in order to obtain a value in terms of ‘expected loss’ (EL) to be used for items designated and measured at fair value maximising the usage of market’s inputs; • non-performing positions are valued in terms of estimated expected future cash flows according to specific indications of impairment (which are the basis for the calculation of the amount and timing of the cash flow). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 351 In addition, with reference to an investment of UniCredit S.p.A. in a debt security issued by the Italian Republic maturing on 30 August 2019 (ITALY 19EUR FRN) subscribed for during placement for a nominal amount of €750 million and with a book value of €750 million at 31 December 2018 (classified in the “mandatorily-at-fair value” portfolio in accordance with SPPI test result), a term repo (conducted in two stages) for a total nominal amount of €750 million, with a book value of liabilities of €824 million at 31 December 2018, was completed in 2012. At the same time, a 4.25% BTP maturing in September 2019 was purchased under a term reverse repo (conducted in 2 stages) for a total nominal value of €750 million and a book value of €824 million at 31 December 2018, with the economic purpose of obtaining the availability of more liquid securities (compared with the security ITALY 19EUR FRN), with the same maturity and similar underlying risks, that can be therefore used more easily for refinancing operations. The term repo and the term reverse repo are subject to netting (whose value is collateralised by cash) in the event of the default of one of the two counterparties or of the Italian Republic. This clause is accounted for as a financial guarantee issued, in accordance with the nature of the commitments of the parties. The fair value at trade date, €22 million, was initially recorded in other liabilities and is amortised on a pro-rata basis according to the current accounting rules. Information on structured trading derivatives with customers and exposures in the renewable energy sector 1. OTC Trading derivatives with customers The business model governing OTC derivatives trading with customers provides for the centralisation of market risk in the CIB Division - Markets Area, while credit risk is assumed by the Group company which, under the divisional or geographical segmentation model, manages the relevant customer’s account. The Group’s operational model provides for customer trading derivatives business to be carried on, as part of each subsidiary’s operational independence: • by the commercial banks and divisions that close transaction in OTC derivatives in order to provide non-institutional clients with products to manage currency, interest-rate and price risk. Under these transactions, the commercial banks transfer their market risks to the CIB Division by means of equal and opposite contracts, retaining only the relevant counterparty risk. The commercial banks also place or collect orders on behalf of others for investment products with embedded derivatives (e.g. structured bonds); • by the CIB Division operating with large corporate and financial institutions, in respect of which it assumes and manages both market and counterparty risk; • by CEE Banks, which transact business directly with their customers. UniCredit group trades OTC derivatives on a wide range of underlying, e.g. interest rates, currency rates, share prices and indexes, commodities (precious metals, base metals, petroleum and energy materials) and credit rights. OTC derivatives offer considerable scope for personalisation: new payoff profiles can be constructed by combining several OTC derivatives (for example, a plain vanilla IRS with one or more plain vanilla or exotic options). The risk and the complexity of the structures obtained in this manner depend on the respective characteristics of the components (reference parameters and indexation mechanisms) and the way in which they are combined. Credit and market risk arising from OTC derivatives business is controlled by the Chief Risk Officer competence line (CRO) in the Parent and/or in the Division or subsidiary involved. This control is carried out by means of guidelines and policies covering risk management, measurement and controls in terms of principles, rules and processes, as well as by setting VaR limits. The business with non-institutional clients does not (usually) entail the use of margin calls, whereas with institutional counterparties (dealt with by the CIB Division) recourse may be made to ‘credit-risk mitigation’ (CRM) techniques, by using netting and/or collateral agreements. Write-downs and write-backs of derivatives to take account of counterparty risk are determined in line with the procedure used to assess other credit exposure, specifically: • performing exposure to customers are mapped by deriving EAD (Exposure at Default) that take into account the Wrong-Way Risk and measured with PD (Probability of Default) and LGD (Loss Given Default) implied by current market default rates obtained from credit & loan-credit default swaps, in order to obtain a value in terms of ‘expected loss’ (EL) to be used for items designated and measured at fair value maximising the usage of market’s inputs; • non-performing positions are valued in terms of estimated expected future cash flows according to specific indications of impairment (which are the basis for the calculation of the amount and timing of the cash flow). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 351 In addition, with reference to an investment of UniCredit S.p.A. in a debt security issued by the Italian Republic maturing on 30 August 2019 (ITALY 19EUR FRN) subscribed for during placement for a nominal amount of €750 million and with a book value of €750 million at 31 December 2018 (classified in the “mandatorily-at-fair value” portfolio in accordance with SPPI test result), a term repo (conducted in two stages) for a total nominal amount of €750 million, with a book value of liabilities of €824 million at 31 December 2018, was completed in 2012. At the same time, a 4.25% BTP maturing in September 2019 was purchased under a term reverse repo (conducted in 2 stages) for a total nominal value of €750 million and a book value of €824 million at 31 December 2018, with the economic purpose of obtaining the availability of more liquid securities (compared with the security ITALY 19EUR FRN), with the same maturity and similar underlying risks, that can be therefore used more easily for refinancing operations. The term repo and the term reverse repo are subject to netting (whose value is collateralised by cash) in the event of the default of one of the two counterparties or of the Italian Republic. This clause is accounted for as a financial guarantee issued, in accordance with the nature of the commitments of the parties. The fair value at trade date, €22 million, was initially recorded in other liabilities and is amortised on a pro-rata basis according to the current accounting rules. Information on structured trading derivatives with customers and exposures in the renewable energy sector 1. OTC Trading derivatives with customers The business model governing OTC derivatives trading with customers provides for the centralisation of market risk in the CIB Division - Markets Area, while credit risk is assumed by the Group company which, under the divisional or geographical segmentation model, manages the relevant customer’s account. The Group’s operational model provides for customer trading derivatives business to be carried on, as part of each subsidiary’s operational independence: • by the commercial banks and divisions that close transaction in OTC derivatives in order to provide non-institutional clients with products to manage currency, interest-rate and price risk. Under these transactions, the commercial banks transfer their market risks to the CIB Division by means of equal and opposite contracts, retaining only the relevant counterparty risk. The commercial banks also place or collect orders on behalf of others for investment products with embedded derivatives (e.g. structured bonds); • by the CIB Division operating with large corporate and financial institutions, in respect of which it assumes and manages both market and counterparty risk; • by CEE Banks, which transact business directly with their customers. UniCredit group trades OTC derivatives on a wide range of underlying, e.g. interest rates, currency rates, share prices and indexes, commodities (precious metals, base metals, petroleum and energy materials) and credit rights. OTC derivatives offer considerable scope for personalisation: new payoff profiles can be constructed by combining several OTC derivatives (for example, a plain vanilla IRS with one or more plain vanilla or exotic options). The risk and the complexity of the structures obtained in this manner depend on the respective characteristics of the components (reference parameters and indexation mechanisms) and the way in which they are combined. Credit and market risk arising from OTC derivatives business is controlled by the Chief Risk Officer competence line (CRO) in the Parent and/or in the Division or subsidiary involved. This control is carried out by means of guidelines and policies covering risk management, measurement and controls in terms of principles, rules and processes, as well as by setting VaR limits. The business with non-institutional clients does not (usually) entail the use of margin calls, whereas with institutional counterparties (dealt with by the CIB Division) recourse may be made to ‘credit-risk mitigation’ (CRM) techniques, by using netting and/or collateral agreements. Write-downs and write-backs of derivatives to take account of counterparty risk are determined in line with the procedure used to assess other credit exposure, specifically: • performing exposure to customers are mapped by deriving EAD (Exposure at Default) that take into account the Wrong-Way Risk and measured with PD (Probability of Default) and LGD (Loss Given Default) implied by current market default rates obtained from credit & loan-credit default swaps, in order to obtain a value in terms of ‘expected loss’ (EL) to be used for items designated and measured at fair value maximising the usage of market’s inputs; • non-performing positions are valued in terms of estimated expected future cash flows according to specific indications of impairment (which are the basis for the calculation of the amount and timing of the cash flow). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 351 In addition, with reference to an investment of UniCredit S.p.A. in a debt security issued by the Italian Republic maturing on 30 August 2019 (ITALY 19EUR FRN) subscribed for during placement for a nominal amount of €750 million and with a book value of €750 million at 31 December 2018 (classified in the “mandatorily-at-fair value” portfolio in accordance with SPPI test result), a term repo (conducted in two stages) for a total nominal amount of €750 million, with a book value of liabilities of €824 million at 31 December 2018, was completed in 2012. At the same time, a 4.25% BTP maturing in September 2019 was purchased under a term reverse repo (conducted in 2 stages) for a total nominal value of €750 million and a book value of €824 million at 31 December 2018, with the economic purpose of obtaining the availability of more liquid securities (compared with the security ITALY 19EUR FRN), with the same maturity and similar underlying risks, that can be therefore used more easily for refinancing operations. The term repo and the term reverse repo are subject to netting (whose value is collateralised by cash) in the event of the default of one of the two counterparties or of the Italian Republic. This clause is accounted for as a financial guarantee issued, in accordance with the nature of the commitments of the parties. The fair value at trade date, €22 million, was initially recorded in other liabilities and is amortised on a pro-rata basis according to the current accounting rules. Information on structured trading derivatives with customers and exposures in the renewable energy sector 1. OTC Trading derivatives with customers The business model governing OTC derivatives trading with customers provides for the centralisation of market risk in the CIB Division - Markets Area, while credit risk is assumed by the Group company which, under the divisional or geographical segmentation model, manages the relevant customer’s account. The Group’s operational model provides for customer trading derivatives business to be carried on, as part of each subsidiary’s operational independence: • by the commercial banks and divisions that close transaction in OTC derivatives in order to provide non-institutional clients with products to manage currency, interest-rate and price risk. Under these transactions, the commercial banks transfer their market risks to the CIB Division by means of equal and opposite contracts, retaining only the relevant counterparty risk. The commercial banks also place or collect orders on behalf of others for investment products with embedded derivatives (e.g. structured bonds); • by the CIB Division operating with large corporate and financial institutions, in respect of which it assumes and manages both market and counterparty risk; • by CEE Banks, which transact business directly with their customers. UniCredit group trades OTC derivatives on a wide range of underlying, e.g. interest rates, currency rates, share prices and indexes, commodities (precious metals, base metals, petroleum and energy materials) and credit rights. OTC derivatives offer considerable scope for personalisation: new payoff profiles can be constructed by combining several OTC derivatives (for example, a plain vanilla IRS with one or more plain vanilla or exotic options). The risk and the complexity of the structures obtained in this manner depend on the respective characteristics of the components (reference parameters and indexation mechanisms) and the way in which they are combined. Credit and market risk arising from OTC derivatives business is controlled by the Chief Risk Officer competence line (CRO) in the Parent and/or in the Division or subsidiary involved. This control is carried out by means of guidelines and policies covering risk management, measurement and controls in terms of principles, rules and processes, as well as by setting VaR limits. The business with non-institutional clients does not (usually) entail the use of margin calls, whereas with institutional counterparties (dealt with by the CIB Division) recourse may be made to ‘credit-risk mitigation’ (CRM) techniques, by using netting and/or collateral agreements. Write-downs and write-backs of derivatives to take account of counterparty risk are determined in line with the procedure used to assess other credit exposure, specifically: • performing exposure to customers are mapped by deriving EAD (Exposure at Default) that take into account the Wrong-Way Risk and measured with PD (Probability of Default) and LGD (Loss Given Default) implied by current market default rates obtained from credit & loan-credit default swaps, in order to obtain a value in terms of ‘expected loss’ (EL) to be used for items designated and measured at fair value maximising the usage of market’s inputs; • non-performing positions are valued in terms of estimated expected future cash flows according to specific indications of impairment (which are the basis for the calculation of the amount and timing of the cash flow). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 352 2018 Annual Report and Accounts · UniCredit Here follows the breakdown of balance-sheet asset item “20a. Financial assets held for trading” and of balance-sheet liability item “20. Financial liabilities held for trading”. For the purpose of the distinction between customers and banking counterparties, the definition contained in Banca d’Italia Circular 262 as for its 6th update of 30 November 2018 (which was used for the preparation of the accounts) was used as a reference. Structured products were defined as derivative contracts that incorporate in the same instrument forms of contracts that generate exposure to several types of risk (with the exception of cross-currency swaps) and/or leverage effects. Fair values of OTC derivatives managed through Central Clearing counterparts are reported on a net basis. The related reduction of balances is €13.533 million and €17.198 million on trading asset and liabilities, respectively. The balance of item “20. Financial assets held for trading” of the Consolidated accounts with regard to derivative contracts totaled €32,155 million (with a notional value of €1,199,850 million) including €19,385 million with customers. The notional value of derivatives with customers amounted to €729,607 million including €716,137 million in plain vanilla (with a fair value of €18,848 million) and €13,470 million in structured derivatives (with a fair value of €537 million). The notional value of derivatives with banking counterparties totaled €470,242 million (fair value of €12,770 million) including €19,497 million relating to structured derivatives (fair value of €531 million). The balance of item “20. Financial liabilities held for trading” of the consolidated accounts with regard to derivative contracts totaled €27,467 million (with a notional value of €1,002,184 million) including €10,984 million with customers. The notional value of derivatives with customers amounted to €533,332 million including €526,542 million in plain vanilla (with a fair value of €10,753 million) and €6,789 million in structured derivatives (with a fair value of €231 million). The notional value of derivatives with banking counterparties totaled €468,853 million (fair value of €16,483 million) including €16,826 million relating to structured derivatives (fair value of €263 million). 2. Exposures in the renewable energy sector Through Ocean Breeze Energy GmbH & Co. KG (OBKG), a fully consolidated subsidiary of UniCredit Bank AG, UniCredit group owns a wind farm named BARD Offshore1 (BO1) with the following characteristics: GEOGRAPHICAL LOCATION OWNER PERCENTAGE OF OWNERSHIP DATE WHEN THE PLANT STARTED TO PRODUCE ENERGY PERCENTAGE OF COMPLETION INSTALLED CAPACITY TOTAL VALUE OF THE ASSET AS AT 12.31.2018 German EEZ(1), 100 km before the island of Borkum Ocean Breeze Energy GmbH & Co. KG 100% December 2010, final taking into operation August 2013 100% 400 MW €1.24 billion Note: (1) Exclusive economic zone. This power plant has been developed by the BARD Group on behalf of OBKG and has been classified as tangible asset since 31 December 2013 in OBKG’s balance sheet. The BARD Group itself has been fully financed by UniCredit Bank AG and, starting from 31 December 2013, fully consolidated by UniCredit Bank AG. The total value of the wind farm and other ancillary tangible assets amounts to €1.24 billion and is net of €53 million grants provided by the European Union which have been classified as government grants in accordance with IAS20 and, in compliance with IAS20.24, deducted from the initial cost of the power plant on the assets side of the balance sheet. The current book value of the wind farm has been confirmed by an appraisal exercise performed by an independent expert by 31 December 2018; no trigger events have been experienced in 2018 potentially affecting wind farm’s carrying value. To cover dismantling/refurbishing costs of BO1 it has been posted a provision of about €43 million (€26 million as at December 2017) by OBKG. Grid connection is available and very stable; wind farm availability has improved steadily since 2015, and has reached industry standard levels of 94-95%. A compensation claims against grid operator (TenneT) over a 2014 grid outage is still running (€72 million according to relevant compensation regime). Such amount have neither been recognised in income nor capitalised as receivables on the balance sheet. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 352 2018 Annual Report and Accounts · UniCredit Here follows the breakdown of balance-sheet asset item “20a. Financial assets held for trading” and of balance-sheet liability item “20. Financial liabilities held for trading”. For the purpose of the distinction between customers and banking counterparties, the definition contained in Banca d’Italia Circular 262 as for its 6th update of 30 November 2018 (which was used for the preparation of the accounts) was used as a reference. Structured products were defined as derivative contracts that incorporate in the same instrument forms of contracts that generate exposure to several types of risk (with the exception of cross-currency swaps) and/or leverage effects. Fair values of OTC derivatives managed through Central Clearing counterparts are reported on a net basis. The related reduction of balances is €13.533 million and €17.198 million on trading asset and liabilities, respectively. The balance of item “20. Financial assets held for trading” of the Consolidated accounts with regard to derivative contracts totaled €32,155 million (with a notional value of €1,199,850 million) including €19,385 million with customers. The notional value of derivatives with customers amounted to €729,607 million including €716,137 million in plain vanilla (with a fair value of €18,848 million) and €13,470 million in structured derivatives (with a fair value of €537 million). The notional value of derivatives with banking counterparties totaled €470,242 million (fair value of €12,770 million) including €19,497 million relating to structured derivatives (fair value of €531 million). The balance of item “20. Financial liabilities held for trading” of the consolidated accounts with regard to derivative contracts totaled €27,467 million (with a notional value of €1,002,184 million) including €10,984 million with customers. The notional value of derivatives with customers amounted to €533,332 million including €526,542 million in plain vanilla (with a fair value of €10,753 million) and €6,789 million in structured derivatives (with a fair value of €231 million). The notional value of derivatives with banking counterparties totaled €468,853 million (fair value of €16,483 million) including €16,826 million relating to structured derivatives (fair value of €263 million). 2. Exposures in the renewable energy sector Through Ocean Breeze Energy GmbH & Co. KG (OBKG), a fully consolidated subsidiary of UniCredit Bank AG, UniCredit group owns a wind farm named BARD Offshore1 (BO1) with the following characteristics: GEOGRAPHICAL LOCATION OWNER PERCENTAGE OF OWNERSHIP DATE WHEN THE PLANT STARTED TO PRODUCE ENERGY PERCENTAGE OF COMPLETION INSTALLED CAPACITY TOTAL VALUE OF THE ASSET AS AT 12.31.2018 German EEZ(1), 100 km before the island of Borkum Ocean Breeze Energy GmbH & Co. KG 100% December 2010, final taking into operation August 2013 100% 400 MW €1.24 billion Note: (1) Exclusive economic zone. This power plant has been developed by the BARD Group on behalf of OBKG and has been classified as tangible asset since 31 December 2013 in OBKG’s balance sheet. The BARD Group itself has been fully financed by UniCredit Bank AG and, starting from 31 December 2013, fully consolidated by UniCredit Bank AG. The total value of the wind farm and other ancillary tangible assets amounts to €1.24 billion and is net of €53 million grants provided by the European Union which have been classified as government grants in accordance with IAS20 and, in compliance with IAS20.24, deducted from the initial cost of the power plant on the assets side of the balance sheet. The current book value of the wind farm has been confirmed by an appraisal exercise performed by an independent expert by 31 December 2018; no trigger events have been experienced in 2018 potentially affecting wind farm’s carrying value. To cover dismantling/refurbishing costs of BO1 it has been posted a provision of about €43 million (€26 million as at December 2017) by OBKG. Grid connection is available and very stable; wind farm availability has improved steadily since 2015, and has reached industry standard levels of 94-95%. A compensation claims against grid operator (TenneT) over a 2014 grid outage is still running (€72 million according to relevant compensation regime). Such amount have neither been recognised in income nor capitalised as receivables on the balance sheet. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 352 2018 Annual Report and Accounts · UniCredit Here follows the breakdown of balance-sheet asset item “20a. Financial assets held for trading” and of balance-sheet liability item “20. Financial liabilities held for trading”. For the purpose of the distinction between customers and banking counterparties, the definition contained in Banca d’Italia Circular 262 as for its 6th update of 30 November 2018 (which was used for the preparation of the accounts) was used as a reference. Structured products were defined as derivative contracts that incorporate in the same instrument forms of contracts that generate exposure to several types of risk (with the exception of cross-currency swaps) and/or leverage effects. Fair values of OTC derivatives managed through Central Clearing counterparts are reported on a net basis. The related reduction of balances is €13.533 million and €17.198 million on trading asset and liabilities, respectively. The balance of item “20. Financial assets held for trading” of the Consolidated accounts with regard to derivative contracts totaled €32,155 million (with a notional value of €1,199,850 million) including €19,385 million with customers. The notional value of derivatives with customers amounted to €729,607 million including €716,137 million in plain vanilla (with a fair value of €18,848 million) and €13,470 million in structured derivatives (with a fair value of €537 million). The notional value of derivatives with banking counterparties totaled €470,242 million (fair value of €12,770 million) including €19,497 million relating to structured derivatives (fair value of €531 million). The balance of item “20. Financial liabilities held for trading” of the consolidated accounts with regard to derivative contracts totaled €27,467 million (with a notional value of €1,002,184 million) including €10,984 million with customers. The notional value of derivatives with customers amounted to €533,332 million including €526,542 million in plain vanilla (with a fair value of €10,753 million) and €6,789 million in structured derivatives (with a fair value of €231 million). The notional value of derivatives with banking counterparties totaled €468,853 million (fair value of €16,483 million) including €16,826 million relating to structured derivatives (fair value of €263 million). 2. Exposures in the renewable energy sector Through Ocean Breeze Energy GmbH & Co. KG (OBKG), a fully consolidated subsidiary of UniCredit Bank AG, UniCredit group owns a wind farm named BARD Offshore1 (BO1) with the following characteristics: GEOGRAPHICAL LOCATION OWNER PERCENTAGE OF OWNERSHIP DATE WHEN THE PLANT STARTED TO PRODUCE ENERGY PERCENTAGE OF COMPLETION INSTALLED CAPACITY TOTAL VALUE OF THE ASSET AS AT 12.31.2018 German EEZ(1), 100 km before the island of Borkum Ocean Breeze Energy GmbH & Co. KG 100% December 2010, final taking into operation August 2013 100% 400 MW €1.24 billion Note: (1) Exclusive economic zone. This power plant has been developed by the BARD Group on behalf of OBKG and has been classified as tangible asset since 31 December 2013 in OBKG’s balance sheet. The BARD Group itself has been fully financed by UniCredit Bank AG and, starting from 31 December 2013, fully consolidated by UniCredit Bank AG. The total value of the wind farm and other ancillary tangible assets amounts to €1.24 billion and is net of €53 million grants provided by the European Union which have been classified as government grants in accordance with IAS20 and, in compliance with IAS20.24, deducted from the initial cost of the power plant on the assets side of the balance sheet. The current book value of the wind farm has been confirmed by an appraisal exercise performed by an independent expert by 31 December 2018; no trigger events have been experienced in 2018 potentially affecting wind farm’s carrying value. To cover dismantling/refurbishing costs of BO1 it has been posted a provision of about €43 million (€26 million as at December 2017) by OBKG. Grid connection is available and very stable; wind farm availability has improved steadily since 2015, and has reached industry standard levels of 94-95%. A compensation claims against grid operator (TenneT) over a 2014 grid outage is still running (€72 million according to relevant compensation regime). Such amount have neither been recognised in income nor capitalised as receivables on the balance sheet. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 352 2018 Annual Report and Accounts · UniCredit Here follows the breakdown of balance-sheet asset item “20a. Financial assets held for trading” and of balance-sheet liability item “20. Financial liabilities held for trading”. For the purpose of the distinction between customers and banking counterparties, the definition contained in Banca d’Italia Circular 262 as for its 6th update of 30 November 2018 (which was used for the preparation of the accounts) was used as a reference. Structured products were defined as derivative contracts that incorporate in the same instrument forms of contracts that generate exposure to several types of risk (with the exception of cross-currency swaps) and/or leverage effects. Fair values of OTC derivatives managed through Central Clearing counterparts are reported on a net basis. The related reduction of balances is €13.533 million and €17.198 million on trading asset and liabilities, respectively. The balance of item “20. Financial assets held for trading” of the Consolidated accounts with regard to derivative contracts totaled €32,155 million (with a notional value of €1,199,850 million) including €19,385 million with customers. The notional value of derivatives with customers amounted to €729,607 million including €716,137 million in plain vanilla (with a fair value of €18,848 million) and €13,470 million in structured derivatives (with a fair value of €537 million). The notional value of derivatives with banking counterparties totaled €470,242 million (fair value of €12,770 million) including €19,497 million relating to structured derivatives (fair value of €531 million). The balance of item “20. Financial liabilities held for trading” of the consolidated accounts with regard to derivative contracts totaled €27,467 million (with a notional value of €1,002,184 million) including €10,984 million with customers. The notional value of derivatives with customers amounted to €533,332 million including €526,542 million in plain vanilla (with a fair value of €10,753 million) and €6,789 million in structured derivatives (with a fair value of €231 million). The notional value of derivatives with banking counterparties totaled €468,853 million (fair value of €16,483 million) including €16,826 million relating to structured derivatives (fair value of €263 million). 2. Exposures in the renewable energy sector Through Ocean Breeze Energy GmbH & Co. KG (OBKG), a fully consolidated subsidiary of UniCredit Bank AG, UniCredit group owns a wind farm named BARD Offshore1 (BO1) with the following characteristics: GEOGRAPHICAL LOCATION OWNER PERCENTAGE OF OWNERSHIP DATE WHEN THE PLANT STARTED TO PRODUCE ENERGY PERCENTAGE OF COMPLETION INSTALLED CAPACITY TOTAL VALUE OF THE ASSET AS AT 12.31.2018 German EEZ(1), 100 km before the island of Borkum Ocean Breeze Energy GmbH & Co. KG 100% December 2010, final taking into operation August 2013 100% 400 MW €1.24 billion Note: (1) Exclusive economic zone. This power plant has been developed by the BARD Group on behalf of OBKG and has been classified as tangible asset since 31 December 2013 in OBKG’s balance sheet. The BARD Group itself has been fully financed by UniCredit Bank AG and, starting from 31 December 2013, fully consolidated by UniCredit Bank AG. The total value of the wind farm and other ancillary tangible assets amounts to €1.24 billion and is net of €53 million grants provided by the European Union which have been classified as government grants in accordance with IAS20 and, in compliance with IAS20.24, deducted from the initial cost of the power plant on the assets side of the balance sheet. The current book value of the wind farm has been confirmed by an appraisal exercise performed by an independent expert by 31 December 2018; no trigger events have been experienced in 2018 potentially affecting wind farm’s carrying value. To cover dismantling/refurbishing costs of BO1 it has been posted a provision of about €43 million (€26 million as at December 2017) by OBKG. Grid connection is available and very stable; wind farm availability has improved steadily since 2015, and has reached industry standard levels of 94-95%. A compensation claims against grid operator (TenneT) over a 2014 grid outage is still running (€72 million according to relevant compensation regime). Such amount have neither been recognised in income nor capitalised as receivables on the balance sheet. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 352 2018 Annual Report and Accounts · UniCredit Here follows the breakdown of balance-sheet asset item “20a. Financial assets held for trading” and of balance-sheet liability item “20. Financial liabilities held for trading”. For the purpose of the distinction between customers and banking counterparties, the definition contained in Banca d’Italia Circular 262 as for its 6th update of 30 November 2018 (which was used for the preparation of the accounts) was used as a reference. Structured products were defined as derivative contracts that incorporate in the same instrument forms of contracts that generate exposure to several types of risk (with the exception of cross-currency swaps) and/or leverage effects. Fair values of OTC derivatives managed through Central Clearing counterparts are reported on a net basis. The related reduction of balances is €13.533 million and €17.198 million on trading asset and liabilities, respectively. The balance of item “20. Financial assets held for trading” of the Consolidated accounts with regard to derivative contracts totaled €32,155 million (with a notional value of €1,199,850 million) including €19,385 million with customers. The notional value of derivatives with customers amounted to €729,607 million including €716,137 million in plain vanilla (with a fair value of €18,848 million) and €13,470 million in structured derivatives (with a fair value of €537 million). The notional value of derivatives with banking counterparties totaled €470,242 million (fair value of €12,770 million) including €19,497 million relating to structured derivatives (fair value of €531 million). The balance of item “20. Financial liabilities held for trading” of the consolidated accounts with regard to derivative contracts totaled €27,467 million (with a notional value of €1,002,184 million) including €10,984 million with customers. The notional value of derivatives with customers amounted to €533,332 million including €526,542 million in plain vanilla (with a fair value of €10,753 million) and €6,789 million in structured derivatives (with a fair value of €231 million). The notional value of derivatives with banking counterparties totaled €468,853 million (fair value of €16,483 million) including €16,826 million relating to structured derivatives (fair value of €263 million). 2. Exposures in the renewable energy sector Through Ocean Breeze Energy GmbH & Co. KG (OBKG), a fully consolidated subsidiary of UniCredit Bank AG, UniCredit group owns a wind farm named BARD Offshore1 (BO1) with the following characteristics: GEOGRAPHICAL LOCATION OWNER PERCENTAGE OF OWNERSHIP DATE WHEN THE PLANT STARTED TO PRODUCE ENERGY PERCENTAGE OF COMPLETION INSTALLED CAPACITY TOTAL VALUE OF THE ASSET AS AT 12.31.2018 German EEZ(1), 100 km before the island of Borkum Ocean Breeze Energy GmbH & Co. KG 100% December 2010, final taking into operation August 2013 100% 400 MW €1.24 billion Note: (1) Exclusive economic zone. This power plant has been developed by the BARD Group on behalf of OBKG and has been classified as tangible asset since 31 December 2013 in OBKG’s balance sheet. The BARD Group itself has been fully financed by UniCredit Bank AG and, starting from 31 December 2013, fully consolidated by UniCredit Bank AG. The total value of the wind farm and other ancillary tangible assets amounts to €1.24 billion and is net of €53 million grants provided by the European Union which have been classified as government grants in accordance with IAS20 and, in compliance with IAS20.24, deducted from the initial cost of the power plant on the assets side of the balance sheet. The current book value of the wind farm has been confirmed by an appraisal exercise performed by an independent expert by 31 December 2018; no trigger events have been experienced in 2018 potentially affecting wind farm’s carrying value. To cover dismantling/refurbishing costs of BO1 it has been posted a provision of about €43 million (€26 million as at December 2017) by OBKG. Grid connection is available and very stable; wind farm availability has improved steadily since 2015, and has reached industry standard levels of 94-95%. A compensation claims against grid operator (TenneT) over a 2014 grid outage is still running (€72 million according to relevant compensation regime). Such amount have neither been recognised in income nor capitalised as receivables on the balance sheet. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 353 E. Prudential perimeter - Credit risk measurement models At the end of December 2018 the expected loss on the credit risk perimeter was 0.38% of total UniCredit Group credit exposure. The result does not include the exposures which have migrated to default and therefore do not enter in the calculation of expected loss. Besides, since risk measurement systems tend to be anti-cyclical, this may result in a smaller elasticity to the swift changes of the macroeconomic scenario. The ratio between credit economic capital (including a component to cover migration risk) and its relative credit exposure amount is 2.86% with reference date end of December 2018. As far as UniCredit S.p.A. quantitative information, reference is made to the paragraph Part E - Notes to the accounts of the parent company UniCredit S.p.A.- Section 1 - Credit Risk - Quantitative information - F. Credit risk measurement models, which is herewith quoted entirely. 2.2 Market risk Market risk derives from the effect that changes in market variables (interest rates, securities prices, exchange rates, etc.) can cause to the economic value of the Group’s portfolio, including the assets held both in the Trading Book, as well as those posted in the Banking Book, both on the operations characteristically involved in commercial banking and in the choice of strategic investments. Market risk management within the UniCredit group accordingly includes all the activities relating to cash transactions and capital structure management, both for the Parent Company, as well as for the individual companies making up the Group. The current organisational model guarantees the ability to steer, to coordinate and to control the activities of some aggregated risks (so-called Portfolio Risks), through dedicated responsibility centres (Portfolio Risk Managers), completely focused and specialised on such risks, under a Group and interdivisional perspective. According to this organisation, the structure at first level of reporting to “Group Risk Management”, dedicated to market risk governance is the “Group Financial Risk” department. Risk management strategies and processes The Parent Company’s Board of Directors lays down strategic guidelines for taking on market risks by calculating capital allocation for the Parent Company and its subsidiaries, depending on risk appetite and value creation objectives in proportion to the risks assumed. The Parent Company has defined Global Rules in order to manage and control market risk, including strategies and processes to be followed. Market risk strategies are set by the Parent Company at least on an annual basis, in line with the definition of the overall Group Risk appetite and then cascaded to the Leal Entities. Market risk appetite is also fundamental for the development of the Group’s business strategy, ensuring the consistence between the budgeted revenues and the setting of Value-at-Risk limits. In this context, on an annual basis Market Risk Management function of the Parent Company agrees with the local Market Risk functions possible changes to the Group Market Risk Framework. Changes to the Group Market Risk Framework can include changes to the perimeter for the calculation of managerial market risk metrics and methodological changes in the limit monitoring framework. To this end, Market Risk Management of the Parent Company gathers the information needed to set up the Group Market Risk Strategy for the following year. In particular, Group Market Risk Management receives from the competent function the Group Risk Appetite Framework, which sets, among others, Market Risk KPIs and from local Market Risk functions, among others, the list of Legal Entities (LEs)/Business Lines allowed to assume market risk exposures, the severities of the related limits and the proposals for the review of market risk levels. Based on these inputs, the Group Market Risk strategy is defined including the following information: • the proposed Market Risk Takers Map; • limits and Warning Levels (WLs) proposal in accordance with the proposed Market Risk Takers Map; • any change occurred to the risk limit framework compared to the previous year; • overview on the macro-economic scenario and related risks for the Group; • market Risk RWA history and expected development; • market Risk KPIs benchmarking; • the business strategy and key initiatives to support the limit proposal. After that all the Group relevant Bodies have approved the Group Market Risk Strategy and given the relevant NBOs for local market risk limits, the approval is communicated to local functions. In terms of monitoring, the LEs carries out periodical activities (e.g. daily monitoring of VaR, weekly monitoring of IRC and SVaR, monthly monitoring of Stress Test Warning Level) under the coordination of the Parent Company Market Risk Management function and the breaches are timely escalated locally to Senior Management and to the Parent Company. Ultimately, it has to be highlighted that detailed Global Rules on market risk strategy definition, limits setting, monitoring, escalation and reporting activities are in place and applied at Group level. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 353 E. Prudential perimeter - Credit risk measurement models At the end of December 2018 the expected loss on the credit risk perimeter was 0.38% of total UniCredit Group credit exposure. The result does not include the exposures which have migrated to default and therefore do not enter in the calculation of expected loss. Besides, since risk measurement systems tend to be anti-cyclical, this may result in a smaller elasticity to the swift changes of the macroeconomic scenario. The ratio between credit economic capital (including a component to cover migration risk) and its relative credit exposure amount is 2.86% with reference date end of December 2018. As far as UniCredit S.p.A. quantitative information, reference is made to the paragraph Part E - Notes to the accounts of the parent company UniCredit S.p.A.- Section 1 - Credit Risk - Quantitative information - F. Credit risk measurement models, which is herewith quoted entirely. 2.2 Market risk Market risk derives from the effect that changes in market variables (interest rates, securities prices, exchange rates, etc.) can cause to the economic value of the Group’s portfolio, including the assets held both in the Trading Book, as well as those posted in the Banking Book, both on the operations characteristically involved in commercial banking and in the choice of strategic investments. Market risk management within the UniCredit group accordingly includes all the activities relating to cash transactions and capital structure management, both for the Parent Company, as well as for the individual companies making up the Group. The current organisational model guarantees the ability to steer, to coordinate and to control the activities of some aggregated risks (so-called Portfolio Risks), through dedicated responsibility centres (Portfolio Risk Managers), completely focused and specialised on such risks, under a Group and interdivisional perspective. According to this organisation, the structure at first level of reporting to “Group Risk Management”, dedicated to market risk governance is the “Group Financial Risk” department. Risk management strategies and processes The Parent Company’s Board of Directors lays down strategic guidelines for taking on market risks by calculating capital allocation for the Parent Company and its subsidiaries, depending on risk appetite and value creation objectives in proportion to the risks assumed. The Parent Company has defined Global Rules in order to manage and control market risk, including strategies and processes to be followed. Market risk strategies are set by the Parent Company at least on an annual basis, in line with the definition of the overall Group Risk appetite and then cascaded to the Leal Entities. Market risk appetite is also fundamental for the development of the Group’s business strategy, ensuring the consistence between the budgeted revenues and the setting of Value-at-Risk limits. In this context, on an annual basis Market Risk Management function of the Parent Company agrees with the local Market Risk functions possible changes to the Group Market Risk Framework. Changes to the Group Market Risk Framework can include changes to the perimeter for the calculation of managerial market risk metrics and methodological changes in the limit monitoring framework. To this end, Market Risk Management of the Parent Company gathers the information needed to set up the Group Market Risk Strategy for the following year. In particular, Group Market Risk Management receives from the competent function the Group Risk Appetite Framework, which sets, among others, Market Risk KPIs and from local Market Risk functions, among others, the list of Legal Entities (LEs)/Business Lines allowed to assume market risk exposures, the severities of the related limits and the proposals for the review of market risk levels. Based on these inputs, the Group Market Risk strategy is defined including the following information: • the proposed Market Risk Takers Map; • limits and Warning Levels (WLs) proposal in accordance with the proposed Market Risk Takers Map; • any change occurred to the risk limit framework compared to the previous year; • overview on the macro-economic scenario and related risks for the Group; • market Risk RWA history and expected development; • market Risk KPIs benchmarking; • the business strategy and key initiatives to support the limit proposal. After that all the Group relevant Bodies have approved the Group Market Risk Strategy and given the relevant NBOs for local market risk limits, the approval is communicated to local functions. In terms of monitoring, the LEs carries out periodical activities (e.g. daily monitoring of VaR, weekly monitoring of IRC and SVaR, monthly monitoring of Stress Test Warning Level) under the coordination of the Parent Company Market Risk Management function and the breaches are timely escalated locally to Senior Management and to the Parent Company. Ultimately, it has to be highlighted that detailed Global Rules on market risk strategy definition, limits setting, monitoring, escalation and reporting activities are in place and applied at Group level. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 353 E. Prudential perimeter - Credit risk measurement models At the end of December 2018 the expected loss on the credit risk perimeter was 0.38% of total UniCredit Group credit exposure. The result does not include the exposures which have migrated to default and therefore do not enter in the calculation of expected loss. Besides, since risk measurement systems tend to be anti-cyclical, this may result in a smaller elasticity to the swift changes of the macroeconomic scenario. The ratio between credit economic capital (including a component to cover migration risk) and its relative credit exposure amount is 2.86% with reference date end of December 2018. As far as UniCredit S.p.A. quantitative information, reference is made to the paragraph Part E - Notes to the accounts of the parent company UniCredit S.p.A.- Section 1 - Credit Risk - Quantitative information - F. Credit risk measurement models, which is herewith quoted entirely. 2.2 Market risk Market risk derives from the effect that changes in market variables (interest rates, securities prices, exchange rates, etc.) can cause to the economic value of the Group’s portfolio, including the assets held both in the Trading Book, as well as those posted in the Banking Book, both on the operations characteristically involved in commercial banking and in the choice of strategic investments. Market risk management within the UniCredit group accordingly includes all the activities relating to cash transactions and capital structure management, both for the Parent Company, as well as for the individual companies making up the Group. The current organisational model guarantees the ability to steer, to coordinate and to control the activities of some aggregated risks (so-called Portfolio Risks), through dedicated responsibility centres (Portfolio Risk Managers), completely focused and specialised on such risks, under a Group and interdivisional perspective. According to this organisation, the structure at first level of reporting to “Group Risk Management”, dedicated to market risk governance is the “Group Financial Risk” department. Risk management strategies and processes The Parent Company’s Board of Directors lays down strategic guidelines for taking on market risks by calculating capital allocation for the Parent Company and its subsidiaries, depending on risk appetite and value creation objectives in proportion to the risks assumed. The Parent Company has defined Global Rules in order to manage and control market risk, including strategies and processes to be followed. Market risk strategies are set by the Parent Company at least on an annual basis, in line with the definition of the overall Group Risk appetite and then cascaded to the Leal Entities. Market risk appetite is also fundamental for the development of the Group’s business strategy, ensuring the consistence between the budgeted revenues and the setting of Value-at-Risk limits. In this context, on an annual basis Market Risk Management function of the Parent Company agrees with the local Market Risk functions possible changes to the Group Market Risk Framework. Changes to the Group Market Risk Framework can include changes to the perimeter for the calculation of managerial market risk metrics and methodological changes in the limit monitoring framework. To this end, Market Risk Management of the Parent Company gathers the information needed to set up the Group Market Risk Strategy for the following year. In particular, Group Market Risk Management receives from the competent function the Group Risk Appetite Framework, which sets, among others, Market Risk KPIs and from local Market Risk functions, among others, the list of Legal Entities (LEs)/Business Lines allowed to assume market risk exposures, the severities of the related limits and the proposals for the review of market risk levels. Based on these inputs, the Group Market Risk strategy is defined including the following information: • the proposed Market Risk Takers Map; • limits and Warning Levels (WLs) proposal in accordance with the proposed Market Risk Takers Map; • any change occurred to the risk limit framework compared to the previous year; • overview on the macro-economic scenario and related risks for the Group; • market Risk RWA history and expected development; • market Risk KPIs benchmarking; • the business strategy and key initiatives to support the limit proposal. After that all the Group relevant Bodies have approved the Group Market Risk Strategy and given the relevant NBOs for local market risk limits, the approval is communicated to local functions. In terms of monitoring, the LEs carries out periodical activities (e.g. daily monitoring of VaR, weekly monitoring of IRC and SVaR, monthly monitoring of Stress Test Warning Level) under the coordination of the Parent Company Market Risk Management function and the breaches are timely escalated locally to Senior Management and to the Parent Company. Ultimately, it has to be highlighted that detailed Global Rules on market risk strategy definition, limits setting, monitoring, escalation and reporting activities are in place and applied at Group level. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 353 E. Prudential perimeter - Credit risk measurement models At the end of December 2018 the expected loss on the credit risk perimeter was 0.38% of total UniCredit Group credit exposure. The result does not include the exposures which have migrated to default and therefore do not enter in the calculation of expected loss. Besides, since risk measurement systems tend to be anti-cyclical, this may result in a smaller elasticity to the swift changes of the macroeconomic scenario. The ratio between credit economic capital (including a component to cover migration risk) and its relative credit exposure amount is 2.86% with reference date end of December 2018. As far as UniCredit S.p.A. quantitative information, reference is made to the paragraph Part E - Notes to the accounts of the parent company UniCredit S.p.A.- Section 1 - Credit Risk - Quantitative information - F. Credit risk measurement models, which is herewith quoted entirely. 2.2 Market risk Market risk derives from the effect that changes in market variables (interest rates, securities prices, exchange rates, etc.) can cause to the economic value of the Group’s portfolio, including the assets held both in the Trading Book, as well as those posted in the Banking Book, both on the operations characteristically involved in commercial banking and in the choice of strategic investments. Market risk management within the UniCredit group accordingly includes all the activities relating to cash transactions and capital structure management, both for the Parent Company, as well as for the individual companies making up the Group. The current organisational model guarantees the ability to steer, to coordinate and to control the activities of some aggregated risks (so-called Portfolio Risks), through dedicated responsibility centres (Portfolio Risk Managers), completely focused and specialised on such risks, under a Group and interdivisional perspective. According to this organisation, the structure at first level of reporting to “Group Risk Management”, dedicated to market risk governance is the “Group Financial Risk” department. Risk management strategies and processes The Parent Company’s Board of Directors lays down strategic guidelines for taking on market risks by calculating capital allocation for the Parent Company and its subsidiaries, depending on risk appetite and value creation objectives in proportion to the risks assumed. The Parent Company has defined Global Rules in order to manage and control market risk, including strategies and processes to be followed. Market risk strategies are set by the Parent Company at least on an annual basis, in line with the definition of the overall Group Risk appetite and then cascaded to the Leal Entities. Market risk appetite is also fundamental for the development of the Group’s business strategy, ensuring the consistence between the budgeted revenues and the setting of Value-at-Risk limits. In this context, on an annual basis Market Risk Management function of the Parent Company agrees with the local Market Risk functions possible changes to the Group Market Risk Framework. Changes to the Group Market Risk Framework can include changes to the perimeter for the calculation of managerial market risk metrics and methodological changes in the limit monitoring framework. To this end, Market Risk Management of the Parent Company gathers the information needed to set up the Group Market Risk Strategy for the following year. In particular, Group Market Risk Management receives from the competent function the Group Risk Appetite Framework, which sets, among others, Market Risk KPIs and from local Market Risk functions, among others, the list of Legal Entities (LEs)/Business Lines allowed to assume market risk exposures, the severities of the related limits and the proposals for the review of market risk levels. Based on these inputs, the Group Market Risk strategy is defined including the following information: • the proposed Market Risk Takers Map; • limits and Warning Levels (WLs) proposal in accordance with the proposed Market Risk Takers Map; • any change occurred to the risk limit framework compared to the previous year; • overview on the macro-economic scenario and related risks for the Group; • market Risk RWA history and expected development; • market Risk KPIs benchmarking; • the business strategy and key initiatives to support the limit proposal. After that all the Group relevant Bodies have approved the Group Market Risk Strategy and given the relevant NBOs for local market risk limits, the approval is communicated to local functions. In terms of monitoring, the LEs carries out periodical activities (e.g. daily monitoring of VaR, weekly monitoring of IRC and SVaR, monthly monitoring of Stress Test Warning Level) under the coordination of the Parent Company Market Risk Management function and the breaches are timely escalated locally to Senior Management and to the Parent Company. Ultimately, it has to be highlighted that detailed Global Rules on market risk strategy definition, limits setting, monitoring, escalation and reporting activities are in place and applied at Group level. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 353 E. Prudential perimeter - Credit risk measurement models At the end of December 2018 the expected loss on the credit risk perimeter was 0.38% of total UniCredit Group credit exposure. The result does not include the exposures which have migrated to default and therefore do not enter in the calculation of expected loss. Besides, since risk measurement systems tend to be anti-cyclical, this may result in a smaller elasticity to the swift changes of the macroeconomic scenario. The ratio between credit economic capital (including a component to cover migration risk) and its relative credit exposure amount is 2.86% with reference date end of December 2018. As far as UniCredit S.p.A. quantitative information, reference is made to the paragraph Part E - Notes to the accounts of the parent company UniCredit S.p.A.- Section 1 - Credit Risk - Quantitative information - F. Credit risk measurement models, which is herewith quoted entirely. 2.2 Market risk Market risk derives from the effect that changes in market variables (interest rates, securities prices, exchange rates, etc.) can cause to the economic value of the Group’s portfolio, including the assets held both in the Trading Book, as well as those posted in the Banking Book, both on the operations characteristically involved in commercial banking and in the choice of strategic investments. Market risk management within the UniCredit group accordingly includes all the activities relating to cash transactions and capital structure management, both for the Parent Company, as well as for the individual companies making up the Group. The current organisational model guarantees the ability to steer, to coordinate and to control the activities of some aggregated risks (so-called Portfolio Risks), through dedicated responsibility centres (Portfolio Risk Managers), completely focused and specialised on such risks, under a Group and interdivisional perspective. According to this organisation, the structure at first level of reporting to “Group Risk Management”, dedicated to market risk governance is the “Group Financial Risk” department. Risk management strategies and processes The Parent Company’s Board of Directors lays down strategic guidelines for taking on market risks by calculating capital allocation for the Parent Company and its subsidiaries, depending on risk appetite and value creation objectives in proportion to the risks assumed. The Parent Company has defined Global Rules in order to manage and control market risk, including strategies and processes to be followed. Market risk strategies are set by the Parent Company at least on an annual basis, in line with the definition of the overall Group Risk appetite and then cascaded to the Leal Entities. Market risk appetite is also fundamental for the development of the Group’s business strategy, ensuring the consistence between the budgeted revenues and the setting of Value-at-Risk limits. In this context, on an annual basis Market Risk Management function of the Parent Company agrees with the local Market Risk functions possible changes to the Group Market Risk Framework. Changes to the Group Market Risk Framework can include changes to the perimeter for the calculation of managerial market risk metrics and methodological changes in the limit monitoring framework. To this end, Market Risk Management of the Parent Company gathers the information needed to set up the Group Market Risk Strategy for the following year. In particular, Group Market Risk Management receives from the competent function the Group Risk Appetite Framework, which sets, among others, Market Risk KPIs and from local Market Risk functions, among others, the list of Legal Entities (LEs)/Business Lines allowed to assume market risk exposures, the severities of the related limits and the proposals for the review of market risk levels. Based on these inputs, the Group Market Risk strategy is defined including the following information: • the proposed Market Risk Takers Map; • limits and Warning Levels (WLs) proposal in accordance with the proposed Market Risk Takers Map; • any change occurred to the risk limit framework compared to the previous year; • overview on the macro-economic scenario and related risks for the Group; • market Risk RWA history and expected development; • market Risk KPIs benchmarking; • the business strategy and key initiatives to support the limit proposal. After that all the Group relevant Bodies have approved the Group Market Risk Strategy and given the relevant NBOs for local market risk limits, the approval is communicated to local functions. In terms of monitoring, the LEs carries out periodical activities (e.g. daily monitoring of VaR, weekly monitoring of IRC and SVaR, monthly monitoring of Stress Test Warning Level) under the coordination of the Parent Company Market Risk Management function and the breaches are timely escalated locally to Senior Management and to the Parent Company. Ultimately, it has to be highlighted that detailed Global Rules on market risk strategy definition, limits setting, monitoring, escalation and reporting activities are in place and applied at Group level. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 354 2018 Annual Report and Accounts · UniCredit Trading Book In accordance with the Capital Requirements Regulation, and as defined in the current policy “Eligibility Criteria for the Regulatory Trading Book assignment”, the Trading Book is defined as all positions in financial instruments and commodities held either with trading intent, or in order to hedge positions held with trading intent. Books held with trading intent are composed of: • positions arising from client servicing and market making; • positions intended to be resold in the short term; • positions intended to benefit from actual or expected short-term price differences between buying and selling prices or from other price or interest rate variations. In addition, Trading Book may include internal or intra-group hedging derivatives transferring risk from Banking Book into Trading Book, entitled to manage the relevant risk and having access to the derivatives market. The essential requirement for the Regulatory Trading Book assignment is a clear “trading intent”, as defined above, which the trader has to commit to and has to confirm on an ongoing basis. Additionally, the so called “tradability”, “marketability” and “hedgeability” requirements have to be assessed in order to evaluate the appropriateness for the Trading Book assignment: • tradability refers to positions free of restrictions on their tradability and coherently reflected within the “Trader Mandate” of the risk taker; • marketability refers to the positions for which a reliable Fair Value can be evaluated based to the largest extent on independently verified observable market parameters; • hedgeability refers to positions for which a hedge could be put in place. The hedgeability is meant to concern the “material” risks of a position which implies not necessarily that all the various risk features are to be hedgeable. When opening a new book, the book manager makes the proposal whether the book should be managed as a Trading Book or a Banking Book based on the planned trading activity. This has to be in line with the bank's internal rules and criteria for the assignment to either Trading Book or Banking Book .The book manager is required to clearly declare the trading intent and therefore to explain the business strategy behind the request for the Regulatory Trading assignment. The book manager is then responsible for all the positions held in his book and the eligibility criteria are expected to be fulfilled on an ongoing basis. Concerning the monitoring phase, to demonstrate adequate trading intent, the following minimum criteria have to be fulfilled at book level and are checked at least on a quarterly basis: • minimum of 5 trades during the past 90 trading days; • minimum of 5% of the volume of each book traded during the past 90 trading days with reference to the last day of the period. In case a breach of the trading intent criteria, the possibility to re-classify the book has to be assessed. With reference to the methodology used to ensure that the policies and procedures implemented for the management of the Trading Book are appropriate, first of all it has to be noted that any new/updated regulation has to be preliminary shared with the main impacted functions/LEs in order to collect their feedback. The competent Group function also assesses the compliance risks with reference to the regulations falling within its direct scope of competence. In addition, before the issuance, the owner of the rule submits to the competent Body/function for the approval. The financial instruments (an asset or a liability, cash or derivative) held by the Group are exposed to changes over time driven by moves of market risk factors. The market risk factors are classified in the following five standard market risk asset classes: • Credit risk: the risk that the value of the instrument decreases due to credit spreads changes, issuer correlation and recovery rates; • Equity risk: the risk that the value of the instrument decreases due to increase/decrease of index/stock prices, equity volatilities, implied correlation; • Interest rate risk: the risk that the value of the instrument decreases due to interest rates changes, basis risk, interest rates volatility; • Currency risk: the risk that the value of the instrument decreases due to foreign exchange rates changes, foreign exchange rates volatility; • Commodity risk: the risk that the value of the instrument changes of the commodity prices, e.g. gold, crude oil, commodity prices volatility Market risk in UniCredit group is measured and limited mainly through two sets of metrics: Broad Market Risk measures and Granular Market Risk measures: • Broad Market Risk measures: these measures are meant to set a boundary to the economic and/or regulatory capital absorption and to the economic loss accepted for Trading Book and/or the overall Trading Book+Banking Book activities. Limitations on Broad Market Risk measures must be reviewed at least annually in the context of the drafting of the Group and Local Market Risk Strategies and must be consistent with assigned budget of revenues, the defined risk taking capacity (ICAAP process) and Group Risk Appetite KPIs. The set of all limitations on Broad Market Risk measures assigned to a specific market risk taker must be consistent with each other. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 354 2018 Annual Report and Accounts · UniCredit Trading Book In accordance with the Capital Requirements Regulation, and as defined in the current policy “Eligibility Criteria for the Regulatory Trading Book assignment”, the Trading Book is defined as all positions in financial instruments and commodities held either with trading intent, or in order to hedge positions held with trading intent. Books held with trading intent are composed of: • positions arising from client servicing and market making; • positions intended to be resold in the short term; • positions intended to benefit from actual or expected short-term price differences between buying and selling prices or from other price or interest rate variations. In addition, Trading Book may include internal or intra-group hedging derivatives transferring risk from Banking Book into Trading Book, entitled to manage the relevant risk and having access to the derivatives market. The essential requirement for the Regulatory Trading Book assignment is a clear “trading intent”, as defined above, which the trader has to commit to and has to confirm on an ongoing basis. Additionally, the so called “tradability”, “marketability” and “hedgeability” requirements have to be assessed in order to evaluate the appropriateness for the Trading Book assignment: • tradability refers to positions free of restrictions on their tradability and coherently reflected within the “Trader Mandate” of the risk taker; • marketability refers to the positions for which a reliable Fair Value can be evaluated based to the largest extent on independently verified observable market parameters; • hedgeability refers to positions for which a hedge could be put in place. The hedgeability is meant to concern the “material” risks of a position which implies not necessarily that all the various risk features are to be hedgeable. When opening a new book, the book manager makes the proposal whether the book should be managed as a Trading Book or a Banking Book based on the planned trading activity. This has to be in line with the bank's internal rules and criteria for the assignment to either Trading Book or Banking Book .The book manager is required to clearly declare the trading intent and therefore to explain the business strategy behind the request for the Regulatory Trading assignment. The book manager is then responsible for all the positions held in his book and the eligibility criteria are expected to be fulfilled on an ongoing basis. Concerning the monitoring phase, to demonstrate adequate trading intent, the following minimum criteria have to be fulfilled at book level and are checked at least on a quarterly basis: • minimum of 5 trades during the past 90 trading days; • minimum of 5% of the volume of each book traded during the past 90 trading days with reference to the last day of the period. In case a breach of the trading intent criteria, the possibility to re-classify the book has to be assessed. With reference to the methodology used to ensure that the policies and procedures implemented for the management of the Trading Book are appropriate, first of all it has to be noted that any new/updated regulation has to be preliminary shared with the main impacted functions/LEs in order to collect their feedback. The competent Group function also assesses the compliance risks with reference to the regulations falling within its direct scope of competence. In addition, before the issuance, the owner of the rule submits to the competent Body/function for the approval. The financial instruments (an asset or a liability, cash or derivative) held by the Group are exposed to changes over time driven by moves of market risk factors. The market risk factors are classified in the following five standard market risk asset classes: • Credit risk: the risk that the value of the instrument decreases due to credit spreads changes, issuer correlation and recovery rates; • Equity risk: the risk that the value of the instrument decreases due to increase/decrease of index/stock prices, equity volatilities, implied correlation; • Interest rate risk: the risk that the value of the instrument decreases due to interest rates changes, basis risk, interest rates volatility; • Currency risk: the risk that the value of the instrument decreases due to foreign exchange rates changes, foreign exchange rates volatility; • Commodity risk: the risk that the value of the instrument changes of the commodity prices, e.g. gold, crude oil, commodity prices volatility Market risk in UniCredit group is measured and limited mainly through two sets of metrics: Broad Market Risk measures and Granular Market Risk measures: • Broad Market Risk measures: these measures are meant to set a boundary to the economic and/or regulatory capital absorption and to the economic loss accepted for Trading Book and/or the overall Trading Book+Banking Book activities. Limitations on Broad Market Risk measures must be reviewed at least annually in the context of the drafting of the Group and Local Market Risk Strategies and must be consistent with assigned budget of revenues, the defined risk taking capacity (ICAAP process) and Group Risk Appetite KPIs. The set of all limitations on Broad Market Risk measures assigned to a specific market risk taker must be consistent with each other. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 354 2018 Annual Report and Accounts · UniCredit Trading Book In accordance with the Capital Requirements Regulation, and as defined in the current policy “Eligibility Criteria for the Regulatory Trading Book assignment”, the Trading Book is defined as all positions in financial instruments and commodities held either with trading intent, or in order to hedge positions held with trading intent. Books held with trading intent are composed of: • positions arising from client servicing and market making; • positions intended to be resold in the short term; • positions intended to benefit from actual or expected short-term price differences between buying and selling prices or from other price or interest rate variations. In addition, Trading Book may include internal or intra-group hedging derivatives transferring risk from Banking Book into Trading Book, entitled to manage the relevant risk and having access to the derivatives market. The essential requirement for the Regulatory Trading Book assignment is a clear “trading intent”, as defined above, which the trader has to commit to and has to confirm on an ongoing basis. Additionally, the so called “tradability”, “marketability” and “hedgeability” requirements have to be assessed in order to evaluate the appropriateness for the Trading Book assignment: • tradability refers to positions free of restrictions on their tradability and coherently reflected within the “Trader Mandate” of the risk taker; • marketability refers to the positions for which a reliable Fair Value can be evaluated based to the largest extent on independently verified observable market parameters; • hedgeability refers to positions for which a hedge could be put in place. The hedgeability is meant to concern the “material” risks of a position which implies not necessarily that all the various risk features are to be hedgeable. When opening a new book, the book manager makes the proposal whether the book should be managed as a Trading Book or a Banking Book based on the planned trading activity. This has to be in line with the bank's internal rules and criteria for the assignment to either Trading Book or Banking Book .The book manager is required to clearly declare the trading intent and therefore to explain the business strategy behind the request for the Regulatory Trading assignment. The book manager is then responsible for all the positions held in his book and the eligibility criteria are expected to be fulfilled on an ongoing basis. Concerning the monitoring phase, to demonstrate adequate trading intent, the following minimum criteria have to be fulfilled at book level and are checked at least on a quarterly basis: • minimum of 5 trades during the past 90 trading days; • minimum of 5% of the volume of each book traded during the past 90 trading days with reference to the last day of the period. In case a breach of the trading intent criteria, the possibility to re-classify the book has to be assessed. With reference to the methodology used to ensure that the policies and procedures implemented for the management of the Trading Book are appropriate, first of all it has to be noted that any new/updated regulation has to be preliminary shared with the main impacted functions/LEs in order to collect their feedback. The competent Group function also assesses the compliance risks with reference to the regulations falling within its direct scope of competence. In addition, before the issuance, the owner of the rule submits to the competent Body/function for the approval. The financial instruments (an asset or a liability, cash or derivative) held by the Group are exposed to changes over time driven by moves of market risk factors. The market risk factors are classified in the following five standard market risk asset classes: • Credit risk: the risk that the value of the instrument decreases due to credit spreads changes, issuer correlation and recovery rates; • Equity risk: the risk that the value of the instrument decreases due to increase/decrease of index/stock prices, equity volatilities, implied correlation; • Interest rate risk: the risk that the value of the instrument decreases due to interest rates changes, basis risk, interest rates volatility; • Currency risk: the risk that the value of the instrument decreases due to foreign exchange rates changes, foreign exchange rates volatility; • Commodity risk: the risk that the value of the instrument changes of the commodity prices, e.g. gold, crude oil, commodity prices volatility Market risk in UniCredit group is measured and limited mainly through two sets of metrics: Broad Market Risk measures and Granular Market Risk measures: • Broad Market Risk measures: these measures are meant to set a boundary to the economic and/or regulatory capital absorption and to the economic loss accepted for Trading Book and/or the overall Trading Book+Banking Book activities. Limitations on Broad Market Risk measures must be reviewed at least annually in the context of the drafting of the Group and Local Market Risk Strategies and must be consistent with assigned budget of revenues, the defined risk taking capacity (ICAAP process) and Group Risk Appetite KPIs. The set of all limitations on Broad Market Risk measures assigned to a specific market risk taker must be consistent with each other. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 354 2018 Annual Report and Accounts · UniCredit Trading Book In accordance with the Capital Requirements Regulation, and as defined in the current policy “Eligibility Criteria for the Regulatory Trading Book assignment”, the Trading Book is defined as all positions in financial instruments and commodities held either with trading intent, or in order to hedge positions held with trading intent. Books held with trading intent are composed of: • positions arising from client servicing and market making; • positions intended to be resold in the short term; • positions intended to benefit from actual or expected short-term price differences between buying and selling prices or from other price or interest rate variations. In addition, Trading Book may include internal or intra-group hedging derivatives transferring risk from Banking Book into Trading Book, entitled to manage the relevant risk and having access to the derivatives market. The essential requirement for the Regulatory Trading Book assignment is a clear “trading intent”, as defined above, which the trader has to commit to and has to confirm on an ongoing basis. Additionally, the so called “tradability”, “marketability” and “hedgeability” requirements have to be assessed in order to evaluate the appropriateness for the Trading Book assignment: • tradability refers to positions free of restrictions on their tradability and coherently reflected within the “Trader Mandate” of the risk taker; • marketability refers to the positions for which a reliable Fair Value can be evaluated based to the largest extent on independently verified observable market parameters; • hedgeability refers to positions for which a hedge could be put in place. The hedgeability is meant to concern the “material” risks of a position which implies not necessarily that all the various risk features are to be hedgeable. When opening a new book, the book manager makes the proposal whether the book should be managed as a Trading Book or a Banking Book based on the planned trading activity. This has to be in line with the bank's internal rules and criteria for the assignment to either Trading Book or Banking Book .The book manager is required to clearly declare the trading intent and therefore to explain the business strategy behind the request for the Regulatory Trading assignment. The book manager is then responsible for all the positions held in his book and the eligibility criteria are expected to be fulfilled on an ongoing basis. Concerning the monitoring phase, to demonstrate adequate trading intent, the following minimum criteria have to be fulfilled at book level and are checked at least on a quarterly basis: • minimum of 5 trades during the past 90 trading days; • minimum of 5% of the volume of each book traded during the past 90 trading days with reference to the last day of the period. In case a breach of the trading intent criteria, the possibility to re-classify the book has to be assessed. With reference to the methodology used to ensure that the policies and procedures implemented for the management of the Trading Book are appropriate, first of all it has to be noted that any new/updated regulation has to be preliminary shared with the main impacted functions/LEs in order to collect their feedback. The competent Group function also assesses the compliance risks with reference to the regulations falling within its direct scope of competence. In addition, before the issuance, the owner of the rule submits to the competent Body/function for the approval. The financial instruments (an asset or a liability, cash or derivative) held by the Group are exposed to changes over time driven by moves of market risk factors. The market risk factors are classified in the following five standard market risk asset classes: • Credit risk: the risk that the value of the instrument decreases due to credit spreads changes, issuer correlation and recovery rates; • Equity risk: the risk that the value of the instrument decreases due to increase/decrease of index/stock prices, equity volatilities, implied correlation; • Interest rate risk: the risk that the value of the instrument decreases due to interest rates changes, basis risk, interest rates volatility; • Currency risk: the risk that the value of the instrument decreases due to foreign exchange rates changes, foreign exchange rates volatility; • Commodity risk: the risk that the value of the instrument changes of the commodity prices, e.g. gold, crude oil, commodity prices volatility Market risk in UniCredit group is measured and limited mainly through two sets of metrics: Broad Market Risk measures and Granular Market Risk measures: • Broad Market Risk measures: these measures are meant to set a boundary to the economic and/or regulatory capital absorption and to the economic loss accepted for Trading Book and/or the overall Trading Book+Banking Book activities. Limitations on Broad Market Risk measures must be reviewed at least annually in the context of the drafting of the Group and Local Market Risk Strategies and must be consistent with assigned budget of revenues, the defined risk taking capacity (ICAAP process) and Group Risk Appetite KPIs. The set of all limitations on Broad Market Risk measures assigned to a specific market risk taker must be consistent with each other. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 354 2018 Annual Report and Accounts · UniCredit Trading Book In accordance with the Capital Requirements Regulation, and as defined in the current policy “Eligibility Criteria for the Regulatory Trading Book assignment”, the Trading Book is defined as all positions in financial instruments and commodities held either with trading intent, or in order to hedge positions held with trading intent. Books held with trading intent are composed of: • positions arising from client servicing and market making; • positions intended to be resold in the short term; • positions intended to benefit from actual or expected short-term price differences between buying and selling prices or from other price or interest rate variations. In addition, Trading Book may include internal or intra-group hedging derivatives transferring risk from Banking Book into Trading Book, entitled to manage the relevant risk and having access to the derivatives market. The essential requirement for the Regulatory Trading Book assignment is a clear “trading intent”, as defined above, which the trader has to commit to and has to confirm on an ongoing basis. Additionally, the so called “tradability”, “marketability” and “hedgeability” requirements have to be assessed in order to evaluate the appropriateness for the Trading Book assignment: • tradability refers to positions free of restrictions on their tradability and coherently reflected within the “Trader Mandate” of the risk taker; • marketability refers to the positions for which a reliable Fair Value can be evaluated based to the largest extent on independently verified observable market parameters; • hedgeability refers to positions for which a hedge could be put in place. The hedgeability is meant to concern the “material” risks of a position which implies not necessarily that all the various risk features are to be hedgeable. When opening a new book, the book manager makes the proposal whether the book should be managed as a Trading Book or a Banking Book based on the planned trading activity. This has to be in line with the bank's internal rules and criteria for the assignment to either Trading Book or Banking Book .The book manager is required to clearly declare the trading intent and therefore to explain the business strategy behind the request for the Regulatory Trading assignment. The book manager is then responsible for all the positions held in his book and the eligibility criteria are expected to be fulfilled on an ongoing basis. Concerning the monitoring phase, to demonstrate adequate trading intent, the following minimum criteria have to be fulfilled at book level and are checked at least on a quarterly basis: • minimum of 5 trades during the past 90 trading days; • minimum of 5% of the volume of each book traded during the past 90 trading days with reference to the last day of the period. In case a breach of the trading intent criteria, the possibility to re-classify the book has to be assessed. With reference to the methodology used to ensure that the policies and procedures implemented for the management of the Trading Book are appropriate, first of all it has to be noted that any new/updated regulation has to be preliminary shared with the main impacted functions/LEs in order to collect their feedback. The competent Group function also assesses the compliance risks with reference to the regulations falling within its direct scope of competence. In addition, before the issuance, the owner of the rule submits to the competent Body/function for the approval. The financial instruments (an asset or a liability, cash or derivative) held by the Group are exposed to changes over time driven by moves of market risk factors. The market risk factors are classified in the following five standard market risk asset classes: • Credit risk: the risk that the value of the instrument decreases due to credit spreads changes, issuer correlation and recovery rates; • Equity risk: the risk that the value of the instrument decreases due to increase/decrease of index/stock prices, equity volatilities, implied correlation; • Interest rate risk: the risk that the value of the instrument decreases due to interest rates changes, basis risk, interest rates volatility; • Currency risk: the risk that the value of the instrument decreases due to foreign exchange rates changes, foreign exchange rates volatility; • Commodity risk: the risk that the value of the instrument changes of the commodity prices, e.g. gold, crude oil, commodity prices volatility Market risk in UniCredit group is measured and limited mainly through two sets of metrics: Broad Market Risk measures and Granular Market Risk measures: • Broad Market Risk measures: these measures are meant to set a boundary to the economic and/or regulatory capital absorption and to the economic loss accepted for Trading Book and/or the overall Trading Book+Banking Book activities. Limitations on Broad Market Risk measures must be reviewed at least annually in the context of the drafting of the Group and Local Market Risk Strategies and must be consistent with assigned budget of revenues, the defined risk taking capacity (ICAAP process) and Group Risk Appetite KPIs. The set of all limitations on Broad Market Risk measures assigned to a specific market risk taker must be consistent with each other. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 355 The consistency must be checked whenever a level for a Broad Market Risk Measure is defined. The Legal Entity Market Risk Function needs to provide evidence of such consistency when required. Broad Market Risk measures are: - Value at Risk (“VaR”), the potential 1-day loss in value of a portfolio for a 99% single-tail confidence interval; calculated through historical simulation in full revaluation using last 500 equally weighted daily observations; - Stressed VaR (“SVaR”), the VaR of a portfolio calculated using a 250-day period of significant financial stress; - Incremental Risk Charge (“IRC”), the amount of regulatory capital aimed at addressing the credit shortcomings (migration and default risks) that can affect a portfolio in one year at a 99.9% confidence level; - 60 Days PL, set as the 60 calendar days rolling period Accumulated Economic P&L without resetting at year end; the limitation on this metrics is called Loss Warning Level (“LWL”); - Worst Stress Test result, defined as the worst conditional loss on a given portfolio resulting from the application of a predefined set of scenarios; the limitation on this metrics is called Stress Test Warning Level (“STWL”); for all STWL included in the Market Risk Taker Maps, Holding Company monitoring is based on the set of scenarios defined in the Group Market Risk Strategy; Legal Entities are allowed to add specific scenarios for local monitoring purposes. • Granular Market Risk measures: these measures allow for a more detailed and stringent control of risk exposures than Broad Market Risk measures. Limitations on Granular Market Risk measures (so-called Granular Market Limits, GMLs) are specific limits to individual risk factors or group of risk factors: - sensitivity levels, which represent the change in the market value of a financial instrument due to small moves of the relevant market risk asset classes/factors. Among others, and not limited to, particularly relevant considering the asset and liability structure of the commercial bank are the Basis Point Value Sensitivity, that measures the change in the present value of the interest rate sensitive positions resulting from a 1bp parallel shift to interest rate, and the Credit Point Value Sensitivity, that measure the change in the present value of the credit risk sensitive positions resulting from a 1bp parallel shift to credit spread (per issuer, rating or industry); - stress scenario levels, which represent the change in the market value of a financial instrument due to large moves of the relevant market risk asset classes/factors; - nominal levels, which are based on the notional value of the exposure. The main objectives of Granular Market Limits are: - to support the management of market risk - to ensure desk’s focus to exposure under their mandate - to restrict risk concentration, i.e. to prevent the build-up of positions that, although consistent with allocated VaR limits, could become unmanageable in case of turmoil or in case of reduced market liquidity - to complement VaR when it does not cover sufficiently a specific risk factor - to facilitate interaction with traders, who manage their books according to sensitivities or scenario analysis - to limit P&L volatility due to a specific risk factor - to complement the compliance framework (e.g. Volcker rule and the German Trennbanken act) GMLs must be consistent with limitations on Broad Market Risk measures. Banking Book The main components of market risk in the Banking Book are: credit spread risk, pure interest rate risk and FX risk. Credit spread risk originates mainly from government bond portfolios held for liquidity purposes. The market risk of the bond portfolio is restricted based on notional, sensitivity measures and Value at Risk. The main credit spread exposure relates to Italian sovereign risk in the Italian perimeter. The second risk type is the interest rate risk. The exposure is measured in terms of economic value sensitivity and the net interest income sensitivity. On a daily basis the treasury functions manages the interest rate risk from commercial transactions within operational limits set by the relevant risk committees. The exposure is measured and monitored on a daily basis by the risk management functions. The Asset & Liability Committee is responsible for the interest rate strategy for the strategic position. This includes the decision of investing the net position of non-interest earning assets and non-interest bearing liabilities. The management of Banking Book interest rate risk aims at optimising, in an on-going scenario, the risk/return profile and long-term value creation while reducing adverse impacts on bank's earnings and regulatory capital coming from interest rates volatility. The main target of IRRBB strategy is the reduction of net interest income volatility in a multiyear horizon. The strategy does not imply any intended directional or discretional positioning to generate additional earnings, unless approved by the relevant bodies and separately monitored. The only exceptions is for the functions authorised to carry interest rates positions within an approved level of limitations. The management strategy on the structural mismatch involving non-interest earning assets and non-interest bearing liabilities (free funds), aims to balance the trade-off between a stable flow of earnings in a multiyear horizon and the opportunity cost of having a fixed rate investment. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 355 The consistency must be checked whenever a level for a Broad Market Risk Measure is defined. The Legal Entity Market Risk Function needs to provide evidence of such consistency when required. Broad Market Risk measures are: - Value at Risk (“VaR”), the potential 1-day loss in value of a portfolio for a 99% single-tail confidence interval; calculated through historical simulation in full revaluation using last 500 equally weighted daily observations; - Stressed VaR (“SVaR”), the VaR of a portfolio calculated using a 250-day period of significant financial stress; - Incremental Risk Charge (“IRC”), the amount of regulatory capital aimed at addressing the credit shortcomings (migration and default risks) that can affect a portfolio in one year at a 99.9% confidence level; - 60 Days PL, set as the 60 calendar days rolling period Accumulated Economic P&L without resetting at year end; the limitation on this metrics is called Loss Warning Level (“LWL”); - Worst Stress Test result, defined as the worst conditional loss on a given portfolio resulting from the application of a predefined set of scenarios; the limitation on this metrics is called Stress Test Warning Level (“STWL”); for all STWL included in the Market Risk Taker Maps, Holding Company monitoring is based on the set of scenarios defined in the Group Market Risk Strategy; Legal Entities are allowed to add specific scenarios for local monitoring purposes. • Granular Market Risk measures: these measures allow for a more detailed and stringent control of risk exposures than Broad Market Risk measures. Limitations on Granular Market Risk measures (so-called Granular Market Limits, GMLs) are specific limits to individual risk factors or group of risk factors: - sensitivity levels, which represent the change in the market value of a financial instrument due to small moves of the relevant market risk asset classes/factors. Among others, and not limited to, particularly relevant considering the asset and liability structure of the commercial bank are the Basis Point Value Sensitivity, that measures the change in the present value of the interest rate sensitive positions resulting from a 1bp parallel shift to interest rate, and the Credit Point Value Sensitivity, that measure the change in the present value of the credit risk sensitive positions resulting from a 1bp parallel shift to credit spread (per issuer, rating or industry); - stress scenario levels, which represent the change in the market value of a financial instrument due to large moves of the relevant market risk asset classes/factors; - nominal levels, which are based on the notional value of the exposure. The main objectives of Granular Market Limits are: - to support the management of market risk - to ensure desk’s focus to exposure under their mandate - to restrict risk concentration, i.e. to prevent the build-up of positions that, although consistent with allocated VaR limits, could become unmanageable in case of turmoil or in case of reduced market liquidity - to complement VaR when it does not cover sufficiently a specific risk factor - to facilitate interaction with traders, who manage their books according to sensitivities or scenario analysis - to limit P&L volatility due to a specific risk factor - to complement the compliance framework (e.g. Volcker rule and the German Trennbanken act) GMLs must be consistent with limitations on Broad Market Risk measures. Banking Book The main components of market risk in the Banking Book are: credit spread risk, pure interest rate risk and FX risk. Credit spread risk originates mainly from government bond portfolios held for liquidity purposes. The market risk of the bond portfolio is restricted based on notional, sensitivity measures and Value at Risk. The main credit spread exposure relates to Italian sovereign risk in the Italian perimeter. The second risk type is the interest rate risk. The exposure is measured in terms of economic value sensitivity and the net interest income sensitivity. On a daily basis the treasury functions manages the interest rate risk from commercial transactions within operational limits set by the relevant risk committees. The exposure is measured and monitored on a daily basis by the risk management functions. The Asset & Liability Committee is responsible for the interest rate strategy for the strategic position. This includes the decision of investing the net position of non-interest earning assets and non-interest bearing liabilities. The management of Banking Book interest rate risk aims at optimising, in an on-going scenario, the risk/return profile and long-term value creation while reducing adverse impacts on bank's earnings and regulatory capital coming from interest rates volatility. The main target of IRRBB strategy is the reduction of net interest income volatility in a multiyear horizon. The strategy does not imply any intended directional or discretional positioning to generate additional earnings, unless approved by the relevant bodies and separately monitored. The only exceptions is for the functions authorised to carry interest rates positions within an approved level of limitations. The management strategy on the structural mismatch involving non-interest earning assets and non-interest bearing liabilities (free funds), aims to balance the trade-off between a stable flow of earnings in a multiyear horizon and the opportunity cost of having a fixed rate investment. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 355 The consistency must be checked whenever a level for a Broad Market Risk Measure is defined. The Legal Entity Market Risk Function needs to provide evidence of such consistency when required. Broad Market Risk measures are: - Value at Risk (“VaR”), the potential 1-day loss in value of a portfolio for a 99% single-tail confidence interval; calculated through historical simulation in full revaluation using last 500 equally weighted daily observations; - Stressed VaR (“SVaR”), the VaR of a portfolio calculated using a 250-day period of significant financial stress; - Incremental Risk Charge (“IRC”), the amount of regulatory capital aimed at addressing the credit shortcomings (migration and default risks) that can affect a portfolio in one year at a 99.9% confidence level; - 60 Days PL, set as the 60 calendar days rolling period Accumulated Economic P&L without resetting at year end; the limitation on this metrics is called Loss Warning Level (“LWL”); - Worst Stress Test result, defined as the worst conditional loss on a given portfolio resulting from the application of a predefined set of scenarios; the limitation on this metrics is called Stress Test Warning Level (“STWL”); for all STWL included in the Market Risk Taker Maps, Holding Company monitoring is based on the set of scenarios defined in the Group Market Risk Strategy; Legal Entities are allowed to add specific scenarios for local monitoring purposes. • Granular Market Risk measures: these measures allow for a more detailed and stringent control of risk exposures than Broad Market Risk measures. Limitations on Granular Market Risk measures (so-called Granular Market Limits, GMLs) are specific limits to individual risk factors or group of risk factors: - sensitivity levels, which represent the change in the market value of a financial instrument due to small moves of the relevant market risk asset classes/factors. Among others, and not limited to, particularly relevant considering the asset and liability structure of the commercial bank are the Basis Point Value Sensitivity, that measures the change in the present value of the interest rate sensitive positions resulting from a 1bp parallel shift to interest rate, and the Credit Point Value Sensitivity, that measure the change in the present value of the credit risk sensitive positions resulting from a 1bp parallel shift to credit spread (per issuer, rating or industry); - stress scenario levels, which represent the change in the market value of a financial instrument due to large moves of the relevant market risk asset classes/factors; - nominal levels, which are based on the notional value of the exposure. The main objectives of Granular Market Limits are: - to support the management of market risk - to ensure desk’s focus to exposure under their mandate - to restrict risk concentration, i.e. to prevent the build-up of positions that, although consistent with allocated VaR limits, could become unmanageable in case of turmoil or in case of reduced market liquidity - to complement VaR when it does not cover sufficiently a specific risk factor - to facilitate interaction with traders, who manage their books according to sensitivities or scenario analysis - to limit P&L volatility due to a specific risk factor - to complement the compliance framework (e.g. Volcker rule and the German Trennbanken act) GMLs must be consistent with limitations on Broad Market Risk measures. Banking Book The main components of market risk in the Banking Book are: credit spread risk, pure interest rate risk and FX risk. Credit spread risk originates mainly from government bond portfolios held for liquidity purposes. The market risk of the bond portfolio is restricted based on notional, sensitivity measures and Value at Risk. The main credit spread exposure relates to Italian sovereign risk in the Italian perimeter. The second risk type is the interest rate risk. The exposure is measured in terms of economic value sensitivity and the net interest income sensitivity. On a daily basis the treasury functions manages the interest rate risk from commercial transactions within operational limits set by the relevant risk committees. The exposure is measured and monitored on a daily basis by the risk management functions. The Asset & Liability Committee is responsible for the interest rate strategy for the strategic position. This includes the decision of investing the net position of non-interest earning assets and non-interest bearing liabilities. The management of Banking Book interest rate risk aims at optimising, in an on-going scenario, the risk/return profile and long-term value creation while reducing adverse impacts on bank's earnings and regulatory capital coming from interest rates volatility. The main target of IRRBB strategy is the reduction of net interest income volatility in a multiyear horizon. The strategy does not imply any intended directional or discretional positioning to generate additional earnings, unless approved by the relevant bodies and separately monitored. The only exceptions is for the functions authorised to carry interest rates positions within an approved level of limitations. The management strategy on the structural mismatch involving non-interest earning assets and non-interest bearing liabilities (free funds), aims to balance the trade-off between a stable flow of earnings in a multiyear horizon and the opportunity cost of having a fixed rate investment. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 355 The consistency must be checked whenever a level for a Broad Market Risk Measure is defined. The Legal Entity Market Risk Function needs to provide evidence of such consistency when required. Broad Market Risk measures are: - Value at Risk (“VaR”), the potential 1-day loss in value of a portfolio for a 99% single-tail confidence interval; calculated through historical simulation in full revaluation using last 500 equally weighted daily observations; - Stressed VaR (“SVaR”), the VaR of a portfolio calculated using a 250-day period of significant financial stress; - Incremental Risk Charge (“IRC”), the amount of regulatory capital aimed at addressing the credit shortcomings (migration and default risks) that can affect a portfolio in one year at a 99.9% confidence level; - 60 Days PL, set as the 60 calendar days rolling period Accumulated Economic P&L without resetting at year end; the limitation on this metrics is called Loss Warning Level (“LWL”); - Worst Stress Test result, defined as the worst conditional loss on a given portfolio resulting from the application of a predefined set of scenarios; the limitation on this metrics is called Stress Test Warning Level (“STWL”); for all STWL included in the Market Risk Taker Maps, Holding Company monitoring is based on the set of scenarios defined in the Group Market Risk Strategy; Legal Entities are allowed to add specific scenarios for local monitoring purposes. • Granular Market Risk measures: these measures allow for a more detailed and stringent control of risk exposures than Broad Market Risk measures. Limitations on Granular Market Risk measures (so-called Granular Market Limits, GMLs) are specific limits to individual risk factors or group of risk factors: - sensitivity levels, which represent the change in the market value of a financial instrument due to small moves of the relevant market risk asset classes/factors. Among others, and not limited to, particularly relevant considering the asset and liability structure of the commercial bank are the Basis Point Value Sensitivity, that measures the change in the present value of the interest rate sensitive positions resulting from a 1bp parallel shift to interest rate, and the Credit Point Value Sensitivity, that measure the change in the present value of the credit risk sensitive positions resulting from a 1bp parallel shift to credit spread (per issuer, rating or industry); - stress scenario levels, which represent the change in the market value of a financial instrument due to large moves of the relevant market risk asset classes/factors; - nominal levels, which are based on the notional value of the exposure. The main objectives of Granular Market Limits are: - to support the management of market risk - to ensure desk’s focus to exposure under their mandate - to restrict risk concentration, i.e. to prevent the build-up of positions that, although consistent with allocated VaR limits, could become unmanageable in case of turmoil or in case of reduced market liquidity - to complement VaR when it does not cover sufficiently a specific risk factor - to facilitate interaction with traders, who manage their books according to sensitivities or scenario analysis - to limit P&L volatility due to a specific risk factor - to complement the compliance framework (e.g. Volcker rule and the German Trennbanken act) GMLs must be consistent with limitations on Broad Market Risk measures. Banking Book The main components of market risk in the Banking Book are: credit spread risk, pure interest rate risk and FX risk. Credit spread risk originates mainly from government bond portfolios held for liquidity purposes. The market risk of the bond portfolio is restricted based on notional, sensitivity measures and Value at Risk. The main credit spread exposure relates to Italian sovereign risk in the Italian perimeter. The second risk type is the interest rate risk. The exposure is measured in terms of economic value sensitivity and the net interest income sensitivity. On a daily basis the treasury functions manages the interest rate risk from commercial transactions within operational limits set by the relevant risk committees. The exposure is measured and monitored on a daily basis by the risk management functions. The Asset & Liability Committee is responsible for the interest rate strategy for the strategic position. This includes the decision of investing the net position of non-interest earning assets and non-interest bearing liabilities. The management of Banking Book interest rate risk aims at optimising, in an on-going scenario, the risk/return profile and long-term value creation while reducing adverse impacts on bank's earnings and regulatory capital coming from interest rates volatility. The main target of IRRBB strategy is the reduction of net interest income volatility in a multiyear horizon. The strategy does not imply any intended directional or discretional positioning to generate additional earnings, unless approved by the relevant bodies and separately monitored. The only exceptions is for the functions authorised to carry interest rates positions within an approved level of limitations. The management strategy on the structural mismatch involving non-interest earning assets and non-interest bearing liabilities (free funds), aims to balance the trade-off between a stable flow of earnings in a multiyear horizon and the opportunity cost of having a fixed rate investment. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 355 The consistency must be checked whenever a level for a Broad Market Risk Measure is defined. The Legal Entity Market Risk Function needs to provide evidence of such consistency when required. Broad Market Risk measures are: - Value at Risk (“VaR”), the potential 1-day loss in value of a portfolio for a 99% single-tail confidence interval; calculated through historical simulation in full revaluation using last 500 equally weighted daily observations; - Stressed VaR (“SVaR”), the VaR of a portfolio calculated using a 250-day period of significant financial stress; - Incremental Risk Charge (“IRC”), the amount of regulatory capital aimed at addressing the credit shortcomings (migration and default risks) that can affect a portfolio in one year at a 99.9% confidence level; - 60 Days PL, set as the 60 calendar days rolling period Accumulated Economic P&L without resetting at year end; the limitation on this metrics is called Loss Warning Level (“LWL”); - Worst Stress Test result, defined as the worst conditional loss on a given portfolio resulting from the application of a predefined set of scenarios; the limitation on this metrics is called Stress Test Warning Level (“STWL”); for all STWL included in the Market Risk Taker Maps, Holding Company monitoring is based on the set of scenarios defined in the Group Market Risk Strategy; Legal Entities are allowed to add specific scenarios for local monitoring purposes. • Granular Market Risk measures: these measures allow for a more detailed and stringent control of risk exposures than Broad Market Risk measures. Limitations on Granular Market Risk measures (so-called Granular Market Limits, GMLs) are specific limits to individual risk factors or group of risk factors: - sensitivity levels, which represent the change in the market value of a financial instrument due to small moves of the relevant market risk asset classes/factors. Among others, and not limited to, particularly relevant considering the asset and liability structure of the commercial bank are the Basis Point Value Sensitivity, that measures the change in the present value of the interest rate sensitive positions resulting from a 1bp parallel shift to interest rate, and the Credit Point Value Sensitivity, that measure the change in the present value of the credit risk sensitive positions resulting from a 1bp parallel shift to credit spread (per issuer, rating or industry); - stress scenario levels, which represent the change in the market value of a financial instrument due to large moves of the relevant market risk asset classes/factors; - nominal levels, which are based on the notional value of the exposure. The main objectives of Granular Market Limits are: - to support the management of market risk - to ensure desk’s focus to exposure under their mandate - to restrict risk concentration, i.e. to prevent the build-up of positions that, although consistent with allocated VaR limits, could become unmanageable in case of turmoil or in case of reduced market liquidity - to complement VaR when it does not cover sufficiently a specific risk factor - to facilitate interaction with traders, who manage their books according to sensitivities or scenario analysis - to limit P&L volatility due to a specific risk factor - to complement the compliance framework (e.g. Volcker rule and the German Trennbanken act) GMLs must be consistent with limitations on Broad Market Risk measures. Banking Book The main components of market risk in the Banking Book are: credit spread risk, pure interest rate risk and FX risk. Credit spread risk originates mainly from government bond portfolios held for liquidity purposes. The market risk of the bond portfolio is restricted based on notional, sensitivity measures and Value at Risk. The main credit spread exposure relates to Italian sovereign risk in the Italian perimeter. The second risk type is the interest rate risk. The exposure is measured in terms of economic value sensitivity and the net interest income sensitivity. On a daily basis the treasury functions manages the interest rate risk from commercial transactions within operational limits set by the relevant risk committees. The exposure is measured and monitored on a daily basis by the risk management functions. The Asset & Liability Committee is responsible for the interest rate strategy for the strategic position. This includes the decision of investing the net position of non-interest earning assets and non-interest bearing liabilities. The management of Banking Book interest rate risk aims at optimising, in an on-going scenario, the risk/return profile and long-term value creation while reducing adverse impacts on bank's earnings and regulatory capital coming from interest rates volatility. The main target of IRRBB strategy is the reduction of net interest income volatility in a multiyear horizon. The strategy does not imply any intended directional or discretional positioning to generate additional earnings, unless approved by the relevant bodies and separately monitored. The only exceptions is for the functions authorised to carry interest rates positions within an approved level of limitations. The management strategy on the structural mismatch involving non-interest earning assets and non-interest bearing liabilities (free funds), aims to balance the trade-off between a stable flow of earnings in a multiyear horizon and the opportunity cost of having a fixed rate investment. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 356 2018 Annual Report and Accounts · UniCredit The interest rate management strategy takes into account the main impact from prepayments. The prepayment behavior is estimated based on historical prepayment data as well as trend analysis. In Italy the prepayment expected profile is implicitly taken into account by treasury while hedging for commercial assets interest risk. The prepayment risk for the German mortgage portfolio is driven by the level of the interest rates and by the behavior of the customers independent of the level of the interest rates. The interest rate sensitive prepayments are rather small at the current level of the interest rates and are hedged via swaptions. The non-interest rate sensitive prepayments are hedged via swaps according to the Interest Rate Risk strategy of the bank. The prepayment risk in Austrian and CEE countries loan portfolio is deemed residual therefore no prepayment hedging strategy is applied. The overall interest risk exposure on Banking Book perimeter is periodically reviewed, at least on a monthly basis, by the group ALCO. The committee’s involvement in interest rate risk management includes: • the definition of granular interest rate Banking Book limits; • the initial approval and fundamental modifications for the measurement and control system of Banking Book interest rate risks with the support of internal validation function (where necessary); • the optimisation of the Group profile for Banking Book interest rate risk; • the definition of the operational strategies (e.g. replicating portfolio) and application of the internal transfer prices within the Italian perimeter; • the consultancy and suggestion to Group Risk & Internal Control Committee with respect to the contribution to Risk Appetite Framework, Global Policy for Interest Rate Banking Book definition and changes of behavioral models for Interest Rate Banking Book and other critical/important issues with potential impact on Banking Book interest rate. A third risk type is FX risk. The sources of this exposure mainly refer to capital investment in foreign currency. The current strategy is not to hedge capital investments. The general policy is to hedge the foreign currency exposures from dividends and contriburions to condolidated net profit (loss) taking into account hedging cost and market circumstances. The exposure is most relevant for CEE Legal Entities. The FX exposure is hedged using forwards and options that are classified as Trading Book. This general rule is valid for the Parent Company. The hedge strategy is reviewed by the relevant risk committees on a periodic basis. Structure and organisation The Group Financial Risk department is responsible for ensuring the implementation of strategies and processes relating to market risk at group-wide level. In terms of main issues relating to market risk matters, the department is accountable for: • governing and controlling the Group’s financial risks through the evaluation of strategies and the proposal to relevant the Bodies of risk limits and Global/Local Rules; • providing decisions and NBO, when specifically required by Global Rules and sub-delegation of powers, for liquidity, interest rate, market, counterparty and trading credit risks of the Group; • ensuring compliance of the Financial Risk Management framework to regulatory requirements. The development and maintenance of Group methodologies, models and architectures regarding financial risk and behavioural as well as the pricing models validation are in charge of Group Financial Risk Methodologies & Models which reports to Group Risk Models & Credit Risk Governance. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 356 2018 Annual Report and Accounts · UniCredit The interest rate management strategy takes into account the main impact from prepayments. The prepayment behavior is estimated based on historical prepayment data as well as trend analysis. In Italy the prepayment expected profile is implicitly taken into account by treasury while hedging for commercial assets interest risk. The prepayment risk for the German mortgage portfolio is driven by the level of the interest rates and by the behavior of the customers independent of the level of the interest rates. The interest rate sensitive prepayments are rather small at the current level of the interest rates and are hedged via swaptions. The non-interest rate sensitive prepayments are hedged via swaps according to the Interest Rate Risk strategy of the bank. The prepayment risk in Austrian and CEE countries loan portfolio is deemed residual therefore no prepayment hedging strategy is applied. The overall interest risk exposure on Banking Book perimeter is periodically reviewed, at least on a monthly basis, by the group ALCO. The committee’s involvement in interest rate risk management includes: • the definition of granular interest rate Banking Book limits; • the initial approval and fundamental modifications for the measurement and control system of Banking Book interest rate risks with the support of internal validation function (where necessary); • the optimisation of the Group profile for Banking Book interest rate risk; • the definition of the operational strategies (e.g. replicating portfolio) and application of the internal transfer prices within the Italian perimeter; • the consultancy and suggestion to Group Risk & Internal Control Committee with respect to the contribution to Risk Appetite Framework, Global Policy for Interest Rate Banking Book definition and changes of behavioral models for Interest Rate Banking Book and other critical/important issues with potential impact on Banking Book interest rate. A third risk type is FX risk. The sources of this exposure mainly refer to capital investment in foreign currency. The current strategy is not to hedge capital investments. The general policy is to hedge the foreign currency exposures from dividends and contriburions to condolidated net profit (loss) taking into account hedging cost and market circumstances. The exposure is most relevant for CEE Legal Entities. The FX exposure is hedged using forwards and options that are classified as Trading Book. This general rule is valid for the Parent Company. The hedge strategy is reviewed by the relevant risk committees on a periodic basis. Structure and organisation The Group Financial Risk department is responsible for ensuring the implementation of strategies and processes relating to market risk at group-wide level. In terms of main issues relating to market risk matters, the department is accountable for: • governing and controlling the Group’s financial risks through the evaluation of strategies and the proposal to relevant the Bodies of risk limits and Global/Local Rules; • providing decisions and NBO, when specifically required by Global Rules and sub-delegation of powers, for liquidity, interest rate, market, counterparty and trading credit risks of the Group; • ensuring compliance of the Financial Risk Management framework to regulatory requirements. The development and maintenance of Group methodologies, models and architectures regarding financial risk and behavioural as well as the pricing models validation are in charge of Group Financial Risk Methodologies & Models which reports to Group Risk Models & Credit Risk Governance. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 356 2018 Annual Report and Accounts · UniCredit The interest rate management strategy takes into account the main impact from prepayments. The prepayment behavior is estimated based on historical prepayment data as well as trend analysis. In Italy the prepayment expected profile is implicitly taken into account by treasury while hedging for commercial assets interest risk. The prepayment risk for the German mortgage portfolio is driven by the level of the interest rates and by the behavior of the customers independent of the level of the interest rates. The interest rate sensitive prepayments are rather small at the current level of the interest rates and are hedged via swaptions. The non-interest rate sensitive prepayments are hedged via swaps according to the Interest Rate Risk strategy of the bank. The prepayment risk in Austrian and CEE countries loan portfolio is deemed residual therefore no prepayment hedging strategy is applied. The overall interest risk exposure on Banking Book perimeter is periodically reviewed, at least on a monthly basis, by the group ALCO. The committee’s involvement in interest rate risk management includes: • the definition of granular interest rate Banking Book limits; • the initial approval and fundamental modifications for the measurement and control system of Banking Book interest rate risks with the support of internal validation function (where necessary); • the optimisation of the Group profile for Banking Book interest rate risk; • the definition of the operational strategies (e.g. replicating portfolio) and application of the internal transfer prices within the Italian perimeter; • the consultancy and suggestion to Group Risk & Internal Control Committee with respect to the contribution to Risk Appetite Framework, Global Policy for Interest Rate Banking Book definition and changes of behavioral models for Interest Rate Banking Book and other critical/important issues with potential impact on Banking Book interest rate. A third risk type is FX risk. The sources of this exposure mainly refer to capital investment in foreign currency. The current strategy is not to hedge capital investments. The general policy is to hedge the foreign currency exposures from dividends and contriburions to condolidated net profit (loss) taking into account hedging cost and market circumstances. The exposure is most relevant for CEE Legal Entities. The FX exposure is hedged using forwards and options that are classified as Trading Book. This general rule is valid for the Parent Company. The hedge strategy is reviewed by the relevant risk committees on a periodic basis. Structure and organisation The Group Financial Risk department is responsible for ensuring the implementation of strategies and processes relating to market risk at group-wide level. In terms of main issues relating to market risk matters, the department is accountable for: • governing and controlling the Group’s financial risks through the evaluation of strategies and the proposal to relevant the Bodies of risk limits and Global/Local Rules; • providing decisions and NBO, when specifically required by Global Rules and sub-delegation of powers, for liquidity, interest rate, market, counterparty and trading credit risks of the Group; • ensuring compliance of the Financial Risk Management framework to regulatory requirements. The development and maintenance of Group methodologies, models and architectures regarding financial risk and behavioural as well as the pricing models validation are in charge of Group Financial Risk Methodologies & Models which reports to Group Risk Models & Credit Risk Governance. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 356 2018 Annual Report and Accounts · UniCredit The interest rate management strategy takes into account the main impact from prepayments. The prepayment behavior is estimated based on historical prepayment data as well as trend analysis. In Italy the prepayment expected profile is implicitly taken into account by treasury while hedging for commercial assets interest risk. The prepayment risk for the German mortgage portfolio is driven by the level of the interest rates and by the behavior of the customers independent of the level of the interest rates. The interest rate sensitive prepayments are rather small at the current level of the interest rates and are hedged via swaptions. The non-interest rate sensitive prepayments are hedged via swaps according to the Interest Rate Risk strategy of the bank. The prepayment risk in Austrian and CEE countries loan portfolio is deemed residual therefore no prepayment hedging strategy is applied. The overall interest risk exposure on Banking Book perimeter is periodically reviewed, at least on a monthly basis, by the group ALCO. The committee’s involvement in interest rate risk management includes: • the definition of granular interest rate Banking Book limits; • the initial approval and fundamental modifications for the measurement and control system of Banking Book interest rate risks with the support of internal validation function (where necessary); • the optimisation of the Group profile for Banking Book interest rate risk; • the definition of the operational strategies (e.g. replicating portfolio) and application of the internal transfer prices within the Italian perimeter; • the consultancy and suggestion to Group Risk & Internal Control Committee with respect to the contribution to Risk Appetite Framework, Global Policy for Interest Rate Banking Book definition and changes of behavioral models for Interest Rate Banking Book and other critical/important issues with potential impact on Banking Book interest rate. A third risk type is FX risk. The sources of this exposure mainly refer to capital investment in foreign currency. The current strategy is not to hedge capital investments. The general policy is to hedge the foreign currency exposures from dividends and contriburions to condolidated net profit (loss) taking into account hedging cost and market circumstances. The exposure is most relevant for CEE Legal Entities. The FX exposure is hedged using forwards and options that are classified as Trading Book. This general rule is valid for the Parent Company. The hedge strategy is reviewed by the relevant risk committees on a periodic basis. Structure and organisation The Group Financial Risk department is responsible for ensuring the implementation of strategies and processes relating to market risk at group-wide level. In terms of main issues relating to market risk matters, the department is accountable for: • governing and controlling the Group’s financial risks through the evaluation of strategies and the proposal to relevant the Bodies of risk limits and Global/Local Rules; • providing decisions and NBO, when specifically required by Global Rules and sub-delegation of powers, for liquidity, interest rate, market, counterparty and trading credit risks of the Group; • ensuring compliance of the Financial Risk Management framework to regulatory requirements. The development and maintenance of Group methodologies, models and architectures regarding financial risk and behavioural as well as the pricing models validation are in charge of Group Financial Risk Methodologies & Models which reports to Group Risk Models & Credit Risk Governance. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 356 2018 Annual Report and Accounts · UniCredit The interest rate management strategy takes into account the main impact from prepayments. The prepayment behavior is estimated based on historical prepayment data as well as trend analysis. In Italy the prepayment expected profile is implicitly taken into account by treasury while hedging for commercial assets interest risk. The prepayment risk for the German mortgage portfolio is driven by the level of the interest rates and by the behavior of the customers independent of the level of the interest rates. The interest rate sensitive prepayments are rather small at the current level of the interest rates and are hedged via swaptions. The non-interest rate sensitive prepayments are hedged via swaps according to the Interest Rate Risk strategy of the bank. The prepayment risk in Austrian and CEE countries loan portfolio is deemed residual therefore no prepayment hedging strategy is applied. The overall interest risk exposure on Banking Book perimeter is periodically reviewed, at least on a monthly basis, by the group ALCO. The committee’s involvement in interest rate risk management includes: • the definition of granular interest rate Banking Book limits; • the initial approval and fundamental modifications for the measurement and control system of Banking Book interest rate risks with the support of internal validation function (where necessary); • the optimisation of the Group profile for Banking Book interest rate risk; • the definition of the operational strategies (e.g. replicating portfolio) and application of the internal transfer prices within the Italian perimeter; • the consultancy and suggestion to Group Risk & Internal Control Committee with respect to the contribution to Risk Appetite Framework, Global Policy for Interest Rate Banking Book definition and changes of behavioral models for Interest Rate Banking Book and other critical/important issues with potential impact on Banking Book interest rate. A third risk type is FX risk. The sources of this exposure mainly refer to capital investment in foreign currency. The current strategy is not to hedge capital investments. The general policy is to hedge the foreign currency exposures from dividends and contriburions to condolidated net profit (loss) taking into account hedging cost and market circumstances. The exposure is most relevant for CEE Legal Entities. The FX exposure is hedged using forwards and options that are classified as Trading Book. This general rule is valid for the Parent Company. The hedge strategy is reviewed by the relevant risk committees on a periodic basis. Structure and organisation The Group Financial Risk department is responsible for ensuring the implementation of strategies and processes relating to market risk at group-wide level. In terms of main issues relating to market risk matters, the department is accountable for: • governing and controlling the Group’s financial risks through the evaluation of strategies and the proposal to relevant the Bodies of risk limits and Global/Local Rules; • providing decisions and NBO, when specifically required by Global Rules and sub-delegation of powers, for liquidity, interest rate, market, counterparty and trading credit risks of the Group; • ensuring compliance of the Financial Risk Management framework to regulatory requirements. The development and maintenance of Group methodologies, models and architectures regarding financial risk and behavioural as well as the pricing models validation are in charge of Group Financial Risk Methodologies & Models which reports to Group Risk Models & Credit Risk Governance. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 357 The department is composed of the following organisational structures with focus on market risk: With reference to the communication mechanism between the different parties involved in market risk management, the responsible Committees are: • Group Market Risk Committee; • Group Assets & Liabilities Committee. The “Group Market Risk Committee”, whose participants/permanent guests are mainly representatives of Risk, Business, Compliance and Internal Audit, meets monthly and is responsible for monitoring market risks at Group level, for evaluating the impact of transactions, approved by the competent bodies, significantly affecting the overall market risk portfolio profile, for submitting to the “Group Risk Internal Control Committee”, for approval or information, market risk strategies, policies, methodologies and limits as well as periodical reporting on the market risk portfolio. The Committee is also responsible for ensuring consistency in market risk policies, methodologies and practices across Business Functions and Legal Entities. The "Group Assets and Liabilities Committee" is involved in the process of defining strategies, policies, methodologies and limits (where applicable) for liquidity risk, FX and Banking Book interest rate risks, transfer pricing, Funding Plan and Contingency Funding Plan and in monitoring activities. It also ensures the consistency of the practices and methodologies relating to liquidity, FX and Banking Book interest rate across Business Functions and Legal Entities, with the aim of optimising the usage of financial resources (e.g. liquidity and capital) in line with Risk Appetite and Business Strategies. Risk measurement and reporting systems Trading Book In 2018, UniCredit group continued to improve and consolidate market risk models in order to properly measure, represent and control the Group risk profile, reflecting these changes in the reporting activity. As regards market risk measurements, more details can be find in paragraph “Internal Model for Price, Interest Rate and Exchange Rate Risk of the Regulatory Trading Book”, while for both monthly and daily reporting process, Global Process Regulation are periodically updated. Within the organisational context described above, the policy implemented by UniCredit group within the scope of market risk management is aimed at gradually adopting and using common principles, rules and processes in terms of appetite for risk, ceiling calculations, model development, pricing and risk model scrutiny. The Group Financial Risk department is specifically required to ensure that principles, rules and processes are in line with industry best practice and consistent with standards and uses in the various countries in which they are applied. GROUP FINANCIAL RISK “Group Market & Trading Credit Risk Management”, responsible for governing and checking the Group’s market risks “Group Price Control”, has the mission to steer and control, for the whole Group, the independent price verification processes (IPV) “Financial Risk Italy” , responsible for the independent control of liquidity, interest rate, market, counterparty, trading credit and collateral risks at UC SpA and Legal Entity/ Italy level as well the required stress tests “Group Financial Risk Standard & Practice” , responsible for Global Policies and for the financial risk reporting coherence and coordination across the Group “Group Liquidity and Interest Rate Risk Management”, responsible for the independent control of liquidity risk and the Balance sheet interest rate risk at Group level as well as for the internal and regulatory stress testing Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 357 The department is composed of the following organisational structures with focus on market risk: With reference to the communication mechanism between the different parties involved in market risk management, the responsible Committees are: • Group Market Risk Committee; • Group Assets & Liabilities Committee. The “Group Market Risk Committee”, whose participants/permanent guests are mainly representatives of Risk, Business, Compliance and Internal Audit, meets monthly and is responsible for monitoring market risks at Group level, for evaluating the impact of transactions, approved by the competent bodies, significantly affecting the overall market risk portfolio profile, for submitting to the “Group Risk Internal Control Committee”, for approval or information, market risk strategies, policies, methodologies and limits as well as periodical reporting on the market risk portfolio. The Committee is also responsible for ensuring consistency in market risk policies, methodologies and practices across Business Functions and Legal Entities. The "Group Assets and Liabilities Committee" is involved in the process of defining strategies, policies, methodologies and limits (where applicable) for liquidity risk, FX and Banking Book interest rate risks, transfer pricing, Funding Plan and Contingency Funding Plan and in monitoring activities. It also ensures the consistency of the practices and methodologies relating to liquidity, FX and Banking Book interest rate across Business Functions and Legal Entities, with the aim of optimising the usage of financial resources (e.g. liquidity and capital) in line with Risk Appetite and Business Strategies. Risk measurement and reporting systems Trading Book In 2018, UniCredit group continued to improve and consolidate market risk models in order to properly measure, represent and control the Group risk profile, reflecting these changes in the reporting activity. As regards market risk measurements, more details can be find in paragraph “Internal Model for Price, Interest Rate and Exchange Rate Risk of the Regulatory Trading Book”, while for both monthly and daily reporting process, Global Process Regulation are periodically updated. Within the organisational context described above, the policy implemented by UniCredit group within the scope of market risk management is aimed at gradually adopting and using common principles, rules and processes in terms of appetite for risk, ceiling calculations, model development, pricing and risk model scrutiny. The Group Financial Risk department is specifically required to ensure that principles, rules and processes are in line with industry best practice and consistent with standards and uses in the various countries in which they are applied. GROUP FINANCIAL RISK “Group Market & Trading Credit Risk Management”, responsible for governing and checking the Group’s market risks “Group Price Control”, has the mission to steer and control, for the whole Group, the independent price verification processes (IPV) “Financial Risk Italy” , responsible for the independent control of liquidity, interest rate, market, counterparty, trading credit and collateral risks at UC SpA and Legal Entity/ Italy level as well the required stress tests “Group Financial Risk Standard & Practice” , responsible for Global Policies and for the financial risk reporting coherence and coordination across the Group “Group Liquidity and Interest Rate Risk Management”, responsible for the independent control of liquidity risk and the Balance sheet interest rate risk at Group level as well as for the internal and regulatory stress testing Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 357 The department is composed of the following organisational structures with focus on market risk: With reference to the communication mechanism between the different parties involved in market risk management, the responsible Committees are: • Group Market Risk Committee; • Group Assets & Liabilities Committee. The “Group Market Risk Committee”, whose participants/permanent guests are mainly representatives of Risk, Business, Compliance and Internal Audit, meets monthly and is responsible for monitoring market risks at Group level, for evaluating the impact of transactions, approved by the competent bodies, significantly affecting the overall market risk portfolio profile, for submitting to the “Group Risk Internal Control Committee”, for approval or information, market risk strategies, policies, methodologies and limits as well as periodical reporting on the market risk portfolio. The Committee is also responsible for ensuring consistency in market risk policies, methodologies and practices across Business Functions and Legal Entities. The "Group Assets and Liabilities Committee" is involved in the process of defining strategies, policies, methodologies and limits (where applicable) for liquidity risk, FX and Banking Book interest rate risks, transfer pricing, Funding Plan and Contingency Funding Plan and in monitoring activities. It also ensures the consistency of the practices and methodologies relating to liquidity, FX and Banking Book interest rate across Business Functions and Legal Entities, with the aim of optimising the usage of financial resources (e.g. liquidity and capital) in line with Risk Appetite and Business Strategies. Risk measurement and reporting systems Trading Book In 2018, UniCredit group continued to improve and consolidate market risk models in order to properly measure, represent and control the Group risk profile, reflecting these changes in the reporting activity. As regards market risk measurements, more details can be find in paragraph “Internal Model for Price, Interest Rate and Exchange Rate Risk of the Regulatory Trading Book”, while for both monthly and daily reporting process, Global Process Regulation are periodically updated. Within the organisational context described above, the policy implemented by UniCredit group within the scope of market risk management is aimed at gradually adopting and using common principles, rules and processes in terms of appetite for risk, ceiling calculations, model development, pricing and risk model scrutiny. The Group Financial Risk department is specifically required to ensure that principles, rules and processes are in line with industry best practice and consistent with standards and uses in the various countries in which they are applied. GROUP FINANCIAL RISK “Group Market & Trading Credit Risk Management”, responsible for governing and checking the Group’s market risks “Group Price Control”, has the mission to steer and control, for the whole Group, the independent price verification processes (IPV) “Financial Risk Italy” , responsible for the independent control of liquidity, interest rate, market, counterparty, trading credit and collateral risks at UC SpA and Legal Entity/ Italy level as well the required stress tests “Group Financial Risk Standard & Practice” , responsible for Global Policies and for the financial risk reporting coherence and coordination across the Group “Group Liquidity and Interest Rate Risk Management”, responsible for the independent control of liquidity risk and the Balance sheet interest rate risk at Group level as well as for the internal and regulatory stress testing Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 357 The department is composed of the following organisational structures with focus on market risk: With reference to the communication mechanism between the different parties involved in market risk management, the responsible Committees are: • Group Market Risk Committee; • Group Assets & Liabilities Committee. The “Group Market Risk Committee”, whose participants/permanent guests are mainly representatives of Risk, Business, Compliance and Internal Audit, meets monthly and is responsible for monitoring market risks at Group level, for evaluating the impact of transactions, approved by the competent bodies, significantly affecting the overall market risk portfolio profile, for submitting to the “Group Risk Internal Control Committee”, for approval or information, market risk strategies, policies, methodologies and limits as well as periodical reporting on the market risk portfolio. The Committee is also responsible for ensuring consistency in market risk policies, methodologies and practices across Business Functions and Legal Entities. The "Group Assets and Liabilities Committee" is involved in the process of defining strategies, policies, methodologies and limits (where applicable) for liquidity risk, FX and Banking Book interest rate risks, transfer pricing, Funding Plan and Contingency Funding Plan and in monitoring activities. It also ensures the consistency of the practices and methodologies relating to liquidity, FX and Banking Book interest rate across Business Functions and Legal Entities, with the aim of optimising the usage of financial resources (e.g. liquidity and capital) in line with Risk Appetite and Business Strategies. Risk measurement and reporting systems Trading Book In 2018, UniCredit group continued to improve and consolidate market risk models in order to properly measure, represent and control the Group risk profile, reflecting these changes in the reporting activity. As regards market risk measurements, more details can be find in paragraph “Internal Model for Price, Interest Rate and Exchange Rate Risk of the Regulatory Trading Book”, while for both monthly and daily reporting process, Global Process Regulation are periodically updated. Within the organisational context described above, the policy implemented by UniCredit group within the scope of market risk management is aimed at gradually adopting and using common principles, rules and processes in terms of appetite for risk, ceiling calculations, model development, pricing and risk model scrutiny. The Group Financial Risk department is specifically required to ensure that principles, rules and processes are in line with industry best practice and consistent with standards and uses in the various countries in which they are applied. GROUP FINANCIAL RISK “Group Market & Trading Credit Risk Management”, responsible for governing and checking the Group’s market risks “Group Price Control”, has the mission to steer and control, for the whole Group, the independent price verification processes (IPV) “Financial Risk Italy” , responsible for the independent control of liquidity, interest rate, market, counterparty, trading credit and collateral risks at UC SpA and Legal Entity/ Italy level as well the required stress tests “Group Financial Risk Standard & Practice” , responsible for Global Policies and for the financial risk reporting coherence and coordination across the Group “Group Liquidity and Interest Rate Risk Management”, responsible for the independent control of liquidity risk and the Balance sheet interest rate risk at Group level as well as for the internal and regulatory stress testing Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 357 The department is composed of the following organisational structures with focus on market risk: With reference to the communication mechanism between the different parties involved in market risk management, the responsible Committees are: • Group Market Risk Committee; • Group Assets & Liabilities Committee. The “Group Market Risk Committee”, whose participants/permanent guests are mainly representatives of Risk, Business, Compliance and Internal Audit, meets monthly and is responsible for monitoring market risks at Group level, for evaluating the impact of transactions, approved by the competent bodies, significantly affecting the overall market risk portfolio profile, for submitting to the “Group Risk Internal Control Committee”, for approval or information, market risk strategies, policies, methodologies and limits as well as periodical reporting on the market risk portfolio. The Committee is also responsible for ensuring consistency in market risk policies, methodologies and practices across Business Functions and Legal Entities. The "Group Assets and Liabilities Committee" is involved in the process of defining strategies, policies, methodologies and limits (where applicable) for liquidity risk, FX and Banking Book interest rate risks, transfer pricing, Funding Plan and Contingency Funding Plan and in monitoring activities. It also ensures the consistency of the practices and methodologies relating to liquidity, FX and Banking Book interest rate across Business Functions and Legal Entities, with the aim of optimising the usage of financial resources (e.g. liquidity and capital) in line with Risk Appetite and Business Strategies. Risk measurement and reporting systems Trading Book In 2018, UniCredit group continued to improve and consolidate market risk models in order to properly measure, represent and control the Group risk profile, reflecting these changes in the reporting activity. As regards market risk measurements, more details can be find in paragraph “Internal Model for Price, Interest Rate and Exchange Rate Risk of the Regulatory Trading Book”, while for both monthly and daily reporting process, Global Process Regulation are periodically updated. Within the organisational context described above, the policy implemented by UniCredit group within the scope of market risk management is aimed at gradually adopting and using common principles, rules and processes in terms of appetite for risk, ceiling calculations, model development, pricing and risk model scrutiny. The Group Financial Risk department is specifically required to ensure that principles, rules and processes are in line with industry best practice and consistent with standards and uses in the various countries in which they are applied. GROUP FINANCIAL RISK “Group Market & Trading Credit Risk Management”, responsible for governing and checking the Group’s market risks “Group Price Control”, has the mission to steer and control, for the whole Group, the independent price verification processes (IPV) “Financial Risk Italy” , responsible for the independent control of liquidity, interest rate, market, counterparty, trading credit and collateral risks at UC SpA and Legal Entity/ Italy level as well the required stress tests “Group Financial Risk Standard & Practice” , responsible for Global Policies and for the financial risk reporting coherence and coordination across the Group “Group Liquidity and Interest Rate Risk Management”, responsible for the independent control of liquidity risk and the Balance sheet interest rate risk at Group level as well as for the internal and regulatory stress testing Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 358 2018 Annual Report and Accounts · UniCredit The main tool used by UniCredit group to measure market risk on trading positions is Value at Risk (VaR), calculated using the historical simulation method. Further details on risk valuation models are included in the following chapter. Group Financial Risk defines market risk reporting standards, both in terms of contents and recurrence, and provides timely information to Top Management and regulators regarding the market risk profile at consolidated level. In addition to VaR and Basel II risk measures, stress tests represent an important risk management tool that provides UniCredit with an indication of how much capital might be needed to absorb losses in case of large financial shocks. Stress testing forms an integral part of the Internal Capital Adequacy Assessment Process (ICAAP), which requires UniCredit to undertake rigorous, forward-looking stress testing that identifies possible events or changes in market conditions that could adversely impact the bank. Banking Book The primary responsibility of the monitoring and control of the risk management for market risk in the Banking Book lies in the Bank’s competent Bodies. For instance, the Parent Company is in charge of monitoring market risks for the Banking Book at consolidated level. As such, it defines structure, data and frequency of the necessary Group reporting. The Banking Book interest rate risk measures cover both the economic value and net interest income risk aspects. More precisely, the different and complementary perspectives involve: • economic value perspective: variation in interest rates can affect the economic value of assets and liabilities. The economic value of the bank can be viewed as the present value of the bank’s expected net cash flows, defined as the expected cash flows on assets minus the expected cash flows on liabilities; a relevant risk measure from this perspective is the economic value sensitivity per time bucket for a 1bp rate shock. This measure is reported to the relevant committees to assess the economic value impact of various changes in the yield curve. In addition the economic value sensitivity for a 200bps parallel shock is included. • earnings at Risk perspective: the focus of the analysis is the impact of changes of interest rates on Net Interest Income that is the difference between revenues generated by interest sensitive assets and the cost relating to interest sensitive liabilities. An example of a measure of risks used is Net Interest Income sensitivity for a 100bps parallel shock of rates. It provides an indication of the impact on the net interest income over the next 12 months if such shock should occur. Additional stress test scenarios are performed on a regular basis to estimate the basis risk and non-parallel shocks. Next to the set of limits and warning levels for interest rate risk, restrictions and exposure measures are in place for other market risk types such foreign exchange risk, equity risk, value risk due to credit spread fluctuations. In addition through economic value sensitivity measures and other granular indicators, these risk types are captured in a value at risk measure that includes all market risk factors. These values at risk measures are based on a historical simulation. Hedging policies and risk mitigation Trading Book On a quarterly basis a set of risk indicators is provided to the Group Risk Committee through the Enterprise Risk Management Report and, on a monthly basis, to the Group Market Risk Committee through the Market Risk Overview report; these include VaR, Stressed VaR and IRC limit usages, Sensitivities, Sovereign Exposure, Stress Test results and P&L. At the same time limit breaches are reported both to the Group Market Risk Committee and to the Group Risk Committee (according to their severity); the escalation process being ruled by the Global Policy "Market Risk Limits" which defines the nature of the various thresholds/limits applied, as well as the relevant bodies to be involve to establish the most appropriate course of action to restore exposure within the approved limits. If required, focus is provided from time to time on the activity of a specific business line/desk in order to ensure the highest level of comprehension and discussion of the risks in certain areas which are deemed to deserve particular attention. Banking Book The ALCO evaluates the main market risk drivers on a monthly basis. Group Risk Management reports to the committee on the Banking Book risk measures both from a value and income perspective. It proposes and monitors limits and warning levels that have been approved by the relevant competent bodies. Breaches of limits and warning levels are reported, upon occurrence, to the relevant bodies. Consequently the escalation process is activated in line with the procedures set in the Policy, to establish the most appropriate course of action to restore exposure within the approved limits. Execution of structural hedges to mitigate the interest rate risk exposure on client business is responsibility of the treasury functions. Strategic transactions in the Banking Book is managed by the Asset and Liability Management department, ALM. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 358 2018 Annual Report and Accounts · UniCredit The main tool used by UniCredit group to measure market risk on trading positions is Value at Risk (VaR), calculated using the historical simulation method. Further details on risk valuation models are included in the following chapter. Group Financial Risk defines market risk reporting standards, both in terms of contents and recurrence, and provides timely information to Top Management and regulators regarding the market risk profile at consolidated level. In addition to VaR and Basel II risk measures, stress tests represent an important risk management tool that provides UniCredit with an indication of how much capital might be needed to absorb losses in case of large financial shocks. Stress testing forms an integral part of the Internal Capital Adequacy Assessment Process (ICAAP), which requires UniCredit to undertake rigorous, forward-looking stress testing that identifies possible events or changes in market conditions that could adversely impact the bank. Banking Book The primary responsibility of the monitoring and control of the risk management for market risk in the Banking Book lies in the Bank’s competent Bodies. For instance, the Parent Company is in charge of monitoring market risks for the Banking Book at consolidated level. As such, it defines structure, data and frequency of the necessary Group reporting. The Banking Book interest rate risk measures cover both the economic value and net interest income risk aspects. More precisely, the different and complementary perspectives involve: • economic value perspective: variation in interest rates can affect the economic value of assets and liabilities. The economic value of the bank can be viewed as the present value of the bank’s expected net cash flows, defined as the expected cash flows on assets minus the expected cash flows on liabilities; a relevant risk measure from this perspective is the economic value sensitivity per time bucket for a 1bp rate shock. This measure is reported to the relevant committees to assess the economic value impact of various changes in the yield curve. In addition the economic value sensitivity for a 200bps parallel shock is included. • earnings at Risk perspective: the focus of the analysis is the impact of changes of interest rates on Net Interest Income that is the difference between revenues generated by interest sensitive assets and the cost relating to interest sensitive liabilities. An example of a measure of risks used is Net Interest Income sensitivity for a 100bps parallel shock of rates. It provides an indication of the impact on the net interest income over the next 12 months if such shock should occur. Additional stress test scenarios are performed on a regular basis to estimate the basis risk and non-parallel shocks. Next to the set of limits and warning levels for interest rate risk, restrictions and exposure measures are in place for other market risk types such foreign exchange risk, equity risk, value risk due to credit spread fluctuations. In addition through economic value sensitivity measures and other granular indicators, these risk types are captured in a value at risk measure that includes all market risk factors. These values at risk measures are based on a historical simulation. Hedging policies and risk mitigation Trading Book On a quarterly basis a set of risk indicators is provided to the Group Risk Committee through the Enterprise Risk Management Report and, on a monthly basis, to the Group Market Risk Committee through the Market Risk Overview report; these include VaR, Stressed VaR and IRC limit usages, Sensitivities, Sovereign Exposure, Stress Test results and P&L. At the same time limit breaches are reported both to the Group Market Risk Committee and to the Group Risk Committee (according to their severity); the escalation process being ruled by the Global Policy "Market Risk Limits" which defines the nature of the various thresholds/limits applied, as well as the relevant bodies to be involve to establish the most appropriate course of action to restore exposure within the approved limits. If required, focus is provided from time to time on the activity of a specific business line/desk in order to ensure the highest level of comprehension and discussion of the risks in certain areas which are deemed to deserve particular attention. Banking Book The ALCO evaluates the main market risk drivers on a monthly basis. Group Risk Management reports to the committee on the Banking Book risk measures both from a value and income perspective. It proposes and monitors limits and warning levels that have been approved by the relevant competent bodies. Breaches of limits and warning levels are reported, upon occurrence, to the relevant bodies. Consequently the escalation process is activated in line with the procedures set in the Policy, to establish the most appropriate course of action to restore exposure within the approved limits. Execution of structural hedges to mitigate the interest rate risk exposure on client business is responsibility of the treasury functions. Strategic transactions in the Banking Book is managed by the Asset and Liability Management department, ALM. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 358 2018 Annual Report and Accounts · UniCredit The main tool used by UniCredit group to measure market risk on trading positions is Value at Risk (VaR), calculated using the historical simulation method. Further details on risk valuation models are included in the following chapter. Group Financial Risk defines market risk reporting standards, both in terms of contents and recurrence, and provides timely information to Top Management and regulators regarding the market risk profile at consolidated level. In addition to VaR and Basel II risk measures, stress tests represent an important risk management tool that provides UniCredit with an indication of how much capital might be needed to absorb losses in case of large financial shocks. Stress testing forms an integral part of the Internal Capital Adequacy Assessment Process (ICAAP), which requires UniCredit to undertake rigorous, forward-looking stress testing that identifies possible events or changes in market conditions that could adversely impact the bank. Banking Book The primary responsibility of the monitoring and control of the risk management for market risk in the Banking Book lies in the Bank’s competent Bodies. For instance, the Parent Company is in charge of monitoring market risks for the Banking Book at consolidated level. As such, it defines structure, data and frequency of the necessary Group reporting. The Banking Book interest rate risk measures cover both the economic value and net interest income risk aspects. More precisely, the different and complementary perspectives involve: • economic value perspective: variation in interest rates can affect the economic value of assets and liabilities. The economic value of the bank can be viewed as the present value of the bank’s expected net cash flows, defined as the expected cash flows on assets minus the expected cash flows on liabilities; a relevant risk measure from this perspective is the economic value sensitivity per time bucket for a 1bp rate shock. This measure is reported to the relevant committees to assess the economic value impact of various changes in the yield curve. In addition the economic value sensitivity for a 200bps parallel shock is included. • earnings at Risk perspective: the focus of the analysis is the impact of changes of interest rates on Net Interest Income that is the difference between revenues generated by interest sensitive assets and the cost relating to interest sensitive liabilities. An example of a measure of risks used is Net Interest Income sensitivity for a 100bps parallel shock of rates. It provides an indication of the impact on the net interest income over the next 12 months if such shock should occur. Additional stress test scenarios are performed on a regular basis to estimate the basis risk and non-parallel shocks. Next to the set of limits and warning levels for interest rate risk, restrictions and exposure measures are in place for other market risk types such foreign exchange risk, equity risk, value risk due to credit spread fluctuations. In addition through economic value sensitivity measures and other granular indicators, these risk types are captured in a value at risk measure that includes all market risk factors. These values at risk measures are based on a historical simulation. Hedging policies and risk mitigation Trading Book On a quarterly basis a set of risk indicators is provided to the Group Risk Committee through the Enterprise Risk Management Report and, on a monthly basis, to the Group Market Risk Committee through the Market Risk Overview report; these include VaR, Stressed VaR and IRC limit usages, Sensitivities, Sovereign Exposure, Stress Test results and P&L. At the same time limit breaches are reported both to the Group Market Risk Committee and to the Group Risk Committee (according to their severity); the escalation process being ruled by the Global Policy "Market Risk Limits" which defines the nature of the various thresholds/limits applied, as well as the relevant bodies to be involve to establish the most appropriate course of action to restore exposure within the approved limits. If required, focus is provided from time to time on the activity of a specific business line/desk in order to ensure the highest level of comprehension and discussion of the risks in certain areas which are deemed to deserve particular attention. Banking Book The ALCO evaluates the main market risk drivers on a monthly basis. Group Risk Management reports to the committee on the Banking Book risk measures both from a value and income perspective. It proposes and monitors limits and warning levels that have been approved by the relevant competent bodies. Breaches of limits and warning levels are reported, upon occurrence, to the relevant bodies. Consequently the escalation process is activated in line with the procedures set in the Policy, to establish the most appropriate course of action to restore exposure within the approved limits. Execution of structural hedges to mitigate the interest rate risk exposure on client business is responsibility of the treasury functions. Strategic transactions in the Banking Book is managed by the Asset and Liability Management department, ALM. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 358 2018 Annual Report and Accounts · UniCredit The main tool used by UniCredit group to measure market risk on trading positions is Value at Risk (VaR), calculated using the historical simulation method. Further details on risk valuation models are included in the following chapter. Group Financial Risk defines market risk reporting standards, both in terms of contents and recurrence, and provides timely information to Top Management and regulators regarding the market risk profile at consolidated level. In addition to VaR and Basel II risk measures, stress tests represent an important risk management tool that provides UniCredit with an indication of how much capital might be needed to absorb losses in case of large financial shocks. Stress testing forms an integral part of the Internal Capital Adequacy Assessment Process (ICAAP), which requires UniCredit to undertake rigorous, forward-looking stress testing that identifies possible events or changes in market conditions that could adversely impact the bank. Banking Book The primary responsibility of the monitoring and control of the risk management for market risk in the Banking Book lies in the Bank’s competent Bodies. For instance, the Parent Company is in charge of monitoring market risks for the Banking Book at consolidated level. As such, it defines structure, data and frequency of the necessary Group reporting. The Banking Book interest rate risk measures cover both the economic value and net interest income risk aspects. More precisely, the different and complementary perspectives involve: • economic value perspective: variation in interest rates can affect the economic value of assets and liabilities. The economic value of the bank can be viewed as the present value of the bank’s expected net cash flows, defined as the expected cash flows on assets minus the expected cash flows on liabilities; a relevant risk measure from this perspective is the economic value sensitivity per time bucket for a 1bp rate shock. This measure is reported to the relevant committees to assess the economic value impact of various changes in the yield curve. In addition the economic value sensitivity for a 200bps parallel shock is included. • earnings at Risk perspective: the focus of the analysis is the impact of changes of interest rates on Net Interest Income that is the difference between revenues generated by interest sensitive assets and the cost relating to interest sensitive liabilities. An example of a measure of risks used is Net Interest Income sensitivity for a 100bps parallel shock of rates. It provides an indication of the impact on the net interest income over the next 12 months if such shock should occur. Additional stress test scenarios are performed on a regular basis to estimate the basis risk and non-parallel shocks. Next to the set of limits and warning levels for interest rate risk, restrictions and exposure measures are in place for other market risk types such foreign exchange risk, equity risk, value risk due to credit spread fluctuations. In addition through economic value sensitivity measures and other granular indicators, these risk types are captured in a value at risk measure that includes all market risk factors. These values at risk measures are based on a historical simulation. Hedging policies and risk mitigation Trading Book On a quarterly basis a set of risk indicators is provided to the Group Risk Committee through the Enterprise Risk Management Report and, on a monthly basis, to the Group Market Risk Committee through the Market Risk Overview report; these include VaR, Stressed VaR and IRC limit usages, Sensitivities, Sovereign Exposure, Stress Test results and P&L. At the same time limit breaches are reported both to the Group Market Risk Committee and to the Group Risk Committee (according to their severity); the escalation process being ruled by the Global Policy "Market Risk Limits" which defines the nature of the various thresholds/limits applied, as well as the relevant bodies to be involve to establish the most appropriate course of action to restore exposure within the approved limits. If required, focus is provided from time to time on the activity of a specific business line/desk in order to ensure the highest level of comprehension and discussion of the risks in certain areas which are deemed to deserve particular attention. Banking Book The ALCO evaluates the main market risk drivers on a monthly basis. Group Risk Management reports to the committee on the Banking Book risk measures both from a value and income perspective. It proposes and monitors limits and warning levels that have been approved by the relevant competent bodies. Breaches of limits and warning levels are reported, upon occurrence, to the relevant bodies. Consequently the escalation process is activated in line with the procedures set in the Policy, to establish the most appropriate course of action to restore exposure within the approved limits. Execution of structural hedges to mitigate the interest rate risk exposure on client business is responsibility of the treasury functions. Strategic transactions in the Banking Book is managed by the Asset and Liability Management department, ALM. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 358 2018 Annual Report and Accounts · UniCredit The main tool used by UniCredit group to measure market risk on trading positions is Value at Risk (VaR), calculated using the historical simulation method. Further details on risk valuation models are included in the following chapter. Group Financial Risk defines market risk reporting standards, both in terms of contents and recurrence, and provides timely information to Top Management and regulators regarding the market risk profile at consolidated level. In addition to VaR and Basel II risk measures, stress tests represent an important risk management tool that provides UniCredit with an indication of how much capital might be needed to absorb losses in case of large financial shocks. Stress testing forms an integral part of the Internal Capital Adequacy Assessment Process (ICAAP), which requires UniCredit to undertake rigorous, forward-looking stress testing that identifies possible events or changes in market conditions that could adversely impact the bank. Banking Book The primary responsibility of the monitoring and control of the risk management for market risk in the Banking Book lies in the Bank’s competent Bodies. For instance, the Parent Company is in charge of monitoring market risks for the Banking Book at consolidated level. As such, it defines structure, data and frequency of the necessary Group reporting. The Banking Book interest rate risk measures cover both the economic value and net interest income risk aspects. More precisely, the different and complementary perspectives involve: • economic value perspective: variation in interest rates can affect the economic value of assets and liabilities. The economic value of the bank can be viewed as the present value of the bank’s expected net cash flows, defined as the expected cash flows on assets minus the expected cash flows on liabilities; a relevant risk measure from this perspective is the economic value sensitivity per time bucket for a 1bp rate shock. This measure is reported to the relevant committees to assess the economic value impact of various changes in the yield curve. In addition the economic value sensitivity for a 200bps parallel shock is included. • earnings at Risk perspective: the focus of the analysis is the impact of changes of interest rates on Net Interest Income that is the difference between revenues generated by interest sensitive assets and the cost relating to interest sensitive liabilities. An example of a measure of risks used is Net Interest Income sensitivity for a 100bps parallel shock of rates. It provides an indication of the impact on the net interest income over the next 12 months if such shock should occur. Additional stress test scenarios are performed on a regular basis to estimate the basis risk and non-parallel shocks. Next to the set of limits and warning levels for interest rate risk, restrictions and exposure measures are in place for other market risk types such foreign exchange risk, equity risk, value risk due to credit spread fluctuations. In addition through economic value sensitivity measures and other granular indicators, these risk types are captured in a value at risk measure that includes all market risk factors. These values at risk measures are based on a historical simulation. Hedging policies and risk mitigation Trading Book On a quarterly basis a set of risk indicators is provided to the Group Risk Committee through the Enterprise Risk Management Report and, on a monthly basis, to the Group Market Risk Committee through the Market Risk Overview report; these include VaR, Stressed VaR and IRC limit usages, Sensitivities, Sovereign Exposure, Stress Test results and P&L. At the same time limit breaches are reported both to the Group Market Risk Committee and to the Group Risk Committee (according to their severity); the escalation process being ruled by the Global Policy "Market Risk Limits" which defines the nature of the various thresholds/limits applied, as well as the relevant bodies to be involve to establish the most appropriate course of action to restore exposure within the approved limits. If required, focus is provided from time to time on the activity of a specific business line/desk in order to ensure the highest level of comprehension and discussion of the risks in certain areas which are deemed to deserve particular attention. Banking Book The ALCO evaluates the main market risk drivers on a monthly basis. Group Risk Management reports to the committee on the Banking Book risk measures both from a value and income perspective. It proposes and monitors limits and warning levels that have been approved by the relevant competent bodies. Breaches of limits and warning levels are reported, upon occurrence, to the relevant bodies. Consequently the escalation process is activated in line with the procedures set in the Policy, to establish the most appropriate course of action to restore exposure within the approved limits. Execution of structural hedges to mitigate the interest rate risk exposure on client business is responsibility of the treasury functions. Strategic transactions in the Banking Book is managed by the Asset and Liability Management department, ALM. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 359 Internal model for price, interest rate and exchange rate risk of the regulatory trading book The current Market Risk internal model is based on Value-at-Risk (VaR) framework, integrated with other risk measures: incremental risk capital charge (IRC) and stressed Value-at-Risk (SVaR) aimed at reducing the pro-cyclicality of the minimum capital requirements for market risk, in line with European directives in force. All the regulatory requirements in the market risk arena have been addressed via internal development of the necessary model and IT infrastructure as opposed to the external acquisition of ready-made solutions. This enabled UniCredit to craft solutions that in many aspects can be considered on the sophisticated end of the spectrum of practices that can be found in the Industry. In this respect one distinctive feature of the market (and counterparty) risk frameworks implemented in UniCredit group is the full revaluation approach employing the same pricing libraries used in the Front Office. UniCredit group calculates both VaR and SVaR for market risk on trading positions using the historical simulation method. Under the historical simulation method positions are revaluated (in full revaluation approach) on the basis of trends in market prices over an appropriate observation period. The empirical distribution of profits/losses deriving therefrom is analysed to determine the effect of extreme market movements on the portfolios. For a given portfolio, probability and time horizon, VaR is defined as a threshold value so that the probability that the mark-to-market loss on the portfolio, over the given time horizon, not exceeding this value (assuming no trading in the portfolio) has the given confidence level. Current configuration of the internal model defines VaR at a 99% confidence level on the 1 day P&L distribution obtained from equally weighted historical scenarios covering the last 500 days. Historical scenarios are built relying on proportional shocks for Equities and FX rates, and on absolute shocks for Interest Rates and Credit Spreads. UniCredit VaR Model simulates all the risk factors, both referring to general and specific risk, thus providing diversification in a straightforward approach. The model is recalibrated on a daily basis. The use of a 1-day time-horizon makes the immediate comparison with realised profits/losses possible and such comparison is the core of the back-testing exercise. The VaR measure identifies a consistent measure across all the portfolios and products, since it: • allows a comparison of risk among different businesses; • provides a means of aggregating and netting position within a portfolio to reflect correlation and offsets between different assets classes; • facilitates comparisons of our market risk both over time and against daily results. Although a valuable guide to risk, VaR should always be viewed within its limitations: • historical simulation relies on past occurrences to forecast potential losses. In case of regime shifts this might not be appropriate; • the length of the time window used to generate the forecasted distribution will necessarily embed a trade-off between the responsiveness of the metric to recent market evolutions (short window) and the spectrum of scenarios that will embed (long window); • assuming a constant one/ten day horizon there is no discrimination between different risk-factor liquidity. Stressed VaR calculation is based on the very same methodology and architecture of the VaR, and it is analogously calculated with 99% confidence level and 1 day time horizon on a weekly basis, but over a stressed observation period of 250 days. The chosen historical period identifies the 1-year observation window which produces the highest resulting measure for the current portfolio. Stress windows are recalibrated on a quarterly basis and are tailored to the portfolio of each Legal Entity of the Group, plus the Group itself (relevant for RWA calculation on a consolidated level). The SVaR window at Group level and for UniCredit S.p.A. stand alone is “Sovereign Debt Crisis” (2011/2012), while for UniCredit Bank AG and UniCredit Bank Austria AG the stressed window corresponds to the “Lehman Crisis” (2008/2009).The 10-day capital requirement is however obtained by extending the 1-day risk measure to the 10 day horizon taking the maximum of the square root of time scaling and a convolution approach that turns the one-day distribution into a 10-day distribution for both the VaR and the Stressed VaR. The 1-day measures are instead actively used for market risk management. In order to validate the consistency of VaR internal models used in calculating capital requirements on market risks, back-testing is performed by comparing the internal model risk estimates with the portfolio profit and loss, in order to check if the 99% of the trading outcomes is covered by the 99th percentile of the risk measures. The test is based on the last twelve months data (i.e. 250 daily observations). In case the number of exceptions in the previous year exceeds what forecasted by the confidence level assumed, a careful revision of model parameters and assumptions is initiated. Group Internal Validation performed the periodic validation of the VaR/SVaR framework to assess the compliance with regulatory requirements including an independent back-testing analysis complemented with different parameterizations (e.g. different time horizon, percentile) and detailing the results for a set of representative portfolios of the bank. The IRC capital charge captures default risk as well as migration risk for un-securitised credit products held in the Trading Book. The internally developed model simulates via multivariate version of a Merton-type model the rating migration events of all the issuers relevant to the Group trading positions over a capital horizon of one year. The transition probabilities and the sector correlations are historically calibrated, while Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 359 Internal model for price, interest rate and exchange rate risk of the regulatory trading book The current Market Risk internal model is based on Value-at-Risk (VaR) framework, integrated with other risk measures: incremental risk capital charge (IRC) and stressed Value-at-Risk (SVaR) aimed at reducing the pro-cyclicality of the minimum capital requirements for market risk, in line with European directives in force. All the regulatory requirements in the market risk arena have been addressed via internal development of the necessary model and IT infrastructure as opposed to the external acquisition of ready-made solutions. This enabled UniCredit to craft solutions that in many aspects can be considered on the sophisticated end of the spectrum of practices that can be found in the Industry. In this respect one distinctive feature of the market (and counterparty) risk frameworks implemented in UniCredit group is the full revaluation approach employing the same pricing libraries used in the Front Office. UniCredit group calculates both VaR and SVaR for market risk on trading positions using the historical simulation method. Under the historical simulation method positions are revaluated (in full revaluation approach) on the basis of trends in market prices over an appropriate observation period. The empirical distribution of profits/losses deriving therefrom is analysed to determine the effect of extreme market movements on the portfolios. For a given portfolio, probability and time horizon, VaR is defined as a threshold value so that the probability that the mark-to-market loss on the portfolio, over the given time horizon, not exceeding this value (assuming no trading in the portfolio) has the given confidence level. Current configuration of the internal model defines VaR at a 99% confidence level on the 1 day P&L distribution obtained from equally weighted historical scenarios covering the last 500 days. Historical scenarios are built relying on proportional shocks for Equities and FX rates, and on absolute shocks for Interest Rates and Credit Spreads. UniCredit VaR Model simulates all the risk factors, both referring to general and specific risk, thus providing diversification in a straightforward approach. The model is recalibrated on a daily basis. The use of a 1-day time-horizon makes the immediate comparison with realised profits/losses possible and such comparison is the core of the back-testing exercise. The VaR measure identifies a consistent measure across all the portfolios and products, since it: • allows a comparison of risk among different businesses; • provides a means of aggregating and netting position within a portfolio to reflect correlation and offsets between different assets classes; • facilitates comparisons of our market risk both over time and against daily results. Although a valuable guide to risk, VaR should always be viewed within its limitations: • historical simulation relies on past occurrences to forecast potential losses. In case of regime shifts this might not be appropriate; • the length of the time window used to generate the forecasted distribution will necessarily embed a trade-off between the responsiveness of the metric to recent market evolutions (short window) and the spectrum of scenarios that will embed (long window); • assuming a constant one/ten day horizon there is no discrimination between different risk-factor liquidity. Stressed VaR calculation is based on the very same methodology and architecture of the VaR, and it is analogously calculated with 99% confidence level and 1 day time horizon on a weekly basis, but over a stressed observation period of 250 days. The chosen historical period identifies the 1-year observation window which produces the highest resulting measure for the current portfolio. Stress windows are recalibrated on a quarterly basis and are tailored to the portfolio of each Legal Entity of the Group, plus the Group itself (relevant for RWA calculation on a consolidated level). The SVaR window at Group level and for UniCredit S.p.A. stand alone is “Sovereign Debt Crisis” (2011/2012), while for UniCredit Bank AG and UniCredit Bank Austria AG the stressed window corresponds to the “Lehman Crisis” (2008/2009).The 10-day capital requirement is however obtained by extending the 1-day risk measure to the 10 day horizon taking the maximum of the square root of time scaling and a convolution approach that turns the one-day distribution into a 10-day distribution for both the VaR and the Stressed VaR. The 1-day measures are instead actively used for market risk management. In order to validate the consistency of VaR internal models used in calculating capital requirements on market risks, back-testing is performed by comparing the internal model risk estimates with the portfolio profit and loss, in order to check if the 99% of the trading outcomes is covered by the 99th percentile of the risk measures. The test is based on the last twelve months data (i.e. 250 daily observations). In case the number of exceptions in the previous year exceeds what forecasted by the confidence level assumed, a careful revision of model parameters and assumptions is initiated. Group Internal Validation performed the periodic validation of the VaR/SVaR framework to assess the compliance with regulatory requirements including an independent back-testing analysis complemented with different parameterizations (e.g. different time horizon, percentile) and detailing the results for a set of representative portfolios of the bank. The IRC capital charge captures default risk as well as migration risk for un-securitised credit products held in the Trading Book. The internally developed model simulates via multivariate version of a Merton-type model the rating migration events of all the issuers relevant to the Group trading positions over a capital horizon of one year. The transition probabilities and the sector correlations are historically calibrated, while Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 359 Internal model for price, interest rate and exchange rate risk of the regulatory trading book The current Market Risk internal model is based on Value-at-Risk (VaR) framework, integrated with other risk measures: incremental risk capital charge (IRC) and stressed Value-at-Risk (SVaR) aimed at reducing the pro-cyclicality of the minimum capital requirements for market risk, in line with European directives in force. All the regulatory requirements in the market risk arena have been addressed via internal development of the necessary model and IT infrastructure as opposed to the external acquisition of ready-made solutions. This enabled UniCredit to craft solutions that in many aspects can be considered on the sophisticated end of the spectrum of practices that can be found in the Industry. In this respect one distinctive feature of the market (and counterparty) risk frameworks implemented in UniCredit group is the full revaluation approach employing the same pricing libraries used in the Front Office. UniCredit group calculates both VaR and SVaR for market risk on trading positions using the historical simulation method. Under the historical simulation method positions are revaluated (in full revaluation approach) on the basis of trends in market prices over an appropriate observation period. The empirical distribution of profits/losses deriving therefrom is analysed to determine the effect of extreme market movements on the portfolios. For a given portfolio, probability and time horizon, VaR is defined as a threshold value so that the probability that the mark-to-market loss on the portfolio, over the given time horizon, not exceeding this value (assuming no trading in the portfolio) has the given confidence level. Current configuration of the internal model defines VaR at a 99% confidence level on the 1 day P&L distribution obtained from equally weighted historical scenarios covering the last 500 days. Historical scenarios are built relying on proportional shocks for Equities and FX rates, and on absolute shocks for Interest Rates and Credit Spreads. UniCredit VaR Model simulates all the risk factors, both referring to general and specific risk, thus providing diversification in a straightforward approach. The model is recalibrated on a daily basis. The use of a 1-day time-horizon makes the immediate comparison with realised profits/losses possible and such comparison is the core of the back-testing exercise. The VaR measure identifies a consistent measure across all the portfolios and products, since it: • allows a comparison of risk among different businesses; • provides a means of aggregating and netting position within a portfolio to reflect correlation and offsets between different assets classes; • facilitates comparisons of our market risk both over time and against daily results. Although a valuable guide to risk, VaR should always be viewed within its limitations: • historical simulation relies on past occurrences to forecast potential losses. In case of regime shifts this might not be appropriate; • the length of the time window used to generate the forecasted distribution will necessarily embed a trade-off between the responsiveness of the metric to recent market evolutions (short window) and the spectrum of scenarios that will embed (long window); • assuming a constant one/ten day horizon there is no discrimination between different risk-factor liquidity. Stressed VaR calculation is based on the very same methodology and architecture of the VaR, and it is analogously calculated with 99% confidence level and 1 day time horizon on a weekly basis, but over a stressed observation period of 250 days. The chosen historical period identifies the 1-year observation window which produces the highest resulting measure for the current portfolio. Stress windows are recalibrated on a quarterly basis and are tailored to the portfolio of each Legal Entity of the Group, plus the Group itself (relevant for RWA calculation on a consolidated level). The SVaR window at Group level and for UniCredit S.p.A. stand alone is “Sovereign Debt Crisis” (2011/2012), while for UniCredit Bank AG and UniCredit Bank Austria AG the stressed window corresponds to the “Lehman Crisis” (2008/2009).The 10-day capital requirement is however obtained by extending the 1-day risk measure to the 10 day horizon taking the maximum of the square root of time scaling and a convolution approach that turns the one-day distribution into a 10-day distribution for both the VaR and the Stressed VaR. The 1-day measures are instead actively used for market risk management. In order to validate the consistency of VaR internal models used in calculating capital requirements on market risks, back-testing is performed by comparing the internal model risk estimates with the portfolio profit and loss, in order to check if the 99% of the trading outcomes is covered by the 99th percentile of the risk measures. The test is based on the last twelve months data (i.e. 250 daily observations). In case the number of exceptions in the previous year exceeds what forecasted by the confidence level assumed, a careful revision of model parameters and assumptions is initiated. Group Internal Validation performed the periodic validation of the VaR/SVaR framework to assess the compliance with regulatory requirements including an independent back-testing analysis complemented with different parameterizations (e.g. different time horizon, percentile) and detailing the results for a set of representative portfolios of the bank. The IRC capital charge captures default risk as well as migration risk for un-securitised credit products held in the Trading Book. The internally developed model simulates via multivariate version of a Merton-type model the rating migration events of all the issuers relevant to the Group trading positions over a capital horizon of one year. The transition probabilities and the sector correlations are historically calibrated, while Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 359 Internal model for price, interest rate and exchange rate risk of the regulatory trading book The current Market Risk internal model is based on Value-at-Risk (VaR) framework, integrated with other risk measures: incremental risk capital charge (IRC) and stressed Value-at-Risk (SVaR) aimed at reducing the pro-cyclicality of the minimum capital requirements for market risk, in line with European directives in force. All the regulatory requirements in the market risk arena have been addressed via internal development of the necessary model and IT infrastructure as opposed to the external acquisition of ready-made solutions. This enabled UniCredit to craft solutions that in many aspects can be considered on the sophisticated end of the spectrum of practices that can be found in the Industry. In this respect one distinctive feature of the market (and counterparty) risk frameworks implemented in UniCredit group is the full revaluation approach employing the same pricing libraries used in the Front Office. UniCredit group calculates both VaR and SVaR for market risk on trading positions using the historical simulation method. Under the historical simulation method positions are revaluated (in full revaluation approach) on the basis of trends in market prices over an appropriate observation period. The empirical distribution of profits/losses deriving therefrom is analysed to determine the effect of extreme market movements on the portfolios. For a given portfolio, probability and time horizon, VaR is defined as a threshold value so that the probability that the mark-to-market loss on the portfolio, over the given time horizon, not exceeding this value (assuming no trading in the portfolio) has the given confidence level. Current configuration of the internal model defines VaR at a 99% confidence level on the 1 day P&L distribution obtained from equally weighted historical scenarios covering the last 500 days. Historical scenarios are built relying on proportional shocks for Equities and FX rates, and on absolute shocks for Interest Rates and Credit Spreads. UniCredit VaR Model simulates all the risk factors, both referring to general and specific risk, thus providing diversification in a straightforward approach. The model is recalibrated on a daily basis. The use of a 1-day time-horizon makes the immediate comparison with realised profits/losses possible and such comparison is the core of the back-testing exercise. The VaR measure identifies a consistent measure across all the portfolios and products, since it: • allows a comparison of risk among different businesses; • provides a means of aggregating and netting position within a portfolio to reflect correlation and offsets between different assets classes; • facilitates comparisons of our market risk both over time and against daily results. Although a valuable guide to risk, VaR should always be viewed within its limitations: • historical simulation relies on past occurrences to forecast potential losses. In case of regime shifts this might not be appropriate; • the length of the time window used to generate the forecasted distribution will necessarily embed a trade-off between the responsiveness of the metric to recent market evolutions (short window) and the spectrum of scenarios that will embed (long window); • assuming a constant one/ten day horizon there is no discrimination between different risk-factor liquidity. Stressed VaR calculation is based on the very same methodology and architecture of the VaR, and it is analogously calculated with 99% confidence level and 1 day time horizon on a weekly basis, but over a stressed observation period of 250 days. The chosen historical period identifies the 1-year observation window which produces the highest resulting measure for the current portfolio. Stress windows are recalibrated on a quarterly basis and are tailored to the portfolio of each Legal Entity of the Group, plus the Group itself (relevant for RWA calculation on a consolidated level). The SVaR window at Group level and for UniCredit S.p.A. stand alone is “Sovereign Debt Crisis” (2011/2012), while for UniCredit Bank AG and UniCredit Bank Austria AG the stressed window corresponds to the “Lehman Crisis” (2008/2009).The 10-day capital requirement is however obtained by extending the 1-day risk measure to the 10 day horizon taking the maximum of the square root of time scaling and a convolution approach that turns the one-day distribution into a 10-day distribution for both the VaR and the Stressed VaR. The 1-day measures are instead actively used for market risk management. In order to validate the consistency of VaR internal models used in calculating capital requirements on market risks, back-testing is performed by comparing the internal model risk estimates with the portfolio profit and loss, in order to check if the 99% of the trading outcomes is covered by the 99th percentile of the risk measures. The test is based on the last twelve months data (i.e. 250 daily observations). In case the number of exceptions in the previous year exceeds what forecasted by the confidence level assumed, a careful revision of model parameters and assumptions is initiated. Group Internal Validation performed the periodic validation of the VaR/SVaR framework to assess the compliance with regulatory requirements including an independent back-testing analysis complemented with different parameterizations (e.g. different time horizon, percentile) and detailing the results for a set of representative portfolios of the bank. The IRC capital charge captures default risk as well as migration risk for un-securitised credit products held in the Trading Book. The internally developed model simulates via multivariate version of a Merton-type model the rating migration events of all the issuers relevant to the Group trading positions over a capital horizon of one year. The transition probabilities and the sector correlations are historically calibrated, while Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 359 Internal model for price, interest rate and exchange rate risk of the regulatory trading book The current Market Risk internal model is based on Value-at-Risk (VaR) framework, integrated with other risk measures: incremental risk capital charge (IRC) and stressed Value-at-Risk (SVaR) aimed at reducing the pro-cyclicality of the minimum capital requirements for market risk, in line with European directives in force. All the regulatory requirements in the market risk arena have been addressed via internal development of the necessary model and IT infrastructure as opposed to the external acquisition of ready-made solutions. This enabled UniCredit to craft solutions that in many aspects can be considered on the sophisticated end of the spectrum of practices that can be found in the Industry. In this respect one distinctive feature of the market (and counterparty) risk frameworks implemented in UniCredit group is the full revaluation approach employing the same pricing libraries used in the Front Office. UniCredit group calculates both VaR and SVaR for market risk on trading positions using the historical simulation method. Under the historical simulation method positions are revaluated (in full revaluation approach) on the basis of trends in market prices over an appropriate observation period. The empirical distribution of profits/losses deriving therefrom is analysed to determine the effect of extreme market movements on the portfolios. For a given portfolio, probability and time horizon, VaR is defined as a threshold value so that the probability that the mark-to-market loss on the portfolio, over the given time horizon, not exceeding this value (assuming no trading in the portfolio) has the given confidence level. Current configuration of the internal model defines VaR at a 99% confidence level on the 1 day P&L distribution obtained from equally weighted historical scenarios covering the last 500 days. Historical scenarios are built relying on proportional shocks for Equities and FX rates, and on absolute shocks for Interest Rates and Credit Spreads. UniCredit VaR Model simulates all the risk factors, both referring to general and specific risk, thus providing diversification in a straightforward approach. The model is recalibrated on a daily basis. The use of a 1-day time-horizon makes the immediate comparison with realised profits/losses possible and such comparison is the core of the back-testing exercise. The VaR measure identifies a consistent measure across all the portfolios and products, since it: • allows a comparison of risk among different businesses; • provides a means of aggregating and netting position within a portfolio to reflect correlation and offsets between different assets classes; • facilitates comparisons of our market risk both over time and against daily results. Although a valuable guide to risk, VaR should always be viewed within its limitations: • historical simulation relies on past occurrences to forecast potential losses. In case of regime shifts this might not be appropriate; • the length of the time window used to generate the forecasted distribution will necessarily embed a trade-off between the responsiveness of the metric to recent market evolutions (short window) and the spectrum of scenarios that will embed (long window); • assuming a constant one/ten day horizon there is no discrimination between different risk-factor liquidity. Stressed VaR calculation is based on the very same methodology and architecture of the VaR, and it is analogously calculated with 99% confidence level and 1 day time horizon on a weekly basis, but over a stressed observation period of 250 days. The chosen historical period identifies the 1-year observation window which produces the highest resulting measure for the current portfolio. Stress windows are recalibrated on a quarterly basis and are tailored to the portfolio of each Legal Entity of the Group, plus the Group itself (relevant for RWA calculation on a consolidated level). The SVaR window at Group level and for UniCredit S.p.A. stand alone is “Sovereign Debt Crisis” (2011/2012), while for UniCredit Bank AG and UniCredit Bank Austria AG the stressed window corresponds to the “Lehman Crisis” (2008/2009).The 10-day capital requirement is however obtained by extending the 1-day risk measure to the 10 day horizon taking the maximum of the square root of time scaling and a convolution approach that turns the one-day distribution into a 10-day distribution for both the VaR and the Stressed VaR. The 1-day measures are instead actively used for market risk management. In order to validate the consistency of VaR internal models used in calculating capital requirements on market risks, back-testing is performed by comparing the internal model risk estimates with the portfolio profit and loss, in order to check if the 99% of the trading outcomes is covered by the 99th percentile of the risk measures. The test is based on the last twelve months data (i.e. 250 daily observations). In case the number of exceptions in the previous year exceeds what forecasted by the confidence level assumed, a careful revision of model parameters and assumptions is initiated. Group Internal Validation performed the periodic validation of the VaR/SVaR framework to assess the compliance with regulatory requirements including an independent back-testing analysis complemented with different parameterizations (e.g. different time horizon, percentile) and detailing the results for a set of representative portfolios of the bank. The IRC capital charge captures default risk as well as migration risk for un-securitised credit products held in the Trading Book. The internally developed model simulates via multivariate version of a Merton-type model the rating migration events of all the issuers relevant to the Group trading positions over a capital horizon of one year. The transition probabilities and the sector correlations are historically calibrated, while Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 360 2018 Annual Report and Accounts · UniCredit idiosyncratic correlations are derived from the IRB correlation formula. Simulated migration events are turned into credit spread scenarios while default events are associated to a simulated recovery rate. In so doing a constant position assumption is employed and products are conservatively all attributed a common liquidity horizon of 1 year. In each scenario all the relevant product inventory is revaluated under such spread and default events producing a simulated Profit or Loss (P&L) that fully reflects convexity, basis risk, portfolio effects and portfolio concentration risks. In this way a high-number of paths Monte Carlo simulation generates a P&L distribution for the Group (and each leaf of its portfolio tree). IRC is defined as the 99.9 percentile of such loss distribution. Additional capital charge for securitisations and credit products not covered by IRC is evaluated through the standardised approach. The following table summarises the main characteristics of the different measures that define the capital requirement for market risk in UniCredit. MEASURE RISK TYPE HORIZON QUANTILE SIMULATION CALIBRATION VaR All Market Risk Factors 1d 99% Historical 2Y window, equally weighted SVaR All Market Risk Factors 1d 99% Historical 1Y window, equally weighted IRC Rating Migration & Default 1Y 99.9% Monte Carlo Through-the-cycle (min 8Y) The IRC Model is subject to a quarterly program of Stress Tests aimed at evaluating the robustness of the model. The relevant parameters as Recovery Rates, Transition Probabilities, idiosyncratic correlation are shocked and the impact on the IRC measure is computed. “Group Internal Validation” performed its analyses in order to evaluate the conceptual soundness of the IRC model, to supplement the available analyses on that topic and to ensure the compliance of the resulting risk management environment with all the relevant regulatory requirements and internal standards. As already remarked by the regulation, traditional back-testing procedures, regarding the 99.9% one-year soundness standard for IRC, are not applicable due to the 1-year time horizon of the measure. Consequently, while validation of the IRC model relied heavily on indirect methods (including stress tests, sensitivity analysis and scenario analysis) in order to assess the qualitative and quantitative reasonableness of the model, special focus has indeed been given to the specific situation of UniCredit portfolios. Group Internal Validation kept the scope of their analyses as wide as possible in order to comprise the many diverse issues that are acting concurrently in such a model (general model design, regulatory compliance, numerical implementation, outcomes explanation). Group Internal Validation performed a full spectrum of validation analyses on the IRC measure calculation using its internal replica libraries. The replica allows a simple verification of the results provided by the productive environment, and in addition opens up the door to a more dynamical and tailored implementation of the needed tests. The spectrum of analysis encompassed Monte Carlo stability, correlation analysis and stressing, calculation of parameters sensitivity, marginal contribution analysis, alternative models comparisons. All major parameters were tested, i.e. correlation matrices, transition probabilities matrices, transition shocks, recovery rates, probabilities of default, number of scenarios. To understand the overall performance of the model in replicating the real-world migration and default phenomena, Group Internal Validation performed also a historical performance exercise comparing the migrations and defaults predicted by UniCredit IRC model with the ones actually observed since 1981 (due to data availability). Banca d’Italia authorised UniCredit group to use internal models for the calculation of capital requirements for market risk. As of today CEE countries are the main companies of the Group that are using the standardised approach for calculating capital requirements related to trading positions. However, the VaR measure is used for the management of market risk in these latter companies. For Trading Book VaR, Stressed VaR and IRC, the bank differentiates between regulatory and managerial views. The managerial measure, are used for Risk monitoring and Business steering purposes as prescribed by Market Risk Framework: in particular VaR limits represent the main metric translating the Risk Appetite into the Market Risk framework. The managerial VaR has a wider scope: it is used to monitor both Trading Book and Overall perimeter (Trading Book + Banking Book), also including Legal Entities for which the standardised measurement method is applied for Regulatory purposes, in order to have a complete picture of risk. The standardised measurement method is also applied to the calculation of capital covering the risk of holding Banking Book exposure in foreign currencies for the Legal Entities (namely UniCredit S.p.A.) that do not have an approval for FX Risk simulation under Internal Model. In this respect the FX risk for both Trading and the Banking Book is included in VaR and SVaR for Regulatory purposes as for the approved Legal Entities (UniCredit Bank AG and UniCredit Bank Austria AG); as regards the managerial view the FX Risk of Banking Book is included in the Overall (Trading Book + Banking Book) VaR. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 360 2018 Annual Report and Accounts · UniCredit idiosyncratic correlations are derived from the IRB correlation formula. Simulated migration events are turned into credit spread scenarios while default events are associated to a simulated recovery rate. In so doing a constant position assumption is employed and products are conservatively all attributed a common liquidity horizon of 1 year. In each scenario all the relevant product inventory is revaluated under such spread and default events producing a simulated Profit or Loss (P&L) that fully reflects convexity, basis risk, portfolio effects and portfolio concentration risks. In this way a high-number of paths Monte Carlo simulation generates a P&L distribution for the Group (and each leaf of its portfolio tree). IRC is defined as the 99.9 percentile of such loss distribution. Additional capital charge for securitisations and credit products not covered by IRC is evaluated through the standardised approach. The following table summarises the main characteristics of the different measures that define the capital requirement for market risk in UniCredit. MEASURE RISK TYPE HORIZON QUANTILE SIMULATION CALIBRATION VaR All Market Risk Factors 1d 99% Historical 2Y window, equally weighted SVaR All Market Risk Factors 1d 99% Historical 1Y window, equally weighted IRC Rating Migration & Default 1Y 99.9% Monte Carlo Through-the-cycle (min 8Y) The IRC Model is subject to a quarterly program of Stress Tests aimed at evaluating the robustness of the model. The relevant parameters as Recovery Rates, Transition Probabilities, idiosyncratic correlation are shocked and the impact on the IRC measure is computed. “Group Internal Validation” performed its analyses in order to evaluate the conceptual soundness of the IRC model, to supplement the available analyses on that topic and to ensure the compliance of the resulting risk management environment with all the relevant regulatory requirements and internal standards. As already remarked by the regulation, traditional back-testing procedures, regarding the 99.9% one-year soundness standard for IRC, are not applicable due to the 1-year time horizon of the measure. Consequently, while validation of the IRC model relied heavily on indirect methods (including stress tests, sensitivity analysis and scenario analysis) in order to assess the qualitative and quantitative reasonableness of the model, special focus has indeed been given to the specific situation of UniCredit portfolios. Group Internal Validation kept the scope of their analyses as wide as possible in order to comprise the many diverse issues that are acting concurrently in such a model (general model design, regulatory compliance, numerical implementation, outcomes explanation). Group Internal Validation performed a full spectrum of validation analyses on the IRC measure calculation using its internal replica libraries. The replica allows a simple verification of the results provided by the productive environment, and in addition opens up the door to a more dynamical and tailored implementation of the needed tests. The spectrum of analysis encompassed Monte Carlo stability, correlation analysis and stressing, calculation of parameters sensitivity, marginal contribution analysis, alternative models comparisons. All major parameters were tested, i.e. correlation matrices, transition probabilities matrices, transition shocks, recovery rates, probabilities of default, number of scenarios. To understand the overall performance of the model in replicating the real-world migration and default phenomena, Group Internal Validation performed also a historical performance exercise comparing the migrations and defaults predicted by UniCredit IRC model with the ones actually observed since 1981 (due to data availability). Banca d’Italia authorised UniCredit group to use internal models for the calculation of capital requirements for market risk. As of today CEE countries are the main companies of the Group that are using the standardised approach for calculating capital requirements related to trading positions. However, the VaR measure is used for the management of market risk in these latter companies. For Trading Book VaR, Stressed VaR and IRC, the bank differentiates between regulatory and managerial views. The managerial measure, are used for Risk monitoring and Business steering purposes as prescribed by Market Risk Framework: in particular VaR limits represent the main metric translating the Risk Appetite into the Market Risk framework. The managerial VaR has a wider scope: it is used to monitor both Trading Book and Overall perimeter (Trading Book + Banking Book), also including Legal Entities for which the standardised measurement method is applied for Regulatory purposes, in order to have a complete picture of risk. The standardised measurement method is also applied to the calculation of capital covering the risk of holding Banking Book exposure in foreign currencies for the Legal Entities (namely UniCredit S.p.A.) that do not have an approval for FX Risk simulation under Internal Model. In this respect the FX risk for both Trading and the Banking Book is included in VaR and SVaR for Regulatory purposes as for the approved Legal Entities (UniCredit Bank AG and UniCredit Bank Austria AG); as regards the managerial view the FX Risk of Banking Book is included in the Overall (Trading Book + Banking Book) VaR. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 360 2018 Annual Report and Accounts · UniCredit idiosyncratic correlations are derived from the IRB correlation formula. Simulated migration events are turned into credit spread scenarios while default events are associated to a simulated recovery rate. In so doing a constant position assumption is employed and products are conservatively all attributed a common liquidity horizon of 1 year. In each scenario all the relevant product inventory is revaluated under such spread and default events producing a simulated Profit or Loss (P&L) that fully reflects convexity, basis risk, portfolio effects and portfolio concentration risks. In this way a high-number of paths Monte Carlo simulation generates a P&L distribution for the Group (and each leaf of its portfolio tree). IRC is defined as the 99.9 percentile of such loss distribution. Additional capital charge for securitisations and credit products not covered by IRC is evaluated through the standardised approach. The following table summarises the main characteristics of the different measures that define the capital requirement for market risk in UniCredit. MEASURE RISK TYPE HORIZON QUANTILE SIMULATION CALIBRATION VaR All Market Risk Factors 1d 99% Historical 2Y window, equally weighted SVaR All Market Risk Factors 1d 99% Historical 1Y window, equally weighted IRC Rating Migration & Default 1Y 99.9% Monte Carlo Through-the-cycle (min 8Y) The IRC Model is subject to a quarterly program of Stress Tests aimed at evaluating the robustness of the model. The relevant parameters as Recovery Rates, Transition Probabilities, idiosyncratic correlation are shocked and the impact on the IRC measure is computed. “Group Internal Validation” performed its analyses in order to evaluate the conceptual soundness of the IRC model, to supplement the available analyses on that topic and to ensure the compliance of the resulting risk management environment with all the relevant regulatory requirements and internal standards. As already remarked by the regulation, traditional back-testing procedures, regarding the 99.9% one-year soundness standard for IRC, are not applicable due to the 1-year time horizon of the measure. Consequently, while validation of the IRC model relied heavily on indirect methods (including stress tests, sensitivity analysis and scenario analysis) in order to assess the qualitative and quantitative reasonableness of the model, special focus has indeed been given to the specific situation of UniCredit portfolios. Group Internal Validation kept the scope of their analyses as wide as possible in order to comprise the many diverse issues that are acting concurrently in such a model (general model design, regulatory compliance, numerical implementation, outcomes explanation). Group Internal Validation performed a full spectrum of validation analyses on the IRC measure calculation using its internal replica libraries. The replica allows a simple verification of the results provided by the productive environment, and in addition opens up the door to a more dynamical and tailored implementation of the needed tests. The spectrum of analysis encompassed Monte Carlo stability, correlation analysis and stressing, calculation of parameters sensitivity, marginal contribution analysis, alternative models comparisons. All major parameters were tested, i.e. correlation matrices, transition probabilities matrices, transition shocks, recovery rates, probabilities of default, number of scenarios. To understand the overall performance of the model in replicating the real-world migration and default phenomena, Group Internal Validation performed also a historical performance exercise comparing the migrations and defaults predicted by UniCredit IRC model with the ones actually observed since 1981 (due to data availability). Banca d’Italia authorised UniCredit group to use internal models for the calculation of capital requirements for market risk. As of today CEE countries are the main companies of the Group that are using the standardised approach for calculating capital requirements related to trading positions. However, the VaR measure is used for the management of market risk in these latter companies. For Trading Book VaR, Stressed VaR and IRC, the bank differentiates between regulatory and managerial views. The managerial measure, are used for Risk monitoring and Business steering purposes as prescribed by Market Risk Framework: in particular VaR limits represent the main metric translating the Risk Appetite into the Market Risk framework. The managerial VaR has a wider scope: it is used to monitor both Trading Book and Overall perimeter (Trading Book + Banking Book), also including Legal Entities for which the standardised measurement method is applied for Regulatory purposes, in order to have a complete picture of risk. The standardised measurement method is also applied to the calculation of capital covering the risk of holding Banking Book exposure in foreign currencies for the Legal Entities (namely UniCredit S.p.A.) that do not have an approval for FX Risk simulation under Internal Model. In this respect the FX risk for both Trading and the Banking Book is included in VaR and SVaR for Regulatory purposes as for the approved Legal Entities (UniCredit Bank AG and UniCredit Bank Austria AG); as regards the managerial view the FX Risk of Banking Book is included in the Overall (Trading Book + Banking Book) VaR. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 360 2018 Annual Report and Accounts · UniCredit idiosyncratic correlations are derived from the IRB correlation formula. Simulated migration events are turned into credit spread scenarios while default events are associated to a simulated recovery rate. In so doing a constant position assumption is employed and products are conservatively all attributed a common liquidity horizon of 1 year. In each scenario all the relevant product inventory is revaluated under such spread and default events producing a simulated Profit or Loss (P&L) that fully reflects convexity, basis risk, portfolio effects and portfolio concentration risks. In this way a high-number of paths Monte Carlo simulation generates a P&L distribution for the Group (and each leaf of its portfolio tree). IRC is defined as the 99.9 percentile of such loss distribution. Additional capital charge for securitisations and credit products not covered by IRC is evaluated through the standardised approach. The following table summarises the main characteristics of the different measures that define the capital requirement for market risk in UniCredit. MEASURE RISK TYPE HORIZON QUANTILE SIMULATION CALIBRATION VaR All Market Risk Factors 1d 99% Historical 2Y window, equally weighted SVaR All Market Risk Factors 1d 99% Historical 1Y window, equally weighted IRC Rating Migration & Default 1Y 99.9% Monte Carlo Through-the-cycle (min 8Y) The IRC Model is subject to a quarterly program of Stress Tests aimed at evaluating the robustness of the model. The relevant parameters as Recovery Rates, Transition Probabilities, idiosyncratic correlation are shocked and the impact on the IRC measure is computed. “Group Internal Validation” performed its analyses in order to evaluate the conceptual soundness of the IRC model, to supplement the available analyses on that topic and to ensure the compliance of the resulting risk management environment with all the relevant regulatory requirements and internal standards. As already remarked by the regulation, traditional back-testing procedures, regarding the 99.9% one-year soundness standard for IRC, are not applicable due to the 1-year time horizon of the measure. Consequently, while validation of the IRC model relied heavily on indirect methods (including stress tests, sensitivity analysis and scenario analysis) in order to assess the qualitative and quantitative reasonableness of the model, special focus has indeed been given to the specific situation of UniCredit portfolios. Group Internal Validation kept the scope of their analyses as wide as possible in order to comprise the many diverse issues that are acting concurrently in such a model (general model design, regulatory compliance, numerical implementation, outcomes explanation). Group Internal Validation performed a full spectrum of validation analyses on the IRC measure calculation using its internal replica libraries. The replica allows a simple verification of the results provided by the productive environment, and in addition opens up the door to a more dynamical and tailored implementation of the needed tests. The spectrum of analysis encompassed Monte Carlo stability, correlation analysis and stressing, calculation of parameters sensitivity, marginal contribution analysis, alternative models comparisons. All major parameters were tested, i.e. correlation matrices, transition probabilities matrices, transition shocks, recovery rates, probabilities of default, number of scenarios. To understand the overall performance of the model in replicating the real-world migration and default phenomena, Group Internal Validation performed also a historical performance exercise comparing the migrations and defaults predicted by UniCredit IRC model with the ones actually observed since 1981 (due to data availability). Banca d’Italia authorised UniCredit group to use internal models for the calculation of capital requirements for market risk. As of today CEE countries are the main companies of the Group that are using the standardised approach for calculating capital requirements related to trading positions. However, the VaR measure is used for the management of market risk in these latter companies. For Trading Book VaR, Stressed VaR and IRC, the bank differentiates between regulatory and managerial views. The managerial measure, are used for Risk monitoring and Business steering purposes as prescribed by Market Risk Framework: in particular VaR limits represent the main metric translating the Risk Appetite into the Market Risk framework. The managerial VaR has a wider scope: it is used to monitor both Trading Book and Overall perimeter (Trading Book + Banking Book), also including Legal Entities for which the standardised measurement method is applied for Regulatory purposes, in order to have a complete picture of risk. The standardised measurement method is also applied to the calculation of capital covering the risk of holding Banking Book exposure in foreign currencies for the Legal Entities (namely UniCredit S.p.A.) that do not have an approval for FX Risk simulation under Internal Model. In this respect the FX risk for both Trading and the Banking Book is included in VaR and SVaR for Regulatory purposes as for the approved Legal Entities (UniCredit Bank AG and UniCredit Bank Austria AG); as regards the managerial view the FX Risk of Banking Book is included in the Overall (Trading Book + Banking Book) VaR. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 360 2018 Annual Report and Accounts · UniCredit idiosyncratic correlations are derived from the IRB correlation formula. Simulated migration events are turned into credit spread scenarios while default events are associated to a simulated recovery rate. In so doing a constant position assumption is employed and products are conservatively all attributed a common liquidity horizon of 1 year. In each scenario all the relevant product inventory is revaluated under such spread and default events producing a simulated Profit or Loss (P&L) that fully reflects convexity, basis risk, portfolio effects and portfolio concentration risks. In this way a high-number of paths Monte Carlo simulation generates a P&L distribution for the Group (and each leaf of its portfolio tree). IRC is defined as the 99.9 percentile of such loss distribution. Additional capital charge for securitisations and credit products not covered by IRC is evaluated through the standardised approach. The following table summarises the main characteristics of the different measures that define the capital requirement for market risk in UniCredit. MEASURE RISK TYPE HORIZON QUANTILE SIMULATION CALIBRATION VaR All Market Risk Factors 1d 99% Historical 2Y window, equally weighted SVaR All Market Risk Factors 1d 99% Historical 1Y window, equally weighted IRC Rating Migration & Default 1Y 99.9% Monte Carlo Through-the-cycle (min 8Y) The IRC Model is subject to a quarterly program of Stress Tests aimed at evaluating the robustness of the model. The relevant parameters as Recovery Rates, Transition Probabilities, idiosyncratic correlation are shocked and the impact on the IRC measure is computed. “Group Internal Validation” performed its analyses in order to evaluate the conceptual soundness of the IRC model, to supplement the available analyses on that topic and to ensure the compliance of the resulting risk management environment with all the relevant regulatory requirements and internal standards. As already remarked by the regulation, traditional back-testing procedures, regarding the 99.9% one-year soundness standard for IRC, are not applicable due to the 1-year time horizon of the measure. Consequently, while validation of the IRC model relied heavily on indirect methods (including stress tests, sensitivity analysis and scenario analysis) in order to assess the qualitative and quantitative reasonableness of the model, special focus has indeed been given to the specific situation of UniCredit portfolios. Group Internal Validation kept the scope of their analyses as wide as possible in order to comprise the many diverse issues that are acting concurrently in such a model (general model design, regulatory compliance, numerical implementation, outcomes explanation). Group Internal Validation performed a full spectrum of validation analyses on the IRC measure calculation using its internal replica libraries. The replica allows a simple verification of the results provided by the productive environment, and in addition opens up the door to a more dynamical and tailored implementation of the needed tests. The spectrum of analysis encompassed Monte Carlo stability, correlation analysis and stressing, calculation of parameters sensitivity, marginal contribution analysis, alternative models comparisons. All major parameters were tested, i.e. correlation matrices, transition probabilities matrices, transition shocks, recovery rates, probabilities of default, number of scenarios. To understand the overall performance of the model in replicating the real-world migration and default phenomena, Group Internal Validation performed also a historical performance exercise comparing the migrations and defaults predicted by UniCredit IRC model with the ones actually observed since 1981 (due to data availability). Banca d’Italia authorised UniCredit group to use internal models for the calculation of capital requirements for market risk. As of today CEE countries are the main companies of the Group that are using the standardised approach for calculating capital requirements related to trading positions. However, the VaR measure is used for the management of market risk in these latter companies. For Trading Book VaR, Stressed VaR and IRC, the bank differentiates between regulatory and managerial views. The managerial measure, are used for Risk monitoring and Business steering purposes as prescribed by Market Risk Framework: in particular VaR limits represent the main metric translating the Risk Appetite into the Market Risk framework. The managerial VaR has a wider scope: it is used to monitor both Trading Book and Overall perimeter (Trading Book + Banking Book), also including Legal Entities for which the standardised measurement method is applied for Regulatory purposes, in order to have a complete picture of risk. The standardised measurement method is also applied to the calculation of capital covering the risk of holding Banking Book exposure in foreign currencies for the Legal Entities (namely UniCredit S.p.A.) that do not have an approval for FX Risk simulation under Internal Model. In this respect the FX risk for both Trading and the Banking Book is included in VaR and SVaR for Regulatory purposes as for the approved Legal Entities (UniCredit Bank AG and UniCredit Bank Austria AG); as regards the managerial view the FX Risk of Banking Book is included in the Overall (Trading Book + Banking Book) VaR. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 361 To sum up the Internal Model approach is used for Regulatory purposes for UniCredit S.p.A., UniCredit Bank AG, UniCredit Bank Austria AG and UniCredit Bank Austria group, while it is used for all Legal Entities (including CEE countries) for managerial purposes. Finally Trading portfolios are subject to Stress tests according to a wide range of simple and complex scenarios. Simple scenarios which envisage the shock of single asset classes, are defined in the context of Interest Rate Risk/Price Risk/Exchange Rate Risk/Credit Spread Risk Sensitivity. Complex scenarios apply simultaneous changes on a number of risk factors. Both simple and complex scenarios are applied to the whole Trading Book. Detailed descriptions are included in paragraph on the Stress Test. Stress tests results are calculated in the Group Market Risk system (UGRM), thus ensuring a common methodological approach across the Group. Results are calculated applying a full revaluation approach meaning that all positions are revalued under stressed conditions; no ad hoc models or pricing functions are applied for stress testing. According to national regulations, some relevant scenarios are also a matter of regulatory reporting on a quarterly basis. In addition a set of scenarios is run monthly on overall Group perimeter, thus covering both Trading and Banking Book positions. Results are discussed monthly in Market Risk Stress Test Open Forum involving Market Risk function’s representatives of all the Legal Entities and Business’ representatives. Results are analysed in depth in the monthly report “Monthly Overview on Market Stress Test”. Stress test Warning levels Usage is monitored monthly. More details on Warning Levels and Strategy are given in the previous paragraph Risk management strategies and processes. VaR, SVaR and IRC Diversified VaR, SVaR and IRC are calculated taking into account the diversification arising from positions taken by different companies within the Imod perimeter (i.e. for which the use of the internal model for the risk calculation is approved). VaR, SVaR and IRC measures are however in place for all the LEs and their values are reported thereafter for information purpose, together with Undiversified Group VaR, SVaR and IRC, calculated as sum of the values of all LEs (without considering Diversification Benefit), considering the Regulatory perimeter when applicable. The increasing trend in the VaR time series, during the first semester 2018, is mainly due to higher volatilities in the financial markets, while the decreasing trend, during the second semester, is manly driven by a decrease of the position subject to the Credit Spread Risk of Republic of Italy in the Trading Book of UniCredit S.p.A. This is also the main driver of the decreasing trend in the stressed VaR and IRC time series. Risk on trading book Daily VaR on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 60 DAYS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 7.7 9.0 9.7 15.1 5.8 13.5 Daily VaR on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 60 DAYS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 0.7 1.1 1.5 4.6 0.6 2.1 Turkey 3.4 1.2 1.1 3.9 0.4 0.6 Bosnia Herzegovina 0.0 0.0 0.0 0.0 0.0 0.0 Serbia 0.1 0.1 0.1 0.1 0.0 0.1 Romania 0.3 0.3 0.4 0.6 0.2 0.3 Bulgaria 0.1 0.2 0.1 0.2 0.1 0.2 Hungary 0.4 0.3 0.5 0.9 0.3 0.7 Czech Republic 1.9 3.0 3.7 5.1 1.3 2.9 Croatia 0.2 0.2 0.2 0.5 0.1 0.2 Slovenia 0.1 0.1 0.1 0.2 0.1 0.1 Baltics 0.0 0.0 0.0 0.0 0.0 0.0 Fineco 0.1 0.1 0.1 0.4 0.0 0.3 Undiversified UniCredit group 16.8 17.8 20.0 31.1 13.0 23.6 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 361 To sum up the Internal Model approach is used for Regulatory purposes for UniCredit S.p.A., UniCredit Bank AG, UniCredit Bank Austria AG and UniCredit Bank Austria group, while it is used for all Legal Entities (including CEE countries) for managerial purposes. Finally Trading portfolios are subject to Stress tests according to a wide range of simple and complex scenarios. Simple scenarios which envisage the shock of single asset classes, are defined in the context of Interest Rate Risk/Price Risk/Exchange Rate Risk/Credit Spread Risk Sensitivity. Complex scenarios apply simultaneous changes on a number of risk factors. Both simple and complex scenarios are applied to the whole Trading Book. Detailed descriptions are included in paragraph on the Stress Test. Stress tests results are calculated in the Group Market Risk system (UGRM), thus ensuring a common methodological approach across the Group. Results are calculated applying a full revaluation approach meaning that all positions are revalued under stressed conditions; no ad hoc models or pricing functions are applied for stress testing. According to national regulations, some relevant scenarios are also a matter of regulatory reporting on a quarterly basis. In addition a set of scenarios is run monthly on overall Group perimeter, thus covering both Trading and Banking Book positions. Results are discussed monthly in Market Risk Stress Test Open Forum involving Market Risk function’s representatives of all the Legal Entities and Business’ representatives. Results are analysed in depth in the monthly report “Monthly Overview on Market Stress Test”. Stress test Warning levels Usage is monitored monthly. More details on Warning Levels and Strategy are given in the previous paragraph Risk management strategies and processes. VaR, SVaR and IRC Diversified VaR, SVaR and IRC are calculated taking into account the diversification arising from positions taken by different companies within the Imod perimeter (i.e. for which the use of the internal model for the risk calculation is approved). VaR, SVaR and IRC measures are however in place for all the LEs and their values are reported thereafter for information purpose, together with Undiversified Group VaR, SVaR and IRC, calculated as sum of the values of all LEs (without considering Diversification Benefit), considering the Regulatory perimeter when applicable. The increasing trend in the VaR time series, during the first semester 2018, is mainly due to higher volatilities in the financial markets, while the decreasing trend, during the second semester, is manly driven by a decrease of the position subject to the Credit Spread Risk of Republic of Italy in the Trading Book of UniCredit S.p.A. This is also the main driver of the decreasing trend in the stressed VaR and IRC time series. Risk on trading book Daily VaR on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 60 DAYS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 7.7 9.0 9.7 15.1 5.8 13.5 Daily VaR on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 60 DAYS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 0.7 1.1 1.5 4.6 0.6 2.1 Turkey 3.4 1.2 1.1 3.9 0.4 0.6 Bosnia Herzegovina 0.0 0.0 0.0 0.0 0.0 0.0 Serbia 0.1 0.1 0.1 0.1 0.0 0.1 Romania 0.3 0.3 0.4 0.6 0.2 0.3 Bulgaria 0.1 0.2 0.1 0.2 0.1 0.2 Hungary 0.4 0.3 0.5 0.9 0.3 0.7 Czech Republic 1.9 3.0 3.7 5.1 1.3 2.9 Croatia 0.2 0.2 0.2 0.5 0.1 0.2 Slovenia 0.1 0.1 0.1 0.2 0.1 0.1 Baltics 0.0 0.0 0.0 0.0 0.0 0.0 Fineco 0.1 0.1 0.1 0.4 0.0 0.3 Undiversified UniCredit group 16.8 17.8 20.0 31.1 13.0 23.6 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 361 To sum up the Internal Model approach is used for Regulatory purposes for UniCredit S.p.A., UniCredit Bank AG, UniCredit Bank Austria AG and UniCredit Bank Austria group, while it is used for all Legal Entities (including CEE countries) for managerial purposes. Finally Trading portfolios are subject to Stress tests according to a wide range of simple and complex scenarios. Simple scenarios which envisage the shock of single asset classes, are defined in the context of Interest Rate Risk/Price Risk/Exchange Rate Risk/Credit Spread Risk Sensitivity. Complex scenarios apply simultaneous changes on a number of risk factors. Both simple and complex scenarios are applied to the whole Trading Book. Detailed descriptions are included in paragraph on the Stress Test. Stress tests results are calculated in the Group Market Risk system (UGRM), thus ensuring a common methodological approach across the Group. Results are calculated applying a full revaluation approach meaning that all positions are revalued under stressed conditions; no ad hoc models or pricing functions are applied for stress testing. According to national regulations, some relevant scenarios are also a matter of regulatory reporting on a quarterly basis. In addition a set of scenarios is run monthly on overall Group perimeter, thus covering both Trading and Banking Book positions. Results are discussed monthly in Market Risk Stress Test Open Forum involving Market Risk function’s representatives of all the Legal Entities and Business’ representatives. Results are analysed in depth in the monthly report “Monthly Overview on Market Stress Test”. Stress test Warning levels Usage is monitored monthly. More details on Warning Levels and Strategy are given in the previous paragraph Risk management strategies and processes. VaR, SVaR and IRC Diversified VaR, SVaR and IRC are calculated taking into account the diversification arising from positions taken by different companies within the Imod perimeter (i.e. for which the use of the internal model for the risk calculation is approved). VaR, SVaR and IRC measures are however in place for all the LEs and their values are reported thereafter for information purpose, together with Undiversified Group VaR, SVaR and IRC, calculated as sum of the values of all LEs (without considering Diversification Benefit), considering the Regulatory perimeter when applicable. The increasing trend in the VaR time series, during the first semester 2018, is mainly due to higher volatilities in the financial markets, while the decreasing trend, during the second semester, is manly driven by a decrease of the position subject to the Credit Spread Risk of Republic of Italy in the Trading Book of UniCredit S.p.A. This is also the main driver of the decreasing trend in the stressed VaR and IRC time series. Risk on trading book Daily VaR on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 60 DAYS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 7.7 9.0 9.7 15.1 5.8 13.5 Daily VaR on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 60 DAYS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 0.7 1.1 1.5 4.6 0.6 2.1 Turkey 3.4 1.2 1.1 3.9 0.4 0.6 Bosnia Herzegovina 0.0 0.0 0.0 0.0 0.0 0.0 Serbia 0.1 0.1 0.1 0.1 0.0 0.1 Romania 0.3 0.3 0.4 0.6 0.2 0.3 Bulgaria 0.1 0.2 0.1 0.2 0.1 0.2 Hungary 0.4 0.3 0.5 0.9 0.3 0.7 Czech Republic 1.9 3.0 3.7 5.1 1.3 2.9 Croatia 0.2 0.2 0.2 0.5 0.1 0.2 Slovenia 0.1 0.1 0.1 0.2 0.1 0.1 Baltics 0.0 0.0 0.0 0.0 0.0 0.0 Fineco 0.1 0.1 0.1 0.4 0.0 0.3 Undiversified UniCredit group 16.8 17.8 20.0 31.1 13.0 23.6 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 361 To sum up the Internal Model approach is used for Regulatory purposes for UniCredit S.p.A., UniCredit Bank AG, UniCredit Bank Austria AG and UniCredit Bank Austria group, while it is used for all Legal Entities (including CEE countries) for managerial purposes. Finally Trading portfolios are subject to Stress tests according to a wide range of simple and complex scenarios. Simple scenarios which envisage the shock of single asset classes, are defined in the context of Interest Rate Risk/Price Risk/Exchange Rate Risk/Credit Spread Risk Sensitivity. Complex scenarios apply simultaneous changes on a number of risk factors. Both simple and complex scenarios are applied to the whole Trading Book. Detailed descriptions are included in paragraph on the Stress Test. Stress tests results are calculated in the Group Market Risk system (UGRM), thus ensuring a common methodological approach across the Group. Results are calculated applying a full revaluation approach meaning that all positions are revalued under stressed conditions; no ad hoc models or pricing functions are applied for stress testing. According to national regulations, some relevant scenarios are also a matter of regulatory reporting on a quarterly basis. In addition a set of scenarios is run monthly on overall Group perimeter, thus covering both Trading and Banking Book positions. Results are discussed monthly in Market Risk Stress Test Open Forum involving Market Risk function’s representatives of all the Legal Entities and Business’ representatives. Results are analysed in depth in the monthly report “Monthly Overview on Market Stress Test”. Stress test Warning levels Usage is monitored monthly. More details on Warning Levels and Strategy are given in the previous paragraph Risk management strategies and processes. VaR, SVaR and IRC Diversified VaR, SVaR and IRC are calculated taking into account the diversification arising from positions taken by different companies within the Imod perimeter (i.e. for which the use of the internal model for the risk calculation is approved). VaR, SVaR and IRC measures are however in place for all the LEs and their values are reported thereafter for information purpose, together with Undiversified Group VaR, SVaR and IRC, calculated as sum of the values of all LEs (without considering Diversification Benefit), considering the Regulatory perimeter when applicable. The increasing trend in the VaR time series, during the first semester 2018, is mainly due to higher volatilities in the financial markets, while the decreasing trend, during the second semester, is manly driven by a decrease of the position subject to the Credit Spread Risk of Republic of Italy in the Trading Book of UniCredit S.p.A. This is also the main driver of the decreasing trend in the stressed VaR and IRC time series. Risk on trading book Daily VaR on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 60 DAYS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 7.7 9.0 9.7 15.1 5.8 13.5 Daily VaR on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 60 DAYS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 0.7 1.1 1.5 4.6 0.6 2.1 Turkey 3.4 1.2 1.1 3.9 0.4 0.6 Bosnia Herzegovina 0.0 0.0 0.0 0.0 0.0 0.0 Serbia 0.1 0.1 0.1 0.1 0.0 0.1 Romania 0.3 0.3 0.4 0.6 0.2 0.3 Bulgaria 0.1 0.2 0.1 0.2 0.1 0.2 Hungary 0.4 0.3 0.5 0.9 0.3 0.7 Czech Republic 1.9 3.0 3.7 5.1 1.3 2.9 Croatia 0.2 0.2 0.2 0.5 0.1 0.2 Slovenia 0.1 0.1 0.1 0.2 0.1 0.1 Baltics 0.0 0.0 0.0 0.0 0.0 0.0 Fineco 0.1 0.1 0.1 0.4 0.0 0.3 Undiversified UniCredit group 16.8 17.8 20.0 31.1 13.0 23.6 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 361 To sum up the Internal Model approach is used for Regulatory purposes for UniCredit S.p.A., UniCredit Bank AG, UniCredit Bank Austria AG and UniCredit Bank Austria group, while it is used for all Legal Entities (including CEE countries) for managerial purposes. Finally Trading portfolios are subject to Stress tests according to a wide range of simple and complex scenarios. Simple scenarios which envisage the shock of single asset classes, are defined in the context of Interest Rate Risk/Price Risk/Exchange Rate Risk/Credit Spread Risk Sensitivity. Complex scenarios apply simultaneous changes on a number of risk factors. Both simple and complex scenarios are applied to the whole Trading Book. Detailed descriptions are included in paragraph on the Stress Test. Stress tests results are calculated in the Group Market Risk system (UGRM), thus ensuring a common methodological approach across the Group. Results are calculated applying a full revaluation approach meaning that all positions are revalued under stressed conditions; no ad hoc models or pricing functions are applied for stress testing. According to national regulations, some relevant scenarios are also a matter of regulatory reporting on a quarterly basis. In addition a set of scenarios is run monthly on overall Group perimeter, thus covering both Trading and Banking Book positions. Results are discussed monthly in Market Risk Stress Test Open Forum involving Market Risk function’s representatives of all the Legal Entities and Business’ representatives. Results are analysed in depth in the monthly report “Monthly Overview on Market Stress Test”. Stress test Warning levels Usage is monitored monthly. More details on Warning Levels and Strategy are given in the previous paragraph Risk management strategies and processes. VaR, SVaR and IRC Diversified VaR, SVaR and IRC are calculated taking into account the diversification arising from positions taken by different companies within the Imod perimeter (i.e. for which the use of the internal model for the risk calculation is approved). VaR, SVaR and IRC measures are however in place for all the LEs and their values are reported thereafter for information purpose, together with Undiversified Group VaR, SVaR and IRC, calculated as sum of the values of all LEs (without considering Diversification Benefit), considering the Regulatory perimeter when applicable. The increasing trend in the VaR time series, during the first semester 2018, is mainly due to higher volatilities in the financial markets, while the decreasing trend, during the second semester, is manly driven by a decrease of the position subject to the Credit Spread Risk of Republic of Italy in the Trading Book of UniCredit S.p.A. This is also the main driver of the decreasing trend in the stressed VaR and IRC time series. Risk on trading book Daily VaR on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 60 DAYS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 7.7 9.0 9.7 15.1 5.8 13.5 Daily VaR on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 60 DAYS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 0.7 1.1 1.5 4.6 0.6 2.1 Turkey 3.4 1.2 1.1 3.9 0.4 0.6 Bosnia Herzegovina 0.0 0.0 0.0 0.0 0.0 0.0 Serbia 0.1 0.1 0.1 0.1 0.0 0.1 Romania 0.3 0.3 0.4 0.6 0.2 0.3 Bulgaria 0.1 0.2 0.1 0.2 0.1 0.2 Hungary 0.4 0.3 0.5 0.9 0.3 0.7 Czech Republic 1.9 3.0 3.7 5.1 1.3 2.9 Croatia 0.2 0.2 0.2 0.5 0.1 0.2 Slovenia 0.1 0.1 0.1 0.2 0.1 0.1 Baltics 0.0 0.0 0.0 0.0 0.0 0.0 Fineco 0.1 0.1 0.1 0.4 0.0 0.3 Undiversified UniCredit group 16.8 17.8 20.0 31.1 13.0 23.6 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 362 2018 Annual Report and Accounts · UniCredit Risk on trading book SVaR on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 25.7 29.1 37.4 59.2 21.6 29.4 SVaR on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 8.3 7.6 13.3 21.3 4.2 13.9 Turkey 2.3 2.2 2.8 5.4 1.2 1.9 Bosnia Herzegovina 0.0 0.0 0.0 0.0 0.0 0.0 Serbia 0.8 1.0 1.1 1.7 0.4 0.8 Romania 1.8 2.2 2.7 4.6 1.0 2.5 Bulgaria 0.6 0.8 0.6 1.0 0.5 0.7 Hungary 1.7 1.6 3.0 5.7 1.1 2.4 Czech Republic 6.2 5.6 5.8 8.7 4.0 3.5 Croatia 0.4 0.8 0.7 1.2 0.3 0.4 Slovenia 0.3 0.3 0.3 0.4 0.2 0.1 Baltics 0.0 0.0 0.0 0.0 0.0 0.0 Undiversified UniCredit group 59.6 58.7 75.1 99.0 50.1 69.6 Risk on trading book IRC on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 176.2 224.5 282.9 479.8 176.2 301.9 IRC on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 15.9 19.1 25.7 112.5 0.1 10.7 Turkey 3.5 3.2 3.7 5.2 3.1 3.8 Serbia 11.0 12.9 12.9 18.9 3.8 10.2 Romania 10.3 15.2 14.4 22.2 3.7 20.0 Bulgaria 0.8 4.2 1.8 5.2 0.0 0.3 Hungary 22.2 20.5 25.5 43.0 14.4 27.6 Czech Republic 1.8 2.4 1.7 4.3 1.0 1.0 Croatia 3.3 4.3 4.7 8.1 3.0 4.1 Undiversified UniCredit group 344.5 442.1 532.3 786.9 344.5 509.7 EU MR4 - Comparison of VaR estimates with gain/losses The following graph shows back-testing results referred to the market risk on the Trading Book, in which VaR results for the last twelve months are compared to the hypothetical “profit and loss” results for Group (I-Mod Perimeter). In 2018, six VaR overshootings were observed for UniCredit group: • 7 June 2018; • 4 June 2018; • 28 May 2018; • 25 May 2018; • 24 May 2018; • 18 May 2018. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 362 2018 Annual Report and Accounts · UniCredit Risk on trading book SVaR on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 25.7 29.1 37.4 59.2 21.6 29.4 SVaR on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 8.3 7.6 13.3 21.3 4.2 13.9 Turkey 2.3 2.2 2.8 5.4 1.2 1.9 Bosnia Herzegovina 0.0 0.0 0.0 0.0 0.0 0.0 Serbia 0.8 1.0 1.1 1.7 0.4 0.8 Romania 1.8 2.2 2.7 4.6 1.0 2.5 Bulgaria 0.6 0.8 0.6 1.0 0.5 0.7 Hungary 1.7 1.6 3.0 5.7 1.1 2.4 Czech Republic 6.2 5.6 5.8 8.7 4.0 3.5 Croatia 0.4 0.8 0.7 1.2 0.3 0.4 Slovenia 0.3 0.3 0.3 0.4 0.2 0.1 Baltics 0.0 0.0 0.0 0.0 0.0 0.0 Undiversified UniCredit group 59.6 58.7 75.1 99.0 50.1 69.6 Risk on trading book IRC on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 176.2 224.5 282.9 479.8 176.2 301.9 IRC on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 15.9 19.1 25.7 112.5 0.1 10.7 Turkey 3.5 3.2 3.7 5.2 3.1 3.8 Serbia 11.0 12.9 12.9 18.9 3.8 10.2 Romania 10.3 15.2 14.4 22.2 3.7 20.0 Bulgaria 0.8 4.2 1.8 5.2 0.0 0.3 Hungary 22.2 20.5 25.5 43.0 14.4 27.6 Czech Republic 1.8 2.4 1.7 4.3 1.0 1.0 Croatia 3.3 4.3 4.7 8.1 3.0 4.1 Undiversified UniCredit group 344.5 442.1 532.3 786.9 344.5 509.7 EU MR4 - Comparison of VaR estimates with gain/losses The following graph shows back-testing results referred to the market risk on the Trading Book, in which VaR results for the last twelve months are compared to the hypothetical “profit and loss” results for Group (I-Mod Perimeter). In 2018, six VaR overshootings were observed for UniCredit group: • 7 June 2018; • 4 June 2018; • 28 May 2018; • 25 May 2018; • 24 May 2018; • 18 May 2018. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 362 2018 Annual Report and Accounts · UniCredit Risk on trading book SVaR on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 25.7 29.1 37.4 59.2 21.6 29.4 SVaR on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 8.3 7.6 13.3 21.3 4.2 13.9 Turkey 2.3 2.2 2.8 5.4 1.2 1.9 Bosnia Herzegovina 0.0 0.0 0.0 0.0 0.0 0.0 Serbia 0.8 1.0 1.1 1.7 0.4 0.8 Romania 1.8 2.2 2.7 4.6 1.0 2.5 Bulgaria 0.6 0.8 0.6 1.0 0.5 0.7 Hungary 1.7 1.6 3.0 5.7 1.1 2.4 Czech Republic 6.2 5.6 5.8 8.7 4.0 3.5 Croatia 0.4 0.8 0.7 1.2 0.3 0.4 Slovenia 0.3 0.3 0.3 0.4 0.2 0.1 Baltics 0.0 0.0 0.0 0.0 0.0 0.0 Undiversified UniCredit group 59.6 58.7 75.1 99.0 50.1 69.6 Risk on trading book IRC on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 176.2 224.5 282.9 479.8 176.2 301.9 IRC on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 15.9 19.1 25.7 112.5 0.1 10.7 Turkey 3.5 3.2 3.7 5.2 3.1 3.8 Serbia 11.0 12.9 12.9 18.9 3.8 10.2 Romania 10.3 15.2 14.4 22.2 3.7 20.0 Bulgaria 0.8 4.2 1.8 5.2 0.0 0.3 Hungary 22.2 20.5 25.5 43.0 14.4 27.6 Czech Republic 1.8 2.4 1.7 4.3 1.0 1.0 Croatia 3.3 4.3 4.7 8.1 3.0 4.1 Undiversified UniCredit group 344.5 442.1 532.3 786.9 344.5 509.7 EU MR4 - Comparison of VaR estimates with gain/losses The following graph shows back-testing results referred to the market risk on the Trading Book, in which VaR results for the last twelve months are compared to the hypothetical “profit and loss” results for Group (I-Mod Perimeter). In 2018, six VaR overshootings were observed for UniCredit group: • 7 June 2018; • 4 June 2018; • 28 May 2018; • 25 May 2018; • 24 May 2018; • 18 May 2018. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 362 2018 Annual Report and Accounts · UniCredit Risk on trading book SVaR on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 25.7 29.1 37.4 59.2 21.6 29.4 SVaR on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 8.3 7.6 13.3 21.3 4.2 13.9 Turkey 2.3 2.2 2.8 5.4 1.2 1.9 Bosnia Herzegovina 0.0 0.0 0.0 0.0 0.0 0.0 Serbia 0.8 1.0 1.1 1.7 0.4 0.8 Romania 1.8 2.2 2.7 4.6 1.0 2.5 Bulgaria 0.6 0.8 0.6 1.0 0.5 0.7 Hungary 1.7 1.6 3.0 5.7 1.1 2.4 Czech Republic 6.2 5.6 5.8 8.7 4.0 3.5 Croatia 0.4 0.8 0.7 1.2 0.3 0.4 Slovenia 0.3 0.3 0.3 0.4 0.2 0.1 Baltics 0.0 0.0 0.0 0.0 0.0 0.0 Undiversified UniCredit group 59.6 58.7 75.1 99.0 50.1 69.6 Risk on trading book IRC on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 176.2 224.5 282.9 479.8 176.2 301.9 IRC on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 15.9 19.1 25.7 112.5 0.1 10.7 Turkey 3.5 3.2 3.7 5.2 3.1 3.8 Serbia 11.0 12.9 12.9 18.9 3.8 10.2 Romania 10.3 15.2 14.4 22.2 3.7 20.0 Bulgaria 0.8 4.2 1.8 5.2 0.0 0.3 Hungary 22.2 20.5 25.5 43.0 14.4 27.6 Czech Republic 1.8 2.4 1.7 4.3 1.0 1.0 Croatia 3.3 4.3 4.7 8.1 3.0 4.1 Undiversified UniCredit group 344.5 442.1 532.3 786.9 344.5 509.7 EU MR4 - Comparison of VaR estimates with gain/losses The following graph shows back-testing results referred to the market risk on the Trading Book, in which VaR results for the last twelve months are compared to the hypothetical “profit and loss” results for Group (I-Mod Perimeter). In 2018, six VaR overshootings were observed for UniCredit group: • 7 June 2018; • 4 June 2018; • 28 May 2018; • 25 May 2018; • 24 May 2018; • 18 May 2018. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 362 2018 Annual Report and Accounts · UniCredit Risk on trading book SVaR on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 25.7 29.1 37.4 59.2 21.6 29.4 SVaR on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 8.3 7.6 13.3 21.3 4.2 13.9 Turkey 2.3 2.2 2.8 5.4 1.2 1.9 Bosnia Herzegovina 0.0 0.0 0.0 0.0 0.0 0.0 Serbia 0.8 1.0 1.1 1.7 0.4 0.8 Romania 1.8 2.2 2.7 4.6 1.0 2.5 Bulgaria 0.6 0.8 0.6 1.0 0.5 0.7 Hungary 1.7 1.6 3.0 5.7 1.1 2.4 Czech Republic 6.2 5.6 5.8 8.7 4.0 3.5 Croatia 0.4 0.8 0.7 1.2 0.3 0.4 Slovenia 0.3 0.3 0.3 0.4 0.2 0.1 Baltics 0.0 0.0 0.0 0.0 0.0 0.0 Undiversified UniCredit group 59.6 58.7 75.1 99.0 50.1 69.6 Risk on trading book IRC on Regulatory Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 I-MOD PERIMETER AVERAGE MAX MIN AVERAGE Diversified UniCredit group 176.2 224.5 282.9 479.8 176.2 301.9 IRC on Managerial Trading Book (€ million) END OF DECEMBER 2018 AVERAGE LAST 12 WEEKS 2018 2017 STANDARDIZED APPROACH PERIMETER AVERAGE MAX MIN AVERAGE Russia 15.9 19.1 25.7 112.5 0.1 10.7 Turkey 3.5 3.2 3.7 5.2 3.1 3.8 Serbia 11.0 12.9 12.9 18.9 3.8 10.2 Romania 10.3 15.2 14.4 22.2 3.7 20.0 Bulgaria 0.8 4.2 1.8 5.2 0.0 0.3 Hungary 22.2 20.5 25.5 43.0 14.4 27.6 Czech Republic 1.8 2.4 1.7 4.3 1.0 1.0 Croatia 3.3 4.3 4.7 8.1 3.0 4.1 Undiversified UniCredit group 344.5 442.1 532.3 786.9 344.5 509.7 EU MR4 - Comparison of VaR estimates with gain/losses The following graph shows back-testing results referred to the market risk on the Trading Book, in which VaR results for the last twelve months are compared to the hypothetical “profit and loss” results for Group (I-Mod Perimeter). In 2018, six VaR overshootings were observed for UniCredit group: • 7 June 2018; • 4 June 2018; • 28 May 2018; • 25 May 2018; • 24 May 2018; • 18 May 2018. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 363 The overshooting were mostly caused by the Republic of Italy spread widening, explained by the increased political risk perception in the Eurozone, as a result of the new Italian government agenda. Additional material drivers were US dollar appreciation against Euro, a widening in credit spread for UniCredit, a larger spread between Federal Republic of Germany and several other sovereigns and supranationals, a decrease in Euro interest rates. Managerial VaR Below are reported the Managerial Diversified Trading Book VaR as of end of December 2018 at Group and Regional Centre levels and the Undiversified Trading Book VaR at Group level, calculated as sum of the values of all LEs (without considering Diversification Benefit). Difference with Regulatory Trading Book was described above. Daily VaR on Managerial Trading Book (€ million) TRADING BOOK END OF DECEMBER 2018 Diversified UniCredit group as per internal model 8.8 RC Germany 5.6 RC Italy 3.7 RC Austria 0.4 RC CEE 4.9 Undiversified UniCredit group 16.8 -30.0-20.0-10.0 - 10.0 20.0 30.0(€million)VaR 1dHypothetical P&LConsolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 363 The overshooting were mostly caused by the Republic of Italy spread widening, explained by the increased political risk perception in the Eurozone, as a result of the new Italian government agenda. Additional material drivers were US dollar appreciation against Euro, a widening in credit spread for UniCredit, a larger spread between Federal Republic of Germany and several other sovereigns and supranationals, a decrease in Euro interest rates. Managerial VaR Below are reported the Managerial Diversified Trading Book VaR as of end of December 2018 at Group and Regional Centre levels and the Undiversified Trading Book VaR at Group level, calculated as sum of the values of all LEs (without considering Diversification Benefit). Difference with Regulatory Trading Book was described above. Daily VaR on Managerial Trading Book (€ million) TRADING BOOK END OF DECEMBER 2018 Diversified UniCredit group as per internal model 8.8 RC Germany 5.6 RC Italy 3.7 RC Austria 0.4 RC CEE 4.9 Undiversified UniCredit group 16.8 -30.0-20.0-10.0 - 10.0 20.0 30.0(€million)VaR 1dHypothetical P&LConsolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 363 The overshooting were mostly caused by the Republic of Italy spread widening, explained by the increased political risk perception in the Eurozone, as a result of the new Italian government agenda. Additional material drivers were US dollar appreciation against Euro, a widening in credit spread for UniCredit, a larger spread between Federal Republic of Germany and several other sovereigns and supranationals, a decrease in Euro interest rates. Managerial VaR Below are reported the Managerial Diversified Trading Book VaR as of end of December 2018 at Group and Regional Centre levels and the Undiversified Trading Book VaR at Group level, calculated as sum of the values of all LEs (without considering Diversification Benefit). Difference with Regulatory Trading Book was described above. Daily VaR on Managerial Trading Book (€ million) TRADING BOOK END OF DECEMBER 2018 Diversified UniCredit group as per internal model 8.8 RC Germany 5.6 RC Italy 3.7 RC Austria 0.4 RC CEE 4.9 Undiversified UniCredit group 16.8 -30.0-20.0-10.0 - 10.0 20.0 30.0(€million)VaR 1dHypothetical P&LConsolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 363 The overshooting were mostly caused by the Republic of Italy spread widening, explained by the increased political risk perception in the Eurozone, as a result of the new Italian government agenda. Additional material drivers were US dollar appreciation against Euro, a widening in credit spread for UniCredit, a larger spread between Federal Republic of Germany and several other sovereigns and supranationals, a decrease in Euro interest rates. Managerial VaR Below are reported the Managerial Diversified Trading Book VaR as of end of December 2018 at Group and Regional Centre levels and the Undiversified Trading Book VaR at Group level, calculated as sum of the values of all LEs (without considering Diversification Benefit). Difference with Regulatory Trading Book was described above. Daily VaR on Managerial Trading Book (€ million) TRADING BOOK END OF DECEMBER 2018 Diversified UniCredit group as per internal model 8.8 RC Germany 5.6 RC Italy 3.7 RC Austria 0.4 RC CEE 4.9 Undiversified UniCredit group 16.8 -30.0-20.0-10.0 - 10.0 20.0 30.0(€million)VaR 1dHypothetical P&LConsolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 363 The overshooting were mostly caused by the Republic of Italy spread widening, explained by the increased political risk perception in the Eurozone, as a result of the new Italian government agenda. Additional material drivers were US dollar appreciation against Euro, a widening in credit spread for UniCredit, a larger spread between Federal Republic of Germany and several other sovereigns and supranationals, a decrease in Euro interest rates. Managerial VaR Below are reported the Managerial Diversified Trading Book VaR as of end of December 2018 at Group and Regional Centre levels and the Undiversified Trading Book VaR at Group level, calculated as sum of the values of all LEs (without considering Diversification Benefit). Difference with Regulatory Trading Book was described above. Daily VaR on Managerial Trading Book (€ million) TRADING BOOK END OF DECEMBER 2018 Diversified UniCredit group as per internal model 8.8 RC Germany 5.6 RC Italy 3.7 RC Austria 0.4 RC CEE 4.9 Undiversified UniCredit group 16.8 -30.0-20.0-10.0 - 10.0 20.0 30.0(€million)VaR 1dHypothetical P&LConsolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 364 2018 Annual Report and Accounts · UniCredit Marginal Regulatory VaR The table below provides a breakdown of 10-days VaR figure (i.e. referred to a 10-days’ time horizon) according to the different market risks (debt, equity, FX, commodities) and its evolution during the year, in the form of template C24 of COREP. Risk on trading book by instruments classes 10-days VaR on Regulatory Trading Book (€ million) 2018 2017 Q1 Q2 Q3 Q4 Q4 Traded Debt Instruments 28.8 40.7 42.0 30.5 31.9 TDI - General Risk 14.2 16.9 21.2 16.7 17.2 TDI - Specific Risk 22.0 32.9 37.0 22.6 25.1 Equities 5.4 6.6 6.1 5.8 5.9 Equities - General Risk - - - - - Equities - Specific Risk 5.4 6.6 6.1 5.8 5.9 Foreign Exchange Risk 10.4 9.9 8.5 5.1 14.9 Commodities Risk 5.5 8.1 9.1 10.2 4.5 Total Amount For General Risk 14.2 16.9 21.2 16.7 17.2 Total Amount For Specific Risk 22.3 30.7 34.8 21.7 26.5 In the fourth quarter 2018, there has been an decrease of the specific risk on traded debt instruments, mainly due to a decrease of the position subject to the Credit Spread Risk of Republic of Italy in the Trading Book of UniCredit S.p.A. CVA The CVA charge data values for the Trading Book for the Group are reported below (as sum of the individual Legal Entities charges since the diversification benefit is not considered). The charge accounts for the credit-spread volatility affecting regulatory CVA. It consists of a VaR figure computed over the current window (CVA VaR) and a VaR figure computed over a stressed window (CVA SVaR). For exposures not covered by the CCR Internal model (used to calculate CVA exposure profiles) the standardised approach (SA) is used. In the second semester of 2018, the Own Fund Requirements due to CVA under Advance model remains relatively stable with respect of the level reached in the second quarter 2018. The main evolutions of the second half of 2018 occurred at the level of the CEE under standardized model, mainly in Turkey. Risk on trading book CVA trading book (€ million) 2018 2017 Q1 Q2 Q3 Q4 Q4 CVA 169.9 145.7 182.1 157.7 250.6 CVA VaR 22.0 13.9 12.0 11.1 32.8 CVA SVaR 101.5 92.3 92.1 94.8 167.8 CVA SA 46.4 39.5 78.0 51.8 50.0 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 364 2018 Annual Report and Accounts · UniCredit Marginal Regulatory VaR The table below provides a breakdown of 10-days VaR figure (i.e. referred to a 10-days’ time horizon) according to the different market risks (debt, equity, FX, commodities) and its evolution during the year, in the form of template C24 of COREP. Risk on trading book by instruments classes 10-days VaR on Regulatory Trading Book (€ million) 2018 2017 Q1 Q2 Q3 Q4 Q4 Traded Debt Instruments 28.8 40.7 42.0 30.5 31.9 TDI - General Risk 14.2 16.9 21.2 16.7 17.2 TDI - Specific Risk 22.0 32.9 37.0 22.6 25.1 Equities 5.4 6.6 6.1 5.8 5.9 Equities - General Risk - - - - - Equities - Specific Risk 5.4 6.6 6.1 5.8 5.9 Foreign Exchange Risk 10.4 9.9 8.5 5.1 14.9 Commodities Risk 5.5 8.1 9.1 10.2 4.5 Total Amount For General Risk 14.2 16.9 21.2 16.7 17.2 Total Amount For Specific Risk 22.3 30.7 34.8 21.7 26.5 In the fourth quarter 2018, there has been an decrease of the specific risk on traded debt instruments, mainly due to a decrease of the position subject to the Credit Spread Risk of Republic of Italy in the Trading Book of UniCredit S.p.A. CVA The CVA charge data values for the Trading Book for the Group are reported below (as sum of the individual Legal Entities charges since the diversification benefit is not considered). The charge accounts for the credit-spread volatility affecting regulatory CVA. It consists of a VaR figure computed over the current window (CVA VaR) and a VaR figure computed over a stressed window (CVA SVaR). For exposures not covered by the CCR Internal model (used to calculate CVA exposure profiles) the standardised approach (SA) is used. In the second semester of 2018, the Own Fund Requirements due to CVA under Advance model remains relatively stable with respect of the level reached in the second quarter 2018. The main evolutions of the second half of 2018 occurred at the level of the CEE under standardized model, mainly in Turkey. Risk on trading book CVA trading book (€ million) 2018 2017 Q1 Q2 Q3 Q4 Q4 CVA 169.9 145.7 182.1 157.7 250.6 CVA VaR 22.0 13.9 12.0 11.1 32.8 CVA SVaR 101.5 92.3 92.1 94.8 167.8 CVA SA 46.4 39.5 78.0 51.8 50.0 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 364 2018 Annual Report and Accounts · UniCredit Marginal Regulatory VaR The table below provides a breakdown of 10-days VaR figure (i.e. referred to a 10-days’ time horizon) according to the different market risks (debt, equity, FX, commodities) and its evolution during the year, in the form of template C24 of COREP. Risk on trading book by instruments classes 10-days VaR on Regulatory Trading Book (€ million) 2018 2017 Q1 Q2 Q3 Q4 Q4 Traded Debt Instruments 28.8 40.7 42.0 30.5 31.9 TDI - General Risk 14.2 16.9 21.2 16.7 17.2 TDI - Specific Risk 22.0 32.9 37.0 22.6 25.1 Equities 5.4 6.6 6.1 5.8 5.9 Equities - General Risk - - - - - Equities - Specific Risk 5.4 6.6 6.1 5.8 5.9 Foreign Exchange Risk 10.4 9.9 8.5 5.1 14.9 Commodities Risk 5.5 8.1 9.1 10.2 4.5 Total Amount For General Risk 14.2 16.9 21.2 16.7 17.2 Total Amount For Specific Risk 22.3 30.7 34.8 21.7 26.5 In the fourth quarter 2018, there has been an decrease of the specific risk on traded debt instruments, mainly due to a decrease of the position subject to the Credit Spread Risk of Republic of Italy in the Trading Book of UniCredit S.p.A. CVA The CVA charge data values for the Trading Book for the Group are reported below (as sum of the individual Legal Entities charges since the diversification benefit is not considered). The charge accounts for the credit-spread volatility affecting regulatory CVA. It consists of a VaR figure computed over the current window (CVA VaR) and a VaR figure computed over a stressed window (CVA SVaR). For exposures not covered by the CCR Internal model (used to calculate CVA exposure profiles) the standardised approach (SA) is used. In the second semester of 2018, the Own Fund Requirements due to CVA under Advance model remains relatively stable with respect of the level reached in the second quarter 2018. The main evolutions of the second half of 2018 occurred at the level of the CEE under standardized model, mainly in Turkey. Risk on trading book CVA trading book (€ million) 2018 2017 Q1 Q2 Q3 Q4 Q4 CVA 169.9 145.7 182.1 157.7 250.6 CVA VaR 22.0 13.9 12.0 11.1 32.8 CVA SVaR 101.5 92.3 92.1 94.8 167.8 CVA SA 46.4 39.5 78.0 51.8 50.0 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 364 2018 Annual Report and Accounts · UniCredit Marginal Regulatory VaR The table below provides a breakdown of 10-days VaR figure (i.e. referred to a 10-days’ time horizon) according to the different market risks (debt, equity, FX, commodities) and its evolution during the year, in the form of template C24 of COREP. Risk on trading book by instruments classes 10-days VaR on Regulatory Trading Book (€ million) 2018 2017 Q1 Q2 Q3 Q4 Q4 Traded Debt Instruments 28.8 40.7 42.0 30.5 31.9 TDI - General Risk 14.2 16.9 21.2 16.7 17.2 TDI - Specific Risk 22.0 32.9 37.0 22.6 25.1 Equities 5.4 6.6 6.1 5.8 5.9 Equities - General Risk - - - - - Equities - Specific Risk 5.4 6.6 6.1 5.8 5.9 Foreign Exchange Risk 10.4 9.9 8.5 5.1 14.9 Commodities Risk 5.5 8.1 9.1 10.2 4.5 Total Amount For General Risk 14.2 16.9 21.2 16.7 17.2 Total Amount For Specific Risk 22.3 30.7 34.8 21.7 26.5 In the fourth quarter 2018, there has been an decrease of the specific risk on traded debt instruments, mainly due to a decrease of the position subject to the Credit Spread Risk of Republic of Italy in the Trading Book of UniCredit S.p.A. CVA The CVA charge data values for the Trading Book for the Group are reported below (as sum of the individual Legal Entities charges since the diversification benefit is not considered). The charge accounts for the credit-spread volatility affecting regulatory CVA. It consists of a VaR figure computed over the current window (CVA VaR) and a VaR figure computed over a stressed window (CVA SVaR). For exposures not covered by the CCR Internal model (used to calculate CVA exposure profiles) the standardised approach (SA) is used. In the second semester of 2018, the Own Fund Requirements due to CVA under Advance model remains relatively stable with respect of the level reached in the second quarter 2018. The main evolutions of the second half of 2018 occurred at the level of the CEE under standardized model, mainly in Turkey. Risk on trading book CVA trading book (€ million) 2018 2017 Q1 Q2 Q3 Q4 Q4 CVA 169.9 145.7 182.1 157.7 250.6 CVA VaR 22.0 13.9 12.0 11.1 32.8 CVA SVaR 101.5 92.3 92.1 94.8 167.8 CVA SA 46.4 39.5 78.0 51.8 50.0 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 364 2018 Annual Report and Accounts · UniCredit Marginal Regulatory VaR The table below provides a breakdown of 10-days VaR figure (i.e. referred to a 10-days’ time horizon) according to the different market risks (debt, equity, FX, commodities) and its evolution during the year, in the form of template C24 of COREP. Risk on trading book by instruments classes 10-days VaR on Regulatory Trading Book (€ million) 2018 2017 Q1 Q2 Q3 Q4 Q4 Traded Debt Instruments 28.8 40.7 42.0 30.5 31.9 TDI - General Risk 14.2 16.9 21.2 16.7 17.2 TDI - Specific Risk 22.0 32.9 37.0 22.6 25.1 Equities 5.4 6.6 6.1 5.8 5.9 Equities - General Risk - - - - - Equities - Specific Risk 5.4 6.6 6.1 5.8 5.9 Foreign Exchange Risk 10.4 9.9 8.5 5.1 14.9 Commodities Risk 5.5 8.1 9.1 10.2 4.5 Total Amount For General Risk 14.2 16.9 21.2 16.7 17.2 Total Amount For Specific Risk 22.3 30.7 34.8 21.7 26.5 In the fourth quarter 2018, there has been an decrease of the specific risk on traded debt instruments, mainly due to a decrease of the position subject to the Credit Spread Risk of Republic of Italy in the Trading Book of UniCredit S.p.A. CVA The CVA charge data values for the Trading Book for the Group are reported below (as sum of the individual Legal Entities charges since the diversification benefit is not considered). The charge accounts for the credit-spread volatility affecting regulatory CVA. It consists of a VaR figure computed over the current window (CVA VaR) and a VaR figure computed over a stressed window (CVA SVaR). For exposures not covered by the CCR Internal model (used to calculate CVA exposure profiles) the standardised approach (SA) is used. In the second semester of 2018, the Own Fund Requirements due to CVA under Advance model remains relatively stable with respect of the level reached in the second quarter 2018. The main evolutions of the second half of 2018 occurred at the level of the CEE under standardized model, mainly in Turkey. Risk on trading book CVA trading book (€ million) 2018 2017 Q1 Q2 Q3 Q4 Q4 CVA 169.9 145.7 182.1 157.7 250.6 CVA VaR 22.0 13.9 12.0 11.1 32.8 CVA SVaR 101.5 92.3 92.1 94.8 167.8 CVA SA 46.4 39.5 78.0 51.8 50.0 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 365 2.2.1 Interest rate risk and price risk - Regulatory trading book Qualitative information Interest rate risk A. General information Interest rate risk arises from financial positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Regardless of use of the internal models in calculating capital requirements on market risks, risk positions in the Group are monitored and subject to limits assigned to the portfolios on the bases of managerial responsibilities and not purely on regulatory criteria. B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to Stress Test paragraph. In addition to the monitoring of Granular Market Limits, Group Market Risk functions conduct sensitivity analysis at least on monthly basis, in order to determine the effect on the income statement of changes in the value of individual risk factors or several risk factors of the same type. Additionally to the sensitivity of financial instruments to changes in the underlying risk factor, the sensitivity to the volatility of interest rates is also calculated assuming positive and negative shifts of 30% in volatility curves or matrices. Price risk A. General information Price risk relating to equities, commodities, investment funds and related derivative products included in the Trading book originates from positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Price risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTCs and recourse to security lending. Volatility trading strategies are implemented using options and complex derivatives B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to the introduction on internal models. As regards Stress Test refers to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to the Stress Test paragraph Quantitative information 1. Regulatory trading portfolio: distribution by residual duration (re-pricing date) of financial assets and liabilities for cash and financial derivatives The table is not reported since a table showing Interest Rate sensitivity is described below, in accordance with Internal Model. 2. Regulatory trading portfolio: distribution of equity exposures and equity indices for the main listing countries The table is not reported since a table showing price risk sensitivity is described below, in accordance with Internal Model. 3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 365 2.2.1 Interest rate risk and price risk - Regulatory trading book Qualitative information Interest rate risk A. General information Interest rate risk arises from financial positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Regardless of use of the internal models in calculating capital requirements on market risks, risk positions in the Group are monitored and subject to limits assigned to the portfolios on the bases of managerial responsibilities and not purely on regulatory criteria. B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to Stress Test paragraph. In addition to the monitoring of Granular Market Limits, Group Market Risk functions conduct sensitivity analysis at least on monthly basis, in order to determine the effect on the income statement of changes in the value of individual risk factors or several risk factors of the same type. Additionally to the sensitivity of financial instruments to changes in the underlying risk factor, the sensitivity to the volatility of interest rates is also calculated assuming positive and negative shifts of 30% in volatility curves or matrices. Price risk A. General information Price risk relating to equities, commodities, investment funds and related derivative products included in the Trading book originates from positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Price risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTCs and recourse to security lending. Volatility trading strategies are implemented using options and complex derivatives B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to the introduction on internal models. As regards Stress Test refers to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to the Stress Test paragraph Quantitative information 1. Regulatory trading portfolio: distribution by residual duration (re-pricing date) of financial assets and liabilities for cash and financial derivatives The table is not reported since a table showing Interest Rate sensitivity is described below, in accordance with Internal Model. 2. Regulatory trading portfolio: distribution of equity exposures and equity indices for the main listing countries The table is not reported since a table showing price risk sensitivity is described below, in accordance with Internal Model. 3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 365 2.2.1 Interest rate risk and price risk - Regulatory trading book Qualitative information Interest rate risk A. General information Interest rate risk arises from financial positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Regardless of use of the internal models in calculating capital requirements on market risks, risk positions in the Group are monitored and subject to limits assigned to the portfolios on the bases of managerial responsibilities and not purely on regulatory criteria. B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to Stress Test paragraph. In addition to the monitoring of Granular Market Limits, Group Market Risk functions conduct sensitivity analysis at least on monthly basis, in order to determine the effect on the income statement of changes in the value of individual risk factors or several risk factors of the same type. Additionally to the sensitivity of financial instruments to changes in the underlying risk factor, the sensitivity to the volatility of interest rates is also calculated assuming positive and negative shifts of 30% in volatility curves or matrices. Price risk A. General information Price risk relating to equities, commodities, investment funds and related derivative products included in the Trading book originates from positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Price risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTCs and recourse to security lending. Volatility trading strategies are implemented using options and complex derivatives B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to the introduction on internal models. As regards Stress Test refers to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to the Stress Test paragraph Quantitative information 1. Regulatory trading portfolio: distribution by residual duration (re-pricing date) of financial assets and liabilities for cash and financial derivatives The table is not reported since a table showing Interest Rate sensitivity is described below, in accordance with Internal Model. 2. Regulatory trading portfolio: distribution of equity exposures and equity indices for the main listing countries The table is not reported since a table showing price risk sensitivity is described below, in accordance with Internal Model. 3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 365 2.2.1 Interest rate risk and price risk - Regulatory trading book Qualitative information Interest rate risk A. General information Interest rate risk arises from financial positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Regardless of use of the internal models in calculating capital requirements on market risks, risk positions in the Group are monitored and subject to limits assigned to the portfolios on the bases of managerial responsibilities and not purely on regulatory criteria. B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to Stress Test paragraph. In addition to the monitoring of Granular Market Limits, Group Market Risk functions conduct sensitivity analysis at least on monthly basis, in order to determine the effect on the income statement of changes in the value of individual risk factors or several risk factors of the same type. Additionally to the sensitivity of financial instruments to changes in the underlying risk factor, the sensitivity to the volatility of interest rates is also calculated assuming positive and negative shifts of 30% in volatility curves or matrices. Price risk A. General information Price risk relating to equities, commodities, investment funds and related derivative products included in the Trading book originates from positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Price risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTCs and recourse to security lending. Volatility trading strategies are implemented using options and complex derivatives B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to the introduction on internal models. As regards Stress Test refers to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to the Stress Test paragraph Quantitative information 1. Regulatory trading portfolio: distribution by residual duration (re-pricing date) of financial assets and liabilities for cash and financial derivatives The table is not reported since a table showing Interest Rate sensitivity is described below, in accordance with Internal Model. 2. Regulatory trading portfolio: distribution of equity exposures and equity indices for the main listing countries The table is not reported since a table showing price risk sensitivity is described below, in accordance with Internal Model. 3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 365 2.2.1 Interest rate risk and price risk - Regulatory trading book Qualitative information Interest rate risk A. General information Interest rate risk arises from financial positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Regardless of use of the internal models in calculating capital requirements on market risks, risk positions in the Group are monitored and subject to limits assigned to the portfolios on the bases of managerial responsibilities and not purely on regulatory criteria. B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to Stress Test paragraph. In addition to the monitoring of Granular Market Limits, Group Market Risk functions conduct sensitivity analysis at least on monthly basis, in order to determine the effect on the income statement of changes in the value of individual risk factors or several risk factors of the same type. Additionally to the sensitivity of financial instruments to changes in the underlying risk factor, the sensitivity to the volatility of interest rates is also calculated assuming positive and negative shifts of 30% in volatility curves or matrices. Price risk A. General information Price risk relating to equities, commodities, investment funds and related derivative products included in the Trading book originates from positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Price risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTCs and recourse to security lending. Volatility trading strategies are implemented using options and complex derivatives B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to the introduction on internal models. As regards Stress Test refers to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to the Stress Test paragraph Quantitative information 1. Regulatory trading portfolio: distribution by residual duration (re-pricing date) of financial assets and liabilities for cash and financial derivatives The table is not reported since a table showing Interest Rate sensitivity is described below, in accordance with Internal Model. 2. Regulatory trading portfolio: distribution of equity exposures and equity indices for the main listing countries The table is not reported since a table showing price risk sensitivity is described below, in accordance with Internal Model. 3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 366 2018 Annual Report and Accounts · UniCredit Interest rate risk Interest Rate Risk Sensitivity Sensitivity to changes in interest rates is determined using both parallel shifts of interest-rate curves, and changes in the curve itself. The curves are analysed using parallel shifts of ±1bp/±10bps and ±100bps. For each 1bp shift, sensitivity is calculated for a series of time-buckets. Sensitivity for changes in the steepness of the rate curve is analysed by clockwise turning (Turn CW), i.e. an increase in short-term rates and a simultaneous fall in long-term rates, and by counter-clockwise turning (Turn CCW), whereby short-term rates fall and long-term rates rise. In particular, clockwise and counter-clockwise turning use the following changes in absolute terms: • +50bps/-50bps for the one-day bucket; • 0bps for the one-year bucket; • -50bps/+50bps for the 30-year plus bucket; • for buckets between the above ones, the change to be set is found by linear interpolation. The Group also calculates sensitivity to the volatility of Interest Rate assuming a positive shift of 30% or negative change of 30% in volatility curves or matrixes. The tables below show trading book sensitivities. (€ million) INTEREST RATES +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL -10 BP +10 BP -100 PB +100 BP CW CCW Total -0.1 -0.2 0.3 0.2 1.1 -0.7 -0.1 0.4 -2.9 0.4 -100.7 -23.7 -4.3 3.0 of which: EUR -0.1 -0.4 0.4 0.3 0.8 -0.8 -0.2 0.0 -0.1 -0.2 -66.0 -26.6 3.8 -5.0 USD -0.0 0.1 -0.2 0.0 0.2 -0.1 -0.1 0.0 0.8 -0.6 5.6 -10.5 2.8 -2.0 GBP 0.0 -0.0 -0.0 -0.0 -0.1 0.3 0.2 0.3 -2.6 2.5 -29.8 22.2 -12.8 11.9 CHF 0.0 -0.0 0.0 -0.0 0.0 -0.0 0.0 0.0 -0.0 0.0 -0.4 0.3 -0.0 0.1 JPY 0.0 0.0 -0.0 -0.1 0.1 -0.0 0.0 0.0 -0.3 0.3 -3.1 3.0 1.0 -1.0 (€ million) -30% +30% Interest Rates 20.3 -22.6 EUR 19.4 -20.8 USD 0.8 -1.6 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 366 2018 Annual Report and Accounts · UniCredit Interest rate risk Interest Rate Risk Sensitivity Sensitivity to changes in interest rates is determined using both parallel shifts of interest-rate curves, and changes in the curve itself. The curves are analysed using parallel shifts of ±1bp/±10bps and ±100bps. For each 1bp shift, sensitivity is calculated for a series of time-buckets. Sensitivity for changes in the steepness of the rate curve is analysed by clockwise turning (Turn CW), i.e. an increase in short-term rates and a simultaneous fall in long-term rates, and by counter-clockwise turning (Turn CCW), whereby short-term rates fall and long-term rates rise. In particular, clockwise and counter-clockwise turning use the following changes in absolute terms: • +50bps/-50bps for the one-day bucket; • 0bps for the one-year bucket; • -50bps/+50bps for the 30-year plus bucket; • for buckets between the above ones, the change to be set is found by linear interpolation. The Group also calculates sensitivity to the volatility of Interest Rate assuming a positive shift of 30% or negative change of 30% in volatility curves or matrixes. The tables below show trading book sensitivities. (€ million) INTEREST RATES +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL -10 BP +10 BP -100 PB +100 BP CW CCW Total -0.1 -0.2 0.3 0.2 1.1 -0.7 -0.1 0.4 -2.9 0.4 -100.7 -23.7 -4.3 3.0 of which: EUR -0.1 -0.4 0.4 0.3 0.8 -0.8 -0.2 0.0 -0.1 -0.2 -66.0 -26.6 3.8 -5.0 USD -0.0 0.1 -0.2 0.0 0.2 -0.1 -0.1 0.0 0.8 -0.6 5.6 -10.5 2.8 -2.0 GBP 0.0 -0.0 -0.0 -0.0 -0.1 0.3 0.2 0.3 -2.6 2.5 -29.8 22.2 -12.8 11.9 CHF 0.0 -0.0 0.0 -0.0 0.0 -0.0 0.0 0.0 -0.0 0.0 -0.4 0.3 -0.0 0.1 JPY 0.0 0.0 -0.0 -0.1 0.1 -0.0 0.0 0.0 -0.3 0.3 -3.1 3.0 1.0 -1.0 (€ million) -30% +30% Interest Rates 20.3 -22.6 EUR 19.4 -20.8 USD 0.8 -1.6 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 366 2018 Annual Report and Accounts · UniCredit Interest rate risk Interest Rate Risk Sensitivity Sensitivity to changes in interest rates is determined using both parallel shifts of interest-rate curves, and changes in the curve itself. The curves are analysed using parallel shifts of ±1bp/±10bps and ±100bps. For each 1bp shift, sensitivity is calculated for a series of time-buckets. Sensitivity for changes in the steepness of the rate curve is analysed by clockwise turning (Turn CW), i.e. an increase in short-term rates and a simultaneous fall in long-term rates, and by counter-clockwise turning (Turn CCW), whereby short-term rates fall and long-term rates rise. In particular, clockwise and counter-clockwise turning use the following changes in absolute terms: • +50bps/-50bps for the one-day bucket; • 0bps for the one-year bucket; • -50bps/+50bps for the 30-year plus bucket; • for buckets between the above ones, the change to be set is found by linear interpolation. The Group also calculates sensitivity to the volatility of Interest Rate assuming a positive shift of 30% or negative change of 30% in volatility curves or matrixes. The tables below show trading book sensitivities. (€ million) INTEREST RATES +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL -10 BP +10 BP -100 PB +100 BP CW CCW Total -0.1 -0.2 0.3 0.2 1.1 -0.7 -0.1 0.4 -2.9 0.4 -100.7 -23.7 -4.3 3.0 of which: EUR -0.1 -0.4 0.4 0.3 0.8 -0.8 -0.2 0.0 -0.1 -0.2 -66.0 -26.6 3.8 -5.0 USD -0.0 0.1 -0.2 0.0 0.2 -0.1 -0.1 0.0 0.8 -0.6 5.6 -10.5 2.8 -2.0 GBP 0.0 -0.0 -0.0 -0.0 -0.1 0.3 0.2 0.3 -2.6 2.5 -29.8 22.2 -12.8 11.9 CHF 0.0 -0.0 0.0 -0.0 0.0 -0.0 0.0 0.0 -0.0 0.0 -0.4 0.3 -0.0 0.1 JPY 0.0 0.0 -0.0 -0.1 0.1 -0.0 0.0 0.0 -0.3 0.3 -3.1 3.0 1.0 -1.0 (€ million) -30% +30% Interest Rates 20.3 -22.6 EUR 19.4 -20.8 USD 0.8 -1.6 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 366 2018 Annual Report and Accounts · UniCredit Interest rate risk Interest Rate Risk Sensitivity Sensitivity to changes in interest rates is determined using both parallel shifts of interest-rate curves, and changes in the curve itself. The curves are analysed using parallel shifts of ±1bp/±10bps and ±100bps. For each 1bp shift, sensitivity is calculated for a series of time-buckets. Sensitivity for changes in the steepness of the rate curve is analysed by clockwise turning (Turn CW), i.e. an increase in short-term rates and a simultaneous fall in long-term rates, and by counter-clockwise turning (Turn CCW), whereby short-term rates fall and long-term rates rise. In particular, clockwise and counter-clockwise turning use the following changes in absolute terms: • +50bps/-50bps for the one-day bucket; • 0bps for the one-year bucket; • -50bps/+50bps for the 30-year plus bucket; • for buckets between the above ones, the change to be set is found by linear interpolation. The Group also calculates sensitivity to the volatility of Interest Rate assuming a positive shift of 30% or negative change of 30% in volatility curves or matrixes. The tables below show trading book sensitivities. (€ million) INTEREST RATES +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL -10 BP +10 BP -100 PB +100 BP CW CCW Total -0.1 -0.2 0.3 0.2 1.1 -0.7 -0.1 0.4 -2.9 0.4 -100.7 -23.7 -4.3 3.0 of which: EUR -0.1 -0.4 0.4 0.3 0.8 -0.8 -0.2 0.0 -0.1 -0.2 -66.0 -26.6 3.8 -5.0 USD -0.0 0.1 -0.2 0.0 0.2 -0.1 -0.1 0.0 0.8 -0.6 5.6 -10.5 2.8 -2.0 GBP 0.0 -0.0 -0.0 -0.0 -0.1 0.3 0.2 0.3 -2.6 2.5 -29.8 22.2 -12.8 11.9 CHF 0.0 -0.0 0.0 -0.0 0.0 -0.0 0.0 0.0 -0.0 0.0 -0.4 0.3 -0.0 0.1 JPY 0.0 0.0 -0.0 -0.1 0.1 -0.0 0.0 0.0 -0.3 0.3 -3.1 3.0 1.0 -1.0 (€ million) -30% +30% Interest Rates 20.3 -22.6 EUR 19.4 -20.8 USD 0.8 -1.6 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 366 2018 Annual Report and Accounts · UniCredit Interest rate risk Interest Rate Risk Sensitivity Sensitivity to changes in interest rates is determined using both parallel shifts of interest-rate curves, and changes in the curve itself. The curves are analysed using parallel shifts of ±1bp/±10bps and ±100bps. For each 1bp shift, sensitivity is calculated for a series of time-buckets. Sensitivity for changes in the steepness of the rate curve is analysed by clockwise turning (Turn CW), i.e. an increase in short-term rates and a simultaneous fall in long-term rates, and by counter-clockwise turning (Turn CCW), whereby short-term rates fall and long-term rates rise. In particular, clockwise and counter-clockwise turning use the following changes in absolute terms: • +50bps/-50bps for the one-day bucket; • 0bps for the one-year bucket; • -50bps/+50bps for the 30-year plus bucket; • for buckets between the above ones, the change to be set is found by linear interpolation. The Group also calculates sensitivity to the volatility of Interest Rate assuming a positive shift of 30% or negative change of 30% in volatility curves or matrixes. The tables below show trading book sensitivities. (€ million) INTEREST RATES +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL -10 BP +10 BP -100 PB +100 BP CW CCW Total -0.1 -0.2 0.3 0.2 1.1 -0.7 -0.1 0.4 -2.9 0.4 -100.7 -23.7 -4.3 3.0 of which: EUR -0.1 -0.4 0.4 0.3 0.8 -0.8 -0.2 0.0 -0.1 -0.2 -66.0 -26.6 3.8 -5.0 USD -0.0 0.1 -0.2 0.0 0.2 -0.1 -0.1 0.0 0.8 -0.6 5.6 -10.5 2.8 -2.0 GBP 0.0 -0.0 -0.0 -0.0 -0.1 0.3 0.2 0.3 -2.6 2.5 -29.8 22.2 -12.8 11.9 CHF 0.0 -0.0 0.0 -0.0 0.0 -0.0 0.0 0.0 -0.0 0.0 -0.4 0.3 -0.0 0.1 JPY 0.0 0.0 -0.0 -0.1 0.1 -0.0 0.0 0.0 -0.3 0.3 -3.1 3.0 1.0 -1.0 (€ million) -30% +30% Interest Rates 20.3 -22.6 EUR 19.4 -20.8 USD 0.8 -1.6 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 367 Price risk Share-price sensitivity Share-price sensitivity is expressed in two ways: • as a “Delta cash-equivalent”, i.e. the euro equivalent of the quantity of the underlying that would expose the bank to the same risk arising from its actual portfolio; • as the economic result of a rise or fall in spot prices of 1%, 10% and 20%. The Delta cash-equivalent and the Delta 1% (i.e. the economic impact of a 1% rise in spot prices) are calculated both for each geographical region (assuming that all stock markets in the region are perfectly correlated) and on the total (assuming therefore that all stock markets are perfectly correlated). The sensitivity arising from changes of 10% and 20% is calculated solely on the total. The Group also calculates sensitivity to the volatility of equities assuming a positive shift of 30% or negative change of 30% in volatility curves or matrixes. In addition, sensitivity to commodity price changes is calculated according to the above criteria. Given its secondary importance as compared to other risk exposures, this is calculated as a single class. The tables below show trading book sensitivities. (€ million) EQUITIES ALL MARKETS DELTA CASH-EQUIVALENT -20% -10% -1% +1% +10% +20% Europe 45.8 - - - 0.5 - - USA 9.7 - - - 0.1 - - Japan 0.8 - - - 0.0 - - Asia ex-Japan 17.3 - - - 0.2 - - Latin America 1.2 - - - 0.0 - - Other -46.7 - - - -0.5 - - Total 28.1 -71.4 -9.4 0.4 0.3 -9.6 -3.5 Commodity -2.9 -6.5 -2.9 -0.2 0.0 1.7 1.8 (€ million) -30% +30% Equities -16.0 6.8 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 367 Price risk Share-price sensitivity Share-price sensitivity is expressed in two ways: • as a “Delta cash-equivalent”, i.e. the euro equivalent of the quantity of the underlying that would expose the bank to the same risk arising from its actual portfolio; • as the economic result of a rise or fall in spot prices of 1%, 10% and 20%. The Delta cash-equivalent and the Delta 1% (i.e. the economic impact of a 1% rise in spot prices) are calculated both for each geographical region (assuming that all stock markets in the region are perfectly correlated) and on the total (assuming therefore that all stock markets are perfectly correlated). The sensitivity arising from changes of 10% and 20% is calculated solely on the total. The Group also calculates sensitivity to the volatility of equities assuming a positive shift of 30% or negative change of 30% in volatility curves or matrixes. In addition, sensitivity to commodity price changes is calculated according to the above criteria. Given its secondary importance as compared to other risk exposures, this is calculated as a single class. The tables below show trading book sensitivities. (€ million) EQUITIES ALL MARKETS DELTA CASH-EQUIVALENT -20% -10% -1% +1% +10% +20% Europe 45.8 - - - 0.5 - - USA 9.7 - - - 0.1 - - Japan 0.8 - - - 0.0 - - Asia ex-Japan 17.3 - - - 0.2 - - Latin America 1.2 - - - 0.0 - - Other -46.7 - - - -0.5 - - Total 28.1 -71.4 -9.4 0.4 0.3 -9.6 -3.5 Commodity -2.9 -6.5 -2.9 -0.2 0.0 1.7 1.8 (€ million) -30% +30% Equities -16.0 6.8 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 367 Price risk Share-price sensitivity Share-price sensitivity is expressed in two ways: • as a “Delta cash-equivalent”, i.e. the euro equivalent of the quantity of the underlying that would expose the bank to the same risk arising from its actual portfolio; • as the economic result of a rise or fall in spot prices of 1%, 10% and 20%. The Delta cash-equivalent and the Delta 1% (i.e. the economic impact of a 1% rise in spot prices) are calculated both for each geographical region (assuming that all stock markets in the region are perfectly correlated) and on the total (assuming therefore that all stock markets are perfectly correlated). The sensitivity arising from changes of 10% and 20% is calculated solely on the total. The Group also calculates sensitivity to the volatility of equities assuming a positive shift of 30% or negative change of 30% in volatility curves or matrixes. In addition, sensitivity to commodity price changes is calculated according to the above criteria. Given its secondary importance as compared to other risk exposures, this is calculated as a single class. The tables below show trading book sensitivities. (€ million) EQUITIES ALL MARKETS DELTA CASH-EQUIVALENT -20% -10% -1% +1% +10% +20% Europe 45.8 - - - 0.5 - - USA 9.7 - - - 0.1 - - Japan 0.8 - - - 0.0 - - Asia ex-Japan 17.3 - - - 0.2 - - Latin America 1.2 - - - 0.0 - - Other -46.7 - - - -0.5 - - Total 28.1 -71.4 -9.4 0.4 0.3 -9.6 -3.5 Commodity -2.9 -6.5 -2.9 -0.2 0.0 1.7 1.8 (€ million) -30% +30% Equities -16.0 6.8 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 367 Price risk Share-price sensitivity Share-price sensitivity is expressed in two ways: • as a “Delta cash-equivalent”, i.e. the euro equivalent of the quantity of the underlying that would expose the bank to the same risk arising from its actual portfolio; • as the economic result of a rise or fall in spot prices of 1%, 10% and 20%. The Delta cash-equivalent and the Delta 1% (i.e. the economic impact of a 1% rise in spot prices) are calculated both for each geographical region (assuming that all stock markets in the region are perfectly correlated) and on the total (assuming therefore that all stock markets are perfectly correlated). The sensitivity arising from changes of 10% and 20% is calculated solely on the total. The Group also calculates sensitivity to the volatility of equities assuming a positive shift of 30% or negative change of 30% in volatility curves or matrixes. In addition, sensitivity to commodity price changes is calculated according to the above criteria. Given its secondary importance as compared to other risk exposures, this is calculated as a single class. The tables below show trading book sensitivities. (€ million) EQUITIES ALL MARKETS DELTA CASH-EQUIVALENT -20% -10% -1% +1% +10% +20% Europe 45.8 - - - 0.5 - - USA 9.7 - - - 0.1 - - Japan 0.8 - - - 0.0 - - Asia ex-Japan 17.3 - - - 0.2 - - Latin America 1.2 - - - 0.0 - - Other -46.7 - - - -0.5 - - Total 28.1 -71.4 -9.4 0.4 0.3 -9.6 -3.5 Commodity -2.9 -6.5 -2.9 -0.2 0.0 1.7 1.8 (€ million) -30% +30% Equities -16.0 6.8 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 367 Price risk Share-price sensitivity Share-price sensitivity is expressed in two ways: • as a “Delta cash-equivalent”, i.e. the euro equivalent of the quantity of the underlying that would expose the bank to the same risk arising from its actual portfolio; • as the economic result of a rise or fall in spot prices of 1%, 10% and 20%. The Delta cash-equivalent and the Delta 1% (i.e. the economic impact of a 1% rise in spot prices) are calculated both for each geographical region (assuming that all stock markets in the region are perfectly correlated) and on the total (assuming therefore that all stock markets are perfectly correlated). The sensitivity arising from changes of 10% and 20% is calculated solely on the total. The Group also calculates sensitivity to the volatility of equities assuming a positive shift of 30% or negative change of 30% in volatility curves or matrixes. In addition, sensitivity to commodity price changes is calculated according to the above criteria. Given its secondary importance as compared to other risk exposures, this is calculated as a single class. The tables below show trading book sensitivities. (€ million) EQUITIES ALL MARKETS DELTA CASH-EQUIVALENT -20% -10% -1% +1% +10% +20% Europe 45.8 - - - 0.5 - - USA 9.7 - - - 0.1 - - Japan 0.8 - - - 0.0 - - Asia ex-Japan 17.3 - - - 0.2 - - Latin America 1.2 - - - 0.0 - - Other -46.7 - - - -0.5 - - Total 28.1 -71.4 -9.4 0.4 0.3 -9.6 -3.5 Commodity -2.9 -6.5 -2.9 -0.2 0.0 1.7 1.8 (€ million) -30% +30% Equities -16.0 6.8 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 368 2018 Annual Report and Accounts · UniCredit 2.2.2 Interest rate risk and price risk - Banking book Qualitative information Interest rate risk A. General aspects, operational processes and methods for measuring interest rate risk Interest rate risk consists of changes in interest rates that are reflected in: • interest income sources, and thus, the bank’s earnings (cash flow risk); • the net present value of assets and liabilities, due to their impact on the present value of future cash flows (fair value risk). The Group measures and monitors this risk within the framework of a Banking Book interest rate risk policy that establishes consistent methodologies and models and limits or thresholds to focus on, with regard to the sensitivity of net interest income and the Group’s economic value. Interest rate risk has an impact on all owned positions resulting from business operations and strategic investment decisions (Banking Book). The main sources of interest rate risk can be classified as follows: • gap risk: it arises from the term structure of banking book instruments, and describes the risk arising from the timing of instrument rate changes. The extent of gap risk depends also on whether changes to the term structure of interest rates occur consistently across the yield curve (parallel risk) or differentially by period (non-parallel risk). Gap risk also encompasses: Repricing risk, defined as the risk of changes in interest rate earned at the time a financial contract’s rate is reset. It emerges if interest rates are settled on liabilities for periods which differ from those on offsetting assets. Repricing risk also refers to the Yield curve risk, occurring when a shift in the yield curve affects the values of interest rate sensitive assets and interest rate bearing liabilities; • basis risk can be broken down in: - tenor risk: resulting from the imperfect correlation in the adjustment of the rates earned and paid on different instruments with otherwise similar rate change characteristics; - currency risk: defined as the risk of potentially offsetting interest rate sensitivities arising from interest rate exposures in several currencies; • option risk: risk resulting from option derivative positions or from the optional elements embedded in many bank positions, where the bank or its customers can alter the level and timing of their cash flows. Limits and threshold are defined in terms of Sensitivity for each Group Bank or Company. The set of metrics is defined depending on the level of sophistication of the Company’s business. Each of the Group’s banks or companies assumes responsibility for managing exposure to interest rate risk within its specified limits. At consolidated level, the functions of Group Risk Management is in charge of interest rate risk measurement. Interest rate risk measurement includes: • Net Interest Income analysis: this involves a constant balance sheet analysis (i.e. assuming that positions remain constant during the period), an impact simulation on interest income for the current period is performed, by taking into account elasticity assumptions for sight items. In addition a simulation analysis includes the analysis of the impact on income from different shocks for the interest rates. Reference shock for a rate rise scenario is an instantaneous and parallel shock of +100bp. While the shocks for the rate fall scenario are applied in an asymmetric way. The currencies to which a shock of -30bp is applied are: EUR, BGN, JPY and CHF. For HUF, whose rates are only marginally negative, a shock of -60bp is be applied. For other currencies the shock is -100bp. Additional scenarios are performed to take into account basis risk and non-parallel shifts. • Economic Value analysis: this includes the calculation of duration measures, value sensitivities of the balance sheet for different points on the curve, as well as the impact on the Economic Value from larger shocks, e.g. a 200bp parallel shift and other non-parallels shocks. The interest rate risk is monitored in terms of Economic value sensitivity for an instantaneous and parallel shock of +1 basis point value of the interest rate term structure. The function responsible for interest rate risk management verifies the limit usage of 1 basis point value sensitivity on a daily basis. On a monthly basis the Economic Value sensitivity for larger parallel and non-parallel shocks in the interest rate term structure and Net Interest Income Sensitivity are measured. The Treasury hedges interest rate risk exposure from commercial transactions. The Treasury interest rate risk exposure is monitored through a set of limits and threshold levels. The same holds for the overall interest rate exposure of the balance sheet, taking into account also the strategic investment positions of the bank, e.g. transactions not directly related to hedging the commercial business. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 368 2018 Annual Report and Accounts · UniCredit 2.2.2 Interest rate risk and price risk - Banking book Qualitative information Interest rate risk A. General aspects, operational processes and methods for measuring interest rate risk Interest rate risk consists of changes in interest rates that are reflected in: • interest income sources, and thus, the bank’s earnings (cash flow risk); • the net present value of assets and liabilities, due to their impact on the present value of future cash flows (fair value risk). The Group measures and monitors this risk within the framework of a Banking Book interest rate risk policy that establishes consistent methodologies and models and limits or thresholds to focus on, with regard to the sensitivity of net interest income and the Group’s economic value. Interest rate risk has an impact on all owned positions resulting from business operations and strategic investment decisions (Banking Book). The main sources of interest rate risk can be classified as follows: • gap risk: it arises from the term structure of banking book instruments, and describes the risk arising from the timing of instrument rate changes. The extent of gap risk depends also on whether changes to the term structure of interest rates occur consistently across the yield curve (parallel risk) or differentially by period (non-parallel risk). Gap risk also encompasses: Repricing risk, defined as the risk of changes in interest rate earned at the time a financial contract’s rate is reset. It emerges if interest rates are settled on liabilities for periods which differ from those on offsetting assets. Repricing risk also refers to the Yield curve risk, occurring when a shift in the yield curve affects the values of interest rate sensitive assets and interest rate bearing liabilities; • basis risk can be broken down in: - tenor risk: resulting from the imperfect correlation in the adjustment of the rates earned and paid on different instruments with otherwise similar rate change characteristics; - currency risk: defined as the risk of potentially offsetting interest rate sensitivities arising from interest rate exposures in several currencies; • option risk: risk resulting from option derivative positions or from the optional elements embedded in many bank positions, where the bank or its customers can alter the level and timing of their cash flows. Limits and threshold are defined in terms of Sensitivity for each Group Bank or Company. The set of metrics is defined depending on the level of sophistication of the Company’s business. Each of the Group’s banks or companies assumes responsibility for managing exposure to interest rate risk within its specified limits. At consolidated level, the functions of Group Risk Management is in charge of interest rate risk measurement. Interest rate risk measurement includes: • Net Interest Income analysis: this involves a constant balance sheet analysis (i.e. assuming that positions remain constant during the period), an impact simulation on interest income for the current period is performed, by taking into account elasticity assumptions for sight items. In addition a simulation analysis includes the analysis of the impact on income from different shocks for the interest rates. Reference shock for a rate rise scenario is an instantaneous and parallel shock of +100bp. While the shocks for the rate fall scenario are applied in an asymmetric way. The currencies to which a shock of -30bp is applied are: EUR, BGN, JPY and CHF. For HUF, whose rates are only marginally negative, a shock of -60bp is be applied. For other currencies the shock is -100bp. Additional scenarios are performed to take into account basis risk and non-parallel shifts. • Economic Value analysis: this includes the calculation of duration measures, value sensitivities of the balance sheet for different points on the curve, as well as the impact on the Economic Value from larger shocks, e.g. a 200bp parallel shift and other non-parallels shocks. The interest rate risk is monitored in terms of Economic value sensitivity for an instantaneous and parallel shock of +1 basis point value of the interest rate term structure. The function responsible for interest rate risk management verifies the limit usage of 1 basis point value sensitivity on a daily basis. On a monthly basis the Economic Value sensitivity for larger parallel and non-parallel shocks in the interest rate term structure and Net Interest Income Sensitivity are measured. The Treasury hedges interest rate risk exposure from commercial transactions. The Treasury interest rate risk exposure is monitored through a set of limits and threshold levels. The same holds for the overall interest rate exposure of the balance sheet, taking into account also the strategic investment positions of the bank, e.g. transactions not directly related to hedging the commercial business. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 368 2018 Annual Report and Accounts · UniCredit 2.2.2 Interest rate risk and price risk - Banking book Qualitative information Interest rate risk A. General aspects, operational processes and methods for measuring interest rate risk Interest rate risk consists of changes in interest rates that are reflected in: • interest income sources, and thus, the bank’s earnings (cash flow risk); • the net present value of assets and liabilities, due to their impact on the present value of future cash flows (fair value risk). The Group measures and monitors this risk within the framework of a Banking Book interest rate risk policy that establishes consistent methodologies and models and limits or thresholds to focus on, with regard to the sensitivity of net interest income and the Group’s economic value. Interest rate risk has an impact on all owned positions resulting from business operations and strategic investment decisions (Banking Book). The main sources of interest rate risk can be classified as follows: • gap risk: it arises from the term structure of banking book instruments, and describes the risk arising from the timing of instrument rate changes. The extent of gap risk depends also on whether changes to the term structure of interest rates occur consistently across the yield curve (parallel risk) or differentially by period (non-parallel risk). Gap risk also encompasses: Repricing risk, defined as the risk of changes in interest rate earned at the time a financial contract’s rate is reset. It emerges if interest rates are settled on liabilities for periods which differ from those on offsetting assets. Repricing risk also refers to the Yield curve risk, occurring when a shift in the yield curve affects the values of interest rate sensitive assets and interest rate bearing liabilities; • basis risk can be broken down in: - tenor risk: resulting from the imperfect correlation in the adjustment of the rates earned and paid on different instruments with otherwise similar rate change characteristics; - currency risk: defined as the risk of potentially offsetting interest rate sensitivities arising from interest rate exposures in several currencies; • option risk: risk resulting from option derivative positions or from the optional elements embedded in many bank positions, where the bank or its customers can alter the level and timing of their cash flows. Limits and threshold are defined in terms of Sensitivity for each Group Bank or Company. The set of metrics is defined depending on the level of sophistication of the Company’s business. Each of the Group’s banks or companies assumes responsibility for managing exposure to interest rate risk within its specified limits. At consolidated level, the functions of Group Risk Management is in charge of interest rate risk measurement. Interest rate risk measurement includes: • Net Interest Income analysis: this involves a constant balance sheet analysis (i.e. assuming that positions remain constant during the period), an impact simulation on interest income for the current period is performed, by taking into account elasticity assumptions for sight items. In addition a simulation analysis includes the analysis of the impact on income from different shocks for the interest rates. Reference shock for a rate rise scenario is an instantaneous and parallel shock of +100bp. While the shocks for the rate fall scenario are applied in an asymmetric way. The currencies to which a shock of -30bp is applied are: EUR, BGN, JPY and CHF. For HUF, whose rates are only marginally negative, a shock of -60bp is be applied. For other currencies the shock is -100bp. Additional scenarios are performed to take into account basis risk and non-parallel shifts. • Economic Value analysis: this includes the calculation of duration measures, value sensitivities of the balance sheet for different points on the curve, as well as the impact on the Economic Value from larger shocks, e.g. a 200bp parallel shift and other non-parallels shocks. The interest rate risk is monitored in terms of Economic value sensitivity for an instantaneous and parallel shock of +1 basis point value of the interest rate term structure. The function responsible for interest rate risk management verifies the limit usage of 1 basis point value sensitivity on a daily basis. On a monthly basis the Economic Value sensitivity for larger parallel and non-parallel shocks in the interest rate term structure and Net Interest Income Sensitivity are measured. The Treasury hedges interest rate risk exposure from commercial transactions. The Treasury interest rate risk exposure is monitored through a set of limits and threshold levels. The same holds for the overall interest rate exposure of the balance sheet, taking into account also the strategic investment positions of the bank, e.g. transactions not directly related to hedging the commercial business. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 368 2018 Annual Report and Accounts · UniCredit 2.2.2 Interest rate risk and price risk - Banking book Qualitative information Interest rate risk A. General aspects, operational processes and methods for measuring interest rate risk Interest rate risk consists of changes in interest rates that are reflected in: • interest income sources, and thus, the bank’s earnings (cash flow risk); • the net present value of assets and liabilities, due to their impact on the present value of future cash flows (fair value risk). The Group measures and monitors this risk within the framework of a Banking Book interest rate risk policy that establishes consistent methodologies and models and limits or thresholds to focus on, with regard to the sensitivity of net interest income and the Group’s economic value. Interest rate risk has an impact on all owned positions resulting from business operations and strategic investment decisions (Banking Book). The main sources of interest rate risk can be classified as follows: • gap risk: it arises from the term structure of banking book instruments, and describes the risk arising from the timing of instrument rate changes. The extent of gap risk depends also on whether changes to the term structure of interest rates occur consistently across the yield curve (parallel risk) or differentially by period (non-parallel risk). Gap risk also encompasses: Repricing risk, defined as the risk of changes in interest rate earned at the time a financial contract’s rate is reset. It emerges if interest rates are settled on liabilities for periods which differ from those on offsetting assets. Repricing risk also refers to the Yield curve risk, occurring when a shift in the yield curve affects the values of interest rate sensitive assets and interest rate bearing liabilities; • basis risk can be broken down in: - tenor risk: resulting from the imperfect correlation in the adjustment of the rates earned and paid on different instruments with otherwise similar rate change characteristics; - currency risk: defined as the risk of potentially offsetting interest rate sensitivities arising from interest rate exposures in several currencies; • option risk: risk resulting from option derivative positions or from the optional elements embedded in many bank positions, where the bank or its customers can alter the level and timing of their cash flows. Limits and threshold are defined in terms of Sensitivity for each Group Bank or Company. The set of metrics is defined depending on the level of sophistication of the Company’s business. Each of the Group’s banks or companies assumes responsibility for managing exposure to interest rate risk within its specified limits. At consolidated level, the functions of Group Risk Management is in charge of interest rate risk measurement. Interest rate risk measurement includes: • Net Interest Income analysis: this involves a constant balance sheet analysis (i.e. assuming that positions remain constant during the period), an impact simulation on interest income for the current period is performed, by taking into account elasticity assumptions for sight items. In addition a simulation analysis includes the analysis of the impact on income from different shocks for the interest rates. Reference shock for a rate rise scenario is an instantaneous and parallel shock of +100bp. While the shocks for the rate fall scenario are applied in an asymmetric way. The currencies to which a shock of -30bp is applied are: EUR, BGN, JPY and CHF. For HUF, whose rates are only marginally negative, a shock of -60bp is be applied. For other currencies the shock is -100bp. Additional scenarios are performed to take into account basis risk and non-parallel shifts. • Economic Value analysis: this includes the calculation of duration measures, value sensitivities of the balance sheet for different points on the curve, as well as the impact on the Economic Value from larger shocks, e.g. a 200bp parallel shift and other non-parallels shocks. The interest rate risk is monitored in terms of Economic value sensitivity for an instantaneous and parallel shock of +1 basis point value of the interest rate term structure. The function responsible for interest rate risk management verifies the limit usage of 1 basis point value sensitivity on a daily basis. On a monthly basis the Economic Value sensitivity for larger parallel and non-parallel shocks in the interest rate term structure and Net Interest Income Sensitivity are measured. The Treasury hedges interest rate risk exposure from commercial transactions. The Treasury interest rate risk exposure is monitored through a set of limits and threshold levels. The same holds for the overall interest rate exposure of the balance sheet, taking into account also the strategic investment positions of the bank, e.g. transactions not directly related to hedging the commercial business. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 368 2018 Annual Report and Accounts · UniCredit 2.2.2 Interest rate risk and price risk - Banking book Qualitative information Interest rate risk A. General aspects, operational processes and methods for measuring interest rate risk Interest rate risk consists of changes in interest rates that are reflected in: • interest income sources, and thus, the bank’s earnings (cash flow risk); • the net present value of assets and liabilities, due to their impact on the present value of future cash flows (fair value risk). The Group measures and monitors this risk within the framework of a Banking Book interest rate risk policy that establishes consistent methodologies and models and limits or thresholds to focus on, with regard to the sensitivity of net interest income and the Group’s economic value. Interest rate risk has an impact on all owned positions resulting from business operations and strategic investment decisions (Banking Book). The main sources of interest rate risk can be classified as follows: • gap risk: it arises from the term structure of banking book instruments, and describes the risk arising from the timing of instrument rate changes. The extent of gap risk depends also on whether changes to the term structure of interest rates occur consistently across the yield curve (parallel risk) or differentially by period (non-parallel risk). Gap risk also encompasses: Repricing risk, defined as the risk of changes in interest rate earned at the time a financial contract’s rate is reset. It emerges if interest rates are settled on liabilities for periods which differ from those on offsetting assets. Repricing risk also refers to the Yield curve risk, occurring when a shift in the yield curve affects the values of interest rate sensitive assets and interest rate bearing liabilities; • basis risk can be broken down in: - tenor risk: resulting from the imperfect correlation in the adjustment of the rates earned and paid on different instruments with otherwise similar rate change characteristics; - currency risk: defined as the risk of potentially offsetting interest rate sensitivities arising from interest rate exposures in several currencies; • option risk: risk resulting from option derivative positions or from the optional elements embedded in many bank positions, where the bank or its customers can alter the level and timing of their cash flows. Limits and threshold are defined in terms of Sensitivity for each Group Bank or Company. The set of metrics is defined depending on the level of sophistication of the Company’s business. Each of the Group’s banks or companies assumes responsibility for managing exposure to interest rate risk within its specified limits. At consolidated level, the functions of Group Risk Management is in charge of interest rate risk measurement. Interest rate risk measurement includes: • Net Interest Income analysis: this involves a constant balance sheet analysis (i.e. assuming that positions remain constant during the period), an impact simulation on interest income for the current period is performed, by taking into account elasticity assumptions for sight items. In addition a simulation analysis includes the analysis of the impact on income from different shocks for the interest rates. Reference shock for a rate rise scenario is an instantaneous and parallel shock of +100bp. While the shocks for the rate fall scenario are applied in an asymmetric way. The currencies to which a shock of -30bp is applied are: EUR, BGN, JPY and CHF. For HUF, whose rates are only marginally negative, a shock of -60bp is be applied. For other currencies the shock is -100bp. Additional scenarios are performed to take into account basis risk and non-parallel shifts. • Economic Value analysis: this includes the calculation of duration measures, value sensitivities of the balance sheet for different points on the curve, as well as the impact on the Economic Value from larger shocks, e.g. a 200bp parallel shift and other non-parallels shocks. The interest rate risk is monitored in terms of Economic value sensitivity for an instantaneous and parallel shock of +1 basis point value of the interest rate term structure. The function responsible for interest rate risk management verifies the limit usage of 1 basis point value sensitivity on a daily basis. On a monthly basis the Economic Value sensitivity for larger parallel and non-parallel shocks in the interest rate term structure and Net Interest Income Sensitivity are measured. The Treasury hedges interest rate risk exposure from commercial transactions. The Treasury interest rate risk exposure is monitored through a set of limits and threshold levels. The same holds for the overall interest rate exposure of the balance sheet, taking into account also the strategic investment positions of the bank, e.g. transactions not directly related to hedging the commercial business. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 369 Price risk A. General aspects, operational processes and methods for measuring price risk Banking Book price risk primarily originates from equity interests held by the Parent company and its subsidiaries as stable investments, as well as units in mutual investment funds not included in the Trading Book as they are also held as stable investments. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes paragraph and for the complex scenarios’ description to Stress Test paragraph. Quantitative information 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 148,623,053 325,238,024 53,841,107 51,698,221 163,639,293 70,581,617 31,632,529 1,148,412 1.1 Debt securities 593,315 39,050,286 12,449,631 14,765,848 72,496,835 34,210,213 7,235,159 13,646 - With prepayment option 53,042 199,331 162,282 - 97,688 153,715 - - - Other 540,273 38,850,955 12,287,349 14,765,848 72,399,147 34,056,498 7,235,159 13,646 1.2 Loans to banks 29,263,748 67,815,420 8,997,300 7,632,712 6,362,608 150,561 6,876,782 494,154 1.3 Loans to customers 118,765,990 218,372,318 32,394,176 29,299,661 84,779,850 36,220,843 17,520,588 640,612 - Current accounts 32,312,320 2,149,457 167,851 1,262,256 1,248,661 44,993 637,746 1,820 - Other loans 86,453,670 216,222,861 32,226,325 28,037,405 83,531,189 36,175,850 16,882,842 638,792 - With prepayment option 11,000,102 59,010,641 8,109,873 3,511,029 19,142,756 7,964,766 7,986,436 4 - Other 75,453,568 157,212,220 24,116,452 24,526,376 64,388,433 28,211,084 8,896,406 638,788 2. On-balance sheet liabilities 413,751,273 212,695,225 30,862,728 29,201,759 98,192,599 22,414,276 13,492,168 899,961 2.1 Deposits from customers 386,124,691 81,352,299 11,111,955 10,510,060 11,225,495 1,894,229 687,731 396,399 - Current accounts 352,183,487 818,582 23,209 4,500 10,401 494 2,325 - - Other 33,941,204 80,533,717 11,088,746 10,505,560 11,215,094 1,893,735 685,406 396,399 - With prepayment option 123,335 - - - - - - - - Other 33,817,869 80,533,717 11,088,746 10,505,560 11,215,094 1,893,735 685,406 396,399 2.2 Deposits from banks 24,022,899 93,359,809 9,376,224 7,938,517 49,996,360 6,003,451 1,050,857 67,769 - Current accounts 12,233,979 26,697 - 14,576 - - - - - Other 11,788,920 93,333,112 9,376,224 7,923,941 49,996,360 6,003,451 1,050,857 67,769 2.3 Debt secuties in issue 993,636 37,084,452 10,371,190 10,722,349 36,842,200 14,413,408 11,753,580 435,620 - With prepayment option - 2,579,147 527,030 1,505,839 3,347,571 1,495,017 658,954 - - Other 993,636 34,505,305 9,844,160 9,216,510 33,494,629 12,918,391 11,094,626 435,620 2.4 Other liabilities 2,610,047 898,665 3,359 30,833 128,544 103,188 - 173 - With prepayment option 2,413 - - - - - - - - Other 2,607,634 898,665 3,359 30,833 128,544 103,188 - 173 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 72,170 47,140 103,871 425,669 205,706 843,177 - + Short positions - 75,091 30,489 101,908 320,416 238,964 755,489 - - Other derivates + Long positions 581,432 9,471,311 222,075 599,756 2,196,376 828,116 269,786 - + Short positions 581,432 9,842,711 222,135 554,109 5,308,963 913,468 269,786 - 3.2 Without underlying security - Option + Long positions 30,576 8,746,355 1,505,425 4,114,530 27,073,702 16,543,400 18,016,883 244,973 + Short positions 30,576 4,273,591 1,281,371 3,602,865 24,978,358 16,940,903 19,259,076 245,095 - Other derivatives + Long positions 40,347,221 407,687,500 74,558,855 90,572,087 368,623,817 89,624,138 18,194,857 2,878,822 + Short positions 8,966,183 461,291,610 67,105,218 95,836,377 355,960,264 60,437,694 33,900,218 4,313,115 4. Other off-balance sheet transactions + Long positions 84,185,243 24,946,521 3,844,413 17,044,288 12,140,397 927,186 2,963,508 560,457 + Short positions 87,434,255 23,573,527 1,308,449 12,999,037 3,847,633 333,606 2,061,286 529,194 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 369 Price risk A. General aspects, operational processes and methods for measuring price risk Banking Book price risk primarily originates from equity interests held by the Parent company and its subsidiaries as stable investments, as well as units in mutual investment funds not included in the Trading Book as they are also held as stable investments. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes paragraph and for the complex scenarios’ description to Stress Test paragraph. Quantitative information 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 148,623,053 325,238,024 53,841,107 51,698,221 163,639,293 70,581,617 31,632,529 1,148,412 1.1 Debt securities 593,315 39,050,286 12,449,631 14,765,848 72,496,835 34,210,213 7,235,159 13,646 - With prepayment option 53,042 199,331 162,282 - 97,688 153,715 - - - Other 540,273 38,850,955 12,287,349 14,765,848 72,399,147 34,056,498 7,235,159 13,646 1.2 Loans to banks 29,263,748 67,815,420 8,997,300 7,632,712 6,362,608 150,561 6,876,782 494,154 1.3 Loans to customers 118,765,990 218,372,318 32,394,176 29,299,661 84,779,850 36,220,843 17,520,588 640,612 - Current accounts 32,312,320 2,149,457 167,851 1,262,256 1,248,661 44,993 637,746 1,820 - Other loans 86,453,670 216,222,861 32,226,325 28,037,405 83,531,189 36,175,850 16,882,842 638,792 - With prepayment option 11,000,102 59,010,641 8,109,873 3,511,029 19,142,756 7,964,766 7,986,436 4 - Other 75,453,568 157,212,220 24,116,452 24,526,376 64,388,433 28,211,084 8,896,406 638,788 2. On-balance sheet liabilities 413,751,273 212,695,225 30,862,728 29,201,759 98,192,599 22,414,276 13,492,168 899,961 2.1 Deposits from customers 386,124,691 81,352,299 11,111,955 10,510,060 11,225,495 1,894,229 687,731 396,399 - Current accounts 352,183,487 818,582 23,209 4,500 10,401 494 2,325 - - Other 33,941,204 80,533,717 11,088,746 10,505,560 11,215,094 1,893,735 685,406 396,399 - With prepayment option 123,335 - - - - - - - - Other 33,817,869 80,533,717 11,088,746 10,505,560 11,215,094 1,893,735 685,406 396,399 2.2 Deposits from banks 24,022,899 93,359,809 9,376,224 7,938,517 49,996,360 6,003,451 1,050,857 67,769 - Current accounts 12,233,979 26,697 - 14,576 - - - - - Other 11,788,920 93,333,112 9,376,224 7,923,941 49,996,360 6,003,451 1,050,857 67,769 2.3 Debt secuties in issue 993,636 37,084,452 10,371,190 10,722,349 36,842,200 14,413,408 11,753,580 435,620 - With prepayment option - 2,579,147 527,030 1,505,839 3,347,571 1,495,017 658,954 - - Other 993,636 34,505,305 9,844,160 9,216,510 33,494,629 12,918,391 11,094,626 435,620 2.4 Other liabilities 2,610,047 898,665 3,359 30,833 128,544 103,188 - 173 - With prepayment option 2,413 - - - - - - - - Other 2,607,634 898,665 3,359 30,833 128,544 103,188 - 173 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 72,170 47,140 103,871 425,669 205,706 843,177 - + Short positions - 75,091 30,489 101,908 320,416 238,964 755,489 - - Other derivates + Long positions 581,432 9,471,311 222,075 599,756 2,196,376 828,116 269,786 - + Short positions 581,432 9,842,711 222,135 554,109 5,308,963 913,468 269,786 - 3.2 Without underlying security - Option + Long positions 30,576 8,746,355 1,505,425 4,114,530 27,073,702 16,543,400 18,016,883 244,973 + Short positions 30,576 4,273,591 1,281,371 3,602,865 24,978,358 16,940,903 19,259,076 245,095 - Other derivatives + Long positions 40,347,221 407,687,500 74,558,855 90,572,087 368,623,817 89,624,138 18,194,857 2,878,822 + Short positions 8,966,183 461,291,610 67,105,218 95,836,377 355,960,264 60,437,694 33,900,218 4,313,115 4. Other off-balance sheet transactions + Long positions 84,185,243 24,946,521 3,844,413 17,044,288 12,140,397 927,186 2,963,508 560,457 + Short positions 87,434,255 23,573,527 1,308,449 12,999,037 3,847,633 333,606 2,061,286 529,194 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 369 Price risk A. General aspects, operational processes and methods for measuring price risk Banking Book price risk primarily originates from equity interests held by the Parent company and its subsidiaries as stable investments, as well as units in mutual investment funds not included in the Trading Book as they are also held as stable investments. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes paragraph and for the complex scenarios’ description to Stress Test paragraph. Quantitative information 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 148,623,053 325,238,024 53,841,107 51,698,221 163,639,293 70,581,617 31,632,529 1,148,412 1.1 Debt securities 593,315 39,050,286 12,449,631 14,765,848 72,496,835 34,210,213 7,235,159 13,646 - With prepayment option 53,042 199,331 162,282 - 97,688 153,715 - - - Other 540,273 38,850,955 12,287,349 14,765,848 72,399,147 34,056,498 7,235,159 13,646 1.2 Loans to banks 29,263,748 67,815,420 8,997,300 7,632,712 6,362,608 150,561 6,876,782 494,154 1.3 Loans to customers 118,765,990 218,372,318 32,394,176 29,299,661 84,779,850 36,220,843 17,520,588 640,612 - Current accounts 32,312,320 2,149,457 167,851 1,262,256 1,248,661 44,993 637,746 1,820 - Other loans 86,453,670 216,222,861 32,226,325 28,037,405 83,531,189 36,175,850 16,882,842 638,792 - With prepayment option 11,000,102 59,010,641 8,109,873 3,511,029 19,142,756 7,964,766 7,986,436 4 - Other 75,453,568 157,212,220 24,116,452 24,526,376 64,388,433 28,211,084 8,896,406 638,788 2. On-balance sheet liabilities 413,751,273 212,695,225 30,862,728 29,201,759 98,192,599 22,414,276 13,492,168 899,961 2.1 Deposits from customers 386,124,691 81,352,299 11,111,955 10,510,060 11,225,495 1,894,229 687,731 396,399 - Current accounts 352,183,487 818,582 23,209 4,500 10,401 494 2,325 - - Other 33,941,204 80,533,717 11,088,746 10,505,560 11,215,094 1,893,735 685,406 396,399 - With prepayment option 123,335 - - - - - - - - Other 33,817,869 80,533,717 11,088,746 10,505,560 11,215,094 1,893,735 685,406 396,399 2.2 Deposits from banks 24,022,899 93,359,809 9,376,224 7,938,517 49,996,360 6,003,451 1,050,857 67,769 - Current accounts 12,233,979 26,697 - 14,576 - - - - - Other 11,788,920 93,333,112 9,376,224 7,923,941 49,996,360 6,003,451 1,050,857 67,769 2.3 Debt secuties in issue 993,636 37,084,452 10,371,190 10,722,349 36,842,200 14,413,408 11,753,580 435,620 - With prepayment option - 2,579,147 527,030 1,505,839 3,347,571 1,495,017 658,954 - - Other 993,636 34,505,305 9,844,160 9,216,510 33,494,629 12,918,391 11,094,626 435,620 2.4 Other liabilities 2,610,047 898,665 3,359 30,833 128,544 103,188 - 173 - With prepayment option 2,413 - - - - - - - - Other 2,607,634 898,665 3,359 30,833 128,544 103,188 - 173 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 72,170 47,140 103,871 425,669 205,706 843,177 - + Short positions - 75,091 30,489 101,908 320,416 238,964 755,489 - - Other derivates + Long positions 581,432 9,471,311 222,075 599,756 2,196,376 828,116 269,786 - + Short positions 581,432 9,842,711 222,135 554,109 5,308,963 913,468 269,786 - 3.2 Without underlying security - Option + Long positions 30,576 8,746,355 1,505,425 4,114,530 27,073,702 16,543,400 18,016,883 244,973 + Short positions 30,576 4,273,591 1,281,371 3,602,865 24,978,358 16,940,903 19,259,076 245,095 - Other derivatives + Long positions 40,347,221 407,687,500 74,558,855 90,572,087 368,623,817 89,624,138 18,194,857 2,878,822 + Short positions 8,966,183 461,291,610 67,105,218 95,836,377 355,960,264 60,437,694 33,900,218 4,313,115 4. Other off-balance sheet transactions + Long positions 84,185,243 24,946,521 3,844,413 17,044,288 12,140,397 927,186 2,963,508 560,457 + Short positions 87,434,255 23,573,527 1,308,449 12,999,037 3,847,633 333,606 2,061,286 529,194 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 369 Price risk A. General aspects, operational processes and methods for measuring price risk Banking Book price risk primarily originates from equity interests held by the Parent company and its subsidiaries as stable investments, as well as units in mutual investment funds not included in the Trading Book as they are also held as stable investments. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes paragraph and for the complex scenarios’ description to Stress Test paragraph. Quantitative information 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 148,623,053 325,238,024 53,841,107 51,698,221 163,639,293 70,581,617 31,632,529 1,148,412 1.1 Debt securities 593,315 39,050,286 12,449,631 14,765,848 72,496,835 34,210,213 7,235,159 13,646 - With prepayment option 53,042 199,331 162,282 - 97,688 153,715 - - - Other 540,273 38,850,955 12,287,349 14,765,848 72,399,147 34,056,498 7,235,159 13,646 1.2 Loans to banks 29,263,748 67,815,420 8,997,300 7,632,712 6,362,608 150,561 6,876,782 494,154 1.3 Loans to customers 118,765,990 218,372,318 32,394,176 29,299,661 84,779,850 36,220,843 17,520,588 640,612 - Current accounts 32,312,320 2,149,457 167,851 1,262,256 1,248,661 44,993 637,746 1,820 - Other loans 86,453,670 216,222,861 32,226,325 28,037,405 83,531,189 36,175,850 16,882,842 638,792 - With prepayment option 11,000,102 59,010,641 8,109,873 3,511,029 19,142,756 7,964,766 7,986,436 4 - Other 75,453,568 157,212,220 24,116,452 24,526,376 64,388,433 28,211,084 8,896,406 638,788 2. On-balance sheet liabilities 413,751,273 212,695,225 30,862,728 29,201,759 98,192,599 22,414,276 13,492,168 899,961 2.1 Deposits from customers 386,124,691 81,352,299 11,111,955 10,510,060 11,225,495 1,894,229 687,731 396,399 - Current accounts 352,183,487 818,582 23,209 4,500 10,401 494 2,325 - - Other 33,941,204 80,533,717 11,088,746 10,505,560 11,215,094 1,893,735 685,406 396,399 - With prepayment option 123,335 - - - - - - - - Other 33,817,869 80,533,717 11,088,746 10,505,560 11,215,094 1,893,735 685,406 396,399 2.2 Deposits from banks 24,022,899 93,359,809 9,376,224 7,938,517 49,996,360 6,003,451 1,050,857 67,769 - Current accounts 12,233,979 26,697 - 14,576 - - - - - Other 11,788,920 93,333,112 9,376,224 7,923,941 49,996,360 6,003,451 1,050,857 67,769 2.3 Debt secuties in issue 993,636 37,084,452 10,371,190 10,722,349 36,842,200 14,413,408 11,753,580 435,620 - With prepayment option - 2,579,147 527,030 1,505,839 3,347,571 1,495,017 658,954 - - Other 993,636 34,505,305 9,844,160 9,216,510 33,494,629 12,918,391 11,094,626 435,620 2.4 Other liabilities 2,610,047 898,665 3,359 30,833 128,544 103,188 - 173 - With prepayment option 2,413 - - - - - - - - Other 2,607,634 898,665 3,359 30,833 128,544 103,188 - 173 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 72,170 47,140 103,871 425,669 205,706 843,177 - + Short positions - 75,091 30,489 101,908 320,416 238,964 755,489 - - Other derivates + Long positions 581,432 9,471,311 222,075 599,756 2,196,376 828,116 269,786 - + Short positions 581,432 9,842,711 222,135 554,109 5,308,963 913,468 269,786 - 3.2 Without underlying security - Option + Long positions 30,576 8,746,355 1,505,425 4,114,530 27,073,702 16,543,400 18,016,883 244,973 + Short positions 30,576 4,273,591 1,281,371 3,602,865 24,978,358 16,940,903 19,259,076 245,095 - Other derivatives + Long positions 40,347,221 407,687,500 74,558,855 90,572,087 368,623,817 89,624,138 18,194,857 2,878,822 + Short positions 8,966,183 461,291,610 67,105,218 95,836,377 355,960,264 60,437,694 33,900,218 4,313,115 4. Other off-balance sheet transactions + Long positions 84,185,243 24,946,521 3,844,413 17,044,288 12,140,397 927,186 2,963,508 560,457 + Short positions 87,434,255 23,573,527 1,308,449 12,999,037 3,847,633 333,606 2,061,286 529,194 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 369 Price risk A. General aspects, operational processes and methods for measuring price risk Banking Book price risk primarily originates from equity interests held by the Parent company and its subsidiaries as stable investments, as well as units in mutual investment funds not included in the Trading Book as they are also held as stable investments. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes paragraph and for the complex scenarios’ description to Stress Test paragraph. Quantitative information 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 148,623,053 325,238,024 53,841,107 51,698,221 163,639,293 70,581,617 31,632,529 1,148,412 1.1 Debt securities 593,315 39,050,286 12,449,631 14,765,848 72,496,835 34,210,213 7,235,159 13,646 - With prepayment option 53,042 199,331 162,282 - 97,688 153,715 - - - Other 540,273 38,850,955 12,287,349 14,765,848 72,399,147 34,056,498 7,235,159 13,646 1.2 Loans to banks 29,263,748 67,815,420 8,997,300 7,632,712 6,362,608 150,561 6,876,782 494,154 1.3 Loans to customers 118,765,990 218,372,318 32,394,176 29,299,661 84,779,850 36,220,843 17,520,588 640,612 - Current accounts 32,312,320 2,149,457 167,851 1,262,256 1,248,661 44,993 637,746 1,820 - Other loans 86,453,670 216,222,861 32,226,325 28,037,405 83,531,189 36,175,850 16,882,842 638,792 - With prepayment option 11,000,102 59,010,641 8,109,873 3,511,029 19,142,756 7,964,766 7,986,436 4 - Other 75,453,568 157,212,220 24,116,452 24,526,376 64,388,433 28,211,084 8,896,406 638,788 2. On-balance sheet liabilities 413,751,273 212,695,225 30,862,728 29,201,759 98,192,599 22,414,276 13,492,168 899,961 2.1 Deposits from customers 386,124,691 81,352,299 11,111,955 10,510,060 11,225,495 1,894,229 687,731 396,399 - Current accounts 352,183,487 818,582 23,209 4,500 10,401 494 2,325 - - Other 33,941,204 80,533,717 11,088,746 10,505,560 11,215,094 1,893,735 685,406 396,399 - With prepayment option 123,335 - - - - - - - - Other 33,817,869 80,533,717 11,088,746 10,505,560 11,215,094 1,893,735 685,406 396,399 2.2 Deposits from banks 24,022,899 93,359,809 9,376,224 7,938,517 49,996,360 6,003,451 1,050,857 67,769 - Current accounts 12,233,979 26,697 - 14,576 - - - - - Other 11,788,920 93,333,112 9,376,224 7,923,941 49,996,360 6,003,451 1,050,857 67,769 2.3 Debt secuties in issue 993,636 37,084,452 10,371,190 10,722,349 36,842,200 14,413,408 11,753,580 435,620 - With prepayment option - 2,579,147 527,030 1,505,839 3,347,571 1,495,017 658,954 - - Other 993,636 34,505,305 9,844,160 9,216,510 33,494,629 12,918,391 11,094,626 435,620 2.4 Other liabilities 2,610,047 898,665 3,359 30,833 128,544 103,188 - 173 - With prepayment option 2,413 - - - - - - - - Other 2,607,634 898,665 3,359 30,833 128,544 103,188 - 173 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 72,170 47,140 103,871 425,669 205,706 843,177 - + Short positions - 75,091 30,489 101,908 320,416 238,964 755,489 - - Other derivates + Long positions 581,432 9,471,311 222,075 599,756 2,196,376 828,116 269,786 - + Short positions 581,432 9,842,711 222,135 554,109 5,308,963 913,468 269,786 - 3.2 Without underlying security - Option + Long positions 30,576 8,746,355 1,505,425 4,114,530 27,073,702 16,543,400 18,016,883 244,973 + Short positions 30,576 4,273,591 1,281,371 3,602,865 24,978,358 16,940,903 19,259,076 245,095 - Other derivatives + Long positions 40,347,221 407,687,500 74,558,855 90,572,087 368,623,817 89,624,138 18,194,857 2,878,822 + Short positions 8,966,183 461,291,610 67,105,218 95,836,377 355,960,264 60,437,694 33,900,218 4,313,115 4. Other off-balance sheet transactions + Long positions 84,185,243 24,946,521 3,844,413 17,044,288 12,140,397 927,186 2,963,508 560,457 + Short positions 87,434,255 23,573,527 1,308,449 12,999,037 3,847,633 333,606 2,061,286 529,194 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 370 2018 Annual Report and Accounts · UniCredit 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: euro (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 125,986,395 281,966,457 48,360,635 42,950,030 141,951,852 66,081,791 28,522,803 1,023,107 1.1 Debt securities 574,707 36,306,909 11,434,865 13,511,709 66,045,679 32,285,349 5,910,041 13,646 - With prepayment option 53,042 176,784 162,282 - 97,688 153,715 - - - Other 521,665 36,130,125 11,272,583 13,511,709 65,947,991 32,131,634 5,910,041 13,646 1.2 Loans to banks 25,211,153 48,195,061 7,787,064 7,024,889 5,099,543 142,607 6,876,782 406,258 1.3 Loans to customers 100,200,535 197,464,487 29,138,706 22,413,432 70,806,630 33,653,835 15,735,980 603,203 - Current accounts 29,548,579 1,376,273 151,655 1,261,297 1,241,955 44,993 619,715 - - Other loans 70,651,956 196,088,214 28,987,051 21,152,135 69,564,675 33,608,842 15,116,265 603,203 - With prepayment option 10,986,834 58,951,594 8,064,418 3,446,170 19,105,737 7,964,442 7,985,340 - - Other 59,665,122 137,136,620 20,922,633 17,705,965 50,458,938 25,644,400 7,130,925 603,203 2. On-balance sheet liabilities 375,071,177 181,715,385 27,340,736 25,418,604 87,194,707 20,695,596 11,769,712 857,152 2.1 Deposits from customers 351,026,575 62,909,898 8,921,472 7,976,329 8,320,489 1,584,842 681,751 394,187 - Current accounts 317,912,006 222,870 48 34 861 - 21 - - Other 33,114,569 62,687,028 8,921,424 7,976,295 8,319,628 1,584,842 681,730 394,187 - With prepayment option 121,780 - - - - - - - - Other 32,992,789 62,687,028 8,921,424 7,976,295 8,319,628 1,584,842 681,730 394,187 2.2 Deposits from banks 20,636,295 82,571,997 8,131,130 7,395,596 48,314,915 5,821,688 1,047,555 27,183 - Current accounts 10,941,253 21,798 - - - - - - - Other 9,695,042 82,550,199 8,131,130 7,395,596 48,314,915 5,821,688 1,047,555 27,183 2.3 Debt secuties in issue 958,687 35,533,169 10,287,385 10,022,863 30,474,802 13,185,878 10,040,406 435,620 - With prepayment option - 2,579,147 527,030 1,505,839 3,347,571 1,495,017 658,954 - - Other 958,687 32,954,022 9,760,355 8,517,024 27,127,231 11,690,861 9,381,452 435,620 2.4 Other liabilities 2,449,620 700,321 749 23,816 84,501 103,188 - 162 - With prepayment option 2,413 - - - - - - - - Other 2,447,207 700,321 749 23,816 84,501 103,188 - 162 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 68,791 47,140 103,871 425,669 205,706 843,177 - + Short positions - 71,712 30,489 101,908 320,416 238,964 755,489 - - Other derivates + Long positions 92,499 1,331,874 2,431 19,322 743,538 94,684 92,000 - + Short positions 92,499 1,205,139 1,411 18,960 743,538 84,684 92,000 - 3.2 Without underlying security - Option + Long positions 30,576 8,746,355 1,505,425 4,114,530 27,073,702 16,010,247 18,016,883 122,813 + Short positions 30,576 4,273,591 1,281,371 3,602,865 24,978,358 16,940,903 19,259,076 121,598 - Other derivatives + Long positions 40,191,519 359,255,656 60,091,395 85,229,705 347,115,958 84,927,451 15,737,951 446,342 + Short positions 8,851,735 393,122,967 61,124,470 92,511,636 338,079,087 57,810,978 33,082,877 2,090,886 4. Other off-balance sheet transactions + Long positions 80,323,764 23,492,836 2,152,242 1,806,964 7,514,824 630,069 841,992 307,276 + Short positions 83,792,099 22,732,742 584,042 590,612 2,918,773 268,126 744,474 302,457 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 370 2018 Annual Report and Accounts · UniCredit 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: euro (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 125,986,395 281,966,457 48,360,635 42,950,030 141,951,852 66,081,791 28,522,803 1,023,107 1.1 Debt securities 574,707 36,306,909 11,434,865 13,511,709 66,045,679 32,285,349 5,910,041 13,646 - With prepayment option 53,042 176,784 162,282 - 97,688 153,715 - - - Other 521,665 36,130,125 11,272,583 13,511,709 65,947,991 32,131,634 5,910,041 13,646 1.2 Loans to banks 25,211,153 48,195,061 7,787,064 7,024,889 5,099,543 142,607 6,876,782 406,258 1.3 Loans to customers 100,200,535 197,464,487 29,138,706 22,413,432 70,806,630 33,653,835 15,735,980 603,203 - Current accounts 29,548,579 1,376,273 151,655 1,261,297 1,241,955 44,993 619,715 - - Other loans 70,651,956 196,088,214 28,987,051 21,152,135 69,564,675 33,608,842 15,116,265 603,203 - With prepayment option 10,986,834 58,951,594 8,064,418 3,446,170 19,105,737 7,964,442 7,985,340 - - Other 59,665,122 137,136,620 20,922,633 17,705,965 50,458,938 25,644,400 7,130,925 603,203 2. On-balance sheet liabilities 375,071,177 181,715,385 27,340,736 25,418,604 87,194,707 20,695,596 11,769,712 857,152 2.1 Deposits from customers 351,026,575 62,909,898 8,921,472 7,976,329 8,320,489 1,584,842 681,751 394,187 - Current accounts 317,912,006 222,870 48 34 861 - 21 - - Other 33,114,569 62,687,028 8,921,424 7,976,295 8,319,628 1,584,842 681,730 394,187 - With prepayment option 121,780 - - - - - - - - Other 32,992,789 62,687,028 8,921,424 7,976,295 8,319,628 1,584,842 681,730 394,187 2.2 Deposits from banks 20,636,295 82,571,997 8,131,130 7,395,596 48,314,915 5,821,688 1,047,555 27,183 - Current accounts 10,941,253 21,798 - - - - - - - Other 9,695,042 82,550,199 8,131,130 7,395,596 48,314,915 5,821,688 1,047,555 27,183 2.3 Debt secuties in issue 958,687 35,533,169 10,287,385 10,022,863 30,474,802 13,185,878 10,040,406 435,620 - With prepayment option - 2,579,147 527,030 1,505,839 3,347,571 1,495,017 658,954 - - Other 958,687 32,954,022 9,760,355 8,517,024 27,127,231 11,690,861 9,381,452 435,620 2.4 Other liabilities 2,449,620 700,321 749 23,816 84,501 103,188 - 162 - With prepayment option 2,413 - - - - - - - - Other 2,447,207 700,321 749 23,816 84,501 103,188 - 162 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 68,791 47,140 103,871 425,669 205,706 843,177 - + Short positions - 71,712 30,489 101,908 320,416 238,964 755,489 - - Other derivates + Long positions 92,499 1,331,874 2,431 19,322 743,538 94,684 92,000 - + Short positions 92,499 1,205,139 1,411 18,960 743,538 84,684 92,000 - 3.2 Without underlying security - Option + Long positions 30,576 8,746,355 1,505,425 4,114,530 27,073,702 16,010,247 18,016,883 122,813 + Short positions 30,576 4,273,591 1,281,371 3,602,865 24,978,358 16,940,903 19,259,076 121,598 - Other derivatives + Long positions 40,191,519 359,255,656 60,091,395 85,229,705 347,115,958 84,927,451 15,737,951 446,342 + Short positions 8,851,735 393,122,967 61,124,470 92,511,636 338,079,087 57,810,978 33,082,877 2,090,886 4. Other off-balance sheet transactions + Long positions 80,323,764 23,492,836 2,152,242 1,806,964 7,514,824 630,069 841,992 307,276 + Short positions 83,792,099 22,732,742 584,042 590,612 2,918,773 268,126 744,474 302,457 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 370 2018 Annual Report and Accounts · UniCredit 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: euro (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 125,986,395 281,966,457 48,360,635 42,950,030 141,951,852 66,081,791 28,522,803 1,023,107 1.1 Debt securities 574,707 36,306,909 11,434,865 13,511,709 66,045,679 32,285,349 5,910,041 13,646 - With prepayment option 53,042 176,784 162,282 - 97,688 153,715 - - - Other 521,665 36,130,125 11,272,583 13,511,709 65,947,991 32,131,634 5,910,041 13,646 1.2 Loans to banks 25,211,153 48,195,061 7,787,064 7,024,889 5,099,543 142,607 6,876,782 406,258 1.3 Loans to customers 100,200,535 197,464,487 29,138,706 22,413,432 70,806,630 33,653,835 15,735,980 603,203 - Current accounts 29,548,579 1,376,273 151,655 1,261,297 1,241,955 44,993 619,715 - - Other loans 70,651,956 196,088,214 28,987,051 21,152,135 69,564,675 33,608,842 15,116,265 603,203 - With prepayment option 10,986,834 58,951,594 8,064,418 3,446,170 19,105,737 7,964,442 7,985,340 - - Other 59,665,122 137,136,620 20,922,633 17,705,965 50,458,938 25,644,400 7,130,925 603,203 2. On-balance sheet liabilities 375,071,177 181,715,385 27,340,736 25,418,604 87,194,707 20,695,596 11,769,712 857,152 2.1 Deposits from customers 351,026,575 62,909,898 8,921,472 7,976,329 8,320,489 1,584,842 681,751 394,187 - Current accounts 317,912,006 222,870 48 34 861 - 21 - - Other 33,114,569 62,687,028 8,921,424 7,976,295 8,319,628 1,584,842 681,730 394,187 - With prepayment option 121,780 - - - - - - - - Other 32,992,789 62,687,028 8,921,424 7,976,295 8,319,628 1,584,842 681,730 394,187 2.2 Deposits from banks 20,636,295 82,571,997 8,131,130 7,395,596 48,314,915 5,821,688 1,047,555 27,183 - Current accounts 10,941,253 21,798 - - - - - - - Other 9,695,042 82,550,199 8,131,130 7,395,596 48,314,915 5,821,688 1,047,555 27,183 2.3 Debt secuties in issue 958,687 35,533,169 10,287,385 10,022,863 30,474,802 13,185,878 10,040,406 435,620 - With prepayment option - 2,579,147 527,030 1,505,839 3,347,571 1,495,017 658,954 - - Other 958,687 32,954,022 9,760,355 8,517,024 27,127,231 11,690,861 9,381,452 435,620 2.4 Other liabilities 2,449,620 700,321 749 23,816 84,501 103,188 - 162 - With prepayment option 2,413 - - - - - - - - Other 2,447,207 700,321 749 23,816 84,501 103,188 - 162 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 68,791 47,140 103,871 425,669 205,706 843,177 - + Short positions - 71,712 30,489 101,908 320,416 238,964 755,489 - - Other derivates + Long positions 92,499 1,331,874 2,431 19,322 743,538 94,684 92,000 - + Short positions 92,499 1,205,139 1,411 18,960 743,538 84,684 92,000 - 3.2 Without underlying security - Option + Long positions 30,576 8,746,355 1,505,425 4,114,530 27,073,702 16,010,247 18,016,883 122,813 + Short positions 30,576 4,273,591 1,281,371 3,602,865 24,978,358 16,940,903 19,259,076 121,598 - Other derivatives + Long positions 40,191,519 359,255,656 60,091,395 85,229,705 347,115,958 84,927,451 15,737,951 446,342 + Short positions 8,851,735 393,122,967 61,124,470 92,511,636 338,079,087 57,810,978 33,082,877 2,090,886 4. Other off-balance sheet transactions + Long positions 80,323,764 23,492,836 2,152,242 1,806,964 7,514,824 630,069 841,992 307,276 + Short positions 83,792,099 22,732,742 584,042 590,612 2,918,773 268,126 744,474 302,457 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 370 2018 Annual Report and Accounts · UniCredit 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: euro (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 125,986,395 281,966,457 48,360,635 42,950,030 141,951,852 66,081,791 28,522,803 1,023,107 1.1 Debt securities 574,707 36,306,909 11,434,865 13,511,709 66,045,679 32,285,349 5,910,041 13,646 - With prepayment option 53,042 176,784 162,282 - 97,688 153,715 - - - Other 521,665 36,130,125 11,272,583 13,511,709 65,947,991 32,131,634 5,910,041 13,646 1.2 Loans to banks 25,211,153 48,195,061 7,787,064 7,024,889 5,099,543 142,607 6,876,782 406,258 1.3 Loans to customers 100,200,535 197,464,487 29,138,706 22,413,432 70,806,630 33,653,835 15,735,980 603,203 - Current accounts 29,548,579 1,376,273 151,655 1,261,297 1,241,955 44,993 619,715 - - Other loans 70,651,956 196,088,214 28,987,051 21,152,135 69,564,675 33,608,842 15,116,265 603,203 - With prepayment option 10,986,834 58,951,594 8,064,418 3,446,170 19,105,737 7,964,442 7,985,340 - - Other 59,665,122 137,136,620 20,922,633 17,705,965 50,458,938 25,644,400 7,130,925 603,203 2. On-balance sheet liabilities 375,071,177 181,715,385 27,340,736 25,418,604 87,194,707 20,695,596 11,769,712 857,152 2.1 Deposits from customers 351,026,575 62,909,898 8,921,472 7,976,329 8,320,489 1,584,842 681,751 394,187 - Current accounts 317,912,006 222,870 48 34 861 - 21 - - Other 33,114,569 62,687,028 8,921,424 7,976,295 8,319,628 1,584,842 681,730 394,187 - With prepayment option 121,780 - - - - - - - - Other 32,992,789 62,687,028 8,921,424 7,976,295 8,319,628 1,584,842 681,730 394,187 2.2 Deposits from banks 20,636,295 82,571,997 8,131,130 7,395,596 48,314,915 5,821,688 1,047,555 27,183 - Current accounts 10,941,253 21,798 - - - - - - - Other 9,695,042 82,550,199 8,131,130 7,395,596 48,314,915 5,821,688 1,047,555 27,183 2.3 Debt secuties in issue 958,687 35,533,169 10,287,385 10,022,863 30,474,802 13,185,878 10,040,406 435,620 - With prepayment option - 2,579,147 527,030 1,505,839 3,347,571 1,495,017 658,954 - - Other 958,687 32,954,022 9,760,355 8,517,024 27,127,231 11,690,861 9,381,452 435,620 2.4 Other liabilities 2,449,620 700,321 749 23,816 84,501 103,188 - 162 - With prepayment option 2,413 - - - - - - - - Other 2,447,207 700,321 749 23,816 84,501 103,188 - 162 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 68,791 47,140 103,871 425,669 205,706 843,177 - + Short positions - 71,712 30,489 101,908 320,416 238,964 755,489 - - Other derivates + Long positions 92,499 1,331,874 2,431 19,322 743,538 94,684 92,000 - + Short positions 92,499 1,205,139 1,411 18,960 743,538 84,684 92,000 - 3.2 Without underlying security - Option + Long positions 30,576 8,746,355 1,505,425 4,114,530 27,073,702 16,010,247 18,016,883 122,813 + Short positions 30,576 4,273,591 1,281,371 3,602,865 24,978,358 16,940,903 19,259,076 121,598 - Other derivatives + Long positions 40,191,519 359,255,656 60,091,395 85,229,705 347,115,958 84,927,451 15,737,951 446,342 + Short positions 8,851,735 393,122,967 61,124,470 92,511,636 338,079,087 57,810,978 33,082,877 2,090,886 4. Other off-balance sheet transactions + Long positions 80,323,764 23,492,836 2,152,242 1,806,964 7,514,824 630,069 841,992 307,276 + Short positions 83,792,099 22,732,742 584,042 590,612 2,918,773 268,126 744,474 302,457 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 370 2018 Annual Report and Accounts · UniCredit 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: euro (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 125,986,395 281,966,457 48,360,635 42,950,030 141,951,852 66,081,791 28,522,803 1,023,107 1.1 Debt securities 574,707 36,306,909 11,434,865 13,511,709 66,045,679 32,285,349 5,910,041 13,646 - With prepayment option 53,042 176,784 162,282 - 97,688 153,715 - - - Other 521,665 36,130,125 11,272,583 13,511,709 65,947,991 32,131,634 5,910,041 13,646 1.2 Loans to banks 25,211,153 48,195,061 7,787,064 7,024,889 5,099,543 142,607 6,876,782 406,258 1.3 Loans to customers 100,200,535 197,464,487 29,138,706 22,413,432 70,806,630 33,653,835 15,735,980 603,203 - Current accounts 29,548,579 1,376,273 151,655 1,261,297 1,241,955 44,993 619,715 - - Other loans 70,651,956 196,088,214 28,987,051 21,152,135 69,564,675 33,608,842 15,116,265 603,203 - With prepayment option 10,986,834 58,951,594 8,064,418 3,446,170 19,105,737 7,964,442 7,985,340 - - Other 59,665,122 137,136,620 20,922,633 17,705,965 50,458,938 25,644,400 7,130,925 603,203 2. On-balance sheet liabilities 375,071,177 181,715,385 27,340,736 25,418,604 87,194,707 20,695,596 11,769,712 857,152 2.1 Deposits from customers 351,026,575 62,909,898 8,921,472 7,976,329 8,320,489 1,584,842 681,751 394,187 - Current accounts 317,912,006 222,870 48 34 861 - 21 - - Other 33,114,569 62,687,028 8,921,424 7,976,295 8,319,628 1,584,842 681,730 394,187 - With prepayment option 121,780 - - - - - - - - Other 32,992,789 62,687,028 8,921,424 7,976,295 8,319,628 1,584,842 681,730 394,187 2.2 Deposits from banks 20,636,295 82,571,997 8,131,130 7,395,596 48,314,915 5,821,688 1,047,555 27,183 - Current accounts 10,941,253 21,798 - - - - - - - Other 9,695,042 82,550,199 8,131,130 7,395,596 48,314,915 5,821,688 1,047,555 27,183 2.3 Debt secuties in issue 958,687 35,533,169 10,287,385 10,022,863 30,474,802 13,185,878 10,040,406 435,620 - With prepayment option - 2,579,147 527,030 1,505,839 3,347,571 1,495,017 658,954 - - Other 958,687 32,954,022 9,760,355 8,517,024 27,127,231 11,690,861 9,381,452 435,620 2.4 Other liabilities 2,449,620 700,321 749 23,816 84,501 103,188 - 162 - With prepayment option 2,413 - - - - - - - - Other 2,447,207 700,321 749 23,816 84,501 103,188 - 162 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 68,791 47,140 103,871 425,669 205,706 843,177 - + Short positions - 71,712 30,489 101,908 320,416 238,964 755,489 - - Other derivates + Long positions 92,499 1,331,874 2,431 19,322 743,538 94,684 92,000 - + Short positions 92,499 1,205,139 1,411 18,960 743,538 84,684 92,000 - 3.2 Without underlying security - Option + Long positions 30,576 8,746,355 1,505,425 4,114,530 27,073,702 16,010,247 18,016,883 122,813 + Short positions 30,576 4,273,591 1,281,371 3,602,865 24,978,358 16,940,903 19,259,076 121,598 - Other derivatives + Long positions 40,191,519 359,255,656 60,091,395 85,229,705 347,115,958 84,927,451 15,737,951 446,342 + Short positions 8,851,735 393,122,967 61,124,470 92,511,636 338,079,087 57,810,978 33,082,877 2,090,886 4. Other off-balance sheet transactions + Long positions 80,323,764 23,492,836 2,152,242 1,806,964 7,514,824 630,069 841,992 307,276 + Short positions 83,792,099 22,732,742 584,042 590,612 2,918,773 268,126 744,474 302,457 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 371 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: other currencies (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 22,636,658 43,271,567 5,480,472 8,748,191 21,687,441 4,499,826 3,109,726 125,305 1.1 Debt securities 18,608 2,743,377 1,014,766 1,254,139 6,451,156 1,924,864 1,325,118 - - With prepayment option - 22,547 - - - - - - - Other 18,608 2,720,830 1,014,766 1,254,139 6,451,156 1,924,864 1,325,118 - 1.2 Loans to banks 4,052,595 19,620,359 1,210,236 607,823 1,263,065 7,954 - 87,896 1.3 Loans to customers 18,565,455 20,907,831 3,255,470 6,886,229 13,973,220 2,567,008 1,784,608 37,409 - Current accounts 2,763,741 773,184 16,196 959 6,706 - 18,031 1,820 - Other loans 15,801,714 20,134,647 3,239,274 6,885,270 13,966,514 2,567,008 1,766,577 35,589 - With prepayment option 13,268 59,047 45,455 64,859 37,019 324 1,096 4 - Other 15,788,446 20,075,600 3,193,819 6,820,411 13,929,495 2,566,684 1,765,481 35,585 2. On-balance sheet liabilities 38,680,096 30,979,840 3,521,992 3,783,155 10,997,892 1,718,680 1,722,456 42,809 2.1 Deposits from customers 35,098,116 18,442,401 2,190,483 2,533,731 2,905,006 309,387 5,980 2,212 - Current accounts 34,271,481 595,712 23,161 4,466 9,540 494 2,304 - - Other 826,635 17,846,689 2,167,322 2,529,265 2,895,466 308,893 3,676 2,212 - With prepayment option 1,555 - - - - - - - - Other 825,080 17,846,689 2,167,322 2,529,265 2,895,466 308,893 3,676 2,212 2.2 Deposits from banks 3,386,604 10,787,812 1,245,094 542,921 1,681,445 181,763 3,302 40,586 - Current accounts 1,292,726 4,899 - 14,576 - - - - - Other 2,093,878 10,782,913 1,245,094 528,345 1,681,445 181,763 3,302 40,586 2.3 Debt secuties in issue 34,949 1,551,283 83,805 699,486 6,367,398 1,227,530 1,713,174 - - With prepayment option - - - - - - - - - Other 34,949 1,551,283 83,805 699,486 6,367,398 1,227,530 1,713,174 - 2.4 Other liabilities 160,427 198,344 2,610 7,017 44,043 - - 11 - With prepayment option - - - - - - - - - Other 160,427 198,344 2,610 7,017 44,043 - - 11 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 3,379 - - - - - - + Short positions - 3,379 - - - - - - - Other derivates + Long positions 488,933 8,139,437 219,644 580,434 1,452,838 733,432 177,786 - + Short positions 488,933 8,637,572 220,724 535,149 4,565,425 828,784 177,786 - 3.2 Without underlying security - Option + Long positions - - - - - 533,153 - 122,160 + Short positions - - - - - - - 123,497 - Other derivatives + Long positions 155,702 48,431,844 14,467,460 5,342,382 21,507,859 4,696,687 2,456,906 2,432,480 + Short positions 114,448 68,168,643 5,980,748 3,324,741 17,881,177 2,626,716 817,341 2,222,229 4. Other off-balance sheet transactions + Long positions 3,861,479 1,453,685 1,692,171 15,237,324 4,625,573 297,117 2,121,516 253,181 + Short positions 3,642,156 840,785 724,407 12,408,425 928,860 65,480 1,316,812 226,737 2. Banking book: internal models and other methods for sensitivity analysis Interest Rate Risk As at 31 December 2018, the sensitivity of interest income to an immediate and parallel shift of +100bps was +€916 million. The sensitivity of the economic value of shareholders’ equity to an immediate and parallel change in interest rates (“parallel shift”) of +200bps was -€3,351 million as 31 December 201833. 33 The figures include modeled sensitivity estimates for assets and liabilities with not well-defined maturities, such as sight and savings deposits. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 371 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: other currencies (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 22,636,658 43,271,567 5,480,472 8,748,191 21,687,441 4,499,826 3,109,726 125,305 1.1 Debt securities 18,608 2,743,377 1,014,766 1,254,139 6,451,156 1,924,864 1,325,118 - - With prepayment option - 22,547 - - - - - - - Other 18,608 2,720,830 1,014,766 1,254,139 6,451,156 1,924,864 1,325,118 - 1.2 Loans to banks 4,052,595 19,620,359 1,210,236 607,823 1,263,065 7,954 - 87,896 1.3 Loans to customers 18,565,455 20,907,831 3,255,470 6,886,229 13,973,220 2,567,008 1,784,608 37,409 - Current accounts 2,763,741 773,184 16,196 959 6,706 - 18,031 1,820 - Other loans 15,801,714 20,134,647 3,239,274 6,885,270 13,966,514 2,567,008 1,766,577 35,589 - With prepayment option 13,268 59,047 45,455 64,859 37,019 324 1,096 4 - Other 15,788,446 20,075,600 3,193,819 6,820,411 13,929,495 2,566,684 1,765,481 35,585 2. On-balance sheet liabilities 38,680,096 30,979,840 3,521,992 3,783,155 10,997,892 1,718,680 1,722,456 42,809 2.1 Deposits from customers 35,098,116 18,442,401 2,190,483 2,533,731 2,905,006 309,387 5,980 2,212 - Current accounts 34,271,481 595,712 23,161 4,466 9,540 494 2,304 - - Other 826,635 17,846,689 2,167,322 2,529,265 2,895,466 308,893 3,676 2,212 - With prepayment option 1,555 - - - - - - - - Other 825,080 17,846,689 2,167,322 2,529,265 2,895,466 308,893 3,676 2,212 2.2 Deposits from banks 3,386,604 10,787,812 1,245,094 542,921 1,681,445 181,763 3,302 40,586 - Current accounts 1,292,726 4,899 - 14,576 - - - - - Other 2,093,878 10,782,913 1,245,094 528,345 1,681,445 181,763 3,302 40,586 2.3 Debt secuties in issue 34,949 1,551,283 83,805 699,486 6,367,398 1,227,530 1,713,174 - - With prepayment option - - - - - - - - - Other 34,949 1,551,283 83,805 699,486 6,367,398 1,227,530 1,713,174 - 2.4 Other liabilities 160,427 198,344 2,610 7,017 44,043 - - 11 - With prepayment option - - - - - - - - - Other 160,427 198,344 2,610 7,017 44,043 - - 11 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 3,379 - - - - - - + Short positions - 3,379 - - - - - - - Other derivates + Long positions 488,933 8,139,437 219,644 580,434 1,452,838 733,432 177,786 - + Short positions 488,933 8,637,572 220,724 535,149 4,565,425 828,784 177,786 - 3.2 Without underlying security - Option + Long positions - - - - - 533,153 - 122,160 + Short positions - - - - - - - 123,497 - Other derivatives + Long positions 155,702 48,431,844 14,467,460 5,342,382 21,507,859 4,696,687 2,456,906 2,432,480 + Short positions 114,448 68,168,643 5,980,748 3,324,741 17,881,177 2,626,716 817,341 2,222,229 4. Other off-balance sheet transactions + Long positions 3,861,479 1,453,685 1,692,171 15,237,324 4,625,573 297,117 2,121,516 253,181 + Short positions 3,642,156 840,785 724,407 12,408,425 928,860 65,480 1,316,812 226,737 2. Banking book: internal models and other methods for sensitivity analysis Interest Rate Risk As at 31 December 2018, the sensitivity of interest income to an immediate and parallel shift of +100bps was +€916 million. The sensitivity of the economic value of shareholders’ equity to an immediate and parallel change in interest rates (“parallel shift”) of +200bps was -€3,351 million as 31 December 201833. 33 The figures include modeled sensitivity estimates for assets and liabilities with not well-defined maturities, such as sight and savings deposits. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 371 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: other currencies (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 22,636,658 43,271,567 5,480,472 8,748,191 21,687,441 4,499,826 3,109,726 125,305 1.1 Debt securities 18,608 2,743,377 1,014,766 1,254,139 6,451,156 1,924,864 1,325,118 - - With prepayment option - 22,547 - - - - - - - Other 18,608 2,720,830 1,014,766 1,254,139 6,451,156 1,924,864 1,325,118 - 1.2 Loans to banks 4,052,595 19,620,359 1,210,236 607,823 1,263,065 7,954 - 87,896 1.3 Loans to customers 18,565,455 20,907,831 3,255,470 6,886,229 13,973,220 2,567,008 1,784,608 37,409 - Current accounts 2,763,741 773,184 16,196 959 6,706 - 18,031 1,820 - Other loans 15,801,714 20,134,647 3,239,274 6,885,270 13,966,514 2,567,008 1,766,577 35,589 - With prepayment option 13,268 59,047 45,455 64,859 37,019 324 1,096 4 - Other 15,788,446 20,075,600 3,193,819 6,820,411 13,929,495 2,566,684 1,765,481 35,585 2. On-balance sheet liabilities 38,680,096 30,979,840 3,521,992 3,783,155 10,997,892 1,718,680 1,722,456 42,809 2.1 Deposits from customers 35,098,116 18,442,401 2,190,483 2,533,731 2,905,006 309,387 5,980 2,212 - Current accounts 34,271,481 595,712 23,161 4,466 9,540 494 2,304 - - Other 826,635 17,846,689 2,167,322 2,529,265 2,895,466 308,893 3,676 2,212 - With prepayment option 1,555 - - - - - - - - Other 825,080 17,846,689 2,167,322 2,529,265 2,895,466 308,893 3,676 2,212 2.2 Deposits from banks 3,386,604 10,787,812 1,245,094 542,921 1,681,445 181,763 3,302 40,586 - Current accounts 1,292,726 4,899 - 14,576 - - - - - Other 2,093,878 10,782,913 1,245,094 528,345 1,681,445 181,763 3,302 40,586 2.3 Debt secuties in issue 34,949 1,551,283 83,805 699,486 6,367,398 1,227,530 1,713,174 - - With prepayment option - - - - - - - - - Other 34,949 1,551,283 83,805 699,486 6,367,398 1,227,530 1,713,174 - 2.4 Other liabilities 160,427 198,344 2,610 7,017 44,043 - - 11 - With prepayment option - - - - - - - - - Other 160,427 198,344 2,610 7,017 44,043 - - 11 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 3,379 - - - - - - + Short positions - 3,379 - - - - - - - Other derivates + Long positions 488,933 8,139,437 219,644 580,434 1,452,838 733,432 177,786 - + Short positions 488,933 8,637,572 220,724 535,149 4,565,425 828,784 177,786 - 3.2 Without underlying security - Option + Long positions - - - - - 533,153 - 122,160 + Short positions - - - - - - - 123,497 - Other derivatives + Long positions 155,702 48,431,844 14,467,460 5,342,382 21,507,859 4,696,687 2,456,906 2,432,480 + Short positions 114,448 68,168,643 5,980,748 3,324,741 17,881,177 2,626,716 817,341 2,222,229 4. Other off-balance sheet transactions + Long positions 3,861,479 1,453,685 1,692,171 15,237,324 4,625,573 297,117 2,121,516 253,181 + Short positions 3,642,156 840,785 724,407 12,408,425 928,860 65,480 1,316,812 226,737 2. Banking book: internal models and other methods for sensitivity analysis Interest Rate Risk As at 31 December 2018, the sensitivity of interest income to an immediate and parallel shift of +100bps was +€916 million. The sensitivity of the economic value of shareholders’ equity to an immediate and parallel change in interest rates (“parallel shift”) of +200bps was -€3,351 million as 31 December 201833. 33 The figures include modeled sensitivity estimates for assets and liabilities with not well-defined maturities, such as sight and savings deposits. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 371 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: other currencies (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 22,636,658 43,271,567 5,480,472 8,748,191 21,687,441 4,499,826 3,109,726 125,305 1.1 Debt securities 18,608 2,743,377 1,014,766 1,254,139 6,451,156 1,924,864 1,325,118 - - With prepayment option - 22,547 - - - - - - - Other 18,608 2,720,830 1,014,766 1,254,139 6,451,156 1,924,864 1,325,118 - 1.2 Loans to banks 4,052,595 19,620,359 1,210,236 607,823 1,263,065 7,954 - 87,896 1.3 Loans to customers 18,565,455 20,907,831 3,255,470 6,886,229 13,973,220 2,567,008 1,784,608 37,409 - Current accounts 2,763,741 773,184 16,196 959 6,706 - 18,031 1,820 - Other loans 15,801,714 20,134,647 3,239,274 6,885,270 13,966,514 2,567,008 1,766,577 35,589 - With prepayment option 13,268 59,047 45,455 64,859 37,019 324 1,096 4 - Other 15,788,446 20,075,600 3,193,819 6,820,411 13,929,495 2,566,684 1,765,481 35,585 2. On-balance sheet liabilities 38,680,096 30,979,840 3,521,992 3,783,155 10,997,892 1,718,680 1,722,456 42,809 2.1 Deposits from customers 35,098,116 18,442,401 2,190,483 2,533,731 2,905,006 309,387 5,980 2,212 - Current accounts 34,271,481 595,712 23,161 4,466 9,540 494 2,304 - - Other 826,635 17,846,689 2,167,322 2,529,265 2,895,466 308,893 3,676 2,212 - With prepayment option 1,555 - - - - - - - - Other 825,080 17,846,689 2,167,322 2,529,265 2,895,466 308,893 3,676 2,212 2.2 Deposits from banks 3,386,604 10,787,812 1,245,094 542,921 1,681,445 181,763 3,302 40,586 - Current accounts 1,292,726 4,899 - 14,576 - - - - - Other 2,093,878 10,782,913 1,245,094 528,345 1,681,445 181,763 3,302 40,586 2.3 Debt secuties in issue 34,949 1,551,283 83,805 699,486 6,367,398 1,227,530 1,713,174 - - With prepayment option - - - - - - - - - Other 34,949 1,551,283 83,805 699,486 6,367,398 1,227,530 1,713,174 - 2.4 Other liabilities 160,427 198,344 2,610 7,017 44,043 - - 11 - With prepayment option - - - - - - - - - Other 160,427 198,344 2,610 7,017 44,043 - - 11 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 3,379 - - - - - - + Short positions - 3,379 - - - - - - - Other derivates + Long positions 488,933 8,139,437 219,644 580,434 1,452,838 733,432 177,786 - + Short positions 488,933 8,637,572 220,724 535,149 4,565,425 828,784 177,786 - 3.2 Without underlying security - Option + Long positions - - - - - 533,153 - 122,160 + Short positions - - - - - - - 123,497 - Other derivatives + Long positions 155,702 48,431,844 14,467,460 5,342,382 21,507,859 4,696,687 2,456,906 2,432,480 + Short positions 114,448 68,168,643 5,980,748 3,324,741 17,881,177 2,626,716 817,341 2,222,229 4. Other off-balance sheet transactions + Long positions 3,861,479 1,453,685 1,692,171 15,237,324 4,625,573 297,117 2,121,516 253,181 + Short positions 3,642,156 840,785 724,407 12,408,425 928,860 65,480 1,316,812 226,737 2. Banking book: internal models and other methods for sensitivity analysis Interest Rate Risk As at 31 December 2018, the sensitivity of interest income to an immediate and parallel shift of +100bps was +€916 million. The sensitivity of the economic value of shareholders’ equity to an immediate and parallel change in interest rates (“parallel shift”) of +200bps was -€3,351 million as 31 December 201833. 33 The figures include modeled sensitivity estimates for assets and liabilities with not well-defined maturities, such as sight and savings deposits. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 371 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: other currencies (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 22,636,658 43,271,567 5,480,472 8,748,191 21,687,441 4,499,826 3,109,726 125,305 1.1 Debt securities 18,608 2,743,377 1,014,766 1,254,139 6,451,156 1,924,864 1,325,118 - - With prepayment option - 22,547 - - - - - - - Other 18,608 2,720,830 1,014,766 1,254,139 6,451,156 1,924,864 1,325,118 - 1.2 Loans to banks 4,052,595 19,620,359 1,210,236 607,823 1,263,065 7,954 - 87,896 1.3 Loans to customers 18,565,455 20,907,831 3,255,470 6,886,229 13,973,220 2,567,008 1,784,608 37,409 - Current accounts 2,763,741 773,184 16,196 959 6,706 - 18,031 1,820 - Other loans 15,801,714 20,134,647 3,239,274 6,885,270 13,966,514 2,567,008 1,766,577 35,589 - With prepayment option 13,268 59,047 45,455 64,859 37,019 324 1,096 4 - Other 15,788,446 20,075,600 3,193,819 6,820,411 13,929,495 2,566,684 1,765,481 35,585 2. On-balance sheet liabilities 38,680,096 30,979,840 3,521,992 3,783,155 10,997,892 1,718,680 1,722,456 42,809 2.1 Deposits from customers 35,098,116 18,442,401 2,190,483 2,533,731 2,905,006 309,387 5,980 2,212 - Current accounts 34,271,481 595,712 23,161 4,466 9,540 494 2,304 - - Other 826,635 17,846,689 2,167,322 2,529,265 2,895,466 308,893 3,676 2,212 - With prepayment option 1,555 - - - - - - - - Other 825,080 17,846,689 2,167,322 2,529,265 2,895,466 308,893 3,676 2,212 2.2 Deposits from banks 3,386,604 10,787,812 1,245,094 542,921 1,681,445 181,763 3,302 40,586 - Current accounts 1,292,726 4,899 - 14,576 - - - - - Other 2,093,878 10,782,913 1,245,094 528,345 1,681,445 181,763 3,302 40,586 2.3 Debt secuties in issue 34,949 1,551,283 83,805 699,486 6,367,398 1,227,530 1,713,174 - - With prepayment option - - - - - - - - - Other 34,949 1,551,283 83,805 699,486 6,367,398 1,227,530 1,713,174 - 2.4 Other liabilities 160,427 198,344 2,610 7,017 44,043 - - 11 - With prepayment option - - - - - - - - - Other 160,427 198,344 2,610 7,017 44,043 - - 11 3. Financial derivatives 3.1 With underlying security - Option + Long positions - 3,379 - - - - - - + Short positions - 3,379 - - - - - - - Other derivates + Long positions 488,933 8,139,437 219,644 580,434 1,452,838 733,432 177,786 - + Short positions 488,933 8,637,572 220,724 535,149 4,565,425 828,784 177,786 - 3.2 Without underlying security - Option + Long positions - - - - - 533,153 - 122,160 + Short positions - - - - - - - 123,497 - Other derivatives + Long positions 155,702 48,431,844 14,467,460 5,342,382 21,507,859 4,696,687 2,456,906 2,432,480 + Short positions 114,448 68,168,643 5,980,748 3,324,741 17,881,177 2,626,716 817,341 2,222,229 4. Other off-balance sheet transactions + Long positions 3,861,479 1,453,685 1,692,171 15,237,324 4,625,573 297,117 2,121,516 253,181 + Short positions 3,642,156 840,785 724,407 12,408,425 928,860 65,480 1,316,812 226,737 2. Banking book: internal models and other methods for sensitivity analysis Interest Rate Risk As at 31 December 2018, the sensitivity of interest income to an immediate and parallel shift of +100bps was +€916 million. The sensitivity of the economic value of shareholders’ equity to an immediate and parallel change in interest rates (“parallel shift”) of +200bps was -€3,351 million as 31 December 201833. 33 The figures include modeled sensitivity estimates for assets and liabilities with not well-defined maturities, such as sight and savings deposits. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 372 2018 Annual Report and Accounts · UniCredit 2.2.3 Exchange rate risk Qualitative information A. General information, risk management processes and measurement methods Exchange rate risk originates both from banks in the Group operating in currency areas other than the Eurozone and from positions taken by specialist centres holding the Group's market risk within the limits assigned. Risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTC. Volatility trading strategies are implemented using options. Exchange rate risk is constantly monitored and measured by using internal models developed by Group companies. For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to the introduction on internal models. These models are also used to calculate capital requirements on market risks due to the exposure to such risk. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes paragraph and for the complex scenarios’ description to Stress Test paragraph. B. Hedging exchange rate risk The exchange risk hedging activity within the trading book is aimed at keeping the FX risk within the defined Granular and Global limits. Regarding banking book the Group adopts hedge strategies for profits and dividends arising from its subsidiaries not belonging to the euro zone, taking into account market circumstances for the hedging strategies. Quantitative information 1. Distribution by currency of assets and liabilites and derivatives (€ '000) ITEMS AMOUNTS AS AT 12.31.2018 CURRENCIES CZECH REPUBLIC KORUNA U.S. DOLLAR SWITZERLAND FRANC JAPAN YEN POLAND ZLOTY OTHER CURRENCIES A. Financial assets 693,553 46,213,496 8,707,190 6,232,706 1,581,556 163,706,223 A.1 Debt securities - 5,758,472 424,425 5,785,256 253,515 28,963,073 A.2 Equity securities - 652,331 167,617 12,506 417,711 407,539 A.3 Loans to banks 583,643 11,457,562 630,483 141,169 548,229 24,852,562 A.4 Loans to customers 109,478 28,317,644 7,429,416 292,293 360,869 109,181,362 A.5 Other financial assets 432 27,487 55,249 1,482 1,232 301,687 B. Other assets 724 1,120,905 5,441 2,308 1,087 1,726,778 C. Financial liabilities 77,584 46,091,006 908,134 218,287 476,692 161,773,846 C.1 Deposits from banks 34,867 16,982,518 211,709 47,842 116,779 63,769,767 C.2 Deposits from customers 42,686 21,079,529 548,856 68,606 317,054 76,625,984 C.3 Debt securities in issue - 7,789,233 144,824 100,720 42,754 20,177,079 C.4 Other financial liabilities 31 239,726 2,745 1,119 105 1,201,016 D. Other liabilities 859 80,999 2,868 435 782 1,631,831 E. Financial derivatives - Options + Long positions 38,990 8,928,267 60,234 7,602 302 1,676,484 + Short positions 19,748 6,788,562 13,788 6,855 9,243 1,691,376 - Other derivatives + Long positions 230,039 115,271,391 8,901,205 10,130,906 1,225,203 127,392,164 + Short positions 236,523 116,499,123 21,009,511 17,813,217 939,223 117,759,645 Total assets 963,306 171,534,059 17,674,070 16,373,522 2,808,148 294,501,649 Total liabilities 334,714 169,459,690 21,934,301 18,038,794 1,425,940 282,856,698 Difference (+/-) 628,592 2,074,369 (4,260,231) (1,665,272) 1,382,208 11,644,951 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 372 2018 Annual Report and Accounts · UniCredit 2.2.3 Exchange rate risk Qualitative information A. General information, risk management processes and measurement methods Exchange rate risk originates both from banks in the Group operating in currency areas other than the Eurozone and from positions taken by specialist centres holding the Group's market risk within the limits assigned. Risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTC. Volatility trading strategies are implemented using options. Exchange rate risk is constantly monitored and measured by using internal models developed by Group companies. For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to the introduction on internal models. These models are also used to calculate capital requirements on market risks due to the exposure to such risk. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes paragraph and for the complex scenarios’ description to Stress Test paragraph. B. Hedging exchange rate risk The exchange risk hedging activity within the trading book is aimed at keeping the FX risk within the defined Granular and Global limits. Regarding banking book the Group adopts hedge strategies for profits and dividends arising from its subsidiaries not belonging to the euro zone, taking into account market circumstances for the hedging strategies. Quantitative information 1. Distribution by currency of assets and liabilites and derivatives (€ '000) ITEMS AMOUNTS AS AT 12.31.2018 CURRENCIES CZECH REPUBLIC KORUNA U.S. DOLLAR SWITZERLAND FRANC JAPAN YEN POLAND ZLOTY OTHER CURRENCIES A. Financial assets 693,553 46,213,496 8,707,190 6,232,706 1,581,556 163,706,223 A.1 Debt securities - 5,758,472 424,425 5,785,256 253,515 28,963,073 A.2 Equity securities - 652,331 167,617 12,506 417,711 407,539 A.3 Loans to banks 583,643 11,457,562 630,483 141,169 548,229 24,852,562 A.4 Loans to customers 109,478 28,317,644 7,429,416 292,293 360,869 109,181,362 A.5 Other financial assets 432 27,487 55,249 1,482 1,232 301,687 B. Other assets 724 1,120,905 5,441 2,308 1,087 1,726,778 C. Financial liabilities 77,584 46,091,006 908,134 218,287 476,692 161,773,846 C.1 Deposits from banks 34,867 16,982,518 211,709 47,842 116,779 63,769,767 C.2 Deposits from customers 42,686 21,079,529 548,856 68,606 317,054 76,625,984 C.3 Debt securities in issue - 7,789,233 144,824 100,720 42,754 20,177,079 C.4 Other financial liabilities 31 239,726 2,745 1,119 105 1,201,016 D. Other liabilities 859 80,999 2,868 435 782 1,631,831 E. Financial derivatives - Options + Long positions 38,990 8,928,267 60,234 7,602 302 1,676,484 + Short positions 19,748 6,788,562 13,788 6,855 9,243 1,691,376 - Other derivatives + Long positions 230,039 115,271,391 8,901,205 10,130,906 1,225,203 127,392,164 + Short positions 236,523 116,499,123 21,009,511 17,813,217 939,223 117,759,645 Total assets 963,306 171,534,059 17,674,070 16,373,522 2,808,148 294,501,649 Total liabilities 334,714 169,459,690 21,934,301 18,038,794 1,425,940 282,856,698 Difference (+/-) 628,592 2,074,369 (4,260,231) (1,665,272) 1,382,208 11,644,951 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 372 2018 Annual Report and Accounts · UniCredit 2.2.3 Exchange rate risk Qualitative information A. General information, risk management processes and measurement methods Exchange rate risk originates both from banks in the Group operating in currency areas other than the Eurozone and from positions taken by specialist centres holding the Group's market risk within the limits assigned. Risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTC. Volatility trading strategies are implemented using options. Exchange rate risk is constantly monitored and measured by using internal models developed by Group companies. For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to the introduction on internal models. These models are also used to calculate capital requirements on market risks due to the exposure to such risk. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes paragraph and for the complex scenarios’ description to Stress Test paragraph. B. Hedging exchange rate risk The exchange risk hedging activity within the trading book is aimed at keeping the FX risk within the defined Granular and Global limits. Regarding banking book the Group adopts hedge strategies for profits and dividends arising from its subsidiaries not belonging to the euro zone, taking into account market circumstances for the hedging strategies. Quantitative information 1. Distribution by currency of assets and liabilites and derivatives (€ '000) ITEMS AMOUNTS AS AT 12.31.2018 CURRENCIES CZECH REPUBLIC KORUNA U.S. DOLLAR SWITZERLAND FRANC JAPAN YEN POLAND ZLOTY OTHER CURRENCIES A. Financial assets 693,553 46,213,496 8,707,190 6,232,706 1,581,556 163,706,223 A.1 Debt securities - 5,758,472 424,425 5,785,256 253,515 28,963,073 A.2 Equity securities - 652,331 167,617 12,506 417,711 407,539 A.3 Loans to banks 583,643 11,457,562 630,483 141,169 548,229 24,852,562 A.4 Loans to customers 109,478 28,317,644 7,429,416 292,293 360,869 109,181,362 A.5 Other financial assets 432 27,487 55,249 1,482 1,232 301,687 B. Other assets 724 1,120,905 5,441 2,308 1,087 1,726,778 C. Financial liabilities 77,584 46,091,006 908,134 218,287 476,692 161,773,846 C.1 Deposits from banks 34,867 16,982,518 211,709 47,842 116,779 63,769,767 C.2 Deposits from customers 42,686 21,079,529 548,856 68,606 317,054 76,625,984 C.3 Debt securities in issue - 7,789,233 144,824 100,720 42,754 20,177,079 C.4 Other financial liabilities 31 239,726 2,745 1,119 105 1,201,016 D. Other liabilities 859 80,999 2,868 435 782 1,631,831 E. Financial derivatives - Options + Long positions 38,990 8,928,267 60,234 7,602 302 1,676,484 + Short positions 19,748 6,788,562 13,788 6,855 9,243 1,691,376 - Other derivatives + Long positions 230,039 115,271,391 8,901,205 10,130,906 1,225,203 127,392,164 + Short positions 236,523 116,499,123 21,009,511 17,813,217 939,223 117,759,645 Total assets 963,306 171,534,059 17,674,070 16,373,522 2,808,148 294,501,649 Total liabilities 334,714 169,459,690 21,934,301 18,038,794 1,425,940 282,856,698 Difference (+/-) 628,592 2,074,369 (4,260,231) (1,665,272) 1,382,208 11,644,951 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 372 2018 Annual Report and Accounts · UniCredit 2.2.3 Exchange rate risk Qualitative information A. General information, risk management processes and measurement methods Exchange rate risk originates both from banks in the Group operating in currency areas other than the Eurozone and from positions taken by specialist centres holding the Group's market risk within the limits assigned. Risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTC. Volatility trading strategies are implemented using options. Exchange rate risk is constantly monitored and measured by using internal models developed by Group companies. For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to the introduction on internal models. These models are also used to calculate capital requirements on market risks due to the exposure to such risk. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes paragraph and for the complex scenarios’ description to Stress Test paragraph. B. Hedging exchange rate risk The exchange risk hedging activity within the trading book is aimed at keeping the FX risk within the defined Granular and Global limits. Regarding banking book the Group adopts hedge strategies for profits and dividends arising from its subsidiaries not belonging to the euro zone, taking into account market circumstances for the hedging strategies. Quantitative information 1. Distribution by currency of assets and liabilites and derivatives (€ '000) ITEMS AMOUNTS AS AT 12.31.2018 CURRENCIES CZECH REPUBLIC KORUNA U.S. DOLLAR SWITZERLAND FRANC JAPAN YEN POLAND ZLOTY OTHER CURRENCIES A. Financial assets 693,553 46,213,496 8,707,190 6,232,706 1,581,556 163,706,223 A.1 Debt securities - 5,758,472 424,425 5,785,256 253,515 28,963,073 A.2 Equity securities - 652,331 167,617 12,506 417,711 407,539 A.3 Loans to banks 583,643 11,457,562 630,483 141,169 548,229 24,852,562 A.4 Loans to customers 109,478 28,317,644 7,429,416 292,293 360,869 109,181,362 A.5 Other financial assets 432 27,487 55,249 1,482 1,232 301,687 B. Other assets 724 1,120,905 5,441 2,308 1,087 1,726,778 C. Financial liabilities 77,584 46,091,006 908,134 218,287 476,692 161,773,846 C.1 Deposits from banks 34,867 16,982,518 211,709 47,842 116,779 63,769,767 C.2 Deposits from customers 42,686 21,079,529 548,856 68,606 317,054 76,625,984 C.3 Debt securities in issue - 7,789,233 144,824 100,720 42,754 20,177,079 C.4 Other financial liabilities 31 239,726 2,745 1,119 105 1,201,016 D. Other liabilities 859 80,999 2,868 435 782 1,631,831 E. Financial derivatives - Options + Long positions 38,990 8,928,267 60,234 7,602 302 1,676,484 + Short positions 19,748 6,788,562 13,788 6,855 9,243 1,691,376 - Other derivatives + Long positions 230,039 115,271,391 8,901,205 10,130,906 1,225,203 127,392,164 + Short positions 236,523 116,499,123 21,009,511 17,813,217 939,223 117,759,645 Total assets 963,306 171,534,059 17,674,070 16,373,522 2,808,148 294,501,649 Total liabilities 334,714 169,459,690 21,934,301 18,038,794 1,425,940 282,856,698 Difference (+/-) 628,592 2,074,369 (4,260,231) (1,665,272) 1,382,208 11,644,951 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 372 2018 Annual Report and Accounts · UniCredit 2.2.3 Exchange rate risk Qualitative information A. General information, risk management processes and measurement methods Exchange rate risk originates both from banks in the Group operating in currency areas other than the Eurozone and from positions taken by specialist centres holding the Group's market risk within the limits assigned. Risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTC. Volatility trading strategies are implemented using options. Exchange rate risk is constantly monitored and measured by using internal models developed by Group companies. For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to the introduction on internal models. These models are also used to calculate capital requirements on market risks due to the exposure to such risk. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes paragraph and for the complex scenarios’ description to Stress Test paragraph. B. Hedging exchange rate risk The exchange risk hedging activity within the trading book is aimed at keeping the FX risk within the defined Granular and Global limits. Regarding banking book the Group adopts hedge strategies for profits and dividends arising from its subsidiaries not belonging to the euro zone, taking into account market circumstances for the hedging strategies. Quantitative information 1. Distribution by currency of assets and liabilites and derivatives (€ '000) ITEMS AMOUNTS AS AT 12.31.2018 CURRENCIES CZECH REPUBLIC KORUNA U.S. DOLLAR SWITZERLAND FRANC JAPAN YEN POLAND ZLOTY OTHER CURRENCIES A. Financial assets 693,553 46,213,496 8,707,190 6,232,706 1,581,556 163,706,223 A.1 Debt securities - 5,758,472 424,425 5,785,256 253,515 28,963,073 A.2 Equity securities - 652,331 167,617 12,506 417,711 407,539 A.3 Loans to banks 583,643 11,457,562 630,483 141,169 548,229 24,852,562 A.4 Loans to customers 109,478 28,317,644 7,429,416 292,293 360,869 109,181,362 A.5 Other financial assets 432 27,487 55,249 1,482 1,232 301,687 B. Other assets 724 1,120,905 5,441 2,308 1,087 1,726,778 C. Financial liabilities 77,584 46,091,006 908,134 218,287 476,692 161,773,846 C.1 Deposits from banks 34,867 16,982,518 211,709 47,842 116,779 63,769,767 C.2 Deposits from customers 42,686 21,079,529 548,856 68,606 317,054 76,625,984 C.3 Debt securities in issue - 7,789,233 144,824 100,720 42,754 20,177,079 C.4 Other financial liabilities 31 239,726 2,745 1,119 105 1,201,016 D. Other liabilities 859 80,999 2,868 435 782 1,631,831 E. Financial derivatives - Options + Long positions 38,990 8,928,267 60,234 7,602 302 1,676,484 + Short positions 19,748 6,788,562 13,788 6,855 9,243 1,691,376 - Other derivatives + Long positions 230,039 115,271,391 8,901,205 10,130,906 1,225,203 127,392,164 + Short positions 236,523 116,499,123 21,009,511 17,813,217 939,223 117,759,645 Total assets 963,306 171,534,059 17,674,070 16,373,522 2,808,148 294,501,649 Total liabilities 334,714 169,459,690 21,934,301 18,038,794 1,425,940 282,856,698 Difference (+/-) 628,592 2,074,369 (4,260,231) (1,665,272) 1,382,208 11,644,951 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 373 2. Internal models and other methodologies for sensitivity analysis Transactional FX risk (impact of fluctuations in foreign exchange rates on the Group’s Profit & Loss in the period) measurement and reporting is part of the Group´s market risk framework. In UGRM, transactional exchange risk exposures are incorporated in the relevant risk calculation, limit monitoring and reporting. Every Legal Entity is required to setup, as part of the respective Market Risk framework, a sound limit system for managing and controlling Transactional Exchange Risk. As a minimum requirement, the limit system shall envisage FX Delta limits for the main currencies which the business is exposed to or for aggregation of currencies. FX Delta limits are part of the Granular Market Risk Limits and are ruled by the Group Policy “Market Risk Limits”. Credit spread risk Qualitative information A. General Information Risk relating to credit spreads and related credit derivative products included in Trading Book originates from positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTC. B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to introduction on internal models. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to Stress Test paragraph Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 373 2. Internal models and other methodologies for sensitivity analysis Transactional FX risk (impact of fluctuations in foreign exchange rates on the Group’s Profit & Loss in the period) measurement and reporting is part of the Group´s market risk framework. In UGRM, transactional exchange risk exposures are incorporated in the relevant risk calculation, limit monitoring and reporting. Every Legal Entity is required to setup, as part of the respective Market Risk framework, a sound limit system for managing and controlling Transactional Exchange Risk. As a minimum requirement, the limit system shall envisage FX Delta limits for the main currencies which the business is exposed to or for aggregation of currencies. FX Delta limits are part of the Granular Market Risk Limits and are ruled by the Group Policy “Market Risk Limits”. Credit spread risk Qualitative information A. General Information Risk relating to credit spreads and related credit derivative products included in Trading Book originates from positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTC. B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to introduction on internal models. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to Stress Test paragraph Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 373 2. Internal models and other methodologies for sensitivity analysis Transactional FX risk (impact of fluctuations in foreign exchange rates on the Group’s Profit & Loss in the period) measurement and reporting is part of the Group´s market risk framework. In UGRM, transactional exchange risk exposures are incorporated in the relevant risk calculation, limit monitoring and reporting. Every Legal Entity is required to setup, as part of the respective Market Risk framework, a sound limit system for managing and controlling Transactional Exchange Risk. As a minimum requirement, the limit system shall envisage FX Delta limits for the main currencies which the business is exposed to or for aggregation of currencies. FX Delta limits are part of the Granular Market Risk Limits and are ruled by the Group Policy “Market Risk Limits”. Credit spread risk Qualitative information A. General Information Risk relating to credit spreads and related credit derivative products included in Trading Book originates from positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTC. B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to introduction on internal models. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to Stress Test paragraph Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 373 2. Internal models and other methodologies for sensitivity analysis Transactional FX risk (impact of fluctuations in foreign exchange rates on the Group’s Profit & Loss in the period) measurement and reporting is part of the Group´s market risk framework. In UGRM, transactional exchange risk exposures are incorporated in the relevant risk calculation, limit monitoring and reporting. Every Legal Entity is required to setup, as part of the respective Market Risk framework, a sound limit system for managing and controlling Transactional Exchange Risk. As a minimum requirement, the limit system shall envisage FX Delta limits for the main currencies which the business is exposed to or for aggregation of currencies. FX Delta limits are part of the Granular Market Risk Limits and are ruled by the Group Policy “Market Risk Limits”. Credit spread risk Qualitative information A. General Information Risk relating to credit spreads and related credit derivative products included in Trading Book originates from positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTC. B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to introduction on internal models. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to Stress Test paragraph Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 373 2. Internal models and other methodologies for sensitivity analysis Transactional FX risk (impact of fluctuations in foreign exchange rates on the Group’s Profit & Loss in the period) measurement and reporting is part of the Group´s market risk framework. In UGRM, transactional exchange risk exposures are incorporated in the relevant risk calculation, limit monitoring and reporting. Every Legal Entity is required to setup, as part of the respective Market Risk framework, a sound limit system for managing and controlling Transactional Exchange Risk. As a minimum requirement, the limit system shall envisage FX Delta limits for the main currencies which the business is exposed to or for aggregation of currencies. FX Delta limits are part of the Granular Market Risk Limits and are ruled by the Group Policy “Market Risk Limits”. Credit spread risk Qualitative information A. General Information Risk relating to credit spreads and related credit derivative products included in Trading Book originates from positions taken by Group specialist centres holding assigned market risk limits within certain levels of discretion. Risk deriving from own trading of these instruments is managed using both directional and relative value strategies via direct sale and purchase of securities, regulated derivatives and OTC. B. Risk Management Processes and Measurement Methods For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, refer to introduction on internal models. As regards Stress Test refer to the introduction on Risk Management Strategies and Processes and for the complex scenarios’ description to Stress Test paragraph Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 374 2018 Annual Report and Accounts · UniCredit Quantitative information Credit spread sensitivity Credit spread sensitivity is calculated by assuming a worsening of creditworthiness seen in a parallel shift of +1bp/+10bp/+100bps in the credit spread curves. These sensitivities are calculated both inclusively, assuming a parallel shift of all the credit spread curves, and in respect of specific rating classes and economic sectors. The table below shows trading book sensitivities. (€ million) +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL +10BP +100BP Total 0.0 -0.1 -0.1 -0.3 -0.1 0.2 -0.1 -0.4 -4.2 -41.2 Rating AAA 0.0 0.0 -0.0 0.0 0.2 0.1 -0.0 0.2 1.8 19.2 AA 0.0 0.0 -0.0 -0.1 -0.1 0.0 0.1 -0.1 -0.9 -9.6 A 0.0 -0.0 -0.0 -0.1 0.0 -0.0 0.0 -0.1 -0.7 -6.5 BBB 0.0 -0.0 -0.1 -0.1 -0.1 0.2 -0.2 -0.3 -3.5 -35.4 BB 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.1 -0.6 -5.5 B 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 -0.0 -0.1 -1.1 CCC and NR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.2 -2.4 Sector Sovereigns & Related 0.0 -0.0 -0.1 -0.0 0.2 0.2 -0.1 0.2 1.7 17.3 ABS and MBS 0.0 0.0 0.0 -0.0 0.0 0.0 0.0 -0.0 -0.1 -0.8 Financial Services 0.0 0.0 -0.1 -0.2 -0.2 0.0 -0.0 -0.5 -5.0 -49.4 All Corporates 0.0 -0.0 0.0 -0.0 -0.0 0.0 0.0 -0.1 -0.8 -8.3 Basic Materials 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 -0.0 -0.2 -2.0 Communications 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.0 -0.2 -1.9 Consumer Cyclical 0.0 0.0 0.0 -0.0 0.0 -0.0 0.0 -0.0 -0.2 -1.6 Consumer Non cyclical 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.1 -0.8 Energy 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.0 -0.2 -1.6 Technology 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.3 Industrial 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 0.0 -0.0 -0.3 Utilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.1 -1.0 All other Corporates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 1.2 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 374 2018 Annual Report and Accounts · UniCredit Quantitative information Credit spread sensitivity Credit spread sensitivity is calculated by assuming a worsening of creditworthiness seen in a parallel shift of +1bp/+10bp/+100bps in the credit spread curves. These sensitivities are calculated both inclusively, assuming a parallel shift of all the credit spread curves, and in respect of specific rating classes and economic sectors. The table below shows trading book sensitivities. (€ million) +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL +10BP +100BP Total 0.0 -0.1 -0.1 -0.3 -0.1 0.2 -0.1 -0.4 -4.2 -41.2 Rating AAA 0.0 0.0 -0.0 0.0 0.2 0.1 -0.0 0.2 1.8 19.2 AA 0.0 0.0 -0.0 -0.1 -0.1 0.0 0.1 -0.1 -0.9 -9.6 A 0.0 -0.0 -0.0 -0.1 0.0 -0.0 0.0 -0.1 -0.7 -6.5 BBB 0.0 -0.0 -0.1 -0.1 -0.1 0.2 -0.2 -0.3 -3.5 -35.4 BB 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.1 -0.6 -5.5 B 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 -0.0 -0.1 -1.1 CCC and NR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.2 -2.4 Sector Sovereigns & Related 0.0 -0.0 -0.1 -0.0 0.2 0.2 -0.1 0.2 1.7 17.3 ABS and MBS 0.0 0.0 0.0 -0.0 0.0 0.0 0.0 -0.0 -0.1 -0.8 Financial Services 0.0 0.0 -0.1 -0.2 -0.2 0.0 -0.0 -0.5 -5.0 -49.4 All Corporates 0.0 -0.0 0.0 -0.0 -0.0 0.0 0.0 -0.1 -0.8 -8.3 Basic Materials 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 -0.0 -0.2 -2.0 Communications 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.0 -0.2 -1.9 Consumer Cyclical 0.0 0.0 0.0 -0.0 0.0 -0.0 0.0 -0.0 -0.2 -1.6 Consumer Non cyclical 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.1 -0.8 Energy 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.0 -0.2 -1.6 Technology 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.3 Industrial 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 0.0 -0.0 -0.3 Utilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.1 -1.0 All other Corporates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 1.2 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 374 2018 Annual Report and Accounts · UniCredit Quantitative information Credit spread sensitivity Credit spread sensitivity is calculated by assuming a worsening of creditworthiness seen in a parallel shift of +1bp/+10bp/+100bps in the credit spread curves. These sensitivities are calculated both inclusively, assuming a parallel shift of all the credit spread curves, and in respect of specific rating classes and economic sectors. The table below shows trading book sensitivities. (€ million) +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL +10BP +100BP Total 0.0 -0.1 -0.1 -0.3 -0.1 0.2 -0.1 -0.4 -4.2 -41.2 Rating AAA 0.0 0.0 -0.0 0.0 0.2 0.1 -0.0 0.2 1.8 19.2 AA 0.0 0.0 -0.0 -0.1 -0.1 0.0 0.1 -0.1 -0.9 -9.6 A 0.0 -0.0 -0.0 -0.1 0.0 -0.0 0.0 -0.1 -0.7 -6.5 BBB 0.0 -0.0 -0.1 -0.1 -0.1 0.2 -0.2 -0.3 -3.5 -35.4 BB 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.1 -0.6 -5.5 B 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 -0.0 -0.1 -1.1 CCC and NR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.2 -2.4 Sector Sovereigns & Related 0.0 -0.0 -0.1 -0.0 0.2 0.2 -0.1 0.2 1.7 17.3 ABS and MBS 0.0 0.0 0.0 -0.0 0.0 0.0 0.0 -0.0 -0.1 -0.8 Financial Services 0.0 0.0 -0.1 -0.2 -0.2 0.0 -0.0 -0.5 -5.0 -49.4 All Corporates 0.0 -0.0 0.0 -0.0 -0.0 0.0 0.0 -0.1 -0.8 -8.3 Basic Materials 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 -0.0 -0.2 -2.0 Communications 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.0 -0.2 -1.9 Consumer Cyclical 0.0 0.0 0.0 -0.0 0.0 -0.0 0.0 -0.0 -0.2 -1.6 Consumer Non cyclical 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.1 -0.8 Energy 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.0 -0.2 -1.6 Technology 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.3 Industrial 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 0.0 -0.0 -0.3 Utilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.1 -1.0 All other Corporates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 1.2 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 374 2018 Annual Report and Accounts · UniCredit Quantitative information Credit spread sensitivity Credit spread sensitivity is calculated by assuming a worsening of creditworthiness seen in a parallel shift of +1bp/+10bp/+100bps in the credit spread curves. These sensitivities are calculated both inclusively, assuming a parallel shift of all the credit spread curves, and in respect of specific rating classes and economic sectors. The table below shows trading book sensitivities. (€ million) +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL +10BP +100BP Total 0.0 -0.1 -0.1 -0.3 -0.1 0.2 -0.1 -0.4 -4.2 -41.2 Rating AAA 0.0 0.0 -0.0 0.0 0.2 0.1 -0.0 0.2 1.8 19.2 AA 0.0 0.0 -0.0 -0.1 -0.1 0.0 0.1 -0.1 -0.9 -9.6 A 0.0 -0.0 -0.0 -0.1 0.0 -0.0 0.0 -0.1 -0.7 -6.5 BBB 0.0 -0.0 -0.1 -0.1 -0.1 0.2 -0.2 -0.3 -3.5 -35.4 BB 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.1 -0.6 -5.5 B 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 -0.0 -0.1 -1.1 CCC and NR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.2 -2.4 Sector Sovereigns & Related 0.0 -0.0 -0.1 -0.0 0.2 0.2 -0.1 0.2 1.7 17.3 ABS and MBS 0.0 0.0 0.0 -0.0 0.0 0.0 0.0 -0.0 -0.1 -0.8 Financial Services 0.0 0.0 -0.1 -0.2 -0.2 0.0 -0.0 -0.5 -5.0 -49.4 All Corporates 0.0 -0.0 0.0 -0.0 -0.0 0.0 0.0 -0.1 -0.8 -8.3 Basic Materials 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 -0.0 -0.2 -2.0 Communications 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.0 -0.2 -1.9 Consumer Cyclical 0.0 0.0 0.0 -0.0 0.0 -0.0 0.0 -0.0 -0.2 -1.6 Consumer Non cyclical 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.1 -0.8 Energy 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.0 -0.2 -1.6 Technology 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.3 Industrial 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 0.0 -0.0 -0.3 Utilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.1 -1.0 All other Corporates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 1.2 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 374 2018 Annual Report and Accounts · UniCredit Quantitative information Credit spread sensitivity Credit spread sensitivity is calculated by assuming a worsening of creditworthiness seen in a parallel shift of +1bp/+10bp/+100bps in the credit spread curves. These sensitivities are calculated both inclusively, assuming a parallel shift of all the credit spread curves, and in respect of specific rating classes and economic sectors. The table below shows trading book sensitivities. (€ million) +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL +10BP +100BP Total 0.0 -0.1 -0.1 -0.3 -0.1 0.2 -0.1 -0.4 -4.2 -41.2 Rating AAA 0.0 0.0 -0.0 0.0 0.2 0.1 -0.0 0.2 1.8 19.2 AA 0.0 0.0 -0.0 -0.1 -0.1 0.0 0.1 -0.1 -0.9 -9.6 A 0.0 -0.0 -0.0 -0.1 0.0 -0.0 0.0 -0.1 -0.7 -6.5 BBB 0.0 -0.0 -0.1 -0.1 -0.1 0.2 -0.2 -0.3 -3.5 -35.4 BB 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.1 -0.6 -5.5 B 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 -0.0 -0.1 -1.1 CCC and NR 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.2 -2.4 Sector Sovereigns & Related 0.0 -0.0 -0.1 -0.0 0.2 0.2 -0.1 0.2 1.7 17.3 ABS and MBS 0.0 0.0 0.0 -0.0 0.0 0.0 0.0 -0.0 -0.1 -0.8 Financial Services 0.0 0.0 -0.1 -0.2 -0.2 0.0 -0.0 -0.5 -5.0 -49.4 All Corporates 0.0 -0.0 0.0 -0.0 -0.0 0.0 0.0 -0.1 -0.8 -8.3 Basic Materials 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 -0.0 -0.2 -2.0 Communications 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.0 -0.2 -1.9 Consumer Cyclical 0.0 0.0 0.0 -0.0 0.0 -0.0 0.0 -0.0 -0.2 -1.6 Consumer Non cyclical 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.1 -0.8 Energy 0.0 0.0 0.0 -0.0 -0.0 0.0 0.0 -0.0 -0.2 -1.6 Technology 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.3 Industrial 0.0 0.0 0.0 0.0 -0.0 0.0 0.0 0.0 -0.0 -0.3 Utilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.0 -0.1 -1.0 All other Corporates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 1.2 Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 375 Stress test Stress tests complement the sensitivity analysis and VaR results in order to assess the potential risks in a different way. A stress test performs the evaluation of a portfolio under both simple scenarios (assuming change to single risk factors) and complex scenarios (assuming simultaneous changes in a number of risk factors). The description of complex scenarios, which combine changes in interest rate, price, exchange-rate and credit spread risk factors is reported below. For the description of simple scenarios, refer to the previous paragraphs. As far as complex scenarios are concerned, different scenarios have been applied to the whole Group Trading Book on a monthly basis and reported to the Top Management. Widespread contagion In this scenario, we assume an intensification of political risks across the EU. Confidence of financial markets, businesses and households sours, leading to tighter financial conditions and lower economic activity. UK growth, which is already suffering from an increase in uncertainty following the vote to leave the EU, would be hit by an intensification of political risks in the rest of the EU. Uncertainty will weigh on UK business investment, trade and capital flows, with knock-on effects on consumer confidence. It could also prolong negotiations over the UK’s exit status from the EU beyond the end of the transition period, set at end-2020. In GDP space, Italy and Spain are most impacted. France follows suit, while Germany is the least affected. At the eurozone level, GDP growth is seen slowing to 0.3% in 2019, followed by a 0.5% contraction in 2020 and a slow recovery to 0.5% in 2021. Overall, the cumulative loss vs. baseline over the three years is 3.8pp. Inflation in the eurozone would remain low in 2019-2021, reflecting a wider output gap and lower oil prices, while the weaker euro is expected to partially offset some of these drags. The unemployment rate would already resume rising in 2019, putting downward pressure on nominal wage growth. The ECB would cut the deposit rate, now de facto the true policy rate, by 10bp to -0.50%, while keeping the refi rate at 0.00%. The size of the rate cut is modest compared to the magnitude of the growth and inflation shock, but we believe the ECB is very close to the effective lower bound as side effects of negative rates start becoming more evident. Another dose of QE appears likely at a time of meaningful deviation from the price stability target. The slow growth recovery in 2021 is unlikely to allow the ECB to raise the deposit rate to mitigate the negative impact on banks’ profitability. Brexit, along with an escalation of political risks in the EU, significantly weighs on business investment and consumer confidence in the UK. Economic activity slows in 2019 and 2020 (0.5%) and reaccelerates moderately thereafter. The opening up of a sizable output gap and the fall in sterling import prices (with lower USD oil prices more than offsetting sterling depreciation) means inflation stays subdued for longer. The rise in unemployment and the lower inflation level moderates wage growth. Capital outflows induce some adjustment of the UK’s large current account deficit. The response of fiscal authorities is to ease policy, while the BoE cuts rates to 0.00%. The US economy should be less affected than EU. The reason is that most of the growth in the US comes from domestic demand, notably consumer spending, therefore direct and indirect trade linkages with Europe are not going to be a huge drag, even when accounting for the spillover on US investment activity. The main transmission channel of the shock is lower stock prices, which directly affect US household finances and balance sheets. After hiking rates to 3% in 2019, the shock will increase pressure on the Fed to ease more aggressively (to 2%) than in the baseline scenario. Protectionism, China slowdown & Turkey shock In this risk scenario, we assume the introduction of protectionist policies in the US (this, however, does not escalate into a global trade war), which intensify downward pressure on GDP growth in emerging markets, especially China, where growth slows from just below 6.5% to 3% by the end of 2019. On top of this, we assume a large growth shock in Turkey, mainly related to the deterioration of the domestic political picture. This scenario implies a more global shock than Widespread Contagion and the main transmission channels are trade and financial markets, the latter predominantly via an aggressive sell-off in risky assets and its negative impact on confidence and investment plans. Moreover, as China is a big commodity importer, its slowdown is expected to increase downward pressure on commodity prices, damaging commodity producers like Russia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 375 Stress test Stress tests complement the sensitivity analysis and VaR results in order to assess the potential risks in a different way. A stress test performs the evaluation of a portfolio under both simple scenarios (assuming change to single risk factors) and complex scenarios (assuming simultaneous changes in a number of risk factors). The description of complex scenarios, which combine changes in interest rate, price, exchange-rate and credit spread risk factors is reported below. For the description of simple scenarios, refer to the previous paragraphs. As far as complex scenarios are concerned, different scenarios have been applied to the whole Group Trading Book on a monthly basis and reported to the Top Management. Widespread contagion In this scenario, we assume an intensification of political risks across the EU. Confidence of financial markets, businesses and households sours, leading to tighter financial conditions and lower economic activity. UK growth, which is already suffering from an increase in uncertainty following the vote to leave the EU, would be hit by an intensification of political risks in the rest of the EU. Uncertainty will weigh on UK business investment, trade and capital flows, with knock-on effects on consumer confidence. It could also prolong negotiations over the UK’s exit status from the EU beyond the end of the transition period, set at end-2020. In GDP space, Italy and Spain are most impacted. France follows suit, while Germany is the least affected. At the eurozone level, GDP growth is seen slowing to 0.3% in 2019, followed by a 0.5% contraction in 2020 and a slow recovery to 0.5% in 2021. Overall, the cumulative loss vs. baseline over the three years is 3.8pp. Inflation in the eurozone would remain low in 2019-2021, reflecting a wider output gap and lower oil prices, while the weaker euro is expected to partially offset some of these drags. The unemployment rate would already resume rising in 2019, putting downward pressure on nominal wage growth. The ECB would cut the deposit rate, now de facto the true policy rate, by 10bp to -0.50%, while keeping the refi rate at 0.00%. The size of the rate cut is modest compared to the magnitude of the growth and inflation shock, but we believe the ECB is very close to the effective lower bound as side effects of negative rates start becoming more evident. Another dose of QE appears likely at a time of meaningful deviation from the price stability target. The slow growth recovery in 2021 is unlikely to allow the ECB to raise the deposit rate to mitigate the negative impact on banks’ profitability. Brexit, along with an escalation of political risks in the EU, significantly weighs on business investment and consumer confidence in the UK. Economic activity slows in 2019 and 2020 (0.5%) and reaccelerates moderately thereafter. The opening up of a sizable output gap and the fall in sterling import prices (with lower USD oil prices more than offsetting sterling depreciation) means inflation stays subdued for longer. The rise in unemployment and the lower inflation level moderates wage growth. Capital outflows induce some adjustment of the UK’s large current account deficit. The response of fiscal authorities is to ease policy, while the BoE cuts rates to 0.00%. The US economy should be less affected than EU. The reason is that most of the growth in the US comes from domestic demand, notably consumer spending, therefore direct and indirect trade linkages with Europe are not going to be a huge drag, even when accounting for the spillover on US investment activity. The main transmission channel of the shock is lower stock prices, which directly affect US household finances and balance sheets. After hiking rates to 3% in 2019, the shock will increase pressure on the Fed to ease more aggressively (to 2%) than in the baseline scenario. Protectionism, China slowdown & Turkey shock In this risk scenario, we assume the introduction of protectionist policies in the US (this, however, does not escalate into a global trade war), which intensify downward pressure on GDP growth in emerging markets, especially China, where growth slows from just below 6.5% to 3% by the end of 2019. On top of this, we assume a large growth shock in Turkey, mainly related to the deterioration of the domestic political picture. This scenario implies a more global shock than Widespread Contagion and the main transmission channels are trade and financial markets, the latter predominantly via an aggressive sell-off in risky assets and its negative impact on confidence and investment plans. Moreover, as China is a big commodity importer, its slowdown is expected to increase downward pressure on commodity prices, damaging commodity producers like Russia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 375 Stress test Stress tests complement the sensitivity analysis and VaR results in order to assess the potential risks in a different way. A stress test performs the evaluation of a portfolio under both simple scenarios (assuming change to single risk factors) and complex scenarios (assuming simultaneous changes in a number of risk factors). The description of complex scenarios, which combine changes in interest rate, price, exchange-rate and credit spread risk factors is reported below. For the description of simple scenarios, refer to the previous paragraphs. As far as complex scenarios are concerned, different scenarios have been applied to the whole Group Trading Book on a monthly basis and reported to the Top Management. Widespread contagion In this scenario, we assume an intensification of political risks across the EU. Confidence of financial markets, businesses and households sours, leading to tighter financial conditions and lower economic activity. UK growth, which is already suffering from an increase in uncertainty following the vote to leave the EU, would be hit by an intensification of political risks in the rest of the EU. Uncertainty will weigh on UK business investment, trade and capital flows, with knock-on effects on consumer confidence. It could also prolong negotiations over the UK’s exit status from the EU beyond the end of the transition period, set at end-2020. In GDP space, Italy and Spain are most impacted. France follows suit, while Germany is the least affected. At the eurozone level, GDP growth is seen slowing to 0.3% in 2019, followed by a 0.5% contraction in 2020 and a slow recovery to 0.5% in 2021. Overall, the cumulative loss vs. baseline over the three years is 3.8pp. Inflation in the eurozone would remain low in 2019-2021, reflecting a wider output gap and lower oil prices, while the weaker euro is expected to partially offset some of these drags. The unemployment rate would already resume rising in 2019, putting downward pressure on nominal wage growth. The ECB would cut the deposit rate, now de facto the true policy rate, by 10bp to -0.50%, while keeping the refi rate at 0.00%. The size of the rate cut is modest compared to the magnitude of the growth and inflation shock, but we believe the ECB is very close to the effective lower bound as side effects of negative rates start becoming more evident. Another dose of QE appears likely at a time of meaningful deviation from the price stability target. The slow growth recovery in 2021 is unlikely to allow the ECB to raise the deposit rate to mitigate the negative impact on banks’ profitability. Brexit, along with an escalation of political risks in the EU, significantly weighs on business investment and consumer confidence in the UK. Economic activity slows in 2019 and 2020 (0.5%) and reaccelerates moderately thereafter. The opening up of a sizable output gap and the fall in sterling import prices (with lower USD oil prices more than offsetting sterling depreciation) means inflation stays subdued for longer. The rise in unemployment and the lower inflation level moderates wage growth. Capital outflows induce some adjustment of the UK’s large current account deficit. The response of fiscal authorities is to ease policy, while the BoE cuts rates to 0.00%. The US economy should be less affected than EU. The reason is that most of the growth in the US comes from domestic demand, notably consumer spending, therefore direct and indirect trade linkages with Europe are not going to be a huge drag, even when accounting for the spillover on US investment activity. The main transmission channel of the shock is lower stock prices, which directly affect US household finances and balance sheets. After hiking rates to 3% in 2019, the shock will increase pressure on the Fed to ease more aggressively (to 2%) than in the baseline scenario. Protectionism, China slowdown & Turkey shock In this risk scenario, we assume the introduction of protectionist policies in the US (this, however, does not escalate into a global trade war), which intensify downward pressure on GDP growth in emerging markets, especially China, where growth slows from just below 6.5% to 3% by the end of 2019. On top of this, we assume a large growth shock in Turkey, mainly related to the deterioration of the domestic political picture. This scenario implies a more global shock than Widespread Contagion and the main transmission channels are trade and financial markets, the latter predominantly via an aggressive sell-off in risky assets and its negative impact on confidence and investment plans. Moreover, as China is a big commodity importer, its slowdown is expected to increase downward pressure on commodity prices, damaging commodity producers like Russia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 375 Stress test Stress tests complement the sensitivity analysis and VaR results in order to assess the potential risks in a different way. A stress test performs the evaluation of a portfolio under both simple scenarios (assuming change to single risk factors) and complex scenarios (assuming simultaneous changes in a number of risk factors). The description of complex scenarios, which combine changes in interest rate, price, exchange-rate and credit spread risk factors is reported below. For the description of simple scenarios, refer to the previous paragraphs. As far as complex scenarios are concerned, different scenarios have been applied to the whole Group Trading Book on a monthly basis and reported to the Top Management. Widespread contagion In this scenario, we assume an intensification of political risks across the EU. Confidence of financial markets, businesses and households sours, leading to tighter financial conditions and lower economic activity. UK growth, which is already suffering from an increase in uncertainty following the vote to leave the EU, would be hit by an intensification of political risks in the rest of the EU. Uncertainty will weigh on UK business investment, trade and capital flows, with knock-on effects on consumer confidence. It could also prolong negotiations over the UK’s exit status from the EU beyond the end of the transition period, set at end-2020. In GDP space, Italy and Spain are most impacted. France follows suit, while Germany is the least affected. At the eurozone level, GDP growth is seen slowing to 0.3% in 2019, followed by a 0.5% contraction in 2020 and a slow recovery to 0.5% in 2021. Overall, the cumulative loss vs. baseline over the three years is 3.8pp. Inflation in the eurozone would remain low in 2019-2021, reflecting a wider output gap and lower oil prices, while the weaker euro is expected to partially offset some of these drags. The unemployment rate would already resume rising in 2019, putting downward pressure on nominal wage growth. The ECB would cut the deposit rate, now de facto the true policy rate, by 10bp to -0.50%, while keeping the refi rate at 0.00%. The size of the rate cut is modest compared to the magnitude of the growth and inflation shock, but we believe the ECB is very close to the effective lower bound as side effects of negative rates start becoming more evident. Another dose of QE appears likely at a time of meaningful deviation from the price stability target. The slow growth recovery in 2021 is unlikely to allow the ECB to raise the deposit rate to mitigate the negative impact on banks’ profitability. Brexit, along with an escalation of political risks in the EU, significantly weighs on business investment and consumer confidence in the UK. Economic activity slows in 2019 and 2020 (0.5%) and reaccelerates moderately thereafter. The opening up of a sizable output gap and the fall in sterling import prices (with lower USD oil prices more than offsetting sterling depreciation) means inflation stays subdued for longer. The rise in unemployment and the lower inflation level moderates wage growth. Capital outflows induce some adjustment of the UK’s large current account deficit. The response of fiscal authorities is to ease policy, while the BoE cuts rates to 0.00%. The US economy should be less affected than EU. The reason is that most of the growth in the US comes from domestic demand, notably consumer spending, therefore direct and indirect trade linkages with Europe are not going to be a huge drag, even when accounting for the spillover on US investment activity. The main transmission channel of the shock is lower stock prices, which directly affect US household finances and balance sheets. After hiking rates to 3% in 2019, the shock will increase pressure on the Fed to ease more aggressively (to 2%) than in the baseline scenario. Protectionism, China slowdown & Turkey shock In this risk scenario, we assume the introduction of protectionist policies in the US (this, however, does not escalate into a global trade war), which intensify downward pressure on GDP growth in emerging markets, especially China, where growth slows from just below 6.5% to 3% by the end of 2019. On top of this, we assume a large growth shock in Turkey, mainly related to the deterioration of the domestic political picture. This scenario implies a more global shock than Widespread Contagion and the main transmission channels are trade and financial markets, the latter predominantly via an aggressive sell-off in risky assets and its negative impact on confidence and investment plans. Moreover, as China is a big commodity importer, its slowdown is expected to increase downward pressure on commodity prices, damaging commodity producers like Russia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 375 Stress test Stress tests complement the sensitivity analysis and VaR results in order to assess the potential risks in a different way. A stress test performs the evaluation of a portfolio under both simple scenarios (assuming change to single risk factors) and complex scenarios (assuming simultaneous changes in a number of risk factors). The description of complex scenarios, which combine changes in interest rate, price, exchange-rate and credit spread risk factors is reported below. For the description of simple scenarios, refer to the previous paragraphs. As far as complex scenarios are concerned, different scenarios have been applied to the whole Group Trading Book on a monthly basis and reported to the Top Management. Widespread contagion In this scenario, we assume an intensification of political risks across the EU. Confidence of financial markets, businesses and households sours, leading to tighter financial conditions and lower economic activity. UK growth, which is already suffering from an increase in uncertainty following the vote to leave the EU, would be hit by an intensification of political risks in the rest of the EU. Uncertainty will weigh on UK business investment, trade and capital flows, with knock-on effects on consumer confidence. It could also prolong negotiations over the UK’s exit status from the EU beyond the end of the transition period, set at end-2020. In GDP space, Italy and Spain are most impacted. France follows suit, while Germany is the least affected. At the eurozone level, GDP growth is seen slowing to 0.3% in 2019, followed by a 0.5% contraction in 2020 and a slow recovery to 0.5% in 2021. Overall, the cumulative loss vs. baseline over the three years is 3.8pp. Inflation in the eurozone would remain low in 2019-2021, reflecting a wider output gap and lower oil prices, while the weaker euro is expected to partially offset some of these drags. The unemployment rate would already resume rising in 2019, putting downward pressure on nominal wage growth. The ECB would cut the deposit rate, now de facto the true policy rate, by 10bp to -0.50%, while keeping the refi rate at 0.00%. The size of the rate cut is modest compared to the magnitude of the growth and inflation shock, but we believe the ECB is very close to the effective lower bound as side effects of negative rates start becoming more evident. Another dose of QE appears likely at a time of meaningful deviation from the price stability target. The slow growth recovery in 2021 is unlikely to allow the ECB to raise the deposit rate to mitigate the negative impact on banks’ profitability. Brexit, along with an escalation of political risks in the EU, significantly weighs on business investment and consumer confidence in the UK. Economic activity slows in 2019 and 2020 (0.5%) and reaccelerates moderately thereafter. The opening up of a sizable output gap and the fall in sterling import prices (with lower USD oil prices more than offsetting sterling depreciation) means inflation stays subdued for longer. The rise in unemployment and the lower inflation level moderates wage growth. Capital outflows induce some adjustment of the UK’s large current account deficit. The response of fiscal authorities is to ease policy, while the BoE cuts rates to 0.00%. The US economy should be less affected than EU. The reason is that most of the growth in the US comes from domestic demand, notably consumer spending, therefore direct and indirect trade linkages with Europe are not going to be a huge drag, even when accounting for the spillover on US investment activity. The main transmission channel of the shock is lower stock prices, which directly affect US household finances and balance sheets. After hiking rates to 3% in 2019, the shock will increase pressure on the Fed to ease more aggressively (to 2%) than in the baseline scenario. Protectionism, China slowdown & Turkey shock In this risk scenario, we assume the introduction of protectionist policies in the US (this, however, does not escalate into a global trade war), which intensify downward pressure on GDP growth in emerging markets, especially China, where growth slows from just below 6.5% to 3% by the end of 2019. On top of this, we assume a large growth shock in Turkey, mainly related to the deterioration of the domestic political picture. This scenario implies a more global shock than Widespread Contagion and the main transmission channels are trade and financial markets, the latter predominantly via an aggressive sell-off in risky assets and its negative impact on confidence and investment plans. Moreover, as China is a big commodity importer, its slowdown is expected to increase downward pressure on commodity prices, damaging commodity producers like Russia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 376 2018 Annual Report and Accounts · UniCredit The drag on Eurozone GDP via the trade channel is supposed to account for a smaller share of the total growth shock, as most of the hit comes from the financial and confidence channel. In general, we assume the overall drag to reflect the openness of the economy and the weight of China as an export destination, with China accounting for 3-4% of total Eurozone exports (i.e. intra + extra EMU exports). Among the main Euro area countries, Germany has by far the largest exposure to trade and China. The latter accounts for about 6% of German exports, followed by France (about 4%), Italy (about 2.5%) and Spain (less than 2.0%). As a consequence, Germany is expected to be the most damaged country in this risk scenario, while Spain is likely to be the least impacted. Austria is treated differently, because it has only a small direct trade exposure to China, but very large exposure to Germany. In our estimates, this implies a growth shock that exceeds that for the Eurozone. In this risk scenario, eurozone growth is assumed to turn negative in 2019 (-0.5%), with the recession set to deepen in 2020 (-1.1%) and only a slow recovery in 2021 (+0.2%). Over three years, the cumulative GDP loss vs. baseline would be 5.5pp. Germany would experience a GDP contraction of 1.4% in 2019, 2.1% in 2020 and 0.1% in 2021. The negative impact of the trade and financial shock on the German economy is assumed to be partly mitigated by fiscal policy (with the main aim to support labor income), while in the other eurozone countries, where room for maneuver on fiscal policy is smaller, the fiscal deficit deterioration will largely reflect automatic stabilizers, like an increase in unemployment benefits. Lower oil prices work as automatic stabilizer, reducing the scale of the GDP shock in energy-importing countries. Inflation in the eurozone will likely be lower compared to “Widespread Contagion”, as higher tariffs on international trade are more than offset by the large decline in oil prices and increasing economic slack. In a context of a global growth slowdown amid weaker commodity prices, the ECB would act further by cutting the deposit rate by a cumulative 20bp to -0.60%, while keeping the refi rate at 0.00%. The size of the rate cut is modest compared to the magnitude of the growth and inflation shock, but we believe the ECB is very close to the effective lower bound as side effects of negative rates start becoming more evident. Another dose of QE appears likely at a time of meaningful deviation from the price stability target. The UK is an open economy, although the trade exposure to China is small. We assume a large adverse growth impact via the shock to global confidence and capital flows. The UK economy stagnates in 2019 and enters a recession in 2020. The steep fall in oil prices and other global commodity prices results in a lower path for UK inflation. Unemployment rises as the economy slows. The US economy should be less affected than the eurozone, due to some short term positive impact of protectionist measures and to its stronger reliance on domestic demand. However, in this scenario of a more global shock, weaker global growth is expected to slow the US recovery in 2019 (GDP at 1.3% in 2019) and to cause a recession in 2020 through weaker exports and a cutback in investment activity, which eventually will weigh on the labor market and thus on consumer spending as well. The Federal Reserve is likely to pause at 2.50% in 2019 and cut rates aggressively (to 1.50%) in 2020. Interest rate shock In this risk scenario, we assume that interest rates (IR) in the eurozone move sharply higher, by 250bps at the short end (refi rate) and by 300bps at the long end (10Y). Importantly, this IR increase is assumed to be totally exogenous, i.e. not driven by macro fundamentals like faster growth or inflation, therefore this scenario should mainly be seen as a purely technical exercise. We also assume that the IR increase is totally passed on to households and firms, meaning that there is no ECB facility that is capable to stop the full pass-through to the real economy. In the second year of the forecast horizon, IR start responding endogenously to macro developments and we assume that the ECB eases monetary policy to counter the material deterioration in the growth and inflation outlook triggered by the IR jump. We assume that about half of the refi rate increase is reversed in 2020 – the refi rate falls to 1.50% at the end of 2020, followed by a further decline that takes the refi rate to 0.50% at the end of 2021. The sharp rise in IR along with its pass-through is highly damaging for growth in the eurozone (GDP: -0.6% in 2019, -1.6% in 2020, -0.1% in 2021), with a 6.4pp cumulative loss vs. baseline over the three years. Within the eurozone, Italy is hit mainly because of high public debt while Spain because of the still high (although falling) leverage of the private sector. The growth damage is smaller in Germany, where leverage (both private and public) is relatively low. The recession causes a clear deterioration of the labor market, with the eurozone unemployment rate seen rising back to an average of 8.9% in 2019, 10.0% in 2020 and 11.4% in 2021. The eurozone witnesses broadly flat growth in consumer prices in all three years, due to the mix of falling oil prices and widening output gap. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 376 2018 Annual Report and Accounts · UniCredit The drag on Eurozone GDP via the trade channel is supposed to account for a smaller share of the total growth shock, as most of the hit comes from the financial and confidence channel. In general, we assume the overall drag to reflect the openness of the economy and the weight of China as an export destination, with China accounting for 3-4% of total Eurozone exports (i.e. intra + extra EMU exports). Among the main Euro area countries, Germany has by far the largest exposure to trade and China. The latter accounts for about 6% of German exports, followed by France (about 4%), Italy (about 2.5%) and Spain (less than 2.0%). As a consequence, Germany is expected to be the most damaged country in this risk scenario, while Spain is likely to be the least impacted. Austria is treated differently, because it has only a small direct trade exposure to China, but very large exposure to Germany. In our estimates, this implies a growth shock that exceeds that for the Eurozone. In this risk scenario, eurozone growth is assumed to turn negative in 2019 (-0.5%), with the recession set to deepen in 2020 (-1.1%) and only a slow recovery in 2021 (+0.2%). Over three years, the cumulative GDP loss vs. baseline would be 5.5pp. Germany would experience a GDP contraction of 1.4% in 2019, 2.1% in 2020 and 0.1% in 2021. The negative impact of the trade and financial shock on the German economy is assumed to be partly mitigated by fiscal policy (with the main aim to support labor income), while in the other eurozone countries, where room for maneuver on fiscal policy is smaller, the fiscal deficit deterioration will largely reflect automatic stabilizers, like an increase in unemployment benefits. Lower oil prices work as automatic stabilizer, reducing the scale of the GDP shock in energy-importing countries. Inflation in the eurozone will likely be lower compared to “Widespread Contagion”, as higher tariffs on international trade are more than offset by the large decline in oil prices and increasing economic slack. In a context of a global growth slowdown amid weaker commodity prices, the ECB would act further by cutting the deposit rate by a cumulative 20bp to -0.60%, while keeping the refi rate at 0.00%. The size of the rate cut is modest compared to the magnitude of the growth and inflation shock, but we believe the ECB is very close to the effective lower bound as side effects of negative rates start becoming more evident. Another dose of QE appears likely at a time of meaningful deviation from the price stability target. The UK is an open economy, although the trade exposure to China is small. We assume a large adverse growth impact via the shock to global confidence and capital flows. The UK economy stagnates in 2019 and enters a recession in 2020. The steep fall in oil prices and other global commodity prices results in a lower path for UK inflation. Unemployment rises as the economy slows. The US economy should be less affected than the eurozone, due to some short term positive impact of protectionist measures and to its stronger reliance on domestic demand. However, in this scenario of a more global shock, weaker global growth is expected to slow the US recovery in 2019 (GDP at 1.3% in 2019) and to cause a recession in 2020 through weaker exports and a cutback in investment activity, which eventually will weigh on the labor market and thus on consumer spending as well. The Federal Reserve is likely to pause at 2.50% in 2019 and cut rates aggressively (to 1.50%) in 2020. Interest rate shock In this risk scenario, we assume that interest rates (IR) in the eurozone move sharply higher, by 250bps at the short end (refi rate) and by 300bps at the long end (10Y). Importantly, this IR increase is assumed to be totally exogenous, i.e. not driven by macro fundamentals like faster growth or inflation, therefore this scenario should mainly be seen as a purely technical exercise. We also assume that the IR increase is totally passed on to households and firms, meaning that there is no ECB facility that is capable to stop the full pass-through to the real economy. In the second year of the forecast horizon, IR start responding endogenously to macro developments and we assume that the ECB eases monetary policy to counter the material deterioration in the growth and inflation outlook triggered by the IR jump. We assume that about half of the refi rate increase is reversed in 2020 – the refi rate falls to 1.50% at the end of 2020, followed by a further decline that takes the refi rate to 0.50% at the end of 2021. The sharp rise in IR along with its pass-through is highly damaging for growth in the eurozone (GDP: -0.6% in 2019, -1.6% in 2020, -0.1% in 2021), with a 6.4pp cumulative loss vs. baseline over the three years. Within the eurozone, Italy is hit mainly because of high public debt while Spain because of the still high (although falling) leverage of the private sector. The growth damage is smaller in Germany, where leverage (both private and public) is relatively low. The recession causes a clear deterioration of the labor market, with the eurozone unemployment rate seen rising back to an average of 8.9% in 2019, 10.0% in 2020 and 11.4% in 2021. The eurozone witnesses broadly flat growth in consumer prices in all three years, due to the mix of falling oil prices and widening output gap. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 376 2018 Annual Report and Accounts · UniCredit The drag on Eurozone GDP via the trade channel is supposed to account for a smaller share of the total growth shock, as most of the hit comes from the financial and confidence channel. In general, we assume the overall drag to reflect the openness of the economy and the weight of China as an export destination, with China accounting for 3-4% of total Eurozone exports (i.e. intra + extra EMU exports). Among the main Euro area countries, Germany has by far the largest exposure to trade and China. The latter accounts for about 6% of German exports, followed by France (about 4%), Italy (about 2.5%) and Spain (less than 2.0%). As a consequence, Germany is expected to be the most damaged country in this risk scenario, while Spain is likely to be the least impacted. Austria is treated differently, because it has only a small direct trade exposure to China, but very large exposure to Germany. In our estimates, this implies a growth shock that exceeds that for the Eurozone. In this risk scenario, eurozone growth is assumed to turn negative in 2019 (-0.5%), with the recession set to deepen in 2020 (-1.1%) and only a slow recovery in 2021 (+0.2%). Over three years, the cumulative GDP loss vs. baseline would be 5.5pp. Germany would experience a GDP contraction of 1.4% in 2019, 2.1% in 2020 and 0.1% in 2021. The negative impact of the trade and financial shock on the German economy is assumed to be partly mitigated by fiscal policy (with the main aim to support labor income), while in the other eurozone countries, where room for maneuver on fiscal policy is smaller, the fiscal deficit deterioration will largely reflect automatic stabilizers, like an increase in unemployment benefits. Lower oil prices work as automatic stabilizer, reducing the scale of the GDP shock in energy-importing countries. Inflation in the eurozone will likely be lower compared to “Widespread Contagion”, as higher tariffs on international trade are more than offset by the large decline in oil prices and increasing economic slack. In a context of a global growth slowdown amid weaker commodity prices, the ECB would act further by cutting the deposit rate by a cumulative 20bp to -0.60%, while keeping the refi rate at 0.00%. The size of the rate cut is modest compared to the magnitude of the growth and inflation shock, but we believe the ECB is very close to the effective lower bound as side effects of negative rates start becoming more evident. Another dose of QE appears likely at a time of meaningful deviation from the price stability target. The UK is an open economy, although the trade exposure to China is small. We assume a large adverse growth impact via the shock to global confidence and capital flows. The UK economy stagnates in 2019 and enters a recession in 2020. The steep fall in oil prices and other global commodity prices results in a lower path for UK inflation. Unemployment rises as the economy slows. The US economy should be less affected than the eurozone, due to some short term positive impact of protectionist measures and to its stronger reliance on domestic demand. However, in this scenario of a more global shock, weaker global growth is expected to slow the US recovery in 2019 (GDP at 1.3% in 2019) and to cause a recession in 2020 through weaker exports and a cutback in investment activity, which eventually will weigh on the labor market and thus on consumer spending as well. The Federal Reserve is likely to pause at 2.50% in 2019 and cut rates aggressively (to 1.50%) in 2020. Interest rate shock In this risk scenario, we assume that interest rates (IR) in the eurozone move sharply higher, by 250bps at the short end (refi rate) and by 300bps at the long end (10Y). Importantly, this IR increase is assumed to be totally exogenous, i.e. not driven by macro fundamentals like faster growth or inflation, therefore this scenario should mainly be seen as a purely technical exercise. We also assume that the IR increase is totally passed on to households and firms, meaning that there is no ECB facility that is capable to stop the full pass-through to the real economy. In the second year of the forecast horizon, IR start responding endogenously to macro developments and we assume that the ECB eases monetary policy to counter the material deterioration in the growth and inflation outlook triggered by the IR jump. We assume that about half of the refi rate increase is reversed in 2020 – the refi rate falls to 1.50% at the end of 2020, followed by a further decline that takes the refi rate to 0.50% at the end of 2021. The sharp rise in IR along with its pass-through is highly damaging for growth in the eurozone (GDP: -0.6% in 2019, -1.6% in 2020, -0.1% in 2021), with a 6.4pp cumulative loss vs. baseline over the three years. Within the eurozone, Italy is hit mainly because of high public debt while Spain because of the still high (although falling) leverage of the private sector. The growth damage is smaller in Germany, where leverage (both private and public) is relatively low. The recession causes a clear deterioration of the labor market, with the eurozone unemployment rate seen rising back to an average of 8.9% in 2019, 10.0% in 2020 and 11.4% in 2021. The eurozone witnesses broadly flat growth in consumer prices in all three years, due to the mix of falling oil prices and widening output gap. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 376 2018 Annual Report and Accounts · UniCredit The drag on Eurozone GDP via the trade channel is supposed to account for a smaller share of the total growth shock, as most of the hit comes from the financial and confidence channel. In general, we assume the overall drag to reflect the openness of the economy and the weight of China as an export destination, with China accounting for 3-4% of total Eurozone exports (i.e. intra + extra EMU exports). Among the main Euro area countries, Germany has by far the largest exposure to trade and China. The latter accounts for about 6% of German exports, followed by France (about 4%), Italy (about 2.5%) and Spain (less than 2.0%). As a consequence, Germany is expected to be the most damaged country in this risk scenario, while Spain is likely to be the least impacted. Austria is treated differently, because it has only a small direct trade exposure to China, but very large exposure to Germany. In our estimates, this implies a growth shock that exceeds that for the Eurozone. In this risk scenario, eurozone growth is assumed to turn negative in 2019 (-0.5%), with the recession set to deepen in 2020 (-1.1%) and only a slow recovery in 2021 (+0.2%). Over three years, the cumulative GDP loss vs. baseline would be 5.5pp. Germany would experience a GDP contraction of 1.4% in 2019, 2.1% in 2020 and 0.1% in 2021. The negative impact of the trade and financial shock on the German economy is assumed to be partly mitigated by fiscal policy (with the main aim to support labor income), while in the other eurozone countries, where room for maneuver on fiscal policy is smaller, the fiscal deficit deterioration will largely reflect automatic stabilizers, like an increase in unemployment benefits. Lower oil prices work as automatic stabilizer, reducing the scale of the GDP shock in energy-importing countries. Inflation in the eurozone will likely be lower compared to “Widespread Contagion”, as higher tariffs on international trade are more than offset by the large decline in oil prices and increasing economic slack. In a context of a global growth slowdown amid weaker commodity prices, the ECB would act further by cutting the deposit rate by a cumulative 20bp to -0.60%, while keeping the refi rate at 0.00%. The size of the rate cut is modest compared to the magnitude of the growth and inflation shock, but we believe the ECB is very close to the effective lower bound as side effects of negative rates start becoming more evident. Another dose of QE appears likely at a time of meaningful deviation from the price stability target. The UK is an open economy, although the trade exposure to China is small. We assume a large adverse growth impact via the shock to global confidence and capital flows. The UK economy stagnates in 2019 and enters a recession in 2020. The steep fall in oil prices and other global commodity prices results in a lower path for UK inflation. Unemployment rises as the economy slows. The US economy should be less affected than the eurozone, due to some short term positive impact of protectionist measures and to its stronger reliance on domestic demand. However, in this scenario of a more global shock, weaker global growth is expected to slow the US recovery in 2019 (GDP at 1.3% in 2019) and to cause a recession in 2020 through weaker exports and a cutback in investment activity, which eventually will weigh on the labor market and thus on consumer spending as well. The Federal Reserve is likely to pause at 2.50% in 2019 and cut rates aggressively (to 1.50%) in 2020. Interest rate shock In this risk scenario, we assume that interest rates (IR) in the eurozone move sharply higher, by 250bps at the short end (refi rate) and by 300bps at the long end (10Y). Importantly, this IR increase is assumed to be totally exogenous, i.e. not driven by macro fundamentals like faster growth or inflation, therefore this scenario should mainly be seen as a purely technical exercise. We also assume that the IR increase is totally passed on to households and firms, meaning that there is no ECB facility that is capable to stop the full pass-through to the real economy. In the second year of the forecast horizon, IR start responding endogenously to macro developments and we assume that the ECB eases monetary policy to counter the material deterioration in the growth and inflation outlook triggered by the IR jump. We assume that about half of the refi rate increase is reversed in 2020 – the refi rate falls to 1.50% at the end of 2020, followed by a further decline that takes the refi rate to 0.50% at the end of 2021. The sharp rise in IR along with its pass-through is highly damaging for growth in the eurozone (GDP: -0.6% in 2019, -1.6% in 2020, -0.1% in 2021), with a 6.4pp cumulative loss vs. baseline over the three years. Within the eurozone, Italy is hit mainly because of high public debt while Spain because of the still high (although falling) leverage of the private sector. The growth damage is smaller in Germany, where leverage (both private and public) is relatively low. The recession causes a clear deterioration of the labor market, with the eurozone unemployment rate seen rising back to an average of 8.9% in 2019, 10.0% in 2020 and 11.4% in 2021. The eurozone witnesses broadly flat growth in consumer prices in all three years, due to the mix of falling oil prices and widening output gap. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 376 2018 Annual Report and Accounts · UniCredit The drag on Eurozone GDP via the trade channel is supposed to account for a smaller share of the total growth shock, as most of the hit comes from the financial and confidence channel. In general, we assume the overall drag to reflect the openness of the economy and the weight of China as an export destination, with China accounting for 3-4% of total Eurozone exports (i.e. intra + extra EMU exports). Among the main Euro area countries, Germany has by far the largest exposure to trade and China. The latter accounts for about 6% of German exports, followed by France (about 4%), Italy (about 2.5%) and Spain (less than 2.0%). As a consequence, Germany is expected to be the most damaged country in this risk scenario, while Spain is likely to be the least impacted. Austria is treated differently, because it has only a small direct trade exposure to China, but very large exposure to Germany. In our estimates, this implies a growth shock that exceeds that for the Eurozone. In this risk scenario, eurozone growth is assumed to turn negative in 2019 (-0.5%), with the recession set to deepen in 2020 (-1.1%) and only a slow recovery in 2021 (+0.2%). Over three years, the cumulative GDP loss vs. baseline would be 5.5pp. Germany would experience a GDP contraction of 1.4% in 2019, 2.1% in 2020 and 0.1% in 2021. The negative impact of the trade and financial shock on the German economy is assumed to be partly mitigated by fiscal policy (with the main aim to support labor income), while in the other eurozone countries, where room for maneuver on fiscal policy is smaller, the fiscal deficit deterioration will largely reflect automatic stabilizers, like an increase in unemployment benefits. Lower oil prices work as automatic stabilizer, reducing the scale of the GDP shock in energy-importing countries. Inflation in the eurozone will likely be lower compared to “Widespread Contagion”, as higher tariffs on international trade are more than offset by the large decline in oil prices and increasing economic slack. In a context of a global growth slowdown amid weaker commodity prices, the ECB would act further by cutting the deposit rate by a cumulative 20bp to -0.60%, while keeping the refi rate at 0.00%. The size of the rate cut is modest compared to the magnitude of the growth and inflation shock, but we believe the ECB is very close to the effective lower bound as side effects of negative rates start becoming more evident. Another dose of QE appears likely at a time of meaningful deviation from the price stability target. The UK is an open economy, although the trade exposure to China is small. We assume a large adverse growth impact via the shock to global confidence and capital flows. The UK economy stagnates in 2019 and enters a recession in 2020. The steep fall in oil prices and other global commodity prices results in a lower path for UK inflation. Unemployment rises as the economy slows. The US economy should be less affected than the eurozone, due to some short term positive impact of protectionist measures and to its stronger reliance on domestic demand. However, in this scenario of a more global shock, weaker global growth is expected to slow the US recovery in 2019 (GDP at 1.3% in 2019) and to cause a recession in 2020 through weaker exports and a cutback in investment activity, which eventually will weigh on the labor market and thus on consumer spending as well. The Federal Reserve is likely to pause at 2.50% in 2019 and cut rates aggressively (to 1.50%) in 2020. Interest rate shock In this risk scenario, we assume that interest rates (IR) in the eurozone move sharply higher, by 250bps at the short end (refi rate) and by 300bps at the long end (10Y). Importantly, this IR increase is assumed to be totally exogenous, i.e. not driven by macro fundamentals like faster growth or inflation, therefore this scenario should mainly be seen as a purely technical exercise. We also assume that the IR increase is totally passed on to households and firms, meaning that there is no ECB facility that is capable to stop the full pass-through to the real economy. In the second year of the forecast horizon, IR start responding endogenously to macro developments and we assume that the ECB eases monetary policy to counter the material deterioration in the growth and inflation outlook triggered by the IR jump. We assume that about half of the refi rate increase is reversed in 2020 – the refi rate falls to 1.50% at the end of 2020, followed by a further decline that takes the refi rate to 0.50% at the end of 2021. The sharp rise in IR along with its pass-through is highly damaging for growth in the eurozone (GDP: -0.6% in 2019, -1.6% in 2020, -0.1% in 2021), with a 6.4pp cumulative loss vs. baseline over the three years. Within the eurozone, Italy is hit mainly because of high public debt while Spain because of the still high (although falling) leverage of the private sector. The growth damage is smaller in Germany, where leverage (both private and public) is relatively low. The recession causes a clear deterioration of the labor market, with the eurozone unemployment rate seen rising back to an average of 8.9% in 2019, 10.0% in 2020 and 11.4% in 2021. The eurozone witnesses broadly flat growth in consumer prices in all three years, due to the mix of falling oil prices and widening output gap. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 377 The substantial tightening of financial conditions in the euro area is transmitted to the UK economy via the significant trade and capital flows between the two economic areas. UK GDP growth slows to 0.4% in 2019 and the economy enters a mild recession in 2020 that lowers GDP by 0.7%, dragged down by high household and public debt. Inflation slows to just above 1% in 2019 and fluctuates around 0% in 2020 and 2021 as a result of the fall in oil prices and growing spare capacity. The external nature of the shock hits exports. Nonetheless, the current account deficit improves slightly faster than in the baseline scenario as capital markets force a more pronounced adjustment. The BoE cuts the Bank Rate to 0.50% in 2019 and to 0.00% in 2020, remaining on hold thereafter. The US economy should remain relatively less affected than the eurozone also in this scenario. The main transmission channel of this shock are higher interest rates and lower stock prices, which directly affect household finances and balance sheets. In particular, this shock with its sizeable negative impact on the stock market should have the largest effect on economic activity in the US, with GDP recording the largest cumulative deviation from the baseline (-3.8pp over three years). The Federal Reserve is expected to cut rates by 25bps in 2019 (to 2.25%) and by a further 125bps in 2020 (to 1.00%), remaining on hold thereafter. Stress Test on Trading Book (€ million) END OF DECEMBER 2018 WIDESPREAD CONTAGION PROTECTIONISM IR SHOCK UniCredit group total -223 -381 -40 RC Germany -185 -362 -80 RC Italy -44 -40 -5 RC Austria -7 -5 7 RC CEE 14 26 38 Most of conditional losses in Trading Book are in UCB AG and UniCredit S.p.A. and are mainly driven by CIB Fixed Income & Currencies and Equity and Derivative Trade business lines in scenarios Widespread Contagion and Protectionism. In Interest Rate Shock scenario conditional losses are lower due to positive contribution of CIB Fixed Income & Currencies business line, driven by Interest Rate shocks defined in this scenario. Conditional profits in Regional Center CEE are driven by impacts of FX and IR defined in scenarios. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 377 The substantial tightening of financial conditions in the euro area is transmitted to the UK economy via the significant trade and capital flows between the two economic areas. UK GDP growth slows to 0.4% in 2019 and the economy enters a mild recession in 2020 that lowers GDP by 0.7%, dragged down by high household and public debt. Inflation slows to just above 1% in 2019 and fluctuates around 0% in 2020 and 2021 as a result of the fall in oil prices and growing spare capacity. The external nature of the shock hits exports. Nonetheless, the current account deficit improves slightly faster than in the baseline scenario as capital markets force a more pronounced adjustment. The BoE cuts the Bank Rate to 0.50% in 2019 and to 0.00% in 2020, remaining on hold thereafter. The US economy should remain relatively less affected than the eurozone also in this scenario. The main transmission channel of this shock are higher interest rates and lower stock prices, which directly affect household finances and balance sheets. In particular, this shock with its sizeable negative impact on the stock market should have the largest effect on economic activity in the US, with GDP recording the largest cumulative deviation from the baseline (-3.8pp over three years). The Federal Reserve is expected to cut rates by 25bps in 2019 (to 2.25%) and by a further 125bps in 2020 (to 1.00%), remaining on hold thereafter. Stress Test on Trading Book (€ million) END OF DECEMBER 2018 WIDESPREAD CONTAGION PROTECTIONISM IR SHOCK UniCredit group total -223 -381 -40 RC Germany -185 -362 -80 RC Italy -44 -40 -5 RC Austria -7 -5 7 RC CEE 14 26 38 Most of conditional losses in Trading Book are in UCB AG and UniCredit S.p.A. and are mainly driven by CIB Fixed Income & Currencies and Equity and Derivative Trade business lines in scenarios Widespread Contagion and Protectionism. In Interest Rate Shock scenario conditional losses are lower due to positive contribution of CIB Fixed Income & Currencies business line, driven by Interest Rate shocks defined in this scenario. Conditional profits in Regional Center CEE are driven by impacts of FX and IR defined in scenarios. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 377 The substantial tightening of financial conditions in the euro area is transmitted to the UK economy via the significant trade and capital flows between the two economic areas. UK GDP growth slows to 0.4% in 2019 and the economy enters a mild recession in 2020 that lowers GDP by 0.7%, dragged down by high household and public debt. Inflation slows to just above 1% in 2019 and fluctuates around 0% in 2020 and 2021 as a result of the fall in oil prices and growing spare capacity. The external nature of the shock hits exports. Nonetheless, the current account deficit improves slightly faster than in the baseline scenario as capital markets force a more pronounced adjustment. The BoE cuts the Bank Rate to 0.50% in 2019 and to 0.00% in 2020, remaining on hold thereafter. The US economy should remain relatively less affected than the eurozone also in this scenario. The main transmission channel of this shock are higher interest rates and lower stock prices, which directly affect household finances and balance sheets. In particular, this shock with its sizeable negative impact on the stock market should have the largest effect on economic activity in the US, with GDP recording the largest cumulative deviation from the baseline (-3.8pp over three years). The Federal Reserve is expected to cut rates by 25bps in 2019 (to 2.25%) and by a further 125bps in 2020 (to 1.00%), remaining on hold thereafter. Stress Test on Trading Book (€ million) END OF DECEMBER 2018 WIDESPREAD CONTAGION PROTECTIONISM IR SHOCK UniCredit group total -223 -381 -40 RC Germany -185 -362 -80 RC Italy -44 -40 -5 RC Austria -7 -5 7 RC CEE 14 26 38 Most of conditional losses in Trading Book are in UCB AG and UniCredit S.p.A. and are mainly driven by CIB Fixed Income & Currencies and Equity and Derivative Trade business lines in scenarios Widespread Contagion and Protectionism. In Interest Rate Shock scenario conditional losses are lower due to positive contribution of CIB Fixed Income & Currencies business line, driven by Interest Rate shocks defined in this scenario. Conditional profits in Regional Center CEE are driven by impacts of FX and IR defined in scenarios. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 377 The substantial tightening of financial conditions in the euro area is transmitted to the UK economy via the significant trade and capital flows between the two economic areas. UK GDP growth slows to 0.4% in 2019 and the economy enters a mild recession in 2020 that lowers GDP by 0.7%, dragged down by high household and public debt. Inflation slows to just above 1% in 2019 and fluctuates around 0% in 2020 and 2021 as a result of the fall in oil prices and growing spare capacity. The external nature of the shock hits exports. Nonetheless, the current account deficit improves slightly faster than in the baseline scenario as capital markets force a more pronounced adjustment. The BoE cuts the Bank Rate to 0.50% in 2019 and to 0.00% in 2020, remaining on hold thereafter. The US economy should remain relatively less affected than the eurozone also in this scenario. The main transmission channel of this shock are higher interest rates and lower stock prices, which directly affect household finances and balance sheets. In particular, this shock with its sizeable negative impact on the stock market should have the largest effect on economic activity in the US, with GDP recording the largest cumulative deviation from the baseline (-3.8pp over three years). The Federal Reserve is expected to cut rates by 25bps in 2019 (to 2.25%) and by a further 125bps in 2020 (to 1.00%), remaining on hold thereafter. Stress Test on Trading Book (€ million) END OF DECEMBER 2018 WIDESPREAD CONTAGION PROTECTIONISM IR SHOCK UniCredit group total -223 -381 -40 RC Germany -185 -362 -80 RC Italy -44 -40 -5 RC Austria -7 -5 7 RC CEE 14 26 38 Most of conditional losses in Trading Book are in UCB AG and UniCredit S.p.A. and are mainly driven by CIB Fixed Income & Currencies and Equity and Derivative Trade business lines in scenarios Widespread Contagion and Protectionism. In Interest Rate Shock scenario conditional losses are lower due to positive contribution of CIB Fixed Income & Currencies business line, driven by Interest Rate shocks defined in this scenario. Conditional profits in Regional Center CEE are driven by impacts of FX and IR defined in scenarios. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 377 The substantial tightening of financial conditions in the euro area is transmitted to the UK economy via the significant trade and capital flows between the two economic areas. UK GDP growth slows to 0.4% in 2019 and the economy enters a mild recession in 2020 that lowers GDP by 0.7%, dragged down by high household and public debt. Inflation slows to just above 1% in 2019 and fluctuates around 0% in 2020 and 2021 as a result of the fall in oil prices and growing spare capacity. The external nature of the shock hits exports. Nonetheless, the current account deficit improves slightly faster than in the baseline scenario as capital markets force a more pronounced adjustment. The BoE cuts the Bank Rate to 0.50% in 2019 and to 0.00% in 2020, remaining on hold thereafter. The US economy should remain relatively less affected than the eurozone also in this scenario. The main transmission channel of this shock are higher interest rates and lower stock prices, which directly affect household finances and balance sheets. In particular, this shock with its sizeable negative impact on the stock market should have the largest effect on economic activity in the US, with GDP recording the largest cumulative deviation from the baseline (-3.8pp over three years). The Federal Reserve is expected to cut rates by 25bps in 2019 (to 2.25%) and by a further 125bps in 2020 (to 1.00%), remaining on hold thereafter. Stress Test on Trading Book (€ million) END OF DECEMBER 2018 WIDESPREAD CONTAGION PROTECTIONISM IR SHOCK UniCredit group total -223 -381 -40 RC Germany -185 -362 -80 RC Italy -44 -40 -5 RC Austria -7 -5 7 RC CEE 14 26 38 Most of conditional losses in Trading Book are in UCB AG and UniCredit S.p.A. and are mainly driven by CIB Fixed Income & Currencies and Equity and Derivative Trade business lines in scenarios Widespread Contagion and Protectionism. In Interest Rate Shock scenario conditional losses are lower due to positive contribution of CIB Fixed Income & Currencies business line, driven by Interest Rate shocks defined in this scenario. Conditional profits in Regional Center CEE are driven by impacts of FX and IR defined in scenarios. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 378 2018 Annual Report and Accounts · UniCredit 2.3 Derivative instruments and hedging policies 2.3.1 Trading financial derivatives A Financial Derivatives A.1 Trading financial derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS UNDERLYING ACTIVITIES/TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 1,340,946,831 421,798,429 119,977,852 54,714,776 a) Options - 127,432,558 22,951,956 6,987,445 b) Swap 1,092,534,735 293,565,871 95,925,107 - c) Forward 242,602,965 800,000 16,727 - d) Futures 5,809,131 - 883,002 47,727,331 e) Other - - 201,060 - 2. Equity instruments and stock indexes - 29,092,991 3,061,101 57,783,418 a) Options - 19,626,823 2,890,005 34,110,547 b) Swap - 9,466,168 1,298 - c) Forward - - - - d) Futures - - - 23,672,821 e) Other - - 169,798 50 3. Gold and currencies 1,040,716 358,345,514 107,721,941 104,560 a) Options - 51,091,858 11,007,476 - b) Swap - 145,679,097 22,872,847 - c) Forward 1,040,716 60,590,945 46,930,154 - d) Futures - - - 104,560 e) Other - 100,983,614 26,911,464 - 4. Commodities - 2,711,820 2,647,957 6,491,989 5. Other - 64,358 841,769 2,422,786 Total 1,341,987,547 812,013,112 234,250,620 121,517,529 This table refers to the notional values of financial derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 378 2018 Annual Report and Accounts · UniCredit 2.3 Derivative instruments and hedging policies 2.3.1 Trading financial derivatives A Financial Derivatives A.1 Trading financial derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS UNDERLYING ACTIVITIES/TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 1,340,946,831 421,798,429 119,977,852 54,714,776 a) Options - 127,432,558 22,951,956 6,987,445 b) Swap 1,092,534,735 293,565,871 95,925,107 - c) Forward 242,602,965 800,000 16,727 - d) Futures 5,809,131 - 883,002 47,727,331 e) Other - - 201,060 - 2. Equity instruments and stock indexes - 29,092,991 3,061,101 57,783,418 a) Options - 19,626,823 2,890,005 34,110,547 b) Swap - 9,466,168 1,298 - c) Forward - - - - d) Futures - - - 23,672,821 e) Other - - 169,798 50 3. Gold and currencies 1,040,716 358,345,514 107,721,941 104,560 a) Options - 51,091,858 11,007,476 - b) Swap - 145,679,097 22,872,847 - c) Forward 1,040,716 60,590,945 46,930,154 - d) Futures - - - 104,560 e) Other - 100,983,614 26,911,464 - 4. Commodities - 2,711,820 2,647,957 6,491,989 5. Other - 64,358 841,769 2,422,786 Total 1,341,987,547 812,013,112 234,250,620 121,517,529 This table refers to the notional values of financial derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 378 2018 Annual Report and Accounts · UniCredit 2.3 Derivative instruments and hedging policies 2.3.1 Trading financial derivatives A Financial Derivatives A.1 Trading financial derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS UNDERLYING ACTIVITIES/TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 1,340,946,831 421,798,429 119,977,852 54,714,776 a) Options - 127,432,558 22,951,956 6,987,445 b) Swap 1,092,534,735 293,565,871 95,925,107 - c) Forward 242,602,965 800,000 16,727 - d) Futures 5,809,131 - 883,002 47,727,331 e) Other - - 201,060 - 2. Equity instruments and stock indexes - 29,092,991 3,061,101 57,783,418 a) Options - 19,626,823 2,890,005 34,110,547 b) Swap - 9,466,168 1,298 - c) Forward - - - - d) Futures - - - 23,672,821 e) Other - - 169,798 50 3. Gold and currencies 1,040,716 358,345,514 107,721,941 104,560 a) Options - 51,091,858 11,007,476 - b) Swap - 145,679,097 22,872,847 - c) Forward 1,040,716 60,590,945 46,930,154 - d) Futures - - - 104,560 e) Other - 100,983,614 26,911,464 - 4. Commodities - 2,711,820 2,647,957 6,491,989 5. Other - 64,358 841,769 2,422,786 Total 1,341,987,547 812,013,112 234,250,620 121,517,529 This table refers to the notional values of financial derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 378 2018 Annual Report and Accounts · UniCredit 2.3 Derivative instruments and hedging policies 2.3.1 Trading financial derivatives A Financial Derivatives A.1 Trading financial derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS UNDERLYING ACTIVITIES/TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 1,340,946,831 421,798,429 119,977,852 54,714,776 a) Options - 127,432,558 22,951,956 6,987,445 b) Swap 1,092,534,735 293,565,871 95,925,107 - c) Forward 242,602,965 800,000 16,727 - d) Futures 5,809,131 - 883,002 47,727,331 e) Other - - 201,060 - 2. Equity instruments and stock indexes - 29,092,991 3,061,101 57,783,418 a) Options - 19,626,823 2,890,005 34,110,547 b) Swap - 9,466,168 1,298 - c) Forward - - - - d) Futures - - - 23,672,821 e) Other - - 169,798 50 3. Gold and currencies 1,040,716 358,345,514 107,721,941 104,560 a) Options - 51,091,858 11,007,476 - b) Swap - 145,679,097 22,872,847 - c) Forward 1,040,716 60,590,945 46,930,154 - d) Futures - - - 104,560 e) Other - 100,983,614 26,911,464 - 4. Commodities - 2,711,820 2,647,957 6,491,989 5. Other - 64,358 841,769 2,422,786 Total 1,341,987,547 812,013,112 234,250,620 121,517,529 This table refers to the notional values of financial derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 378 2018 Annual Report and Accounts · UniCredit 2.3 Derivative instruments and hedging policies 2.3.1 Trading financial derivatives A Financial Derivatives A.1 Trading financial derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS UNDERLYING ACTIVITIES/TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 1,340,946,831 421,798,429 119,977,852 54,714,776 a) Options - 127,432,558 22,951,956 6,987,445 b) Swap 1,092,534,735 293,565,871 95,925,107 - c) Forward 242,602,965 800,000 16,727 - d) Futures 5,809,131 - 883,002 47,727,331 e) Other - - 201,060 - 2. Equity instruments and stock indexes - 29,092,991 3,061,101 57,783,418 a) Options - 19,626,823 2,890,005 34,110,547 b) Swap - 9,466,168 1,298 - c) Forward - - - - d) Futures - - - 23,672,821 e) Other - - 169,798 50 3. Gold and currencies 1,040,716 358,345,514 107,721,941 104,560 a) Options - 51,091,858 11,007,476 - b) Swap - 145,679,097 22,872,847 - c) Forward 1,040,716 60,590,945 46,930,154 - d) Futures - - - 104,560 e) Other - 100,983,614 26,911,464 - 4. Commodities - 2,711,820 2,647,957 6,491,989 5. Other - 64,358 841,769 2,422,786 Total 1,341,987,547 812,013,112 234,250,620 121,517,529 This table refers to the notional values of financial derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 379 A.2 Trading financial derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 3,129,640 1,971,589 2,017,370 b) Interest rate swap 13,201,001 15,889,144 4,240,883 - c) Cross currency swap - 4,903,831 973,966 - d) Equity swap - - 9 - e) Forward 5,797 607,491 914,242 - f) Futures 224 - 1,339 510,242 g) Other - 1,047,587 496,180 2,231 Total 13,207,022 25,577,693 8,598,208 2,529,843 2. Negative fair value a) Options - 4,961,348 278,750 1,974,134 b) Interest rate swap 14,448,013 15,135,465 861,870 - c) Cross currency swap - 4,808,667 735,505 - d) Equity swap - - 4 - e) Forward 11,539 783,704 1,016,423 - f) Futures 5 - 560 2,947,368 g) Other - 1,097,534 474,974 20 Total 14,459,557 26,786,718 3,368,086 4,921,522 This table presents distribution by product of the gross positive and negative financial derivatives’ fair values according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 379 A.2 Trading financial derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 3,129,640 1,971,589 2,017,370 b) Interest rate swap 13,201,001 15,889,144 4,240,883 - c) Cross currency swap - 4,903,831 973,966 - d) Equity swap - - 9 - e) Forward 5,797 607,491 914,242 - f) Futures 224 - 1,339 510,242 g) Other - 1,047,587 496,180 2,231 Total 13,207,022 25,577,693 8,598,208 2,529,843 2. Negative fair value a) Options - 4,961,348 278,750 1,974,134 b) Interest rate swap 14,448,013 15,135,465 861,870 - c) Cross currency swap - 4,808,667 735,505 - d) Equity swap - - 4 - e) Forward 11,539 783,704 1,016,423 - f) Futures 5 - 560 2,947,368 g) Other - 1,097,534 474,974 20 Total 14,459,557 26,786,718 3,368,086 4,921,522 This table presents distribution by product of the gross positive and negative financial derivatives’ fair values according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 379 A.2 Trading financial derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 3,129,640 1,971,589 2,017,370 b) Interest rate swap 13,201,001 15,889,144 4,240,883 - c) Cross currency swap - 4,903,831 973,966 - d) Equity swap - - 9 - e) Forward 5,797 607,491 914,242 - f) Futures 224 - 1,339 510,242 g) Other - 1,047,587 496,180 2,231 Total 13,207,022 25,577,693 8,598,208 2,529,843 2. Negative fair value a) Options - 4,961,348 278,750 1,974,134 b) Interest rate swap 14,448,013 15,135,465 861,870 - c) Cross currency swap - 4,808,667 735,505 - d) Equity swap - - 4 - e) Forward 11,539 783,704 1,016,423 - f) Futures 5 - 560 2,947,368 g) Other - 1,097,534 474,974 20 Total 14,459,557 26,786,718 3,368,086 4,921,522 This table presents distribution by product of the gross positive and negative financial derivatives’ fair values according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 379 A.2 Trading financial derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 3,129,640 1,971,589 2,017,370 b) Interest rate swap 13,201,001 15,889,144 4,240,883 - c) Cross currency swap - 4,903,831 973,966 - d) Equity swap - - 9 - e) Forward 5,797 607,491 914,242 - f) Futures 224 - 1,339 510,242 g) Other - 1,047,587 496,180 2,231 Total 13,207,022 25,577,693 8,598,208 2,529,843 2. Negative fair value a) Options - 4,961,348 278,750 1,974,134 b) Interest rate swap 14,448,013 15,135,465 861,870 - c) Cross currency swap - 4,808,667 735,505 - d) Equity swap - - 4 - e) Forward 11,539 783,704 1,016,423 - f) Futures 5 - 560 2,947,368 g) Other - 1,097,534 474,974 20 Total 14,459,557 26,786,718 3,368,086 4,921,522 This table presents distribution by product of the gross positive and negative financial derivatives’ fair values according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 379 A.2 Trading financial derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 3,129,640 1,971,589 2,017,370 b) Interest rate swap 13,201,001 15,889,144 4,240,883 - c) Cross currency swap - 4,903,831 973,966 - d) Equity swap - - 9 - e) Forward 5,797 607,491 914,242 - f) Futures 224 - 1,339 510,242 g) Other - 1,047,587 496,180 2,231 Total 13,207,022 25,577,693 8,598,208 2,529,843 2. Negative fair value a) Options - 4,961,348 278,750 1,974,134 b) Interest rate swap 14,448,013 15,135,465 861,870 - c) Cross currency swap - 4,808,667 735,505 - d) Equity swap - - 4 - e) Forward 11,539 783,704 1,016,423 - f) Futures 5 - 560 2,947,368 g) Other - 1,097,534 474,974 20 Total 14,459,557 26,786,718 3,368,086 4,921,522 This table presents distribution by product of the gross positive and negative financial derivatives’ fair values according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 380 2018 Annual Report and Accounts · UniCredit A.3 OTC trading financial derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 14,728,973 27,348,383 77,900,496 - Positive fair value X 215,179 358,122 5,219,615 - Negative fair value X 193,124 427,711 280,163 2) Equity instruments and stock indexes - Notional amount X 302,562 1,679,347 1,079,192 - Positive fair value X 25,558 264,308 5,020 - Negative fair value X 56,879 9,480 78,608 3) Gold and currencies - Notional amount X 28,303,170 28,287,080 51,131,691 - Positive fair value X 270,318 670,948 868,612 - Negative fair value X 412,358 478,181 966,524 4) Commodities - Notional amount X 413 242,728 2,404,816 - Positive fair value X 165,270 24,204 460,073 - Negative fair value X 178,439 5,255 100,541 5) Other - Notional amount X 277,664 322,700 241,405 - Positive fair value X 977 189 49,815 - Negative fair value X 3,040 129,047 48,736 Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 1,340,946,831 256,370,770 106,991,757 58,435,902 - Positive fair value 13,206,523 11,522,054 3,151,794 3,567,751 - Negative fair value 14,452,693 14,127,413 4,044,743 944,017 2) Equity instruments and stock indexes - Notional amount - 20,006,790 9,086,201 - - Positive fair value - 580,624 91,224 - - Negative fair value - 671,078 246,775 - 3) Gold and currencies - Notional amount 1,040,716 277,759,864 56,980,249 23,605,401 - Positive fair value 499 4,236,998 994,425 1,270,568 - Negative fair value 6,864 4,931,188 992,677 594,386 4) Commodities - Notional amount - 256,550 79,973 2,375,297 - Positive fair value - 14,426 10,325 137,504 - Negative fair value - 17,156 10,930 107,796 5) Other - Notional amount - - 64,358 - - Positive fair value - - - - - Negative fair value - - - 98,559 This table presents distribution by counterparty of the notional amount and gross positive and negative financial derivatives’ fair values according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 380 2018 Annual Report and Accounts · UniCredit A.3 OTC trading financial derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 14,728,973 27,348,383 77,900,496 - Positive fair value X 215,179 358,122 5,219,615 - Negative fair value X 193,124 427,711 280,163 2) Equity instruments and stock indexes - Notional amount X 302,562 1,679,347 1,079,192 - Positive fair value X 25,558 264,308 5,020 - Negative fair value X 56,879 9,480 78,608 3) Gold and currencies - Notional amount X 28,303,170 28,287,080 51,131,691 - Positive fair value X 270,318 670,948 868,612 - Negative fair value X 412,358 478,181 966,524 4) Commodities - Notional amount X 413 242,728 2,404,816 - Positive fair value X 165,270 24,204 460,073 - Negative fair value X 178,439 5,255 100,541 5) Other - Notional amount X 277,664 322,700 241,405 - Positive fair value X 977 189 49,815 - Negative fair value X 3,040 129,047 48,736 Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 1,340,946,831 256,370,770 106,991,757 58,435,902 - Positive fair value 13,206,523 11,522,054 3,151,794 3,567,751 - Negative fair value 14,452,693 14,127,413 4,044,743 944,017 2) Equity instruments and stock indexes - Notional amount - 20,006,790 9,086,201 - - Positive fair value - 580,624 91,224 - - Negative fair value - 671,078 246,775 - 3) Gold and currencies - Notional amount 1,040,716 277,759,864 56,980,249 23,605,401 - Positive fair value 499 4,236,998 994,425 1,270,568 - Negative fair value 6,864 4,931,188 992,677 594,386 4) Commodities - Notional amount - 256,550 79,973 2,375,297 - Positive fair value - 14,426 10,325 137,504 - Negative fair value - 17,156 10,930 107,796 5) Other - Notional amount - - 64,358 - - Positive fair value - - - - - Negative fair value - - - 98,559 This table presents distribution by counterparty of the notional amount and gross positive and negative financial derivatives’ fair values according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 380 2018 Annual Report and Accounts · UniCredit A.3 OTC trading financial derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 14,728,973 27,348,383 77,900,496 - Positive fair value X 215,179 358,122 5,219,615 - Negative fair value X 193,124 427,711 280,163 2) Equity instruments and stock indexes - Notional amount X 302,562 1,679,347 1,079,192 - Positive fair value X 25,558 264,308 5,020 - Negative fair value X 56,879 9,480 78,608 3) Gold and currencies - Notional amount X 28,303,170 28,287,080 51,131,691 - Positive fair value X 270,318 670,948 868,612 - Negative fair value X 412,358 478,181 966,524 4) Commodities - Notional amount X 413 242,728 2,404,816 - Positive fair value X 165,270 24,204 460,073 - Negative fair value X 178,439 5,255 100,541 5) Other - Notional amount X 277,664 322,700 241,405 - Positive fair value X 977 189 49,815 - Negative fair value X 3,040 129,047 48,736 Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 1,340,946,831 256,370,770 106,991,757 58,435,902 - Positive fair value 13,206,523 11,522,054 3,151,794 3,567,751 - Negative fair value 14,452,693 14,127,413 4,044,743 944,017 2) Equity instruments and stock indexes - Notional amount - 20,006,790 9,086,201 - - Positive fair value - 580,624 91,224 - - Negative fair value - 671,078 246,775 - 3) Gold and currencies - Notional amount 1,040,716 277,759,864 56,980,249 23,605,401 - Positive fair value 499 4,236,998 994,425 1,270,568 - Negative fair value 6,864 4,931,188 992,677 594,386 4) Commodities - Notional amount - 256,550 79,973 2,375,297 - Positive fair value - 14,426 10,325 137,504 - Negative fair value - 17,156 10,930 107,796 5) Other - Notional amount - - 64,358 - - Positive fair value - - - - - Negative fair value - - - 98,559 This table presents distribution by counterparty of the notional amount and gross positive and negative financial derivatives’ fair values according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 380 2018 Annual Report and Accounts · UniCredit A.3 OTC trading financial derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 14,728,973 27,348,383 77,900,496 - Positive fair value X 215,179 358,122 5,219,615 - Negative fair value X 193,124 427,711 280,163 2) Equity instruments and stock indexes - Notional amount X 302,562 1,679,347 1,079,192 - Positive fair value X 25,558 264,308 5,020 - Negative fair value X 56,879 9,480 78,608 3) Gold and currencies - Notional amount X 28,303,170 28,287,080 51,131,691 - Positive fair value X 270,318 670,948 868,612 - Negative fair value X 412,358 478,181 966,524 4) Commodities - Notional amount X 413 242,728 2,404,816 - Positive fair value X 165,270 24,204 460,073 - Negative fair value X 178,439 5,255 100,541 5) Other - Notional amount X 277,664 322,700 241,405 - Positive fair value X 977 189 49,815 - Negative fair value X 3,040 129,047 48,736 Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 1,340,946,831 256,370,770 106,991,757 58,435,902 - Positive fair value 13,206,523 11,522,054 3,151,794 3,567,751 - Negative fair value 14,452,693 14,127,413 4,044,743 944,017 2) Equity instruments and stock indexes - Notional amount - 20,006,790 9,086,201 - - Positive fair value - 580,624 91,224 - - Negative fair value - 671,078 246,775 - 3) Gold and currencies - Notional amount 1,040,716 277,759,864 56,980,249 23,605,401 - Positive fair value 499 4,236,998 994,425 1,270,568 - Negative fair value 6,864 4,931,188 992,677 594,386 4) Commodities - Notional amount - 256,550 79,973 2,375,297 - Positive fair value - 14,426 10,325 137,504 - Negative fair value - 17,156 10,930 107,796 5) Other - Notional amount - - 64,358 - - Positive fair value - - - - - Negative fair value - - - 98,559 This table presents distribution by counterparty of the notional amount and gross positive and negative financial derivatives’ fair values according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 380 2018 Annual Report and Accounts · UniCredit A.3 OTC trading financial derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 14,728,973 27,348,383 77,900,496 - Positive fair value X 215,179 358,122 5,219,615 - Negative fair value X 193,124 427,711 280,163 2) Equity instruments and stock indexes - Notional amount X 302,562 1,679,347 1,079,192 - Positive fair value X 25,558 264,308 5,020 - Negative fair value X 56,879 9,480 78,608 3) Gold and currencies - Notional amount X 28,303,170 28,287,080 51,131,691 - Positive fair value X 270,318 670,948 868,612 - Negative fair value X 412,358 478,181 966,524 4) Commodities - Notional amount X 413 242,728 2,404,816 - Positive fair value X 165,270 24,204 460,073 - Negative fair value X 178,439 5,255 100,541 5) Other - Notional amount X 277,664 322,700 241,405 - Positive fair value X 977 189 49,815 - Negative fair value X 3,040 129,047 48,736 Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 1,340,946,831 256,370,770 106,991,757 58,435,902 - Positive fair value 13,206,523 11,522,054 3,151,794 3,567,751 - Negative fair value 14,452,693 14,127,413 4,044,743 944,017 2) Equity instruments and stock indexes - Notional amount - 20,006,790 9,086,201 - - Positive fair value - 580,624 91,224 - - Negative fair value - 671,078 246,775 - 3) Gold and currencies - Notional amount 1,040,716 277,759,864 56,980,249 23,605,401 - Positive fair value 499 4,236,998 994,425 1,270,568 - Negative fair value 6,864 4,931,188 992,677 594,386 4) Commodities - Notional amount - 256,550 79,973 2,375,297 - Positive fair value - 14,426 10,325 137,504 - Negative fair value - 17,156 10,930 107,796 5) Other - Notional amount - - 64,358 - - Positive fair value - - - - - Negative fair value - - - 98,559 This table presents distribution by counterparty of the notional amount and gross positive and negative financial derivatives’ fair values according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 381 A.4 OTC financial derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 630,664,441 703,201,334 548,857,336 1,882,723,111 A.2 Financial derivative contracts on equity securities and stock indexes 15,010,655 12,779,792 4,363,647 32,154,094 A.3 Financial derivative contracts on exchange rates and hold 310,672,231 114,783,737 41,651,938 467,107,906 A.4 Financial derivative contracts on other values 4,321,138 1,013,474 25,166 5,359,778 A.5 Other financial derivatives 558,124 297,704 50,300 906,128 Total 12.31.2018 961,226,589 832,076,041 594,948,387 2,388,251,017 B. Credit derivatives B.1 Trading credit derivatives: end of period notional amounts (€ '000) TRADING DERIVATIVES CATEGORY OF TRANSACTIONS WITH A SINGLE COUNTERPARTY WITH MORE THAN ONE COUNTERPARTY (BASKET) 1. Protection buyer's contracts a) Credit default products 7,088,924 6,308,603 b) Credit spread products - - c) Total rate of return swap 548,538 - d) Other - - Total 12.31.2018 7,637,462 6,308,603 2. Protection seller's contracts a) Credit default products 6,702,261 6,460,849 b) Credit spread products - - c) Total rate of return swap 690,883 - d) Other - - Total 12.31.2018 7,393,144 6,460,849 This table refers to the notional values of credit derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. B.2 Trading credit derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT TYPES OF DERIVATIVE INSTRUMENTS 12.31.2018 1. Positive fair value a) Credit default products 202,709 b) Credit spread products - c) Total rate of return swap 7,884 d) Other - Total 210,593 2. Negative fair value a) Credit default products 214,580 b) Credit spread products - c) Total rate of return swap 139,297 d) Other - Total 353,877 This table presents distribution by product of the gross positive and negative credit derivatives’ fair values according to classification within the accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 381 A.4 OTC financial derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 630,664,441 703,201,334 548,857,336 1,882,723,111 A.2 Financial derivative contracts on equity securities and stock indexes 15,010,655 12,779,792 4,363,647 32,154,094 A.3 Financial derivative contracts on exchange rates and hold 310,672,231 114,783,737 41,651,938 467,107,906 A.4 Financial derivative contracts on other values 4,321,138 1,013,474 25,166 5,359,778 A.5 Other financial derivatives 558,124 297,704 50,300 906,128 Total 12.31.2018 961,226,589 832,076,041 594,948,387 2,388,251,017 B. Credit derivatives B.1 Trading credit derivatives: end of period notional amounts (€ '000) TRADING DERIVATIVES CATEGORY OF TRANSACTIONS WITH A SINGLE COUNTERPARTY WITH MORE THAN ONE COUNTERPARTY (BASKET) 1. Protection buyer's contracts a) Credit default products 7,088,924 6,308,603 b) Credit spread products - - c) Total rate of return swap 548,538 - d) Other - - Total 12.31.2018 7,637,462 6,308,603 2. Protection seller's contracts a) Credit default products 6,702,261 6,460,849 b) Credit spread products - - c) Total rate of return swap 690,883 - d) Other - - Total 12.31.2018 7,393,144 6,460,849 This table refers to the notional values of credit derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. B.2 Trading credit derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT TYPES OF DERIVATIVE INSTRUMENTS 12.31.2018 1. Positive fair value a) Credit default products 202,709 b) Credit spread products - c) Total rate of return swap 7,884 d) Other - Total 210,593 2. Negative fair value a) Credit default products 214,580 b) Credit spread products - c) Total rate of return swap 139,297 d) Other - Total 353,877 This table presents distribution by product of the gross positive and negative credit derivatives’ fair values according to classification within the accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 381 A.4 OTC financial derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 630,664,441 703,201,334 548,857,336 1,882,723,111 A.2 Financial derivative contracts on equity securities and stock indexes 15,010,655 12,779,792 4,363,647 32,154,094 A.3 Financial derivative contracts on exchange rates and hold 310,672,231 114,783,737 41,651,938 467,107,906 A.4 Financial derivative contracts on other values 4,321,138 1,013,474 25,166 5,359,778 A.5 Other financial derivatives 558,124 297,704 50,300 906,128 Total 12.31.2018 961,226,589 832,076,041 594,948,387 2,388,251,017 B. Credit derivatives B.1 Trading credit derivatives: end of period notional amounts (€ '000) TRADING DERIVATIVES CATEGORY OF TRANSACTIONS WITH A SINGLE COUNTERPARTY WITH MORE THAN ONE COUNTERPARTY (BASKET) 1. Protection buyer's contracts a) Credit default products 7,088,924 6,308,603 b) Credit spread products - - c) Total rate of return swap 548,538 - d) Other - - Total 12.31.2018 7,637,462 6,308,603 2. Protection seller's contracts a) Credit default products 6,702,261 6,460,849 b) Credit spread products - - c) Total rate of return swap 690,883 - d) Other - - Total 12.31.2018 7,393,144 6,460,849 This table refers to the notional values of credit derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. B.2 Trading credit derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT TYPES OF DERIVATIVE INSTRUMENTS 12.31.2018 1. Positive fair value a) Credit default products 202,709 b) Credit spread products - c) Total rate of return swap 7,884 d) Other - Total 210,593 2. Negative fair value a) Credit default products 214,580 b) Credit spread products - c) Total rate of return swap 139,297 d) Other - Total 353,877 This table presents distribution by product of the gross positive and negative credit derivatives’ fair values according to classification within the accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 381 A.4 OTC financial derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 630,664,441 703,201,334 548,857,336 1,882,723,111 A.2 Financial derivative contracts on equity securities and stock indexes 15,010,655 12,779,792 4,363,647 32,154,094 A.3 Financial derivative contracts on exchange rates and hold 310,672,231 114,783,737 41,651,938 467,107,906 A.4 Financial derivative contracts on other values 4,321,138 1,013,474 25,166 5,359,778 A.5 Other financial derivatives 558,124 297,704 50,300 906,128 Total 12.31.2018 961,226,589 832,076,041 594,948,387 2,388,251,017 B. Credit derivatives B.1 Trading credit derivatives: end of period notional amounts (€ '000) TRADING DERIVATIVES CATEGORY OF TRANSACTIONS WITH A SINGLE COUNTERPARTY WITH MORE THAN ONE COUNTERPARTY (BASKET) 1. Protection buyer's contracts a) Credit default products 7,088,924 6,308,603 b) Credit spread products - - c) Total rate of return swap 548,538 - d) Other - - Total 12.31.2018 7,637,462 6,308,603 2. Protection seller's contracts a) Credit default products 6,702,261 6,460,849 b) Credit spread products - - c) Total rate of return swap 690,883 - d) Other - - Total 12.31.2018 7,393,144 6,460,849 This table refers to the notional values of credit derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. B.2 Trading credit derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT TYPES OF DERIVATIVE INSTRUMENTS 12.31.2018 1. Positive fair value a) Credit default products 202,709 b) Credit spread products - c) Total rate of return swap 7,884 d) Other - Total 210,593 2. Negative fair value a) Credit default products 214,580 b) Credit spread products - c) Total rate of return swap 139,297 d) Other - Total 353,877 This table presents distribution by product of the gross positive and negative credit derivatives’ fair values according to classification within the accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 381 A.4 OTC financial derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 630,664,441 703,201,334 548,857,336 1,882,723,111 A.2 Financial derivative contracts on equity securities and stock indexes 15,010,655 12,779,792 4,363,647 32,154,094 A.3 Financial derivative contracts on exchange rates and hold 310,672,231 114,783,737 41,651,938 467,107,906 A.4 Financial derivative contracts on other values 4,321,138 1,013,474 25,166 5,359,778 A.5 Other financial derivatives 558,124 297,704 50,300 906,128 Total 12.31.2018 961,226,589 832,076,041 594,948,387 2,388,251,017 B. Credit derivatives B.1 Trading credit derivatives: end of period notional amounts (€ '000) TRADING DERIVATIVES CATEGORY OF TRANSACTIONS WITH A SINGLE COUNTERPARTY WITH MORE THAN ONE COUNTERPARTY (BASKET) 1. Protection buyer's contracts a) Credit default products 7,088,924 6,308,603 b) Credit spread products - - c) Total rate of return swap 548,538 - d) Other - - Total 12.31.2018 7,637,462 6,308,603 2. Protection seller's contracts a) Credit default products 6,702,261 6,460,849 b) Credit spread products - - c) Total rate of return swap 690,883 - d) Other - - Total 12.31.2018 7,393,144 6,460,849 This table refers to the notional values of credit derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. B.2 Trading credit derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT TYPES OF DERIVATIVE INSTRUMENTS 12.31.2018 1. Positive fair value a) Credit default products 202,709 b) Credit spread products - c) Total rate of return swap 7,884 d) Other - Total 210,593 2. Negative fair value a) Credit default products 214,580 b) Credit spread products - c) Total rate of return swap 139,297 d) Other - Total 353,877 This table presents distribution by product of the gross positive and negative credit derivatives’ fair values according to classification within the accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 382 2018 Annual Report and Accounts · UniCredit B.3 OTC trading credit derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Protection buyer's contracts - Notional amount X 370,752 177,786 - - Positive fair value X 715 - - - Negative fair value X 9,967 14,181 - 2) Protection seller's contracts - Notional amount X 668,602 22,281 - - Positive fair value X 7,169 - - - Negative fair value X 111,641 3,508 - Contracts included in netting agreement 1) Protection buyer's contracts - Notional amount 50,000 7,123,372 6,224,155 - - Positive fair value 28 43,337 23,496 - - Negative fair value 154 63,343 82,353 - 2) Protection seller's contracts - Notional amount 42,400 6,044,255 7,076,455 - - Positive fair value 322 52,038 83,488 - - Negative fair value 384 38,216 30,130 - This table presents distribution by counterparty of the notional amount and gross positive and negative credit derivatives’ fair values according to classification within the accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. B.4 OTC trading credit derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL 1. Protection buyer's contracts 6,830,464 6,844,574 178,956 13,853,994 2. Protection seller's contracts 6,564,585 6,937,879 443,601 13,946,065 Total 12.31.2018 13,395,049 13,782,453 622,557 27,800,059 This table refers to the notional values of credit derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. B.5 Credit derivatives linked to fair value option: annual changes No data to be disclosed. 2.3.2 Hending policies Qualitative information Hedging derivative transactions are used to manage the exposure to market risks and volatility of financial outcomes that arise as part of our normal business operations and are executed in accordance with internal policies. Derivatives are mainly used to manage of the banking book interest rate risk with the following goals: • reducing banking book interest rate risk profile according to Risk Appetite Framework approved by the Board of Directors and limits defined by relevant Committees or risk functions. Within Risk Appetite Framework, the banking book exposure to interest rate risk is defined either in terms of Net Interest Income Sensitivity and Economic Value Sensitivity; • optimizing the natural hedge between the risk profile of assets and liabilities using derivatives to manage the mismatch, even temporary, between the volume and the rates of assets and liabilities with different repricing schedules; • minimizing the net exposure of derivatives used for hedging either assets and liabilities. A Fair value hedging operations The objective of fair value hedge on assets/liabilities is to hedge the exposure to changes in fair value coming from the embedded risk factor subject to an hedging transaction. The fair value hedge is applied both for identified financial instruments (securities, debt issues, loans, borrowings) and for portfolios of financial instruments (in particular, fixed rate loans and non-maturity deposits). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 382 2018 Annual Report and Accounts · UniCredit B.3 OTC trading credit derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Protection buyer's contracts - Notional amount X 370,752 177,786 - - Positive fair value X 715 - - - Negative fair value X 9,967 14,181 - 2) Protection seller's contracts - Notional amount X 668,602 22,281 - - Positive fair value X 7,169 - - - Negative fair value X 111,641 3,508 - Contracts included in netting agreement 1) Protection buyer's contracts - Notional amount 50,000 7,123,372 6,224,155 - - Positive fair value 28 43,337 23,496 - - Negative fair value 154 63,343 82,353 - 2) Protection seller's contracts - Notional amount 42,400 6,044,255 7,076,455 - - Positive fair value 322 52,038 83,488 - - Negative fair value 384 38,216 30,130 - This table presents distribution by counterparty of the notional amount and gross positive and negative credit derivatives’ fair values according to classification within the accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. B.4 OTC trading credit derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL 1. Protection buyer's contracts 6,830,464 6,844,574 178,956 13,853,994 2. Protection seller's contracts 6,564,585 6,937,879 443,601 13,946,065 Total 12.31.2018 13,395,049 13,782,453 622,557 27,800,059 This table refers to the notional values of credit derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. B.5 Credit derivatives linked to fair value option: annual changes No data to be disclosed. 2.3.2 Hending policies Qualitative information Hedging derivative transactions are used to manage the exposure to market risks and volatility of financial outcomes that arise as part of our normal business operations and are executed in accordance with internal policies. Derivatives are mainly used to manage of the banking book interest rate risk with the following goals: • reducing banking book interest rate risk profile according to Risk Appetite Framework approved by the Board of Directors and limits defined by relevant Committees or risk functions. Within Risk Appetite Framework, the banking book exposure to interest rate risk is defined either in terms of Net Interest Income Sensitivity and Economic Value Sensitivity; • optimizing the natural hedge between the risk profile of assets and liabilities using derivatives to manage the mismatch, even temporary, between the volume and the rates of assets and liabilities with different repricing schedules; • minimizing the net exposure of derivatives used for hedging either assets and liabilities. A Fair value hedging operations The objective of fair value hedge on assets/liabilities is to hedge the exposure to changes in fair value coming from the embedded risk factor subject to an hedging transaction. The fair value hedge is applied both for identified financial instruments (securities, debt issues, loans, borrowings) and for portfolios of financial instruments (in particular, fixed rate loans and non-maturity deposits). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 382 2018 Annual Report and Accounts · UniCredit B.3 OTC trading credit derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Protection buyer's contracts - Notional amount X 370,752 177,786 - - Positive fair value X 715 - - - Negative fair value X 9,967 14,181 - 2) Protection seller's contracts - Notional amount X 668,602 22,281 - - Positive fair value X 7,169 - - - Negative fair value X 111,641 3,508 - Contracts included in netting agreement 1) Protection buyer's contracts - Notional amount 50,000 7,123,372 6,224,155 - - Positive fair value 28 43,337 23,496 - - Negative fair value 154 63,343 82,353 - 2) Protection seller's contracts - Notional amount 42,400 6,044,255 7,076,455 - - Positive fair value 322 52,038 83,488 - - Negative fair value 384 38,216 30,130 - This table presents distribution by counterparty of the notional amount and gross positive and negative credit derivatives’ fair values according to classification within the accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. B.4 OTC trading credit derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL 1. Protection buyer's contracts 6,830,464 6,844,574 178,956 13,853,994 2. Protection seller's contracts 6,564,585 6,937,879 443,601 13,946,065 Total 12.31.2018 13,395,049 13,782,453 622,557 27,800,059 This table refers to the notional values of credit derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. B.5 Credit derivatives linked to fair value option: annual changes No data to be disclosed. 2.3.2 Hending policies Qualitative information Hedging derivative transactions are used to manage the exposure to market risks and volatility of financial outcomes that arise as part of our normal business operations and are executed in accordance with internal policies. Derivatives are mainly used to manage of the banking book interest rate risk with the following goals: • reducing banking book interest rate risk profile according to Risk Appetite Framework approved by the Board of Directors and limits defined by relevant Committees or risk functions. Within Risk Appetite Framework, the banking book exposure to interest rate risk is defined either in terms of Net Interest Income Sensitivity and Economic Value Sensitivity; • optimizing the natural hedge between the risk profile of assets and liabilities using derivatives to manage the mismatch, even temporary, between the volume and the rates of assets and liabilities with different repricing schedules; • minimizing the net exposure of derivatives used for hedging either assets and liabilities. A Fair value hedging operations The objective of fair value hedge on assets/liabilities is to hedge the exposure to changes in fair value coming from the embedded risk factor subject to an hedging transaction. The fair value hedge is applied both for identified financial instruments (securities, debt issues, loans, borrowings) and for portfolios of financial instruments (in particular, fixed rate loans and non-maturity deposits). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 382 2018 Annual Report and Accounts · UniCredit B.3 OTC trading credit derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Protection buyer's contracts - Notional amount X 370,752 177,786 - - Positive fair value X 715 - - - Negative fair value X 9,967 14,181 - 2) Protection seller's contracts - Notional amount X 668,602 22,281 - - Positive fair value X 7,169 - - - Negative fair value X 111,641 3,508 - Contracts included in netting agreement 1) Protection buyer's contracts - Notional amount 50,000 7,123,372 6,224,155 - - Positive fair value 28 43,337 23,496 - - Negative fair value 154 63,343 82,353 - 2) Protection seller's contracts - Notional amount 42,400 6,044,255 7,076,455 - - Positive fair value 322 52,038 83,488 - - Negative fair value 384 38,216 30,130 - This table presents distribution by counterparty of the notional amount and gross positive and negative credit derivatives’ fair values according to classification within the accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. B.4 OTC trading credit derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL 1. Protection buyer's contracts 6,830,464 6,844,574 178,956 13,853,994 2. Protection seller's contracts 6,564,585 6,937,879 443,601 13,946,065 Total 12.31.2018 13,395,049 13,782,453 622,557 27,800,059 This table refers to the notional values of credit derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. B.5 Credit derivatives linked to fair value option: annual changes No data to be disclosed. 2.3.2 Hending policies Qualitative information Hedging derivative transactions are used to manage the exposure to market risks and volatility of financial outcomes that arise as part of our normal business operations and are executed in accordance with internal policies. Derivatives are mainly used to manage of the banking book interest rate risk with the following goals: • reducing banking book interest rate risk profile according to Risk Appetite Framework approved by the Board of Directors and limits defined by relevant Committees or risk functions. Within Risk Appetite Framework, the banking book exposure to interest rate risk is defined either in terms of Net Interest Income Sensitivity and Economic Value Sensitivity; • optimizing the natural hedge between the risk profile of assets and liabilities using derivatives to manage the mismatch, even temporary, between the volume and the rates of assets and liabilities with different repricing schedules; • minimizing the net exposure of derivatives used for hedging either assets and liabilities. A Fair value hedging operations The objective of fair value hedge on assets/liabilities is to hedge the exposure to changes in fair value coming from the embedded risk factor subject to an hedging transaction. The fair value hedge is applied both for identified financial instruments (securities, debt issues, loans, borrowings) and for portfolios of financial instruments (in particular, fixed rate loans and non-maturity deposits). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 382 2018 Annual Report and Accounts · UniCredit B.3 OTC trading credit derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Protection buyer's contracts - Notional amount X 370,752 177,786 - - Positive fair value X 715 - - - Negative fair value X 9,967 14,181 - 2) Protection seller's contracts - Notional amount X 668,602 22,281 - - Positive fair value X 7,169 - - - Negative fair value X 111,641 3,508 - Contracts included in netting agreement 1) Protection buyer's contracts - Notional amount 50,000 7,123,372 6,224,155 - - Positive fair value 28 43,337 23,496 - - Negative fair value 154 63,343 82,353 - 2) Protection seller's contracts - Notional amount 42,400 6,044,255 7,076,455 - - Positive fair value 322 52,038 83,488 - - Negative fair value 384 38,216 30,130 - This table presents distribution by counterparty of the notional amount and gross positive and negative credit derivatives’ fair values according to classification within the accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. B.4 OTC trading credit derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL 1. Protection buyer's contracts 6,830,464 6,844,574 178,956 13,853,994 2. Protection seller's contracts 6,564,585 6,937,879 443,601 13,946,065 Total 12.31.2018 13,395,049 13,782,453 622,557 27,800,059 This table refers to the notional values of credit derivatives according to classification within accounting trading portfolio applied in the separate financial statements of the Legal Entities belonging to Banking Group. B.5 Credit derivatives linked to fair value option: annual changes No data to be disclosed. 2.3.2 Hending policies Qualitative information Hedging derivative transactions are used to manage the exposure to market risks and volatility of financial outcomes that arise as part of our normal business operations and are executed in accordance with internal policies. Derivatives are mainly used to manage of the banking book interest rate risk with the following goals: • reducing banking book interest rate risk profile according to Risk Appetite Framework approved by the Board of Directors and limits defined by relevant Committees or risk functions. Within Risk Appetite Framework, the banking book exposure to interest rate risk is defined either in terms of Net Interest Income Sensitivity and Economic Value Sensitivity; • optimizing the natural hedge between the risk profile of assets and liabilities using derivatives to manage the mismatch, even temporary, between the volume and the rates of assets and liabilities with different repricing schedules; • minimizing the net exposure of derivatives used for hedging either assets and liabilities. A Fair value hedging operations The objective of fair value hedge on assets/liabilities is to hedge the exposure to changes in fair value coming from the embedded risk factor subject to an hedging transaction. The fair value hedge is applied both for identified financial instruments (securities, debt issues, loans, borrowings) and for portfolios of financial instruments (in particular, fixed rate loans and non-maturity deposits). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 383 The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. The hedging strategy on identified financial instruments classified as Held-to-Collect (HTC) and Held-to-Collect & Sell (HTCS) considers the contractual features of each instruments and business intent. The hedging strategy on portfolios of financial instruments refers to the amounts of money contained in the portfolio of interest rate exposures that are not already subject to "micro/specific" hedging and mirrors to the nominal amount and financial conditions of hedging derivatives The objective of fair value hedge on assets/liabilities denominated in foreign currency is to hedge the exposure to changes in fair value by converting to Euro denominated assets/liabilities. The hedging instruments used mainly consist of interest rate swaps, basis swaps, caps, floors and cross currencies swaps. B. Cash flow hedging operations The objective of cash flow hedge on floating rate assets/liabilities is to hedge the exposure to changes in cash flows from borrowings/lendings that bear a floating interest rate. The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. Cash flow hedges are particularly used to hedge interest rate risk on floating-rate assets and liabilities, including rollovers, and foreign exchange risks on highly probable forecast foreign currency revenues. The hedging instruments used mainly consist of interest rate swaps, caps, floors, cross-currency swaps with a maturity up to 20-30year for some commercial assets. C. Foreign net investments hedge activities No hedging strategy is in place on an investment in entities whose functional currency differs from the Group’s functional currency. The Group put in place some economic hedges on forecasted foreign currency revenues stemming from those entities. The objective of the economic hedge on is to reduce the volatility on the income statement coming from the foreign exchange risks. FX risk on forecasted foreign currency revenues is continuously monitored and hedging strategies are periodically assessed. The hedging strategy and the percentage to be hedged is defined on a case by case basis considering, inter alia, the diversification effect and taking into account the volatility and correlation in the FX rates. The derivatives used consist mainly of currency options. These derivatives may not qualify or should be not qualify for hedge accounting even though achieves substantially the same economic results. The impact of economic hedge is accounted in Line 80 - Trading Income line. D. Hedging instruments and E. Hedged elements Prospective hedge effectiveness is established by the fact that all derivatives must, at inception, have the effect of reducing interest rate risk in term of Economic Value Sensitivity (Fair Value Hedge) or Net Interest Income Sensitivity (Cash Flow Hedge) in the specific/portfolio of hedged underlyings. Retrospectively the hedge effectiveness is quarterly measured by referring to the most stable portion of assets / liabilities using a portfolio hedge approach or by referring to the portion of risk being hedged using a micro/specific approach. Sources of ineffectiveness comes from (i) the Euribor/Eonia basis for hedging derivatives transactions subject to a collateral agreement, (ii) Credit/Debit Value and Funding Value adjustment impacting derivative transactions fair values, (iii) shortfall arising in the underlying’s specifically associated with that hedge in term of nominal or reverse sensitivity due to prepayment or default on commercial assets or withdrawals on liabilities included such as commercial non maturity deposits and are presented in Line 90 - Net Gains (Losses) on Hedge Accounting. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 383 The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. The hedging strategy on identified financial instruments classified as Held-to-Collect (HTC) and Held-to-Collect & Sell (HTCS) considers the contractual features of each instruments and business intent. The hedging strategy on portfolios of financial instruments refers to the amounts of money contained in the portfolio of interest rate exposures that are not already subject to "micro/specific" hedging and mirrors to the nominal amount and financial conditions of hedging derivatives The objective of fair value hedge on assets/liabilities denominated in foreign currency is to hedge the exposure to changes in fair value by converting to Euro denominated assets/liabilities. The hedging instruments used mainly consist of interest rate swaps, basis swaps, caps, floors and cross currencies swaps. B. Cash flow hedging operations The objective of cash flow hedge on floating rate assets/liabilities is to hedge the exposure to changes in cash flows from borrowings/lendings that bear a floating interest rate. The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. Cash flow hedges are particularly used to hedge interest rate risk on floating-rate assets and liabilities, including rollovers, and foreign exchange risks on highly probable forecast foreign currency revenues. The hedging instruments used mainly consist of interest rate swaps, caps, floors, cross-currency swaps with a maturity up to 20-30year for some commercial assets. C. Foreign net investments hedge activities No hedging strategy is in place on an investment in entities whose functional currency differs from the Group’s functional currency. The Group put in place some economic hedges on forecasted foreign currency revenues stemming from those entities. The objective of the economic hedge on is to reduce the volatility on the income statement coming from the foreign exchange risks. FX risk on forecasted foreign currency revenues is continuously monitored and hedging strategies are periodically assessed. The hedging strategy and the percentage to be hedged is defined on a case by case basis considering, inter alia, the diversification effect and taking into account the volatility and correlation in the FX rates. The derivatives used consist mainly of currency options. These derivatives may not qualify or should be not qualify for hedge accounting even though achieves substantially the same economic results. The impact of economic hedge is accounted in Line 80 - Trading Income line. D. Hedging instruments and E. Hedged elements Prospective hedge effectiveness is established by the fact that all derivatives must, at inception, have the effect of reducing interest rate risk in term of Economic Value Sensitivity (Fair Value Hedge) or Net Interest Income Sensitivity (Cash Flow Hedge) in the specific/portfolio of hedged underlyings. Retrospectively the hedge effectiveness is quarterly measured by referring to the most stable portion of assets / liabilities using a portfolio hedge approach or by referring to the portion of risk being hedged using a micro/specific approach. Sources of ineffectiveness comes from (i) the Euribor/Eonia basis for hedging derivatives transactions subject to a collateral agreement, (ii) Credit/Debit Value and Funding Value adjustment impacting derivative transactions fair values, (iii) shortfall arising in the underlying’s specifically associated with that hedge in term of nominal or reverse sensitivity due to prepayment or default on commercial assets or withdrawals on liabilities included such as commercial non maturity deposits and are presented in Line 90 - Net Gains (Losses) on Hedge Accounting. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 383 The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. The hedging strategy on identified financial instruments classified as Held-to-Collect (HTC) and Held-to-Collect & Sell (HTCS) considers the contractual features of each instruments and business intent. The hedging strategy on portfolios of financial instruments refers to the amounts of money contained in the portfolio of interest rate exposures that are not already subject to "micro/specific" hedging and mirrors to the nominal amount and financial conditions of hedging derivatives The objective of fair value hedge on assets/liabilities denominated in foreign currency is to hedge the exposure to changes in fair value by converting to Euro denominated assets/liabilities. The hedging instruments used mainly consist of interest rate swaps, basis swaps, caps, floors and cross currencies swaps. B. Cash flow hedging operations The objective of cash flow hedge on floating rate assets/liabilities is to hedge the exposure to changes in cash flows from borrowings/lendings that bear a floating interest rate. The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. Cash flow hedges are particularly used to hedge interest rate risk on floating-rate assets and liabilities, including rollovers, and foreign exchange risks on highly probable forecast foreign currency revenues. The hedging instruments used mainly consist of interest rate swaps, caps, floors, cross-currency swaps with a maturity up to 20-30year for some commercial assets. C. Foreign net investments hedge activities No hedging strategy is in place on an investment in entities whose functional currency differs from the Group’s functional currency. The Group put in place some economic hedges on forecasted foreign currency revenues stemming from those entities. The objective of the economic hedge on is to reduce the volatility on the income statement coming from the foreign exchange risks. FX risk on forecasted foreign currency revenues is continuously monitored and hedging strategies are periodically assessed. The hedging strategy and the percentage to be hedged is defined on a case by case basis considering, inter alia, the diversification effect and taking into account the volatility and correlation in the FX rates. The derivatives used consist mainly of currency options. These derivatives may not qualify or should be not qualify for hedge accounting even though achieves substantially the same economic results. The impact of economic hedge is accounted in Line 80 - Trading Income line. D. Hedging instruments and E. Hedged elements Prospective hedge effectiveness is established by the fact that all derivatives must, at inception, have the effect of reducing interest rate risk in term of Economic Value Sensitivity (Fair Value Hedge) or Net Interest Income Sensitivity (Cash Flow Hedge) in the specific/portfolio of hedged underlyings. Retrospectively the hedge effectiveness is quarterly measured by referring to the most stable portion of assets / liabilities using a portfolio hedge approach or by referring to the portion of risk being hedged using a micro/specific approach. Sources of ineffectiveness comes from (i) the Euribor/Eonia basis for hedging derivatives transactions subject to a collateral agreement, (ii) Credit/Debit Value and Funding Value adjustment impacting derivative transactions fair values, (iii) shortfall arising in the underlying’s specifically associated with that hedge in term of nominal or reverse sensitivity due to prepayment or default on commercial assets or withdrawals on liabilities included such as commercial non maturity deposits and are presented in Line 90 - Net Gains (Losses) on Hedge Accounting. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 383 The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. The hedging strategy on identified financial instruments classified as Held-to-Collect (HTC) and Held-to-Collect & Sell (HTCS) considers the contractual features of each instruments and business intent. The hedging strategy on portfolios of financial instruments refers to the amounts of money contained in the portfolio of interest rate exposures that are not already subject to "micro/specific" hedging and mirrors to the nominal amount and financial conditions of hedging derivatives The objective of fair value hedge on assets/liabilities denominated in foreign currency is to hedge the exposure to changes in fair value by converting to Euro denominated assets/liabilities. The hedging instruments used mainly consist of interest rate swaps, basis swaps, caps, floors and cross currencies swaps. B. Cash flow hedging operations The objective of cash flow hedge on floating rate assets/liabilities is to hedge the exposure to changes in cash flows from borrowings/lendings that bear a floating interest rate. The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. Cash flow hedges are particularly used to hedge interest rate risk on floating-rate assets and liabilities, including rollovers, and foreign exchange risks on highly probable forecast foreign currency revenues. The hedging instruments used mainly consist of interest rate swaps, caps, floors, cross-currency swaps with a maturity up to 20-30year for some commercial assets. C. Foreign net investments hedge activities No hedging strategy is in place on an investment in entities whose functional currency differs from the Group’s functional currency. The Group put in place some economic hedges on forecasted foreign currency revenues stemming from those entities. The objective of the economic hedge on is to reduce the volatility on the income statement coming from the foreign exchange risks. FX risk on forecasted foreign currency revenues is continuously monitored and hedging strategies are periodically assessed. The hedging strategy and the percentage to be hedged is defined on a case by case basis considering, inter alia, the diversification effect and taking into account the volatility and correlation in the FX rates. The derivatives used consist mainly of currency options. These derivatives may not qualify or should be not qualify for hedge accounting even though achieves substantially the same economic results. The impact of economic hedge is accounted in Line 80 - Trading Income line. D. Hedging instruments and E. Hedged elements Prospective hedge effectiveness is established by the fact that all derivatives must, at inception, have the effect of reducing interest rate risk in term of Economic Value Sensitivity (Fair Value Hedge) or Net Interest Income Sensitivity (Cash Flow Hedge) in the specific/portfolio of hedged underlyings. Retrospectively the hedge effectiveness is quarterly measured by referring to the most stable portion of assets / liabilities using a portfolio hedge approach or by referring to the portion of risk being hedged using a micro/specific approach. Sources of ineffectiveness comes from (i) the Euribor/Eonia basis for hedging derivatives transactions subject to a collateral agreement, (ii) Credit/Debit Value and Funding Value adjustment impacting derivative transactions fair values, (iii) shortfall arising in the underlying’s specifically associated with that hedge in term of nominal or reverse sensitivity due to prepayment or default on commercial assets or withdrawals on liabilities included such as commercial non maturity deposits and are presented in Line 90 - Net Gains (Losses) on Hedge Accounting. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 383 The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. The hedging strategy on identified financial instruments classified as Held-to-Collect (HTC) and Held-to-Collect & Sell (HTCS) considers the contractual features of each instruments and business intent. The hedging strategy on portfolios of financial instruments refers to the amounts of money contained in the portfolio of interest rate exposures that are not already subject to "micro/specific" hedging and mirrors to the nominal amount and financial conditions of hedging derivatives The objective of fair value hedge on assets/liabilities denominated in foreign currency is to hedge the exposure to changes in fair value by converting to Euro denominated assets/liabilities. The hedging instruments used mainly consist of interest rate swaps, basis swaps, caps, floors and cross currencies swaps. B. Cash flow hedging operations The objective of cash flow hedge on floating rate assets/liabilities is to hedge the exposure to changes in cash flows from borrowings/lendings that bear a floating interest rate. The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. Cash flow hedges are particularly used to hedge interest rate risk on floating-rate assets and liabilities, including rollovers, and foreign exchange risks on highly probable forecast foreign currency revenues. The hedging instruments used mainly consist of interest rate swaps, caps, floors, cross-currency swaps with a maturity up to 20-30year for some commercial assets. C. Foreign net investments hedge activities No hedging strategy is in place on an investment in entities whose functional currency differs from the Group’s functional currency. The Group put in place some economic hedges on forecasted foreign currency revenues stemming from those entities. The objective of the economic hedge on is to reduce the volatility on the income statement coming from the foreign exchange risks. FX risk on forecasted foreign currency revenues is continuously monitored and hedging strategies are periodically assessed. The hedging strategy and the percentage to be hedged is defined on a case by case basis considering, inter alia, the diversification effect and taking into account the volatility and correlation in the FX rates. The derivatives used consist mainly of currency options. These derivatives may not qualify or should be not qualify for hedge accounting even though achieves substantially the same economic results. The impact of economic hedge is accounted in Line 80 - Trading Income line. D. Hedging instruments and E. Hedged elements Prospective hedge effectiveness is established by the fact that all derivatives must, at inception, have the effect of reducing interest rate risk in term of Economic Value Sensitivity (Fair Value Hedge) or Net Interest Income Sensitivity (Cash Flow Hedge) in the specific/portfolio of hedged underlyings. Retrospectively the hedge effectiveness is quarterly measured by referring to the most stable portion of assets / liabilities using a portfolio hedge approach or by referring to the portion of risk being hedged using a micro/specific approach. Sources of ineffectiveness comes from (i) the Euribor/Eonia basis for hedging derivatives transactions subject to a collateral agreement, (ii) Credit/Debit Value and Funding Value adjustment impacting derivative transactions fair values, (iii) shortfall arising in the underlying’s specifically associated with that hedge in term of nominal or reverse sensitivity due to prepayment or default on commercial assets or withdrawals on liabilities included such as commercial non maturity deposits and are presented in Line 90 - Net Gains (Losses) on Hedge Accounting. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 384 2018 Annual Report and Accounts · UniCredit Quantitative information A. Cash flow hedging derivatives A.1 Cash-flow hedging derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 86,190,738 15,732,336 268,690,121 4,100,000 a) Options - 2,412,400 - - b) Swap 85,633,738 13,319,936 11,331,121 - c) Forward 557,000 - - - d) Futures - - 257,359,000 4,100,000 e) Other - - - - 2. Equity instruments and stock indexes - - - - a) Options - - - - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 9,013,489 3,258,793 - a) Options - - - - b) Swap - 7,703,445 3,258,793 - c) Forward - 1,310,044 - - d) Futures - - - - e) Other - - - - 4. Commodities - - - - 5. Other - - - - Total 86,190,738 24,745,825 271,948,914 4,100,000 This table refers the notional value of cash-flow hedging derivatives according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the banking Group. A.2 Cash-flow hedging derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT POSITIVE AND NEGATIVE FAIR VALUE OVER THE COUNTER ORGANISED MARKETS 12.31.2018 TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES CHANGES IN VALUE USED TO CALCULATE HEDGE INEFFECTIVENESS WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 17,763 - - - b) Interest rate swap 2,668,029 280,051 293,483 - - c) Cross currency swap - 61,507 32,312 - - d) Equity swap - - - - - e) Forward - 3,755 - - - f) Futures - - 98,971 15 - g) Other - - - 17,661 - Total 2,668,029 363,076 424,766 17,676 - 2. Negative fair value a) Options - 61,243 - - - b) Interest rate swap 993,655 507,694 148,145 - - c) Cross currency swap - 357,108 50,512 - - d) Equity swap - - - - - e) Forward 6 - - - - f) Futures - - 99,485 13 - g) Other - - - 947 - Total 993,661 926,045 298,142 960 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 384 2018 Annual Report and Accounts · UniCredit Quantitative information A. Cash flow hedging derivatives A.1 Cash-flow hedging derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 86,190,738 15,732,336 268,690,121 4,100,000 a) Options - 2,412,400 - - b) Swap 85,633,738 13,319,936 11,331,121 - c) Forward 557,000 - - - d) Futures - - 257,359,000 4,100,000 e) Other - - - - 2. Equity instruments and stock indexes - - - - a) Options - - - - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 9,013,489 3,258,793 - a) Options - - - - b) Swap - 7,703,445 3,258,793 - c) Forward - 1,310,044 - - d) Futures - - - - e) Other - - - - 4. Commodities - - - - 5. Other - - - - Total 86,190,738 24,745,825 271,948,914 4,100,000 This table refers the notional value of cash-flow hedging derivatives according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the banking Group. A.2 Cash-flow hedging derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT POSITIVE AND NEGATIVE FAIR VALUE OVER THE COUNTER ORGANISED MARKETS 12.31.2018 TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES CHANGES IN VALUE USED TO CALCULATE HEDGE INEFFECTIVENESS WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 17,763 - - - b) Interest rate swap 2,668,029 280,051 293,483 - - c) Cross currency swap - 61,507 32,312 - - d) Equity swap - - - - - e) Forward - 3,755 - - - f) Futures - - 98,971 15 - g) Other - - - 17,661 - Total 2,668,029 363,076 424,766 17,676 - 2. Negative fair value a) Options - 61,243 - - - b) Interest rate swap 993,655 507,694 148,145 - - c) Cross currency swap - 357,108 50,512 - - d) Equity swap - - - - - e) Forward 6 - - - - f) Futures - - 99,485 13 - g) Other - - - 947 - Total 993,661 926,045 298,142 960 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 384 2018 Annual Report and Accounts · UniCredit Quantitative information A. Cash flow hedging derivatives A.1 Cash-flow hedging derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 86,190,738 15,732,336 268,690,121 4,100,000 a) Options - 2,412,400 - - b) Swap 85,633,738 13,319,936 11,331,121 - c) Forward 557,000 - - - d) Futures - - 257,359,000 4,100,000 e) Other - - - - 2. Equity instruments and stock indexes - - - - a) Options - - - - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 9,013,489 3,258,793 - a) Options - - - - b) Swap - 7,703,445 3,258,793 - c) Forward - 1,310,044 - - d) Futures - - - - e) Other - - - - 4. Commodities - - - - 5. Other - - - - Total 86,190,738 24,745,825 271,948,914 4,100,000 This table refers the notional value of cash-flow hedging derivatives according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the banking Group. A.2 Cash-flow hedging derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT POSITIVE AND NEGATIVE FAIR VALUE OVER THE COUNTER ORGANISED MARKETS 12.31.2018 TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES CHANGES IN VALUE USED TO CALCULATE HEDGE INEFFECTIVENESS WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 17,763 - - - b) Interest rate swap 2,668,029 280,051 293,483 - - c) Cross currency swap - 61,507 32,312 - - d) Equity swap - - - - - e) Forward - 3,755 - - - f) Futures - - 98,971 15 - g) Other - - - 17,661 - Total 2,668,029 363,076 424,766 17,676 - 2. Negative fair value a) Options - 61,243 - - - b) Interest rate swap 993,655 507,694 148,145 - - c) Cross currency swap - 357,108 50,512 - - d) Equity swap - - - - - e) Forward 6 - - - - f) Futures - - 99,485 13 - g) Other - - - 947 - Total 993,661 926,045 298,142 960 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 384 2018 Annual Report and Accounts · UniCredit Quantitative information A. Cash flow hedging derivatives A.1 Cash-flow hedging derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 86,190,738 15,732,336 268,690,121 4,100,000 a) Options - 2,412,400 - - b) Swap 85,633,738 13,319,936 11,331,121 - c) Forward 557,000 - - - d) Futures - - 257,359,000 4,100,000 e) Other - - - - 2. Equity instruments and stock indexes - - - - a) Options - - - - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 9,013,489 3,258,793 - a) Options - - - - b) Swap - 7,703,445 3,258,793 - c) Forward - 1,310,044 - - d) Futures - - - - e) Other - - - - 4. Commodities - - - - 5. Other - - - - Total 86,190,738 24,745,825 271,948,914 4,100,000 This table refers the notional value of cash-flow hedging derivatives according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the banking Group. A.2 Cash-flow hedging derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT POSITIVE AND NEGATIVE FAIR VALUE OVER THE COUNTER ORGANISED MARKETS 12.31.2018 TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES CHANGES IN VALUE USED TO CALCULATE HEDGE INEFFECTIVENESS WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 17,763 - - - b) Interest rate swap 2,668,029 280,051 293,483 - - c) Cross currency swap - 61,507 32,312 - - d) Equity swap - - - - - e) Forward - 3,755 - - - f) Futures - - 98,971 15 - g) Other - - - 17,661 - Total 2,668,029 363,076 424,766 17,676 - 2. Negative fair value a) Options - 61,243 - - - b) Interest rate swap 993,655 507,694 148,145 - - c) Cross currency swap - 357,108 50,512 - - d) Equity swap - - - - - e) Forward 6 - - - - f) Futures - - 99,485 13 - g) Other - - - 947 - Total 993,661 926,045 298,142 960 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 384 2018 Annual Report and Accounts · UniCredit Quantitative information A. Cash flow hedging derivatives A.1 Cash-flow hedging derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 86,190,738 15,732,336 268,690,121 4,100,000 a) Options - 2,412,400 - - b) Swap 85,633,738 13,319,936 11,331,121 - c) Forward 557,000 - - - d) Futures - - 257,359,000 4,100,000 e) Other - - - - 2. Equity instruments and stock indexes - - - - a) Options - - - - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 9,013,489 3,258,793 - a) Options - - - - b) Swap - 7,703,445 3,258,793 - c) Forward - 1,310,044 - - d) Futures - - - - e) Other - - - - 4. Commodities - - - - 5. Other - - - - Total 86,190,738 24,745,825 271,948,914 4,100,000 This table refers the notional value of cash-flow hedging derivatives according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the banking Group. A.2 Cash-flow hedging derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT POSITIVE AND NEGATIVE FAIR VALUE OVER THE COUNTER ORGANISED MARKETS 12.31.2018 TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES CHANGES IN VALUE USED TO CALCULATE HEDGE INEFFECTIVENESS WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 17,763 - - - b) Interest rate swap 2,668,029 280,051 293,483 - - c) Cross currency swap - 61,507 32,312 - - d) Equity swap - - - - - e) Forward - 3,755 - - - f) Futures - - 98,971 15 - g) Other - - - 17,661 - Total 2,668,029 363,076 424,766 17,676 - 2. Negative fair value a) Options - 61,243 - - - b) Interest rate swap 993,655 507,694 148,145 - - c) Cross currency swap - 357,108 50,512 - - d) Equity swap - - - - - e) Forward 6 - - - - f) Futures - - 99,485 13 - g) Other - - - 947 - Total 993,661 926,045 298,142 960 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 385 This table presents distribution by product of the gross positive and negative cash-flow hedging derivatives’ fair values according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. A.3 OTC Cash-flow hedging derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 268,089,619 600,502 - - Positive fair value X 346,201 46,253 - - Negative fair value X 240,514 7,116 - 2) Equity instruments and stock indexes - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 3) Gold and currencies - Notional amount X 2,316,947 941,846 - - Positive fair value X 32,127 185 - - Negative fair value X 47,069 3,443 - 4) Commodities - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 86,190,738 11,969,584 3,264,787 497,965 - Positive fair value 2,668,029 225,280 57,169 15,365 - Negative fair value 993,661 252,088 224,108 92,741 2) Equity instruments and stock indexes - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 3) Gold and currencies - Notional amount - 7,780,921 1,232,568 - - Positive fair value - 55,814 9,448 - - Negative fair value - 356,251 857 - 4) Commodities - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - This table presents distribution by counterparty of the notional amount and the gross positive and negative cash-flow hedging derivatives’ fair values according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 385 This table presents distribution by product of the gross positive and negative cash-flow hedging derivatives’ fair values according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. A.3 OTC Cash-flow hedging derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 268,089,619 600,502 - - Positive fair value X 346,201 46,253 - - Negative fair value X 240,514 7,116 - 2) Equity instruments and stock indexes - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 3) Gold and currencies - Notional amount X 2,316,947 941,846 - - Positive fair value X 32,127 185 - - Negative fair value X 47,069 3,443 - 4) Commodities - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 86,190,738 11,969,584 3,264,787 497,965 - Positive fair value 2,668,029 225,280 57,169 15,365 - Negative fair value 993,661 252,088 224,108 92,741 2) Equity instruments and stock indexes - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 3) Gold and currencies - Notional amount - 7,780,921 1,232,568 - - Positive fair value - 55,814 9,448 - - Negative fair value - 356,251 857 - 4) Commodities - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - This table presents distribution by counterparty of the notional amount and the gross positive and negative cash-flow hedging derivatives’ fair values according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 385 This table presents distribution by product of the gross positive and negative cash-flow hedging derivatives’ fair values according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. A.3 OTC Cash-flow hedging derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 268,089,619 600,502 - - Positive fair value X 346,201 46,253 - - Negative fair value X 240,514 7,116 - 2) Equity instruments and stock indexes - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 3) Gold and currencies - Notional amount X 2,316,947 941,846 - - Positive fair value X 32,127 185 - - Negative fair value X 47,069 3,443 - 4) Commodities - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 86,190,738 11,969,584 3,264,787 497,965 - Positive fair value 2,668,029 225,280 57,169 15,365 - Negative fair value 993,661 252,088 224,108 92,741 2) Equity instruments and stock indexes - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 3) Gold and currencies - Notional amount - 7,780,921 1,232,568 - - Positive fair value - 55,814 9,448 - - Negative fair value - 356,251 857 - 4) Commodities - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - This table presents distribution by counterparty of the notional amount and the gross positive and negative cash-flow hedging derivatives’ fair values according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 385 This table presents distribution by product of the gross positive and negative cash-flow hedging derivatives’ fair values according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. A.3 OTC Cash-flow hedging derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 268,089,619 600,502 - - Positive fair value X 346,201 46,253 - - Negative fair value X 240,514 7,116 - 2) Equity instruments and stock indexes - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 3) Gold and currencies - Notional amount X 2,316,947 941,846 - - Positive fair value X 32,127 185 - - Negative fair value X 47,069 3,443 - 4) Commodities - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 86,190,738 11,969,584 3,264,787 497,965 - Positive fair value 2,668,029 225,280 57,169 15,365 - Negative fair value 993,661 252,088 224,108 92,741 2) Equity instruments and stock indexes - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 3) Gold and currencies - Notional amount - 7,780,921 1,232,568 - - Positive fair value - 55,814 9,448 - - Negative fair value - 356,251 857 - 4) Commodities - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - This table presents distribution by counterparty of the notional amount and the gross positive and negative cash-flow hedging derivatives’ fair values according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 385 This table presents distribution by product of the gross positive and negative cash-flow hedging derivatives’ fair values according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. A.3 OTC Cash-flow hedging derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 268,089,619 600,502 - - Positive fair value X 346,201 46,253 - - Negative fair value X 240,514 7,116 - 2) Equity instruments and stock indexes - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 3) Gold and currencies - Notional amount X 2,316,947 941,846 - - Positive fair value X 32,127 185 - - Negative fair value X 47,069 3,443 - 4) Commodities - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 86,190,738 11,969,584 3,264,787 497,965 - Positive fair value 2,668,029 225,280 57,169 15,365 - Negative fair value 993,661 252,088 224,108 92,741 2) Equity instruments and stock indexes - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 3) Gold and currencies - Notional amount - 7,780,921 1,232,568 - - Positive fair value - 55,814 9,448 - - Negative fair value - 356,251 857 - 4) Commodities - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - This table presents distribution by counterparty of the notional amount and the gross positive and negative cash-flow hedging derivatives’ fair values according to classification within the accounting hedging portfolio applied in the separate financial statements of the Legal Entities belonging to the Banking Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 386 2018 Annual Report and Accounts · UniCredit A.4 OTC Cash-flow hedging derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 115,602,056 214,224,254 40,786,889 370,613,199 A.2 Financial derivative contracts on equity securities and stock indexes - - - - A.3 Financial derivative contracts on exchange rates and gold 6,682,870 5,482,383 107,027 12,272,280 A.4 Financial derivative contracts on other values - - - - A.5 Other financial derivatives - - - - Total 12.31.2018 122,284,926 219,706,637 40,893,916 382,885,479 B. Hedging credit derivatives No data to be disclosed. C. Hedging instruments not derivatives Note that, as provided by the 5th update of Circular 262 of Banca d’Italia, the present table is not disclosed as the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. D. Hedges instruments Note that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. In this context the following table provides the required information about hedged instruments Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 386 2018 Annual Report and Accounts · UniCredit A.4 OTC Cash-flow hedging derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 115,602,056 214,224,254 40,786,889 370,613,199 A.2 Financial derivative contracts on equity securities and stock indexes - - - - A.3 Financial derivative contracts on exchange rates and gold 6,682,870 5,482,383 107,027 12,272,280 A.4 Financial derivative contracts on other values - - - - A.5 Other financial derivatives - - - - Total 12.31.2018 122,284,926 219,706,637 40,893,916 382,885,479 B. Hedging credit derivatives No data to be disclosed. C. Hedging instruments not derivatives Note that, as provided by the 5th update of Circular 262 of Banca d’Italia, the present table is not disclosed as the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. D. Hedges instruments Note that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. In this context the following table provides the required information about hedged instruments Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 386 2018 Annual Report and Accounts · UniCredit A.4 OTC Cash-flow hedging derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 115,602,056 214,224,254 40,786,889 370,613,199 A.2 Financial derivative contracts on equity securities and stock indexes - - - - A.3 Financial derivative contracts on exchange rates and gold 6,682,870 5,482,383 107,027 12,272,280 A.4 Financial derivative contracts on other values - - - - A.5 Other financial derivatives - - - - Total 12.31.2018 122,284,926 219,706,637 40,893,916 382,885,479 B. Hedging credit derivatives No data to be disclosed. C. Hedging instruments not derivatives Note that, as provided by the 5th update of Circular 262 of Banca d’Italia, the present table is not disclosed as the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. D. Hedges instruments Note that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. In this context the following table provides the required information about hedged instruments Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 386 2018 Annual Report and Accounts · UniCredit A.4 OTC Cash-flow hedging derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 115,602,056 214,224,254 40,786,889 370,613,199 A.2 Financial derivative contracts on equity securities and stock indexes - - - - A.3 Financial derivative contracts on exchange rates and gold 6,682,870 5,482,383 107,027 12,272,280 A.4 Financial derivative contracts on other values - - - - A.5 Other financial derivatives - - - - Total 12.31.2018 122,284,926 219,706,637 40,893,916 382,885,479 B. Hedging credit derivatives No data to be disclosed. C. Hedging instruments not derivatives Note that, as provided by the 5th update of Circular 262 of Banca d’Italia, the present table is not disclosed as the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. D. Hedges instruments Note that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. In this context the following table provides the required information about hedged instruments Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 386 2018 Annual Report and Accounts · UniCredit A.4 OTC Cash-flow hedging derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 115,602,056 214,224,254 40,786,889 370,613,199 A.2 Financial derivative contracts on equity securities and stock indexes - - - - A.3 Financial derivative contracts on exchange rates and gold 6,682,870 5,482,383 107,027 12,272,280 A.4 Financial derivative contracts on other values - - - - A.5 Other financial derivatives - - - - Total 12.31.2018 122,284,926 219,706,637 40,893,916 382,885,479 B. Hedging credit derivatives No data to be disclosed. C. Hedging instruments not derivatives Note that, as provided by the 5th update of Circular 262 of Banca d’Italia, the present table is not disclosed as the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. D. Hedges instruments Note that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. In this context the following table provides the required information about hedged instruments Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 387 Micro hedging and macro hedging: breakdown by hedged item and risk type (€ '000) AMOUNT AS AT 12.31.2018 MICRO HEDGE: CARRYING AMOUNT MACRO HEDGE: CARRYING AMOUNT A) Fair value hedge 1. Assets 1.1 Financial assets measured at fair value through other comprehensive income 60,161,041 2,498 1.1.1 Interest rate 59,919,701 X 1.1.2 Equity - X 1.1.3 Foreign exchange and gold 241,340 X 1.1.4 Credit - X 1.1.5 Other - X 1.2 Financial assets measured at amortised cost 16,038,647 2,569,834 1.2.1 Interest rate 16,038,647 X 1.2.2 Equity - X 1.2.3 Foreign exchange and gold - X 1.2.4 Credit - X 1.2.5 Other - X 2. Liabilites 2.1 Financial liabilities measured at amortised costs 3,151,517 3,615,172 2.1.1 Interest rate 3,151,517 X 2.1.2 Equity - X 2.1.3 Foreign exchange and gold - X 2.1.4 Credit - X 2.1.5 Other - X B) Cash flow hedge 1. Assets 6,317 X 1.1 Interest rate 6,317 X 1.2 Equity - X 1.3 Foreign exchange and gold - X 1.4 Credit - X 1.5 Other - X 2. Liabilites 64,438 X 2.1 Interest rate 64,438 X 2.2 Equity - X 2.3 Foreign exchange and gold - X 2.4 Credit - X 2.5 Other - X C) Hedge of net investments in foreign operations - X D) Porftolio - Assets X 956,850 E) Porftolio - Liabilities X 1,234,406 E. Effects of hedging policy at equity This table has to be filled in only by entities that apply IFRS9 hedge accounting rules. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 387 Micro hedging and macro hedging: breakdown by hedged item and risk type (€ '000) AMOUNT AS AT 12.31.2018 MICRO HEDGE: CARRYING AMOUNT MACRO HEDGE: CARRYING AMOUNT A) Fair value hedge 1. Assets 1.1 Financial assets measured at fair value through other comprehensive income 60,161,041 2,498 1.1.1 Interest rate 59,919,701 X 1.1.2 Equity - X 1.1.3 Foreign exchange and gold 241,340 X 1.1.4 Credit - X 1.1.5 Other - X 1.2 Financial assets measured at amortised cost 16,038,647 2,569,834 1.2.1 Interest rate 16,038,647 X 1.2.2 Equity - X 1.2.3 Foreign exchange and gold - X 1.2.4 Credit - X 1.2.5 Other - X 2. Liabilites 2.1 Financial liabilities measured at amortised costs 3,151,517 3,615,172 2.1.1 Interest rate 3,151,517 X 2.1.2 Equity - X 2.1.3 Foreign exchange and gold - X 2.1.4 Credit - X 2.1.5 Other - X B) Cash flow hedge 1. Assets 6,317 X 1.1 Interest rate 6,317 X 1.2 Equity - X 1.3 Foreign exchange and gold - X 1.4 Credit - X 1.5 Other - X 2. Liabilites 64,438 X 2.1 Interest rate 64,438 X 2.2 Equity - X 2.3 Foreign exchange and gold - X 2.4 Credit - X 2.5 Other - X C) Hedge of net investments in foreign operations - X D) Porftolio - Assets X 956,850 E) Porftolio - Liabilities X 1,234,406 E. Effects of hedging policy at equity This table has to be filled in only by entities that apply IFRS9 hedge accounting rules. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 387 Micro hedging and macro hedging: breakdown by hedged item and risk type (€ '000) AMOUNT AS AT 12.31.2018 MICRO HEDGE: CARRYING AMOUNT MACRO HEDGE: CARRYING AMOUNT A) Fair value hedge 1. Assets 1.1 Financial assets measured at fair value through other comprehensive income 60,161,041 2,498 1.1.1 Interest rate 59,919,701 X 1.1.2 Equity - X 1.1.3 Foreign exchange and gold 241,340 X 1.1.4 Credit - X 1.1.5 Other - X 1.2 Financial assets measured at amortised cost 16,038,647 2,569,834 1.2.1 Interest rate 16,038,647 X 1.2.2 Equity - X 1.2.3 Foreign exchange and gold - X 1.2.4 Credit - X 1.2.5 Other - X 2. Liabilites 2.1 Financial liabilities measured at amortised costs 3,151,517 3,615,172 2.1.1 Interest rate 3,151,517 X 2.1.2 Equity - X 2.1.3 Foreign exchange and gold - X 2.1.4 Credit - X 2.1.5 Other - X B) Cash flow hedge 1. Assets 6,317 X 1.1 Interest rate 6,317 X 1.2 Equity - X 1.3 Foreign exchange and gold - X 1.4 Credit - X 1.5 Other - X 2. Liabilites 64,438 X 2.1 Interest rate 64,438 X 2.2 Equity - X 2.3 Foreign exchange and gold - X 2.4 Credit - X 2.5 Other - X C) Hedge of net investments in foreign operations - X D) Porftolio - Assets X 956,850 E) Porftolio - Liabilities X 1,234,406 E. Effects of hedging policy at equity This table has to be filled in only by entities that apply IFRS9 hedge accounting rules. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 387 Micro hedging and macro hedging: breakdown by hedged item and risk type (€ '000) AMOUNT AS AT 12.31.2018 MICRO HEDGE: CARRYING AMOUNT MACRO HEDGE: CARRYING AMOUNT A) Fair value hedge 1. Assets 1.1 Financial assets measured at fair value through other comprehensive income 60,161,041 2,498 1.1.1 Interest rate 59,919,701 X 1.1.2 Equity - X 1.1.3 Foreign exchange and gold 241,340 X 1.1.4 Credit - X 1.1.5 Other - X 1.2 Financial assets measured at amortised cost 16,038,647 2,569,834 1.2.1 Interest rate 16,038,647 X 1.2.2 Equity - X 1.2.3 Foreign exchange and gold - X 1.2.4 Credit - X 1.2.5 Other - X 2. Liabilites 2.1 Financial liabilities measured at amortised costs 3,151,517 3,615,172 2.1.1 Interest rate 3,151,517 X 2.1.2 Equity - X 2.1.3 Foreign exchange and gold - X 2.1.4 Credit - X 2.1.5 Other - X B) Cash flow hedge 1. Assets 6,317 X 1.1 Interest rate 6,317 X 1.2 Equity - X 1.3 Foreign exchange and gold - X 1.4 Credit - X 1.5 Other - X 2. Liabilites 64,438 X 2.1 Interest rate 64,438 X 2.2 Equity - X 2.3 Foreign exchange and gold - X 2.4 Credit - X 2.5 Other - X C) Hedge of net investments in foreign operations - X D) Porftolio - Assets X 956,850 E) Porftolio - Liabilities X 1,234,406 E. Effects of hedging policy at equity This table has to be filled in only by entities that apply IFRS9 hedge accounting rules. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 387 Micro hedging and macro hedging: breakdown by hedged item and risk type (€ '000) AMOUNT AS AT 12.31.2018 MICRO HEDGE: CARRYING AMOUNT MACRO HEDGE: CARRYING AMOUNT A) Fair value hedge 1. Assets 1.1 Financial assets measured at fair value through other comprehensive income 60,161,041 2,498 1.1.1 Interest rate 59,919,701 X 1.1.2 Equity - X 1.1.3 Foreign exchange and gold 241,340 X 1.1.4 Credit - X 1.1.5 Other - X 1.2 Financial assets measured at amortised cost 16,038,647 2,569,834 1.2.1 Interest rate 16,038,647 X 1.2.2 Equity - X 1.2.3 Foreign exchange and gold - X 1.2.4 Credit - X 1.2.5 Other - X 2. Liabilites 2.1 Financial liabilities measured at amortised costs 3,151,517 3,615,172 2.1.1 Interest rate 3,151,517 X 2.1.2 Equity - X 2.1.3 Foreign exchange and gold - X 2.1.4 Credit - X 2.1.5 Other - X B) Cash flow hedge 1. Assets 6,317 X 1.1 Interest rate 6,317 X 1.2 Equity - X 1.3 Foreign exchange and gold - X 1.4 Credit - X 1.5 Other - X 2. Liabilites 64,438 X 2.1 Interest rate 64,438 X 2.2 Equity - X 2.3 Foreign exchange and gold - X 2.4 Credit - X 2.5 Other - X C) Hedge of net investments in foreign operations - X D) Porftolio - Assets X 956,850 E) Porftolio - Liabilities X 1,234,406 E. Effects of hedging policy at equity This table has to be filled in only by entities that apply IFRS9 hedge accounting rules. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 388 2018 Annual Report and Accounts · UniCredit 2.3.3 Other information on derivatives instruments (trading and hedging) A. Financial and credit derivatives A.1 OTC financial and credit derivatives: net fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES A. Financial derivatives 1) Debt securities and interest rates - Notional amount 1,420,431,961 558,254,956 136,981,548 130,225,215 - Positive net fair value 12,361,813 12,319,111 2,562,218 8,477,412 - Negative net fair value 11,930,810 14,847,698 3,433,996 1,147,482 2) Equity instruments and stock indexes - Notional amount - 25,269,439 10,925,927 1,045,758 - Positive net fair value - 786,385 361,287 3,583 - Negative net fair value - 797,977 261,728 78,246 3) Gold and currencies - Notional amount 1,040,716 305,454,743 85,610,485 70,020,955 - Positive net fair value 499 4,462,056 1,660,926 1,845,348 - Negative net fair value 6,864 5,537,219 1,451,824 1,446,023 4) Commodities - Notional amount - 354,695 255,285 3,228,838 - Positive net fair value - 179,697 32,429 492,285 - Negative net fair value - 195,595 13,855 155,349 5) Other - Notional amount - 13,755,647 5,396,978 12,700,219 - Positive net fair value - 977 3,104 480,981 - Negative net fair value - 108,662 262,122 189,542 B. Credit derivatives 1) Protection buyer's contracts - Notional amount 50,000 7,494,124 6,401,941 - - Positive net fair value 28 44,052 23,496 - - Negative net fair value 155 73,310 96,534 - 2) Protection seller's contracts - Notional amount 42,401 6,712,857 7,098,736 - - Positive net fair value 323 59,206 83,488 - - Negative net fair value 384 150,036 33,639 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 388 2018 Annual Report and Accounts · UniCredit 2.3.3 Other information on derivatives instruments (trading and hedging) A. Financial and credit derivatives A.1 OTC financial and credit derivatives: net fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES A. Financial derivatives 1) Debt securities and interest rates - Notional amount 1,420,431,961 558,254,956 136,981,548 130,225,215 - Positive net fair value 12,361,813 12,319,111 2,562,218 8,477,412 - Negative net fair value 11,930,810 14,847,698 3,433,996 1,147,482 2) Equity instruments and stock indexes - Notional amount - 25,269,439 10,925,927 1,045,758 - Positive net fair value - 786,385 361,287 3,583 - Negative net fair value - 797,977 261,728 78,246 3) Gold and currencies - Notional amount 1,040,716 305,454,743 85,610,485 70,020,955 - Positive net fair value 499 4,462,056 1,660,926 1,845,348 - Negative net fair value 6,864 5,537,219 1,451,824 1,446,023 4) Commodities - Notional amount - 354,695 255,285 3,228,838 - Positive net fair value - 179,697 32,429 492,285 - Negative net fair value - 195,595 13,855 155,349 5) Other - Notional amount - 13,755,647 5,396,978 12,700,219 - Positive net fair value - 977 3,104 480,981 - Negative net fair value - 108,662 262,122 189,542 B. Credit derivatives 1) Protection buyer's contracts - Notional amount 50,000 7,494,124 6,401,941 - - Positive net fair value 28 44,052 23,496 - - Negative net fair value 155 73,310 96,534 - 2) Protection seller's contracts - Notional amount 42,401 6,712,857 7,098,736 - - Positive net fair value 323 59,206 83,488 - - Negative net fair value 384 150,036 33,639 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 388 2018 Annual Report and Accounts · UniCredit 2.3.3 Other information on derivatives instruments (trading and hedging) A. Financial and credit derivatives A.1 OTC financial and credit derivatives: net fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES A. Financial derivatives 1) Debt securities and interest rates - Notional amount 1,420,431,961 558,254,956 136,981,548 130,225,215 - Positive net fair value 12,361,813 12,319,111 2,562,218 8,477,412 - Negative net fair value 11,930,810 14,847,698 3,433,996 1,147,482 2) Equity instruments and stock indexes - Notional amount - 25,269,439 10,925,927 1,045,758 - Positive net fair value - 786,385 361,287 3,583 - Negative net fair value - 797,977 261,728 78,246 3) Gold and currencies - Notional amount 1,040,716 305,454,743 85,610,485 70,020,955 - Positive net fair value 499 4,462,056 1,660,926 1,845,348 - Negative net fair value 6,864 5,537,219 1,451,824 1,446,023 4) Commodities - Notional amount - 354,695 255,285 3,228,838 - Positive net fair value - 179,697 32,429 492,285 - Negative net fair value - 195,595 13,855 155,349 5) Other - Notional amount - 13,755,647 5,396,978 12,700,219 - Positive net fair value - 977 3,104 480,981 - Negative net fair value - 108,662 262,122 189,542 B. Credit derivatives 1) Protection buyer's contracts - Notional amount 50,000 7,494,124 6,401,941 - - Positive net fair value 28 44,052 23,496 - - Negative net fair value 155 73,310 96,534 - 2) Protection seller's contracts - Notional amount 42,401 6,712,857 7,098,736 - - Positive net fair value 323 59,206 83,488 - - Negative net fair value 384 150,036 33,639 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 388 2018 Annual Report and Accounts · UniCredit 2.3.3 Other information on derivatives instruments (trading and hedging) A. Financial and credit derivatives A.1 OTC financial and credit derivatives: net fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES A. Financial derivatives 1) Debt securities and interest rates - Notional amount 1,420,431,961 558,254,956 136,981,548 130,225,215 - Positive net fair value 12,361,813 12,319,111 2,562,218 8,477,412 - Negative net fair value 11,930,810 14,847,698 3,433,996 1,147,482 2) Equity instruments and stock indexes - Notional amount - 25,269,439 10,925,927 1,045,758 - Positive net fair value - 786,385 361,287 3,583 - Negative net fair value - 797,977 261,728 78,246 3) Gold and currencies - Notional amount 1,040,716 305,454,743 85,610,485 70,020,955 - Positive net fair value 499 4,462,056 1,660,926 1,845,348 - Negative net fair value 6,864 5,537,219 1,451,824 1,446,023 4) Commodities - Notional amount - 354,695 255,285 3,228,838 - Positive net fair value - 179,697 32,429 492,285 - Negative net fair value - 195,595 13,855 155,349 5) Other - Notional amount - 13,755,647 5,396,978 12,700,219 - Positive net fair value - 977 3,104 480,981 - Negative net fair value - 108,662 262,122 189,542 B. Credit derivatives 1) Protection buyer's contracts - Notional amount 50,000 7,494,124 6,401,941 - - Positive net fair value 28 44,052 23,496 - - Negative net fair value 155 73,310 96,534 - 2) Protection seller's contracts - Notional amount 42,401 6,712,857 7,098,736 - - Positive net fair value 323 59,206 83,488 - - Negative net fair value 384 150,036 33,639 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 388 2018 Annual Report and Accounts · UniCredit 2.3.3 Other information on derivatives instruments (trading and hedging) A. Financial and credit derivatives A.1 OTC financial and credit derivatives: net fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES A. Financial derivatives 1) Debt securities and interest rates - Notional amount 1,420,431,961 558,254,956 136,981,548 130,225,215 - Positive net fair value 12,361,813 12,319,111 2,562,218 8,477,412 - Negative net fair value 11,930,810 14,847,698 3,433,996 1,147,482 2) Equity instruments and stock indexes - Notional amount - 25,269,439 10,925,927 1,045,758 - Positive net fair value - 786,385 361,287 3,583 - Negative net fair value - 797,977 261,728 78,246 3) Gold and currencies - Notional amount 1,040,716 305,454,743 85,610,485 70,020,955 - Positive net fair value 499 4,462,056 1,660,926 1,845,348 - Negative net fair value 6,864 5,537,219 1,451,824 1,446,023 4) Commodities - Notional amount - 354,695 255,285 3,228,838 - Positive net fair value - 179,697 32,429 492,285 - Negative net fair value - 195,595 13,855 155,349 5) Other - Notional amount - 13,755,647 5,396,978 12,700,219 - Positive net fair value - 977 3,104 480,981 - Negative net fair value - 108,662 262,122 189,542 B. Credit derivatives 1) Protection buyer's contracts - Notional amount 50,000 7,494,124 6,401,941 - - Positive net fair value 28 44,052 23,496 - - Negative net fair value 155 73,310 96,534 - 2) Protection seller's contracts - Notional amount 42,401 6,712,857 7,098,736 - - Positive net fair value 323 59,206 83,488 - - Negative net fair value 384 150,036 33,639 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 389 2.4 Liquidity risk Qualitative information A. General aspects, operational processes and methods for measuring liquidity risk Liquidity risk is defined as the risk that the Group may find itself unable to fulfil its expected or unexpected payment obligations (by cash or delivery), current and future, without jeopardizing its day-to day operations or its financial condition. The key principles The liquidity reference banks The Group aims to maintain liquidity at a level that enables to fund its operations at the best rate conditions under normal operating circumstances, and to remain always in a position to meet payment obligations. To this end, the Group complies accurately with the legal and regulatory provisions imposed by the national Central Banks and by the national authorities of each country where it operates. In addition to local legal and regulatory requirements, the Holding Company, under the responsibility of the Group Risk Management, defines policies and metrics to be applied at Group-wide level, to ensure that liquidity position of any Entity meets the requirements of the Group. For these reasons, the Group is organised on a managerial perspective, according to the concept of the liquidity reference bank. The liquidity reference banks are legal entities that act in their responsibility as liquidity hub. They are in charge: • of the liquidity management and concentration process of liquidity flows of the legal entities falling within their perimeter of responsibility; • of the funding optimisation carried out on the relevant local markets and are responsible to coordinate the access to short-term and medium long term markets of the legal entities belonging to their perimeter; • finally, of the implementation of the Group’s liquidity rules at local level in line with Group’s Governance Guideline and Policy and with local regulations. A particularly important role is played by the Holding Company, as a “supervisory and overarching liquidity reference bank” with its role of steering, coordinating, and controlling all the aspects regarding liquidity for the whole Group. The Parent company has the responsibility to set the overall Group risk appetite and sub-allocate the limits in agreement with the liquidity reference banks and/or legal entities. In particular, Parent company functions are responsible for the following: • outlining Group overall liquidity risk management strategies; • developing liquidity risk metrics and methodologies; • setting specific limits for liquidity risk exposures, in line with the Group risk appetite; • optimizing liquidity allocation amongst legal entities, in compliance to the local regulations and transferability limitation; • coordinating access to financial markets for liquidity management; • outlining the yearly Group funding and contingency funding plan, coordinating and monitoring their execution; • assessing the adequacy of the liquidity reserves buffers at legal entity and Group level; • coordinating the refinancing transactions with the ECB; • defining, periodically reviewing the Group ILAAP and approving the Group ILAAP Report on yearly basis. • The Holding Company, moreover, acts as the liquidity reference bank Italy. The principle of “self-sufficiency” This organisational model allows self-sufficiency of the Group by accessing the local and global markets for liquidity in a controlled and coordinated way. According to Group Policies, structural liquidity surpluses can be up-streamed to the Holding Company, unless legal requirements prevent it. The liquidity available at country level could be subject to restrictions due to legal, regulatory and political constraints. The so called “Large Exposure Regime”, applied throughout Europe, along with specific national laws like the “German Stock Corporation Act”, are examples of legal constraints to the free circulation of funds within a cross-border banking Group34. As a general rule, the large exposure regime, which came into force on 31 December 2010, limits interbank exposures to a maximum of 25% of own funds: this rule is also applicable to intra-group exposures. However, there are significant differences in the way in which this EU regulation has been implemented in the various countries. In many CEE countries the limit of 25% of free funds is valid, with some countries showing even stricter rules; in Austria, according to the National law, the "25% of own funds limit" is not applied to exposures towards the parent company, if located in the European Economic Area; finally, in Germany the national Regulator has set up a process to apply for a waiver, exempting intra-group exposures from the large exposure limitation. 34 Also Banca d’Italia Rules, Circolare 285, foresees that the Group should ensure the maintenance through the time of adequate reserves in each legal entity, in order to take into account possible regulatory constraints (First Part, Title IV, Chapter 6, Section III, paragraph 7). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 389 2.4 Liquidity risk Qualitative information A. General aspects, operational processes and methods for measuring liquidity risk Liquidity risk is defined as the risk that the Group may find itself unable to fulfil its expected or unexpected payment obligations (by cash or delivery), current and future, without jeopardizing its day-to day operations or its financial condition. The key principles The liquidity reference banks The Group aims to maintain liquidity at a level that enables to fund its operations at the best rate conditions under normal operating circumstances, and to remain always in a position to meet payment obligations. To this end, the Group complies accurately with the legal and regulatory provisions imposed by the national Central Banks and by the national authorities of each country where it operates. In addition to local legal and regulatory requirements, the Holding Company, under the responsibility of the Group Risk Management, defines policies and metrics to be applied at Group-wide level, to ensure that liquidity position of any Entity meets the requirements of the Group. For these reasons, the Group is organised on a managerial perspective, according to the concept of the liquidity reference bank. The liquidity reference banks are legal entities that act in their responsibility as liquidity hub. They are in charge: • of the liquidity management and concentration process of liquidity flows of the legal entities falling within their perimeter of responsibility; • of the funding optimisation carried out on the relevant local markets and are responsible to coordinate the access to short-term and medium long term markets of the legal entities belonging to their perimeter; • finally, of the implementation of the Group’s liquidity rules at local level in line with Group’s Governance Guideline and Policy and with local regulations. A particularly important role is played by the Holding Company, as a “supervisory and overarching liquidity reference bank” with its role of steering, coordinating, and controlling all the aspects regarding liquidity for the whole Group. The Parent company has the responsibility to set the overall Group risk appetite and sub-allocate the limits in agreement with the liquidity reference banks and/or legal entities. In particular, Parent company functions are responsible for the following: • outlining Group overall liquidity risk management strategies; • developing liquidity risk metrics and methodologies; • setting specific limits for liquidity risk exposures, in line with the Group risk appetite; • optimizing liquidity allocation amongst legal entities, in compliance to the local regulations and transferability limitation; • coordinating access to financial markets for liquidity management; • outlining the yearly Group funding and contingency funding plan, coordinating and monitoring their execution; • assessing the adequacy of the liquidity reserves buffers at legal entity and Group level; • coordinating the refinancing transactions with the ECB; • defining, periodically reviewing the Group ILAAP and approving the Group ILAAP Report on yearly basis. • The Holding Company, moreover, acts as the liquidity reference bank Italy. The principle of “self-sufficiency” This organisational model allows self-sufficiency of the Group by accessing the local and global markets for liquidity in a controlled and coordinated way. According to Group Policies, structural liquidity surpluses can be up-streamed to the Holding Company, unless legal requirements prevent it. The liquidity available at country level could be subject to restrictions due to legal, regulatory and political constraints. The so called “Large Exposure Regime”, applied throughout Europe, along with specific national laws like the “German Stock Corporation Act”, are examples of legal constraints to the free circulation of funds within a cross-border banking Group34. As a general rule, the large exposure regime, which came into force on 31 December 2010, limits interbank exposures to a maximum of 25% of own funds: this rule is also applicable to intra-group exposures. However, there are significant differences in the way in which this EU regulation has been implemented in the various countries. In many CEE countries the limit of 25% of free funds is valid, with some countries showing even stricter rules; in Austria, according to the National law, the "25% of own funds limit" is not applied to exposures towards the parent company, if located in the European Economic Area; finally, in Germany the national Regulator has set up a process to apply for a waiver, exempting intra-group exposures from the large exposure limitation. 34 Also Banca d’Italia Rules, Circolare 285, foresees that the Group should ensure the maintenance through the time of adequate reserves in each legal entity, in order to take into account possible regulatory constraints (First Part, Title IV, Chapter 6, Section III, paragraph 7). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 389 2.4 Liquidity risk Qualitative information A. General aspects, operational processes and methods for measuring liquidity risk Liquidity risk is defined as the risk that the Group may find itself unable to fulfil its expected or unexpected payment obligations (by cash or delivery), current and future, without jeopardizing its day-to day operations or its financial condition. The key principles The liquidity reference banks The Group aims to maintain liquidity at a level that enables to fund its operations at the best rate conditions under normal operating circumstances, and to remain always in a position to meet payment obligations. To this end, the Group complies accurately with the legal and regulatory provisions imposed by the national Central Banks and by the national authorities of each country where it operates. In addition to local legal and regulatory requirements, the Holding Company, under the responsibility of the Group Risk Management, defines policies and metrics to be applied at Group-wide level, to ensure that liquidity position of any Entity meets the requirements of the Group. For these reasons, the Group is organised on a managerial perspective, according to the concept of the liquidity reference bank. The liquidity reference banks are legal entities that act in their responsibility as liquidity hub. They are in charge: • of the liquidity management and concentration process of liquidity flows of the legal entities falling within their perimeter of responsibility; • of the funding optimisation carried out on the relevant local markets and are responsible to coordinate the access to short-term and medium long term markets of the legal entities belonging to their perimeter; • finally, of the implementation of the Group’s liquidity rules at local level in line with Group’s Governance Guideline and Policy and with local regulations. A particularly important role is played by the Holding Company, as a “supervisory and overarching liquidity reference bank” with its role of steering, coordinating, and controlling all the aspects regarding liquidity for the whole Group. The Parent company has the responsibility to set the overall Group risk appetite and sub-allocate the limits in agreement with the liquidity reference banks and/or legal entities. In particular, Parent company functions are responsible for the following: • outlining Group overall liquidity risk management strategies; • developing liquidity risk metrics and methodologies; • setting specific limits for liquidity risk exposures, in line with the Group risk appetite; • optimizing liquidity allocation amongst legal entities, in compliance to the local regulations and transferability limitation; • coordinating access to financial markets for liquidity management; • outlining the yearly Group funding and contingency funding plan, coordinating and monitoring their execution; • assessing the adequacy of the liquidity reserves buffers at legal entity and Group level; • coordinating the refinancing transactions with the ECB; • defining, periodically reviewing the Group ILAAP and approving the Group ILAAP Report on yearly basis. • The Holding Company, moreover, acts as the liquidity reference bank Italy. The principle of “self-sufficiency” This organisational model allows self-sufficiency of the Group by accessing the local and global markets for liquidity in a controlled and coordinated way. According to Group Policies, structural liquidity surpluses can be up-streamed to the Holding Company, unless legal requirements prevent it. The liquidity available at country level could be subject to restrictions due to legal, regulatory and political constraints. The so called “Large Exposure Regime”, applied throughout Europe, along with specific national laws like the “German Stock Corporation Act”, are examples of legal constraints to the free circulation of funds within a cross-border banking Group34. As a general rule, the large exposure regime, which came into force on 31 December 2010, limits interbank exposures to a maximum of 25% of own funds: this rule is also applicable to intra-group exposures. However, there are significant differences in the way in which this EU regulation has been implemented in the various countries. In many CEE countries the limit of 25% of free funds is valid, with some countries showing even stricter rules; in Austria, according to the National law, the "25% of own funds limit" is not applied to exposures towards the parent company, if located in the European Economic Area; finally, in Germany the national Regulator has set up a process to apply for a waiver, exempting intra-group exposures from the large exposure limitation. 34 Also Banca d’Italia Rules, Circolare 285, foresees that the Group should ensure the maintenance through the time of adequate reserves in each legal entity, in order to take into account possible regulatory constraints (First Part, Title IV, Chapter 6, Section III, paragraph 7). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 389 2.4 Liquidity risk Qualitative information A. General aspects, operational processes and methods for measuring liquidity risk Liquidity risk is defined as the risk that the Group may find itself unable to fulfil its expected or unexpected payment obligations (by cash or delivery), current and future, without jeopardizing its day-to day operations or its financial condition. The key principles The liquidity reference banks The Group aims to maintain liquidity at a level that enables to fund its operations at the best rate conditions under normal operating circumstances, and to remain always in a position to meet payment obligations. To this end, the Group complies accurately with the legal and regulatory provisions imposed by the national Central Banks and by the national authorities of each country where it operates. In addition to local legal and regulatory requirements, the Holding Company, under the responsibility of the Group Risk Management, defines policies and metrics to be applied at Group-wide level, to ensure that liquidity position of any Entity meets the requirements of the Group. For these reasons, the Group is organised on a managerial perspective, according to the concept of the liquidity reference bank. The liquidity reference banks are legal entities that act in their responsibility as liquidity hub. They are in charge: • of the liquidity management and concentration process of liquidity flows of the legal entities falling within their perimeter of responsibility; • of the funding optimisation carried out on the relevant local markets and are responsible to coordinate the access to short-term and medium long term markets of the legal entities belonging to their perimeter; • finally, of the implementation of the Group’s liquidity rules at local level in line with Group’s Governance Guideline and Policy and with local regulations. A particularly important role is played by the Holding Company, as a “supervisory and overarching liquidity reference bank” with its role of steering, coordinating, and controlling all the aspects regarding liquidity for the whole Group. The Parent company has the responsibility to set the overall Group risk appetite and sub-allocate the limits in agreement with the liquidity reference banks and/or legal entities. In particular, Parent company functions are responsible for the following: • outlining Group overall liquidity risk management strategies; • developing liquidity risk metrics and methodologies; • setting specific limits for liquidity risk exposures, in line with the Group risk appetite; • optimizing liquidity allocation amongst legal entities, in compliance to the local regulations and transferability limitation; • coordinating access to financial markets for liquidity management; • outlining the yearly Group funding and contingency funding plan, coordinating and monitoring their execution; • assessing the adequacy of the liquidity reserves buffers at legal entity and Group level; • coordinating the refinancing transactions with the ECB; • defining, periodically reviewing the Group ILAAP and approving the Group ILAAP Report on yearly basis. • The Holding Company, moreover, acts as the liquidity reference bank Italy. The principle of “self-sufficiency” This organisational model allows self-sufficiency of the Group by accessing the local and global markets for liquidity in a controlled and coordinated way. According to Group Policies, structural liquidity surpluses can be up-streamed to the Holding Company, unless legal requirements prevent it. The liquidity available at country level could be subject to restrictions due to legal, regulatory and political constraints. The so called “Large Exposure Regime”, applied throughout Europe, along with specific national laws like the “German Stock Corporation Act”, are examples of legal constraints to the free circulation of funds within a cross-border banking Group34. As a general rule, the large exposure regime, which came into force on 31 December 2010, limits interbank exposures to a maximum of 25% of own funds: this rule is also applicable to intra-group exposures. However, there are significant differences in the way in which this EU regulation has been implemented in the various countries. In many CEE countries the limit of 25% of free funds is valid, with some countries showing even stricter rules; in Austria, according to the National law, the "25% of own funds limit" is not applied to exposures towards the parent company, if located in the European Economic Area; finally, in Germany the national Regulator has set up a process to apply for a waiver, exempting intra-group exposures from the large exposure limitation. 34 Also Banca d’Italia Rules, Circolare 285, foresees that the Group should ensure the maintenance through the time of adequate reserves in each legal entity, in order to take into account possible regulatory constraints (First Part, Title IV, Chapter 6, Section III, paragraph 7). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 389 2.4 Liquidity risk Qualitative information A. General aspects, operational processes and methods for measuring liquidity risk Liquidity risk is defined as the risk that the Group may find itself unable to fulfil its expected or unexpected payment obligations (by cash or delivery), current and future, without jeopardizing its day-to day operations or its financial condition. The key principles The liquidity reference banks The Group aims to maintain liquidity at a level that enables to fund its operations at the best rate conditions under normal operating circumstances, and to remain always in a position to meet payment obligations. To this end, the Group complies accurately with the legal and regulatory provisions imposed by the national Central Banks and by the national authorities of each country where it operates. In addition to local legal and regulatory requirements, the Holding Company, under the responsibility of the Group Risk Management, defines policies and metrics to be applied at Group-wide level, to ensure that liquidity position of any Entity meets the requirements of the Group. For these reasons, the Group is organised on a managerial perspective, according to the concept of the liquidity reference bank. The liquidity reference banks are legal entities that act in their responsibility as liquidity hub. They are in charge: • of the liquidity management and concentration process of liquidity flows of the legal entities falling within their perimeter of responsibility; • of the funding optimisation carried out on the relevant local markets and are responsible to coordinate the access to short-term and medium long term markets of the legal entities belonging to their perimeter; • finally, of the implementation of the Group’s liquidity rules at local level in line with Group’s Governance Guideline and Policy and with local regulations. A particularly important role is played by the Holding Company, as a “supervisory and overarching liquidity reference bank” with its role of steering, coordinating, and controlling all the aspects regarding liquidity for the whole Group. The Parent company has the responsibility to set the overall Group risk appetite and sub-allocate the limits in agreement with the liquidity reference banks and/or legal entities. In particular, Parent company functions are responsible for the following: • outlining Group overall liquidity risk management strategies; • developing liquidity risk metrics and methodologies; • setting specific limits for liquidity risk exposures, in line with the Group risk appetite; • optimizing liquidity allocation amongst legal entities, in compliance to the local regulations and transferability limitation; • coordinating access to financial markets for liquidity management; • outlining the yearly Group funding and contingency funding plan, coordinating and monitoring their execution; • assessing the adequacy of the liquidity reserves buffers at legal entity and Group level; • coordinating the refinancing transactions with the ECB; • defining, periodically reviewing the Group ILAAP and approving the Group ILAAP Report on yearly basis. • The Holding Company, moreover, acts as the liquidity reference bank Italy. The principle of “self-sufficiency” This organisational model allows self-sufficiency of the Group by accessing the local and global markets for liquidity in a controlled and coordinated way. According to Group Policies, structural liquidity surpluses can be up-streamed to the Holding Company, unless legal requirements prevent it. The liquidity available at country level could be subject to restrictions due to legal, regulatory and political constraints. The so called “Large Exposure Regime”, applied throughout Europe, along with specific national laws like the “German Stock Corporation Act”, are examples of legal constraints to the free circulation of funds within a cross-border banking Group34. As a general rule, the large exposure regime, which came into force on 31 December 2010, limits interbank exposures to a maximum of 25% of own funds: this rule is also applicable to intra-group exposures. However, there are significant differences in the way in which this EU regulation has been implemented in the various countries. In many CEE countries the limit of 25% of free funds is valid, with some countries showing even stricter rules; in Austria, according to the National law, the "25% of own funds limit" is not applied to exposures towards the parent company, if located in the European Economic Area; finally, in Germany the national Regulator has set up a process to apply for a waiver, exempting intra-group exposures from the large exposure limitation. 34 Also Banca d’Italia Rules, Circolare 285, foresees that the Group should ensure the maintenance through the time of adequate reserves in each legal entity, in order to take into account possible regulatory constraints (First Part, Title IV, Chapter 6, Section III, paragraph 7). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 390 2018 Annual Report and Accounts · UniCredit In the absence of official limits valid at national level, Austrian and German Regulators reserve the right to judge the exposure level on a case-by-case basis. In the current economic environment, in many of the territories in which the Group operates, Banking Regulatory Authorities are adopting measures aimed at reducing the exposure of their national banking system towards foreign jurisdictions with potential negative impacts on the ability of the Group to finance its activities. For these reasons, the “Liquidity management & control group policy” provides for a further principle in order to enhance a sound liquidity risk management; that is, each legal entity with market access has to increase its liquidity self-sufficiency, fostering in this way the exploitation of its strengths. In addition to this, the Group rule states that each LE (including the liquidity reference bank) should be self-sufficient in terms of liquidity in its local currency, either on its own or by leveraging on the relevant liquidity reference bank. This self-sufficiency principle is reflected in a specific “limit structure”: limits are set both at Group and at individual level, with the purpose of avoiding/controlling significant imbalances among legal entities. This type of organisation promotes the self-sufficiency of the legal entities, by allowing them to access the local and global markets for liquidity in a controlled and coordinated way, whilst optimizing: i) the liquidity surpluses and deficits within the Group’s legal entities ii) the overall costs of funding across the Group. Roles and responsibilities At Group level, three main functions are identified in the management of the liquidity: the Group Risk Management competence line, the “Group Planning, Finance, Shareholding And Investor Relations” function, and the “Treasury” function (within the “Markets” Business Unit), each with different roles and responsibilities. In particular, the operational responsibilities reside in the Finance and the Treasury functions, while the Risk Management function has responsibilities of independent controls and independent reporting compared to the operational functions (in line with the current requirements of Banca d’Italia). Specifically, the Risk Management function is responsible for the independent control of liquidity risk and of balance sheet interest rate and FX risk at Group level and for the internal and regulatory stress testing. In detail: • defining policies and methodologies for measuring and controlling the liquidity risk and developing, updating and presenting the independent internal risk reports/assessments to internal competent functions (second level controls); • putting in place a strong and comprehensive internal limit and control framework to mitigate or limit the liquidity risk in line with the risk tolerance in order to monitor the different material drivers of liquidity risk; • contributing to the setting of the risk appetite framework; • assessing and monitoring liquidity risk exposure trends at Group and Country level and confronting them with the respective limits and triggers; • verifying the correct implementation of the agreed mapping rules; • performing an independent assessment of the Funding Plan and of the Contingency Funding Plan as well as monitoring their execution; • developing and performing the liquidity stress test at Group level, analysing the outcome, delineating new scenarios to be taken into account and centralizing the action plan related to the stress test results; it is also responsible of periodically reviewing the liquidity stress test framework; • monitoring and regularly reporting intragroup liquidity metrics of each legal entity towards and from the other members of the Group; • definition of a minimum set of common managerial reporting standards, perimeters of applications and layouts at Group level, centralizing, if needed, the database in order to consolidate the Group liquidity positions and release the related reporting and analysis; • monitoring the liquidity risk and producing regular risk reporting at Group Level in alignment with Basel Committee’s “Principles for effective risk data aggregation and risk reporting”, setting common standards in terms of presentations and communications. • performing internal validation activities at Group level on systems for measuring liquidity risks on related processes and data quality and IT components, as well as on models for pricing financial instruments in order to check that they are conform to regulatory requirements and in-house standards; • developing and back-testing the behavioural models for the measurement of the liquidity risk; • validating, controlling the implementation and releases independent assessments on the models to map the liquidity profile of balance sheet items (i.e. deposit stickiness, prepayment, behavioural models, etc.). Group Treasury acts as main coordinator in the management of infra-group flows, stemming from liquidity deficits or surplus of the various Group’s legal entities, and applies the appropriate transfer prices to such funds movements. By doing so, Group Treasury ensures a disciplined and efficient access to the markets. Group planning, finance, shareholding and investor relations competence line is responsible for the coordination of the overall financial planning process at Group, liquidity reference banks and relevant LEs level, aiming to efficiently ensure the stability and the sustainability of the financial structure through time, addressing assets and liabilities composition and maturities, in compliance with the limits and triggers set for liquidity and balance sheet metrics. It is also responsible for the execution of the medium long term Group’s funding strategy (including securitisation operations), coordinating the access to national and international capital markets for all the liquidity reference banks and relevant LEs, exploiting local market opportunities in order to reduce the costs of funding and diversify the financing sources. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 390 2018 Annual Report and Accounts · UniCredit In the absence of official limits valid at national level, Austrian and German Regulators reserve the right to judge the exposure level on a case-by-case basis. In the current economic environment, in many of the territories in which the Group operates, Banking Regulatory Authorities are adopting measures aimed at reducing the exposure of their national banking system towards foreign jurisdictions with potential negative impacts on the ability of the Group to finance its activities. For these reasons, the “Liquidity management & control group policy” provides for a further principle in order to enhance a sound liquidity risk management; that is, each legal entity with market access has to increase its liquidity self-sufficiency, fostering in this way the exploitation of its strengths. In addition to this, the Group rule states that each LE (including the liquidity reference bank) should be self-sufficient in terms of liquidity in its local currency, either on its own or by leveraging on the relevant liquidity reference bank. This self-sufficiency principle is reflected in a specific “limit structure”: limits are set both at Group and at individual level, with the purpose of avoiding/controlling significant imbalances among legal entities. This type of organisation promotes the self-sufficiency of the legal entities, by allowing them to access the local and global markets for liquidity in a controlled and coordinated way, whilst optimizing: i) the liquidity surpluses and deficits within the Group’s legal entities ii) the overall costs of funding across the Group. Roles and responsibilities At Group level, three main functions are identified in the management of the liquidity: the Group Risk Management competence line, the “Group Planning, Finance, Shareholding And Investor Relations” function, and the “Treasury” function (within the “Markets” Business Unit), each with different roles and responsibilities. In particular, the operational responsibilities reside in the Finance and the Treasury functions, while the Risk Management function has responsibilities of independent controls and independent reporting compared to the operational functions (in line with the current requirements of Banca d’Italia). Specifically, the Risk Management function is responsible for the independent control of liquidity risk and of balance sheet interest rate and FX risk at Group level and for the internal and regulatory stress testing. In detail: • defining policies and methodologies for measuring and controlling the liquidity risk and developing, updating and presenting the independent internal risk reports/assessments to internal competent functions (second level controls); • putting in place a strong and comprehensive internal limit and control framework to mitigate or limit the liquidity risk in line with the risk tolerance in order to monitor the different material drivers of liquidity risk; • contributing to the setting of the risk appetite framework; • assessing and monitoring liquidity risk exposure trends at Group and Country level and confronting them with the respective limits and triggers; • verifying the correct implementation of the agreed mapping rules; • performing an independent assessment of the Funding Plan and of the Contingency Funding Plan as well as monitoring their execution; • developing and performing the liquidity stress test at Group level, analysing the outcome, delineating new scenarios to be taken into account and centralizing the action plan related to the stress test results; it is also responsible of periodically reviewing the liquidity stress test framework; • monitoring and regularly reporting intragroup liquidity metrics of each legal entity towards and from the other members of the Group; • definition of a minimum set of common managerial reporting standards, perimeters of applications and layouts at Group level, centralizing, if needed, the database in order to consolidate the Group liquidity positions and release the related reporting and analysis; • monitoring the liquidity risk and producing regular risk reporting at Group Level in alignment with Basel Committee’s “Principles for effective risk data aggregation and risk reporting”, setting common standards in terms of presentations and communications. • performing internal validation activities at Group level on systems for measuring liquidity risks on related processes and data quality and IT components, as well as on models for pricing financial instruments in order to check that they are conform to regulatory requirements and in-house standards; • developing and back-testing the behavioural models for the measurement of the liquidity risk; • validating, controlling the implementation and releases independent assessments on the models to map the liquidity profile of balance sheet items (i.e. deposit stickiness, prepayment, behavioural models, etc.). Group Treasury acts as main coordinator in the management of infra-group flows, stemming from liquidity deficits or surplus of the various Group’s legal entities, and applies the appropriate transfer prices to such funds movements. By doing so, Group Treasury ensures a disciplined and efficient access to the markets. Group planning, finance, shareholding and investor relations competence line is responsible for the coordination of the overall financial planning process at Group, liquidity reference banks and relevant LEs level, aiming to efficiently ensure the stability and the sustainability of the financial structure through time, addressing assets and liabilities composition and maturities, in compliance with the limits and triggers set for liquidity and balance sheet metrics. It is also responsible for the execution of the medium long term Group’s funding strategy (including securitisation operations), coordinating the access to national and international capital markets for all the liquidity reference banks and relevant LEs, exploiting local market opportunities in order to reduce the costs of funding and diversify the financing sources. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 390 2018 Annual Report and Accounts · UniCredit In the absence of official limits valid at national level, Austrian and German Regulators reserve the right to judge the exposure level on a case-by-case basis. In the current economic environment, in many of the territories in which the Group operates, Banking Regulatory Authorities are adopting measures aimed at reducing the exposure of their national banking system towards foreign jurisdictions with potential negative impacts on the ability of the Group to finance its activities. For these reasons, the “Liquidity management & control group policy” provides for a further principle in order to enhance a sound liquidity risk management; that is, each legal entity with market access has to increase its liquidity self-sufficiency, fostering in this way the exploitation of its strengths. In addition to this, the Group rule states that each LE (including the liquidity reference bank) should be self-sufficient in terms of liquidity in its local currency, either on its own or by leveraging on the relevant liquidity reference bank. This self-sufficiency principle is reflected in a specific “limit structure”: limits are set both at Group and at individual level, with the purpose of avoiding/controlling significant imbalances among legal entities. This type of organisation promotes the self-sufficiency of the legal entities, by allowing them to access the local and global markets for liquidity in a controlled and coordinated way, whilst optimizing: i) the liquidity surpluses and deficits within the Group’s legal entities ii) the overall costs of funding across the Group. Roles and responsibilities At Group level, three main functions are identified in the management of the liquidity: the Group Risk Management competence line, the “Group Planning, Finance, Shareholding And Investor Relations” function, and the “Treasury” function (within the “Markets” Business Unit), each with different roles and responsibilities. In particular, the operational responsibilities reside in the Finance and the Treasury functions, while the Risk Management function has responsibilities of independent controls and independent reporting compared to the operational functions (in line with the current requirements of Banca d’Italia). Specifically, the Risk Management function is responsible for the independent control of liquidity risk and of balance sheet interest rate and FX risk at Group level and for the internal and regulatory stress testing. In detail: • defining policies and methodologies for measuring and controlling the liquidity risk and developing, updating and presenting the independent internal risk reports/assessments to internal competent functions (second level controls); • putting in place a strong and comprehensive internal limit and control framework to mitigate or limit the liquidity risk in line with the risk tolerance in order to monitor the different material drivers of liquidity risk; • contributing to the setting of the risk appetite framework; • assessing and monitoring liquidity risk exposure trends at Group and Country level and confronting them with the respective limits and triggers; • verifying the correct implementation of the agreed mapping rules; • performing an independent assessment of the Funding Plan and of the Contingency Funding Plan as well as monitoring their execution; • developing and performing the liquidity stress test at Group level, analysing the outcome, delineating new scenarios to be taken into account and centralizing the action plan related to the stress test results; it is also responsible of periodically reviewing the liquidity stress test framework; • monitoring and regularly reporting intragroup liquidity metrics of each legal entity towards and from the other members of the Group; • definition of a minimum set of common managerial reporting standards, perimeters of applications and layouts at Group level, centralizing, if needed, the database in order to consolidate the Group liquidity positions and release the related reporting and analysis; • monitoring the liquidity risk and producing regular risk reporting at Group Level in alignment with Basel Committee’s “Principles for effective risk data aggregation and risk reporting”, setting common standards in terms of presentations and communications. • performing internal validation activities at Group level on systems for measuring liquidity risks on related processes and data quality and IT components, as well as on models for pricing financial instruments in order to check that they are conform to regulatory requirements and in-house standards; • developing and back-testing the behavioural models for the measurement of the liquidity risk; • validating, controlling the implementation and releases independent assessments on the models to map the liquidity profile of balance sheet items (i.e. deposit stickiness, prepayment, behavioural models, etc.). Group Treasury acts as main coordinator in the management of infra-group flows, stemming from liquidity deficits or surplus of the various Group’s legal entities, and applies the appropriate transfer prices to such funds movements. By doing so, Group Treasury ensures a disciplined and efficient access to the markets. Group planning, finance, shareholding and investor relations competence line is responsible for the coordination of the overall financial planning process at Group, liquidity reference banks and relevant LEs level, aiming to efficiently ensure the stability and the sustainability of the financial structure through time, addressing assets and liabilities composition and maturities, in compliance with the limits and triggers set for liquidity and balance sheet metrics. It is also responsible for the execution of the medium long term Group’s funding strategy (including securitisation operations), coordinating the access to national and international capital markets for all the liquidity reference banks and relevant LEs, exploiting local market opportunities in order to reduce the costs of funding and diversify the financing sources. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 390 2018 Annual Report and Accounts · UniCredit In the absence of official limits valid at national level, Austrian and German Regulators reserve the right to judge the exposure level on a case-by-case basis. In the current economic environment, in many of the territories in which the Group operates, Banking Regulatory Authorities are adopting measures aimed at reducing the exposure of their national banking system towards foreign jurisdictions with potential negative impacts on the ability of the Group to finance its activities. For these reasons, the “Liquidity management & control group policy” provides for a further principle in order to enhance a sound liquidity risk management; that is, each legal entity with market access has to increase its liquidity self-sufficiency, fostering in this way the exploitation of its strengths. In addition to this, the Group rule states that each LE (including the liquidity reference bank) should be self-sufficient in terms of liquidity in its local currency, either on its own or by leveraging on the relevant liquidity reference bank. This self-sufficiency principle is reflected in a specific “limit structure”: limits are set both at Group and at individual level, with the purpose of avoiding/controlling significant imbalances among legal entities. This type of organisation promotes the self-sufficiency of the legal entities, by allowing them to access the local and global markets for liquidity in a controlled and coordinated way, whilst optimizing: i) the liquidity surpluses and deficits within the Group’s legal entities ii) the overall costs of funding across the Group. Roles and responsibilities At Group level, three main functions are identified in the management of the liquidity: the Group Risk Management competence line, the “Group Planning, Finance, Shareholding And Investor Relations” function, and the “Treasury” function (within the “Markets” Business Unit), each with different roles and responsibilities. In particular, the operational responsibilities reside in the Finance and the Treasury functions, while the Risk Management function has responsibilities of independent controls and independent reporting compared to the operational functions (in line with the current requirements of Banca d’Italia). Specifically, the Risk Management function is responsible for the independent control of liquidity risk and of balance sheet interest rate and FX risk at Group level and for the internal and regulatory stress testing. In detail: • defining policies and methodologies for measuring and controlling the liquidity risk and developing, updating and presenting the independent internal risk reports/assessments to internal competent functions (second level controls); • putting in place a strong and comprehensive internal limit and control framework to mitigate or limit the liquidity risk in line with the risk tolerance in order to monitor the different material drivers of liquidity risk; • contributing to the setting of the risk appetite framework; • assessing and monitoring liquidity risk exposure trends at Group and Country level and confronting them with the respective limits and triggers; • verifying the correct implementation of the agreed mapping rules; • performing an independent assessment of the Funding Plan and of the Contingency Funding Plan as well as monitoring their execution; • developing and performing the liquidity stress test at Group level, analysing the outcome, delineating new scenarios to be taken into account and centralizing the action plan related to the stress test results; it is also responsible of periodically reviewing the liquidity stress test framework; • monitoring and regularly reporting intragroup liquidity metrics of each legal entity towards and from the other members of the Group; • definition of a minimum set of common managerial reporting standards, perimeters of applications and layouts at Group level, centralizing, if needed, the database in order to consolidate the Group liquidity positions and release the related reporting and analysis; • monitoring the liquidity risk and producing regular risk reporting at Group Level in alignment with Basel Committee’s “Principles for effective risk data aggregation and risk reporting”, setting common standards in terms of presentations and communications. • performing internal validation activities at Group level on systems for measuring liquidity risks on related processes and data quality and IT components, as well as on models for pricing financial instruments in order to check that they are conform to regulatory requirements and in-house standards; • developing and back-testing the behavioural models for the measurement of the liquidity risk; • validating, controlling the implementation and releases independent assessments on the models to map the liquidity profile of balance sheet items (i.e. deposit stickiness, prepayment, behavioural models, etc.). Group Treasury acts as main coordinator in the management of infra-group flows, stemming from liquidity deficits or surplus of the various Group’s legal entities, and applies the appropriate transfer prices to such funds movements. By doing so, Group Treasury ensures a disciplined and efficient access to the markets. Group planning, finance, shareholding and investor relations competence line is responsible for the coordination of the overall financial planning process at Group, liquidity reference banks and relevant LEs level, aiming to efficiently ensure the stability and the sustainability of the financial structure through time, addressing assets and liabilities composition and maturities, in compliance with the limits and triggers set for liquidity and balance sheet metrics. It is also responsible for the execution of the medium long term Group’s funding strategy (including securitisation operations), coordinating the access to national and international capital markets for all the liquidity reference banks and relevant LEs, exploiting local market opportunities in order to reduce the costs of funding and diversify the financing sources. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 390 2018 Annual Report and Accounts · UniCredit In the absence of official limits valid at national level, Austrian and German Regulators reserve the right to judge the exposure level on a case-by-case basis. In the current economic environment, in many of the territories in which the Group operates, Banking Regulatory Authorities are adopting measures aimed at reducing the exposure of their national banking system towards foreign jurisdictions with potential negative impacts on the ability of the Group to finance its activities. For these reasons, the “Liquidity management & control group policy” provides for a further principle in order to enhance a sound liquidity risk management; that is, each legal entity with market access has to increase its liquidity self-sufficiency, fostering in this way the exploitation of its strengths. In addition to this, the Group rule states that each LE (including the liquidity reference bank) should be self-sufficient in terms of liquidity in its local currency, either on its own or by leveraging on the relevant liquidity reference bank. This self-sufficiency principle is reflected in a specific “limit structure”: limits are set both at Group and at individual level, with the purpose of avoiding/controlling significant imbalances among legal entities. This type of organisation promotes the self-sufficiency of the legal entities, by allowing them to access the local and global markets for liquidity in a controlled and coordinated way, whilst optimizing: i) the liquidity surpluses and deficits within the Group’s legal entities ii) the overall costs of funding across the Group. Roles and responsibilities At Group level, three main functions are identified in the management of the liquidity: the Group Risk Management competence line, the “Group Planning, Finance, Shareholding And Investor Relations” function, and the “Treasury” function (within the “Markets” Business Unit), each with different roles and responsibilities. In particular, the operational responsibilities reside in the Finance and the Treasury functions, while the Risk Management function has responsibilities of independent controls and independent reporting compared to the operational functions (in line with the current requirements of Banca d’Italia). Specifically, the Risk Management function is responsible for the independent control of liquidity risk and of balance sheet interest rate and FX risk at Group level and for the internal and regulatory stress testing. In detail: • defining policies and methodologies for measuring and controlling the liquidity risk and developing, updating and presenting the independent internal risk reports/assessments to internal competent functions (second level controls); • putting in place a strong and comprehensive internal limit and control framework to mitigate or limit the liquidity risk in line with the risk tolerance in order to monitor the different material drivers of liquidity risk; • contributing to the setting of the risk appetite framework; • assessing and monitoring liquidity risk exposure trends at Group and Country level and confronting them with the respective limits and triggers; • verifying the correct implementation of the agreed mapping rules; • performing an independent assessment of the Funding Plan and of the Contingency Funding Plan as well as monitoring their execution; • developing and performing the liquidity stress test at Group level, analysing the outcome, delineating new scenarios to be taken into account and centralizing the action plan related to the stress test results; it is also responsible of periodically reviewing the liquidity stress test framework; • monitoring and regularly reporting intragroup liquidity metrics of each legal entity towards and from the other members of the Group; • definition of a minimum set of common managerial reporting standards, perimeters of applications and layouts at Group level, centralizing, if needed, the database in order to consolidate the Group liquidity positions and release the related reporting and analysis; • monitoring the liquidity risk and producing regular risk reporting at Group Level in alignment with Basel Committee’s “Principles for effective risk data aggregation and risk reporting”, setting common standards in terms of presentations and communications. • performing internal validation activities at Group level on systems for measuring liquidity risks on related processes and data quality and IT components, as well as on models for pricing financial instruments in order to check that they are conform to regulatory requirements and in-house standards; • developing and back-testing the behavioural models for the measurement of the liquidity risk; • validating, controlling the implementation and releases independent assessments on the models to map the liquidity profile of balance sheet items (i.e. deposit stickiness, prepayment, behavioural models, etc.). Group Treasury acts as main coordinator in the management of infra-group flows, stemming from liquidity deficits or surplus of the various Group’s legal entities, and applies the appropriate transfer prices to such funds movements. By doing so, Group Treasury ensures a disciplined and efficient access to the markets. Group planning, finance, shareholding and investor relations competence line is responsible for the coordination of the overall financial planning process at Group, liquidity reference banks and relevant LEs level, aiming to efficiently ensure the stability and the sustainability of the financial structure through time, addressing assets and liabilities composition and maturities, in compliance with the limits and triggers set for liquidity and balance sheet metrics. It is also responsible for the execution of the medium long term Group’s funding strategy (including securitisation operations), coordinating the access to national and international capital markets for all the liquidity reference banks and relevant LEs, exploiting local market opportunities in order to reduce the costs of funding and diversify the financing sources. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 391 Moreover, all the relevant issues that concern the liquidity risk and management perspective of the Group are discussed in GALCO (Group assets & liabilities committee). The main responsibilities of GALCO are: • participating by advising and proposing the definition of the strategies, policies, methodologies and limits for liquidity risk, fund transfer pricing, funding plan and contingency funding plan; • contributing to the definition of the Risk Appetite in terms of thresholds for liquidity risk, interest rate risk of the banking book and FX risk; • optimizing the liquidity risk profile of the Group within the defined limits; • controlling the liquidity risk, including the periodical reports that have to be delivered to regulators; • approving and validate the liquidity stress test scenarios and the relative assumptions; • approving the ILAAP proposal and the regulatory reporting to be submitted to Group risk & internal control committee (GR&ICC); • approving the operative strategies for the evolution of the balance sheet and the application of fund transfer price for Italian perimeter. Optimisation of liquidity risks is pursued through the setting of specific limits on the standard banking activity of transforming short, medium and long-term maturities. This is implemented in accordance with legal and regulatory framework in each country and internal rules and policies of the Group companies through management models in place within the individual liquidity reference banks. Such models are subject to analyses carried out by the local Risk Management or equivalent structure with the same responsibilities in coordination with the Group’s Risk Management to ensure that they comply with the metrics and the objectives of the Group’s liquidity framework. Moreover, the regional rules must conform to national law and regulatory requirements. Risk measurement and reporting systems Techniques for risk measurement The different types of liquidity risk managed by the bank are: • short term liquidity risk refers to the risk of non-conformity between the amounts and/or the maturities of cash inflows and cash outflows in the short term (below one year). • market liquidity risk is the risk that the bank may face a considerable (and unfavourable) price change generated by exogenous or endogenous factors and incur losses as a result of the sale of assets deemed to be liquid. In the worst case, the bank might not be able to liquidate such positions. • intraday liquidity risk appears when a bank is not able "to meet payment and settlement obligations on a timely manner basis under both normal and stressed conditions". • structural liquidity risk is defined as the inability to raise the necessary funds to maintain an adequate ratio between medium to long-term (over one year) assets and liabilities at reasonable pricing level, in a stable and sustainable way, without affecting the daily operations or the financial condition of the Bank. It could have a potential impact on the cost of funding (own credit and market funding spreads), affecting future income of the institution. • contingency risk, or stress liquidity is related to future and unexpected obligations (i. e. draw on committed facilities, deposits withdrawal, increase in collateral pledging) and could require the bank a greater amount of liquidity compared to what is considered the amount to run the ordinary business. • intragroup liquidity risk, that might generate from an excessive exposure or dependency towards / from specific Group counterparts; • funding concentration risk arises when the bank leverages on such a limited number of funding sources, that they become of such significance that the withdrawal of one or few could trigger liquidity problems. • foreign exchange liquidity risk, generated by the current and projected liquidity mismatch between cash inflows and cash outflows in foreign currencies (refinancing risk) or related with the maturity distribution of the assets and liabilities in foreign currencies (foreign currency structural mismatch risk). The exposure of the Group and its legal entities to any of these risks is measured by associating to any of them a metric or a set of metrics. Every legal entity of the Group is exposed to the above mentioned risks at a different extent: a materiality analysis is performed in order to define the perimeter of the liquidity risk management and control. Liquidity risk, for its particular nature, is addressed by means of gap analyses, liquidity stress testing, and complementary measures (mainly through a set of indicators, among which: loans to deposits gap, liquidity coverage ratio). In particular, gap analyses are performed within two distinct time horizons: • liquidity imbalance mismatch approach on a daily basis, which controls the short-term liquidity risk arising from the overnight up to a 12 months maturity; • gap ratios on a monthly basis, which control the medium to long-term risk (structural liquidity) from the 1Y maturity onwards. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 391 Moreover, all the relevant issues that concern the liquidity risk and management perspective of the Group are discussed in GALCO (Group assets & liabilities committee). The main responsibilities of GALCO are: • participating by advising and proposing the definition of the strategies, policies, methodologies and limits for liquidity risk, fund transfer pricing, funding plan and contingency funding plan; • contributing to the definition of the Risk Appetite in terms of thresholds for liquidity risk, interest rate risk of the banking book and FX risk; • optimizing the liquidity risk profile of the Group within the defined limits; • controlling the liquidity risk, including the periodical reports that have to be delivered to regulators; • approving and validate the liquidity stress test scenarios and the relative assumptions; • approving the ILAAP proposal and the regulatory reporting to be submitted to Group risk & internal control committee (GR&ICC); • approving the operative strategies for the evolution of the balance sheet and the application of fund transfer price for Italian perimeter. Optimisation of liquidity risks is pursued through the setting of specific limits on the standard banking activity of transforming short, medium and long-term maturities. This is implemented in accordance with legal and regulatory framework in each country and internal rules and policies of the Group companies through management models in place within the individual liquidity reference banks. Such models are subject to analyses carried out by the local Risk Management or equivalent structure with the same responsibilities in coordination with the Group’s Risk Management to ensure that they comply with the metrics and the objectives of the Group’s liquidity framework. Moreover, the regional rules must conform to national law and regulatory requirements. Risk measurement and reporting systems Techniques for risk measurement The different types of liquidity risk managed by the bank are: • short term liquidity risk refers to the risk of non-conformity between the amounts and/or the maturities of cash inflows and cash outflows in the short term (below one year). • market liquidity risk is the risk that the bank may face a considerable (and unfavourable) price change generated by exogenous or endogenous factors and incur losses as a result of the sale of assets deemed to be liquid. In the worst case, the bank might not be able to liquidate such positions. • intraday liquidity risk appears when a bank is not able "to meet payment and settlement obligations on a timely manner basis under both normal and stressed conditions". • structural liquidity risk is defined as the inability to raise the necessary funds to maintain an adequate ratio between medium to long-term (over one year) assets and liabilities at reasonable pricing level, in a stable and sustainable way, without affecting the daily operations or the financial condition of the Bank. It could have a potential impact on the cost of funding (own credit and market funding spreads), affecting future income of the institution. • contingency risk, or stress liquidity is related to future and unexpected obligations (i. e. draw on committed facilities, deposits withdrawal, increase in collateral pledging) and could require the bank a greater amount of liquidity compared to what is considered the amount to run the ordinary business. • intragroup liquidity risk, that might generate from an excessive exposure or dependency towards / from specific Group counterparts; • funding concentration risk arises when the bank leverages on such a limited number of funding sources, that they become of such significance that the withdrawal of one or few could trigger liquidity problems. • foreign exchange liquidity risk, generated by the current and projected liquidity mismatch between cash inflows and cash outflows in foreign currencies (refinancing risk) or related with the maturity distribution of the assets and liabilities in foreign currencies (foreign currency structural mismatch risk). The exposure of the Group and its legal entities to any of these risks is measured by associating to any of them a metric or a set of metrics. Every legal entity of the Group is exposed to the above mentioned risks at a different extent: a materiality analysis is performed in order to define the perimeter of the liquidity risk management and control. Liquidity risk, for its particular nature, is addressed by means of gap analyses, liquidity stress testing, and complementary measures (mainly through a set of indicators, among which: loans to deposits gap, liquidity coverage ratio). In particular, gap analyses are performed within two distinct time horizons: • liquidity imbalance mismatch approach on a daily basis, which controls the short-term liquidity risk arising from the overnight up to a 12 months maturity; • gap ratios on a monthly basis, which control the medium to long-term risk (structural liquidity) from the 1Y maturity onwards. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 391 Moreover, all the relevant issues that concern the liquidity risk and management perspective of the Group are discussed in GALCO (Group assets & liabilities committee). The main responsibilities of GALCO are: • participating by advising and proposing the definition of the strategies, policies, methodologies and limits for liquidity risk, fund transfer pricing, funding plan and contingency funding plan; • contributing to the definition of the Risk Appetite in terms of thresholds for liquidity risk, interest rate risk of the banking book and FX risk; • optimizing the liquidity risk profile of the Group within the defined limits; • controlling the liquidity risk, including the periodical reports that have to be delivered to regulators; • approving and validate the liquidity stress test scenarios and the relative assumptions; • approving the ILAAP proposal and the regulatory reporting to be submitted to Group risk & internal control committee (GR&ICC); • approving the operative strategies for the evolution of the balance sheet and the application of fund transfer price for Italian perimeter. Optimisation of liquidity risks is pursued through the setting of specific limits on the standard banking activity of transforming short, medium and long-term maturities. This is implemented in accordance with legal and regulatory framework in each country and internal rules and policies of the Group companies through management models in place within the individual liquidity reference banks. Such models are subject to analyses carried out by the local Risk Management or equivalent structure with the same responsibilities in coordination with the Group’s Risk Management to ensure that they comply with the metrics and the objectives of the Group’s liquidity framework. Moreover, the regional rules must conform to national law and regulatory requirements. Risk measurement and reporting systems Techniques for risk measurement The different types of liquidity risk managed by the bank are: • short term liquidity risk refers to the risk of non-conformity between the amounts and/or the maturities of cash inflows and cash outflows in the short term (below one year). • market liquidity risk is the risk that the bank may face a considerable (and unfavourable) price change generated by exogenous or endogenous factors and incur losses as a result of the sale of assets deemed to be liquid. In the worst case, the bank might not be able to liquidate such positions. • intraday liquidity risk appears when a bank is not able "to meet payment and settlement obligations on a timely manner basis under both normal and stressed conditions". • structural liquidity risk is defined as the inability to raise the necessary funds to maintain an adequate ratio between medium to long-term (over one year) assets and liabilities at reasonable pricing level, in a stable and sustainable way, without affecting the daily operations or the financial condition of the Bank. It could have a potential impact on the cost of funding (own credit and market funding spreads), affecting future income of the institution. • contingency risk, or stress liquidity is related to future and unexpected obligations (i. e. draw on committed facilities, deposits withdrawal, increase in collateral pledging) and could require the bank a greater amount of liquidity compared to what is considered the amount to run the ordinary business. • intragroup liquidity risk, that might generate from an excessive exposure or dependency towards / from specific Group counterparts; • funding concentration risk arises when the bank leverages on such a limited number of funding sources, that they become of such significance that the withdrawal of one or few could trigger liquidity problems. • foreign exchange liquidity risk, generated by the current and projected liquidity mismatch between cash inflows and cash outflows in foreign currencies (refinancing risk) or related with the maturity distribution of the assets and liabilities in foreign currencies (foreign currency structural mismatch risk). The exposure of the Group and its legal entities to any of these risks is measured by associating to any of them a metric or a set of metrics. Every legal entity of the Group is exposed to the above mentioned risks at a different extent: a materiality analysis is performed in order to define the perimeter of the liquidity risk management and control. Liquidity risk, for its particular nature, is addressed by means of gap analyses, liquidity stress testing, and complementary measures (mainly through a set of indicators, among which: loans to deposits gap, liquidity coverage ratio). In particular, gap analyses are performed within two distinct time horizons: • liquidity imbalance mismatch approach on a daily basis, which controls the short-term liquidity risk arising from the overnight up to a 12 months maturity; • gap ratios on a monthly basis, which control the medium to long-term risk (structural liquidity) from the 1Y maturity onwards. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 391 Moreover, all the relevant issues that concern the liquidity risk and management perspective of the Group are discussed in GALCO (Group assets & liabilities committee). The main responsibilities of GALCO are: • participating by advising and proposing the definition of the strategies, policies, methodologies and limits for liquidity risk, fund transfer pricing, funding plan and contingency funding plan; • contributing to the definition of the Risk Appetite in terms of thresholds for liquidity risk, interest rate risk of the banking book and FX risk; • optimizing the liquidity risk profile of the Group within the defined limits; • controlling the liquidity risk, including the periodical reports that have to be delivered to regulators; • approving and validate the liquidity stress test scenarios and the relative assumptions; • approving the ILAAP proposal and the regulatory reporting to be submitted to Group risk & internal control committee (GR&ICC); • approving the operative strategies for the evolution of the balance sheet and the application of fund transfer price for Italian perimeter. Optimisation of liquidity risks is pursued through the setting of specific limits on the standard banking activity of transforming short, medium and long-term maturities. This is implemented in accordance with legal and regulatory framework in each country and internal rules and policies of the Group companies through management models in place within the individual liquidity reference banks. Such models are subject to analyses carried out by the local Risk Management or equivalent structure with the same responsibilities in coordination with the Group’s Risk Management to ensure that they comply with the metrics and the objectives of the Group’s liquidity framework. Moreover, the regional rules must conform to national law and regulatory requirements. Risk measurement and reporting systems Techniques for risk measurement The different types of liquidity risk managed by the bank are: • short term liquidity risk refers to the risk of non-conformity between the amounts and/or the maturities of cash inflows and cash outflows in the short term (below one year). • market liquidity risk is the risk that the bank may face a considerable (and unfavourable) price change generated by exogenous or endogenous factors and incur losses as a result of the sale of assets deemed to be liquid. In the worst case, the bank might not be able to liquidate such positions. • intraday liquidity risk appears when a bank is not able "to meet payment and settlement obligations on a timely manner basis under both normal and stressed conditions". • structural liquidity risk is defined as the inability to raise the necessary funds to maintain an adequate ratio between medium to long-term (over one year) assets and liabilities at reasonable pricing level, in a stable and sustainable way, without affecting the daily operations or the financial condition of the Bank. It could have a potential impact on the cost of funding (own credit and market funding spreads), affecting future income of the institution. • contingency risk, or stress liquidity is related to future and unexpected obligations (i. e. draw on committed facilities, deposits withdrawal, increase in collateral pledging) and could require the bank a greater amount of liquidity compared to what is considered the amount to run the ordinary business. • intragroup liquidity risk, that might generate from an excessive exposure or dependency towards / from specific Group counterparts; • funding concentration risk arises when the bank leverages on such a limited number of funding sources, that they become of such significance that the withdrawal of one or few could trigger liquidity problems. • foreign exchange liquidity risk, generated by the current and projected liquidity mismatch between cash inflows and cash outflows in foreign currencies (refinancing risk) or related with the maturity distribution of the assets and liabilities in foreign currencies (foreign currency structural mismatch risk). The exposure of the Group and its legal entities to any of these risks is measured by associating to any of them a metric or a set of metrics. Every legal entity of the Group is exposed to the above mentioned risks at a different extent: a materiality analysis is performed in order to define the perimeter of the liquidity risk management and control. Liquidity risk, for its particular nature, is addressed by means of gap analyses, liquidity stress testing, and complementary measures (mainly through a set of indicators, among which: loans to deposits gap, liquidity coverage ratio). In particular, gap analyses are performed within two distinct time horizons: • liquidity imbalance mismatch approach on a daily basis, which controls the short-term liquidity risk arising from the overnight up to a 12 months maturity; • gap ratios on a monthly basis, which control the medium to long-term risk (structural liquidity) from the 1Y maturity onwards. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 391 Moreover, all the relevant issues that concern the liquidity risk and management perspective of the Group are discussed in GALCO (Group assets & liabilities committee). The main responsibilities of GALCO are: • participating by advising and proposing the definition of the strategies, policies, methodologies and limits for liquidity risk, fund transfer pricing, funding plan and contingency funding plan; • contributing to the definition of the Risk Appetite in terms of thresholds for liquidity risk, interest rate risk of the banking book and FX risk; • optimizing the liquidity risk profile of the Group within the defined limits; • controlling the liquidity risk, including the periodical reports that have to be delivered to regulators; • approving and validate the liquidity stress test scenarios and the relative assumptions; • approving the ILAAP proposal and the regulatory reporting to be submitted to Group risk & internal control committee (GR&ICC); • approving the operative strategies for the evolution of the balance sheet and the application of fund transfer price for Italian perimeter. Optimisation of liquidity risks is pursued through the setting of specific limits on the standard banking activity of transforming short, medium and long-term maturities. This is implemented in accordance with legal and regulatory framework in each country and internal rules and policies of the Group companies through management models in place within the individual liquidity reference banks. Such models are subject to analyses carried out by the local Risk Management or equivalent structure with the same responsibilities in coordination with the Group’s Risk Management to ensure that they comply with the metrics and the objectives of the Group’s liquidity framework. Moreover, the regional rules must conform to national law and regulatory requirements. Risk measurement and reporting systems Techniques for risk measurement The different types of liquidity risk managed by the bank are: • short term liquidity risk refers to the risk of non-conformity between the amounts and/or the maturities of cash inflows and cash outflows in the short term (below one year). • market liquidity risk is the risk that the bank may face a considerable (and unfavourable) price change generated by exogenous or endogenous factors and incur losses as a result of the sale of assets deemed to be liquid. In the worst case, the bank might not be able to liquidate such positions. • intraday liquidity risk appears when a bank is not able "to meet payment and settlement obligations on a timely manner basis under both normal and stressed conditions". • structural liquidity risk is defined as the inability to raise the necessary funds to maintain an adequate ratio between medium to long-term (over one year) assets and liabilities at reasonable pricing level, in a stable and sustainable way, without affecting the daily operations or the financial condition of the Bank. It could have a potential impact on the cost of funding (own credit and market funding spreads), affecting future income of the institution. • contingency risk, or stress liquidity is related to future and unexpected obligations (i. e. draw on committed facilities, deposits withdrawal, increase in collateral pledging) and could require the bank a greater amount of liquidity compared to what is considered the amount to run the ordinary business. • intragroup liquidity risk, that might generate from an excessive exposure or dependency towards / from specific Group counterparts; • funding concentration risk arises when the bank leverages on such a limited number of funding sources, that they become of such significance that the withdrawal of one or few could trigger liquidity problems. • foreign exchange liquidity risk, generated by the current and projected liquidity mismatch between cash inflows and cash outflows in foreign currencies (refinancing risk) or related with the maturity distribution of the assets and liabilities in foreign currencies (foreign currency structural mismatch risk). The exposure of the Group and its legal entities to any of these risks is measured by associating to any of them a metric or a set of metrics. Every legal entity of the Group is exposed to the above mentioned risks at a different extent: a materiality analysis is performed in order to define the perimeter of the liquidity risk management and control. Liquidity risk, for its particular nature, is addressed by means of gap analyses, liquidity stress testing, and complementary measures (mainly through a set of indicators, among which: loans to deposits gap, liquidity coverage ratio). In particular, gap analyses are performed within two distinct time horizons: • liquidity imbalance mismatch approach on a daily basis, which controls the short-term liquidity risk arising from the overnight up to a 12 months maturity; • gap ratios on a monthly basis, which control the medium to long-term risk (structural liquidity) from the 1Y maturity onwards. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 392 2018 Annual Report and Accounts · UniCredit Strategies and processes to manage the liquidity risk The Group’s liquidity framework is based upon the Liquidity Risk Mismatch Model which is characterised by the following fundamental principles: • short-term liquidity risk management (operational liquidity), which considers the events that will impact upon the Group’s liquidity position from 1 day up to one year. The primary objective is to maintain the Group’s capacity to fulfil its ordinary and extraordinary payment obligations while minimizing the relevant costs. • structural liquidity risk management (structural risk), which considers the events that will impact upon the Group’s liquidity position over one year. The primary objective is to maintain an adequate ratio between medium/long term liabilities and medium to long-term assets, with a view to avoid pressures on short-term funding sources (both current and future), while in the meantime optimizing the cost of funding. • stress tests: Liquidity risk is a low probability, high impact event. Therefore stress testing is an excellent tool to reveal potential vulnerabilities in the Balance Sheet. The Bank uses several scenarios ranging from general market crisis to idiosyncratic crisis, and a combination hereof. In this context, the mismatch model takes into account all assets, liabilities, off-balance sheet positions and also both present and future events which generate certain or potential cash flows for the Group, thereby protecting the Group Banks/Companies from risks related to the transformation of maturity. Moreover, the liquidity risk is included in the Group’s risk appetite framework through some specific liquidity indicators. Short-term liquidity management Short-term liquidity management aims at ensuring that the Group remains in a position to fulfil its cash payment obligations, whether expected or unexpected, focused on the exposure for the first 12 months. The standard measures taken for such purposes are the following: • management of the access to payment systems (operational liquidity management); • management of cash payments to be made and monitoring of the level of liquidity reserves and the extent of their utilization (analysis and active management of the maturity ladder). These principles are applicable at Group level and have to be used across the liquidity reference banks. The operative maturity ladder is composed by the net contractual cash flows (in/outflows) affecting the cash position at Central Banks or “Nostro Account”. Therefore, these flows impact directly the “core liquidity” of the bank, over pre-defined time buckets. The operative maturity ladder is composed of the following building-blocks: • primary gap, which shows the net wholesale refinancing requirements over the various time-buckets of the horizon. • counterbalancing capacity, which shows the amount of unencumbered securities that are accepted as collateral by Central Banks and/or market counterparties. The counterbalancing capacity is considered at its “liquidity value” (i.e. the market value minus the applicable haircut). • cumulative gap, which is the sum of the previous components. • reservation for unexpected flows, which consists of liquidity adjustment to the operative maturity ladder, to consider a buffer that can be used by the Treasury to refinance unexpected outflows impacting the Central Bank position (included in the short-term buckets). The reservation for unexpected flows takes into account the volatility of the funding needs of the commercial asset portfolio, the volatility of the commercial funding sources, including potential concentration effects, the change of liquidity value of the counterbalancing capacity due to observed market price changes. The operative maturity ladder is included in the Group risk appetite framework, with a limit of 0 on the 3 months bucket. The Group adopts also the cash horizon as a synthetic indicator of the short-term liquidity risk levels. The cash horizon identifies the number of days after which the relevant entity is no longer able to meet its liquidity obligations as expressed in the operative maturity ladder, after having exhausted the available counterbalancing capacity. Structural liquidity management The Group’s structural liquidity management aims to limit refinancing exposures above one year and thus reducing refinancing needs in the shorter term. The maintenance of an adequate ratio between medium to long-term liabilities and assets aims at avoiding pressures on short-term sources, whether present or future. The standard measures taken for such purposes are the following: • the spreading of the maturity of funding operations in order to reduce the usage of less stable funding sources, while in the meantime optimizing the cost of funding (integrated management of strategic liquidity and tactical liquidity); • the financing of growth through strategic funding activities, setting the most appropriate maturities (yearly funding plan); • the balancing of medium/to long-term wholesale funding requirements with the need to minimise costs, by diversifying sources, national markets, currencies of issuance and instruments used (realisation of the yearly funding plan). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 392 2018 Annual Report and Accounts · UniCredit Strategies and processes to manage the liquidity risk The Group’s liquidity framework is based upon the Liquidity Risk Mismatch Model which is characterised by the following fundamental principles: • short-term liquidity risk management (operational liquidity), which considers the events that will impact upon the Group’s liquidity position from 1 day up to one year. The primary objective is to maintain the Group’s capacity to fulfil its ordinary and extraordinary payment obligations while minimizing the relevant costs. • structural liquidity risk management (structural risk), which considers the events that will impact upon the Group’s liquidity position over one year. The primary objective is to maintain an adequate ratio between medium/long term liabilities and medium to long-term assets, with a view to avoid pressures on short-term funding sources (both current and future), while in the meantime optimizing the cost of funding. • stress tests: Liquidity risk is a low probability, high impact event. Therefore stress testing is an excellent tool to reveal potential vulnerabilities in the Balance Sheet. The Bank uses several scenarios ranging from general market crisis to idiosyncratic crisis, and a combination hereof. In this context, the mismatch model takes into account all assets, liabilities, off-balance sheet positions and also both present and future events which generate certain or potential cash flows for the Group, thereby protecting the Group Banks/Companies from risks related to the transformation of maturity. Moreover, the liquidity risk is included in the Group’s risk appetite framework through some specific liquidity indicators. Short-term liquidity management Short-term liquidity management aims at ensuring that the Group remains in a position to fulfil its cash payment obligations, whether expected or unexpected, focused on the exposure for the first 12 months. The standard measures taken for such purposes are the following: • management of the access to payment systems (operational liquidity management); • management of cash payments to be made and monitoring of the level of liquidity reserves and the extent of their utilization (analysis and active management of the maturity ladder). These principles are applicable at Group level and have to be used across the liquidity reference banks. The operative maturity ladder is composed by the net contractual cash flows (in/outflows) affecting the cash position at Central Banks or “Nostro Account”. Therefore, these flows impact directly the “core liquidity” of the bank, over pre-defined time buckets. The operative maturity ladder is composed of the following building-blocks: • primary gap, which shows the net wholesale refinancing requirements over the various time-buckets of the horizon. • counterbalancing capacity, which shows the amount of unencumbered securities that are accepted as collateral by Central Banks and/or market counterparties. The counterbalancing capacity is considered at its “liquidity value” (i.e. the market value minus the applicable haircut). • cumulative gap, which is the sum of the previous components. • reservation for unexpected flows, which consists of liquidity adjustment to the operative maturity ladder, to consider a buffer that can be used by the Treasury to refinance unexpected outflows impacting the Central Bank position (included in the short-term buckets). The reservation for unexpected flows takes into account the volatility of the funding needs of the commercial asset portfolio, the volatility of the commercial funding sources, including potential concentration effects, the change of liquidity value of the counterbalancing capacity due to observed market price changes. The operative maturity ladder is included in the Group risk appetite framework, with a limit of 0 on the 3 months bucket. The Group adopts also the cash horizon as a synthetic indicator of the short-term liquidity risk levels. The cash horizon identifies the number of days after which the relevant entity is no longer able to meet its liquidity obligations as expressed in the operative maturity ladder, after having exhausted the available counterbalancing capacity. Structural liquidity management The Group’s structural liquidity management aims to limit refinancing exposures above one year and thus reducing refinancing needs in the shorter term. The maintenance of an adequate ratio between medium to long-term liabilities and assets aims at avoiding pressures on short-term sources, whether present or future. The standard measures taken for such purposes are the following: • the spreading of the maturity of funding operations in order to reduce the usage of less stable funding sources, while in the meantime optimizing the cost of funding (integrated management of strategic liquidity and tactical liquidity); • the financing of growth through strategic funding activities, setting the most appropriate maturities (yearly funding plan); • the balancing of medium/to long-term wholesale funding requirements with the need to minimise costs, by diversifying sources, national markets, currencies of issuance and instruments used (realisation of the yearly funding plan). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 392 2018 Annual Report and Accounts · UniCredit Strategies and processes to manage the liquidity risk The Group’s liquidity framework is based upon the Liquidity Risk Mismatch Model which is characterised by the following fundamental principles: • short-term liquidity risk management (operational liquidity), which considers the events that will impact upon the Group’s liquidity position from 1 day up to one year. The primary objective is to maintain the Group’s capacity to fulfil its ordinary and extraordinary payment obligations while minimizing the relevant costs. • structural liquidity risk management (structural risk), which considers the events that will impact upon the Group’s liquidity position over one year. The primary objective is to maintain an adequate ratio between medium/long term liabilities and medium to long-term assets, with a view to avoid pressures on short-term funding sources (both current and future), while in the meantime optimizing the cost of funding. • stress tests: Liquidity risk is a low probability, high impact event. Therefore stress testing is an excellent tool to reveal potential vulnerabilities in the Balance Sheet. The Bank uses several scenarios ranging from general market crisis to idiosyncratic crisis, and a combination hereof. In this context, the mismatch model takes into account all assets, liabilities, off-balance sheet positions and also both present and future events which generate certain or potential cash flows for the Group, thereby protecting the Group Banks/Companies from risks related to the transformation of maturity. Moreover, the liquidity risk is included in the Group’s risk appetite framework through some specific liquidity indicators. Short-term liquidity management Short-term liquidity management aims at ensuring that the Group remains in a position to fulfil its cash payment obligations, whether expected or unexpected, focused on the exposure for the first 12 months. The standard measures taken for such purposes are the following: • management of the access to payment systems (operational liquidity management); • management of cash payments to be made and monitoring of the level of liquidity reserves and the extent of their utilization (analysis and active management of the maturity ladder). These principles are applicable at Group level and have to be used across the liquidity reference banks. The operative maturity ladder is composed by the net contractual cash flows (in/outflows) affecting the cash position at Central Banks or “Nostro Account”. Therefore, these flows impact directly the “core liquidity” of the bank, over pre-defined time buckets. The operative maturity ladder is composed of the following building-blocks: • primary gap, which shows the net wholesale refinancing requirements over the various time-buckets of the horizon. • counterbalancing capacity, which shows the amount of unencumbered securities that are accepted as collateral by Central Banks and/or market counterparties. The counterbalancing capacity is considered at its “liquidity value” (i.e. the market value minus the applicable haircut). • cumulative gap, which is the sum of the previous components. • reservation for unexpected flows, which consists of liquidity adjustment to the operative maturity ladder, to consider a buffer that can be used by the Treasury to refinance unexpected outflows impacting the Central Bank position (included in the short-term buckets). The reservation for unexpected flows takes into account the volatility of the funding needs of the commercial asset portfolio, the volatility of the commercial funding sources, including potential concentration effects, the change of liquidity value of the counterbalancing capacity due to observed market price changes. The operative maturity ladder is included in the Group risk appetite framework, with a limit of 0 on the 3 months bucket. The Group adopts also the cash horizon as a synthetic indicator of the short-term liquidity risk levels. The cash horizon identifies the number of days after which the relevant entity is no longer able to meet its liquidity obligations as expressed in the operative maturity ladder, after having exhausted the available counterbalancing capacity. Structural liquidity management The Group’s structural liquidity management aims to limit refinancing exposures above one year and thus reducing refinancing needs in the shorter term. The maintenance of an adequate ratio between medium to long-term liabilities and assets aims at avoiding pressures on short-term sources, whether present or future. The standard measures taken for such purposes are the following: • the spreading of the maturity of funding operations in order to reduce the usage of less stable funding sources, while in the meantime optimizing the cost of funding (integrated management of strategic liquidity and tactical liquidity); • the financing of growth through strategic funding activities, setting the most appropriate maturities (yearly funding plan); • the balancing of medium/to long-term wholesale funding requirements with the need to minimise costs, by diversifying sources, national markets, currencies of issuance and instruments used (realisation of the yearly funding plan). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 392 2018 Annual Report and Accounts · UniCredit Strategies and processes to manage the liquidity risk The Group’s liquidity framework is based upon the Liquidity Risk Mismatch Model which is characterised by the following fundamental principles: • short-term liquidity risk management (operational liquidity), which considers the events that will impact upon the Group’s liquidity position from 1 day up to one year. The primary objective is to maintain the Group’s capacity to fulfil its ordinary and extraordinary payment obligations while minimizing the relevant costs. • structural liquidity risk management (structural risk), which considers the events that will impact upon the Group’s liquidity position over one year. The primary objective is to maintain an adequate ratio between medium/long term liabilities and medium to long-term assets, with a view to avoid pressures on short-term funding sources (both current and future), while in the meantime optimizing the cost of funding. • stress tests: Liquidity risk is a low probability, high impact event. Therefore stress testing is an excellent tool to reveal potential vulnerabilities in the Balance Sheet. The Bank uses several scenarios ranging from general market crisis to idiosyncratic crisis, and a combination hereof. In this context, the mismatch model takes into account all assets, liabilities, off-balance sheet positions and also both present and future events which generate certain or potential cash flows for the Group, thereby protecting the Group Banks/Companies from risks related to the transformation of maturity. Moreover, the liquidity risk is included in the Group’s risk appetite framework through some specific liquidity indicators. Short-term liquidity management Short-term liquidity management aims at ensuring that the Group remains in a position to fulfil its cash payment obligations, whether expected or unexpected, focused on the exposure for the first 12 months. The standard measures taken for such purposes are the following: • management of the access to payment systems (operational liquidity management); • management of cash payments to be made and monitoring of the level of liquidity reserves and the extent of their utilization (analysis and active management of the maturity ladder). These principles are applicable at Group level and have to be used across the liquidity reference banks. The operative maturity ladder is composed by the net contractual cash flows (in/outflows) affecting the cash position at Central Banks or “Nostro Account”. Therefore, these flows impact directly the “core liquidity” of the bank, over pre-defined time buckets. The operative maturity ladder is composed of the following building-blocks: • primary gap, which shows the net wholesale refinancing requirements over the various time-buckets of the horizon. • counterbalancing capacity, which shows the amount of unencumbered securities that are accepted as collateral by Central Banks and/or market counterparties. The counterbalancing capacity is considered at its “liquidity value” (i.e. the market value minus the applicable haircut). • cumulative gap, which is the sum of the previous components. • reservation for unexpected flows, which consists of liquidity adjustment to the operative maturity ladder, to consider a buffer that can be used by the Treasury to refinance unexpected outflows impacting the Central Bank position (included in the short-term buckets). The reservation for unexpected flows takes into account the volatility of the funding needs of the commercial asset portfolio, the volatility of the commercial funding sources, including potential concentration effects, the change of liquidity value of the counterbalancing capacity due to observed market price changes. The operative maturity ladder is included in the Group risk appetite framework, with a limit of 0 on the 3 months bucket. The Group adopts also the cash horizon as a synthetic indicator of the short-term liquidity risk levels. The cash horizon identifies the number of days after which the relevant entity is no longer able to meet its liquidity obligations as expressed in the operative maturity ladder, after having exhausted the available counterbalancing capacity. Structural liquidity management The Group’s structural liquidity management aims to limit refinancing exposures above one year and thus reducing refinancing needs in the shorter term. The maintenance of an adequate ratio between medium to long-term liabilities and assets aims at avoiding pressures on short-term sources, whether present or future. The standard measures taken for such purposes are the following: • the spreading of the maturity of funding operations in order to reduce the usage of less stable funding sources, while in the meantime optimizing the cost of funding (integrated management of strategic liquidity and tactical liquidity); • the financing of growth through strategic funding activities, setting the most appropriate maturities (yearly funding plan); • the balancing of medium/to long-term wholesale funding requirements with the need to minimise costs, by diversifying sources, national markets, currencies of issuance and instruments used (realisation of the yearly funding plan). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 392 2018 Annual Report and Accounts · UniCredit Strategies and processes to manage the liquidity risk The Group’s liquidity framework is based upon the Liquidity Risk Mismatch Model which is characterised by the following fundamental principles: • short-term liquidity risk management (operational liquidity), which considers the events that will impact upon the Group’s liquidity position from 1 day up to one year. The primary objective is to maintain the Group’s capacity to fulfil its ordinary and extraordinary payment obligations while minimizing the relevant costs. • structural liquidity risk management (structural risk), which considers the events that will impact upon the Group’s liquidity position over one year. The primary objective is to maintain an adequate ratio between medium/long term liabilities and medium to long-term assets, with a view to avoid pressures on short-term funding sources (both current and future), while in the meantime optimizing the cost of funding. • stress tests: Liquidity risk is a low probability, high impact event. Therefore stress testing is an excellent tool to reveal potential vulnerabilities in the Balance Sheet. The Bank uses several scenarios ranging from general market crisis to idiosyncratic crisis, and a combination hereof. In this context, the mismatch model takes into account all assets, liabilities, off-balance sheet positions and also both present and future events which generate certain or potential cash flows for the Group, thereby protecting the Group Banks/Companies from risks related to the transformation of maturity. Moreover, the liquidity risk is included in the Group’s risk appetite framework through some specific liquidity indicators. Short-term liquidity management Short-term liquidity management aims at ensuring that the Group remains in a position to fulfil its cash payment obligations, whether expected or unexpected, focused on the exposure for the first 12 months. The standard measures taken for such purposes are the following: • management of the access to payment systems (operational liquidity management); • management of cash payments to be made and monitoring of the level of liquidity reserves and the extent of their utilization (analysis and active management of the maturity ladder). These principles are applicable at Group level and have to be used across the liquidity reference banks. The operative maturity ladder is composed by the net contractual cash flows (in/outflows) affecting the cash position at Central Banks or “Nostro Account”. Therefore, these flows impact directly the “core liquidity” of the bank, over pre-defined time buckets. The operative maturity ladder is composed of the following building-blocks: • primary gap, which shows the net wholesale refinancing requirements over the various time-buckets of the horizon. • counterbalancing capacity, which shows the amount of unencumbered securities that are accepted as collateral by Central Banks and/or market counterparties. The counterbalancing capacity is considered at its “liquidity value” (i.e. the market value minus the applicable haircut). • cumulative gap, which is the sum of the previous components. • reservation for unexpected flows, which consists of liquidity adjustment to the operative maturity ladder, to consider a buffer that can be used by the Treasury to refinance unexpected outflows impacting the Central Bank position (included in the short-term buckets). The reservation for unexpected flows takes into account the volatility of the funding needs of the commercial asset portfolio, the volatility of the commercial funding sources, including potential concentration effects, the change of liquidity value of the counterbalancing capacity due to observed market price changes. The operative maturity ladder is included in the Group risk appetite framework, with a limit of 0 on the 3 months bucket. The Group adopts also the cash horizon as a synthetic indicator of the short-term liquidity risk levels. The cash horizon identifies the number of days after which the relevant entity is no longer able to meet its liquidity obligations as expressed in the operative maturity ladder, after having exhausted the available counterbalancing capacity. Structural liquidity management The Group’s structural liquidity management aims to limit refinancing exposures above one year and thus reducing refinancing needs in the shorter term. The maintenance of an adequate ratio between medium to long-term liabilities and assets aims at avoiding pressures on short-term sources, whether present or future. The standard measures taken for such purposes are the following: • the spreading of the maturity of funding operations in order to reduce the usage of less stable funding sources, while in the meantime optimizing the cost of funding (integrated management of strategic liquidity and tactical liquidity); • the financing of growth through strategic funding activities, setting the most appropriate maturities (yearly funding plan); • the balancing of medium/to long-term wholesale funding requirements with the need to minimise costs, by diversifying sources, national markets, currencies of issuance and instruments used (realisation of the yearly funding plan). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 393 The main metric used to measure the medium/long-term position is the net stable funding ratio, as described by Basel III. In general, the net stable funding ratio is calculated as the ratio between liabilities and assets. All the balance sheet items are mapped according to their contractual maturity. Furthermore, they are assigned a weight that reflect, for the liabilities, their stability within the balance sheet and, for the assets, the portion that is rolled-over by the bank or that, more in general, cannot be traded on the market in exchange of liquidity that would generate relief to the institution. The internal limit set at 101% means that stable liabilities have to fully cover the requirements of funding generated by the assets. A key structural metric, aimed at measuring the funding needs originated from the commercial activity of the Bank, is the funding gap (an improved loans-to-deposits gap). It measures the need of funding, the bank has to finance on the wholesale market. The indicator is integrated in the risk appetite framework with the aim of monitoring and managing the level of funding coverage of net loans to customers, coming from funding sources not exclusively obtained through Treasury/Finance activity. Liquidity under stress Stress testing is a risk management technique used to evaluate the potential effects on an institution’s financial condition of a specific event and/or movement in a set of financial variables. As a forward looking tool, liquidity stress testing diagnostics the institution’s liquidity risk. In particular the results of the stress tests are used to: • determine liquidity limits both in quantitative and qualitative terms; • plan and carry out alternative funding transactions for purposes of off-setting liquidity outflows; • structure/modify the liquidity profile of the Group’s assets; • provide support to the development of the liquidity contingency plan. In order to execute stress tests that are consistent across the liquidity reference banks, the Group has a centralised approach to stress testing, requiring each local liquidity reference bank to run the same scenario set under the coordination of the Group risk management. The Group runs liquidity scenarios and sensitivity analyses on a regular basis, the latter by assessing the impact on an institution's financial condition of a move in one particular risk factor, whereas scenario tests tend to consider the impact of simultaneous moves in a number of risk factors, based on a hypothetical, well defined and consistent stress scenario. At macro level the Group identifies three different types of potential liquidity crisis: • market (systemic, global or sector): market downturn scenario. This scenario consists of a sudden turmoil in a monetary and capital market, which may be caused by closure (or limited access) to market/settlement system, critical political events, country crisis, credit crunch, etc.; • specific to the Group, or part of it (idiosyncratic): name crisis; the assumptions could be operational risk, events related to the worsened perception of the Group reputational risk and a downgrade in UniCredit S.p.A. rating or other Group legal entities; • a combination of market and specific crisis: combined scenario. These scenarios are expected to cause a substantial reduction in the funding coming from rating-sensitive customers, CD/CPs’ investors and inter-bank markets. In addition, a possible usage of the undrawn portion of the committed lines is considered. The combined scenario is defined as a general negative development in the market environment and also as a factual or market-hypothesized problem specific to the Group. During 2018 the Group liquidity stress test result on the combined scenario was always positive. In addition to the internal stress test, the bank adopts and monitors also the liquidity coverage ratio (LCR), The liquidity coverage ratio is calculated in accordance with the provisions of Implementing Regulation (EU) 2016/322 in force from 1 October 2016. It is the ratio between the high quality liquid assets (HQLA) and the net cash outflows expected over the coming 30 days, under stress test conditions. The compliance with this regulatory requirement is constantly monitored by setting, in the risk appetite framework, internal limitations above the binding minimum level of 100%. Among the liquidity outflows that occur in a stress scenario, the bank has monitor on a monthly basis the impact in terms of additionally required collateral that the bank may be required to provide given a downgrade of its own credit rating. All relevant rating agencies are considered. The testing is carried out on a legal entity level, but consolidated reporting is available to analyse the impact on group wide basis. Specific attention is dedicated to exposures towards special purpose vehicles (SPV). At the Group level the amount of material outflows due to deterioration of own credit quality, included in the components of the Liquidity Coverage Ratio, is equal to €5,235 million as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 393 The main metric used to measure the medium/long-term position is the net stable funding ratio, as described by Basel III. In general, the net stable funding ratio is calculated as the ratio between liabilities and assets. All the balance sheet items are mapped according to their contractual maturity. Furthermore, they are assigned a weight that reflect, for the liabilities, their stability within the balance sheet and, for the assets, the portion that is rolled-over by the bank or that, more in general, cannot be traded on the market in exchange of liquidity that would generate relief to the institution. The internal limit set at 101% means that stable liabilities have to fully cover the requirements of funding generated by the assets. A key structural metric, aimed at measuring the funding needs originated from the commercial activity of the Bank, is the funding gap (an improved loans-to-deposits gap). It measures the need of funding, the bank has to finance on the wholesale market. The indicator is integrated in the risk appetite framework with the aim of monitoring and managing the level of funding coverage of net loans to customers, coming from funding sources not exclusively obtained through Treasury/Finance activity. Liquidity under stress Stress testing is a risk management technique used to evaluate the potential effects on an institution’s financial condition of a specific event and/or movement in a set of financial variables. As a forward looking tool, liquidity stress testing diagnostics the institution’s liquidity risk. In particular the results of the stress tests are used to: • determine liquidity limits both in quantitative and qualitative terms; • plan and carry out alternative funding transactions for purposes of off-setting liquidity outflows; • structure/modify the liquidity profile of the Group’s assets; • provide support to the development of the liquidity contingency plan. In order to execute stress tests that are consistent across the liquidity reference banks, the Group has a centralised approach to stress testing, requiring each local liquidity reference bank to run the same scenario set under the coordination of the Group risk management. The Group runs liquidity scenarios and sensitivity analyses on a regular basis, the latter by assessing the impact on an institution's financial condition of a move in one particular risk factor, whereas scenario tests tend to consider the impact of simultaneous moves in a number of risk factors, based on a hypothetical, well defined and consistent stress scenario. At macro level the Group identifies three different types of potential liquidity crisis: • market (systemic, global or sector): market downturn scenario. This scenario consists of a sudden turmoil in a monetary and capital market, which may be caused by closure (or limited access) to market/settlement system, critical political events, country crisis, credit crunch, etc.; • specific to the Group, or part of it (idiosyncratic): name crisis; the assumptions could be operational risk, events related to the worsened perception of the Group reputational risk and a downgrade in UniCredit S.p.A. rating or other Group legal entities; • a combination of market and specific crisis: combined scenario. These scenarios are expected to cause a substantial reduction in the funding coming from rating-sensitive customers, CD/CPs’ investors and inter-bank markets. In addition, a possible usage of the undrawn portion of the committed lines is considered. The combined scenario is defined as a general negative development in the market environment and also as a factual or market-hypothesized problem specific to the Group. During 2018 the Group liquidity stress test result on the combined scenario was always positive. In addition to the internal stress test, the bank adopts and monitors also the liquidity coverage ratio (LCR), The liquidity coverage ratio is calculated in accordance with the provisions of Implementing Regulation (EU) 2016/322 in force from 1 October 2016. It is the ratio between the high quality liquid assets (HQLA) and the net cash outflows expected over the coming 30 days, under stress test conditions. The compliance with this regulatory requirement is constantly monitored by setting, in the risk appetite framework, internal limitations above the binding minimum level of 100%. Among the liquidity outflows that occur in a stress scenario, the bank has monitor on a monthly basis the impact in terms of additionally required collateral that the bank may be required to provide given a downgrade of its own credit rating. All relevant rating agencies are considered. The testing is carried out on a legal entity level, but consolidated reporting is available to analyse the impact on group wide basis. Specific attention is dedicated to exposures towards special purpose vehicles (SPV). At the Group level the amount of material outflows due to deterioration of own credit quality, included in the components of the Liquidity Coverage Ratio, is equal to €5,235 million as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 393 The main metric used to measure the medium/long-term position is the net stable funding ratio, as described by Basel III. In general, the net stable funding ratio is calculated as the ratio between liabilities and assets. All the balance sheet items are mapped according to their contractual maturity. Furthermore, they are assigned a weight that reflect, for the liabilities, their stability within the balance sheet and, for the assets, the portion that is rolled-over by the bank or that, more in general, cannot be traded on the market in exchange of liquidity that would generate relief to the institution. The internal limit set at 101% means that stable liabilities have to fully cover the requirements of funding generated by the assets. A key structural metric, aimed at measuring the funding needs originated from the commercial activity of the Bank, is the funding gap (an improved loans-to-deposits gap). It measures the need of funding, the bank has to finance on the wholesale market. The indicator is integrated in the risk appetite framework with the aim of monitoring and managing the level of funding coverage of net loans to customers, coming from funding sources not exclusively obtained through Treasury/Finance activity. Liquidity under stress Stress testing is a risk management technique used to evaluate the potential effects on an institution’s financial condition of a specific event and/or movement in a set of financial variables. As a forward looking tool, liquidity stress testing diagnostics the institution’s liquidity risk. In particular the results of the stress tests are used to: • determine liquidity limits both in quantitative and qualitative terms; • plan and carry out alternative funding transactions for purposes of off-setting liquidity outflows; • structure/modify the liquidity profile of the Group’s assets; • provide support to the development of the liquidity contingency plan. In order to execute stress tests that are consistent across the liquidity reference banks, the Group has a centralised approach to stress testing, requiring each local liquidity reference bank to run the same scenario set under the coordination of the Group risk management. The Group runs liquidity scenarios and sensitivity analyses on a regular basis, the latter by assessing the impact on an institution's financial condition of a move in one particular risk factor, whereas scenario tests tend to consider the impact of simultaneous moves in a number of risk factors, based on a hypothetical, well defined and consistent stress scenario. At macro level the Group identifies three different types of potential liquidity crisis: • market (systemic, global or sector): market downturn scenario. This scenario consists of a sudden turmoil in a monetary and capital market, which may be caused by closure (or limited access) to market/settlement system, critical political events, country crisis, credit crunch, etc.; • specific to the Group, or part of it (idiosyncratic): name crisis; the assumptions could be operational risk, events related to the worsened perception of the Group reputational risk and a downgrade in UniCredit S.p.A. rating or other Group legal entities; • a combination of market and specific crisis: combined scenario. These scenarios are expected to cause a substantial reduction in the funding coming from rating-sensitive customers, CD/CPs’ investors and inter-bank markets. In addition, a possible usage of the undrawn portion of the committed lines is considered. The combined scenario is defined as a general negative development in the market environment and also as a factual or market-hypothesized problem specific to the Group. During 2018 the Group liquidity stress test result on the combined scenario was always positive. In addition to the internal stress test, the bank adopts and monitors also the liquidity coverage ratio (LCR), The liquidity coverage ratio is calculated in accordance with the provisions of Implementing Regulation (EU) 2016/322 in force from 1 October 2016. It is the ratio between the high quality liquid assets (HQLA) and the net cash outflows expected over the coming 30 days, under stress test conditions. The compliance with this regulatory requirement is constantly monitored by setting, in the risk appetite framework, internal limitations above the binding minimum level of 100%. Among the liquidity outflows that occur in a stress scenario, the bank has monitor on a monthly basis the impact in terms of additionally required collateral that the bank may be required to provide given a downgrade of its own credit rating. All relevant rating agencies are considered. The testing is carried out on a legal entity level, but consolidated reporting is available to analyse the impact on group wide basis. Specific attention is dedicated to exposures towards special purpose vehicles (SPV). At the Group level the amount of material outflows due to deterioration of own credit quality, included in the components of the Liquidity Coverage Ratio, is equal to €5,235 million as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 393 The main metric used to measure the medium/long-term position is the net stable funding ratio, as described by Basel III. In general, the net stable funding ratio is calculated as the ratio between liabilities and assets. All the balance sheet items are mapped according to their contractual maturity. Furthermore, they are assigned a weight that reflect, for the liabilities, their stability within the balance sheet and, for the assets, the portion that is rolled-over by the bank or that, more in general, cannot be traded on the market in exchange of liquidity that would generate relief to the institution. The internal limit set at 101% means that stable liabilities have to fully cover the requirements of funding generated by the assets. A key structural metric, aimed at measuring the funding needs originated from the commercial activity of the Bank, is the funding gap (an improved loans-to-deposits gap). It measures the need of funding, the bank has to finance on the wholesale market. The indicator is integrated in the risk appetite framework with the aim of monitoring and managing the level of funding coverage of net loans to customers, coming from funding sources not exclusively obtained through Treasury/Finance activity. Liquidity under stress Stress testing is a risk management technique used to evaluate the potential effects on an institution’s financial condition of a specific event and/or movement in a set of financial variables. As a forward looking tool, liquidity stress testing diagnostics the institution’s liquidity risk. In particular the results of the stress tests are used to: • determine liquidity limits both in quantitative and qualitative terms; • plan and carry out alternative funding transactions for purposes of off-setting liquidity outflows; • structure/modify the liquidity profile of the Group’s assets; • provide support to the development of the liquidity contingency plan. In order to execute stress tests that are consistent across the liquidity reference banks, the Group has a centralised approach to stress testing, requiring each local liquidity reference bank to run the same scenario set under the coordination of the Group risk management. The Group runs liquidity scenarios and sensitivity analyses on a regular basis, the latter by assessing the impact on an institution's financial condition of a move in one particular risk factor, whereas scenario tests tend to consider the impact of simultaneous moves in a number of risk factors, based on a hypothetical, well defined and consistent stress scenario. At macro level the Group identifies three different types of potential liquidity crisis: • market (systemic, global or sector): market downturn scenario. This scenario consists of a sudden turmoil in a monetary and capital market, which may be caused by closure (or limited access) to market/settlement system, critical political events, country crisis, credit crunch, etc.; • specific to the Group, or part of it (idiosyncratic): name crisis; the assumptions could be operational risk, events related to the worsened perception of the Group reputational risk and a downgrade in UniCredit S.p.A. rating or other Group legal entities; • a combination of market and specific crisis: combined scenario. These scenarios are expected to cause a substantial reduction in the funding coming from rating-sensitive customers, CD/CPs’ investors and inter-bank markets. In addition, a possible usage of the undrawn portion of the committed lines is considered. The combined scenario is defined as a general negative development in the market environment and also as a factual or market-hypothesized problem specific to the Group. During 2018 the Group liquidity stress test result on the combined scenario was always positive. In addition to the internal stress test, the bank adopts and monitors also the liquidity coverage ratio (LCR), The liquidity coverage ratio is calculated in accordance with the provisions of Implementing Regulation (EU) 2016/322 in force from 1 October 2016. It is the ratio between the high quality liquid assets (HQLA) and the net cash outflows expected over the coming 30 days, under stress test conditions. The compliance with this regulatory requirement is constantly monitored by setting, in the risk appetite framework, internal limitations above the binding minimum level of 100%. Among the liquidity outflows that occur in a stress scenario, the bank has monitor on a monthly basis the impact in terms of additionally required collateral that the bank may be required to provide given a downgrade of its own credit rating. All relevant rating agencies are considered. The testing is carried out on a legal entity level, but consolidated reporting is available to analyse the impact on group wide basis. Specific attention is dedicated to exposures towards special purpose vehicles (SPV). At the Group level the amount of material outflows due to deterioration of own credit quality, included in the components of the Liquidity Coverage Ratio, is equal to €5,235 million as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 393 The main metric used to measure the medium/long-term position is the net stable funding ratio, as described by Basel III. In general, the net stable funding ratio is calculated as the ratio between liabilities and assets. All the balance sheet items are mapped according to their contractual maturity. Furthermore, they are assigned a weight that reflect, for the liabilities, their stability within the balance sheet and, for the assets, the portion that is rolled-over by the bank or that, more in general, cannot be traded on the market in exchange of liquidity that would generate relief to the institution. The internal limit set at 101% means that stable liabilities have to fully cover the requirements of funding generated by the assets. A key structural metric, aimed at measuring the funding needs originated from the commercial activity of the Bank, is the funding gap (an improved loans-to-deposits gap). It measures the need of funding, the bank has to finance on the wholesale market. The indicator is integrated in the risk appetite framework with the aim of monitoring and managing the level of funding coverage of net loans to customers, coming from funding sources not exclusively obtained through Treasury/Finance activity. Liquidity under stress Stress testing is a risk management technique used to evaluate the potential effects on an institution’s financial condition of a specific event and/or movement in a set of financial variables. As a forward looking tool, liquidity stress testing diagnostics the institution’s liquidity risk. In particular the results of the stress tests are used to: • determine liquidity limits both in quantitative and qualitative terms; • plan and carry out alternative funding transactions for purposes of off-setting liquidity outflows; • structure/modify the liquidity profile of the Group’s assets; • provide support to the development of the liquidity contingency plan. In order to execute stress tests that are consistent across the liquidity reference banks, the Group has a centralised approach to stress testing, requiring each local liquidity reference bank to run the same scenario set under the coordination of the Group risk management. The Group runs liquidity scenarios and sensitivity analyses on a regular basis, the latter by assessing the impact on an institution's financial condition of a move in one particular risk factor, whereas scenario tests tend to consider the impact of simultaneous moves in a number of risk factors, based on a hypothetical, well defined and consistent stress scenario. At macro level the Group identifies three different types of potential liquidity crisis: • market (systemic, global or sector): market downturn scenario. This scenario consists of a sudden turmoil in a monetary and capital market, which may be caused by closure (or limited access) to market/settlement system, critical political events, country crisis, credit crunch, etc.; • specific to the Group, or part of it (idiosyncratic): name crisis; the assumptions could be operational risk, events related to the worsened perception of the Group reputational risk and a downgrade in UniCredit S.p.A. rating or other Group legal entities; • a combination of market and specific crisis: combined scenario. These scenarios are expected to cause a substantial reduction in the funding coming from rating-sensitive customers, CD/CPs’ investors and inter-bank markets. In addition, a possible usage of the undrawn portion of the committed lines is considered. The combined scenario is defined as a general negative development in the market environment and also as a factual or market-hypothesized problem specific to the Group. During 2018 the Group liquidity stress test result on the combined scenario was always positive. In addition to the internal stress test, the bank adopts and monitors also the liquidity coverage ratio (LCR), The liquidity coverage ratio is calculated in accordance with the provisions of Implementing Regulation (EU) 2016/322 in force from 1 October 2016. It is the ratio between the high quality liquid assets (HQLA) and the net cash outflows expected over the coming 30 days, under stress test conditions. The compliance with this regulatory requirement is constantly monitored by setting, in the risk appetite framework, internal limitations above the binding minimum level of 100%. Among the liquidity outflows that occur in a stress scenario, the bank has monitor on a monthly basis the impact in terms of additionally required collateral that the bank may be required to provide given a downgrade of its own credit rating. All relevant rating agencies are considered. The testing is carried out on a legal entity level, but consolidated reporting is available to analyse the impact on group wide basis. Specific attention is dedicated to exposures towards special purpose vehicles (SPV). At the Group level the amount of material outflows due to deterioration of own credit quality, included in the components of the Liquidity Coverage Ratio, is equal to €5,235 million as at 31 December 2018. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 394 2018 Annual Report and Accounts · UniCredit Risk Mitigatio Monitoring and reporting In the Group the governance and control of liquidity risk is mainly performed through the setting and monitoring of operating restrictions, managerial and regulatory, aimed at preventing potential vulnerabilities in the bank's ability to meet its cash flow obligations that are embedded in risk metrics limits or warning/trigger levels. The short-term liquidity limits are monitored and reported on a daily basis. The structural liquidity ratios and their exposure against limits are monitored and reported on a monthly basis. The survival period and the result of the liquidity stress test are reported and monitored on a weekly basis. In case of limit breach or warning level activation at Group level, the Group risk management function investigates the rationale of the events, triggering the proper escalation and reporting them to the relevant committees. Mitigation factors Liquidity risk is considered a relevant risk category for the risk appetite determination of the Group. The practices and processes are included in the “Liquidity management & control Group policy”, that defines the principles that Holding Company and legal entities have to apply for hedging and mitigating this risk and the roles to be interpreted by the different committees and functions. In addition to have an adequate liquidity buffer to face unexpected outflows and robust and regular up-to-date stress testing performed on a regular basis, the main liquidity mitigation factors for UniCredit group are: • an accurate plan of short-term and medium to long-term liquidity needs, to be monitored on a monthly basis; • an effective contingency liquidity policy with feasible and up-to-date contingency action plan to be executed in case of crisis; • a system of early warning indicators such to anticipate any potential liquidity crisis and give enough time to the Group to restore its safe liquidity profile. Funding plan The funding plan plays a fundamental role in the overall liquidity management influencing both the short-term and the structural position. The funding plan, defined at each level (i.e. Group, liquidity reference bank and legal entity level), is developed consistently with a sustainable analysis of uses and sources, both on short-term and structural positions. One of the objectives of accessing the medium and long-term channels is to avoid the pressure on the short-term liquidity position. The funding plan is updated at least on a yearly basis and is approved by the Board of Directors. Moreover, it is aligned with the budgeting process and the risk appetite framework. The Holding Company accesses the market for Group capital instruments. The Holding Company coordinates the market access of the liquidity reference banks and legal entities, while the liquidity reference banks coordinate the access of the legal entities falling within their perimeter. Each legal entity or liquidity reference bank can access the markets for medium and long-term funding, in order to increase its self-sufficiency, exploit market opportunities and functional specialisation, safeguarding the optimisation of cost of funds of the Group. Group planning, finance, shareholding and investor relations function is responsible for the elaboration of the funding plan. Risk management is responsible for providing an independent assessment of the funding plan. Group contingency liquidity management The liquidity crises usually develop quickly and the relevant signals may be either difficult to interpret or may even be lacking; it is, therefore, important to clearly identify players, powers, responsibilities, communication and reporting criteria, in order to increase significantly the probability of overcoming the state of emergency successfully. A liquidity crisis could be classified as systemic (e.g. overall capital and money market disruption) or specific (e.g. specific to the bank), or a combination of both. The ability to act in time is essential to minimise the potentially disruptive consequences of a liquidity crisis. The analysis of the stress tests will form a valuable tool to identify the expected consequences and to define up front the most suitable actions in a certain crisis scenario. In combination with the early warning Indicators the organisation may be able to reduce the negative liquidity effects in the initial stages of a crisis. Therefore, a crisis-mode operating model, that can be activated effectively in case of crisis according to an approved procedure, has been defined. In order to be able to proceed timely, a set of mitigating actions have been pre-defined. Depending on the situation some of these actions can then be approved for execution. The Group contingency liquidity management global policy has the objective of ensuring effective interventions starting from the very outset (initial hours) of the liquidity crisis, through the definition of specific guidelines on activation, meetings, decisions, actions and communications. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 394 2018 Annual Report and Accounts · UniCredit Risk Mitigatio Monitoring and reporting In the Group the governance and control of liquidity risk is mainly performed through the setting and monitoring of operating restrictions, managerial and regulatory, aimed at preventing potential vulnerabilities in the bank's ability to meet its cash flow obligations that are embedded in risk metrics limits or warning/trigger levels. The short-term liquidity limits are monitored and reported on a daily basis. The structural liquidity ratios and their exposure against limits are monitored and reported on a monthly basis. The survival period and the result of the liquidity stress test are reported and monitored on a weekly basis. In case of limit breach or warning level activation at Group level, the Group risk management function investigates the rationale of the events, triggering the proper escalation and reporting them to the relevant committees. Mitigation factors Liquidity risk is considered a relevant risk category for the risk appetite determination of the Group. The practices and processes are included in the “Liquidity management & control Group policy”, that defines the principles that Holding Company and legal entities have to apply for hedging and mitigating this risk and the roles to be interpreted by the different committees and functions. In addition to have an adequate liquidity buffer to face unexpected outflows and robust and regular up-to-date stress testing performed on a regular basis, the main liquidity mitigation factors for UniCredit group are: • an accurate plan of short-term and medium to long-term liquidity needs, to be monitored on a monthly basis; • an effective contingency liquidity policy with feasible and up-to-date contingency action plan to be executed in case of crisis; • a system of early warning indicators such to anticipate any potential liquidity crisis and give enough time to the Group to restore its safe liquidity profile. Funding plan The funding plan plays a fundamental role in the overall liquidity management influencing both the short-term and the structural position. The funding plan, defined at each level (i.e. Group, liquidity reference bank and legal entity level), is developed consistently with a sustainable analysis of uses and sources, both on short-term and structural positions. One of the objectives of accessing the medium and long-term channels is to avoid the pressure on the short-term liquidity position. The funding plan is updated at least on a yearly basis and is approved by the Board of Directors. Moreover, it is aligned with the budgeting process and the risk appetite framework. The Holding Company accesses the market for Group capital instruments. The Holding Company coordinates the market access of the liquidity reference banks and legal entities, while the liquidity reference banks coordinate the access of the legal entities falling within their perimeter. Each legal entity or liquidity reference bank can access the markets for medium and long-term funding, in order to increase its self-sufficiency, exploit market opportunities and functional specialisation, safeguarding the optimisation of cost of funds of the Group. Group planning, finance, shareholding and investor relations function is responsible for the elaboration of the funding plan. Risk management is responsible for providing an independent assessment of the funding plan. Group contingency liquidity management The liquidity crises usually develop quickly and the relevant signals may be either difficult to interpret or may even be lacking; it is, therefore, important to clearly identify players, powers, responsibilities, communication and reporting criteria, in order to increase significantly the probability of overcoming the state of emergency successfully. A liquidity crisis could be classified as systemic (e.g. overall capital and money market disruption) or specific (e.g. specific to the bank), or a combination of both. The ability to act in time is essential to minimise the potentially disruptive consequences of a liquidity crisis. The analysis of the stress tests will form a valuable tool to identify the expected consequences and to define up front the most suitable actions in a certain crisis scenario. In combination with the early warning Indicators the organisation may be able to reduce the negative liquidity effects in the initial stages of a crisis. Therefore, a crisis-mode operating model, that can be activated effectively in case of crisis according to an approved procedure, has been defined. In order to be able to proceed timely, a set of mitigating actions have been pre-defined. Depending on the situation some of these actions can then be approved for execution. The Group contingency liquidity management global policy has the objective of ensuring effective interventions starting from the very outset (initial hours) of the liquidity crisis, through the definition of specific guidelines on activation, meetings, decisions, actions and communications. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 394 2018 Annual Report and Accounts · UniCredit Risk Mitigatio Monitoring and reporting In the Group the governance and control of liquidity risk is mainly performed through the setting and monitoring of operating restrictions, managerial and regulatory, aimed at preventing potential vulnerabilities in the bank's ability to meet its cash flow obligations that are embedded in risk metrics limits or warning/trigger levels. The short-term liquidity limits are monitored and reported on a daily basis. The structural liquidity ratios and their exposure against limits are monitored and reported on a monthly basis. The survival period and the result of the liquidity stress test are reported and monitored on a weekly basis. In case of limit breach or warning level activation at Group level, the Group risk management function investigates the rationale of the events, triggering the proper escalation and reporting them to the relevant committees. Mitigation factors Liquidity risk is considered a relevant risk category for the risk appetite determination of the Group. The practices and processes are included in the “Liquidity management & control Group policy”, that defines the principles that Holding Company and legal entities have to apply for hedging and mitigating this risk and the roles to be interpreted by the different committees and functions. In addition to have an adequate liquidity buffer to face unexpected outflows and robust and regular up-to-date stress testing performed on a regular basis, the main liquidity mitigation factors for UniCredit group are: • an accurate plan of short-term and medium to long-term liquidity needs, to be monitored on a monthly basis; • an effective contingency liquidity policy with feasible and up-to-date contingency action plan to be executed in case of crisis; • a system of early warning indicators such to anticipate any potential liquidity crisis and give enough time to the Group to restore its safe liquidity profile. Funding plan The funding plan plays a fundamental role in the overall liquidity management influencing both the short-term and the structural position. The funding plan, defined at each level (i.e. Group, liquidity reference bank and legal entity level), is developed consistently with a sustainable analysis of uses and sources, both on short-term and structural positions. One of the objectives of accessing the medium and long-term channels is to avoid the pressure on the short-term liquidity position. The funding plan is updated at least on a yearly basis and is approved by the Board of Directors. Moreover, it is aligned with the budgeting process and the risk appetite framework. The Holding Company accesses the market for Group capital instruments. The Holding Company coordinates the market access of the liquidity reference banks and legal entities, while the liquidity reference banks coordinate the access of the legal entities falling within their perimeter. Each legal entity or liquidity reference bank can access the markets for medium and long-term funding, in order to increase its self-sufficiency, exploit market opportunities and functional specialisation, safeguarding the optimisation of cost of funds of the Group. Group planning, finance, shareholding and investor relations function is responsible for the elaboration of the funding plan. Risk management is responsible for providing an independent assessment of the funding plan. Group contingency liquidity management The liquidity crises usually develop quickly and the relevant signals may be either difficult to interpret or may even be lacking; it is, therefore, important to clearly identify players, powers, responsibilities, communication and reporting criteria, in order to increase significantly the probability of overcoming the state of emergency successfully. A liquidity crisis could be classified as systemic (e.g. overall capital and money market disruption) or specific (e.g. specific to the bank), or a combination of both. The ability to act in time is essential to minimise the potentially disruptive consequences of a liquidity crisis. The analysis of the stress tests will form a valuable tool to identify the expected consequences and to define up front the most suitable actions in a certain crisis scenario. In combination with the early warning Indicators the organisation may be able to reduce the negative liquidity effects in the initial stages of a crisis. Therefore, a crisis-mode operating model, that can be activated effectively in case of crisis according to an approved procedure, has been defined. In order to be able to proceed timely, a set of mitigating actions have been pre-defined. Depending on the situation some of these actions can then be approved for execution. The Group contingency liquidity management global policy has the objective of ensuring effective interventions starting from the very outset (initial hours) of the liquidity crisis, through the definition of specific guidelines on activation, meetings, decisions, actions and communications. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 394 2018 Annual Report and Accounts · UniCredit Risk Mitigatio Monitoring and reporting In the Group the governance and control of liquidity risk is mainly performed through the setting and monitoring of operating restrictions, managerial and regulatory, aimed at preventing potential vulnerabilities in the bank's ability to meet its cash flow obligations that are embedded in risk metrics limits or warning/trigger levels. The short-term liquidity limits are monitored and reported on a daily basis. The structural liquidity ratios and their exposure against limits are monitored and reported on a monthly basis. The survival period and the result of the liquidity stress test are reported and monitored on a weekly basis. In case of limit breach or warning level activation at Group level, the Group risk management function investigates the rationale of the events, triggering the proper escalation and reporting them to the relevant committees. Mitigation factors Liquidity risk is considered a relevant risk category for the risk appetite determination of the Group. The practices and processes are included in the “Liquidity management & control Group policy”, that defines the principles that Holding Company and legal entities have to apply for hedging and mitigating this risk and the roles to be interpreted by the different committees and functions. In addition to have an adequate liquidity buffer to face unexpected outflows and robust and regular up-to-date stress testing performed on a regular basis, the main liquidity mitigation factors for UniCredit group are: • an accurate plan of short-term and medium to long-term liquidity needs, to be monitored on a monthly basis; • an effective contingency liquidity policy with feasible and up-to-date contingency action plan to be executed in case of crisis; • a system of early warning indicators such to anticipate any potential liquidity crisis and give enough time to the Group to restore its safe liquidity profile. Funding plan The funding plan plays a fundamental role in the overall liquidity management influencing both the short-term and the structural position. The funding plan, defined at each level (i.e. Group, liquidity reference bank and legal entity level), is developed consistently with a sustainable analysis of uses and sources, both on short-term and structural positions. One of the objectives of accessing the medium and long-term channels is to avoid the pressure on the short-term liquidity position. The funding plan is updated at least on a yearly basis and is approved by the Board of Directors. Moreover, it is aligned with the budgeting process and the risk appetite framework. The Holding Company accesses the market for Group capital instruments. The Holding Company coordinates the market access of the liquidity reference banks and legal entities, while the liquidity reference banks coordinate the access of the legal entities falling within their perimeter. Each legal entity or liquidity reference bank can access the markets for medium and long-term funding, in order to increase its self-sufficiency, exploit market opportunities and functional specialisation, safeguarding the optimisation of cost of funds of the Group. Group planning, finance, shareholding and investor relations function is responsible for the elaboration of the funding plan. Risk management is responsible for providing an independent assessment of the funding plan. Group contingency liquidity management The liquidity crises usually develop quickly and the relevant signals may be either difficult to interpret or may even be lacking; it is, therefore, important to clearly identify players, powers, responsibilities, communication and reporting criteria, in order to increase significantly the probability of overcoming the state of emergency successfully. A liquidity crisis could be classified as systemic (e.g. overall capital and money market disruption) or specific (e.g. specific to the bank), or a combination of both. The ability to act in time is essential to minimise the potentially disruptive consequences of a liquidity crisis. The analysis of the stress tests will form a valuable tool to identify the expected consequences and to define up front the most suitable actions in a certain crisis scenario. In combination with the early warning Indicators the organisation may be able to reduce the negative liquidity effects in the initial stages of a crisis. Therefore, a crisis-mode operating model, that can be activated effectively in case of crisis according to an approved procedure, has been defined. In order to be able to proceed timely, a set of mitigating actions have been pre-defined. Depending on the situation some of these actions can then be approved for execution. The Group contingency liquidity management global policy has the objective of ensuring effective interventions starting from the very outset (initial hours) of the liquidity crisis, through the definition of specific guidelines on activation, meetings, decisions, actions and communications. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 394 2018 Annual Report and Accounts · UniCredit Risk Mitigatio Monitoring and reporting In the Group the governance and control of liquidity risk is mainly performed through the setting and monitoring of operating restrictions, managerial and regulatory, aimed at preventing potential vulnerabilities in the bank's ability to meet its cash flow obligations that are embedded in risk metrics limits or warning/trigger levels. The short-term liquidity limits are monitored and reported on a daily basis. The structural liquidity ratios and their exposure against limits are monitored and reported on a monthly basis. The survival period and the result of the liquidity stress test are reported and monitored on a weekly basis. In case of limit breach or warning level activation at Group level, the Group risk management function investigates the rationale of the events, triggering the proper escalation and reporting them to the relevant committees. Mitigation factors Liquidity risk is considered a relevant risk category for the risk appetite determination of the Group. The practices and processes are included in the “Liquidity management & control Group policy”, that defines the principles that Holding Company and legal entities have to apply for hedging and mitigating this risk and the roles to be interpreted by the different committees and functions. In addition to have an adequate liquidity buffer to face unexpected outflows and robust and regular up-to-date stress testing performed on a regular basis, the main liquidity mitigation factors for UniCredit group are: • an accurate plan of short-term and medium to long-term liquidity needs, to be monitored on a monthly basis; • an effective contingency liquidity policy with feasible and up-to-date contingency action plan to be executed in case of crisis; • a system of early warning indicators such to anticipate any potential liquidity crisis and give enough time to the Group to restore its safe liquidity profile. Funding plan The funding plan plays a fundamental role in the overall liquidity management influencing both the short-term and the structural position. The funding plan, defined at each level (i.e. Group, liquidity reference bank and legal entity level), is developed consistently with a sustainable analysis of uses and sources, both on short-term and structural positions. One of the objectives of accessing the medium and long-term channels is to avoid the pressure on the short-term liquidity position. The funding plan is updated at least on a yearly basis and is approved by the Board of Directors. Moreover, it is aligned with the budgeting process and the risk appetite framework. The Holding Company accesses the market for Group capital instruments. The Holding Company coordinates the market access of the liquidity reference banks and legal entities, while the liquidity reference banks coordinate the access of the legal entities falling within their perimeter. Each legal entity or liquidity reference bank can access the markets for medium and long-term funding, in order to increase its self-sufficiency, exploit market opportunities and functional specialisation, safeguarding the optimisation of cost of funds of the Group. Group planning, finance, shareholding and investor relations function is responsible for the elaboration of the funding plan. Risk management is responsible for providing an independent assessment of the funding plan. Group contingency liquidity management The liquidity crises usually develop quickly and the relevant signals may be either difficult to interpret or may even be lacking; it is, therefore, important to clearly identify players, powers, responsibilities, communication and reporting criteria, in order to increase significantly the probability of overcoming the state of emergency successfully. A liquidity crisis could be classified as systemic (e.g. overall capital and money market disruption) or specific (e.g. specific to the bank), or a combination of both. The ability to act in time is essential to minimise the potentially disruptive consequences of a liquidity crisis. The analysis of the stress tests will form a valuable tool to identify the expected consequences and to define up front the most suitable actions in a certain crisis scenario. In combination with the early warning Indicators the organisation may be able to reduce the negative liquidity effects in the initial stages of a crisis. Therefore, a crisis-mode operating model, that can be activated effectively in case of crisis according to an approved procedure, has been defined. In order to be able to proceed timely, a set of mitigating actions have been pre-defined. Depending on the situation some of these actions can then be approved for execution. The Group contingency liquidity management global policy has the objective of ensuring effective interventions starting from the very outset (initial hours) of the liquidity crisis, through the definition of specific guidelines on activation, meetings, decisions, actions and communications. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 395 This is achieved through: • a set of early warning indicators that may help to identify emerging vulnerabilities in the Group liquidity risk position; • activation of extraordinary liquidity governance and operating model linked to indicators included in both the risk appetite and recovery and resolution plan framework; • a set of available standby mitigating liquidity actions; • consistent internal and external communication. A relevant part of the contingency liquidity management is the contingency funding plan. Such a plan consists of a set of potential but concrete management actions to be performed in time of crisis. Such actions are described in terms of size, instrument, and timing of execution aimed at improving the bank’s liquidity position during time of crisis. The contingency funding plan is developed on the basis of the annual Funding Plan. A specific early warning indicators dashboard is in place, both at the Group and at the relevant legal entities level, in order to continuously monitor situations of stress, which may, among others, be originated by market, sector or name specific events. They are based either on macroeconomic or market indicators that also reflect the monetary policy stance of the Central Banks variables, or on specific internal metrics. The system of early warning indicators helps to identify emerging vulnerabilities in the Group’s liquidity risk position or potential funding needs, triggering a potential response by the senior management. A “traffic light approach” is adopted for each metric in order to have sufficient time to inform senior management of a deteriorating situation and allow to put in place adequate actions aimed at restoring the business-as-usual state. Adequacy of the Liquidity Risk Management In the yearly process of the ILAAP, the senior management is requested to give a judgement on the adequacy of the liquidity position and stability of funding, called Liquidity Adequacy Statement (LAS). This assessment aims at showing the main drivers that had modified the liquidity position throughout the year and provides comment also on the evolution of the main metrics that are used to steer the different aspects of the liquidity risk. At the end of 2018, the Group liquidity situation is deemed adequate and the liquidity risk management arrangements of the institution ensure that the liquidity risk management systems put in place are adequate with regard to the institution’s profile and strategy. The framework of measurement systems and of limits in place aims to ensure that the Group has always an internal liquidity buffer/reserve that allows it to face expected and unexpected payments. In the daily Treasury activity, the (managerial) liquidity reserve is represented by the Counterbalancing Capacity (CBC). Group Treasury, in its role of operative liquidity management function is entitled to monetize also the bonds belonging to the trading book, if this is necessary to restore the liquidity positions, prevailing on any existing business or risk management strategies. From a regulatory perspective, the liquidity reserve is represented by the amount of high quality liquid assets (HQLA). This is the numerator of the LCR and is made of assets, which can be easily and immediately converted into cash at little or no loss of value even in periods of severe idiosyncratic and market stress. These assets are unencumbered, which means free of legal, regulatory, contractual or other restrictions on the ability of the bank to liquidate, sell, transfer, or assign them. The adequacy of the liquidity reserve under both perspectives is monitored and controlled through the limitations set on the operative maturity ladder (managerial) and on the liquidity coverage ratio (regulatory), as described above. During 2018, the operative maturity ladder of the Group, measured considering the impediments in the transfer of liquidity among legal entities, was constantly above the Risk Appetite Trigger, defined at a level that ensures that the Group would have enough liquidity to survive to a period of stress. Similarly the Group liquidity coverage ratio (LCR) was always well above the trigger (set above the minimum regulatory requirement of 100%), confirming that its liquidity reserve was large enough to cover one month of stress designed according to the regulatory hypothesis. While the operative maturity ladder and the LCR restrictions ensure that the liquidity reserves are adequate, the respect of the funding gap and other structural liquidity metrics restrictions ensure that the bank maintains an appropriate balance between assets and liabilities in the medium-long term (beyond one year), preventing additional pressure on the short term liquidity position. In 2018, both the funding gap and the net stable funding ratio were above the limitations set in the risk appetite framework, thus confirming the relative stability of the funding source of the Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 395 This is achieved through: • a set of early warning indicators that may help to identify emerging vulnerabilities in the Group liquidity risk position; • activation of extraordinary liquidity governance and operating model linked to indicators included in both the risk appetite and recovery and resolution plan framework; • a set of available standby mitigating liquidity actions; • consistent internal and external communication. A relevant part of the contingency liquidity management is the contingency funding plan. Such a plan consists of a set of potential but concrete management actions to be performed in time of crisis. Such actions are described in terms of size, instrument, and timing of execution aimed at improving the bank’s liquidity position during time of crisis. The contingency funding plan is developed on the basis of the annual Funding Plan. A specific early warning indicators dashboard is in place, both at the Group and at the relevant legal entities level, in order to continuously monitor situations of stress, which may, among others, be originated by market, sector or name specific events. They are based either on macroeconomic or market indicators that also reflect the monetary policy stance of the Central Banks variables, or on specific internal metrics. The system of early warning indicators helps to identify emerging vulnerabilities in the Group’s liquidity risk position or potential funding needs, triggering a potential response by the senior management. A “traffic light approach” is adopted for each metric in order to have sufficient time to inform senior management of a deteriorating situation and allow to put in place adequate actions aimed at restoring the business-as-usual state. Adequacy of the Liquidity Risk Management In the yearly process of the ILAAP, the senior management is requested to give a judgement on the adequacy of the liquidity position and stability of funding, called Liquidity Adequacy Statement (LAS). This assessment aims at showing the main drivers that had modified the liquidity position throughout the year and provides comment also on the evolution of the main metrics that are used to steer the different aspects of the liquidity risk. At the end of 2018, the Group liquidity situation is deemed adequate and the liquidity risk management arrangements of the institution ensure that the liquidity risk management systems put in place are adequate with regard to the institution’s profile and strategy. The framework of measurement systems and of limits in place aims to ensure that the Group has always an internal liquidity buffer/reserve that allows it to face expected and unexpected payments. In the daily Treasury activity, the (managerial) liquidity reserve is represented by the Counterbalancing Capacity (CBC). Group Treasury, in its role of operative liquidity management function is entitled to monetize also the bonds belonging to the trading book, if this is necessary to restore the liquidity positions, prevailing on any existing business or risk management strategies. From a regulatory perspective, the liquidity reserve is represented by the amount of high quality liquid assets (HQLA). This is the numerator of the LCR and is made of assets, which can be easily and immediately converted into cash at little or no loss of value even in periods of severe idiosyncratic and market stress. These assets are unencumbered, which means free of legal, regulatory, contractual or other restrictions on the ability of the bank to liquidate, sell, transfer, or assign them. The adequacy of the liquidity reserve under both perspectives is monitored and controlled through the limitations set on the operative maturity ladder (managerial) and on the liquidity coverage ratio (regulatory), as described above. During 2018, the operative maturity ladder of the Group, measured considering the impediments in the transfer of liquidity among legal entities, was constantly above the Risk Appetite Trigger, defined at a level that ensures that the Group would have enough liquidity to survive to a period of stress. Similarly the Group liquidity coverage ratio (LCR) was always well above the trigger (set above the minimum regulatory requirement of 100%), confirming that its liquidity reserve was large enough to cover one month of stress designed according to the regulatory hypothesis. While the operative maturity ladder and the LCR restrictions ensure that the liquidity reserves are adequate, the respect of the funding gap and other structural liquidity metrics restrictions ensure that the bank maintains an appropriate balance between assets and liabilities in the medium-long term (beyond one year), preventing additional pressure on the short term liquidity position. In 2018, both the funding gap and the net stable funding ratio were above the limitations set in the risk appetite framework, thus confirming the relative stability of the funding source of the Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 395 This is achieved through: • a set of early warning indicators that may help to identify emerging vulnerabilities in the Group liquidity risk position; • activation of extraordinary liquidity governance and operating model linked to indicators included in both the risk appetite and recovery and resolution plan framework; • a set of available standby mitigating liquidity actions; • consistent internal and external communication. A relevant part of the contingency liquidity management is the contingency funding plan. Such a plan consists of a set of potential but concrete management actions to be performed in time of crisis. Such actions are described in terms of size, instrument, and timing of execution aimed at improving the bank’s liquidity position during time of crisis. The contingency funding plan is developed on the basis of the annual Funding Plan. A specific early warning indicators dashboard is in place, both at the Group and at the relevant legal entities level, in order to continuously monitor situations of stress, which may, among others, be originated by market, sector or name specific events. They are based either on macroeconomic or market indicators that also reflect the monetary policy stance of the Central Banks variables, or on specific internal metrics. The system of early warning indicators helps to identify emerging vulnerabilities in the Group’s liquidity risk position or potential funding needs, triggering a potential response by the senior management. A “traffic light approach” is adopted for each metric in order to have sufficient time to inform senior management of a deteriorating situation and allow to put in place adequate actions aimed at restoring the business-as-usual state. Adequacy of the Liquidity Risk Management In the yearly process of the ILAAP, the senior management is requested to give a judgement on the adequacy of the liquidity position and stability of funding, called Liquidity Adequacy Statement (LAS). This assessment aims at showing the main drivers that had modified the liquidity position throughout the year and provides comment also on the evolution of the main metrics that are used to steer the different aspects of the liquidity risk. At the end of 2018, the Group liquidity situation is deemed adequate and the liquidity risk management arrangements of the institution ensure that the liquidity risk management systems put in place are adequate with regard to the institution’s profile and strategy. The framework of measurement systems and of limits in place aims to ensure that the Group has always an internal liquidity buffer/reserve that allows it to face expected and unexpected payments. In the daily Treasury activity, the (managerial) liquidity reserve is represented by the Counterbalancing Capacity (CBC). Group Treasury, in its role of operative liquidity management function is entitled to monetize also the bonds belonging to the trading book, if this is necessary to restore the liquidity positions, prevailing on any existing business or risk management strategies. From a regulatory perspective, the liquidity reserve is represented by the amount of high quality liquid assets (HQLA). This is the numerator of the LCR and is made of assets, which can be easily and immediately converted into cash at little or no loss of value even in periods of severe idiosyncratic and market stress. These assets are unencumbered, which means free of legal, regulatory, contractual or other restrictions on the ability of the bank to liquidate, sell, transfer, or assign them. The adequacy of the liquidity reserve under both perspectives is monitored and controlled through the limitations set on the operative maturity ladder (managerial) and on the liquidity coverage ratio (regulatory), as described above. During 2018, the operative maturity ladder of the Group, measured considering the impediments in the transfer of liquidity among legal entities, was constantly above the Risk Appetite Trigger, defined at a level that ensures that the Group would have enough liquidity to survive to a period of stress. Similarly the Group liquidity coverage ratio (LCR) was always well above the trigger (set above the minimum regulatory requirement of 100%), confirming that its liquidity reserve was large enough to cover one month of stress designed according to the regulatory hypothesis. While the operative maturity ladder and the LCR restrictions ensure that the liquidity reserves are adequate, the respect of the funding gap and other structural liquidity metrics restrictions ensure that the bank maintains an appropriate balance between assets and liabilities in the medium-long term (beyond one year), preventing additional pressure on the short term liquidity position. In 2018, both the funding gap and the net stable funding ratio were above the limitations set in the risk appetite framework, thus confirming the relative stability of the funding source of the Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 395 This is achieved through: • a set of early warning indicators that may help to identify emerging vulnerabilities in the Group liquidity risk position; • activation of extraordinary liquidity governance and operating model linked to indicators included in both the risk appetite and recovery and resolution plan framework; • a set of available standby mitigating liquidity actions; • consistent internal and external communication. A relevant part of the contingency liquidity management is the contingency funding plan. Such a plan consists of a set of potential but concrete management actions to be performed in time of crisis. Such actions are described in terms of size, instrument, and timing of execution aimed at improving the bank’s liquidity position during time of crisis. The contingency funding plan is developed on the basis of the annual Funding Plan. A specific early warning indicators dashboard is in place, both at the Group and at the relevant legal entities level, in order to continuously monitor situations of stress, which may, among others, be originated by market, sector or name specific events. They are based either on macroeconomic or market indicators that also reflect the monetary policy stance of the Central Banks variables, or on specific internal metrics. The system of early warning indicators helps to identify emerging vulnerabilities in the Group’s liquidity risk position or potential funding needs, triggering a potential response by the senior management. A “traffic light approach” is adopted for each metric in order to have sufficient time to inform senior management of a deteriorating situation and allow to put in place adequate actions aimed at restoring the business-as-usual state. Adequacy of the Liquidity Risk Management In the yearly process of the ILAAP, the senior management is requested to give a judgement on the adequacy of the liquidity position and stability of funding, called Liquidity Adequacy Statement (LAS). This assessment aims at showing the main drivers that had modified the liquidity position throughout the year and provides comment also on the evolution of the main metrics that are used to steer the different aspects of the liquidity risk. At the end of 2018, the Group liquidity situation is deemed adequate and the liquidity risk management arrangements of the institution ensure that the liquidity risk management systems put in place are adequate with regard to the institution’s profile and strategy. The framework of measurement systems and of limits in place aims to ensure that the Group has always an internal liquidity buffer/reserve that allows it to face expected and unexpected payments. In the daily Treasury activity, the (managerial) liquidity reserve is represented by the Counterbalancing Capacity (CBC). Group Treasury, in its role of operative liquidity management function is entitled to monetize also the bonds belonging to the trading book, if this is necessary to restore the liquidity positions, prevailing on any existing business or risk management strategies. From a regulatory perspective, the liquidity reserve is represented by the amount of high quality liquid assets (HQLA). This is the numerator of the LCR and is made of assets, which can be easily and immediately converted into cash at little or no loss of value even in periods of severe idiosyncratic and market stress. These assets are unencumbered, which means free of legal, regulatory, contractual or other restrictions on the ability of the bank to liquidate, sell, transfer, or assign them. The adequacy of the liquidity reserve under both perspectives is monitored and controlled through the limitations set on the operative maturity ladder (managerial) and on the liquidity coverage ratio (regulatory), as described above. During 2018, the operative maturity ladder of the Group, measured considering the impediments in the transfer of liquidity among legal entities, was constantly above the Risk Appetite Trigger, defined at a level that ensures that the Group would have enough liquidity to survive to a period of stress. Similarly the Group liquidity coverage ratio (LCR) was always well above the trigger (set above the minimum regulatory requirement of 100%), confirming that its liquidity reserve was large enough to cover one month of stress designed according to the regulatory hypothesis. While the operative maturity ladder and the LCR restrictions ensure that the liquidity reserves are adequate, the respect of the funding gap and other structural liquidity metrics restrictions ensure that the bank maintains an appropriate balance between assets and liabilities in the medium-long term (beyond one year), preventing additional pressure on the short term liquidity position. In 2018, both the funding gap and the net stable funding ratio were above the limitations set in the risk appetite framework, thus confirming the relative stability of the funding source of the Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 395 This is achieved through: • a set of early warning indicators that may help to identify emerging vulnerabilities in the Group liquidity risk position; • activation of extraordinary liquidity governance and operating model linked to indicators included in both the risk appetite and recovery and resolution plan framework; • a set of available standby mitigating liquidity actions; • consistent internal and external communication. A relevant part of the contingency liquidity management is the contingency funding plan. Such a plan consists of a set of potential but concrete management actions to be performed in time of crisis. Such actions are described in terms of size, instrument, and timing of execution aimed at improving the bank’s liquidity position during time of crisis. The contingency funding plan is developed on the basis of the annual Funding Plan. A specific early warning indicators dashboard is in place, both at the Group and at the relevant legal entities level, in order to continuously monitor situations of stress, which may, among others, be originated by market, sector or name specific events. They are based either on macroeconomic or market indicators that also reflect the monetary policy stance of the Central Banks variables, or on specific internal metrics. The system of early warning indicators helps to identify emerging vulnerabilities in the Group’s liquidity risk position or potential funding needs, triggering a potential response by the senior management. A “traffic light approach” is adopted for each metric in order to have sufficient time to inform senior management of a deteriorating situation and allow to put in place adequate actions aimed at restoring the business-as-usual state. Adequacy of the Liquidity Risk Management In the yearly process of the ILAAP, the senior management is requested to give a judgement on the adequacy of the liquidity position and stability of funding, called Liquidity Adequacy Statement (LAS). This assessment aims at showing the main drivers that had modified the liquidity position throughout the year and provides comment also on the evolution of the main metrics that are used to steer the different aspects of the liquidity risk. At the end of 2018, the Group liquidity situation is deemed adequate and the liquidity risk management arrangements of the institution ensure that the liquidity risk management systems put in place are adequate with regard to the institution’s profile and strategy. The framework of measurement systems and of limits in place aims to ensure that the Group has always an internal liquidity buffer/reserve that allows it to face expected and unexpected payments. In the daily Treasury activity, the (managerial) liquidity reserve is represented by the Counterbalancing Capacity (CBC). Group Treasury, in its role of operative liquidity management function is entitled to monetize also the bonds belonging to the trading book, if this is necessary to restore the liquidity positions, prevailing on any existing business or risk management strategies. From a regulatory perspective, the liquidity reserve is represented by the amount of high quality liquid assets (HQLA). This is the numerator of the LCR and is made of assets, which can be easily and immediately converted into cash at little or no loss of value even in periods of severe idiosyncratic and market stress. These assets are unencumbered, which means free of legal, regulatory, contractual or other restrictions on the ability of the bank to liquidate, sell, transfer, or assign them. The adequacy of the liquidity reserve under both perspectives is monitored and controlled through the limitations set on the operative maturity ladder (managerial) and on the liquidity coverage ratio (regulatory), as described above. During 2018, the operative maturity ladder of the Group, measured considering the impediments in the transfer of liquidity among legal entities, was constantly above the Risk Appetite Trigger, defined at a level that ensures that the Group would have enough liquidity to survive to a period of stress. Similarly the Group liquidity coverage ratio (LCR) was always well above the trigger (set above the minimum regulatory requirement of 100%), confirming that its liquidity reserve was large enough to cover one month of stress designed according to the regulatory hypothesis. While the operative maturity ladder and the LCR restrictions ensure that the liquidity reserves are adequate, the respect of the funding gap and other structural liquidity metrics restrictions ensure that the bank maintains an appropriate balance between assets and liabilities in the medium-long term (beyond one year), preventing additional pressure on the short term liquidity position. In 2018, both the funding gap and the net stable funding ratio were above the limitations set in the risk appetite framework, thus confirming the relative stability of the funding source of the Group. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 396 2018 Annual Report and Accounts · UniCredit Quantitative information 1. Time breakdown by contractual residual maturity of financial assets and liabilities (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 102,269,348 32,468,136 26,289,392 34,953,248 71,245,829 40,062,042 65,092,540 268,074,559 218,156,933 8,668,132 A.1 Government securities 697,307 324,616 119,905 3,845,625 2,923,510 2,521,056 11,095,745 62,220,396 33,707,534 - A.2 Other debt securities 263,484 9,666 152,103 1,116,327 1,695,421 2,220,575 6,451,782 32,137,152 29,211,476 71,975 A.3 Units in investment funds 1,074,933 - - - - - - - - 2,736,347 A.4 Loans 100,233,624 32,133,854 26,017,384 29,991,296 66,626,898 35,320,411 47,545,013 173,717,011 155,237,923 5,859,810 - Banks 33,345,225 12,175,577 8,557,320 5,649,075 29,141,835 9,227,745 8,521,960 9,085,078 8,756,481 3,334,997 - Customers 66,888,399 19,958,277 17,460,064 24,342,221 37,485,063 26,092,666 39,023,053 164,631,933 146,481,442 2,524,813 B. On-balance sheet liabilities 400,891,595 51,160,189 27,445,595 36,196,966 66,952,481 21,116,536 30,218,246 129,906,861 55,576,242 5,703,735 B.1. Deposits and current accounts 388,963,905 13,565,850 14,141,321 22,210,012 41,813,971 11,586,792 14,541,266 28,525,727 8,889,170 429,249 - Banks 29,235,605 9,125,451 7,142,190 7,798,171 15,375,519 3,558,134 5,073,263 15,808,097 6,965,654 35,258 - Customers 359,728,300 4,440,399 6,999,131 14,411,841 26,438,452 8,028,658 9,468,003 12,717,630 1,923,516 393,991 B.2 Debt securities 340,231 197,589 1,592,972 2,919,776 6,077,180 4,490,954 5,810,075 39,519,119 31,262,790 5,115,206 B.3 Other liabilities 11,587,459 37,396,750 11,711,302 11,067,178 19,061,330 5,038,790 9,866,905 61,862,015 15,424,282 159,280 C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 792,606 9,967,548 8,937,455 12,393,687 24,591,846 20,572,951 15,023,610 49,892,166 26,206,757 309 - Short positions 792,465 10,573,476 8,929,560 12,351,576 23,256,998 20,290,978 14,862,123 51,070,671 22,146,996 310 C.2 Financial derivatives without capital swap - Long positions 26,245,908 3,683,516 2,783,866 5,511,654 16,786,302 10,000,143 24,276,071 33,870,734 23,696,283 3,197 - Short positions 24,190,234 3,831,728 2,665,607 5,347,074 18,981,920 9,929,210 24,599,941 33,285,757 22,262,984 3,197 C.3 Deposits and loans to be received - Long positions 18,554 18,427,902 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,911 2,123,184 4,524,757 1,414,117 1,593,561 - 124,306 - - C.4 Commitments to disburse funds - Long positions 70,828,192 1,012,432 145,972 754,304 4,841,145 7,189,021 3,673,580 13,547,197 5,754,321 575,657 - Short positions 74,554,713 237,408 38,417 416,117 5,238,901 5,790,990 2,391,423 10,357,517 5,237,435 532,613 C.5 Financial guarantees given 1,662,262 363,318 72,567 530,265 704,363 1,421,227 14,905,042 6,501,056 1,777,082 4,800 C.6 Financial guarantees received 9,762,171 103,560 2,179 97,173 134,055 227,391 338,580 13,331,080 16,489,018 646,106 C.7 Credit derivatives with capital swap - Long positions - 548,538 - 13,000 1,332,000 2,661,000 2,588,000 6,823,000 17,000 - - Short positions - 548,538 - 13,000 1,497,000 2,485,000 2,405,000 6,285,000 92,000 - C.8 Credit derivatives without capital swap - Long positions - - - 19,000 5,000 36,500 - 533,600 2,062,717 - - Short positions - - - - 325,000 36,500 - 96,600 2,039,717 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 396 2018 Annual Report and Accounts · UniCredit Quantitative information 1. Time breakdown by contractual residual maturity of financial assets and liabilities (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 102,269,348 32,468,136 26,289,392 34,953,248 71,245,829 40,062,042 65,092,540 268,074,559 218,156,933 8,668,132 A.1 Government securities 697,307 324,616 119,905 3,845,625 2,923,510 2,521,056 11,095,745 62,220,396 33,707,534 - A.2 Other debt securities 263,484 9,666 152,103 1,116,327 1,695,421 2,220,575 6,451,782 32,137,152 29,211,476 71,975 A.3 Units in investment funds 1,074,933 - - - - - - - - 2,736,347 A.4 Loans 100,233,624 32,133,854 26,017,384 29,991,296 66,626,898 35,320,411 47,545,013 173,717,011 155,237,923 5,859,810 - Banks 33,345,225 12,175,577 8,557,320 5,649,075 29,141,835 9,227,745 8,521,960 9,085,078 8,756,481 3,334,997 - Customers 66,888,399 19,958,277 17,460,064 24,342,221 37,485,063 26,092,666 39,023,053 164,631,933 146,481,442 2,524,813 B. On-balance sheet liabilities 400,891,595 51,160,189 27,445,595 36,196,966 66,952,481 21,116,536 30,218,246 129,906,861 55,576,242 5,703,735 B.1. Deposits and current accounts 388,963,905 13,565,850 14,141,321 22,210,012 41,813,971 11,586,792 14,541,266 28,525,727 8,889,170 429,249 - Banks 29,235,605 9,125,451 7,142,190 7,798,171 15,375,519 3,558,134 5,073,263 15,808,097 6,965,654 35,258 - Customers 359,728,300 4,440,399 6,999,131 14,411,841 26,438,452 8,028,658 9,468,003 12,717,630 1,923,516 393,991 B.2 Debt securities 340,231 197,589 1,592,972 2,919,776 6,077,180 4,490,954 5,810,075 39,519,119 31,262,790 5,115,206 B.3 Other liabilities 11,587,459 37,396,750 11,711,302 11,067,178 19,061,330 5,038,790 9,866,905 61,862,015 15,424,282 159,280 C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 792,606 9,967,548 8,937,455 12,393,687 24,591,846 20,572,951 15,023,610 49,892,166 26,206,757 309 - Short positions 792,465 10,573,476 8,929,560 12,351,576 23,256,998 20,290,978 14,862,123 51,070,671 22,146,996 310 C.2 Financial derivatives without capital swap - Long positions 26,245,908 3,683,516 2,783,866 5,511,654 16,786,302 10,000,143 24,276,071 33,870,734 23,696,283 3,197 - Short positions 24,190,234 3,831,728 2,665,607 5,347,074 18,981,920 9,929,210 24,599,941 33,285,757 22,262,984 3,197 C.3 Deposits and loans to be received - Long positions 18,554 18,427,902 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,911 2,123,184 4,524,757 1,414,117 1,593,561 - 124,306 - - C.4 Commitments to disburse funds - Long positions 70,828,192 1,012,432 145,972 754,304 4,841,145 7,189,021 3,673,580 13,547,197 5,754,321 575,657 - Short positions 74,554,713 237,408 38,417 416,117 5,238,901 5,790,990 2,391,423 10,357,517 5,237,435 532,613 C.5 Financial guarantees given 1,662,262 363,318 72,567 530,265 704,363 1,421,227 14,905,042 6,501,056 1,777,082 4,800 C.6 Financial guarantees received 9,762,171 103,560 2,179 97,173 134,055 227,391 338,580 13,331,080 16,489,018 646,106 C.7 Credit derivatives with capital swap - Long positions - 548,538 - 13,000 1,332,000 2,661,000 2,588,000 6,823,000 17,000 - - Short positions - 548,538 - 13,000 1,497,000 2,485,000 2,405,000 6,285,000 92,000 - C.8 Credit derivatives without capital swap - Long positions - - - 19,000 5,000 36,500 - 533,600 2,062,717 - - Short positions - - - - 325,000 36,500 - 96,600 2,039,717 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 396 2018 Annual Report and Accounts · UniCredit Quantitative information 1. Time breakdown by contractual residual maturity of financial assets and liabilities (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 102,269,348 32,468,136 26,289,392 34,953,248 71,245,829 40,062,042 65,092,540 268,074,559 218,156,933 8,668,132 A.1 Government securities 697,307 324,616 119,905 3,845,625 2,923,510 2,521,056 11,095,745 62,220,396 33,707,534 - A.2 Other debt securities 263,484 9,666 152,103 1,116,327 1,695,421 2,220,575 6,451,782 32,137,152 29,211,476 71,975 A.3 Units in investment funds 1,074,933 - - - - - - - - 2,736,347 A.4 Loans 100,233,624 32,133,854 26,017,384 29,991,296 66,626,898 35,320,411 47,545,013 173,717,011 155,237,923 5,859,810 - Banks 33,345,225 12,175,577 8,557,320 5,649,075 29,141,835 9,227,745 8,521,960 9,085,078 8,756,481 3,334,997 - Customers 66,888,399 19,958,277 17,460,064 24,342,221 37,485,063 26,092,666 39,023,053 164,631,933 146,481,442 2,524,813 B. On-balance sheet liabilities 400,891,595 51,160,189 27,445,595 36,196,966 66,952,481 21,116,536 30,218,246 129,906,861 55,576,242 5,703,735 B.1. Deposits and current accounts 388,963,905 13,565,850 14,141,321 22,210,012 41,813,971 11,586,792 14,541,266 28,525,727 8,889,170 429,249 - Banks 29,235,605 9,125,451 7,142,190 7,798,171 15,375,519 3,558,134 5,073,263 15,808,097 6,965,654 35,258 - Customers 359,728,300 4,440,399 6,999,131 14,411,841 26,438,452 8,028,658 9,468,003 12,717,630 1,923,516 393,991 B.2 Debt securities 340,231 197,589 1,592,972 2,919,776 6,077,180 4,490,954 5,810,075 39,519,119 31,262,790 5,115,206 B.3 Other liabilities 11,587,459 37,396,750 11,711,302 11,067,178 19,061,330 5,038,790 9,866,905 61,862,015 15,424,282 159,280 C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 792,606 9,967,548 8,937,455 12,393,687 24,591,846 20,572,951 15,023,610 49,892,166 26,206,757 309 - Short positions 792,465 10,573,476 8,929,560 12,351,576 23,256,998 20,290,978 14,862,123 51,070,671 22,146,996 310 C.2 Financial derivatives without capital swap - Long positions 26,245,908 3,683,516 2,783,866 5,511,654 16,786,302 10,000,143 24,276,071 33,870,734 23,696,283 3,197 - Short positions 24,190,234 3,831,728 2,665,607 5,347,074 18,981,920 9,929,210 24,599,941 33,285,757 22,262,984 3,197 C.3 Deposits and loans to be received - Long positions 18,554 18,427,902 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,911 2,123,184 4,524,757 1,414,117 1,593,561 - 124,306 - - C.4 Commitments to disburse funds - Long positions 70,828,192 1,012,432 145,972 754,304 4,841,145 7,189,021 3,673,580 13,547,197 5,754,321 575,657 - Short positions 74,554,713 237,408 38,417 416,117 5,238,901 5,790,990 2,391,423 10,357,517 5,237,435 532,613 C.5 Financial guarantees given 1,662,262 363,318 72,567 530,265 704,363 1,421,227 14,905,042 6,501,056 1,777,082 4,800 C.6 Financial guarantees received 9,762,171 103,560 2,179 97,173 134,055 227,391 338,580 13,331,080 16,489,018 646,106 C.7 Credit derivatives with capital swap - Long positions - 548,538 - 13,000 1,332,000 2,661,000 2,588,000 6,823,000 17,000 - - Short positions - 548,538 - 13,000 1,497,000 2,485,000 2,405,000 6,285,000 92,000 - C.8 Credit derivatives without capital swap - Long positions - - - 19,000 5,000 36,500 - 533,600 2,062,717 - - Short positions - - - - 325,000 36,500 - 96,600 2,039,717 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 396 2018 Annual Report and Accounts · UniCredit Quantitative information 1. Time breakdown by contractual residual maturity of financial assets and liabilities (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 102,269,348 32,468,136 26,289,392 34,953,248 71,245,829 40,062,042 65,092,540 268,074,559 218,156,933 8,668,132 A.1 Government securities 697,307 324,616 119,905 3,845,625 2,923,510 2,521,056 11,095,745 62,220,396 33,707,534 - A.2 Other debt securities 263,484 9,666 152,103 1,116,327 1,695,421 2,220,575 6,451,782 32,137,152 29,211,476 71,975 A.3 Units in investment funds 1,074,933 - - - - - - - - 2,736,347 A.4 Loans 100,233,624 32,133,854 26,017,384 29,991,296 66,626,898 35,320,411 47,545,013 173,717,011 155,237,923 5,859,810 - Banks 33,345,225 12,175,577 8,557,320 5,649,075 29,141,835 9,227,745 8,521,960 9,085,078 8,756,481 3,334,997 - Customers 66,888,399 19,958,277 17,460,064 24,342,221 37,485,063 26,092,666 39,023,053 164,631,933 146,481,442 2,524,813 B. On-balance sheet liabilities 400,891,595 51,160,189 27,445,595 36,196,966 66,952,481 21,116,536 30,218,246 129,906,861 55,576,242 5,703,735 B.1. Deposits and current accounts 388,963,905 13,565,850 14,141,321 22,210,012 41,813,971 11,586,792 14,541,266 28,525,727 8,889,170 429,249 - Banks 29,235,605 9,125,451 7,142,190 7,798,171 15,375,519 3,558,134 5,073,263 15,808,097 6,965,654 35,258 - Customers 359,728,300 4,440,399 6,999,131 14,411,841 26,438,452 8,028,658 9,468,003 12,717,630 1,923,516 393,991 B.2 Debt securities 340,231 197,589 1,592,972 2,919,776 6,077,180 4,490,954 5,810,075 39,519,119 31,262,790 5,115,206 B.3 Other liabilities 11,587,459 37,396,750 11,711,302 11,067,178 19,061,330 5,038,790 9,866,905 61,862,015 15,424,282 159,280 C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 792,606 9,967,548 8,937,455 12,393,687 24,591,846 20,572,951 15,023,610 49,892,166 26,206,757 309 - Short positions 792,465 10,573,476 8,929,560 12,351,576 23,256,998 20,290,978 14,862,123 51,070,671 22,146,996 310 C.2 Financial derivatives without capital swap - Long positions 26,245,908 3,683,516 2,783,866 5,511,654 16,786,302 10,000,143 24,276,071 33,870,734 23,696,283 3,197 - Short positions 24,190,234 3,831,728 2,665,607 5,347,074 18,981,920 9,929,210 24,599,941 33,285,757 22,262,984 3,197 C.3 Deposits and loans to be received - Long positions 18,554 18,427,902 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,911 2,123,184 4,524,757 1,414,117 1,593,561 - 124,306 - - C.4 Commitments to disburse funds - Long positions 70,828,192 1,012,432 145,972 754,304 4,841,145 7,189,021 3,673,580 13,547,197 5,754,321 575,657 - Short positions 74,554,713 237,408 38,417 416,117 5,238,901 5,790,990 2,391,423 10,357,517 5,237,435 532,613 C.5 Financial guarantees given 1,662,262 363,318 72,567 530,265 704,363 1,421,227 14,905,042 6,501,056 1,777,082 4,800 C.6 Financial guarantees received 9,762,171 103,560 2,179 97,173 134,055 227,391 338,580 13,331,080 16,489,018 646,106 C.7 Credit derivatives with capital swap - Long positions - 548,538 - 13,000 1,332,000 2,661,000 2,588,000 6,823,000 17,000 - - Short positions - 548,538 - 13,000 1,497,000 2,485,000 2,405,000 6,285,000 92,000 - C.8 Credit derivatives without capital swap - Long positions - - - 19,000 5,000 36,500 - 533,600 2,062,717 - - Short positions - - - - 325,000 36,500 - 96,600 2,039,717 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 396 2018 Annual Report and Accounts · UniCredit Quantitative information 1. Time breakdown by contractual residual maturity of financial assets and liabilities (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 102,269,348 32,468,136 26,289,392 34,953,248 71,245,829 40,062,042 65,092,540 268,074,559 218,156,933 8,668,132 A.1 Government securities 697,307 324,616 119,905 3,845,625 2,923,510 2,521,056 11,095,745 62,220,396 33,707,534 - A.2 Other debt securities 263,484 9,666 152,103 1,116,327 1,695,421 2,220,575 6,451,782 32,137,152 29,211,476 71,975 A.3 Units in investment funds 1,074,933 - - - - - - - - 2,736,347 A.4 Loans 100,233,624 32,133,854 26,017,384 29,991,296 66,626,898 35,320,411 47,545,013 173,717,011 155,237,923 5,859,810 - Banks 33,345,225 12,175,577 8,557,320 5,649,075 29,141,835 9,227,745 8,521,960 9,085,078 8,756,481 3,334,997 - Customers 66,888,399 19,958,277 17,460,064 24,342,221 37,485,063 26,092,666 39,023,053 164,631,933 146,481,442 2,524,813 B. On-balance sheet liabilities 400,891,595 51,160,189 27,445,595 36,196,966 66,952,481 21,116,536 30,218,246 129,906,861 55,576,242 5,703,735 B.1. Deposits and current accounts 388,963,905 13,565,850 14,141,321 22,210,012 41,813,971 11,586,792 14,541,266 28,525,727 8,889,170 429,249 - Banks 29,235,605 9,125,451 7,142,190 7,798,171 15,375,519 3,558,134 5,073,263 15,808,097 6,965,654 35,258 - Customers 359,728,300 4,440,399 6,999,131 14,411,841 26,438,452 8,028,658 9,468,003 12,717,630 1,923,516 393,991 B.2 Debt securities 340,231 197,589 1,592,972 2,919,776 6,077,180 4,490,954 5,810,075 39,519,119 31,262,790 5,115,206 B.3 Other liabilities 11,587,459 37,396,750 11,711,302 11,067,178 19,061,330 5,038,790 9,866,905 61,862,015 15,424,282 159,280 C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 792,606 9,967,548 8,937,455 12,393,687 24,591,846 20,572,951 15,023,610 49,892,166 26,206,757 309 - Short positions 792,465 10,573,476 8,929,560 12,351,576 23,256,998 20,290,978 14,862,123 51,070,671 22,146,996 310 C.2 Financial derivatives without capital swap - Long positions 26,245,908 3,683,516 2,783,866 5,511,654 16,786,302 10,000,143 24,276,071 33,870,734 23,696,283 3,197 - Short positions 24,190,234 3,831,728 2,665,607 5,347,074 18,981,920 9,929,210 24,599,941 33,285,757 22,262,984 3,197 C.3 Deposits and loans to be received - Long positions 18,554 18,427,902 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,911 2,123,184 4,524,757 1,414,117 1,593,561 - 124,306 - - C.4 Commitments to disburse funds - Long positions 70,828,192 1,012,432 145,972 754,304 4,841,145 7,189,021 3,673,580 13,547,197 5,754,321 575,657 - Short positions 74,554,713 237,408 38,417 416,117 5,238,901 5,790,990 2,391,423 10,357,517 5,237,435 532,613 C.5 Financial guarantees given 1,662,262 363,318 72,567 530,265 704,363 1,421,227 14,905,042 6,501,056 1,777,082 4,800 C.6 Financial guarantees received 9,762,171 103,560 2,179 97,173 134,055 227,391 338,580 13,331,080 16,489,018 646,106 C.7 Credit derivatives with capital swap - Long positions - 548,538 - 13,000 1,332,000 2,661,000 2,588,000 6,823,000 17,000 - - Short positions - 548,538 - 13,000 1,497,000 2,485,000 2,405,000 6,285,000 92,000 - C.8 Credit derivatives without capital swap - Long positions - - - 19,000 5,000 36,500 - 533,600 2,062,717 - - Short positions - - - - 325,000 36,500 - 96,600 2,039,717 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 397 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: euro (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 81,338,442 25,706,578 19,859,412 30,484,242 62,043,480 34,543,598 58,056,322 238,620,023 196,498,838 8,485,852 A.1 Government securities 692,983 282,732 108,822 3,723,260 2,634,655 2,424,632 10,707,587 55,573,222 28,325,300 - A.2 Other debt securities 263,398 6,649 143,648 1,113,226 1,688,487 2,114,484 6,356,927 31,403,331 27,847,124 63,145 A.3 Units in investment funds 1,014,268 - - - - - - - - 2,666,315 A.4 Loans 79,367,793 25,417,197 19,606,942 25,647,756 57,720,338 30,004,482 40,991,808 151,643,470 140,326,414 5,756,392 - Banks 28,719,346 6,473,733 3,059,820 3,587,550 23,958,576 7,936,761 7,807,017 7,703,222 8,285,176 3,272,223 - Customers 50,648,447 18,943,464 16,547,122 22,060,206 33,761,762 22,067,721 33,184,791 143,940,248 132,041,238 2,484,169 B. On-balance sheet liabilities 362,974,602 48,421,321 21,592,941 24,216,873 56,989,532 15,710,675 25,561,264 117,700,554 50,378,858 5,682,759 B.1. Deposits and current accounts 351,864,448 10,877,998 8,558,159 10,676,806 33,332,718 7,547,605 11,415,862 23,059,974 6,977,419 408,273 - Banks 26,270,540 8,032,992 5,733,174 5,573,431 11,519,994 2,353,661 4,078,416 13,085,224 5,368,802 14,296 - Customers 325,593,908 2,845,006 2,824,985 5,103,375 21,812,724 5,193,944 7,337,446 9,974,750 1,608,617 393,977 B.2 Debt securities 340,061 175,823 1,532,612 2,799,351 5,038,993 3,922,290 5,333,888 33,685,585 28,664,259 5,115,206 B.3 Other liabilities 10,770,093 37,367,500 11,502,170 10,740,716 18,617,821 4,240,780 8,811,514 60,954,995 14,737,180 159,280 C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 148,379 5,248,952 4,587,681 4,667,587 7,011,710 9,179,284 4,300,705 18,420,176 13,619,290 309 - Short positions 116,930 4,289,545 2,730,996 5,821,271 8,066,778 8,000,565 5,947,508 19,284,850 9,496,578 310 C.2 Financial derivatives without capital swap - Long positions 24,640,038 1,672,441 2,111,329 2,680,730 13,184,257 5,727,801 14,462,294 16,409,108 14,575,355 3,197 - Short positions 22,394,048 2,548,569 1,838,562 3,305,192 13,863,254 6,273,452 11,013,161 14,548,947 13,869,927 3,197 C.3 Deposits and loans to be received - Long positions - 18,380,300 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,348 2,119,696 4,517,526 1,363,171 1,589,634 - 124,306 - - C.4 Commitments to disburse funds - Long positions 69,313,783 1,006,335 135,422 398,084 3,776,353 2,058,996 1,820,808 11,447,167 3,922,625 305,895 - Short positions 72,872,994 141,432 32,834 354,875 4,410,016 963,031 1,161,613 8,568,424 3,712,183 305,876 C.5 Financial guarantees given 1,434,240 360,104 49,517 403,433 355,014 603,392 790,612 2,655,084 941,002 4,800 C.6 Financial guarantees received 9,503,893 103,494 1,774 96,738 122,645 200,660 295,202 13,071,295 15,692,254 15,630 C.7 Credit derivatives with capital swap - Long positions - - - - 604,000 1,527,000 973,000 5,517,000 17,000 - - Short positions - - - - 500,000 1,557,000 884,000 5,092,000 89,000 - C.8 Credit derivatives without capital swap - Long positions - - - - 5,000 36,500 - 38,600 1,996,717 - - Short positions - - - - 5,000 36,500 - 96,600 2,039,717 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 397 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: euro (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 81,338,442 25,706,578 19,859,412 30,484,242 62,043,480 34,543,598 58,056,322 238,620,023 196,498,838 8,485,852 A.1 Government securities 692,983 282,732 108,822 3,723,260 2,634,655 2,424,632 10,707,587 55,573,222 28,325,300 - A.2 Other debt securities 263,398 6,649 143,648 1,113,226 1,688,487 2,114,484 6,356,927 31,403,331 27,847,124 63,145 A.3 Units in investment funds 1,014,268 - - - - - - - - 2,666,315 A.4 Loans 79,367,793 25,417,197 19,606,942 25,647,756 57,720,338 30,004,482 40,991,808 151,643,470 140,326,414 5,756,392 - Banks 28,719,346 6,473,733 3,059,820 3,587,550 23,958,576 7,936,761 7,807,017 7,703,222 8,285,176 3,272,223 - Customers 50,648,447 18,943,464 16,547,122 22,060,206 33,761,762 22,067,721 33,184,791 143,940,248 132,041,238 2,484,169 B. On-balance sheet liabilities 362,974,602 48,421,321 21,592,941 24,216,873 56,989,532 15,710,675 25,561,264 117,700,554 50,378,858 5,682,759 B.1. Deposits and current accounts 351,864,448 10,877,998 8,558,159 10,676,806 33,332,718 7,547,605 11,415,862 23,059,974 6,977,419 408,273 - Banks 26,270,540 8,032,992 5,733,174 5,573,431 11,519,994 2,353,661 4,078,416 13,085,224 5,368,802 14,296 - Customers 325,593,908 2,845,006 2,824,985 5,103,375 21,812,724 5,193,944 7,337,446 9,974,750 1,608,617 393,977 B.2 Debt securities 340,061 175,823 1,532,612 2,799,351 5,038,993 3,922,290 5,333,888 33,685,585 28,664,259 5,115,206 B.3 Other liabilities 10,770,093 37,367,500 11,502,170 10,740,716 18,617,821 4,240,780 8,811,514 60,954,995 14,737,180 159,280 C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 148,379 5,248,952 4,587,681 4,667,587 7,011,710 9,179,284 4,300,705 18,420,176 13,619,290 309 - Short positions 116,930 4,289,545 2,730,996 5,821,271 8,066,778 8,000,565 5,947,508 19,284,850 9,496,578 310 C.2 Financial derivatives without capital swap - Long positions 24,640,038 1,672,441 2,111,329 2,680,730 13,184,257 5,727,801 14,462,294 16,409,108 14,575,355 3,197 - Short positions 22,394,048 2,548,569 1,838,562 3,305,192 13,863,254 6,273,452 11,013,161 14,548,947 13,869,927 3,197 C.3 Deposits and loans to be received - Long positions - 18,380,300 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,348 2,119,696 4,517,526 1,363,171 1,589,634 - 124,306 - - C.4 Commitments to disburse funds - Long positions 69,313,783 1,006,335 135,422 398,084 3,776,353 2,058,996 1,820,808 11,447,167 3,922,625 305,895 - Short positions 72,872,994 141,432 32,834 354,875 4,410,016 963,031 1,161,613 8,568,424 3,712,183 305,876 C.5 Financial guarantees given 1,434,240 360,104 49,517 403,433 355,014 603,392 790,612 2,655,084 941,002 4,800 C.6 Financial guarantees received 9,503,893 103,494 1,774 96,738 122,645 200,660 295,202 13,071,295 15,692,254 15,630 C.7 Credit derivatives with capital swap - Long positions - - - - 604,000 1,527,000 973,000 5,517,000 17,000 - - Short positions - - - - 500,000 1,557,000 884,000 5,092,000 89,000 - C.8 Credit derivatives without capital swap - Long positions - - - - 5,000 36,500 - 38,600 1,996,717 - - Short positions - - - - 5,000 36,500 - 96,600 2,039,717 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 397 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: euro (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 81,338,442 25,706,578 19,859,412 30,484,242 62,043,480 34,543,598 58,056,322 238,620,023 196,498,838 8,485,852 A.1 Government securities 692,983 282,732 108,822 3,723,260 2,634,655 2,424,632 10,707,587 55,573,222 28,325,300 - A.2 Other debt securities 263,398 6,649 143,648 1,113,226 1,688,487 2,114,484 6,356,927 31,403,331 27,847,124 63,145 A.3 Units in investment funds 1,014,268 - - - - - - - - 2,666,315 A.4 Loans 79,367,793 25,417,197 19,606,942 25,647,756 57,720,338 30,004,482 40,991,808 151,643,470 140,326,414 5,756,392 - Banks 28,719,346 6,473,733 3,059,820 3,587,550 23,958,576 7,936,761 7,807,017 7,703,222 8,285,176 3,272,223 - Customers 50,648,447 18,943,464 16,547,122 22,060,206 33,761,762 22,067,721 33,184,791 143,940,248 132,041,238 2,484,169 B. On-balance sheet liabilities 362,974,602 48,421,321 21,592,941 24,216,873 56,989,532 15,710,675 25,561,264 117,700,554 50,378,858 5,682,759 B.1. Deposits and current accounts 351,864,448 10,877,998 8,558,159 10,676,806 33,332,718 7,547,605 11,415,862 23,059,974 6,977,419 408,273 - Banks 26,270,540 8,032,992 5,733,174 5,573,431 11,519,994 2,353,661 4,078,416 13,085,224 5,368,802 14,296 - Customers 325,593,908 2,845,006 2,824,985 5,103,375 21,812,724 5,193,944 7,337,446 9,974,750 1,608,617 393,977 B.2 Debt securities 340,061 175,823 1,532,612 2,799,351 5,038,993 3,922,290 5,333,888 33,685,585 28,664,259 5,115,206 B.3 Other liabilities 10,770,093 37,367,500 11,502,170 10,740,716 18,617,821 4,240,780 8,811,514 60,954,995 14,737,180 159,280 C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 148,379 5,248,952 4,587,681 4,667,587 7,011,710 9,179,284 4,300,705 18,420,176 13,619,290 309 - Short positions 116,930 4,289,545 2,730,996 5,821,271 8,066,778 8,000,565 5,947,508 19,284,850 9,496,578 310 C.2 Financial derivatives without capital swap - Long positions 24,640,038 1,672,441 2,111,329 2,680,730 13,184,257 5,727,801 14,462,294 16,409,108 14,575,355 3,197 - Short positions 22,394,048 2,548,569 1,838,562 3,305,192 13,863,254 6,273,452 11,013,161 14,548,947 13,869,927 3,197 C.3 Deposits and loans to be received - Long positions - 18,380,300 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,348 2,119,696 4,517,526 1,363,171 1,589,634 - 124,306 - - C.4 Commitments to disburse funds - Long positions 69,313,783 1,006,335 135,422 398,084 3,776,353 2,058,996 1,820,808 11,447,167 3,922,625 305,895 - Short positions 72,872,994 141,432 32,834 354,875 4,410,016 963,031 1,161,613 8,568,424 3,712,183 305,876 C.5 Financial guarantees given 1,434,240 360,104 49,517 403,433 355,014 603,392 790,612 2,655,084 941,002 4,800 C.6 Financial guarantees received 9,503,893 103,494 1,774 96,738 122,645 200,660 295,202 13,071,295 15,692,254 15,630 C.7 Credit derivatives with capital swap - Long positions - - - - 604,000 1,527,000 973,000 5,517,000 17,000 - - Short positions - - - - 500,000 1,557,000 884,000 5,092,000 89,000 - C.8 Credit derivatives without capital swap - Long positions - - - - 5,000 36,500 - 38,600 1,996,717 - - Short positions - - - - 5,000 36,500 - 96,600 2,039,717 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 397 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: euro (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 81,338,442 25,706,578 19,859,412 30,484,242 62,043,480 34,543,598 58,056,322 238,620,023 196,498,838 8,485,852 A.1 Government securities 692,983 282,732 108,822 3,723,260 2,634,655 2,424,632 10,707,587 55,573,222 28,325,300 - A.2 Other debt securities 263,398 6,649 143,648 1,113,226 1,688,487 2,114,484 6,356,927 31,403,331 27,847,124 63,145 A.3 Units in investment funds 1,014,268 - - - - - - - - 2,666,315 A.4 Loans 79,367,793 25,417,197 19,606,942 25,647,756 57,720,338 30,004,482 40,991,808 151,643,470 140,326,414 5,756,392 - Banks 28,719,346 6,473,733 3,059,820 3,587,550 23,958,576 7,936,761 7,807,017 7,703,222 8,285,176 3,272,223 - Customers 50,648,447 18,943,464 16,547,122 22,060,206 33,761,762 22,067,721 33,184,791 143,940,248 132,041,238 2,484,169 B. On-balance sheet liabilities 362,974,602 48,421,321 21,592,941 24,216,873 56,989,532 15,710,675 25,561,264 117,700,554 50,378,858 5,682,759 B.1. Deposits and current accounts 351,864,448 10,877,998 8,558,159 10,676,806 33,332,718 7,547,605 11,415,862 23,059,974 6,977,419 408,273 - Banks 26,270,540 8,032,992 5,733,174 5,573,431 11,519,994 2,353,661 4,078,416 13,085,224 5,368,802 14,296 - Customers 325,593,908 2,845,006 2,824,985 5,103,375 21,812,724 5,193,944 7,337,446 9,974,750 1,608,617 393,977 B.2 Debt securities 340,061 175,823 1,532,612 2,799,351 5,038,993 3,922,290 5,333,888 33,685,585 28,664,259 5,115,206 B.3 Other liabilities 10,770,093 37,367,500 11,502,170 10,740,716 18,617,821 4,240,780 8,811,514 60,954,995 14,737,180 159,280 C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 148,379 5,248,952 4,587,681 4,667,587 7,011,710 9,179,284 4,300,705 18,420,176 13,619,290 309 - Short positions 116,930 4,289,545 2,730,996 5,821,271 8,066,778 8,000,565 5,947,508 19,284,850 9,496,578 310 C.2 Financial derivatives without capital swap - Long positions 24,640,038 1,672,441 2,111,329 2,680,730 13,184,257 5,727,801 14,462,294 16,409,108 14,575,355 3,197 - Short positions 22,394,048 2,548,569 1,838,562 3,305,192 13,863,254 6,273,452 11,013,161 14,548,947 13,869,927 3,197 C.3 Deposits and loans to be received - Long positions - 18,380,300 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,348 2,119,696 4,517,526 1,363,171 1,589,634 - 124,306 - - C.4 Commitments to disburse funds - Long positions 69,313,783 1,006,335 135,422 398,084 3,776,353 2,058,996 1,820,808 11,447,167 3,922,625 305,895 - Short positions 72,872,994 141,432 32,834 354,875 4,410,016 963,031 1,161,613 8,568,424 3,712,183 305,876 C.5 Financial guarantees given 1,434,240 360,104 49,517 403,433 355,014 603,392 790,612 2,655,084 941,002 4,800 C.6 Financial guarantees received 9,503,893 103,494 1,774 96,738 122,645 200,660 295,202 13,071,295 15,692,254 15,630 C.7 Credit derivatives with capital swap - Long positions - - - - 604,000 1,527,000 973,000 5,517,000 17,000 - - Short positions - - - - 500,000 1,557,000 884,000 5,092,000 89,000 - C.8 Credit derivatives without capital swap - Long positions - - - - 5,000 36,500 - 38,600 1,996,717 - - Short positions - - - - 5,000 36,500 - 96,600 2,039,717 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 397 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: euro (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 81,338,442 25,706,578 19,859,412 30,484,242 62,043,480 34,543,598 58,056,322 238,620,023 196,498,838 8,485,852 A.1 Government securities 692,983 282,732 108,822 3,723,260 2,634,655 2,424,632 10,707,587 55,573,222 28,325,300 - A.2 Other debt securities 263,398 6,649 143,648 1,113,226 1,688,487 2,114,484 6,356,927 31,403,331 27,847,124 63,145 A.3 Units in investment funds 1,014,268 - - - - - - - - 2,666,315 A.4 Loans 79,367,793 25,417,197 19,606,942 25,647,756 57,720,338 30,004,482 40,991,808 151,643,470 140,326,414 5,756,392 - Banks 28,719,346 6,473,733 3,059,820 3,587,550 23,958,576 7,936,761 7,807,017 7,703,222 8,285,176 3,272,223 - Customers 50,648,447 18,943,464 16,547,122 22,060,206 33,761,762 22,067,721 33,184,791 143,940,248 132,041,238 2,484,169 B. On-balance sheet liabilities 362,974,602 48,421,321 21,592,941 24,216,873 56,989,532 15,710,675 25,561,264 117,700,554 50,378,858 5,682,759 B.1. Deposits and current accounts 351,864,448 10,877,998 8,558,159 10,676,806 33,332,718 7,547,605 11,415,862 23,059,974 6,977,419 408,273 - Banks 26,270,540 8,032,992 5,733,174 5,573,431 11,519,994 2,353,661 4,078,416 13,085,224 5,368,802 14,296 - Customers 325,593,908 2,845,006 2,824,985 5,103,375 21,812,724 5,193,944 7,337,446 9,974,750 1,608,617 393,977 B.2 Debt securities 340,061 175,823 1,532,612 2,799,351 5,038,993 3,922,290 5,333,888 33,685,585 28,664,259 5,115,206 B.3 Other liabilities 10,770,093 37,367,500 11,502,170 10,740,716 18,617,821 4,240,780 8,811,514 60,954,995 14,737,180 159,280 C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 148,379 5,248,952 4,587,681 4,667,587 7,011,710 9,179,284 4,300,705 18,420,176 13,619,290 309 - Short positions 116,930 4,289,545 2,730,996 5,821,271 8,066,778 8,000,565 5,947,508 19,284,850 9,496,578 310 C.2 Financial derivatives without capital swap - Long positions 24,640,038 1,672,441 2,111,329 2,680,730 13,184,257 5,727,801 14,462,294 16,409,108 14,575,355 3,197 - Short positions 22,394,048 2,548,569 1,838,562 3,305,192 13,863,254 6,273,452 11,013,161 14,548,947 13,869,927 3,197 C.3 Deposits and loans to be received - Long positions - 18,380,300 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,348 2,119,696 4,517,526 1,363,171 1,589,634 - 124,306 - - C.4 Commitments to disburse funds - Long positions 69,313,783 1,006,335 135,422 398,084 3,776,353 2,058,996 1,820,808 11,447,167 3,922,625 305,895 - Short positions 72,872,994 141,432 32,834 354,875 4,410,016 963,031 1,161,613 8,568,424 3,712,183 305,876 C.5 Financial guarantees given 1,434,240 360,104 49,517 403,433 355,014 603,392 790,612 2,655,084 941,002 4,800 C.6 Financial guarantees received 9,503,893 103,494 1,774 96,738 122,645 200,660 295,202 13,071,295 15,692,254 15,630 C.7 Credit derivatives with capital swap - Long positions - - - - 604,000 1,527,000 973,000 5,517,000 17,000 - - Short positions - - - - 500,000 1,557,000 884,000 5,092,000 89,000 - C.8 Credit derivatives without capital swap - Long positions - - - - 5,000 36,500 - 38,600 1,996,717 - - Short positions - - - - 5,000 36,500 - 96,600 2,039,717 - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 398 2018 Annual Report and Accounts · UniCredit 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: other currencies (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 20,930,906 6,761,558 6,429,980 4,469,006 9,202,349 5,518,444 7,036,218 29,454,536 21,658,095 182,280 A.1 Government securities 4,324 41,884 11,083 122,365 288,855 96,424 388,158 6,647,174 5,382,234 - A.2 Other debt securities 86 3,017 8,455 3,101 6,934 106,091 94,855 733,821 1,364,352 8,830 A.3 Units in investment funds 60,665 - - - - - - - - 70,032 A.4 Loans 20,865,831 6,716,657 6,410,442 4,343,540 8,906,560 5,315,929 6,553,205 22,073,541 14,911,509 103,418 - Banks 4,625,879 5,701,844 5,497,500 2,061,525 5,183,259 1,290,984 714,943 1,381,856 471,305 62,774 - Customers 16,239,952 1,014,813 912,942 2,282,015 3,723,301 4,024,945 5,838,262 20,691,685 14,440,204 40,644 B. On-balance sheet liabilities 37,916,993 2,738,868 5,852,654 11,980,093 9,962,949 5,405,861 4,656,982 12,206,307 5,197,384 20,976 B.1. Deposits and current accounts 37,099,457 2,687,852 5,583,162 11,533,206 8,481,253 4,039,187 3,125,404 5,465,753 1,911,751 20,976 - Banks 2,965,065 1,092,459 1,409,016 2,224,740 3,855,525 1,204,473 994,847 2,722,873 1,596,852 20,962 - Customers 34,134,392 1,595,393 4,174,146 9,308,466 4,625,728 2,834,714 2,130,557 2,742,880 314,899 14 B.2 Debt securities 170 21,766 60,360 120,425 1,038,187 568,664 476,187 5,833,534 2,598,531 - B.3 Other liabilities 817,366 29,250 209,132 326,462 443,509 798,010 1,055,391 907,020 687,102 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 644,227 4,718,596 4,349,774 7,726,100 17,580,136 11,393,667 10,722,905 31,471,990 12,587,467 - - Short positions 675,535 6,283,931 6,198,564 6,530,305 15,190,220 12,290,413 8,914,615 31,785,821 12,650,418 - C.2 Financial derivatives without capital swap - Long positions 1,605,870 2,011,075 672,537 2,830,924 3,602,045 4,272,342 9,813,777 17,461,626 9,120,928 - - Short positions 1,796,186 1,283,159 827,045 2,041,882 5,118,666 3,655,758 13,586,780 18,736,810 8,393,057 - C.3 Deposits and loans to be received - Long positions 18,554 47,602 - - - - - - - - - Short positions - 563 3,488 7,231 50,946 3,927 - - - - C.4 Commitments to disburse funds - Long positions 1,514,409 6,097 10,550 356,220 1,064,792 5,130,025 1,852,772 2,100,030 1,831,696 269,762 - Short positions 1,681,719 95,976 5,583 61,242 828,885 4,827,959 1,229,810 1,789,093 1,525,252 226,737 C.5 Financial guarantees given 228,022 3,214 23,050 126,832 349,349 817,835 14,114,430 3,845,972 836,080 - C.6 Financial guarantees received 258,278 66 405 435 11,410 26,731 43,378 259,785 796,764 630,476 C.7 Credit derivatives with capital swap - Long positions - 548,538 - 13,000 728,000 1,134,000 1,615,000 1,306,000 - - - Short positions - 548,538 - 13,000 997,000 928,000 1,521,000 1,193,000 3,000 - C.8 Credit derivatives without capital swap - Long positions - - - 19,000 - - - 495,000 66,000 - - Short positions - - - - 320,000 - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 398 2018 Annual Report and Accounts · UniCredit 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: other currencies (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 20,930,906 6,761,558 6,429,980 4,469,006 9,202,349 5,518,444 7,036,218 29,454,536 21,658,095 182,280 A.1 Government securities 4,324 41,884 11,083 122,365 288,855 96,424 388,158 6,647,174 5,382,234 - A.2 Other debt securities 86 3,017 8,455 3,101 6,934 106,091 94,855 733,821 1,364,352 8,830 A.3 Units in investment funds 60,665 - - - - - - - - 70,032 A.4 Loans 20,865,831 6,716,657 6,410,442 4,343,540 8,906,560 5,315,929 6,553,205 22,073,541 14,911,509 103,418 - Banks 4,625,879 5,701,844 5,497,500 2,061,525 5,183,259 1,290,984 714,943 1,381,856 471,305 62,774 - Customers 16,239,952 1,014,813 912,942 2,282,015 3,723,301 4,024,945 5,838,262 20,691,685 14,440,204 40,644 B. On-balance sheet liabilities 37,916,993 2,738,868 5,852,654 11,980,093 9,962,949 5,405,861 4,656,982 12,206,307 5,197,384 20,976 B.1. Deposits and current accounts 37,099,457 2,687,852 5,583,162 11,533,206 8,481,253 4,039,187 3,125,404 5,465,753 1,911,751 20,976 - Banks 2,965,065 1,092,459 1,409,016 2,224,740 3,855,525 1,204,473 994,847 2,722,873 1,596,852 20,962 - Customers 34,134,392 1,595,393 4,174,146 9,308,466 4,625,728 2,834,714 2,130,557 2,742,880 314,899 14 B.2 Debt securities 170 21,766 60,360 120,425 1,038,187 568,664 476,187 5,833,534 2,598,531 - B.3 Other liabilities 817,366 29,250 209,132 326,462 443,509 798,010 1,055,391 907,020 687,102 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 644,227 4,718,596 4,349,774 7,726,100 17,580,136 11,393,667 10,722,905 31,471,990 12,587,467 - - Short positions 675,535 6,283,931 6,198,564 6,530,305 15,190,220 12,290,413 8,914,615 31,785,821 12,650,418 - C.2 Financial derivatives without capital swap - Long positions 1,605,870 2,011,075 672,537 2,830,924 3,602,045 4,272,342 9,813,777 17,461,626 9,120,928 - - Short positions 1,796,186 1,283,159 827,045 2,041,882 5,118,666 3,655,758 13,586,780 18,736,810 8,393,057 - C.3 Deposits and loans to be received - Long positions 18,554 47,602 - - - - - - - - - Short positions - 563 3,488 7,231 50,946 3,927 - - - - C.4 Commitments to disburse funds - Long positions 1,514,409 6,097 10,550 356,220 1,064,792 5,130,025 1,852,772 2,100,030 1,831,696 269,762 - Short positions 1,681,719 95,976 5,583 61,242 828,885 4,827,959 1,229,810 1,789,093 1,525,252 226,737 C.5 Financial guarantees given 228,022 3,214 23,050 126,832 349,349 817,835 14,114,430 3,845,972 836,080 - C.6 Financial guarantees received 258,278 66 405 435 11,410 26,731 43,378 259,785 796,764 630,476 C.7 Credit derivatives with capital swap - Long positions - 548,538 - 13,000 728,000 1,134,000 1,615,000 1,306,000 - - - Short positions - 548,538 - 13,000 997,000 928,000 1,521,000 1,193,000 3,000 - C.8 Credit derivatives without capital swap - Long positions - - - 19,000 - - - 495,000 66,000 - - Short positions - - - - 320,000 - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 398 2018 Annual Report and Accounts · UniCredit 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: other currencies (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 20,930,906 6,761,558 6,429,980 4,469,006 9,202,349 5,518,444 7,036,218 29,454,536 21,658,095 182,280 A.1 Government securities 4,324 41,884 11,083 122,365 288,855 96,424 388,158 6,647,174 5,382,234 - A.2 Other debt securities 86 3,017 8,455 3,101 6,934 106,091 94,855 733,821 1,364,352 8,830 A.3 Units in investment funds 60,665 - - - - - - - - 70,032 A.4 Loans 20,865,831 6,716,657 6,410,442 4,343,540 8,906,560 5,315,929 6,553,205 22,073,541 14,911,509 103,418 - Banks 4,625,879 5,701,844 5,497,500 2,061,525 5,183,259 1,290,984 714,943 1,381,856 471,305 62,774 - Customers 16,239,952 1,014,813 912,942 2,282,015 3,723,301 4,024,945 5,838,262 20,691,685 14,440,204 40,644 B. On-balance sheet liabilities 37,916,993 2,738,868 5,852,654 11,980,093 9,962,949 5,405,861 4,656,982 12,206,307 5,197,384 20,976 B.1. Deposits and current accounts 37,099,457 2,687,852 5,583,162 11,533,206 8,481,253 4,039,187 3,125,404 5,465,753 1,911,751 20,976 - Banks 2,965,065 1,092,459 1,409,016 2,224,740 3,855,525 1,204,473 994,847 2,722,873 1,596,852 20,962 - Customers 34,134,392 1,595,393 4,174,146 9,308,466 4,625,728 2,834,714 2,130,557 2,742,880 314,899 14 B.2 Debt securities 170 21,766 60,360 120,425 1,038,187 568,664 476,187 5,833,534 2,598,531 - B.3 Other liabilities 817,366 29,250 209,132 326,462 443,509 798,010 1,055,391 907,020 687,102 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 644,227 4,718,596 4,349,774 7,726,100 17,580,136 11,393,667 10,722,905 31,471,990 12,587,467 - - Short positions 675,535 6,283,931 6,198,564 6,530,305 15,190,220 12,290,413 8,914,615 31,785,821 12,650,418 - C.2 Financial derivatives without capital swap - Long positions 1,605,870 2,011,075 672,537 2,830,924 3,602,045 4,272,342 9,813,777 17,461,626 9,120,928 - - Short positions 1,796,186 1,283,159 827,045 2,041,882 5,118,666 3,655,758 13,586,780 18,736,810 8,393,057 - C.3 Deposits and loans to be received - Long positions 18,554 47,602 - - - - - - - - - Short positions - 563 3,488 7,231 50,946 3,927 - - - - C.4 Commitments to disburse funds - Long positions 1,514,409 6,097 10,550 356,220 1,064,792 5,130,025 1,852,772 2,100,030 1,831,696 269,762 - Short positions 1,681,719 95,976 5,583 61,242 828,885 4,827,959 1,229,810 1,789,093 1,525,252 226,737 C.5 Financial guarantees given 228,022 3,214 23,050 126,832 349,349 817,835 14,114,430 3,845,972 836,080 - C.6 Financial guarantees received 258,278 66 405 435 11,410 26,731 43,378 259,785 796,764 630,476 C.7 Credit derivatives with capital swap - Long positions - 548,538 - 13,000 728,000 1,134,000 1,615,000 1,306,000 - - - Short positions - 548,538 - 13,000 997,000 928,000 1,521,000 1,193,000 3,000 - C.8 Credit derivatives without capital swap - Long positions - - - 19,000 - - - 495,000 66,000 - - Short positions - - - - 320,000 - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 398 2018 Annual Report and Accounts · UniCredit 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: other currencies (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 20,930,906 6,761,558 6,429,980 4,469,006 9,202,349 5,518,444 7,036,218 29,454,536 21,658,095 182,280 A.1 Government securities 4,324 41,884 11,083 122,365 288,855 96,424 388,158 6,647,174 5,382,234 - A.2 Other debt securities 86 3,017 8,455 3,101 6,934 106,091 94,855 733,821 1,364,352 8,830 A.3 Units in investment funds 60,665 - - - - - - - - 70,032 A.4 Loans 20,865,831 6,716,657 6,410,442 4,343,540 8,906,560 5,315,929 6,553,205 22,073,541 14,911,509 103,418 - Banks 4,625,879 5,701,844 5,497,500 2,061,525 5,183,259 1,290,984 714,943 1,381,856 471,305 62,774 - Customers 16,239,952 1,014,813 912,942 2,282,015 3,723,301 4,024,945 5,838,262 20,691,685 14,440,204 40,644 B. On-balance sheet liabilities 37,916,993 2,738,868 5,852,654 11,980,093 9,962,949 5,405,861 4,656,982 12,206,307 5,197,384 20,976 B.1. Deposits and current accounts 37,099,457 2,687,852 5,583,162 11,533,206 8,481,253 4,039,187 3,125,404 5,465,753 1,911,751 20,976 - Banks 2,965,065 1,092,459 1,409,016 2,224,740 3,855,525 1,204,473 994,847 2,722,873 1,596,852 20,962 - Customers 34,134,392 1,595,393 4,174,146 9,308,466 4,625,728 2,834,714 2,130,557 2,742,880 314,899 14 B.2 Debt securities 170 21,766 60,360 120,425 1,038,187 568,664 476,187 5,833,534 2,598,531 - B.3 Other liabilities 817,366 29,250 209,132 326,462 443,509 798,010 1,055,391 907,020 687,102 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 644,227 4,718,596 4,349,774 7,726,100 17,580,136 11,393,667 10,722,905 31,471,990 12,587,467 - - Short positions 675,535 6,283,931 6,198,564 6,530,305 15,190,220 12,290,413 8,914,615 31,785,821 12,650,418 - C.2 Financial derivatives without capital swap - Long positions 1,605,870 2,011,075 672,537 2,830,924 3,602,045 4,272,342 9,813,777 17,461,626 9,120,928 - - Short positions 1,796,186 1,283,159 827,045 2,041,882 5,118,666 3,655,758 13,586,780 18,736,810 8,393,057 - C.3 Deposits and loans to be received - Long positions 18,554 47,602 - - - - - - - - - Short positions - 563 3,488 7,231 50,946 3,927 - - - - C.4 Commitments to disburse funds - Long positions 1,514,409 6,097 10,550 356,220 1,064,792 5,130,025 1,852,772 2,100,030 1,831,696 269,762 - Short positions 1,681,719 95,976 5,583 61,242 828,885 4,827,959 1,229,810 1,789,093 1,525,252 226,737 C.5 Financial guarantees given 228,022 3,214 23,050 126,832 349,349 817,835 14,114,430 3,845,972 836,080 - C.6 Financial guarantees received 258,278 66 405 435 11,410 26,731 43,378 259,785 796,764 630,476 C.7 Credit derivatives with capital swap - Long positions - 548,538 - 13,000 728,000 1,134,000 1,615,000 1,306,000 - - - Short positions - 548,538 - 13,000 997,000 928,000 1,521,000 1,193,000 3,000 - C.8 Credit derivatives without capital swap - Long positions - - - 19,000 - - - 495,000 66,000 - - Short positions - - - - 320,000 - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 398 2018 Annual Report and Accounts · UniCredit 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: other currencies (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 20,930,906 6,761,558 6,429,980 4,469,006 9,202,349 5,518,444 7,036,218 29,454,536 21,658,095 182,280 A.1 Government securities 4,324 41,884 11,083 122,365 288,855 96,424 388,158 6,647,174 5,382,234 - A.2 Other debt securities 86 3,017 8,455 3,101 6,934 106,091 94,855 733,821 1,364,352 8,830 A.3 Units in investment funds 60,665 - - - - - - - - 70,032 A.4 Loans 20,865,831 6,716,657 6,410,442 4,343,540 8,906,560 5,315,929 6,553,205 22,073,541 14,911,509 103,418 - Banks 4,625,879 5,701,844 5,497,500 2,061,525 5,183,259 1,290,984 714,943 1,381,856 471,305 62,774 - Customers 16,239,952 1,014,813 912,942 2,282,015 3,723,301 4,024,945 5,838,262 20,691,685 14,440,204 40,644 B. On-balance sheet liabilities 37,916,993 2,738,868 5,852,654 11,980,093 9,962,949 5,405,861 4,656,982 12,206,307 5,197,384 20,976 B.1. Deposits and current accounts 37,099,457 2,687,852 5,583,162 11,533,206 8,481,253 4,039,187 3,125,404 5,465,753 1,911,751 20,976 - Banks 2,965,065 1,092,459 1,409,016 2,224,740 3,855,525 1,204,473 994,847 2,722,873 1,596,852 20,962 - Customers 34,134,392 1,595,393 4,174,146 9,308,466 4,625,728 2,834,714 2,130,557 2,742,880 314,899 14 B.2 Debt securities 170 21,766 60,360 120,425 1,038,187 568,664 476,187 5,833,534 2,598,531 - B.3 Other liabilities 817,366 29,250 209,132 326,462 443,509 798,010 1,055,391 907,020 687,102 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 644,227 4,718,596 4,349,774 7,726,100 17,580,136 11,393,667 10,722,905 31,471,990 12,587,467 - - Short positions 675,535 6,283,931 6,198,564 6,530,305 15,190,220 12,290,413 8,914,615 31,785,821 12,650,418 - C.2 Financial derivatives without capital swap - Long positions 1,605,870 2,011,075 672,537 2,830,924 3,602,045 4,272,342 9,813,777 17,461,626 9,120,928 - - Short positions 1,796,186 1,283,159 827,045 2,041,882 5,118,666 3,655,758 13,586,780 18,736,810 8,393,057 - C.3 Deposits and loans to be received - Long positions 18,554 47,602 - - - - - - - - - Short positions - 563 3,488 7,231 50,946 3,927 - - - - C.4 Commitments to disburse funds - Long positions 1,514,409 6,097 10,550 356,220 1,064,792 5,130,025 1,852,772 2,100,030 1,831,696 269,762 - Short positions 1,681,719 95,976 5,583 61,242 828,885 4,827,959 1,229,810 1,789,093 1,525,252 226,737 C.5 Financial guarantees given 228,022 3,214 23,050 126,832 349,349 817,835 14,114,430 3,845,972 836,080 - C.6 Financial guarantees received 258,278 66 405 435 11,410 26,731 43,378 259,785 796,764 630,476 C.7 Credit derivatives with capital swap - Long positions - 548,538 - 13,000 728,000 1,134,000 1,615,000 1,306,000 - - - Short positions - 548,538 - 13,000 997,000 928,000 1,521,000 1,193,000 3,000 - C.8 Credit derivatives without capital swap - Long positions - - - 19,000 - - - 495,000 66,000 - - Short positions - - - - 320,000 - - - - - Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 399 2.5 Operational risks Qualitative information A. General aspects, operational processes and methods for measuring operational risk Operational risk Operational risk is the risk of loss due to errors, infringements, interruptions, damages caused by internal processes or personnel or systems or caused by external events. This definition includes legal and compliance risks, but excludes strategic and reputational risk. For example, losses arising from the following can be defined as operational: internal or external fraud, employment practices and workplace safety, client claims, products distribution, fines and penalties due to regulation breaches, damages to the company’s physical assets, business disruption and system failures, process management. Group operational risk framework UniCredit Group sets the operational risk management framework as a combination of policies and procedures for controlling, measuring and mitigating the operational risk of the Group and of the controlled Entities. The operational risk policies, applying to all Legal Entities, are common principles defining the roles of the company bodies, the operational risk management function, as well as the relationship with other functions involved in operational risk monitoring and management. The Parent company coordinates the Legal Entities, according to the internal regulation and the Group operational risk control rulebook. Specific Risks Committees (Group Risk & Internal Control Committee, Group Operational and Reputational Risks Committee) are set up to monitor risk exposure, mitigating actions, measurement and control methods within the Group. With particular reference to Unicredit S.p.A. the “ Italian Operational & Reputational Risk Committee” (IORRIC) meets with the aim of monitoring the exposure to operational and reputational risks and evaluating the events with significant impact and the related mitigation actions with reference to UniCredit S.p.A. perimeter and its Italian subsidiaries. The methodologies for data classification and completeness verification, scenario analysis, risk indicators, reporting and capital at risk measurement are set by the Parent company Group Operational & Reputational Risks department and applied to all Legal Entities. A pivot element of the risk control framework is the operational risk management application, allowing the collection of the data required for operational risk control and capital measurement. The compliance of the Group Operational risk control and measurement system with external regulations and Group standards is assessed through an internal validation process, which is under the responsibility of the Group Internal Validation department of the Parent company and is independent from the Group Operational & Reputational Risks Department. Since March 2008, the UniCredit Group applies the AMA model (Advanced Measurement Approach) for calculating operational risk capital. The use of this method has been rolled out to the main Legal Entities of the Group. Organizational structure Senior Management is responsible for approving all aspects related to the Group operational risk framework and verifying the adequacy of the measurement and control system; it is regularly updated on changes to the risk profile and operational risk exposure, with the support of the appropriate risk committees if required. The “Group Operational & Reputational Risks Committee” is responsible for the evaluation and monitoring of operational (including ICT and Cyber) and reputational risks at Group level. It enables the coordination among the control functions in identifying and sharing group priorities concerning Operational & Reputational Risks (e.g. emerging risks) and monitors the effectiveness of initiatives put in place to oversee them. In detail: The “Group Operational & Reputational Risks Committee” meets with functions of consultation and suggestion for the definition of proposals to be submitted to functions, decision-making bodies (i.e. “Group Risk & Internal Control Committee”/ GR&ICC), managerial body (i.e. “Executive Management Committee”/ EMC) or Legal Entities, for: • sharing the overall strategies for operational risk optimization, as well as monitoring the initiatives put in place for the related implementation; • evaluating: - periodical group reporting provided by Group Operational & Reputational Risks function on operational losses (with particular focus on events having high impacts), Regulatory Capital, Risk Weighted Assets, Indicators and Scenario Analysis, ICT & Cyber Risks analysis; - issues concerning operational & reputational risks reported by Legal Entities committees; - external operational events having potential impact on Group risk profile; - evidences reported by Group Compliance function on carried out second level controls, as well as on current and expected impacts of monitored regulations, evidences reported by the Group Chief Operating Officer (COO) on incidents and assessments for ICT, Operations and Security Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 399 2.5 Operational risks Qualitative information A. General aspects, operational processes and methods for measuring operational risk Operational risk Operational risk is the risk of loss due to errors, infringements, interruptions, damages caused by internal processes or personnel or systems or caused by external events. This definition includes legal and compliance risks, but excludes strategic and reputational risk. For example, losses arising from the following can be defined as operational: internal or external fraud, employment practices and workplace safety, client claims, products distribution, fines and penalties due to regulation breaches, damages to the company’s physical assets, business disruption and system failures, process management. Group operational risk framework UniCredit Group sets the operational risk management framework as a combination of policies and procedures for controlling, measuring and mitigating the operational risk of the Group and of the controlled Entities. The operational risk policies, applying to all Legal Entities, are common principles defining the roles of the company bodies, the operational risk management function, as well as the relationship with other functions involved in operational risk monitoring and management. The Parent company coordinates the Legal Entities, according to the internal regulation and the Group operational risk control rulebook. Specific Risks Committees (Group Risk & Internal Control Committee, Group Operational and Reputational Risks Committee) are set up to monitor risk exposure, mitigating actions, measurement and control methods within the Group. With particular reference to Unicredit S.p.A. the “ Italian Operational & Reputational Risk Committee” (IORRIC) meets with the aim of monitoring the exposure to operational and reputational risks and evaluating the events with significant impact and the related mitigation actions with reference to UniCredit S.p.A. perimeter and its Italian subsidiaries. The methodologies for data classification and completeness verification, scenario analysis, risk indicators, reporting and capital at risk measurement are set by the Parent company Group Operational & Reputational Risks department and applied to all Legal Entities. A pivot element of the risk control framework is the operational risk management application, allowing the collection of the data required for operational risk control and capital measurement. The compliance of the Group Operational risk control and measurement system with external regulations and Group standards is assessed through an internal validation process, which is under the responsibility of the Group Internal Validation department of the Parent company and is independent from the Group Operational & Reputational Risks Department. Since March 2008, the UniCredit Group applies the AMA model (Advanced Measurement Approach) for calculating operational risk capital. The use of this method has been rolled out to the main Legal Entities of the Group. Organizational structure Senior Management is responsible for approving all aspects related to the Group operational risk framework and verifying the adequacy of the measurement and control system; it is regularly updated on changes to the risk profile and operational risk exposure, with the support of the appropriate risk committees if required. The “Group Operational & Reputational Risks Committee” is responsible for the evaluation and monitoring of operational (including ICT and Cyber) and reputational risks at Group level. It enables the coordination among the control functions in identifying and sharing group priorities concerning Operational & Reputational Risks (e.g. emerging risks) and monitors the effectiveness of initiatives put in place to oversee them. In detail: The “Group Operational & Reputational Risks Committee” meets with functions of consultation and suggestion for the definition of proposals to be submitted to functions, decision-making bodies (i.e. “Group Risk & Internal Control Committee”/ GR&ICC), managerial body (i.e. “Executive Management Committee”/ EMC) or Legal Entities, for: • sharing the overall strategies for operational risk optimization, as well as monitoring the initiatives put in place for the related implementation; • evaluating: - periodical group reporting provided by Group Operational & Reputational Risks function on operational losses (with particular focus on events having high impacts), Regulatory Capital, Risk Weighted Assets, Indicators and Scenario Analysis, ICT & Cyber Risks analysis; - issues concerning operational & reputational risks reported by Legal Entities committees; - external operational events having potential impact on Group risk profile; - evidences reported by Group Compliance function on carried out second level controls, as well as on current and expected impacts of monitored regulations, evidences reported by the Group Chief Operating Officer (COO) on incidents and assessments for ICT, Operations and Security Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 399 2.5 Operational risks Qualitative information A. General aspects, operational processes and methods for measuring operational risk Operational risk Operational risk is the risk of loss due to errors, infringements, interruptions, damages caused by internal processes or personnel or systems or caused by external events. This definition includes legal and compliance risks, but excludes strategic and reputational risk. For example, losses arising from the following can be defined as operational: internal or external fraud, employment practices and workplace safety, client claims, products distribution, fines and penalties due to regulation breaches, damages to the company’s physical assets, business disruption and system failures, process management. Group operational risk framework UniCredit Group sets the operational risk management framework as a combination of policies and procedures for controlling, measuring and mitigating the operational risk of the Group and of the controlled Entities. The operational risk policies, applying to all Legal Entities, are common principles defining the roles of the company bodies, the operational risk management function, as well as the relationship with other functions involved in operational risk monitoring and management. The Parent company coordinates the Legal Entities, according to the internal regulation and the Group operational risk control rulebook. Specific Risks Committees (Group Risk & Internal Control Committee, Group Operational and Reputational Risks Committee) are set up to monitor risk exposure, mitigating actions, measurement and control methods within the Group. With particular reference to Unicredit S.p.A. the “ Italian Operational & Reputational Risk Committee” (IORRIC) meets with the aim of monitoring the exposure to operational and reputational risks and evaluating the events with significant impact and the related mitigation actions with reference to UniCredit S.p.A. perimeter and its Italian subsidiaries. The methodologies for data classification and completeness verification, scenario analysis, risk indicators, reporting and capital at risk measurement are set by the Parent company Group Operational & Reputational Risks department and applied to all Legal Entities. A pivot element of the risk control framework is the operational risk management application, allowing the collection of the data required for operational risk control and capital measurement. The compliance of the Group Operational risk control and measurement system with external regulations and Group standards is assessed through an internal validation process, which is under the responsibility of the Group Internal Validation department of the Parent company and is independent from the Group Operational & Reputational Risks Department. Since March 2008, the UniCredit Group applies the AMA model (Advanced Measurement Approach) for calculating operational risk capital. The use of this method has been rolled out to the main Legal Entities of the Group. Organizational structure Senior Management is responsible for approving all aspects related to the Group operational risk framework and verifying the adequacy of the measurement and control system; it is regularly updated on changes to the risk profile and operational risk exposure, with the support of the appropriate risk committees if required. The “Group Operational & Reputational Risks Committee” is responsible for the evaluation and monitoring of operational (including ICT and Cyber) and reputational risks at Group level. It enables the coordination among the control functions in identifying and sharing group priorities concerning Operational & Reputational Risks (e.g. emerging risks) and monitors the effectiveness of initiatives put in place to oversee them. In detail: The “Group Operational & Reputational Risks Committee” meets with functions of consultation and suggestion for the definition of proposals to be submitted to functions, decision-making bodies (i.e. “Group Risk & Internal Control Committee”/ GR&ICC), managerial body (i.e. “Executive Management Committee”/ EMC) or Legal Entities, for: • sharing the overall strategies for operational risk optimization, as well as monitoring the initiatives put in place for the related implementation; • evaluating: - periodical group reporting provided by Group Operational & Reputational Risks function on operational losses (with particular focus on events having high impacts), Regulatory Capital, Risk Weighted Assets, Indicators and Scenario Analysis, ICT & Cyber Risks analysis; - issues concerning operational & reputational risks reported by Legal Entities committees; - external operational events having potential impact on Group risk profile; - evidences reported by Group Compliance function on carried out second level controls, as well as on current and expected impacts of monitored regulations, evidences reported by the Group Chief Operating Officer (COO) on incidents and assessments for ICT, Operations and Security Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 399 2.5 Operational risks Qualitative information A. General aspects, operational processes and methods for measuring operational risk Operational risk Operational risk is the risk of loss due to errors, infringements, interruptions, damages caused by internal processes or personnel or systems or caused by external events. This definition includes legal and compliance risks, but excludes strategic and reputational risk. For example, losses arising from the following can be defined as operational: internal or external fraud, employment practices and workplace safety, client claims, products distribution, fines and penalties due to regulation breaches, damages to the company’s physical assets, business disruption and system failures, process management. Group operational risk framework UniCredit Group sets the operational risk management framework as a combination of policies and procedures for controlling, measuring and mitigating the operational risk of the Group and of the controlled Entities. The operational risk policies, applying to all Legal Entities, are common principles defining the roles of the company bodies, the operational risk management function, as well as the relationship with other functions involved in operational risk monitoring and management. The Parent company coordinates the Legal Entities, according to the internal regulation and the Group operational risk control rulebook. Specific Risks Committees (Group Risk & Internal Control Committee, Group Operational and Reputational Risks Committee) are set up to monitor risk exposure, mitigating actions, measurement and control methods within the Group. With particular reference to Unicredit S.p.A. the “ Italian Operational & Reputational Risk Committee” (IORRIC) meets with the aim of monitoring the exposure to operational and reputational risks and evaluating the events with significant impact and the related mitigation actions with reference to UniCredit S.p.A. perimeter and its Italian subsidiaries. The methodologies for data classification and completeness verification, scenario analysis, risk indicators, reporting and capital at risk measurement are set by the Parent company Group Operational & Reputational Risks department and applied to all Legal Entities. A pivot element of the risk control framework is the operational risk management application, allowing the collection of the data required for operational risk control and capital measurement. The compliance of the Group Operational risk control and measurement system with external regulations and Group standards is assessed through an internal validation process, which is under the responsibility of the Group Internal Validation department of the Parent company and is independent from the Group Operational & Reputational Risks Department. Since March 2008, the UniCredit Group applies the AMA model (Advanced Measurement Approach) for calculating operational risk capital. The use of this method has been rolled out to the main Legal Entities of the Group. Organizational structure Senior Management is responsible for approving all aspects related to the Group operational risk framework and verifying the adequacy of the measurement and control system; it is regularly updated on changes to the risk profile and operational risk exposure, with the support of the appropriate risk committees if required. The “Group Operational & Reputational Risks Committee” is responsible for the evaluation and monitoring of operational (including ICT and Cyber) and reputational risks at Group level. It enables the coordination among the control functions in identifying and sharing group priorities concerning Operational & Reputational Risks (e.g. emerging risks) and monitors the effectiveness of initiatives put in place to oversee them. In detail: The “Group Operational & Reputational Risks Committee” meets with functions of consultation and suggestion for the definition of proposals to be submitted to functions, decision-making bodies (i.e. “Group Risk & Internal Control Committee”/ GR&ICC), managerial body (i.e. “Executive Management Committee”/ EMC) or Legal Entities, for: • sharing the overall strategies for operational risk optimization, as well as monitoring the initiatives put in place for the related implementation; • evaluating: - periodical group reporting provided by Group Operational & Reputational Risks function on operational losses (with particular focus on events having high impacts), Regulatory Capital, Risk Weighted Assets, Indicators and Scenario Analysis, ICT & Cyber Risks analysis; - issues concerning operational & reputational risks reported by Legal Entities committees; - external operational events having potential impact on Group risk profile; - evidences reported by Group Compliance function on carried out second level controls, as well as on current and expected impacts of monitored regulations, evidences reported by the Group Chief Operating Officer (COO) on incidents and assessments for ICT, Operations and Security Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 399 2.5 Operational risks Qualitative information A. General aspects, operational processes and methods for measuring operational risk Operational risk Operational risk is the risk of loss due to errors, infringements, interruptions, damages caused by internal processes or personnel or systems or caused by external events. This definition includes legal and compliance risks, but excludes strategic and reputational risk. For example, losses arising from the following can be defined as operational: internal or external fraud, employment practices and workplace safety, client claims, products distribution, fines and penalties due to regulation breaches, damages to the company’s physical assets, business disruption and system failures, process management. Group operational risk framework UniCredit Group sets the operational risk management framework as a combination of policies and procedures for controlling, measuring and mitigating the operational risk of the Group and of the controlled Entities. The operational risk policies, applying to all Legal Entities, are common principles defining the roles of the company bodies, the operational risk management function, as well as the relationship with other functions involved in operational risk monitoring and management. The Parent company coordinates the Legal Entities, according to the internal regulation and the Group operational risk control rulebook. Specific Risks Committees (Group Risk & Internal Control Committee, Group Operational and Reputational Risks Committee) are set up to monitor risk exposure, mitigating actions, measurement and control methods within the Group. With particular reference to Unicredit S.p.A. the “ Italian Operational & Reputational Risk Committee” (IORRIC) meets with the aim of monitoring the exposure to operational and reputational risks and evaluating the events with significant impact and the related mitigation actions with reference to UniCredit S.p.A. perimeter and its Italian subsidiaries. The methodologies for data classification and completeness verification, scenario analysis, risk indicators, reporting and capital at risk measurement are set by the Parent company Group Operational & Reputational Risks department and applied to all Legal Entities. A pivot element of the risk control framework is the operational risk management application, allowing the collection of the data required for operational risk control and capital measurement. The compliance of the Group Operational risk control and measurement system with external regulations and Group standards is assessed through an internal validation process, which is under the responsibility of the Group Internal Validation department of the Parent company and is independent from the Group Operational & Reputational Risks Department. Since March 2008, the UniCredit Group applies the AMA model (Advanced Measurement Approach) for calculating operational risk capital. The use of this method has been rolled out to the main Legal Entities of the Group. Organizational structure Senior Management is responsible for approving all aspects related to the Group operational risk framework and verifying the adequacy of the measurement and control system; it is regularly updated on changes to the risk profile and operational risk exposure, with the support of the appropriate risk committees if required. The “Group Operational & Reputational Risks Committee” is responsible for the evaluation and monitoring of operational (including ICT and Cyber) and reputational risks at Group level. It enables the coordination among the control functions in identifying and sharing group priorities concerning Operational & Reputational Risks (e.g. emerging risks) and monitors the effectiveness of initiatives put in place to oversee them. In detail: The “Group Operational & Reputational Risks Committee” meets with functions of consultation and suggestion for the definition of proposals to be submitted to functions, decision-making bodies (i.e. “Group Risk & Internal Control Committee”/ GR&ICC), managerial body (i.e. “Executive Management Committee”/ EMC) or Legal Entities, for: • sharing the overall strategies for operational risk optimization, as well as monitoring the initiatives put in place for the related implementation; • evaluating: - periodical group reporting provided by Group Operational & Reputational Risks function on operational losses (with particular focus on events having high impacts), Regulatory Capital, Risk Weighted Assets, Indicators and Scenario Analysis, ICT & Cyber Risks analysis; - issues concerning operational & reputational risks reported by Legal Entities committees; - external operational events having potential impact on Group risk profile; - evidences reported by Group Compliance function on carried out second level controls, as well as on current and expected impacts of monitored regulations, evidences reported by the Group Chief Operating Officer (COO) on incidents and assessments for ICT, Operations and Security Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 400 2018 Annual Report and Accounts · UniCredit topics as well as main group risks/criticalities highlighted by the Internal Audit function; - potential synergies for further improvements concerning the actions plans aiming at the mitigation of the main operational risks of the Legal Entities, highlighted by control functions and by the COO (including situations that led to emergencies), by verifying from time to time their effectiveness and the return to business as usual; - yearly Regulatory Internal Validation Report on operational risk; • disclosing the Group risk appetite proposals, including capitalization targets and capital allocation criteria for Group operational risks, as well as the Group insurance strategies proposed by the competent functions; • disclosing fundamental modifications in measurement methodologies for Operational & Reputational risks; • issuing opinions on reputational risk related to non-credit transactions identified by the Head of CIB Division. The “Group Operational & Reputational Risks Committee” provides to the “Group Risk & Internal Control Committee” / GR&ICC and/or “Executive Management Committee”/EMC a periodical information on main evidences of evaluations and on specific actions proposed or activated. The “Group Operational & Reputational Risks Committee” / GORRIC receives from the Group Operational & Reputational Risks function a periodical aggregated information concerning either Holding and Legal Entities reports on all transactions inherent to reputational risks evaluation, including transactions reported by competent Committees (GMRC, GTCC, ITCC, ISTCC, DCMCC), based on current Global Rules on reputational risk. The Committee periodically receives also the list of events reported by “Top Experts” commission and evaluated by them as “not material” for the Group reputational risk profile. The Committee, convened by the Chairman, meets at least on a quarterly basis, or whenever the meeting is deemed necessary by the Chairman. The Group Operational & Reputational Risks department reports to the head of Group Risk Management and is responsible for the governance and control of operational and reputational risks of the Group (including operational risks bordering on credit risk, alias Cross Credit risks); the department is also responsible for the evaluation of the exposure to operational and reputational risks, grating their continual and independent monitoring, as well as of the definition of strategies to mitigate such risks and contain related losses for UniCredit S.p.A perimeter. In addition, the department is responsible for the definition of operational risk losses optimization program, leveraging on specific risk models and methodologies; it has furthermore the responsibility of coordinating the activities performed by the subsidiaries of UniCredit S.p.A. that apply the AMA model (limited to Legal Entities not included in other Hub perimeter) according to Group Operational and Reputational Risks Framework and of coordinating, for the perimeter of competence, the corresponding functions within the Group Legal Entities, according to Group Managerial Golden Rule (“GMGR” and “GMGR Evolution”). Furthermore, the department ensure that risk control activities on related risks assumed in the Foreign Branches of UniCredit S.p.A. are monitored and reported to the Group Chief Risk Officer and is responsible for ensuring integrated reporting between the control functions (e.g. Compliance, Audit) on the main operational and reputational risks of the Group. The structure is additionally responsible for the governance and control of ICT/Cyber Risks, through: a) the definition of the framework for the management of ICT/Cyber risks, the coordination and monitoring of the Legal Entities in the implementation of it; b) the measurement, assessment and control of ICT/ Cyber risks for UniCredit S.p.A.; c) the monitoring at Group level of the implementation and results of mitigation actions to oversee ICT/Cyber risks in cooperation with the competent functions (e.g. “Group Information & Security Office”), also through the analysis of risk indicators. The department has four organizational units: “Operational Risk Analytics and Oversight” responsible for defining the principles and rules at Group level for identification, assessment and control of operational risk, monitoring their correct application by the Legal Entities with focus on operational losses data collection and scenario analysis activity. The unit is responsible for defining risk capital measurement methodologies, calculating operational risk capital and the corresponding economic capital, as well as conducting quantitative analysis of the Group's exposure to operational risk also based on operational risks analytics models. The unit is furthermore responsible for the reporting of operational risks and of the definition process of the Risk Appetite Framework/RAF metrics for competence risks, as well as the related periodical monitoring. “Operational & Reputational Risks Assessment and Strategies” responsible for defining and monitoring the strategic areas for the management of operational risk consistent with the RAF and the Group's strategic objectives, keeping the responsibility for coordinating/monitoring risk mitigation actions and coordinate the monitoring of operational risks in the CEE perimeter, directly supporting the “CRO CEE” structure. The unit furthermore develops ad hoc analysis on specific issues of operational and reputational risk. Finally it is responsible of defining methodologies for assessing reputational risk by verifying its correct implementation and controlling the risk assessment activities for Italian transactions within the scope of the Global Rules related to reputation risk (e.g. weapons and nuclear energy sectors). “Operational Risks Management Italy” responsible for overseeing the operational risks of UniCredit S.p.A, supports the business functions of the Italian perimeter in the identification and monitoring of operational risks, also by executing specific risk assessment activities (e.g. on relevant transactions). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 400 2018 Annual Report and Accounts · UniCredit topics as well as main group risks/criticalities highlighted by the Internal Audit function; - potential synergies for further improvements concerning the actions plans aiming at the mitigation of the main operational risks of the Legal Entities, highlighted by control functions and by the COO (including situations that led to emergencies), by verifying from time to time their effectiveness and the return to business as usual; - yearly Regulatory Internal Validation Report on operational risk; • disclosing the Group risk appetite proposals, including capitalization targets and capital allocation criteria for Group operational risks, as well as the Group insurance strategies proposed by the competent functions; • disclosing fundamental modifications in measurement methodologies for Operational & Reputational risks; • issuing opinions on reputational risk related to non-credit transactions identified by the Head of CIB Division. The “Group Operational & Reputational Risks Committee” provides to the “Group Risk & Internal Control Committee” / GR&ICC and/or “Executive Management Committee”/EMC a periodical information on main evidences of evaluations and on specific actions proposed or activated. The “Group Operational & Reputational Risks Committee” / GORRIC receives from the Group Operational & Reputational Risks function a periodical aggregated information concerning either Holding and Legal Entities reports on all transactions inherent to reputational risks evaluation, including transactions reported by competent Committees (GMRC, GTCC, ITCC, ISTCC, DCMCC), based on current Global Rules on reputational risk. The Committee periodically receives also the list of events reported by “Top Experts” commission and evaluated by them as “not material” for the Group reputational risk profile. The Committee, convened by the Chairman, meets at least on a quarterly basis, or whenever the meeting is deemed necessary by the Chairman. The Group Operational & Reputational Risks department reports to the head of Group Risk Management and is responsible for the governance and control of operational and reputational risks of the Group (including operational risks bordering on credit risk, alias Cross Credit risks); the department is also responsible for the evaluation of the exposure to operational and reputational risks, grating their continual and independent monitoring, as well as of the definition of strategies to mitigate such risks and contain related losses for UniCredit S.p.A perimeter. In addition, the department is responsible for the definition of operational risk losses optimization program, leveraging on specific risk models and methodologies; it has furthermore the responsibility of coordinating the activities performed by the subsidiaries of UniCredit S.p.A. that apply the AMA model (limited to Legal Entities not included in other Hub perimeter) according to Group Operational and Reputational Risks Framework and of coordinating, for the perimeter of competence, the corresponding functions within the Group Legal Entities, according to Group Managerial Golden Rule (“GMGR” and “GMGR Evolution”). Furthermore, the department ensure that risk control activities on related risks assumed in the Foreign Branches of UniCredit S.p.A. are monitored and reported to the Group Chief Risk Officer and is responsible for ensuring integrated reporting between the control functions (e.g. Compliance, Audit) on the main operational and reputational risks of the Group. The structure is additionally responsible for the governance and control of ICT/Cyber Risks, through: a) the definition of the framework for the management of ICT/Cyber risks, the coordination and monitoring of the Legal Entities in the implementation of it; b) the measurement, assessment and control of ICT/ Cyber risks for UniCredit S.p.A.; c) the monitoring at Group level of the implementation and results of mitigation actions to oversee ICT/Cyber risks in cooperation with the competent functions (e.g. “Group Information & Security Office”), also through the analysis of risk indicators. The department has four organizational units: “Operational Risk Analytics and Oversight” responsible for defining the principles and rules at Group level for identification, assessment and control of operational risk, monitoring their correct application by the Legal Entities with focus on operational losses data collection and scenario analysis activity. The unit is responsible for defining risk capital measurement methodologies, calculating operational risk capital and the corresponding economic capital, as well as conducting quantitative analysis of the Group's exposure to operational risk also based on operational risks analytics models. The unit is furthermore responsible for the reporting of operational risks and of the definition process of the Risk Appetite Framework/RAF metrics for competence risks, as well as the related periodical monitoring. “Operational & Reputational Risks Assessment and Strategies” responsible for defining and monitoring the strategic areas for the management of operational risk consistent with the RAF and the Group's strategic objectives, keeping the responsibility for coordinating/monitoring risk mitigation actions and coordinate the monitoring of operational risks in the CEE perimeter, directly supporting the “CRO CEE” structure. The unit furthermore develops ad hoc analysis on specific issues of operational and reputational risk. Finally it is responsible of defining methodologies for assessing reputational risk by verifying its correct implementation and controlling the risk assessment activities for Italian transactions within the scope of the Global Rules related to reputation risk (e.g. weapons and nuclear energy sectors). “Operational Risks Management Italy” responsible for overseeing the operational risks of UniCredit S.p.A, supports the business functions of the Italian perimeter in the identification and monitoring of operational risks, also by executing specific risk assessment activities (e.g. on relevant transactions). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 400 2018 Annual Report and Accounts · UniCredit topics as well as main group risks/criticalities highlighted by the Internal Audit function; - potential synergies for further improvements concerning the actions plans aiming at the mitigation of the main operational risks of the Legal Entities, highlighted by control functions and by the COO (including situations that led to emergencies), by verifying from time to time their effectiveness and the return to business as usual; - yearly Regulatory Internal Validation Report on operational risk; • disclosing the Group risk appetite proposals, including capitalization targets and capital allocation criteria for Group operational risks, as well as the Group insurance strategies proposed by the competent functions; • disclosing fundamental modifications in measurement methodologies for Operational & Reputational risks; • issuing opinions on reputational risk related to non-credit transactions identified by the Head of CIB Division. The “Group Operational & Reputational Risks Committee” provides to the “Group Risk & Internal Control Committee” / GR&ICC and/or “Executive Management Committee”/EMC a periodical information on main evidences of evaluations and on specific actions proposed or activated. The “Group Operational & Reputational Risks Committee” / GORRIC receives from the Group Operational & Reputational Risks function a periodical aggregated information concerning either Holding and Legal Entities reports on all transactions inherent to reputational risks evaluation, including transactions reported by competent Committees (GMRC, GTCC, ITCC, ISTCC, DCMCC), based on current Global Rules on reputational risk. The Committee periodically receives also the list of events reported by “Top Experts” commission and evaluated by them as “not material” for the Group reputational risk profile. The Committee, convened by the Chairman, meets at least on a quarterly basis, or whenever the meeting is deemed necessary by the Chairman. The Group Operational & Reputational Risks department reports to the head of Group Risk Management and is responsible for the governance and control of operational and reputational risks of the Group (including operational risks bordering on credit risk, alias Cross Credit risks); the department is also responsible for the evaluation of the exposure to operational and reputational risks, grating their continual and independent monitoring, as well as of the definition of strategies to mitigate such risks and contain related losses for UniCredit S.p.A perimeter. In addition, the department is responsible for the definition of operational risk losses optimization program, leveraging on specific risk models and methodologies; it has furthermore the responsibility of coordinating the activities performed by the subsidiaries of UniCredit S.p.A. that apply the AMA model (limited to Legal Entities not included in other Hub perimeter) according to Group Operational and Reputational Risks Framework and of coordinating, for the perimeter of competence, the corresponding functions within the Group Legal Entities, according to Group Managerial Golden Rule (“GMGR” and “GMGR Evolution”). Furthermore, the department ensure that risk control activities on related risks assumed in the Foreign Branches of UniCredit S.p.A. are monitored and reported to the Group Chief Risk Officer and is responsible for ensuring integrated reporting between the control functions (e.g. Compliance, Audit) on the main operational and reputational risks of the Group. The structure is additionally responsible for the governance and control of ICT/Cyber Risks, through: a) the definition of the framework for the management of ICT/Cyber risks, the coordination and monitoring of the Legal Entities in the implementation of it; b) the measurement, assessment and control of ICT/ Cyber risks for UniCredit S.p.A.; c) the monitoring at Group level of the implementation and results of mitigation actions to oversee ICT/Cyber risks in cooperation with the competent functions (e.g. “Group Information & Security Office”), also through the analysis of risk indicators. The department has four organizational units: “Operational Risk Analytics and Oversight” responsible for defining the principles and rules at Group level for identification, assessment and control of operational risk, monitoring their correct application by the Legal Entities with focus on operational losses data collection and scenario analysis activity. The unit is responsible for defining risk capital measurement methodologies, calculating operational risk capital and the corresponding economic capital, as well as conducting quantitative analysis of the Group's exposure to operational risk also based on operational risks analytics models. The unit is furthermore responsible for the reporting of operational risks and of the definition process of the Risk Appetite Framework/RAF metrics for competence risks, as well as the related periodical monitoring. “Operational & Reputational Risks Assessment and Strategies” responsible for defining and monitoring the strategic areas for the management of operational risk consistent with the RAF and the Group's strategic objectives, keeping the responsibility for coordinating/monitoring risk mitigation actions and coordinate the monitoring of operational risks in the CEE perimeter, directly supporting the “CRO CEE” structure. The unit furthermore develops ad hoc analysis on specific issues of operational and reputational risk. Finally it is responsible of defining methodologies for assessing reputational risk by verifying its correct implementation and controlling the risk assessment activities for Italian transactions within the scope of the Global Rules related to reputation risk (e.g. weapons and nuclear energy sectors). “Operational Risks Management Italy” responsible for overseeing the operational risks of UniCredit S.p.A, supports the business functions of the Italian perimeter in the identification and monitoring of operational risks, also by executing specific risk assessment activities (e.g. on relevant transactions). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 400 2018 Annual Report and Accounts · UniCredit topics as well as main group risks/criticalities highlighted by the Internal Audit function; - potential synergies for further improvements concerning the actions plans aiming at the mitigation of the main operational risks of the Legal Entities, highlighted by control functions and by the COO (including situations that led to emergencies), by verifying from time to time their effectiveness and the return to business as usual; - yearly Regulatory Internal Validation Report on operational risk; • disclosing the Group risk appetite proposals, including capitalization targets and capital allocation criteria for Group operational risks, as well as the Group insurance strategies proposed by the competent functions; • disclosing fundamental modifications in measurement methodologies for Operational & Reputational risks; • issuing opinions on reputational risk related to non-credit transactions identified by the Head of CIB Division. The “Group Operational & Reputational Risks Committee” provides to the “Group Risk & Internal Control Committee” / GR&ICC and/or “Executive Management Committee”/EMC a periodical information on main evidences of evaluations and on specific actions proposed or activated. The “Group Operational & Reputational Risks Committee” / GORRIC receives from the Group Operational & Reputational Risks function a periodical aggregated information concerning either Holding and Legal Entities reports on all transactions inherent to reputational risks evaluation, including transactions reported by competent Committees (GMRC, GTCC, ITCC, ISTCC, DCMCC), based on current Global Rules on reputational risk. The Committee periodically receives also the list of events reported by “Top Experts” commission and evaluated by them as “not material” for the Group reputational risk profile. The Committee, convened by the Chairman, meets at least on a quarterly basis, or whenever the meeting is deemed necessary by the Chairman. The Group Operational & Reputational Risks department reports to the head of Group Risk Management and is responsible for the governance and control of operational and reputational risks of the Group (including operational risks bordering on credit risk, alias Cross Credit risks); the department is also responsible for the evaluation of the exposure to operational and reputational risks, grating their continual and independent monitoring, as well as of the definition of strategies to mitigate such risks and contain related losses for UniCredit S.p.A perimeter. In addition, the department is responsible for the definition of operational risk losses optimization program, leveraging on specific risk models and methodologies; it has furthermore the responsibility of coordinating the activities performed by the subsidiaries of UniCredit S.p.A. that apply the AMA model (limited to Legal Entities not included in other Hub perimeter) according to Group Operational and Reputational Risks Framework and of coordinating, for the perimeter of competence, the corresponding functions within the Group Legal Entities, according to Group Managerial Golden Rule (“GMGR” and “GMGR Evolution”). Furthermore, the department ensure that risk control activities on related risks assumed in the Foreign Branches of UniCredit S.p.A. are monitored and reported to the Group Chief Risk Officer and is responsible for ensuring integrated reporting between the control functions (e.g. Compliance, Audit) on the main operational and reputational risks of the Group. The structure is additionally responsible for the governance and control of ICT/Cyber Risks, through: a) the definition of the framework for the management of ICT/Cyber risks, the coordination and monitoring of the Legal Entities in the implementation of it; b) the measurement, assessment and control of ICT/ Cyber risks for UniCredit S.p.A.; c) the monitoring at Group level of the implementation and results of mitigation actions to oversee ICT/Cyber risks in cooperation with the competent functions (e.g. “Group Information & Security Office”), also through the analysis of risk indicators. The department has four organizational units: “Operational Risk Analytics and Oversight” responsible for defining the principles and rules at Group level for identification, assessment and control of operational risk, monitoring their correct application by the Legal Entities with focus on operational losses data collection and scenario analysis activity. The unit is responsible for defining risk capital measurement methodologies, calculating operational risk capital and the corresponding economic capital, as well as conducting quantitative analysis of the Group's exposure to operational risk also based on operational risks analytics models. The unit is furthermore responsible for the reporting of operational risks and of the definition process of the Risk Appetite Framework/RAF metrics for competence risks, as well as the related periodical monitoring. “Operational & Reputational Risks Assessment and Strategies” responsible for defining and monitoring the strategic areas for the management of operational risk consistent with the RAF and the Group's strategic objectives, keeping the responsibility for coordinating/monitoring risk mitigation actions and coordinate the monitoring of operational risks in the CEE perimeter, directly supporting the “CRO CEE” structure. The unit furthermore develops ad hoc analysis on specific issues of operational and reputational risk. Finally it is responsible of defining methodologies for assessing reputational risk by verifying its correct implementation and controlling the risk assessment activities for Italian transactions within the scope of the Global Rules related to reputation risk (e.g. weapons and nuclear energy sectors). “Operational Risks Management Italy” responsible for overseeing the operational risks of UniCredit S.p.A, supports the business functions of the Italian perimeter in the identification and monitoring of operational risks, also by executing specific risk assessment activities (e.g. on relevant transactions). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 400 2018 Annual Report and Accounts · UniCredit topics as well as main group risks/criticalities highlighted by the Internal Audit function; - potential synergies for further improvements concerning the actions plans aiming at the mitigation of the main operational risks of the Legal Entities, highlighted by control functions and by the COO (including situations that led to emergencies), by verifying from time to time their effectiveness and the return to business as usual; - yearly Regulatory Internal Validation Report on operational risk; • disclosing the Group risk appetite proposals, including capitalization targets and capital allocation criteria for Group operational risks, as well as the Group insurance strategies proposed by the competent functions; • disclosing fundamental modifications in measurement methodologies for Operational & Reputational risks; • issuing opinions on reputational risk related to non-credit transactions identified by the Head of CIB Division. The “Group Operational & Reputational Risks Committee” provides to the “Group Risk & Internal Control Committee” / GR&ICC and/or “Executive Management Committee”/EMC a periodical information on main evidences of evaluations and on specific actions proposed or activated. The “Group Operational & Reputational Risks Committee” / GORRIC receives from the Group Operational & Reputational Risks function a periodical aggregated information concerning either Holding and Legal Entities reports on all transactions inherent to reputational risks evaluation, including transactions reported by competent Committees (GMRC, GTCC, ITCC, ISTCC, DCMCC), based on current Global Rules on reputational risk. The Committee periodically receives also the list of events reported by “Top Experts” commission and evaluated by them as “not material” for the Group reputational risk profile. The Committee, convened by the Chairman, meets at least on a quarterly basis, or whenever the meeting is deemed necessary by the Chairman. The Group Operational & Reputational Risks department reports to the head of Group Risk Management and is responsible for the governance and control of operational and reputational risks of the Group (including operational risks bordering on credit risk, alias Cross Credit risks); the department is also responsible for the evaluation of the exposure to operational and reputational risks, grating their continual and independent monitoring, as well as of the definition of strategies to mitigate such risks and contain related losses for UniCredit S.p.A perimeter. In addition, the department is responsible for the definition of operational risk losses optimization program, leveraging on specific risk models and methodologies; it has furthermore the responsibility of coordinating the activities performed by the subsidiaries of UniCredit S.p.A. that apply the AMA model (limited to Legal Entities not included in other Hub perimeter) according to Group Operational and Reputational Risks Framework and of coordinating, for the perimeter of competence, the corresponding functions within the Group Legal Entities, according to Group Managerial Golden Rule (“GMGR” and “GMGR Evolution”). Furthermore, the department ensure that risk control activities on related risks assumed in the Foreign Branches of UniCredit S.p.A. are monitored and reported to the Group Chief Risk Officer and is responsible for ensuring integrated reporting between the control functions (e.g. Compliance, Audit) on the main operational and reputational risks of the Group. The structure is additionally responsible for the governance and control of ICT/Cyber Risks, through: a) the definition of the framework for the management of ICT/Cyber risks, the coordination and monitoring of the Legal Entities in the implementation of it; b) the measurement, assessment and control of ICT/ Cyber risks for UniCredit S.p.A.; c) the monitoring at Group level of the implementation and results of mitigation actions to oversee ICT/Cyber risks in cooperation with the competent functions (e.g. “Group Information & Security Office”), also through the analysis of risk indicators. The department has four organizational units: “Operational Risk Analytics and Oversight” responsible for defining the principles and rules at Group level for identification, assessment and control of operational risk, monitoring their correct application by the Legal Entities with focus on operational losses data collection and scenario analysis activity. The unit is responsible for defining risk capital measurement methodologies, calculating operational risk capital and the corresponding economic capital, as well as conducting quantitative analysis of the Group's exposure to operational risk also based on operational risks analytics models. The unit is furthermore responsible for the reporting of operational risks and of the definition process of the Risk Appetite Framework/RAF metrics for competence risks, as well as the related periodical monitoring. “Operational & Reputational Risks Assessment and Strategies” responsible for defining and monitoring the strategic areas for the management of operational risk consistent with the RAF and the Group's strategic objectives, keeping the responsibility for coordinating/monitoring risk mitigation actions and coordinate the monitoring of operational risks in the CEE perimeter, directly supporting the “CRO CEE” structure. The unit furthermore develops ad hoc analysis on specific issues of operational and reputational risk. Finally it is responsible of defining methodologies for assessing reputational risk by verifying its correct implementation and controlling the risk assessment activities for Italian transactions within the scope of the Global Rules related to reputation risk (e.g. weapons and nuclear energy sectors). “Operational Risks Management Italy” responsible for overseeing the operational risks of UniCredit S.p.A, supports the business functions of the Italian perimeter in the identification and monitoring of operational risks, also by executing specific risk assessment activities (e.g. on relevant transactions). Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 401 The structure, compliantly to the group methodology: a) assures the conformity of risk indicators and operational losses, checking that they are regularly reported within the group losses database; b) cooperates to provide the analysis of the operational and reputational risks’ impact, in case new products are introduced or some relevant changes are made within the processes, the structure, the business context; c) identifies, together with the local business functions, the main operational risks that should affect the development of business strategies and of budget ambition (Business Syndication), in order to suggest the related mitigation actions and to monitor their implementation and effectiveness. In addition, the structure coordinates the Permanent Work Group for the mitigation of operational risks of Unicredit S.p.A. and supports, in its role of technical secretariat, the activity of the ”Italian Operational & Reputational Risk Committee” (IORRIC). “Operational, Reputational Risks on Credit Framework & Fraud Management” responsible for the governance, identification and monitoring of the operational and reputational risk on credit framework for the Group, with the aim of reducing operational losses (including those driven by external frauds). Moreover, the structure has a steering role on the Group Legal Entities for what concerns the specific perimeter and has a reporting function in the related committees, as well as in the appropriate contexts. The Operational Risk Management functions of the controlled Entities provide specific operational risk training to the staff, realized also through intranet training programs, and are responsible for the correct implementation of the Group framework elements. Internal validation process In compliance with regulations, an internal validation process for the operational risk control and measurement system has been set up for the Parent Company and for the relevant Legal Entities in order to verify the compliance with regulations and Group standards. This process is under the responsibility of the Market, Operational and Pillar II Risks Validation unit, within the Group Internal Validation department. Group methodologies for measuring and allocating the capital at risk and the IT system are validated at Parent Company level by the abovementioned function, as well as the implementation of the operational risk control and management system within the relevant Entities, which is firstly analyzed through a self-assessment performed by local Operational Risk Management functions, following the technical instructions and policies issued by Group Internal Validation. The results of the local self-assessments are annually verified by Group Internal Validation, which also performs additional analysis on data and documentation. Such evidences are the basis for the release of specific Validation Reports to the relevant subsidiaries. The local self-assessment, together with the opinion of Group Internal Validation and Internal Audit report are submitted to the Legal Entities’ competent governing bodies. All the validation outcomes on the operational risk control and measurement system, both at Parent Company and controlled Entities level, are annually consolidated within the annual validation report which, along with the annual Internal Audit report, is presented to the UniCredit Board of Directors. Periodical reporting on validation activities is submitted also to “Group Operational & Reputational Risks Committee”. Reporting A reporting system has been developed to keep senior management and the management body regularly informed on the Group operational risk exposure and the risk mitigation actions. In particular, monthly reports are provided on operational losses trend, specific key risk indicators to monitor risk exposure and the main initiatives undertaken to prevent or mitigate operational risk in the various business areas. Quarterly updates are provided on capital-at-risk estimations. Operational risk management and mitigation Operational risk management exploits process reengineering to reduce the risk exposure and insurance policies management, defining proper deductibles and policies limits. In the Legal Entities, the Risk Committee (or the PWG “Permanent Work Group” composed by relevant functions for the operational risk monitoring, or other bodies in accordance to local regulations) reviews risks tracked by the Operational Risk functions with the support of functions involved in daily operational risk control, and monitors the implementation of the risk mitigation initiatives. Stress test Starting from 2017, the Group is performing regular sensitivity analysis and stress testing for Operational Risk, including complex scenarios as part of the Firm-wide Stress test exercise defined within the Group Stress Test Council, with the aim to verify the response of the loss model and the resulting capital at risk to changes in the underlying macro-economic factors data set. Scenarios are proposed by Research Department, discussed and finalized within the Group Stress Test Council. Firm wide Scenarios will be run twice a year, or on demand if it is required, in order to assess the potential risks driven by changes in the macro-economic environment. Risk capital measurement and allocation mechanism UniCredit developed an internal model for measuring the capital requirements. The system for measuring operational risk is based on internal loss data, external loss data, scenario analysis data and risk indicators. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 401 The structure, compliantly to the group methodology: a) assures the conformity of risk indicators and operational losses, checking that they are regularly reported within the group losses database; b) cooperates to provide the analysis of the operational and reputational risks’ impact, in case new products are introduced or some relevant changes are made within the processes, the structure, the business context; c) identifies, together with the local business functions, the main operational risks that should affect the development of business strategies and of budget ambition (Business Syndication), in order to suggest the related mitigation actions and to monitor their implementation and effectiveness. In addition, the structure coordinates the Permanent Work Group for the mitigation of operational risks of Unicredit S.p.A. and supports, in its role of technical secretariat, the activity of the ”Italian Operational & Reputational Risk Committee” (IORRIC). “Operational, Reputational Risks on Credit Framework & Fraud Management” responsible for the governance, identification and monitoring of the operational and reputational risk on credit framework for the Group, with the aim of reducing operational losses (including those driven by external frauds). Moreover, the structure has a steering role on the Group Legal Entities for what concerns the specific perimeter and has a reporting function in the related committees, as well as in the appropriate contexts. The Operational Risk Management functions of the controlled Entities provide specific operational risk training to the staff, realized also through intranet training programs, and are responsible for the correct implementation of the Group framework elements. Internal validation process In compliance with regulations, an internal validation process for the operational risk control and measurement system has been set up for the Parent Company and for the relevant Legal Entities in order to verify the compliance with regulations and Group standards. This process is under the responsibility of the Market, Operational and Pillar II Risks Validation unit, within the Group Internal Validation department. Group methodologies for measuring and allocating the capital at risk and the IT system are validated at Parent Company level by the abovementioned function, as well as the implementation of the operational risk control and management system within the relevant Entities, which is firstly analyzed through a self-assessment performed by local Operational Risk Management functions, following the technical instructions and policies issued by Group Internal Validation. The results of the local self-assessments are annually verified by Group Internal Validation, which also performs additional analysis on data and documentation. Such evidences are the basis for the release of specific Validation Reports to the relevant subsidiaries. The local self-assessment, together with the opinion of Group Internal Validation and Internal Audit report are submitted to the Legal Entities’ competent governing bodies. All the validation outcomes on the operational risk control and measurement system, both at Parent Company and controlled Entities level, are annually consolidated within the annual validation report which, along with the annual Internal Audit report, is presented to the UniCredit Board of Directors. Periodical reporting on validation activities is submitted also to “Group Operational & Reputational Risks Committee”. Reporting A reporting system has been developed to keep senior management and the management body regularly informed on the Group operational risk exposure and the risk mitigation actions. In particular, monthly reports are provided on operational losses trend, specific key risk indicators to monitor risk exposure and the main initiatives undertaken to prevent or mitigate operational risk in the various business areas. Quarterly updates are provided on capital-at-risk estimations. Operational risk management and mitigation Operational risk management exploits process reengineering to reduce the risk exposure and insurance policies management, defining proper deductibles and policies limits. In the Legal Entities, the Risk Committee (or the PWG “Permanent Work Group” composed by relevant functions for the operational risk monitoring, or other bodies in accordance to local regulations) reviews risks tracked by the Operational Risk functions with the support of functions involved in daily operational risk control, and monitors the implementation of the risk mitigation initiatives. Stress test Starting from 2017, the Group is performing regular sensitivity analysis and stress testing for Operational Risk, including complex scenarios as part of the Firm-wide Stress test exercise defined within the Group Stress Test Council, with the aim to verify the response of the loss model and the resulting capital at risk to changes in the underlying macro-economic factors data set. Scenarios are proposed by Research Department, discussed and finalized within the Group Stress Test Council. Firm wide Scenarios will be run twice a year, or on demand if it is required, in order to assess the potential risks driven by changes in the macro-economic environment. Risk capital measurement and allocation mechanism UniCredit developed an internal model for measuring the capital requirements. The system for measuring operational risk is based on internal loss data, external loss data, scenario analysis data and risk indicators. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 401 The structure, compliantly to the group methodology: a) assures the conformity of risk indicators and operational losses, checking that they are regularly reported within the group losses database; b) cooperates to provide the analysis of the operational and reputational risks’ impact, in case new products are introduced or some relevant changes are made within the processes, the structure, the business context; c) identifies, together with the local business functions, the main operational risks that should affect the development of business strategies and of budget ambition (Business Syndication), in order to suggest the related mitigation actions and to monitor their implementation and effectiveness. In addition, the structure coordinates the Permanent Work Group for the mitigation of operational risks of Unicredit S.p.A. and supports, in its role of technical secretariat, the activity of the ”Italian Operational & Reputational Risk Committee” (IORRIC). “Operational, Reputational Risks on Credit Framework & Fraud Management” responsible for the governance, identification and monitoring of the operational and reputational risk on credit framework for the Group, with the aim of reducing operational losses (including those driven by external frauds). Moreover, the structure has a steering role on the Group Legal Entities for what concerns the specific perimeter and has a reporting function in the related committees, as well as in the appropriate contexts. The Operational Risk Management functions of the controlled Entities provide specific operational risk training to the staff, realized also through intranet training programs, and are responsible for the correct implementation of the Group framework elements. Internal validation process In compliance with regulations, an internal validation process for the operational risk control and measurement system has been set up for the Parent Company and for the relevant Legal Entities in order to verify the compliance with regulations and Group standards. This process is under the responsibility of the Market, Operational and Pillar II Risks Validation unit, within the Group Internal Validation department. Group methodologies for measuring and allocating the capital at risk and the IT system are validated at Parent Company level by the abovementioned function, as well as the implementation of the operational risk control and management system within the relevant Entities, which is firstly analyzed through a self-assessment performed by local Operational Risk Management functions, following the technical instructions and policies issued by Group Internal Validation. The results of the local self-assessments are annually verified by Group Internal Validation, which also performs additional analysis on data and documentation. Such evidences are the basis for the release of specific Validation Reports to the relevant subsidiaries. The local self-assessment, together with the opinion of Group Internal Validation and Internal Audit report are submitted to the Legal Entities’ competent governing bodies. All the validation outcomes on the operational risk control and measurement system, both at Parent Company and controlled Entities level, are annually consolidated within the annual validation report which, along with the annual Internal Audit report, is presented to the UniCredit Board of Directors. Periodical reporting on validation activities is submitted also to “Group Operational & Reputational Risks Committee”. Reporting A reporting system has been developed to keep senior management and the management body regularly informed on the Group operational risk exposure and the risk mitigation actions. In particular, monthly reports are provided on operational losses trend, specific key risk indicators to monitor risk exposure and the main initiatives undertaken to prevent or mitigate operational risk in the various business areas. Quarterly updates are provided on capital-at-risk estimations. Operational risk management and mitigation Operational risk management exploits process reengineering to reduce the risk exposure and insurance policies management, defining proper deductibles and policies limits. In the Legal Entities, the Risk Committee (or the PWG “Permanent Work Group” composed by relevant functions for the operational risk monitoring, or other bodies in accordance to local regulations) reviews risks tracked by the Operational Risk functions with the support of functions involved in daily operational risk control, and monitors the implementation of the risk mitigation initiatives. Stress test Starting from 2017, the Group is performing regular sensitivity analysis and stress testing for Operational Risk, including complex scenarios as part of the Firm-wide Stress test exercise defined within the Group Stress Test Council, with the aim to verify the response of the loss model and the resulting capital at risk to changes in the underlying macro-economic factors data set. Scenarios are proposed by Research Department, discussed and finalized within the Group Stress Test Council. Firm wide Scenarios will be run twice a year, or on demand if it is required, in order to assess the potential risks driven by changes in the macro-economic environment. Risk capital measurement and allocation mechanism UniCredit developed an internal model for measuring the capital requirements. The system for measuring operational risk is based on internal loss data, external loss data, scenario analysis data and risk indicators. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 401 The structure, compliantly to the group methodology: a) assures the conformity of risk indicators and operational losses, checking that they are regularly reported within the group losses database; b) cooperates to provide the analysis of the operational and reputational risks’ impact, in case new products are introduced or some relevant changes are made within the processes, the structure, the business context; c) identifies, together with the local business functions, the main operational risks that should affect the development of business strategies and of budget ambition (Business Syndication), in order to suggest the related mitigation actions and to monitor their implementation and effectiveness. In addition, the structure coordinates the Permanent Work Group for the mitigation of operational risks of Unicredit S.p.A. and supports, in its role of technical secretariat, the activity of the ”Italian Operational & Reputational Risk Committee” (IORRIC). “Operational, Reputational Risks on Credit Framework & Fraud Management” responsible for the governance, identification and monitoring of the operational and reputational risk on credit framework for the Group, with the aim of reducing operational losses (including those driven by external frauds). Moreover, the structure has a steering role on the Group Legal Entities for what concerns the specific perimeter and has a reporting function in the related committees, as well as in the appropriate contexts. The Operational Risk Management functions of the controlled Entities provide specific operational risk training to the staff, realized also through intranet training programs, and are responsible for the correct implementation of the Group framework elements. Internal validation process In compliance with regulations, an internal validation process for the operational risk control and measurement system has been set up for the Parent Company and for the relevant Legal Entities in order to verify the compliance with regulations and Group standards. This process is under the responsibility of the Market, Operational and Pillar II Risks Validation unit, within the Group Internal Validation department. Group methodologies for measuring and allocating the capital at risk and the IT system are validated at Parent Company level by the abovementioned function, as well as the implementation of the operational risk control and management system within the relevant Entities, which is firstly analyzed through a self-assessment performed by local Operational Risk Management functions, following the technical instructions and policies issued by Group Internal Validation. The results of the local self-assessments are annually verified by Group Internal Validation, which also performs additional analysis on data and documentation. Such evidences are the basis for the release of specific Validation Reports to the relevant subsidiaries. The local self-assessment, together with the opinion of Group Internal Validation and Internal Audit report are submitted to the Legal Entities’ competent governing bodies. All the validation outcomes on the operational risk control and measurement system, both at Parent Company and controlled Entities level, are annually consolidated within the annual validation report which, along with the annual Internal Audit report, is presented to the UniCredit Board of Directors. Periodical reporting on validation activities is submitted also to “Group Operational & Reputational Risks Committee”. Reporting A reporting system has been developed to keep senior management and the management body regularly informed on the Group operational risk exposure and the risk mitigation actions. In particular, monthly reports are provided on operational losses trend, specific key risk indicators to monitor risk exposure and the main initiatives undertaken to prevent or mitigate operational risk in the various business areas. Quarterly updates are provided on capital-at-risk estimations. Operational risk management and mitigation Operational risk management exploits process reengineering to reduce the risk exposure and insurance policies management, defining proper deductibles and policies limits. In the Legal Entities, the Risk Committee (or the PWG “Permanent Work Group” composed by relevant functions for the operational risk monitoring, or other bodies in accordance to local regulations) reviews risks tracked by the Operational Risk functions with the support of functions involved in daily operational risk control, and monitors the implementation of the risk mitigation initiatives. Stress test Starting from 2017, the Group is performing regular sensitivity analysis and stress testing for Operational Risk, including complex scenarios as part of the Firm-wide Stress test exercise defined within the Group Stress Test Council, with the aim to verify the response of the loss model and the resulting capital at risk to changes in the underlying macro-economic factors data set. Scenarios are proposed by Research Department, discussed and finalized within the Group Stress Test Council. Firm wide Scenarios will be run twice a year, or on demand if it is required, in order to assess the potential risks driven by changes in the macro-economic environment. Risk capital measurement and allocation mechanism UniCredit developed an internal model for measuring the capital requirements. The system for measuring operational risk is based on internal loss data, external loss data, scenario analysis data and risk indicators. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 401 The structure, compliantly to the group methodology: a) assures the conformity of risk indicators and operational losses, checking that they are regularly reported within the group losses database; b) cooperates to provide the analysis of the operational and reputational risks’ impact, in case new products are introduced or some relevant changes are made within the processes, the structure, the business context; c) identifies, together with the local business functions, the main operational risks that should affect the development of business strategies and of budget ambition (Business Syndication), in order to suggest the related mitigation actions and to monitor their implementation and effectiveness. In addition, the structure coordinates the Permanent Work Group for the mitigation of operational risks of Unicredit S.p.A. and supports, in its role of technical secretariat, the activity of the ”Italian Operational & Reputational Risk Committee” (IORRIC). “Operational, Reputational Risks on Credit Framework & Fraud Management” responsible for the governance, identification and monitoring of the operational and reputational risk on credit framework for the Group, with the aim of reducing operational losses (including those driven by external frauds). Moreover, the structure has a steering role on the Group Legal Entities for what concerns the specific perimeter and has a reporting function in the related committees, as well as in the appropriate contexts. The Operational Risk Management functions of the controlled Entities provide specific operational risk training to the staff, realized also through intranet training programs, and are responsible for the correct implementation of the Group framework elements. Internal validation process In compliance with regulations, an internal validation process for the operational risk control and measurement system has been set up for the Parent Company and for the relevant Legal Entities in order to verify the compliance with regulations and Group standards. This process is under the responsibility of the Market, Operational and Pillar II Risks Validation unit, within the Group Internal Validation department. Group methodologies for measuring and allocating the capital at risk and the IT system are validated at Parent Company level by the abovementioned function, as well as the implementation of the operational risk control and management system within the relevant Entities, which is firstly analyzed through a self-assessment performed by local Operational Risk Management functions, following the technical instructions and policies issued by Group Internal Validation. The results of the local self-assessments are annually verified by Group Internal Validation, which also performs additional analysis on data and documentation. Such evidences are the basis for the release of specific Validation Reports to the relevant subsidiaries. The local self-assessment, together with the opinion of Group Internal Validation and Internal Audit report are submitted to the Legal Entities’ competent governing bodies. All the validation outcomes on the operational risk control and measurement system, both at Parent Company and controlled Entities level, are annually consolidated within the annual validation report which, along with the annual Internal Audit report, is presented to the UniCredit Board of Directors. Periodical reporting on validation activities is submitted also to “Group Operational & Reputational Risks Committee”. Reporting A reporting system has been developed to keep senior management and the management body regularly informed on the Group operational risk exposure and the risk mitigation actions. In particular, monthly reports are provided on operational losses trend, specific key risk indicators to monitor risk exposure and the main initiatives undertaken to prevent or mitigate operational risk in the various business areas. Quarterly updates are provided on capital-at-risk estimations. Operational risk management and mitigation Operational risk management exploits process reengineering to reduce the risk exposure and insurance policies management, defining proper deductibles and policies limits. In the Legal Entities, the Risk Committee (or the PWG “Permanent Work Group” composed by relevant functions for the operational risk monitoring, or other bodies in accordance to local regulations) reviews risks tracked by the Operational Risk functions with the support of functions involved in daily operational risk control, and monitors the implementation of the risk mitigation initiatives. Stress test Starting from 2017, the Group is performing regular sensitivity analysis and stress testing for Operational Risk, including complex scenarios as part of the Firm-wide Stress test exercise defined within the Group Stress Test Council, with the aim to verify the response of the loss model and the resulting capital at risk to changes in the underlying macro-economic factors data set. Scenarios are proposed by Research Department, discussed and finalized within the Group Stress Test Council. Firm wide Scenarios will be run twice a year, or on demand if it is required, in order to assess the potential risks driven by changes in the macro-economic environment. Risk capital measurement and allocation mechanism UniCredit developed an internal model for measuring the capital requirements. The system for measuring operational risk is based on internal loss data, external loss data, scenario analysis data and risk indicators. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 402 2018 Annual Report and Accounts · UniCredit Capital at risk is calculated per risk class. For each risk class, severity and frequency of loss data are separately estimated to obtain the annual loss distribution through simulation. The severity distribution is estimated on internal, external and scenario analysis data, while the frequency distribution is determined using only the internal data. An adjustment for key operational risk indicators is applied to each risk class. Annual loss distributions of each risk class are aggregated through a copula functions based method, considering also insurance coverage. Capital at risk is calculated at a confidence level of 99.9% on the overall loss distribution for regulatory purposes and for economic capital purposes, considering expected loss deduction. Through an allocation mechanism, the individual Legal Entities’ capital requirements are identified, reflecting the Legal Entities’ risk exposure. B. Legal risks The parent company UniCredit S.p.A. and other UniCredit group companies are named as defendants in several legal proceedings. In particular, as of 31 December 2018, the parent company UniCredit S.p.A. and other UniCredit group companies were named as defendants in about 20,800 legal proceedings, of which approx. 10,000 involving the parent company UniCredit S.p.A. (excluding labor law cases, tax cases and credit recovery actions in which counterclaims were asserted or objections raised with regard to the credit claims of Group companies). Moreover, from time to time, past and present directors, officers and employees may be involved in civil and/or criminal proceedings, the details of which the UniCredit group may not lawfully know about or communicate. The Group is also required to fulfill appropriately various legal and regulatory requirements in relation to certain aspects of its activity, such as conflicts of interest, ethical issues, anti-money laundering laws, US and international sanctions, client assets, competition law, privacy and information security rules and others. Actual or alleged failure to do so may lead, to additional litigation and investigations and subjects the Group to damages claims, regulatory fines, other penalties and/or reputational damages. In addition, one or more Group companies and/or their current and/or former directors are subject or may in the future be subject to investigations by the relevant supervisory or prosecutorial authority in a number of countries in which the Group operates. These include investigations and/or proceedings relating, inter alia, to aspects of systems and controls and instances of actual and potential regulatory infringement by the relevant Group companies and/or its clients. Given the nature of the UniCredit group’s business and its reorganization over time there is a risk that claims or matters that initially involve one Group company may affect or involve other Group entities. In many cases, there is substantial uncertainty regarding the outcomes of the proceedings and the amount of possible losses. These cases include criminal proceedings, administrative proceedings brought by the relevant supervisory or prosecution authorities and/or claims in which the claimed damages and/or potential liability of the Group is not and cannot be determined, either because of how the claims is presented and/or because of the nature of the actual proceedings. In such cases, until the time when it will be possible to estimate reliably the potential outcome, no provisions are made. However, where it is possible to estimate reliably the amount of possible losses and the loss is considered likely, provisions have been made in the financial statements to the extent the parent company UniCredit S.p.A., or any of the Group companies involved, deemed appropriate based on the circumstances of the case and in compliance with International Accounting Standards (IAS). To provide for possible liabilities and costs that may result from pending legal proceedings (excluding labor law and tax cases), as of 31 December 2018, the UniCredit group set aside a provision for risks and charges of €2,365 million, of which €647 million for the parent company UniCredit S.p.A. As of 31 December 2018, the total amount of claimed damages relating to judicial proceedings other than labor, tax and debt collections proceedings was €11.4 billion, of which approx. €7 billion for the proceedings involving the parent company UniCredit S.p.A. This figure is affected by both the disomogeneous nature of the pending proceedings and the number of involved jurisdictions and their corresponding characteristics in which the UniCredit group is named as a defendant. The estimate for reasonably possible liabilities and this provision are based upon information available as of 31 December 2018, however, given the many uncertainties inherent in legal proceedings, they involve significant elements of judgment. In particular, in some cases it is not possible to form a reliable estimate, for instance where proceedings have not yet been commenced or where the extent of legal and factual uncertainties makes any estimate speculative. Therefore any provision may not be sufficient to meet entirely the legal costs and the fines and penalties that may result from pending legal actions. Set out below is a summary of information, including, if material and/or indicated, the single requests of the plaintiffs, relating to matters involving the UniCredit group which are not considered groundless or in the ordinary course of the Group’s business. This section also describes pending proceedings against the parent company UniCredit S.p.A. and/or other UniCredit group companies and/or employees (even former employees) that the parent company UniCredit S.p.A. considers relevant and which, at present, are not characterized by a defined claim or for which the respective claim cannot be quantified. Unless expressly mentioned below, labor law and tax claims are excluded from this section and are described elsewhere in the notes of this section. In accordance with IAS37, information that would seriously prejudice the relevant company’s position in the dispute may be omitted. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 402 2018 Annual Report and Accounts · UniCredit Capital at risk is calculated per risk class. For each risk class, severity and frequency of loss data are separately estimated to obtain the annual loss distribution through simulation. The severity distribution is estimated on internal, external and scenario analysis data, while the frequency distribution is determined using only the internal data. An adjustment for key operational risk indicators is applied to each risk class. Annual loss distributions of each risk class are aggregated through a copula functions based method, considering also insurance coverage. Capital at risk is calculated at a confidence level of 99.9% on the overall loss distribution for regulatory purposes and for economic capital purposes, considering expected loss deduction. Through an allocation mechanism, the individual Legal Entities’ capital requirements are identified, reflecting the Legal Entities’ risk exposure. B. Legal risks The parent company UniCredit S.p.A. and other UniCredit group companies are named as defendants in several legal proceedings. In particular, as of 31 December 2018, the parent company UniCredit S.p.A. and other UniCredit group companies were named as defendants in about 20,800 legal proceedings, of which approx. 10,000 involving the parent company UniCredit S.p.A. (excluding labor law cases, tax cases and credit recovery actions in which counterclaims were asserted or objections raised with regard to the credit claims of Group companies). Moreover, from time to time, past and present directors, officers and employees may be involved in civil and/or criminal proceedings, the details of which the UniCredit group may not lawfully know about or communicate. The Group is also required to fulfill appropriately various legal and regulatory requirements in relation to certain aspects of its activity, such as conflicts of interest, ethical issues, anti-money laundering laws, US and international sanctions, client assets, competition law, privacy and information security rules and others. Actual or alleged failure to do so may lead, to additional litigation and investigations and subjects the Group to damages claims, regulatory fines, other penalties and/or reputational damages. In addition, one or more Group companies and/or their current and/or former directors are subject or may in the future be subject to investigations by the relevant supervisory or prosecutorial authority in a number of countries in which the Group operates. These include investigations and/or proceedings relating, inter alia, to aspects of systems and controls and instances of actual and potential regulatory infringement by the relevant Group companies and/or its clients. Given the nature of the UniCredit group’s business and its reorganization over time there is a risk that claims or matters that initially involve one Group company may affect or involve other Group entities. In many cases, there is substantial uncertainty regarding the outcomes of the proceedings and the amount of possible losses. These cases include criminal proceedings, administrative proceedings brought by the relevant supervisory or prosecution authorities and/or claims in which the claimed damages and/or potential liability of the Group is not and cannot be determined, either because of how the claims is presented and/or because of the nature of the actual proceedings. In such cases, until the time when it will be possible to estimate reliably the potential outcome, no provisions are made. However, where it is possible to estimate reliably the amount of possible losses and the loss is considered likely, provisions have been made in the financial statements to the extent the parent company UniCredit S.p.A., or any of the Group companies involved, deemed appropriate based on the circumstances of the case and in compliance with International Accounting Standards (IAS). To provide for possible liabilities and costs that may result from pending legal proceedings (excluding labor law and tax cases), as of 31 December 2018, the UniCredit group set aside a provision for risks and charges of €2,365 million, of which €647 million for the parent company UniCredit S.p.A. As of 31 December 2018, the total amount of claimed damages relating to judicial proceedings other than labor, tax and debt collections proceedings was €11.4 billion, of which approx. €7 billion for the proceedings involving the parent company UniCredit S.p.A. This figure is affected by both the disomogeneous nature of the pending proceedings and the number of involved jurisdictions and their corresponding characteristics in which the UniCredit group is named as a defendant. The estimate for reasonably possible liabilities and this provision are based upon information available as of 31 December 2018, however, given the many uncertainties inherent in legal proceedings, they involve significant elements of judgment. In particular, in some cases it is not possible to form a reliable estimate, for instance where proceedings have not yet been commenced or where the extent of legal and factual uncertainties makes any estimate speculative. Therefore any provision may not be sufficient to meet entirely the legal costs and the fines and penalties that may result from pending legal actions. Set out below is a summary of information, including, if material and/or indicated, the single requests of the plaintiffs, relating to matters involving the UniCredit group which are not considered groundless or in the ordinary course of the Group’s business. This section also describes pending proceedings against the parent company UniCredit S.p.A. and/or other UniCredit group companies and/or employees (even former employees) that the parent company UniCredit S.p.A. considers relevant and which, at present, are not characterized by a defined claim or for which the respective claim cannot be quantified. Unless expressly mentioned below, labor law and tax claims are excluded from this section and are described elsewhere in the notes of this section. In accordance with IAS37, information that would seriously prejudice the relevant company’s position in the dispute may be omitted. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 402 2018 Annual Report and Accounts · UniCredit Capital at risk is calculated per risk class. For each risk class, severity and frequency of loss data are separately estimated to obtain the annual loss distribution through simulation. The severity distribution is estimated on internal, external and scenario analysis data, while the frequency distribution is determined using only the internal data. An adjustment for key operational risk indicators is applied to each risk class. Annual loss distributions of each risk class are aggregated through a copula functions based method, considering also insurance coverage. Capital at risk is calculated at a confidence level of 99.9% on the overall loss distribution for regulatory purposes and for economic capital purposes, considering expected loss deduction. Through an allocation mechanism, the individual Legal Entities’ capital requirements are identified, reflecting the Legal Entities’ risk exposure. B. Legal risks The parent company UniCredit S.p.A. and other UniCredit group companies are named as defendants in several legal proceedings. In particular, as of 31 December 2018, the parent company UniCredit S.p.A. and other UniCredit group companies were named as defendants in about 20,800 legal proceedings, of which approx. 10,000 involving the parent company UniCredit S.p.A. (excluding labor law cases, tax cases and credit recovery actions in which counterclaims were asserted or objections raised with regard to the credit claims of Group companies). Moreover, from time to time, past and present directors, officers and employees may be involved in civil and/or criminal proceedings, the details of which the UniCredit group may not lawfully know about or communicate. The Group is also required to fulfill appropriately various legal and regulatory requirements in relation to certain aspects of its activity, such as conflicts of interest, ethical issues, anti-money laundering laws, US and international sanctions, client assets, competition law, privacy and information security rules and others. Actual or alleged failure to do so may lead, to additional litigation and investigations and subjects the Group to damages claims, regulatory fines, other penalties and/or reputational damages. In addition, one or more Group companies and/or their current and/or former directors are subject or may in the future be subject to investigations by the relevant supervisory or prosecutorial authority in a number of countries in which the Group operates. These include investigations and/or proceedings relating, inter alia, to aspects of systems and controls and instances of actual and potential regulatory infringement by the relevant Group companies and/or its clients. Given the nature of the UniCredit group’s business and its reorganization over time there is a risk that claims or matters that initially involve one Group company may affect or involve other Group entities. In many cases, there is substantial uncertainty regarding the outcomes of the proceedings and the amount of possible losses. These cases include criminal proceedings, administrative proceedings brought by the relevant supervisory or prosecution authorities and/or claims in which the claimed damages and/or potential liability of the Group is not and cannot be determined, either because of how the claims is presented and/or because of the nature of the actual proceedings. In such cases, until the time when it will be possible to estimate reliably the potential outcome, no provisions are made. However, where it is possible to estimate reliably the amount of possible losses and the loss is considered likely, provisions have been made in the financial statements to the extent the parent company UniCredit S.p.A., or any of the Group companies involved, deemed appropriate based on the circumstances of the case and in compliance with International Accounting Standards (IAS). To provide for possible liabilities and costs that may result from pending legal proceedings (excluding labor law and tax cases), as of 31 December 2018, the UniCredit group set aside a provision for risks and charges of €2,365 million, of which €647 million for the parent company UniCredit S.p.A. As of 31 December 2018, the total amount of claimed damages relating to judicial proceedings other than labor, tax and debt collections proceedings was €11.4 billion, of which approx. €7 billion for the proceedings involving the parent company UniCredit S.p.A. This figure is affected by both the disomogeneous nature of the pending proceedings and the number of involved jurisdictions and their corresponding characteristics in which the UniCredit group is named as a defendant. The estimate for reasonably possible liabilities and this provision are based upon information available as of 31 December 2018, however, given the many uncertainties inherent in legal proceedings, they involve significant elements of judgment. In particular, in some cases it is not possible to form a reliable estimate, for instance where proceedings have not yet been commenced or where the extent of legal and factual uncertainties makes any estimate speculative. Therefore any provision may not be sufficient to meet entirely the legal costs and the fines and penalties that may result from pending legal actions. Set out below is a summary of information, including, if material and/or indicated, the single requests of the plaintiffs, relating to matters involving the UniCredit group which are not considered groundless or in the ordinary course of the Group’s business. This section also describes pending proceedings against the parent company UniCredit S.p.A. and/or other UniCredit group companies and/or employees (even former employees) that the parent company UniCredit S.p.A. considers relevant and which, at present, are not characterized by a defined claim or for which the respective claim cannot be quantified. Unless expressly mentioned below, labor law and tax claims are excluded from this section and are described elsewhere in the notes of this section. In accordance with IAS37, information that would seriously prejudice the relevant company’s position in the dispute may be omitted. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 402 2018 Annual Report and Accounts · UniCredit Capital at risk is calculated per risk class. For each risk class, severity and frequency of loss data are separately estimated to obtain the annual loss distribution through simulation. The severity distribution is estimated on internal, external and scenario analysis data, while the frequency distribution is determined using only the internal data. An adjustment for key operational risk indicators is applied to each risk class. Annual loss distributions of each risk class are aggregated through a copula functions based method, considering also insurance coverage. Capital at risk is calculated at a confidence level of 99.9% on the overall loss distribution for regulatory purposes and for economic capital purposes, considering expected loss deduction. Through an allocation mechanism, the individual Legal Entities’ capital requirements are identified, reflecting the Legal Entities’ risk exposure. B. Legal risks The parent company UniCredit S.p.A. and other UniCredit group companies are named as defendants in several legal proceedings. In particular, as of 31 December 2018, the parent company UniCredit S.p.A. and other UniCredit group companies were named as defendants in about 20,800 legal proceedings, of which approx. 10,000 involving the parent company UniCredit S.p.A. (excluding labor law cases, tax cases and credit recovery actions in which counterclaims were asserted or objections raised with regard to the credit claims of Group companies). Moreover, from time to time, past and present directors, officers and employees may be involved in civil and/or criminal proceedings, the details of which the UniCredit group may not lawfully know about or communicate. The Group is also required to fulfill appropriately various legal and regulatory requirements in relation to certain aspects of its activity, such as conflicts of interest, ethical issues, anti-money laundering laws, US and international sanctions, client assets, competition law, privacy and information security rules and others. Actual or alleged failure to do so may lead, to additional litigation and investigations and subjects the Group to damages claims, regulatory fines, other penalties and/or reputational damages. In addition, one or more Group companies and/or their current and/or former directors are subject or may in the future be subject to investigations by the relevant supervisory or prosecutorial authority in a number of countries in which the Group operates. These include investigations and/or proceedings relating, inter alia, to aspects of systems and controls and instances of actual and potential regulatory infringement by the relevant Group companies and/or its clients. Given the nature of the UniCredit group’s business and its reorganization over time there is a risk that claims or matters that initially involve one Group company may affect or involve other Group entities. In many cases, there is substantial uncertainty regarding the outcomes of the proceedings and the amount of possible losses. These cases include criminal proceedings, administrative proceedings brought by the relevant supervisory or prosecution authorities and/or claims in which the claimed damages and/or potential liability of the Group is not and cannot be determined, either because of how the claims is presented and/or because of the nature of the actual proceedings. In such cases, until the time when it will be possible to estimate reliably the potential outcome, no provisions are made. However, where it is possible to estimate reliably the amount of possible losses and the loss is considered likely, provisions have been made in the financial statements to the extent the parent company UniCredit S.p.A., or any of the Group companies involved, deemed appropriate based on the circumstances of the case and in compliance with International Accounting Standards (IAS). To provide for possible liabilities and costs that may result from pending legal proceedings (excluding labor law and tax cases), as of 31 December 2018, the UniCredit group set aside a provision for risks and charges of €2,365 million, of which €647 million for the parent company UniCredit S.p.A. As of 31 December 2018, the total amount of claimed damages relating to judicial proceedings other than labor, tax and debt collections proceedings was €11.4 billion, of which approx. €7 billion for the proceedings involving the parent company UniCredit S.p.A. This figure is affected by both the disomogeneous nature of the pending proceedings and the number of involved jurisdictions and their corresponding characteristics in which the UniCredit group is named as a defendant. The estimate for reasonably possible liabilities and this provision are based upon information available as of 31 December 2018, however, given the many uncertainties inherent in legal proceedings, they involve significant elements of judgment. In particular, in some cases it is not possible to form a reliable estimate, for instance where proceedings have not yet been commenced or where the extent of legal and factual uncertainties makes any estimate speculative. Therefore any provision may not be sufficient to meet entirely the legal costs and the fines and penalties that may result from pending legal actions. Set out below is a summary of information, including, if material and/or indicated, the single requests of the plaintiffs, relating to matters involving the UniCredit group which are not considered groundless or in the ordinary course of the Group’s business. This section also describes pending proceedings against the parent company UniCredit S.p.A. and/or other UniCredit group companies and/or employees (even former employees) that the parent company UniCredit S.p.A. considers relevant and which, at present, are not characterized by a defined claim or for which the respective claim cannot be quantified. Unless expressly mentioned below, labor law and tax claims are excluded from this section and are described elsewhere in the notes of this section. In accordance with IAS37, information that would seriously prejudice the relevant company’s position in the dispute may be omitted. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 402 2018 Annual Report and Accounts · UniCredit Capital at risk is calculated per risk class. For each risk class, severity and frequency of loss data are separately estimated to obtain the annual loss distribution through simulation. The severity distribution is estimated on internal, external and scenario analysis data, while the frequency distribution is determined using only the internal data. An adjustment for key operational risk indicators is applied to each risk class. Annual loss distributions of each risk class are aggregated through a copula functions based method, considering also insurance coverage. Capital at risk is calculated at a confidence level of 99.9% on the overall loss distribution for regulatory purposes and for economic capital purposes, considering expected loss deduction. Through an allocation mechanism, the individual Legal Entities’ capital requirements are identified, reflecting the Legal Entities’ risk exposure. B. Legal risks The parent company UniCredit S.p.A. and other UniCredit group companies are named as defendants in several legal proceedings. In particular, as of 31 December 2018, the parent company UniCredit S.p.A. and other UniCredit group companies were named as defendants in about 20,800 legal proceedings, of which approx. 10,000 involving the parent company UniCredit S.p.A. (excluding labor law cases, tax cases and credit recovery actions in which counterclaims were asserted or objections raised with regard to the credit claims of Group companies). Moreover, from time to time, past and present directors, officers and employees may be involved in civil and/or criminal proceedings, the details of which the UniCredit group may not lawfully know about or communicate. The Group is also required to fulfill appropriately various legal and regulatory requirements in relation to certain aspects of its activity, such as conflicts of interest, ethical issues, anti-money laundering laws, US and international sanctions, client assets, competition law, privacy and information security rules and others. Actual or alleged failure to do so may lead, to additional litigation and investigations and subjects the Group to damages claims, regulatory fines, other penalties and/or reputational damages. In addition, one or more Group companies and/or their current and/or former directors are subject or may in the future be subject to investigations by the relevant supervisory or prosecutorial authority in a number of countries in which the Group operates. These include investigations and/or proceedings relating, inter alia, to aspects of systems and controls and instances of actual and potential regulatory infringement by the relevant Group companies and/or its clients. Given the nature of the UniCredit group’s business and its reorganization over time there is a risk that claims or matters that initially involve one Group company may affect or involve other Group entities. In many cases, there is substantial uncertainty regarding the outcomes of the proceedings and the amount of possible losses. These cases include criminal proceedings, administrative proceedings brought by the relevant supervisory or prosecution authorities and/or claims in which the claimed damages and/or potential liability of the Group is not and cannot be determined, either because of how the claims is presented and/or because of the nature of the actual proceedings. In such cases, until the time when it will be possible to estimate reliably the potential outcome, no provisions are made. However, where it is possible to estimate reliably the amount of possible losses and the loss is considered likely, provisions have been made in the financial statements to the extent the parent company UniCredit S.p.A., or any of the Group companies involved, deemed appropriate based on the circumstances of the case and in compliance with International Accounting Standards (IAS). To provide for possible liabilities and costs that may result from pending legal proceedings (excluding labor law and tax cases), as of 31 December 2018, the UniCredit group set aside a provision for risks and charges of €2,365 million, of which €647 million for the parent company UniCredit S.p.A. As of 31 December 2018, the total amount of claimed damages relating to judicial proceedings other than labor, tax and debt collections proceedings was €11.4 billion, of which approx. €7 billion for the proceedings involving the parent company UniCredit S.p.A. This figure is affected by both the disomogeneous nature of the pending proceedings and the number of involved jurisdictions and their corresponding characteristics in which the UniCredit group is named as a defendant. The estimate for reasonably possible liabilities and this provision are based upon information available as of 31 December 2018, however, given the many uncertainties inherent in legal proceedings, they involve significant elements of judgment. In particular, in some cases it is not possible to form a reliable estimate, for instance where proceedings have not yet been commenced or where the extent of legal and factual uncertainties makes any estimate speculative. Therefore any provision may not be sufficient to meet entirely the legal costs and the fines and penalties that may result from pending legal actions. Set out below is a summary of information, including, if material and/or indicated, the single requests of the plaintiffs, relating to matters involving the UniCredit group which are not considered groundless or in the ordinary course of the Group’s business. This section also describes pending proceedings against the parent company UniCredit S.p.A. and/or other UniCredit group companies and/or employees (even former employees) that the parent company UniCredit S.p.A. considers relevant and which, at present, are not characterized by a defined claim or for which the respective claim cannot be quantified. Unless expressly mentioned below, labor law and tax claims are excluded from this section and are described elsewhere in the notes of this section. In accordance with IAS37, information that would seriously prejudice the relevant company’s position in the dispute may be omitted. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 403 Proceedings which involve the parent company UniCredit S.p.A. Madoff Background The parent company UniCredit S.p.A. and several of its direct and indirect subsidiaries have been subject to legal action or investigated in the wake of a Ponzi Scheme perpetrated by Bernard L. Madoff (“Madoff”) through his company Bernard L. Madoff Investment Securities LLC (“BLMIS”), which was exposed in December 2008. The background of such litigations and investigations, and the connections between the parent company UniCredit S.p.A. and certain of its affiliates with BLMIS, have been more fully disclosed in prior reporting periods. Proceedings in the United States Claims by the SIPA Trustee In December 2010, the bankruptcy administrator (the “SIPA Trustee”) for the liquidation of BLMIS filed, as one of a number of cases, a case before a US Federal Court against ca. 60 defendants, including HSBC, the parent company UniCredit S.p.A. and certain of its affiliates (the “HSBC” case). In the HSBC case, the SIPA Trustee sought to recover a damage compensation for an overall amount of more than 6 billion dollars (to be later determined over the course of the proceedings) against all 60 or so defendants for common law claims (i.e. claims for aiding and abetting the violations by BLMIS) and avoidance claims (also known as claw-back claims). No separate claim for damages was brought against the UniCredit group. All claims against the parent company UniCredit S.p.A. and other companies of the UniCredit group, both relating to common law claims and those related to claw-back actions, were rejected without any possibility of appeal, with the exception of (i) UCB Austria, where on 21 July 2015 the SIPA Trustee has voluntarily waived, with possibility to appeal, the claw-back actions against UCB Austria; and (ii) BAWFM, where, on 22 November 2016, the bankruptcy court issued a decision that required the dismissal of the claw-back claims against BAWFM. On 16 March 2017, the SIPA Trustee filed a notice of appeal from the dismissal of the claims. The appeal remains pending. However, if that appeal were successful, the potential claim for damage is non-material and, therefore, there are no specific risk profiles for UniCredit group. Certain current or formerly affiliated persons named as defendants in the HSBC case may have rights to indemnification from the parent company UniCredit S.p.A. and its affiliated entities. Furthermore, to date and to the knowledge of the parent company UniCredit S.p.A., there are no further actions commenced by parties other than the SIPA Trustee in relation to this matter. Claim by SPV OSUS Ltd The parent company UniCredit S.p.A. and certain of its affiliates - UCB Austria, BAWFM and PAI - were named as defendants, together with approximately 40 other defendants, in a lawsuit filed before the Supreme Court of the State of New York, County of New York, on 12 December 2014, by SPV OSUS Ltd. The lawsuit was removed to the United States District Court for the Southern District of New York on 20 April 2018. The plaintiffs’ claims are based on common law, and are only aimed at obtaining monetary compensation, vis-à-vis all defendants in connection with alleged aiding and abetting a breach of fiduciary duty, aiding and abetting a fraud, aiding and abetting a conversion and knowing participation in a breach of trust in connection with the Madoff Ponzi Scheme. The case is brought on behalf of a purported assignee of an investor in BLMIS, with no specification of the claimed amount. On 21 September 2018, all defendants moved to dismiss all of the plaintiff’s claims on various grounds including, without limitation, lack of personal jurisdiction, statute of limitations, and lack of proximate cause. The motion is fully briefed. Proceedings outside the United States Investors in the Primeo and Herald funds brought numerous civil proceedings in Austria. As of 31 December 2018, 30 civil proceedings remain pending with a claimed amount totaling €8.15 million plus interest, of which: 23 are pending before a judge of first instance with no judgment yet, and 5 are pending before the Court of Appeal with no judgment yet. Two cases were remanded back to the first instance. In one case an appeal and in the other case an extraordinary appeal before the Supreme Court will be brought in January 2019. The claims in these proceedings pertain to alleged breaches by UCB Austria of certain duties regarding its function as prospectus controller (i.e. regarding the review of prospectuses for accuracy and completeness), or that UCB Austria improperly advised certain investors (directly or indirectly) to invest in funds in Madoff-related investments or a combination of these claims. The Austrian Supreme Court issued 24 final decisions with respect to prospectus liability claims asserted in the legal proceedings. With respect to claims related to the Primeo funds, 14 final Austrian Supreme Court decisions have been issued in favor of UCB Austria. In two cases the Supreme Court did not accept UCB Austria's extraordinary appeal, thus making the decisions of the Court of Appeal in favor of the claimant final and binding. With respect to the Herald fund, the Austrian Supreme Court ruled 5 times with respect to prospectus liability, 2 in favor of UCB Austria and 3 times in favor of the claimants. In a prospectus liability case with Primeo and Herald investments the Austrian Supreme Court ruled in favor of UCB Austria; in two further prospectus liability cases with Primeo and Herald investments the Supreme Court did not accept the claimants’ extraordinary appeals, thus rendering binding the decisions of the Court of Appeal in favor of Bank Austria. While the impact of these decisions on the remaining cases cannot be predicted with certainty, future rulings may be adverse to UCB Austria. In respect of the Austrian civil proceedings pending as against UCB Austria related to Madoff's matter, UCB Austria has made provisions for an amount considered appropriate to the current risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 403 Proceedings which involve the parent company UniCredit S.p.A. Madoff Background The parent company UniCredit S.p.A. and several of its direct and indirect subsidiaries have been subject to legal action or investigated in the wake of a Ponzi Scheme perpetrated by Bernard L. Madoff (“Madoff”) through his company Bernard L. Madoff Investment Securities LLC (“BLMIS”), which was exposed in December 2008. The background of such litigations and investigations, and the connections between the parent company UniCredit S.p.A. and certain of its affiliates with BLMIS, have been more fully disclosed in prior reporting periods. Proceedings in the United States Claims by the SIPA Trustee In December 2010, the bankruptcy administrator (the “SIPA Trustee”) for the liquidation of BLMIS filed, as one of a number of cases, a case before a US Federal Court against ca. 60 defendants, including HSBC, the parent company UniCredit S.p.A. and certain of its affiliates (the “HSBC” case). In the HSBC case, the SIPA Trustee sought to recover a damage compensation for an overall amount of more than 6 billion dollars (to be later determined over the course of the proceedings) against all 60 or so defendants for common law claims (i.e. claims for aiding and abetting the violations by BLMIS) and avoidance claims (also known as claw-back claims). No separate claim for damages was brought against the UniCredit group. All claims against the parent company UniCredit S.p.A. and other companies of the UniCredit group, both relating to common law claims and those related to claw-back actions, were rejected without any possibility of appeal, with the exception of (i) UCB Austria, where on 21 July 2015 the SIPA Trustee has voluntarily waived, with possibility to appeal, the claw-back actions against UCB Austria; and (ii) BAWFM, where, on 22 November 2016, the bankruptcy court issued a decision that required the dismissal of the claw-back claims against BAWFM. On 16 March 2017, the SIPA Trustee filed a notice of appeal from the dismissal of the claims. The appeal remains pending. However, if that appeal were successful, the potential claim for damage is non-material and, therefore, there are no specific risk profiles for UniCredit group. Certain current or formerly affiliated persons named as defendants in the HSBC case may have rights to indemnification from the parent company UniCredit S.p.A. and its affiliated entities. Furthermore, to date and to the knowledge of the parent company UniCredit S.p.A., there are no further actions commenced by parties other than the SIPA Trustee in relation to this matter. Claim by SPV OSUS Ltd The parent company UniCredit S.p.A. and certain of its affiliates - UCB Austria, BAWFM and PAI - were named as defendants, together with approximately 40 other defendants, in a lawsuit filed before the Supreme Court of the State of New York, County of New York, on 12 December 2014, by SPV OSUS Ltd. The lawsuit was removed to the United States District Court for the Southern District of New York on 20 April 2018. The plaintiffs’ claims are based on common law, and are only aimed at obtaining monetary compensation, vis-à-vis all defendants in connection with alleged aiding and abetting a breach of fiduciary duty, aiding and abetting a fraud, aiding and abetting a conversion and knowing participation in a breach of trust in connection with the Madoff Ponzi Scheme. The case is brought on behalf of a purported assignee of an investor in BLMIS, with no specification of the claimed amount. On 21 September 2018, all defendants moved to dismiss all of the plaintiff’s claims on various grounds including, without limitation, lack of personal jurisdiction, statute of limitations, and lack of proximate cause. The motion is fully briefed. Proceedings outside the United States Investors in the Primeo and Herald funds brought numerous civil proceedings in Austria. As of 31 December 2018, 30 civil proceedings remain pending with a claimed amount totaling €8.15 million plus interest, of which: 23 are pending before a judge of first instance with no judgment yet, and 5 are pending before the Court of Appeal with no judgment yet. Two cases were remanded back to the first instance. In one case an appeal and in the other case an extraordinary appeal before the Supreme Court will be brought in January 2019. The claims in these proceedings pertain to alleged breaches by UCB Austria of certain duties regarding its function as prospectus controller (i.e. regarding the review of prospectuses for accuracy and completeness), or that UCB Austria improperly advised certain investors (directly or indirectly) to invest in funds in Madoff-related investments or a combination of these claims. The Austrian Supreme Court issued 24 final decisions with respect to prospectus liability claims asserted in the legal proceedings. With respect to claims related to the Primeo funds, 14 final Austrian Supreme Court decisions have been issued in favor of UCB Austria. In two cases the Supreme Court did not accept UCB Austria's extraordinary appeal, thus making the decisions of the Court of Appeal in favor of the claimant final and binding. With respect to the Herald fund, the Austrian Supreme Court ruled 5 times with respect to prospectus liability, 2 in favor of UCB Austria and 3 times in favor of the claimants. In a prospectus liability case with Primeo and Herald investments the Austrian Supreme Court ruled in favor of UCB Austria; in two further prospectus liability cases with Primeo and Herald investments the Supreme Court did not accept the claimants’ extraordinary appeals, thus rendering binding the decisions of the Court of Appeal in favor of Bank Austria. While the impact of these decisions on the remaining cases cannot be predicted with certainty, future rulings may be adverse to UCB Austria. In respect of the Austrian civil proceedings pending as against UCB Austria related to Madoff's matter, UCB Austria has made provisions for an amount considered appropriate to the current risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 403 Proceedings which involve the parent company UniCredit S.p.A. Madoff Background The parent company UniCredit S.p.A. and several of its direct and indirect subsidiaries have been subject to legal action or investigated in the wake of a Ponzi Scheme perpetrated by Bernard L. Madoff (“Madoff”) through his company Bernard L. Madoff Investment Securities LLC (“BLMIS”), which was exposed in December 2008. The background of such litigations and investigations, and the connections between the parent company UniCredit S.p.A. and certain of its affiliates with BLMIS, have been more fully disclosed in prior reporting periods. Proceedings in the United States Claims by the SIPA Trustee In December 2010, the bankruptcy administrator (the “SIPA Trustee”) for the liquidation of BLMIS filed, as one of a number of cases, a case before a US Federal Court against ca. 60 defendants, including HSBC, the parent company UniCredit S.p.A. and certain of its affiliates (the “HSBC” case). In the HSBC case, the SIPA Trustee sought to recover a damage compensation for an overall amount of more than 6 billion dollars (to be later determined over the course of the proceedings) against all 60 or so defendants for common law claims (i.e. claims for aiding and abetting the violations by BLMIS) and avoidance claims (also known as claw-back claims). No separate claim for damages was brought against the UniCredit group. All claims against the parent company UniCredit S.p.A. and other companies of the UniCredit group, both relating to common law claims and those related to claw-back actions, were rejected without any possibility of appeal, with the exception of (i) UCB Austria, where on 21 July 2015 the SIPA Trustee has voluntarily waived, with possibility to appeal, the claw-back actions against UCB Austria; and (ii) BAWFM, where, on 22 November 2016, the bankruptcy court issued a decision that required the dismissal of the claw-back claims against BAWFM. On 16 March 2017, the SIPA Trustee filed a notice of appeal from the dismissal of the claims. The appeal remains pending. However, if that appeal were successful, the potential claim for damage is non-material and, therefore, there are no specific risk profiles for UniCredit group. Certain current or formerly affiliated persons named as defendants in the HSBC case may have rights to indemnification from the parent company UniCredit S.p.A. and its affiliated entities. Furthermore, to date and to the knowledge of the parent company UniCredit S.p.A., there are no further actions commenced by parties other than the SIPA Trustee in relation to this matter. Claim by SPV OSUS Ltd The parent company UniCredit S.p.A. and certain of its affiliates - UCB Austria, BAWFM and PAI - were named as defendants, together with approximately 40 other defendants, in a lawsuit filed before the Supreme Court of the State of New York, County of New York, on 12 December 2014, by SPV OSUS Ltd. The lawsuit was removed to the United States District Court for the Southern District of New York on 20 April 2018. The plaintiffs’ claims are based on common law, and are only aimed at obtaining monetary compensation, vis-à-vis all defendants in connection with alleged aiding and abetting a breach of fiduciary duty, aiding and abetting a fraud, aiding and abetting a conversion and knowing participation in a breach of trust in connection with the Madoff Ponzi Scheme. The case is brought on behalf of a purported assignee of an investor in BLMIS, with no specification of the claimed amount. On 21 September 2018, all defendants moved to dismiss all of the plaintiff’s claims on various grounds including, without limitation, lack of personal jurisdiction, statute of limitations, and lack of proximate cause. The motion is fully briefed. Proceedings outside the United States Investors in the Primeo and Herald funds brought numerous civil proceedings in Austria. As of 31 December 2018, 30 civil proceedings remain pending with a claimed amount totaling €8.15 million plus interest, of which: 23 are pending before a judge of first instance with no judgment yet, and 5 are pending before the Court of Appeal with no judgment yet. Two cases were remanded back to the first instance. In one case an appeal and in the other case an extraordinary appeal before the Supreme Court will be brought in January 2019. The claims in these proceedings pertain to alleged breaches by UCB Austria of certain duties regarding its function as prospectus controller (i.e. regarding the review of prospectuses for accuracy and completeness), or that UCB Austria improperly advised certain investors (directly or indirectly) to invest in funds in Madoff-related investments or a combination of these claims. The Austrian Supreme Court issued 24 final decisions with respect to prospectus liability claims asserted in the legal proceedings. With respect to claims related to the Primeo funds, 14 final Austrian Supreme Court decisions have been issued in favor of UCB Austria. In two cases the Supreme Court did not accept UCB Austria's extraordinary appeal, thus making the decisions of the Court of Appeal in favor of the claimant final and binding. With respect to the Herald fund, the Austrian Supreme Court ruled 5 times with respect to prospectus liability, 2 in favor of UCB Austria and 3 times in favor of the claimants. In a prospectus liability case with Primeo and Herald investments the Austrian Supreme Court ruled in favor of UCB Austria; in two further prospectus liability cases with Primeo and Herald investments the Supreme Court did not accept the claimants’ extraordinary appeals, thus rendering binding the decisions of the Court of Appeal in favor of Bank Austria. While the impact of these decisions on the remaining cases cannot be predicted with certainty, future rulings may be adverse to UCB Austria. In respect of the Austrian civil proceedings pending as against UCB Austria related to Madoff's matter, UCB Austria has made provisions for an amount considered appropriate to the current risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 403 Proceedings which involve the parent company UniCredit S.p.A. Madoff Background The parent company UniCredit S.p.A. and several of its direct and indirect subsidiaries have been subject to legal action or investigated in the wake of a Ponzi Scheme perpetrated by Bernard L. Madoff (“Madoff”) through his company Bernard L. Madoff Investment Securities LLC (“BLMIS”), which was exposed in December 2008. The background of such litigations and investigations, and the connections between the parent company UniCredit S.p.A. and certain of its affiliates with BLMIS, have been more fully disclosed in prior reporting periods. Proceedings in the United States Claims by the SIPA Trustee In December 2010, the bankruptcy administrator (the “SIPA Trustee”) for the liquidation of BLMIS filed, as one of a number of cases, a case before a US Federal Court against ca. 60 defendants, including HSBC, the parent company UniCredit S.p.A. and certain of its affiliates (the “HSBC” case). In the HSBC case, the SIPA Trustee sought to recover a damage compensation for an overall amount of more than 6 billion dollars (to be later determined over the course of the proceedings) against all 60 or so defendants for common law claims (i.e. claims for aiding and abetting the violations by BLMIS) and avoidance claims (also known as claw-back claims). No separate claim for damages was brought against the UniCredit group. All claims against the parent company UniCredit S.p.A. and other companies of the UniCredit group, both relating to common law claims and those related to claw-back actions, were rejected without any possibility of appeal, with the exception of (i) UCB Austria, where on 21 July 2015 the SIPA Trustee has voluntarily waived, with possibility to appeal, the claw-back actions against UCB Austria; and (ii) BAWFM, where, on 22 November 2016, the bankruptcy court issued a decision that required the dismissal of the claw-back claims against BAWFM. On 16 March 2017, the SIPA Trustee filed a notice of appeal from the dismissal of the claims. The appeal remains pending. However, if that appeal were successful, the potential claim for damage is non-material and, therefore, there are no specific risk profiles for UniCredit group. Certain current or formerly affiliated persons named as defendants in the HSBC case may have rights to indemnification from the parent company UniCredit S.p.A. and its affiliated entities. Furthermore, to date and to the knowledge of the parent company UniCredit S.p.A., there are no further actions commenced by parties other than the SIPA Trustee in relation to this matter. Claim by SPV OSUS Ltd The parent company UniCredit S.p.A. and certain of its affiliates - UCB Austria, BAWFM and PAI - were named as defendants, together with approximately 40 other defendants, in a lawsuit filed before the Supreme Court of the State of New York, County of New York, on 12 December 2014, by SPV OSUS Ltd. The lawsuit was removed to the United States District Court for the Southern District of New York on 20 April 2018. The plaintiffs’ claims are based on common law, and are only aimed at obtaining monetary compensation, vis-à-vis all defendants in connection with alleged aiding and abetting a breach of fiduciary duty, aiding and abetting a fraud, aiding and abetting a conversion and knowing participation in a breach of trust in connection with the Madoff Ponzi Scheme. The case is brought on behalf of a purported assignee of an investor in BLMIS, with no specification of the claimed amount. On 21 September 2018, all defendants moved to dismiss all of the plaintiff’s claims on various grounds including, without limitation, lack of personal jurisdiction, statute of limitations, and lack of proximate cause. The motion is fully briefed. Proceedings outside the United States Investors in the Primeo and Herald funds brought numerous civil proceedings in Austria. As of 31 December 2018, 30 civil proceedings remain pending with a claimed amount totaling €8.15 million plus interest, of which: 23 are pending before a judge of first instance with no judgment yet, and 5 are pending before the Court of Appeal with no judgment yet. Two cases were remanded back to the first instance. In one case an appeal and in the other case an extraordinary appeal before the Supreme Court will be brought in January 2019. The claims in these proceedings pertain to alleged breaches by UCB Austria of certain duties regarding its function as prospectus controller (i.e. regarding the review of prospectuses for accuracy and completeness), or that UCB Austria improperly advised certain investors (directly or indirectly) to invest in funds in Madoff-related investments or a combination of these claims. The Austrian Supreme Court issued 24 final decisions with respect to prospectus liability claims asserted in the legal proceedings. With respect to claims related to the Primeo funds, 14 final Austrian Supreme Court decisions have been issued in favor of UCB Austria. In two cases the Supreme Court did not accept UCB Austria's extraordinary appeal, thus making the decisions of the Court of Appeal in favor of the claimant final and binding. With respect to the Herald fund, the Austrian Supreme Court ruled 5 times with respect to prospectus liability, 2 in favor of UCB Austria and 3 times in favor of the claimants. In a prospectus liability case with Primeo and Herald investments the Austrian Supreme Court ruled in favor of UCB Austria; in two further prospectus liability cases with Primeo and Herald investments the Supreme Court did not accept the claimants’ extraordinary appeals, thus rendering binding the decisions of the Court of Appeal in favor of Bank Austria. While the impact of these decisions on the remaining cases cannot be predicted with certainty, future rulings may be adverse to UCB Austria. In respect of the Austrian civil proceedings pending as against UCB Austria related to Madoff's matter, UCB Austria has made provisions for an amount considered appropriate to the current risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 403 Proceedings which involve the parent company UniCredit S.p.A. Madoff Background The parent company UniCredit S.p.A. and several of its direct and indirect subsidiaries have been subject to legal action or investigated in the wake of a Ponzi Scheme perpetrated by Bernard L. Madoff (“Madoff”) through his company Bernard L. Madoff Investment Securities LLC (“BLMIS”), which was exposed in December 2008. The background of such litigations and investigations, and the connections between the parent company UniCredit S.p.A. and certain of its affiliates with BLMIS, have been more fully disclosed in prior reporting periods. Proceedings in the United States Claims by the SIPA Trustee In December 2010, the bankruptcy administrator (the “SIPA Trustee”) for the liquidation of BLMIS filed, as one of a number of cases, a case before a US Federal Court against ca. 60 defendants, including HSBC, the parent company UniCredit S.p.A. and certain of its affiliates (the “HSBC” case). In the HSBC case, the SIPA Trustee sought to recover a damage compensation for an overall amount of more than 6 billion dollars (to be later determined over the course of the proceedings) against all 60 or so defendants for common law claims (i.e. claims for aiding and abetting the violations by BLMIS) and avoidance claims (also known as claw-back claims). No separate claim for damages was brought against the UniCredit group. All claims against the parent company UniCredit S.p.A. and other companies of the UniCredit group, both relating to common law claims and those related to claw-back actions, were rejected without any possibility of appeal, with the exception of (i) UCB Austria, where on 21 July 2015 the SIPA Trustee has voluntarily waived, with possibility to appeal, the claw-back actions against UCB Austria; and (ii) BAWFM, where, on 22 November 2016, the bankruptcy court issued a decision that required the dismissal of the claw-back claims against BAWFM. On 16 March 2017, the SIPA Trustee filed a notice of appeal from the dismissal of the claims. The appeal remains pending. However, if that appeal were successful, the potential claim for damage is non-material and, therefore, there are no specific risk profiles for UniCredit group. Certain current or formerly affiliated persons named as defendants in the HSBC case may have rights to indemnification from the parent company UniCredit S.p.A. and its affiliated entities. Furthermore, to date and to the knowledge of the parent company UniCredit S.p.A., there are no further actions commenced by parties other than the SIPA Trustee in relation to this matter. Claim by SPV OSUS Ltd The parent company UniCredit S.p.A. and certain of its affiliates - UCB Austria, BAWFM and PAI - were named as defendants, together with approximately 40 other defendants, in a lawsuit filed before the Supreme Court of the State of New York, County of New York, on 12 December 2014, by SPV OSUS Ltd. The lawsuit was removed to the United States District Court for the Southern District of New York on 20 April 2018. The plaintiffs’ claims are based on common law, and are only aimed at obtaining monetary compensation, vis-à-vis all defendants in connection with alleged aiding and abetting a breach of fiduciary duty, aiding and abetting a fraud, aiding and abetting a conversion and knowing participation in a breach of trust in connection with the Madoff Ponzi Scheme. The case is brought on behalf of a purported assignee of an investor in BLMIS, with no specification of the claimed amount. On 21 September 2018, all defendants moved to dismiss all of the plaintiff’s claims on various grounds including, without limitation, lack of personal jurisdiction, statute of limitations, and lack of proximate cause. The motion is fully briefed. Proceedings outside the United States Investors in the Primeo and Herald funds brought numerous civil proceedings in Austria. As of 31 December 2018, 30 civil proceedings remain pending with a claimed amount totaling €8.15 million plus interest, of which: 23 are pending before a judge of first instance with no judgment yet, and 5 are pending before the Court of Appeal with no judgment yet. Two cases were remanded back to the first instance. In one case an appeal and in the other case an extraordinary appeal before the Supreme Court will be brought in January 2019. The claims in these proceedings pertain to alleged breaches by UCB Austria of certain duties regarding its function as prospectus controller (i.e. regarding the review of prospectuses for accuracy and completeness), or that UCB Austria improperly advised certain investors (directly or indirectly) to invest in funds in Madoff-related investments or a combination of these claims. The Austrian Supreme Court issued 24 final decisions with respect to prospectus liability claims asserted in the legal proceedings. With respect to claims related to the Primeo funds, 14 final Austrian Supreme Court decisions have been issued in favor of UCB Austria. In two cases the Supreme Court did not accept UCB Austria's extraordinary appeal, thus making the decisions of the Court of Appeal in favor of the claimant final and binding. With respect to the Herald fund, the Austrian Supreme Court ruled 5 times with respect to prospectus liability, 2 in favor of UCB Austria and 3 times in favor of the claimants. In a prospectus liability case with Primeo and Herald investments the Austrian Supreme Court ruled in favor of UCB Austria; in two further prospectus liability cases with Primeo and Herald investments the Supreme Court did not accept the claimants’ extraordinary appeals, thus rendering binding the decisions of the Court of Appeal in favor of Bank Austria. While the impact of these decisions on the remaining cases cannot be predicted with certainty, future rulings may be adverse to UCB Austria. In respect of the Austrian civil proceedings pending as against UCB Austria related to Madoff's matter, UCB Austria has made provisions for an amount considered appropriate to the current risk. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 404 2018 Annual Report and Accounts · UniCredit UCB Austria has been named as a defendant in criminal proceedings in Austria concerning the Madoff case on allegations that UCB Austria breached provisions of the Austrian Investment Fund Act as prospectus controller of the Primeo fund; other allegations are related to the level of fees and embezzlement. In the past, parts of the complaints have already been closed. The criminal proceedings regarding the other allegations are still at the investigation stage and no official indictments against UCB Austria have been brought by the Austrian prosecutor, therefore, it is not possible to estimate the sanctions (if any) that would be imposed on UCB Austria as well as the potential joint liability of UCB Austria. Certain potential consequences In addition to the foregoing proceedings and investigations stemming from the Madoff case against the parent company UniCredit S.p.A., its subsidiaries and some of their respective employees and former employees, subject to any applicable limitations on the time by when proceedings must be brought, additional Madoff-related proceedings may be filed in the future in the United States, Austria or elsewhere. Such potential future proceedings could be filed against the parent company UniCredit S.p.A., its subsidiaries, their respective employees or former employees or entities with which the parent company UniCredit S.p.A. is affiliated or may have investments in. The pending or possible future proceedings may have negative consequences for the UniCredit group. Save as described above, at the moment, it is not possible to estimate reliably the timing and results of the various proceedings, nor determine the level of liability, if any responsibility exists. Save as described above, in compliance with international accounting standards, no provisions have been made for specific risks associated with Madoff related claims and charges. Proceedings arising out of the purchase of UCB AG by the parent company UniCredit S.p.A. and the related Group reorganization. Squeeze-out of UCB AG minority shareholders (Appraisal Proceeding) In 2008, approximately 300 former minority shareholders of UCB AG filed a request before the District Court of Munich I to have a review of the price paid to them by the parent company UniCredit S.p.A., equal to €38.26 per share, in the context of the squeeze out of minority shareholders (Appraisal Proceeding). The dispute mainly concerns the valuation of UCB AG, which is the basis for the calculation of the price to be paid to the former minority shareholders. At present the proceeding is pending in the first instance. The District Court of Munich has appointed experts for the valuation of UCB AG at the time of the squeeze-out, who have submitted their opinion in November 2017. The experts have confirmed that the valuation of UCB AG for the purposes of the squeeze-out cash compensation was by and large adequate. The court-appointed experts have, however, identified certain value effects which, in the opinion of the experts, could lead to a value increase of UCB AG’s former subsidiaries Bank Austria and certain CEE financial institutions. Against this background, the experts question the appropriateness of the purchase prices paid before the squeeze-out by the parent company UniCredit S.p.A. to UCB AG for UCB Austria and for the said CEE financial institutions. The opinion of the experts does not bind the court. Both the parent company UniCredit S.p.A. and the applicants have submitted comments on the expert opinion to the court, which has asked the court-appointed experts to prepare a supplemental expert opinion on these comments by September 2019. The next oral hearing is scheduled for February 2020. It will then be upon the court of first instance to decide on the request of the minority shareholders based on the expert opinion and the legal issues that are relevant and material to the decision of the court. The parent company UniCredit S.p.A. continues to believe that it has fully complied with applicable law and that the amount paid to the minority shareholders was adequate. It will vigorously defend this position in the ongoing proceedings and has submitted its comments on the expert opinion to the court. The decision of first instance will be subject to appeal. Thus, at this stage, it is not possible to estimate the duration of the proceeding, which might also last for a number of years and could result in the parent company UniCredit S.p.A. having to pay additional cash compensation to the former shareholders. No estimate on the amount in dispute can be made at the current stage of the proceeding. Squeeze-out of UCB Austria’s minority shareholders (Appraisal Proceeding) In 2008, approximately 70 former minority shareholders in UCB Austria commenced proceedings before the Commercial Court of Vienna claiming that the squeeze-out price paid to them, equal to €129.4 per share, was inadequate, and asking the court to review the adequacy of the amount paid (Appraisal Proceeding). The Commercial Court of Vienna referred the case to a panel, called the “Gremium”, to investigate the facts of the case in order to review the adequacy of the cash compensation. On 26 June 2018, the Gremium issued its opinion consistent with the opinions of its experts that had been given in December 2011 and May 2013, and which were, in general, positive for the parent company UniCredit S.p.A. The Gremium referred the case back to the Commercial Court of Vienna. The parent company UniCredit S.p.A. submitted its comments to the Court on the Gremium’s decision at the end of July 2018 along with other parties. The proceedings will continue before the Commercial Court of Vienna who has ordered the parties to submit additional documents to the court and will decide on the price evaluation and other legal matters. The parent company UniCredit S.p.A., considering the nature of the valuation methods used, believes that the amount paid to the minority shareholders was adequate. At present, it is not possible to evaluate the amount under dispute and the possible risk connected with the above described Appraisal Proceeding. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 404 2018 Annual Report and Accounts · UniCredit UCB Austria has been named as a defendant in criminal proceedings in Austria concerning the Madoff case on allegations that UCB Austria breached provisions of the Austrian Investment Fund Act as prospectus controller of the Primeo fund; other allegations are related to the level of fees and embezzlement. In the past, parts of the complaints have already been closed. The criminal proceedings regarding the other allegations are still at the investigation stage and no official indictments against UCB Austria have been brought by the Austrian prosecutor, therefore, it is not possible to estimate the sanctions (if any) that would be imposed on UCB Austria as well as the potential joint liability of UCB Austria. Certain potential consequences In addition to the foregoing proceedings and investigations stemming from the Madoff case against the parent company UniCredit S.p.A., its subsidiaries and some of their respective employees and former employees, subject to any applicable limitations on the time by when proceedings must be brought, additional Madoff-related proceedings may be filed in the future in the United States, Austria or elsewhere. Such potential future proceedings could be filed against the parent company UniCredit S.p.A., its subsidiaries, their respective employees or former employees or entities with which the parent company UniCredit S.p.A. is affiliated or may have investments in. The pending or possible future proceedings may have negative consequences for the UniCredit group. Save as described above, at the moment, it is not possible to estimate reliably the timing and results of the various proceedings, nor determine the level of liability, if any responsibility exists. Save as described above, in compliance with international accounting standards, no provisions have been made for specific risks associated with Madoff related claims and charges. Proceedings arising out of the purchase of UCB AG by the parent company UniCredit S.p.A. and the related Group reorganization. Squeeze-out of UCB AG minority shareholders (Appraisal Proceeding) In 2008, approximately 300 former minority shareholders of UCB AG filed a request before the District Court of Munich I to have a review of the price paid to them by the parent company UniCredit S.p.A., equal to €38.26 per share, in the context of the squeeze out of minority shareholders (Appraisal Proceeding). The dispute mainly concerns the valuation of UCB AG, which is the basis for the calculation of the price to be paid to the former minority shareholders. At present the proceeding is pending in the first instance. The District Court of Munich has appointed experts for the valuation of UCB AG at the time of the squeeze-out, who have submitted their opinion in November 2017. The experts have confirmed that the valuation of UCB AG for the purposes of the squeeze-out cash compensation was by and large adequate. The court-appointed experts have, however, identified certain value effects which, in the opinion of the experts, could lead to a value increase of UCB AG’s former subsidiaries Bank Austria and certain CEE financial institutions. Against this background, the experts question the appropriateness of the purchase prices paid before the squeeze-out by the parent company UniCredit S.p.A. to UCB AG for UCB Austria and for the said CEE financial institutions. The opinion of the experts does not bind the court. Both the parent company UniCredit S.p.A. and the applicants have submitted comments on the expert opinion to the court, which has asked the court-appointed experts to prepare a supplemental expert opinion on these comments by September 2019. The next oral hearing is scheduled for February 2020. It will then be upon the court of first instance to decide on the request of the minority shareholders based on the expert opinion and the legal issues that are relevant and material to the decision of the court. The parent company UniCredit S.p.A. continues to believe that it has fully complied with applicable law and that the amount paid to the minority shareholders was adequate. It will vigorously defend this position in the ongoing proceedings and has submitted its comments on the expert opinion to the court. The decision of first instance will be subject to appeal. Thus, at this stage, it is not possible to estimate the duration of the proceeding, which might also last for a number of years and could result in the parent company UniCredit S.p.A. having to pay additional cash compensation to the former shareholders. No estimate on the amount in dispute can be made at the current stage of the proceeding. Squeeze-out of UCB Austria’s minority shareholders (Appraisal Proceeding) In 2008, approximately 70 former minority shareholders in UCB Austria commenced proceedings before the Commercial Court of Vienna claiming that the squeeze-out price paid to them, equal to €129.4 per share, was inadequate, and asking the court to review the adequacy of the amount paid (Appraisal Proceeding). The Commercial Court of Vienna referred the case to a panel, called the “Gremium”, to investigate the facts of the case in order to review the adequacy of the cash compensation. On 26 June 2018, the Gremium issued its opinion consistent with the opinions of its experts that had been given in December 2011 and May 2013, and which were, in general, positive for the parent company UniCredit S.p.A. The Gremium referred the case back to the Commercial Court of Vienna. The parent company UniCredit S.p.A. submitted its comments to the Court on the Gremium’s decision at the end of July 2018 along with other parties. The proceedings will continue before the Commercial Court of Vienna who has ordered the parties to submit additional documents to the court and will decide on the price evaluation and other legal matters. The parent company UniCredit S.p.A., considering the nature of the valuation methods used, believes that the amount paid to the minority shareholders was adequate. At present, it is not possible to evaluate the amount under dispute and the possible risk connected with the above described Appraisal Proceeding. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 404 2018 Annual Report and Accounts · UniCredit UCB Austria has been named as a defendant in criminal proceedings in Austria concerning the Madoff case on allegations that UCB Austria breached provisions of the Austrian Investment Fund Act as prospectus controller of the Primeo fund; other allegations are related to the level of fees and embezzlement. In the past, parts of the complaints have already been closed. The criminal proceedings regarding the other allegations are still at the investigation stage and no official indictments against UCB Austria have been brought by the Austrian prosecutor, therefore, it is not possible to estimate the sanctions (if any) that would be imposed on UCB Austria as well as the potential joint liability of UCB Austria. Certain potential consequences In addition to the foregoing proceedings and investigations stemming from the Madoff case against the parent company UniCredit S.p.A., its subsidiaries and some of their respective employees and former employees, subject to any applicable limitations on the time by when proceedings must be brought, additional Madoff-related proceedings may be filed in the future in the United States, Austria or elsewhere. Such potential future proceedings could be filed against the parent company UniCredit S.p.A., its subsidiaries, their respective employees or former employees or entities with which the parent company UniCredit S.p.A. is affiliated or may have investments in. The pending or possible future proceedings may have negative consequences for the UniCredit group. Save as described above, at the moment, it is not possible to estimate reliably the timing and results of the various proceedings, nor determine the level of liability, if any responsibility exists. Save as described above, in compliance with international accounting standards, no provisions have been made for specific risks associated with Madoff related claims and charges. Proceedings arising out of the purchase of UCB AG by the parent company UniCredit S.p.A. and the related Group reorganization. Squeeze-out of UCB AG minority shareholders (Appraisal Proceeding) In 2008, approximately 300 former minority shareholders of UCB AG filed a request before the District Court of Munich I to have a review of the price paid to them by the parent company UniCredit S.p.A., equal to €38.26 per share, in the context of the squeeze out of minority shareholders (Appraisal Proceeding). The dispute mainly concerns the valuation of UCB AG, which is the basis for the calculation of the price to be paid to the former minority shareholders. At present the proceeding is pending in the first instance. The District Court of Munich has appointed experts for the valuation of UCB AG at the time of the squeeze-out, who have submitted their opinion in November 2017. The experts have confirmed that the valuation of UCB AG for the purposes of the squeeze-out cash compensation was by and large adequate. The court-appointed experts have, however, identified certain value effects which, in the opinion of the experts, could lead to a value increase of UCB AG’s former subsidiaries Bank Austria and certain CEE financial institutions. Against this background, the experts question the appropriateness of the purchase prices paid before the squeeze-out by the parent company UniCredit S.p.A. to UCB AG for UCB Austria and for the said CEE financial institutions. The opinion of the experts does not bind the court. Both the parent company UniCredit S.p.A. and the applicants have submitted comments on the expert opinion to the court, which has asked the court-appointed experts to prepare a supplemental expert opinion on these comments by September 2019. The next oral hearing is scheduled for February 2020. It will then be upon the court of first instance to decide on the request of the minority shareholders based on the expert opinion and the legal issues that are relevant and material to the decision of the court. The parent company UniCredit S.p.A. continues to believe that it has fully complied with applicable law and that the amount paid to the minority shareholders was adequate. It will vigorously defend this position in the ongoing proceedings and has submitted its comments on the expert opinion to the court. The decision of first instance will be subject to appeal. Thus, at this stage, it is not possible to estimate the duration of the proceeding, which might also last for a number of years and could result in the parent company UniCredit S.p.A. having to pay additional cash compensation to the former shareholders. No estimate on the amount in dispute can be made at the current stage of the proceeding. Squeeze-out of UCB Austria’s minority shareholders (Appraisal Proceeding) In 2008, approximately 70 former minority shareholders in UCB Austria commenced proceedings before the Commercial Court of Vienna claiming that the squeeze-out price paid to them, equal to €129.4 per share, was inadequate, and asking the court to review the adequacy of the amount paid (Appraisal Proceeding). The Commercial Court of Vienna referred the case to a panel, called the “Gremium”, to investigate the facts of the case in order to review the adequacy of the cash compensation. On 26 June 2018, the Gremium issued its opinion consistent with the opinions of its experts that had been given in December 2011 and May 2013, and which were, in general, positive for the parent company UniCredit S.p.A. The Gremium referred the case back to the Commercial Court of Vienna. The parent company UniCredit S.p.A. submitted its comments to the Court on the Gremium’s decision at the end of July 2018 along with other parties. The proceedings will continue before the Commercial Court of Vienna who has ordered the parties to submit additional documents to the court and will decide on the price evaluation and other legal matters. The parent company UniCredit S.p.A., considering the nature of the valuation methods used, believes that the amount paid to the minority shareholders was adequate. At present, it is not possible to evaluate the amount under dispute and the possible risk connected with the above described Appraisal Proceeding. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 404 2018 Annual Report and Accounts · UniCredit UCB Austria has been named as a defendant in criminal proceedings in Austria concerning the Madoff case on allegations that UCB Austria breached provisions of the Austrian Investment Fund Act as prospectus controller of the Primeo fund; other allegations are related to the level of fees and embezzlement. In the past, parts of the complaints have already been closed. The criminal proceedings regarding the other allegations are still at the investigation stage and no official indictments against UCB Austria have been brought by the Austrian prosecutor, therefore, it is not possible to estimate the sanctions (if any) that would be imposed on UCB Austria as well as the potential joint liability of UCB Austria. Certain potential consequences In addition to the foregoing proceedings and investigations stemming from the Madoff case against the parent company UniCredit S.p.A., its subsidiaries and some of their respective employees and former employees, subject to any applicable limitations on the time by when proceedings must be brought, additional Madoff-related proceedings may be filed in the future in the United States, Austria or elsewhere. Such potential future proceedings could be filed against the parent company UniCredit S.p.A., its subsidiaries, their respective employees or former employees or entities with which the parent company UniCredit S.p.A. is affiliated or may have investments in. The pending or possible future proceedings may have negative consequences for the UniCredit group. Save as described above, at the moment, it is not possible to estimate reliably the timing and results of the various proceedings, nor determine the level of liability, if any responsibility exists. Save as described above, in compliance with international accounting standards, no provisions have been made for specific risks associated with Madoff related claims and charges. Proceedings arising out of the purchase of UCB AG by the parent company UniCredit S.p.A. and the related Group reorganization. Squeeze-out of UCB AG minority shareholders (Appraisal Proceeding) In 2008, approximately 300 former minority shareholders of UCB AG filed a request before the District Court of Munich I to have a review of the price paid to them by the parent company UniCredit S.p.A., equal to €38.26 per share, in the context of the squeeze out of minority shareholders (Appraisal Proceeding). The dispute mainly concerns the valuation of UCB AG, which is the basis for the calculation of the price to be paid to the former minority shareholders. At present the proceeding is pending in the first instance. The District Court of Munich has appointed experts for the valuation of UCB AG at the time of the squeeze-out, who have submitted their opinion in November 2017. The experts have confirmed that the valuation of UCB AG for the purposes of the squeeze-out cash compensation was by and large adequate. The court-appointed experts have, however, identified certain value effects which, in the opinion of the experts, could lead to a value increase of UCB AG’s former subsidiaries Bank Austria and certain CEE financial institutions. Against this background, the experts question the appropriateness of the purchase prices paid before the squeeze-out by the parent company UniCredit S.p.A. to UCB AG for UCB Austria and for the said CEE financial institutions. The opinion of the experts does not bind the court. Both the parent company UniCredit S.p.A. and the applicants have submitted comments on the expert opinion to the court, which has asked the court-appointed experts to prepare a supplemental expert opinion on these comments by September 2019. The next oral hearing is scheduled for February 2020. It will then be upon the court of first instance to decide on the request of the minority shareholders based on the expert opinion and the legal issues that are relevant and material to the decision of the court. The parent company UniCredit S.p.A. continues to believe that it has fully complied with applicable law and that the amount paid to the minority shareholders was adequate. It will vigorously defend this position in the ongoing proceedings and has submitted its comments on the expert opinion to the court. The decision of first instance will be subject to appeal. Thus, at this stage, it is not possible to estimate the duration of the proceeding, which might also last for a number of years and could result in the parent company UniCredit S.p.A. having to pay additional cash compensation to the former shareholders. No estimate on the amount in dispute can be made at the current stage of the proceeding. Squeeze-out of UCB Austria’s minority shareholders (Appraisal Proceeding) In 2008, approximately 70 former minority shareholders in UCB Austria commenced proceedings before the Commercial Court of Vienna claiming that the squeeze-out price paid to them, equal to €129.4 per share, was inadequate, and asking the court to review the adequacy of the amount paid (Appraisal Proceeding). The Commercial Court of Vienna referred the case to a panel, called the “Gremium”, to investigate the facts of the case in order to review the adequacy of the cash compensation. On 26 June 2018, the Gremium issued its opinion consistent with the opinions of its experts that had been given in December 2011 and May 2013, and which were, in general, positive for the parent company UniCredit S.p.A. The Gremium referred the case back to the Commercial Court of Vienna. The parent company UniCredit S.p.A. submitted its comments to the Court on the Gremium’s decision at the end of July 2018 along with other parties. The proceedings will continue before the Commercial Court of Vienna who has ordered the parties to submit additional documents to the court and will decide on the price evaluation and other legal matters. The parent company UniCredit S.p.A., considering the nature of the valuation methods used, believes that the amount paid to the minority shareholders was adequate. At present, it is not possible to evaluate the amount under dispute and the possible risk connected with the above described Appraisal Proceeding. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 404 2018 Annual Report and Accounts · UniCredit UCB Austria has been named as a defendant in criminal proceedings in Austria concerning the Madoff case on allegations that UCB Austria breached provisions of the Austrian Investment Fund Act as prospectus controller of the Primeo fund; other allegations are related to the level of fees and embezzlement. In the past, parts of the complaints have already been closed. The criminal proceedings regarding the other allegations are still at the investigation stage and no official indictments against UCB Austria have been brought by the Austrian prosecutor, therefore, it is not possible to estimate the sanctions (if any) that would be imposed on UCB Austria as well as the potential joint liability of UCB Austria. Certain potential consequences In addition to the foregoing proceedings and investigations stemming from the Madoff case against the parent company UniCredit S.p.A., its subsidiaries and some of their respective employees and former employees, subject to any applicable limitations on the time by when proceedings must be brought, additional Madoff-related proceedings may be filed in the future in the United States, Austria or elsewhere. Such potential future proceedings could be filed against the parent company UniCredit S.p.A., its subsidiaries, their respective employees or former employees or entities with which the parent company UniCredit S.p.A. is affiliated or may have investments in. The pending or possible future proceedings may have negative consequences for the UniCredit group. Save as described above, at the moment, it is not possible to estimate reliably the timing and results of the various proceedings, nor determine the level of liability, if any responsibility exists. Save as described above, in compliance with international accounting standards, no provisions have been made for specific risks associated with Madoff related claims and charges. Proceedings arising out of the purchase of UCB AG by the parent company UniCredit S.p.A. and the related Group reorganization. Squeeze-out of UCB AG minority shareholders (Appraisal Proceeding) In 2008, approximately 300 former minority shareholders of UCB AG filed a request before the District Court of Munich I to have a review of the price paid to them by the parent company UniCredit S.p.A., equal to €38.26 per share, in the context of the squeeze out of minority shareholders (Appraisal Proceeding). The dispute mainly concerns the valuation of UCB AG, which is the basis for the calculation of the price to be paid to the former minority shareholders. At present the proceeding is pending in the first instance. The District Court of Munich has appointed experts for the valuation of UCB AG at the time of the squeeze-out, who have submitted their opinion in November 2017. The experts have confirmed that the valuation of UCB AG for the purposes of the squeeze-out cash compensation was by and large adequate. The court-appointed experts have, however, identified certain value effects which, in the opinion of the experts, could lead to a value increase of UCB AG’s former subsidiaries Bank Austria and certain CEE financial institutions. Against this background, the experts question the appropriateness of the purchase prices paid before the squeeze-out by the parent company UniCredit S.p.A. to UCB AG for UCB Austria and for the said CEE financial institutions. The opinion of the experts does not bind the court. Both the parent company UniCredit S.p.A. and the applicants have submitted comments on the expert opinion to the court, which has asked the court-appointed experts to prepare a supplemental expert opinion on these comments by September 2019. The next oral hearing is scheduled for February 2020. It will then be upon the court of first instance to decide on the request of the minority shareholders based on the expert opinion and the legal issues that are relevant and material to the decision of the court. The parent company UniCredit S.p.A. continues to believe that it has fully complied with applicable law and that the amount paid to the minority shareholders was adequate. It will vigorously defend this position in the ongoing proceedings and has submitted its comments on the expert opinion to the court. The decision of first instance will be subject to appeal. Thus, at this stage, it is not possible to estimate the duration of the proceeding, which might also last for a number of years and could result in the parent company UniCredit S.p.A. having to pay additional cash compensation to the former shareholders. No estimate on the amount in dispute can be made at the current stage of the proceeding. Squeeze-out of UCB Austria’s minority shareholders (Appraisal Proceeding) In 2008, approximately 70 former minority shareholders in UCB Austria commenced proceedings before the Commercial Court of Vienna claiming that the squeeze-out price paid to them, equal to €129.4 per share, was inadequate, and asking the court to review the adequacy of the amount paid (Appraisal Proceeding). The Commercial Court of Vienna referred the case to a panel, called the “Gremium”, to investigate the facts of the case in order to review the adequacy of the cash compensation. On 26 June 2018, the Gremium issued its opinion consistent with the opinions of its experts that had been given in December 2011 and May 2013, and which were, in general, positive for the parent company UniCredit S.p.A. The Gremium referred the case back to the Commercial Court of Vienna. The parent company UniCredit S.p.A. submitted its comments to the Court on the Gremium’s decision at the end of July 2018 along with other parties. The proceedings will continue before the Commercial Court of Vienna who has ordered the parties to submit additional documents to the court and will decide on the price evaluation and other legal matters. The parent company UniCredit S.p.A., considering the nature of the valuation methods used, believes that the amount paid to the minority shareholders was adequate. At present, it is not possible to evaluate the amount under dispute and the possible risk connected with the above described Appraisal Proceeding. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 405 Financial sanctions matters In the past years, violations of US sanctions and certain US dollar payment practices have resulted in certain financial institutions entering into settlements and paying substantial fines and penalties to various US authorities, including the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of Justice (“DOJ”), the District Attorney for New York County (“NYDA”), the U.S. Federal Reserve (“Fed”) and the New York Department of Financial Services (“DFS”). More specifically, in March 2011, UCB AG received a subpoena from the NYDA relating to historical transactions involving certain Iranian entities designated by OFAC and their affiliates. In June 2012, the DOJ opened an investigation of OFAC-related compliance by UCB AG and its subsidiaries more generally. In this context, UCB AG conducted a voluntary investigation of its U.S. dollar payments practices and its historical compliance with applicable U.S. financial sanctions, in the course of which certain historical non-transparent practices have been identified. In addition, UCB Austria independently conducted a voluntary investigation of its historical compliance with applicable U.S. financial sanctions and has similarly identified certain historical non-transparent practices. The parent company UniCredit S.p.A. has also in conducted a voluntary review of its historical compliance with applicable U.S. financial sanctions. Each of these entities is cooperating with the relevant U.S. authorities and remediation activities relating to policies and procedures have commenced and are ongoing. Each Group entity subject to investigations is updating its regulators as appropriate. It is also possible that investigations into historical compliance practices may be extended to other companies within the Group or that new investigations or proceedings may be commenced against the parent company UniCredit S.p.A. and/or the Group. Recent violations of U.S. sanctions and certain U.S. dollar payment practices by other European financial institutions have resulted in those institutions entering into settlements and paying material fines and penalties to various U.S. authorities. The investigations and/or proceedings into certain Group companies could therefore result in the payment of material fines and/or criminal or civil penalties. The parent company UniCredit S.p.A., UCB AG and UCB Austria AG continue settlement discussions with the relevant US authorities to come to a resolution of these matters. Discussions are ongoing and the parent company UniCredit S.p.A. and the Group companies have not yet entered into any agreement with these authorities. Therefore it is not possible to determine with any certainty the terms and timing of any resolution with any relevant authorities, including what final costs, remediation, payments or other criminal or civil liability may occur in connection with a final resolution. The investigation costs, remediation required and/or payments or other legal liabilities to be incurred in connection with the proceedings could lead to liquidity outflows, potentially affect net results and have a material adverse effect on a reputational basis and business activities. The Group booked provisions which are deemed appropriate. The timing of any agreement with the various U.S. authorities is currently not determinable, however it is possible that settlement discussions with any or all of the Group entities could be completed by the end of the first semester of 2019. Proceeding relating to certain forms of banking operations The UniCredit group is named as a defendant in several proceedings in matters connected to its operations with clients, which are not specific to the UniCredit group, rather affect the financial sector in general. In this regard, as of 31 December 2018 (i) proceedings against the parent company UniCredit S.p.A. pertaining to compound interest, typical of the Italian market, had a total claimed amount of €1.169 million, mediations included; (ii) proceedings pertaining to derivative products, mainly affecting the Italian market (for which the claimed amount against the parent company UniCredit S.p.A. was €767 million, mediations included) and the German market (for which the claimed amount against UCB AG was €91.8 million); and (iii) proceedings relating to foreign currency loans, mainly affecting the CEE countries (for which the claimed amount was around €44 million). The proceedings pertaining to compound interest mainly involve damages requests from clients arising from the alleged unlawfulness of the calculation methods of the amount of interest payable in connection with certain banking contracts. Starting from the first years of 2000, there has been a progressive increase in claims brought by the account holders due to the unwinding of the interest payable arisen from the quarterly compound interest. In the course of 2018, the number of claims for refunds/compensation for compound interest did not show particular variations compared to 2017. At present, the parent company UniCredit S.p.A. has made provisions that it deems appropriate for the risks associated with these claims. With regard to the litigation connected to derivative products, several financial institutions, including UniCredit group companies, entered into a number of derivative contracts, both with institutional and non-institutional investors. In Germany and in Italy there are a number of pending proceedings against certain Group companies that relate to derivative contracts concluded by both institutional and non-institutional investors. The filing of such litigations affects the financial sector generally and is not specific to the parent company UniCredit S.p.A. and its Group companies. At present, it is not possible to assess the full impact of these legal challenges on the Group. With respect to proceedings relating to foreign currency loans, in the last decade, a significant number of customers in the Central and Eastern Europe area took out loans and mortgages denominated in a foreign currency (“FX”). In a number of instances customers, or consumer associations acting on their behalf, have sought to renegotiate the terms of such FX loans and mortgages, including having the loan principal and associated interest payments redenominated in the local currency at the time that the loan was taken out, and floating rates retrospectively changed to fixed rates. In addition, in a number of countries legislation that impacts FX loans was proposed or implemented. These developments resulted in litigation against subsidiaries of the parent company UniCredit S.p.A. in a number of CEE countries including Croatia, Hungary, Romania, Slovenia and Serbia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 405 Financial sanctions matters In the past years, violations of US sanctions and certain US dollar payment practices have resulted in certain financial institutions entering into settlements and paying substantial fines and penalties to various US authorities, including the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of Justice (“DOJ”), the District Attorney for New York County (“NYDA”), the U.S. Federal Reserve (“Fed”) and the New York Department of Financial Services (“DFS”). More specifically, in March 2011, UCB AG received a subpoena from the NYDA relating to historical transactions involving certain Iranian entities designated by OFAC and their affiliates. In June 2012, the DOJ opened an investigation of OFAC-related compliance by UCB AG and its subsidiaries more generally. In this context, UCB AG conducted a voluntary investigation of its U.S. dollar payments practices and its historical compliance with applicable U.S. financial sanctions, in the course of which certain historical non-transparent practices have been identified. In addition, UCB Austria independently conducted a voluntary investigation of its historical compliance with applicable U.S. financial sanctions and has similarly identified certain historical non-transparent practices. The parent company UniCredit S.p.A. has also in conducted a voluntary review of its historical compliance with applicable U.S. financial sanctions. Each of these entities is cooperating with the relevant U.S. authorities and remediation activities relating to policies and procedures have commenced and are ongoing. Each Group entity subject to investigations is updating its regulators as appropriate. It is also possible that investigations into historical compliance practices may be extended to other companies within the Group or that new investigations or proceedings may be commenced against the parent company UniCredit S.p.A. and/or the Group. Recent violations of U.S. sanctions and certain U.S. dollar payment practices by other European financial institutions have resulted in those institutions entering into settlements and paying material fines and penalties to various U.S. authorities. The investigations and/or proceedings into certain Group companies could therefore result in the payment of material fines and/or criminal or civil penalties. The parent company UniCredit S.p.A., UCB AG and UCB Austria AG continue settlement discussions with the relevant US authorities to come to a resolution of these matters. Discussions are ongoing and the parent company UniCredit S.p.A. and the Group companies have not yet entered into any agreement with these authorities. Therefore it is not possible to determine with any certainty the terms and timing of any resolution with any relevant authorities, including what final costs, remediation, payments or other criminal or civil liability may occur in connection with a final resolution. The investigation costs, remediation required and/or payments or other legal liabilities to be incurred in connection with the proceedings could lead to liquidity outflows, potentially affect net results and have a material adverse effect on a reputational basis and business activities. The Group booked provisions which are deemed appropriate. The timing of any agreement with the various U.S. authorities is currently not determinable, however it is possible that settlement discussions with any or all of the Group entities could be completed by the end of the first semester of 2019. Proceeding relating to certain forms of banking operations The UniCredit group is named as a defendant in several proceedings in matters connected to its operations with clients, which are not specific to the UniCredit group, rather affect the financial sector in general. In this regard, as of 31 December 2018 (i) proceedings against the parent company UniCredit S.p.A. pertaining to compound interest, typical of the Italian market, had a total claimed amount of €1.169 million, mediations included; (ii) proceedings pertaining to derivative products, mainly affecting the Italian market (for which the claimed amount against the parent company UniCredit S.p.A. was €767 million, mediations included) and the German market (for which the claimed amount against UCB AG was €91.8 million); and (iii) proceedings relating to foreign currency loans, mainly affecting the CEE countries (for which the claimed amount was around €44 million). The proceedings pertaining to compound interest mainly involve damages requests from clients arising from the alleged unlawfulness of the calculation methods of the amount of interest payable in connection with certain banking contracts. Starting from the first years of 2000, there has been a progressive increase in claims brought by the account holders due to the unwinding of the interest payable arisen from the quarterly compound interest. In the course of 2018, the number of claims for refunds/compensation for compound interest did not show particular variations compared to 2017. At present, the parent company UniCredit S.p.A. has made provisions that it deems appropriate for the risks associated with these claims. With regard to the litigation connected to derivative products, several financial institutions, including UniCredit group companies, entered into a number of derivative contracts, both with institutional and non-institutional investors. In Germany and in Italy there are a number of pending proceedings against certain Group companies that relate to derivative contracts concluded by both institutional and non-institutional investors. The filing of such litigations affects the financial sector generally and is not specific to the parent company UniCredit S.p.A. and its Group companies. At present, it is not possible to assess the full impact of these legal challenges on the Group. With respect to proceedings relating to foreign currency loans, in the last decade, a significant number of customers in the Central and Eastern Europe area took out loans and mortgages denominated in a foreign currency (“FX”). In a number of instances customers, or consumer associations acting on their behalf, have sought to renegotiate the terms of such FX loans and mortgages, including having the loan principal and associated interest payments redenominated in the local currency at the time that the loan was taken out, and floating rates retrospectively changed to fixed rates. In addition, in a number of countries legislation that impacts FX loans was proposed or implemented. These developments resulted in litigation against subsidiaries of the parent company UniCredit S.p.A. in a number of CEE countries including Croatia, Hungary, Romania, Slovenia and Serbia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 405 Financial sanctions matters In the past years, violations of US sanctions and certain US dollar payment practices have resulted in certain financial institutions entering into settlements and paying substantial fines and penalties to various US authorities, including the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of Justice (“DOJ”), the District Attorney for New York County (“NYDA”), the U.S. Federal Reserve (“Fed”) and the New York Department of Financial Services (“DFS”). More specifically, in March 2011, UCB AG received a subpoena from the NYDA relating to historical transactions involving certain Iranian entities designated by OFAC and their affiliates. In June 2012, the DOJ opened an investigation of OFAC-related compliance by UCB AG and its subsidiaries more generally. In this context, UCB AG conducted a voluntary investigation of its U.S. dollar payments practices and its historical compliance with applicable U.S. financial sanctions, in the course of which certain historical non-transparent practices have been identified. In addition, UCB Austria independently conducted a voluntary investigation of its historical compliance with applicable U.S. financial sanctions and has similarly identified certain historical non-transparent practices. The parent company UniCredit S.p.A. has also in conducted a voluntary review of its historical compliance with applicable U.S. financial sanctions. Each of these entities is cooperating with the relevant U.S. authorities and remediation activities relating to policies and procedures have commenced and are ongoing. Each Group entity subject to investigations is updating its regulators as appropriate. It is also possible that investigations into historical compliance practices may be extended to other companies within the Group or that new investigations or proceedings may be commenced against the parent company UniCredit S.p.A. and/or the Group. Recent violations of U.S. sanctions and certain U.S. dollar payment practices by other European financial institutions have resulted in those institutions entering into settlements and paying material fines and penalties to various U.S. authorities. The investigations and/or proceedings into certain Group companies could therefore result in the payment of material fines and/or criminal or civil penalties. The parent company UniCredit S.p.A., UCB AG and UCB Austria AG continue settlement discussions with the relevant US authorities to come to a resolution of these matters. Discussions are ongoing and the parent company UniCredit S.p.A. and the Group companies have not yet entered into any agreement with these authorities. Therefore it is not possible to determine with any certainty the terms and timing of any resolution with any relevant authorities, including what final costs, remediation, payments or other criminal or civil liability may occur in connection with a final resolution. The investigation costs, remediation required and/or payments or other legal liabilities to be incurred in connection with the proceedings could lead to liquidity outflows, potentially affect net results and have a material adverse effect on a reputational basis and business activities. The Group booked provisions which are deemed appropriate. The timing of any agreement with the various U.S. authorities is currently not determinable, however it is possible that settlement discussions with any or all of the Group entities could be completed by the end of the first semester of 2019. Proceeding relating to certain forms of banking operations The UniCredit group is named as a defendant in several proceedings in matters connected to its operations with clients, which are not specific to the UniCredit group, rather affect the financial sector in general. In this regard, as of 31 December 2018 (i) proceedings against the parent company UniCredit S.p.A. pertaining to compound interest, typical of the Italian market, had a total claimed amount of €1.169 million, mediations included; (ii) proceedings pertaining to derivative products, mainly affecting the Italian market (for which the claimed amount against the parent company UniCredit S.p.A. was €767 million, mediations included) and the German market (for which the claimed amount against UCB AG was €91.8 million); and (iii) proceedings relating to foreign currency loans, mainly affecting the CEE countries (for which the claimed amount was around €44 million). The proceedings pertaining to compound interest mainly involve damages requests from clients arising from the alleged unlawfulness of the calculation methods of the amount of interest payable in connection with certain banking contracts. Starting from the first years of 2000, there has been a progressive increase in claims brought by the account holders due to the unwinding of the interest payable arisen from the quarterly compound interest. In the course of 2018, the number of claims for refunds/compensation for compound interest did not show particular variations compared to 2017. At present, the parent company UniCredit S.p.A. has made provisions that it deems appropriate for the risks associated with these claims. With regard to the litigation connected to derivative products, several financial institutions, including UniCredit group companies, entered into a number of derivative contracts, both with institutional and non-institutional investors. In Germany and in Italy there are a number of pending proceedings against certain Group companies that relate to derivative contracts concluded by both institutional and non-institutional investors. The filing of such litigations affects the financial sector generally and is not specific to the parent company UniCredit S.p.A. and its Group companies. At present, it is not possible to assess the full impact of these legal challenges on the Group. With respect to proceedings relating to foreign currency loans, in the last decade, a significant number of customers in the Central and Eastern Europe area took out loans and mortgages denominated in a foreign currency (“FX”). In a number of instances customers, or consumer associations acting on their behalf, have sought to renegotiate the terms of such FX loans and mortgages, including having the loan principal and associated interest payments redenominated in the local currency at the time that the loan was taken out, and floating rates retrospectively changed to fixed rates. In addition, in a number of countries legislation that impacts FX loans was proposed or implemented. These developments resulted in litigation against subsidiaries of the parent company UniCredit S.p.A. in a number of CEE countries including Croatia, Hungary, Romania, Slovenia and Serbia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 405 Financial sanctions matters In the past years, violations of US sanctions and certain US dollar payment practices have resulted in certain financial institutions entering into settlements and paying substantial fines and penalties to various US authorities, including the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of Justice (“DOJ”), the District Attorney for New York County (“NYDA”), the U.S. Federal Reserve (“Fed”) and the New York Department of Financial Services (“DFS”). More specifically, in March 2011, UCB AG received a subpoena from the NYDA relating to historical transactions involving certain Iranian entities designated by OFAC and their affiliates. In June 2012, the DOJ opened an investigation of OFAC-related compliance by UCB AG and its subsidiaries more generally. In this context, UCB AG conducted a voluntary investigation of its U.S. dollar payments practices and its historical compliance with applicable U.S. financial sanctions, in the course of which certain historical non-transparent practices have been identified. In addition, UCB Austria independently conducted a voluntary investigation of its historical compliance with applicable U.S. financial sanctions and has similarly identified certain historical non-transparent practices. The parent company UniCredit S.p.A. has also in conducted a voluntary review of its historical compliance with applicable U.S. financial sanctions. Each of these entities is cooperating with the relevant U.S. authorities and remediation activities relating to policies and procedures have commenced and are ongoing. Each Group entity subject to investigations is updating its regulators as appropriate. It is also possible that investigations into historical compliance practices may be extended to other companies within the Group or that new investigations or proceedings may be commenced against the parent company UniCredit S.p.A. and/or the Group. Recent violations of U.S. sanctions and certain U.S. dollar payment practices by other European financial institutions have resulted in those institutions entering into settlements and paying material fines and penalties to various U.S. authorities. The investigations and/or proceedings into certain Group companies could therefore result in the payment of material fines and/or criminal or civil penalties. The parent company UniCredit S.p.A., UCB AG and UCB Austria AG continue settlement discussions with the relevant US authorities to come to a resolution of these matters. Discussions are ongoing and the parent company UniCredit S.p.A. and the Group companies have not yet entered into any agreement with these authorities. Therefore it is not possible to determine with any certainty the terms and timing of any resolution with any relevant authorities, including what final costs, remediation, payments or other criminal or civil liability may occur in connection with a final resolution. The investigation costs, remediation required and/or payments or other legal liabilities to be incurred in connection with the proceedings could lead to liquidity outflows, potentially affect net results and have a material adverse effect on a reputational basis and business activities. The Group booked provisions which are deemed appropriate. The timing of any agreement with the various U.S. authorities is currently not determinable, however it is possible that settlement discussions with any or all of the Group entities could be completed by the end of the first semester of 2019. Proceeding relating to certain forms of banking operations The UniCredit group is named as a defendant in several proceedings in matters connected to its operations with clients, which are not specific to the UniCredit group, rather affect the financial sector in general. In this regard, as of 31 December 2018 (i) proceedings against the parent company UniCredit S.p.A. pertaining to compound interest, typical of the Italian market, had a total claimed amount of €1.169 million, mediations included; (ii) proceedings pertaining to derivative products, mainly affecting the Italian market (for which the claimed amount against the parent company UniCredit S.p.A. was €767 million, mediations included) and the German market (for which the claimed amount against UCB AG was €91.8 million); and (iii) proceedings relating to foreign currency loans, mainly affecting the CEE countries (for which the claimed amount was around €44 million). The proceedings pertaining to compound interest mainly involve damages requests from clients arising from the alleged unlawfulness of the calculation methods of the amount of interest payable in connection with certain banking contracts. Starting from the first years of 2000, there has been a progressive increase in claims brought by the account holders due to the unwinding of the interest payable arisen from the quarterly compound interest. In the course of 2018, the number of claims for refunds/compensation for compound interest did not show particular variations compared to 2017. At present, the parent company UniCredit S.p.A. has made provisions that it deems appropriate for the risks associated with these claims. With regard to the litigation connected to derivative products, several financial institutions, including UniCredit group companies, entered into a number of derivative contracts, both with institutional and non-institutional investors. In Germany and in Italy there are a number of pending proceedings against certain Group companies that relate to derivative contracts concluded by both institutional and non-institutional investors. The filing of such litigations affects the financial sector generally and is not specific to the parent company UniCredit S.p.A. and its Group companies. At present, it is not possible to assess the full impact of these legal challenges on the Group. With respect to proceedings relating to foreign currency loans, in the last decade, a significant number of customers in the Central and Eastern Europe area took out loans and mortgages denominated in a foreign currency (“FX”). In a number of instances customers, or consumer associations acting on their behalf, have sought to renegotiate the terms of such FX loans and mortgages, including having the loan principal and associated interest payments redenominated in the local currency at the time that the loan was taken out, and floating rates retrospectively changed to fixed rates. In addition, in a number of countries legislation that impacts FX loans was proposed or implemented. These developments resulted in litigation against subsidiaries of the parent company UniCredit S.p.A. in a number of CEE countries including Croatia, Hungary, Romania, Slovenia and Serbia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 405 Financial sanctions matters In the past years, violations of US sanctions and certain US dollar payment practices have resulted in certain financial institutions entering into settlements and paying substantial fines and penalties to various US authorities, including the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of Justice (“DOJ”), the District Attorney for New York County (“NYDA”), the U.S. Federal Reserve (“Fed”) and the New York Department of Financial Services (“DFS”). More specifically, in March 2011, UCB AG received a subpoena from the NYDA relating to historical transactions involving certain Iranian entities designated by OFAC and their affiliates. In June 2012, the DOJ opened an investigation of OFAC-related compliance by UCB AG and its subsidiaries more generally. In this context, UCB AG conducted a voluntary investigation of its U.S. dollar payments practices and its historical compliance with applicable U.S. financial sanctions, in the course of which certain historical non-transparent practices have been identified. In addition, UCB Austria independently conducted a voluntary investigation of its historical compliance with applicable U.S. financial sanctions and has similarly identified certain historical non-transparent practices. The parent company UniCredit S.p.A. has also in conducted a voluntary review of its historical compliance with applicable U.S. financial sanctions. Each of these entities is cooperating with the relevant U.S. authorities and remediation activities relating to policies and procedures have commenced and are ongoing. Each Group entity subject to investigations is updating its regulators as appropriate. It is also possible that investigations into historical compliance practices may be extended to other companies within the Group or that new investigations or proceedings may be commenced against the parent company UniCredit S.p.A. and/or the Group. Recent violations of U.S. sanctions and certain U.S. dollar payment practices by other European financial institutions have resulted in those institutions entering into settlements and paying material fines and penalties to various U.S. authorities. The investigations and/or proceedings into certain Group companies could therefore result in the payment of material fines and/or criminal or civil penalties. The parent company UniCredit S.p.A., UCB AG and UCB Austria AG continue settlement discussions with the relevant US authorities to come to a resolution of these matters. Discussions are ongoing and the parent company UniCredit S.p.A. and the Group companies have not yet entered into any agreement with these authorities. Therefore it is not possible to determine with any certainty the terms and timing of any resolution with any relevant authorities, including what final costs, remediation, payments or other criminal or civil liability may occur in connection with a final resolution. The investigation costs, remediation required and/or payments or other legal liabilities to be incurred in connection with the proceedings could lead to liquidity outflows, potentially affect net results and have a material adverse effect on a reputational basis and business activities. The Group booked provisions which are deemed appropriate. The timing of any agreement with the various U.S. authorities is currently not determinable, however it is possible that settlement discussions with any or all of the Group entities could be completed by the end of the first semester of 2019. Proceeding relating to certain forms of banking operations The UniCredit group is named as a defendant in several proceedings in matters connected to its operations with clients, which are not specific to the UniCredit group, rather affect the financial sector in general. In this regard, as of 31 December 2018 (i) proceedings against the parent company UniCredit S.p.A. pertaining to compound interest, typical of the Italian market, had a total claimed amount of €1.169 million, mediations included; (ii) proceedings pertaining to derivative products, mainly affecting the Italian market (for which the claimed amount against the parent company UniCredit S.p.A. was €767 million, mediations included) and the German market (for which the claimed amount against UCB AG was €91.8 million); and (iii) proceedings relating to foreign currency loans, mainly affecting the CEE countries (for which the claimed amount was around €44 million). The proceedings pertaining to compound interest mainly involve damages requests from clients arising from the alleged unlawfulness of the calculation methods of the amount of interest payable in connection with certain banking contracts. Starting from the first years of 2000, there has been a progressive increase in claims brought by the account holders due to the unwinding of the interest payable arisen from the quarterly compound interest. In the course of 2018, the number of claims for refunds/compensation for compound interest did not show particular variations compared to 2017. At present, the parent company UniCredit S.p.A. has made provisions that it deems appropriate for the risks associated with these claims. With regard to the litigation connected to derivative products, several financial institutions, including UniCredit group companies, entered into a number of derivative contracts, both with institutional and non-institutional investors. In Germany and in Italy there are a number of pending proceedings against certain Group companies that relate to derivative contracts concluded by both institutional and non-institutional investors. The filing of such litigations affects the financial sector generally and is not specific to the parent company UniCredit S.p.A. and its Group companies. At present, it is not possible to assess the full impact of these legal challenges on the Group. With respect to proceedings relating to foreign currency loans, in the last decade, a significant number of customers in the Central and Eastern Europe area took out loans and mortgages denominated in a foreign currency (“FX”). In a number of instances customers, or consumer associations acting on their behalf, have sought to renegotiate the terms of such FX loans and mortgages, including having the loan principal and associated interest payments redenominated in the local currency at the time that the loan was taken out, and floating rates retrospectively changed to fixed rates. In addition, in a number of countries legislation that impacts FX loans was proposed or implemented. These developments resulted in litigation against subsidiaries of the parent company UniCredit S.p.A. in a number of CEE countries including Croatia, Hungary, Romania, Slovenia and Serbia. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 406 2018 Annual Report and Accounts · UniCredit In Croatia, following the implementation in September 2015 of a new law that rewrote the terms of FX loan contracts, a number of these lawsuits were withdrawn as customers took advantage of the benefits of the new law. Zagrebačka Banka (“Zaba”) challenged the new law before the Croatian Constitutional Court. On 4 April 2017, the Constitutional Court rejected Zaba's constitutional challenge and no further remedies are available under local laws. In 21 September 2016, UCB Austria and Zaba initiated a claim against the Republic of Croatia under the Agreement between the Government of the Republic of Austria and the Government of the Republic of Croatia for the promotion and protection of investments in order to recover the losses suffered as a result of amendments in 2015 to the Consumer Lending Act and Credit Institutions Act mandating the conversion of Swiss franc-linked loans into Euro-linked. In the interim, Zaba complied with the provisions of the new law and adjusted accordingly all the respective contracts where the customers requested so. Following a hearing, the arbitral tribunal ruled on part of the Respondent’s jurisdictional objections. The arbitral proceedings remain pending. Vanderbilt related litigations Claims brought or threatened by or on behalf of the State of New Mexico or any of its agencies or funds. In August 2006, the New Mexico Educational Retirement Board (“ERB”) and the New Mexico State Investment Council (“SIC”), both US state funds, invested $90 million in Vanderbilt Financial, LLC (“VF”), a vehicle sponsored by Vanderbilt Capital Advisors, LLC (“VCA”). VCA is a subsidiary of Pioneer Investment Management USA Inc., at the time an indirect subsidiary of the parent company UniCredit S.p.A. The purpose of VF was to invest in the equity tranche of various collateralized debt obligations (“CDOs”) managed primarily by VCA. The equity investments in VF, including those made by the ERB and SIC, became worthless. VF was later liquidated. Beginning in 2009, several lawsuits were threatened or filed (some of which were later dismissed) on behalf of the State of New Mexico relating to the dealings between VCA and the State of New Mexico. These lawsuits include proceedings launched by a former employee of the State of New Mexico who claimed the right, pursuant to the law of the State of New Mexico, to act as a representative of the State for the losses suffered by the State of New Mexico with regard to investments managed by VCA. In these proceedings, in addition to VCA, Pioneer Investment Management USA Inc., PGAM and the parent company UniCredit S.p.A. were also named as defendants, by virtue of their respective corporate affiliation with VCA, as described in the previous paragraph. In addition, two class actions were launched with regard to VCA on behalf of the public pension fund managed by ERB and the State of New Mexico threatened to launch a case against VCA if its claim was not satisfied. These suits threatened or instigated relate to losses suffered by the ERB and/or SIC on their VF investments, with additional claims threatened in relation to further losses suffered by SIC on its earlier investments in other VCA-managed CDOs. The lawsuits threatened or instigated allege fraud and kickback practices. Damages claimed in the lawsuits filed by or on behalf of the State of New Mexico are computed based on multiples of the original investment, up to a total of $365 million. In 2012, VCA reached an agreement with the ERB, SIC and State of New Mexico to settle for the sum of $24.25 million all claims brought or threatened by or on behalf of the State of New Mexico or any of its agencies or funds. The settlement amount was deposited into escrow at the beginning of 2013. The settlement is contingent on the Court’s approval, but that process was temporarily delayed, and the original litigation was stayed, pending the determination by the New Mexico Supreme Court of a legal matter in a lawsuit brought against a different set of defendants in other proceedings. The New Mexico Supreme Court issued its ruling on the awaited legal matter in June 2015 and in December 2015 VCA, the ERB, SIC, and the State of New Mexico renewed their request for Court approval of the settlement. The Court held a hearing on the matter in April 2016 and in June 2017 approved the settlement and directed that the claims against VCA be dismissed. A judgment to that effect was entered in September 2017 and a motion by the former State employee seeking to set aside that judgment was denied by the Court in October 2017. Appeals from the judgment and the subsequent order were taken in October and November 2017 and the settlement cannot be effectuated while the appeal remains pending. If the judgment is upheld on appeal, the escrowed amount will be paid over to the State of New Mexico and VCA, Pioneer Investment Management USA Inc., PGAM and the parent company UniCredit S.p.A. will all be released from all claims that were or could have been brought by or on behalf of the State or any of its agencies or funds. Divania S.r.l. In the first half of 2007, Divania S.r.l. (now in bankruptcy) (“Divania”) filed a suit in the Court of Bari against UniCredit Banca d’Impresa S.p.A. (then UniCredit Corporate Banking S.p.A. and now “UniCredit S.p.A.”) alleging violations of law and regulation (relating, inter alia, to financial products) in relation to certain rate and currency derivative transactions created between January 2000 and May 2005 first by Credito Italiano S.p.A. and subsequently by UniCredit Banca d’Impresa S.p.A. (now “UniCredit S.p.A.”). The plaintiff requests that the contracts be declared non-existent, or failing that, null and void or to be cancelled or terminated, and that UniCredit Banca d’Impresa S.p.A. pay the plaintiff a total of €276.6 million as well as legal fees and interest. It also seeks the nullification of a settlement that the parties reached in 2005 under which Divania had agreed to waive any claims in respect of the transactions. The parent company UniCredit S.p.A. rejects Divania demands. Without prejudice to its rejection of liability, it maintains that the amount claimed has been calculated by aggregating all the debits made (for an amount much larger than the actual amount), without taking into account the credits received that significantly reduce the plaintiff’s demands. In 2010, the Court-appointed expert witness submitted a report that largely confirms the Bank’s position stating that there was a loss on derivatives amounting to about €6,4 million (which would increase to €10,884 million should the out- Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 406 2018 Annual Report and Accounts · UniCredit In Croatia, following the implementation in September 2015 of a new law that rewrote the terms of FX loan contracts, a number of these lawsuits were withdrawn as customers took advantage of the benefits of the new law. Zagrebačka Banka (“Zaba”) challenged the new law before the Croatian Constitutional Court. On 4 April 2017, the Constitutional Court rejected Zaba's constitutional challenge and no further remedies are available under local laws. In 21 September 2016, UCB Austria and Zaba initiated a claim against the Republic of Croatia under the Agreement between the Government of the Republic of Austria and the Government of the Republic of Croatia for the promotion and protection of investments in order to recover the losses suffered as a result of amendments in 2015 to the Consumer Lending Act and Credit Institutions Act mandating the conversion of Swiss franc-linked loans into Euro-linked. In the interim, Zaba complied with the provisions of the new law and adjusted accordingly all the respective contracts where the customers requested so. Following a hearing, the arbitral tribunal ruled on part of the Respondent’s jurisdictional objections. The arbitral proceedings remain pending. Vanderbilt related litigations Claims brought or threatened by or on behalf of the State of New Mexico or any of its agencies or funds. In August 2006, the New Mexico Educational Retirement Board (“ERB”) and the New Mexico State Investment Council (“SIC”), both US state funds, invested $90 million in Vanderbilt Financial, LLC (“VF”), a vehicle sponsored by Vanderbilt Capital Advisors, LLC (“VCA”). VCA is a subsidiary of Pioneer Investment Management USA Inc., at the time an indirect subsidiary of the parent company UniCredit S.p.A. The purpose of VF was to invest in the equity tranche of various collateralized debt obligations (“CDOs”) managed primarily by VCA. The equity investments in VF, including those made by the ERB and SIC, became worthless. VF was later liquidated. Beginning in 2009, several lawsuits were threatened or filed (some of which were later dismissed) on behalf of the State of New Mexico relating to the dealings between VCA and the State of New Mexico. These lawsuits include proceedings launched by a former employee of the State of New Mexico who claimed the right, pursuant to the law of the State of New Mexico, to act as a representative of the State for the losses suffered by the State of New Mexico with regard to investments managed by VCA. In these proceedings, in addition to VCA, Pioneer Investment Management USA Inc., PGAM and the parent company UniCredit S.p.A. were also named as defendants, by virtue of their respective corporate affiliation with VCA, as described in the previous paragraph. In addition, two class actions were launched with regard to VCA on behalf of the public pension fund managed by ERB and the State of New Mexico threatened to launch a case against VCA if its claim was not satisfied. These suits threatened or instigated relate to losses suffered by the ERB and/or SIC on their VF investments, with additional claims threatened in relation to further losses suffered by SIC on its earlier investments in other VCA-managed CDOs. The lawsuits threatened or instigated allege fraud and kickback practices. Damages claimed in the lawsuits filed by or on behalf of the State of New Mexico are computed based on multiples of the original investment, up to a total of $365 million. In 2012, VCA reached an agreement with the ERB, SIC and State of New Mexico to settle for the sum of $24.25 million all claims brought or threatened by or on behalf of the State of New Mexico or any of its agencies or funds. The settlement amount was deposited into escrow at the beginning of 2013. The settlement is contingent on the Court’s approval, but that process was temporarily delayed, and the original litigation was stayed, pending the determination by the New Mexico Supreme Court of a legal matter in a lawsuit brought against a different set of defendants in other proceedings. The New Mexico Supreme Court issued its ruling on the awaited legal matter in June 2015 and in December 2015 VCA, the ERB, SIC, and the State of New Mexico renewed their request for Court approval of the settlement. The Court held a hearing on the matter in April 2016 and in June 2017 approved the settlement and directed that the claims against VCA be dismissed. A judgment to that effect was entered in September 2017 and a motion by the former State employee seeking to set aside that judgment was denied by the Court in October 2017. Appeals from the judgment and the subsequent order were taken in October and November 2017 and the settlement cannot be effectuated while the appeal remains pending. If the judgment is upheld on appeal, the escrowed amount will be paid over to the State of New Mexico and VCA, Pioneer Investment Management USA Inc., PGAM and the parent company UniCredit S.p.A. will all be released from all claims that were or could have been brought by or on behalf of the State or any of its agencies or funds. Divania S.r.l. In the first half of 2007, Divania S.r.l. (now in bankruptcy) (“Divania”) filed a suit in the Court of Bari against UniCredit Banca d’Impresa S.p.A. (then UniCredit Corporate Banking S.p.A. and now “UniCredit S.p.A.”) alleging violations of law and regulation (relating, inter alia, to financial products) in relation to certain rate and currency derivative transactions created between January 2000 and May 2005 first by Credito Italiano S.p.A. and subsequently by UniCredit Banca d’Impresa S.p.A. (now “UniCredit S.p.A.”). The plaintiff requests that the contracts be declared non-existent, or failing that, null and void or to be cancelled or terminated, and that UniCredit Banca d’Impresa S.p.A. pay the plaintiff a total of €276.6 million as well as legal fees and interest. It also seeks the nullification of a settlement that the parties reached in 2005 under which Divania had agreed to waive any claims in respect of the transactions. The parent company UniCredit S.p.A. rejects Divania demands. Without prejudice to its rejection of liability, it maintains that the amount claimed has been calculated by aggregating all the debits made (for an amount much larger than the actual amount), without taking into account the credits received that significantly reduce the plaintiff’s demands. In 2010, the Court-appointed expert witness submitted a report that largely confirms the Bank’s position stating that there was a loss on derivatives amounting to about €6,4 million (which would increase to €10,884 million should the out- Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 406 2018 Annual Report and Accounts · UniCredit In Croatia, following the implementation in September 2015 of a new law that rewrote the terms of FX loan contracts, a number of these lawsuits were withdrawn as customers took advantage of the benefits of the new law. Zagrebačka Banka (“Zaba”) challenged the new law before the Croatian Constitutional Court. On 4 April 2017, the Constitutional Court rejected Zaba's constitutional challenge and no further remedies are available under local laws. In 21 September 2016, UCB Austria and Zaba initiated a claim against the Republic of Croatia under the Agreement between the Government of the Republic of Austria and the Government of the Republic of Croatia for the promotion and protection of investments in order to recover the losses suffered as a result of amendments in 2015 to the Consumer Lending Act and Credit Institutions Act mandating the conversion of Swiss franc-linked loans into Euro-linked. In the interim, Zaba complied with the provisions of the new law and adjusted accordingly all the respective contracts where the customers requested so. Following a hearing, the arbitral tribunal ruled on part of the Respondent’s jurisdictional objections. The arbitral proceedings remain pending. Vanderbilt related litigations Claims brought or threatened by or on behalf of the State of New Mexico or any of its agencies or funds. In August 2006, the New Mexico Educational Retirement Board (“ERB”) and the New Mexico State Investment Council (“SIC”), both US state funds, invested $90 million in Vanderbilt Financial, LLC (“VF”), a vehicle sponsored by Vanderbilt Capital Advisors, LLC (“VCA”). VCA is a subsidiary of Pioneer Investment Management USA Inc., at the time an indirect subsidiary of the parent company UniCredit S.p.A. The purpose of VF was to invest in the equity tranche of various collateralized debt obligations (“CDOs”) managed primarily by VCA. The equity investments in VF, including those made by the ERB and SIC, became worthless. VF was later liquidated. Beginning in 2009, several lawsuits were threatened or filed (some of which were later dismissed) on behalf of the State of New Mexico relating to the dealings between VCA and the State of New Mexico. These lawsuits include proceedings launched by a former employee of the State of New Mexico who claimed the right, pursuant to the law of the State of New Mexico, to act as a representative of the State for the losses suffered by the State of New Mexico with regard to investments managed by VCA. In these proceedings, in addition to VCA, Pioneer Investment Management USA Inc., PGAM and the parent company UniCredit S.p.A. were also named as defendants, by virtue of their respective corporate affiliation with VCA, as described in the previous paragraph. In addition, two class actions were launched with regard to VCA on behalf of the public pension fund managed by ERB and the State of New Mexico threatened to launch a case against VCA if its claim was not satisfied. These suits threatened or instigated relate to losses suffered by the ERB and/or SIC on their VF investments, with additional claims threatened in relation to further losses suffered by SIC on its earlier investments in other VCA-managed CDOs. The lawsuits threatened or instigated allege fraud and kickback practices. Damages claimed in the lawsuits filed by or on behalf of the State of New Mexico are computed based on multiples of the original investment, up to a total of $365 million. In 2012, VCA reached an agreement with the ERB, SIC and State of New Mexico to settle for the sum of $24.25 million all claims brought or threatened by or on behalf of the State of New Mexico or any of its agencies or funds. The settlement amount was deposited into escrow at the beginning of 2013. The settlement is contingent on the Court’s approval, but that process was temporarily delayed, and the original litigation was stayed, pending the determination by the New Mexico Supreme Court of a legal matter in a lawsuit brought against a different set of defendants in other proceedings. The New Mexico Supreme Court issued its ruling on the awaited legal matter in June 2015 and in December 2015 VCA, the ERB, SIC, and the State of New Mexico renewed their request for Court approval of the settlement. The Court held a hearing on the matter in April 2016 and in June 2017 approved the settlement and directed that the claims against VCA be dismissed. A judgment to that effect was entered in September 2017 and a motion by the former State employee seeking to set aside that judgment was denied by the Court in October 2017. Appeals from the judgment and the subsequent order were taken in October and November 2017 and the settlement cannot be effectuated while the appeal remains pending. If the judgment is upheld on appeal, the escrowed amount will be paid over to the State of New Mexico and VCA, Pioneer Investment Management USA Inc., PGAM and the parent company UniCredit S.p.A. will all be released from all claims that were or could have been brought by or on behalf of the State or any of its agencies or funds. Divania S.r.l. In the first half of 2007, Divania S.r.l. (now in bankruptcy) (“Divania”) filed a suit in the Court of Bari against UniCredit Banca d’Impresa S.p.A. (then UniCredit Corporate Banking S.p.A. and now “UniCredit S.p.A.”) alleging violations of law and regulation (relating, inter alia, to financial products) in relation to certain rate and currency derivative transactions created between January 2000 and May 2005 first by Credito Italiano S.p.A. and subsequently by UniCredit Banca d’Impresa S.p.A. (now “UniCredit S.p.A.”). The plaintiff requests that the contracts be declared non-existent, or failing that, null and void or to be cancelled or terminated, and that UniCredit Banca d’Impresa S.p.A. pay the plaintiff a total of €276.6 million as well as legal fees and interest. It also seeks the nullification of a settlement that the parties reached in 2005 under which Divania had agreed to waive any claims in respect of the transactions. The parent company UniCredit S.p.A. rejects Divania demands. Without prejudice to its rejection of liability, it maintains that the amount claimed has been calculated by aggregating all the debits made (for an amount much larger than the actual amount), without taking into account the credits received that significantly reduce the plaintiff’s demands. In 2010, the Court-appointed expert witness submitted a report that largely confirms the Bank’s position stating that there was a loss on derivatives amounting to about €6,4 million (which would increase to €10,884 million should the out- Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 406 2018 Annual Report and Accounts · UniCredit In Croatia, following the implementation in September 2015 of a new law that rewrote the terms of FX loan contracts, a number of these lawsuits were withdrawn as customers took advantage of the benefits of the new law. Zagrebačka Banka (“Zaba”) challenged the new law before the Croatian Constitutional Court. On 4 April 2017, the Constitutional Court rejected Zaba's constitutional challenge and no further remedies are available under local laws. In 21 September 2016, UCB Austria and Zaba initiated a claim against the Republic of Croatia under the Agreement between the Government of the Republic of Austria and the Government of the Republic of Croatia for the promotion and protection of investments in order to recover the losses suffered as a result of amendments in 2015 to the Consumer Lending Act and Credit Institutions Act mandating the conversion of Swiss franc-linked loans into Euro-linked. In the interim, Zaba complied with the provisions of the new law and adjusted accordingly all the respective contracts where the customers requested so. Following a hearing, the arbitral tribunal ruled on part of the Respondent’s jurisdictional objections. The arbitral proceedings remain pending. Vanderbilt related litigations Claims brought or threatened by or on behalf of the State of New Mexico or any of its agencies or funds. In August 2006, the New Mexico Educational Retirement Board (“ERB”) and the New Mexico State Investment Council (“SIC”), both US state funds, invested $90 million in Vanderbilt Financial, LLC (“VF”), a vehicle sponsored by Vanderbilt Capital Advisors, LLC (“VCA”). VCA is a subsidiary of Pioneer Investment Management USA Inc., at the time an indirect subsidiary of the parent company UniCredit S.p.A. The purpose of VF was to invest in the equity tranche of various collateralized debt obligations (“CDOs”) managed primarily by VCA. The equity investments in VF, including those made by the ERB and SIC, became worthless. VF was later liquidated. Beginning in 2009, several lawsuits were threatened or filed (some of which were later dismissed) on behalf of the State of New Mexico relating to the dealings between VCA and the State of New Mexico. These lawsuits include proceedings launched by a former employee of the State of New Mexico who claimed the right, pursuant to the law of the State of New Mexico, to act as a representative of the State for the losses suffered by the State of New Mexico with regard to investments managed by VCA. In these proceedings, in addition to VCA, Pioneer Investment Management USA Inc., PGAM and the parent company UniCredit S.p.A. were also named as defendants, by virtue of their respective corporate affiliation with VCA, as described in the previous paragraph. In addition, two class actions were launched with regard to VCA on behalf of the public pension fund managed by ERB and the State of New Mexico threatened to launch a case against VCA if its claim was not satisfied. These suits threatened or instigated relate to losses suffered by the ERB and/or SIC on their VF investments, with additional claims threatened in relation to further losses suffered by SIC on its earlier investments in other VCA-managed CDOs. The lawsuits threatened or instigated allege fraud and kickback practices. Damages claimed in the lawsuits filed by or on behalf of the State of New Mexico are computed based on multiples of the original investment, up to a total of $365 million. In 2012, VCA reached an agreement with the ERB, SIC and State of New Mexico to settle for the sum of $24.25 million all claims brought or threatened by or on behalf of the State of New Mexico or any of its agencies or funds. The settlement amount was deposited into escrow at the beginning of 2013. The settlement is contingent on the Court’s approval, but that process was temporarily delayed, and the original litigation was stayed, pending the determination by the New Mexico Supreme Court of a legal matter in a lawsuit brought against a different set of defendants in other proceedings. The New Mexico Supreme Court issued its ruling on the awaited legal matter in June 2015 and in December 2015 VCA, the ERB, SIC, and the State of New Mexico renewed their request for Court approval of the settlement. The Court held a hearing on the matter in April 2016 and in June 2017 approved the settlement and directed that the claims against VCA be dismissed. A judgment to that effect was entered in September 2017 and a motion by the former State employee seeking to set aside that judgment was denied by the Court in October 2017. Appeals from the judgment and the subsequent order were taken in October and November 2017 and the settlement cannot be effectuated while the appeal remains pending. If the judgment is upheld on appeal, the escrowed amount will be paid over to the State of New Mexico and VCA, Pioneer Investment Management USA Inc., PGAM and the parent company UniCredit S.p.A. will all be released from all claims that were or could have been brought by or on behalf of the State or any of its agencies or funds. Divania S.r.l. In the first half of 2007, Divania S.r.l. (now in bankruptcy) (“Divania”) filed a suit in the Court of Bari against UniCredit Banca d’Impresa S.p.A. (then UniCredit Corporate Banking S.p.A. and now “UniCredit S.p.A.”) alleging violations of law and regulation (relating, inter alia, to financial products) in relation to certain rate and currency derivative transactions created between January 2000 and May 2005 first by Credito Italiano S.p.A. and subsequently by UniCredit Banca d’Impresa S.p.A. (now “UniCredit S.p.A.”). The plaintiff requests that the contracts be declared non-existent, or failing that, null and void or to be cancelled or terminated, and that UniCredit Banca d’Impresa S.p.A. pay the plaintiff a total of €276.6 million as well as legal fees and interest. It also seeks the nullification of a settlement that the parties reached in 2005 under which Divania had agreed to waive any claims in respect of the transactions. The parent company UniCredit S.p.A. rejects Divania demands. Without prejudice to its rejection of liability, it maintains that the amount claimed has been calculated by aggregating all the debits made (for an amount much larger than the actual amount), without taking into account the credits received that significantly reduce the plaintiff’s demands. In 2010, the Court-appointed expert witness submitted a report that largely confirms the Bank’s position stating that there was a loss on derivatives amounting to about €6,4 million (which would increase to €10,884 million should the out- Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 406 2018 Annual Report and Accounts · UniCredit In Croatia, following the implementation in September 2015 of a new law that rewrote the terms of FX loan contracts, a number of these lawsuits were withdrawn as customers took advantage of the benefits of the new law. Zagrebačka Banka (“Zaba”) challenged the new law before the Croatian Constitutional Court. On 4 April 2017, the Constitutional Court rejected Zaba's constitutional challenge and no further remedies are available under local laws. In 21 September 2016, UCB Austria and Zaba initiated a claim against the Republic of Croatia under the Agreement between the Government of the Republic of Austria and the Government of the Republic of Croatia for the promotion and protection of investments in order to recover the losses suffered as a result of amendments in 2015 to the Consumer Lending Act and Credit Institutions Act mandating the conversion of Swiss franc-linked loans into Euro-linked. In the interim, Zaba complied with the provisions of the new law and adjusted accordingly all the respective contracts where the customers requested so. Following a hearing, the arbitral tribunal ruled on part of the Respondent’s jurisdictional objections. The arbitral proceedings remain pending. Vanderbilt related litigations Claims brought or threatened by or on behalf of the State of New Mexico or any of its agencies or funds. In August 2006, the New Mexico Educational Retirement Board (“ERB”) and the New Mexico State Investment Council (“SIC”), both US state funds, invested $90 million in Vanderbilt Financial, LLC (“VF”), a vehicle sponsored by Vanderbilt Capital Advisors, LLC (“VCA”). VCA is a subsidiary of Pioneer Investment Management USA Inc., at the time an indirect subsidiary of the parent company UniCredit S.p.A. The purpose of VF was to invest in the equity tranche of various collateralized debt obligations (“CDOs”) managed primarily by VCA. The equity investments in VF, including those made by the ERB and SIC, became worthless. VF was later liquidated. Beginning in 2009, several lawsuits were threatened or filed (some of which were later dismissed) on behalf of the State of New Mexico relating to the dealings between VCA and the State of New Mexico. These lawsuits include proceedings launched by a former employee of the State of New Mexico who claimed the right, pursuant to the law of the State of New Mexico, to act as a representative of the State for the losses suffered by the State of New Mexico with regard to investments managed by VCA. In these proceedings, in addition to VCA, Pioneer Investment Management USA Inc., PGAM and the parent company UniCredit S.p.A. were also named as defendants, by virtue of their respective corporate affiliation with VCA, as described in the previous paragraph. In addition, two class actions were launched with regard to VCA on behalf of the public pension fund managed by ERB and the State of New Mexico threatened to launch a case against VCA if its claim was not satisfied. These suits threatened or instigated relate to losses suffered by the ERB and/or SIC on their VF investments, with additional claims threatened in relation to further losses suffered by SIC on its earlier investments in other VCA-managed CDOs. The lawsuits threatened or instigated allege fraud and kickback practices. Damages claimed in the lawsuits filed by or on behalf of the State of New Mexico are computed based on multiples of the original investment, up to a total of $365 million. In 2012, VCA reached an agreement with the ERB, SIC and State of New Mexico to settle for the sum of $24.25 million all claims brought or threatened by or on behalf of the State of New Mexico or any of its agencies or funds. The settlement amount was deposited into escrow at the beginning of 2013. The settlement is contingent on the Court’s approval, but that process was temporarily delayed, and the original litigation was stayed, pending the determination by the New Mexico Supreme Court of a legal matter in a lawsuit brought against a different set of defendants in other proceedings. The New Mexico Supreme Court issued its ruling on the awaited legal matter in June 2015 and in December 2015 VCA, the ERB, SIC, and the State of New Mexico renewed their request for Court approval of the settlement. The Court held a hearing on the matter in April 2016 and in June 2017 approved the settlement and directed that the claims against VCA be dismissed. A judgment to that effect was entered in September 2017 and a motion by the former State employee seeking to set aside that judgment was denied by the Court in October 2017. Appeals from the judgment and the subsequent order were taken in October and November 2017 and the settlement cannot be effectuated while the appeal remains pending. If the judgment is upheld on appeal, the escrowed amount will be paid over to the State of New Mexico and VCA, Pioneer Investment Management USA Inc., PGAM and the parent company UniCredit S.p.A. will all be released from all claims that were or could have been brought by or on behalf of the State or any of its agencies or funds. Divania S.r.l. In the first half of 2007, Divania S.r.l. (now in bankruptcy) (“Divania”) filed a suit in the Court of Bari against UniCredit Banca d’Impresa S.p.A. (then UniCredit Corporate Banking S.p.A. and now “UniCredit S.p.A.”) alleging violations of law and regulation (relating, inter alia, to financial products) in relation to certain rate and currency derivative transactions created between January 2000 and May 2005 first by Credito Italiano S.p.A. and subsequently by UniCredit Banca d’Impresa S.p.A. (now “UniCredit S.p.A.”). The plaintiff requests that the contracts be declared non-existent, or failing that, null and void or to be cancelled or terminated, and that UniCredit Banca d’Impresa S.p.A. pay the plaintiff a total of €276.6 million as well as legal fees and interest. It also seeks the nullification of a settlement that the parties reached in 2005 under which Divania had agreed to waive any claims in respect of the transactions. The parent company UniCredit S.p.A. rejects Divania demands. Without prejudice to its rejection of liability, it maintains that the amount claimed has been calculated by aggregating all the debits made (for an amount much larger than the actual amount), without taking into account the credits received that significantly reduce the plaintiff’s demands. In 2010, the Court-appointed expert witness submitted a report that largely confirms the Bank’s position stating that there was a loss on derivatives amounting to about €6,4 million (which would increase to €10,884 million should the out- Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 407 of-court settlement, challenged by the plaintiff, be judged unlawful and thus null and void). The expert opinion states that interest should be added in an amount between €4,137 million (contractual rate) and €868,000 (legal rate). On 29 September 2014, the judges reserved their decision. A new expert report was then ordered, which essentially confirmed the conclusions of the previous expert report. At the hearing held on 6 June 2016 the judges reserved again their decision. On 16 January 2017, the Court issued a decision declaring not to be competent to decide on part of the plaintiff’s claims and ordered the parent company UniCredit S.p.A. to pay, in favor of Divania’s bankruptcy Receiver an overall amount of approximately €7.6 million plus legal interests and part of the expenses. The decision has been appealed. At the first hearing of 29 November 2017, the proceedings were adjourned to 11 October 2019 for the filing of the parties’ conclusions. Two additional lawsuits have also been filed by Divania., (i) one for €68.9 million (which was subsequently increased up to € 80.5 million pursuant to Article 183 of the Code of Civil Procedure); and (ii) a second for €1.6 million. As for the first case, in May 2016 the Court ordered the parent company UniCredit S.p.A. to pay approximately €12.6 million plus costs. The parent company UniCredit S.p.A. appealed against the decision and at the first hearing the case was adjourned to 22 June 2018 for the filing of detailed conclusions. At the hearing of 22 June, the case was adjourned to 11 October 2019 for the filing of the parties’ conclusions. In respect of the second case, on 26 November 2015, the Court of Bari rejected the original claim of Divania. The judgment has res judicata effect. The parent company UniCredit S.p.A. has made a provision for an amount it deems appropriate to cover the risk of the lawsuit. I Viaggi del Ventaglio Group (IVV) In 2011 foreign companies IVV DE MEXICO S.A., TONLE S.A. and the bankruptcy trustee IVV INTERNATIONAL S.A. filed a lawsuit in the Court of Milan for approximately €68 million. In 2014, the bankruptcy trustees of IVV Holding S.r.l. and IVV S.p.A. filed two additional lawsuits in the Court of Milan for €48 million and €170 million, respectively. The three lawsuits are related. The first and third relate to allegedly unlawful conduct in relation to loans. The second relates to disputed derivative transactions. The parent company UniCredit S.p.A.’s view is that the claims appear to be groundless based on its preliminary analysis. In particular: (i) as far as the first lawsuit is concerned (a claim amounting to approximately €68 million), the parent company UniCredit S.p.A. won in first instance. Respectively, in July 2016 and in September 2016 the plaintiffs filed an appeal against the decision and at the hearing of 16 January 2019 the parties filed their conclusions and the proceeding is in its conclusive phase; (ii) as far as the second lawsuit is concerned (a claim amounting to approximately €48 million), relating mainly to disputed derivative transactions, in 2015, all the evidentiary requests, including the appointment of an expert, have been rejected. On 21 May 2018, the Court of Milan rejected all IVV S.p.A.’s claims by and ordered it to pay costs. The Judge approved the settlement agreement between the Bank and the Bankruptcy Trustee; and (iii) lastly, with regard to the third lawsuit (a claim amounting to approximately €170 million), it is currently at the evidentiary stage and the requests made by the judge to the court-appointed expert do not seem related to the position of the parent company UniCredit S.p.A. An additional report filed by the court-appointed expert is favourable for the defendants. The case has been adjourned to 12 March 2019 for the filing of the parties’ conclusions. Lawsuit brought by “Paolo Bolici” In May 2014, the company wholly owned by Paolo Bolici sued the parent company UniCredit S.p.A. in the Court of Rome seeking the return of approximately €12 million for compound interest (including alleged usury component) and €400 million for damages. The company then went bankrupt. The Court of Rome issued the decision on 16 May 2017 rejecting all the claims and ordering the bankruptcy procedure to reimburse the parent company UniCredit S.p.A. with the legal costs. The parent company UniCredit S.p.A. decided not to make provisions. On 17 June 2017 the bankruptcy procedure appealed the decision. The case has been adjourned to 7 December 2021 for the filing of the parties’ conclusions. Mazza Group The civil lawsuit originates from a criminal proceeding before the Court of Rome for illicit lending transactions of disloyal employees of the parent company UniCredit S.p.A. in favor of certain clients for approximately €84 million. These unlawful credit transactions involve: (i) unlawful supply of funding, (ii) early use of unavailable large sums, (iii) irregular opening of accounts which the employees, in increasingly important roles, facilitated in violation of the regulations and procedures of Banca di Roma S.p.A. (later "UniCredit Banca di Roma S.p.A.” and afterwards merged by incorporation into the parent company UniCredit S.p.A.). In May 2013, certain criminal proceedings, related to acts and offences representatives of a group of companies (the “Mazza Group”) committed in 2005 with the collaboration of disloyal employees of the parent company UniCredit S.p.A., came to an end with an exculpatory ruling (no case to answer). The Public Prosecutor and the parent company UniCredit S.p.A. appealed this decision. On 4 December 2018, the trial was adjourned to 12 February 2019; on that date, the Prosecution will give his final oral submission and then, following submissions by the other parties in other hearings, a judgment will be issued. Currently two lawsuits are pending for compensation claims against the parent company UniCredit S.p.A.: • the first filed in June 2014 by the Mazza notary in the Court of Rome, demanding from the parent company UniCredit S.p.A. compensation for damage allegedly suffered following the criminal complaint brought by the former Banca di Roma S.p.A.. The plaintiff makes use of the exculpatory ruling in the criminal proceedings to claim a traumatic experience with repercussions on their health, marriage, social and professional life, with financial, moral, existential and personal injury damages of approximately €15 million. The proceeding is at the evidence collection stage and the Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 407 of-court settlement, challenged by the plaintiff, be judged unlawful and thus null and void). The expert opinion states that interest should be added in an amount between €4,137 million (contractual rate) and €868,000 (legal rate). On 29 September 2014, the judges reserved their decision. A new expert report was then ordered, which essentially confirmed the conclusions of the previous expert report. At the hearing held on 6 June 2016 the judges reserved again their decision. On 16 January 2017, the Court issued a decision declaring not to be competent to decide on part of the plaintiff’s claims and ordered the parent company UniCredit S.p.A. to pay, in favor of Divania’s bankruptcy Receiver an overall amount of approximately €7.6 million plus legal interests and part of the expenses. The decision has been appealed. At the first hearing of 29 November 2017, the proceedings were adjourned to 11 October 2019 for the filing of the parties’ conclusions. Two additional lawsuits have also been filed by Divania., (i) one for €68.9 million (which was subsequently increased up to € 80.5 million pursuant to Article 183 of the Code of Civil Procedure); and (ii) a second for €1.6 million. As for the first case, in May 2016 the Court ordered the parent company UniCredit S.p.A. to pay approximately €12.6 million plus costs. The parent company UniCredit S.p.A. appealed against the decision and at the first hearing the case was adjourned to 22 June 2018 for the filing of detailed conclusions. At the hearing of 22 June, the case was adjourned to 11 October 2019 for the filing of the parties’ conclusions. In respect of the second case, on 26 November 2015, the Court of Bari rejected the original claim of Divania. The judgment has res judicata effect. The parent company UniCredit S.p.A. has made a provision for an amount it deems appropriate to cover the risk of the lawsuit. I Viaggi del Ventaglio Group (IVV) In 2011 foreign companies IVV DE MEXICO S.A., TONLE S.A. and the bankruptcy trustee IVV INTERNATIONAL S.A. filed a lawsuit in the Court of Milan for approximately €68 million. In 2014, the bankruptcy trustees of IVV Holding S.r.l. and IVV S.p.A. filed two additional lawsuits in the Court of Milan for €48 million and €170 million, respectively. The three lawsuits are related. The first and third relate to allegedly unlawful conduct in relation to loans. The second relates to disputed derivative transactions. The parent company UniCredit S.p.A.’s view is that the claims appear to be groundless based on its preliminary analysis. In particular: (i) as far as the first lawsuit is concerned (a claim amounting to approximately €68 million), the parent company UniCredit S.p.A. won in first instance. Respectively, in July 2016 and in September 2016 the plaintiffs filed an appeal against the decision and at the hearing of 16 January 2019 the parties filed their conclusions and the proceeding is in its conclusive phase; (ii) as far as the second lawsuit is concerned (a claim amounting to approximately €48 million), relating mainly to disputed derivative transactions, in 2015, all the evidentiary requests, including the appointment of an expert, have been rejected. On 21 May 2018, the Court of Milan rejected all IVV S.p.A.’s claims by and ordered it to pay costs. The Judge approved the settlement agreement between the Bank and the Bankruptcy Trustee; and (iii) lastly, with regard to the third lawsuit (a claim amounting to approximately €170 million), it is currently at the evidentiary stage and the requests made by the judge to the court-appointed expert do not seem related to the position of the parent company UniCredit S.p.A. An additional report filed by the court-appointed expert is favourable for the defendants. The case has been adjourned to 12 March 2019 for the filing of the parties’ conclusions. Lawsuit brought by “Paolo Bolici” In May 2014, the company wholly owned by Paolo Bolici sued the parent company UniCredit S.p.A. in the Court of Rome seeking the return of approximately €12 million for compound interest (including alleged usury component) and €400 million for damages. The company then went bankrupt. The Court of Rome issued the decision on 16 May 2017 rejecting all the claims and ordering the bankruptcy procedure to reimburse the parent company UniCredit S.p.A. with the legal costs. The parent company UniCredit S.p.A. decided not to make provisions. On 17 June 2017 the bankruptcy procedure appealed the decision. The case has been adjourned to 7 December 2021 for the filing of the parties’ conclusions. Mazza Group The civil lawsuit originates from a criminal proceeding before the Court of Rome for illicit lending transactions of disloyal employees of the parent company UniCredit S.p.A. in favor of certain clients for approximately €84 million. These unlawful credit transactions involve: (i) unlawful supply of funding, (ii) early use of unavailable large sums, (iii) irregular opening of accounts which the employees, in increasingly important roles, facilitated in violation of the regulations and procedures of Banca di Roma S.p.A. (later "UniCredit Banca di Roma S.p.A.” and afterwards merged by incorporation into the parent company UniCredit S.p.A.). In May 2013, certain criminal proceedings, related to acts and offences representatives of a group of companies (the “Mazza Group”) committed in 2005 with the collaboration of disloyal employees of the parent company UniCredit S.p.A., came to an end with an exculpatory ruling (no case to answer). The Public Prosecutor and the parent company UniCredit S.p.A. appealed this decision. On 4 December 2018, the trial was adjourned to 12 February 2019; on that date, the Prosecution will give his final oral submission and then, following submissions by the other parties in other hearings, a judgment will be issued. Currently two lawsuits are pending for compensation claims against the parent company UniCredit S.p.A.: • the first filed in June 2014 by the Mazza notary in the Court of Rome, demanding from the parent company UniCredit S.p.A. compensation for damage allegedly suffered following the criminal complaint brought by the former Banca di Roma S.p.A.. The plaintiff makes use of the exculpatory ruling in the criminal proceedings to claim a traumatic experience with repercussions on their health, marriage, social and professional life, with financial, moral, existential and personal injury damages of approximately €15 million. The proceeding is at the evidence collection stage and the Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 407 of-court settlement, challenged by the plaintiff, be judged unlawful and thus null and void). The expert opinion states that interest should be added in an amount between €4,137 million (contractual rate) and €868,000 (legal rate). On 29 September 2014, the judges reserved their decision. A new expert report was then ordered, which essentially confirmed the conclusions of the previous expert report. At the hearing held on 6 June 2016 the judges reserved again their decision. On 16 January 2017, the Court issued a decision declaring not to be competent to decide on part of the plaintiff’s claims and ordered the parent company UniCredit S.p.A. to pay, in favor of Divania’s bankruptcy Receiver an overall amount of approximately €7.6 million plus legal interests and part of the expenses. The decision has been appealed. At the first hearing of 29 November 2017, the proceedings were adjourned to 11 October 2019 for the filing of the parties’ conclusions. Two additional lawsuits have also been filed by Divania., (i) one for €68.9 million (which was subsequently increased up to € 80.5 million pursuant to Article 183 of the Code of Civil Procedure); and (ii) a second for €1.6 million. As for the first case, in May 2016 the Court ordered the parent company UniCredit S.p.A. to pay approximately €12.6 million plus costs. The parent company UniCredit S.p.A. appealed against the decision and at the first hearing the case was adjourned to 22 June 2018 for the filing of detailed conclusions. At the hearing of 22 June, the case was adjourned to 11 October 2019 for the filing of the parties’ conclusions. In respect of the second case, on 26 November 2015, the Court of Bari rejected the original claim of Divania. The judgment has res judicata effect. The parent company UniCredit S.p.A. has made a provision for an amount it deems appropriate to cover the risk of the lawsuit. I Viaggi del Ventaglio Group (IVV) In 2011 foreign companies IVV DE MEXICO S.A., TONLE S.A. and the bankruptcy trustee IVV INTERNATIONAL S.A. filed a lawsuit in the Court of Milan for approximately €68 million. In 2014, the bankruptcy trustees of IVV Holding S.r.l. and IVV S.p.A. filed two additional lawsuits in the Court of Milan for €48 million and €170 million, respectively. The three lawsuits are related. The first and third relate to allegedly unlawful conduct in relation to loans. The second relates to disputed derivative transactions. The parent company UniCredit S.p.A.’s view is that the claims appear to be groundless based on its preliminary analysis. In particular: (i) as far as the first lawsuit is concerned (a claim amounting to approximately €68 million), the parent company UniCredit S.p.A. won in first instance. Respectively, in July 2016 and in September 2016 the plaintiffs filed an appeal against the decision and at the hearing of 16 January 2019 the parties filed their conclusions and the proceeding is in its conclusive phase; (ii) as far as the second lawsuit is concerned (a claim amounting to approximately €48 million), relating mainly to disputed derivative transactions, in 2015, all the evidentiary requests, including the appointment of an expert, have been rejected. On 21 May 2018, the Court of Milan rejected all IVV S.p.A.’s claims by and ordered it to pay costs. The Judge approved the settlement agreement between the Bank and the Bankruptcy Trustee; and (iii) lastly, with regard to the third lawsuit (a claim amounting to approximately €170 million), it is currently at the evidentiary stage and the requests made by the judge to the court-appointed expert do not seem related to the position of the parent company UniCredit S.p.A. An additional report filed by the court-appointed expert is favourable for the defendants. The case has been adjourned to 12 March 2019 for the filing of the parties’ conclusions. Lawsuit brought by “Paolo Bolici” In May 2014, the company wholly owned by Paolo Bolici sued the parent company UniCredit S.p.A. in the Court of Rome seeking the return of approximately €12 million for compound interest (including alleged usury component) and €400 million for damages. The company then went bankrupt. The Court of Rome issued the decision on 16 May 2017 rejecting all the claims and ordering the bankruptcy procedure to reimburse the parent company UniCredit S.p.A. with the legal costs. The parent company UniCredit S.p.A. decided not to make provisions. On 17 June 2017 the bankruptcy procedure appealed the decision. The case has been adjourned to 7 December 2021 for the filing of the parties’ conclusions. Mazza Group The civil lawsuit originates from a criminal proceeding before the Court of Rome for illicit lending transactions of disloyal employees of the parent company UniCredit S.p.A. in favor of certain clients for approximately €84 million. These unlawful credit transactions involve: (i) unlawful supply of funding, (ii) early use of unavailable large sums, (iii) irregular opening of accounts which the employees, in increasingly important roles, facilitated in violation of the regulations and procedures of Banca di Roma S.p.A. (later "UniCredit Banca di Roma S.p.A.” and afterwards merged by incorporation into the parent company UniCredit S.p.A.). In May 2013, certain criminal proceedings, related to acts and offences representatives of a group of companies (the “Mazza Group”) committed in 2005 with the collaboration of disloyal employees of the parent company UniCredit S.p.A., came to an end with an exculpatory ruling (no case to answer). The Public Prosecutor and the parent company UniCredit S.p.A. appealed this decision. On 4 December 2018, the trial was adjourned to 12 February 2019; on that date, the Prosecution will give his final oral submission and then, following submissions by the other parties in other hearings, a judgment will be issued. Currently two lawsuits are pending for compensation claims against the parent company UniCredit S.p.A.: • the first filed in June 2014 by the Mazza notary in the Court of Rome, demanding from the parent company UniCredit S.p.A. compensation for damage allegedly suffered following the criminal complaint brought by the former Banca di Roma S.p.A.. The plaintiff makes use of the exculpatory ruling in the criminal proceedings to claim a traumatic experience with repercussions on their health, marriage, social and professional life, with financial, moral, existential and personal injury damages of approximately €15 million. The proceeding is at the evidence collection stage and the Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 407 of-court settlement, challenged by the plaintiff, be judged unlawful and thus null and void). The expert opinion states that interest should be added in an amount between €4,137 million (contractual rate) and €868,000 (legal rate). On 29 September 2014, the judges reserved their decision. A new expert report was then ordered, which essentially confirmed the conclusions of the previous expert report. At the hearing held on 6 June 2016 the judges reserved again their decision. On 16 January 2017, the Court issued a decision declaring not to be competent to decide on part of the plaintiff’s claims and ordered the parent company UniCredit S.p.A. to pay, in favor of Divania’s bankruptcy Receiver an overall amount of approximately €7.6 million plus legal interests and part of the expenses. The decision has been appealed. At the first hearing of 29 November 2017, the proceedings were adjourned to 11 October 2019 for the filing of the parties’ conclusions. Two additional lawsuits have also been filed by Divania., (i) one for €68.9 million (which was subsequently increased up to € 80.5 million pursuant to Article 183 of the Code of Civil Procedure); and (ii) a second for €1.6 million. As for the first case, in May 2016 the Court ordered the parent company UniCredit S.p.A. to pay approximately €12.6 million plus costs. The parent company UniCredit S.p.A. appealed against the decision and at the first hearing the case was adjourned to 22 June 2018 for the filing of detailed conclusions. At the hearing of 22 June, the case was adjourned to 11 October 2019 for the filing of the parties’ conclusions. In respect of the second case, on 26 November 2015, the Court of Bari rejected the original claim of Divania. The judgment has res judicata effect. The parent company UniCredit S.p.A. has made a provision for an amount it deems appropriate to cover the risk of the lawsuit. I Viaggi del Ventaglio Group (IVV) In 2011 foreign companies IVV DE MEXICO S.A., TONLE S.A. and the bankruptcy trustee IVV INTERNATIONAL S.A. filed a lawsuit in the Court of Milan for approximately €68 million. In 2014, the bankruptcy trustees of IVV Holding S.r.l. and IVV S.p.A. filed two additional lawsuits in the Court of Milan for €48 million and €170 million, respectively. The three lawsuits are related. The first and third relate to allegedly unlawful conduct in relation to loans. The second relates to disputed derivative transactions. The parent company UniCredit S.p.A.’s view is that the claims appear to be groundless based on its preliminary analysis. In particular: (i) as far as the first lawsuit is concerned (a claim amounting to approximately €68 million), the parent company UniCredit S.p.A. won in first instance. Respectively, in July 2016 and in September 2016 the plaintiffs filed an appeal against the decision and at the hearing of 16 January 2019 the parties filed their conclusions and the proceeding is in its conclusive phase; (ii) as far as the second lawsuit is concerned (a claim amounting to approximately €48 million), relating mainly to disputed derivative transactions, in 2015, all the evidentiary requests, including the appointment of an expert, have been rejected. On 21 May 2018, the Court of Milan rejected all IVV S.p.A.’s claims by and ordered it to pay costs. The Judge approved the settlement agreement between the Bank and the Bankruptcy Trustee; and (iii) lastly, with regard to the third lawsuit (a claim amounting to approximately €170 million), it is currently at the evidentiary stage and the requests made by the judge to the court-appointed expert do not seem related to the position of the parent company UniCredit S.p.A. An additional report filed by the court-appointed expert is favourable for the defendants. The case has been adjourned to 12 March 2019 for the filing of the parties’ conclusions. Lawsuit brought by “Paolo Bolici” In May 2014, the company wholly owned by Paolo Bolici sued the parent company UniCredit S.p.A. in the Court of Rome seeking the return of approximately €12 million for compound interest (including alleged usury component) and €400 million for damages. The company then went bankrupt. The Court of Rome issued the decision on 16 May 2017 rejecting all the claims and ordering the bankruptcy procedure to reimburse the parent company UniCredit S.p.A. with the legal costs. The parent company UniCredit S.p.A. decided not to make provisions. On 17 June 2017 the bankruptcy procedure appealed the decision. The case has been adjourned to 7 December 2021 for the filing of the parties’ conclusions. Mazza Group The civil lawsuit originates from a criminal proceeding before the Court of Rome for illicit lending transactions of disloyal employees of the parent company UniCredit S.p.A. in favor of certain clients for approximately €84 million. These unlawful credit transactions involve: (i) unlawful supply of funding, (ii) early use of unavailable large sums, (iii) irregular opening of accounts which the employees, in increasingly important roles, facilitated in violation of the regulations and procedures of Banca di Roma S.p.A. (later "UniCredit Banca di Roma S.p.A.” and afterwards merged by incorporation into the parent company UniCredit S.p.A.). In May 2013, certain criminal proceedings, related to acts and offences representatives of a group of companies (the “Mazza Group”) committed in 2005 with the collaboration of disloyal employees of the parent company UniCredit S.p.A., came to an end with an exculpatory ruling (no case to answer). The Public Prosecutor and the parent company UniCredit S.p.A. appealed this decision. On 4 December 2018, the trial was adjourned to 12 February 2019; on that date, the Prosecution will give his final oral submission and then, following submissions by the other parties in other hearings, a judgment will be issued. Currently two lawsuits are pending for compensation claims against the parent company UniCredit S.p.A.: • the first filed in June 2014 by the Mazza notary in the Court of Rome, demanding from the parent company UniCredit S.p.A. compensation for damage allegedly suffered following the criminal complaint brought by the former Banca di Roma S.p.A.. The plaintiff makes use of the exculpatory ruling in the criminal proceedings to claim a traumatic experience with repercussions on their health, marriage, social and professional life, with financial, moral, existential and personal injury damages of approximately €15 million. The proceeding is at the evidence collection stage and the Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 407 of-court settlement, challenged by the plaintiff, be judged unlawful and thus null and void). The expert opinion states that interest should be added in an amount between €4,137 million (contractual rate) and €868,000 (legal rate). On 29 September 2014, the judges reserved their decision. A new expert report was then ordered, which essentially confirmed the conclusions of the previous expert report. At the hearing held on 6 June 2016 the judges reserved again their decision. On 16 January 2017, the Court issued a decision declaring not to be competent to decide on part of the plaintiff’s claims and ordered the parent company UniCredit S.p.A. to pay, in favor of Divania’s bankruptcy Receiver an overall amount of approximately €7.6 million plus legal interests and part of the expenses. The decision has been appealed. At the first hearing of 29 November 2017, the proceedings were adjourned to 11 October 2019 for the filing of the parties’ conclusions. Two additional lawsuits have also been filed by Divania., (i) one for €68.9 million (which was subsequently increased up to € 80.5 million pursuant to Article 183 of the Code of Civil Procedure); and (ii) a second for €1.6 million. As for the first case, in May 2016 the Court ordered the parent company UniCredit S.p.A. to pay approximately €12.6 million plus costs. The parent company UniCredit S.p.A. appealed against the decision and at the first hearing the case was adjourned to 22 June 2018 for the filing of detailed conclusions. At the hearing of 22 June, the case was adjourned to 11 October 2019 for the filing of the parties’ conclusions. In respect of the second case, on 26 November 2015, the Court of Bari rejected the original claim of Divania. The judgment has res judicata effect. The parent company UniCredit S.p.A. has made a provision for an amount it deems appropriate to cover the risk of the lawsuit. I Viaggi del Ventaglio Group (IVV) In 2011 foreign companies IVV DE MEXICO S.A., TONLE S.A. and the bankruptcy trustee IVV INTERNATIONAL S.A. filed a lawsuit in the Court of Milan for approximately €68 million. In 2014, the bankruptcy trustees of IVV Holding S.r.l. and IVV S.p.A. filed two additional lawsuits in the Court of Milan for €48 million and €170 million, respectively. The three lawsuits are related. The first and third relate to allegedly unlawful conduct in relation to loans. The second relates to disputed derivative transactions. The parent company UniCredit S.p.A.’s view is that the claims appear to be groundless based on its preliminary analysis. In particular: (i) as far as the first lawsuit is concerned (a claim amounting to approximately €68 million), the parent company UniCredit S.p.A. won in first instance. Respectively, in July 2016 and in September 2016 the plaintiffs filed an appeal against the decision and at the hearing of 16 January 2019 the parties filed their conclusions and the proceeding is in its conclusive phase; (ii) as far as the second lawsuit is concerned (a claim amounting to approximately €48 million), relating mainly to disputed derivative transactions, in 2015, all the evidentiary requests, including the appointment of an expert, have been rejected. On 21 May 2018, the Court of Milan rejected all IVV S.p.A.’s claims by and ordered it to pay costs. The Judge approved the settlement agreement between the Bank and the Bankruptcy Trustee; and (iii) lastly, with regard to the third lawsuit (a claim amounting to approximately €170 million), it is currently at the evidentiary stage and the requests made by the judge to the court-appointed expert do not seem related to the position of the parent company UniCredit S.p.A. An additional report filed by the court-appointed expert is favourable for the defendants. The case has been adjourned to 12 March 2019 for the filing of the parties’ conclusions. Lawsuit brought by “Paolo Bolici” In May 2014, the company wholly owned by Paolo Bolici sued the parent company UniCredit S.p.A. in the Court of Rome seeking the return of approximately €12 million for compound interest (including alleged usury component) and €400 million for damages. The company then went bankrupt. The Court of Rome issued the decision on 16 May 2017 rejecting all the claims and ordering the bankruptcy procedure to reimburse the parent company UniCredit S.p.A. with the legal costs. The parent company UniCredit S.p.A. decided not to make provisions. On 17 June 2017 the bankruptcy procedure appealed the decision. The case has been adjourned to 7 December 2021 for the filing of the parties’ conclusions. Mazza Group The civil lawsuit originates from a criminal proceeding before the Court of Rome for illicit lending transactions of disloyal employees of the parent company UniCredit S.p.A. in favor of certain clients for approximately €84 million. These unlawful credit transactions involve: (i) unlawful supply of funding, (ii) early use of unavailable large sums, (iii) irregular opening of accounts which the employees, in increasingly important roles, facilitated in violation of the regulations and procedures of Banca di Roma S.p.A. (later "UniCredit Banca di Roma S.p.A.” and afterwards merged by incorporation into the parent company UniCredit S.p.A.). In May 2013, certain criminal proceedings, related to acts and offences representatives of a group of companies (the “Mazza Group”) committed in 2005 with the collaboration of disloyal employees of the parent company UniCredit S.p.A., came to an end with an exculpatory ruling (no case to answer). The Public Prosecutor and the parent company UniCredit S.p.A. appealed this decision. On 4 December 2018, the trial was adjourned to 12 February 2019; on that date, the Prosecution will give his final oral submission and then, following submissions by the other parties in other hearings, a judgment will be issued. Currently two lawsuits are pending for compensation claims against the parent company UniCredit S.p.A.: • the first filed in June 2014 by the Mazza notary in the Court of Rome, demanding from the parent company UniCredit S.p.A. compensation for damage allegedly suffered following the criminal complaint brought by the former Banca di Roma S.p.A.. The plaintiff makes use of the exculpatory ruling in the criminal proceedings to claim a traumatic experience with repercussions on their health, marriage, social and professional life, with financial, moral, existential and personal injury damages of approximately €15 million. The proceeding is at the evidence collection stage and the Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 408 2018 Annual Report and Accounts · UniCredit hearing for the submission of the parties’ conclusion is scheduled for 13 July 2020; and • the second filed in March 2016 by Como S.r.l. and Camillo Colella in the Court of Rome, demanding damages from the parent company UniCredit S.p.A. in the amount of approximately 379 million. Similarly to the Mazza notary, the plaintiffs complain that the initiatives of the former Banca di Roma S.p.A. in the criminal and civil proceedings, caused financial, moral, existential and personal injury damages to Camillo Colella, as well as damages for the loss of important commercial opportunities, as well as image, reputational and commercial damage to Como S.r.l. The proceeding is in its conclusive phase. In the view of the parent company UniCredit S.p.A., these lawsuits currently appear to be unfounded. The parent company UniCredit S.p.A. has made a provision it deems consistent to cover the risk resulting from unlawful credit transactions, which is essentially equal to the residual credit of the parent company UniCredit S.p.A. So.De.Co. - Nuova Compagnia di Partecipazioni S.p.A. So.De.Co. S.r.l. (So.De.Co.), following to a restructuring transaction by which it acquired the “oil” business from the parent company Nuova Compagnia di Partecipazione S.p.A. (NCP), was sold to Ludoil Energy Srl in November 2014. In March 2016, So.De.Co., then controlled by Ludoil, summoned before the Court of Rome its former directors, NCP, the parent company UniCredit S.p.A. (in its capacity as holding company of NCP) and the external auditors (PricewaterhouseCoopers S.p.A. and Deloitte & Touche S.p.A.) claiming damages of approximately €94 million against the defendants, on a several and joint liability basis allegedly deriving from the failure to quantify, since at least 2010, the statutory capital loss, from the insufficient provisions for charges and risks related to environmental issues, and from the unreasonably high price paid for the acquisition of the “oil” business units and subsidiaries from NCP in the context of the group reorganization of the “oil” business. The parent company UniCredit S.p.A. has been sued by deducing the unfounded nature of the claim and the absence of the damage complained of. On 9 May 2017, the judge rejected all plaintiffs’ requests for evidence collection and scheduled the hearing for filing the conclusions for 12 February 2019. In November 2017, So.De.Co. served a claim against NCP and former directors on the same matter previously subject to a mediation, which had ended with no agreement between the parties. The first hearing, scheduled for 20 February 2018, was adjourned to 15 January 2019 to allow the renovation of a previously incomplete service of the claim. At such hearing, the case was adjourned to 11 June 2019 before which the parties will have the chance to file evidentiary briefs. Criminal proceedings Certain entities within the UniCredit group and certain of its representatives (including those no longer in office), are involved in various criminal proceedings and/or, as far as the parent company UniCredit S.p.A. is aware, are under investigation by the competent authorities with regard to various cases linked to banking transactions, including, specifically, in Italy, the offence pursuant to Article 644 (usury) of the Criminal Code. At present, these criminal proceedings have not had significant negative impact on the operating results and capital and financial position of the parent company UniCredit S.p.A. and/or the Group, however there is a risk that, if the parent company UniCredit S.p.A. and/or other UniCredit group entities or their representatives (including those no longer in office) were to be convicted, these events could have an impact on the reputation of the parent company UniCredit S.p.A. and/or the UniCredit group. On 14 December 2018, the Public Prosecutor of the Court of Tempio Pausania dismissed the parent company UniCredit S.p.A. from the criminal proceedings it had initiated, as the alleged violation of Article 24-ter of Legislative Decree 231/2001 became time-barred. Other proceedings Proceedings related to claims for withholding tax credits On 31 July 2014 the Supervisory Board of UCB AG concluded its internal investigation into the so-called “cum-ex” transactions (the short selling of equities around dividend dates and claims for withholding tax credits on German share dividends) at UCB AG. The findings of the Supervisory Board’s investigation indicated that the bank sustained losses due to certain past acts/omissions of individuals. The Supervisory Board has submitted a claim for compensation against three individual former members of the management board, not seeing reasons to take any action against the current members. These proceedings are ongoing. UniCredit S.p.A., UCB AG’s parent company, supports the decisions taken by the Supervisory Board. In addition, criminal investigations have been conducted against current or former employees of UCB AG by the Prosecutors in Frankfurt on the Main, Cologne and Munich with the aim of verifying alleged tax evasion offences on their part. UCB AG cooperated - and continues to cooperate - with the aforesaid Prosecutors who investigated offences that include possible tax evasion in connection with cum-ex transactions both for UCB AG’s own book as well as for a former customer of UCB AG. Proceedings in Cologne against UCB AG and its former employees were closed in November 2015 with, inter alia, the payment by UCB AG of a fine of €9.8 million. The investigations by the Frankfurt on the Main Prosecutor against UCB AG under section 30 of the Administrative Offences Act (the Ordnungswidrigkeitengesetz) were closed in February 2016 by the payment of a fine of €5 million. The investigation by the Munich Prosecutor against UCB AG was closed as well in April 2017 following the payment of a forfeiture of €5 million. In December 2018, in connection with a separate ongoing investigation against former bank employees by the Cologne prosecutor, UCB AG was informed of the initiation of an additional administrative proceeding regarding “cum-ex” transactions involving Exchange Traded Funds (“ETF”). The facts are being examined internally. UCB AG continues to cooperate with the authorities. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 408 2018 Annual Report and Accounts · UniCredit hearing for the submission of the parties’ conclusion is scheduled for 13 July 2020; and • the second filed in March 2016 by Como S.r.l. and Camillo Colella in the Court of Rome, demanding damages from the parent company UniCredit S.p.A. in the amount of approximately 379 million. Similarly to the Mazza notary, the plaintiffs complain that the initiatives of the former Banca di Roma S.p.A. in the criminal and civil proceedings, caused financial, moral, existential and personal injury damages to Camillo Colella, as well as damages for the loss of important commercial opportunities, as well as image, reputational and commercial damage to Como S.r.l. The proceeding is in its conclusive phase. In the view of the parent company UniCredit S.p.A., these lawsuits currently appear to be unfounded. The parent company UniCredit S.p.A. has made a provision it deems consistent to cover the risk resulting from unlawful credit transactions, which is essentially equal to the residual credit of the parent company UniCredit S.p.A. So.De.Co. - Nuova Compagnia di Partecipazioni S.p.A. So.De.Co. S.r.l. (So.De.Co.), following to a restructuring transaction by which it acquired the “oil” business from the parent company Nuova Compagnia di Partecipazione S.p.A. (NCP), was sold to Ludoil Energy Srl in November 2014. In March 2016, So.De.Co., then controlled by Ludoil, summoned before the Court of Rome its former directors, NCP, the parent company UniCredit S.p.A. (in its capacity as holding company of NCP) and the external auditors (PricewaterhouseCoopers S.p.A. and Deloitte & Touche S.p.A.) claiming damages of approximately €94 million against the defendants, on a several and joint liability basis allegedly deriving from the failure to quantify, since at least 2010, the statutory capital loss, from the insufficient provisions for charges and risks related to environmental issues, and from the unreasonably high price paid for the acquisition of the “oil” business units and subsidiaries from NCP in the context of the group reorganization of the “oil” business. The parent company UniCredit S.p.A. has been sued by deducing the unfounded nature of the claim and the absence of the damage complained of. On 9 May 2017, the judge rejected all plaintiffs’ requests for evidence collection and scheduled the hearing for filing the conclusions for 12 February 2019. In November 2017, So.De.Co. served a claim against NCP and former directors on the same matter previously subject to a mediation, which had ended with no agreement between the parties. The first hearing, scheduled for 20 February 2018, was adjourned to 15 January 2019 to allow the renovation of a previously incomplete service of the claim. At such hearing, the case was adjourned to 11 June 2019 before which the parties will have the chance to file evidentiary briefs. Criminal proceedings Certain entities within the UniCredit group and certain of its representatives (including those no longer in office), are involved in various criminal proceedings and/or, as far as the parent company UniCredit S.p.A. is aware, are under investigation by the competent authorities with regard to various cases linked to banking transactions, including, specifically, in Italy, the offence pursuant to Article 644 (usury) of the Criminal Code. At present, these criminal proceedings have not had significant negative impact on the operating results and capital and financial position of the parent company UniCredit S.p.A. and/or the Group, however there is a risk that, if the parent company UniCredit S.p.A. and/or other UniCredit group entities or their representatives (including those no longer in office) were to be convicted, these events could have an impact on the reputation of the parent company UniCredit S.p.A. and/or the UniCredit group. On 14 December 2018, the Public Prosecutor of the Court of Tempio Pausania dismissed the parent company UniCredit S.p.A. from the criminal proceedings it had initiated, as the alleged violation of Article 24-ter of Legislative Decree 231/2001 became time-barred. Other proceedings Proceedings related to claims for withholding tax credits On 31 July 2014 the Supervisory Board of UCB AG concluded its internal investigation into the so-called “cum-ex” transactions (the short selling of equities around dividend dates and claims for withholding tax credits on German share dividends) at UCB AG. The findings of the Supervisory Board’s investigation indicated that the bank sustained losses due to certain past acts/omissions of individuals. The Supervisory Board has submitted a claim for compensation against three individual former members of the management board, not seeing reasons to take any action against the current members. These proceedings are ongoing. UniCredit S.p.A., UCB AG’s parent company, supports the decisions taken by the Supervisory Board. In addition, criminal investigations have been conducted against current or former employees of UCB AG by the Prosecutors in Frankfurt on the Main, Cologne and Munich with the aim of verifying alleged tax evasion offences on their part. UCB AG cooperated - and continues to cooperate - with the aforesaid Prosecutors who investigated offences that include possible tax evasion in connection with cum-ex transactions both for UCB AG’s own book as well as for a former customer of UCB AG. Proceedings in Cologne against UCB AG and its former employees were closed in November 2015 with, inter alia, the payment by UCB AG of a fine of €9.8 million. The investigations by the Frankfurt on the Main Prosecutor against UCB AG under section 30 of the Administrative Offences Act (the Ordnungswidrigkeitengesetz) were closed in February 2016 by the payment of a fine of €5 million. The investigation by the Munich Prosecutor against UCB AG was closed as well in April 2017 following the payment of a forfeiture of €5 million. In December 2018, in connection with a separate ongoing investigation against former bank employees by the Cologne prosecutor, UCB AG was informed of the initiation of an additional administrative proceeding regarding “cum-ex” transactions involving Exchange Traded Funds (“ETF”). The facts are being examined internally. UCB AG continues to cooperate with the authorities. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 408 2018 Annual Report and Accounts · UniCredit hearing for the submission of the parties’ conclusion is scheduled for 13 July 2020; and • the second filed in March 2016 by Como S.r.l. and Camillo Colella in the Court of Rome, demanding damages from the parent company UniCredit S.p.A. in the amount of approximately 379 million. Similarly to the Mazza notary, the plaintiffs complain that the initiatives of the former Banca di Roma S.p.A. in the criminal and civil proceedings, caused financial, moral, existential and personal injury damages to Camillo Colella, as well as damages for the loss of important commercial opportunities, as well as image, reputational and commercial damage to Como S.r.l. The proceeding is in its conclusive phase. In the view of the parent company UniCredit S.p.A., these lawsuits currently appear to be unfounded. The parent company UniCredit S.p.A. has made a provision it deems consistent to cover the risk resulting from unlawful credit transactions, which is essentially equal to the residual credit of the parent company UniCredit S.p.A. So.De.Co. - Nuova Compagnia di Partecipazioni S.p.A. So.De.Co. S.r.l. (So.De.Co.), following to a restructuring transaction by which it acquired the “oil” business from the parent company Nuova Compagnia di Partecipazione S.p.A. (NCP), was sold to Ludoil Energy Srl in November 2014. In March 2016, So.De.Co., then controlled by Ludoil, summoned before the Court of Rome its former directors, NCP, the parent company UniCredit S.p.A. (in its capacity as holding company of NCP) and the external auditors (PricewaterhouseCoopers S.p.A. and Deloitte & Touche S.p.A.) claiming damages of approximately €94 million against the defendants, on a several and joint liability basis allegedly deriving from the failure to quantify, since at least 2010, the statutory capital loss, from the insufficient provisions for charges and risks related to environmental issues, and from the unreasonably high price paid for the acquisition of the “oil” business units and subsidiaries from NCP in the context of the group reorganization of the “oil” business. The parent company UniCredit S.p.A. has been sued by deducing the unfounded nature of the claim and the absence of the damage complained of. On 9 May 2017, the judge rejected all plaintiffs’ requests for evidence collection and scheduled the hearing for filing the conclusions for 12 February 2019. In November 2017, So.De.Co. served a claim against NCP and former directors on the same matter previously subject to a mediation, which had ended with no agreement between the parties. The first hearing, scheduled for 20 February 2018, was adjourned to 15 January 2019 to allow the renovation of a previously incomplete service of the claim. At such hearing, the case was adjourned to 11 June 2019 before which the parties will have the chance to file evidentiary briefs. Criminal proceedings Certain entities within the UniCredit group and certain of its representatives (including those no longer in office), are involved in various criminal proceedings and/or, as far as the parent company UniCredit S.p.A. is aware, are under investigation by the competent authorities with regard to various cases linked to banking transactions, including, specifically, in Italy, the offence pursuant to Article 644 (usury) of the Criminal Code. At present, these criminal proceedings have not had significant negative impact on the operating results and capital and financial position of the parent company UniCredit S.p.A. and/or the Group, however there is a risk that, if the parent company UniCredit S.p.A. and/or other UniCredit group entities or their representatives (including those no longer in office) were to be convicted, these events could have an impact on the reputation of the parent company UniCredit S.p.A. and/or the UniCredit group. On 14 December 2018, the Public Prosecutor of the Court of Tempio Pausania dismissed the parent company UniCredit S.p.A. from the criminal proceedings it had initiated, as the alleged violation of Article 24-ter of Legislative Decree 231/2001 became time-barred. Other proceedings Proceedings related to claims for withholding tax credits On 31 July 2014 the Supervisory Board of UCB AG concluded its internal investigation into the so-called “cum-ex” transactions (the short selling of equities around dividend dates and claims for withholding tax credits on German share dividends) at UCB AG. The findings of the Supervisory Board’s investigation indicated that the bank sustained losses due to certain past acts/omissions of individuals. The Supervisory Board has submitted a claim for compensation against three individual former members of the management board, not seeing reasons to take any action against the current members. These proceedings are ongoing. UniCredit S.p.A., UCB AG’s parent company, supports the decisions taken by the Supervisory Board. In addition, criminal investigations have been conducted against current or former employees of UCB AG by the Prosecutors in Frankfurt on the Main, Cologne and Munich with the aim of verifying alleged tax evasion offences on their part. UCB AG cooperated - and continues to cooperate - with the aforesaid Prosecutors who investigated offences that include possible tax evasion in connection with cum-ex transactions both for UCB AG’s own book as well as for a former customer of UCB AG. Proceedings in Cologne against UCB AG and its former employees were closed in November 2015 with, inter alia, the payment by UCB AG of a fine of €9.8 million. The investigations by the Frankfurt on the Main Prosecutor against UCB AG under section 30 of the Administrative Offences Act (the Ordnungswidrigkeitengesetz) were closed in February 2016 by the payment of a fine of €5 million. The investigation by the Munich Prosecutor against UCB AG was closed as well in April 2017 following the payment of a forfeiture of €5 million. In December 2018, in connection with a separate ongoing investigation against former bank employees by the Cologne prosecutor, UCB AG was informed of the initiation of an additional administrative proceeding regarding “cum-ex” transactions involving Exchange Traded Funds (“ETF”). The facts are being examined internally. UCB AG continues to cooperate with the authorities. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 408 2018 Annual Report and Accounts · UniCredit hearing for the submission of the parties’ conclusion is scheduled for 13 July 2020; and • the second filed in March 2016 by Como S.r.l. and Camillo Colella in the Court of Rome, demanding damages from the parent company UniCredit S.p.A. in the amount of approximately 379 million. Similarly to the Mazza notary, the plaintiffs complain that the initiatives of the former Banca di Roma S.p.A. in the criminal and civil proceedings, caused financial, moral, existential and personal injury damages to Camillo Colella, as well as damages for the loss of important commercial opportunities, as well as image, reputational and commercial damage to Como S.r.l. The proceeding is in its conclusive phase. In the view of the parent company UniCredit S.p.A., these lawsuits currently appear to be unfounded. The parent company UniCredit S.p.A. has made a provision it deems consistent to cover the risk resulting from unlawful credit transactions, which is essentially equal to the residual credit of the parent company UniCredit S.p.A. So.De.Co. - Nuova Compagnia di Partecipazioni S.p.A. So.De.Co. S.r.l. (So.De.Co.), following to a restructuring transaction by which it acquired the “oil” business from the parent company Nuova Compagnia di Partecipazione S.p.A. (NCP), was sold to Ludoil Energy Srl in November 2014. In March 2016, So.De.Co., then controlled by Ludoil, summoned before the Court of Rome its former directors, NCP, the parent company UniCredit S.p.A. (in its capacity as holding company of NCP) and the external auditors (PricewaterhouseCoopers S.p.A. and Deloitte & Touche S.p.A.) claiming damages of approximately €94 million against the defendants, on a several and joint liability basis allegedly deriving from the failure to quantify, since at least 2010, the statutory capital loss, from the insufficient provisions for charges and risks related to environmental issues, and from the unreasonably high price paid for the acquisition of the “oil” business units and subsidiaries from NCP in the context of the group reorganization of the “oil” business. The parent company UniCredit S.p.A. has been sued by deducing the unfounded nature of the claim and the absence of the damage complained of. On 9 May 2017, the judge rejected all plaintiffs’ requests for evidence collection and scheduled the hearing for filing the conclusions for 12 February 2019. In November 2017, So.De.Co. served a claim against NCP and former directors on the same matter previously subject to a mediation, which had ended with no agreement between the parties. The first hearing, scheduled for 20 February 2018, was adjourned to 15 January 2019 to allow the renovation of a previously incomplete service of the claim. At such hearing, the case was adjourned to 11 June 2019 before which the parties will have the chance to file evidentiary briefs. Criminal proceedings Certain entities within the UniCredit group and certain of its representatives (including those no longer in office), are involved in various criminal proceedings and/or, as far as the parent company UniCredit S.p.A. is aware, are under investigation by the competent authorities with regard to various cases linked to banking transactions, including, specifically, in Italy, the offence pursuant to Article 644 (usury) of the Criminal Code. At present, these criminal proceedings have not had significant negative impact on the operating results and capital and financial position of the parent company UniCredit S.p.A. and/or the Group, however there is a risk that, if the parent company UniCredit S.p.A. and/or other UniCredit group entities or their representatives (including those no longer in office) were to be convicted, these events could have an impact on the reputation of the parent company UniCredit S.p.A. and/or the UniCredit group. On 14 December 2018, the Public Prosecutor of the Court of Tempio Pausania dismissed the parent company UniCredit S.p.A. from the criminal proceedings it had initiated, as the alleged violation of Article 24-ter of Legislative Decree 231/2001 became time-barred. Other proceedings Proceedings related to claims for withholding tax credits On 31 July 2014 the Supervisory Board of UCB AG concluded its internal investigation into the so-called “cum-ex” transactions (the short selling of equities around dividend dates and claims for withholding tax credits on German share dividends) at UCB AG. The findings of the Supervisory Board’s investigation indicated that the bank sustained losses due to certain past acts/omissions of individuals. The Supervisory Board has submitted a claim for compensation against three individual former members of the management board, not seeing reasons to take any action against the current members. These proceedings are ongoing. UniCredit S.p.A., UCB AG’s parent company, supports the decisions taken by the Supervisory Board. In addition, criminal investigations have been conducted against current or former employees of UCB AG by the Prosecutors in Frankfurt on the Main, Cologne and Munich with the aim of verifying alleged tax evasion offences on their part. UCB AG cooperated - and continues to cooperate - with the aforesaid Prosecutors who investigated offences that include possible tax evasion in connection with cum-ex transactions both for UCB AG’s own book as well as for a former customer of UCB AG. Proceedings in Cologne against UCB AG and its former employees were closed in November 2015 with, inter alia, the payment by UCB AG of a fine of €9.8 million. The investigations by the Frankfurt on the Main Prosecutor against UCB AG under section 30 of the Administrative Offences Act (the Ordnungswidrigkeitengesetz) were closed in February 2016 by the payment of a fine of €5 million. The investigation by the Munich Prosecutor against UCB AG was closed as well in April 2017 following the payment of a forfeiture of €5 million. In December 2018, in connection with a separate ongoing investigation against former bank employees by the Cologne prosecutor, UCB AG was informed of the initiation of an additional administrative proceeding regarding “cum-ex” transactions involving Exchange Traded Funds (“ETF”). The facts are being examined internally. UCB AG continues to cooperate with the authorities. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 408 2018 Annual Report and Accounts · UniCredit hearing for the submission of the parties’ conclusion is scheduled for 13 July 2020; and • the second filed in March 2016 by Como S.r.l. and Camillo Colella in the Court of Rome, demanding damages from the parent company UniCredit S.p.A. in the amount of approximately 379 million. Similarly to the Mazza notary, the plaintiffs complain that the initiatives of the former Banca di Roma S.p.A. in the criminal and civil proceedings, caused financial, moral, existential and personal injury damages to Camillo Colella, as well as damages for the loss of important commercial opportunities, as well as image, reputational and commercial damage to Como S.r.l. The proceeding is in its conclusive phase. In the view of the parent company UniCredit S.p.A., these lawsuits currently appear to be unfounded. The parent company UniCredit S.p.A. has made a provision it deems consistent to cover the risk resulting from unlawful credit transactions, which is essentially equal to the residual credit of the parent company UniCredit S.p.A. So.De.Co. - Nuova Compagnia di Partecipazioni S.p.A. So.De.Co. S.r.l. (So.De.Co.), following to a restructuring transaction by which it acquired the “oil” business from the parent company Nuova Compagnia di Partecipazione S.p.A. (NCP), was sold to Ludoil Energy Srl in November 2014. In March 2016, So.De.Co., then controlled by Ludoil, summoned before the Court of Rome its former directors, NCP, the parent company UniCredit S.p.A. (in its capacity as holding company of NCP) and the external auditors (PricewaterhouseCoopers S.p.A. and Deloitte & Touche S.p.A.) claiming damages of approximately €94 million against the defendants, on a several and joint liability basis allegedly deriving from the failure to quantify, since at least 2010, the statutory capital loss, from the insufficient provisions for charges and risks related to environmental issues, and from the unreasonably high price paid for the acquisition of the “oil” business units and subsidiaries from NCP in the context of the group reorganization of the “oil” business. The parent company UniCredit S.p.A. has been sued by deducing the unfounded nature of the claim and the absence of the damage complained of. On 9 May 2017, the judge rejected all plaintiffs’ requests for evidence collection and scheduled the hearing for filing the conclusions for 12 February 2019. In November 2017, So.De.Co. served a claim against NCP and former directors on the same matter previously subject to a mediation, which had ended with no agreement between the parties. The first hearing, scheduled for 20 February 2018, was adjourned to 15 January 2019 to allow the renovation of a previously incomplete service of the claim. At such hearing, the case was adjourned to 11 June 2019 before which the parties will have the chance to file evidentiary briefs. Criminal proceedings Certain entities within the UniCredit group and certain of its representatives (including those no longer in office), are involved in various criminal proceedings and/or, as far as the parent company UniCredit S.p.A. is aware, are under investigation by the competent authorities with regard to various cases linked to banking transactions, including, specifically, in Italy, the offence pursuant to Article 644 (usury) of the Criminal Code. At present, these criminal proceedings have not had significant negative impact on the operating results and capital and financial position of the parent company UniCredit S.p.A. and/or the Group, however there is a risk that, if the parent company UniCredit S.p.A. and/or other UniCredit group entities or their representatives (including those no longer in office) were to be convicted, these events could have an impact on the reputation of the parent company UniCredit S.p.A. and/or the UniCredit group. On 14 December 2018, the Public Prosecutor of the Court of Tempio Pausania dismissed the parent company UniCredit S.p.A. from the criminal proceedings it had initiated, as the alleged violation of Article 24-ter of Legislative Decree 231/2001 became time-barred. Other proceedings Proceedings related to claims for withholding tax credits On 31 July 2014 the Supervisory Board of UCB AG concluded its internal investigation into the so-called “cum-ex” transactions (the short selling of equities around dividend dates and claims for withholding tax credits on German share dividends) at UCB AG. The findings of the Supervisory Board’s investigation indicated that the bank sustained losses due to certain past acts/omissions of individuals. The Supervisory Board has submitted a claim for compensation against three individual former members of the management board, not seeing reasons to take any action against the current members. These proceedings are ongoing. UniCredit S.p.A., UCB AG’s parent company, supports the decisions taken by the Supervisory Board. In addition, criminal investigations have been conducted against current or former employees of UCB AG by the Prosecutors in Frankfurt on the Main, Cologne and Munich with the aim of verifying alleged tax evasion offences on their part. UCB AG cooperated - and continues to cooperate - with the aforesaid Prosecutors who investigated offences that include possible tax evasion in connection with cum-ex transactions both for UCB AG’s own book as well as for a former customer of UCB AG. Proceedings in Cologne against UCB AG and its former employees were closed in November 2015 with, inter alia, the payment by UCB AG of a fine of €9.8 million. The investigations by the Frankfurt on the Main Prosecutor against UCB AG under section 30 of the Administrative Offences Act (the Ordnungswidrigkeitengesetz) were closed in February 2016 by the payment of a fine of €5 million. The investigation by the Munich Prosecutor against UCB AG was closed as well in April 2017 following the payment of a forfeiture of €5 million. In December 2018, in connection with a separate ongoing investigation against former bank employees by the Cologne prosecutor, UCB AG was informed of the initiation of an additional administrative proceeding regarding “cum-ex” transactions involving Exchange Traded Funds (“ETF”). The facts are being examined internally. UCB AG continues to cooperate with the authorities. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 409 The Munich tax authorities are currently performing a regular field audit of UCB AG for the years 2009 to 2012 which inter alia includes review of other transactions in equities around the dividend record date. During these years UCB AG performed, inter alia, securities-lending with different domestic counterparts which inter alia include, but are not limited to, different types of securities transactions around the dividend date. It remains to be clarified whether, and under what circumstances, tax credits can be obtained or taxes refunded with regard to different types of transactions carried out close to the distribution of dividends, and which are the further consequences for the bank in case of different tax treatment. The same applies for the years 2013 until 2015 following the current regular tax audit mentioned above. It cannot be ruled out that UCB AG might be exposed to tax-claims in this respect by relevant tax-offices or third party claims under civil law. UCB AG is in constant communication with relevant Supervisory Authorities and competent tax authorities regarding these matters. UCB AG has made provisions deemed appropriate. Medienfonds/closed-end funds Various investors in VIP Medienfonds 4 GmbH & Co. KG to whom the UCB AG issued loans to finance their participation brought legal proceedings against UCB AG. In the context of the conclusion of the loan agreements the plaintiffs claim that an inadequate advice was provided by the bank about the fund structure and the related tax consequences. A settlement was reached with the vast majority of the plaintiffs. An outstanding final decision with respect to the question of UCB AG's liability for the prospectus in the proceeding pursuant to the Capital Markets Test Case Act (Kapitalanleger-Musterverfahrensgesetz) which is pending at the Higher Regional Court of Munich, will affect only a few pending cases. Furthermore, at present, UCB AG is defending lawsuits concerning other closed-end funds. Investors filed lawsuits against UCB AG and claim insufficient advice was provided by the bank within the scope of their investment in closed-end funds. In particular, the investors claim that UCB AG did not or did not fully disclose any refunds made to the bank or they were advised on the basis of an allegedly incorrect prospectus. The questions regarding a correct and sufficient advice to a customer as well as questions regarding the limitation period and thus the success prospects in the proceedings depend on the individual circumstances of the particular case and are therefore difficult to be predicted. As far as these proceedings were disputed, the experience in the past has shown that the deciding courts have largely ruled in favour of UCB AG. Alpine Holding GmbH Alpine Holding GmbH (a limited liability company) undertook a bond offering every year from 2010 to 2012. In 2010 and 2011, UCB Austria acted as joint lead manager, together with another bank. In June/July 2013, Alpine Holding GmbH and Alpine Bau GmbH became insolvent and insolvency proceedings began. Numerous bondholders then started to send letters to the banks involved in issuing the bonds, setting out their claims. Insofar as UCB Austria is concerned, bondholders based their claims primarily on prospectus liability of the joint lead managers; only in a minority of cases they also claimed an alleged misselling due to bad investment advice. Furthermore, UCB Austria, among other banks, has been named as defendant in civil proceedings initiated by investors including three class actions filed by the Federal Chamber of Labor (with the claimed amount totaling about €20.26 million). The principal claim is prospectus liability. These civil proceedings are mainly pending in the first instance. So far the Austrian Supreme Court has not issued a final decision with respect to prospectus liability claims against UCB Austria. In addition to the foregoing proceedings against UCB Austria stemming from the Alpine insolvency, additional Alpine-related actions have been threatened and may be filed in the future. The pending or future actions may have negative consequences for UCB Austria. At the moment, it is not possible to estimate reliably the timing and results of the various actions, nor determine the level of liability, if any. In addition, several involved persons have been named as defendants in criminal proceedings in Austria which concern the Alpine bankruptcy case. UCB Austria has joined these proceedings as private party. The criminal proceedings are at the pre-trial stage. Unknown responsible persons of the issuing banks involved were formally also investigated by the public prosecutor’s office. In May 2017, the Public Prosecutors Office decided to close the proceedings against this group of persons. Several appeals against this decision were rejected in January 2018, hence the decision is final. Proceedings against the remaining defendants were closed in May 2018. Private parties appealed against this decision and the proceedings are still pending. Valauret S.A. In 2004, Valauret S.A. and Hughes de Lasteyrie du Saillant filed a civil claim for losses resulting from the drop in the share price between 2002 and 2003, allegedly caused by earlier fraudulent actions by members of the company’s board of directors and others. UCB Austria (as successor to Creditanstalt) was joined as the fourteenth defendant in 2007 on the basis that it was banker to one of the defendants. Valauret S.A. is seeking damages of €129.8 million in addition to legal costs and Hughes de Lasteyrie du Saillant damages of €4.39 million. In 2006, before the action was extended to UCB Austria, the civil proceedings were stayed following the opening of criminal proceedings by the French State that are ongoing. In December 2008, the civil proceedings were also stayed against UCB Austria. In UCB Austria’s opinion, the claim is groundless and at present no provisions have been made. C. Risks arising from employment law cases UniCredit is involved in employment law disputes. In general, all employment law disputes are supported by provisions made to meet any disbursements incurred and in any case UniCredit does not believe that any liabilities relating to the outcome of the pending proceedings could have a significant impact on its economic and/or financial standing. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 409 The Munich tax authorities are currently performing a regular field audit of UCB AG for the years 2009 to 2012 which inter alia includes review of other transactions in equities around the dividend record date. During these years UCB AG performed, inter alia, securities-lending with different domestic counterparts which inter alia include, but are not limited to, different types of securities transactions around the dividend date. It remains to be clarified whether, and under what circumstances, tax credits can be obtained or taxes refunded with regard to different types of transactions carried out close to the distribution of dividends, and which are the further consequences for the bank in case of different tax treatment. The same applies for the years 2013 until 2015 following the current regular tax audit mentioned above. It cannot be ruled out that UCB AG might be exposed to tax-claims in this respect by relevant tax-offices or third party claims under civil law. UCB AG is in constant communication with relevant Supervisory Authorities and competent tax authorities regarding these matters. UCB AG has made provisions deemed appropriate. Medienfonds/closed-end funds Various investors in VIP Medienfonds 4 GmbH & Co. KG to whom the UCB AG issued loans to finance their participation brought legal proceedings against UCB AG. In the context of the conclusion of the loan agreements the plaintiffs claim that an inadequate advice was provided by the bank about the fund structure and the related tax consequences. A settlement was reached with the vast majority of the plaintiffs. An outstanding final decision with respect to the question of UCB AG's liability for the prospectus in the proceeding pursuant to the Capital Markets Test Case Act (Kapitalanleger-Musterverfahrensgesetz) which is pending at the Higher Regional Court of Munich, will affect only a few pending cases. Furthermore, at present, UCB AG is defending lawsuits concerning other closed-end funds. Investors filed lawsuits against UCB AG and claim insufficient advice was provided by the bank within the scope of their investment in closed-end funds. In particular, the investors claim that UCB AG did not or did not fully disclose any refunds made to the bank or they were advised on the basis of an allegedly incorrect prospectus. The questions regarding a correct and sufficient advice to a customer as well as questions regarding the limitation period and thus the success prospects in the proceedings depend on the individual circumstances of the particular case and are therefore difficult to be predicted. As far as these proceedings were disputed, the experience in the past has shown that the deciding courts have largely ruled in favour of UCB AG. Alpine Holding GmbH Alpine Holding GmbH (a limited liability company) undertook a bond offering every year from 2010 to 2012. In 2010 and 2011, UCB Austria acted as joint lead manager, together with another bank. In June/July 2013, Alpine Holding GmbH and Alpine Bau GmbH became insolvent and insolvency proceedings began. Numerous bondholders then started to send letters to the banks involved in issuing the bonds, setting out their claims. Insofar as UCB Austria is concerned, bondholders based their claims primarily on prospectus liability of the joint lead managers; only in a minority of cases they also claimed an alleged misselling due to bad investment advice. Furthermore, UCB Austria, among other banks, has been named as defendant in civil proceedings initiated by investors including three class actions filed by the Federal Chamber of Labor (with the claimed amount totaling about €20.26 million). The principal claim is prospectus liability. These civil proceedings are mainly pending in the first instance. So far the Austrian Supreme Court has not issued a final decision with respect to prospectus liability claims against UCB Austria. In addition to the foregoing proceedings against UCB Austria stemming from the Alpine insolvency, additional Alpine-related actions have been threatened and may be filed in the future. The pending or future actions may have negative consequences for UCB Austria. At the moment, it is not possible to estimate reliably the timing and results of the various actions, nor determine the level of liability, if any. In addition, several involved persons have been named as defendants in criminal proceedings in Austria which concern the Alpine bankruptcy case. UCB Austria has joined these proceedings as private party. The criminal proceedings are at the pre-trial stage. Unknown responsible persons of the issuing banks involved were formally also investigated by the public prosecutor’s office. In May 2017, the Public Prosecutors Office decided to close the proceedings against this group of persons. Several appeals against this decision were rejected in January 2018, hence the decision is final. Proceedings against the remaining defendants were closed in May 2018. Private parties appealed against this decision and the proceedings are still pending. Valauret S.A. In 2004, Valauret S.A. and Hughes de Lasteyrie du Saillant filed a civil claim for losses resulting from the drop in the share price between 2002 and 2003, allegedly caused by earlier fraudulent actions by members of the company’s board of directors and others. UCB Austria (as successor to Creditanstalt) was joined as the fourteenth defendant in 2007 on the basis that it was banker to one of the defendants. Valauret S.A. is seeking damages of €129.8 million in addition to legal costs and Hughes de Lasteyrie du Saillant damages of €4.39 million. In 2006, before the action was extended to UCB Austria, the civil proceedings were stayed following the opening of criminal proceedings by the French State that are ongoing. In December 2008, the civil proceedings were also stayed against UCB Austria. In UCB Austria’s opinion, the claim is groundless and at present no provisions have been made. C. Risks arising from employment law cases UniCredit is involved in employment law disputes. In general, all employment law disputes are supported by provisions made to meet any disbursements incurred and in any case UniCredit does not believe that any liabilities relating to the outcome of the pending proceedings could have a significant impact on its economic and/or financial standing. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 409 The Munich tax authorities are currently performing a regular field audit of UCB AG for the years 2009 to 2012 which inter alia includes review of other transactions in equities around the dividend record date. During these years UCB AG performed, inter alia, securities-lending with different domestic counterparts which inter alia include, but are not limited to, different types of securities transactions around the dividend date. It remains to be clarified whether, and under what circumstances, tax credits can be obtained or taxes refunded with regard to different types of transactions carried out close to the distribution of dividends, and which are the further consequences for the bank in case of different tax treatment. The same applies for the years 2013 until 2015 following the current regular tax audit mentioned above. It cannot be ruled out that UCB AG might be exposed to tax-claims in this respect by relevant tax-offices or third party claims under civil law. UCB AG is in constant communication with relevant Supervisory Authorities and competent tax authorities regarding these matters. UCB AG has made provisions deemed appropriate. Medienfonds/closed-end funds Various investors in VIP Medienfonds 4 GmbH & Co. KG to whom the UCB AG issued loans to finance their participation brought legal proceedings against UCB AG. In the context of the conclusion of the loan agreements the plaintiffs claim that an inadequate advice was provided by the bank about the fund structure and the related tax consequences. A settlement was reached with the vast majority of the plaintiffs. An outstanding final decision with respect to the question of UCB AG's liability for the prospectus in the proceeding pursuant to the Capital Markets Test Case Act (Kapitalanleger-Musterverfahrensgesetz) which is pending at the Higher Regional Court of Munich, will affect only a few pending cases. Furthermore, at present, UCB AG is defending lawsuits concerning other closed-end funds. Investors filed lawsuits against UCB AG and claim insufficient advice was provided by the bank within the scope of their investment in closed-end funds. In particular, the investors claim that UCB AG did not or did not fully disclose any refunds made to the bank or they were advised on the basis of an allegedly incorrect prospectus. The questions regarding a correct and sufficient advice to a customer as well as questions regarding the limitation period and thus the success prospects in the proceedings depend on the individual circumstances of the particular case and are therefore difficult to be predicted. As far as these proceedings were disputed, the experience in the past has shown that the deciding courts have largely ruled in favour of UCB AG. Alpine Holding GmbH Alpine Holding GmbH (a limited liability company) undertook a bond offering every year from 2010 to 2012. In 2010 and 2011, UCB Austria acted as joint lead manager, together with another bank. In June/July 2013, Alpine Holding GmbH and Alpine Bau GmbH became insolvent and insolvency proceedings began. Numerous bondholders then started to send letters to the banks involved in issuing the bonds, setting out their claims. Insofar as UCB Austria is concerned, bondholders based their claims primarily on prospectus liability of the joint lead managers; only in a minority of cases they also claimed an alleged misselling due to bad investment advice. Furthermore, UCB Austria, among other banks, has been named as defendant in civil proceedings initiated by investors including three class actions filed by the Federal Chamber of Labor (with the claimed amount totaling about €20.26 million). The principal claim is prospectus liability. These civil proceedings are mainly pending in the first instance. So far the Austrian Supreme Court has not issued a final decision with respect to prospectus liability claims against UCB Austria. In addition to the foregoing proceedings against UCB Austria stemming from the Alpine insolvency, additional Alpine-related actions have been threatened and may be filed in the future. The pending or future actions may have negative consequences for UCB Austria. At the moment, it is not possible to estimate reliably the timing and results of the various actions, nor determine the level of liability, if any. In addition, several involved persons have been named as defendants in criminal proceedings in Austria which concern the Alpine bankruptcy case. UCB Austria has joined these proceedings as private party. The criminal proceedings are at the pre-trial stage. Unknown responsible persons of the issuing banks involved were formally also investigated by the public prosecutor’s office. In May 2017, the Public Prosecutors Office decided to close the proceedings against this group of persons. Several appeals against this decision were rejected in January 2018, hence the decision is final. Proceedings against the remaining defendants were closed in May 2018. Private parties appealed against this decision and the proceedings are still pending. Valauret S.A. In 2004, Valauret S.A. and Hughes de Lasteyrie du Saillant filed a civil claim for losses resulting from the drop in the share price between 2002 and 2003, allegedly caused by earlier fraudulent actions by members of the company’s board of directors and others. UCB Austria (as successor to Creditanstalt) was joined as the fourteenth defendant in 2007 on the basis that it was banker to one of the defendants. Valauret S.A. is seeking damages of €129.8 million in addition to legal costs and Hughes de Lasteyrie du Saillant damages of €4.39 million. In 2006, before the action was extended to UCB Austria, the civil proceedings were stayed following the opening of criminal proceedings by the French State that are ongoing. In December 2008, the civil proceedings were also stayed against UCB Austria. In UCB Austria’s opinion, the claim is groundless and at present no provisions have been made. C. Risks arising from employment law cases UniCredit is involved in employment law disputes. In general, all employment law disputes are supported by provisions made to meet any disbursements incurred and in any case UniCredit does not believe that any liabilities relating to the outcome of the pending proceedings could have a significant impact on its economic and/or financial standing. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 409 The Munich tax authorities are currently performing a regular field audit of UCB AG for the years 2009 to 2012 which inter alia includes review of other transactions in equities around the dividend record date. During these years UCB AG performed, inter alia, securities-lending with different domestic counterparts which inter alia include, but are not limited to, different types of securities transactions around the dividend date. It remains to be clarified whether, and under what circumstances, tax credits can be obtained or taxes refunded with regard to different types of transactions carried out close to the distribution of dividends, and which are the further consequences for the bank in case of different tax treatment. The same applies for the years 2013 until 2015 following the current regular tax audit mentioned above. It cannot be ruled out that UCB AG might be exposed to tax-claims in this respect by relevant tax-offices or third party claims under civil law. UCB AG is in constant communication with relevant Supervisory Authorities and competent tax authorities regarding these matters. UCB AG has made provisions deemed appropriate. Medienfonds/closed-end funds Various investors in VIP Medienfonds 4 GmbH & Co. KG to whom the UCB AG issued loans to finance their participation brought legal proceedings against UCB AG. In the context of the conclusion of the loan agreements the plaintiffs claim that an inadequate advice was provided by the bank about the fund structure and the related tax consequences. A settlement was reached with the vast majority of the plaintiffs. An outstanding final decision with respect to the question of UCB AG's liability for the prospectus in the proceeding pursuant to the Capital Markets Test Case Act (Kapitalanleger-Musterverfahrensgesetz) which is pending at the Higher Regional Court of Munich, will affect only a few pending cases. Furthermore, at present, UCB AG is defending lawsuits concerning other closed-end funds. Investors filed lawsuits against UCB AG and claim insufficient advice was provided by the bank within the scope of their investment in closed-end funds. In particular, the investors claim that UCB AG did not or did not fully disclose any refunds made to the bank or they were advised on the basis of an allegedly incorrect prospectus. The questions regarding a correct and sufficient advice to a customer as well as questions regarding the limitation period and thus the success prospects in the proceedings depend on the individual circumstances of the particular case and are therefore difficult to be predicted. As far as these proceedings were disputed, the experience in the past has shown that the deciding courts have largely ruled in favour of UCB AG. Alpine Holding GmbH Alpine Holding GmbH (a limited liability company) undertook a bond offering every year from 2010 to 2012. In 2010 and 2011, UCB Austria acted as joint lead manager, together with another bank. In June/July 2013, Alpine Holding GmbH and Alpine Bau GmbH became insolvent and insolvency proceedings began. Numerous bondholders then started to send letters to the banks involved in issuing the bonds, setting out their claims. Insofar as UCB Austria is concerned, bondholders based their claims primarily on prospectus liability of the joint lead managers; only in a minority of cases they also claimed an alleged misselling due to bad investment advice. Furthermore, UCB Austria, among other banks, has been named as defendant in civil proceedings initiated by investors including three class actions filed by the Federal Chamber of Labor (with the claimed amount totaling about €20.26 million). The principal claim is prospectus liability. These civil proceedings are mainly pending in the first instance. So far the Austrian Supreme Court has not issued a final decision with respect to prospectus liability claims against UCB Austria. In addition to the foregoing proceedings against UCB Austria stemming from the Alpine insolvency, additional Alpine-related actions have been threatened and may be filed in the future. The pending or future actions may have negative consequences for UCB Austria. At the moment, it is not possible to estimate reliably the timing and results of the various actions, nor determine the level of liability, if any. In addition, several involved persons have been named as defendants in criminal proceedings in Austria which concern the Alpine bankruptcy case. UCB Austria has joined these proceedings as private party. The criminal proceedings are at the pre-trial stage. Unknown responsible persons of the issuing banks involved were formally also investigated by the public prosecutor’s office. In May 2017, the Public Prosecutors Office decided to close the proceedings against this group of persons. Several appeals against this decision were rejected in January 2018, hence the decision is final. Proceedings against the remaining defendants were closed in May 2018. Private parties appealed against this decision and the proceedings are still pending. Valauret S.A. In 2004, Valauret S.A. and Hughes de Lasteyrie du Saillant filed a civil claim for losses resulting from the drop in the share price between 2002 and 2003, allegedly caused by earlier fraudulent actions by members of the company’s board of directors and others. UCB Austria (as successor to Creditanstalt) was joined as the fourteenth defendant in 2007 on the basis that it was banker to one of the defendants. Valauret S.A. is seeking damages of €129.8 million in addition to legal costs and Hughes de Lasteyrie du Saillant damages of €4.39 million. In 2006, before the action was extended to UCB Austria, the civil proceedings were stayed following the opening of criminal proceedings by the French State that are ongoing. In December 2008, the civil proceedings were also stayed against UCB Austria. In UCB Austria’s opinion, the claim is groundless and at present no provisions have been made. C. Risks arising from employment law cases UniCredit is involved in employment law disputes. In general, all employment law disputes are supported by provisions made to meet any disbursements incurred and in any case UniCredit does not believe that any liabilities relating to the outcome of the pending proceedings could have a significant impact on its economic and/or financial standing. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 409 The Munich tax authorities are currently performing a regular field audit of UCB AG for the years 2009 to 2012 which inter alia includes review of other transactions in equities around the dividend record date. During these years UCB AG performed, inter alia, securities-lending with different domestic counterparts which inter alia include, but are not limited to, different types of securities transactions around the dividend date. It remains to be clarified whether, and under what circumstances, tax credits can be obtained or taxes refunded with regard to different types of transactions carried out close to the distribution of dividends, and which are the further consequences for the bank in case of different tax treatment. The same applies for the years 2013 until 2015 following the current regular tax audit mentioned above. It cannot be ruled out that UCB AG might be exposed to tax-claims in this respect by relevant tax-offices or third party claims under civil law. UCB AG is in constant communication with relevant Supervisory Authorities and competent tax authorities regarding these matters. UCB AG has made provisions deemed appropriate. Medienfonds/closed-end funds Various investors in VIP Medienfonds 4 GmbH & Co. KG to whom the UCB AG issued loans to finance their participation brought legal proceedings against UCB AG. In the context of the conclusion of the loan agreements the plaintiffs claim that an inadequate advice was provided by the bank about the fund structure and the related tax consequences. A settlement was reached with the vast majority of the plaintiffs. An outstanding final decision with respect to the question of UCB AG's liability for the prospectus in the proceeding pursuant to the Capital Markets Test Case Act (Kapitalanleger-Musterverfahrensgesetz) which is pending at the Higher Regional Court of Munich, will affect only a few pending cases. Furthermore, at present, UCB AG is defending lawsuits concerning other closed-end funds. Investors filed lawsuits against UCB AG and claim insufficient advice was provided by the bank within the scope of their investment in closed-end funds. In particular, the investors claim that UCB AG did not or did not fully disclose any refunds made to the bank or they were advised on the basis of an allegedly incorrect prospectus. The questions regarding a correct and sufficient advice to a customer as well as questions regarding the limitation period and thus the success prospects in the proceedings depend on the individual circumstances of the particular case and are therefore difficult to be predicted. As far as these proceedings were disputed, the experience in the past has shown that the deciding courts have largely ruled in favour of UCB AG. Alpine Holding GmbH Alpine Holding GmbH (a limited liability company) undertook a bond offering every year from 2010 to 2012. In 2010 and 2011, UCB Austria acted as joint lead manager, together with another bank. In June/July 2013, Alpine Holding GmbH and Alpine Bau GmbH became insolvent and insolvency proceedings began. Numerous bondholders then started to send letters to the banks involved in issuing the bonds, setting out their claims. Insofar as UCB Austria is concerned, bondholders based their claims primarily on prospectus liability of the joint lead managers; only in a minority of cases they also claimed an alleged misselling due to bad investment advice. Furthermore, UCB Austria, among other banks, has been named as defendant in civil proceedings initiated by investors including three class actions filed by the Federal Chamber of Labor (with the claimed amount totaling about €20.26 million). The principal claim is prospectus liability. These civil proceedings are mainly pending in the first instance. So far the Austrian Supreme Court has not issued a final decision with respect to prospectus liability claims against UCB Austria. In addition to the foregoing proceedings against UCB Austria stemming from the Alpine insolvency, additional Alpine-related actions have been threatened and may be filed in the future. The pending or future actions may have negative consequences for UCB Austria. At the moment, it is not possible to estimate reliably the timing and results of the various actions, nor determine the level of liability, if any. In addition, several involved persons have been named as defendants in criminal proceedings in Austria which concern the Alpine bankruptcy case. UCB Austria has joined these proceedings as private party. The criminal proceedings are at the pre-trial stage. Unknown responsible persons of the issuing banks involved were formally also investigated by the public prosecutor’s office. In May 2017, the Public Prosecutors Office decided to close the proceedings against this group of persons. Several appeals against this decision were rejected in January 2018, hence the decision is final. Proceedings against the remaining defendants were closed in May 2018. Private parties appealed against this decision and the proceedings are still pending. Valauret S.A. In 2004, Valauret S.A. and Hughes de Lasteyrie du Saillant filed a civil claim for losses resulting from the drop in the share price between 2002 and 2003, allegedly caused by earlier fraudulent actions by members of the company’s board of directors and others. UCB Austria (as successor to Creditanstalt) was joined as the fourteenth defendant in 2007 on the basis that it was banker to one of the defendants. Valauret S.A. is seeking damages of €129.8 million in addition to legal costs and Hughes de Lasteyrie du Saillant damages of €4.39 million. In 2006, before the action was extended to UCB Austria, the civil proceedings were stayed following the opening of criminal proceedings by the French State that are ongoing. In December 2008, the civil proceedings were also stayed against UCB Austria. In UCB Austria’s opinion, the claim is groundless and at present no provisions have been made. C. Risks arising from employment law cases UniCredit is involved in employment law disputes. In general, all employment law disputes are supported by provisions made to meet any disbursements incurred and in any case UniCredit does not believe that any liabilities relating to the outcome of the pending proceedings could have a significant impact on its economic and/or financial standing. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 410 2018 Annual Report and Accounts · UniCredit Lawsuits filed against UniCredit S.p.A. by members of the former Cassa di Risparmio di Roma Fund Lawsuits have been brought against UniCredit by members of the former Cassa di Risparmio di Roma Fund. These lawsuits, having been won in earlier proceedings by UniCredit, hang on appeal cases brought before the relevant courts of appeal and the Court of Cassation (as applicable) in which the main claim is a request that the funding levels of the former Cassa di Risparmio di Roma Fund be restored and that the individual social security accounts of each member be assessed and quantified. With reference to the main claim, the relief sought is estimated at €384 million. No provisions were made as these actions are considered to be unfounded. D. Risks arising from tax disputes The following information pertains to the most relevant litigations born in 2018 and to those already pending at the beginning of the fiscal year, which have been decided or otherwise defined. For the litigations which are not mentioned, reference must be made to the financial statements of previous fiscal years. Pending cases arising during the period During 2018 UniCredit S.p.A. and certain controlled companies have been served some deeds among which the most relevant are reported: • nine notices of assessment, for a total amount of €4.9 million, served with regard to registration tax on guarantees referred to loans subject to the substitute tax provided for by D.P.R. 601/1973. Against all the notices of assessment the bank has filed claims with the tax court and has requested the cancellation to the Tax Authorities. As of December 31, 2018, the Tax Authorities have cancelled all the notices of assessment; • a notice of assessment, served to UniCredit S.p.A. as the consolidating entity for tax purposes, regarding IRES 2013 referred to Pioneer Investment Management S.G.R.p.A., with which the Tax Authorities have challenged transfer pricing related items, similarly to what happened with respect to the fiscal years from 2006 to 2012. The higher IRES tax requested is equal to €4.4 million, plus interest, and no penalty has been applied since the Tax Authorities have expressly recognized the compliance with the transfer pricing documentation regime; • a deed referred to the fiscal monitoring regime, with which an administrative penalty regarding equal to €1 million has been issued which, according to the applicable law, can be defined by means of the payment of €0.36 million; • in September 2018 the Italian Customs notified to Nuova Compagnia di Partecipazioni S.p.A. and to So.De.Co. S.r.l., a company previously controlled, a tax audit report referred to alleged violations regarding VAT and excises; the amount which can be potentially referred to So.De.Co. S.r.l., limited to joint liability for excises allegedly unpaid, is equal to €7.5 million, plus penalties (which will be determined subsequently by the competent Customs Office). No further deed has been notified by the Tax Authorities. Moreover: • to UniCredit Bank A.G. - Italian branch, in October 2018, after a tax audit regarding 2012 and 2013, the Tax Authorities have notified a tax audit report regarding IRES, IRAP and VAT. The remarks concerning IRES and IRAP, referred to alleged violations regarding transfer pricing, have been defined by means an out of Court settlement. In comparison with a higher taxable base assessed equal to €9.5 million (for the two fiscal years), the higher taxable base defined is equal to €5.9 million (for the two fiscal years). Therefore, the company paid higher IRES and IRAP taxes equal to €2.4 million, plus interest, while no administrative penalty has been applied since, also in this case, the Tax Authorities have expressly recognized the compliance with the transfer pricing documentation regime. As for VAT, the remarks arising from the tax audit report are referred to the effects of the decision no. C-7/13 (Skandia) of the EUCJ and the higher tax assessed amounts to, respectively, €5.5 million for 2013 and €6 million for 2014. In December 2018 the Tax Authorities served a notice of assessment for VAT 2013, bearing, in addition to the higher tax of €5.5 million, also administrative penalties, equal to €6.2 million, and interest; • to UniCredit Services S.C.p.A. (formerly UniCredit Business Integrated Solutions S.C.p.A.) the Tax Authorities notified a questionnaire regarding transfer pricing for 2013; • to UniCredit S.p.A. the Tax Authorities notified a questionnaire regarding the tax treatment of dividend paid by Banca d’Italia in 2013 and 2014. All the requests of information have been answered within the due date indicated by the Tax Authorities. Updates on pending disputes and tax audits As for 2018, the following information is reported: • with respect to the registration tax allegedly due for the registration of the rulings that had settled a number of opposition proceedings regarding the liability status of the companies of the “Costanzo Group”, the Tax Authorities have recognized as partly not due the registration tax requested, for a total amount of €8.95 million. Therefore, the total value of all the litigations is reduced to €18.95 million. In addition the second Degree Tax Court of Catania has issued a decision in favor of the bank relating to a notice of assessment of €0.23 million. Currently, all the litigations are pending and, in one case, the Tax Authorities filed a claim with the Supreme Court; with respect to this litigation, the bank has challenged the claim of the Tax Authorities; • in the financial statements as of December 31, 2017, a favorable decision, definitive, has been mentioned, which had cancelled the notices of assessment served to UniCredit Leasing S.p.A. for IRES and VAT 2005 (total value €120 million). As a consequence, the Tax Authorities have cancelled also the notice of assessment served to UniCredit S.p.A. for IRES 2005 (as the consolidating company for tax purposes), for a total value of €19 million; • in 2017 the Tax Authorities served to UniCredit S.p.A. a notice of assessment referred to the company Dicembre 2007 S.p.A., liquidated, of which UniCredit S.p.A. was a shareholder. The deed refers to the allegedly incorrect application of the participation exemption regime for the purposes if IRES due for 2011. The total amount requested is equal to €14.6 million, plus interest (€7.7 million for higher IRES and €6.9 million for penalties) and it has been requested jointly to all the former shareholders. UniCredit S.p.A. is liable up to 46.67% of the higher sums requested; therefore, the share referred to UniCredit S.p.A. is equal to €6.9 million. The company has filed a claim with the Tax Court, which has cancelled the notice of Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 410 2018 Annual Report and Accounts · UniCredit Lawsuits filed against UniCredit S.p.A. by members of the former Cassa di Risparmio di Roma Fund Lawsuits have been brought against UniCredit by members of the former Cassa di Risparmio di Roma Fund. These lawsuits, having been won in earlier proceedings by UniCredit, hang on appeal cases brought before the relevant courts of appeal and the Court of Cassation (as applicable) in which the main claim is a request that the funding levels of the former Cassa di Risparmio di Roma Fund be restored and that the individual social security accounts of each member be assessed and quantified. With reference to the main claim, the relief sought is estimated at €384 million. No provisions were made as these actions are considered to be unfounded. D. Risks arising from tax disputes The following information pertains to the most relevant litigations born in 2018 and to those already pending at the beginning of the fiscal year, which have been decided or otherwise defined. For the litigations which are not mentioned, reference must be made to the financial statements of previous fiscal years. Pending cases arising during the period During 2018 UniCredit S.p.A. and certain controlled companies have been served some deeds among which the most relevant are reported: • nine notices of assessment, for a total amount of €4.9 million, served with regard to registration tax on guarantees referred to loans subject to the substitute tax provided for by D.P.R. 601/1973. Against all the notices of assessment the bank has filed claims with the tax court and has requested the cancellation to the Tax Authorities. As of December 31, 2018, the Tax Authorities have cancelled all the notices of assessment; • a notice of assessment, served to UniCredit S.p.A. as the consolidating entity for tax purposes, regarding IRES 2013 referred to Pioneer Investment Management S.G.R.p.A., with which the Tax Authorities have challenged transfer pricing related items, similarly to what happened with respect to the fiscal years from 2006 to 2012. The higher IRES tax requested is equal to €4.4 million, plus interest, and no penalty has been applied since the Tax Authorities have expressly recognized the compliance with the transfer pricing documentation regime; • a deed referred to the fiscal monitoring regime, with which an administrative penalty regarding equal to €1 million has been issued which, according to the applicable law, can be defined by means of the payment of €0.36 million; • in September 2018 the Italian Customs notified to Nuova Compagnia di Partecipazioni S.p.A. and to So.De.Co. S.r.l., a company previously controlled, a tax audit report referred to alleged violations regarding VAT and excises; the amount which can be potentially referred to So.De.Co. S.r.l., limited to joint liability for excises allegedly unpaid, is equal to €7.5 million, plus penalties (which will be determined subsequently by the competent Customs Office). No further deed has been notified by the Tax Authorities. Moreover: • to UniCredit Bank A.G. - Italian branch, in October 2018, after a tax audit regarding 2012 and 2013, the Tax Authorities have notified a tax audit report regarding IRES, IRAP and VAT. The remarks concerning IRES and IRAP, referred to alleged violations regarding transfer pricing, have been defined by means an out of Court settlement. In comparison with a higher taxable base assessed equal to €9.5 million (for the two fiscal years), the higher taxable base defined is equal to €5.9 million (for the two fiscal years). Therefore, the company paid higher IRES and IRAP taxes equal to €2.4 million, plus interest, while no administrative penalty has been applied since, also in this case, the Tax Authorities have expressly recognized the compliance with the transfer pricing documentation regime. As for VAT, the remarks arising from the tax audit report are referred to the effects of the decision no. C-7/13 (Skandia) of the EUCJ and the higher tax assessed amounts to, respectively, €5.5 million for 2013 and €6 million for 2014. In December 2018 the Tax Authorities served a notice of assessment for VAT 2013, bearing, in addition to the higher tax of €5.5 million, also administrative penalties, equal to €6.2 million, and interest; • to UniCredit Services S.C.p.A. (formerly UniCredit Business Integrated Solutions S.C.p.A.) the Tax Authorities notified a questionnaire regarding transfer pricing for 2013; • to UniCredit S.p.A. the Tax Authorities notified a questionnaire regarding the tax treatment of dividend paid by Banca d’Italia in 2013 and 2014. All the requests of information have been answered within the due date indicated by the Tax Authorities. Updates on pending disputes and tax audits As for 2018, the following information is reported: • with respect to the registration tax allegedly due for the registration of the rulings that had settled a number of opposition proceedings regarding the liability status of the companies of the “Costanzo Group”, the Tax Authorities have recognized as partly not due the registration tax requested, for a total amount of €8.95 million. Therefore, the total value of all the litigations is reduced to €18.95 million. In addition the second Degree Tax Court of Catania has issued a decision in favor of the bank relating to a notice of assessment of €0.23 million. Currently, all the litigations are pending and, in one case, the Tax Authorities filed a claim with the Supreme Court; with respect to this litigation, the bank has challenged the claim of the Tax Authorities; • in the financial statements as of December 31, 2017, a favorable decision, definitive, has been mentioned, which had cancelled the notices of assessment served to UniCredit Leasing S.p.A. for IRES and VAT 2005 (total value €120 million). As a consequence, the Tax Authorities have cancelled also the notice of assessment served to UniCredit S.p.A. for IRES 2005 (as the consolidating company for tax purposes), for a total value of €19 million; • in 2017 the Tax Authorities served to UniCredit S.p.A. a notice of assessment referred to the company Dicembre 2007 S.p.A., liquidated, of which UniCredit S.p.A. was a shareholder. The deed refers to the allegedly incorrect application of the participation exemption regime for the purposes if IRES due for 2011. The total amount requested is equal to €14.6 million, plus interest (€7.7 million for higher IRES and €6.9 million for penalties) and it has been requested jointly to all the former shareholders. UniCredit S.p.A. is liable up to 46.67% of the higher sums requested; therefore, the share referred to UniCredit S.p.A. is equal to €6.9 million. The company has filed a claim with the Tax Court, which has cancelled the notice of Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 410 2018 Annual Report and Accounts · UniCredit Lawsuits filed against UniCredit S.p.A. by members of the former Cassa di Risparmio di Roma Fund Lawsuits have been brought against UniCredit by members of the former Cassa di Risparmio di Roma Fund. These lawsuits, having been won in earlier proceedings by UniCredit, hang on appeal cases brought before the relevant courts of appeal and the Court of Cassation (as applicable) in which the main claim is a request that the funding levels of the former Cassa di Risparmio di Roma Fund be restored and that the individual social security accounts of each member be assessed and quantified. With reference to the main claim, the relief sought is estimated at €384 million. No provisions were made as these actions are considered to be unfounded. D. Risks arising from tax disputes The following information pertains to the most relevant litigations born in 2018 and to those already pending at the beginning of the fiscal year, which have been decided or otherwise defined. For the litigations which are not mentioned, reference must be made to the financial statements of previous fiscal years. Pending cases arising during the period During 2018 UniCredit S.p.A. and certain controlled companies have been served some deeds among which the most relevant are reported: • nine notices of assessment, for a total amount of €4.9 million, served with regard to registration tax on guarantees referred to loans subject to the substitute tax provided for by D.P.R. 601/1973. Against all the notices of assessment the bank has filed claims with the tax court and has requested the cancellation to the Tax Authorities. As of December 31, 2018, the Tax Authorities have cancelled all the notices of assessment; • a notice of assessment, served to UniCredit S.p.A. as the consolidating entity for tax purposes, regarding IRES 2013 referred to Pioneer Investment Management S.G.R.p.A., with which the Tax Authorities have challenged transfer pricing related items, similarly to what happened with respect to the fiscal years from 2006 to 2012. The higher IRES tax requested is equal to €4.4 million, plus interest, and no penalty has been applied since the Tax Authorities have expressly recognized the compliance with the transfer pricing documentation regime; • a deed referred to the fiscal monitoring regime, with which an administrative penalty regarding equal to €1 million has been issued which, according to the applicable law, can be defined by means of the payment of €0.36 million; • in September 2018 the Italian Customs notified to Nuova Compagnia di Partecipazioni S.p.A. and to So.De.Co. S.r.l., a company previously controlled, a tax audit report referred to alleged violations regarding VAT and excises; the amount which can be potentially referred to So.De.Co. S.r.l., limited to joint liability for excises allegedly unpaid, is equal to €7.5 million, plus penalties (which will be determined subsequently by the competent Customs Office). No further deed has been notified by the Tax Authorities. Moreover: • to UniCredit Bank A.G. - Italian branch, in October 2018, after a tax audit regarding 2012 and 2013, the Tax Authorities have notified a tax audit report regarding IRES, IRAP and VAT. The remarks concerning IRES and IRAP, referred to alleged violations regarding transfer pricing, have been defined by means an out of Court settlement. In comparison with a higher taxable base assessed equal to €9.5 million (for the two fiscal years), the higher taxable base defined is equal to €5.9 million (for the two fiscal years). Therefore, the company paid higher IRES and IRAP taxes equal to €2.4 million, plus interest, while no administrative penalty has been applied since, also in this case, the Tax Authorities have expressly recognized the compliance with the transfer pricing documentation regime. As for VAT, the remarks arising from the tax audit report are referred to the effects of the decision no. C-7/13 (Skandia) of the EUCJ and the higher tax assessed amounts to, respectively, €5.5 million for 2013 and €6 million for 2014. In December 2018 the Tax Authorities served a notice of assessment for VAT 2013, bearing, in addition to the higher tax of €5.5 million, also administrative penalties, equal to €6.2 million, and interest; • to UniCredit Services S.C.p.A. (formerly UniCredit Business Integrated Solutions S.C.p.A.) the Tax Authorities notified a questionnaire regarding transfer pricing for 2013; • to UniCredit S.p.A. the Tax Authorities notified a questionnaire regarding the tax treatment of dividend paid by Banca d’Italia in 2013 and 2014. All the requests of information have been answered within the due date indicated by the Tax Authorities. Updates on pending disputes and tax audits As for 2018, the following information is reported: • with respect to the registration tax allegedly due for the registration of the rulings that had settled a number of opposition proceedings regarding the liability status of the companies of the “Costanzo Group”, the Tax Authorities have recognized as partly not due the registration tax requested, for a total amount of €8.95 million. Therefore, the total value of all the litigations is reduced to €18.95 million. In addition the second Degree Tax Court of Catania has issued a decision in favor of the bank relating to a notice of assessment of €0.23 million. Currently, all the litigations are pending and, in one case, the Tax Authorities filed a claim with the Supreme Court; with respect to this litigation, the bank has challenged the claim of the Tax Authorities; • in the financial statements as of December 31, 2017, a favorable decision, definitive, has been mentioned, which had cancelled the notices of assessment served to UniCredit Leasing S.p.A. for IRES and VAT 2005 (total value €120 million). As a consequence, the Tax Authorities have cancelled also the notice of assessment served to UniCredit S.p.A. for IRES 2005 (as the consolidating company for tax purposes), for a total value of €19 million; • in 2017 the Tax Authorities served to UniCredit S.p.A. a notice of assessment referred to the company Dicembre 2007 S.p.A., liquidated, of which UniCredit S.p.A. was a shareholder. The deed refers to the allegedly incorrect application of the participation exemption regime for the purposes if IRES due for 2011. The total amount requested is equal to €14.6 million, plus interest (€7.7 million for higher IRES and €6.9 million for penalties) and it has been requested jointly to all the former shareholders. UniCredit S.p.A. is liable up to 46.67% of the higher sums requested; therefore, the share referred to UniCredit S.p.A. is equal to €6.9 million. The company has filed a claim with the Tax Court, which has cancelled the notice of Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 410 2018 Annual Report and Accounts · UniCredit Lawsuits filed against UniCredit S.p.A. by members of the former Cassa di Risparmio di Roma Fund Lawsuits have been brought against UniCredit by members of the former Cassa di Risparmio di Roma Fund. These lawsuits, having been won in earlier proceedings by UniCredit, hang on appeal cases brought before the relevant courts of appeal and the Court of Cassation (as applicable) in which the main claim is a request that the funding levels of the former Cassa di Risparmio di Roma Fund be restored and that the individual social security accounts of each member be assessed and quantified. With reference to the main claim, the relief sought is estimated at €384 million. No provisions were made as these actions are considered to be unfounded. D. Risks arising from tax disputes The following information pertains to the most relevant litigations born in 2018 and to those already pending at the beginning of the fiscal year, which have been decided or otherwise defined. For the litigations which are not mentioned, reference must be made to the financial statements of previous fiscal years. Pending cases arising during the period During 2018 UniCredit S.p.A. and certain controlled companies have been served some deeds among which the most relevant are reported: • nine notices of assessment, for a total amount of €4.9 million, served with regard to registration tax on guarantees referred to loans subject to the substitute tax provided for by D.P.R. 601/1973. Against all the notices of assessment the bank has filed claims with the tax court and has requested the cancellation to the Tax Authorities. As of December 31, 2018, the Tax Authorities have cancelled all the notices of assessment; • a notice of assessment, served to UniCredit S.p.A. as the consolidating entity for tax purposes, regarding IRES 2013 referred to Pioneer Investment Management S.G.R.p.A., with which the Tax Authorities have challenged transfer pricing related items, similarly to what happened with respect to the fiscal years from 2006 to 2012. The higher IRES tax requested is equal to €4.4 million, plus interest, and no penalty has been applied since the Tax Authorities have expressly recognized the compliance with the transfer pricing documentation regime; • a deed referred to the fiscal monitoring regime, with which an administrative penalty regarding equal to €1 million has been issued which, according to the applicable law, can be defined by means of the payment of €0.36 million; • in September 2018 the Italian Customs notified to Nuova Compagnia di Partecipazioni S.p.A. and to So.De.Co. S.r.l., a company previously controlled, a tax audit report referred to alleged violations regarding VAT and excises; the amount which can be potentially referred to So.De.Co. S.r.l., limited to joint liability for excises allegedly unpaid, is equal to €7.5 million, plus penalties (which will be determined subsequently by the competent Customs Office). No further deed has been notified by the Tax Authorities. Moreover: • to UniCredit Bank A.G. - Italian branch, in October 2018, after a tax audit regarding 2012 and 2013, the Tax Authorities have notified a tax audit report regarding IRES, IRAP and VAT. The remarks concerning IRES and IRAP, referred to alleged violations regarding transfer pricing, have been defined by means an out of Court settlement. In comparison with a higher taxable base assessed equal to €9.5 million (for the two fiscal years), the higher taxable base defined is equal to €5.9 million (for the two fiscal years). Therefore, the company paid higher IRES and IRAP taxes equal to €2.4 million, plus interest, while no administrative penalty has been applied since, also in this case, the Tax Authorities have expressly recognized the compliance with the transfer pricing documentation regime. As for VAT, the remarks arising from the tax audit report are referred to the effects of the decision no. C-7/13 (Skandia) of the EUCJ and the higher tax assessed amounts to, respectively, €5.5 million for 2013 and €6 million for 2014. In December 2018 the Tax Authorities served a notice of assessment for VAT 2013, bearing, in addition to the higher tax of €5.5 million, also administrative penalties, equal to €6.2 million, and interest; • to UniCredit Services S.C.p.A. (formerly UniCredit Business Integrated Solutions S.C.p.A.) the Tax Authorities notified a questionnaire regarding transfer pricing for 2013; • to UniCredit S.p.A. the Tax Authorities notified a questionnaire regarding the tax treatment of dividend paid by Banca d’Italia in 2013 and 2014. All the requests of information have been answered within the due date indicated by the Tax Authorities. Updates on pending disputes and tax audits As for 2018, the following information is reported: • with respect to the registration tax allegedly due for the registration of the rulings that had settled a number of opposition proceedings regarding the liability status of the companies of the “Costanzo Group”, the Tax Authorities have recognized as partly not due the registration tax requested, for a total amount of €8.95 million. Therefore, the total value of all the litigations is reduced to €18.95 million. In addition the second Degree Tax Court of Catania has issued a decision in favor of the bank relating to a notice of assessment of €0.23 million. Currently, all the litigations are pending and, in one case, the Tax Authorities filed a claim with the Supreme Court; with respect to this litigation, the bank has challenged the claim of the Tax Authorities; • in the financial statements as of December 31, 2017, a favorable decision, definitive, has been mentioned, which had cancelled the notices of assessment served to UniCredit Leasing S.p.A. for IRES and VAT 2005 (total value €120 million). As a consequence, the Tax Authorities have cancelled also the notice of assessment served to UniCredit S.p.A. for IRES 2005 (as the consolidating company for tax purposes), for a total value of €19 million; • in 2017 the Tax Authorities served to UniCredit S.p.A. a notice of assessment referred to the company Dicembre 2007 S.p.A., liquidated, of which UniCredit S.p.A. was a shareholder. The deed refers to the allegedly incorrect application of the participation exemption regime for the purposes if IRES due for 2011. The total amount requested is equal to €14.6 million, plus interest (€7.7 million for higher IRES and €6.9 million for penalties) and it has been requested jointly to all the former shareholders. UniCredit S.p.A. is liable up to 46.67% of the higher sums requested; therefore, the share referred to UniCredit S.p.A. is equal to €6.9 million. The company has filed a claim with the Tax Court, which has cancelled the notice of Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 410 2018 Annual Report and Accounts · UniCredit Lawsuits filed against UniCredit S.p.A. by members of the former Cassa di Risparmio di Roma Fund Lawsuits have been brought against UniCredit by members of the former Cassa di Risparmio di Roma Fund. These lawsuits, having been won in earlier proceedings by UniCredit, hang on appeal cases brought before the relevant courts of appeal and the Court of Cassation (as applicable) in which the main claim is a request that the funding levels of the former Cassa di Risparmio di Roma Fund be restored and that the individual social security accounts of each member be assessed and quantified. With reference to the main claim, the relief sought is estimated at €384 million. No provisions were made as these actions are considered to be unfounded. D. Risks arising from tax disputes The following information pertains to the most relevant litigations born in 2018 and to those already pending at the beginning of the fiscal year, which have been decided or otherwise defined. For the litigations which are not mentioned, reference must be made to the financial statements of previous fiscal years. Pending cases arising during the period During 2018 UniCredit S.p.A. and certain controlled companies have been served some deeds among which the most relevant are reported: • nine notices of assessment, for a total amount of €4.9 million, served with regard to registration tax on guarantees referred to loans subject to the substitute tax provided for by D.P.R. 601/1973. Against all the notices of assessment the bank has filed claims with the tax court and has requested the cancellation to the Tax Authorities. As of December 31, 2018, the Tax Authorities have cancelled all the notices of assessment; • a notice of assessment, served to UniCredit S.p.A. as the consolidating entity for tax purposes, regarding IRES 2013 referred to Pioneer Investment Management S.G.R.p.A., with which the Tax Authorities have challenged transfer pricing related items, similarly to what happened with respect to the fiscal years from 2006 to 2012. The higher IRES tax requested is equal to €4.4 million, plus interest, and no penalty has been applied since the Tax Authorities have expressly recognized the compliance with the transfer pricing documentation regime; • a deed referred to the fiscal monitoring regime, with which an administrative penalty regarding equal to €1 million has been issued which, according to the applicable law, can be defined by means of the payment of €0.36 million; • in September 2018 the Italian Customs notified to Nuova Compagnia di Partecipazioni S.p.A. and to So.De.Co. S.r.l., a company previously controlled, a tax audit report referred to alleged violations regarding VAT and excises; the amount which can be potentially referred to So.De.Co. S.r.l., limited to joint liability for excises allegedly unpaid, is equal to €7.5 million, plus penalties (which will be determined subsequently by the competent Customs Office). No further deed has been notified by the Tax Authorities. Moreover: • to UniCredit Bank A.G. - Italian branch, in October 2018, after a tax audit regarding 2012 and 2013, the Tax Authorities have notified a tax audit report regarding IRES, IRAP and VAT. The remarks concerning IRES and IRAP, referred to alleged violations regarding transfer pricing, have been defined by means an out of Court settlement. In comparison with a higher taxable base assessed equal to €9.5 million (for the two fiscal years), the higher taxable base defined is equal to €5.9 million (for the two fiscal years). Therefore, the company paid higher IRES and IRAP taxes equal to €2.4 million, plus interest, while no administrative penalty has been applied since, also in this case, the Tax Authorities have expressly recognized the compliance with the transfer pricing documentation regime. As for VAT, the remarks arising from the tax audit report are referred to the effects of the decision no. C-7/13 (Skandia) of the EUCJ and the higher tax assessed amounts to, respectively, €5.5 million for 2013 and €6 million for 2014. In December 2018 the Tax Authorities served a notice of assessment for VAT 2013, bearing, in addition to the higher tax of €5.5 million, also administrative penalties, equal to €6.2 million, and interest; • to UniCredit Services S.C.p.A. (formerly UniCredit Business Integrated Solutions S.C.p.A.) the Tax Authorities notified a questionnaire regarding transfer pricing for 2013; • to UniCredit S.p.A. the Tax Authorities notified a questionnaire regarding the tax treatment of dividend paid by Banca d’Italia in 2013 and 2014. All the requests of information have been answered within the due date indicated by the Tax Authorities. Updates on pending disputes and tax audits As for 2018, the following information is reported: • with respect to the registration tax allegedly due for the registration of the rulings that had settled a number of opposition proceedings regarding the liability status of the companies of the “Costanzo Group”, the Tax Authorities have recognized as partly not due the registration tax requested, for a total amount of €8.95 million. Therefore, the total value of all the litigations is reduced to €18.95 million. In addition the second Degree Tax Court of Catania has issued a decision in favor of the bank relating to a notice of assessment of €0.23 million. Currently, all the litigations are pending and, in one case, the Tax Authorities filed a claim with the Supreme Court; with respect to this litigation, the bank has challenged the claim of the Tax Authorities; • in the financial statements as of December 31, 2017, a favorable decision, definitive, has been mentioned, which had cancelled the notices of assessment served to UniCredit Leasing S.p.A. for IRES and VAT 2005 (total value €120 million). As a consequence, the Tax Authorities have cancelled also the notice of assessment served to UniCredit S.p.A. for IRES 2005 (as the consolidating company for tax purposes), for a total value of €19 million; • in 2017 the Tax Authorities served to UniCredit S.p.A. a notice of assessment referred to the company Dicembre 2007 S.p.A., liquidated, of which UniCredit S.p.A. was a shareholder. The deed refers to the allegedly incorrect application of the participation exemption regime for the purposes if IRES due for 2011. The total amount requested is equal to €14.6 million, plus interest (€7.7 million for higher IRES and €6.9 million for penalties) and it has been requested jointly to all the former shareholders. UniCredit S.p.A. is liable up to 46.67% of the higher sums requested; therefore, the share referred to UniCredit S.p.A. is equal to €6.9 million. The company has filed a claim with the Tax Court, which has cancelled the notice of Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 411 assessment. The Tax Authorities have filed an appeal; • with respect to UniCredit S.p.A. the Italian Supreme Court issued two decisions relating to the application of higher IRAP tax rate for the Region Veneto, for 2004. The litigation arises from the increase of 1% of the IRAP tax rate, applicable to banks and financial companies, provided for by the Region Veneto for 2002 and subsequent years. Such increase has given rise to the requests of payment of the higher tax and against such requests of payment the company filed claims with the Tax Courts. In general terms, the Supreme Court has, initially, ruled that the aforementioned increase was not legitimate, due to a violation of the general prohibition of the increase of the regional IRAP rates provided for by Law 289/2002; subsequently, the Court changed its interpretation, stating that the increase is legitimate only up to 0.5%, since such value should be grounded in the founding Law of IRAP tax. The aforementioned two decisions have confirmed the latter interpretation, however referring the litigations to the second degree Tax Court for additional factual inquiries. The total value of such litigations is equal to €3.2 million; • moreover, the Supreme Court has definitively ruled in favor of the bank, with respect to a notice of assessment regarding registration tax on a decision that settled an opposition proceeding regarding the liability status of a company. The notice of assessment has been entirely canceled, for a total amount of €2 million; • again, the Supreme Court has issued a favorable decision regarding a VAT assessment for 2000. The value of the litigation is equal to €0.5 million; • finally, the Supreme Court has issued a decision with which it has referred the parties to the second degree Tax Court, with respect to a litigation regarding the 1984 IRPEG tax credit pertaining to former Banco di Sicilia. The refund of this credit has been requested by Banco di Sicilia with respect to the former Cassa Centrale di Risparmio Vittorio Emanuele per le Province Siciliane, a company of which Banco di Sicilia had acquired the business activity. In particular, the decision pertains to the case in which the taxpayer has filed a tax return requesting the refund of a tax credit and, subsequently, the Tax Authorities have served a notice of assessment (thus increasing the taxable income reported) against which the taxpayer has filed a claim, giving rise to a litigation. According to the Court, if the taxpayer benefitted from the tax amnesty, provided for by Law 289/2002, in order to define such litigation, the definition should imply the full acceptance of the assessment and therefore, the taxpayer should be no more entitled to receive the tax credit. In this case, the Court has referred the parties to the second degree Tax Court for further factual inquiries. The value of the litigation is equal to €69 million (including principal and interest). It should be added that the litigation regarding the notice of assessment, defined by means of the tax amnesty, was referred to higher IRPEG tax equal to €4.5 million, in comparison to a tax credit equal to €25.6 million (for principal). With reference to risks arising from this litigation, adequate provisions have been posted in the financial statements • UniCredit Leasing S.p.A. has settled out of court several notices of assessment regarding VAT and IRAP for the fiscal years from 2010 to 2012. In comparison to a total amount requested of €22.8 million (plus interest) pursuant to the aforementioned settlements the company paid a total amount of €2.6 million (plus interest). As of 31 December 2017 the total amount of provisions for tax risks amounted to about €103 million (including provisions for legal expenses). As of 31 December 2018, the amount increased for higher provisions referred to pending litigations (€71.7 million) and for tax credits for which the litigation is threatened (€7.5 million). Therefore, the provisions amount to €182.1 million, of which €6.7 million for legal expenses. Tax proceedings in Germany Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risk - Qualitative information - B. Legal risks - Part E of the Consolidated explanatory notes. E. Other claims by customers Reference is made to the same paragraph Section 5 Operational Risk - Qualitative information - E. Other claims by customers - Part E of the Notes to the accounts of the parent company UniCredit S.p.A. which is herewith quoted entirely. Diamond offer Reference is made to the same paragraph Section 5 Operational Risk - Qualitative information - E. Other claims by customers - Diamond offer - Part E of the Notes to the accounts of the parent company UniCredit S.p.A. which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 411 assessment. The Tax Authorities have filed an appeal; • with respect to UniCredit S.p.A. the Italian Supreme Court issued two decisions relating to the application of higher IRAP tax rate for the Region Veneto, for 2004. The litigation arises from the increase of 1% of the IRAP tax rate, applicable to banks and financial companies, provided for by the Region Veneto for 2002 and subsequent years. Such increase has given rise to the requests of payment of the higher tax and against such requests of payment the company filed claims with the Tax Courts. In general terms, the Supreme Court has, initially, ruled that the aforementioned increase was not legitimate, due to a violation of the general prohibition of the increase of the regional IRAP rates provided for by Law 289/2002; subsequently, the Court changed its interpretation, stating that the increase is legitimate only up to 0.5%, since such value should be grounded in the founding Law of IRAP tax. The aforementioned two decisions have confirmed the latter interpretation, however referring the litigations to the second degree Tax Court for additional factual inquiries. The total value of such litigations is equal to €3.2 million; • moreover, the Supreme Court has definitively ruled in favor of the bank, with respect to a notice of assessment regarding registration tax on a decision that settled an opposition proceeding regarding the liability status of a company. The notice of assessment has been entirely canceled, for a total amount of €2 million; • again, the Supreme Court has issued a favorable decision regarding a VAT assessment for 2000. The value of the litigation is equal to €0.5 million; • finally, the Supreme Court has issued a decision with which it has referred the parties to the second degree Tax Court, with respect to a litigation regarding the 1984 IRPEG tax credit pertaining to former Banco di Sicilia. The refund of this credit has been requested by Banco di Sicilia with respect to the former Cassa Centrale di Risparmio Vittorio Emanuele per le Province Siciliane, a company of which Banco di Sicilia had acquired the business activity. In particular, the decision pertains to the case in which the taxpayer has filed a tax return requesting the refund of a tax credit and, subsequently, the Tax Authorities have served a notice of assessment (thus increasing the taxable income reported) against which the taxpayer has filed a claim, giving rise to a litigation. According to the Court, if the taxpayer benefitted from the tax amnesty, provided for by Law 289/2002, in order to define such litigation, the definition should imply the full acceptance of the assessment and therefore, the taxpayer should be no more entitled to receive the tax credit. In this case, the Court has referred the parties to the second degree Tax Court for further factual inquiries. The value of the litigation is equal to €69 million (including principal and interest). It should be added that the litigation regarding the notice of assessment, defined by means of the tax amnesty, was referred to higher IRPEG tax equal to €4.5 million, in comparison to a tax credit equal to €25.6 million (for principal). With reference to risks arising from this litigation, adequate provisions have been posted in the financial statements • UniCredit Leasing S.p.A. has settled out of court several notices of assessment regarding VAT and IRAP for the fiscal years from 2010 to 2012. In comparison to a total amount requested of €22.8 million (plus interest) pursuant to the aforementioned settlements the company paid a total amount of €2.6 million (plus interest). As of 31 December 2017 the total amount of provisions for tax risks amounted to about €103 million (including provisions for legal expenses). As of 31 December 2018, the amount increased for higher provisions referred to pending litigations (€71.7 million) and for tax credits for which the litigation is threatened (€7.5 million). Therefore, the provisions amount to €182.1 million, of which €6.7 million for legal expenses. Tax proceedings in Germany Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risk - Qualitative information - B. Legal risks - Part E of the Consolidated explanatory notes. E. Other claims by customers Reference is made to the same paragraph Section 5 Operational Risk - Qualitative information - E. Other claims by customers - Part E of the Notes to the accounts of the parent company UniCredit S.p.A. which is herewith quoted entirely. Diamond offer Reference is made to the same paragraph Section 5 Operational Risk - Qualitative information - E. Other claims by customers - Diamond offer - Part E of the Notes to the accounts of the parent company UniCredit S.p.A. which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 411 assessment. The Tax Authorities have filed an appeal; • with respect to UniCredit S.p.A. the Italian Supreme Court issued two decisions relating to the application of higher IRAP tax rate for the Region Veneto, for 2004. The litigation arises from the increase of 1% of the IRAP tax rate, applicable to banks and financial companies, provided for by the Region Veneto for 2002 and subsequent years. Such increase has given rise to the requests of payment of the higher tax and against such requests of payment the company filed claims with the Tax Courts. In general terms, the Supreme Court has, initially, ruled that the aforementioned increase was not legitimate, due to a violation of the general prohibition of the increase of the regional IRAP rates provided for by Law 289/2002; subsequently, the Court changed its interpretation, stating that the increase is legitimate only up to 0.5%, since such value should be grounded in the founding Law of IRAP tax. The aforementioned two decisions have confirmed the latter interpretation, however referring the litigations to the second degree Tax Court for additional factual inquiries. The total value of such litigations is equal to €3.2 million; • moreover, the Supreme Court has definitively ruled in favor of the bank, with respect to a notice of assessment regarding registration tax on a decision that settled an opposition proceeding regarding the liability status of a company. The notice of assessment has been entirely canceled, for a total amount of €2 million; • again, the Supreme Court has issued a favorable decision regarding a VAT assessment for 2000. The value of the litigation is equal to €0.5 million; • finally, the Supreme Court has issued a decision with which it has referred the parties to the second degree Tax Court, with respect to a litigation regarding the 1984 IRPEG tax credit pertaining to former Banco di Sicilia. The refund of this credit has been requested by Banco di Sicilia with respect to the former Cassa Centrale di Risparmio Vittorio Emanuele per le Province Siciliane, a company of which Banco di Sicilia had acquired the business activity. In particular, the decision pertains to the case in which the taxpayer has filed a tax return requesting the refund of a tax credit and, subsequently, the Tax Authorities have served a notice of assessment (thus increasing the taxable income reported) against which the taxpayer has filed a claim, giving rise to a litigation. According to the Court, if the taxpayer benefitted from the tax amnesty, provided for by Law 289/2002, in order to define such litigation, the definition should imply the full acceptance of the assessment and therefore, the taxpayer should be no more entitled to receive the tax credit. In this case, the Court has referred the parties to the second degree Tax Court for further factual inquiries. The value of the litigation is equal to €69 million (including principal and interest). It should be added that the litigation regarding the notice of assessment, defined by means of the tax amnesty, was referred to higher IRPEG tax equal to €4.5 million, in comparison to a tax credit equal to €25.6 million (for principal). With reference to risks arising from this litigation, adequate provisions have been posted in the financial statements • UniCredit Leasing S.p.A. has settled out of court several notices of assessment regarding VAT and IRAP for the fiscal years from 2010 to 2012. In comparison to a total amount requested of €22.8 million (plus interest) pursuant to the aforementioned settlements the company paid a total amount of €2.6 million (plus interest). As of 31 December 2017 the total amount of provisions for tax risks amounted to about €103 million (including provisions for legal expenses). As of 31 December 2018, the amount increased for higher provisions referred to pending litigations (€71.7 million) and for tax credits for which the litigation is threatened (€7.5 million). Therefore, the provisions amount to €182.1 million, of which €6.7 million for legal expenses. Tax proceedings in Germany Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risk - Qualitative information - B. Legal risks - Part E of the Consolidated explanatory notes. E. Other claims by customers Reference is made to the same paragraph Section 5 Operational Risk - Qualitative information - E. Other claims by customers - Part E of the Notes to the accounts of the parent company UniCredit S.p.A. which is herewith quoted entirely. Diamond offer Reference is made to the same paragraph Section 5 Operational Risk - Qualitative information - E. Other claims by customers - Diamond offer - Part E of the Notes to the accounts of the parent company UniCredit S.p.A. which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 411 assessment. The Tax Authorities have filed an appeal; • with respect to UniCredit S.p.A. the Italian Supreme Court issued two decisions relating to the application of higher IRAP tax rate for the Region Veneto, for 2004. The litigation arises from the increase of 1% of the IRAP tax rate, applicable to banks and financial companies, provided for by the Region Veneto for 2002 and subsequent years. Such increase has given rise to the requests of payment of the higher tax and against such requests of payment the company filed claims with the Tax Courts. In general terms, the Supreme Court has, initially, ruled that the aforementioned increase was not legitimate, due to a violation of the general prohibition of the increase of the regional IRAP rates provided for by Law 289/2002; subsequently, the Court changed its interpretation, stating that the increase is legitimate only up to 0.5%, since such value should be grounded in the founding Law of IRAP tax. The aforementioned two decisions have confirmed the latter interpretation, however referring the litigations to the second degree Tax Court for additional factual inquiries. The total value of such litigations is equal to €3.2 million; • moreover, the Supreme Court has definitively ruled in favor of the bank, with respect to a notice of assessment regarding registration tax on a decision that settled an opposition proceeding regarding the liability status of a company. The notice of assessment has been entirely canceled, for a total amount of €2 million; • again, the Supreme Court has issued a favorable decision regarding a VAT assessment for 2000. The value of the litigation is equal to €0.5 million; • finally, the Supreme Court has issued a decision with which it has referred the parties to the second degree Tax Court, with respect to a litigation regarding the 1984 IRPEG tax credit pertaining to former Banco di Sicilia. The refund of this credit has been requested by Banco di Sicilia with respect to the former Cassa Centrale di Risparmio Vittorio Emanuele per le Province Siciliane, a company of which Banco di Sicilia had acquired the business activity. In particular, the decision pertains to the case in which the taxpayer has filed a tax return requesting the refund of a tax credit and, subsequently, the Tax Authorities have served a notice of assessment (thus increasing the taxable income reported) against which the taxpayer has filed a claim, giving rise to a litigation. According to the Court, if the taxpayer benefitted from the tax amnesty, provided for by Law 289/2002, in order to define such litigation, the definition should imply the full acceptance of the assessment and therefore, the taxpayer should be no more entitled to receive the tax credit. In this case, the Court has referred the parties to the second degree Tax Court for further factual inquiries. The value of the litigation is equal to €69 million (including principal and interest). It should be added that the litigation regarding the notice of assessment, defined by means of the tax amnesty, was referred to higher IRPEG tax equal to €4.5 million, in comparison to a tax credit equal to €25.6 million (for principal). With reference to risks arising from this litigation, adequate provisions have been posted in the financial statements • UniCredit Leasing S.p.A. has settled out of court several notices of assessment regarding VAT and IRAP for the fiscal years from 2010 to 2012. In comparison to a total amount requested of €22.8 million (plus interest) pursuant to the aforementioned settlements the company paid a total amount of €2.6 million (plus interest). As of 31 December 2017 the total amount of provisions for tax risks amounted to about €103 million (including provisions for legal expenses). As of 31 December 2018, the amount increased for higher provisions referred to pending litigations (€71.7 million) and for tax credits for which the litigation is threatened (€7.5 million). Therefore, the provisions amount to €182.1 million, of which €6.7 million for legal expenses. Tax proceedings in Germany Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risk - Qualitative information - B. Legal risks - Part E of the Consolidated explanatory notes. E. Other claims by customers Reference is made to the same paragraph Section 5 Operational Risk - Qualitative information - E. Other claims by customers - Part E of the Notes to the accounts of the parent company UniCredit S.p.A. which is herewith quoted entirely. Diamond offer Reference is made to the same paragraph Section 5 Operational Risk - Qualitative information - E. Other claims by customers - Diamond offer - Part E of the Notes to the accounts of the parent company UniCredit S.p.A. which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 411 assessment. The Tax Authorities have filed an appeal; • with respect to UniCredit S.p.A. the Italian Supreme Court issued two decisions relating to the application of higher IRAP tax rate for the Region Veneto, for 2004. The litigation arises from the increase of 1% of the IRAP tax rate, applicable to banks and financial companies, provided for by the Region Veneto for 2002 and subsequent years. Such increase has given rise to the requests of payment of the higher tax and against such requests of payment the company filed claims with the Tax Courts. In general terms, the Supreme Court has, initially, ruled that the aforementioned increase was not legitimate, due to a violation of the general prohibition of the increase of the regional IRAP rates provided for by Law 289/2002; subsequently, the Court changed its interpretation, stating that the increase is legitimate only up to 0.5%, since such value should be grounded in the founding Law of IRAP tax. The aforementioned two decisions have confirmed the latter interpretation, however referring the litigations to the second degree Tax Court for additional factual inquiries. The total value of such litigations is equal to €3.2 million; • moreover, the Supreme Court has definitively ruled in favor of the bank, with respect to a notice of assessment regarding registration tax on a decision that settled an opposition proceeding regarding the liability status of a company. The notice of assessment has been entirely canceled, for a total amount of €2 million; • again, the Supreme Court has issued a favorable decision regarding a VAT assessment for 2000. The value of the litigation is equal to €0.5 million; • finally, the Supreme Court has issued a decision with which it has referred the parties to the second degree Tax Court, with respect to a litigation regarding the 1984 IRPEG tax credit pertaining to former Banco di Sicilia. The refund of this credit has been requested by Banco di Sicilia with respect to the former Cassa Centrale di Risparmio Vittorio Emanuele per le Province Siciliane, a company of which Banco di Sicilia had acquired the business activity. In particular, the decision pertains to the case in which the taxpayer has filed a tax return requesting the refund of a tax credit and, subsequently, the Tax Authorities have served a notice of assessment (thus increasing the taxable income reported) against which the taxpayer has filed a claim, giving rise to a litigation. According to the Court, if the taxpayer benefitted from the tax amnesty, provided for by Law 289/2002, in order to define such litigation, the definition should imply the full acceptance of the assessment and therefore, the taxpayer should be no more entitled to receive the tax credit. In this case, the Court has referred the parties to the second degree Tax Court for further factual inquiries. The value of the litigation is equal to €69 million (including principal and interest). It should be added that the litigation regarding the notice of assessment, defined by means of the tax amnesty, was referred to higher IRPEG tax equal to €4.5 million, in comparison to a tax credit equal to €25.6 million (for principal). With reference to risks arising from this litigation, adequate provisions have been posted in the financial statements • UniCredit Leasing S.p.A. has settled out of court several notices of assessment regarding VAT and IRAP for the fiscal years from 2010 to 2012. In comparison to a total amount requested of €22.8 million (plus interest) pursuant to the aforementioned settlements the company paid a total amount of €2.6 million (plus interest). As of 31 December 2017 the total amount of provisions for tax risks amounted to about €103 million (including provisions for legal expenses). As of 31 December 2018, the amount increased for higher provisions referred to pending litigations (€71.7 million) and for tax credits for which the litigation is threatened (€7.5 million). Therefore, the provisions amount to €182.1 million, of which €6.7 million for legal expenses. Tax proceedings in Germany Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risk - Qualitative information - B. Legal risks - Part E of the Consolidated explanatory notes. E. Other claims by customers Reference is made to the same paragraph Section 5 Operational Risk - Qualitative information - E. Other claims by customers - Part E of the Notes to the accounts of the parent company UniCredit S.p.A. which is herewith quoted entirely. Diamond offer Reference is made to the same paragraph Section 5 Operational Risk - Qualitative information - E. Other claims by customers - Diamond offer - Part E of the Notes to the accounts of the parent company UniCredit S.p.A. which is herewith quoted entirely. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 412 2018 Annual Report and Accounts · UniCredit Quantitative information Detailed below is the percentage composition at Group Level, by type of event , of operational risk sources as defined by the New Basel Capital Accord and acknowledged by the Regulations for the Prudential Supervision of Banks issued by Banca d’Italia in December 2013 (Circular No.285/2013 and following updates). Regarding the quantitative information of Unicredit S.p.A, reference is made to the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section - 5 - Operational Risks - Quantitative Information which is herewith quoted entirely. The risk categories for event type are the following: • internal fraud: losses owing to unauthorised activity, fraud, embezzlement or violation of laws, regulations or business directives that involve at least one internal member of the bank; • external fraud: losses owing to fraud, embezzlement or violation of laws by subjects external to the bank; • employment practices and workplace safety: losses arising from actions in breach of employment, health and workplace safety laws or agreements, from personal injury compensation payments or from cases of discrimination or failure to apply equal treatment; • clients, products and business practices: losses arising from non-fulfilment of professional obligations towards clients or from the nature or characteristics of the products or services provided; • damage from external events: losses arising from external events, including natural disasters, acts of terrorism and vandalism; • business disruption and system failures: losses owing to business disruption and system failures or interruptions; • process management, execution and delivery: losses owing to operational or process management shortfalls, as well as losses arising from transactions with commercial counterparties, sellers and suppliers. In 2018, the main source of operational risk was "Clients, products and business practices”, a category which includes losses arising from the non-fulfilment of professional obligations towards clients or from the nature or characteristics of the products or services provided, as well as any sanctions for violating regulations; in this category the major event is linked to potential losses due to the ongoing American Authorities investigation for alleged violation of US sanctions. The second largest contribution to losses refers to errors in process management, execution and delivery due to operational or process management shortage. There were also, in decreasing order, losses stemming from internal fraud, external fraud. The residual risk categories were IT systems related problems and damage to physical assets from external events. 93.4%3.4%0.8%1.7%0.0%0.1%0.6%Operational losses FY2018 divided by risk categoryBusiness practicesProcess executionExternal fraudInternal fraudEmployment practicesMaterial damageIT SystemsConsolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 412 2018 Annual Report and Accounts · UniCredit Quantitative information Detailed below is the percentage composition at Group Level, by type of event , of operational risk sources as defined by the New Basel Capital Accord and acknowledged by the Regulations for the Prudential Supervision of Banks issued by Banca d’Italia in December 2013 (Circular No.285/2013 and following updates). Regarding the quantitative information of Unicredit S.p.A, reference is made to the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section - 5 - Operational Risks - Quantitative Information which is herewith quoted entirely. The risk categories for event type are the following: • internal fraud: losses owing to unauthorised activity, fraud, embezzlement or violation of laws, regulations or business directives that involve at least one internal member of the bank; • external fraud: losses owing to fraud, embezzlement or violation of laws by subjects external to the bank; • employment practices and workplace safety: losses arising from actions in breach of employment, health and workplace safety laws or agreements, from personal injury compensation payments or from cases of discrimination or failure to apply equal treatment; • clients, products and business practices: losses arising from non-fulfilment of professional obligations towards clients or from the nature or characteristics of the products or services provided; • damage from external events: losses arising from external events, including natural disasters, acts of terrorism and vandalism; • business disruption and system failures: losses owing to business disruption and system failures or interruptions; • process management, execution and delivery: losses owing to operational or process management shortfalls, as well as losses arising from transactions with commercial counterparties, sellers and suppliers. In 2018, the main source of operational risk was "Clients, products and business practices”, a category which includes losses arising from the non-fulfilment of professional obligations towards clients or from the nature or characteristics of the products or services provided, as well as any sanctions for violating regulations; in this category the major event is linked to potential losses due to the ongoing American Authorities investigation for alleged violation of US sanctions. The second largest contribution to losses refers to errors in process management, execution and delivery due to operational or process management shortage. There were also, in decreasing order, losses stemming from internal fraud, external fraud. The residual risk categories were IT systems related problems and damage to physical assets from external events. 93.4%3.4%0.8%1.7%0.0%0.1%0.6%Operational losses FY2018 divided by risk categoryBusiness practicesProcess executionExternal fraudInternal fraudEmployment practicesMaterial damageIT SystemsConsolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 412 2018 Annual Report and Accounts · UniCredit Quantitative information Detailed below is the percentage composition at Group Level, by type of event , of operational risk sources as defined by the New Basel Capital Accord and acknowledged by the Regulations for the Prudential Supervision of Banks issued by Banca d’Italia in December 2013 (Circular No.285/2013 and following updates). Regarding the quantitative information of Unicredit S.p.A, reference is made to the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section - 5 - Operational Risks - Quantitative Information which is herewith quoted entirely. The risk categories for event type are the following: • internal fraud: losses owing to unauthorised activity, fraud, embezzlement or violation of laws, regulations or business directives that involve at least one internal member of the bank; • external fraud: losses owing to fraud, embezzlement or violation of laws by subjects external to the bank; • employment practices and workplace safety: losses arising from actions in breach of employment, health and workplace safety laws or agreements, from personal injury compensation payments or from cases of discrimination or failure to apply equal treatment; • clients, products and business practices: losses arising from non-fulfilment of professional obligations towards clients or from the nature or characteristics of the products or services provided; • damage from external events: losses arising from external events, including natural disasters, acts of terrorism and vandalism; • business disruption and system failures: losses owing to business disruption and system failures or interruptions; • process management, execution and delivery: losses owing to operational or process management shortfalls, as well as losses arising from transactions with commercial counterparties, sellers and suppliers. In 2018, the main source of operational risk was "Clients, products and business practices”, a category which includes losses arising from the non-fulfilment of professional obligations towards clients or from the nature or characteristics of the products or services provided, as well as any sanctions for violating regulations; in this category the major event is linked to potential losses due to the ongoing American Authorities investigation for alleged violation of US sanctions. The second largest contribution to losses refers to errors in process management, execution and delivery due to operational or process management shortage. There were also, in decreasing order, losses stemming from internal fraud, external fraud. The residual risk categories were IT systems related problems and damage to physical assets from external events. 93.4%3.4%0.8%1.7%0.0%0.1%0.6%Operational losses FY2018 divided by risk categoryBusiness practicesProcess executionExternal fraudInternal fraudEmployment practicesMaterial damageIT SystemsConsolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 412 2018 Annual Report and Accounts · UniCredit Quantitative information Detailed below is the percentage composition at Group Level, by type of event , of operational risk sources as defined by the New Basel Capital Accord and acknowledged by the Regulations for the Prudential Supervision of Banks issued by Banca d’Italia in December 2013 (Circular No.285/2013 and following updates). Regarding the quantitative information of Unicredit S.p.A, reference is made to the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section - 5 - Operational Risks - Quantitative Information which is herewith quoted entirely. The risk categories for event type are the following: • internal fraud: losses owing to unauthorised activity, fraud, embezzlement or violation of laws, regulations or business directives that involve at least one internal member of the bank; • external fraud: losses owing to fraud, embezzlement or violation of laws by subjects external to the bank; • employment practices and workplace safety: losses arising from actions in breach of employment, health and workplace safety laws or agreements, from personal injury compensation payments or from cases of discrimination or failure to apply equal treatment; • clients, products and business practices: losses arising from non-fulfilment of professional obligations towards clients or from the nature or characteristics of the products or services provided; • damage from external events: losses arising from external events, including natural disasters, acts of terrorism and vandalism; • business disruption and system failures: losses owing to business disruption and system failures or interruptions; • process management, execution and delivery: losses owing to operational or process management shortfalls, as well as losses arising from transactions with commercial counterparties, sellers and suppliers. In 2018, the main source of operational risk was "Clients, products and business practices”, a category which includes losses arising from the non-fulfilment of professional obligations towards clients or from the nature or characteristics of the products or services provided, as well as any sanctions for violating regulations; in this category the major event is linked to potential losses due to the ongoing American Authorities investigation for alleged violation of US sanctions. The second largest contribution to losses refers to errors in process management, execution and delivery due to operational or process management shortage. There were also, in decreasing order, losses stemming from internal fraud, external fraud. The residual risk categories were IT systems related problems and damage to physical assets from external events. 93.4%3.4%0.8%1.7%0.0%0.1%0.6%Operational losses FY2018 divided by risk categoryBusiness practicesProcess executionExternal fraudInternal fraudEmployment practicesMaterial damageIT SystemsConsolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 412 2018 Annual Report and Accounts · UniCredit Quantitative information Detailed below is the percentage composition at Group Level, by type of event , of operational risk sources as defined by the New Basel Capital Accord and acknowledged by the Regulations for the Prudential Supervision of Banks issued by Banca d’Italia in December 2013 (Circular No.285/2013 and following updates). Regarding the quantitative information of Unicredit S.p.A, reference is made to the paragraph of Part E - Notes to the accounts of the parent company UniCredit S.p.A. - Section - 5 - Operational Risks - Quantitative Information which is herewith quoted entirely. The risk categories for event type are the following: • internal fraud: losses owing to unauthorised activity, fraud, embezzlement or violation of laws, regulations or business directives that involve at least one internal member of the bank; • external fraud: losses owing to fraud, embezzlement or violation of laws by subjects external to the bank; • employment practices and workplace safety: losses arising from actions in breach of employment, health and workplace safety laws or agreements, from personal injury compensation payments or from cases of discrimination or failure to apply equal treatment; • clients, products and business practices: losses arising from non-fulfilment of professional obligations towards clients or from the nature or characteristics of the products or services provided; • damage from external events: losses arising from external events, including natural disasters, acts of terrorism and vandalism; • business disruption and system failures: losses owing to business disruption and system failures or interruptions; • process management, execution and delivery: losses owing to operational or process management shortfalls, as well as losses arising from transactions with commercial counterparties, sellers and suppliers. In 2018, the main source of operational risk was "Clients, products and business practices”, a category which includes losses arising from the non-fulfilment of professional obligations towards clients or from the nature or characteristics of the products or services provided, as well as any sanctions for violating regulations; in this category the major event is linked to potential losses due to the ongoing American Authorities investigation for alleged violation of US sanctions. The second largest contribution to losses refers to errors in process management, execution and delivery due to operational or process management shortage. There were also, in decreasing order, losses stemming from internal fraud, external fraud. The residual risk categories were IT systems related problems and damage to physical assets from external events. 93.4%3.4%0.8%1.7%0.0%0.1%0.6%Operational losses FY2018 divided by risk categoryBusiness practicesProcess executionExternal fraudInternal fraudEmployment practicesMaterial damageIT SystemsConsolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 413 2.6 Other risks Other risks included in Economic Capital The so-called Pillar 1 risk types (credit risk, market risk, operational risk, as described in dedicated chapters) are considered as primary risks, but there are also other risks the Group considers as significant, namely: 1. business risk; 2. real estate risk; 3. participation risk. These risks are defined as follows. 1. Business risk Business risk is defined as adverse, unexpected changes in business volume and/or margins that are not due to credit, market and operational risks. Business risk can result, above all, from changes in the competitive situation or customer behaviour, but may also result from changes in the legal framework. The exposure data used to calculate Business risk are taken from the income statements of each Entity of the Group for which the risk is significant. Volatility and correlations are derived from the time series of relevant items of Income statement reports. Business risk focuses on the impact of unexpected shocks on future margins on a one year time horizon; in this context the margin is defined as the difference between earnings and costs not explained by risk factors already included e.g. in credit, market, operational risk. Business risk is calculated on a quarterly basis for monitoring and budgeting purposes according to planning time scheduling. 2. Real estate risk Real estate risk is defined as the potential loss resulting from market value fluctuations of the Group’s Real Estate portfolio, including real estate Special purpose vehicles. It does not take into consideration properties held as collateral which are evaluated inside credit risk. The relevant data for the Real Estate risk calculation include general information related to properties and area or regional price indexes for each property to enable calculation of volatility and correlation in the model. The real estate risk model estimates the maximum potential loss with a confidence level set according to the rating target over a one-year time horizon, using a Monte Carlo simulation approach and assuming real estate returns are correlated and have a non-Gaussian distribution. Real estate risk is calculated quarterly for monitoring purposes with a portfolio updated every six months and for budgeting purposes according to the timelines scheduled in the planning process. 3. Financial investments risk Financial investments risk stems from the equity investments held in companies not included in the Group and not held in the Trading Book. The relevant portfolio mainly includes listed and unlisted shares, derivatives with underlying equity, private equity, units of mutual, hedge and private equity funds. For all Group equity positions, capital charges may be calculated using either a PD/LGD-based approach or a market-based one. The PD/LGD approach is used for unlisted or listed but not liquid equities, including direct private equity holdings. The market-based approach is used for traded equities, equity hedges and all mutual, hedge and private equity funds through the mapping to market risk factors. The calculation of the risk is based on the maximum potential loss, i.e. Value at Risk (VaR), with a confidence level set according to the rating target and over a one-year time horizon and is executed inside credit and market risk models according to the nature of the underlying portfolio. Financial investments risk is calculated quarterly for monitoring and for budgeting purposes according to the timelines scheduled in the planning process. Risk measurement methods Within the Internal Capital Adequacy Assessment Process (ICAAP) and in line with the proportionality principle defined in Pillar II of Basel II, the risk profile of the Group and the main material Legal Entities is assessed for all the Pillar 2 risk types. Credit, market, operational, business and real estate risks are measured quantitatively, by: • Economic Capital and aggregation as an input for Internal Capital; • stress tests. The Internal Capital represents the capital needed to face the potential losses inherent in the Group’s business activities and takes into consideration all the Pillar 2 risk types identified by the Group and which are quantifiable in terms of Economic Capital: credit, market, operational, business, participation and real estate risks. The effect of the diversification between risk types (“inter-risk diversification”) and of the diversification at portfolio level (“intra-risk diversification”) are calculated. In addition a Capital add-on is calculated as prudential cushion in order to account for model risk uncertainty. Internal Capital is calculated using a Bayesian Copula with a one year time horizon and a confidence level in line with the Group rating target. For control purposes, the Internal Capital is calculated quarterly; it is also projected for budgeting purposes. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 413 2.6 Other risks Other risks included in Economic Capital The so-called Pillar 1 risk types (credit risk, market risk, operational risk, as described in dedicated chapters) are considered as primary risks, but there are also other risks the Group considers as significant, namely: 1. business risk; 2. real estate risk; 3. participation risk. These risks are defined as follows. 1. Business risk Business risk is defined as adverse, unexpected changes in business volume and/or margins that are not due to credit, market and operational risks. Business risk can result, above all, from changes in the competitive situation or customer behaviour, but may also result from changes in the legal framework. The exposure data used to calculate Business risk are taken from the income statements of each Entity of the Group for which the risk is significant. Volatility and correlations are derived from the time series of relevant items of Income statement reports. Business risk focuses on the impact of unexpected shocks on future margins on a one year time horizon; in this context the margin is defined as the difference between earnings and costs not explained by risk factors already included e.g. in credit, market, operational risk. Business risk is calculated on a quarterly basis for monitoring and budgeting purposes according to planning time scheduling. 2. Real estate risk Real estate risk is defined as the potential loss resulting from market value fluctuations of the Group’s Real Estate portfolio, including real estate Special purpose vehicles. It does not take into consideration properties held as collateral which are evaluated inside credit risk. The relevant data for the Real Estate risk calculation include general information related to properties and area or regional price indexes for each property to enable calculation of volatility and correlation in the model. The real estate risk model estimates the maximum potential loss with a confidence level set according to the rating target over a one-year time horizon, using a Monte Carlo simulation approach and assuming real estate returns are correlated and have a non-Gaussian distribution. Real estate risk is calculated quarterly for monitoring purposes with a portfolio updated every six months and for budgeting purposes according to the timelines scheduled in the planning process. 3. Financial investments risk Financial investments risk stems from the equity investments held in companies not included in the Group and not held in the Trading Book. The relevant portfolio mainly includes listed and unlisted shares, derivatives with underlying equity, private equity, units of mutual, hedge and private equity funds. For all Group equity positions, capital charges may be calculated using either a PD/LGD-based approach or a market-based one. The PD/LGD approach is used for unlisted or listed but not liquid equities, including direct private equity holdings. The market-based approach is used for traded equities, equity hedges and all mutual, hedge and private equity funds through the mapping to market risk factors. The calculation of the risk is based on the maximum potential loss, i.e. Value at Risk (VaR), with a confidence level set according to the rating target and over a one-year time horizon and is executed inside credit and market risk models according to the nature of the underlying portfolio. Financial investments risk is calculated quarterly for monitoring and for budgeting purposes according to the timelines scheduled in the planning process. Risk measurement methods Within the Internal Capital Adequacy Assessment Process (ICAAP) and in line with the proportionality principle defined in Pillar II of Basel II, the risk profile of the Group and the main material Legal Entities is assessed for all the Pillar 2 risk types. Credit, market, operational, business and real estate risks are measured quantitatively, by: • Economic Capital and aggregation as an input for Internal Capital; • stress tests. The Internal Capital represents the capital needed to face the potential losses inherent in the Group’s business activities and takes into consideration all the Pillar 2 risk types identified by the Group and which are quantifiable in terms of Economic Capital: credit, market, operational, business, participation and real estate risks. The effect of the diversification between risk types (“inter-risk diversification”) and of the diversification at portfolio level (“intra-risk diversification”) are calculated. In addition a Capital add-on is calculated as prudential cushion in order to account for model risk uncertainty. Internal Capital is calculated using a Bayesian Copula with a one year time horizon and a confidence level in line with the Group rating target. For control purposes, the Internal Capital is calculated quarterly; it is also projected for budgeting purposes. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 413 2.6 Other risks Other risks included in Economic Capital The so-called Pillar 1 risk types (credit risk, market risk, operational risk, as described in dedicated chapters) are considered as primary risks, but there are also other risks the Group considers as significant, namely: 1. business risk; 2. real estate risk; 3. participation risk. These risks are defined as follows. 1. Business risk Business risk is defined as adverse, unexpected changes in business volume and/or margins that are not due to credit, market and operational risks. Business risk can result, above all, from changes in the competitive situation or customer behaviour, but may also result from changes in the legal framework. The exposure data used to calculate Business risk are taken from the income statements of each Entity of the Group for which the risk is significant. Volatility and correlations are derived from the time series of relevant items of Income statement reports. Business risk focuses on the impact of unexpected shocks on future margins on a one year time horizon; in this context the margin is defined as the difference between earnings and costs not explained by risk factors already included e.g. in credit, market, operational risk. Business risk is calculated on a quarterly basis for monitoring and budgeting purposes according to planning time scheduling. 2. Real estate risk Real estate risk is defined as the potential loss resulting from market value fluctuations of the Group’s Real Estate portfolio, including real estate Special purpose vehicles. It does not take into consideration properties held as collateral which are evaluated inside credit risk. The relevant data for the Real Estate risk calculation include general information related to properties and area or regional price indexes for each property to enable calculation of volatility and correlation in the model. The real estate risk model estimates the maximum potential loss with a confidence level set according to the rating target over a one-year time horizon, using a Monte Carlo simulation approach and assuming real estate returns are correlated and have a non-Gaussian distribution. Real estate risk is calculated quarterly for monitoring purposes with a portfolio updated every six months and for budgeting purposes according to the timelines scheduled in the planning process. 3. Financial investments risk Financial investments risk stems from the equity investments held in companies not included in the Group and not held in the Trading Book. The relevant portfolio mainly includes listed and unlisted shares, derivatives with underlying equity, private equity, units of mutual, hedge and private equity funds. For all Group equity positions, capital charges may be calculated using either a PD/LGD-based approach or a market-based one. The PD/LGD approach is used for unlisted or listed but not liquid equities, including direct private equity holdings. The market-based approach is used for traded equities, equity hedges and all mutual, hedge and private equity funds through the mapping to market risk factors. The calculation of the risk is based on the maximum potential loss, i.e. Value at Risk (VaR), with a confidence level set according to the rating target and over a one-year time horizon and is executed inside credit and market risk models according to the nature of the underlying portfolio. Financial investments risk is calculated quarterly for monitoring and for budgeting purposes according to the timelines scheduled in the planning process. Risk measurement methods Within the Internal Capital Adequacy Assessment Process (ICAAP) and in line with the proportionality principle defined in Pillar II of Basel II, the risk profile of the Group and the main material Legal Entities is assessed for all the Pillar 2 risk types. Credit, market, operational, business and real estate risks are measured quantitatively, by: • Economic Capital and aggregation as an input for Internal Capital; • stress tests. The Internal Capital represents the capital needed to face the potential losses inherent in the Group’s business activities and takes into consideration all the Pillar 2 risk types identified by the Group and which are quantifiable in terms of Economic Capital: credit, market, operational, business, participation and real estate risks. The effect of the diversification between risk types (“inter-risk diversification”) and of the diversification at portfolio level (“intra-risk diversification”) are calculated. In addition a Capital add-on is calculated as prudential cushion in order to account for model risk uncertainty. Internal Capital is calculated using a Bayesian Copula with a one year time horizon and a confidence level in line with the Group rating target. For control purposes, the Internal Capital is calculated quarterly; it is also projected for budgeting purposes. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 413 2.6 Other risks Other risks included in Economic Capital The so-called Pillar 1 risk types (credit risk, market risk, operational risk, as described in dedicated chapters) are considered as primary risks, but there are also other risks the Group considers as significant, namely: 1. business risk; 2. real estate risk; 3. participation risk. These risks are defined as follows. 1. Business risk Business risk is defined as adverse, unexpected changes in business volume and/or margins that are not due to credit, market and operational risks. Business risk can result, above all, from changes in the competitive situation or customer behaviour, but may also result from changes in the legal framework. The exposure data used to calculate Business risk are taken from the income statements of each Entity of the Group for which the risk is significant. Volatility and correlations are derived from the time series of relevant items of Income statement reports. Business risk focuses on the impact of unexpected shocks on future margins on a one year time horizon; in this context the margin is defined as the difference between earnings and costs not explained by risk factors already included e.g. in credit, market, operational risk. Business risk is calculated on a quarterly basis for monitoring and budgeting purposes according to planning time scheduling. 2. Real estate risk Real estate risk is defined as the potential loss resulting from market value fluctuations of the Group’s Real Estate portfolio, including real estate Special purpose vehicles. It does not take into consideration properties held as collateral which are evaluated inside credit risk. The relevant data for the Real Estate risk calculation include general information related to properties and area or regional price indexes for each property to enable calculation of volatility and correlation in the model. The real estate risk model estimates the maximum potential loss with a confidence level set according to the rating target over a one-year time horizon, using a Monte Carlo simulation approach and assuming real estate returns are correlated and have a non-Gaussian distribution. Real estate risk is calculated quarterly for monitoring purposes with a portfolio updated every six months and for budgeting purposes according to the timelines scheduled in the planning process. 3. Financial investments risk Financial investments risk stems from the equity investments held in companies not included in the Group and not held in the Trading Book. The relevant portfolio mainly includes listed and unlisted shares, derivatives with underlying equity, private equity, units of mutual, hedge and private equity funds. For all Group equity positions, capital charges may be calculated using either a PD/LGD-based approach or a market-based one. The PD/LGD approach is used for unlisted or listed but not liquid equities, including direct private equity holdings. The market-based approach is used for traded equities, equity hedges and all mutual, hedge and private equity funds through the mapping to market risk factors. The calculation of the risk is based on the maximum potential loss, i.e. Value at Risk (VaR), with a confidence level set according to the rating target and over a one-year time horizon and is executed inside credit and market risk models according to the nature of the underlying portfolio. Financial investments risk is calculated quarterly for monitoring and for budgeting purposes according to the timelines scheduled in the planning process. Risk measurement methods Within the Internal Capital Adequacy Assessment Process (ICAAP) and in line with the proportionality principle defined in Pillar II of Basel II, the risk profile of the Group and the main material Legal Entities is assessed for all the Pillar 2 risk types. Credit, market, operational, business and real estate risks are measured quantitatively, by: • Economic Capital and aggregation as an input for Internal Capital; • stress tests. The Internal Capital represents the capital needed to face the potential losses inherent in the Group’s business activities and takes into consideration all the Pillar 2 risk types identified by the Group and which are quantifiable in terms of Economic Capital: credit, market, operational, business, participation and real estate risks. The effect of the diversification between risk types (“inter-risk diversification”) and of the diversification at portfolio level (“intra-risk diversification”) are calculated. In addition a Capital add-on is calculated as prudential cushion in order to account for model risk uncertainty. Internal Capital is calculated using a Bayesian Copula with a one year time horizon and a confidence level in line with the Group rating target. For control purposes, the Internal Capital is calculated quarterly; it is also projected for budgeting purposes. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 413 2.6 Other risks Other risks included in Economic Capital The so-called Pillar 1 risk types (credit risk, market risk, operational risk, as described in dedicated chapters) are considered as primary risks, but there are also other risks the Group considers as significant, namely: 1. business risk; 2. real estate risk; 3. participation risk. These risks are defined as follows. 1. Business risk Business risk is defined as adverse, unexpected changes in business volume and/or margins that are not due to credit, market and operational risks. Business risk can result, above all, from changes in the competitive situation or customer behaviour, but may also result from changes in the legal framework. The exposure data used to calculate Business risk are taken from the income statements of each Entity of the Group for which the risk is significant. Volatility and correlations are derived from the time series of relevant items of Income statement reports. Business risk focuses on the impact of unexpected shocks on future margins on a one year time horizon; in this context the margin is defined as the difference between earnings and costs not explained by risk factors already included e.g. in credit, market, operational risk. Business risk is calculated on a quarterly basis for monitoring and budgeting purposes according to planning time scheduling. 2. Real estate risk Real estate risk is defined as the potential loss resulting from market value fluctuations of the Group’s Real Estate portfolio, including real estate Special purpose vehicles. It does not take into consideration properties held as collateral which are evaluated inside credit risk. The relevant data for the Real Estate risk calculation include general information related to properties and area or regional price indexes for each property to enable calculation of volatility and correlation in the model. The real estate risk model estimates the maximum potential loss with a confidence level set according to the rating target over a one-year time horizon, using a Monte Carlo simulation approach and assuming real estate returns are correlated and have a non-Gaussian distribution. Real estate risk is calculated quarterly for monitoring purposes with a portfolio updated every six months and for budgeting purposes according to the timelines scheduled in the planning process. 3. Financial investments risk Financial investments risk stems from the equity investments held in companies not included in the Group and not held in the Trading Book. The relevant portfolio mainly includes listed and unlisted shares, derivatives with underlying equity, private equity, units of mutual, hedge and private equity funds. For all Group equity positions, capital charges may be calculated using either a PD/LGD-based approach or a market-based one. The PD/LGD approach is used for unlisted or listed but not liquid equities, including direct private equity holdings. The market-based approach is used for traded equities, equity hedges and all mutual, hedge and private equity funds through the mapping to market risk factors. The calculation of the risk is based on the maximum potential loss, i.e. Value at Risk (VaR), with a confidence level set according to the rating target and over a one-year time horizon and is executed inside credit and market risk models according to the nature of the underlying portfolio. Financial investments risk is calculated quarterly for monitoring and for budgeting purposes according to the timelines scheduled in the planning process. Risk measurement methods Within the Internal Capital Adequacy Assessment Process (ICAAP) and in line with the proportionality principle defined in Pillar II of Basel II, the risk profile of the Group and the main material Legal Entities is assessed for all the Pillar 2 risk types. Credit, market, operational, business and real estate risks are measured quantitatively, by: • Economic Capital and aggregation as an input for Internal Capital; • stress tests. The Internal Capital represents the capital needed to face the potential losses inherent in the Group’s business activities and takes into consideration all the Pillar 2 risk types identified by the Group and which are quantifiable in terms of Economic Capital: credit, market, operational, business, participation and real estate risks. The effect of the diversification between risk types (“inter-risk diversification”) and of the diversification at portfolio level (“intra-risk diversification”) are calculated. In addition a Capital add-on is calculated as prudential cushion in order to account for model risk uncertainty. Internal Capital is calculated using a Bayesian Copula with a one year time horizon and a confidence level in line with the Group rating target. For control purposes, the Internal Capital is calculated quarterly; it is also projected for budgeting purposes. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 414 2018 Annual Report and Accounts · UniCredit The multidimensional nature of risk makes it necessary to supplement the measurement of economic capital with stress testing, not only in order to estimate losses in certain scenarios, but also to assess their impacts in terms of capital requirements. Stress testing is a key risk management tool for the management of the relevant risks in order to assess the bank's vulnerability with respect to exceptional but plausible events, providing additional information to the monitoring activities. Stress testing activities, consistently with regulatory requirements, are performed on the basis of a set of internally defined stress scenarios. The stress test activities also assess the capital requirements for the main regions where the Group is active, and are carried out at least twice a year. In the context of the activities of risk measurement prescribed by Pillar II, the Group-wide stress test considers the various impacts of a given macro-economic scenario on all relevant risks with the aim of giving a complete and thorough representation of the behaviour of the Group in stressed conditions. These scenarios are drawn analysing both significant market events happened in the past and plausible worst-case events not yet occurred. Stress test is performed for both single risk types and risk aggregation and produces conditional losses and stressed Economic Capital as outputs. Estimate of aggregate stress test accounts for the change of materiality of single risks as well as for the change of diversification benefit in stressed conditions. Since 2017 two complementary approaches are applied in stress testing activities: “Normative Perspective” focuses on the effects of stressed scenarios on regulatory capital metrics while “Economic Perspective” deals with economic value changes evaluated at portfolio level. The Group Top Management is involved in the ex-ante as well as in the ex-post stress analysis in the following way: • before the exercise is finalized, with a presentation regarding the selected scenarios and the underlying assumptions; • after the exercise is finalized, with the disclosure of the results and a potential discussion of a contingency plan, if needed. The adequacy of the risk measurement methodologies supporting the ICAAP, including stress testing and risk aggregation, is checked by Internal Validation functions. Consistently with the corporate governance system, UniCredit S.p.A. Group Risk Management is responsible for the Group Economic and Internal Capital methodology development and their measurement, as well as for the setting and implementation of the Group related processes. The "Group Rules", after the approval, are sent to relevant Legal Entities for approval and implementation. Reputational risk UniCredit Group defines Reputational Risk as the current or future risk of a loss or decline in profits or share value as a result of a negative perception of the bank's image by customers, counterparties, bank shareholders, investors or regulators. Since 2010 UniCredit rules the reputational risk and the policy currently in place is the Group Reputational Risk management policy which aims at defining a general set of principles and rules for assessing and controlling reputational risk. In addition, since 2017 the Global Process Regulation “Reputational Risk management for Material Events” is in force aimed to define a straightforward escalation process to the Holding Company’s Top Management for events not managed via existing Reputational Risk processes in order to allow it to react promptly in managing the potential consequences. The reputational risk management is in charge to Group Operational & Reputational Risks Department of UniCredit S.p.A. and to dedicated functions within the Group companies. In addition, the setup of the Group Risk & Internal Control Committee ensures consistency in reputational risk policies, methodologies and practices controlling and monitoring the Group Reputational Risk portfolio. Furthermore the Transactional Credit Committees are in charge of evaluating possible reputational risks inherent transactions, on the basis of the current reputational risk guidelines and policies. The current policies mitigating specific Reputational risk topics regard “Defense/Weapons Industry”, “Nuclear Energy”, “Mining”, “Water Infrastructure (dam)” and “Coal fired power generation”. Top and emerging risks In UniCredit, the management and monitoring of risks is based on a dynamic approach; Top Management is promptly informed on top risks and/or emerging risks through a strict monitoring process embedded in the risk assessment process. The Risk Management identifies and estimates these risks and submits them regularly to senior/top management and Board of Directors which take the appropriate actions to manage and mitigate risks. Until December 2018, the Group paid particular attention to following kind of risks 1. Geopolitical Risks existing in the areas where Unicredit operates, especially in Turkey and Russia 2. Economic Consequences coming from “Brexit” event 3. Risks stemming from the current Regulatory developments that could affect Group profitability Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 414 2018 Annual Report and Accounts · UniCredit The multidimensional nature of risk makes it necessary to supplement the measurement of economic capital with stress testing, not only in order to estimate losses in certain scenarios, but also to assess their impacts in terms of capital requirements. Stress testing is a key risk management tool for the management of the relevant risks in order to assess the bank's vulnerability with respect to exceptional but plausible events, providing additional information to the monitoring activities. Stress testing activities, consistently with regulatory requirements, are performed on the basis of a set of internally defined stress scenarios. The stress test activities also assess the capital requirements for the main regions where the Group is active, and are carried out at least twice a year. In the context of the activities of risk measurement prescribed by Pillar II, the Group-wide stress test considers the various impacts of a given macro-economic scenario on all relevant risks with the aim of giving a complete and thorough representation of the behaviour of the Group in stressed conditions. These scenarios are drawn analysing both significant market events happened in the past and plausible worst-case events not yet occurred. Stress test is performed for both single risk types and risk aggregation and produces conditional losses and stressed Economic Capital as outputs. Estimate of aggregate stress test accounts for the change of materiality of single risks as well as for the change of diversification benefit in stressed conditions. Since 2017 two complementary approaches are applied in stress testing activities: “Normative Perspective” focuses on the effects of stressed scenarios on regulatory capital metrics while “Economic Perspective” deals with economic value changes evaluated at portfolio level. The Group Top Management is involved in the ex-ante as well as in the ex-post stress analysis in the following way: • before the exercise is finalized, with a presentation regarding the selected scenarios and the underlying assumptions; • after the exercise is finalized, with the disclosure of the results and a potential discussion of a contingency plan, if needed. The adequacy of the risk measurement methodologies supporting the ICAAP, including stress testing and risk aggregation, is checked by Internal Validation functions. Consistently with the corporate governance system, UniCredit S.p.A. Group Risk Management is responsible for the Group Economic and Internal Capital methodology development and their measurement, as well as for the setting and implementation of the Group related processes. The "Group Rules", after the approval, are sent to relevant Legal Entities for approval and implementation. Reputational risk UniCredit Group defines Reputational Risk as the current or future risk of a loss or decline in profits or share value as a result of a negative perception of the bank's image by customers, counterparties, bank shareholders, investors or regulators. Since 2010 UniCredit rules the reputational risk and the policy currently in place is the Group Reputational Risk management policy which aims at defining a general set of principles and rules for assessing and controlling reputational risk. In addition, since 2017 the Global Process Regulation “Reputational Risk management for Material Events” is in force aimed to define a straightforward escalation process to the Holding Company’s Top Management for events not managed via existing Reputational Risk processes in order to allow it to react promptly in managing the potential consequences. The reputational risk management is in charge to Group Operational & Reputational Risks Department of UniCredit S.p.A. and to dedicated functions within the Group companies. In addition, the setup of the Group Risk & Internal Control Committee ensures consistency in reputational risk policies, methodologies and practices controlling and monitoring the Group Reputational Risk portfolio. Furthermore the Transactional Credit Committees are in charge of evaluating possible reputational risks inherent transactions, on the basis of the current reputational risk guidelines and policies. The current policies mitigating specific Reputational risk topics regard “Defense/Weapons Industry”, “Nuclear Energy”, “Mining”, “Water Infrastructure (dam)” and “Coal fired power generation”. Top and emerging risks In UniCredit, the management and monitoring of risks is based on a dynamic approach; Top Management is promptly informed on top risks and/or emerging risks through a strict monitoring process embedded in the risk assessment process. The Risk Management identifies and estimates these risks and submits them regularly to senior/top management and Board of Directors which take the appropriate actions to manage and mitigate risks. Until December 2018, the Group paid particular attention to following kind of risks 1. Geopolitical Risks existing in the areas where Unicredit operates, especially in Turkey and Russia 2. Economic Consequences coming from “Brexit” event 3. Risks stemming from the current Regulatory developments that could affect Group profitability Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 414 2018 Annual Report and Accounts · UniCredit The multidimensional nature of risk makes it necessary to supplement the measurement of economic capital with stress testing, not only in order to estimate losses in certain scenarios, but also to assess their impacts in terms of capital requirements. Stress testing is a key risk management tool for the management of the relevant risks in order to assess the bank's vulnerability with respect to exceptional but plausible events, providing additional information to the monitoring activities. Stress testing activities, consistently with regulatory requirements, are performed on the basis of a set of internally defined stress scenarios. The stress test activities also assess the capital requirements for the main regions where the Group is active, and are carried out at least twice a year. In the context of the activities of risk measurement prescribed by Pillar II, the Group-wide stress test considers the various impacts of a given macro-economic scenario on all relevant risks with the aim of giving a complete and thorough representation of the behaviour of the Group in stressed conditions. These scenarios are drawn analysing both significant market events happened in the past and plausible worst-case events not yet occurred. Stress test is performed for both single risk types and risk aggregation and produces conditional losses and stressed Economic Capital as outputs. Estimate of aggregate stress test accounts for the change of materiality of single risks as well as for the change of diversification benefit in stressed conditions. Since 2017 two complementary approaches are applied in stress testing activities: “Normative Perspective” focuses on the effects of stressed scenarios on regulatory capital metrics while “Economic Perspective” deals with economic value changes evaluated at portfolio level. The Group Top Management is involved in the ex-ante as well as in the ex-post stress analysis in the following way: • before the exercise is finalized, with a presentation regarding the selected scenarios and the underlying assumptions; • after the exercise is finalized, with the disclosure of the results and a potential discussion of a contingency plan, if needed. The adequacy of the risk measurement methodologies supporting the ICAAP, including stress testing and risk aggregation, is checked by Internal Validation functions. Consistently with the corporate governance system, UniCredit S.p.A. Group Risk Management is responsible for the Group Economic and Internal Capital methodology development and their measurement, as well as for the setting and implementation of the Group related processes. The "Group Rules", after the approval, are sent to relevant Legal Entities for approval and implementation. Reputational risk UniCredit Group defines Reputational Risk as the current or future risk of a loss or decline in profits or share value as a result of a negative perception of the bank's image by customers, counterparties, bank shareholders, investors or regulators. Since 2010 UniCredit rules the reputational risk and the policy currently in place is the Group Reputational Risk management policy which aims at defining a general set of principles and rules for assessing and controlling reputational risk. In addition, since 2017 the Global Process Regulation “Reputational Risk management for Material Events” is in force aimed to define a straightforward escalation process to the Holding Company’s Top Management for events not managed via existing Reputational Risk processes in order to allow it to react promptly in managing the potential consequences. The reputational risk management is in charge to Group Operational & Reputational Risks Department of UniCredit S.p.A. and to dedicated functions within the Group companies. In addition, the setup of the Group Risk & Internal Control Committee ensures consistency in reputational risk policies, methodologies and practices controlling and monitoring the Group Reputational Risk portfolio. Furthermore the Transactional Credit Committees are in charge of evaluating possible reputational risks inherent transactions, on the basis of the current reputational risk guidelines and policies. The current policies mitigating specific Reputational risk topics regard “Defense/Weapons Industry”, “Nuclear Energy”, “Mining”, “Water Infrastructure (dam)” and “Coal fired power generation”. Top and emerging risks In UniCredit, the management and monitoring of risks is based on a dynamic approach; Top Management is promptly informed on top risks and/or emerging risks through a strict monitoring process embedded in the risk assessment process. The Risk Management identifies and estimates these risks and submits them regularly to senior/top management and Board of Directors which take the appropriate actions to manage and mitigate risks. Until December 2018, the Group paid particular attention to following kind of risks 1. Geopolitical Risks existing in the areas where Unicredit operates, especially in Turkey and Russia 2. Economic Consequences coming from “Brexit” event 3. Risks stemming from the current Regulatory developments that could affect Group profitability Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 414 2018 Annual Report and Accounts · UniCredit The multidimensional nature of risk makes it necessary to supplement the measurement of economic capital with stress testing, not only in order to estimate losses in certain scenarios, but also to assess their impacts in terms of capital requirements. Stress testing is a key risk management tool for the management of the relevant risks in order to assess the bank's vulnerability with respect to exceptional but plausible events, providing additional information to the monitoring activities. Stress testing activities, consistently with regulatory requirements, are performed on the basis of a set of internally defined stress scenarios. The stress test activities also assess the capital requirements for the main regions where the Group is active, and are carried out at least twice a year. In the context of the activities of risk measurement prescribed by Pillar II, the Group-wide stress test considers the various impacts of a given macro-economic scenario on all relevant risks with the aim of giving a complete and thorough representation of the behaviour of the Group in stressed conditions. These scenarios are drawn analysing both significant market events happened in the past and plausible worst-case events not yet occurred. Stress test is performed for both single risk types and risk aggregation and produces conditional losses and stressed Economic Capital as outputs. Estimate of aggregate stress test accounts for the change of materiality of single risks as well as for the change of diversification benefit in stressed conditions. Since 2017 two complementary approaches are applied in stress testing activities: “Normative Perspective” focuses on the effects of stressed scenarios on regulatory capital metrics while “Economic Perspective” deals with economic value changes evaluated at portfolio level. The Group Top Management is involved in the ex-ante as well as in the ex-post stress analysis in the following way: • before the exercise is finalized, with a presentation regarding the selected scenarios and the underlying assumptions; • after the exercise is finalized, with the disclosure of the results and a potential discussion of a contingency plan, if needed. The adequacy of the risk measurement methodologies supporting the ICAAP, including stress testing and risk aggregation, is checked by Internal Validation functions. Consistently with the corporate governance system, UniCredit S.p.A. Group Risk Management is responsible for the Group Economic and Internal Capital methodology development and their measurement, as well as for the setting and implementation of the Group related processes. The "Group Rules", after the approval, are sent to relevant Legal Entities for approval and implementation. Reputational risk UniCredit Group defines Reputational Risk as the current or future risk of a loss or decline in profits or share value as a result of a negative perception of the bank's image by customers, counterparties, bank shareholders, investors or regulators. Since 2010 UniCredit rules the reputational risk and the policy currently in place is the Group Reputational Risk management policy which aims at defining a general set of principles and rules for assessing and controlling reputational risk. In addition, since 2017 the Global Process Regulation “Reputational Risk management for Material Events” is in force aimed to define a straightforward escalation process to the Holding Company’s Top Management for events not managed via existing Reputational Risk processes in order to allow it to react promptly in managing the potential consequences. The reputational risk management is in charge to Group Operational & Reputational Risks Department of UniCredit S.p.A. and to dedicated functions within the Group companies. In addition, the setup of the Group Risk & Internal Control Committee ensures consistency in reputational risk policies, methodologies and practices controlling and monitoring the Group Reputational Risk portfolio. Furthermore the Transactional Credit Committees are in charge of evaluating possible reputational risks inherent transactions, on the basis of the current reputational risk guidelines and policies. The current policies mitigating specific Reputational risk topics regard “Defense/Weapons Industry”, “Nuclear Energy”, “Mining”, “Water Infrastructure (dam)” and “Coal fired power generation”. Top and emerging risks In UniCredit, the management and monitoring of risks is based on a dynamic approach; Top Management is promptly informed on top risks and/or emerging risks through a strict monitoring process embedded in the risk assessment process. The Risk Management identifies and estimates these risks and submits them regularly to senior/top management and Board of Directors which take the appropriate actions to manage and mitigate risks. Until December 2018, the Group paid particular attention to following kind of risks 1. Geopolitical Risks existing in the areas where Unicredit operates, especially in Turkey and Russia 2. Economic Consequences coming from “Brexit” event 3. Risks stemming from the current Regulatory developments that could affect Group profitability Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 414 2018 Annual Report and Accounts · UniCredit The multidimensional nature of risk makes it necessary to supplement the measurement of economic capital with stress testing, not only in order to estimate losses in certain scenarios, but also to assess their impacts in terms of capital requirements. Stress testing is a key risk management tool for the management of the relevant risks in order to assess the bank's vulnerability with respect to exceptional but plausible events, providing additional information to the monitoring activities. Stress testing activities, consistently with regulatory requirements, are performed on the basis of a set of internally defined stress scenarios. The stress test activities also assess the capital requirements for the main regions where the Group is active, and are carried out at least twice a year. In the context of the activities of risk measurement prescribed by Pillar II, the Group-wide stress test considers the various impacts of a given macro-economic scenario on all relevant risks with the aim of giving a complete and thorough representation of the behaviour of the Group in stressed conditions. These scenarios are drawn analysing both significant market events happened in the past and plausible worst-case events not yet occurred. Stress test is performed for both single risk types and risk aggregation and produces conditional losses and stressed Economic Capital as outputs. Estimate of aggregate stress test accounts for the change of materiality of single risks as well as for the change of diversification benefit in stressed conditions. Since 2017 two complementary approaches are applied in stress testing activities: “Normative Perspective” focuses on the effects of stressed scenarios on regulatory capital metrics while “Economic Perspective” deals with economic value changes evaluated at portfolio level. The Group Top Management is involved in the ex-ante as well as in the ex-post stress analysis in the following way: • before the exercise is finalized, with a presentation regarding the selected scenarios and the underlying assumptions; • after the exercise is finalized, with the disclosure of the results and a potential discussion of a contingency plan, if needed. The adequacy of the risk measurement methodologies supporting the ICAAP, including stress testing and risk aggregation, is checked by Internal Validation functions. Consistently with the corporate governance system, UniCredit S.p.A. Group Risk Management is responsible for the Group Economic and Internal Capital methodology development and their measurement, as well as for the setting and implementation of the Group related processes. The "Group Rules", after the approval, are sent to relevant Legal Entities for approval and implementation. Reputational risk UniCredit Group defines Reputational Risk as the current or future risk of a loss or decline in profits or share value as a result of a negative perception of the bank's image by customers, counterparties, bank shareholders, investors or regulators. Since 2010 UniCredit rules the reputational risk and the policy currently in place is the Group Reputational Risk management policy which aims at defining a general set of principles and rules for assessing and controlling reputational risk. In addition, since 2017 the Global Process Regulation “Reputational Risk management for Material Events” is in force aimed to define a straightforward escalation process to the Holding Company’s Top Management for events not managed via existing Reputational Risk processes in order to allow it to react promptly in managing the potential consequences. The reputational risk management is in charge to Group Operational & Reputational Risks Department of UniCredit S.p.A. and to dedicated functions within the Group companies. In addition, the setup of the Group Risk & Internal Control Committee ensures consistency in reputational risk policies, methodologies and practices controlling and monitoring the Group Reputational Risk portfolio. Furthermore the Transactional Credit Committees are in charge of evaluating possible reputational risks inherent transactions, on the basis of the current reputational risk guidelines and policies. The current policies mitigating specific Reputational risk topics regard “Defense/Weapons Industry”, “Nuclear Energy”, “Mining”, “Water Infrastructure (dam)” and “Coal fired power generation”. Top and emerging risks In UniCredit, the management and monitoring of risks is based on a dynamic approach; Top Management is promptly informed on top risks and/or emerging risks through a strict monitoring process embedded in the risk assessment process. The Risk Management identifies and estimates these risks and submits them regularly to senior/top management and Board of Directors which take the appropriate actions to manage and mitigate risks. Until December 2018, the Group paid particular attention to following kind of risks 1. Geopolitical Risks existing in the areas where Unicredit operates, especially in Turkey and Russia 2. Economic Consequences coming from “Brexit” event 3. Risks stemming from the current Regulatory developments that could affect Group profitability Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 415 1. Geopolitical risks Turkish, economy is undergoing a recession. Unlike the one experienced in 2008-09, the recession may be longer as the appetite for emerging market assets is weaker and the private sector is more leveraged this time around. The economy should return to growth once the impact of the currency crisis subsides. Russia’s economic performance in 2018 was characterized by close-to-potential growth and more volatility in sentiment, financial and monetary indicators. This dichotomy between growth and high volatility could persist in 2019-20. While future growth will depend on economic policies, the volatility will be shaped by domestic policy options and external economic conditions. GDP growth is expected to remain close to potential. 2. Economic consequences coming from “Brexit” event On 15th January, the UK House of Commons overwhelmingly rejected Theresa May's Brexit deal. Much uncertainty surrounds what would happen after the defeat of the proposal and opens the possibility of a no deal scenario, although very unlikely as a majority of MPs have demonstrated their determination to prevent it. In general, major points of attention are related to the uncertainty on legal aspects affecting continuity of cross-border financial contracts, the cross border transfer of personal data and access to UK market infrastructure. UCG’s business model is based on a multi-hub structure which allows us to flexibly react to any Brexit outcome by leveraging on continental EU UniCredit hubs. 3. Current Regulatory environments Evolution of the regulatory framework Over the last few years the regulatory framework in which financial institutions act has become increasingly complex and stricter. This complexity has further increased following the introduction of new financial regulations, some of them being still under discussion, and by the ECB central role in the supervision of a large portion of the European banking system. All these changes might significantly affect our Group and introduce additional challenges for the general banking sector profitability and capital requirements. The most relevant changes are the following: • Revision to the Basel III framework for the calculation of risk weighted assets for credit, operational and market risk published in December 2017 (known as Basel IV). The regulator’s ultimate goal is to restrict the usage of internal models for measuring credit risk on some specific portfolios and to return to a more stringent standardized approach as well as to eliminate internal models for operational risks. These revisions complement the change to the market risk framework (Fundamental Review of Trading Book) finalized in January 2019, which envisages the introduction of more stringent and sophisticated internal models and standardized approaches for measuring market risk in the trading portfolios. Proposals to accommodate the revised Basel III into European Union standards could probably materialize in 2020 (CRRIII), with entry into force not earlier than end 2022. With regard to internal models for credit risk, alongside the regulatory proposal of the Basel Committee, EBA issued new guidelines which will impose tighter criteria for risk parameter estimation, further increasing capital requirement for banks using internal models extensively. • NPLs provisioning backstop. In March 2018 the ECB published the Addendum to the Guidance on NPL, introducing the “Prudential provisioning backstop for non performing exposures”. Specifically, the new rules provide quantitative guidelines to ensure more timely coverage of Non Performing exposures, defining minimum level of prudential coverage for exposures classified as non performing since 1 April 2018. The new coverage rules defined by the Supervisor require banks to apply a full coverage of a Non Performing exposure starting from the second year up to the seventh year since the date of the counterparty’s classification to default (ie. Past Due, Unlikely to Pay, Bad loans), depending on whether the exposure is unsecured or secured respectively. The potential gap between the coverage envisaged by the new rules and the accounting provisions applied at the reference date should be filled via Core Tier 1 deduction. • On top of the rules defined within ECB Addendum (being Pillar II requirements), the European Commission is currently finalizing a further regulation – planned to come into force by 1H19 with corresponding acknowledgement within the Capital Requirement Regulation – which envisages a Pillar I measure similar to the ECB one, although with some specificities: first of all, European Commission regulation applies to all the new loans originated since the coming into force of the regulation that afterwards become non performing; second of all, it envisages slightly different calibration rules of prudential provisioning, requiring full coverage after 3, 7, 9 years of default classification for unsecured, secured by movable property and secured by immovable property, respectively. • Entry into force of a binding 3% minimum leverage ratio, an additional regulatory requirement compared to the risk based indicators envisaged in the Basel III package. The leverage ratio aims to constrain the building up of financial leverage in the banking industry, as well as to reinforce the capital requirements with a supplementary measure not based on risk parameters. The final regulation for the European Union (CRRII) is expected to be finalized before 2019 European parliamentary elections, which will imply the entry into force of this new regulatory requirement in 2021, with Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 415 1. Geopolitical risks Turkish, economy is undergoing a recession. Unlike the one experienced in 2008-09, the recession may be longer as the appetite for emerging market assets is weaker and the private sector is more leveraged this time around. The economy should return to growth once the impact of the currency crisis subsides. Russia’s economic performance in 2018 was characterized by close-to-potential growth and more volatility in sentiment, financial and monetary indicators. This dichotomy between growth and high volatility could persist in 2019-20. While future growth will depend on economic policies, the volatility will be shaped by domestic policy options and external economic conditions. GDP growth is expected to remain close to potential. 2. Economic consequences coming from “Brexit” event On 15th January, the UK House of Commons overwhelmingly rejected Theresa May's Brexit deal. Much uncertainty surrounds what would happen after the defeat of the proposal and opens the possibility of a no deal scenario, although very unlikely as a majority of MPs have demonstrated their determination to prevent it. In general, major points of attention are related to the uncertainty on legal aspects affecting continuity of cross-border financial contracts, the cross border transfer of personal data and access to UK market infrastructure. UCG’s business model is based on a multi-hub structure which allows us to flexibly react to any Brexit outcome by leveraging on continental EU UniCredit hubs. 3. Current Regulatory environments Evolution of the regulatory framework Over the last few years the regulatory framework in which financial institutions act has become increasingly complex and stricter. This complexity has further increased following the introduction of new financial regulations, some of them being still under discussion, and by the ECB central role in the supervision of a large portion of the European banking system. All these changes might significantly affect our Group and introduce additional challenges for the general banking sector profitability and capital requirements. The most relevant changes are the following: • Revision to the Basel III framework for the calculation of risk weighted assets for credit, operational and market risk published in December 2017 (known as Basel IV). The regulator’s ultimate goal is to restrict the usage of internal models for measuring credit risk on some specific portfolios and to return to a more stringent standardized approach as well as to eliminate internal models for operational risks. These revisions complement the change to the market risk framework (Fundamental Review of Trading Book) finalized in January 2019, which envisages the introduction of more stringent and sophisticated internal models and standardized approaches for measuring market risk in the trading portfolios. Proposals to accommodate the revised Basel III into European Union standards could probably materialize in 2020 (CRRIII), with entry into force not earlier than end 2022. With regard to internal models for credit risk, alongside the regulatory proposal of the Basel Committee, EBA issued new guidelines which will impose tighter criteria for risk parameter estimation, further increasing capital requirement for banks using internal models extensively. • NPLs provisioning backstop. In March 2018 the ECB published the Addendum to the Guidance on NPL, introducing the “Prudential provisioning backstop for non performing exposures”. Specifically, the new rules provide quantitative guidelines to ensure more timely coverage of Non Performing exposures, defining minimum level of prudential coverage for exposures classified as non performing since 1 April 2018. The new coverage rules defined by the Supervisor require banks to apply a full coverage of a Non Performing exposure starting from the second year up to the seventh year since the date of the counterparty’s classification to default (ie. Past Due, Unlikely to Pay, Bad loans), depending on whether the exposure is unsecured or secured respectively. The potential gap between the coverage envisaged by the new rules and the accounting provisions applied at the reference date should be filled via Core Tier 1 deduction. • On top of the rules defined within ECB Addendum (being Pillar II requirements), the European Commission is currently finalizing a further regulation – planned to come into force by 1H19 with corresponding acknowledgement within the Capital Requirement Regulation – which envisages a Pillar I measure similar to the ECB one, although with some specificities: first of all, European Commission regulation applies to all the new loans originated since the coming into force of the regulation that afterwards become non performing; second of all, it envisages slightly different calibration rules of prudential provisioning, requiring full coverage after 3, 7, 9 years of default classification for unsecured, secured by movable property and secured by immovable property, respectively. • Entry into force of a binding 3% minimum leverage ratio, an additional regulatory requirement compared to the risk based indicators envisaged in the Basel III package. The leverage ratio aims to constrain the building up of financial leverage in the banking industry, as well as to reinforce the capital requirements with a supplementary measure not based on risk parameters. The final regulation for the European Union (CRRII) is expected to be finalized before 2019 European parliamentary elections, which will imply the entry into force of this new regulatory requirement in 2021, with Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 415 1. Geopolitical risks Turkish, economy is undergoing a recession. Unlike the one experienced in 2008-09, the recession may be longer as the appetite for emerging market assets is weaker and the private sector is more leveraged this time around. The economy should return to growth once the impact of the currency crisis subsides. Russia’s economic performance in 2018 was characterized by close-to-potential growth and more volatility in sentiment, financial and monetary indicators. This dichotomy between growth and high volatility could persist in 2019-20. While future growth will depend on economic policies, the volatility will be shaped by domestic policy options and external economic conditions. GDP growth is expected to remain close to potential. 2. Economic consequences coming from “Brexit” event On 15th January, the UK House of Commons overwhelmingly rejected Theresa May's Brexit deal. Much uncertainty surrounds what would happen after the defeat of the proposal and opens the possibility of a no deal scenario, although very unlikely as a majority of MPs have demonstrated their determination to prevent it. In general, major points of attention are related to the uncertainty on legal aspects affecting continuity of cross-border financial contracts, the cross border transfer of personal data and access to UK market infrastructure. UCG’s business model is based on a multi-hub structure which allows us to flexibly react to any Brexit outcome by leveraging on continental EU UniCredit hubs. 3. Current Regulatory environments Evolution of the regulatory framework Over the last few years the regulatory framework in which financial institutions act has become increasingly complex and stricter. This complexity has further increased following the introduction of new financial regulations, some of them being still under discussion, and by the ECB central role in the supervision of a large portion of the European banking system. All these changes might significantly affect our Group and introduce additional challenges for the general banking sector profitability and capital requirements. The most relevant changes are the following: • Revision to the Basel III framework for the calculation of risk weighted assets for credit, operational and market risk published in December 2017 (known as Basel IV). The regulator’s ultimate goal is to restrict the usage of internal models for measuring credit risk on some specific portfolios and to return to a more stringent standardized approach as well as to eliminate internal models for operational risks. These revisions complement the change to the market risk framework (Fundamental Review of Trading Book) finalized in January 2019, which envisages the introduction of more stringent and sophisticated internal models and standardized approaches for measuring market risk in the trading portfolios. Proposals to accommodate the revised Basel III into European Union standards could probably materialize in 2020 (CRRIII), with entry into force not earlier than end 2022. With regard to internal models for credit risk, alongside the regulatory proposal of the Basel Committee, EBA issued new guidelines which will impose tighter criteria for risk parameter estimation, further increasing capital requirement for banks using internal models extensively. • NPLs provisioning backstop. In March 2018 the ECB published the Addendum to the Guidance on NPL, introducing the “Prudential provisioning backstop for non performing exposures”. Specifically, the new rules provide quantitative guidelines to ensure more timely coverage of Non Performing exposures, defining minimum level of prudential coverage for exposures classified as non performing since 1 April 2018. The new coverage rules defined by the Supervisor require banks to apply a full coverage of a Non Performing exposure starting from the second year up to the seventh year since the date of the counterparty’s classification to default (ie. Past Due, Unlikely to Pay, Bad loans), depending on whether the exposure is unsecured or secured respectively. The potential gap between the coverage envisaged by the new rules and the accounting provisions applied at the reference date should be filled via Core Tier 1 deduction. • On top of the rules defined within ECB Addendum (being Pillar II requirements), the European Commission is currently finalizing a further regulation – planned to come into force by 1H19 with corresponding acknowledgement within the Capital Requirement Regulation – which envisages a Pillar I measure similar to the ECB one, although with some specificities: first of all, European Commission regulation applies to all the new loans originated since the coming into force of the regulation that afterwards become non performing; second of all, it envisages slightly different calibration rules of prudential provisioning, requiring full coverage after 3, 7, 9 years of default classification for unsecured, secured by movable property and secured by immovable property, respectively. • Entry into force of a binding 3% minimum leverage ratio, an additional regulatory requirement compared to the risk based indicators envisaged in the Basel III package. The leverage ratio aims to constrain the building up of financial leverage in the banking industry, as well as to reinforce the capital requirements with a supplementary measure not based on risk parameters. The final regulation for the European Union (CRRII) is expected to be finalized before 2019 European parliamentary elections, which will imply the entry into force of this new regulatory requirement in 2021, with Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 415 1. Geopolitical risks Turkish, economy is undergoing a recession. Unlike the one experienced in 2008-09, the recession may be longer as the appetite for emerging market assets is weaker and the private sector is more leveraged this time around. The economy should return to growth once the impact of the currency crisis subsides. Russia’s economic performance in 2018 was characterized by close-to-potential growth and more volatility in sentiment, financial and monetary indicators. This dichotomy between growth and high volatility could persist in 2019-20. While future growth will depend on economic policies, the volatility will be shaped by domestic policy options and external economic conditions. GDP growth is expected to remain close to potential. 2. Economic consequences coming from “Brexit” event On 15th January, the UK House of Commons overwhelmingly rejected Theresa May's Brexit deal. Much uncertainty surrounds what would happen after the defeat of the proposal and opens the possibility of a no deal scenario, although very unlikely as a majority of MPs have demonstrated their determination to prevent it. In general, major points of attention are related to the uncertainty on legal aspects affecting continuity of cross-border financial contracts, the cross border transfer of personal data and access to UK market infrastructure. UCG’s business model is based on a multi-hub structure which allows us to flexibly react to any Brexit outcome by leveraging on continental EU UniCredit hubs. 3. Current Regulatory environments Evolution of the regulatory framework Over the last few years the regulatory framework in which financial institutions act has become increasingly complex and stricter. This complexity has further increased following the introduction of new financial regulations, some of them being still under discussion, and by the ECB central role in the supervision of a large portion of the European banking system. All these changes might significantly affect our Group and introduce additional challenges for the general banking sector profitability and capital requirements. The most relevant changes are the following: • Revision to the Basel III framework for the calculation of risk weighted assets for credit, operational and market risk published in December 2017 (known as Basel IV). The regulator’s ultimate goal is to restrict the usage of internal models for measuring credit risk on some specific portfolios and to return to a more stringent standardized approach as well as to eliminate internal models for operational risks. These revisions complement the change to the market risk framework (Fundamental Review of Trading Book) finalized in January 2019, which envisages the introduction of more stringent and sophisticated internal models and standardized approaches for measuring market risk in the trading portfolios. Proposals to accommodate the revised Basel III into European Union standards could probably materialize in 2020 (CRRIII), with entry into force not earlier than end 2022. With regard to internal models for credit risk, alongside the regulatory proposal of the Basel Committee, EBA issued new guidelines which will impose tighter criteria for risk parameter estimation, further increasing capital requirement for banks using internal models extensively. • NPLs provisioning backstop. In March 2018 the ECB published the Addendum to the Guidance on NPL, introducing the “Prudential provisioning backstop for non performing exposures”. Specifically, the new rules provide quantitative guidelines to ensure more timely coverage of Non Performing exposures, defining minimum level of prudential coverage for exposures classified as non performing since 1 April 2018. The new coverage rules defined by the Supervisor require banks to apply a full coverage of a Non Performing exposure starting from the second year up to the seventh year since the date of the counterparty’s classification to default (ie. Past Due, Unlikely to Pay, Bad loans), depending on whether the exposure is unsecured or secured respectively. The potential gap between the coverage envisaged by the new rules and the accounting provisions applied at the reference date should be filled via Core Tier 1 deduction. • On top of the rules defined within ECB Addendum (being Pillar II requirements), the European Commission is currently finalizing a further regulation – planned to come into force by 1H19 with corresponding acknowledgement within the Capital Requirement Regulation – which envisages a Pillar I measure similar to the ECB one, although with some specificities: first of all, European Commission regulation applies to all the new loans originated since the coming into force of the regulation that afterwards become non performing; second of all, it envisages slightly different calibration rules of prudential provisioning, requiring full coverage after 3, 7, 9 years of default classification for unsecured, secured by movable property and secured by immovable property, respectively. • Entry into force of a binding 3% minimum leverage ratio, an additional regulatory requirement compared to the risk based indicators envisaged in the Basel III package. The leverage ratio aims to constrain the building up of financial leverage in the banking industry, as well as to reinforce the capital requirements with a supplementary measure not based on risk parameters. The final regulation for the European Union (CRRII) is expected to be finalized before 2019 European parliamentary elections, which will imply the entry into force of this new regulatory requirement in 2021, with Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 415 1. Geopolitical risks Turkish, economy is undergoing a recession. Unlike the one experienced in 2008-09, the recession may be longer as the appetite for emerging market assets is weaker and the private sector is more leveraged this time around. The economy should return to growth once the impact of the currency crisis subsides. Russia’s economic performance in 2018 was characterized by close-to-potential growth and more volatility in sentiment, financial and monetary indicators. This dichotomy between growth and high volatility could persist in 2019-20. While future growth will depend on economic policies, the volatility will be shaped by domestic policy options and external economic conditions. GDP growth is expected to remain close to potential. 2. Economic consequences coming from “Brexit” event On 15th January, the UK House of Commons overwhelmingly rejected Theresa May's Brexit deal. Much uncertainty surrounds what would happen after the defeat of the proposal and opens the possibility of a no deal scenario, although very unlikely as a majority of MPs have demonstrated their determination to prevent it. In general, major points of attention are related to the uncertainty on legal aspects affecting continuity of cross-border financial contracts, the cross border transfer of personal data and access to UK market infrastructure. UCG’s business model is based on a multi-hub structure which allows us to flexibly react to any Brexit outcome by leveraging on continental EU UniCredit hubs. 3. Current Regulatory environments Evolution of the regulatory framework Over the last few years the regulatory framework in which financial institutions act has become increasingly complex and stricter. This complexity has further increased following the introduction of new financial regulations, some of them being still under discussion, and by the ECB central role in the supervision of a large portion of the European banking system. All these changes might significantly affect our Group and introduce additional challenges for the general banking sector profitability and capital requirements. The most relevant changes are the following: • Revision to the Basel III framework for the calculation of risk weighted assets for credit, operational and market risk published in December 2017 (known as Basel IV). The regulator’s ultimate goal is to restrict the usage of internal models for measuring credit risk on some specific portfolios and to return to a more stringent standardized approach as well as to eliminate internal models for operational risks. These revisions complement the change to the market risk framework (Fundamental Review of Trading Book) finalized in January 2019, which envisages the introduction of more stringent and sophisticated internal models and standardized approaches for measuring market risk in the trading portfolios. Proposals to accommodate the revised Basel III into European Union standards could probably materialize in 2020 (CRRIII), with entry into force not earlier than end 2022. With regard to internal models for credit risk, alongside the regulatory proposal of the Basel Committee, EBA issued new guidelines which will impose tighter criteria for risk parameter estimation, further increasing capital requirement for banks using internal models extensively. • NPLs provisioning backstop. In March 2018 the ECB published the Addendum to the Guidance on NPL, introducing the “Prudential provisioning backstop for non performing exposures”. Specifically, the new rules provide quantitative guidelines to ensure more timely coverage of Non Performing exposures, defining minimum level of prudential coverage for exposures classified as non performing since 1 April 2018. The new coverage rules defined by the Supervisor require banks to apply a full coverage of a Non Performing exposure starting from the second year up to the seventh year since the date of the counterparty’s classification to default (ie. Past Due, Unlikely to Pay, Bad loans), depending on whether the exposure is unsecured or secured respectively. The potential gap between the coverage envisaged by the new rules and the accounting provisions applied at the reference date should be filled via Core Tier 1 deduction. • On top of the rules defined within ECB Addendum (being Pillar II requirements), the European Commission is currently finalizing a further regulation – planned to come into force by 1H19 with corresponding acknowledgement within the Capital Requirement Regulation – which envisages a Pillar I measure similar to the ECB one, although with some specificities: first of all, European Commission regulation applies to all the new loans originated since the coming into force of the regulation that afterwards become non performing; second of all, it envisages slightly different calibration rules of prudential provisioning, requiring full coverage after 3, 7, 9 years of default classification for unsecured, secured by movable property and secured by immovable property, respectively. • Entry into force of a binding 3% minimum leverage ratio, an additional regulatory requirement compared to the risk based indicators envisaged in the Basel III package. The leverage ratio aims to constrain the building up of financial leverage in the banking industry, as well as to reinforce the capital requirements with a supplementary measure not based on risk parameters. The final regulation for the European Union (CRRII) is expected to be finalized before 2019 European parliamentary elections, which will imply the entry into force of this new regulatory requirement in 2021, with Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 416 2018 Annual Report and Accounts · UniCredit a subsequent implementation of the G-SIB buffer in 2022 (in line with the Basel IV implementation timeline). In addition to changes implemented in the CRRII, also the revision to the leverage ratio calculation (mainly on exposure measure) introduced by the Basel IV package will have to be implemented in Europe through the further revision of the CRR (CRRIII) and enter into force not earlier than end 2022. • Entry into force of the liquidity requirements envisaged in Basel III: a short term indicator (liquidity coverage ratio, “LCR”), with the goal to have banks to maintain a liquidity buffer to survive a 30-days period of stress, and a structural liquidity indicator (the net stable funding ratio, “NSFR”) referring to a time horizon over one year, introduced to ensure that assets and liabilities have a sustainable structure in terms of maturity. While the LCR is already in force, the NSFR will be introduced in the European Union through the ongoing revision of the CRR/CRDIV (CRR II/CRD V), with entry into force most likely in 2021. • TLAC/MREL introduction: the Total Loss Absorbing Capacity (“TLAC”) introduced by the Financial Stability Board as a global standard for G-SIBs - and aimed at ensuring that institutions maintain a sufficient amount of financial resources to absorb losses and recapitalize in case of stress – is being implemented in Europe through the BRRD2 and the CRRII/CRDIV. The European transposition of TLAC, i.e. the “Pillar 1” Minimum Requirement for Own Funds and Eligible Liabilities (Pillar 1 MREL) applies to all G-SIBs; “Pillar 2” MREL instead is bank-specific. TLAC (Pillar 1 MREL) will likely become binding in the 2Q 2019 (i.e. when BRRD2, CRRII and CRDIV are expected to be approved at the EU level) as a transitional requirement, equal to 16% + Combined Capital Buffer of Risk Weighted Assets (RWAs) and will reach its fully loaded shape (18% + Combined Capital Buffer of RWAs) in 2022 (with no intermediate levels envisaged in terms of calibration). MREL, instead, is being phased-in and reaches its fully loaded shape in 2024 (with intermediate levels, in terms of calibration, to be discretionally set by the Resolution Authority). • Discussion of preferential treatment of sovereign exposure in banks’ banking book: banks‘ exposures to the home sovereign currently benefit of a zero risk weight. There is no concrete proposal under consultation yet, but policy makers and regulators are discussing which approach to adopt to remove this preferential treatment. On the one hand, the Basel Committee, although it has not yet reached a consensus on making any changes to the regulatory treatment of sovereign exposures at this stage, published a discussion paper in December 2017, envisaging an high-level proposal of regulatory change which foresees the elimination of both the zero risk weight on sovereign exposures and the usage of internal model, together with the introduction of a concentration limit on sovereign exposures. On the other hand, the European Parliament published in 2017 another proposal of regulatory change based on the introduction of a concentration charge only. Moreover, in 2018 the European Parliament issued a proposal, currently under discussion, to allow preferential treatment to a new class of state bond-backed securities (SBBS), to encourage diversification of banks’ holdings of euro zone bonds. SBBS would be a new type of asset created by the private sector based on a pre-defined pool of sovereign bonds of the Euro area Member States. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 416 2018 Annual Report and Accounts · UniCredit a subsequent implementation of the G-SIB buffer in 2022 (in line with the Basel IV implementation timeline). In addition to changes implemented in the CRRII, also the revision to the leverage ratio calculation (mainly on exposure measure) introduced by the Basel IV package will have to be implemented in Europe through the further revision of the CRR (CRRIII) and enter into force not earlier than end 2022. • Entry into force of the liquidity requirements envisaged in Basel III: a short term indicator (liquidity coverage ratio, “LCR”), with the goal to have banks to maintain a liquidity buffer to survive a 30-days period of stress, and a structural liquidity indicator (the net stable funding ratio, “NSFR”) referring to a time horizon over one year, introduced to ensure that assets and liabilities have a sustainable structure in terms of maturity. While the LCR is already in force, the NSFR will be introduced in the European Union through the ongoing revision of the CRR/CRDIV (CRR II/CRD V), with entry into force most likely in 2021. • TLAC/MREL introduction: the Total Loss Absorbing Capacity (“TLAC”) introduced by the Financial Stability Board as a global standard for G-SIBs - and aimed at ensuring that institutions maintain a sufficient amount of financial resources to absorb losses and recapitalize in case of stress – is being implemented in Europe through the BRRD2 and the CRRII/CRDIV. The European transposition of TLAC, i.e. the “Pillar 1” Minimum Requirement for Own Funds and Eligible Liabilities (Pillar 1 MREL) applies to all G-SIBs; “Pillar 2” MREL instead is bank-specific. TLAC (Pillar 1 MREL) will likely become binding in the 2Q 2019 (i.e. when BRRD2, CRRII and CRDIV are expected to be approved at the EU level) as a transitional requirement, equal to 16% + Combined Capital Buffer of Risk Weighted Assets (RWAs) and will reach its fully loaded shape (18% + Combined Capital Buffer of RWAs) in 2022 (with no intermediate levels envisaged in terms of calibration). MREL, instead, is being phased-in and reaches its fully loaded shape in 2024 (with intermediate levels, in terms of calibration, to be discretionally set by the Resolution Authority). • Discussion of preferential treatment of sovereign exposure in banks’ banking book: banks‘ exposures to the home sovereign currently benefit of a zero risk weight. There is no concrete proposal under consultation yet, but policy makers and regulators are discussing which approach to adopt to remove this preferential treatment. On the one hand, the Basel Committee, although it has not yet reached a consensus on making any changes to the regulatory treatment of sovereign exposures at this stage, published a discussion paper in December 2017, envisaging an high-level proposal of regulatory change which foresees the elimination of both the zero risk weight on sovereign exposures and the usage of internal model, together with the introduction of a concentration limit on sovereign exposures. On the other hand, the European Parliament published in 2017 another proposal of regulatory change based on the introduction of a concentration charge only. Moreover, in 2018 the European Parliament issued a proposal, currently under discussion, to allow preferential treatment to a new class of state bond-backed securities (SBBS), to encourage diversification of banks’ holdings of euro zone bonds. SBBS would be a new type of asset created by the private sector based on a pre-defined pool of sovereign bonds of the Euro area Member States. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 416 2018 Annual Report and Accounts · UniCredit a subsequent implementation of the G-SIB buffer in 2022 (in line with the Basel IV implementation timeline). In addition to changes implemented in the CRRII, also the revision to the leverage ratio calculation (mainly on exposure measure) introduced by the Basel IV package will have to be implemented in Europe through the further revision of the CRR (CRRIII) and enter into force not earlier than end 2022. • Entry into force of the liquidity requirements envisaged in Basel III: a short term indicator (liquidity coverage ratio, “LCR”), with the goal to have banks to maintain a liquidity buffer to survive a 30-days period of stress, and a structural liquidity indicator (the net stable funding ratio, “NSFR”) referring to a time horizon over one year, introduced to ensure that assets and liabilities have a sustainable structure in terms of maturity. While the LCR is already in force, the NSFR will be introduced in the European Union through the ongoing revision of the CRR/CRDIV (CRR II/CRD V), with entry into force most likely in 2021. • TLAC/MREL introduction: the Total Loss Absorbing Capacity (“TLAC”) introduced by the Financial Stability Board as a global standard for G-SIBs - and aimed at ensuring that institutions maintain a sufficient amount of financial resources to absorb losses and recapitalize in case of stress – is being implemented in Europe through the BRRD2 and the CRRII/CRDIV. The European transposition of TLAC, i.e. the “Pillar 1” Minimum Requirement for Own Funds and Eligible Liabilities (Pillar 1 MREL) applies to all G-SIBs; “Pillar 2” MREL instead is bank-specific. TLAC (Pillar 1 MREL) will likely become binding in the 2Q 2019 (i.e. when BRRD2, CRRII and CRDIV are expected to be approved at the EU level) as a transitional requirement, equal to 16% + Combined Capital Buffer of Risk Weighted Assets (RWAs) and will reach its fully loaded shape (18% + Combined Capital Buffer of RWAs) in 2022 (with no intermediate levels envisaged in terms of calibration). MREL, instead, is being phased-in and reaches its fully loaded shape in 2024 (with intermediate levels, in terms of calibration, to be discretionally set by the Resolution Authority). • Discussion of preferential treatment of sovereign exposure in banks’ banking book: banks‘ exposures to the home sovereign currently benefit of a zero risk weight. There is no concrete proposal under consultation yet, but policy makers and regulators are discussing which approach to adopt to remove this preferential treatment. On the one hand, the Basel Committee, although it has not yet reached a consensus on making any changes to the regulatory treatment of sovereign exposures at this stage, published a discussion paper in December 2017, envisaging an high-level proposal of regulatory change which foresees the elimination of both the zero risk weight on sovereign exposures and the usage of internal model, together with the introduction of a concentration limit on sovereign exposures. On the other hand, the European Parliament published in 2017 another proposal of regulatory change based on the introduction of a concentration charge only. Moreover, in 2018 the European Parliament issued a proposal, currently under discussion, to allow preferential treatment to a new class of state bond-backed securities (SBBS), to encourage diversification of banks’ holdings of euro zone bonds. SBBS would be a new type of asset created by the private sector based on a pre-defined pool of sovereign bonds of the Euro area Member States. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 416 2018 Annual Report and Accounts · UniCredit a subsequent implementation of the G-SIB buffer in 2022 (in line with the Basel IV implementation timeline). In addition to changes implemented in the CRRII, also the revision to the leverage ratio calculation (mainly on exposure measure) introduced by the Basel IV package will have to be implemented in Europe through the further revision of the CRR (CRRIII) and enter into force not earlier than end 2022. • Entry into force of the liquidity requirements envisaged in Basel III: a short term indicator (liquidity coverage ratio, “LCR”), with the goal to have banks to maintain a liquidity buffer to survive a 30-days period of stress, and a structural liquidity indicator (the net stable funding ratio, “NSFR”) referring to a time horizon over one year, introduced to ensure that assets and liabilities have a sustainable structure in terms of maturity. While the LCR is already in force, the NSFR will be introduced in the European Union through the ongoing revision of the CRR/CRDIV (CRR II/CRD V), with entry into force most likely in 2021. • TLAC/MREL introduction: the Total Loss Absorbing Capacity (“TLAC”) introduced by the Financial Stability Board as a global standard for G-SIBs - and aimed at ensuring that institutions maintain a sufficient amount of financial resources to absorb losses and recapitalize in case of stress – is being implemented in Europe through the BRRD2 and the CRRII/CRDIV. The European transposition of TLAC, i.e. the “Pillar 1” Minimum Requirement for Own Funds and Eligible Liabilities (Pillar 1 MREL) applies to all G-SIBs; “Pillar 2” MREL instead is bank-specific. TLAC (Pillar 1 MREL) will likely become binding in the 2Q 2019 (i.e. when BRRD2, CRRII and CRDIV are expected to be approved at the EU level) as a transitional requirement, equal to 16% + Combined Capital Buffer of Risk Weighted Assets (RWAs) and will reach its fully loaded shape (18% + Combined Capital Buffer of RWAs) in 2022 (with no intermediate levels envisaged in terms of calibration). MREL, instead, is being phased-in and reaches its fully loaded shape in 2024 (with intermediate levels, in terms of calibration, to be discretionally set by the Resolution Authority). • Discussion of preferential treatment of sovereign exposure in banks’ banking book: banks‘ exposures to the home sovereign currently benefit of a zero risk weight. There is no concrete proposal under consultation yet, but policy makers and regulators are discussing which approach to adopt to remove this preferential treatment. On the one hand, the Basel Committee, although it has not yet reached a consensus on making any changes to the regulatory treatment of sovereign exposures at this stage, published a discussion paper in December 2017, envisaging an high-level proposal of regulatory change which foresees the elimination of both the zero risk weight on sovereign exposures and the usage of internal model, together with the introduction of a concentration limit on sovereign exposures. On the other hand, the European Parliament published in 2017 another proposal of regulatory change based on the introduction of a concentration charge only. Moreover, in 2018 the European Parliament issued a proposal, currently under discussion, to allow preferential treatment to a new class of state bond-backed securities (SBBS), to encourage diversification of banks’ holdings of euro zone bonds. SBBS would be a new type of asset created by the private sector based on a pre-defined pool of sovereign bonds of the Euro area Member States. Consolidated financial statements | Notes to the consolidated accounts Part E - Information on risks and hedging policies 416 2018 Annual Report and Accounts · UniCredit a subsequent implementation of the G-SIB buffer in 2022 (in line with the Basel IV implementation timeline). In addition to changes implemented in the CRRII, also the revision to the leverage ratio calculation (mainly on exposure measure) introduced by the Basel IV package will have to be implemented in Europe through the further revision of the CRR (CRRIII) and enter into force not earlier than end 2022. • Entry into force of the liquidity requirements envisaged in Basel III: a short term indicator (liquidity coverage ratio, “LCR”), with the goal to have banks to maintain a liquidity buffer to survive a 30-days period of stress, and a structural liquidity indicator (the net stable funding ratio, “NSFR”) referring to a time horizon over one year, introduced to ensure that assets and liabilities have a sustainable structure in terms of maturity. While the LCR is already in force, the NSFR will be introduced in the European Union through the ongoing revision of the CRR/CRDIV (CRR II/CRD V), with entry into force most likely in 2021. • TLAC/MREL introduction: the Total Loss Absorbing Capacity (“TLAC”) introduced by the Financial Stability Board as a global standard for G-SIBs - and aimed at ensuring that institutions maintain a sufficient amount of financial resources to absorb losses and recapitalize in case of stress – is being implemented in Europe through the BRRD2 and the CRRII/CRDIV. The European transposition of TLAC, i.e. the “Pillar 1” Minimum Requirement for Own Funds and Eligible Liabilities (Pillar 1 MREL) applies to all G-SIBs; “Pillar 2” MREL instead is bank-specific. TLAC (Pillar 1 MREL) will likely become binding in the 2Q 2019 (i.e. when BRRD2, CRRII and CRDIV are expected to be approved at the EU level) as a transitional requirement, equal to 16% + Combined Capital Buffer of Risk Weighted Assets (RWAs) and will reach its fully loaded shape (18% + Combined Capital Buffer of RWAs) in 2022 (with no intermediate levels envisaged in terms of calibration). MREL, instead, is being phased-in and reaches its fully loaded shape in 2024 (with intermediate levels, in terms of calibration, to be discretionally set by the Resolution Authority). • Discussion of preferential treatment of sovereign exposure in banks’ banking book: banks‘ exposures to the home sovereign currently benefit of a zero risk weight. There is no concrete proposal under consultation yet, but policy makers and regulators are discussing which approach to adopt to remove this preferential treatment. On the one hand, the Basel Committee, although it has not yet reached a consensus on making any changes to the regulatory treatment of sovereign exposures at this stage, published a discussion paper in December 2017, envisaging an high-level proposal of regulatory change which foresees the elimination of both the zero risk weight on sovereign exposures and the usage of internal model, together with the introduction of a concentration limit on sovereign exposures. On the other hand, the European Parliament published in 2017 another proposal of regulatory change based on the introduction of a concentration charge only. Moreover, in 2018 the European Parliament issued a proposal, currently under discussion, to allow preferential treatment to a new class of state bond-backed securities (SBBS), to encourage diversification of banks’ holdings of euro zone bonds. SBBS would be a new type of asset created by the private sector based on a pre-defined pool of sovereign bonds of the Euro area Member States. Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity UniCredit ·2018 Annual Report and Accounts 417 Part F - Consolidated shareholders’ equity Section 1 - Consolidated Shareholders’ Equity A. Qualitative information UniCredit group deems as priority the activities of capital management and capital allocation based on the risks taken, with the aim of expanding the Group’s operations in a value creation perspective. These activities are structured in the different phases of the Group planning and monitoring process and, in particular, in: • planning and budgeting processes: - proposals of risks appetite and capitalisation objectives; - analysis of risks associated with value drivers and allocation of capital to business areas and units; - assignment of risk-adjusted performance objectives; - analysis of the impact on the Group’s value and the creation of value for shareholders; - preparation and proposal of the equity plan and dividend policy; • monitoring processes: - analysis of performance achieved at Group and business unit level and preparation of managerial reports for internal and external use; - analysis and monitoring of limits; - analysis and performance monitoring of the capital ratios of the Group and single companies. The Group has committed itself to generate income in excess to the one necessary to remunerate risk (cost of equity) and to create value for its shareholders by allocating capital to the various business areas and business units on the basis of specific risk profiles. To support the processes of planning and monitoring, the Group adopts a methodology based on risk-adjusted performance measurement (RAPM) which provides a number of indicators that combine and summarise the operating, financial and risk-related variables to be considered. Therefore, the Group capital and its allocation are of relevant importance in the definition of corporate strategies, as, on one hand, the Group Capital represents the shareholders’ investment in the Group, which needs to be adequately remunerated, and on the other hand, it is a scarce resource subject to the external constraints set by regulators. In the allocation process, the definitions of capital adopted are as following: • risk or employed capital: this is the equity component provided by shareholders (employed capital) which must be remunerated through an income generation greater than or equal to expectations (cost of equity); • capital at risk: this is the portion of capital and reserves that is used (the budgeted amount or allocated capital) or was used to cover (at period-end - absorbed capital) the risks taken to pursue the objective of creating value. If capital at risk is measured through risk management methods, then it is defined as internal capital; if it is measured through regulatory provisions, then it is defined as regulatory capital. Internal capital and regulatory capital differ in terms of their definition and the categories of risk covered. The former is based on the actual measurement of the exposure taken, while the latter is based on schedules specified in regulatory provisions. Internal capital is set at such a level to cover adverse events with a high level of probability, while regulatory capital is quantified on the basis of a CET1 target ratio in line with the one of major international banking groups and taking into account the impacts of the supervisory regulations in force or that will be adopted. Capital Allocated to Business Segment is quantified by regulatory capital, with the exception of the capital allocated to Fineco which is determined as the highest between the regulatory capital and internal capital. The capital management activity, performed by the Capital Management unit of Group Planning, Capital Management & Strategic ALM, is aimed at defining the target level of capitalisation for the Group and its companies in line with supervisory regulations and the appetite to risk. UniCredit group has identified a Fully Loaded Common Equity Tier 1 Ratio Target between 12.0% and 12.5% as of 2019, as communicated in November 2018 within the Targets of Transform 2019 update during the market presentation of the third quarter 2018 Group Results (https://www.unicreditgroup.eu/content/dam/unicreditgroup-eu/documents/en/investors/group-results/2018/3Q18/UniCredit_PR_3Q18-ENG.pdf). In the dynamic activity of capital management, the Capital Management unit defines the capital plan and monitors the regulatory capital ratios. The monitoring activity is focused, on one hand, on capital, according to both accounting and regulatory definition (Common Equity Tier 1, Additional Tier 1, and Tier 2 Capital), and, on the other hand, on the planning and performance of risk-weighted assets (RWA). The dynamic approach to the capital management activity aims at identifying the most suitable investment and capital instruments (ordinary shares and other capital instruments) for achieving the defined targets. If there is a capital shortfall, the gaps to be filled and capital generation measures are indicated, and their cost and efficiency are measured through the RAPM methodology. In this context, value analysis is enhanced by the joint role played by the Capital Management unit in the fields of, among others, regulatory, accounting, financial, tax-related, risk management, etc. and with respect to the changing regulations affecting these aspects; in this way, the Capital Management unit will be able to perform the necessary assessments and to provide with the necessary instructions the other Group HQ areas or companies asked to perform these tasks. Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity UniCredit ·2018 Annual Report and Accounts 417 Part F - Consolidated shareholders’ equity Section 1 - Consolidated Shareholders’ Equity A. Qualitative information UniCredit group deems as priority the activities of capital management and capital allocation based on the risks taken, with the aim of expanding the Group’s operations in a value creation perspective. These activities are structured in the different phases of the Group planning and monitoring process and, in particular, in: • planning and budgeting processes: - proposals of risks appetite and capitalisation objectives; - analysis of risks associated with value drivers and allocation of capital to business areas and units; - assignment of risk-adjusted performance objectives; - analysis of the impact on the Group’s value and the creation of value for shareholders; - preparation and proposal of the equity plan and dividend policy; • monitoring processes: - analysis of performance achieved at Group and business unit level and preparation of managerial reports for internal and external use; - analysis and monitoring of limits; - analysis and performance monitoring of the capital ratios of the Group and single companies. The Group has committed itself to generate income in excess to the one necessary to remunerate risk (cost of equity) and to create value for its shareholders by allocating capital to the various business areas and business units on the basis of specific risk profiles. To support the processes of planning and monitoring, the Group adopts a methodology based on risk-adjusted performance measurement (RAPM) which provides a number of indicators that combine and summarise the operating, financial and risk-related variables to be considered. Therefore, the Group capital and its allocation are of relevant importance in the definition of corporate strategies, as, on one hand, the Group Capital represents the shareholders’ investment in the Group, which needs to be adequately remunerated, and on the other hand, it is a scarce resource subject to the external constraints set by regulators. In the allocation process, the definitions of capital adopted are as following: • risk or employed capital: this is the equity component provided by shareholders (employed capital) which must be remunerated through an income generation greater than or equal to expectations (cost of equity); • capital at risk: this is the portion of capital and reserves that is used (the budgeted amount or allocated capital) or was used to cover (at period-end - absorbed capital) the risks taken to pursue the objective of creating value. If capital at risk is measured through risk management methods, then it is defined as internal capital; if it is measured through regulatory provisions, then it is defined as regulatory capital. Internal capital and regulatory capital differ in terms of their definition and the categories of risk covered. The former is based on the actual measurement of the exposure taken, while the latter is based on schedules specified in regulatory provisions. Internal capital is set at such a level to cover adverse events with a high level of probability, while regulatory capital is quantified on the basis of a CET1 target ratio in line with the one of major international banking groups and taking into account the impacts of the supervisory regulations in force or that will be adopted. Capital Allocated to Business Segment is quantified by regulatory capital, with the exception of the capital allocated to Fineco which is determined as the highest between the regulatory capital and internal capital. The capital management activity, performed by the Capital Management unit of Group Planning, Capital Management & Strategic ALM, is aimed at defining the target level of capitalisation for the Group and its companies in line with supervisory regulations and the appetite to risk. UniCredit group has identified a Fully Loaded Common Equity Tier 1 Ratio Target between 12.0% and 12.5% as of 2019, as communicated in November 2018 within the Targets of Transform 2019 update during the market presentation of the third quarter 2018 Group Results (https://www.unicreditgroup.eu/content/dam/unicreditgroup-eu/documents/en/investors/group-results/2018/3Q18/UniCredit_PR_3Q18-ENG.pdf). In the dynamic activity of capital management, the Capital Management unit defines the capital plan and monitors the regulatory capital ratios. The monitoring activity is focused, on one hand, on capital, according to both accounting and regulatory definition (Common Equity Tier 1, Additional Tier 1, and Tier 2 Capital), and, on the other hand, on the planning and performance of risk-weighted assets (RWA). The dynamic approach to the capital management activity aims at identifying the most suitable investment and capital instruments (ordinary shares and other capital instruments) for achieving the defined targets. If there is a capital shortfall, the gaps to be filled and capital generation measures are indicated, and their cost and efficiency are measured through the RAPM methodology. In this context, value analysis is enhanced by the joint role played by the Capital Management unit in the fields of, among others, regulatory, accounting, financial, tax-related, risk management, etc. and with respect to the changing regulations affecting these aspects; in this way, the Capital Management unit will be able to perform the necessary assessments and to provide with the necessary instructions the other Group HQ areas or companies asked to perform these tasks. Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity UniCredit ·2018 Annual Report and Accounts 417 Part F - Consolidated shareholders’ equity Section 1 - Consolidated Shareholders’ Equity A. Qualitative information UniCredit group deems as priority the activities of capital management and capital allocation based on the risks taken, with the aim of expanding the Group’s operations in a value creation perspective. These activities are structured in the different phases of the Group planning and monitoring process and, in particular, in: • planning and budgeting processes: - proposals of risks appetite and capitalisation objectives; - analysis of risks associated with value drivers and allocation of capital to business areas and units; - assignment of risk-adjusted performance objectives; - analysis of the impact on the Group’s value and the creation of value for shareholders; - preparation and proposal of the equity plan and dividend policy; • monitoring processes: - analysis of performance achieved at Group and business unit level and preparation of managerial reports for internal and external use; - analysis and monitoring of limits; - analysis and performance monitoring of the capital ratios of the Group and single companies. The Group has committed itself to generate income in excess to the one necessary to remunerate risk (cost of equity) and to create value for its shareholders by allocating capital to the various business areas and business units on the basis of specific risk profiles. To support the processes of planning and monitoring, the Group adopts a methodology based on risk-adjusted performance measurement (RAPM) which provides a number of indicators that combine and summarise the operating, financial and risk-related variables to be considered. Therefore, the Group capital and its allocation are of relevant importance in the definition of corporate strategies, as, on one hand, the Group Capital represents the shareholders’ investment in the Group, which needs to be adequately remunerated, and on the other hand, it is a scarce resource subject to the external constraints set by regulators. In the allocation process, the definitions of capital adopted are as following: • risk or employed capital: this is the equity component provided by shareholders (employed capital) which must be remunerated through an income generation greater than or equal to expectations (cost of equity); • capital at risk: this is the portion of capital and reserves that is used (the budgeted amount or allocated capital) or was used to cover (at period-end - absorbed capital) the risks taken to pursue the objective of creating value. If capital at risk is measured through risk management methods, then it is defined as internal capital; if it is measured through regulatory provisions, then it is defined as regulatory capital. Internal capital and regulatory capital differ in terms of their definition and the categories of risk covered. The former is based on the actual measurement of the exposure taken, while the latter is based on schedules specified in regulatory provisions. Internal capital is set at such a level to cover adverse events with a high level of probability, while regulatory capital is quantified on the basis of a CET1 target ratio in line with the one of major international banking groups and taking into account the impacts of the supervisory regulations in force or that will be adopted. Capital Allocated to Business Segment is quantified by regulatory capital, with the exception of the capital allocated to Fineco which is determined as the highest between the regulatory capital and internal capital. The capital management activity, performed by the Capital Management unit of Group Planning, Capital Management & Strategic ALM, is aimed at defining the target level of capitalisation for the Group and its companies in line with supervisory regulations and the appetite to risk. UniCredit group has identified a Fully Loaded Common Equity Tier 1 Ratio Target between 12.0% and 12.5% as of 2019, as communicated in November 2018 within the Targets of Transform 2019 update during the market presentation of the third quarter 2018 Group Results (https://www.unicreditgroup.eu/content/dam/unicreditgroup-eu/documents/en/investors/group-results/2018/3Q18/UniCredit_PR_3Q18-ENG.pdf). In the dynamic activity of capital management, the Capital Management unit defines the capital plan and monitors the regulatory capital ratios. The monitoring activity is focused, on one hand, on capital, according to both accounting and regulatory definition (Common Equity Tier 1, Additional Tier 1, and Tier 2 Capital), and, on the other hand, on the planning and performance of risk-weighted assets (RWA). The dynamic approach to the capital management activity aims at identifying the most suitable investment and capital instruments (ordinary shares and other capital instruments) for achieving the defined targets. If there is a capital shortfall, the gaps to be filled and capital generation measures are indicated, and their cost and efficiency are measured through the RAPM methodology. In this context, value analysis is enhanced by the joint role played by the Capital Management unit in the fields of, among others, regulatory, accounting, financial, tax-related, risk management, etc. and with respect to the changing regulations affecting these aspects; in this way, the Capital Management unit will be able to perform the necessary assessments and to provide with the necessary instructions the other Group HQ areas or companies asked to perform these tasks. Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity UniCredit ·2018 Annual Report and Accounts 417 Part F - Consolidated shareholders’ equity Section 1 - Consolidated Shareholders’ Equity A. Qualitative information UniCredit group deems as priority the activities of capital management and capital allocation based on the risks taken, with the aim of expanding the Group’s operations in a value creation perspective. These activities are structured in the different phases of the Group planning and monitoring process and, in particular, in: • planning and budgeting processes: - proposals of risks appetite and capitalisation objectives; - analysis of risks associated with value drivers and allocation of capital to business areas and units; - assignment of risk-adjusted performance objectives; - analysis of the impact on the Group’s value and the creation of value for shareholders; - preparation and proposal of the equity plan and dividend policy; • monitoring processes: - analysis of performance achieved at Group and business unit level and preparation of managerial reports for internal and external use; - analysis and monitoring of limits; - analysis and performance monitoring of the capital ratios of the Group and single companies. The Group has committed itself to generate income in excess to the one necessary to remunerate risk (cost of equity) and to create value for its shareholders by allocating capital to the various business areas and business units on the basis of specific risk profiles. To support the processes of planning and monitoring, the Group adopts a methodology based on risk-adjusted performance measurement (RAPM) which provides a number of indicators that combine and summarise the operating, financial and risk-related variables to be considered. Therefore, the Group capital and its allocation are of relevant importance in the definition of corporate strategies, as, on one hand, the Group Capital represents the shareholders’ investment in the Group, which needs to be adequately remunerated, and on the other hand, it is a scarce resource subject to the external constraints set by regulators. In the allocation process, the definitions of capital adopted are as following: • risk or employed capital: this is the equity component provided by shareholders (employed capital) which must be remunerated through an income generation greater than or equal to expectations (cost of equity); • capital at risk: this is the portion of capital and reserves that is used (the budgeted amount or allocated capital) or was used to cover (at period-end - absorbed capital) the risks taken to pursue the objective of creating value. If capital at risk is measured through risk management methods, then it is defined as internal capital; if it is measured through regulatory provisions, then it is defined as regulatory capital. Internal capital and regulatory capital differ in terms of their definition and the categories of risk covered. The former is based on the actual measurement of the exposure taken, while the latter is based on schedules specified in regulatory provisions. Internal capital is set at such a level to cover adverse events with a high level of probability, while regulatory capital is quantified on the basis of a CET1 target ratio in line with the one of major international banking groups and taking into account the impacts of the supervisory regulations in force or that will be adopted. Capital Allocated to Business Segment is quantified by regulatory capital, with the exception of the capital allocated to Fineco which is determined as the highest between the regulatory capital and internal capital. The capital management activity, performed by the Capital Management unit of Group Planning, Capital Management & Strategic ALM, is aimed at defining the target level of capitalisation for the Group and its companies in line with supervisory regulations and the appetite to risk. UniCredit group has identified a Fully Loaded Common Equity Tier 1 Ratio Target between 12.0% and 12.5% as of 2019, as communicated in November 2018 within the Targets of Transform 2019 update during the market presentation of the third quarter 2018 Group Results (https://www.unicreditgroup.eu/content/dam/unicreditgroup-eu/documents/en/investors/group-results/2018/3Q18/UniCredit_PR_3Q18-ENG.pdf). In the dynamic activity of capital management, the Capital Management unit defines the capital plan and monitors the regulatory capital ratios. The monitoring activity is focused, on one hand, on capital, according to both accounting and regulatory definition (Common Equity Tier 1, Additional Tier 1, and Tier 2 Capital), and, on the other hand, on the planning and performance of risk-weighted assets (RWA). The dynamic approach to the capital management activity aims at identifying the most suitable investment and capital instruments (ordinary shares and other capital instruments) for achieving the defined targets. If there is a capital shortfall, the gaps to be filled and capital generation measures are indicated, and their cost and efficiency are measured through the RAPM methodology. In this context, value analysis is enhanced by the joint role played by the Capital Management unit in the fields of, among others, regulatory, accounting, financial, tax-related, risk management, etc. and with respect to the changing regulations affecting these aspects; in this way, the Capital Management unit will be able to perform the necessary assessments and to provide with the necessary instructions the other Group HQ areas or companies asked to perform these tasks. Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity UniCredit ·2018 Annual Report and Accounts 417 Part F - Consolidated shareholders’ equity Section 1 - Consolidated Shareholders’ Equity A. Qualitative information UniCredit group deems as priority the activities of capital management and capital allocation based on the risks taken, with the aim of expanding the Group’s operations in a value creation perspective. These activities are structured in the different phases of the Group planning and monitoring process and, in particular, in: • planning and budgeting processes: - proposals of risks appetite and capitalisation objectives; - analysis of risks associated with value drivers and allocation of capital to business areas and units; - assignment of risk-adjusted performance objectives; - analysis of the impact on the Group’s value and the creation of value for shareholders; - preparation and proposal of the equity plan and dividend policy; • monitoring processes: - analysis of performance achieved at Group and business unit level and preparation of managerial reports for internal and external use; - analysis and monitoring of limits; - analysis and performance monitoring of the capital ratios of the Group and single companies. The Group has committed itself to generate income in excess to the one necessary to remunerate risk (cost of equity) and to create value for its shareholders by allocating capital to the various business areas and business units on the basis of specific risk profiles. To support the processes of planning and monitoring, the Group adopts a methodology based on risk-adjusted performance measurement (RAPM) which provides a number of indicators that combine and summarise the operating, financial and risk-related variables to be considered. Therefore, the Group capital and its allocation are of relevant importance in the definition of corporate strategies, as, on one hand, the Group Capital represents the shareholders’ investment in the Group, which needs to be adequately remunerated, and on the other hand, it is a scarce resource subject to the external constraints set by regulators. In the allocation process, the definitions of capital adopted are as following: • risk or employed capital: this is the equity component provided by shareholders (employed capital) which must be remunerated through an income generation greater than or equal to expectations (cost of equity); • capital at risk: this is the portion of capital and reserves that is used (the budgeted amount or allocated capital) or was used to cover (at period-end - absorbed capital) the risks taken to pursue the objective of creating value. If capital at risk is measured through risk management methods, then it is defined as internal capital; if it is measured through regulatory provisions, then it is defined as regulatory capital. Internal capital and regulatory capital differ in terms of their definition and the categories of risk covered. The former is based on the actual measurement of the exposure taken, while the latter is based on schedules specified in regulatory provisions. Internal capital is set at such a level to cover adverse events with a high level of probability, while regulatory capital is quantified on the basis of a CET1 target ratio in line with the one of major international banking groups and taking into account the impacts of the supervisory regulations in force or that will be adopted. Capital Allocated to Business Segment is quantified by regulatory capital, with the exception of the capital allocated to Fineco which is determined as the highest between the regulatory capital and internal capital. The capital management activity, performed by the Capital Management unit of Group Planning, Capital Management & Strategic ALM, is aimed at defining the target level of capitalisation for the Group and its companies in line with supervisory regulations and the appetite to risk. UniCredit group has identified a Fully Loaded Common Equity Tier 1 Ratio Target between 12.0% and 12.5% as of 2019, as communicated in November 2018 within the Targets of Transform 2019 update during the market presentation of the third quarter 2018 Group Results (https://www.unicreditgroup.eu/content/dam/unicreditgroup-eu/documents/en/investors/group-results/2018/3Q18/UniCredit_PR_3Q18-ENG.pdf). In the dynamic activity of capital management, the Capital Management unit defines the capital plan and monitors the regulatory capital ratios. The monitoring activity is focused, on one hand, on capital, according to both accounting and regulatory definition (Common Equity Tier 1, Additional Tier 1, and Tier 2 Capital), and, on the other hand, on the planning and performance of risk-weighted assets (RWA). The dynamic approach to the capital management activity aims at identifying the most suitable investment and capital instruments (ordinary shares and other capital instruments) for achieving the defined targets. If there is a capital shortfall, the gaps to be filled and capital generation measures are indicated, and their cost and efficiency are measured through the RAPM methodology. In this context, value analysis is enhanced by the joint role played by the Capital Management unit in the fields of, among others, regulatory, accounting, financial, tax-related, risk management, etc. and with respect to the changing regulations affecting these aspects; in this way, the Capital Management unit will be able to perform the necessary assessments and to provide with the necessary instructions the other Group HQ areas or companies asked to perform these tasks. Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity 418 2018 Annual Report and Accounts · UniCredit B. Quantitative information B.1 Consolidated Shareholders' Equity: breakdown by type of company (€ '000) AMOUNTS AS AT 12.31.2018 NET EQUITY ITEMS BANKING GROUP INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ADJUSTMENTS AND ELIMINATIONS TOTAL 1. Share Capital 21,226,195 - 22,945 (1,061) 21,248,079 2. Share premium reserve 13,479,623 - 106 39 13,479,768 3. Reserves 20,867,715 31,444 (45,244) (20,295) 20,833,620 4. Equity instruments 4,610,073 - (1) 1 4,610,073 5. Treasury shares (18,122) - - - (18,122) 6. Revaluation reserves (7,493,655) 14,299 (2,777,459) 2,762,596 (7,494,219) - Equity instruments designated at fair value through other comprehensive income (265,156) - (14) (1) (265,171) - Hedge accounting of equity instruments designated at fair value through other comprehnsive income - - - - - - Financial assets (different from equity instruments) at fair value through other comprehnsive income 73,754 - 3 112,183 185,940 - Property, plant and equipment - - - - - - Intangible assets - - - - - - Foreign investments hedging - - - - - - Cash flow hedging 190,327 - - (117,826) 72,501 - Hedging instruments (non-designated items) - - - - - - Foreign Exchange differences (5,137,351) - - 2,808,336 (2,329,015) - Non-current assets and disposal groups classified as held for sale (113) - (113) 113 (113) - Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 41,377 - - - 41,377 - Actuarial gains (losses) on defined benefit (2,729,565) - (1,194) 15,843 (2,714,916) - Part of valuation reserves from investments valued at equity method 56,052 14,299 (2,776,141) (56,052) (2,761,842) - Special revaluation laws 277,020 - - - 277,020 7. Profit (Loss) of the year (+/-) Minority 4,103,721 76,462 641,920 (713,521) 4,108,582 Total 56,775,550 122,205 (2,157,733) 2,027,759 56,767,781 B.2 Revaluation reserves of financial assets at fair value through other comprehensive income: brekdown (€ '000) ASSETS/VALUES AMOUNTS AS AT 12.31.2018 PRUDENTIAL CONSOLIDATED BANKING GROUP (EX IAS39) INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ADJUSTMENTS AND ELIMINATIONS TOTAL POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE 1. Debt securities 834,705 (760,969) - - 4 (1) (6,498) 118,686 828,211 (642,284) 2. Equity securities 290,153 (555,306) - - 2 (15) (1) (6) 290,154 (555,327) 3. Loans 15 - - - - (1) - 1 15 - Total 12.31.2018 1,124,873 (1,316,275) - - 6 (17) (6,499) 118,681 1,118,380 (1,197,611) Total 12.31.2017(*) 1,860,573 (401,976) - - 7,870 (7,870) (31,700) 57,807 1,836,743 (352,039) Note: (*) Including O.I.C.R. share (ex IAS39) Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity 418 2018 Annual Report and Accounts · UniCredit B. Quantitative information B.1 Consolidated Shareholders' Equity: breakdown by type of company (€ '000) AMOUNTS AS AT 12.31.2018 NET EQUITY ITEMS BANKING GROUP INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ADJUSTMENTS AND ELIMINATIONS TOTAL 1. Share Capital 21,226,195 - 22,945 (1,061) 21,248,079 2. Share premium reserve 13,479,623 - 106 39 13,479,768 3. Reserves 20,867,715 31,444 (45,244) (20,295) 20,833,620 4. Equity instruments 4,610,073 - (1) 1 4,610,073 5. Treasury shares (18,122) - - - (18,122) 6. Revaluation reserves (7,493,655) 14,299 (2,777,459) 2,762,596 (7,494,219) - Equity instruments designated at fair value through other comprehensive income (265,156) - (14) (1) (265,171) - Hedge accounting of equity instruments designated at fair value through other comprehnsive income - - - - - - Financial assets (different from equity instruments) at fair value through other comprehnsive income 73,754 - 3 112,183 185,940 - Property, plant and equipment - - - - - - Intangible assets - - - - - - Foreign investments hedging - - - - - - Cash flow hedging 190,327 - - (117,826) 72,501 - Hedging instruments (non-designated items) - - - - - - Foreign Exchange differences (5,137,351) - - 2,808,336 (2,329,015) - Non-current assets and disposal groups classified as held for sale (113) - (113) 113 (113) - Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 41,377 - - - 41,377 - Actuarial gains (losses) on defined benefit (2,729,565) - (1,194) 15,843 (2,714,916) - Part of valuation reserves from investments valued at equity method 56,052 14,299 (2,776,141) (56,052) (2,761,842) - Special revaluation laws 277,020 - - - 277,020 7. Profit (Loss) of the year (+/-) Minority 4,103,721 76,462 641,920 (713,521) 4,108,582 Total 56,775,550 122,205 (2,157,733) 2,027,759 56,767,781 B.2 Revaluation reserves of financial assets at fair value through other comprehensive income: brekdown (€ '000) ASSETS/VALUES AMOUNTS AS AT 12.31.2018 PRUDENTIAL CONSOLIDATED BANKING GROUP (EX IAS39) INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ADJUSTMENTS AND ELIMINATIONS TOTAL POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE 1. Debt securities 834,705 (760,969) - - 4 (1) (6,498) 118,686 828,211 (642,284) 2. Equity securities 290,153 (555,306) - - 2 (15) (1) (6) 290,154 (555,327) 3. Loans 15 - - - - (1) - 1 15 - Total 12.31.2018 1,124,873 (1,316,275) - - 6 (17) (6,499) 118,681 1,118,380 (1,197,611) Total 12.31.2017(*) 1,860,573 (401,976) - - 7,870 (7,870) (31,700) 57,807 1,836,743 (352,039) Note: (*) Including O.I.C.R. share (ex IAS39) Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity 418 2018 Annual Report and Accounts · UniCredit B. Quantitative information B.1 Consolidated Shareholders' Equity: breakdown by type of company (€ '000) AMOUNTS AS AT 12.31.2018 NET EQUITY ITEMS BANKING GROUP INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ADJUSTMENTS AND ELIMINATIONS TOTAL 1. Share Capital 21,226,195 - 22,945 (1,061) 21,248,079 2. Share premium reserve 13,479,623 - 106 39 13,479,768 3. Reserves 20,867,715 31,444 (45,244) (20,295) 20,833,620 4. Equity instruments 4,610,073 - (1) 1 4,610,073 5. Treasury shares (18,122) - - - (18,122) 6. Revaluation reserves (7,493,655) 14,299 (2,777,459) 2,762,596 (7,494,219) - Equity instruments designated at fair value through other comprehensive income (265,156) - (14) (1) (265,171) - Hedge accounting of equity instruments designated at fair value through other comprehnsive income - - - - - - Financial assets (different from equity instruments) at fair value through other comprehnsive income 73,754 - 3 112,183 185,940 - Property, plant and equipment - - - - - - Intangible assets - - - - - - Foreign investments hedging - - - - - - Cash flow hedging 190,327 - - (117,826) 72,501 - Hedging instruments (non-designated items) - - - - - - Foreign Exchange differences (5,137,351) - - 2,808,336 (2,329,015) - Non-current assets and disposal groups classified as held for sale (113) - (113) 113 (113) - Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 41,377 - - - 41,377 - Actuarial gains (losses) on defined benefit (2,729,565) - (1,194) 15,843 (2,714,916) - Part of valuation reserves from investments valued at equity method 56,052 14,299 (2,776,141) (56,052) (2,761,842) - Special revaluation laws 277,020 - - - 277,020 7. Profit (Loss) of the year (+/-) Minority 4,103,721 76,462 641,920 (713,521) 4,108,582 Total 56,775,550 122,205 (2,157,733) 2,027,759 56,767,781 B.2 Revaluation reserves of financial assets at fair value through other comprehensive income: brekdown (€ '000) ASSETS/VALUES AMOUNTS AS AT 12.31.2018 PRUDENTIAL CONSOLIDATED BANKING GROUP (EX IAS39) INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ADJUSTMENTS AND ELIMINATIONS TOTAL POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE 1. Debt securities 834,705 (760,969) - - 4 (1) (6,498) 118,686 828,211 (642,284) 2. Equity securities 290,153 (555,306) - - 2 (15) (1) (6) 290,154 (555,327) 3. Loans 15 - - - - (1) - 1 15 - Total 12.31.2018 1,124,873 (1,316,275) - - 6 (17) (6,499) 118,681 1,118,380 (1,197,611) Total 12.31.2017(*) 1,860,573 (401,976) - - 7,870 (7,870) (31,700) 57,807 1,836,743 (352,039) Note: (*) Including O.I.C.R. share (ex IAS39) Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity 418 2018 Annual Report and Accounts · UniCredit B. Quantitative information B.1 Consolidated Shareholders' Equity: breakdown by type of company (€ '000) AMOUNTS AS AT 12.31.2018 NET EQUITY ITEMS BANKING GROUP INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ADJUSTMENTS AND ELIMINATIONS TOTAL 1. Share Capital 21,226,195 - 22,945 (1,061) 21,248,079 2. Share premium reserve 13,479,623 - 106 39 13,479,768 3. Reserves 20,867,715 31,444 (45,244) (20,295) 20,833,620 4. Equity instruments 4,610,073 - (1) 1 4,610,073 5. Treasury shares (18,122) - - - (18,122) 6. Revaluation reserves (7,493,655) 14,299 (2,777,459) 2,762,596 (7,494,219) - Equity instruments designated at fair value through other comprehensive income (265,156) - (14) (1) (265,171) - Hedge accounting of equity instruments designated at fair value through other comprehnsive income - - - - - - Financial assets (different from equity instruments) at fair value through other comprehnsive income 73,754 - 3 112,183 185,940 - Property, plant and equipment - - - - - - Intangible assets - - - - - - Foreign investments hedging - - - - - - Cash flow hedging 190,327 - - (117,826) 72,501 - Hedging instruments (non-designated items) - - - - - - Foreign Exchange differences (5,137,351) - - 2,808,336 (2,329,015) - Non-current assets and disposal groups classified as held for sale (113) - (113) 113 (113) - Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 41,377 - - - 41,377 - Actuarial gains (losses) on defined benefit (2,729,565) - (1,194) 15,843 (2,714,916) - Part of valuation reserves from investments valued at equity method 56,052 14,299 (2,776,141) (56,052) (2,761,842) - Special revaluation laws 277,020 - - - 277,020 7. Profit (Loss) of the year (+/-) Minority 4,103,721 76,462 641,920 (713,521) 4,108,582 Total 56,775,550 122,205 (2,157,733) 2,027,759 56,767,781 B.2 Revaluation reserves of financial assets at fair value through other comprehensive income: brekdown (€ '000) ASSETS/VALUES AMOUNTS AS AT 12.31.2018 PRUDENTIAL CONSOLIDATED BANKING GROUP (EX IAS39) INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ADJUSTMENTS AND ELIMINATIONS TOTAL POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE 1. Debt securities 834,705 (760,969) - - 4 (1) (6,498) 118,686 828,211 (642,284) 2. Equity securities 290,153 (555,306) - - 2 (15) (1) (6) 290,154 (555,327) 3. Loans 15 - - - - (1) - 1 15 - Total 12.31.2018 1,124,873 (1,316,275) - - 6 (17) (6,499) 118,681 1,118,380 (1,197,611) Total 12.31.2017(*) 1,860,573 (401,976) - - 7,870 (7,870) (31,700) 57,807 1,836,743 (352,039) Note: (*) Including O.I.C.R. share (ex IAS39) Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity 418 2018 Annual Report and Accounts · UniCredit B. Quantitative information B.1 Consolidated Shareholders' Equity: breakdown by type of company (€ '000) AMOUNTS AS AT 12.31.2018 NET EQUITY ITEMS BANKING GROUP INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ADJUSTMENTS AND ELIMINATIONS TOTAL 1. Share Capital 21,226,195 - 22,945 (1,061) 21,248,079 2. Share premium reserve 13,479,623 - 106 39 13,479,768 3. Reserves 20,867,715 31,444 (45,244) (20,295) 20,833,620 4. Equity instruments 4,610,073 - (1) 1 4,610,073 5. Treasury shares (18,122) - - - (18,122) 6. Revaluation reserves (7,493,655) 14,299 (2,777,459) 2,762,596 (7,494,219) - Equity instruments designated at fair value through other comprehensive income (265,156) - (14) (1) (265,171) - Hedge accounting of equity instruments designated at fair value through other comprehnsive income - - - - - - Financial assets (different from equity instruments) at fair value through other comprehnsive income 73,754 - 3 112,183 185,940 - Property, plant and equipment - - - - - - Intangible assets - - - - - - Foreign investments hedging - - - - - - Cash flow hedging 190,327 - - (117,826) 72,501 - Hedging instruments (non-designated items) - - - - - - Foreign Exchange differences (5,137,351) - - 2,808,336 (2,329,015) - Non-current assets and disposal groups classified as held for sale (113) - (113) 113 (113) - Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 41,377 - - - 41,377 - Actuarial gains (losses) on defined benefit (2,729,565) - (1,194) 15,843 (2,714,916) - Part of valuation reserves from investments valued at equity method 56,052 14,299 (2,776,141) (56,052) (2,761,842) - Special revaluation laws 277,020 - - - 277,020 7. Profit (Loss) of the year (+/-) Minority 4,103,721 76,462 641,920 (713,521) 4,108,582 Total 56,775,550 122,205 (2,157,733) 2,027,759 56,767,781 B.2 Revaluation reserves of financial assets at fair value through other comprehensive income: brekdown (€ '000) ASSETS/VALUES AMOUNTS AS AT 12.31.2018 PRUDENTIAL CONSOLIDATED BANKING GROUP (EX IAS39) INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ADJUSTMENTS AND ELIMINATIONS TOTAL POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE 1. Debt securities 834,705 (760,969) - - 4 (1) (6,498) 118,686 828,211 (642,284) 2. Equity securities 290,153 (555,306) - - 2 (15) (1) (6) 290,154 (555,327) 3. Loans 15 - - - - (1) - 1 15 - Total 12.31.2018 1,124,873 (1,316,275) - - 6 (17) (6,499) 118,681 1,118,380 (1,197,611) Total 12.31.2017(*) 1,860,573 (401,976) - - 7,870 (7,870) (31,700) 57,807 1,836,743 (352,039) Note: (*) Including O.I.C.R. share (ex IAS39) Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity UniCredit ·2018 Annual Report and Accounts 419 B.3 Revaluation reserves of financial assets at fair value through other comprehensive income: annual change (€ '000) ASSETS/VALUES CHANGES IN 2018 DEBT SECURITIES EQUITY SECURITIES LOANS 1. Opening balance 1,475,594 (248,847) 14 2. Positive changes 355,492 80,761 1 2.1 Fair value increases 188,085 31,509 - 2.2 Net losses on impairment 18,784 X - 2.3 Reclassification through profit or loss of negative reserves: following disposal 146,775 X - 2.4 Transfers to other comprehensive shareholders' equity (equity instruments) - 49,242 - 2.5 Other changes 1,848 10 1 3. Negative changes (1,645,159) (97,087) - 3.1 Fair value reductions (1,342,097) (86,976) - 3.2 Recoveries on impairment (10,062) - - 3.3 Reclassification throught profit or loss of positive reserves: following disposal (286,131) X - 3.4 Transfers to other comprehensive shareholders' equity (equity instruments) - (392) - 3.5 Other changes (6,869) (9,719) - 4. Closing balance 185,927 (265,173) 15 B.4 Revaluation reserves related to defined benefit plans: annual changes (€'000) CHANGES IN 2018 BANKING GROUP INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ELIMINATIONS AND ADJUSTMENTS TOTAL 1. Opening balance (2,431,437) - (1,456) 17,367 (2,415,526) 2. Increases 25,148 - 263 (4,335) 21,076 2.1 Increases in fair value 19,781 - 263 (15) 20,029 2.2 Transfers to other net equity items - - - - - 2.3 Other changes 5,367 - - (4,320) 1,047 3. Decreases 323,276 - 1 (2,811) 320,466 3.1 Decreases in fair value 311,260 - - (2,778) 308,482 3.2 Transfers to other net equity items - - - - - 3.3 Other changes 12,016 - 1 (33) 11,984 4. Closing balance (2,729,565) - (1,194) 15,843 (2,714,916) Section 2 - Own funds and banking regulatory ratios For this section please refer to the own funds disclosure and capital adequacy reported into the UniCredit group disclosure (Pillar III). Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity UniCredit ·2018 Annual Report and Accounts 419 B.3 Revaluation reserves of financial assets at fair value through other comprehensive income: annual change (€ '000) ASSETS/VALUES CHANGES IN 2018 DEBT SECURITIES EQUITY SECURITIES LOANS 1. Opening balance 1,475,594 (248,847) 14 2. Positive changes 355,492 80,761 1 2.1 Fair value increases 188,085 31,509 - 2.2 Net losses on impairment 18,784 X - 2.3 Reclassification through profit or loss of negative reserves: following disposal 146,775 X - 2.4 Transfers to other comprehensive shareholders' equity (equity instruments) - 49,242 - 2.5 Other changes 1,848 10 1 3. Negative changes (1,645,159) (97,087) - 3.1 Fair value reductions (1,342,097) (86,976) - 3.2 Recoveries on impairment (10,062) - - 3.3 Reclassification throught profit or loss of positive reserves: following disposal (286,131) X - 3.4 Transfers to other comprehensive shareholders' equity (equity instruments) - (392) - 3.5 Other changes (6,869) (9,719) - 4. Closing balance 185,927 (265,173) 15 B.4 Revaluation reserves related to defined benefit plans: annual changes (€'000) CHANGES IN 2018 BANKING GROUP INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ELIMINATIONS AND ADJUSTMENTS TOTAL 1. Opening balance (2,431,437) - (1,456) 17,367 (2,415,526) 2. Increases 25,148 - 263 (4,335) 21,076 2.1 Increases in fair value 19,781 - 263 (15) 20,029 2.2 Transfers to other net equity items - - - - - 2.3 Other changes 5,367 - - (4,320) 1,047 3. Decreases 323,276 - 1 (2,811) 320,466 3.1 Decreases in fair value 311,260 - - (2,778) 308,482 3.2 Transfers to other net equity items - - - - - 3.3 Other changes 12,016 - 1 (33) 11,984 4. Closing balance (2,729,565) - (1,194) 15,843 (2,714,916) Section 2 - Own funds and banking regulatory ratios For this section please refer to the own funds disclosure and capital adequacy reported into the UniCredit group disclosure (Pillar III). Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity UniCredit ·2018 Annual Report and Accounts 419 B.3 Revaluation reserves of financial assets at fair value through other comprehensive income: annual change (€ '000) ASSETS/VALUES CHANGES IN 2018 DEBT SECURITIES EQUITY SECURITIES LOANS 1. Opening balance 1,475,594 (248,847) 14 2. Positive changes 355,492 80,761 1 2.1 Fair value increases 188,085 31,509 - 2.2 Net losses on impairment 18,784 X - 2.3 Reclassification through profit or loss of negative reserves: following disposal 146,775 X - 2.4 Transfers to other comprehensive shareholders' equity (equity instruments) - 49,242 - 2.5 Other changes 1,848 10 1 3. Negative changes (1,645,159) (97,087) - 3.1 Fair value reductions (1,342,097) (86,976) - 3.2 Recoveries on impairment (10,062) - - 3.3 Reclassification throught profit or loss of positive reserves: following disposal (286,131) X - 3.4 Transfers to other comprehensive shareholders' equity (equity instruments) - (392) - 3.5 Other changes (6,869) (9,719) - 4. Closing balance 185,927 (265,173) 15 B.4 Revaluation reserves related to defined benefit plans: annual changes (€'000) CHANGES IN 2018 BANKING GROUP INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ELIMINATIONS AND ADJUSTMENTS TOTAL 1. Opening balance (2,431,437) - (1,456) 17,367 (2,415,526) 2. Increases 25,148 - 263 (4,335) 21,076 2.1 Increases in fair value 19,781 - 263 (15) 20,029 2.2 Transfers to other net equity items - - - - - 2.3 Other changes 5,367 - - (4,320) 1,047 3. Decreases 323,276 - 1 (2,811) 320,466 3.1 Decreases in fair value 311,260 - - (2,778) 308,482 3.2 Transfers to other net equity items - - - - - 3.3 Other changes 12,016 - 1 (33) 11,984 4. Closing balance (2,729,565) - (1,194) 15,843 (2,714,916) Section 2 - Own funds and banking regulatory ratios For this section please refer to the own funds disclosure and capital adequacy reported into the UniCredit group disclosure (Pillar III). Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity UniCredit ·2018 Annual Report and Accounts 419 B.3 Revaluation reserves of financial assets at fair value through other comprehensive income: annual change (€ '000) ASSETS/VALUES CHANGES IN 2018 DEBT SECURITIES EQUITY SECURITIES LOANS 1. Opening balance 1,475,594 (248,847) 14 2. Positive changes 355,492 80,761 1 2.1 Fair value increases 188,085 31,509 - 2.2 Net losses on impairment 18,784 X - 2.3 Reclassification through profit or loss of negative reserves: following disposal 146,775 X - 2.4 Transfers to other comprehensive shareholders' equity (equity instruments) - 49,242 - 2.5 Other changes 1,848 10 1 3. Negative changes (1,645,159) (97,087) - 3.1 Fair value reductions (1,342,097) (86,976) - 3.2 Recoveries on impairment (10,062) - - 3.3 Reclassification throught profit or loss of positive reserves: following disposal (286,131) X - 3.4 Transfers to other comprehensive shareholders' equity (equity instruments) - (392) - 3.5 Other changes (6,869) (9,719) - 4. Closing balance 185,927 (265,173) 15 B.4 Revaluation reserves related to defined benefit plans: annual changes (€'000) CHANGES IN 2018 BANKING GROUP INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ELIMINATIONS AND ADJUSTMENTS TOTAL 1. Opening balance (2,431,437) - (1,456) 17,367 (2,415,526) 2. Increases 25,148 - 263 (4,335) 21,076 2.1 Increases in fair value 19,781 - 263 (15) 20,029 2.2 Transfers to other net equity items - - - - - 2.3 Other changes 5,367 - - (4,320) 1,047 3. Decreases 323,276 - 1 (2,811) 320,466 3.1 Decreases in fair value 311,260 - - (2,778) 308,482 3.2 Transfers to other net equity items - - - - - 3.3 Other changes 12,016 - 1 (33) 11,984 4. Closing balance (2,729,565) - (1,194) 15,843 (2,714,916) Section 2 - Own funds and banking regulatory ratios For this section please refer to the own funds disclosure and capital adequacy reported into the UniCredit group disclosure (Pillar III). Consolidated financial statements | Notes to the consolidated accounts Part F - Consolidated shareholders’ equity UniCredit ·2018 Annual Report and Accounts 419 B.3 Revaluation reserves of financial assets at fair value through other comprehensive income: annual change (€ '000) ASSETS/VALUES CHANGES IN 2018 DEBT SECURITIES EQUITY SECURITIES LOANS 1. Opening balance 1,475,594 (248,847) 14 2. Positive changes 355,492 80,761 1 2.1 Fair value increases 188,085 31,509 - 2.2 Net losses on impairment 18,784 X - 2.3 Reclassification through profit or loss of negative reserves: following disposal 146,775 X - 2.4 Transfers to other comprehensive shareholders' equity (equity instruments) - 49,242 - 2.5 Other changes 1,848 10 1 3. Negative changes (1,645,159) (97,087) - 3.1 Fair value reductions (1,342,097) (86,976) - 3.2 Recoveries on impairment (10,062) - - 3.3 Reclassification throught profit or loss of positive reserves: following disposal (286,131) X - 3.4 Transfers to other comprehensive shareholders' equity (equity instruments) - (392) - 3.5 Other changes (6,869) (9,719) - 4. Closing balance 185,927 (265,173) 15 B.4 Revaluation reserves related to defined benefit plans: annual changes (€'000) CHANGES IN 2018 BANKING GROUP INSURANCE COMPANIES OTHER COMPANIES CONSOLIDATION ELIMINATIONS AND ADJUSTMENTS TOTAL 1. Opening balance (2,431,437) - (1,456) 17,367 (2,415,526) 2. Increases 25,148 - 263 (4,335) 21,076 2.1 Increases in fair value 19,781 - 263 (15) 20,029 2.2 Transfers to other net equity items - - - - - 2.3 Other changes 5,367 - - (4,320) 1,047 3. Decreases 323,276 - 1 (2,811) 320,466 3.1 Decreases in fair value 311,260 - - (2,778) 308,482 3.2 Transfers to other net equity items - - - - - 3.3 Other changes 12,016 - 1 (33) 11,984 4. Closing balance (2,729,565) - (1,194) 15,843 (2,714,916) Section 2 - Own funds and banking regulatory ratios For this section please refer to the own funds disclosure and capital adequacy reported into the UniCredit group disclosure (Pillar III). Consolidated financial statements | Notes to the consolidated accounts Part G - Business combinations 420 2018 Annual Report and Accounts · UniCredit Part G - Business combinatios Section 1 - Business combinations completed in the year Business combinations with counterparties outside the Group are carried out using the “purchase method” prescribed by the accounting standard IFRS3 “Business Combinations”. Under its reorganisation programme the Group may carry out business combinations involving companies or businesses which were already directly or indirectly controlled by UniCredit S.p.A. (Business Combination Under Common Control). These transactions have no economic substance and are accounted for in the acquirer’s and acquired entity’s accounts in accordance with the continuity principle. These transactions have no effect on consolidated level. 1. Business combinations outside the Group In 2018 the Group has performed no business combinations outside the Group. For further details please refer to Part A, Section 3 - Consolidation scope and methods of Notes to the Consolidated Accounts. 2. Business combinations inside the Group In 2018 within the Group some transactions were carried out involving disposal or buy-outs of Business Units with business combinations under common control in line with strategic guidelines of the Group. These transactions had no economic substance and was accounted for in the acquirer’s and acquired entity’s accounts in accordance with the continuity principle. The main transaction refers to the closing on 30 June 2018 the company UniCredit Luxembourg S.A., 100% subsidiary of UniCredit Bank AG. Starting from 1 July 2018, Unicredit Luxembourg S.A. has become a branch of UCB AG. The decision to close the company was approved by the Management Board of UCB AG on 20 December 2016 in line with the Group strategic plan "Transform 2019". Section 2 - Business combinations completed after year-end No business combination have been completed after year end. Section 3 - Retrospective adjustments No retrospective adjustments has been applied in 2018 on business combinations competed in previous years. Consolidated financial statements | Notes to the consolidated accounts Part G - Business combinations 420 2018 Annual Report and Accounts · UniCredit Part G - Business combinatios Section 1 - Business combinations completed in the year Business combinations with counterparties outside the Group are carried out using the “purchase method” prescribed by the accounting standard IFRS3 “Business Combinations”. Under its reorganisation programme the Group may carry out business combinations involving companies or businesses which were already directly or indirectly controlled by UniCredit S.p.A. (Business Combination Under Common Control). These transactions have no economic substance and are accounted for in the acquirer’s and acquired entity’s accounts in accordance with the continuity principle. These transactions have no effect on consolidated level. 1. Business combinations outside the Group In 2018 the Group has performed no business combinations outside the Group. For further details please refer to Part A, Section 3 - Consolidation scope and methods of Notes to the Consolidated Accounts. 2. Business combinations inside the Group In 2018 within the Group some transactions were carried out involving disposal or buy-outs of Business Units with business combinations under common control in line with strategic guidelines of the Group. These transactions had no economic substance and was accounted for in the acquirer’s and acquired entity’s accounts in accordance with the continuity principle. The main transaction refers to the closing on 30 June 2018 the company UniCredit Luxembourg S.A., 100% subsidiary of UniCredit Bank AG. Starting from 1 July 2018, Unicredit Luxembourg S.A. has become a branch of UCB AG. The decision to close the company was approved by the Management Board of UCB AG on 20 December 2016 in line with the Group strategic plan "Transform 2019". Section 2 - Business combinations completed after year-end No business combination have been completed after year end. Section 3 - Retrospective adjustments No retrospective adjustments has been applied in 2018 on business combinations competed in previous years. Consolidated financial statements | Notes to the consolidated accounts Part G - Business combinations 420 2018 Annual Report and Accounts · UniCredit Part G - Business combinatios Section 1 - Business combinations completed in the year Business combinations with counterparties outside the Group are carried out using the “purchase method” prescribed by the accounting standard IFRS3 “Business Combinations”. Under its reorganisation programme the Group may carry out business combinations involving companies or businesses which were already directly or indirectly controlled by UniCredit S.p.A. (Business Combination Under Common Control). These transactions have no economic substance and are accounted for in the acquirer’s and acquired entity’s accounts in accordance with the continuity principle. These transactions have no effect on consolidated level. 1. Business combinations outside the Group In 2018 the Group has performed no business combinations outside the Group. For further details please refer to Part A, Section 3 - Consolidation scope and methods of Notes to the Consolidated Accounts. 2. Business combinations inside the Group In 2018 within the Group some transactions were carried out involving disposal or buy-outs of Business Units with business combinations under common control in line with strategic guidelines of the Group. These transactions had no economic substance and was accounted for in the acquirer’s and acquired entity’s accounts in accordance with the continuity principle. The main transaction refers to the closing on 30 June 2018 the company UniCredit Luxembourg S.A., 100% subsidiary of UniCredit Bank AG. Starting from 1 July 2018, Unicredit Luxembourg S.A. has become a branch of UCB AG. The decision to close the company was approved by the Management Board of UCB AG on 20 December 2016 in line with the Group strategic plan "Transform 2019". Section 2 - Business combinations completed after year-end No business combination have been completed after year end. Section 3 - Retrospective adjustments No retrospective adjustments has been applied in 2018 on business combinations competed in previous years. Consolidated financial statements | Notes to the consolidated accounts Part G - Business combinations 420 2018 Annual Report and Accounts · UniCredit Part G - Business combinatios Section 1 - Business combinations completed in the year Business combinations with counterparties outside the Group are carried out using the “purchase method” prescribed by the accounting standard IFRS3 “Business Combinations”. Under its reorganisation programme the Group may carry out business combinations involving companies or businesses which were already directly or indirectly controlled by UniCredit S.p.A. (Business Combination Under Common Control). These transactions have no economic substance and are accounted for in the acquirer’s and acquired entity’s accounts in accordance with the continuity principle. These transactions have no effect on consolidated level. 1. Business combinations outside the Group In 2018 the Group has performed no business combinations outside the Group. For further details please refer to Part A, Section 3 - Consolidation scope and methods of Notes to the Consolidated Accounts. 2. Business combinations inside the Group In 2018 within the Group some transactions were carried out involving disposal or buy-outs of Business Units with business combinations under common control in line with strategic guidelines of the Group. These transactions had no economic substance and was accounted for in the acquirer’s and acquired entity’s accounts in accordance with the continuity principle. The main transaction refers to the closing on 30 June 2018 the company UniCredit Luxembourg S.A., 100% subsidiary of UniCredit Bank AG. Starting from 1 July 2018, Unicredit Luxembourg S.A. has become a branch of UCB AG. The decision to close the company was approved by the Management Board of UCB AG on 20 December 2016 in line with the Group strategic plan "Transform 2019". Section 2 - Business combinations completed after year-end No business combination have been completed after year end. Section 3 - Retrospective adjustments No retrospective adjustments has been applied in 2018 on business combinations competed in previous years. Consolidated financial statements | Notes to the consolidated accounts Part G - Business combinations 420 2018 Annual Report and Accounts · UniCredit Part G - Business combinatios Section 1 - Business combinations completed in the year Business combinations with counterparties outside the Group are carried out using the “purchase method” prescribed by the accounting standard IFRS3 “Business Combinations”. Under its reorganisation programme the Group may carry out business combinations involving companies or businesses which were already directly or indirectly controlled by UniCredit S.p.A. (Business Combination Under Common Control). These transactions have no economic substance and are accounted for in the acquirer’s and acquired entity’s accounts in accordance with the continuity principle. These transactions have no effect on consolidated level. 1. Business combinations outside the Group In 2018 the Group has performed no business combinations outside the Group. For further details please refer to Part A, Section 3 - Consolidation scope and methods of Notes to the Consolidated Accounts. 2. Business combinations inside the Group In 2018 within the Group some transactions were carried out involving disposal or buy-outs of Business Units with business combinations under common control in line with strategic guidelines of the Group. These transactions had no economic substance and was accounted for in the acquirer’s and acquired entity’s accounts in accordance with the continuity principle. The main transaction refers to the closing on 30 June 2018 the company UniCredit Luxembourg S.A., 100% subsidiary of UniCredit Bank AG. Starting from 1 July 2018, Unicredit Luxembourg S.A. has become a branch of UCB AG. The decision to close the company was approved by the Management Board of UCB AG on 20 December 2016 in line with the Group strategic plan "Transform 2019". Section 2 - Business combinations completed after year-end No business combination have been completed after year end. Section 3 - Retrospective adjustments No retrospective adjustments has been applied in 2018 on business combinations competed in previous years. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 421 Part H - Related-party transactions Introduction For the purposes of financial disclosure, in accordance with the Commission Regulation (EU) No.632/2010 of 19 July 2010, the text of IAS24 applies, which defines the concept of related party and identifies the relations between that party and the entity producing the financial statements. IAS24 also explains that the disclosure should include transactions entered into with subsidiaries of associates and subsidiaries of joint ventures. Pursuant to IAS24, UniCredit S.p.A.’s related parties include: • companies belonging to UniCredit group and companies controlled by UniCredit but not consolidated35; • associates and joint ventures, as well as their subsidiaries; • UniCredit’s “Key management personnel”; • close family members of “key management personnel” and companies controlled (or jointly controlled) by key management personnel or their close family members; • UniCredit group employee post-employment benefit plans. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Also for the management of related-party transactions refer to the discipline established by CONSOB Regulation No.17221/2010 (deriving from the provisions of Art.2391-bis of the Italian Civil Code) and by Banca d’Italia Circular No.263/2006 (Title V, Chapter 5) introduced in 2011 as well as the provisions pursuant to Art.136 of Legislative Decree No.385/1993, under which corporate officers may assume obligations towards the bank they manage, direct or control, only upon unanimous approval of the board of the bank and positive opinion of the Board of Statutory Auditors. In this regard, UniCredit, as a listed issuer and subject to Banca d’Italia regulations, has adopted the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA”, approved by UniCredit’s Board of Directors with the positive opinion of the Related-Parties Committee, before Related Parties and Equity Investments Committee and of the Board of Statutory Auditors, which is published on UniCredit website (www.unicreditgroup.eu), designed to define preliminary and conclusive rules with respect to transactions initiated by UniCredit, including those conducted through subsidiaries, with related parties, and the manner in which information is disclosed to corporate bodies, the supervisory authorities and the market. Specific guidelines contained in the Global Policy have been distributed to the company’s functions and Group Legal Entities in order to systematically abide to the above-mentioned reporting requirements. UniCredit has also established, in accordance with those guidelines, the abovementioned Related-Parties Committee and Equity Investments, consisting of three members appointed by the Board of Directors among its members qualified as "independent" within the meaning of Art.3 of the Corporate Governance Code. In addition UniCredit applies specific procedures regarding internal controls on risk activities with subjects in conflit of interests regulated in the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA”. During 2018, transactions carried out with related parties reported in the data streams provided by the reference standards, were executed and carried out based on assessments of the economic convenience and interests of the Group. 35 For the purposes of this Consolidated report and accounts 2018 of UniCredit group as at 31 December 2018 transactions and outstanding balances between consolidated companies were written off as described in Part A. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 421 Part H - Related-party transactions Introduction For the purposes of financial disclosure, in accordance with the Commission Regulation (EU) No.632/2010 of 19 July 2010, the text of IAS24 applies, which defines the concept of related party and identifies the relations between that party and the entity producing the financial statements. IAS24 also explains that the disclosure should include transactions entered into with subsidiaries of associates and subsidiaries of joint ventures. Pursuant to IAS24, UniCredit S.p.A.’s related parties include: • companies belonging to UniCredit group and companies controlled by UniCredit but not consolidated35; • associates and joint ventures, as well as their subsidiaries; • UniCredit’s “Key management personnel”; • close family members of “key management personnel” and companies controlled (or jointly controlled) by key management personnel or their close family members; • UniCredit group employee post-employment benefit plans. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Also for the management of related-party transactions refer to the discipline established by CONSOB Regulation No.17221/2010 (deriving from the provisions of Art.2391-bis of the Italian Civil Code) and by Banca d’Italia Circular No.263/2006 (Title V, Chapter 5) introduced in 2011 as well as the provisions pursuant to Art.136 of Legislative Decree No.385/1993, under which corporate officers may assume obligations towards the bank they manage, direct or control, only upon unanimous approval of the board of the bank and positive opinion of the Board of Statutory Auditors. In this regard, UniCredit, as a listed issuer and subject to Banca d’Italia regulations, has adopted the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA”, approved by UniCredit’s Board of Directors with the positive opinion of the Related-Parties Committee, before Related Parties and Equity Investments Committee and of the Board of Statutory Auditors, which is published on UniCredit website (www.unicreditgroup.eu), designed to define preliminary and conclusive rules with respect to transactions initiated by UniCredit, including those conducted through subsidiaries, with related parties, and the manner in which information is disclosed to corporate bodies, the supervisory authorities and the market. Specific guidelines contained in the Global Policy have been distributed to the company’s functions and Group Legal Entities in order to systematically abide to the above-mentioned reporting requirements. UniCredit has also established, in accordance with those guidelines, the abovementioned Related-Parties Committee and Equity Investments, consisting of three members appointed by the Board of Directors among its members qualified as "independent" within the meaning of Art.3 of the Corporate Governance Code. In addition UniCredit applies specific procedures regarding internal controls on risk activities with subjects in conflit of interests regulated in the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA”. During 2018, transactions carried out with related parties reported in the data streams provided by the reference standards, were executed and carried out based on assessments of the economic convenience and interests of the Group. 35 For the purposes of this Consolidated report and accounts 2018 of UniCredit group as at 31 December 2018 transactions and outstanding balances between consolidated companies were written off as described in Part A. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 421 Part H - Related-party transactions Introduction For the purposes of financial disclosure, in accordance with the Commission Regulation (EU) No.632/2010 of 19 July 2010, the text of IAS24 applies, which defines the concept of related party and identifies the relations between that party and the entity producing the financial statements. IAS24 also explains that the disclosure should include transactions entered into with subsidiaries of associates and subsidiaries of joint ventures. Pursuant to IAS24, UniCredit S.p.A.’s related parties include: • companies belonging to UniCredit group and companies controlled by UniCredit but not consolidated35; • associates and joint ventures, as well as their subsidiaries; • UniCredit’s “Key management personnel”; • close family members of “key management personnel” and companies controlled (or jointly controlled) by key management personnel or their close family members; • UniCredit group employee post-employment benefit plans. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Also for the management of related-party transactions refer to the discipline established by CONSOB Regulation No.17221/2010 (deriving from the provisions of Art.2391-bis of the Italian Civil Code) and by Banca d’Italia Circular No.263/2006 (Title V, Chapter 5) introduced in 2011 as well as the provisions pursuant to Art.136 of Legislative Decree No.385/1993, under which corporate officers may assume obligations towards the bank they manage, direct or control, only upon unanimous approval of the board of the bank and positive opinion of the Board of Statutory Auditors. In this regard, UniCredit, as a listed issuer and subject to Banca d’Italia regulations, has adopted the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA”, approved by UniCredit’s Board of Directors with the positive opinion of the Related-Parties Committee, before Related Parties and Equity Investments Committee and of the Board of Statutory Auditors, which is published on UniCredit website (www.unicreditgroup.eu), designed to define preliminary and conclusive rules with respect to transactions initiated by UniCredit, including those conducted through subsidiaries, with related parties, and the manner in which information is disclosed to corporate bodies, the supervisory authorities and the market. Specific guidelines contained in the Global Policy have been distributed to the company’s functions and Group Legal Entities in order to systematically abide to the above-mentioned reporting requirements. UniCredit has also established, in accordance with those guidelines, the abovementioned Related-Parties Committee and Equity Investments, consisting of three members appointed by the Board of Directors among its members qualified as "independent" within the meaning of Art.3 of the Corporate Governance Code. In addition UniCredit applies specific procedures regarding internal controls on risk activities with subjects in conflit of interests regulated in the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA”. During 2018, transactions carried out with related parties reported in the data streams provided by the reference standards, were executed and carried out based on assessments of the economic convenience and interests of the Group. 35 For the purposes of this Consolidated report and accounts 2018 of UniCredit group as at 31 December 2018 transactions and outstanding balances between consolidated companies were written off as described in Part A. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 421 Part H - Related-party transactions Introduction For the purposes of financial disclosure, in accordance with the Commission Regulation (EU) No.632/2010 of 19 July 2010, the text of IAS24 applies, which defines the concept of related party and identifies the relations between that party and the entity producing the financial statements. IAS24 also explains that the disclosure should include transactions entered into with subsidiaries of associates and subsidiaries of joint ventures. Pursuant to IAS24, UniCredit S.p.A.’s related parties include: • companies belonging to UniCredit group and companies controlled by UniCredit but not consolidated35; • associates and joint ventures, as well as their subsidiaries; • UniCredit’s “Key management personnel”; • close family members of “key management personnel” and companies controlled (or jointly controlled) by key management personnel or their close family members; • UniCredit group employee post-employment benefit plans. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Also for the management of related-party transactions refer to the discipline established by CONSOB Regulation No.17221/2010 (deriving from the provisions of Art.2391-bis of the Italian Civil Code) and by Banca d’Italia Circular No.263/2006 (Title V, Chapter 5) introduced in 2011 as well as the provisions pursuant to Art.136 of Legislative Decree No.385/1993, under which corporate officers may assume obligations towards the bank they manage, direct or control, only upon unanimous approval of the board of the bank and positive opinion of the Board of Statutory Auditors. In this regard, UniCredit, as a listed issuer and subject to Banca d’Italia regulations, has adopted the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA”, approved by UniCredit’s Board of Directors with the positive opinion of the Related-Parties Committee, before Related Parties and Equity Investments Committee and of the Board of Statutory Auditors, which is published on UniCredit website (www.unicreditgroup.eu), designed to define preliminary and conclusive rules with respect to transactions initiated by UniCredit, including those conducted through subsidiaries, with related parties, and the manner in which information is disclosed to corporate bodies, the supervisory authorities and the market. Specific guidelines contained in the Global Policy have been distributed to the company’s functions and Group Legal Entities in order to systematically abide to the above-mentioned reporting requirements. UniCredit has also established, in accordance with those guidelines, the abovementioned Related-Parties Committee and Equity Investments, consisting of three members appointed by the Board of Directors among its members qualified as "independent" within the meaning of Art.3 of the Corporate Governance Code. In addition UniCredit applies specific procedures regarding internal controls on risk activities with subjects in conflit of interests regulated in the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA”. During 2018, transactions carried out with related parties reported in the data streams provided by the reference standards, were executed and carried out based on assessments of the economic convenience and interests of the Group. 35 For the purposes of this Consolidated report and accounts 2018 of UniCredit group as at 31 December 2018 transactions and outstanding balances between consolidated companies were written off as described in Part A. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 421 Part H - Related-party transactions Introduction For the purposes of financial disclosure, in accordance with the Commission Regulation (EU) No.632/2010 of 19 July 2010, the text of IAS24 applies, which defines the concept of related party and identifies the relations between that party and the entity producing the financial statements. IAS24 also explains that the disclosure should include transactions entered into with subsidiaries of associates and subsidiaries of joint ventures. Pursuant to IAS24, UniCredit S.p.A.’s related parties include: • companies belonging to UniCredit group and companies controlled by UniCredit but not consolidated35; • associates and joint ventures, as well as their subsidiaries; • UniCredit’s “Key management personnel”; • close family members of “key management personnel” and companies controlled (or jointly controlled) by key management personnel or their close family members; • UniCredit group employee post-employment benefit plans. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Also for the management of related-party transactions refer to the discipline established by CONSOB Regulation No.17221/2010 (deriving from the provisions of Art.2391-bis of the Italian Civil Code) and by Banca d’Italia Circular No.263/2006 (Title V, Chapter 5) introduced in 2011 as well as the provisions pursuant to Art.136 of Legislative Decree No.385/1993, under which corporate officers may assume obligations towards the bank they manage, direct or control, only upon unanimous approval of the board of the bank and positive opinion of the Board of Statutory Auditors. In this regard, UniCredit, as a listed issuer and subject to Banca d’Italia regulations, has adopted the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA”, approved by UniCredit’s Board of Directors with the positive opinion of the Related-Parties Committee, before Related Parties and Equity Investments Committee and of the Board of Statutory Auditors, which is published on UniCredit website (www.unicreditgroup.eu), designed to define preliminary and conclusive rules with respect to transactions initiated by UniCredit, including those conducted through subsidiaries, with related parties, and the manner in which information is disclosed to corporate bodies, the supervisory authorities and the market. Specific guidelines contained in the Global Policy have been distributed to the company’s functions and Group Legal Entities in order to systematically abide to the above-mentioned reporting requirements. UniCredit has also established, in accordance with those guidelines, the abovementioned Related-Parties Committee and Equity Investments, consisting of three members appointed by the Board of Directors among its members qualified as "independent" within the meaning of Art.3 of the Corporate Governance Code. In addition UniCredit applies specific procedures regarding internal controls on risk activities with subjects in conflit of interests regulated in the Global Policy “Transactions with related parties, associated persons and Corporate Officers ex art.136 CBA”. During 2018, transactions carried out with related parties reported in the data streams provided by the reference standards, were executed and carried out based on assessments of the economic convenience and interests of the Group. 35 For the purposes of this Consolidated report and accounts 2018 of UniCredit group as at 31 December 2018 transactions and outstanding balances between consolidated companies were written off as described in Part A. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 422 2018 Annual Report and Accounts · UniCredit 1. Details of Key management personnels’ compensation Details of Key management personnel’s 2018 remuneration are given below pursuant to IAS24 and to Banca d’Italia Circular 262 dated 22 December 2005 (5th update of 22 December 2017) requiring that also the Statutory Auditors’ compensation be included. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Remuneration paid to key management personnel (including directors) (€ '000) YEAR 2018 YEAR 2017 a) short-term employee benefits 16,165 15,802 b) post-retirement benefits 929 891 of which: under defined benefit plans - - of which: under defined contribution plans 929 891 c) other long-term benefits - - d) termination benefits - 4,344 e) share-based payments 6,116 5,060 Total 23,210 26,097 The information reported above include the compensation paid to Directors (€4,425 thousand), Statutory Auditors (€757 thousand), General Manager (€1,595 thousand) and other Managers with strategic responsibility (€7,695 thousand), as shown in the document "Annex 1 to the 2019 Group Compensation Policy", and €8,738 thousand relating to other costs borne in 2018 (the company share of social security contributions, allocations to statutory deferred pay funds and share-based payments using UniCredit and its subsidiaries’ equity instruments). The reduction in total remuneration (by €2,887 thousand) compared to 2017 is linked mainly to the absence of payment of termination indemnities in a context anyhow characterised by the maintenance, during 2018, of the conservative approach to remuneration that in 2017 accompanied the launch of the Transform 2019 plan. The only growing item is the one related to share-based payments, which reflects the shifting of a significant portion of variable compensation to long-term equity incentives in order to align the interests of management with those of shareholders. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 422 2018 Annual Report and Accounts · UniCredit 1. Details of Key management personnels’ compensation Details of Key management personnel’s 2018 remuneration are given below pursuant to IAS24 and to Banca d’Italia Circular 262 dated 22 December 2005 (5th update of 22 December 2017) requiring that also the Statutory Auditors’ compensation be included. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Remuneration paid to key management personnel (including directors) (€ '000) YEAR 2018 YEAR 2017 a) short-term employee benefits 16,165 15,802 b) post-retirement benefits 929 891 of which: under defined benefit plans - - of which: under defined contribution plans 929 891 c) other long-term benefits - - d) termination benefits - 4,344 e) share-based payments 6,116 5,060 Total 23,210 26,097 The information reported above include the compensation paid to Directors (€4,425 thousand), Statutory Auditors (€757 thousand), General Manager (€1,595 thousand) and other Managers with strategic responsibility (€7,695 thousand), as shown in the document "Annex 1 to the 2019 Group Compensation Policy", and €8,738 thousand relating to other costs borne in 2018 (the company share of social security contributions, allocations to statutory deferred pay funds and share-based payments using UniCredit and its subsidiaries’ equity instruments). The reduction in total remuneration (by €2,887 thousand) compared to 2017 is linked mainly to the absence of payment of termination indemnities in a context anyhow characterised by the maintenance, during 2018, of the conservative approach to remuneration that in 2017 accompanied the launch of the Transform 2019 plan. The only growing item is the one related to share-based payments, which reflects the shifting of a significant portion of variable compensation to long-term equity incentives in order to align the interests of management with those of shareholders. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 422 2018 Annual Report and Accounts · UniCredit 1. Details of Key management personnels’ compensation Details of Key management personnel’s 2018 remuneration are given below pursuant to IAS24 and to Banca d’Italia Circular 262 dated 22 December 2005 (5th update of 22 December 2017) requiring that also the Statutory Auditors’ compensation be included. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Remuneration paid to key management personnel (including directors) (€ '000) YEAR 2018 YEAR 2017 a) short-term employee benefits 16,165 15,802 b) post-retirement benefits 929 891 of which: under defined benefit plans - - of which: under defined contribution plans 929 891 c) other long-term benefits - - d) termination benefits - 4,344 e) share-based payments 6,116 5,060 Total 23,210 26,097 The information reported above include the compensation paid to Directors (€4,425 thousand), Statutory Auditors (€757 thousand), General Manager (€1,595 thousand) and other Managers with strategic responsibility (€7,695 thousand), as shown in the document "Annex 1 to the 2019 Group Compensation Policy", and €8,738 thousand relating to other costs borne in 2018 (the company share of social security contributions, allocations to statutory deferred pay funds and share-based payments using UniCredit and its subsidiaries’ equity instruments). The reduction in total remuneration (by €2,887 thousand) compared to 2017 is linked mainly to the absence of payment of termination indemnities in a context anyhow characterised by the maintenance, during 2018, of the conservative approach to remuneration that in 2017 accompanied the launch of the Transform 2019 plan. The only growing item is the one related to share-based payments, which reflects the shifting of a significant portion of variable compensation to long-term equity incentives in order to align the interests of management with those of shareholders. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 422 2018 Annual Report and Accounts · UniCredit 1. Details of Key management personnels’ compensation Details of Key management personnel’s 2018 remuneration are given below pursuant to IAS24 and to Banca d’Italia Circular 262 dated 22 December 2005 (5th update of 22 December 2017) requiring that also the Statutory Auditors’ compensation be included. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Remuneration paid to key management personnel (including directors) (€ '000) YEAR 2018 YEAR 2017 a) short-term employee benefits 16,165 15,802 b) post-retirement benefits 929 891 of which: under defined benefit plans - - of which: under defined contribution plans 929 891 c) other long-term benefits - - d) termination benefits - 4,344 e) share-based payments 6,116 5,060 Total 23,210 26,097 The information reported above include the compensation paid to Directors (€4,425 thousand), Statutory Auditors (€757 thousand), General Manager (€1,595 thousand) and other Managers with strategic responsibility (€7,695 thousand), as shown in the document "Annex 1 to the 2019 Group Compensation Policy", and €8,738 thousand relating to other costs borne in 2018 (the company share of social security contributions, allocations to statutory deferred pay funds and share-based payments using UniCredit and its subsidiaries’ equity instruments). The reduction in total remuneration (by €2,887 thousand) compared to 2017 is linked mainly to the absence of payment of termination indemnities in a context anyhow characterised by the maintenance, during 2018, of the conservative approach to remuneration that in 2017 accompanied the launch of the Transform 2019 plan. The only growing item is the one related to share-based payments, which reflects the shifting of a significant portion of variable compensation to long-term equity incentives in order to align the interests of management with those of shareholders. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 422 2018 Annual Report and Accounts · UniCredit 1. Details of Key management personnels’ compensation Details of Key management personnel’s 2018 remuneration are given below pursuant to IAS24 and to Banca d’Italia Circular 262 dated 22 December 2005 (5th update of 22 December 2017) requiring that also the Statutory Auditors’ compensation be included. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Remuneration paid to key management personnel (including directors) (€ '000) YEAR 2018 YEAR 2017 a) short-term employee benefits 16,165 15,802 b) post-retirement benefits 929 891 of which: under defined benefit plans - - of which: under defined contribution plans 929 891 c) other long-term benefits - - d) termination benefits - 4,344 e) share-based payments 6,116 5,060 Total 23,210 26,097 The information reported above include the compensation paid to Directors (€4,425 thousand), Statutory Auditors (€757 thousand), General Manager (€1,595 thousand) and other Managers with strategic responsibility (€7,695 thousand), as shown in the document "Annex 1 to the 2019 Group Compensation Policy", and €8,738 thousand relating to other costs borne in 2018 (the company share of social security contributions, allocations to statutory deferred pay funds and share-based payments using UniCredit and its subsidiaries’ equity instruments). The reduction in total remuneration (by €2,887 thousand) compared to 2017 is linked mainly to the absence of payment of termination indemnities in a context anyhow characterised by the maintenance, during 2018, of the conservative approach to remuneration that in 2017 accompanied the launch of the Transform 2019 plan. The only growing item is the one related to share-based payments, which reflects the shifting of a significant portion of variable compensation to long-term equity incentives in order to align the interests of management with those of shareholders. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 423 2. Related-party transactions The following table sets out the assets, liabilities, guarantees and commitments, for each group of related parties, pursuant to IAS24. Related-party transactions: balance sheet items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED NOT CONSOLIDATED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM Financial assets at fair value through profit or loss - 85,743 1,109,430 - - 1,195,173 1.39% 1,990 - a) Financial assets held for trading - 85,743 1,009,869 - - 1,095,612 1.68% 1,990 - b) Financial assets designated at fair value - - - - - - - - - c) Other financial assets mandatorily at fair value - - 99,561 - - 99,561 0.48% - - Financial assets at fair value through other comprehensive income - - 107,361 - - 107,361 0.12% - - Financial assets at amortised cost 3,179 3,597,322 2,740,973 2,589 1,311 6,345,374 1.10% 415,460 0.07% a) Loans and advances to banks - 2,373,625 1,560,702 - - 3,934,327 5.34% - - b) Loans and advances to customers 3,179 1,223,697 1,180,271 2,589 1,311 2,411,047 0.48% 415,460 0.08% Hedging derivatives (assets) - - - - - - - - - Non-current assets and disposal groups classified as held for sale - - 15,587 - - 15,587 0.87% - - Other assets 819 4,606 127,460 - 1 132,886 1.81% - - Total - Assets 3,998 3,687,671 4,100,811 2,589 1,312 7,796,381 1.02% 417,450 0.05% Financial liabilities at amortised cost 11,698 28,817 8,965,454 4,568 147,124 9,157,661 1.33% 47,766 0.01% a) Deposits from banks 71 23,978 7,252,922 - - 7,276,971 5.78% 31,037 0.02% b) Deposits from customers 11,627 4,839 1,712,532 4,568 147,124 1,880,690 0.39% 16,729 - c) Debt securities in issue - - - - - - - - - Financial liabilities held for trading and designated at fair value - 18,116 35,187 - - 53,303 0.10% - - Hedging derivatives (liabilities) - - - - - - - - - Liabilities associated with disposal groups classified as held for sale - - - - - - - - - Other liabilities 853 857 25,897 - 1 27,608 0.20% 108 - Total - Liabilities 12,551 47,790 9,026,538 4,568 147,125 9,238,572 1.22% 47,874 0.01% Guarantees given and commitments(**) 1,860 2,882,336 2,313,698 179 3,248 5,201,321 - 244,535 Notes: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. (**) It should be noted that the item “Guarantees given and commitments” includes revocable commitments. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 423 2. Related-party transactions The following table sets out the assets, liabilities, guarantees and commitments, for each group of related parties, pursuant to IAS24. Related-party transactions: balance sheet items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED NOT CONSOLIDATED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM Financial assets at fair value through profit or loss - 85,743 1,109,430 - - 1,195,173 1.39% 1,990 - a) Financial assets held for trading - 85,743 1,009,869 - - 1,095,612 1.68% 1,990 - b) Financial assets designated at fair value - - - - - - - - - c) Other financial assets mandatorily at fair value - - 99,561 - - 99,561 0.48% - - Financial assets at fair value through other comprehensive income - - 107,361 - - 107,361 0.12% - - Financial assets at amortised cost 3,179 3,597,322 2,740,973 2,589 1,311 6,345,374 1.10% 415,460 0.07% a) Loans and advances to banks - 2,373,625 1,560,702 - - 3,934,327 5.34% - - b) Loans and advances to customers 3,179 1,223,697 1,180,271 2,589 1,311 2,411,047 0.48% 415,460 0.08% Hedging derivatives (assets) - - - - - - - - - Non-current assets and disposal groups classified as held for sale - - 15,587 - - 15,587 0.87% - - Other assets 819 4,606 127,460 - 1 132,886 1.81% - - Total - Assets 3,998 3,687,671 4,100,811 2,589 1,312 7,796,381 1.02% 417,450 0.05% Financial liabilities at amortised cost 11,698 28,817 8,965,454 4,568 147,124 9,157,661 1.33% 47,766 0.01% a) Deposits from banks 71 23,978 7,252,922 - - 7,276,971 5.78% 31,037 0.02% b) Deposits from customers 11,627 4,839 1,712,532 4,568 147,124 1,880,690 0.39% 16,729 - c) Debt securities in issue - - - - - - - - - Financial liabilities held for trading and designated at fair value - 18,116 35,187 - - 53,303 0.10% - - Hedging derivatives (liabilities) - - - - - - - - - Liabilities associated with disposal groups classified as held for sale - - - - - - - - - Other liabilities 853 857 25,897 - 1 27,608 0.20% 108 - Total - Liabilities 12,551 47,790 9,026,538 4,568 147,125 9,238,572 1.22% 47,874 0.01% Guarantees given and commitments(**) 1,860 2,882,336 2,313,698 179 3,248 5,201,321 - 244,535 Notes: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. (**) It should be noted that the item “Guarantees given and commitments” includes revocable commitments. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 423 2. Related-party transactions The following table sets out the assets, liabilities, guarantees and commitments, for each group of related parties, pursuant to IAS24. Related-party transactions: balance sheet items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED NOT CONSOLIDATED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM Financial assets at fair value through profit or loss - 85,743 1,109,430 - - 1,195,173 1.39% 1,990 - a) Financial assets held for trading - 85,743 1,009,869 - - 1,095,612 1.68% 1,990 - b) Financial assets designated at fair value - - - - - - - - - c) Other financial assets mandatorily at fair value - - 99,561 - - 99,561 0.48% - - Financial assets at fair value through other comprehensive income - - 107,361 - - 107,361 0.12% - - Financial assets at amortised cost 3,179 3,597,322 2,740,973 2,589 1,311 6,345,374 1.10% 415,460 0.07% a) Loans and advances to banks - 2,373,625 1,560,702 - - 3,934,327 5.34% - - b) Loans and advances to customers 3,179 1,223,697 1,180,271 2,589 1,311 2,411,047 0.48% 415,460 0.08% Hedging derivatives (assets) - - - - - - - - - Non-current assets and disposal groups classified as held for sale - - 15,587 - - 15,587 0.87% - - Other assets 819 4,606 127,460 - 1 132,886 1.81% - - Total - Assets 3,998 3,687,671 4,100,811 2,589 1,312 7,796,381 1.02% 417,450 0.05% Financial liabilities at amortised cost 11,698 28,817 8,965,454 4,568 147,124 9,157,661 1.33% 47,766 0.01% a) Deposits from banks 71 23,978 7,252,922 - - 7,276,971 5.78% 31,037 0.02% b) Deposits from customers 11,627 4,839 1,712,532 4,568 147,124 1,880,690 0.39% 16,729 - c) Debt securities in issue - - - - - - - - - Financial liabilities held for trading and designated at fair value - 18,116 35,187 - - 53,303 0.10% - - Hedging derivatives (liabilities) - - - - - - - - - Liabilities associated with disposal groups classified as held for sale - - - - - - - - - Other liabilities 853 857 25,897 - 1 27,608 0.20% 108 - Total - Liabilities 12,551 47,790 9,026,538 4,568 147,125 9,238,572 1.22% 47,874 0.01% Guarantees given and commitments(**) 1,860 2,882,336 2,313,698 179 3,248 5,201,321 - 244,535 Notes: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. (**) It should be noted that the item “Guarantees given and commitments” includes revocable commitments. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 423 2. Related-party transactions The following table sets out the assets, liabilities, guarantees and commitments, for each group of related parties, pursuant to IAS24. Related-party transactions: balance sheet items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED NOT CONSOLIDATED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM Financial assets at fair value through profit or loss - 85,743 1,109,430 - - 1,195,173 1.39% 1,990 - a) Financial assets held for trading - 85,743 1,009,869 - - 1,095,612 1.68% 1,990 - b) Financial assets designated at fair value - - - - - - - - - c) Other financial assets mandatorily at fair value - - 99,561 - - 99,561 0.48% - - Financial assets at fair value through other comprehensive income - - 107,361 - - 107,361 0.12% - - Financial assets at amortised cost 3,179 3,597,322 2,740,973 2,589 1,311 6,345,374 1.10% 415,460 0.07% a) Loans and advances to banks - 2,373,625 1,560,702 - - 3,934,327 5.34% - - b) Loans and advances to customers 3,179 1,223,697 1,180,271 2,589 1,311 2,411,047 0.48% 415,460 0.08% Hedging derivatives (assets) - - - - - - - - - Non-current assets and disposal groups classified as held for sale - - 15,587 - - 15,587 0.87% - - Other assets 819 4,606 127,460 - 1 132,886 1.81% - - Total - Assets 3,998 3,687,671 4,100,811 2,589 1,312 7,796,381 1.02% 417,450 0.05% Financial liabilities at amortised cost 11,698 28,817 8,965,454 4,568 147,124 9,157,661 1.33% 47,766 0.01% a) Deposits from banks 71 23,978 7,252,922 - - 7,276,971 5.78% 31,037 0.02% b) Deposits from customers 11,627 4,839 1,712,532 4,568 147,124 1,880,690 0.39% 16,729 - c) Debt securities in issue - - - - - - - - - Financial liabilities held for trading and designated at fair value - 18,116 35,187 - - 53,303 0.10% - - Hedging derivatives (liabilities) - - - - - - - - - Liabilities associated with disposal groups classified as held for sale - - - - - - - - - Other liabilities 853 857 25,897 - 1 27,608 0.20% 108 - Total - Liabilities 12,551 47,790 9,026,538 4,568 147,125 9,238,572 1.22% 47,874 0.01% Guarantees given and commitments(**) 1,860 2,882,336 2,313,698 179 3,248 5,201,321 - 244,535 Notes: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. (**) It should be noted that the item “Guarantees given and commitments” includes revocable commitments. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 423 2. Related-party transactions The following table sets out the assets, liabilities, guarantees and commitments, for each group of related parties, pursuant to IAS24. Related-party transactions: balance sheet items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED NOT CONSOLIDATED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM Financial assets at fair value through profit or loss - 85,743 1,109,430 - - 1,195,173 1.39% 1,990 - a) Financial assets held for trading - 85,743 1,009,869 - - 1,095,612 1.68% 1,990 - b) Financial assets designated at fair value - - - - - - - - - c) Other financial assets mandatorily at fair value - - 99,561 - - 99,561 0.48% - - Financial assets at fair value through other comprehensive income - - 107,361 - - 107,361 0.12% - - Financial assets at amortised cost 3,179 3,597,322 2,740,973 2,589 1,311 6,345,374 1.10% 415,460 0.07% a) Loans and advances to banks - 2,373,625 1,560,702 - - 3,934,327 5.34% - - b) Loans and advances to customers 3,179 1,223,697 1,180,271 2,589 1,311 2,411,047 0.48% 415,460 0.08% Hedging derivatives (assets) - - - - - - - - - Non-current assets and disposal groups classified as held for sale - - 15,587 - - 15,587 0.87% - - Other assets 819 4,606 127,460 - 1 132,886 1.81% - - Total - Assets 3,998 3,687,671 4,100,811 2,589 1,312 7,796,381 1.02% 417,450 0.05% Financial liabilities at amortised cost 11,698 28,817 8,965,454 4,568 147,124 9,157,661 1.33% 47,766 0.01% a) Deposits from banks 71 23,978 7,252,922 - - 7,276,971 5.78% 31,037 0.02% b) Deposits from customers 11,627 4,839 1,712,532 4,568 147,124 1,880,690 0.39% 16,729 - c) Debt securities in issue - - - - - - - - - Financial liabilities held for trading and designated at fair value - 18,116 35,187 - - 53,303 0.10% - - Hedging derivatives (liabilities) - - - - - - - - - Liabilities associated with disposal groups classified as held for sale - - - - - - - - - Other liabilities 853 857 25,897 - 1 27,608 0.20% 108 - Total - Liabilities 12,551 47,790 9,026,538 4,568 147,125 9,238,572 1.22% 47,874 0.01% Guarantees given and commitments(**) 1,860 2,882,336 2,313,698 179 3,248 5,201,321 - 244,535 Notes: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. (**) It should be noted that the item “Guarantees given and commitments” includes revocable commitments. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 424 2018 Annual Report and Accounts · UniCredit The following table sets out the impact of transactions, for each group of related parties, on income statements, pursuant to IAS24. Related-party transactions: profit and loss items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED NOT CONSOLIDATED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM 10. Interest income and similar revenues 5,440 139,596 88,664 16 7,972 241,688 1.59% 6,465 0.04% 20. Interest expenses and similar charges - (561) (32,802) (2) (121) (33,486) 0.77% (422) 0.01% 30. Net interest margin 5,440 139,035 55,862 14 7,851 208,202 1.92% 6,043 0.06% 40. Fees and commissions income 1,456 5,607 841,303 28 4,448 852,842 10.44% 1,431 0.02% 50. Fees and commissions expenses (350) (581) (13,479) - - (14,410) 1.11% - - 60. Net fees and commissions 1,106 5,026 827,824 28 4,448 838,432 12.20% 1,431 0.02% 70. Dividend income and similar revenues 2,002 - 157,980 - - 159,982 38.74% 28 0.01% 80. Net gains (losses) on trading - (16,039) (128) - 5,776 (10,391) 2.49% (12,820) 3.08% 90. Net gains (losses) on hedge accounting - - - - - - - - - 100. Gains (Losses) on disposal and repurchase of - - - - - - - - - a) Financial assets at amortised cost - - - - - - - - - b) Financial assets at fair value through other comprehensive income - - - - - - - - - c) Financial liabilities - - - - - - - - - 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - - (1,837) - (2,198) (4,035) 1.40% - - a) Financial assets/liabilities designated at fair value - - 221 - - 221 0.05% - - b) Other financial assets mandatorily at fair value - - (2,058) - (2,198) (4,256) 3.48% - - 120. Operating income 8,548 128,022 1,039,701 42 15,877 1,192,190 6.22% (5,318) 0.03% 130. Net losses/recoveries on credit impairment relating to (31,014) - (35,276) 21 1,077 (65,192) 2.43% 817 0.03% a) Financial assets at amortised cost (31,014) - (35,276) 21 1,077 (65,192) 2.45% 817 0.03% b) Financial assets at fair value through other comprehensive income - - - - - - - - - 140. Gains/Losses from contractual changes with no cancellations - - - - - - - - - 190. Administrative expenses 276 1,111 (544,939) (25) (31,661) (575,238) 5.01% - - a) Staff costs 621 1,127 6,077 (17) (20,242) (12,434) 0.19% - - b) Other administrative expenses (345) (16) (551,016) (8) (11,419) (562,804) 11.14% - - 200. Net provisions for risks and charges 92 - (52) - (6) 34 - - - 230. Other operating expenses/income 520 4,890 (31,595) 27 39 (26,119) 2.56% 1 - 240. Operating costs 888 6,001 (576,586) 2 (31,628) (601,323) 5.01% 1 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 424 2018 Annual Report and Accounts · UniCredit The following table sets out the impact of transactions, for each group of related parties, on income statements, pursuant to IAS24. Related-party transactions: profit and loss items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED NOT CONSOLIDATED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM 10. Interest income and similar revenues 5,440 139,596 88,664 16 7,972 241,688 1.59% 6,465 0.04% 20. Interest expenses and similar charges - (561) (32,802) (2) (121) (33,486) 0.77% (422) 0.01% 30. Net interest margin 5,440 139,035 55,862 14 7,851 208,202 1.92% 6,043 0.06% 40. Fees and commissions income 1,456 5,607 841,303 28 4,448 852,842 10.44% 1,431 0.02% 50. Fees and commissions expenses (350) (581) (13,479) - - (14,410) 1.11% - - 60. Net fees and commissions 1,106 5,026 827,824 28 4,448 838,432 12.20% 1,431 0.02% 70. Dividend income and similar revenues 2,002 - 157,980 - - 159,982 38.74% 28 0.01% 80. Net gains (losses) on trading - (16,039) (128) - 5,776 (10,391) 2.49% (12,820) 3.08% 90. Net gains (losses) on hedge accounting - - - - - - - - - 100. Gains (Losses) on disposal and repurchase of - - - - - - - - - a) Financial assets at amortised cost - - - - - - - - - b) Financial assets at fair value through other comprehensive income - - - - - - - - - c) Financial liabilities - - - - - - - - - 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - - (1,837) - (2,198) (4,035) 1.40% - - a) Financial assets/liabilities designated at fair value - - 221 - - 221 0.05% - - b) Other financial assets mandatorily at fair value - - (2,058) - (2,198) (4,256) 3.48% - - 120. Operating income 8,548 128,022 1,039,701 42 15,877 1,192,190 6.22% (5,318) 0.03% 130. Net losses/recoveries on credit impairment relating to (31,014) - (35,276) 21 1,077 (65,192) 2.43% 817 0.03% a) Financial assets at amortised cost (31,014) - (35,276) 21 1,077 (65,192) 2.45% 817 0.03% b) Financial assets at fair value through other comprehensive income - - - - - - - - - 140. Gains/Losses from contractual changes with no cancellations - - - - - - - - - 190. Administrative expenses 276 1,111 (544,939) (25) (31,661) (575,238) 5.01% - - a) Staff costs 621 1,127 6,077 (17) (20,242) (12,434) 0.19% - - b) Other administrative expenses (345) (16) (551,016) (8) (11,419) (562,804) 11.14% - - 200. Net provisions for risks and charges 92 - (52) - (6) 34 - - - 230. Other operating expenses/income 520 4,890 (31,595) 27 39 (26,119) 2.56% 1 - 240. Operating costs 888 6,001 (576,586) 2 (31,628) (601,323) 5.01% 1 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 424 2018 Annual Report and Accounts · UniCredit The following table sets out the impact of transactions, for each group of related parties, on income statements, pursuant to IAS24. Related-party transactions: profit and loss items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED NOT CONSOLIDATED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM 10. Interest income and similar revenues 5,440 139,596 88,664 16 7,972 241,688 1.59% 6,465 0.04% 20. Interest expenses and similar charges - (561) (32,802) (2) (121) (33,486) 0.77% (422) 0.01% 30. Net interest margin 5,440 139,035 55,862 14 7,851 208,202 1.92% 6,043 0.06% 40. Fees and commissions income 1,456 5,607 841,303 28 4,448 852,842 10.44% 1,431 0.02% 50. Fees and commissions expenses (350) (581) (13,479) - - (14,410) 1.11% - - 60. Net fees and commissions 1,106 5,026 827,824 28 4,448 838,432 12.20% 1,431 0.02% 70. Dividend income and similar revenues 2,002 - 157,980 - - 159,982 38.74% 28 0.01% 80. Net gains (losses) on trading - (16,039) (128) - 5,776 (10,391) 2.49% (12,820) 3.08% 90. Net gains (losses) on hedge accounting - - - - - - - - - 100. Gains (Losses) on disposal and repurchase of - - - - - - - - - a) Financial assets at amortised cost - - - - - - - - - b) Financial assets at fair value through other comprehensive income - - - - - - - - - c) Financial liabilities - - - - - - - - - 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - - (1,837) - (2,198) (4,035) 1.40% - - a) Financial assets/liabilities designated at fair value - - 221 - - 221 0.05% - - b) Other financial assets mandatorily at fair value - - (2,058) - (2,198) (4,256) 3.48% - - 120. Operating income 8,548 128,022 1,039,701 42 15,877 1,192,190 6.22% (5,318) 0.03% 130. Net losses/recoveries on credit impairment relating to (31,014) - (35,276) 21 1,077 (65,192) 2.43% 817 0.03% a) Financial assets at amortised cost (31,014) - (35,276) 21 1,077 (65,192) 2.45% 817 0.03% b) Financial assets at fair value through other comprehensive income - - - - - - - - - 140. Gains/Losses from contractual changes with no cancellations - - - - - - - - - 190. Administrative expenses 276 1,111 (544,939) (25) (31,661) (575,238) 5.01% - - a) Staff costs 621 1,127 6,077 (17) (20,242) (12,434) 0.19% - - b) Other administrative expenses (345) (16) (551,016) (8) (11,419) (562,804) 11.14% - - 200. Net provisions for risks and charges 92 - (52) - (6) 34 - - - 230. Other operating expenses/income 520 4,890 (31,595) 27 39 (26,119) 2.56% 1 - 240. Operating costs 888 6,001 (576,586) 2 (31,628) (601,323) 5.01% 1 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 424 2018 Annual Report and Accounts · UniCredit The following table sets out the impact of transactions, for each group of related parties, on income statements, pursuant to IAS24. Related-party transactions: profit and loss items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED NOT CONSOLIDATED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM 10. Interest income and similar revenues 5,440 139,596 88,664 16 7,972 241,688 1.59% 6,465 0.04% 20. Interest expenses and similar charges - (561) (32,802) (2) (121) (33,486) 0.77% (422) 0.01% 30. Net interest margin 5,440 139,035 55,862 14 7,851 208,202 1.92% 6,043 0.06% 40. Fees and commissions income 1,456 5,607 841,303 28 4,448 852,842 10.44% 1,431 0.02% 50. Fees and commissions expenses (350) (581) (13,479) - - (14,410) 1.11% - - 60. Net fees and commissions 1,106 5,026 827,824 28 4,448 838,432 12.20% 1,431 0.02% 70. Dividend income and similar revenues 2,002 - 157,980 - - 159,982 38.74% 28 0.01% 80. Net gains (losses) on trading - (16,039) (128) - 5,776 (10,391) 2.49% (12,820) 3.08% 90. Net gains (losses) on hedge accounting - - - - - - - - - 100. Gains (Losses) on disposal and repurchase of - - - - - - - - - a) Financial assets at amortised cost - - - - - - - - - b) Financial assets at fair value through other comprehensive income - - - - - - - - - c) Financial liabilities - - - - - - - - - 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - - (1,837) - (2,198) (4,035) 1.40% - - a) Financial assets/liabilities designated at fair value - - 221 - - 221 0.05% - - b) Other financial assets mandatorily at fair value - - (2,058) - (2,198) (4,256) 3.48% - - 120. Operating income 8,548 128,022 1,039,701 42 15,877 1,192,190 6.22% (5,318) 0.03% 130. Net losses/recoveries on credit impairment relating to (31,014) - (35,276) 21 1,077 (65,192) 2.43% 817 0.03% a) Financial assets at amortised cost (31,014) - (35,276) 21 1,077 (65,192) 2.45% 817 0.03% b) Financial assets at fair value through other comprehensive income - - - - - - - - - 140. Gains/Losses from contractual changes with no cancellations - - - - - - - - - 190. Administrative expenses 276 1,111 (544,939) (25) (31,661) (575,238) 5.01% - - a) Staff costs 621 1,127 6,077 (17) (20,242) (12,434) 0.19% - - b) Other administrative expenses (345) (16) (551,016) (8) (11,419) (562,804) 11.14% - - 200. Net provisions for risks and charges 92 - (52) - (6) 34 - - - 230. Other operating expenses/income 520 4,890 (31,595) 27 39 (26,119) 2.56% 1 - 240. Operating costs 888 6,001 (576,586) 2 (31,628) (601,323) 5.01% 1 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 424 2018 Annual Report and Accounts · UniCredit The following table sets out the impact of transactions, for each group of related parties, on income statements, pursuant to IAS24. Related-party transactions: profit and loss items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED NOT CONSOLIDATED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM 10. Interest income and similar revenues 5,440 139,596 88,664 16 7,972 241,688 1.59% 6,465 0.04% 20. Interest expenses and similar charges - (561) (32,802) (2) (121) (33,486) 0.77% (422) 0.01% 30. Net interest margin 5,440 139,035 55,862 14 7,851 208,202 1.92% 6,043 0.06% 40. Fees and commissions income 1,456 5,607 841,303 28 4,448 852,842 10.44% 1,431 0.02% 50. Fees and commissions expenses (350) (581) (13,479) - - (14,410) 1.11% - - 60. Net fees and commissions 1,106 5,026 827,824 28 4,448 838,432 12.20% 1,431 0.02% 70. Dividend income and similar revenues 2,002 - 157,980 - - 159,982 38.74% 28 0.01% 80. Net gains (losses) on trading - (16,039) (128) - 5,776 (10,391) 2.49% (12,820) 3.08% 90. Net gains (losses) on hedge accounting - - - - - - - - - 100. Gains (Losses) on disposal and repurchase of - - - - - - - - - a) Financial assets at amortised cost - - - - - - - - - b) Financial assets at fair value through other comprehensive income - - - - - - - - - c) Financial liabilities - - - - - - - - - 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - - (1,837) - (2,198) (4,035) 1.40% - - a) Financial assets/liabilities designated at fair value - - 221 - - 221 0.05% - - b) Other financial assets mandatorily at fair value - - (2,058) - (2,198) (4,256) 3.48% - - 120. Operating income 8,548 128,022 1,039,701 42 15,877 1,192,190 6.22% (5,318) 0.03% 130. Net losses/recoveries on credit impairment relating to (31,014) - (35,276) 21 1,077 (65,192) 2.43% 817 0.03% a) Financial assets at amortised cost (31,014) - (35,276) 21 1,077 (65,192) 2.45% 817 0.03% b) Financial assets at fair value through other comprehensive income - - - - - - - - - 140. Gains/Losses from contractual changes with no cancellations - - - - - - - - - 190. Administrative expenses 276 1,111 (544,939) (25) (31,661) (575,238) 5.01% - - a) Staff costs 621 1,127 6,077 (17) (20,242) (12,434) 0.19% - - b) Other administrative expenses (345) (16) (551,016) (8) (11,419) (562,804) 11.14% - - 200. Net provisions for risks and charges 92 - (52) - (6) 34 - - - 230. Other operating expenses/income 520 4,890 (31,595) 27 39 (26,119) 2.56% 1 - 240. Operating costs 888 6,001 (576,586) 2 (31,628) (601,323) 5.01% 1 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 425 The “Other related-parties IAS” category includes: • close family members of key management personnel (i.e. those family members who, as is expected, may influence, or be influenced by, the person in question); • companies controlled (or jointly controlled) by key management personnel or their close family members; • Group employee post-employment benefit plans. The main related-party transactions are the following. • In 2012 the subsidiary UniCredit Services S.C.p.A. (US) formerly UniCredit Business Integrated Solutions S.C.p.A. (UBIS), assumed the role of operating sub-holding to provide the Group’s support services both in Italy and abroad. - In this regard, on 15 February 2013 the Board of Directors of US approved the executive plan relating to the “Invoice Management” transaction aimed at the formation of a joint venture with the partner Accenture S.p.A. (Accenture) for the provision of back office services with respect to the “active and passive cycle” (issuance, receipt, verification, recording and payment of invoices). In relation to this, US transferred, with effect from 1 April 2013, its “active and passive cycle” business unit to the company formed by Accenture and called “Accenture Back Office and Administration Services S.p.A.” and sold to Accenture some of the shares resulting from the transfer. Following the transaction, US holds 49% of Accenture Back Office and Administration Services S.p.A.’s (ABAS) share capital; the remaining 51% is held by Accenture (which is the controlling shareholder). - Afterwards, on 19 April 2013, the Board of Directors of US approved the executive plan of the project aimed at establishing a joint venture with another major player in the industry, IBM Italia S.p.A. (IBM), for the provision of technological infrastructure services (hardware, data centre, etc.) to Commercial Banking. The transaction was completed when US transferred, with effect from 1 September 2013, of “Information Technology" business unit to the company "Value Transformation Services S.p.A.” (V-TServices), formed and controlled by IBM Italia S.p.A. Following the transaction, US holds 49% of V-TServices’s share capital; the remaining 51% is held by IBM (which is therefore the controlling shareholder). In December 2016 a contractual renegotiation, with extention of expiry to December 2026, between UniCredit Business Integrated Solution e V-TService has been concluded with the aim of increasing value creation and ability to catch new opportunities from technological evolution. The services provided to UniCredit group by the abovementioned companies result in an exchange of fees (administrative costs). It should be noted that in April 2018 ABAS ceased to be a related-party following its sale. • With reference to transactions with Mediobanca S.p.A. (“Mediobanca”), in addition to the transactions falling within the ordinary course of business and financial activity, UniCredit S.p.A. has entered into a thirty-year usufruct contract on UniCredit shares with Mediobanca, under which Mediobanca gives back to UniCredit S.p.A., in return for a consideration (recorded as a reduction in Shareholders’ Equity), the right to vote and receive dividends on UniCredit S.p.A. shares subscribed in January 2009, as part of the capital increase approved by UniCredit in November 2008. These shares were concomitantly used, by Mediobanca, in support of the issuance of convertible securities denominated “Cashes”. Following the resolutions of UniCredit S.p.A.’s Extraordinary Shareholders’ Meeting of December 2011, the number of shares underlying the usufruct contract and the formula for calculating the remuneration fees in favor of Mediobanca were adjusted to reflect (i) the reverse split of UniCredit S.p.A. shares and (ii) the free capital increase of December 2011 carried out through the allocation to capital of an equivalent amount transferred from the issue-premium reserve recorded in January 2009. A further reverse split of UniCredit S.p.A. shares underlying the usufruct agreement has been approved by the Extraordinary Shareholders’ Meeting of January 2017. In 2018 the first three installments referred to the 2017 result has been paid respectively for €30 million, €32 million and €31 million; as contractual conditions for installment payments referred to 2016 result have not been met, the related four instalments (May 2017, August 2017, November 2017 and February 2018) were not paid. • With regard to UniCredit’s current strategy of reduction of non-performing exposures in order to strengthen the Group’s risk profile as per the Transform 2019 plan, it should be noted that: - in June 2017, an agreement was signed with MBCredit Solution S.p.A. (member of Mediobanca group) for the non-recourse sale in three tranches of bad exposures from consumer loan portfolios, two tranches of which were completed in 2017 and the third tranche was completed in the first half of 2018; - in November and December 2017, two further agreements were signed with MBCredit Solution S.p.A. for (i) the non-recourse sale of a portfolio of loans with the Italian SME segment and (ii) for the sale of a portfolio of loans deriving from unsecured terminated lease agreements; - in June 2018, UniCredit S.p.A. has reached an agreement with MBCredit Solutions S.p.A. in relation to the disposal on a non-recourse basis (pro-soluto) of a non-performing unsecured consumer credit portfolio, in Italy. The portfolio consists of Italian unsecured consumer credits with a gross book value of approximately €124 million; - UniCredit and MBCredit Solutions S.p.A. have also reached an agreement for the disposal of further Italian unsecured consumer loans of the same nature, originated from second quarter 2018 to the end of the year. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 425 The “Other related-parties IAS” category includes: • close family members of key management personnel (i.e. those family members who, as is expected, may influence, or be influenced by, the person in question); • companies controlled (or jointly controlled) by key management personnel or their close family members; • Group employee post-employment benefit plans. The main related-party transactions are the following. • In 2012 the subsidiary UniCredit Services S.C.p.A. (US) formerly UniCredit Business Integrated Solutions S.C.p.A. (UBIS), assumed the role of operating sub-holding to provide the Group’s support services both in Italy and abroad. - In this regard, on 15 February 2013 the Board of Directors of US approved the executive plan relating to the “Invoice Management” transaction aimed at the formation of a joint venture with the partner Accenture S.p.A. (Accenture) for the provision of back office services with respect to the “active and passive cycle” (issuance, receipt, verification, recording and payment of invoices). In relation to this, US transferred, with effect from 1 April 2013, its “active and passive cycle” business unit to the company formed by Accenture and called “Accenture Back Office and Administration Services S.p.A.” and sold to Accenture some of the shares resulting from the transfer. Following the transaction, US holds 49% of Accenture Back Office and Administration Services S.p.A.’s (ABAS) share capital; the remaining 51% is held by Accenture (which is the controlling shareholder). - Afterwards, on 19 April 2013, the Board of Directors of US approved the executive plan of the project aimed at establishing a joint venture with another major player in the industry, IBM Italia S.p.A. (IBM), for the provision of technological infrastructure services (hardware, data centre, etc.) to Commercial Banking. The transaction was completed when US transferred, with effect from 1 September 2013, of “Information Technology" business unit to the company "Value Transformation Services S.p.A.” (V-TServices), formed and controlled by IBM Italia S.p.A. Following the transaction, US holds 49% of V-TServices’s share capital; the remaining 51% is held by IBM (which is therefore the controlling shareholder). In December 2016 a contractual renegotiation, with extention of expiry to December 2026, between UniCredit Business Integrated Solution e V-TService has been concluded with the aim of increasing value creation and ability to catch new opportunities from technological evolution. The services provided to UniCredit group by the abovementioned companies result in an exchange of fees (administrative costs). It should be noted that in April 2018 ABAS ceased to be a related-party following its sale. • With reference to transactions with Mediobanca S.p.A. (“Mediobanca”), in addition to the transactions falling within the ordinary course of business and financial activity, UniCredit S.p.A. has entered into a thirty-year usufruct contract on UniCredit shares with Mediobanca, under which Mediobanca gives back to UniCredit S.p.A., in return for a consideration (recorded as a reduction in Shareholders’ Equity), the right to vote and receive dividends on UniCredit S.p.A. shares subscribed in January 2009, as part of the capital increase approved by UniCredit in November 2008. These shares were concomitantly used, by Mediobanca, in support of the issuance of convertible securities denominated “Cashes”. Following the resolutions of UniCredit S.p.A.’s Extraordinary Shareholders’ Meeting of December 2011, the number of shares underlying the usufruct contract and the formula for calculating the remuneration fees in favor of Mediobanca were adjusted to reflect (i) the reverse split of UniCredit S.p.A. shares and (ii) the free capital increase of December 2011 carried out through the allocation to capital of an equivalent amount transferred from the issue-premium reserve recorded in January 2009. A further reverse split of UniCredit S.p.A. shares underlying the usufruct agreement has been approved by the Extraordinary Shareholders’ Meeting of January 2017. In 2018 the first three installments referred to the 2017 result has been paid respectively for €30 million, €32 million and €31 million; as contractual conditions for installment payments referred to 2016 result have not been met, the related four instalments (May 2017, August 2017, November 2017 and February 2018) were not paid. • With regard to UniCredit’s current strategy of reduction of non-performing exposures in order to strengthen the Group’s risk profile as per the Transform 2019 plan, it should be noted that: - in June 2017, an agreement was signed with MBCredit Solution S.p.A. (member of Mediobanca group) for the non-recourse sale in three tranches of bad exposures from consumer loan portfolios, two tranches of which were completed in 2017 and the third tranche was completed in the first half of 2018; - in November and December 2017, two further agreements were signed with MBCredit Solution S.p.A. for (i) the non-recourse sale of a portfolio of loans with the Italian SME segment and (ii) for the sale of a portfolio of loans deriving from unsecured terminated lease agreements; - in June 2018, UniCredit S.p.A. has reached an agreement with MBCredit Solutions S.p.A. in relation to the disposal on a non-recourse basis (pro-soluto) of a non-performing unsecured consumer credit portfolio, in Italy. The portfolio consists of Italian unsecured consumer credits with a gross book value of approximately €124 million; - UniCredit and MBCredit Solutions S.p.A. have also reached an agreement for the disposal of further Italian unsecured consumer loans of the same nature, originated from second quarter 2018 to the end of the year. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 425 The “Other related-parties IAS” category includes: • close family members of key management personnel (i.e. those family members who, as is expected, may influence, or be influenced by, the person in question); • companies controlled (or jointly controlled) by key management personnel or their close family members; • Group employee post-employment benefit plans. The main related-party transactions are the following. • In 2012 the subsidiary UniCredit Services S.C.p.A. (US) formerly UniCredit Business Integrated Solutions S.C.p.A. (UBIS), assumed the role of operating sub-holding to provide the Group’s support services both in Italy and abroad. - In this regard, on 15 February 2013 the Board of Directors of US approved the executive plan relating to the “Invoice Management” transaction aimed at the formation of a joint venture with the partner Accenture S.p.A. (Accenture) for the provision of back office services with respect to the “active and passive cycle” (issuance, receipt, verification, recording and payment of invoices). In relation to this, US transferred, with effect from 1 April 2013, its “active and passive cycle” business unit to the company formed by Accenture and called “Accenture Back Office and Administration Services S.p.A.” and sold to Accenture some of the shares resulting from the transfer. Following the transaction, US holds 49% of Accenture Back Office and Administration Services S.p.A.’s (ABAS) share capital; the remaining 51% is held by Accenture (which is the controlling shareholder). - Afterwards, on 19 April 2013, the Board of Directors of US approved the executive plan of the project aimed at establishing a joint venture with another major player in the industry, IBM Italia S.p.A. (IBM), for the provision of technological infrastructure services (hardware, data centre, etc.) to Commercial Banking. The transaction was completed when US transferred, with effect from 1 September 2013, of “Information Technology" business unit to the company "Value Transformation Services S.p.A.” (V-TServices), formed and controlled by IBM Italia S.p.A. Following the transaction, US holds 49% of V-TServices’s share capital; the remaining 51% is held by IBM (which is therefore the controlling shareholder). In December 2016 a contractual renegotiation, with extention of expiry to December 2026, between UniCredit Business Integrated Solution e V-TService has been concluded with the aim of increasing value creation and ability to catch new opportunities from technological evolution. The services provided to UniCredit group by the abovementioned companies result in an exchange of fees (administrative costs). It should be noted that in April 2018 ABAS ceased to be a related-party following its sale. • With reference to transactions with Mediobanca S.p.A. (“Mediobanca”), in addition to the transactions falling within the ordinary course of business and financial activity, UniCredit S.p.A. has entered into a thirty-year usufruct contract on UniCredit shares with Mediobanca, under which Mediobanca gives back to UniCredit S.p.A., in return for a consideration (recorded as a reduction in Shareholders’ Equity), the right to vote and receive dividends on UniCredit S.p.A. shares subscribed in January 2009, as part of the capital increase approved by UniCredit in November 2008. These shares were concomitantly used, by Mediobanca, in support of the issuance of convertible securities denominated “Cashes”. Following the resolutions of UniCredit S.p.A.’s Extraordinary Shareholders’ Meeting of December 2011, the number of shares underlying the usufruct contract and the formula for calculating the remuneration fees in favor of Mediobanca were adjusted to reflect (i) the reverse split of UniCredit S.p.A. shares and (ii) the free capital increase of December 2011 carried out through the allocation to capital of an equivalent amount transferred from the issue-premium reserve recorded in January 2009. A further reverse split of UniCredit S.p.A. shares underlying the usufruct agreement has been approved by the Extraordinary Shareholders’ Meeting of January 2017. In 2018 the first three installments referred to the 2017 result has been paid respectively for €30 million, €32 million and €31 million; as contractual conditions for installment payments referred to 2016 result have not been met, the related four instalments (May 2017, August 2017, November 2017 and February 2018) were not paid. • With regard to UniCredit’s current strategy of reduction of non-performing exposures in order to strengthen the Group’s risk profile as per the Transform 2019 plan, it should be noted that: - in June 2017, an agreement was signed with MBCredit Solution S.p.A. (member of Mediobanca group) for the non-recourse sale in three tranches of bad exposures from consumer loan portfolios, two tranches of which were completed in 2017 and the third tranche was completed in the first half of 2018; - in November and December 2017, two further agreements were signed with MBCredit Solution S.p.A. for (i) the non-recourse sale of a portfolio of loans with the Italian SME segment and (ii) for the sale of a portfolio of loans deriving from unsecured terminated lease agreements; - in June 2018, UniCredit S.p.A. has reached an agreement with MBCredit Solutions S.p.A. in relation to the disposal on a non-recourse basis (pro-soluto) of a non-performing unsecured consumer credit portfolio, in Italy. The portfolio consists of Italian unsecured consumer credits with a gross book value of approximately €124 million; - UniCredit and MBCredit Solutions S.p.A. have also reached an agreement for the disposal of further Italian unsecured consumer loans of the same nature, originated from second quarter 2018 to the end of the year. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 425 The “Other related-parties IAS” category includes: • close family members of key management personnel (i.e. those family members who, as is expected, may influence, or be influenced by, the person in question); • companies controlled (or jointly controlled) by key management personnel or their close family members; • Group employee post-employment benefit plans. The main related-party transactions are the following. • In 2012 the subsidiary UniCredit Services S.C.p.A. (US) formerly UniCredit Business Integrated Solutions S.C.p.A. (UBIS), assumed the role of operating sub-holding to provide the Group’s support services both in Italy and abroad. - In this regard, on 15 February 2013 the Board of Directors of US approved the executive plan relating to the “Invoice Management” transaction aimed at the formation of a joint venture with the partner Accenture S.p.A. (Accenture) for the provision of back office services with respect to the “active and passive cycle” (issuance, receipt, verification, recording and payment of invoices). In relation to this, US transferred, with effect from 1 April 2013, its “active and passive cycle” business unit to the company formed by Accenture and called “Accenture Back Office and Administration Services S.p.A.” and sold to Accenture some of the shares resulting from the transfer. Following the transaction, US holds 49% of Accenture Back Office and Administration Services S.p.A.’s (ABAS) share capital; the remaining 51% is held by Accenture (which is the controlling shareholder). - Afterwards, on 19 April 2013, the Board of Directors of US approved the executive plan of the project aimed at establishing a joint venture with another major player in the industry, IBM Italia S.p.A. (IBM), for the provision of technological infrastructure services (hardware, data centre, etc.) to Commercial Banking. The transaction was completed when US transferred, with effect from 1 September 2013, of “Information Technology" business unit to the company "Value Transformation Services S.p.A.” (V-TServices), formed and controlled by IBM Italia S.p.A. Following the transaction, US holds 49% of V-TServices’s share capital; the remaining 51% is held by IBM (which is therefore the controlling shareholder). In December 2016 a contractual renegotiation, with extention of expiry to December 2026, between UniCredit Business Integrated Solution e V-TService has been concluded with the aim of increasing value creation and ability to catch new opportunities from technological evolution. The services provided to UniCredit group by the abovementioned companies result in an exchange of fees (administrative costs). It should be noted that in April 2018 ABAS ceased to be a related-party following its sale. • With reference to transactions with Mediobanca S.p.A. (“Mediobanca”), in addition to the transactions falling within the ordinary course of business and financial activity, UniCredit S.p.A. has entered into a thirty-year usufruct contract on UniCredit shares with Mediobanca, under which Mediobanca gives back to UniCredit S.p.A., in return for a consideration (recorded as a reduction in Shareholders’ Equity), the right to vote and receive dividends on UniCredit S.p.A. shares subscribed in January 2009, as part of the capital increase approved by UniCredit in November 2008. These shares were concomitantly used, by Mediobanca, in support of the issuance of convertible securities denominated “Cashes”. Following the resolutions of UniCredit S.p.A.’s Extraordinary Shareholders’ Meeting of December 2011, the number of shares underlying the usufruct contract and the formula for calculating the remuneration fees in favor of Mediobanca were adjusted to reflect (i) the reverse split of UniCredit S.p.A. shares and (ii) the free capital increase of December 2011 carried out through the allocation to capital of an equivalent amount transferred from the issue-premium reserve recorded in January 2009. A further reverse split of UniCredit S.p.A. shares underlying the usufruct agreement has been approved by the Extraordinary Shareholders’ Meeting of January 2017. In 2018 the first three installments referred to the 2017 result has been paid respectively for €30 million, €32 million and €31 million; as contractual conditions for installment payments referred to 2016 result have not been met, the related four instalments (May 2017, August 2017, November 2017 and February 2018) were not paid. • With regard to UniCredit’s current strategy of reduction of non-performing exposures in order to strengthen the Group’s risk profile as per the Transform 2019 plan, it should be noted that: - in June 2017, an agreement was signed with MBCredit Solution S.p.A. (member of Mediobanca group) for the non-recourse sale in three tranches of bad exposures from consumer loan portfolios, two tranches of which were completed in 2017 and the third tranche was completed in the first half of 2018; - in November and December 2017, two further agreements were signed with MBCredit Solution S.p.A. for (i) the non-recourse sale of a portfolio of loans with the Italian SME segment and (ii) for the sale of a portfolio of loans deriving from unsecured terminated lease agreements; - in June 2018, UniCredit S.p.A. has reached an agreement with MBCredit Solutions S.p.A. in relation to the disposal on a non-recourse basis (pro-soluto) of a non-performing unsecured consumer credit portfolio, in Italy. The portfolio consists of Italian unsecured consumer credits with a gross book value of approximately €124 million; - UniCredit and MBCredit Solutions S.p.A. have also reached an agreement for the disposal of further Italian unsecured consumer loans of the same nature, originated from second quarter 2018 to the end of the year. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 425 The “Other related-parties IAS” category includes: • close family members of key management personnel (i.e. those family members who, as is expected, may influence, or be influenced by, the person in question); • companies controlled (or jointly controlled) by key management personnel or their close family members; • Group employee post-employment benefit plans. The main related-party transactions are the following. • In 2012 the subsidiary UniCredit Services S.C.p.A. (US) formerly UniCredit Business Integrated Solutions S.C.p.A. (UBIS), assumed the role of operating sub-holding to provide the Group’s support services both in Italy and abroad. - In this regard, on 15 February 2013 the Board of Directors of US approved the executive plan relating to the “Invoice Management” transaction aimed at the formation of a joint venture with the partner Accenture S.p.A. (Accenture) for the provision of back office services with respect to the “active and passive cycle” (issuance, receipt, verification, recording and payment of invoices). In relation to this, US transferred, with effect from 1 April 2013, its “active and passive cycle” business unit to the company formed by Accenture and called “Accenture Back Office and Administration Services S.p.A.” and sold to Accenture some of the shares resulting from the transfer. Following the transaction, US holds 49% of Accenture Back Office and Administration Services S.p.A.’s (ABAS) share capital; the remaining 51% is held by Accenture (which is the controlling shareholder). - Afterwards, on 19 April 2013, the Board of Directors of US approved the executive plan of the project aimed at establishing a joint venture with another major player in the industry, IBM Italia S.p.A. (IBM), for the provision of technological infrastructure services (hardware, data centre, etc.) to Commercial Banking. The transaction was completed when US transferred, with effect from 1 September 2013, of “Information Technology" business unit to the company "Value Transformation Services S.p.A.” (V-TServices), formed and controlled by IBM Italia S.p.A. Following the transaction, US holds 49% of V-TServices’s share capital; the remaining 51% is held by IBM (which is therefore the controlling shareholder). In December 2016 a contractual renegotiation, with extention of expiry to December 2026, between UniCredit Business Integrated Solution e V-TService has been concluded with the aim of increasing value creation and ability to catch new opportunities from technological evolution. The services provided to UniCredit group by the abovementioned companies result in an exchange of fees (administrative costs). It should be noted that in April 2018 ABAS ceased to be a related-party following its sale. • With reference to transactions with Mediobanca S.p.A. (“Mediobanca”), in addition to the transactions falling within the ordinary course of business and financial activity, UniCredit S.p.A. has entered into a thirty-year usufruct contract on UniCredit shares with Mediobanca, under which Mediobanca gives back to UniCredit S.p.A., in return for a consideration (recorded as a reduction in Shareholders’ Equity), the right to vote and receive dividends on UniCredit S.p.A. shares subscribed in January 2009, as part of the capital increase approved by UniCredit in November 2008. These shares were concomitantly used, by Mediobanca, in support of the issuance of convertible securities denominated “Cashes”. Following the resolutions of UniCredit S.p.A.’s Extraordinary Shareholders’ Meeting of December 2011, the number of shares underlying the usufruct contract and the formula for calculating the remuneration fees in favor of Mediobanca were adjusted to reflect (i) the reverse split of UniCredit S.p.A. shares and (ii) the free capital increase of December 2011 carried out through the allocation to capital of an equivalent amount transferred from the issue-premium reserve recorded in January 2009. A further reverse split of UniCredit S.p.A. shares underlying the usufruct agreement has been approved by the Extraordinary Shareholders’ Meeting of January 2017. In 2018 the first three installments referred to the 2017 result has been paid respectively for €30 million, €32 million and €31 million; as contractual conditions for installment payments referred to 2016 result have not been met, the related four instalments (May 2017, August 2017, November 2017 and February 2018) were not paid. • With regard to UniCredit’s current strategy of reduction of non-performing exposures in order to strengthen the Group’s risk profile as per the Transform 2019 plan, it should be noted that: - in June 2017, an agreement was signed with MBCredit Solution S.p.A. (member of Mediobanca group) for the non-recourse sale in three tranches of bad exposures from consumer loan portfolios, two tranches of which were completed in 2017 and the third tranche was completed in the first half of 2018; - in November and December 2017, two further agreements were signed with MBCredit Solution S.p.A. for (i) the non-recourse sale of a portfolio of loans with the Italian SME segment and (ii) for the sale of a portfolio of loans deriving from unsecured terminated lease agreements; - in June 2018, UniCredit S.p.A. has reached an agreement with MBCredit Solutions S.p.A. in relation to the disposal on a non-recourse basis (pro-soluto) of a non-performing unsecured consumer credit portfolio, in Italy. The portfolio consists of Italian unsecured consumer credits with a gross book value of approximately €124 million; - UniCredit and MBCredit Solutions S.p.A. have also reached an agreement for the disposal of further Italian unsecured consumer loans of the same nature, originated from second quarter 2018 to the end of the year. Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 426 2018 Annual Report and Accounts · UniCredit • In January 2018, a settlement and of binding term-sheet for contract amendment (STA) was signed amending administrative services contracts between Unicredit Services and Enterprise Services - Shared Service Center S.p.A. (ES-SCC), which is 49% owned by UniCredit Services and 51% owned by Enterprise Services Italia S.r.l., for the management of UniCredit S.p.A. and UniCredit Bank Austria AG personnel. The agreement provides for the termination of the service contract in Italy and the sale of the interest held by UniCredit Services to the majority shareholder during 2018, as well as an extension of the term of the service contract in Austria until 2033. On 14 May 2018 the amendment to the Master Services Agreement (MSA), that implements the contents of the STA with reference both to Italy and Austria, was signed. On 21 May 2018, pursuant to the Master Service Agreement, UniCredit Services exercise the right to terminate for convenience the Italy Local Services Agreement, with effect starting from 1 July 2018. Accordingly, ES-SCC has performed the Termination Assistance Services as defined in MSA and has continued in performing all the Services provided for the Italy LSA until 31 December 2018. • It should be noted that in December 2018 ES-SSC ceased to be a related-party following its sale. In 2018, through a competitive auction process, UniCredit has signed long-term partnership with Allianz for the exclusive distribution of Life and Non-Life bancassurance products (excluding Credit Protection products) in Bulgaria, Croatia, Hungary, Romania, Slovenia, Czech Republic and Slovakia (and potentially in Bosnia in case the conditions are met). The partnership was gimplemented in the y mentioned countries, through local distribution agreements, in compliance with the all local regulations, in the second half of 2018. • It should be noted that distribution agreements concerning insurance products were signed with the following associates: - Aviva S.p.A.; - CNP UniCredit Vita S.p.A.; - Creditras Assicurazioni S.p.A.; - Creditras Vita S.p.A.; - Incontra Assicurazioni S.p.A. • The relationships with other related parties include the relationships with external pension funds (for UniCredit employees), since they have separate legal personality. These transactions were conducted on the same terms and conditions as those applied to transactions with independent third parties. The relationships with these pension funds are almost entirely represented by the relationships included in Deposits from customers (and related interests). Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 426 2018 Annual Report and Accounts · UniCredit • In January 2018, a settlement and of binding term-sheet for contract amendment (STA) was signed amending administrative services contracts between Unicredit Services and Enterprise Services - Shared Service Center S.p.A. (ES-SCC), which is 49% owned by UniCredit Services and 51% owned by Enterprise Services Italia S.r.l., for the management of UniCredit S.p.A. and UniCredit Bank Austria AG personnel. The agreement provides for the termination of the service contract in Italy and the sale of the interest held by UniCredit Services to the majority shareholder during 2018, as well as an extension of the term of the service contract in Austria until 2033. On 14 May 2018 the amendment to the Master Services Agreement (MSA), that implements the contents of the STA with reference both to Italy and Austria, was signed. On 21 May 2018, pursuant to the Master Service Agreement, UniCredit Services exercise the right to terminate for convenience the Italy Local Services Agreement, with effect starting from 1 July 2018. Accordingly, ES-SCC has performed the Termination Assistance Services as defined in MSA and has continued in performing all the Services provided for the Italy LSA until 31 December 2018. • It should be noted that in December 2018 ES-SSC ceased to be a related-party following its sale. In 2018, through a competitive auction process, UniCredit has signed long-term partnership with Allianz for the exclusive distribution of Life and Non-Life bancassurance products (excluding Credit Protection products) in Bulgaria, Croatia, Hungary, Romania, Slovenia, Czech Republic and Slovakia (and potentially in Bosnia in case the conditions are met). The partnership was gimplemented in the y mentioned countries, through local distribution agreements, in compliance with the all local regulations, in the second half of 2018. • It should be noted that distribution agreements concerning insurance products were signed with the following associates: - Aviva S.p.A.; - CNP UniCredit Vita S.p.A.; - Creditras Assicurazioni S.p.A.; - Creditras Vita S.p.A.; - Incontra Assicurazioni S.p.A. • The relationships with other related parties include the relationships with external pension funds (for UniCredit employees), since they have separate legal personality. These transactions were conducted on the same terms and conditions as those applied to transactions with independent third parties. The relationships with these pension funds are almost entirely represented by the relationships included in Deposits from customers (and related interests). Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 426 2018 Annual Report and Accounts · UniCredit • In January 2018, a settlement and of binding term-sheet for contract amendment (STA) was signed amending administrative services contracts between Unicredit Services and Enterprise Services - Shared Service Center S.p.A. (ES-SCC), which is 49% owned by UniCredit Services and 51% owned by Enterprise Services Italia S.r.l., for the management of UniCredit S.p.A. and UniCredit Bank Austria AG personnel. The agreement provides for the termination of the service contract in Italy and the sale of the interest held by UniCredit Services to the majority shareholder during 2018, as well as an extension of the term of the service contract in Austria until 2033. On 14 May 2018 the amendment to the Master Services Agreement (MSA), that implements the contents of the STA with reference both to Italy and Austria, was signed. On 21 May 2018, pursuant to the Master Service Agreement, UniCredit Services exercise the right to terminate for convenience the Italy Local Services Agreement, with effect starting from 1 July 2018. Accordingly, ES-SCC has performed the Termination Assistance Services as defined in MSA and has continued in performing all the Services provided for the Italy LSA until 31 December 2018. • It should be noted that in December 2018 ES-SSC ceased to be a related-party following its sale. In 2018, through a competitive auction process, UniCredit has signed long-term partnership with Allianz for the exclusive distribution of Life and Non-Life bancassurance products (excluding Credit Protection products) in Bulgaria, Croatia, Hungary, Romania, Slovenia, Czech Republic and Slovakia (and potentially in Bosnia in case the conditions are met). The partnership was gimplemented in the y mentioned countries, through local distribution agreements, in compliance with the all local regulations, in the second half of 2018. • It should be noted that distribution agreements concerning insurance products were signed with the following associates: - Aviva S.p.A.; - CNP UniCredit Vita S.p.A.; - Creditras Assicurazioni S.p.A.; - Creditras Vita S.p.A.; - Incontra Assicurazioni S.p.A. • The relationships with other related parties include the relationships with external pension funds (for UniCredit employees), since they have separate legal personality. These transactions were conducted on the same terms and conditions as those applied to transactions with independent third parties. The relationships with these pension funds are almost entirely represented by the relationships included in Deposits from customers (and related interests). Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 426 2018 Annual Report and Accounts · UniCredit • In January 2018, a settlement and of binding term-sheet for contract amendment (STA) was signed amending administrative services contracts between Unicredit Services and Enterprise Services - Shared Service Center S.p.A. (ES-SCC), which is 49% owned by UniCredit Services and 51% owned by Enterprise Services Italia S.r.l., for the management of UniCredit S.p.A. and UniCredit Bank Austria AG personnel. The agreement provides for the termination of the service contract in Italy and the sale of the interest held by UniCredit Services to the majority shareholder during 2018, as well as an extension of the term of the service contract in Austria until 2033. On 14 May 2018 the amendment to the Master Services Agreement (MSA), that implements the contents of the STA with reference both to Italy and Austria, was signed. On 21 May 2018, pursuant to the Master Service Agreement, UniCredit Services exercise the right to terminate for convenience the Italy Local Services Agreement, with effect starting from 1 July 2018. Accordingly, ES-SCC has performed the Termination Assistance Services as defined in MSA and has continued in performing all the Services provided for the Italy LSA until 31 December 2018. • It should be noted that in December 2018 ES-SSC ceased to be a related-party following its sale. In 2018, through a competitive auction process, UniCredit has signed long-term partnership with Allianz for the exclusive distribution of Life and Non-Life bancassurance products (excluding Credit Protection products) in Bulgaria, Croatia, Hungary, Romania, Slovenia, Czech Republic and Slovakia (and potentially in Bosnia in case the conditions are met). The partnership was gimplemented in the y mentioned countries, through local distribution agreements, in compliance with the all local regulations, in the second half of 2018. • It should be noted that distribution agreements concerning insurance products were signed with the following associates: - Aviva S.p.A.; - CNP UniCredit Vita S.p.A.; - Creditras Assicurazioni S.p.A.; - Creditras Vita S.p.A.; - Incontra Assicurazioni S.p.A. • The relationships with other related parties include the relationships with external pension funds (for UniCredit employees), since they have separate legal personality. These transactions were conducted on the same terms and conditions as those applied to transactions with independent third parties. The relationships with these pension funds are almost entirely represented by the relationships included in Deposits from customers (and related interests). Consolidated financial statements | Notes to the consolidated accounts Part H - Related-party transactions 426 2018 Annual Report and Accounts · UniCredit • In January 2018, a settlement and of binding term-sheet for contract amendment (STA) was signed amending administrative services contracts between Unicredit Services and Enterprise Services - Shared Service Center S.p.A. (ES-SCC), which is 49% owned by UniCredit Services and 51% owned by Enterprise Services Italia S.r.l., for the management of UniCredit S.p.A. and UniCredit Bank Austria AG personnel. The agreement provides for the termination of the service contract in Italy and the sale of the interest held by UniCredit Services to the majority shareholder during 2018, as well as an extension of the term of the service contract in Austria until 2033. On 14 May 2018 the amendment to the Master Services Agreement (MSA), that implements the contents of the STA with reference both to Italy and Austria, was signed. On 21 May 2018, pursuant to the Master Service Agreement, UniCredit Services exercise the right to terminate for convenience the Italy Local Services Agreement, with effect starting from 1 July 2018. Accordingly, ES-SCC has performed the Termination Assistance Services as defined in MSA and has continued in performing all the Services provided for the Italy LSA until 31 December 2018. • It should be noted that in December 2018 ES-SSC ceased to be a related-party following its sale. In 2018, through a competitive auction process, UniCredit has signed long-term partnership with Allianz for the exclusive distribution of Life and Non-Life bancassurance products (excluding Credit Protection products) in Bulgaria, Croatia, Hungary, Romania, Slovenia, Czech Republic and Slovakia (and potentially in Bosnia in case the conditions are met). The partnership was gimplemented in the y mentioned countries, through local distribution agreements, in compliance with the all local regulations, in the second half of 2018. • It should be noted that distribution agreements concerning insurance products were signed with the following associates: - Aviva S.p.A.; - CNP UniCredit Vita S.p.A.; - Creditras Assicurazioni S.p.A.; - Creditras Vita S.p.A.; - Incontra Assicurazioni S.p.A. • The relationships with other related parties include the relationships with external pension funds (for UniCredit employees), since they have separate legal personality. These transactions were conducted on the same terms and conditions as those applied to transactions with independent third parties. The relationships with these pension funds are almost entirely represented by the relationships included in Deposits from customers (and related interests). Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments UniCredit ·2018 Annual Report and Accounts 427 Part I - Share-based payments Qualitative information 1. Description of payment agreements based on own equity instruments 1.1 Outstanding instruments Group Medium & Long Term Incentive Plans for selected employees include the following categories: • Equity-Settled Share Based Payments, which provide for the delivery of shares; • Cash Settled Share Based Payments, which provide for a cash payments36. The first category includes the following: • Stock Options allocated to selected top & senior managers and key talents of the Group and represented by subscription rights of UniCredit shares; • Group Executive Incentive System that offers to eligible Group executive a variable remuneration for which payment will be made within five years. The beneficiary will receive the payment in cash and/or in UniCredit shares; the payment is related to the achievement of performance conditions (other than market conditions) stated in the plan rules; • Group Executive Incentive System (Bonus Pool) that offer to eligible Group executives and relevant employees identified following regulatory rules, a bonus structure composed by upfront (following the moment of performance evaluation) and deferred payments in cash and in shares, to be paid over a period of ranging from 1 to 6 years. This payment structure will guarantee the alignment to shareholder interest and will be subjected to malus (which applies in case specific profitability, capital and liquidity thresholds are not met at both Group and country/division level) and claw back conditions (as legally enforceable) according to the plan rules (both non-market vesting conditions); • Employee Share Ownership Plan (ESOP - Let’s Share) that offers to eligible Group employees the opportunity to buy UniCredit ordinary shares with the advantages to foresee the granting of free ordinary shares (“free shares”) or rights to receive them measured on the basis of the shares purchased by each participant (“investment shares”) during the “enrolment period”. The granting of free ordinary shares is subordinated to the plan rules; • Long Term Incentive 2017-2019 that offers to eligible executives and key players of the Group an incentive 100% based on ordinary UniCredit shares, subject to 3-years deferral and to malus and claw-back conditions, as legally enforceable, according to the plan rules. The plan is structured on 3-years performance period, aligned to the new UniCredit strategic plan and provides for the allocation of an award based on gateway conditions on profitability, liquidity, capital and risk position and a set of performance conditions focused on Group targets, aligned with Transform 2019; • FinecoBank Stock granting for employees and for Personal Financial Advisors (PFA) offering the allocation of free shares of FinecoBank to beneficiaries belonging to top management of the Bank , executives and employees of the Bank (other than top management) and to selected network’s Personal Financial Advisors. The shares shall be allocated to the beneficiaries in three or four annual instalments. The plans are subject to entry conditions (profitability and capital thresholds) and clawback clauses (as legally applicable) in accordance with the plan rules; • FinecoBank Personal Financial Advisors (PFA) incentive system, that offer to selected financial advisors, identified as key personnel in accordance with regulatory requirements, an incentive system consisting of immediate cash payments (following performance evaluation) and deferred payments, in cash and FinecoBank ordinary shares, over a period of 5 years. This payment structure ensures that bonuses are aligned to shareholders’ interests and is subject to malus clauses (which apply when specific earnings, liquidity and capital thresholds are not met at Group and/or at country/division level) and clawback clauses (to the extent they are legally applicable) in accordance with the plan rules (which are both vesting conditions other than market conditions); • FinecoBank Long term incentive 2018-2020 that offers to eligible executives and key players of FinecoBank, an incentive 100% based on ordinary FinecoBank shares, subject to pluriannual deferral and to malus and claw-back conditions, as legally enforceable, according to the plan rules. The allocation is subject to the achievement of specific performance objectives; • FinecoBank Long Term Incentive Plan for Personal Financial Advisors belonging to Identified Staff 2018-2020, which provides for Personal Financial Advisors that will be identified as “Identified Staff” in the 2020 performance year, the allocation of an incentive – in cash and Fineco ordinary shares – to be granted in a multi-year period, subject to the achievement of specific performance objectives. The second category includes the following other equity instruments (phantom shares) used for incentive system 2015 of selected FinecoBank Personal Financial Advisors, subject to malus (which apply in the event that specific profitability, liquidity and capital thresholds are not met at Group and/or at country/division level) and clawback clauses (to the extent they are legally applicable) in accordance with the plan rules (both vesting conditions other than market conditions). 36 Linked to the economic value of instruments representing a subsidiaries Shareholders’ Equity. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments UniCredit ·2018 Annual Report and Accounts 427 Part I - Share-based payments Qualitative information 1. Description of payment agreements based on own equity instruments 1.1 Outstanding instruments Group Medium & Long Term Incentive Plans for selected employees include the following categories: • Equity-Settled Share Based Payments, which provide for the delivery of shares; • Cash Settled Share Based Payments, which provide for a cash payments36. The first category includes the following: • Stock Options allocated to selected top & senior managers and key talents of the Group and represented by subscription rights of UniCredit shares; • Group Executive Incentive System that offers to eligible Group executive a variable remuneration for which payment will be made within five years. The beneficiary will receive the payment in cash and/or in UniCredit shares; the payment is related to the achievement of performance conditions (other than market conditions) stated in the plan rules; • Group Executive Incentive System (Bonus Pool) that offer to eligible Group executives and relevant employees identified following regulatory rules, a bonus structure composed by upfront (following the moment of performance evaluation) and deferred payments in cash and in shares, to be paid over a period of ranging from 1 to 6 years. This payment structure will guarantee the alignment to shareholder interest and will be subjected to malus (which applies in case specific profitability, capital and liquidity thresholds are not met at both Group and country/division level) and claw back conditions (as legally enforceable) according to the plan rules (both non-market vesting conditions); • Employee Share Ownership Plan (ESOP - Let’s Share) that offers to eligible Group employees the opportunity to buy UniCredit ordinary shares with the advantages to foresee the granting of free ordinary shares (“free shares”) or rights to receive them measured on the basis of the shares purchased by each participant (“investment shares”) during the “enrolment period”. The granting of free ordinary shares is subordinated to the plan rules; • Long Term Incentive 2017-2019 that offers to eligible executives and key players of the Group an incentive 100% based on ordinary UniCredit shares, subject to 3-years deferral and to malus and claw-back conditions, as legally enforceable, according to the plan rules. The plan is structured on 3-years performance period, aligned to the new UniCredit strategic plan and provides for the allocation of an award based on gateway conditions on profitability, liquidity, capital and risk position and a set of performance conditions focused on Group targets, aligned with Transform 2019; • FinecoBank Stock granting for employees and for Personal Financial Advisors (PFA) offering the allocation of free shares of FinecoBank to beneficiaries belonging to top management of the Bank , executives and employees of the Bank (other than top management) and to selected network’s Personal Financial Advisors. The shares shall be allocated to the beneficiaries in three or four annual instalments. The plans are subject to entry conditions (profitability and capital thresholds) and clawback clauses (as legally applicable) in accordance with the plan rules; • FinecoBank Personal Financial Advisors (PFA) incentive system, that offer to selected financial advisors, identified as key personnel in accordance with regulatory requirements, an incentive system consisting of immediate cash payments (following performance evaluation) and deferred payments, in cash and FinecoBank ordinary shares, over a period of 5 years. This payment structure ensures that bonuses are aligned to shareholders’ interests and is subject to malus clauses (which apply when specific earnings, liquidity and capital thresholds are not met at Group and/or at country/division level) and clawback clauses (to the extent they are legally applicable) in accordance with the plan rules (which are both vesting conditions other than market conditions); • FinecoBank Long term incentive 2018-2020 that offers to eligible executives and key players of FinecoBank, an incentive 100% based on ordinary FinecoBank shares, subject to pluriannual deferral and to malus and claw-back conditions, as legally enforceable, according to the plan rules. The allocation is subject to the achievement of specific performance objectives; • FinecoBank Long Term Incentive Plan for Personal Financial Advisors belonging to Identified Staff 2018-2020, which provides for Personal Financial Advisors that will be identified as “Identified Staff” in the 2020 performance year, the allocation of an incentive – in cash and Fineco ordinary shares – to be granted in a multi-year period, subject to the achievement of specific performance objectives. The second category includes the following other equity instruments (phantom shares) used for incentive system 2015 of selected FinecoBank Personal Financial Advisors, subject to malus (which apply in the event that specific profitability, liquidity and capital thresholds are not met at Group and/or at country/division level) and clawback clauses (to the extent they are legally applicable) in accordance with the plan rules (both vesting conditions other than market conditions). 36 Linked to the economic value of instruments representing a subsidiaries Shareholders’ Equity. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments UniCredit ·2018 Annual Report and Accounts 427 Part I - Share-based payments Qualitative information 1. Description of payment agreements based on own equity instruments 1.1 Outstanding instruments Group Medium & Long Term Incentive Plans for selected employees include the following categories: • Equity-Settled Share Based Payments, which provide for the delivery of shares; • Cash Settled Share Based Payments, which provide for a cash payments36. The first category includes the following: • Stock Options allocated to selected top & senior managers and key talents of the Group and represented by subscription rights of UniCredit shares; • Group Executive Incentive System that offers to eligible Group executive a variable remuneration for which payment will be made within five years. The beneficiary will receive the payment in cash and/or in UniCredit shares; the payment is related to the achievement of performance conditions (other than market conditions) stated in the plan rules; • Group Executive Incentive System (Bonus Pool) that offer to eligible Group executives and relevant employees identified following regulatory rules, a bonus structure composed by upfront (following the moment of performance evaluation) and deferred payments in cash and in shares, to be paid over a period of ranging from 1 to 6 years. This payment structure will guarantee the alignment to shareholder interest and will be subjected to malus (which applies in case specific profitability, capital and liquidity thresholds are not met at both Group and country/division level) and claw back conditions (as legally enforceable) according to the plan rules (both non-market vesting conditions); • Employee Share Ownership Plan (ESOP - Let’s Share) that offers to eligible Group employees the opportunity to buy UniCredit ordinary shares with the advantages to foresee the granting of free ordinary shares (“free shares”) or rights to receive them measured on the basis of the shares purchased by each participant (“investment shares”) during the “enrolment period”. The granting of free ordinary shares is subordinated to the plan rules; • Long Term Incentive 2017-2019 that offers to eligible executives and key players of the Group an incentive 100% based on ordinary UniCredit shares, subject to 3-years deferral and to malus and claw-back conditions, as legally enforceable, according to the plan rules. The plan is structured on 3-years performance period, aligned to the new UniCredit strategic plan and provides for the allocation of an award based on gateway conditions on profitability, liquidity, capital and risk position and a set of performance conditions focused on Group targets, aligned with Transform 2019; • FinecoBank Stock granting for employees and for Personal Financial Advisors (PFA) offering the allocation of free shares of FinecoBank to beneficiaries belonging to top management of the Bank , executives and employees of the Bank (other than top management) and to selected network’s Personal Financial Advisors. The shares shall be allocated to the beneficiaries in three or four annual instalments. The plans are subject to entry conditions (profitability and capital thresholds) and clawback clauses (as legally applicable) in accordance with the plan rules; • FinecoBank Personal Financial Advisors (PFA) incentive system, that offer to selected financial advisors, identified as key personnel in accordance with regulatory requirements, an incentive system consisting of immediate cash payments (following performance evaluation) and deferred payments, in cash and FinecoBank ordinary shares, over a period of 5 years. This payment structure ensures that bonuses are aligned to shareholders’ interests and is subject to malus clauses (which apply when specific earnings, liquidity and capital thresholds are not met at Group and/or at country/division level) and clawback clauses (to the extent they are legally applicable) in accordance with the plan rules (which are both vesting conditions other than market conditions); • FinecoBank Long term incentive 2018-2020 that offers to eligible executives and key players of FinecoBank, an incentive 100% based on ordinary FinecoBank shares, subject to pluriannual deferral and to malus and claw-back conditions, as legally enforceable, according to the plan rules. The allocation is subject to the achievement of specific performance objectives; • FinecoBank Long Term Incentive Plan for Personal Financial Advisors belonging to Identified Staff 2018-2020, which provides for Personal Financial Advisors that will be identified as “Identified Staff” in the 2020 performance year, the allocation of an incentive – in cash and Fineco ordinary shares – to be granted in a multi-year period, subject to the achievement of specific performance objectives. The second category includes the following other equity instruments (phantom shares) used for incentive system 2015 of selected FinecoBank Personal Financial Advisors, subject to malus (which apply in the event that specific profitability, liquidity and capital thresholds are not met at Group and/or at country/division level) and clawback clauses (to the extent they are legally applicable) in accordance with the plan rules (both vesting conditions other than market conditions). 36 Linked to the economic value of instruments representing a subsidiaries Shareholders’ Equity. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments UniCredit ·2018 Annual Report and Accounts 427 Part I - Share-based payments Qualitative information 1. Description of payment agreements based on own equity instruments 1.1 Outstanding instruments Group Medium & Long Term Incentive Plans for selected employees include the following categories: • Equity-Settled Share Based Payments, which provide for the delivery of shares; • Cash Settled Share Based Payments, which provide for a cash payments36. The first category includes the following: • Stock Options allocated to selected top & senior managers and key talents of the Group and represented by subscription rights of UniCredit shares; • Group Executive Incentive System that offers to eligible Group executive a variable remuneration for which payment will be made within five years. The beneficiary will receive the payment in cash and/or in UniCredit shares; the payment is related to the achievement of performance conditions (other than market conditions) stated in the plan rules; • Group Executive Incentive System (Bonus Pool) that offer to eligible Group executives and relevant employees identified following regulatory rules, a bonus structure composed by upfront (following the moment of performance evaluation) and deferred payments in cash and in shares, to be paid over a period of ranging from 1 to 6 years. This payment structure will guarantee the alignment to shareholder interest and will be subjected to malus (which applies in case specific profitability, capital and liquidity thresholds are not met at both Group and country/division level) and claw back conditions (as legally enforceable) according to the plan rules (both non-market vesting conditions); • Employee Share Ownership Plan (ESOP - Let’s Share) that offers to eligible Group employees the opportunity to buy UniCredit ordinary shares with the advantages to foresee the granting of free ordinary shares (“free shares”) or rights to receive them measured on the basis of the shares purchased by each participant (“investment shares”) during the “enrolment period”. The granting of free ordinary shares is subordinated to the plan rules; • Long Term Incentive 2017-2019 that offers to eligible executives and key players of the Group an incentive 100% based on ordinary UniCredit shares, subject to 3-years deferral and to malus and claw-back conditions, as legally enforceable, according to the plan rules. The plan is structured on 3-years performance period, aligned to the new UniCredit strategic plan and provides for the allocation of an award based on gateway conditions on profitability, liquidity, capital and risk position and a set of performance conditions focused on Group targets, aligned with Transform 2019; • FinecoBank Stock granting for employees and for Personal Financial Advisors (PFA) offering the allocation of free shares of FinecoBank to beneficiaries belonging to top management of the Bank , executives and employees of the Bank (other than top management) and to selected network’s Personal Financial Advisors. The shares shall be allocated to the beneficiaries in three or four annual instalments. The plans are subject to entry conditions (profitability and capital thresholds) and clawback clauses (as legally applicable) in accordance with the plan rules; • FinecoBank Personal Financial Advisors (PFA) incentive system, that offer to selected financial advisors, identified as key personnel in accordance with regulatory requirements, an incentive system consisting of immediate cash payments (following performance evaluation) and deferred payments, in cash and FinecoBank ordinary shares, over a period of 5 years. This payment structure ensures that bonuses are aligned to shareholders’ interests and is subject to malus clauses (which apply when specific earnings, liquidity and capital thresholds are not met at Group and/or at country/division level) and clawback clauses (to the extent they are legally applicable) in accordance with the plan rules (which are both vesting conditions other than market conditions); • FinecoBank Long term incentive 2018-2020 that offers to eligible executives and key players of FinecoBank, an incentive 100% based on ordinary FinecoBank shares, subject to pluriannual deferral and to malus and claw-back conditions, as legally enforceable, according to the plan rules. The allocation is subject to the achievement of specific performance objectives; • FinecoBank Long Term Incentive Plan for Personal Financial Advisors belonging to Identified Staff 2018-2020, which provides for Personal Financial Advisors that will be identified as “Identified Staff” in the 2020 performance year, the allocation of an incentive – in cash and Fineco ordinary shares – to be granted in a multi-year period, subject to the achievement of specific performance objectives. The second category includes the following other equity instruments (phantom shares) used for incentive system 2015 of selected FinecoBank Personal Financial Advisors, subject to malus (which apply in the event that specific profitability, liquidity and capital thresholds are not met at Group and/or at country/division level) and clawback clauses (to the extent they are legally applicable) in accordance with the plan rules (both vesting conditions other than market conditions). 36 Linked to the economic value of instruments representing a subsidiaries Shareholders’ Equity. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments UniCredit ·2018 Annual Report and Accounts 427 Part I - Share-based payments Qualitative information 1. Description of payment agreements based on own equity instruments 1.1 Outstanding instruments Group Medium & Long Term Incentive Plans for selected employees include the following categories: • Equity-Settled Share Based Payments, which provide for the delivery of shares; • Cash Settled Share Based Payments, which provide for a cash payments36. The first category includes the following: • Stock Options allocated to selected top & senior managers and key talents of the Group and represented by subscription rights of UniCredit shares; • Group Executive Incentive System that offers to eligible Group executive a variable remuneration for which payment will be made within five years. The beneficiary will receive the payment in cash and/or in UniCredit shares; the payment is related to the achievement of performance conditions (other than market conditions) stated in the plan rules; • Group Executive Incentive System (Bonus Pool) that offer to eligible Group executives and relevant employees identified following regulatory rules, a bonus structure composed by upfront (following the moment of performance evaluation) and deferred payments in cash and in shares, to be paid over a period of ranging from 1 to 6 years. This payment structure will guarantee the alignment to shareholder interest and will be subjected to malus (which applies in case specific profitability, capital and liquidity thresholds are not met at both Group and country/division level) and claw back conditions (as legally enforceable) according to the plan rules (both non-market vesting conditions); • Employee Share Ownership Plan (ESOP - Let’s Share) that offers to eligible Group employees the opportunity to buy UniCredit ordinary shares with the advantages to foresee the granting of free ordinary shares (“free shares”) or rights to receive them measured on the basis of the shares purchased by each participant (“investment shares”) during the “enrolment period”. The granting of free ordinary shares is subordinated to the plan rules; • Long Term Incentive 2017-2019 that offers to eligible executives and key players of the Group an incentive 100% based on ordinary UniCredit shares, subject to 3-years deferral and to malus and claw-back conditions, as legally enforceable, according to the plan rules. The plan is structured on 3-years performance period, aligned to the new UniCredit strategic plan and provides for the allocation of an award based on gateway conditions on profitability, liquidity, capital and risk position and a set of performance conditions focused on Group targets, aligned with Transform 2019; • FinecoBank Stock granting for employees and for Personal Financial Advisors (PFA) offering the allocation of free shares of FinecoBank to beneficiaries belonging to top management of the Bank , executives and employees of the Bank (other than top management) and to selected network’s Personal Financial Advisors. The shares shall be allocated to the beneficiaries in three or four annual instalments. The plans are subject to entry conditions (profitability and capital thresholds) and clawback clauses (as legally applicable) in accordance with the plan rules; • FinecoBank Personal Financial Advisors (PFA) incentive system, that offer to selected financial advisors, identified as key personnel in accordance with regulatory requirements, an incentive system consisting of immediate cash payments (following performance evaluation) and deferred payments, in cash and FinecoBank ordinary shares, over a period of 5 years. This payment structure ensures that bonuses are aligned to shareholders’ interests and is subject to malus clauses (which apply when specific earnings, liquidity and capital thresholds are not met at Group and/or at country/division level) and clawback clauses (to the extent they are legally applicable) in accordance with the plan rules (which are both vesting conditions other than market conditions); • FinecoBank Long term incentive 2018-2020 that offers to eligible executives and key players of FinecoBank, an incentive 100% based on ordinary FinecoBank shares, subject to pluriannual deferral and to malus and claw-back conditions, as legally enforceable, according to the plan rules. The allocation is subject to the achievement of specific performance objectives; • FinecoBank Long Term Incentive Plan for Personal Financial Advisors belonging to Identified Staff 2018-2020, which provides for Personal Financial Advisors that will be identified as “Identified Staff” in the 2020 performance year, the allocation of an incentive – in cash and Fineco ordinary shares – to be granted in a multi-year period, subject to the achievement of specific performance objectives. The second category includes the following other equity instruments (phantom shares) used for incentive system 2015 of selected FinecoBank Personal Financial Advisors, subject to malus (which apply in the event that specific profitability, liquidity and capital thresholds are not met at Group and/or at country/division level) and clawback clauses (to the extent they are legally applicable) in accordance with the plan rules (both vesting conditions other than market conditions). 36 Linked to the economic value of instruments representing a subsidiaries Shareholders’ Equity. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments 428 2018 Annual Report and Accounts · UniCredit It is also noted that, according to Banca d’Italia Circular 285 (20° update dated November 22, 2017), the equity-settled share based payments, represented by deferred payments in UniCredit and FinecoBank ordinary shares not subject to vesting conditions, are used for the settlement of the so-called golden parachute (e.g. severance) for the relevant employees. 1.2 Measurement model 1.2.1 Stock Options The Hull and White evaluation model has been adopted to measure the economic value of stock options. This model is based on a trinomial tree price distribution using the Boyle’s algorithm and estimates the early exercise probability on the basis of a deterministic model connected to: • reaching a market share value equals to an exercise price-multiple (M); • probability of beneficiaries’ early exit (E) after the end of the vesting period. Economic and equity effects will be recognized on a basis of instrument vesting period. Any new stock options’ plans haven’t been granted during 2018. 1.2.2 Group Executive Incentive System The amount of the incentive is determined on a basis of the achievement of quantitative and qualitative goals stated by the plan. In particular, the overall evaluation of the employee’s relevant manager is expressed as a percentage, from a minimum of 0% to a maximum of 150% (non-market vesting conditions). This percentage, adjusted by the application of a risk/opportunity factor - Group gate - at first payment multiplied by the bonus opportunity, determines the effective amount that will be paid to the beneficiary. Economic and net equity effects will be accrued on a basis of instruments’ vesting period. 1.2.3 Group Executive Incentive System (Bonus Pool) The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. Economic and net equity effects will be accrued on a basis of instruments’ vesting period. Group Executive Incentive System “Bonus Pool 2017” - Shares The plan is divided into clusters, each of which can have three or four installments of share-based payments spread over a period defined according to plan rules. SHARES GRANTED GROUP EXECUTIVE INCENTIVE SYSTEM - BONUS POOL 2017 INSTALLMENT (2020) INSTALLMENT (2021) INSTALLMENT (2022) INSTALLMENT (2023) Date of bonus opportunity economic value granting Feb-09-2017 Feb-09-2017 Feb-09-2017 Feb-09-2017 Date of Board resolution (to determine number of shares) Mar-05-2018 Mar-05-2018 Mar-05-2018 Mar-05-2018 Vesting period start date Jan-01-2017 Jan-01-2017 Jan-01-2017 Jan-01-2017 Vesting period end date Dec-31-2017 Dec-31-2019 Dec-31-2020 Dec-31-2021 UniCredit share market price [€] 17.451 17.451 17.451 17.451 Economic value of vesting conditions [€] -0.651 -1.314 -1.973 -2.626 Performance shares' fair value per unit at grant date [€](*) 16.800 16.137 15.478 14.825 Note: (*) The same fair value per unit are used for quantification of costs connected to share based payments for the settlement of golden parachute Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments 428 2018 Annual Report and Accounts · UniCredit It is also noted that, according to Banca d’Italia Circular 285 (20° update dated November 22, 2017), the equity-settled share based payments, represented by deferred payments in UniCredit and FinecoBank ordinary shares not subject to vesting conditions, are used for the settlement of the so-called golden parachute (e.g. severance) for the relevant employees. 1.2 Measurement model 1.2.1 Stock Options The Hull and White evaluation model has been adopted to measure the economic value of stock options. This model is based on a trinomial tree price distribution using the Boyle’s algorithm and estimates the early exercise probability on the basis of a deterministic model connected to: • reaching a market share value equals to an exercise price-multiple (M); • probability of beneficiaries’ early exit (E) after the end of the vesting period. Economic and equity effects will be recognized on a basis of instrument vesting period. Any new stock options’ plans haven’t been granted during 2018. 1.2.2 Group Executive Incentive System The amount of the incentive is determined on a basis of the achievement of quantitative and qualitative goals stated by the plan. In particular, the overall evaluation of the employee’s relevant manager is expressed as a percentage, from a minimum of 0% to a maximum of 150% (non-market vesting conditions). This percentage, adjusted by the application of a risk/opportunity factor - Group gate - at first payment multiplied by the bonus opportunity, determines the effective amount that will be paid to the beneficiary. Economic and net equity effects will be accrued on a basis of instruments’ vesting period. 1.2.3 Group Executive Incentive System (Bonus Pool) The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. Economic and net equity effects will be accrued on a basis of instruments’ vesting period. Group Executive Incentive System “Bonus Pool 2017” - Shares The plan is divided into clusters, each of which can have three or four installments of share-based payments spread over a period defined according to plan rules. SHARES GRANTED GROUP EXECUTIVE INCENTIVE SYSTEM - BONUS POOL 2017 INSTALLMENT (2020) INSTALLMENT (2021) INSTALLMENT (2022) INSTALLMENT (2023) Date of bonus opportunity economic value granting Feb-09-2017 Feb-09-2017 Feb-09-2017 Feb-09-2017 Date of Board resolution (to determine number of shares) Mar-05-2018 Mar-05-2018 Mar-05-2018 Mar-05-2018 Vesting period start date Jan-01-2017 Jan-01-2017 Jan-01-2017 Jan-01-2017 Vesting period end date Dec-31-2017 Dec-31-2019 Dec-31-2020 Dec-31-2021 UniCredit share market price [€] 17.451 17.451 17.451 17.451 Economic value of vesting conditions [€] -0.651 -1.314 -1.973 -2.626 Performance shares' fair value per unit at grant date [€](*) 16.800 16.137 15.478 14.825 Note: (*) The same fair value per unit are used for quantification of costs connected to share based payments for the settlement of golden parachute Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments 428 2018 Annual Report and Accounts · UniCredit It is also noted that, according to Banca d’Italia Circular 285 (20° update dated November 22, 2017), the equity-settled share based payments, represented by deferred payments in UniCredit and FinecoBank ordinary shares not subject to vesting conditions, are used for the settlement of the so-called golden parachute (e.g. severance) for the relevant employees. 1.2 Measurement model 1.2.1 Stock Options The Hull and White evaluation model has been adopted to measure the economic value of stock options. This model is based on a trinomial tree price distribution using the Boyle’s algorithm and estimates the early exercise probability on the basis of a deterministic model connected to: • reaching a market share value equals to an exercise price-multiple (M); • probability of beneficiaries’ early exit (E) after the end of the vesting period. Economic and equity effects will be recognized on a basis of instrument vesting period. Any new stock options’ plans haven’t been granted during 2018. 1.2.2 Group Executive Incentive System The amount of the incentive is determined on a basis of the achievement of quantitative and qualitative goals stated by the plan. In particular, the overall evaluation of the employee’s relevant manager is expressed as a percentage, from a minimum of 0% to a maximum of 150% (non-market vesting conditions). This percentage, adjusted by the application of a risk/opportunity factor - Group gate - at first payment multiplied by the bonus opportunity, determines the effective amount that will be paid to the beneficiary. Economic and net equity effects will be accrued on a basis of instruments’ vesting period. 1.2.3 Group Executive Incentive System (Bonus Pool) The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. Economic and net equity effects will be accrued on a basis of instruments’ vesting period. Group Executive Incentive System “Bonus Pool 2017” - Shares The plan is divided into clusters, each of which can have three or four installments of share-based payments spread over a period defined according to plan rules. SHARES GRANTED GROUP EXECUTIVE INCENTIVE SYSTEM - BONUS POOL 2017 INSTALLMENT (2020) INSTALLMENT (2021) INSTALLMENT (2022) INSTALLMENT (2023) Date of bonus opportunity economic value granting Feb-09-2017 Feb-09-2017 Feb-09-2017 Feb-09-2017 Date of Board resolution (to determine number of shares) Mar-05-2018 Mar-05-2018 Mar-05-2018 Mar-05-2018 Vesting period start date Jan-01-2017 Jan-01-2017 Jan-01-2017 Jan-01-2017 Vesting period end date Dec-31-2017 Dec-31-2019 Dec-31-2020 Dec-31-2021 UniCredit share market price [€] 17.451 17.451 17.451 17.451 Economic value of vesting conditions [€] -0.651 -1.314 -1.973 -2.626 Performance shares' fair value per unit at grant date [€](*) 16.800 16.137 15.478 14.825 Note: (*) The same fair value per unit are used for quantification of costs connected to share based payments for the settlement of golden parachute Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments 428 2018 Annual Report and Accounts · UniCredit It is also noted that, according to Banca d’Italia Circular 285 (20° update dated November 22, 2017), the equity-settled share based payments, represented by deferred payments in UniCredit and FinecoBank ordinary shares not subject to vesting conditions, are used for the settlement of the so-called golden parachute (e.g. severance) for the relevant employees. 1.2 Measurement model 1.2.1 Stock Options The Hull and White evaluation model has been adopted to measure the economic value of stock options. This model is based on a trinomial tree price distribution using the Boyle’s algorithm and estimates the early exercise probability on the basis of a deterministic model connected to: • reaching a market share value equals to an exercise price-multiple (M); • probability of beneficiaries’ early exit (E) after the end of the vesting period. Economic and equity effects will be recognized on a basis of instrument vesting period. Any new stock options’ plans haven’t been granted during 2018. 1.2.2 Group Executive Incentive System The amount of the incentive is determined on a basis of the achievement of quantitative and qualitative goals stated by the plan. In particular, the overall evaluation of the employee’s relevant manager is expressed as a percentage, from a minimum of 0% to a maximum of 150% (non-market vesting conditions). This percentage, adjusted by the application of a risk/opportunity factor - Group gate - at first payment multiplied by the bonus opportunity, determines the effective amount that will be paid to the beneficiary. Economic and net equity effects will be accrued on a basis of instruments’ vesting period. 1.2.3 Group Executive Incentive System (Bonus Pool) The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. Economic and net equity effects will be accrued on a basis of instruments’ vesting period. Group Executive Incentive System “Bonus Pool 2017” - Shares The plan is divided into clusters, each of which can have three or four installments of share-based payments spread over a period defined according to plan rules. SHARES GRANTED GROUP EXECUTIVE INCENTIVE SYSTEM - BONUS POOL 2017 INSTALLMENT (2020) INSTALLMENT (2021) INSTALLMENT (2022) INSTALLMENT (2023) Date of bonus opportunity economic value granting Feb-09-2017 Feb-09-2017 Feb-09-2017 Feb-09-2017 Date of Board resolution (to determine number of shares) Mar-05-2018 Mar-05-2018 Mar-05-2018 Mar-05-2018 Vesting period start date Jan-01-2017 Jan-01-2017 Jan-01-2017 Jan-01-2017 Vesting period end date Dec-31-2017 Dec-31-2019 Dec-31-2020 Dec-31-2021 UniCredit share market price [€] 17.451 17.451 17.451 17.451 Economic value of vesting conditions [€] -0.651 -1.314 -1.973 -2.626 Performance shares' fair value per unit at grant date [€](*) 16.800 16.137 15.478 14.825 Note: (*) The same fair value per unit are used for quantification of costs connected to share based payments for the settlement of golden parachute Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments 428 2018 Annual Report and Accounts · UniCredit It is also noted that, according to Banca d’Italia Circular 285 (20° update dated November 22, 2017), the equity-settled share based payments, represented by deferred payments in UniCredit and FinecoBank ordinary shares not subject to vesting conditions, are used for the settlement of the so-called golden parachute (e.g. severance) for the relevant employees. 1.2 Measurement model 1.2.1 Stock Options The Hull and White evaluation model has been adopted to measure the economic value of stock options. This model is based on a trinomial tree price distribution using the Boyle’s algorithm and estimates the early exercise probability on the basis of a deterministic model connected to: • reaching a market share value equals to an exercise price-multiple (M); • probability of beneficiaries’ early exit (E) after the end of the vesting period. Economic and equity effects will be recognized on a basis of instrument vesting period. Any new stock options’ plans haven’t been granted during 2018. 1.2.2 Group Executive Incentive System The amount of the incentive is determined on a basis of the achievement of quantitative and qualitative goals stated by the plan. In particular, the overall evaluation of the employee’s relevant manager is expressed as a percentage, from a minimum of 0% to a maximum of 150% (non-market vesting conditions). This percentage, adjusted by the application of a risk/opportunity factor - Group gate - at first payment multiplied by the bonus opportunity, determines the effective amount that will be paid to the beneficiary. Economic and net equity effects will be accrued on a basis of instruments’ vesting period. 1.2.3 Group Executive Incentive System (Bonus Pool) The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. Economic and net equity effects will be accrued on a basis of instruments’ vesting period. Group Executive Incentive System “Bonus Pool 2017” - Shares The plan is divided into clusters, each of which can have three or four installments of share-based payments spread over a period defined according to plan rules. SHARES GRANTED GROUP EXECUTIVE INCENTIVE SYSTEM - BONUS POOL 2017 INSTALLMENT (2020) INSTALLMENT (2021) INSTALLMENT (2022) INSTALLMENT (2023) Date of bonus opportunity economic value granting Feb-09-2017 Feb-09-2017 Feb-09-2017 Feb-09-2017 Date of Board resolution (to determine number of shares) Mar-05-2018 Mar-05-2018 Mar-05-2018 Mar-05-2018 Vesting period start date Jan-01-2017 Jan-01-2017 Jan-01-2017 Jan-01-2017 Vesting period end date Dec-31-2017 Dec-31-2019 Dec-31-2020 Dec-31-2021 UniCredit share market price [€] 17.451 17.451 17.451 17.451 Economic value of vesting conditions [€] -0.651 -1.314 -1.973 -2.626 Performance shares' fair value per unit at grant date [€](*) 16.800 16.137 15.478 14.825 Note: (*) The same fair value per unit are used for quantification of costs connected to share based payments for the settlement of golden parachute Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments UniCredit ·2018 Annual Report and Accounts 429 Group Executive Incentive System 2018 (Bonus Pool) The new Group Incentive System 2018 is based on a bonus pool approach, aligned with regulatory requirements and market practices, which defines: • sustainability, through direct link with entity results and alignment with relevant risk categories, utilizing specific indicators linked to risk-appetite framework; • link between bonuses and organization structure, defining the pool at country/division level with further review at Group level; • bonuses allocated to executives and other relevant employee, identified on a basis of European Bank Authority (EBA) rules, according to local regulations; • payment structure has been defined in accordance with regulatory provisions qualified by Directive 2013/36/EU (CRD IV) and will be distributed in a period of six years by using a mix of shares and cash. All profit and loss and net equity effects related to the plan will be booked during the vesting period. 1.2.4. Long Term Incentive 2017-2019 The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. The plan is divided into clusters, based on the beneficiary position, each of which can have from one to four installments of share-based payments spread over a period defined according to plan rules. 1.2.5. FinecoBank stock granting to employees and personal financial advisor (PFA) The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. 1.2.6. FinecoBank incentive system 2015 PFA – cash settled share based payments plan The economic value of phantom shares allocated corresponds to the market price of the FinecoBank shares. The plan was assigned in 2015 and the income statement and the balance sheet effects will be recognized during the vesting period of the instruments. Quantitative information 1. Annual changes Stock Option and Performance Stock Option UniCredit YEAR 2018(1) YEAR 2017(1) ITEMS/NUMBER OF OPTIONS AND EXERCISE PRICE NUMBER OF OPTIONS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY NUMBER OF OPTIONS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY A. Outstanding at beginning of period 2,885,799 126.261 Oct-2018 4,288,319 137.099 Aug-2019 B. Increases - - - - B.1 New issues - - - - B.2 Other - - - - C. Decreases 2,108,873 - 1,402,520 - C.1 Forfeited 146,054 138.239 963,056 145.763 C.2 Exercised - - - - C.3 Expired 1,962,819 - 439,464 - C.4 Other - - - - D. Outstanding at end of period 776,926 148.718 Jun-2019 2,885,799 126.261 Oct-2018 E. Vested Options at end of period 776,926 148.718 Jun-2019 2,885,799 126.261 Oct-2018 Note: (1) The information related to Number of options and Average exercise price had been modified following the grouping operations resolved by UniCredit Annual General Meeting held on 15 December 2011 and the UniCredit Extraordinary Shareholders’ Meeting on 12 January 2017 and following the application of “adjustment factors” recommended by AIAF (Associazione Italiana Analisti Finanziari) equal to: • 0.88730816 as the free capital increase resolved by the UniCredit Annual General Meeting on 29 April 2009 (“scrip dividend”); • 0.95476659 as the capital increase resolved by the UniCredit Extraordinary Shareholder Meeting on 16 November 2009 and finalized on 24 February 2010; • 0.6586305 as the capital increase resolved by the UniCredit Extraordinary Shareholders’ Meeting on 15 December 2011 and finalized in 2012; • 0.50112555 as the capital increase resolved by the UniCredit Extraordinary Shareholders’ Meeting on 12 January 2017 and finalized on 2 March 2017. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments UniCredit ·2018 Annual Report and Accounts 429 Group Executive Incentive System 2018 (Bonus Pool) The new Group Incentive System 2018 is based on a bonus pool approach, aligned with regulatory requirements and market practices, which defines: • sustainability, through direct link with entity results and alignment with relevant risk categories, utilizing specific indicators linked to risk-appetite framework; • link between bonuses and organization structure, defining the pool at country/division level with further review at Group level; • bonuses allocated to executives and other relevant employee, identified on a basis of European Bank Authority (EBA) rules, according to local regulations; • payment structure has been defined in accordance with regulatory provisions qualified by Directive 2013/36/EU (CRD IV) and will be distributed in a period of six years by using a mix of shares and cash. All profit and loss and net equity effects related to the plan will be booked during the vesting period. 1.2.4. Long Term Incentive 2017-2019 The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. The plan is divided into clusters, based on the beneficiary position, each of which can have from one to four installments of share-based payments spread over a period defined according to plan rules. 1.2.5. FinecoBank stock granting to employees and personal financial advisor (PFA) The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. 1.2.6. FinecoBank incentive system 2015 PFA – cash settled share based payments plan The economic value of phantom shares allocated corresponds to the market price of the FinecoBank shares. The plan was assigned in 2015 and the income statement and the balance sheet effects will be recognized during the vesting period of the instruments. Quantitative information 1. Annual changes Stock Option and Performance Stock Option UniCredit YEAR 2018(1) YEAR 2017(1) ITEMS/NUMBER OF OPTIONS AND EXERCISE PRICE NUMBER OF OPTIONS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY NUMBER OF OPTIONS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY A. Outstanding at beginning of period 2,885,799 126.261 Oct-2018 4,288,319 137.099 Aug-2019 B. Increases - - - - B.1 New issues - - - - B.2 Other - - - - C. Decreases 2,108,873 - 1,402,520 - C.1 Forfeited 146,054 138.239 963,056 145.763 C.2 Exercised - - - - C.3 Expired 1,962,819 - 439,464 - C.4 Other - - - - D. Outstanding at end of period 776,926 148.718 Jun-2019 2,885,799 126.261 Oct-2018 E. Vested Options at end of period 776,926 148.718 Jun-2019 2,885,799 126.261 Oct-2018 Note: (1) The information related to Number of options and Average exercise price had been modified following the grouping operations resolved by UniCredit Annual General Meeting held on 15 December 2011 and the UniCredit Extraordinary Shareholders’ Meeting on 12 January 2017 and following the application of “adjustment factors” recommended by AIAF (Associazione Italiana Analisti Finanziari) equal to: • 0.88730816 as the free capital increase resolved by the UniCredit Annual General Meeting on 29 April 2009 (“scrip dividend”); • 0.95476659 as the capital increase resolved by the UniCredit Extraordinary Shareholder Meeting on 16 November 2009 and finalized on 24 February 2010; • 0.6586305 as the capital increase resolved by the UniCredit Extraordinary Shareholders’ Meeting on 15 December 2011 and finalized in 2012; • 0.50112555 as the capital increase resolved by the UniCredit Extraordinary Shareholders’ Meeting on 12 January 2017 and finalized on 2 March 2017. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments UniCredit ·2018 Annual Report and Accounts 429 Group Executive Incentive System 2018 (Bonus Pool) The new Group Incentive System 2018 is based on a bonus pool approach, aligned with regulatory requirements and market practices, which defines: • sustainability, through direct link with entity results and alignment with relevant risk categories, utilizing specific indicators linked to risk-appetite framework; • link between bonuses and organization structure, defining the pool at country/division level with further review at Group level; • bonuses allocated to executives and other relevant employee, identified on a basis of European Bank Authority (EBA) rules, according to local regulations; • payment structure has been defined in accordance with regulatory provisions qualified by Directive 2013/36/EU (CRD IV) and will be distributed in a period of six years by using a mix of shares and cash. All profit and loss and net equity effects related to the plan will be booked during the vesting period. 1.2.4. Long Term Incentive 2017-2019 The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. The plan is divided into clusters, based on the beneficiary position, each of which can have from one to four installments of share-based payments spread over a period defined according to plan rules. 1.2.5. FinecoBank stock granting to employees and personal financial advisor (PFA) The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. 1.2.6. FinecoBank incentive system 2015 PFA – cash settled share based payments plan The economic value of phantom shares allocated corresponds to the market price of the FinecoBank shares. The plan was assigned in 2015 and the income statement and the balance sheet effects will be recognized during the vesting period of the instruments. Quantitative information 1. Annual changes Stock Option and Performance Stock Option UniCredit YEAR 2018(1) YEAR 2017(1) ITEMS/NUMBER OF OPTIONS AND EXERCISE PRICE NUMBER OF OPTIONS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY NUMBER OF OPTIONS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY A. Outstanding at beginning of period 2,885,799 126.261 Oct-2018 4,288,319 137.099 Aug-2019 B. Increases - - - - B.1 New issues - - - - B.2 Other - - - - C. Decreases 2,108,873 - 1,402,520 - C.1 Forfeited 146,054 138.239 963,056 145.763 C.2 Exercised - - - - C.3 Expired 1,962,819 - 439,464 - C.4 Other - - - - D. Outstanding at end of period 776,926 148.718 Jun-2019 2,885,799 126.261 Oct-2018 E. Vested Options at end of period 776,926 148.718 Jun-2019 2,885,799 126.261 Oct-2018 Note: (1) The information related to Number of options and Average exercise price had been modified following the grouping operations resolved by UniCredit Annual General Meeting held on 15 December 2011 and the UniCredit Extraordinary Shareholders’ Meeting on 12 January 2017 and following the application of “adjustment factors” recommended by AIAF (Associazione Italiana Analisti Finanziari) equal to: • 0.88730816 as the free capital increase resolved by the UniCredit Annual General Meeting on 29 April 2009 (“scrip dividend”); • 0.95476659 as the capital increase resolved by the UniCredit Extraordinary Shareholder Meeting on 16 November 2009 and finalized on 24 February 2010; • 0.6586305 as the capital increase resolved by the UniCredit Extraordinary Shareholders’ Meeting on 15 December 2011 and finalized in 2012; • 0.50112555 as the capital increase resolved by the UniCredit Extraordinary Shareholders’ Meeting on 12 January 2017 and finalized on 2 March 2017. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments UniCredit ·2018 Annual Report and Accounts 429 Group Executive Incentive System 2018 (Bonus Pool) The new Group Incentive System 2018 is based on a bonus pool approach, aligned with regulatory requirements and market practices, which defines: • sustainability, through direct link with entity results and alignment with relevant risk categories, utilizing specific indicators linked to risk-appetite framework; • link between bonuses and organization structure, defining the pool at country/division level with further review at Group level; • bonuses allocated to executives and other relevant employee, identified on a basis of European Bank Authority (EBA) rules, according to local regulations; • payment structure has been defined in accordance with regulatory provisions qualified by Directive 2013/36/EU (CRD IV) and will be distributed in a period of six years by using a mix of shares and cash. All profit and loss and net equity effects related to the plan will be booked during the vesting period. 1.2.4. Long Term Incentive 2017-2019 The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. The plan is divided into clusters, based on the beneficiary position, each of which can have from one to four installments of share-based payments spread over a period defined according to plan rules. 1.2.5. FinecoBank stock granting to employees and personal financial advisor (PFA) The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. 1.2.6. FinecoBank incentive system 2015 PFA – cash settled share based payments plan The economic value of phantom shares allocated corresponds to the market price of the FinecoBank shares. The plan was assigned in 2015 and the income statement and the balance sheet effects will be recognized during the vesting period of the instruments. Quantitative information 1. Annual changes Stock Option and Performance Stock Option UniCredit YEAR 2018(1) YEAR 2017(1) ITEMS/NUMBER OF OPTIONS AND EXERCISE PRICE NUMBER OF OPTIONS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY NUMBER OF OPTIONS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY A. Outstanding at beginning of period 2,885,799 126.261 Oct-2018 4,288,319 137.099 Aug-2019 B. Increases - - - - B.1 New issues - - - - B.2 Other - - - - C. Decreases 2,108,873 - 1,402,520 - C.1 Forfeited 146,054 138.239 963,056 145.763 C.2 Exercised - - - - C.3 Expired 1,962,819 - 439,464 - C.4 Other - - - - D. Outstanding at end of period 776,926 148.718 Jun-2019 2,885,799 126.261 Oct-2018 E. Vested Options at end of period 776,926 148.718 Jun-2019 2,885,799 126.261 Oct-2018 Note: (1) The information related to Number of options and Average exercise price had been modified following the grouping operations resolved by UniCredit Annual General Meeting held on 15 December 2011 and the UniCredit Extraordinary Shareholders’ Meeting on 12 January 2017 and following the application of “adjustment factors” recommended by AIAF (Associazione Italiana Analisti Finanziari) equal to: • 0.88730816 as the free capital increase resolved by the UniCredit Annual General Meeting on 29 April 2009 (“scrip dividend”); • 0.95476659 as the capital increase resolved by the UniCredit Extraordinary Shareholder Meeting on 16 November 2009 and finalized on 24 February 2010; • 0.6586305 as the capital increase resolved by the UniCredit Extraordinary Shareholders’ Meeting on 15 December 2011 and finalized in 2012; • 0.50112555 as the capital increase resolved by the UniCredit Extraordinary Shareholders’ Meeting on 12 January 2017 and finalized on 2 March 2017. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments UniCredit ·2018 Annual Report and Accounts 429 Group Executive Incentive System 2018 (Bonus Pool) The new Group Incentive System 2018 is based on a bonus pool approach, aligned with regulatory requirements and market practices, which defines: • sustainability, through direct link with entity results and alignment with relevant risk categories, utilizing specific indicators linked to risk-appetite framework; • link between bonuses and organization structure, defining the pool at country/division level with further review at Group level; • bonuses allocated to executives and other relevant employee, identified on a basis of European Bank Authority (EBA) rules, according to local regulations; • payment structure has been defined in accordance with regulatory provisions qualified by Directive 2013/36/EU (CRD IV) and will be distributed in a period of six years by using a mix of shares and cash. All profit and loss and net equity effects related to the plan will be booked during the vesting period. 1.2.4. Long Term Incentive 2017-2019 The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. The plan is divided into clusters, based on the beneficiary position, each of which can have from one to four installments of share-based payments spread over a period defined according to plan rules. 1.2.5. FinecoBank stock granting to employees and personal financial advisor (PFA) The economic value of performance shares is measured considering the share market price at the grant date less the present value of the future dividends during the vesting period. 1.2.6. FinecoBank incentive system 2015 PFA – cash settled share based payments plan The economic value of phantom shares allocated corresponds to the market price of the FinecoBank shares. The plan was assigned in 2015 and the income statement and the balance sheet effects will be recognized during the vesting period of the instruments. Quantitative information 1. Annual changes Stock Option and Performance Stock Option UniCredit YEAR 2018(1) YEAR 2017(1) ITEMS/NUMBER OF OPTIONS AND EXERCISE PRICE NUMBER OF OPTIONS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY NUMBER OF OPTIONS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY A. Outstanding at beginning of period 2,885,799 126.261 Oct-2018 4,288,319 137.099 Aug-2019 B. Increases - - - - B.1 New issues - - - - B.2 Other - - - - C. Decreases 2,108,873 - 1,402,520 - C.1 Forfeited 146,054 138.239 963,056 145.763 C.2 Exercised - - - - C.3 Expired 1,962,819 - 439,464 - C.4 Other - - - - D. Outstanding at end of period 776,926 148.718 Jun-2019 2,885,799 126.261 Oct-2018 E. Vested Options at end of period 776,926 148.718 Jun-2019 2,885,799 126.261 Oct-2018 Note: (1) The information related to Number of options and Average exercise price had been modified following the grouping operations resolved by UniCredit Annual General Meeting held on 15 December 2011 and the UniCredit Extraordinary Shareholders’ Meeting on 12 January 2017 and following the application of “adjustment factors” recommended by AIAF (Associazione Italiana Analisti Finanziari) equal to: • 0.88730816 as the free capital increase resolved by the UniCredit Annual General Meeting on 29 April 2009 (“scrip dividend”); • 0.95476659 as the capital increase resolved by the UniCredit Extraordinary Shareholder Meeting on 16 November 2009 and finalized on 24 February 2010; • 0.6586305 as the capital increase resolved by the UniCredit Extraordinary Shareholders’ Meeting on 15 December 2011 and finalized in 2012; • 0.50112555 as the capital increase resolved by the UniCredit Extraordinary Shareholders’ Meeting on 12 January 2017 and finalized on 2 March 2017. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments 430 2018 Annual Report and Accounts · UniCredit Other UniCredit equity instruments: Performance Shares ITEMS/NUMBER OF OTHER EQUITY INSTRUMENTS AND EXERCISE PRICE YEAR 2018 YEAR 2017(1) NUMBER OF OTHER EQUITY INSTRUMENTS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY NUMBER OF OTHER EQUITY INSTRUMENTS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY A. Outstanding at beginning of period 15,773,637 - Aug-2019 8,515,174 - Feb-2017 B. Increases 3,524,219 - 9,197,282 B.1 New issues 3,524,219 - 9,197,282 - B.2 Other - - 0 C. Decreases 3,813,727 - 1,938,819 C.1 Forfeited 286,259 - 651,780 - C.2 Exercised(2) 3,527,468 - 1,287,039 C.3 Expired - - - - C.4 Other - - - D. Outstanding at end of period(3) 15,484,129 - Dec-2019 15,773,637 - Aug-2019 E. Vested instruments at end of period 2,289,712 - 5,828,989 Notes: (1) The information related to number of options and average exercise price had been modified following the grouping operation resolved by UniCredit Extraordinary Shareholders’ Meeting held on 12 January 2017 and following the application of “adjustment factor” equal to 0.50112555 recommended by AIAF (Associazione Italiana Analisti Finanziari) for the capital increase resolved by the UniCredit Extraordinary Shareholder Meeting on 12 January 2017 and finalized on 2 March 2017. (2) As far as the 2018 movement is concerned, the average market price at the exercise date is equal to €16.48 (€18.54 was the price observed at exercise date for 2017 movimentation) (3) UniCredit undertakes to grant, conditional upon achieving performance targets set in the strategic plan 15,484,129 ordinary shares at the end of 2018 (15,773,637 ordinary shares at the end of 2017). According to Let’s Share 2017 plan rules, in July 2017 it had been delivered to Group participants 176,995 free shares related to services rendered during the period 2017-2018. The said above UniCredit free ordinary shares had been acquired on the market, and are not considered in the table of annual changes. 2. Other Information Effects on Profit and Loss All Share-Based Payment granted after 7 November 2002 whose vesting period ends after 1 January 2005 are included within the scope of the IFRS2. Financial statement presentation related to share based payments (€ '000) 2018 2017 TOTAL VESTED PLANS TOTAL VESTED PLANS (Costs)/Revenues(1) (77,226) (77,135) - connected to equity-settled plans(2) (75,003) (78,626) - connected to cash-settled plans (2,223) 1,491 Debts for cash-settled plans 3,674 - 2,853 - Notes: (1) Includes costs/revenues and debts for plans referred to equity instruments of other Group’s entities (e.g. FinecoBank). (2) Includes costs for €1.9 million related to golden parachute. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments 430 2018 Annual Report and Accounts · UniCredit Other UniCredit equity instruments: Performance Shares ITEMS/NUMBER OF OTHER EQUITY INSTRUMENTS AND EXERCISE PRICE YEAR 2018 YEAR 2017(1) NUMBER OF OTHER EQUITY INSTRUMENTS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY NUMBER OF OTHER EQUITY INSTRUMENTS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY A. Outstanding at beginning of period 15,773,637 - Aug-2019 8,515,174 - Feb-2017 B. Increases 3,524,219 - 9,197,282 B.1 New issues 3,524,219 - 9,197,282 - B.2 Other - - 0 C. Decreases 3,813,727 - 1,938,819 C.1 Forfeited 286,259 - 651,780 - C.2 Exercised(2) 3,527,468 - 1,287,039 C.3 Expired - - - - C.4 Other - - - D. Outstanding at end of period(3) 15,484,129 - Dec-2019 15,773,637 - Aug-2019 E. Vested instruments at end of period 2,289,712 - 5,828,989 Notes: (1) The information related to number of options and average exercise price had been modified following the grouping operation resolved by UniCredit Extraordinary Shareholders’ Meeting held on 12 January 2017 and following the application of “adjustment factor” equal to 0.50112555 recommended by AIAF (Associazione Italiana Analisti Finanziari) for the capital increase resolved by the UniCredit Extraordinary Shareholder Meeting on 12 January 2017 and finalized on 2 March 2017. (2) As far as the 2018 movement is concerned, the average market price at the exercise date is equal to €16.48 (€18.54 was the price observed at exercise date for 2017 movimentation) (3) UniCredit undertakes to grant, conditional upon achieving performance targets set in the strategic plan 15,484,129 ordinary shares at the end of 2018 (15,773,637 ordinary shares at the end of 2017). According to Let’s Share 2017 plan rules, in July 2017 it had been delivered to Group participants 176,995 free shares related to services rendered during the period 2017-2018. The said above UniCredit free ordinary shares had been acquired on the market, and are not considered in the table of annual changes. 2. Other Information Effects on Profit and Loss All Share-Based Payment granted after 7 November 2002 whose vesting period ends after 1 January 2005 are included within the scope of the IFRS2. Financial statement presentation related to share based payments (€ '000) 2018 2017 TOTAL VESTED PLANS TOTAL VESTED PLANS (Costs)/Revenues(1) (77,226) (77,135) - connected to equity-settled plans(2) (75,003) (78,626) - connected to cash-settled plans (2,223) 1,491 Debts for cash-settled plans 3,674 - 2,853 - Notes: (1) Includes costs/revenues and debts for plans referred to equity instruments of other Group’s entities (e.g. FinecoBank). (2) Includes costs for €1.9 million related to golden parachute. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments 430 2018 Annual Report and Accounts · UniCredit Other UniCredit equity instruments: Performance Shares ITEMS/NUMBER OF OTHER EQUITY INSTRUMENTS AND EXERCISE PRICE YEAR 2018 YEAR 2017(1) NUMBER OF OTHER EQUITY INSTRUMENTS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY NUMBER OF OTHER EQUITY INSTRUMENTS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY A. Outstanding at beginning of period 15,773,637 - Aug-2019 8,515,174 - Feb-2017 B. Increases 3,524,219 - 9,197,282 B.1 New issues 3,524,219 - 9,197,282 - B.2 Other - - 0 C. Decreases 3,813,727 - 1,938,819 C.1 Forfeited 286,259 - 651,780 - C.2 Exercised(2) 3,527,468 - 1,287,039 C.3 Expired - - - - C.4 Other - - - D. Outstanding at end of period(3) 15,484,129 - Dec-2019 15,773,637 - Aug-2019 E. Vested instruments at end of period 2,289,712 - 5,828,989 Notes: (1) The information related to number of options and average exercise price had been modified following the grouping operation resolved by UniCredit Extraordinary Shareholders’ Meeting held on 12 January 2017 and following the application of “adjustment factor” equal to 0.50112555 recommended by AIAF (Associazione Italiana Analisti Finanziari) for the capital increase resolved by the UniCredit Extraordinary Shareholder Meeting on 12 January 2017 and finalized on 2 March 2017. (2) As far as the 2018 movement is concerned, the average market price at the exercise date is equal to €16.48 (€18.54 was the price observed at exercise date for 2017 movimentation) (3) UniCredit undertakes to grant, conditional upon achieving performance targets set in the strategic plan 15,484,129 ordinary shares at the end of 2018 (15,773,637 ordinary shares at the end of 2017). According to Let’s Share 2017 plan rules, in July 2017 it had been delivered to Group participants 176,995 free shares related to services rendered during the period 2017-2018. The said above UniCredit free ordinary shares had been acquired on the market, and are not considered in the table of annual changes. 2. Other Information Effects on Profit and Loss All Share-Based Payment granted after 7 November 2002 whose vesting period ends after 1 January 2005 are included within the scope of the IFRS2. Financial statement presentation related to share based payments (€ '000) 2018 2017 TOTAL VESTED PLANS TOTAL VESTED PLANS (Costs)/Revenues(1) (77,226) (77,135) - connected to equity-settled plans(2) (75,003) (78,626) - connected to cash-settled plans (2,223) 1,491 Debts for cash-settled plans 3,674 - 2,853 - Notes: (1) Includes costs/revenues and debts for plans referred to equity instruments of other Group’s entities (e.g. FinecoBank). (2) Includes costs for €1.9 million related to golden parachute. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments 430 2018 Annual Report and Accounts · UniCredit Other UniCredit equity instruments: Performance Shares ITEMS/NUMBER OF OTHER EQUITY INSTRUMENTS AND EXERCISE PRICE YEAR 2018 YEAR 2017(1) NUMBER OF OTHER EQUITY INSTRUMENTS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY NUMBER OF OTHER EQUITY INSTRUMENTS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY A. Outstanding at beginning of period 15,773,637 - Aug-2019 8,515,174 - Feb-2017 B. Increases 3,524,219 - 9,197,282 B.1 New issues 3,524,219 - 9,197,282 - B.2 Other - - 0 C. Decreases 3,813,727 - 1,938,819 C.1 Forfeited 286,259 - 651,780 - C.2 Exercised(2) 3,527,468 - 1,287,039 C.3 Expired - - - - C.4 Other - - - D. Outstanding at end of period(3) 15,484,129 - Dec-2019 15,773,637 - Aug-2019 E. Vested instruments at end of period 2,289,712 - 5,828,989 Notes: (1) The information related to number of options and average exercise price had been modified following the grouping operation resolved by UniCredit Extraordinary Shareholders’ Meeting held on 12 January 2017 and following the application of “adjustment factor” equal to 0.50112555 recommended by AIAF (Associazione Italiana Analisti Finanziari) for the capital increase resolved by the UniCredit Extraordinary Shareholder Meeting on 12 January 2017 and finalized on 2 March 2017. (2) As far as the 2018 movement is concerned, the average market price at the exercise date is equal to €16.48 (€18.54 was the price observed at exercise date for 2017 movimentation) (3) UniCredit undertakes to grant, conditional upon achieving performance targets set in the strategic plan 15,484,129 ordinary shares at the end of 2018 (15,773,637 ordinary shares at the end of 2017). According to Let’s Share 2017 plan rules, in July 2017 it had been delivered to Group participants 176,995 free shares related to services rendered during the period 2017-2018. The said above UniCredit free ordinary shares had been acquired on the market, and are not considered in the table of annual changes. 2. Other Information Effects on Profit and Loss All Share-Based Payment granted after 7 November 2002 whose vesting period ends after 1 January 2005 are included within the scope of the IFRS2. Financial statement presentation related to share based payments (€ '000) 2018 2017 TOTAL VESTED PLANS TOTAL VESTED PLANS (Costs)/Revenues(1) (77,226) (77,135) - connected to equity-settled plans(2) (75,003) (78,626) - connected to cash-settled plans (2,223) 1,491 Debts for cash-settled plans 3,674 - 2,853 - Notes: (1) Includes costs/revenues and debts for plans referred to equity instruments of other Group’s entities (e.g. FinecoBank). (2) Includes costs for €1.9 million related to golden parachute. Consolidated financial statements | Notes to the consolidated accounts Part I - Share-based payments 430 2018 Annual Report and Accounts · UniCredit Other UniCredit equity instruments: Performance Shares ITEMS/NUMBER OF OTHER EQUITY INSTRUMENTS AND EXERCISE PRICE YEAR 2018 YEAR 2017(1) NUMBER OF OTHER EQUITY INSTRUMENTS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY NUMBER OF OTHER EQUITY INSTRUMENTS AVERAGE EXERCISE PRICE [€] AVERAGE MATURITY A. Outstanding at beginning of period 15,773,637 - Aug-2019 8,515,174 - Feb-2017 B. Increases 3,524,219 - 9,197,282 B.1 New issues 3,524,219 - 9,197,282 - B.2 Other - - 0 C. Decreases 3,813,727 - 1,938,819 C.1 Forfeited 286,259 - 651,780 - C.2 Exercised(2) 3,527,468 - 1,287,039 C.3 Expired - - - - C.4 Other - - - D. Outstanding at end of period(3) 15,484,129 - Dec-2019 15,773,637 - Aug-2019 E. Vested instruments at end of period 2,289,712 - 5,828,989 Notes: (1) The information related to number of options and average exercise price had been modified following the grouping operation resolved by UniCredit Extraordinary Shareholders’ Meeting held on 12 January 2017 and following the application of “adjustment factor” equal to 0.50112555 recommended by AIAF (Associazione Italiana Analisti Finanziari) for the capital increase resolved by the UniCredit Extraordinary Shareholder Meeting on 12 January 2017 and finalized on 2 March 2017. (2) As far as the 2018 movement is concerned, the average market price at the exercise date is equal to €16.48 (€18.54 was the price observed at exercise date for 2017 movimentation) (3) UniCredit undertakes to grant, conditional upon achieving performance targets set in the strategic plan 15,484,129 ordinary shares at the end of 2018 (15,773,637 ordinary shares at the end of 2017). According to Let’s Share 2017 plan rules, in July 2017 it had been delivered to Group participants 176,995 free shares related to services rendered during the period 2017-2018. The said above UniCredit free ordinary shares had been acquired on the market, and are not considered in the table of annual changes. 2. Other Information Effects on Profit and Loss All Share-Based Payment granted after 7 November 2002 whose vesting period ends after 1 January 2005 are included within the scope of the IFRS2. Financial statement presentation related to share based payments (€ '000) 2018 2017 TOTAL VESTED PLANS TOTAL VESTED PLANS (Costs)/Revenues(1) (77,226) (77,135) - connected to equity-settled plans(2) (75,003) (78,626) - connected to cash-settled plans (2,223) 1,491 Debts for cash-settled plans 3,674 - 2,853 - Notes: (1) Includes costs/revenues and debts for plans referred to equity instruments of other Group’s entities (e.g. FinecoBank). (2) Includes costs for €1.9 million related to golden parachute. Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 431 Part L - Segment reporting Organizational structure The format for segment information reflects the organisational structure currently used in management reporting for monitoring the Group’s results, which is broken down into the following business segments: Commercial Banking Italy, Commercial Banking Germany, Commercial Banking Austria, Corporate & Investment Banking (CIB), Central and Eastern Europe (CEE), Fineco, Group Corporate Center and Non core. Commercial Banking Italy Commercial Banking Italy is composed by UniCredit S.p.A. commercial network related to Core clients (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division), Leasing (excluding Non core clients), Factoring and local Corporate Center with supporting functions for the Italian business. In relation to individual clients (Households and clients of specialised network Private Banking), Commercial Banking Italy’s goal is to offer a full range of products and services to fulfill transactional, investments and credit needs, relying on branches and multichannel services provided thanks to new technologies. In relation to corporate customers, Commercial Banking Italy operates trying to guarantee both the support to the economic and entrepreneurial system and the profitability and quality of its portfolio. The current Corporate channel is organised on the territory with about 685 Managers divided in 56 Corporate Areas. The territorial organisation promotes a bank closer to customers and faster decision-making processes, while the belonging to UniCredit group allows to support companies in developing international attitudes. Commercial Banking Germany Commercial Banking Germany provides all German customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services through its branch network. Commercial Banking Germany holds large market shares and a strategic market position in retail banking, in private banking and especially in business with local corporate customers (including factoring and leasing). Different service models are applied in line with the needs of its various customer groups: retail customers, private banking customers, small business and corporate customers, commercial real estate customers and wealth management customers. In particular: the Corporate segment employs a different “Mittelstand” bank model to its competitors in that it serves both business and personal needs across the whole bandwidth of German enterprises and firms operating in Germany; the private clients segment serves retail customers and private banking customers with banking and insurance solutions across all areas of demand. In detail, all-round advisory offering reflects the individual and differentiated needs of these customer groups in terms of relationship model and product offering. Commercial Banking Italy segment also includes the local Corporate Center, which performs tasks as sub-holding towards other sub-group legal entities. Commercial Banking Austria Commercial Banking Austria provides its Austrian customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services. It is composed of: Retail, Corporate (excluding CIB clients, but including the product factories Factoring and Leasing), Private Banking (with its two well-known brands Bank Austria Private Banking and Schoellerbank AG) and the local Corporate Center. Retail covers business with private individuals, ranging from mass-market to affluent customers and business customers. Corporates covers the entire range of SMEs, medium-sized and large companies which do not access capital markets (including real estate and public sector). A broad coverage of the Retail and Corporate business lines is ensured through its nation-wide branch network. Commercial Banking Austria holds significant market shares and a strategic market position in retail banking, private banking and especially in business with local corporate customers and is one of the leading providers of banking services in Austria. Commercial Banking Austria applies an integrated service model, allowing clients to decide when, where and how they contact UniCredit Bank Austria. This approach combines classic branches which are continuously modernised, new formats of advisory service centres and modern self-service branches, internet solutions, mobile banking with innovative apps and contact to relationship managers via video-telephony. Corporate & Investment Banking (CIB) The CIB Division targets mainly Large Corporate and Multinational clients with highly sophisticated financial profile and needs for investment banking services, as well as institutional clients of UniCredit group. CIB serves Group’s clients across 32 countries with a wide range of specialised products and services, combining geographical proximity with an high expertise in all segments in which it is active. Moreover CIB acts as products and solutions provider for the commercial network, provides structured financing, hedging and treasury solutions for corporate and investment products for private and retail, according to the “CIB fully plugged-in concept”. In the light of a more integrated client offering, Joint Venture between Commercial Banking and CIB division have been set up in Italy and Germany, with the objective to increase cross selling of investment banking products (M&A, Capital Markets and derivatives) to commercial banking clients. Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 431 Part L - Segment reporting Organizational structure The format for segment information reflects the organisational structure currently used in management reporting for monitoring the Group’s results, which is broken down into the following business segments: Commercial Banking Italy, Commercial Banking Germany, Commercial Banking Austria, Corporate & Investment Banking (CIB), Central and Eastern Europe (CEE), Fineco, Group Corporate Center and Non core. Commercial Banking Italy Commercial Banking Italy is composed by UniCredit S.p.A. commercial network related to Core clients (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division), Leasing (excluding Non core clients), Factoring and local Corporate Center with supporting functions for the Italian business. In relation to individual clients (Households and clients of specialised network Private Banking), Commercial Banking Italy’s goal is to offer a full range of products and services to fulfill transactional, investments and credit needs, relying on branches and multichannel services provided thanks to new technologies. In relation to corporate customers, Commercial Banking Italy operates trying to guarantee both the support to the economic and entrepreneurial system and the profitability and quality of its portfolio. The current Corporate channel is organised on the territory with about 685 Managers divided in 56 Corporate Areas. The territorial organisation promotes a bank closer to customers and faster decision-making processes, while the belonging to UniCredit group allows to support companies in developing international attitudes. Commercial Banking Germany Commercial Banking Germany provides all German customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services through its branch network. Commercial Banking Germany holds large market shares and a strategic market position in retail banking, in private banking and especially in business with local corporate customers (including factoring and leasing). Different service models are applied in line with the needs of its various customer groups: retail customers, private banking customers, small business and corporate customers, commercial real estate customers and wealth management customers. In particular: the Corporate segment employs a different “Mittelstand” bank model to its competitors in that it serves both business and personal needs across the whole bandwidth of German enterprises and firms operating in Germany; the private clients segment serves retail customers and private banking customers with banking and insurance solutions across all areas of demand. In detail, all-round advisory offering reflects the individual and differentiated needs of these customer groups in terms of relationship model and product offering. Commercial Banking Italy segment also includes the local Corporate Center, which performs tasks as sub-holding towards other sub-group legal entities. Commercial Banking Austria Commercial Banking Austria provides its Austrian customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services. It is composed of: Retail, Corporate (excluding CIB clients, but including the product factories Factoring and Leasing), Private Banking (with its two well-known brands Bank Austria Private Banking and Schoellerbank AG) and the local Corporate Center. Retail covers business with private individuals, ranging from mass-market to affluent customers and business customers. Corporates covers the entire range of SMEs, medium-sized and large companies which do not access capital markets (including real estate and public sector). A broad coverage of the Retail and Corporate business lines is ensured through its nation-wide branch network. Commercial Banking Austria holds significant market shares and a strategic market position in retail banking, private banking and especially in business with local corporate customers and is one of the leading providers of banking services in Austria. Commercial Banking Austria applies an integrated service model, allowing clients to decide when, where and how they contact UniCredit Bank Austria. This approach combines classic branches which are continuously modernised, new formats of advisory service centres and modern self-service branches, internet solutions, mobile banking with innovative apps and contact to relationship managers via video-telephony. Corporate & Investment Banking (CIB) The CIB Division targets mainly Large Corporate and Multinational clients with highly sophisticated financial profile and needs for investment banking services, as well as institutional clients of UniCredit group. CIB serves Group’s clients across 32 countries with a wide range of specialised products and services, combining geographical proximity with an high expertise in all segments in which it is active. Moreover CIB acts as products and solutions provider for the commercial network, provides structured financing, hedging and treasury solutions for corporate and investment products for private and retail, according to the “CIB fully plugged-in concept”. In the light of a more integrated client offering, Joint Venture between Commercial Banking and CIB division have been set up in Italy and Germany, with the objective to increase cross selling of investment banking products (M&A, Capital Markets and derivatives) to commercial banking clients. Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 431 Part L - Segment reporting Organizational structure The format for segment information reflects the organisational structure currently used in management reporting for monitoring the Group’s results, which is broken down into the following business segments: Commercial Banking Italy, Commercial Banking Germany, Commercial Banking Austria, Corporate & Investment Banking (CIB), Central and Eastern Europe (CEE), Fineco, Group Corporate Center and Non core. Commercial Banking Italy Commercial Banking Italy is composed by UniCredit S.p.A. commercial network related to Core clients (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division), Leasing (excluding Non core clients), Factoring and local Corporate Center with supporting functions for the Italian business. In relation to individual clients (Households and clients of specialised network Private Banking), Commercial Banking Italy’s goal is to offer a full range of products and services to fulfill transactional, investments and credit needs, relying on branches and multichannel services provided thanks to new technologies. In relation to corporate customers, Commercial Banking Italy operates trying to guarantee both the support to the economic and entrepreneurial system and the profitability and quality of its portfolio. The current Corporate channel is organised on the territory with about 685 Managers divided in 56 Corporate Areas. The territorial organisation promotes a bank closer to customers and faster decision-making processes, while the belonging to UniCredit group allows to support companies in developing international attitudes. Commercial Banking Germany Commercial Banking Germany provides all German customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services through its branch network. Commercial Banking Germany holds large market shares and a strategic market position in retail banking, in private banking and especially in business with local corporate customers (including factoring and leasing). Different service models are applied in line with the needs of its various customer groups: retail customers, private banking customers, small business and corporate customers, commercial real estate customers and wealth management customers. In particular: the Corporate segment employs a different “Mittelstand” bank model to its competitors in that it serves both business and personal needs across the whole bandwidth of German enterprises and firms operating in Germany; the private clients segment serves retail customers and private banking customers with banking and insurance solutions across all areas of demand. In detail, all-round advisory offering reflects the individual and differentiated needs of these customer groups in terms of relationship model and product offering. Commercial Banking Italy segment also includes the local Corporate Center, which performs tasks as sub-holding towards other sub-group legal entities. Commercial Banking Austria Commercial Banking Austria provides its Austrian customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services. It is composed of: Retail, Corporate (excluding CIB clients, but including the product factories Factoring and Leasing), Private Banking (with its two well-known brands Bank Austria Private Banking and Schoellerbank AG) and the local Corporate Center. Retail covers business with private individuals, ranging from mass-market to affluent customers and business customers. Corporates covers the entire range of SMEs, medium-sized and large companies which do not access capital markets (including real estate and public sector). A broad coverage of the Retail and Corporate business lines is ensured through its nation-wide branch network. Commercial Banking Austria holds significant market shares and a strategic market position in retail banking, private banking and especially in business with local corporate customers and is one of the leading providers of banking services in Austria. Commercial Banking Austria applies an integrated service model, allowing clients to decide when, where and how they contact UniCredit Bank Austria. This approach combines classic branches which are continuously modernised, new formats of advisory service centres and modern self-service branches, internet solutions, mobile banking with innovative apps and contact to relationship managers via video-telephony. Corporate & Investment Banking (CIB) The CIB Division targets mainly Large Corporate and Multinational clients with highly sophisticated financial profile and needs for investment banking services, as well as institutional clients of UniCredit group. CIB serves Group’s clients across 32 countries with a wide range of specialised products and services, combining geographical proximity with an high expertise in all segments in which it is active. Moreover CIB acts as products and solutions provider for the commercial network, provides structured financing, hedging and treasury solutions for corporate and investment products for private and retail, according to the “CIB fully plugged-in concept”. In the light of a more integrated client offering, Joint Venture between Commercial Banking and CIB division have been set up in Italy and Germany, with the objective to increase cross selling of investment banking products (M&A, Capital Markets and derivatives) to commercial banking clients. Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 431 Part L - Segment reporting Organizational structure The format for segment information reflects the organisational structure currently used in management reporting for monitoring the Group’s results, which is broken down into the following business segments: Commercial Banking Italy, Commercial Banking Germany, Commercial Banking Austria, Corporate & Investment Banking (CIB), Central and Eastern Europe (CEE), Fineco, Group Corporate Center and Non core. Commercial Banking Italy Commercial Banking Italy is composed by UniCredit S.p.A. commercial network related to Core clients (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division), Leasing (excluding Non core clients), Factoring and local Corporate Center with supporting functions for the Italian business. In relation to individual clients (Households and clients of specialised network Private Banking), Commercial Banking Italy’s goal is to offer a full range of products and services to fulfill transactional, investments and credit needs, relying on branches and multichannel services provided thanks to new technologies. In relation to corporate customers, Commercial Banking Italy operates trying to guarantee both the support to the economic and entrepreneurial system and the profitability and quality of its portfolio. The current Corporate channel is organised on the territory with about 685 Managers divided in 56 Corporate Areas. The territorial organisation promotes a bank closer to customers and faster decision-making processes, while the belonging to UniCredit group allows to support companies in developing international attitudes. Commercial Banking Germany Commercial Banking Germany provides all German customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services through its branch network. Commercial Banking Germany holds large market shares and a strategic market position in retail banking, in private banking and especially in business with local corporate customers (including factoring and leasing). Different service models are applied in line with the needs of its various customer groups: retail customers, private banking customers, small business and corporate customers, commercial real estate customers and wealth management customers. In particular: the Corporate segment employs a different “Mittelstand” bank model to its competitors in that it serves both business and personal needs across the whole bandwidth of German enterprises and firms operating in Germany; the private clients segment serves retail customers and private banking customers with banking and insurance solutions across all areas of demand. In detail, all-round advisory offering reflects the individual and differentiated needs of these customer groups in terms of relationship model and product offering. Commercial Banking Italy segment also includes the local Corporate Center, which performs tasks as sub-holding towards other sub-group legal entities. Commercial Banking Austria Commercial Banking Austria provides its Austrian customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services. It is composed of: Retail, Corporate (excluding CIB clients, but including the product factories Factoring and Leasing), Private Banking (with its two well-known brands Bank Austria Private Banking and Schoellerbank AG) and the local Corporate Center. Retail covers business with private individuals, ranging from mass-market to affluent customers and business customers. Corporates covers the entire range of SMEs, medium-sized and large companies which do not access capital markets (including real estate and public sector). A broad coverage of the Retail and Corporate business lines is ensured through its nation-wide branch network. Commercial Banking Austria holds significant market shares and a strategic market position in retail banking, private banking and especially in business with local corporate customers and is one of the leading providers of banking services in Austria. Commercial Banking Austria applies an integrated service model, allowing clients to decide when, where and how they contact UniCredit Bank Austria. This approach combines classic branches which are continuously modernised, new formats of advisory service centres and modern self-service branches, internet solutions, mobile banking with innovative apps and contact to relationship managers via video-telephony. Corporate & Investment Banking (CIB) The CIB Division targets mainly Large Corporate and Multinational clients with highly sophisticated financial profile and needs for investment banking services, as well as institutional clients of UniCredit group. CIB serves Group’s clients across 32 countries with a wide range of specialised products and services, combining geographical proximity with an high expertise in all segments in which it is active. Moreover CIB acts as products and solutions provider for the commercial network, provides structured financing, hedging and treasury solutions for corporate and investment products for private and retail, according to the “CIB fully plugged-in concept”. In the light of a more integrated client offering, Joint Venture between Commercial Banking and CIB division have been set up in Italy and Germany, with the objective to increase cross selling of investment banking products (M&A, Capital Markets and derivatives) to commercial banking clients. Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 431 Part L - Segment reporting Organizational structure The format for segment information reflects the organisational structure currently used in management reporting for monitoring the Group’s results, which is broken down into the following business segments: Commercial Banking Italy, Commercial Banking Germany, Commercial Banking Austria, Corporate & Investment Banking (CIB), Central and Eastern Europe (CEE), Fineco, Group Corporate Center and Non core. Commercial Banking Italy Commercial Banking Italy is composed by UniCredit S.p.A. commercial network related to Core clients (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division), Leasing (excluding Non core clients), Factoring and local Corporate Center with supporting functions for the Italian business. In relation to individual clients (Households and clients of specialised network Private Banking), Commercial Banking Italy’s goal is to offer a full range of products and services to fulfill transactional, investments and credit needs, relying on branches and multichannel services provided thanks to new technologies. In relation to corporate customers, Commercial Banking Italy operates trying to guarantee both the support to the economic and entrepreneurial system and the profitability and quality of its portfolio. The current Corporate channel is organised on the territory with about 685 Managers divided in 56 Corporate Areas. The territorial organisation promotes a bank closer to customers and faster decision-making processes, while the belonging to UniCredit group allows to support companies in developing international attitudes. Commercial Banking Germany Commercial Banking Germany provides all German customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services through its branch network. Commercial Banking Germany holds large market shares and a strategic market position in retail banking, in private banking and especially in business with local corporate customers (including factoring and leasing). Different service models are applied in line with the needs of its various customer groups: retail customers, private banking customers, small business and corporate customers, commercial real estate customers and wealth management customers. In particular: the Corporate segment employs a different “Mittelstand” bank model to its competitors in that it serves both business and personal needs across the whole bandwidth of German enterprises and firms operating in Germany; the private clients segment serves retail customers and private banking customers with banking and insurance solutions across all areas of demand. In detail, all-round advisory offering reflects the individual and differentiated needs of these customer groups in terms of relationship model and product offering. Commercial Banking Italy segment also includes the local Corporate Center, which performs tasks as sub-holding towards other sub-group legal entities. Commercial Banking Austria Commercial Banking Austria provides its Austrian customers (excluding Large Corporate and Multinational clients, supported by Corporate and Investment Banking Division) with a complete range of banking products and services. It is composed of: Retail, Corporate (excluding CIB clients, but including the product factories Factoring and Leasing), Private Banking (with its two well-known brands Bank Austria Private Banking and Schoellerbank AG) and the local Corporate Center. Retail covers business with private individuals, ranging from mass-market to affluent customers and business customers. Corporates covers the entire range of SMEs, medium-sized and large companies which do not access capital markets (including real estate and public sector). A broad coverage of the Retail and Corporate business lines is ensured through its nation-wide branch network. Commercial Banking Austria holds significant market shares and a strategic market position in retail banking, private banking and especially in business with local corporate customers and is one of the leading providers of banking services in Austria. Commercial Banking Austria applies an integrated service model, allowing clients to decide when, where and how they contact UniCredit Bank Austria. This approach combines classic branches which are continuously modernised, new formats of advisory service centres and modern self-service branches, internet solutions, mobile banking with innovative apps and contact to relationship managers via video-telephony. Corporate & Investment Banking (CIB) The CIB Division targets mainly Large Corporate and Multinational clients with highly sophisticated financial profile and needs for investment banking services, as well as institutional clients of UniCredit group. CIB serves Group’s clients across 32 countries with a wide range of specialised products and services, combining geographical proximity with an high expertise in all segments in which it is active. Moreover CIB acts as products and solutions provider for the commercial network, provides structured financing, hedging and treasury solutions for corporate and investment products for private and retail, according to the “CIB fully plugged-in concept”. In the light of a more integrated client offering, Joint Venture between Commercial Banking and CIB division have been set up in Italy and Germany, with the objective to increase cross selling of investment banking products (M&A, Capital Markets and derivatives) to commercial banking clients. Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting 432 2018 Annual Report and Accounts · UniCredit The organisational structure of CIB is based on a matrix that integrates market coverage (carried out through an extensive network in Western, Central and Eastern Europe and an international network of branches and representative offices) and product offering (divided into three Product Lines that consolidate the breadth of the Group’s CIB know-how). The dedicated commercial networks (CIB Network Italy, CIB Network Germany, CIB Network Austria, CIB Network France, International Network, Financial Institutions Group) are responsible for the relationships with corporate clients, banks and financial institutions as well as the sale of a broad range of financial products and services, ranging from traditional lending and merchant banking operations to more sophisticated services with high added value, such as project finance, acquisition finance and other investment banking services and operations in international financial markets. The three following Product Lines supplement and add value to the activities of the commercial networks and the marketing of the relevant products: • Financing and Advisory (F&A) - F&A is the expertise center for all business operations related to credit and advisory services for corporate and institutional clients. It is responsible for providing a wide variety of products and services ranging from plain vanilla and standardized products, extending to more sophisticated products such as Capital Markets (Equity and Debt Capital Markets), Corporate Finance and Advisory, Syndications, Leverage Buy-Out, Project and Commodity Finance, Real Estate Finance, Structured Trade and Export Finance; • Markets - Markets is the centre specialized for all financial markets activities and serves as the Group’s access point to the capital markets. This results in a highly complementary international platform with a strong presence in emerging European financial markets. As a centralized product line, it is responsible for the coordination of financial markets-related activities, including the structuring of products such as FX, Rates, Equities and credit related activities; • Global Transaction Banking (GTB) - GTB is the centre for Cash Management, e-banking, Supply Chain Finance and Trade Finance products and global securities services. Central and Eastern Europe (CEE) The Group operates, through the CEE business segment, in 12 Central and Eastern Europe countries: Azerbaijan, Bosnia- Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey; having, in addition, Leasing activities in the 3 Baltic countries. The CEE business segment offers a wide range of products and services to retail, corporate and institutional clients in these countries. UniCredit Group is able to offer its retail customers in the CEE countries a broad portfolio of products and services similar to those offered to its Italian, German and Austrian customers. With respect to corporate clients, UniCredit group is constantly engaged in standardizing the customer segments and range of products. The Group shares its business models on an international level in order to ensure access to its network in any country where the Group is present. This approach is vital due to the variety of global products offered, particularly cash management and trade finance solutions to corporate customers operating in more than one CEE country. Fineco FinecoBank, the multichannel bank of the UniCredit group, is one of the most important FinTech banks in Europe. It offers from a single account banking, credit, trading and investment services though transactional and advisory platform developed with proprietary technologies, and combined with one of the largest financial advisory network in Italy. Fineco is a bank leader in brokerage in Europe, and one of the most important player in Private Banking in Italy, offering tailor-made advisory services. Since 2017, FinecoBank is also in UK with an offer focused on brokerage and banking services. Group Corporate Center The Group Corporate Center’s objective is to lead, control and support the management of the assets and related risks of the Group as a whole and of the single Group companies in their respective areas of competence. In this framework, an important objective is to optimize costs and internal processes guaranteeing operating excellence and supporting the sustainable growth of the business lines. Non core Starting from the first quarter 2014 the Group decided to introduce a clear distinction between above described activities defined as core segment, meaning strategic business segments and in line with risk strategies, , and activities defined as non-core segment, including non-strategic assets and those with a poor fit to the Group’s risk-adjusted return framework, with the aim of reducing the overall exposure of this last segment in the course of time and to improve the risk profile. Specifically, the non-core segment includes selected assets of Commercial Banking Italy (identified on a single deal/client basis) to be managed with a risk mitigation approach and some special vehicles for securitization operations. Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting 432 2018 Annual Report and Accounts · UniCredit The organisational structure of CIB is based on a matrix that integrates market coverage (carried out through an extensive network in Western, Central and Eastern Europe and an international network of branches and representative offices) and product offering (divided into three Product Lines that consolidate the breadth of the Group’s CIB know-how). The dedicated commercial networks (CIB Network Italy, CIB Network Germany, CIB Network Austria, CIB Network France, International Network, Financial Institutions Group) are responsible for the relationships with corporate clients, banks and financial institutions as well as the sale of a broad range of financial products and services, ranging from traditional lending and merchant banking operations to more sophisticated services with high added value, such as project finance, acquisition finance and other investment banking services and operations in international financial markets. The three following Product Lines supplement and add value to the activities of the commercial networks and the marketing of the relevant products: • Financing and Advisory (F&A) - F&A is the expertise center for all business operations related to credit and advisory services for corporate and institutional clients. It is responsible for providing a wide variety of products and services ranging from plain vanilla and standardized products, extending to more sophisticated products such as Capital Markets (Equity and Debt Capital Markets), Corporate Finance and Advisory, Syndications, Leverage Buy-Out, Project and Commodity Finance, Real Estate Finance, Structured Trade and Export Finance; • Markets - Markets is the centre specialized for all financial markets activities and serves as the Group’s access point to the capital markets. This results in a highly complementary international platform with a strong presence in emerging European financial markets. As a centralized product line, it is responsible for the coordination of financial markets-related activities, including the structuring of products such as FX, Rates, Equities and credit related activities; • Global Transaction Banking (GTB) - GTB is the centre for Cash Management, e-banking, Supply Chain Finance and Trade Finance products and global securities services. Central and Eastern Europe (CEE) The Group operates, through the CEE business segment, in 12 Central and Eastern Europe countries: Azerbaijan, Bosnia- Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey; having, in addition, Leasing activities in the 3 Baltic countries. The CEE business segment offers a wide range of products and services to retail, corporate and institutional clients in these countries. UniCredit Group is able to offer its retail customers in the CEE countries a broad portfolio of products and services similar to those offered to its Italian, German and Austrian customers. With respect to corporate clients, UniCredit group is constantly engaged in standardizing the customer segments and range of products. The Group shares its business models on an international level in order to ensure access to its network in any country where the Group is present. This approach is vital due to the variety of global products offered, particularly cash management and trade finance solutions to corporate customers operating in more than one CEE country. Fineco FinecoBank, the multichannel bank of the UniCredit group, is one of the most important FinTech banks in Europe. It offers from a single account banking, credit, trading and investment services though transactional and advisory platform developed with proprietary technologies, and combined with one of the largest financial advisory network in Italy. Fineco is a bank leader in brokerage in Europe, and one of the most important player in Private Banking in Italy, offering tailor-made advisory services. Since 2017, FinecoBank is also in UK with an offer focused on brokerage and banking services. Group Corporate Center The Group Corporate Center’s objective is to lead, control and support the management of the assets and related risks of the Group as a whole and of the single Group companies in their respective areas of competence. In this framework, an important objective is to optimize costs and internal processes guaranteeing operating excellence and supporting the sustainable growth of the business lines. Non core Starting from the first quarter 2014 the Group decided to introduce a clear distinction between above described activities defined as core segment, meaning strategic business segments and in line with risk strategies, , and activities defined as non-core segment, including non-strategic assets and those with a poor fit to the Group’s risk-adjusted return framework, with the aim of reducing the overall exposure of this last segment in the course of time and to improve the risk profile. Specifically, the non-core segment includes selected assets of Commercial Banking Italy (identified on a single deal/client basis) to be managed with a risk mitigation approach and some special vehicles for securitization operations. Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting 432 2018 Annual Report and Accounts · UniCredit The organisational structure of CIB is based on a matrix that integrates market coverage (carried out through an extensive network in Western, Central and Eastern Europe and an international network of branches and representative offices) and product offering (divided into three Product Lines that consolidate the breadth of the Group’s CIB know-how). The dedicated commercial networks (CIB Network Italy, CIB Network Germany, CIB Network Austria, CIB Network France, International Network, Financial Institutions Group) are responsible for the relationships with corporate clients, banks and financial institutions as well as the sale of a broad range of financial products and services, ranging from traditional lending and merchant banking operations to more sophisticated services with high added value, such as project finance, acquisition finance and other investment banking services and operations in international financial markets. The three following Product Lines supplement and add value to the activities of the commercial networks and the marketing of the relevant products: • Financing and Advisory (F&A) - F&A is the expertise center for all business operations related to credit and advisory services for corporate and institutional clients. It is responsible for providing a wide variety of products and services ranging from plain vanilla and standardized products, extending to more sophisticated products such as Capital Markets (Equity and Debt Capital Markets), Corporate Finance and Advisory, Syndications, Leverage Buy-Out, Project and Commodity Finance, Real Estate Finance, Structured Trade and Export Finance; • Markets - Markets is the centre specialized for all financial markets activities and serves as the Group’s access point to the capital markets. This results in a highly complementary international platform with a strong presence in emerging European financial markets. As a centralized product line, it is responsible for the coordination of financial markets-related activities, including the structuring of products such as FX, Rates, Equities and credit related activities; • Global Transaction Banking (GTB) - GTB is the centre for Cash Management, e-banking, Supply Chain Finance and Trade Finance products and global securities services. Central and Eastern Europe (CEE) The Group operates, through the CEE business segment, in 12 Central and Eastern Europe countries: Azerbaijan, Bosnia- Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey; having, in addition, Leasing activities in the 3 Baltic countries. The CEE business segment offers a wide range of products and services to retail, corporate and institutional clients in these countries. UniCredit Group is able to offer its retail customers in the CEE countries a broad portfolio of products and services similar to those offered to its Italian, German and Austrian customers. With respect to corporate clients, UniCredit group is constantly engaged in standardizing the customer segments and range of products. The Group shares its business models on an international level in order to ensure access to its network in any country where the Group is present. This approach is vital due to the variety of global products offered, particularly cash management and trade finance solutions to corporate customers operating in more than one CEE country. Fineco FinecoBank, the multichannel bank of the UniCredit group, is one of the most important FinTech banks in Europe. It offers from a single account banking, credit, trading and investment services though transactional and advisory platform developed with proprietary technologies, and combined with one of the largest financial advisory network in Italy. Fineco is a bank leader in brokerage in Europe, and one of the most important player in Private Banking in Italy, offering tailor-made advisory services. Since 2017, FinecoBank is also in UK with an offer focused on brokerage and banking services. Group Corporate Center The Group Corporate Center’s objective is to lead, control and support the management of the assets and related risks of the Group as a whole and of the single Group companies in their respective areas of competence. In this framework, an important objective is to optimize costs and internal processes guaranteeing operating excellence and supporting the sustainable growth of the business lines. Non core Starting from the first quarter 2014 the Group decided to introduce a clear distinction between above described activities defined as core segment, meaning strategic business segments and in line with risk strategies, , and activities defined as non-core segment, including non-strategic assets and those with a poor fit to the Group’s risk-adjusted return framework, with the aim of reducing the overall exposure of this last segment in the course of time and to improve the risk profile. Specifically, the non-core segment includes selected assets of Commercial Banking Italy (identified on a single deal/client basis) to be managed with a risk mitigation approach and some special vehicles for securitization operations. Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting 432 2018 Annual Report and Accounts · UniCredit The organisational structure of CIB is based on a matrix that integrates market coverage (carried out through an extensive network in Western, Central and Eastern Europe and an international network of branches and representative offices) and product offering (divided into three Product Lines that consolidate the breadth of the Group’s CIB know-how). The dedicated commercial networks (CIB Network Italy, CIB Network Germany, CIB Network Austria, CIB Network France, International Network, Financial Institutions Group) are responsible for the relationships with corporate clients, banks and financial institutions as well as the sale of a broad range of financial products and services, ranging from traditional lending and merchant banking operations to more sophisticated services with high added value, such as project finance, acquisition finance and other investment banking services and operations in international financial markets. The three following Product Lines supplement and add value to the activities of the commercial networks and the marketing of the relevant products: • Financing and Advisory (F&A) - F&A is the expertise center for all business operations related to credit and advisory services for corporate and institutional clients. It is responsible for providing a wide variety of products and services ranging from plain vanilla and standardized products, extending to more sophisticated products such as Capital Markets (Equity and Debt Capital Markets), Corporate Finance and Advisory, Syndications, Leverage Buy-Out, Project and Commodity Finance, Real Estate Finance, Structured Trade and Export Finance; • Markets - Markets is the centre specialized for all financial markets activities and serves as the Group’s access point to the capital markets. This results in a highly complementary international platform with a strong presence in emerging European financial markets. As a centralized product line, it is responsible for the coordination of financial markets-related activities, including the structuring of products such as FX, Rates, Equities and credit related activities; • Global Transaction Banking (GTB) - GTB is the centre for Cash Management, e-banking, Supply Chain Finance and Trade Finance products and global securities services. Central and Eastern Europe (CEE) The Group operates, through the CEE business segment, in 12 Central and Eastern Europe countries: Azerbaijan, Bosnia- Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey; having, in addition, Leasing activities in the 3 Baltic countries. The CEE business segment offers a wide range of products and services to retail, corporate and institutional clients in these countries. UniCredit Group is able to offer its retail customers in the CEE countries a broad portfolio of products and services similar to those offered to its Italian, German and Austrian customers. With respect to corporate clients, UniCredit group is constantly engaged in standardizing the customer segments and range of products. The Group shares its business models on an international level in order to ensure access to its network in any country where the Group is present. This approach is vital due to the variety of global products offered, particularly cash management and trade finance solutions to corporate customers operating in more than one CEE country. Fineco FinecoBank, the multichannel bank of the UniCredit group, is one of the most important FinTech banks in Europe. It offers from a single account banking, credit, trading and investment services though transactional and advisory platform developed with proprietary technologies, and combined with one of the largest financial advisory network in Italy. Fineco is a bank leader in brokerage in Europe, and one of the most important player in Private Banking in Italy, offering tailor-made advisory services. Since 2017, FinecoBank is also in UK with an offer focused on brokerage and banking services. Group Corporate Center The Group Corporate Center’s objective is to lead, control and support the management of the assets and related risks of the Group as a whole and of the single Group companies in their respective areas of competence. In this framework, an important objective is to optimize costs and internal processes guaranteeing operating excellence and supporting the sustainable growth of the business lines. Non core Starting from the first quarter 2014 the Group decided to introduce a clear distinction between above described activities defined as core segment, meaning strategic business segments and in line with risk strategies, , and activities defined as non-core segment, including non-strategic assets and those with a poor fit to the Group’s risk-adjusted return framework, with the aim of reducing the overall exposure of this last segment in the course of time and to improve the risk profile. Specifically, the non-core segment includes selected assets of Commercial Banking Italy (identified on a single deal/client basis) to be managed with a risk mitigation approach and some special vehicles for securitization operations. Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting 432 2018 Annual Report and Accounts · UniCredit The organisational structure of CIB is based on a matrix that integrates market coverage (carried out through an extensive network in Western, Central and Eastern Europe and an international network of branches and representative offices) and product offering (divided into three Product Lines that consolidate the breadth of the Group’s CIB know-how). The dedicated commercial networks (CIB Network Italy, CIB Network Germany, CIB Network Austria, CIB Network France, International Network, Financial Institutions Group) are responsible for the relationships with corporate clients, banks and financial institutions as well as the sale of a broad range of financial products and services, ranging from traditional lending and merchant banking operations to more sophisticated services with high added value, such as project finance, acquisition finance and other investment banking services and operations in international financial markets. The three following Product Lines supplement and add value to the activities of the commercial networks and the marketing of the relevant products: • Financing and Advisory (F&A) - F&A is the expertise center for all business operations related to credit and advisory services for corporate and institutional clients. It is responsible for providing a wide variety of products and services ranging from plain vanilla and standardized products, extending to more sophisticated products such as Capital Markets (Equity and Debt Capital Markets), Corporate Finance and Advisory, Syndications, Leverage Buy-Out, Project and Commodity Finance, Real Estate Finance, Structured Trade and Export Finance; • Markets - Markets is the centre specialized for all financial markets activities and serves as the Group’s access point to the capital markets. This results in a highly complementary international platform with a strong presence in emerging European financial markets. As a centralized product line, it is responsible for the coordination of financial markets-related activities, including the structuring of products such as FX, Rates, Equities and credit related activities; • Global Transaction Banking (GTB) - GTB is the centre for Cash Management, e-banking, Supply Chain Finance and Trade Finance products and global securities services. Central and Eastern Europe (CEE) The Group operates, through the CEE business segment, in 12 Central and Eastern Europe countries: Azerbaijan, Bosnia- Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey; having, in addition, Leasing activities in the 3 Baltic countries. The CEE business segment offers a wide range of products and services to retail, corporate and institutional clients in these countries. UniCredit Group is able to offer its retail customers in the CEE countries a broad portfolio of products and services similar to those offered to its Italian, German and Austrian customers. With respect to corporate clients, UniCredit group is constantly engaged in standardizing the customer segments and range of products. The Group shares its business models on an international level in order to ensure access to its network in any country where the Group is present. This approach is vital due to the variety of global products offered, particularly cash management and trade finance solutions to corporate customers operating in more than one CEE country. Fineco FinecoBank, the multichannel bank of the UniCredit group, is one of the most important FinTech banks in Europe. It offers from a single account banking, credit, trading and investment services though transactional and advisory platform developed with proprietary technologies, and combined with one of the largest financial advisory network in Italy. Fineco is a bank leader in brokerage in Europe, and one of the most important player in Private Banking in Italy, offering tailor-made advisory services. Since 2017, FinecoBank is also in UK with an offer focused on brokerage and banking services. Group Corporate Center The Group Corporate Center’s objective is to lead, control and support the management of the assets and related risks of the Group as a whole and of the single Group companies in their respective areas of competence. In this framework, an important objective is to optimize costs and internal processes guaranteeing operating excellence and supporting the sustainable growth of the business lines. Non core Starting from the first quarter 2014 the Group decided to introduce a clear distinction between above described activities defined as core segment, meaning strategic business segments and in line with risk strategies, , and activities defined as non-core segment, including non-strategic assets and those with a poor fit to the Group’s risk-adjusted return framework, with the aim of reducing the overall exposure of this last segment in the course of time and to improve the risk profile. Specifically, the non-core segment includes selected assets of Commercial Banking Italy (identified on a single deal/client basis) to be managed with a risk mitigation approach and some special vehicles for securitization operations. Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 433 A - Primary segment A.1 - Breakdown by business segment: income statement (€ '000) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 Net interest 3,494,851 1,513,544 686,660 2,713,267 2,291,590 277,376 (225,540) 103,901 10,855,649 Dividends and other income from equity investments 76,463 10,733 155,041 324,506 52,926 42 117,813 - 737,524 Net fees and commissions 3,742,143 752,114 617,618 876,069 623,849 300,432 (90,031) (66,686) 6,755,508 Net trading income 50,295 79,061 68,696 323,077 754,061 44,239 (20,078) (54,575) 1,244,776 Net other expenses/income (107,134) 114,082 35,390 25,564 90,232 1,913 12,346 (42,494) 129,899 OPERATING INCOME 7,256,618 2,469,534 1,563,405 4,262,483 3,812,658 624,002 (205,490) (59,854) 19,723,356 Payroll costs (2,310,194) (967,303) (561,717) (756,202) (595,108) (86,581) (1,110,443) (35,191) (6,422,739) Other administrative expenses (2,162,110) (707,398) (446,518) (676,704) (968,012) (245,519) 1,201,377 (151,865) (4,156,749) Recovery of expenses 419,110 5,441 1 1,246 2,971 96,767 80,840 78,599 684,975 Amortisation, depreciation and impairment losses on tangible and intangible assets (72,220) (34,655) (13,412) (134,103) (3,011) (10,431) (535,668) (85) (803,585) Operating expenses (4,125,414) (1,703,915) (1,021,646) (1,565,763) (1,563,160) (245,764) (363,894) (108,542) (10,698,098) OPERATING PROFIT 3,131,204 765,619 541,759 2,696,720 2,249,498 378,238 (569,384) (168,396) 9,025,258 Net writedowns of loans and provisions for guarantees and commitments (1,046,424) (145,431) 24,764 (457,119) (75,946) (4,384) 6,404 (921,110) (2,619,246) OPERATING NET PROFIT 2,084,780 620,188 566,523 2,239,601 2,173,552 373,854 (562,980) (1,089,506) 6,406,012 Other charges and provisions (314,117) (360,880) (120,391) (192,647) (817,090) (21,380) (378,689) (87,524) (2,292,718) Integration costs (1,505) (24,017) (994) (5,434) (444) (121) 23,106 232 (9,177) Net income from investments 112,931 133,500 2,533 (7,125) 14,040 1,105 (719,751) (21,908) (484,675) PROFIT BEFORE TAX 1,882,089 368,791 447,671 2,034,395 1,370,058 353,458 (1,638,314) (1,198,706) 3,619,442 A.2 - Breakdown by business segment: balance sheet amounts and RWA (€ '000) BALANCE SHEET AMOUNTS COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 CUSTOMERS LOANS (NET REPOS AND IC) 145,645,364 84,462,655 44,971,405 65,344,093 80,447,772 2,804,507 3,270,762 6,629,272 433,575,830 CUSTOMERS DEPOS (NET REPOS AND IC) 146,259,765 91,693,812 47,375,479 65,743,753 45,281,267 22,156,888 2,985,469 527,650 422,024,083 TOTAL RISK WEIGHTED ASSETS (BASEL 3) 94,913,522 36,062,412 23,313,588 86,277,281 81,039,518 2,371,535 34,072,608 12,129,257 370,179,719 A.3 - Staff COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 STAFF Employees (FTE) 29,669 9,208 4,873 24,218 3,289 1,125 14,059 345 86,786 Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 433 A - Primary segment A.1 - Breakdown by business segment: income statement (€ '000) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 Net interest 3,494,851 1,513,544 686,660 2,713,267 2,291,590 277,376 (225,540) 103,901 10,855,649 Dividends and other income from equity investments 76,463 10,733 155,041 324,506 52,926 42 117,813 - 737,524 Net fees and commissions 3,742,143 752,114 617,618 876,069 623,849 300,432 (90,031) (66,686) 6,755,508 Net trading income 50,295 79,061 68,696 323,077 754,061 44,239 (20,078) (54,575) 1,244,776 Net other expenses/income (107,134) 114,082 35,390 25,564 90,232 1,913 12,346 (42,494) 129,899 OPERATING INCOME 7,256,618 2,469,534 1,563,405 4,262,483 3,812,658 624,002 (205,490) (59,854) 19,723,356 Payroll costs (2,310,194) (967,303) (561,717) (756,202) (595,108) (86,581) (1,110,443) (35,191) (6,422,739) Other administrative expenses (2,162,110) (707,398) (446,518) (676,704) (968,012) (245,519) 1,201,377 (151,865) (4,156,749) Recovery of expenses 419,110 5,441 1 1,246 2,971 96,767 80,840 78,599 684,975 Amortisation, depreciation and impairment losses on tangible and intangible assets (72,220) (34,655) (13,412) (134,103) (3,011) (10,431) (535,668) (85) (803,585) Operating expenses (4,125,414) (1,703,915) (1,021,646) (1,565,763) (1,563,160) (245,764) (363,894) (108,542) (10,698,098) OPERATING PROFIT 3,131,204 765,619 541,759 2,696,720 2,249,498 378,238 (569,384) (168,396) 9,025,258 Net writedowns of loans and provisions for guarantees and commitments (1,046,424) (145,431) 24,764 (457,119) (75,946) (4,384) 6,404 (921,110) (2,619,246) OPERATING NET PROFIT 2,084,780 620,188 566,523 2,239,601 2,173,552 373,854 (562,980) (1,089,506) 6,406,012 Other charges and provisions (314,117) (360,880) (120,391) (192,647) (817,090) (21,380) (378,689) (87,524) (2,292,718) Integration costs (1,505) (24,017) (994) (5,434) (444) (121) 23,106 232 (9,177) Net income from investments 112,931 133,500 2,533 (7,125) 14,040 1,105 (719,751) (21,908) (484,675) PROFIT BEFORE TAX 1,882,089 368,791 447,671 2,034,395 1,370,058 353,458 (1,638,314) (1,198,706) 3,619,442 A.2 - Breakdown by business segment: balance sheet amounts and RWA (€ '000) BALANCE SHEET AMOUNTS COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 CUSTOMERS LOANS (NET REPOS AND IC) 145,645,364 84,462,655 44,971,405 65,344,093 80,447,772 2,804,507 3,270,762 6,629,272 433,575,830 CUSTOMERS DEPOS (NET REPOS AND IC) 146,259,765 91,693,812 47,375,479 65,743,753 45,281,267 22,156,888 2,985,469 527,650 422,024,083 TOTAL RISK WEIGHTED ASSETS (BASEL 3) 94,913,522 36,062,412 23,313,588 86,277,281 81,039,518 2,371,535 34,072,608 12,129,257 370,179,719 A.3 - Staff COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 STAFF Employees (FTE) 29,669 9,208 4,873 24,218 3,289 1,125 14,059 345 86,786 Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 433 A - Primary segment A.1 - Breakdown by business segment: income statement (€ '000) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 Net interest 3,494,851 1,513,544 686,660 2,713,267 2,291,590 277,376 (225,540) 103,901 10,855,649 Dividends and other income from equity investments 76,463 10,733 155,041 324,506 52,926 42 117,813 - 737,524 Net fees and commissions 3,742,143 752,114 617,618 876,069 623,849 300,432 (90,031) (66,686) 6,755,508 Net trading income 50,295 79,061 68,696 323,077 754,061 44,239 (20,078) (54,575) 1,244,776 Net other expenses/income (107,134) 114,082 35,390 25,564 90,232 1,913 12,346 (42,494) 129,899 OPERATING INCOME 7,256,618 2,469,534 1,563,405 4,262,483 3,812,658 624,002 (205,490) (59,854) 19,723,356 Payroll costs (2,310,194) (967,303) (561,717) (756,202) (595,108) (86,581) (1,110,443) (35,191) (6,422,739) Other administrative expenses (2,162,110) (707,398) (446,518) (676,704) (968,012) (245,519) 1,201,377 (151,865) (4,156,749) Recovery of expenses 419,110 5,441 1 1,246 2,971 96,767 80,840 78,599 684,975 Amortisation, depreciation and impairment losses on tangible and intangible assets (72,220) (34,655) (13,412) (134,103) (3,011) (10,431) (535,668) (85) (803,585) Operating expenses (4,125,414) (1,703,915) (1,021,646) (1,565,763) (1,563,160) (245,764) (363,894) (108,542) (10,698,098) OPERATING PROFIT 3,131,204 765,619 541,759 2,696,720 2,249,498 378,238 (569,384) (168,396) 9,025,258 Net writedowns of loans and provisions for guarantees and commitments (1,046,424) (145,431) 24,764 (457,119) (75,946) (4,384) 6,404 (921,110) (2,619,246) OPERATING NET PROFIT 2,084,780 620,188 566,523 2,239,601 2,173,552 373,854 (562,980) (1,089,506) 6,406,012 Other charges and provisions (314,117) (360,880) (120,391) (192,647) (817,090) (21,380) (378,689) (87,524) (2,292,718) Integration costs (1,505) (24,017) (994) (5,434) (444) (121) 23,106 232 (9,177) Net income from investments 112,931 133,500 2,533 (7,125) 14,040 1,105 (719,751) (21,908) (484,675) PROFIT BEFORE TAX 1,882,089 368,791 447,671 2,034,395 1,370,058 353,458 (1,638,314) (1,198,706) 3,619,442 A.2 - Breakdown by business segment: balance sheet amounts and RWA (€ '000) BALANCE SHEET AMOUNTS COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 CUSTOMERS LOANS (NET REPOS AND IC) 145,645,364 84,462,655 44,971,405 65,344,093 80,447,772 2,804,507 3,270,762 6,629,272 433,575,830 CUSTOMERS DEPOS (NET REPOS AND IC) 146,259,765 91,693,812 47,375,479 65,743,753 45,281,267 22,156,888 2,985,469 527,650 422,024,083 TOTAL RISK WEIGHTED ASSETS (BASEL 3) 94,913,522 36,062,412 23,313,588 86,277,281 81,039,518 2,371,535 34,072,608 12,129,257 370,179,719 A.3 - Staff COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 STAFF Employees (FTE) 29,669 9,208 4,873 24,218 3,289 1,125 14,059 345 86,786 Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 433 A - Primary segment A.1 - Breakdown by business segment: income statement (€ '000) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 Net interest 3,494,851 1,513,544 686,660 2,713,267 2,291,590 277,376 (225,540) 103,901 10,855,649 Dividends and other income from equity investments 76,463 10,733 155,041 324,506 52,926 42 117,813 - 737,524 Net fees and commissions 3,742,143 752,114 617,618 876,069 623,849 300,432 (90,031) (66,686) 6,755,508 Net trading income 50,295 79,061 68,696 323,077 754,061 44,239 (20,078) (54,575) 1,244,776 Net other expenses/income (107,134) 114,082 35,390 25,564 90,232 1,913 12,346 (42,494) 129,899 OPERATING INCOME 7,256,618 2,469,534 1,563,405 4,262,483 3,812,658 624,002 (205,490) (59,854) 19,723,356 Payroll costs (2,310,194) (967,303) (561,717) (756,202) (595,108) (86,581) (1,110,443) (35,191) (6,422,739) Other administrative expenses (2,162,110) (707,398) (446,518) (676,704) (968,012) (245,519) 1,201,377 (151,865) (4,156,749) Recovery of expenses 419,110 5,441 1 1,246 2,971 96,767 80,840 78,599 684,975 Amortisation, depreciation and impairment losses on tangible and intangible assets (72,220) (34,655) (13,412) (134,103) (3,011) (10,431) (535,668) (85) (803,585) Operating expenses (4,125,414) (1,703,915) (1,021,646) (1,565,763) (1,563,160) (245,764) (363,894) (108,542) (10,698,098) OPERATING PROFIT 3,131,204 765,619 541,759 2,696,720 2,249,498 378,238 (569,384) (168,396) 9,025,258 Net writedowns of loans and provisions for guarantees and commitments (1,046,424) (145,431) 24,764 (457,119) (75,946) (4,384) 6,404 (921,110) (2,619,246) OPERATING NET PROFIT 2,084,780 620,188 566,523 2,239,601 2,173,552 373,854 (562,980) (1,089,506) 6,406,012 Other charges and provisions (314,117) (360,880) (120,391) (192,647) (817,090) (21,380) (378,689) (87,524) (2,292,718) Integration costs (1,505) (24,017) (994) (5,434) (444) (121) 23,106 232 (9,177) Net income from investments 112,931 133,500 2,533 (7,125) 14,040 1,105 (719,751) (21,908) (484,675) PROFIT BEFORE TAX 1,882,089 368,791 447,671 2,034,395 1,370,058 353,458 (1,638,314) (1,198,706) 3,619,442 A.2 - Breakdown by business segment: balance sheet amounts and RWA (€ '000) BALANCE SHEET AMOUNTS COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 CUSTOMERS LOANS (NET REPOS AND IC) 145,645,364 84,462,655 44,971,405 65,344,093 80,447,772 2,804,507 3,270,762 6,629,272 433,575,830 CUSTOMERS DEPOS (NET REPOS AND IC) 146,259,765 91,693,812 47,375,479 65,743,753 45,281,267 22,156,888 2,985,469 527,650 422,024,083 TOTAL RISK WEIGHTED ASSETS (BASEL 3) 94,913,522 36,062,412 23,313,588 86,277,281 81,039,518 2,371,535 34,072,608 12,129,257 370,179,719 A.3 - Staff COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 STAFF Employees (FTE) 29,669 9,208 4,873 24,218 3,289 1,125 14,059 345 86,786 Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 433 A - Primary segment A.1 - Breakdown by business segment: income statement (€ '000) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 Net interest 3,494,851 1,513,544 686,660 2,713,267 2,291,590 277,376 (225,540) 103,901 10,855,649 Dividends and other income from equity investments 76,463 10,733 155,041 324,506 52,926 42 117,813 - 737,524 Net fees and commissions 3,742,143 752,114 617,618 876,069 623,849 300,432 (90,031) (66,686) 6,755,508 Net trading income 50,295 79,061 68,696 323,077 754,061 44,239 (20,078) (54,575) 1,244,776 Net other expenses/income (107,134) 114,082 35,390 25,564 90,232 1,913 12,346 (42,494) 129,899 OPERATING INCOME 7,256,618 2,469,534 1,563,405 4,262,483 3,812,658 624,002 (205,490) (59,854) 19,723,356 Payroll costs (2,310,194) (967,303) (561,717) (756,202) (595,108) (86,581) (1,110,443) (35,191) (6,422,739) Other administrative expenses (2,162,110) (707,398) (446,518) (676,704) (968,012) (245,519) 1,201,377 (151,865) (4,156,749) Recovery of expenses 419,110 5,441 1 1,246 2,971 96,767 80,840 78,599 684,975 Amortisation, depreciation and impairment losses on tangible and intangible assets (72,220) (34,655) (13,412) (134,103) (3,011) (10,431) (535,668) (85) (803,585) Operating expenses (4,125,414) (1,703,915) (1,021,646) (1,565,763) (1,563,160) (245,764) (363,894) (108,542) (10,698,098) OPERATING PROFIT 3,131,204 765,619 541,759 2,696,720 2,249,498 378,238 (569,384) (168,396) 9,025,258 Net writedowns of loans and provisions for guarantees and commitments (1,046,424) (145,431) 24,764 (457,119) (75,946) (4,384) 6,404 (921,110) (2,619,246) OPERATING NET PROFIT 2,084,780 620,188 566,523 2,239,601 2,173,552 373,854 (562,980) (1,089,506) 6,406,012 Other charges and provisions (314,117) (360,880) (120,391) (192,647) (817,090) (21,380) (378,689) (87,524) (2,292,718) Integration costs (1,505) (24,017) (994) (5,434) (444) (121) 23,106 232 (9,177) Net income from investments 112,931 133,500 2,533 (7,125) 14,040 1,105 (719,751) (21,908) (484,675) PROFIT BEFORE TAX 1,882,089 368,791 447,671 2,034,395 1,370,058 353,458 (1,638,314) (1,198,706) 3,619,442 A.2 - Breakdown by business segment: balance sheet amounts and RWA (€ '000) BALANCE SHEET AMOUNTS COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 CUSTOMERS LOANS (NET REPOS AND IC) 145,645,364 84,462,655 44,971,405 65,344,093 80,447,772 2,804,507 3,270,762 6,629,272 433,575,830 CUSTOMERS DEPOS (NET REPOS AND IC) 146,259,765 91,693,812 47,375,479 65,743,753 45,281,267 22,156,888 2,985,469 527,650 422,024,083 TOTAL RISK WEIGHTED ASSETS (BASEL 3) 94,913,522 36,062,412 23,313,588 86,277,281 81,039,518 2,371,535 34,072,608 12,129,257 370,179,719 A.3 - Staff COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2018 STAFF Employees (FTE) 29,669 9,208 4,873 24,218 3,289 1,125 14,059 345 86,786 Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting 434 2018 Annual Report and Accounts · UniCredit A.1 - Breakdown by business segment: income statement (€ '000) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 Net interest 3,703,687 1,649,392 723,731 2,598,443 2,131,467 264,092 (622,052) 184,258 10,633,018 Dividends and other income from equity investments 79,960 4,485 146,214 334,032 18,549 29 54,642 - 637,911 Net fees and commissions 3,713,171 762,495 622,888 848,084 638,864 269,847 (86,185) (74,029) 6,695,135 Net trading income 41,766 139,293 37,882 356,112 1,243,325 48,218 (71,994) 23,450 1,818,052 Net other expenses/income (96,327) 137,978 52,751 49,148 80,475 3,762 (6,182) (65,208) 156,397 OPERATING INCOME 7,442,257 2,693,643 1,583,466 4,185,819 4,112,680 585,948 (731,771) 68,471 19,940,513 Payroll costs (2,525,145) (1,034,618) (590,253) (740,910) (635,246) (79,294) (1,257,544) (42,011) (6,905,021) Other administrative expenses (2,279,055) (735,575) (480,046) (677,525) (989,725) (236,917) 1,198,268 (184,467) (4,385,042) Recovery of expenses 440,673 (2,012) - 73 1,971 93,369 119,122 106,784 759,980 Amortisation, depreciation and impairment losses on tangible and intangible assets (74,809) (38,043) (15,101) (124,847) (2,786) (10,398) (541,462) (52) (807,498) Operating expenses (4,438,336) (1,810,248) (1,085,400) (1,543,209) (1,625,786) (233,240) (481,616) (119,746) (11,337,581) OPERATING PROFIT 3,003,921 883,395 498,066 2,642,610 2,486,894 352,708 (1,213,387) (51,275) 8,602,932 Net writedowns of loans and provisions for guarantees and commitments (974,586) (125,495) 16,619 (583,669) (275,093) (5,351) (29,829) (961,725) (2,939,129) OPERATING NET PROFIT 2,029,335 757,900 514,685 2,058,941 2,211,801 347,357 (1,243,216) (1,013,000) 5,663,803 Other charges and provisions (264,248) (101,146) (84,021) (179,485) (140,565) (19,025) (161,066) (114,214) (1,063,770) Integration costs 21,403 (6,950) (380) (28,211) (3,025) 408 (130,428) 571 (146,612) Net income from investments (11,331) (19,177) 14,253 4,024 (65,122) (13,399) (207,794) (6,742) (305,288) PROFIT BEFORE TAX 1,775,159 630,627 444,537 1,855,269 2,003,089 315,341 (1,742,504) (1,133,385) 4,148,133 A.2 - Breakdown by business segment: balance sheet amounts and RWA (€ '000) BALANCE SHEET AMOUNTS COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 CUSTOMERS LOANS (NET REPOS AND IC) 137,437,427 80,748,638 44,336,458 59,965,992 71,647,254 1,926,504 2,728,768 14,222,931 413,013,972 CUSTOMERS DEPOS (NET REPOS AND IC) 140,934,841 91,581,651 46,486,524 62,405,820 47,774,900 20,058,626 3,634,268 914,418 413,791,048 TOTAL RISK WEIGHTED ASSETS (BASEL 3) 85,591,503 33,999,479 20,963,252 85,995,509 75,639,234 2,331,771 29,984,916 21,594,559 356,100,221 A.3 - Staff COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 STAFF Employees (FTE) 32,334 10,105 5,092 24,089 3,298 1,082 15,488 464 91,952 Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting 434 2018 Annual Report and Accounts · UniCredit A.1 - Breakdown by business segment: income statement (€ '000) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 Net interest 3,703,687 1,649,392 723,731 2,598,443 2,131,467 264,092 (622,052) 184,258 10,633,018 Dividends and other income from equity investments 79,960 4,485 146,214 334,032 18,549 29 54,642 - 637,911 Net fees and commissions 3,713,171 762,495 622,888 848,084 638,864 269,847 (86,185) (74,029) 6,695,135 Net trading income 41,766 139,293 37,882 356,112 1,243,325 48,218 (71,994) 23,450 1,818,052 Net other expenses/income (96,327) 137,978 52,751 49,148 80,475 3,762 (6,182) (65,208) 156,397 OPERATING INCOME 7,442,257 2,693,643 1,583,466 4,185,819 4,112,680 585,948 (731,771) 68,471 19,940,513 Payroll costs (2,525,145) (1,034,618) (590,253) (740,910) (635,246) (79,294) (1,257,544) (42,011) (6,905,021) Other administrative expenses (2,279,055) (735,575) (480,046) (677,525) (989,725) (236,917) 1,198,268 (184,467) (4,385,042) Recovery of expenses 440,673 (2,012) - 73 1,971 93,369 119,122 106,784 759,980 Amortisation, depreciation and impairment losses on tangible and intangible assets (74,809) (38,043) (15,101) (124,847) (2,786) (10,398) (541,462) (52) (807,498) Operating expenses (4,438,336) (1,810,248) (1,085,400) (1,543,209) (1,625,786) (233,240) (481,616) (119,746) (11,337,581) OPERATING PROFIT 3,003,921 883,395 498,066 2,642,610 2,486,894 352,708 (1,213,387) (51,275) 8,602,932 Net writedowns of loans and provisions for guarantees and commitments (974,586) (125,495) 16,619 (583,669) (275,093) (5,351) (29,829) (961,725) (2,939,129) OPERATING NET PROFIT 2,029,335 757,900 514,685 2,058,941 2,211,801 347,357 (1,243,216) (1,013,000) 5,663,803 Other charges and provisions (264,248) (101,146) (84,021) (179,485) (140,565) (19,025) (161,066) (114,214) (1,063,770) Integration costs 21,403 (6,950) (380) (28,211) (3,025) 408 (130,428) 571 (146,612) Net income from investments (11,331) (19,177) 14,253 4,024 (65,122) (13,399) (207,794) (6,742) (305,288) PROFIT BEFORE TAX 1,775,159 630,627 444,537 1,855,269 2,003,089 315,341 (1,742,504) (1,133,385) 4,148,133 A.2 - Breakdown by business segment: balance sheet amounts and RWA (€ '000) BALANCE SHEET AMOUNTS COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 CUSTOMERS LOANS (NET REPOS AND IC) 137,437,427 80,748,638 44,336,458 59,965,992 71,647,254 1,926,504 2,728,768 14,222,931 413,013,972 CUSTOMERS DEPOS (NET REPOS AND IC) 140,934,841 91,581,651 46,486,524 62,405,820 47,774,900 20,058,626 3,634,268 914,418 413,791,048 TOTAL RISK WEIGHTED ASSETS (BASEL 3) 85,591,503 33,999,479 20,963,252 85,995,509 75,639,234 2,331,771 29,984,916 21,594,559 356,100,221 A.3 - Staff COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 STAFF Employees (FTE) 32,334 10,105 5,092 24,089 3,298 1,082 15,488 464 91,952 Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting 434 2018 Annual Report and Accounts · UniCredit A.1 - Breakdown by business segment: income statement (€ '000) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 Net interest 3,703,687 1,649,392 723,731 2,598,443 2,131,467 264,092 (622,052) 184,258 10,633,018 Dividends and other income from equity investments 79,960 4,485 146,214 334,032 18,549 29 54,642 - 637,911 Net fees and commissions 3,713,171 762,495 622,888 848,084 638,864 269,847 (86,185) (74,029) 6,695,135 Net trading income 41,766 139,293 37,882 356,112 1,243,325 48,218 (71,994) 23,450 1,818,052 Net other expenses/income (96,327) 137,978 52,751 49,148 80,475 3,762 (6,182) (65,208) 156,397 OPERATING INCOME 7,442,257 2,693,643 1,583,466 4,185,819 4,112,680 585,948 (731,771) 68,471 19,940,513 Payroll costs (2,525,145) (1,034,618) (590,253) (740,910) (635,246) (79,294) (1,257,544) (42,011) (6,905,021) Other administrative expenses (2,279,055) (735,575) (480,046) (677,525) (989,725) (236,917) 1,198,268 (184,467) (4,385,042) Recovery of expenses 440,673 (2,012) - 73 1,971 93,369 119,122 106,784 759,980 Amortisation, depreciation and impairment losses on tangible and intangible assets (74,809) (38,043) (15,101) (124,847) (2,786) (10,398) (541,462) (52) (807,498) Operating expenses (4,438,336) (1,810,248) (1,085,400) (1,543,209) (1,625,786) (233,240) (481,616) (119,746) (11,337,581) OPERATING PROFIT 3,003,921 883,395 498,066 2,642,610 2,486,894 352,708 (1,213,387) (51,275) 8,602,932 Net writedowns of loans and provisions for guarantees and commitments (974,586) (125,495) 16,619 (583,669) (275,093) (5,351) (29,829) (961,725) (2,939,129) OPERATING NET PROFIT 2,029,335 757,900 514,685 2,058,941 2,211,801 347,357 (1,243,216) (1,013,000) 5,663,803 Other charges and provisions (264,248) (101,146) (84,021) (179,485) (140,565) (19,025) (161,066) (114,214) (1,063,770) Integration costs 21,403 (6,950) (380) (28,211) (3,025) 408 (130,428) 571 (146,612) Net income from investments (11,331) (19,177) 14,253 4,024 (65,122) (13,399) (207,794) (6,742) (305,288) PROFIT BEFORE TAX 1,775,159 630,627 444,537 1,855,269 2,003,089 315,341 (1,742,504) (1,133,385) 4,148,133 A.2 - Breakdown by business segment: balance sheet amounts and RWA (€ '000) BALANCE SHEET AMOUNTS COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 CUSTOMERS LOANS (NET REPOS AND IC) 137,437,427 80,748,638 44,336,458 59,965,992 71,647,254 1,926,504 2,728,768 14,222,931 413,013,972 CUSTOMERS DEPOS (NET REPOS AND IC) 140,934,841 91,581,651 46,486,524 62,405,820 47,774,900 20,058,626 3,634,268 914,418 413,791,048 TOTAL RISK WEIGHTED ASSETS (BASEL 3) 85,591,503 33,999,479 20,963,252 85,995,509 75,639,234 2,331,771 29,984,916 21,594,559 356,100,221 A.3 - Staff COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 STAFF Employees (FTE) 32,334 10,105 5,092 24,089 3,298 1,082 15,488 464 91,952 Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting 434 2018 Annual Report and Accounts · UniCredit A.1 - Breakdown by business segment: income statement (€ '000) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 Net interest 3,703,687 1,649,392 723,731 2,598,443 2,131,467 264,092 (622,052) 184,258 10,633,018 Dividends and other income from equity investments 79,960 4,485 146,214 334,032 18,549 29 54,642 - 637,911 Net fees and commissions 3,713,171 762,495 622,888 848,084 638,864 269,847 (86,185) (74,029) 6,695,135 Net trading income 41,766 139,293 37,882 356,112 1,243,325 48,218 (71,994) 23,450 1,818,052 Net other expenses/income (96,327) 137,978 52,751 49,148 80,475 3,762 (6,182) (65,208) 156,397 OPERATING INCOME 7,442,257 2,693,643 1,583,466 4,185,819 4,112,680 585,948 (731,771) 68,471 19,940,513 Payroll costs (2,525,145) (1,034,618) (590,253) (740,910) (635,246) (79,294) (1,257,544) (42,011) (6,905,021) Other administrative expenses (2,279,055) (735,575) (480,046) (677,525) (989,725) (236,917) 1,198,268 (184,467) (4,385,042) Recovery of expenses 440,673 (2,012) - 73 1,971 93,369 119,122 106,784 759,980 Amortisation, depreciation and impairment losses on tangible and intangible assets (74,809) (38,043) (15,101) (124,847) (2,786) (10,398) (541,462) (52) (807,498) Operating expenses (4,438,336) (1,810,248) (1,085,400) (1,543,209) (1,625,786) (233,240) (481,616) (119,746) (11,337,581) OPERATING PROFIT 3,003,921 883,395 498,066 2,642,610 2,486,894 352,708 (1,213,387) (51,275) 8,602,932 Net writedowns of loans and provisions for guarantees and commitments (974,586) (125,495) 16,619 (583,669) (275,093) (5,351) (29,829) (961,725) (2,939,129) OPERATING NET PROFIT 2,029,335 757,900 514,685 2,058,941 2,211,801 347,357 (1,243,216) (1,013,000) 5,663,803 Other charges and provisions (264,248) (101,146) (84,021) (179,485) (140,565) (19,025) (161,066) (114,214) (1,063,770) Integration costs 21,403 (6,950) (380) (28,211) (3,025) 408 (130,428) 571 (146,612) Net income from investments (11,331) (19,177) 14,253 4,024 (65,122) (13,399) (207,794) (6,742) (305,288) PROFIT BEFORE TAX 1,775,159 630,627 444,537 1,855,269 2,003,089 315,341 (1,742,504) (1,133,385) 4,148,133 A.2 - Breakdown by business segment: balance sheet amounts and RWA (€ '000) BALANCE SHEET AMOUNTS COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 CUSTOMERS LOANS (NET REPOS AND IC) 137,437,427 80,748,638 44,336,458 59,965,992 71,647,254 1,926,504 2,728,768 14,222,931 413,013,972 CUSTOMERS DEPOS (NET REPOS AND IC) 140,934,841 91,581,651 46,486,524 62,405,820 47,774,900 20,058,626 3,634,268 914,418 413,791,048 TOTAL RISK WEIGHTED ASSETS (BASEL 3) 85,591,503 33,999,479 20,963,252 85,995,509 75,639,234 2,331,771 29,984,916 21,594,559 356,100,221 A.3 - Staff COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 STAFF Employees (FTE) 32,334 10,105 5,092 24,089 3,298 1,082 15,488 464 91,952 Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting 434 2018 Annual Report and Accounts · UniCredit A.1 - Breakdown by business segment: income statement (€ '000) COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 Net interest 3,703,687 1,649,392 723,731 2,598,443 2,131,467 264,092 (622,052) 184,258 10,633,018 Dividends and other income from equity investments 79,960 4,485 146,214 334,032 18,549 29 54,642 - 637,911 Net fees and commissions 3,713,171 762,495 622,888 848,084 638,864 269,847 (86,185) (74,029) 6,695,135 Net trading income 41,766 139,293 37,882 356,112 1,243,325 48,218 (71,994) 23,450 1,818,052 Net other expenses/income (96,327) 137,978 52,751 49,148 80,475 3,762 (6,182) (65,208) 156,397 OPERATING INCOME 7,442,257 2,693,643 1,583,466 4,185,819 4,112,680 585,948 (731,771) 68,471 19,940,513 Payroll costs (2,525,145) (1,034,618) (590,253) (740,910) (635,246) (79,294) (1,257,544) (42,011) (6,905,021) Other administrative expenses (2,279,055) (735,575) (480,046) (677,525) (989,725) (236,917) 1,198,268 (184,467) (4,385,042) Recovery of expenses 440,673 (2,012) - 73 1,971 93,369 119,122 106,784 759,980 Amortisation, depreciation and impairment losses on tangible and intangible assets (74,809) (38,043) (15,101) (124,847) (2,786) (10,398) (541,462) (52) (807,498) Operating expenses (4,438,336) (1,810,248) (1,085,400) (1,543,209) (1,625,786) (233,240) (481,616) (119,746) (11,337,581) OPERATING PROFIT 3,003,921 883,395 498,066 2,642,610 2,486,894 352,708 (1,213,387) (51,275) 8,602,932 Net writedowns of loans and provisions for guarantees and commitments (974,586) (125,495) 16,619 (583,669) (275,093) (5,351) (29,829) (961,725) (2,939,129) OPERATING NET PROFIT 2,029,335 757,900 514,685 2,058,941 2,211,801 347,357 (1,243,216) (1,013,000) 5,663,803 Other charges and provisions (264,248) (101,146) (84,021) (179,485) (140,565) (19,025) (161,066) (114,214) (1,063,770) Integration costs 21,403 (6,950) (380) (28,211) (3,025) 408 (130,428) 571 (146,612) Net income from investments (11,331) (19,177) 14,253 4,024 (65,122) (13,399) (207,794) (6,742) (305,288) PROFIT BEFORE TAX 1,775,159 630,627 444,537 1,855,269 2,003,089 315,341 (1,742,504) (1,133,385) 4,148,133 A.2 - Breakdown by business segment: balance sheet amounts and RWA (€ '000) BALANCE SHEET AMOUNTS COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 CUSTOMERS LOANS (NET REPOS AND IC) 137,437,427 80,748,638 44,336,458 59,965,992 71,647,254 1,926,504 2,728,768 14,222,931 413,013,972 CUSTOMERS DEPOS (NET REPOS AND IC) 140,934,841 91,581,651 46,486,524 62,405,820 47,774,900 20,058,626 3,634,268 914,418 413,791,048 TOTAL RISK WEIGHTED ASSETS (BASEL 3) 85,591,503 33,999,479 20,963,252 85,995,509 75,639,234 2,331,771 29,984,916 21,594,559 356,100,221 A.3 - Staff COMMERCIAL BANKING ITALY COMMERCIAL BANKING GERMANY COMMERCIAL BANKING AUSTRIA CENTRAL EASTERN EUROPE CORPORATE & INVESTMENT BANKING FINECO GROUP CORPORATE CENTRE NON CORE CONSOLIDATED GROUP TOTAL 12.31.2017 STAFF Employees (FTE) 32,334 10,105 5,092 24,089 3,298 1,082 15,488 464 91,952 Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 435 B - Secondary segment (€ '000) AMOUNTS AS AT 12.31.2018 TOTAL ASSETS OPERATING INCOME(*) COST OF INVESTMENT Italy 368,185,805 9,182,907 356,184 Germany 254,906,297 3,955,526 151,435 Austria 93,541,818 1,782,810 134,678 Total other european countries 114,383,496 4,243,524 313,187 of which: Western Europe 21,099,353 394,332 1,114 of which: Central and Eastern Europe 93,284,143 3,849,192 312,073 America 450,449 4,434 - Asia 859 (2,206) - Rest of the world - - - Total 831,468,724 19,166,995 955,484 Note: (*) Item 120 in Income Statement. (€ '000) AMOUNT AS AT 12.31.2017 TOTAL ASSETS OPERATING INCOME(*) COST OF INVESTMENT Italy 368,184,663 8,509,300 163,836 Germany 250,168,547 3,836,299 173,445 Austria 93,077,063 1,751,038 123,226 Total other european countries 125,071,477 4,044,644 320,849 of which: Western Europe 33,835,531 362,460 655 of which: Central and Eastern Europe 91,235,946 3,682,184 320,194 America 277,040 5,359 - Asia 10,934 (612) - Rest of the world - - - Total 836,789,724 18,146,028 781,356 Note: (*) Item 120 in income statement. The amounts of each country are aggregated by country of residence of the relevant legal Head Office (i.e.: foreign branches are generally included in the relevant parent company or conventionally attributed to another country). Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 435 B - Secondary segment (€ '000) AMOUNTS AS AT 12.31.2018 TOTAL ASSETS OPERATING INCOME(*) COST OF INVESTMENT Italy 368,185,805 9,182,907 356,184 Germany 254,906,297 3,955,526 151,435 Austria 93,541,818 1,782,810 134,678 Total other european countries 114,383,496 4,243,524 313,187 of which: Western Europe 21,099,353 394,332 1,114 of which: Central and Eastern Europe 93,284,143 3,849,192 312,073 America 450,449 4,434 - Asia 859 (2,206) - Rest of the world - - - Total 831,468,724 19,166,995 955,484 Note: (*) Item 120 in Income Statement. (€ '000) AMOUNT AS AT 12.31.2017 TOTAL ASSETS OPERATING INCOME(*) COST OF INVESTMENT Italy 368,184,663 8,509,300 163,836 Germany 250,168,547 3,836,299 173,445 Austria 93,077,063 1,751,038 123,226 Total other european countries 125,071,477 4,044,644 320,849 of which: Western Europe 33,835,531 362,460 655 of which: Central and Eastern Europe 91,235,946 3,682,184 320,194 America 277,040 5,359 - Asia 10,934 (612) - Rest of the world - - - Total 836,789,724 18,146,028 781,356 Note: (*) Item 120 in income statement. The amounts of each country are aggregated by country of residence of the relevant legal Head Office (i.e.: foreign branches are generally included in the relevant parent company or conventionally attributed to another country). Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 435 B - Secondary segment (€ '000) AMOUNTS AS AT 12.31.2018 TOTAL ASSETS OPERATING INCOME(*) COST OF INVESTMENT Italy 368,185,805 9,182,907 356,184 Germany 254,906,297 3,955,526 151,435 Austria 93,541,818 1,782,810 134,678 Total other european countries 114,383,496 4,243,524 313,187 of which: Western Europe 21,099,353 394,332 1,114 of which: Central and Eastern Europe 93,284,143 3,849,192 312,073 America 450,449 4,434 - Asia 859 (2,206) - Rest of the world - - - Total 831,468,724 19,166,995 955,484 Note: (*) Item 120 in Income Statement. (€ '000) AMOUNT AS AT 12.31.2017 TOTAL ASSETS OPERATING INCOME(*) COST OF INVESTMENT Italy 368,184,663 8,509,300 163,836 Germany 250,168,547 3,836,299 173,445 Austria 93,077,063 1,751,038 123,226 Total other european countries 125,071,477 4,044,644 320,849 of which: Western Europe 33,835,531 362,460 655 of which: Central and Eastern Europe 91,235,946 3,682,184 320,194 America 277,040 5,359 - Asia 10,934 (612) - Rest of the world - - - Total 836,789,724 18,146,028 781,356 Note: (*) Item 120 in income statement. The amounts of each country are aggregated by country of residence of the relevant legal Head Office (i.e.: foreign branches are generally included in the relevant parent company or conventionally attributed to another country). Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 435 B - Secondary segment (€ '000) AMOUNTS AS AT 12.31.2018 TOTAL ASSETS OPERATING INCOME(*) COST OF INVESTMENT Italy 368,185,805 9,182,907 356,184 Germany 254,906,297 3,955,526 151,435 Austria 93,541,818 1,782,810 134,678 Total other european countries 114,383,496 4,243,524 313,187 of which: Western Europe 21,099,353 394,332 1,114 of which: Central and Eastern Europe 93,284,143 3,849,192 312,073 America 450,449 4,434 - Asia 859 (2,206) - Rest of the world - - - Total 831,468,724 19,166,995 955,484 Note: (*) Item 120 in Income Statement. (€ '000) AMOUNT AS AT 12.31.2017 TOTAL ASSETS OPERATING INCOME(*) COST OF INVESTMENT Italy 368,184,663 8,509,300 163,836 Germany 250,168,547 3,836,299 173,445 Austria 93,077,063 1,751,038 123,226 Total other european countries 125,071,477 4,044,644 320,849 of which: Western Europe 33,835,531 362,460 655 of which: Central and Eastern Europe 91,235,946 3,682,184 320,194 America 277,040 5,359 - Asia 10,934 (612) - Rest of the world - - - Total 836,789,724 18,146,028 781,356 Note: (*) Item 120 in income statement. The amounts of each country are aggregated by country of residence of the relevant legal Head Office (i.e.: foreign branches are generally included in the relevant parent company or conventionally attributed to another country). Consolidated financial statements | Notes to the consolidated accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 435 B - Secondary segment (€ '000) AMOUNTS AS AT 12.31.2018 TOTAL ASSETS OPERATING INCOME(*) COST OF INVESTMENT Italy 368,185,805 9,182,907 356,184 Germany 254,906,297 3,955,526 151,435 Austria 93,541,818 1,782,810 134,678 Total other european countries 114,383,496 4,243,524 313,187 of which: Western Europe 21,099,353 394,332 1,114 of which: Central and Eastern Europe 93,284,143 3,849,192 312,073 America 450,449 4,434 - Asia 859 (2,206) - Rest of the world - - - Total 831,468,724 19,166,995 955,484 Note: (*) Item 120 in Income Statement. (€ '000) AMOUNT AS AT 12.31.2017 TOTAL ASSETS OPERATING INCOME(*) COST OF INVESTMENT Italy 368,184,663 8,509,300 163,836 Germany 250,168,547 3,836,299 173,445 Austria 93,077,063 1,751,038 123,226 Total other european countries 125,071,477 4,044,644 320,849 of which: Western Europe 33,835,531 362,460 655 of which: Central and Eastern Europe 91,235,946 3,682,184 320,194 America 277,040 5,359 - Asia 10,934 (612) - Rest of the world - - - Total 836,789,724 18,146,028 781,356 Note: (*) Item 120 in income statement. The amounts of each country are aggregated by country of residence of the relevant legal Head Office (i.e.: foreign branches are generally included in the relevant parent company or conventionally attributed to another country).  436 2018 Annual Report and Accounts · UniCredit 436 2018 Annual Report and Accounts · UniCredit 436 2018 Annual Report and Accounts · UniCredit 436 2018 Annual Report and Accounts · UniCredit 436 2018 Annual Report and Accounts · UniCredit Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 437 Annexes A reconciliation of the reclassified balance sheet and profit and loss account to the mandatory reporting schedules, is provided below. Any discrepancy in the data shown in this table is solely due to roundings. An explanation for the restatement of comparative figures is provided in the previous sections. Consolidated balance sheet (€ million) AMOUNTS AS AT ASSETS 12.31.2018 Cash and cash balances 30,991 Item 10. Cash and cash balances 30,991 Financial assets held for trading 65,231 Item 20. Financial assets at fair value through profit and loss: a) Financial assets held for trading 65,231 Loans to banks 69,850 Item 40. Financial assets at amortised cost: a) Loans and receivables with banks 73,643 less: Reclassification of debt securities in Other financial assets (3,839) + Reclassification of loans from Other financial assets - Item 20 c) 47 Loans to customers 471,839 Item 40. Financial assets at amortised cost: b) Loans and receivables with customers 505,668 less: Reclassification of debt securities in Other financial assets (36,304) + Reclassification of loans from Other financial assets - Item 20 c) 2,475 Other financial assets 152,310 Item 20. Financial assets at fair value through profit and loss: b) Financial assets designated at fair value 0 Item 20. Financial assets at fair value through profit and loss: c) Other financial assets mandatorily at fair value 20,906 less: Reclassification of loans in Loans to banks (47) less: Reclassification of loans in Loans to customers (2,475) Item 30. Financial assets at fair value through other comprehensive income 88,280 Item 70. Equity investments 5,502 + Reclassification of debt securities from Loans to banks - Item 40 a) 3,839 + Reclassification of debt securities from Loans to customers - Item 40 b) 36,304 Hedging instruments 7,120 Item 50. Hedging derivatives 4,682 Item 60. Changes in fair value of portfolio hedged items (+/-) 2,439 Property, plant and equipment 8,408 Item 90. Property, plant and equipment 8,408 Goodwill 1,484 Item 100. Intangible assets of which: goodwill 1,484 Other intangible assets 2,024 Item 100. Intangible assets net of goodwill 2,024 Tax assets 13,078 Item 110. Tax assets 13,078 Non-current assets and disposal groups classified as held for sale 1,800 Item 120. Non-current assets and disposal groups classified as held for sale 1,800 Other assets 7,334 Item 80. Insurance reserves charged to reinsurers - Item 130. Other assets 7,334 Total assets 831,469 Annex 1 - Reconciliation of reclassified Accounts to Mandatory Reporting Schedule Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 437 Annexes A reconciliation of the reclassified balance sheet and profit and loss account to the mandatory reporting schedules, is provided below. Any discrepancy in the data shown in this table is solely due to roundings. An explanation for the restatement of comparative figures is provided in the previous sections. Consolidated balance sheet (€ million) AMOUNTS AS AT ASSETS 12.31.2018 Cash and cash balances 30,991 Item 10. Cash and cash balances 30,991 Financial assets held for trading 65,231 Item 20. Financial assets at fair value through profit and loss: a) Financial assets held for trading 65,231 Loans to banks 69,850 Item 40. Financial assets at amortised cost: a) Loans and receivables with banks 73,643 less: Reclassification of debt securities in Other financial assets (3,839) + Reclassification of loans from Other financial assets - Item 20 c) 47 Loans to customers 471,839 Item 40. Financial assets at amortised cost: b) Loans and receivables with customers 505,668 less: Reclassification of debt securities in Other financial assets (36,304) + Reclassification of loans from Other financial assets - Item 20 c) 2,475 Other financial assets 152,310 Item 20. Financial assets at fair value through profit and loss: b) Financial assets designated at fair value 0 Item 20. Financial assets at fair value through profit and loss: c) Other financial assets mandatorily at fair value 20,906 less: Reclassification of loans in Loans to banks (47) less: Reclassification of loans in Loans to customers (2,475) Item 30. Financial assets at fair value through other comprehensive income 88,280 Item 70. Equity investments 5,502 + Reclassification of debt securities from Loans to banks - Item 40 a) 3,839 + Reclassification of debt securities from Loans to customers - Item 40 b) 36,304 Hedging instruments 7,120 Item 50. Hedging derivatives 4,682 Item 60. Changes in fair value of portfolio hedged items (+/-) 2,439 Property, plant and equipment 8,408 Item 90. Property, plant and equipment 8,408 Goodwill 1,484 Item 100. Intangible assets of which: goodwill 1,484 Other intangible assets 2,024 Item 100. Intangible assets net of goodwill 2,024 Tax assets 13,078 Item 110. Tax assets 13,078 Non-current assets and disposal groups classified as held for sale 1,800 Item 120. Non-current assets and disposal groups classified as held for sale 1,800 Other assets 7,334 Item 80. Insurance reserves charged to reinsurers - Item 130. Other assets 7,334 Total assets 831,469 Annex 1 - Reconciliation of reclassified Accounts to Mandatory Reporting Schedule Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 437 Annexes A reconciliation of the reclassified balance sheet and profit and loss account to the mandatory reporting schedules, is provided below. Any discrepancy in the data shown in this table is solely due to roundings. An explanation for the restatement of comparative figures is provided in the previous sections. Consolidated balance sheet (€ million) AMOUNTS AS AT ASSETS 12.31.2018 Cash and cash balances 30,991 Item 10. Cash and cash balances 30,991 Financial assets held for trading 65,231 Item 20. Financial assets at fair value through profit and loss: a) Financial assets held for trading 65,231 Loans to banks 69,850 Item 40. Financial assets at amortised cost: a) Loans and receivables with banks 73,643 less: Reclassification of debt securities in Other financial assets (3,839) + Reclassification of loans from Other financial assets - Item 20 c) 47 Loans to customers 471,839 Item 40. Financial assets at amortised cost: b) Loans and receivables with customers 505,668 less: Reclassification of debt securities in Other financial assets (36,304) + Reclassification of loans from Other financial assets - Item 20 c) 2,475 Other financial assets 152,310 Item 20. Financial assets at fair value through profit and loss: b) Financial assets designated at fair value 0 Item 20. Financial assets at fair value through profit and loss: c) Other financial assets mandatorily at fair value 20,906 less: Reclassification of loans in Loans to banks (47) less: Reclassification of loans in Loans to customers (2,475) Item 30. Financial assets at fair value through other comprehensive income 88,280 Item 70. Equity investments 5,502 + Reclassification of debt securities from Loans to banks - Item 40 a) 3,839 + Reclassification of debt securities from Loans to customers - Item 40 b) 36,304 Hedging instruments 7,120 Item 50. Hedging derivatives 4,682 Item 60. Changes in fair value of portfolio hedged items (+/-) 2,439 Property, plant and equipment 8,408 Item 90. Property, plant and equipment 8,408 Goodwill 1,484 Item 100. Intangible assets of which: goodwill 1,484 Other intangible assets 2,024 Item 100. Intangible assets net of goodwill 2,024 Tax assets 13,078 Item 110. Tax assets 13,078 Non-current assets and disposal groups classified as held for sale 1,800 Item 120. Non-current assets and disposal groups classified as held for sale 1,800 Other assets 7,334 Item 80. Insurance reserves charged to reinsurers - Item 130. Other assets 7,334 Total assets 831,469 Annex 1 - Reconciliation of reclassified Accounts to Mandatory Reporting Schedule Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 437 Annexes A reconciliation of the reclassified balance sheet and profit and loss account to the mandatory reporting schedules, is provided below. Any discrepancy in the data shown in this table is solely due to roundings. An explanation for the restatement of comparative figures is provided in the previous sections. Consolidated balance sheet (€ million) AMOUNTS AS AT ASSETS 12.31.2018 Cash and cash balances 30,991 Item 10. Cash and cash balances 30,991 Financial assets held for trading 65,231 Item 20. Financial assets at fair value through profit and loss: a) Financial assets held for trading 65,231 Loans to banks 69,850 Item 40. Financial assets at amortised cost: a) Loans and receivables with banks 73,643 less: Reclassification of debt securities in Other financial assets (3,839) + Reclassification of loans from Other financial assets - Item 20 c) 47 Loans to customers 471,839 Item 40. Financial assets at amortised cost: b) Loans and receivables with customers 505,668 less: Reclassification of debt securities in Other financial assets (36,304) + Reclassification of loans from Other financial assets - Item 20 c) 2,475 Other financial assets 152,310 Item 20. Financial assets at fair value through profit and loss: b) Financial assets designated at fair value 0 Item 20. Financial assets at fair value through profit and loss: c) Other financial assets mandatorily at fair value 20,906 less: Reclassification of loans in Loans to banks (47) less: Reclassification of loans in Loans to customers (2,475) Item 30. Financial assets at fair value through other comprehensive income 88,280 Item 70. Equity investments 5,502 + Reclassification of debt securities from Loans to banks - Item 40 a) 3,839 + Reclassification of debt securities from Loans to customers - Item 40 b) 36,304 Hedging instruments 7,120 Item 50. Hedging derivatives 4,682 Item 60. Changes in fair value of portfolio hedged items (+/-) 2,439 Property, plant and equipment 8,408 Item 90. Property, plant and equipment 8,408 Goodwill 1,484 Item 100. Intangible assets of which: goodwill 1,484 Other intangible assets 2,024 Item 100. Intangible assets net of goodwill 2,024 Tax assets 13,078 Item 110. Tax assets 13,078 Non-current assets and disposal groups classified as held for sale 1,800 Item 120. Non-current assets and disposal groups classified as held for sale 1,800 Other assets 7,334 Item 80. Insurance reserves charged to reinsurers - Item 130. Other assets 7,334 Total assets 831,469 Annex 1 - Reconciliation of reclassified Accounts to Mandatory Reporting Schedule Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 437 Annexes A reconciliation of the reclassified balance sheet and profit and loss account to the mandatory reporting schedules, is provided below. Any discrepancy in the data shown in this table is solely due to roundings. An explanation for the restatement of comparative figures is provided in the previous sections. Consolidated balance sheet (€ million) AMOUNTS AS AT ASSETS 12.31.2018 Cash and cash balances 30,991 Item 10. Cash and cash balances 30,991 Financial assets held for trading 65,231 Item 20. Financial assets at fair value through profit and loss: a) Financial assets held for trading 65,231 Loans to banks 69,850 Item 40. Financial assets at amortised cost: a) Loans and receivables with banks 73,643 less: Reclassification of debt securities in Other financial assets (3,839) + Reclassification of loans from Other financial assets - Item 20 c) 47 Loans to customers 471,839 Item 40. Financial assets at amortised cost: b) Loans and receivables with customers 505,668 less: Reclassification of debt securities in Other financial assets (36,304) + Reclassification of loans from Other financial assets - Item 20 c) 2,475 Other financial assets 152,310 Item 20. Financial assets at fair value through profit and loss: b) Financial assets designated at fair value 0 Item 20. Financial assets at fair value through profit and loss: c) Other financial assets mandatorily at fair value 20,906 less: Reclassification of loans in Loans to banks (47) less: Reclassification of loans in Loans to customers (2,475) Item 30. Financial assets at fair value through other comprehensive income 88,280 Item 70. Equity investments 5,502 + Reclassification of debt securities from Loans to banks - Item 40 a) 3,839 + Reclassification of debt securities from Loans to customers - Item 40 b) 36,304 Hedging instruments 7,120 Item 50. Hedging derivatives 4,682 Item 60. Changes in fair value of portfolio hedged items (+/-) 2,439 Property, plant and equipment 8,408 Item 90. Property, plant and equipment 8,408 Goodwill 1,484 Item 100. Intangible assets of which: goodwill 1,484 Other intangible assets 2,024 Item 100. Intangible assets net of goodwill 2,024 Tax assets 13,078 Item 110. Tax assets 13,078 Non-current assets and disposal groups classified as held for sale 1,800 Item 120. Non-current assets and disposal groups classified as held for sale 1,800 Other assets 7,334 Item 80. Insurance reserves charged to reinsurers - Item 130. Other assets 7,334 Total assets 831,469 Annex 1 - Reconciliation of reclassified Accounts to Mandatory Reporting Schedule Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 438 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ million) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 Deposits from banks 125,895 Item 10. Financial liabilities at amortised cost: a) Deposits from banks 125,895 Deposits from customers 478,988 Item 10. Financial liabilities at amortised cost: b) Deposits from customers 478,988 Debt securities issued 81,153 Item 10. Financial liabilities at amortised cost: c) Debt securities in issue 81,153 Financial liabilities held for trading 43,111 Item 20. Financial liabilities held for trading 43,111 Financial liabilities designated at fair value 9,318 Item 30. Financial liabilities designated at fair value 9,318 Hedging instruments 9,262 Item 40. Hedging derivatives 6,032 Item 50. Value adjustment of hedged financial liabilities (+/-) 3,230 Tax liabilities 825 Item 60. Tax liabilities 825 Liabilities included in disposal groups classified as held for sale 540 Item 70. Liabilities referrable to disposal groups classified as held for sale 540 Other liabilities 25,609 Item 80. Other liabilities 13,951 item 90. Provision for employee severance pay 698 Item 100. Provisions for risks and charges 10,961 Item 110. Technical reserves - Minorities 927 Item 190. Minority shareholders' equity (+/-) 927 Group shareholders' equity: 55,841 - Capital and reserves 51,948 Item 120. Valuation reserves (7,489) Item 140. Equity instruments 4,610 Item 150. Reserves 20,503 Item 160. Share premium 13,393 Item 170. Share capital 20,940 Item 180. Treasury shares (-) (9) - Net profit (loss) 3,892 Item 200. Profit (Loss) for the period (+/-) 3,892 Total liabilities and shareholders' equity 831,469 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 438 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ million) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 Deposits from banks 125,895 Item 10. Financial liabilities at amortised cost: a) Deposits from banks 125,895 Deposits from customers 478,988 Item 10. Financial liabilities at amortised cost: b) Deposits from customers 478,988 Debt securities issued 81,153 Item 10. Financial liabilities at amortised cost: c) Debt securities in issue 81,153 Financial liabilities held for trading 43,111 Item 20. Financial liabilities held for trading 43,111 Financial liabilities designated at fair value 9,318 Item 30. Financial liabilities designated at fair value 9,318 Hedging instruments 9,262 Item 40. Hedging derivatives 6,032 Item 50. Value adjustment of hedged financial liabilities (+/-) 3,230 Tax liabilities 825 Item 60. Tax liabilities 825 Liabilities included in disposal groups classified as held for sale 540 Item 70. Liabilities referrable to disposal groups classified as held for sale 540 Other liabilities 25,609 Item 80. Other liabilities 13,951 item 90. Provision for employee severance pay 698 Item 100. Provisions for risks and charges 10,961 Item 110. Technical reserves - Minorities 927 Item 190. Minority shareholders' equity (+/-) 927 Group shareholders' equity: 55,841 - Capital and reserves 51,948 Item 120. Valuation reserves (7,489) Item 140. Equity instruments 4,610 Item 150. Reserves 20,503 Item 160. Share premium 13,393 Item 170. Share capital 20,940 Item 180. Treasury shares (-) (9) - Net profit (loss) 3,892 Item 200. Profit (Loss) for the period (+/-) 3,892 Total liabilities and shareholders' equity 831,469 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 438 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ million) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 Deposits from banks 125,895 Item 10. Financial liabilities at amortised cost: a) Deposits from banks 125,895 Deposits from customers 478,988 Item 10. Financial liabilities at amortised cost: b) Deposits from customers 478,988 Debt securities issued 81,153 Item 10. Financial liabilities at amortised cost: c) Debt securities in issue 81,153 Financial liabilities held for trading 43,111 Item 20. Financial liabilities held for trading 43,111 Financial liabilities designated at fair value 9,318 Item 30. Financial liabilities designated at fair value 9,318 Hedging instruments 9,262 Item 40. Hedging derivatives 6,032 Item 50. Value adjustment of hedged financial liabilities (+/-) 3,230 Tax liabilities 825 Item 60. Tax liabilities 825 Liabilities included in disposal groups classified as held for sale 540 Item 70. Liabilities referrable to disposal groups classified as held for sale 540 Other liabilities 25,609 Item 80. Other liabilities 13,951 item 90. Provision for employee severance pay 698 Item 100. Provisions for risks and charges 10,961 Item 110. Technical reserves - Minorities 927 Item 190. Minority shareholders' equity (+/-) 927 Group shareholders' equity: 55,841 - Capital and reserves 51,948 Item 120. Valuation reserves (7,489) Item 140. Equity instruments 4,610 Item 150. Reserves 20,503 Item 160. Share premium 13,393 Item 170. Share capital 20,940 Item 180. Treasury shares (-) (9) - Net profit (loss) 3,892 Item 200. Profit (Loss) for the period (+/-) 3,892 Total liabilities and shareholders' equity 831,469 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 438 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ million) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 Deposits from banks 125,895 Item 10. Financial liabilities at amortised cost: a) Deposits from banks 125,895 Deposits from customers 478,988 Item 10. Financial liabilities at amortised cost: b) Deposits from customers 478,988 Debt securities issued 81,153 Item 10. Financial liabilities at amortised cost: c) Debt securities in issue 81,153 Financial liabilities held for trading 43,111 Item 20. Financial liabilities held for trading 43,111 Financial liabilities designated at fair value 9,318 Item 30. Financial liabilities designated at fair value 9,318 Hedging instruments 9,262 Item 40. Hedging derivatives 6,032 Item 50. Value adjustment of hedged financial liabilities (+/-) 3,230 Tax liabilities 825 Item 60. Tax liabilities 825 Liabilities included in disposal groups classified as held for sale 540 Item 70. Liabilities referrable to disposal groups classified as held for sale 540 Other liabilities 25,609 Item 80. Other liabilities 13,951 item 90. Provision for employee severance pay 698 Item 100. Provisions for risks and charges 10,961 Item 110. Technical reserves - Minorities 927 Item 190. Minority shareholders' equity (+/-) 927 Group shareholders' equity: 55,841 - Capital and reserves 51,948 Item 120. Valuation reserves (7,489) Item 140. Equity instruments 4,610 Item 150. Reserves 20,503 Item 160. Share premium 13,393 Item 170. Share capital 20,940 Item 180. Treasury shares (-) (9) - Net profit (loss) 3,892 Item 200. Profit (Loss) for the period (+/-) 3,892 Total liabilities and shareholders' equity 831,469 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 438 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ million) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 Deposits from banks 125,895 Item 10. Financial liabilities at amortised cost: a) Deposits from banks 125,895 Deposits from customers 478,988 Item 10. Financial liabilities at amortised cost: b) Deposits from customers 478,988 Debt securities issued 81,153 Item 10. Financial liabilities at amortised cost: c) Debt securities in issue 81,153 Financial liabilities held for trading 43,111 Item 20. Financial liabilities held for trading 43,111 Financial liabilities designated at fair value 9,318 Item 30. Financial liabilities designated at fair value 9,318 Hedging instruments 9,262 Item 40. Hedging derivatives 6,032 Item 50. Value adjustment of hedged financial liabilities (+/-) 3,230 Tax liabilities 825 Item 60. Tax liabilities 825 Liabilities included in disposal groups classified as held for sale 540 Item 70. Liabilities referrable to disposal groups classified as held for sale 540 Other liabilities 25,609 Item 80. Other liabilities 13,951 item 90. Provision for employee severance pay 698 Item 100. Provisions for risks and charges 10,961 Item 110. Technical reserves - Minorities 927 Item 190. Minority shareholders' equity (+/-) 927 Group shareholders' equity: 55,841 - Capital and reserves 51,948 Item 120. Valuation reserves (7,489) Item 140. Equity instruments 4,610 Item 150. Reserves 20,503 Item 160. Share premium 13,393 Item 170. Share capital 20,940 Item 180. Treasury shares (-) (9) - Net profit (loss) 3,892 Item 200. Profit (Loss) for the period (+/-) 3,892 Total liabilities and shareholders' equity 831,469 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 439 Consolidated balance sheet (€ million) AMOUNTS AS AT ASSETS 12.31.2017 Cash and cash balances 64,493 Item 10. Cash and cash balances 64,493 Financial assets held for trading 74,686 Item 20. Financial assets held for trading 74,686 Loans to banks 70,983 Item 60. Loans and receivables with banks 70,983 Loans to customers 438,895 Item 70. Loans and receivables with customers 447,727 + Reclassification of debt securities with customers (8,832) Other financial assets 147,496 Item 30. Financial assets at fair value through profit or loss 22,073 Item 40. Available-for-sale financial assets 104,101 Item 50. Held-to-maturity investments 6,277 Item 100. Equity investments 6,212 + Reclassification of debt securities with customers 8,832 Hedging instruments 5,676 Item 80. Hedging derivatives 3,431 Item 90. Changes in fair value of portfolio hedged items (+/-) 2,245 Property, plant and equipment 8,449 Item 120. Property, plant and equipment 8,449 Goodwill 1,484 Item 130. Intangible assets of which: goodwill 1,484 Other intangible assets 1,902 Item 130. Intangible assets net of goodwill 1,902 Tax assets 12,658 Item 140. Tax assets 12,658 Non-current assets and disposal groups classified as held for sale 1,111 Item 150. Non-current assets and disposal groups classified as held for sale 1,111 Other assets 8,958 Item 110. Insurance reserves attributable to reinsurers - Item 160. Other assets 8,958 Total assets 836,790 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 439 Consolidated balance sheet (€ million) AMOUNTS AS AT ASSETS 12.31.2017 Cash and cash balances 64,493 Item 10. Cash and cash balances 64,493 Financial assets held for trading 74,686 Item 20. Financial assets held for trading 74,686 Loans to banks 70,983 Item 60. Loans and receivables with banks 70,983 Loans to customers 438,895 Item 70. Loans and receivables with customers 447,727 + Reclassification of debt securities with customers (8,832) Other financial assets 147,496 Item 30. Financial assets at fair value through profit or loss 22,073 Item 40. Available-for-sale financial assets 104,101 Item 50. Held-to-maturity investments 6,277 Item 100. Equity investments 6,212 + Reclassification of debt securities with customers 8,832 Hedging instruments 5,676 Item 80. Hedging derivatives 3,431 Item 90. Changes in fair value of portfolio hedged items (+/-) 2,245 Property, plant and equipment 8,449 Item 120. Property, plant and equipment 8,449 Goodwill 1,484 Item 130. Intangible assets of which: goodwill 1,484 Other intangible assets 1,902 Item 130. Intangible assets net of goodwill 1,902 Tax assets 12,658 Item 140. Tax assets 12,658 Non-current assets and disposal groups classified as held for sale 1,111 Item 150. Non-current assets and disposal groups classified as held for sale 1,111 Other assets 8,958 Item 110. Insurance reserves attributable to reinsurers - Item 160. Other assets 8,958 Total assets 836,790 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 439 Consolidated balance sheet (€ million) AMOUNTS AS AT ASSETS 12.31.2017 Cash and cash balances 64,493 Item 10. Cash and cash balances 64,493 Financial assets held for trading 74,686 Item 20. Financial assets held for trading 74,686 Loans to banks 70,983 Item 60. Loans and receivables with banks 70,983 Loans to customers 438,895 Item 70. Loans and receivables with customers 447,727 + Reclassification of debt securities with customers (8,832) Other financial assets 147,496 Item 30. Financial assets at fair value through profit or loss 22,073 Item 40. Available-for-sale financial assets 104,101 Item 50. Held-to-maturity investments 6,277 Item 100. Equity investments 6,212 + Reclassification of debt securities with customers 8,832 Hedging instruments 5,676 Item 80. Hedging derivatives 3,431 Item 90. Changes in fair value of portfolio hedged items (+/-) 2,245 Property, plant and equipment 8,449 Item 120. Property, plant and equipment 8,449 Goodwill 1,484 Item 130. Intangible assets of which: goodwill 1,484 Other intangible assets 1,902 Item 130. Intangible assets net of goodwill 1,902 Tax assets 12,658 Item 140. Tax assets 12,658 Non-current assets and disposal groups classified as held for sale 1,111 Item 150. Non-current assets and disposal groups classified as held for sale 1,111 Other assets 8,958 Item 110. Insurance reserves attributable to reinsurers - Item 160. Other assets 8,958 Total assets 836,790 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 439 Consolidated balance sheet (€ million) AMOUNTS AS AT ASSETS 12.31.2017 Cash and cash balances 64,493 Item 10. Cash and cash balances 64,493 Financial assets held for trading 74,686 Item 20. Financial assets held for trading 74,686 Loans to banks 70,983 Item 60. Loans and receivables with banks 70,983 Loans to customers 438,895 Item 70. Loans and receivables with customers 447,727 + Reclassification of debt securities with customers (8,832) Other financial assets 147,496 Item 30. Financial assets at fair value through profit or loss 22,073 Item 40. Available-for-sale financial assets 104,101 Item 50. Held-to-maturity investments 6,277 Item 100. Equity investments 6,212 + Reclassification of debt securities with customers 8,832 Hedging instruments 5,676 Item 80. Hedging derivatives 3,431 Item 90. Changes in fair value of portfolio hedged items (+/-) 2,245 Property, plant and equipment 8,449 Item 120. Property, plant and equipment 8,449 Goodwill 1,484 Item 130. Intangible assets of which: goodwill 1,484 Other intangible assets 1,902 Item 130. Intangible assets net of goodwill 1,902 Tax assets 12,658 Item 140. Tax assets 12,658 Non-current assets and disposal groups classified as held for sale 1,111 Item 150. Non-current assets and disposal groups classified as held for sale 1,111 Other assets 8,958 Item 110. Insurance reserves attributable to reinsurers - Item 160. Other assets 8,958 Total assets 836,790 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 439 Consolidated balance sheet (€ million) AMOUNTS AS AT ASSETS 12.31.2017 Cash and cash balances 64,493 Item 10. Cash and cash balances 64,493 Financial assets held for trading 74,686 Item 20. Financial assets held for trading 74,686 Loans to banks 70,983 Item 60. Loans and receivables with banks 70,983 Loans to customers 438,895 Item 70. Loans and receivables with customers 447,727 + Reclassification of debt securities with customers (8,832) Other financial assets 147,496 Item 30. Financial assets at fair value through profit or loss 22,073 Item 40. Available-for-sale financial assets 104,101 Item 50. Held-to-maturity investments 6,277 Item 100. Equity investments 6,212 + Reclassification of debt securities with customers 8,832 Hedging instruments 5,676 Item 80. Hedging derivatives 3,431 Item 90. Changes in fair value of portfolio hedged items (+/-) 2,245 Property, plant and equipment 8,449 Item 120. Property, plant and equipment 8,449 Goodwill 1,484 Item 130. Intangible assets of which: goodwill 1,484 Other intangible assets 1,902 Item 130. Intangible assets net of goodwill 1,902 Tax assets 12,658 Item 140. Tax assets 12,658 Non-current assets and disposal groups classified as held for sale 1,111 Item 150. Non-current assets and disposal groups classified as held for sale 1,111 Other assets 8,958 Item 110. Insurance reserves attributable to reinsurers - Item 160. Other assets 8,958 Total assets 836,790 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 440 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ million) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017 Deposits from banks 123,244 Item 10. 'Deposits from banks 123,244 Deposits from customers 462,895 Item 20. Deposits from customers 462,895 Debt securities issued 98,603 Item 30. Debt securities in issue 98,603 Financial liabilities held for trading 55,784 Item 40. Financial liabilities held for trading 55,784 Financial liabilities designated at fair value 3,011 Item 50. Financial liabilities at fair value through profit or loss 3,011 Hedging instruments 6,610 Item 60. Hedging derivatives 3,568 Item 70. Changes in fair value of portfolio hedged items (+/-) 3,042 Tax liabilities 1,093 Item 80. Tax liabilities 1,093 Liabilities included in disposal groups classified as held for sale 185 Item 90. Liabilities included in disposal groups classified as held for sale 185 Other liabilities 25,141 Item 100. Other liabilities 15,573 Item 110. Provision for employee severance pay 917 Item 120. Provisions for risks and charges 8,650 Item 130. Insurance reserves - Minorities 894 Item 210. Minorities (+/-) 894 Group Shareholders' Equity: 59,331 - Capital and reserves 53,858 Item 140. Revaluation reserves (4,327) Item 160. Equity instruments 4,610 Item 170. Reserves 19,297 Item 180. Share premium 13,400 Item 190. Share capital 20,881 Item 200. Treasury shares (-) (3) - Net profit (loss) 5,473 Item 220. 'Net profit (loss) for the year (+/-) 5,473 Total liabilities and shareholders' equity 836,790 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 440 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ million) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017 Deposits from banks 123,244 Item 10. 'Deposits from banks 123,244 Deposits from customers 462,895 Item 20. Deposits from customers 462,895 Debt securities issued 98,603 Item 30. Debt securities in issue 98,603 Financial liabilities held for trading 55,784 Item 40. Financial liabilities held for trading 55,784 Financial liabilities designated at fair value 3,011 Item 50. Financial liabilities at fair value through profit or loss 3,011 Hedging instruments 6,610 Item 60. Hedging derivatives 3,568 Item 70. Changes in fair value of portfolio hedged items (+/-) 3,042 Tax liabilities 1,093 Item 80. Tax liabilities 1,093 Liabilities included in disposal groups classified as held for sale 185 Item 90. Liabilities included in disposal groups classified as held for sale 185 Other liabilities 25,141 Item 100. Other liabilities 15,573 Item 110. Provision for employee severance pay 917 Item 120. Provisions for risks and charges 8,650 Item 130. Insurance reserves - Minorities 894 Item 210. Minorities (+/-) 894 Group Shareholders' Equity: 59,331 - Capital and reserves 53,858 Item 140. Revaluation reserves (4,327) Item 160. Equity instruments 4,610 Item 170. Reserves 19,297 Item 180. Share premium 13,400 Item 190. Share capital 20,881 Item 200. Treasury shares (-) (3) - Net profit (loss) 5,473 Item 220. 'Net profit (loss) for the year (+/-) 5,473 Total liabilities and shareholders' equity 836,790 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 440 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ million) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017 Deposits from banks 123,244 Item 10. 'Deposits from banks 123,244 Deposits from customers 462,895 Item 20. Deposits from customers 462,895 Debt securities issued 98,603 Item 30. Debt securities in issue 98,603 Financial liabilities held for trading 55,784 Item 40. Financial liabilities held for trading 55,784 Financial liabilities designated at fair value 3,011 Item 50. Financial liabilities at fair value through profit or loss 3,011 Hedging instruments 6,610 Item 60. Hedging derivatives 3,568 Item 70. Changes in fair value of portfolio hedged items (+/-) 3,042 Tax liabilities 1,093 Item 80. Tax liabilities 1,093 Liabilities included in disposal groups classified as held for sale 185 Item 90. Liabilities included in disposal groups classified as held for sale 185 Other liabilities 25,141 Item 100. Other liabilities 15,573 Item 110. Provision for employee severance pay 917 Item 120. Provisions for risks and charges 8,650 Item 130. Insurance reserves - Minorities 894 Item 210. Minorities (+/-) 894 Group Shareholders' Equity: 59,331 - Capital and reserves 53,858 Item 140. Revaluation reserves (4,327) Item 160. Equity instruments 4,610 Item 170. Reserves 19,297 Item 180. Share premium 13,400 Item 190. Share capital 20,881 Item 200. Treasury shares (-) (3) - Net profit (loss) 5,473 Item 220. 'Net profit (loss) for the year (+/-) 5,473 Total liabilities and shareholders' equity 836,790 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 440 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ million) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017 Deposits from banks 123,244 Item 10. 'Deposits from banks 123,244 Deposits from customers 462,895 Item 20. Deposits from customers 462,895 Debt securities issued 98,603 Item 30. Debt securities in issue 98,603 Financial liabilities held for trading 55,784 Item 40. Financial liabilities held for trading 55,784 Financial liabilities designated at fair value 3,011 Item 50. Financial liabilities at fair value through profit or loss 3,011 Hedging instruments 6,610 Item 60. Hedging derivatives 3,568 Item 70. Changes in fair value of portfolio hedged items (+/-) 3,042 Tax liabilities 1,093 Item 80. Tax liabilities 1,093 Liabilities included in disposal groups classified as held for sale 185 Item 90. Liabilities included in disposal groups classified as held for sale 185 Other liabilities 25,141 Item 100. Other liabilities 15,573 Item 110. Provision for employee severance pay 917 Item 120. Provisions for risks and charges 8,650 Item 130. Insurance reserves - Minorities 894 Item 210. Minorities (+/-) 894 Group Shareholders' Equity: 59,331 - Capital and reserves 53,858 Item 140. Revaluation reserves (4,327) Item 160. Equity instruments 4,610 Item 170. Reserves 19,297 Item 180. Share premium 13,400 Item 190. Share capital 20,881 Item 200. Treasury shares (-) (3) - Net profit (loss) 5,473 Item 220. 'Net profit (loss) for the year (+/-) 5,473 Total liabilities and shareholders' equity 836,790 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 440 2018 Annual Report and Accounts · UniCredit continued: Consolidated balance sheet (€ million) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017 Deposits from banks 123,244 Item 10. 'Deposits from banks 123,244 Deposits from customers 462,895 Item 20. Deposits from customers 462,895 Debt securities issued 98,603 Item 30. Debt securities in issue 98,603 Financial liabilities held for trading 55,784 Item 40. Financial liabilities held for trading 55,784 Financial liabilities designated at fair value 3,011 Item 50. Financial liabilities at fair value through profit or loss 3,011 Hedging instruments 6,610 Item 60. Hedging derivatives 3,568 Item 70. Changes in fair value of portfolio hedged items (+/-) 3,042 Tax liabilities 1,093 Item 80. Tax liabilities 1,093 Liabilities included in disposal groups classified as held for sale 185 Item 90. Liabilities included in disposal groups classified as held for sale 185 Other liabilities 25,141 Item 100. Other liabilities 15,573 Item 110. Provision for employee severance pay 917 Item 120. Provisions for risks and charges 8,650 Item 130. Insurance reserves - Minorities 894 Item 210. Minorities (+/-) 894 Group Shareholders' Equity: 59,331 - Capital and reserves 53,858 Item 140. Revaluation reserves (4,327) Item 160. Equity instruments 4,610 Item 170. Reserves 19,297 Item 180. Share premium 13,400 Item 190. Share capital 20,881 Item 200. Treasury shares (-) (3) - Net profit (loss) 5,473 Item 220. 'Net profit (loss) for the year (+/-) 5,473 Total liabilities and shareholders' equity 836,790 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 441 Consolidated income statement (€ million) YEAR 2018 Net interest 10,856 Item 30. Net interest margin 10,853 less: Net interest margin of industrial companies 2 Dividends and other income from equity investments 738 Item 70. Dividend income and similar revenue 413 less: Dividends from held for trading equity instruments included in Item 70 (320) Item 250. Profit (Loss) of equity investments - of which: Profit (Loss) of equity investments valued at equity 644 Net fees and commissions 6,756 Item 60. Net fees and commissions 6,870 + Other administrative expenses - of which: outsourced services for the management of non-performing loans (115) Net trading income 1,245 Item 80. Net gains (losses) on trading 417 less: Net gains (losses) on trading of industrial companies - + Dividends from held for trading equity instruments (from Item 70) 320 Item 90. Net gains (losses) on hedge accounting 17 Item 100. Gains (Losses) on disposal and repurchase of: c) financial liabilities 3 Item 100. Gains (Losses) on disposal or repurchase of: b) financial assets at fair value through other comprehensive income 176 + Gains (Losses) on disposal and repurchase of financial assets at armortised cost - different from loans (from Item 100 a) 23 Item 110. Net gains (losses) on other financial assets/liabilities at fair value through profit and loss 289 Net other expenses/income 130 Item 230. Other operating expenses/income 1,018 less: Integration costs 2 less: Other operating income - of which: recovery of costs (639) + Net value adjustments/write-backs on property, plant and equipment in operating lease assets (from Item 210) (149) less: Transitional revenues from Pekao and Pgam (3) less: Net value adjustments/write-backs on leasehold improvements (on non-separable assets) classified as "Other assets" 62 less: Other operating income - Other income from invoicing JVs (43) less: Other administrative expenses - of which: outsourced services for the management of non-performing loans - penalties (19) + Result of industrial companies (133) + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans (from Item 100 a) 26 Gains (Losses) on disposals of investments in operating lease assets (from Item 280) 7 OPERATING INCOME 19,723 Payroll costs (6,423) Item 190. Administrative expenses: a) staff costs (6,437) less: Administrative expenses: a) staff costs of industrial companies 4 less: Integration costs 10 Other administrative expenses (4,157) Item 190. Administrative expenses: b) other administrative expenses (5,052) less: Administrative expenses: b) other administrative expenses of industrial companies 14 less: Administrative expenses - Contributions to the Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA 821 less: outsourced services for the management of non-performing loans - penalties 19 less: outsourced services for the management of non-performing loans 115 + Net value adjustments/write-backs on leasehold improvements (on non-separable assets) classified as "Other assets" - (from Item 230) (62) less: Integration costs (11) Recovery of expenses 685 + Other net operating income - of which: recovery of costs (from Item 230) 639 + Other operating income - Transition revenues from Pekao and Pgam - (from Item 230) 3 + Other operating income - Other income from invoicing JVs 43 Amortisation, depreciation and impairment losses on intangible and tangible assets (804) Item 210. Net value adjustments/write-backs on property, plant and equipment (606) less: Impairment losses/write backs on property owned for investment (41) less: Net value adjustments/write-backs of tangible in operating lease assets (from Item 210) 149 less: Integration costs 2 Item 220. Net value adjustments/write-backs on intangible assets (425) less: Integration costs 1 less: Net write-downs on property, plant and equipment and intangible assets of industrial companies 113 less: Purchase Price Allocation effect 4 Operating costs (10,698) OPERATING PROFIT (LOSS) 9,025 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 441 Consolidated income statement (€ million) YEAR 2018 Net interest 10,856 Item 30. Net interest margin 10,853 less: Net interest margin of industrial companies 2 Dividends and other income from equity investments 738 Item 70. Dividend income and similar revenue 413 less: Dividends from held for trading equity instruments included in Item 70 (320) Item 250. Profit (Loss) of equity investments - of which: Profit (Loss) of equity investments valued at equity 644 Net fees and commissions 6,756 Item 60. Net fees and commissions 6,870 + Other administrative expenses - of which: outsourced services for the management of non-performing loans (115) Net trading income 1,245 Item 80. Net gains (losses) on trading 417 less: Net gains (losses) on trading of industrial companies - + Dividends from held for trading equity instruments (from Item 70) 320 Item 90. Net gains (losses) on hedge accounting 17 Item 100. Gains (Losses) on disposal and repurchase of: c) financial liabilities 3 Item 100. Gains (Losses) on disposal or repurchase of: b) financial assets at fair value through other comprehensive income 176 + Gains (Losses) on disposal and repurchase of financial assets at armortised cost - different from loans (from Item 100 a) 23 Item 110. Net gains (losses) on other financial assets/liabilities at fair value through profit and loss 289 Net other expenses/income 130 Item 230. Other operating expenses/income 1,018 less: Integration costs 2 less: Other operating income - of which: recovery of costs (639) + Net value adjustments/write-backs on property, plant and equipment in operating lease assets (from Item 210) (149) less: Transitional revenues from Pekao and Pgam (3) less: Net value adjustments/write-backs on leasehold improvements (on non-separable assets) classified as "Other assets" 62 less: Other operating income - Other income from invoicing JVs (43) less: Other administrative expenses - of which: outsourced services for the management of non-performing loans - penalties (19) + Result of industrial companies (133) + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans (from Item 100 a) 26 Gains (Losses) on disposals of investments in operating lease assets (from Item 280) 7 OPERATING INCOME 19,723 Payroll costs (6,423) Item 190. Administrative expenses: a) staff costs (6,437) less: Administrative expenses: a) staff costs of industrial companies 4 less: Integration costs 10 Other administrative expenses (4,157) Item 190. Administrative expenses: b) other administrative expenses (5,052) less: Administrative expenses: b) other administrative expenses of industrial companies 14 less: Administrative expenses - Contributions to the Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA 821 less: outsourced services for the management of non-performing loans - penalties 19 less: outsourced services for the management of non-performing loans 115 + Net value adjustments/write-backs on leasehold improvements (on non-separable assets) classified as "Other assets" - (from Item 230) (62) less: Integration costs (11) Recovery of expenses 685 + Other net operating income - of which: recovery of costs (from Item 230) 639 + Other operating income - Transition revenues from Pekao and Pgam - (from Item 230) 3 + Other operating income - Other income from invoicing JVs 43 Amortisation, depreciation and impairment losses on intangible and tangible assets (804) Item 210. Net value adjustments/write-backs on property, plant and equipment (606) less: Impairment losses/write backs on property owned for investment (41) less: Net value adjustments/write-backs of tangible in operating lease assets (from Item 210) 149 less: Integration costs 2 Item 220. Net value adjustments/write-backs on intangible assets (425) less: Integration costs 1 less: Net write-downs on property, plant and equipment and intangible assets of industrial companies 113 less: Purchase Price Allocation effect 4 Operating costs (10,698) OPERATING PROFIT (LOSS) 9,025 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 441 Consolidated income statement (€ million) YEAR 2018 Net interest 10,856 Item 30. Net interest margin 10,853 less: Net interest margin of industrial companies 2 Dividends and other income from equity investments 738 Item 70. Dividend income and similar revenue 413 less: Dividends from held for trading equity instruments included in Item 70 (320) Item 250. Profit (Loss) of equity investments - of which: Profit (Loss) of equity investments valued at equity 644 Net fees and commissions 6,756 Item 60. Net fees and commissions 6,870 + Other administrative expenses - of which: outsourced services for the management of non-performing loans (115) Net trading income 1,245 Item 80. Net gains (losses) on trading 417 less: Net gains (losses) on trading of industrial companies - + Dividends from held for trading equity instruments (from Item 70) 320 Item 90. Net gains (losses) on hedge accounting 17 Item 100. Gains (Losses) on disposal and repurchase of: c) financial liabilities 3 Item 100. Gains (Losses) on disposal or repurchase of: b) financial assets at fair value through other comprehensive income 176 + Gains (Losses) on disposal and repurchase of financial assets at armortised cost - different from loans (from Item 100 a) 23 Item 110. Net gains (losses) on other financial assets/liabilities at fair value through profit and loss 289 Net other expenses/income 130 Item 230. Other operating expenses/income 1,018 less: Integration costs 2 less: Other operating income - of which: recovery of costs (639) + Net value adjustments/write-backs on property, plant and equipment in operating lease assets (from Item 210) (149) less: Transitional revenues from Pekao and Pgam (3) less: Net value adjustments/write-backs on leasehold improvements (on non-separable assets) classified as "Other assets" 62 less: Other operating income - Other income from invoicing JVs (43) less: Other administrative expenses - of which: outsourced services for the management of non-performing loans - penalties (19) + Result of industrial companies (133) + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans (from Item 100 a) 26 Gains (Losses) on disposals of investments in operating lease assets (from Item 280) 7 OPERATING INCOME 19,723 Payroll costs (6,423) Item 190. Administrative expenses: a) staff costs (6,437) less: Administrative expenses: a) staff costs of industrial companies 4 less: Integration costs 10 Other administrative expenses (4,157) Item 190. Administrative expenses: b) other administrative expenses (5,052) less: Administrative expenses: b) other administrative expenses of industrial companies 14 less: Administrative expenses - Contributions to the Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA 821 less: outsourced services for the management of non-performing loans - penalties 19 less: outsourced services for the management of non-performing loans 115 + Net value adjustments/write-backs on leasehold improvements (on non-separable assets) classified as "Other assets" - (from Item 230) (62) less: Integration costs (11) Recovery of expenses 685 + Other net operating income - of which: recovery of costs (from Item 230) 639 + Other operating income - Transition revenues from Pekao and Pgam - (from Item 230) 3 + Other operating income - Other income from invoicing JVs 43 Amortisation, depreciation and impairment losses on intangible and tangible assets (804) Item 210. Net value adjustments/write-backs on property, plant and equipment (606) less: Impairment losses/write backs on property owned for investment (41) less: Net value adjustments/write-backs of tangible in operating lease assets (from Item 210) 149 less: Integration costs 2 Item 220. Net value adjustments/write-backs on intangible assets (425) less: Integration costs 1 less: Net write-downs on property, plant and equipment and intangible assets of industrial companies 113 less: Purchase Price Allocation effect 4 Operating costs (10,698) OPERATING PROFIT (LOSS) 9,025 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 441 Consolidated income statement (€ million) YEAR 2018 Net interest 10,856 Item 30. Net interest margin 10,853 less: Net interest margin of industrial companies 2 Dividends and other income from equity investments 738 Item 70. Dividend income and similar revenue 413 less: Dividends from held for trading equity instruments included in Item 70 (320) Item 250. Profit (Loss) of equity investments - of which: Profit (Loss) of equity investments valued at equity 644 Net fees and commissions 6,756 Item 60. Net fees and commissions 6,870 + Other administrative expenses - of which: outsourced services for the management of non-performing loans (115) Net trading income 1,245 Item 80. Net gains (losses) on trading 417 less: Net gains (losses) on trading of industrial companies - + Dividends from held for trading equity instruments (from Item 70) 320 Item 90. Net gains (losses) on hedge accounting 17 Item 100. Gains (Losses) on disposal and repurchase of: c) financial liabilities 3 Item 100. Gains (Losses) on disposal or repurchase of: b) financial assets at fair value through other comprehensive income 176 + Gains (Losses) on disposal and repurchase of financial assets at armortised cost - different from loans (from Item 100 a) 23 Item 110. Net gains (losses) on other financial assets/liabilities at fair value through profit and loss 289 Net other expenses/income 130 Item 230. Other operating expenses/income 1,018 less: Integration costs 2 less: Other operating income - of which: recovery of costs (639) + Net value adjustments/write-backs on property, plant and equipment in operating lease assets (from Item 210) (149) less: Transitional revenues from Pekao and Pgam (3) less: Net value adjustments/write-backs on leasehold improvements (on non-separable assets) classified as "Other assets" 62 less: Other operating income - Other income from invoicing JVs (43) less: Other administrative expenses - of which: outsourced services for the management of non-performing loans - penalties (19) + Result of industrial companies (133) + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans (from Item 100 a) 26 Gains (Losses) on disposals of investments in operating lease assets (from Item 280) 7 OPERATING INCOME 19,723 Payroll costs (6,423) Item 190. Administrative expenses: a) staff costs (6,437) less: Administrative expenses: a) staff costs of industrial companies 4 less: Integration costs 10 Other administrative expenses (4,157) Item 190. Administrative expenses: b) other administrative expenses (5,052) less: Administrative expenses: b) other administrative expenses of industrial companies 14 less: Administrative expenses - Contributions to the Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA 821 less: outsourced services for the management of non-performing loans - penalties 19 less: outsourced services for the management of non-performing loans 115 + Net value adjustments/write-backs on leasehold improvements (on non-separable assets) classified as "Other assets" - (from Item 230) (62) less: Integration costs (11) Recovery of expenses 685 + Other net operating income - of which: recovery of costs (from Item 230) 639 + Other operating income - Transition revenues from Pekao and Pgam - (from Item 230) 3 + Other operating income - Other income from invoicing JVs 43 Amortisation, depreciation and impairment losses on intangible and tangible assets (804) Item 210. Net value adjustments/write-backs on property, plant and equipment (606) less: Impairment losses/write backs on property owned for investment (41) less: Net value adjustments/write-backs of tangible in operating lease assets (from Item 210) 149 less: Integration costs 2 Item 220. Net value adjustments/write-backs on intangible assets (425) less: Integration costs 1 less: Net write-downs on property, plant and equipment and intangible assets of industrial companies 113 less: Purchase Price Allocation effect 4 Operating costs (10,698) OPERATING PROFIT (LOSS) 9,025 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 441 Consolidated income statement (€ million) YEAR 2018 Net interest 10,856 Item 30. Net interest margin 10,853 less: Net interest margin of industrial companies 2 Dividends and other income from equity investments 738 Item 70. Dividend income and similar revenue 413 less: Dividends from held for trading equity instruments included in Item 70 (320) Item 250. Profit (Loss) of equity investments - of which: Profit (Loss) of equity investments valued at equity 644 Net fees and commissions 6,756 Item 60. Net fees and commissions 6,870 + Other administrative expenses - of which: outsourced services for the management of non-performing loans (115) Net trading income 1,245 Item 80. Net gains (losses) on trading 417 less: Net gains (losses) on trading of industrial companies - + Dividends from held for trading equity instruments (from Item 70) 320 Item 90. Net gains (losses) on hedge accounting 17 Item 100. Gains (Losses) on disposal and repurchase of: c) financial liabilities 3 Item 100. Gains (Losses) on disposal or repurchase of: b) financial assets at fair value through other comprehensive income 176 + Gains (Losses) on disposal and repurchase of financial assets at armortised cost - different from loans (from Item 100 a) 23 Item 110. Net gains (losses) on other financial assets/liabilities at fair value through profit and loss 289 Net other expenses/income 130 Item 230. Other operating expenses/income 1,018 less: Integration costs 2 less: Other operating income - of which: recovery of costs (639) + Net value adjustments/write-backs on property, plant and equipment in operating lease assets (from Item 210) (149) less: Transitional revenues from Pekao and Pgam (3) less: Net value adjustments/write-backs on leasehold improvements (on non-separable assets) classified as "Other assets" 62 less: Other operating income - Other income from invoicing JVs (43) less: Other administrative expenses - of which: outsourced services for the management of non-performing loans - penalties (19) + Result of industrial companies (133) + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans (from Item 100 a) 26 Gains (Losses) on disposals of investments in operating lease assets (from Item 280) 7 OPERATING INCOME 19,723 Payroll costs (6,423) Item 190. Administrative expenses: a) staff costs (6,437) less: Administrative expenses: a) staff costs of industrial companies 4 less: Integration costs 10 Other administrative expenses (4,157) Item 190. Administrative expenses: b) other administrative expenses (5,052) less: Administrative expenses: b) other administrative expenses of industrial companies 14 less: Administrative expenses - Contributions to the Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA 821 less: outsourced services for the management of non-performing loans - penalties 19 less: outsourced services for the management of non-performing loans 115 + Net value adjustments/write-backs on leasehold improvements (on non-separable assets) classified as "Other assets" - (from Item 230) (62) less: Integration costs (11) Recovery of expenses 685 + Other net operating income - of which: recovery of costs (from Item 230) 639 + Other operating income - Transition revenues from Pekao and Pgam - (from Item 230) 3 + Other operating income - Other income from invoicing JVs 43 Amortisation, depreciation and impairment losses on intangible and tangible assets (804) Item 210. Net value adjustments/write-backs on property, plant and equipment (606) less: Impairment losses/write backs on property owned for investment (41) less: Net value adjustments/write-backs of tangible in operating lease assets (from Item 210) 149 less: Integration costs 2 Item 220. Net value adjustments/write-backs on intangible assets (425) less: Integration costs 1 less: Net write-downs on property, plant and equipment and intangible assets of industrial companies 113 less: Purchase Price Allocation effect 4 Operating costs (10,698) OPERATING PROFIT (LOSS) 9,025 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 442 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ million) YEAR 2018 OPERATING PROFIT (LOSS) 9,025 Net write-downs on loans and provisions for guarantees and commitments (2,619) Item 100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost 129 less: Gains (Losses) on disposals/repurchases on loans and receivables - performing loans (26) less: Gains (Losses) on disposal and repurchase of financial assets at armortised cost - debt securities (23) Item 130. Net losses/recoveries on impairment relating to: a) financial assets at amortised cost (2,662) less: Recoveries on impairment relating to: a) financial assets at amortised cost - debt securities (16) Item 130. Net losses/recoveries on impairment relating to: b) Financial assets at fair value through other comprehensive income (19) less: Net losses/recoveries on impairment relating to: b) Financial assets at fair value through other comprehensive income - debt securities 19 Item 140. Gains/Losses from contractual changes with no cancellations (3) less: Gains/Losses from contractual changes with no cancellations - debt securities - Item 200. Net provisions for risks and charge - of which: a) commitments and financial guarantees given (19) less: Net losses on impairment other financial assets - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) 2 NET OPERATING PROFIT (LOSS) 6,406 Other charges and provisions (2,293) Item 200. Net provisions for risks and charges - of which: b) other net provision (1,504) less: Net provisions for risks and charges of industrial companies 1 less: Tax disputes relating to income tax (interests and sanctions excluded) 28 + Administrative expenses - Contributions to Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA (821) + Provisions for risks and charges - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) (2) Surplus on release of integration provision 5 Integration costs (9) Integration costs before Purchase Price Allocation effect (9) Net income from investments (485) + Net losses/recoveries on impairment relating to: of which: a) financial assets at amortised cost - debt securities (from Item 130) 16 + Net losses/recoveries on impairment relating to: of which: b) financial assets at fair value through other comprehensive income - debt securities (from Item 130) (19) + Gains/Losses from contractual changes with no cancellations - debt securities (from Item 140) - + Impairment losses/write backs on property owned for investment (from Item 210) 41 Item 250. Profit (Loss) of equity investments - of which: write-backs/impairment losses and gains/losses on disposal of associates valued at equity (742) Item 260. Net gains (losses) on tangible and intangible assets measured at fair value 1 Item 280. Gains (Losses) on disposal on investments 231 less: Gains (Losses) on disposals on investments in operating lease assets (from Item 280) (7) less: Industrial companies (6) PROFIT (LOSS) BEFORE TAX 3,619 Income tax for the period 479 Item 300. Tax expense (income) from continuing operations 502 less: Tax expense related to profit from continuing operations of industrial companies 7 + Other changes and provisions - Tax disputes relating to income tax (interests and sanctions excluded) - (from Item 200 b) (28) less: Purchase Price Allocation effect (1) NET PROFIT (LOSS) 4,098 Profit (Loss) from non-current assets held for sale after tax 14 Item 320. Profit (Loss) after tax from discontinued operations 14 PROFIT (LOSS) FOR THE PERIOD 4,112 Minorities (216) Item 340. Minorities' profit (loss) for the period (216) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 3,896 Purchase Price Allocation effect (3) Goodwill impairment - Item 270. Goodwill Impairment - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 3,892 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 442 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ million) YEAR 2018 OPERATING PROFIT (LOSS) 9,025 Net write-downs on loans and provisions for guarantees and commitments (2,619) Item 100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost 129 less: Gains (Losses) on disposals/repurchases on loans and receivables - performing loans (26) less: Gains (Losses) on disposal and repurchase of financial assets at armortised cost - debt securities (23) Item 130. Net losses/recoveries on impairment relating to: a) financial assets at amortised cost (2,662) less: Recoveries on impairment relating to: a) financial assets at amortised cost - debt securities (16) Item 130. Net losses/recoveries on impairment relating to: b) Financial assets at fair value through other comprehensive income (19) less: Net losses/recoveries on impairment relating to: b) Financial assets at fair value through other comprehensive income - debt securities 19 Item 140. Gains/Losses from contractual changes with no cancellations (3) less: Gains/Losses from contractual changes with no cancellations - debt securities - Item 200. Net provisions for risks and charge - of which: a) commitments and financial guarantees given (19) less: Net losses on impairment other financial assets - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) 2 NET OPERATING PROFIT (LOSS) 6,406 Other charges and provisions (2,293) Item 200. Net provisions for risks and charges - of which: b) other net provision (1,504) less: Net provisions for risks and charges of industrial companies 1 less: Tax disputes relating to income tax (interests and sanctions excluded) 28 + Administrative expenses - Contributions to Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA (821) + Provisions for risks and charges - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) (2) Surplus on release of integration provision 5 Integration costs (9) Integration costs before Purchase Price Allocation effect (9) Net income from investments (485) + Net losses/recoveries on impairment relating to: of which: a) financial assets at amortised cost - debt securities (from Item 130) 16 + Net losses/recoveries on impairment relating to: of which: b) financial assets at fair value through other comprehensive income - debt securities (from Item 130) (19) + Gains/Losses from contractual changes with no cancellations - debt securities (from Item 140) - + Impairment losses/write backs on property owned for investment (from Item 210) 41 Item 250. Profit (Loss) of equity investments - of which: write-backs/impairment losses and gains/losses on disposal of associates valued at equity (742) Item 260. Net gains (losses) on tangible and intangible assets measured at fair value 1 Item 280. Gains (Losses) on disposal on investments 231 less: Gains (Losses) on disposals on investments in operating lease assets (from Item 280) (7) less: Industrial companies (6) PROFIT (LOSS) BEFORE TAX 3,619 Income tax for the period 479 Item 300. Tax expense (income) from continuing operations 502 less: Tax expense related to profit from continuing operations of industrial companies 7 + Other changes and provisions - Tax disputes relating to income tax (interests and sanctions excluded) - (from Item 200 b) (28) less: Purchase Price Allocation effect (1) NET PROFIT (LOSS) 4,098 Profit (Loss) from non-current assets held for sale after tax 14 Item 320. Profit (Loss) after tax from discontinued operations 14 PROFIT (LOSS) FOR THE PERIOD 4,112 Minorities (216) Item 340. Minorities' profit (loss) for the period (216) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 3,896 Purchase Price Allocation effect (3) Goodwill impairment - Item 270. Goodwill Impairment - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 3,892 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 442 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ million) YEAR 2018 OPERATING PROFIT (LOSS) 9,025 Net write-downs on loans and provisions for guarantees and commitments (2,619) Item 100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost 129 less: Gains (Losses) on disposals/repurchases on loans and receivables - performing loans (26) less: Gains (Losses) on disposal and repurchase of financial assets at armortised cost - debt securities (23) Item 130. Net losses/recoveries on impairment relating to: a) financial assets at amortised cost (2,662) less: Recoveries on impairment relating to: a) financial assets at amortised cost - debt securities (16) Item 130. Net losses/recoveries on impairment relating to: b) Financial assets at fair value through other comprehensive income (19) less: Net losses/recoveries on impairment relating to: b) Financial assets at fair value through other comprehensive income - debt securities 19 Item 140. Gains/Losses from contractual changes with no cancellations (3) less: Gains/Losses from contractual changes with no cancellations - debt securities - Item 200. Net provisions for risks and charge - of which: a) commitments and financial guarantees given (19) less: Net losses on impairment other financial assets - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) 2 NET OPERATING PROFIT (LOSS) 6,406 Other charges and provisions (2,293) Item 200. Net provisions for risks and charges - of which: b) other net provision (1,504) less: Net provisions for risks and charges of industrial companies 1 less: Tax disputes relating to income tax (interests and sanctions excluded) 28 + Administrative expenses - Contributions to Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA (821) + Provisions for risks and charges - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) (2) Surplus on release of integration provision 5 Integration costs (9) Integration costs before Purchase Price Allocation effect (9) Net income from investments (485) + Net losses/recoveries on impairment relating to: of which: a) financial assets at amortised cost - debt securities (from Item 130) 16 + Net losses/recoveries on impairment relating to: of which: b) financial assets at fair value through other comprehensive income - debt securities (from Item 130) (19) + Gains/Losses from contractual changes with no cancellations - debt securities (from Item 140) - + Impairment losses/write backs on property owned for investment (from Item 210) 41 Item 250. Profit (Loss) of equity investments - of which: write-backs/impairment losses and gains/losses on disposal of associates valued at equity (742) Item 260. Net gains (losses) on tangible and intangible assets measured at fair value 1 Item 280. Gains (Losses) on disposal on investments 231 less: Gains (Losses) on disposals on investments in operating lease assets (from Item 280) (7) less: Industrial companies (6) PROFIT (LOSS) BEFORE TAX 3,619 Income tax for the period 479 Item 300. Tax expense (income) from continuing operations 502 less: Tax expense related to profit from continuing operations of industrial companies 7 + Other changes and provisions - Tax disputes relating to income tax (interests and sanctions excluded) - (from Item 200 b) (28) less: Purchase Price Allocation effect (1) NET PROFIT (LOSS) 4,098 Profit (Loss) from non-current assets held for sale after tax 14 Item 320. Profit (Loss) after tax from discontinued operations 14 PROFIT (LOSS) FOR THE PERIOD 4,112 Minorities (216) Item 340. Minorities' profit (loss) for the period (216) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 3,896 Purchase Price Allocation effect (3) Goodwill impairment - Item 270. Goodwill Impairment - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 3,892 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 442 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ million) YEAR 2018 OPERATING PROFIT (LOSS) 9,025 Net write-downs on loans and provisions for guarantees and commitments (2,619) Item 100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost 129 less: Gains (Losses) on disposals/repurchases on loans and receivables - performing loans (26) less: Gains (Losses) on disposal and repurchase of financial assets at armortised cost - debt securities (23) Item 130. Net losses/recoveries on impairment relating to: a) financial assets at amortised cost (2,662) less: Recoveries on impairment relating to: a) financial assets at amortised cost - debt securities (16) Item 130. Net losses/recoveries on impairment relating to: b) Financial assets at fair value through other comprehensive income (19) less: Net losses/recoveries on impairment relating to: b) Financial assets at fair value through other comprehensive income - debt securities 19 Item 140. Gains/Losses from contractual changes with no cancellations (3) less: Gains/Losses from contractual changes with no cancellations - debt securities - Item 200. Net provisions for risks and charge - of which: a) commitments and financial guarantees given (19) less: Net losses on impairment other financial assets - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) 2 NET OPERATING PROFIT (LOSS) 6,406 Other charges and provisions (2,293) Item 200. Net provisions for risks and charges - of which: b) other net provision (1,504) less: Net provisions for risks and charges of industrial companies 1 less: Tax disputes relating to income tax (interests and sanctions excluded) 28 + Administrative expenses - Contributions to Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA (821) + Provisions for risks and charges - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) (2) Surplus on release of integration provision 5 Integration costs (9) Integration costs before Purchase Price Allocation effect (9) Net income from investments (485) + Net losses/recoveries on impairment relating to: of which: a) financial assets at amortised cost - debt securities (from Item 130) 16 + Net losses/recoveries on impairment relating to: of which: b) financial assets at fair value through other comprehensive income - debt securities (from Item 130) (19) + Gains/Losses from contractual changes with no cancellations - debt securities (from Item 140) - + Impairment losses/write backs on property owned for investment (from Item 210) 41 Item 250. Profit (Loss) of equity investments - of which: write-backs/impairment losses and gains/losses on disposal of associates valued at equity (742) Item 260. Net gains (losses) on tangible and intangible assets measured at fair value 1 Item 280. Gains (Losses) on disposal on investments 231 less: Gains (Losses) on disposals on investments in operating lease assets (from Item 280) (7) less: Industrial companies (6) PROFIT (LOSS) BEFORE TAX 3,619 Income tax for the period 479 Item 300. Tax expense (income) from continuing operations 502 less: Tax expense related to profit from continuing operations of industrial companies 7 + Other changes and provisions - Tax disputes relating to income tax (interests and sanctions excluded) - (from Item 200 b) (28) less: Purchase Price Allocation effect (1) NET PROFIT (LOSS) 4,098 Profit (Loss) from non-current assets held for sale after tax 14 Item 320. Profit (Loss) after tax from discontinued operations 14 PROFIT (LOSS) FOR THE PERIOD 4,112 Minorities (216) Item 340. Minorities' profit (loss) for the period (216) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 3,896 Purchase Price Allocation effect (3) Goodwill impairment - Item 270. Goodwill Impairment - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 3,892 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 442 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ million) YEAR 2018 OPERATING PROFIT (LOSS) 9,025 Net write-downs on loans and provisions for guarantees and commitments (2,619) Item 100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost 129 less: Gains (Losses) on disposals/repurchases on loans and receivables - performing loans (26) less: Gains (Losses) on disposal and repurchase of financial assets at armortised cost - debt securities (23) Item 130. Net losses/recoveries on impairment relating to: a) financial assets at amortised cost (2,662) less: Recoveries on impairment relating to: a) financial assets at amortised cost - debt securities (16) Item 130. Net losses/recoveries on impairment relating to: b) Financial assets at fair value through other comprehensive income (19) less: Net losses/recoveries on impairment relating to: b) Financial assets at fair value through other comprehensive income - debt securities 19 Item 140. Gains/Losses from contractual changes with no cancellations (3) less: Gains/Losses from contractual changes with no cancellations - debt securities - Item 200. Net provisions for risks and charge - of which: a) commitments and financial guarantees given (19) less: Net losses on impairment other financial assets - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) 2 NET OPERATING PROFIT (LOSS) 6,406 Other charges and provisions (2,293) Item 200. Net provisions for risks and charges - of which: b) other net provision (1,504) less: Net provisions for risks and charges of industrial companies 1 less: Tax disputes relating to income tax (interests and sanctions excluded) 28 + Administrative expenses - Contributions to Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA (821) + Provisions for risks and charges - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) (2) Surplus on release of integration provision 5 Integration costs (9) Integration costs before Purchase Price Allocation effect (9) Net income from investments (485) + Net losses/recoveries on impairment relating to: of which: a) financial assets at amortised cost - debt securities (from Item 130) 16 + Net losses/recoveries on impairment relating to: of which: b) financial assets at fair value through other comprehensive income - debt securities (from Item 130) (19) + Gains/Losses from contractual changes with no cancellations - debt securities (from Item 140) - + Impairment losses/write backs on property owned for investment (from Item 210) 41 Item 250. Profit (Loss) of equity investments - of which: write-backs/impairment losses and gains/losses on disposal of associates valued at equity (742) Item 260. Net gains (losses) on tangible and intangible assets measured at fair value 1 Item 280. Gains (Losses) on disposal on investments 231 less: Gains (Losses) on disposals on investments in operating lease assets (from Item 280) (7) less: Industrial companies (6) PROFIT (LOSS) BEFORE TAX 3,619 Income tax for the period 479 Item 300. Tax expense (income) from continuing operations 502 less: Tax expense related to profit from continuing operations of industrial companies 7 + Other changes and provisions - Tax disputes relating to income tax (interests and sanctions excluded) - (from Item 200 b) (28) less: Purchase Price Allocation effect (1) NET PROFIT (LOSS) 4,098 Profit (Loss) from non-current assets held for sale after tax 14 Item 320. Profit (Loss) after tax from discontinued operations 14 PROFIT (LOSS) FOR THE PERIOD 4,112 Minorities (216) Item 340. Minorities' profit (loss) for the period (216) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 3,896 Purchase Price Allocation effect (3) Goodwill impairment - Item 270. Goodwill Impairment - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 3,892 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 443 Consolidated income statement (€ million) YEAR 2017 Net interest 10,633 Item 30. Net interest margin 10,298 less: Net interest margin of industrial companies - + Reclassification of interests from impairment losses on loans 334 Dividends and other income from equity investments 638 Item 70. Dividend income and similar revenues 315 less: Dividends from held for trading equity instruments included in item 70 (258) Item 240. Profit (Loss) of investments - of which: Profit (Loss) of equity investments valued at equity 581 Net fees and commissions 6,695 Item 60. Net fees and commissions 6,392 + Reclassification of net fees vs. PGAM and PEKAO 442 + Reclassification of indemnities for the management of non-performing loans 1 + Reclassification in net commission due to contractual changes (13) less: Other administrative expenses - of which: outsourced services for the management of non-performing loans (139) + Other operating income - of which: recovery of costs - commissioni istruttoria veloce (CIV) 12 Net trading income 1,818 Item 80. Gains (Losses) on financial assets and liabilities held for trading 1,075 + Dividends from held for trading equity instruments (from item 70) 258 + Gains (Losses) on disposal not realized on Pekao equity stake underlying the Equity-linked Certificates issued by UniCredit S.p.A. (from item 310) 5 Item 90. Fair value adjustments in hedge accounting 57 Item 100. Gains (Losses) on disposal or repurchase of: d) financial liabilities (1) + Gains (Losses) on disposal or repurchase of: b) available-for-sale financial assets (from item 100) 533 less: Gains (Losses) on AFS disposals - Equity instruments - Equity investments - day one profit/loss (20) Item 110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss (91) Net other expenses/income 156 + Gains (losses) on disposals/repurchases on loans and receivables - not impaired position (from item 100 a) 89 Item 220. Other net operating income 1,036 less: Other operating income - of which: recovery of costs (687) less: Net write-downs/-backs of tangible operating lease assets (from item 200) (141) less: Write-downs on leasehold improvements (on non-separable assets) - No Group 67 less: Other operating income - Other income from invoicing JVs (only with respect to Ubis) (81) less: Other administrative expenses - of which: outsourced services for the management of Non-Performing loans - penalties (12) less: Reclassification of indemnities for the management of non-performing loans (1) + Result of industrial companies (146) less: Integration costs 29 Gains (Losses) on disposals of investments - assets leasing operation (from item 270) 7 OPERATING INCOME 19,941 Payroll costs (6,905) Item 180. Administrative costs: a) staff expense (6,930) less: Administrative costs: a) staff expenses of industrial companies 11 less: Integration costs 14 Other administrative expenses (4,385) Item 180. Administrative costs: b) other administrative expense (5,139) less: Administrative costs: b) other administrative expense of industrial companies 24 less: Administrative costs - Contributions to the Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA 586 less: Outsourced services for the management of non-performing loans 151 less: Reclassification in net commission due to contractual changes 13 Write-downs on leasehold improvements (on non-separable assets) - No Group (67) less: Integration costs 48 Recovery of expenses 760 Item 220. Other net operating income - of which: Operating income - recovery of costs 687 less: other operating income - of which: recovery of costs - commissioni istruttoria veloce (CIV) (12) + Other operating income - Transition revenues from Pekao and Pgam (only with respect to Ubis) 4 + Other operating income - Other income from invoicing JVs (only with respect to Ubis) 81 Amortisation, depreciation and impairment losses on intangible and tangible assets (807) Item 200. Impairment/write-backs on property, plant and equipment (760) less: Impairment losses/write backs on property owned for investment 76 less: Net write-downs/-backs of tangible operating lease assets (from item 200) 141 less: Integration costs 25 Item 210. Impairment/write-backs on intangible assets (407) less: Net write-downs on property, plant and equipment and intangible assets of industrial companies 113 less: Purchase Price Allocation effect 5 Operating costs (11,338) OPERATING PROFIT (LOSS) 8,603 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 443 Consolidated income statement (€ million) YEAR 2017 Net interest 10,633 Item 30. Net interest margin 10,298 less: Net interest margin of industrial companies - + Reclassification of interests from impairment losses on loans 334 Dividends and other income from equity investments 638 Item 70. Dividend income and similar revenues 315 less: Dividends from held for trading equity instruments included in item 70 (258) Item 240. Profit (Loss) of investments - of which: Profit (Loss) of equity investments valued at equity 581 Net fees and commissions 6,695 Item 60. Net fees and commissions 6,392 + Reclassification of net fees vs. PGAM and PEKAO 442 + Reclassification of indemnities for the management of non-performing loans 1 + Reclassification in net commission due to contractual changes (13) less: Other administrative expenses - of which: outsourced services for the management of non-performing loans (139) + Other operating income - of which: recovery of costs - commissioni istruttoria veloce (CIV) 12 Net trading income 1,818 Item 80. Gains (Losses) on financial assets and liabilities held for trading 1,075 + Dividends from held for trading equity instruments (from item 70) 258 + Gains (Losses) on disposal not realized on Pekao equity stake underlying the Equity-linked Certificates issued by UniCredit S.p.A. (from item 310) 5 Item 90. Fair value adjustments in hedge accounting 57 Item 100. Gains (Losses) on disposal or repurchase of: d) financial liabilities (1) + Gains (Losses) on disposal or repurchase of: b) available-for-sale financial assets (from item 100) 533 less: Gains (Losses) on AFS disposals - Equity instruments - Equity investments - day one profit/loss (20) Item 110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss (91) Net other expenses/income 156 + Gains (losses) on disposals/repurchases on loans and receivables - not impaired position (from item 100 a) 89 Item 220. Other net operating income 1,036 less: Other operating income - of which: recovery of costs (687) less: Net write-downs/-backs of tangible operating lease assets (from item 200) (141) less: Write-downs on leasehold improvements (on non-separable assets) - No Group 67 less: Other operating income - Other income from invoicing JVs (only with respect to Ubis) (81) less: Other administrative expenses - of which: outsourced services for the management of Non-Performing loans - penalties (12) less: Reclassification of indemnities for the management of non-performing loans (1) + Result of industrial companies (146) less: Integration costs 29 Gains (Losses) on disposals of investments - assets leasing operation (from item 270) 7 OPERATING INCOME 19,941 Payroll costs (6,905) Item 180. Administrative costs: a) staff expense (6,930) less: Administrative costs: a) staff expenses of industrial companies 11 less: Integration costs 14 Other administrative expenses (4,385) Item 180. Administrative costs: b) other administrative expense (5,139) less: Administrative costs: b) other administrative expense of industrial companies 24 less: Administrative costs - Contributions to the Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA 586 less: Outsourced services for the management of non-performing loans 151 less: Reclassification in net commission due to contractual changes 13 Write-downs on leasehold improvements (on non-separable assets) - No Group (67) less: Integration costs 48 Recovery of expenses 760 Item 220. Other net operating income - of which: Operating income - recovery of costs 687 less: other operating income - of which: recovery of costs - commissioni istruttoria veloce (CIV) (12) + Other operating income - Transition revenues from Pekao and Pgam (only with respect to Ubis) 4 + Other operating income - Other income from invoicing JVs (only with respect to Ubis) 81 Amortisation, depreciation and impairment losses on intangible and tangible assets (807) Item 200. Impairment/write-backs on property, plant and equipment (760) less: Impairment losses/write backs on property owned for investment 76 less: Net write-downs/-backs of tangible operating lease assets (from item 200) 141 less: Integration costs 25 Item 210. Impairment/write-backs on intangible assets (407) less: Net write-downs on property, plant and equipment and intangible assets of industrial companies 113 less: Purchase Price Allocation effect 5 Operating costs (11,338) OPERATING PROFIT (LOSS) 8,603 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 443 Consolidated income statement (€ million) YEAR 2017 Net interest 10,633 Item 30. Net interest margin 10,298 less: Net interest margin of industrial companies - + Reclassification of interests from impairment losses on loans 334 Dividends and other income from equity investments 638 Item 70. Dividend income and similar revenues 315 less: Dividends from held for trading equity instruments included in item 70 (258) Item 240. Profit (Loss) of investments - of which: Profit (Loss) of equity investments valued at equity 581 Net fees and commissions 6,695 Item 60. Net fees and commissions 6,392 + Reclassification of net fees vs. PGAM and PEKAO 442 + Reclassification of indemnities for the management of non-performing loans 1 + Reclassification in net commission due to contractual changes (13) less: Other administrative expenses - of which: outsourced services for the management of non-performing loans (139) + Other operating income - of which: recovery of costs - commissioni istruttoria veloce (CIV) 12 Net trading income 1,818 Item 80. Gains (Losses) on financial assets and liabilities held for trading 1,075 + Dividends from held for trading equity instruments (from item 70) 258 + Gains (Losses) on disposal not realized on Pekao equity stake underlying the Equity-linked Certificates issued by UniCredit S.p.A. (from item 310) 5 Item 90. Fair value adjustments in hedge accounting 57 Item 100. Gains (Losses) on disposal or repurchase of: d) financial liabilities (1) + Gains (Losses) on disposal or repurchase of: b) available-for-sale financial assets (from item 100) 533 less: Gains (Losses) on AFS disposals - Equity instruments - Equity investments - day one profit/loss (20) Item 110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss (91) Net other expenses/income 156 + Gains (losses) on disposals/repurchases on loans and receivables - not impaired position (from item 100 a) 89 Item 220. Other net operating income 1,036 less: Other operating income - of which: recovery of costs (687) less: Net write-downs/-backs of tangible operating lease assets (from item 200) (141) less: Write-downs on leasehold improvements (on non-separable assets) - No Group 67 less: Other operating income - Other income from invoicing JVs (only with respect to Ubis) (81) less: Other administrative expenses - of which: outsourced services for the management of Non-Performing loans - penalties (12) less: Reclassification of indemnities for the management of non-performing loans (1) + Result of industrial companies (146) less: Integration costs 29 Gains (Losses) on disposals of investments - assets leasing operation (from item 270) 7 OPERATING INCOME 19,941 Payroll costs (6,905) Item 180. Administrative costs: a) staff expense (6,930) less: Administrative costs: a) staff expenses of industrial companies 11 less: Integration costs 14 Other administrative expenses (4,385) Item 180. Administrative costs: b) other administrative expense (5,139) less: Administrative costs: b) other administrative expense of industrial companies 24 less: Administrative costs - Contributions to the Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA 586 less: Outsourced services for the management of non-performing loans 151 less: Reclassification in net commission due to contractual changes 13 Write-downs on leasehold improvements (on non-separable assets) - No Group (67) less: Integration costs 48 Recovery of expenses 760 Item 220. Other net operating income - of which: Operating income - recovery of costs 687 less: other operating income - of which: recovery of costs - commissioni istruttoria veloce (CIV) (12) + Other operating income - Transition revenues from Pekao and Pgam (only with respect to Ubis) 4 + Other operating income - Other income from invoicing JVs (only with respect to Ubis) 81 Amortisation, depreciation and impairment losses on intangible and tangible assets (807) Item 200. Impairment/write-backs on property, plant and equipment (760) less: Impairment losses/write backs on property owned for investment 76 less: Net write-downs/-backs of tangible operating lease assets (from item 200) 141 less: Integration costs 25 Item 210. Impairment/write-backs on intangible assets (407) less: Net write-downs on property, plant and equipment and intangible assets of industrial companies 113 less: Purchase Price Allocation effect 5 Operating costs (11,338) OPERATING PROFIT (LOSS) 8,603 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 443 Consolidated income statement (€ million) YEAR 2017 Net interest 10,633 Item 30. Net interest margin 10,298 less: Net interest margin of industrial companies - + Reclassification of interests from impairment losses on loans 334 Dividends and other income from equity investments 638 Item 70. Dividend income and similar revenues 315 less: Dividends from held for trading equity instruments included in item 70 (258) Item 240. Profit (Loss) of investments - of which: Profit (Loss) of equity investments valued at equity 581 Net fees and commissions 6,695 Item 60. Net fees and commissions 6,392 + Reclassification of net fees vs. PGAM and PEKAO 442 + Reclassification of indemnities for the management of non-performing loans 1 + Reclassification in net commission due to contractual changes (13) less: Other administrative expenses - of which: outsourced services for the management of non-performing loans (139) + Other operating income - of which: recovery of costs - commissioni istruttoria veloce (CIV) 12 Net trading income 1,818 Item 80. Gains (Losses) on financial assets and liabilities held for trading 1,075 + Dividends from held for trading equity instruments (from item 70) 258 + Gains (Losses) on disposal not realized on Pekao equity stake underlying the Equity-linked Certificates issued by UniCredit S.p.A. (from item 310) 5 Item 90. Fair value adjustments in hedge accounting 57 Item 100. Gains (Losses) on disposal or repurchase of: d) financial liabilities (1) + Gains (Losses) on disposal or repurchase of: b) available-for-sale financial assets (from item 100) 533 less: Gains (Losses) on AFS disposals - Equity instruments - Equity investments - day one profit/loss (20) Item 110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss (91) Net other expenses/income 156 + Gains (losses) on disposals/repurchases on loans and receivables - not impaired position (from item 100 a) 89 Item 220. Other net operating income 1,036 less: Other operating income - of which: recovery of costs (687) less: Net write-downs/-backs of tangible operating lease assets (from item 200) (141) less: Write-downs on leasehold improvements (on non-separable assets) - No Group 67 less: Other operating income - Other income from invoicing JVs (only with respect to Ubis) (81) less: Other administrative expenses - of which: outsourced services for the management of Non-Performing loans - penalties (12) less: Reclassification of indemnities for the management of non-performing loans (1) + Result of industrial companies (146) less: Integration costs 29 Gains (Losses) on disposals of investments - assets leasing operation (from item 270) 7 OPERATING INCOME 19,941 Payroll costs (6,905) Item 180. Administrative costs: a) staff expense (6,930) less: Administrative costs: a) staff expenses of industrial companies 11 less: Integration costs 14 Other administrative expenses (4,385) Item 180. Administrative costs: b) other administrative expense (5,139) less: Administrative costs: b) other administrative expense of industrial companies 24 less: Administrative costs - Contributions to the Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA 586 less: Outsourced services for the management of non-performing loans 151 less: Reclassification in net commission due to contractual changes 13 Write-downs on leasehold improvements (on non-separable assets) - No Group (67) less: Integration costs 48 Recovery of expenses 760 Item 220. Other net operating income - of which: Operating income - recovery of costs 687 less: other operating income - of which: recovery of costs - commissioni istruttoria veloce (CIV) (12) + Other operating income - Transition revenues from Pekao and Pgam (only with respect to Ubis) 4 + Other operating income - Other income from invoicing JVs (only with respect to Ubis) 81 Amortisation, depreciation and impairment losses on intangible and tangible assets (807) Item 200. Impairment/write-backs on property, plant and equipment (760) less: Impairment losses/write backs on property owned for investment 76 less: Net write-downs/-backs of tangible operating lease assets (from item 200) 141 less: Integration costs 25 Item 210. Impairment/write-backs on intangible assets (407) less: Net write-downs on property, plant and equipment and intangible assets of industrial companies 113 less: Purchase Price Allocation effect 5 Operating costs (11,338) OPERATING PROFIT (LOSS) 8,603 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 443 Consolidated income statement (€ million) YEAR 2017 Net interest 10,633 Item 30. Net interest margin 10,298 less: Net interest margin of industrial companies - + Reclassification of interests from impairment losses on loans 334 Dividends and other income from equity investments 638 Item 70. Dividend income and similar revenues 315 less: Dividends from held for trading equity instruments included in item 70 (258) Item 240. Profit (Loss) of investments - of which: Profit (Loss) of equity investments valued at equity 581 Net fees and commissions 6,695 Item 60. Net fees and commissions 6,392 + Reclassification of net fees vs. PGAM and PEKAO 442 + Reclassification of indemnities for the management of non-performing loans 1 + Reclassification in net commission due to contractual changes (13) less: Other administrative expenses - of which: outsourced services for the management of non-performing loans (139) + Other operating income - of which: recovery of costs - commissioni istruttoria veloce (CIV) 12 Net trading income 1,818 Item 80. Gains (Losses) on financial assets and liabilities held for trading 1,075 + Dividends from held for trading equity instruments (from item 70) 258 + Gains (Losses) on disposal not realized on Pekao equity stake underlying the Equity-linked Certificates issued by UniCredit S.p.A. (from item 310) 5 Item 90. Fair value adjustments in hedge accounting 57 Item 100. Gains (Losses) on disposal or repurchase of: d) financial liabilities (1) + Gains (Losses) on disposal or repurchase of: b) available-for-sale financial assets (from item 100) 533 less: Gains (Losses) on AFS disposals - Equity instruments - Equity investments - day one profit/loss (20) Item 110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss (91) Net other expenses/income 156 + Gains (losses) on disposals/repurchases on loans and receivables - not impaired position (from item 100 a) 89 Item 220. Other net operating income 1,036 less: Other operating income - of which: recovery of costs (687) less: Net write-downs/-backs of tangible operating lease assets (from item 200) (141) less: Write-downs on leasehold improvements (on non-separable assets) - No Group 67 less: Other operating income - Other income from invoicing JVs (only with respect to Ubis) (81) less: Other administrative expenses - of which: outsourced services for the management of Non-Performing loans - penalties (12) less: Reclassification of indemnities for the management of non-performing loans (1) + Result of industrial companies (146) less: Integration costs 29 Gains (Losses) on disposals of investments - assets leasing operation (from item 270) 7 OPERATING INCOME 19,941 Payroll costs (6,905) Item 180. Administrative costs: a) staff expense (6,930) less: Administrative costs: a) staff expenses of industrial companies 11 less: Integration costs 14 Other administrative expenses (4,385) Item 180. Administrative costs: b) other administrative expense (5,139) less: Administrative costs: b) other administrative expense of industrial companies 24 less: Administrative costs - Contributions to the Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA 586 less: Outsourced services for the management of non-performing loans 151 less: Reclassification in net commission due to contractual changes 13 Write-downs on leasehold improvements (on non-separable assets) - No Group (67) less: Integration costs 48 Recovery of expenses 760 Item 220. Other net operating income - of which: Operating income - recovery of costs 687 less: other operating income - of which: recovery of costs - commissioni istruttoria veloce (CIV) (12) + Other operating income - Transition revenues from Pekao and Pgam (only with respect to Ubis) 4 + Other operating income - Other income from invoicing JVs (only with respect to Ubis) 81 Amortisation, depreciation and impairment losses on intangible and tangible assets (807) Item 200. Impairment/write-backs on property, plant and equipment (760) less: Impairment losses/write backs on property owned for investment 76 less: Net write-downs/-backs of tangible operating lease assets (from item 200) 141 less: Integration costs 25 Item 210. Impairment/write-backs on intangible assets (407) less: Net write-downs on property, plant and equipment and intangible assets of industrial companies 113 less: Purchase Price Allocation effect 5 Operating costs (11,338) OPERATING PROFIT (LOSS) 8,603 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 444 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ million) YEAR 2017 OPERATING PROFIT (LOSS) 8,603 Net impairment losses on loans and provisions for guarantees and commitments (2,939) Item 100. Gains (Losses) on disposal and repurchase of: a) loans (434) less: Gains (Losses) on disposals/repurchases on loans and receivables - not impaired position (from item 100 a) (89) Item 130. Net losses/recoveries on impairment: a) loans (2,091) less: Reclassification of interests from impairment losses on loans (334) Item 130. Net losses/recoveries on impairment: d) other financial assets 6 less: Net losses on impairment other financial assets - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) 3 NET OPERATING PROFIT (LOSS) 5,664 Other charges and provisions (1,064) Item 190. Net provisions for risks and charges (509) less: Provisions for risks and charges of industrial companies 2 + Administrative costs - contributions to Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA (586) + Provisions for risks and charges - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) (3) Surplus on release of integration provision 31 Integration costs (147) Integration costs before Purchase Price Allocation effect (147) Net income from investments (305) Item 130. Net losses/recoveries on impairment: b) available-for-sale financial assets (335) + Gains (Losses) on AFS disposals - Equity instruments - Equity investments - day one profit/loss 20 Item 130. Net losses/recoveries on impairment: c) held-to-maturity investments 6 Impairment losses/write backs on property owned for investment (from item 200) (76) Item 240. Profit (Loss) of investments of which: write-backs/impairment losses and gains/losses on disposal of associates valued at equity (5) Item 250. Gains (Losses) on tangible and intangible assets measured at fair value (1) Item 270. Gains (Losses) on disposal of investments 100 less: Gains (Losses) on disposals of investments - assets leasing operation (from item 270) (7) less: Industrial companies (8) PROFIT (LOSS) BEFORE TAX 4,148 Income tax for the period (609) Item 290. Tax expense (income) related to profit or loss from continuing operations (596) less: Tax expense related to profit from continuing operations of industrial companies 5 less: Reclassification of UPASSMNG - UCI (16) less: Purchase Price Allocation effect (2) NET PROFIT (LOSS) 3,539 Profit (Loss) from non-current assets held for sale after tax 2,251 Item 310. Profit (Loss) after tax from discontinued operations 2,682 less: Reclassification of net fees vs. PGAM and PEKAO (426) less: Gains (Losses) on disposal not realized on Pekao equity stake underlying the Equity-linked Certificates issued by UniCredit S.p.A. (5) PROFIT (LOSS) FOR THE PERIOD 5,790 Minorities (313) Item 330. Minorities (313) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 5,477 Purchase Price Allocation effect (4) Goodwill impairment - Item 260. Impairment of goodwill - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 5,473 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 444 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ million) YEAR 2017 OPERATING PROFIT (LOSS) 8,603 Net impairment losses on loans and provisions for guarantees and commitments (2,939) Item 100. Gains (Losses) on disposal and repurchase of: a) loans (434) less: Gains (Losses) on disposals/repurchases on loans and receivables - not impaired position (from item 100 a) (89) Item 130. Net losses/recoveries on impairment: a) loans (2,091) less: Reclassification of interests from impairment losses on loans (334) Item 130. Net losses/recoveries on impairment: d) other financial assets 6 less: Net losses on impairment other financial assets - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) 3 NET OPERATING PROFIT (LOSS) 5,664 Other charges and provisions (1,064) Item 190. Net provisions for risks and charges (509) less: Provisions for risks and charges of industrial companies 2 + Administrative costs - contributions to Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA (586) + Provisions for risks and charges - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) (3) Surplus on release of integration provision 31 Integration costs (147) Integration costs before Purchase Price Allocation effect (147) Net income from investments (305) Item 130. Net losses/recoveries on impairment: b) available-for-sale financial assets (335) + Gains (Losses) on AFS disposals - Equity instruments - Equity investments - day one profit/loss 20 Item 130. Net losses/recoveries on impairment: c) held-to-maturity investments 6 Impairment losses/write backs on property owned for investment (from item 200) (76) Item 240. Profit (Loss) of investments of which: write-backs/impairment losses and gains/losses on disposal of associates valued at equity (5) Item 250. Gains (Losses) on tangible and intangible assets measured at fair value (1) Item 270. Gains (Losses) on disposal of investments 100 less: Gains (Losses) on disposals of investments - assets leasing operation (from item 270) (7) less: Industrial companies (8) PROFIT (LOSS) BEFORE TAX 4,148 Income tax for the period (609) Item 290. Tax expense (income) related to profit or loss from continuing operations (596) less: Tax expense related to profit from continuing operations of industrial companies 5 less: Reclassification of UPASSMNG - UCI (16) less: Purchase Price Allocation effect (2) NET PROFIT (LOSS) 3,539 Profit (Loss) from non-current assets held for sale after tax 2,251 Item 310. Profit (Loss) after tax from discontinued operations 2,682 less: Reclassification of net fees vs. PGAM and PEKAO (426) less: Gains (Losses) on disposal not realized on Pekao equity stake underlying the Equity-linked Certificates issued by UniCredit S.p.A. (5) PROFIT (LOSS) FOR THE PERIOD 5,790 Minorities (313) Item 330. Minorities (313) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 5,477 Purchase Price Allocation effect (4) Goodwill impairment - Item 260. Impairment of goodwill - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 5,473 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 444 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ million) YEAR 2017 OPERATING PROFIT (LOSS) 8,603 Net impairment losses on loans and provisions for guarantees and commitments (2,939) Item 100. Gains (Losses) on disposal and repurchase of: a) loans (434) less: Gains (Losses) on disposals/repurchases on loans and receivables - not impaired position (from item 100 a) (89) Item 130. Net losses/recoveries on impairment: a) loans (2,091) less: Reclassification of interests from impairment losses on loans (334) Item 130. Net losses/recoveries on impairment: d) other financial assets 6 less: Net losses on impairment other financial assets - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) 3 NET OPERATING PROFIT (LOSS) 5,664 Other charges and provisions (1,064) Item 190. Net provisions for risks and charges (509) less: Provisions for risks and charges of industrial companies 2 + Administrative costs - contributions to Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA (586) + Provisions for risks and charges - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) (3) Surplus on release of integration provision 31 Integration costs (147) Integration costs before Purchase Price Allocation effect (147) Net income from investments (305) Item 130. Net losses/recoveries on impairment: b) available-for-sale financial assets (335) + Gains (Losses) on AFS disposals - Equity instruments - Equity investments - day one profit/loss 20 Item 130. Net losses/recoveries on impairment: c) held-to-maturity investments 6 Impairment losses/write backs on property owned for investment (from item 200) (76) Item 240. Profit (Loss) of investments of which: write-backs/impairment losses and gains/losses on disposal of associates valued at equity (5) Item 250. Gains (Losses) on tangible and intangible assets measured at fair value (1) Item 270. Gains (Losses) on disposal of investments 100 less: Gains (Losses) on disposals of investments - assets leasing operation (from item 270) (7) less: Industrial companies (8) PROFIT (LOSS) BEFORE TAX 4,148 Income tax for the period (609) Item 290. Tax expense (income) related to profit or loss from continuing operations (596) less: Tax expense related to profit from continuing operations of industrial companies 5 less: Reclassification of UPASSMNG - UCI (16) less: Purchase Price Allocation effect (2) NET PROFIT (LOSS) 3,539 Profit (Loss) from non-current assets held for sale after tax 2,251 Item 310. Profit (Loss) after tax from discontinued operations 2,682 less: Reclassification of net fees vs. PGAM and PEKAO (426) less: Gains (Losses) on disposal not realized on Pekao equity stake underlying the Equity-linked Certificates issued by UniCredit S.p.A. (5) PROFIT (LOSS) FOR THE PERIOD 5,790 Minorities (313) Item 330. Minorities (313) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 5,477 Purchase Price Allocation effect (4) Goodwill impairment - Item 260. Impairment of goodwill - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 5,473 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 444 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ million) YEAR 2017 OPERATING PROFIT (LOSS) 8,603 Net impairment losses on loans and provisions for guarantees and commitments (2,939) Item 100. Gains (Losses) on disposal and repurchase of: a) loans (434) less: Gains (Losses) on disposals/repurchases on loans and receivables - not impaired position (from item 100 a) (89) Item 130. Net losses/recoveries on impairment: a) loans (2,091) less: Reclassification of interests from impairment losses on loans (334) Item 130. Net losses/recoveries on impairment: d) other financial assets 6 less: Net losses on impairment other financial assets - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) 3 NET OPERATING PROFIT (LOSS) 5,664 Other charges and provisions (1,064) Item 190. Net provisions for risks and charges (509) less: Provisions for risks and charges of industrial companies 2 + Administrative costs - contributions to Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA (586) + Provisions for risks and charges - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) (3) Surplus on release of integration provision 31 Integration costs (147) Integration costs before Purchase Price Allocation effect (147) Net income from investments (305) Item 130. Net losses/recoveries on impairment: b) available-for-sale financial assets (335) + Gains (Losses) on AFS disposals - Equity instruments - Equity investments - day one profit/loss 20 Item 130. Net losses/recoveries on impairment: c) held-to-maturity investments 6 Impairment losses/write backs on property owned for investment (from item 200) (76) Item 240. Profit (Loss) of investments of which: write-backs/impairment losses and gains/losses on disposal of associates valued at equity (5) Item 250. Gains (Losses) on tangible and intangible assets measured at fair value (1) Item 270. Gains (Losses) on disposal of investments 100 less: Gains (Losses) on disposals of investments - assets leasing operation (from item 270) (7) less: Industrial companies (8) PROFIT (LOSS) BEFORE TAX 4,148 Income tax for the period (609) Item 290. Tax expense (income) related to profit or loss from continuing operations (596) less: Tax expense related to profit from continuing operations of industrial companies 5 less: Reclassification of UPASSMNG - UCI (16) less: Purchase Price Allocation effect (2) NET PROFIT (LOSS) 3,539 Profit (Loss) from non-current assets held for sale after tax 2,251 Item 310. Profit (Loss) after tax from discontinued operations 2,682 less: Reclassification of net fees vs. PGAM and PEKAO (426) less: Gains (Losses) on disposal not realized on Pekao equity stake underlying the Equity-linked Certificates issued by UniCredit S.p.A. (5) PROFIT (LOSS) FOR THE PERIOD 5,790 Minorities (313) Item 330. Minorities (313) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 5,477 Purchase Price Allocation effect (4) Goodwill impairment - Item 260. Impairment of goodwill - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 5,473 Consolidated financial statements | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 444 2018 Annual Report and Accounts · UniCredit continued: Consolidated income statement (€ million) YEAR 2017 OPERATING PROFIT (LOSS) 8,603 Net impairment losses on loans and provisions for guarantees and commitments (2,939) Item 100. Gains (Losses) on disposal and repurchase of: a) loans (434) less: Gains (Losses) on disposals/repurchases on loans and receivables - not impaired position (from item 100 a) (89) Item 130. Net losses/recoveries on impairment: a) loans (2,091) less: Reclassification of interests from impairment losses on loans (334) Item 130. Net losses/recoveries on impairment: d) other financial assets 6 less: Net losses on impairment other financial assets - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) 3 NET OPERATING PROFIT (LOSS) 5,664 Other charges and provisions (1,064) Item 190. Net provisions for risks and charges (509) less: Provisions for risks and charges of industrial companies 2 + Administrative costs - contributions to Resolution Funds, Deposit Guarantee Schemes (DGS), Bank Levy and Guarantee fees for DTA (586) + Provisions for risks and charges - contribution to National Interbank Deposit Guarantee Fund (F.I.T.D.) (3) Surplus on release of integration provision 31 Integration costs (147) Integration costs before Purchase Price Allocation effect (147) Net income from investments (305) Item 130. Net losses/recoveries on impairment: b) available-for-sale financial assets (335) + Gains (Losses) on AFS disposals - Equity instruments - Equity investments - day one profit/loss 20 Item 130. Net losses/recoveries on impairment: c) held-to-maturity investments 6 Impairment losses/write backs on property owned for investment (from item 200) (76) Item 240. Profit (Loss) of investments of which: write-backs/impairment losses and gains/losses on disposal of associates valued at equity (5) Item 250. Gains (Losses) on tangible and intangible assets measured at fair value (1) Item 270. Gains (Losses) on disposal of investments 100 less: Gains (Losses) on disposals of investments - assets leasing operation (from item 270) (7) less: Industrial companies (8) PROFIT (LOSS) BEFORE TAX 4,148 Income tax for the period (609) Item 290. Tax expense (income) related to profit or loss from continuing operations (596) less: Tax expense related to profit from continuing operations of industrial companies 5 less: Reclassification of UPASSMNG - UCI (16) less: Purchase Price Allocation effect (2) NET PROFIT (LOSS) 3,539 Profit (Loss) from non-current assets held for sale after tax 2,251 Item 310. Profit (Loss) after tax from discontinued operations 2,682 less: Reclassification of net fees vs. PGAM and PEKAO (426) less: Gains (Losses) on disposal not realized on Pekao equity stake underlying the Equity-linked Certificates issued by UniCredit S.p.A. (5) PROFIT (LOSS) FOR THE PERIOD 5,790 Minorities (313) Item 330. Minorities (313) NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP BEFORE PPA 5,477 Purchase Price Allocation effect (4) Goodwill impairment - Item 260. Impairment of goodwill - NET PROFIT (LOSS) ATTRIBUTABLE TO THE GROUP 5,473 Consolidated financial statements | Annexes Annex 2 - Fees for annual audits and related services UniCredit ·2018 Annual Report and Accounts 445 UniCredit group 2018 - Deloitte Network As prescribed by Art.149-duodecies of the Consob Issuers Regulation, the following table gives fees paid in 2018 for services rendered by Deloitte & Touche S.p.A. and firms in its network. (€ '000) SERVICE TYPE SERVICE PROVIDER USER FEES(1) Audit(2) Deloitte & Touche S.p.A. Parent company - UniCredit S.p.A. 3,543 Deloitte & Touche S.p.A. Subsidiaries 1,499 Deloitte Network Subsidiaries 16,614 Certification, letters of comfort, etc(3) Deloitte & Touche S.p.A Parent company - UniCredit S.p.A. 1,894 Deloitte & Touche S.p.A. Subsidiaries 227 Deloitte Network Parent company - UniCredit S.p.A. 107 Deloitte Network Subsidiaries 5,879 Other services(4) Deloitte & Touche S.p.A. Parent company - UniCredit S.p.A. 246 Deloitte & Touche S.p.A. Subsidiaries 10 Deloitte Network Parent company - UniCredit S.p.A. 593 Deloitte Network Subsidiaries 5,237 Total 35,849 Notes: (1) Excl. VAT and Expenses. (2) Does not include fees for audits of investment funds. (3) Mainly: verification services provided to UniCredit S.p.A. (Limited review on 2018 non financial information, Limited review on 2Q 2018 and 3Q 2018 Consolidated Reports for the inclusion of interim net profit in Common Equity Tier 1 Capital, Issuing Comfort Letters concerning bond issues, Signing the Italian tax declaration forms, Supervisory Fees ECB ISA805, Reporting data TLTRO II ISAE3000, Limited Assurance Engagement OBG ISAE3000, Local statutory audit report of foreign branches according to local regulations), other verification services required by regulations/local Supervisory Authority in Germany and Austria. (4) Mainly: other services provided to UniCredit S.p.A. (Agrees upon procedure on Own Funds, Support to projects "New App Mobile Banking", "MREL Framework and Reporting"); services provided to the subsidiary UniCredit Services S.c.p.A.; support provided to the subsidiary UniCredit Bank AG. Annex 2 - Fees for annual audits and related services Consolidated financial statements | Annexes Annex 2 - Fees for annual audits and related services UniCredit ·2018 Annual Report and Accounts 445 UniCredit group 2018 - Deloitte Network As prescribed by Art.149-duodecies of the Consob Issuers Regulation, the following table gives fees paid in 2018 for services rendered by Deloitte & Touche S.p.A. and firms in its network. (€ '000) SERVICE TYPE SERVICE PROVIDER USER FEES(1) Audit(2) Deloitte & Touche S.p.A. Parent company - UniCredit S.p.A. 3,543 Deloitte & Touche S.p.A. Subsidiaries 1,499 Deloitte Network Subsidiaries 16,614 Certification, letters of comfort, etc(3) Deloitte & Touche S.p.A Parent company - UniCredit S.p.A. 1,894 Deloitte & Touche S.p.A. Subsidiaries 227 Deloitte Network Parent company - UniCredit S.p.A. 107 Deloitte Network Subsidiaries 5,879 Other services(4) Deloitte & Touche S.p.A. Parent company - UniCredit S.p.A. 246 Deloitte & Touche S.p.A. Subsidiaries 10 Deloitte Network Parent company - UniCredit S.p.A. 593 Deloitte Network Subsidiaries 5,237 Total 35,849 Notes: (1) Excl. VAT and Expenses. (2) Does not include fees for audits of investment funds. (3) Mainly: verification services provided to UniCredit S.p.A. (Limited review on 2018 non financial information, Limited review on 2Q 2018 and 3Q 2018 Consolidated Reports for the inclusion of interim net profit in Common Equity Tier 1 Capital, Issuing Comfort Letters concerning bond issues, Signing the Italian tax declaration forms, Supervisory Fees ECB ISA805, Reporting data TLTRO II ISAE3000, Limited Assurance Engagement OBG ISAE3000, Local statutory audit report of foreign branches according to local regulations), other verification services required by regulations/local Supervisory Authority in Germany and Austria. (4) Mainly: other services provided to UniCredit S.p.A. (Agrees upon procedure on Own Funds, Support to projects "New App Mobile Banking", "MREL Framework and Reporting"); services provided to the subsidiary UniCredit Services S.c.p.A.; support provided to the subsidiary UniCredit Bank AG. Annex 2 - Fees for annual audits and related services Consolidated financial statements | Annexes Annex 2 - Fees for annual audits and related services UniCredit ·2018 Annual Report and Accounts 445 UniCredit group 2018 - Deloitte Network As prescribed by Art.149-duodecies of the Consob Issuers Regulation, the following table gives fees paid in 2018 for services rendered by Deloitte & Touche S.p.A. and firms in its network. (€ '000) SERVICE TYPE SERVICE PROVIDER USER FEES(1) Audit(2) Deloitte & Touche S.p.A. Parent company - UniCredit S.p.A. 3,543 Deloitte & Touche S.p.A. Subsidiaries 1,499 Deloitte Network Subsidiaries 16,614 Certification, letters of comfort, etc(3) Deloitte & Touche S.p.A Parent company - UniCredit S.p.A. 1,894 Deloitte & Touche S.p.A. Subsidiaries 227 Deloitte Network Parent company - UniCredit S.p.A. 107 Deloitte Network Subsidiaries 5,879 Other services(4) Deloitte & Touche S.p.A. Parent company - UniCredit S.p.A. 246 Deloitte & Touche S.p.A. Subsidiaries 10 Deloitte Network Parent company - UniCredit S.p.A. 593 Deloitte Network Subsidiaries 5,237 Total 35,849 Notes: (1) Excl. VAT and Expenses. (2) Does not include fees for audits of investment funds. (3) Mainly: verification services provided to UniCredit S.p.A. (Limited review on 2018 non financial information, Limited review on 2Q 2018 and 3Q 2018 Consolidated Reports for the inclusion of interim net profit in Common Equity Tier 1 Capital, Issuing Comfort Letters concerning bond issues, Signing the Italian tax declaration forms, Supervisory Fees ECB ISA805, Reporting data TLTRO II ISAE3000, Limited Assurance Engagement OBG ISAE3000, Local statutory audit report of foreign branches according to local regulations), other verification services required by regulations/local Supervisory Authority in Germany and Austria. (4) Mainly: other services provided to UniCredit S.p.A. (Agrees upon procedure on Own Funds, Support to projects "New App Mobile Banking", "MREL Framework and Reporting"); services provided to the subsidiary UniCredit Services S.c.p.A.; support provided to the subsidiary UniCredit Bank AG. Annex 2 - Fees for annual audits and related services Consolidated financial statements | Annexes Annex 2 - Fees for annual audits and related services UniCredit ·2018 Annual Report and Accounts 445 UniCredit group 2018 - Deloitte Network As prescribed by Art.149-duodecies of the Consob Issuers Regulation, the following table gives fees paid in 2018 for services rendered by Deloitte & Touche S.p.A. and firms in its network. (€ '000) SERVICE TYPE SERVICE PROVIDER USER FEES(1) Audit(2) Deloitte & Touche S.p.A. Parent company - UniCredit S.p.A. 3,543 Deloitte & Touche S.p.A. Subsidiaries 1,499 Deloitte Network Subsidiaries 16,614 Certification, letters of comfort, etc(3) Deloitte & Touche S.p.A Parent company - UniCredit S.p.A. 1,894 Deloitte & Touche S.p.A. Subsidiaries 227 Deloitte Network Parent company - UniCredit S.p.A. 107 Deloitte Network Subsidiaries 5,879 Other services(4) Deloitte & Touche S.p.A. Parent company - UniCredit S.p.A. 246 Deloitte & Touche S.p.A. Subsidiaries 10 Deloitte Network Parent company - UniCredit S.p.A. 593 Deloitte Network Subsidiaries 5,237 Total 35,849 Notes: (1) Excl. VAT and Expenses. (2) Does not include fees for audits of investment funds. (3) Mainly: verification services provided to UniCredit S.p.A. (Limited review on 2018 non financial information, Limited review on 2Q 2018 and 3Q 2018 Consolidated Reports for the inclusion of interim net profit in Common Equity Tier 1 Capital, Issuing Comfort Letters concerning bond issues, Signing the Italian tax declaration forms, Supervisory Fees ECB ISA805, Reporting data TLTRO II ISAE3000, Limited Assurance Engagement OBG ISAE3000, Local statutory audit report of foreign branches according to local regulations), other verification services required by regulations/local Supervisory Authority in Germany and Austria. (4) Mainly: other services provided to UniCredit S.p.A. (Agrees upon procedure on Own Funds, Support to projects "New App Mobile Banking", "MREL Framework and Reporting"); services provided to the subsidiary UniCredit Services S.c.p.A.; support provided to the subsidiary UniCredit Bank AG. Annex 2 - Fees for annual audits and related services Consolidated financial statements | Annexes Annex 2 - Fees for annual audits and related services UniCredit ·2018 Annual Report and Accounts 445 UniCredit group 2018 - Deloitte Network As prescribed by Art.149-duodecies of the Consob Issuers Regulation, the following table gives fees paid in 2018 for services rendered by Deloitte & Touche S.p.A. and firms in its network. (€ '000) SERVICE TYPE SERVICE PROVIDER USER FEES(1) Audit(2) Deloitte & Touche S.p.A. Parent company - UniCredit S.p.A. 3,543 Deloitte & Touche S.p.A. Subsidiaries 1,499 Deloitte Network Subsidiaries 16,614 Certification, letters of comfort, etc(3) Deloitte & Touche S.p.A Parent company - UniCredit S.p.A. 1,894 Deloitte & Touche S.p.A. Subsidiaries 227 Deloitte Network Parent company - UniCredit S.p.A. 107 Deloitte Network Subsidiaries 5,879 Other services(4) Deloitte & Touche S.p.A. Parent company - UniCredit S.p.A. 246 Deloitte & Touche S.p.A. Subsidiaries 10 Deloitte Network Parent company - UniCredit S.p.A. 593 Deloitte Network Subsidiaries 5,237 Total 35,849 Notes: (1) Excl. VAT and Expenses. (2) Does not include fees for audits of investment funds. (3) Mainly: verification services provided to UniCredit S.p.A. (Limited review on 2018 non financial information, Limited review on 2Q 2018 and 3Q 2018 Consolidated Reports for the inclusion of interim net profit in Common Equity Tier 1 Capital, Issuing Comfort Letters concerning bond issues, Signing the Italian tax declaration forms, Supervisory Fees ECB ISA805, Reporting data TLTRO II ISAE3000, Limited Assurance Engagement OBG ISAE3000, Local statutory audit report of foreign branches according to local regulations), other verification services required by regulations/local Supervisory Authority in Germany and Austria. (4) Mainly: other services provided to UniCredit S.p.A. (Agrees upon procedure on Own Funds, Support to projects "New App Mobile Banking", "MREL Framework and Reporting"); services provided to the subsidiary UniCredit Services S.c.p.A.; support provided to the subsidiary UniCredit Bank AG. Annex 2 - Fees for annual audits and related services Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 446 2018 Annual Report and Accounts · UniCredit Annex 3 - Securitisation - qualitative tables ORIGINATOR: UniCredit S.p.A. Traditional securitisations of Performing and Non-Performing loans STRATEGIES, PROCESSES AND GOALS: The initiatives are a part of the Group's strategies, one of the objectives of which is to finance, at competitive rates (and in large amounts), the development of medium and long-term through the disposal of existing "Performing" and "Non-Performing" loan portfolios and also creating eligible securities for refinancing operations with the ECB and/or with third parties (counterbalancing capacity). The main advantages of the transactions can be summarised as follows: - improvement in the matching of asset maturities; - diversification of sources of financing; - broadening of investor base and resulting optimisation of funding cost; - creating counterbalancing capacity. Moreover, securitisation transactions can also be implemented for purposes related to business projects (for better management of assets), corporate restructuring or deleveraging projects. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: UniCredit S.p.A. acts as "Servicer" for almost all transactions concerned for which is Originator. As per the agreements entered into with issuing companies (special purpose vehicles - SPV), servicing consists of performing, on behalf of these companies, administrative, collection and securitised loan collection activities as well as the management of any recovery procedures for impaired loans. Thus, as Servicer, UniCredit S.p.A. is charged with continually tracking cash flows from securitised loans and constantly monitoring their collection, with the assistance of third party companies (especially for the recovery of impaired loans; the company involved is DoBank S.p.A., which operates as an assistant to the Servicer, governed by a special agreement). The Servicer provides the Special Purpose Vehicle (and other counterparties indicated in the servicing agreements) information on the activity performed by, periodically reports that indicate, among other things, the collection and transfer of the income stream sold, the amount of default positions and recoveries completed, overdue installments, etc., with all information broken down in relation to specific transactions. These reports (which are usually quarterly) are periodically checked (if contractually required) by an auditing firm. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: From a strategic point of view, Group Finance Department is responsible for central coordination. In this context, the above structure plays: a) in the launch phase of the operation the role of proposer and provides support to the other Bank’s Divisions and to the individual Legal Entities in conducting transactions, cooperating with all the other departments (Planning & Capital Management, Group Risk Management, M&A etc.) in identifying the characteristics and the distinctive features of "true sale" securitisations loans in order to achieve the targets set in the Group’s Funding Plan and in the Contingency Funding Plan, approved by the Board of Directors, in the ordinary plan of creating counterbalancing capacity, as well as in organisational strategy and business of Top Management. Specific transactions are subject to prior approval by the competent departments of the Holding and of the Originator Bank (during approval, among other things, the structure, costs and impacts in terms of liquidity, counterbalancing capacity, organisational, business and/or any capital relief are discussed and analyzed), and to final approval by the Board of Directors of the Originator Bank; b) in the management phase of the operation, the monitoring role of the securitised portfolios performances and any rating action published by Ratings Agencies, the interactions with the Ratings Agencies in order to submit regular information on portfolios and, more generally, the role of coordination of the Originator Bank to facilitate the solution of events relating to the securitised portfolios (management of actions of payments holidays, downgrading, restructurings, etc.). The Bank has established a special coordination unit (General Ledger & Securitisation Reporting) within the Group Accounting & Regulatory Reporting Department. This unit has been tasked with administrative activities connected to the Servicer and Account Bank related-duties, and to carry out these duties, it works in close cooperation with specific, qualified areas of the Bank (Group Risk Management, Group Finance, Group Legal Advice & Contracts, etc.) and the Group (UniCredit Services S.C.p.A., etc.). It also provides a technical and operational support to network units. The information regarding the monitoring of collections and the performance of the securitised portfolio is periodically submitted to the Servicer's Board of Directors. HEDGING POLICIES: By agreement, securitised portfolios can be protected from interest rate risk by means of the Special Purpose Vehicle entering into Interest Rate Swap (IRS) agreements to hedge a fixed-rate portfolio, and Basis Swaps to hedge an indexed rate portfolio. In connection with these swaps, always if required by agreements, related back-to-back swap contracts are entered into between the Swap counterparty and UniCredit S.p.A. as Originator, interfaced in some cases by UniCredit Bank AG. OPERATING RESULTS: At the end of December 2018, the operating results related to existing securitisation transactions essentially reflected the performance of underlying portfolios and the resulting cash flows, and obviously are affected by the amount of defaults and prepayments during the period, which, moreover, are in line with the performance seen in other assets of this kind that are not securitised. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 446 2018 Annual Report and Accounts · UniCredit Annex 3 - Securitisation - qualitative tables ORIGINATOR: UniCredit S.p.A. Traditional securitisations of Performing and Non-Performing loans STRATEGIES, PROCESSES AND GOALS: The initiatives are a part of the Group's strategies, one of the objectives of which is to finance, at competitive rates (and in large amounts), the development of medium and long-term through the disposal of existing "Performing" and "Non-Performing" loan portfolios and also creating eligible securities for refinancing operations with the ECB and/or with third parties (counterbalancing capacity). The main advantages of the transactions can be summarised as follows: - improvement in the matching of asset maturities; - diversification of sources of financing; - broadening of investor base and resulting optimisation of funding cost; - creating counterbalancing capacity. Moreover, securitisation transactions can also be implemented for purposes related to business projects (for better management of assets), corporate restructuring or deleveraging projects. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: UniCredit S.p.A. acts as "Servicer" for almost all transactions concerned for which is Originator. As per the agreements entered into with issuing companies (special purpose vehicles - SPV), servicing consists of performing, on behalf of these companies, administrative, collection and securitised loan collection activities as well as the management of any recovery procedures for impaired loans. Thus, as Servicer, UniCredit S.p.A. is charged with continually tracking cash flows from securitised loans and constantly monitoring their collection, with the assistance of third party companies (especially for the recovery of impaired loans; the company involved is DoBank S.p.A., which operates as an assistant to the Servicer, governed by a special agreement). The Servicer provides the Special Purpose Vehicle (and other counterparties indicated in the servicing agreements) information on the activity performed by, periodically reports that indicate, among other things, the collection and transfer of the income stream sold, the amount of default positions and recoveries completed, overdue installments, etc., with all information broken down in relation to specific transactions. These reports (which are usually quarterly) are periodically checked (if contractually required) by an auditing firm. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: From a strategic point of view, Group Finance Department is responsible for central coordination. In this context, the above structure plays: a) in the launch phase of the operation the role of proposer and provides support to the other Bank’s Divisions and to the individual Legal Entities in conducting transactions, cooperating with all the other departments (Planning & Capital Management, Group Risk Management, M&A etc.) in identifying the characteristics and the distinctive features of "true sale" securitisations loans in order to achieve the targets set in the Group’s Funding Plan and in the Contingency Funding Plan, approved by the Board of Directors, in the ordinary plan of creating counterbalancing capacity, as well as in organisational strategy and business of Top Management. Specific transactions are subject to prior approval by the competent departments of the Holding and of the Originator Bank (during approval, among other things, the structure, costs and impacts in terms of liquidity, counterbalancing capacity, organisational, business and/or any capital relief are discussed and analyzed), and to final approval by the Board of Directors of the Originator Bank; b) in the management phase of the operation, the monitoring role of the securitised portfolios performances and any rating action published by Ratings Agencies, the interactions with the Ratings Agencies in order to submit regular information on portfolios and, more generally, the role of coordination of the Originator Bank to facilitate the solution of events relating to the securitised portfolios (management of actions of payments holidays, downgrading, restructurings, etc.). The Bank has established a special coordination unit (General Ledger & Securitisation Reporting) within the Group Accounting & Regulatory Reporting Department. This unit has been tasked with administrative activities connected to the Servicer and Account Bank related-duties, and to carry out these duties, it works in close cooperation with specific, qualified areas of the Bank (Group Risk Management, Group Finance, Group Legal Advice & Contracts, etc.) and the Group (UniCredit Services S.C.p.A., etc.). It also provides a technical and operational support to network units. The information regarding the monitoring of collections and the performance of the securitised portfolio is periodically submitted to the Servicer's Board of Directors. HEDGING POLICIES: By agreement, securitised portfolios can be protected from interest rate risk by means of the Special Purpose Vehicle entering into Interest Rate Swap (IRS) agreements to hedge a fixed-rate portfolio, and Basis Swaps to hedge an indexed rate portfolio. In connection with these swaps, always if required by agreements, related back-to-back swap contracts are entered into between the Swap counterparty and UniCredit S.p.A. as Originator, interfaced in some cases by UniCredit Bank AG. OPERATING RESULTS: At the end of December 2018, the operating results related to existing securitisation transactions essentially reflected the performance of underlying portfolios and the resulting cash flows, and obviously are affected by the amount of defaults and prepayments during the period, which, moreover, are in line with the performance seen in other assets of this kind that are not securitised. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 446 2018 Annual Report and Accounts · UniCredit Annex 3 - Securitisation - qualitative tables ORIGINATOR: UniCredit S.p.A. Traditional securitisations of Performing and Non-Performing loans STRATEGIES, PROCESSES AND GOALS: The initiatives are a part of the Group's strategies, one of the objectives of which is to finance, at competitive rates (and in large amounts), the development of medium and long-term through the disposal of existing "Performing" and "Non-Performing" loan portfolios and also creating eligible securities for refinancing operations with the ECB and/or with third parties (counterbalancing capacity). The main advantages of the transactions can be summarised as follows: - improvement in the matching of asset maturities; - diversification of sources of financing; - broadening of investor base and resulting optimisation of funding cost; - creating counterbalancing capacity. Moreover, securitisation transactions can also be implemented for purposes related to business projects (for better management of assets), corporate restructuring or deleveraging projects. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: UniCredit S.p.A. acts as "Servicer" for almost all transactions concerned for which is Originator. As per the agreements entered into with issuing companies (special purpose vehicles - SPV), servicing consists of performing, on behalf of these companies, administrative, collection and securitised loan collection activities as well as the management of any recovery procedures for impaired loans. Thus, as Servicer, UniCredit S.p.A. is charged with continually tracking cash flows from securitised loans and constantly monitoring their collection, with the assistance of third party companies (especially for the recovery of impaired loans; the company involved is DoBank S.p.A., which operates as an assistant to the Servicer, governed by a special agreement). The Servicer provides the Special Purpose Vehicle (and other counterparties indicated in the servicing agreements) information on the activity performed by, periodically reports that indicate, among other things, the collection and transfer of the income stream sold, the amount of default positions and recoveries completed, overdue installments, etc., with all information broken down in relation to specific transactions. These reports (which are usually quarterly) are periodically checked (if contractually required) by an auditing firm. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: From a strategic point of view, Group Finance Department is responsible for central coordination. In this context, the above structure plays: a) in the launch phase of the operation the role of proposer and provides support to the other Bank’s Divisions and to the individual Legal Entities in conducting transactions, cooperating with all the other departments (Planning & Capital Management, Group Risk Management, M&A etc.) in identifying the characteristics and the distinctive features of "true sale" securitisations loans in order to achieve the targets set in the Group’s Funding Plan and in the Contingency Funding Plan, approved by the Board of Directors, in the ordinary plan of creating counterbalancing capacity, as well as in organisational strategy and business of Top Management. Specific transactions are subject to prior approval by the competent departments of the Holding and of the Originator Bank (during approval, among other things, the structure, costs and impacts in terms of liquidity, counterbalancing capacity, organisational, business and/or any capital relief are discussed and analyzed), and to final approval by the Board of Directors of the Originator Bank; b) in the management phase of the operation, the monitoring role of the securitised portfolios performances and any rating action published by Ratings Agencies, the interactions with the Ratings Agencies in order to submit regular information on portfolios and, more generally, the role of coordination of the Originator Bank to facilitate the solution of events relating to the securitised portfolios (management of actions of payments holidays, downgrading, restructurings, etc.). The Bank has established a special coordination unit (General Ledger & Securitisation Reporting) within the Group Accounting & Regulatory Reporting Department. This unit has been tasked with administrative activities connected to the Servicer and Account Bank related-duties, and to carry out these duties, it works in close cooperation with specific, qualified areas of the Bank (Group Risk Management, Group Finance, Group Legal Advice & Contracts, etc.) and the Group (UniCredit Services S.C.p.A., etc.). It also provides a technical and operational support to network units. The information regarding the monitoring of collections and the performance of the securitised portfolio is periodically submitted to the Servicer's Board of Directors. HEDGING POLICIES: By agreement, securitised portfolios can be protected from interest rate risk by means of the Special Purpose Vehicle entering into Interest Rate Swap (IRS) agreements to hedge a fixed-rate portfolio, and Basis Swaps to hedge an indexed rate portfolio. In connection with these swaps, always if required by agreements, related back-to-back swap contracts are entered into between the Swap counterparty and UniCredit S.p.A. as Originator, interfaced in some cases by UniCredit Bank AG. OPERATING RESULTS: At the end of December 2018, the operating results related to existing securitisation transactions essentially reflected the performance of underlying portfolios and the resulting cash flows, and obviously are affected by the amount of defaults and prepayments during the period, which, moreover, are in line with the performance seen in other assets of this kind that are not securitised. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 446 2018 Annual Report and Accounts · UniCredit Annex 3 - Securitisation - qualitative tables ORIGINATOR: UniCredit S.p.A. Traditional securitisations of Performing and Non-Performing loans STRATEGIES, PROCESSES AND GOALS: The initiatives are a part of the Group's strategies, one of the objectives of which is to finance, at competitive rates (and in large amounts), the development of medium and long-term through the disposal of existing "Performing" and "Non-Performing" loan portfolios and also creating eligible securities for refinancing operations with the ECB and/or with third parties (counterbalancing capacity). The main advantages of the transactions can be summarised as follows: - improvement in the matching of asset maturities; - diversification of sources of financing; - broadening of investor base and resulting optimisation of funding cost; - creating counterbalancing capacity. Moreover, securitisation transactions can also be implemented for purposes related to business projects (for better management of assets), corporate restructuring or deleveraging projects. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: UniCredit S.p.A. acts as "Servicer" for almost all transactions concerned for which is Originator. As per the agreements entered into with issuing companies (special purpose vehicles - SPV), servicing consists of performing, on behalf of these companies, administrative, collection and securitised loan collection activities as well as the management of any recovery procedures for impaired loans. Thus, as Servicer, UniCredit S.p.A. is charged with continually tracking cash flows from securitised loans and constantly monitoring their collection, with the assistance of third party companies (especially for the recovery of impaired loans; the company involved is DoBank S.p.A., which operates as an assistant to the Servicer, governed by a special agreement). The Servicer provides the Special Purpose Vehicle (and other counterparties indicated in the servicing agreements) information on the activity performed by, periodically reports that indicate, among other things, the collection and transfer of the income stream sold, the amount of default positions and recoveries completed, overdue installments, etc., with all information broken down in relation to specific transactions. These reports (which are usually quarterly) are periodically checked (if contractually required) by an auditing firm. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: From a strategic point of view, Group Finance Department is responsible for central coordination. In this context, the above structure plays: a) in the launch phase of the operation the role of proposer and provides support to the other Bank’s Divisions and to the individual Legal Entities in conducting transactions, cooperating with all the other departments (Planning & Capital Management, Group Risk Management, M&A etc.) in identifying the characteristics and the distinctive features of "true sale" securitisations loans in order to achieve the targets set in the Group’s Funding Plan and in the Contingency Funding Plan, approved by the Board of Directors, in the ordinary plan of creating counterbalancing capacity, as well as in organisational strategy and business of Top Management. Specific transactions are subject to prior approval by the competent departments of the Holding and of the Originator Bank (during approval, among other things, the structure, costs and impacts in terms of liquidity, counterbalancing capacity, organisational, business and/or any capital relief are discussed and analyzed), and to final approval by the Board of Directors of the Originator Bank; b) in the management phase of the operation, the monitoring role of the securitised portfolios performances and any rating action published by Ratings Agencies, the interactions with the Ratings Agencies in order to submit regular information on portfolios and, more generally, the role of coordination of the Originator Bank to facilitate the solution of events relating to the securitised portfolios (management of actions of payments holidays, downgrading, restructurings, etc.). The Bank has established a special coordination unit (General Ledger & Securitisation Reporting) within the Group Accounting & Regulatory Reporting Department. This unit has been tasked with administrative activities connected to the Servicer and Account Bank related-duties, and to carry out these duties, it works in close cooperation with specific, qualified areas of the Bank (Group Risk Management, Group Finance, Group Legal Advice & Contracts, etc.) and the Group (UniCredit Services S.C.p.A., etc.). It also provides a technical and operational support to network units. The information regarding the monitoring of collections and the performance of the securitised portfolio is periodically submitted to the Servicer's Board of Directors. HEDGING POLICIES: By agreement, securitised portfolios can be protected from interest rate risk by means of the Special Purpose Vehicle entering into Interest Rate Swap (IRS) agreements to hedge a fixed-rate portfolio, and Basis Swaps to hedge an indexed rate portfolio. In connection with these swaps, always if required by agreements, related back-to-back swap contracts are entered into between the Swap counterparty and UniCredit S.p.A. as Originator, interfaced in some cases by UniCredit Bank AG. OPERATING RESULTS: At the end of December 2018, the operating results related to existing securitisation transactions essentially reflected the performance of underlying portfolios and the resulting cash flows, and obviously are affected by the amount of defaults and prepayments during the period, which, moreover, are in line with the performance seen in other assets of this kind that are not securitised. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 446 2018 Annual Report and Accounts · UniCredit Annex 3 - Securitisation - qualitative tables ORIGINATOR: UniCredit S.p.A. Traditional securitisations of Performing and Non-Performing loans STRATEGIES, PROCESSES AND GOALS: The initiatives are a part of the Group's strategies, one of the objectives of which is to finance, at competitive rates (and in large amounts), the development of medium and long-term through the disposal of existing "Performing" and "Non-Performing" loan portfolios and also creating eligible securities for refinancing operations with the ECB and/or with third parties (counterbalancing capacity). The main advantages of the transactions can be summarised as follows: - improvement in the matching of asset maturities; - diversification of sources of financing; - broadening of investor base and resulting optimisation of funding cost; - creating counterbalancing capacity. Moreover, securitisation transactions can also be implemented for purposes related to business projects (for better management of assets), corporate restructuring or deleveraging projects. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: UniCredit S.p.A. acts as "Servicer" for almost all transactions concerned for which is Originator. As per the agreements entered into with issuing companies (special purpose vehicles - SPV), servicing consists of performing, on behalf of these companies, administrative, collection and securitised loan collection activities as well as the management of any recovery procedures for impaired loans. Thus, as Servicer, UniCredit S.p.A. is charged with continually tracking cash flows from securitised loans and constantly monitoring their collection, with the assistance of third party companies (especially for the recovery of impaired loans; the company involved is DoBank S.p.A., which operates as an assistant to the Servicer, governed by a special agreement). The Servicer provides the Special Purpose Vehicle (and other counterparties indicated in the servicing agreements) information on the activity performed by, periodically reports that indicate, among other things, the collection and transfer of the income stream sold, the amount of default positions and recoveries completed, overdue installments, etc., with all information broken down in relation to specific transactions. These reports (which are usually quarterly) are periodically checked (if contractually required) by an auditing firm. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: From a strategic point of view, Group Finance Department is responsible for central coordination. In this context, the above structure plays: a) in the launch phase of the operation the role of proposer and provides support to the other Bank’s Divisions and to the individual Legal Entities in conducting transactions, cooperating with all the other departments (Planning & Capital Management, Group Risk Management, M&A etc.) in identifying the characteristics and the distinctive features of "true sale" securitisations loans in order to achieve the targets set in the Group’s Funding Plan and in the Contingency Funding Plan, approved by the Board of Directors, in the ordinary plan of creating counterbalancing capacity, as well as in organisational strategy and business of Top Management. Specific transactions are subject to prior approval by the competent departments of the Holding and of the Originator Bank (during approval, among other things, the structure, costs and impacts in terms of liquidity, counterbalancing capacity, organisational, business and/or any capital relief are discussed and analyzed), and to final approval by the Board of Directors of the Originator Bank; b) in the management phase of the operation, the monitoring role of the securitised portfolios performances and any rating action published by Ratings Agencies, the interactions with the Ratings Agencies in order to submit regular information on portfolios and, more generally, the role of coordination of the Originator Bank to facilitate the solution of events relating to the securitised portfolios (management of actions of payments holidays, downgrading, restructurings, etc.). The Bank has established a special coordination unit (General Ledger & Securitisation Reporting) within the Group Accounting & Regulatory Reporting Department. This unit has been tasked with administrative activities connected to the Servicer and Account Bank related-duties, and to carry out these duties, it works in close cooperation with specific, qualified areas of the Bank (Group Risk Management, Group Finance, Group Legal Advice & Contracts, etc.) and the Group (UniCredit Services S.C.p.A., etc.). It also provides a technical and operational support to network units. The information regarding the monitoring of collections and the performance of the securitised portfolio is periodically submitted to the Servicer's Board of Directors. HEDGING POLICIES: By agreement, securitised portfolios can be protected from interest rate risk by means of the Special Purpose Vehicle entering into Interest Rate Swap (IRS) agreements to hedge a fixed-rate portfolio, and Basis Swaps to hedge an indexed rate portfolio. In connection with these swaps, always if required by agreements, related back-to-back swap contracts are entered into between the Swap counterparty and UniCredit S.p.A. as Originator, interfaced in some cases by UniCredit Bank AG. OPERATING RESULTS: At the end of December 2018, the operating results related to existing securitisation transactions essentially reflected the performance of underlying portfolios and the resulting cash flows, and obviously are affected by the amount of defaults and prepayments during the period, which, moreover, are in line with the performance seen in other assets of this kind that are not securitised. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 447 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CONSUMER THREE Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Consumer Three S.r.l. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Counterbalancing capacity Type of asset: Personal loans Quality of Asset: Performing Closing date: 04.20.2016 Nominal Value of disposal portfolio (€) (*): 6,076,877,786 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €50 million for loans renegotiation. Consumer Three also constituited for ABS investors benefit into an eligible entity a cash reserve amount outstanding, at the end of accounting period, for €51.5 million Other relevant information: Self-securitisation Rating Agencies: Moody's/Fitch Amount of CDS or other supersenior risk transferred: Amount and Condition of tranching: . ISIN IT0005176505 IT0005176513 . Type of security Senior Junior . Class A J . Rating Aa3/A Not rated . Nominal value issued (€) (*) 4,679,100,000 1,397,694,923 . Nominal value at the end of accounting period (€) (*) 4,679,100,000 1,397,694,923 Note: (*) In the 2018 third quarter an amendment has been performed in order to postope the revolving period until June 2020. Moreover an extraordinary new transfer has been settled along the 2018 fourth quarter, increasing the nominal value of the disposal portfolio at € 1,999,523,773, the Senior Note nominal value at € 1,664,100,00 and the Junior Note nominal value at € 335,340,954. The Notes Final Maturity Date has been posponed to Decembre 2056. The Cash Reserve Required Amount has decreased from € 60.300.000 to € 51.470.100. The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 447 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CONSUMER THREE Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Consumer Three S.r.l. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Counterbalancing capacity Type of asset: Personal loans Quality of Asset: Performing Closing date: 04.20.2016 Nominal Value of disposal portfolio (€) (*): 6,076,877,786 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €50 million for loans renegotiation. Consumer Three also constituited for ABS investors benefit into an eligible entity a cash reserve amount outstanding, at the end of accounting period, for €51.5 million Other relevant information: Self-securitisation Rating Agencies: Moody's/Fitch Amount of CDS or other supersenior risk transferred: Amount and Condition of tranching: . ISIN IT0005176505 IT0005176513 . Type of security Senior Junior . Class A J . Rating Aa3/A Not rated . Nominal value issued (€) (*) 4,679,100,000 1,397,694,923 . Nominal value at the end of accounting period (€) (*) 4,679,100,000 1,397,694,923 Note: (*) In the 2018 third quarter an amendment has been performed in order to postope the revolving period until June 2020. Moreover an extraordinary new transfer has been settled along the 2018 fourth quarter, increasing the nominal value of the disposal portfolio at € 1,999,523,773, the Senior Note nominal value at € 1,664,100,00 and the Junior Note nominal value at € 335,340,954. The Notes Final Maturity Date has been posponed to Decembre 2056. The Cash Reserve Required Amount has decreased from € 60.300.000 to € 51.470.100. The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 447 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CONSUMER THREE Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Consumer Three S.r.l. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Counterbalancing capacity Type of asset: Personal loans Quality of Asset: Performing Closing date: 04.20.2016 Nominal Value of disposal portfolio (€) (*): 6,076,877,786 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €50 million for loans renegotiation. Consumer Three also constituited for ABS investors benefit into an eligible entity a cash reserve amount outstanding, at the end of accounting period, for €51.5 million Other relevant information: Self-securitisation Rating Agencies: Moody's/Fitch Amount of CDS or other supersenior risk transferred: Amount and Condition of tranching: . ISIN IT0005176505 IT0005176513 . Type of security Senior Junior . Class A J . Rating Aa3/A Not rated . Nominal value issued (€) (*) 4,679,100,000 1,397,694,923 . Nominal value at the end of accounting period (€) (*) 4,679,100,000 1,397,694,923 Note: (*) In the 2018 third quarter an amendment has been performed in order to postope the revolving period until June 2020. Moreover an extraordinary new transfer has been settled along the 2018 fourth quarter, increasing the nominal value of the disposal portfolio at € 1,999,523,773, the Senior Note nominal value at € 1,664,100,00 and the Junior Note nominal value at € 335,340,954. The Notes Final Maturity Date has been posponed to Decembre 2056. The Cash Reserve Required Amount has decreased from € 60.300.000 to € 51.470.100. The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 447 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CONSUMER THREE Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Consumer Three S.r.l. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Counterbalancing capacity Type of asset: Personal loans Quality of Asset: Performing Closing date: 04.20.2016 Nominal Value of disposal portfolio (€) (*): 6,076,877,786 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €50 million for loans renegotiation. Consumer Three also constituited for ABS investors benefit into an eligible entity a cash reserve amount outstanding, at the end of accounting period, for €51.5 million Other relevant information: Self-securitisation Rating Agencies: Moody's/Fitch Amount of CDS or other supersenior risk transferred: Amount and Condition of tranching: . ISIN IT0005176505 IT0005176513 . Type of security Senior Junior . Class A J . Rating Aa3/A Not rated . Nominal value issued (€) (*) 4,679,100,000 1,397,694,923 . Nominal value at the end of accounting period (€) (*) 4,679,100,000 1,397,694,923 Note: (*) In the 2018 third quarter an amendment has been performed in order to postope the revolving period until June 2020. Moreover an extraordinary new transfer has been settled along the 2018 fourth quarter, increasing the nominal value of the disposal portfolio at € 1,999,523,773, the Senior Note nominal value at € 1,664,100,00 and the Junior Note nominal value at € 335,340,954. The Notes Final Maturity Date has been posponed to Decembre 2056. The Cash Reserve Required Amount has decreased from € 60.300.000 to € 51.470.100. The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 447 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CONSUMER THREE Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Consumer Three S.r.l. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Counterbalancing capacity Type of asset: Personal loans Quality of Asset: Performing Closing date: 04.20.2016 Nominal Value of disposal portfolio (€) (*): 6,076,877,786 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €50 million for loans renegotiation. Consumer Three also constituited for ABS investors benefit into an eligible entity a cash reserve amount outstanding, at the end of accounting period, for €51.5 million Other relevant information: Self-securitisation Rating Agencies: Moody's/Fitch Amount of CDS or other supersenior risk transferred: Amount and Condition of tranching: . ISIN IT0005176505 IT0005176513 . Type of security Senior Junior . Class A J . Rating Aa3/A Not rated . Nominal value issued (€) (*) 4,679,100,000 1,397,694,923 . Nominal value at the end of accounting period (€) (*) 4,679,100,000 1,397,694,923 Note: (*) In the 2018 third quarter an amendment has been performed in order to postope the revolving period until June 2020. Moreover an extraordinary new transfer has been settled along the 2018 fourth quarter, increasing the nominal value of the disposal portfolio at € 1,999,523,773, the Senior Note nominal value at € 1,664,100,00 and the Junior Note nominal value at € 335,340,954. The Notes Final Maturity Date has been posponed to Decembre 2056. The Cash Reserve Required Amount has decreased from € 60.300.000 to € 51.470.100. The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 448 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: LARGE CORPORATE ONE Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Large Corporate ONE S.r.l. Servicer: UniCredit S.p.A. Arranger: - Target transaction: Funding/Counterbalancing capacity Type of asset: Large Corporate Loans Quality of Asset: Performing Closing date: 08.13.2013 Nominal Value of reference portfolio: 278,606,012 Issued guarantees by the Bank (€): Senior Notes Guarantee amounting to €304 million Issued guarantees by third parties (€): - Bank Lines of Credit: Interest Shortfall Facility amounting to €11 million Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: The credit line of Interest Shortfall Facility, of the original value of €15 million, was used, online capital for €3.982.507 Rating Agencies: Standard & Poor's Amount of CDS or other risk transferred: - Amount and Condition of tranching: . ISIN IT0004955776 IT0004955479 . Type of security Senior Junior . Class A B . Rating BBB - . Nominal Value Issued (€) 897,000,000 103,000,000 . Reference Position (€) 250,000,000 28,706,800 . Reference Position at the end of accounting period (€) 250,000,000 28,706,800 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 448 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: LARGE CORPORATE ONE Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Large Corporate ONE S.r.l. Servicer: UniCredit S.p.A. Arranger: - Target transaction: Funding/Counterbalancing capacity Type of asset: Large Corporate Loans Quality of Asset: Performing Closing date: 08.13.2013 Nominal Value of reference portfolio: 278,606,012 Issued guarantees by the Bank (€): Senior Notes Guarantee amounting to €304 million Issued guarantees by third parties (€): - Bank Lines of Credit: Interest Shortfall Facility amounting to €11 million Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: The credit line of Interest Shortfall Facility, of the original value of €15 million, was used, online capital for €3.982.507 Rating Agencies: Standard & Poor's Amount of CDS or other risk transferred: - Amount and Condition of tranching: . ISIN IT0004955776 IT0004955479 . Type of security Senior Junior . Class A B . Rating BBB - . Nominal Value Issued (€) 897,000,000 103,000,000 . Reference Position (€) 250,000,000 28,706,800 . Reference Position at the end of accounting period (€) 250,000,000 28,706,800 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 448 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: LARGE CORPORATE ONE Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Large Corporate ONE S.r.l. Servicer: UniCredit S.p.A. Arranger: - Target transaction: Funding/Counterbalancing capacity Type of asset: Large Corporate Loans Quality of Asset: Performing Closing date: 08.13.2013 Nominal Value of reference portfolio: 278,606,012 Issued guarantees by the Bank (€): Senior Notes Guarantee amounting to €304 million Issued guarantees by third parties (€): - Bank Lines of Credit: Interest Shortfall Facility amounting to €11 million Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: The credit line of Interest Shortfall Facility, of the original value of €15 million, was used, online capital for €3.982.507 Rating Agencies: Standard & Poor's Amount of CDS or other risk transferred: - Amount and Condition of tranching: . ISIN IT0004955776 IT0004955479 . Type of security Senior Junior . Class A B . Rating BBB - . Nominal Value Issued (€) 897,000,000 103,000,000 . Reference Position (€) 250,000,000 28,706,800 . Reference Position at the end of accounting period (€) 250,000,000 28,706,800 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 448 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: LARGE CORPORATE ONE Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Large Corporate ONE S.r.l. Servicer: UniCredit S.p.A. Arranger: - Target transaction: Funding/Counterbalancing capacity Type of asset: Large Corporate Loans Quality of Asset: Performing Closing date: 08.13.2013 Nominal Value of reference portfolio: 278,606,012 Issued guarantees by the Bank (€): Senior Notes Guarantee amounting to €304 million Issued guarantees by third parties (€): - Bank Lines of Credit: Interest Shortfall Facility amounting to €11 million Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: The credit line of Interest Shortfall Facility, of the original value of €15 million, was used, online capital for €3.982.507 Rating Agencies: Standard & Poor's Amount of CDS or other risk transferred: - Amount and Condition of tranching: . ISIN IT0004955776 IT0004955479 . Type of security Senior Junior . Class A B . Rating BBB - . Nominal Value Issued (€) 897,000,000 103,000,000 . Reference Position (€) 250,000,000 28,706,800 . Reference Position at the end of accounting period (€) 250,000,000 28,706,800 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 448 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: LARGE CORPORATE ONE Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Large Corporate ONE S.r.l. Servicer: UniCredit S.p.A. Arranger: - Target transaction: Funding/Counterbalancing capacity Type of asset: Large Corporate Loans Quality of Asset: Performing Closing date: 08.13.2013 Nominal Value of reference portfolio: 278,606,012 Issued guarantees by the Bank (€): Senior Notes Guarantee amounting to €304 million Issued guarantees by third parties (€): - Bank Lines of Credit: Interest Shortfall Facility amounting to €11 million Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: The credit line of Interest Shortfall Facility, of the original value of €15 million, was used, online capital for €3.982.507 Rating Agencies: Standard & Poor's Amount of CDS or other risk transferred: - Amount and Condition of tranching: . ISIN IT0004955776 IT0004955479 . Type of security Senior Junior . Class A B . Rating BBB - . Nominal Value Issued (€) 897,000,000 103,000,000 . Reference Position (€) 250,000,000 28,706,800 . Reference Position at the end of accounting period (€) 250,000,000 28,706,800 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 449 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CORDUSIO RMBS UCFIN - SERIE 2006 (EX CORDUSIO RMBS 3 - UBCASA Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Banca per la Casa S.p.A.) Issuer: Cordusio RMBS UCFin S.r.l. (ex Cordusio RMBS 3 - UBCasa 1 S.r.l.) Servicer: UniCredit S.p.A. Arranger: UCB AG London Branch Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 11.16.2006 Nominal Value of disposal portfolio (€): 2,495,969,428 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €14.976 million, which at the end of accounting period is fully reimbursed. Other relevant information: Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €160 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A., on 2013, has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Fitch/Moody's/Standard & Poor's Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004144884 IT0004144892 . Type of security Senior Senior . Class A1 A2 . Rating - AA/Aa3/AA . Nominal value issued (€) 600,000,000 1,735,000,000 . Nominal value at the end of accounting period (€) - 272,179,513 . ISIN IT0004144900 IT0004144934 . Type of security Mezzanine Mezzanine . Class B C . Rating AA/Aa3/A+ A+/Aa3/A+ . Nominal value issued (€) 75,000,000 25,000,000 . Nominal value at the end of accounting period (€) 75,000,000 25,000,000 . ISIN IT0004144959 IT0004144967 . Type of security Mezzanine Junior . Class D E . Rating BBB/Baa1/A+ - . Nominal value issued (€) 48,000,000 12,969,425 . Nominal value at the end of accounting period (€) 48,000,000 12,969,425 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 449 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CORDUSIO RMBS UCFIN - SERIE 2006 (EX CORDUSIO RMBS 3 - UBCASA Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Banca per la Casa S.p.A.) Issuer: Cordusio RMBS UCFin S.r.l. (ex Cordusio RMBS 3 - UBCasa 1 S.r.l.) Servicer: UniCredit S.p.A. Arranger: UCB AG London Branch Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 11.16.2006 Nominal Value of disposal portfolio (€): 2,495,969,428 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €14.976 million, which at the end of accounting period is fully reimbursed. Other relevant information: Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €160 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A., on 2013, has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Fitch/Moody's/Standard & Poor's Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004144884 IT0004144892 . Type of security Senior Senior . Class A1 A2 . Rating - AA/Aa3/AA . Nominal value issued (€) 600,000,000 1,735,000,000 . Nominal value at the end of accounting period (€) - 272,179,513 . ISIN IT0004144900 IT0004144934 . Type of security Mezzanine Mezzanine . Class B C . Rating AA/Aa3/A+ A+/Aa3/A+ . Nominal value issued (€) 75,000,000 25,000,000 . Nominal value at the end of accounting period (€) 75,000,000 25,000,000 . ISIN IT0004144959 IT0004144967 . Type of security Mezzanine Junior . Class D E . Rating BBB/Baa1/A+ - . Nominal value issued (€) 48,000,000 12,969,425 . Nominal value at the end of accounting period (€) 48,000,000 12,969,425 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 449 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CORDUSIO RMBS UCFIN - SERIE 2006 (EX CORDUSIO RMBS 3 - UBCASA Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Banca per la Casa S.p.A.) Issuer: Cordusio RMBS UCFin S.r.l. (ex Cordusio RMBS 3 - UBCasa 1 S.r.l.) Servicer: UniCredit S.p.A. Arranger: UCB AG London Branch Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 11.16.2006 Nominal Value of disposal portfolio (€): 2,495,969,428 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €14.976 million, which at the end of accounting period is fully reimbursed. Other relevant information: Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €160 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A., on 2013, has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Fitch/Moody's/Standard & Poor's Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004144884 IT0004144892 . Type of security Senior Senior . Class A1 A2 . Rating - AA/Aa3/AA . Nominal value issued (€) 600,000,000 1,735,000,000 . Nominal value at the end of accounting period (€) - 272,179,513 . ISIN IT0004144900 IT0004144934 . Type of security Mezzanine Mezzanine . Class B C . Rating AA/Aa3/A+ A+/Aa3/A+ . Nominal value issued (€) 75,000,000 25,000,000 . Nominal value at the end of accounting period (€) 75,000,000 25,000,000 . ISIN IT0004144959 IT0004144967 . Type of security Mezzanine Junior . Class D E . Rating BBB/Baa1/A+ - . Nominal value issued (€) 48,000,000 12,969,425 . Nominal value at the end of accounting period (€) 48,000,000 12,969,425 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 449 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CORDUSIO RMBS UCFIN - SERIE 2006 (EX CORDUSIO RMBS 3 - UBCASA Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Banca per la Casa S.p.A.) Issuer: Cordusio RMBS UCFin S.r.l. (ex Cordusio RMBS 3 - UBCasa 1 S.r.l.) Servicer: UniCredit S.p.A. Arranger: UCB AG London Branch Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 11.16.2006 Nominal Value of disposal portfolio (€): 2,495,969,428 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €14.976 million, which at the end of accounting period is fully reimbursed. Other relevant information: Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €160 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A., on 2013, has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Fitch/Moody's/Standard & Poor's Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004144884 IT0004144892 . Type of security Senior Senior . Class A1 A2 . Rating - AA/Aa3/AA . Nominal value issued (€) 600,000,000 1,735,000,000 . Nominal value at the end of accounting period (€) - 272,179,513 . ISIN IT0004144900 IT0004144934 . Type of security Mezzanine Mezzanine . Class B C . Rating AA/Aa3/A+ A+/Aa3/A+ . Nominal value issued (€) 75,000,000 25,000,000 . Nominal value at the end of accounting period (€) 75,000,000 25,000,000 . ISIN IT0004144959 IT0004144967 . Type of security Mezzanine Junior . Class D E . Rating BBB/Baa1/A+ - . Nominal value issued (€) 48,000,000 12,969,425 . Nominal value at the end of accounting period (€) 48,000,000 12,969,425 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 449 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CORDUSIO RMBS UCFIN - SERIE 2006 (EX CORDUSIO RMBS 3 - UBCASA Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Banca per la Casa S.p.A.) Issuer: Cordusio RMBS UCFin S.r.l. (ex Cordusio RMBS 3 - UBCasa 1 S.r.l.) Servicer: UniCredit S.p.A. Arranger: UCB AG London Branch Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 11.16.2006 Nominal Value of disposal portfolio (€): 2,495,969,428 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €14.976 million, which at the end of accounting period is fully reimbursed. Other relevant information: Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €160 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A., on 2013, has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Fitch/Moody's/Standard & Poor's Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004144884 IT0004144892 . Type of security Senior Senior . Class A1 A2 . Rating - AA/Aa3/AA . Nominal value issued (€) 600,000,000 1,735,000,000 . Nominal value at the end of accounting period (€) - 272,179,513 . ISIN IT0004144900 IT0004144934 . Type of security Mezzanine Mezzanine . Class B C . Rating AA/Aa3/A+ A+/Aa3/A+ . Nominal value issued (€) 75,000,000 25,000,000 . Nominal value at the end of accounting period (€) 75,000,000 25,000,000 . ISIN IT0004144959 IT0004144967 . Type of security Mezzanine Junior . Class D E . Rating BBB/Baa1/A+ - . Nominal value issued (€) 48,000,000 12,969,425 . Nominal value at the end of accounting period (€) 48,000,000 12,969,425 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 450 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CORDUSIO RMBS SECURITISATION - SERIE 2007 CORDUSIO RMBS SECURITISATION - SERIE 2006 (EX CORDUSIO RMBS 2) Type of securitisation: Traditional Traditional Originator: UniCredit Banca S.p.A. UniCredit Banca S.p.A. Issuer: Cordusio RMBS Securitisation S.r.l. Cordusio RMBS Securitisation S.r.l. (ex Cordusio RMBS 2 S.r.l.) Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UCB Ag London Branch (ex Bayerische Hypo und Vereinsbank AG, London Branch) UCB Ag London Branch (ex Bayerische Hypo und Vereinsbank AG, London Branch) Target transaction: Funding/Counterbalancing capacity Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Private Mortgage Loans Quality of Asset: Performing Performing Closing date: 05.22.2007 07.06.2006 Nominal Value of disposal portfolio (€): 3,908,102,838 2,544,388,351 Guarantees issued by the Bank: - - Guarantees issued by Third Parties: - - Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €6.253 million, at the end of accounting period that amount is fully reimbursed UniCredit S.p.A. has granted SPV a subordinated loan of €6.361 million, at the end of accounting period that amount is fully reimboursed Other relevant information: Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €236 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €170 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Fitch/Moody's/Standard & Poor's Fitch/Moody's/Standard & Poor's Amount of CDS or other supersenior risk transferred: - - Amount and Conditions of tranching: . ISIN IT0004231210 IT0004231236 IT0004087158 IT0004087174 . Type of security Senior Senior Senior Senior . Class A1 A2 A1 A2 . Rating - - - AA/Aa3/AA . Nominal value issued (€) 703,500,000 2,227,600,000 500,000,000 1,892,000,000 . Nominal value at the end of accounting period (€) - - - 72,290,292 . ISIN IT0004231244 IT0004231285 IT0004087182 IT0004087190 . Type of security Senior Mezzanine Mezzanine Mezzanine . Class A3 B B C . Rating A+/Aa3/AA A+/Aa3/A+ AA/Aa3/A+ BBB+/Ba1/A+ . Nominal value issued (€) 738,600,000 71,100,000 45,700,000 96,000,000 . Nominal value at the end of accounting period (€) 554,353,054 71,100,000 45,700,000 96,000,000 . ISIN IT0004231293 IT0004231301 IT0004087216 . Type of security Mezzanine Mezzanine Junior . Class C D D . Rating A/Aa3/A+ BBB-/Ba1/BBB - . Nominal value issued (€) 43,800,000 102,000,000 10,688,351 . Nominal value at the end of accounting period (€) 43,800,000 102,000,000 10,688,351 . ISIN IT0004231319 IT0004231327 . Type of security Mezzanine Junior . Class E F . Rating CCC/Caa1/B- - . Nominal value issued (€) 19,500,000 2,002,838 . Nominal value at the end of accounting period (€) 19,500,000 2,002,838 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 450 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CORDUSIO RMBS SECURITISATION - SERIE 2007 CORDUSIO RMBS SECURITISATION - SERIE 2006 (EX CORDUSIO RMBS 2) Type of securitisation: Traditional Traditional Originator: UniCredit Banca S.p.A. UniCredit Banca S.p.A. Issuer: Cordusio RMBS Securitisation S.r.l. Cordusio RMBS Securitisation S.r.l. (ex Cordusio RMBS 2 S.r.l.) Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UCB Ag London Branch (ex Bayerische Hypo und Vereinsbank AG, London Branch) UCB Ag London Branch (ex Bayerische Hypo und Vereinsbank AG, London Branch) Target transaction: Funding/Counterbalancing capacity Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Private Mortgage Loans Quality of Asset: Performing Performing Closing date: 05.22.2007 07.06.2006 Nominal Value of disposal portfolio (€): 3,908,102,838 2,544,388,351 Guarantees issued by the Bank: - - Guarantees issued by Third Parties: - - Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €6.253 million, at the end of accounting period that amount is fully reimbursed UniCredit S.p.A. has granted SPV a subordinated loan of €6.361 million, at the end of accounting period that amount is fully reimboursed Other relevant information: Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €236 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €170 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Fitch/Moody's/Standard & Poor's Fitch/Moody's/Standard & Poor's Amount of CDS or other supersenior risk transferred: - - Amount and Conditions of tranching: . ISIN IT0004231210 IT0004231236 IT0004087158 IT0004087174 . Type of security Senior Senior Senior Senior . Class A1 A2 A1 A2 . Rating - - - AA/Aa3/AA . Nominal value issued (€) 703,500,000 2,227,600,000 500,000,000 1,892,000,000 . Nominal value at the end of accounting period (€) - - - 72,290,292 . ISIN IT0004231244 IT0004231285 IT0004087182 IT0004087190 . Type of security Senior Mezzanine Mezzanine Mezzanine . Class A3 B B C . Rating A+/Aa3/AA A+/Aa3/A+ AA/Aa3/A+ BBB+/Ba1/A+ . Nominal value issued (€) 738,600,000 71,100,000 45,700,000 96,000,000 . Nominal value at the end of accounting period (€) 554,353,054 71,100,000 45,700,000 96,000,000 . ISIN IT0004231293 IT0004231301 IT0004087216 . Type of security Mezzanine Mezzanine Junior . Class C D D . Rating A/Aa3/A+ BBB-/Ba1/BBB - . Nominal value issued (€) 43,800,000 102,000,000 10,688,351 . Nominal value at the end of accounting period (€) 43,800,000 102,000,000 10,688,351 . ISIN IT0004231319 IT0004231327 . Type of security Mezzanine Junior . Class E F . Rating CCC/Caa1/B- - . Nominal value issued (€) 19,500,000 2,002,838 . Nominal value at the end of accounting period (€) 19,500,000 2,002,838 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 450 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CORDUSIO RMBS SECURITISATION - SERIE 2007 CORDUSIO RMBS SECURITISATION - SERIE 2006 (EX CORDUSIO RMBS 2) Type of securitisation: Traditional Traditional Originator: UniCredit Banca S.p.A. UniCredit Banca S.p.A. Issuer: Cordusio RMBS Securitisation S.r.l. Cordusio RMBS Securitisation S.r.l. (ex Cordusio RMBS 2 S.r.l.) Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UCB Ag London Branch (ex Bayerische Hypo und Vereinsbank AG, London Branch) UCB Ag London Branch (ex Bayerische Hypo und Vereinsbank AG, London Branch) Target transaction: Funding/Counterbalancing capacity Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Private Mortgage Loans Quality of Asset: Performing Performing Closing date: 05.22.2007 07.06.2006 Nominal Value of disposal portfolio (€): 3,908,102,838 2,544,388,351 Guarantees issued by the Bank: - - Guarantees issued by Third Parties: - - Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €6.253 million, at the end of accounting period that amount is fully reimbursed UniCredit S.p.A. has granted SPV a subordinated loan of €6.361 million, at the end of accounting period that amount is fully reimboursed Other relevant information: Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €236 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €170 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Fitch/Moody's/Standard & Poor's Fitch/Moody's/Standard & Poor's Amount of CDS or other supersenior risk transferred: - - Amount and Conditions of tranching: . ISIN IT0004231210 IT0004231236 IT0004087158 IT0004087174 . Type of security Senior Senior Senior Senior . Class A1 A2 A1 A2 . Rating - - - AA/Aa3/AA . Nominal value issued (€) 703,500,000 2,227,600,000 500,000,000 1,892,000,000 . Nominal value at the end of accounting period (€) - - - 72,290,292 . ISIN IT0004231244 IT0004231285 IT0004087182 IT0004087190 . Type of security Senior Mezzanine Mezzanine Mezzanine . Class A3 B B C . Rating A+/Aa3/AA A+/Aa3/A+ AA/Aa3/A+ BBB+/Ba1/A+ . Nominal value issued (€) 738,600,000 71,100,000 45,700,000 96,000,000 . Nominal value at the end of accounting period (€) 554,353,054 71,100,000 45,700,000 96,000,000 . ISIN IT0004231293 IT0004231301 IT0004087216 . Type of security Mezzanine Mezzanine Junior . Class C D D . Rating A/Aa3/A+ BBB-/Ba1/BBB - . Nominal value issued (€) 43,800,000 102,000,000 10,688,351 . Nominal value at the end of accounting period (€) 43,800,000 102,000,000 10,688,351 . ISIN IT0004231319 IT0004231327 . Type of security Mezzanine Junior . Class E F . Rating CCC/Caa1/B- - . Nominal value issued (€) 19,500,000 2,002,838 . Nominal value at the end of accounting period (€) 19,500,000 2,002,838 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 450 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CORDUSIO RMBS SECURITISATION - SERIE 2007 CORDUSIO RMBS SECURITISATION - SERIE 2006 (EX CORDUSIO RMBS 2) Type of securitisation: Traditional Traditional Originator: UniCredit Banca S.p.A. UniCredit Banca S.p.A. Issuer: Cordusio RMBS Securitisation S.r.l. Cordusio RMBS Securitisation S.r.l. (ex Cordusio RMBS 2 S.r.l.) Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UCB Ag London Branch (ex Bayerische Hypo und Vereinsbank AG, London Branch) UCB Ag London Branch (ex Bayerische Hypo und Vereinsbank AG, London Branch) Target transaction: Funding/Counterbalancing capacity Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Private Mortgage Loans Quality of Asset: Performing Performing Closing date: 05.22.2007 07.06.2006 Nominal Value of disposal portfolio (€): 3,908,102,838 2,544,388,351 Guarantees issued by the Bank: - - Guarantees issued by Third Parties: - - Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €6.253 million, at the end of accounting period that amount is fully reimbursed UniCredit S.p.A. has granted SPV a subordinated loan of €6.361 million, at the end of accounting period that amount is fully reimboursed Other relevant information: Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €236 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €170 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Fitch/Moody's/Standard & Poor's Fitch/Moody's/Standard & Poor's Amount of CDS or other supersenior risk transferred: - - Amount and Conditions of tranching: . ISIN IT0004231210 IT0004231236 IT0004087158 IT0004087174 . Type of security Senior Senior Senior Senior . Class A1 A2 A1 A2 . Rating - - - AA/Aa3/AA . Nominal value issued (€) 703,500,000 2,227,600,000 500,000,000 1,892,000,000 . Nominal value at the end of accounting period (€) - - - 72,290,292 . ISIN IT0004231244 IT0004231285 IT0004087182 IT0004087190 . Type of security Senior Mezzanine Mezzanine Mezzanine . Class A3 B B C . Rating A+/Aa3/AA A+/Aa3/A+ AA/Aa3/A+ BBB+/Ba1/A+ . Nominal value issued (€) 738,600,000 71,100,000 45,700,000 96,000,000 . Nominal value at the end of accounting period (€) 554,353,054 71,100,000 45,700,000 96,000,000 . ISIN IT0004231293 IT0004231301 IT0004087216 . Type of security Mezzanine Mezzanine Junior . Class C D D . Rating A/Aa3/A+ BBB-/Ba1/BBB - . Nominal value issued (€) 43,800,000 102,000,000 10,688,351 . Nominal value at the end of accounting period (€) 43,800,000 102,000,000 10,688,351 . ISIN IT0004231319 IT0004231327 . Type of security Mezzanine Junior . Class E F . Rating CCC/Caa1/B- - . Nominal value issued (€) 19,500,000 2,002,838 . Nominal value at the end of accounting period (€) 19,500,000 2,002,838 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 450 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CORDUSIO RMBS SECURITISATION - SERIE 2007 CORDUSIO RMBS SECURITISATION - SERIE 2006 (EX CORDUSIO RMBS 2) Type of securitisation: Traditional Traditional Originator: UniCredit Banca S.p.A. UniCredit Banca S.p.A. Issuer: Cordusio RMBS Securitisation S.r.l. Cordusio RMBS Securitisation S.r.l. (ex Cordusio RMBS 2 S.r.l.) Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UCB Ag London Branch (ex Bayerische Hypo und Vereinsbank AG, London Branch) UCB Ag London Branch (ex Bayerische Hypo und Vereinsbank AG, London Branch) Target transaction: Funding/Counterbalancing capacity Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Private Mortgage Loans Quality of Asset: Performing Performing Closing date: 05.22.2007 07.06.2006 Nominal Value of disposal portfolio (€): 3,908,102,838 2,544,388,351 Guarantees issued by the Bank: - - Guarantees issued by Third Parties: - - Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €6.253 million, at the end of accounting period that amount is fully reimbursed UniCredit S.p.A. has granted SPV a subordinated loan of €6.361 million, at the end of accounting period that amount is fully reimboursed Other relevant information: Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €236 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €170 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Fitch/Moody's/Standard & Poor's Fitch/Moody's/Standard & Poor's Amount of CDS or other supersenior risk transferred: - - Amount and Conditions of tranching: . ISIN IT0004231210 IT0004231236 IT0004087158 IT0004087174 . Type of security Senior Senior Senior Senior . Class A1 A2 A1 A2 . Rating - - - AA/Aa3/AA . Nominal value issued (€) 703,500,000 2,227,600,000 500,000,000 1,892,000,000 . Nominal value at the end of accounting period (€) - - - 72,290,292 . ISIN IT0004231244 IT0004231285 IT0004087182 IT0004087190 . Type of security Senior Mezzanine Mezzanine Mezzanine . Class A3 B B C . Rating A+/Aa3/AA A+/Aa3/A+ AA/Aa3/A+ BBB+/Ba1/A+ . Nominal value issued (€) 738,600,000 71,100,000 45,700,000 96,000,000 . Nominal value at the end of accounting period (€) 554,353,054 71,100,000 45,700,000 96,000,000 . ISIN IT0004231293 IT0004231301 IT0004087216 . Type of security Mezzanine Mezzanine Junior . Class C D D . Rating A/Aa3/A+ BBB-/Ba1/BBB - . Nominal value issued (€) 43,800,000 102,000,000 10,688,351 . Nominal value at the end of accounting period (€) 43,800,000 102,000,000 10,688,351 . ISIN IT0004231319 IT0004231327 . Type of security Mezzanine Junior . Class E F . Rating CCC/Caa1/B- - . Nominal value issued (€) 19,500,000 2,002,838 . Nominal value at the end of accounting period (€) 19,500,000 2,002,838 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 451 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: BIPCA CORDUSIO RMBS Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Bipop Carire, Società per Azioni) Issuer: Capital Mortgage Srl Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. (ex Bipop Carire, Società per Azioni) Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 12.17.2007 Nominal Value of disposal portfolio (€): 951,664,009 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €9.514 million. At the end of accounting period it is fully reimbursed. Other relevant information: All securities issued outstanding from 31 December 2010 have been retained by UniCredit S.p.A. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €59 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Standard & Poor's/Moody's Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004302730 IT0004302748 . Type of security Senior Senior . Class A1 A2 . Rating AA/Aa3 A+/Aa3 . Nominal value issued (€) 666,300,000 185,500,000 . Nominal value at the end of accounting period (€) 3,888,793 185,500,000 . ISIN IT0004302755 IT0004302763 . Type of security Mezzanine Mezzanine . Class B C . Rating A+/Aa3 A+/A1 . Nominal value issued (€) 61,800,000 14,300,000 . Nominal value at the end of accounting period (€) 61,800,000 14,300,000 . ISIN IT0004302797 IT0004302854 . Type of security Mezzanine Mezzanine . Class D E . Rating BB-/Baa1 B-/Baa3 . Nominal value issued (€) 18,000,000 5,500,000 . Nominal value at the end of accounting period (€) 18,000,000 5,500,000 . ISIN IT0004302912 . Type of security Junior . Class F . Rating - . Nominal value issued (€) 250,000 . Nominal value at the end of accounting period (€) 250,000 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 451 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: BIPCA CORDUSIO RMBS Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Bipop Carire, Società per Azioni) Issuer: Capital Mortgage Srl Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. (ex Bipop Carire, Società per Azioni) Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 12.17.2007 Nominal Value of disposal portfolio (€): 951,664,009 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €9.514 million. At the end of accounting period it is fully reimbursed. Other relevant information: All securities issued outstanding from 31 December 2010 have been retained by UniCredit S.p.A. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €59 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Standard & Poor's/Moody's Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004302730 IT0004302748 . Type of security Senior Senior . Class A1 A2 . Rating AA/Aa3 A+/Aa3 . Nominal value issued (€) 666,300,000 185,500,000 . Nominal value at the end of accounting period (€) 3,888,793 185,500,000 . ISIN IT0004302755 IT0004302763 . Type of security Mezzanine Mezzanine . Class B C . Rating A+/Aa3 A+/A1 . Nominal value issued (€) 61,800,000 14,300,000 . Nominal value at the end of accounting period (€) 61,800,000 14,300,000 . ISIN IT0004302797 IT0004302854 . Type of security Mezzanine Mezzanine . Class D E . Rating BB-/Baa1 B-/Baa3 . Nominal value issued (€) 18,000,000 5,500,000 . Nominal value at the end of accounting period (€) 18,000,000 5,500,000 . ISIN IT0004302912 . Type of security Junior . Class F . Rating - . Nominal value issued (€) 250,000 . Nominal value at the end of accounting period (€) 250,000 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 451 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: BIPCA CORDUSIO RMBS Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Bipop Carire, Società per Azioni) Issuer: Capital Mortgage Srl Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. (ex Bipop Carire, Società per Azioni) Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 12.17.2007 Nominal Value of disposal portfolio (€): 951,664,009 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €9.514 million. At the end of accounting period it is fully reimbursed. Other relevant information: All securities issued outstanding from 31 December 2010 have been retained by UniCredit S.p.A. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €59 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Standard & Poor's/Moody's Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004302730 IT0004302748 . Type of security Senior Senior . Class A1 A2 . Rating AA/Aa3 A+/Aa3 . Nominal value issued (€) 666,300,000 185,500,000 . Nominal value at the end of accounting period (€) 3,888,793 185,500,000 . ISIN IT0004302755 IT0004302763 . Type of security Mezzanine Mezzanine . Class B C . Rating A+/Aa3 A+/A1 . Nominal value issued (€) 61,800,000 14,300,000 . Nominal value at the end of accounting period (€) 61,800,000 14,300,000 . ISIN IT0004302797 IT0004302854 . Type of security Mezzanine Mezzanine . Class D E . Rating BB-/Baa1 B-/Baa3 . Nominal value issued (€) 18,000,000 5,500,000 . Nominal value at the end of accounting period (€) 18,000,000 5,500,000 . ISIN IT0004302912 . Type of security Junior . Class F . Rating - . Nominal value issued (€) 250,000 . Nominal value at the end of accounting period (€) 250,000 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 451 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: BIPCA CORDUSIO RMBS Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Bipop Carire, Società per Azioni) Issuer: Capital Mortgage Srl Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. (ex Bipop Carire, Società per Azioni) Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 12.17.2007 Nominal Value of disposal portfolio (€): 951,664,009 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €9.514 million. At the end of accounting period it is fully reimbursed. Other relevant information: All securities issued outstanding from 31 December 2010 have been retained by UniCredit S.p.A. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €59 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Standard & Poor's/Moody's Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004302730 IT0004302748 . Type of security Senior Senior . Class A1 A2 . Rating AA/Aa3 A+/Aa3 . Nominal value issued (€) 666,300,000 185,500,000 . Nominal value at the end of accounting period (€) 3,888,793 185,500,000 . ISIN IT0004302755 IT0004302763 . Type of security Mezzanine Mezzanine . Class B C . Rating A+/Aa3 A+/A1 . Nominal value issued (€) 61,800,000 14,300,000 . Nominal value at the end of accounting period (€) 61,800,000 14,300,000 . ISIN IT0004302797 IT0004302854 . Type of security Mezzanine Mezzanine . Class D E . Rating BB-/Baa1 B-/Baa3 . Nominal value issued (€) 18,000,000 5,500,000 . Nominal value at the end of accounting period (€) 18,000,000 5,500,000 . ISIN IT0004302912 . Type of security Junior . Class F . Rating - . Nominal value issued (€) 250,000 . Nominal value at the end of accounting period (€) 250,000 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 451 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: BIPCA CORDUSIO RMBS Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Bipop Carire, Società per Azioni) Issuer: Capital Mortgage Srl Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. (ex Bipop Carire, Società per Azioni) Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 12.17.2007 Nominal Value of disposal portfolio (€): 951,664,009 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €9.514 million. At the end of accounting period it is fully reimbursed. Other relevant information: All securities issued outstanding from 31 December 2010 have been retained by UniCredit S.p.A. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid €59 million of funds into an eligible entity to maintain its role as an Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Moreover UniCredit S.p.A. has been replaced as swap counterparty with another Bank rated as eligible by ratings Agencies. Rating Agencies: Standard & Poor's/Moody's Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004302730 IT0004302748 . Type of security Senior Senior . Class A1 A2 . Rating AA/Aa3 A+/Aa3 . Nominal value issued (€) 666,300,000 185,500,000 . Nominal value at the end of accounting period (€) 3,888,793 185,500,000 . ISIN IT0004302755 IT0004302763 . Type of security Mezzanine Mezzanine . Class B C . Rating A+/Aa3 A+/A1 . Nominal value issued (€) 61,800,000 14,300,000 . Nominal value at the end of accounting period (€) 61,800,000 14,300,000 . ISIN IT0004302797 IT0004302854 . Type of security Mezzanine Mezzanine . Class D E . Rating BB-/Baa1 B-/Baa3 . Nominal value issued (€) 18,000,000 5,500,000 . Nominal value at the end of accounting period (€) 18,000,000 5,500,000 . ISIN IT0004302912 . Type of security Junior . Class F . Rating - . Nominal value issued (€) 250,000 . Nominal value at the end of accounting period (€) 250,000 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 452 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CAPITAL MORTGAGE 2007 - 1 Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Banca di Roma S.p.A.) Issuer: Capital Mortgage S.r.l. Servicer: UniCredit S.p.A. Arranger: UCB AG (ex Capitalia S.p.A.) Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 05.14.2007 Nominal Value of disposal portfolio (€): 2,183,087,875 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €37.19 million (as equity). Other relevant information: Tranching based on an original assets portfolio €2,479.4 million, reduced to €2,183.1 million due to checks after closing date. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid funds into an eligible entity (amounting to €155.75 million at 31 December 2016) to maintain its role as Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Rating Agencies: S & P/Moody's/Fitch Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004222532 IT0004222540 . Type of security Senior Senior . Class A1 A2 . Rating AA/A3/BBB+ AA/A3/BBB+ . Nominal value issued (€) 1,736,000,000 644,000,000 . Nominal value at the end of accounting period (€) 196,545,059 299,198,536 . ISIN IT0004222557 IT0004222565 . Type of security Mezzanine Junior . Class B C . Rating BB/B3/B- D/Ca/CC . Nominal value issued (€) 74,000,000 25,350,000 . Nominal value at the end of accounting period (€) 74,000,000 25,350,000 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 452 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CAPITAL MORTGAGE 2007 - 1 Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Banca di Roma S.p.A.) Issuer: Capital Mortgage S.r.l. Servicer: UniCredit S.p.A. Arranger: UCB AG (ex Capitalia S.p.A.) Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 05.14.2007 Nominal Value of disposal portfolio (€): 2,183,087,875 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €37.19 million (as equity). Other relevant information: Tranching based on an original assets portfolio €2,479.4 million, reduced to €2,183.1 million due to checks after closing date. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid funds into an eligible entity (amounting to €155.75 million at 31 December 2016) to maintain its role as Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Rating Agencies: S & P/Moody's/Fitch Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004222532 IT0004222540 . Type of security Senior Senior . Class A1 A2 . Rating AA/A3/BBB+ AA/A3/BBB+ . Nominal value issued (€) 1,736,000,000 644,000,000 . Nominal value at the end of accounting period (€) 196,545,059 299,198,536 . ISIN IT0004222557 IT0004222565 . Type of security Mezzanine Junior . Class B C . Rating BB/B3/B- D/Ca/CC . Nominal value issued (€) 74,000,000 25,350,000 . Nominal value at the end of accounting period (€) 74,000,000 25,350,000 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 452 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CAPITAL MORTGAGE 2007 - 1 Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Banca di Roma S.p.A.) Issuer: Capital Mortgage S.r.l. Servicer: UniCredit S.p.A. Arranger: UCB AG (ex Capitalia S.p.A.) Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 05.14.2007 Nominal Value of disposal portfolio (€): 2,183,087,875 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €37.19 million (as equity). Other relevant information: Tranching based on an original assets portfolio €2,479.4 million, reduced to €2,183.1 million due to checks after closing date. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid funds into an eligible entity (amounting to €155.75 million at 31 December 2016) to maintain its role as Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Rating Agencies: S & P/Moody's/Fitch Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004222532 IT0004222540 . Type of security Senior Senior . Class A1 A2 . Rating AA/A3/BBB+ AA/A3/BBB+ . Nominal value issued (€) 1,736,000,000 644,000,000 . Nominal value at the end of accounting period (€) 196,545,059 299,198,536 . ISIN IT0004222557 IT0004222565 . Type of security Mezzanine Junior . Class B C . Rating BB/B3/B- D/Ca/CC . Nominal value issued (€) 74,000,000 25,350,000 . Nominal value at the end of accounting period (€) 74,000,000 25,350,000 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 452 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CAPITAL MORTGAGE 2007 - 1 Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Banca di Roma S.p.A.) Issuer: Capital Mortgage S.r.l. Servicer: UniCredit S.p.A. Arranger: UCB AG (ex Capitalia S.p.A.) Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 05.14.2007 Nominal Value of disposal portfolio (€): 2,183,087,875 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €37.19 million (as equity). Other relevant information: Tranching based on an original assets portfolio €2,479.4 million, reduced to €2,183.1 million due to checks after closing date. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid funds into an eligible entity (amounting to €155.75 million at 31 December 2016) to maintain its role as Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Rating Agencies: S & P/Moody's/Fitch Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004222532 IT0004222540 . Type of security Senior Senior . Class A1 A2 . Rating AA/A3/BBB+ AA/A3/BBB+ . Nominal value issued (€) 1,736,000,000 644,000,000 . Nominal value at the end of accounting period (€) 196,545,059 299,198,536 . ISIN IT0004222557 IT0004222565 . Type of security Mezzanine Junior . Class B C . Rating BB/B3/B- D/Ca/CC . Nominal value issued (€) 74,000,000 25,350,000 . Nominal value at the end of accounting period (€) 74,000,000 25,350,000 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 452 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: CAPITAL MORTGAGE 2007 - 1 Type of securitisation: Traditional Originator: UniCredit S.p.A. (ex Banca di Roma S.p.A.) Issuer: Capital Mortgage S.r.l. Servicer: UniCredit S.p.A. Arranger: UCB AG (ex Capitalia S.p.A.) Target transaction: Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Quality of Asset: Performing Closing date: 05.14.2007 Nominal Value of disposal portfolio (€): 2,183,087,875 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €37.19 million (as equity). Other relevant information: Tranching based on an original assets portfolio €2,479.4 million, reduced to €2,183.1 million due to checks after closing date. Following its downgrade by debt-rating agencies, UniCredit S.p.A. paid funds into an eligible entity (amounting to €155.75 million at 31 December 2016) to maintain its role as Account Bank; during the year, as a result of the contractual amendment and the contextual outsourcing of the role of the Account Bank, the fund was fully repaid. Rating Agencies: S & P/Moody's/Fitch Amount of CDS or other supersenior risk transferred: - Amount and Conditions of tranching: . ISIN IT0004222532 IT0004222540 . Type of security Senior Senior . Class A1 A2 . Rating AA/A3/BBB+ AA/A3/BBB+ . Nominal value issued (€) 1,736,000,000 644,000,000 . Nominal value at the end of accounting period (€) 196,545,059 299,198,536 . ISIN IT0004222557 IT0004222565 . Type of security Mezzanine Junior . Class B C . Rating BB/B3/B- D/Ca/CC . Nominal value issued (€) 74,000,000 25,350,000 . Nominal value at the end of accounting period (€) 74,000,000 25,350,000 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 453 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: F-E MORTGAGES 2005 F-E MORTGAGES SERIES 1-2003 HELICONUS Type of securitisation: Traditional Traditional Traditional Originator: UniCredit S.p.A. (ex FinecoBank S.p.A.) UniCredit S.p.A. (ex Fin-eco Banca ICQ S.p.A.) UniCredit S.p.A. (ex Fin-eco Banca ICQ S.p.A.) Issuer: F-E Mortgages S.r.l. F-E Mortgages S.r.l. Heliconus S.r.l Servicer: UniCredit S.p.A. UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) Target transaction: Funding/Counterbalancing capacity Funding/Counterbalancing capacity Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Private Mortgage Loans Private Mortgage Loans Quality of Asset: Performing Performing Performing Closing date: 04.06.2005 11.27.2003 11.08.2002 Nominal Value of disposal 1,028,683,779 748,630,649 408,790,215 Guarantees issued by the Bank: - - - Guarantees issued by Third - - - Bank Lines of Credit: - UniCredit S.p.A. issued a credit line for €20 million (jointly with The Royal Bank of Scotland Milan Branch). The amount of line of credit is totally redeemed UniCredit S.p.A. issued a credit line for €10.22 million. The amount of the credit line is totally redeemed Third Parties Lines of Credit: - - - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €15.431 million (as Equity). At the end of accounting period the amount of capital tranche is fully reimboursed - - Other relevant information: - Following the downgrade of Royal Bank of Scotland Plc by Moody's, on 3 August 2012 UniCredit S.p.A. made a reserve of €20 million for the SPV, corresponding to the liquidity line Following its downgrade by Moody's, on 12 January 2012 UniCredit S.p.A. made a reserve of €10.22 million for the SPV, corresponding to the liquidity line Rating Agencies: S & P/Moody's/Fitch S & P/Moody's/Fitch S & P/Moody's/Fitch Amount of CDS or other supersenior risk transferred: - - - Amount and Conditions of . ISIN IT0003830418 IT0003830426 IT0003575039 IT0003575070 IT0003383855 IT0003383871 . Type of security Senior Mezzanine Senior Mezzanine Senior Mezzanine . Class A B A1 B A B . Rating AA/Aa3/AA A+/Aa3/AA AA/Aa3/AA A+/Aa3/AA AA/Aa3/AA - /Aa3/AA . Nominal value issued (€) 951,600,000 41,100,000 682,000,000 48,000,000 369,000,000 30,800,000 . Nominal value at the end of accounting period (€) 86,154,343 36,863,691 14,682,880 48,000,000 5,457,912 30,800,000 . ISIN IT0003830434 IT0003575088 IT0003575096 IT0003383939 . Type of security Junior Mezzanine Junior Junior . Class C C D C . Rating BBB-/Aa3/A+ A+/Baa1/AA - - . Nominal value issued (€) 36,000,000 11,000,000 7,630,000 8,990,200 . Nominal value at the end of accounting period (€) 32,289,365 11,000,000 7,630,000 8,990,200 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 453 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: F-E MORTGAGES 2005 F-E MORTGAGES SERIES 1-2003 HELICONUS Type of securitisation: Traditional Traditional Traditional Originator: UniCredit S.p.A. (ex FinecoBank S.p.A.) UniCredit S.p.A. (ex Fin-eco Banca ICQ S.p.A.) UniCredit S.p.A. (ex Fin-eco Banca ICQ S.p.A.) Issuer: F-E Mortgages S.r.l. F-E Mortgages S.r.l. Heliconus S.r.l Servicer: UniCredit S.p.A. UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) Target transaction: Funding/Counterbalancing capacity Funding/Counterbalancing capacity Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Private Mortgage Loans Private Mortgage Loans Quality of Asset: Performing Performing Performing Closing date: 04.06.2005 11.27.2003 11.08.2002 Nominal Value of disposal 1,028,683,779 748,630,649 408,790,215 Guarantees issued by the Bank: - - - Guarantees issued by Third - - - Bank Lines of Credit: - UniCredit S.p.A. issued a credit line for €20 million (jointly with The Royal Bank of Scotland Milan Branch). The amount of line of credit is totally redeemed UniCredit S.p.A. issued a credit line for €10.22 million. The amount of the credit line is totally redeemed Third Parties Lines of Credit: - - - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €15.431 million (as Equity). At the end of accounting period the amount of capital tranche is fully reimboursed - - Other relevant information: - Following the downgrade of Royal Bank of Scotland Plc by Moody's, on 3 August 2012 UniCredit S.p.A. made a reserve of €20 million for the SPV, corresponding to the liquidity line Following its downgrade by Moody's, on 12 January 2012 UniCredit S.p.A. made a reserve of €10.22 million for the SPV, corresponding to the liquidity line Rating Agencies: S & P/Moody's/Fitch S & P/Moody's/Fitch S & P/Moody's/Fitch Amount of CDS or other supersenior risk transferred: - - - Amount and Conditions of . ISIN IT0003830418 IT0003830426 IT0003575039 IT0003575070 IT0003383855 IT0003383871 . Type of security Senior Mezzanine Senior Mezzanine Senior Mezzanine . Class A B A1 B A B . Rating AA/Aa3/AA A+/Aa3/AA AA/Aa3/AA A+/Aa3/AA AA/Aa3/AA - /Aa3/AA . Nominal value issued (€) 951,600,000 41,100,000 682,000,000 48,000,000 369,000,000 30,800,000 . Nominal value at the end of accounting period (€) 86,154,343 36,863,691 14,682,880 48,000,000 5,457,912 30,800,000 . ISIN IT0003830434 IT0003575088 IT0003575096 IT0003383939 . Type of security Junior Mezzanine Junior Junior . Class C C D C . Rating BBB-/Aa3/A+ A+/Baa1/AA - - . Nominal value issued (€) 36,000,000 11,000,000 7,630,000 8,990,200 . Nominal value at the end of accounting period (€) 32,289,365 11,000,000 7,630,000 8,990,200 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 453 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: F-E MORTGAGES 2005 F-E MORTGAGES SERIES 1-2003 HELICONUS Type of securitisation: Traditional Traditional Traditional Originator: UniCredit S.p.A. (ex FinecoBank S.p.A.) UniCredit S.p.A. (ex Fin-eco Banca ICQ S.p.A.) UniCredit S.p.A. (ex Fin-eco Banca ICQ S.p.A.) Issuer: F-E Mortgages S.r.l. F-E Mortgages S.r.l. Heliconus S.r.l Servicer: UniCredit S.p.A. UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) Target transaction: Funding/Counterbalancing capacity Funding/Counterbalancing capacity Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Private Mortgage Loans Private Mortgage Loans Quality of Asset: Performing Performing Performing Closing date: 04.06.2005 11.27.2003 11.08.2002 Nominal Value of disposal 1,028,683,779 748,630,649 408,790,215 Guarantees issued by the Bank: - - - Guarantees issued by Third - - - Bank Lines of Credit: - UniCredit S.p.A. issued a credit line for €20 million (jointly with The Royal Bank of Scotland Milan Branch). The amount of line of credit is totally redeemed UniCredit S.p.A. issued a credit line for €10.22 million. The amount of the credit line is totally redeemed Third Parties Lines of Credit: - - - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €15.431 million (as Equity). At the end of accounting period the amount of capital tranche is fully reimboursed - - Other relevant information: - Following the downgrade of Royal Bank of Scotland Plc by Moody's, on 3 August 2012 UniCredit S.p.A. made a reserve of €20 million for the SPV, corresponding to the liquidity line Following its downgrade by Moody's, on 12 January 2012 UniCredit S.p.A. made a reserve of €10.22 million for the SPV, corresponding to the liquidity line Rating Agencies: S & P/Moody's/Fitch S & P/Moody's/Fitch S & P/Moody's/Fitch Amount of CDS or other supersenior risk transferred: - - - Amount and Conditions of . ISIN IT0003830418 IT0003830426 IT0003575039 IT0003575070 IT0003383855 IT0003383871 . Type of security Senior Mezzanine Senior Mezzanine Senior Mezzanine . Class A B A1 B A B . Rating AA/Aa3/AA A+/Aa3/AA AA/Aa3/AA A+/Aa3/AA AA/Aa3/AA - /Aa3/AA . Nominal value issued (€) 951,600,000 41,100,000 682,000,000 48,000,000 369,000,000 30,800,000 . Nominal value at the end of accounting period (€) 86,154,343 36,863,691 14,682,880 48,000,000 5,457,912 30,800,000 . ISIN IT0003830434 IT0003575088 IT0003575096 IT0003383939 . Type of security Junior Mezzanine Junior Junior . Class C C D C . Rating BBB-/Aa3/A+ A+/Baa1/AA - - . Nominal value issued (€) 36,000,000 11,000,000 7,630,000 8,990,200 . Nominal value at the end of accounting period (€) 32,289,365 11,000,000 7,630,000 8,990,200 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 453 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: F-E MORTGAGES 2005 F-E MORTGAGES SERIES 1-2003 HELICONUS Type of securitisation: Traditional Traditional Traditional Originator: UniCredit S.p.A. (ex FinecoBank S.p.A.) UniCredit S.p.A. (ex Fin-eco Banca ICQ S.p.A.) UniCredit S.p.A. (ex Fin-eco Banca ICQ S.p.A.) Issuer: F-E Mortgages S.r.l. F-E Mortgages S.r.l. Heliconus S.r.l Servicer: UniCredit S.p.A. UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) Target transaction: Funding/Counterbalancing capacity Funding/Counterbalancing capacity Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Private Mortgage Loans Private Mortgage Loans Quality of Asset: Performing Performing Performing Closing date: 04.06.2005 11.27.2003 11.08.2002 Nominal Value of disposal 1,028,683,779 748,630,649 408,790,215 Guarantees issued by the Bank: - - - Guarantees issued by Third - - - Bank Lines of Credit: - UniCredit S.p.A. issued a credit line for €20 million (jointly with The Royal Bank of Scotland Milan Branch). The amount of line of credit is totally redeemed UniCredit S.p.A. issued a credit line for €10.22 million. The amount of the credit line is totally redeemed Third Parties Lines of Credit: - - - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €15.431 million (as Equity). At the end of accounting period the amount of capital tranche is fully reimboursed - - Other relevant information: - Following the downgrade of Royal Bank of Scotland Plc by Moody's, on 3 August 2012 UniCredit S.p.A. made a reserve of €20 million for the SPV, corresponding to the liquidity line Following its downgrade by Moody's, on 12 January 2012 UniCredit S.p.A. made a reserve of €10.22 million for the SPV, corresponding to the liquidity line Rating Agencies: S & P/Moody's/Fitch S & P/Moody's/Fitch S & P/Moody's/Fitch Amount of CDS or other supersenior risk transferred: - - - Amount and Conditions of . ISIN IT0003830418 IT0003830426 IT0003575039 IT0003575070 IT0003383855 IT0003383871 . Type of security Senior Mezzanine Senior Mezzanine Senior Mezzanine . Class A B A1 B A B . Rating AA/Aa3/AA A+/Aa3/AA AA/Aa3/AA A+/Aa3/AA AA/Aa3/AA - /Aa3/AA . Nominal value issued (€) 951,600,000 41,100,000 682,000,000 48,000,000 369,000,000 30,800,000 . Nominal value at the end of accounting period (€) 86,154,343 36,863,691 14,682,880 48,000,000 5,457,912 30,800,000 . ISIN IT0003830434 IT0003575088 IT0003575096 IT0003383939 . Type of security Junior Mezzanine Junior Junior . Class C C D C . Rating BBB-/Aa3/A+ A+/Baa1/AA - - . Nominal value issued (€) 36,000,000 11,000,000 7,630,000 8,990,200 . Nominal value at the end of accounting period (€) 32,289,365 11,000,000 7,630,000 8,990,200 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 453 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: F-E MORTGAGES 2005 F-E MORTGAGES SERIES 1-2003 HELICONUS Type of securitisation: Traditional Traditional Traditional Originator: UniCredit S.p.A. (ex FinecoBank S.p.A.) UniCredit S.p.A. (ex Fin-eco Banca ICQ S.p.A.) UniCredit S.p.A. (ex Fin-eco Banca ICQ S.p.A.) Issuer: F-E Mortgages S.r.l. F-E Mortgages S.r.l. Heliconus S.r.l Servicer: UniCredit S.p.A. UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) UniCredit S.p.A. (ex MCC S.p.A. - Capitalia Gruppo Bancario) Target transaction: Funding/Counterbalancing capacity Funding/Counterbalancing capacity Funding/Counterbalancing capacity Type of asset: Private Mortgage Loans Private Mortgage Loans Private Mortgage Loans Quality of Asset: Performing Performing Performing Closing date: 04.06.2005 11.27.2003 11.08.2002 Nominal Value of disposal 1,028,683,779 748,630,649 408,790,215 Guarantees issued by the Bank: - - - Guarantees issued by Third - - - Bank Lines of Credit: - UniCredit S.p.A. issued a credit line for €20 million (jointly with The Royal Bank of Scotland Milan Branch). The amount of line of credit is totally redeemed UniCredit S.p.A. issued a credit line for €10.22 million. The amount of the credit line is totally redeemed Third Parties Lines of Credit: - - - Other Credit Enhancements: UniCredit S.p.A. has granted SPV a subordinated loan of €15.431 million (as Equity). At the end of accounting period the amount of capital tranche is fully reimboursed - - Other relevant information: - Following the downgrade of Royal Bank of Scotland Plc by Moody's, on 3 August 2012 UniCredit S.p.A. made a reserve of €20 million for the SPV, corresponding to the liquidity line Following its downgrade by Moody's, on 12 January 2012 UniCredit S.p.A. made a reserve of €10.22 million for the SPV, corresponding to the liquidity line Rating Agencies: S & P/Moody's/Fitch S & P/Moody's/Fitch S & P/Moody's/Fitch Amount of CDS or other supersenior risk transferred: - - - Amount and Conditions of . ISIN IT0003830418 IT0003830426 IT0003575039 IT0003575070 IT0003383855 IT0003383871 . Type of security Senior Mezzanine Senior Mezzanine Senior Mezzanine . Class A B A1 B A B . Rating AA/Aa3/AA A+/Aa3/AA AA/Aa3/AA A+/Aa3/AA AA/Aa3/AA - /Aa3/AA . Nominal value issued (€) 951,600,000 41,100,000 682,000,000 48,000,000 369,000,000 30,800,000 . Nominal value at the end of accounting period (€) 86,154,343 36,863,691 14,682,880 48,000,000 5,457,912 30,800,000 . ISIN IT0003830434 IT0003575088 IT0003575096 IT0003383939 . Type of security Junior Mezzanine Junior Junior . Class C C D C . Rating BBB-/Aa3/A+ A+/Baa1/AA - - . Nominal value issued (€) 36,000,000 11,000,000 7,630,000 8,990,200 . Nominal value at the end of accounting period (€) 32,289,365 11,000,000 7,630,000 8,990,200 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 454 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: ARENA NPL ONE Type of securitisation: Self-securitisation Originator: UniCredit SpA (ex UCCMB S.p.A.) Issuer: Arena NPL One S.r.L. Servicer: UniCredit S.p.A. Arranger: UBS Target transaction : Funding Type of asset: Unsecured loans - mortgage loans Quality of asset: Non-Performing Closing date: 12.04.2014 Nominal Value of disposal portfolio (€): 8,460,706,273 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: UniCredit S.p.A. issued a line of Liquidity Facility revolving amounts to €100 million, used for €29.75 million at the end of accounting period. Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: UniCredit S.p.A. has granted SPV a loans facility of €30 million, used for legal expenses and refunded for an amount of €23.9. Rating Agencies: No Rating Agency Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005070120 IT0005070138 . Type of security Senior Junior . Class A B . Rating - - . Nominal value issued (€) 304,300,000 913,049,310 . Nominal value at the end of accounting period (€) 0 913,049,310 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 454 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: ARENA NPL ONE Type of securitisation: Self-securitisation Originator: UniCredit SpA (ex UCCMB S.p.A.) Issuer: Arena NPL One S.r.L. Servicer: UniCredit S.p.A. Arranger: UBS Target transaction : Funding Type of asset: Unsecured loans - mortgage loans Quality of asset: Non-Performing Closing date: 12.04.2014 Nominal Value of disposal portfolio (€): 8,460,706,273 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: UniCredit S.p.A. issued a line of Liquidity Facility revolving amounts to €100 million, used for €29.75 million at the end of accounting period. Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: UniCredit S.p.A. has granted SPV a loans facility of €30 million, used for legal expenses and refunded for an amount of €23.9. Rating Agencies: No Rating Agency Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005070120 IT0005070138 . Type of security Senior Junior . Class A B . Rating - - . Nominal value issued (€) 304,300,000 913,049,310 . Nominal value at the end of accounting period (€) 0 913,049,310 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 454 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: ARENA NPL ONE Type of securitisation: Self-securitisation Originator: UniCredit SpA (ex UCCMB S.p.A.) Issuer: Arena NPL One S.r.L. Servicer: UniCredit S.p.A. Arranger: UBS Target transaction : Funding Type of asset: Unsecured loans - mortgage loans Quality of asset: Non-Performing Closing date: 12.04.2014 Nominal Value of disposal portfolio (€): 8,460,706,273 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: UniCredit S.p.A. issued a line of Liquidity Facility revolving amounts to €100 million, used for €29.75 million at the end of accounting period. Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: UniCredit S.p.A. has granted SPV a loans facility of €30 million, used for legal expenses and refunded for an amount of €23.9. Rating Agencies: No Rating Agency Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005070120 IT0005070138 . Type of security Senior Junior . Class A B . Rating - - . Nominal value issued (€) 304,300,000 913,049,310 . Nominal value at the end of accounting period (€) 0 913,049,310 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 454 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: ARENA NPL ONE Type of securitisation: Self-securitisation Originator: UniCredit SpA (ex UCCMB S.p.A.) Issuer: Arena NPL One S.r.L. Servicer: UniCredit S.p.A. Arranger: UBS Target transaction : Funding Type of asset: Unsecured loans - mortgage loans Quality of asset: Non-Performing Closing date: 12.04.2014 Nominal Value of disposal portfolio (€): 8,460,706,273 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: UniCredit S.p.A. issued a line of Liquidity Facility revolving amounts to €100 million, used for €29.75 million at the end of accounting period. Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: UniCredit S.p.A. has granted SPV a loans facility of €30 million, used for legal expenses and refunded for an amount of €23.9. Rating Agencies: No Rating Agency Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005070120 IT0005070138 . Type of security Senior Junior . Class A B . Rating - - . Nominal value issued (€) 304,300,000 913,049,310 . Nominal value at the end of accounting period (€) 0 913,049,310 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 454 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: ARENA NPL ONE Type of securitisation: Self-securitisation Originator: UniCredit SpA (ex UCCMB S.p.A.) Issuer: Arena NPL One S.r.L. Servicer: UniCredit S.p.A. Arranger: UBS Target transaction : Funding Type of asset: Unsecured loans - mortgage loans Quality of asset: Non-Performing Closing date: 12.04.2014 Nominal Value of disposal portfolio (€): 8,460,706,273 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: UniCredit S.p.A. issued a line of Liquidity Facility revolving amounts to €100 million, used for €29.75 million at the end of accounting period. Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: UniCredit S.p.A. has granted SPV a loans facility of €30 million, used for legal expenses and refunded for an amount of €23.9. Rating Agencies: No Rating Agency Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005070120 IT0005070138 . Type of security Senior Junior . Class A B . Rating - - . Nominal value issued (€) 304,300,000 913,049,310 . Nominal value at the end of accounting period (€) 0 913,049,310 The "Closing date" is the date when the securitisation transaction was completed, i.e. the date when all contractual documents were signed. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 455 ORIGINATOR: UniCredit S.p.A. Transaction from previous years STRATEGIES, PROCESSES AND GOALS: The following initiatives were undertaken to allow the Group to improve the management of loan restructuring, also through the innovative use (for this purpose) of securitization. The goal is to facilitate and increase recoveries of the exposures under securitization thanks to: - restructuring with long-term industrial logic, focusing on introducing new finance (by third parties) in favour of the debtors sold, with focus on concrete needs and opportunities for the companies involved; - efficient and targeted restructuring and turnaround processes. Shared acceptance of the economic principles that guide the transactions in question and a strong alignment of the interests between the parties involved, ensures the asset manager 's commitment to maximize the value of the said assets, optimising therefore the expected recovery on the junior notes bought by UniCredit S.p.A., through the transferred management of the securitised portfolio. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: UniCredit S.p.A. does not act as Servicer. The business of servicing is carried out by third parties outside the Group, as per the contracts stipulated with the Special Purpose Vehicle issuing the ABS securities, and involves the administration, encashment, restructuring and collection of securitised loans, on behalf thereof, as well as managing any recovery proceedings on Non-Performing loans. The Servicer of the assets, therefore, has the task, on an ongoing basis, of following the financial flows arising from the securitised loans, constantly monitoring the encashment, also where appropriate making use of third party companies. For each specific transaction, the Servicer provides the Special Purpose Vehicle (in addition to other counterparties as defined in the servicing contracts, including UniCredit S.p.A.) with information on the activities carried out via periodic reports which show, inter alia, the collection and realization of the assigned receivables, the number of defaulted positions and the successfully completed recoveries, the instalments in arrears, restructuring activities, etc. Where contractually provided for, these reports are periodically checked by an independent auditors' firm. ORGANIZATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: The Servicer provides UniCredit S.p.A. with a series of reports that enable the evaluation and monitoring of the underlying portfolios. Periodically, the performances are also presented in the reference internal Committees. HEDGING POLICIES: There are no risk hedging derivatives. OPERATING RESULTS: A set of monitoring initiatives has been implemented, focused both on the single company performances and the evolution of the projects as a whole. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 455 ORIGINATOR: UniCredit S.p.A. Transaction from previous years STRATEGIES, PROCESSES AND GOALS: The following initiatives were undertaken to allow the Group to improve the management of loan restructuring, also through the innovative use (for this purpose) of securitization. The goal is to facilitate and increase recoveries of the exposures under securitization thanks to: - restructuring with long-term industrial logic, focusing on introducing new finance (by third parties) in favour of the debtors sold, with focus on concrete needs and opportunities for the companies involved; - efficient and targeted restructuring and turnaround processes. Shared acceptance of the economic principles that guide the transactions in question and a strong alignment of the interests between the parties involved, ensures the asset manager 's commitment to maximize the value of the said assets, optimising therefore the expected recovery on the junior notes bought by UniCredit S.p.A., through the transferred management of the securitised portfolio. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: UniCredit S.p.A. does not act as Servicer. The business of servicing is carried out by third parties outside the Group, as per the contracts stipulated with the Special Purpose Vehicle issuing the ABS securities, and involves the administration, encashment, restructuring and collection of securitised loans, on behalf thereof, as well as managing any recovery proceedings on Non-Performing loans. The Servicer of the assets, therefore, has the task, on an ongoing basis, of following the financial flows arising from the securitised loans, constantly monitoring the encashment, also where appropriate making use of third party companies. For each specific transaction, the Servicer provides the Special Purpose Vehicle (in addition to other counterparties as defined in the servicing contracts, including UniCredit S.p.A.) with information on the activities carried out via periodic reports which show, inter alia, the collection and realization of the assigned receivables, the number of defaulted positions and the successfully completed recoveries, the instalments in arrears, restructuring activities, etc. Where contractually provided for, these reports are periodically checked by an independent auditors' firm. ORGANIZATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: The Servicer provides UniCredit S.p.A. with a series of reports that enable the evaluation and monitoring of the underlying portfolios. Periodically, the performances are also presented in the reference internal Committees. HEDGING POLICIES: There are no risk hedging derivatives. OPERATING RESULTS: A set of monitoring initiatives has been implemented, focused both on the single company performances and the evolution of the projects as a whole. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 455 ORIGINATOR: UniCredit S.p.A. Transaction from previous years STRATEGIES, PROCESSES AND GOALS: The following initiatives were undertaken to allow the Group to improve the management of loan restructuring, also through the innovative use (for this purpose) of securitization. The goal is to facilitate and increase recoveries of the exposures under securitization thanks to: - restructuring with long-term industrial logic, focusing on introducing new finance (by third parties) in favour of the debtors sold, with focus on concrete needs and opportunities for the companies involved; - efficient and targeted restructuring and turnaround processes. Shared acceptance of the economic principles that guide the transactions in question and a strong alignment of the interests between the parties involved, ensures the asset manager 's commitment to maximize the value of the said assets, optimising therefore the expected recovery on the junior notes bought by UniCredit S.p.A., through the transferred management of the securitised portfolio. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: UniCredit S.p.A. does not act as Servicer. The business of servicing is carried out by third parties outside the Group, as per the contracts stipulated with the Special Purpose Vehicle issuing the ABS securities, and involves the administration, encashment, restructuring and collection of securitised loans, on behalf thereof, as well as managing any recovery proceedings on Non-Performing loans. The Servicer of the assets, therefore, has the task, on an ongoing basis, of following the financial flows arising from the securitised loans, constantly monitoring the encashment, also where appropriate making use of third party companies. For each specific transaction, the Servicer provides the Special Purpose Vehicle (in addition to other counterparties as defined in the servicing contracts, including UniCredit S.p.A.) with information on the activities carried out via periodic reports which show, inter alia, the collection and realization of the assigned receivables, the number of defaulted positions and the successfully completed recoveries, the instalments in arrears, restructuring activities, etc. Where contractually provided for, these reports are periodically checked by an independent auditors' firm. ORGANIZATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: The Servicer provides UniCredit S.p.A. with a series of reports that enable the evaluation and monitoring of the underlying portfolios. Periodically, the performances are also presented in the reference internal Committees. HEDGING POLICIES: There are no risk hedging derivatives. OPERATING RESULTS: A set of monitoring initiatives has been implemented, focused both on the single company performances and the evolution of the projects as a whole. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 455 ORIGINATOR: UniCredit S.p.A. Transaction from previous years STRATEGIES, PROCESSES AND GOALS: The following initiatives were undertaken to allow the Group to improve the management of loan restructuring, also through the innovative use (for this purpose) of securitization. The goal is to facilitate and increase recoveries of the exposures under securitization thanks to: - restructuring with long-term industrial logic, focusing on introducing new finance (by third parties) in favour of the debtors sold, with focus on concrete needs and opportunities for the companies involved; - efficient and targeted restructuring and turnaround processes. Shared acceptance of the economic principles that guide the transactions in question and a strong alignment of the interests between the parties involved, ensures the asset manager 's commitment to maximize the value of the said assets, optimising therefore the expected recovery on the junior notes bought by UniCredit S.p.A., through the transferred management of the securitised portfolio. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: UniCredit S.p.A. does not act as Servicer. The business of servicing is carried out by third parties outside the Group, as per the contracts stipulated with the Special Purpose Vehicle issuing the ABS securities, and involves the administration, encashment, restructuring and collection of securitised loans, on behalf thereof, as well as managing any recovery proceedings on Non-Performing loans. The Servicer of the assets, therefore, has the task, on an ongoing basis, of following the financial flows arising from the securitised loans, constantly monitoring the encashment, also where appropriate making use of third party companies. For each specific transaction, the Servicer provides the Special Purpose Vehicle (in addition to other counterparties as defined in the servicing contracts, including UniCredit S.p.A.) with information on the activities carried out via periodic reports which show, inter alia, the collection and realization of the assigned receivables, the number of defaulted positions and the successfully completed recoveries, the instalments in arrears, restructuring activities, etc. Where contractually provided for, these reports are periodically checked by an independent auditors' firm. ORGANIZATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: The Servicer provides UniCredit S.p.A. with a series of reports that enable the evaluation and monitoring of the underlying portfolios. Periodically, the performances are also presented in the reference internal Committees. HEDGING POLICIES: There are no risk hedging derivatives. OPERATING RESULTS: A set of monitoring initiatives has been implemented, focused both on the single company performances and the evolution of the projects as a whole. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 455 ORIGINATOR: UniCredit S.p.A. Transaction from previous years STRATEGIES, PROCESSES AND GOALS: The following initiatives were undertaken to allow the Group to improve the management of loan restructuring, also through the innovative use (for this purpose) of securitization. The goal is to facilitate and increase recoveries of the exposures under securitization thanks to: - restructuring with long-term industrial logic, focusing on introducing new finance (by third parties) in favour of the debtors sold, with focus on concrete needs and opportunities for the companies involved; - efficient and targeted restructuring and turnaround processes. Shared acceptance of the economic principles that guide the transactions in question and a strong alignment of the interests between the parties involved, ensures the asset manager 's commitment to maximize the value of the said assets, optimising therefore the expected recovery on the junior notes bought by UniCredit S.p.A., through the transferred management of the securitised portfolio. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: UniCredit S.p.A. does not act as Servicer. The business of servicing is carried out by third parties outside the Group, as per the contracts stipulated with the Special Purpose Vehicle issuing the ABS securities, and involves the administration, encashment, restructuring and collection of securitised loans, on behalf thereof, as well as managing any recovery proceedings on Non-Performing loans. The Servicer of the assets, therefore, has the task, on an ongoing basis, of following the financial flows arising from the securitised loans, constantly monitoring the encashment, also where appropriate making use of third party companies. For each specific transaction, the Servicer provides the Special Purpose Vehicle (in addition to other counterparties as defined in the servicing contracts, including UniCredit S.p.A.) with information on the activities carried out via periodic reports which show, inter alia, the collection and realization of the assigned receivables, the number of defaulted positions and the successfully completed recoveries, the instalments in arrears, restructuring activities, etc. Where contractually provided for, these reports are periodically checked by an independent auditors' firm. ORGANIZATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: The Servicer provides UniCredit S.p.A. with a series of reports that enable the evaluation and monitoring of the underlying portfolios. Periodically, the performances are also presented in the reference internal Committees. HEDGING POLICIES: There are no risk hedging derivatives. OPERATING RESULTS: A set of monitoring initiatives has been implemented, focused both on the single company performances and the evolution of the projects as a whole. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 456 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Operations of securitization of Non-Performing credits NAME: SANDOKAN Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Yanez S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtors sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay + NPL Closing date: 08.02.2017 11.21.2017 10.17.2018 12.12.2018 Nominal Value of disposal portfolio: 860,754,418 238,105,754 17,643,656 95,899,237 Net amount of pre-existing writedown/writebacks: - - - - Disposal Profit & Loss realised (€): - - - - Portfolio disposal price (€): 860,754,418 238,105,754 17,643,656 95,899,237 Guarantees issued by the Bank: No No No No Guarantees issued by Third Parties: No No No No Bank Lines of Credit : 10,000,000 - - - Third Parties Lines of Credit (€): No No No No Other Credit Enhancements (€): No No No No Other relevant information: no Pending the issuance of new securities in the course of 2019. Pending the issuance of new securities in the course of 2019. Pending the issuance of new securities in the course of 2019. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005273674 IT0005273666 . Type of security Senior (*) Senior (*) . Class AS2 AX . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 0.5 0.5 . Rate 4.0% 14.0% . Subordinated level - Sub AS2 . Nominal value issued 1,000 1,000 . Nominal value at the end of accounting period 1.485.681 (**) 3.910 (**) . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/Banca Finanziaria Internazionale Banca Finanziaria Internazionale . ISIN IT0005273690 IT0005273708 . Type of security Senior (*) Senior (*) . Class AJ2 B1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 0.5 3.10 . Rate 14.0% 3.0% . Subordinated level Sub AS2, pari passu AX Sub AS2, AX, AJ2 . Nominal value issued 1,000 171,520,000 . Nominal value at the end of accounting period 74.284 (**) 73,847,294.07 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF UniCredit Spa . ISIN IT0005273724 IT0005273732 . Type of security Senior (*) Mezzanine (*) . Class B2 C1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 3 4.70 . Rate 7.5% 3.5% . Subordinated level Sub AS2, AX, AJ2, B1 Sub AS2, AX, AJ2, B1, B2 . Nominal value issued 42,880,000 57,360,000 . Nominal value at the end of accounting period 18,518,768.89 57,360,000 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 456 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Operations of securitization of Non-Performing credits NAME: SANDOKAN Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Yanez S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtors sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay + NPL Closing date: 08.02.2017 11.21.2017 10.17.2018 12.12.2018 Nominal Value of disposal portfolio: 860,754,418 238,105,754 17,643,656 95,899,237 Net amount of pre-existing writedown/writebacks: - - - - Disposal Profit & Loss realised (€): - - - - Portfolio disposal price (€): 860,754,418 238,105,754 17,643,656 95,899,237 Guarantees issued by the Bank: No No No No Guarantees issued by Third Parties: No No No No Bank Lines of Credit : 10,000,000 - - - Third Parties Lines of Credit (€): No No No No Other Credit Enhancements (€): No No No No Other relevant information: no Pending the issuance of new securities in the course of 2019. Pending the issuance of new securities in the course of 2019. Pending the issuance of new securities in the course of 2019. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005273674 IT0005273666 . Type of security Senior (*) Senior (*) . Class AS2 AX . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 0.5 0.5 . Rate 4.0% 14.0% . Subordinated level - Sub AS2 . Nominal value issued 1,000 1,000 . Nominal value at the end of accounting period 1.485.681 (**) 3.910 (**) . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/Banca Finanziaria Internazionale Banca Finanziaria Internazionale . ISIN IT0005273690 IT0005273708 . Type of security Senior (*) Senior (*) . Class AJ2 B1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 0.5 3.10 . Rate 14.0% 3.0% . Subordinated level Sub AS2, pari passu AX Sub AS2, AX, AJ2 . Nominal value issued 1,000 171,520,000 . Nominal value at the end of accounting period 74.284 (**) 73,847,294.07 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF UniCredit Spa . ISIN IT0005273724 IT0005273732 . Type of security Senior (*) Mezzanine (*) . Class B2 C1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 3 4.70 . Rate 7.5% 3.5% . Subordinated level Sub AS2, AX, AJ2, B1 Sub AS2, AX, AJ2, B1, B2 . Nominal value issued 42,880,000 57,360,000 . Nominal value at the end of accounting period 18,518,768.89 57,360,000 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 456 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Operations of securitization of Non-Performing credits NAME: SANDOKAN Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Yanez S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtors sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay + NPL Closing date: 08.02.2017 11.21.2017 10.17.2018 12.12.2018 Nominal Value of disposal portfolio: 860,754,418 238,105,754 17,643,656 95,899,237 Net amount of pre-existing writedown/writebacks: - - - - Disposal Profit & Loss realised (€): - - - - Portfolio disposal price (€): 860,754,418 238,105,754 17,643,656 95,899,237 Guarantees issued by the Bank: No No No No Guarantees issued by Third Parties: No No No No Bank Lines of Credit : 10,000,000 - - - Third Parties Lines of Credit (€): No No No No Other Credit Enhancements (€): No No No No Other relevant information: no Pending the issuance of new securities in the course of 2019. Pending the issuance of new securities in the course of 2019. Pending the issuance of new securities in the course of 2019. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005273674 IT0005273666 . Type of security Senior (*) Senior (*) . Class AS2 AX . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 0.5 0.5 . Rate 4.0% 14.0% . Subordinated level - Sub AS2 . Nominal value issued 1,000 1,000 . Nominal value at the end of accounting period 1.485.681 (**) 3.910 (**) . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/Banca Finanziaria Internazionale Banca Finanziaria Internazionale . ISIN IT0005273690 IT0005273708 . Type of security Senior (*) Senior (*) . Class AJ2 B1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 0.5 3.10 . Rate 14.0% 3.0% . Subordinated level Sub AS2, pari passu AX Sub AS2, AX, AJ2 . Nominal value issued 1,000 171,520,000 . Nominal value at the end of accounting period 74.284 (**) 73,847,294.07 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF UniCredit Spa . ISIN IT0005273724 IT0005273732 . Type of security Senior (*) Mezzanine (*) . Class B2 C1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 3 4.70 . Rate 7.5% 3.5% . Subordinated level Sub AS2, AX, AJ2, B1 Sub AS2, AX, AJ2, B1, B2 . Nominal value issued 42,880,000 57,360,000 . Nominal value at the end of accounting period 18,518,768.89 57,360,000 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 456 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Operations of securitization of Non-Performing credits NAME: SANDOKAN Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Yanez S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtors sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay + NPL Closing date: 08.02.2017 11.21.2017 10.17.2018 12.12.2018 Nominal Value of disposal portfolio: 860,754,418 238,105,754 17,643,656 95,899,237 Net amount of pre-existing writedown/writebacks: - - - - Disposal Profit & Loss realised (€): - - - - Portfolio disposal price (€): 860,754,418 238,105,754 17,643,656 95,899,237 Guarantees issued by the Bank: No No No No Guarantees issued by Third Parties: No No No No Bank Lines of Credit : 10,000,000 - - - Third Parties Lines of Credit (€): No No No No Other Credit Enhancements (€): No No No No Other relevant information: no Pending the issuance of new securities in the course of 2019. Pending the issuance of new securities in the course of 2019. Pending the issuance of new securities in the course of 2019. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005273674 IT0005273666 . Type of security Senior (*) Senior (*) . Class AS2 AX . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 0.5 0.5 . Rate 4.0% 14.0% . Subordinated level - Sub AS2 . Nominal value issued 1,000 1,000 . Nominal value at the end of accounting period 1.485.681 (**) 3.910 (**) . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/Banca Finanziaria Internazionale Banca Finanziaria Internazionale . ISIN IT0005273690 IT0005273708 . Type of security Senior (*) Senior (*) . Class AJ2 B1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 0.5 3.10 . Rate 14.0% 3.0% . Subordinated level Sub AS2, pari passu AX Sub AS2, AX, AJ2 . Nominal value issued 1,000 171,520,000 . Nominal value at the end of accounting period 74.284 (**) 73,847,294.07 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF UniCredit Spa . ISIN IT0005273724 IT0005273732 . Type of security Senior (*) Mezzanine (*) . Class B2 C1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 3 4.70 . Rate 7.5% 3.5% . Subordinated level Sub AS2, AX, AJ2, B1 Sub AS2, AX, AJ2, B1, B2 . Nominal value issued 42,880,000 57,360,000 . Nominal value at the end of accounting period 18,518,768.89 57,360,000 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 456 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Operations of securitization of Non-Performing credits NAME: SANDOKAN Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Yanez S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtors sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay + NPL Closing date: 08.02.2017 11.21.2017 10.17.2018 12.12.2018 Nominal Value of disposal portfolio: 860,754,418 238,105,754 17,643,656 95,899,237 Net amount of pre-existing writedown/writebacks: - - - - Disposal Profit & Loss realised (€): - - - - Portfolio disposal price (€): 860,754,418 238,105,754 17,643,656 95,899,237 Guarantees issued by the Bank: No No No No Guarantees issued by Third Parties: No No No No Bank Lines of Credit : 10,000,000 - - - Third Parties Lines of Credit (€): No No No No Other Credit Enhancements (€): No No No No Other relevant information: no Pending the issuance of new securities in the course of 2019. Pending the issuance of new securities in the course of 2019. Pending the issuance of new securities in the course of 2019. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005273674 IT0005273666 . Type of security Senior (*) Senior (*) . Class AS2 AX . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 0.5 0.5 . Rate 4.0% 14.0% . Subordinated level - Sub AS2 . Nominal value issued 1,000 1,000 . Nominal value at the end of accounting period 1.485.681 (**) 3.910 (**) . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/Banca Finanziaria Internazionale Banca Finanziaria Internazionale . ISIN IT0005273690 IT0005273708 . Type of security Senior (*) Senior (*) . Class AJ2 B1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 0.5 3.10 . Rate 14.0% 3.0% . Subordinated level Sub AS2, pari passu AX Sub AS2, AX, AJ2 . Nominal value issued 1,000 171,520,000 . Nominal value at the end of accounting period 74.284 (**) 73,847,294.07 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF UniCredit Spa . ISIN IT0005273724 IT0005273732 . Type of security Senior (*) Mezzanine (*) . Class B2 C1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 3 4.70 . Rate 7.5% 3.5% . Subordinated level Sub AS2, AX, AJ2, B1 Sub AS2, AX, AJ2, B1, B2 . Nominal value issued 42,880,000 57,360,000 . Nominal value at the end of accounting period 18,518,768.89 57,360,000 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 457 continued from previous page NAME: SANDOKAN . ISIN IT0005273740 IT0005273757 . Type of security Mezzanine (*) Mezzanine (*) . Class C2 D1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 4.60 7.60 . Rate 15.0% 4.0% . Subordinated level Sub AS2, AX, AJ2, B1, B2, C1 Sub AS2, AX, AJ2, B1, B2, C1, . Nominal value issued 14,340,000 126,350,000 . Nominal value at the end of accounting period 14,340,000 126,350,000 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. . ISIN IT0005273773 IT0005273872 . Type of security Mezzanine (*) Junior (*) . Class D2 E . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 6.80 10.10 . Rate 19.0% 5% . Subordinated level Sub AS2, AX, AJ2, B1, B2, C1, Sub AS2, AX, AJ2, B1, B2, C1, . Nominal value issued 6,650,000 441,654,400 . Nominal value at the end of accounting period 6,650,000 441,654,400 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. Distribution of securitised assets by area (€): Italy 860,757,400 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 860,757,400 Distribution of securitised assets by business sector of the borrower (€): Governments - other governments agencies - Banks - Financial Companies - Insurance Companies - Non-financial companies 860,757,400 Other entities - TOTAL 860,757,400 Notes: *) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. (**) Additional Subscription Payments due for partially paid notes. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. In cases where the securities have not yet been issued, the closing date corresponds to the date of sale of the portfolio Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 457 continued from previous page NAME: SANDOKAN . ISIN IT0005273740 IT0005273757 . Type of security Mezzanine (*) Mezzanine (*) . Class C2 D1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 4.60 7.60 . Rate 15.0% 4.0% . Subordinated level Sub AS2, AX, AJ2, B1, B2, C1 Sub AS2, AX, AJ2, B1, B2, C1, . Nominal value issued 14,340,000 126,350,000 . Nominal value at the end of accounting period 14,340,000 126,350,000 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. . ISIN IT0005273773 IT0005273872 . Type of security Mezzanine (*) Junior (*) . Class D2 E . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 6.80 10.10 . Rate 19.0% 5% . Subordinated level Sub AS2, AX, AJ2, B1, B2, C1, Sub AS2, AX, AJ2, B1, B2, C1, . Nominal value issued 6,650,000 441,654,400 . Nominal value at the end of accounting period 6,650,000 441,654,400 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. Distribution of securitised assets by area (€): Italy 860,757,400 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 860,757,400 Distribution of securitised assets by business sector of the borrower (€): Governments - other governments agencies - Banks - Financial Companies - Insurance Companies - Non-financial companies 860,757,400 Other entities - TOTAL 860,757,400 Notes: *) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. (**) Additional Subscription Payments due for partially paid notes. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. In cases where the securities have not yet been issued, the closing date corresponds to the date of sale of the portfolio Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 457 continued from previous page NAME: SANDOKAN . ISIN IT0005273740 IT0005273757 . Type of security Mezzanine (*) Mezzanine (*) . Class C2 D1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 4.60 7.60 . Rate 15.0% 4.0% . Subordinated level Sub AS2, AX, AJ2, B1, B2, C1 Sub AS2, AX, AJ2, B1, B2, C1, . Nominal value issued 14,340,000 126,350,000 . Nominal value at the end of accounting period 14,340,000 126,350,000 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. . ISIN IT0005273773 IT0005273872 . Type of security Mezzanine (*) Junior (*) . Class D2 E . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 6.80 10.10 . Rate 19.0% 5% . Subordinated level Sub AS2, AX, AJ2, B1, B2, C1, Sub AS2, AX, AJ2, B1, B2, C1, . Nominal value issued 6,650,000 441,654,400 . Nominal value at the end of accounting period 6,650,000 441,654,400 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. Distribution of securitised assets by area (€): Italy 860,757,400 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 860,757,400 Distribution of securitised assets by business sector of the borrower (€): Governments - other governments agencies - Banks - Financial Companies - Insurance Companies - Non-financial companies 860,757,400 Other entities - TOTAL 860,757,400 Notes: *) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. (**) Additional Subscription Payments due for partially paid notes. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. In cases where the securities have not yet been issued, the closing date corresponds to the date of sale of the portfolio Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 457 continued from previous page NAME: SANDOKAN . ISIN IT0005273740 IT0005273757 . Type of security Mezzanine (*) Mezzanine (*) . Class C2 D1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 4.60 7.60 . Rate 15.0% 4.0% . Subordinated level Sub AS2, AX, AJ2, B1, B2, C1 Sub AS2, AX, AJ2, B1, B2, C1, . Nominal value issued 14,340,000 126,350,000 . Nominal value at the end of accounting period 14,340,000 126,350,000 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. . ISIN IT0005273773 IT0005273872 . Type of security Mezzanine (*) Junior (*) . Class D2 E . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 6.80 10.10 . Rate 19.0% 5% . Subordinated level Sub AS2, AX, AJ2, B1, B2, C1, Sub AS2, AX, AJ2, B1, B2, C1, . Nominal value issued 6,650,000 441,654,400 . Nominal value at the end of accounting period 6,650,000 441,654,400 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. Distribution of securitised assets by area (€): Italy 860,757,400 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 860,757,400 Distribution of securitised assets by business sector of the borrower (€): Governments - other governments agencies - Banks - Financial Companies - Insurance Companies - Non-financial companies 860,757,400 Other entities - TOTAL 860,757,400 Notes: *) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. (**) Additional Subscription Payments due for partially paid notes. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. In cases where the securities have not yet been issued, the closing date corresponds to the date of sale of the portfolio Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 457 continued from previous page NAME: SANDOKAN . ISIN IT0005273740 IT0005273757 . Type of security Mezzanine (*) Mezzanine (*) . Class C2 D1 . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 4.60 7.60 . Rate 15.0% 4.0% . Subordinated level Sub AS2, AX, AJ2, B1, B2, C1 Sub AS2, AX, AJ2, B1, B2, C1, . Nominal value issued 14,340,000 126,350,000 . Nominal value at the end of accounting period 14,340,000 126,350,000 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. . ISIN IT0005273773 IT0005273872 . Type of security Mezzanine (*) Junior (*) . Class D2 E . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity 11.30.2050 11.30.2050 . Call option - - . Expected duration (years) 6.80 10.10 . Rate 19.0% 5% . Subordinated level Sub AS2, AX, AJ2, B1, B2, C1, Sub AS2, AX, AJ2, B1, B2, C1, . Nominal value issued 6,650,000 441,654,400 . Nominal value at the end of accounting period 6,650,000 441,654,400 . Security subscribers Celidoria S.a.r.l./Europa Plus SCA SIF/FR Invest UniCredit S.p.A. Distribution of securitised assets by area (€): Italy 860,757,400 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 860,757,400 Distribution of securitised assets by business sector of the borrower (€): Governments - other governments agencies - Banks - Financial Companies - Insurance Companies - Non-financial companies 860,757,400 Other entities - TOTAL 860,757,400 Notes: *) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. (**) Additional Subscription Payments due for partially paid notes. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. In cases where the securities have not yet been issued, the closing date corresponds to the date of sale of the portfolio Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 458 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: PILLARSTONE ITALY - PREMUDA Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 07.14.2016 Nominal Value of disposal portfolio (€): $78,220,999.08 + €31,265,398.23 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€): - Portfolio disposal price (€): $78,220,999.08 + €31,265,398.23 Guarantees issued by the Bank: no Guarantees issued by Third Parties: no Bank Lines of Credit : no Third Parties Lines of Credit (€): 7,000,000 Other Credit Enhancements (€): no Other relevant information: no Rating Agencies: no Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005203937 IT0005203952 . Type of security Senior (*) Mezzanine (*) . Class A B . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 07.14.2016 07.14.2016 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 5.0 5.0 . Rate 8.50% 2.67% . Subordinated level - Sub A . Nominal value issued (€) €2,743,000 $57,663,000 . Nominal value at the end of accounting period (€) €1.823.079 $57,663,000 . Security subscribers Pall Mall Solution ICAV UniCredit S.p.A. . ISIN IT0005246712 IT0005246761 . Type of security Mezzanine (*) Junior (*) . Class B C . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 04.04.2017 04.04.2017 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 3.4 3.4 . Rate 3.43% 9.76% . Subordinated level Sub A Sub A,B . Nominal value issued (€) €280,000 €2,956,000 . Nominal value at the end of accounting period (€) €280,000 €2,956,000 . Security subscribers UniCredit S.p.A. UniCredit S.p.A. . ISIN IT0005204125 IT0005204133 . Type of security Junior (*) Junior (*) . Class C C . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 07.14.2016 07.14.2016 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 5.0 5.0 . Rate 9.71% 10.69% . Subordinated level Sub A,B Sub A,B . Nominal value issued (€) €25,272,000 $20,558,000 . Nominal value at the end of accounting period (€) €25,272,000 $20,558,000 . Security subscribers UniCredit S.p.A. UniCredit S.p.A. Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 458 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: PILLARSTONE ITALY - PREMUDA Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 07.14.2016 Nominal Value of disposal portfolio (€): $78,220,999.08 + €31,265,398.23 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€): - Portfolio disposal price (€): $78,220,999.08 + €31,265,398.23 Guarantees issued by the Bank: no Guarantees issued by Third Parties: no Bank Lines of Credit : no Third Parties Lines of Credit (€): 7,000,000 Other Credit Enhancements (€): no Other relevant information: no Rating Agencies: no Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005203937 IT0005203952 . Type of security Senior (*) Mezzanine (*) . Class A B . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 07.14.2016 07.14.2016 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 5.0 5.0 . Rate 8.50% 2.67% . Subordinated level - Sub A . Nominal value issued (€) €2,743,000 $57,663,000 . Nominal value at the end of accounting period (€) €1.823.079 $57,663,000 . Security subscribers Pall Mall Solution ICAV UniCredit S.p.A. . ISIN IT0005246712 IT0005246761 . Type of security Mezzanine (*) Junior (*) . Class B C . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 04.04.2017 04.04.2017 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 3.4 3.4 . Rate 3.43% 9.76% . Subordinated level Sub A Sub A,B . Nominal value issued (€) €280,000 €2,956,000 . Nominal value at the end of accounting period (€) €280,000 €2,956,000 . Security subscribers UniCredit S.p.A. UniCredit S.p.A. . ISIN IT0005204125 IT0005204133 . Type of security Junior (*) Junior (*) . Class C C . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 07.14.2016 07.14.2016 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 5.0 5.0 . Rate 9.71% 10.69% . Subordinated level Sub A,B Sub A,B . Nominal value issued (€) €25,272,000 $20,558,000 . Nominal value at the end of accounting period (€) €25,272,000 $20,558,000 . Security subscribers UniCredit S.p.A. UniCredit S.p.A. Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 458 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: PILLARSTONE ITALY - PREMUDA Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 07.14.2016 Nominal Value of disposal portfolio (€): $78,220,999.08 + €31,265,398.23 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€): - Portfolio disposal price (€): $78,220,999.08 + €31,265,398.23 Guarantees issued by the Bank: no Guarantees issued by Third Parties: no Bank Lines of Credit : no Third Parties Lines of Credit (€): 7,000,000 Other Credit Enhancements (€): no Other relevant information: no Rating Agencies: no Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005203937 IT0005203952 . Type of security Senior (*) Mezzanine (*) . Class A B . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 07.14.2016 07.14.2016 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 5.0 5.0 . Rate 8.50% 2.67% . Subordinated level - Sub A . Nominal value issued (€) €2,743,000 $57,663,000 . Nominal value at the end of accounting period (€) €1.823.079 $57,663,000 . Security subscribers Pall Mall Solution ICAV UniCredit S.p.A. . ISIN IT0005246712 IT0005246761 . Type of security Mezzanine (*) Junior (*) . Class B C . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 04.04.2017 04.04.2017 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 3.4 3.4 . Rate 3.43% 9.76% . Subordinated level Sub A Sub A,B . Nominal value issued (€) €280,000 €2,956,000 . Nominal value at the end of accounting period (€) €280,000 €2,956,000 . Security subscribers UniCredit S.p.A. UniCredit S.p.A. . ISIN IT0005204125 IT0005204133 . Type of security Junior (*) Junior (*) . Class C C . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 07.14.2016 07.14.2016 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 5.0 5.0 . Rate 9.71% 10.69% . Subordinated level Sub A,B Sub A,B . Nominal value issued (€) €25,272,000 $20,558,000 . Nominal value at the end of accounting period (€) €25,272,000 $20,558,000 . Security subscribers UniCredit S.p.A. UniCredit S.p.A. Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 458 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: PILLARSTONE ITALY - PREMUDA Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 07.14.2016 Nominal Value of disposal portfolio (€): $78,220,999.08 + €31,265,398.23 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€): - Portfolio disposal price (€): $78,220,999.08 + €31,265,398.23 Guarantees issued by the Bank: no Guarantees issued by Third Parties: no Bank Lines of Credit : no Third Parties Lines of Credit (€): 7,000,000 Other Credit Enhancements (€): no Other relevant information: no Rating Agencies: no Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005203937 IT0005203952 . Type of security Senior (*) Mezzanine (*) . Class A B . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 07.14.2016 07.14.2016 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 5.0 5.0 . Rate 8.50% 2.67% . Subordinated level - Sub A . Nominal value issued (€) €2,743,000 $57,663,000 . Nominal value at the end of accounting period (€) €1.823.079 $57,663,000 . Security subscribers Pall Mall Solution ICAV UniCredit S.p.A. . ISIN IT0005246712 IT0005246761 . Type of security Mezzanine (*) Junior (*) . Class B C . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 04.04.2017 04.04.2017 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 3.4 3.4 . Rate 3.43% 9.76% . Subordinated level Sub A Sub A,B . Nominal value issued (€) €280,000 €2,956,000 . Nominal value at the end of accounting period (€) €280,000 €2,956,000 . Security subscribers UniCredit S.p.A. UniCredit S.p.A. . ISIN IT0005204125 IT0005204133 . Type of security Junior (*) Junior (*) . Class C C . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 07.14.2016 07.14.2016 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 5.0 5.0 . Rate 9.71% 10.69% . Subordinated level Sub A,B Sub A,B . Nominal value issued (€) €25,272,000 $20,558,000 . Nominal value at the end of accounting period (€) €25,272,000 $20,558,000 . Security subscribers UniCredit S.p.A. UniCredit S.p.A. Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 458 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: PILLARSTONE ITALY - PREMUDA Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 07.14.2016 Nominal Value of disposal portfolio (€): $78,220,999.08 + €31,265,398.23 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€): - Portfolio disposal price (€): $78,220,999.08 + €31,265,398.23 Guarantees issued by the Bank: no Guarantees issued by Third Parties: no Bank Lines of Credit : no Third Parties Lines of Credit (€): 7,000,000 Other Credit Enhancements (€): no Other relevant information: no Rating Agencies: no Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005203937 IT0005203952 . Type of security Senior (*) Mezzanine (*) . Class A B . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 07.14.2016 07.14.2016 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 5.0 5.0 . Rate 8.50% 2.67% . Subordinated level - Sub A . Nominal value issued (€) €2,743,000 $57,663,000 . Nominal value at the end of accounting period (€) €1.823.079 $57,663,000 . Security subscribers Pall Mall Solution ICAV UniCredit S.p.A. . ISIN IT0005246712 IT0005246761 . Type of security Mezzanine (*) Junior (*) . Class B C . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 04.04.2017 04.04.2017 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 3.4 3.4 . Rate 3.43% 9.76% . Subordinated level Sub A Sub A,B . Nominal value issued (€) €280,000 €2,956,000 . Nominal value at the end of accounting period (€) €280,000 €2,956,000 . Security subscribers UniCredit S.p.A. UniCredit S.p.A. . ISIN IT0005204125 IT0005204133 . Type of security Junior (*) Junior (*) . Class C C . Rating Not applicable Not applicable . Quotation Not applicable Not applicable . Issue date 07.14.2016 07.14.2016 . Legal maturity 10.20.2030 10.20.2030 . Call option no . Expected duration (years) 5.0 5.0 . Rate 9.71% 10.69% . Subordinated level Sub A,B Sub A,B . Nominal value issued (€) €25,272,000 $20,558,000 . Nominal value at the end of accounting period (€) €25,272,000 $20,558,000 . Security subscribers UniCredit S.p.A. UniCredit S.p.A. Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 459 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: PILLARSTONE ITALY - BURGO Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 12.10.2015 Nominal Value of disposal portfolio (€) : 150,646,763 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€): - Portfolio disposal price (€): 150,646,763 Guarantees issued by the Bank: No Guarantees issued by Third Parties: No Bank Lines of Credit : No Third Parties Lines of Credit (€): 7,000,000 Other Credit Enhancements (€): 21,998,763 Other relevant information: Credit Enhancement is represented by the deferred purchase price (DPP), subordinated to the junior security for the payment, of a convertible loan sold to the vehicle. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005154809 IT0005154825 . Type of security Senior(*) Mezzanine(*) . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 12.10.2015 12.10.2015 . Legal maturity 10.20.2030 10.20.2030 . Call option Not applicable . Expected duration (years) 5.0 5.0 . Rate 8.50% EUR6M(360) + 200bps . Subordinated level - Sub A . Nominal value issued (€) 5,423,000 103,043,000 . Nominal value at the end of accounting period (€) 5,423,000 103,043,000 . Security subscribers Pall Mall Solutions 1 ICAV UniCredit S.p.A. . ISIN IT0005155251 . Type of security Junior(*) . Class C . Rating - . Quotation Not listed . Issue date 12.10.2015 . Legal maturity 10.20.2030 . Call option No . Expected duration (years) 5.0 . Rate EUR6M(360)+1000bps . Subordinated level Sub A, B . Nominal value issued (€) 20,182,000 . Nominal value at the end of accounting period (€) 20,182,000 . Security subscribers UniCredit S.p.A. Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 459 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: PILLARSTONE ITALY - BURGO Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 12.10.2015 Nominal Value of disposal portfolio (€) : 150,646,763 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€): - Portfolio disposal price (€): 150,646,763 Guarantees issued by the Bank: No Guarantees issued by Third Parties: No Bank Lines of Credit : No Third Parties Lines of Credit (€): 7,000,000 Other Credit Enhancements (€): 21,998,763 Other relevant information: Credit Enhancement is represented by the deferred purchase price (DPP), subordinated to the junior security for the payment, of a convertible loan sold to the vehicle. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005154809 IT0005154825 . Type of security Senior(*) Mezzanine(*) . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 12.10.2015 12.10.2015 . Legal maturity 10.20.2030 10.20.2030 . Call option Not applicable . Expected duration (years) 5.0 5.0 . Rate 8.50% EUR6M(360) + 200bps . Subordinated level - Sub A . Nominal value issued (€) 5,423,000 103,043,000 . Nominal value at the end of accounting period (€) 5,423,000 103,043,000 . Security subscribers Pall Mall Solutions 1 ICAV UniCredit S.p.A. . ISIN IT0005155251 . Type of security Junior(*) . Class C . Rating - . Quotation Not listed . Issue date 12.10.2015 . Legal maturity 10.20.2030 . Call option No . Expected duration (years) 5.0 . Rate EUR6M(360)+1000bps . Subordinated level Sub A, B . Nominal value issued (€) 20,182,000 . Nominal value at the end of accounting period (€) 20,182,000 . Security subscribers UniCredit S.p.A. Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 459 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: PILLARSTONE ITALY - BURGO Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 12.10.2015 Nominal Value of disposal portfolio (€) : 150,646,763 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€): - Portfolio disposal price (€): 150,646,763 Guarantees issued by the Bank: No Guarantees issued by Third Parties: No Bank Lines of Credit : No Third Parties Lines of Credit (€): 7,000,000 Other Credit Enhancements (€): 21,998,763 Other relevant information: Credit Enhancement is represented by the deferred purchase price (DPP), subordinated to the junior security for the payment, of a convertible loan sold to the vehicle. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005154809 IT0005154825 . Type of security Senior(*) Mezzanine(*) . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 12.10.2015 12.10.2015 . Legal maturity 10.20.2030 10.20.2030 . Call option Not applicable . Expected duration (years) 5.0 5.0 . Rate 8.50% EUR6M(360) + 200bps . Subordinated level - Sub A . Nominal value issued (€) 5,423,000 103,043,000 . Nominal value at the end of accounting period (€) 5,423,000 103,043,000 . Security subscribers Pall Mall Solutions 1 ICAV UniCredit S.p.A. . ISIN IT0005155251 . Type of security Junior(*) . Class C . Rating - . Quotation Not listed . Issue date 12.10.2015 . Legal maturity 10.20.2030 . Call option No . Expected duration (years) 5.0 . Rate EUR6M(360)+1000bps . Subordinated level Sub A, B . Nominal value issued (€) 20,182,000 . Nominal value at the end of accounting period (€) 20,182,000 . Security subscribers UniCredit S.p.A. Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 459 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: PILLARSTONE ITALY - BURGO Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 12.10.2015 Nominal Value of disposal portfolio (€) : 150,646,763 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€): - Portfolio disposal price (€): 150,646,763 Guarantees issued by the Bank: No Guarantees issued by Third Parties: No Bank Lines of Credit : No Third Parties Lines of Credit (€): 7,000,000 Other Credit Enhancements (€): 21,998,763 Other relevant information: Credit Enhancement is represented by the deferred purchase price (DPP), subordinated to the junior security for the payment, of a convertible loan sold to the vehicle. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005154809 IT0005154825 . Type of security Senior(*) Mezzanine(*) . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 12.10.2015 12.10.2015 . Legal maturity 10.20.2030 10.20.2030 . Call option Not applicable . Expected duration (years) 5.0 5.0 . Rate 8.50% EUR6M(360) + 200bps . Subordinated level - Sub A . Nominal value issued (€) 5,423,000 103,043,000 . Nominal value at the end of accounting period (€) 5,423,000 103,043,000 . Security subscribers Pall Mall Solutions 1 ICAV UniCredit S.p.A. . ISIN IT0005155251 . Type of security Junior(*) . Class C . Rating - . Quotation Not listed . Issue date 12.10.2015 . Legal maturity 10.20.2030 . Call option No . Expected duration (years) 5.0 . Rate EUR6M(360)+1000bps . Subordinated level Sub A, B . Nominal value issued (€) 20,182,000 . Nominal value at the end of accounting period (€) 20,182,000 . Security subscribers UniCredit S.p.A. Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 459 ORIGINATOR: UniCredit S.p.A. Transaction from previous years NAME: PILLARSTONE ITALY - BURGO Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 12.10.2015 Nominal Value of disposal portfolio (€) : 150,646,763 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€): - Portfolio disposal price (€): 150,646,763 Guarantees issued by the Bank: No Guarantees issued by Third Parties: No Bank Lines of Credit : No Third Parties Lines of Credit (€): 7,000,000 Other Credit Enhancements (€): 21,998,763 Other relevant information: Credit Enhancement is represented by the deferred purchase price (DPP), subordinated to the junior security for the payment, of a convertible loan sold to the vehicle. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005154809 IT0005154825 . Type of security Senior(*) Mezzanine(*) . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 12.10.2015 12.10.2015 . Legal maturity 10.20.2030 10.20.2030 . Call option Not applicable . Expected duration (years) 5.0 5.0 . Rate 8.50% EUR6M(360) + 200bps . Subordinated level - Sub A . Nominal value issued (€) 5,423,000 103,043,000 . Nominal value at the end of accounting period (€) 5,423,000 103,043,000 . Security subscribers Pall Mall Solutions 1 ICAV UniCredit S.p.A. . ISIN IT0005155251 . Type of security Junior(*) . Class C . Rating - . Quotation Not listed . Issue date 12.10.2015 . Legal maturity 10.20.2030 . Call option No . Expected duration (years) 5.0 . Rate EUR6M(360)+1000bps . Subordinated level Sub A, B . Nominal value issued (€) 20,182,000 . Nominal value at the end of accounting period (€) 20,182,000 . Security subscribers UniCredit S.p.A. Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions - 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 460 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NOME CARTOLARIZZAZIONE: PILLARSTONE ITALY - RAINBOW Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 10.12.2015 09.04.2018 Nominal Value of disposal portfolio (€): 74,216,000 16,525,000 Net amount of pre-existing writedown/writebacks: - - Disposal Profit & Loss realised: - - Portfolio disposal price (€): 74,216,000 16,525,000 Guarantees issued by the Bank: No Guarantees issued by Third Parties: No Bank Lines of Credit: No Third Parties Lines of Credit (€): 3,500,000 2,000,000 Other Credit Enhancements: No Other relevant information: No The sale of portfolio in April 2018 determined the booking in the Financial Statements of a loan to the vehicle for the same amount, pending the issuance by the latter of new securities. These securities were subsequently issued on 22 January 2019. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005154833 IT0005155103 . Type of security Senior(*) Mezzanine(*) . Class A B . Rating - - . Quotation Non quotato Non quotato . Issue date 12.10.2015 12.10.2015 . Legal maturity 10.20.2030 10.20.2030 . Call option Not applicable . Expected duration (years) 5.0 5.0 . Rate 8.50% EUR6M(360) + 144pb . Subordinated level - Sub A . Nominal value issued (€) 890,000 16,921,000 . Nominal value at the end of accounting period (€) 890,000 16,921,000 . ISIN IT0005155111 . Type of security Junior(*) . Class C . Rating - . Quotation Non quotato . Issue date 12.10.2015 . Legal maturity 10.20.2030 . Call option Non applicabile . Expected duration (years) 5.0 . Rate EUR6M(360)+1000pb . Subordinated level Sub A, B . Nominal value issued (€) 56,405,000 . Nominal value at the end of accounting period (€) 56,405,000 Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions – 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. In cases where the securities have not yet been issued, the closing date corresponds to the date of sale of the portfolio. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 460 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NOME CARTOLARIZZAZIONE: PILLARSTONE ITALY - RAINBOW Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 10.12.2015 09.04.2018 Nominal Value of disposal portfolio (€): 74,216,000 16,525,000 Net amount of pre-existing writedown/writebacks: - - Disposal Profit & Loss realised: - - Portfolio disposal price (€): 74,216,000 16,525,000 Guarantees issued by the Bank: No Guarantees issued by Third Parties: No Bank Lines of Credit: No Third Parties Lines of Credit (€): 3,500,000 2,000,000 Other Credit Enhancements: No Other relevant information: No The sale of portfolio in April 2018 determined the booking in the Financial Statements of a loan to the vehicle for the same amount, pending the issuance by the latter of new securities. These securities were subsequently issued on 22 January 2019. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005154833 IT0005155103 . Type of security Senior(*) Mezzanine(*) . Class A B . Rating - - . Quotation Non quotato Non quotato . Issue date 12.10.2015 12.10.2015 . Legal maturity 10.20.2030 10.20.2030 . Call option Not applicable . Expected duration (years) 5.0 5.0 . Rate 8.50% EUR6M(360) + 144pb . Subordinated level - Sub A . Nominal value issued (€) 890,000 16,921,000 . Nominal value at the end of accounting period (€) 890,000 16,921,000 . ISIN IT0005155111 . Type of security Junior(*) . Class C . Rating - . Quotation Non quotato . Issue date 12.10.2015 . Legal maturity 10.20.2030 . Call option Non applicabile . Expected duration (years) 5.0 . Rate EUR6M(360)+1000pb . Subordinated level Sub A, B . Nominal value issued (€) 56,405,000 . Nominal value at the end of accounting period (€) 56,405,000 Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions – 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. In cases where the securities have not yet been issued, the closing date corresponds to the date of sale of the portfolio. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 460 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NOME CARTOLARIZZAZIONE: PILLARSTONE ITALY - RAINBOW Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 10.12.2015 09.04.2018 Nominal Value of disposal portfolio (€): 74,216,000 16,525,000 Net amount of pre-existing writedown/writebacks: - - Disposal Profit & Loss realised: - - Portfolio disposal price (€): 74,216,000 16,525,000 Guarantees issued by the Bank: No Guarantees issued by Third Parties: No Bank Lines of Credit: No Third Parties Lines of Credit (€): 3,500,000 2,000,000 Other Credit Enhancements: No Other relevant information: No The sale of portfolio in April 2018 determined the booking in the Financial Statements of a loan to the vehicle for the same amount, pending the issuance by the latter of new securities. These securities were subsequently issued on 22 January 2019. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005154833 IT0005155103 . Type of security Senior(*) Mezzanine(*) . Class A B . Rating - - . Quotation Non quotato Non quotato . Issue date 12.10.2015 12.10.2015 . Legal maturity 10.20.2030 10.20.2030 . Call option Not applicable . Expected duration (years) 5.0 5.0 . Rate 8.50% EUR6M(360) + 144pb . Subordinated level - Sub A . Nominal value issued (€) 890,000 16,921,000 . Nominal value at the end of accounting period (€) 890,000 16,921,000 . ISIN IT0005155111 . Type of security Junior(*) . Class C . Rating - . Quotation Non quotato . Issue date 12.10.2015 . Legal maturity 10.20.2030 . Call option Non applicabile . Expected duration (years) 5.0 . Rate EUR6M(360)+1000pb . Subordinated level Sub A, B . Nominal value issued (€) 56,405,000 . Nominal value at the end of accounting period (€) 56,405,000 Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions – 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. In cases where the securities have not yet been issued, the closing date corresponds to the date of sale of the portfolio. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 460 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NOME CARTOLARIZZAZIONE: PILLARSTONE ITALY - RAINBOW Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 10.12.2015 09.04.2018 Nominal Value of disposal portfolio (€): 74,216,000 16,525,000 Net amount of pre-existing writedown/writebacks: - - Disposal Profit & Loss realised: - - Portfolio disposal price (€): 74,216,000 16,525,000 Guarantees issued by the Bank: No Guarantees issued by Third Parties: No Bank Lines of Credit: No Third Parties Lines of Credit (€): 3,500,000 2,000,000 Other Credit Enhancements: No Other relevant information: No The sale of portfolio in April 2018 determined the booking in the Financial Statements of a loan to the vehicle for the same amount, pending the issuance by the latter of new securities. These securities were subsequently issued on 22 January 2019. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005154833 IT0005155103 . Type of security Senior(*) Mezzanine(*) . Class A B . Rating - - . Quotation Non quotato Non quotato . Issue date 12.10.2015 12.10.2015 . Legal maturity 10.20.2030 10.20.2030 . Call option Not applicable . Expected duration (years) 5.0 5.0 . Rate 8.50% EUR6M(360) + 144pb . Subordinated level - Sub A . Nominal value issued (€) 890,000 16,921,000 . Nominal value at the end of accounting period (€) 890,000 16,921,000 . ISIN IT0005155111 . Type of security Junior(*) . Class C . Rating - . Quotation Non quotato . Issue date 12.10.2015 . Legal maturity 10.20.2030 . Call option Non applicabile . Expected duration (years) 5.0 . Rate EUR6M(360)+1000pb . Subordinated level Sub A, B . Nominal value issued (€) 56,405,000 . Nominal value at the end of accounting period (€) 56,405,000 Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions – 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. In cases where the securities have not yet been issued, the closing date corresponds to the date of sale of the portfolio. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 460 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Transaction from previous years NOME CARTOLARIZZAZIONE: PILLARSTONE ITALY - RAINBOW Type of securitisation: Traditional Originator: UniCredit S.p.A. Issuer: Pillarstone Italy SPV S.r.l. Servicer: Securitisation Services S.p.A. Arranger: Not applicable Target transaction: Innovative structure of securitisation to manage and overcome the temporary difficulties of the debtor sold, in order to optimise the reimbursement of the securitised portfolio. Type of asset: Corporate loans Quality of Asset: Unlikely to pay Closing date: 10.12.2015 09.04.2018 Nominal Value of disposal portfolio (€): 74,216,000 16,525,000 Net amount of pre-existing writedown/writebacks: - - Disposal Profit & Loss realised: - - Portfolio disposal price (€): 74,216,000 16,525,000 Guarantees issued by the Bank: No Guarantees issued by Third Parties: No Bank Lines of Credit: No Third Parties Lines of Credit (€): 3,500,000 2,000,000 Other Credit Enhancements: No Other relevant information: No The sale of portfolio in April 2018 determined the booking in the Financial Statements of a loan to the vehicle for the same amount, pending the issuance by the latter of new securities. These securities were subsequently issued on 22 January 2019. Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005154833 IT0005155103 . Type of security Senior(*) Mezzanine(*) . Class A B . Rating - - . Quotation Non quotato Non quotato . Issue date 12.10.2015 12.10.2015 . Legal maturity 10.20.2030 10.20.2030 . Call option Not applicable . Expected duration (years) 5.0 5.0 . Rate 8.50% EUR6M(360) + 144pb . Subordinated level - Sub A . Nominal value issued (€) 890,000 16,921,000 . Nominal value at the end of accounting period (€) 890,000 16,921,000 . ISIN IT0005155111 . Type of security Junior(*) . Class C . Rating - . Quotation Non quotato . Issue date 12.10.2015 . Legal maturity 10.20.2030 . Call option Non applicabile . Expected duration (years) 5.0 . Rate EUR6M(360)+1000pb . Subordinated level Sub A, B . Nominal value issued (€) 56,405,000 . Nominal value at the end of accounting period (€) 56,405,000 Note: (*) The classification of the field "Type of security" refers to Banca d’Italia Circular 262 "The Bank's Financial Statements" - Chapter 1 General principles - Section 5 Definitions – 5.23 - Securitisations: senior, mezzanine and junior exposures. The "Closing date" is the date when the securitization vehicle has issued the securities of the transaction. In cases where the securities have not yet been issued, the closing date corresponds to the date of sale of the portfolio. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 461 ORIGINATOR: UniCredit S.p.A. Traditional securitisations of Non-Performing loans Transactions from previous years NAME: FINO 1 Type of securitisation: Traditional Originator: UniCredit S.p.A/Arena Npl ONE S.r.l. Issuer: FINO 1 Securitisation S.r.l. Servicer: doBank S.p.A. (Master Servicer and Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to small and medium enterprises and individuals Quality of Asset: Bad loans (sofferenze) Closing date: 31 July 2017 Nominal Value of disposal portfolio (€): 5,376,266,868 Net amount of pre-existing writedown/writebacks: 890,222,581 Disposal Profit & Loss realised (€) (*): -95,911,884 Portfolio disposal price (€): 794,310,697 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor. Rating Agencies: Moody's - DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277311 IT0005277337 . Type of security Senior Mezzanine . Class A B . Rating A2 - BBB (high) (sf) Ba3 - BB (high) (sf) . Quotation not listed not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option not before 07.31.2020 . Expected duration (years) 2.2 4.1 . Rate 3M Eur + 1.5% 3M Eur + 4% . Subordinated level - SUB A . Nominal value issued (€) 500,000,000 175,000,000 . Nominal value at the end of accounting period (€) 545,018,500 29,640,000 . ISIN IT0005277345 IT0005277352 . Type of security Mezzanine Junior . Class C D . Rating B1 - BB (sf) - . Quotation not listed not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option not before 07.31.2020 . Expected duration (years) 4.2 6.8 . Rate 3M Eur + 6% 3M Eur + 12% . Subordinated level SUB A-B SUB A-B-C . Nominal value issued (€) 69,000,000 50,311,000 . Nominal value at the end of accounting period (€) 40,000,000 50,311,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 461 ORIGINATOR: UniCredit S.p.A. Traditional securitisations of Non-Performing loans Transactions from previous years NAME: FINO 1 Type of securitisation: Traditional Originator: UniCredit S.p.A/Arena Npl ONE S.r.l. Issuer: FINO 1 Securitisation S.r.l. Servicer: doBank S.p.A. (Master Servicer and Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to small and medium enterprises and individuals Quality of Asset: Bad loans (sofferenze) Closing date: 31 July 2017 Nominal Value of disposal portfolio (€): 5,376,266,868 Net amount of pre-existing writedown/writebacks: 890,222,581 Disposal Profit & Loss realised (€) (*): -95,911,884 Portfolio disposal price (€): 794,310,697 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor. Rating Agencies: Moody's - DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277311 IT0005277337 . Type of security Senior Mezzanine . Class A B . Rating A2 - BBB (high) (sf) Ba3 - BB (high) (sf) . Quotation not listed not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option not before 07.31.2020 . Expected duration (years) 2.2 4.1 . Rate 3M Eur + 1.5% 3M Eur + 4% . Subordinated level - SUB A . Nominal value issued (€) 500,000,000 175,000,000 . Nominal value at the end of accounting period (€) 545,018,500 29,640,000 . ISIN IT0005277345 IT0005277352 . Type of security Mezzanine Junior . Class C D . Rating B1 - BB (sf) - . Quotation not listed not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option not before 07.31.2020 . Expected duration (years) 4.2 6.8 . Rate 3M Eur + 6% 3M Eur + 12% . Subordinated level SUB A-B SUB A-B-C . Nominal value issued (€) 69,000,000 50,311,000 . Nominal value at the end of accounting period (€) 40,000,000 50,311,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 461 ORIGINATOR: UniCredit S.p.A. Traditional securitisations of Non-Performing loans Transactions from previous years NAME: FINO 1 Type of securitisation: Traditional Originator: UniCredit S.p.A/Arena Npl ONE S.r.l. Issuer: FINO 1 Securitisation S.r.l. Servicer: doBank S.p.A. (Master Servicer and Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to small and medium enterprises and individuals Quality of Asset: Bad loans (sofferenze) Closing date: 31 July 2017 Nominal Value of disposal portfolio (€): 5,376,266,868 Net amount of pre-existing writedown/writebacks: 890,222,581 Disposal Profit & Loss realised (€) (*): -95,911,884 Portfolio disposal price (€): 794,310,697 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor. Rating Agencies: Moody's - DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277311 IT0005277337 . Type of security Senior Mezzanine . Class A B . Rating A2 - BBB (high) (sf) Ba3 - BB (high) (sf) . Quotation not listed not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option not before 07.31.2020 . Expected duration (years) 2.2 4.1 . Rate 3M Eur + 1.5% 3M Eur + 4% . Subordinated level - SUB A . Nominal value issued (€) 500,000,000 175,000,000 . Nominal value at the end of accounting period (€) 545,018,500 29,640,000 . ISIN IT0005277345 IT0005277352 . Type of security Mezzanine Junior . Class C D . Rating B1 - BB (sf) - . Quotation not listed not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option not before 07.31.2020 . Expected duration (years) 4.2 6.8 . Rate 3M Eur + 6% 3M Eur + 12% . Subordinated level SUB A-B SUB A-B-C . Nominal value issued (€) 69,000,000 50,311,000 . Nominal value at the end of accounting period (€) 40,000,000 50,311,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 461 ORIGINATOR: UniCredit S.p.A. Traditional securitisations of Non-Performing loans Transactions from previous years NAME: FINO 1 Type of securitisation: Traditional Originator: UniCredit S.p.A/Arena Npl ONE S.r.l. Issuer: FINO 1 Securitisation S.r.l. Servicer: doBank S.p.A. (Master Servicer and Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to small and medium enterprises and individuals Quality of Asset: Bad loans (sofferenze) Closing date: 31 July 2017 Nominal Value of disposal portfolio (€): 5,376,266,868 Net amount of pre-existing writedown/writebacks: 890,222,581 Disposal Profit & Loss realised (€) (*): -95,911,884 Portfolio disposal price (€): 794,310,697 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor. Rating Agencies: Moody's - DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277311 IT0005277337 . Type of security Senior Mezzanine . Class A B . Rating A2 - BBB (high) (sf) Ba3 - BB (high) (sf) . Quotation not listed not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option not before 07.31.2020 . Expected duration (years) 2.2 4.1 . Rate 3M Eur + 1.5% 3M Eur + 4% . Subordinated level - SUB A . Nominal value issued (€) 500,000,000 175,000,000 . Nominal value at the end of accounting period (€) 545,018,500 29,640,000 . ISIN IT0005277345 IT0005277352 . Type of security Mezzanine Junior . Class C D . Rating B1 - BB (sf) - . Quotation not listed not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option not before 07.31.2020 . Expected duration (years) 4.2 6.8 . Rate 3M Eur + 6% 3M Eur + 12% . Subordinated level SUB A-B SUB A-B-C . Nominal value issued (€) 69,000,000 50,311,000 . Nominal value at the end of accounting period (€) 40,000,000 50,311,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 461 ORIGINATOR: UniCredit S.p.A. Traditional securitisations of Non-Performing loans Transactions from previous years NAME: FINO 1 Type of securitisation: Traditional Originator: UniCredit S.p.A/Arena Npl ONE S.r.l. Issuer: FINO 1 Securitisation S.r.l. Servicer: doBank S.p.A. (Master Servicer and Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to small and medium enterprises and individuals Quality of Asset: Bad loans (sofferenze) Closing date: 31 July 2017 Nominal Value of disposal portfolio (€): 5,376,266,868 Net amount of pre-existing writedown/writebacks: 890,222,581 Disposal Profit & Loss realised (€) (*): -95,911,884 Portfolio disposal price (€): 794,310,697 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor. Rating Agencies: Moody's - DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277311 IT0005277337 . Type of security Senior Mezzanine . Class A B . Rating A2 - BBB (high) (sf) Ba3 - BB (high) (sf) . Quotation not listed not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option not before 07.31.2020 . Expected duration (years) 2.2 4.1 . Rate 3M Eur + 1.5% 3M Eur + 4% . Subordinated level - SUB A . Nominal value issued (€) 500,000,000 175,000,000 . Nominal value at the end of accounting period (€) 545,018,500 29,640,000 . ISIN IT0005277345 IT0005277352 . Type of security Mezzanine Junior . Class C D . Rating B1 - BB (sf) - . Quotation not listed not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option not before 07.31.2020 . Expected duration (years) 4.2 6.8 . Rate 3M Eur + 6% 3M Eur + 12% . Subordinated level SUB A-B SUB A-B-C . Nominal value issued (€) 69,000,000 50,311,000 . Nominal value at the end of accounting period (€) 40,000,000 50,311,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 462 2018 Annual Report and Accounts · UniCredit NAME: FINO 2 Type of securitisation: Traditional Originator: UniCredit S.p.A/Arena Npl ONE S.r.l. Issuer: FINO 2 Securitisation S.r.l. Servicer: doBank S.p.A. (Master Servicer and Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to small and medium enterprises and individuals Quality of Asset: Bad loans (sofferenze) Closing date: 31 July 2017 Nominal Value of disposal portfolio (€): 7,840,924,572 Net amount of pre-existing writedown/writebacks: 821,592,350 Disposal Profit & Loss realised (€) (*): -181,439,057 Portfolio disposal price (€): 640,153,293 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor. Rating Agencies: - Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277378 IT0005277394 . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option - . Expected duration (years) 1.6 3.6 . Rate 3M Eur + 2% 3M Eur + 6% . Subordinated level - SUB A . Nominal value issued (€) 400,000,000 125,000,000 . Nominal value at the end of accounting period (€) 323,036,000 125,000,000 . ISIN IT0005277402 IT0005277410 . Type of security Mezzanine Junior . Class C D . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option - . Expected duration (years) 4.3 6.2 . Rate 3M Eur + 8% 3M Eur + 12% . Subordinated level SUB A-B SUB A-B-C . Nominal value issued (€) 75,600,000 39,554,000 . Nominal value at the end of accounting period (€) 75,600,000 39,554,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 462 2018 Annual Report and Accounts · UniCredit NAME: FINO 2 Type of securitisation: Traditional Originator: UniCredit S.p.A/Arena Npl ONE S.r.l. Issuer: FINO 2 Securitisation S.r.l. Servicer: doBank S.p.A. (Master Servicer and Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to small and medium enterprises and individuals Quality of Asset: Bad loans (sofferenze) Closing date: 31 July 2017 Nominal Value of disposal portfolio (€): 7,840,924,572 Net amount of pre-existing writedown/writebacks: 821,592,350 Disposal Profit & Loss realised (€) (*): -181,439,057 Portfolio disposal price (€): 640,153,293 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor. Rating Agencies: - Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277378 IT0005277394 . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option - . Expected duration (years) 1.6 3.6 . Rate 3M Eur + 2% 3M Eur + 6% . Subordinated level - SUB A . Nominal value issued (€) 400,000,000 125,000,000 . Nominal value at the end of accounting period (€) 323,036,000 125,000,000 . ISIN IT0005277402 IT0005277410 . Type of security Mezzanine Junior . Class C D . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option - . Expected duration (years) 4.3 6.2 . Rate 3M Eur + 8% 3M Eur + 12% . Subordinated level SUB A-B SUB A-B-C . Nominal value issued (€) 75,600,000 39,554,000 . Nominal value at the end of accounting period (€) 75,600,000 39,554,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 462 2018 Annual Report and Accounts · UniCredit NAME: FINO 2 Type of securitisation: Traditional Originator: UniCredit S.p.A/Arena Npl ONE S.r.l. Issuer: FINO 2 Securitisation S.r.l. Servicer: doBank S.p.A. (Master Servicer and Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to small and medium enterprises and individuals Quality of Asset: Bad loans (sofferenze) Closing date: 31 July 2017 Nominal Value of disposal portfolio (€): 7,840,924,572 Net amount of pre-existing writedown/writebacks: 821,592,350 Disposal Profit & Loss realised (€) (*): -181,439,057 Portfolio disposal price (€): 640,153,293 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor. Rating Agencies: - Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277378 IT0005277394 . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option - . Expected duration (years) 1.6 3.6 . Rate 3M Eur + 2% 3M Eur + 6% . Subordinated level - SUB A . Nominal value issued (€) 400,000,000 125,000,000 . Nominal value at the end of accounting period (€) 323,036,000 125,000,000 . ISIN IT0005277402 IT0005277410 . Type of security Mezzanine Junior . Class C D . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option - . Expected duration (years) 4.3 6.2 . Rate 3M Eur + 8% 3M Eur + 12% . Subordinated level SUB A-B SUB A-B-C . Nominal value issued (€) 75,600,000 39,554,000 . Nominal value at the end of accounting period (€) 75,600,000 39,554,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 462 2018 Annual Report and Accounts · UniCredit NAME: FINO 2 Type of securitisation: Traditional Originator: UniCredit S.p.A/Arena Npl ONE S.r.l. Issuer: FINO 2 Securitisation S.r.l. Servicer: doBank S.p.A. (Master Servicer and Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to small and medium enterprises and individuals Quality of Asset: Bad loans (sofferenze) Closing date: 31 July 2017 Nominal Value of disposal portfolio (€): 7,840,924,572 Net amount of pre-existing writedown/writebacks: 821,592,350 Disposal Profit & Loss realised (€) (*): -181,439,057 Portfolio disposal price (€): 640,153,293 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor. Rating Agencies: - Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277378 IT0005277394 . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option - . Expected duration (years) 1.6 3.6 . Rate 3M Eur + 2% 3M Eur + 6% . Subordinated level - SUB A . Nominal value issued (€) 400,000,000 125,000,000 . Nominal value at the end of accounting period (€) 323,036,000 125,000,000 . ISIN IT0005277402 IT0005277410 . Type of security Mezzanine Junior . Class C D . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option - . Expected duration (years) 4.3 6.2 . Rate 3M Eur + 8% 3M Eur + 12% . Subordinated level SUB A-B SUB A-B-C . Nominal value issued (€) 75,600,000 39,554,000 . Nominal value at the end of accounting period (€) 75,600,000 39,554,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 462 2018 Annual Report and Accounts · UniCredit NAME: FINO 2 Type of securitisation: Traditional Originator: UniCredit S.p.A/Arena Npl ONE S.r.l. Issuer: FINO 2 Securitisation S.r.l. Servicer: doBank S.p.A. (Master Servicer and Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to small and medium enterprises and individuals Quality of Asset: Bad loans (sofferenze) Closing date: 31 July 2017 Nominal Value of disposal portfolio (€): 7,840,924,572 Net amount of pre-existing writedown/writebacks: 821,592,350 Disposal Profit & Loss realised (€) (*): -181,439,057 Portfolio disposal price (€): 640,153,293 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor. Rating Agencies: - Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277378 IT0005277394 . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option - . Expected duration (years) 1.6 3.6 . Rate 3M Eur + 2% 3M Eur + 6% . Subordinated level - SUB A . Nominal value issued (€) 400,000,000 125,000,000 . Nominal value at the end of accounting period (€) 323,036,000 125,000,000 . ISIN IT0005277402 IT0005277410 . Type of security Mezzanine Junior . Class C D . Rating - - . Quotation Not listed Not listed . Issue date 07.31.2017 07.31.2017 . Legal maturity October 2045 October 2045 . Call option - . Expected duration (years) 4.3 6.2 . Rate 3M Eur + 8% 3M Eur + 12% . Subordinated level SUB A-B SUB A-B-C . Nominal value issued (€) 75,600,000 39,554,000 . Nominal value at the end of accounting period (€) 75,600,000 39,554,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 463 NAME: ONIF Type of securitisation: Traditional Originator: UniCredit S.p.A Issuer: Onif Finance S.r.l. Servicer: Zenith Service S.p.A. (Master Servicer) - Phoenix Asset Management S.p.A. (Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to large enterprises Quality of Asset: Bad loans (sofferenze) Closing date: 26 July 2017 Nominal Value of disposal portfolio (€): 2,994,149,412 Net amount of pre-existing writedown/writebacks: 401,928,516 Disposal Profit & Loss realised (€) (*): -84,423,445 Portfolio disposal price net of Lock Box Cash (€): 317,505,071 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : 2,000,000 Third Parties Lines of Credit (€): - Other Credit Enhancements (€): Cash reserve EUR 700,000 Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277014 IT0005277022 . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 07.26.2017 07.26.2017 . Legal maturity October 2042 October 2042 . Call option - . Expected duration (years) 2.0 4.5 . Rate 2.00% 5.00% . Subordinated level - SUB A . Nominal value issued (€) 150,000,000 100,000,000 . Nominal value at the end of accounting period (€) 94,114,323 100,000,000 . ISIN IT0005277030 . Type of security Junior . Class C . Rating - . Quotation Not listed . Issue date 07.26.2017 . Legal maturity October 2042 . Call option - . Expected duration (years) 6.7 . Rate 10.00% . Subordinated level SUB A-B . Nominal value issued (€) 79,508,000 . Nominal value at the end of accounting period (€) 79,508,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 463 NAME: ONIF Type of securitisation: Traditional Originator: UniCredit S.p.A Issuer: Onif Finance S.r.l. Servicer: Zenith Service S.p.A. (Master Servicer) - Phoenix Asset Management S.p.A. (Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to large enterprises Quality of Asset: Bad loans (sofferenze) Closing date: 26 July 2017 Nominal Value of disposal portfolio (€): 2,994,149,412 Net amount of pre-existing writedown/writebacks: 401,928,516 Disposal Profit & Loss realised (€) (*): -84,423,445 Portfolio disposal price net of Lock Box Cash (€): 317,505,071 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : 2,000,000 Third Parties Lines of Credit (€): - Other Credit Enhancements (€): Cash reserve EUR 700,000 Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277014 IT0005277022 . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 07.26.2017 07.26.2017 . Legal maturity October 2042 October 2042 . Call option - . Expected duration (years) 2.0 4.5 . Rate 2.00% 5.00% . Subordinated level - SUB A . Nominal value issued (€) 150,000,000 100,000,000 . Nominal value at the end of accounting period (€) 94,114,323 100,000,000 . ISIN IT0005277030 . Type of security Junior . Class C . Rating - . Quotation Not listed . Issue date 07.26.2017 . Legal maturity October 2042 . Call option - . Expected duration (years) 6.7 . Rate 10.00% . Subordinated level SUB A-B . Nominal value issued (€) 79,508,000 . Nominal value at the end of accounting period (€) 79,508,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 463 NAME: ONIF Type of securitisation: Traditional Originator: UniCredit S.p.A Issuer: Onif Finance S.r.l. Servicer: Zenith Service S.p.A. (Master Servicer) - Phoenix Asset Management S.p.A. (Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to large enterprises Quality of Asset: Bad loans (sofferenze) Closing date: 26 July 2017 Nominal Value of disposal portfolio (€): 2,994,149,412 Net amount of pre-existing writedown/writebacks: 401,928,516 Disposal Profit & Loss realised (€) (*): -84,423,445 Portfolio disposal price net of Lock Box Cash (€): 317,505,071 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : 2,000,000 Third Parties Lines of Credit (€): - Other Credit Enhancements (€): Cash reserve EUR 700,000 Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277014 IT0005277022 . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 07.26.2017 07.26.2017 . Legal maturity October 2042 October 2042 . Call option - . Expected duration (years) 2.0 4.5 . Rate 2.00% 5.00% . Subordinated level - SUB A . Nominal value issued (€) 150,000,000 100,000,000 . Nominal value at the end of accounting period (€) 94,114,323 100,000,000 . ISIN IT0005277030 . Type of security Junior . Class C . Rating - . Quotation Not listed . Issue date 07.26.2017 . Legal maturity October 2042 . Call option - . Expected duration (years) 6.7 . Rate 10.00% . Subordinated level SUB A-B . Nominal value issued (€) 79,508,000 . Nominal value at the end of accounting period (€) 79,508,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 463 NAME: ONIF Type of securitisation: Traditional Originator: UniCredit S.p.A Issuer: Onif Finance S.r.l. Servicer: Zenith Service S.p.A. (Master Servicer) - Phoenix Asset Management S.p.A. (Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to large enterprises Quality of Asset: Bad loans (sofferenze) Closing date: 26 July 2017 Nominal Value of disposal portfolio (€): 2,994,149,412 Net amount of pre-existing writedown/writebacks: 401,928,516 Disposal Profit & Loss realised (€) (*): -84,423,445 Portfolio disposal price net of Lock Box Cash (€): 317,505,071 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : 2,000,000 Third Parties Lines of Credit (€): - Other Credit Enhancements (€): Cash reserve EUR 700,000 Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277014 IT0005277022 . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 07.26.2017 07.26.2017 . Legal maturity October 2042 October 2042 . Call option - . Expected duration (years) 2.0 4.5 . Rate 2.00% 5.00% . Subordinated level - SUB A . Nominal value issued (€) 150,000,000 100,000,000 . Nominal value at the end of accounting period (€) 94,114,323 100,000,000 . ISIN IT0005277030 . Type of security Junior . Class C . Rating - . Quotation Not listed . Issue date 07.26.2017 . Legal maturity October 2042 . Call option - . Expected duration (years) 6.7 . Rate 10.00% . Subordinated level SUB A-B . Nominal value issued (€) 79,508,000 . Nominal value at the end of accounting period (€) 79,508,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 463 NAME: ONIF Type of securitisation: Traditional Originator: UniCredit S.p.A Issuer: Onif Finance S.r.l. Servicer: Zenith Service S.p.A. (Master Servicer) - Phoenix Asset Management S.p.A. (Special Servicer) Arranger: Morgan Stanley International Plc - UniCredit Bank AG Target transaction: UniCredit S.p.A. NPL stock reduction Type of asset: Secured and unsecured loans granted to large enterprises Quality of Asset: Bad loans (sofferenze) Closing date: 26 July 2017 Nominal Value of disposal portfolio (€): 2,994,149,412 Net amount of pre-existing writedown/writebacks: 401,928,516 Disposal Profit & Loss realised (€) (*): -84,423,445 Portfolio disposal price net of Lock Box Cash (€): 317,505,071 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit : 2,000,000 Third Parties Lines of Credit (€): - Other Credit Enhancements (€): Cash reserve EUR 700,000 Other relevant information: UniCredit S.p.A. holds a credit exposure (Deferred Subscription Prices - DSPs) towards a group of counterparties guarantor of the investor and deriving from the deferment in payment of 60% of the purchase price of the notes by the investor Rating Agencies: No Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005277014 IT0005277022 . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation Not listed Not listed . Issue date 07.26.2017 07.26.2017 . Legal maturity October 2042 October 2042 . Call option - . Expected duration (years) 2.0 4.5 . Rate 2.00% 5.00% . Subordinated level - SUB A . Nominal value issued (€) 150,000,000 100,000,000 . Nominal value at the end of accounting period (€) 94,114,323 100,000,000 . ISIN IT0005277030 . Type of security Junior . Class C . Rating - . Quotation Not listed . Issue date 07.26.2017 . Legal maturity October 2042 . Call option - . Expected duration (years) 6.7 . Rate 10.00% . Subordinated level SUB A-B . Nominal value issued (€) 79,508,000 . Nominal value at the end of accounting period (€) 79,508,000 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 464 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Synthetic securitisations of Performing loans New Transactions 2018 NAME: Bond Italia 5-bis Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Southern Italy Quality of Asset: Performing Closing date: 10.19.2018 Nominal Value of disposal portfolio (€): 34,217,513 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 10.19.2018 10.19.2018 . Legal maturity 08.31.2024 08.31.2024 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 32,078,918 2,138,595 . Nominal value at the end of accounting period (€) 31,972,413 2,138,595 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest 19,954,627 - Northeast 7,971,996 - Central 3,614,396 - South and Islands 2,676,494 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 34,217,513 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 34,217,513 Other entities - TOTAL 34,217,513 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 464 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Synthetic securitisations of Performing loans New Transactions 2018 NAME: Bond Italia 5-bis Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Southern Italy Quality of Asset: Performing Closing date: 10.19.2018 Nominal Value of disposal portfolio (€): 34,217,513 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 10.19.2018 10.19.2018 . Legal maturity 08.31.2024 08.31.2024 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 32,078,918 2,138,595 . Nominal value at the end of accounting period (€) 31,972,413 2,138,595 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest 19,954,627 - Northeast 7,971,996 - Central 3,614,396 - South and Islands 2,676,494 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 34,217,513 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 34,217,513 Other entities - TOTAL 34,217,513 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 464 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Synthetic securitisations of Performing loans New Transactions 2018 NAME: Bond Italia 5-bis Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Southern Italy Quality of Asset: Performing Closing date: 10.19.2018 Nominal Value of disposal portfolio (€): 34,217,513 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 10.19.2018 10.19.2018 . Legal maturity 08.31.2024 08.31.2024 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 32,078,918 2,138,595 . Nominal value at the end of accounting period (€) 31,972,413 2,138,595 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest 19,954,627 - Northeast 7,971,996 - Central 3,614,396 - South and Islands 2,676,494 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 34,217,513 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 34,217,513 Other entities - TOTAL 34,217,513 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 464 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Synthetic securitisations of Performing loans New Transactions 2018 NAME: Bond Italia 5-bis Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Southern Italy Quality of Asset: Performing Closing date: 10.19.2018 Nominal Value of disposal portfolio (€): 34,217,513 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 10.19.2018 10.19.2018 . Legal maturity 08.31.2024 08.31.2024 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 32,078,918 2,138,595 . Nominal value at the end of accounting period (€) 31,972,413 2,138,595 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest 19,954,627 - Northeast 7,971,996 - Central 3,614,396 - South and Islands 2,676,494 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 34,217,513 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 34,217,513 Other entities - TOTAL 34,217,513 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 464 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Synthetic securitisations of Performing loans New Transactions 2018 NAME: Bond Italia 5-bis Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Southern Italy Quality of Asset: Performing Closing date: 10.19.2018 Nominal Value of disposal portfolio (€): 34,217,513 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 10.19.2018 10.19.2018 . Legal maturity 08.31.2024 08.31.2024 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 32,078,918 2,138,595 . Nominal value at the end of accounting period (€) 31,972,413 2,138,595 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest 19,954,627 - Northeast 7,971,996 - Central 3,614,396 - South and Islands 2,676,494 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 34,217,513 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 34,217,513 Other entities - TOTAL 34,217,513 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 465 NAME: Bond del Mezzogiorno 1 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Southern Italy Quality of Asset: Performing Closing date: 09.19.2018 Nominal Value of disposal portfolio (€): 91,922,368 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 09.19.2018 09.19.2018 . Legal maturity 02.29.2024 02.29.2024 . Call option Not applicable . Expected duration (years) - - . Rate - - . Subordinated level - Sub A . Nominal value issued (€) 80,432,072 11,490,296 . Nominal value at the end of accounting period (€) 80,111,351 11,490,296 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest - - Northeast - - Central - - South and Islands 91,922,368 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 91,922,368 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 91,922,368 Other entities - TOTAL 91,922,368 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 465 NAME: Bond del Mezzogiorno 1 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Southern Italy Quality of Asset: Performing Closing date: 09.19.2018 Nominal Value of disposal portfolio (€): 91,922,368 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 09.19.2018 09.19.2018 . Legal maturity 02.29.2024 02.29.2024 . Call option Not applicable . Expected duration (years) - - . Rate - - . Subordinated level - Sub A . Nominal value issued (€) 80,432,072 11,490,296 . Nominal value at the end of accounting period (€) 80,111,351 11,490,296 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest - - Northeast - - Central - - South and Islands 91,922,368 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 91,922,368 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 91,922,368 Other entities - TOTAL 91,922,368 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 465 NAME: Bond del Mezzogiorno 1 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Southern Italy Quality of Asset: Performing Closing date: 09.19.2018 Nominal Value of disposal portfolio (€): 91,922,368 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 09.19.2018 09.19.2018 . Legal maturity 02.29.2024 02.29.2024 . Call option Not applicable . Expected duration (years) - - . Rate - - . Subordinated level - Sub A . Nominal value issued (€) 80,432,072 11,490,296 . Nominal value at the end of accounting period (€) 80,111,351 11,490,296 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest - - Northeast - - Central - - South and Islands 91,922,368 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 91,922,368 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 91,922,368 Other entities - TOTAL 91,922,368 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 465 NAME: Bond del Mezzogiorno 1 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Southern Italy Quality of Asset: Performing Closing date: 09.19.2018 Nominal Value of disposal portfolio (€): 91,922,368 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 09.19.2018 09.19.2018 . Legal maturity 02.29.2024 02.29.2024 . Call option Not applicable . Expected duration (years) - - . Rate - - . Subordinated level - Sub A . Nominal value issued (€) 80,432,072 11,490,296 . Nominal value at the end of accounting period (€) 80,111,351 11,490,296 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest - - Northeast - - Central - - South and Islands 91,922,368 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 91,922,368 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 91,922,368 Other entities - TOTAL 91,922,368 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 465 NAME: Bond del Mezzogiorno 1 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Southern Italy Quality of Asset: Performing Closing date: 09.19.2018 Nominal Value of disposal portfolio (€): 91,922,368 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 09.19.2018 09.19.2018 . Legal maturity 02.29.2024 02.29.2024 . Call option Not applicable . Expected duration (years) - - . Rate - - . Subordinated level - Sub A . Nominal value issued (€) 80,432,072 11,490,296 . Nominal value at the end of accounting period (€) 80,111,351 11,490,296 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest - - Northeast - - Central - - South and Islands 91,922,368 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 91,922,368 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 91,922,368 Other entities - TOTAL 91,922,368 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 466 2018 Annual Report and Accounts · UniCredit NAME: Agribond 2 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity 72 months - to small and medium enterprises pertaining to the agricolture sector Quality of Asset: Performing Closing date: 09.05.2018 Nominal Value of disposal portfolio (€): 166,345,749 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 09.05.2018 09.05.2018 . Legal maturity 12.31.2026 12.31.2026 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 153,869,818 12,475,931 . Nominal value at the end of accounting period (€) 150,206,037 12,475,931 . Security subscribers UniCredit S.p.A. Parzialmente coperto da protection seller Distribution of securitised assets by area (€): Italy - Northwest 24,098,713 - Northeast 50,764,561 - Central 20,980,418 - South and Islands 70,502,058 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 166,345,749 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 166,345,749 Other entities - TOTAL 166,345,749 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 466 2018 Annual Report and Accounts · UniCredit NAME: Agribond 2 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity 72 months - to small and medium enterprises pertaining to the agricolture sector Quality of Asset: Performing Closing date: 09.05.2018 Nominal Value of disposal portfolio (€): 166,345,749 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 09.05.2018 09.05.2018 . Legal maturity 12.31.2026 12.31.2026 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 153,869,818 12,475,931 . Nominal value at the end of accounting period (€) 150,206,037 12,475,931 . Security subscribers UniCredit S.p.A. Parzialmente coperto da protection seller Distribution of securitised assets by area (€): Italy - Northwest 24,098,713 - Northeast 50,764,561 - Central 20,980,418 - South and Islands 70,502,058 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 166,345,749 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 166,345,749 Other entities - TOTAL 166,345,749 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 466 2018 Annual Report and Accounts · UniCredit NAME: Agribond 2 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity 72 months - to small and medium enterprises pertaining to the agricolture sector Quality of Asset: Performing Closing date: 09.05.2018 Nominal Value of disposal portfolio (€): 166,345,749 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 09.05.2018 09.05.2018 . Legal maturity 12.31.2026 12.31.2026 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 153,869,818 12,475,931 . Nominal value at the end of accounting period (€) 150,206,037 12,475,931 . Security subscribers UniCredit S.p.A. Parzialmente coperto da protection seller Distribution of securitised assets by area (€): Italy - Northwest 24,098,713 - Northeast 50,764,561 - Central 20,980,418 - South and Islands 70,502,058 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 166,345,749 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 166,345,749 Other entities - TOTAL 166,345,749 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 466 2018 Annual Report and Accounts · UniCredit NAME: Agribond 2 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity 72 months - to small and medium enterprises pertaining to the agricolture sector Quality of Asset: Performing Closing date: 09.05.2018 Nominal Value of disposal portfolio (€): 166,345,749 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 09.05.2018 09.05.2018 . Legal maturity 12.31.2026 12.31.2026 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 153,869,818 12,475,931 . Nominal value at the end of accounting period (€) 150,206,037 12,475,931 . Security subscribers UniCredit S.p.A. Parzialmente coperto da protection seller Distribution of securitised assets by area (€): Italy - Northwest 24,098,713 - Northeast 50,764,561 - Central 20,980,418 - South and Islands 70,502,058 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 166,345,749 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 166,345,749 Other entities - TOTAL 166,345,749 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 466 2018 Annual Report and Accounts · UniCredit NAME: Agribond 2 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity 72 months - to small and medium enterprises pertaining to the agricolture sector Quality of Asset: Performing Closing date: 09.05.2018 Nominal Value of disposal portfolio (€): 166,345,749 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 09.05.2018 09.05.2018 . Legal maturity 12.31.2026 12.31.2026 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 153,869,818 12,475,931 . Nominal value at the end of accounting period (€) 150,206,037 12,475,931 . Security subscribers UniCredit S.p.A. Parzialmente coperto da protection seller Distribution of securitised assets by area (€): Italy - Northwest 24,098,713 - Northeast 50,764,561 - Central 20,980,418 - South and Islands 70,502,058 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 166,345,749 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 166,345,749 Other entities - TOTAL 166,345,749 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 467 NAME: Puglia Sviluppo 1 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Apulia Quality of Asset: Performing Closing date: 03.31.2017 Nominal Value of disposal portfolio (€): 21,146,928 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Junior risk partially collateralised Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 03.31.2017 03.31.2017 . Legal maturity 12.31.2025 12.31.2025 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 19,032,235 2,114,693 . Nominal value at the end of accounting period (€) 7,307,384 2,114,693 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest - - Northeast - - Central - - South and Islands 21,146,928 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 21,146,928 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 21,146,928 Other entities - TOTAL 21,146,928 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 467 NAME: Puglia Sviluppo 1 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Apulia Quality of Asset: Performing Closing date: 03.31.2017 Nominal Value of disposal portfolio (€): 21,146,928 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Junior risk partially collateralised Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 03.31.2017 03.31.2017 . Legal maturity 12.31.2025 12.31.2025 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 19,032,235 2,114,693 . Nominal value at the end of accounting period (€) 7,307,384 2,114,693 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest - - Northeast - - Central - - South and Islands 21,146,928 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 21,146,928 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 21,146,928 Other entities - TOTAL 21,146,928 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 467 NAME: Puglia Sviluppo 1 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Apulia Quality of Asset: Performing Closing date: 03.31.2017 Nominal Value of disposal portfolio (€): 21,146,928 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Junior risk partially collateralised Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 03.31.2017 03.31.2017 . Legal maturity 12.31.2025 12.31.2025 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 19,032,235 2,114,693 . Nominal value at the end of accounting period (€) 7,307,384 2,114,693 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest - - Northeast - - Central - - South and Islands 21,146,928 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 21,146,928 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 21,146,928 Other entities - TOTAL 21,146,928 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 467 NAME: Puglia Sviluppo 1 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Apulia Quality of Asset: Performing Closing date: 03.31.2017 Nominal Value of disposal portfolio (€): 21,146,928 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Junior risk partially collateralised Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 03.31.2017 03.31.2017 . Legal maturity 12.31.2025 12.31.2025 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 19,032,235 2,114,693 . Nominal value at the end of accounting period (€) 7,307,384 2,114,693 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest - - Northeast - - Central - - South and Islands 21,146,928 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 21,146,928 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 21,146,928 Other entities - TOTAL 21,146,928 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 467 NAME: Puglia Sviluppo 1 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Apulia Quality of Asset: Performing Closing date: 03.31.2017 Nominal Value of disposal portfolio (€): 21,146,928 Net amount of pre-existing writedown/writebacks: - Disposal Profit & Loss realised (€) (*): - Portfolio disposal price (€): - Guarantees issued by the Bank: - Guarantees issued by Third Parties: Junior risk partially collateralised Bank Lines of Credit : - Third Parties Lines of Credit (€): - Other Credit Enhancements (€): - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Issue date 03.31.2017 03.31.2017 . Legal maturity 12.31.2025 12.31.2025 . Call option Not applicable . Expected duration (years) - - . Rate Not applicable Not applicable . Subordinated level - Sub A . Nominal value issued (€) 19,032,235 2,114,693 . Nominal value at the end of accounting period (€) 7,307,384 2,114,693 . Security subscribers UniCredit S.p.A. Partially hedged by protection seller Distribution of securitised assets by area (€): Italy - Northwest - - Northeast - - Central - - South and Islands 21,146,928 Other European Countries - E.U. countries - - non-E.U. countries - America - Rest of the World - TOTAL 21,146,928 Distribution of securitised assets by business sector of the borrower (€): Governments - Other public-sector entities - Banks - Financial Companies - Insurance Companies - Non-financial companies 21,146,928 Other entities - TOTAL 21,146,928 Note: (*) Amount gross of initial transaction's costs. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 468 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Synthetic securitisations of Performing loans Transactions from previous years NAME: SME Initiative 2017 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Pool of UniCredit's SME loans, concentrated in South of Italy for at least 50% Quality of Asset: Performing Closing date: 12.22.2017 Nominal Value of reference portfolio (€): 460.440.633 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the mezzanine and junior risk in the form of personal guarantee Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Upper Mezzanine . Class A B1 . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level - Sub A . Reference Position (€) 395,040,094 2,369,585 . Reference Position at the end of accounting period (€) 197,771,040 2,369,585 . ISIN Not applicable Not applicable . Type of security Middle Mezzanine Lower Mezzanine . Class B2 B3 . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level Sub A, B1 Sub A, B1, B2 . Reference Position (€) 473,917 11,847,924 . Reference Position at the end of accounting period (€) 473,917 11,847,924 . ISIN Not applicable Not applicable . Type of security Second Loss Junior . Class C D . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level Sub A, B1, B2, B3 Sub A, B1, B2, B3, C . Reference Position (€) 14,217,509 36,491,605 . Reference Position at the end of accounting period (€) 14,217,509 36,491,605 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 468 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Synthetic securitisations of Performing loans Transactions from previous years NAME: SME Initiative 2017 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Pool of UniCredit's SME loans, concentrated in South of Italy for at least 50% Quality of Asset: Performing Closing date: 12.22.2017 Nominal Value of reference portfolio (€): 460.440.633 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the mezzanine and junior risk in the form of personal guarantee Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Upper Mezzanine . Class A B1 . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level - Sub A . Reference Position (€) 395,040,094 2,369,585 . Reference Position at the end of accounting period (€) 197,771,040 2,369,585 . ISIN Not applicable Not applicable . Type of security Middle Mezzanine Lower Mezzanine . Class B2 B3 . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level Sub A, B1 Sub A, B1, B2 . Reference Position (€) 473,917 11,847,924 . Reference Position at the end of accounting period (€) 473,917 11,847,924 . ISIN Not applicable Not applicable . Type of security Second Loss Junior . Class C D . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level Sub A, B1, B2, B3 Sub A, B1, B2, B3, C . Reference Position (€) 14,217,509 36,491,605 . Reference Position at the end of accounting period (€) 14,217,509 36,491,605 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 468 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Synthetic securitisations of Performing loans Transactions from previous years NAME: SME Initiative 2017 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Pool of UniCredit's SME loans, concentrated in South of Italy for at least 50% Quality of Asset: Performing Closing date: 12.22.2017 Nominal Value of reference portfolio (€): 460.440.633 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the mezzanine and junior risk in the form of personal guarantee Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Upper Mezzanine . Class A B1 . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level - Sub A . Reference Position (€) 395,040,094 2,369,585 . Reference Position at the end of accounting period (€) 197,771,040 2,369,585 . ISIN Not applicable Not applicable . Type of security Middle Mezzanine Lower Mezzanine . Class B2 B3 . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level Sub A, B1 Sub A, B1, B2 . Reference Position (€) 473,917 11,847,924 . Reference Position at the end of accounting period (€) 473,917 11,847,924 . ISIN Not applicable Not applicable . Type of security Second Loss Junior . Class C D . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level Sub A, B1, B2, B3 Sub A, B1, B2, B3, C . Reference Position (€) 14,217,509 36,491,605 . Reference Position at the end of accounting period (€) 14,217,509 36,491,605 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 468 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Synthetic securitisations of Performing loans Transactions from previous years NAME: SME Initiative 2017 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Pool of UniCredit's SME loans, concentrated in South of Italy for at least 50% Quality of Asset: Performing Closing date: 12.22.2017 Nominal Value of reference portfolio (€): 460.440.633 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the mezzanine and junior risk in the form of personal guarantee Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Upper Mezzanine . Class A B1 . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level - Sub A . Reference Position (€) 395,040,094 2,369,585 . Reference Position at the end of accounting period (€) 197,771,040 2,369,585 . ISIN Not applicable Not applicable . Type of security Middle Mezzanine Lower Mezzanine . Class B2 B3 . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level Sub A, B1 Sub A, B1, B2 . Reference Position (€) 473,917 11,847,924 . Reference Position at the end of accounting period (€) 473,917 11,847,924 . ISIN Not applicable Not applicable . Type of security Second Loss Junior . Class C D . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level Sub A, B1, B2, B3 Sub A, B1, B2, B3, C . Reference Position (€) 14,217,509 36,491,605 . Reference Position at the end of accounting period (€) 14,217,509 36,491,605 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 468 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit S.p.A. Synthetic securitisations of Performing loans Transactions from previous years NAME: SME Initiative 2017 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Pool of UniCredit's SME loans, concentrated in South of Italy for at least 50% Quality of Asset: Performing Closing date: 12.22.2017 Nominal Value of reference portfolio (€): 460.440.633 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the mezzanine and junior risk in the form of personal guarantee Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Upper Mezzanine . Class A B1 . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level - Sub A . Reference Position (€) 395,040,094 2,369,585 . Reference Position at the end of accounting period (€) 197,771,040 2,369,585 . ISIN Not applicable Not applicable . Type of security Middle Mezzanine Lower Mezzanine . Class B2 B3 . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level Sub A, B1 Sub A, B1, B2 . Reference Position (€) 473,917 11,847,924 . Reference Position at the end of accounting period (€) 473,917 11,847,924 . ISIN Not applicable Not applicable . Type of security Second Loss Junior . Class C D . Rating - - . Issue date 12.22.2017 12.22.2017 . Legal maturity 11.13.2030 11.13.2030 . Call option Clean-up call, regulatory call,Time call . Expected duration 11.13.2030 11.13.2030 . Rate Not applicable Not applicable . Subordinated level Sub A, B1, B2, B3 Sub A, B1, B2, B3, C . Reference Position (€) 14,217,509 36,491,605 . Reference Position at the end of accounting period (€) 14,217,509 36,491,605 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 469 NAME: Finpiemonte 2016 FILSEC 2016 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Piemonte Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Liguria Quality of Asset: Performing Performing Closing date: 10.31.2017 10.31.2017 Nominal Value of reference portfolio (€): 58,000,000 28,000,000 Issued guarantees by the Bank: Issued guarantees by third parties: Junior risk partially collateralised Junior risk partially collateralised Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 10.31.2017 10.31.2017 06.16.2017 06.16.2017 . Legal maturity 12.31.2021 12.31.2021 12.31.2021 12.31.2021 . Call option Not applicable Not applicable . Expected duration 12.31.2021 12.31.2021 12.31.2021 12.31.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 50,750,000 7,250,000 24,500,000 3,500,000 . Reference Position at the end of accounting period (€) 12,590,273 7,209,277 4,121,292 3,500,000 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 469 NAME: Finpiemonte 2016 FILSEC 2016 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Piemonte Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Liguria Quality of Asset: Performing Performing Closing date: 10.31.2017 10.31.2017 Nominal Value of reference portfolio (€): 58,000,000 28,000,000 Issued guarantees by the Bank: Issued guarantees by third parties: Junior risk partially collateralised Junior risk partially collateralised Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 10.31.2017 10.31.2017 06.16.2017 06.16.2017 . Legal maturity 12.31.2021 12.31.2021 12.31.2021 12.31.2021 . Call option Not applicable Not applicable . Expected duration 12.31.2021 12.31.2021 12.31.2021 12.31.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 50,750,000 7,250,000 24,500,000 3,500,000 . Reference Position at the end of accounting period (€) 12,590,273 7,209,277 4,121,292 3,500,000 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 469 NAME: Finpiemonte 2016 FILSEC 2016 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Piemonte Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Liguria Quality of Asset: Performing Performing Closing date: 10.31.2017 10.31.2017 Nominal Value of reference portfolio (€): 58,000,000 28,000,000 Issued guarantees by the Bank: Issued guarantees by third parties: Junior risk partially collateralised Junior risk partially collateralised Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 10.31.2017 10.31.2017 06.16.2017 06.16.2017 . Legal maturity 12.31.2021 12.31.2021 12.31.2021 12.31.2021 . Call option Not applicable Not applicable . Expected duration 12.31.2021 12.31.2021 12.31.2021 12.31.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 50,750,000 7,250,000 24,500,000 3,500,000 . Reference Position at the end of accounting period (€) 12,590,273 7,209,277 4,121,292 3,500,000 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 469 NAME: Finpiemonte 2016 FILSEC 2016 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Piemonte Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Liguria Quality of Asset: Performing Performing Closing date: 10.31.2017 10.31.2017 Nominal Value of reference portfolio (€): 58,000,000 28,000,000 Issued guarantees by the Bank: Issued guarantees by third parties: Junior risk partially collateralised Junior risk partially collateralised Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 10.31.2017 10.31.2017 06.16.2017 06.16.2017 . Legal maturity 12.31.2021 12.31.2021 12.31.2021 12.31.2021 . Call option Not applicable Not applicable . Expected duration 12.31.2021 12.31.2021 12.31.2021 12.31.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 50,750,000 7,250,000 24,500,000 3,500,000 . Reference Position at the end of accounting period (€) 12,590,273 7,209,277 4,121,292 3,500,000 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 469 NAME: Finpiemonte 2016 FILSEC 2016 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Piemonte Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises located in Liguria Quality of Asset: Performing Performing Closing date: 10.31.2017 10.31.2017 Nominal Value of reference portfolio (€): 58,000,000 28,000,000 Issued guarantees by the Bank: Issued guarantees by third parties: Junior risk partially collateralised Junior risk partially collateralised Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 10.31.2017 10.31.2017 06.16.2017 06.16.2017 . Legal maturity 12.31.2021 12.31.2021 12.31.2021 12.31.2021 . Call option Not applicable Not applicable . Expected duration 12.31.2021 12.31.2021 12.31.2021 12.31.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 50,750,000 7,250,000 24,500,000 3,500,000 . Reference Position at the end of accounting period (€) 12,590,273 7,209,277 4,121,292 3,500,000 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 470 2018 Annual Report and Accounts · UniCredit NAME: BOND ITALIA 5 INV BOND ITALIA 5 MIX Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 24 and 60 months - to small and medium enterprises Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Quality of Asset: Performing Performing Closing date: 06.16.2017 06.16.2017 Nominal Value of reference portfolio (€): 72,447,737 296,985,668 Issued guarantees by the Bank: Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 06.16.2017 06.16.2017 06.16.2017 06.16.2017 . Legal maturity 06.30.2022 06.30.2022 06.30.2022 06.30.2022 . Call option Not applicable Not applicable . Expected duration 06.30.2022 06.30.2022 06.30.2022 06.30.2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 67,014,157 5,433,580 278,424,064 18,561,604 . Reference Position at the end of accounting period (€) 42,552,080 5,405,580 102,753,134 18,061,604 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 470 2018 Annual Report and Accounts · UniCredit NAME: BOND ITALIA 5 INV BOND ITALIA 5 MIX Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 24 and 60 months - to small and medium enterprises Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Quality of Asset: Performing Performing Closing date: 06.16.2017 06.16.2017 Nominal Value of reference portfolio (€): 72,447,737 296,985,668 Issued guarantees by the Bank: Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 06.16.2017 06.16.2017 06.16.2017 06.16.2017 . Legal maturity 06.30.2022 06.30.2022 06.30.2022 06.30.2022 . Call option Not applicable Not applicable . Expected duration 06.30.2022 06.30.2022 06.30.2022 06.30.2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 67,014,157 5,433,580 278,424,064 18,561,604 . Reference Position at the end of accounting period (€) 42,552,080 5,405,580 102,753,134 18,061,604 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 470 2018 Annual Report and Accounts · UniCredit NAME: BOND ITALIA 5 INV BOND ITALIA 5 MIX Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 24 and 60 months - to small and medium enterprises Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Quality of Asset: Performing Performing Closing date: 06.16.2017 06.16.2017 Nominal Value of reference portfolio (€): 72,447,737 296,985,668 Issued guarantees by the Bank: Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 06.16.2017 06.16.2017 06.16.2017 06.16.2017 . Legal maturity 06.30.2022 06.30.2022 06.30.2022 06.30.2022 . Call option Not applicable Not applicable . Expected duration 06.30.2022 06.30.2022 06.30.2022 06.30.2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 67,014,157 5,433,580 278,424,064 18,561,604 . Reference Position at the end of accounting period (€) 42,552,080 5,405,580 102,753,134 18,061,604 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 470 2018 Annual Report and Accounts · UniCredit NAME: BOND ITALIA 5 INV BOND ITALIA 5 MIX Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 24 and 60 months - to small and medium enterprises Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Quality of Asset: Performing Performing Closing date: 06.16.2017 06.16.2017 Nominal Value of reference portfolio (€): 72,447,737 296,985,668 Issued guarantees by the Bank: Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 06.16.2017 06.16.2017 06.16.2017 06.16.2017 . Legal maturity 06.30.2022 06.30.2022 06.30.2022 06.30.2022 . Call option Not applicable Not applicable . Expected duration 06.30.2022 06.30.2022 06.30.2022 06.30.2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 67,014,157 5,433,580 278,424,064 18,561,604 . Reference Position at the end of accounting period (€) 42,552,080 5,405,580 102,753,134 18,061,604 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 470 2018 Annual Report and Accounts · UniCredit NAME: BOND ITALIA 5 INV BOND ITALIA 5 MIX Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 24 and 60 months - to small and medium enterprises Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Quality of Asset: Performing Performing Closing date: 06.16.2017 06.16.2017 Nominal Value of reference portfolio (€): 72,447,737 296,985,668 Issued guarantees by the Bank: Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 06.16.2017 06.16.2017 06.16.2017 06.16.2017 . Legal maturity 06.30.2022 06.30.2022 06.30.2022 06.30.2022 . Call option Not applicable Not applicable . Expected duration 06.30.2022 06.30.2022 06.30.2022 06.30.2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 67,014,157 5,433,580 278,424,064 18,561,604 . Reference Position at the end of accounting period (€) 42,552,080 5,405,580 102,753,134 18,061,604 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 471 NAME: BOND ITALIA4 MISTO ARTS MIDCAP5 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans - maturity between 18 and 60 months - to small and medium enterpises Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 12.07.2016 12.02.2016 Nominal Value of reference portfolio (€): 299,997,840 2,462,951,367 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of pledge on time deposit Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of SFA Approach (*) No rating agency, use of Standardised Approach (*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 12.07.2016 12.07.2016 12.02.2016 12.02.2016 . Legal maturity 06.30.2023 06.30.2023 12.31.2046 12.31.2046 . Call option Not applicable Clean-up call, Regulatory Call, Time call . Expected duration (years) 06.30.2023 06.30.2023 WAL 3,58Y; time call after 5Y; regulatory call expected Dec 2023 WAL 3,58Y; time call after 5Y; regulatory call expected Dec 2023 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 281,247,975 18,749,865 2,339,951,367 123,000,000 . Reference Position at the end of accounting period (€) 73,478,875 17.653.692 1,165,102,422 117,592,464 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 471 NAME: BOND ITALIA4 MISTO ARTS MIDCAP5 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans - maturity between 18 and 60 months - to small and medium enterpises Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 12.07.2016 12.02.2016 Nominal Value of reference portfolio (€): 299,997,840 2,462,951,367 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of pledge on time deposit Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of SFA Approach (*) No rating agency, use of Standardised Approach (*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 12.07.2016 12.07.2016 12.02.2016 12.02.2016 . Legal maturity 06.30.2023 06.30.2023 12.31.2046 12.31.2046 . Call option Not applicable Clean-up call, Regulatory Call, Time call . Expected duration (years) 06.30.2023 06.30.2023 WAL 3,58Y; time call after 5Y; regulatory call expected Dec 2023 WAL 3,58Y; time call after 5Y; regulatory call expected Dec 2023 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 281,247,975 18,749,865 2,339,951,367 123,000,000 . Reference Position at the end of accounting period (€) 73,478,875 17.653.692 1,165,102,422 117,592,464 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 471 NAME: BOND ITALIA4 MISTO ARTS MIDCAP5 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans - maturity between 18 and 60 months - to small and medium enterpises Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 12.07.2016 12.02.2016 Nominal Value of reference portfolio (€): 299,997,840 2,462,951,367 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of pledge on time deposit Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of SFA Approach (*) No rating agency, use of Standardised Approach (*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 12.07.2016 12.07.2016 12.02.2016 12.02.2016 . Legal maturity 06.30.2023 06.30.2023 12.31.2046 12.31.2046 . Call option Not applicable Clean-up call, Regulatory Call, Time call . Expected duration (years) 06.30.2023 06.30.2023 WAL 3,58Y; time call after 5Y; regulatory call expected Dec 2023 WAL 3,58Y; time call after 5Y; regulatory call expected Dec 2023 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 281,247,975 18,749,865 2,339,951,367 123,000,000 . Reference Position at the end of accounting period (€) 73,478,875 17.653.692 1,165,102,422 117,592,464 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 471 NAME: BOND ITALIA4 MISTO ARTS MIDCAP5 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans - maturity between 18 and 60 months - to small and medium enterpises Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 12.07.2016 12.02.2016 Nominal Value of reference portfolio (€): 299,997,840 2,462,951,367 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of pledge on time deposit Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of SFA Approach (*) No rating agency, use of Standardised Approach (*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 12.07.2016 12.07.2016 12.02.2016 12.02.2016 . Legal maturity 06.30.2023 06.30.2023 12.31.2046 12.31.2046 . Call option Not applicable Clean-up call, Regulatory Call, Time call . Expected duration (years) 06.30.2023 06.30.2023 WAL 3,58Y; time call after 5Y; regulatory call expected Dec 2023 WAL 3,58Y; time call after 5Y; regulatory call expected Dec 2023 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 281,247,975 18,749,865 2,339,951,367 123,000,000 . Reference Position at the end of accounting period (€) 73,478,875 17.653.692 1,165,102,422 117,592,464 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 471 NAME: BOND ITALIA4 MISTO ARTS MIDCAP5 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans - maturity between 18 and 60 months - to small and medium enterpises Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 12.07.2016 12.02.2016 Nominal Value of reference portfolio (€): 299,997,840 2,462,951,367 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of pledge on time deposit Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of SFA Approach (*) No rating agency, use of Standardised Approach (*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 12.07.2016 12.07.2016 12.02.2016 12.02.2016 . Legal maturity 06.30.2023 06.30.2023 12.31.2046 12.31.2046 . Call option Not applicable Clean-up call, Regulatory Call, Time call . Expected duration (years) 06.30.2023 06.30.2023 WAL 3,58Y; time call after 5Y; regulatory call expected Dec 2023 WAL 3,58Y; time call after 5Y; regulatory call expected Dec 2023 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 281,247,975 18,749,865 2,339,951,367 123,000,000 . Reference Position at the end of accounting period (€) 73,478,875 17.653.692 1,165,102,422 117,592,464 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 472 2018 Annual Report and Accounts · UniCredit NAME: ARTS MIDCAP4 AGRIBOND Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Loans to Small and Mid Corporates Unsecured loans - maturity 72 months - to small and medium enterprises pertaining to the agricolture sector Quality of Asset: Performing Performing Closing date: 06.21.2016 06.30.2015 Nominal Value of reference portfolio (€): 2,258,505,513 172,000,000 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.21.2016 06.21.2016 06.30.2015 06.30.2015 . Legal maturity 01.31.2036 01.31.2036 12.31.2022 12.31.2022 . Call option Clean-up call, Regulatory Call, Time call - . Expected duration (years) WAL 3,8Y; time call after 5Y; regulatory call expected Mar 2024 WAL 3,8Y; time call after 5Y; regulatory call expected Mar 2024 12.31.2022 12.31.2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - - . Reference Position (€) 2,145,505,513 113,000,000 161,256,654 10,743,346 . Reference Position at the end of accounting period (€) 1,045,424,721 112,457,671 63,262,708 10,743,346 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 472 2018 Annual Report and Accounts · UniCredit NAME: ARTS MIDCAP4 AGRIBOND Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Loans to Small and Mid Corporates Unsecured loans - maturity 72 months - to small and medium enterprises pertaining to the agricolture sector Quality of Asset: Performing Performing Closing date: 06.21.2016 06.30.2015 Nominal Value of reference portfolio (€): 2,258,505,513 172,000,000 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.21.2016 06.21.2016 06.30.2015 06.30.2015 . Legal maturity 01.31.2036 01.31.2036 12.31.2022 12.31.2022 . Call option Clean-up call, Regulatory Call, Time call - . Expected duration (years) WAL 3,8Y; time call after 5Y; regulatory call expected Mar 2024 WAL 3,8Y; time call after 5Y; regulatory call expected Mar 2024 12.31.2022 12.31.2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - - . Reference Position (€) 2,145,505,513 113,000,000 161,256,654 10,743,346 . Reference Position at the end of accounting period (€) 1,045,424,721 112,457,671 63,262,708 10,743,346 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 472 2018 Annual Report and Accounts · UniCredit NAME: ARTS MIDCAP4 AGRIBOND Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Loans to Small and Mid Corporates Unsecured loans - maturity 72 months - to small and medium enterprises pertaining to the agricolture sector Quality of Asset: Performing Performing Closing date: 06.21.2016 06.30.2015 Nominal Value of reference portfolio (€): 2,258,505,513 172,000,000 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.21.2016 06.21.2016 06.30.2015 06.30.2015 . Legal maturity 01.31.2036 01.31.2036 12.31.2022 12.31.2022 . Call option Clean-up call, Regulatory Call, Time call - . Expected duration (years) WAL 3,8Y; time call after 5Y; regulatory call expected Mar 2024 WAL 3,8Y; time call after 5Y; regulatory call expected Mar 2024 12.31.2022 12.31.2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - - . Reference Position (€) 2,145,505,513 113,000,000 161,256,654 10,743,346 . Reference Position at the end of accounting period (€) 1,045,424,721 112,457,671 63,262,708 10,743,346 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 472 2018 Annual Report and Accounts · UniCredit NAME: ARTS MIDCAP4 AGRIBOND Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Loans to Small and Mid Corporates Unsecured loans - maturity 72 months - to small and medium enterprises pertaining to the agricolture sector Quality of Asset: Performing Performing Closing date: 06.21.2016 06.30.2015 Nominal Value of reference portfolio (€): 2,258,505,513 172,000,000 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.21.2016 06.21.2016 06.30.2015 06.30.2015 . Legal maturity 01.31.2036 01.31.2036 12.31.2022 12.31.2022 . Call option Clean-up call, Regulatory Call, Time call - . Expected duration (years) WAL 3,8Y; time call after 5Y; regulatory call expected Mar 2024 WAL 3,8Y; time call after 5Y; regulatory call expected Mar 2024 12.31.2022 12.31.2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - - . Reference Position (€) 2,145,505,513 113,000,000 161,256,654 10,743,346 . Reference Position at the end of accounting period (€) 1,045,424,721 112,457,671 63,262,708 10,743,346 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 472 2018 Annual Report and Accounts · UniCredit NAME: ARTS MIDCAP4 AGRIBOND Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Loans to Small and Mid Corporates Unsecured loans - maturity 72 months - to small and medium enterprises pertaining to the agricolture sector Quality of Asset: Performing Performing Closing date: 06.21.2016 06.30.2015 Nominal Value of reference portfolio (€): 2,258,505,513 172,000,000 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.21.2016 06.21.2016 06.30.2015 06.30.2015 . Legal maturity 01.31.2036 01.31.2036 12.31.2022 12.31.2022 . Call option Clean-up call, Regulatory Call, Time call - . Expected duration (years) WAL 3,8Y; time call after 5Y; regulatory call expected Mar 2024 WAL 3,8Y; time call after 5Y; regulatory call expected Mar 2024 12.31.2022 12.31.2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - - . Reference Position (€) 2,145,505,513 113,000,000 161,256,654 10,743,346 . Reference Position at the end of accounting period (€) 1,045,424,721 112,457,671 63,262,708 10,743,346 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 473 NAME: BOND ITALIA 3 INVESTIMENTI BOND ITALIA3 MISTO Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans - maturity between 24 and 60 months - to small and medium enterprises unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Quality of Asset: Performing Performing Closing date: 05.14.2016 05.14.2016 Nominal Value of reference portfolio (€): 99,037,451 166,024,432 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Standardised Approach (*) No rating agency, use of Standardised Approach (*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class - - - - . Rating - - - - . Issue date 05.14.2016 05.14.2016 05.14.2016 05.14.2016 . Legal maturity 02.28.2022 02.28.2022 02.28.2021 02.28.2021 . Call option Not applicable Not applicable . Expected duration (years) 02.28.2022 02.28.2022 02.28.2021 02.28.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - - - - . Reference Position (€) 91,609,642 7,427,809 155,647,905 10,376,527 . Reference Position at the end of accounting period (€) 34,969,823 6,657,796 705,052 9,731,009 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 473 NAME: BOND ITALIA 3 INVESTIMENTI BOND ITALIA3 MISTO Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans - maturity between 24 and 60 months - to small and medium enterprises unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Quality of Asset: Performing Performing Closing date: 05.14.2016 05.14.2016 Nominal Value of reference portfolio (€): 99,037,451 166,024,432 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Standardised Approach (*) No rating agency, use of Standardised Approach (*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class - - - - . Rating - - - - . Issue date 05.14.2016 05.14.2016 05.14.2016 05.14.2016 . Legal maturity 02.28.2022 02.28.2022 02.28.2021 02.28.2021 . Call option Not applicable Not applicable . Expected duration (years) 02.28.2022 02.28.2022 02.28.2021 02.28.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - - - - . Reference Position (€) 91,609,642 7,427,809 155,647,905 10,376,527 . Reference Position at the end of accounting period (€) 34,969,823 6,657,796 705,052 9,731,009 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 473 NAME: BOND ITALIA 3 INVESTIMENTI BOND ITALIA3 MISTO Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans - maturity between 24 and 60 months - to small and medium enterprises unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Quality of Asset: Performing Performing Closing date: 05.14.2016 05.14.2016 Nominal Value of reference portfolio (€): 99,037,451 166,024,432 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Standardised Approach (*) No rating agency, use of Standardised Approach (*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class - - - - . Rating - - - - . Issue date 05.14.2016 05.14.2016 05.14.2016 05.14.2016 . Legal maturity 02.28.2022 02.28.2022 02.28.2021 02.28.2021 . Call option Not applicable Not applicable . Expected duration (years) 02.28.2022 02.28.2022 02.28.2021 02.28.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - - - - . Reference Position (€) 91,609,642 7,427,809 155,647,905 10,376,527 . Reference Position at the end of accounting period (€) 34,969,823 6,657,796 705,052 9,731,009 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 473 NAME: BOND ITALIA 3 INVESTIMENTI BOND ITALIA3 MISTO Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans - maturity between 24 and 60 months - to small and medium enterprises unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Quality of Asset: Performing Performing Closing date: 05.14.2016 05.14.2016 Nominal Value of reference portfolio (€): 99,037,451 166,024,432 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Standardised Approach (*) No rating agency, use of Standardised Approach (*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class - - - - . Rating - - - - . Issue date 05.14.2016 05.14.2016 05.14.2016 05.14.2016 . Legal maturity 02.28.2022 02.28.2022 02.28.2021 02.28.2021 . Call option Not applicable Not applicable . Expected duration (years) 02.28.2022 02.28.2022 02.28.2021 02.28.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - - - - . Reference Position (€) 91,609,642 7,427,809 155,647,905 10,376,527 . Reference Position at the end of accounting period (€) 34,969,823 6,657,796 705,052 9,731,009 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 473 NAME: BOND ITALIA 3 INVESTIMENTI BOND ITALIA3 MISTO Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans - maturity between 24 and 60 months - to small and medium enterprises unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Quality of Asset: Performing Performing Closing date: 05.14.2016 05.14.2016 Nominal Value of reference portfolio (€): 99,037,451 166,024,432 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Standardised Approach (*) No rating agency, use of Standardised Approach (*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class - - - - . Rating - - - - . Issue date 05.14.2016 05.14.2016 05.14.2016 05.14.2016 . Legal maturity 02.28.2022 02.28.2022 02.28.2021 02.28.2021 . Call option Not applicable Not applicable . Expected duration (years) 02.28.2022 02.28.2022 02.28.2021 02.28.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - - - - . Reference Position (€) 91,609,642 7,427,809 155,647,905 10,376,527 . Reference Position at the end of accounting period (€) 34,969,823 6,657,796 705,052 9,731,009 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 474 2018 Annual Report and Accounts · UniCredit NAME: SARDAFIDI BOND ITALIA4 INVESTIMENTI Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans to small and medium enterprises located in Sardinia, originated with the purpose of financing working capital and/or investments unsecured loans - maturity between 24 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 10.15.2015 12.07.2016 Nominal Value of reference portfolio (€): 14,472,615 99,999,355 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 10.15.2016 10.15.2016 12.07.2016 12.07.2016 . Legal maturity 06.30.2021 06.30.2021 06.30.2023 06.30.2023 . Call option Not applicable Not applicable . Expected duration (years) 06.30.2021 06.30.2021 06.30.2023 06.30.2023 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - - - Sub A . Reference Position (€) 13,186,160 1,286,455 92,499,404 7,499,951 . Reference Position at the end of accounting period (€) 1,678,983 1,286,455 58,815,895 7,469,951 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 474 2018 Annual Report and Accounts · UniCredit NAME: SARDAFIDI BOND ITALIA4 INVESTIMENTI Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans to small and medium enterprises located in Sardinia, originated with the purpose of financing working capital and/or investments unsecured loans - maturity between 24 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 10.15.2015 12.07.2016 Nominal Value of reference portfolio (€): 14,472,615 99,999,355 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 10.15.2016 10.15.2016 12.07.2016 12.07.2016 . Legal maturity 06.30.2021 06.30.2021 06.30.2023 06.30.2023 . Call option Not applicable Not applicable . Expected duration (years) 06.30.2021 06.30.2021 06.30.2023 06.30.2023 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - - - Sub A . Reference Position (€) 13,186,160 1,286,455 92,499,404 7,499,951 . Reference Position at the end of accounting period (€) 1,678,983 1,286,455 58,815,895 7,469,951 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 474 2018 Annual Report and Accounts · UniCredit NAME: SARDAFIDI BOND ITALIA4 INVESTIMENTI Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans to small and medium enterprises located in Sardinia, originated with the purpose of financing working capital and/or investments unsecured loans - maturity between 24 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 10.15.2015 12.07.2016 Nominal Value of reference portfolio (€): 14,472,615 99,999,355 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 10.15.2016 10.15.2016 12.07.2016 12.07.2016 . Legal maturity 06.30.2021 06.30.2021 06.30.2023 06.30.2023 . Call option Not applicable Not applicable . Expected duration (years) 06.30.2021 06.30.2021 06.30.2023 06.30.2023 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - - - Sub A . Reference Position (€) 13,186,160 1,286,455 92,499,404 7,499,951 . Reference Position at the end of accounting period (€) 1,678,983 1,286,455 58,815,895 7,469,951 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 474 2018 Annual Report and Accounts · UniCredit NAME: SARDAFIDI BOND ITALIA4 INVESTIMENTI Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans to small and medium enterprises located in Sardinia, originated with the purpose of financing working capital and/or investments unsecured loans - maturity between 24 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 10.15.2015 12.07.2016 Nominal Value of reference portfolio (€): 14,472,615 99,999,355 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 10.15.2016 10.15.2016 12.07.2016 12.07.2016 . Legal maturity 06.30.2021 06.30.2021 06.30.2023 06.30.2023 . Call option Not applicable Not applicable . Expected duration (years) 06.30.2021 06.30.2021 06.30.2023 06.30.2023 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - - - Sub A . Reference Position (€) 13,186,160 1,286,455 92,499,404 7,499,951 . Reference Position at the end of accounting period (€) 1,678,983 1,286,455 58,815,895 7,469,951 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 474 2018 Annual Report and Accounts · UniCredit NAME: SARDAFIDI BOND ITALIA4 INVESTIMENTI Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: unsecured loans to small and medium enterprises located in Sardinia, originated with the purpose of financing working capital and/or investments unsecured loans - maturity between 24 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 10.15.2015 12.07.2016 Nominal Value of reference portfolio (€): 14,472,615 99,999,355 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 10.15.2016 10.15.2016 12.07.2016 12.07.2016 . Legal maturity 06.30.2021 06.30.2021 06.30.2023 06.30.2023 . Call option Not applicable Not applicable . Expected duration (years) 06.30.2021 06.30.2021 06.30.2023 06.30.2023 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - - - Sub A . Reference Position (€) 13,186,160 1,286,455 92,499,404 7,499,951 . Reference Position at the end of accounting period (€) 1,678,983 1,286,455 58,815,895 7,469,951 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 475 NAME: BOND ITALIA1 MISTO BOND ITALIA2 MISTO Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Unsecured loans - maturity between 18 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 06.30.2015 12.31.2015 Nominal Value of reference portfolio (€): 295,689,323 299,780,540 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.30.2015 06.30.2015 12.31.2015 12.31.2015 . Legal maturity 12.31.2023 12.31.2023 02.28.2021 02.28.2021 . Call option Not applicable Not applicable . Expected duration 12.31.2023 12.31.2023 02.28.2021 02.28.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 277,208,740 18,480,583 281,044,256 18,736,284 . Reference Position at the end of accounting period (€) - 13,603,715 553,751 15,068,845 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 475 NAME: BOND ITALIA1 MISTO BOND ITALIA2 MISTO Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Unsecured loans - maturity between 18 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 06.30.2015 12.31.2015 Nominal Value of reference portfolio (€): 295,689,323 299,780,540 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.30.2015 06.30.2015 12.31.2015 12.31.2015 . Legal maturity 12.31.2023 12.31.2023 02.28.2021 02.28.2021 . Call option Not applicable Not applicable . Expected duration 12.31.2023 12.31.2023 02.28.2021 02.28.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 277,208,740 18,480,583 281,044,256 18,736,284 . Reference Position at the end of accounting period (€) - 13,603,715 553,751 15,068,845 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 475 NAME: BOND ITALIA1 MISTO BOND ITALIA2 MISTO Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Unsecured loans - maturity between 18 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 06.30.2015 12.31.2015 Nominal Value of reference portfolio (€): 295,689,323 299,780,540 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.30.2015 06.30.2015 12.31.2015 12.31.2015 . Legal maturity 12.31.2023 12.31.2023 02.28.2021 02.28.2021 . Call option Not applicable Not applicable . Expected duration 12.31.2023 12.31.2023 02.28.2021 02.28.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 277,208,740 18,480,583 281,044,256 18,736,284 . Reference Position at the end of accounting period (€) - 13,603,715 553,751 15,068,845 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 475 NAME: BOND ITALIA1 MISTO BOND ITALIA2 MISTO Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Unsecured loans - maturity between 18 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 06.30.2015 12.31.2015 Nominal Value of reference portfolio (€): 295,689,323 299,780,540 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.30.2015 06.30.2015 12.31.2015 12.31.2015 . Legal maturity 12.31.2023 12.31.2023 02.28.2021 02.28.2021 . Call option Not applicable Not applicable . Expected duration 12.31.2023 12.31.2023 02.28.2021 02.28.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 277,208,740 18,480,583 281,044,256 18,736,284 . Reference Position at the end of accounting period (€) - 13,603,715 553,751 15,068,845 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 475 NAME: BOND ITALIA1 MISTO BOND ITALIA2 MISTO Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 18 and 60 months - to small and medium enterprises Unsecured loans - maturity between 18 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 06.30.2015 12.31.2015 Nominal Value of reference portfolio (€): 295,689,323 299,780,540 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.30.2015 06.30.2015 12.31.2015 12.31.2015 . Legal maturity 12.31.2023 12.31.2023 02.28.2021 02.28.2021 . Call option Not applicable Not applicable . Expected duration 12.31.2023 12.31.2023 02.28.2021 02.28.2021 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 277,208,740 18,480,583 281,044,256 18,736,284 . Reference Position at the end of accounting period (€) - 13,603,715 553,751 15,068,845 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 476 2018 Annual Report and Accounts · UniCredit NAME: BOND ITALIA2 INVESTIMENTI ARTS MIDCAP3 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 24 and 60 months - to small and medium enterprises Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 12.31.2015 11.21.2015 Nominal Value of reference portfolio (€): 99,861,218 4,367,226,943 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of pledge on time deposit; Financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 12.31.2015 12.31.2015 11.21.2015 11.21.2015 . Legal maturity 02.28.2022 02.28.2022 12.31.2030 12.31.2030 . Call option Not applicable Clean-up call, regulatory call . Expected duration 02.28.2022 02.28.2022 WAL 3,36 regulatory call expected Dec 2022 WAL 3,36 regulatory call expected Dec 2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 92,371,627 7,489,591 4,105,194,943 43,672,000 . Reference Position at the end of accounting period (€) 33,470,301 6,854,909 974,411,145 43,672,000 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Issue date 11.21.2015 . Legal maturity 12.31.2030 . Rate Not applicable . Subordinated level Sub A, B . Reference Position 218,360,000 . Reference Position at the end of accounting period 217,428,222 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 476 2018 Annual Report and Accounts · UniCredit NAME: BOND ITALIA2 INVESTIMENTI ARTS MIDCAP3 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 24 and 60 months - to small and medium enterprises Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 12.31.2015 11.21.2015 Nominal Value of reference portfolio (€): 99,861,218 4,367,226,943 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of pledge on time deposit; Financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 12.31.2015 12.31.2015 11.21.2015 11.21.2015 . Legal maturity 02.28.2022 02.28.2022 12.31.2030 12.31.2030 . Call option Not applicable Clean-up call, regulatory call . Expected duration 02.28.2022 02.28.2022 WAL 3,36 regulatory call expected Dec 2022 WAL 3,36 regulatory call expected Dec 2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 92,371,627 7,489,591 4,105,194,943 43,672,000 . Reference Position at the end of accounting period (€) 33,470,301 6,854,909 974,411,145 43,672,000 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Issue date 11.21.2015 . Legal maturity 12.31.2030 . Rate Not applicable . Subordinated level Sub A, B . Reference Position 218,360,000 . Reference Position at the end of accounting period 217,428,222 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 476 2018 Annual Report and Accounts · UniCredit NAME: BOND ITALIA2 INVESTIMENTI ARTS MIDCAP3 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 24 and 60 months - to small and medium enterprises Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 12.31.2015 11.21.2015 Nominal Value of reference portfolio (€): 99,861,218 4,367,226,943 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of pledge on time deposit; Financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 12.31.2015 12.31.2015 11.21.2015 11.21.2015 . Legal maturity 02.28.2022 02.28.2022 12.31.2030 12.31.2030 . Call option Not applicable Clean-up call, regulatory call . Expected duration 02.28.2022 02.28.2022 WAL 3,36 regulatory call expected Dec 2022 WAL 3,36 regulatory call expected Dec 2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 92,371,627 7,489,591 4,105,194,943 43,672,000 . Reference Position at the end of accounting period (€) 33,470,301 6,854,909 974,411,145 43,672,000 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Issue date 11.21.2015 . Legal maturity 12.31.2030 . Rate Not applicable . Subordinated level Sub A, B . Reference Position 218,360,000 . Reference Position at the end of accounting period 217,428,222 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 476 2018 Annual Report and Accounts · UniCredit NAME: BOND ITALIA2 INVESTIMENTI ARTS MIDCAP3 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 24 and 60 months - to small and medium enterprises Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 12.31.2015 11.21.2015 Nominal Value of reference portfolio (€): 99,861,218 4,367,226,943 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of pledge on time deposit; Financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 12.31.2015 12.31.2015 11.21.2015 11.21.2015 . Legal maturity 02.28.2022 02.28.2022 12.31.2030 12.31.2030 . Call option Not applicable Clean-up call, regulatory call . Expected duration 02.28.2022 02.28.2022 WAL 3,36 regulatory call expected Dec 2022 WAL 3,36 regulatory call expected Dec 2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 92,371,627 7,489,591 4,105,194,943 43,672,000 . Reference Position at the end of accounting period (€) 33,470,301 6,854,909 974,411,145 43,672,000 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Issue date 11.21.2015 . Legal maturity 12.31.2030 . Rate Not applicable . Subordinated level Sub A, B . Reference Position 218,360,000 . Reference Position at the end of accounting period 217,428,222 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 476 2018 Annual Report and Accounts · UniCredit NAME: BOND ITALIA2 INVESTIMENTI ARTS MIDCAP3 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans - maturity between 24 and 60 months - to small and medium enterprises Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 12.31.2015 11.21.2015 Nominal Value of reference portfolio (€): 99,861,218 4,367,226,943 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of personal guarantee Financial guarantee to hedge the junior risk in the form of pledge on time deposit; Financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 12.31.2015 12.31.2015 11.21.2015 11.21.2015 . Legal maturity 02.28.2022 02.28.2022 12.31.2030 12.31.2030 . Call option Not applicable Clean-up call, regulatory call . Expected duration 02.28.2022 02.28.2022 WAL 3,36 regulatory call expected Dec 2022 WAL 3,36 regulatory call expected Dec 2022 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 92,371,627 7,489,591 4,105,194,943 43,672,000 . Reference Position at the end of accounting period (€) 33,470,301 6,854,909 974,411,145 43,672,000 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Issue date 11.21.2015 . Legal maturity 12.31.2030 . Rate Not applicable . Subordinated level Sub A, B . Reference Position 218,360,000 . Reference Position at the end of accounting period 217,428,222 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 477 NAME: GEPAFIN ARTS MIDCAP2 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans with maturity > 18 months to corporates located in Umbria Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 03.09.2015 06.12.2015 Nominal Value of reference portfolio (€): 7,473,980 1,618,022,277 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of pledge on time deposit; Financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 03.09.2015 03.09.2015 06.12.2015 06.12.2015 . Legal maturity 12.31.2019 12.31.2019 12.31.2026 12.31.2026 . Call option Not applicable Clean-up call, regulatory call . Expected duration 12.31.2019 12.31.2019 WAL 2,7 regulatory call expected Sep 2019 WAL 2,7 regulatory call expected Sep 2019 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 6,772,921 701,059 1,504,772,277 32,350,000 . Reference Position at the end of accounting period (€) - 52,450 96,413,553 32,350,000 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Issue date 06.12.2015 . Legal maturity 12.31.2026 . Rate Not applicable . Subordinated level Sub A, B . Reference Position (€) 80,900,000 . Reference Position at the end of accounting period (€) 80,652,244 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 477 NAME: GEPAFIN ARTS MIDCAP2 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans with maturity > 18 months to corporates located in Umbria Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 03.09.2015 06.12.2015 Nominal Value of reference portfolio (€): 7,473,980 1,618,022,277 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of pledge on time deposit; Financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 03.09.2015 03.09.2015 06.12.2015 06.12.2015 . Legal maturity 12.31.2019 12.31.2019 12.31.2026 12.31.2026 . Call option Not applicable Clean-up call, regulatory call . Expected duration 12.31.2019 12.31.2019 WAL 2,7 regulatory call expected Sep 2019 WAL 2,7 regulatory call expected Sep 2019 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 6,772,921 701,059 1,504,772,277 32,350,000 . Reference Position at the end of accounting period (€) - 52,450 96,413,553 32,350,000 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Issue date 06.12.2015 . Legal maturity 12.31.2026 . Rate Not applicable . Subordinated level Sub A, B . Reference Position (€) 80,900,000 . Reference Position at the end of accounting period (€) 80,652,244 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 477 NAME: GEPAFIN ARTS MIDCAP2 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans with maturity > 18 months to corporates located in Umbria Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 03.09.2015 06.12.2015 Nominal Value of reference portfolio (€): 7,473,980 1,618,022,277 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of pledge on time deposit; Financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 03.09.2015 03.09.2015 06.12.2015 06.12.2015 . Legal maturity 12.31.2019 12.31.2019 12.31.2026 12.31.2026 . Call option Not applicable Clean-up call, regulatory call . Expected duration 12.31.2019 12.31.2019 WAL 2,7 regulatory call expected Sep 2019 WAL 2,7 regulatory call expected Sep 2019 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 6,772,921 701,059 1,504,772,277 32,350,000 . Reference Position at the end of accounting period (€) - 52,450 96,413,553 32,350,000 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Issue date 06.12.2015 . Legal maturity 12.31.2026 . Rate Not applicable . Subordinated level Sub A, B . Reference Position (€) 80,900,000 . Reference Position at the end of accounting period (€) 80,652,244 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 477 NAME: GEPAFIN ARTS MIDCAP2 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans with maturity > 18 months to corporates located in Umbria Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 03.09.2015 06.12.2015 Nominal Value of reference portfolio (€): 7,473,980 1,618,022,277 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of pledge on time deposit; Financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 03.09.2015 03.09.2015 06.12.2015 06.12.2015 . Legal maturity 12.31.2019 12.31.2019 12.31.2026 12.31.2026 . Call option Not applicable Clean-up call, regulatory call . Expected duration 12.31.2019 12.31.2019 WAL 2,7 regulatory call expected Sep 2019 WAL 2,7 regulatory call expected Sep 2019 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 6,772,921 701,059 1,504,772,277 32,350,000 . Reference Position at the end of accounting period (€) - 52,450 96,413,553 32,350,000 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Issue date 06.12.2015 . Legal maturity 12.31.2026 . Rate Not applicable . Subordinated level Sub A, B . Reference Position (€) 80,900,000 . Reference Position at the end of accounting period (€) 80,652,244 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 477 NAME: GEPAFIN ARTS MIDCAP2 Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: UniCredit S.p.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCredit S.p.A. UniCreditBank A.G. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Unsecured loans with maturity > 18 months to corporates located in Umbria Loans to Mid - Corporates Quality of Asset: Performing Performing Closing date: 03.09.2015 06.12.2015 Nominal Value of reference portfolio (€): 7,473,980 1,618,022,277 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of pledge on time deposit; Financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula No rating agency, use of Supervisory Formula Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Mezzanine . Class A B A B . Rating - - - - . Issue date 03.09.2015 03.09.2015 06.12.2015 06.12.2015 . Legal maturity 12.31.2019 12.31.2019 12.31.2026 12.31.2026 . Call option Not applicable Clean-up call, regulatory call . Expected duration 12.31.2019 12.31.2019 WAL 2,7 regulatory call expected Sep 2019 WAL 2,7 regulatory call expected Sep 2019 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 6,772,921 701,059 1,504,772,277 32,350,000 . Reference Position at the end of accounting period (€) - 52,450 96,413,553 32,350,000 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Issue date 06.12.2015 . Legal maturity 12.31.2026 . Rate Not applicable . Subordinated level Sub A, B . Reference Position (€) 80,900,000 . Reference Position at the end of accounting period (€) 80,652,244 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 478 2018 Annual Report and Accounts · UniCredit NAME: ARTS LEONARDO BOND ITALIA1 INVESTIMENTI Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: ARTS LEONARDO 2015-1 S.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Project financing Loans and Shipping Unsecured loans - maturity between 24 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 06.26.2015 06.30.2015 Nominal Value of reference portfolio (€): 1,519,889,561 93,593,038 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.26.2015 06.26.2015 06.30.2015 06.30.2015 . Legal maturity 2040 2040 02.28.2025 02.28.2025 . Call option Clean-up call, regulatory call Not applicable . Expected duration 2021 2021 02.28.2025 02.28.2025 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 1,413,497,292 106,392,269 86,573,560 7,019,478 . Reference Position at the end of accounting period (€) 473,710,222 97,495,613 29,434,393 6,631,280 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 478 2018 Annual Report and Accounts · UniCredit NAME: ARTS LEONARDO BOND ITALIA1 INVESTIMENTI Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: ARTS LEONARDO 2015-1 S.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Project financing Loans and Shipping Unsecured loans - maturity between 24 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 06.26.2015 06.30.2015 Nominal Value of reference portfolio (€): 1,519,889,561 93,593,038 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.26.2015 06.26.2015 06.30.2015 06.30.2015 . Legal maturity 2040 2040 02.28.2025 02.28.2025 . Call option Clean-up call, regulatory call Not applicable . Expected duration 2021 2021 02.28.2025 02.28.2025 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 1,413,497,292 106,392,269 86,573,560 7,019,478 . Reference Position at the end of accounting period (€) 473,710,222 97,495,613 29,434,393 6,631,280 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 478 2018 Annual Report and Accounts · UniCredit NAME: ARTS LEONARDO BOND ITALIA1 INVESTIMENTI Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: ARTS LEONARDO 2015-1 S.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Project financing Loans and Shipping Unsecured loans - maturity between 24 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 06.26.2015 06.30.2015 Nominal Value of reference portfolio (€): 1,519,889,561 93,593,038 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.26.2015 06.26.2015 06.30.2015 06.30.2015 . Legal maturity 2040 2040 02.28.2025 02.28.2025 . Call option Clean-up call, regulatory call Not applicable . Expected duration 2021 2021 02.28.2025 02.28.2025 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 1,413,497,292 106,392,269 86,573,560 7,019,478 . Reference Position at the end of accounting period (€) 473,710,222 97,495,613 29,434,393 6,631,280 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 478 2018 Annual Report and Accounts · UniCredit NAME: ARTS LEONARDO BOND ITALIA1 INVESTIMENTI Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: ARTS LEONARDO 2015-1 S.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Project financing Loans and Shipping Unsecured loans - maturity between 24 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 06.26.2015 06.30.2015 Nominal Value of reference portfolio (€): 1,519,889,561 93,593,038 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.26.2015 06.26.2015 06.30.2015 06.30.2015 . Legal maturity 2040 2040 02.28.2025 02.28.2025 . Call option Clean-up call, regulatory call Not applicable . Expected duration 2021 2021 02.28.2025 02.28.2025 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 1,413,497,292 106,392,269 86,573,560 7,019,478 . Reference Position at the end of accounting period (€) 473,710,222 97,495,613 29,434,393 6,631,280 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 478 2018 Annual Report and Accounts · UniCredit NAME: ARTS LEONARDO BOND ITALIA1 INVESTIMENTI Type of securitisation: Tranched Cover Tranched Cover Originator: UniCredit S.p.A. UniCredit S.p.A. Issuer: ARTS LEONARDO 2015-1 S.A. UniCredit S.p.A. Servicer: UniCredit S.p.A. UniCredit S.p.A. Arranger: UniCreditBank A.G. UniCredit S.p.A. Target transaction: Credit risk hedging Credit risk hedging Type of asset: Project financing Loans and Shipping Unsecured loans - maturity between 24 and 60 months - to small and medium enterpises Quality of Asset: Performing Performing Closing date: 06.26.2015 06.30.2015 Nominal Value of reference portfolio (€): 1,519,889,561 93,593,038 Issued guarantees by the Bank: - - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Financial guarantee to hedge the junior risk in the form of personal guarantee Bank Lines of Credit: - - Third Parties Lines of Credit: - - Other Credit Enhancements: - - Other relevant information: - - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable Not applicable Not applicable . Type of security Senior Junior Senior Junior . Class A B A B . Rating - - - - . Issue date 06.26.2015 06.26.2015 06.30.2015 06.30.2015 . Legal maturity 2040 2040 02.28.2025 02.28.2025 . Call option Clean-up call, regulatory call Not applicable . Expected duration 2021 2021 02.28.2025 02.28.2025 . Rate Not applicable Not applicable Not applicable Not applicable . Subordinated level - Sub A - Sub A . Reference Position (€) 1,413,497,292 106,392,269 86,573,560 7,019,478 . Reference Position at the end of accounting period (€) 473,710,222 97,495,613 29,434,393 6,631,280 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 479 NAME: UNICREDIT MIDCAP 2014 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Highly diversified and granular pool of loans to Small and Medium Enterprises Quality of Asset: Performing Closing date: 12.16.2014 Nominal Value of reference portfolio (€): 1,864,170,543 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit; financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Mezzanine . Class A B . Rating - - . Legal maturity 12.31.2026 12.31.2026 . Subordinated level - Sub A . Reference Position (€) 1,715,036,900 37,133,644 . Reference Position at the end of accounting period (€) 91,030,575 37,133,644 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Legal maturity 12.31.2026 . Subordinated level Sub A, B . Reference Position (€) 112,000,000 . Reference Position at the end of accounting period (€) 111,967,259 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 479 NAME: UNICREDIT MIDCAP 2014 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Highly diversified and granular pool of loans to Small and Medium Enterprises Quality of Asset: Performing Closing date: 12.16.2014 Nominal Value of reference portfolio (€): 1,864,170,543 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit; financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Mezzanine . Class A B . Rating - - . Legal maturity 12.31.2026 12.31.2026 . Subordinated level - Sub A . Reference Position (€) 1,715,036,900 37,133,644 . Reference Position at the end of accounting period (€) 91,030,575 37,133,644 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Legal maturity 12.31.2026 . Subordinated level Sub A, B . Reference Position (€) 112,000,000 . Reference Position at the end of accounting period (€) 111,967,259 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 479 NAME: UNICREDIT MIDCAP 2014 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Highly diversified and granular pool of loans to Small and Medium Enterprises Quality of Asset: Performing Closing date: 12.16.2014 Nominal Value of reference portfolio (€): 1,864,170,543 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit; financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Mezzanine . Class A B . Rating - - . Legal maturity 12.31.2026 12.31.2026 . Subordinated level - Sub A . Reference Position (€) 1,715,036,900 37,133,644 . Reference Position at the end of accounting period (€) 91,030,575 37,133,644 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Legal maturity 12.31.2026 . Subordinated level Sub A, B . Reference Position (€) 112,000,000 . Reference Position at the end of accounting period (€) 111,967,259 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 479 NAME: UNICREDIT MIDCAP 2014 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Highly diversified and granular pool of loans to Small and Medium Enterprises Quality of Asset: Performing Closing date: 12.16.2014 Nominal Value of reference portfolio (€): 1,864,170,543 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit; financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Mezzanine . Class A B . Rating - - . Legal maturity 12.31.2026 12.31.2026 . Subordinated level - Sub A . Reference Position (€) 1,715,036,900 37,133,644 . Reference Position at the end of accounting period (€) 91,030,575 37,133,644 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Legal maturity 12.31.2026 . Subordinated level Sub A, B . Reference Position (€) 112,000,000 . Reference Position at the end of accounting period (€) 111,967,259 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 479 NAME: UNICREDIT MIDCAP 2014 Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Highly diversified and granular pool of loans to Small and Medium Enterprises Quality of Asset: Performing Closing date: 12.16.2014 Nominal Value of reference portfolio (€): 1,864,170,543 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit; financial guarantee to hedge the mezzanine risk in the form of personal guarantee Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Mezzanine . Class A B . Rating - - . Legal maturity 12.31.2026 12.31.2026 . Subordinated level - Sub A . Reference Position (€) 1,715,036,900 37,133,644 . Reference Position at the end of accounting period (€) 91,030,575 37,133,644 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Legal maturity 12.31.2026 . Subordinated level Sub A, B . Reference Position (€) 112,000,000 . Reference Position at the end of accounting period (€) 111,967,259 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 480 2018 Annual Report and Accounts · UniCredit NAME: CONFIDIMPRESA TRENTINO E COOPERATIVA ARTIGIANA DI GARANZIA DELLA PROVINCIA DI TRENTO Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Loans to small and medium entriprises Quality of Asset: Performing Closing date: 06.30.2014 Nominal Value of reference portfolio (€): 10,540,000 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: The Consortia guarantee hedges the 95% of the Junior tranche and the tranche is equal to €665,694. Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Legal maturity 03.31.2020 03.31.2020 . Subordinated level - Sub A . Reference Position (€) 9,874,316 665,694 . Reference Position at the end of accounting period (€) 125,107 602,165 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 480 2018 Annual Report and Accounts · UniCredit NAME: CONFIDIMPRESA TRENTINO E COOPERATIVA ARTIGIANA DI GARANZIA DELLA PROVINCIA DI TRENTO Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Loans to small and medium entriprises Quality of Asset: Performing Closing date: 06.30.2014 Nominal Value of reference portfolio (€): 10,540,000 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: The Consortia guarantee hedges the 95% of the Junior tranche and the tranche is equal to €665,694. Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Legal maturity 03.31.2020 03.31.2020 . Subordinated level - Sub A . Reference Position (€) 9,874,316 665,694 . Reference Position at the end of accounting period (€) 125,107 602,165 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 480 2018 Annual Report and Accounts · UniCredit NAME: CONFIDIMPRESA TRENTINO E COOPERATIVA ARTIGIANA DI GARANZIA DELLA PROVINCIA DI TRENTO Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Loans to small and medium entriprises Quality of Asset: Performing Closing date: 06.30.2014 Nominal Value of reference portfolio (€): 10,540,000 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: The Consortia guarantee hedges the 95% of the Junior tranche and the tranche is equal to €665,694. Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Legal maturity 03.31.2020 03.31.2020 . Subordinated level - Sub A . Reference Position (€) 9,874,316 665,694 . Reference Position at the end of accounting period (€) 125,107 602,165 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 480 2018 Annual Report and Accounts · UniCredit NAME: CONFIDIMPRESA TRENTINO E COOPERATIVA ARTIGIANA DI GARANZIA DELLA PROVINCIA DI TRENTO Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Loans to small and medium entriprises Quality of Asset: Performing Closing date: 06.30.2014 Nominal Value of reference portfolio (€): 10,540,000 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: The Consortia guarantee hedges the 95% of the Junior tranche and the tranche is equal to €665,694. Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Legal maturity 03.31.2020 03.31.2020 . Subordinated level - Sub A . Reference Position (€) 9,874,316 665,694 . Reference Position at the end of accounting period (€) 125,107 602,165 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 480 2018 Annual Report and Accounts · UniCredit NAME: CONFIDIMPRESA TRENTINO E COOPERATIVA ARTIGIANA DI GARANZIA DELLA PROVINCIA DI TRENTO Type of securitisation: Tranched Cover Originator: UniCredit S.p.A. Issuer: UniCredit S.p.A. Servicer: UniCredit S.p.A. Arranger: UniCredit S.p.A. Target transaction: Credit risk hedging Type of asset: Loans to small and medium entriprises Quality of Asset: Performing Closing date: 06.30.2014 Nominal Value of reference portfolio (€): 10,540,000 Issued guarantees by the Bank: - Issued guarantees by third parties: Financial guarantee to hedge the junior risk in the form of pledge on time deposit Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: The Consortia guarantee hedges the 95% of the Junior tranche and the tranche is equal to €665,694. Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Legal maturity 03.31.2020 03.31.2020 . Subordinated level - Sub A . Reference Position (€) 9,874,316 665,694 . Reference Position at the end of accounting period (€) 125,107 602,165 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by art . 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 481 ORIGINATOR: UniCredit Leasing S.p.A. STRATEGIES, PROCESSES AND GOALS: The main reasons for these transactions are: improve asset allocation, diversification of funding sources and improve Regulatory Ratios. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: Each portfolio is monitored on an ongoing basis and is described in monthly and quarterly reports (required by the agreements) with a breakdown of loans by status and the trend of repayments. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: Coordination Structure was set up in the Accounts Department. The Board of Directors is provided with a report with a breakdown of repayments and the status of loans. HEDGING POLICIES: The Special Purpose Vehicle bought IRSs as fair value hedge and Basis Swaps as Cash flow hedge (and related back to back between Originator and Counterparty). OPERATING RESULTS: Repayments are in line with the schedule provided on issue (business plan) such that the equity tranche yield (including extra spread) is in line with expected yield on investments with similar risk level. Transactions from previous periods NAME: LSV9 - SERIE 2016 Type of securitisation: Traditional Originator: UniCredit Leasing S.p.A. Issuer: Locat SV S.r.l Servicer: UniCredit Leasing S.p.A. Arranger: UniCredit Bank AG London Branch Target transaction: Funding/Counterbalancing capacity Type of asset: Leasing loans bearing car, capital goods and real estate. Quality of Asset: Performing Closing date: 11.11.2016 Nominal Value of disposal portfolio (€): 3,784,088,049 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 3,784,088,049 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit Leasing S.p.A. has granted SPV a subordinated loan of 40 million euro Other relevant information: Self - securitisation (No Revolving) Rating Agencies: Moodys/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005219578 IT0005219586 . Type of security Senior Junior . Class A B . Rating A1/A (high) - . Quotation Dublin Dublin . Issue date 11.14.2016 11.14.2016 . Legal maturity 12.12.2042 12.12.2042 . Call option Clean-up call . Expected duration (years) 3.14 - . Rate Euribor 3m + 130bps Euribor 3m + 500 bps . Subordinated level - Sub A . Nominal value issued (€) 2,667,800,000 1,116,288,048 . Nominal value at the end of accounting period (€) 1,413,717,375 1,116,288,048 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 481 ORIGINATOR: UniCredit Leasing S.p.A. STRATEGIES, PROCESSES AND GOALS: The main reasons for these transactions are: improve asset allocation, diversification of funding sources and improve Regulatory Ratios. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: Each portfolio is monitored on an ongoing basis and is described in monthly and quarterly reports (required by the agreements) with a breakdown of loans by status and the trend of repayments. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: Coordination Structure was set up in the Accounts Department. The Board of Directors is provided with a report with a breakdown of repayments and the status of loans. HEDGING POLICIES: The Special Purpose Vehicle bought IRSs as fair value hedge and Basis Swaps as Cash flow hedge (and related back to back between Originator and Counterparty). OPERATING RESULTS: Repayments are in line with the schedule provided on issue (business plan) such that the equity tranche yield (including extra spread) is in line with expected yield on investments with similar risk level. Transactions from previous periods NAME: LSV9 - SERIE 2016 Type of securitisation: Traditional Originator: UniCredit Leasing S.p.A. Issuer: Locat SV S.r.l Servicer: UniCredit Leasing S.p.A. Arranger: UniCredit Bank AG London Branch Target transaction: Funding/Counterbalancing capacity Type of asset: Leasing loans bearing car, capital goods and real estate. Quality of Asset: Performing Closing date: 11.11.2016 Nominal Value of disposal portfolio (€): 3,784,088,049 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 3,784,088,049 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit Leasing S.p.A. has granted SPV a subordinated loan of 40 million euro Other relevant information: Self - securitisation (No Revolving) Rating Agencies: Moodys/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005219578 IT0005219586 . Type of security Senior Junior . Class A B . Rating A1/A (high) - . Quotation Dublin Dublin . Issue date 11.14.2016 11.14.2016 . Legal maturity 12.12.2042 12.12.2042 . Call option Clean-up call . Expected duration (years) 3.14 - . Rate Euribor 3m + 130bps Euribor 3m + 500 bps . Subordinated level - Sub A . Nominal value issued (€) 2,667,800,000 1,116,288,048 . Nominal value at the end of accounting period (€) 1,413,717,375 1,116,288,048 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 481 ORIGINATOR: UniCredit Leasing S.p.A. STRATEGIES, PROCESSES AND GOALS: The main reasons for these transactions are: improve asset allocation, diversification of funding sources and improve Regulatory Ratios. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: Each portfolio is monitored on an ongoing basis and is described in monthly and quarterly reports (required by the agreements) with a breakdown of loans by status and the trend of repayments. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: Coordination Structure was set up in the Accounts Department. The Board of Directors is provided with a report with a breakdown of repayments and the status of loans. HEDGING POLICIES: The Special Purpose Vehicle bought IRSs as fair value hedge and Basis Swaps as Cash flow hedge (and related back to back between Originator and Counterparty). OPERATING RESULTS: Repayments are in line with the schedule provided on issue (business plan) such that the equity tranche yield (including extra spread) is in line with expected yield on investments with similar risk level. Transactions from previous periods NAME: LSV9 - SERIE 2016 Type of securitisation: Traditional Originator: UniCredit Leasing S.p.A. Issuer: Locat SV S.r.l Servicer: UniCredit Leasing S.p.A. Arranger: UniCredit Bank AG London Branch Target transaction: Funding/Counterbalancing capacity Type of asset: Leasing loans bearing car, capital goods and real estate. Quality of Asset: Performing Closing date: 11.11.2016 Nominal Value of disposal portfolio (€): 3,784,088,049 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 3,784,088,049 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit Leasing S.p.A. has granted SPV a subordinated loan of 40 million euro Other relevant information: Self - securitisation (No Revolving) Rating Agencies: Moodys/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005219578 IT0005219586 . Type of security Senior Junior . Class A B . Rating A1/A (high) - . Quotation Dublin Dublin . Issue date 11.14.2016 11.14.2016 . Legal maturity 12.12.2042 12.12.2042 . Call option Clean-up call . Expected duration (years) 3.14 - . Rate Euribor 3m + 130bps Euribor 3m + 500 bps . Subordinated level - Sub A . Nominal value issued (€) 2,667,800,000 1,116,288,048 . Nominal value at the end of accounting period (€) 1,413,717,375 1,116,288,048 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 481 ORIGINATOR: UniCredit Leasing S.p.A. STRATEGIES, PROCESSES AND GOALS: The main reasons for these transactions are: improve asset allocation, diversification of funding sources and improve Regulatory Ratios. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: Each portfolio is monitored on an ongoing basis and is described in monthly and quarterly reports (required by the agreements) with a breakdown of loans by status and the trend of repayments. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: Coordination Structure was set up in the Accounts Department. The Board of Directors is provided with a report with a breakdown of repayments and the status of loans. HEDGING POLICIES: The Special Purpose Vehicle bought IRSs as fair value hedge and Basis Swaps as Cash flow hedge (and related back to back between Originator and Counterparty). OPERATING RESULTS: Repayments are in line with the schedule provided on issue (business plan) such that the equity tranche yield (including extra spread) is in line with expected yield on investments with similar risk level. Transactions from previous periods NAME: LSV9 - SERIE 2016 Type of securitisation: Traditional Originator: UniCredit Leasing S.p.A. Issuer: Locat SV S.r.l Servicer: UniCredit Leasing S.p.A. Arranger: UniCredit Bank AG London Branch Target transaction: Funding/Counterbalancing capacity Type of asset: Leasing loans bearing car, capital goods and real estate. Quality of Asset: Performing Closing date: 11.11.2016 Nominal Value of disposal portfolio (€): 3,784,088,049 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 3,784,088,049 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit Leasing S.p.A. has granted SPV a subordinated loan of 40 million euro Other relevant information: Self - securitisation (No Revolving) Rating Agencies: Moodys/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005219578 IT0005219586 . Type of security Senior Junior . Class A B . Rating A1/A (high) - . Quotation Dublin Dublin . Issue date 11.14.2016 11.14.2016 . Legal maturity 12.12.2042 12.12.2042 . Call option Clean-up call . Expected duration (years) 3.14 - . Rate Euribor 3m + 130bps Euribor 3m + 500 bps . Subordinated level - Sub A . Nominal value issued (€) 2,667,800,000 1,116,288,048 . Nominal value at the end of accounting period (€) 1,413,717,375 1,116,288,048 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 481 ORIGINATOR: UniCredit Leasing S.p.A. STRATEGIES, PROCESSES AND GOALS: The main reasons for these transactions are: improve asset allocation, diversification of funding sources and improve Regulatory Ratios. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: Each portfolio is monitored on an ongoing basis and is described in monthly and quarterly reports (required by the agreements) with a breakdown of loans by status and the trend of repayments. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: Coordination Structure was set up in the Accounts Department. The Board of Directors is provided with a report with a breakdown of repayments and the status of loans. HEDGING POLICIES: The Special Purpose Vehicle bought IRSs as fair value hedge and Basis Swaps as Cash flow hedge (and related back to back between Originator and Counterparty). OPERATING RESULTS: Repayments are in line with the schedule provided on issue (business plan) such that the equity tranche yield (including extra spread) is in line with expected yield on investments with similar risk level. Transactions from previous periods NAME: LSV9 - SERIE 2016 Type of securitisation: Traditional Originator: UniCredit Leasing S.p.A. Issuer: Locat SV S.r.l Servicer: UniCredit Leasing S.p.A. Arranger: UniCredit Bank AG London Branch Target transaction: Funding/Counterbalancing capacity Type of asset: Leasing loans bearing car, capital goods and real estate. Quality of Asset: Performing Closing date: 11.11.2016 Nominal Value of disposal portfolio (€): 3,784,088,049 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 3,784,088,049 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: UniCredit Leasing S.p.A. has granted SPV a subordinated loan of 40 million euro Other relevant information: Self - securitisation (No Revolving) Rating Agencies: Moodys/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN IT0005219578 IT0005219586 . Type of security Senior Junior . Class A B . Rating A1/A (high) - . Quotation Dublin Dublin . Issue date 11.14.2016 11.14.2016 . Legal maturity 12.12.2042 12.12.2042 . Call option Clean-up call . Expected duration (years) 3.14 - . Rate Euribor 3m + 130bps Euribor 3m + 500 bps . Subordinated level - Sub A . Nominal value issued (€) 2,667,800,000 1,116,288,048 . Nominal value at the end of accounting period (€) 1,413,717,375 1,116,288,048 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 482 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit Bank AG STRATEGIES, PROCESSES AND GOALS: The main motivation for the Bank's securitisation programs is the Capital relief and Funding for True Sale Transactions. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: Each portfolio is monitored by the servicing department on an ongoing basis and it is illustrated in the form of quarterly report (investor report), which provides a breakdown of the status of loans. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: The Board Members approve each new transaction and any other related decision and they are informed on the expected performances and on those in the final balance. The bank's annual/interim report contains information on the bank's own ABS transactions. HEDGING POLICIES: For true sale transactions the issuer hedged portfolio's interest rate risks through Interest Rate Swaps. OPERATING RESULTS: The results achieved up to the present are broadly in line with expectations; payments received from the portfolio ensured punctual and full payment to security holders and other parties to the transaction. Transactions from previous periods NAME: ROSENKAVALIER 2015 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Rosenkavalier 2015 UG Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: Large Corporate and SME corporate loans Quality of Asset: Performing Closing date: 12.18.2015 (restructured on 11.30.2018) Nominal Value of disposal portfolio (€): 3,500,000,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 3,500,000,000 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral Rating Agencies: Fitch/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN DE000A1687E2 DE000A1687F9 . Type of security Senior Junior . Class A B . Rating A/A - . Quotation Munich Munich . Issue date 12.18.2015 12.18.2015 . Legal maturity 08.31.2045 08.31.2045 . Call option Any payment date . Rate Fixed Coupon 0,35% Fixed Coupon 3,25% . Subordinated level Waterfall Position 1 Waterfall Position 2 . Nominal value issued (€) 2,103,500,000 1,396,500,000 . Nominal value at the end of accounting period (€) 2,103,500,000 1,396,500,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 482 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit Bank AG STRATEGIES, PROCESSES AND GOALS: The main motivation for the Bank's securitisation programs is the Capital relief and Funding for True Sale Transactions. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: Each portfolio is monitored by the servicing department on an ongoing basis and it is illustrated in the form of quarterly report (investor report), which provides a breakdown of the status of loans. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: The Board Members approve each new transaction and any other related decision and they are informed on the expected performances and on those in the final balance. The bank's annual/interim report contains information on the bank's own ABS transactions. HEDGING POLICIES: For true sale transactions the issuer hedged portfolio's interest rate risks through Interest Rate Swaps. OPERATING RESULTS: The results achieved up to the present are broadly in line with expectations; payments received from the portfolio ensured punctual and full payment to security holders and other parties to the transaction. Transactions from previous periods NAME: ROSENKAVALIER 2015 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Rosenkavalier 2015 UG Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: Large Corporate and SME corporate loans Quality of Asset: Performing Closing date: 12.18.2015 (restructured on 11.30.2018) Nominal Value of disposal portfolio (€): 3,500,000,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 3,500,000,000 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral Rating Agencies: Fitch/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN DE000A1687E2 DE000A1687F9 . Type of security Senior Junior . Class A B . Rating A/A - . Quotation Munich Munich . Issue date 12.18.2015 12.18.2015 . Legal maturity 08.31.2045 08.31.2045 . Call option Any payment date . Rate Fixed Coupon 0,35% Fixed Coupon 3,25% . Subordinated level Waterfall Position 1 Waterfall Position 2 . Nominal value issued (€) 2,103,500,000 1,396,500,000 . Nominal value at the end of accounting period (€) 2,103,500,000 1,396,500,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 482 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit Bank AG STRATEGIES, PROCESSES AND GOALS: The main motivation for the Bank's securitisation programs is the Capital relief and Funding for True Sale Transactions. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: Each portfolio is monitored by the servicing department on an ongoing basis and it is illustrated in the form of quarterly report (investor report), which provides a breakdown of the status of loans. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: The Board Members approve each new transaction and any other related decision and they are informed on the expected performances and on those in the final balance. The bank's annual/interim report contains information on the bank's own ABS transactions. HEDGING POLICIES: For true sale transactions the issuer hedged portfolio's interest rate risks through Interest Rate Swaps. OPERATING RESULTS: The results achieved up to the present are broadly in line with expectations; payments received from the portfolio ensured punctual and full payment to security holders and other parties to the transaction. Transactions from previous periods NAME: ROSENKAVALIER 2015 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Rosenkavalier 2015 UG Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: Large Corporate and SME corporate loans Quality of Asset: Performing Closing date: 12.18.2015 (restructured on 11.30.2018) Nominal Value of disposal portfolio (€): 3,500,000,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 3,500,000,000 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral Rating Agencies: Fitch/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN DE000A1687E2 DE000A1687F9 . Type of security Senior Junior . Class A B . Rating A/A - . Quotation Munich Munich . Issue date 12.18.2015 12.18.2015 . Legal maturity 08.31.2045 08.31.2045 . Call option Any payment date . Rate Fixed Coupon 0,35% Fixed Coupon 3,25% . Subordinated level Waterfall Position 1 Waterfall Position 2 . Nominal value issued (€) 2,103,500,000 1,396,500,000 . Nominal value at the end of accounting period (€) 2,103,500,000 1,396,500,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 482 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit Bank AG STRATEGIES, PROCESSES AND GOALS: The main motivation for the Bank's securitisation programs is the Capital relief and Funding for True Sale Transactions. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: Each portfolio is monitored by the servicing department on an ongoing basis and it is illustrated in the form of quarterly report (investor report), which provides a breakdown of the status of loans. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: The Board Members approve each new transaction and any other related decision and they are informed on the expected performances and on those in the final balance. The bank's annual/interim report contains information on the bank's own ABS transactions. HEDGING POLICIES: For true sale transactions the issuer hedged portfolio's interest rate risks through Interest Rate Swaps. OPERATING RESULTS: The results achieved up to the present are broadly in line with expectations; payments received from the portfolio ensured punctual and full payment to security holders and other parties to the transaction. Transactions from previous periods NAME: ROSENKAVALIER 2015 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Rosenkavalier 2015 UG Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: Large Corporate and SME corporate loans Quality of Asset: Performing Closing date: 12.18.2015 (restructured on 11.30.2018) Nominal Value of disposal portfolio (€): 3,500,000,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 3,500,000,000 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral Rating Agencies: Fitch/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN DE000A1687E2 DE000A1687F9 . Type of security Senior Junior . Class A B . Rating A/A - . Quotation Munich Munich . Issue date 12.18.2015 12.18.2015 . Legal maturity 08.31.2045 08.31.2045 . Call option Any payment date . Rate Fixed Coupon 0,35% Fixed Coupon 3,25% . Subordinated level Waterfall Position 1 Waterfall Position 2 . Nominal value issued (€) 2,103,500,000 1,396,500,000 . Nominal value at the end of accounting period (€) 2,103,500,000 1,396,500,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 482 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit Bank AG STRATEGIES, PROCESSES AND GOALS: The main motivation for the Bank's securitisation programs is the Capital relief and Funding for True Sale Transactions. INTERNAL MEASUREMENT AND RISK MONITORING SYSTEMS: Each portfolio is monitored by the servicing department on an ongoing basis and it is illustrated in the form of quarterly report (investor report), which provides a breakdown of the status of loans. ORGANISATIONAL STRUCTURE AND SYSTEM FOR REPORTING TO SENIOR MANAGEMENT: The Board Members approve each new transaction and any other related decision and they are informed on the expected performances and on those in the final balance. The bank's annual/interim report contains information on the bank's own ABS transactions. HEDGING POLICIES: For true sale transactions the issuer hedged portfolio's interest rate risks through Interest Rate Swaps. OPERATING RESULTS: The results achieved up to the present are broadly in line with expectations; payments received from the portfolio ensured punctual and full payment to security holders and other parties to the transaction. Transactions from previous periods NAME: ROSENKAVALIER 2015 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Rosenkavalier 2015 UG Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: Large Corporate and SME corporate loans Quality of Asset: Performing Closing date: 12.18.2015 (restructured on 11.30.2018) Nominal Value of disposal portfolio (€): 3,500,000,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 3,500,000,000 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral Rating Agencies: Fitch/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN DE000A1687E2 DE000A1687F9 . Type of security Senior Junior . Class A B . Rating A/A - . Quotation Munich Munich . Issue date 12.18.2015 12.18.2015 . Legal maturity 08.31.2045 08.31.2045 . Call option Any payment date . Rate Fixed Coupon 0,35% Fixed Coupon 3,25% . Subordinated level Waterfall Position 1 Waterfall Position 2 . Nominal value issued (€) 2,103,500,000 1,396,500,000 . Nominal value at the end of accounting period (€) 2,103,500,000 1,396,500,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 483 NAME: GELDILUX-TS-2015 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Geldilux-TS-2015 S.A. (Luxembourg) Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: SME corporate loans Quality of Asset: Performing Closing date: 07.29.2015 Nominal Value of disposal portfolio at the end of the accounting period (€): 2,140,400,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 2,140,400,000 Garantees issued by the Bank (€): - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral, True Sale - Revolving Rating Agencies: Moody's/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN XS1261539610 XS1261582545 . Type of security Senior Senior . Class A Liqudity Note . Rating Aaa/A not rated . Quotation Luxembourg Luxembourg . Issue date 07.29.2015 07.29.2015 . Legal maturity 07.08.2022 04.11.2023 . Call option Clean-up call . Rate EUR1M (floored to zero) + 50bps EUR1M + 130bps . Subordinated level Waterfall Position 1 Waterfall Position 2 . Nominal value issued (€) 1,830,000,000 22,000,000 . Nominal value at the end of accounting period (€) 1,830,000,000 - . ISIN XS1261576810 XS1261577206 . Type of security Mezzanine Mezzanine . Class B C . Rating A2/- Baa2/- . Quotation Luxembourg Luxembourg . Issue date 07.29.2015 07.29.2015 . Legal maturity 04.11.2023 04.11.2023 . Call option Clean-up call . Rate EUR1M + 95bps EUR1M + 150bps . Subordinated level Waterfall Position 3 Waterfall Position 4 . Nominal value issued (€) 84,000,000 36,000,000 . Nominal value at the end of accounting period (€) - - . ISIN XS1261577628 . Type of security Junior . Class D . Rating - . Quotation Luxembourg . Issue date 07.29.2015 . Legal maturity 07.08.2022 . Call option Clean-up call . Rate EUR1M (floored to zero) + 300bps . Subordinated level Waterfall Position 5 . Nominal value issued (€) 310,400,000 . Nominal value at the end of accounting period (€) 310,400,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 483 NAME: GELDILUX-TS-2015 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Geldilux-TS-2015 S.A. (Luxembourg) Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: SME corporate loans Quality of Asset: Performing Closing date: 07.29.2015 Nominal Value of disposal portfolio at the end of the accounting period (€): 2,140,400,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 2,140,400,000 Garantees issued by the Bank (€): - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral, True Sale - Revolving Rating Agencies: Moody's/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN XS1261539610 XS1261582545 . Type of security Senior Senior . Class A Liqudity Note . Rating Aaa/A not rated . Quotation Luxembourg Luxembourg . Issue date 07.29.2015 07.29.2015 . Legal maturity 07.08.2022 04.11.2023 . Call option Clean-up call . Rate EUR1M (floored to zero) + 50bps EUR1M + 130bps . Subordinated level Waterfall Position 1 Waterfall Position 2 . Nominal value issued (€) 1,830,000,000 22,000,000 . Nominal value at the end of accounting period (€) 1,830,000,000 - . ISIN XS1261576810 XS1261577206 . Type of security Mezzanine Mezzanine . Class B C . Rating A2/- Baa2/- . Quotation Luxembourg Luxembourg . Issue date 07.29.2015 07.29.2015 . Legal maturity 04.11.2023 04.11.2023 . Call option Clean-up call . Rate EUR1M + 95bps EUR1M + 150bps . Subordinated level Waterfall Position 3 Waterfall Position 4 . Nominal value issued (€) 84,000,000 36,000,000 . Nominal value at the end of accounting period (€) - - . ISIN XS1261577628 . Type of security Junior . Class D . Rating - . Quotation Luxembourg . Issue date 07.29.2015 . Legal maturity 07.08.2022 . Call option Clean-up call . Rate EUR1M (floored to zero) + 300bps . Subordinated level Waterfall Position 5 . Nominal value issued (€) 310,400,000 . Nominal value at the end of accounting period (€) 310,400,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 483 NAME: GELDILUX-TS-2015 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Geldilux-TS-2015 S.A. (Luxembourg) Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: SME corporate loans Quality of Asset: Performing Closing date: 07.29.2015 Nominal Value of disposal portfolio at the end of the accounting period (€): 2,140,400,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 2,140,400,000 Garantees issued by the Bank (€): - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral, True Sale - Revolving Rating Agencies: Moody's/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN XS1261539610 XS1261582545 . Type of security Senior Senior . Class A Liqudity Note . Rating Aaa/A not rated . Quotation Luxembourg Luxembourg . Issue date 07.29.2015 07.29.2015 . Legal maturity 07.08.2022 04.11.2023 . Call option Clean-up call . Rate EUR1M (floored to zero) + 50bps EUR1M + 130bps . Subordinated level Waterfall Position 1 Waterfall Position 2 . Nominal value issued (€) 1,830,000,000 22,000,000 . Nominal value at the end of accounting period (€) 1,830,000,000 - . ISIN XS1261576810 XS1261577206 . Type of security Mezzanine Mezzanine . Class B C . Rating A2/- Baa2/- . Quotation Luxembourg Luxembourg . Issue date 07.29.2015 07.29.2015 . Legal maturity 04.11.2023 04.11.2023 . Call option Clean-up call . Rate EUR1M + 95bps EUR1M + 150bps . Subordinated level Waterfall Position 3 Waterfall Position 4 . Nominal value issued (€) 84,000,000 36,000,000 . Nominal value at the end of accounting period (€) - - . ISIN XS1261577628 . Type of security Junior . Class D . Rating - . Quotation Luxembourg . Issue date 07.29.2015 . Legal maturity 07.08.2022 . Call option Clean-up call . Rate EUR1M (floored to zero) + 300bps . Subordinated level Waterfall Position 5 . Nominal value issued (€) 310,400,000 . Nominal value at the end of accounting period (€) 310,400,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 483 NAME: GELDILUX-TS-2015 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Geldilux-TS-2015 S.A. (Luxembourg) Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: SME corporate loans Quality of Asset: Performing Closing date: 07.29.2015 Nominal Value of disposal portfolio at the end of the accounting period (€): 2,140,400,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 2,140,400,000 Garantees issued by the Bank (€): - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral, True Sale - Revolving Rating Agencies: Moody's/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN XS1261539610 XS1261582545 . Type of security Senior Senior . Class A Liqudity Note . Rating Aaa/A not rated . Quotation Luxembourg Luxembourg . Issue date 07.29.2015 07.29.2015 . Legal maturity 07.08.2022 04.11.2023 . Call option Clean-up call . Rate EUR1M (floored to zero) + 50bps EUR1M + 130bps . Subordinated level Waterfall Position 1 Waterfall Position 2 . Nominal value issued (€) 1,830,000,000 22,000,000 . Nominal value at the end of accounting period (€) 1,830,000,000 - . ISIN XS1261576810 XS1261577206 . Type of security Mezzanine Mezzanine . Class B C . Rating A2/- Baa2/- . Quotation Luxembourg Luxembourg . Issue date 07.29.2015 07.29.2015 . Legal maturity 04.11.2023 04.11.2023 . Call option Clean-up call . Rate EUR1M + 95bps EUR1M + 150bps . Subordinated level Waterfall Position 3 Waterfall Position 4 . Nominal value issued (€) 84,000,000 36,000,000 . Nominal value at the end of accounting period (€) - - . ISIN XS1261577628 . Type of security Junior . Class D . Rating - . Quotation Luxembourg . Issue date 07.29.2015 . Legal maturity 07.08.2022 . Call option Clean-up call . Rate EUR1M (floored to zero) + 300bps . Subordinated level Waterfall Position 5 . Nominal value issued (€) 310,400,000 . Nominal value at the end of accounting period (€) 310,400,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 483 NAME: GELDILUX-TS-2015 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Geldilux-TS-2015 S.A. (Luxembourg) Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: SME corporate loans Quality of Asset: Performing Closing date: 07.29.2015 Nominal Value of disposal portfolio at the end of the accounting period (€): 2,140,400,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 2,140,400,000 Garantees issued by the Bank (€): - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral, True Sale - Revolving Rating Agencies: Moody's/DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN XS1261539610 XS1261582545 . Type of security Senior Senior . Class A Liqudity Note . Rating Aaa/A not rated . Quotation Luxembourg Luxembourg . Issue date 07.29.2015 07.29.2015 . Legal maturity 07.08.2022 04.11.2023 . Call option Clean-up call . Rate EUR1M (floored to zero) + 50bps EUR1M + 130bps . Subordinated level Waterfall Position 1 Waterfall Position 2 . Nominal value issued (€) 1,830,000,000 22,000,000 . Nominal value at the end of accounting period (€) 1,830,000,000 - . ISIN XS1261576810 XS1261577206 . Type of security Mezzanine Mezzanine . Class B C . Rating A2/- Baa2/- . Quotation Luxembourg Luxembourg . Issue date 07.29.2015 07.29.2015 . Legal maturity 04.11.2023 04.11.2023 . Call option Clean-up call . Rate EUR1M + 95bps EUR1M + 150bps . Subordinated level Waterfall Position 3 Waterfall Position 4 . Nominal value issued (€) 84,000,000 36,000,000 . Nominal value at the end of accounting period (€) - - . ISIN XS1261577628 . Type of security Junior . Class D . Rating - . Quotation Luxembourg . Issue date 07.29.2015 . Legal maturity 07.08.2022 . Call option Clean-up call . Rate EUR1M (floored to zero) + 300bps . Subordinated level Waterfall Position 5 . Nominal value issued (€) 310,400,000 . Nominal value at the end of accounting period (€) 310,400,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 484 2018 Annual Report and Accounts · UniCredit NAME: ROSENKAVALIER 2008 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Rosenkavalier 2008 GmbH Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: Mortgage loans Quality of Asset: Performing Closing date: 12.12.2008 Nominal Value of disposal portfolio at the end of the accounting period (€): 3,140,316,084 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral Rating Agencies: FITCH/Moody's Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN DE000A0AEDB2 DE000A0AEDC0 . Type of security Senior Junior . Class A B . Rating A+/A2 - . Legal maturity 10.31.2058 10.31.2058 . Subordinated level - sub A . Nominal value issued (€) 9,652,700,000 2,293,750,000 . Nominal value at the end of accounting period (€) 2,575,059,189 565,256,895 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 484 2018 Annual Report and Accounts · UniCredit NAME: ROSENKAVALIER 2008 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Rosenkavalier 2008 GmbH Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: Mortgage loans Quality of Asset: Performing Closing date: 12.12.2008 Nominal Value of disposal portfolio at the end of the accounting period (€): 3,140,316,084 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral Rating Agencies: FITCH/Moody's Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN DE000A0AEDB2 DE000A0AEDC0 . Type of security Senior Junior . Class A B . Rating A+/A2 - . Legal maturity 10.31.2058 10.31.2058 . Subordinated level - sub A . Nominal value issued (€) 9,652,700,000 2,293,750,000 . Nominal value at the end of accounting period (€) 2,575,059,189 565,256,895 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 484 2018 Annual Report and Accounts · UniCredit NAME: ROSENKAVALIER 2008 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Rosenkavalier 2008 GmbH Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: Mortgage loans Quality of Asset: Performing Closing date: 12.12.2008 Nominal Value of disposal portfolio at the end of the accounting period (€): 3,140,316,084 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral Rating Agencies: FITCH/Moody's Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN DE000A0AEDB2 DE000A0AEDC0 . Type of security Senior Junior . Class A B . Rating A+/A2 - . Legal maturity 10.31.2058 10.31.2058 . Subordinated level - sub A . Nominal value issued (€) 9,652,700,000 2,293,750,000 . Nominal value at the end of accounting period (€) 2,575,059,189 565,256,895 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 484 2018 Annual Report and Accounts · UniCredit NAME: ROSENKAVALIER 2008 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Rosenkavalier 2008 GmbH Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: Mortgage loans Quality of Asset: Performing Closing date: 12.12.2008 Nominal Value of disposal portfolio at the end of the accounting period (€): 3,140,316,084 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral Rating Agencies: FITCH/Moody's Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN DE000A0AEDB2 DE000A0AEDC0 . Type of security Senior Junior . Class A B . Rating A+/A2 - . Legal maturity 10.31.2058 10.31.2058 . Subordinated level - sub A . Nominal value issued (€) 9,652,700,000 2,293,750,000 . Nominal value at the end of accounting period (€) 2,575,059,189 565,256,895 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 484 2018 Annual Report and Accounts · UniCredit NAME: ROSENKAVALIER 2008 Type of securitisation: Traditional Originator: UniCredit Bank AG Issuer: Rosenkavalier 2008 GmbH Servicer: UniCredit Bank AG Arranger: UniCredit Bank AG (UniCredit Markets & Investment Banking) Target transaction: Liquidity Type of asset: Mortgage loans Quality of Asset: Performing Closing date: 12.12.2008 Nominal Value of disposal portfolio at the end of the accounting period (€): 3,140,316,084 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: Transaction executed to create ECB collateral Rating Agencies: FITCH/Moody's Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN DE000A0AEDB2 DE000A0AEDC0 . Type of security Senior Junior . Class A B . Rating A+/A2 - . Legal maturity 10.31.2058 10.31.2058 . Subordinated level - sub A . Nominal value issued (€) 9,652,700,000 2,293,750,000 . Nominal value at the end of accounting period (€) 2,575,059,189 565,256,895 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 485 ORIGINATOR: UniCredit Bank Austria AG Transactions from previous periods NAME: AMADEUS 2015 Type of securitisation: Synthetic Originator: UniCredit Bank Austria AG Issuer: - Servicer: UniCredit Bank Austria AG Arranger: UniCredit Bank AG Target transaction: Risk Transfer and RWA relief Type of asset: Loans and Guarantees granted to SMEs Quality of Asset: Performing Closing date: 12.21.2015 Nominal Value of reference portfolio (€): 1,964,785,123 (of which securitised 1,866,545,867, corresponding to 95% of the portfolio) Net amount of preexisting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price: - Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: (*) Amount of CDS or other risk transferred: - Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation - - . Issue date 12.21.2015 12.21.2015 . Legal maturity 11.30.2028 11.30.2028 . Call option 10% Clean Up Call 10% Clean Up Call . Expected duration - - . Rate - - . Subordinated level - Sub A . Reference Position (€) 1,731,221,292 41,997,282 . Reference Position at the end of accounting period (€) 414,950,988 41,997,282 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Quotation - . Issue date 12.21.2015 . Legal maturity 11.30.2028 . Call option 10% Clean Up Call . Expected duration - . Rate - . Subordinated level Sub A and B . Reference Position (€) 93,327,293 . Reference Position at the end of accounting period (€) 80,114,883 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by article 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 485 ORIGINATOR: UniCredit Bank Austria AG Transactions from previous periods NAME: AMADEUS 2015 Type of securitisation: Synthetic Originator: UniCredit Bank Austria AG Issuer: - Servicer: UniCredit Bank Austria AG Arranger: UniCredit Bank AG Target transaction: Risk Transfer and RWA relief Type of asset: Loans and Guarantees granted to SMEs Quality of Asset: Performing Closing date: 12.21.2015 Nominal Value of reference portfolio (€): 1,964,785,123 (of which securitised 1,866,545,867, corresponding to 95% of the portfolio) Net amount of preexisting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price: - Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: (*) Amount of CDS or other risk transferred: - Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation - - . Issue date 12.21.2015 12.21.2015 . Legal maturity 11.30.2028 11.30.2028 . Call option 10% Clean Up Call 10% Clean Up Call . Expected duration - - . Rate - - . Subordinated level - Sub A . Reference Position (€) 1,731,221,292 41,997,282 . Reference Position at the end of accounting period (€) 414,950,988 41,997,282 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Quotation - . Issue date 12.21.2015 . Legal maturity 11.30.2028 . Call option 10% Clean Up Call . Expected duration - . Rate - . Subordinated level Sub A and B . Reference Position (€) 93,327,293 . Reference Position at the end of accounting period (€) 80,114,883 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by article 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 485 ORIGINATOR: UniCredit Bank Austria AG Transactions from previous periods NAME: AMADEUS 2015 Type of securitisation: Synthetic Originator: UniCredit Bank Austria AG Issuer: - Servicer: UniCredit Bank Austria AG Arranger: UniCredit Bank AG Target transaction: Risk Transfer and RWA relief Type of asset: Loans and Guarantees granted to SMEs Quality of Asset: Performing Closing date: 12.21.2015 Nominal Value of reference portfolio (€): 1,964,785,123 (of which securitised 1,866,545,867, corresponding to 95% of the portfolio) Net amount of preexisting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price: - Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: (*) Amount of CDS or other risk transferred: - Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation - - . Issue date 12.21.2015 12.21.2015 . Legal maturity 11.30.2028 11.30.2028 . Call option 10% Clean Up Call 10% Clean Up Call . Expected duration - - . Rate - - . Subordinated level - Sub A . Reference Position (€) 1,731,221,292 41,997,282 . Reference Position at the end of accounting period (€) 414,950,988 41,997,282 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Quotation - . Issue date 12.21.2015 . Legal maturity 11.30.2028 . Call option 10% Clean Up Call . Expected duration - . Rate - . Subordinated level Sub A and B . Reference Position (€) 93,327,293 . Reference Position at the end of accounting period (€) 80,114,883 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by article 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 485 ORIGINATOR: UniCredit Bank Austria AG Transactions from previous periods NAME: AMADEUS 2015 Type of securitisation: Synthetic Originator: UniCredit Bank Austria AG Issuer: - Servicer: UniCredit Bank Austria AG Arranger: UniCredit Bank AG Target transaction: Risk Transfer and RWA relief Type of asset: Loans and Guarantees granted to SMEs Quality of Asset: Performing Closing date: 12.21.2015 Nominal Value of reference portfolio (€): 1,964,785,123 (of which securitised 1,866,545,867, corresponding to 95% of the portfolio) Net amount of preexisting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price: - Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: (*) Amount of CDS or other risk transferred: - Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation - - . Issue date 12.21.2015 12.21.2015 . Legal maturity 11.30.2028 11.30.2028 . Call option 10% Clean Up Call 10% Clean Up Call . Expected duration - - . Rate - - . Subordinated level - Sub A . Reference Position (€) 1,731,221,292 41,997,282 . Reference Position at the end of accounting period (€) 414,950,988 41,997,282 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Quotation - . Issue date 12.21.2015 . Legal maturity 11.30.2028 . Call option 10% Clean Up Call . Expected duration - . Rate - . Subordinated level Sub A and B . Reference Position (€) 93,327,293 . Reference Position at the end of accounting period (€) 80,114,883 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by article 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 485 ORIGINATOR: UniCredit Bank Austria AG Transactions from previous periods NAME: AMADEUS 2015 Type of securitisation: Synthetic Originator: UniCredit Bank Austria AG Issuer: - Servicer: UniCredit Bank Austria AG Arranger: UniCredit Bank AG Target transaction: Risk Transfer and RWA relief Type of asset: Loans and Guarantees granted to SMEs Quality of Asset: Performing Closing date: 12.21.2015 Nominal Value of reference portfolio (€): 1,964,785,123 (of which securitised 1,866,545,867, corresponding to 95% of the portfolio) Net amount of preexisting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price: - Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: - Rating Agencies: (*) Amount of CDS or other risk transferred: - Amount and Conditions of tranching: . ISIN Not applicable Not applicable . Type of security Senior Mezzanine . Class A B . Rating - - . Quotation - - . Issue date 12.21.2015 12.21.2015 . Legal maturity 11.30.2028 11.30.2028 . Call option 10% Clean Up Call 10% Clean Up Call . Expected duration - - . Rate - - . Subordinated level - Sub A . Reference Position (€) 1,731,221,292 41,997,282 . Reference Position at the end of accounting period (€) 414,950,988 41,997,282 . ISIN Not applicable . Type of security Junior . Class C . Rating - . Quotation - . Issue date 12.21.2015 . Legal maturity 11.30.2028 . Call option 10% Clean Up Call . Expected duration - . Rate - . Subordinated level Sub A and B . Reference Position (€) 93,327,293 . Reference Position at the end of accounting period (€) 80,114,883 Notes: ( * ) Synthetic securitizations carried out using the Supervisory Formula Approach ("Supervisory Formula Approach - SFA") as required by article 262 of Regulation (EU) n. 575/2013 (Capital Requirements Regulation - CRR) , and earlier by circular 263/2006 of the Banca d’Italia. In case of absence of eligible external rating and if PD and LGD estimations can be provided, the CRR (Art . 259 1. b )) requires that the calculation of capital requirements for the various tranches of the securitization shall be performed using the Supervisory formula , in accordance with art. 262, taking care to provide the following five elements: 1. the capital requirement on the securitized assets calculated using the IRB approach (kIRB); 2. the level of credit support of the concerned tranche; 3. the thickness of the tranche; 4. the number of securitized assets; 5. the average LGD. Then, using the Supervisory Formula Approach, it is possible to calculate the risk equivalent amount for a securitization tranche related to its seniority, granularity, support level and risk of the underlying. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 486 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit Leasing (Austria) GmbH Transactions from previous periods NAME: SUCCESS 2015 Type of securitisation: Traditional Originator: UniCredit Leasing (Austria) GMBH Issuer: Success 2015 B.V. Servicer: UniCredit Leasing (Austria) GMBH Arranger: UniCredit Bank AG Target transaction: Funding Type of asset: Leasing Assets (Vehicle and Equipment) Quality of Asset: Performing Closing date: 11.09.2015 Nominal Value of disposal portfolio (€): 325,300,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 325,300,000 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements(€): Subordinated Loan €4,618,000 Other relevant information: - Rating Agencies: Fitch & DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN XS1317727698 XS1317727938 . Type of security Senior Junior . Class A B . Rating AAA - . Quotation Listed Luxembourg Stock Exchange Not listed . Issue date 11.09.2015 11.09.2015 . Legal maturity 10.31.2029 10.31.2029 . Call option 10% clean up call . Expected duration (years) 6.0 6.0 . Rate EUR3M + 0,47% EUR3M + 2% . Subordinated level - sub A . Nominal value issued (€) 230,900,000 94,400,000 . Nominal value at the end of accounting period (€) 230,109,754 94,400,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 486 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit Leasing (Austria) GmbH Transactions from previous periods NAME: SUCCESS 2015 Type of securitisation: Traditional Originator: UniCredit Leasing (Austria) GMBH Issuer: Success 2015 B.V. Servicer: UniCredit Leasing (Austria) GMBH Arranger: UniCredit Bank AG Target transaction: Funding Type of asset: Leasing Assets (Vehicle and Equipment) Quality of Asset: Performing Closing date: 11.09.2015 Nominal Value of disposal portfolio (€): 325,300,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 325,300,000 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements(€): Subordinated Loan €4,618,000 Other relevant information: - Rating Agencies: Fitch & DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN XS1317727698 XS1317727938 . Type of security Senior Junior . Class A B . Rating AAA - . Quotation Listed Luxembourg Stock Exchange Not listed . Issue date 11.09.2015 11.09.2015 . Legal maturity 10.31.2029 10.31.2029 . Call option 10% clean up call . Expected duration (years) 6.0 6.0 . Rate EUR3M + 0,47% EUR3M + 2% . Subordinated level - sub A . Nominal value issued (€) 230,900,000 94,400,000 . Nominal value at the end of accounting period (€) 230,109,754 94,400,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 486 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit Leasing (Austria) GmbH Transactions from previous periods NAME: SUCCESS 2015 Type of securitisation: Traditional Originator: UniCredit Leasing (Austria) GMBH Issuer: Success 2015 B.V. Servicer: UniCredit Leasing (Austria) GMBH Arranger: UniCredit Bank AG Target transaction: Funding Type of asset: Leasing Assets (Vehicle and Equipment) Quality of Asset: Performing Closing date: 11.09.2015 Nominal Value of disposal portfolio (€): 325,300,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 325,300,000 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements(€): Subordinated Loan €4,618,000 Other relevant information: - Rating Agencies: Fitch & DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN XS1317727698 XS1317727938 . Type of security Senior Junior . Class A B . Rating AAA - . Quotation Listed Luxembourg Stock Exchange Not listed . Issue date 11.09.2015 11.09.2015 . Legal maturity 10.31.2029 10.31.2029 . Call option 10% clean up call . Expected duration (years) 6.0 6.0 . Rate EUR3M + 0,47% EUR3M + 2% . Subordinated level - sub A . Nominal value issued (€) 230,900,000 94,400,000 . Nominal value at the end of accounting period (€) 230,109,754 94,400,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 486 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit Leasing (Austria) GmbH Transactions from previous periods NAME: SUCCESS 2015 Type of securitisation: Traditional Originator: UniCredit Leasing (Austria) GMBH Issuer: Success 2015 B.V. Servicer: UniCredit Leasing (Austria) GMBH Arranger: UniCredit Bank AG Target transaction: Funding Type of asset: Leasing Assets (Vehicle and Equipment) Quality of Asset: Performing Closing date: 11.09.2015 Nominal Value of disposal portfolio (€): 325,300,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 325,300,000 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements(€): Subordinated Loan €4,618,000 Other relevant information: - Rating Agencies: Fitch & DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN XS1317727698 XS1317727938 . Type of security Senior Junior . Class A B . Rating AAA - . Quotation Listed Luxembourg Stock Exchange Not listed . Issue date 11.09.2015 11.09.2015 . Legal maturity 10.31.2029 10.31.2029 . Call option 10% clean up call . Expected duration (years) 6.0 6.0 . Rate EUR3M + 0,47% EUR3M + 2% . Subordinated level - sub A . Nominal value issued (€) 230,900,000 94,400,000 . Nominal value at the end of accounting period (€) 230,109,754 94,400,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables 486 2018 Annual Report and Accounts · UniCredit ORIGINATOR: UniCredit Leasing (Austria) GmbH Transactions from previous periods NAME: SUCCESS 2015 Type of securitisation: Traditional Originator: UniCredit Leasing (Austria) GMBH Issuer: Success 2015 B.V. Servicer: UniCredit Leasing (Austria) GMBH Arranger: UniCredit Bank AG Target transaction: Funding Type of asset: Leasing Assets (Vehicle and Equipment) Quality of Asset: Performing Closing date: 11.09.2015 Nominal Value of disposal portfolio (€): 325,300,000 Net amount of preexinting writedown/writebacks: - Disposal Profit & Loss realised: - Portfolio disposal price (€): 325,300,000 Guarantees issued by the Bank: - Guarantees issued by Third Parties: - Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements(€): Subordinated Loan €4,618,000 Other relevant information: - Rating Agencies: Fitch & DBRS Amount of CDS or other supersenior risk transferred: - Amount and Condition of tranching: . ISIN XS1317727698 XS1317727938 . Type of security Senior Junior . Class A B . Rating AAA - . Quotation Listed Luxembourg Stock Exchange Not listed . Issue date 11.09.2015 11.09.2015 . Legal maturity 10.31.2029 10.31.2029 . Call option 10% clean up call . Expected duration (years) 6.0 6.0 . Rate EUR3M + 0,47% EUR3M + 2% . Subordinated level - sub A . Nominal value issued (€) 230,900,000 94,400,000 . Nominal value at the end of accounting period (€) 230,109,754 94,400,000 Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 487 ORIGINATOR: UniCredit Bulbank AD Transactions from previous periods NAME EIF JEREMIE Type of securitisation: Synthetic - First loss Portfolio Guarantees Originator: UniCredit Bulbank AD Issuer: European Investment Fund (EIF) Servicer: UniCredit Bulbank AD Arranger: UniCredit Bulbank AD Target transaction: Risk transfer and capital relief Type of asset: Highly diversified and granular pool of UniCredit Bulbank's SME loans Quality of Asset: Performing Closing date: 08.15.2011 Nominal Value of reference portfolio (€): 10,661,375 Guarantees issued by the Bank: - Guarantees issued by Third Parties: First loss cash collateral EIF Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: 0 € Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other risk transferred: Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Reference Position (€) - 8,528,969 . Reference Position at the end of accounting period (€) - 8,528,969 Nota: (*) Synthetic securitization carried out used the Standardized Approach as required under Basel III. Where there is no eligible external rating , the Bank that holds or guarantees such an exposure may determine the risk weight by applying the “look through” treatment, provided the composition of the underlying pool is known at all times. The unrated most senior position receives the average risk weight of the underlying exposures subject to supervisory review. Where Bank is unable to determine the risk weights assigned to the underlying credit risk exposures, the unrated position must be deducted from regulatory capital. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 487 ORIGINATOR: UniCredit Bulbank AD Transactions from previous periods NAME EIF JEREMIE Type of securitisation: Synthetic - First loss Portfolio Guarantees Originator: UniCredit Bulbank AD Issuer: European Investment Fund (EIF) Servicer: UniCredit Bulbank AD Arranger: UniCredit Bulbank AD Target transaction: Risk transfer and capital relief Type of asset: Highly diversified and granular pool of UniCredit Bulbank's SME loans Quality of Asset: Performing Closing date: 08.15.2011 Nominal Value of reference portfolio (€): 10,661,375 Guarantees issued by the Bank: - Guarantees issued by Third Parties: First loss cash collateral EIF Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: 0 € Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other risk transferred: Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Reference Position (€) - 8,528,969 . Reference Position at the end of accounting period (€) - 8,528,969 Nota: (*) Synthetic securitization carried out used the Standardized Approach as required under Basel III. Where there is no eligible external rating , the Bank that holds or guarantees such an exposure may determine the risk weight by applying the “look through” treatment, provided the composition of the underlying pool is known at all times. The unrated most senior position receives the average risk weight of the underlying exposures subject to supervisory review. Where Bank is unable to determine the risk weights assigned to the underlying credit risk exposures, the unrated position must be deducted from regulatory capital. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 487 ORIGINATOR: UniCredit Bulbank AD Transactions from previous periods NAME EIF JEREMIE Type of securitisation: Synthetic - First loss Portfolio Guarantees Originator: UniCredit Bulbank AD Issuer: European Investment Fund (EIF) Servicer: UniCredit Bulbank AD Arranger: UniCredit Bulbank AD Target transaction: Risk transfer and capital relief Type of asset: Highly diversified and granular pool of UniCredit Bulbank's SME loans Quality of Asset: Performing Closing date: 08.15.2011 Nominal Value of reference portfolio (€): 10,661,375 Guarantees issued by the Bank: - Guarantees issued by Third Parties: First loss cash collateral EIF Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: 0 € Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other risk transferred: Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Reference Position (€) - 8,528,969 . Reference Position at the end of accounting period (€) - 8,528,969 Nota: (*) Synthetic securitization carried out used the Standardized Approach as required under Basel III. Where there is no eligible external rating , the Bank that holds or guarantees such an exposure may determine the risk weight by applying the “look through” treatment, provided the composition of the underlying pool is known at all times. The unrated most senior position receives the average risk weight of the underlying exposures subject to supervisory review. Where Bank is unable to determine the risk weights assigned to the underlying credit risk exposures, the unrated position must be deducted from regulatory capital. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 487 ORIGINATOR: UniCredit Bulbank AD Transactions from previous periods NAME EIF JEREMIE Type of securitisation: Synthetic - First loss Portfolio Guarantees Originator: UniCredit Bulbank AD Issuer: European Investment Fund (EIF) Servicer: UniCredit Bulbank AD Arranger: UniCredit Bulbank AD Target transaction: Risk transfer and capital relief Type of asset: Highly diversified and granular pool of UniCredit Bulbank's SME loans Quality of Asset: Performing Closing date: 08.15.2011 Nominal Value of reference portfolio (€): 10,661,375 Guarantees issued by the Bank: - Guarantees issued by Third Parties: First loss cash collateral EIF Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: 0 € Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other risk transferred: Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Reference Position (€) - 8,528,969 . Reference Position at the end of accounting period (€) - 8,528,969 Nota: (*) Synthetic securitization carried out used the Standardized Approach as required under Basel III. Where there is no eligible external rating , the Bank that holds or guarantees such an exposure may determine the risk weight by applying the “look through” treatment, provided the composition of the underlying pool is known at all times. The unrated most senior position receives the average risk weight of the underlying exposures subject to supervisory review. Where Bank is unable to determine the risk weights assigned to the underlying credit risk exposures, the unrated position must be deducted from regulatory capital. Consolidated financial statements | Annexes Annex 3 - Securitisations - qualitative tables UniCredit ·2018 Annual Report and Accounts 487 ORIGINATOR: UniCredit Bulbank AD Transactions from previous periods NAME EIF JEREMIE Type of securitisation: Synthetic - First loss Portfolio Guarantees Originator: UniCredit Bulbank AD Issuer: European Investment Fund (EIF) Servicer: UniCredit Bulbank AD Arranger: UniCredit Bulbank AD Target transaction: Risk transfer and capital relief Type of asset: Highly diversified and granular pool of UniCredit Bulbank's SME loans Quality of Asset: Performing Closing date: 08.15.2011 Nominal Value of reference portfolio (€): 10,661,375 Guarantees issued by the Bank: - Guarantees issued by Third Parties: First loss cash collateral EIF Bank Lines of Credit: - Third Parties Lines of Credit: - Other Credit Enhancements: - Other relevant information: 0 € Rating Agencies: No rating agency, use of Supervisory Formula Approach(*) Amount of CDS or other risk transferred: Amount and Condition of tranching: . ISIN Not applicable Not applicable . Type of security Senior Junior . Class A B . Rating - - . Reference Position (€) - 8,528,969 . Reference Position at the end of accounting period (€) - 8,528,969 Nota: (*) Synthetic securitization carried out used the Standardized Approach as required under Basel III. Where there is no eligible external rating , the Bank that holds or guarantees such an exposure may determine the risk weight by applying the “look through” treatment, provided the composition of the underlying pool is known at all times. The unrated most senior position receives the average risk weight of the underlying exposures subject to supervisory review. Where Bank is unable to determine the risk weights assigned to the underlying credit risk exposures, the unrated position must be deducted from regulatory capital.  488 2018 Annual Report and Accounts · UniCredit 488 2018 Annual Report and Accounts · UniCredit 488 2018 Annual Report and Accounts · UniCredit 488 2018 Annual Report and Accounts · UniCredit 488 2018 Annual Report and Accounts · UniCredit Consolidated financial statements | Certification Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended UniCredit ·2018 Annual Report and Accounts 489 Certification 1. The undersigned Jean Pierre Mustier (as Chief Executive Officer) and Stefano Porro (as the Manager Charged with preparing the financial reports) of UniCredit S.p.A., also in compliance with Art.154-bis, (paragraphs 3 and 4) of Italian Legislative Decree No.58 of 24 February 1998, do hereby certify: • the adequacy in relation to the Legal Entity’s features and • the actual application of the administrative and accounting procedures employed to draw up the 2018 Consolidated Financial Statements. 2. The adequacy of administrative and accounting procedures employed to draw up the 2018 Consolidated Financial Statements has been evaluated by applying a model developed by UniCredit S.p.A., in accordance with the “Internal Controls - Integrated Framework (CoSO)” and the “Control Objective for IT and Related Technologies (Cobit)”, which represent generally accepted international standards for internal control system and for financial reporting in particular. 3. The undersigned also certify that: 3.1 the 2018 Consolidated Financial Statements: a) were prepared in compliance with applicable international accounting standards recognized by the European Community pursuant to European Parliament and Council Regulation No.1606/2002 of 19 July 2002; b) correspond to the results of the accounting books and records; c) are suitable to provide a fair and correct representation of the economic and financial situation of the issuer and of the group of companies included in the scope of consolidation; 3.2 the Report on Operations includes a reliable analysis of the operating trend and results, as well as of the situation of the issuer and of the Legal Entities included in the scope of consolidation, together with a description of the main risks and uncertainties they are exposed to. Milan - 6 February 2019 Jean Pierre MUSTIER Stefano PORRO Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended Consolidated financial statements | Certification Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended UniCredit ·2018 Annual Report and Accounts 489 Certification 1. The undersigned Jean Pierre Mustier (as Chief Executive Officer) and Stefano Porro (as the Manager Charged with preparing the financial reports) of UniCredit S.p.A., also in compliance with Art.154-bis, (paragraphs 3 and 4) of Italian Legislative Decree No.58 of 24 February 1998, do hereby certify: • the adequacy in relation to the Legal Entity’s features and • the actual application of the administrative and accounting procedures employed to draw up the 2018 Consolidated Financial Statements. 2. The adequacy of administrative and accounting procedures employed to draw up the 2018 Consolidated Financial Statements has been evaluated by applying a model developed by UniCredit S.p.A., in accordance with the “Internal Controls - Integrated Framework (CoSO)” and the “Control Objective for IT and Related Technologies (Cobit)”, which represent generally accepted international standards for internal control system and for financial reporting in particular. 3. The undersigned also certify that: 3.1 the 2018 Consolidated Financial Statements: a) were prepared in compliance with applicable international accounting standards recognized by the European Community pursuant to European Parliament and Council Regulation No.1606/2002 of 19 July 2002; b) correspond to the results of the accounting books and records; c) are suitable to provide a fair and correct representation of the economic and financial situation of the issuer and of the group of companies included in the scope of consolidation; 3.2 the Report on Operations includes a reliable analysis of the operating trend and results, as well as of the situation of the issuer and of the Legal Entities included in the scope of consolidation, together with a description of the main risks and uncertainties they are exposed to. Milan - 6 February 2019 Jean Pierre MUSTIER Stefano PORRO Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended Consolidated financial statements | Certification Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended UniCredit ·2018 Annual Report and Accounts 489 Certification 1. The undersigned Jean Pierre Mustier (as Chief Executive Officer) and Stefano Porro (as the Manager Charged with preparing the financial reports) of UniCredit S.p.A., also in compliance with Art.154-bis, (paragraphs 3 and 4) of Italian Legislative Decree No.58 of 24 February 1998, do hereby certify: • the adequacy in relation to the Legal Entity’s features and • the actual application of the administrative and accounting procedures employed to draw up the 2018 Consolidated Financial Statements. 2. The adequacy of administrative and accounting procedures employed to draw up the 2018 Consolidated Financial Statements has been evaluated by applying a model developed by UniCredit S.p.A., in accordance with the “Internal Controls - Integrated Framework (CoSO)” and the “Control Objective for IT and Related Technologies (Cobit)”, which represent generally accepted international standards for internal control system and for financial reporting in particular. 3. The undersigned also certify that: 3.1 the 2018 Consolidated Financial Statements: a) were prepared in compliance with applicable international accounting standards recognized by the European Community pursuant to European Parliament and Council Regulation No.1606/2002 of 19 July 2002; b) correspond to the results of the accounting books and records; c) are suitable to provide a fair and correct representation of the economic and financial situation of the issuer and of the group of companies included in the scope of consolidation; 3.2 the Report on Operations includes a reliable analysis of the operating trend and results, as well as of the situation of the issuer and of the Legal Entities included in the scope of consolidation, together with a description of the main risks and uncertainties they are exposed to. Milan - 6 February 2019 Jean Pierre MUSTIER Stefano PORRO Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended Consolidated financial statements | Certification Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended UniCredit ·2018 Annual Report and Accounts 489 Certification 1. The undersigned Jean Pierre Mustier (as Chief Executive Officer) and Stefano Porro (as the Manager Charged with preparing the financial reports) of UniCredit S.p.A., also in compliance with Art.154-bis, (paragraphs 3 and 4) of Italian Legislative Decree No.58 of 24 February 1998, do hereby certify: • the adequacy in relation to the Legal Entity’s features and • the actual application of the administrative and accounting procedures employed to draw up the 2018 Consolidated Financial Statements. 2. The adequacy of administrative and accounting procedures employed to draw up the 2018 Consolidated Financial Statements has been evaluated by applying a model developed by UniCredit S.p.A., in accordance with the “Internal Controls - Integrated Framework (CoSO)” and the “Control Objective for IT and Related Technologies (Cobit)”, which represent generally accepted international standards for internal control system and for financial reporting in particular. 3. The undersigned also certify that: 3.1 the 2018 Consolidated Financial Statements: a) were prepared in compliance with applicable international accounting standards recognized by the European Community pursuant to European Parliament and Council Regulation No.1606/2002 of 19 July 2002; b) correspond to the results of the accounting books and records; c) are suitable to provide a fair and correct representation of the economic and financial situation of the issuer and of the group of companies included in the scope of consolidation; 3.2 the Report on Operations includes a reliable analysis of the operating trend and results, as well as of the situation of the issuer and of the Legal Entities included in the scope of consolidation, together with a description of the main risks and uncertainties they are exposed to. Milan - 6 February 2019 Jean Pierre MUSTIER Stefano PORRO Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended Consolidated financial statements | Certification Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended UniCredit ·2018 Annual Report and Accounts 489 Certification 1. The undersigned Jean Pierre Mustier (as Chief Executive Officer) and Stefano Porro (as the Manager Charged with preparing the financial reports) of UniCredit S.p.A., also in compliance with Art.154-bis, (paragraphs 3 and 4) of Italian Legislative Decree No.58 of 24 February 1998, do hereby certify: • the adequacy in relation to the Legal Entity’s features and • the actual application of the administrative and accounting procedures employed to draw up the 2018 Consolidated Financial Statements. 2. The adequacy of administrative and accounting procedures employed to draw up the 2018 Consolidated Financial Statements has been evaluated by applying a model developed by UniCredit S.p.A., in accordance with the “Internal Controls - Integrated Framework (CoSO)” and the “Control Objective for IT and Related Technologies (Cobit)”, which represent generally accepted international standards for internal control system and for financial reporting in particular. 3. The undersigned also certify that: 3.1 the 2018 Consolidated Financial Statements: a) were prepared in compliance with applicable international accounting standards recognized by the European Community pursuant to European Parliament and Council Regulation No.1606/2002 of 19 July 2002; b) correspond to the results of the accounting books and records; c) are suitable to provide a fair and correct representation of the economic and financial situation of the issuer and of the group of companies included in the scope of consolidation; 3.2 the Report on Operations includes a reliable analysis of the operating trend and results, as well as of the situation of the issuer and of the Legal Entities included in the scope of consolidation, together with a description of the main risks and uncertainties they are exposed to. Milan - 6 February 2019 Jean Pierre MUSTIER Stefano PORRO Consolidated Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended  I 490 2018 Annual Report and Accounts · UniCredit I 490 2018 Annual Report and Accounts · UniCredit I 490 2018 Annual Report and Accounts · UniCredit I 490 2018 Annual Report and Accounts · UniCredit I 490 2018 Annual Report and Accounts · UniCredit  502 2018 Annual Report and Accounts · UniCredit 502 2018 Annual Report and Accounts · UniCredit 502 2018 Annual Report and Accounts · UniCredit 502 2018 Annual Report and Accounts · UniCredit 502 2018 Annual Report and Accounts · UniCredit One Bank, One UniCredit. 2018 Report and Accounts of UniCredit S.p.A. GENERAL MEETING DRAFT  504 2018 Annual Report and Accounts · UniCredit 504 2018 Annual Report and Accounts · UniCredit 504 2018 Annual Report and Accounts · UniCredit 504 2018 Annual Report and Accounts · UniCredit 504 2018 Annual Report and Accounts · UniCredit  Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 505 REPORT AND ACCOUNTS 2018 OF UNICREDIT S.P.A. Report on operations 511 Introduction and highlights 511 Introduction to Report on operations of UniCredit S.p.A. 511 Highlights, alternative performance indicators and other measures 511 Reclassified company account 514 Results of the year 519 Main results and performance for the period 519 Capital and Value Management 526 Principles of value creation and disciplined capital allocation 526 Capital ratios 526 Capital strengthening 526 Shareholders’ Equity 527 Shareholders 528 Treasury shares 528 Company activities 529 Other information 531 Group activities development operations and other corporate transactions 531 Conversion of tax credits 531 Certifications and other communications 531 Subsequent events and outlook 532 Subsequent events 532 Outlook 533 Proposals to the Shareholders’ Meeting 535 Company financial statements 535 Company accounts 537 Balance sheet 537 Income statement 538 Statement of comprehensive income 539 Statement of changes in shareholders’e equity 540 Cash flow statement 542 Notes to the accounts 545 Parta A - Accounting policies 545 A.1 - General 545 Section 1 - Statement of compliance with IFRS 545 Section 2 - General Preparation Criteria 545 Section 3 - Subsequent events 547 Section 4 - Other matters 547 A.2 - Main items of the accounts 562 A.3 - Information on transfers between portfolios of financial assets 580 A.4 - Information on fair value 581 Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 505 REPORT AND ACCOUNTS 2018 OF UNICREDIT S.P.A. Report on operations 511 Introduction and highlights 511 Introduction to Report on operations of UniCredit S.p.A. 511 Highlights, alternative performance indicators and other measures 511 Reclassified company account 514 Results of the year 519 Main results and performance for the period 519 Capital and Value Management 526 Principles of value creation and disciplined capital allocation 526 Capital ratios 526 Capital strengthening 526 Shareholders’ Equity 527 Shareholders 528 Treasury shares 528 Company activities 529 Other information 531 Group activities development operations and other corporate transactions 531 Conversion of tax credits 531 Certifications and other communications 531 Subsequent events and outlook 532 Subsequent events 532 Outlook 533 Proposals to the Shareholders’ Meeting 535 Company financial statements 535 Company accounts 537 Balance sheet 537 Income statement 538 Statement of comprehensive income 539 Statement of changes in shareholders’e equity 540 Cash flow statement 542 Notes to the accounts 545 Parta A - Accounting policies 545 A.1 - General 545 Section 1 - Statement of compliance with IFRS 545 Section 2 - General Preparation Criteria 545 Section 3 - Subsequent events 547 Section 4 - Other matters 547 A.2 - Main items of the accounts 562 A.3 - Information on transfers between portfolios of financial assets 580 A.4 - Information on fair value 581 Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 505 REPORT AND ACCOUNTS 2018 OF UNICREDIT S.P.A. Report on operations 511 Introduction and highlights 511 Introduction to Report on operations of UniCredit S.p.A. 511 Highlights, alternative performance indicators and other measures 511 Reclassified company account 514 Results of the year 519 Main results and performance for the period 519 Capital and Value Management 526 Principles of value creation and disciplined capital allocation 526 Capital ratios 526 Capital strengthening 526 Shareholders’ Equity 527 Shareholders 528 Treasury shares 528 Company activities 529 Other information 531 Group activities development operations and other corporate transactions 531 Conversion of tax credits 531 Certifications and other communications 531 Subsequent events and outlook 532 Subsequent events 532 Outlook 533 Proposals to the Shareholders’ Meeting 535 Company financial statements 535 Company accounts 537 Balance sheet 537 Income statement 538 Statement of comprehensive income 539 Statement of changes in shareholders’e equity 540 Cash flow statement 542 Notes to the accounts 545 Parta A - Accounting policies 545 A.1 - General 545 Section 1 - Statement of compliance with IFRS 545 Section 2 - General Preparation Criteria 545 Section 3 - Subsequent events 547 Section 4 - Other matters 547 A.2 - Main items of the accounts 562 A.3 - Information on transfers between portfolios of financial assets 580 A.4 - Information on fair value 581 Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 505 REPORT AND ACCOUNTS 2018 OF UNICREDIT S.P.A. Report on operations 511 Introduction and highlights 511 Introduction to Report on operations of UniCredit S.p.A. 511 Highlights, alternative performance indicators and other measures 511 Reclassified company account 514 Results of the year 519 Main results and performance for the period 519 Capital and Value Management 526 Principles of value creation and disciplined capital allocation 526 Capital ratios 526 Capital strengthening 526 Shareholders’ Equity 527 Shareholders 528 Treasury shares 528 Company activities 529 Other information 531 Group activities development operations and other corporate transactions 531 Conversion of tax credits 531 Certifications and other communications 531 Subsequent events and outlook 532 Subsequent events 532 Outlook 533 Proposals to the Shareholders’ Meeting 535 Company financial statements 535 Company accounts 537 Balance sheet 537 Income statement 538 Statement of comprehensive income 539 Statement of changes in shareholders’e equity 540 Cash flow statement 542 Notes to the accounts 545 Parta A - Accounting policies 545 A.1 - General 545 Section 1 - Statement of compliance with IFRS 545 Section 2 - General Preparation Criteria 545 Section 3 - Subsequent events 547 Section 4 - Other matters 547 A.2 - Main items of the accounts 562 A.3 - Information on transfers between portfolios of financial assets 580 A.4 - Information on fair value 581 Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 505 REPORT AND ACCOUNTS 2018 OF UNICREDIT S.P.A. Report on operations 511 Introduction and highlights 511 Introduction to Report on operations of UniCredit S.p.A. 511 Highlights, alternative performance indicators and other measures 511 Reclassified company account 514 Results of the year 519 Main results and performance for the period 519 Capital and Value Management 526 Principles of value creation and disciplined capital allocation 526 Capital ratios 526 Capital strengthening 526 Shareholders’ Equity 527 Shareholders 528 Treasury shares 528 Company activities 529 Other information 531 Group activities development operations and other corporate transactions 531 Conversion of tax credits 531 Certifications and other communications 531 Subsequent events and outlook 532 Subsequent events 532 Outlook 533 Proposals to the Shareholders’ Meeting 535 Company financial statements 535 Company accounts 537 Balance sheet 537 Income statement 538 Statement of comprehensive income 539 Statement of changes in shareholders’e equity 540 Cash flow statement 542 Notes to the accounts 545 Parta A - Accounting policies 545 A.1 - General 545 Section 1 - Statement of compliance with IFRS 545 Section 2 - General Preparation Criteria 545 Section 3 - Subsequent events 547 Section 4 - Other matters 547 A.2 - Main items of the accounts 562 A.3 - Information on transfers between portfolios of financial assets 580 A.4 - Information on fair value 581  Report and accounts 2018 of UniCredit S.p.A. 506 2018 Annual Report and Accounts · UniCredit Part B - Balance sheet 594 Assets 594 Section 1 - Cash and cash balances - Item 10 594 Section 2 - Financial assets at fair value through profit or loss - Item 20 594 Information about the units of Atlante Fund and Italian Recovery Fund (former Atlante II) 596 Information about the investment in the Schema Volontario 596 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 599 Information about the shareholding in Banca d'Italia 600 Section 4 - Financial assets at amortised cost - Item 40 602 Section 5 - Hedging derivatives - Item 50 606 Section 6 - Changes in fair value of portfolio hedged items - Item 60 607 Section 7 - Equity investments - Item 70 608 Section 8 - Property, plant and equipment - Item 80 610 Section 9 - Intangible assets - Item 90 613 Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) 615 Section 11 - Non current assets and disposal groups classified as held for sale - Item 110 (Assets) and Item 70 (Liabilities) 619 Section 12 - Other assets - Item 120 620 Liabilities 622 Section 1 - Financial liabilities at amortised cost - Item 10 622 Section 2 - Financial liabilities held for trading - Item 20 625 Section 3 - Financial liabilities designated at fair value - Item 30 627 Section 4 - Hedging derivatives - Item 40 628 Section 5 - Value adjustment of hedged financial liabilities - Item 50 628 Section 6 - Tax liabilities - Item 60 628 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 629 Section 8 - Other liabilities - Item 80 629 Section 9 - Provision for employee severance pay - Item 90 630 Section 10 - Provisions for risks and charges - Item 100 630 Section 11 - Redeemable shares - Item 120 634 Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 634 Other information 639 Part C - Income statement 643 Section 1 - Interests - Items 10 and 20 643 Section 2 - Fees and commissions - Items 40 and 50 645 Section 3 - Dividend income and similar revenue - Item 70 646 Report and accounts 2018 of UniCredit S.p.A. 506 2018 Annual Report and Accounts · UniCredit Part B - Balance sheet 594 Assets 594 Section 1 - Cash and cash balances - Item 10 594 Section 2 - Financial assets at fair value through profit or loss - Item 20 594 Information about the units of Atlante Fund and Italian Recovery Fund (former Atlante II) 596 Information about the investment in the Schema Volontario 596 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 599 Information about the shareholding in Banca d'Italia 600 Section 4 - Financial assets at amortised cost - Item 40 602 Section 5 - Hedging derivatives - Item 50 606 Section 6 - Changes in fair value of portfolio hedged items - Item 60 607 Section 7 - Equity investments - Item 70 608 Section 8 - Property, plant and equipment - Item 80 610 Section 9 - Intangible assets - Item 90 613 Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) 615 Section 11 - Non current assets and disposal groups classified as held for sale - Item 110 (Assets) and Item 70 (Liabilities) 619 Section 12 - Other assets - Item 120 620 Liabilities 622 Section 1 - Financial liabilities at amortised cost - Item 10 622 Section 2 - Financial liabilities held for trading - Item 20 625 Section 3 - Financial liabilities designated at fair value - Item 30 627 Section 4 - Hedging derivatives - Item 40 628 Section 5 - Value adjustment of hedged financial liabilities - Item 50 628 Section 6 - Tax liabilities - Item 60 628 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 629 Section 8 - Other liabilities - Item 80 629 Section 9 - Provision for employee severance pay - Item 90 630 Section 10 - Provisions for risks and charges - Item 100 630 Section 11 - Redeemable shares - Item 120 634 Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 634 Other information 639 Part C - Income statement 643 Section 1 - Interests - Items 10 and 20 643 Section 2 - Fees and commissions - Items 40 and 50 645 Section 3 - Dividend income and similar revenue - Item 70 646 Report and accounts 2018 of UniCredit S.p.A. 506 2018 Annual Report and Accounts · UniCredit Part B - Balance sheet 594 Assets 594 Section 1 - Cash and cash balances - Item 10 594 Section 2 - Financial assets at fair value through profit or loss - Item 20 594 Information about the units of Atlante Fund and Italian Recovery Fund (former Atlante II) 596 Information about the investment in the Schema Volontario 596 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 599 Information about the shareholding in Banca d'Italia 600 Section 4 - Financial assets at amortised cost - Item 40 602 Section 5 - Hedging derivatives - Item 50 606 Section 6 - Changes in fair value of portfolio hedged items - Item 60 607 Section 7 - Equity investments - Item 70 608 Section 8 - Property, plant and equipment - Item 80 610 Section 9 - Intangible assets - Item 90 613 Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) 615 Section 11 - Non current assets and disposal groups classified as held for sale - Item 110 (Assets) and Item 70 (Liabilities) 619 Section 12 - Other assets - Item 120 620 Liabilities 622 Section 1 - Financial liabilities at amortised cost - Item 10 622 Section 2 - Financial liabilities held for trading - Item 20 625 Section 3 - Financial liabilities designated at fair value - Item 30 627 Section 4 - Hedging derivatives - Item 40 628 Section 5 - Value adjustment of hedged financial liabilities - Item 50 628 Section 6 - Tax liabilities - Item 60 628 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 629 Section 8 - Other liabilities - Item 80 629 Section 9 - Provision for employee severance pay - Item 90 630 Section 10 - Provisions for risks and charges - Item 100 630 Section 11 - Redeemable shares - Item 120 634 Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 634 Other information 639 Part C - Income statement 643 Section 1 - Interests - Items 10 and 20 643 Section 2 - Fees and commissions - Items 40 and 50 645 Section 3 - Dividend income and similar revenue - Item 70 646 Report and accounts 2018 of UniCredit S.p.A. 506 2018 Annual Report and Accounts · UniCredit Part B - Balance sheet 594 Assets 594 Section 1 - Cash and cash balances - Item 10 594 Section 2 - Financial assets at fair value through profit or loss - Item 20 594 Information about the units of Atlante Fund and Italian Recovery Fund (former Atlante II) 596 Information about the investment in the Schema Volontario 596 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 599 Information about the shareholding in Banca d'Italia 600 Section 4 - Financial assets at amortised cost - Item 40 602 Section 5 - Hedging derivatives - Item 50 606 Section 6 - Changes in fair value of portfolio hedged items - Item 60 607 Section 7 - Equity investments - Item 70 608 Section 8 - Property, plant and equipment - Item 80 610 Section 9 - Intangible assets - Item 90 613 Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) 615 Section 11 - Non current assets and disposal groups classified as held for sale - Item 110 (Assets) and Item 70 (Liabilities) 619 Section 12 - Other assets - Item 120 620 Liabilities 622 Section 1 - Financial liabilities at amortised cost - Item 10 622 Section 2 - Financial liabilities held for trading - Item 20 625 Section 3 - Financial liabilities designated at fair value - Item 30 627 Section 4 - Hedging derivatives - Item 40 628 Section 5 - Value adjustment of hedged financial liabilities - Item 50 628 Section 6 - Tax liabilities - Item 60 628 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 629 Section 8 - Other liabilities - Item 80 629 Section 9 - Provision for employee severance pay - Item 90 630 Section 10 - Provisions for risks and charges - Item 100 630 Section 11 - Redeemable shares - Item 120 634 Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 634 Other information 639 Part C - Income statement 643 Section 1 - Interests - Items 10 and 20 643 Section 2 - Fees and commissions - Items 40 and 50 645 Section 3 - Dividend income and similar revenue - Item 70 646 Report and accounts 2018 of UniCredit S.p.A. 506 2018 Annual Report and Accounts · UniCredit Part B - Balance sheet 594 Assets 594 Section 1 - Cash and cash balances - Item 10 594 Section 2 - Financial assets at fair value through profit or loss - Item 20 594 Information about the units of Atlante Fund and Italian Recovery Fund (former Atlante II) 596 Information about the investment in the Schema Volontario 596 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 599 Information about the shareholding in Banca d'Italia 600 Section 4 - Financial assets at amortised cost - Item 40 602 Section 5 - Hedging derivatives - Item 50 606 Section 6 - Changes in fair value of portfolio hedged items - Item 60 607 Section 7 - Equity investments - Item 70 608 Section 8 - Property, plant and equipment - Item 80 610 Section 9 - Intangible assets - Item 90 613 Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) 615 Section 11 - Non current assets and disposal groups classified as held for sale - Item 110 (Assets) and Item 70 (Liabilities) 619 Section 12 - Other assets - Item 120 620 Liabilities 622 Section 1 - Financial liabilities at amortised cost - Item 10 622 Section 2 - Financial liabilities held for trading - Item 20 625 Section 3 - Financial liabilities designated at fair value - Item 30 627 Section 4 - Hedging derivatives - Item 40 628 Section 5 - Value adjustment of hedged financial liabilities - Item 50 628 Section 6 - Tax liabilities - Item 60 628 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 629 Section 8 - Other liabilities - Item 80 629 Section 9 - Provision for employee severance pay - Item 90 630 Section 10 - Provisions for risks and charges - Item 100 630 Section 11 - Redeemable shares - Item 120 634 Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 634 Other information 639 Part C - Income statement 643 Section 1 - Interests - Items 10 and 20 643 Section 2 - Fees and commissions - Items 40 and 50 645 Section 3 - Dividend income and similar revenue - Item 70 646  Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 507 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 647 Section 5 - Fair value adjustments in hedge accounting - Item 90 648 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 649 Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 650 Section 8 - Net losses/recoveries on credit impairment - Item 130 651 Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 652 Section 10 - Administrative expenses - Item 160 653 Contributions to Resolution and Guarantee Funds 654 DTA guarantee fees 654 Section 11 - Net provisions for risks and charges - Item 170 655 Section 12 - Net value adjustments/write-backs on property, plant and equipment - Item 180 655 Section 13 - Net value adjustments/write-backs on intangible assets - Item 190 656 Section 14 - Other operating expenses/income - Item 200 656 Section 15 - Gains (Losses) of equity investments - Item 220 657 Section 16 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 230 657 Section 17 - Goodwill impairment - Item 240 657 Section 18 - Gains (Losses) on disposals on investments - Item 250 657 Section 19 - Tax expenses (income) for the period from continuing operations - Item 270 658 Section 20 - Profit (Loss) after tax from discontinued operations - Item 290 660 Section 21 - Other information 660 Section 22 - Earnings per share 661 Part D - Comprehensive income 662 Part E - Information on risks and hedging policies 664 Introduction 664 Section 1 - Credit risk 664 Qualitative information 664 1. General aspects 664 2. Credit risk management policies 664 3. Non-performing credit exposure 670 4. Commercial renegotiation of financial assets and forborne exposures 672 Quantitative information 673 A. Credit quality 673 B. Distribution and concentration of credit exposures 685 C. Securitisation transactions 691 D. Information on structured entities not consolidated for accounting purposes (other than vehicles for securitisation transactions) 694 E. Sales transaction 695 F. Credit risk measurement models 699 Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 507 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 647 Section 5 - Fair value adjustments in hedge accounting - Item 90 648 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 649 Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 650 Section 8 - Net losses/recoveries on credit impairment - Item 130 651 Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 652 Section 10 - Administrative expenses - Item 160 653 Contributions to Resolution and Guarantee Funds 654 DTA guarantee fees 654 Section 11 - Net provisions for risks and charges - Item 170 655 Section 12 - Net value adjustments/write-backs on property, plant and equipment - Item 180 655 Section 13 - Net value adjustments/write-backs on intangible assets - Item 190 656 Section 14 - Other operating expenses/income - Item 200 656 Section 15 - Gains (Losses) of equity investments - Item 220 657 Section 16 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 230 657 Section 17 - Goodwill impairment - Item 240 657 Section 18 - Gains (Losses) on disposals on investments - Item 250 657 Section 19 - Tax expenses (income) for the period from continuing operations - Item 270 658 Section 20 - Profit (Loss) after tax from discontinued operations - Item 290 660 Section 21 - Other information 660 Section 22 - Earnings per share 661 Part D - Comprehensive income 662 Part E - Information on risks and hedging policies 664 Introduction 664 Section 1 - Credit risk 664 Qualitative information 664 1. General aspects 664 2. Credit risk management policies 664 3. Non-performing credit exposure 670 4. Commercial renegotiation of financial assets and forborne exposures 672 Quantitative information 673 A. Credit quality 673 B. Distribution and concentration of credit exposures 685 C. Securitisation transactions 691 D. Information on structured entities not consolidated for accounting purposes (other than vehicles for securitisation transactions) 694 E. Sales transaction 695 F. Credit risk measurement models 699 Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 507 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 647 Section 5 - Fair value adjustments in hedge accounting - Item 90 648 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 649 Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 650 Section 8 - Net losses/recoveries on credit impairment - Item 130 651 Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 652 Section 10 - Administrative expenses - Item 160 653 Contributions to Resolution and Guarantee Funds 654 DTA guarantee fees 654 Section 11 - Net provisions for risks and charges - Item 170 655 Section 12 - Net value adjustments/write-backs on property, plant and equipment - Item 180 655 Section 13 - Net value adjustments/write-backs on intangible assets - Item 190 656 Section 14 - Other operating expenses/income - Item 200 656 Section 15 - Gains (Losses) of equity investments - Item 220 657 Section 16 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 230 657 Section 17 - Goodwill impairment - Item 240 657 Section 18 - Gains (Losses) on disposals on investments - Item 250 657 Section 19 - Tax expenses (income) for the period from continuing operations - Item 270 658 Section 20 - Profit (Loss) after tax from discontinued operations - Item 290 660 Section 21 - Other information 660 Section 22 - Earnings per share 661 Part D - Comprehensive income 662 Part E - Information on risks and hedging policies 664 Introduction 664 Section 1 - Credit risk 664 Qualitative information 664 1. General aspects 664 2. Credit risk management policies 664 3. Non-performing credit exposure 670 4. Commercial renegotiation of financial assets and forborne exposures 672 Quantitative information 673 A. Credit quality 673 B. Distribution and concentration of credit exposures 685 C. Securitisation transactions 691 D. Information on structured entities not consolidated for accounting purposes (other than vehicles for securitisation transactions) 694 E. Sales transaction 695 F. Credit risk measurement models 699 Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 507 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 647 Section 5 - Fair value adjustments in hedge accounting - Item 90 648 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 649 Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 650 Section 8 - Net losses/recoveries on credit impairment - Item 130 651 Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 652 Section 10 - Administrative expenses - Item 160 653 Contributions to Resolution and Guarantee Funds 654 DTA guarantee fees 654 Section 11 - Net provisions for risks and charges - Item 170 655 Section 12 - Net value adjustments/write-backs on property, plant and equipment - Item 180 655 Section 13 - Net value adjustments/write-backs on intangible assets - Item 190 656 Section 14 - Other operating expenses/income - Item 200 656 Section 15 - Gains (Losses) of equity investments - Item 220 657 Section 16 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 230 657 Section 17 - Goodwill impairment - Item 240 657 Section 18 - Gains (Losses) on disposals on investments - Item 250 657 Section 19 - Tax expenses (income) for the period from continuing operations - Item 270 658 Section 20 - Profit (Loss) after tax from discontinued operations - Item 290 660 Section 21 - Other information 660 Section 22 - Earnings per share 661 Part D - Comprehensive income 662 Part E - Information on risks and hedging policies 664 Introduction 664 Section 1 - Credit risk 664 Qualitative information 664 1. General aspects 664 2. Credit risk management policies 664 3. Non-performing credit exposure 670 4. Commercial renegotiation of financial assets and forborne exposures 672 Quantitative information 673 A. Credit quality 673 B. Distribution and concentration of credit exposures 685 C. Securitisation transactions 691 D. Information on structured entities not consolidated for accounting purposes (other than vehicles for securitisation transactions) 694 E. Sales transaction 695 F. Credit risk measurement models 699 Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 507 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 647 Section 5 - Fair value adjustments in hedge accounting - Item 90 648 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 649 Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 650 Section 8 - Net losses/recoveries on credit impairment - Item 130 651 Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 652 Section 10 - Administrative expenses - Item 160 653 Contributions to Resolution and Guarantee Funds 654 DTA guarantee fees 654 Section 11 - Net provisions for risks and charges - Item 170 655 Section 12 - Net value adjustments/write-backs on property, plant and equipment - Item 180 655 Section 13 - Net value adjustments/write-backs on intangible assets - Item 190 656 Section 14 - Other operating expenses/income - Item 200 656 Section 15 - Gains (Losses) of equity investments - Item 220 657 Section 16 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 230 657 Section 17 - Goodwill impairment - Item 240 657 Section 18 - Gains (Losses) on disposals on investments - Item 250 657 Section 19 - Tax expenses (income) for the period from continuing operations - Item 270 658 Section 20 - Profit (Loss) after tax from discontinued operations - Item 290 660 Section 21 - Other information 660 Section 22 - Earnings per share 661 Part D - Comprehensive income 662 Part E - Information on risks and hedging policies 664 Introduction 664 Section 1 - Credit risk 664 Qualitative information 664 1. General aspects 664 2. Credit risk management policies 664 3. Non-performing credit exposure 670 4. Commercial renegotiation of financial assets and forborne exposures 672 Quantitative information 673 A. Credit quality 673 B. Distribution and concentration of credit exposures 685 C. Securitisation transactions 691 D. Information on structured entities not consolidated for accounting purposes (other than vehicles for securitisation transactions) 694 E. Sales transaction 695 F. Credit risk measurement models 699  Report and accounts 2018 of UniCredit S.p.A. 508 2018 Annual Report and Accounts · UniCredit Section 2 - Market risk 699 2.1 Interest rate risk and price risk - Regulatory trading book 699 Qualitative information 699 Quantitative information 700 2.2 Interest rate and price risk - Banking book 701 Qualitative information 701 Quantitative information 701 2.3 Exchange rate risk 704 Qualitative information 704 Quantitative information 704 Credit spread risk and Stress test 705 Section 3 - Derivative instrument and hedging policies 705 3.1 Trading financial derivatives 705 A. Financial derivatives 705 B. Credit derivatives 708 3.2 Hedging policies 708 Qualitative information 708 Quantitative information 709 3.3 Other information on derivatives instruments (trading and hedging) 713 A. Financial and credit derivatives 713 Section 4 - Liquidity risk 714 Qualitative information 714 Quantitative information 714 Section 5 - Operational risk 716 Qualitative information 716 A. General aspects, operational processes and methods for measuring operational risk 716 B. Risks arising from legal disputes 716 C. Risks arising from employment law cases 716 D. Risks arising from tax disputes 716 E. Other claims by customers 717 Quantitative information 718 Section 6 - Other risks 718 Other risks included in Economic Capital 718 Reputational risk 718 Top and emerging risk 718 Part F - Shareholders’ equity 719 Section 1 - Shareholders’ equity 719 A. Qualitative information 719 B. Quantitative information 719 Section 2 - Own funds and regulatory ratios 720 Report and accounts 2018 of UniCredit S.p.A. 508 2018 Annual Report and Accounts · UniCredit Section 2 - Market risk 699 2.1 Interest rate risk and price risk - Regulatory trading book 699 Qualitative information 699 Quantitative information 700 2.2 Interest rate and price risk - Banking book 701 Qualitative information 701 Quantitative information 701 2.3 Exchange rate risk 704 Qualitative information 704 Quantitative information 704 Credit spread risk and Stress test 705 Section 3 - Derivative instrument and hedging policies 705 3.1 Trading financial derivatives 705 A. Financial derivatives 705 B. Credit derivatives 708 3.2 Hedging policies 708 Qualitative information 708 Quantitative information 709 3.3 Other information on derivatives instruments (trading and hedging) 713 A. Financial and credit derivatives 713 Section 4 - Liquidity risk 714 Qualitative information 714 Quantitative information 714 Section 5 - Operational risk 716 Qualitative information 716 A. General aspects, operational processes and methods for measuring operational risk 716 B. Risks arising from legal disputes 716 C. Risks arising from employment law cases 716 D. Risks arising from tax disputes 716 E. Other claims by customers 717 Quantitative information 718 Section 6 - Other risks 718 Other risks included in Economic Capital 718 Reputational risk 718 Top and emerging risk 718 Part F - Shareholders’ equity 719 Section 1 - Shareholders’ equity 719 A. Qualitative information 719 B. Quantitative information 719 Section 2 - Own funds and regulatory ratios 720 Report and accounts 2018 of UniCredit S.p.A. 508 2018 Annual Report and Accounts · UniCredit Section 2 - Market risk 699 2.1 Interest rate risk and price risk - Regulatory trading book 699 Qualitative information 699 Quantitative information 700 2.2 Interest rate and price risk - Banking book 701 Qualitative information 701 Quantitative information 701 2.3 Exchange rate risk 704 Qualitative information 704 Quantitative information 704 Credit spread risk and Stress test 705 Section 3 - Derivative instrument and hedging policies 705 3.1 Trading financial derivatives 705 A. Financial derivatives 705 B. Credit derivatives 708 3.2 Hedging policies 708 Qualitative information 708 Quantitative information 709 3.3 Other information on derivatives instruments (trading and hedging) 713 A. Financial and credit derivatives 713 Section 4 - Liquidity risk 714 Qualitative information 714 Quantitative information 714 Section 5 - Operational risk 716 Qualitative information 716 A. General aspects, operational processes and methods for measuring operational risk 716 B. Risks arising from legal disputes 716 C. Risks arising from employment law cases 716 D. Risks arising from tax disputes 716 E. Other claims by customers 717 Quantitative information 718 Section 6 - Other risks 718 Other risks included in Economic Capital 718 Reputational risk 718 Top and emerging risk 718 Part F - Shareholders’ equity 719 Section 1 - Shareholders’ equity 719 A. Qualitative information 719 B. Quantitative information 719 Section 2 - Own funds and regulatory ratios 720 Report and accounts 2018 of UniCredit S.p.A. 508 2018 Annual Report and Accounts · UniCredit Section 2 - Market risk 699 2.1 Interest rate risk and price risk - Regulatory trading book 699 Qualitative information 699 Quantitative information 700 2.2 Interest rate and price risk - Banking book 701 Qualitative information 701 Quantitative information 701 2.3 Exchange rate risk 704 Qualitative information 704 Quantitative information 704 Credit spread risk and Stress test 705 Section 3 - Derivative instrument and hedging policies 705 3.1 Trading financial derivatives 705 A. Financial derivatives 705 B. Credit derivatives 708 3.2 Hedging policies 708 Qualitative information 708 Quantitative information 709 3.3 Other information on derivatives instruments (trading and hedging) 713 A. Financial and credit derivatives 713 Section 4 - Liquidity risk 714 Qualitative information 714 Quantitative information 714 Section 5 - Operational risk 716 Qualitative information 716 A. General aspects, operational processes and methods for measuring operational risk 716 B. Risks arising from legal disputes 716 C. Risks arising from employment law cases 716 D. Risks arising from tax disputes 716 E. Other claims by customers 717 Quantitative information 718 Section 6 - Other risks 718 Other risks included in Economic Capital 718 Reputational risk 718 Top and emerging risk 718 Part F - Shareholders’ equity 719 Section 1 - Shareholders’ equity 719 A. Qualitative information 719 B. Quantitative information 719 Section 2 - Own funds and regulatory ratios 720 Report and accounts 2018 of UniCredit S.p.A. 508 2018 Annual Report and Accounts · UniCredit Section 2 - Market risk 699 2.1 Interest rate risk and price risk - Regulatory trading book 699 Qualitative information 699 Quantitative information 700 2.2 Interest rate and price risk - Banking book 701 Qualitative information 701 Quantitative information 701 2.3 Exchange rate risk 704 Qualitative information 704 Quantitative information 704 Credit spread risk and Stress test 705 Section 3 - Derivative instrument and hedging policies 705 3.1 Trading financial derivatives 705 A. Financial derivatives 705 B. Credit derivatives 708 3.2 Hedging policies 708 Qualitative information 708 Quantitative information 709 3.3 Other information on derivatives instruments (trading and hedging) 713 A. Financial and credit derivatives 713 Section 4 - Liquidity risk 714 Qualitative information 714 Quantitative information 714 Section 5 - Operational risk 716 Qualitative information 716 A. General aspects, operational processes and methods for measuring operational risk 716 B. Risks arising from legal disputes 716 C. Risks arising from employment law cases 716 D. Risks arising from tax disputes 716 E. Other claims by customers 717 Quantitative information 718 Section 6 - Other risks 718 Other risks included in Economic Capital 718 Reputational risk 718 Top and emerging risk 718 Part F - Shareholders’ equity 719 Section 1 - Shareholders’ equity 719 A. Qualitative information 719 B. Quantitative information 719 Section 2 - Own funds and regulatory ratios 720  Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 509 Part G - Business combinations 721 Section 1 - Business Combinations completed in the year 721 Section 2 - Business Combinations completed after year-end 721 Part H - Related-party transactions 722 Introduction 722 1. Details of Key management personnels’ compensation 722 2. Related-party transactions 723 Part I - Share-based payments 726 A. Qualitative information 726 1. Description of payment agreements based on own equity instruments 726 B. Quantitative information 726 1. Annual changes 726 2. Other information 726 Part L - Segment reporting 727 Annexes 729 Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 729 Annex 2 - Fees for annual audits and other services 735 Annex 3 - Internal pension funds: statement of changes in the year and final accounts 736 Annex 4 - Securitisations - qualitative tables 738 Certification 741 Reports and resolutions 743 Board of Statutory Auditors’ Report 743 Report of the External Auditors 763 Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 509 Part G - Business combinations 721 Section 1 - Business Combinations completed in the year 721 Section 2 - Business Combinations completed after year-end 721 Part H - Related-party transactions 722 Introduction 722 1. Details of Key management personnels’ compensation 722 2. Related-party transactions 723 Part I - Share-based payments 726 A. Qualitative information 726 1. Description of payment agreements based on own equity instruments 726 B. Quantitative information 726 1. Annual changes 726 2. Other information 726 Part L - Segment reporting 727 Annexes 729 Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 729 Annex 2 - Fees for annual audits and other services 735 Annex 3 - Internal pension funds: statement of changes in the year and final accounts 736 Annex 4 - Securitisations - qualitative tables 738 Certification 741 Reports and resolutions 743 Board of Statutory Auditors’ Report 743 Report of the External Auditors 763 Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 509 Part G - Business combinations 721 Section 1 - Business Combinations completed in the year 721 Section 2 - Business Combinations completed after year-end 721 Part H - Related-party transactions 722 Introduction 722 1. Details of Key management personnels’ compensation 722 2. Related-party transactions 723 Part I - Share-based payments 726 A. Qualitative information 726 1. Description of payment agreements based on own equity instruments 726 B. Quantitative information 726 1. Annual changes 726 2. Other information 726 Part L - Segment reporting 727 Annexes 729 Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 729 Annex 2 - Fees for annual audits and other services 735 Annex 3 - Internal pension funds: statement of changes in the year and final accounts 736 Annex 4 - Securitisations - qualitative tables 738 Certification 741 Reports and resolutions 743 Board of Statutory Auditors’ Report 743 Report of the External Auditors 763 Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 509 Part G - Business combinations 721 Section 1 - Business Combinations completed in the year 721 Section 2 - Business Combinations completed after year-end 721 Part H - Related-party transactions 722 Introduction 722 1. Details of Key management personnels’ compensation 722 2. Related-party transactions 723 Part I - Share-based payments 726 A. Qualitative information 726 1. Description of payment agreements based on own equity instruments 726 B. Quantitative information 726 1. Annual changes 726 2. Other information 726 Part L - Segment reporting 727 Annexes 729 Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 729 Annex 2 - Fees for annual audits and other services 735 Annex 3 - Internal pension funds: statement of changes in the year and final accounts 736 Annex 4 - Securitisations - qualitative tables 738 Certification 741 Reports and resolutions 743 Board of Statutory Auditors’ Report 743 Report of the External Auditors 763 Report and accounts 2018 of UniCredit S.p.A. UniCredit ·2018 Annual Report and Accounts 509 Part G - Business combinations 721 Section 1 - Business Combinations completed in the year 721 Section 2 - Business Combinations completed after year-end 721 Part H - Related-party transactions 722 Introduction 722 1. Details of Key management personnels’ compensation 722 2. Related-party transactions 723 Part I - Share-based payments 726 A. Qualitative information 726 1. Description of payment agreements based on own equity instruments 726 B. Quantitative information 726 1. Annual changes 726 2. Other information 726 Part L - Segment reporting 727 Annexes 729 Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 729 Annex 2 - Fees for annual audits and other services 735 Annex 3 - Internal pension funds: statement of changes in the year and final accounts 736 Annex 4 - Securitisations - qualitative tables 738 Certification 741 Reports and resolutions 743 Board of Statutory Auditors’ Report 743 Report of the External Auditors 763 Maximise commercial bank value. We continue to maximise commercial bank value by successfully focusing on our clients, delivering a positive experience through our multichannel strategy and best-in-class products and services. The fully plugged in CIB leverages on the Group’s strong commercial banking relationships to support the real economy. Report on operations Introduction and highlights UniCredit ·2018 Annual Report and Accounts 511 Report on operations Introduction and highlights Introduction to Report on operations of UniCredit S.p.A. This Report on operations illustrates the performance of the Parent company and the related amounts and results. It includes financial information such as Highlights, Reclassified accounts and their quarterly figures as well as a comment on the Results of the year. The information in this report is supported, in order to provide further information about the performance achieved by the company, by some alternative performance indicators (“API”) such as: Cost/Income ratio, Net bad loans to customers/Loans to customers, Net Non-Performing loans to customers/Loans to customers. Although some of this information, including certain APIs, is neither extracted nor directly reconciled with Company Financial Statements, the Report on operations, the Annexes and the Glossary provide explanatory descriptions of the contents and, in case, the calculation methods used, in accordance with European Securities and Markets Authority Guidelines (ESMA/2015/1415) of 5 October 2015. For other information required by Law and regulations, refer to the Consolidated report on operations or to the Notes to the accounts of financial statements of UniCredit S.p.A. as better specified below. Refer to Consolidated report on operations for information relating to: • Share information - UniCredit share; • Macroeconomic situation, banking and financial markets; • qualitative disclosure of Principles of value creation and disciplined capital allocation, Capita ratios for information relating to transitional capital requirements and buffers for UniCredit group and Capital strengthening; • references of UniCredit official website where can be found Report on corporate governance and ownership structure, Report on remuneration and Non-financial information; • Research and development projects; • Group activities development operations and other corporate transactions; • Significant organisational changes and organisational structure; • Certifications and other communications; • Subsequent events; • Outlook. For information relating to related-party relations and transactions refer to the Notes to the Accounts - Part H of Company financial statements of UniCredit S.p.A. For a complete description of risks and uncertainties that the bank has to face in the current market situation refer the Notes to the accounts - Part E of the Company financial statements of UniCredit S.p.A. Highlights, alternative performance indicators and other measures Income statement (€ million) YEAR 2018 2017 % CHANGE Operating income 10,619 11,773 - 9.8% of which: - net interest 4,166 3,960 + 5.2% - dividends and other income from equity investments 2,630 3,808 - 30.9% - net fees and commissions 3,839 3,798 + 1.1% Operating costs (4,960) (5,424) - 8.6% Operating profit (loss) 5,659 6,349 - 10.9% Net write-downs on loans and provisions for guarantees and commitments (1,986) (2,103) - 5.6% Net operating profit (loss) 3,673 4,246 - 13.5% Profit (Loss) before tax 1,302 6,122 - 78.7% Net profit (loss) 2,458 6,236 - 60.6% The figures in this table refer to the reclassified income statement. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. Report on operations Introduction and highlights UniCredit ·2018 Annual Report and Accounts 511 Report on operations Introduction and highlights Introduction to Report on operations of UniCredit S.p.A. This Report on operations illustrates the performance of the Parent company and the related amounts and results. It includes financial information such as Highlights, Reclassified accounts and their quarterly figures as well as a comment on the Results of the year. The information in this report is supported, in order to provide further information about the performance achieved by the company, by some alternative performance indicators (“API”) such as: Cost/Income ratio, Net bad loans to customers/Loans to customers, Net Non-Performing loans to customers/Loans to customers. Although some of this information, including certain APIs, is neither extracted nor directly reconciled with Company Financial Statements, the Report on operations, the Annexes and the Glossary provide explanatory descriptions of the contents and, in case, the calculation methods used, in accordance with European Securities and Markets Authority Guidelines (ESMA/2015/1415) of 5 October 2015. For other information required by Law and regulations, refer to the Consolidated report on operations or to the Notes to the accounts of financial statements of UniCredit S.p.A. as better specified below. Refer to Consolidated report on operations for information relating to: • Share information - UniCredit share; • Macroeconomic situation, banking and financial markets; • qualitative disclosure of Principles of value creation and disciplined capital allocation, Capita ratios for information relating to transitional capital requirements and buffers for UniCredit group and Capital strengthening; • references of UniCredit official website where can be found Report on corporate governance and ownership structure, Report on remuneration and Non-financial information; • Research and development projects; • Group activities development operations and other corporate transactions; • Significant organisational changes and organisational structure; • Certifications and other communications; • Subsequent events; • Outlook. For information relating to related-party relations and transactions refer to the Notes to the Accounts - Part H of Company financial statements of UniCredit S.p.A. For a complete description of risks and uncertainties that the bank has to face in the current market situation refer the Notes to the accounts - Part E of the Company financial statements of UniCredit S.p.A. Highlights, alternative performance indicators and other measures Income statement (€ million) YEAR 2018 2017 % CHANGE Operating income 10,619 11,773 - 9.8% of which: - net interest 4,166 3,960 + 5.2% - dividends and other income from equity investments 2,630 3,808 - 30.9% - net fees and commissions 3,839 3,798 + 1.1% Operating costs (4,960) (5,424) - 8.6% Operating profit (loss) 5,659 6,349 - 10.9% Net write-downs on loans and provisions for guarantees and commitments (1,986) (2,103) - 5.6% Net operating profit (loss) 3,673 4,246 - 13.5% Profit (Loss) before tax 1,302 6,122 - 78.7% Net profit (loss) 2,458 6,236 - 60.6% The figures in this table refer to the reclassified income statement. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. Report on operations Introduction and highlights UniCredit ·2018 Annual Report and Accounts 511 Report on operations Introduction and highlights Introduction to Report on operations of UniCredit S.p.A. This Report on operations illustrates the performance of the Parent company and the related amounts and results. It includes financial information such as Highlights, Reclassified accounts and their quarterly figures as well as a comment on the Results of the year. The information in this report is supported, in order to provide further information about the performance achieved by the company, by some alternative performance indicators (“API”) such as: Cost/Income ratio, Net bad loans to customers/Loans to customers, Net Non-Performing loans to customers/Loans to customers. Although some of this information, including certain APIs, is neither extracted nor directly reconciled with Company Financial Statements, the Report on operations, the Annexes and the Glossary provide explanatory descriptions of the contents and, in case, the calculation methods used, in accordance with European Securities and Markets Authority Guidelines (ESMA/2015/1415) of 5 October 2015. For other information required by Law and regulations, refer to the Consolidated report on operations or to the Notes to the accounts of financial statements of UniCredit S.p.A. as better specified below. Refer to Consolidated report on operations for information relating to: • Share information - UniCredit share; • Macroeconomic situation, banking and financial markets; • qualitative disclosure of Principles of value creation and disciplined capital allocation, Capita ratios for information relating to transitional capital requirements and buffers for UniCredit group and Capital strengthening; • references of UniCredit official website where can be found Report on corporate governance and ownership structure, Report on remuneration and Non-financial information; • Research and development projects; • Group activities development operations and other corporate transactions; • Significant organisational changes and organisational structure; • Certifications and other communications; • Subsequent events; • Outlook. For information relating to related-party relations and transactions refer to the Notes to the Accounts - Part H of Company financial statements of UniCredit S.p.A. For a complete description of risks and uncertainties that the bank has to face in the current market situation refer the Notes to the accounts - Part E of the Company financial statements of UniCredit S.p.A. Highlights, alternative performance indicators and other measures Income statement (€ million) YEAR 2018 2017 % CHANGE Operating income 10,619 11,773 - 9.8% of which: - net interest 4,166 3,960 + 5.2% - dividends and other income from equity investments 2,630 3,808 - 30.9% - net fees and commissions 3,839 3,798 + 1.1% Operating costs (4,960) (5,424) - 8.6% Operating profit (loss) 5,659 6,349 - 10.9% Net write-downs on loans and provisions for guarantees and commitments (1,986) (2,103) - 5.6% Net operating profit (loss) 3,673 4,246 - 13.5% Profit (Loss) before tax 1,302 6,122 - 78.7% Net profit (loss) 2,458 6,236 - 60.6% The figures in this table refer to the reclassified income statement. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. Report on operations Introduction and highlights UniCredit ·2018 Annual Report and Accounts 511 Report on operations Introduction and highlights Introduction to Report on operations of UniCredit S.p.A. This Report on operations illustrates the performance of the Parent company and the related amounts and results. It includes financial information such as Highlights, Reclassified accounts and their quarterly figures as well as a comment on the Results of the year. The information in this report is supported, in order to provide further information about the performance achieved by the company, by some alternative performance indicators (“API”) such as: Cost/Income ratio, Net bad loans to customers/Loans to customers, Net Non-Performing loans to customers/Loans to customers. Although some of this information, including certain APIs, is neither extracted nor directly reconciled with Company Financial Statements, the Report on operations, the Annexes and the Glossary provide explanatory descriptions of the contents and, in case, the calculation methods used, in accordance with European Securities and Markets Authority Guidelines (ESMA/2015/1415) of 5 October 2015. For other information required by Law and regulations, refer to the Consolidated report on operations or to the Notes to the accounts of financial statements of UniCredit S.p.A. as better specified below. Refer to Consolidated report on operations for information relating to: • Share information - UniCredit share; • Macroeconomic situation, banking and financial markets; • qualitative disclosure of Principles of value creation and disciplined capital allocation, Capita ratios for information relating to transitional capital requirements and buffers for UniCredit group and Capital strengthening; • references of UniCredit official website where can be found Report on corporate governance and ownership structure, Report on remuneration and Non-financial information; • Research and development projects; • Group activities development operations and other corporate transactions; • Significant organisational changes and organisational structure; • Certifications and other communications; • Subsequent events; • Outlook. For information relating to related-party relations and transactions refer to the Notes to the Accounts - Part H of Company financial statements of UniCredit S.p.A. For a complete description of risks and uncertainties that the bank has to face in the current market situation refer the Notes to the accounts - Part E of the Company financial statements of UniCredit S.p.A. Highlights, alternative performance indicators and other measures Income statement (€ million) YEAR 2018 2017 % CHANGE Operating income 10,619 11,773 - 9.8% of which: - net interest 4,166 3,960 + 5.2% - dividends and other income from equity investments 2,630 3,808 - 30.9% - net fees and commissions 3,839 3,798 + 1.1% Operating costs (4,960) (5,424) - 8.6% Operating profit (loss) 5,659 6,349 - 10.9% Net write-downs on loans and provisions for guarantees and commitments (1,986) (2,103) - 5.6% Net operating profit (loss) 3,673 4,246 - 13.5% Profit (Loss) before tax 1,302 6,122 - 78.7% Net profit (loss) 2,458 6,236 - 60.6% The figures in this table refer to the reclassified income statement. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. Report on operations Introduction and highlights UniCredit ·2018 Annual Report and Accounts 511 Report on operations Introduction and highlights Introduction to Report on operations of UniCredit S.p.A. This Report on operations illustrates the performance of the Parent company and the related amounts and results. It includes financial information such as Highlights, Reclassified accounts and their quarterly figures as well as a comment on the Results of the year. The information in this report is supported, in order to provide further information about the performance achieved by the company, by some alternative performance indicators (“API”) such as: Cost/Income ratio, Net bad loans to customers/Loans to customers, Net Non-Performing loans to customers/Loans to customers. Although some of this information, including certain APIs, is neither extracted nor directly reconciled with Company Financial Statements, the Report on operations, the Annexes and the Glossary provide explanatory descriptions of the contents and, in case, the calculation methods used, in accordance with European Securities and Markets Authority Guidelines (ESMA/2015/1415) of 5 October 2015. For other information required by Law and regulations, refer to the Consolidated report on operations or to the Notes to the accounts of financial statements of UniCredit S.p.A. as better specified below. Refer to Consolidated report on operations for information relating to: • Share information - UniCredit share; • Macroeconomic situation, banking and financial markets; • qualitative disclosure of Principles of value creation and disciplined capital allocation, Capita ratios for information relating to transitional capital requirements and buffers for UniCredit group and Capital strengthening; • references of UniCredit official website where can be found Report on corporate governance and ownership structure, Report on remuneration and Non-financial information; • Research and development projects; • Group activities development operations and other corporate transactions; • Significant organisational changes and organisational structure; • Certifications and other communications; • Subsequent events; • Outlook. For information relating to related-party relations and transactions refer to the Notes to the Accounts - Part H of Company financial statements of UniCredit S.p.A. For a complete description of risks and uncertainties that the bank has to face in the current market situation refer the Notes to the accounts - Part E of the Company financial statements of UniCredit S.p.A. Highlights, alternative performance indicators and other measures Income statement (€ million) YEAR 2018 2017 % CHANGE Operating income 10,619 11,773 - 9.8% of which: - net interest 4,166 3,960 + 5.2% - dividends and other income from equity investments 2,630 3,808 - 30.9% - net fees and commissions 3,839 3,798 + 1.1% Operating costs (4,960) (5,424) - 8.6% Operating profit (loss) 5,659 6,349 - 10.9% Net write-downs on loans and provisions for guarantees and commitments (1,986) (2,103) - 5.6% Net operating profit (loss) 3,673 4,246 - 13.5% Profit (Loss) before tax 1,302 6,122 - 78.7% Net profit (loss) 2,458 6,236 - 60.6% The figures in this table refer to the reclassified income statement. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified income statement”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. Report on operations Introduction and highlights 512 2018 Annual Report and Accounts · UniCredit Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 12.31.2017 % CHANGE Total assets 405,616 404,980 + 0.2% Financial assets held for trading 11,834 13,864 - 14.6% Loans and receivables with customers 222,591 206,546 + 7.8% of which: non-performing loans 9,367 13,894 - 32.6% Financial liabilities held for trading 10,384 13,068 - 20.5% Deposits from customers and debt securities issued 264,841 262,084 + 1.1% of which: - deposits from customers 211,872 197,139 + 7.5% - debt securities issued 52,969 64,945 - 18.4% Shareholders' equity 50,836 53,508 - 5.0% The figures in this table refer to the reclassified balance sheet. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified balance sheet”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For further details on “non-performing loans” see paragraphs “Loans to customers” and “Credit quality” in this Report on operations. Profitability ratios YEAR 2018 2017 CHANGE EPS(1) (€) 1,070 3,180 - 2,110 Cost/Income ratio(2) 46.7% 46.1% + 0.6% ROA(3) 0.6% 1.5% - 0.9% Notes: (1) Earnings per share. For further details refer to Part C - Section 22. (2) Ratio between operating expenses and operating income. (3) Return on assets calculated as the ratio between Net profit (loss) and Total assets pursuant to art. 90 of CRD IV. Risk ratios AS AT % CHANGE ON % CHANGE ON 12.31.2018 01.01.2018 12.31.2017 12.31.2018/01.01.2018 01.01.2018/12.31.2017 Net bad loans to customers/Loans to customers 1.3% 1.6% 2.7% - 0.3% - 1.1% Net non-performing loans to customers/Loans to customers 4.2% 5.6% 6.7% - 1.4% - 1.1% For more details refer to table “Loans to customers - Credit quality” in paragraph “Credit quality” in this Report on operations. Report on operations Introduction and highlights 512 2018 Annual Report and Accounts · UniCredit Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 12.31.2017 % CHANGE Total assets 405,616 404,980 + 0.2% Financial assets held for trading 11,834 13,864 - 14.6% Loans and receivables with customers 222,591 206,546 + 7.8% of which: non-performing loans 9,367 13,894 - 32.6% Financial liabilities held for trading 10,384 13,068 - 20.5% Deposits from customers and debt securities issued 264,841 262,084 + 1.1% of which: - deposits from customers 211,872 197,139 + 7.5% - debt securities issued 52,969 64,945 - 18.4% Shareholders' equity 50,836 53,508 - 5.0% The figures in this table refer to the reclassified balance sheet. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified balance sheet”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For further details on “non-performing loans” see paragraphs “Loans to customers” and “Credit quality” in this Report on operations. Profitability ratios YEAR 2018 2017 CHANGE EPS(1) (€) 1,070 3,180 - 2,110 Cost/Income ratio(2) 46.7% 46.1% + 0.6% ROA(3) 0.6% 1.5% - 0.9% Notes: (1) Earnings per share. For further details refer to Part C - Section 22. (2) Ratio between operating expenses and operating income. (3) Return on assets calculated as the ratio between Net profit (loss) and Total assets pursuant to art. 90 of CRD IV. Risk ratios AS AT % CHANGE ON % CHANGE ON 12.31.2018 01.01.2018 12.31.2017 12.31.2018/01.01.2018 01.01.2018/12.31.2017 Net bad loans to customers/Loans to customers 1.3% 1.6% 2.7% - 0.3% - 1.1% Net non-performing loans to customers/Loans to customers 4.2% 5.6% 6.7% - 1.4% - 1.1% For more details refer to table “Loans to customers - Credit quality” in paragraph “Credit quality” in this Report on operations. Report on operations Introduction and highlights 512 2018 Annual Report and Accounts · UniCredit Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 12.31.2017 % CHANGE Total assets 405,616 404,980 + 0.2% Financial assets held for trading 11,834 13,864 - 14.6% Loans and receivables with customers 222,591 206,546 + 7.8% of which: non-performing loans 9,367 13,894 - 32.6% Financial liabilities held for trading 10,384 13,068 - 20.5% Deposits from customers and debt securities issued 264,841 262,084 + 1.1% of which: - deposits from customers 211,872 197,139 + 7.5% - debt securities issued 52,969 64,945 - 18.4% Shareholders' equity 50,836 53,508 - 5.0% The figures in this table refer to the reclassified balance sheet. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified balance sheet”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For further details on “non-performing loans” see paragraphs “Loans to customers” and “Credit quality” in this Report on operations. Profitability ratios YEAR 2018 2017 CHANGE EPS(1) (€) 1,070 3,180 - 2,110 Cost/Income ratio(2) 46.7% 46.1% + 0.6% ROA(3) 0.6% 1.5% - 0.9% Notes: (1) Earnings per share. For further details refer to Part C - Section 22. (2) Ratio between operating expenses and operating income. (3) Return on assets calculated as the ratio between Net profit (loss) and Total assets pursuant to art. 90 of CRD IV. Risk ratios AS AT % CHANGE ON % CHANGE ON 12.31.2018 01.01.2018 12.31.2017 12.31.2018/01.01.2018 01.01.2018/12.31.2017 Net bad loans to customers/Loans to customers 1.3% 1.6% 2.7% - 0.3% - 1.1% Net non-performing loans to customers/Loans to customers 4.2% 5.6% 6.7% - 1.4% - 1.1% For more details refer to table “Loans to customers - Credit quality” in paragraph “Credit quality” in this Report on operations. Report on operations Introduction and highlights 512 2018 Annual Report and Accounts · UniCredit Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 12.31.2017 % CHANGE Total assets 405,616 404,980 + 0.2% Financial assets held for trading 11,834 13,864 - 14.6% Loans and receivables with customers 222,591 206,546 + 7.8% of which: non-performing loans 9,367 13,894 - 32.6% Financial liabilities held for trading 10,384 13,068 - 20.5% Deposits from customers and debt securities issued 264,841 262,084 + 1.1% of which: - deposits from customers 211,872 197,139 + 7.5% - debt securities issued 52,969 64,945 - 18.4% Shareholders' equity 50,836 53,508 - 5.0% The figures in this table refer to the reclassified balance sheet. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified balance sheet”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For further details on “non-performing loans” see paragraphs “Loans to customers” and “Credit quality” in this Report on operations. Profitability ratios YEAR 2018 2017 CHANGE EPS(1) (€) 1,070 3,180 - 2,110 Cost/Income ratio(2) 46.7% 46.1% + 0.6% ROA(3) 0.6% 1.5% - 0.9% Notes: (1) Earnings per share. For further details refer to Part C - Section 22. (2) Ratio between operating expenses and operating income. (3) Return on assets calculated as the ratio between Net profit (loss) and Total assets pursuant to art. 90 of CRD IV. Risk ratios AS AT % CHANGE ON % CHANGE ON 12.31.2018 01.01.2018 12.31.2017 12.31.2018/01.01.2018 01.01.2018/12.31.2017 Net bad loans to customers/Loans to customers 1.3% 1.6% 2.7% - 0.3% - 1.1% Net non-performing loans to customers/Loans to customers 4.2% 5.6% 6.7% - 1.4% - 1.1% For more details refer to table “Loans to customers - Credit quality” in paragraph “Credit quality” in this Report on operations. Report on operations Introduction and highlights 512 2018 Annual Report and Accounts · UniCredit Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 12.31.2017 % CHANGE Total assets 405,616 404,980 + 0.2% Financial assets held for trading 11,834 13,864 - 14.6% Loans and receivables with customers 222,591 206,546 + 7.8% of which: non-performing loans 9,367 13,894 - 32.6% Financial liabilities held for trading 10,384 13,068 - 20.5% Deposits from customers and debt securities issued 264,841 262,084 + 1.1% of which: - deposits from customers 211,872 197,139 + 7.5% - debt securities issued 52,969 64,945 - 18.4% Shareholders' equity 50,836 53,508 - 5.0% The figures in this table refer to the reclassified balance sheet. The amounts related to year 2017 differ from the ones published at that time. For further details refer to “Reconciliation principles followed for the reclassified balance sheet”. In Annex 1 is included the reconciliation between the reclassified accounts and the mandatory reporting schedule, as required by Consob Notice No.6064293 of 28 July 2006. For further details on “non-performing loans” see paragraphs “Loans to customers” and “Credit quality” in this Report on operations. Profitability ratios YEAR 2018 2017 CHANGE EPS(1) (€) 1,070 3,180 - 2,110 Cost/Income ratio(2) 46.7% 46.1% + 0.6% ROA(3) 0.6% 1.5% - 0.9% Notes: (1) Earnings per share. For further details refer to Part C - Section 22. (2) Ratio between operating expenses and operating income. (3) Return on assets calculated as the ratio between Net profit (loss) and Total assets pursuant to art. 90 of CRD IV. Risk ratios AS AT % CHANGE ON % CHANGE ON 12.31.2018 01.01.2018 12.31.2017 12.31.2018/01.01.2018 01.01.2018/12.31.2017 Net bad loans to customers/Loans to customers 1.3% 1.6% 2.7% - 0.3% - 1.1% Net non-performing loans to customers/Loans to customers 4.2% 5.6% 6.7% - 1.4% - 1.1% For more details refer to table “Loans to customers - Credit quality” in paragraph “Credit quality” in this Report on operations. Report on operations Introduction and highlights UniCredit ·2018 Annual Report and Accounts 513 Staff and branches AS AT 12.31.2018 12.31.2017 CHANGE Employees 35,526 38,952 -3,426 Branches 2,845 3,096 -251 of which: - Italy 2,836 3,087 -251 - Other countries 8 9 -1 Transitional capital ratios AS AT 12.31.2018(*) 12.31.2017(*) CHANGE Total own funds (€ million) 56,527 60,332 - 3,805 Total risk-weighted assets (€ million) 204,991 202,121 + 2,870 Common Equity Tier 1 Capital Ratio 21.65% 22.99% - 1.3% Total Capital Ratio 27.58% 29.85% - 2.3% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit S.p.A. has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. For more details see paragraph "Capital and value management - Capital ratios", for more details of this Report on operations. Report on operations Introduction and highlights UniCredit ·2018 Annual Report and Accounts 513 Staff and branches AS AT 12.31.2018 12.31.2017 CHANGE Employees 35,526 38,952 -3,426 Branches 2,845 3,096 -251 of which: - Italy 2,836 3,087 -251 - Other countries 8 9 -1 Transitional capital ratios AS AT 12.31.2018(*) 12.31.2017(*) CHANGE Total own funds (€ million) 56,527 60,332 - 3,805 Total risk-weighted assets (€ million) 204,991 202,121 + 2,870 Common Equity Tier 1 Capital Ratio 21.65% 22.99% - 1.3% Total Capital Ratio 27.58% 29.85% - 2.3% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit S.p.A. has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. For more details see paragraph "Capital and value management - Capital ratios", for more details of this Report on operations. Report on operations Introduction and highlights UniCredit ·2018 Annual Report and Accounts 513 Staff and branches AS AT 12.31.2018 12.31.2017 CHANGE Employees 35,526 38,952 -3,426 Branches 2,845 3,096 -251 of which: - Italy 2,836 3,087 -251 - Other countries 8 9 -1 Transitional capital ratios AS AT 12.31.2018(*) 12.31.2017(*) CHANGE Total own funds (€ million) 56,527 60,332 - 3,805 Total risk-weighted assets (€ million) 204,991 202,121 + 2,870 Common Equity Tier 1 Capital Ratio 21.65% 22.99% - 1.3% Total Capital Ratio 27.58% 29.85% - 2.3% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit S.p.A. has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. For more details see paragraph "Capital and value management - Capital ratios", for more details of this Report on operations. Report on operations Introduction and highlights UniCredit ·2018 Annual Report and Accounts 513 Staff and branches AS AT 12.31.2018 12.31.2017 CHANGE Employees 35,526 38,952 -3,426 Branches 2,845 3,096 -251 of which: - Italy 2,836 3,087 -251 - Other countries 8 9 -1 Transitional capital ratios AS AT 12.31.2018(*) 12.31.2017(*) CHANGE Total own funds (€ million) 56,527 60,332 - 3,805 Total risk-weighted assets (€ million) 204,991 202,121 + 2,870 Common Equity Tier 1 Capital Ratio 21.65% 22.99% - 1.3% Total Capital Ratio 27.58% 29.85% - 2.3% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit S.p.A. has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. For more details see paragraph "Capital and value management - Capital ratios", for more details of this Report on operations. Report on operations Introduction and highlights UniCredit ·2018 Annual Report and Accounts 513 Staff and branches AS AT 12.31.2018 12.31.2017 CHANGE Employees 35,526 38,952 -3,426 Branches 2,845 3,096 -251 of which: - Italy 2,836 3,087 -251 - Other countries 8 9 -1 Transitional capital ratios AS AT 12.31.2018(*) 12.31.2017(*) CHANGE Total own funds (€ million) 56,527 60,332 - 3,805 Total risk-weighted assets (€ million) 204,991 202,121 + 2,870 Common Equity Tier 1 Capital Ratio 21.65% 22.99% - 1.3% Total Capital Ratio 27.58% 29.85% - 2.3% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit S.p.A. has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. For more details see paragraph "Capital and value management - Capital ratios", for more details of this Report on operations. Report on operations Reclassified company accounts 514 2018 Annual Report and Accounts · UniCredit Reconciliation principles followed for the reclassified balance sheet The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Loans to banks” of “Financial assets at amortised cost: a) Loans and receivables with banks” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the inclusion in “Loans to customers” of “Financial assets at amortised cost: b) Loans and receivables with customers” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the aggregation as “Other financial assets” of “Financial assets at fair value through profit and loss: b) Financial assets designated at fair value and c) Other financial assets mandatorily at fair value” net of loans reclassified in “Loans to banks and to customers”, of “Financial assets at fair value through other comprehensive income” and of “Equity investments” with inclusion of debt securities from Loans to banks and customers - Item 40 a) and b); • grouping under “Hedging instruments”, both assets and liabilities, of “Hedging derivatives” and “Changes in fair value of portfolio hedged items”; • the inclusion of “Provision for employee severance pay”, “Provisions for risks and charges” and “Technical reserves” under “Other liabilities”. The format of the Reclassified Balance Sheet is different from the one used in the previous financial year following the reclassification/aggregation of item “Provisions for risks and charges” from a separate item to “Other liabilities” and of item “Revaluation Reserves” from a separate item to item “Capital and Reserves”. The item “Financial investments” has also been renamed in “Other financial assets” as well as previous item “Deposits from customers and debt securities in issue” is now evidenced in two separate items “Deposits from customers and “Debt securities issued”. The comparative periods were restated accordingly. 2017 figures were also restated following the reclassification of the component relating to debt securities from “Loans to customers” to item “Other financial assets”. Reclassified balance sheet (€ million) AMOUNTS AS AT CHANGE ASSETS 12.31.2018 12.31.2017 AMOUNT % Cash and cash balances 7,461 25,817 - 18,356 - 71.1% Financial assets held for trading 11,834 13,864 - 2,030 - 14.6% Loans to banks 28,635 27,567 + 1,068 + 3.9% Loans to customers 222,591 206,546 + 16,045 + 7.8% Other financial assets 112,294 107,697 + 4,597 + 4.3% Hedging instruments 5,853 6,114 - 261 - 4.3% Property, plant and equipment 2,246 2,209 + 37 + 1.7% Goodwill - - - - Other intangible assets 4 4 - - Tax assets 10,704 10,311 + 393 + 3.8% Non-current assets and disposal groups classified as held for sale 117 150 - 33 - 22.0% Other assets 3,877 4,701 - 824 - 17.5% Total assets 405,616 404,980 + 636 + 0.2% (€ million) AMOUNTS AS AT CHANGE LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 AMOUNT % Deposits from banks 58,995 56,807 + 2,188 + 3.9% Deposits from customers 211,872 197,139 + 14,733 + 7.5% Debt securities issued 52,969 64,945 - 11,976 - 18.4% Financial liabilities held for trading 10,384 13,068 - 2,684 - 20.5% Financial liabilities designated at fair value 3,535 2,738 + 797 + 29.1% Hedging instruments 6,295 6,279 + 16 + 0.3% Tax liabilities 2 1 + 1 + 100.0% Liabilities included in disposal groups classified as held for sale - - - - Other liabilities 10,728 10,495 + 233 + 2.2% Shareholders' Equity: 50,836 53,508 - 2,672 - 5.0% - capital and reserves 48,378 47,272 + 1,106 + 2.3% - net profit (loss) 2,458 6,236 - 3,778 - 60.6% Total liabilities and Shareholders' equity 405,616 404,980 + 636 + 0.2% Reclassified company account Report on operations Reclassified company accounts 514 2018 Annual Report and Accounts · UniCredit Reconciliation principles followed for the reclassified balance sheet The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Loans to banks” of “Financial assets at amortised cost: a) Loans and receivables with banks” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the inclusion in “Loans to customers” of “Financial assets at amortised cost: b) Loans and receivables with customers” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the aggregation as “Other financial assets” of “Financial assets at fair value through profit and loss: b) Financial assets designated at fair value and c) Other financial assets mandatorily at fair value” net of loans reclassified in “Loans to banks and to customers”, of “Financial assets at fair value through other comprehensive income” and of “Equity investments” with inclusion of debt securities from Loans to banks and customers - Item 40 a) and b); • grouping under “Hedging instruments”, both assets and liabilities, of “Hedging derivatives” and “Changes in fair value of portfolio hedged items”; • the inclusion of “Provision for employee severance pay”, “Provisions for risks and charges” and “Technical reserves” under “Other liabilities”. The format of the Reclassified Balance Sheet is different from the one used in the previous financial year following the reclassification/aggregation of item “Provisions for risks and charges” from a separate item to “Other liabilities” and of item “Revaluation Reserves” from a separate item to item “Capital and Reserves”. The item “Financial investments” has also been renamed in “Other financial assets” as well as previous item “Deposits from customers and debt securities in issue” is now evidenced in two separate items “Deposits from customers and “Debt securities issued”. The comparative periods were restated accordingly. 2017 figures were also restated following the reclassification of the component relating to debt securities from “Loans to customers” to item “Other financial assets”. Reclassified balance sheet (€ million) AMOUNTS AS AT CHANGE ASSETS 12.31.2018 12.31.2017 AMOUNT % Cash and cash balances 7,461 25,817 - 18,356 - 71.1% Financial assets held for trading 11,834 13,864 - 2,030 - 14.6% Loans to banks 28,635 27,567 + 1,068 + 3.9% Loans to customers 222,591 206,546 + 16,045 + 7.8% Other financial assets 112,294 107,697 + 4,597 + 4.3% Hedging instruments 5,853 6,114 - 261 - 4.3% Property, plant and equipment 2,246 2,209 + 37 + 1.7% Goodwill - - - - Other intangible assets 4 4 - - Tax assets 10,704 10,311 + 393 + 3.8% Non-current assets and disposal groups classified as held for sale 117 150 - 33 - 22.0% Other assets 3,877 4,701 - 824 - 17.5% Total assets 405,616 404,980 + 636 + 0.2% (€ million) AMOUNTS AS AT CHANGE LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 AMOUNT % Deposits from banks 58,995 56,807 + 2,188 + 3.9% Deposits from customers 211,872 197,139 + 14,733 + 7.5% Debt securities issued 52,969 64,945 - 11,976 - 18.4% Financial liabilities held for trading 10,384 13,068 - 2,684 - 20.5% Financial liabilities designated at fair value 3,535 2,738 + 797 + 29.1% Hedging instruments 6,295 6,279 + 16 + 0.3% Tax liabilities 2 1 + 1 + 100.0% Liabilities included in disposal groups classified as held for sale - - - - Other liabilities 10,728 10,495 + 233 + 2.2% Shareholders' Equity: 50,836 53,508 - 2,672 - 5.0% - capital and reserves 48,378 47,272 + 1,106 + 2.3% - net profit (loss) 2,458 6,236 - 3,778 - 60.6% Total liabilities and Shareholders' equity 405,616 404,980 + 636 + 0.2% Reclassified company account Report on operations Reclassified company accounts 514 2018 Annual Report and Accounts · UniCredit Reconciliation principles followed for the reclassified balance sheet The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Loans to banks” of “Financial assets at amortised cost: a) Loans and receivables with banks” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the inclusion in “Loans to customers” of “Financial assets at amortised cost: b) Loans and receivables with customers” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the aggregation as “Other financial assets” of “Financial assets at fair value through profit and loss: b) Financial assets designated at fair value and c) Other financial assets mandatorily at fair value” net of loans reclassified in “Loans to banks and to customers”, of “Financial assets at fair value through other comprehensive income” and of “Equity investments” with inclusion of debt securities from Loans to banks and customers - Item 40 a) and b); • grouping under “Hedging instruments”, both assets and liabilities, of “Hedging derivatives” and “Changes in fair value of portfolio hedged items”; • the inclusion of “Provision for employee severance pay”, “Provisions for risks and charges” and “Technical reserves” under “Other liabilities”. The format of the Reclassified Balance Sheet is different from the one used in the previous financial year following the reclassification/aggregation of item “Provisions for risks and charges” from a separate item to “Other liabilities” and of item “Revaluation Reserves” from a separate item to item “Capital and Reserves”. The item “Financial investments” has also been renamed in “Other financial assets” as well as previous item “Deposits from customers and debt securities in issue” is now evidenced in two separate items “Deposits from customers and “Debt securities issued”. The comparative periods were restated accordingly. 2017 figures were also restated following the reclassification of the component relating to debt securities from “Loans to customers” to item “Other financial assets”. Reclassified balance sheet (€ million) AMOUNTS AS AT CHANGE ASSETS 12.31.2018 12.31.2017 AMOUNT % Cash and cash balances 7,461 25,817 - 18,356 - 71.1% Financial assets held for trading 11,834 13,864 - 2,030 - 14.6% Loans to banks 28,635 27,567 + 1,068 + 3.9% Loans to customers 222,591 206,546 + 16,045 + 7.8% Other financial assets 112,294 107,697 + 4,597 + 4.3% Hedging instruments 5,853 6,114 - 261 - 4.3% Property, plant and equipment 2,246 2,209 + 37 + 1.7% Goodwill - - - - Other intangible assets 4 4 - - Tax assets 10,704 10,311 + 393 + 3.8% Non-current assets and disposal groups classified as held for sale 117 150 - 33 - 22.0% Other assets 3,877 4,701 - 824 - 17.5% Total assets 405,616 404,980 + 636 + 0.2% (€ million) AMOUNTS AS AT CHANGE LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 AMOUNT % Deposits from banks 58,995 56,807 + 2,188 + 3.9% Deposits from customers 211,872 197,139 + 14,733 + 7.5% Debt securities issued 52,969 64,945 - 11,976 - 18.4% Financial liabilities held for trading 10,384 13,068 - 2,684 - 20.5% Financial liabilities designated at fair value 3,535 2,738 + 797 + 29.1% Hedging instruments 6,295 6,279 + 16 + 0.3% Tax liabilities 2 1 + 1 + 100.0% Liabilities included in disposal groups classified as held for sale - - - - Other liabilities 10,728 10,495 + 233 + 2.2% Shareholders' Equity: 50,836 53,508 - 2,672 - 5.0% - capital and reserves 48,378 47,272 + 1,106 + 2.3% - net profit (loss) 2,458 6,236 - 3,778 - 60.6% Total liabilities and Shareholders' equity 405,616 404,980 + 636 + 0.2% Reclassified company account Report on operations Reclassified company accounts 514 2018 Annual Report and Accounts · UniCredit Reconciliation principles followed for the reclassified balance sheet The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Loans to banks” of “Financial assets at amortised cost: a) Loans and receivables with banks” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the inclusion in “Loans to customers” of “Financial assets at amortised cost: b) Loans and receivables with customers” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the aggregation as “Other financial assets” of “Financial assets at fair value through profit and loss: b) Financial assets designated at fair value and c) Other financial assets mandatorily at fair value” net of loans reclassified in “Loans to banks and to customers”, of “Financial assets at fair value through other comprehensive income” and of “Equity investments” with inclusion of debt securities from Loans to banks and customers - Item 40 a) and b); • grouping under “Hedging instruments”, both assets and liabilities, of “Hedging derivatives” and “Changes in fair value of portfolio hedged items”; • the inclusion of “Provision for employee severance pay”, “Provisions for risks and charges” and “Technical reserves” under “Other liabilities”. The format of the Reclassified Balance Sheet is different from the one used in the previous financial year following the reclassification/aggregation of item “Provisions for risks and charges” from a separate item to “Other liabilities” and of item “Revaluation Reserves” from a separate item to item “Capital and Reserves”. The item “Financial investments” has also been renamed in “Other financial assets” as well as previous item “Deposits from customers and debt securities in issue” is now evidenced in two separate items “Deposits from customers and “Debt securities issued”. The comparative periods were restated accordingly. 2017 figures were also restated following the reclassification of the component relating to debt securities from “Loans to customers” to item “Other financial assets”. Reclassified balance sheet (€ million) AMOUNTS AS AT CHANGE ASSETS 12.31.2018 12.31.2017 AMOUNT % Cash and cash balances 7,461 25,817 - 18,356 - 71.1% Financial assets held for trading 11,834 13,864 - 2,030 - 14.6% Loans to banks 28,635 27,567 + 1,068 + 3.9% Loans to customers 222,591 206,546 + 16,045 + 7.8% Other financial assets 112,294 107,697 + 4,597 + 4.3% Hedging instruments 5,853 6,114 - 261 - 4.3% Property, plant and equipment 2,246 2,209 + 37 + 1.7% Goodwill - - - - Other intangible assets 4 4 - - Tax assets 10,704 10,311 + 393 + 3.8% Non-current assets and disposal groups classified as held for sale 117 150 - 33 - 22.0% Other assets 3,877 4,701 - 824 - 17.5% Total assets 405,616 404,980 + 636 + 0.2% (€ million) AMOUNTS AS AT CHANGE LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 AMOUNT % Deposits from banks 58,995 56,807 + 2,188 + 3.9% Deposits from customers 211,872 197,139 + 14,733 + 7.5% Debt securities issued 52,969 64,945 - 11,976 - 18.4% Financial liabilities held for trading 10,384 13,068 - 2,684 - 20.5% Financial liabilities designated at fair value 3,535 2,738 + 797 + 29.1% Hedging instruments 6,295 6,279 + 16 + 0.3% Tax liabilities 2 1 + 1 + 100.0% Liabilities included in disposal groups classified as held for sale - - - - Other liabilities 10,728 10,495 + 233 + 2.2% Shareholders' Equity: 50,836 53,508 - 2,672 - 5.0% - capital and reserves 48,378 47,272 + 1,106 + 2.3% - net profit (loss) 2,458 6,236 - 3,778 - 60.6% Total liabilities and Shareholders' equity 405,616 404,980 + 636 + 0.2% Reclassified company account Report on operations Reclassified company accounts 514 2018 Annual Report and Accounts · UniCredit Reconciliation principles followed for the reclassified balance sheet The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Loans to banks” of “Financial assets at amortised cost: a) Loans and receivables with banks” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the inclusion in “Loans to customers” of “Financial assets at amortised cost: b) Loans and receivables with customers” net of debt securities reclassified in “Other financial assets” and of loans reclassified from “Other financial assets - Item 20 c)”; • the aggregation as “Other financial assets” of “Financial assets at fair value through profit and loss: b) Financial assets designated at fair value and c) Other financial assets mandatorily at fair value” net of loans reclassified in “Loans to banks and to customers”, of “Financial assets at fair value through other comprehensive income” and of “Equity investments” with inclusion of debt securities from Loans to banks and customers - Item 40 a) and b); • grouping under “Hedging instruments”, both assets and liabilities, of “Hedging derivatives” and “Changes in fair value of portfolio hedged items”; • the inclusion of “Provision for employee severance pay”, “Provisions for risks and charges” and “Technical reserves” under “Other liabilities”. The format of the Reclassified Balance Sheet is different from the one used in the previous financial year following the reclassification/aggregation of item “Provisions for risks and charges” from a separate item to “Other liabilities” and of item “Revaluation Reserves” from a separate item to item “Capital and Reserves”. The item “Financial investments” has also been renamed in “Other financial assets” as well as previous item “Deposits from customers and debt securities in issue” is now evidenced in two separate items “Deposits from customers and “Debt securities issued”. The comparative periods were restated accordingly. 2017 figures were also restated following the reclassification of the component relating to debt securities from “Loans to customers” to item “Other financial assets”. Reclassified balance sheet (€ million) AMOUNTS AS AT CHANGE ASSETS 12.31.2018 12.31.2017 AMOUNT % Cash and cash balances 7,461 25,817 - 18,356 - 71.1% Financial assets held for trading 11,834 13,864 - 2,030 - 14.6% Loans to banks 28,635 27,567 + 1,068 + 3.9% Loans to customers 222,591 206,546 + 16,045 + 7.8% Other financial assets 112,294 107,697 + 4,597 + 4.3% Hedging instruments 5,853 6,114 - 261 - 4.3% Property, plant and equipment 2,246 2,209 + 37 + 1.7% Goodwill - - - - Other intangible assets 4 4 - - Tax assets 10,704 10,311 + 393 + 3.8% Non-current assets and disposal groups classified as held for sale 117 150 - 33 - 22.0% Other assets 3,877 4,701 - 824 - 17.5% Total assets 405,616 404,980 + 636 + 0.2% (€ million) AMOUNTS AS AT CHANGE LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 AMOUNT % Deposits from banks 58,995 56,807 + 2,188 + 3.9% Deposits from customers 211,872 197,139 + 14,733 + 7.5% Debt securities issued 52,969 64,945 - 11,976 - 18.4% Financial liabilities held for trading 10,384 13,068 - 2,684 - 20.5% Financial liabilities designated at fair value 3,535 2,738 + 797 + 29.1% Hedging instruments 6,295 6,279 + 16 + 0.3% Tax liabilities 2 1 + 1 + 100.0% Liabilities included in disposal groups classified as held for sale - - - - Other liabilities 10,728 10,495 + 233 + 2.2% Shareholders' Equity: 50,836 53,508 - 2,672 - 5.0% - capital and reserves 48,378 47,272 + 1,106 + 2.3% - net profit (loss) 2,458 6,236 - 3,778 - 60.6% Total liabilities and Shareholders' equity 405,616 404,980 + 636 + 0.2% Reclassified company account Report on operations Reclassified company accounts UniCredit ·2018 Annual Report and Accounts 515 Reclassified balance sheet - Quarterly figures (€ million) AMOUNTS AS AT AMOUNTS AS AT ASSETS 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Cash and cash balances 7,461 6,347 4,849 22,951 25,817 20,437 24,093 9,489 Financial assets held for trading 11,834 17,605 16,595 15,877 13,864 17,980 15,794 17,749 Loans to banks 28,635 32,917 26,423 23,699 27,567 23,377 18,268 19,846 Loans to customers 222,591 215,733 220,447 205,697 206,546 207,856 211,148 215,815 Other financial assets 112,294 110,211 107,009 104,160 107,697 101,203 101,729 108,262 Hedging instruments 5,853 5,257 5,869 5,720 6,114 6,510 6,781 7,352 Property, plant and equipment 2,246 2,234 2,244 2,292 2,209 2,267 2,280 2,317 Goodwill - - - - - - - - Other intangible assets 4 4 4 4 4 7 4 4 Tax assets 10,704 9,984 9,818 9,804 10,311 10,961 11,483 12,165 Non-current assets and disposal groups classified as held for sale 117 127 425 93 150 2,316 4,070 7,312 Other assets 3,877 4,084 4,375 3,888 4,701 4,189 4,759 4,503 Total assets 405,616 404,503 398,058 394,185 404,980 397,103 400,409 404,814 (€ million) AMOUNTS AS AT AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Deposits from banks 58,995 64,545 64,159 58,899 56,807 55,999 55,868 58,914 Deposits from customers 211,872 207,716 195,995 193,001 197,139 186,467 179,984 183,668 Debt securities issued 52,969 51,115 54,594 60,370 64,945 73,260 78,831 78,434 Financial liabilities held for trading 10,384 12,733 11,612 11,098 13,068 14,191 13,040 14,334 Financial liabilities designated at fair value 3,535 2,900 2,790 2,748 2,738 2,785 2,708 2,665 Hedging instruments 6,295 5,263 6,057 5,877 6,279 6,569 7,087 7,972 Tax liabilities 2 3 2 2 1 2 8 164 Liabilities included in disposal groups classified as held for sale - - 234 - - - - 4 Other liabilities 10,728 9,927 10,963 11,320 10,495 10,373 15,114 13,639 Shareholders' Equity: 50,836 50,301 51,652 50,870 53,508 47,457 47,769 45,020 - capital and reserves 48,378 48,377 48,704 50,470 47,272 46,387 46,469 45,009 - net profit (loss) 2,458 1,924 2,948 400 6,236 1,070 1,300 11 Total liabilities and Shareholders' equity 405,616 404,503 398,058 394,185 404,980 397,103 400,409 404,814 Report on operations Reclassified company accounts UniCredit ·2018 Annual Report and Accounts 515 Reclassified balance sheet - Quarterly figures (€ million) AMOUNTS AS AT AMOUNTS AS AT ASSETS 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Cash and cash balances 7,461 6,347 4,849 22,951 25,817 20,437 24,093 9,489 Financial assets held for trading 11,834 17,605 16,595 15,877 13,864 17,980 15,794 17,749 Loans to banks 28,635 32,917 26,423 23,699 27,567 23,377 18,268 19,846 Loans to customers 222,591 215,733 220,447 205,697 206,546 207,856 211,148 215,815 Other financial assets 112,294 110,211 107,009 104,160 107,697 101,203 101,729 108,262 Hedging instruments 5,853 5,257 5,869 5,720 6,114 6,510 6,781 7,352 Property, plant and equipment 2,246 2,234 2,244 2,292 2,209 2,267 2,280 2,317 Goodwill - - - - - - - - Other intangible assets 4 4 4 4 4 7 4 4 Tax assets 10,704 9,984 9,818 9,804 10,311 10,961 11,483 12,165 Non-current assets and disposal groups classified as held for sale 117 127 425 93 150 2,316 4,070 7,312 Other assets 3,877 4,084 4,375 3,888 4,701 4,189 4,759 4,503 Total assets 405,616 404,503 398,058 394,185 404,980 397,103 400,409 404,814 (€ million) AMOUNTS AS AT AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Deposits from banks 58,995 64,545 64,159 58,899 56,807 55,999 55,868 58,914 Deposits from customers 211,872 207,716 195,995 193,001 197,139 186,467 179,984 183,668 Debt securities issued 52,969 51,115 54,594 60,370 64,945 73,260 78,831 78,434 Financial liabilities held for trading 10,384 12,733 11,612 11,098 13,068 14,191 13,040 14,334 Financial liabilities designated at fair value 3,535 2,900 2,790 2,748 2,738 2,785 2,708 2,665 Hedging instruments 6,295 5,263 6,057 5,877 6,279 6,569 7,087 7,972 Tax liabilities 2 3 2 2 1 2 8 164 Liabilities included in disposal groups classified as held for sale - - 234 - - - - 4 Other liabilities 10,728 9,927 10,963 11,320 10,495 10,373 15,114 13,639 Shareholders' Equity: 50,836 50,301 51,652 50,870 53,508 47,457 47,769 45,020 - capital and reserves 48,378 48,377 48,704 50,470 47,272 46,387 46,469 45,009 - net profit (loss) 2,458 1,924 2,948 400 6,236 1,070 1,300 11 Total liabilities and Shareholders' equity 405,616 404,503 398,058 394,185 404,980 397,103 400,409 404,814 Report on operations Reclassified company accounts UniCredit ·2018 Annual Report and Accounts 515 Reclassified balance sheet - Quarterly figures (€ million) AMOUNTS AS AT AMOUNTS AS AT ASSETS 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Cash and cash balances 7,461 6,347 4,849 22,951 25,817 20,437 24,093 9,489 Financial assets held for trading 11,834 17,605 16,595 15,877 13,864 17,980 15,794 17,749 Loans to banks 28,635 32,917 26,423 23,699 27,567 23,377 18,268 19,846 Loans to customers 222,591 215,733 220,447 205,697 206,546 207,856 211,148 215,815 Other financial assets 112,294 110,211 107,009 104,160 107,697 101,203 101,729 108,262 Hedging instruments 5,853 5,257 5,869 5,720 6,114 6,510 6,781 7,352 Property, plant and equipment 2,246 2,234 2,244 2,292 2,209 2,267 2,280 2,317 Goodwill - - - - - - - - Other intangible assets 4 4 4 4 4 7 4 4 Tax assets 10,704 9,984 9,818 9,804 10,311 10,961 11,483 12,165 Non-current assets and disposal groups classified as held for sale 117 127 425 93 150 2,316 4,070 7,312 Other assets 3,877 4,084 4,375 3,888 4,701 4,189 4,759 4,503 Total assets 405,616 404,503 398,058 394,185 404,980 397,103 400,409 404,814 (€ million) AMOUNTS AS AT AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Deposits from banks 58,995 64,545 64,159 58,899 56,807 55,999 55,868 58,914 Deposits from customers 211,872 207,716 195,995 193,001 197,139 186,467 179,984 183,668 Debt securities issued 52,969 51,115 54,594 60,370 64,945 73,260 78,831 78,434 Financial liabilities held for trading 10,384 12,733 11,612 11,098 13,068 14,191 13,040 14,334 Financial liabilities designated at fair value 3,535 2,900 2,790 2,748 2,738 2,785 2,708 2,665 Hedging instruments 6,295 5,263 6,057 5,877 6,279 6,569 7,087 7,972 Tax liabilities 2 3 2 2 1 2 8 164 Liabilities included in disposal groups classified as held for sale - - 234 - - - - 4 Other liabilities 10,728 9,927 10,963 11,320 10,495 10,373 15,114 13,639 Shareholders' Equity: 50,836 50,301 51,652 50,870 53,508 47,457 47,769 45,020 - capital and reserves 48,378 48,377 48,704 50,470 47,272 46,387 46,469 45,009 - net profit (loss) 2,458 1,924 2,948 400 6,236 1,070 1,300 11 Total liabilities and Shareholders' equity 405,616 404,503 398,058 394,185 404,980 397,103 400,409 404,814 Report on operations Reclassified company accounts UniCredit ·2018 Annual Report and Accounts 515 Reclassified balance sheet - Quarterly figures (€ million) AMOUNTS AS AT AMOUNTS AS AT ASSETS 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Cash and cash balances 7,461 6,347 4,849 22,951 25,817 20,437 24,093 9,489 Financial assets held for trading 11,834 17,605 16,595 15,877 13,864 17,980 15,794 17,749 Loans to banks 28,635 32,917 26,423 23,699 27,567 23,377 18,268 19,846 Loans to customers 222,591 215,733 220,447 205,697 206,546 207,856 211,148 215,815 Other financial assets 112,294 110,211 107,009 104,160 107,697 101,203 101,729 108,262 Hedging instruments 5,853 5,257 5,869 5,720 6,114 6,510 6,781 7,352 Property, plant and equipment 2,246 2,234 2,244 2,292 2,209 2,267 2,280 2,317 Goodwill - - - - - - - - Other intangible assets 4 4 4 4 4 7 4 4 Tax assets 10,704 9,984 9,818 9,804 10,311 10,961 11,483 12,165 Non-current assets and disposal groups classified as held for sale 117 127 425 93 150 2,316 4,070 7,312 Other assets 3,877 4,084 4,375 3,888 4,701 4,189 4,759 4,503 Total assets 405,616 404,503 398,058 394,185 404,980 397,103 400,409 404,814 (€ million) AMOUNTS AS AT AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Deposits from banks 58,995 64,545 64,159 58,899 56,807 55,999 55,868 58,914 Deposits from customers 211,872 207,716 195,995 193,001 197,139 186,467 179,984 183,668 Debt securities issued 52,969 51,115 54,594 60,370 64,945 73,260 78,831 78,434 Financial liabilities held for trading 10,384 12,733 11,612 11,098 13,068 14,191 13,040 14,334 Financial liabilities designated at fair value 3,535 2,900 2,790 2,748 2,738 2,785 2,708 2,665 Hedging instruments 6,295 5,263 6,057 5,877 6,279 6,569 7,087 7,972 Tax liabilities 2 3 2 2 1 2 8 164 Liabilities included in disposal groups classified as held for sale - - 234 - - - - 4 Other liabilities 10,728 9,927 10,963 11,320 10,495 10,373 15,114 13,639 Shareholders' Equity: 50,836 50,301 51,652 50,870 53,508 47,457 47,769 45,020 - capital and reserves 48,378 48,377 48,704 50,470 47,272 46,387 46,469 45,009 - net profit (loss) 2,458 1,924 2,948 400 6,236 1,070 1,300 11 Total liabilities and Shareholders' equity 405,616 404,503 398,058 394,185 404,980 397,103 400,409 404,814 Report on operations Reclassified company accounts UniCredit ·2018 Annual Report and Accounts 515 Reclassified balance sheet - Quarterly figures (€ million) AMOUNTS AS AT AMOUNTS AS AT ASSETS 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Cash and cash balances 7,461 6,347 4,849 22,951 25,817 20,437 24,093 9,489 Financial assets held for trading 11,834 17,605 16,595 15,877 13,864 17,980 15,794 17,749 Loans to banks 28,635 32,917 26,423 23,699 27,567 23,377 18,268 19,846 Loans to customers 222,591 215,733 220,447 205,697 206,546 207,856 211,148 215,815 Other financial assets 112,294 110,211 107,009 104,160 107,697 101,203 101,729 108,262 Hedging instruments 5,853 5,257 5,869 5,720 6,114 6,510 6,781 7,352 Property, plant and equipment 2,246 2,234 2,244 2,292 2,209 2,267 2,280 2,317 Goodwill - - - - - - - - Other intangible assets 4 4 4 4 4 7 4 4 Tax assets 10,704 9,984 9,818 9,804 10,311 10,961 11,483 12,165 Non-current assets and disposal groups classified as held for sale 117 127 425 93 150 2,316 4,070 7,312 Other assets 3,877 4,084 4,375 3,888 4,701 4,189 4,759 4,503 Total assets 405,616 404,503 398,058 394,185 404,980 397,103 400,409 404,814 (€ million) AMOUNTS AS AT AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 09.30.2018 06.30.2018 03.31.2018 12.31.2017 09.30.2017 06.30.2017 03.31.2017 Deposits from banks 58,995 64,545 64,159 58,899 56,807 55,999 55,868 58,914 Deposits from customers 211,872 207,716 195,995 193,001 197,139 186,467 179,984 183,668 Debt securities issued 52,969 51,115 54,594 60,370 64,945 73,260 78,831 78,434 Financial liabilities held for trading 10,384 12,733 11,612 11,098 13,068 14,191 13,040 14,334 Financial liabilities designated at fair value 3,535 2,900 2,790 2,748 2,738 2,785 2,708 2,665 Hedging instruments 6,295 5,263 6,057 5,877 6,279 6,569 7,087 7,972 Tax liabilities 2 3 2 2 1 2 8 164 Liabilities included in disposal groups classified as held for sale - - 234 - - - - 4 Other liabilities 10,728 9,927 10,963 11,320 10,495 10,373 15,114 13,639 Shareholders' Equity: 50,836 50,301 51,652 50,870 53,508 47,457 47,769 45,020 - capital and reserves 48,378 48,377 48,704 50,470 47,272 46,387 46,469 45,009 - net profit (loss) 2,458 1,924 2,948 400 6,236 1,070 1,300 11 Total liabilities and Shareholders' equity 405,616 404,503 398,058 394,185 404,980 397,103 400,409 404,814 Report on operations Reclassified company accounts 516 2018 Annual Report and Accounts · UniCredit Reconciliation principles followed for the reclassified income statement The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Dividends and other income from equity investments” of “Profit (Loss) of equity investments valued at equity” and the exclusion of “Dividends from held for trading equity instruments” which are included in “Net trading income”; • the inclusion among “Net trading income” of net gains (losses) on trading, on hedge accounting, of net gains/losses on the financial assets/liabilities at fair value through profit or loss and of gains/losses on disposal or repurchase of financial assets at fair value through other comprehensive income; • the inclusion in the “Net other operating expenses/income”, excluding “Recovery of expenses” which is classified under its own item, the exclusion of the costs for “Write-downs on leasehold improvements” classified among “Other administrative expenses” and inclusion of result of industrial companies; • presentation of “Payroll costs”, “Other administrative expenses”, “Amortisation, depreciation and impairment losses on tangible and intangible assets” and “Other charges and Provisions” net of any “Integration costs” relating to the reorganisation operations, classified as a separate item; • the exclusion from the “Other administrative expenses” of the Contributions to the Resolution Funds (SRF), the Deposit Guarantee Schemes (DGS), the Bank Levies and the Guarantee fees for DTA reclassified in item “Other charges and provision”; • the exclusion from “Amortisation, depreciation and impairment losses on intangible and tangible assets” of property owned for investment and those related to operating lease assets, which are reclassified respectively among “Net income from investments” and “Net other expenses/income”; • the inclusion in “Net income from investments” of write-downs and write-backs on financial assets at amortised cost and at fair value through other comprehensive income - debt securities, gains (losses) on disposal of investments, gains (losses) on tangible and intangible assets measured at fair value as well as gains (losses) on equity investments and on disposal of investments; • in “Net write-downs on loans and provisions for guarantees and commitments”, the inclusion of net losses/recoveries on financial assets at amortised cost and at fair value through other comprehensive income net of debt securities and the inclusion of commitments and financial guarantees given on “Net provisions for risks and charge”. 2017 figures were restated following the reclassification of interests from item “Net write-downs on loans and provisions for guarantees and commitments” to item “Net interest” considering: • the component linked to the interests due to time value unwinding, determined in the valuation of non-performing financial assets; • the identification of interests income on the non-performing financial assets calculated on their net balance sheet exposure based on the related interest rates. Report on operations Reclassified company accounts 516 2018 Annual Report and Accounts · UniCredit Reconciliation principles followed for the reclassified income statement The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Dividends and other income from equity investments” of “Profit (Loss) of equity investments valued at equity” and the exclusion of “Dividends from held for trading equity instruments” which are included in “Net trading income”; • the inclusion among “Net trading income” of net gains (losses) on trading, on hedge accounting, of net gains/losses on the financial assets/liabilities at fair value through profit or loss and of gains/losses on disposal or repurchase of financial assets at fair value through other comprehensive income; • the inclusion in the “Net other operating expenses/income”, excluding “Recovery of expenses” which is classified under its own item, the exclusion of the costs for “Write-downs on leasehold improvements” classified among “Other administrative expenses” and inclusion of result of industrial companies; • presentation of “Payroll costs”, “Other administrative expenses”, “Amortisation, depreciation and impairment losses on tangible and intangible assets” and “Other charges and Provisions” net of any “Integration costs” relating to the reorganisation operations, classified as a separate item; • the exclusion from the “Other administrative expenses” of the Contributions to the Resolution Funds (SRF), the Deposit Guarantee Schemes (DGS), the Bank Levies and the Guarantee fees for DTA reclassified in item “Other charges and provision”; • the exclusion from “Amortisation, depreciation and impairment losses on intangible and tangible assets” of property owned for investment and those related to operating lease assets, which are reclassified respectively among “Net income from investments” and “Net other expenses/income”; • the inclusion in “Net income from investments” of write-downs and write-backs on financial assets at amortised cost and at fair value through other comprehensive income - debt securities, gains (losses) on disposal of investments, gains (losses) on tangible and intangible assets measured at fair value as well as gains (losses) on equity investments and on disposal of investments; • in “Net write-downs on loans and provisions for guarantees and commitments”, the inclusion of net losses/recoveries on financial assets at amortised cost and at fair value through other comprehensive income net of debt securities and the inclusion of commitments and financial guarantees given on “Net provisions for risks and charge”. 2017 figures were restated following the reclassification of interests from item “Net write-downs on loans and provisions for guarantees and commitments” to item “Net interest” considering: • the component linked to the interests due to time value unwinding, determined in the valuation of non-performing financial assets; • the identification of interests income on the non-performing financial assets calculated on their net balance sheet exposure based on the related interest rates. Report on operations Reclassified company accounts 516 2018 Annual Report and Accounts · UniCredit Reconciliation principles followed for the reclassified income statement The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Dividends and other income from equity investments” of “Profit (Loss) of equity investments valued at equity” and the exclusion of “Dividends from held for trading equity instruments” which are included in “Net trading income”; • the inclusion among “Net trading income” of net gains (losses) on trading, on hedge accounting, of net gains/losses on the financial assets/liabilities at fair value through profit or loss and of gains/losses on disposal or repurchase of financial assets at fair value through other comprehensive income; • the inclusion in the “Net other operating expenses/income”, excluding “Recovery of expenses” which is classified under its own item, the exclusion of the costs for “Write-downs on leasehold improvements” classified among “Other administrative expenses” and inclusion of result of industrial companies; • presentation of “Payroll costs”, “Other administrative expenses”, “Amortisation, depreciation and impairment losses on tangible and intangible assets” and “Other charges and Provisions” net of any “Integration costs” relating to the reorganisation operations, classified as a separate item; • the exclusion from the “Other administrative expenses” of the Contributions to the Resolution Funds (SRF), the Deposit Guarantee Schemes (DGS), the Bank Levies and the Guarantee fees for DTA reclassified in item “Other charges and provision”; • the exclusion from “Amortisation, depreciation and impairment losses on intangible and tangible assets” of property owned for investment and those related to operating lease assets, which are reclassified respectively among “Net income from investments” and “Net other expenses/income”; • the inclusion in “Net income from investments” of write-downs and write-backs on financial assets at amortised cost and at fair value through other comprehensive income - debt securities, gains (losses) on disposal of investments, gains (losses) on tangible and intangible assets measured at fair value as well as gains (losses) on equity investments and on disposal of investments; • in “Net write-downs on loans and provisions for guarantees and commitments”, the inclusion of net losses/recoveries on financial assets at amortised cost and at fair value through other comprehensive income net of debt securities and the inclusion of commitments and financial guarantees given on “Net provisions for risks and charge”. 2017 figures were restated following the reclassification of interests from item “Net write-downs on loans and provisions for guarantees and commitments” to item “Net interest” considering: • the component linked to the interests due to time value unwinding, determined in the valuation of non-performing financial assets; • the identification of interests income on the non-performing financial assets calculated on their net balance sheet exposure based on the related interest rates. Report on operations Reclassified company accounts 516 2018 Annual Report and Accounts · UniCredit Reconciliation principles followed for the reclassified income statement The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Dividends and other income from equity investments” of “Profit (Loss) of equity investments valued at equity” and the exclusion of “Dividends from held for trading equity instruments” which are included in “Net trading income”; • the inclusion among “Net trading income” of net gains (losses) on trading, on hedge accounting, of net gains/losses on the financial assets/liabilities at fair value through profit or loss and of gains/losses on disposal or repurchase of financial assets at fair value through other comprehensive income; • the inclusion in the “Net other operating expenses/income”, excluding “Recovery of expenses” which is classified under its own item, the exclusion of the costs for “Write-downs on leasehold improvements” classified among “Other administrative expenses” and inclusion of result of industrial companies; • presentation of “Payroll costs”, “Other administrative expenses”, “Amortisation, depreciation and impairment losses on tangible and intangible assets” and “Other charges and Provisions” net of any “Integration costs” relating to the reorganisation operations, classified as a separate item; • the exclusion from the “Other administrative expenses” of the Contributions to the Resolution Funds (SRF), the Deposit Guarantee Schemes (DGS), the Bank Levies and the Guarantee fees for DTA reclassified in item “Other charges and provision”; • the exclusion from “Amortisation, depreciation and impairment losses on intangible and tangible assets” of property owned for investment and those related to operating lease assets, which are reclassified respectively among “Net income from investments” and “Net other expenses/income”; • the inclusion in “Net income from investments” of write-downs and write-backs on financial assets at amortised cost and at fair value through other comprehensive income - debt securities, gains (losses) on disposal of investments, gains (losses) on tangible and intangible assets measured at fair value as well as gains (losses) on equity investments and on disposal of investments; • in “Net write-downs on loans and provisions for guarantees and commitments”, the inclusion of net losses/recoveries on financial assets at amortised cost and at fair value through other comprehensive income net of debt securities and the inclusion of commitments and financial guarantees given on “Net provisions for risks and charge”. 2017 figures were restated following the reclassification of interests from item “Net write-downs on loans and provisions for guarantees and commitments” to item “Net interest” considering: • the component linked to the interests due to time value unwinding, determined in the valuation of non-performing financial assets; • the identification of interests income on the non-performing financial assets calculated on their net balance sheet exposure based on the related interest rates. Report on operations Reclassified company accounts 516 2018 Annual Report and Accounts · UniCredit Reconciliation principles followed for the reclassified income statement The main reclassifications, whose amounts are provided analytically in the tables enclosed with this report, involve: • the inclusion in “Dividends and other income from equity investments” of “Profit (Loss) of equity investments valued at equity” and the exclusion of “Dividends from held for trading equity instruments” which are included in “Net trading income”; • the inclusion among “Net trading income” of net gains (losses) on trading, on hedge accounting, of net gains/losses on the financial assets/liabilities at fair value through profit or loss and of gains/losses on disposal or repurchase of financial assets at fair value through other comprehensive income; • the inclusion in the “Net other operating expenses/income”, excluding “Recovery of expenses” which is classified under its own item, the exclusion of the costs for “Write-downs on leasehold improvements” classified among “Other administrative expenses” and inclusion of result of industrial companies; • presentation of “Payroll costs”, “Other administrative expenses”, “Amortisation, depreciation and impairment losses on tangible and intangible assets” and “Other charges and Provisions” net of any “Integration costs” relating to the reorganisation operations, classified as a separate item; • the exclusion from the “Other administrative expenses” of the Contributions to the Resolution Funds (SRF), the Deposit Guarantee Schemes (DGS), the Bank Levies and the Guarantee fees for DTA reclassified in item “Other charges and provision”; • the exclusion from “Amortisation, depreciation and impairment losses on intangible and tangible assets” of property owned for investment and those related to operating lease assets, which are reclassified respectively among “Net income from investments” and “Net other expenses/income”; • the inclusion in “Net income from investments” of write-downs and write-backs on financial assets at amortised cost and at fair value through other comprehensive income - debt securities, gains (losses) on disposal of investments, gains (losses) on tangible and intangible assets measured at fair value as well as gains (losses) on equity investments and on disposal of investments; • in “Net write-downs on loans and provisions for guarantees and commitments”, the inclusion of net losses/recoveries on financial assets at amortised cost and at fair value through other comprehensive income net of debt securities and the inclusion of commitments and financial guarantees given on “Net provisions for risks and charge”. 2017 figures were restated following the reclassification of interests from item “Net write-downs on loans and provisions for guarantees and commitments” to item “Net interest” considering: • the component linked to the interests due to time value unwinding, determined in the valuation of non-performing financial assets; • the identification of interests income on the non-performing financial assets calculated on their net balance sheet exposure based on the related interest rates. Report on operations Reclassified company accounts UniCredit ·2018 Annual Report and Accounts 517 Reclassified income statement (€ million) YEAR CHANGE 2018 2017 P&L % Net interest 4,166 3,960 + 206 + 5.2% Dividends and other income from equity investments 2,630 3,808 - 1,178 - 30.9% Net fees and commissions 3,839 3,798 + 41 + 1.1% Net trading income 78 302 - 224 - 74.2% Net other expenses/income (94) (95) + 1 - 1.1% OPERATING INCOME 10,619 11,773 - 1,154 - 9.8% Payroll costs (2,866) (3,139) + 273 - 8.7% Other administrative expenses (2,465) (2,694) + 229 - 8.5% Recovery of expenses 508 546 - 38 - 7.0% Amortisation, depreciation and impairment losses on intangible and tangible assets (137) (137) - - Operating costs (4,960) (5,424) + 464 - 8.6% OPERATING PROFIT (LOSS) 5,659 6,349 - 690 - 10.9% Net write-downs on loans and provisions for guarantees and commitments (1,986) (2,103) + 117 - 5.6% NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Other charges and provisions (786) (565) - 221 + 39.1% of which: systemic charges (384) (181) - 203 n.m. Integration costs (3) 14 - 17 n.m. Net income from investments (1,582) 2,427 - 4,009 n.m. PROFIT (LOSS) BEFORE TAX 1,302 6,122 - 4,820 - 78.7% Income tax for the period 1,156 30 + 1,126 n.m. PROFIT (LOSS) AFTER TAX 2,458 6,152 - 3,694 - 60.0% Profit (Loss) from non-current assets held for sale after tax - 84 - 84 - PROFIT (LOSS) FOR THE PERIOD 2,458 6,236 - 3,778 - 60.6% Goodwill impairment - - - - NET PROFIT (LOSS) 2,458 6,236 - 3,778 - 60.6% Reclassified income statement Reclassified balance sheet - Quarterly figures Report on operations Reclassified company accounts UniCredit ·2018 Annual Report and Accounts 517 Reclassified income statement (€ million) YEAR CHANGE 2018 2017 P&L % Net interest 4,166 3,960 + 206 + 5.2% Dividends and other income from equity investments 2,630 3,808 - 1,178 - 30.9% Net fees and commissions 3,839 3,798 + 41 + 1.1% Net trading income 78 302 - 224 - 74.2% Net other expenses/income (94) (95) + 1 - 1.1% OPERATING INCOME 10,619 11,773 - 1,154 - 9.8% Payroll costs (2,866) (3,139) + 273 - 8.7% Other administrative expenses (2,465) (2,694) + 229 - 8.5% Recovery of expenses 508 546 - 38 - 7.0% Amortisation, depreciation and impairment losses on intangible and tangible assets (137) (137) - - Operating costs (4,960) (5,424) + 464 - 8.6% OPERATING PROFIT (LOSS) 5,659 6,349 - 690 - 10.9% Net write-downs on loans and provisions for guarantees and commitments (1,986) (2,103) + 117 - 5.6% NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Other charges and provisions (786) (565) - 221 + 39.1% of which: systemic charges (384) (181) - 203 n.m. Integration costs (3) 14 - 17 n.m. Net income from investments (1,582) 2,427 - 4,009 n.m. PROFIT (LOSS) BEFORE TAX 1,302 6,122 - 4,820 - 78.7% Income tax for the period 1,156 30 + 1,126 n.m. PROFIT (LOSS) AFTER TAX 2,458 6,152 - 3,694 - 60.0% Profit (Loss) from non-current assets held for sale after tax - 84 - 84 - PROFIT (LOSS) FOR THE PERIOD 2,458 6,236 - 3,778 - 60.6% Goodwill impairment - - - - NET PROFIT (LOSS) 2,458 6,236 - 3,778 - 60.6% Reclassified income statement Reclassified balance sheet - Quarterly figures Report on operations Reclassified company accounts UniCredit ·2018 Annual Report and Accounts 517 Reclassified income statement (€ million) YEAR CHANGE 2018 2017 P&L % Net interest 4,166 3,960 + 206 + 5.2% Dividends and other income from equity investments 2,630 3,808 - 1,178 - 30.9% Net fees and commissions 3,839 3,798 + 41 + 1.1% Net trading income 78 302 - 224 - 74.2% Net other expenses/income (94) (95) + 1 - 1.1% OPERATING INCOME 10,619 11,773 - 1,154 - 9.8% Payroll costs (2,866) (3,139) + 273 - 8.7% Other administrative expenses (2,465) (2,694) + 229 - 8.5% Recovery of expenses 508 546 - 38 - 7.0% Amortisation, depreciation and impairment losses on intangible and tangible assets (137) (137) - - Operating costs (4,960) (5,424) + 464 - 8.6% OPERATING PROFIT (LOSS) 5,659 6,349 - 690 - 10.9% Net write-downs on loans and provisions for guarantees and commitments (1,986) (2,103) + 117 - 5.6% NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Other charges and provisions (786) (565) - 221 + 39.1% of which: systemic charges (384) (181) - 203 n.m. Integration costs (3) 14 - 17 n.m. Net income from investments (1,582) 2,427 - 4,009 n.m. PROFIT (LOSS) BEFORE TAX 1,302 6,122 - 4,820 - 78.7% Income tax for the period 1,156 30 + 1,126 n.m. PROFIT (LOSS) AFTER TAX 2,458 6,152 - 3,694 - 60.0% Profit (Loss) from non-current assets held for sale after tax - 84 - 84 - PROFIT (LOSS) FOR THE PERIOD 2,458 6,236 - 3,778 - 60.6% Goodwill impairment - - - - NET PROFIT (LOSS) 2,458 6,236 - 3,778 - 60.6% Reclassified income statement Reclassified balance sheet - Quarterly figures Report on operations Reclassified company accounts UniCredit ·2018 Annual Report and Accounts 517 Reclassified income statement (€ million) YEAR CHANGE 2018 2017 P&L % Net interest 4,166 3,960 + 206 + 5.2% Dividends and other income from equity investments 2,630 3,808 - 1,178 - 30.9% Net fees and commissions 3,839 3,798 + 41 + 1.1% Net trading income 78 302 - 224 - 74.2% Net other expenses/income (94) (95) + 1 - 1.1% OPERATING INCOME 10,619 11,773 - 1,154 - 9.8% Payroll costs (2,866) (3,139) + 273 - 8.7% Other administrative expenses (2,465) (2,694) + 229 - 8.5% Recovery of expenses 508 546 - 38 - 7.0% Amortisation, depreciation and impairment losses on intangible and tangible assets (137) (137) - - Operating costs (4,960) (5,424) + 464 - 8.6% OPERATING PROFIT (LOSS) 5,659 6,349 - 690 - 10.9% Net write-downs on loans and provisions for guarantees and commitments (1,986) (2,103) + 117 - 5.6% NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Other charges and provisions (786) (565) - 221 + 39.1% of which: systemic charges (384) (181) - 203 n.m. Integration costs (3) 14 - 17 n.m. Net income from investments (1,582) 2,427 - 4,009 n.m. PROFIT (LOSS) BEFORE TAX 1,302 6,122 - 4,820 - 78.7% Income tax for the period 1,156 30 + 1,126 n.m. PROFIT (LOSS) AFTER TAX 2,458 6,152 - 3,694 - 60.0% Profit (Loss) from non-current assets held for sale after tax - 84 - 84 - PROFIT (LOSS) FOR THE PERIOD 2,458 6,236 - 3,778 - 60.6% Goodwill impairment - - - - NET PROFIT (LOSS) 2,458 6,236 - 3,778 - 60.6% Reclassified income statement Reclassified balance sheet - Quarterly figures Report on operations Reclassified company accounts UniCredit ·2018 Annual Report and Accounts 517 Reclassified income statement (€ million) YEAR CHANGE 2018 2017 P&L % Net interest 4,166 3,960 + 206 + 5.2% Dividends and other income from equity investments 2,630 3,808 - 1,178 - 30.9% Net fees and commissions 3,839 3,798 + 41 + 1.1% Net trading income 78 302 - 224 - 74.2% Net other expenses/income (94) (95) + 1 - 1.1% OPERATING INCOME 10,619 11,773 - 1,154 - 9.8% Payroll costs (2,866) (3,139) + 273 - 8.7% Other administrative expenses (2,465) (2,694) + 229 - 8.5% Recovery of expenses 508 546 - 38 - 7.0% Amortisation, depreciation and impairment losses on intangible and tangible assets (137) (137) - - Operating costs (4,960) (5,424) + 464 - 8.6% OPERATING PROFIT (LOSS) 5,659 6,349 - 690 - 10.9% Net write-downs on loans and provisions for guarantees and commitments (1,986) (2,103) + 117 - 5.6% NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Other charges and provisions (786) (565) - 221 + 39.1% of which: systemic charges (384) (181) - 203 n.m. Integration costs (3) 14 - 17 n.m. Net income from investments (1,582) 2,427 - 4,009 n.m. PROFIT (LOSS) BEFORE TAX 1,302 6,122 - 4,820 - 78.7% Income tax for the period 1,156 30 + 1,126 n.m. PROFIT (LOSS) AFTER TAX 2,458 6,152 - 3,694 - 60.0% Profit (Loss) from non-current assets held for sale after tax - 84 - 84 - PROFIT (LOSS) FOR THE PERIOD 2,458 6,236 - 3,778 - 60.6% Goodwill impairment - - - - NET PROFIT (LOSS) 2,458 6,236 - 3,778 - 60.6% Reclassified income statement Reclassified balance sheet - Quarterly figures Report on operations Reclassified company accounts 518 2018 Annual Report and Accounts · UniCredit Reclassified income statement - Quarterly figures (€ million) 2018 2017 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net interest 1,090 1,076 1,020 980 966 931 1,033 1,030 Dividends and other income from equity investments 36 54 2,393 147 106 2 3,607 93 Net fees and commissions 927 909 1,002 1,001 954 900 994 950 Net trading income (6) (19) 14 89 130 76 45 51 Net other expenses/income (42) (20) (20) (12) (18) (24) (33) (20) OPERATING INCOME 2,005 2,000 4,409 2,205 2,138 1,885 5,646 2,104 Payroll costs (715) (705) (717) (729) (785) (779) (793) (782) Other administrative expenses (621) (608) (619) (617) (697) (685) (657) (655) Recovery of expenses 126 128 136 118 170 128 123 125 Amortisation, depreciation and impairment losses on intangible and tangible assets (38) (34) (33) (32) (39) (35) (32) (31) Operating costs (1,248) (1,219) (1,233) (1,260) (1,351) (1,371) (1,359) (1,343) OPERATING PROFIT (LOSS) 757 781 3,176 945 787 514 4,287 761 Net write-downs on loans and provisions for guarantees and commitments (626) (491) (535) (334) (515) (490) (549) (549) NET OPERATING PROFIT (LOSS) 131 290 2,641 611 272 24 3,738 212 Other charges and provisions (223) (151) (221) (191) (108) (241) (76) (140) o/w systemic charges (41) (96) (110) (137) 44 (126) 17 (116) Integration costs (1) (1) (1) - 16 (1) 1 (2) Net income from investments (330) (1,182) (49) (21) 4,953 (9) (2,468) (49) PROFIT (LOSS) BEFORE TAX (423) (1,044) 2,370 399 5,133 (227) 1,195 21 Income tax for the period 957 20 178 1 (51) (3) 94 (10) PROFIT (LOSS) AFTER TAX 534 (1,024) 2,548 400 5,082 (230) 1,289 11 Profit (Loss) from non-current assets held for sale, after tax - - - - 84 - - - PROFIT (LOSS) FOR THE PERIOD 534 (1,024) 2,548 400 5,166 (230) 1,289 11 Goodwill impairment - - - - - - - - NET PROFIT (LOSS) 534 (1,024) 2,548 400 5,166 (230) 1,289 11 Reclassified income statement – Quarterly figures Report on operations Reclassified company accounts 518 2018 Annual Report and Accounts · UniCredit Reclassified income statement - Quarterly figures (€ million) 2018 2017 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net interest 1,090 1,076 1,020 980 966 931 1,033 1,030 Dividends and other income from equity investments 36 54 2,393 147 106 2 3,607 93 Net fees and commissions 927 909 1,002 1,001 954 900 994 950 Net trading income (6) (19) 14 89 130 76 45 51 Net other expenses/income (42) (20) (20) (12) (18) (24) (33) (20) OPERATING INCOME 2,005 2,000 4,409 2,205 2,138 1,885 5,646 2,104 Payroll costs (715) (705) (717) (729) (785) (779) (793) (782) Other administrative expenses (621) (608) (619) (617) (697) (685) (657) (655) Recovery of expenses 126 128 136 118 170 128 123 125 Amortisation, depreciation and impairment losses on intangible and tangible assets (38) (34) (33) (32) (39) (35) (32) (31) Operating costs (1,248) (1,219) (1,233) (1,260) (1,351) (1,371) (1,359) (1,343) OPERATING PROFIT (LOSS) 757 781 3,176 945 787 514 4,287 761 Net write-downs on loans and provisions for guarantees and commitments (626) (491) (535) (334) (515) (490) (549) (549) NET OPERATING PROFIT (LOSS) 131 290 2,641 611 272 24 3,738 212 Other charges and provisions (223) (151) (221) (191) (108) (241) (76) (140) o/w systemic charges (41) (96) (110) (137) 44 (126) 17 (116) Integration costs (1) (1) (1) - 16 (1) 1 (2) Net income from investments (330) (1,182) (49) (21) 4,953 (9) (2,468) (49) PROFIT (LOSS) BEFORE TAX (423) (1,044) 2,370 399 5,133 (227) 1,195 21 Income tax for the period 957 20 178 1 (51) (3) 94 (10) PROFIT (LOSS) AFTER TAX 534 (1,024) 2,548 400 5,082 (230) 1,289 11 Profit (Loss) from non-current assets held for sale, after tax - - - - 84 - - - PROFIT (LOSS) FOR THE PERIOD 534 (1,024) 2,548 400 5,166 (230) 1,289 11 Goodwill impairment - - - - - - - - NET PROFIT (LOSS) 534 (1,024) 2,548 400 5,166 (230) 1,289 11 Reclassified income statement – Quarterly figures Report on operations Reclassified company accounts 518 2018 Annual Report and Accounts · UniCredit Reclassified income statement - Quarterly figures (€ million) 2018 2017 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net interest 1,090 1,076 1,020 980 966 931 1,033 1,030 Dividends and other income from equity investments 36 54 2,393 147 106 2 3,607 93 Net fees and commissions 927 909 1,002 1,001 954 900 994 950 Net trading income (6) (19) 14 89 130 76 45 51 Net other expenses/income (42) (20) (20) (12) (18) (24) (33) (20) OPERATING INCOME 2,005 2,000 4,409 2,205 2,138 1,885 5,646 2,104 Payroll costs (715) (705) (717) (729) (785) (779) (793) (782) Other administrative expenses (621) (608) (619) (617) (697) (685) (657) (655) Recovery of expenses 126 128 136 118 170 128 123 125 Amortisation, depreciation and impairment losses on intangible and tangible assets (38) (34) (33) (32) (39) (35) (32) (31) Operating costs (1,248) (1,219) (1,233) (1,260) (1,351) (1,371) (1,359) (1,343) OPERATING PROFIT (LOSS) 757 781 3,176 945 787 514 4,287 761 Net write-downs on loans and provisions for guarantees and commitments (626) (491) (535) (334) (515) (490) (549) (549) NET OPERATING PROFIT (LOSS) 131 290 2,641 611 272 24 3,738 212 Other charges and provisions (223) (151) (221) (191) (108) (241) (76) (140) o/w systemic charges (41) (96) (110) (137) 44 (126) 17 (116) Integration costs (1) (1) (1) - 16 (1) 1 (2) Net income from investments (330) (1,182) (49) (21) 4,953 (9) (2,468) (49) PROFIT (LOSS) BEFORE TAX (423) (1,044) 2,370 399 5,133 (227) 1,195 21 Income tax for the period 957 20 178 1 (51) (3) 94 (10) PROFIT (LOSS) AFTER TAX 534 (1,024) 2,548 400 5,082 (230) 1,289 11 Profit (Loss) from non-current assets held for sale, after tax - - - - 84 - - - PROFIT (LOSS) FOR THE PERIOD 534 (1,024) 2,548 400 5,166 (230) 1,289 11 Goodwill impairment - - - - - - - - NET PROFIT (LOSS) 534 (1,024) 2,548 400 5,166 (230) 1,289 11 Reclassified income statement – Quarterly figures Report on operations Reclassified company accounts 518 2018 Annual Report and Accounts · UniCredit Reclassified income statement - Quarterly figures (€ million) 2018 2017 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net interest 1,090 1,076 1,020 980 966 931 1,033 1,030 Dividends and other income from equity investments 36 54 2,393 147 106 2 3,607 93 Net fees and commissions 927 909 1,002 1,001 954 900 994 950 Net trading income (6) (19) 14 89 130 76 45 51 Net other expenses/income (42) (20) (20) (12) (18) (24) (33) (20) OPERATING INCOME 2,005 2,000 4,409 2,205 2,138 1,885 5,646 2,104 Payroll costs (715) (705) (717) (729) (785) (779) (793) (782) Other administrative expenses (621) (608) (619) (617) (697) (685) (657) (655) Recovery of expenses 126 128 136 118 170 128 123 125 Amortisation, depreciation and impairment losses on intangible and tangible assets (38) (34) (33) (32) (39) (35) (32) (31) Operating costs (1,248) (1,219) (1,233) (1,260) (1,351) (1,371) (1,359) (1,343) OPERATING PROFIT (LOSS) 757 781 3,176 945 787 514 4,287 761 Net write-downs on loans and provisions for guarantees and commitments (626) (491) (535) (334) (515) (490) (549) (549) NET OPERATING PROFIT (LOSS) 131 290 2,641 611 272 24 3,738 212 Other charges and provisions (223) (151) (221) (191) (108) (241) (76) (140) o/w systemic charges (41) (96) (110) (137) 44 (126) 17 (116) Integration costs (1) (1) (1) - 16 (1) 1 (2) Net income from investments (330) (1,182) (49) (21) 4,953 (9) (2,468) (49) PROFIT (LOSS) BEFORE TAX (423) (1,044) 2,370 399 5,133 (227) 1,195 21 Income tax for the period 957 20 178 1 (51) (3) 94 (10) PROFIT (LOSS) AFTER TAX 534 (1,024) 2,548 400 5,082 (230) 1,289 11 Profit (Loss) from non-current assets held for sale, after tax - - - - 84 - - - PROFIT (LOSS) FOR THE PERIOD 534 (1,024) 2,548 400 5,166 (230) 1,289 11 Goodwill impairment - - - - - - - - NET PROFIT (LOSS) 534 (1,024) 2,548 400 5,166 (230) 1,289 11 Reclassified income statement – Quarterly figures Report on operations Reclassified company accounts 518 2018 Annual Report and Accounts · UniCredit Reclassified income statement - Quarterly figures (€ million) 2018 2017 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net interest 1,090 1,076 1,020 980 966 931 1,033 1,030 Dividends and other income from equity investments 36 54 2,393 147 106 2 3,607 93 Net fees and commissions 927 909 1,002 1,001 954 900 994 950 Net trading income (6) (19) 14 89 130 76 45 51 Net other expenses/income (42) (20) (20) (12) (18) (24) (33) (20) OPERATING INCOME 2,005 2,000 4,409 2,205 2,138 1,885 5,646 2,104 Payroll costs (715) (705) (717) (729) (785) (779) (793) (782) Other administrative expenses (621) (608) (619) (617) (697) (685) (657) (655) Recovery of expenses 126 128 136 118 170 128 123 125 Amortisation, depreciation and impairment losses on intangible and tangible assets (38) (34) (33) (32) (39) (35) (32) (31) Operating costs (1,248) (1,219) (1,233) (1,260) (1,351) (1,371) (1,359) (1,343) OPERATING PROFIT (LOSS) 757 781 3,176 945 787 514 4,287 761 Net write-downs on loans and provisions for guarantees and commitments (626) (491) (535) (334) (515) (490) (549) (549) NET OPERATING PROFIT (LOSS) 131 290 2,641 611 272 24 3,738 212 Other charges and provisions (223) (151) (221) (191) (108) (241) (76) (140) o/w systemic charges (41) (96) (110) (137) 44 (126) 17 (116) Integration costs (1) (1) (1) - 16 (1) 1 (2) Net income from investments (330) (1,182) (49) (21) 4,953 (9) (2,468) (49) PROFIT (LOSS) BEFORE TAX (423) (1,044) 2,370 399 5,133 (227) 1,195 21 Income tax for the period 957 20 178 1 (51) (3) 94 (10) PROFIT (LOSS) AFTER TAX 534 (1,024) 2,548 400 5,082 (230) 1,289 11 Profit (Loss) from non-current assets held for sale, after tax - - - - 84 - - - PROFIT (LOSS) FOR THE PERIOD 534 (1,024) 2,548 400 5,166 (230) 1,289 11 Goodwill impairment - - - - - - - - NET PROFIT (LOSS) 534 (1,024) 2,548 400 5,166 (230) 1,289 11 Reclassified income statement – Quarterly figures Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 519 Results of the year Main results and performance for the period Introduction The 2018 net profit (€2,458 million) was affected in the third quarter of the year by the Koc Finansal Hizmetler Istanbul share impairment for -€1,293 million (-€1.319 million as at 31 December 2018) and by the extraordinary positive impact accounted in the fourth quarter of the year for a total amount of €887million related to: • the recognition through P&L of the temporary differences tax effect (871 million) deriving from the change, due to new Italian Budgetary Law, of the fiscal treatment related to the IFRS9 First Time Adoption on Loan Loss Provisions; • the effect on IRAP current tax (€16 million) following the adoption of the abovementioned approach. Excluding these extraordinary elements, during 2018 a net profit of €2,864 million would have been recorded. In case the positive tax effects related to IFRS9 First Time Adoption would have been recognized through equity, the 2018 net profit (€2,458 million) would have been equal to €1,571 million. The income statement Breakdown of operating profit Net operating profit (loss) at 31 December 2018 totaled €3,673 million, down -€573 million on the previous year. The Operating profit totaled €5,659 million (-€690 million or -10.9% year on year) and net write-downs of loans amounted to -€1,986 million (up +€117 million year-on-year). The annual decrease in the Operating profit (loss) on December 2017 is attributable to the reduction in Operating income (-€1,154 million) partially offset by the decrease in Operating costs (+€464 million). Net operating profit (loss) (€ million) YEAR CHANGE 2018 2017 P&L % OPERATING INCOME 10,619 11,773 - 1,154 - 9.8% Operating costs (4,960) (5,424) + 464 - 8.6% OPERATING PROFIT (LOSS) 5,659 6,349 - 690 - 10.9% Net write-downs of loans and provisions for guarantees and commitments (1,986) (2,103) + 117 - 5.6% NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Operating income At 31 December 2018, Operating income totaled €10,619 million, down -€1,154 million on the previous year (-9.8%). The decrease was mainly attributable to Dividends and other income from equity investments (-€1,178 million) and Net trading income (-€224 million). Increasing Net Interest (+€206 million) and Net commissions and fees (€41 million). Net interest at December 2018 amounted to €4,166 million, with an improvement on the previous year (+5.2%). In 2018 the system continued to be characterised by a compression on loan rates, due to the general presence of liquidity and the particular competitiveness of the market on interest rates. However the increase in corporates and households medium long-term loans volumes and the reduction in cost of funding contributed to the improvement in Net Interest on 2017. In the fourth quarter 2018, the Bank went on in executing the Yearly Funding Plan carrying out the diversification of the funding mix in order to optimize access to capital market and the relating costs. In all 2018 quarters, access to medium long term capital market was coherent with the evolution of other sources of liquidity as Institutional Investors or commercial network. About that, at the end of November the Bank executed successfully a Senior non Preferred issue in USD, amounted to 3 billion. This issue was placed to a principal Institutional Investor under the US GMTN Programme, contributing to increase the amount of eligible instruments to satisfy TLAC requirements, which application is expected for 2019. In the context of the volatility highlighted by Italian government bonds, expecially in the second half of 2018, the cost of funding remained under the expectations at the beginning of the year as regards in terms of the medium long term interest rate spread over Euribor rate paid to Investors. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 519 Results of the year Main results and performance for the period Introduction The 2018 net profit (€2,458 million) was affected in the third quarter of the year by the Koc Finansal Hizmetler Istanbul share impairment for -€1,293 million (-€1.319 million as at 31 December 2018) and by the extraordinary positive impact accounted in the fourth quarter of the year for a total amount of €887million related to: • the recognition through P&L of the temporary differences tax effect (871 million) deriving from the change, due to new Italian Budgetary Law, of the fiscal treatment related to the IFRS9 First Time Adoption on Loan Loss Provisions; • the effect on IRAP current tax (€16 million) following the adoption of the abovementioned approach. Excluding these extraordinary elements, during 2018 a net profit of €2,864 million would have been recorded. In case the positive tax effects related to IFRS9 First Time Adoption would have been recognized through equity, the 2018 net profit (€2,458 million) would have been equal to €1,571 million. The income statement Breakdown of operating profit Net operating profit (loss) at 31 December 2018 totaled €3,673 million, down -€573 million on the previous year. The Operating profit totaled €5,659 million (-€690 million or -10.9% year on year) and net write-downs of loans amounted to -€1,986 million (up +€117 million year-on-year). The annual decrease in the Operating profit (loss) on December 2017 is attributable to the reduction in Operating income (-€1,154 million) partially offset by the decrease in Operating costs (+€464 million). Net operating profit (loss) (€ million) YEAR CHANGE 2018 2017 P&L % OPERATING INCOME 10,619 11,773 - 1,154 - 9.8% Operating costs (4,960) (5,424) + 464 - 8.6% OPERATING PROFIT (LOSS) 5,659 6,349 - 690 - 10.9% Net write-downs of loans and provisions for guarantees and commitments (1,986) (2,103) + 117 - 5.6% NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Operating income At 31 December 2018, Operating income totaled €10,619 million, down -€1,154 million on the previous year (-9.8%). The decrease was mainly attributable to Dividends and other income from equity investments (-€1,178 million) and Net trading income (-€224 million). Increasing Net Interest (+€206 million) and Net commissions and fees (€41 million). Net interest at December 2018 amounted to €4,166 million, with an improvement on the previous year (+5.2%). In 2018 the system continued to be characterised by a compression on loan rates, due to the general presence of liquidity and the particular competitiveness of the market on interest rates. However the increase in corporates and households medium long-term loans volumes and the reduction in cost of funding contributed to the improvement in Net Interest on 2017. In the fourth quarter 2018, the Bank went on in executing the Yearly Funding Plan carrying out the diversification of the funding mix in order to optimize access to capital market and the relating costs. In all 2018 quarters, access to medium long term capital market was coherent with the evolution of other sources of liquidity as Institutional Investors or commercial network. About that, at the end of November the Bank executed successfully a Senior non Preferred issue in USD, amounted to 3 billion. This issue was placed to a principal Institutional Investor under the US GMTN Programme, contributing to increase the amount of eligible instruments to satisfy TLAC requirements, which application is expected for 2019. In the context of the volatility highlighted by Italian government bonds, expecially in the second half of 2018, the cost of funding remained under the expectations at the beginning of the year as regards in terms of the medium long term interest rate spread over Euribor rate paid to Investors. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 519 Results of the year Main results and performance for the period Introduction The 2018 net profit (€2,458 million) was affected in the third quarter of the year by the Koc Finansal Hizmetler Istanbul share impairment for -€1,293 million (-€1.319 million as at 31 December 2018) and by the extraordinary positive impact accounted in the fourth quarter of the year for a total amount of €887million related to: • the recognition through P&L of the temporary differences tax effect (871 million) deriving from the change, due to new Italian Budgetary Law, of the fiscal treatment related to the IFRS9 First Time Adoption on Loan Loss Provisions; • the effect on IRAP current tax (€16 million) following the adoption of the abovementioned approach. Excluding these extraordinary elements, during 2018 a net profit of €2,864 million would have been recorded. In case the positive tax effects related to IFRS9 First Time Adoption would have been recognized through equity, the 2018 net profit (€2,458 million) would have been equal to €1,571 million. The income statement Breakdown of operating profit Net operating profit (loss) at 31 December 2018 totaled €3,673 million, down -€573 million on the previous year. The Operating profit totaled €5,659 million (-€690 million or -10.9% year on year) and net write-downs of loans amounted to -€1,986 million (up +€117 million year-on-year). The annual decrease in the Operating profit (loss) on December 2017 is attributable to the reduction in Operating income (-€1,154 million) partially offset by the decrease in Operating costs (+€464 million). Net operating profit (loss) (€ million) YEAR CHANGE 2018 2017 P&L % OPERATING INCOME 10,619 11,773 - 1,154 - 9.8% Operating costs (4,960) (5,424) + 464 - 8.6% OPERATING PROFIT (LOSS) 5,659 6,349 - 690 - 10.9% Net write-downs of loans and provisions for guarantees and commitments (1,986) (2,103) + 117 - 5.6% NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Operating income At 31 December 2018, Operating income totaled €10,619 million, down -€1,154 million on the previous year (-9.8%). The decrease was mainly attributable to Dividends and other income from equity investments (-€1,178 million) and Net trading income (-€224 million). Increasing Net Interest (+€206 million) and Net commissions and fees (€41 million). Net interest at December 2018 amounted to €4,166 million, with an improvement on the previous year (+5.2%). In 2018 the system continued to be characterised by a compression on loan rates, due to the general presence of liquidity and the particular competitiveness of the market on interest rates. However the increase in corporates and households medium long-term loans volumes and the reduction in cost of funding contributed to the improvement in Net Interest on 2017. In the fourth quarter 2018, the Bank went on in executing the Yearly Funding Plan carrying out the diversification of the funding mix in order to optimize access to capital market and the relating costs. In all 2018 quarters, access to medium long term capital market was coherent with the evolution of other sources of liquidity as Institutional Investors or commercial network. About that, at the end of November the Bank executed successfully a Senior non Preferred issue in USD, amounted to 3 billion. This issue was placed to a principal Institutional Investor under the US GMTN Programme, contributing to increase the amount of eligible instruments to satisfy TLAC requirements, which application is expected for 2019. In the context of the volatility highlighted by Italian government bonds, expecially in the second half of 2018, the cost of funding remained under the expectations at the beginning of the year as regards in terms of the medium long term interest rate spread over Euribor rate paid to Investors. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 519 Results of the year Main results and performance for the period Introduction The 2018 net profit (€2,458 million) was affected in the third quarter of the year by the Koc Finansal Hizmetler Istanbul share impairment for -€1,293 million (-€1.319 million as at 31 December 2018) and by the extraordinary positive impact accounted in the fourth quarter of the year for a total amount of €887million related to: • the recognition through P&L of the temporary differences tax effect (871 million) deriving from the change, due to new Italian Budgetary Law, of the fiscal treatment related to the IFRS9 First Time Adoption on Loan Loss Provisions; • the effect on IRAP current tax (€16 million) following the adoption of the abovementioned approach. Excluding these extraordinary elements, during 2018 a net profit of €2,864 million would have been recorded. In case the positive tax effects related to IFRS9 First Time Adoption would have been recognized through equity, the 2018 net profit (€2,458 million) would have been equal to €1,571 million. The income statement Breakdown of operating profit Net operating profit (loss) at 31 December 2018 totaled €3,673 million, down -€573 million on the previous year. The Operating profit totaled €5,659 million (-€690 million or -10.9% year on year) and net write-downs of loans amounted to -€1,986 million (up +€117 million year-on-year). The annual decrease in the Operating profit (loss) on December 2017 is attributable to the reduction in Operating income (-€1,154 million) partially offset by the decrease in Operating costs (+€464 million). Net operating profit (loss) (€ million) YEAR CHANGE 2018 2017 P&L % OPERATING INCOME 10,619 11,773 - 1,154 - 9.8% Operating costs (4,960) (5,424) + 464 - 8.6% OPERATING PROFIT (LOSS) 5,659 6,349 - 690 - 10.9% Net write-downs of loans and provisions for guarantees and commitments (1,986) (2,103) + 117 - 5.6% NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Operating income At 31 December 2018, Operating income totaled €10,619 million, down -€1,154 million on the previous year (-9.8%). The decrease was mainly attributable to Dividends and other income from equity investments (-€1,178 million) and Net trading income (-€224 million). Increasing Net Interest (+€206 million) and Net commissions and fees (€41 million). Net interest at December 2018 amounted to €4,166 million, with an improvement on the previous year (+5.2%). In 2018 the system continued to be characterised by a compression on loan rates, due to the general presence of liquidity and the particular competitiveness of the market on interest rates. However the increase in corporates and households medium long-term loans volumes and the reduction in cost of funding contributed to the improvement in Net Interest on 2017. In the fourth quarter 2018, the Bank went on in executing the Yearly Funding Plan carrying out the diversification of the funding mix in order to optimize access to capital market and the relating costs. In all 2018 quarters, access to medium long term capital market was coherent with the evolution of other sources of liquidity as Institutional Investors or commercial network. About that, at the end of November the Bank executed successfully a Senior non Preferred issue in USD, amounted to 3 billion. This issue was placed to a principal Institutional Investor under the US GMTN Programme, contributing to increase the amount of eligible instruments to satisfy TLAC requirements, which application is expected for 2019. In the context of the volatility highlighted by Italian government bonds, expecially in the second half of 2018, the cost of funding remained under the expectations at the beginning of the year as regards in terms of the medium long term interest rate spread over Euribor rate paid to Investors. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 519 Results of the year Main results and performance for the period Introduction The 2018 net profit (€2,458 million) was affected in the third quarter of the year by the Koc Finansal Hizmetler Istanbul share impairment for -€1,293 million (-€1.319 million as at 31 December 2018) and by the extraordinary positive impact accounted in the fourth quarter of the year for a total amount of €887million related to: • the recognition through P&L of the temporary differences tax effect (871 million) deriving from the change, due to new Italian Budgetary Law, of the fiscal treatment related to the IFRS9 First Time Adoption on Loan Loss Provisions; • the effect on IRAP current tax (€16 million) following the adoption of the abovementioned approach. Excluding these extraordinary elements, during 2018 a net profit of €2,864 million would have been recorded. In case the positive tax effects related to IFRS9 First Time Adoption would have been recognized through equity, the 2018 net profit (€2,458 million) would have been equal to €1,571 million. The income statement Breakdown of operating profit Net operating profit (loss) at 31 December 2018 totaled €3,673 million, down -€573 million on the previous year. The Operating profit totaled €5,659 million (-€690 million or -10.9% year on year) and net write-downs of loans amounted to -€1,986 million (up +€117 million year-on-year). The annual decrease in the Operating profit (loss) on December 2017 is attributable to the reduction in Operating income (-€1,154 million) partially offset by the decrease in Operating costs (+€464 million). Net operating profit (loss) (€ million) YEAR CHANGE 2018 2017 P&L % OPERATING INCOME 10,619 11,773 - 1,154 - 9.8% Operating costs (4,960) (5,424) + 464 - 8.6% OPERATING PROFIT (LOSS) 5,659 6,349 - 690 - 10.9% Net write-downs of loans and provisions for guarantees and commitments (1,986) (2,103) + 117 - 5.6% NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Operating income At 31 December 2018, Operating income totaled €10,619 million, down -€1,154 million on the previous year (-9.8%). The decrease was mainly attributable to Dividends and other income from equity investments (-€1,178 million) and Net trading income (-€224 million). Increasing Net Interest (+€206 million) and Net commissions and fees (€41 million). Net interest at December 2018 amounted to €4,166 million, with an improvement on the previous year (+5.2%). In 2018 the system continued to be characterised by a compression on loan rates, due to the general presence of liquidity and the particular competitiveness of the market on interest rates. However the increase in corporates and households medium long-term loans volumes and the reduction in cost of funding contributed to the improvement in Net Interest on 2017. In the fourth quarter 2018, the Bank went on in executing the Yearly Funding Plan carrying out the diversification of the funding mix in order to optimize access to capital market and the relating costs. In all 2018 quarters, access to medium long term capital market was coherent with the evolution of other sources of liquidity as Institutional Investors or commercial network. About that, at the end of November the Bank executed successfully a Senior non Preferred issue in USD, amounted to 3 billion. This issue was placed to a principal Institutional Investor under the US GMTN Programme, contributing to increase the amount of eligible instruments to satisfy TLAC requirements, which application is expected for 2019. In the context of the volatility highlighted by Italian government bonds, expecially in the second half of 2018, the cost of funding remained under the expectations at the beginning of the year as regards in terms of the medium long term interest rate spread over Euribor rate paid to Investors. Report on operations Results of the year 520 2018 Annual Report and Accounts · UniCredit Dividends and other income from equity investments recorded in 2018 totaled €2,630 million, down -€1,178 million year on year. The decrease was mainly due to lower dividends distributed in 2018 by UniCredit Bank AG, amounted to +€1,300 million (-€1,705 million compared to 2017), partially offset by UniCredit Bank Austria dividends, amounted to +€379 million. Net fee and commission income and expense at 31 December 2018 amounted to €3,839 million, increased by +€41 million (+1.1%) year-on-year. This increase was mainly due to current accounts, loans and credit commitments sector (+€92 million). Decrease in Asset management, custody and administration (-€84 million) driven by the lower mutual funds fees. Net trading income at December 2018 (+€78 million) was essentially attributable to the gains from investment portfolio (+€87 million). In 2018 Net trading income recorded gains from the effects of the exchange rate revaluation of the exposure in USD generated by the issuance of Additional Tier 1 instruments (+€34 million), Certificates and their derivatives (+€54 million) and XVA - Credit, Funding and Debt Value Adjustment (+€28 million). while losses related to valuation of shares in Bank Pekao S.A. and the linked Secured mandatorily exchangeable equity-linked certificate amounted to -€42 million. Overall, Net trading income decreased by -€224 million compared to the previous year. The mainly changes in comparison with 2017 are attributable to the following: • -€207 million due to less gains from Investment Portfolio; • -€54 million due to losses related to non core portfolio disposals and impairments; • +€43 million from XVA. The balance of other operating income and charges at December 2018 amounted to -€94 million, substantially unchanged respect to the result of the same period of the previous year. The main impacts in 2018 are due to charges relating to company activities (compensation, rebates, services provided, recoveries, rents, etc.) totaling -€85 million Operating costs The total of Operating Costs at December 2018 amounted to -€4,960 million, recording a decrease of €464 million (-8.6%) compared to the previous year. Staff expenses, amounted to -€2,866 million, decreased compared to 2017 by approximately €273 million (-8.7%), mainly due to the effect of staff structure reduction. The change in the staff structure, which in terms of Full Time Equivalent (FTE) stands 34,038 at 31 December 2018, showed a decrease of about 3,097 FTE from the previous year mainly attributable to exits related to Transform plan. Other administrative expenses in 2018 totaled -€2,465 million, down €229 million (-8.5%) compared to 2017. This decrease was concentrated on credit recovery expenses (-€35 million), on direct costs for consulting (-€32 million), on indirect taxes and duties (-€18 million) mainly for less costs related to stamp duties, and on advertising expenses (-€11 million). Recovery of expenses, amounting to €508 million, decreased (-€38 million, -7,0%), primarily for less recovery on stamp duties and for credit recovery expenses. Amortization, depreciation and impairment losses on intangible and tangible assets amounted to -€137 million, flat compared to the previous year. Net impairment losses on loans At the end of December 2018, net write-downs on loans and provisions for guarantees and commitments amounted to -€1,986 million, down €117 (-5.6%) million compared to the previous year. The cost of risk, measured as a ratio of average loans to customers, was equal to 0.93%. Net operating profit Net operating profit (loss) came to +€3,673 million, down -€573 million compared to +€4,246 million in 2017, mainly due to the decrease in Dividends and other income from equity investments versus the previous year, partially offset by the reduction in Operating costs and net write-downs of loans and provisions for guarantees and commitments and Net Interest increase. Report on operations Results of the year 520 2018 Annual Report and Accounts · UniCredit Dividends and other income from equity investments recorded in 2018 totaled €2,630 million, down -€1,178 million year on year. The decrease was mainly due to lower dividends distributed in 2018 by UniCredit Bank AG, amounted to +€1,300 million (-€1,705 million compared to 2017), partially offset by UniCredit Bank Austria dividends, amounted to +€379 million. Net fee and commission income and expense at 31 December 2018 amounted to €3,839 million, increased by +€41 million (+1.1%) year-on-year. This increase was mainly due to current accounts, loans and credit commitments sector (+€92 million). Decrease in Asset management, custody and administration (-€84 million) driven by the lower mutual funds fees. Net trading income at December 2018 (+€78 million) was essentially attributable to the gains from investment portfolio (+€87 million). In 2018 Net trading income recorded gains from the effects of the exchange rate revaluation of the exposure in USD generated by the issuance of Additional Tier 1 instruments (+€34 million), Certificates and their derivatives (+€54 million) and XVA - Credit, Funding and Debt Value Adjustment (+€28 million). while losses related to valuation of shares in Bank Pekao S.A. and the linked Secured mandatorily exchangeable equity-linked certificate amounted to -€42 million. Overall, Net trading income decreased by -€224 million compared to the previous year. The mainly changes in comparison with 2017 are attributable to the following: • -€207 million due to less gains from Investment Portfolio; • -€54 million due to losses related to non core portfolio disposals and impairments; • +€43 million from XVA. The balance of other operating income and charges at December 2018 amounted to -€94 million, substantially unchanged respect to the result of the same period of the previous year. The main impacts in 2018 are due to charges relating to company activities (compensation, rebates, services provided, recoveries, rents, etc.) totaling -€85 million Operating costs The total of Operating Costs at December 2018 amounted to -€4,960 million, recording a decrease of €464 million (-8.6%) compared to the previous year. Staff expenses, amounted to -€2,866 million, decreased compared to 2017 by approximately €273 million (-8.7%), mainly due to the effect of staff structure reduction. The change in the staff structure, which in terms of Full Time Equivalent (FTE) stands 34,038 at 31 December 2018, showed a decrease of about 3,097 FTE from the previous year mainly attributable to exits related to Transform plan. Other administrative expenses in 2018 totaled -€2,465 million, down €229 million (-8.5%) compared to 2017. This decrease was concentrated on credit recovery expenses (-€35 million), on direct costs for consulting (-€32 million), on indirect taxes and duties (-€18 million) mainly for less costs related to stamp duties, and on advertising expenses (-€11 million). Recovery of expenses, amounting to €508 million, decreased (-€38 million, -7,0%), primarily for less recovery on stamp duties and for credit recovery expenses. Amortization, depreciation and impairment losses on intangible and tangible assets amounted to -€137 million, flat compared to the previous year. Net impairment losses on loans At the end of December 2018, net write-downs on loans and provisions for guarantees and commitments amounted to -€1,986 million, down €117 (-5.6%) million compared to the previous year. The cost of risk, measured as a ratio of average loans to customers, was equal to 0.93%. Net operating profit Net operating profit (loss) came to +€3,673 million, down -€573 million compared to +€4,246 million in 2017, mainly due to the decrease in Dividends and other income from equity investments versus the previous year, partially offset by the reduction in Operating costs and net write-downs of loans and provisions for guarantees and commitments and Net Interest increase. Report on operations Results of the year 520 2018 Annual Report and Accounts · UniCredit Dividends and other income from equity investments recorded in 2018 totaled €2,630 million, down -€1,178 million year on year. The decrease was mainly due to lower dividends distributed in 2018 by UniCredit Bank AG, amounted to +€1,300 million (-€1,705 million compared to 2017), partially offset by UniCredit Bank Austria dividends, amounted to +€379 million. Net fee and commission income and expense at 31 December 2018 amounted to €3,839 million, increased by +€41 million (+1.1%) year-on-year. This increase was mainly due to current accounts, loans and credit commitments sector (+€92 million). Decrease in Asset management, custody and administration (-€84 million) driven by the lower mutual funds fees. Net trading income at December 2018 (+€78 million) was essentially attributable to the gains from investment portfolio (+€87 million). In 2018 Net trading income recorded gains from the effects of the exchange rate revaluation of the exposure in USD generated by the issuance of Additional Tier 1 instruments (+€34 million), Certificates and their derivatives (+€54 million) and XVA - Credit, Funding and Debt Value Adjustment (+€28 million). while losses related to valuation of shares in Bank Pekao S.A. and the linked Secured mandatorily exchangeable equity-linked certificate amounted to -€42 million. Overall, Net trading income decreased by -€224 million compared to the previous year. The mainly changes in comparison with 2017 are attributable to the following: • -€207 million due to less gains from Investment Portfolio; • -€54 million due to losses related to non core portfolio disposals and impairments; • +€43 million from XVA. The balance of other operating income and charges at December 2018 amounted to -€94 million, substantially unchanged respect to the result of the same period of the previous year. The main impacts in 2018 are due to charges relating to company activities (compensation, rebates, services provided, recoveries, rents, etc.) totaling -€85 million Operating costs The total of Operating Costs at December 2018 amounted to -€4,960 million, recording a decrease of €464 million (-8.6%) compared to the previous year. Staff expenses, amounted to -€2,866 million, decreased compared to 2017 by approximately €273 million (-8.7%), mainly due to the effect of staff structure reduction. The change in the staff structure, which in terms of Full Time Equivalent (FTE) stands 34,038 at 31 December 2018, showed a decrease of about 3,097 FTE from the previous year mainly attributable to exits related to Transform plan. Other administrative expenses in 2018 totaled -€2,465 million, down €229 million (-8.5%) compared to 2017. This decrease was concentrated on credit recovery expenses (-€35 million), on direct costs for consulting (-€32 million), on indirect taxes and duties (-€18 million) mainly for less costs related to stamp duties, and on advertising expenses (-€11 million). Recovery of expenses, amounting to €508 million, decreased (-€38 million, -7,0%), primarily for less recovery on stamp duties and for credit recovery expenses. Amortization, depreciation and impairment losses on intangible and tangible assets amounted to -€137 million, flat compared to the previous year. Net impairment losses on loans At the end of December 2018, net write-downs on loans and provisions for guarantees and commitments amounted to -€1,986 million, down €117 (-5.6%) million compared to the previous year. The cost of risk, measured as a ratio of average loans to customers, was equal to 0.93%. Net operating profit Net operating profit (loss) came to +€3,673 million, down -€573 million compared to +€4,246 million in 2017, mainly due to the decrease in Dividends and other income from equity investments versus the previous year, partially offset by the reduction in Operating costs and net write-downs of loans and provisions for guarantees and commitments and Net Interest increase. Report on operations Results of the year 520 2018 Annual Report and Accounts · UniCredit Dividends and other income from equity investments recorded in 2018 totaled €2,630 million, down -€1,178 million year on year. The decrease was mainly due to lower dividends distributed in 2018 by UniCredit Bank AG, amounted to +€1,300 million (-€1,705 million compared to 2017), partially offset by UniCredit Bank Austria dividends, amounted to +€379 million. Net fee and commission income and expense at 31 December 2018 amounted to €3,839 million, increased by +€41 million (+1.1%) year-on-year. This increase was mainly due to current accounts, loans and credit commitments sector (+€92 million). Decrease in Asset management, custody and administration (-€84 million) driven by the lower mutual funds fees. Net trading income at December 2018 (+€78 million) was essentially attributable to the gains from investment portfolio (+€87 million). In 2018 Net trading income recorded gains from the effects of the exchange rate revaluation of the exposure in USD generated by the issuance of Additional Tier 1 instruments (+€34 million), Certificates and their derivatives (+€54 million) and XVA - Credit, Funding and Debt Value Adjustment (+€28 million). while losses related to valuation of shares in Bank Pekao S.A. and the linked Secured mandatorily exchangeable equity-linked certificate amounted to -€42 million. Overall, Net trading income decreased by -€224 million compared to the previous year. The mainly changes in comparison with 2017 are attributable to the following: • -€207 million due to less gains from Investment Portfolio; • -€54 million due to losses related to non core portfolio disposals and impairments; • +€43 million from XVA. The balance of other operating income and charges at December 2018 amounted to -€94 million, substantially unchanged respect to the result of the same period of the previous year. The main impacts in 2018 are due to charges relating to company activities (compensation, rebates, services provided, recoveries, rents, etc.) totaling -€85 million Operating costs The total of Operating Costs at December 2018 amounted to -€4,960 million, recording a decrease of €464 million (-8.6%) compared to the previous year. Staff expenses, amounted to -€2,866 million, decreased compared to 2017 by approximately €273 million (-8.7%), mainly due to the effect of staff structure reduction. The change in the staff structure, which in terms of Full Time Equivalent (FTE) stands 34,038 at 31 December 2018, showed a decrease of about 3,097 FTE from the previous year mainly attributable to exits related to Transform plan. Other administrative expenses in 2018 totaled -€2,465 million, down €229 million (-8.5%) compared to 2017. This decrease was concentrated on credit recovery expenses (-€35 million), on direct costs for consulting (-€32 million), on indirect taxes and duties (-€18 million) mainly for less costs related to stamp duties, and on advertising expenses (-€11 million). Recovery of expenses, amounting to €508 million, decreased (-€38 million, -7,0%), primarily for less recovery on stamp duties and for credit recovery expenses. Amortization, depreciation and impairment losses on intangible and tangible assets amounted to -€137 million, flat compared to the previous year. Net impairment losses on loans At the end of December 2018, net write-downs on loans and provisions for guarantees and commitments amounted to -€1,986 million, down €117 (-5.6%) million compared to the previous year. The cost of risk, measured as a ratio of average loans to customers, was equal to 0.93%. Net operating profit Net operating profit (loss) came to +€3,673 million, down -€573 million compared to +€4,246 million in 2017, mainly due to the decrease in Dividends and other income from equity investments versus the previous year, partially offset by the reduction in Operating costs and net write-downs of loans and provisions for guarantees and commitments and Net Interest increase. Report on operations Results of the year 520 2018 Annual Report and Accounts · UniCredit Dividends and other income from equity investments recorded in 2018 totaled €2,630 million, down -€1,178 million year on year. The decrease was mainly due to lower dividends distributed in 2018 by UniCredit Bank AG, amounted to +€1,300 million (-€1,705 million compared to 2017), partially offset by UniCredit Bank Austria dividends, amounted to +€379 million. Net fee and commission income and expense at 31 December 2018 amounted to €3,839 million, increased by +€41 million (+1.1%) year-on-year. This increase was mainly due to current accounts, loans and credit commitments sector (+€92 million). Decrease in Asset management, custody and administration (-€84 million) driven by the lower mutual funds fees. Net trading income at December 2018 (+€78 million) was essentially attributable to the gains from investment portfolio (+€87 million). In 2018 Net trading income recorded gains from the effects of the exchange rate revaluation of the exposure in USD generated by the issuance of Additional Tier 1 instruments (+€34 million), Certificates and their derivatives (+€54 million) and XVA - Credit, Funding and Debt Value Adjustment (+€28 million). while losses related to valuation of shares in Bank Pekao S.A. and the linked Secured mandatorily exchangeable equity-linked certificate amounted to -€42 million. Overall, Net trading income decreased by -€224 million compared to the previous year. The mainly changes in comparison with 2017 are attributable to the following: • -€207 million due to less gains from Investment Portfolio; • -€54 million due to losses related to non core portfolio disposals and impairments; • +€43 million from XVA. The balance of other operating income and charges at December 2018 amounted to -€94 million, substantially unchanged respect to the result of the same period of the previous year. The main impacts in 2018 are due to charges relating to company activities (compensation, rebates, services provided, recoveries, rents, etc.) totaling -€85 million Operating costs The total of Operating Costs at December 2018 amounted to -€4,960 million, recording a decrease of €464 million (-8.6%) compared to the previous year. Staff expenses, amounted to -€2,866 million, decreased compared to 2017 by approximately €273 million (-8.7%), mainly due to the effect of staff structure reduction. The change in the staff structure, which in terms of Full Time Equivalent (FTE) stands 34,038 at 31 December 2018, showed a decrease of about 3,097 FTE from the previous year mainly attributable to exits related to Transform plan. Other administrative expenses in 2018 totaled -€2,465 million, down €229 million (-8.5%) compared to 2017. This decrease was concentrated on credit recovery expenses (-€35 million), on direct costs for consulting (-€32 million), on indirect taxes and duties (-€18 million) mainly for less costs related to stamp duties, and on advertising expenses (-€11 million). Recovery of expenses, amounting to €508 million, decreased (-€38 million, -7,0%), primarily for less recovery on stamp duties and for credit recovery expenses. Amortization, depreciation and impairment losses on intangible and tangible assets amounted to -€137 million, flat compared to the previous year. Net impairment losses on loans At the end of December 2018, net write-downs on loans and provisions for guarantees and commitments amounted to -€1,986 million, down €117 (-5.6%) million compared to the previous year. The cost of risk, measured as a ratio of average loans to customers, was equal to 0.93%. Net operating profit Net operating profit (loss) came to +€3,673 million, down -€573 million compared to +€4,246 million in 2017, mainly due to the decrease in Dividends and other income from equity investments versus the previous year, partially offset by the reduction in Operating costs and net write-downs of loans and provisions for guarantees and commitments and Net Interest increase. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 521 Net profit (loss) In the table below, the data showing the transition from operating profit (loss) to net profit (loss) have been reclassified for illustrative purposes. Net profit (loss) (€ million) YEAR CHANGE 2018 2017 P&L % NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Other charges and provisions (786) (565) - 221 + 39.1% Integration costs (3) 14 - 17 n.m. Net income from investments (1,582) 2,427 - 4,009 n.m. PROFIT (LOSS) BEFORE TAX 1,302 6,122 - 4,820 - 78.7% Income tax for the period 1,156 30 + 1,126 n.m. PROFIT (LOSS) AFTER TAX 2,458 6,152 - 3,694 - 60.0% Profit (Loss) from non-current assets held for sale after tax - 84 - 84 - PROFIT (LOSS) FOR THE PERIOD 2,458 6,236 - 3,778 - 60.6% Goodwill impairment - - - - NET PROFIT (LOSS) 2,458 6,236 - 3,778 - 60.6% Other charges and provisions Other charges and provisions, amounting to -€786 million, compared to -€565 million in 2017, consider the Deposit Guarantee Scheme (DGS) contribution to Fondo Interbancario di Tutela dei Depositi - FITD (-€81 million), the contribution ordinary and straordinary to the Single Resolution Fund (-€192 million) and other general provisions for litigations, lawsuits, disputes, incidents and claims in which the Bank is a passive subject. Integration costs Integration costs amounted to -€3 million, substantially attributable to the insourcing of the Shared Service Center. Net income (losses) from investments Net income from investments was -€1,582 million, recording a decrease of -€4,009 million compared to 2017. The decrease was mainly due to profit on Pioneer sale (+€1,551 million) and write-backs on equity for €1,021 million (of which +€947 million regarding UniCredit Bank Austria, +€293 million regarding UniCredit Bank AG), recorded in 2017. In addition, in 2018 it was recorded a write-down on equity of -€1,319 million regarding Koc Finansal Hizmetler Istanbul. Taxes on Income for 2018 reports a positive amount of €1,156 million, showing an increase in comparison with a positive amounts of €30 million in 2017. During 2018 the following amendments to the tax legislation have been introduced. Specifically: • Ministerial Decree 10 January 2018 was defined the tax regime applicable to the reclassification of financial assets from IAS39 categories to IFRS9 ones and establishes the full deductibility, for IRES and IRAP purposes, of the higher loan loss provisions determined by the adoption of a valuation criterion based on the expected losses in lieu of the actual losses. • Law 30 December 2018 No.145 (Budget Law 2019) was introduced the following tax new provisions: - the tax effect determined by the IFRS9 first time adoption is spread over a 10-year period for IRES and IRAP purposes; - the reversal of convertible DTA on loan loss provision scheduled for 2018 is postponed to 2026; - the reversal plan of the convertible DTA on goodwill is re-determined up to 2029, for IRES and IRAP, based on fixed annual percentage, changing from year-to-year, as provided for by the law. No reversal is scheduled for 2018; - the Notional Interest Deduction (“ACE”) has been repealed starting from 2019. The postponement of the 2018 reversal of convertible DTA on loan loss provision and on goodwill (as per the second and third bullet above), has not determined a tax burden for UniCredit S.p.A. since the reversal at stake was already monetized in financial year 2017 in connection with the DTA conversion into tax credit performed on the 2016 accounting loss. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 521 Net profit (loss) In the table below, the data showing the transition from operating profit (loss) to net profit (loss) have been reclassified for illustrative purposes. Net profit (loss) (€ million) YEAR CHANGE 2018 2017 P&L % NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Other charges and provisions (786) (565) - 221 + 39.1% Integration costs (3) 14 - 17 n.m. Net income from investments (1,582) 2,427 - 4,009 n.m. PROFIT (LOSS) BEFORE TAX 1,302 6,122 - 4,820 - 78.7% Income tax for the period 1,156 30 + 1,126 n.m. PROFIT (LOSS) AFTER TAX 2,458 6,152 - 3,694 - 60.0% Profit (Loss) from non-current assets held for sale after tax - 84 - 84 - PROFIT (LOSS) FOR THE PERIOD 2,458 6,236 - 3,778 - 60.6% Goodwill impairment - - - - NET PROFIT (LOSS) 2,458 6,236 - 3,778 - 60.6% Other charges and provisions Other charges and provisions, amounting to -€786 million, compared to -€565 million in 2017, consider the Deposit Guarantee Scheme (DGS) contribution to Fondo Interbancario di Tutela dei Depositi - FITD (-€81 million), the contribution ordinary and straordinary to the Single Resolution Fund (-€192 million) and other general provisions for litigations, lawsuits, disputes, incidents and claims in which the Bank is a passive subject. Integration costs Integration costs amounted to -€3 million, substantially attributable to the insourcing of the Shared Service Center. Net income (losses) from investments Net income from investments was -€1,582 million, recording a decrease of -€4,009 million compared to 2017. The decrease was mainly due to profit on Pioneer sale (+€1,551 million) and write-backs on equity for €1,021 million (of which +€947 million regarding UniCredit Bank Austria, +€293 million regarding UniCredit Bank AG), recorded in 2017. In addition, in 2018 it was recorded a write-down on equity of -€1,319 million regarding Koc Finansal Hizmetler Istanbul. Taxes on Income for 2018 reports a positive amount of €1,156 million, showing an increase in comparison with a positive amounts of €30 million in 2017. During 2018 the following amendments to the tax legislation have been introduced. Specifically: • Ministerial Decree 10 January 2018 was defined the tax regime applicable to the reclassification of financial assets from IAS39 categories to IFRS9 ones and establishes the full deductibility, for IRES and IRAP purposes, of the higher loan loss provisions determined by the adoption of a valuation criterion based on the expected losses in lieu of the actual losses. • Law 30 December 2018 No.145 (Budget Law 2019) was introduced the following tax new provisions: - the tax effect determined by the IFRS9 first time adoption is spread over a 10-year period for IRES and IRAP purposes; - the reversal of convertible DTA on loan loss provision scheduled for 2018 is postponed to 2026; - the reversal plan of the convertible DTA on goodwill is re-determined up to 2029, for IRES and IRAP, based on fixed annual percentage, changing from year-to-year, as provided for by the law. No reversal is scheduled for 2018; - the Notional Interest Deduction (“ACE”) has been repealed starting from 2019. The postponement of the 2018 reversal of convertible DTA on loan loss provision and on goodwill (as per the second and third bullet above), has not determined a tax burden for UniCredit S.p.A. since the reversal at stake was already monetized in financial year 2017 in connection with the DTA conversion into tax credit performed on the 2016 accounting loss. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 521 Net profit (loss) In the table below, the data showing the transition from operating profit (loss) to net profit (loss) have been reclassified for illustrative purposes. Net profit (loss) (€ million) YEAR CHANGE 2018 2017 P&L % NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Other charges and provisions (786) (565) - 221 + 39.1% Integration costs (3) 14 - 17 n.m. Net income from investments (1,582) 2,427 - 4,009 n.m. PROFIT (LOSS) BEFORE TAX 1,302 6,122 - 4,820 - 78.7% Income tax for the period 1,156 30 + 1,126 n.m. PROFIT (LOSS) AFTER TAX 2,458 6,152 - 3,694 - 60.0% Profit (Loss) from non-current assets held for sale after tax - 84 - 84 - PROFIT (LOSS) FOR THE PERIOD 2,458 6,236 - 3,778 - 60.6% Goodwill impairment - - - - NET PROFIT (LOSS) 2,458 6,236 - 3,778 - 60.6% Other charges and provisions Other charges and provisions, amounting to -€786 million, compared to -€565 million in 2017, consider the Deposit Guarantee Scheme (DGS) contribution to Fondo Interbancario di Tutela dei Depositi - FITD (-€81 million), the contribution ordinary and straordinary to the Single Resolution Fund (-€192 million) and other general provisions for litigations, lawsuits, disputes, incidents and claims in which the Bank is a passive subject. Integration costs Integration costs amounted to -€3 million, substantially attributable to the insourcing of the Shared Service Center. Net income (losses) from investments Net income from investments was -€1,582 million, recording a decrease of -€4,009 million compared to 2017. The decrease was mainly due to profit on Pioneer sale (+€1,551 million) and write-backs on equity for €1,021 million (of which +€947 million regarding UniCredit Bank Austria, +€293 million regarding UniCredit Bank AG), recorded in 2017. In addition, in 2018 it was recorded a write-down on equity of -€1,319 million regarding Koc Finansal Hizmetler Istanbul. Taxes on Income for 2018 reports a positive amount of €1,156 million, showing an increase in comparison with a positive amounts of €30 million in 2017. During 2018 the following amendments to the tax legislation have been introduced. Specifically: • Ministerial Decree 10 January 2018 was defined the tax regime applicable to the reclassification of financial assets from IAS39 categories to IFRS9 ones and establishes the full deductibility, for IRES and IRAP purposes, of the higher loan loss provisions determined by the adoption of a valuation criterion based on the expected losses in lieu of the actual losses. • Law 30 December 2018 No.145 (Budget Law 2019) was introduced the following tax new provisions: - the tax effect determined by the IFRS9 first time adoption is spread over a 10-year period for IRES and IRAP purposes; - the reversal of convertible DTA on loan loss provision scheduled for 2018 is postponed to 2026; - the reversal plan of the convertible DTA on goodwill is re-determined up to 2029, for IRES and IRAP, based on fixed annual percentage, changing from year-to-year, as provided for by the law. No reversal is scheduled for 2018; - the Notional Interest Deduction (“ACE”) has been repealed starting from 2019. The postponement of the 2018 reversal of convertible DTA on loan loss provision and on goodwill (as per the second and third bullet above), has not determined a tax burden for UniCredit S.p.A. since the reversal at stake was already monetized in financial year 2017 in connection with the DTA conversion into tax credit performed on the 2016 accounting loss. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 521 Net profit (loss) In the table below, the data showing the transition from operating profit (loss) to net profit (loss) have been reclassified for illustrative purposes. Net profit (loss) (€ million) YEAR CHANGE 2018 2017 P&L % NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Other charges and provisions (786) (565) - 221 + 39.1% Integration costs (3) 14 - 17 n.m. Net income from investments (1,582) 2,427 - 4,009 n.m. PROFIT (LOSS) BEFORE TAX 1,302 6,122 - 4,820 - 78.7% Income tax for the period 1,156 30 + 1,126 n.m. PROFIT (LOSS) AFTER TAX 2,458 6,152 - 3,694 - 60.0% Profit (Loss) from non-current assets held for sale after tax - 84 - 84 - PROFIT (LOSS) FOR THE PERIOD 2,458 6,236 - 3,778 - 60.6% Goodwill impairment - - - - NET PROFIT (LOSS) 2,458 6,236 - 3,778 - 60.6% Other charges and provisions Other charges and provisions, amounting to -€786 million, compared to -€565 million in 2017, consider the Deposit Guarantee Scheme (DGS) contribution to Fondo Interbancario di Tutela dei Depositi - FITD (-€81 million), the contribution ordinary and straordinary to the Single Resolution Fund (-€192 million) and other general provisions for litigations, lawsuits, disputes, incidents and claims in which the Bank is a passive subject. Integration costs Integration costs amounted to -€3 million, substantially attributable to the insourcing of the Shared Service Center. Net income (losses) from investments Net income from investments was -€1,582 million, recording a decrease of -€4,009 million compared to 2017. The decrease was mainly due to profit on Pioneer sale (+€1,551 million) and write-backs on equity for €1,021 million (of which +€947 million regarding UniCredit Bank Austria, +€293 million regarding UniCredit Bank AG), recorded in 2017. In addition, in 2018 it was recorded a write-down on equity of -€1,319 million regarding Koc Finansal Hizmetler Istanbul. Taxes on Income for 2018 reports a positive amount of €1,156 million, showing an increase in comparison with a positive amounts of €30 million in 2017. During 2018 the following amendments to the tax legislation have been introduced. Specifically: • Ministerial Decree 10 January 2018 was defined the tax regime applicable to the reclassification of financial assets from IAS39 categories to IFRS9 ones and establishes the full deductibility, for IRES and IRAP purposes, of the higher loan loss provisions determined by the adoption of a valuation criterion based on the expected losses in lieu of the actual losses. • Law 30 December 2018 No.145 (Budget Law 2019) was introduced the following tax new provisions: - the tax effect determined by the IFRS9 first time adoption is spread over a 10-year period for IRES and IRAP purposes; - the reversal of convertible DTA on loan loss provision scheduled for 2018 is postponed to 2026; - the reversal plan of the convertible DTA on goodwill is re-determined up to 2029, for IRES and IRAP, based on fixed annual percentage, changing from year-to-year, as provided for by the law. No reversal is scheduled for 2018; - the Notional Interest Deduction (“ACE”) has been repealed starting from 2019. The postponement of the 2018 reversal of convertible DTA on loan loss provision and on goodwill (as per the second and third bullet above), has not determined a tax burden for UniCredit S.p.A. since the reversal at stake was already monetized in financial year 2017 in connection with the DTA conversion into tax credit performed on the 2016 accounting loss. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 521 Net profit (loss) In the table below, the data showing the transition from operating profit (loss) to net profit (loss) have been reclassified for illustrative purposes. Net profit (loss) (€ million) YEAR CHANGE 2018 2017 P&L % NET OPERATING PROFIT (LOSS) 3,673 4,246 - 573 - 13.5% Other charges and provisions (786) (565) - 221 + 39.1% Integration costs (3) 14 - 17 n.m. Net income from investments (1,582) 2,427 - 4,009 n.m. PROFIT (LOSS) BEFORE TAX 1,302 6,122 - 4,820 - 78.7% Income tax for the period 1,156 30 + 1,126 n.m. PROFIT (LOSS) AFTER TAX 2,458 6,152 - 3,694 - 60.0% Profit (Loss) from non-current assets held for sale after tax - 84 - 84 - PROFIT (LOSS) FOR THE PERIOD 2,458 6,236 - 3,778 - 60.6% Goodwill impairment - - - - NET PROFIT (LOSS) 2,458 6,236 - 3,778 - 60.6% Other charges and provisions Other charges and provisions, amounting to -€786 million, compared to -€565 million in 2017, consider the Deposit Guarantee Scheme (DGS) contribution to Fondo Interbancario di Tutela dei Depositi - FITD (-€81 million), the contribution ordinary and straordinary to the Single Resolution Fund (-€192 million) and other general provisions for litigations, lawsuits, disputes, incidents and claims in which the Bank is a passive subject. Integration costs Integration costs amounted to -€3 million, substantially attributable to the insourcing of the Shared Service Center. Net income (losses) from investments Net income from investments was -€1,582 million, recording a decrease of -€4,009 million compared to 2017. The decrease was mainly due to profit on Pioneer sale (+€1,551 million) and write-backs on equity for €1,021 million (of which +€947 million regarding UniCredit Bank Austria, +€293 million regarding UniCredit Bank AG), recorded in 2017. In addition, in 2018 it was recorded a write-down on equity of -€1,319 million regarding Koc Finansal Hizmetler Istanbul. Taxes on Income for 2018 reports a positive amount of €1,156 million, showing an increase in comparison with a positive amounts of €30 million in 2017. During 2018 the following amendments to the tax legislation have been introduced. Specifically: • Ministerial Decree 10 January 2018 was defined the tax regime applicable to the reclassification of financial assets from IAS39 categories to IFRS9 ones and establishes the full deductibility, for IRES and IRAP purposes, of the higher loan loss provisions determined by the adoption of a valuation criterion based on the expected losses in lieu of the actual losses. • Law 30 December 2018 No.145 (Budget Law 2019) was introduced the following tax new provisions: - the tax effect determined by the IFRS9 first time adoption is spread over a 10-year period for IRES and IRAP purposes; - the reversal of convertible DTA on loan loss provision scheduled for 2018 is postponed to 2026; - the reversal plan of the convertible DTA on goodwill is re-determined up to 2029, for IRES and IRAP, based on fixed annual percentage, changing from year-to-year, as provided for by the law. No reversal is scheduled for 2018; - the Notional Interest Deduction (“ACE”) has been repealed starting from 2019. The postponement of the 2018 reversal of convertible DTA on loan loss provision and on goodwill (as per the second and third bullet above), has not determined a tax burden for UniCredit S.p.A. since the reversal at stake was already monetized in financial year 2017 in connection with the DTA conversion into tax credit performed on the 2016 accounting loss. Report on operations Results of the year 522 2018 Annual Report and Accounts · UniCredit The item Taxes in the reclassified income statement is equal to €1,156 million and is composed by: • a positive IRES (current and deferred taxes) of €865 million, including +€727 million of DTAs relating to 9/10 of the tax effect of the higher loan loss provisions determined by IFRS9 first time adoption (FTA), deferred to subsequent years; • a positive IRAP (current and deferred taxes) of €85 million, including +€144 million of DTAs relating to 9/10 of the tax effect of the higher loan loss provisions determined by IFRS9 first time adoption (FTA), deferred to subsequent years; • tax provision of - €3 million related to the taxation on a transparent basis of controlled foreign companies (CFC); • non-deductible withholding tax of - €15 million suffered in Italy and abroad; • net extraordinary income of +€138 million, deriving from the true-up of the 2017 tax accrual following the submission of the 2017 tax return, impacted by the finalization of certain items evaluation which could only be estimated for the 2017 tax accrual and further by the positive responses to the tax rulings submitted to the Italian Revenue Agency on specific tax topics; • tax accrual referred to foreign branches for an amount equal to -€13 million; • tax credit deriving from the conversion of the “ACE” benefit into IRAP tax credit for €99 million. Current IRES shows a tax loss of €91 million. Corresponding DTA on said tax loss, equal to €25 million, have not been accrued, which therefore increases the stock of the out of balance (unrecognized) DTAs on tax losses to a total amount of €3,350 million (already including €34 million tax loss deriving from the incorporation of the subsidiaries PGAM and Buddy Servizi Molecolari). Further, following the sustainability test, which is performed on the 5-year time horizon criterion used at Group level, also considered that the Tax Group shows a negative taxable base, the recognized amount of DTA is equal to €78 million, with no impact on the Income statement according to the international accounting standards. Current IRAP tax accrual shows a negative amount equal to €63 million. During 2018, in light of the negative taxable basis for IRES and the availability of tax losses carried forward determining an indefinite postponement of the monetization of the ACE benefit, the corresponding amount of said ACE benefit has been converted into a tax credit for IRAP purposes, as provided for by Law Decree 24 June 2014, No.91 (passed with modification by law 11 August 2014, No.116) prior to the deadline for the payment of the IRAP due for 2017. Therefore, the ACE benefit for 2016, equal to €43 million, and for 2017, equal to €56 million, were converted into a tax credit, determining an extraordinary income in the Income statement, considered that the corresponding DTA on the ACE benefit was impaired being not sustainable. The IRAP credit will be used over 5 years in equal installments as provided for by the relevant law, with the possibility to carry forward any unused amount upon the fifth year. The Balance Sheet Loans to Customers As of 31 December 2018, loans to customers totalled €222,591 million, a decrease of €16,045 million (+7.8%) compared to 31 December 2018. Loans and advances to customers (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Performing loans 179,399 168,762 + 10,637 + 6.3% Repos 33,825 23,890 + 9,935 + 41.6% Non-performing exposures 9,367 13,894 - 4,527 - 32.6% Total loans and receivables with customers 222,591 206,546 + 16,045 + 7.8% More specifically: • performing loans increased by €10,637 million (+6.3%); • reverse repos recorded an increase of €9,935 million (+41.6%); • impaired assets recorded a decrease of €4,527 million (-32.6%). Performing loans (€179,399 million at 31 December 2018) included €747 million due from Special Purpose Vehicles (SPVs), attributable mainly to liquidity which UniCredit S.p.A., following the downgrading from 2012 by the rating agencies involved in the transactions, had to transfer (based on the contractual documentation signed) to other banks, still considered “eligible”, in favor of the SPVs granting loans as part of the transactions originated by UniCredit S.p.A. in relation to securitisations and covered bond issue programmes. Report on operations Results of the year 522 2018 Annual Report and Accounts · UniCredit The item Taxes in the reclassified income statement is equal to €1,156 million and is composed by: • a positive IRES (current and deferred taxes) of €865 million, including +€727 million of DTAs relating to 9/10 of the tax effect of the higher loan loss provisions determined by IFRS9 first time adoption (FTA), deferred to subsequent years; • a positive IRAP (current and deferred taxes) of €85 million, including +€144 million of DTAs relating to 9/10 of the tax effect of the higher loan loss provisions determined by IFRS9 first time adoption (FTA), deferred to subsequent years; • tax provision of - €3 million related to the taxation on a transparent basis of controlled foreign companies (CFC); • non-deductible withholding tax of - €15 million suffered in Italy and abroad; • net extraordinary income of +€138 million, deriving from the true-up of the 2017 tax accrual following the submission of the 2017 tax return, impacted by the finalization of certain items evaluation which could only be estimated for the 2017 tax accrual and further by the positive responses to the tax rulings submitted to the Italian Revenue Agency on specific tax topics; • tax accrual referred to foreign branches for an amount equal to -€13 million; • tax credit deriving from the conversion of the “ACE” benefit into IRAP tax credit for €99 million. Current IRES shows a tax loss of €91 million. Corresponding DTA on said tax loss, equal to €25 million, have not been accrued, which therefore increases the stock of the out of balance (unrecognized) DTAs on tax losses to a total amount of €3,350 million (already including €34 million tax loss deriving from the incorporation of the subsidiaries PGAM and Buddy Servizi Molecolari). Further, following the sustainability test, which is performed on the 5-year time horizon criterion used at Group level, also considered that the Tax Group shows a negative taxable base, the recognized amount of DTA is equal to €78 million, with no impact on the Income statement according to the international accounting standards. Current IRAP tax accrual shows a negative amount equal to €63 million. During 2018, in light of the negative taxable basis for IRES and the availability of tax losses carried forward determining an indefinite postponement of the monetization of the ACE benefit, the corresponding amount of said ACE benefit has been converted into a tax credit for IRAP purposes, as provided for by Law Decree 24 June 2014, No.91 (passed with modification by law 11 August 2014, No.116) prior to the deadline for the payment of the IRAP due for 2017. Therefore, the ACE benefit for 2016, equal to €43 million, and for 2017, equal to €56 million, were converted into a tax credit, determining an extraordinary income in the Income statement, considered that the corresponding DTA on the ACE benefit was impaired being not sustainable. The IRAP credit will be used over 5 years in equal installments as provided for by the relevant law, with the possibility to carry forward any unused amount upon the fifth year. The Balance Sheet Loans to Customers As of 31 December 2018, loans to customers totalled €222,591 million, a decrease of €16,045 million (+7.8%) compared to 31 December 2018. Loans and advances to customers (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Performing loans 179,399 168,762 + 10,637 + 6.3% Repos 33,825 23,890 + 9,935 + 41.6% Non-performing exposures 9,367 13,894 - 4,527 - 32.6% Total loans and receivables with customers 222,591 206,546 + 16,045 + 7.8% More specifically: • performing loans increased by €10,637 million (+6.3%); • reverse repos recorded an increase of €9,935 million (+41.6%); • impaired assets recorded a decrease of €4,527 million (-32.6%). Performing loans (€179,399 million at 31 December 2018) included €747 million due from Special Purpose Vehicles (SPVs), attributable mainly to liquidity which UniCredit S.p.A., following the downgrading from 2012 by the rating agencies involved in the transactions, had to transfer (based on the contractual documentation signed) to other banks, still considered “eligible”, in favor of the SPVs granting loans as part of the transactions originated by UniCredit S.p.A. in relation to securitisations and covered bond issue programmes. Report on operations Results of the year 522 2018 Annual Report and Accounts · UniCredit The item Taxes in the reclassified income statement is equal to €1,156 million and is composed by: • a positive IRES (current and deferred taxes) of €865 million, including +€727 million of DTAs relating to 9/10 of the tax effect of the higher loan loss provisions determined by IFRS9 first time adoption (FTA), deferred to subsequent years; • a positive IRAP (current and deferred taxes) of €85 million, including +€144 million of DTAs relating to 9/10 of the tax effect of the higher loan loss provisions determined by IFRS9 first time adoption (FTA), deferred to subsequent years; • tax provision of - €3 million related to the taxation on a transparent basis of controlled foreign companies (CFC); • non-deductible withholding tax of - €15 million suffered in Italy and abroad; • net extraordinary income of +€138 million, deriving from the true-up of the 2017 tax accrual following the submission of the 2017 tax return, impacted by the finalization of certain items evaluation which could only be estimated for the 2017 tax accrual and further by the positive responses to the tax rulings submitted to the Italian Revenue Agency on specific tax topics; • tax accrual referred to foreign branches for an amount equal to -€13 million; • tax credit deriving from the conversion of the “ACE” benefit into IRAP tax credit for €99 million. Current IRES shows a tax loss of €91 million. Corresponding DTA on said tax loss, equal to €25 million, have not been accrued, which therefore increases the stock of the out of balance (unrecognized) DTAs on tax losses to a total amount of €3,350 million (already including €34 million tax loss deriving from the incorporation of the subsidiaries PGAM and Buddy Servizi Molecolari). Further, following the sustainability test, which is performed on the 5-year time horizon criterion used at Group level, also considered that the Tax Group shows a negative taxable base, the recognized amount of DTA is equal to €78 million, with no impact on the Income statement according to the international accounting standards. Current IRAP tax accrual shows a negative amount equal to €63 million. During 2018, in light of the negative taxable basis for IRES and the availability of tax losses carried forward determining an indefinite postponement of the monetization of the ACE benefit, the corresponding amount of said ACE benefit has been converted into a tax credit for IRAP purposes, as provided for by Law Decree 24 June 2014, No.91 (passed with modification by law 11 August 2014, No.116) prior to the deadline for the payment of the IRAP due for 2017. Therefore, the ACE benefit for 2016, equal to €43 million, and for 2017, equal to €56 million, were converted into a tax credit, determining an extraordinary income in the Income statement, considered that the corresponding DTA on the ACE benefit was impaired being not sustainable. The IRAP credit will be used over 5 years in equal installments as provided for by the relevant law, with the possibility to carry forward any unused amount upon the fifth year. The Balance Sheet Loans to Customers As of 31 December 2018, loans to customers totalled €222,591 million, a decrease of €16,045 million (+7.8%) compared to 31 December 2018. Loans and advances to customers (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Performing loans 179,399 168,762 + 10,637 + 6.3% Repos 33,825 23,890 + 9,935 + 41.6% Non-performing exposures 9,367 13,894 - 4,527 - 32.6% Total loans and receivables with customers 222,591 206,546 + 16,045 + 7.8% More specifically: • performing loans increased by €10,637 million (+6.3%); • reverse repos recorded an increase of €9,935 million (+41.6%); • impaired assets recorded a decrease of €4,527 million (-32.6%). Performing loans (€179,399 million at 31 December 2018) included €747 million due from Special Purpose Vehicles (SPVs), attributable mainly to liquidity which UniCredit S.p.A., following the downgrading from 2012 by the rating agencies involved in the transactions, had to transfer (based on the contractual documentation signed) to other banks, still considered “eligible”, in favor of the SPVs granting loans as part of the transactions originated by UniCredit S.p.A. in relation to securitisations and covered bond issue programmes. Report on operations Results of the year 522 2018 Annual Report and Accounts · UniCredit The item Taxes in the reclassified income statement is equal to €1,156 million and is composed by: • a positive IRES (current and deferred taxes) of €865 million, including +€727 million of DTAs relating to 9/10 of the tax effect of the higher loan loss provisions determined by IFRS9 first time adoption (FTA), deferred to subsequent years; • a positive IRAP (current and deferred taxes) of €85 million, including +€144 million of DTAs relating to 9/10 of the tax effect of the higher loan loss provisions determined by IFRS9 first time adoption (FTA), deferred to subsequent years; • tax provision of - €3 million related to the taxation on a transparent basis of controlled foreign companies (CFC); • non-deductible withholding tax of - €15 million suffered in Italy and abroad; • net extraordinary income of +€138 million, deriving from the true-up of the 2017 tax accrual following the submission of the 2017 tax return, impacted by the finalization of certain items evaluation which could only be estimated for the 2017 tax accrual and further by the positive responses to the tax rulings submitted to the Italian Revenue Agency on specific tax topics; • tax accrual referred to foreign branches for an amount equal to -€13 million; • tax credit deriving from the conversion of the “ACE” benefit into IRAP tax credit for €99 million. Current IRES shows a tax loss of €91 million. Corresponding DTA on said tax loss, equal to €25 million, have not been accrued, which therefore increases the stock of the out of balance (unrecognized) DTAs on tax losses to a total amount of €3,350 million (already including €34 million tax loss deriving from the incorporation of the subsidiaries PGAM and Buddy Servizi Molecolari). Further, following the sustainability test, which is performed on the 5-year time horizon criterion used at Group level, also considered that the Tax Group shows a negative taxable base, the recognized amount of DTA is equal to €78 million, with no impact on the Income statement according to the international accounting standards. Current IRAP tax accrual shows a negative amount equal to €63 million. During 2018, in light of the negative taxable basis for IRES and the availability of tax losses carried forward determining an indefinite postponement of the monetization of the ACE benefit, the corresponding amount of said ACE benefit has been converted into a tax credit for IRAP purposes, as provided for by Law Decree 24 June 2014, No.91 (passed with modification by law 11 August 2014, No.116) prior to the deadline for the payment of the IRAP due for 2017. Therefore, the ACE benefit for 2016, equal to €43 million, and for 2017, equal to €56 million, were converted into a tax credit, determining an extraordinary income in the Income statement, considered that the corresponding DTA on the ACE benefit was impaired being not sustainable. The IRAP credit will be used over 5 years in equal installments as provided for by the relevant law, with the possibility to carry forward any unused amount upon the fifth year. The Balance Sheet Loans to Customers As of 31 December 2018, loans to customers totalled €222,591 million, a decrease of €16,045 million (+7.8%) compared to 31 December 2018. Loans and advances to customers (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Performing loans 179,399 168,762 + 10,637 + 6.3% Repos 33,825 23,890 + 9,935 + 41.6% Non-performing exposures 9,367 13,894 - 4,527 - 32.6% Total loans and receivables with customers 222,591 206,546 + 16,045 + 7.8% More specifically: • performing loans increased by €10,637 million (+6.3%); • reverse repos recorded an increase of €9,935 million (+41.6%); • impaired assets recorded a decrease of €4,527 million (-32.6%). Performing loans (€179,399 million at 31 December 2018) included €747 million due from Special Purpose Vehicles (SPVs), attributable mainly to liquidity which UniCredit S.p.A., following the downgrading from 2012 by the rating agencies involved in the transactions, had to transfer (based on the contractual documentation signed) to other banks, still considered “eligible”, in favor of the SPVs granting loans as part of the transactions originated by UniCredit S.p.A. in relation to securitisations and covered bond issue programmes. Report on operations Results of the year 522 2018 Annual Report and Accounts · UniCredit The item Taxes in the reclassified income statement is equal to €1,156 million and is composed by: • a positive IRES (current and deferred taxes) of €865 million, including +€727 million of DTAs relating to 9/10 of the tax effect of the higher loan loss provisions determined by IFRS9 first time adoption (FTA), deferred to subsequent years; • a positive IRAP (current and deferred taxes) of €85 million, including +€144 million of DTAs relating to 9/10 of the tax effect of the higher loan loss provisions determined by IFRS9 first time adoption (FTA), deferred to subsequent years; • tax provision of - €3 million related to the taxation on a transparent basis of controlled foreign companies (CFC); • non-deductible withholding tax of - €15 million suffered in Italy and abroad; • net extraordinary income of +€138 million, deriving from the true-up of the 2017 tax accrual following the submission of the 2017 tax return, impacted by the finalization of certain items evaluation which could only be estimated for the 2017 tax accrual and further by the positive responses to the tax rulings submitted to the Italian Revenue Agency on specific tax topics; • tax accrual referred to foreign branches for an amount equal to -€13 million; • tax credit deriving from the conversion of the “ACE” benefit into IRAP tax credit for €99 million. Current IRES shows a tax loss of €91 million. Corresponding DTA on said tax loss, equal to €25 million, have not been accrued, which therefore increases the stock of the out of balance (unrecognized) DTAs on tax losses to a total amount of €3,350 million (already including €34 million tax loss deriving from the incorporation of the subsidiaries PGAM and Buddy Servizi Molecolari). Further, following the sustainability test, which is performed on the 5-year time horizon criterion used at Group level, also considered that the Tax Group shows a negative taxable base, the recognized amount of DTA is equal to €78 million, with no impact on the Income statement according to the international accounting standards. Current IRAP tax accrual shows a negative amount equal to €63 million. During 2018, in light of the negative taxable basis for IRES and the availability of tax losses carried forward determining an indefinite postponement of the monetization of the ACE benefit, the corresponding amount of said ACE benefit has been converted into a tax credit for IRAP purposes, as provided for by Law Decree 24 June 2014, No.91 (passed with modification by law 11 August 2014, No.116) prior to the deadline for the payment of the IRAP due for 2017. Therefore, the ACE benefit for 2016, equal to €43 million, and for 2017, equal to €56 million, were converted into a tax credit, determining an extraordinary income in the Income statement, considered that the corresponding DTA on the ACE benefit was impaired being not sustainable. The IRAP credit will be used over 5 years in equal installments as provided for by the relevant law, with the possibility to carry forward any unused amount upon the fifth year. The Balance Sheet Loans to Customers As of 31 December 2018, loans to customers totalled €222,591 million, a decrease of €16,045 million (+7.8%) compared to 31 December 2018. Loans and advances to customers (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Performing loans 179,399 168,762 + 10,637 + 6.3% Repos 33,825 23,890 + 9,935 + 41.6% Non-performing exposures 9,367 13,894 - 4,527 - 32.6% Total loans and receivables with customers 222,591 206,546 + 16,045 + 7.8% More specifically: • performing loans increased by €10,637 million (+6.3%); • reverse repos recorded an increase of €9,935 million (+41.6%); • impaired assets recorded a decrease of €4,527 million (-32.6%). Performing loans (€179,399 million at 31 December 2018) included €747 million due from Special Purpose Vehicles (SPVs), attributable mainly to liquidity which UniCredit S.p.A., following the downgrading from 2012 by the rating agencies involved in the transactions, had to transfer (based on the contractual documentation signed) to other banks, still considered “eligible”, in favor of the SPVs granting loans as part of the transactions originated by UniCredit S.p.A. in relation to securitisations and covered bond issue programmes. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 523 During 2018 the aforementioned receivables from Special Purpose Vehicle (S.P.V.) fell by -€421 million compared to 31 December 2017. The reduction is due to the normal management of securitization transactions Reverse repos amounted to €33,825 million at 31 December 2018 (€23,890 million at the end of 2017), and consisted almost entirely of transactions with Cassa di Compensazione e Garanzia, with Cassa Depositi e Prestiti and Poste Italiane Spa. Impaired loans at the end of December 2018 amounted to €9,367 million and came to 4.2% of the total amount of loans to customers. They mainly referred to the business segment. The reduction of 4.527 million (-32.6% compared to 13.894 million at the end of December 2017) is a direct consequence: • the adoption of the IFRS9 principle (€ 2,427 million); • the implementation of a new approach in the management and recovery of such loans that focuses on the timeliness of receipts in order to more quickly reduce their stock as envisaged in the new 2016-2019 Strategic Plan approved on 12 December 2016. Credit quality As of 31 December 2018, the face value of the impaired assets totaled €25,507 million, representing 10.6% of total nominal loans to customers down by 13.5% on 1 January 2018 (post adoption of IFRS9 principle). At book value (net of write-downs of €16,140 million), impaired loans stood at €9,367 million at year-end 2018, down compared to €11,467 million at 1 January 2018, representing 4.2% of total loans compared to 5.6% at the beginning of 2018. The ratio of non-performing loans (at face values) amounted to 5.4% of total loans to customers,6.9% at 1 January 2018; loans classified as unlikely to pay amounted to 5.0% of total loans (6.4% at 1 January 2018), while impaired past due exposures amounted to 0.19% of total loans (0.24% at 1 January 2018). The coverage ratio of impaired loans (specific write-downs to face value) came to around 63.3%, up on the 62.0% figure recorded at 1 January 2018 and consisting of 78.4% of non-performing loans, 48,0% of loans classified as unlikely to pay and 34.6% of impaired past due exposures. Performing loans, which amounted to €214,474 million at face value (€193,548 million at 1 January 2018), were written down, at 31 December 2018, by a total of €1,250 million, with a coverage ratio of 0.6% (0.7% at 1 January 2018). Overall, therefore, total Loans to customers at 31 December 2018 stood at €239,981 million, with value adjustments of €17,390 million taking the general level of coverage for Loans to Customers to 7.2% (9.0% at 1 January 2018). The overall reduction in the coverage ratio is substantially due to the contraction of the impact of impaired loans on the aggregate of Loans to customer. For the management and recovery of problematic loans (non-performing and unlikely to pay), the Bank uses the services offered by doBank S.p.A., a bank specialised in loan recovery. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 523 During 2018 the aforementioned receivables from Special Purpose Vehicle (S.P.V.) fell by -€421 million compared to 31 December 2017. The reduction is due to the normal management of securitization transactions Reverse repos amounted to €33,825 million at 31 December 2018 (€23,890 million at the end of 2017), and consisted almost entirely of transactions with Cassa di Compensazione e Garanzia, with Cassa Depositi e Prestiti and Poste Italiane Spa. Impaired loans at the end of December 2018 amounted to €9,367 million and came to 4.2% of the total amount of loans to customers. They mainly referred to the business segment. The reduction of 4.527 million (-32.6% compared to 13.894 million at the end of December 2017) is a direct consequence: • the adoption of the IFRS9 principle (€ 2,427 million); • the implementation of a new approach in the management and recovery of such loans that focuses on the timeliness of receipts in order to more quickly reduce their stock as envisaged in the new 2016-2019 Strategic Plan approved on 12 December 2016. Credit quality As of 31 December 2018, the face value of the impaired assets totaled €25,507 million, representing 10.6% of total nominal loans to customers down by 13.5% on 1 January 2018 (post adoption of IFRS9 principle). At book value (net of write-downs of €16,140 million), impaired loans stood at €9,367 million at year-end 2018, down compared to €11,467 million at 1 January 2018, representing 4.2% of total loans compared to 5.6% at the beginning of 2018. The ratio of non-performing loans (at face values) amounted to 5.4% of total loans to customers,6.9% at 1 January 2018; loans classified as unlikely to pay amounted to 5.0% of total loans (6.4% at 1 January 2018), while impaired past due exposures amounted to 0.19% of total loans (0.24% at 1 January 2018). The coverage ratio of impaired loans (specific write-downs to face value) came to around 63.3%, up on the 62.0% figure recorded at 1 January 2018 and consisting of 78.4% of non-performing loans, 48,0% of loans classified as unlikely to pay and 34.6% of impaired past due exposures. Performing loans, which amounted to €214,474 million at face value (€193,548 million at 1 January 2018), were written down, at 31 December 2018, by a total of €1,250 million, with a coverage ratio of 0.6% (0.7% at 1 January 2018). Overall, therefore, total Loans to customers at 31 December 2018 stood at €239,981 million, with value adjustments of €17,390 million taking the general level of coverage for Loans to Customers to 7.2% (9.0% at 1 January 2018). The overall reduction in the coverage ratio is substantially due to the contraction of the impact of impaired loans on the aggregate of Loans to customer. For the management and recovery of problematic loans (non-performing and unlikely to pay), the Bank uses the services offered by doBank S.p.A., a bank specialised in loan recovery. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 523 During 2018 the aforementioned receivables from Special Purpose Vehicle (S.P.V.) fell by -€421 million compared to 31 December 2017. The reduction is due to the normal management of securitization transactions Reverse repos amounted to €33,825 million at 31 December 2018 (€23,890 million at the end of 2017), and consisted almost entirely of transactions with Cassa di Compensazione e Garanzia, with Cassa Depositi e Prestiti and Poste Italiane Spa. Impaired loans at the end of December 2018 amounted to €9,367 million and came to 4.2% of the total amount of loans to customers. They mainly referred to the business segment. The reduction of 4.527 million (-32.6% compared to 13.894 million at the end of December 2017) is a direct consequence: • the adoption of the IFRS9 principle (€ 2,427 million); • the implementation of a new approach in the management and recovery of such loans that focuses on the timeliness of receipts in order to more quickly reduce their stock as envisaged in the new 2016-2019 Strategic Plan approved on 12 December 2016. Credit quality As of 31 December 2018, the face value of the impaired assets totaled €25,507 million, representing 10.6% of total nominal loans to customers down by 13.5% on 1 January 2018 (post adoption of IFRS9 principle). At book value (net of write-downs of €16,140 million), impaired loans stood at €9,367 million at year-end 2018, down compared to €11,467 million at 1 January 2018, representing 4.2% of total loans compared to 5.6% at the beginning of 2018. The ratio of non-performing loans (at face values) amounted to 5.4% of total loans to customers,6.9% at 1 January 2018; loans classified as unlikely to pay amounted to 5.0% of total loans (6.4% at 1 January 2018), while impaired past due exposures amounted to 0.19% of total loans (0.24% at 1 January 2018). The coverage ratio of impaired loans (specific write-downs to face value) came to around 63.3%, up on the 62.0% figure recorded at 1 January 2018 and consisting of 78.4% of non-performing loans, 48,0% of loans classified as unlikely to pay and 34.6% of impaired past due exposures. Performing loans, which amounted to €214,474 million at face value (€193,548 million at 1 January 2018), were written down, at 31 December 2018, by a total of €1,250 million, with a coverage ratio of 0.6% (0.7% at 1 January 2018). Overall, therefore, total Loans to customers at 31 December 2018 stood at €239,981 million, with value adjustments of €17,390 million taking the general level of coverage for Loans to Customers to 7.2% (9.0% at 1 January 2018). The overall reduction in the coverage ratio is substantially due to the contraction of the impact of impaired loans on the aggregate of Loans to customer. For the management and recovery of problematic loans (non-performing and unlikely to pay), the Bank uses the services offered by doBank S.p.A., a bank specialised in loan recovery. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 523 During 2018 the aforementioned receivables from Special Purpose Vehicle (S.P.V.) fell by -€421 million compared to 31 December 2017. The reduction is due to the normal management of securitization transactions Reverse repos amounted to €33,825 million at 31 December 2018 (€23,890 million at the end of 2017), and consisted almost entirely of transactions with Cassa di Compensazione e Garanzia, with Cassa Depositi e Prestiti and Poste Italiane Spa. Impaired loans at the end of December 2018 amounted to €9,367 million and came to 4.2% of the total amount of loans to customers. They mainly referred to the business segment. The reduction of 4.527 million (-32.6% compared to 13.894 million at the end of December 2017) is a direct consequence: • the adoption of the IFRS9 principle (€ 2,427 million); • the implementation of a new approach in the management and recovery of such loans that focuses on the timeliness of receipts in order to more quickly reduce their stock as envisaged in the new 2016-2019 Strategic Plan approved on 12 December 2016. Credit quality As of 31 December 2018, the face value of the impaired assets totaled €25,507 million, representing 10.6% of total nominal loans to customers down by 13.5% on 1 January 2018 (post adoption of IFRS9 principle). At book value (net of write-downs of €16,140 million), impaired loans stood at €9,367 million at year-end 2018, down compared to €11,467 million at 1 January 2018, representing 4.2% of total loans compared to 5.6% at the beginning of 2018. The ratio of non-performing loans (at face values) amounted to 5.4% of total loans to customers,6.9% at 1 January 2018; loans classified as unlikely to pay amounted to 5.0% of total loans (6.4% at 1 January 2018), while impaired past due exposures amounted to 0.19% of total loans (0.24% at 1 January 2018). The coverage ratio of impaired loans (specific write-downs to face value) came to around 63.3%, up on the 62.0% figure recorded at 1 January 2018 and consisting of 78.4% of non-performing loans, 48,0% of loans classified as unlikely to pay and 34.6% of impaired past due exposures. Performing loans, which amounted to €214,474 million at face value (€193,548 million at 1 January 2018), were written down, at 31 December 2018, by a total of €1,250 million, with a coverage ratio of 0.6% (0.7% at 1 January 2018). Overall, therefore, total Loans to customers at 31 December 2018 stood at €239,981 million, with value adjustments of €17,390 million taking the general level of coverage for Loans to Customers to 7.2% (9.0% at 1 January 2018). The overall reduction in the coverage ratio is substantially due to the contraction of the impact of impaired loans on the aggregate of Loans to customer. For the management and recovery of problematic loans (non-performing and unlikely to pay), the Bank uses the services offered by doBank S.p.A., a bank specialised in loan recovery. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 523 During 2018 the aforementioned receivables from Special Purpose Vehicle (S.P.V.) fell by -€421 million compared to 31 December 2017. The reduction is due to the normal management of securitization transactions Reverse repos amounted to €33,825 million at 31 December 2018 (€23,890 million at the end of 2017), and consisted almost entirely of transactions with Cassa di Compensazione e Garanzia, with Cassa Depositi e Prestiti and Poste Italiane Spa. Impaired loans at the end of December 2018 amounted to €9,367 million and came to 4.2% of the total amount of loans to customers. They mainly referred to the business segment. The reduction of 4.527 million (-32.6% compared to 13.894 million at the end of December 2017) is a direct consequence: • the adoption of the IFRS9 principle (€ 2,427 million); • the implementation of a new approach in the management and recovery of such loans that focuses on the timeliness of receipts in order to more quickly reduce their stock as envisaged in the new 2016-2019 Strategic Plan approved on 12 December 2016. Credit quality As of 31 December 2018, the face value of the impaired assets totaled €25,507 million, representing 10.6% of total nominal loans to customers down by 13.5% on 1 January 2018 (post adoption of IFRS9 principle). At book value (net of write-downs of €16,140 million), impaired loans stood at €9,367 million at year-end 2018, down compared to €11,467 million at 1 January 2018, representing 4.2% of total loans compared to 5.6% at the beginning of 2018. The ratio of non-performing loans (at face values) amounted to 5.4% of total loans to customers,6.9% at 1 January 2018; loans classified as unlikely to pay amounted to 5.0% of total loans (6.4% at 1 January 2018), while impaired past due exposures amounted to 0.19% of total loans (0.24% at 1 January 2018). The coverage ratio of impaired loans (specific write-downs to face value) came to around 63.3%, up on the 62.0% figure recorded at 1 January 2018 and consisting of 78.4% of non-performing loans, 48,0% of loans classified as unlikely to pay and 34.6% of impaired past due exposures. Performing loans, which amounted to €214,474 million at face value (€193,548 million at 1 January 2018), were written down, at 31 December 2018, by a total of €1,250 million, with a coverage ratio of 0.6% (0.7% at 1 January 2018). Overall, therefore, total Loans to customers at 31 December 2018 stood at €239,981 million, with value adjustments of €17,390 million taking the general level of coverage for Loans to Customers to 7.2% (9.0% at 1 January 2018). The overall reduction in the coverage ratio is substantially due to the contraction of the impact of impaired loans on the aggregate of Loans to customer. For the management and recovery of problematic loans (non-performing and unlikely to pay), the Bank uses the services offered by doBank S.p.A., a bank specialised in loan recovery. Report on operations Results of the year 524 2018 Annual Report and Accounts · UniCredit The summary table below provides additional details: Loans to customers - Asset quality (€ million) BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE TOTAL(*) NON-PERFORMING PERFORMING TOTAL LOANS As at 12.31.2018 Gross exposure 13,021 12,023 462 25,507 214,474 239,981 as a percentage of total loans 5.43% 5.01% 0.19% 10.63% 89.37% Writedowns 10,210 5,770 160 16,140 1,250 17,390 as a percentage of face value 78.41% 47.99% 34.56% 63.28% 0.58% Carrying value 2,811 6,254 302 9,367 213,224 222,591 as a percentage of total loans 1.26% 2.81% 0.14% 4.21% 95.79% As at 01.01.2018(**) Gross exposure 15,346 14,272 547 30,165 193,548 223,713 as a percentage of total loans 6.86% 6.38% 0.24% 13.48% 86.52% Writedowns 12,107 6,388 202 18,698 1,405 20,103 as a percentage of face value 78.90% 44.76% 37.01% 61.99% 0.73% Carrying value 3,239 7,884 344 11,467 192,143 203,610 as a percentage of total loans 1.59% 3.87% 0.17% 5.63% 94.37% As at 12.31.2017(***) Gross exposure 17,740 14,388 552 32,679 193,564 226,243 as a percentage of total loans 7.84% 6.36% 0.24% 14.44% 85.56% Writedowns 12,101 6,468 216 18,786 911 19,697 as a percentage of face value 68.22% 44.96% 39.16% 57.48% 0.47% Carrying value 5,638 7,920 336 13,894 192,653 206,546 as a percentage of total loans 2.73% 3.83% 0.16% 6.73% 93.27% Notes: (*) The perimeter of non-performing loans is equivalent to the perimeter of EBA NPE exposures. (**) The figures as at 1 January 2018 differ from the ones as at 31 December 2017 as a result of IFRS9 accounting principle adoption and of the exclusion of “Interessi di mora” components. The latter are excluded from Gross exposures and Writedowns in accordance with the fifth update of Banca d’Italia Circular 262 issued on 22 December 2017. (***) The figures as at 31 December 2017 differ from the ones published at the reference date due to the exclusion of the debt securities. Deposits from customers and debt securities in issue Deposits from customers and debt securities in issue, totaling €264,841 million (+1.1% year on year), recorded an increase of €2,757 million compared to the end of 2017 due to operating units in Italy for €5,542 million and an decrease attributable to operating units abroad for €2,785 million. Deposits from customers and debt securities in issue (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Deposits from customers 211,872 197,139 + 14,733 + 7.5% Debt securities in issue 52,969 64,945 - 11,976 - 18.4% Total deposits from customers and debt securities in issue 264,841 262,084 + 2,757 + 1.1% Deposits from customers came to €211,872 million, an increase of €14,733 million on the end of 2017. More specifically: • current accounts and demand deposits increased by €3,577 million; • time deposits reduced by €388 million; • repurchase agreements with customers increased by €12.401 million; • other types of deposits reduced by €857 million. Debt securities in issue, equal to €52,969 million, decreased in 2018 for €11,976 million, mainly attributable to operating units in Italy that saw an overall decrease of €9,065 million, driven by bond issues (-€7,875), certificates of deposit (-€118 million) and to “buoni fruttiferi” (-€164 million); certificates of deposit with operating units abroad increased by €2,785 million. Report on operations Results of the year 524 2018 Annual Report and Accounts · UniCredit The summary table below provides additional details: Loans to customers - Asset quality (€ million) BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE TOTAL(*) NON-PERFORMING PERFORMING TOTAL LOANS As at 12.31.2018 Gross exposure 13,021 12,023 462 25,507 214,474 239,981 as a percentage of total loans 5.43% 5.01% 0.19% 10.63% 89.37% Writedowns 10,210 5,770 160 16,140 1,250 17,390 as a percentage of face value 78.41% 47.99% 34.56% 63.28% 0.58% Carrying value 2,811 6,254 302 9,367 213,224 222,591 as a percentage of total loans 1.26% 2.81% 0.14% 4.21% 95.79% As at 01.01.2018(**) Gross exposure 15,346 14,272 547 30,165 193,548 223,713 as a percentage of total loans 6.86% 6.38% 0.24% 13.48% 86.52% Writedowns 12,107 6,388 202 18,698 1,405 20,103 as a percentage of face value 78.90% 44.76% 37.01% 61.99% 0.73% Carrying value 3,239 7,884 344 11,467 192,143 203,610 as a percentage of total loans 1.59% 3.87% 0.17% 5.63% 94.37% As at 12.31.2017(***) Gross exposure 17,740 14,388 552 32,679 193,564 226,243 as a percentage of total loans 7.84% 6.36% 0.24% 14.44% 85.56% Writedowns 12,101 6,468 216 18,786 911 19,697 as a percentage of face value 68.22% 44.96% 39.16% 57.48% 0.47% Carrying value 5,638 7,920 336 13,894 192,653 206,546 as a percentage of total loans 2.73% 3.83% 0.16% 6.73% 93.27% Notes: (*) The perimeter of non-performing loans is equivalent to the perimeter of EBA NPE exposures. (**) The figures as at 1 January 2018 differ from the ones as at 31 December 2017 as a result of IFRS9 accounting principle adoption and of the exclusion of “Interessi di mora” components. The latter are excluded from Gross exposures and Writedowns in accordance with the fifth update of Banca d’Italia Circular 262 issued on 22 December 2017. (***) The figures as at 31 December 2017 differ from the ones published at the reference date due to the exclusion of the debt securities. Deposits from customers and debt securities in issue Deposits from customers and debt securities in issue, totaling €264,841 million (+1.1% year on year), recorded an increase of €2,757 million compared to the end of 2017 due to operating units in Italy for €5,542 million and an decrease attributable to operating units abroad for €2,785 million. Deposits from customers and debt securities in issue (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Deposits from customers 211,872 197,139 + 14,733 + 7.5% Debt securities in issue 52,969 64,945 - 11,976 - 18.4% Total deposits from customers and debt securities in issue 264,841 262,084 + 2,757 + 1.1% Deposits from customers came to €211,872 million, an increase of €14,733 million on the end of 2017. More specifically: • current accounts and demand deposits increased by €3,577 million; • time deposits reduced by €388 million; • repurchase agreements with customers increased by €12.401 million; • other types of deposits reduced by €857 million. Debt securities in issue, equal to €52,969 million, decreased in 2018 for €11,976 million, mainly attributable to operating units in Italy that saw an overall decrease of €9,065 million, driven by bond issues (-€7,875), certificates of deposit (-€118 million) and to “buoni fruttiferi” (-€164 million); certificates of deposit with operating units abroad increased by €2,785 million. Report on operations Results of the year 524 2018 Annual Report and Accounts · UniCredit The summary table below provides additional details: Loans to customers - Asset quality (€ million) BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE TOTAL(*) NON-PERFORMING PERFORMING TOTAL LOANS As at 12.31.2018 Gross exposure 13,021 12,023 462 25,507 214,474 239,981 as a percentage of total loans 5.43% 5.01% 0.19% 10.63% 89.37% Writedowns 10,210 5,770 160 16,140 1,250 17,390 as a percentage of face value 78.41% 47.99% 34.56% 63.28% 0.58% Carrying value 2,811 6,254 302 9,367 213,224 222,591 as a percentage of total loans 1.26% 2.81% 0.14% 4.21% 95.79% As at 01.01.2018(**) Gross exposure 15,346 14,272 547 30,165 193,548 223,713 as a percentage of total loans 6.86% 6.38% 0.24% 13.48% 86.52% Writedowns 12,107 6,388 202 18,698 1,405 20,103 as a percentage of face value 78.90% 44.76% 37.01% 61.99% 0.73% Carrying value 3,239 7,884 344 11,467 192,143 203,610 as a percentage of total loans 1.59% 3.87% 0.17% 5.63% 94.37% As at 12.31.2017(***) Gross exposure 17,740 14,388 552 32,679 193,564 226,243 as a percentage of total loans 7.84% 6.36% 0.24% 14.44% 85.56% Writedowns 12,101 6,468 216 18,786 911 19,697 as a percentage of face value 68.22% 44.96% 39.16% 57.48% 0.47% Carrying value 5,638 7,920 336 13,894 192,653 206,546 as a percentage of total loans 2.73% 3.83% 0.16% 6.73% 93.27% Notes: (*) The perimeter of non-performing loans is equivalent to the perimeter of EBA NPE exposures. (**) The figures as at 1 January 2018 differ from the ones as at 31 December 2017 as a result of IFRS9 accounting principle adoption and of the exclusion of “Interessi di mora” components. The latter are excluded from Gross exposures and Writedowns in accordance with the fifth update of Banca d’Italia Circular 262 issued on 22 December 2017. (***) The figures as at 31 December 2017 differ from the ones published at the reference date due to the exclusion of the debt securities. Deposits from customers and debt securities in issue Deposits from customers and debt securities in issue, totaling €264,841 million (+1.1% year on year), recorded an increase of €2,757 million compared to the end of 2017 due to operating units in Italy for €5,542 million and an decrease attributable to operating units abroad for €2,785 million. Deposits from customers and debt securities in issue (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Deposits from customers 211,872 197,139 + 14,733 + 7.5% Debt securities in issue 52,969 64,945 - 11,976 - 18.4% Total deposits from customers and debt securities in issue 264,841 262,084 + 2,757 + 1.1% Deposits from customers came to €211,872 million, an increase of €14,733 million on the end of 2017. More specifically: • current accounts and demand deposits increased by €3,577 million; • time deposits reduced by €388 million; • repurchase agreements with customers increased by €12.401 million; • other types of deposits reduced by €857 million. Debt securities in issue, equal to €52,969 million, decreased in 2018 for €11,976 million, mainly attributable to operating units in Italy that saw an overall decrease of €9,065 million, driven by bond issues (-€7,875), certificates of deposit (-€118 million) and to “buoni fruttiferi” (-€164 million); certificates of deposit with operating units abroad increased by €2,785 million. Report on operations Results of the year 524 2018 Annual Report and Accounts · UniCredit The summary table below provides additional details: Loans to customers - Asset quality (€ million) BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE TOTAL(*) NON-PERFORMING PERFORMING TOTAL LOANS As at 12.31.2018 Gross exposure 13,021 12,023 462 25,507 214,474 239,981 as a percentage of total loans 5.43% 5.01% 0.19% 10.63% 89.37% Writedowns 10,210 5,770 160 16,140 1,250 17,390 as a percentage of face value 78.41% 47.99% 34.56% 63.28% 0.58% Carrying value 2,811 6,254 302 9,367 213,224 222,591 as a percentage of total loans 1.26% 2.81% 0.14% 4.21% 95.79% As at 01.01.2018(**) Gross exposure 15,346 14,272 547 30,165 193,548 223,713 as a percentage of total loans 6.86% 6.38% 0.24% 13.48% 86.52% Writedowns 12,107 6,388 202 18,698 1,405 20,103 as a percentage of face value 78.90% 44.76% 37.01% 61.99% 0.73% Carrying value 3,239 7,884 344 11,467 192,143 203,610 as a percentage of total loans 1.59% 3.87% 0.17% 5.63% 94.37% As at 12.31.2017(***) Gross exposure 17,740 14,388 552 32,679 193,564 226,243 as a percentage of total loans 7.84% 6.36% 0.24% 14.44% 85.56% Writedowns 12,101 6,468 216 18,786 911 19,697 as a percentage of face value 68.22% 44.96% 39.16% 57.48% 0.47% Carrying value 5,638 7,920 336 13,894 192,653 206,546 as a percentage of total loans 2.73% 3.83% 0.16% 6.73% 93.27% Notes: (*) The perimeter of non-performing loans is equivalent to the perimeter of EBA NPE exposures. (**) The figures as at 1 January 2018 differ from the ones as at 31 December 2017 as a result of IFRS9 accounting principle adoption and of the exclusion of “Interessi di mora” components. The latter are excluded from Gross exposures and Writedowns in accordance with the fifth update of Banca d’Italia Circular 262 issued on 22 December 2017. (***) The figures as at 31 December 2017 differ from the ones published at the reference date due to the exclusion of the debt securities. Deposits from customers and debt securities in issue Deposits from customers and debt securities in issue, totaling €264,841 million (+1.1% year on year), recorded an increase of €2,757 million compared to the end of 2017 due to operating units in Italy for €5,542 million and an decrease attributable to operating units abroad for €2,785 million. Deposits from customers and debt securities in issue (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Deposits from customers 211,872 197,139 + 14,733 + 7.5% Debt securities in issue 52,969 64,945 - 11,976 - 18.4% Total deposits from customers and debt securities in issue 264,841 262,084 + 2,757 + 1.1% Deposits from customers came to €211,872 million, an increase of €14,733 million on the end of 2017. More specifically: • current accounts and demand deposits increased by €3,577 million; • time deposits reduced by €388 million; • repurchase agreements with customers increased by €12.401 million; • other types of deposits reduced by €857 million. Debt securities in issue, equal to €52,969 million, decreased in 2018 for €11,976 million, mainly attributable to operating units in Italy that saw an overall decrease of €9,065 million, driven by bond issues (-€7,875), certificates of deposit (-€118 million) and to “buoni fruttiferi” (-€164 million); certificates of deposit with operating units abroad increased by €2,785 million. Report on operations Results of the year 524 2018 Annual Report and Accounts · UniCredit The summary table below provides additional details: Loans to customers - Asset quality (€ million) BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE TOTAL(*) NON-PERFORMING PERFORMING TOTAL LOANS As at 12.31.2018 Gross exposure 13,021 12,023 462 25,507 214,474 239,981 as a percentage of total loans 5.43% 5.01% 0.19% 10.63% 89.37% Writedowns 10,210 5,770 160 16,140 1,250 17,390 as a percentage of face value 78.41% 47.99% 34.56% 63.28% 0.58% Carrying value 2,811 6,254 302 9,367 213,224 222,591 as a percentage of total loans 1.26% 2.81% 0.14% 4.21% 95.79% As at 01.01.2018(**) Gross exposure 15,346 14,272 547 30,165 193,548 223,713 as a percentage of total loans 6.86% 6.38% 0.24% 13.48% 86.52% Writedowns 12,107 6,388 202 18,698 1,405 20,103 as a percentage of face value 78.90% 44.76% 37.01% 61.99% 0.73% Carrying value 3,239 7,884 344 11,467 192,143 203,610 as a percentage of total loans 1.59% 3.87% 0.17% 5.63% 94.37% As at 12.31.2017(***) Gross exposure 17,740 14,388 552 32,679 193,564 226,243 as a percentage of total loans 7.84% 6.36% 0.24% 14.44% 85.56% Writedowns 12,101 6,468 216 18,786 911 19,697 as a percentage of face value 68.22% 44.96% 39.16% 57.48% 0.47% Carrying value 5,638 7,920 336 13,894 192,653 206,546 as a percentage of total loans 2.73% 3.83% 0.16% 6.73% 93.27% Notes: (*) The perimeter of non-performing loans is equivalent to the perimeter of EBA NPE exposures. (**) The figures as at 1 January 2018 differ from the ones as at 31 December 2017 as a result of IFRS9 accounting principle adoption and of the exclusion of “Interessi di mora” components. The latter are excluded from Gross exposures and Writedowns in accordance with the fifth update of Banca d’Italia Circular 262 issued on 22 December 2017. (***) The figures as at 31 December 2017 differ from the ones published at the reference date due to the exclusion of the debt securities. Deposits from customers and debt securities in issue Deposits from customers and debt securities in issue, totaling €264,841 million (+1.1% year on year), recorded an increase of €2,757 million compared to the end of 2017 due to operating units in Italy for €5,542 million and an decrease attributable to operating units abroad for €2,785 million. Deposits from customers and debt securities in issue (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Deposits from customers 211,872 197,139 + 14,733 + 7.5% Debt securities in issue 52,969 64,945 - 11,976 - 18.4% Total deposits from customers and debt securities in issue 264,841 262,084 + 2,757 + 1.1% Deposits from customers came to €211,872 million, an increase of €14,733 million on the end of 2017. More specifically: • current accounts and demand deposits increased by €3,577 million; • time deposits reduced by €388 million; • repurchase agreements with customers increased by €12.401 million; • other types of deposits reduced by €857 million. Debt securities in issue, equal to €52,969 million, decreased in 2018 for €11,976 million, mainly attributable to operating units in Italy that saw an overall decrease of €9,065 million, driven by bond issues (-€7,875), certificates of deposit (-€118 million) and to “buoni fruttiferi” (-€164 million); certificates of deposit with operating units abroad increased by €2,785 million. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 525 Other financial assets In 2018 financial investments showed an increase of €4,597 million (+4.3%) resulting from the combination of the changes in financial assets at fair value through other comprehensive income (-€11,408 million), in debt securities at amortised cost (+€16,911 million), in investments in associates and joint ventures (-€1,272 million) and in financial assets at fair value through profit or loss (+€366 million). Other financial assets (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Financial assets at fair value through profit or loss - Other financial assets mandatorily at fair value 3,164 2,798 + 366 + 13.1% Financial assets at fair value through other comprehensive income 46,927 58,335 - 11,408 - 19.6% Debt securities and loans at amortised cost 19,330 2,419 + 16,911 n.m. Equity investments 42,873 44,145 - 1,272 - 2.9% Total other financial assets 112,294 107,697 + 4,597 + 4.3% More specifically: • financial assets at fair value through other comprehensive income included €45,271 million in debt and equity securities (decreased by €11,316 million primarily due to sales and redemption of government securities) and €1,656 million in equity interests. Equity interests included in this portfolio posted an annual decrease of €92 million, mainly attributable to: - sale of Banca d’Italia quotes (€53 million); - sale of Bank of Valletta quotes (€18 million, with a loss for -€3 million); - fair value changes, of which ABHH Holding (-€31 million); • debt securities at amortised cost mainly include government securities; • the value of equity investments, equal to €42,873 million, decreased by €1,272 million, mainly driven by the combined effects arising from: - the write-downs of the investment (of which: Koc Finansal Hizmetler Istanbul -€1.319 million, AO UniCredit Bank -€244 million, Cordusio Sim -€158 million, UniCredit Banka Slovenija D.D. -€17 million, UniCredit Consumer Financing Ifn S.A. -€16 million, UniCredit Bank Austria Credistanstalt Ag -€12 million, Unicredit Turn Around Management Cee Gmbh -€13 million, Unicredit Subito Casa S.p.A. -€1 million, UniCredit Global Leasing Export Gmbh -€1 million, Aviva S.p.A -€6 million, Risanamento S.p.A. -€6 million, Fenice S.r.l.- €2 million); - the write-up of the investment (of which: UniCredit Bank Ag €30 million, Mediobanca Banca di Credito Finanziario S.p.A. €28 million, UniCredit International Luxembourg €4 million, Nuova Compagnia di Partecipazioni €2 million); - capital increases in Koc Finansal Hizmetler Istanbul (€310 million) and Unicredit Bank S.A. (€150 million). Interbank position In the fourth quarter of 2018, the Bank went on in executing the Yearly Funding Plan carrying out the diversification of the funding mix in order to exploit all the Group liquidity hubs and enhancing the cost of medium long-term funding. Along the 2018 quarters, d of December, the access to the debt capital markets has been performed in coherence with the wide range of the other liquidity sources coming from both Institutional Investors and commercial network customers. To this respect, at the end of November the Bank executed successfully the Senior non Preferred issue US Dollar denominated, for a total amount of USD 3 billion. This issue has been allocated to a primary Institutional Investor as a private placement under the US GMTN Program and it provides a relevant contribution to the compliance towards the TLAC rules expected to enter into in force in 2019. Finally, in the context of the Italian Governments Bonds volatility particularly relevant in the second half of the year, the cost of funding in 2018 over-performed the expectations in terms of the medium long-term interest rate spread over Euribor rate paid to Investors. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 525 Other financial assets In 2018 financial investments showed an increase of €4,597 million (+4.3%) resulting from the combination of the changes in financial assets at fair value through other comprehensive income (-€11,408 million), in debt securities at amortised cost (+€16,911 million), in investments in associates and joint ventures (-€1,272 million) and in financial assets at fair value through profit or loss (+€366 million). Other financial assets (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Financial assets at fair value through profit or loss - Other financial assets mandatorily at fair value 3,164 2,798 + 366 + 13.1% Financial assets at fair value through other comprehensive income 46,927 58,335 - 11,408 - 19.6% Debt securities and loans at amortised cost 19,330 2,419 + 16,911 n.m. Equity investments 42,873 44,145 - 1,272 - 2.9% Total other financial assets 112,294 107,697 + 4,597 + 4.3% More specifically: • financial assets at fair value through other comprehensive income included €45,271 million in debt and equity securities (decreased by €11,316 million primarily due to sales and redemption of government securities) and €1,656 million in equity interests. Equity interests included in this portfolio posted an annual decrease of €92 million, mainly attributable to: - sale of Banca d’Italia quotes (€53 million); - sale of Bank of Valletta quotes (€18 million, with a loss for -€3 million); - fair value changes, of which ABHH Holding (-€31 million); • debt securities at amortised cost mainly include government securities; • the value of equity investments, equal to €42,873 million, decreased by €1,272 million, mainly driven by the combined effects arising from: - the write-downs of the investment (of which: Koc Finansal Hizmetler Istanbul -€1.319 million, AO UniCredit Bank -€244 million, Cordusio Sim -€158 million, UniCredit Banka Slovenija D.D. -€17 million, UniCredit Consumer Financing Ifn S.A. -€16 million, UniCredit Bank Austria Credistanstalt Ag -€12 million, Unicredit Turn Around Management Cee Gmbh -€13 million, Unicredit Subito Casa S.p.A. -€1 million, UniCredit Global Leasing Export Gmbh -€1 million, Aviva S.p.A -€6 million, Risanamento S.p.A. -€6 million, Fenice S.r.l.- €2 million); - the write-up of the investment (of which: UniCredit Bank Ag €30 million, Mediobanca Banca di Credito Finanziario S.p.A. €28 million, UniCredit International Luxembourg €4 million, Nuova Compagnia di Partecipazioni €2 million); - capital increases in Koc Finansal Hizmetler Istanbul (€310 million) and Unicredit Bank S.A. (€150 million). Interbank position In the fourth quarter of 2018, the Bank went on in executing the Yearly Funding Plan carrying out the diversification of the funding mix in order to exploit all the Group liquidity hubs and enhancing the cost of medium long-term funding. Along the 2018 quarters, d of December, the access to the debt capital markets has been performed in coherence with the wide range of the other liquidity sources coming from both Institutional Investors and commercial network customers. To this respect, at the end of November the Bank executed successfully the Senior non Preferred issue US Dollar denominated, for a total amount of USD 3 billion. This issue has been allocated to a primary Institutional Investor as a private placement under the US GMTN Program and it provides a relevant contribution to the compliance towards the TLAC rules expected to enter into in force in 2019. Finally, in the context of the Italian Governments Bonds volatility particularly relevant in the second half of the year, the cost of funding in 2018 over-performed the expectations in terms of the medium long-term interest rate spread over Euribor rate paid to Investors. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 525 Other financial assets In 2018 financial investments showed an increase of €4,597 million (+4.3%) resulting from the combination of the changes in financial assets at fair value through other comprehensive income (-€11,408 million), in debt securities at amortised cost (+€16,911 million), in investments in associates and joint ventures (-€1,272 million) and in financial assets at fair value through profit or loss (+€366 million). Other financial assets (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Financial assets at fair value through profit or loss - Other financial assets mandatorily at fair value 3,164 2,798 + 366 + 13.1% Financial assets at fair value through other comprehensive income 46,927 58,335 - 11,408 - 19.6% Debt securities and loans at amortised cost 19,330 2,419 + 16,911 n.m. Equity investments 42,873 44,145 - 1,272 - 2.9% Total other financial assets 112,294 107,697 + 4,597 + 4.3% More specifically: • financial assets at fair value through other comprehensive income included €45,271 million in debt and equity securities (decreased by €11,316 million primarily due to sales and redemption of government securities) and €1,656 million in equity interests. Equity interests included in this portfolio posted an annual decrease of €92 million, mainly attributable to: - sale of Banca d’Italia quotes (€53 million); - sale of Bank of Valletta quotes (€18 million, with a loss for -€3 million); - fair value changes, of which ABHH Holding (-€31 million); • debt securities at amortised cost mainly include government securities; • the value of equity investments, equal to €42,873 million, decreased by €1,272 million, mainly driven by the combined effects arising from: - the write-downs of the investment (of which: Koc Finansal Hizmetler Istanbul -€1.319 million, AO UniCredit Bank -€244 million, Cordusio Sim -€158 million, UniCredit Banka Slovenija D.D. -€17 million, UniCredit Consumer Financing Ifn S.A. -€16 million, UniCredit Bank Austria Credistanstalt Ag -€12 million, Unicredit Turn Around Management Cee Gmbh -€13 million, Unicredit Subito Casa S.p.A. -€1 million, UniCredit Global Leasing Export Gmbh -€1 million, Aviva S.p.A -€6 million, Risanamento S.p.A. -€6 million, Fenice S.r.l.- €2 million); - the write-up of the investment (of which: UniCredit Bank Ag €30 million, Mediobanca Banca di Credito Finanziario S.p.A. €28 million, UniCredit International Luxembourg €4 million, Nuova Compagnia di Partecipazioni €2 million); - capital increases in Koc Finansal Hizmetler Istanbul (€310 million) and Unicredit Bank S.A. (€150 million). Interbank position In the fourth quarter of 2018, the Bank went on in executing the Yearly Funding Plan carrying out the diversification of the funding mix in order to exploit all the Group liquidity hubs and enhancing the cost of medium long-term funding. Along the 2018 quarters, d of December, the access to the debt capital markets has been performed in coherence with the wide range of the other liquidity sources coming from both Institutional Investors and commercial network customers. To this respect, at the end of November the Bank executed successfully the Senior non Preferred issue US Dollar denominated, for a total amount of USD 3 billion. This issue has been allocated to a primary Institutional Investor as a private placement under the US GMTN Program and it provides a relevant contribution to the compliance towards the TLAC rules expected to enter into in force in 2019. Finally, in the context of the Italian Governments Bonds volatility particularly relevant in the second half of the year, the cost of funding in 2018 over-performed the expectations in terms of the medium long-term interest rate spread over Euribor rate paid to Investors. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 525 Other financial assets In 2018 financial investments showed an increase of €4,597 million (+4.3%) resulting from the combination of the changes in financial assets at fair value through other comprehensive income (-€11,408 million), in debt securities at amortised cost (+€16,911 million), in investments in associates and joint ventures (-€1,272 million) and in financial assets at fair value through profit or loss (+€366 million). Other financial assets (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Financial assets at fair value through profit or loss - Other financial assets mandatorily at fair value 3,164 2,798 + 366 + 13.1% Financial assets at fair value through other comprehensive income 46,927 58,335 - 11,408 - 19.6% Debt securities and loans at amortised cost 19,330 2,419 + 16,911 n.m. Equity investments 42,873 44,145 - 1,272 - 2.9% Total other financial assets 112,294 107,697 + 4,597 + 4.3% More specifically: • financial assets at fair value through other comprehensive income included €45,271 million in debt and equity securities (decreased by €11,316 million primarily due to sales and redemption of government securities) and €1,656 million in equity interests. Equity interests included in this portfolio posted an annual decrease of €92 million, mainly attributable to: - sale of Banca d’Italia quotes (€53 million); - sale of Bank of Valletta quotes (€18 million, with a loss for -€3 million); - fair value changes, of which ABHH Holding (-€31 million); • debt securities at amortised cost mainly include government securities; • the value of equity investments, equal to €42,873 million, decreased by €1,272 million, mainly driven by the combined effects arising from: - the write-downs of the investment (of which: Koc Finansal Hizmetler Istanbul -€1.319 million, AO UniCredit Bank -€244 million, Cordusio Sim -€158 million, UniCredit Banka Slovenija D.D. -€17 million, UniCredit Consumer Financing Ifn S.A. -€16 million, UniCredit Bank Austria Credistanstalt Ag -€12 million, Unicredit Turn Around Management Cee Gmbh -€13 million, Unicredit Subito Casa S.p.A. -€1 million, UniCredit Global Leasing Export Gmbh -€1 million, Aviva S.p.A -€6 million, Risanamento S.p.A. -€6 million, Fenice S.r.l.- €2 million); - the write-up of the investment (of which: UniCredit Bank Ag €30 million, Mediobanca Banca di Credito Finanziario S.p.A. €28 million, UniCredit International Luxembourg €4 million, Nuova Compagnia di Partecipazioni €2 million); - capital increases in Koc Finansal Hizmetler Istanbul (€310 million) and Unicredit Bank S.A. (€150 million). Interbank position In the fourth quarter of 2018, the Bank went on in executing the Yearly Funding Plan carrying out the diversification of the funding mix in order to exploit all the Group liquidity hubs and enhancing the cost of medium long-term funding. Along the 2018 quarters, d of December, the access to the debt capital markets has been performed in coherence with the wide range of the other liquidity sources coming from both Institutional Investors and commercial network customers. To this respect, at the end of November the Bank executed successfully the Senior non Preferred issue US Dollar denominated, for a total amount of USD 3 billion. This issue has been allocated to a primary Institutional Investor as a private placement under the US GMTN Program and it provides a relevant contribution to the compliance towards the TLAC rules expected to enter into in force in 2019. Finally, in the context of the Italian Governments Bonds volatility particularly relevant in the second half of the year, the cost of funding in 2018 over-performed the expectations in terms of the medium long-term interest rate spread over Euribor rate paid to Investors. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 525 Other financial assets In 2018 financial investments showed an increase of €4,597 million (+4.3%) resulting from the combination of the changes in financial assets at fair value through other comprehensive income (-€11,408 million), in debt securities at amortised cost (+€16,911 million), in investments in associates and joint ventures (-€1,272 million) and in financial assets at fair value through profit or loss (+€366 million). Other financial assets (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Financial assets at fair value through profit or loss - Other financial assets mandatorily at fair value 3,164 2,798 + 366 + 13.1% Financial assets at fair value through other comprehensive income 46,927 58,335 - 11,408 - 19.6% Debt securities and loans at amortised cost 19,330 2,419 + 16,911 n.m. Equity investments 42,873 44,145 - 1,272 - 2.9% Total other financial assets 112,294 107,697 + 4,597 + 4.3% More specifically: • financial assets at fair value through other comprehensive income included €45,271 million in debt and equity securities (decreased by €11,316 million primarily due to sales and redemption of government securities) and €1,656 million in equity interests. Equity interests included in this portfolio posted an annual decrease of €92 million, mainly attributable to: - sale of Banca d’Italia quotes (€53 million); - sale of Bank of Valletta quotes (€18 million, with a loss for -€3 million); - fair value changes, of which ABHH Holding (-€31 million); • debt securities at amortised cost mainly include government securities; • the value of equity investments, equal to €42,873 million, decreased by €1,272 million, mainly driven by the combined effects arising from: - the write-downs of the investment (of which: Koc Finansal Hizmetler Istanbul -€1.319 million, AO UniCredit Bank -€244 million, Cordusio Sim -€158 million, UniCredit Banka Slovenija D.D. -€17 million, UniCredit Consumer Financing Ifn S.A. -€16 million, UniCredit Bank Austria Credistanstalt Ag -€12 million, Unicredit Turn Around Management Cee Gmbh -€13 million, Unicredit Subito Casa S.p.A. -€1 million, UniCredit Global Leasing Export Gmbh -€1 million, Aviva S.p.A -€6 million, Risanamento S.p.A. -€6 million, Fenice S.r.l.- €2 million); - the write-up of the investment (of which: UniCredit Bank Ag €30 million, Mediobanca Banca di Credito Finanziario S.p.A. €28 million, UniCredit International Luxembourg €4 million, Nuova Compagnia di Partecipazioni €2 million); - capital increases in Koc Finansal Hizmetler Istanbul (€310 million) and Unicredit Bank S.A. (€150 million). Interbank position In the fourth quarter of 2018, the Bank went on in executing the Yearly Funding Plan carrying out the diversification of the funding mix in order to exploit all the Group liquidity hubs and enhancing the cost of medium long-term funding. Along the 2018 quarters, d of December, the access to the debt capital markets has been performed in coherence with the wide range of the other liquidity sources coming from both Institutional Investors and commercial network customers. To this respect, at the end of November the Bank executed successfully the Senior non Preferred issue US Dollar denominated, for a total amount of USD 3 billion. This issue has been allocated to a primary Institutional Investor as a private placement under the US GMTN Program and it provides a relevant contribution to the compliance towards the TLAC rules expected to enter into in force in 2019. Finally, in the context of the Italian Governments Bonds volatility particularly relevant in the second half of the year, the cost of funding in 2018 over-performed the expectations in terms of the medium long-term interest rate spread over Euribor rate paid to Investors. Report on operations Results of the year 526 2018 Annual Report and Accounts · UniCredit Capital and Value Management Principles of value creation and disciplined capital allocation Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. Capital ratios Transitional own funds and capital ratios (€ million) AS AT 12.31.2018(*) (**) 12.31.2017(*) Common Equity Tier 1 Capital 44,385 46,458 Tier 1 Capital 49,526 51,717 Total own funds 56,527 60,332 Total RWA 204,991 202,121 Common Equity Tier 1 Capital Ratio 21.65% 22.99% Tier 1 Capital Ratio 24.16% 25.59% Total Capital Ratio 27.58% 29.85% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit S.p.A. has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. The negative change with respect to 31 December 2017 (about €3.8 billion on Total own funds), in addition to the effects of the first application of new IFRS9 accounting principle and the profit of the period recognised in CET1 capital net of dividends, mainly reflects the negative change on the reserve of capital instruments and debt securities measured at fair value that mainly reflect the trend related to the valuation of Italian government bonds and the impact referred to the maturity/redemption of subordinated instruments classified in Additional Tier 1 Capital and Tier 2 Capital”. Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to 2018 transitional capital requirements and buffers for UniCredit group with the exception of what is reported below. The profit eligible as at 31 December 2018, equal to €2,458 million is recognised in the Own Funds for €1,853 million, resulting after i) the destination, approved by the Board of Director, to dividends for €601 million, correspondent to the 20% of the rectified Group net profit (equal to €3,006 million), excluding the positive extraordinary impact linked to the tax effects deriving from the change of the fiscal treatment related to First Time Adoption of IFRS9 (€887 million) and ii) the social and charity initiatives for €4 million. The net profit 2018 as at 31 December 2018 is included in CET1 capital following the authorization by the competent Authority according to CRR Article 26(2). Capital strengthening Reference is made to the paragraph Capital strengthening of the Consolidated report on operations, which is herewith quoted entirely. Report on operations Results of the year 526 2018 Annual Report and Accounts · UniCredit Capital and Value Management Principles of value creation and disciplined capital allocation Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. Capital ratios Transitional own funds and capital ratios (€ million) AS AT 12.31.2018(*) (**) 12.31.2017(*) Common Equity Tier 1 Capital 44,385 46,458 Tier 1 Capital 49,526 51,717 Total own funds 56,527 60,332 Total RWA 204,991 202,121 Common Equity Tier 1 Capital Ratio 21.65% 22.99% Tier 1 Capital Ratio 24.16% 25.59% Total Capital Ratio 27.58% 29.85% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit S.p.A. has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. The negative change with respect to 31 December 2017 (about €3.8 billion on Total own funds), in addition to the effects of the first application of new IFRS9 accounting principle and the profit of the period recognised in CET1 capital net of dividends, mainly reflects the negative change on the reserve of capital instruments and debt securities measured at fair value that mainly reflect the trend related to the valuation of Italian government bonds and the impact referred to the maturity/redemption of subordinated instruments classified in Additional Tier 1 Capital and Tier 2 Capital”. Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to 2018 transitional capital requirements and buffers for UniCredit group with the exception of what is reported below. The profit eligible as at 31 December 2018, equal to €2,458 million is recognised in the Own Funds for €1,853 million, resulting after i) the destination, approved by the Board of Director, to dividends for €601 million, correspondent to the 20% of the rectified Group net profit (equal to €3,006 million), excluding the positive extraordinary impact linked to the tax effects deriving from the change of the fiscal treatment related to First Time Adoption of IFRS9 (€887 million) and ii) the social and charity initiatives for €4 million. The net profit 2018 as at 31 December 2018 is included in CET1 capital following the authorization by the competent Authority according to CRR Article 26(2). Capital strengthening Reference is made to the paragraph Capital strengthening of the Consolidated report on operations, which is herewith quoted entirely. Report on operations Results of the year 526 2018 Annual Report and Accounts · UniCredit Capital and Value Management Principles of value creation and disciplined capital allocation Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. Capital ratios Transitional own funds and capital ratios (€ million) AS AT 12.31.2018(*) (**) 12.31.2017(*) Common Equity Tier 1 Capital 44,385 46,458 Tier 1 Capital 49,526 51,717 Total own funds 56,527 60,332 Total RWA 204,991 202,121 Common Equity Tier 1 Capital Ratio 21.65% 22.99% Tier 1 Capital Ratio 24.16% 25.59% Total Capital Ratio 27.58% 29.85% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit S.p.A. has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. The negative change with respect to 31 December 2017 (about €3.8 billion on Total own funds), in addition to the effects of the first application of new IFRS9 accounting principle and the profit of the period recognised in CET1 capital net of dividends, mainly reflects the negative change on the reserve of capital instruments and debt securities measured at fair value that mainly reflect the trend related to the valuation of Italian government bonds and the impact referred to the maturity/redemption of subordinated instruments classified in Additional Tier 1 Capital and Tier 2 Capital”. Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to 2018 transitional capital requirements and buffers for UniCredit group with the exception of what is reported below. The profit eligible as at 31 December 2018, equal to €2,458 million is recognised in the Own Funds for €1,853 million, resulting after i) the destination, approved by the Board of Director, to dividends for €601 million, correspondent to the 20% of the rectified Group net profit (equal to €3,006 million), excluding the positive extraordinary impact linked to the tax effects deriving from the change of the fiscal treatment related to First Time Adoption of IFRS9 (€887 million) and ii) the social and charity initiatives for €4 million. The net profit 2018 as at 31 December 2018 is included in CET1 capital following the authorization by the competent Authority according to CRR Article 26(2). Capital strengthening Reference is made to the paragraph Capital strengthening of the Consolidated report on operations, which is herewith quoted entirely. Report on operations Results of the year 526 2018 Annual Report and Accounts · UniCredit Capital and Value Management Principles of value creation and disciplined capital allocation Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. Capital ratios Transitional own funds and capital ratios (€ million) AS AT 12.31.2018(*) (**) 12.31.2017(*) Common Equity Tier 1 Capital 44,385 46,458 Tier 1 Capital 49,526 51,717 Total own funds 56,527 60,332 Total RWA 204,991 202,121 Common Equity Tier 1 Capital Ratio 21.65% 22.99% Tier 1 Capital Ratio 24.16% 25.59% Total Capital Ratio 27.58% 29.85% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit S.p.A. has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. The negative change with respect to 31 December 2017 (about €3.8 billion on Total own funds), in addition to the effects of the first application of new IFRS9 accounting principle and the profit of the period recognised in CET1 capital net of dividends, mainly reflects the negative change on the reserve of capital instruments and debt securities measured at fair value that mainly reflect the trend related to the valuation of Italian government bonds and the impact referred to the maturity/redemption of subordinated instruments classified in Additional Tier 1 Capital and Tier 2 Capital”. Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to 2018 transitional capital requirements and buffers for UniCredit group with the exception of what is reported below. The profit eligible as at 31 December 2018, equal to €2,458 million is recognised in the Own Funds for €1,853 million, resulting after i) the destination, approved by the Board of Director, to dividends for €601 million, correspondent to the 20% of the rectified Group net profit (equal to €3,006 million), excluding the positive extraordinary impact linked to the tax effects deriving from the change of the fiscal treatment related to First Time Adoption of IFRS9 (€887 million) and ii) the social and charity initiatives for €4 million. The net profit 2018 as at 31 December 2018 is included in CET1 capital following the authorization by the competent Authority according to CRR Article 26(2). Capital strengthening Reference is made to the paragraph Capital strengthening of the Consolidated report on operations, which is herewith quoted entirely. Report on operations Results of the year 526 2018 Annual Report and Accounts · UniCredit Capital and Value Management Principles of value creation and disciplined capital allocation Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. Capital ratios Transitional own funds and capital ratios (€ million) AS AT 12.31.2018(*) (**) 12.31.2017(*) Common Equity Tier 1 Capital 44,385 46,458 Tier 1 Capital 49,526 51,717 Total own funds 56,527 60,332 Total RWA 204,991 202,121 Common Equity Tier 1 Capital Ratio 21.65% 22.99% Tier 1 Capital Ratio 24.16% 25.59% Total Capital Ratio 27.58% 29.85% Note: (*) Transitional own funds and capital ratios including all transitional adjustments according to the yearly applicable percentages. (**) UniCredit S.p.A. has decided to not apply the IFRS9 transitional approach as reported in article 473a of the Regulation 575/2013/EU (CRR). Therefore the values shown fully reflect the impact arising from the application of the IFRS9 principle. The negative change with respect to 31 December 2017 (about €3.8 billion on Total own funds), in addition to the effects of the first application of new IFRS9 accounting principle and the profit of the period recognised in CET1 capital net of dividends, mainly reflects the negative change on the reserve of capital instruments and debt securities measured at fair value that mainly reflect the trend related to the valuation of Italian government bonds and the impact referred to the maturity/redemption of subordinated instruments classified in Additional Tier 1 Capital and Tier 2 Capital”. Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to 2018 transitional capital requirements and buffers for UniCredit group with the exception of what is reported below. The profit eligible as at 31 December 2018, equal to €2,458 million is recognised in the Own Funds for €1,853 million, resulting after i) the destination, approved by the Board of Director, to dividends for €601 million, correspondent to the 20% of the rectified Group net profit (equal to €3,006 million), excluding the positive extraordinary impact linked to the tax effects deriving from the change of the fiscal treatment related to First Time Adoption of IFRS9 (€887 million) and ii) the social and charity initiatives for €4 million. The net profit 2018 as at 31 December 2018 is included in CET1 capital following the authorization by the competent Authority according to CRR Article 26(2). Capital strengthening Reference is made to the paragraph Capital strengthening of the Consolidated report on operations, which is herewith quoted entirely. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 527 Shareholders’ Equity Shareholders' equity (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Share capital 20,940 20,881 + 59 + 0.3% Share premium 13,393 13,400 - 7 - 0.1% Equity instruments 4,610 4,610 - - Reserves 9,940 7,798 + 2,142 + 27.5% Revaluation reserves (503) 585 - 1,088 n.m. Treasury shares (2) (2) - - Total capital and reserves 48,378 47,272 + 1,106 + 2.3% Net profit (loss) 2,458 6,236 - 3,778 - 60.6% Total shareholders' equity 50,836 53,508 - 2,672 - 5.0% Shareholders' Equity at 31 December 2018 amounted to €50,836 million, a decrease of €2,672 million compared to 31 December 2017, attributable to: • -€ 3,084 million for allocation to equity the reclassification and remeasurement effects resulting from the first time adoption of IFRS9; • -€7 million for cash settlement adjustment provided for by the mandatory conversion of savings shares, paid through Share premium reserve; • -€711 million for distribution of dividends from allocation of 2017 net profit, as approved by Shareholders' Meeting of 12 April 2018. • -€4 million assigned to the charity fund from allocation of 2017 net profit, as approved by Shareholders' Meeting of 12 April 2018. • -€2 million for the charge to reserve of the expenses related to capital increase (net of taxes); • +€70 million from the adjustment to the reserve dedicated to Equity Settled Share Based Payments; • -€242 million from the allocation to the reserves of the coupon paid to subscribers of Additional Tier 1 notes (net of taxes); • -€93 million due to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes”; • -€19 million for allocation to equity of realized net gains and losses from disposal of financial assets and liabilities at fair value through comprehensive income. • -€268 million from negative effects deriving from the non-sustainability of the tax benefits connected to the shareholders' equity items; • -€770 million from the net effect deriving from revaluation reserves, of which: -€837 million from financial assets at fair value through “other comprehensive income; -€34 million from cash flow hedges; €+99 million from financial liabilities designated at fair value through profit or loss, due to changes in their creditworthiness and +€2 million from defined benefit plans; • +€2,458 million from the profit for the period. Note the following significant changes occurred in 2018 which, though reflected among the various components of shareholders' equity, did not change the overall amount thereof: • following the resolutions of the Shareholders' Meeting of 12 April 2018 on allocation of the net profit of the year 2017 occurred: (i) €40 million allocated to the Reserve for the issue of the shares connected to the medium term incentive plan for Group personnel; (ii) +€5,481 million allocated to the Statutory reserve; • the increase of €59 million in share capital following the resolution of the Board of Directors of 7 February 2018 executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 527 Shareholders’ Equity Shareholders' equity (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Share capital 20,940 20,881 + 59 + 0.3% Share premium 13,393 13,400 - 7 - 0.1% Equity instruments 4,610 4,610 - - Reserves 9,940 7,798 + 2,142 + 27.5% Revaluation reserves (503) 585 - 1,088 n.m. Treasury shares (2) (2) - - Total capital and reserves 48,378 47,272 + 1,106 + 2.3% Net profit (loss) 2,458 6,236 - 3,778 - 60.6% Total shareholders' equity 50,836 53,508 - 2,672 - 5.0% Shareholders' Equity at 31 December 2018 amounted to €50,836 million, a decrease of €2,672 million compared to 31 December 2017, attributable to: • -€ 3,084 million for allocation to equity the reclassification and remeasurement effects resulting from the first time adoption of IFRS9; • -€7 million for cash settlement adjustment provided for by the mandatory conversion of savings shares, paid through Share premium reserve; • -€711 million for distribution of dividends from allocation of 2017 net profit, as approved by Shareholders' Meeting of 12 April 2018. • -€4 million assigned to the charity fund from allocation of 2017 net profit, as approved by Shareholders' Meeting of 12 April 2018. • -€2 million for the charge to reserve of the expenses related to capital increase (net of taxes); • +€70 million from the adjustment to the reserve dedicated to Equity Settled Share Based Payments; • -€242 million from the allocation to the reserves of the coupon paid to subscribers of Additional Tier 1 notes (net of taxes); • -€93 million due to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes”; • -€19 million for allocation to equity of realized net gains and losses from disposal of financial assets and liabilities at fair value through comprehensive income. • -€268 million from negative effects deriving from the non-sustainability of the tax benefits connected to the shareholders' equity items; • -€770 million from the net effect deriving from revaluation reserves, of which: -€837 million from financial assets at fair value through “other comprehensive income; -€34 million from cash flow hedges; €+99 million from financial liabilities designated at fair value through profit or loss, due to changes in their creditworthiness and +€2 million from defined benefit plans; • +€2,458 million from the profit for the period. Note the following significant changes occurred in 2018 which, though reflected among the various components of shareholders' equity, did not change the overall amount thereof: • following the resolutions of the Shareholders' Meeting of 12 April 2018 on allocation of the net profit of the year 2017 occurred: (i) €40 million allocated to the Reserve for the issue of the shares connected to the medium term incentive plan for Group personnel; (ii) +€5,481 million allocated to the Statutory reserve; • the increase of €59 million in share capital following the resolution of the Board of Directors of 7 February 2018 executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 527 Shareholders’ Equity Shareholders' equity (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Share capital 20,940 20,881 + 59 + 0.3% Share premium 13,393 13,400 - 7 - 0.1% Equity instruments 4,610 4,610 - - Reserves 9,940 7,798 + 2,142 + 27.5% Revaluation reserves (503) 585 - 1,088 n.m. Treasury shares (2) (2) - - Total capital and reserves 48,378 47,272 + 1,106 + 2.3% Net profit (loss) 2,458 6,236 - 3,778 - 60.6% Total shareholders' equity 50,836 53,508 - 2,672 - 5.0% Shareholders' Equity at 31 December 2018 amounted to €50,836 million, a decrease of €2,672 million compared to 31 December 2017, attributable to: • -€ 3,084 million for allocation to equity the reclassification and remeasurement effects resulting from the first time adoption of IFRS9; • -€7 million for cash settlement adjustment provided for by the mandatory conversion of savings shares, paid through Share premium reserve; • -€711 million for distribution of dividends from allocation of 2017 net profit, as approved by Shareholders' Meeting of 12 April 2018. • -€4 million assigned to the charity fund from allocation of 2017 net profit, as approved by Shareholders' Meeting of 12 April 2018. • -€2 million for the charge to reserve of the expenses related to capital increase (net of taxes); • +€70 million from the adjustment to the reserve dedicated to Equity Settled Share Based Payments; • -€242 million from the allocation to the reserves of the coupon paid to subscribers of Additional Tier 1 notes (net of taxes); • -€93 million due to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes”; • -€19 million for allocation to equity of realized net gains and losses from disposal of financial assets and liabilities at fair value through comprehensive income. • -€268 million from negative effects deriving from the non-sustainability of the tax benefits connected to the shareholders' equity items; • -€770 million from the net effect deriving from revaluation reserves, of which: -€837 million from financial assets at fair value through “other comprehensive income; -€34 million from cash flow hedges; €+99 million from financial liabilities designated at fair value through profit or loss, due to changes in their creditworthiness and +€2 million from defined benefit plans; • +€2,458 million from the profit for the period. Note the following significant changes occurred in 2018 which, though reflected among the various components of shareholders' equity, did not change the overall amount thereof: • following the resolutions of the Shareholders' Meeting of 12 April 2018 on allocation of the net profit of the year 2017 occurred: (i) €40 million allocated to the Reserve for the issue of the shares connected to the medium term incentive plan for Group personnel; (ii) +€5,481 million allocated to the Statutory reserve; • the increase of €59 million in share capital following the resolution of the Board of Directors of 7 February 2018 executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 527 Shareholders’ Equity Shareholders' equity (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Share capital 20,940 20,881 + 59 + 0.3% Share premium 13,393 13,400 - 7 - 0.1% Equity instruments 4,610 4,610 - - Reserves 9,940 7,798 + 2,142 + 27.5% Revaluation reserves (503) 585 - 1,088 n.m. Treasury shares (2) (2) - - Total capital and reserves 48,378 47,272 + 1,106 + 2.3% Net profit (loss) 2,458 6,236 - 3,778 - 60.6% Total shareholders' equity 50,836 53,508 - 2,672 - 5.0% Shareholders' Equity at 31 December 2018 amounted to €50,836 million, a decrease of €2,672 million compared to 31 December 2017, attributable to: • -€ 3,084 million for allocation to equity the reclassification and remeasurement effects resulting from the first time adoption of IFRS9; • -€7 million for cash settlement adjustment provided for by the mandatory conversion of savings shares, paid through Share premium reserve; • -€711 million for distribution of dividends from allocation of 2017 net profit, as approved by Shareholders' Meeting of 12 April 2018. • -€4 million assigned to the charity fund from allocation of 2017 net profit, as approved by Shareholders' Meeting of 12 April 2018. • -€2 million for the charge to reserve of the expenses related to capital increase (net of taxes); • +€70 million from the adjustment to the reserve dedicated to Equity Settled Share Based Payments; • -€242 million from the allocation to the reserves of the coupon paid to subscribers of Additional Tier 1 notes (net of taxes); • -€93 million due to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes”; • -€19 million for allocation to equity of realized net gains and losses from disposal of financial assets and liabilities at fair value through comprehensive income. • -€268 million from negative effects deriving from the non-sustainability of the tax benefits connected to the shareholders' equity items; • -€770 million from the net effect deriving from revaluation reserves, of which: -€837 million from financial assets at fair value through “other comprehensive income; -€34 million from cash flow hedges; €+99 million from financial liabilities designated at fair value through profit or loss, due to changes in their creditworthiness and +€2 million from defined benefit plans; • +€2,458 million from the profit for the period. Note the following significant changes occurred in 2018 which, though reflected among the various components of shareholders' equity, did not change the overall amount thereof: • following the resolutions of the Shareholders' Meeting of 12 April 2018 on allocation of the net profit of the year 2017 occurred: (i) €40 million allocated to the Reserve for the issue of the shares connected to the medium term incentive plan for Group personnel; (ii) +€5,481 million allocated to the Statutory reserve; • the increase of €59 million in share capital following the resolution of the Board of Directors of 7 February 2018 executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel. Report on operations Results of the year UniCredit ·2018 Annual Report and Accounts 527 Shareholders’ Equity Shareholders' equity (€ million) AMOUNTS AS AT CHANGE 12.31.2018 12.31.2017 AMOUNT % Share capital 20,940 20,881 + 59 + 0.3% Share premium 13,393 13,400 - 7 - 0.1% Equity instruments 4,610 4,610 - - Reserves 9,940 7,798 + 2,142 + 27.5% Revaluation reserves (503) 585 - 1,088 n.m. Treasury shares (2) (2) - - Total capital and reserves 48,378 47,272 + 1,106 + 2.3% Net profit (loss) 2,458 6,236 - 3,778 - 60.6% Total shareholders' equity 50,836 53,508 - 2,672 - 5.0% Shareholders' Equity at 31 December 2018 amounted to €50,836 million, a decrease of €2,672 million compared to 31 December 2017, attributable to: • -€ 3,084 million for allocation to equity the reclassification and remeasurement effects resulting from the first time adoption of IFRS9; • -€7 million for cash settlement adjustment provided for by the mandatory conversion of savings shares, paid through Share premium reserve; • -€711 million for distribution of dividends from allocation of 2017 net profit, as approved by Shareholders' Meeting of 12 April 2018. • -€4 million assigned to the charity fund from allocation of 2017 net profit, as approved by Shareholders' Meeting of 12 April 2018. • -€2 million for the charge to reserve of the expenses related to capital increase (net of taxes); • +€70 million from the adjustment to the reserve dedicated to Equity Settled Share Based Payments; • -€242 million from the allocation to the reserves of the coupon paid to subscribers of Additional Tier 1 notes (net of taxes); • -€93 million due to disbursements, charged to equity, made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes”; • -€19 million for allocation to equity of realized net gains and losses from disposal of financial assets and liabilities at fair value through comprehensive income. • -€268 million from negative effects deriving from the non-sustainability of the tax benefits connected to the shareholders' equity items; • -€770 million from the net effect deriving from revaluation reserves, of which: -€837 million from financial assets at fair value through “other comprehensive income; -€34 million from cash flow hedges; €+99 million from financial liabilities designated at fair value through profit or loss, due to changes in their creditworthiness and +€2 million from defined benefit plans; • +€2,458 million from the profit for the period. Note the following significant changes occurred in 2018 which, though reflected among the various components of shareholders' equity, did not change the overall amount thereof: • following the resolutions of the Shareholders' Meeting of 12 April 2018 on allocation of the net profit of the year 2017 occurred: (i) €40 million allocated to the Reserve for the issue of the shares connected to the medium term incentive plan for Group personnel; (ii) +€5,481 million allocated to the Statutory reserve; • the increase of €59 million in share capital following the resolution of the Board of Directors of 7 February 2018 executed through a withdrawal from the specifically constituted reserve, for the issue of the shares connected to the medium term incentive plan for Group personnel. Report on operations Results of the year 528 2018 Annual Report and Accounts · UniCredit Shareholders The share capital, fully subscribed and paid up, amounts to €20,940,398,466.81 divided into No.2,230,176,665 ordinary shares with no face value. As at 31 December 2018, according to the analyses performed using data from heterogeneous sources, including the content of the Register of Shareholders, the documentation relating to the participation in the shareholders’ meeting of the Company, communications to CONSOB, public filings available on the market: • shareholders were approximately 293,000; • resident shareholders held around 17.01% of the capital and foreign shareholders 82.99%; • 92.13% of the share capital is held by legal entities, the remaining 7.87% by natural persons. Also as of that date, the main shareholders, those holding significant shareholdings exceeding 3%, according to communications received in accordance with current legislation, who are not entitled to the exemption from the mandatory communication as set forth under Art.119bis of the Consob Regulation No.11971/99, are: Principal UniCredit shareholders SHAREHOLDER ORDINARY SHARES % OWNED Aabar Luxembourg S.a.r.l. 112,141,192 5.028% Treasury shares The treasury share balance and relevant carrying value remain unchanged from year-end 2017, due to the fact that there were no transactions involving treasury shares in 2018. The number of treasury shares in portfolio reflects the reverse stock split in preparation for the subsequent capital increase approved by the Extraordinary Shareholders’ Meeting of 12 January 2017. Report on operations Results of the year 528 2018 Annual Report and Accounts · UniCredit Shareholders The share capital, fully subscribed and paid up, amounts to €20,940,398,466.81 divided into No.2,230,176,665 ordinary shares with no face value. As at 31 December 2018, according to the analyses performed using data from heterogeneous sources, including the content of the Register of Shareholders, the documentation relating to the participation in the shareholders’ meeting of the Company, communications to CONSOB, public filings available on the market: • shareholders were approximately 293,000; • resident shareholders held around 17.01% of the capital and foreign shareholders 82.99%; • 92.13% of the share capital is held by legal entities, the remaining 7.87% by natural persons. Also as of that date, the main shareholders, those holding significant shareholdings exceeding 3%, according to communications received in accordance with current legislation, who are not entitled to the exemption from the mandatory communication as set forth under Art.119bis of the Consob Regulation No.11971/99, are: Principal UniCredit shareholders SHAREHOLDER ORDINARY SHARES % OWNED Aabar Luxembourg S.a.r.l. 112,141,192 5.028% Treasury shares The treasury share balance and relevant carrying value remain unchanged from year-end 2017, due to the fact that there were no transactions involving treasury shares in 2018. The number of treasury shares in portfolio reflects the reverse stock split in preparation for the subsequent capital increase approved by the Extraordinary Shareholders’ Meeting of 12 January 2017. Report on operations Results of the year 528 2018 Annual Report and Accounts · UniCredit Shareholders The share capital, fully subscribed and paid up, amounts to €20,940,398,466.81 divided into No.2,230,176,665 ordinary shares with no face value. As at 31 December 2018, according to the analyses performed using data from heterogeneous sources, including the content of the Register of Shareholders, the documentation relating to the participation in the shareholders’ meeting of the Company, communications to CONSOB, public filings available on the market: • shareholders were approximately 293,000; • resident shareholders held around 17.01% of the capital and foreign shareholders 82.99%; • 92.13% of the share capital is held by legal entities, the remaining 7.87% by natural persons. Also as of that date, the main shareholders, those holding significant shareholdings exceeding 3%, according to communications received in accordance with current legislation, who are not entitled to the exemption from the mandatory communication as set forth under Art.119bis of the Consob Regulation No.11971/99, are: Principal UniCredit shareholders SHAREHOLDER ORDINARY SHARES % OWNED Aabar Luxembourg S.a.r.l. 112,141,192 5.028% Treasury shares The treasury share balance and relevant carrying value remain unchanged from year-end 2017, due to the fact that there were no transactions involving treasury shares in 2018. The number of treasury shares in portfolio reflects the reverse stock split in preparation for the subsequent capital increase approved by the Extraordinary Shareholders’ Meeting of 12 January 2017. Report on operations Results of the year 528 2018 Annual Report and Accounts · UniCredit Shareholders The share capital, fully subscribed and paid up, amounts to €20,940,398,466.81 divided into No.2,230,176,665 ordinary shares with no face value. As at 31 December 2018, according to the analyses performed using data from heterogeneous sources, including the content of the Register of Shareholders, the documentation relating to the participation in the shareholders’ meeting of the Company, communications to CONSOB, public filings available on the market: • shareholders were approximately 293,000; • resident shareholders held around 17.01% of the capital and foreign shareholders 82.99%; • 92.13% of the share capital is held by legal entities, the remaining 7.87% by natural persons. Also as of that date, the main shareholders, those holding significant shareholdings exceeding 3%, according to communications received in accordance with current legislation, who are not entitled to the exemption from the mandatory communication as set forth under Art.119bis of the Consob Regulation No.11971/99, are: Principal UniCredit shareholders SHAREHOLDER ORDINARY SHARES % OWNED Aabar Luxembourg S.a.r.l. 112,141,192 5.028% Treasury shares The treasury share balance and relevant carrying value remain unchanged from year-end 2017, due to the fact that there were no transactions involving treasury shares in 2018. The number of treasury shares in portfolio reflects the reverse stock split in preparation for the subsequent capital increase approved by the Extraordinary Shareholders’ Meeting of 12 January 2017. Report on operations Results of the year 528 2018 Annual Report and Accounts · UniCredit Shareholders The share capital, fully subscribed and paid up, amounts to €20,940,398,466.81 divided into No.2,230,176,665 ordinary shares with no face value. As at 31 December 2018, according to the analyses performed using data from heterogeneous sources, including the content of the Register of Shareholders, the documentation relating to the participation in the shareholders’ meeting of the Company, communications to CONSOB, public filings available on the market: • shareholders were approximately 293,000; • resident shareholders held around 17.01% of the capital and foreign shareholders 82.99%; • 92.13% of the share capital is held by legal entities, the remaining 7.87% by natural persons. Also as of that date, the main shareholders, those holding significant shareholdings exceeding 3%, according to communications received in accordance with current legislation, who are not entitled to the exemption from the mandatory communication as set forth under Art.119bis of the Consob Regulation No.11971/99, are: Principal UniCredit shareholders SHAREHOLDER ORDINARY SHARES % OWNED Aabar Luxembourg S.a.r.l. 112,141,192 5.028% Treasury shares The treasury share balance and relevant carrying value remain unchanged from year-end 2017, due to the fact that there were no transactions involving treasury shares in 2018. The number of treasury shares in portfolio reflects the reverse stock split in preparation for the subsequent capital increase approved by the Extraordinary Shareholders’ Meeting of 12 January 2017. Report on operations Company activities UniCredit ·2018 Annual Report and Accounts 529 Company activities The commercial network Operating structure in Italy During 2018, UniCredit domestic network was subject to the changes described below: • closure of 198 branches and opening of 1 branch of Commercial Banking Network; • partial re-organisation of the Corporate Banking Network; • sale of the pawn sector. As a result of the above, the structure of the domestic network at 31 December 2018 consisted of a total of 2,836 units, of which 2,466 belonging to Commercial Banking Network. At 31 December 2018, following the initiatives described above and a small-scale branch re-organisation resulting from the ongoing optimisation and streamlining process of organisational units, the Italian distribution network was structured as follows. Italian branch network REGION NUMBER OF OFFICES AT 12.31.2018 % BREAKDOWN - Piedmont 296 10.5% - Valle d'Aosta 15 0.5% - Lombardy 350 12.3% - Liguria 51 1.8% - Trentino Alto Adige 48 1.7% - Veneto 339 12.0% - Friuli Venezia Giulia 92 3.2% - Emilia Romagna 364 12.8% - Tuscany 120 4.2% - Umbria 66 2.3% - Marche 59 2.1% - Lazio 376 13.3% - Abruzzo 29 1.0% - Molise 28 1.0% - Campania 133 4.7% - Puglia 107 3.8% - Basilicata 9 0.3% - Calabria 22 0.8% - Sicily 290 10.2% - Sardinia 42 1.5% Total branches 2,836 100.0% Branches and rappresentatives abroad At 31 December 2018 UniCredit S.p.A. had eight branches abroad, plus a Permanent Establishment in Vienna and five rappresentative offices: UniCredit S.p.A. international network as at 12.31.2018 BRANCHES PERMANENT ESTABLISHMENT REPRESENTATIVE OFFICES PRC - Shanghai AUSTRIA - Wien BELGIUM - Brussels GERMANY - Munich BRAZIL - Sao Paulo(**) GERMANY - Munich(*) PRC - Beijing UNITED KINGDOM - London INDIA - Mumbai UNITED STATES - New York LYBIA - Tripoli FRANCE - Paris SPAIN - Madrid UNITED ARAB EMIRATES - Abu Dhabi Notes: (*) Formerly Branch of UniCredit Family and Financing Bank. (**) Through the subsidiary BAVÁRIA SERVIÇOS DE REPRESENTAÇÃO COMERCIAL LTDA. Report on operations Company activities UniCredit ·2018 Annual Report and Accounts 529 Company activities The commercial network Operating structure in Italy During 2018, UniCredit domestic network was subject to the changes described below: • closure of 198 branches and opening of 1 branch of Commercial Banking Network; • partial re-organisation of the Corporate Banking Network; • sale of the pawn sector. As a result of the above, the structure of the domestic network at 31 December 2018 consisted of a total of 2,836 units, of which 2,466 belonging to Commercial Banking Network. At 31 December 2018, following the initiatives described above and a small-scale branch re-organisation resulting from the ongoing optimisation and streamlining process of organisational units, the Italian distribution network was structured as follows. Italian branch network REGION NUMBER OF OFFICES AT 12.31.2018 % BREAKDOWN - Piedmont 296 10.5% - Valle d'Aosta 15 0.5% - Lombardy 350 12.3% - Liguria 51 1.8% - Trentino Alto Adige 48 1.7% - Veneto 339 12.0% - Friuli Venezia Giulia 92 3.2% - Emilia Romagna 364 12.8% - Tuscany 120 4.2% - Umbria 66 2.3% - Marche 59 2.1% - Lazio 376 13.3% - Abruzzo 29 1.0% - Molise 28 1.0% - Campania 133 4.7% - Puglia 107 3.8% - Basilicata 9 0.3% - Calabria 22 0.8% - Sicily 290 10.2% - Sardinia 42 1.5% Total branches 2,836 100.0% Branches and rappresentatives abroad At 31 December 2018 UniCredit S.p.A. had eight branches abroad, plus a Permanent Establishment in Vienna and five rappresentative offices: UniCredit S.p.A. international network as at 12.31.2018 BRANCHES PERMANENT ESTABLISHMENT REPRESENTATIVE OFFICES PRC - Shanghai AUSTRIA - Wien BELGIUM - Brussels GERMANY - Munich BRAZIL - Sao Paulo(**) GERMANY - Munich(*) PRC - Beijing UNITED KINGDOM - London INDIA - Mumbai UNITED STATES - New York LYBIA - Tripoli FRANCE - Paris SPAIN - Madrid UNITED ARAB EMIRATES - Abu Dhabi Notes: (*) Formerly Branch of UniCredit Family and Financing Bank. (**) Through the subsidiary BAVÁRIA SERVIÇOS DE REPRESENTAÇÃO COMERCIAL LTDA. Report on operations Company activities UniCredit ·2018 Annual Report and Accounts 529 Company activities The commercial network Operating structure in Italy During 2018, UniCredit domestic network was subject to the changes described below: • closure of 198 branches and opening of 1 branch of Commercial Banking Network; • partial re-organisation of the Corporate Banking Network; • sale of the pawn sector. As a result of the above, the structure of the domestic network at 31 December 2018 consisted of a total of 2,836 units, of which 2,466 belonging to Commercial Banking Network. At 31 December 2018, following the initiatives described above and a small-scale branch re-organisation resulting from the ongoing optimisation and streamlining process of organisational units, the Italian distribution network was structured as follows. Italian branch network REGION NUMBER OF OFFICES AT 12.31.2018 % BREAKDOWN - Piedmont 296 10.5% - Valle d'Aosta 15 0.5% - Lombardy 350 12.3% - Liguria 51 1.8% - Trentino Alto Adige 48 1.7% - Veneto 339 12.0% - Friuli Venezia Giulia 92 3.2% - Emilia Romagna 364 12.8% - Tuscany 120 4.2% - Umbria 66 2.3% - Marche 59 2.1% - Lazio 376 13.3% - Abruzzo 29 1.0% - Molise 28 1.0% - Campania 133 4.7% - Puglia 107 3.8% - Basilicata 9 0.3% - Calabria 22 0.8% - Sicily 290 10.2% - Sardinia 42 1.5% Total branches 2,836 100.0% Branches and rappresentatives abroad At 31 December 2018 UniCredit S.p.A. had eight branches abroad, plus a Permanent Establishment in Vienna and five rappresentative offices: UniCredit S.p.A. international network as at 12.31.2018 BRANCHES PERMANENT ESTABLISHMENT REPRESENTATIVE OFFICES PRC - Shanghai AUSTRIA - Wien BELGIUM - Brussels GERMANY - Munich BRAZIL - Sao Paulo(**) GERMANY - Munich(*) PRC - Beijing UNITED KINGDOM - London INDIA - Mumbai UNITED STATES - New York LYBIA - Tripoli FRANCE - Paris SPAIN - Madrid UNITED ARAB EMIRATES - Abu Dhabi Notes: (*) Formerly Branch of UniCredit Family and Financing Bank. (**) Through the subsidiary BAVÁRIA SERVIÇOS DE REPRESENTAÇÃO COMERCIAL LTDA. Report on operations Company activities UniCredit ·2018 Annual Report and Accounts 529 Company activities The commercial network Operating structure in Italy During 2018, UniCredit domestic network was subject to the changes described below: • closure of 198 branches and opening of 1 branch of Commercial Banking Network; • partial re-organisation of the Corporate Banking Network; • sale of the pawn sector. As a result of the above, the structure of the domestic network at 31 December 2018 consisted of a total of 2,836 units, of which 2,466 belonging to Commercial Banking Network. At 31 December 2018, following the initiatives described above and a small-scale branch re-organisation resulting from the ongoing optimisation and streamlining process of organisational units, the Italian distribution network was structured as follows. Italian branch network REGION NUMBER OF OFFICES AT 12.31.2018 % BREAKDOWN - Piedmont 296 10.5% - Valle d'Aosta 15 0.5% - Lombardy 350 12.3% - Liguria 51 1.8% - Trentino Alto Adige 48 1.7% - Veneto 339 12.0% - Friuli Venezia Giulia 92 3.2% - Emilia Romagna 364 12.8% - Tuscany 120 4.2% - Umbria 66 2.3% - Marche 59 2.1% - Lazio 376 13.3% - Abruzzo 29 1.0% - Molise 28 1.0% - Campania 133 4.7% - Puglia 107 3.8% - Basilicata 9 0.3% - Calabria 22 0.8% - Sicily 290 10.2% - Sardinia 42 1.5% Total branches 2,836 100.0% Branches and rappresentatives abroad At 31 December 2018 UniCredit S.p.A. had eight branches abroad, plus a Permanent Establishment in Vienna and five rappresentative offices: UniCredit S.p.A. international network as at 12.31.2018 BRANCHES PERMANENT ESTABLISHMENT REPRESENTATIVE OFFICES PRC - Shanghai AUSTRIA - Wien BELGIUM - Brussels GERMANY - Munich BRAZIL - Sao Paulo(**) GERMANY - Munich(*) PRC - Beijing UNITED KINGDOM - London INDIA - Mumbai UNITED STATES - New York LYBIA - Tripoli FRANCE - Paris SPAIN - Madrid UNITED ARAB EMIRATES - Abu Dhabi Notes: (*) Formerly Branch of UniCredit Family and Financing Bank. (**) Through the subsidiary BAVÁRIA SERVIÇOS DE REPRESENTAÇÃO COMERCIAL LTDA. Report on operations Company activities UniCredit ·2018 Annual Report and Accounts 529 Company activities The commercial network Operating structure in Italy During 2018, UniCredit domestic network was subject to the changes described below: • closure of 198 branches and opening of 1 branch of Commercial Banking Network; • partial re-organisation of the Corporate Banking Network; • sale of the pawn sector. As a result of the above, the structure of the domestic network at 31 December 2018 consisted of a total of 2,836 units, of which 2,466 belonging to Commercial Banking Network. At 31 December 2018, following the initiatives described above and a small-scale branch re-organisation resulting from the ongoing optimisation and streamlining process of organisational units, the Italian distribution network was structured as follows. Italian branch network REGION NUMBER OF OFFICES AT 12.31.2018 % BREAKDOWN - Piedmont 296 10.5% - Valle d'Aosta 15 0.5% - Lombardy 350 12.3% - Liguria 51 1.8% - Trentino Alto Adige 48 1.7% - Veneto 339 12.0% - Friuli Venezia Giulia 92 3.2% - Emilia Romagna 364 12.8% - Tuscany 120 4.2% - Umbria 66 2.3% - Marche 59 2.1% - Lazio 376 13.3% - Abruzzo 29 1.0% - Molise 28 1.0% - Campania 133 4.7% - Puglia 107 3.8% - Basilicata 9 0.3% - Calabria 22 0.8% - Sicily 290 10.2% - Sardinia 42 1.5% Total branches 2,836 100.0% Branches and rappresentatives abroad At 31 December 2018 UniCredit S.p.A. had eight branches abroad, plus a Permanent Establishment in Vienna and five rappresentative offices: UniCredit S.p.A. international network as at 12.31.2018 BRANCHES PERMANENT ESTABLISHMENT REPRESENTATIVE OFFICES PRC - Shanghai AUSTRIA - Wien BELGIUM - Brussels GERMANY - Munich BRAZIL - Sao Paulo(**) GERMANY - Munich(*) PRC - Beijing UNITED KINGDOM - London INDIA - Mumbai UNITED STATES - New York LYBIA - Tripoli FRANCE - Paris SPAIN - Madrid UNITED ARAB EMIRATES - Abu Dhabi Notes: (*) Formerly Branch of UniCredit Family and Financing Bank. (**) Through the subsidiary BAVÁRIA SERVIÇOS DE REPRESENTAÇÃO COMERCIAL LTDA. Report on operations Company activities 530 2018 Annual Report and Accounts · UniCredit Resources Personnel developments At 31 December 2018, UniCredit S.p.A.’s headcount is No.35,526 compared to No.38,952 at 31 December 2017. The reduction of resource is mainly due to restructuring plan. Category 12.31.2018 12.31.2017 CHANGE TOTAL OF WHICH: OUTSIDE ITALY TOTAL OF WHICH: OUTSIDE ITALY IN TOTAL PERCENT Senior Management 758 6 855 9 -97 - 11.4% Management - 3rd and 4th grade 7,257 39 7,885 47 -628 - 8.0% Management - 1st and 2nd grade 10,992 5 11,905 4 -913 - 7.7% Other Staff 16,519 10 18,307 14 -1,788 - 9.8% Total 35,526 60 38,952 74 -3,426 - 8.8% of which, Part-time staff 5,085 - 5,314 - -229 - 4.3% The composition of the workforce by seniority and by age bracket is shown in the following tables. With respect to educational level, 37% of UniCredit S.p.A. employees have university degrees (mostly in the areas of economics and banking, or law). Women make up 46,1% of personnel. Breakdown by seniority 12.31.2018 12.31.2017 CHANGE NUMBER PERCENT NUMBER PERCENT AMOUNT PERCENT Up to 10 4,462 12.6% 5,660 14.5% -1,198 - 21.2% From 11 to 20 years 13,221 37.2% 12,021 30.9% +1,200 + 10.0% From 21 to 30 years 9,966 28.1% 11,588 29.8% -1,622 - 14.0% Over 30 7,877 22.2% 9,683 24.9% -1,806 - 18.7% Total 35,526 100.0% 38,952 100.0% -3,426 - 8.8% Breakdown by age 12.31.2018 12.31.2017 CHANGE NUMBER PERCENT NUMBER PERCENT AMOUNT PERCENT Up to 30 1,300 3.7% 1,018 2.6% +282 + 27.7% From 31 to 40 years 6,275 17.7% 7,052 18.1% -777 - 11.0% From 41 to 50 years 12,759 35.9% 13,290 34.1% -531 - 4.0% Over 50 15,192 42.8% 17,592 45.2% -2,400 - 13.6% Total 35,526 100.0% 38,952 100.0% -3,426 - 8.8% With regard to training, managerial growth, union relations, environment and occupational safety, refer to the chapter “Human Capital” in the Integrated Report. This document, published on the institutional website, describes how UniCredit creates sustainable value that has a positive impact on society by supporting the advancement of local communities, the competitiveness of enterprises and the well-being of individuals. The Integrated Report of UniCredit constitutes a Non-Financial Statement pursuant to articles 3 and 4 of Legislative Decree 254/2016. Report on operations Company activities 530 2018 Annual Report and Accounts · UniCredit Resources Personnel developments At 31 December 2018, UniCredit S.p.A.’s headcount is No.35,526 compared to No.38,952 at 31 December 2017. The reduction of resource is mainly due to restructuring plan. Category 12.31.2018 12.31.2017 CHANGE TOTAL OF WHICH: OUTSIDE ITALY TOTAL OF WHICH: OUTSIDE ITALY IN TOTAL PERCENT Senior Management 758 6 855 9 -97 - 11.4% Management - 3rd and 4th grade 7,257 39 7,885 47 -628 - 8.0% Management - 1st and 2nd grade 10,992 5 11,905 4 -913 - 7.7% Other Staff 16,519 10 18,307 14 -1,788 - 9.8% Total 35,526 60 38,952 74 -3,426 - 8.8% of which, Part-time staff 5,085 - 5,314 - -229 - 4.3% The composition of the workforce by seniority and by age bracket is shown in the following tables. With respect to educational level, 37% of UniCredit S.p.A. employees have university degrees (mostly in the areas of economics and banking, or law). Women make up 46,1% of personnel. Breakdown by seniority 12.31.2018 12.31.2017 CHANGE NUMBER PERCENT NUMBER PERCENT AMOUNT PERCENT Up to 10 4,462 12.6% 5,660 14.5% -1,198 - 21.2% From 11 to 20 years 13,221 37.2% 12,021 30.9% +1,200 + 10.0% From 21 to 30 years 9,966 28.1% 11,588 29.8% -1,622 - 14.0% Over 30 7,877 22.2% 9,683 24.9% -1,806 - 18.7% Total 35,526 100.0% 38,952 100.0% -3,426 - 8.8% Breakdown by age 12.31.2018 12.31.2017 CHANGE NUMBER PERCENT NUMBER PERCENT AMOUNT PERCENT Up to 30 1,300 3.7% 1,018 2.6% +282 + 27.7% From 31 to 40 years 6,275 17.7% 7,052 18.1% -777 - 11.0% From 41 to 50 years 12,759 35.9% 13,290 34.1% -531 - 4.0% Over 50 15,192 42.8% 17,592 45.2% -2,400 - 13.6% Total 35,526 100.0% 38,952 100.0% -3,426 - 8.8% With regard to training, managerial growth, union relations, environment and occupational safety, refer to the chapter “Human Capital” in the Integrated Report. This document, published on the institutional website, describes how UniCredit creates sustainable value that has a positive impact on society by supporting the advancement of local communities, the competitiveness of enterprises and the well-being of individuals. The Integrated Report of UniCredit constitutes a Non-Financial Statement pursuant to articles 3 and 4 of Legislative Decree 254/2016. Report on operations Company activities 530 2018 Annual Report and Accounts · UniCredit Resources Personnel developments At 31 December 2018, UniCredit S.p.A.’s headcount is No.35,526 compared to No.38,952 at 31 December 2017. The reduction of resource is mainly due to restructuring plan. Category 12.31.2018 12.31.2017 CHANGE TOTAL OF WHICH: OUTSIDE ITALY TOTAL OF WHICH: OUTSIDE ITALY IN TOTAL PERCENT Senior Management 758 6 855 9 -97 - 11.4% Management - 3rd and 4th grade 7,257 39 7,885 47 -628 - 8.0% Management - 1st and 2nd grade 10,992 5 11,905 4 -913 - 7.7% Other Staff 16,519 10 18,307 14 -1,788 - 9.8% Total 35,526 60 38,952 74 -3,426 - 8.8% of which, Part-time staff 5,085 - 5,314 - -229 - 4.3% The composition of the workforce by seniority and by age bracket is shown in the following tables. With respect to educational level, 37% of UniCredit S.p.A. employees have university degrees (mostly in the areas of economics and banking, or law). Women make up 46,1% of personnel. Breakdown by seniority 12.31.2018 12.31.2017 CHANGE NUMBER PERCENT NUMBER PERCENT AMOUNT PERCENT Up to 10 4,462 12.6% 5,660 14.5% -1,198 - 21.2% From 11 to 20 years 13,221 37.2% 12,021 30.9% +1,200 + 10.0% From 21 to 30 years 9,966 28.1% 11,588 29.8% -1,622 - 14.0% Over 30 7,877 22.2% 9,683 24.9% -1,806 - 18.7% Total 35,526 100.0% 38,952 100.0% -3,426 - 8.8% Breakdown by age 12.31.2018 12.31.2017 CHANGE NUMBER PERCENT NUMBER PERCENT AMOUNT PERCENT Up to 30 1,300 3.7% 1,018 2.6% +282 + 27.7% From 31 to 40 years 6,275 17.7% 7,052 18.1% -777 - 11.0% From 41 to 50 years 12,759 35.9% 13,290 34.1% -531 - 4.0% Over 50 15,192 42.8% 17,592 45.2% -2,400 - 13.6% Total 35,526 100.0% 38,952 100.0% -3,426 - 8.8% With regard to training, managerial growth, union relations, environment and occupational safety, refer to the chapter “Human Capital” in the Integrated Report. This document, published on the institutional website, describes how UniCredit creates sustainable value that has a positive impact on society by supporting the advancement of local communities, the competitiveness of enterprises and the well-being of individuals. The Integrated Report of UniCredit constitutes a Non-Financial Statement pursuant to articles 3 and 4 of Legislative Decree 254/2016. Report on operations Company activities 530 2018 Annual Report and Accounts · UniCredit Resources Personnel developments At 31 December 2018, UniCredit S.p.A.’s headcount is No.35,526 compared to No.38,952 at 31 December 2017. The reduction of resource is mainly due to restructuring plan. Category 12.31.2018 12.31.2017 CHANGE TOTAL OF WHICH: OUTSIDE ITALY TOTAL OF WHICH: OUTSIDE ITALY IN TOTAL PERCENT Senior Management 758 6 855 9 -97 - 11.4% Management - 3rd and 4th grade 7,257 39 7,885 47 -628 - 8.0% Management - 1st and 2nd grade 10,992 5 11,905 4 -913 - 7.7% Other Staff 16,519 10 18,307 14 -1,788 - 9.8% Total 35,526 60 38,952 74 -3,426 - 8.8% of which, Part-time staff 5,085 - 5,314 - -229 - 4.3% The composition of the workforce by seniority and by age bracket is shown in the following tables. With respect to educational level, 37% of UniCredit S.p.A. employees have university degrees (mostly in the areas of economics and banking, or law). Women make up 46,1% of personnel. Breakdown by seniority 12.31.2018 12.31.2017 CHANGE NUMBER PERCENT NUMBER PERCENT AMOUNT PERCENT Up to 10 4,462 12.6% 5,660 14.5% -1,198 - 21.2% From 11 to 20 years 13,221 37.2% 12,021 30.9% +1,200 + 10.0% From 21 to 30 years 9,966 28.1% 11,588 29.8% -1,622 - 14.0% Over 30 7,877 22.2% 9,683 24.9% -1,806 - 18.7% Total 35,526 100.0% 38,952 100.0% -3,426 - 8.8% Breakdown by age 12.31.2018 12.31.2017 CHANGE NUMBER PERCENT NUMBER PERCENT AMOUNT PERCENT Up to 30 1,300 3.7% 1,018 2.6% +282 + 27.7% From 31 to 40 years 6,275 17.7% 7,052 18.1% -777 - 11.0% From 41 to 50 years 12,759 35.9% 13,290 34.1% -531 - 4.0% Over 50 15,192 42.8% 17,592 45.2% -2,400 - 13.6% Total 35,526 100.0% 38,952 100.0% -3,426 - 8.8% With regard to training, managerial growth, union relations, environment and occupational safety, refer to the chapter “Human Capital” in the Integrated Report. This document, published on the institutional website, describes how UniCredit creates sustainable value that has a positive impact on society by supporting the advancement of local communities, the competitiveness of enterprises and the well-being of individuals. The Integrated Report of UniCredit constitutes a Non-Financial Statement pursuant to articles 3 and 4 of Legislative Decree 254/2016. Report on operations Company activities 530 2018 Annual Report and Accounts · UniCredit Resources Personnel developments At 31 December 2018, UniCredit S.p.A.’s headcount is No.35,526 compared to No.38,952 at 31 December 2017. The reduction of resource is mainly due to restructuring plan. Category 12.31.2018 12.31.2017 CHANGE TOTAL OF WHICH: OUTSIDE ITALY TOTAL OF WHICH: OUTSIDE ITALY IN TOTAL PERCENT Senior Management 758 6 855 9 -97 - 11.4% Management - 3rd and 4th grade 7,257 39 7,885 47 -628 - 8.0% Management - 1st and 2nd grade 10,992 5 11,905 4 -913 - 7.7% Other Staff 16,519 10 18,307 14 -1,788 - 9.8% Total 35,526 60 38,952 74 -3,426 - 8.8% of which, Part-time staff 5,085 - 5,314 - -229 - 4.3% The composition of the workforce by seniority and by age bracket is shown in the following tables. With respect to educational level, 37% of UniCredit S.p.A. employees have university degrees (mostly in the areas of economics and banking, or law). Women make up 46,1% of personnel. Breakdown by seniority 12.31.2018 12.31.2017 CHANGE NUMBER PERCENT NUMBER PERCENT AMOUNT PERCENT Up to 10 4,462 12.6% 5,660 14.5% -1,198 - 21.2% From 11 to 20 years 13,221 37.2% 12,021 30.9% +1,200 + 10.0% From 21 to 30 years 9,966 28.1% 11,588 29.8% -1,622 - 14.0% Over 30 7,877 22.2% 9,683 24.9% -1,806 - 18.7% Total 35,526 100.0% 38,952 100.0% -3,426 - 8.8% Breakdown by age 12.31.2018 12.31.2017 CHANGE NUMBER PERCENT NUMBER PERCENT AMOUNT PERCENT Up to 30 1,300 3.7% 1,018 2.6% +282 + 27.7% From 31 to 40 years 6,275 17.7% 7,052 18.1% -777 - 11.0% From 41 to 50 years 12,759 35.9% 13,290 34.1% -531 - 4.0% Over 50 15,192 42.8% 17,592 45.2% -2,400 - 13.6% Total 35,526 100.0% 38,952 100.0% -3,426 - 8.8% With regard to training, managerial growth, union relations, environment and occupational safety, refer to the chapter “Human Capital” in the Integrated Report. This document, published on the institutional website, describes how UniCredit creates sustainable value that has a positive impact on society by supporting the advancement of local communities, the competitiveness of enterprises and the well-being of individuals. The Integrated Report of UniCredit constitutes a Non-Financial Statement pursuant to articles 3 and 4 of Legislative Decree 254/2016. Report on operations Other information UniCredit ·2018 Annual Report and Accounts 531 Other information Group activities development operations and other corporate transactions Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to events relating to the parent company UniCredit S.p.A. which is herewith quoted entirely. Conversion of tax credits The 2017 financial year closed with a profit of €6.236 million; therefore, the conditions for carrying out a new transformation of Deferred Tax Assets (DTAs) into tax credits pursuant to Article 2, paragraph 55 of the Decree-Law of 29 December 2010 no 225 were not met. Certifications and other communications Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. For more information on related-party transactions refer to Notes to the accounts - Part H. Report on operations Other information UniCredit ·2018 Annual Report and Accounts 531 Other information Group activities development operations and other corporate transactions Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to events relating to the parent company UniCredit S.p.A. which is herewith quoted entirely. Conversion of tax credits The 2017 financial year closed with a profit of €6.236 million; therefore, the conditions for carrying out a new transformation of Deferred Tax Assets (DTAs) into tax credits pursuant to Article 2, paragraph 55 of the Decree-Law of 29 December 2010 no 225 were not met. Certifications and other communications Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. For more information on related-party transactions refer to Notes to the accounts - Part H. Report on operations Other information UniCredit ·2018 Annual Report and Accounts 531 Other information Group activities development operations and other corporate transactions Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to events relating to the parent company UniCredit S.p.A. which is herewith quoted entirely. Conversion of tax credits The 2017 financial year closed with a profit of €6.236 million; therefore, the conditions for carrying out a new transformation of Deferred Tax Assets (DTAs) into tax credits pursuant to Article 2, paragraph 55 of the Decree-Law of 29 December 2010 no 225 were not met. Certifications and other communications Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. For more information on related-party transactions refer to Notes to the accounts - Part H. Report on operations Other information UniCredit ·2018 Annual Report and Accounts 531 Other information Group activities development operations and other corporate transactions Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to events relating to the parent company UniCredit S.p.A. which is herewith quoted entirely. Conversion of tax credits The 2017 financial year closed with a profit of €6.236 million; therefore, the conditions for carrying out a new transformation of Deferred Tax Assets (DTAs) into tax credits pursuant to Article 2, paragraph 55 of the Decree-Law of 29 December 2010 no 225 were not met. Certifications and other communications Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. For more information on related-party transactions refer to Notes to the accounts - Part H. Report on operations Other information UniCredit ·2018 Annual Report and Accounts 531 Other information Group activities development operations and other corporate transactions Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to events relating to the parent company UniCredit S.p.A. which is herewith quoted entirely. Conversion of tax credits The 2017 financial year closed with a profit of €6.236 million; therefore, the conditions for carrying out a new transformation of Deferred Tax Assets (DTAs) into tax credits pursuant to Article 2, paragraph 55 of the Decree-Law of 29 December 2010 no 225 were not met. Certifications and other communications Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. For more information on related-party transactions refer to Notes to the accounts - Part H. Report on operations Subsequent events and outlook 532 2018 Annual Report and Accounts · UniCredit Subsequent events and outlook Subsequent events 37 Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to events relating to the parent company UniCredit S.p.A. which is herewith quoted entirely. Subsequent events 37 Up to the date of approval by the Board of Directors’ Meeting of 6 February 2019 which, on the same date, authorised the publication also in accordance with IAS10. Report on operations Subsequent events and outlook 532 2018 Annual Report and Accounts · UniCredit Subsequent events and outlook Subsequent events 37 Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to events relating to the parent company UniCredit S.p.A. which is herewith quoted entirely. Subsequent events 37 Up to the date of approval by the Board of Directors’ Meeting of 6 February 2019 which, on the same date, authorised the publication also in accordance with IAS10. Report on operations Subsequent events and outlook 532 2018 Annual Report and Accounts · UniCredit Subsequent events and outlook Subsequent events 37 Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to events relating to the parent company UniCredit S.p.A. which is herewith quoted entirely. Subsequent events 37 Up to the date of approval by the Board of Directors’ Meeting of 6 February 2019 which, on the same date, authorised the publication also in accordance with IAS10. Report on operations Subsequent events and outlook 532 2018 Annual Report and Accounts · UniCredit Subsequent events and outlook Subsequent events 37 Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to events relating to the parent company UniCredit S.p.A. which is herewith quoted entirely. Subsequent events 37 Up to the date of approval by the Board of Directors’ Meeting of 6 February 2019 which, on the same date, authorised the publication also in accordance with IAS10. Report on operations Subsequent events and outlook 532 2018 Annual Report and Accounts · UniCredit Subsequent events and outlook Subsequent events 37 Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group with specific reference to events relating to the parent company UniCredit S.p.A. which is herewith quoted entirely. Subsequent events 37 Up to the date of approval by the Board of Directors’ Meeting of 6 February 2019 which, on the same date, authorised the publication also in accordance with IAS10. Report on operations Subsequent events and outlook UniCredit ·2018 Annual Report and Accounts 533 Outlook Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. Milan - 6 February 2019 THE BOARD OF DIRECTORS CHAIRMAN CEO FABRIZIO SACCOMANNI JEAN PIERRE MUSTIER Report on operations Subsequent events and outlook UniCredit ·2018 Annual Report and Accounts 533 Outlook Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. Milan - 6 February 2019 THE BOARD OF DIRECTORS CHAIRMAN CEO FABRIZIO SACCOMANNI JEAN PIERRE MUSTIER Report on operations Subsequent events and outlook UniCredit ·2018 Annual Report and Accounts 533 Outlook Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. Milan - 6 February 2019 THE BOARD OF DIRECTORS CHAIRMAN CEO FABRIZIO SACCOMANNI JEAN PIERRE MUSTIER Report on operations Subsequent events and outlook UniCredit ·2018 Annual Report and Accounts 533 Outlook Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. Milan - 6 February 2019 THE BOARD OF DIRECTORS CHAIRMAN CEO FABRIZIO SACCOMANNI JEAN PIERRE MUSTIER Report on operations Subsequent events and outlook UniCredit ·2018 Annual Report and Accounts 533 Outlook Reference is made to the corresponding paragraph of Consolidated report on operations of UniCredit group which is herewith quoted entirely. Milan - 6 February 2019 THE BOARD OF DIRECTORS CHAIRMAN CEO FABRIZIO SACCOMANNI JEAN PIERRE MUSTIER Adopt lean but steering center. We have created a lean but steering center to drive Group-wide performance and ensure accountability. Through leaner support functions and transparent cost allocation, we focus on efficiency and simplification.  Proposal to shareholders’ Meeting UniCredit ·2018 Annual Report and Accounts 535 Proposals to the Shareholders’ Meeting Company financial statements For the proposals to Shareholders’ Meeting refer to the specific Board of Directors’ reports in relation to the allocation of the 2018 result. Proposal to shareholders’ Meeting UniCredit ·2018 Annual Report and Accounts 535 Proposals to the Shareholders’ Meeting Company financial statements For the proposals to Shareholders’ Meeting refer to the specific Board of Directors’ reports in relation to the allocation of the 2018 result. Proposal to shareholders’ Meeting UniCredit ·2018 Annual Report and Accounts 535 Proposals to the Shareholders’ Meeting Company financial statements For the proposals to Shareholders’ Meeting refer to the specific Board of Directors’ reports in relation to the allocation of the 2018 result. Proposal to shareholders’ Meeting UniCredit ·2018 Annual Report and Accounts 535 Proposals to the Shareholders’ Meeting Company financial statements For the proposals to Shareholders’ Meeting refer to the specific Board of Directors’ reports in relation to the allocation of the 2018 result. Proposal to shareholders’ Meeting UniCredit ·2018 Annual Report and Accounts 535 Proposals to the Shareholders’ Meeting Company financial statements For the proposals to Shareholders’ Meeting refer to the specific Board of Directors’ reports in relation to the allocation of the 2018 result.  536 2018 Annual Report and Accounts · UniCredit 536 2018 Annual Report and Accounts · UniCredit 536 2018 Annual Report and Accounts · UniCredit 536 2018 Annual Report and Accounts · UniCredit 536 2018 Annual Report and Accounts · UniCredit Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 537 Balance sheet (€) AMOUNTS AS AT ASSETS 12.31.2018 12.31.2017 10. Cash and cash balances 7,460,706,040 25,816,708,377 20. Financial assets at fair value through profit or loss: 14,998,825,205 a) financial assets held for trading 11,834,351,538 b) financial assets designated at fair value 351 c) other financial assets mandatorily at fair value 3,164,473,316 Financial assets held for trading (ex IAS39 Item 20) 13,863,778,570 Financial assets at fair value through profit or loss (ex IAS39 Item 30) 651,920,173 30. Financial assets at fair value through other comprehensive income 46,926,536,608 Available-for-sale financial assets (ex IAS39 Item 40) 59,718,169,298 40. Financial assets at amortised cost: 270,556,434,138 a) loans and advances to banks 30,971,842,243 b) loans and advances to customers 239,584,591,895 Held-to-maturity investments (ex IAS39 Item 50) 762,430,874 Loans and receivables with banks (ex IAS39 Item 60) 27,566,760,856 Loans and receivables with customers (ex IAS39 Item 70) 208,965,454,636 50. Hedging derivatives 4,167,319,172 4,399,939,250 60. Changes in fair value of portfolio hedged items (+/-) 1,685,974,892 1,714,488,195 70. Equity investments 42,872,911,676 44,145,484,970 80. Property, plant and equipment 2,246,183,476 2,209,454,955 90. Intangible assets 3,932,839 4,349,513 of which: goodwill - - 100. Tax assets: 10,704,290,933 10,310,576,804 a) current 757,454,501 1,660,306,433 b) deferred 9,946,836,432 8,650,270,371 110. Non-current assets and disposal groups classified as held for sale 116,674,288 150,030,667 120. Other assets 3,875,730,081 4,700,353,858 Total assets 405,615,519,348 404,979,900,996 Company accounts Balance sheet (€) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 10. Financial liabilities at amortised cost: 323,835,358,883 a) deposits from banks 58,994,789,432 b) deposits from customers 211,871,724,249 c) debt securities in issue 52,968,845,202 Deposits from banks (ex IAS39 Item 10) 56,807,016,417 Deposits from customers (ex IAS39 Item 20) 197,138,761,654 Debt securities in issue (ex IAS39 Item 30) 64,945,632,171 20. Financial liabilities held for trading 10,383,522,810 Financial liabilities held for trading (ex IAS39 Item 40) 13,067,880,871 30. Financial liabilities designated at fair value 3,534,518,992 Financial liabilities at fair value through profit or loss (ex IAS39 Item 50) 2,737,624,598 40. Hedging derivatives 4,525,258,448 4,558,319,891 50. Value adjustment of hedged financial liabilities (+/-) 1,770,149,836 1,720,371,037 60. Tax liabilities: 1,786,328 1,151,624 a) current 1,786,328 1,151,624 b) deferred - - 70. Liabilities associated with assets classified as held for sale - - 80. Other liabilities 7,617,123,027 7,823,823,206 90. Provision for employee severance pay 629,190,259 828,450,167 100. Provisions for risks and charges: 2,482,620,470 1,843,004,707 a) committments and guarantees given 491,897,124 b) post-retirement benefit obligations 90,539,306 77,312,166 c) other provisions for risks and charges 1,900,184,040 1,765,692,541 110. Valuation reserves (502,666,304) 585,547,375 120. Redeemable shares - - 130. Equity instruments 4,610,073,464 4,610,073,464 140. Reserves 9,939,543,149 7,798,689,926 150. Share premium 13,392,918,356 13,399,798,681 160. Share capital 20,940,398,467 20,880,549,802 170. Treasury shares (-) (2,440,001) (2,440,001) 180. Profit (Loss) of the year (+/-) 2,458,163,164 6,235,645,406 Total liabilities and shareholders' equity 405,615,519,348 404,979,900,996 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 537 Balance sheet (€) AMOUNTS AS AT ASSETS 12.31.2018 12.31.2017 10. Cash and cash balances 7,460,706,040 25,816,708,377 20. Financial assets at fair value through profit or loss: 14,998,825,205 a) financial assets held for trading 11,834,351,538 b) financial assets designated at fair value 351 c) other financial assets mandatorily at fair value 3,164,473,316 Financial assets held for trading (ex IAS39 Item 20) 13,863,778,570 Financial assets at fair value through profit or loss (ex IAS39 Item 30) 651,920,173 30. Financial assets at fair value through other comprehensive income 46,926,536,608 Available-for-sale financial assets (ex IAS39 Item 40) 59,718,169,298 40. Financial assets at amortised cost: 270,556,434,138 a) loans and advances to banks 30,971,842,243 b) loans and advances to customers 239,584,591,895 Held-to-maturity investments (ex IAS39 Item 50) 762,430,874 Loans and receivables with banks (ex IAS39 Item 60) 27,566,760,856 Loans and receivables with customers (ex IAS39 Item 70) 208,965,454,636 50. Hedging derivatives 4,167,319,172 4,399,939,250 60. Changes in fair value of portfolio hedged items (+/-) 1,685,974,892 1,714,488,195 70. Equity investments 42,872,911,676 44,145,484,970 80. Property, plant and equipment 2,246,183,476 2,209,454,955 90. Intangible assets 3,932,839 4,349,513 of which: goodwill - - 100. Tax assets: 10,704,290,933 10,310,576,804 a) current 757,454,501 1,660,306,433 b) deferred 9,946,836,432 8,650,270,371 110. Non-current assets and disposal groups classified as held for sale 116,674,288 150,030,667 120. Other assets 3,875,730,081 4,700,353,858 Total assets 405,615,519,348 404,979,900,996 Company accounts Balance sheet (€) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 10. Financial liabilities at amortised cost: 323,835,358,883 a) deposits from banks 58,994,789,432 b) deposits from customers 211,871,724,249 c) debt securities in issue 52,968,845,202 Deposits from banks (ex IAS39 Item 10) 56,807,016,417 Deposits from customers (ex IAS39 Item 20) 197,138,761,654 Debt securities in issue (ex IAS39 Item 30) 64,945,632,171 20. Financial liabilities held for trading 10,383,522,810 Financial liabilities held for trading (ex IAS39 Item 40) 13,067,880,871 30. Financial liabilities designated at fair value 3,534,518,992 Financial liabilities at fair value through profit or loss (ex IAS39 Item 50) 2,737,624,598 40. Hedging derivatives 4,525,258,448 4,558,319,891 50. Value adjustment of hedged financial liabilities (+/-) 1,770,149,836 1,720,371,037 60. Tax liabilities: 1,786,328 1,151,624 a) current 1,786,328 1,151,624 b) deferred - - 70. Liabilities associated with assets classified as held for sale - - 80. Other liabilities 7,617,123,027 7,823,823,206 90. Provision for employee severance pay 629,190,259 828,450,167 100. Provisions for risks and charges: 2,482,620,470 1,843,004,707 a) committments and guarantees given 491,897,124 b) post-retirement benefit obligations 90,539,306 77,312,166 c) other provisions for risks and charges 1,900,184,040 1,765,692,541 110. Valuation reserves (502,666,304) 585,547,375 120. Redeemable shares - - 130. Equity instruments 4,610,073,464 4,610,073,464 140. Reserves 9,939,543,149 7,798,689,926 150. Share premium 13,392,918,356 13,399,798,681 160. Share capital 20,940,398,467 20,880,549,802 170. Treasury shares (-) (2,440,001) (2,440,001) 180. Profit (Loss) of the year (+/-) 2,458,163,164 6,235,645,406 Total liabilities and shareholders' equity 405,615,519,348 404,979,900,996 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 537 Balance sheet (€) AMOUNTS AS AT ASSETS 12.31.2018 12.31.2017 10. Cash and cash balances 7,460,706,040 25,816,708,377 20. Financial assets at fair value through profit or loss: 14,998,825,205 a) financial assets held for trading 11,834,351,538 b) financial assets designated at fair value 351 c) other financial assets mandatorily at fair value 3,164,473,316 Financial assets held for trading (ex IAS39 Item 20) 13,863,778,570 Financial assets at fair value through profit or loss (ex IAS39 Item 30) 651,920,173 30. Financial assets at fair value through other comprehensive income 46,926,536,608 Available-for-sale financial assets (ex IAS39 Item 40) 59,718,169,298 40. Financial assets at amortised cost: 270,556,434,138 a) loans and advances to banks 30,971,842,243 b) loans and advances to customers 239,584,591,895 Held-to-maturity investments (ex IAS39 Item 50) 762,430,874 Loans and receivables with banks (ex IAS39 Item 60) 27,566,760,856 Loans and receivables with customers (ex IAS39 Item 70) 208,965,454,636 50. Hedging derivatives 4,167,319,172 4,399,939,250 60. Changes in fair value of portfolio hedged items (+/-) 1,685,974,892 1,714,488,195 70. Equity investments 42,872,911,676 44,145,484,970 80. Property, plant and equipment 2,246,183,476 2,209,454,955 90. Intangible assets 3,932,839 4,349,513 of which: goodwill - - 100. Tax assets: 10,704,290,933 10,310,576,804 a) current 757,454,501 1,660,306,433 b) deferred 9,946,836,432 8,650,270,371 110. Non-current assets and disposal groups classified as held for sale 116,674,288 150,030,667 120. Other assets 3,875,730,081 4,700,353,858 Total assets 405,615,519,348 404,979,900,996 Company accounts Balance sheet (€) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 10. Financial liabilities at amortised cost: 323,835,358,883 a) deposits from banks 58,994,789,432 b) deposits from customers 211,871,724,249 c) debt securities in issue 52,968,845,202 Deposits from banks (ex IAS39 Item 10) 56,807,016,417 Deposits from customers (ex IAS39 Item 20) 197,138,761,654 Debt securities in issue (ex IAS39 Item 30) 64,945,632,171 20. Financial liabilities held for trading 10,383,522,810 Financial liabilities held for trading (ex IAS39 Item 40) 13,067,880,871 30. Financial liabilities designated at fair value 3,534,518,992 Financial liabilities at fair value through profit or loss (ex IAS39 Item 50) 2,737,624,598 40. Hedging derivatives 4,525,258,448 4,558,319,891 50. Value adjustment of hedged financial liabilities (+/-) 1,770,149,836 1,720,371,037 60. Tax liabilities: 1,786,328 1,151,624 a) current 1,786,328 1,151,624 b) deferred - - 70. Liabilities associated with assets classified as held for sale - - 80. Other liabilities 7,617,123,027 7,823,823,206 90. Provision for employee severance pay 629,190,259 828,450,167 100. Provisions for risks and charges: 2,482,620,470 1,843,004,707 a) committments and guarantees given 491,897,124 b) post-retirement benefit obligations 90,539,306 77,312,166 c) other provisions for risks and charges 1,900,184,040 1,765,692,541 110. Valuation reserves (502,666,304) 585,547,375 120. Redeemable shares - - 130. Equity instruments 4,610,073,464 4,610,073,464 140. Reserves 9,939,543,149 7,798,689,926 150. Share premium 13,392,918,356 13,399,798,681 160. Share capital 20,940,398,467 20,880,549,802 170. Treasury shares (-) (2,440,001) (2,440,001) 180. Profit (Loss) of the year (+/-) 2,458,163,164 6,235,645,406 Total liabilities and shareholders' equity 405,615,519,348 404,979,900,996 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 537 Balance sheet (€) AMOUNTS AS AT ASSETS 12.31.2018 12.31.2017 10. Cash and cash balances 7,460,706,040 25,816,708,377 20. Financial assets at fair value through profit or loss: 14,998,825,205 a) financial assets held for trading 11,834,351,538 b) financial assets designated at fair value 351 c) other financial assets mandatorily at fair value 3,164,473,316 Financial assets held for trading (ex IAS39 Item 20) 13,863,778,570 Financial assets at fair value through profit or loss (ex IAS39 Item 30) 651,920,173 30. Financial assets at fair value through other comprehensive income 46,926,536,608 Available-for-sale financial assets (ex IAS39 Item 40) 59,718,169,298 40. Financial assets at amortised cost: 270,556,434,138 a) loans and advances to banks 30,971,842,243 b) loans and advances to customers 239,584,591,895 Held-to-maturity investments (ex IAS39 Item 50) 762,430,874 Loans and receivables with banks (ex IAS39 Item 60) 27,566,760,856 Loans and receivables with customers (ex IAS39 Item 70) 208,965,454,636 50. Hedging derivatives 4,167,319,172 4,399,939,250 60. Changes in fair value of portfolio hedged items (+/-) 1,685,974,892 1,714,488,195 70. Equity investments 42,872,911,676 44,145,484,970 80. Property, plant and equipment 2,246,183,476 2,209,454,955 90. Intangible assets 3,932,839 4,349,513 of which: goodwill - - 100. Tax assets: 10,704,290,933 10,310,576,804 a) current 757,454,501 1,660,306,433 b) deferred 9,946,836,432 8,650,270,371 110. Non-current assets and disposal groups classified as held for sale 116,674,288 150,030,667 120. Other assets 3,875,730,081 4,700,353,858 Total assets 405,615,519,348 404,979,900,996 Company accounts Balance sheet (€) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 10. Financial liabilities at amortised cost: 323,835,358,883 a) deposits from banks 58,994,789,432 b) deposits from customers 211,871,724,249 c) debt securities in issue 52,968,845,202 Deposits from banks (ex IAS39 Item 10) 56,807,016,417 Deposits from customers (ex IAS39 Item 20) 197,138,761,654 Debt securities in issue (ex IAS39 Item 30) 64,945,632,171 20. Financial liabilities held for trading 10,383,522,810 Financial liabilities held for trading (ex IAS39 Item 40) 13,067,880,871 30. Financial liabilities designated at fair value 3,534,518,992 Financial liabilities at fair value through profit or loss (ex IAS39 Item 50) 2,737,624,598 40. Hedging derivatives 4,525,258,448 4,558,319,891 50. Value adjustment of hedged financial liabilities (+/-) 1,770,149,836 1,720,371,037 60. Tax liabilities: 1,786,328 1,151,624 a) current 1,786,328 1,151,624 b) deferred - - 70. Liabilities associated with assets classified as held for sale - - 80. Other liabilities 7,617,123,027 7,823,823,206 90. Provision for employee severance pay 629,190,259 828,450,167 100. Provisions for risks and charges: 2,482,620,470 1,843,004,707 a) committments and guarantees given 491,897,124 b) post-retirement benefit obligations 90,539,306 77,312,166 c) other provisions for risks and charges 1,900,184,040 1,765,692,541 110. Valuation reserves (502,666,304) 585,547,375 120. Redeemable shares - - 130. Equity instruments 4,610,073,464 4,610,073,464 140. Reserves 9,939,543,149 7,798,689,926 150. Share premium 13,392,918,356 13,399,798,681 160. Share capital 20,940,398,467 20,880,549,802 170. Treasury shares (-) (2,440,001) (2,440,001) 180. Profit (Loss) of the year (+/-) 2,458,163,164 6,235,645,406 Total liabilities and shareholders' equity 405,615,519,348 404,979,900,996 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 537 Balance sheet (€) AMOUNTS AS AT ASSETS 12.31.2018 12.31.2017 10. Cash and cash balances 7,460,706,040 25,816,708,377 20. Financial assets at fair value through profit or loss: 14,998,825,205 a) financial assets held for trading 11,834,351,538 b) financial assets designated at fair value 351 c) other financial assets mandatorily at fair value 3,164,473,316 Financial assets held for trading (ex IAS39 Item 20) 13,863,778,570 Financial assets at fair value through profit or loss (ex IAS39 Item 30) 651,920,173 30. Financial assets at fair value through other comprehensive income 46,926,536,608 Available-for-sale financial assets (ex IAS39 Item 40) 59,718,169,298 40. Financial assets at amortised cost: 270,556,434,138 a) loans and advances to banks 30,971,842,243 b) loans and advances to customers 239,584,591,895 Held-to-maturity investments (ex IAS39 Item 50) 762,430,874 Loans and receivables with banks (ex IAS39 Item 60) 27,566,760,856 Loans and receivables with customers (ex IAS39 Item 70) 208,965,454,636 50. Hedging derivatives 4,167,319,172 4,399,939,250 60. Changes in fair value of portfolio hedged items (+/-) 1,685,974,892 1,714,488,195 70. Equity investments 42,872,911,676 44,145,484,970 80. Property, plant and equipment 2,246,183,476 2,209,454,955 90. Intangible assets 3,932,839 4,349,513 of which: goodwill - - 100. Tax assets: 10,704,290,933 10,310,576,804 a) current 757,454,501 1,660,306,433 b) deferred 9,946,836,432 8,650,270,371 110. Non-current assets and disposal groups classified as held for sale 116,674,288 150,030,667 120. Other assets 3,875,730,081 4,700,353,858 Total assets 405,615,519,348 404,979,900,996 Company accounts Balance sheet (€) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2018 12.31.2017 10. Financial liabilities at amortised cost: 323,835,358,883 a) deposits from banks 58,994,789,432 b) deposits from customers 211,871,724,249 c) debt securities in issue 52,968,845,202 Deposits from banks (ex IAS39 Item 10) 56,807,016,417 Deposits from customers (ex IAS39 Item 20) 197,138,761,654 Debt securities in issue (ex IAS39 Item 30) 64,945,632,171 20. Financial liabilities held for trading 10,383,522,810 Financial liabilities held for trading (ex IAS39 Item 40) 13,067,880,871 30. Financial liabilities designated at fair value 3,534,518,992 Financial liabilities at fair value through profit or loss (ex IAS39 Item 50) 2,737,624,598 40. Hedging derivatives 4,525,258,448 4,558,319,891 50. Value adjustment of hedged financial liabilities (+/-) 1,770,149,836 1,720,371,037 60. Tax liabilities: 1,786,328 1,151,624 a) current 1,786,328 1,151,624 b) deferred - - 70. Liabilities associated with assets classified as held for sale - - 80. Other liabilities 7,617,123,027 7,823,823,206 90. Provision for employee severance pay 629,190,259 828,450,167 100. Provisions for risks and charges: 2,482,620,470 1,843,004,707 a) committments and guarantees given 491,897,124 b) post-retirement benefit obligations 90,539,306 77,312,166 c) other provisions for risks and charges 1,900,184,040 1,765,692,541 110. Valuation reserves (502,666,304) 585,547,375 120. Redeemable shares - - 130. Equity instruments 4,610,073,464 4,610,073,464 140. Reserves 9,939,543,149 7,798,689,926 150. Share premium 13,392,918,356 13,399,798,681 160. Share capital 20,940,398,467 20,880,549,802 170. Treasury shares (-) (2,440,001) (2,440,001) 180. Profit (Loss) of the year (+/-) 2,458,163,164 6,235,645,406 Total liabilities and shareholders' equity 405,615,519,348 404,979,900,996 Company financial statements | Company accounts Company accounts 538 2018 Annual Report and Accounts · UniCredit Income statement Income statement (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Interest income and similar revenues 5,275,772,261 5,626,643,041 of which: interest income calculated with the effective interest method 5,188,014,031 20. Interest expenses and similar charges (1,109,354,399) (1,915,704,127) 30. Net interest margin 4,166,417,862 3,710,938,914 40. Fees and commissions income 4,350,574,073 4,312,823,798 50. Fees and commissions expenses (400,336,954) (391,567,552) 60. Net fees and commissions 3,950,237,119 3,921,256,246 70. Dividend income and similar revenues 2,630,046,719 3,808,045,507 80. Net gains (losses) on trading (313,353) Gains (Losses) on financial assets and liabilities held for trading (ex IAS39 Item 80) 85,220,626 90. Net gains (losses) on hedge accounting 1,129,982 (12,707,305) 100. Gains (Losses) on disposal and repurchase of: 52,089,007 a) financial assets at amortised cost (34,059,358) b) financial assets at fair value through other comprehensive income 86,905,280 c) financial liabilities (756,915) Gains (Losses) on disposal and repurchase of: (ex IAS39 Item 100) (219,217,125) a) loans (569,446,667) b) available-for-sale financial assets 313,647,375 c) held-to-maturity investments - d) financial liabilities 36,582,167 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: (8,815,157) a) financial assets/liabilities designated at fair value 124,803,444 b) other financial assets mandatorily at fair value (133,618,601) Gains (Losses) on financial assets/liabilities at fair value through profit or loss (ex IAS39 Item 110) (101,000,034) 120. Operating income 10,790,792,179 11,192,536,829 130. Net losses/recoveries on credit impairment relating to: (2,011,419,803) a) financial assets at amortised cost (1,997,651,409) b) financial assets at fair value through other comprehensive income (13,768,394) Net losses/recoveries on impairment: (ex IAS39 Item 130) (1,582,779,892) a) loans (1,337,535,270) b) available-for-sale financial assets (313,534,043) c) held-to-maturity investments - d) other financial assets 68,289,421 140. Gains/Losses from contractual changes with no cancellations (3,293,454) 150. Net profit from financial activities 8,776,078,922 9,609,756,937 160. Administrative expenses: (5,825,870,722) (6,116,091,163) a) staff costs (2,866,359,659) (3,121,490,571) b) other administrative expenses (2,959,511,063) (2,994,600,592) 170. Net provisions for risks and charges: (390,722,022) (388,397,245) a) commitments and financial guarantees given 37,627,123 b) other net provisions (428,349,145) (388,397,245) 180. Net value adjustments/write-backs on property, plant and equipment (151,995,175) (164,527,912) 190. Net value adjustments/write-backs on intangible assets (2,136,588) (4,433,882) 200. Other operating expenses/income 411,522,116 432,313,066 210. Operating costs (5,959,202,391) (6,241,137,136) 220. Gains (Losses) of equity investments (1,589,813,036) 2,742,978,849 230. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - - 240. Goodwill impairment - - 250. Gains (Losses) on disposals on investments 49,532,641 9,779,700 260. Profit (Loss) before tax from continuing operations 1,276,596,136 6,121,378,350 270. Tax (expenses) income of the year from continuing operations 1,181,567,028 30,164,357 280. Profit (Loss) after tax from continuing operations 2,458,163,164 6,151,542,707 290. Profit (Loss) after tax from discontinued operations - 84,102,699 300. Profit (Loss) of the year 2,458,163,164 6,235,645,406 Company financial statements | Company accounts Company accounts 538 2018 Annual Report and Accounts · UniCredit Income statement Income statement (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Interest income and similar revenues 5,275,772,261 5,626,643,041 of which: interest income calculated with the effective interest method 5,188,014,031 20. Interest expenses and similar charges (1,109,354,399) (1,915,704,127) 30. Net interest margin 4,166,417,862 3,710,938,914 40. Fees and commissions income 4,350,574,073 4,312,823,798 50. Fees and commissions expenses (400,336,954) (391,567,552) 60. Net fees and commissions 3,950,237,119 3,921,256,246 70. Dividend income and similar revenues 2,630,046,719 3,808,045,507 80. Net gains (losses) on trading (313,353) Gains (Losses) on financial assets and liabilities held for trading (ex IAS39 Item 80) 85,220,626 90. Net gains (losses) on hedge accounting 1,129,982 (12,707,305) 100. Gains (Losses) on disposal and repurchase of: 52,089,007 a) financial assets at amortised cost (34,059,358) b) financial assets at fair value through other comprehensive income 86,905,280 c) financial liabilities (756,915) Gains (Losses) on disposal and repurchase of: (ex IAS39 Item 100) (219,217,125) a) loans (569,446,667) b) available-for-sale financial assets 313,647,375 c) held-to-maturity investments - d) financial liabilities 36,582,167 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: (8,815,157) a) financial assets/liabilities designated at fair value 124,803,444 b) other financial assets mandatorily at fair value (133,618,601) Gains (Losses) on financial assets/liabilities at fair value through profit or loss (ex IAS39 Item 110) (101,000,034) 120. Operating income 10,790,792,179 11,192,536,829 130. Net losses/recoveries on credit impairment relating to: (2,011,419,803) a) financial assets at amortised cost (1,997,651,409) b) financial assets at fair value through other comprehensive income (13,768,394) Net losses/recoveries on impairment: (ex IAS39 Item 130) (1,582,779,892) a) loans (1,337,535,270) b) available-for-sale financial assets (313,534,043) c) held-to-maturity investments - d) other financial assets 68,289,421 140. Gains/Losses from contractual changes with no cancellations (3,293,454) 150. Net profit from financial activities 8,776,078,922 9,609,756,937 160. Administrative expenses: (5,825,870,722) (6,116,091,163) a) staff costs (2,866,359,659) (3,121,490,571) b) other administrative expenses (2,959,511,063) (2,994,600,592) 170. Net provisions for risks and charges: (390,722,022) (388,397,245) a) commitments and financial guarantees given 37,627,123 b) other net provisions (428,349,145) (388,397,245) 180. Net value adjustments/write-backs on property, plant and equipment (151,995,175) (164,527,912) 190. Net value adjustments/write-backs on intangible assets (2,136,588) (4,433,882) 200. Other operating expenses/income 411,522,116 432,313,066 210. Operating costs (5,959,202,391) (6,241,137,136) 220. Gains (Losses) of equity investments (1,589,813,036) 2,742,978,849 230. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - - 240. Goodwill impairment - - 250. Gains (Losses) on disposals on investments 49,532,641 9,779,700 260. Profit (Loss) before tax from continuing operations 1,276,596,136 6,121,378,350 270. Tax (expenses) income of the year from continuing operations 1,181,567,028 30,164,357 280. Profit (Loss) after tax from continuing operations 2,458,163,164 6,151,542,707 290. Profit (Loss) after tax from discontinued operations - 84,102,699 300. Profit (Loss) of the year 2,458,163,164 6,235,645,406 Company financial statements | Company accounts Company accounts 538 2018 Annual Report and Accounts · UniCredit Income statement Income statement (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Interest income and similar revenues 5,275,772,261 5,626,643,041 of which: interest income calculated with the effective interest method 5,188,014,031 20. Interest expenses and similar charges (1,109,354,399) (1,915,704,127) 30. Net interest margin 4,166,417,862 3,710,938,914 40. Fees and commissions income 4,350,574,073 4,312,823,798 50. Fees and commissions expenses (400,336,954) (391,567,552) 60. Net fees and commissions 3,950,237,119 3,921,256,246 70. Dividend income and similar revenues 2,630,046,719 3,808,045,507 80. Net gains (losses) on trading (313,353) Gains (Losses) on financial assets and liabilities held for trading (ex IAS39 Item 80) 85,220,626 90. Net gains (losses) on hedge accounting 1,129,982 (12,707,305) 100. Gains (Losses) on disposal and repurchase of: 52,089,007 a) financial assets at amortised cost (34,059,358) b) financial assets at fair value through other comprehensive income 86,905,280 c) financial liabilities (756,915) Gains (Losses) on disposal and repurchase of: (ex IAS39 Item 100) (219,217,125) a) loans (569,446,667) b) available-for-sale financial assets 313,647,375 c) held-to-maturity investments - d) financial liabilities 36,582,167 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: (8,815,157) a) financial assets/liabilities designated at fair value 124,803,444 b) other financial assets mandatorily at fair value (133,618,601) Gains (Losses) on financial assets/liabilities at fair value through profit or loss (ex IAS39 Item 110) (101,000,034) 120. Operating income 10,790,792,179 11,192,536,829 130. Net losses/recoveries on credit impairment relating to: (2,011,419,803) a) financial assets at amortised cost (1,997,651,409) b) financial assets at fair value through other comprehensive income (13,768,394) Net losses/recoveries on impairment: (ex IAS39 Item 130) (1,582,779,892) a) loans (1,337,535,270) b) available-for-sale financial assets (313,534,043) c) held-to-maturity investments - d) other financial assets 68,289,421 140. Gains/Losses from contractual changes with no cancellations (3,293,454) 150. Net profit from financial activities 8,776,078,922 9,609,756,937 160. Administrative expenses: (5,825,870,722) (6,116,091,163) a) staff costs (2,866,359,659) (3,121,490,571) b) other administrative expenses (2,959,511,063) (2,994,600,592) 170. Net provisions for risks and charges: (390,722,022) (388,397,245) a) commitments and financial guarantees given 37,627,123 b) other net provisions (428,349,145) (388,397,245) 180. Net value adjustments/write-backs on property, plant and equipment (151,995,175) (164,527,912) 190. Net value adjustments/write-backs on intangible assets (2,136,588) (4,433,882) 200. Other operating expenses/income 411,522,116 432,313,066 210. Operating costs (5,959,202,391) (6,241,137,136) 220. Gains (Losses) of equity investments (1,589,813,036) 2,742,978,849 230. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - - 240. Goodwill impairment - - 250. Gains (Losses) on disposals on investments 49,532,641 9,779,700 260. Profit (Loss) before tax from continuing operations 1,276,596,136 6,121,378,350 270. Tax (expenses) income of the year from continuing operations 1,181,567,028 30,164,357 280. Profit (Loss) after tax from continuing operations 2,458,163,164 6,151,542,707 290. Profit (Loss) after tax from discontinued operations - 84,102,699 300. Profit (Loss) of the year 2,458,163,164 6,235,645,406 Company financial statements | Company accounts Company accounts 538 2018 Annual Report and Accounts · UniCredit Income statement Income statement (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Interest income and similar revenues 5,275,772,261 5,626,643,041 of which: interest income calculated with the effective interest method 5,188,014,031 20. Interest expenses and similar charges (1,109,354,399) (1,915,704,127) 30. Net interest margin 4,166,417,862 3,710,938,914 40. Fees and commissions income 4,350,574,073 4,312,823,798 50. Fees and commissions expenses (400,336,954) (391,567,552) 60. Net fees and commissions 3,950,237,119 3,921,256,246 70. Dividend income and similar revenues 2,630,046,719 3,808,045,507 80. Net gains (losses) on trading (313,353) Gains (Losses) on financial assets and liabilities held for trading (ex IAS39 Item 80) 85,220,626 90. Net gains (losses) on hedge accounting 1,129,982 (12,707,305) 100. Gains (Losses) on disposal and repurchase of: 52,089,007 a) financial assets at amortised cost (34,059,358) b) financial assets at fair value through other comprehensive income 86,905,280 c) financial liabilities (756,915) Gains (Losses) on disposal and repurchase of: (ex IAS39 Item 100) (219,217,125) a) loans (569,446,667) b) available-for-sale financial assets 313,647,375 c) held-to-maturity investments - d) financial liabilities 36,582,167 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: (8,815,157) a) financial assets/liabilities designated at fair value 124,803,444 b) other financial assets mandatorily at fair value (133,618,601) Gains (Losses) on financial assets/liabilities at fair value through profit or loss (ex IAS39 Item 110) (101,000,034) 120. Operating income 10,790,792,179 11,192,536,829 130. Net losses/recoveries on credit impairment relating to: (2,011,419,803) a) financial assets at amortised cost (1,997,651,409) b) financial assets at fair value through other comprehensive income (13,768,394) Net losses/recoveries on impairment: (ex IAS39 Item 130) (1,582,779,892) a) loans (1,337,535,270) b) available-for-sale financial assets (313,534,043) c) held-to-maturity investments - d) other financial assets 68,289,421 140. Gains/Losses from contractual changes with no cancellations (3,293,454) 150. Net profit from financial activities 8,776,078,922 9,609,756,937 160. Administrative expenses: (5,825,870,722) (6,116,091,163) a) staff costs (2,866,359,659) (3,121,490,571) b) other administrative expenses (2,959,511,063) (2,994,600,592) 170. Net provisions for risks and charges: (390,722,022) (388,397,245) a) commitments and financial guarantees given 37,627,123 b) other net provisions (428,349,145) (388,397,245) 180. Net value adjustments/write-backs on property, plant and equipment (151,995,175) (164,527,912) 190. Net value adjustments/write-backs on intangible assets (2,136,588) (4,433,882) 200. Other operating expenses/income 411,522,116 432,313,066 210. Operating costs (5,959,202,391) (6,241,137,136) 220. Gains (Losses) of equity investments (1,589,813,036) 2,742,978,849 230. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - - 240. Goodwill impairment - - 250. Gains (Losses) on disposals on investments 49,532,641 9,779,700 260. Profit (Loss) before tax from continuing operations 1,276,596,136 6,121,378,350 270. Tax (expenses) income of the year from continuing operations 1,181,567,028 30,164,357 280. Profit (Loss) after tax from continuing operations 2,458,163,164 6,151,542,707 290. Profit (Loss) after tax from discontinued operations - 84,102,699 300. Profit (Loss) of the year 2,458,163,164 6,235,645,406 Company financial statements | Company accounts Company accounts 538 2018 Annual Report and Accounts · UniCredit Income statement Income statement (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Interest income and similar revenues 5,275,772,261 5,626,643,041 of which: interest income calculated with the effective interest method 5,188,014,031 20. Interest expenses and similar charges (1,109,354,399) (1,915,704,127) 30. Net interest margin 4,166,417,862 3,710,938,914 40. Fees and commissions income 4,350,574,073 4,312,823,798 50. Fees and commissions expenses (400,336,954) (391,567,552) 60. Net fees and commissions 3,950,237,119 3,921,256,246 70. Dividend income and similar revenues 2,630,046,719 3,808,045,507 80. Net gains (losses) on trading (313,353) Gains (Losses) on financial assets and liabilities held for trading (ex IAS39 Item 80) 85,220,626 90. Net gains (losses) on hedge accounting 1,129,982 (12,707,305) 100. Gains (Losses) on disposal and repurchase of: 52,089,007 a) financial assets at amortised cost (34,059,358) b) financial assets at fair value through other comprehensive income 86,905,280 c) financial liabilities (756,915) Gains (Losses) on disposal and repurchase of: (ex IAS39 Item 100) (219,217,125) a) loans (569,446,667) b) available-for-sale financial assets 313,647,375 c) held-to-maturity investments - d) financial liabilities 36,582,167 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: (8,815,157) a) financial assets/liabilities designated at fair value 124,803,444 b) other financial assets mandatorily at fair value (133,618,601) Gains (Losses) on financial assets/liabilities at fair value through profit or loss (ex IAS39 Item 110) (101,000,034) 120. Operating income 10,790,792,179 11,192,536,829 130. Net losses/recoveries on credit impairment relating to: (2,011,419,803) a) financial assets at amortised cost (1,997,651,409) b) financial assets at fair value through other comprehensive income (13,768,394) Net losses/recoveries on impairment: (ex IAS39 Item 130) (1,582,779,892) a) loans (1,337,535,270) b) available-for-sale financial assets (313,534,043) c) held-to-maturity investments - d) other financial assets 68,289,421 140. Gains/Losses from contractual changes with no cancellations (3,293,454) 150. Net profit from financial activities 8,776,078,922 9,609,756,937 160. Administrative expenses: (5,825,870,722) (6,116,091,163) a) staff costs (2,866,359,659) (3,121,490,571) b) other administrative expenses (2,959,511,063) (2,994,600,592) 170. Net provisions for risks and charges: (390,722,022) (388,397,245) a) commitments and financial guarantees given 37,627,123 b) other net provisions (428,349,145) (388,397,245) 180. Net value adjustments/write-backs on property, plant and equipment (151,995,175) (164,527,912) 190. Net value adjustments/write-backs on intangible assets (2,136,588) (4,433,882) 200. Other operating expenses/income 411,522,116 432,313,066 210. Operating costs (5,959,202,391) (6,241,137,136) 220. Gains (Losses) of equity investments (1,589,813,036) 2,742,978,849 230. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - - 240. Goodwill impairment - - 250. Gains (Losses) on disposals on investments 49,532,641 9,779,700 260. Profit (Loss) before tax from continuing operations 1,276,596,136 6,121,378,350 270. Tax (expenses) income of the year from continuing operations 1,181,567,028 30,164,357 280. Profit (Loss) after tax from continuing operations 2,458,163,164 6,151,542,707 290. Profit (Loss) after tax from discontinued operations - 84,102,699 300. Profit (Loss) of the year 2,458,163,164 6,235,645,406 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 539 Statement of other comprehensive income (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Net profit (loss) of the year 2,458,163,164 6,235,645,406 Other comprehensive income after tax not reclassified to profit or loss 20. Equity instruments designated at fair value through other comprehensive income 19,186,637 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 98,845,352 40. Hedge accounting of equity instruments designated at fair value through other comprehensive - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined-benefit plans 1,726,609 15,218,639 80. Non-current assets and disposal groups classified as held for sale - - 90. Portion of valuation reserves from investments valued at equity method - - Other comprehensive income after tax reclassified to profit or loss 100. Foreign investments hedging - - 110. Foreign exchange differences - - 120. Cash flow hedging (33,793,267) (38,978,962) 130. Hedging instruments (non-designated items) - 140. Financial assets (different from equity instruments) at fair value through other comprehensive income (823,990,852) Available-for-sale financial assets:(ex IAS39 Item 100) (106,872,594) 150. Non-current assets and disposal groups classified as held for sale - - 160. Part of valuation reserves from investments valued at equity method - - 170. Total other comprehensive income after tax (738,025,521) (130,632,917) 180. Other comprehensive income (Item 10+170) 1,720,137,643 6,105,012,489 Statement of comprehensive income Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 539 Statement of other comprehensive income (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Net profit (loss) of the year 2,458,163,164 6,235,645,406 Other comprehensive income after tax not reclassified to profit or loss 20. Equity instruments designated at fair value through other comprehensive income 19,186,637 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 98,845,352 40. Hedge accounting of equity instruments designated at fair value through other comprehensive - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined-benefit plans 1,726,609 15,218,639 80. Non-current assets and disposal groups classified as held for sale - - 90. Portion of valuation reserves from investments valued at equity method - - Other comprehensive income after tax reclassified to profit or loss 100. Foreign investments hedging - - 110. Foreign exchange differences - - 120. Cash flow hedging (33,793,267) (38,978,962) 130. Hedging instruments (non-designated items) - 140. Financial assets (different from equity instruments) at fair value through other comprehensive income (823,990,852) Available-for-sale financial assets:(ex IAS39 Item 100) (106,872,594) 150. Non-current assets and disposal groups classified as held for sale - - 160. Part of valuation reserves from investments valued at equity method - - 170. Total other comprehensive income after tax (738,025,521) (130,632,917) 180. Other comprehensive income (Item 10+170) 1,720,137,643 6,105,012,489 Statement of comprehensive income Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 539 Statement of other comprehensive income (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Net profit (loss) of the year 2,458,163,164 6,235,645,406 Other comprehensive income after tax not reclassified to profit or loss 20. Equity instruments designated at fair value through other comprehensive income 19,186,637 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 98,845,352 40. Hedge accounting of equity instruments designated at fair value through other comprehensive - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined-benefit plans 1,726,609 15,218,639 80. Non-current assets and disposal groups classified as held for sale - - 90. Portion of valuation reserves from investments valued at equity method - - Other comprehensive income after tax reclassified to profit or loss 100. Foreign investments hedging - - 110. Foreign exchange differences - - 120. Cash flow hedging (33,793,267) (38,978,962) 130. Hedging instruments (non-designated items) - 140. Financial assets (different from equity instruments) at fair value through other comprehensive income (823,990,852) Available-for-sale financial assets:(ex IAS39 Item 100) (106,872,594) 150. Non-current assets and disposal groups classified as held for sale - - 160. Part of valuation reserves from investments valued at equity method - - 170. Total other comprehensive income after tax (738,025,521) (130,632,917) 180. Other comprehensive income (Item 10+170) 1,720,137,643 6,105,012,489 Statement of comprehensive income Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 539 Statement of other comprehensive income (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Net profit (loss) of the year 2,458,163,164 6,235,645,406 Other comprehensive income after tax not reclassified to profit or loss 20. Equity instruments designated at fair value through other comprehensive income 19,186,637 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 98,845,352 40. Hedge accounting of equity instruments designated at fair value through other comprehensive - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined-benefit plans 1,726,609 15,218,639 80. Non-current assets and disposal groups classified as held for sale - - 90. Portion of valuation reserves from investments valued at equity method - - Other comprehensive income after tax reclassified to profit or loss 100. Foreign investments hedging - - 110. Foreign exchange differences - - 120. Cash flow hedging (33,793,267) (38,978,962) 130. Hedging instruments (non-designated items) - 140. Financial assets (different from equity instruments) at fair value through other comprehensive income (823,990,852) Available-for-sale financial assets:(ex IAS39 Item 100) (106,872,594) 150. Non-current assets and disposal groups classified as held for sale - - 160. Part of valuation reserves from investments valued at equity method - - 170. Total other comprehensive income after tax (738,025,521) (130,632,917) 180. Other comprehensive income (Item 10+170) 1,720,137,643 6,105,012,489 Statement of comprehensive income Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 539 Statement of other comprehensive income (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Net profit (loss) of the year 2,458,163,164 6,235,645,406 Other comprehensive income after tax not reclassified to profit or loss 20. Equity instruments designated at fair value through other comprehensive income 19,186,637 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 98,845,352 40. Hedge accounting of equity instruments designated at fair value through other comprehensive - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined-benefit plans 1,726,609 15,218,639 80. Non-current assets and disposal groups classified as held for sale - - 90. Portion of valuation reserves from investments valued at equity method - - Other comprehensive income after tax reclassified to profit or loss 100. Foreign investments hedging - - 110. Foreign exchange differences - - 120. Cash flow hedging (33,793,267) (38,978,962) 130. Hedging instruments (non-designated items) - 140. Financial assets (different from equity instruments) at fair value through other comprehensive income (823,990,852) Available-for-sale financial assets:(ex IAS39 Item 100) (106,872,594) 150. Non-current assets and disposal groups classified as held for sale - - 160. Part of valuation reserves from investments valued at equity method - - 170. Total other comprehensive income after tax (738,025,521) (130,632,917) 180. Other comprehensive income (Item 10+170) 1,720,137,643 6,105,012,489 Statement of comprehensive income Company financial statements | Company accounts Company accounts 540 2018 Annual Report and Accounts · UniCredit Statement of changes in shareholders' equity as at 31 December 2018 (€) CHANGE IN OPENING BALANCE CHANGES IN THE YEAR PREVIOUS YEAR PROFIT (LOSS) ALLOCATION CHANGES IN RESERVES SHAREHOLDERS' EQUITY TRANSACTIONS 2018 RESERVES DIVIDENDS AND OTHER ALLOCATIONS ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS 12.31.2018 12.31.2017 01.01.2018 OTHER COMPREHENSIVE INCOME SHAREHOLDERS' EQUITY AS AT BALANCE AS AT BALANCE AS AT Share capital: - ordinary shares 20,878,182,216 - 20,878,182,216 - - - 62,216,251 - - - - - - 20,940,398,467 - other shares 2,367,586 - 2,367,586 - - - - (2,367,586) - - - - - - Share premium 13,399,798,681 - 13,399,798,681 - - (6,880,325) - - - - - - - 13,392,918,356 Reserves: - from profits 2,766,246,127 (2,765,649,153) 596,974 5,521,086,601 - (11,965,232) (59,848,665) - - - - - - 5,449,869,678 - other 5,032,443,799 - 5,032,443,799 - - (613,235,689) - - - - - 70,465,361 - 4,489,673,471 Valuation reserves 585,547,376 (318,060,936) 267,486,440 - - (32,127,223) - - - - - - (738,025,521) (502,666,304) Equity instruments 4,610,073,464 - 4,610,073,464 - - - - - - - - - - 4,610,073,464 Treasury shares (2,440,001) - (2,440,001) - - - - - - - - - - (2,440,001) Profit (Loss) of the year 6,235,645,406 - 6,235,645,406 (5,521,086,601) (714,558,805) - - - - - - - 2,458,163,164 2,458,163,164 Shareholders’ equity 53,507,864,654 (3,083,710,089) 50,424,154,565 - (714,558,805) (664,208,469) 2,367,586 (2,367,586) - - - 70,465,361 1,720,137,643 50,835,990,295 The column changes in opening balances includes the reclassification and remeasurement effects resulting from the first time adoption of the accounting principle IFRS9. For further details refer to paragraph “Transition to ‘IFRS9: Financial Instruments of UniCredit S.p.A.” reported on the Notes to the Accounts - Part A - Accounting policies, section A.1.4. General - Other matters. Changes in capital items represent the effects of mandatory conversion of savings shares into ordinary shares approved by Shareholders' Meeting on 4 December 2017. The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares connected with the ESOP Plans and other Group Executive Incentive Plans. Statement of changes in shareholders’e equity Company financial statements | Company accounts Company accounts 540 2018 Annual Report and Accounts · UniCredit Statement of changes in shareholders' equity as at 31 December 2018 (€) CHANGE IN OPENING BALANCE CHANGES IN THE YEAR PREVIOUS YEAR PROFIT (LOSS) ALLOCATION CHANGES IN RESERVES SHAREHOLDERS' EQUITY TRANSACTIONS 2018 RESERVES DIVIDENDS AND OTHER ALLOCATIONS ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS 12.31.2018 12.31.2017 01.01.2018 OTHER COMPREHENSIVE INCOME SHAREHOLDERS' EQUITY AS AT BALANCE AS AT BALANCE AS AT Share capital: - ordinary shares 20,878,182,216 - 20,878,182,216 - - - 62,216,251 - - - - - - 20,940,398,467 - other shares 2,367,586 - 2,367,586 - - - - (2,367,586) - - - - - - Share premium 13,399,798,681 - 13,399,798,681 - - (6,880,325) - - - - - - - 13,392,918,356 Reserves: - from profits 2,766,246,127 (2,765,649,153) 596,974 5,521,086,601 - (11,965,232) (59,848,665) - - - - - - 5,449,869,678 - other 5,032,443,799 - 5,032,443,799 - - (613,235,689) - - - - - 70,465,361 - 4,489,673,471 Valuation reserves 585,547,376 (318,060,936) 267,486,440 - - (32,127,223) - - - - - - (738,025,521) (502,666,304) Equity instruments 4,610,073,464 - 4,610,073,464 - - - - - - - - - - 4,610,073,464 Treasury shares (2,440,001) - (2,440,001) - - - - - - - - - - (2,440,001) Profit (Loss) of the year 6,235,645,406 - 6,235,645,406 (5,521,086,601) (714,558,805) - - - - - - - 2,458,163,164 2,458,163,164 Shareholders’ equity 53,507,864,654 (3,083,710,089) 50,424,154,565 - (714,558,805) (664,208,469) 2,367,586 (2,367,586) - - - 70,465,361 1,720,137,643 50,835,990,295 The column changes in opening balances includes the reclassification and remeasurement effects resulting from the first time adoption of the accounting principle IFRS9. For further details refer to paragraph “Transition to ‘IFRS9: Financial Instruments of UniCredit S.p.A.” reported on the Notes to the Accounts - Part A - Accounting policies, section A.1.4. General - Other matters. Changes in capital items represent the effects of mandatory conversion of savings shares into ordinary shares approved by Shareholders' Meeting on 4 December 2017. The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares connected with the ESOP Plans and other Group Executive Incentive Plans. Statement of changes in shareholders’e equity Company financial statements | Company accounts Company accounts 540 2018 Annual Report and Accounts · UniCredit Statement of changes in shareholders' equity as at 31 December 2018 (€) CHANGE IN OPENING BALANCE CHANGES IN THE YEAR PREVIOUS YEAR PROFIT (LOSS) ALLOCATION CHANGES IN RESERVES SHAREHOLDERS' EQUITY TRANSACTIONS 2018 RESERVES DIVIDENDS AND OTHER ALLOCATIONS ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS 12.31.2018 12.31.2017 01.01.2018 OTHER COMPREHENSIVE INCOME SHAREHOLDERS' EQUITY AS AT BALANCE AS AT BALANCE AS AT Share capital: - ordinary shares 20,878,182,216 - 20,878,182,216 - - - 62,216,251 - - - - - - 20,940,398,467 - other shares 2,367,586 - 2,367,586 - - - - (2,367,586) - - - - - - Share premium 13,399,798,681 - 13,399,798,681 - - (6,880,325) - - - - - - - 13,392,918,356 Reserves: - from profits 2,766,246,127 (2,765,649,153) 596,974 5,521,086,601 - (11,965,232) (59,848,665) - - - - - - 5,449,869,678 - other 5,032,443,799 - 5,032,443,799 - - (613,235,689) - - - - - 70,465,361 - 4,489,673,471 Valuation reserves 585,547,376 (318,060,936) 267,486,440 - - (32,127,223) - - - - - - (738,025,521) (502,666,304) Equity instruments 4,610,073,464 - 4,610,073,464 - - - - - - - - - - 4,610,073,464 Treasury shares (2,440,001) - (2,440,001) - - - - - - - - - - (2,440,001) Profit (Loss) of the year 6,235,645,406 - 6,235,645,406 (5,521,086,601) (714,558,805) - - - - - - - 2,458,163,164 2,458,163,164 Shareholders’ equity 53,507,864,654 (3,083,710,089) 50,424,154,565 - (714,558,805) (664,208,469) 2,367,586 (2,367,586) - - - 70,465,361 1,720,137,643 50,835,990,295 The column changes in opening balances includes the reclassification and remeasurement effects resulting from the first time adoption of the accounting principle IFRS9. For further details refer to paragraph “Transition to ‘IFRS9: Financial Instruments of UniCredit S.p.A.” reported on the Notes to the Accounts - Part A - Accounting policies, section A.1.4. General - Other matters. Changes in capital items represent the effects of mandatory conversion of savings shares into ordinary shares approved by Shareholders' Meeting on 4 December 2017. The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares connected with the ESOP Plans and other Group Executive Incentive Plans. Statement of changes in shareholders’e equity Company financial statements | Company accounts Company accounts 540 2018 Annual Report and Accounts · UniCredit Statement of changes in shareholders' equity as at 31 December 2018 (€) CHANGE IN OPENING BALANCE CHANGES IN THE YEAR PREVIOUS YEAR PROFIT (LOSS) ALLOCATION CHANGES IN RESERVES SHAREHOLDERS' EQUITY TRANSACTIONS 2018 RESERVES DIVIDENDS AND OTHER ALLOCATIONS ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS 12.31.2018 12.31.2017 01.01.2018 OTHER COMPREHENSIVE INCOME SHAREHOLDERS' EQUITY AS AT BALANCE AS AT BALANCE AS AT Share capital: - ordinary shares 20,878,182,216 - 20,878,182,216 - - - 62,216,251 - - - - - - 20,940,398,467 - other shares 2,367,586 - 2,367,586 - - - - (2,367,586) - - - - - - Share premium 13,399,798,681 - 13,399,798,681 - - (6,880,325) - - - - - - - 13,392,918,356 Reserves: - from profits 2,766,246,127 (2,765,649,153) 596,974 5,521,086,601 - (11,965,232) (59,848,665) - - - - - - 5,449,869,678 - other 5,032,443,799 - 5,032,443,799 - - (613,235,689) - - - - - 70,465,361 - 4,489,673,471 Valuation reserves 585,547,376 (318,060,936) 267,486,440 - - (32,127,223) - - - - - - (738,025,521) (502,666,304) Equity instruments 4,610,073,464 - 4,610,073,464 - - - - - - - - - - 4,610,073,464 Treasury shares (2,440,001) - (2,440,001) - - - - - - - - - - (2,440,001) Profit (Loss) of the year 6,235,645,406 - 6,235,645,406 (5,521,086,601) (714,558,805) - - - - - - - 2,458,163,164 2,458,163,164 Shareholders’ equity 53,507,864,654 (3,083,710,089) 50,424,154,565 - (714,558,805) (664,208,469) 2,367,586 (2,367,586) - - - 70,465,361 1,720,137,643 50,835,990,295 The column changes in opening balances includes the reclassification and remeasurement effects resulting from the first time adoption of the accounting principle IFRS9. For further details refer to paragraph “Transition to ‘IFRS9: Financial Instruments of UniCredit S.p.A.” reported on the Notes to the Accounts - Part A - Accounting policies, section A.1.4. General - Other matters. Changes in capital items represent the effects of mandatory conversion of savings shares into ordinary shares approved by Shareholders' Meeting on 4 December 2017. The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares connected with the ESOP Plans and other Group Executive Incentive Plans. Statement of changes in shareholders’e equity Company financial statements | Company accounts Company accounts 540 2018 Annual Report and Accounts · UniCredit Statement of changes in shareholders' equity as at 31 December 2018 (€) CHANGE IN OPENING BALANCE CHANGES IN THE YEAR PREVIOUS YEAR PROFIT (LOSS) ALLOCATION CHANGES IN RESERVES SHAREHOLDERS' EQUITY TRANSACTIONS 2018 RESERVES DIVIDENDS AND OTHER ALLOCATIONS ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS 12.31.2018 12.31.2017 01.01.2018 OTHER COMPREHENSIVE INCOME SHAREHOLDERS' EQUITY AS AT BALANCE AS AT BALANCE AS AT Share capital: - ordinary shares 20,878,182,216 - 20,878,182,216 - - - 62,216,251 - - - - - - 20,940,398,467 - other shares 2,367,586 - 2,367,586 - - - - (2,367,586) - - - - - - Share premium 13,399,798,681 - 13,399,798,681 - - (6,880,325) - - - - - - - 13,392,918,356 Reserves: - from profits 2,766,246,127 (2,765,649,153) 596,974 5,521,086,601 - (11,965,232) (59,848,665) - - - - - - 5,449,869,678 - other 5,032,443,799 - 5,032,443,799 - - (613,235,689) - - - - - 70,465,361 - 4,489,673,471 Valuation reserves 585,547,376 (318,060,936) 267,486,440 - - (32,127,223) - - - - - - (738,025,521) (502,666,304) Equity instruments 4,610,073,464 - 4,610,073,464 - - - - - - - - - - 4,610,073,464 Treasury shares (2,440,001) - (2,440,001) - - - - - - - - - - (2,440,001) Profit (Loss) of the year 6,235,645,406 - 6,235,645,406 (5,521,086,601) (714,558,805) - - - - - - - 2,458,163,164 2,458,163,164 Shareholders’ equity 53,507,864,654 (3,083,710,089) 50,424,154,565 - (714,558,805) (664,208,469) 2,367,586 (2,367,586) - - - 70,465,361 1,720,137,643 50,835,990,295 The column changes in opening balances includes the reclassification and remeasurement effects resulting from the first time adoption of the accounting principle IFRS9. For further details refer to paragraph “Transition to ‘IFRS9: Financial Instruments of UniCredit S.p.A.” reported on the Notes to the Accounts - Part A - Accounting policies, section A.1.4. General - Other matters. Changes in capital items represent the effects of mandatory conversion of savings shares into ordinary shares approved by Shareholders' Meeting on 4 December 2017. The amounts disclosed in column “Stock Options” represent the effects of the delivery of shares connected with the ESOP Plans and other Group Executive Incentive Plans. Statement of changes in shareholders’e equity Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 541 Statement of changes in shareholders' equity as at 31 December 2017 (€) CHANGE IN OPENING BALANCE CHANGES IN THE YEAR PREVIOUS YEAR PROFIT (LOSS) ALLOCATION CHANGES IN RESERVES SHAREHOLDERS' EQUITY TRANSACTIONS 2017 RESERVES DIVIDENDS AND OTHER ALLOCATIONS ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS 12.31.2017 12.31.2016 01.01.2017 OTHER COMPREHENSIVE INCOME SHAREHOLDERS' EQUITY AS AT BALANCE AS AT BALANCE AS AT Share capital: - ordinary shares 20,838,376,719 - 20,838,376,719 - - - 39,805,497 - - - - - - 20,878,182,216 - other shares 8,516,718 - 8,516,718 - - - (6,149,132) - - - - - - 2,367,586 Share premium 14,384,917,645 - 14,384,917,645 (11,460,132,615) - (2,508,551,030) 12,983,564,681 - - - - - - 13,399,798,681 Reserves: - from profits 3,152,798,847 - 3,152,798,847 - - (368,965,123) (17,587,597) - - - - - - 2,766,246,127 - other 2,675,567,091 - 2,675,567,091 - - 2,278,537,320 - - - - - 78,339,388 - 5,032,443,799 Valuation reserves 716,180,292 - 716,180,292 - - - - - - - - - (130,632,916) 585,547,376 Equity instruments 2,383,463,450 - 2,383,463,450 - - - - - - 2,226,610,014 - - - 4,610,073,464 Treasury shares (2,440,001) - (2,440,001) - - - - - - - - - - (2,440,001) Profit (Loss) of the year (11,460,132,615) - (11,460,132,615) 11,460,132,615 - - - - - - - - 6,235,645,406 6,235,645,406 Shareholders’ equity 32,697,248,146 - 32,697,248,146 - - (598,978,833) 12,999,633,449 - - 2,226,610,014 - 78,339,388 6,105,012,490 53,507,864,654 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 541 Statement of changes in shareholders' equity as at 31 December 2017 (€) CHANGE IN OPENING BALANCE CHANGES IN THE YEAR PREVIOUS YEAR PROFIT (LOSS) ALLOCATION CHANGES IN RESERVES SHAREHOLDERS' EQUITY TRANSACTIONS 2017 RESERVES DIVIDENDS AND OTHER ALLOCATIONS ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS 12.31.2017 12.31.2016 01.01.2017 OTHER COMPREHENSIVE INCOME SHAREHOLDERS' EQUITY AS AT BALANCE AS AT BALANCE AS AT Share capital: - ordinary shares 20,838,376,719 - 20,838,376,719 - - - 39,805,497 - - - - - - 20,878,182,216 - other shares 8,516,718 - 8,516,718 - - - (6,149,132) - - - - - - 2,367,586 Share premium 14,384,917,645 - 14,384,917,645 (11,460,132,615) - (2,508,551,030) 12,983,564,681 - - - - - - 13,399,798,681 Reserves: - from profits 3,152,798,847 - 3,152,798,847 - - (368,965,123) (17,587,597) - - - - - - 2,766,246,127 - other 2,675,567,091 - 2,675,567,091 - - 2,278,537,320 - - - - - 78,339,388 - 5,032,443,799 Valuation reserves 716,180,292 - 716,180,292 - - - - - - - - - (130,632,916) 585,547,376 Equity instruments 2,383,463,450 - 2,383,463,450 - - - - - - 2,226,610,014 - - - 4,610,073,464 Treasury shares (2,440,001) - (2,440,001) - - - - - - - - - - (2,440,001) Profit (Loss) of the year (11,460,132,615) - (11,460,132,615) 11,460,132,615 - - - - - - - - 6,235,645,406 6,235,645,406 Shareholders’ equity 32,697,248,146 - 32,697,248,146 - - (598,978,833) 12,999,633,449 - - 2,226,610,014 - 78,339,388 6,105,012,490 53,507,864,654 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 541 Statement of changes in shareholders' equity as at 31 December 2017 (€) CHANGE IN OPENING BALANCE CHANGES IN THE YEAR PREVIOUS YEAR PROFIT (LOSS) ALLOCATION CHANGES IN RESERVES SHAREHOLDERS' EQUITY TRANSACTIONS 2017 RESERVES DIVIDENDS AND OTHER ALLOCATIONS ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS 12.31.2017 12.31.2016 01.01.2017 OTHER COMPREHENSIVE INCOME SHAREHOLDERS' EQUITY AS AT BALANCE AS AT BALANCE AS AT Share capital: - ordinary shares 20,838,376,719 - 20,838,376,719 - - - 39,805,497 - - - - - - 20,878,182,216 - other shares 8,516,718 - 8,516,718 - - - (6,149,132) - - - - - - 2,367,586 Share premium 14,384,917,645 - 14,384,917,645 (11,460,132,615) - (2,508,551,030) 12,983,564,681 - - - - - - 13,399,798,681 Reserves: - from profits 3,152,798,847 - 3,152,798,847 - - (368,965,123) (17,587,597) - - - - - - 2,766,246,127 - other 2,675,567,091 - 2,675,567,091 - - 2,278,537,320 - - - - - 78,339,388 - 5,032,443,799 Valuation reserves 716,180,292 - 716,180,292 - - - - - - - - - (130,632,916) 585,547,376 Equity instruments 2,383,463,450 - 2,383,463,450 - - - - - - 2,226,610,014 - - - 4,610,073,464 Treasury shares (2,440,001) - (2,440,001) - - - - - - - - - - (2,440,001) Profit (Loss) of the year (11,460,132,615) - (11,460,132,615) 11,460,132,615 - - - - - - - - 6,235,645,406 6,235,645,406 Shareholders’ equity 32,697,248,146 - 32,697,248,146 - - (598,978,833) 12,999,633,449 - - 2,226,610,014 - 78,339,388 6,105,012,490 53,507,864,654 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 541 Statement of changes in shareholders' equity as at 31 December 2017 (€) CHANGE IN OPENING BALANCE CHANGES IN THE YEAR PREVIOUS YEAR PROFIT (LOSS) ALLOCATION CHANGES IN RESERVES SHAREHOLDERS' EQUITY TRANSACTIONS 2017 RESERVES DIVIDENDS AND OTHER ALLOCATIONS ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS 12.31.2017 12.31.2016 01.01.2017 OTHER COMPREHENSIVE INCOME SHAREHOLDERS' EQUITY AS AT BALANCE AS AT BALANCE AS AT Share capital: - ordinary shares 20,838,376,719 - 20,838,376,719 - - - 39,805,497 - - - - - - 20,878,182,216 - other shares 8,516,718 - 8,516,718 - - - (6,149,132) - - - - - - 2,367,586 Share premium 14,384,917,645 - 14,384,917,645 (11,460,132,615) - (2,508,551,030) 12,983,564,681 - - - - - - 13,399,798,681 Reserves: - from profits 3,152,798,847 - 3,152,798,847 - - (368,965,123) (17,587,597) - - - - - - 2,766,246,127 - other 2,675,567,091 - 2,675,567,091 - - 2,278,537,320 - - - - - 78,339,388 - 5,032,443,799 Valuation reserves 716,180,292 - 716,180,292 - - - - - - - - - (130,632,916) 585,547,376 Equity instruments 2,383,463,450 - 2,383,463,450 - - - - - - 2,226,610,014 - - - 4,610,073,464 Treasury shares (2,440,001) - (2,440,001) - - - - - - - - - - (2,440,001) Profit (Loss) of the year (11,460,132,615) - (11,460,132,615) 11,460,132,615 - - - - - - - - 6,235,645,406 6,235,645,406 Shareholders’ equity 32,697,248,146 - 32,697,248,146 - - (598,978,833) 12,999,633,449 - - 2,226,610,014 - 78,339,388 6,105,012,490 53,507,864,654 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 541 Statement of changes in shareholders' equity as at 31 December 2017 (€) CHANGE IN OPENING BALANCE CHANGES IN THE YEAR PREVIOUS YEAR PROFIT (LOSS) ALLOCATION CHANGES IN RESERVES SHAREHOLDERS' EQUITY TRANSACTIONS 2017 RESERVES DIVIDENDS AND OTHER ALLOCATIONS ISSUE OF NEW SHARES PURCHASE OF TREASURY SHARES DIVIDENDS EXTRAORDINARY DISTRIBUTION CHANGE IN EQUITY INSTRUMENTS TREASURY SHARES DERIVATIVES STOCK OPTIONS 12.31.2017 12.31.2016 01.01.2017 OTHER COMPREHENSIVE INCOME SHAREHOLDERS' EQUITY AS AT BALANCE AS AT BALANCE AS AT Share capital: - ordinary shares 20,838,376,719 - 20,838,376,719 - - - 39,805,497 - - - - - - 20,878,182,216 - other shares 8,516,718 - 8,516,718 - - - (6,149,132) - - - - - - 2,367,586 Share premium 14,384,917,645 - 14,384,917,645 (11,460,132,615) - (2,508,551,030) 12,983,564,681 - - - - - - 13,399,798,681 Reserves: - from profits 3,152,798,847 - 3,152,798,847 - - (368,965,123) (17,587,597) - - - - - - 2,766,246,127 - other 2,675,567,091 - 2,675,567,091 - - 2,278,537,320 - - - - - 78,339,388 - 5,032,443,799 Valuation reserves 716,180,292 - 716,180,292 - - - - - - - - - (130,632,916) 585,547,376 Equity instruments 2,383,463,450 - 2,383,463,450 - - - - - - 2,226,610,014 - - - 4,610,073,464 Treasury shares (2,440,001) - (2,440,001) - - - - - - - - - - (2,440,001) Profit (Loss) of the year (11,460,132,615) - (11,460,132,615) 11,460,132,615 - - - - - - - - 6,235,645,406 6,235,645,406 Shareholders’ equity 32,697,248,146 - 32,697,248,146 - - (598,978,833) 12,999,633,449 - - 2,226,610,014 - 78,339,388 6,105,012,490 53,507,864,654 Company financial statements | Company accounts Company accounts 542 2018 Annual Report and Accounts · UniCredit Cash flow statement Cash flow statement (indirect method) (€) AS AT 12.31.2018 12.31.2017 A. OPERATING ACTIVITIES 1. Operations: 4,482,553,630 (925,520,821) - profit (loss) of the period (+/-) 2,458,163,164 6,235,645,406 - profit (loss) of merged companies (+/-) (81,538,991) - gains/losses on financial assets held for trading and on other financial assets/liabilities at fair value through profit or loss (-/+) 315,724,218 - capital gains/losses on financial assets/liabilities held for trading and on assets/liabilities designated at fair value through profit and loss (+/-) (ex IAS39) 111,409,757 - gains (losses) on hedge accounting (-/+) (1,129,982) 12,707,305 - net losses/recoveries on impairment (+/-) 2,728,453,465 - net losses/recoveries on impairment (+/-) (ex IAS39) 1,582,779,892 - net value adjustments/write-backs on property, plant and equipment and intangible assets (+/-) 154,131,763 168,961,794 - net provisions for risks and charges and other expenses/income (+/-) 249,442,852 - provisions and other incomes/expenses (+/-) (ex IAS39) (1,439,154,475) - unpaid duties, taxes and tax credits (+/-) (1,181,567,028) (2,896,889,494) - impairment/write-backs after tax on discontinued operations (+/-) - - - other adjustments (+/-) (240,664,822) (4,619,442,015) 2. Liquidity generated/absorbed by financial assets: (26,030,069,943) 10,622,105,252 - financial assets held for trading 2,775,852,205 - financial assets held for trading (ex IAS39) 1,723,412,558 - financial assets designated at fair value 111 - other financial assets mandatorily at fair value (274,212,969) - financial assets at fair value (ex IAS39) 16,659,006 - financial assets at fair value through other comprehensive income 9,423,653,624 - available-for-sale financial assets (ex IAS39) 3,678,177,287 - financial assets at amortised cost (39,416,177,019) - loans and receivables with banks (ex IAS39) (5,211,908,792) - loans and receivables with customers (ex IAS39) 5,082,532,761 - other assets 1,460,814,105 5,333,232,432 3. Liquidity generated/absorbed by financial liabilities: 2,185,793,164 (6,462,734,117) - financial liabilities at amortised cost 5,168,925,419 - deposits from banks (ex IAS39) 16,286,194,508 - deposits from customers (ex IAS39) 617,827,511 - debt certificates including bonds (ex IAS39) (18,181,172,815) - financial liabilities held for trading (3,773,190,709) - financial liabilities held for trading (ex IAS39) (3,075,432,726) - financial liabilities designated at fair value 1,040,196,632 - financial liabilities designated at fair value (ex IAS39) 527,007,432 - other liabilities (250,138,178) (2,637,158,027) Net liquidity generated/absorbed by operating activities (19,361,723,149) 3,233,850,314 Company financial statements | Company accounts Company accounts 542 2018 Annual Report and Accounts · UniCredit Cash flow statement Cash flow statement (indirect method) (€) AS AT 12.31.2018 12.31.2017 A. OPERATING ACTIVITIES 1. Operations: 4,482,553,630 (925,520,821) - profit (loss) of the period (+/-) 2,458,163,164 6,235,645,406 - profit (loss) of merged companies (+/-) (81,538,991) - gains/losses on financial assets held for trading and on other financial assets/liabilities at fair value through profit or loss (-/+) 315,724,218 - capital gains/losses on financial assets/liabilities held for trading and on assets/liabilities designated at fair value through profit and loss (+/-) (ex IAS39) 111,409,757 - gains (losses) on hedge accounting (-/+) (1,129,982) 12,707,305 - net losses/recoveries on impairment (+/-) 2,728,453,465 - net losses/recoveries on impairment (+/-) (ex IAS39) 1,582,779,892 - net value adjustments/write-backs on property, plant and equipment and intangible assets (+/-) 154,131,763 168,961,794 - net provisions for risks and charges and other expenses/income (+/-) 249,442,852 - provisions and other incomes/expenses (+/-) (ex IAS39) (1,439,154,475) - unpaid duties, taxes and tax credits (+/-) (1,181,567,028) (2,896,889,494) - impairment/write-backs after tax on discontinued operations (+/-) - - - other adjustments (+/-) (240,664,822) (4,619,442,015) 2. Liquidity generated/absorbed by financial assets: (26,030,069,943) 10,622,105,252 - financial assets held for trading 2,775,852,205 - financial assets held for trading (ex IAS39) 1,723,412,558 - financial assets designated at fair value 111 - other financial assets mandatorily at fair value (274,212,969) - financial assets at fair value (ex IAS39) 16,659,006 - financial assets at fair value through other comprehensive income 9,423,653,624 - available-for-sale financial assets (ex IAS39) 3,678,177,287 - financial assets at amortised cost (39,416,177,019) - loans and receivables with banks (ex IAS39) (5,211,908,792) - loans and receivables with customers (ex IAS39) 5,082,532,761 - other assets 1,460,814,105 5,333,232,432 3. Liquidity generated/absorbed by financial liabilities: 2,185,793,164 (6,462,734,117) - financial liabilities at amortised cost 5,168,925,419 - deposits from banks (ex IAS39) 16,286,194,508 - deposits from customers (ex IAS39) 617,827,511 - debt certificates including bonds (ex IAS39) (18,181,172,815) - financial liabilities held for trading (3,773,190,709) - financial liabilities held for trading (ex IAS39) (3,075,432,726) - financial liabilities designated at fair value 1,040,196,632 - financial liabilities designated at fair value (ex IAS39) 527,007,432 - other liabilities (250,138,178) (2,637,158,027) Net liquidity generated/absorbed by operating activities (19,361,723,149) 3,233,850,314 Company financial statements | Company accounts Company accounts 542 2018 Annual Report and Accounts · UniCredit Cash flow statement Cash flow statement (indirect method) (€) AS AT 12.31.2018 12.31.2017 A. OPERATING ACTIVITIES 1. Operations: 4,482,553,630 (925,520,821) - profit (loss) of the period (+/-) 2,458,163,164 6,235,645,406 - profit (loss) of merged companies (+/-) (81,538,991) - gains/losses on financial assets held for trading and on other financial assets/liabilities at fair value through profit or loss (-/+) 315,724,218 - capital gains/losses on financial assets/liabilities held for trading and on assets/liabilities designated at fair value through profit and loss (+/-) (ex IAS39) 111,409,757 - gains (losses) on hedge accounting (-/+) (1,129,982) 12,707,305 - net losses/recoveries on impairment (+/-) 2,728,453,465 - net losses/recoveries on impairment (+/-) (ex IAS39) 1,582,779,892 - net value adjustments/write-backs on property, plant and equipment and intangible assets (+/-) 154,131,763 168,961,794 - net provisions for risks and charges and other expenses/income (+/-) 249,442,852 - provisions and other incomes/expenses (+/-) (ex IAS39) (1,439,154,475) - unpaid duties, taxes and tax credits (+/-) (1,181,567,028) (2,896,889,494) - impairment/write-backs after tax on discontinued operations (+/-) - - - other adjustments (+/-) (240,664,822) (4,619,442,015) 2. Liquidity generated/absorbed by financial assets: (26,030,069,943) 10,622,105,252 - financial assets held for trading 2,775,852,205 - financial assets held for trading (ex IAS39) 1,723,412,558 - financial assets designated at fair value 111 - other financial assets mandatorily at fair value (274,212,969) - financial assets at fair value (ex IAS39) 16,659,006 - financial assets at fair value through other comprehensive income 9,423,653,624 - available-for-sale financial assets (ex IAS39) 3,678,177,287 - financial assets at amortised cost (39,416,177,019) - loans and receivables with banks (ex IAS39) (5,211,908,792) - loans and receivables with customers (ex IAS39) 5,082,532,761 - other assets 1,460,814,105 5,333,232,432 3. Liquidity generated/absorbed by financial liabilities: 2,185,793,164 (6,462,734,117) - financial liabilities at amortised cost 5,168,925,419 - deposits from banks (ex IAS39) 16,286,194,508 - deposits from customers (ex IAS39) 617,827,511 - debt certificates including bonds (ex IAS39) (18,181,172,815) - financial liabilities held for trading (3,773,190,709) - financial liabilities held for trading (ex IAS39) (3,075,432,726) - financial liabilities designated at fair value 1,040,196,632 - financial liabilities designated at fair value (ex IAS39) 527,007,432 - other liabilities (250,138,178) (2,637,158,027) Net liquidity generated/absorbed by operating activities (19,361,723,149) 3,233,850,314 Company financial statements | Company accounts Company accounts 542 2018 Annual Report and Accounts · UniCredit Cash flow statement Cash flow statement (indirect method) (€) AS AT 12.31.2018 12.31.2017 A. OPERATING ACTIVITIES 1. Operations: 4,482,553,630 (925,520,821) - profit (loss) of the period (+/-) 2,458,163,164 6,235,645,406 - profit (loss) of merged companies (+/-) (81,538,991) - gains/losses on financial assets held for trading and on other financial assets/liabilities at fair value through profit or loss (-/+) 315,724,218 - capital gains/losses on financial assets/liabilities held for trading and on assets/liabilities designated at fair value through profit and loss (+/-) (ex IAS39) 111,409,757 - gains (losses) on hedge accounting (-/+) (1,129,982) 12,707,305 - net losses/recoveries on impairment (+/-) 2,728,453,465 - net losses/recoveries on impairment (+/-) (ex IAS39) 1,582,779,892 - net value adjustments/write-backs on property, plant and equipment and intangible assets (+/-) 154,131,763 168,961,794 - net provisions for risks and charges and other expenses/income (+/-) 249,442,852 - provisions and other incomes/expenses (+/-) (ex IAS39) (1,439,154,475) - unpaid duties, taxes and tax credits (+/-) (1,181,567,028) (2,896,889,494) - impairment/write-backs after tax on discontinued operations (+/-) - - - other adjustments (+/-) (240,664,822) (4,619,442,015) 2. Liquidity generated/absorbed by financial assets: (26,030,069,943) 10,622,105,252 - financial assets held for trading 2,775,852,205 - financial assets held for trading (ex IAS39) 1,723,412,558 - financial assets designated at fair value 111 - other financial assets mandatorily at fair value (274,212,969) - financial assets at fair value (ex IAS39) 16,659,006 - financial assets at fair value through other comprehensive income 9,423,653,624 - available-for-sale financial assets (ex IAS39) 3,678,177,287 - financial assets at amortised cost (39,416,177,019) - loans and receivables with banks (ex IAS39) (5,211,908,792) - loans and receivables with customers (ex IAS39) 5,082,532,761 - other assets 1,460,814,105 5,333,232,432 3. Liquidity generated/absorbed by financial liabilities: 2,185,793,164 (6,462,734,117) - financial liabilities at amortised cost 5,168,925,419 - deposits from banks (ex IAS39) 16,286,194,508 - deposits from customers (ex IAS39) 617,827,511 - debt certificates including bonds (ex IAS39) (18,181,172,815) - financial liabilities held for trading (3,773,190,709) - financial liabilities held for trading (ex IAS39) (3,075,432,726) - financial liabilities designated at fair value 1,040,196,632 - financial liabilities designated at fair value (ex IAS39) 527,007,432 - other liabilities (250,138,178) (2,637,158,027) Net liquidity generated/absorbed by operating activities (19,361,723,149) 3,233,850,314 Company financial statements | Company accounts Company accounts 542 2018 Annual Report and Accounts · UniCredit Cash flow statement Cash flow statement (indirect method) (€) AS AT 12.31.2018 12.31.2017 A. OPERATING ACTIVITIES 1. Operations: 4,482,553,630 (925,520,821) - profit (loss) of the period (+/-) 2,458,163,164 6,235,645,406 - profit (loss) of merged companies (+/-) (81,538,991) - gains/losses on financial assets held for trading and on other financial assets/liabilities at fair value through profit or loss (-/+) 315,724,218 - capital gains/losses on financial assets/liabilities held for trading and on assets/liabilities designated at fair value through profit and loss (+/-) (ex IAS39) 111,409,757 - gains (losses) on hedge accounting (-/+) (1,129,982) 12,707,305 - net losses/recoveries on impairment (+/-) 2,728,453,465 - net losses/recoveries on impairment (+/-) (ex IAS39) 1,582,779,892 - net value adjustments/write-backs on property, plant and equipment and intangible assets (+/-) 154,131,763 168,961,794 - net provisions for risks and charges and other expenses/income (+/-) 249,442,852 - provisions and other incomes/expenses (+/-) (ex IAS39) (1,439,154,475) - unpaid duties, taxes and tax credits (+/-) (1,181,567,028) (2,896,889,494) - impairment/write-backs after tax on discontinued operations (+/-) - - - other adjustments (+/-) (240,664,822) (4,619,442,015) 2. Liquidity generated/absorbed by financial assets: (26,030,069,943) 10,622,105,252 - financial assets held for trading 2,775,852,205 - financial assets held for trading (ex IAS39) 1,723,412,558 - financial assets designated at fair value 111 - other financial assets mandatorily at fair value (274,212,969) - financial assets at fair value (ex IAS39) 16,659,006 - financial assets at fair value through other comprehensive income 9,423,653,624 - available-for-sale financial assets (ex IAS39) 3,678,177,287 - financial assets at amortised cost (39,416,177,019) - loans and receivables with banks (ex IAS39) (5,211,908,792) - loans and receivables with customers (ex IAS39) 5,082,532,761 - other assets 1,460,814,105 5,333,232,432 3. Liquidity generated/absorbed by financial liabilities: 2,185,793,164 (6,462,734,117) - financial liabilities at amortised cost 5,168,925,419 - deposits from banks (ex IAS39) 16,286,194,508 - deposits from customers (ex IAS39) 617,827,511 - debt certificates including bonds (ex IAS39) (18,181,172,815) - financial liabilities held for trading (3,773,190,709) - financial liabilities held for trading (ex IAS39) (3,075,432,726) - financial liabilities designated at fair value 1,040,196,632 - financial liabilities designated at fair value (ex IAS39) 527,007,432 - other liabilities (250,138,178) (2,637,158,027) Net liquidity generated/absorbed by operating activities (19,361,723,149) 3,233,850,314 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 543 continued: Cash flow statement (indirect method) (€) AS AT 12.31.2018 12.31.2017 B. INVESTMENT ACTIVITIES 1. Liquidity generated by: 2,868,978,416 7,052,946,913 - sales of equity investments 89,572,834 3,213,120,624 - collected dividends on equity investments 2,571,148,764 3,808,045,507 - sales of property, plant and equipment 69,799,346 - - sales of intangible assets - 31,780,782 - sales of business units 138,457,472 - - sales of financial assets held to maturity (ex IAS39) - 2. Liquidity absorbed by: (751,416,024) (735,923,592) - purchases of equity investments (514,035,831) (613,220,786) - purchases of property, plant and equipment (235,642,129) (7,260,019) - purchases of intangible assets (1,738,064) (114,428,858) - purchases of business units - (1,013,929) - purchases of financial assets held to maturity (ex IAS39) - Net liquidity generated/absorbed by investment activities 2,117,562,392 6,317,023,321 C. FUNDING ACTIVITIES - issue/purchase of treasury shares - 12,570,507,695 - issue/purchase of equity instruments - 2,226,610,014 - dividend distribution and other (1,153,014,877) (281,310,268) Net liquidity generated/absorbed by funding activities (1,153,014,877) 14,515,807,441 NET LIQUIDITY GENERATED/ABSORBED IN THE YEAR (18,397,175,634) 24,066,681,076 Key: (+) generated; (-) absorbed. Reconciliation (€) AS AT ITEMS 12.31.2018 12.31.2017 Cash and cash balances at the beginning of the year 25,816,708,377 1,851,831,592 Net liquidity generated/absorbed in the year (18,397,175,634) 24,066,681,076 Cash and cash balances: foreign exchange effect 41,173,297 (101,804,291) Cash and cash balances at the end of the year 7,460,706,040 25,816,708,377 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 543 continued: Cash flow statement (indirect method) (€) AS AT 12.31.2018 12.31.2017 B. INVESTMENT ACTIVITIES 1. Liquidity generated by: 2,868,978,416 7,052,946,913 - sales of equity investments 89,572,834 3,213,120,624 - collected dividends on equity investments 2,571,148,764 3,808,045,507 - sales of property, plant and equipment 69,799,346 - - sales of intangible assets - 31,780,782 - sales of business units 138,457,472 - - sales of financial assets held to maturity (ex IAS39) - 2. Liquidity absorbed by: (751,416,024) (735,923,592) - purchases of equity investments (514,035,831) (613,220,786) - purchases of property, plant and equipment (235,642,129) (7,260,019) - purchases of intangible assets (1,738,064) (114,428,858) - purchases of business units - (1,013,929) - purchases of financial assets held to maturity (ex IAS39) - Net liquidity generated/absorbed by investment activities 2,117,562,392 6,317,023,321 C. FUNDING ACTIVITIES - issue/purchase of treasury shares - 12,570,507,695 - issue/purchase of equity instruments - 2,226,610,014 - dividend distribution and other (1,153,014,877) (281,310,268) Net liquidity generated/absorbed by funding activities (1,153,014,877) 14,515,807,441 NET LIQUIDITY GENERATED/ABSORBED IN THE YEAR (18,397,175,634) 24,066,681,076 Key: (+) generated; (-) absorbed. Reconciliation (€) AS AT ITEMS 12.31.2018 12.31.2017 Cash and cash balances at the beginning of the year 25,816,708,377 1,851,831,592 Net liquidity generated/absorbed in the year (18,397,175,634) 24,066,681,076 Cash and cash balances: foreign exchange effect 41,173,297 (101,804,291) Cash and cash balances at the end of the year 7,460,706,040 25,816,708,377 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 543 continued: Cash flow statement (indirect method) (€) AS AT 12.31.2018 12.31.2017 B. INVESTMENT ACTIVITIES 1. Liquidity generated by: 2,868,978,416 7,052,946,913 - sales of equity investments 89,572,834 3,213,120,624 - collected dividends on equity investments 2,571,148,764 3,808,045,507 - sales of property, plant and equipment 69,799,346 - - sales of intangible assets - 31,780,782 - sales of business units 138,457,472 - - sales of financial assets held to maturity (ex IAS39) - 2. Liquidity absorbed by: (751,416,024) (735,923,592) - purchases of equity investments (514,035,831) (613,220,786) - purchases of property, plant and equipment (235,642,129) (7,260,019) - purchases of intangible assets (1,738,064) (114,428,858) - purchases of business units - (1,013,929) - purchases of financial assets held to maturity (ex IAS39) - Net liquidity generated/absorbed by investment activities 2,117,562,392 6,317,023,321 C. FUNDING ACTIVITIES - issue/purchase of treasury shares - 12,570,507,695 - issue/purchase of equity instruments - 2,226,610,014 - dividend distribution and other (1,153,014,877) (281,310,268) Net liquidity generated/absorbed by funding activities (1,153,014,877) 14,515,807,441 NET LIQUIDITY GENERATED/ABSORBED IN THE YEAR (18,397,175,634) 24,066,681,076 Key: (+) generated; (-) absorbed. Reconciliation (€) AS AT ITEMS 12.31.2018 12.31.2017 Cash and cash balances at the beginning of the year 25,816,708,377 1,851,831,592 Net liquidity generated/absorbed in the year (18,397,175,634) 24,066,681,076 Cash and cash balances: foreign exchange effect 41,173,297 (101,804,291) Cash and cash balances at the end of the year 7,460,706,040 25,816,708,377 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 543 continued: Cash flow statement (indirect method) (€) AS AT 12.31.2018 12.31.2017 B. INVESTMENT ACTIVITIES 1. Liquidity generated by: 2,868,978,416 7,052,946,913 - sales of equity investments 89,572,834 3,213,120,624 - collected dividends on equity investments 2,571,148,764 3,808,045,507 - sales of property, plant and equipment 69,799,346 - - sales of intangible assets - 31,780,782 - sales of business units 138,457,472 - - sales of financial assets held to maturity (ex IAS39) - 2. Liquidity absorbed by: (751,416,024) (735,923,592) - purchases of equity investments (514,035,831) (613,220,786) - purchases of property, plant and equipment (235,642,129) (7,260,019) - purchases of intangible assets (1,738,064) (114,428,858) - purchases of business units - (1,013,929) - purchases of financial assets held to maturity (ex IAS39) - Net liquidity generated/absorbed by investment activities 2,117,562,392 6,317,023,321 C. FUNDING ACTIVITIES - issue/purchase of treasury shares - 12,570,507,695 - issue/purchase of equity instruments - 2,226,610,014 - dividend distribution and other (1,153,014,877) (281,310,268) Net liquidity generated/absorbed by funding activities (1,153,014,877) 14,515,807,441 NET LIQUIDITY GENERATED/ABSORBED IN THE YEAR (18,397,175,634) 24,066,681,076 Key: (+) generated; (-) absorbed. Reconciliation (€) AS AT ITEMS 12.31.2018 12.31.2017 Cash and cash balances at the beginning of the year 25,816,708,377 1,851,831,592 Net liquidity generated/absorbed in the year (18,397,175,634) 24,066,681,076 Cash and cash balances: foreign exchange effect 41,173,297 (101,804,291) Cash and cash balances at the end of the year 7,460,706,040 25,816,708,377 Company financial statements | Company accounts Company accounts UniCredit ·2018 Annual Report and Accounts 543 continued: Cash flow statement (indirect method) (€) AS AT 12.31.2018 12.31.2017 B. INVESTMENT ACTIVITIES 1. Liquidity generated by: 2,868,978,416 7,052,946,913 - sales of equity investments 89,572,834 3,213,120,624 - collected dividends on equity investments 2,571,148,764 3,808,045,507 - sales of property, plant and equipment 69,799,346 - - sales of intangible assets - 31,780,782 - sales of business units 138,457,472 - - sales of financial assets held to maturity (ex IAS39) - 2. Liquidity absorbed by: (751,416,024) (735,923,592) - purchases of equity investments (514,035,831) (613,220,786) - purchases of property, plant and equipment (235,642,129) (7,260,019) - purchases of intangible assets (1,738,064) (114,428,858) - purchases of business units - (1,013,929) - purchases of financial assets held to maturity (ex IAS39) - Net liquidity generated/absorbed by investment activities 2,117,562,392 6,317,023,321 C. FUNDING ACTIVITIES - issue/purchase of treasury shares - 12,570,507,695 - issue/purchase of equity instruments - 2,226,610,014 - dividend distribution and other (1,153,014,877) (281,310,268) Net liquidity generated/absorbed by funding activities (1,153,014,877) 14,515,807,441 NET LIQUIDITY GENERATED/ABSORBED IN THE YEAR (18,397,175,634) 24,066,681,076 Key: (+) generated; (-) absorbed. Reconciliation (€) AS AT ITEMS 12.31.2018 12.31.2017 Cash and cash balances at the beginning of the year 25,816,708,377 1,851,831,592 Net liquidity generated/absorbed in the year (18,397,175,634) 24,066,681,076 Cash and cash balances: foreign exchange effect 41,173,297 (101,804,291) Cash and cash balances at the end of the year 7,460,706,040 25,816,708,377 Company financial statements | Company accounts Company accounts 544 2018 Annual Report and Accounts · UniCredit Company financial statements | Company accounts Company accounts 544 2018 Annual Report and Accounts · UniCredit Company financial statements | Company accounts Company accounts 544 2018 Annual Report and Accounts · UniCredit Company financial statements | Company accounts Company accounts 544 2018 Annual Report and Accounts · UniCredit Company financial statements | Company accounts Company accounts 544 2018 Annual Report and Accounts · UniCredit Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 545 Notes to the accounts Parta A - Accounting policies A.1 - General Section 1 - Statement of compliance with IFRS These Accounts have been prepared in accordance with the IFRS issued by the International Accounting Standards Board (IASB), including the interpretation documents issued by the SIC and the IFRIC, and endorsed by the European Commission up to 31 December 2018, pursuant to EU Regulation No.1606/2002 which was incorporated into Italian legislation through Legislative Decree No.38 of 28 February 2005 (see Section 5 - Other matters). The Accounts are an integral part of the Annual Financial Statements as required by Art.154-ter, par.1 of the Single Finance Act (TUF, Legislative Decree No.58 of 24 February 1998). In its circular 262 of 22 December 2005 and subsequent amendments Banca d’Italia laid down the formats for the financial statements and explanatory notes used to prepare these Accounts. Banca d’Italia issued on 22 December 2017 the V update of its circular 262 adjusting the formats for the financial statements and explanatory notes to the requirements of IFRS 9 Financial Instruments. Please note that as a result of the first time adoption of the new accounting standard IFRS9 and the choice not to restate the previous period, the templates and the tables in the notes prescribed by the mentioned circular have been integrated with additional items in order to allow comparisons with the previous period that has been presented according to IAS39 standard and to Circular 262 (4th update of 15 December 2015). Opening balances shown in tables of the notes to the accounts are the ones coming from the first time adoption of the new accounting standard IFRS9. In addition, with reference to Part E – Information on risks and hedging policies, the abovementioned circumstances have required the choice not to provide the comparison with the previous period with reference to certain tables whose content is not comparable with previous period tables. Section 2 - General Preparation Criteria As mentioned above, these Accounts have been prepared in accordance with the IFRS endorsed by the European Commission. The following documents have been used to interpret and support the application of IFRS, even though not all of them have been endorsed by the European Commission: • The Conceptual Framework for Financial Reporting; • Implementation Guidance, Basis for Conclusions, IFRICs and any other documents prepared by the IASB or International Financial Reporting Interpretations Committee (IFRIC) supplementing the IFRSs; • Interpretative documents on the application of IAS/IFRS in Italy prepared by the Organismo Italiano di Contabilità (OIC) and Associazione Bancaria Italiana (ABI); • ESMA (European Securities and Markets Authority) and CONSOB documents on the application of specific IFRS provisions. The Accounts include the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement (compiled using the “indirect method”) and the Notes to the Accounts, together with the Report on Operations and Annexes. In addition, pursuant to Art.123-bis par.3 of TUF, as reported in chapter “Other information” of the Report on Operations, the Report on Corporate Governance and Ownership Structures is available in the "Governance" section of UniCredit website: https://www.unicreditgroup.eu/it/governance/system-policies/corporate-governance-report.html - Italian version, and https://www.unicreditgroup.eu/en/governance/system-policies/corporate-governance-report.html - English version). Figures in the financial statements and Notes to the Accounts are given in thousands of euros, unless otherwise specified. In their joint Document No.4 of 3 March 2010, Banca d’Italia, Consob and Isvap made a few observations on the current situation of the markets and businesses and requested to disclose in the financial statements information which are essential for a better understanding of business trends and outlook. In this regard, the Directors, based on the 2016-2019 Strategic Plan as well as on the results of the capital increase fully subscribed with effect from 2 March 2017, identified no symptoms in the capital and financial structure and in the economic performance that could indicate uncertainty about the ability to continue as a going-concern and therefore believe with reasonable certainty that the Bank will continue to operate profitably in the Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 545 Notes to the accounts Parta A - Accounting policies A.1 - General Section 1 - Statement of compliance with IFRS These Accounts have been prepared in accordance with the IFRS issued by the International Accounting Standards Board (IASB), including the interpretation documents issued by the SIC and the IFRIC, and endorsed by the European Commission up to 31 December 2018, pursuant to EU Regulation No.1606/2002 which was incorporated into Italian legislation through Legislative Decree No.38 of 28 February 2005 (see Section 5 - Other matters). The Accounts are an integral part of the Annual Financial Statements as required by Art.154-ter, par.1 of the Single Finance Act (TUF, Legislative Decree No.58 of 24 February 1998). In its circular 262 of 22 December 2005 and subsequent amendments Banca d’Italia laid down the formats for the financial statements and explanatory notes used to prepare these Accounts. Banca d’Italia issued on 22 December 2017 the V update of its circular 262 adjusting the formats for the financial statements and explanatory notes to the requirements of IFRS 9 Financial Instruments. Please note that as a result of the first time adoption of the new accounting standard IFRS9 and the choice not to restate the previous period, the templates and the tables in the notes prescribed by the mentioned circular have been integrated with additional items in order to allow comparisons with the previous period that has been presented according to IAS39 standard and to Circular 262 (4th update of 15 December 2015). Opening balances shown in tables of the notes to the accounts are the ones coming from the first time adoption of the new accounting standard IFRS9. In addition, with reference to Part E – Information on risks and hedging policies, the abovementioned circumstances have required the choice not to provide the comparison with the previous period with reference to certain tables whose content is not comparable with previous period tables. Section 2 - General Preparation Criteria As mentioned above, these Accounts have been prepared in accordance with the IFRS endorsed by the European Commission. The following documents have been used to interpret and support the application of IFRS, even though not all of them have been endorsed by the European Commission: • The Conceptual Framework for Financial Reporting; • Implementation Guidance, Basis for Conclusions, IFRICs and any other documents prepared by the IASB or International Financial Reporting Interpretations Committee (IFRIC) supplementing the IFRSs; • Interpretative documents on the application of IAS/IFRS in Italy prepared by the Organismo Italiano di Contabilità (OIC) and Associazione Bancaria Italiana (ABI); • ESMA (European Securities and Markets Authority) and CONSOB documents on the application of specific IFRS provisions. The Accounts include the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement (compiled using the “indirect method”) and the Notes to the Accounts, together with the Report on Operations and Annexes. In addition, pursuant to Art.123-bis par.3 of TUF, as reported in chapter “Other information” of the Report on Operations, the Report on Corporate Governance and Ownership Structures is available in the "Governance" section of UniCredit website: https://www.unicreditgroup.eu/it/governance/system-policies/corporate-governance-report.html - Italian version, and https://www.unicreditgroup.eu/en/governance/system-policies/corporate-governance-report.html - English version). Figures in the financial statements and Notes to the Accounts are given in thousands of euros, unless otherwise specified. In their joint Document No.4 of 3 March 2010, Banca d’Italia, Consob and Isvap made a few observations on the current situation of the markets and businesses and requested to disclose in the financial statements information which are essential for a better understanding of business trends and outlook. In this regard, the Directors, based on the 2016-2019 Strategic Plan as well as on the results of the capital increase fully subscribed with effect from 2 March 2017, identified no symptoms in the capital and financial structure and in the economic performance that could indicate uncertainty about the ability to continue as a going-concern and therefore believe with reasonable certainty that the Bank will continue to operate profitably in the Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 545 Notes to the accounts Parta A - Accounting policies A.1 - General Section 1 - Statement of compliance with IFRS These Accounts have been prepared in accordance with the IFRS issued by the International Accounting Standards Board (IASB), including the interpretation documents issued by the SIC and the IFRIC, and endorsed by the European Commission up to 31 December 2018, pursuant to EU Regulation No.1606/2002 which was incorporated into Italian legislation through Legislative Decree No.38 of 28 February 2005 (see Section 5 - Other matters). The Accounts are an integral part of the Annual Financial Statements as required by Art.154-ter, par.1 of the Single Finance Act (TUF, Legislative Decree No.58 of 24 February 1998). In its circular 262 of 22 December 2005 and subsequent amendments Banca d’Italia laid down the formats for the financial statements and explanatory notes used to prepare these Accounts. Banca d’Italia issued on 22 December 2017 the V update of its circular 262 adjusting the formats for the financial statements and explanatory notes to the requirements of IFRS 9 Financial Instruments. Please note that as a result of the first time adoption of the new accounting standard IFRS9 and the choice not to restate the previous period, the templates and the tables in the notes prescribed by the mentioned circular have been integrated with additional items in order to allow comparisons with the previous period that has been presented according to IAS39 standard and to Circular 262 (4th update of 15 December 2015). Opening balances shown in tables of the notes to the accounts are the ones coming from the first time adoption of the new accounting standard IFRS9. In addition, with reference to Part E – Information on risks and hedging policies, the abovementioned circumstances have required the choice not to provide the comparison with the previous period with reference to certain tables whose content is not comparable with previous period tables. Section 2 - General Preparation Criteria As mentioned above, these Accounts have been prepared in accordance with the IFRS endorsed by the European Commission. The following documents have been used to interpret and support the application of IFRS, even though not all of them have been endorsed by the European Commission: • The Conceptual Framework for Financial Reporting; • Implementation Guidance, Basis for Conclusions, IFRICs and any other documents prepared by the IASB or International Financial Reporting Interpretations Committee (IFRIC) supplementing the IFRSs; • Interpretative documents on the application of IAS/IFRS in Italy prepared by the Organismo Italiano di Contabilità (OIC) and Associazione Bancaria Italiana (ABI); • ESMA (European Securities and Markets Authority) and CONSOB documents on the application of specific IFRS provisions. The Accounts include the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement (compiled using the “indirect method”) and the Notes to the Accounts, together with the Report on Operations and Annexes. In addition, pursuant to Art.123-bis par.3 of TUF, as reported in chapter “Other information” of the Report on Operations, the Report on Corporate Governance and Ownership Structures is available in the "Governance" section of UniCredit website: https://www.unicreditgroup.eu/it/governance/system-policies/corporate-governance-report.html - Italian version, and https://www.unicreditgroup.eu/en/governance/system-policies/corporate-governance-report.html - English version). Figures in the financial statements and Notes to the Accounts are given in thousands of euros, unless otherwise specified. In their joint Document No.4 of 3 March 2010, Banca d’Italia, Consob and Isvap made a few observations on the current situation of the markets and businesses and requested to disclose in the financial statements information which are essential for a better understanding of business trends and outlook. In this regard, the Directors, based on the 2016-2019 Strategic Plan as well as on the results of the capital increase fully subscribed with effect from 2 March 2017, identified no symptoms in the capital and financial structure and in the economic performance that could indicate uncertainty about the ability to continue as a going-concern and therefore believe with reasonable certainty that the Bank will continue to operate profitably in the Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 545 Notes to the accounts Parta A - Accounting policies A.1 - General Section 1 - Statement of compliance with IFRS These Accounts have been prepared in accordance with the IFRS issued by the International Accounting Standards Board (IASB), including the interpretation documents issued by the SIC and the IFRIC, and endorsed by the European Commission up to 31 December 2018, pursuant to EU Regulation No.1606/2002 which was incorporated into Italian legislation through Legislative Decree No.38 of 28 February 2005 (see Section 5 - Other matters). The Accounts are an integral part of the Annual Financial Statements as required by Art.154-ter, par.1 of the Single Finance Act (TUF, Legislative Decree No.58 of 24 February 1998). In its circular 262 of 22 December 2005 and subsequent amendments Banca d’Italia laid down the formats for the financial statements and explanatory notes used to prepare these Accounts. Banca d’Italia issued on 22 December 2017 the V update of its circular 262 adjusting the formats for the financial statements and explanatory notes to the requirements of IFRS 9 Financial Instruments. Please note that as a result of the first time adoption of the new accounting standard IFRS9 and the choice not to restate the previous period, the templates and the tables in the notes prescribed by the mentioned circular have been integrated with additional items in order to allow comparisons with the previous period that has been presented according to IAS39 standard and to Circular 262 (4th update of 15 December 2015). Opening balances shown in tables of the notes to the accounts are the ones coming from the first time adoption of the new accounting standard IFRS9. In addition, with reference to Part E – Information on risks and hedging policies, the abovementioned circumstances have required the choice not to provide the comparison with the previous period with reference to certain tables whose content is not comparable with previous period tables. Section 2 - General Preparation Criteria As mentioned above, these Accounts have been prepared in accordance with the IFRS endorsed by the European Commission. The following documents have been used to interpret and support the application of IFRS, even though not all of them have been endorsed by the European Commission: • The Conceptual Framework for Financial Reporting; • Implementation Guidance, Basis for Conclusions, IFRICs and any other documents prepared by the IASB or International Financial Reporting Interpretations Committee (IFRIC) supplementing the IFRSs; • Interpretative documents on the application of IAS/IFRS in Italy prepared by the Organismo Italiano di Contabilità (OIC) and Associazione Bancaria Italiana (ABI); • ESMA (European Securities and Markets Authority) and CONSOB documents on the application of specific IFRS provisions. The Accounts include the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement (compiled using the “indirect method”) and the Notes to the Accounts, together with the Report on Operations and Annexes. In addition, pursuant to Art.123-bis par.3 of TUF, as reported in chapter “Other information” of the Report on Operations, the Report on Corporate Governance and Ownership Structures is available in the "Governance" section of UniCredit website: https://www.unicreditgroup.eu/it/governance/system-policies/corporate-governance-report.html - Italian version, and https://www.unicreditgroup.eu/en/governance/system-policies/corporate-governance-report.html - English version). Figures in the financial statements and Notes to the Accounts are given in thousands of euros, unless otherwise specified. In their joint Document No.4 of 3 March 2010, Banca d’Italia, Consob and Isvap made a few observations on the current situation of the markets and businesses and requested to disclose in the financial statements information which are essential for a better understanding of business trends and outlook. In this regard, the Directors, based on the 2016-2019 Strategic Plan as well as on the results of the capital increase fully subscribed with effect from 2 March 2017, identified no symptoms in the capital and financial structure and in the economic performance that could indicate uncertainty about the ability to continue as a going-concern and therefore believe with reasonable certainty that the Bank will continue to operate profitably in the Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 545 Notes to the accounts Parta A - Accounting policies A.1 - General Section 1 - Statement of compliance with IFRS These Accounts have been prepared in accordance with the IFRS issued by the International Accounting Standards Board (IASB), including the interpretation documents issued by the SIC and the IFRIC, and endorsed by the European Commission up to 31 December 2018, pursuant to EU Regulation No.1606/2002 which was incorporated into Italian legislation through Legislative Decree No.38 of 28 February 2005 (see Section 5 - Other matters). The Accounts are an integral part of the Annual Financial Statements as required by Art.154-ter, par.1 of the Single Finance Act (TUF, Legislative Decree No.58 of 24 February 1998). In its circular 262 of 22 December 2005 and subsequent amendments Banca d’Italia laid down the formats for the financial statements and explanatory notes used to prepare these Accounts. Banca d’Italia issued on 22 December 2017 the V update of its circular 262 adjusting the formats for the financial statements and explanatory notes to the requirements of IFRS 9 Financial Instruments. Please note that as a result of the first time adoption of the new accounting standard IFRS9 and the choice not to restate the previous period, the templates and the tables in the notes prescribed by the mentioned circular have been integrated with additional items in order to allow comparisons with the previous period that has been presented according to IAS39 standard and to Circular 262 (4th update of 15 December 2015). Opening balances shown in tables of the notes to the accounts are the ones coming from the first time adoption of the new accounting standard IFRS9. In addition, with reference to Part E – Information on risks and hedging policies, the abovementioned circumstances have required the choice not to provide the comparison with the previous period with reference to certain tables whose content is not comparable with previous period tables. Section 2 - General Preparation Criteria As mentioned above, these Accounts have been prepared in accordance with the IFRS endorsed by the European Commission. The following documents have been used to interpret and support the application of IFRS, even though not all of them have been endorsed by the European Commission: • The Conceptual Framework for Financial Reporting; • Implementation Guidance, Basis for Conclusions, IFRICs and any other documents prepared by the IASB or International Financial Reporting Interpretations Committee (IFRIC) supplementing the IFRSs; • Interpretative documents on the application of IAS/IFRS in Italy prepared by the Organismo Italiano di Contabilità (OIC) and Associazione Bancaria Italiana (ABI); • ESMA (European Securities and Markets Authority) and CONSOB documents on the application of specific IFRS provisions. The Accounts include the Balance Sheet, the Income Statement, the Statement of Other Comprehensive Income, the Statement of changes in Shareholders’ Equity, the Cash Flow Statement (compiled using the “indirect method”) and the Notes to the Accounts, together with the Report on Operations and Annexes. In addition, pursuant to Art.123-bis par.3 of TUF, as reported in chapter “Other information” of the Report on Operations, the Report on Corporate Governance and Ownership Structures is available in the "Governance" section of UniCredit website: https://www.unicreditgroup.eu/it/governance/system-policies/corporate-governance-report.html - Italian version, and https://www.unicreditgroup.eu/en/governance/system-policies/corporate-governance-report.html - English version). Figures in the financial statements and Notes to the Accounts are given in thousands of euros, unless otherwise specified. In their joint Document No.4 of 3 March 2010, Banca d’Italia, Consob and Isvap made a few observations on the current situation of the markets and businesses and requested to disclose in the financial statements information which are essential for a better understanding of business trends and outlook. In this regard, the Directors, based on the 2016-2019 Strategic Plan as well as on the results of the capital increase fully subscribed with effect from 2 March 2017, identified no symptoms in the capital and financial structure and in the economic performance that could indicate uncertainty about the ability to continue as a going-concern and therefore believe with reasonable certainty that the Bank will continue to operate profitably in the Company financial statements | Notes to the accounts Part A - Accounting policies 546 2018 Annual Report and Accounts · UniCredit foreseeable future; as a result, in accordance with the provisions of IAS1, the UniCredit S.p.A.’s Financial Statements as at 31 December 2018 have been prepared on a going-concern basis. The measurement criteria adopted are therefore consistent with the assumption that the business is a going-concern and with the principles of accrual based accounting, the relevance and materiality of accounting information, and the prevalence of economic substance over legal form. These criteria have not changed compared with the previous year. Risks and uncertainty relating to the use of estimates Pursuant to IFRSs, Management must make judgments, estimates and assumptions that affect the application of accounting principles and the amounts of assets, liabilities, income and expenses reported in the accounts, as well as the disclosure concerning potential assets and liabilities. Estimates and the related assumptions are based on previous experience and other factors considered reasonable under the circumstances and have been used to estimate the carrying values of assets and liabilities not readily available from other sources. In particular estimated figures have been used for the recognition of some of the largest value-based items in the Accounts at 31 December 2018, as required by the accounting policies and regulations described above. These estimates are largely based on calculations of future recoverability of the values recognised in the accounts according to the rules laid down in current legislation and have been made on the assumption of a going-concern, i.e. without contemplating the possibility of the forced sale of the estimated items. The processes adopted confirm the carrying values at 31 December 2018. Valuation is particularly difficult because of the uncertainty in the macroeconomic and market environment. The parameters and information used to check the above-mentioned values were therefore significantly affected by such factors, which could change rapidly in ways that are currently unforeseeable, such that further effects on future carrying values cannot be ruled out. Estimates and assumptions are regularly reviewed. Any changes resulting from these reviews are recognised in the period in which the review was carried out, provided the change only concerns that period. If the revision concerns both current and future periods it is recognised accordingly in both current and future periods. Uncertainty affecting estimates is generally inherent in the measurement of: • fair value of financial instruments not listed in active markets; • loans and receivables, equity investments and, in general, any other financial assets/liabilities; • severance pay (Italy) and other employee benefits; • provisions for risks and charges and contingent assets (for more information on legal risks see Part E – Section 5 - Operational risk); • deferred tax assets; • investment properties; whose assessment may significantly change over time according to the trend in (i) domestic and international socio-economic conditions and subsequent impact on the Bank’s profitability and customers’ creditworthiness, (ii) financial markets, which affect changes in interest rates, prices and actuarial assumptions and (iii) real estate market affecting the value of property owned by the Bank or received as collateral. Regarding the evaluation of credit exposures, it should be noted that, with the entrance into force of IFRS9, their evaluation depends on forward-looking information and, in particular, on the evolution of macro-economic scenarios used in the calculation of loan loss provisions. Please note that the economic and political uncertainty in Turkey and Russia were taken into account during the assessment of the net assets owned by the Bank in these countries. Please see Part E - Information on risks and hedging policies - Section 5 - Other Risks - Top and emerging risks of the Financial Statements. Similarly, risks and uncertainties associated with a macroeconomic scenario involving tensions in international trade, an increase in rates and spreads, with specific reference to certain geographical areas and the expected contractions of quantitative easing measures so far implemented by Central Banks, were considered in the valuation of assets. In this regard, refer to the Outlook. With specific reference to future cash flow projections used in the valuation of deferred tax assets, it should be noted that the parameters and information used are significantly influenced by the macro-economic market situation, which may change in unpredictably. With specific reference to valuation techniques, unobservable inputs used in the fair value measurement and sensitivities to changes in those inputs, please refer to Section A.4 - Information on fair value. Company financial statements | Notes to the accounts Part A - Accounting policies 546 2018 Annual Report and Accounts · UniCredit foreseeable future; as a result, in accordance with the provisions of IAS1, the UniCredit S.p.A.’s Financial Statements as at 31 December 2018 have been prepared on a going-concern basis. The measurement criteria adopted are therefore consistent with the assumption that the business is a going-concern and with the principles of accrual based accounting, the relevance and materiality of accounting information, and the prevalence of economic substance over legal form. These criteria have not changed compared with the previous year. Risks and uncertainty relating to the use of estimates Pursuant to IFRSs, Management must make judgments, estimates and assumptions that affect the application of accounting principles and the amounts of assets, liabilities, income and expenses reported in the accounts, as well as the disclosure concerning potential assets and liabilities. Estimates and the related assumptions are based on previous experience and other factors considered reasonable under the circumstances and have been used to estimate the carrying values of assets and liabilities not readily available from other sources. In particular estimated figures have been used for the recognition of some of the largest value-based items in the Accounts at 31 December 2018, as required by the accounting policies and regulations described above. These estimates are largely based on calculations of future recoverability of the values recognised in the accounts according to the rules laid down in current legislation and have been made on the assumption of a going-concern, i.e. without contemplating the possibility of the forced sale of the estimated items. The processes adopted confirm the carrying values at 31 December 2018. Valuation is particularly difficult because of the uncertainty in the macroeconomic and market environment. The parameters and information used to check the above-mentioned values were therefore significantly affected by such factors, which could change rapidly in ways that are currently unforeseeable, such that further effects on future carrying values cannot be ruled out. Estimates and assumptions are regularly reviewed. Any changes resulting from these reviews are recognised in the period in which the review was carried out, provided the change only concerns that period. If the revision concerns both current and future periods it is recognised accordingly in both current and future periods. Uncertainty affecting estimates is generally inherent in the measurement of: • fair value of financial instruments not listed in active markets; • loans and receivables, equity investments and, in general, any other financial assets/liabilities; • severance pay (Italy) and other employee benefits; • provisions for risks and charges and contingent assets (for more information on legal risks see Part E – Section 5 - Operational risk); • deferred tax assets; • investment properties; whose assessment may significantly change over time according to the trend in (i) domestic and international socio-economic conditions and subsequent impact on the Bank’s profitability and customers’ creditworthiness, (ii) financial markets, which affect changes in interest rates, prices and actuarial assumptions and (iii) real estate market affecting the value of property owned by the Bank or received as collateral. Regarding the evaluation of credit exposures, it should be noted that, with the entrance into force of IFRS9, their evaluation depends on forward-looking information and, in particular, on the evolution of macro-economic scenarios used in the calculation of loan loss provisions. Please note that the economic and political uncertainty in Turkey and Russia were taken into account during the assessment of the net assets owned by the Bank in these countries. Please see Part E - Information on risks and hedging policies - Section 5 - Other Risks - Top and emerging risks of the Financial Statements. Similarly, risks and uncertainties associated with a macroeconomic scenario involving tensions in international trade, an increase in rates and spreads, with specific reference to certain geographical areas and the expected contractions of quantitative easing measures so far implemented by Central Banks, were considered in the valuation of assets. In this regard, refer to the Outlook. With specific reference to future cash flow projections used in the valuation of deferred tax assets, it should be noted that the parameters and information used are significantly influenced by the macro-economic market situation, which may change in unpredictably. With specific reference to valuation techniques, unobservable inputs used in the fair value measurement and sensitivities to changes in those inputs, please refer to Section A.4 - Information on fair value. Company financial statements | Notes to the accounts Part A - Accounting policies 546 2018 Annual Report and Accounts · UniCredit foreseeable future; as a result, in accordance with the provisions of IAS1, the UniCredit S.p.A.’s Financial Statements as at 31 December 2018 have been prepared on a going-concern basis. The measurement criteria adopted are therefore consistent with the assumption that the business is a going-concern and with the principles of accrual based accounting, the relevance and materiality of accounting information, and the prevalence of economic substance over legal form. These criteria have not changed compared with the previous year. Risks and uncertainty relating to the use of estimates Pursuant to IFRSs, Management must make judgments, estimates and assumptions that affect the application of accounting principles and the amounts of assets, liabilities, income and expenses reported in the accounts, as well as the disclosure concerning potential assets and liabilities. Estimates and the related assumptions are based on previous experience and other factors considered reasonable under the circumstances and have been used to estimate the carrying values of assets and liabilities not readily available from other sources. In particular estimated figures have been used for the recognition of some of the largest value-based items in the Accounts at 31 December 2018, as required by the accounting policies and regulations described above. These estimates are largely based on calculations of future recoverability of the values recognised in the accounts according to the rules laid down in current legislation and have been made on the assumption of a going-concern, i.e. without contemplating the possibility of the forced sale of the estimated items. The processes adopted confirm the carrying values at 31 December 2018. Valuation is particularly difficult because of the uncertainty in the macroeconomic and market environment. The parameters and information used to check the above-mentioned values were therefore significantly affected by such factors, which could change rapidly in ways that are currently unforeseeable, such that further effects on future carrying values cannot be ruled out. Estimates and assumptions are regularly reviewed. Any changes resulting from these reviews are recognised in the period in which the review was carried out, provided the change only concerns that period. If the revision concerns both current and future periods it is recognised accordingly in both current and future periods. Uncertainty affecting estimates is generally inherent in the measurement of: • fair value of financial instruments not listed in active markets; • loans and receivables, equity investments and, in general, any other financial assets/liabilities; • severance pay (Italy) and other employee benefits; • provisions for risks and charges and contingent assets (for more information on legal risks see Part E – Section 5 - Operational risk); • deferred tax assets; • investment properties; whose assessment may significantly change over time according to the trend in (i) domestic and international socio-economic conditions and subsequent impact on the Bank’s profitability and customers’ creditworthiness, (ii) financial markets, which affect changes in interest rates, prices and actuarial assumptions and (iii) real estate market affecting the value of property owned by the Bank or received as collateral. Regarding the evaluation of credit exposures, it should be noted that, with the entrance into force of IFRS9, their evaluation depends on forward-looking information and, in particular, on the evolution of macro-economic scenarios used in the calculation of loan loss provisions. Please note that the economic and political uncertainty in Turkey and Russia were taken into account during the assessment of the net assets owned by the Bank in these countries. Please see Part E - Information on risks and hedging policies - Section 5 - Other Risks - Top and emerging risks of the Financial Statements. Similarly, risks and uncertainties associated with a macroeconomic scenario involving tensions in international trade, an increase in rates and spreads, with specific reference to certain geographical areas and the expected contractions of quantitative easing measures so far implemented by Central Banks, were considered in the valuation of assets. In this regard, refer to the Outlook. With specific reference to future cash flow projections used in the valuation of deferred tax assets, it should be noted that the parameters and information used are significantly influenced by the macro-economic market situation, which may change in unpredictably. With specific reference to valuation techniques, unobservable inputs used in the fair value measurement and sensitivities to changes in those inputs, please refer to Section A.4 - Information on fair value. Company financial statements | Notes to the accounts Part A - Accounting policies 546 2018 Annual Report and Accounts · UniCredit foreseeable future; as a result, in accordance with the provisions of IAS1, the UniCredit S.p.A.’s Financial Statements as at 31 December 2018 have been prepared on a going-concern basis. The measurement criteria adopted are therefore consistent with the assumption that the business is a going-concern and with the principles of accrual based accounting, the relevance and materiality of accounting information, and the prevalence of economic substance over legal form. These criteria have not changed compared with the previous year. Risks and uncertainty relating to the use of estimates Pursuant to IFRSs, Management must make judgments, estimates and assumptions that affect the application of accounting principles and the amounts of assets, liabilities, income and expenses reported in the accounts, as well as the disclosure concerning potential assets and liabilities. Estimates and the related assumptions are based on previous experience and other factors considered reasonable under the circumstances and have been used to estimate the carrying values of assets and liabilities not readily available from other sources. In particular estimated figures have been used for the recognition of some of the largest value-based items in the Accounts at 31 December 2018, as required by the accounting policies and regulations described above. These estimates are largely based on calculations of future recoverability of the values recognised in the accounts according to the rules laid down in current legislation and have been made on the assumption of a going-concern, i.e. without contemplating the possibility of the forced sale of the estimated items. The processes adopted confirm the carrying values at 31 December 2018. Valuation is particularly difficult because of the uncertainty in the macroeconomic and market environment. The parameters and information used to check the above-mentioned values were therefore significantly affected by such factors, which could change rapidly in ways that are currently unforeseeable, such that further effects on future carrying values cannot be ruled out. Estimates and assumptions are regularly reviewed. Any changes resulting from these reviews are recognised in the period in which the review was carried out, provided the change only concerns that period. If the revision concerns both current and future periods it is recognised accordingly in both current and future periods. Uncertainty affecting estimates is generally inherent in the measurement of: • fair value of financial instruments not listed in active markets; • loans and receivables, equity investments and, in general, any other financial assets/liabilities; • severance pay (Italy) and other employee benefits; • provisions for risks and charges and contingent assets (for more information on legal risks see Part E – Section 5 - Operational risk); • deferred tax assets; • investment properties; whose assessment may significantly change over time according to the trend in (i) domestic and international socio-economic conditions and subsequent impact on the Bank’s profitability and customers’ creditworthiness, (ii) financial markets, which affect changes in interest rates, prices and actuarial assumptions and (iii) real estate market affecting the value of property owned by the Bank or received as collateral. Regarding the evaluation of credit exposures, it should be noted that, with the entrance into force of IFRS9, their evaluation depends on forward-looking information and, in particular, on the evolution of macro-economic scenarios used in the calculation of loan loss provisions. Please note that the economic and political uncertainty in Turkey and Russia were taken into account during the assessment of the net assets owned by the Bank in these countries. Please see Part E - Information on risks and hedging policies - Section 5 - Other Risks - Top and emerging risks of the Financial Statements. Similarly, risks and uncertainties associated with a macroeconomic scenario involving tensions in international trade, an increase in rates and spreads, with specific reference to certain geographical areas and the expected contractions of quantitative easing measures so far implemented by Central Banks, were considered in the valuation of assets. In this regard, refer to the Outlook. With specific reference to future cash flow projections used in the valuation of deferred tax assets, it should be noted that the parameters and information used are significantly influenced by the macro-economic market situation, which may change in unpredictably. With specific reference to valuation techniques, unobservable inputs used in the fair value measurement and sensitivities to changes in those inputs, please refer to Section A.4 - Information on fair value. Company financial statements | Notes to the accounts Part A - Accounting policies 546 2018 Annual Report and Accounts · UniCredit foreseeable future; as a result, in accordance with the provisions of IAS1, the UniCredit S.p.A.’s Financial Statements as at 31 December 2018 have been prepared on a going-concern basis. The measurement criteria adopted are therefore consistent with the assumption that the business is a going-concern and with the principles of accrual based accounting, the relevance and materiality of accounting information, and the prevalence of economic substance over legal form. These criteria have not changed compared with the previous year. Risks and uncertainty relating to the use of estimates Pursuant to IFRSs, Management must make judgments, estimates and assumptions that affect the application of accounting principles and the amounts of assets, liabilities, income and expenses reported in the accounts, as well as the disclosure concerning potential assets and liabilities. Estimates and the related assumptions are based on previous experience and other factors considered reasonable under the circumstances and have been used to estimate the carrying values of assets and liabilities not readily available from other sources. In particular estimated figures have been used for the recognition of some of the largest value-based items in the Accounts at 31 December 2018, as required by the accounting policies and regulations described above. These estimates are largely based on calculations of future recoverability of the values recognised in the accounts according to the rules laid down in current legislation and have been made on the assumption of a going-concern, i.e. without contemplating the possibility of the forced sale of the estimated items. The processes adopted confirm the carrying values at 31 December 2018. Valuation is particularly difficult because of the uncertainty in the macroeconomic and market environment. The parameters and information used to check the above-mentioned values were therefore significantly affected by such factors, which could change rapidly in ways that are currently unforeseeable, such that further effects on future carrying values cannot be ruled out. Estimates and assumptions are regularly reviewed. Any changes resulting from these reviews are recognised in the period in which the review was carried out, provided the change only concerns that period. If the revision concerns both current and future periods it is recognised accordingly in both current and future periods. Uncertainty affecting estimates is generally inherent in the measurement of: • fair value of financial instruments not listed in active markets; • loans and receivables, equity investments and, in general, any other financial assets/liabilities; • severance pay (Italy) and other employee benefits; • provisions for risks and charges and contingent assets (for more information on legal risks see Part E – Section 5 - Operational risk); • deferred tax assets; • investment properties; whose assessment may significantly change over time according to the trend in (i) domestic and international socio-economic conditions and subsequent impact on the Bank’s profitability and customers’ creditworthiness, (ii) financial markets, which affect changes in interest rates, prices and actuarial assumptions and (iii) real estate market affecting the value of property owned by the Bank or received as collateral. Regarding the evaluation of credit exposures, it should be noted that, with the entrance into force of IFRS9, their evaluation depends on forward-looking information and, in particular, on the evolution of macro-economic scenarios used in the calculation of loan loss provisions. Please note that the economic and political uncertainty in Turkey and Russia were taken into account during the assessment of the net assets owned by the Bank in these countries. Please see Part E - Information on risks and hedging policies - Section 5 - Other Risks - Top and emerging risks of the Financial Statements. Similarly, risks and uncertainties associated with a macroeconomic scenario involving tensions in international trade, an increase in rates and spreads, with specific reference to certain geographical areas and the expected contractions of quantitative easing measures so far implemented by Central Banks, were considered in the valuation of assets. In this regard, refer to the Outlook. With specific reference to future cash flow projections used in the valuation of deferred tax assets, it should be noted that the parameters and information used are significantly influenced by the macro-economic market situation, which may change in unpredictably. With specific reference to valuation techniques, unobservable inputs used in the fair value measurement and sensitivities to changes in those inputs, please refer to Section A.4 - Information on fair value. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 547 Section 3 - Subsequent events No material events have occurred after the balance sheet date that would make it necessary to change any of the information given in the Accounts as of 31 December 2018. For a description of the significant events after year end see the specific paragraph of the Report on Operations. Section 4 - Other matters In 2018 the following standards, amendments or interpretations came into force: • IFRS9 - Financial Instruments (EU Regulation 2016/2067); • IFRS15 - Revenue from Contracts with Customers (EU Regulation 2016/1905); • Amendments to IFRS4: Applying IFRS9 Financial Instruments with IFRS4 Insurance Contracts (EU Regulation 2017/1988); • Clarifications to IFRS15 Revenue from Contracts with Customers (EU Regulation 2017/1987); • IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (Reg. UE 2018/519); • Amendments to IAS40: Transfers of Investment Property (Reg. UE 2018/400); • Amendments to IFRS2: Classification and Measurement of Share-based Payment Transactions (Reg. UE 2018/289); • Annual Improvements to IFRS Standards 2014-2016 Cycle (Reg. UE 2018/182). For further details on the impacts coming from IFRS9 and IFRS15 adoption, refer to the specific paragraphs of the current section. As of 31 December 2018 the European Commission endorsed the following accounting principles that will be applicable for reporting periods beginning on or after 1 January 2019: • IFRS16 - Leasing (EU Regulation 2017/1986); • IFRIC 23 Uncertainty over Income Tax Treatments (Reg. UE 2018/1595); • Amendments to IFRS9: Prepayment Features with Negative Compensation (EU Regulation 2018/498). IFRS16, effective starting from 1 January 2019 and subject to the completion of the endorsement process by the European Union on 31 October 2017, modifies the current set of international accounting principles and interpretations on leases and, in particular, IAS17. IFRS16 introduces a new definition for leases and confirms the current distinction between two types of leases (operating and finance) with reference to the accounting treatment to be applied by the lessor. With reference to the accounting treatment to be applied by the lessee, the new accounting standard sets, for all the leasing typologies, the recognition as an asset, representing the right of use of the underlying asset and, at the same time, a liability for the future payments requested by the lease contract. At the initial recognition such asset is measured on the basis of the lease contract cash flows. After the initial recognition the right-of-use will be measured on the basis of the rules set for the assets by IAS16, IAS38 or by IAS40 and therefore applying the cost model, less any accumulated depreciation and any accumulated impairment losses, the revaluation model or the fair value model as applicable. In this context, the Bank is performing the activities aimed to ensure compliance with this accounting principle, in particular with reference to the calculation and accounting for Right of Use and Lease Liability that represent the main discontinuity compared to the current accounting model required by IAS17. The activities aimed to the development of rules, principles and IT systems to be used for the proper evaluation of new assets and liabilities and the subsequent calculation of the related economic effects have been finalised. In this context the Bank has decided, as allowed by the standard, not to apply IFRS16 provisions to: • leases of intangible assets; • short term leases, lower than 12 months; and • low value assets leases. For this purpose an asset is considered as “low value” when its fair value when new is equal to or lower than €5 thousand. This category mainly comprises office equipment (PC, monitors, tablets, etc.) and fixed and mobile phones. In order to calculate the lease liability and the related right-of-use asset, the Bank proceeds with discounting the future lease payments at a proper discount rate. In this respect, future lease payments to discount are determined based on contractual provisions and net of VAT, when applicable, as the obligation to pay such a tax starts when the invoice is issued by the lessor and not at the starting date of the lease contract. In addition if the lease payments foreseen by the contracts include additional services beside the mere rental of the asset, the right of use and the associated lease liability are calculated considering also these components. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 547 Section 3 - Subsequent events No material events have occurred after the balance sheet date that would make it necessary to change any of the information given in the Accounts as of 31 December 2018. For a description of the significant events after year end see the specific paragraph of the Report on Operations. Section 4 - Other matters In 2018 the following standards, amendments or interpretations came into force: • IFRS9 - Financial Instruments (EU Regulation 2016/2067); • IFRS15 - Revenue from Contracts with Customers (EU Regulation 2016/1905); • Amendments to IFRS4: Applying IFRS9 Financial Instruments with IFRS4 Insurance Contracts (EU Regulation 2017/1988); • Clarifications to IFRS15 Revenue from Contracts with Customers (EU Regulation 2017/1987); • IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (Reg. UE 2018/519); • Amendments to IAS40: Transfers of Investment Property (Reg. UE 2018/400); • Amendments to IFRS2: Classification and Measurement of Share-based Payment Transactions (Reg. UE 2018/289); • Annual Improvements to IFRS Standards 2014-2016 Cycle (Reg. UE 2018/182). For further details on the impacts coming from IFRS9 and IFRS15 adoption, refer to the specific paragraphs of the current section. As of 31 December 2018 the European Commission endorsed the following accounting principles that will be applicable for reporting periods beginning on or after 1 January 2019: • IFRS16 - Leasing (EU Regulation 2017/1986); • IFRIC 23 Uncertainty over Income Tax Treatments (Reg. UE 2018/1595); • Amendments to IFRS9: Prepayment Features with Negative Compensation (EU Regulation 2018/498). IFRS16, effective starting from 1 January 2019 and subject to the completion of the endorsement process by the European Union on 31 October 2017, modifies the current set of international accounting principles and interpretations on leases and, in particular, IAS17. IFRS16 introduces a new definition for leases and confirms the current distinction between two types of leases (operating and finance) with reference to the accounting treatment to be applied by the lessor. With reference to the accounting treatment to be applied by the lessee, the new accounting standard sets, for all the leasing typologies, the recognition as an asset, representing the right of use of the underlying asset and, at the same time, a liability for the future payments requested by the lease contract. At the initial recognition such asset is measured on the basis of the lease contract cash flows. After the initial recognition the right-of-use will be measured on the basis of the rules set for the assets by IAS16, IAS38 or by IAS40 and therefore applying the cost model, less any accumulated depreciation and any accumulated impairment losses, the revaluation model or the fair value model as applicable. In this context, the Bank is performing the activities aimed to ensure compliance with this accounting principle, in particular with reference to the calculation and accounting for Right of Use and Lease Liability that represent the main discontinuity compared to the current accounting model required by IAS17. The activities aimed to the development of rules, principles and IT systems to be used for the proper evaluation of new assets and liabilities and the subsequent calculation of the related economic effects have been finalised. In this context the Bank has decided, as allowed by the standard, not to apply IFRS16 provisions to: • leases of intangible assets; • short term leases, lower than 12 months; and • low value assets leases. For this purpose an asset is considered as “low value” when its fair value when new is equal to or lower than €5 thousand. This category mainly comprises office equipment (PC, monitors, tablets, etc.) and fixed and mobile phones. In order to calculate the lease liability and the related right-of-use asset, the Bank proceeds with discounting the future lease payments at a proper discount rate. In this respect, future lease payments to discount are determined based on contractual provisions and net of VAT, when applicable, as the obligation to pay such a tax starts when the invoice is issued by the lessor and not at the starting date of the lease contract. In addition if the lease payments foreseen by the contracts include additional services beside the mere rental of the asset, the right of use and the associated lease liability are calculated considering also these components. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 547 Section 3 - Subsequent events No material events have occurred after the balance sheet date that would make it necessary to change any of the information given in the Accounts as of 31 December 2018. For a description of the significant events after year end see the specific paragraph of the Report on Operations. Section 4 - Other matters In 2018 the following standards, amendments or interpretations came into force: • IFRS9 - Financial Instruments (EU Regulation 2016/2067); • IFRS15 - Revenue from Contracts with Customers (EU Regulation 2016/1905); • Amendments to IFRS4: Applying IFRS9 Financial Instruments with IFRS4 Insurance Contracts (EU Regulation 2017/1988); • Clarifications to IFRS15 Revenue from Contracts with Customers (EU Regulation 2017/1987); • IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (Reg. UE 2018/519); • Amendments to IAS40: Transfers of Investment Property (Reg. UE 2018/400); • Amendments to IFRS2: Classification and Measurement of Share-based Payment Transactions (Reg. UE 2018/289); • Annual Improvements to IFRS Standards 2014-2016 Cycle (Reg. UE 2018/182). For further details on the impacts coming from IFRS9 and IFRS15 adoption, refer to the specific paragraphs of the current section. As of 31 December 2018 the European Commission endorsed the following accounting principles that will be applicable for reporting periods beginning on or after 1 January 2019: • IFRS16 - Leasing (EU Regulation 2017/1986); • IFRIC 23 Uncertainty over Income Tax Treatments (Reg. UE 2018/1595); • Amendments to IFRS9: Prepayment Features with Negative Compensation (EU Regulation 2018/498). IFRS16, effective starting from 1 January 2019 and subject to the completion of the endorsement process by the European Union on 31 October 2017, modifies the current set of international accounting principles and interpretations on leases and, in particular, IAS17. IFRS16 introduces a new definition for leases and confirms the current distinction between two types of leases (operating and finance) with reference to the accounting treatment to be applied by the lessor. With reference to the accounting treatment to be applied by the lessee, the new accounting standard sets, for all the leasing typologies, the recognition as an asset, representing the right of use of the underlying asset and, at the same time, a liability for the future payments requested by the lease contract. At the initial recognition such asset is measured on the basis of the lease contract cash flows. After the initial recognition the right-of-use will be measured on the basis of the rules set for the assets by IAS16, IAS38 or by IAS40 and therefore applying the cost model, less any accumulated depreciation and any accumulated impairment losses, the revaluation model or the fair value model as applicable. In this context, the Bank is performing the activities aimed to ensure compliance with this accounting principle, in particular with reference to the calculation and accounting for Right of Use and Lease Liability that represent the main discontinuity compared to the current accounting model required by IAS17. The activities aimed to the development of rules, principles and IT systems to be used for the proper evaluation of new assets and liabilities and the subsequent calculation of the related economic effects have been finalised. In this context the Bank has decided, as allowed by the standard, not to apply IFRS16 provisions to: • leases of intangible assets; • short term leases, lower than 12 months; and • low value assets leases. For this purpose an asset is considered as “low value” when its fair value when new is equal to or lower than €5 thousand. This category mainly comprises office equipment (PC, monitors, tablets, etc.) and fixed and mobile phones. In order to calculate the lease liability and the related right-of-use asset, the Bank proceeds with discounting the future lease payments at a proper discount rate. In this respect, future lease payments to discount are determined based on contractual provisions and net of VAT, when applicable, as the obligation to pay such a tax starts when the invoice is issued by the lessor and not at the starting date of the lease contract. In addition if the lease payments foreseen by the contracts include additional services beside the mere rental of the asset, the right of use and the associated lease liability are calculated considering also these components. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 547 Section 3 - Subsequent events No material events have occurred after the balance sheet date that would make it necessary to change any of the information given in the Accounts as of 31 December 2018. For a description of the significant events after year end see the specific paragraph of the Report on Operations. Section 4 - Other matters In 2018 the following standards, amendments or interpretations came into force: • IFRS9 - Financial Instruments (EU Regulation 2016/2067); • IFRS15 - Revenue from Contracts with Customers (EU Regulation 2016/1905); • Amendments to IFRS4: Applying IFRS9 Financial Instruments with IFRS4 Insurance Contracts (EU Regulation 2017/1988); • Clarifications to IFRS15 Revenue from Contracts with Customers (EU Regulation 2017/1987); • IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (Reg. UE 2018/519); • Amendments to IAS40: Transfers of Investment Property (Reg. UE 2018/400); • Amendments to IFRS2: Classification and Measurement of Share-based Payment Transactions (Reg. UE 2018/289); • Annual Improvements to IFRS Standards 2014-2016 Cycle (Reg. UE 2018/182). For further details on the impacts coming from IFRS9 and IFRS15 adoption, refer to the specific paragraphs of the current section. As of 31 December 2018 the European Commission endorsed the following accounting principles that will be applicable for reporting periods beginning on or after 1 January 2019: • IFRS16 - Leasing (EU Regulation 2017/1986); • IFRIC 23 Uncertainty over Income Tax Treatments (Reg. UE 2018/1595); • Amendments to IFRS9: Prepayment Features with Negative Compensation (EU Regulation 2018/498). IFRS16, effective starting from 1 January 2019 and subject to the completion of the endorsement process by the European Union on 31 October 2017, modifies the current set of international accounting principles and interpretations on leases and, in particular, IAS17. IFRS16 introduces a new definition for leases and confirms the current distinction between two types of leases (operating and finance) with reference to the accounting treatment to be applied by the lessor. With reference to the accounting treatment to be applied by the lessee, the new accounting standard sets, for all the leasing typologies, the recognition as an asset, representing the right of use of the underlying asset and, at the same time, a liability for the future payments requested by the lease contract. At the initial recognition such asset is measured on the basis of the lease contract cash flows. After the initial recognition the right-of-use will be measured on the basis of the rules set for the assets by IAS16, IAS38 or by IAS40 and therefore applying the cost model, less any accumulated depreciation and any accumulated impairment losses, the revaluation model or the fair value model as applicable. In this context, the Bank is performing the activities aimed to ensure compliance with this accounting principle, in particular with reference to the calculation and accounting for Right of Use and Lease Liability that represent the main discontinuity compared to the current accounting model required by IAS17. The activities aimed to the development of rules, principles and IT systems to be used for the proper evaluation of new assets and liabilities and the subsequent calculation of the related economic effects have been finalised. In this context the Bank has decided, as allowed by the standard, not to apply IFRS16 provisions to: • leases of intangible assets; • short term leases, lower than 12 months; and • low value assets leases. For this purpose an asset is considered as “low value” when its fair value when new is equal to or lower than €5 thousand. This category mainly comprises office equipment (PC, monitors, tablets, etc.) and fixed and mobile phones. In order to calculate the lease liability and the related right-of-use asset, the Bank proceeds with discounting the future lease payments at a proper discount rate. In this respect, future lease payments to discount are determined based on contractual provisions and net of VAT, when applicable, as the obligation to pay such a tax starts when the invoice is issued by the lessor and not at the starting date of the lease contract. In addition if the lease payments foreseen by the contracts include additional services beside the mere rental of the asset, the right of use and the associated lease liability are calculated considering also these components. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 547 Section 3 - Subsequent events No material events have occurred after the balance sheet date that would make it necessary to change any of the information given in the Accounts as of 31 December 2018. For a description of the significant events after year end see the specific paragraph of the Report on Operations. Section 4 - Other matters In 2018 the following standards, amendments or interpretations came into force: • IFRS9 - Financial Instruments (EU Regulation 2016/2067); • IFRS15 - Revenue from Contracts with Customers (EU Regulation 2016/1905); • Amendments to IFRS4: Applying IFRS9 Financial Instruments with IFRS4 Insurance Contracts (EU Regulation 2017/1988); • Clarifications to IFRS15 Revenue from Contracts with Customers (EU Regulation 2017/1987); • IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (Reg. UE 2018/519); • Amendments to IAS40: Transfers of Investment Property (Reg. UE 2018/400); • Amendments to IFRS2: Classification and Measurement of Share-based Payment Transactions (Reg. UE 2018/289); • Annual Improvements to IFRS Standards 2014-2016 Cycle (Reg. UE 2018/182). For further details on the impacts coming from IFRS9 and IFRS15 adoption, refer to the specific paragraphs of the current section. As of 31 December 2018 the European Commission endorsed the following accounting principles that will be applicable for reporting periods beginning on or after 1 January 2019: • IFRS16 - Leasing (EU Regulation 2017/1986); • IFRIC 23 Uncertainty over Income Tax Treatments (Reg. UE 2018/1595); • Amendments to IFRS9: Prepayment Features with Negative Compensation (EU Regulation 2018/498). IFRS16, effective starting from 1 January 2019 and subject to the completion of the endorsement process by the European Union on 31 October 2017, modifies the current set of international accounting principles and interpretations on leases and, in particular, IAS17. IFRS16 introduces a new definition for leases and confirms the current distinction between two types of leases (operating and finance) with reference to the accounting treatment to be applied by the lessor. With reference to the accounting treatment to be applied by the lessee, the new accounting standard sets, for all the leasing typologies, the recognition as an asset, representing the right of use of the underlying asset and, at the same time, a liability for the future payments requested by the lease contract. At the initial recognition such asset is measured on the basis of the lease contract cash flows. After the initial recognition the right-of-use will be measured on the basis of the rules set for the assets by IAS16, IAS38 or by IAS40 and therefore applying the cost model, less any accumulated depreciation and any accumulated impairment losses, the revaluation model or the fair value model as applicable. In this context, the Bank is performing the activities aimed to ensure compliance with this accounting principle, in particular with reference to the calculation and accounting for Right of Use and Lease Liability that represent the main discontinuity compared to the current accounting model required by IAS17. The activities aimed to the development of rules, principles and IT systems to be used for the proper evaluation of new assets and liabilities and the subsequent calculation of the related economic effects have been finalised. In this context the Bank has decided, as allowed by the standard, not to apply IFRS16 provisions to: • leases of intangible assets; • short term leases, lower than 12 months; and • low value assets leases. For this purpose an asset is considered as “low value” when its fair value when new is equal to or lower than €5 thousand. This category mainly comprises office equipment (PC, monitors, tablets, etc.) and fixed and mobile phones. In order to calculate the lease liability and the related right-of-use asset, the Bank proceeds with discounting the future lease payments at a proper discount rate. In this respect, future lease payments to discount are determined based on contractual provisions and net of VAT, when applicable, as the obligation to pay such a tax starts when the invoice is issued by the lessor and not at the starting date of the lease contract. In addition if the lease payments foreseen by the contracts include additional services beside the mere rental of the asset, the right of use and the associated lease liability are calculated considering also these components. Company financial statements | Notes to the accounts Part A - Accounting policies 548 2018 Annual Report and Accounts · UniCredit To perform the mentioned calculation lease payments have to be discounted at the interest rate implicit in the contract or, if it is not available, at the incremental borrowing rate. The latter is determined on the basis of the cost of funding for liabilities of similar duration and similar security of those implicit in the lease contract. In determining the lease term it is necessary to consider the non-cancellable period, established in the contract, in which the lessee is entitled to use the underlying asset taking also into account potential renewal options if the lessee is reasonably certain to renew. In particular, with regard to those contracts that allows the lessee to tacitly renew the lease contract after a first set of years, the lease term is determined taking into account factors such as the length of the first period, the existence of dismissal plans for the asset leased and any other circumstance indicating the reasonably certainty of the renewal. The Bank has decided not to restate comparatives and has chosen, for First Time Adoption purposes, to put the value of right of use equal to the lease liability. In particular, the adoption of IFRS16 will determine an increase of the Bank’s total assets and liabilities that can be preliminary estimated in the range of 0.3% while the effect on Bank’s CET1 ratio can be preliminarily estimated in the range of -0.1%, gross of tax effect. As of 31 December 2018 the IASB issued the following standards, amendments, interpretations or revisions, whose application is subject to completion of the endorsement process by the competent bodies of the European Commission, which is still ongoing: • IFRS17: Insurance Contracts (May 2017); • Amendments to IAS28: Long-term Interests in Associates and Joint Ventures (October 2017); • Annual Improvements to IFRS Standards 2015-2017 Cycle (December 2017); • Amendments to IAS19: Plan Amendment, Curtailment or Settlement (February 2018); • Amendments to the IFRS Conceptual Framework (March 2018); • Amendments to IFRS3: Business combination (October 2018); • Amendments to IAS1 and IAS8: Definition of Material (October 2018). Transition to “IFRS15: Revenue from contracts with customers” of UniCredit S.p.A. IFRS15, effective starting from 1 January 2018, endorsed by the European Union with Regulation EU 2016/1905 of 22 September 2016 (published on 29 October 2016), modifies the previous set of international accounting principles and interpretations on revenue recognition and, in particular, IAS18. IFRS15 provides for: • two approaches for the revenue recognition (“point in time” or “over time”) depending on the nature of the performance obligation; • a new model for the analysis of the transactions (“Five steps model”) focused on the transfer of control; and • the request for a more detailed disclosure to be included in the explanatory notes to the financial statements. The adoption of the new accounting standard could determine (i) the reclassification between lines of income statement, used for presenting revenues, (ii) a change in the timing recognition of such revenue, when the contract with the customer contains several performance obligation, that must be accounted for separately under the accounting standard, (iii) a different measure of the revenue in order to reflect their variability. Based on the analysis performed, no major impacts have been detected by the adoption of IFRS15 on current economic and financial volumes. Company financial statements | Notes to the accounts Part A - Accounting policies 548 2018 Annual Report and Accounts · UniCredit To perform the mentioned calculation lease payments have to be discounted at the interest rate implicit in the contract or, if it is not available, at the incremental borrowing rate. The latter is determined on the basis of the cost of funding for liabilities of similar duration and similar security of those implicit in the lease contract. In determining the lease term it is necessary to consider the non-cancellable period, established in the contract, in which the lessee is entitled to use the underlying asset taking also into account potential renewal options if the lessee is reasonably certain to renew. In particular, with regard to those contracts that allows the lessee to tacitly renew the lease contract after a first set of years, the lease term is determined taking into account factors such as the length of the first period, the existence of dismissal plans for the asset leased and any other circumstance indicating the reasonably certainty of the renewal. The Bank has decided not to restate comparatives and has chosen, for First Time Adoption purposes, to put the value of right of use equal to the lease liability. In particular, the adoption of IFRS16 will determine an increase of the Bank’s total assets and liabilities that can be preliminary estimated in the range of 0.3% while the effect on Bank’s CET1 ratio can be preliminarily estimated in the range of -0.1%, gross of tax effect. As of 31 December 2018 the IASB issued the following standards, amendments, interpretations or revisions, whose application is subject to completion of the endorsement process by the competent bodies of the European Commission, which is still ongoing: • IFRS17: Insurance Contracts (May 2017); • Amendments to IAS28: Long-term Interests in Associates and Joint Ventures (October 2017); • Annual Improvements to IFRS Standards 2015-2017 Cycle (December 2017); • Amendments to IAS19: Plan Amendment, Curtailment or Settlement (February 2018); • Amendments to the IFRS Conceptual Framework (March 2018); • Amendments to IFRS3: Business combination (October 2018); • Amendments to IAS1 and IAS8: Definition of Material (October 2018). Transition to “IFRS15: Revenue from contracts with customers” of UniCredit S.p.A. IFRS15, effective starting from 1 January 2018, endorsed by the European Union with Regulation EU 2016/1905 of 22 September 2016 (published on 29 October 2016), modifies the previous set of international accounting principles and interpretations on revenue recognition and, in particular, IAS18. IFRS15 provides for: • two approaches for the revenue recognition (“point in time” or “over time”) depending on the nature of the performance obligation; • a new model for the analysis of the transactions (“Five steps model”) focused on the transfer of control; and • the request for a more detailed disclosure to be included in the explanatory notes to the financial statements. The adoption of the new accounting standard could determine (i) the reclassification between lines of income statement, used for presenting revenues, (ii) a change in the timing recognition of such revenue, when the contract with the customer contains several performance obligation, that must be accounted for separately under the accounting standard, (iii) a different measure of the revenue in order to reflect their variability. Based on the analysis performed, no major impacts have been detected by the adoption of IFRS15 on current economic and financial volumes. Company financial statements | Notes to the accounts Part A - Accounting policies 548 2018 Annual Report and Accounts · UniCredit To perform the mentioned calculation lease payments have to be discounted at the interest rate implicit in the contract or, if it is not available, at the incremental borrowing rate. The latter is determined on the basis of the cost of funding for liabilities of similar duration and similar security of those implicit in the lease contract. In determining the lease term it is necessary to consider the non-cancellable period, established in the contract, in which the lessee is entitled to use the underlying asset taking also into account potential renewal options if the lessee is reasonably certain to renew. In particular, with regard to those contracts that allows the lessee to tacitly renew the lease contract after a first set of years, the lease term is determined taking into account factors such as the length of the first period, the existence of dismissal plans for the asset leased and any other circumstance indicating the reasonably certainty of the renewal. The Bank has decided not to restate comparatives and has chosen, for First Time Adoption purposes, to put the value of right of use equal to the lease liability. In particular, the adoption of IFRS16 will determine an increase of the Bank’s total assets and liabilities that can be preliminary estimated in the range of 0.3% while the effect on Bank’s CET1 ratio can be preliminarily estimated in the range of -0.1%, gross of tax effect. As of 31 December 2018 the IASB issued the following standards, amendments, interpretations or revisions, whose application is subject to completion of the endorsement process by the competent bodies of the European Commission, which is still ongoing: • IFRS17: Insurance Contracts (May 2017); • Amendments to IAS28: Long-term Interests in Associates and Joint Ventures (October 2017); • Annual Improvements to IFRS Standards 2015-2017 Cycle (December 2017); • Amendments to IAS19: Plan Amendment, Curtailment or Settlement (February 2018); • Amendments to the IFRS Conceptual Framework (March 2018); • Amendments to IFRS3: Business combination (October 2018); • Amendments to IAS1 and IAS8: Definition of Material (October 2018). Transition to “IFRS15: Revenue from contracts with customers” of UniCredit S.p.A. IFRS15, effective starting from 1 January 2018, endorsed by the European Union with Regulation EU 2016/1905 of 22 September 2016 (published on 29 October 2016), modifies the previous set of international accounting principles and interpretations on revenue recognition and, in particular, IAS18. IFRS15 provides for: • two approaches for the revenue recognition (“point in time” or “over time”) depending on the nature of the performance obligation; • a new model for the analysis of the transactions (“Five steps model”) focused on the transfer of control; and • the request for a more detailed disclosure to be included in the explanatory notes to the financial statements. The adoption of the new accounting standard could determine (i) the reclassification between lines of income statement, used for presenting revenues, (ii) a change in the timing recognition of such revenue, when the contract with the customer contains several performance obligation, that must be accounted for separately under the accounting standard, (iii) a different measure of the revenue in order to reflect their variability. Based on the analysis performed, no major impacts have been detected by the adoption of IFRS15 on current economic and financial volumes. Company financial statements | Notes to the accounts Part A - Accounting policies 548 2018 Annual Report and Accounts · UniCredit To perform the mentioned calculation lease payments have to be discounted at the interest rate implicit in the contract or, if it is not available, at the incremental borrowing rate. The latter is determined on the basis of the cost of funding for liabilities of similar duration and similar security of those implicit in the lease contract. In determining the lease term it is necessary to consider the non-cancellable period, established in the contract, in which the lessee is entitled to use the underlying asset taking also into account potential renewal options if the lessee is reasonably certain to renew. In particular, with regard to those contracts that allows the lessee to tacitly renew the lease contract after a first set of years, the lease term is determined taking into account factors such as the length of the first period, the existence of dismissal plans for the asset leased and any other circumstance indicating the reasonably certainty of the renewal. The Bank has decided not to restate comparatives and has chosen, for First Time Adoption purposes, to put the value of right of use equal to the lease liability. In particular, the adoption of IFRS16 will determine an increase of the Bank’s total assets and liabilities that can be preliminary estimated in the range of 0.3% while the effect on Bank’s CET1 ratio can be preliminarily estimated in the range of -0.1%, gross of tax effect. As of 31 December 2018 the IASB issued the following standards, amendments, interpretations or revisions, whose application is subject to completion of the endorsement process by the competent bodies of the European Commission, which is still ongoing: • IFRS17: Insurance Contracts (May 2017); • Amendments to IAS28: Long-term Interests in Associates and Joint Ventures (October 2017); • Annual Improvements to IFRS Standards 2015-2017 Cycle (December 2017); • Amendments to IAS19: Plan Amendment, Curtailment or Settlement (February 2018); • Amendments to the IFRS Conceptual Framework (March 2018); • Amendments to IFRS3: Business combination (October 2018); • Amendments to IAS1 and IAS8: Definition of Material (October 2018). Transition to “IFRS15: Revenue from contracts with customers” of UniCredit S.p.A. IFRS15, effective starting from 1 January 2018, endorsed by the European Union with Regulation EU 2016/1905 of 22 September 2016 (published on 29 October 2016), modifies the previous set of international accounting principles and interpretations on revenue recognition and, in particular, IAS18. IFRS15 provides for: • two approaches for the revenue recognition (“point in time” or “over time”) depending on the nature of the performance obligation; • a new model for the analysis of the transactions (“Five steps model”) focused on the transfer of control; and • the request for a more detailed disclosure to be included in the explanatory notes to the financial statements. The adoption of the new accounting standard could determine (i) the reclassification between lines of income statement, used for presenting revenues, (ii) a change in the timing recognition of such revenue, when the contract with the customer contains several performance obligation, that must be accounted for separately under the accounting standard, (iii) a different measure of the revenue in order to reflect their variability. Based on the analysis performed, no major impacts have been detected by the adoption of IFRS15 on current economic and financial volumes. Company financial statements | Notes to the accounts Part A - Accounting policies 548 2018 Annual Report and Accounts · UniCredit To perform the mentioned calculation lease payments have to be discounted at the interest rate implicit in the contract or, if it is not available, at the incremental borrowing rate. The latter is determined on the basis of the cost of funding for liabilities of similar duration and similar security of those implicit in the lease contract. In determining the lease term it is necessary to consider the non-cancellable period, established in the contract, in which the lessee is entitled to use the underlying asset taking also into account potential renewal options if the lessee is reasonably certain to renew. In particular, with regard to those contracts that allows the lessee to tacitly renew the lease contract after a first set of years, the lease term is determined taking into account factors such as the length of the first period, the existence of dismissal plans for the asset leased and any other circumstance indicating the reasonably certainty of the renewal. The Bank has decided not to restate comparatives and has chosen, for First Time Adoption purposes, to put the value of right of use equal to the lease liability. In particular, the adoption of IFRS16 will determine an increase of the Bank’s total assets and liabilities that can be preliminary estimated in the range of 0.3% while the effect on Bank’s CET1 ratio can be preliminarily estimated in the range of -0.1%, gross of tax effect. As of 31 December 2018 the IASB issued the following standards, amendments, interpretations or revisions, whose application is subject to completion of the endorsement process by the competent bodies of the European Commission, which is still ongoing: • IFRS17: Insurance Contracts (May 2017); • Amendments to IAS28: Long-term Interests in Associates and Joint Ventures (October 2017); • Annual Improvements to IFRS Standards 2015-2017 Cycle (December 2017); • Amendments to IAS19: Plan Amendment, Curtailment or Settlement (February 2018); • Amendments to the IFRS Conceptual Framework (March 2018); • Amendments to IFRS3: Business combination (October 2018); • Amendments to IAS1 and IAS8: Definition of Material (October 2018). Transition to “IFRS15: Revenue from contracts with customers” of UniCredit S.p.A. IFRS15, effective starting from 1 January 2018, endorsed by the European Union with Regulation EU 2016/1905 of 22 September 2016 (published on 29 October 2016), modifies the previous set of international accounting principles and interpretations on revenue recognition and, in particular, IAS18. IFRS15 provides for: • two approaches for the revenue recognition (“point in time” or “over time”) depending on the nature of the performance obligation; • a new model for the analysis of the transactions (“Five steps model”) focused on the transfer of control; and • the request for a more detailed disclosure to be included in the explanatory notes to the financial statements. The adoption of the new accounting standard could determine (i) the reclassification between lines of income statement, used for presenting revenues, (ii) a change in the timing recognition of such revenue, when the contract with the customer contains several performance obligation, that must be accounted for separately under the accounting standard, (iii) a different measure of the revenue in order to reflect their variability. Based on the analysis performed, no major impacts have been detected by the adoption of IFRS15 on current economic and financial volumes. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 549 Transition to “IFRS9: Financial instruments” of UniCredit S.p.A. 1. Summary of impacts As at 1 January 2018, UniCredit group S.p.A. adopted the accounting standard “IFRS9: Financial instruments”. The adoption of the standard is the result of a long-time project aimed at creating reporting and risk monitoring methods, harmonised between Group’s Legal Entities, that ensure compliance with the standard and at updating governance and monitoring processes in light of the new rules. This project was organised at Group level through specific work-streams: • work-stream “Classification and Measurement” aimed at reviewing financial instruments classification in line with new IFRS9 criteria; • work-stream “Impairment” aimed at developing and implementing models and methods for calculating impairment. These work-streams go together with a specific activity aimed at adapting models and methods to the specific characteristics of Corporate & Investment Banking (CIB). The entire project was developed actively involving Bank’s structures, Board of Directors and Top Management. The following should be noted with regard to the new accounting standard: • has introduced significant changes in the rules for classifying and measuring financial instruments compared to IAS39. With reference to loans and debt securities, the classification and consequent measurement of these instruments is based on the "business model” and on the characteristics of the financial instrument cash flows (SPPI criterion - Solely Payments of Principal and Interests). With reference to equity instruments, they will be classified as financial instruments at fair value, with differences recognised through profit or loss or in other comprehensive income. In the latter case, unlike the requirements of IAS39 for available-for-sale financial assets, IFRS9 no longer requires to recognise impairment losses and provides that, in the event of sale of the instrument, the profits and losses on disposal must be reclassified to other shareholders' equity reserve and not to profit or loss. In the end, with reference to financial liabilities designated at fair value, it modified the accounting of "own credit risk", i.e. the changes in the value of liabilities at fair value that are due to fluctuations in their creditworthiness. According to the new standard, these changes must be recognised in an equity reserve, rather than in the income statement as per IAS39, thus eliminating a source of volatility in economic results. • has introduced a new accounting model of impairment for credit exposures based on (i) an "expected losses" approach replacing the current one based on the recognition of "incurred losses" and (ii) the concept of "lifetime" expected loss. • has introduced guidelines that clarify when financial instruments shall be written off by specifying that the write-off constitutes an event of accounting derecognition; • has also modified the rules applicable to "hedge accounting" with regard to designating a hedging relationship and verifying its effectiveness with the aim of ensuring a higher alignment between the accounting recognition of hedges and the underlying management rationale. The Bank has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. The Bank has decided to exploit the option provided by the accounting standard not to restate comparative figures of previous years, consequently, for UniCredit S.p.A, the first time adoption of the new standard is 1 January 2018. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 549 Transition to “IFRS9: Financial instruments” of UniCredit S.p.A. 1. Summary of impacts As at 1 January 2018, UniCredit group S.p.A. adopted the accounting standard “IFRS9: Financial instruments”. The adoption of the standard is the result of a long-time project aimed at creating reporting and risk monitoring methods, harmonised between Group’s Legal Entities, that ensure compliance with the standard and at updating governance and monitoring processes in light of the new rules. This project was organised at Group level through specific work-streams: • work-stream “Classification and Measurement” aimed at reviewing financial instruments classification in line with new IFRS9 criteria; • work-stream “Impairment” aimed at developing and implementing models and methods for calculating impairment. These work-streams go together with a specific activity aimed at adapting models and methods to the specific characteristics of Corporate & Investment Banking (CIB). The entire project was developed actively involving Bank’s structures, Board of Directors and Top Management. The following should be noted with regard to the new accounting standard: • has introduced significant changes in the rules for classifying and measuring financial instruments compared to IAS39. With reference to loans and debt securities, the classification and consequent measurement of these instruments is based on the "business model” and on the characteristics of the financial instrument cash flows (SPPI criterion - Solely Payments of Principal and Interests). With reference to equity instruments, they will be classified as financial instruments at fair value, with differences recognised through profit or loss or in other comprehensive income. In the latter case, unlike the requirements of IAS39 for available-for-sale financial assets, IFRS9 no longer requires to recognise impairment losses and provides that, in the event of sale of the instrument, the profits and losses on disposal must be reclassified to other shareholders' equity reserve and not to profit or loss. In the end, with reference to financial liabilities designated at fair value, it modified the accounting of "own credit risk", i.e. the changes in the value of liabilities at fair value that are due to fluctuations in their creditworthiness. According to the new standard, these changes must be recognised in an equity reserve, rather than in the income statement as per IAS39, thus eliminating a source of volatility in economic results. • has introduced a new accounting model of impairment for credit exposures based on (i) an "expected losses" approach replacing the current one based on the recognition of "incurred losses" and (ii) the concept of "lifetime" expected loss. • has introduced guidelines that clarify when financial instruments shall be written off by specifying that the write-off constitutes an event of accounting derecognition; • has also modified the rules applicable to "hedge accounting" with regard to designating a hedging relationship and verifying its effectiveness with the aim of ensuring a higher alignment between the accounting recognition of hedges and the underlying management rationale. The Bank has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. The Bank has decided to exploit the option provided by the accounting standard not to restate comparative figures of previous years, consequently, for UniCredit S.p.A, the first time adoption of the new standard is 1 January 2018. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 549 Transition to “IFRS9: Financial instruments” of UniCredit S.p.A. 1. Summary of impacts As at 1 January 2018, UniCredit group S.p.A. adopted the accounting standard “IFRS9: Financial instruments”. The adoption of the standard is the result of a long-time project aimed at creating reporting and risk monitoring methods, harmonised between Group’s Legal Entities, that ensure compliance with the standard and at updating governance and monitoring processes in light of the new rules. This project was organised at Group level through specific work-streams: • work-stream “Classification and Measurement” aimed at reviewing financial instruments classification in line with new IFRS9 criteria; • work-stream “Impairment” aimed at developing and implementing models and methods for calculating impairment. These work-streams go together with a specific activity aimed at adapting models and methods to the specific characteristics of Corporate & Investment Banking (CIB). The entire project was developed actively involving Bank’s structures, Board of Directors and Top Management. The following should be noted with regard to the new accounting standard: • has introduced significant changes in the rules for classifying and measuring financial instruments compared to IAS39. With reference to loans and debt securities, the classification and consequent measurement of these instruments is based on the "business model” and on the characteristics of the financial instrument cash flows (SPPI criterion - Solely Payments of Principal and Interests). With reference to equity instruments, they will be classified as financial instruments at fair value, with differences recognised through profit or loss or in other comprehensive income. In the latter case, unlike the requirements of IAS39 for available-for-sale financial assets, IFRS9 no longer requires to recognise impairment losses and provides that, in the event of sale of the instrument, the profits and losses on disposal must be reclassified to other shareholders' equity reserve and not to profit or loss. In the end, with reference to financial liabilities designated at fair value, it modified the accounting of "own credit risk", i.e. the changes in the value of liabilities at fair value that are due to fluctuations in their creditworthiness. According to the new standard, these changes must be recognised in an equity reserve, rather than in the income statement as per IAS39, thus eliminating a source of volatility in economic results. • has introduced a new accounting model of impairment for credit exposures based on (i) an "expected losses" approach replacing the current one based on the recognition of "incurred losses" and (ii) the concept of "lifetime" expected loss. • has introduced guidelines that clarify when financial instruments shall be written off by specifying that the write-off constitutes an event of accounting derecognition; • has also modified the rules applicable to "hedge accounting" with regard to designating a hedging relationship and verifying its effectiveness with the aim of ensuring a higher alignment between the accounting recognition of hedges and the underlying management rationale. The Bank has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. The Bank has decided to exploit the option provided by the accounting standard not to restate comparative figures of previous years, consequently, for UniCredit S.p.A, the first time adoption of the new standard is 1 January 2018. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 549 Transition to “IFRS9: Financial instruments” of UniCredit S.p.A. 1. Summary of impacts As at 1 January 2018, UniCredit group S.p.A. adopted the accounting standard “IFRS9: Financial instruments”. The adoption of the standard is the result of a long-time project aimed at creating reporting and risk monitoring methods, harmonised between Group’s Legal Entities, that ensure compliance with the standard and at updating governance and monitoring processes in light of the new rules. This project was organised at Group level through specific work-streams: • work-stream “Classification and Measurement” aimed at reviewing financial instruments classification in line with new IFRS9 criteria; • work-stream “Impairment” aimed at developing and implementing models and methods for calculating impairment. These work-streams go together with a specific activity aimed at adapting models and methods to the specific characteristics of Corporate & Investment Banking (CIB). The entire project was developed actively involving Bank’s structures, Board of Directors and Top Management. The following should be noted with regard to the new accounting standard: • has introduced significant changes in the rules for classifying and measuring financial instruments compared to IAS39. With reference to loans and debt securities, the classification and consequent measurement of these instruments is based on the "business model” and on the characteristics of the financial instrument cash flows (SPPI criterion - Solely Payments of Principal and Interests). With reference to equity instruments, they will be classified as financial instruments at fair value, with differences recognised through profit or loss or in other comprehensive income. In the latter case, unlike the requirements of IAS39 for available-for-sale financial assets, IFRS9 no longer requires to recognise impairment losses and provides that, in the event of sale of the instrument, the profits and losses on disposal must be reclassified to other shareholders' equity reserve and not to profit or loss. In the end, with reference to financial liabilities designated at fair value, it modified the accounting of "own credit risk", i.e. the changes in the value of liabilities at fair value that are due to fluctuations in their creditworthiness. According to the new standard, these changes must be recognised in an equity reserve, rather than in the income statement as per IAS39, thus eliminating a source of volatility in economic results. • has introduced a new accounting model of impairment for credit exposures based on (i) an "expected losses" approach replacing the current one based on the recognition of "incurred losses" and (ii) the concept of "lifetime" expected loss. • has introduced guidelines that clarify when financial instruments shall be written off by specifying that the write-off constitutes an event of accounting derecognition; • has also modified the rules applicable to "hedge accounting" with regard to designating a hedging relationship and verifying its effectiveness with the aim of ensuring a higher alignment between the accounting recognition of hedges and the underlying management rationale. The Bank has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. The Bank has decided to exploit the option provided by the accounting standard not to restate comparative figures of previous years, consequently, for UniCredit S.p.A, the first time adoption of the new standard is 1 January 2018. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 549 Transition to “IFRS9: Financial instruments” of UniCredit S.p.A. 1. Summary of impacts As at 1 January 2018, UniCredit group S.p.A. adopted the accounting standard “IFRS9: Financial instruments”. The adoption of the standard is the result of a long-time project aimed at creating reporting and risk monitoring methods, harmonised between Group’s Legal Entities, that ensure compliance with the standard and at updating governance and monitoring processes in light of the new rules. This project was organised at Group level through specific work-streams: • work-stream “Classification and Measurement” aimed at reviewing financial instruments classification in line with new IFRS9 criteria; • work-stream “Impairment” aimed at developing and implementing models and methods for calculating impairment. These work-streams go together with a specific activity aimed at adapting models and methods to the specific characteristics of Corporate & Investment Banking (CIB). The entire project was developed actively involving Bank’s structures, Board of Directors and Top Management. The following should be noted with regard to the new accounting standard: • has introduced significant changes in the rules for classifying and measuring financial instruments compared to IAS39. With reference to loans and debt securities, the classification and consequent measurement of these instruments is based on the "business model” and on the characteristics of the financial instrument cash flows (SPPI criterion - Solely Payments of Principal and Interests). With reference to equity instruments, they will be classified as financial instruments at fair value, with differences recognised through profit or loss or in other comprehensive income. In the latter case, unlike the requirements of IAS39 for available-for-sale financial assets, IFRS9 no longer requires to recognise impairment losses and provides that, in the event of sale of the instrument, the profits and losses on disposal must be reclassified to other shareholders' equity reserve and not to profit or loss. In the end, with reference to financial liabilities designated at fair value, it modified the accounting of "own credit risk", i.e. the changes in the value of liabilities at fair value that are due to fluctuations in their creditworthiness. According to the new standard, these changes must be recognised in an equity reserve, rather than in the income statement as per IAS39, thus eliminating a source of volatility in economic results. • has introduced a new accounting model of impairment for credit exposures based on (i) an "expected losses" approach replacing the current one based on the recognition of "incurred losses" and (ii) the concept of "lifetime" expected loss. • has introduced guidelines that clarify when financial instruments shall be written off by specifying that the write-off constitutes an event of accounting derecognition; • has also modified the rules applicable to "hedge accounting" with regard to designating a hedging relationship and verifying its effectiveness with the aim of ensuring a higher alignment between the accounting recognition of hedges and the underlying management rationale. The Bank has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. The Bank has decided to exploit the option provided by the accounting standard not to restate comparative figures of previous years, consequently, for UniCredit S.p.A, the first time adoption of the new standard is 1 January 2018. Company financial statements | Notes to the accounts Part A - Accounting policies 550 2018 Annual Report and Accounts · UniCredit UniCredit S.p.A. Balance Sheet as at 1 January 2018 is presented below, prepared in accordance with the mandatory format envisaged by the 5th Update of Banca d’Italia Circular 262 issued on 22 December 2017. Balance sheet (€ '000) AMOUNTS AS AT ASSETS 01.01.2018 10. Cash and cash balances 25,816,708 20. Financial assets at fair value through profit or loss: 16,884,089 a) Financial assets held for trading 13,863,779 b) Financial assets designated at fair value - c) Other financial assets mandatorily at fair value 3,020,310 30. Financial assets at fair value through other comprehensive income 57,541,000 40. Financial assets at amortised cost: 234,110,104 a) Loans and advances to banks 27,922,885 b) Loans and advances to customers 206,187,219 50. Hedging derivatives 4,399,939 60. Changes in fair value of portfolio hedged items (+/-) 1,743,968 70. Equity investments 44,145,485 80. Property, plant and equipment 2,209,455 90. Intangible assets 4,350 of which: goodwill - 100. Tax assets: 10,414,745 a) Current 1,660,306 b) Deferred 8,754,439 110. Non-current assets and disposal groups classified as held for sale 150,031 120. Other assets 4,717,335 Total assets 402,137,209 continued: Balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 01.01.2018 10. Financial liabilities at amortised cost: 318,891,410 a) Deposits from banks 56,807,016 b) Deposits from customers 197,138,762 c) Debt securities in issue 64,945,632 20. Financial liabilities held for trading 13,095,915 30. Financial liabilities designated at fair value 2,737,625 40. Hedging derivatives 4,530,286 50. Value adjustment of hedged financial liabilities (+/-) 1,720,371 60. Tax liabilities: 1,152 a) Current 1,152 b) Deferred - 70. Liabilities associated with assets classified as held for sale - 80. Other liabilities 7,535,311 90. Provision for employee severance pay 828,450 100. Provisions for risks and charges: 2,372,535 a) Committments and guarantees given 529,530 b) Post-retirement benefit obligations 77,312 c) Other provisions for risks and charges 1,765,693 110. Valuation reserves 267,486 120. Redeemable shares - 130. Equity instruments 4,610,073 140. Reserves 5,033,041 150. Share premium 13,399,799 160. Share capital 20,880,550 170. Treasury shares (-) (2,440) 180. Profit (Loss) for the period (+/-) 6,235,645 Total Liabilities and Shareholders' Equity 402,137,209 Company financial statements | Notes to the accounts Part A - Accounting policies 550 2018 Annual Report and Accounts · UniCredit UniCredit S.p.A. Balance Sheet as at 1 January 2018 is presented below, prepared in accordance with the mandatory format envisaged by the 5th Update of Banca d’Italia Circular 262 issued on 22 December 2017. Balance sheet (€ '000) AMOUNTS AS AT ASSETS 01.01.2018 10. Cash and cash balances 25,816,708 20. Financial assets at fair value through profit or loss: 16,884,089 a) Financial assets held for trading 13,863,779 b) Financial assets designated at fair value - c) Other financial assets mandatorily at fair value 3,020,310 30. Financial assets at fair value through other comprehensive income 57,541,000 40. Financial assets at amortised cost: 234,110,104 a) Loans and advances to banks 27,922,885 b) Loans and advances to customers 206,187,219 50. Hedging derivatives 4,399,939 60. Changes in fair value of portfolio hedged items (+/-) 1,743,968 70. Equity investments 44,145,485 80. Property, plant and equipment 2,209,455 90. Intangible assets 4,350 of which: goodwill - 100. Tax assets: 10,414,745 a) Current 1,660,306 b) Deferred 8,754,439 110. Non-current assets and disposal groups classified as held for sale 150,031 120. Other assets 4,717,335 Total assets 402,137,209 continued: Balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 01.01.2018 10. Financial liabilities at amortised cost: 318,891,410 a) Deposits from banks 56,807,016 b) Deposits from customers 197,138,762 c) Debt securities in issue 64,945,632 20. Financial liabilities held for trading 13,095,915 30. Financial liabilities designated at fair value 2,737,625 40. Hedging derivatives 4,530,286 50. Value adjustment of hedged financial liabilities (+/-) 1,720,371 60. Tax liabilities: 1,152 a) Current 1,152 b) Deferred - 70. Liabilities associated with assets classified as held for sale - 80. Other liabilities 7,535,311 90. Provision for employee severance pay 828,450 100. Provisions for risks and charges: 2,372,535 a) Committments and guarantees given 529,530 b) Post-retirement benefit obligations 77,312 c) Other provisions for risks and charges 1,765,693 110. Valuation reserves 267,486 120. Redeemable shares - 130. Equity instruments 4,610,073 140. Reserves 5,033,041 150. Share premium 13,399,799 160. Share capital 20,880,550 170. Treasury shares (-) (2,440) 180. Profit (Loss) for the period (+/-) 6,235,645 Total Liabilities and Shareholders' Equity 402,137,209 Company financial statements | Notes to the accounts Part A - Accounting policies 550 2018 Annual Report and Accounts · UniCredit UniCredit S.p.A. Balance Sheet as at 1 January 2018 is presented below, prepared in accordance with the mandatory format envisaged by the 5th Update of Banca d’Italia Circular 262 issued on 22 December 2017. Balance sheet (€ '000) AMOUNTS AS AT ASSETS 01.01.2018 10. Cash and cash balances 25,816,708 20. Financial assets at fair value through profit or loss: 16,884,089 a) Financial assets held for trading 13,863,779 b) Financial assets designated at fair value - c) Other financial assets mandatorily at fair value 3,020,310 30. Financial assets at fair value through other comprehensive income 57,541,000 40. Financial assets at amortised cost: 234,110,104 a) Loans and advances to banks 27,922,885 b) Loans and advances to customers 206,187,219 50. Hedging derivatives 4,399,939 60. Changes in fair value of portfolio hedged items (+/-) 1,743,968 70. Equity investments 44,145,485 80. Property, plant and equipment 2,209,455 90. Intangible assets 4,350 of which: goodwill - 100. Tax assets: 10,414,745 a) Current 1,660,306 b) Deferred 8,754,439 110. Non-current assets and disposal groups classified as held for sale 150,031 120. Other assets 4,717,335 Total assets 402,137,209 continued: Balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 01.01.2018 10. Financial liabilities at amortised cost: 318,891,410 a) Deposits from banks 56,807,016 b) Deposits from customers 197,138,762 c) Debt securities in issue 64,945,632 20. Financial liabilities held for trading 13,095,915 30. Financial liabilities designated at fair value 2,737,625 40. Hedging derivatives 4,530,286 50. Value adjustment of hedged financial liabilities (+/-) 1,720,371 60. Tax liabilities: 1,152 a) Current 1,152 b) Deferred - 70. Liabilities associated with assets classified as held for sale - 80. Other liabilities 7,535,311 90. Provision for employee severance pay 828,450 100. Provisions for risks and charges: 2,372,535 a) Committments and guarantees given 529,530 b) Post-retirement benefit obligations 77,312 c) Other provisions for risks and charges 1,765,693 110. Valuation reserves 267,486 120. Redeemable shares - 130. Equity instruments 4,610,073 140. Reserves 5,033,041 150. Share premium 13,399,799 160. Share capital 20,880,550 170. Treasury shares (-) (2,440) 180. Profit (Loss) for the period (+/-) 6,235,645 Total Liabilities and Shareholders' Equity 402,137,209 Company financial statements | Notes to the accounts Part A - Accounting policies 550 2018 Annual Report and Accounts · UniCredit UniCredit S.p.A. Balance Sheet as at 1 January 2018 is presented below, prepared in accordance with the mandatory format envisaged by the 5th Update of Banca d’Italia Circular 262 issued on 22 December 2017. Balance sheet (€ '000) AMOUNTS AS AT ASSETS 01.01.2018 10. Cash and cash balances 25,816,708 20. Financial assets at fair value through profit or loss: 16,884,089 a) Financial assets held for trading 13,863,779 b) Financial assets designated at fair value - c) Other financial assets mandatorily at fair value 3,020,310 30. Financial assets at fair value through other comprehensive income 57,541,000 40. Financial assets at amortised cost: 234,110,104 a) Loans and advances to banks 27,922,885 b) Loans and advances to customers 206,187,219 50. Hedging derivatives 4,399,939 60. Changes in fair value of portfolio hedged items (+/-) 1,743,968 70. Equity investments 44,145,485 80. Property, plant and equipment 2,209,455 90. Intangible assets 4,350 of which: goodwill - 100. Tax assets: 10,414,745 a) Current 1,660,306 b) Deferred 8,754,439 110. Non-current assets and disposal groups classified as held for sale 150,031 120. Other assets 4,717,335 Total assets 402,137,209 continued: Balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 01.01.2018 10. Financial liabilities at amortised cost: 318,891,410 a) Deposits from banks 56,807,016 b) Deposits from customers 197,138,762 c) Debt securities in issue 64,945,632 20. Financial liabilities held for trading 13,095,915 30. Financial liabilities designated at fair value 2,737,625 40. Hedging derivatives 4,530,286 50. Value adjustment of hedged financial liabilities (+/-) 1,720,371 60. Tax liabilities: 1,152 a) Current 1,152 b) Deferred - 70. Liabilities associated with assets classified as held for sale - 80. Other liabilities 7,535,311 90. Provision for employee severance pay 828,450 100. Provisions for risks and charges: 2,372,535 a) Committments and guarantees given 529,530 b) Post-retirement benefit obligations 77,312 c) Other provisions for risks and charges 1,765,693 110. Valuation reserves 267,486 120. Redeemable shares - 130. Equity instruments 4,610,073 140. Reserves 5,033,041 150. Share premium 13,399,799 160. Share capital 20,880,550 170. Treasury shares (-) (2,440) 180. Profit (Loss) for the period (+/-) 6,235,645 Total Liabilities and Shareholders' Equity 402,137,209 Company financial statements | Notes to the accounts Part A - Accounting policies 550 2018 Annual Report and Accounts · UniCredit UniCredit S.p.A. Balance Sheet as at 1 January 2018 is presented below, prepared in accordance with the mandatory format envisaged by the 5th Update of Banca d’Italia Circular 262 issued on 22 December 2017. Balance sheet (€ '000) AMOUNTS AS AT ASSETS 01.01.2018 10. Cash and cash balances 25,816,708 20. Financial assets at fair value through profit or loss: 16,884,089 a) Financial assets held for trading 13,863,779 b) Financial assets designated at fair value - c) Other financial assets mandatorily at fair value 3,020,310 30. Financial assets at fair value through other comprehensive income 57,541,000 40. Financial assets at amortised cost: 234,110,104 a) Loans and advances to banks 27,922,885 b) Loans and advances to customers 206,187,219 50. Hedging derivatives 4,399,939 60. Changes in fair value of portfolio hedged items (+/-) 1,743,968 70. Equity investments 44,145,485 80. Property, plant and equipment 2,209,455 90. Intangible assets 4,350 of which: goodwill - 100. Tax assets: 10,414,745 a) Current 1,660,306 b) Deferred 8,754,439 110. Non-current assets and disposal groups classified as held for sale 150,031 120. Other assets 4,717,335 Total assets 402,137,209 continued: Balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 01.01.2018 10. Financial liabilities at amortised cost: 318,891,410 a) Deposits from banks 56,807,016 b) Deposits from customers 197,138,762 c) Debt securities in issue 64,945,632 20. Financial liabilities held for trading 13,095,915 30. Financial liabilities designated at fair value 2,737,625 40. Hedging derivatives 4,530,286 50. Value adjustment of hedged financial liabilities (+/-) 1,720,371 60. Tax liabilities: 1,152 a) Current 1,152 b) Deferred - 70. Liabilities associated with assets classified as held for sale - 80. Other liabilities 7,535,311 90. Provision for employee severance pay 828,450 100. Provisions for risks and charges: 2,372,535 a) Committments and guarantees given 529,530 b) Post-retirement benefit obligations 77,312 c) Other provisions for risks and charges 1,765,693 110. Valuation reserves 267,486 120. Redeemable shares - 130. Equity instruments 4,610,073 140. Reserves 5,033,041 150. Share premium 13,399,799 160. Share capital 20,880,550 170. Treasury shares (-) (2,440) 180. Profit (Loss) for the period (+/-) 6,235,645 Total Liabilities and Shareholders' Equity 402,137,209 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 551 The adoption of IFRS9 has determined: • an overall negative effect on equity for an amount of -€3,083,710 thousand net of taxes calculated on 1 January 201838 (-€3,187,879 thousand gross of taxes); • an overall negative effect on CET139 fully loaded equal to -151 bps (-156 bps gross of taxes); • the increase of loan loss provisions to an amount equal to €20,606,292 thousand. In particular, this effect (-€3,083,710 thousand net of taxes and -€3,187,879 thousand gross of taxes) stems from: • for an amount, net of the taxes, of -€318,061 thousand (-€358,122 thousand gross of taxes) from changes in the revaluation reserves reported in item “110. Valuation reserves” which is attributable to instruments classified in item “30 Financial assets at fair value through other comprehensive income” and in item “30. Financial liabilities designated at fair value”, for the component relating to the valuation of own creditworthiness; • for an amount, net of the tax effect, of -€2,765,649 thousand (-€2,829,757 thousand gross of taxes) from changes in item “140. Reserves” attributable to the effects of reclassification and measurement of financial instruments other than those reported in item “30. Financial assets at fair value through other comprehensive income” and to the calculation of impairment on on-balance-sheet and off-balance sheet exposures. Note that these final impacts are different from those preliminarily disclosed in the Reports and Accounts as at 31 December 201740 mainly as a result of: • the observation of market transactions occurred on a specific asset class of NPL loans that are included in the NPL Strategy that has required the revision of prices, estimated through internal models, considered in the sale scenario for the measurement of non-performing exposures41. This price adjustments has determined a negative FTA effect of €270,675 thousand, gross of taxes. • the inclusion in the “NPL strategy” of an additional portfolio of non-performing exposures for an amount equal to their residual value after write-off recognition in light of: - the Group strategy for the management of the Non-performing loan portfolio that gives precedence to the deleveraging of such portfolio, as illustrated in the Multi-year Plan (MYP) communicated to the market in December 2017; - the introduction by IFRS9 of specific guidance on write-off. Note that the Bank has developed specific guidelines on write-off aimed at granting the compliance with IFRS9 and the document “Guidance to banks on non-performing loans “ issued by ECB. Write-offs have determined a negative FTA effect of €802,763 thousand, gross of taxes42. 2. Classification and measurement As a result of the entry into force of the new accounting standard, the Bank has reclassified financial assets and liabilities as at 1 January 2018 into the new envisaged categories. In this regard, it should be noted that this classification is based on business model and characteristics of the contractual cash flows. The analysis of the business model was conducted by mapping the business areas that make up the Bank and by allocating a specific business model, for IFRS9 purposes, to each of them. In this regard, the business areas that make up the Bank's banking portfolio have been assigned "held-to-collect" or "held-to-collect and sell" business models according to holding intentions and expected turnover of the financial instruments. The business areas that make up the Bank's trading portfolio have been assigned an "other" business model in order to reflect trading intentions. For the purposes of classifying financial instruments in the new categories envisaged by IFRS9, the business model analysis must be complemented by an analysis of contractual flows ("SPPI Test"). In this regard, the Bank has developed systems and processes to analyse the portfolio of debt securities and loans in place and assess whether the characteristics of contractual cash flows allow for measurement at amortised cost (“held-to-collect” portfolio) or at fair value with effect on other comprehensive income (“held-to-collect and sell” portfolio). The analysis in question was carried out both by contract and by defining specific clusters based on the characteristics of the transactions and using a specific internally developed tool ("SPPI Tool") to analyse the contract features with respect to IFRS9 requirements, or by using external data providers. 38 In the current section “Transition to “IFRS9: Financial instruments” of UniCredit S.p.A.” the tax impacts shown are based on tax regulation existing as at 1 January 2018. 39 UniCredit S.p.A has decided to not apply the IFRS9 transitional approach as reported in article 473a of the CRR. Therefore, the calculation of own funds, capital absorption, capital ratios and leverage fully reflects the impact arising from the application of the IFRS9 principle. 40 UniCredit S.p.A. Reports and Accounts as at 31 December 2017, page 73: “[…] Overall adjustments to the carrying value of financial instruments due to IFRS9 transition will be accounted for through Equity as of 1 January 2018. and they will have an impact on fully loaded CET1 ratio, gross of tax effect, that can be preliminarily estimated in the range of -102bps which is equivalent to about -€2.1 billion.” 41 Refer to the related paragraph of Part A – Section 15 – Other Information. 42 Refer to the related paragraph of Part A – Section 15 – Other Information. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 551 The adoption of IFRS9 has determined: • an overall negative effect on equity for an amount of -€3,083,710 thousand net of taxes calculated on 1 January 201838 (-€3,187,879 thousand gross of taxes); • an overall negative effect on CET139 fully loaded equal to -151 bps (-156 bps gross of taxes); • the increase of loan loss provisions to an amount equal to €20,606,292 thousand. In particular, this effect (-€3,083,710 thousand net of taxes and -€3,187,879 thousand gross of taxes) stems from: • for an amount, net of the taxes, of -€318,061 thousand (-€358,122 thousand gross of taxes) from changes in the revaluation reserves reported in item “110. Valuation reserves” which is attributable to instruments classified in item “30 Financial assets at fair value through other comprehensive income” and in item “30. Financial liabilities designated at fair value”, for the component relating to the valuation of own creditworthiness; • for an amount, net of the tax effect, of -€2,765,649 thousand (-€2,829,757 thousand gross of taxes) from changes in item “140. Reserves” attributable to the effects of reclassification and measurement of financial instruments other than those reported in item “30. Financial assets at fair value through other comprehensive income” and to the calculation of impairment on on-balance-sheet and off-balance sheet exposures. Note that these final impacts are different from those preliminarily disclosed in the Reports and Accounts as at 31 December 201740 mainly as a result of: • the observation of market transactions occurred on a specific asset class of NPL loans that are included in the NPL Strategy that has required the revision of prices, estimated through internal models, considered in the sale scenario for the measurement of non-performing exposures41. This price adjustments has determined a negative FTA effect of €270,675 thousand, gross of taxes. • the inclusion in the “NPL strategy” of an additional portfolio of non-performing exposures for an amount equal to their residual value after write-off recognition in light of: - the Group strategy for the management of the Non-performing loan portfolio that gives precedence to the deleveraging of such portfolio, as illustrated in the Multi-year Plan (MYP) communicated to the market in December 2017; - the introduction by IFRS9 of specific guidance on write-off. Note that the Bank has developed specific guidelines on write-off aimed at granting the compliance with IFRS9 and the document “Guidance to banks on non-performing loans “ issued by ECB. Write-offs have determined a negative FTA effect of €802,763 thousand, gross of taxes42. 2. Classification and measurement As a result of the entry into force of the new accounting standard, the Bank has reclassified financial assets and liabilities as at 1 January 2018 into the new envisaged categories. In this regard, it should be noted that this classification is based on business model and characteristics of the contractual cash flows. The analysis of the business model was conducted by mapping the business areas that make up the Bank and by allocating a specific business model, for IFRS9 purposes, to each of them. In this regard, the business areas that make up the Bank's banking portfolio have been assigned "held-to-collect" or "held-to-collect and sell" business models according to holding intentions and expected turnover of the financial instruments. The business areas that make up the Bank's trading portfolio have been assigned an "other" business model in order to reflect trading intentions. For the purposes of classifying financial instruments in the new categories envisaged by IFRS9, the business model analysis must be complemented by an analysis of contractual flows ("SPPI Test"). In this regard, the Bank has developed systems and processes to analyse the portfolio of debt securities and loans in place and assess whether the characteristics of contractual cash flows allow for measurement at amortised cost (“held-to-collect” portfolio) or at fair value with effect on other comprehensive income (“held-to-collect and sell” portfolio). The analysis in question was carried out both by contract and by defining specific clusters based on the characteristics of the transactions and using a specific internally developed tool ("SPPI Tool") to analyse the contract features with respect to IFRS9 requirements, or by using external data providers. 38 In the current section “Transition to “IFRS9: Financial instruments” of UniCredit S.p.A.” the tax impacts shown are based on tax regulation existing as at 1 January 2018. 39 UniCredit S.p.A has decided to not apply the IFRS9 transitional approach as reported in article 473a of the CRR. Therefore, the calculation of own funds, capital absorption, capital ratios and leverage fully reflects the impact arising from the application of the IFRS9 principle. 40 UniCredit S.p.A. Reports and Accounts as at 31 December 2017, page 73: “[…] Overall adjustments to the carrying value of financial instruments due to IFRS9 transition will be accounted for through Equity as of 1 January 2018. and they will have an impact on fully loaded CET1 ratio, gross of tax effect, that can be preliminarily estimated in the range of -102bps which is equivalent to about -€2.1 billion.” 41 Refer to the related paragraph of Part A – Section 15 – Other Information. 42 Refer to the related paragraph of Part A – Section 15 – Other Information. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 551 The adoption of IFRS9 has determined: • an overall negative effect on equity for an amount of -€3,083,710 thousand net of taxes calculated on 1 January 201838 (-€3,187,879 thousand gross of taxes); • an overall negative effect on CET139 fully loaded equal to -151 bps (-156 bps gross of taxes); • the increase of loan loss provisions to an amount equal to €20,606,292 thousand. In particular, this effect (-€3,083,710 thousand net of taxes and -€3,187,879 thousand gross of taxes) stems from: • for an amount, net of the taxes, of -€318,061 thousand (-€358,122 thousand gross of taxes) from changes in the revaluation reserves reported in item “110. Valuation reserves” which is attributable to instruments classified in item “30 Financial assets at fair value through other comprehensive income” and in item “30. Financial liabilities designated at fair value”, for the component relating to the valuation of own creditworthiness; • for an amount, net of the tax effect, of -€2,765,649 thousand (-€2,829,757 thousand gross of taxes) from changes in item “140. Reserves” attributable to the effects of reclassification and measurement of financial instruments other than those reported in item “30. Financial assets at fair value through other comprehensive income” and to the calculation of impairment on on-balance-sheet and off-balance sheet exposures. Note that these final impacts are different from those preliminarily disclosed in the Reports and Accounts as at 31 December 201740 mainly as a result of: • the observation of market transactions occurred on a specific asset class of NPL loans that are included in the NPL Strategy that has required the revision of prices, estimated through internal models, considered in the sale scenario for the measurement of non-performing exposures41. This price adjustments has determined a negative FTA effect of €270,675 thousand, gross of taxes. • the inclusion in the “NPL strategy” of an additional portfolio of non-performing exposures for an amount equal to their residual value after write-off recognition in light of: - the Group strategy for the management of the Non-performing loan portfolio that gives precedence to the deleveraging of such portfolio, as illustrated in the Multi-year Plan (MYP) communicated to the market in December 2017; - the introduction by IFRS9 of specific guidance on write-off. Note that the Bank has developed specific guidelines on write-off aimed at granting the compliance with IFRS9 and the document “Guidance to banks on non-performing loans “ issued by ECB. Write-offs have determined a negative FTA effect of €802,763 thousand, gross of taxes42. 2. Classification and measurement As a result of the entry into force of the new accounting standard, the Bank has reclassified financial assets and liabilities as at 1 January 2018 into the new envisaged categories. In this regard, it should be noted that this classification is based on business model and characteristics of the contractual cash flows. The analysis of the business model was conducted by mapping the business areas that make up the Bank and by allocating a specific business model, for IFRS9 purposes, to each of them. In this regard, the business areas that make up the Bank's banking portfolio have been assigned "held-to-collect" or "held-to-collect and sell" business models according to holding intentions and expected turnover of the financial instruments. The business areas that make up the Bank's trading portfolio have been assigned an "other" business model in order to reflect trading intentions. For the purposes of classifying financial instruments in the new categories envisaged by IFRS9, the business model analysis must be complemented by an analysis of contractual flows ("SPPI Test"). In this regard, the Bank has developed systems and processes to analyse the portfolio of debt securities and loans in place and assess whether the characteristics of contractual cash flows allow for measurement at amortised cost (“held-to-collect” portfolio) or at fair value with effect on other comprehensive income (“held-to-collect and sell” portfolio). The analysis in question was carried out both by contract and by defining specific clusters based on the characteristics of the transactions and using a specific internally developed tool ("SPPI Tool") to analyse the contract features with respect to IFRS9 requirements, or by using external data providers. 38 In the current section “Transition to “IFRS9: Financial instruments” of UniCredit S.p.A.” the tax impacts shown are based on tax regulation existing as at 1 January 2018. 39 UniCredit S.p.A has decided to not apply the IFRS9 transitional approach as reported in article 473a of the CRR. Therefore, the calculation of own funds, capital absorption, capital ratios and leverage fully reflects the impact arising from the application of the IFRS9 principle. 40 UniCredit S.p.A. Reports and Accounts as at 31 December 2017, page 73: “[…] Overall adjustments to the carrying value of financial instruments due to IFRS9 transition will be accounted for through Equity as of 1 January 2018. and they will have an impact on fully loaded CET1 ratio, gross of tax effect, that can be preliminarily estimated in the range of -102bps which is equivalent to about -€2.1 billion.” 41 Refer to the related paragraph of Part A – Section 15 – Other Information. 42 Refer to the related paragraph of Part A – Section 15 – Other Information. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 551 The adoption of IFRS9 has determined: • an overall negative effect on equity for an amount of -€3,083,710 thousand net of taxes calculated on 1 January 201838 (-€3,187,879 thousand gross of taxes); • an overall negative effect on CET139 fully loaded equal to -151 bps (-156 bps gross of taxes); • the increase of loan loss provisions to an amount equal to €20,606,292 thousand. In particular, this effect (-€3,083,710 thousand net of taxes and -€3,187,879 thousand gross of taxes) stems from: • for an amount, net of the taxes, of -€318,061 thousand (-€358,122 thousand gross of taxes) from changes in the revaluation reserves reported in item “110. Valuation reserves” which is attributable to instruments classified in item “30 Financial assets at fair value through other comprehensive income” and in item “30. Financial liabilities designated at fair value”, for the component relating to the valuation of own creditworthiness; • for an amount, net of the tax effect, of -€2,765,649 thousand (-€2,829,757 thousand gross of taxes) from changes in item “140. Reserves” attributable to the effects of reclassification and measurement of financial instruments other than those reported in item “30. Financial assets at fair value through other comprehensive income” and to the calculation of impairment on on-balance-sheet and off-balance sheet exposures. Note that these final impacts are different from those preliminarily disclosed in the Reports and Accounts as at 31 December 201740 mainly as a result of: • the observation of market transactions occurred on a specific asset class of NPL loans that are included in the NPL Strategy that has required the revision of prices, estimated through internal models, considered in the sale scenario for the measurement of non-performing exposures41. This price adjustments has determined a negative FTA effect of €270,675 thousand, gross of taxes. • the inclusion in the “NPL strategy” of an additional portfolio of non-performing exposures for an amount equal to their residual value after write-off recognition in light of: - the Group strategy for the management of the Non-performing loan portfolio that gives precedence to the deleveraging of such portfolio, as illustrated in the Multi-year Plan (MYP) communicated to the market in December 2017; - the introduction by IFRS9 of specific guidance on write-off. Note that the Bank has developed specific guidelines on write-off aimed at granting the compliance with IFRS9 and the document “Guidance to banks on non-performing loans “ issued by ECB. Write-offs have determined a negative FTA effect of €802,763 thousand, gross of taxes42. 2. Classification and measurement As a result of the entry into force of the new accounting standard, the Bank has reclassified financial assets and liabilities as at 1 January 2018 into the new envisaged categories. In this regard, it should be noted that this classification is based on business model and characteristics of the contractual cash flows. The analysis of the business model was conducted by mapping the business areas that make up the Bank and by allocating a specific business model, for IFRS9 purposes, to each of them. In this regard, the business areas that make up the Bank's banking portfolio have been assigned "held-to-collect" or "held-to-collect and sell" business models according to holding intentions and expected turnover of the financial instruments. The business areas that make up the Bank's trading portfolio have been assigned an "other" business model in order to reflect trading intentions. For the purposes of classifying financial instruments in the new categories envisaged by IFRS9, the business model analysis must be complemented by an analysis of contractual flows ("SPPI Test"). In this regard, the Bank has developed systems and processes to analyse the portfolio of debt securities and loans in place and assess whether the characteristics of contractual cash flows allow for measurement at amortised cost (“held-to-collect” portfolio) or at fair value with effect on other comprehensive income (“held-to-collect and sell” portfolio). The analysis in question was carried out both by contract and by defining specific clusters based on the characteristics of the transactions and using a specific internally developed tool ("SPPI Tool") to analyse the contract features with respect to IFRS9 requirements, or by using external data providers. 38 In the current section “Transition to “IFRS9: Financial instruments” of UniCredit S.p.A.” the tax impacts shown are based on tax regulation existing as at 1 January 2018. 39 UniCredit S.p.A has decided to not apply the IFRS9 transitional approach as reported in article 473a of the CRR. Therefore, the calculation of own funds, capital absorption, capital ratios and leverage fully reflects the impact arising from the application of the IFRS9 principle. 40 UniCredit S.p.A. Reports and Accounts as at 31 December 2017, page 73: “[…] Overall adjustments to the carrying value of financial instruments due to IFRS9 transition will be accounted for through Equity as of 1 January 2018. and they will have an impact on fully loaded CET1 ratio, gross of tax effect, that can be preliminarily estimated in the range of -102bps which is equivalent to about -€2.1 billion.” 41 Refer to the related paragraph of Part A – Section 15 – Other Information. 42 Refer to the related paragraph of Part A – Section 15 – Other Information. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 551 The adoption of IFRS9 has determined: • an overall negative effect on equity for an amount of -€3,083,710 thousand net of taxes calculated on 1 January 201838 (-€3,187,879 thousand gross of taxes); • an overall negative effect on CET139 fully loaded equal to -151 bps (-156 bps gross of taxes); • the increase of loan loss provisions to an amount equal to €20,606,292 thousand. In particular, this effect (-€3,083,710 thousand net of taxes and -€3,187,879 thousand gross of taxes) stems from: • for an amount, net of the taxes, of -€318,061 thousand (-€358,122 thousand gross of taxes) from changes in the revaluation reserves reported in item “110. Valuation reserves” which is attributable to instruments classified in item “30 Financial assets at fair value through other comprehensive income” and in item “30. Financial liabilities designated at fair value”, for the component relating to the valuation of own creditworthiness; • for an amount, net of the tax effect, of -€2,765,649 thousand (-€2,829,757 thousand gross of taxes) from changes in item “140. Reserves” attributable to the effects of reclassification and measurement of financial instruments other than those reported in item “30. Financial assets at fair value through other comprehensive income” and to the calculation of impairment on on-balance-sheet and off-balance sheet exposures. Note that these final impacts are different from those preliminarily disclosed in the Reports and Accounts as at 31 December 201740 mainly as a result of: • the observation of market transactions occurred on a specific asset class of NPL loans that are included in the NPL Strategy that has required the revision of prices, estimated through internal models, considered in the sale scenario for the measurement of non-performing exposures41. This price adjustments has determined a negative FTA effect of €270,675 thousand, gross of taxes. • the inclusion in the “NPL strategy” of an additional portfolio of non-performing exposures for an amount equal to their residual value after write-off recognition in light of: - the Group strategy for the management of the Non-performing loan portfolio that gives precedence to the deleveraging of such portfolio, as illustrated in the Multi-year Plan (MYP) communicated to the market in December 2017; - the introduction by IFRS9 of specific guidance on write-off. Note that the Bank has developed specific guidelines on write-off aimed at granting the compliance with IFRS9 and the document “Guidance to banks on non-performing loans “ issued by ECB. Write-offs have determined a negative FTA effect of €802,763 thousand, gross of taxes42. 2. Classification and measurement As a result of the entry into force of the new accounting standard, the Bank has reclassified financial assets and liabilities as at 1 January 2018 into the new envisaged categories. In this regard, it should be noted that this classification is based on business model and characteristics of the contractual cash flows. The analysis of the business model was conducted by mapping the business areas that make up the Bank and by allocating a specific business model, for IFRS9 purposes, to each of them. In this regard, the business areas that make up the Bank's banking portfolio have been assigned "held-to-collect" or "held-to-collect and sell" business models according to holding intentions and expected turnover of the financial instruments. The business areas that make up the Bank's trading portfolio have been assigned an "other" business model in order to reflect trading intentions. For the purposes of classifying financial instruments in the new categories envisaged by IFRS9, the business model analysis must be complemented by an analysis of contractual flows ("SPPI Test"). In this regard, the Bank has developed systems and processes to analyse the portfolio of debt securities and loans in place and assess whether the characteristics of contractual cash flows allow for measurement at amortised cost (“held-to-collect” portfolio) or at fair value with effect on other comprehensive income (“held-to-collect and sell” portfolio). The analysis in question was carried out both by contract and by defining specific clusters based on the characteristics of the transactions and using a specific internally developed tool ("SPPI Tool") to analyse the contract features with respect to IFRS9 requirements, or by using external data providers. 38 In the current section “Transition to “IFRS9: Financial instruments” of UniCredit S.p.A.” the tax impacts shown are based on tax regulation existing as at 1 January 2018. 39 UniCredit S.p.A has decided to not apply the IFRS9 transitional approach as reported in article 473a of the CRR. Therefore, the calculation of own funds, capital absorption, capital ratios and leverage fully reflects the impact arising from the application of the IFRS9 principle. 40 UniCredit S.p.A. Reports and Accounts as at 31 December 2017, page 73: “[…] Overall adjustments to the carrying value of financial instruments due to IFRS9 transition will be accounted for through Equity as of 1 January 2018. and they will have an impact on fully loaded CET1 ratio, gross of tax effect, that can be preliminarily estimated in the range of -102bps which is equivalent to about -€2.1 billion.” 41 Refer to the related paragraph of Part A – Section 15 – Other Information. 42 Refer to the related paragraph of Part A – Section 15 – Other Information. Company financial statements | Notes to the accounts Part A - Accounting policies 552 2018 Annual Report and Accounts · UniCredit 3. Impairment The entry into force of the new accounting standard has required the developments of model aimed at calculating the amount of loan loss provisions on the basis of the expected credit loss. The models developed are based on two main pillars: • the allocation of credit exposures in the Stages 1, 2 and 3 as required by the standard (Stage Allocation); • the calculation of the associated expected credit loss. With reference to stage allocation the Bank has developed a combination of relative and absolute elements aimed at granting the proper allocation of credit exposures in the different credit Stages. For additional information refer to Part E - Section 1 - Credit risk. With reference to the calculation of expected credit loss, Bank models leverage on the Probability of Default (“PD”), Loss Given Default, (“LGD”) and Exposure at Default (“EAD”) used for regulatory purposes, with specific adjustments in order to ensure compliance with accounting rules. These adjustments are aimed, among other things, at introducing “point-in-time” adjustments to replace “through-the-cycle” adjustments required for regulatory purposes and including “forward looking” information. With reference to the latter the Bank has selected three macroeconomic scenarios to determine the forward looking component, a baseline scenario, a positive scenario and a negative scenario. The baseline scenario is the main scenario and indeed is expected to be the one with the highest likelihood of occurrence. The positive and the negative scenario represent alternative occurrences, either better or worse when compared to the baseline scenario in terms of evolution of the economies of the countries where the Bank operates. • The Base Scenario (“Baseline”) reflects the macroeconomic evolution expected from the Bank and as such is coherent with the assumptions used by the Bank in the planning processes. The Baseline Scenario foresees an economic growth stable and positive, both for the Eurozone and for the CEE countries, in a context where the interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. Specifically, the annual growth of the real GDP for the Eurozone is foreseen at +1.8% for 2018 and +1.5% for 2019 (with Italy at +1.2% and +1.0% and Germany at +1.9% and +1.8%, respectively), while the foreseen growth for the CEE countries is +2.4% in 2018 and +2.2% in 2019. The Scenario implies that the 3 months Euribor stays negative for 2018 and comes back near zero in 2019. • The Positive Scenario is based on the hypothesis that the positive economic growth of 2017 both at global level and at European level might consolidate even in 2018, sustained by the trend in the global commerce and by accommodating economic policies. This would imply, for the biggest European countries, a maximum phase of the economic cycle prolonged by an year, that would reflect in a bigger growth of the annual real GDP (with respect to the baseline scenario) of about 0.2%-0.5% both in 2018 and in 2019. Specifically, the annual growth of the real GDP for the Eurozone would grow to +2.3% for 2018 and +1.9% for 2019 (with Italy at +1.5% and +1.2% respectively) in a context of short term rates (3 months Euribor) still negatives or close to zero. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a better trend of the economy than the one assumed in the Baseline scenario. • The Adverse Scenario reflects one of the scenarios used in the evaluation processes of the capital adequacy (ICAAP). In coherence with the ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Bank foresees as most relevant in the context of the countries where it operates and for its business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks of the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tension between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for different “asset class” and to a slowdown of the economic growth both of the Eurozone (lower of about 1.5 per year with respect to the baseline scenario, in terms of real GDP) and of CEE countries (lower of about 2. points percentage, respectively). Specifically, the annual growth of the GDP for the Eurozone would be +0.4% for 2018 and -0.1% for 2019 (with Italy to -0.2% and -1.1% respectively) in a context of rates in the short run (3 months Euribor) that would stay negative even in 2019, based on the hypothesis that the ECB would prolong in such a market context the liquidity support to markets. The likelihood of happening of such scenario, at the time of its definition, is foreseen probable and appropriate to quantify the adverse trend of the of the economy. In coherence with the scenario and with the magnitude of changes compared to the baseline scenario, it is assumed that the negative scenario is less likely than the positive scenario. In addition the assessment of impaired exposures (Stage 3) considered sale scenarios whereas the Bank’s Non-Performing Asset Strategy foresees the sale on the market as a recovery method For additional information on the methods used for the calculation of expected loss refer to Part E - Section 1 - Credit risk. Company financial statements | Notes to the accounts Part A - Accounting policies 552 2018 Annual Report and Accounts · UniCredit 3. Impairment The entry into force of the new accounting standard has required the developments of model aimed at calculating the amount of loan loss provisions on the basis of the expected credit loss. The models developed are based on two main pillars: • the allocation of credit exposures in the Stages 1, 2 and 3 as required by the standard (Stage Allocation); • the calculation of the associated expected credit loss. With reference to stage allocation the Bank has developed a combination of relative and absolute elements aimed at granting the proper allocation of credit exposures in the different credit Stages. For additional information refer to Part E - Section 1 - Credit risk. With reference to the calculation of expected credit loss, Bank models leverage on the Probability of Default (“PD”), Loss Given Default, (“LGD”) and Exposure at Default (“EAD”) used for regulatory purposes, with specific adjustments in order to ensure compliance with accounting rules. These adjustments are aimed, among other things, at introducing “point-in-time” adjustments to replace “through-the-cycle” adjustments required for regulatory purposes and including “forward looking” information. With reference to the latter the Bank has selected three macroeconomic scenarios to determine the forward looking component, a baseline scenario, a positive scenario and a negative scenario. The baseline scenario is the main scenario and indeed is expected to be the one with the highest likelihood of occurrence. The positive and the negative scenario represent alternative occurrences, either better or worse when compared to the baseline scenario in terms of evolution of the economies of the countries where the Bank operates. • The Base Scenario (“Baseline”) reflects the macroeconomic evolution expected from the Bank and as such is coherent with the assumptions used by the Bank in the planning processes. The Baseline Scenario foresees an economic growth stable and positive, both for the Eurozone and for the CEE countries, in a context where the interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. Specifically, the annual growth of the real GDP for the Eurozone is foreseen at +1.8% for 2018 and +1.5% for 2019 (with Italy at +1.2% and +1.0% and Germany at +1.9% and +1.8%, respectively), while the foreseen growth for the CEE countries is +2.4% in 2018 and +2.2% in 2019. The Scenario implies that the 3 months Euribor stays negative for 2018 and comes back near zero in 2019. • The Positive Scenario is based on the hypothesis that the positive economic growth of 2017 both at global level and at European level might consolidate even in 2018, sustained by the trend in the global commerce and by accommodating economic policies. This would imply, for the biggest European countries, a maximum phase of the economic cycle prolonged by an year, that would reflect in a bigger growth of the annual real GDP (with respect to the baseline scenario) of about 0.2%-0.5% both in 2018 and in 2019. Specifically, the annual growth of the real GDP for the Eurozone would grow to +2.3% for 2018 and +1.9% for 2019 (with Italy at +1.5% and +1.2% respectively) in a context of short term rates (3 months Euribor) still negatives or close to zero. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a better trend of the economy than the one assumed in the Baseline scenario. • The Adverse Scenario reflects one of the scenarios used in the evaluation processes of the capital adequacy (ICAAP). In coherence with the ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Bank foresees as most relevant in the context of the countries where it operates and for its business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks of the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tension between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for different “asset class” and to a slowdown of the economic growth both of the Eurozone (lower of about 1.5 per year with respect to the baseline scenario, in terms of real GDP) and of CEE countries (lower of about 2. points percentage, respectively). Specifically, the annual growth of the GDP for the Eurozone would be +0.4% for 2018 and -0.1% for 2019 (with Italy to -0.2% and -1.1% respectively) in a context of rates in the short run (3 months Euribor) that would stay negative even in 2019, based on the hypothesis that the ECB would prolong in such a market context the liquidity support to markets. The likelihood of happening of such scenario, at the time of its definition, is foreseen probable and appropriate to quantify the adverse trend of the of the economy. In coherence with the scenario and with the magnitude of changes compared to the baseline scenario, it is assumed that the negative scenario is less likely than the positive scenario. In addition the assessment of impaired exposures (Stage 3) considered sale scenarios whereas the Bank’s Non-Performing Asset Strategy foresees the sale on the market as a recovery method For additional information on the methods used for the calculation of expected loss refer to Part E - Section 1 - Credit risk. Company financial statements | Notes to the accounts Part A - Accounting policies 552 2018 Annual Report and Accounts · UniCredit 3. Impairment The entry into force of the new accounting standard has required the developments of model aimed at calculating the amount of loan loss provisions on the basis of the expected credit loss. The models developed are based on two main pillars: • the allocation of credit exposures in the Stages 1, 2 and 3 as required by the standard (Stage Allocation); • the calculation of the associated expected credit loss. With reference to stage allocation the Bank has developed a combination of relative and absolute elements aimed at granting the proper allocation of credit exposures in the different credit Stages. For additional information refer to Part E - Section 1 - Credit risk. With reference to the calculation of expected credit loss, Bank models leverage on the Probability of Default (“PD”), Loss Given Default, (“LGD”) and Exposure at Default (“EAD”) used for regulatory purposes, with specific adjustments in order to ensure compliance with accounting rules. These adjustments are aimed, among other things, at introducing “point-in-time” adjustments to replace “through-the-cycle” adjustments required for regulatory purposes and including “forward looking” information. With reference to the latter the Bank has selected three macroeconomic scenarios to determine the forward looking component, a baseline scenario, a positive scenario and a negative scenario. The baseline scenario is the main scenario and indeed is expected to be the one with the highest likelihood of occurrence. The positive and the negative scenario represent alternative occurrences, either better or worse when compared to the baseline scenario in terms of evolution of the economies of the countries where the Bank operates. • The Base Scenario (“Baseline”) reflects the macroeconomic evolution expected from the Bank and as such is coherent with the assumptions used by the Bank in the planning processes. The Baseline Scenario foresees an economic growth stable and positive, both for the Eurozone and for the CEE countries, in a context where the interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. Specifically, the annual growth of the real GDP for the Eurozone is foreseen at +1.8% for 2018 and +1.5% for 2019 (with Italy at +1.2% and +1.0% and Germany at +1.9% and +1.8%, respectively), while the foreseen growth for the CEE countries is +2.4% in 2018 and +2.2% in 2019. The Scenario implies that the 3 months Euribor stays negative for 2018 and comes back near zero in 2019. • The Positive Scenario is based on the hypothesis that the positive economic growth of 2017 both at global level and at European level might consolidate even in 2018, sustained by the trend in the global commerce and by accommodating economic policies. This would imply, for the biggest European countries, a maximum phase of the economic cycle prolonged by an year, that would reflect in a bigger growth of the annual real GDP (with respect to the baseline scenario) of about 0.2%-0.5% both in 2018 and in 2019. Specifically, the annual growth of the real GDP for the Eurozone would grow to +2.3% for 2018 and +1.9% for 2019 (with Italy at +1.5% and +1.2% respectively) in a context of short term rates (3 months Euribor) still negatives or close to zero. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a better trend of the economy than the one assumed in the Baseline scenario. • The Adverse Scenario reflects one of the scenarios used in the evaluation processes of the capital adequacy (ICAAP). In coherence with the ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Bank foresees as most relevant in the context of the countries where it operates and for its business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks of the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tension between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for different “asset class” and to a slowdown of the economic growth both of the Eurozone (lower of about 1.5 per year with respect to the baseline scenario, in terms of real GDP) and of CEE countries (lower of about 2. points percentage, respectively). Specifically, the annual growth of the GDP for the Eurozone would be +0.4% for 2018 and -0.1% for 2019 (with Italy to -0.2% and -1.1% respectively) in a context of rates in the short run (3 months Euribor) that would stay negative even in 2019, based on the hypothesis that the ECB would prolong in such a market context the liquidity support to markets. The likelihood of happening of such scenario, at the time of its definition, is foreseen probable and appropriate to quantify the adverse trend of the of the economy. In coherence with the scenario and with the magnitude of changes compared to the baseline scenario, it is assumed that the negative scenario is less likely than the positive scenario. In addition the assessment of impaired exposures (Stage 3) considered sale scenarios whereas the Bank’s Non-Performing Asset Strategy foresees the sale on the market as a recovery method For additional information on the methods used for the calculation of expected loss refer to Part E - Section 1 - Credit risk. Company financial statements | Notes to the accounts Part A - Accounting policies 552 2018 Annual Report and Accounts · UniCredit 3. Impairment The entry into force of the new accounting standard has required the developments of model aimed at calculating the amount of loan loss provisions on the basis of the expected credit loss. The models developed are based on two main pillars: • the allocation of credit exposures in the Stages 1, 2 and 3 as required by the standard (Stage Allocation); • the calculation of the associated expected credit loss. With reference to stage allocation the Bank has developed a combination of relative and absolute elements aimed at granting the proper allocation of credit exposures in the different credit Stages. For additional information refer to Part E - Section 1 - Credit risk. With reference to the calculation of expected credit loss, Bank models leverage on the Probability of Default (“PD”), Loss Given Default, (“LGD”) and Exposure at Default (“EAD”) used for regulatory purposes, with specific adjustments in order to ensure compliance with accounting rules. These adjustments are aimed, among other things, at introducing “point-in-time” adjustments to replace “through-the-cycle” adjustments required for regulatory purposes and including “forward looking” information. With reference to the latter the Bank has selected three macroeconomic scenarios to determine the forward looking component, a baseline scenario, a positive scenario and a negative scenario. The baseline scenario is the main scenario and indeed is expected to be the one with the highest likelihood of occurrence. The positive and the negative scenario represent alternative occurrences, either better or worse when compared to the baseline scenario in terms of evolution of the economies of the countries where the Bank operates. • The Base Scenario (“Baseline”) reflects the macroeconomic evolution expected from the Bank and as such is coherent with the assumptions used by the Bank in the planning processes. The Baseline Scenario foresees an economic growth stable and positive, both for the Eurozone and for the CEE countries, in a context where the interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. Specifically, the annual growth of the real GDP for the Eurozone is foreseen at +1.8% for 2018 and +1.5% for 2019 (with Italy at +1.2% and +1.0% and Germany at +1.9% and +1.8%, respectively), while the foreseen growth for the CEE countries is +2.4% in 2018 and +2.2% in 2019. The Scenario implies that the 3 months Euribor stays negative for 2018 and comes back near zero in 2019. • The Positive Scenario is based on the hypothesis that the positive economic growth of 2017 both at global level and at European level might consolidate even in 2018, sustained by the trend in the global commerce and by accommodating economic policies. This would imply, for the biggest European countries, a maximum phase of the economic cycle prolonged by an year, that would reflect in a bigger growth of the annual real GDP (with respect to the baseline scenario) of about 0.2%-0.5% both in 2018 and in 2019. Specifically, the annual growth of the real GDP for the Eurozone would grow to +2.3% for 2018 and +1.9% for 2019 (with Italy at +1.5% and +1.2% respectively) in a context of short term rates (3 months Euribor) still negatives or close to zero. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a better trend of the economy than the one assumed in the Baseline scenario. • The Adverse Scenario reflects one of the scenarios used in the evaluation processes of the capital adequacy (ICAAP). In coherence with the ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Bank foresees as most relevant in the context of the countries where it operates and for its business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks of the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tension between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for different “asset class” and to a slowdown of the economic growth both of the Eurozone (lower of about 1.5 per year with respect to the baseline scenario, in terms of real GDP) and of CEE countries (lower of about 2. points percentage, respectively). Specifically, the annual growth of the GDP for the Eurozone would be +0.4% for 2018 and -0.1% for 2019 (with Italy to -0.2% and -1.1% respectively) in a context of rates in the short run (3 months Euribor) that would stay negative even in 2019, based on the hypothesis that the ECB would prolong in such a market context the liquidity support to markets. The likelihood of happening of such scenario, at the time of its definition, is foreseen probable and appropriate to quantify the adverse trend of the of the economy. In coherence with the scenario and with the magnitude of changes compared to the baseline scenario, it is assumed that the negative scenario is less likely than the positive scenario. In addition the assessment of impaired exposures (Stage 3) considered sale scenarios whereas the Bank’s Non-Performing Asset Strategy foresees the sale on the market as a recovery method For additional information on the methods used for the calculation of expected loss refer to Part E - Section 1 - Credit risk. Company financial statements | Notes to the accounts Part A - Accounting policies 552 2018 Annual Report and Accounts · UniCredit 3. Impairment The entry into force of the new accounting standard has required the developments of model aimed at calculating the amount of loan loss provisions on the basis of the expected credit loss. The models developed are based on two main pillars: • the allocation of credit exposures in the Stages 1, 2 and 3 as required by the standard (Stage Allocation); • the calculation of the associated expected credit loss. With reference to stage allocation the Bank has developed a combination of relative and absolute elements aimed at granting the proper allocation of credit exposures in the different credit Stages. For additional information refer to Part E - Section 1 - Credit risk. With reference to the calculation of expected credit loss, Bank models leverage on the Probability of Default (“PD”), Loss Given Default, (“LGD”) and Exposure at Default (“EAD”) used for regulatory purposes, with specific adjustments in order to ensure compliance with accounting rules. These adjustments are aimed, among other things, at introducing “point-in-time” adjustments to replace “through-the-cycle” adjustments required for regulatory purposes and including “forward looking” information. With reference to the latter the Bank has selected three macroeconomic scenarios to determine the forward looking component, a baseline scenario, a positive scenario and a negative scenario. The baseline scenario is the main scenario and indeed is expected to be the one with the highest likelihood of occurrence. The positive and the negative scenario represent alternative occurrences, either better or worse when compared to the baseline scenario in terms of evolution of the economies of the countries where the Bank operates. • The Base Scenario (“Baseline”) reflects the macroeconomic evolution expected from the Bank and as such is coherent with the assumptions used by the Bank in the planning processes. The Baseline Scenario foresees an economic growth stable and positive, both for the Eurozone and for the CEE countries, in a context where the interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. Specifically, the annual growth of the real GDP for the Eurozone is foreseen at +1.8% for 2018 and +1.5% for 2019 (with Italy at +1.2% and +1.0% and Germany at +1.9% and +1.8%, respectively), while the foreseen growth for the CEE countries is +2.4% in 2018 and +2.2% in 2019. The Scenario implies that the 3 months Euribor stays negative for 2018 and comes back near zero in 2019. • The Positive Scenario is based on the hypothesis that the positive economic growth of 2017 both at global level and at European level might consolidate even in 2018, sustained by the trend in the global commerce and by accommodating economic policies. This would imply, for the biggest European countries, a maximum phase of the economic cycle prolonged by an year, that would reflect in a bigger growth of the annual real GDP (with respect to the baseline scenario) of about 0.2%-0.5% both in 2018 and in 2019. Specifically, the annual growth of the real GDP for the Eurozone would grow to +2.3% for 2018 and +1.9% for 2019 (with Italy at +1.5% and +1.2% respectively) in a context of short term rates (3 months Euribor) still negatives or close to zero. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a better trend of the economy than the one assumed in the Baseline scenario. • The Adverse Scenario reflects one of the scenarios used in the evaluation processes of the capital adequacy (ICAAP). In coherence with the ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Bank foresees as most relevant in the context of the countries where it operates and for its business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks of the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tension between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for different “asset class” and to a slowdown of the economic growth both of the Eurozone (lower of about 1.5 per year with respect to the baseline scenario, in terms of real GDP) and of CEE countries (lower of about 2. points percentage, respectively). Specifically, the annual growth of the GDP for the Eurozone would be +0.4% for 2018 and -0.1% for 2019 (with Italy to -0.2% and -1.1% respectively) in a context of rates in the short run (3 months Euribor) that would stay negative even in 2019, based on the hypothesis that the ECB would prolong in such a market context the liquidity support to markets. The likelihood of happening of such scenario, at the time of its definition, is foreseen probable and appropriate to quantify the adverse trend of the of the economy. In coherence with the scenario and with the magnitude of changes compared to the baseline scenario, it is assumed that the negative scenario is less likely than the positive scenario. In addition the assessment of impaired exposures (Stage 3) considered sale scenarios whereas the Bank’s Non-Performing Asset Strategy foresees the sale on the market as a recovery method For additional information on the methods used for the calculation of expected loss refer to Part E - Section 1 - Credit risk. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 553 3. Reclassifications performed as at 1 January 2018 The following tables summarise the reclassifications performed on Balance Sheet (Assets and Liabilities) based on IFRS9 initial application and Banca d’Italia Circular 262 5th amendment. Balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Cash and cash balances 25,816,708 - - - 25,816,708 20. Financial assets at fair value through profit or loss: 16,908,530 (24,441) - 16,884,089 a) Financial assets held for trading 13,863,779 - - 13,863,779 b) Financial assets designated at fair value - - - - c) Other financial assets mandatorily at fair value 3,044,751 (24,441) - 3,020,310 Financial assets held for trading (ex IAS39 Item N. 20) 13,863,779 (13,863,779) - - Financial assets at fair value through profit or loss (ex IAS39 Item N. 30) 651,920 (651,920) - - 30. Financial assets at fair value through other comprehensive income 57,506,967 34,033 - 57,541,000 Available-for-sale financial assets (ex IAS39 Item N. 40) 59,718,169 (59,718,169) - - 40. Financial assets at amortised cost: 237,113,018 (3,002,914) - 234,110,104 Held-to-maturity investments (ex IAS39 Item N. 50) 762,431 (762,431) - - Loans and receivables with banks (ex IAS39 Item N. 60) 27,566,761 (27,566,761) - - Loans and receivables with customers (ex IAS39 Item N. 70) 208,965,455 (208,965,455) - - 50. Hedging derivatives 4,399,939 - - - 4,399,939 60. Changes in fair value of portfolio hedged items (+/-) 1,714,488 - 29,480 - 1,743,968 70. Equity investments 44,145,485 - - - 44,145,485 80. Property, plant and equipment 2,209,455 - - - 2,209,455 90. Intangible assets 4,350 - - - 4,350 of which: goodwill - - - - - 100. Tax assets: 10,310,576 - 104,169 - 10,414,745 a) Current 1,660,306 - - - 1,660,306 b) Deferred 8,650,270 - 104,169 - 8,754,439 110. Non-current assets and disposal groups classified as held for sale 150,031 - - - 150,031 120. Other assets 4,700,354 - - 16,981 4,717,335 Total assets 404,979,901 402,137,209 The amounts reported under “Other Changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 553 3. Reclassifications performed as at 1 January 2018 The following tables summarise the reclassifications performed on Balance Sheet (Assets and Liabilities) based on IFRS9 initial application and Banca d’Italia Circular 262 5th amendment. Balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Cash and cash balances 25,816,708 - - - 25,816,708 20. Financial assets at fair value through profit or loss: 16,908,530 (24,441) - 16,884,089 a) Financial assets held for trading 13,863,779 - - 13,863,779 b) Financial assets designated at fair value - - - - c) Other financial assets mandatorily at fair value 3,044,751 (24,441) - 3,020,310 Financial assets held for trading (ex IAS39 Item N. 20) 13,863,779 (13,863,779) - - Financial assets at fair value through profit or loss (ex IAS39 Item N. 30) 651,920 (651,920) - - 30. Financial assets at fair value through other comprehensive income 57,506,967 34,033 - 57,541,000 Available-for-sale financial assets (ex IAS39 Item N. 40) 59,718,169 (59,718,169) - - 40. Financial assets at amortised cost: 237,113,018 (3,002,914) - 234,110,104 Held-to-maturity investments (ex IAS39 Item N. 50) 762,431 (762,431) - - Loans and receivables with banks (ex IAS39 Item N. 60) 27,566,761 (27,566,761) - - Loans and receivables with customers (ex IAS39 Item N. 70) 208,965,455 (208,965,455) - - 50. Hedging derivatives 4,399,939 - - - 4,399,939 60. Changes in fair value of portfolio hedged items (+/-) 1,714,488 - 29,480 - 1,743,968 70. Equity investments 44,145,485 - - - 44,145,485 80. Property, plant and equipment 2,209,455 - - - 2,209,455 90. Intangible assets 4,350 - - - 4,350 of which: goodwill - - - - - 100. Tax assets: 10,310,576 - 104,169 - 10,414,745 a) Current 1,660,306 - - - 1,660,306 b) Deferred 8,650,270 - 104,169 - 8,754,439 110. Non-current assets and disposal groups classified as held for sale 150,031 - - - 150,031 120. Other assets 4,700,354 - - 16,981 4,717,335 Total assets 404,979,901 402,137,209 The amounts reported under “Other Changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 553 3. Reclassifications performed as at 1 January 2018 The following tables summarise the reclassifications performed on Balance Sheet (Assets and Liabilities) based on IFRS9 initial application and Banca d’Italia Circular 262 5th amendment. Balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Cash and cash balances 25,816,708 - - - 25,816,708 20. Financial assets at fair value through profit or loss: 16,908,530 (24,441) - 16,884,089 a) Financial assets held for trading 13,863,779 - - 13,863,779 b) Financial assets designated at fair value - - - - c) Other financial assets mandatorily at fair value 3,044,751 (24,441) - 3,020,310 Financial assets held for trading (ex IAS39 Item N. 20) 13,863,779 (13,863,779) - - Financial assets at fair value through profit or loss (ex IAS39 Item N. 30) 651,920 (651,920) - - 30. Financial assets at fair value through other comprehensive income 57,506,967 34,033 - 57,541,000 Available-for-sale financial assets (ex IAS39 Item N. 40) 59,718,169 (59,718,169) - - 40. Financial assets at amortised cost: 237,113,018 (3,002,914) - 234,110,104 Held-to-maturity investments (ex IAS39 Item N. 50) 762,431 (762,431) - - Loans and receivables with banks (ex IAS39 Item N. 60) 27,566,761 (27,566,761) - - Loans and receivables with customers (ex IAS39 Item N. 70) 208,965,455 (208,965,455) - - 50. Hedging derivatives 4,399,939 - - - 4,399,939 60. Changes in fair value of portfolio hedged items (+/-) 1,714,488 - 29,480 - 1,743,968 70. Equity investments 44,145,485 - - - 44,145,485 80. Property, plant and equipment 2,209,455 - - - 2,209,455 90. Intangible assets 4,350 - - - 4,350 of which: goodwill - - - - - 100. Tax assets: 10,310,576 - 104,169 - 10,414,745 a) Current 1,660,306 - - - 1,660,306 b) Deferred 8,650,270 - 104,169 - 8,754,439 110. Non-current assets and disposal groups classified as held for sale 150,031 - - - 150,031 120. Other assets 4,700,354 - - 16,981 4,717,335 Total assets 404,979,901 402,137,209 The amounts reported under “Other Changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 553 3. Reclassifications performed as at 1 January 2018 The following tables summarise the reclassifications performed on Balance Sheet (Assets and Liabilities) based on IFRS9 initial application and Banca d’Italia Circular 262 5th amendment. Balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Cash and cash balances 25,816,708 - - - 25,816,708 20. Financial assets at fair value through profit or loss: 16,908,530 (24,441) - 16,884,089 a) Financial assets held for trading 13,863,779 - - 13,863,779 b) Financial assets designated at fair value - - - - c) Other financial assets mandatorily at fair value 3,044,751 (24,441) - 3,020,310 Financial assets held for trading (ex IAS39 Item N. 20) 13,863,779 (13,863,779) - - Financial assets at fair value through profit or loss (ex IAS39 Item N. 30) 651,920 (651,920) - - 30. Financial assets at fair value through other comprehensive income 57,506,967 34,033 - 57,541,000 Available-for-sale financial assets (ex IAS39 Item N. 40) 59,718,169 (59,718,169) - - 40. Financial assets at amortised cost: 237,113,018 (3,002,914) - 234,110,104 Held-to-maturity investments (ex IAS39 Item N. 50) 762,431 (762,431) - - Loans and receivables with banks (ex IAS39 Item N. 60) 27,566,761 (27,566,761) - - Loans and receivables with customers (ex IAS39 Item N. 70) 208,965,455 (208,965,455) - - 50. Hedging derivatives 4,399,939 - - - 4,399,939 60. Changes in fair value of portfolio hedged items (+/-) 1,714,488 - 29,480 - 1,743,968 70. Equity investments 44,145,485 - - - 44,145,485 80. Property, plant and equipment 2,209,455 - - - 2,209,455 90. Intangible assets 4,350 - - - 4,350 of which: goodwill - - - - - 100. Tax assets: 10,310,576 - 104,169 - 10,414,745 a) Current 1,660,306 - - - 1,660,306 b) Deferred 8,650,270 - 104,169 - 8,754,439 110. Non-current assets and disposal groups classified as held for sale 150,031 - - - 150,031 120. Other assets 4,700,354 - - 16,981 4,717,335 Total assets 404,979,901 402,137,209 The amounts reported under “Other Changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 553 3. Reclassifications performed as at 1 January 2018 The following tables summarise the reclassifications performed on Balance Sheet (Assets and Liabilities) based on IFRS9 initial application and Banca d’Italia Circular 262 5th amendment. Balance sheet (€ '000) AMOUNTS AS AT ASSETS 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Cash and cash balances 25,816,708 - - - 25,816,708 20. Financial assets at fair value through profit or loss: 16,908,530 (24,441) - 16,884,089 a) Financial assets held for trading 13,863,779 - - 13,863,779 b) Financial assets designated at fair value - - - - c) Other financial assets mandatorily at fair value 3,044,751 (24,441) - 3,020,310 Financial assets held for trading (ex IAS39 Item N. 20) 13,863,779 (13,863,779) - - Financial assets at fair value through profit or loss (ex IAS39 Item N. 30) 651,920 (651,920) - - 30. Financial assets at fair value through other comprehensive income 57,506,967 34,033 - 57,541,000 Available-for-sale financial assets (ex IAS39 Item N. 40) 59,718,169 (59,718,169) - - 40. Financial assets at amortised cost: 237,113,018 (3,002,914) - 234,110,104 Held-to-maturity investments (ex IAS39 Item N. 50) 762,431 (762,431) - - Loans and receivables with banks (ex IAS39 Item N. 60) 27,566,761 (27,566,761) - - Loans and receivables with customers (ex IAS39 Item N. 70) 208,965,455 (208,965,455) - - 50. Hedging derivatives 4,399,939 - - - 4,399,939 60. Changes in fair value of portfolio hedged items (+/-) 1,714,488 - 29,480 - 1,743,968 70. Equity investments 44,145,485 - - - 44,145,485 80. Property, plant and equipment 2,209,455 - - - 2,209,455 90. Intangible assets 4,350 - - - 4,350 of which: goodwill - - - - - 100. Tax assets: 10,310,576 - 104,169 - 10,414,745 a) Current 1,660,306 - - - 1,660,306 b) Deferred 8,650,270 - 104,169 - 8,754,439 110. Non-current assets and disposal groups classified as held for sale 150,031 - - - 150,031 120. Other assets 4,700,354 - - 16,981 4,717,335 Total assets 404,979,901 402,137,209 The amounts reported under “Other Changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. Company financial statements | Notes to the accounts Part A - Accounting policies 554 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Financial liabilities at amortised cost: 318,891,410 - - 318,891,410 a) Deposits from banks 56,807,016 - - 56,807,016 b) Deposits from customers 197,138,762 - - 197,138,762 c) Debt securities in issue 64,945,632 - - 64,945,632 Deposits from banks (ex IAS39 Item N. 10) 56,807,016 (56,807,016) - - Deposits from customers (ex IAS39 Item N. 20) 197,138,762 (197,138,762) - - Debt securities in issue (ex IAS39 Item N. 30) 64,945,632 (64,945,632) - - 20. Financial liabilities held for trading 13,067,881 28,034 - 13,095,915 Financial liabilities held for trading (ex IAS39 Item N. 40) 13,067,881 (13,067,881) - - 30. Financial liabilities designated at fair value 2,737,625 - - 2,737,625 Financial liabilities at fair value through profit or loss (ex IAS 39 Item N. 50) 2,737,625 (2,737,625) - - 40. Hedging derivatives 4,558,320 - (28,034) - 4,530,286 50. Value adjustment of hedged financial liabilities (+/-) 1,720,371 - - - 1,720,371 60. Tax liabilities: 1,152 - - - 1,152 a) Current 1,152 - - - 1,152 b) Deferred - - - - - 70. Liabilities associated with assets classified as held for sale - - - - - 80. Other liabilities 7,823,823 - (305,487) 16,975 7,535,311 90. Provision for employee severance pay 828,450 - - - 828,450 100. Provisions for risks and charges: 1,843,005 - 529,530 - 2,372,535 110. Valuation reserves 585,547 - (318,061) - 267,486 120. Redeemable shares - - - - - 130. Equity instruments 4,610,073 - - - 4,610,073 140. Reserves 7,798,690 - (2,765,649) - 5,033,041 150. Share premium 13,399,799 - - - 13,399,799 160. Share capital 20,880,550 - - - 20,880,550 170. Treasury shares (-) (2,440) - - - (2,440) 180. Profit (Loss) for the period (+/-) 6,235,645 - - - 6,235,645 Total Liabilities and Shareholders' Equity 404,979,901 402,137,209 The amounts reported under “Other Changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. 3.1 Reclassification of financial instruments performed as at 1 January 2018 With reference to the reclassifications of financial instruments in application of the new accounting standard, the following tables show separately for financial assets and liabilities: a) the portfolio under IAS39 and the related closing balance as of 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as of 1 January 2018. Company financial statements | Notes to the accounts Part A - Accounting policies 554 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Financial liabilities at amortised cost: 318,891,410 - - 318,891,410 a) Deposits from banks 56,807,016 - - 56,807,016 b) Deposits from customers 197,138,762 - - 197,138,762 c) Debt securities in issue 64,945,632 - - 64,945,632 Deposits from banks (ex IAS39 Item N. 10) 56,807,016 (56,807,016) - - Deposits from customers (ex IAS39 Item N. 20) 197,138,762 (197,138,762) - - Debt securities in issue (ex IAS39 Item N. 30) 64,945,632 (64,945,632) - - 20. Financial liabilities held for trading 13,067,881 28,034 - 13,095,915 Financial liabilities held for trading (ex IAS39 Item N. 40) 13,067,881 (13,067,881) - - 30. Financial liabilities designated at fair value 2,737,625 - - 2,737,625 Financial liabilities at fair value through profit or loss (ex IAS 39 Item N. 50) 2,737,625 (2,737,625) - - 40. Hedging derivatives 4,558,320 - (28,034) - 4,530,286 50. Value adjustment of hedged financial liabilities (+/-) 1,720,371 - - - 1,720,371 60. Tax liabilities: 1,152 - - - 1,152 a) Current 1,152 - - - 1,152 b) Deferred - - - - - 70. Liabilities associated with assets classified as held for sale - - - - - 80. Other liabilities 7,823,823 - (305,487) 16,975 7,535,311 90. Provision for employee severance pay 828,450 - - - 828,450 100. Provisions for risks and charges: 1,843,005 - 529,530 - 2,372,535 110. Valuation reserves 585,547 - (318,061) - 267,486 120. Redeemable shares - - - - - 130. Equity instruments 4,610,073 - - - 4,610,073 140. Reserves 7,798,690 - (2,765,649) - 5,033,041 150. Share premium 13,399,799 - - - 13,399,799 160. Share capital 20,880,550 - - - 20,880,550 170. Treasury shares (-) (2,440) - - - (2,440) 180. Profit (Loss) for the period (+/-) 6,235,645 - - - 6,235,645 Total Liabilities and Shareholders' Equity 404,979,901 402,137,209 The amounts reported under “Other Changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. 3.1 Reclassification of financial instruments performed as at 1 January 2018 With reference to the reclassifications of financial instruments in application of the new accounting standard, the following tables show separately for financial assets and liabilities: a) the portfolio under IAS39 and the related closing balance as of 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as of 1 January 2018. Company financial statements | Notes to the accounts Part A - Accounting policies 554 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Financial liabilities at amortised cost: 318,891,410 - - 318,891,410 a) Deposits from banks 56,807,016 - - 56,807,016 b) Deposits from customers 197,138,762 - - 197,138,762 c) Debt securities in issue 64,945,632 - - 64,945,632 Deposits from banks (ex IAS39 Item N. 10) 56,807,016 (56,807,016) - - Deposits from customers (ex IAS39 Item N. 20) 197,138,762 (197,138,762) - - Debt securities in issue (ex IAS39 Item N. 30) 64,945,632 (64,945,632) - - 20. Financial liabilities held for trading 13,067,881 28,034 - 13,095,915 Financial liabilities held for trading (ex IAS39 Item N. 40) 13,067,881 (13,067,881) - - 30. Financial liabilities designated at fair value 2,737,625 - - 2,737,625 Financial liabilities at fair value through profit or loss (ex IAS 39 Item N. 50) 2,737,625 (2,737,625) - - 40. Hedging derivatives 4,558,320 - (28,034) - 4,530,286 50. Value adjustment of hedged financial liabilities (+/-) 1,720,371 - - - 1,720,371 60. Tax liabilities: 1,152 - - - 1,152 a) Current 1,152 - - - 1,152 b) Deferred - - - - - 70. Liabilities associated with assets classified as held for sale - - - - - 80. Other liabilities 7,823,823 - (305,487) 16,975 7,535,311 90. Provision for employee severance pay 828,450 - - - 828,450 100. Provisions for risks and charges: 1,843,005 - 529,530 - 2,372,535 110. Valuation reserves 585,547 - (318,061) - 267,486 120. Redeemable shares - - - - - 130. Equity instruments 4,610,073 - - - 4,610,073 140. Reserves 7,798,690 - (2,765,649) - 5,033,041 150. Share premium 13,399,799 - - - 13,399,799 160. Share capital 20,880,550 - - - 20,880,550 170. Treasury shares (-) (2,440) - - - (2,440) 180. Profit (Loss) for the period (+/-) 6,235,645 - - - 6,235,645 Total Liabilities and Shareholders' Equity 404,979,901 402,137,209 The amounts reported under “Other Changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. 3.1 Reclassification of financial instruments performed as at 1 January 2018 With reference to the reclassifications of financial instruments in application of the new accounting standard, the following tables show separately for financial assets and liabilities: a) the portfolio under IAS39 and the related closing balance as of 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as of 1 January 2018. Company financial statements | Notes to the accounts Part A - Accounting policies 554 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Financial liabilities at amortised cost: 318,891,410 - - 318,891,410 a) Deposits from banks 56,807,016 - - 56,807,016 b) Deposits from customers 197,138,762 - - 197,138,762 c) Debt securities in issue 64,945,632 - - 64,945,632 Deposits from banks (ex IAS39 Item N. 10) 56,807,016 (56,807,016) - - Deposits from customers (ex IAS39 Item N. 20) 197,138,762 (197,138,762) - - Debt securities in issue (ex IAS39 Item N. 30) 64,945,632 (64,945,632) - - 20. Financial liabilities held for trading 13,067,881 28,034 - 13,095,915 Financial liabilities held for trading (ex IAS39 Item N. 40) 13,067,881 (13,067,881) - - 30. Financial liabilities designated at fair value 2,737,625 - - 2,737,625 Financial liabilities at fair value through profit or loss (ex IAS 39 Item N. 50) 2,737,625 (2,737,625) - - 40. Hedging derivatives 4,558,320 - (28,034) - 4,530,286 50. Value adjustment of hedged financial liabilities (+/-) 1,720,371 - - - 1,720,371 60. Tax liabilities: 1,152 - - - 1,152 a) Current 1,152 - - - 1,152 b) Deferred - - - - - 70. Liabilities associated with assets classified as held for sale - - - - - 80. Other liabilities 7,823,823 - (305,487) 16,975 7,535,311 90. Provision for employee severance pay 828,450 - - - 828,450 100. Provisions for risks and charges: 1,843,005 - 529,530 - 2,372,535 110. Valuation reserves 585,547 - (318,061) - 267,486 120. Redeemable shares - - - - - 130. Equity instruments 4,610,073 - - - 4,610,073 140. Reserves 7,798,690 - (2,765,649) - 5,033,041 150. Share premium 13,399,799 - - - 13,399,799 160. Share capital 20,880,550 - - - 20,880,550 170. Treasury shares (-) (2,440) - - - (2,440) 180. Profit (Loss) for the period (+/-) 6,235,645 - - - 6,235,645 Total Liabilities and Shareholders' Equity 404,979,901 402,137,209 The amounts reported under “Other Changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. 3.1 Reclassification of financial instruments performed as at 1 January 2018 With reference to the reclassifications of financial instruments in application of the new accounting standard, the following tables show separately for financial assets and liabilities: a) the portfolio under IAS39 and the related closing balance as of 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as of 1 January 2018. Company financial statements | Notes to the accounts Part A - Accounting policies 554 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ '000) AMOUNTS AS AT LIABILITIES AND SHAREHOLDERS' EQUITY 12.31.2017 RECLASSIFICATION OF BALANCE SHEET VALUE ON 01.01.2018 CHANGE IN MEASUREMENT OTHER CHANGES 01.01.2018 10. Financial liabilities at amortised cost: 318,891,410 - - 318,891,410 a) Deposits from banks 56,807,016 - - 56,807,016 b) Deposits from customers 197,138,762 - - 197,138,762 c) Debt securities in issue 64,945,632 - - 64,945,632 Deposits from banks (ex IAS39 Item N. 10) 56,807,016 (56,807,016) - - Deposits from customers (ex IAS39 Item N. 20) 197,138,762 (197,138,762) - - Debt securities in issue (ex IAS39 Item N. 30) 64,945,632 (64,945,632) - - 20. Financial liabilities held for trading 13,067,881 28,034 - 13,095,915 Financial liabilities held for trading (ex IAS39 Item N. 40) 13,067,881 (13,067,881) - - 30. Financial liabilities designated at fair value 2,737,625 - - 2,737,625 Financial liabilities at fair value through profit or loss (ex IAS 39 Item N. 50) 2,737,625 (2,737,625) - - 40. Hedging derivatives 4,558,320 - (28,034) - 4,530,286 50. Value adjustment of hedged financial liabilities (+/-) 1,720,371 - - - 1,720,371 60. Tax liabilities: 1,152 - - - 1,152 a) Current 1,152 - - - 1,152 b) Deferred - - - - - 70. Liabilities associated with assets classified as held for sale - - - - - 80. Other liabilities 7,823,823 - (305,487) 16,975 7,535,311 90. Provision for employee severance pay 828,450 - - - 828,450 100. Provisions for risks and charges: 1,843,005 - 529,530 - 2,372,535 110. Valuation reserves 585,547 - (318,061) - 267,486 120. Redeemable shares - - - - - 130. Equity instruments 4,610,073 - - - 4,610,073 140. Reserves 7,798,690 - (2,765,649) - 5,033,041 150. Share premium 13,399,799 - - - 13,399,799 160. Share capital 20,880,550 - - - 20,880,550 170. Treasury shares (-) (2,440) - - - (2,440) 180. Profit (Loss) for the period (+/-) 6,235,645 - - - 6,235,645 Total Liabilities and Shareholders' Equity 404,979,901 402,137,209 The amounts reported under “Other Changes” are due to the application of IFRS9 by UniCredit S.p.A. foreign branches and roundings. 3.1 Reclassification of financial instruments performed as at 1 January 2018 With reference to the reclassifications of financial instruments in application of the new accounting standard, the following tables show separately for financial assets and liabilities: a) the portfolio under IAS39 and the related closing balance as of 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as of 1 January 2018. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 555 Reclassification of financial assets Legend A: Reclassification of former IAS39 book value B: Change in measurement C: New book value as per IFRS9 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS HELD FOR TRADING FINANCIAL ASSETS DESIGNATED AT FAIR VALUE A B C A B C Financial assets held for trading 13,863,779 13,863,779 - 13,863,779 - - - Financial assets at Fair Value through profit or loss 651,920 - - - - - - Available for sale financial assets 59,718,169 - - - - - - Held to Maturity Investments 762,431 - - - - - - Loans to Banks 27,566,761 - - - - - - Loans to Customers 208,965,455 - - - - - - IFRS9 Total 13,863,779 - (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME A B C A B C Financial assets held for trading 13,863,779 - - - - - - Financial assets at Fair Value through profit or loss 651,920 651,920 - 651,920 - - - Available for sale financial assets 59,718,169 1,399,307 - 1,399,307 57,377,980 - 57,377,980 Held to Maturity Investments 762,431 746,713 12,354 759,067 - - - Loans to Banks 27,566,761 29,511 (1,057) 28,454 128,987 34,033 163,020 Loans to Customers 208,965,455 217,300 (35,738) 181,562 - - - IFRS9 Total 3,020,310 57,541,000 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS AT AMORTIZED COST TOTAL A B C A B C Financial assets held for trading 13,863,779 - - - 13,863,779 - 13,863,779 Financial assets at Fair Value through profit or loss 651,920 - - - 651,920 - 651,920 Available for sale financial assets 59,718,169 940,882 (60,457) 880,425 59,718,169 (60,457) 59,657,712 Held to Maturity Investments 762,431 15,718 - 15,718 762,431 12,354 774,785 Loans to Banks 27,566,761 27,408,263 (9,117) 27,399,146 27,566,761 23,859 27,590,620 Loans to Customers 208,965,455 208,748,155 (2,933,340) 205,814,815 208,965,455 (2,969,078) 205,996,377 IFRS9 Total 234,110,104 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 555 Reclassification of financial assets Legend A: Reclassification of former IAS39 book value B: Change in measurement C: New book value as per IFRS9 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS HELD FOR TRADING FINANCIAL ASSETS DESIGNATED AT FAIR VALUE A B C A B C Financial assets held for trading 13,863,779 13,863,779 - 13,863,779 - - - Financial assets at Fair Value through profit or loss 651,920 - - - - - - Available for sale financial assets 59,718,169 - - - - - - Held to Maturity Investments 762,431 - - - - - - Loans to Banks 27,566,761 - - - - - - Loans to Customers 208,965,455 - - - - - - IFRS9 Total 13,863,779 - (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME A B C A B C Financial assets held for trading 13,863,779 - - - - - - Financial assets at Fair Value through profit or loss 651,920 651,920 - 651,920 - - - Available for sale financial assets 59,718,169 1,399,307 - 1,399,307 57,377,980 - 57,377,980 Held to Maturity Investments 762,431 746,713 12,354 759,067 - - - Loans to Banks 27,566,761 29,511 (1,057) 28,454 128,987 34,033 163,020 Loans to Customers 208,965,455 217,300 (35,738) 181,562 - - - IFRS9 Total 3,020,310 57,541,000 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS AT AMORTIZED COST TOTAL A B C A B C Financial assets held for trading 13,863,779 - - - 13,863,779 - 13,863,779 Financial assets at Fair Value through profit or loss 651,920 - - - 651,920 - 651,920 Available for sale financial assets 59,718,169 940,882 (60,457) 880,425 59,718,169 (60,457) 59,657,712 Held to Maturity Investments 762,431 15,718 - 15,718 762,431 12,354 774,785 Loans to Banks 27,566,761 27,408,263 (9,117) 27,399,146 27,566,761 23,859 27,590,620 Loans to Customers 208,965,455 208,748,155 (2,933,340) 205,814,815 208,965,455 (2,969,078) 205,996,377 IFRS9 Total 234,110,104 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 555 Reclassification of financial assets Legend A: Reclassification of former IAS39 book value B: Change in measurement C: New book value as per IFRS9 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS HELD FOR TRADING FINANCIAL ASSETS DESIGNATED AT FAIR VALUE A B C A B C Financial assets held for trading 13,863,779 13,863,779 - 13,863,779 - - - Financial assets at Fair Value through profit or loss 651,920 - - - - - - Available for sale financial assets 59,718,169 - - - - - - Held to Maturity Investments 762,431 - - - - - - Loans to Banks 27,566,761 - - - - - - Loans to Customers 208,965,455 - - - - - - IFRS9 Total 13,863,779 - (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME A B C A B C Financial assets held for trading 13,863,779 - - - - - - Financial assets at Fair Value through profit or loss 651,920 651,920 - 651,920 - - - Available for sale financial assets 59,718,169 1,399,307 - 1,399,307 57,377,980 - 57,377,980 Held to Maturity Investments 762,431 746,713 12,354 759,067 - - - Loans to Banks 27,566,761 29,511 (1,057) 28,454 128,987 34,033 163,020 Loans to Customers 208,965,455 217,300 (35,738) 181,562 - - - IFRS9 Total 3,020,310 57,541,000 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS AT AMORTIZED COST TOTAL A B C A B C Financial assets held for trading 13,863,779 - - - 13,863,779 - 13,863,779 Financial assets at Fair Value through profit or loss 651,920 - - - 651,920 - 651,920 Available for sale financial assets 59,718,169 940,882 (60,457) 880,425 59,718,169 (60,457) 59,657,712 Held to Maturity Investments 762,431 15,718 - 15,718 762,431 12,354 774,785 Loans to Banks 27,566,761 27,408,263 (9,117) 27,399,146 27,566,761 23,859 27,590,620 Loans to Customers 208,965,455 208,748,155 (2,933,340) 205,814,815 208,965,455 (2,969,078) 205,996,377 IFRS9 Total 234,110,104 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 555 Reclassification of financial assets Legend A: Reclassification of former IAS39 book value B: Change in measurement C: New book value as per IFRS9 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS HELD FOR TRADING FINANCIAL ASSETS DESIGNATED AT FAIR VALUE A B C A B C Financial assets held for trading 13,863,779 13,863,779 - 13,863,779 - - - Financial assets at Fair Value through profit or loss 651,920 - - - - - - Available for sale financial assets 59,718,169 - - - - - - Held to Maturity Investments 762,431 - - - - - - Loans to Banks 27,566,761 - - - - - - Loans to Customers 208,965,455 - - - - - - IFRS9 Total 13,863,779 - (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME A B C A B C Financial assets held for trading 13,863,779 - - - - - - Financial assets at Fair Value through profit or loss 651,920 651,920 - 651,920 - - - Available for sale financial assets 59,718,169 1,399,307 - 1,399,307 57,377,980 - 57,377,980 Held to Maturity Investments 762,431 746,713 12,354 759,067 - - - Loans to Banks 27,566,761 29,511 (1,057) 28,454 128,987 34,033 163,020 Loans to Customers 208,965,455 217,300 (35,738) 181,562 - - - IFRS9 Total 3,020,310 57,541,000 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS AT AMORTIZED COST TOTAL A B C A B C Financial assets held for trading 13,863,779 - - - 13,863,779 - 13,863,779 Financial assets at Fair Value through profit or loss 651,920 - - - 651,920 - 651,920 Available for sale financial assets 59,718,169 940,882 (60,457) 880,425 59,718,169 (60,457) 59,657,712 Held to Maturity Investments 762,431 15,718 - 15,718 762,431 12,354 774,785 Loans to Banks 27,566,761 27,408,263 (9,117) 27,399,146 27,566,761 23,859 27,590,620 Loans to Customers 208,965,455 208,748,155 (2,933,340) 205,814,815 208,965,455 (2,969,078) 205,996,377 IFRS9 Total 234,110,104 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 555 Reclassification of financial assets Legend A: Reclassification of former IAS39 book value B: Change in measurement C: New book value as per IFRS9 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS HELD FOR TRADING FINANCIAL ASSETS DESIGNATED AT FAIR VALUE A B C A B C Financial assets held for trading 13,863,779 13,863,779 - 13,863,779 - - - Financial assets at Fair Value through profit or loss 651,920 - - - - - - Available for sale financial assets 59,718,169 - - - - - - Held to Maturity Investments 762,431 - - - - - - Loans to Banks 27,566,761 - - - - - - Loans to Customers 208,965,455 - - - - - - IFRS9 Total 13,863,779 - (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME A B C A B C Financial assets held for trading 13,863,779 - - - - - - Financial assets at Fair Value through profit or loss 651,920 651,920 - 651,920 - - - Available for sale financial assets 59,718,169 1,399,307 - 1,399,307 57,377,980 - 57,377,980 Held to Maturity Investments 762,431 746,713 12,354 759,067 - - - Loans to Banks 27,566,761 29,511 (1,057) 28,454 128,987 34,033 163,020 Loans to Customers 208,965,455 217,300 (35,738) 181,562 - - - IFRS9 Total 3,020,310 57,541,000 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL ASSETS AT AMORTIZED COST TOTAL A B C A B C Financial assets held for trading 13,863,779 - - - 13,863,779 - 13,863,779 Financial assets at Fair Value through profit or loss 651,920 - - - 651,920 - 651,920 Available for sale financial assets 59,718,169 940,882 (60,457) 880,425 59,718,169 (60,457) 59,657,712 Held to Maturity Investments 762,431 15,718 - 15,718 762,431 12,354 774,785 Loans to Banks 27,566,761 27,408,263 (9,117) 27,399,146 27,566,761 23,859 27,590,620 Loans to Customers 208,965,455 208,748,155 (2,933,340) 205,814,815 208,965,455 (2,969,078) 205,996,377 IFRS9 Total 234,110,104 Company financial statements | Notes to the accounts Part A - Accounting policies 556 2018 Annual Report and Accounts · UniCredit The reclassification of financial assets shows: • with reference to financial assets previously classified under item “20. Financial assets held for trading” the almost complete classification in the same category foreseen by IFRS9; • with reference to financial assets previously classified under item “30. Financial assets at fair value through profit or loss” their almost complete classification in the same categories foreseen by IFRS9; • with reference financial assets previously classified under item “40. Available-for-sale-financial assets”: - the almost complete reclassification of debt securities (€57,059,031thousand) in item “30. Financial assets at fair value through other comprehensive income” (€55,625,365 thousand). The remaining part was reclassified under item “20.c) Other financial assets mandatorily at fair value” or in item “40. Financial assets at amortised cost” due to the characteristics of cash flows, which do not allow for classification as Financial assets at fair value through other comprehensive income despite a "held to collect and sell" business model or to better reflect the "held to collect" business model associated with these financial instruments; With reference to the reclassifications to financial assets carried at amortised cost, it should be noted that this transfer had a negative effect of -€60,457 thousand due to the simultaneous reversal of previously recognised revaluation reserves and the recognition of impairment on these instruments; - The classification of equity instruments (€1,906,311 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€1,752,614 thousand) given the nature of the relationship and/or the characteristics of the instrument. The remaining part was classified under item “20.c) Other financial assets mandatorily at fair value”. In this case the revaluation reserve have been reclassified in item “140. Reserves”; - The classification of units in investment funds (€752,827 thousand) in item “20.c) Other financial assets mandatorily at fair value” also due to regulatory clarifications according to which these instruments cannot be considered as equity instruments with consequent recognition of the related revaluation reserves recognised under IAS39 in item “140. Reserves”; • with reference to financial assets previously classified under item “50. Financial assets held to maturity”, consisting exclusively of debt securities (€762.431 thousand), they were mainly classified under item “20.c) Other financial assets mandatorily at fair value” (€746.713 thousand) as a consequence of the characteristics of the cash flow that do not allow for their classification under financial assets at amortised cost. This reclassification had a positive effect of €12,354 thousand due to application of the new impairment rules. The remaining part of the portfolio was reclassified in item “40. Financial Assets at amortised cost”; • with reference to financial assets previously classified under item “60. Loans and receivables with banks” (€27,566,761 thousand) consisting of both loans and debt securities, they were almost entirely classified (€27,408,263 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €9,117 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Financial assets mandatorily measured at fair value” (€29,511 thousand) due to the characteristics of the cash flows or, as regards debt securities, in item “30. Financial assets at fair value through other comprehensive income” (€128,987 thousand) to reflect the changed business model associated with these positions. These reclassifications had a positive impact on shareholders' equity of €32,976 thousand arising from fair value measurement; • with reference to financial assets previously classified under item “70. Loans and receivables with customers” (€208,965,455 thousand) consisting of both loans and debt securities, they were almost entirely classified (€208,748,155 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €2,933,340 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Other financial assets mandatorily at fair value” (€217,300 thousand) due to the characteristics of the cash flows. These reclassifications had a negative impact on shareholders' equity of €35,738 thousand arising from fair value measurement. As regards financial assets reclassified in item “30. Financial assets at fair value through other comprehensive income”, it should be noted that the table does not include the effects from application of impairment rules on these instruments. These effects, however, do not have an impact on shareholders' equity since, according to the rules of the standard, the impairment leads to recognition upon first application of a negative reserve in item “140. Reserves” which is offset by an increase of equal amount in item “110.Valuation reserves”. Company financial statements | Notes to the accounts Part A - Accounting policies 556 2018 Annual Report and Accounts · UniCredit The reclassification of financial assets shows: • with reference to financial assets previously classified under item “20. Financial assets held for trading” the almost complete classification in the same category foreseen by IFRS9; • with reference to financial assets previously classified under item “30. Financial assets at fair value through profit or loss” their almost complete classification in the same categories foreseen by IFRS9; • with reference financial assets previously classified under item “40. Available-for-sale-financial assets”: - the almost complete reclassification of debt securities (€57,059,031thousand) in item “30. Financial assets at fair value through other comprehensive income” (€55,625,365 thousand). The remaining part was reclassified under item “20.c) Other financial assets mandatorily at fair value” or in item “40. Financial assets at amortised cost” due to the characteristics of cash flows, which do not allow for classification as Financial assets at fair value through other comprehensive income despite a "held to collect and sell" business model or to better reflect the "held to collect" business model associated with these financial instruments; With reference to the reclassifications to financial assets carried at amortised cost, it should be noted that this transfer had a negative effect of -€60,457 thousand due to the simultaneous reversal of previously recognised revaluation reserves and the recognition of impairment on these instruments; - The classification of equity instruments (€1,906,311 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€1,752,614 thousand) given the nature of the relationship and/or the characteristics of the instrument. The remaining part was classified under item “20.c) Other financial assets mandatorily at fair value”. In this case the revaluation reserve have been reclassified in item “140. Reserves”; - The classification of units in investment funds (€752,827 thousand) in item “20.c) Other financial assets mandatorily at fair value” also due to regulatory clarifications according to which these instruments cannot be considered as equity instruments with consequent recognition of the related revaluation reserves recognised under IAS39 in item “140. Reserves”; • with reference to financial assets previously classified under item “50. Financial assets held to maturity”, consisting exclusively of debt securities (€762.431 thousand), they were mainly classified under item “20.c) Other financial assets mandatorily at fair value” (€746.713 thousand) as a consequence of the characteristics of the cash flow that do not allow for their classification under financial assets at amortised cost. This reclassification had a positive effect of €12,354 thousand due to application of the new impairment rules. The remaining part of the portfolio was reclassified in item “40. Financial Assets at amortised cost”; • with reference to financial assets previously classified under item “60. Loans and receivables with banks” (€27,566,761 thousand) consisting of both loans and debt securities, they were almost entirely classified (€27,408,263 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €9,117 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Financial assets mandatorily measured at fair value” (€29,511 thousand) due to the characteristics of the cash flows or, as regards debt securities, in item “30. Financial assets at fair value through other comprehensive income” (€128,987 thousand) to reflect the changed business model associated with these positions. These reclassifications had a positive impact on shareholders' equity of €32,976 thousand arising from fair value measurement; • with reference to financial assets previously classified under item “70. Loans and receivables with customers” (€208,965,455 thousand) consisting of both loans and debt securities, they were almost entirely classified (€208,748,155 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €2,933,340 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Other financial assets mandatorily at fair value” (€217,300 thousand) due to the characteristics of the cash flows. These reclassifications had a negative impact on shareholders' equity of €35,738 thousand arising from fair value measurement. As regards financial assets reclassified in item “30. Financial assets at fair value through other comprehensive income”, it should be noted that the table does not include the effects from application of impairment rules on these instruments. These effects, however, do not have an impact on shareholders' equity since, according to the rules of the standard, the impairment leads to recognition upon first application of a negative reserve in item “140. Reserves” which is offset by an increase of equal amount in item “110.Valuation reserves”. Company financial statements | Notes to the accounts Part A - Accounting policies 556 2018 Annual Report and Accounts · UniCredit The reclassification of financial assets shows: • with reference to financial assets previously classified under item “20. Financial assets held for trading” the almost complete classification in the same category foreseen by IFRS9; • with reference to financial assets previously classified under item “30. Financial assets at fair value through profit or loss” their almost complete classification in the same categories foreseen by IFRS9; • with reference financial assets previously classified under item “40. Available-for-sale-financial assets”: - the almost complete reclassification of debt securities (€57,059,031thousand) in item “30. Financial assets at fair value through other comprehensive income” (€55,625,365 thousand). The remaining part was reclassified under item “20.c) Other financial assets mandatorily at fair value” or in item “40. Financial assets at amortised cost” due to the characteristics of cash flows, which do not allow for classification as Financial assets at fair value through other comprehensive income despite a "held to collect and sell" business model or to better reflect the "held to collect" business model associated with these financial instruments; With reference to the reclassifications to financial assets carried at amortised cost, it should be noted that this transfer had a negative effect of -€60,457 thousand due to the simultaneous reversal of previously recognised revaluation reserves and the recognition of impairment on these instruments; - The classification of equity instruments (€1,906,311 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€1,752,614 thousand) given the nature of the relationship and/or the characteristics of the instrument. The remaining part was classified under item “20.c) Other financial assets mandatorily at fair value”. In this case the revaluation reserve have been reclassified in item “140. Reserves”; - The classification of units in investment funds (€752,827 thousand) in item “20.c) Other financial assets mandatorily at fair value” also due to regulatory clarifications according to which these instruments cannot be considered as equity instruments with consequent recognition of the related revaluation reserves recognised under IAS39 in item “140. Reserves”; • with reference to financial assets previously classified under item “50. Financial assets held to maturity”, consisting exclusively of debt securities (€762.431 thousand), they were mainly classified under item “20.c) Other financial assets mandatorily at fair value” (€746.713 thousand) as a consequence of the characteristics of the cash flow that do not allow for their classification under financial assets at amortised cost. This reclassification had a positive effect of €12,354 thousand due to application of the new impairment rules. The remaining part of the portfolio was reclassified in item “40. Financial Assets at amortised cost”; • with reference to financial assets previously classified under item “60. Loans and receivables with banks” (€27,566,761 thousand) consisting of both loans and debt securities, they were almost entirely classified (€27,408,263 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €9,117 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Financial assets mandatorily measured at fair value” (€29,511 thousand) due to the characteristics of the cash flows or, as regards debt securities, in item “30. Financial assets at fair value through other comprehensive income” (€128,987 thousand) to reflect the changed business model associated with these positions. These reclassifications had a positive impact on shareholders' equity of €32,976 thousand arising from fair value measurement; • with reference to financial assets previously classified under item “70. Loans and receivables with customers” (€208,965,455 thousand) consisting of both loans and debt securities, they were almost entirely classified (€208,748,155 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €2,933,340 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Other financial assets mandatorily at fair value” (€217,300 thousand) due to the characteristics of the cash flows. These reclassifications had a negative impact on shareholders' equity of €35,738 thousand arising from fair value measurement. As regards financial assets reclassified in item “30. Financial assets at fair value through other comprehensive income”, it should be noted that the table does not include the effects from application of impairment rules on these instruments. These effects, however, do not have an impact on shareholders' equity since, according to the rules of the standard, the impairment leads to recognition upon first application of a negative reserve in item “140. Reserves” which is offset by an increase of equal amount in item “110.Valuation reserves”. Company financial statements | Notes to the accounts Part A - Accounting policies 556 2018 Annual Report and Accounts · UniCredit The reclassification of financial assets shows: • with reference to financial assets previously classified under item “20. Financial assets held for trading” the almost complete classification in the same category foreseen by IFRS9; • with reference to financial assets previously classified under item “30. Financial assets at fair value through profit or loss” their almost complete classification in the same categories foreseen by IFRS9; • with reference financial assets previously classified under item “40. Available-for-sale-financial assets”: - the almost complete reclassification of debt securities (€57,059,031thousand) in item “30. Financial assets at fair value through other comprehensive income” (€55,625,365 thousand). The remaining part was reclassified under item “20.c) Other financial assets mandatorily at fair value” or in item “40. Financial assets at amortised cost” due to the characteristics of cash flows, which do not allow for classification as Financial assets at fair value through other comprehensive income despite a "held to collect and sell" business model or to better reflect the "held to collect" business model associated with these financial instruments; With reference to the reclassifications to financial assets carried at amortised cost, it should be noted that this transfer had a negative effect of -€60,457 thousand due to the simultaneous reversal of previously recognised revaluation reserves and the recognition of impairment on these instruments; - The classification of equity instruments (€1,906,311 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€1,752,614 thousand) given the nature of the relationship and/or the characteristics of the instrument. The remaining part was classified under item “20.c) Other financial assets mandatorily at fair value”. In this case the revaluation reserve have been reclassified in item “140. Reserves”; - The classification of units in investment funds (€752,827 thousand) in item “20.c) Other financial assets mandatorily at fair value” also due to regulatory clarifications according to which these instruments cannot be considered as equity instruments with consequent recognition of the related revaluation reserves recognised under IAS39 in item “140. Reserves”; • with reference to financial assets previously classified under item “50. Financial assets held to maturity”, consisting exclusively of debt securities (€762.431 thousand), they were mainly classified under item “20.c) Other financial assets mandatorily at fair value” (€746.713 thousand) as a consequence of the characteristics of the cash flow that do not allow for their classification under financial assets at amortised cost. This reclassification had a positive effect of €12,354 thousand due to application of the new impairment rules. The remaining part of the portfolio was reclassified in item “40. Financial Assets at amortised cost”; • with reference to financial assets previously classified under item “60. Loans and receivables with banks” (€27,566,761 thousand) consisting of both loans and debt securities, they were almost entirely classified (€27,408,263 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €9,117 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Financial assets mandatorily measured at fair value” (€29,511 thousand) due to the characteristics of the cash flows or, as regards debt securities, in item “30. Financial assets at fair value through other comprehensive income” (€128,987 thousand) to reflect the changed business model associated with these positions. These reclassifications had a positive impact on shareholders' equity of €32,976 thousand arising from fair value measurement; • with reference to financial assets previously classified under item “70. Loans and receivables with customers” (€208,965,455 thousand) consisting of both loans and debt securities, they were almost entirely classified (€208,748,155 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €2,933,340 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Other financial assets mandatorily at fair value” (€217,300 thousand) due to the characteristics of the cash flows. These reclassifications had a negative impact on shareholders' equity of €35,738 thousand arising from fair value measurement. As regards financial assets reclassified in item “30. Financial assets at fair value through other comprehensive income”, it should be noted that the table does not include the effects from application of impairment rules on these instruments. These effects, however, do not have an impact on shareholders' equity since, according to the rules of the standard, the impairment leads to recognition upon first application of a negative reserve in item “140. Reserves” which is offset by an increase of equal amount in item “110.Valuation reserves”. Company financial statements | Notes to the accounts Part A - Accounting policies 556 2018 Annual Report and Accounts · UniCredit The reclassification of financial assets shows: • with reference to financial assets previously classified under item “20. Financial assets held for trading” the almost complete classification in the same category foreseen by IFRS9; • with reference to financial assets previously classified under item “30. Financial assets at fair value through profit or loss” their almost complete classification in the same categories foreseen by IFRS9; • with reference financial assets previously classified under item “40. Available-for-sale-financial assets”: - the almost complete reclassification of debt securities (€57,059,031thousand) in item “30. Financial assets at fair value through other comprehensive income” (€55,625,365 thousand). The remaining part was reclassified under item “20.c) Other financial assets mandatorily at fair value” or in item “40. Financial assets at amortised cost” due to the characteristics of cash flows, which do not allow for classification as Financial assets at fair value through other comprehensive income despite a "held to collect and sell" business model or to better reflect the "held to collect" business model associated with these financial instruments; With reference to the reclassifications to financial assets carried at amortised cost, it should be noted that this transfer had a negative effect of -€60,457 thousand due to the simultaneous reversal of previously recognised revaluation reserves and the recognition of impairment on these instruments; - The classification of equity instruments (€1,906,311 thousand) in item “30. Financial assets at fair value through other comprehensive income” (€1,752,614 thousand) given the nature of the relationship and/or the characteristics of the instrument. The remaining part was classified under item “20.c) Other financial assets mandatorily at fair value”. In this case the revaluation reserve have been reclassified in item “140. Reserves”; - The classification of units in investment funds (€752,827 thousand) in item “20.c) Other financial assets mandatorily at fair value” also due to regulatory clarifications according to which these instruments cannot be considered as equity instruments with consequent recognition of the related revaluation reserves recognised under IAS39 in item “140. Reserves”; • with reference to financial assets previously classified under item “50. Financial assets held to maturity”, consisting exclusively of debt securities (€762.431 thousand), they were mainly classified under item “20.c) Other financial assets mandatorily at fair value” (€746.713 thousand) as a consequence of the characteristics of the cash flow that do not allow for their classification under financial assets at amortised cost. This reclassification had a positive effect of €12,354 thousand due to application of the new impairment rules. The remaining part of the portfolio was reclassified in item “40. Financial Assets at amortised cost”; • with reference to financial assets previously classified under item “60. Loans and receivables with banks” (€27,566,761 thousand) consisting of both loans and debt securities, they were almost entirely classified (€27,408,263 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €9,117 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Financial assets mandatorily measured at fair value” (€29,511 thousand) due to the characteristics of the cash flows or, as regards debt securities, in item “30. Financial assets at fair value through other comprehensive income” (€128,987 thousand) to reflect the changed business model associated with these positions. These reclassifications had a positive impact on shareholders' equity of €32,976 thousand arising from fair value measurement; • with reference to financial assets previously classified under item “70. Loans and receivables with customers” (€208,965,455 thousand) consisting of both loans and debt securities, they were almost entirely classified (€208,748,155 thousand) under item “40. Financial assets at amortised cost”. This reclassification had a negative effect of €2,933,340 thousand due to application of the new impairment rules. The remaining part has been reclassified in item “20.c) Other financial assets mandatorily at fair value” (€217,300 thousand) due to the characteristics of the cash flows. These reclassifications had a negative impact on shareholders' equity of €35,738 thousand arising from fair value measurement. As regards financial assets reclassified in item “30. Financial assets at fair value through other comprehensive income”, it should be noted that the table does not include the effects from application of impairment rules on these instruments. These effects, however, do not have an impact on shareholders' equity since, according to the rules of the standard, the impairment leads to recognition upon first application of a negative reserve in item “140. Reserves” which is offset by an increase of equal amount in item “110.Valuation reserves”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 557 The following table focuses on the reclassification from “Available-for-sale-financial assets”, according to IAS39, to “Financial assets at amortised cost”, according to IFRS9, in order to represent, both for debt securities and loans, carrying value as of 31 December 2018, the Fair Value that would have been accounted for at the same date in case of no reclassification in FTA and the consequent changes in Fair Value that would have been recognised in the period: (€ '000) INSTRUMENTS TYPE ACCOUNTING PORTFOLIO UNDER IAS39 ACCOUNTING PORTFOLIO UNDER IFRS9 CARRYING AMOUNT AS AT FAIR VALUE AS AT FAIR VALUE GAINS OR LOSSES ABSENT RECLASSIFICATION 12.31.2018 12.31.2018 Financial Assets reclassified from Available for sale (AFS) to Financial Assets at amortized cost 1. Debt securities AFS AC 726,430 757,978 (32,441) 2. Loans AFS AC - - - Total 726,430 757,978 (32,441) Reclassification of financial liabilities A: Reclassification of former IAS39 book value B: Change in measurement C: New IFRS9 book value (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM BANKS FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM CUSTOMERS A B C A B C Deposits from banks 56,807,016 56,807,016 - 56,807,016 - - - Deposits from customers 197,138,762 - - - 197,138,762 - 197,138,762 Debt securities in issue 64,945,632 - - - - - - Financial liabilities held for trading 13,067,881 - - - - - - Financial liabilities at fair value through p&l 2,737,625 - - - - - - IFRS9 total 56,807,016 197,138,762 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEBT SECURITIES IN ISSUE FINANCIAL LIABILITIES HELD FOR TRADING A B C A B C Deposits from banks 56,807,016 - - - - - - Deposits from customers 197,138,762 - - - - - - Debt securities in issue 64,945,632 64,945,632 - 64,945,632 - - - Financial liabilities held for trading 13,067,881 - - - 13,067,881 28,034 13,095,915 Financial liabilities at fair value through p&l 2,737,625 - - - - - - IFRS9 total 64,945,632 13,095,915 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 557 The following table focuses on the reclassification from “Available-for-sale-financial assets”, according to IAS39, to “Financial assets at amortised cost”, according to IFRS9, in order to represent, both for debt securities and loans, carrying value as of 31 December 2018, the Fair Value that would have been accounted for at the same date in case of no reclassification in FTA and the consequent changes in Fair Value that would have been recognised in the period: (€ '000) INSTRUMENTS TYPE ACCOUNTING PORTFOLIO UNDER IAS39 ACCOUNTING PORTFOLIO UNDER IFRS9 CARRYING AMOUNT AS AT FAIR VALUE AS AT FAIR VALUE GAINS OR LOSSES ABSENT RECLASSIFICATION 12.31.2018 12.31.2018 Financial Assets reclassified from Available for sale (AFS) to Financial Assets at amortized cost 1. Debt securities AFS AC 726,430 757,978 (32,441) 2. Loans AFS AC - - - Total 726,430 757,978 (32,441) Reclassification of financial liabilities A: Reclassification of former IAS39 book value B: Change in measurement C: New IFRS9 book value (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM BANKS FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM CUSTOMERS A B C A B C Deposits from banks 56,807,016 56,807,016 - 56,807,016 - - - Deposits from customers 197,138,762 - - - 197,138,762 - 197,138,762 Debt securities in issue 64,945,632 - - - - - - Financial liabilities held for trading 13,067,881 - - - - - - Financial liabilities at fair value through p&l 2,737,625 - - - - - - IFRS9 total 56,807,016 197,138,762 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEBT SECURITIES IN ISSUE FINANCIAL LIABILITIES HELD FOR TRADING A B C A B C Deposits from banks 56,807,016 - - - - - - Deposits from customers 197,138,762 - - - - - - Debt securities in issue 64,945,632 64,945,632 - 64,945,632 - - - Financial liabilities held for trading 13,067,881 - - - 13,067,881 28,034 13,095,915 Financial liabilities at fair value through p&l 2,737,625 - - - - - - IFRS9 total 64,945,632 13,095,915 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 557 The following table focuses on the reclassification from “Available-for-sale-financial assets”, according to IAS39, to “Financial assets at amortised cost”, according to IFRS9, in order to represent, both for debt securities and loans, carrying value as of 31 December 2018, the Fair Value that would have been accounted for at the same date in case of no reclassification in FTA and the consequent changes in Fair Value that would have been recognised in the period: (€ '000) INSTRUMENTS TYPE ACCOUNTING PORTFOLIO UNDER IAS39 ACCOUNTING PORTFOLIO UNDER IFRS9 CARRYING AMOUNT AS AT FAIR VALUE AS AT FAIR VALUE GAINS OR LOSSES ABSENT RECLASSIFICATION 12.31.2018 12.31.2018 Financial Assets reclassified from Available for sale (AFS) to Financial Assets at amortized cost 1. Debt securities AFS AC 726,430 757,978 (32,441) 2. Loans AFS AC - - - Total 726,430 757,978 (32,441) Reclassification of financial liabilities A: Reclassification of former IAS39 book value B: Change in measurement C: New IFRS9 book value (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM BANKS FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM CUSTOMERS A B C A B C Deposits from banks 56,807,016 56,807,016 - 56,807,016 - - - Deposits from customers 197,138,762 - - - 197,138,762 - 197,138,762 Debt securities in issue 64,945,632 - - - - - - Financial liabilities held for trading 13,067,881 - - - - - - Financial liabilities at fair value through p&l 2,737,625 - - - - - - IFRS9 total 56,807,016 197,138,762 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEBT SECURITIES IN ISSUE FINANCIAL LIABILITIES HELD FOR TRADING A B C A B C Deposits from banks 56,807,016 - - - - - - Deposits from customers 197,138,762 - - - - - - Debt securities in issue 64,945,632 64,945,632 - 64,945,632 - - - Financial liabilities held for trading 13,067,881 - - - 13,067,881 28,034 13,095,915 Financial liabilities at fair value through p&l 2,737,625 - - - - - - IFRS9 total 64,945,632 13,095,915 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 557 The following table focuses on the reclassification from “Available-for-sale-financial assets”, according to IAS39, to “Financial assets at amortised cost”, according to IFRS9, in order to represent, both for debt securities and loans, carrying value as of 31 December 2018, the Fair Value that would have been accounted for at the same date in case of no reclassification in FTA and the consequent changes in Fair Value that would have been recognised in the period: (€ '000) INSTRUMENTS TYPE ACCOUNTING PORTFOLIO UNDER IAS39 ACCOUNTING PORTFOLIO UNDER IFRS9 CARRYING AMOUNT AS AT FAIR VALUE AS AT FAIR VALUE GAINS OR LOSSES ABSENT RECLASSIFICATION 12.31.2018 12.31.2018 Financial Assets reclassified from Available for sale (AFS) to Financial Assets at amortized cost 1. Debt securities AFS AC 726,430 757,978 (32,441) 2. Loans AFS AC - - - Total 726,430 757,978 (32,441) Reclassification of financial liabilities A: Reclassification of former IAS39 book value B: Change in measurement C: New IFRS9 book value (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM BANKS FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM CUSTOMERS A B C A B C Deposits from banks 56,807,016 56,807,016 - 56,807,016 - - - Deposits from customers 197,138,762 - - - 197,138,762 - 197,138,762 Debt securities in issue 64,945,632 - - - - - - Financial liabilities held for trading 13,067,881 - - - - - - Financial liabilities at fair value through p&l 2,737,625 - - - - - - IFRS9 total 56,807,016 197,138,762 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEBT SECURITIES IN ISSUE FINANCIAL LIABILITIES HELD FOR TRADING A B C A B C Deposits from banks 56,807,016 - - - - - - Deposits from customers 197,138,762 - - - - - - Debt securities in issue 64,945,632 64,945,632 - 64,945,632 - - - Financial liabilities held for trading 13,067,881 - - - 13,067,881 28,034 13,095,915 Financial liabilities at fair value through p&l 2,737,625 - - - - - - IFRS9 total 64,945,632 13,095,915 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 557 The following table focuses on the reclassification from “Available-for-sale-financial assets”, according to IAS39, to “Financial assets at amortised cost”, according to IFRS9, in order to represent, both for debt securities and loans, carrying value as of 31 December 2018, the Fair Value that would have been accounted for at the same date in case of no reclassification in FTA and the consequent changes in Fair Value that would have been recognised in the period: (€ '000) INSTRUMENTS TYPE ACCOUNTING PORTFOLIO UNDER IAS39 ACCOUNTING PORTFOLIO UNDER IFRS9 CARRYING AMOUNT AS AT FAIR VALUE AS AT FAIR VALUE GAINS OR LOSSES ABSENT RECLASSIFICATION 12.31.2018 12.31.2018 Financial Assets reclassified from Available for sale (AFS) to Financial Assets at amortized cost 1. Debt securities AFS AC 726,430 757,978 (32,441) 2. Loans AFS AC - - - Total 726,430 757,978 (32,441) Reclassification of financial liabilities A: Reclassification of former IAS39 book value B: Change in measurement C: New IFRS9 book value (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM BANKS FINANCIAL LIABILITIES AT AMORTIZED COST - DEPOSITS FROM CUSTOMERS A B C A B C Deposits from banks 56,807,016 56,807,016 - 56,807,016 - - - Deposits from customers 197,138,762 - - - 197,138,762 - 197,138,762 Debt securities in issue 64,945,632 - - - - - - Financial liabilities held for trading 13,067,881 - - - - - - Financial liabilities at fair value through p&l 2,737,625 - - - - - - IFRS9 total 56,807,016 197,138,762 (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES AT AMORTIZED COST - DEBT SECURITIES IN ISSUE FINANCIAL LIABILITIES HELD FOR TRADING A B C A B C Deposits from banks 56,807,016 - - - - - - Deposits from customers 197,138,762 - - - - - - Debt securities in issue 64,945,632 64,945,632 - 64,945,632 - - - Financial liabilities held for trading 13,067,881 - - - 13,067,881 28,034 13,095,915 Financial liabilities at fair value through p&l 2,737,625 - - - - - - IFRS9 total 64,945,632 13,095,915 Company financial statements | Notes to the accounts Part A - Accounting policies 558 2018 Annual Report and Accounts · UniCredit (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS TOTAL A B C A B C Deposits from banks 56,807,016 - - - 56,807,016 - 56,807,016 Deposits from customers 197,138,762 - - - 197,138,762 - 197,138,762 Debt securities in issue 64,945,632 - - - 64,945,632 - 64,945,632 Financial liabilities held for trading 13,067,881 - - - 13,067,881 28,034 13,095,915 Financial liabilities at fair value through p&l 2,737,625 2,737,625 - 2,737,625 2,737,625 - 2,737,625 IFRS9 total 2,737,625 The reclassification of financial liabilities highlights a substantial continuity of the classifications compared to those applied according to IAS39, taking also into account the change in name of the various categories following implementation of the V Update of Circular 262. As regards financial liabilities recorded in item “30. Financial liabilities designated at fair value”, the cumulative fair value changes deriving from changes in own creditworthiness as of the issue date have been reported in item “110. Valuation reserves” in application of the rules established by IFRS9. As regards the financial liabilities previously recorded in item “50. Financial liabilities at fair value”, the application of this rule does not affect the shareholders’ equity but leads to a transfer between item “140. Reserves” and item “110. Valuation reserves”. It is worth specifying that in the column Change in measurement the Bank has reclassified an amount equal to €28,034 thousand relating to hedging derivatives that have been reclassified to trading derivatives given the reclassification of the hedged items in a portfolio measured at fair value through profit and loss. 3.2 Loan loss provisions With reference to impairment, the following table shows, as at 1 January 2018, the gross exposure and value adjustments broken down by accounting portfolio and by classification stage. (€ '000) GROSS AMOUNT LOAN LOSS PROVISIONS NET EXPOSURE S1 S2 S3 S1 S2 S3 S1 S2 S3 Item 30. Financial assets at fair value through other comprehensive income 55,796,727 375 - (8,645) (71) - 55,788,082 304 - - Debt securities 55,796,727 375 - (8,645) (71) - 55,788,082 304 - - Loans and advances with banks - - - - - - - - - - Loans and advances with customers - - - - - - - - - Item 40. Financial assets measured at amortized cost 210,596,842 13,516,694 30,064,614 (560,145) (891,551) (18,616,351) 210,036,697 12,625,143 11,448,264 - Debt securities 3,259,813 22,978 7,018 (12,813) (17,608) (3,003) 3,247,000 5,370 4,014 - Loans and advances with banks 27,226,667 92,560 6,524 (15,795) (224) (1,526) 27,210,872 92,336 4,998 - Loans and advances with customers 180,110,363 13,401,156 30,051,072 (531,537) (873,720) (18,611,821) 179,578,825 12,527,437 11,439,251 The amount of loan loss provision on commitments and guarantees given are equal to €529.530 thousand as reported in the Balance Sheet Liabilities in item “100. Provisions for risks and charges: a) commitments and guarantees given”. Company financial statements | Notes to the accounts Part A - Accounting policies 558 2018 Annual Report and Accounts · UniCredit (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS TOTAL A B C A B C Deposits from banks 56,807,016 - - - 56,807,016 - 56,807,016 Deposits from customers 197,138,762 - - - 197,138,762 - 197,138,762 Debt securities in issue 64,945,632 - - - 64,945,632 - 64,945,632 Financial liabilities held for trading 13,067,881 - - - 13,067,881 28,034 13,095,915 Financial liabilities at fair value through p&l 2,737,625 2,737,625 - 2,737,625 2,737,625 - 2,737,625 IFRS9 total 2,737,625 The reclassification of financial liabilities highlights a substantial continuity of the classifications compared to those applied according to IAS39, taking also into account the change in name of the various categories following implementation of the V Update of Circular 262. As regards financial liabilities recorded in item “30. Financial liabilities designated at fair value”, the cumulative fair value changes deriving from changes in own creditworthiness as of the issue date have been reported in item “110. Valuation reserves” in application of the rules established by IFRS9. As regards the financial liabilities previously recorded in item “50. Financial liabilities at fair value”, the application of this rule does not affect the shareholders’ equity but leads to a transfer between item “140. Reserves” and item “110. Valuation reserves”. It is worth specifying that in the column Change in measurement the Bank has reclassified an amount equal to €28,034 thousand relating to hedging derivatives that have been reclassified to trading derivatives given the reclassification of the hedged items in a portfolio measured at fair value through profit and loss. 3.2 Loan loss provisions With reference to impairment, the following table shows, as at 1 January 2018, the gross exposure and value adjustments broken down by accounting portfolio and by classification stage. (€ '000) GROSS AMOUNT LOAN LOSS PROVISIONS NET EXPOSURE S1 S2 S3 S1 S2 S3 S1 S2 S3 Item 30. Financial assets at fair value through other comprehensive income 55,796,727 375 - (8,645) (71) - 55,788,082 304 - - Debt securities 55,796,727 375 - (8,645) (71) - 55,788,082 304 - - Loans and advances with banks - - - - - - - - - - Loans and advances with customers - - - - - - - - - Item 40. Financial assets measured at amortized cost 210,596,842 13,516,694 30,064,614 (560,145) (891,551) (18,616,351) 210,036,697 12,625,143 11,448,264 - Debt securities 3,259,813 22,978 7,018 (12,813) (17,608) (3,003) 3,247,000 5,370 4,014 - Loans and advances with banks 27,226,667 92,560 6,524 (15,795) (224) (1,526) 27,210,872 92,336 4,998 - Loans and advances with customers 180,110,363 13,401,156 30,051,072 (531,537) (873,720) (18,611,821) 179,578,825 12,527,437 11,439,251 The amount of loan loss provision on commitments and guarantees given are equal to €529.530 thousand as reported in the Balance Sheet Liabilities in item “100. Provisions for risks and charges: a) commitments and guarantees given”. Company financial statements | Notes to the accounts Part A - Accounting policies 558 2018 Annual Report and Accounts · UniCredit (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS TOTAL A B C A B C Deposits from banks 56,807,016 - - - 56,807,016 - 56,807,016 Deposits from customers 197,138,762 - - - 197,138,762 - 197,138,762 Debt securities in issue 64,945,632 - - - 64,945,632 - 64,945,632 Financial liabilities held for trading 13,067,881 - - - 13,067,881 28,034 13,095,915 Financial liabilities at fair value through p&l 2,737,625 2,737,625 - 2,737,625 2,737,625 - 2,737,625 IFRS9 total 2,737,625 The reclassification of financial liabilities highlights a substantial continuity of the classifications compared to those applied according to IAS39, taking also into account the change in name of the various categories following implementation of the V Update of Circular 262. As regards financial liabilities recorded in item “30. Financial liabilities designated at fair value”, the cumulative fair value changes deriving from changes in own creditworthiness as of the issue date have been reported in item “110. Valuation reserves” in application of the rules established by IFRS9. As regards the financial liabilities previously recorded in item “50. Financial liabilities at fair value”, the application of this rule does not affect the shareholders’ equity but leads to a transfer between item “140. Reserves” and item “110. Valuation reserves”. It is worth specifying that in the column Change in measurement the Bank has reclassified an amount equal to €28,034 thousand relating to hedging derivatives that have been reclassified to trading derivatives given the reclassification of the hedged items in a portfolio measured at fair value through profit and loss. 3.2 Loan loss provisions With reference to impairment, the following table shows, as at 1 January 2018, the gross exposure and value adjustments broken down by accounting portfolio and by classification stage. (€ '000) GROSS AMOUNT LOAN LOSS PROVISIONS NET EXPOSURE S1 S2 S3 S1 S2 S3 S1 S2 S3 Item 30. Financial assets at fair value through other comprehensive income 55,796,727 375 - (8,645) (71) - 55,788,082 304 - - Debt securities 55,796,727 375 - (8,645) (71) - 55,788,082 304 - - Loans and advances with banks - - - - - - - - - - Loans and advances with customers - - - - - - - - - Item 40. Financial assets measured at amortized cost 210,596,842 13,516,694 30,064,614 (560,145) (891,551) (18,616,351) 210,036,697 12,625,143 11,448,264 - Debt securities 3,259,813 22,978 7,018 (12,813) (17,608) (3,003) 3,247,000 5,370 4,014 - Loans and advances with banks 27,226,667 92,560 6,524 (15,795) (224) (1,526) 27,210,872 92,336 4,998 - Loans and advances with customers 180,110,363 13,401,156 30,051,072 (531,537) (873,720) (18,611,821) 179,578,825 12,527,437 11,439,251 The amount of loan loss provision on commitments and guarantees given are equal to €529.530 thousand as reported in the Balance Sheet Liabilities in item “100. Provisions for risks and charges: a) commitments and guarantees given”. Company financial statements | Notes to the accounts Part A - Accounting policies 558 2018 Annual Report and Accounts · UniCredit (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS TOTAL A B C A B C Deposits from banks 56,807,016 - - - 56,807,016 - 56,807,016 Deposits from customers 197,138,762 - - - 197,138,762 - 197,138,762 Debt securities in issue 64,945,632 - - - 64,945,632 - 64,945,632 Financial liabilities held for trading 13,067,881 - - - 13,067,881 28,034 13,095,915 Financial liabilities at fair value through p&l 2,737,625 2,737,625 - 2,737,625 2,737,625 - 2,737,625 IFRS9 total 2,737,625 The reclassification of financial liabilities highlights a substantial continuity of the classifications compared to those applied according to IAS39, taking also into account the change in name of the various categories following implementation of the V Update of Circular 262. As regards financial liabilities recorded in item “30. Financial liabilities designated at fair value”, the cumulative fair value changes deriving from changes in own creditworthiness as of the issue date have been reported in item “110. Valuation reserves” in application of the rules established by IFRS9. As regards the financial liabilities previously recorded in item “50. Financial liabilities at fair value”, the application of this rule does not affect the shareholders’ equity but leads to a transfer between item “140. Reserves” and item “110. Valuation reserves”. It is worth specifying that in the column Change in measurement the Bank has reclassified an amount equal to €28,034 thousand relating to hedging derivatives that have been reclassified to trading derivatives given the reclassification of the hedged items in a portfolio measured at fair value through profit and loss. 3.2 Loan loss provisions With reference to impairment, the following table shows, as at 1 January 2018, the gross exposure and value adjustments broken down by accounting portfolio and by classification stage. (€ '000) GROSS AMOUNT LOAN LOSS PROVISIONS NET EXPOSURE S1 S2 S3 S1 S2 S3 S1 S2 S3 Item 30. Financial assets at fair value through other comprehensive income 55,796,727 375 - (8,645) (71) - 55,788,082 304 - - Debt securities 55,796,727 375 - (8,645) (71) - 55,788,082 304 - - Loans and advances with banks - - - - - - - - - - Loans and advances with customers - - - - - - - - - Item 40. Financial assets measured at amortized cost 210,596,842 13,516,694 30,064,614 (560,145) (891,551) (18,616,351) 210,036,697 12,625,143 11,448,264 - Debt securities 3,259,813 22,978 7,018 (12,813) (17,608) (3,003) 3,247,000 5,370 4,014 - Loans and advances with banks 27,226,667 92,560 6,524 (15,795) (224) (1,526) 27,210,872 92,336 4,998 - Loans and advances with customers 180,110,363 13,401,156 30,051,072 (531,537) (873,720) (18,611,821) 179,578,825 12,527,437 11,439,251 The amount of loan loss provision on commitments and guarantees given are equal to €529.530 thousand as reported in the Balance Sheet Liabilities in item “100. Provisions for risks and charges: a) commitments and guarantees given”. Company financial statements | Notes to the accounts Part A - Accounting policies 558 2018 Annual Report and Accounts · UniCredit (€ '000) IAS39 CATEGORY NEW IFRS9 CATEGORY BOOK VALUE AT 12.31.2017 IAS39 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS TOTAL A B C A B C Deposits from banks 56,807,016 - - - 56,807,016 - 56,807,016 Deposits from customers 197,138,762 - - - 197,138,762 - 197,138,762 Debt securities in issue 64,945,632 - - - 64,945,632 - 64,945,632 Financial liabilities held for trading 13,067,881 - - - 13,067,881 28,034 13,095,915 Financial liabilities at fair value through p&l 2,737,625 2,737,625 - 2,737,625 2,737,625 - 2,737,625 IFRS9 total 2,737,625 The reclassification of financial liabilities highlights a substantial continuity of the classifications compared to those applied according to IAS39, taking also into account the change in name of the various categories following implementation of the V Update of Circular 262. As regards financial liabilities recorded in item “30. Financial liabilities designated at fair value”, the cumulative fair value changes deriving from changes in own creditworthiness as of the issue date have been reported in item “110. Valuation reserves” in application of the rules established by IFRS9. As regards the financial liabilities previously recorded in item “50. Financial liabilities at fair value”, the application of this rule does not affect the shareholders’ equity but leads to a transfer between item “140. Reserves” and item “110. Valuation reserves”. It is worth specifying that in the column Change in measurement the Bank has reclassified an amount equal to €28,034 thousand relating to hedging derivatives that have been reclassified to trading derivatives given the reclassification of the hedged items in a portfolio measured at fair value through profit and loss. 3.2 Loan loss provisions With reference to impairment, the following table shows, as at 1 January 2018, the gross exposure and value adjustments broken down by accounting portfolio and by classification stage. (€ '000) GROSS AMOUNT LOAN LOSS PROVISIONS NET EXPOSURE S1 S2 S3 S1 S2 S3 S1 S2 S3 Item 30. Financial assets at fair value through other comprehensive income 55,796,727 375 - (8,645) (71) - 55,788,082 304 - - Debt securities 55,796,727 375 - (8,645) (71) - 55,788,082 304 - - Loans and advances with banks - - - - - - - - - - Loans and advances with customers - - - - - - - - - Item 40. Financial assets measured at amortized cost 210,596,842 13,516,694 30,064,614 (560,145) (891,551) (18,616,351) 210,036,697 12,625,143 11,448,264 - Debt securities 3,259,813 22,978 7,018 (12,813) (17,608) (3,003) 3,247,000 5,370 4,014 - Loans and advances with banks 27,226,667 92,560 6,524 (15,795) (224) (1,526) 27,210,872 92,336 4,998 - Loans and advances with customers 180,110,363 13,401,156 30,051,072 (531,537) (873,720) (18,611,821) 179,578,825 12,527,437 11,439,251 The amount of loan loss provision on commitments and guarantees given are equal to €529.530 thousand as reported in the Balance Sheet Liabilities in item “100. Provisions for risks and charges: a) commitments and guarantees given”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 559 With reference to impairment on cash exposures the following tables show: a) the portfolio under IAS39 and the related closing balance as of 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as of 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) 20. Financial assets held for trading - - - 30. Financial assets at fair value through profit or loss - - - 40. Financial assets available for sale - 20,042 20,042 50. Held to maturity investments - - - 60. Loans and receivables with banks 6,964 1,526 8,490 70. Loans and receivables with customers 916,319 18,790,900 19,707,219 Total 923,284 18,812,467 19,735,751 (€ '000) IAS39 CATEGORY PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale - - - - 8,716 8,716 - 3,222 3,222 50. Held to maturity investments - - - - - - - - - 60. Loans and receivables with banks - - - - - - 6,964 9,087 16,052 70. Loans and receivables with customers 3,422 (3,422) - - - - 912,897 519,525 1,432,422 Total 3,422 (3,422) - - 8,716 8,716 919,862 531,834 1,451,696 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 559 With reference to impairment on cash exposures the following tables show: a) the portfolio under IAS39 and the related closing balance as of 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as of 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) 20. Financial assets held for trading - - - 30. Financial assets at fair value through profit or loss - - - 40. Financial assets available for sale - 20,042 20,042 50. Held to maturity investments - - - 60. Loans and receivables with banks 6,964 1,526 8,490 70. Loans and receivables with customers 916,319 18,790,900 19,707,219 Total 923,284 18,812,467 19,735,751 (€ '000) IAS39 CATEGORY PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale - - - - 8,716 8,716 - 3,222 3,222 50. Held to maturity investments - - - - - - - - - 60. Loans and receivables with banks - - - - - - 6,964 9,087 16,052 70. Loans and receivables with customers 3,422 (3,422) - - - - 912,897 519,525 1,432,422 Total 3,422 (3,422) - - 8,716 8,716 919,862 531,834 1,451,696 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 559 With reference to impairment on cash exposures the following tables show: a) the portfolio under IAS39 and the related closing balance as of 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as of 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) 20. Financial assets held for trading - - - 30. Financial assets at fair value through profit or loss - - - 40. Financial assets available for sale - 20,042 20,042 50. Held to maturity investments - - - 60. Loans and receivables with banks 6,964 1,526 8,490 70. Loans and receivables with customers 916,319 18,790,900 19,707,219 Total 923,284 18,812,467 19,735,751 (€ '000) IAS39 CATEGORY PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale - - - - 8,716 8,716 - 3,222 3,222 50. Held to maturity investments - - - - - - - - - 60. Loans and receivables with banks - - - - - - 6,964 9,087 16,052 70. Loans and receivables with customers 3,422 (3,422) - - - - 912,897 519,525 1,432,422 Total 3,422 (3,422) - - 8,716 8,716 919,862 531,834 1,451,696 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 559 With reference to impairment on cash exposures the following tables show: a) the portfolio under IAS39 and the related closing balance as of 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as of 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) 20. Financial assets held for trading - - - 30. Financial assets at fair value through profit or loss - - - 40. Financial assets available for sale - 20,042 20,042 50. Held to maturity investments - - - 60. Loans and receivables with banks 6,964 1,526 8,490 70. Loans and receivables with customers 916,319 18,790,900 19,707,219 Total 923,284 18,812,467 19,735,751 (€ '000) IAS39 CATEGORY PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale - - - - 8,716 8,716 - 3,222 3,222 50. Held to maturity investments - - - - - - - - - 60. Loans and receivables with banks - - - - - - 6,964 9,087 16,052 70. Loans and receivables with customers 3,422 (3,422) - - - - 912,897 519,525 1,432,422 Total 3,422 (3,422) - - 8,716 8,716 919,862 531,834 1,451,696 Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 559 With reference to impairment on cash exposures the following tables show: a) the portfolio under IAS39 and the related closing balance as of 31 December 2017; b) the reclassification of this balance in the various IFRS9 portfolios; c) the effects from application of the measurement criteria envisaged by IFRS9; d) the opening IFRS9 balance as of 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IAS39) 20. Financial assets held for trading - - - 30. Financial assets at fair value through profit or loss - - - 40. Financial assets available for sale - 20,042 20,042 50. Held to maturity investments - - - 60. Loans and receivables with banks 6,964 1,526 8,490 70. Loans and receivables with customers 916,319 18,790,900 19,707,219 Total 923,284 18,812,467 19,735,751 (€ '000) IAS39 CATEGORY PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale - - - - 8,716 8,716 - 3,222 3,222 50. Held to maturity investments - - - - - - - - - 60. Loans and receivables with banks - - - - - - 6,964 9,087 16,052 70. Loans and receivables with customers 3,422 (3,422) - - - - 912,897 519,525 1,432,422 Total 3,422 (3,422) - - 8,716 8,716 919,862 531,834 1,451,696 Company financial statements | Notes to the accounts Part A - Accounting policies 560 2018 Annual Report and Accounts · UniCredit (€ '000) IAS39 CATEGORY NON PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale 20,042 (20,042) - - - - - - - 50. Held to maturity investments - - - - - - - - - 60. Loans and receivables with banks - - - - - - 1,526 - 1,526 70. Loans and receivables with customers 67,103 (67,103) - - - - 18,723,797 (108,972) 18,614,825 Total 87,145 (87,145) - - - - 18,725,323 (108,972) 18,616,351 With reference to impairment off-balance exposures the following table show: a) the closing balance as of 31 December 2017; b) the effects from application of the measurement criteria envisaged by IFRS9; c) the opening IFRS9 balance as of 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IFRS9) Off-balance sheet exposures 43,054 64,068 107,122 262,433 159,975 422,408 305,487 529,530 Note that the item “change in measurement” includes, in addition to the effects deriving from the adoption of new IFRS 9 loan loss provision calculation rules, the impacts linked to the reversal of penalty interest from loan loss provisions as requested by the 5th Update of Banca d’Italia Circular 262, the impact of write-off of some credit exposures included in the NPL strategy and the impact coming from the reclassification of some exposures to portfolio evaluated at fair value through profit or loss. Company financial statements | Notes to the accounts Part A - Accounting policies 560 2018 Annual Report and Accounts · UniCredit (€ '000) IAS39 CATEGORY NON PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale 20,042 (20,042) - - - - - - - 50. Held to maturity investments - - - - - - - - - 60. Loans and receivables with banks - - - - - - 1,526 - 1,526 70. Loans and receivables with customers 67,103 (67,103) - - - - 18,723,797 (108,972) 18,614,825 Total 87,145 (87,145) - - - - 18,725,323 (108,972) 18,616,351 With reference to impairment off-balance exposures the following table show: a) the closing balance as of 31 December 2017; b) the effects from application of the measurement criteria envisaged by IFRS9; c) the opening IFRS9 balance as of 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IFRS9) Off-balance sheet exposures 43,054 64,068 107,122 262,433 159,975 422,408 305,487 529,530 Note that the item “change in measurement” includes, in addition to the effects deriving from the adoption of new IFRS 9 loan loss provision calculation rules, the impacts linked to the reversal of penalty interest from loan loss provisions as requested by the 5th Update of Banca d’Italia Circular 262, the impact of write-off of some credit exposures included in the NPL strategy and the impact coming from the reclassification of some exposures to portfolio evaluated at fair value through profit or loss. Company financial statements | Notes to the accounts Part A - Accounting policies 560 2018 Annual Report and Accounts · UniCredit (€ '000) IAS39 CATEGORY NON PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale 20,042 (20,042) - - - - - - - 50. Held to maturity investments - - - - - - - - - 60. Loans and receivables with banks - - - - - - 1,526 - 1,526 70. Loans and receivables with customers 67,103 (67,103) - - - - 18,723,797 (108,972) 18,614,825 Total 87,145 (87,145) - - - - 18,725,323 (108,972) 18,616,351 With reference to impairment off-balance exposures the following table show: a) the closing balance as of 31 December 2017; b) the effects from application of the measurement criteria envisaged by IFRS9; c) the opening IFRS9 balance as of 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IFRS9) Off-balance sheet exposures 43,054 64,068 107,122 262,433 159,975 422,408 305,487 529,530 Note that the item “change in measurement” includes, in addition to the effects deriving from the adoption of new IFRS 9 loan loss provision calculation rules, the impacts linked to the reversal of penalty interest from loan loss provisions as requested by the 5th Update of Banca d’Italia Circular 262, the impact of write-off of some credit exposures included in the NPL strategy and the impact coming from the reclassification of some exposures to portfolio evaluated at fair value through profit or loss. Company financial statements | Notes to the accounts Part A - Accounting policies 560 2018 Annual Report and Accounts · UniCredit (€ '000) IAS39 CATEGORY NON PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale 20,042 (20,042) - - - - - - - 50. Held to maturity investments - - - - - - - - - 60. Loans and receivables with banks - - - - - - 1,526 - 1,526 70. Loans and receivables with customers 67,103 (67,103) - - - - 18,723,797 (108,972) 18,614,825 Total 87,145 (87,145) - - - - 18,725,323 (108,972) 18,616,351 With reference to impairment off-balance exposures the following table show: a) the closing balance as of 31 December 2017; b) the effects from application of the measurement criteria envisaged by IFRS9; c) the opening IFRS9 balance as of 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IFRS9) Off-balance sheet exposures 43,054 64,068 107,122 262,433 159,975 422,408 305,487 529,530 Note that the item “change in measurement” includes, in addition to the effects deriving from the adoption of new IFRS 9 loan loss provision calculation rules, the impacts linked to the reversal of penalty interest from loan loss provisions as requested by the 5th Update of Banca d’Italia Circular 262, the impact of write-off of some credit exposures included in the NPL strategy and the impact coming from the reclassification of some exposures to portfolio evaluated at fair value through profit or loss. Company financial statements | Notes to the accounts Part A - Accounting policies 560 2018 Annual Report and Accounts · UniCredit (€ '000) IAS39 CATEGORY NON PERFORMING FINANCIAL ASSETS MANDATORY AT FAIR VALUE FINANCIAL ASSETS AT FV THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS MEASURED AT AMORTIZED COST CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) 20. Financial assets held for trading - - - - - - - - - 30. Financial assets at fair value through profit or loss - - - - - - - - - 40. Financial assets available for sale 20,042 (20,042) - - - - - - - 50. Held to maturity investments - - - - - - - - - 60. Loans and receivables with banks - - - - - - 1,526 - 1,526 70. Loans and receivables with customers 67,103 (67,103) - - - - 18,723,797 (108,972) 18,614,825 Total 87,145 (87,145) - - - - 18,725,323 (108,972) 18,616,351 With reference to impairment off-balance exposures the following table show: a) the closing balance as of 31 December 2017; b) the effects from application of the measurement criteria envisaged by IFRS9; c) the opening IFRS9 balance as of 1 January 2018. (€ '000) IAS39 CATEGORY PERFORMING NON PERFORMING TOTAL CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CHANGE IN MEASUREMENT CUMULATED WRITEDOWNS (EX IFRS9) CUMULATED WRITEDOWNS (EX IAS39) CUMULATED WRITEDOWNS (EX IFRS9) Off-balance sheet exposures 43,054 64,068 107,122 262,433 159,975 422,408 305,487 529,530 Note that the item “change in measurement” includes, in addition to the effects deriving from the adoption of new IFRS 9 loan loss provision calculation rules, the impacts linked to the reversal of penalty interest from loan loss provisions as requested by the 5th Update of Banca d’Italia Circular 262, the impact of write-off of some credit exposures included in the NPL strategy and the impact coming from the reclassification of some exposures to portfolio evaluated at fair value through profit or loss. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 561 3.3 Further reclassifications carried out as at 1 January 2018 in compliance with IFRS9 and the V update of circular 262 The widespread impact of the introduction of the IFRS9 principle is further demonstrated by the fact that the impacts arising from its adoption have determined effects not only on the single financial asset and liabilities but also on other items relating to the latter. In this regard the following should be noted: • the item “Changes in fair value of portfolio hedged items” (assets and liabilities) that as of 31 December 2017 were respectively amounted to €1,714,488 thousand turn to €1,743,968 thousand. Those differences relate to the reclassification of assets and liabilities subject to “macro-hedging” relationship in item “20.c) Other financial assets mandatorily at fair value” with their consequent exclusion from hedging relationship; • tax assets that as of 31 December 2017 amounted to €10,310,576 thousand now amount to €10,414,745 thousand as a result of tax effects on the accounting changes resulting from IFRS9 application; • the Other Assets that as of 31 December 2017 amounted to €4,700,354 thousand now amount to €4,717,335 thousand as a consequence of the application of IFRS9 by the Bank’s foreign branches. It should be noted that the 5th Update of Circular 262 clarified that tangible assets accounted for in accordance with the provisions of IAS2 must be recorded in item “90. Tangible assets” rather than in item “Other Assets”. The same update also required provisions for off-balance sheet exposures to be shown in item “100. Provisions for risks and charges” rather than in item “Other liabilities”. Approval of 2019 Budgetary law and consequent effects on deferred taxes related to IFRS9 adoption Starting from 1 January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1 January 2018 net equity (First Time Adoption - FTA43). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Budgetary Law approved in December 2018 envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. Recognition of these DTAs has required an in-depth analysis by the management so to assess the proper accounting treatment, given the absence of specific indications by IAS 12 on their recognition against equity or against P&L. On this matter, which pertains to a strict representation issue not involving recognition nor measurement topics, the management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and ISVAP (now IVASS) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). In conclusion, DTAs related to the first time adoption of IFRS9, have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €2,458 million (€534 million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €1,571 million (in the fourth quarter of 2018 would have been net loss of €353 million). Lastly note that the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. *** The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 are audited by Deloitte & Touche S.p.A. pursuant to Legislative Decree No.39 of 27 January 2010 and to the resolution passed by the Shareholders’ Meeting on 11 May 2012. 43.Refer to Part A - Accounting policies - Section 4 Other matters - “Transition to IFRS9: Financial instruments” of UniCredit S.p.A.” for an explanation of the effects arising from the first time adoption of IFRS9. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 561 3.3 Further reclassifications carried out as at 1 January 2018 in compliance with IFRS9 and the V update of circular 262 The widespread impact of the introduction of the IFRS9 principle is further demonstrated by the fact that the impacts arising from its adoption have determined effects not only on the single financial asset and liabilities but also on other items relating to the latter. In this regard the following should be noted: • the item “Changes in fair value of portfolio hedged items” (assets and liabilities) that as of 31 December 2017 were respectively amounted to €1,714,488 thousand turn to €1,743,968 thousand. Those differences relate to the reclassification of assets and liabilities subject to “macro-hedging” relationship in item “20.c) Other financial assets mandatorily at fair value” with their consequent exclusion from hedging relationship; • tax assets that as of 31 December 2017 amounted to €10,310,576 thousand now amount to €10,414,745 thousand as a result of tax effects on the accounting changes resulting from IFRS9 application; • the Other Assets that as of 31 December 2017 amounted to €4,700,354 thousand now amount to €4,717,335 thousand as a consequence of the application of IFRS9 by the Bank’s foreign branches. It should be noted that the 5th Update of Circular 262 clarified that tangible assets accounted for in accordance with the provisions of IAS2 must be recorded in item “90. Tangible assets” rather than in item “Other Assets”. The same update also required provisions for off-balance sheet exposures to be shown in item “100. Provisions for risks and charges” rather than in item “Other liabilities”. Approval of 2019 Budgetary law and consequent effects on deferred taxes related to IFRS9 adoption Starting from 1 January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1 January 2018 net equity (First Time Adoption - FTA43). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Budgetary Law approved in December 2018 envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. Recognition of these DTAs has required an in-depth analysis by the management so to assess the proper accounting treatment, given the absence of specific indications by IAS 12 on their recognition against equity or against P&L. On this matter, which pertains to a strict representation issue not involving recognition nor measurement topics, the management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and ISVAP (now IVASS) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). In conclusion, DTAs related to the first time adoption of IFRS9, have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €2,458 million (€534 million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €1,571 million (in the fourth quarter of 2018 would have been net loss of €353 million). Lastly note that the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. *** The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 are audited by Deloitte & Touche S.p.A. pursuant to Legislative Decree No.39 of 27 January 2010 and to the resolution passed by the Shareholders’ Meeting on 11 May 2012. 43.Refer to Part A - Accounting policies - Section 4 Other matters - “Transition to IFRS9: Financial instruments” of UniCredit S.p.A.” for an explanation of the effects arising from the first time adoption of IFRS9. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 561 3.3 Further reclassifications carried out as at 1 January 2018 in compliance with IFRS9 and the V update of circular 262 The widespread impact of the introduction of the IFRS9 principle is further demonstrated by the fact that the impacts arising from its adoption have determined effects not only on the single financial asset and liabilities but also on other items relating to the latter. In this regard the following should be noted: • the item “Changes in fair value of portfolio hedged items” (assets and liabilities) that as of 31 December 2017 were respectively amounted to €1,714,488 thousand turn to €1,743,968 thousand. Those differences relate to the reclassification of assets and liabilities subject to “macro-hedging” relationship in item “20.c) Other financial assets mandatorily at fair value” with their consequent exclusion from hedging relationship; • tax assets that as of 31 December 2017 amounted to €10,310,576 thousand now amount to €10,414,745 thousand as a result of tax effects on the accounting changes resulting from IFRS9 application; • the Other Assets that as of 31 December 2017 amounted to €4,700,354 thousand now amount to €4,717,335 thousand as a consequence of the application of IFRS9 by the Bank’s foreign branches. It should be noted that the 5th Update of Circular 262 clarified that tangible assets accounted for in accordance with the provisions of IAS2 must be recorded in item “90. Tangible assets” rather than in item “Other Assets”. The same update also required provisions for off-balance sheet exposures to be shown in item “100. Provisions for risks and charges” rather than in item “Other liabilities”. Approval of 2019 Budgetary law and consequent effects on deferred taxes related to IFRS9 adoption Starting from 1 January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1 January 2018 net equity (First Time Adoption - FTA43). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Budgetary Law approved in December 2018 envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. Recognition of these DTAs has required an in-depth analysis by the management so to assess the proper accounting treatment, given the absence of specific indications by IAS 12 on their recognition against equity or against P&L. On this matter, which pertains to a strict representation issue not involving recognition nor measurement topics, the management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and ISVAP (now IVASS) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). In conclusion, DTAs related to the first time adoption of IFRS9, have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €2,458 million (€534 million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €1,571 million (in the fourth quarter of 2018 would have been net loss of €353 million). Lastly note that the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. *** The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 are audited by Deloitte & Touche S.p.A. pursuant to Legislative Decree No.39 of 27 January 2010 and to the resolution passed by the Shareholders’ Meeting on 11 May 2012. 43.Refer to Part A - Accounting policies - Section 4 Other matters - “Transition to IFRS9: Financial instruments” of UniCredit S.p.A.” for an explanation of the effects arising from the first time adoption of IFRS9. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 561 3.3 Further reclassifications carried out as at 1 January 2018 in compliance with IFRS9 and the V update of circular 262 The widespread impact of the introduction of the IFRS9 principle is further demonstrated by the fact that the impacts arising from its adoption have determined effects not only on the single financial asset and liabilities but also on other items relating to the latter. In this regard the following should be noted: • the item “Changes in fair value of portfolio hedged items” (assets and liabilities) that as of 31 December 2017 were respectively amounted to €1,714,488 thousand turn to €1,743,968 thousand. Those differences relate to the reclassification of assets and liabilities subject to “macro-hedging” relationship in item “20.c) Other financial assets mandatorily at fair value” with their consequent exclusion from hedging relationship; • tax assets that as of 31 December 2017 amounted to €10,310,576 thousand now amount to €10,414,745 thousand as a result of tax effects on the accounting changes resulting from IFRS9 application; • the Other Assets that as of 31 December 2017 amounted to €4,700,354 thousand now amount to €4,717,335 thousand as a consequence of the application of IFRS9 by the Bank’s foreign branches. It should be noted that the 5th Update of Circular 262 clarified that tangible assets accounted for in accordance with the provisions of IAS2 must be recorded in item “90. Tangible assets” rather than in item “Other Assets”. The same update also required provisions for off-balance sheet exposures to be shown in item “100. Provisions for risks and charges” rather than in item “Other liabilities”. Approval of 2019 Budgetary law and consequent effects on deferred taxes related to IFRS9 adoption Starting from 1 January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1 January 2018 net equity (First Time Adoption - FTA43). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Budgetary Law approved in December 2018 envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. Recognition of these DTAs has required an in-depth analysis by the management so to assess the proper accounting treatment, given the absence of specific indications by IAS 12 on their recognition against equity or against P&L. On this matter, which pertains to a strict representation issue not involving recognition nor measurement topics, the management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and ISVAP (now IVASS) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). In conclusion, DTAs related to the first time adoption of IFRS9, have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €2,458 million (€534 million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €1,571 million (in the fourth quarter of 2018 would have been net loss of €353 million). Lastly note that the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. *** The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 are audited by Deloitte & Touche S.p.A. pursuant to Legislative Decree No.39 of 27 January 2010 and to the resolution passed by the Shareholders’ Meeting on 11 May 2012. 43.Refer to Part A - Accounting policies - Section 4 Other matters - “Transition to IFRS9: Financial instruments” of UniCredit S.p.A.” for an explanation of the effects arising from the first time adoption of IFRS9. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 561 3.3 Further reclassifications carried out as at 1 January 2018 in compliance with IFRS9 and the V update of circular 262 The widespread impact of the introduction of the IFRS9 principle is further demonstrated by the fact that the impacts arising from its adoption have determined effects not only on the single financial asset and liabilities but also on other items relating to the latter. In this regard the following should be noted: • the item “Changes in fair value of portfolio hedged items” (assets and liabilities) that as of 31 December 2017 were respectively amounted to €1,714,488 thousand turn to €1,743,968 thousand. Those differences relate to the reclassification of assets and liabilities subject to “macro-hedging” relationship in item “20.c) Other financial assets mandatorily at fair value” with their consequent exclusion from hedging relationship; • tax assets that as of 31 December 2017 amounted to €10,310,576 thousand now amount to €10,414,745 thousand as a result of tax effects on the accounting changes resulting from IFRS9 application; • the Other Assets that as of 31 December 2017 amounted to €4,700,354 thousand now amount to €4,717,335 thousand as a consequence of the application of IFRS9 by the Bank’s foreign branches. It should be noted that the 5th Update of Circular 262 clarified that tangible assets accounted for in accordance with the provisions of IAS2 must be recorded in item “90. Tangible assets” rather than in item “Other Assets”. The same update also required provisions for off-balance sheet exposures to be shown in item “100. Provisions for risks and charges” rather than in item “Other liabilities”. Approval of 2019 Budgetary law and consequent effects on deferred taxes related to IFRS9 adoption Starting from 1 January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1 January 2018 net equity (First Time Adoption - FTA43). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Budgetary Law approved in December 2018 envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. Recognition of these DTAs has required an in-depth analysis by the management so to assess the proper accounting treatment, given the absence of specific indications by IAS 12 on their recognition against equity or against P&L. On this matter, which pertains to a strict representation issue not involving recognition nor measurement topics, the management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and ISVAP (now IVASS) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). In conclusion, DTAs related to the first time adoption of IFRS9, have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €2,458 million (€534 million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €1,571 million (in the fourth quarter of 2018 would have been net loss of €353 million). Lastly note that the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. *** The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 are audited by Deloitte & Touche S.p.A. pursuant to Legislative Decree No.39 of 27 January 2010 and to the resolution passed by the Shareholders’ Meeting on 11 May 2012. 43.Refer to Part A - Accounting policies - Section 4 Other matters - “Transition to IFRS9: Financial instruments” of UniCredit S.p.A.” for an explanation of the effects arising from the first time adoption of IFRS9. Company financial statements | Notes to the accounts Part A - Accounting policies 562 2018 Annual Report and Accounts · UniCredit UniCredit group prepared and published within the time limits set by law and in manner required by Consob, the Consolidated First Half Financial Report as at 30 June 2018, subject to limited scope audit, as well as the Consolidated Interim Reports as at 31 March and 30 September 2018, both as Press Releases. The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 has been approved by the Board of Directors’ meeting of 6 February 2019, which authorised its disclosure to the public, also pursuant to IAS10. The whole document is filed in the competent offices and entities as required by law. A.2 - Main items of the accounts 1 - Financial assets at fair value through profit or loss a) Financial assets held for trading A financial asset is classified as held for trading if it is: • acquired or incurred principally for the purpose of selling or repurchasing it in the short term; • part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; • it is a derivative contract not designated under hedge accounting, including derivatives with positive fair value embedded in financial liabilities other than those valued at fair value with recognition of income effects through profit or loss. As other financial instruments, on initial recognition, at settlement date, a held-for-trading financial asset is measured at its fair value, usually equal to the amount paid, excluding transaction costs and revenue, which are recognised in profit and loss although directly attributable to the financial assets. Held for Trading derivatives are recognised at trade date. After initial recognition these financial assets are measured at their fair value through profit or loss. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial asset is recognised in profit or loss in item “80. Net gains (losses) on trading”, including gains or losses on financial derivatives relating to financial assets and/or financial liabilities designated at fair value or other financial assets mandatorily at fair value. If the fair value of a financial instrument falls below zero, which may happen with derivative contracts, it is recognised in item “20. Financial liabilities held for trading”. A derivative is a financial instrument or other contract that has all three of the following characteristics: • its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable (usually called the “underlying”) provided that in case of non-financial variable, this is not specific of one of the parties to the contract; • it requires no initial net investment or an initial net investment that is lower than what would be required for other types of contracts that would be expected to have a similar response to changes in market factors; • it is settled at a future date. An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract, with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative is separated from financial liabilities other than those measured at fair value through profit or loss and from non-financial instruments, and is recognised as a derivative, if: • the economic characteristics and risks of the embedded derivative are not closely relating to those of the host contract; • a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and • the hybrid (combined) instrument is not measured entirely at fair value through profit or loss. When an embedded derivative is separated, the host contract is accounted for according to its accounting classification. Company financial statements | Notes to the accounts Part A - Accounting policies 562 2018 Annual Report and Accounts · UniCredit UniCredit group prepared and published within the time limits set by law and in manner required by Consob, the Consolidated First Half Financial Report as at 30 June 2018, subject to limited scope audit, as well as the Consolidated Interim Reports as at 31 March and 30 September 2018, both as Press Releases. The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 has been approved by the Board of Directors’ meeting of 6 February 2019, which authorised its disclosure to the public, also pursuant to IAS10. The whole document is filed in the competent offices and entities as required by law. A.2 - Main items of the accounts 1 - Financial assets at fair value through profit or loss a) Financial assets held for trading A financial asset is classified as held for trading if it is: • acquired or incurred principally for the purpose of selling or repurchasing it in the short term; • part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; • it is a derivative contract not designated under hedge accounting, including derivatives with positive fair value embedded in financial liabilities other than those valued at fair value with recognition of income effects through profit or loss. As other financial instruments, on initial recognition, at settlement date, a held-for-trading financial asset is measured at its fair value, usually equal to the amount paid, excluding transaction costs and revenue, which are recognised in profit and loss although directly attributable to the financial assets. Held for Trading derivatives are recognised at trade date. After initial recognition these financial assets are measured at their fair value through profit or loss. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial asset is recognised in profit or loss in item “80. Net gains (losses) on trading”, including gains or losses on financial derivatives relating to financial assets and/or financial liabilities designated at fair value or other financial assets mandatorily at fair value. If the fair value of a financial instrument falls below zero, which may happen with derivative contracts, it is recognised in item “20. Financial liabilities held for trading”. A derivative is a financial instrument or other contract that has all three of the following characteristics: • its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable (usually called the “underlying”) provided that in case of non-financial variable, this is not specific of one of the parties to the contract; • it requires no initial net investment or an initial net investment that is lower than what would be required for other types of contracts that would be expected to have a similar response to changes in market factors; • it is settled at a future date. An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract, with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative is separated from financial liabilities other than those measured at fair value through profit or loss and from non-financial instruments, and is recognised as a derivative, if: • the economic characteristics and risks of the embedded derivative are not closely relating to those of the host contract; • a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and • the hybrid (combined) instrument is not measured entirely at fair value through profit or loss. When an embedded derivative is separated, the host contract is accounted for according to its accounting classification. Company financial statements | Notes to the accounts Part A - Accounting policies 562 2018 Annual Report and Accounts · UniCredit UniCredit group prepared and published within the time limits set by law and in manner required by Consob, the Consolidated First Half Financial Report as at 30 June 2018, subject to limited scope audit, as well as the Consolidated Interim Reports as at 31 March and 30 September 2018, both as Press Releases. The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 has been approved by the Board of Directors’ meeting of 6 February 2019, which authorised its disclosure to the public, also pursuant to IAS10. The whole document is filed in the competent offices and entities as required by law. A.2 - Main items of the accounts 1 - Financial assets at fair value through profit or loss a) Financial assets held for trading A financial asset is classified as held for trading if it is: • acquired or incurred principally for the purpose of selling or repurchasing it in the short term; • part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; • it is a derivative contract not designated under hedge accounting, including derivatives with positive fair value embedded in financial liabilities other than those valued at fair value with recognition of income effects through profit or loss. As other financial instruments, on initial recognition, at settlement date, a held-for-trading financial asset is measured at its fair value, usually equal to the amount paid, excluding transaction costs and revenue, which are recognised in profit and loss although directly attributable to the financial assets. Held for Trading derivatives are recognised at trade date. After initial recognition these financial assets are measured at their fair value through profit or loss. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial asset is recognised in profit or loss in item “80. Net gains (losses) on trading”, including gains or losses on financial derivatives relating to financial assets and/or financial liabilities designated at fair value or other financial assets mandatorily at fair value. If the fair value of a financial instrument falls below zero, which may happen with derivative contracts, it is recognised in item “20. Financial liabilities held for trading”. A derivative is a financial instrument or other contract that has all three of the following characteristics: • its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable (usually called the “underlying”) provided that in case of non-financial variable, this is not specific of one of the parties to the contract; • it requires no initial net investment or an initial net investment that is lower than what would be required for other types of contracts that would be expected to have a similar response to changes in market factors; • it is settled at a future date. An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract, with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative is separated from financial liabilities other than those measured at fair value through profit or loss and from non-financial instruments, and is recognised as a derivative, if: • the economic characteristics and risks of the embedded derivative are not closely relating to those of the host contract; • a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and • the hybrid (combined) instrument is not measured entirely at fair value through profit or loss. When an embedded derivative is separated, the host contract is accounted for according to its accounting classification. Company financial statements | Notes to the accounts Part A - Accounting policies 562 2018 Annual Report and Accounts · UniCredit UniCredit group prepared and published within the time limits set by law and in manner required by Consob, the Consolidated First Half Financial Report as at 30 June 2018, subject to limited scope audit, as well as the Consolidated Interim Reports as at 31 March and 30 September 2018, both as Press Releases. The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 has been approved by the Board of Directors’ meeting of 6 February 2019, which authorised its disclosure to the public, also pursuant to IAS10. The whole document is filed in the competent offices and entities as required by law. A.2 - Main items of the accounts 1 - Financial assets at fair value through profit or loss a) Financial assets held for trading A financial asset is classified as held for trading if it is: • acquired or incurred principally for the purpose of selling or repurchasing it in the short term; • part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; • it is a derivative contract not designated under hedge accounting, including derivatives with positive fair value embedded in financial liabilities other than those valued at fair value with recognition of income effects through profit or loss. As other financial instruments, on initial recognition, at settlement date, a held-for-trading financial asset is measured at its fair value, usually equal to the amount paid, excluding transaction costs and revenue, which are recognised in profit and loss although directly attributable to the financial assets. Held for Trading derivatives are recognised at trade date. After initial recognition these financial assets are measured at their fair value through profit or loss. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial asset is recognised in profit or loss in item “80. Net gains (losses) on trading”, including gains or losses on financial derivatives relating to financial assets and/or financial liabilities designated at fair value or other financial assets mandatorily at fair value. If the fair value of a financial instrument falls below zero, which may happen with derivative contracts, it is recognised in item “20. Financial liabilities held for trading”. A derivative is a financial instrument or other contract that has all three of the following characteristics: • its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable (usually called the “underlying”) provided that in case of non-financial variable, this is not specific of one of the parties to the contract; • it requires no initial net investment or an initial net investment that is lower than what would be required for other types of contracts that would be expected to have a similar response to changes in market factors; • it is settled at a future date. An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract, with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative is separated from financial liabilities other than those measured at fair value through profit or loss and from non-financial instruments, and is recognised as a derivative, if: • the economic characteristics and risks of the embedded derivative are not closely relating to those of the host contract; • a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and • the hybrid (combined) instrument is not measured entirely at fair value through profit or loss. When an embedded derivative is separated, the host contract is accounted for according to its accounting classification. Company financial statements | Notes to the accounts Part A - Accounting policies 562 2018 Annual Report and Accounts · UniCredit UniCredit group prepared and published within the time limits set by law and in manner required by Consob, the Consolidated First Half Financial Report as at 30 June 2018, subject to limited scope audit, as well as the Consolidated Interim Reports as at 31 March and 30 September 2018, both as Press Releases. The Parent Company Accounts and the Consolidated Accounts as at 31 December 2018 has been approved by the Board of Directors’ meeting of 6 February 2019, which authorised its disclosure to the public, also pursuant to IAS10. The whole document is filed in the competent offices and entities as required by law. A.2 - Main items of the accounts 1 - Financial assets at fair value through profit or loss a) Financial assets held for trading A financial asset is classified as held for trading if it is: • acquired or incurred principally for the purpose of selling or repurchasing it in the short term; • part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; • it is a derivative contract not designated under hedge accounting, including derivatives with positive fair value embedded in financial liabilities other than those valued at fair value with recognition of income effects through profit or loss. As other financial instruments, on initial recognition, at settlement date, a held-for-trading financial asset is measured at its fair value, usually equal to the amount paid, excluding transaction costs and revenue, which are recognised in profit and loss although directly attributable to the financial assets. Held for Trading derivatives are recognised at trade date. After initial recognition these financial assets are measured at their fair value through profit or loss. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial asset is recognised in profit or loss in item “80. Net gains (losses) on trading”, including gains or losses on financial derivatives relating to financial assets and/or financial liabilities designated at fair value or other financial assets mandatorily at fair value. If the fair value of a financial instrument falls below zero, which may happen with derivative contracts, it is recognised in item “20. Financial liabilities held for trading”. A derivative is a financial instrument or other contract that has all three of the following characteristics: • its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable (usually called the “underlying”) provided that in case of non-financial variable, this is not specific of one of the parties to the contract; • it requires no initial net investment or an initial net investment that is lower than what would be required for other types of contracts that would be expected to have a similar response to changes in market factors; • it is settled at a future date. An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract, with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative is separated from financial liabilities other than those measured at fair value through profit or loss and from non-financial instruments, and is recognised as a derivative, if: • the economic characteristics and risks of the embedded derivative are not closely relating to those of the host contract; • a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and • the hybrid (combined) instrument is not measured entirely at fair value through profit or loss. When an embedded derivative is separated, the host contract is accounted for according to its accounting classification. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 563 b) Financial assets designated at fair value through profit or loss A non-derivative financial asset can be designated at fair value if the abovementioned designation avoids accounting mismatches that arise from measuring assets and associated liabilities according to different measurement criteria. These assets are accounted for alike “Financial assets held for trading” however gains and losses, whether realised or unrealised, are recognised in item “110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: a) financial assets/liabilities designated at fair value”; such item also includes changes in fair value on “financial liabilities designated at fair value” linked to own credit risk, if such a designation creates or increases an accounting mismatch in P&L according to IFRS9. c) Other financial assets mandatorily at fair value A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. Specifically, the following assets have been classified in this portfolio: • debt instruments, securities and loans for which the business model is neither held to collect nor held to collect and sell but which are not part of the trading book; • debt instruments, securities and loans with cash flows that are not solely payment of principal and interest; • units in investment funds; • equity instruments not held for trading for which the Bank does not apply the option granted by the standard of valuing these instruments at fair value through other comprehensive income. These assets are accounted for alike “Financial assets held for trading”, however gains and losses, whether realised or unrealised, are recognised in item “110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: b) other financial assets mandatorily at fair value”. 2 - Financial assets at fair value through other comprehensive income A financial asset is classified as at fair value through other comprehensive income if: • its business model is held to collect and sell; • its cash flows are solely the payment of principal and interest. This category also includes equity instruments not held for trading for which the Bank applies the option granted by the standard of valuing the instruments at fair value through other comprehensive income. On initial recognition, at settlement date, a financial assets is measured at fair value, which is usually equal to the consideration paid, plus transaction costs and revenues directly attributable to the instrument. After initial recognition, the interests accrued on interest-bearing instruments are recorded in the income statement according to the amortised cost criterion in item “10. Interest income and similar revenues” if positive, or in item 20. “Interest expenses and similar charges” if negative. The gains and losses arising from changes in fair value are recognised in the Statement of comprehensive income and shown under item “110. Valuation reserves” in shareholders' equity. These instruments are tested for impairment as illustrated in the specific section 15 - Other Information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income” with contra-entry in the statement of other comprehensive income and also shown under item “110. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in income statement in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 563 b) Financial assets designated at fair value through profit or loss A non-derivative financial asset can be designated at fair value if the abovementioned designation avoids accounting mismatches that arise from measuring assets and associated liabilities according to different measurement criteria. These assets are accounted for alike “Financial assets held for trading” however gains and losses, whether realised or unrealised, are recognised in item “110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: a) financial assets/liabilities designated at fair value”; such item also includes changes in fair value on “financial liabilities designated at fair value” linked to own credit risk, if such a designation creates or increases an accounting mismatch in P&L according to IFRS9. c) Other financial assets mandatorily at fair value A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. Specifically, the following assets have been classified in this portfolio: • debt instruments, securities and loans for which the business model is neither held to collect nor held to collect and sell but which are not part of the trading book; • debt instruments, securities and loans with cash flows that are not solely payment of principal and interest; • units in investment funds; • equity instruments not held for trading for which the Bank does not apply the option granted by the standard of valuing these instruments at fair value through other comprehensive income. These assets are accounted for alike “Financial assets held for trading”, however gains and losses, whether realised or unrealised, are recognised in item “110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: b) other financial assets mandatorily at fair value”. 2 - Financial assets at fair value through other comprehensive income A financial asset is classified as at fair value through other comprehensive income if: • its business model is held to collect and sell; • its cash flows are solely the payment of principal and interest. This category also includes equity instruments not held for trading for which the Bank applies the option granted by the standard of valuing the instruments at fair value through other comprehensive income. On initial recognition, at settlement date, a financial assets is measured at fair value, which is usually equal to the consideration paid, plus transaction costs and revenues directly attributable to the instrument. After initial recognition, the interests accrued on interest-bearing instruments are recorded in the income statement according to the amortised cost criterion in item “10. Interest income and similar revenues” if positive, or in item 20. “Interest expenses and similar charges” if negative. The gains and losses arising from changes in fair value are recognised in the Statement of comprehensive income and shown under item “110. Valuation reserves” in shareholders' equity. These instruments are tested for impairment as illustrated in the specific section 15 - Other Information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income” with contra-entry in the statement of other comprehensive income and also shown under item “110. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in income statement in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 563 b) Financial assets designated at fair value through profit or loss A non-derivative financial asset can be designated at fair value if the abovementioned designation avoids accounting mismatches that arise from measuring assets and associated liabilities according to different measurement criteria. These assets are accounted for alike “Financial assets held for trading” however gains and losses, whether realised or unrealised, are recognised in item “110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: a) financial assets/liabilities designated at fair value”; such item also includes changes in fair value on “financial liabilities designated at fair value” linked to own credit risk, if such a designation creates or increases an accounting mismatch in P&L according to IFRS9. c) Other financial assets mandatorily at fair value A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. Specifically, the following assets have been classified in this portfolio: • debt instruments, securities and loans for which the business model is neither held to collect nor held to collect and sell but which are not part of the trading book; • debt instruments, securities and loans with cash flows that are not solely payment of principal and interest; • units in investment funds; • equity instruments not held for trading for which the Bank does not apply the option granted by the standard of valuing these instruments at fair value through other comprehensive income. These assets are accounted for alike “Financial assets held for trading”, however gains and losses, whether realised or unrealised, are recognised in item “110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: b) other financial assets mandatorily at fair value”. 2 - Financial assets at fair value through other comprehensive income A financial asset is classified as at fair value through other comprehensive income if: • its business model is held to collect and sell; • its cash flows are solely the payment of principal and interest. This category also includes equity instruments not held for trading for which the Bank applies the option granted by the standard of valuing the instruments at fair value through other comprehensive income. On initial recognition, at settlement date, a financial assets is measured at fair value, which is usually equal to the consideration paid, plus transaction costs and revenues directly attributable to the instrument. After initial recognition, the interests accrued on interest-bearing instruments are recorded in the income statement according to the amortised cost criterion in item “10. Interest income and similar revenues” if positive, or in item 20. “Interest expenses and similar charges” if negative. The gains and losses arising from changes in fair value are recognised in the Statement of comprehensive income and shown under item “110. Valuation reserves” in shareholders' equity. These instruments are tested for impairment as illustrated in the specific section 15 - Other Information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income” with contra-entry in the statement of other comprehensive income and also shown under item “110. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in income statement in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 563 b) Financial assets designated at fair value through profit or loss A non-derivative financial asset can be designated at fair value if the abovementioned designation avoids accounting mismatches that arise from measuring assets and associated liabilities according to different measurement criteria. These assets are accounted for alike “Financial assets held for trading” however gains and losses, whether realised or unrealised, are recognised in item “110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: a) financial assets/liabilities designated at fair value”; such item also includes changes in fair value on “financial liabilities designated at fair value” linked to own credit risk, if such a designation creates or increases an accounting mismatch in P&L according to IFRS9. c) Other financial assets mandatorily at fair value A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. Specifically, the following assets have been classified in this portfolio: • debt instruments, securities and loans for which the business model is neither held to collect nor held to collect and sell but which are not part of the trading book; • debt instruments, securities and loans with cash flows that are not solely payment of principal and interest; • units in investment funds; • equity instruments not held for trading for which the Bank does not apply the option granted by the standard of valuing these instruments at fair value through other comprehensive income. These assets are accounted for alike “Financial assets held for trading”, however gains and losses, whether realised or unrealised, are recognised in item “110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: b) other financial assets mandatorily at fair value”. 2 - Financial assets at fair value through other comprehensive income A financial asset is classified as at fair value through other comprehensive income if: • its business model is held to collect and sell; • its cash flows are solely the payment of principal and interest. This category also includes equity instruments not held for trading for which the Bank applies the option granted by the standard of valuing the instruments at fair value through other comprehensive income. On initial recognition, at settlement date, a financial assets is measured at fair value, which is usually equal to the consideration paid, plus transaction costs and revenues directly attributable to the instrument. After initial recognition, the interests accrued on interest-bearing instruments are recorded in the income statement according to the amortised cost criterion in item “10. Interest income and similar revenues” if positive, or in item 20. “Interest expenses and similar charges” if negative. The gains and losses arising from changes in fair value are recognised in the Statement of comprehensive income and shown under item “110. Valuation reserves” in shareholders' equity. These instruments are tested for impairment as illustrated in the specific section 15 - Other Information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income” with contra-entry in the statement of other comprehensive income and also shown under item “110. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in income statement in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 563 b) Financial assets designated at fair value through profit or loss A non-derivative financial asset can be designated at fair value if the abovementioned designation avoids accounting mismatches that arise from measuring assets and associated liabilities according to different measurement criteria. These assets are accounted for alike “Financial assets held for trading” however gains and losses, whether realised or unrealised, are recognised in item “110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: a) financial assets/liabilities designated at fair value”; such item also includes changes in fair value on “financial liabilities designated at fair value” linked to own credit risk, if such a designation creates or increases an accounting mismatch in P&L according to IFRS9. c) Other financial assets mandatorily at fair value A financial asset is classified as financial asset mandatorily at fair value if it does not meet the conditions, in terms of business model or cash flow characteristics, for being measured at amortised cost or at fair value through other comprehensive income. Specifically, the following assets have been classified in this portfolio: • debt instruments, securities and loans for which the business model is neither held to collect nor held to collect and sell but which are not part of the trading book; • debt instruments, securities and loans with cash flows that are not solely payment of principal and interest; • units in investment funds; • equity instruments not held for trading for which the Bank does not apply the option granted by the standard of valuing these instruments at fair value through other comprehensive income. These assets are accounted for alike “Financial assets held for trading”, however gains and losses, whether realised or unrealised, are recognised in item “110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss: b) other financial assets mandatorily at fair value”. 2 - Financial assets at fair value through other comprehensive income A financial asset is classified as at fair value through other comprehensive income if: • its business model is held to collect and sell; • its cash flows are solely the payment of principal and interest. This category also includes equity instruments not held for trading for which the Bank applies the option granted by the standard of valuing the instruments at fair value through other comprehensive income. On initial recognition, at settlement date, a financial assets is measured at fair value, which is usually equal to the consideration paid, plus transaction costs and revenues directly attributable to the instrument. After initial recognition, the interests accrued on interest-bearing instruments are recorded in the income statement according to the amortised cost criterion in item “10. Interest income and similar revenues” if positive, or in item 20. “Interest expenses and similar charges” if negative. The gains and losses arising from changes in fair value are recognised in the Statement of comprehensive income and shown under item “110. Valuation reserves” in shareholders' equity. These instruments are tested for impairment as illustrated in the specific section 15 - Other Information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income” with contra-entry in the statement of other comprehensive income and also shown under item “110. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in income statement in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: b) financial assets at fair value through other comprehensive income”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. Company financial statements | Notes to the accounts Part A - Accounting policies 564 2018 Annual Report and Accounts · UniCredit The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk. With regard to equity instruments, the gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “110. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in item “140. Reserves”. In accordance with the provisions of IFRS9, no impairment losses on equity instruments are recognised in the income statement. Only dividends are recognised in P&L within item “70. Dividend income and similar revenues”. 3 - Financial assets at amortised cost A financial asset is classified as financial assets measured at amortised cost if: • its business model is held to collect; • its cash flows are solely the payment of principal and interest. These items also include the net value of finance leases of assets under construction or awaiting lease, provided the leases have the characteristics of contracts entailing the transfer of risk. On initial recognition, at settlement date, financial assets at amortised cost are measured at fair value, which is usually equal to the consideration paid, plus transaction costs and income directly attributable to the instrument. After initial recognition at fair value, these assets are measured at amortised cost which requires the recognition of interest on an accrual basis by using the effective interest rate method over the term of the loan. Such interest is recognised in item “10. Interest income and similar revenues” if positive, or in item “20. Interest expenses and similar charges” if negative. The amount of financial assets at amortised cost is adjusted in order to take into account impairment losses arising from valuation process as illustrated in the specific section 15 - Other information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk. 4 - Hedge accounting Hedging instruments are created to hedge market (interest-rate, currency and price) and/or credit risk to which the hedged positions are exposed. They may be described as follows: • Fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or liability, or an identifiable portion of such an asset or liability; • Cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction which could affect profit or loss in future periods; • Hedge of a net investment in a foreign entity, whose operations are based or conducted in a currency other than euro. It should be noted that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Company financial statements | Notes to the accounts Part A - Accounting policies 564 2018 Annual Report and Accounts · UniCredit The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk. With regard to equity instruments, the gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “110. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in item “140. Reserves”. In accordance with the provisions of IFRS9, no impairment losses on equity instruments are recognised in the income statement. Only dividends are recognised in P&L within item “70. Dividend income and similar revenues”. 3 - Financial assets at amortised cost A financial asset is classified as financial assets measured at amortised cost if: • its business model is held to collect; • its cash flows are solely the payment of principal and interest. These items also include the net value of finance leases of assets under construction or awaiting lease, provided the leases have the characteristics of contracts entailing the transfer of risk. On initial recognition, at settlement date, financial assets at amortised cost are measured at fair value, which is usually equal to the consideration paid, plus transaction costs and income directly attributable to the instrument. After initial recognition at fair value, these assets are measured at amortised cost which requires the recognition of interest on an accrual basis by using the effective interest rate method over the term of the loan. Such interest is recognised in item “10. Interest income and similar revenues” if positive, or in item “20. Interest expenses and similar charges” if negative. The amount of financial assets at amortised cost is adjusted in order to take into account impairment losses arising from valuation process as illustrated in the specific section 15 - Other information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk. 4 - Hedge accounting Hedging instruments are created to hedge market (interest-rate, currency and price) and/or credit risk to which the hedged positions are exposed. They may be described as follows: • Fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or liability, or an identifiable portion of such an asset or liability; • Cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction which could affect profit or loss in future periods; • Hedge of a net investment in a foreign entity, whose operations are based or conducted in a currency other than euro. It should be noted that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Company financial statements | Notes to the accounts Part A - Accounting policies 564 2018 Annual Report and Accounts · UniCredit The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk. With regard to equity instruments, the gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “110. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in item “140. Reserves”. In accordance with the provisions of IFRS9, no impairment losses on equity instruments are recognised in the income statement. Only dividends are recognised in P&L within item “70. Dividend income and similar revenues”. 3 - Financial assets at amortised cost A financial asset is classified as financial assets measured at amortised cost if: • its business model is held to collect; • its cash flows are solely the payment of principal and interest. These items also include the net value of finance leases of assets under construction or awaiting lease, provided the leases have the characteristics of contracts entailing the transfer of risk. On initial recognition, at settlement date, financial assets at amortised cost are measured at fair value, which is usually equal to the consideration paid, plus transaction costs and income directly attributable to the instrument. After initial recognition at fair value, these assets are measured at amortised cost which requires the recognition of interest on an accrual basis by using the effective interest rate method over the term of the loan. Such interest is recognised in item “10. Interest income and similar revenues” if positive, or in item “20. Interest expenses and similar charges” if negative. The amount of financial assets at amortised cost is adjusted in order to take into account impairment losses arising from valuation process as illustrated in the specific section 15 - Other information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk. 4 - Hedge accounting Hedging instruments are created to hedge market (interest-rate, currency and price) and/or credit risk to which the hedged positions are exposed. They may be described as follows: • Fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or liability, or an identifiable portion of such an asset or liability; • Cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction which could affect profit or loss in future periods; • Hedge of a net investment in a foreign entity, whose operations are based or conducted in a currency other than euro. It should be noted that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Company financial statements | Notes to the accounts Part A - Accounting policies 564 2018 Annual Report and Accounts · UniCredit The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk. With regard to equity instruments, the gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “110. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in item “140. Reserves”. In accordance with the provisions of IFRS9, no impairment losses on equity instruments are recognised in the income statement. Only dividends are recognised in P&L within item “70. Dividend income and similar revenues”. 3 - Financial assets at amortised cost A financial asset is classified as financial assets measured at amortised cost if: • its business model is held to collect; • its cash flows are solely the payment of principal and interest. These items also include the net value of finance leases of assets under construction or awaiting lease, provided the leases have the characteristics of contracts entailing the transfer of risk. On initial recognition, at settlement date, financial assets at amortised cost are measured at fair value, which is usually equal to the consideration paid, plus transaction costs and income directly attributable to the instrument. After initial recognition at fair value, these assets are measured at amortised cost which requires the recognition of interest on an accrual basis by using the effective interest rate method over the term of the loan. Such interest is recognised in item “10. Interest income and similar revenues” if positive, or in item “20. Interest expenses and similar charges” if negative. The amount of financial assets at amortised cost is adjusted in order to take into account impairment losses arising from valuation process as illustrated in the specific section 15 - Other information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk. 4 - Hedge accounting Hedging instruments are created to hedge market (interest-rate, currency and price) and/or credit risk to which the hedged positions are exposed. They may be described as follows: • Fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or liability, or an identifiable portion of such an asset or liability; • Cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction which could affect profit or loss in future periods; • Hedge of a net investment in a foreign entity, whose operations are based or conducted in a currency other than euro. It should be noted that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Company financial statements | Notes to the accounts Part A - Accounting policies 564 2018 Annual Report and Accounts · UniCredit The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk. With regard to equity instruments, the gains and losses arising from changes in fair value are recognised in the Statement of other comprehensive income and reported under item “110. Valuation reserves” in shareholders' equity. In the event of disposal, the accumulated profits and losses are recorded in item “140. Reserves”. In accordance with the provisions of IFRS9, no impairment losses on equity instruments are recognised in the income statement. Only dividends are recognised in P&L within item “70. Dividend income and similar revenues”. 3 - Financial assets at amortised cost A financial asset is classified as financial assets measured at amortised cost if: • its business model is held to collect; • its cash flows are solely the payment of principal and interest. These items also include the net value of finance leases of assets under construction or awaiting lease, provided the leases have the characteristics of contracts entailing the transfer of risk. On initial recognition, at settlement date, financial assets at amortised cost are measured at fair value, which is usually equal to the consideration paid, plus transaction costs and income directly attributable to the instrument. After initial recognition at fair value, these assets are measured at amortised cost which requires the recognition of interest on an accrual basis by using the effective interest rate method over the term of the loan. Such interest is recognised in item “10. Interest income and similar revenues” if positive, or in item “20. Interest expenses and similar charges” if negative. The amount of financial assets at amortised cost is adjusted in order to take into account impairment losses arising from valuation process as illustrated in the specific section 15 - Other information - Impairment. Impairment losses are recorded in the income statement, in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. In the event of disposal, the accumulated profits and losses are recorded in the income statement in item “100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost”. Amounts deriving from financial assets carrying amount adjustment, gross of cumulated write-downs, in order to reflect modifications on contractual cash flows that do not give rise to accounting derecognition, are recognised in P&L in item “140. Gains/Losses from contractual changes with no cancellations”; such line does not include the impact of contractual modifications on the amount of expected loss recognised in item “130. Net losses/recoveries on credit impairment relating to: a) financial assets at amortised cost”. Such item can also include on-balance credit exposures which are already non-performing on initial recognition. These exposures are qualified as “Purchased Originated Credit Impaired - POCI”. The amortised cost and the interest income generated by these assets are calculated by considering, in the estimate of future cash flows, the expected credit losses over the entire residual duration of the asset. This expected credit loss is subject to periodic review thus determining the recognition of impairment or write-backs. For further information on "Purchased Originated Credit Impaired” assets see Part E - Section 1 - Credit risk. 4 - Hedge accounting Hedging instruments are created to hedge market (interest-rate, currency and price) and/or credit risk to which the hedged positions are exposed. They may be described as follows: • Fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or liability, or an identifiable portion of such an asset or liability; • Cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction which could affect profit or loss in future periods; • Hedge of a net investment in a foreign entity, whose operations are based or conducted in a currency other than euro. It should be noted that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 565 Hedging derivatives are initially recognised on trade date and are valued at their fair value. A hedging relationship qualifies for hedge accounting if there is formal designation and documentation of the hedging relationship including the risk management objective, the strategy for undertaking the hedge, and how the hedging instrument’s prospective and retrospective effectiveness will be assessed. It is necessary to assess the hedge’s effectiveness, at inception and in subsequent periods, in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Generally a hedge is regarded as highly effective if, at the inception of the hedge and in subsequent periods, it is determined prospectively to remain highly effective, and retrospectively verified that the hedge ratio (i.e. the changes in fair value of hedged items and hedging instruments) is within a range of 80 -125 per cent. The hedge is assessed on an ongoing basis and thus must prospectively remain highly effective throughout the financial reporting periods for which the hedge has been designated. The assessment of effectiveness is made at each balance-sheet date or other reporting date. If the assessment does not confirm the effectiveness of the hedge, from that time on hedge accounting is discontinued in respect of the hedge and the hedging derivative is reclassified as a held-for-trading instrument. In addition, the hedging relationship ceases when (i) the hedging instrument expires or is sold, terminated or exercised, (ii) the hedged item is sold, expires or is repaid, (iii) it is no longer highly probable that the forecast transaction will occur. Hedging instruments are so designated when identifiable with an ultimate counterparty outside the Group. Hedging derivatives are measured at fair value. Specifically: • Fair Value Hedging - an effective fair value hedge is accounted for as follows: the gain or loss from remeasuring the hedging instrument at fair value is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; the gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised through profit or loss in the same item. Hedging ineffectiveness is represented by the difference between the change in the fair value of hedging instruments and the change in the fair value of hedged item. If the hedging relationship is terminated for reasons other than the sale of the hedged item, the difference between the carrying amount of the hedged item on termination of the hedging and the carrying amount it would have had if the hedge had never existed, is recognised through profit or loss in interest receivable or payable over the residual life of the original hedge, in the case of interest-bearing instruments; if the financial instrument does not bear interest, the difference is recognised in profit or loss under item “90. Net gains (losses) on hedge accounting” at once. If the hedged item is sold or repaid, the portion of fair value which is still unamortised is at once recognised through profit or loss in item “100. Gains (Losses) on disposal and repurchase”; • Cash Flow Hedging - hedging instruments are valued at fair value. Change in the fair value of a hedging instrument that is considered effective is recognised in equity item “110. Revaluation reserves”. The ineffective portion of the gain or loss is recognised through profit or loss in item “90 Net gains (losses) on hedge accounting”. If a cash flow hedge is determined to be no longer effective or the hedging relationship is terminated, the cumulative gain or loss on the hedging instrument that remains recognised in revaluation reserves from the period when the hedge was effective remains separately recognised in revaluation reserves until the forecast hedged transaction occurs or is determined to be no longer possible; in the latter case gains or losses are transferred through profit or loss to “90 Net gains (losses) on hedge accounting”. The fair value changes are recorded in the Statement of Other Comprehensive Income and disclosed in item “110. Revaluation reserves"; • Hedging a Net Investment in a Foreign Entity - hedges of a net investment in a foreign entity whose activities are based or conducted in a country or currency other than those of the reporting entity are accounted for similarly to cash flow hedges. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognised directly in equity is recognised through profit or loss on disposal of the foreign entity. The fair value changes are recorded in the Statement of Comprehensive Income and disclosed in item “110. Valuation reserves"; the ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; • Macro-hedges of Financial Assets (Liabilities) - IAS39 allows a fair-value item hedged against interest rate fluctuations to be not only a single asset or liability but also a monetary position contained in a number of financial assets or liabilities (or parts of them); accordingly, a group of derivatives can be used to offset fair-value fluctuations in hedged items due to changes in market rates. Macro-hedging may not be used for net positions resulting from the offsetting of assets and liabilities. As for fair value micro hedging, macrohedging is considered highly effective if, at the inception of the hedge and in subsequent periods, changes in the fair value attributable to the hedged position are offset by changes in fair value of the hedging instrument and if the hedge ratio is retrospectively assessed falling within the range of 80-125 per cent. Net changes, gains or losses, in the fair value of the macro-hedged assets and liabilities attributable to the hedged risk are recognised in asset Item “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)”, respectively and offset the profit or loss item “90. Net gains (losses) on hedge accounting". Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 565 Hedging derivatives are initially recognised on trade date and are valued at their fair value. A hedging relationship qualifies for hedge accounting if there is formal designation and documentation of the hedging relationship including the risk management objective, the strategy for undertaking the hedge, and how the hedging instrument’s prospective and retrospective effectiveness will be assessed. It is necessary to assess the hedge’s effectiveness, at inception and in subsequent periods, in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Generally a hedge is regarded as highly effective if, at the inception of the hedge and in subsequent periods, it is determined prospectively to remain highly effective, and retrospectively verified that the hedge ratio (i.e. the changes in fair value of hedged items and hedging instruments) is within a range of 80 -125 per cent. The hedge is assessed on an ongoing basis and thus must prospectively remain highly effective throughout the financial reporting periods for which the hedge has been designated. The assessment of effectiveness is made at each balance-sheet date or other reporting date. If the assessment does not confirm the effectiveness of the hedge, from that time on hedge accounting is discontinued in respect of the hedge and the hedging derivative is reclassified as a held-for-trading instrument. In addition, the hedging relationship ceases when (i) the hedging instrument expires or is sold, terminated or exercised, (ii) the hedged item is sold, expires or is repaid, (iii) it is no longer highly probable that the forecast transaction will occur. Hedging instruments are so designated when identifiable with an ultimate counterparty outside the Group. Hedging derivatives are measured at fair value. Specifically: • Fair Value Hedging - an effective fair value hedge is accounted for as follows: the gain or loss from remeasuring the hedging instrument at fair value is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; the gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised through profit or loss in the same item. Hedging ineffectiveness is represented by the difference between the change in the fair value of hedging instruments and the change in the fair value of hedged item. If the hedging relationship is terminated for reasons other than the sale of the hedged item, the difference between the carrying amount of the hedged item on termination of the hedging and the carrying amount it would have had if the hedge had never existed, is recognised through profit or loss in interest receivable or payable over the residual life of the original hedge, in the case of interest-bearing instruments; if the financial instrument does not bear interest, the difference is recognised in profit or loss under item “90. Net gains (losses) on hedge accounting” at once. If the hedged item is sold or repaid, the portion of fair value which is still unamortised is at once recognised through profit or loss in item “100. Gains (Losses) on disposal and repurchase”; • Cash Flow Hedging - hedging instruments are valued at fair value. Change in the fair value of a hedging instrument that is considered effective is recognised in equity item “110. Revaluation reserves”. The ineffective portion of the gain or loss is recognised through profit or loss in item “90 Net gains (losses) on hedge accounting”. If a cash flow hedge is determined to be no longer effective or the hedging relationship is terminated, the cumulative gain or loss on the hedging instrument that remains recognised in revaluation reserves from the period when the hedge was effective remains separately recognised in revaluation reserves until the forecast hedged transaction occurs or is determined to be no longer possible; in the latter case gains or losses are transferred through profit or loss to “90 Net gains (losses) on hedge accounting”. The fair value changes are recorded in the Statement of Other Comprehensive Income and disclosed in item “110. Revaluation reserves"; • Hedging a Net Investment in a Foreign Entity - hedges of a net investment in a foreign entity whose activities are based or conducted in a country or currency other than those of the reporting entity are accounted for similarly to cash flow hedges. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognised directly in equity is recognised through profit or loss on disposal of the foreign entity. The fair value changes are recorded in the Statement of Comprehensive Income and disclosed in item “110. Valuation reserves"; the ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; • Macro-hedges of Financial Assets (Liabilities) - IAS39 allows a fair-value item hedged against interest rate fluctuations to be not only a single asset or liability but also a monetary position contained in a number of financial assets or liabilities (or parts of them); accordingly, a group of derivatives can be used to offset fair-value fluctuations in hedged items due to changes in market rates. Macro-hedging may not be used for net positions resulting from the offsetting of assets and liabilities. As for fair value micro hedging, macrohedging is considered highly effective if, at the inception of the hedge and in subsequent periods, changes in the fair value attributable to the hedged position are offset by changes in fair value of the hedging instrument and if the hedge ratio is retrospectively assessed falling within the range of 80-125 per cent. Net changes, gains or losses, in the fair value of the macro-hedged assets and liabilities attributable to the hedged risk are recognised in asset Item “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)”, respectively and offset the profit or loss item “90. Net gains (losses) on hedge accounting". Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 565 Hedging derivatives are initially recognised on trade date and are valued at their fair value. A hedging relationship qualifies for hedge accounting if there is formal designation and documentation of the hedging relationship including the risk management objective, the strategy for undertaking the hedge, and how the hedging instrument’s prospective and retrospective effectiveness will be assessed. It is necessary to assess the hedge’s effectiveness, at inception and in subsequent periods, in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Generally a hedge is regarded as highly effective if, at the inception of the hedge and in subsequent periods, it is determined prospectively to remain highly effective, and retrospectively verified that the hedge ratio (i.e. the changes in fair value of hedged items and hedging instruments) is within a range of 80 -125 per cent. The hedge is assessed on an ongoing basis and thus must prospectively remain highly effective throughout the financial reporting periods for which the hedge has been designated. The assessment of effectiveness is made at each balance-sheet date or other reporting date. If the assessment does not confirm the effectiveness of the hedge, from that time on hedge accounting is discontinued in respect of the hedge and the hedging derivative is reclassified as a held-for-trading instrument. In addition, the hedging relationship ceases when (i) the hedging instrument expires or is sold, terminated or exercised, (ii) the hedged item is sold, expires or is repaid, (iii) it is no longer highly probable that the forecast transaction will occur. Hedging instruments are so designated when identifiable with an ultimate counterparty outside the Group. Hedging derivatives are measured at fair value. Specifically: • Fair Value Hedging - an effective fair value hedge is accounted for as follows: the gain or loss from remeasuring the hedging instrument at fair value is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; the gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised through profit or loss in the same item. Hedging ineffectiveness is represented by the difference between the change in the fair value of hedging instruments and the change in the fair value of hedged item. If the hedging relationship is terminated for reasons other than the sale of the hedged item, the difference between the carrying amount of the hedged item on termination of the hedging and the carrying amount it would have had if the hedge had never existed, is recognised through profit or loss in interest receivable or payable over the residual life of the original hedge, in the case of interest-bearing instruments; if the financial instrument does not bear interest, the difference is recognised in profit or loss under item “90. Net gains (losses) on hedge accounting” at once. If the hedged item is sold or repaid, the portion of fair value which is still unamortised is at once recognised through profit or loss in item “100. Gains (Losses) on disposal and repurchase”; • Cash Flow Hedging - hedging instruments are valued at fair value. Change in the fair value of a hedging instrument that is considered effective is recognised in equity item “110. Revaluation reserves”. The ineffective portion of the gain or loss is recognised through profit or loss in item “90 Net gains (losses) on hedge accounting”. If a cash flow hedge is determined to be no longer effective or the hedging relationship is terminated, the cumulative gain or loss on the hedging instrument that remains recognised in revaluation reserves from the period when the hedge was effective remains separately recognised in revaluation reserves until the forecast hedged transaction occurs or is determined to be no longer possible; in the latter case gains or losses are transferred through profit or loss to “90 Net gains (losses) on hedge accounting”. The fair value changes are recorded in the Statement of Other Comprehensive Income and disclosed in item “110. Revaluation reserves"; • Hedging a Net Investment in a Foreign Entity - hedges of a net investment in a foreign entity whose activities are based or conducted in a country or currency other than those of the reporting entity are accounted for similarly to cash flow hedges. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognised directly in equity is recognised through profit or loss on disposal of the foreign entity. The fair value changes are recorded in the Statement of Comprehensive Income and disclosed in item “110. Valuation reserves"; the ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; • Macro-hedges of Financial Assets (Liabilities) - IAS39 allows a fair-value item hedged against interest rate fluctuations to be not only a single asset or liability but also a monetary position contained in a number of financial assets or liabilities (or parts of them); accordingly, a group of derivatives can be used to offset fair-value fluctuations in hedged items due to changes in market rates. Macro-hedging may not be used for net positions resulting from the offsetting of assets and liabilities. As for fair value micro hedging, macrohedging is considered highly effective if, at the inception of the hedge and in subsequent periods, changes in the fair value attributable to the hedged position are offset by changes in fair value of the hedging instrument and if the hedge ratio is retrospectively assessed falling within the range of 80-125 per cent. Net changes, gains or losses, in the fair value of the macro-hedged assets and liabilities attributable to the hedged risk are recognised in asset Item “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)”, respectively and offset the profit or loss item “90. Net gains (losses) on hedge accounting". Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 565 Hedging derivatives are initially recognised on trade date and are valued at their fair value. A hedging relationship qualifies for hedge accounting if there is formal designation and documentation of the hedging relationship including the risk management objective, the strategy for undertaking the hedge, and how the hedging instrument’s prospective and retrospective effectiveness will be assessed. It is necessary to assess the hedge’s effectiveness, at inception and in subsequent periods, in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Generally a hedge is regarded as highly effective if, at the inception of the hedge and in subsequent periods, it is determined prospectively to remain highly effective, and retrospectively verified that the hedge ratio (i.e. the changes in fair value of hedged items and hedging instruments) is within a range of 80 -125 per cent. The hedge is assessed on an ongoing basis and thus must prospectively remain highly effective throughout the financial reporting periods for which the hedge has been designated. The assessment of effectiveness is made at each balance-sheet date or other reporting date. If the assessment does not confirm the effectiveness of the hedge, from that time on hedge accounting is discontinued in respect of the hedge and the hedging derivative is reclassified as a held-for-trading instrument. In addition, the hedging relationship ceases when (i) the hedging instrument expires or is sold, terminated or exercised, (ii) the hedged item is sold, expires or is repaid, (iii) it is no longer highly probable that the forecast transaction will occur. Hedging instruments are so designated when identifiable with an ultimate counterparty outside the Group. Hedging derivatives are measured at fair value. Specifically: • Fair Value Hedging - an effective fair value hedge is accounted for as follows: the gain or loss from remeasuring the hedging instrument at fair value is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; the gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised through profit or loss in the same item. Hedging ineffectiveness is represented by the difference between the change in the fair value of hedging instruments and the change in the fair value of hedged item. If the hedging relationship is terminated for reasons other than the sale of the hedged item, the difference between the carrying amount of the hedged item on termination of the hedging and the carrying amount it would have had if the hedge had never existed, is recognised through profit or loss in interest receivable or payable over the residual life of the original hedge, in the case of interest-bearing instruments; if the financial instrument does not bear interest, the difference is recognised in profit or loss under item “90. Net gains (losses) on hedge accounting” at once. If the hedged item is sold or repaid, the portion of fair value which is still unamortised is at once recognised through profit or loss in item “100. Gains (Losses) on disposal and repurchase”; • Cash Flow Hedging - hedging instruments are valued at fair value. Change in the fair value of a hedging instrument that is considered effective is recognised in equity item “110. Revaluation reserves”. The ineffective portion of the gain or loss is recognised through profit or loss in item “90 Net gains (losses) on hedge accounting”. If a cash flow hedge is determined to be no longer effective or the hedging relationship is terminated, the cumulative gain or loss on the hedging instrument that remains recognised in revaluation reserves from the period when the hedge was effective remains separately recognised in revaluation reserves until the forecast hedged transaction occurs or is determined to be no longer possible; in the latter case gains or losses are transferred through profit or loss to “90 Net gains (losses) on hedge accounting”. The fair value changes are recorded in the Statement of Other Comprehensive Income and disclosed in item “110. Revaluation reserves"; • Hedging a Net Investment in a Foreign Entity - hedges of a net investment in a foreign entity whose activities are based or conducted in a country or currency other than those of the reporting entity are accounted for similarly to cash flow hedges. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognised directly in equity is recognised through profit or loss on disposal of the foreign entity. The fair value changes are recorded in the Statement of Comprehensive Income and disclosed in item “110. Valuation reserves"; the ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; • Macro-hedges of Financial Assets (Liabilities) - IAS39 allows a fair-value item hedged against interest rate fluctuations to be not only a single asset or liability but also a monetary position contained in a number of financial assets or liabilities (or parts of them); accordingly, a group of derivatives can be used to offset fair-value fluctuations in hedged items due to changes in market rates. Macro-hedging may not be used for net positions resulting from the offsetting of assets and liabilities. As for fair value micro hedging, macrohedging is considered highly effective if, at the inception of the hedge and in subsequent periods, changes in the fair value attributable to the hedged position are offset by changes in fair value of the hedging instrument and if the hedge ratio is retrospectively assessed falling within the range of 80-125 per cent. Net changes, gains or losses, in the fair value of the macro-hedged assets and liabilities attributable to the hedged risk are recognised in asset Item “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)”, respectively and offset the profit or loss item “90. Net gains (losses) on hedge accounting". Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 565 Hedging derivatives are initially recognised on trade date and are valued at their fair value. A hedging relationship qualifies for hedge accounting if there is formal designation and documentation of the hedging relationship including the risk management objective, the strategy for undertaking the hedge, and how the hedging instrument’s prospective and retrospective effectiveness will be assessed. It is necessary to assess the hedge’s effectiveness, at inception and in subsequent periods, in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Generally a hedge is regarded as highly effective if, at the inception of the hedge and in subsequent periods, it is determined prospectively to remain highly effective, and retrospectively verified that the hedge ratio (i.e. the changes in fair value of hedged items and hedging instruments) is within a range of 80 -125 per cent. The hedge is assessed on an ongoing basis and thus must prospectively remain highly effective throughout the financial reporting periods for which the hedge has been designated. The assessment of effectiveness is made at each balance-sheet date or other reporting date. If the assessment does not confirm the effectiveness of the hedge, from that time on hedge accounting is discontinued in respect of the hedge and the hedging derivative is reclassified as a held-for-trading instrument. In addition, the hedging relationship ceases when (i) the hedging instrument expires or is sold, terminated or exercised, (ii) the hedged item is sold, expires or is repaid, (iii) it is no longer highly probable that the forecast transaction will occur. Hedging instruments are so designated when identifiable with an ultimate counterparty outside the Group. Hedging derivatives are measured at fair value. Specifically: • Fair Value Hedging - an effective fair value hedge is accounted for as follows: the gain or loss from remeasuring the hedging instrument at fair value is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; the gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised through profit or loss in the same item. Hedging ineffectiveness is represented by the difference between the change in the fair value of hedging instruments and the change in the fair value of hedged item. If the hedging relationship is terminated for reasons other than the sale of the hedged item, the difference between the carrying amount of the hedged item on termination of the hedging and the carrying amount it would have had if the hedge had never existed, is recognised through profit or loss in interest receivable or payable over the residual life of the original hedge, in the case of interest-bearing instruments; if the financial instrument does not bear interest, the difference is recognised in profit or loss under item “90. Net gains (losses) on hedge accounting” at once. If the hedged item is sold or repaid, the portion of fair value which is still unamortised is at once recognised through profit or loss in item “100. Gains (Losses) on disposal and repurchase”; • Cash Flow Hedging - hedging instruments are valued at fair value. Change in the fair value of a hedging instrument that is considered effective is recognised in equity item “110. Revaluation reserves”. The ineffective portion of the gain or loss is recognised through profit or loss in item “90 Net gains (losses) on hedge accounting”. If a cash flow hedge is determined to be no longer effective or the hedging relationship is terminated, the cumulative gain or loss on the hedging instrument that remains recognised in revaluation reserves from the period when the hedge was effective remains separately recognised in revaluation reserves until the forecast hedged transaction occurs or is determined to be no longer possible; in the latter case gains or losses are transferred through profit or loss to “90 Net gains (losses) on hedge accounting”. The fair value changes are recorded in the Statement of Other Comprehensive Income and disclosed in item “110. Revaluation reserves"; • Hedging a Net Investment in a Foreign Entity - hedges of a net investment in a foreign entity whose activities are based or conducted in a country or currency other than those of the reporting entity are accounted for similarly to cash flow hedges. The gain or loss on the hedging instrument relating to the effective portion of the hedge that has been recognised directly in equity is recognised through profit or loss on disposal of the foreign entity. The fair value changes are recorded in the Statement of Comprehensive Income and disclosed in item “110. Valuation reserves"; the ineffective portion of the gain or loss is recognised through profit or loss in item “90. Net gains (losses) on hedge accounting”; • Macro-hedges of Financial Assets (Liabilities) - IAS39 allows a fair-value item hedged against interest rate fluctuations to be not only a single asset or liability but also a monetary position contained in a number of financial assets or liabilities (or parts of them); accordingly, a group of derivatives can be used to offset fair-value fluctuations in hedged items due to changes in market rates. Macro-hedging may not be used for net positions resulting from the offsetting of assets and liabilities. As for fair value micro hedging, macrohedging is considered highly effective if, at the inception of the hedge and in subsequent periods, changes in the fair value attributable to the hedged position are offset by changes in fair value of the hedging instrument and if the hedge ratio is retrospectively assessed falling within the range of 80-125 per cent. Net changes, gains or losses, in the fair value of the macro-hedged assets and liabilities attributable to the hedged risk are recognised in asset Item “60. Changes in fair value of portfolio hedged items (+/-)” or liability item “50. Value adjustment of hedged financial liabilities (+/-)”, respectively and offset the profit or loss item “90. Net gains (losses) on hedge accounting". Company financial statements | Notes to the accounts Part A - Accounting policies 566 2018 Annual Report and Accounts · UniCredit The ineffectiveness of the hedging arises to the extent that the change in the fair value of the hedging item differs from the change in the fair value of the hedged monetary position. The extent of hedge ineffectiveness is in any case recognised in profit and loss item “90. Net gains (losses) on hedge accounting ". If the hedging relationship is terminated, for reasons other than the sale of the hedged items, cumulative gain or loss in items “60. Changes in fair value of portfolio hedged items (+/-)” (Assets) and “50. Value adjustment of hedged financial liabilities (+/-)” (Liabilities) is recognised through profit or loss in items “10. Interest income and similar revenues” or “20. Interest expenses and similar charges”, along the residual life of the hedged financial assets or liabilities. If the latter are sold or repaid, unamortised fair value is at once recognised through profit and loss in item “100. Gains (Losses) on disposal and repurchase”. 5 - Equity investments Equity investments are equity instruments and consequently defined as financial instruments under IAS32. Investments in equity instruments made with the intention of establishing or maintaining a long-term operational relationship with the investee are strategic investments. The following are the types of equity investment: Subsidiaries Entities, including structured entities, over which the Bank has direct or indirect control, are considered subsidiaries. Control over an entity entails the Bank's ability to exercise power in order to influence the variable returns to which the Bank is exposed through its relationship with them. In order to verify the existence of control, the Group considers the following factors: • the purpose and establishment of the investee, in order to identify which are the entity's objectives, the activities that determine its returns and how these activities are ruled; • the power, in order to understand whether the Group has contractual rights that attribute the ability to rule the relevant activities; to this end only substantial rights that provide practical ability to rule are considered; • the exposure held in relation to the investee, in order to assess whether the Group has relationships with the investee, the returns of which are subject to changes deriving from variations in the investee's performance; • the existence of potential principal - agent relationships. If the relevant activities are ruled through voting rights, the existence of control is verified considering the voting rights held, including the potential ones, and the existence of any shareholders' or other agreements which attribute the right to control the majority of the voting rights, to appoint the majority of the governing body or in any case the power to determine the entity's financial and operating policies. Subsidiaries may also include any “structured entity” in which the voting rights are not significant for establishing control, including special purpose entities and investment funds. In the case of structured entities, the existence of control is ascertained considering both the contractual rights that enable governance of the relevant activities (or those that contribute most to the results) and the Group's exposure to the variability of returns deriving from these activities. Joint venture A joint venture is an entity in which the Bank has: • a joint control agreement; • rights on the net assets of the entity. In detail a joint control exists when the decisions over the relevant activities require the unanimous consent of all the parties that share control. Associates An associate is an entity over which the investor has significant influence and which are not subsidiaries or joint ventures. Significant influence is presumed when the investor: • holds, directly or indirectly, at least 20% of the share capital of another entity, or • is able, also through shareholders' agreements, to exercise significant influence through: - representation on the governing body of the company; - participation in the policy-making process, including participation in decisions about dividends or other distributions; Company financial statements | Notes to the accounts Part A - Accounting policies 566 2018 Annual Report and Accounts · UniCredit The ineffectiveness of the hedging arises to the extent that the change in the fair value of the hedging item differs from the change in the fair value of the hedged monetary position. The extent of hedge ineffectiveness is in any case recognised in profit and loss item “90. Net gains (losses) on hedge accounting ". If the hedging relationship is terminated, for reasons other than the sale of the hedged items, cumulative gain or loss in items “60. Changes in fair value of portfolio hedged items (+/-)” (Assets) and “50. Value adjustment of hedged financial liabilities (+/-)” (Liabilities) is recognised through profit or loss in items “10. Interest income and similar revenues” or “20. Interest expenses and similar charges”, along the residual life of the hedged financial assets or liabilities. If the latter are sold or repaid, unamortised fair value is at once recognised through profit and loss in item “100. Gains (Losses) on disposal and repurchase”. 5 - Equity investments Equity investments are equity instruments and consequently defined as financial instruments under IAS32. Investments in equity instruments made with the intention of establishing or maintaining a long-term operational relationship with the investee are strategic investments. The following are the types of equity investment: Subsidiaries Entities, including structured entities, over which the Bank has direct or indirect control, are considered subsidiaries. Control over an entity entails the Bank's ability to exercise power in order to influence the variable returns to which the Bank is exposed through its relationship with them. In order to verify the existence of control, the Group considers the following factors: • the purpose and establishment of the investee, in order to identify which are the entity's objectives, the activities that determine its returns and how these activities are ruled; • the power, in order to understand whether the Group has contractual rights that attribute the ability to rule the relevant activities; to this end only substantial rights that provide practical ability to rule are considered; • the exposure held in relation to the investee, in order to assess whether the Group has relationships with the investee, the returns of which are subject to changes deriving from variations in the investee's performance; • the existence of potential principal - agent relationships. If the relevant activities are ruled through voting rights, the existence of control is verified considering the voting rights held, including the potential ones, and the existence of any shareholders' or other agreements which attribute the right to control the majority of the voting rights, to appoint the majority of the governing body or in any case the power to determine the entity's financial and operating policies. Subsidiaries may also include any “structured entity” in which the voting rights are not significant for establishing control, including special purpose entities and investment funds. In the case of structured entities, the existence of control is ascertained considering both the contractual rights that enable governance of the relevant activities (or those that contribute most to the results) and the Group's exposure to the variability of returns deriving from these activities. Joint venture A joint venture is an entity in which the Bank has: • a joint control agreement; • rights on the net assets of the entity. In detail a joint control exists when the decisions over the relevant activities require the unanimous consent of all the parties that share control. Associates An associate is an entity over which the investor has significant influence and which are not subsidiaries or joint ventures. Significant influence is presumed when the investor: • holds, directly or indirectly, at least 20% of the share capital of another entity, or • is able, also through shareholders' agreements, to exercise significant influence through: - representation on the governing body of the company; - participation in the policy-making process, including participation in decisions about dividends or other distributions; Company financial statements | Notes to the accounts Part A - Accounting policies 566 2018 Annual Report and Accounts · UniCredit The ineffectiveness of the hedging arises to the extent that the change in the fair value of the hedging item differs from the change in the fair value of the hedged monetary position. The extent of hedge ineffectiveness is in any case recognised in profit and loss item “90. Net gains (losses) on hedge accounting ". If the hedging relationship is terminated, for reasons other than the sale of the hedged items, cumulative gain or loss in items “60. Changes in fair value of portfolio hedged items (+/-)” (Assets) and “50. Value adjustment of hedged financial liabilities (+/-)” (Liabilities) is recognised through profit or loss in items “10. Interest income and similar revenues” or “20. Interest expenses and similar charges”, along the residual life of the hedged financial assets or liabilities. If the latter are sold or repaid, unamortised fair value is at once recognised through profit and loss in item “100. Gains (Losses) on disposal and repurchase”. 5 - Equity investments Equity investments are equity instruments and consequently defined as financial instruments under IAS32. Investments in equity instruments made with the intention of establishing or maintaining a long-term operational relationship with the investee are strategic investments. The following are the types of equity investment: Subsidiaries Entities, including structured entities, over which the Bank has direct or indirect control, are considered subsidiaries. Control over an entity entails the Bank's ability to exercise power in order to influence the variable returns to which the Bank is exposed through its relationship with them. In order to verify the existence of control, the Group considers the following factors: • the purpose and establishment of the investee, in order to identify which are the entity's objectives, the activities that determine its returns and how these activities are ruled; • the power, in order to understand whether the Group has contractual rights that attribute the ability to rule the relevant activities; to this end only substantial rights that provide practical ability to rule are considered; • the exposure held in relation to the investee, in order to assess whether the Group has relationships with the investee, the returns of which are subject to changes deriving from variations in the investee's performance; • the existence of potential principal - agent relationships. If the relevant activities are ruled through voting rights, the existence of control is verified considering the voting rights held, including the potential ones, and the existence of any shareholders' or other agreements which attribute the right to control the majority of the voting rights, to appoint the majority of the governing body or in any case the power to determine the entity's financial and operating policies. Subsidiaries may also include any “structured entity” in which the voting rights are not significant for establishing control, including special purpose entities and investment funds. In the case of structured entities, the existence of control is ascertained considering both the contractual rights that enable governance of the relevant activities (or those that contribute most to the results) and the Group's exposure to the variability of returns deriving from these activities. Joint venture A joint venture is an entity in which the Bank has: • a joint control agreement; • rights on the net assets of the entity. In detail a joint control exists when the decisions over the relevant activities require the unanimous consent of all the parties that share control. Associates An associate is an entity over which the investor has significant influence and which are not subsidiaries or joint ventures. Significant influence is presumed when the investor: • holds, directly or indirectly, at least 20% of the share capital of another entity, or • is able, also through shareholders' agreements, to exercise significant influence through: - representation on the governing body of the company; - participation in the policy-making process, including participation in decisions about dividends or other distributions; Company financial statements | Notes to the accounts Part A - Accounting policies 566 2018 Annual Report and Accounts · UniCredit The ineffectiveness of the hedging arises to the extent that the change in the fair value of the hedging item differs from the change in the fair value of the hedged monetary position. The extent of hedge ineffectiveness is in any case recognised in profit and loss item “90. Net gains (losses) on hedge accounting ". If the hedging relationship is terminated, for reasons other than the sale of the hedged items, cumulative gain or loss in items “60. Changes in fair value of portfolio hedged items (+/-)” (Assets) and “50. Value adjustment of hedged financial liabilities (+/-)” (Liabilities) is recognised through profit or loss in items “10. Interest income and similar revenues” or “20. Interest expenses and similar charges”, along the residual life of the hedged financial assets or liabilities. If the latter are sold or repaid, unamortised fair value is at once recognised through profit and loss in item “100. Gains (Losses) on disposal and repurchase”. 5 - Equity investments Equity investments are equity instruments and consequently defined as financial instruments under IAS32. Investments in equity instruments made with the intention of establishing or maintaining a long-term operational relationship with the investee are strategic investments. The following are the types of equity investment: Subsidiaries Entities, including structured entities, over which the Bank has direct or indirect control, are considered subsidiaries. Control over an entity entails the Bank's ability to exercise power in order to influence the variable returns to which the Bank is exposed through its relationship with them. In order to verify the existence of control, the Group considers the following factors: • the purpose and establishment of the investee, in order to identify which are the entity's objectives, the activities that determine its returns and how these activities are ruled; • the power, in order to understand whether the Group has contractual rights that attribute the ability to rule the relevant activities; to this end only substantial rights that provide practical ability to rule are considered; • the exposure held in relation to the investee, in order to assess whether the Group has relationships with the investee, the returns of which are subject to changes deriving from variations in the investee's performance; • the existence of potential principal - agent relationships. If the relevant activities are ruled through voting rights, the existence of control is verified considering the voting rights held, including the potential ones, and the existence of any shareholders' or other agreements which attribute the right to control the majority of the voting rights, to appoint the majority of the governing body or in any case the power to determine the entity's financial and operating policies. Subsidiaries may also include any “structured entity” in which the voting rights are not significant for establishing control, including special purpose entities and investment funds. In the case of structured entities, the existence of control is ascertained considering both the contractual rights that enable governance of the relevant activities (or those that contribute most to the results) and the Group's exposure to the variability of returns deriving from these activities. Joint venture A joint venture is an entity in which the Bank has: • a joint control agreement; • rights on the net assets of the entity. In detail a joint control exists when the decisions over the relevant activities require the unanimous consent of all the parties that share control. Associates An associate is an entity over which the investor has significant influence and which are not subsidiaries or joint ventures. Significant influence is presumed when the investor: • holds, directly or indirectly, at least 20% of the share capital of another entity, or • is able, also through shareholders' agreements, to exercise significant influence through: - representation on the governing body of the company; - participation in the policy-making process, including participation in decisions about dividends or other distributions; Company financial statements | Notes to the accounts Part A - Accounting policies 566 2018 Annual Report and Accounts · UniCredit The ineffectiveness of the hedging arises to the extent that the change in the fair value of the hedging item differs from the change in the fair value of the hedged monetary position. The extent of hedge ineffectiveness is in any case recognised in profit and loss item “90. Net gains (losses) on hedge accounting ". If the hedging relationship is terminated, for reasons other than the sale of the hedged items, cumulative gain or loss in items “60. Changes in fair value of portfolio hedged items (+/-)” (Assets) and “50. Value adjustment of hedged financial liabilities (+/-)” (Liabilities) is recognised through profit or loss in items “10. Interest income and similar revenues” or “20. Interest expenses and similar charges”, along the residual life of the hedged financial assets or liabilities. If the latter are sold or repaid, unamortised fair value is at once recognised through profit and loss in item “100. Gains (Losses) on disposal and repurchase”. 5 - Equity investments Equity investments are equity instruments and consequently defined as financial instruments under IAS32. Investments in equity instruments made with the intention of establishing or maintaining a long-term operational relationship with the investee are strategic investments. The following are the types of equity investment: Subsidiaries Entities, including structured entities, over which the Bank has direct or indirect control, are considered subsidiaries. Control over an entity entails the Bank's ability to exercise power in order to influence the variable returns to which the Bank is exposed through its relationship with them. In order to verify the existence of control, the Group considers the following factors: • the purpose and establishment of the investee, in order to identify which are the entity's objectives, the activities that determine its returns and how these activities are ruled; • the power, in order to understand whether the Group has contractual rights that attribute the ability to rule the relevant activities; to this end only substantial rights that provide practical ability to rule are considered; • the exposure held in relation to the investee, in order to assess whether the Group has relationships with the investee, the returns of which are subject to changes deriving from variations in the investee's performance; • the existence of potential principal - agent relationships. If the relevant activities are ruled through voting rights, the existence of control is verified considering the voting rights held, including the potential ones, and the existence of any shareholders' or other agreements which attribute the right to control the majority of the voting rights, to appoint the majority of the governing body or in any case the power to determine the entity's financial and operating policies. Subsidiaries may also include any “structured entity” in which the voting rights are not significant for establishing control, including special purpose entities and investment funds. In the case of structured entities, the existence of control is ascertained considering both the contractual rights that enable governance of the relevant activities (or those that contribute most to the results) and the Group's exposure to the variability of returns deriving from these activities. Joint venture A joint venture is an entity in which the Bank has: • a joint control agreement; • rights on the net assets of the entity. In detail a joint control exists when the decisions over the relevant activities require the unanimous consent of all the parties that share control. Associates An associate is an entity over which the investor has significant influence and which are not subsidiaries or joint ventures. Significant influence is presumed when the investor: • holds, directly or indirectly, at least 20% of the share capital of another entity, or • is able, also through shareholders' agreements, to exercise significant influence through: - representation on the governing body of the company; - participation in the policy-making process, including participation in decisions about dividends or other distributions; Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 567 - the existence of significant transactions; - interchange of managerial personnel; - provision of key technical information. It should be noted that only companies which are governed through voting rights can be classified as associates. Investments in subsidiaries, associates and joint ventures are measured at cost. The purchase price of an equity investment is the sum of: • the fair value, at the date of acquisition, of the assets sold, liabilities assumed and equity instruments issued by the purchaser in exchange for control of the investee; and • any cost directly attributable to the acquisition. If there is evidence that an equity investment may have become impaired, its carrying value is compared with its recoverable value, which is determined on the basis of its value in use, in turn calculated by means of valuation models in general use in financial business, which discount expected future cash flow from the equity investment. If it is not possible to obtain sufficient information the value in use is considered to be the net worth of the company. If the recovery value is less than the carrying value, the difference is recognised through profit or loss in item “220. Gains (Losses) of equity investments”. If the reasons for impairment are removed following a subsequent event occurring after the recognition of impairment, write-backs are made through same profit or loss item. Equity investments considered strategic investments not covered by the above definitions and not recognised in item “110. Non-current assets and disposal groups classified as held for sale” are classified as financial assets at fair value through other comprehensive income or other financial assets mandatorily at fair value and accordingly treated. 6 - Property, plant and equipment The item includes: • land; • buildings; • furniture and fixtures; • plant and machinery; • other machinery and equipment; and is divided between: • assets used in the business; • assets held as investments; • Inventories in the scope of IAS2 Standard. This item also includes tangible assets arising from collection of collaterals. Assets used in the business and Assets held as investments Assets used in the business are held for use in the production or supply of goods or services or for administrative purposes and are expected to be used for more than one period. This category also (conventionally) includes assets to be let or under construction and to be leased under a finance lease, only for those finance leases which provide for retention of risk by the lessor until the acceptance of the asset by the lessee and the start of rentals under the finance lease. The item “Property, plant and equipment” includes assets used as lessee under a finance lease, or let/hired out as lessor under an operating lease. Property, plant and equipment also include leasehold improvements relating to assets which can be separately identified. They are classified according to the specific sub-items relating to the asset type (e.g. plants). Leasehold improvements are usually borne in order to make leased premises fit for the expected use. Improvements and additional expenses relating to property, plant and equipment identifiable but not separable are recognised in item “120. Other assets”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 567 - the existence of significant transactions; - interchange of managerial personnel; - provision of key technical information. It should be noted that only companies which are governed through voting rights can be classified as associates. Investments in subsidiaries, associates and joint ventures are measured at cost. The purchase price of an equity investment is the sum of: • the fair value, at the date of acquisition, of the assets sold, liabilities assumed and equity instruments issued by the purchaser in exchange for control of the investee; and • any cost directly attributable to the acquisition. If there is evidence that an equity investment may have become impaired, its carrying value is compared with its recoverable value, which is determined on the basis of its value in use, in turn calculated by means of valuation models in general use in financial business, which discount expected future cash flow from the equity investment. If it is not possible to obtain sufficient information the value in use is considered to be the net worth of the company. If the recovery value is less than the carrying value, the difference is recognised through profit or loss in item “220. Gains (Losses) of equity investments”. If the reasons for impairment are removed following a subsequent event occurring after the recognition of impairment, write-backs are made through same profit or loss item. Equity investments considered strategic investments not covered by the above definitions and not recognised in item “110. Non-current assets and disposal groups classified as held for sale” are classified as financial assets at fair value through other comprehensive income or other financial assets mandatorily at fair value and accordingly treated. 6 - Property, plant and equipment The item includes: • land; • buildings; • furniture and fixtures; • plant and machinery; • other machinery and equipment; and is divided between: • assets used in the business; • assets held as investments; • Inventories in the scope of IAS2 Standard. This item also includes tangible assets arising from collection of collaterals. Assets used in the business and Assets held as investments Assets used in the business are held for use in the production or supply of goods or services or for administrative purposes and are expected to be used for more than one period. This category also (conventionally) includes assets to be let or under construction and to be leased under a finance lease, only for those finance leases which provide for retention of risk by the lessor until the acceptance of the asset by the lessee and the start of rentals under the finance lease. The item “Property, plant and equipment” includes assets used as lessee under a finance lease, or let/hired out as lessor under an operating lease. Property, plant and equipment also include leasehold improvements relating to assets which can be separately identified. They are classified according to the specific sub-items relating to the asset type (e.g. plants). Leasehold improvements are usually borne in order to make leased premises fit for the expected use. Improvements and additional expenses relating to property, plant and equipment identifiable but not separable are recognised in item “120. Other assets”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 567 - the existence of significant transactions; - interchange of managerial personnel; - provision of key technical information. It should be noted that only companies which are governed through voting rights can be classified as associates. Investments in subsidiaries, associates and joint ventures are measured at cost. The purchase price of an equity investment is the sum of: • the fair value, at the date of acquisition, of the assets sold, liabilities assumed and equity instruments issued by the purchaser in exchange for control of the investee; and • any cost directly attributable to the acquisition. If there is evidence that an equity investment may have become impaired, its carrying value is compared with its recoverable value, which is determined on the basis of its value in use, in turn calculated by means of valuation models in general use in financial business, which discount expected future cash flow from the equity investment. If it is not possible to obtain sufficient information the value in use is considered to be the net worth of the company. If the recovery value is less than the carrying value, the difference is recognised through profit or loss in item “220. Gains (Losses) of equity investments”. If the reasons for impairment are removed following a subsequent event occurring after the recognition of impairment, write-backs are made through same profit or loss item. Equity investments considered strategic investments not covered by the above definitions and not recognised in item “110. Non-current assets and disposal groups classified as held for sale” are classified as financial assets at fair value through other comprehensive income or other financial assets mandatorily at fair value and accordingly treated. 6 - Property, plant and equipment The item includes: • land; • buildings; • furniture and fixtures; • plant and machinery; • other machinery and equipment; and is divided between: • assets used in the business; • assets held as investments; • Inventories in the scope of IAS2 Standard. This item also includes tangible assets arising from collection of collaterals. Assets used in the business and Assets held as investments Assets used in the business are held for use in the production or supply of goods or services or for administrative purposes and are expected to be used for more than one period. This category also (conventionally) includes assets to be let or under construction and to be leased under a finance lease, only for those finance leases which provide for retention of risk by the lessor until the acceptance of the asset by the lessee and the start of rentals under the finance lease. The item “Property, plant and equipment” includes assets used as lessee under a finance lease, or let/hired out as lessor under an operating lease. Property, plant and equipment also include leasehold improvements relating to assets which can be separately identified. They are classified according to the specific sub-items relating to the asset type (e.g. plants). Leasehold improvements are usually borne in order to make leased premises fit for the expected use. Improvements and additional expenses relating to property, plant and equipment identifiable but not separable are recognised in item “120. Other assets”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 567 - the existence of significant transactions; - interchange of managerial personnel; - provision of key technical information. It should be noted that only companies which are governed through voting rights can be classified as associates. Investments in subsidiaries, associates and joint ventures are measured at cost. The purchase price of an equity investment is the sum of: • the fair value, at the date of acquisition, of the assets sold, liabilities assumed and equity instruments issued by the purchaser in exchange for control of the investee; and • any cost directly attributable to the acquisition. If there is evidence that an equity investment may have become impaired, its carrying value is compared with its recoverable value, which is determined on the basis of its value in use, in turn calculated by means of valuation models in general use in financial business, which discount expected future cash flow from the equity investment. If it is not possible to obtain sufficient information the value in use is considered to be the net worth of the company. If the recovery value is less than the carrying value, the difference is recognised through profit or loss in item “220. Gains (Losses) of equity investments”. If the reasons for impairment are removed following a subsequent event occurring after the recognition of impairment, write-backs are made through same profit or loss item. Equity investments considered strategic investments not covered by the above definitions and not recognised in item “110. Non-current assets and disposal groups classified as held for sale” are classified as financial assets at fair value through other comprehensive income or other financial assets mandatorily at fair value and accordingly treated. 6 - Property, plant and equipment The item includes: • land; • buildings; • furniture and fixtures; • plant and machinery; • other machinery and equipment; and is divided between: • assets used in the business; • assets held as investments; • Inventories in the scope of IAS2 Standard. This item also includes tangible assets arising from collection of collaterals. Assets used in the business and Assets held as investments Assets used in the business are held for use in the production or supply of goods or services or for administrative purposes and are expected to be used for more than one period. This category also (conventionally) includes assets to be let or under construction and to be leased under a finance lease, only for those finance leases which provide for retention of risk by the lessor until the acceptance of the asset by the lessee and the start of rentals under the finance lease. The item “Property, plant and equipment” includes assets used as lessee under a finance lease, or let/hired out as lessor under an operating lease. Property, plant and equipment also include leasehold improvements relating to assets which can be separately identified. They are classified according to the specific sub-items relating to the asset type (e.g. plants). Leasehold improvements are usually borne in order to make leased premises fit for the expected use. Improvements and additional expenses relating to property, plant and equipment identifiable but not separable are recognised in item “120. Other assets”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 567 - the existence of significant transactions; - interchange of managerial personnel; - provision of key technical information. It should be noted that only companies which are governed through voting rights can be classified as associates. Investments in subsidiaries, associates and joint ventures are measured at cost. The purchase price of an equity investment is the sum of: • the fair value, at the date of acquisition, of the assets sold, liabilities assumed and equity instruments issued by the purchaser in exchange for control of the investee; and • any cost directly attributable to the acquisition. If there is evidence that an equity investment may have become impaired, its carrying value is compared with its recoverable value, which is determined on the basis of its value in use, in turn calculated by means of valuation models in general use in financial business, which discount expected future cash flow from the equity investment. If it is not possible to obtain sufficient information the value in use is considered to be the net worth of the company. If the recovery value is less than the carrying value, the difference is recognised through profit or loss in item “220. Gains (Losses) of equity investments”. If the reasons for impairment are removed following a subsequent event occurring after the recognition of impairment, write-backs are made through same profit or loss item. Equity investments considered strategic investments not covered by the above definitions and not recognised in item “110. Non-current assets and disposal groups classified as held for sale” are classified as financial assets at fair value through other comprehensive income or other financial assets mandatorily at fair value and accordingly treated. 6 - Property, plant and equipment The item includes: • land; • buildings; • furniture and fixtures; • plant and machinery; • other machinery and equipment; and is divided between: • assets used in the business; • assets held as investments; • Inventories in the scope of IAS2 Standard. This item also includes tangible assets arising from collection of collaterals. Assets used in the business and Assets held as investments Assets used in the business are held for use in the production or supply of goods or services or for administrative purposes and are expected to be used for more than one period. This category also (conventionally) includes assets to be let or under construction and to be leased under a finance lease, only for those finance leases which provide for retention of risk by the lessor until the acceptance of the asset by the lessee and the start of rentals under the finance lease. The item “Property, plant and equipment” includes assets used as lessee under a finance lease, or let/hired out as lessor under an operating lease. Property, plant and equipment also include leasehold improvements relating to assets which can be separately identified. They are classified according to the specific sub-items relating to the asset type (e.g. plants). Leasehold improvements are usually borne in order to make leased premises fit for the expected use. Improvements and additional expenses relating to property, plant and equipment identifiable but not separable are recognised in item “120. Other assets”. Company financial statements | Notes to the accounts Part A - Accounting policies 568 2018 Annual Report and Accounts · UniCredit Assets held for investment purposes are properties covered by IAS40, i.e. properties held (owned or under a finance lease) in order to derive rentals and/or a capital gain. Property, plant and equipment are initially recognised at cost including all costs directly attributable to bringing the asset into use (transaction costs, professional fees, direct transport costs incurred in bringing the asset to the desired location, installation costs and dismantling costs). Subsequent costs are added to the carrying amount or recognised as a separate asset only when it is probable that there will be future economic benefits in excess of those initially foreseen and the cost can be reliably measured. Other expenses borne at a later time (e.g. normal maintenance costs) are recognised in the year they are incurred in profit and loss items: “160. Administrative expenses: b) other administrative expenses”, if they refer to assets used in the business; or: “200. Other operating expenses/income”, if they refer to property held for investment. After being recognised as an asset, an item of property, plant and equipment is carried at cost less any accumulated depreciation and any cumulative impairment losses. An item with a finite useful life is subject to straight-line depreciation. Residual useful life is usually assessed as follows: • Buildings up to 33 years; • Furniture up to 7 years; • Electronic equipment up to 12 years; • Other up to 7 years; • Leasehold Improvements up to 15 years. An item with an indefinite useful life is not depreciated. Land and buildings are recognised separately, even if acquired together. Land is not depreciated since it usually has an indefinite useful life. Buildings have instead a finite useful life and are therefore subject to depreciation. The estimate of the useful life of an asset is reviewed at least at each accounting period-end on the basis inter alia of the conditions of use of the asset, of maintenance conditions and expected obsolescence, and, if expectations differ from previous estimates, the depreciation amount for the current and subsequent financial years is adjusted accordingly. If there is clear evidence that an asset has been impaired the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e., the present value of future cash flow expected to originate from the asset. Any value adjustment is recognised in profit and loss item “180. Net value adjustments/write-backs on property, plant and equipment”. If the value of a previously impaired asset is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there had been no losses recognised on the prior-year impairment. An item of property, plant and equipment is derecognised (i) on disposal or (ii) when no future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in profit and loss item “250. Gains (Losses) on disposal of investments” or “180. Net value adjustments/write-backs on property, plant and equipment”, respectively. Inventories in the scope of IAS2 standard Inventories are assets held for sale in the ordinary course of business. They are accounted for at the lower of their carrying amounts and net realizable value. Any value adjustment arising from the application of the aforementioned criterion is recognised under item “180. Net value adjustments/write-backs on property, plant and equipment”. 7 - Intangible assets An intangible asset is an identifiable non-monetary without physical substance which is expected to be used for more than one period and from which future economic benefits are probable. Intangible assets are principally represented by software. Company financial statements | Notes to the accounts Part A - Accounting policies 568 2018 Annual Report and Accounts · UniCredit Assets held for investment purposes are properties covered by IAS40, i.e. properties held (owned or under a finance lease) in order to derive rentals and/or a capital gain. Property, plant and equipment are initially recognised at cost including all costs directly attributable to bringing the asset into use (transaction costs, professional fees, direct transport costs incurred in bringing the asset to the desired location, installation costs and dismantling costs). Subsequent costs are added to the carrying amount or recognised as a separate asset only when it is probable that there will be future economic benefits in excess of those initially foreseen and the cost can be reliably measured. Other expenses borne at a later time (e.g. normal maintenance costs) are recognised in the year they are incurred in profit and loss items: “160. Administrative expenses: b) other administrative expenses”, if they refer to assets used in the business; or: “200. Other operating expenses/income”, if they refer to property held for investment. After being recognised as an asset, an item of property, plant and equipment is carried at cost less any accumulated depreciation and any cumulative impairment losses. An item with a finite useful life is subject to straight-line depreciation. Residual useful life is usually assessed as follows: • Buildings up to 33 years; • Furniture up to 7 years; • Electronic equipment up to 12 years; • Other up to 7 years; • Leasehold Improvements up to 15 years. An item with an indefinite useful life is not depreciated. Land and buildings are recognised separately, even if acquired together. Land is not depreciated since it usually has an indefinite useful life. Buildings have instead a finite useful life and are therefore subject to depreciation. The estimate of the useful life of an asset is reviewed at least at each accounting period-end on the basis inter alia of the conditions of use of the asset, of maintenance conditions and expected obsolescence, and, if expectations differ from previous estimates, the depreciation amount for the current and subsequent financial years is adjusted accordingly. If there is clear evidence that an asset has been impaired the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e., the present value of future cash flow expected to originate from the asset. Any value adjustment is recognised in profit and loss item “180. Net value adjustments/write-backs on property, plant and equipment”. If the value of a previously impaired asset is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there had been no losses recognised on the prior-year impairment. An item of property, plant and equipment is derecognised (i) on disposal or (ii) when no future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in profit and loss item “250. Gains (Losses) on disposal of investments” or “180. Net value adjustments/write-backs on property, plant and equipment”, respectively. Inventories in the scope of IAS2 standard Inventories are assets held for sale in the ordinary course of business. They are accounted for at the lower of their carrying amounts and net realizable value. Any value adjustment arising from the application of the aforementioned criterion is recognised under item “180. Net value adjustments/write-backs on property, plant and equipment”. 7 - Intangible assets An intangible asset is an identifiable non-monetary without physical substance which is expected to be used for more than one period and from which future economic benefits are probable. Intangible assets are principally represented by software. Company financial statements | Notes to the accounts Part A - Accounting policies 568 2018 Annual Report and Accounts · UniCredit Assets held for investment purposes are properties covered by IAS40, i.e. properties held (owned or under a finance lease) in order to derive rentals and/or a capital gain. Property, plant and equipment are initially recognised at cost including all costs directly attributable to bringing the asset into use (transaction costs, professional fees, direct transport costs incurred in bringing the asset to the desired location, installation costs and dismantling costs). Subsequent costs are added to the carrying amount or recognised as a separate asset only when it is probable that there will be future economic benefits in excess of those initially foreseen and the cost can be reliably measured. Other expenses borne at a later time (e.g. normal maintenance costs) are recognised in the year they are incurred in profit and loss items: “160. Administrative expenses: b) other administrative expenses”, if they refer to assets used in the business; or: “200. Other operating expenses/income”, if they refer to property held for investment. After being recognised as an asset, an item of property, plant and equipment is carried at cost less any accumulated depreciation and any cumulative impairment losses. An item with a finite useful life is subject to straight-line depreciation. Residual useful life is usually assessed as follows: • Buildings up to 33 years; • Furniture up to 7 years; • Electronic equipment up to 12 years; • Other up to 7 years; • Leasehold Improvements up to 15 years. An item with an indefinite useful life is not depreciated. Land and buildings are recognised separately, even if acquired together. Land is not depreciated since it usually has an indefinite useful life. Buildings have instead a finite useful life and are therefore subject to depreciation. The estimate of the useful life of an asset is reviewed at least at each accounting period-end on the basis inter alia of the conditions of use of the asset, of maintenance conditions and expected obsolescence, and, if expectations differ from previous estimates, the depreciation amount for the current and subsequent financial years is adjusted accordingly. If there is clear evidence that an asset has been impaired the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e., the present value of future cash flow expected to originate from the asset. Any value adjustment is recognised in profit and loss item “180. Net value adjustments/write-backs on property, plant and equipment”. If the value of a previously impaired asset is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there had been no losses recognised on the prior-year impairment. An item of property, plant and equipment is derecognised (i) on disposal or (ii) when no future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in profit and loss item “250. Gains (Losses) on disposal of investments” or “180. Net value adjustments/write-backs on property, plant and equipment”, respectively. Inventories in the scope of IAS2 standard Inventories are assets held for sale in the ordinary course of business. They are accounted for at the lower of their carrying amounts and net realizable value. Any value adjustment arising from the application of the aforementioned criterion is recognised under item “180. Net value adjustments/write-backs on property, plant and equipment”. 7 - Intangible assets An intangible asset is an identifiable non-monetary without physical substance which is expected to be used for more than one period and from which future economic benefits are probable. Intangible assets are principally represented by software. Company financial statements | Notes to the accounts Part A - Accounting policies 568 2018 Annual Report and Accounts · UniCredit Assets held for investment purposes are properties covered by IAS40, i.e. properties held (owned or under a finance lease) in order to derive rentals and/or a capital gain. Property, plant and equipment are initially recognised at cost including all costs directly attributable to bringing the asset into use (transaction costs, professional fees, direct transport costs incurred in bringing the asset to the desired location, installation costs and dismantling costs). Subsequent costs are added to the carrying amount or recognised as a separate asset only when it is probable that there will be future economic benefits in excess of those initially foreseen and the cost can be reliably measured. Other expenses borne at a later time (e.g. normal maintenance costs) are recognised in the year they are incurred in profit and loss items: “160. Administrative expenses: b) other administrative expenses”, if they refer to assets used in the business; or: “200. Other operating expenses/income”, if they refer to property held for investment. After being recognised as an asset, an item of property, plant and equipment is carried at cost less any accumulated depreciation and any cumulative impairment losses. An item with a finite useful life is subject to straight-line depreciation. Residual useful life is usually assessed as follows: • Buildings up to 33 years; • Furniture up to 7 years; • Electronic equipment up to 12 years; • Other up to 7 years; • Leasehold Improvements up to 15 years. An item with an indefinite useful life is not depreciated. Land and buildings are recognised separately, even if acquired together. Land is not depreciated since it usually has an indefinite useful life. Buildings have instead a finite useful life and are therefore subject to depreciation. The estimate of the useful life of an asset is reviewed at least at each accounting period-end on the basis inter alia of the conditions of use of the asset, of maintenance conditions and expected obsolescence, and, if expectations differ from previous estimates, the depreciation amount for the current and subsequent financial years is adjusted accordingly. If there is clear evidence that an asset has been impaired the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e., the present value of future cash flow expected to originate from the asset. Any value adjustment is recognised in profit and loss item “180. Net value adjustments/write-backs on property, plant and equipment”. If the value of a previously impaired asset is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there had been no losses recognised on the prior-year impairment. An item of property, plant and equipment is derecognised (i) on disposal or (ii) when no future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in profit and loss item “250. Gains (Losses) on disposal of investments” or “180. Net value adjustments/write-backs on property, plant and equipment”, respectively. Inventories in the scope of IAS2 standard Inventories are assets held for sale in the ordinary course of business. They are accounted for at the lower of their carrying amounts and net realizable value. Any value adjustment arising from the application of the aforementioned criterion is recognised under item “180. Net value adjustments/write-backs on property, plant and equipment”. 7 - Intangible assets An intangible asset is an identifiable non-monetary without physical substance which is expected to be used for more than one period and from which future economic benefits are probable. Intangible assets are principally represented by software. Company financial statements | Notes to the accounts Part A - Accounting policies 568 2018 Annual Report and Accounts · UniCredit Assets held for investment purposes are properties covered by IAS40, i.e. properties held (owned or under a finance lease) in order to derive rentals and/or a capital gain. Property, plant and equipment are initially recognised at cost including all costs directly attributable to bringing the asset into use (transaction costs, professional fees, direct transport costs incurred in bringing the asset to the desired location, installation costs and dismantling costs). Subsequent costs are added to the carrying amount or recognised as a separate asset only when it is probable that there will be future economic benefits in excess of those initially foreseen and the cost can be reliably measured. Other expenses borne at a later time (e.g. normal maintenance costs) are recognised in the year they are incurred in profit and loss items: “160. Administrative expenses: b) other administrative expenses”, if they refer to assets used in the business; or: “200. Other operating expenses/income”, if they refer to property held for investment. After being recognised as an asset, an item of property, plant and equipment is carried at cost less any accumulated depreciation and any cumulative impairment losses. An item with a finite useful life is subject to straight-line depreciation. Residual useful life is usually assessed as follows: • Buildings up to 33 years; • Furniture up to 7 years; • Electronic equipment up to 12 years; • Other up to 7 years; • Leasehold Improvements up to 15 years. An item with an indefinite useful life is not depreciated. Land and buildings are recognised separately, even if acquired together. Land is not depreciated since it usually has an indefinite useful life. Buildings have instead a finite useful life and are therefore subject to depreciation. The estimate of the useful life of an asset is reviewed at least at each accounting period-end on the basis inter alia of the conditions of use of the asset, of maintenance conditions and expected obsolescence, and, if expectations differ from previous estimates, the depreciation amount for the current and subsequent financial years is adjusted accordingly. If there is clear evidence that an asset has been impaired the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e., the present value of future cash flow expected to originate from the asset. Any value adjustment is recognised in profit and loss item “180. Net value adjustments/write-backs on property, plant and equipment”. If the value of a previously impaired asset is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there had been no losses recognised on the prior-year impairment. An item of property, plant and equipment is derecognised (i) on disposal or (ii) when no future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in profit and loss item “250. Gains (Losses) on disposal of investments” or “180. Net value adjustments/write-backs on property, plant and equipment”, respectively. Inventories in the scope of IAS2 standard Inventories are assets held for sale in the ordinary course of business. They are accounted for at the lower of their carrying amounts and net realizable value. Any value adjustment arising from the application of the aforementioned criterion is recognised under item “180. Net value adjustments/write-backs on property, plant and equipment”. 7 - Intangible assets An intangible asset is an identifiable non-monetary without physical substance which is expected to be used for more than one period and from which future economic benefits are probable. Intangible assets are principally represented by software. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 569 Intangible assets other than goodwill are recognised at purchase cost, i.e. including any cost incurred to bring the asset into use, less accumulated amortisation and impairment losses. Costs sustained after purchase are: • added to initial cost, provided they increase future economic benefits arising from the underlying asset (i.e. if they increase its value or productive capacity); • in other cases (i.e. when they do not increase the asset’s original value, but are intended merely to preserve its original functionality) are taken to profit or loss in a single amount in the year in which they have been borne. An intangible asset with a definite life is subject to straight-line amortisation over its estimated useful life. Residual useful life is usually assessed as follows: • Software up to 10 years. If there is clear evidence that an asset has been impaired, the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e. the present value of future cash flows expected to originate from the asset. Any impairment loss is recognised in profit and loss item “190. Impairment/write-backs on intangible assets”. If the value of a previously impaired intangible asset, other than goodwill is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there were no losses recognised on the prior-year impairment. An intangible asset is derecognised (i) on disposal or (ii) when no further future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in the profit and loss item “250. Gains (Losses) on disposal of investments” or “190. Impairment/write-backs on intangible assets”, respectively. 8 - Non-current assets held for sale These categories include individual assets held for disposal (tangible, intangible and financial assets) or groups of assets held for sale, with the related liabilities, as required by IFRS5. Individual assets (or groups of assets held for sale) are recognised in item “110. Non-current assets and disposal groups classified as held for sale” and item “70. Liabilities included in disposal groups classified as held for sale”, respectively, at the lower of their carrying amounts and fair values less costs to sell. The revaluation reserves relating to non-current assets classified as held for sale, which are recorded as a contra item to changes in value relevant for this purpose, are reported separately in the Statement of Other Comprehensive Income (see Explanatory notes - Part D – Other Comprehensive Income). The net balance of profits (dividends, interest income, etc.) and losses (interest expense, etc.) attributable to discontinued operations are recognised in the income statement under item “290. Profit (Loss) after tax from discontinued operations”. Profits and losses attributable to individual assets or disposal groups, that do not constitute discontinued operations, held for disposal are recognised in the income statement under the appropriate item. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 569 Intangible assets other than goodwill are recognised at purchase cost, i.e. including any cost incurred to bring the asset into use, less accumulated amortisation and impairment losses. Costs sustained after purchase are: • added to initial cost, provided they increase future economic benefits arising from the underlying asset (i.e. if they increase its value or productive capacity); • in other cases (i.e. when they do not increase the asset’s original value, but are intended merely to preserve its original functionality) are taken to profit or loss in a single amount in the year in which they have been borne. An intangible asset with a definite life is subject to straight-line amortisation over its estimated useful life. Residual useful life is usually assessed as follows: • Software up to 10 years. If there is clear evidence that an asset has been impaired, the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e. the present value of future cash flows expected to originate from the asset. Any impairment loss is recognised in profit and loss item “190. Impairment/write-backs on intangible assets”. If the value of a previously impaired intangible asset, other than goodwill is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there were no losses recognised on the prior-year impairment. An intangible asset is derecognised (i) on disposal or (ii) when no further future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in the profit and loss item “250. Gains (Losses) on disposal of investments” or “190. Impairment/write-backs on intangible assets”, respectively. 8 - Non-current assets held for sale These categories include individual assets held for disposal (tangible, intangible and financial assets) or groups of assets held for sale, with the related liabilities, as required by IFRS5. Individual assets (or groups of assets held for sale) are recognised in item “110. Non-current assets and disposal groups classified as held for sale” and item “70. Liabilities included in disposal groups classified as held for sale”, respectively, at the lower of their carrying amounts and fair values less costs to sell. The revaluation reserves relating to non-current assets classified as held for sale, which are recorded as a contra item to changes in value relevant for this purpose, are reported separately in the Statement of Other Comprehensive Income (see Explanatory notes - Part D – Other Comprehensive Income). The net balance of profits (dividends, interest income, etc.) and losses (interest expense, etc.) attributable to discontinued operations are recognised in the income statement under item “290. Profit (Loss) after tax from discontinued operations”. Profits and losses attributable to individual assets or disposal groups, that do not constitute discontinued operations, held for disposal are recognised in the income statement under the appropriate item. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 569 Intangible assets other than goodwill are recognised at purchase cost, i.e. including any cost incurred to bring the asset into use, less accumulated amortisation and impairment losses. Costs sustained after purchase are: • added to initial cost, provided they increase future economic benefits arising from the underlying asset (i.e. if they increase its value or productive capacity); • in other cases (i.e. when they do not increase the asset’s original value, but are intended merely to preserve its original functionality) are taken to profit or loss in a single amount in the year in which they have been borne. An intangible asset with a definite life is subject to straight-line amortisation over its estimated useful life. Residual useful life is usually assessed as follows: • Software up to 10 years. If there is clear evidence that an asset has been impaired, the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e. the present value of future cash flows expected to originate from the asset. Any impairment loss is recognised in profit and loss item “190. Impairment/write-backs on intangible assets”. If the value of a previously impaired intangible asset, other than goodwill is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there were no losses recognised on the prior-year impairment. An intangible asset is derecognised (i) on disposal or (ii) when no further future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in the profit and loss item “250. Gains (Losses) on disposal of investments” or “190. Impairment/write-backs on intangible assets”, respectively. 8 - Non-current assets held for sale These categories include individual assets held for disposal (tangible, intangible and financial assets) or groups of assets held for sale, with the related liabilities, as required by IFRS5. Individual assets (or groups of assets held for sale) are recognised in item “110. Non-current assets and disposal groups classified as held for sale” and item “70. Liabilities included in disposal groups classified as held for sale”, respectively, at the lower of their carrying amounts and fair values less costs to sell. The revaluation reserves relating to non-current assets classified as held for sale, which are recorded as a contra item to changes in value relevant for this purpose, are reported separately in the Statement of Other Comprehensive Income (see Explanatory notes - Part D – Other Comprehensive Income). The net balance of profits (dividends, interest income, etc.) and losses (interest expense, etc.) attributable to discontinued operations are recognised in the income statement under item “290. Profit (Loss) after tax from discontinued operations”. Profits and losses attributable to individual assets or disposal groups, that do not constitute discontinued operations, held for disposal are recognised in the income statement under the appropriate item. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 569 Intangible assets other than goodwill are recognised at purchase cost, i.e. including any cost incurred to bring the asset into use, less accumulated amortisation and impairment losses. Costs sustained after purchase are: • added to initial cost, provided they increase future economic benefits arising from the underlying asset (i.e. if they increase its value or productive capacity); • in other cases (i.e. when they do not increase the asset’s original value, but are intended merely to preserve its original functionality) are taken to profit or loss in a single amount in the year in which they have been borne. An intangible asset with a definite life is subject to straight-line amortisation over its estimated useful life. Residual useful life is usually assessed as follows: • Software up to 10 years. If there is clear evidence that an asset has been impaired, the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e. the present value of future cash flows expected to originate from the asset. Any impairment loss is recognised in profit and loss item “190. Impairment/write-backs on intangible assets”. If the value of a previously impaired intangible asset, other than goodwill is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there were no losses recognised on the prior-year impairment. An intangible asset is derecognised (i) on disposal or (ii) when no further future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in the profit and loss item “250. Gains (Losses) on disposal of investments” or “190. Impairment/write-backs on intangible assets”, respectively. 8 - Non-current assets held for sale These categories include individual assets held for disposal (tangible, intangible and financial assets) or groups of assets held for sale, with the related liabilities, as required by IFRS5. Individual assets (or groups of assets held for sale) are recognised in item “110. Non-current assets and disposal groups classified as held for sale” and item “70. Liabilities included in disposal groups classified as held for sale”, respectively, at the lower of their carrying amounts and fair values less costs to sell. The revaluation reserves relating to non-current assets classified as held for sale, which are recorded as a contra item to changes in value relevant for this purpose, are reported separately in the Statement of Other Comprehensive Income (see Explanatory notes - Part D – Other Comprehensive Income). The net balance of profits (dividends, interest income, etc.) and losses (interest expense, etc.) attributable to discontinued operations are recognised in the income statement under item “290. Profit (Loss) after tax from discontinued operations”. Profits and losses attributable to individual assets or disposal groups, that do not constitute discontinued operations, held for disposal are recognised in the income statement under the appropriate item. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 569 Intangible assets other than goodwill are recognised at purchase cost, i.e. including any cost incurred to bring the asset into use, less accumulated amortisation and impairment losses. Costs sustained after purchase are: • added to initial cost, provided they increase future economic benefits arising from the underlying asset (i.e. if they increase its value or productive capacity); • in other cases (i.e. when they do not increase the asset’s original value, but are intended merely to preserve its original functionality) are taken to profit or loss in a single amount in the year in which they have been borne. An intangible asset with a definite life is subject to straight-line amortisation over its estimated useful life. Residual useful life is usually assessed as follows: • Software up to 10 years. If there is clear evidence that an asset has been impaired, the carrying amount of the asset is compared with its recoverable value, equal to the greater of its fair value less selling cost and its value in use, i.e. the present value of future cash flows expected to originate from the asset. Any impairment loss is recognised in profit and loss item “190. Impairment/write-backs on intangible assets”. If the value of a previously impaired intangible asset, other than goodwill is restored, its increased carrying amount cannot exceed the net carrying amount it would have had if there were no losses recognised on the prior-year impairment. An intangible asset is derecognised (i) on disposal or (ii) when no further future economic benefits are expected from its use or sale in the future and any difference between sale proceeds or recoverable value and carrying value is recognised in the profit and loss item “250. Gains (Losses) on disposal of investments” or “190. Impairment/write-backs on intangible assets”, respectively. 8 - Non-current assets held for sale These categories include individual assets held for disposal (tangible, intangible and financial assets) or groups of assets held for sale, with the related liabilities, as required by IFRS5. Individual assets (or groups of assets held for sale) are recognised in item “110. Non-current assets and disposal groups classified as held for sale” and item “70. Liabilities included in disposal groups classified as held for sale”, respectively, at the lower of their carrying amounts and fair values less costs to sell. The revaluation reserves relating to non-current assets classified as held for sale, which are recorded as a contra item to changes in value relevant for this purpose, are reported separately in the Statement of Other Comprehensive Income (see Explanatory notes - Part D – Other Comprehensive Income). The net balance of profits (dividends, interest income, etc.) and losses (interest expense, etc.) attributable to discontinued operations are recognised in the income statement under item “290. Profit (Loss) after tax from discontinued operations”. Profits and losses attributable to individual assets or disposal groups, that do not constitute discontinued operations, held for disposal are recognised in the income statement under the appropriate item. Company financial statements | Notes to the accounts Part A - Accounting policies 570 2018 Annual Report and Accounts · UniCredit 9 - Current and deferred tax Tax assets and tax liabilities are recognised in the Balance Sheet respectively in item 100. of assets (“Tax assets”) and item 60. of liabilities (“Tax liabilities”). In compliance with the “Balance sheet method”, current and deferred tax items are: • current tax assets, i.e. amount of tax paid in excess of income tax due in accordance with local tax regulations; • current tax liabilities, i.e. amounts of corporate tax due in accordance with local tax regulations; • deferred tax assets, i.e. amounts of income tax recoverable in future fiscal years and attributable to: - deductible temporary differences; - the carryforward of unused tax losses; - the carryforward of unused tax credits; • deferred tax liabilities, i.e. the amounts of income tax due in future fiscal years in respect of taxable temporary differences. Current tax assets and tax liabilities are calculated in accordance with local tax regulations and are recognised in profit or loss on an accrual basis. In particular current corporate tax (“IRES”) is calculated at a rate of 27.50%; the regional tax on productive activity (“IRAP”) is applied on a regional basis. The national rate is set at 4.65%, to which each Region can autonomously increase a surcharge up to 0.92%, therefore theoretically a rate of 5.57% (plus an additional surcharge of 0.15% provided for the Regions with an healthcare deficit status). In general, deferred tax assets and liabilities arise when there is a difference between the accounting treatment and the tax treatment of the carrying amount of an asset or liability. Deferred tax assets and liabilities are recognised applying tax rates that at the balance sheet date are expected to apply in the period when the carrying amount of the asset will be recovered or the liability will be settled on the basis of tax regulations in force, and are periodically reviewed in order to reflect any changes in regulations. Under the tax consolidation system adopted by the Bank, deferred tax assets are recognised only to the extent that it is probable that sufficient taxable profit evaluated based on the Bank’s ability to generate it in future financial years will be available. Deferred tax liabilities are always recognised. In accordance with the provisions of IAS12, the probability that sufficient future taxable profit against which the deferred tax assets can be utilised will be available is reviewed periodically. The carrying amount of deferred tax assets should be reduced to the extent that it is not probable that sufficient taxable profit will be available. Current and deferred taxes are recognised in profit and loss item “270. Tax expense (income) related to profit or loss from continuing operations”, except for tax referred to items that in the same or in another fiscal year are credited or charged directly to equity, such as those relating to gains or losses on financial assets at fair value through other comprehensive income and those relating to changes in the fair value of cash flow hedging instruments, whose changes in value are recognised, net of tax, directly in the Statement of Other Comprehensive Income - Valuation reserves. IRES is determined on the basis of the “consolidato fiscale” rules pursuant to L.D.344/03; UniCredit S.p.A. opted to apply tax consolidation of the Group’s Italian entities (see also Part B of these Notes - Section 10.7 Further information). Current tax assets and liabilities are presented on the Balance Sheet net of the related current tax liabilities if the following requirements are met: • existence of a legally enforceable right to offset the amounts recognised; • the intention to extinguish for the remaining net, or realise the asset and at the same time extinguish the liability. Deferred tax assets are presented on the Balance Sheet net of the related deferred tax liabilities if the following requirements are met: • existence of an enforceable right to offset current tax assets with current tax liabilities; and • the deferred tax assets and liabilities must relate to income taxes applied to the same tax authority on the same taxable entity or on different taxable entities that intend to settle the current tax liabilities and assets on a net basis (usually in presence of a “consolidato fiscale”). Company financial statements | Notes to the accounts Part A - Accounting policies 570 2018 Annual Report and Accounts · UniCredit 9 - Current and deferred tax Tax assets and tax liabilities are recognised in the Balance Sheet respectively in item 100. of assets (“Tax assets”) and item 60. of liabilities (“Tax liabilities”). In compliance with the “Balance sheet method”, current and deferred tax items are: • current tax assets, i.e. amount of tax paid in excess of income tax due in accordance with local tax regulations; • current tax liabilities, i.e. amounts of corporate tax due in accordance with local tax regulations; • deferred tax assets, i.e. amounts of income tax recoverable in future fiscal years and attributable to: - deductible temporary differences; - the carryforward of unused tax losses; - the carryforward of unused tax credits; • deferred tax liabilities, i.e. the amounts of income tax due in future fiscal years in respect of taxable temporary differences. Current tax assets and tax liabilities are calculated in accordance with local tax regulations and are recognised in profit or loss on an accrual basis. In particular current corporate tax (“IRES”) is calculated at a rate of 27.50%; the regional tax on productive activity (“IRAP”) is applied on a regional basis. The national rate is set at 4.65%, to which each Region can autonomously increase a surcharge up to 0.92%, therefore theoretically a rate of 5.57% (plus an additional surcharge of 0.15% provided for the Regions with an healthcare deficit status). In general, deferred tax assets and liabilities arise when there is a difference between the accounting treatment and the tax treatment of the carrying amount of an asset or liability. Deferred tax assets and liabilities are recognised applying tax rates that at the balance sheet date are expected to apply in the period when the carrying amount of the asset will be recovered or the liability will be settled on the basis of tax regulations in force, and are periodically reviewed in order to reflect any changes in regulations. Under the tax consolidation system adopted by the Bank, deferred tax assets are recognised only to the extent that it is probable that sufficient taxable profit evaluated based on the Bank’s ability to generate it in future financial years will be available. Deferred tax liabilities are always recognised. In accordance with the provisions of IAS12, the probability that sufficient future taxable profit against which the deferred tax assets can be utilised will be available is reviewed periodically. The carrying amount of deferred tax assets should be reduced to the extent that it is not probable that sufficient taxable profit will be available. Current and deferred taxes are recognised in profit and loss item “270. Tax expense (income) related to profit or loss from continuing operations”, except for tax referred to items that in the same or in another fiscal year are credited or charged directly to equity, such as those relating to gains or losses on financial assets at fair value through other comprehensive income and those relating to changes in the fair value of cash flow hedging instruments, whose changes in value are recognised, net of tax, directly in the Statement of Other Comprehensive Income - Valuation reserves. IRES is determined on the basis of the “consolidato fiscale” rules pursuant to L.D.344/03; UniCredit S.p.A. opted to apply tax consolidation of the Group’s Italian entities (see also Part B of these Notes - Section 10.7 Further information). Current tax assets and liabilities are presented on the Balance Sheet net of the related current tax liabilities if the following requirements are met: • existence of a legally enforceable right to offset the amounts recognised; • the intention to extinguish for the remaining net, or realise the asset and at the same time extinguish the liability. Deferred tax assets are presented on the Balance Sheet net of the related deferred tax liabilities if the following requirements are met: • existence of an enforceable right to offset current tax assets with current tax liabilities; and • the deferred tax assets and liabilities must relate to income taxes applied to the same tax authority on the same taxable entity or on different taxable entities that intend to settle the current tax liabilities and assets on a net basis (usually in presence of a “consolidato fiscale”). Company financial statements | Notes to the accounts Part A - Accounting policies 570 2018 Annual Report and Accounts · UniCredit 9 - Current and deferred tax Tax assets and tax liabilities are recognised in the Balance Sheet respectively in item 100. of assets (“Tax assets”) and item 60. of liabilities (“Tax liabilities”). In compliance with the “Balance sheet method”, current and deferred tax items are: • current tax assets, i.e. amount of tax paid in excess of income tax due in accordance with local tax regulations; • current tax liabilities, i.e. amounts of corporate tax due in accordance with local tax regulations; • deferred tax assets, i.e. amounts of income tax recoverable in future fiscal years and attributable to: - deductible temporary differences; - the carryforward of unused tax losses; - the carryforward of unused tax credits; • deferred tax liabilities, i.e. the amounts of income tax due in future fiscal years in respect of taxable temporary differences. Current tax assets and tax liabilities are calculated in accordance with local tax regulations and are recognised in profit or loss on an accrual basis. In particular current corporate tax (“IRES”) is calculated at a rate of 27.50%; the regional tax on productive activity (“IRAP”) is applied on a regional basis. The national rate is set at 4.65%, to which each Region can autonomously increase a surcharge up to 0.92%, therefore theoretically a rate of 5.57% (plus an additional surcharge of 0.15% provided for the Regions with an healthcare deficit status). In general, deferred tax assets and liabilities arise when there is a difference between the accounting treatment and the tax treatment of the carrying amount of an asset or liability. Deferred tax assets and liabilities are recognised applying tax rates that at the balance sheet date are expected to apply in the period when the carrying amount of the asset will be recovered or the liability will be settled on the basis of tax regulations in force, and are periodically reviewed in order to reflect any changes in regulations. Under the tax consolidation system adopted by the Bank, deferred tax assets are recognised only to the extent that it is probable that sufficient taxable profit evaluated based on the Bank’s ability to generate it in future financial years will be available. Deferred tax liabilities are always recognised. In accordance with the provisions of IAS12, the probability that sufficient future taxable profit against which the deferred tax assets can be utilised will be available is reviewed periodically. The carrying amount of deferred tax assets should be reduced to the extent that it is not probable that sufficient taxable profit will be available. Current and deferred taxes are recognised in profit and loss item “270. Tax expense (income) related to profit or loss from continuing operations”, except for tax referred to items that in the same or in another fiscal year are credited or charged directly to equity, such as those relating to gains or losses on financial assets at fair value through other comprehensive income and those relating to changes in the fair value of cash flow hedging instruments, whose changes in value are recognised, net of tax, directly in the Statement of Other Comprehensive Income - Valuation reserves. IRES is determined on the basis of the “consolidato fiscale” rules pursuant to L.D.344/03; UniCredit S.p.A. opted to apply tax consolidation of the Group’s Italian entities (see also Part B of these Notes - Section 10.7 Further information). Current tax assets and liabilities are presented on the Balance Sheet net of the related current tax liabilities if the following requirements are met: • existence of a legally enforceable right to offset the amounts recognised; • the intention to extinguish for the remaining net, or realise the asset and at the same time extinguish the liability. Deferred tax assets are presented on the Balance Sheet net of the related deferred tax liabilities if the following requirements are met: • existence of an enforceable right to offset current tax assets with current tax liabilities; and • the deferred tax assets and liabilities must relate to income taxes applied to the same tax authority on the same taxable entity or on different taxable entities that intend to settle the current tax liabilities and assets on a net basis (usually in presence of a “consolidato fiscale”). Company financial statements | Notes to the accounts Part A - Accounting policies 570 2018 Annual Report and Accounts · UniCredit 9 - Current and deferred tax Tax assets and tax liabilities are recognised in the Balance Sheet respectively in item 100. of assets (“Tax assets”) and item 60. of liabilities (“Tax liabilities”). In compliance with the “Balance sheet method”, current and deferred tax items are: • current tax assets, i.e. amount of tax paid in excess of income tax due in accordance with local tax regulations; • current tax liabilities, i.e. amounts of corporate tax due in accordance with local tax regulations; • deferred tax assets, i.e. amounts of income tax recoverable in future fiscal years and attributable to: - deductible temporary differences; - the carryforward of unused tax losses; - the carryforward of unused tax credits; • deferred tax liabilities, i.e. the amounts of income tax due in future fiscal years in respect of taxable temporary differences. Current tax assets and tax liabilities are calculated in accordance with local tax regulations and are recognised in profit or loss on an accrual basis. In particular current corporate tax (“IRES”) is calculated at a rate of 27.50%; the regional tax on productive activity (“IRAP”) is applied on a regional basis. The national rate is set at 4.65%, to which each Region can autonomously increase a surcharge up to 0.92%, therefore theoretically a rate of 5.57% (plus an additional surcharge of 0.15% provided for the Regions with an healthcare deficit status). In general, deferred tax assets and liabilities arise when there is a difference between the accounting treatment and the tax treatment of the carrying amount of an asset or liability. Deferred tax assets and liabilities are recognised applying tax rates that at the balance sheet date are expected to apply in the period when the carrying amount of the asset will be recovered or the liability will be settled on the basis of tax regulations in force, and are periodically reviewed in order to reflect any changes in regulations. Under the tax consolidation system adopted by the Bank, deferred tax assets are recognised only to the extent that it is probable that sufficient taxable profit evaluated based on the Bank’s ability to generate it in future financial years will be available. Deferred tax liabilities are always recognised. In accordance with the provisions of IAS12, the probability that sufficient future taxable profit against which the deferred tax assets can be utilised will be available is reviewed periodically. The carrying amount of deferred tax assets should be reduced to the extent that it is not probable that sufficient taxable profit will be available. Current and deferred taxes are recognised in profit and loss item “270. Tax expense (income) related to profit or loss from continuing operations”, except for tax referred to items that in the same or in another fiscal year are credited or charged directly to equity, such as those relating to gains or losses on financial assets at fair value through other comprehensive income and those relating to changes in the fair value of cash flow hedging instruments, whose changes in value are recognised, net of tax, directly in the Statement of Other Comprehensive Income - Valuation reserves. IRES is determined on the basis of the “consolidato fiscale” rules pursuant to L.D.344/03; UniCredit S.p.A. opted to apply tax consolidation of the Group’s Italian entities (see also Part B of these Notes - Section 10.7 Further information). Current tax assets and liabilities are presented on the Balance Sheet net of the related current tax liabilities if the following requirements are met: • existence of a legally enforceable right to offset the amounts recognised; • the intention to extinguish for the remaining net, or realise the asset and at the same time extinguish the liability. Deferred tax assets are presented on the Balance Sheet net of the related deferred tax liabilities if the following requirements are met: • existence of an enforceable right to offset current tax assets with current tax liabilities; and • the deferred tax assets and liabilities must relate to income taxes applied to the same tax authority on the same taxable entity or on different taxable entities that intend to settle the current tax liabilities and assets on a net basis (usually in presence of a “consolidato fiscale”). Company financial statements | Notes to the accounts Part A - Accounting policies 570 2018 Annual Report and Accounts · UniCredit 9 - Current and deferred tax Tax assets and tax liabilities are recognised in the Balance Sheet respectively in item 100. of assets (“Tax assets”) and item 60. of liabilities (“Tax liabilities”). In compliance with the “Balance sheet method”, current and deferred tax items are: • current tax assets, i.e. amount of tax paid in excess of income tax due in accordance with local tax regulations; • current tax liabilities, i.e. amounts of corporate tax due in accordance with local tax regulations; • deferred tax assets, i.e. amounts of income tax recoverable in future fiscal years and attributable to: - deductible temporary differences; - the carryforward of unused tax losses; - the carryforward of unused tax credits; • deferred tax liabilities, i.e. the amounts of income tax due in future fiscal years in respect of taxable temporary differences. Current tax assets and tax liabilities are calculated in accordance with local tax regulations and are recognised in profit or loss on an accrual basis. In particular current corporate tax (“IRES”) is calculated at a rate of 27.50%; the regional tax on productive activity (“IRAP”) is applied on a regional basis. The national rate is set at 4.65%, to which each Region can autonomously increase a surcharge up to 0.92%, therefore theoretically a rate of 5.57% (plus an additional surcharge of 0.15% provided for the Regions with an healthcare deficit status). In general, deferred tax assets and liabilities arise when there is a difference between the accounting treatment and the tax treatment of the carrying amount of an asset or liability. Deferred tax assets and liabilities are recognised applying tax rates that at the balance sheet date are expected to apply in the period when the carrying amount of the asset will be recovered or the liability will be settled on the basis of tax regulations in force, and are periodically reviewed in order to reflect any changes in regulations. Under the tax consolidation system adopted by the Bank, deferred tax assets are recognised only to the extent that it is probable that sufficient taxable profit evaluated based on the Bank’s ability to generate it in future financial years will be available. Deferred tax liabilities are always recognised. In accordance with the provisions of IAS12, the probability that sufficient future taxable profit against which the deferred tax assets can be utilised will be available is reviewed periodically. The carrying amount of deferred tax assets should be reduced to the extent that it is not probable that sufficient taxable profit will be available. Current and deferred taxes are recognised in profit and loss item “270. Tax expense (income) related to profit or loss from continuing operations”, except for tax referred to items that in the same or in another fiscal year are credited or charged directly to equity, such as those relating to gains or losses on financial assets at fair value through other comprehensive income and those relating to changes in the fair value of cash flow hedging instruments, whose changes in value are recognised, net of tax, directly in the Statement of Other Comprehensive Income - Valuation reserves. IRES is determined on the basis of the “consolidato fiscale” rules pursuant to L.D.344/03; UniCredit S.p.A. opted to apply tax consolidation of the Group’s Italian entities (see also Part B of these Notes - Section 10.7 Further information). Current tax assets and liabilities are presented on the Balance Sheet net of the related current tax liabilities if the following requirements are met: • existence of a legally enforceable right to offset the amounts recognised; • the intention to extinguish for the remaining net, or realise the asset and at the same time extinguish the liability. Deferred tax assets are presented on the Balance Sheet net of the related deferred tax liabilities if the following requirements are met: • existence of an enforceable right to offset current tax assets with current tax liabilities; and • the deferred tax assets and liabilities must relate to income taxes applied to the same tax authority on the same taxable entity or on different taxable entities that intend to settle the current tax liabilities and assets on a net basis (usually in presence of a “consolidato fiscale”). Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 571 10 - Provisions for risks and charges Committments and guarantees given Provisions for risks and charges for commitments and guarantees given are recognised against for irrevocable commitments and guarantees whether they are in scope of IFRS9 or IAS37. The item hosts the estimates of expected loss calculated on these instruments resulting from valuation process as described in Section 15 - Other Information - Impairment. The provision of the period is accounted under item “170. Net provisions for risks and charges: a) commitments and financial guarantees given”. Please note that all contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument are considered financial guarantees. Retirement payments and similar obligations Retirement provisions, i.e. provisions for employee benefits payable after the completion of employment, are defined as contribution plans or defined-benefit plans according to the nature of the plan. In detail: • Defined-benefit plans provide a series of benefits depending on factors such as age, years of service and compensation policies. Under this type of plan actuarial and investment risks are borne by the company. • Defined-contribution plans are plans under which the company makes fixed contributions. Benefits are the result of the amount of contributions paid and return on contributions invested. The employer bears no actuarial and/or investment risks connected with this type of plans as it has no legal or implicit obligation to make further contributions, should the plan not be sufficient to provide benefits to all employees. Defined-benefit plans are present-valued by an external actuary using the Unit Credit Projection method. This method distributes the cost of benefits uniformly over the employee’s working life. Obligations are the present value of average future benefits pro rata to the ratio of years of service to theoretical seniority at the time of benefit payment. More specifically, the amount recognised according to IAS19 Revised as a net liability/asset in item “100. Provisions for risks and charges: b) post-retirement benefit obligations” is the present value of the obligation at the balance sheet date, less any pension charges relating to benefits already provided but not yet recognised, less the fair value at the balance sheet date of plan assets other than those due to directly settle the obligations adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. Actuarial gains or losses arising from the valuation of defined-benefit liabilities are recorded in the Statement of Other Comprehensive Income and disclosed in the item “110. Revaluation reserves”. The discount rate used to discount obligations (whether financed or not) relating to benefits to be provided after retirement varies according to the currency of denomination and country where the liabilities are allocated and is determined on the basis of market yield at the balance sheet date of prime issuers’ bonds (HQCB: high quality corporate bonds) with an average life in keeping with that of the relevant liability. Other provisions Provisions for risks and charges are recognised when: • the entity has a present obligation (legal or constructive) as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • a reliable estimate can be made of the amount of the obligation. The amounts recognised as provisions are the best estimate of the expenditure required to settle the present obligation. The risks and uncertainties that inevitably surround the relevant events and circumstances are taken into account in reaching the best estimate of a provision. In particular, where the effect of the time value of money is significant (generally when payment is to be made more than 18 months from recognition), the amount of the provision should be the present value of the best estimate of the cost required to settle the obligation. The discount rate used reflects the current market assessments. Provisions are reviewed periodically and adjusted to reflect the current best estimate. If it becomes clear that it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 571 10 - Provisions for risks and charges Committments and guarantees given Provisions for risks and charges for commitments and guarantees given are recognised against for irrevocable commitments and guarantees whether they are in scope of IFRS9 or IAS37. The item hosts the estimates of expected loss calculated on these instruments resulting from valuation process as described in Section 15 - Other Information - Impairment. The provision of the period is accounted under item “170. Net provisions for risks and charges: a) commitments and financial guarantees given”. Please note that all contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument are considered financial guarantees. Retirement payments and similar obligations Retirement provisions, i.e. provisions for employee benefits payable after the completion of employment, are defined as contribution plans or defined-benefit plans according to the nature of the plan. In detail: • Defined-benefit plans provide a series of benefits depending on factors such as age, years of service and compensation policies. Under this type of plan actuarial and investment risks are borne by the company. • Defined-contribution plans are plans under which the company makes fixed contributions. Benefits are the result of the amount of contributions paid and return on contributions invested. The employer bears no actuarial and/or investment risks connected with this type of plans as it has no legal or implicit obligation to make further contributions, should the plan not be sufficient to provide benefits to all employees. Defined-benefit plans are present-valued by an external actuary using the Unit Credit Projection method. This method distributes the cost of benefits uniformly over the employee’s working life. Obligations are the present value of average future benefits pro rata to the ratio of years of service to theoretical seniority at the time of benefit payment. More specifically, the amount recognised according to IAS19 Revised as a net liability/asset in item “100. Provisions for risks and charges: b) post-retirement benefit obligations” is the present value of the obligation at the balance sheet date, less any pension charges relating to benefits already provided but not yet recognised, less the fair value at the balance sheet date of plan assets other than those due to directly settle the obligations adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. Actuarial gains or losses arising from the valuation of defined-benefit liabilities are recorded in the Statement of Other Comprehensive Income and disclosed in the item “110. Revaluation reserves”. The discount rate used to discount obligations (whether financed or not) relating to benefits to be provided after retirement varies according to the currency of denomination and country where the liabilities are allocated and is determined on the basis of market yield at the balance sheet date of prime issuers’ bonds (HQCB: high quality corporate bonds) with an average life in keeping with that of the relevant liability. Other provisions Provisions for risks and charges are recognised when: • the entity has a present obligation (legal or constructive) as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • a reliable estimate can be made of the amount of the obligation. The amounts recognised as provisions are the best estimate of the expenditure required to settle the present obligation. The risks and uncertainties that inevitably surround the relevant events and circumstances are taken into account in reaching the best estimate of a provision. In particular, where the effect of the time value of money is significant (generally when payment is to be made more than 18 months from recognition), the amount of the provision should be the present value of the best estimate of the cost required to settle the obligation. The discount rate used reflects the current market assessments. Provisions are reviewed periodically and adjusted to reflect the current best estimate. If it becomes clear that it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 571 10 - Provisions for risks and charges Committments and guarantees given Provisions for risks and charges for commitments and guarantees given are recognised against for irrevocable commitments and guarantees whether they are in scope of IFRS9 or IAS37. The item hosts the estimates of expected loss calculated on these instruments resulting from valuation process as described in Section 15 - Other Information - Impairment. The provision of the period is accounted under item “170. Net provisions for risks and charges: a) commitments and financial guarantees given”. Please note that all contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument are considered financial guarantees. Retirement payments and similar obligations Retirement provisions, i.e. provisions for employee benefits payable after the completion of employment, are defined as contribution plans or defined-benefit plans according to the nature of the plan. In detail: • Defined-benefit plans provide a series of benefits depending on factors such as age, years of service and compensation policies. Under this type of plan actuarial and investment risks are borne by the company. • Defined-contribution plans are plans under which the company makes fixed contributions. Benefits are the result of the amount of contributions paid and return on contributions invested. The employer bears no actuarial and/or investment risks connected with this type of plans as it has no legal or implicit obligation to make further contributions, should the plan not be sufficient to provide benefits to all employees. Defined-benefit plans are present-valued by an external actuary using the Unit Credit Projection method. This method distributes the cost of benefits uniformly over the employee’s working life. Obligations are the present value of average future benefits pro rata to the ratio of years of service to theoretical seniority at the time of benefit payment. More specifically, the amount recognised according to IAS19 Revised as a net liability/asset in item “100. Provisions for risks and charges: b) post-retirement benefit obligations” is the present value of the obligation at the balance sheet date, less any pension charges relating to benefits already provided but not yet recognised, less the fair value at the balance sheet date of plan assets other than those due to directly settle the obligations adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. Actuarial gains or losses arising from the valuation of defined-benefit liabilities are recorded in the Statement of Other Comprehensive Income and disclosed in the item “110. Revaluation reserves”. The discount rate used to discount obligations (whether financed or not) relating to benefits to be provided after retirement varies according to the currency of denomination and country where the liabilities are allocated and is determined on the basis of market yield at the balance sheet date of prime issuers’ bonds (HQCB: high quality corporate bonds) with an average life in keeping with that of the relevant liability. Other provisions Provisions for risks and charges are recognised when: • the entity has a present obligation (legal or constructive) as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • a reliable estimate can be made of the amount of the obligation. The amounts recognised as provisions are the best estimate of the expenditure required to settle the present obligation. The risks and uncertainties that inevitably surround the relevant events and circumstances are taken into account in reaching the best estimate of a provision. In particular, where the effect of the time value of money is significant (generally when payment is to be made more than 18 months from recognition), the amount of the provision should be the present value of the best estimate of the cost required to settle the obligation. The discount rate used reflects the current market assessments. Provisions are reviewed periodically and adjusted to reflect the current best estimate. If it becomes clear that it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 571 10 - Provisions for risks and charges Committments and guarantees given Provisions for risks and charges for commitments and guarantees given are recognised against for irrevocable commitments and guarantees whether they are in scope of IFRS9 or IAS37. The item hosts the estimates of expected loss calculated on these instruments resulting from valuation process as described in Section 15 - Other Information - Impairment. The provision of the period is accounted under item “170. Net provisions for risks and charges: a) commitments and financial guarantees given”. Please note that all contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument are considered financial guarantees. Retirement payments and similar obligations Retirement provisions, i.e. provisions for employee benefits payable after the completion of employment, are defined as contribution plans or defined-benefit plans according to the nature of the plan. In detail: • Defined-benefit plans provide a series of benefits depending on factors such as age, years of service and compensation policies. Under this type of plan actuarial and investment risks are borne by the company. • Defined-contribution plans are plans under which the company makes fixed contributions. Benefits are the result of the amount of contributions paid and return on contributions invested. The employer bears no actuarial and/or investment risks connected with this type of plans as it has no legal or implicit obligation to make further contributions, should the plan not be sufficient to provide benefits to all employees. Defined-benefit plans are present-valued by an external actuary using the Unit Credit Projection method. This method distributes the cost of benefits uniformly over the employee’s working life. Obligations are the present value of average future benefits pro rata to the ratio of years of service to theoretical seniority at the time of benefit payment. More specifically, the amount recognised according to IAS19 Revised as a net liability/asset in item “100. Provisions for risks and charges: b) post-retirement benefit obligations” is the present value of the obligation at the balance sheet date, less any pension charges relating to benefits already provided but not yet recognised, less the fair value at the balance sheet date of plan assets other than those due to directly settle the obligations adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. Actuarial gains or losses arising from the valuation of defined-benefit liabilities are recorded in the Statement of Other Comprehensive Income and disclosed in the item “110. Revaluation reserves”. The discount rate used to discount obligations (whether financed or not) relating to benefits to be provided after retirement varies according to the currency of denomination and country where the liabilities are allocated and is determined on the basis of market yield at the balance sheet date of prime issuers’ bonds (HQCB: high quality corporate bonds) with an average life in keeping with that of the relevant liability. Other provisions Provisions for risks and charges are recognised when: • the entity has a present obligation (legal or constructive) as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • a reliable estimate can be made of the amount of the obligation. The amounts recognised as provisions are the best estimate of the expenditure required to settle the present obligation. The risks and uncertainties that inevitably surround the relevant events and circumstances are taken into account in reaching the best estimate of a provision. In particular, where the effect of the time value of money is significant (generally when payment is to be made more than 18 months from recognition), the amount of the provision should be the present value of the best estimate of the cost required to settle the obligation. The discount rate used reflects the current market assessments. Provisions are reviewed periodically and adjusted to reflect the current best estimate. If it becomes clear that it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 571 10 - Provisions for risks and charges Committments and guarantees given Provisions for risks and charges for commitments and guarantees given are recognised against for irrevocable commitments and guarantees whether they are in scope of IFRS9 or IAS37. The item hosts the estimates of expected loss calculated on these instruments resulting from valuation process as described in Section 15 - Other Information - Impairment. The provision of the period is accounted under item “170. Net provisions for risks and charges: a) commitments and financial guarantees given”. Please note that all contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument are considered financial guarantees. Retirement payments and similar obligations Retirement provisions, i.e. provisions for employee benefits payable after the completion of employment, are defined as contribution plans or defined-benefit plans according to the nature of the plan. In detail: • Defined-benefit plans provide a series of benefits depending on factors such as age, years of service and compensation policies. Under this type of plan actuarial and investment risks are borne by the company. • Defined-contribution plans are plans under which the company makes fixed contributions. Benefits are the result of the amount of contributions paid and return on contributions invested. The employer bears no actuarial and/or investment risks connected with this type of plans as it has no legal or implicit obligation to make further contributions, should the plan not be sufficient to provide benefits to all employees. Defined-benefit plans are present-valued by an external actuary using the Unit Credit Projection method. This method distributes the cost of benefits uniformly over the employee’s working life. Obligations are the present value of average future benefits pro rata to the ratio of years of service to theoretical seniority at the time of benefit payment. More specifically, the amount recognised according to IAS19 Revised as a net liability/asset in item “100. Provisions for risks and charges: b) post-retirement benefit obligations” is the present value of the obligation at the balance sheet date, less any pension charges relating to benefits already provided but not yet recognised, less the fair value at the balance sheet date of plan assets other than those due to directly settle the obligations adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. Actuarial gains or losses arising from the valuation of defined-benefit liabilities are recorded in the Statement of Other Comprehensive Income and disclosed in the item “110. Revaluation reserves”. The discount rate used to discount obligations (whether financed or not) relating to benefits to be provided after retirement varies according to the currency of denomination and country where the liabilities are allocated and is determined on the basis of market yield at the balance sheet date of prime issuers’ bonds (HQCB: high quality corporate bonds) with an average life in keeping with that of the relevant liability. Other provisions Provisions for risks and charges are recognised when: • the entity has a present obligation (legal or constructive) as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and • a reliable estimate can be made of the amount of the obligation. The amounts recognised as provisions are the best estimate of the expenditure required to settle the present obligation. The risks and uncertainties that inevitably surround the relevant events and circumstances are taken into account in reaching the best estimate of a provision. In particular, where the effect of the time value of money is significant (generally when payment is to be made more than 18 months from recognition), the amount of the provision should be the present value of the best estimate of the cost required to settle the obligation. The discount rate used reflects the current market assessments. Provisions are reviewed periodically and adjusted to reflect the current best estimate. If it becomes clear that it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Company financial statements | Notes to the accounts Part A - Accounting policies 572 2018 Annual Report and Accounts · UniCredit Provisions are used only for expenses for which they were originally recognised. Allocations made in the year are recognised in profit and loss item “170. Net provisions for risks and charges: b) other net provisions” and include increases due to the passage of time; they are also net of any reversals. “Other provisions” also include obligations relating to benefits due to agents, specifically supplementary customer portfolio payments, merit payments, contractual payments and payments under non-competition agreements, which are measured as per defined benefit plans; accordingly these obligations are calculated using the Unit Credit Projection method (see previous paragraph Retirement Payments and Similar Obligations). 11 - Financial liabilities measured at amortised cost Financial liabilities measured at amortised cost comprise financial instruments (other than liabilities held for trading or those designated at fair value) representing the various forms of third-party funding. These financial liabilities are recognised at settlement date initially at fair value, which is normally the consideration received less transaction costs directly attributable to the financial liability. Subsequently these instruments are measured at amortised cost using the effective interest method. Such interest is recognised in item “20. Interest expenses and similar charges” if negative or in item “10. Interest income and similar revenues” if positive. Hybrid debt instruments indexed to equity instruments, foreign exchange, credit instruments or indexes, are treated as structured instruments. The embedded derivative is separated from the host contract and recognised as a derivative, provided that separation requirements are met, and recognised at fair value. The embedded derivative is recognised at its fair value, classified as financial assets or liabilities held for trading and subsequently measured at fair value through profit or loss with changes in fair value recognised in P&L in item “80. Net gains (losses) on trading”. The difference between the total amount received and the initial fair value of the embedded derivative is attributed to the host contract. Instruments convertible into treasury shares imply recognition, at the issuance date, of a financial liability and of the equity part to be recognised in item “130. Equity instruments”, if a physical delivery settles the contract. The equity part is initially measured at the residual value, i.e. the overall value of the instrument less the separately determined value of a financial liability with no conversion clause and the same cash flows. The resulting financial liability is recognised at amortised cost using the effective interest method. Securities in issue are recognised net of repurchased amounts; the difference between the carrying value of the liability and the amount paid to buy it in is recognised into profit and loss in line “100. Gains (Losses) on disposal and repurchase of: c) financial liabilities”. Subsequent disposal by the issuer is considered as a new issue which doesn’t produce gains or losses. 12 - Financial liabilities held for trading Financial liabilities held for trading include: • derivatives that are not designated as hedging instruments; • obligations to deliver financial assets borrowed by a short seller (i.e. an entity that sells financial assets it does not yet own); • financial liabilities issued with an intention to repurchase them in the short term; • financial liabilities that are part of a portfolio of financial instruments considered as a unit and for which there is evidence of a recent pattern of trading. Financial liabilities held for trading, including derivatives, are measured at fair value on initial recognition and during the life of the transaction. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial liability is recognised in profit or loss in item “80. Net gains (losses) on trading”. Company financial statements | Notes to the accounts Part A - Accounting policies 572 2018 Annual Report and Accounts · UniCredit Provisions are used only for expenses for which they were originally recognised. Allocations made in the year are recognised in profit and loss item “170. Net provisions for risks and charges: b) other net provisions” and include increases due to the passage of time; they are also net of any reversals. “Other provisions” also include obligations relating to benefits due to agents, specifically supplementary customer portfolio payments, merit payments, contractual payments and payments under non-competition agreements, which are measured as per defined benefit plans; accordingly these obligations are calculated using the Unit Credit Projection method (see previous paragraph Retirement Payments and Similar Obligations). 11 - Financial liabilities measured at amortised cost Financial liabilities measured at amortised cost comprise financial instruments (other than liabilities held for trading or those designated at fair value) representing the various forms of third-party funding. These financial liabilities are recognised at settlement date initially at fair value, which is normally the consideration received less transaction costs directly attributable to the financial liability. Subsequently these instruments are measured at amortised cost using the effective interest method. Such interest is recognised in item “20. Interest expenses and similar charges” if negative or in item “10. Interest income and similar revenues” if positive. Hybrid debt instruments indexed to equity instruments, foreign exchange, credit instruments or indexes, are treated as structured instruments. The embedded derivative is separated from the host contract and recognised as a derivative, provided that separation requirements are met, and recognised at fair value. The embedded derivative is recognised at its fair value, classified as financial assets or liabilities held for trading and subsequently measured at fair value through profit or loss with changes in fair value recognised in P&L in item “80. Net gains (losses) on trading”. The difference between the total amount received and the initial fair value of the embedded derivative is attributed to the host contract. Instruments convertible into treasury shares imply recognition, at the issuance date, of a financial liability and of the equity part to be recognised in item “130. Equity instruments”, if a physical delivery settles the contract. The equity part is initially measured at the residual value, i.e. the overall value of the instrument less the separately determined value of a financial liability with no conversion clause and the same cash flows. The resulting financial liability is recognised at amortised cost using the effective interest method. Securities in issue are recognised net of repurchased amounts; the difference between the carrying value of the liability and the amount paid to buy it in is recognised into profit and loss in line “100. Gains (Losses) on disposal and repurchase of: c) financial liabilities”. Subsequent disposal by the issuer is considered as a new issue which doesn’t produce gains or losses. 12 - Financial liabilities held for trading Financial liabilities held for trading include: • derivatives that are not designated as hedging instruments; • obligations to deliver financial assets borrowed by a short seller (i.e. an entity that sells financial assets it does not yet own); • financial liabilities issued with an intention to repurchase them in the short term; • financial liabilities that are part of a portfolio of financial instruments considered as a unit and for which there is evidence of a recent pattern of trading. Financial liabilities held for trading, including derivatives, are measured at fair value on initial recognition and during the life of the transaction. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial liability is recognised in profit or loss in item “80. Net gains (losses) on trading”. Company financial statements | Notes to the accounts Part A - Accounting policies 572 2018 Annual Report and Accounts · UniCredit Provisions are used only for expenses for which they were originally recognised. Allocations made in the year are recognised in profit and loss item “170. Net provisions for risks and charges: b) other net provisions” and include increases due to the passage of time; they are also net of any reversals. “Other provisions” also include obligations relating to benefits due to agents, specifically supplementary customer portfolio payments, merit payments, contractual payments and payments under non-competition agreements, which are measured as per defined benefit plans; accordingly these obligations are calculated using the Unit Credit Projection method (see previous paragraph Retirement Payments and Similar Obligations). 11 - Financial liabilities measured at amortised cost Financial liabilities measured at amortised cost comprise financial instruments (other than liabilities held for trading or those designated at fair value) representing the various forms of third-party funding. These financial liabilities are recognised at settlement date initially at fair value, which is normally the consideration received less transaction costs directly attributable to the financial liability. Subsequently these instruments are measured at amortised cost using the effective interest method. Such interest is recognised in item “20. Interest expenses and similar charges” if negative or in item “10. Interest income and similar revenues” if positive. Hybrid debt instruments indexed to equity instruments, foreign exchange, credit instruments or indexes, are treated as structured instruments. The embedded derivative is separated from the host contract and recognised as a derivative, provided that separation requirements are met, and recognised at fair value. The embedded derivative is recognised at its fair value, classified as financial assets or liabilities held for trading and subsequently measured at fair value through profit or loss with changes in fair value recognised in P&L in item “80. Net gains (losses) on trading”. The difference between the total amount received and the initial fair value of the embedded derivative is attributed to the host contract. Instruments convertible into treasury shares imply recognition, at the issuance date, of a financial liability and of the equity part to be recognised in item “130. Equity instruments”, if a physical delivery settles the contract. The equity part is initially measured at the residual value, i.e. the overall value of the instrument less the separately determined value of a financial liability with no conversion clause and the same cash flows. The resulting financial liability is recognised at amortised cost using the effective interest method. Securities in issue are recognised net of repurchased amounts; the difference between the carrying value of the liability and the amount paid to buy it in is recognised into profit and loss in line “100. Gains (Losses) on disposal and repurchase of: c) financial liabilities”. Subsequent disposal by the issuer is considered as a new issue which doesn’t produce gains or losses. 12 - Financial liabilities held for trading Financial liabilities held for trading include: • derivatives that are not designated as hedging instruments; • obligations to deliver financial assets borrowed by a short seller (i.e. an entity that sells financial assets it does not yet own); • financial liabilities issued with an intention to repurchase them in the short term; • financial liabilities that are part of a portfolio of financial instruments considered as a unit and for which there is evidence of a recent pattern of trading. Financial liabilities held for trading, including derivatives, are measured at fair value on initial recognition and during the life of the transaction. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial liability is recognised in profit or loss in item “80. Net gains (losses) on trading”. Company financial statements | Notes to the accounts Part A - Accounting policies 572 2018 Annual Report and Accounts · UniCredit Provisions are used only for expenses for which they were originally recognised. Allocations made in the year are recognised in profit and loss item “170. Net provisions for risks and charges: b) other net provisions” and include increases due to the passage of time; they are also net of any reversals. “Other provisions” also include obligations relating to benefits due to agents, specifically supplementary customer portfolio payments, merit payments, contractual payments and payments under non-competition agreements, which are measured as per defined benefit plans; accordingly these obligations are calculated using the Unit Credit Projection method (see previous paragraph Retirement Payments and Similar Obligations). 11 - Financial liabilities measured at amortised cost Financial liabilities measured at amortised cost comprise financial instruments (other than liabilities held for trading or those designated at fair value) representing the various forms of third-party funding. These financial liabilities are recognised at settlement date initially at fair value, which is normally the consideration received less transaction costs directly attributable to the financial liability. Subsequently these instruments are measured at amortised cost using the effective interest method. Such interest is recognised in item “20. Interest expenses and similar charges” if negative or in item “10. Interest income and similar revenues” if positive. Hybrid debt instruments indexed to equity instruments, foreign exchange, credit instruments or indexes, are treated as structured instruments. The embedded derivative is separated from the host contract and recognised as a derivative, provided that separation requirements are met, and recognised at fair value. The embedded derivative is recognised at its fair value, classified as financial assets or liabilities held for trading and subsequently measured at fair value through profit or loss with changes in fair value recognised in P&L in item “80. Net gains (losses) on trading”. The difference between the total amount received and the initial fair value of the embedded derivative is attributed to the host contract. Instruments convertible into treasury shares imply recognition, at the issuance date, of a financial liability and of the equity part to be recognised in item “130. Equity instruments”, if a physical delivery settles the contract. The equity part is initially measured at the residual value, i.e. the overall value of the instrument less the separately determined value of a financial liability with no conversion clause and the same cash flows. The resulting financial liability is recognised at amortised cost using the effective interest method. Securities in issue are recognised net of repurchased amounts; the difference between the carrying value of the liability and the amount paid to buy it in is recognised into profit and loss in line “100. Gains (Losses) on disposal and repurchase of: c) financial liabilities”. Subsequent disposal by the issuer is considered as a new issue which doesn’t produce gains or losses. 12 - Financial liabilities held for trading Financial liabilities held for trading include: • derivatives that are not designated as hedging instruments; • obligations to deliver financial assets borrowed by a short seller (i.e. an entity that sells financial assets it does not yet own); • financial liabilities issued with an intention to repurchase them in the short term; • financial liabilities that are part of a portfolio of financial instruments considered as a unit and for which there is evidence of a recent pattern of trading. Financial liabilities held for trading, including derivatives, are measured at fair value on initial recognition and during the life of the transaction. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial liability is recognised in profit or loss in item “80. Net gains (losses) on trading”. Company financial statements | Notes to the accounts Part A - Accounting policies 572 2018 Annual Report and Accounts · UniCredit Provisions are used only for expenses for which they were originally recognised. Allocations made in the year are recognised in profit and loss item “170. Net provisions for risks and charges: b) other net provisions” and include increases due to the passage of time; they are also net of any reversals. “Other provisions” also include obligations relating to benefits due to agents, specifically supplementary customer portfolio payments, merit payments, contractual payments and payments under non-competition agreements, which are measured as per defined benefit plans; accordingly these obligations are calculated using the Unit Credit Projection method (see previous paragraph Retirement Payments and Similar Obligations). 11 - Financial liabilities measured at amortised cost Financial liabilities measured at amortised cost comprise financial instruments (other than liabilities held for trading or those designated at fair value) representing the various forms of third-party funding. These financial liabilities are recognised at settlement date initially at fair value, which is normally the consideration received less transaction costs directly attributable to the financial liability. Subsequently these instruments are measured at amortised cost using the effective interest method. Such interest is recognised in item “20. Interest expenses and similar charges” if negative or in item “10. Interest income and similar revenues” if positive. Hybrid debt instruments indexed to equity instruments, foreign exchange, credit instruments or indexes, are treated as structured instruments. The embedded derivative is separated from the host contract and recognised as a derivative, provided that separation requirements are met, and recognised at fair value. The embedded derivative is recognised at its fair value, classified as financial assets or liabilities held for trading and subsequently measured at fair value through profit or loss with changes in fair value recognised in P&L in item “80. Net gains (losses) on trading”. The difference between the total amount received and the initial fair value of the embedded derivative is attributed to the host contract. Instruments convertible into treasury shares imply recognition, at the issuance date, of a financial liability and of the equity part to be recognised in item “130. Equity instruments”, if a physical delivery settles the contract. The equity part is initially measured at the residual value, i.e. the overall value of the instrument less the separately determined value of a financial liability with no conversion clause and the same cash flows. The resulting financial liability is recognised at amortised cost using the effective interest method. Securities in issue are recognised net of repurchased amounts; the difference between the carrying value of the liability and the amount paid to buy it in is recognised into profit and loss in line “100. Gains (Losses) on disposal and repurchase of: c) financial liabilities”. Subsequent disposal by the issuer is considered as a new issue which doesn’t produce gains or losses. 12 - Financial liabilities held for trading Financial liabilities held for trading include: • derivatives that are not designated as hedging instruments; • obligations to deliver financial assets borrowed by a short seller (i.e. an entity that sells financial assets it does not yet own); • financial liabilities issued with an intention to repurchase them in the short term; • financial liabilities that are part of a portfolio of financial instruments considered as a unit and for which there is evidence of a recent pattern of trading. Financial liabilities held for trading, including derivatives, are measured at fair value on initial recognition and during the life of the transaction. A gain or loss arising from sale or redemption or a change in the fair value of a HfT financial liability is recognised in profit or loss in item “80. Net gains (losses) on trading”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 573 13 - Financial liabilities designated at fair value Financial liabilities, like financial assets may also be designated, according to IFRS9, on initial recognition as measured at fair value, provided that: • this designation eliminates or considerably reduces an accounting or measurement inconsistency that would arise from the application of different methods of measurement to assets and liabilities and related gains or losses; or • a group of financial assets, financial liabilities or both are managed and measured at fair value under risk management or investment strategy which is internally documented with the entity’s key management personnel. This category may also include financial liabilities represented by hybrid (combined) instruments containing embedded derivatives that otherwise should have been separated from the host contract. Financial liabilities presented in this category are measured at fair value at initial recognition and for the life of the transaction. The changes in fair value are recognised in the income statement in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value” except for any changes in fair value arising from changes in their creditworthiness, which are shown under item “110. Valuation reserves” of shareholders’ equity unless such accounting results in an inconsistency that arises from the application of different methods of measuring assets and liabilities and related gains or losses, in which case also the changes in fair value deriving from changes in creditworthiness are recorded in the income statement. In case of redemption the balance of cumulated changes in fair value due to own credit risk booked in item “110. Valuation reserves” is reclassified in line “140. Reserves”. 14 - Foreign currency transactions A foreign currency transaction is recognised at the spot exchange rate of the transaction date. Foreign currency monetary assets and liabilities are translated at the closing rate of the period. Exchange differences arising from settlement of monetary items at rates different from those of the transaction date and unrealised exchange rate differences on foreign currency assets and liabilities not yet settled, other than assets and liabilities designated as measured at fair value and hedging instruments, are recognised in profit and loss item “80. Gains (Losses) on financial assets and liabilities held for trading”. Exchange rate differences arising on a monetary item that is part of an entity's net investment in a foreign operation whose activities are based or conducted in a country or currency other than those of the reporting entity are initially recognised in the entity's equity, and recognised in profit or loss on disposal of the net investment. Non-monetary assets and liabilities recognised at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated at the closing rate. In this case the exchange differences are recognised: • in profit and loss if the financial asset is classified in a portfolio measured at fair value through profit or loss; or • in the Statement of Other Comprehensive Income, and disclosed in the Revaluation reserves, if the financial asset is classified in “Financial assets at fair value through other comprehensive income”. Hedges of a net investment in a foreign operation are recognised similarly to cash flow hedges. On the disposal of a foreign operation, the cumulative amount of the exchange rate differences, classified in an Equity reserve, is reclassified in profit or loss. 15 - Other information Impairment Loans and debt securities classified as financial assets at amortised cost, financial assets at fair value through other comprehensive income and related off-balance sheet exposures are tested for impairment as required by IFRS9. In this regard, these instruments are classified in stage 1, stage 2 or stage 3 according to their absolute or relative credit quality with respect to initial disbursement. Specifically: • Stage 1: includes (i) newly issued or acquired credit exposures, (ii) exposures for which credit risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk (low credit risk exemption); • Stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • Stage 3: includes impaired credit exposures. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 573 13 - Financial liabilities designated at fair value Financial liabilities, like financial assets may also be designated, according to IFRS9, on initial recognition as measured at fair value, provided that: • this designation eliminates or considerably reduces an accounting or measurement inconsistency that would arise from the application of different methods of measurement to assets and liabilities and related gains or losses; or • a group of financial assets, financial liabilities or both are managed and measured at fair value under risk management or investment strategy which is internally documented with the entity’s key management personnel. This category may also include financial liabilities represented by hybrid (combined) instruments containing embedded derivatives that otherwise should have been separated from the host contract. Financial liabilities presented in this category are measured at fair value at initial recognition and for the life of the transaction. The changes in fair value are recognised in the income statement in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value” except for any changes in fair value arising from changes in their creditworthiness, which are shown under item “110. Valuation reserves” of shareholders’ equity unless such accounting results in an inconsistency that arises from the application of different methods of measuring assets and liabilities and related gains or losses, in which case also the changes in fair value deriving from changes in creditworthiness are recorded in the income statement. In case of redemption the balance of cumulated changes in fair value due to own credit risk booked in item “110. Valuation reserves” is reclassified in line “140. Reserves”. 14 - Foreign currency transactions A foreign currency transaction is recognised at the spot exchange rate of the transaction date. Foreign currency monetary assets and liabilities are translated at the closing rate of the period. Exchange differences arising from settlement of monetary items at rates different from those of the transaction date and unrealised exchange rate differences on foreign currency assets and liabilities not yet settled, other than assets and liabilities designated as measured at fair value and hedging instruments, are recognised in profit and loss item “80. Gains (Losses) on financial assets and liabilities held for trading”. Exchange rate differences arising on a monetary item that is part of an entity's net investment in a foreign operation whose activities are based or conducted in a country or currency other than those of the reporting entity are initially recognised in the entity's equity, and recognised in profit or loss on disposal of the net investment. Non-monetary assets and liabilities recognised at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated at the closing rate. In this case the exchange differences are recognised: • in profit and loss if the financial asset is classified in a portfolio measured at fair value through profit or loss; or • in the Statement of Other Comprehensive Income, and disclosed in the Revaluation reserves, if the financial asset is classified in “Financial assets at fair value through other comprehensive income”. Hedges of a net investment in a foreign operation are recognised similarly to cash flow hedges. On the disposal of a foreign operation, the cumulative amount of the exchange rate differences, classified in an Equity reserve, is reclassified in profit or loss. 15 - Other information Impairment Loans and debt securities classified as financial assets at amortised cost, financial assets at fair value through other comprehensive income and related off-balance sheet exposures are tested for impairment as required by IFRS9. In this regard, these instruments are classified in stage 1, stage 2 or stage 3 according to their absolute or relative credit quality with respect to initial disbursement. Specifically: • Stage 1: includes (i) newly issued or acquired credit exposures, (ii) exposures for which credit risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk (low credit risk exemption); • Stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • Stage 3: includes impaired credit exposures. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 573 13 - Financial liabilities designated at fair value Financial liabilities, like financial assets may also be designated, according to IFRS9, on initial recognition as measured at fair value, provided that: • this designation eliminates or considerably reduces an accounting or measurement inconsistency that would arise from the application of different methods of measurement to assets and liabilities and related gains or losses; or • a group of financial assets, financial liabilities or both are managed and measured at fair value under risk management or investment strategy which is internally documented with the entity’s key management personnel. This category may also include financial liabilities represented by hybrid (combined) instruments containing embedded derivatives that otherwise should have been separated from the host contract. Financial liabilities presented in this category are measured at fair value at initial recognition and for the life of the transaction. The changes in fair value are recognised in the income statement in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value” except for any changes in fair value arising from changes in their creditworthiness, which are shown under item “110. Valuation reserves” of shareholders’ equity unless such accounting results in an inconsistency that arises from the application of different methods of measuring assets and liabilities and related gains or losses, in which case also the changes in fair value deriving from changes in creditworthiness are recorded in the income statement. In case of redemption the balance of cumulated changes in fair value due to own credit risk booked in item “110. Valuation reserves” is reclassified in line “140. Reserves”. 14 - Foreign currency transactions A foreign currency transaction is recognised at the spot exchange rate of the transaction date. Foreign currency monetary assets and liabilities are translated at the closing rate of the period. Exchange differences arising from settlement of monetary items at rates different from those of the transaction date and unrealised exchange rate differences on foreign currency assets and liabilities not yet settled, other than assets and liabilities designated as measured at fair value and hedging instruments, are recognised in profit and loss item “80. Gains (Losses) on financial assets and liabilities held for trading”. Exchange rate differences arising on a monetary item that is part of an entity's net investment in a foreign operation whose activities are based or conducted in a country or currency other than those of the reporting entity are initially recognised in the entity's equity, and recognised in profit or loss on disposal of the net investment. Non-monetary assets and liabilities recognised at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated at the closing rate. In this case the exchange differences are recognised: • in profit and loss if the financial asset is classified in a portfolio measured at fair value through profit or loss; or • in the Statement of Other Comprehensive Income, and disclosed in the Revaluation reserves, if the financial asset is classified in “Financial assets at fair value through other comprehensive income”. Hedges of a net investment in a foreign operation are recognised similarly to cash flow hedges. On the disposal of a foreign operation, the cumulative amount of the exchange rate differences, classified in an Equity reserve, is reclassified in profit or loss. 15 - Other information Impairment Loans and debt securities classified as financial assets at amortised cost, financial assets at fair value through other comprehensive income and related off-balance sheet exposures are tested for impairment as required by IFRS9. In this regard, these instruments are classified in stage 1, stage 2 or stage 3 according to their absolute or relative credit quality with respect to initial disbursement. Specifically: • Stage 1: includes (i) newly issued or acquired credit exposures, (ii) exposures for which credit risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk (low credit risk exemption); • Stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • Stage 3: includes impaired credit exposures. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 573 13 - Financial liabilities designated at fair value Financial liabilities, like financial assets may also be designated, according to IFRS9, on initial recognition as measured at fair value, provided that: • this designation eliminates or considerably reduces an accounting or measurement inconsistency that would arise from the application of different methods of measurement to assets and liabilities and related gains or losses; or • a group of financial assets, financial liabilities or both are managed and measured at fair value under risk management or investment strategy which is internally documented with the entity’s key management personnel. This category may also include financial liabilities represented by hybrid (combined) instruments containing embedded derivatives that otherwise should have been separated from the host contract. Financial liabilities presented in this category are measured at fair value at initial recognition and for the life of the transaction. The changes in fair value are recognised in the income statement in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value” except for any changes in fair value arising from changes in their creditworthiness, which are shown under item “110. Valuation reserves” of shareholders’ equity unless such accounting results in an inconsistency that arises from the application of different methods of measuring assets and liabilities and related gains or losses, in which case also the changes in fair value deriving from changes in creditworthiness are recorded in the income statement. In case of redemption the balance of cumulated changes in fair value due to own credit risk booked in item “110. Valuation reserves” is reclassified in line “140. Reserves”. 14 - Foreign currency transactions A foreign currency transaction is recognised at the spot exchange rate of the transaction date. Foreign currency monetary assets and liabilities are translated at the closing rate of the period. Exchange differences arising from settlement of monetary items at rates different from those of the transaction date and unrealised exchange rate differences on foreign currency assets and liabilities not yet settled, other than assets and liabilities designated as measured at fair value and hedging instruments, are recognised in profit and loss item “80. Gains (Losses) on financial assets and liabilities held for trading”. Exchange rate differences arising on a monetary item that is part of an entity's net investment in a foreign operation whose activities are based or conducted in a country or currency other than those of the reporting entity are initially recognised in the entity's equity, and recognised in profit or loss on disposal of the net investment. Non-monetary assets and liabilities recognised at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated at the closing rate. In this case the exchange differences are recognised: • in profit and loss if the financial asset is classified in a portfolio measured at fair value through profit or loss; or • in the Statement of Other Comprehensive Income, and disclosed in the Revaluation reserves, if the financial asset is classified in “Financial assets at fair value through other comprehensive income”. Hedges of a net investment in a foreign operation are recognised similarly to cash flow hedges. On the disposal of a foreign operation, the cumulative amount of the exchange rate differences, classified in an Equity reserve, is reclassified in profit or loss. 15 - Other information Impairment Loans and debt securities classified as financial assets at amortised cost, financial assets at fair value through other comprehensive income and related off-balance sheet exposures are tested for impairment as required by IFRS9. In this regard, these instruments are classified in stage 1, stage 2 or stage 3 according to their absolute or relative credit quality with respect to initial disbursement. Specifically: • Stage 1: includes (i) newly issued or acquired credit exposures, (ii) exposures for which credit risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk (low credit risk exemption); • Stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • Stage 3: includes impaired credit exposures. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 573 13 - Financial liabilities designated at fair value Financial liabilities, like financial assets may also be designated, according to IFRS9, on initial recognition as measured at fair value, provided that: • this designation eliminates or considerably reduces an accounting or measurement inconsistency that would arise from the application of different methods of measurement to assets and liabilities and related gains or losses; or • a group of financial assets, financial liabilities or both are managed and measured at fair value under risk management or investment strategy which is internally documented with the entity’s key management personnel. This category may also include financial liabilities represented by hybrid (combined) instruments containing embedded derivatives that otherwise should have been separated from the host contract. Financial liabilities presented in this category are measured at fair value at initial recognition and for the life of the transaction. The changes in fair value are recognised in the income statement in item “110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss - a) financial assets/liabilities designated at fair value” except for any changes in fair value arising from changes in their creditworthiness, which are shown under item “110. Valuation reserves” of shareholders’ equity unless such accounting results in an inconsistency that arises from the application of different methods of measuring assets and liabilities and related gains or losses, in which case also the changes in fair value deriving from changes in creditworthiness are recorded in the income statement. In case of redemption the balance of cumulated changes in fair value due to own credit risk booked in item “110. Valuation reserves” is reclassified in line “140. Reserves”. 14 - Foreign currency transactions A foreign currency transaction is recognised at the spot exchange rate of the transaction date. Foreign currency monetary assets and liabilities are translated at the closing rate of the period. Exchange differences arising from settlement of monetary items at rates different from those of the transaction date and unrealised exchange rate differences on foreign currency assets and liabilities not yet settled, other than assets and liabilities designated as measured at fair value and hedging instruments, are recognised in profit and loss item “80. Gains (Losses) on financial assets and liabilities held for trading”. Exchange rate differences arising on a monetary item that is part of an entity's net investment in a foreign operation whose activities are based or conducted in a country or currency other than those of the reporting entity are initially recognised in the entity's equity, and recognised in profit or loss on disposal of the net investment. Non-monetary assets and liabilities recognised at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated at the closing rate. In this case the exchange differences are recognised: • in profit and loss if the financial asset is classified in a portfolio measured at fair value through profit or loss; or • in the Statement of Other Comprehensive Income, and disclosed in the Revaluation reserves, if the financial asset is classified in “Financial assets at fair value through other comprehensive income”. Hedges of a net investment in a foreign operation are recognised similarly to cash flow hedges. On the disposal of a foreign operation, the cumulative amount of the exchange rate differences, classified in an Equity reserve, is reclassified in profit or loss. 15 - Other information Impairment Loans and debt securities classified as financial assets at amortised cost, financial assets at fair value through other comprehensive income and related off-balance sheet exposures are tested for impairment as required by IFRS9. In this regard, these instruments are classified in stage 1, stage 2 or stage 3 according to their absolute or relative credit quality with respect to initial disbursement. Specifically: • Stage 1: includes (i) newly issued or acquired credit exposures, (ii) exposures for which credit risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk (low credit risk exemption); • Stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • Stage 3: includes impaired credit exposures. Company financial statements | Notes to the accounts Part A - Accounting policies 574 2018 Annual Report and Accounts · UniCredit For exposures in stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. The allocation of credit exposures in one of the abovementioned stages is done at initial recognition, when the exposures is classified at stage 1 and it is periodically reviewed based on “stage allocation” rules as specified in Part E - Section 1 - Credit risk. In order to calculate the expected loss and the related loan loss provision, the Bank uses Probability of Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”) parameters, used for regulatory purposes and adjusted in order to ensure that impairment measurement represents values which are “point in time”, “forward looking” and inclusive of multiple scenarios. In this respect see Part E - Section 1 - Credit risk for further information on expected loss calculation methodologies. With reference to stage 3, it should be noted that it includes impaired exposures corresponding to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 7/24/2014), in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates. In particular EBA has defined as “Non-Performing” the exposures that meet one or both of the following criteria: • material exposures with more than 90 days past due; • exposures for which the bank values that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. In addition, the abovementioned Circular No.272 establishes that the aggregate of impaired assets is divided into the following categories: • Bad loans: cash and off-balance exposures to counterparty in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation. The assessment is generally carried out on an analytical basis (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or, in case of non-significant individually amounts, on a flat-rate basis for homogeneous types of exposures; • Unlikely to pay: cash and off-balance exposures for which conditions for evaluating the debt as bad loan are not met and for which it is unlikely that without recurring to enforcement of collaterals the debtor is able to pay in full (capital and/or interests) his credit obligations. Such assessment is made independently of any past due and unpaid amount/instalments. The classification among unlikely to pay is not necessarily linked to anomalies (non-repayment), rather it is linked to factors that indicate a situation of risk of default of the debtor. Unlikely to pay are generally accounted analytically (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or on a flat-rate basis for homogeneous types of exposures. The exposures classified among unlikely to pay and qualified as so-called forborne can be reclassified among non-impaired receivables only after at least one year has elapsed from the time of granting and the conditions indicated in paragraph 157 of EBA Implementing Technical Standards . With reference to their evaluation: - they are generally analytically evaluated and may include the discounted charge deriving from the possible renegotiation of the rate at conditions below the original contractual rate; - the renegotiations of loans that require their derecognition in exchange of shares through “debt-to-equity swap” transactions requires the assessment, before executing the swap, of the credit exposures in accordance with stipulated agreements at the date of preparation of the financial statements. Any differences between the value of receivables and the value at initial recognition of equity instruments is accounted in income statement in the impairment losses; • Past due exposures: cash exposures different from those classified as non-performing loans and unlikely to pay that at the reporting date are past due. Past due exposures can be determined referring alternatively to individual debtor or individual transaction. In particular they represent an entire exposure to counterparties different from those classified as unlikely to pay and bad loans that at the reporting date show past due receivables from more than 90 days as well as requirements established by local prudential regulation for the inclusion of these credits into “past due” (standardised banks) or “default exposures” (IRB banks). Past due exposures are evaluated on a on a flat-rate basis on historical/statistical basis, applying, if available, the riskiness identified by the risk factor used for the purposes of EU Regulation No.575/2013 (CRR) relating to prudential requirements for credit institutions and investment firms (LGD - Loss Given Default). Allowances for impairment of loans and receivables are based on the present value of expected cash flows of principal and interest. In determining the present value of future cash flows, the basic requirement is the identification of estimated collections, the timing of payments and the discount rate used. Company financial statements | Notes to the accounts Part A - Accounting policies 574 2018 Annual Report and Accounts · UniCredit For exposures in stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. The allocation of credit exposures in one of the abovementioned stages is done at initial recognition, when the exposures is classified at stage 1 and it is periodically reviewed based on “stage allocation” rules as specified in Part E - Section 1 - Credit risk. In order to calculate the expected loss and the related loan loss provision, the Bank uses Probability of Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”) parameters, used for regulatory purposes and adjusted in order to ensure that impairment measurement represents values which are “point in time”, “forward looking” and inclusive of multiple scenarios. In this respect see Part E - Section 1 - Credit risk for further information on expected loss calculation methodologies. With reference to stage 3, it should be noted that it includes impaired exposures corresponding to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 7/24/2014), in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates. In particular EBA has defined as “Non-Performing” the exposures that meet one or both of the following criteria: • material exposures with more than 90 days past due; • exposures for which the bank values that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. In addition, the abovementioned Circular No.272 establishes that the aggregate of impaired assets is divided into the following categories: • Bad loans: cash and off-balance exposures to counterparty in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation. The assessment is generally carried out on an analytical basis (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or, in case of non-significant individually amounts, on a flat-rate basis for homogeneous types of exposures; • Unlikely to pay: cash and off-balance exposures for which conditions for evaluating the debt as bad loan are not met and for which it is unlikely that without recurring to enforcement of collaterals the debtor is able to pay in full (capital and/or interests) his credit obligations. Such assessment is made independently of any past due and unpaid amount/instalments. The classification among unlikely to pay is not necessarily linked to anomalies (non-repayment), rather it is linked to factors that indicate a situation of risk of default of the debtor. Unlikely to pay are generally accounted analytically (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or on a flat-rate basis for homogeneous types of exposures. The exposures classified among unlikely to pay and qualified as so-called forborne can be reclassified among non-impaired receivables only after at least one year has elapsed from the time of granting and the conditions indicated in paragraph 157 of EBA Implementing Technical Standards . With reference to their evaluation: - they are generally analytically evaluated and may include the discounted charge deriving from the possible renegotiation of the rate at conditions below the original contractual rate; - the renegotiations of loans that require their derecognition in exchange of shares through “debt-to-equity swap” transactions requires the assessment, before executing the swap, of the credit exposures in accordance with stipulated agreements at the date of preparation of the financial statements. Any differences between the value of receivables and the value at initial recognition of equity instruments is accounted in income statement in the impairment losses; • Past due exposures: cash exposures different from those classified as non-performing loans and unlikely to pay that at the reporting date are past due. Past due exposures can be determined referring alternatively to individual debtor or individual transaction. In particular they represent an entire exposure to counterparties different from those classified as unlikely to pay and bad loans that at the reporting date show past due receivables from more than 90 days as well as requirements established by local prudential regulation for the inclusion of these credits into “past due” (standardised banks) or “default exposures” (IRB banks). Past due exposures are evaluated on a on a flat-rate basis on historical/statistical basis, applying, if available, the riskiness identified by the risk factor used for the purposes of EU Regulation No.575/2013 (CRR) relating to prudential requirements for credit institutions and investment firms (LGD - Loss Given Default). Allowances for impairment of loans and receivables are based on the present value of expected cash flows of principal and interest. In determining the present value of future cash flows, the basic requirement is the identification of estimated collections, the timing of payments and the discount rate used. Company financial statements | Notes to the accounts Part A - Accounting policies 574 2018 Annual Report and Accounts · UniCredit For exposures in stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. The allocation of credit exposures in one of the abovementioned stages is done at initial recognition, when the exposures is classified at stage 1 and it is periodically reviewed based on “stage allocation” rules as specified in Part E - Section 1 - Credit risk. In order to calculate the expected loss and the related loan loss provision, the Bank uses Probability of Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”) parameters, used for regulatory purposes and adjusted in order to ensure that impairment measurement represents values which are “point in time”, “forward looking” and inclusive of multiple scenarios. In this respect see Part E - Section 1 - Credit risk for further information on expected loss calculation methodologies. With reference to stage 3, it should be noted that it includes impaired exposures corresponding to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 7/24/2014), in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates. In particular EBA has defined as “Non-Performing” the exposures that meet one or both of the following criteria: • material exposures with more than 90 days past due; • exposures for which the bank values that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. In addition, the abovementioned Circular No.272 establishes that the aggregate of impaired assets is divided into the following categories: • Bad loans: cash and off-balance exposures to counterparty in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation. The assessment is generally carried out on an analytical basis (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or, in case of non-significant individually amounts, on a flat-rate basis for homogeneous types of exposures; • Unlikely to pay: cash and off-balance exposures for which conditions for evaluating the debt as bad loan are not met and for which it is unlikely that without recurring to enforcement of collaterals the debtor is able to pay in full (capital and/or interests) his credit obligations. Such assessment is made independently of any past due and unpaid amount/instalments. The classification among unlikely to pay is not necessarily linked to anomalies (non-repayment), rather it is linked to factors that indicate a situation of risk of default of the debtor. Unlikely to pay are generally accounted analytically (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or on a flat-rate basis for homogeneous types of exposures. The exposures classified among unlikely to pay and qualified as so-called forborne can be reclassified among non-impaired receivables only after at least one year has elapsed from the time of granting and the conditions indicated in paragraph 157 of EBA Implementing Technical Standards . With reference to their evaluation: - they are generally analytically evaluated and may include the discounted charge deriving from the possible renegotiation of the rate at conditions below the original contractual rate; - the renegotiations of loans that require their derecognition in exchange of shares through “debt-to-equity swap” transactions requires the assessment, before executing the swap, of the credit exposures in accordance with stipulated agreements at the date of preparation of the financial statements. Any differences between the value of receivables and the value at initial recognition of equity instruments is accounted in income statement in the impairment losses; • Past due exposures: cash exposures different from those classified as non-performing loans and unlikely to pay that at the reporting date are past due. Past due exposures can be determined referring alternatively to individual debtor or individual transaction. In particular they represent an entire exposure to counterparties different from those classified as unlikely to pay and bad loans that at the reporting date show past due receivables from more than 90 days as well as requirements established by local prudential regulation for the inclusion of these credits into “past due” (standardised banks) or “default exposures” (IRB banks). Past due exposures are evaluated on a on a flat-rate basis on historical/statistical basis, applying, if available, the riskiness identified by the risk factor used for the purposes of EU Regulation No.575/2013 (CRR) relating to prudential requirements for credit institutions and investment firms (LGD - Loss Given Default). Allowances for impairment of loans and receivables are based on the present value of expected cash flows of principal and interest. In determining the present value of future cash flows, the basic requirement is the identification of estimated collections, the timing of payments and the discount rate used. Company financial statements | Notes to the accounts Part A - Accounting policies 574 2018 Annual Report and Accounts · UniCredit For exposures in stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. The allocation of credit exposures in one of the abovementioned stages is done at initial recognition, when the exposures is classified at stage 1 and it is periodically reviewed based on “stage allocation” rules as specified in Part E - Section 1 - Credit risk. In order to calculate the expected loss and the related loan loss provision, the Bank uses Probability of Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”) parameters, used for regulatory purposes and adjusted in order to ensure that impairment measurement represents values which are “point in time”, “forward looking” and inclusive of multiple scenarios. In this respect see Part E - Section 1 - Credit risk for further information on expected loss calculation methodologies. With reference to stage 3, it should be noted that it includes impaired exposures corresponding to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 7/24/2014), in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates. In particular EBA has defined as “Non-Performing” the exposures that meet one or both of the following criteria: • material exposures with more than 90 days past due; • exposures for which the bank values that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. In addition, the abovementioned Circular No.272 establishes that the aggregate of impaired assets is divided into the following categories: • Bad loans: cash and off-balance exposures to counterparty in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation. The assessment is generally carried out on an analytical basis (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or, in case of non-significant individually amounts, on a flat-rate basis for homogeneous types of exposures; • Unlikely to pay: cash and off-balance exposures for which conditions for evaluating the debt as bad loan are not met and for which it is unlikely that without recurring to enforcement of collaterals the debtor is able to pay in full (capital and/or interests) his credit obligations. Such assessment is made independently of any past due and unpaid amount/instalments. The classification among unlikely to pay is not necessarily linked to anomalies (non-repayment), rather it is linked to factors that indicate a situation of risk of default of the debtor. Unlikely to pay are generally accounted analytically (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or on a flat-rate basis for homogeneous types of exposures. The exposures classified among unlikely to pay and qualified as so-called forborne can be reclassified among non-impaired receivables only after at least one year has elapsed from the time of granting and the conditions indicated in paragraph 157 of EBA Implementing Technical Standards . With reference to their evaluation: - they are generally analytically evaluated and may include the discounted charge deriving from the possible renegotiation of the rate at conditions below the original contractual rate; - the renegotiations of loans that require their derecognition in exchange of shares through “debt-to-equity swap” transactions requires the assessment, before executing the swap, of the credit exposures in accordance with stipulated agreements at the date of preparation of the financial statements. Any differences between the value of receivables and the value at initial recognition of equity instruments is accounted in income statement in the impairment losses; • Past due exposures: cash exposures different from those classified as non-performing loans and unlikely to pay that at the reporting date are past due. Past due exposures can be determined referring alternatively to individual debtor or individual transaction. In particular they represent an entire exposure to counterparties different from those classified as unlikely to pay and bad loans that at the reporting date show past due receivables from more than 90 days as well as requirements established by local prudential regulation for the inclusion of these credits into “past due” (standardised banks) or “default exposures” (IRB banks). Past due exposures are evaluated on a on a flat-rate basis on historical/statistical basis, applying, if available, the riskiness identified by the risk factor used for the purposes of EU Regulation No.575/2013 (CRR) relating to prudential requirements for credit institutions and investment firms (LGD - Loss Given Default). Allowances for impairment of loans and receivables are based on the present value of expected cash flows of principal and interest. In determining the present value of future cash flows, the basic requirement is the identification of estimated collections, the timing of payments and the discount rate used. Company financial statements | Notes to the accounts Part A - Accounting policies 574 2018 Annual Report and Accounts · UniCredit For exposures in stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. The allocation of credit exposures in one of the abovementioned stages is done at initial recognition, when the exposures is classified at stage 1 and it is periodically reviewed based on “stage allocation” rules as specified in Part E - Section 1 - Credit risk. In order to calculate the expected loss and the related loan loss provision, the Bank uses Probability of Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”) parameters, used for regulatory purposes and adjusted in order to ensure that impairment measurement represents values which are “point in time”, “forward looking” and inclusive of multiple scenarios. In this respect see Part E - Section 1 - Credit risk for further information on expected loss calculation methodologies. With reference to stage 3, it should be noted that it includes impaired exposures corresponding to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS /2013/03/rev1 7/24/2014), in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates. In particular EBA has defined as “Non-Performing” the exposures that meet one or both of the following criteria: • material exposures with more than 90 days past due; • exposures for which the bank values that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. In addition, the abovementioned Circular No.272 establishes that the aggregate of impaired assets is divided into the following categories: • Bad loans: cash and off-balance exposures to counterparty in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation. The assessment is generally carried out on an analytical basis (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or, in case of non-significant individually amounts, on a flat-rate basis for homogeneous types of exposures; • Unlikely to pay: cash and off-balance exposures for which conditions for evaluating the debt as bad loan are not met and for which it is unlikely that without recurring to enforcement of collaterals the debtor is able to pay in full (capital and/or interests) his credit obligations. Such assessment is made independently of any past due and unpaid amount/instalments. The classification among unlikely to pay is not necessarily linked to anomalies (non-repayment), rather it is linked to factors that indicate a situation of risk of default of the debtor. Unlikely to pay are generally accounted analytically (also through the comparison with coverage levels statistically defined for credit portfolios below a predefined threshold) or on a flat-rate basis for homogeneous types of exposures. The exposures classified among unlikely to pay and qualified as so-called forborne can be reclassified among non-impaired receivables only after at least one year has elapsed from the time of granting and the conditions indicated in paragraph 157 of EBA Implementing Technical Standards . With reference to their evaluation: - they are generally analytically evaluated and may include the discounted charge deriving from the possible renegotiation of the rate at conditions below the original contractual rate; - the renegotiations of loans that require their derecognition in exchange of shares through “debt-to-equity swap” transactions requires the assessment, before executing the swap, of the credit exposures in accordance with stipulated agreements at the date of preparation of the financial statements. Any differences between the value of receivables and the value at initial recognition of equity instruments is accounted in income statement in the impairment losses; • Past due exposures: cash exposures different from those classified as non-performing loans and unlikely to pay that at the reporting date are past due. Past due exposures can be determined referring alternatively to individual debtor or individual transaction. In particular they represent an entire exposure to counterparties different from those classified as unlikely to pay and bad loans that at the reporting date show past due receivables from more than 90 days as well as requirements established by local prudential regulation for the inclusion of these credits into “past due” (standardised banks) or “default exposures” (IRB banks). Past due exposures are evaluated on a on a flat-rate basis on historical/statistical basis, applying, if available, the riskiness identified by the risk factor used for the purposes of EU Regulation No.575/2013 (CRR) relating to prudential requirements for credit institutions and investment firms (LGD - Loss Given Default). Allowances for impairment of loans and receivables are based on the present value of expected cash flows of principal and interest. In determining the present value of future cash flows, the basic requirement is the identification of estimated collections, the timing of payments and the discount rate used. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 575 In particular, the amount of the loss on impaired exposures classified as bad loans and unlikely to pay, according to the categories specified above, is the difference between the carrying amount and the present value of estimated cash flows discounted at the original interest rate of the financial asset. For all fixed rate positions, the interest rate thus determined is kept constant in subsequent financial years, while for floating rate positions the interest rate is updated according to contractual terms. If the original interest rate cannot be found, or if finding it would be excessively burdensome, the rate that best approximates is applied, also recurring to “practical expedients” that do not alter the substance, and ensure consistency with the international accounting standards. Recovery times are estimated on the basis of business plans or forecasts based on historical recovery experience observed for similar classes of loans, taking into account the customer segment, the type of loan, the type of security and any other factors considered relevant. Also the impairment on impaired exposures was calculated as required by the new accounting standard IFRS9 to include (i) the adjustments necessary to reach the calculation of a point-in-time and forward-looking loss; and (ii) multiple scenarios applicable to this type of exposure including any sale scenarios in case the Bank’s NPE strategy foresees the recovery through sale on the market according to what is specified in Part E - Section 1 - Credit risk. I there are no reasonable expectations to recover a financial assets in its entirety or a portion thereof, the gross exposure is subject to write-off. Write-off, that may involve either a full or a part of a financial asset, might be accounted for before that the legal actions, activated to recover the credit exposure, are closed and doesn’t imply the forfeiture of the legal right to recover. In this context the Bank has developed a specific guideline that assess the need to recognize a write-off. For further information see Part E - Section 1 - Credit risk. Modification Renegotiations of financial instruments which cause a change in contractual conditions are accounted for depending on the significance of the contractual change itself. In particular, when renegotiations are not considered significant the gross exposure is re-determined through the calculation of the present value of cash flows following the renegotiation at the original effective interest rate The difference between the gross exposure before and after renegotiation, adjusted to consider changes in the related loan loss provision, is recognised in P&L as modification gain or loss. In this regard, renegotiations achieved both by amending the original contract or by closing a new one, are considered significant when they determine the expiry of the right to receive cash flows accordingly to the original contract. In particular, the rights to receive cash flows are considered as expired in case of renegotiations that introduce contractual clauses which determine a change in the financial instrument classification, which determine a change in the currency or which are carried out at market conditions therefore without causing credit concession. Business combinations A business combination is a transaction through which an entity obtains control of a business segment, thus bringing together different businesses into one reporting entity. A business combination may result in a Parent-subsidiary relationship in which the acquirer is the Parent and the acquiree is a subsidiary of the acquirer. A business combination may involve the purchase of the net assets of another entity, in which case goodwill can arise, or the purchase of the equity of the other entity (mergers). IFRS3 requires that all business combinations concerning business divisions shall be accounted for by applying the purchase method, that involves the following steps: i) identifying an acquirer; ii) measuring the cost of the business combination; and iii) allocating, at the acquisition date, the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed. The cost of a business combination is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer, in exchange for control of the acquiree. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 575 In particular, the amount of the loss on impaired exposures classified as bad loans and unlikely to pay, according to the categories specified above, is the difference between the carrying amount and the present value of estimated cash flows discounted at the original interest rate of the financial asset. For all fixed rate positions, the interest rate thus determined is kept constant in subsequent financial years, while for floating rate positions the interest rate is updated according to contractual terms. If the original interest rate cannot be found, or if finding it would be excessively burdensome, the rate that best approximates is applied, also recurring to “practical expedients” that do not alter the substance, and ensure consistency with the international accounting standards. Recovery times are estimated on the basis of business plans or forecasts based on historical recovery experience observed for similar classes of loans, taking into account the customer segment, the type of loan, the type of security and any other factors considered relevant. Also the impairment on impaired exposures was calculated as required by the new accounting standard IFRS9 to include (i) the adjustments necessary to reach the calculation of a point-in-time and forward-looking loss; and (ii) multiple scenarios applicable to this type of exposure including any sale scenarios in case the Bank’s NPE strategy foresees the recovery through sale on the market according to what is specified in Part E - Section 1 - Credit risk. I there are no reasonable expectations to recover a financial assets in its entirety or a portion thereof, the gross exposure is subject to write-off. Write-off, that may involve either a full or a part of a financial asset, might be accounted for before that the legal actions, activated to recover the credit exposure, are closed and doesn’t imply the forfeiture of the legal right to recover. In this context the Bank has developed a specific guideline that assess the need to recognize a write-off. For further information see Part E - Section 1 - Credit risk. Modification Renegotiations of financial instruments which cause a change in contractual conditions are accounted for depending on the significance of the contractual change itself. In particular, when renegotiations are not considered significant the gross exposure is re-determined through the calculation of the present value of cash flows following the renegotiation at the original effective interest rate The difference between the gross exposure before and after renegotiation, adjusted to consider changes in the related loan loss provision, is recognised in P&L as modification gain or loss. In this regard, renegotiations achieved both by amending the original contract or by closing a new one, are considered significant when they determine the expiry of the right to receive cash flows accordingly to the original contract. In particular, the rights to receive cash flows are considered as expired in case of renegotiations that introduce contractual clauses which determine a change in the financial instrument classification, which determine a change in the currency or which are carried out at market conditions therefore without causing credit concession. Business combinations A business combination is a transaction through which an entity obtains control of a business segment, thus bringing together different businesses into one reporting entity. A business combination may result in a Parent-subsidiary relationship in which the acquirer is the Parent and the acquiree is a subsidiary of the acquirer. A business combination may involve the purchase of the net assets of another entity, in which case goodwill can arise, or the purchase of the equity of the other entity (mergers). IFRS3 requires that all business combinations concerning business divisions shall be accounted for by applying the purchase method, that involves the following steps: i) identifying an acquirer; ii) measuring the cost of the business combination; and iii) allocating, at the acquisition date, the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed. The cost of a business combination is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer, in exchange for control of the acquiree. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 575 In particular, the amount of the loss on impaired exposures classified as bad loans and unlikely to pay, according to the categories specified above, is the difference between the carrying amount and the present value of estimated cash flows discounted at the original interest rate of the financial asset. For all fixed rate positions, the interest rate thus determined is kept constant in subsequent financial years, while for floating rate positions the interest rate is updated according to contractual terms. If the original interest rate cannot be found, or if finding it would be excessively burdensome, the rate that best approximates is applied, also recurring to “practical expedients” that do not alter the substance, and ensure consistency with the international accounting standards. Recovery times are estimated on the basis of business plans or forecasts based on historical recovery experience observed for similar classes of loans, taking into account the customer segment, the type of loan, the type of security and any other factors considered relevant. Also the impairment on impaired exposures was calculated as required by the new accounting standard IFRS9 to include (i) the adjustments necessary to reach the calculation of a point-in-time and forward-looking loss; and (ii) multiple scenarios applicable to this type of exposure including any sale scenarios in case the Bank’s NPE strategy foresees the recovery through sale on the market according to what is specified in Part E - Section 1 - Credit risk. I there are no reasonable expectations to recover a financial assets in its entirety or a portion thereof, the gross exposure is subject to write-off. Write-off, that may involve either a full or a part of a financial asset, might be accounted for before that the legal actions, activated to recover the credit exposure, are closed and doesn’t imply the forfeiture of the legal right to recover. In this context the Bank has developed a specific guideline that assess the need to recognize a write-off. For further information see Part E - Section 1 - Credit risk. Modification Renegotiations of financial instruments which cause a change in contractual conditions are accounted for depending on the significance of the contractual change itself. In particular, when renegotiations are not considered significant the gross exposure is re-determined through the calculation of the present value of cash flows following the renegotiation at the original effective interest rate The difference between the gross exposure before and after renegotiation, adjusted to consider changes in the related loan loss provision, is recognised in P&L as modification gain or loss. In this regard, renegotiations achieved both by amending the original contract or by closing a new one, are considered significant when they determine the expiry of the right to receive cash flows accordingly to the original contract. In particular, the rights to receive cash flows are considered as expired in case of renegotiations that introduce contractual clauses which determine a change in the financial instrument classification, which determine a change in the currency or which are carried out at market conditions therefore without causing credit concession. Business combinations A business combination is a transaction through which an entity obtains control of a business segment, thus bringing together different businesses into one reporting entity. A business combination may result in a Parent-subsidiary relationship in which the acquirer is the Parent and the acquiree is a subsidiary of the acquirer. A business combination may involve the purchase of the net assets of another entity, in which case goodwill can arise, or the purchase of the equity of the other entity (mergers). IFRS3 requires that all business combinations concerning business divisions shall be accounted for by applying the purchase method, that involves the following steps: i) identifying an acquirer; ii) measuring the cost of the business combination; and iii) allocating, at the acquisition date, the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed. The cost of a business combination is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer, in exchange for control of the acquiree. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 575 In particular, the amount of the loss on impaired exposures classified as bad loans and unlikely to pay, according to the categories specified above, is the difference between the carrying amount and the present value of estimated cash flows discounted at the original interest rate of the financial asset. For all fixed rate positions, the interest rate thus determined is kept constant in subsequent financial years, while for floating rate positions the interest rate is updated according to contractual terms. If the original interest rate cannot be found, or if finding it would be excessively burdensome, the rate that best approximates is applied, also recurring to “practical expedients” that do not alter the substance, and ensure consistency with the international accounting standards. Recovery times are estimated on the basis of business plans or forecasts based on historical recovery experience observed for similar classes of loans, taking into account the customer segment, the type of loan, the type of security and any other factors considered relevant. Also the impairment on impaired exposures was calculated as required by the new accounting standard IFRS9 to include (i) the adjustments necessary to reach the calculation of a point-in-time and forward-looking loss; and (ii) multiple scenarios applicable to this type of exposure including any sale scenarios in case the Bank’s NPE strategy foresees the recovery through sale on the market according to what is specified in Part E - Section 1 - Credit risk. I there are no reasonable expectations to recover a financial assets in its entirety or a portion thereof, the gross exposure is subject to write-off. Write-off, that may involve either a full or a part of a financial asset, might be accounted for before that the legal actions, activated to recover the credit exposure, are closed and doesn’t imply the forfeiture of the legal right to recover. In this context the Bank has developed a specific guideline that assess the need to recognize a write-off. For further information see Part E - Section 1 - Credit risk. Modification Renegotiations of financial instruments which cause a change in contractual conditions are accounted for depending on the significance of the contractual change itself. In particular, when renegotiations are not considered significant the gross exposure is re-determined through the calculation of the present value of cash flows following the renegotiation at the original effective interest rate The difference between the gross exposure before and after renegotiation, adjusted to consider changes in the related loan loss provision, is recognised in P&L as modification gain or loss. In this regard, renegotiations achieved both by amending the original contract or by closing a new one, are considered significant when they determine the expiry of the right to receive cash flows accordingly to the original contract. In particular, the rights to receive cash flows are considered as expired in case of renegotiations that introduce contractual clauses which determine a change in the financial instrument classification, which determine a change in the currency or which are carried out at market conditions therefore without causing credit concession. Business combinations A business combination is a transaction through which an entity obtains control of a business segment, thus bringing together different businesses into one reporting entity. A business combination may result in a Parent-subsidiary relationship in which the acquirer is the Parent and the acquiree is a subsidiary of the acquirer. A business combination may involve the purchase of the net assets of another entity, in which case goodwill can arise, or the purchase of the equity of the other entity (mergers). IFRS3 requires that all business combinations concerning business divisions shall be accounted for by applying the purchase method, that involves the following steps: i) identifying an acquirer; ii) measuring the cost of the business combination; and iii) allocating, at the acquisition date, the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed. The cost of a business combination is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer, in exchange for control of the acquiree. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 575 In particular, the amount of the loss on impaired exposures classified as bad loans and unlikely to pay, according to the categories specified above, is the difference between the carrying amount and the present value of estimated cash flows discounted at the original interest rate of the financial asset. For all fixed rate positions, the interest rate thus determined is kept constant in subsequent financial years, while for floating rate positions the interest rate is updated according to contractual terms. If the original interest rate cannot be found, or if finding it would be excessively burdensome, the rate that best approximates is applied, also recurring to “practical expedients” that do not alter the substance, and ensure consistency with the international accounting standards. Recovery times are estimated on the basis of business plans or forecasts based on historical recovery experience observed for similar classes of loans, taking into account the customer segment, the type of loan, the type of security and any other factors considered relevant. Also the impairment on impaired exposures was calculated as required by the new accounting standard IFRS9 to include (i) the adjustments necessary to reach the calculation of a point-in-time and forward-looking loss; and (ii) multiple scenarios applicable to this type of exposure including any sale scenarios in case the Bank’s NPE strategy foresees the recovery through sale on the market according to what is specified in Part E - Section 1 - Credit risk. I there are no reasonable expectations to recover a financial assets in its entirety or a portion thereof, the gross exposure is subject to write-off. Write-off, that may involve either a full or a part of a financial asset, might be accounted for before that the legal actions, activated to recover the credit exposure, are closed and doesn’t imply the forfeiture of the legal right to recover. In this context the Bank has developed a specific guideline that assess the need to recognize a write-off. For further information see Part E - Section 1 - Credit risk. Modification Renegotiations of financial instruments which cause a change in contractual conditions are accounted for depending on the significance of the contractual change itself. In particular, when renegotiations are not considered significant the gross exposure is re-determined through the calculation of the present value of cash flows following the renegotiation at the original effective interest rate The difference between the gross exposure before and after renegotiation, adjusted to consider changes in the related loan loss provision, is recognised in P&L as modification gain or loss. In this regard, renegotiations achieved both by amending the original contract or by closing a new one, are considered significant when they determine the expiry of the right to receive cash flows accordingly to the original contract. In particular, the rights to receive cash flows are considered as expired in case of renegotiations that introduce contractual clauses which determine a change in the financial instrument classification, which determine a change in the currency or which are carried out at market conditions therefore without causing credit concession. Business combinations A business combination is a transaction through which an entity obtains control of a business segment, thus bringing together different businesses into one reporting entity. A business combination may result in a Parent-subsidiary relationship in which the acquirer is the Parent and the acquiree is a subsidiary of the acquirer. A business combination may involve the purchase of the net assets of another entity, in which case goodwill can arise, or the purchase of the equity of the other entity (mergers). IFRS3 requires that all business combinations concerning business divisions shall be accounted for by applying the purchase method, that involves the following steps: i) identifying an acquirer; ii) measuring the cost of the business combination; and iii) allocating, at the acquisition date, the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed. The cost of a business combination is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the acquirer, in exchange for control of the acquiree. Company financial statements | Notes to the accounts Part A - Accounting policies 576 2018 Annual Report and Accounts · UniCredit The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. When this is achieved through a single exchange transaction, the date of exchange coincides with the acquisition date. A business combination may involve more than one exchange transaction; nevertheless, the cost of the business combination remains equal to the fair value of the total shareholding acquired. This involves the revaluation at fair value, and the recognition of the effects in the Income Statement, of the equity investments previously held in the acquired entity. The cost of a business combination is allocated by recognising the assets, the liabilities and the identifiable contingent liabilities of the acquired company at their acquisition-date fair value. Exceptions to this principle are deferred income tax assets and liabilities, employee benefits, indemnification assets, reacquired rights, non-current assets held for sale, and share-based payment transactions that are subject to review in accordance with the principle applicable to them. Positive difference between the cost of the business combination and the net fair value of the identifiable assets, liabilities and contingent liabilities so recognised is accounted for as goodwill. After initial recognition, goodwill is tested for impairment at least annually. If the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the acquirer shall reassess the fair values and recognise immediately any excess remaining after that reassessment in profit or loss. In the case of business combinations resulting in a Parent company-subsidiary (acquirer-acuiree) relationship, the equity investment is accounted for under the cost method. Derecognition of financial assets Derecognition is the removal of a previously recognised financial asset from an entity’s balance sheet. Before evaluating whether, and to what extent, derecognition is appropriate, under IFRS9 an entity should determine whether the relevant conditions apply to a financial asset in its entirety or to a part of a financial asset. The standard is applied to a part of financial assets being transferred if, and only if, the part being considered for derecognition meets one of the following conditions: • the part comprises only specifically identified cash flows from a financial asset, or a group of assets, (e.g. interest cash flows from an asset); • the part comprises a clearly identified percentage of the cash flows from a financial asset (e.g. a 90 per cent share of all cash flows from an asset); • the part comprises only a fully proportionate (pro-rata) share of specifically identified cash flow (e.g. 90 per cent share of interest cash flows from an asset). In all other cases, the standard is applied to the financial asset in its entirety (or to the group of similar financial assets in their entirety) An entity shall derecognise a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the contractual rights to receive the cash flows of the financial asset to a third party. Rights to cash flow are considered to be transferred even if contractual rights to receive the asset’s cash flow are retained but there is an obligation to pay this cash flow to one or more entities and all the following conditions are fulfilled (pass-through agreement): • there is no obligation on the Bank to pay amounts not received from the original asset; • sale or pledge of the original asset is not allowed, unless it secures the obligation to pay cash flow; • the Bank is obliged to transfer forthwith all cash flows received and may not invest them, except for liquidity invested for the short period between the date of receipt and that of payment, provided that the interest accrued in that period is paid on. Recognition is also subject to verification of effective transfer of all the risks and rewards of ownership of the financial asset. If the entity transfers substantially all the risks and rewards of ownership of the financial asset, the entity shall derecognise the asset (or group of assets) and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer. Conversely, if the entity substantially retains all the risks and rewards of ownership of the asset (or group of assets), the entity shall continue to recognise the transferred asset(s). In this case it is necessary to recognise a liability corresponding to the amount received under the transfer and subsequently recognise all income accruing on the asset and expense accruing on the liability. The main transactions that could not permit, under the above rules, full derecognition of a financial asset are securitisations, reverse repos and lending transactions. Company financial statements | Notes to the accounts Part A - Accounting policies 576 2018 Annual Report and Accounts · UniCredit The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. When this is achieved through a single exchange transaction, the date of exchange coincides with the acquisition date. A business combination may involve more than one exchange transaction; nevertheless, the cost of the business combination remains equal to the fair value of the total shareholding acquired. This involves the revaluation at fair value, and the recognition of the effects in the Income Statement, of the equity investments previously held in the acquired entity. The cost of a business combination is allocated by recognising the assets, the liabilities and the identifiable contingent liabilities of the acquired company at their acquisition-date fair value. Exceptions to this principle are deferred income tax assets and liabilities, employee benefits, indemnification assets, reacquired rights, non-current assets held for sale, and share-based payment transactions that are subject to review in accordance with the principle applicable to them. Positive difference between the cost of the business combination and the net fair value of the identifiable assets, liabilities and contingent liabilities so recognised is accounted for as goodwill. After initial recognition, goodwill is tested for impairment at least annually. If the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the acquirer shall reassess the fair values and recognise immediately any excess remaining after that reassessment in profit or loss. In the case of business combinations resulting in a Parent company-subsidiary (acquirer-acuiree) relationship, the equity investment is accounted for under the cost method. Derecognition of financial assets Derecognition is the removal of a previously recognised financial asset from an entity’s balance sheet. Before evaluating whether, and to what extent, derecognition is appropriate, under IFRS9 an entity should determine whether the relevant conditions apply to a financial asset in its entirety or to a part of a financial asset. The standard is applied to a part of financial assets being transferred if, and only if, the part being considered for derecognition meets one of the following conditions: • the part comprises only specifically identified cash flows from a financial asset, or a group of assets, (e.g. interest cash flows from an asset); • the part comprises a clearly identified percentage of the cash flows from a financial asset (e.g. a 90 per cent share of all cash flows from an asset); • the part comprises only a fully proportionate (pro-rata) share of specifically identified cash flow (e.g. 90 per cent share of interest cash flows from an asset). In all other cases, the standard is applied to the financial asset in its entirety (or to the group of similar financial assets in their entirety) An entity shall derecognise a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the contractual rights to receive the cash flows of the financial asset to a third party. Rights to cash flow are considered to be transferred even if contractual rights to receive the asset’s cash flow are retained but there is an obligation to pay this cash flow to one or more entities and all the following conditions are fulfilled (pass-through agreement): • there is no obligation on the Bank to pay amounts not received from the original asset; • sale or pledge of the original asset is not allowed, unless it secures the obligation to pay cash flow; • the Bank is obliged to transfer forthwith all cash flows received and may not invest them, except for liquidity invested for the short period between the date of receipt and that of payment, provided that the interest accrued in that period is paid on. Recognition is also subject to verification of effective transfer of all the risks and rewards of ownership of the financial asset. If the entity transfers substantially all the risks and rewards of ownership of the financial asset, the entity shall derecognise the asset (or group of assets) and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer. Conversely, if the entity substantially retains all the risks and rewards of ownership of the asset (or group of assets), the entity shall continue to recognise the transferred asset(s). In this case it is necessary to recognise a liability corresponding to the amount received under the transfer and subsequently recognise all income accruing on the asset and expense accruing on the liability. The main transactions that could not permit, under the above rules, full derecognition of a financial asset are securitisations, reverse repos and lending transactions. Company financial statements | Notes to the accounts Part A - Accounting policies 576 2018 Annual Report and Accounts · UniCredit The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. When this is achieved through a single exchange transaction, the date of exchange coincides with the acquisition date. A business combination may involve more than one exchange transaction; nevertheless, the cost of the business combination remains equal to the fair value of the total shareholding acquired. This involves the revaluation at fair value, and the recognition of the effects in the Income Statement, of the equity investments previously held in the acquired entity. The cost of a business combination is allocated by recognising the assets, the liabilities and the identifiable contingent liabilities of the acquired company at their acquisition-date fair value. Exceptions to this principle are deferred income tax assets and liabilities, employee benefits, indemnification assets, reacquired rights, non-current assets held for sale, and share-based payment transactions that are subject to review in accordance with the principle applicable to them. Positive difference between the cost of the business combination and the net fair value of the identifiable assets, liabilities and contingent liabilities so recognised is accounted for as goodwill. After initial recognition, goodwill is tested for impairment at least annually. If the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the acquirer shall reassess the fair values and recognise immediately any excess remaining after that reassessment in profit or loss. In the case of business combinations resulting in a Parent company-subsidiary (acquirer-acuiree) relationship, the equity investment is accounted for under the cost method. Derecognition of financial assets Derecognition is the removal of a previously recognised financial asset from an entity’s balance sheet. Before evaluating whether, and to what extent, derecognition is appropriate, under IFRS9 an entity should determine whether the relevant conditions apply to a financial asset in its entirety or to a part of a financial asset. The standard is applied to a part of financial assets being transferred if, and only if, the part being considered for derecognition meets one of the following conditions: • the part comprises only specifically identified cash flows from a financial asset, or a group of assets, (e.g. interest cash flows from an asset); • the part comprises a clearly identified percentage of the cash flows from a financial asset (e.g. a 90 per cent share of all cash flows from an asset); • the part comprises only a fully proportionate (pro-rata) share of specifically identified cash flow (e.g. 90 per cent share of interest cash flows from an asset). In all other cases, the standard is applied to the financial asset in its entirety (or to the group of similar financial assets in their entirety) An entity shall derecognise a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the contractual rights to receive the cash flows of the financial asset to a third party. Rights to cash flow are considered to be transferred even if contractual rights to receive the asset’s cash flow are retained but there is an obligation to pay this cash flow to one or more entities and all the following conditions are fulfilled (pass-through agreement): • there is no obligation on the Bank to pay amounts not received from the original asset; • sale or pledge of the original asset is not allowed, unless it secures the obligation to pay cash flow; • the Bank is obliged to transfer forthwith all cash flows received and may not invest them, except for liquidity invested for the short period between the date of receipt and that of payment, provided that the interest accrued in that period is paid on. Recognition is also subject to verification of effective transfer of all the risks and rewards of ownership of the financial asset. If the entity transfers substantially all the risks and rewards of ownership of the financial asset, the entity shall derecognise the asset (or group of assets) and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer. Conversely, if the entity substantially retains all the risks and rewards of ownership of the asset (or group of assets), the entity shall continue to recognise the transferred asset(s). In this case it is necessary to recognise a liability corresponding to the amount received under the transfer and subsequently recognise all income accruing on the asset and expense accruing on the liability. The main transactions that could not permit, under the above rules, full derecognition of a financial asset are securitisations, reverse repos and lending transactions. Company financial statements | Notes to the accounts Part A - Accounting policies 576 2018 Annual Report and Accounts · UniCredit The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. When this is achieved through a single exchange transaction, the date of exchange coincides with the acquisition date. A business combination may involve more than one exchange transaction; nevertheless, the cost of the business combination remains equal to the fair value of the total shareholding acquired. This involves the revaluation at fair value, and the recognition of the effects in the Income Statement, of the equity investments previously held in the acquired entity. The cost of a business combination is allocated by recognising the assets, the liabilities and the identifiable contingent liabilities of the acquired company at their acquisition-date fair value. Exceptions to this principle are deferred income tax assets and liabilities, employee benefits, indemnification assets, reacquired rights, non-current assets held for sale, and share-based payment transactions that are subject to review in accordance with the principle applicable to them. Positive difference between the cost of the business combination and the net fair value of the identifiable assets, liabilities and contingent liabilities so recognised is accounted for as goodwill. After initial recognition, goodwill is tested for impairment at least annually. If the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the acquirer shall reassess the fair values and recognise immediately any excess remaining after that reassessment in profit or loss. In the case of business combinations resulting in a Parent company-subsidiary (acquirer-acuiree) relationship, the equity investment is accounted for under the cost method. Derecognition of financial assets Derecognition is the removal of a previously recognised financial asset from an entity’s balance sheet. Before evaluating whether, and to what extent, derecognition is appropriate, under IFRS9 an entity should determine whether the relevant conditions apply to a financial asset in its entirety or to a part of a financial asset. The standard is applied to a part of financial assets being transferred if, and only if, the part being considered for derecognition meets one of the following conditions: • the part comprises only specifically identified cash flows from a financial asset, or a group of assets, (e.g. interest cash flows from an asset); • the part comprises a clearly identified percentage of the cash flows from a financial asset (e.g. a 90 per cent share of all cash flows from an asset); • the part comprises only a fully proportionate (pro-rata) share of specifically identified cash flow (e.g. 90 per cent share of interest cash flows from an asset). In all other cases, the standard is applied to the financial asset in its entirety (or to the group of similar financial assets in their entirety) An entity shall derecognise a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the contractual rights to receive the cash flows of the financial asset to a third party. Rights to cash flow are considered to be transferred even if contractual rights to receive the asset’s cash flow are retained but there is an obligation to pay this cash flow to one or more entities and all the following conditions are fulfilled (pass-through agreement): • there is no obligation on the Bank to pay amounts not received from the original asset; • sale or pledge of the original asset is not allowed, unless it secures the obligation to pay cash flow; • the Bank is obliged to transfer forthwith all cash flows received and may not invest them, except for liquidity invested for the short period between the date of receipt and that of payment, provided that the interest accrued in that period is paid on. Recognition is also subject to verification of effective transfer of all the risks and rewards of ownership of the financial asset. If the entity transfers substantially all the risks and rewards of ownership of the financial asset, the entity shall derecognise the asset (or group of assets) and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer. Conversely, if the entity substantially retains all the risks and rewards of ownership of the asset (or group of assets), the entity shall continue to recognise the transferred asset(s). In this case it is necessary to recognise a liability corresponding to the amount received under the transfer and subsequently recognise all income accruing on the asset and expense accruing on the liability. The main transactions that could not permit, under the above rules, full derecognition of a financial asset are securitisations, reverse repos and lending transactions. Company financial statements | Notes to the accounts Part A - Accounting policies 576 2018 Annual Report and Accounts · UniCredit The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. When this is achieved through a single exchange transaction, the date of exchange coincides with the acquisition date. A business combination may involve more than one exchange transaction; nevertheless, the cost of the business combination remains equal to the fair value of the total shareholding acquired. This involves the revaluation at fair value, and the recognition of the effects in the Income Statement, of the equity investments previously held in the acquired entity. The cost of a business combination is allocated by recognising the assets, the liabilities and the identifiable contingent liabilities of the acquired company at their acquisition-date fair value. Exceptions to this principle are deferred income tax assets and liabilities, employee benefits, indemnification assets, reacquired rights, non-current assets held for sale, and share-based payment transactions that are subject to review in accordance with the principle applicable to them. Positive difference between the cost of the business combination and the net fair value of the identifiable assets, liabilities and contingent liabilities so recognised is accounted for as goodwill. After initial recognition, goodwill is tested for impairment at least annually. If the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the acquirer shall reassess the fair values and recognise immediately any excess remaining after that reassessment in profit or loss. In the case of business combinations resulting in a Parent company-subsidiary (acquirer-acuiree) relationship, the equity investment is accounted for under the cost method. Derecognition of financial assets Derecognition is the removal of a previously recognised financial asset from an entity’s balance sheet. Before evaluating whether, and to what extent, derecognition is appropriate, under IFRS9 an entity should determine whether the relevant conditions apply to a financial asset in its entirety or to a part of a financial asset. The standard is applied to a part of financial assets being transferred if, and only if, the part being considered for derecognition meets one of the following conditions: • the part comprises only specifically identified cash flows from a financial asset, or a group of assets, (e.g. interest cash flows from an asset); • the part comprises a clearly identified percentage of the cash flows from a financial asset (e.g. a 90 per cent share of all cash flows from an asset); • the part comprises only a fully proportionate (pro-rata) share of specifically identified cash flow (e.g. 90 per cent share of interest cash flows from an asset). In all other cases, the standard is applied to the financial asset in its entirety (or to the group of similar financial assets in their entirety) An entity shall derecognise a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the contractual rights to receive the cash flows of the financial asset to a third party. Rights to cash flow are considered to be transferred even if contractual rights to receive the asset’s cash flow are retained but there is an obligation to pay this cash flow to one or more entities and all the following conditions are fulfilled (pass-through agreement): • there is no obligation on the Bank to pay amounts not received from the original asset; • sale or pledge of the original asset is not allowed, unless it secures the obligation to pay cash flow; • the Bank is obliged to transfer forthwith all cash flows received and may not invest them, except for liquidity invested for the short period between the date of receipt and that of payment, provided that the interest accrued in that period is paid on. Recognition is also subject to verification of effective transfer of all the risks and rewards of ownership of the financial asset. If the entity transfers substantially all the risks and rewards of ownership of the financial asset, the entity shall derecognise the asset (or group of assets) and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer. Conversely, if the entity substantially retains all the risks and rewards of ownership of the asset (or group of assets), the entity shall continue to recognise the transferred asset(s). In this case it is necessary to recognise a liability corresponding to the amount received under the transfer and subsequently recognise all income accruing on the asset and expense accruing on the liability. The main transactions that could not permit, under the above rules, full derecognition of a financial asset are securitisations, reverse repos and lending transactions. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 577 In the case of securitisations the Bank does not derecognise the financial asset on purchase of the equity tranche or provision of other types of support of the structure which result in the Bank retaining the credit risk of the securitised portfolio. In the case of reverse repos and stock securities lending, the assets transacted are not derecognised since the terms of the transaction entail the retention of all their risks and rewards. Finally, it should be noted that securities lending transactions collateralised by other securities or not collateralised were recorded as off-balance sheet items. Repo transactions and securities lending Securities received in a transaction that entails a contractual obligation to sell them at a later date or delivered under a contractual obligation to repurchase are neither recognised nor derecognised. In respect of securities purchased under an agreement to resell, the consideration is recognised as a loan to customers or banks, or as an asset held for trading. In respect of securities held in a repurchase agreement, the liability is recognised as due to banks or customers, or as held for trading financial liability. Revenue from these loans, being the coupons accrued on the securities and the difference between the sale/purchase and resale/repurchase prices, is recognised in profit or loss through interest income and expenses on an accruals basis. These transactions can only be offset if, and only if, they are carried out with the same counterparty and provided that such offset is provided for in the underlying contracts. The same rules apply to securities lending transactions collateralised by cash fully available to the lender. The P&L items connected with these transactions are booked respectively: • in item Interest, with respect to the positive item (borrower) and the negative item (lender) relating to the return on cash paid to the lender; • in item Fees and commissions, with respect to the negative item (borrower) and the positive item (lender) relating to the service provided by the lender by making the security available. With reference to securities lending transactions collateralised by other securities, or not collateralised, the security lent or the security put up as collateral are still recognised as assets in the balance sheet, depending on the role, lender or borrower, respectively, played in the transaction. Counterparty risk relating to the latter securities lending or borrowing transactions is shown under the tables of Explanatory notes - Part E - Section 1 - Credit risk - Quantitative information - A. Credit quality. Equity instruments Equity instruments are instruments that represent a residual interest in Group’s assets net of its liabilities. Classification of an issued instrument as equity is possible only if there are no contractual obligation to make payments in form of capital redemptions, interest or other kinds of returns. In particular, instruments having the following features are classified as equity instruments: • the instrument is perpetual or has a maturity equal to duration of the entity; • full discretion of the issuer in coupon payments and redemptions, also advanced, of the principal outstanding. Additional Tier 1 instruments are included in this category, in line with the provisions of Regulation (EU) No.575/2013 (CRR) on prudential requirements for credit institutions and investment firms, if, additionally to the characteristics described above: i) maintain within the full discretion of the issuer the possibility to perform a write-up of the nominal value after the occurrence of a capital event that has determined a write-down; ii) do not incorporate outlook that force the issuer to provide for payments (must-pay clauses) following genuine events under the direct control of the parties. Equity instruments, different from common or saving shares, are presented in item “130. Equity instruments” for the consideration received including transaction costs directly attributable to the instruments. Any coupon paid, net of related taxes, reduces item “140. Reserves”. Any difference between the amounts paid for the redemption or repurchase of these instruments and their carrying value is recognised in item “140. Reserves”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 577 In the case of securitisations the Bank does not derecognise the financial asset on purchase of the equity tranche or provision of other types of support of the structure which result in the Bank retaining the credit risk of the securitised portfolio. In the case of reverse repos and stock securities lending, the assets transacted are not derecognised since the terms of the transaction entail the retention of all their risks and rewards. Finally, it should be noted that securities lending transactions collateralised by other securities or not collateralised were recorded as off-balance sheet items. Repo transactions and securities lending Securities received in a transaction that entails a contractual obligation to sell them at a later date or delivered under a contractual obligation to repurchase are neither recognised nor derecognised. In respect of securities purchased under an agreement to resell, the consideration is recognised as a loan to customers or banks, or as an asset held for trading. In respect of securities held in a repurchase agreement, the liability is recognised as due to banks or customers, or as held for trading financial liability. Revenue from these loans, being the coupons accrued on the securities and the difference between the sale/purchase and resale/repurchase prices, is recognised in profit or loss through interest income and expenses on an accruals basis. These transactions can only be offset if, and only if, they are carried out with the same counterparty and provided that such offset is provided for in the underlying contracts. The same rules apply to securities lending transactions collateralised by cash fully available to the lender. The P&L items connected with these transactions are booked respectively: • in item Interest, with respect to the positive item (borrower) and the negative item (lender) relating to the return on cash paid to the lender; • in item Fees and commissions, with respect to the negative item (borrower) and the positive item (lender) relating to the service provided by the lender by making the security available. With reference to securities lending transactions collateralised by other securities, or not collateralised, the security lent or the security put up as collateral are still recognised as assets in the balance sheet, depending on the role, lender or borrower, respectively, played in the transaction. Counterparty risk relating to the latter securities lending or borrowing transactions is shown under the tables of Explanatory notes - Part E - Section 1 - Credit risk - Quantitative information - A. Credit quality. Equity instruments Equity instruments are instruments that represent a residual interest in Group’s assets net of its liabilities. Classification of an issued instrument as equity is possible only if there are no contractual obligation to make payments in form of capital redemptions, interest or other kinds of returns. In particular, instruments having the following features are classified as equity instruments: • the instrument is perpetual or has a maturity equal to duration of the entity; • full discretion of the issuer in coupon payments and redemptions, also advanced, of the principal outstanding. Additional Tier 1 instruments are included in this category, in line with the provisions of Regulation (EU) No.575/2013 (CRR) on prudential requirements for credit institutions and investment firms, if, additionally to the characteristics described above: i) maintain within the full discretion of the issuer the possibility to perform a write-up of the nominal value after the occurrence of a capital event that has determined a write-down; ii) do not incorporate outlook that force the issuer to provide for payments (must-pay clauses) following genuine events under the direct control of the parties. Equity instruments, different from common or saving shares, are presented in item “130. Equity instruments” for the consideration received including transaction costs directly attributable to the instruments. Any coupon paid, net of related taxes, reduces item “140. Reserves”. Any difference between the amounts paid for the redemption or repurchase of these instruments and their carrying value is recognised in item “140. Reserves”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 577 In the case of securitisations the Bank does not derecognise the financial asset on purchase of the equity tranche or provision of other types of support of the structure which result in the Bank retaining the credit risk of the securitised portfolio. In the case of reverse repos and stock securities lending, the assets transacted are not derecognised since the terms of the transaction entail the retention of all their risks and rewards. Finally, it should be noted that securities lending transactions collateralised by other securities or not collateralised were recorded as off-balance sheet items. Repo transactions and securities lending Securities received in a transaction that entails a contractual obligation to sell them at a later date or delivered under a contractual obligation to repurchase are neither recognised nor derecognised. In respect of securities purchased under an agreement to resell, the consideration is recognised as a loan to customers or banks, or as an asset held for trading. In respect of securities held in a repurchase agreement, the liability is recognised as due to banks or customers, or as held for trading financial liability. Revenue from these loans, being the coupons accrued on the securities and the difference between the sale/purchase and resale/repurchase prices, is recognised in profit or loss through interest income and expenses on an accruals basis. These transactions can only be offset if, and only if, they are carried out with the same counterparty and provided that such offset is provided for in the underlying contracts. The same rules apply to securities lending transactions collateralised by cash fully available to the lender. The P&L items connected with these transactions are booked respectively: • in item Interest, with respect to the positive item (borrower) and the negative item (lender) relating to the return on cash paid to the lender; • in item Fees and commissions, with respect to the negative item (borrower) and the positive item (lender) relating to the service provided by the lender by making the security available. With reference to securities lending transactions collateralised by other securities, or not collateralised, the security lent or the security put up as collateral are still recognised as assets in the balance sheet, depending on the role, lender or borrower, respectively, played in the transaction. Counterparty risk relating to the latter securities lending or borrowing transactions is shown under the tables of Explanatory notes - Part E - Section 1 - Credit risk - Quantitative information - A. Credit quality. Equity instruments Equity instruments are instruments that represent a residual interest in Group’s assets net of its liabilities. Classification of an issued instrument as equity is possible only if there are no contractual obligation to make payments in form of capital redemptions, interest or other kinds of returns. In particular, instruments having the following features are classified as equity instruments: • the instrument is perpetual or has a maturity equal to duration of the entity; • full discretion of the issuer in coupon payments and redemptions, also advanced, of the principal outstanding. Additional Tier 1 instruments are included in this category, in line with the provisions of Regulation (EU) No.575/2013 (CRR) on prudential requirements for credit institutions and investment firms, if, additionally to the characteristics described above: i) maintain within the full discretion of the issuer the possibility to perform a write-up of the nominal value after the occurrence of a capital event that has determined a write-down; ii) do not incorporate outlook that force the issuer to provide for payments (must-pay clauses) following genuine events under the direct control of the parties. Equity instruments, different from common or saving shares, are presented in item “130. Equity instruments” for the consideration received including transaction costs directly attributable to the instruments. Any coupon paid, net of related taxes, reduces item “140. Reserves”. Any difference between the amounts paid for the redemption or repurchase of these instruments and their carrying value is recognised in item “140. Reserves”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 577 In the case of securitisations the Bank does not derecognise the financial asset on purchase of the equity tranche or provision of other types of support of the structure which result in the Bank retaining the credit risk of the securitised portfolio. In the case of reverse repos and stock securities lending, the assets transacted are not derecognised since the terms of the transaction entail the retention of all their risks and rewards. Finally, it should be noted that securities lending transactions collateralised by other securities or not collateralised were recorded as off-balance sheet items. Repo transactions and securities lending Securities received in a transaction that entails a contractual obligation to sell them at a later date or delivered under a contractual obligation to repurchase are neither recognised nor derecognised. In respect of securities purchased under an agreement to resell, the consideration is recognised as a loan to customers or banks, or as an asset held for trading. In respect of securities held in a repurchase agreement, the liability is recognised as due to banks or customers, or as held for trading financial liability. Revenue from these loans, being the coupons accrued on the securities and the difference between the sale/purchase and resale/repurchase prices, is recognised in profit or loss through interest income and expenses on an accruals basis. These transactions can only be offset if, and only if, they are carried out with the same counterparty and provided that such offset is provided for in the underlying contracts. The same rules apply to securities lending transactions collateralised by cash fully available to the lender. The P&L items connected with these transactions are booked respectively: • in item Interest, with respect to the positive item (borrower) and the negative item (lender) relating to the return on cash paid to the lender; • in item Fees and commissions, with respect to the negative item (borrower) and the positive item (lender) relating to the service provided by the lender by making the security available. With reference to securities lending transactions collateralised by other securities, or not collateralised, the security lent or the security put up as collateral are still recognised as assets in the balance sheet, depending on the role, lender or borrower, respectively, played in the transaction. Counterparty risk relating to the latter securities lending or borrowing transactions is shown under the tables of Explanatory notes - Part E - Section 1 - Credit risk - Quantitative information - A. Credit quality. Equity instruments Equity instruments are instruments that represent a residual interest in Group’s assets net of its liabilities. Classification of an issued instrument as equity is possible only if there are no contractual obligation to make payments in form of capital redemptions, interest or other kinds of returns. In particular, instruments having the following features are classified as equity instruments: • the instrument is perpetual or has a maturity equal to duration of the entity; • full discretion of the issuer in coupon payments and redemptions, also advanced, of the principal outstanding. Additional Tier 1 instruments are included in this category, in line with the provisions of Regulation (EU) No.575/2013 (CRR) on prudential requirements for credit institutions and investment firms, if, additionally to the characteristics described above: i) maintain within the full discretion of the issuer the possibility to perform a write-up of the nominal value after the occurrence of a capital event that has determined a write-down; ii) do not incorporate outlook that force the issuer to provide for payments (must-pay clauses) following genuine events under the direct control of the parties. Equity instruments, different from common or saving shares, are presented in item “130. Equity instruments” for the consideration received including transaction costs directly attributable to the instruments. Any coupon paid, net of related taxes, reduces item “140. Reserves”. Any difference between the amounts paid for the redemption or repurchase of these instruments and their carrying value is recognised in item “140. Reserves”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 577 In the case of securitisations the Bank does not derecognise the financial asset on purchase of the equity tranche or provision of other types of support of the structure which result in the Bank retaining the credit risk of the securitised portfolio. In the case of reverse repos and stock securities lending, the assets transacted are not derecognised since the terms of the transaction entail the retention of all their risks and rewards. Finally, it should be noted that securities lending transactions collateralised by other securities or not collateralised were recorded as off-balance sheet items. Repo transactions and securities lending Securities received in a transaction that entails a contractual obligation to sell them at a later date or delivered under a contractual obligation to repurchase are neither recognised nor derecognised. In respect of securities purchased under an agreement to resell, the consideration is recognised as a loan to customers or banks, or as an asset held for trading. In respect of securities held in a repurchase agreement, the liability is recognised as due to banks or customers, or as held for trading financial liability. Revenue from these loans, being the coupons accrued on the securities and the difference between the sale/purchase and resale/repurchase prices, is recognised in profit or loss through interest income and expenses on an accruals basis. These transactions can only be offset if, and only if, they are carried out with the same counterparty and provided that such offset is provided for in the underlying contracts. The same rules apply to securities lending transactions collateralised by cash fully available to the lender. The P&L items connected with these transactions are booked respectively: • in item Interest, with respect to the positive item (borrower) and the negative item (lender) relating to the return on cash paid to the lender; • in item Fees and commissions, with respect to the negative item (borrower) and the positive item (lender) relating to the service provided by the lender by making the security available. With reference to securities lending transactions collateralised by other securities, or not collateralised, the security lent or the security put up as collateral are still recognised as assets in the balance sheet, depending on the role, lender or borrower, respectively, played in the transaction. Counterparty risk relating to the latter securities lending or borrowing transactions is shown under the tables of Explanatory notes - Part E - Section 1 - Credit risk - Quantitative information - A. Credit quality. Equity instruments Equity instruments are instruments that represent a residual interest in Group’s assets net of its liabilities. Classification of an issued instrument as equity is possible only if there are no contractual obligation to make payments in form of capital redemptions, interest or other kinds of returns. In particular, instruments having the following features are classified as equity instruments: • the instrument is perpetual or has a maturity equal to duration of the entity; • full discretion of the issuer in coupon payments and redemptions, also advanced, of the principal outstanding. Additional Tier 1 instruments are included in this category, in line with the provisions of Regulation (EU) No.575/2013 (CRR) on prudential requirements for credit institutions and investment firms, if, additionally to the characteristics described above: i) maintain within the full discretion of the issuer the possibility to perform a write-up of the nominal value after the occurrence of a capital event that has determined a write-down; ii) do not incorporate outlook that force the issuer to provide for payments (must-pay clauses) following genuine events under the direct control of the parties. Equity instruments, different from common or saving shares, are presented in item “130. Equity instruments” for the consideration received including transaction costs directly attributable to the instruments. Any coupon paid, net of related taxes, reduces item “140. Reserves”. Any difference between the amounts paid for the redemption or repurchase of these instruments and their carrying value is recognised in item “140. Reserves”. Company financial statements | Notes to the accounts Part A - Accounting policies 578 2018 Annual Report and Accounts · UniCredit Treasury shares Changes in treasury shares are reported as a direct contra item to Shareholders' Equity, i.e. as a reduction to the latter in the amount of any purchases, and as an increase in the amount of any sales proceeds. This entails that, if treasury shares are subsequently sold, the difference between the sale price and the related post-tax repurchase cost is recognised entirely as a contra item to Shareholders' Equity. Finance Leases Finance leases effectively transfer all the risks and benefits of ownership of an asset to the lessee; ownership of the asset is transferred to the lessee, however not necessarily at contractual maturity. The lessee acquires the economic benefit of the use of the leased asset for most of its useful life, in exchange for a commitment to pay to the lessor an amount approximately equivalent to the fair value of the asset and related finance costs. Recognition in the lessor’s accounts is as follows: • in assets, the value of the loan, less the principal of lease payments due and paid by the lessee; • in profit or loss, interest received. See previous paragraphs 6 - Property, Plant and Equipment and 7 - Intangible Assets below for treatment of the lessee’s assets. Factoring Loans acquired in factoring transactions with recourse are recognised to the extent of the advances granted to customers on their consideration. Loans acquired without recourse are recognised as such once it has been established that there are no contractual clauses that would invalidate the transfer of all risks and benefits to the factor. Italian staff severance pay (Trattamento di fine rapporto - “TFR”) The “TFR” provision for Italy-based employee benefits is to be construed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using the unit credit projection method (see previous paragraph 10 - under Provisions for Risks and Charges - Retirement Payments and Similar Obligations). This method distributes the cost of the benefit evenly over the employee’s working life. The liability is determined as the present value of average future payments adjusted according to the ratio of years of service to total years of service at the time of payment of the benefit. Following pension reform by Law No.252/2005, TFR installments accrued to 31 December 2006, to the date between 1 January 2007 and 30 June 2007 on which the employee opted to devolve their TFR to a supplementary pension fund) stay in the employer and are considered a post-employment defined benefit plan therefore incurring actuarial valuation, though with simplified actuarial assumptions, i.e. forecast future pay rises are not considered. TFR installments accrued since 1 January 2007 (date of Law 252’s coming into effect) (or since the date between 1 January 2007 and 30 June 2007) have been, at the employee’s discretion, either (i) paid into a pension fund or (ii) left in the company and (where the company has in excess of 50 employees) are paid into an INPS Treasury fund by the employer, are assimilated to a defined-contribution plan. Costs relating to TFR are recognised in the Income Statement in item “160. Administrative costs: a) staff expense” and include, for the part of obligations already exiting at the date of the reform (assimilated to a defined benefit plan), interest cost accrued in the year; for the part of plan considered defined contribution plan, the accrued installments for the year paid into the complementary pension scheme or to the Treasury fund of INPS. Actuarial gains (losses), i.e. the difference between the liabilities’ carrying value and the present value of the obligation at the end of the period are recorded in the Statement of Other Comprehensive Income and disclosed in the Revaluation reserves according to IAS19 Revised. Share-based payment Equity-settled payments made to employees or other staff in consideration of goods received or services rendered, using equity instruments comprise: • Stock options; • Performance shares (i.e. awarded on attainment of certain objectives); • Restricted shares (i.e. subject to a lock-up period). Considering the difficulty of reliably measuring the fair value of the services rendered against equity-settled payments, reference is made to the fair value of the instruments themselves, measured at the date of the allocation. Company financial statements | Notes to the accounts Part A - Accounting policies 578 2018 Annual Report and Accounts · UniCredit Treasury shares Changes in treasury shares are reported as a direct contra item to Shareholders' Equity, i.e. as a reduction to the latter in the amount of any purchases, and as an increase in the amount of any sales proceeds. This entails that, if treasury shares are subsequently sold, the difference between the sale price and the related post-tax repurchase cost is recognised entirely as a contra item to Shareholders' Equity. Finance Leases Finance leases effectively transfer all the risks and benefits of ownership of an asset to the lessee; ownership of the asset is transferred to the lessee, however not necessarily at contractual maturity. The lessee acquires the economic benefit of the use of the leased asset for most of its useful life, in exchange for a commitment to pay to the lessor an amount approximately equivalent to the fair value of the asset and related finance costs. Recognition in the lessor’s accounts is as follows: • in assets, the value of the loan, less the principal of lease payments due and paid by the lessee; • in profit or loss, interest received. See previous paragraphs 6 - Property, Plant and Equipment and 7 - Intangible Assets below for treatment of the lessee’s assets. Factoring Loans acquired in factoring transactions with recourse are recognised to the extent of the advances granted to customers on their consideration. Loans acquired without recourse are recognised as such once it has been established that there are no contractual clauses that would invalidate the transfer of all risks and benefits to the factor. Italian staff severance pay (Trattamento di fine rapporto - “TFR”) The “TFR” provision for Italy-based employee benefits is to be construed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using the unit credit projection method (see previous paragraph 10 - under Provisions for Risks and Charges - Retirement Payments and Similar Obligations). This method distributes the cost of the benefit evenly over the employee’s working life. The liability is determined as the present value of average future payments adjusted according to the ratio of years of service to total years of service at the time of payment of the benefit. Following pension reform by Law No.252/2005, TFR installments accrued to 31 December 2006, to the date between 1 January 2007 and 30 June 2007 on which the employee opted to devolve their TFR to a supplementary pension fund) stay in the employer and are considered a post-employment defined benefit plan therefore incurring actuarial valuation, though with simplified actuarial assumptions, i.e. forecast future pay rises are not considered. TFR installments accrued since 1 January 2007 (date of Law 252’s coming into effect) (or since the date between 1 January 2007 and 30 June 2007) have been, at the employee’s discretion, either (i) paid into a pension fund or (ii) left in the company and (where the company has in excess of 50 employees) are paid into an INPS Treasury fund by the employer, are assimilated to a defined-contribution plan. Costs relating to TFR are recognised in the Income Statement in item “160. Administrative costs: a) staff expense” and include, for the part of obligations already exiting at the date of the reform (assimilated to a defined benefit plan), interest cost accrued in the year; for the part of plan considered defined contribution plan, the accrued installments for the year paid into the complementary pension scheme or to the Treasury fund of INPS. Actuarial gains (losses), i.e. the difference between the liabilities’ carrying value and the present value of the obligation at the end of the period are recorded in the Statement of Other Comprehensive Income and disclosed in the Revaluation reserves according to IAS19 Revised. Share-based payment Equity-settled payments made to employees or other staff in consideration of goods received or services rendered, using equity instruments comprise: • Stock options; • Performance shares (i.e. awarded on attainment of certain objectives); • Restricted shares (i.e. subject to a lock-up period). Considering the difficulty of reliably measuring the fair value of the services rendered against equity-settled payments, reference is made to the fair value of the instruments themselves, measured at the date of the allocation. Company financial statements | Notes to the accounts Part A - Accounting policies 578 2018 Annual Report and Accounts · UniCredit Treasury shares Changes in treasury shares are reported as a direct contra item to Shareholders' Equity, i.e. as a reduction to the latter in the amount of any purchases, and as an increase in the amount of any sales proceeds. This entails that, if treasury shares are subsequently sold, the difference between the sale price and the related post-tax repurchase cost is recognised entirely as a contra item to Shareholders' Equity. Finance Leases Finance leases effectively transfer all the risks and benefits of ownership of an asset to the lessee; ownership of the asset is transferred to the lessee, however not necessarily at contractual maturity. The lessee acquires the economic benefit of the use of the leased asset for most of its useful life, in exchange for a commitment to pay to the lessor an amount approximately equivalent to the fair value of the asset and related finance costs. Recognition in the lessor’s accounts is as follows: • in assets, the value of the loan, less the principal of lease payments due and paid by the lessee; • in profit or loss, interest received. See previous paragraphs 6 - Property, Plant and Equipment and 7 - Intangible Assets below for treatment of the lessee’s assets. Factoring Loans acquired in factoring transactions with recourse are recognised to the extent of the advances granted to customers on their consideration. Loans acquired without recourse are recognised as such once it has been established that there are no contractual clauses that would invalidate the transfer of all risks and benefits to the factor. Italian staff severance pay (Trattamento di fine rapporto - “TFR”) The “TFR” provision for Italy-based employee benefits is to be construed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using the unit credit projection method (see previous paragraph 10 - under Provisions for Risks and Charges - Retirement Payments and Similar Obligations). This method distributes the cost of the benefit evenly over the employee’s working life. The liability is determined as the present value of average future payments adjusted according to the ratio of years of service to total years of service at the time of payment of the benefit. Following pension reform by Law No.252/2005, TFR installments accrued to 31 December 2006, to the date between 1 January 2007 and 30 June 2007 on which the employee opted to devolve their TFR to a supplementary pension fund) stay in the employer and are considered a post-employment defined benefit plan therefore incurring actuarial valuation, though with simplified actuarial assumptions, i.e. forecast future pay rises are not considered. TFR installments accrued since 1 January 2007 (date of Law 252’s coming into effect) (or since the date between 1 January 2007 and 30 June 2007) have been, at the employee’s discretion, either (i) paid into a pension fund or (ii) left in the company and (where the company has in excess of 50 employees) are paid into an INPS Treasury fund by the employer, are assimilated to a defined-contribution plan. Costs relating to TFR are recognised in the Income Statement in item “160. Administrative costs: a) staff expense” and include, for the part of obligations already exiting at the date of the reform (assimilated to a defined benefit plan), interest cost accrued in the year; for the part of plan considered defined contribution plan, the accrued installments for the year paid into the complementary pension scheme or to the Treasury fund of INPS. Actuarial gains (losses), i.e. the difference between the liabilities’ carrying value and the present value of the obligation at the end of the period are recorded in the Statement of Other Comprehensive Income and disclosed in the Revaluation reserves according to IAS19 Revised. Share-based payment Equity-settled payments made to employees or other staff in consideration of goods received or services rendered, using equity instruments comprise: • Stock options; • Performance shares (i.e. awarded on attainment of certain objectives); • Restricted shares (i.e. subject to a lock-up period). Considering the difficulty of reliably measuring the fair value of the services rendered against equity-settled payments, reference is made to the fair value of the instruments themselves, measured at the date of the allocation. Company financial statements | Notes to the accounts Part A - Accounting policies 578 2018 Annual Report and Accounts · UniCredit Treasury shares Changes in treasury shares are reported as a direct contra item to Shareholders' Equity, i.e. as a reduction to the latter in the amount of any purchases, and as an increase in the amount of any sales proceeds. This entails that, if treasury shares are subsequently sold, the difference between the sale price and the related post-tax repurchase cost is recognised entirely as a contra item to Shareholders' Equity. Finance Leases Finance leases effectively transfer all the risks and benefits of ownership of an asset to the lessee; ownership of the asset is transferred to the lessee, however not necessarily at contractual maturity. The lessee acquires the economic benefit of the use of the leased asset for most of its useful life, in exchange for a commitment to pay to the lessor an amount approximately equivalent to the fair value of the asset and related finance costs. Recognition in the lessor’s accounts is as follows: • in assets, the value of the loan, less the principal of lease payments due and paid by the lessee; • in profit or loss, interest received. See previous paragraphs 6 - Property, Plant and Equipment and 7 - Intangible Assets below for treatment of the lessee’s assets. Factoring Loans acquired in factoring transactions with recourse are recognised to the extent of the advances granted to customers on their consideration. Loans acquired without recourse are recognised as such once it has been established that there are no contractual clauses that would invalidate the transfer of all risks and benefits to the factor. Italian staff severance pay (Trattamento di fine rapporto - “TFR”) The “TFR” provision for Italy-based employee benefits is to be construed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using the unit credit projection method (see previous paragraph 10 - under Provisions for Risks and Charges - Retirement Payments and Similar Obligations). This method distributes the cost of the benefit evenly over the employee’s working life. The liability is determined as the present value of average future payments adjusted according to the ratio of years of service to total years of service at the time of payment of the benefit. Following pension reform by Law No.252/2005, TFR installments accrued to 31 December 2006, to the date between 1 January 2007 and 30 June 2007 on which the employee opted to devolve their TFR to a supplementary pension fund) stay in the employer and are considered a post-employment defined benefit plan therefore incurring actuarial valuation, though with simplified actuarial assumptions, i.e. forecast future pay rises are not considered. TFR installments accrued since 1 January 2007 (date of Law 252’s coming into effect) (or since the date between 1 January 2007 and 30 June 2007) have been, at the employee’s discretion, either (i) paid into a pension fund or (ii) left in the company and (where the company has in excess of 50 employees) are paid into an INPS Treasury fund by the employer, are assimilated to a defined-contribution plan. Costs relating to TFR are recognised in the Income Statement in item “160. Administrative costs: a) staff expense” and include, for the part of obligations already exiting at the date of the reform (assimilated to a defined benefit plan), interest cost accrued in the year; for the part of plan considered defined contribution plan, the accrued installments for the year paid into the complementary pension scheme or to the Treasury fund of INPS. Actuarial gains (losses), i.e. the difference between the liabilities’ carrying value and the present value of the obligation at the end of the period are recorded in the Statement of Other Comprehensive Income and disclosed in the Revaluation reserves according to IAS19 Revised. Share-based payment Equity-settled payments made to employees or other staff in consideration of goods received or services rendered, using equity instruments comprise: • Stock options; • Performance shares (i.e. awarded on attainment of certain objectives); • Restricted shares (i.e. subject to a lock-up period). Considering the difficulty of reliably measuring the fair value of the services rendered against equity-settled payments, reference is made to the fair value of the instruments themselves, measured at the date of the allocation. Company financial statements | Notes to the accounts Part A - Accounting policies 578 2018 Annual Report and Accounts · UniCredit Treasury shares Changes in treasury shares are reported as a direct contra item to Shareholders' Equity, i.e. as a reduction to the latter in the amount of any purchases, and as an increase in the amount of any sales proceeds. This entails that, if treasury shares are subsequently sold, the difference between the sale price and the related post-tax repurchase cost is recognised entirely as a contra item to Shareholders' Equity. Finance Leases Finance leases effectively transfer all the risks and benefits of ownership of an asset to the lessee; ownership of the asset is transferred to the lessee, however not necessarily at contractual maturity. The lessee acquires the economic benefit of the use of the leased asset for most of its useful life, in exchange for a commitment to pay to the lessor an amount approximately equivalent to the fair value of the asset and related finance costs. Recognition in the lessor’s accounts is as follows: • in assets, the value of the loan, less the principal of lease payments due and paid by the lessee; • in profit or loss, interest received. See previous paragraphs 6 - Property, Plant and Equipment and 7 - Intangible Assets below for treatment of the lessee’s assets. Factoring Loans acquired in factoring transactions with recourse are recognised to the extent of the advances granted to customers on their consideration. Loans acquired without recourse are recognised as such once it has been established that there are no contractual clauses that would invalidate the transfer of all risks and benefits to the factor. Italian staff severance pay (Trattamento di fine rapporto - “TFR”) The “TFR” provision for Italy-based employee benefits is to be construed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using the unit credit projection method (see previous paragraph 10 - under Provisions for Risks and Charges - Retirement Payments and Similar Obligations). This method distributes the cost of the benefit evenly over the employee’s working life. The liability is determined as the present value of average future payments adjusted according to the ratio of years of service to total years of service at the time of payment of the benefit. Following pension reform by Law No.252/2005, TFR installments accrued to 31 December 2006, to the date between 1 January 2007 and 30 June 2007 on which the employee opted to devolve their TFR to a supplementary pension fund) stay in the employer and are considered a post-employment defined benefit plan therefore incurring actuarial valuation, though with simplified actuarial assumptions, i.e. forecast future pay rises are not considered. TFR installments accrued since 1 January 2007 (date of Law 252’s coming into effect) (or since the date between 1 January 2007 and 30 June 2007) have been, at the employee’s discretion, either (i) paid into a pension fund or (ii) left in the company and (where the company has in excess of 50 employees) are paid into an INPS Treasury fund by the employer, are assimilated to a defined-contribution plan. Costs relating to TFR are recognised in the Income Statement in item “160. Administrative costs: a) staff expense” and include, for the part of obligations already exiting at the date of the reform (assimilated to a defined benefit plan), interest cost accrued in the year; for the part of plan considered defined contribution plan, the accrued installments for the year paid into the complementary pension scheme or to the Treasury fund of INPS. Actuarial gains (losses), i.e. the difference between the liabilities’ carrying value and the present value of the obligation at the end of the period are recorded in the Statement of Other Comprehensive Income and disclosed in the Revaluation reserves according to IAS19 Revised. Share-based payment Equity-settled payments made to employees or other staff in consideration of goods received or services rendered, using equity instruments comprise: • Stock options; • Performance shares (i.e. awarded on attainment of certain objectives); • Restricted shares (i.e. subject to a lock-up period). Considering the difficulty of reliably measuring the fair value of the services rendered against equity-settled payments, reference is made to the fair value of the instruments themselves, measured at the date of the allocation. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 579 This fair value is recognised as cost in profit and loss item “160. Administrative costs: a) staff expenses” offsetting the Shareholders’ Equity item “140. Reserves”, on an accruals basis over the period in which the services are rendered. The fair value of a cash-settled share-based payment, the services acquired and the liability incurred are measured at the fair value of the liability, recognised in item “80. Other liabilities”. The fair value of the liability, as long as it remains unsettled, is remeasured at each balance sheet date and all changes in fair value are recognised in profit and loss item “160. Administrative costs: a) staff costs”. Guarantees and credit derivatives in the same class Guarantees and credit derivatives in the same class measured under IFRS9 (i.e. contracts under which the issuer make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument) are initially and subsequently (on remeasurement following impairment losses) recognised in item “100. Provisions for risks and charges: a) commitments and guarantees given”. On initial recognition guarantees given are recognised at fair value, which usually corresponds to the amount received when the guarantee is issued. After the initial recognition, guarantees given are recognised at the higher of the initially recognised value, net of any amortised portion, and the estimated amount required to meet the obligation. The effects of valuation, relating to any impairment of the underlying, are recognised in the same balance-sheet item contra item “170. Net provisions for risks and charges: a)commitments and financial guarantees given” in the income statement. Offsetting financial assets and financial liabilities The accounting offsetting of assets and liabilities items has been performed according to IAS32, assessing the fulfillment of the following requirements: a) current legally enforceable right to set off the recognised amounts; b) intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously. In accordance with IFRS7, further information have been included in the table of Note to the accounts, in Part B - Other information. In these tables, in particular, following information have to be reported: • balance-sheet values, before and after the accounting offsetting effects, related to the assets and liabilities which meet the criteria for applying those effects; • values of the exposures which do not meet the above mentioned criteria, but are included in Master Netting Agreements, or similar agreements, which create the right to set-off only following specified circumstances (i.e. default events); • amounts of related collaterals. Amortised cost The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at the initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability. The effective interest method is a method of allocating the interest income or interest expense over the life of a financial asset or liability. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. The calculation includes all fees and basis points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. Commissions forming an integral part of the effective interest rate include loan drawdown fees or underwriting fees relating to a financial asset not designated at fair value, e.g., fees received as compensation for the assessment of the issuer’s or borrower’s financial situation, for valuation and registration of security, and generally for the completion of the transaction. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include financing costs or internal administrative or holding costs. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 579 This fair value is recognised as cost in profit and loss item “160. Administrative costs: a) staff expenses” offsetting the Shareholders’ Equity item “140. Reserves”, on an accruals basis over the period in which the services are rendered. The fair value of a cash-settled share-based payment, the services acquired and the liability incurred are measured at the fair value of the liability, recognised in item “80. Other liabilities”. The fair value of the liability, as long as it remains unsettled, is remeasured at each balance sheet date and all changes in fair value are recognised in profit and loss item “160. Administrative costs: a) staff costs”. Guarantees and credit derivatives in the same class Guarantees and credit derivatives in the same class measured under IFRS9 (i.e. contracts under which the issuer make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument) are initially and subsequently (on remeasurement following impairment losses) recognised in item “100. Provisions for risks and charges: a) commitments and guarantees given”. On initial recognition guarantees given are recognised at fair value, which usually corresponds to the amount received when the guarantee is issued. After the initial recognition, guarantees given are recognised at the higher of the initially recognised value, net of any amortised portion, and the estimated amount required to meet the obligation. The effects of valuation, relating to any impairment of the underlying, are recognised in the same balance-sheet item contra item “170. Net provisions for risks and charges: a)commitments and financial guarantees given” in the income statement. Offsetting financial assets and financial liabilities The accounting offsetting of assets and liabilities items has been performed according to IAS32, assessing the fulfillment of the following requirements: a) current legally enforceable right to set off the recognised amounts; b) intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously. In accordance with IFRS7, further information have been included in the table of Note to the accounts, in Part B - Other information. In these tables, in particular, following information have to be reported: • balance-sheet values, before and after the accounting offsetting effects, related to the assets and liabilities which meet the criteria for applying those effects; • values of the exposures which do not meet the above mentioned criteria, but are included in Master Netting Agreements, or similar agreements, which create the right to set-off only following specified circumstances (i.e. default events); • amounts of related collaterals. Amortised cost The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at the initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability. The effective interest method is a method of allocating the interest income or interest expense over the life of a financial asset or liability. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. The calculation includes all fees and basis points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. Commissions forming an integral part of the effective interest rate include loan drawdown fees or underwriting fees relating to a financial asset not designated at fair value, e.g., fees received as compensation for the assessment of the issuer’s or borrower’s financial situation, for valuation and registration of security, and generally for the completion of the transaction. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include financing costs or internal administrative or holding costs. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 579 This fair value is recognised as cost in profit and loss item “160. Administrative costs: a) staff expenses” offsetting the Shareholders’ Equity item “140. Reserves”, on an accruals basis over the period in which the services are rendered. The fair value of a cash-settled share-based payment, the services acquired and the liability incurred are measured at the fair value of the liability, recognised in item “80. Other liabilities”. The fair value of the liability, as long as it remains unsettled, is remeasured at each balance sheet date and all changes in fair value are recognised in profit and loss item “160. Administrative costs: a) staff costs”. Guarantees and credit derivatives in the same class Guarantees and credit derivatives in the same class measured under IFRS9 (i.e. contracts under which the issuer make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument) are initially and subsequently (on remeasurement following impairment losses) recognised in item “100. Provisions for risks and charges: a) commitments and guarantees given”. On initial recognition guarantees given are recognised at fair value, which usually corresponds to the amount received when the guarantee is issued. After the initial recognition, guarantees given are recognised at the higher of the initially recognised value, net of any amortised portion, and the estimated amount required to meet the obligation. The effects of valuation, relating to any impairment of the underlying, are recognised in the same balance-sheet item contra item “170. Net provisions for risks and charges: a)commitments and financial guarantees given” in the income statement. Offsetting financial assets and financial liabilities The accounting offsetting of assets and liabilities items has been performed according to IAS32, assessing the fulfillment of the following requirements: a) current legally enforceable right to set off the recognised amounts; b) intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously. In accordance with IFRS7, further information have been included in the table of Note to the accounts, in Part B - Other information. In these tables, in particular, following information have to be reported: • balance-sheet values, before and after the accounting offsetting effects, related to the assets and liabilities which meet the criteria for applying those effects; • values of the exposures which do not meet the above mentioned criteria, but are included in Master Netting Agreements, or similar agreements, which create the right to set-off only following specified circumstances (i.e. default events); • amounts of related collaterals. Amortised cost The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at the initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability. The effective interest method is a method of allocating the interest income or interest expense over the life of a financial asset or liability. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. The calculation includes all fees and basis points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. Commissions forming an integral part of the effective interest rate include loan drawdown fees or underwriting fees relating to a financial asset not designated at fair value, e.g., fees received as compensation for the assessment of the issuer’s or borrower’s financial situation, for valuation and registration of security, and generally for the completion of the transaction. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include financing costs or internal administrative or holding costs. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 579 This fair value is recognised as cost in profit and loss item “160. Administrative costs: a) staff expenses” offsetting the Shareholders’ Equity item “140. Reserves”, on an accruals basis over the period in which the services are rendered. The fair value of a cash-settled share-based payment, the services acquired and the liability incurred are measured at the fair value of the liability, recognised in item “80. Other liabilities”. The fair value of the liability, as long as it remains unsettled, is remeasured at each balance sheet date and all changes in fair value are recognised in profit and loss item “160. Administrative costs: a) staff costs”. Guarantees and credit derivatives in the same class Guarantees and credit derivatives in the same class measured under IFRS9 (i.e. contracts under which the issuer make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument) are initially and subsequently (on remeasurement following impairment losses) recognised in item “100. Provisions for risks and charges: a) commitments and guarantees given”. On initial recognition guarantees given are recognised at fair value, which usually corresponds to the amount received when the guarantee is issued. After the initial recognition, guarantees given are recognised at the higher of the initially recognised value, net of any amortised portion, and the estimated amount required to meet the obligation. The effects of valuation, relating to any impairment of the underlying, are recognised in the same balance-sheet item contra item “170. Net provisions for risks and charges: a)commitments and financial guarantees given” in the income statement. Offsetting financial assets and financial liabilities The accounting offsetting of assets and liabilities items has been performed according to IAS32, assessing the fulfillment of the following requirements: a) current legally enforceable right to set off the recognised amounts; b) intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously. In accordance with IFRS7, further information have been included in the table of Note to the accounts, in Part B - Other information. In these tables, in particular, following information have to be reported: • balance-sheet values, before and after the accounting offsetting effects, related to the assets and liabilities which meet the criteria for applying those effects; • values of the exposures which do not meet the above mentioned criteria, but are included in Master Netting Agreements, or similar agreements, which create the right to set-off only following specified circumstances (i.e. default events); • amounts of related collaterals. Amortised cost The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at the initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability. The effective interest method is a method of allocating the interest income or interest expense over the life of a financial asset or liability. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. The calculation includes all fees and basis points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. Commissions forming an integral part of the effective interest rate include loan drawdown fees or underwriting fees relating to a financial asset not designated at fair value, e.g., fees received as compensation for the assessment of the issuer’s or borrower’s financial situation, for valuation and registration of security, and generally for the completion of the transaction. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include financing costs or internal administrative or holding costs. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 579 This fair value is recognised as cost in profit and loss item “160. Administrative costs: a) staff expenses” offsetting the Shareholders’ Equity item “140. Reserves”, on an accruals basis over the period in which the services are rendered. The fair value of a cash-settled share-based payment, the services acquired and the liability incurred are measured at the fair value of the liability, recognised in item “80. Other liabilities”. The fair value of the liability, as long as it remains unsettled, is remeasured at each balance sheet date and all changes in fair value are recognised in profit and loss item “160. Administrative costs: a) staff costs”. Guarantees and credit derivatives in the same class Guarantees and credit derivatives in the same class measured under IFRS9 (i.e. contracts under which the issuer make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument) are initially and subsequently (on remeasurement following impairment losses) recognised in item “100. Provisions for risks and charges: a) commitments and guarantees given”. On initial recognition guarantees given are recognised at fair value, which usually corresponds to the amount received when the guarantee is issued. After the initial recognition, guarantees given are recognised at the higher of the initially recognised value, net of any amortised portion, and the estimated amount required to meet the obligation. The effects of valuation, relating to any impairment of the underlying, are recognised in the same balance-sheet item contra item “170. Net provisions for risks and charges: a)commitments and financial guarantees given” in the income statement. Offsetting financial assets and financial liabilities The accounting offsetting of assets and liabilities items has been performed according to IAS32, assessing the fulfillment of the following requirements: a) current legally enforceable right to set off the recognised amounts; b) intention either to settle on a net basis, or to realise the asset and settle the liability simultaneously. In accordance with IFRS7, further information have been included in the table of Note to the accounts, in Part B - Other information. In these tables, in particular, following information have to be reported: • balance-sheet values, before and after the accounting offsetting effects, related to the assets and liabilities which meet the criteria for applying those effects; • values of the exposures which do not meet the above mentioned criteria, but are included in Master Netting Agreements, or similar agreements, which create the right to set-off only following specified circumstances (i.e. default events); • amounts of related collaterals. Amortised cost The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at the initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability. The effective interest method is a method of allocating the interest income or interest expense over the life of a financial asset or liability. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. The calculation includes all fees and basis points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. Commissions forming an integral part of the effective interest rate include loan drawdown fees or underwriting fees relating to a financial asset not designated at fair value, e.g., fees received as compensation for the assessment of the issuer’s or borrower’s financial situation, for valuation and registration of security, and generally for the completion of the transaction. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include financing costs or internal administrative or holding costs. Company financial statements | Notes to the accounts Part A - Accounting policies 580 2018 Annual Report and Accounts · UniCredit Recognition of income and expenses Interest income and expenses Interest income and expenses and similar income and expense items relate to monetary items, i.e. liquidity and debt financial instruments (i) held for trading, (ii) designated at fair value (iii) mandatorily at fair value (iv) at fair value through other comprehensive income (v) at amortised cost and financial liabilities at amortised cost. Interest income and expense are recognised through profit or loss with respect to all instruments measured at amortised cost, using the effective interest method. Interest also includes the net credit or debit balance of differentials and margins on financial derivatives: • hedging interest-bearing assets and liabilities; • HfT but linked for business purposes to assets and liabilities designated as measured at fair value (fair value option); • linked for business purposes to HfT assets and liabilities paying differentials or margins on different maturities. Fees and commissions income and other operating income Fees and commissions income and other operating income are accounted for in P&L as the entity satisfies the performance obligation embedded in the contract, according to “IFRS15 Revenue from Contracts with Customers” rules. In particular: • if the performance obligation is satisfied at a specific moment (“point in time”), the related revenue is recognized in P&L when the service is provided; • if the performance obligation is satisfied over-time, the related revenue is recognized in P&L in order to reflect the progress of satisfaction of such obligation. Due to the above mentioned rules, transaction fees coming from trading in securities are typically booked in the moment when the service is provided while fees related to portfolios management, consulting or fund management are normally recognized during the term of the contract (input method). For this second type of fees, in fact, it is deemed that the input which are necessary to provide the service incorporated in the performance obligation are evenly distributed during the term of the contract. If the timing of cash-in is not aligned to the way the performance obligation is satisfied, the Bank accounts for a contract asset or a contract liability for the portion of revenue accrued in the period or to defer in the following periods. The amount of revenues linked to fees and commissions income and other operating income is measured based on contractual provisions. If the amount contractually foreseen is subject, totally or partially, to variability, a revenue has to be booked based on the most probable amount that the Bank expects to receive. Such amount is determined on the basis of all facts and circumstances considered relevant for the evaluation, that depend on the type of service provided and, in particular, on the presumption that it is not highly probable that the revenue recognized will not be significantly reversed. Please note, nevertheless, that for the services provided by the Bank such a variability is not usually foreseen. Finally, if a contract regards different goods/services whose performance obligations are not satisfied at the same time, the revenue is allocated among the different obligation proportionally to the stand-alone price of the single item delivered. These amounts will therefore accounted for in P&L on the basis of the timing of satisfaction of each obligation. This circumstance, which is not significant, might happen in case of customer loyalty programs that require to provide goods or services for free, or by cashing-in a price not at market condition, if the client reaches a specific volume of fees, or in case of programs to acquire new customers that assign a bonus to the target (in the form of a product or a service) when it becomes a new client. Dividends Dividends are recognised in the profit and loss account for the year in which their distribution has been approved. A.3 - Information on transfers between portfolios of financial assets There were no transfers between portfolios of financial assets in 2018. Company financial statements | Notes to the accounts Part A - Accounting policies 580 2018 Annual Report and Accounts · UniCredit Recognition of income and expenses Interest income and expenses Interest income and expenses and similar income and expense items relate to monetary items, i.e. liquidity and debt financial instruments (i) held for trading, (ii) designated at fair value (iii) mandatorily at fair value (iv) at fair value through other comprehensive income (v) at amortised cost and financial liabilities at amortised cost. Interest income and expense are recognised through profit or loss with respect to all instruments measured at amortised cost, using the effective interest method. Interest also includes the net credit or debit balance of differentials and margins on financial derivatives: • hedging interest-bearing assets and liabilities; • HfT but linked for business purposes to assets and liabilities designated as measured at fair value (fair value option); • linked for business purposes to HfT assets and liabilities paying differentials or margins on different maturities. Fees and commissions income and other operating income Fees and commissions income and other operating income are accounted for in P&L as the entity satisfies the performance obligation embedded in the contract, according to “IFRS15 Revenue from Contracts with Customers” rules. In particular: • if the performance obligation is satisfied at a specific moment (“point in time”), the related revenue is recognized in P&L when the service is provided; • if the performance obligation is satisfied over-time, the related revenue is recognized in P&L in order to reflect the progress of satisfaction of such obligation. Due to the above mentioned rules, transaction fees coming from trading in securities are typically booked in the moment when the service is provided while fees related to portfolios management, consulting or fund management are normally recognized during the term of the contract (input method). For this second type of fees, in fact, it is deemed that the input which are necessary to provide the service incorporated in the performance obligation are evenly distributed during the term of the contract. If the timing of cash-in is not aligned to the way the performance obligation is satisfied, the Bank accounts for a contract asset or a contract liability for the portion of revenue accrued in the period or to defer in the following periods. The amount of revenues linked to fees and commissions income and other operating income is measured based on contractual provisions. If the amount contractually foreseen is subject, totally or partially, to variability, a revenue has to be booked based on the most probable amount that the Bank expects to receive. Such amount is determined on the basis of all facts and circumstances considered relevant for the evaluation, that depend on the type of service provided and, in particular, on the presumption that it is not highly probable that the revenue recognized will not be significantly reversed. Please note, nevertheless, that for the services provided by the Bank such a variability is not usually foreseen. Finally, if a contract regards different goods/services whose performance obligations are not satisfied at the same time, the revenue is allocated among the different obligation proportionally to the stand-alone price of the single item delivered. These amounts will therefore accounted for in P&L on the basis of the timing of satisfaction of each obligation. This circumstance, which is not significant, might happen in case of customer loyalty programs that require to provide goods or services for free, or by cashing-in a price not at market condition, if the client reaches a specific volume of fees, or in case of programs to acquire new customers that assign a bonus to the target (in the form of a product or a service) when it becomes a new client. Dividends Dividends are recognised in the profit and loss account for the year in which their distribution has been approved. A.3 - Information on transfers between portfolios of financial assets There were no transfers between portfolios of financial assets in 2018. Company financial statements | Notes to the accounts Part A - Accounting policies 580 2018 Annual Report and Accounts · UniCredit Recognition of income and expenses Interest income and expenses Interest income and expenses and similar income and expense items relate to monetary items, i.e. liquidity and debt financial instruments (i) held for trading, (ii) designated at fair value (iii) mandatorily at fair value (iv) at fair value through other comprehensive income (v) at amortised cost and financial liabilities at amortised cost. Interest income and expense are recognised through profit or loss with respect to all instruments measured at amortised cost, using the effective interest method. Interest also includes the net credit or debit balance of differentials and margins on financial derivatives: • hedging interest-bearing assets and liabilities; • HfT but linked for business purposes to assets and liabilities designated as measured at fair value (fair value option); • linked for business purposes to HfT assets and liabilities paying differentials or margins on different maturities. Fees and commissions income and other operating income Fees and commissions income and other operating income are accounted for in P&L as the entity satisfies the performance obligation embedded in the contract, according to “IFRS15 Revenue from Contracts with Customers” rules. In particular: • if the performance obligation is satisfied at a specific moment (“point in time”), the related revenue is recognized in P&L when the service is provided; • if the performance obligation is satisfied over-time, the related revenue is recognized in P&L in order to reflect the progress of satisfaction of such obligation. Due to the above mentioned rules, transaction fees coming from trading in securities are typically booked in the moment when the service is provided while fees related to portfolios management, consulting or fund management are normally recognized during the term of the contract (input method). For this second type of fees, in fact, it is deemed that the input which are necessary to provide the service incorporated in the performance obligation are evenly distributed during the term of the contract. If the timing of cash-in is not aligned to the way the performance obligation is satisfied, the Bank accounts for a contract asset or a contract liability for the portion of revenue accrued in the period or to defer in the following periods. The amount of revenues linked to fees and commissions income and other operating income is measured based on contractual provisions. If the amount contractually foreseen is subject, totally or partially, to variability, a revenue has to be booked based on the most probable amount that the Bank expects to receive. Such amount is determined on the basis of all facts and circumstances considered relevant for the evaluation, that depend on the type of service provided and, in particular, on the presumption that it is not highly probable that the revenue recognized will not be significantly reversed. Please note, nevertheless, that for the services provided by the Bank such a variability is not usually foreseen. Finally, if a contract regards different goods/services whose performance obligations are not satisfied at the same time, the revenue is allocated among the different obligation proportionally to the stand-alone price of the single item delivered. These amounts will therefore accounted for in P&L on the basis of the timing of satisfaction of each obligation. This circumstance, which is not significant, might happen in case of customer loyalty programs that require to provide goods or services for free, or by cashing-in a price not at market condition, if the client reaches a specific volume of fees, or in case of programs to acquire new customers that assign a bonus to the target (in the form of a product or a service) when it becomes a new client. Dividends Dividends are recognised in the profit and loss account for the year in which their distribution has been approved. A.3 - Information on transfers between portfolios of financial assets There were no transfers between portfolios of financial assets in 2018. Company financial statements | Notes to the accounts Part A - Accounting policies 580 2018 Annual Report and Accounts · UniCredit Recognition of income and expenses Interest income and expenses Interest income and expenses and similar income and expense items relate to monetary items, i.e. liquidity and debt financial instruments (i) held for trading, (ii) designated at fair value (iii) mandatorily at fair value (iv) at fair value through other comprehensive income (v) at amortised cost and financial liabilities at amortised cost. Interest income and expense are recognised through profit or loss with respect to all instruments measured at amortised cost, using the effective interest method. Interest also includes the net credit or debit balance of differentials and margins on financial derivatives: • hedging interest-bearing assets and liabilities; • HfT but linked for business purposes to assets and liabilities designated as measured at fair value (fair value option); • linked for business purposes to HfT assets and liabilities paying differentials or margins on different maturities. Fees and commissions income and other operating income Fees and commissions income and other operating income are accounted for in P&L as the entity satisfies the performance obligation embedded in the contract, according to “IFRS15 Revenue from Contracts with Customers” rules. In particular: • if the performance obligation is satisfied at a specific moment (“point in time”), the related revenue is recognized in P&L when the service is provided; • if the performance obligation is satisfied over-time, the related revenue is recognized in P&L in order to reflect the progress of satisfaction of such obligation. Due to the above mentioned rules, transaction fees coming from trading in securities are typically booked in the moment when the service is provided while fees related to portfolios management, consulting or fund management are normally recognized during the term of the contract (input method). For this second type of fees, in fact, it is deemed that the input which are necessary to provide the service incorporated in the performance obligation are evenly distributed during the term of the contract. If the timing of cash-in is not aligned to the way the performance obligation is satisfied, the Bank accounts for a contract asset or a contract liability for the portion of revenue accrued in the period or to defer in the following periods. The amount of revenues linked to fees and commissions income and other operating income is measured based on contractual provisions. If the amount contractually foreseen is subject, totally or partially, to variability, a revenue has to be booked based on the most probable amount that the Bank expects to receive. Such amount is determined on the basis of all facts and circumstances considered relevant for the evaluation, that depend on the type of service provided and, in particular, on the presumption that it is not highly probable that the revenue recognized will not be significantly reversed. Please note, nevertheless, that for the services provided by the Bank such a variability is not usually foreseen. Finally, if a contract regards different goods/services whose performance obligations are not satisfied at the same time, the revenue is allocated among the different obligation proportionally to the stand-alone price of the single item delivered. These amounts will therefore accounted for in P&L on the basis of the timing of satisfaction of each obligation. This circumstance, which is not significant, might happen in case of customer loyalty programs that require to provide goods or services for free, or by cashing-in a price not at market condition, if the client reaches a specific volume of fees, or in case of programs to acquire new customers that assign a bonus to the target (in the form of a product or a service) when it becomes a new client. Dividends Dividends are recognised in the profit and loss account for the year in which their distribution has been approved. A.3 - Information on transfers between portfolios of financial assets There were no transfers between portfolios of financial assets in 2018. Company financial statements | Notes to the accounts Part A - Accounting policies 580 2018 Annual Report and Accounts · UniCredit Recognition of income and expenses Interest income and expenses Interest income and expenses and similar income and expense items relate to monetary items, i.e. liquidity and debt financial instruments (i) held for trading, (ii) designated at fair value (iii) mandatorily at fair value (iv) at fair value through other comprehensive income (v) at amortised cost and financial liabilities at amortised cost. Interest income and expense are recognised through profit or loss with respect to all instruments measured at amortised cost, using the effective interest method. Interest also includes the net credit or debit balance of differentials and margins on financial derivatives: • hedging interest-bearing assets and liabilities; • HfT but linked for business purposes to assets and liabilities designated as measured at fair value (fair value option); • linked for business purposes to HfT assets and liabilities paying differentials or margins on different maturities. Fees and commissions income and other operating income Fees and commissions income and other operating income are accounted for in P&L as the entity satisfies the performance obligation embedded in the contract, according to “IFRS15 Revenue from Contracts with Customers” rules. In particular: • if the performance obligation is satisfied at a specific moment (“point in time”), the related revenue is recognized in P&L when the service is provided; • if the performance obligation is satisfied over-time, the related revenue is recognized in P&L in order to reflect the progress of satisfaction of such obligation. Due to the above mentioned rules, transaction fees coming from trading in securities are typically booked in the moment when the service is provided while fees related to portfolios management, consulting or fund management are normally recognized during the term of the contract (input method). For this second type of fees, in fact, it is deemed that the input which are necessary to provide the service incorporated in the performance obligation are evenly distributed during the term of the contract. If the timing of cash-in is not aligned to the way the performance obligation is satisfied, the Bank accounts for a contract asset or a contract liability for the portion of revenue accrued in the period or to defer in the following periods. The amount of revenues linked to fees and commissions income and other operating income is measured based on contractual provisions. If the amount contractually foreseen is subject, totally or partially, to variability, a revenue has to be booked based on the most probable amount that the Bank expects to receive. Such amount is determined on the basis of all facts and circumstances considered relevant for the evaluation, that depend on the type of service provided and, in particular, on the presumption that it is not highly probable that the revenue recognized will not be significantly reversed. Please note, nevertheless, that for the services provided by the Bank such a variability is not usually foreseen. Finally, if a contract regards different goods/services whose performance obligations are not satisfied at the same time, the revenue is allocated among the different obligation proportionally to the stand-alone price of the single item delivered. These amounts will therefore accounted for in P&L on the basis of the timing of satisfaction of each obligation. This circumstance, which is not significant, might happen in case of customer loyalty programs that require to provide goods or services for free, or by cashing-in a price not at market condition, if the client reaches a specific volume of fees, or in case of programs to acquire new customers that assign a bonus to the target (in the form of a product or a service) when it becomes a new client. Dividends Dividends are recognised in the profit and loss account for the year in which their distribution has been approved. A.3 - Information on transfers between portfolios of financial assets There were no transfers between portfolios of financial assets in 2018. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 581 A.4 - Information on fair value Qualitative information This section presents a disclosure on fair value as required by IFRS13. Fair value is the price that could be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants in the principal market at the measurement date (i.e. an exit price). The fair value of a financial liability with a demand feature (e.g. a demand deposit) cannot be lower than the amount payable on demand, discounted from the first date that the amount could be required to be paid. For financial instruments listed in active markets the fair value is determined on the basis of official prices in the principal market to which the Group has access (Mark to Market). A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from a pricing service, the dealer, the broker, the agency that determines prices or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If a published price quotation in an active market does not exist for a financial instrument in its entirety, but active markets exist for its component parts, fair value can be determined on the basis of the relevant market prices for the component parts. If the observable prices in active market or other observable inputs, such as the quoted price of a similar instrument in an active market, the Group may use another valuation techniques, such as: • a market approach (e.g. using quoted prices for similar liabilities or equity instruments held by other parties as assets); • cost approach (e.g. it reflects the amount that would be required currently to replace the service capacity of an asset, that is the current replacement cost); • an income approach (e.g. a present value technique that takes into account the future cash flows that a market participant would expect to receive from holding the liability or equity instrument as an asset). The Group uses valuation models (Mark to Model) in keeping with the methods generally accepted and used by the market. Valuation models include techniques based on the discounting of future cash flows and on volatility estimates, and they are subject to revision both during their development and periodically in order to ensure their consistency with the objectives of the valuation. These methods use inputs based on prices set in recent transactions for the instrument being valued and/or prices/quotations for instruments having similar characteristics in terms of risk profile. Indeed, these prices/quotations are relevant for determining significant parameters in terms of credit, liquidity and price risk of the instrument being valued. Reference to these market parameters allows to limit the discretionary nature of the valuation, and ensures that the resulting fair value can be verified. If, for one or more risk factors it is not possible to refer to market data, the valuation models employed use estimates based on historical data as inputs. As a further guarantee of the objectivity of valuations derived from valuation models, the Group employs: • Independent price verifications (IPVs); • Fair value adjustments (FVAs). Independent price verification requires that the prices are verified at least monthly by Risk Management units that are independent from the units that assume the risk exposure. This verification calls for comparing and adjusting the price in line with valuations obtained from independent market participants. For instruments not quoted in active markets, the above verification process uses prices contributed by info providers as a reference, and assigns a greater weighting to those prices that are considered representative of the instrument being valued. This valuation can include the "executability" of the transaction at the price observed, the number of contributors, the degree of similarity of the financial instruments, the consistency of prices from different sources, and the process followed by the info provider to obtain the information. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 581 A.4 - Information on fair value Qualitative information This section presents a disclosure on fair value as required by IFRS13. Fair value is the price that could be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants in the principal market at the measurement date (i.e. an exit price). The fair value of a financial liability with a demand feature (e.g. a demand deposit) cannot be lower than the amount payable on demand, discounted from the first date that the amount could be required to be paid. For financial instruments listed in active markets the fair value is determined on the basis of official prices in the principal market to which the Group has access (Mark to Market). A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from a pricing service, the dealer, the broker, the agency that determines prices or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If a published price quotation in an active market does not exist for a financial instrument in its entirety, but active markets exist for its component parts, fair value can be determined on the basis of the relevant market prices for the component parts. If the observable prices in active market or other observable inputs, such as the quoted price of a similar instrument in an active market, the Group may use another valuation techniques, such as: • a market approach (e.g. using quoted prices for similar liabilities or equity instruments held by other parties as assets); • cost approach (e.g. it reflects the amount that would be required currently to replace the service capacity of an asset, that is the current replacement cost); • an income approach (e.g. a present value technique that takes into account the future cash flows that a market participant would expect to receive from holding the liability or equity instrument as an asset). The Group uses valuation models (Mark to Model) in keeping with the methods generally accepted and used by the market. Valuation models include techniques based on the discounting of future cash flows and on volatility estimates, and they are subject to revision both during their development and periodically in order to ensure their consistency with the objectives of the valuation. These methods use inputs based on prices set in recent transactions for the instrument being valued and/or prices/quotations for instruments having similar characteristics in terms of risk profile. Indeed, these prices/quotations are relevant for determining significant parameters in terms of credit, liquidity and price risk of the instrument being valued. Reference to these market parameters allows to limit the discretionary nature of the valuation, and ensures that the resulting fair value can be verified. If, for one or more risk factors it is not possible to refer to market data, the valuation models employed use estimates based on historical data as inputs. As a further guarantee of the objectivity of valuations derived from valuation models, the Group employs: • Independent price verifications (IPVs); • Fair value adjustments (FVAs). Independent price verification requires that the prices are verified at least monthly by Risk Management units that are independent from the units that assume the risk exposure. This verification calls for comparing and adjusting the price in line with valuations obtained from independent market participants. For instruments not quoted in active markets, the above verification process uses prices contributed by info providers as a reference, and assigns a greater weighting to those prices that are considered representative of the instrument being valued. This valuation can include the "executability" of the transaction at the price observed, the number of contributors, the degree of similarity of the financial instruments, the consistency of prices from different sources, and the process followed by the info provider to obtain the information. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 581 A.4 - Information on fair value Qualitative information This section presents a disclosure on fair value as required by IFRS13. Fair value is the price that could be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants in the principal market at the measurement date (i.e. an exit price). The fair value of a financial liability with a demand feature (e.g. a demand deposit) cannot be lower than the amount payable on demand, discounted from the first date that the amount could be required to be paid. For financial instruments listed in active markets the fair value is determined on the basis of official prices in the principal market to which the Group has access (Mark to Market). A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from a pricing service, the dealer, the broker, the agency that determines prices or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If a published price quotation in an active market does not exist for a financial instrument in its entirety, but active markets exist for its component parts, fair value can be determined on the basis of the relevant market prices for the component parts. If the observable prices in active market or other observable inputs, such as the quoted price of a similar instrument in an active market, the Group may use another valuation techniques, such as: • a market approach (e.g. using quoted prices for similar liabilities or equity instruments held by other parties as assets); • cost approach (e.g. it reflects the amount that would be required currently to replace the service capacity of an asset, that is the current replacement cost); • an income approach (e.g. a present value technique that takes into account the future cash flows that a market participant would expect to receive from holding the liability or equity instrument as an asset). The Group uses valuation models (Mark to Model) in keeping with the methods generally accepted and used by the market. Valuation models include techniques based on the discounting of future cash flows and on volatility estimates, and they are subject to revision both during their development and periodically in order to ensure their consistency with the objectives of the valuation. These methods use inputs based on prices set in recent transactions for the instrument being valued and/or prices/quotations for instruments having similar characteristics in terms of risk profile. Indeed, these prices/quotations are relevant for determining significant parameters in terms of credit, liquidity and price risk of the instrument being valued. Reference to these market parameters allows to limit the discretionary nature of the valuation, and ensures that the resulting fair value can be verified. If, for one or more risk factors it is not possible to refer to market data, the valuation models employed use estimates based on historical data as inputs. As a further guarantee of the objectivity of valuations derived from valuation models, the Group employs: • Independent price verifications (IPVs); • Fair value adjustments (FVAs). Independent price verification requires that the prices are verified at least monthly by Risk Management units that are independent from the units that assume the risk exposure. This verification calls for comparing and adjusting the price in line with valuations obtained from independent market participants. For instruments not quoted in active markets, the above verification process uses prices contributed by info providers as a reference, and assigns a greater weighting to those prices that are considered representative of the instrument being valued. This valuation can include the "executability" of the transaction at the price observed, the number of contributors, the degree of similarity of the financial instruments, the consistency of prices from different sources, and the process followed by the info provider to obtain the information. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 581 A.4 - Information on fair value Qualitative information This section presents a disclosure on fair value as required by IFRS13. Fair value is the price that could be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants in the principal market at the measurement date (i.e. an exit price). The fair value of a financial liability with a demand feature (e.g. a demand deposit) cannot be lower than the amount payable on demand, discounted from the first date that the amount could be required to be paid. For financial instruments listed in active markets the fair value is determined on the basis of official prices in the principal market to which the Group has access (Mark to Market). A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from a pricing service, the dealer, the broker, the agency that determines prices or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If a published price quotation in an active market does not exist for a financial instrument in its entirety, but active markets exist for its component parts, fair value can be determined on the basis of the relevant market prices for the component parts. If the observable prices in active market or other observable inputs, such as the quoted price of a similar instrument in an active market, the Group may use another valuation techniques, such as: • a market approach (e.g. using quoted prices for similar liabilities or equity instruments held by other parties as assets); • cost approach (e.g. it reflects the amount that would be required currently to replace the service capacity of an asset, that is the current replacement cost); • an income approach (e.g. a present value technique that takes into account the future cash flows that a market participant would expect to receive from holding the liability or equity instrument as an asset). The Group uses valuation models (Mark to Model) in keeping with the methods generally accepted and used by the market. Valuation models include techniques based on the discounting of future cash flows and on volatility estimates, and they are subject to revision both during their development and periodically in order to ensure their consistency with the objectives of the valuation. These methods use inputs based on prices set in recent transactions for the instrument being valued and/or prices/quotations for instruments having similar characteristics in terms of risk profile. Indeed, these prices/quotations are relevant for determining significant parameters in terms of credit, liquidity and price risk of the instrument being valued. Reference to these market parameters allows to limit the discretionary nature of the valuation, and ensures that the resulting fair value can be verified. If, for one or more risk factors it is not possible to refer to market data, the valuation models employed use estimates based on historical data as inputs. As a further guarantee of the objectivity of valuations derived from valuation models, the Group employs: • Independent price verifications (IPVs); • Fair value adjustments (FVAs). Independent price verification requires that the prices are verified at least monthly by Risk Management units that are independent from the units that assume the risk exposure. This verification calls for comparing and adjusting the price in line with valuations obtained from independent market participants. For instruments not quoted in active markets, the above verification process uses prices contributed by info providers as a reference, and assigns a greater weighting to those prices that are considered representative of the instrument being valued. This valuation can include the "executability" of the transaction at the price observed, the number of contributors, the degree of similarity of the financial instruments, the consistency of prices from different sources, and the process followed by the info provider to obtain the information. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 581 A.4 - Information on fair value Qualitative information This section presents a disclosure on fair value as required by IFRS13. Fair value is the price that could be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants in the principal market at the measurement date (i.e. an exit price). The fair value of a financial liability with a demand feature (e.g. a demand deposit) cannot be lower than the amount payable on demand, discounted from the first date that the amount could be required to be paid. For financial instruments listed in active markets the fair value is determined on the basis of official prices in the principal market to which the Group has access (Mark to Market). A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from a pricing service, the dealer, the broker, the agency that determines prices or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If a published price quotation in an active market does not exist for a financial instrument in its entirety, but active markets exist for its component parts, fair value can be determined on the basis of the relevant market prices for the component parts. If the observable prices in active market or other observable inputs, such as the quoted price of a similar instrument in an active market, the Group may use another valuation techniques, such as: • a market approach (e.g. using quoted prices for similar liabilities or equity instruments held by other parties as assets); • cost approach (e.g. it reflects the amount that would be required currently to replace the service capacity of an asset, that is the current replacement cost); • an income approach (e.g. a present value technique that takes into account the future cash flows that a market participant would expect to receive from holding the liability or equity instrument as an asset). The Group uses valuation models (Mark to Model) in keeping with the methods generally accepted and used by the market. Valuation models include techniques based on the discounting of future cash flows and on volatility estimates, and they are subject to revision both during their development and periodically in order to ensure their consistency with the objectives of the valuation. These methods use inputs based on prices set in recent transactions for the instrument being valued and/or prices/quotations for instruments having similar characteristics in terms of risk profile. Indeed, these prices/quotations are relevant for determining significant parameters in terms of credit, liquidity and price risk of the instrument being valued. Reference to these market parameters allows to limit the discretionary nature of the valuation, and ensures that the resulting fair value can be verified. If, for one or more risk factors it is not possible to refer to market data, the valuation models employed use estimates based on historical data as inputs. As a further guarantee of the objectivity of valuations derived from valuation models, the Group employs: • Independent price verifications (IPVs); • Fair value adjustments (FVAs). Independent price verification requires that the prices are verified at least monthly by Risk Management units that are independent from the units that assume the risk exposure. This verification calls for comparing and adjusting the price in line with valuations obtained from independent market participants. For instruments not quoted in active markets, the above verification process uses prices contributed by info providers as a reference, and assigns a greater weighting to those prices that are considered representative of the instrument being valued. This valuation can include the "executability" of the transaction at the price observed, the number of contributors, the degree of similarity of the financial instruments, the consistency of prices from different sources, and the process followed by the info provider to obtain the information. Company financial statements | Notes to the accounts Part A - Accounting policies 582 2018 Annual Report and Accounts · UniCredit A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used Hereby we provide IFRS13 disclosure requirements about accounting portfolios measured at fair value on a recurring basis, not measured at fair value, or measured at fair value on a non-recurring basis. Assets and liabilities measured at fair value on a recurring basis Fixed-Income securities Fixed-Income securities are priced in a two tier process depending on the liquidity in the respective market. Liquid instruments in active markets are marked to market and consequently positions in these instruments are disclosed in reference to Fair Value Hierarchy under Level 144. In order to assess it, within the global bond Independent Price Verification (IPV) process a daily Liquidity Indicator is defined taking into account: • the number of executable bid/ask quotes, • their relative sizes and spreads. Such indicator is tracked over a 20 business days time window in order to obtain a stable monthly indicator. Instruments not traded in active markets are marked to model based on implied credit spread curves derived from the former Level 1 instruments. The model maximises the use of observable input and minimises the use of unobservable inputs. With this respect, depending on the proximity of the credit spread curve applied, the bonds are disclosed as Level 2 or Level 3, Level 3 is applied in case credit spread curves used are significantly unobservable. Under fair value accounting, fair value adjustments for liquidity and model deficiencies compensate for the lack of market observables for the Level 2 and Level 3 positions. In the global bond IPV process market prices of Level 1 bonds and pricing models for illiquid bonds are regularly verified for accuracy. Structured financial products The fair value of structured financial products not quoted is determines on active markets using the appropriate derivative valuation methodology given the nature of the embedded structure (when this is not to be separated). Such instruments are classified as Level 2 or Level 3 depending on the observability of significant inputs to the model. Asset Backed Securities UniCredit valuation process relies on internal policies centred on: • extension and implementation across all the Group’s Legal Entities of an independent Price Verification (IPV) process suited to the changed market conditions for Structured Credit Bonds; • integration of current Fair Value Adjustments Policy. According to the IPV process the quality of a price is assessed based upon the availability of quotes of independent market players for identical assets. The process relies first on consensus data provider as reliable collector of market quotes. As a second step, prices are assessed by benchmarking each security to a pool of similar securities with available market quotes. An alternative approach consists in evaluating the instrument through the use of quantitative pricing models, which are applicable every time that information regarding market participants assumptions on model parameters are reasonably made available without excessive costs or efforts. Derivatives Fair value of derivatives not traded in an active market is determined using a mark-to-model valuation technique. In such cases, where active markets exist for its component parts, then fair value is determined on the basis of the relevant market prices for the component parts. Valuation techniques that are based on significant inputs that are observable are referred to as Level 2 valuations, while those based on techniques that use significant unobservable inputs are referred to as Level 3 valuations. Equity instruments Equity Instruments are assigned to Level 1 when a quoted price is available on a liquid market and to Level 3 when no quotations are available or quotations have been suspended indefinitely. These instruments are classifies as Level 2 only when trading volume on the market where the instrument is quoted has decreased significantly. 44 As far as Italian Government bonds are concerned, it is worth stressing they are typically exchanged on the MTS market which is largely aknowledged as the main liquid platform for this kind of asset. Company financial statements | Notes to the accounts Part A - Accounting policies 582 2018 Annual Report and Accounts · UniCredit A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used Hereby we provide IFRS13 disclosure requirements about accounting portfolios measured at fair value on a recurring basis, not measured at fair value, or measured at fair value on a non-recurring basis. Assets and liabilities measured at fair value on a recurring basis Fixed-Income securities Fixed-Income securities are priced in a two tier process depending on the liquidity in the respective market. Liquid instruments in active markets are marked to market and consequently positions in these instruments are disclosed in reference to Fair Value Hierarchy under Level 144. In order to assess it, within the global bond Independent Price Verification (IPV) process a daily Liquidity Indicator is defined taking into account: • the number of executable bid/ask quotes, • their relative sizes and spreads. Such indicator is tracked over a 20 business days time window in order to obtain a stable monthly indicator. Instruments not traded in active markets are marked to model based on implied credit spread curves derived from the former Level 1 instruments. The model maximises the use of observable input and minimises the use of unobservable inputs. With this respect, depending on the proximity of the credit spread curve applied, the bonds are disclosed as Level 2 or Level 3, Level 3 is applied in case credit spread curves used are significantly unobservable. Under fair value accounting, fair value adjustments for liquidity and model deficiencies compensate for the lack of market observables for the Level 2 and Level 3 positions. In the global bond IPV process market prices of Level 1 bonds and pricing models for illiquid bonds are regularly verified for accuracy. Structured financial products The fair value of structured financial products not quoted is determines on active markets using the appropriate derivative valuation methodology given the nature of the embedded structure (when this is not to be separated). Such instruments are classified as Level 2 or Level 3 depending on the observability of significant inputs to the model. Asset Backed Securities UniCredit valuation process relies on internal policies centred on: • extension and implementation across all the Group’s Legal Entities of an independent Price Verification (IPV) process suited to the changed market conditions for Structured Credit Bonds; • integration of current Fair Value Adjustments Policy. According to the IPV process the quality of a price is assessed based upon the availability of quotes of independent market players for identical assets. The process relies first on consensus data provider as reliable collector of market quotes. As a second step, prices are assessed by benchmarking each security to a pool of similar securities with available market quotes. An alternative approach consists in evaluating the instrument through the use of quantitative pricing models, which are applicable every time that information regarding market participants assumptions on model parameters are reasonably made available without excessive costs or efforts. Derivatives Fair value of derivatives not traded in an active market is determined using a mark-to-model valuation technique. In such cases, where active markets exist for its component parts, then fair value is determined on the basis of the relevant market prices for the component parts. Valuation techniques that are based on significant inputs that are observable are referred to as Level 2 valuations, while those based on techniques that use significant unobservable inputs are referred to as Level 3 valuations. Equity instruments Equity Instruments are assigned to Level 1 when a quoted price is available on a liquid market and to Level 3 when no quotations are available or quotations have been suspended indefinitely. These instruments are classifies as Level 2 only when trading volume on the market where the instrument is quoted has decreased significantly. 44 As far as Italian Government bonds are concerned, it is worth stressing they are typically exchanged on the MTS market which is largely aknowledged as the main liquid platform for this kind of asset. Company financial statements | Notes to the accounts Part A - Accounting policies 582 2018 Annual Report and Accounts · UniCredit A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used Hereby we provide IFRS13 disclosure requirements about accounting portfolios measured at fair value on a recurring basis, not measured at fair value, or measured at fair value on a non-recurring basis. Assets and liabilities measured at fair value on a recurring basis Fixed-Income securities Fixed-Income securities are priced in a two tier process depending on the liquidity in the respective market. Liquid instruments in active markets are marked to market and consequently positions in these instruments are disclosed in reference to Fair Value Hierarchy under Level 144. In order to assess it, within the global bond Independent Price Verification (IPV) process a daily Liquidity Indicator is defined taking into account: • the number of executable bid/ask quotes, • their relative sizes and spreads. Such indicator is tracked over a 20 business days time window in order to obtain a stable monthly indicator. Instruments not traded in active markets are marked to model based on implied credit spread curves derived from the former Level 1 instruments. The model maximises the use of observable input and minimises the use of unobservable inputs. With this respect, depending on the proximity of the credit spread curve applied, the bonds are disclosed as Level 2 or Level 3, Level 3 is applied in case credit spread curves used are significantly unobservable. Under fair value accounting, fair value adjustments for liquidity and model deficiencies compensate for the lack of market observables for the Level 2 and Level 3 positions. In the global bond IPV process market prices of Level 1 bonds and pricing models for illiquid bonds are regularly verified for accuracy. Structured financial products The fair value of structured financial products not quoted is determines on active markets using the appropriate derivative valuation methodology given the nature of the embedded structure (when this is not to be separated). Such instruments are classified as Level 2 or Level 3 depending on the observability of significant inputs to the model. Asset Backed Securities UniCredit valuation process relies on internal policies centred on: • extension and implementation across all the Group’s Legal Entities of an independent Price Verification (IPV) process suited to the changed market conditions for Structured Credit Bonds; • integration of current Fair Value Adjustments Policy. According to the IPV process the quality of a price is assessed based upon the availability of quotes of independent market players for identical assets. The process relies first on consensus data provider as reliable collector of market quotes. As a second step, prices are assessed by benchmarking each security to a pool of similar securities with available market quotes. An alternative approach consists in evaluating the instrument through the use of quantitative pricing models, which are applicable every time that information regarding market participants assumptions on model parameters are reasonably made available without excessive costs or efforts. Derivatives Fair value of derivatives not traded in an active market is determined using a mark-to-model valuation technique. In such cases, where active markets exist for its component parts, then fair value is determined on the basis of the relevant market prices for the component parts. Valuation techniques that are based on significant inputs that are observable are referred to as Level 2 valuations, while those based on techniques that use significant unobservable inputs are referred to as Level 3 valuations. Equity instruments Equity Instruments are assigned to Level 1 when a quoted price is available on a liquid market and to Level 3 when no quotations are available or quotations have been suspended indefinitely. These instruments are classifies as Level 2 only when trading volume on the market where the instrument is quoted has decreased significantly. 44 As far as Italian Government bonds are concerned, it is worth stressing they are typically exchanged on the MTS market which is largely aknowledged as the main liquid platform for this kind of asset. Company financial statements | Notes to the accounts Part A - Accounting policies 582 2018 Annual Report and Accounts · UniCredit A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used Hereby we provide IFRS13 disclosure requirements about accounting portfolios measured at fair value on a recurring basis, not measured at fair value, or measured at fair value on a non-recurring basis. Assets and liabilities measured at fair value on a recurring basis Fixed-Income securities Fixed-Income securities are priced in a two tier process depending on the liquidity in the respective market. Liquid instruments in active markets are marked to market and consequently positions in these instruments are disclosed in reference to Fair Value Hierarchy under Level 144. In order to assess it, within the global bond Independent Price Verification (IPV) process a daily Liquidity Indicator is defined taking into account: • the number of executable bid/ask quotes, • their relative sizes and spreads. Such indicator is tracked over a 20 business days time window in order to obtain a stable monthly indicator. Instruments not traded in active markets are marked to model based on implied credit spread curves derived from the former Level 1 instruments. The model maximises the use of observable input and minimises the use of unobservable inputs. With this respect, depending on the proximity of the credit spread curve applied, the bonds are disclosed as Level 2 or Level 3, Level 3 is applied in case credit spread curves used are significantly unobservable. Under fair value accounting, fair value adjustments for liquidity and model deficiencies compensate for the lack of market observables for the Level 2 and Level 3 positions. In the global bond IPV process market prices of Level 1 bonds and pricing models for illiquid bonds are regularly verified for accuracy. Structured financial products The fair value of structured financial products not quoted is determines on active markets using the appropriate derivative valuation methodology given the nature of the embedded structure (when this is not to be separated). Such instruments are classified as Level 2 or Level 3 depending on the observability of significant inputs to the model. Asset Backed Securities UniCredit valuation process relies on internal policies centred on: • extension and implementation across all the Group’s Legal Entities of an independent Price Verification (IPV) process suited to the changed market conditions for Structured Credit Bonds; • integration of current Fair Value Adjustments Policy. According to the IPV process the quality of a price is assessed based upon the availability of quotes of independent market players for identical assets. The process relies first on consensus data provider as reliable collector of market quotes. As a second step, prices are assessed by benchmarking each security to a pool of similar securities with available market quotes. An alternative approach consists in evaluating the instrument through the use of quantitative pricing models, which are applicable every time that information regarding market participants assumptions on model parameters are reasonably made available without excessive costs or efforts. Derivatives Fair value of derivatives not traded in an active market is determined using a mark-to-model valuation technique. In such cases, where active markets exist for its component parts, then fair value is determined on the basis of the relevant market prices for the component parts. Valuation techniques that are based on significant inputs that are observable are referred to as Level 2 valuations, while those based on techniques that use significant unobservable inputs are referred to as Level 3 valuations. Equity instruments Equity Instruments are assigned to Level 1 when a quoted price is available on a liquid market and to Level 3 when no quotations are available or quotations have been suspended indefinitely. These instruments are classifies as Level 2 only when trading volume on the market where the instrument is quoted has decreased significantly. 44 As far as Italian Government bonds are concerned, it is worth stressing they are typically exchanged on the MTS market which is largely aknowledged as the main liquid platform for this kind of asset. Company financial statements | Notes to the accounts Part A - Accounting policies 582 2018 Annual Report and Accounts · UniCredit A.4.1 Fair value levels 2 and 3: valuation techniques and inputs used Hereby we provide IFRS13 disclosure requirements about accounting portfolios measured at fair value on a recurring basis, not measured at fair value, or measured at fair value on a non-recurring basis. Assets and liabilities measured at fair value on a recurring basis Fixed-Income securities Fixed-Income securities are priced in a two tier process depending on the liquidity in the respective market. Liquid instruments in active markets are marked to market and consequently positions in these instruments are disclosed in reference to Fair Value Hierarchy under Level 144. In order to assess it, within the global bond Independent Price Verification (IPV) process a daily Liquidity Indicator is defined taking into account: • the number of executable bid/ask quotes, • their relative sizes and spreads. Such indicator is tracked over a 20 business days time window in order to obtain a stable monthly indicator. Instruments not traded in active markets are marked to model based on implied credit spread curves derived from the former Level 1 instruments. The model maximises the use of observable input and minimises the use of unobservable inputs. With this respect, depending on the proximity of the credit spread curve applied, the bonds are disclosed as Level 2 or Level 3, Level 3 is applied in case credit spread curves used are significantly unobservable. Under fair value accounting, fair value adjustments for liquidity and model deficiencies compensate for the lack of market observables for the Level 2 and Level 3 positions. In the global bond IPV process market prices of Level 1 bonds and pricing models for illiquid bonds are regularly verified for accuracy. Structured financial products The fair value of structured financial products not quoted is determines on active markets using the appropriate derivative valuation methodology given the nature of the embedded structure (when this is not to be separated). Such instruments are classified as Level 2 or Level 3 depending on the observability of significant inputs to the model. Asset Backed Securities UniCredit valuation process relies on internal policies centred on: • extension and implementation across all the Group’s Legal Entities of an independent Price Verification (IPV) process suited to the changed market conditions for Structured Credit Bonds; • integration of current Fair Value Adjustments Policy. According to the IPV process the quality of a price is assessed based upon the availability of quotes of independent market players for identical assets. The process relies first on consensus data provider as reliable collector of market quotes. As a second step, prices are assessed by benchmarking each security to a pool of similar securities with available market quotes. An alternative approach consists in evaluating the instrument through the use of quantitative pricing models, which are applicable every time that information regarding market participants assumptions on model parameters are reasonably made available without excessive costs or efforts. Derivatives Fair value of derivatives not traded in an active market is determined using a mark-to-model valuation technique. In such cases, where active markets exist for its component parts, then fair value is determined on the basis of the relevant market prices for the component parts. Valuation techniques that are based on significant inputs that are observable are referred to as Level 2 valuations, while those based on techniques that use significant unobservable inputs are referred to as Level 3 valuations. Equity instruments Equity Instruments are assigned to Level 1 when a quoted price is available on a liquid market and to Level 3 when no quotations are available or quotations have been suspended indefinitely. These instruments are classifies as Level 2 only when trading volume on the market where the instrument is quoted has decreased significantly. 44 As far as Italian Government bonds are concerned, it is worth stressing they are typically exchanged on the MTS market which is largely aknowledged as the main liquid platform for this kind of asset. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 583 Investment funds The Group holds investments in certain investment funds that publish net asset value (NAV) per share, including mutual funds, private equity funds, hedge funds (including funds of funds) and real estate funds. The Group’s investments include co-investments in funds that are managed by the Group and investments in funds that are managed by third parties and in particular: Real estate funds Real Estate Funds are mapped to Level 1 when quoted prices are available on an active market; when this condition does not hold, Real Estate Funds are disclosed as Level 3 and they are evaluated through an adequate credit adjustment of the NAV based on the specific features of each fund. Other funds The Group holds investments also in mutual funds, hedge funds and private equity funds. Funds are usually assigned to Level 1 when a quoted price is available on an active market. Funds are disclosed as Level 2 or Level 3 depending on NAV availability, portfolio transparency and possible issues relating to position write-off. Property, plant and equipment measured at fair value The Group owns property, plant and equipment held for investment purposes, which are valued according to the fair value model for Real Estate investments linked to liabilities that generate a return on investments themselves. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Given the current portfolio composition, most of the positions are at level 3. Fair Value Adjustments (FVA) Fair Value Adjustment is defined as the amount to be added either to the market observed mid-price or to the theoretical price generated by a valuation model with the aim of obtaining a fair value of the position which reflects the actual exit price of a certain position. Below a list of adjustments: • Credit/Debit Valuation Adjustment (CVA/DVA); • Model risk; • Close-out costs; • Other adjustments. Credit/Debit Valuation Adjustment (CVA/DVA) Credit Valuation Adjustments (CVAs) and Debit Valuation Adjustments (DVAs) are incorporated into derivative valuations to reflect the impact on fair value of counterparty credit risk and UniCredit own credit quality respectively. UniCredit CVA/DVA methodology is based on the following inputs: • EAD derived by simulation techniques. Simulated exposures also take into account Specific Wrong-Way Risk that arises from transactions where there is a correlation between counterparty credit risk and the underlying derivative risk factors; • PD implied by current market default rates, obtained from Credit Default Swaps; • LGD based on the estimated level of expected recovery should a counterparty default and implied by current market default rates, obtained from credit default swaps. As of 31 December 2018, net CVA/DVA cumulative adjustment, relating to performing counterparts, amounts to €38 million negative. The part related to own credit spread evolution, which is filtered out from regulatory capital (accordingly to CRDIV), amounts to €41 million negative. Funding Cost and Benefit Adjustment (FCA/FBA) Funding Valuation Adjustment (FundVA) is the sum of a Funding Cost Adjustment (FCA) and of a Funding Benefit Adjustment (FBA) that indeed accounts for the expected future funding costs/benefits for derivatives that are not fully collateralised. Most material contributors are in-the-money trades with uncollateralised counterparties. UniCredit FVA methodology is based on the following inputs: • positive and negative exposure profiles derived leveraging on a risk-neutral spin-off of the Counterparty Credit Risk internal model; • PD term structure implied by current market default rates obtained from credit default swaps; • a funding spread curve that is representative of the average funding spread of peer financial groups. As of 31 December 2018 the Fair Value adjustment component (FundVA) reflect into P&L amounts to €14.24 million negative. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 583 Investment funds The Group holds investments in certain investment funds that publish net asset value (NAV) per share, including mutual funds, private equity funds, hedge funds (including funds of funds) and real estate funds. The Group’s investments include co-investments in funds that are managed by the Group and investments in funds that are managed by third parties and in particular: Real estate funds Real Estate Funds are mapped to Level 1 when quoted prices are available on an active market; when this condition does not hold, Real Estate Funds are disclosed as Level 3 and they are evaluated through an adequate credit adjustment of the NAV based on the specific features of each fund. Other funds The Group holds investments also in mutual funds, hedge funds and private equity funds. Funds are usually assigned to Level 1 when a quoted price is available on an active market. Funds are disclosed as Level 2 or Level 3 depending on NAV availability, portfolio transparency and possible issues relating to position write-off. Property, plant and equipment measured at fair value The Group owns property, plant and equipment held for investment purposes, which are valued according to the fair value model for Real Estate investments linked to liabilities that generate a return on investments themselves. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Given the current portfolio composition, most of the positions are at level 3. Fair Value Adjustments (FVA) Fair Value Adjustment is defined as the amount to be added either to the market observed mid-price or to the theoretical price generated by a valuation model with the aim of obtaining a fair value of the position which reflects the actual exit price of a certain position. Below a list of adjustments: • Credit/Debit Valuation Adjustment (CVA/DVA); • Model risk; • Close-out costs; • Other adjustments. Credit/Debit Valuation Adjustment (CVA/DVA) Credit Valuation Adjustments (CVAs) and Debit Valuation Adjustments (DVAs) are incorporated into derivative valuations to reflect the impact on fair value of counterparty credit risk and UniCredit own credit quality respectively. UniCredit CVA/DVA methodology is based on the following inputs: • EAD derived by simulation techniques. Simulated exposures also take into account Specific Wrong-Way Risk that arises from transactions where there is a correlation between counterparty credit risk and the underlying derivative risk factors; • PD implied by current market default rates, obtained from Credit Default Swaps; • LGD based on the estimated level of expected recovery should a counterparty default and implied by current market default rates, obtained from credit default swaps. As of 31 December 2018, net CVA/DVA cumulative adjustment, relating to performing counterparts, amounts to €38 million negative. The part related to own credit spread evolution, which is filtered out from regulatory capital (accordingly to CRDIV), amounts to €41 million negative. Funding Cost and Benefit Adjustment (FCA/FBA) Funding Valuation Adjustment (FundVA) is the sum of a Funding Cost Adjustment (FCA) and of a Funding Benefit Adjustment (FBA) that indeed accounts for the expected future funding costs/benefits for derivatives that are not fully collateralised. Most material contributors are in-the-money trades with uncollateralised counterparties. UniCredit FVA methodology is based on the following inputs: • positive and negative exposure profiles derived leveraging on a risk-neutral spin-off of the Counterparty Credit Risk internal model; • PD term structure implied by current market default rates obtained from credit default swaps; • a funding spread curve that is representative of the average funding spread of peer financial groups. As of 31 December 2018 the Fair Value adjustment component (FundVA) reflect into P&L amounts to €14.24 million negative. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 583 Investment funds The Group holds investments in certain investment funds that publish net asset value (NAV) per share, including mutual funds, private equity funds, hedge funds (including funds of funds) and real estate funds. The Group’s investments include co-investments in funds that are managed by the Group and investments in funds that are managed by third parties and in particular: Real estate funds Real Estate Funds are mapped to Level 1 when quoted prices are available on an active market; when this condition does not hold, Real Estate Funds are disclosed as Level 3 and they are evaluated through an adequate credit adjustment of the NAV based on the specific features of each fund. Other funds The Group holds investments also in mutual funds, hedge funds and private equity funds. Funds are usually assigned to Level 1 when a quoted price is available on an active market. Funds are disclosed as Level 2 or Level 3 depending on NAV availability, portfolio transparency and possible issues relating to position write-off. Property, plant and equipment measured at fair value The Group owns property, plant and equipment held for investment purposes, which are valued according to the fair value model for Real Estate investments linked to liabilities that generate a return on investments themselves. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Given the current portfolio composition, most of the positions are at level 3. Fair Value Adjustments (FVA) Fair Value Adjustment is defined as the amount to be added either to the market observed mid-price or to the theoretical price generated by a valuation model with the aim of obtaining a fair value of the position which reflects the actual exit price of a certain position. Below a list of adjustments: • Credit/Debit Valuation Adjustment (CVA/DVA); • Model risk; • Close-out costs; • Other adjustments. Credit/Debit Valuation Adjustment (CVA/DVA) Credit Valuation Adjustments (CVAs) and Debit Valuation Adjustments (DVAs) are incorporated into derivative valuations to reflect the impact on fair value of counterparty credit risk and UniCredit own credit quality respectively. UniCredit CVA/DVA methodology is based on the following inputs: • EAD derived by simulation techniques. Simulated exposures also take into account Specific Wrong-Way Risk that arises from transactions where there is a correlation between counterparty credit risk and the underlying derivative risk factors; • PD implied by current market default rates, obtained from Credit Default Swaps; • LGD based on the estimated level of expected recovery should a counterparty default and implied by current market default rates, obtained from credit default swaps. As of 31 December 2018, net CVA/DVA cumulative adjustment, relating to performing counterparts, amounts to €38 million negative. The part related to own credit spread evolution, which is filtered out from regulatory capital (accordingly to CRDIV), amounts to €41 million negative. Funding Cost and Benefit Adjustment (FCA/FBA) Funding Valuation Adjustment (FundVA) is the sum of a Funding Cost Adjustment (FCA) and of a Funding Benefit Adjustment (FBA) that indeed accounts for the expected future funding costs/benefits for derivatives that are not fully collateralised. Most material contributors are in-the-money trades with uncollateralised counterparties. UniCredit FVA methodology is based on the following inputs: • positive and negative exposure profiles derived leveraging on a risk-neutral spin-off of the Counterparty Credit Risk internal model; • PD term structure implied by current market default rates obtained from credit default swaps; • a funding spread curve that is representative of the average funding spread of peer financial groups. As of 31 December 2018 the Fair Value adjustment component (FundVA) reflect into P&L amounts to €14.24 million negative. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 583 Investment funds The Group holds investments in certain investment funds that publish net asset value (NAV) per share, including mutual funds, private equity funds, hedge funds (including funds of funds) and real estate funds. The Group’s investments include co-investments in funds that are managed by the Group and investments in funds that are managed by third parties and in particular: Real estate funds Real Estate Funds are mapped to Level 1 when quoted prices are available on an active market; when this condition does not hold, Real Estate Funds are disclosed as Level 3 and they are evaluated through an adequate credit adjustment of the NAV based on the specific features of each fund. Other funds The Group holds investments also in mutual funds, hedge funds and private equity funds. Funds are usually assigned to Level 1 when a quoted price is available on an active market. Funds are disclosed as Level 2 or Level 3 depending on NAV availability, portfolio transparency and possible issues relating to position write-off. Property, plant and equipment measured at fair value The Group owns property, plant and equipment held for investment purposes, which are valued according to the fair value model for Real Estate investments linked to liabilities that generate a return on investments themselves. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Given the current portfolio composition, most of the positions are at level 3. Fair Value Adjustments (FVA) Fair Value Adjustment is defined as the amount to be added either to the market observed mid-price or to the theoretical price generated by a valuation model with the aim of obtaining a fair value of the position which reflects the actual exit price of a certain position. Below a list of adjustments: • Credit/Debit Valuation Adjustment (CVA/DVA); • Model risk; • Close-out costs; • Other adjustments. Credit/Debit Valuation Adjustment (CVA/DVA) Credit Valuation Adjustments (CVAs) and Debit Valuation Adjustments (DVAs) are incorporated into derivative valuations to reflect the impact on fair value of counterparty credit risk and UniCredit own credit quality respectively. UniCredit CVA/DVA methodology is based on the following inputs: • EAD derived by simulation techniques. Simulated exposures also take into account Specific Wrong-Way Risk that arises from transactions where there is a correlation between counterparty credit risk and the underlying derivative risk factors; • PD implied by current market default rates, obtained from Credit Default Swaps; • LGD based on the estimated level of expected recovery should a counterparty default and implied by current market default rates, obtained from credit default swaps. As of 31 December 2018, net CVA/DVA cumulative adjustment, relating to performing counterparts, amounts to €38 million negative. The part related to own credit spread evolution, which is filtered out from regulatory capital (accordingly to CRDIV), amounts to €41 million negative. Funding Cost and Benefit Adjustment (FCA/FBA) Funding Valuation Adjustment (FundVA) is the sum of a Funding Cost Adjustment (FCA) and of a Funding Benefit Adjustment (FBA) that indeed accounts for the expected future funding costs/benefits for derivatives that are not fully collateralised. Most material contributors are in-the-money trades with uncollateralised counterparties. UniCredit FVA methodology is based on the following inputs: • positive and negative exposure profiles derived leveraging on a risk-neutral spin-off of the Counterparty Credit Risk internal model; • PD term structure implied by current market default rates obtained from credit default swaps; • a funding spread curve that is representative of the average funding spread of peer financial groups. As of 31 December 2018 the Fair Value adjustment component (FundVA) reflect into P&L amounts to €14.24 million negative. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 583 Investment funds The Group holds investments in certain investment funds that publish net asset value (NAV) per share, including mutual funds, private equity funds, hedge funds (including funds of funds) and real estate funds. The Group’s investments include co-investments in funds that are managed by the Group and investments in funds that are managed by third parties and in particular: Real estate funds Real Estate Funds are mapped to Level 1 when quoted prices are available on an active market; when this condition does not hold, Real Estate Funds are disclosed as Level 3 and they are evaluated through an adequate credit adjustment of the NAV based on the specific features of each fund. Other funds The Group holds investments also in mutual funds, hedge funds and private equity funds. Funds are usually assigned to Level 1 when a quoted price is available on an active market. Funds are disclosed as Level 2 or Level 3 depending on NAV availability, portfolio transparency and possible issues relating to position write-off. Property, plant and equipment measured at fair value The Group owns property, plant and equipment held for investment purposes, which are valued according to the fair value model for Real Estate investments linked to liabilities that generate a return on investments themselves. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Given the current portfolio composition, most of the positions are at level 3. Fair Value Adjustments (FVA) Fair Value Adjustment is defined as the amount to be added either to the market observed mid-price or to the theoretical price generated by a valuation model with the aim of obtaining a fair value of the position which reflects the actual exit price of a certain position. Below a list of adjustments: • Credit/Debit Valuation Adjustment (CVA/DVA); • Model risk; • Close-out costs; • Other adjustments. Credit/Debit Valuation Adjustment (CVA/DVA) Credit Valuation Adjustments (CVAs) and Debit Valuation Adjustments (DVAs) are incorporated into derivative valuations to reflect the impact on fair value of counterparty credit risk and UniCredit own credit quality respectively. UniCredit CVA/DVA methodology is based on the following inputs: • EAD derived by simulation techniques. Simulated exposures also take into account Specific Wrong-Way Risk that arises from transactions where there is a correlation between counterparty credit risk and the underlying derivative risk factors; • PD implied by current market default rates, obtained from Credit Default Swaps; • LGD based on the estimated level of expected recovery should a counterparty default and implied by current market default rates, obtained from credit default swaps. As of 31 December 2018, net CVA/DVA cumulative adjustment, relating to performing counterparts, amounts to €38 million negative. The part related to own credit spread evolution, which is filtered out from regulatory capital (accordingly to CRDIV), amounts to €41 million negative. Funding Cost and Benefit Adjustment (FCA/FBA) Funding Valuation Adjustment (FundVA) is the sum of a Funding Cost Adjustment (FCA) and of a Funding Benefit Adjustment (FBA) that indeed accounts for the expected future funding costs/benefits for derivatives that are not fully collateralised. Most material contributors are in-the-money trades with uncollateralised counterparties. UniCredit FVA methodology is based on the following inputs: • positive and negative exposure profiles derived leveraging on a risk-neutral spin-off of the Counterparty Credit Risk internal model; • PD term structure implied by current market default rates obtained from credit default swaps; • a funding spread curve that is representative of the average funding spread of peer financial groups. As of 31 December 2018 the Fair Value adjustment component (FundVA) reflect into P&L amounts to €14.24 million negative. Company financial statements | Notes to the accounts Part A - Accounting policies 584 2018 Annual Report and Accounts · UniCredit Model risk Financial models are used for the valuation of the financial instruments if the direct market quotes are not readily available. In general the model risk is represented by the possibility that a financial instrument’s evaluation is actually sensitive to the choice of model. It is possible to value the same financial instrument by using alternative models which could provide different results in term of pricing. The model risk adjustment refers to the risk that the actual fair value of the instrument differs from the value produced by the model. Close-out costs It measures the implicit costs of closing an (aggregated) trading position. The position could be closed by a long position (or purchase in the case of a short position), or by entering into a new transaction (or several transactions) that offsets (hedges) the open position. The close-out costs are typically derived from the bid/ask spreads observed on the market. It accounts for the fact that a position is valued at mid but can only be closed at bid or ask. This adjustment is not needed when the position is marked at bid or ask and already represents an exit price. In addition a close-out adjustment of the NAV is applied when there are some penalties relating to position write-off in an investment fund. Other adjustments Other fair value adjustments, which are not included in the previous categories, could be taken into consideration to align the evaluation to the current exit price, also according to the level of liquidity of the market and valuation parameters, e.g. adjustment of equity prices whose quotation on the market are not representative of the effective exit price. Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis Financial instrument not carried at fair value, for example retail loans and deposit, and credit facilities extended to corporate clients are not managed on a fair value basis. For these instruments fair value is calculated for disclosure purposes only and does not impact the balance sheet or the profit or loss. Additionally, since these instruments generally do not trade, there is significant management judgment required to determine their fair values as defined by IFRS13. Cash and cash balances Cash and cash balances are not carried at fair value on the Consolidated Balance Sheets, but they are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. Financial assets at amortised cost For the assets that are composed by securities, fair value is determined according to what explained in section “Assets and Liabilities measured at fair value on a recurring basis - Fixed Income Securities”. On the other hands, fair value for performing Loans and Receivables to banks and customers is determined using the discounted cash flow model adjusted for credit risk. Some portfolios are valued according to simplified approaches, which however take into account the financial features of the financial instruments. Property, plant and equipment held for investment purposes The fair value of property, plant and equipment held for investment purposes is determined on the basis of a valuation by an independent appraiser who holds a recognised and relevant professional qualification which perform its valuation mainly on the basis of an indirect knowledge of the assets through the information made available by the owner and relating to the localization, consistency, destination and in consideration of market analysis. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Financial liabilities at amortised cost Fair value for debt securities in issue is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s subordinated and non-subordinated risk curves. On the other hands, Fair value for other financial liabilities is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s senior and subordinated risk curves. Description of the valuation techniques Specific valuation techniques are used to value positions for which a market price is not directly observable from market sources. The Group uses well known valuation techniques for determining fair values of financial and non-financial instruments that are not actively traded and quoted. The valuation techniques used for Level 2 and 3 assets and liabilities are described below. Company financial statements | Notes to the accounts Part A - Accounting policies 584 2018 Annual Report and Accounts · UniCredit Model risk Financial models are used for the valuation of the financial instruments if the direct market quotes are not readily available. In general the model risk is represented by the possibility that a financial instrument’s evaluation is actually sensitive to the choice of model. It is possible to value the same financial instrument by using alternative models which could provide different results in term of pricing. The model risk adjustment refers to the risk that the actual fair value of the instrument differs from the value produced by the model. Close-out costs It measures the implicit costs of closing an (aggregated) trading position. The position could be closed by a long position (or purchase in the case of a short position), or by entering into a new transaction (or several transactions) that offsets (hedges) the open position. The close-out costs are typically derived from the bid/ask spreads observed on the market. It accounts for the fact that a position is valued at mid but can only be closed at bid or ask. This adjustment is not needed when the position is marked at bid or ask and already represents an exit price. In addition a close-out adjustment of the NAV is applied when there are some penalties relating to position write-off in an investment fund. Other adjustments Other fair value adjustments, which are not included in the previous categories, could be taken into consideration to align the evaluation to the current exit price, also according to the level of liquidity of the market and valuation parameters, e.g. adjustment of equity prices whose quotation on the market are not representative of the effective exit price. Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis Financial instrument not carried at fair value, for example retail loans and deposit, and credit facilities extended to corporate clients are not managed on a fair value basis. For these instruments fair value is calculated for disclosure purposes only and does not impact the balance sheet or the profit or loss. Additionally, since these instruments generally do not trade, there is significant management judgment required to determine their fair values as defined by IFRS13. Cash and cash balances Cash and cash balances are not carried at fair value on the Consolidated Balance Sheets, but they are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. Financial assets at amortised cost For the assets that are composed by securities, fair value is determined according to what explained in section “Assets and Liabilities measured at fair value on a recurring basis - Fixed Income Securities”. On the other hands, fair value for performing Loans and Receivables to banks and customers is determined using the discounted cash flow model adjusted for credit risk. Some portfolios are valued according to simplified approaches, which however take into account the financial features of the financial instruments. Property, plant and equipment held for investment purposes The fair value of property, plant and equipment held for investment purposes is determined on the basis of a valuation by an independent appraiser who holds a recognised and relevant professional qualification which perform its valuation mainly on the basis of an indirect knowledge of the assets through the information made available by the owner and relating to the localization, consistency, destination and in consideration of market analysis. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Financial liabilities at amortised cost Fair value for debt securities in issue is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s subordinated and non-subordinated risk curves. On the other hands, Fair value for other financial liabilities is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s senior and subordinated risk curves. Description of the valuation techniques Specific valuation techniques are used to value positions for which a market price is not directly observable from market sources. The Group uses well known valuation techniques for determining fair values of financial and non-financial instruments that are not actively traded and quoted. The valuation techniques used for Level 2 and 3 assets and liabilities are described below. Company financial statements | Notes to the accounts Part A - Accounting policies 584 2018 Annual Report and Accounts · UniCredit Model risk Financial models are used for the valuation of the financial instruments if the direct market quotes are not readily available. In general the model risk is represented by the possibility that a financial instrument’s evaluation is actually sensitive to the choice of model. It is possible to value the same financial instrument by using alternative models which could provide different results in term of pricing. The model risk adjustment refers to the risk that the actual fair value of the instrument differs from the value produced by the model. Close-out costs It measures the implicit costs of closing an (aggregated) trading position. The position could be closed by a long position (or purchase in the case of a short position), or by entering into a new transaction (or several transactions) that offsets (hedges) the open position. The close-out costs are typically derived from the bid/ask spreads observed on the market. It accounts for the fact that a position is valued at mid but can only be closed at bid or ask. This adjustment is not needed when the position is marked at bid or ask and already represents an exit price. In addition a close-out adjustment of the NAV is applied when there are some penalties relating to position write-off in an investment fund. Other adjustments Other fair value adjustments, which are not included in the previous categories, could be taken into consideration to align the evaluation to the current exit price, also according to the level of liquidity of the market and valuation parameters, e.g. adjustment of equity prices whose quotation on the market are not representative of the effective exit price. Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis Financial instrument not carried at fair value, for example retail loans and deposit, and credit facilities extended to corporate clients are not managed on a fair value basis. For these instruments fair value is calculated for disclosure purposes only and does not impact the balance sheet or the profit or loss. Additionally, since these instruments generally do not trade, there is significant management judgment required to determine their fair values as defined by IFRS13. Cash and cash balances Cash and cash balances are not carried at fair value on the Consolidated Balance Sheets, but they are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. Financial assets at amortised cost For the assets that are composed by securities, fair value is determined according to what explained in section “Assets and Liabilities measured at fair value on a recurring basis - Fixed Income Securities”. On the other hands, fair value for performing Loans and Receivables to banks and customers is determined using the discounted cash flow model adjusted for credit risk. Some portfolios are valued according to simplified approaches, which however take into account the financial features of the financial instruments. Property, plant and equipment held for investment purposes The fair value of property, plant and equipment held for investment purposes is determined on the basis of a valuation by an independent appraiser who holds a recognised and relevant professional qualification which perform its valuation mainly on the basis of an indirect knowledge of the assets through the information made available by the owner and relating to the localization, consistency, destination and in consideration of market analysis. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Financial liabilities at amortised cost Fair value for debt securities in issue is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s subordinated and non-subordinated risk curves. On the other hands, Fair value for other financial liabilities is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s senior and subordinated risk curves. Description of the valuation techniques Specific valuation techniques are used to value positions for which a market price is not directly observable from market sources. The Group uses well known valuation techniques for determining fair values of financial and non-financial instruments that are not actively traded and quoted. The valuation techniques used for Level 2 and 3 assets and liabilities are described below. Company financial statements | Notes to the accounts Part A - Accounting policies 584 2018 Annual Report and Accounts · UniCredit Model risk Financial models are used for the valuation of the financial instruments if the direct market quotes are not readily available. In general the model risk is represented by the possibility that a financial instrument’s evaluation is actually sensitive to the choice of model. It is possible to value the same financial instrument by using alternative models which could provide different results in term of pricing. The model risk adjustment refers to the risk that the actual fair value of the instrument differs from the value produced by the model. Close-out costs It measures the implicit costs of closing an (aggregated) trading position. The position could be closed by a long position (or purchase in the case of a short position), or by entering into a new transaction (or several transactions) that offsets (hedges) the open position. The close-out costs are typically derived from the bid/ask spreads observed on the market. It accounts for the fact that a position is valued at mid but can only be closed at bid or ask. This adjustment is not needed when the position is marked at bid or ask and already represents an exit price. In addition a close-out adjustment of the NAV is applied when there are some penalties relating to position write-off in an investment fund. Other adjustments Other fair value adjustments, which are not included in the previous categories, could be taken into consideration to align the evaluation to the current exit price, also according to the level of liquidity of the market and valuation parameters, e.g. adjustment of equity prices whose quotation on the market are not representative of the effective exit price. Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis Financial instrument not carried at fair value, for example retail loans and deposit, and credit facilities extended to corporate clients are not managed on a fair value basis. For these instruments fair value is calculated for disclosure purposes only and does not impact the balance sheet or the profit or loss. Additionally, since these instruments generally do not trade, there is significant management judgment required to determine their fair values as defined by IFRS13. Cash and cash balances Cash and cash balances are not carried at fair value on the Consolidated Balance Sheets, but they are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. Financial assets at amortised cost For the assets that are composed by securities, fair value is determined according to what explained in section “Assets and Liabilities measured at fair value on a recurring basis - Fixed Income Securities”. On the other hands, fair value for performing Loans and Receivables to banks and customers is determined using the discounted cash flow model adjusted for credit risk. Some portfolios are valued according to simplified approaches, which however take into account the financial features of the financial instruments. Property, plant and equipment held for investment purposes The fair value of property, plant and equipment held for investment purposes is determined on the basis of a valuation by an independent appraiser who holds a recognised and relevant professional qualification which perform its valuation mainly on the basis of an indirect knowledge of the assets through the information made available by the owner and relating to the localization, consistency, destination and in consideration of market analysis. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Financial liabilities at amortised cost Fair value for debt securities in issue is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s subordinated and non-subordinated risk curves. On the other hands, Fair value for other financial liabilities is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s senior and subordinated risk curves. Description of the valuation techniques Specific valuation techniques are used to value positions for which a market price is not directly observable from market sources. The Group uses well known valuation techniques for determining fair values of financial and non-financial instruments that are not actively traded and quoted. The valuation techniques used for Level 2 and 3 assets and liabilities are described below. Company financial statements | Notes to the accounts Part A - Accounting policies 584 2018 Annual Report and Accounts · UniCredit Model risk Financial models are used for the valuation of the financial instruments if the direct market quotes are not readily available. In general the model risk is represented by the possibility that a financial instrument’s evaluation is actually sensitive to the choice of model. It is possible to value the same financial instrument by using alternative models which could provide different results in term of pricing. The model risk adjustment refers to the risk that the actual fair value of the instrument differs from the value produced by the model. Close-out costs It measures the implicit costs of closing an (aggregated) trading position. The position could be closed by a long position (or purchase in the case of a short position), or by entering into a new transaction (or several transactions) that offsets (hedges) the open position. The close-out costs are typically derived from the bid/ask spreads observed on the market. It accounts for the fact that a position is valued at mid but can only be closed at bid or ask. This adjustment is not needed when the position is marked at bid or ask and already represents an exit price. In addition a close-out adjustment of the NAV is applied when there are some penalties relating to position write-off in an investment fund. Other adjustments Other fair value adjustments, which are not included in the previous categories, could be taken into consideration to align the evaluation to the current exit price, also according to the level of liquidity of the market and valuation parameters, e.g. adjustment of equity prices whose quotation on the market are not representative of the effective exit price. Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis Financial instrument not carried at fair value, for example retail loans and deposit, and credit facilities extended to corporate clients are not managed on a fair value basis. For these instruments fair value is calculated for disclosure purposes only and does not impact the balance sheet or the profit or loss. Additionally, since these instruments generally do not trade, there is significant management judgment required to determine their fair values as defined by IFRS13. Cash and cash balances Cash and cash balances are not carried at fair value on the Consolidated Balance Sheets, but they are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. Financial assets at amortised cost For the assets that are composed by securities, fair value is determined according to what explained in section “Assets and Liabilities measured at fair value on a recurring basis - Fixed Income Securities”. On the other hands, fair value for performing Loans and Receivables to banks and customers is determined using the discounted cash flow model adjusted for credit risk. Some portfolios are valued according to simplified approaches, which however take into account the financial features of the financial instruments. Property, plant and equipment held for investment purposes The fair value of property, plant and equipment held for investment purposes is determined on the basis of a valuation by an independent appraiser who holds a recognised and relevant professional qualification which perform its valuation mainly on the basis of an indirect knowledge of the assets through the information made available by the owner and relating to the localization, consistency, destination and in consideration of market analysis. The attribution of fair value levels is based on the level of observability of the significant market parameters used by the valuation technique. Financial liabilities at amortised cost Fair value for debt securities in issue is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s subordinated and non-subordinated risk curves. On the other hands, Fair value for other financial liabilities is determined using the discounted cash flow model adjusted for UniCredit credit risk. The Credit Spread is determined using UCG’s senior and subordinated risk curves. Description of the valuation techniques Specific valuation techniques are used to value positions for which a market price is not directly observable from market sources. The Group uses well known valuation techniques for determining fair values of financial and non-financial instruments that are not actively traded and quoted. The valuation techniques used for Level 2 and 3 assets and liabilities are described below. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 585 Option Pricing Model Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option Pricing Models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return. Discounted cash flow Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument. The model requires the estimation of the cash flow and the adoption of market’s parameters for the discounting: discount rate or discount margin reflects the credit and/or funding spreads required by the market for instruments with similar risk and liquidity profiles to produce a “discounted value”. The fair value of the contract is given by the sum of the present values of future cash flows. Hazard Rate Model The valuation of CDS instruments requires the knowledge of the entity’s survival probability at future dates. The estimate of this probability curve uses the standard model for survival probabilities and requires as parameters the credit default swap market quotes on standard future dates in addition to the risk free curve and the expected recovery rate. The hazard rate is part of the described process and it indicates the instantaneous probability of default at different future instants. Market Approach A valuation technique that uses prices generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities. Gordon Growth Model This is the model used to determine the intrinsic value of an equity investment, based on a series of future dividends which grow at a constant rate. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the present value of future dividends. Dividend Discount Model This model is used to determine the value of an equity investment, based on the series of predicted future dividends. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the fair value of an equity share as the sum of the present value of all future dividends. Adjusted NAV Net asset value is the total value of a fund’s assets less liabilities. An increase in net asset value would result in an increase in a fair value measure. Usually for funds classified as Level 3, NAV represents a risk free valuation, therefore in this case the NAV is adjusted so as to consider the issuer’s default risk. Description of the inputs used to measure the fair value of items categorised in Level 2 and 3 Hereby a description of the main significant inputs used to measure the fair value of items categorised in Level 2 and 3 of the fair value hierarchy. Volatility Volatility is a measure for variation of price of a financial instrument over time. In particular, volatility measures the speed and severity of market price changes for an instrument, parameter or market index given the particular instrument, parameter or index changes in value over time, expressed as a percentage of relative change in price. The higher the volatility of the underlying, the riskier the instrument. In general, long option positions benefit from increases in volatility, whereas short option positions will suffer losses. There are different types of volatility: • volatility of interest rate, • inflation volatility, • volatility of foreign exchange, • volatility of equity stocks, equity or other indexes/prices. Correlation Correlation is a measure of the relationship between the movements of two variables. When parameters are positively correlated, an increase in correlation results in a higher fair value measure. On the contrary, given a short correlation position, an increase in correlation, in isolation, would generally result in a decrease in a fair value measure. Therefore changes in correlation levels can have a major impact, favorable or unfavorable, on the fair value of an instrument, depending on the type of correlation. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 585 Option Pricing Model Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option Pricing Models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return. Discounted cash flow Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument. The model requires the estimation of the cash flow and the adoption of market’s parameters for the discounting: discount rate or discount margin reflects the credit and/or funding spreads required by the market for instruments with similar risk and liquidity profiles to produce a “discounted value”. The fair value of the contract is given by the sum of the present values of future cash flows. Hazard Rate Model The valuation of CDS instruments requires the knowledge of the entity’s survival probability at future dates. The estimate of this probability curve uses the standard model for survival probabilities and requires as parameters the credit default swap market quotes on standard future dates in addition to the risk free curve and the expected recovery rate. The hazard rate is part of the described process and it indicates the instantaneous probability of default at different future instants. Market Approach A valuation technique that uses prices generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities. Gordon Growth Model This is the model used to determine the intrinsic value of an equity investment, based on a series of future dividends which grow at a constant rate. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the present value of future dividends. Dividend Discount Model This model is used to determine the value of an equity investment, based on the series of predicted future dividends. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the fair value of an equity share as the sum of the present value of all future dividends. Adjusted NAV Net asset value is the total value of a fund’s assets less liabilities. An increase in net asset value would result in an increase in a fair value measure. Usually for funds classified as Level 3, NAV represents a risk free valuation, therefore in this case the NAV is adjusted so as to consider the issuer’s default risk. Description of the inputs used to measure the fair value of items categorised in Level 2 and 3 Hereby a description of the main significant inputs used to measure the fair value of items categorised in Level 2 and 3 of the fair value hierarchy. Volatility Volatility is a measure for variation of price of a financial instrument over time. In particular, volatility measures the speed and severity of market price changes for an instrument, parameter or market index given the particular instrument, parameter or index changes in value over time, expressed as a percentage of relative change in price. The higher the volatility of the underlying, the riskier the instrument. In general, long option positions benefit from increases in volatility, whereas short option positions will suffer losses. There are different types of volatility: • volatility of interest rate, • inflation volatility, • volatility of foreign exchange, • volatility of equity stocks, equity or other indexes/prices. Correlation Correlation is a measure of the relationship between the movements of two variables. When parameters are positively correlated, an increase in correlation results in a higher fair value measure. On the contrary, given a short correlation position, an increase in correlation, in isolation, would generally result in a decrease in a fair value measure. Therefore changes in correlation levels can have a major impact, favorable or unfavorable, on the fair value of an instrument, depending on the type of correlation. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 585 Option Pricing Model Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option Pricing Models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return. Discounted cash flow Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument. The model requires the estimation of the cash flow and the adoption of market’s parameters for the discounting: discount rate or discount margin reflects the credit and/or funding spreads required by the market for instruments with similar risk and liquidity profiles to produce a “discounted value”. The fair value of the contract is given by the sum of the present values of future cash flows. Hazard Rate Model The valuation of CDS instruments requires the knowledge of the entity’s survival probability at future dates. The estimate of this probability curve uses the standard model for survival probabilities and requires as parameters the credit default swap market quotes on standard future dates in addition to the risk free curve and the expected recovery rate. The hazard rate is part of the described process and it indicates the instantaneous probability of default at different future instants. Market Approach A valuation technique that uses prices generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities. Gordon Growth Model This is the model used to determine the intrinsic value of an equity investment, based on a series of future dividends which grow at a constant rate. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the present value of future dividends. Dividend Discount Model This model is used to determine the value of an equity investment, based on the series of predicted future dividends. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the fair value of an equity share as the sum of the present value of all future dividends. Adjusted NAV Net asset value is the total value of a fund’s assets less liabilities. An increase in net asset value would result in an increase in a fair value measure. Usually for funds classified as Level 3, NAV represents a risk free valuation, therefore in this case the NAV is adjusted so as to consider the issuer’s default risk. Description of the inputs used to measure the fair value of items categorised in Level 2 and 3 Hereby a description of the main significant inputs used to measure the fair value of items categorised in Level 2 and 3 of the fair value hierarchy. Volatility Volatility is a measure for variation of price of a financial instrument over time. In particular, volatility measures the speed and severity of market price changes for an instrument, parameter or market index given the particular instrument, parameter or index changes in value over time, expressed as a percentage of relative change in price. The higher the volatility of the underlying, the riskier the instrument. In general, long option positions benefit from increases in volatility, whereas short option positions will suffer losses. There are different types of volatility: • volatility of interest rate, • inflation volatility, • volatility of foreign exchange, • volatility of equity stocks, equity or other indexes/prices. Correlation Correlation is a measure of the relationship between the movements of two variables. When parameters are positively correlated, an increase in correlation results in a higher fair value measure. On the contrary, given a short correlation position, an increase in correlation, in isolation, would generally result in a decrease in a fair value measure. Therefore changes in correlation levels can have a major impact, favorable or unfavorable, on the fair value of an instrument, depending on the type of correlation. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 585 Option Pricing Model Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option Pricing Models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return. Discounted cash flow Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument. The model requires the estimation of the cash flow and the adoption of market’s parameters for the discounting: discount rate or discount margin reflects the credit and/or funding spreads required by the market for instruments with similar risk and liquidity profiles to produce a “discounted value”. The fair value of the contract is given by the sum of the present values of future cash flows. Hazard Rate Model The valuation of CDS instruments requires the knowledge of the entity’s survival probability at future dates. The estimate of this probability curve uses the standard model for survival probabilities and requires as parameters the credit default swap market quotes on standard future dates in addition to the risk free curve and the expected recovery rate. The hazard rate is part of the described process and it indicates the instantaneous probability of default at different future instants. Market Approach A valuation technique that uses prices generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities. Gordon Growth Model This is the model used to determine the intrinsic value of an equity investment, based on a series of future dividends which grow at a constant rate. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the present value of future dividends. Dividend Discount Model This model is used to determine the value of an equity investment, based on the series of predicted future dividends. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the fair value of an equity share as the sum of the present value of all future dividends. Adjusted NAV Net asset value is the total value of a fund’s assets less liabilities. An increase in net asset value would result in an increase in a fair value measure. Usually for funds classified as Level 3, NAV represents a risk free valuation, therefore in this case the NAV is adjusted so as to consider the issuer’s default risk. Description of the inputs used to measure the fair value of items categorised in Level 2 and 3 Hereby a description of the main significant inputs used to measure the fair value of items categorised in Level 2 and 3 of the fair value hierarchy. Volatility Volatility is a measure for variation of price of a financial instrument over time. In particular, volatility measures the speed and severity of market price changes for an instrument, parameter or market index given the particular instrument, parameter or index changes in value over time, expressed as a percentage of relative change in price. The higher the volatility of the underlying, the riskier the instrument. In general, long option positions benefit from increases in volatility, whereas short option positions will suffer losses. There are different types of volatility: • volatility of interest rate, • inflation volatility, • volatility of foreign exchange, • volatility of equity stocks, equity or other indexes/prices. Correlation Correlation is a measure of the relationship between the movements of two variables. When parameters are positively correlated, an increase in correlation results in a higher fair value measure. On the contrary, given a short correlation position, an increase in correlation, in isolation, would generally result in a decrease in a fair value measure. Therefore changes in correlation levels can have a major impact, favorable or unfavorable, on the fair value of an instrument, depending on the type of correlation. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 585 Option Pricing Model Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option Pricing Models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return. Discounted cash flow Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument. The model requires the estimation of the cash flow and the adoption of market’s parameters for the discounting: discount rate or discount margin reflects the credit and/or funding spreads required by the market for instruments with similar risk and liquidity profiles to produce a “discounted value”. The fair value of the contract is given by the sum of the present values of future cash flows. Hazard Rate Model The valuation of CDS instruments requires the knowledge of the entity’s survival probability at future dates. The estimate of this probability curve uses the standard model for survival probabilities and requires as parameters the credit default swap market quotes on standard future dates in addition to the risk free curve and the expected recovery rate. The hazard rate is part of the described process and it indicates the instantaneous probability of default at different future instants. Market Approach A valuation technique that uses prices generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities. Gordon Growth Model This is the model used to determine the intrinsic value of an equity investment, based on a series of future dividends which grow at a constant rate. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the present value of future dividends. Dividend Discount Model This model is used to determine the value of an equity investment, based on the series of predicted future dividends. Given a dividend to be paid in a specific year and the hypothesis that the dividend grows at a constant rate, the model computes the fair value of an equity share as the sum of the present value of all future dividends. Adjusted NAV Net asset value is the total value of a fund’s assets less liabilities. An increase in net asset value would result in an increase in a fair value measure. Usually for funds classified as Level 3, NAV represents a risk free valuation, therefore in this case the NAV is adjusted so as to consider the issuer’s default risk. Description of the inputs used to measure the fair value of items categorised in Level 2 and 3 Hereby a description of the main significant inputs used to measure the fair value of items categorised in Level 2 and 3 of the fair value hierarchy. Volatility Volatility is a measure for variation of price of a financial instrument over time. In particular, volatility measures the speed and severity of market price changes for an instrument, parameter or market index given the particular instrument, parameter or index changes in value over time, expressed as a percentage of relative change in price. The higher the volatility of the underlying, the riskier the instrument. In general, long option positions benefit from increases in volatility, whereas short option positions will suffer losses. There are different types of volatility: • volatility of interest rate, • inflation volatility, • volatility of foreign exchange, • volatility of equity stocks, equity or other indexes/prices. Correlation Correlation is a measure of the relationship between the movements of two variables. When parameters are positively correlated, an increase in correlation results in a higher fair value measure. On the contrary, given a short correlation position, an increase in correlation, in isolation, would generally result in a decrease in a fair value measure. Therefore changes in correlation levels can have a major impact, favorable or unfavorable, on the fair value of an instrument, depending on the type of correlation. Company financial statements | Notes to the accounts Part A - Accounting policies 586 2018 Annual Report and Accounts · UniCredit Correlation is a pricing input for a derivative product where the payoff is driven by multiple underlying risks. The level of correlation used in the valuation of derivatives with multiple underlying risks depends on a number of factors including the nature of those risks. Dividends The derivation of a forward price for an individual stock or index is important both for measuring fair value for forward or swap contracts and for measuring fair value using option pricing models. The relationship between the current stock price and the forward price is based on a combination of expected future dividend levels and payment timings and, to a lesser extent, the relevant funding rates applicable to the stock in question. The dividend yield and timing represents the most significant parameter in determining fair value for instruments that are sensitive to an equity forward price. Interest rate curve The calculation of the interest rate curve is based on standard bootstrapping techniques relying on the set of quotes of appropriate financial instruments, for each currency, which turns interest rates in zero-coupon. Less liquid currencies interest curve refer to the rates in currencies for which a market liquidity doesn’t exist in terms of tightness, depth and resiliency. The illiquidity of these input data impacts directly the valuation of securities or derivatives expressed in illiquid currencies. Inflation Swap rate The determination of forward levels for inflation indexes is based on swap quote over inflation indexes. Swap over inflation may present a low liquidity level whether there is no liquid market in terms of rigidity, deepness and resistance. The illiquidity of those inputs has an indirect impact on the valuation of a debt instrument linked to inflation (inflation-linked note) or in case of a derivative over inflation. Credit spreads Different valuation models, especially for credit derivatives require an input for the credit spread which reflects the credit quality of the associated credit name. The credit spread of a particular security is quoted in relation to the yield on a benchmark security or reference rate, typically either U.S. Treasury or LIBOR/EURIBOR and is generally expressed in terms of basis points. The ranges for credit spreads cover a variety of underlings (index and single names), regions, sectors, maturities and credit qualities (high-yield and investment-grade). The broad range of this population gives rise to the width of the ranges of unobservable inputs. Loss Given Default (LGD)/Recovery Rate LGD also known as loss severity (the inverse concept is the recovery rate) represents the percentage of contractual cash flows lost in the event of a default, expressed as the net amount of loss relating to the outstanding balance. An increase in the loss severity, in isolation, would result in a decrease in a fair value measure.The Loss given default is facility-specific because such losses are generally understood to be influenced by key transaction characteristics such as the presence of collateral and the degree of subordination. Price Where market prices are not observable, comparison via proxy is used to measure a fair value. Prepayment Rate (PR) The PR is the estimated rate at which forecasted prepayments of principal of the related debt instrument are expected to occur. Voluntary unscheduled payments (prepayments) change the future cash flows for the investor and thereby change the fair value of the security. In general as prepayment speeds change, the weighted average life of the security changes, which impacts the valuation either positively or negatively, depending upon the nature of the security and the direction of the change in the weighted average life. Probability of Default (PD) The probability of default is an estimate of the likelihood of not collecting contractual amounts. It provides an estimate of the likelihood that a client of a financial institution will be unable to meet its debt obligations over a particular time horizon. The PD of an obligor not only depends on the risk characteristics of that particular obligor but also the economic environment and the degree to which it affects the obligor. Early Conversion The early conversion is the estimate of the probability that the liability would be converted into equity earlier than the terms stated. Company financial statements | Notes to the accounts Part A - Accounting policies 586 2018 Annual Report and Accounts · UniCredit Correlation is a pricing input for a derivative product where the payoff is driven by multiple underlying risks. The level of correlation used in the valuation of derivatives with multiple underlying risks depends on a number of factors including the nature of those risks. Dividends The derivation of a forward price for an individual stock or index is important both for measuring fair value for forward or swap contracts and for measuring fair value using option pricing models. The relationship between the current stock price and the forward price is based on a combination of expected future dividend levels and payment timings and, to a lesser extent, the relevant funding rates applicable to the stock in question. The dividend yield and timing represents the most significant parameter in determining fair value for instruments that are sensitive to an equity forward price. Interest rate curve The calculation of the interest rate curve is based on standard bootstrapping techniques relying on the set of quotes of appropriate financial instruments, for each currency, which turns interest rates in zero-coupon. Less liquid currencies interest curve refer to the rates in currencies for which a market liquidity doesn’t exist in terms of tightness, depth and resiliency. The illiquidity of these input data impacts directly the valuation of securities or derivatives expressed in illiquid currencies. Inflation Swap rate The determination of forward levels for inflation indexes is based on swap quote over inflation indexes. Swap over inflation may present a low liquidity level whether there is no liquid market in terms of rigidity, deepness and resistance. The illiquidity of those inputs has an indirect impact on the valuation of a debt instrument linked to inflation (inflation-linked note) or in case of a derivative over inflation. Credit spreads Different valuation models, especially for credit derivatives require an input for the credit spread which reflects the credit quality of the associated credit name. The credit spread of a particular security is quoted in relation to the yield on a benchmark security or reference rate, typically either U.S. Treasury or LIBOR/EURIBOR and is generally expressed in terms of basis points. The ranges for credit spreads cover a variety of underlings (index and single names), regions, sectors, maturities and credit qualities (high-yield and investment-grade). The broad range of this population gives rise to the width of the ranges of unobservable inputs. Loss Given Default (LGD)/Recovery Rate LGD also known as loss severity (the inverse concept is the recovery rate) represents the percentage of contractual cash flows lost in the event of a default, expressed as the net amount of loss relating to the outstanding balance. An increase in the loss severity, in isolation, would result in a decrease in a fair value measure.The Loss given default is facility-specific because such losses are generally understood to be influenced by key transaction characteristics such as the presence of collateral and the degree of subordination. Price Where market prices are not observable, comparison via proxy is used to measure a fair value. Prepayment Rate (PR) The PR is the estimated rate at which forecasted prepayments of principal of the related debt instrument are expected to occur. Voluntary unscheduled payments (prepayments) change the future cash flows for the investor and thereby change the fair value of the security. In general as prepayment speeds change, the weighted average life of the security changes, which impacts the valuation either positively or negatively, depending upon the nature of the security and the direction of the change in the weighted average life. Probability of Default (PD) The probability of default is an estimate of the likelihood of not collecting contractual amounts. It provides an estimate of the likelihood that a client of a financial institution will be unable to meet its debt obligations over a particular time horizon. The PD of an obligor not only depends on the risk characteristics of that particular obligor but also the economic environment and the degree to which it affects the obligor. Early Conversion The early conversion is the estimate of the probability that the liability would be converted into equity earlier than the terms stated. Company financial statements | Notes to the accounts Part A - Accounting policies 586 2018 Annual Report and Accounts · UniCredit Correlation is a pricing input for a derivative product where the payoff is driven by multiple underlying risks. The level of correlation used in the valuation of derivatives with multiple underlying risks depends on a number of factors including the nature of those risks. Dividends The derivation of a forward price for an individual stock or index is important both for measuring fair value for forward or swap contracts and for measuring fair value using option pricing models. The relationship between the current stock price and the forward price is based on a combination of expected future dividend levels and payment timings and, to a lesser extent, the relevant funding rates applicable to the stock in question. The dividend yield and timing represents the most significant parameter in determining fair value for instruments that are sensitive to an equity forward price. Interest rate curve The calculation of the interest rate curve is based on standard bootstrapping techniques relying on the set of quotes of appropriate financial instruments, for each currency, which turns interest rates in zero-coupon. Less liquid currencies interest curve refer to the rates in currencies for which a market liquidity doesn’t exist in terms of tightness, depth and resiliency. The illiquidity of these input data impacts directly the valuation of securities or derivatives expressed in illiquid currencies. Inflation Swap rate The determination of forward levels for inflation indexes is based on swap quote over inflation indexes. Swap over inflation may present a low liquidity level whether there is no liquid market in terms of rigidity, deepness and resistance. The illiquidity of those inputs has an indirect impact on the valuation of a debt instrument linked to inflation (inflation-linked note) or in case of a derivative over inflation. Credit spreads Different valuation models, especially for credit derivatives require an input for the credit spread which reflects the credit quality of the associated credit name. The credit spread of a particular security is quoted in relation to the yield on a benchmark security or reference rate, typically either U.S. Treasury or LIBOR/EURIBOR and is generally expressed in terms of basis points. The ranges for credit spreads cover a variety of underlings (index and single names), regions, sectors, maturities and credit qualities (high-yield and investment-grade). The broad range of this population gives rise to the width of the ranges of unobservable inputs. Loss Given Default (LGD)/Recovery Rate LGD also known as loss severity (the inverse concept is the recovery rate) represents the percentage of contractual cash flows lost in the event of a default, expressed as the net amount of loss relating to the outstanding balance. An increase in the loss severity, in isolation, would result in a decrease in a fair value measure.The Loss given default is facility-specific because such losses are generally understood to be influenced by key transaction characteristics such as the presence of collateral and the degree of subordination. Price Where market prices are not observable, comparison via proxy is used to measure a fair value. Prepayment Rate (PR) The PR is the estimated rate at which forecasted prepayments of principal of the related debt instrument are expected to occur. Voluntary unscheduled payments (prepayments) change the future cash flows for the investor and thereby change the fair value of the security. In general as prepayment speeds change, the weighted average life of the security changes, which impacts the valuation either positively or negatively, depending upon the nature of the security and the direction of the change in the weighted average life. Probability of Default (PD) The probability of default is an estimate of the likelihood of not collecting contractual amounts. It provides an estimate of the likelihood that a client of a financial institution will be unable to meet its debt obligations over a particular time horizon. The PD of an obligor not only depends on the risk characteristics of that particular obligor but also the economic environment and the degree to which it affects the obligor. Early Conversion The early conversion is the estimate of the probability that the liability would be converted into equity earlier than the terms stated. Company financial statements | Notes to the accounts Part A - Accounting policies 586 2018 Annual Report and Accounts · UniCredit Correlation is a pricing input for a derivative product where the payoff is driven by multiple underlying risks. The level of correlation used in the valuation of derivatives with multiple underlying risks depends on a number of factors including the nature of those risks. Dividends The derivation of a forward price for an individual stock or index is important both for measuring fair value for forward or swap contracts and for measuring fair value using option pricing models. The relationship between the current stock price and the forward price is based on a combination of expected future dividend levels and payment timings and, to a lesser extent, the relevant funding rates applicable to the stock in question. The dividend yield and timing represents the most significant parameter in determining fair value for instruments that are sensitive to an equity forward price. Interest rate curve The calculation of the interest rate curve is based on standard bootstrapping techniques relying on the set of quotes of appropriate financial instruments, for each currency, which turns interest rates in zero-coupon. Less liquid currencies interest curve refer to the rates in currencies for which a market liquidity doesn’t exist in terms of tightness, depth and resiliency. The illiquidity of these input data impacts directly the valuation of securities or derivatives expressed in illiquid currencies. Inflation Swap rate The determination of forward levels for inflation indexes is based on swap quote over inflation indexes. Swap over inflation may present a low liquidity level whether there is no liquid market in terms of rigidity, deepness and resistance. The illiquidity of those inputs has an indirect impact on the valuation of a debt instrument linked to inflation (inflation-linked note) or in case of a derivative over inflation. Credit spreads Different valuation models, especially for credit derivatives require an input for the credit spread which reflects the credit quality of the associated credit name. The credit spread of a particular security is quoted in relation to the yield on a benchmark security or reference rate, typically either U.S. Treasury or LIBOR/EURIBOR and is generally expressed in terms of basis points. The ranges for credit spreads cover a variety of underlings (index and single names), regions, sectors, maturities and credit qualities (high-yield and investment-grade). The broad range of this population gives rise to the width of the ranges of unobservable inputs. Loss Given Default (LGD)/Recovery Rate LGD also known as loss severity (the inverse concept is the recovery rate) represents the percentage of contractual cash flows lost in the event of a default, expressed as the net amount of loss relating to the outstanding balance. An increase in the loss severity, in isolation, would result in a decrease in a fair value measure.The Loss given default is facility-specific because such losses are generally understood to be influenced by key transaction characteristics such as the presence of collateral and the degree of subordination. Price Where market prices are not observable, comparison via proxy is used to measure a fair value. Prepayment Rate (PR) The PR is the estimated rate at which forecasted prepayments of principal of the related debt instrument are expected to occur. Voluntary unscheduled payments (prepayments) change the future cash flows for the investor and thereby change the fair value of the security. In general as prepayment speeds change, the weighted average life of the security changes, which impacts the valuation either positively or negatively, depending upon the nature of the security and the direction of the change in the weighted average life. Probability of Default (PD) The probability of default is an estimate of the likelihood of not collecting contractual amounts. It provides an estimate of the likelihood that a client of a financial institution will be unable to meet its debt obligations over a particular time horizon. The PD of an obligor not only depends on the risk characteristics of that particular obligor but also the economic environment and the degree to which it affects the obligor. Early Conversion The early conversion is the estimate of the probability that the liability would be converted into equity earlier than the terms stated. Company financial statements | Notes to the accounts Part A - Accounting policies 586 2018 Annual Report and Accounts · UniCredit Correlation is a pricing input for a derivative product where the payoff is driven by multiple underlying risks. The level of correlation used in the valuation of derivatives with multiple underlying risks depends on a number of factors including the nature of those risks. Dividends The derivation of a forward price for an individual stock or index is important both for measuring fair value for forward or swap contracts and for measuring fair value using option pricing models. The relationship between the current stock price and the forward price is based on a combination of expected future dividend levels and payment timings and, to a lesser extent, the relevant funding rates applicable to the stock in question. The dividend yield and timing represents the most significant parameter in determining fair value for instruments that are sensitive to an equity forward price. Interest rate curve The calculation of the interest rate curve is based on standard bootstrapping techniques relying on the set of quotes of appropriate financial instruments, for each currency, which turns interest rates in zero-coupon. Less liquid currencies interest curve refer to the rates in currencies for which a market liquidity doesn’t exist in terms of tightness, depth and resiliency. The illiquidity of these input data impacts directly the valuation of securities or derivatives expressed in illiquid currencies. Inflation Swap rate The determination of forward levels for inflation indexes is based on swap quote over inflation indexes. Swap over inflation may present a low liquidity level whether there is no liquid market in terms of rigidity, deepness and resistance. The illiquidity of those inputs has an indirect impact on the valuation of a debt instrument linked to inflation (inflation-linked note) or in case of a derivative over inflation. Credit spreads Different valuation models, especially for credit derivatives require an input for the credit spread which reflects the credit quality of the associated credit name. The credit spread of a particular security is quoted in relation to the yield on a benchmark security or reference rate, typically either U.S. Treasury or LIBOR/EURIBOR and is generally expressed in terms of basis points. The ranges for credit spreads cover a variety of underlings (index and single names), regions, sectors, maturities and credit qualities (high-yield and investment-grade). The broad range of this population gives rise to the width of the ranges of unobservable inputs. Loss Given Default (LGD)/Recovery Rate LGD also known as loss severity (the inverse concept is the recovery rate) represents the percentage of contractual cash flows lost in the event of a default, expressed as the net amount of loss relating to the outstanding balance. An increase in the loss severity, in isolation, would result in a decrease in a fair value measure.The Loss given default is facility-specific because such losses are generally understood to be influenced by key transaction characteristics such as the presence of collateral and the degree of subordination. Price Where market prices are not observable, comparison via proxy is used to measure a fair value. Prepayment Rate (PR) The PR is the estimated rate at which forecasted prepayments of principal of the related debt instrument are expected to occur. Voluntary unscheduled payments (prepayments) change the future cash flows for the investor and thereby change the fair value of the security. In general as prepayment speeds change, the weighted average life of the security changes, which impacts the valuation either positively or negatively, depending upon the nature of the security and the direction of the change in the weighted average life. Probability of Default (PD) The probability of default is an estimate of the likelihood of not collecting contractual amounts. It provides an estimate of the likelihood that a client of a financial institution will be unable to meet its debt obligations over a particular time horizon. The PD of an obligor not only depends on the risk characteristics of that particular obligor but also the economic environment and the degree to which it affects the obligor. Early Conversion The early conversion is the estimate of the probability that the liability would be converted into equity earlier than the terms stated. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 587 EBITDA EBITDA is an indicator of the current operating profitability of the business, that is the income generated by the use of the company’s assets and the commercialisation of the products manufactured. Ke The Ke (cost of capital) represents the minimum rate that the company has to offer to its shareholders as remuneration for the funds received. Growth rate It is the constant growth rate used for the future dividends estimate. Quantitative information on significant unobservable inputs used in the fair value measurement: accounting portfolios measured at fair value categorised as Level 3 The following table shows, for each product category, the amount of Assets and Liabilities measured at fair value and the range of variation of unobservable parameters, across the whole portfolio, as monitored by group Risk Management functions. (€ million) PRODUCT CATEGORIES FAIR VALUE ASSETS FAIR VALUE LIABILITIES VALUATION TECHNIQUES UNOBSERVABLE PARAMETERS RANGE Derivatives Financial Foreign Exchange 44.32 48.36 Option Pricing Model Volatility 1% 40% Discounted Cash Flows Interest rate -60% 30% Interest Rate 75.33 16.36 Discounted Cash Flows Swap Rate (bps) -40 bps 1000 bps Inflation Swap Rate 0 bps 230 bps Equity & commodities 502.67 373.45 Option Pricing Model Volatility 1% 107% Correlation -98% 98% Credit Credit - - Hazard Rate Model Credit Spread 100% 28% Recovery rate 0% 54% Debt Securities and Loans Corporate/ Government/Other 235.36 - Market Approach Price (% of used value) 0% 199% Mortgage & Asset Backed Securities 231 - Discounted Cash Flows Credit Spread (bps) 7bps 1190bps Recovery rate 20% 100% Default Rate 0% 8% Prepayment Rate 0% 30% Equity Securities Unlisted Equity & Holdings 752.65 - Market Approach Price (% of used value) 0% 100% Gordon Growth Model Ke 8.0% 16.0% Growth Rate 2.0% 3.0% Units in Investment Funds Real Estate & Other Funds 1,057.21 - Adjusted Nav PD 1% 30% LGD 35% 60% Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 587 EBITDA EBITDA is an indicator of the current operating profitability of the business, that is the income generated by the use of the company’s assets and the commercialisation of the products manufactured. Ke The Ke (cost of capital) represents the minimum rate that the company has to offer to its shareholders as remuneration for the funds received. Growth rate It is the constant growth rate used for the future dividends estimate. Quantitative information on significant unobservable inputs used in the fair value measurement: accounting portfolios measured at fair value categorised as Level 3 The following table shows, for each product category, the amount of Assets and Liabilities measured at fair value and the range of variation of unobservable parameters, across the whole portfolio, as monitored by group Risk Management functions. (€ million) PRODUCT CATEGORIES FAIR VALUE ASSETS FAIR VALUE LIABILITIES VALUATION TECHNIQUES UNOBSERVABLE PARAMETERS RANGE Derivatives Financial Foreign Exchange 44.32 48.36 Option Pricing Model Volatility 1% 40% Discounted Cash Flows Interest rate -60% 30% Interest Rate 75.33 16.36 Discounted Cash Flows Swap Rate (bps) -40 bps 1000 bps Inflation Swap Rate 0 bps 230 bps Equity & commodities 502.67 373.45 Option Pricing Model Volatility 1% 107% Correlation -98% 98% Credit Credit - - Hazard Rate Model Credit Spread 100% 28% Recovery rate 0% 54% Debt Securities and Loans Corporate/ Government/Other 235.36 - Market Approach Price (% of used value) 0% 199% Mortgage & Asset Backed Securities 231 - Discounted Cash Flows Credit Spread (bps) 7bps 1190bps Recovery rate 20% 100% Default Rate 0% 8% Prepayment Rate 0% 30% Equity Securities Unlisted Equity & Holdings 752.65 - Market Approach Price (% of used value) 0% 100% Gordon Growth Model Ke 8.0% 16.0% Growth Rate 2.0% 3.0% Units in Investment Funds Real Estate & Other Funds 1,057.21 - Adjusted Nav PD 1% 30% LGD 35% 60% Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 587 EBITDA EBITDA is an indicator of the current operating profitability of the business, that is the income generated by the use of the company’s assets and the commercialisation of the products manufactured. Ke The Ke (cost of capital) represents the minimum rate that the company has to offer to its shareholders as remuneration for the funds received. Growth rate It is the constant growth rate used for the future dividends estimate. Quantitative information on significant unobservable inputs used in the fair value measurement: accounting portfolios measured at fair value categorised as Level 3 The following table shows, for each product category, the amount of Assets and Liabilities measured at fair value and the range of variation of unobservable parameters, across the whole portfolio, as monitored by group Risk Management functions. (€ million) PRODUCT CATEGORIES FAIR VALUE ASSETS FAIR VALUE LIABILITIES VALUATION TECHNIQUES UNOBSERVABLE PARAMETERS RANGE Derivatives Financial Foreign Exchange 44.32 48.36 Option Pricing Model Volatility 1% 40% Discounted Cash Flows Interest rate -60% 30% Interest Rate 75.33 16.36 Discounted Cash Flows Swap Rate (bps) -40 bps 1000 bps Inflation Swap Rate 0 bps 230 bps Equity & commodities 502.67 373.45 Option Pricing Model Volatility 1% 107% Correlation -98% 98% Credit Credit - - Hazard Rate Model Credit Spread 100% 28% Recovery rate 0% 54% Debt Securities and Loans Corporate/ Government/Other 235.36 - Market Approach Price (% of used value) 0% 199% Mortgage & Asset Backed Securities 231 - Discounted Cash Flows Credit Spread (bps) 7bps 1190bps Recovery rate 20% 100% Default Rate 0% 8% Prepayment Rate 0% 30% Equity Securities Unlisted Equity & Holdings 752.65 - Market Approach Price (% of used value) 0% 100% Gordon Growth Model Ke 8.0% 16.0% Growth Rate 2.0% 3.0% Units in Investment Funds Real Estate & Other Funds 1,057.21 - Adjusted Nav PD 1% 30% LGD 35% 60% Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 587 EBITDA EBITDA is an indicator of the current operating profitability of the business, that is the income generated by the use of the company’s assets and the commercialisation of the products manufactured. Ke The Ke (cost of capital) represents the minimum rate that the company has to offer to its shareholders as remuneration for the funds received. Growth rate It is the constant growth rate used for the future dividends estimate. Quantitative information on significant unobservable inputs used in the fair value measurement: accounting portfolios measured at fair value categorised as Level 3 The following table shows, for each product category, the amount of Assets and Liabilities measured at fair value and the range of variation of unobservable parameters, across the whole portfolio, as monitored by group Risk Management functions. (€ million) PRODUCT CATEGORIES FAIR VALUE ASSETS FAIR VALUE LIABILITIES VALUATION TECHNIQUES UNOBSERVABLE PARAMETERS RANGE Derivatives Financial Foreign Exchange 44.32 48.36 Option Pricing Model Volatility 1% 40% Discounted Cash Flows Interest rate -60% 30% Interest Rate 75.33 16.36 Discounted Cash Flows Swap Rate (bps) -40 bps 1000 bps Inflation Swap Rate 0 bps 230 bps Equity & commodities 502.67 373.45 Option Pricing Model Volatility 1% 107% Correlation -98% 98% Credit Credit - - Hazard Rate Model Credit Spread 100% 28% Recovery rate 0% 54% Debt Securities and Loans Corporate/ Government/Other 235.36 - Market Approach Price (% of used value) 0% 199% Mortgage & Asset Backed Securities 231 - Discounted Cash Flows Credit Spread (bps) 7bps 1190bps Recovery rate 20% 100% Default Rate 0% 8% Prepayment Rate 0% 30% Equity Securities Unlisted Equity & Holdings 752.65 - Market Approach Price (% of used value) 0% 100% Gordon Growth Model Ke 8.0% 16.0% Growth Rate 2.0% 3.0% Units in Investment Funds Real Estate & Other Funds 1,057.21 - Adjusted Nav PD 1% 30% LGD 35% 60% Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 587 EBITDA EBITDA is an indicator of the current operating profitability of the business, that is the income generated by the use of the company’s assets and the commercialisation of the products manufactured. Ke The Ke (cost of capital) represents the minimum rate that the company has to offer to its shareholders as remuneration for the funds received. Growth rate It is the constant growth rate used for the future dividends estimate. Quantitative information on significant unobservable inputs used in the fair value measurement: accounting portfolios measured at fair value categorised as Level 3 The following table shows, for each product category, the amount of Assets and Liabilities measured at fair value and the range of variation of unobservable parameters, across the whole portfolio, as monitored by group Risk Management functions. (€ million) PRODUCT CATEGORIES FAIR VALUE ASSETS FAIR VALUE LIABILITIES VALUATION TECHNIQUES UNOBSERVABLE PARAMETERS RANGE Derivatives Financial Foreign Exchange 44.32 48.36 Option Pricing Model Volatility 1% 40% Discounted Cash Flows Interest rate -60% 30% Interest Rate 75.33 16.36 Discounted Cash Flows Swap Rate (bps) -40 bps 1000 bps Inflation Swap Rate 0 bps 230 bps Equity & commodities 502.67 373.45 Option Pricing Model Volatility 1% 107% Correlation -98% 98% Credit Credit - - Hazard Rate Model Credit Spread 100% 28% Recovery rate 0% 54% Debt Securities and Loans Corporate/ Government/Other 235.36 - Market Approach Price (% of used value) 0% 199% Mortgage & Asset Backed Securities 231 - Discounted Cash Flows Credit Spread (bps) 7bps 1190bps Recovery rate 20% 100% Default Rate 0% 8% Prepayment Rate 0% 30% Equity Securities Unlisted Equity & Holdings 752.65 - Market Approach Price (% of used value) 0% 100% Gordon Growth Model Ke 8.0% 16.0% Growth Rate 2.0% 3.0% Units in Investment Funds Real Estate & Other Funds 1,057.21 - Adjusted Nav PD 1% 30% LGD 35% 60% Company financial statements | Notes to the accounts Part A - Accounting policies 588 2018 Annual Report and Accounts · UniCredit A.4.2 Valuations processes and sensitivities The Group verifies that the value attributed to each position reflects the current fair value in an appropriate way. Assets and liabilities subject to fair value measurements are determined using different techniques, among which (but not only) models such as discounted cash flow and internal models. On the basis of the observability of the input used, all the measurements are classified as Level 1, Level 2 or Level 3 of the fair value hierarchy. When a financial instrument, measured at fair value, is valued through the use of one or more significant inputs not directly observable on the market, a further procedure for the price verification is implemented. These procedures include the revision of relevant historical data, the analysis of profits and losses, the individual valuation of each component for structural products and benchmarking. This approach uses subjective opinions and judgments based on experience and, therefore, it could require valuation adjustments which take into account the bid/ask spread, liquidity and counterparty risk, in addition to the valuation model type adopted. According to Group Market Risk Governance guidelines, in order to ensure the right separateness of the functions in charge of the model development and those in charge of the validation processes, all valuation models developed by Group companies’ front offices are independently tested centrally and validated by the Group Internal Validation functions. The aim of this independent control structure is evaluating the model risk from a theoretical solidity, calibration techniques eventually applied and appropriateness of the model for a specific product in a defined market point of views. In addition to the daily mark-to-market or mark-to-model valuation, the Independent Price Verification (IPV) is applied by from Market Risk function with the aim of guaranteeing a fair value provided by an independent structure for all instruments, illiquid included. Fair value sensitivity to variations in unobservable inputs used in the fair value computation for instruments categorised as Level 3 The direction of sensitivity for instruments categorised at level 3 of fair value hierarchy to variations in significant unobservable inputs is supplied in the following table. For fair value computations where significant unobservable input are employed (Level 3), the sensitivity analysis is performed using a range of reasonable alternatives for the unobservable parameters. The Company takes into account that the impact of unobservable inputs in the fair value computation of level 3 financial instruments, depends on the correlation among different inputs used in the valuation technique. In addition, the effect of unobservable input variation has an impact on the amount and the direction of fair value measurement, also according to the instrument nature and sign. (€ million) PRODUCT CATEGORIES FAIR VALUE MOVEMENTS GIVEN REASONABLE POSSIBLE ALTERNATIVES Derivatives Financial Equities & Commodities +/- 14.45 Foreign Exchange +/- 9.27 Interest Rate +/- 22.27 Credit +/- - Debt Securities and Loans Corporate/Government/Other +/- 1.49 Mortgage & Asset Backed Securities +/- 9.45 Equity Securities Unlisted Equity & Holdings +/- 46.44 Units in investment funds Real Estate & Other Funds +/- 11.77 Within the unlisted Level 3 Units in Investment Funds, measured using a model, the shares in Atlante and Italian Recovery Fund, former Atlante II, (€355 million at 31 December 2018) are classified and, within Equity Securities, the investments in the Voluntary Scheme (as at 31 December 2018 equal to €40,4 million). For further information, please refer to Part B - Section 4 - Available for sale financial assets. Company financial statements | Notes to the accounts Part A - Accounting policies 588 2018 Annual Report and Accounts · UniCredit A.4.2 Valuations processes and sensitivities The Group verifies that the value attributed to each position reflects the current fair value in an appropriate way. Assets and liabilities subject to fair value measurements are determined using different techniques, among which (but not only) models such as discounted cash flow and internal models. On the basis of the observability of the input used, all the measurements are classified as Level 1, Level 2 or Level 3 of the fair value hierarchy. When a financial instrument, measured at fair value, is valued through the use of one or more significant inputs not directly observable on the market, a further procedure for the price verification is implemented. These procedures include the revision of relevant historical data, the analysis of profits and losses, the individual valuation of each component for structural products and benchmarking. This approach uses subjective opinions and judgments based on experience and, therefore, it could require valuation adjustments which take into account the bid/ask spread, liquidity and counterparty risk, in addition to the valuation model type adopted. According to Group Market Risk Governance guidelines, in order to ensure the right separateness of the functions in charge of the model development and those in charge of the validation processes, all valuation models developed by Group companies’ front offices are independently tested centrally and validated by the Group Internal Validation functions. The aim of this independent control structure is evaluating the model risk from a theoretical solidity, calibration techniques eventually applied and appropriateness of the model for a specific product in a defined market point of views. In addition to the daily mark-to-market or mark-to-model valuation, the Independent Price Verification (IPV) is applied by from Market Risk function with the aim of guaranteeing a fair value provided by an independent structure for all instruments, illiquid included. Fair value sensitivity to variations in unobservable inputs used in the fair value computation for instruments categorised as Level 3 The direction of sensitivity for instruments categorised at level 3 of fair value hierarchy to variations in significant unobservable inputs is supplied in the following table. For fair value computations where significant unobservable input are employed (Level 3), the sensitivity analysis is performed using a range of reasonable alternatives for the unobservable parameters. The Company takes into account that the impact of unobservable inputs in the fair value computation of level 3 financial instruments, depends on the correlation among different inputs used in the valuation technique. In addition, the effect of unobservable input variation has an impact on the amount and the direction of fair value measurement, also according to the instrument nature and sign. (€ million) PRODUCT CATEGORIES FAIR VALUE MOVEMENTS GIVEN REASONABLE POSSIBLE ALTERNATIVES Derivatives Financial Equities & Commodities +/- 14.45 Foreign Exchange +/- 9.27 Interest Rate +/- 22.27 Credit +/- - Debt Securities and Loans Corporate/Government/Other +/- 1.49 Mortgage & Asset Backed Securities +/- 9.45 Equity Securities Unlisted Equity & Holdings +/- 46.44 Units in investment funds Real Estate & Other Funds +/- 11.77 Within the unlisted Level 3 Units in Investment Funds, measured using a model, the shares in Atlante and Italian Recovery Fund, former Atlante II, (€355 million at 31 December 2018) are classified and, within Equity Securities, the investments in the Voluntary Scheme (as at 31 December 2018 equal to €40,4 million). For further information, please refer to Part B - Section 4 - Available for sale financial assets. Company financial statements | Notes to the accounts Part A - Accounting policies 588 2018 Annual Report and Accounts · UniCredit A.4.2 Valuations processes and sensitivities The Group verifies that the value attributed to each position reflects the current fair value in an appropriate way. Assets and liabilities subject to fair value measurements are determined using different techniques, among which (but not only) models such as discounted cash flow and internal models. On the basis of the observability of the input used, all the measurements are classified as Level 1, Level 2 or Level 3 of the fair value hierarchy. When a financial instrument, measured at fair value, is valued through the use of one or more significant inputs not directly observable on the market, a further procedure for the price verification is implemented. These procedures include the revision of relevant historical data, the analysis of profits and losses, the individual valuation of each component for structural products and benchmarking. This approach uses subjective opinions and judgments based on experience and, therefore, it could require valuation adjustments which take into account the bid/ask spread, liquidity and counterparty risk, in addition to the valuation model type adopted. According to Group Market Risk Governance guidelines, in order to ensure the right separateness of the functions in charge of the model development and those in charge of the validation processes, all valuation models developed by Group companies’ front offices are independently tested centrally and validated by the Group Internal Validation functions. The aim of this independent control structure is evaluating the model risk from a theoretical solidity, calibration techniques eventually applied and appropriateness of the model for a specific product in a defined market point of views. In addition to the daily mark-to-market or mark-to-model valuation, the Independent Price Verification (IPV) is applied by from Market Risk function with the aim of guaranteeing a fair value provided by an independent structure for all instruments, illiquid included. Fair value sensitivity to variations in unobservable inputs used in the fair value computation for instruments categorised as Level 3 The direction of sensitivity for instruments categorised at level 3 of fair value hierarchy to variations in significant unobservable inputs is supplied in the following table. For fair value computations where significant unobservable input are employed (Level 3), the sensitivity analysis is performed using a range of reasonable alternatives for the unobservable parameters. The Company takes into account that the impact of unobservable inputs in the fair value computation of level 3 financial instruments, depends on the correlation among different inputs used in the valuation technique. In addition, the effect of unobservable input variation has an impact on the amount and the direction of fair value measurement, also according to the instrument nature and sign. (€ million) PRODUCT CATEGORIES FAIR VALUE MOVEMENTS GIVEN REASONABLE POSSIBLE ALTERNATIVES Derivatives Financial Equities & Commodities +/- 14.45 Foreign Exchange +/- 9.27 Interest Rate +/- 22.27 Credit +/- - Debt Securities and Loans Corporate/Government/Other +/- 1.49 Mortgage & Asset Backed Securities +/- 9.45 Equity Securities Unlisted Equity & Holdings +/- 46.44 Units in investment funds Real Estate & Other Funds +/- 11.77 Within the unlisted Level 3 Units in Investment Funds, measured using a model, the shares in Atlante and Italian Recovery Fund, former Atlante II, (€355 million at 31 December 2018) are classified and, within Equity Securities, the investments in the Voluntary Scheme (as at 31 December 2018 equal to €40,4 million). For further information, please refer to Part B - Section 4 - Available for sale financial assets. Company financial statements | Notes to the accounts Part A - Accounting policies 588 2018 Annual Report and Accounts · UniCredit A.4.2 Valuations processes and sensitivities The Group verifies that the value attributed to each position reflects the current fair value in an appropriate way. Assets and liabilities subject to fair value measurements are determined using different techniques, among which (but not only) models such as discounted cash flow and internal models. On the basis of the observability of the input used, all the measurements are classified as Level 1, Level 2 or Level 3 of the fair value hierarchy. When a financial instrument, measured at fair value, is valued through the use of one or more significant inputs not directly observable on the market, a further procedure for the price verification is implemented. These procedures include the revision of relevant historical data, the analysis of profits and losses, the individual valuation of each component for structural products and benchmarking. This approach uses subjective opinions and judgments based on experience and, therefore, it could require valuation adjustments which take into account the bid/ask spread, liquidity and counterparty risk, in addition to the valuation model type adopted. According to Group Market Risk Governance guidelines, in order to ensure the right separateness of the functions in charge of the model development and those in charge of the validation processes, all valuation models developed by Group companies’ front offices are independently tested centrally and validated by the Group Internal Validation functions. The aim of this independent control structure is evaluating the model risk from a theoretical solidity, calibration techniques eventually applied and appropriateness of the model for a specific product in a defined market point of views. In addition to the daily mark-to-market or mark-to-model valuation, the Independent Price Verification (IPV) is applied by from Market Risk function with the aim of guaranteeing a fair value provided by an independent structure for all instruments, illiquid included. Fair value sensitivity to variations in unobservable inputs used in the fair value computation for instruments categorised as Level 3 The direction of sensitivity for instruments categorised at level 3 of fair value hierarchy to variations in significant unobservable inputs is supplied in the following table. For fair value computations where significant unobservable input are employed (Level 3), the sensitivity analysis is performed using a range of reasonable alternatives for the unobservable parameters. The Company takes into account that the impact of unobservable inputs in the fair value computation of level 3 financial instruments, depends on the correlation among different inputs used in the valuation technique. In addition, the effect of unobservable input variation has an impact on the amount and the direction of fair value measurement, also according to the instrument nature and sign. (€ million) PRODUCT CATEGORIES FAIR VALUE MOVEMENTS GIVEN REASONABLE POSSIBLE ALTERNATIVES Derivatives Financial Equities & Commodities +/- 14.45 Foreign Exchange +/- 9.27 Interest Rate +/- 22.27 Credit +/- - Debt Securities and Loans Corporate/Government/Other +/- 1.49 Mortgage & Asset Backed Securities +/- 9.45 Equity Securities Unlisted Equity & Holdings +/- 46.44 Units in investment funds Real Estate & Other Funds +/- 11.77 Within the unlisted Level 3 Units in Investment Funds, measured using a model, the shares in Atlante and Italian Recovery Fund, former Atlante II, (€355 million at 31 December 2018) are classified and, within Equity Securities, the investments in the Voluntary Scheme (as at 31 December 2018 equal to €40,4 million). For further information, please refer to Part B - Section 4 - Available for sale financial assets. Company financial statements | Notes to the accounts Part A - Accounting policies 588 2018 Annual Report and Accounts · UniCredit A.4.2 Valuations processes and sensitivities The Group verifies that the value attributed to each position reflects the current fair value in an appropriate way. Assets and liabilities subject to fair value measurements are determined using different techniques, among which (but not only) models such as discounted cash flow and internal models. On the basis of the observability of the input used, all the measurements are classified as Level 1, Level 2 or Level 3 of the fair value hierarchy. When a financial instrument, measured at fair value, is valued through the use of one or more significant inputs not directly observable on the market, a further procedure for the price verification is implemented. These procedures include the revision of relevant historical data, the analysis of profits and losses, the individual valuation of each component for structural products and benchmarking. This approach uses subjective opinions and judgments based on experience and, therefore, it could require valuation adjustments which take into account the bid/ask spread, liquidity and counterparty risk, in addition to the valuation model type adopted. According to Group Market Risk Governance guidelines, in order to ensure the right separateness of the functions in charge of the model development and those in charge of the validation processes, all valuation models developed by Group companies’ front offices are independently tested centrally and validated by the Group Internal Validation functions. The aim of this independent control structure is evaluating the model risk from a theoretical solidity, calibration techniques eventually applied and appropriateness of the model for a specific product in a defined market point of views. In addition to the daily mark-to-market or mark-to-model valuation, the Independent Price Verification (IPV) is applied by from Market Risk function with the aim of guaranteeing a fair value provided by an independent structure for all instruments, illiquid included. Fair value sensitivity to variations in unobservable inputs used in the fair value computation for instruments categorised as Level 3 The direction of sensitivity for instruments categorised at level 3 of fair value hierarchy to variations in significant unobservable inputs is supplied in the following table. For fair value computations where significant unobservable input are employed (Level 3), the sensitivity analysis is performed using a range of reasonable alternatives for the unobservable parameters. The Company takes into account that the impact of unobservable inputs in the fair value computation of level 3 financial instruments, depends on the correlation among different inputs used in the valuation technique. In addition, the effect of unobservable input variation has an impact on the amount and the direction of fair value measurement, also according to the instrument nature and sign. (€ million) PRODUCT CATEGORIES FAIR VALUE MOVEMENTS GIVEN REASONABLE POSSIBLE ALTERNATIVES Derivatives Financial Equities & Commodities +/- 14.45 Foreign Exchange +/- 9.27 Interest Rate +/- 22.27 Credit +/- - Debt Securities and Loans Corporate/Government/Other +/- 1.49 Mortgage & Asset Backed Securities +/- 9.45 Equity Securities Unlisted Equity & Holdings +/- 46.44 Units in investment funds Real Estate & Other Funds +/- 11.77 Within the unlisted Level 3 Units in Investment Funds, measured using a model, the shares in Atlante and Italian Recovery Fund, former Atlante II, (€355 million at 31 December 2018) are classified and, within Equity Securities, the investments in the Voluntary Scheme (as at 31 December 2018 equal to €40,4 million). For further information, please refer to Part B - Section 4 - Available for sale financial assets. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 589 A.4.3 Fair value hierarchy IFRS13 establishes a fair value hierarchy according to the observability of the input used in the valuation techniques adopted for valuations. The fair value hierarchy level associated to assets and liabilities is set as the minimum level among all significant valuation inputs used. A valuation input is not considered significant for the fair value of an instrument if the remaining inputs are able to explain the major part of the fair value variance itself over a period of three months. In some specific cases, the significance limit is assessed in relation to the fair value of the instrument at the measurement date. In particular, three levels are considered: • level 1: fair value for instruments classified within this level is determined according to the quoted prices on active markets; • level 2: fair value for instruments classified within this level is determined according to the valuation models which use observable inputs on active markets; • level 3: fair value for instruments classified within this level is determined according to the valuation models which prevalently use significant unobservable input on active markets. Financial instruments are classified to a certain fair value level according to the observability of the input used for the valuation. Level 1 (quoted prices in active markets): quoted prices (unadjusted) in active markets are available for identical assets or liabilities that the entity has the ability to access at the measurement date. An active market is a market in which orderly transactions for the asset or liability take place with sufficient frequency and volume for pricing information to be provided on an on-going basis (e.g. MTS market about prices for most of the government bonds therein traded). Level 2 (observable inputs): inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Inputs are observable if they are developed on the basis of publicly available information about actual events or transactions and reflect the assumptions that market participants would use when pricing the asset or liability. Level 3 (unobservable inputs): inputs other than the ones included in level 1 and level 2, not directly observable on the market for the evaluation of asset and liability, or used for the definition of significant adjustments to fair value. Unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk. When fair value is measured directly taking into consideration an observable price and quoted on an active market, the hierarchy attribution process will assign Level 1. When fair value has to be measured either via Comparable approach or via Mark-to-Model approach, the hierarchy attribution process will assign Level 2 or Level 3, depending on the observability of all the significant input parameters. Within the choice among various valuation techniques the Group employs the one which maximises the use of observable inputs. Transfers between hierarchy levels The main drivers to transfers in and out the FV levels (both between L1 and L2 and in/out L3) include changes in market conditions (among which liquidity parameter) and enhancements to valuation techniques and weights for unobservable inputs used for the valuation itself. Quantitative and qualitative details about transfers between FV levels occurred in the period is presented in Part A.4.5 - Fair value hierarchy. A.4.4 Other information The Group uses the IFRS13 exception for fair value measurements on a net basis with reference to financial assets and liabilities with offsetting positions of market risk or counterparty credit risk. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 589 A.4.3 Fair value hierarchy IFRS13 establishes a fair value hierarchy according to the observability of the input used in the valuation techniques adopted for valuations. The fair value hierarchy level associated to assets and liabilities is set as the minimum level among all significant valuation inputs used. A valuation input is not considered significant for the fair value of an instrument if the remaining inputs are able to explain the major part of the fair value variance itself over a period of three months. In some specific cases, the significance limit is assessed in relation to the fair value of the instrument at the measurement date. In particular, three levels are considered: • level 1: fair value for instruments classified within this level is determined according to the quoted prices on active markets; • level 2: fair value for instruments classified within this level is determined according to the valuation models which use observable inputs on active markets; • level 3: fair value for instruments classified within this level is determined according to the valuation models which prevalently use significant unobservable input on active markets. Financial instruments are classified to a certain fair value level according to the observability of the input used for the valuation. Level 1 (quoted prices in active markets): quoted prices (unadjusted) in active markets are available for identical assets or liabilities that the entity has the ability to access at the measurement date. An active market is a market in which orderly transactions for the asset or liability take place with sufficient frequency and volume for pricing information to be provided on an on-going basis (e.g. MTS market about prices for most of the government bonds therein traded). Level 2 (observable inputs): inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Inputs are observable if they are developed on the basis of publicly available information about actual events or transactions and reflect the assumptions that market participants would use when pricing the asset or liability. Level 3 (unobservable inputs): inputs other than the ones included in level 1 and level 2, not directly observable on the market for the evaluation of asset and liability, or used for the definition of significant adjustments to fair value. Unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk. When fair value is measured directly taking into consideration an observable price and quoted on an active market, the hierarchy attribution process will assign Level 1. When fair value has to be measured either via Comparable approach or via Mark-to-Model approach, the hierarchy attribution process will assign Level 2 or Level 3, depending on the observability of all the significant input parameters. Within the choice among various valuation techniques the Group employs the one which maximises the use of observable inputs. Transfers between hierarchy levels The main drivers to transfers in and out the FV levels (both between L1 and L2 and in/out L3) include changes in market conditions (among which liquidity parameter) and enhancements to valuation techniques and weights for unobservable inputs used for the valuation itself. Quantitative and qualitative details about transfers between FV levels occurred in the period is presented in Part A.4.5 - Fair value hierarchy. A.4.4 Other information The Group uses the IFRS13 exception for fair value measurements on a net basis with reference to financial assets and liabilities with offsetting positions of market risk or counterparty credit risk. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 589 A.4.3 Fair value hierarchy IFRS13 establishes a fair value hierarchy according to the observability of the input used in the valuation techniques adopted for valuations. The fair value hierarchy level associated to assets and liabilities is set as the minimum level among all significant valuation inputs used. A valuation input is not considered significant for the fair value of an instrument if the remaining inputs are able to explain the major part of the fair value variance itself over a period of three months. In some specific cases, the significance limit is assessed in relation to the fair value of the instrument at the measurement date. In particular, three levels are considered: • level 1: fair value for instruments classified within this level is determined according to the quoted prices on active markets; • level 2: fair value for instruments classified within this level is determined according to the valuation models which use observable inputs on active markets; • level 3: fair value for instruments classified within this level is determined according to the valuation models which prevalently use significant unobservable input on active markets. Financial instruments are classified to a certain fair value level according to the observability of the input used for the valuation. Level 1 (quoted prices in active markets): quoted prices (unadjusted) in active markets are available for identical assets or liabilities that the entity has the ability to access at the measurement date. An active market is a market in which orderly transactions for the asset or liability take place with sufficient frequency and volume for pricing information to be provided on an on-going basis (e.g. MTS market about prices for most of the government bonds therein traded). Level 2 (observable inputs): inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Inputs are observable if they are developed on the basis of publicly available information about actual events or transactions and reflect the assumptions that market participants would use when pricing the asset or liability. Level 3 (unobservable inputs): inputs other than the ones included in level 1 and level 2, not directly observable on the market for the evaluation of asset and liability, or used for the definition of significant adjustments to fair value. Unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk. When fair value is measured directly taking into consideration an observable price and quoted on an active market, the hierarchy attribution process will assign Level 1. When fair value has to be measured either via Comparable approach or via Mark-to-Model approach, the hierarchy attribution process will assign Level 2 or Level 3, depending on the observability of all the significant input parameters. Within the choice among various valuation techniques the Group employs the one which maximises the use of observable inputs. Transfers between hierarchy levels The main drivers to transfers in and out the FV levels (both between L1 and L2 and in/out L3) include changes in market conditions (among which liquidity parameter) and enhancements to valuation techniques and weights for unobservable inputs used for the valuation itself. Quantitative and qualitative details about transfers between FV levels occurred in the period is presented in Part A.4.5 - Fair value hierarchy. A.4.4 Other information The Group uses the IFRS13 exception for fair value measurements on a net basis with reference to financial assets and liabilities with offsetting positions of market risk or counterparty credit risk. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 589 A.4.3 Fair value hierarchy IFRS13 establishes a fair value hierarchy according to the observability of the input used in the valuation techniques adopted for valuations. The fair value hierarchy level associated to assets and liabilities is set as the minimum level among all significant valuation inputs used. A valuation input is not considered significant for the fair value of an instrument if the remaining inputs are able to explain the major part of the fair value variance itself over a period of three months. In some specific cases, the significance limit is assessed in relation to the fair value of the instrument at the measurement date. In particular, three levels are considered: • level 1: fair value for instruments classified within this level is determined according to the quoted prices on active markets; • level 2: fair value for instruments classified within this level is determined according to the valuation models which use observable inputs on active markets; • level 3: fair value for instruments classified within this level is determined according to the valuation models which prevalently use significant unobservable input on active markets. Financial instruments are classified to a certain fair value level according to the observability of the input used for the valuation. Level 1 (quoted prices in active markets): quoted prices (unadjusted) in active markets are available for identical assets or liabilities that the entity has the ability to access at the measurement date. An active market is a market in which orderly transactions for the asset or liability take place with sufficient frequency and volume for pricing information to be provided on an on-going basis (e.g. MTS market about prices for most of the government bonds therein traded). Level 2 (observable inputs): inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Inputs are observable if they are developed on the basis of publicly available information about actual events or transactions and reflect the assumptions that market participants would use when pricing the asset or liability. Level 3 (unobservable inputs): inputs other than the ones included in level 1 and level 2, not directly observable on the market for the evaluation of asset and liability, or used for the definition of significant adjustments to fair value. Unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk. When fair value is measured directly taking into consideration an observable price and quoted on an active market, the hierarchy attribution process will assign Level 1. When fair value has to be measured either via Comparable approach or via Mark-to-Model approach, the hierarchy attribution process will assign Level 2 or Level 3, depending on the observability of all the significant input parameters. Within the choice among various valuation techniques the Group employs the one which maximises the use of observable inputs. Transfers between hierarchy levels The main drivers to transfers in and out the FV levels (both between L1 and L2 and in/out L3) include changes in market conditions (among which liquidity parameter) and enhancements to valuation techniques and weights for unobservable inputs used for the valuation itself. Quantitative and qualitative details about transfers between FV levels occurred in the period is presented in Part A.4.5 - Fair value hierarchy. A.4.4 Other information The Group uses the IFRS13 exception for fair value measurements on a net basis with reference to financial assets and liabilities with offsetting positions of market risk or counterparty credit risk. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 589 A.4.3 Fair value hierarchy IFRS13 establishes a fair value hierarchy according to the observability of the input used in the valuation techniques adopted for valuations. The fair value hierarchy level associated to assets and liabilities is set as the minimum level among all significant valuation inputs used. A valuation input is not considered significant for the fair value of an instrument if the remaining inputs are able to explain the major part of the fair value variance itself over a period of three months. In some specific cases, the significance limit is assessed in relation to the fair value of the instrument at the measurement date. In particular, three levels are considered: • level 1: fair value for instruments classified within this level is determined according to the quoted prices on active markets; • level 2: fair value for instruments classified within this level is determined according to the valuation models which use observable inputs on active markets; • level 3: fair value for instruments classified within this level is determined according to the valuation models which prevalently use significant unobservable input on active markets. Financial instruments are classified to a certain fair value level according to the observability of the input used for the valuation. Level 1 (quoted prices in active markets): quoted prices (unadjusted) in active markets are available for identical assets or liabilities that the entity has the ability to access at the measurement date. An active market is a market in which orderly transactions for the asset or liability take place with sufficient frequency and volume for pricing information to be provided on an on-going basis (e.g. MTS market about prices for most of the government bonds therein traded). Level 2 (observable inputs): inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Inputs are observable if they are developed on the basis of publicly available information about actual events or transactions and reflect the assumptions that market participants would use when pricing the asset or liability. Level 3 (unobservable inputs): inputs other than the ones included in level 1 and level 2, not directly observable on the market for the evaluation of asset and liability, or used for the definition of significant adjustments to fair value. Unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk. When fair value is measured directly taking into consideration an observable price and quoted on an active market, the hierarchy attribution process will assign Level 1. When fair value has to be measured either via Comparable approach or via Mark-to-Model approach, the hierarchy attribution process will assign Level 2 or Level 3, depending on the observability of all the significant input parameters. Within the choice among various valuation techniques the Group employs the one which maximises the use of observable inputs. Transfers between hierarchy levels The main drivers to transfers in and out the FV levels (both between L1 and L2 and in/out L3) include changes in market conditions (among which liquidity parameter) and enhancements to valuation techniques and weights for unobservable inputs used for the valuation itself. Quantitative and qualitative details about transfers between FV levels occurred in the period is presented in Part A.4.5 - Fair value hierarchy. A.4.4 Other information The Group uses the IFRS13 exception for fair value measurements on a net basis with reference to financial assets and liabilities with offsetting positions of market risk or counterparty credit risk. Company financial statements | Notes to the accounts Part A - Accounting policies 590 2018 Annual Report and Accounts · UniCredit Quantitative information A.4.5 Other information The following tables show the portfolios breakdown in terms of (i) financial assets and liabilities valued at fair value as well as (ii) assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis, according to the above-mentioned levels. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2018 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at fair value through profit or loss 7,107,361 5,819,883 2,071,581 a) Financial assets held for trading 6,516,349 4,700,268 617,735 b) Financial assets designated at fair value - - - c) Financial assets mandatorily at fair value 591,012 1,119,615 1,453,846 2. Financial assets at fair value through other comprehensive income 41,694,542 4,350,833 881,162 3. Hedging derivatives 98,971 4,063,749 4,599 4. Property, plant and equipment - - - 5. Intangible assets - - - Total 48,900,874 14,234,465 2,957,342 1. Financial liabilities held for trading 4,661,768 5,295,491 426,264 2. Financial liabilities designated at fair value - 3,534,519 - 3. Hedging derivatives 99,485 4,413,864 11,909 Total 4,761,253 13,243,874 438,173 The item “1. c) Financial assets mandatorily at fair value” at level 3 as at 31 December 2018 includes the investments in Atlante and Italian Recovery Fund, former Atlante II (carrying value €355 million) and in “Schema Volontario” (carrying value €40,4 million). Since no market valuations or prices of comparable securities are available for Schema Volontario, at 31 December 2018 the fair value of such instrument was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the Rendiconto 2018 of the “Schema Volontario” itself, while concerning Atlante and Italian Recovery Fund, former Atlante II, the Fair Value was determined having as reference the valuation of the financial assets provided from the fund itself, supplemented, if appropriate, using internal models (Discounted Cash Flow and Market Multiples). See Part B - Section 2.5 - Financial assets mandatorily at fair value income for further information. Transfers between level of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution. Besides the transfers related to financial assets and liabilities carried at level 3 detailed in the sections below during the year no transfers between level 1 and 2 occurred. Company financial statements | Notes to the accounts Part A - Accounting policies 590 2018 Annual Report and Accounts · UniCredit Quantitative information A.4.5 Other information The following tables show the portfolios breakdown in terms of (i) financial assets and liabilities valued at fair value as well as (ii) assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis, according to the above-mentioned levels. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2018 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at fair value through profit or loss 7,107,361 5,819,883 2,071,581 a) Financial assets held for trading 6,516,349 4,700,268 617,735 b) Financial assets designated at fair value - - - c) Financial assets mandatorily at fair value 591,012 1,119,615 1,453,846 2. Financial assets at fair value through other comprehensive income 41,694,542 4,350,833 881,162 3. Hedging derivatives 98,971 4,063,749 4,599 4. Property, plant and equipment - - - 5. Intangible assets - - - Total 48,900,874 14,234,465 2,957,342 1. Financial liabilities held for trading 4,661,768 5,295,491 426,264 2. Financial liabilities designated at fair value - 3,534,519 - 3. Hedging derivatives 99,485 4,413,864 11,909 Total 4,761,253 13,243,874 438,173 The item “1. c) Financial assets mandatorily at fair value” at level 3 as at 31 December 2018 includes the investments in Atlante and Italian Recovery Fund, former Atlante II (carrying value €355 million) and in “Schema Volontario” (carrying value €40,4 million). Since no market valuations or prices of comparable securities are available for Schema Volontario, at 31 December 2018 the fair value of such instrument was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the Rendiconto 2018 of the “Schema Volontario” itself, while concerning Atlante and Italian Recovery Fund, former Atlante II, the Fair Value was determined having as reference the valuation of the financial assets provided from the fund itself, supplemented, if appropriate, using internal models (Discounted Cash Flow and Market Multiples). See Part B - Section 2.5 - Financial assets mandatorily at fair value income for further information. Transfers between level of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution. Besides the transfers related to financial assets and liabilities carried at level 3 detailed in the sections below during the year no transfers between level 1 and 2 occurred. Company financial statements | Notes to the accounts Part A - Accounting policies 590 2018 Annual Report and Accounts · UniCredit Quantitative information A.4.5 Other information The following tables show the portfolios breakdown in terms of (i) financial assets and liabilities valued at fair value as well as (ii) assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis, according to the above-mentioned levels. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2018 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at fair value through profit or loss 7,107,361 5,819,883 2,071,581 a) Financial assets held for trading 6,516,349 4,700,268 617,735 b) Financial assets designated at fair value - - - c) Financial assets mandatorily at fair value 591,012 1,119,615 1,453,846 2. Financial assets at fair value through other comprehensive income 41,694,542 4,350,833 881,162 3. Hedging derivatives 98,971 4,063,749 4,599 4. Property, plant and equipment - - - 5. Intangible assets - - - Total 48,900,874 14,234,465 2,957,342 1. Financial liabilities held for trading 4,661,768 5,295,491 426,264 2. Financial liabilities designated at fair value - 3,534,519 - 3. Hedging derivatives 99,485 4,413,864 11,909 Total 4,761,253 13,243,874 438,173 The item “1. c) Financial assets mandatorily at fair value” at level 3 as at 31 December 2018 includes the investments in Atlante and Italian Recovery Fund, former Atlante II (carrying value €355 million) and in “Schema Volontario” (carrying value €40,4 million). Since no market valuations or prices of comparable securities are available for Schema Volontario, at 31 December 2018 the fair value of such instrument was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the Rendiconto 2018 of the “Schema Volontario” itself, while concerning Atlante and Italian Recovery Fund, former Atlante II, the Fair Value was determined having as reference the valuation of the financial assets provided from the fund itself, supplemented, if appropriate, using internal models (Discounted Cash Flow and Market Multiples). See Part B - Section 2.5 - Financial assets mandatorily at fair value income for further information. Transfers between level of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution. Besides the transfers related to financial assets and liabilities carried at level 3 detailed in the sections below during the year no transfers between level 1 and 2 occurred. Company financial statements | Notes to the accounts Part A - Accounting policies 590 2018 Annual Report and Accounts · UniCredit Quantitative information A.4.5 Other information The following tables show the portfolios breakdown in terms of (i) financial assets and liabilities valued at fair value as well as (ii) assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis, according to the above-mentioned levels. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2018 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at fair value through profit or loss 7,107,361 5,819,883 2,071,581 a) Financial assets held for trading 6,516,349 4,700,268 617,735 b) Financial assets designated at fair value - - - c) Financial assets mandatorily at fair value 591,012 1,119,615 1,453,846 2. Financial assets at fair value through other comprehensive income 41,694,542 4,350,833 881,162 3. Hedging derivatives 98,971 4,063,749 4,599 4. Property, plant and equipment - - - 5. Intangible assets - - - Total 48,900,874 14,234,465 2,957,342 1. Financial liabilities held for trading 4,661,768 5,295,491 426,264 2. Financial liabilities designated at fair value - 3,534,519 - 3. Hedging derivatives 99,485 4,413,864 11,909 Total 4,761,253 13,243,874 438,173 The item “1. c) Financial assets mandatorily at fair value” at level 3 as at 31 December 2018 includes the investments in Atlante and Italian Recovery Fund, former Atlante II (carrying value €355 million) and in “Schema Volontario” (carrying value €40,4 million). Since no market valuations or prices of comparable securities are available for Schema Volontario, at 31 December 2018 the fair value of such instrument was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the Rendiconto 2018 of the “Schema Volontario” itself, while concerning Atlante and Italian Recovery Fund, former Atlante II, the Fair Value was determined having as reference the valuation of the financial assets provided from the fund itself, supplemented, if appropriate, using internal models (Discounted Cash Flow and Market Multiples). See Part B - Section 2.5 - Financial assets mandatorily at fair value income for further information. Transfers between level of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution. Besides the transfers related to financial assets and liabilities carried at level 3 detailed in the sections below during the year no transfers between level 1 and 2 occurred. Company financial statements | Notes to the accounts Part A - Accounting policies 590 2018 Annual Report and Accounts · UniCredit Quantitative information A.4.5 Other information The following tables show the portfolios breakdown in terms of (i) financial assets and liabilities valued at fair value as well as (ii) assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis, according to the above-mentioned levels. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) FINANCIAL ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2018 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at fair value through profit or loss 7,107,361 5,819,883 2,071,581 a) Financial assets held for trading 6,516,349 4,700,268 617,735 b) Financial assets designated at fair value - - - c) Financial assets mandatorily at fair value 591,012 1,119,615 1,453,846 2. Financial assets at fair value through other comprehensive income 41,694,542 4,350,833 881,162 3. Hedging derivatives 98,971 4,063,749 4,599 4. Property, plant and equipment - - - 5. Intangible assets - - - Total 48,900,874 14,234,465 2,957,342 1. Financial liabilities held for trading 4,661,768 5,295,491 426,264 2. Financial liabilities designated at fair value - 3,534,519 - 3. Hedging derivatives 99,485 4,413,864 11,909 Total 4,761,253 13,243,874 438,173 The item “1. c) Financial assets mandatorily at fair value” at level 3 as at 31 December 2018 includes the investments in Atlante and Italian Recovery Fund, former Atlante II (carrying value €355 million) and in “Schema Volontario” (carrying value €40,4 million). Since no market valuations or prices of comparable securities are available for Schema Volontario, at 31 December 2018 the fair value of such instrument was determined using internal models (Discounted Cash Flow and Market Multiples) also having as reference the valuation of the financial assets of the “Schema Volontario” (supported by the advisor in charge) contained in the Rendiconto 2018 of the “Schema Volontario” itself, while concerning Atlante and Italian Recovery Fund, former Atlante II, the Fair Value was determined having as reference the valuation of the financial assets provided from the fund itself, supplemented, if appropriate, using internal models (Discounted Cash Flow and Market Multiples). See Part B - Section 2.5 - Financial assets mandatorily at fair value income for further information. Transfers between level of fair value occurring during the year mainly reflect the evolution of reference market and the enhancement of processes for fair value level attribution. Besides the transfers related to financial assets and liabilities carried at level 3 detailed in the sections below during the year no transfers between level 1 and 2 occurred. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 591 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2017 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets held for trading 8,165,654 4,983,336 714,789 2. Financial assets at fair value through P&L 509,418 58,783 83,719 3. Available for sale financial assets 55,143,740 2,914,862 1,389,652 4. Hedging derivative assets 16,896 4,383,043 - 5. Property, plant and equipment - - - 6. Intangible assets - - - Total 63,835,708 12,340,024 2,188,160 1. Financial liabilities held for Trading 7,240,313 5,297,269 530,299 2. Financial liabilities at fair value through P&L - 2,737,625 - 3. Hedging derivative liabilities 29,210 4,529,110 - Total 7,269,523 12,564,004 530,299 A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME HEDGING DERIVATIVES PROPERTY, PLANT AND EQUIPMENT INTANGIBLE ASSETS TOTAL OF WHICH: A) FINANCIAL ASSETS HELD FOR TRADING OF WHICH: B) FINANCIAL ASSETS DESIGNATED AT FAIR VALUE OF WHICH: C) FINANCIAL ASSETS MANDATORILY AT FAIR VALUE 1. Opening balances 1,770,874 714,789 - 1,056,085 888,262 - - - 2. Increases 1,909,672 1,279,052 - 630,620 696,925 5,713 - - 2.1 Purchases 678,197 283,397 - 394,800 20,485 - - - 2.2 Profits recognised in 1,036,560 965,441 - 71,119 23,070 - - - 2.2.1 Income statement 1,036,560 965,441 - 71,119 3,681 - - - - of which unrealised gains 511,097 446,981 - 64,116 - - - - 2.2.2 Equity X X X X 19,389 - - - 2.3 Transfers from other levels 173,251 30,214 - 143,037 430,945 1,114 - - 2.4 Other increases 21,664 - - 21,664 222,425 4,599 - - 3. Decreases 1,608,965 1,376,106 - 232,859 704,025 1,114 - - 3.1 Sales 754,567 678,415 - 76,152 371,492 - - - 3.2 Redemptions 23,879 3 - 23,876 55,673 - - - 3.3 Losses recognised in 674,131 605,470 - 68,661 111,391 - - - 3.3.1 Income statement 674,131 605,470 - 68,661 2,853 - - - - of which unrealised losses 481,834 445,424 - 36,410 - - - - 3.3.2 Equity X X X X 108,538 - - - 3.4 Transfers to other levels 127,675 92,010 - 35,665 - - - - 3.5 Other decreases 28,713 208 - 28,505 165,469 1,114 - - of which: business combinations - - - - - - - - 4. Closing balances 2,071,581 617,735 - 1,453,846 881,162 4,599 - - The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting; • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. The sub-item “2.2 Profits” and the sub-item “3.3 Losses” on fair value on financial assets at fair value through other comprehensive income are accounted in item “120. Revaluation reserves” of Shareholder’s Equity, with the exception of impairment and gains and losses on exchange rates on monetary assets (liabilities) which are reported respectively within item “130. Net losses/recoveries on credit impairment: b) financial assets/liabilities at fair value through other comprehensive income” and item “80. Gains and losses on financial assets and liabilities held for trading” until the financial asset is not sold, instant in which cumulative gains and losses are reported at Income Statement at item “100. b) Gains and losses on financial assets at fair value through other comprehensive income”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 591 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2017 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets held for trading 8,165,654 4,983,336 714,789 2. Financial assets at fair value through P&L 509,418 58,783 83,719 3. Available for sale financial assets 55,143,740 2,914,862 1,389,652 4. Hedging derivative assets 16,896 4,383,043 - 5. Property, plant and equipment - - - 6. Intangible assets - - - Total 63,835,708 12,340,024 2,188,160 1. Financial liabilities held for Trading 7,240,313 5,297,269 530,299 2. Financial liabilities at fair value through P&L - 2,737,625 - 3. Hedging derivative liabilities 29,210 4,529,110 - Total 7,269,523 12,564,004 530,299 A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME HEDGING DERIVATIVES PROPERTY, PLANT AND EQUIPMENT INTANGIBLE ASSETS TOTAL OF WHICH: A) FINANCIAL ASSETS HELD FOR TRADING OF WHICH: B) FINANCIAL ASSETS DESIGNATED AT FAIR VALUE OF WHICH: C) FINANCIAL ASSETS MANDATORILY AT FAIR VALUE 1. Opening balances 1,770,874 714,789 - 1,056,085 888,262 - - - 2. Increases 1,909,672 1,279,052 - 630,620 696,925 5,713 - - 2.1 Purchases 678,197 283,397 - 394,800 20,485 - - - 2.2 Profits recognised in 1,036,560 965,441 - 71,119 23,070 - - - 2.2.1 Income statement 1,036,560 965,441 - 71,119 3,681 - - - - of which unrealised gains 511,097 446,981 - 64,116 - - - - 2.2.2 Equity X X X X 19,389 - - - 2.3 Transfers from other levels 173,251 30,214 - 143,037 430,945 1,114 - - 2.4 Other increases 21,664 - - 21,664 222,425 4,599 - - 3. Decreases 1,608,965 1,376,106 - 232,859 704,025 1,114 - - 3.1 Sales 754,567 678,415 - 76,152 371,492 - - - 3.2 Redemptions 23,879 3 - 23,876 55,673 - - - 3.3 Losses recognised in 674,131 605,470 - 68,661 111,391 - - - 3.3.1 Income statement 674,131 605,470 - 68,661 2,853 - - - - of which unrealised losses 481,834 445,424 - 36,410 - - - - 3.3.2 Equity X X X X 108,538 - - - 3.4 Transfers to other levels 127,675 92,010 - 35,665 - - - - 3.5 Other decreases 28,713 208 - 28,505 165,469 1,114 - - of which: business combinations - - - - - - - - 4. Closing balances 2,071,581 617,735 - 1,453,846 881,162 4,599 - - The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting; • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. The sub-item “2.2 Profits” and the sub-item “3.3 Losses” on fair value on financial assets at fair value through other comprehensive income are accounted in item “120. Revaluation reserves” of Shareholder’s Equity, with the exception of impairment and gains and losses on exchange rates on monetary assets (liabilities) which are reported respectively within item “130. Net losses/recoveries on credit impairment: b) financial assets/liabilities at fair value through other comprehensive income” and item “80. Gains and losses on financial assets and liabilities held for trading” until the financial asset is not sold, instant in which cumulative gains and losses are reported at Income Statement at item “100. b) Gains and losses on financial assets at fair value through other comprehensive income”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 591 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2017 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets held for trading 8,165,654 4,983,336 714,789 2. Financial assets at fair value through P&L 509,418 58,783 83,719 3. Available for sale financial assets 55,143,740 2,914,862 1,389,652 4. Hedging derivative assets 16,896 4,383,043 - 5. Property, plant and equipment - - - 6. Intangible assets - - - Total 63,835,708 12,340,024 2,188,160 1. Financial liabilities held for Trading 7,240,313 5,297,269 530,299 2. Financial liabilities at fair value through P&L - 2,737,625 - 3. Hedging derivative liabilities 29,210 4,529,110 - Total 7,269,523 12,564,004 530,299 A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME HEDGING DERIVATIVES PROPERTY, PLANT AND EQUIPMENT INTANGIBLE ASSETS TOTAL OF WHICH: A) FINANCIAL ASSETS HELD FOR TRADING OF WHICH: B) FINANCIAL ASSETS DESIGNATED AT FAIR VALUE OF WHICH: C) FINANCIAL ASSETS MANDATORILY AT FAIR VALUE 1. Opening balances 1,770,874 714,789 - 1,056,085 888,262 - - - 2. Increases 1,909,672 1,279,052 - 630,620 696,925 5,713 - - 2.1 Purchases 678,197 283,397 - 394,800 20,485 - - - 2.2 Profits recognised in 1,036,560 965,441 - 71,119 23,070 - - - 2.2.1 Income statement 1,036,560 965,441 - 71,119 3,681 - - - - of which unrealised gains 511,097 446,981 - 64,116 - - - - 2.2.2 Equity X X X X 19,389 - - - 2.3 Transfers from other levels 173,251 30,214 - 143,037 430,945 1,114 - - 2.4 Other increases 21,664 - - 21,664 222,425 4,599 - - 3. Decreases 1,608,965 1,376,106 - 232,859 704,025 1,114 - - 3.1 Sales 754,567 678,415 - 76,152 371,492 - - - 3.2 Redemptions 23,879 3 - 23,876 55,673 - - - 3.3 Losses recognised in 674,131 605,470 - 68,661 111,391 - - - 3.3.1 Income statement 674,131 605,470 - 68,661 2,853 - - - - of which unrealised losses 481,834 445,424 - 36,410 - - - - 3.3.2 Equity X X X X 108,538 - - - 3.4 Transfers to other levels 127,675 92,010 - 35,665 - - - - 3.5 Other decreases 28,713 208 - 28,505 165,469 1,114 - - of which: business combinations - - - - - - - - 4. Closing balances 2,071,581 617,735 - 1,453,846 881,162 4,599 - - The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting; • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. The sub-item “2.2 Profits” and the sub-item “3.3 Losses” on fair value on financial assets at fair value through other comprehensive income are accounted in item “120. Revaluation reserves” of Shareholder’s Equity, with the exception of impairment and gains and losses on exchange rates on monetary assets (liabilities) which are reported respectively within item “130. Net losses/recoveries on credit impairment: b) financial assets/liabilities at fair value through other comprehensive income” and item “80. Gains and losses on financial assets and liabilities held for trading” until the financial asset is not sold, instant in which cumulative gains and losses are reported at Income Statement at item “100. b) Gains and losses on financial assets at fair value through other comprehensive income”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 591 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2017 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets held for trading 8,165,654 4,983,336 714,789 2. Financial assets at fair value through P&L 509,418 58,783 83,719 3. Available for sale financial assets 55,143,740 2,914,862 1,389,652 4. Hedging derivative assets 16,896 4,383,043 - 5. Property, plant and equipment - - - 6. Intangible assets - - - Total 63,835,708 12,340,024 2,188,160 1. Financial liabilities held for Trading 7,240,313 5,297,269 530,299 2. Financial liabilities at fair value through P&L - 2,737,625 - 3. Hedging derivative liabilities 29,210 4,529,110 - Total 7,269,523 12,564,004 530,299 A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME HEDGING DERIVATIVES PROPERTY, PLANT AND EQUIPMENT INTANGIBLE ASSETS TOTAL OF WHICH: A) FINANCIAL ASSETS HELD FOR TRADING OF WHICH: B) FINANCIAL ASSETS DESIGNATED AT FAIR VALUE OF WHICH: C) FINANCIAL ASSETS MANDATORILY AT FAIR VALUE 1. Opening balances 1,770,874 714,789 - 1,056,085 888,262 - - - 2. Increases 1,909,672 1,279,052 - 630,620 696,925 5,713 - - 2.1 Purchases 678,197 283,397 - 394,800 20,485 - - - 2.2 Profits recognised in 1,036,560 965,441 - 71,119 23,070 - - - 2.2.1 Income statement 1,036,560 965,441 - 71,119 3,681 - - - - of which unrealised gains 511,097 446,981 - 64,116 - - - - 2.2.2 Equity X X X X 19,389 - - - 2.3 Transfers from other levels 173,251 30,214 - 143,037 430,945 1,114 - - 2.4 Other increases 21,664 - - 21,664 222,425 4,599 - - 3. Decreases 1,608,965 1,376,106 - 232,859 704,025 1,114 - - 3.1 Sales 754,567 678,415 - 76,152 371,492 - - - 3.2 Redemptions 23,879 3 - 23,876 55,673 - - - 3.3 Losses recognised in 674,131 605,470 - 68,661 111,391 - - - 3.3.1 Income statement 674,131 605,470 - 68,661 2,853 - - - - of which unrealised losses 481,834 445,424 - 36,410 - - - - 3.3.2 Equity X X X X 108,538 - - - 3.4 Transfers to other levels 127,675 92,010 - 35,665 - - - - 3.5 Other decreases 28,713 208 - 28,505 165,469 1,114 - - of which: business combinations - - - - - - - - 4. Closing balances 2,071,581 617,735 - 1,453,846 881,162 4,599 - - The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting; • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. The sub-item “2.2 Profits” and the sub-item “3.3 Losses” on fair value on financial assets at fair value through other comprehensive income are accounted in item “120. Revaluation reserves” of Shareholder’s Equity, with the exception of impairment and gains and losses on exchange rates on monetary assets (liabilities) which are reported respectively within item “130. Net losses/recoveries on credit impairment: b) financial assets/liabilities at fair value through other comprehensive income” and item “80. Gains and losses on financial assets and liabilities held for trading” until the financial asset is not sold, instant in which cumulative gains and losses are reported at Income Statement at item “100. b) Gains and losses on financial assets at fair value through other comprehensive income”. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 591 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES MEASURED AT FAIR VALUE AMOUNTS AS AT 12.31.2017 LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets held for trading 8,165,654 4,983,336 714,789 2. Financial assets at fair value through P&L 509,418 58,783 83,719 3. Available for sale financial assets 55,143,740 2,914,862 1,389,652 4. Hedging derivative assets 16,896 4,383,043 - 5. Property, plant and equipment - - - 6. Intangible assets - - - Total 63,835,708 12,340,024 2,188,160 1. Financial liabilities held for Trading 7,240,313 5,297,269 530,299 2. Financial liabilities at fair value through P&L - 2,737,625 - 3. Hedging derivative liabilities 29,210 4,529,110 - Total 7,269,523 12,564,004 530,299 A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME HEDGING DERIVATIVES PROPERTY, PLANT AND EQUIPMENT INTANGIBLE ASSETS TOTAL OF WHICH: A) FINANCIAL ASSETS HELD FOR TRADING OF WHICH: B) FINANCIAL ASSETS DESIGNATED AT FAIR VALUE OF WHICH: C) FINANCIAL ASSETS MANDATORILY AT FAIR VALUE 1. Opening balances 1,770,874 714,789 - 1,056,085 888,262 - - - 2. Increases 1,909,672 1,279,052 - 630,620 696,925 5,713 - - 2.1 Purchases 678,197 283,397 - 394,800 20,485 - - - 2.2 Profits recognised in 1,036,560 965,441 - 71,119 23,070 - - - 2.2.1 Income statement 1,036,560 965,441 - 71,119 3,681 - - - - of which unrealised gains 511,097 446,981 - 64,116 - - - - 2.2.2 Equity X X X X 19,389 - - - 2.3 Transfers from other levels 173,251 30,214 - 143,037 430,945 1,114 - - 2.4 Other increases 21,664 - - 21,664 222,425 4,599 - - 3. Decreases 1,608,965 1,376,106 - 232,859 704,025 1,114 - - 3.1 Sales 754,567 678,415 - 76,152 371,492 - - - 3.2 Redemptions 23,879 3 - 23,876 55,673 - - - 3.3 Losses recognised in 674,131 605,470 - 68,661 111,391 - - - 3.3.1 Income statement 674,131 605,470 - 68,661 2,853 - - - - of which unrealised losses 481,834 445,424 - 36,410 - - - - 3.3.2 Equity X X X X 108,538 - - - 3.4 Transfers to other levels 127,675 92,010 - 35,665 - - - - 3.5 Other decreases 28,713 208 - 28,505 165,469 1,114 - - of which: business combinations - - - - - - - - 4. Closing balances 2,071,581 617,735 - 1,453,846 881,162 4,599 - - The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting; • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. The sub-item “2.2 Profits” and the sub-item “3.3 Losses” on fair value on financial assets at fair value through other comprehensive income are accounted in item “120. Revaluation reserves” of Shareholder’s Equity, with the exception of impairment and gains and losses on exchange rates on monetary assets (liabilities) which are reported respectively within item “130. Net losses/recoveries on credit impairment: b) financial assets/liabilities at fair value through other comprehensive income” and item “80. Gains and losses on financial assets and liabilities held for trading” until the financial asset is not sold, instant in which cumulative gains and losses are reported at Income Statement at item “100. b) Gains and losses on financial assets at fair value through other comprehensive income”. Company financial statements | Notes to the accounts Part A - Accounting policies 592 2018 Annual Report and Accounts · UniCredit A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL LIABILITIES HELD FOR TRADING FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE HEDGING DERIVATIVES 1. Opening balances 530,298 - - 2. Increases 996,730 - 11,909 2.1 Issuance 145,122 - - 2.2 Losses recognised in 820,575 - - 2.2.1 Income statement 820,575 - - - of which unrealised losses 354,148 - - 2.2.2 Equity X - - 2.3 Transfers from other levels 31,033 - 5,422 2.4 Other increases - - 6,487 3. Decreases 1,100,764 - - 3.1 Redemptions 468,701 - - 3.2 Purchases - - - 3.3 Profits recognised in 539,551 - - 3.3.1 Income statement 539,551 - - - of which unrealised gains 363,398 - - 3.3.2 Equity X - - 3.4 Transfers to other levels 92,512 - - 3.5 Other decreases - - - of which: business combinations - - - 4. Closing balances 426,264 - 11,909 The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting. • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at amortised cost 270,556,434 16,476,688 130,496,611 122,714,962 2. Property, plant and equipment held for investment 568,627 - - 742,709 3. Non-current assets and disposal groups classified as held for sale 116,674 - 57,273 - Total 271,241,735 16,476,688 130,553,884 123,457,671 1. Financial liabilities at amortised cost 323,835,359 27,590,067 95,423,293 200,695,283 2. Liabilities associated with assets classified as held for sale - - - - Total 323,835,359 27,590,067 95,423,293 200,695,283 The changes occurred between 31 December 2017 and 31 December 2018 in the ratio between fair value and book value for financial assets at amortised cost reflect the enhancement of the methodology and the parameters adopted for the fair value calculation for disclosure and the evolution in the benchmark interest rate, in the risk premium and in the probability of default depending on or deriving from markets trend. These events together with the evolution of the approach to identify the significance of non-observable inputs have been reflected in fair value hierarchy level distribution. The book value of items “3. Non-current assets and disposal groups classified as held for sale” (Assets) includes amounts referred to assets measured on Balance Sheet on the basis of their cost €59 million. For further details on these two sub-items see Part B - Section 11 - table 11.1. Company financial statements | Notes to the accounts Part A - Accounting policies 592 2018 Annual Report and Accounts · UniCredit A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL LIABILITIES HELD FOR TRADING FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE HEDGING DERIVATIVES 1. Opening balances 530,298 - - 2. Increases 996,730 - 11,909 2.1 Issuance 145,122 - - 2.2 Losses recognised in 820,575 - - 2.2.1 Income statement 820,575 - - - of which unrealised losses 354,148 - - 2.2.2 Equity X - - 2.3 Transfers from other levels 31,033 - 5,422 2.4 Other increases - - 6,487 3. Decreases 1,100,764 - - 3.1 Redemptions 468,701 - - 3.2 Purchases - - - 3.3 Profits recognised in 539,551 - - 3.3.1 Income statement 539,551 - - - of which unrealised gains 363,398 - - 3.3.2 Equity X - - 3.4 Transfers to other levels 92,512 - - 3.5 Other decreases - - - of which: business combinations - - - 4. Closing balances 426,264 - 11,909 The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting. • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at amortised cost 270,556,434 16,476,688 130,496,611 122,714,962 2. Property, plant and equipment held for investment 568,627 - - 742,709 3. Non-current assets and disposal groups classified as held for sale 116,674 - 57,273 - Total 271,241,735 16,476,688 130,553,884 123,457,671 1. Financial liabilities at amortised cost 323,835,359 27,590,067 95,423,293 200,695,283 2. Liabilities associated with assets classified as held for sale - - - - Total 323,835,359 27,590,067 95,423,293 200,695,283 The changes occurred between 31 December 2017 and 31 December 2018 in the ratio between fair value and book value for financial assets at amortised cost reflect the enhancement of the methodology and the parameters adopted for the fair value calculation for disclosure and the evolution in the benchmark interest rate, in the risk premium and in the probability of default depending on or deriving from markets trend. These events together with the evolution of the approach to identify the significance of non-observable inputs have been reflected in fair value hierarchy level distribution. The book value of items “3. Non-current assets and disposal groups classified as held for sale” (Assets) includes amounts referred to assets measured on Balance Sheet on the basis of their cost €59 million. For further details on these two sub-items see Part B - Section 11 - table 11.1. Company financial statements | Notes to the accounts Part A - Accounting policies 592 2018 Annual Report and Accounts · UniCredit A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL LIABILITIES HELD FOR TRADING FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE HEDGING DERIVATIVES 1. Opening balances 530,298 - - 2. Increases 996,730 - 11,909 2.1 Issuance 145,122 - - 2.2 Losses recognised in 820,575 - - 2.2.1 Income statement 820,575 - - - of which unrealised losses 354,148 - - 2.2.2 Equity X - - 2.3 Transfers from other levels 31,033 - 5,422 2.4 Other increases - - 6,487 3. Decreases 1,100,764 - - 3.1 Redemptions 468,701 - - 3.2 Purchases - - - 3.3 Profits recognised in 539,551 - - 3.3.1 Income statement 539,551 - - - of which unrealised gains 363,398 - - 3.3.2 Equity X - - 3.4 Transfers to other levels 92,512 - - 3.5 Other decreases - - - of which: business combinations - - - 4. Closing balances 426,264 - 11,909 The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting. • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at amortised cost 270,556,434 16,476,688 130,496,611 122,714,962 2. Property, plant and equipment held for investment 568,627 - - 742,709 3. Non-current assets and disposal groups classified as held for sale 116,674 - 57,273 - Total 271,241,735 16,476,688 130,553,884 123,457,671 1. Financial liabilities at amortised cost 323,835,359 27,590,067 95,423,293 200,695,283 2. Liabilities associated with assets classified as held for sale - - - - Total 323,835,359 27,590,067 95,423,293 200,695,283 The changes occurred between 31 December 2017 and 31 December 2018 in the ratio between fair value and book value for financial assets at amortised cost reflect the enhancement of the methodology and the parameters adopted for the fair value calculation for disclosure and the evolution in the benchmark interest rate, in the risk premium and in the probability of default depending on or deriving from markets trend. These events together with the evolution of the approach to identify the significance of non-observable inputs have been reflected in fair value hierarchy level distribution. The book value of items “3. Non-current assets and disposal groups classified as held for sale” (Assets) includes amounts referred to assets measured on Balance Sheet on the basis of their cost €59 million. For further details on these two sub-items see Part B - Section 11 - table 11.1. Company financial statements | Notes to the accounts Part A - Accounting policies 592 2018 Annual Report and Accounts · UniCredit A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL LIABILITIES HELD FOR TRADING FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE HEDGING DERIVATIVES 1. Opening balances 530,298 - - 2. Increases 996,730 - 11,909 2.1 Issuance 145,122 - - 2.2 Losses recognised in 820,575 - - 2.2.1 Income statement 820,575 - - - of which unrealised losses 354,148 - - 2.2.2 Equity X - - 2.3 Transfers from other levels 31,033 - 5,422 2.4 Other increases - - 6,487 3. Decreases 1,100,764 - - 3.1 Redemptions 468,701 - - 3.2 Purchases - - - 3.3 Profits recognised in 539,551 - - 3.3.1 Income statement 539,551 - - - of which unrealised gains 363,398 - - 3.3.2 Equity X - - 3.4 Transfers to other levels 92,512 - - 3.5 Other decreases - - - of which: business combinations - - - 4. Closing balances 426,264 - 11,909 The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting. • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at amortised cost 270,556,434 16,476,688 130,496,611 122,714,962 2. Property, plant and equipment held for investment 568,627 - - 742,709 3. Non-current assets and disposal groups classified as held for sale 116,674 - 57,273 - Total 271,241,735 16,476,688 130,553,884 123,457,671 1. Financial liabilities at amortised cost 323,835,359 27,590,067 95,423,293 200,695,283 2. Liabilities associated with assets classified as held for sale - - - - Total 323,835,359 27,590,067 95,423,293 200,695,283 The changes occurred between 31 December 2017 and 31 December 2018 in the ratio between fair value and book value for financial assets at amortised cost reflect the enhancement of the methodology and the parameters adopted for the fair value calculation for disclosure and the evolution in the benchmark interest rate, in the risk premium and in the probability of default depending on or deriving from markets trend. These events together with the evolution of the approach to identify the significance of non-observable inputs have been reflected in fair value hierarchy level distribution. The book value of items “3. Non-current assets and disposal groups classified as held for sale” (Assets) includes amounts referred to assets measured on Balance Sheet on the basis of their cost €59 million. For further details on these two sub-items see Part B - Section 11 - table 11.1. Company financial statements | Notes to the accounts Part A - Accounting policies 592 2018 Annual Report and Accounts · UniCredit A.4.5.3 Annual changes in liabilities measured at fair value on a recurring basis (level 3) (€ '000) CHANGES IN 2018 FINANCIAL LIABILITIES HELD FOR TRADING FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE HEDGING DERIVATIVES 1. Opening balances 530,298 - - 2. Increases 996,730 - 11,909 2.1 Issuance 145,122 - - 2.2 Losses recognised in 820,575 - - 2.2.1 Income statement 820,575 - - - of which unrealised losses 354,148 - - 2.2.2 Equity X - - 2.3 Transfers from other levels 31,033 - 5,422 2.4 Other increases - - 6,487 3. Decreases 1,100,764 - - 3.1 Redemptions 468,701 - - 3.2 Purchases - - - 3.3 Profits recognised in 539,551 - - 3.3.1 Income statement 539,551 - - - of which unrealised gains 363,398 - - 3.3.2 Equity X - - 3.4 Transfers to other levels 92,512 - - 3.5 Other decreases - - - of which: business combinations - - - 4. Closing balances 426,264 - 11,909 The items “2. Increases” and “3. Decreases” in financial assets are included in the profit and loss in the following items: • Item 80: Gains and losses on financial assets and liabilities held for trading; • Item 90: Fair value adjustments in hedge accounting. • Item 110: Net gains (losses) on other financial assets/liabilities at fair value through profit or loss. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value levels (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Financial assets at amortised cost 270,556,434 16,476,688 130,496,611 122,714,962 2. Property, plant and equipment held for investment 568,627 - - 742,709 3. Non-current assets and disposal groups classified as held for sale 116,674 - 57,273 - Total 271,241,735 16,476,688 130,553,884 123,457,671 1. Financial liabilities at amortised cost 323,835,359 27,590,067 95,423,293 200,695,283 2. Liabilities associated with assets classified as held for sale - - - - Total 323,835,359 27,590,067 95,423,293 200,695,283 The changes occurred between 31 December 2017 and 31 December 2018 in the ratio between fair value and book value for financial assets at amortised cost reflect the enhancement of the methodology and the parameters adopted for the fair value calculation for disclosure and the evolution in the benchmark interest rate, in the risk premium and in the probability of default depending on or deriving from markets trend. These events together with the evolution of the approach to identify the significance of non-observable inputs have been reflected in fair value hierarchy level distribution. The book value of items “3. Non-current assets and disposal groups classified as held for sale” (Assets) includes amounts referred to assets measured on Balance Sheet on the basis of their cost €59 million. For further details on these two sub-items see Part B - Section 11 - table 11.1. Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 593 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value level (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Held-to-maturity investments 762,431 22,403 759,067 - 2. Loans and receivables with banks 27,566,761 29,292 12,005,277 15,780,419 3. Loans and receivables with customers 208,965,455 - 92,410,539 115,728,812 4. Property, plant and equipment held for investment 540,914 - - 704,974 5. Non-current assets and disposal groups classified as held for sale 150,031 - 79,306 - Total 237,985,592 51,695 105,254,189 132,214,205 1. Deposits from banks 56,807,016 - 13,896,046 43,033,573 2. Deposits from customers 197,138,762 - 37,732,119 159,325,053 3. Debt securities in issue 64,945,632 30,184,820 31,599,312 6,316,916 4. Liabilities included in disposal groups classified as held for sale - - - - Total 318,891,410 30,184,820 83,227,477 208,675,542 The value at which financial instruments are recognised is equal to their fair value on the same date. The fair value of financial instruments, other than those designated at fair value through profit or loss, at their recognition date is usually assumed to be equal to the amount collected or paid. For financial instruments held for trading (see Sections 1 and 14 of part A.2 above) and instruments designated at fair value (see Sections 5 and 15 of part A.2 above), any difference from the amount collected or paid is posted under the appropriate items of the income statement. The use of conservative valuation models, the processes described above for revising the models used and related parameters and value adjustments to reflect model risk ensure that the amount recognised in the income statement is not derived from the use of valuation parameters that cannot be observed. More specifically, the calculation of fair value adjustments to reflect model risk ensures that the fair value portion of these instruments relating to the use of subjective parameters is not recognised in the profit and loss account, but changes the balance sheet value of these instruments. Recognition of this portion in the profit and loss account is then made only when objective parameters are applied and therefore the adjustments are derecognised. At 31 December 2018, as well as at 31 December 2017, there were no value adjustments to reflect model risk (amount not recognised though profit or loss). Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 593 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value level (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Held-to-maturity investments 762,431 22,403 759,067 - 2. Loans and receivables with banks 27,566,761 29,292 12,005,277 15,780,419 3. Loans and receivables with customers 208,965,455 - 92,410,539 115,728,812 4. Property, plant and equipment held for investment 540,914 - - 704,974 5. Non-current assets and disposal groups classified as held for sale 150,031 - 79,306 - Total 237,985,592 51,695 105,254,189 132,214,205 1. Deposits from banks 56,807,016 - 13,896,046 43,033,573 2. Deposits from customers 197,138,762 - 37,732,119 159,325,053 3. Debt securities in issue 64,945,632 30,184,820 31,599,312 6,316,916 4. Liabilities included in disposal groups classified as held for sale - - - - Total 318,891,410 30,184,820 83,227,477 208,675,542 The value at which financial instruments are recognised is equal to their fair value on the same date. The fair value of financial instruments, other than those designated at fair value through profit or loss, at their recognition date is usually assumed to be equal to the amount collected or paid. For financial instruments held for trading (see Sections 1 and 14 of part A.2 above) and instruments designated at fair value (see Sections 5 and 15 of part A.2 above), any difference from the amount collected or paid is posted under the appropriate items of the income statement. The use of conservative valuation models, the processes described above for revising the models used and related parameters and value adjustments to reflect model risk ensure that the amount recognised in the income statement is not derived from the use of valuation parameters that cannot be observed. More specifically, the calculation of fair value adjustments to reflect model risk ensures that the fair value portion of these instruments relating to the use of subjective parameters is not recognised in the profit and loss account, but changes the balance sheet value of these instruments. Recognition of this portion in the profit and loss account is then made only when objective parameters are applied and therefore the adjustments are derecognised. At 31 December 2018, as well as at 31 December 2017, there were no value adjustments to reflect model risk (amount not recognised though profit or loss). Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 593 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value level (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Held-to-maturity investments 762,431 22,403 759,067 - 2. Loans and receivables with banks 27,566,761 29,292 12,005,277 15,780,419 3. Loans and receivables with customers 208,965,455 - 92,410,539 115,728,812 4. Property, plant and equipment held for investment 540,914 - - 704,974 5. Non-current assets and disposal groups classified as held for sale 150,031 - 79,306 - Total 237,985,592 51,695 105,254,189 132,214,205 1. Deposits from banks 56,807,016 - 13,896,046 43,033,573 2. Deposits from customers 197,138,762 - 37,732,119 159,325,053 3. Debt securities in issue 64,945,632 30,184,820 31,599,312 6,316,916 4. Liabilities included in disposal groups classified as held for sale - - - - Total 318,891,410 30,184,820 83,227,477 208,675,542 The value at which financial instruments are recognised is equal to their fair value on the same date. The fair value of financial instruments, other than those designated at fair value through profit or loss, at their recognition date is usually assumed to be equal to the amount collected or paid. For financial instruments held for trading (see Sections 1 and 14 of part A.2 above) and instruments designated at fair value (see Sections 5 and 15 of part A.2 above), any difference from the amount collected or paid is posted under the appropriate items of the income statement. The use of conservative valuation models, the processes described above for revising the models used and related parameters and value adjustments to reflect model risk ensure that the amount recognised in the income statement is not derived from the use of valuation parameters that cannot be observed. More specifically, the calculation of fair value adjustments to reflect model risk ensures that the fair value portion of these instruments relating to the use of subjective parameters is not recognised in the profit and loss account, but changes the balance sheet value of these instruments. Recognition of this portion in the profit and loss account is then made only when objective parameters are applied and therefore the adjustments are derecognised. At 31 December 2018, as well as at 31 December 2017, there were no value adjustments to reflect model risk (amount not recognised though profit or loss). Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 593 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value level (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Held-to-maturity investments 762,431 22,403 759,067 - 2. Loans and receivables with banks 27,566,761 29,292 12,005,277 15,780,419 3. Loans and receivables with customers 208,965,455 - 92,410,539 115,728,812 4. Property, plant and equipment held for investment 540,914 - - 704,974 5. Non-current assets and disposal groups classified as held for sale 150,031 - 79,306 - Total 237,985,592 51,695 105,254,189 132,214,205 1. Deposits from banks 56,807,016 - 13,896,046 43,033,573 2. Deposits from customers 197,138,762 - 37,732,119 159,325,053 3. Debt securities in issue 64,945,632 30,184,820 31,599,312 6,316,916 4. Liabilities included in disposal groups classified as held for sale - - - - Total 318,891,410 30,184,820 83,227,477 208,675,542 The value at which financial instruments are recognised is equal to their fair value on the same date. The fair value of financial instruments, other than those designated at fair value through profit or loss, at their recognition date is usually assumed to be equal to the amount collected or paid. For financial instruments held for trading (see Sections 1 and 14 of part A.2 above) and instruments designated at fair value (see Sections 5 and 15 of part A.2 above), any difference from the amount collected or paid is posted under the appropriate items of the income statement. The use of conservative valuation models, the processes described above for revising the models used and related parameters and value adjustments to reflect model risk ensure that the amount recognised in the income statement is not derived from the use of valuation parameters that cannot be observed. More specifically, the calculation of fair value adjustments to reflect model risk ensures that the fair value portion of these instruments relating to the use of subjective parameters is not recognised in the profit and loss account, but changes the balance sheet value of these instruments. Recognition of this portion in the profit and loss account is then made only when objective parameters are applied and therefore the adjustments are derecognised. At 31 December 2018, as well as at 31 December 2017, there were no value adjustments to reflect model risk (amount not recognised though profit or loss). Company financial statements | Notes to the accounts Part A - Accounting policies UniCredit ·2018 Annual Report and Accounts 593 The table prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) is reported below for the purpose of comparability. A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: breakdown by fair value level (€ '000) ASSETS/LIABILITIES NOT MEASURED AT FAIR VALUE OR MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Held-to-maturity investments 762,431 22,403 759,067 - 2. Loans and receivables with banks 27,566,761 29,292 12,005,277 15,780,419 3. Loans and receivables with customers 208,965,455 - 92,410,539 115,728,812 4. Property, plant and equipment held for investment 540,914 - - 704,974 5. Non-current assets and disposal groups classified as held for sale 150,031 - 79,306 - Total 237,985,592 51,695 105,254,189 132,214,205 1. Deposits from banks 56,807,016 - 13,896,046 43,033,573 2. Deposits from customers 197,138,762 - 37,732,119 159,325,053 3. Debt securities in issue 64,945,632 30,184,820 31,599,312 6,316,916 4. Liabilities included in disposal groups classified as held for sale - - - - Total 318,891,410 30,184,820 83,227,477 208,675,542 The value at which financial instruments are recognised is equal to their fair value on the same date. The fair value of financial instruments, other than those designated at fair value through profit or loss, at their recognition date is usually assumed to be equal to the amount collected or paid. For financial instruments held for trading (see Sections 1 and 14 of part A.2 above) and instruments designated at fair value (see Sections 5 and 15 of part A.2 above), any difference from the amount collected or paid is posted under the appropriate items of the income statement. The use of conservative valuation models, the processes described above for revising the models used and related parameters and value adjustments to reflect model risk ensure that the amount recognised in the income statement is not derived from the use of valuation parameters that cannot be observed. More specifically, the calculation of fair value adjustments to reflect model risk ensures that the fair value portion of these instruments relating to the use of subjective parameters is not recognised in the profit and loss account, but changes the balance sheet value of these instruments. Recognition of this portion in the profit and loss account is then made only when objective parameters are applied and therefore the adjustments are derecognised. At 31 December 2018, as well as at 31 December 2017, there were no value adjustments to reflect model risk (amount not recognised though profit or loss). Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 594 2018 Annual Report and Accounts · UniCredit Part B - Balance sheet Assets Section 1 - Cash and cash balances - Item 10 1.1 Cash and cash balances: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 a) Cash 1,530,300 1,483,113 b) Demand deposits with Central banks 5,930,406 24,333,595 Total 7,460,706 25,816,708 The change in the item "Demand deposits with Central Banks" is mainly attributable to the increase in cash invested with Banca d’Italia. Section 2 - Financial assets at fair value through profit or loss - Item 20 2.1 Financial assets held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Financial assets (non-derivatives) 1. Debt securities 6,511,690 64 - 1.1 Structured securities - - - 1.2 Other debt securities 6,511,690 64 - 2. Equity instruments - - - 3. Units in investment funds - - - 4. Loans - - - 4.1 Reverse Repos - - - 4.2 Other - - - Total (A) 6,511,690 64 - B. Derivative instruments 1. Financial derivatives 4,659 4,700,204 617,735 1.1 Trading 4,659 4,574,375 349,879 1.2 Linked to fair value option - 6,650 227,758 1.3 Other - 119,179 40,098 2. Credit derivatives - - - 2.1 Trading - - - 2.2 Linked to fair value option - - - 2.3 Other - - - Total (B) 4,659 4,700,204 617,735 Total (A+B) 6,516,349 4,700,268 617,735 Total Level 1, Level 2 and Level 3 11,834,352 The sub-item "Financial assets (non-derivatives)" consists mainly of Italian government bonds from Market Making activity. The sub-item "Derivative instruments-Financial derivatives-Other" comprises: (i) derivatives embedded in structured financial instruments, where the host has been classified in a category different from held-for-trading or fair value option and (ii) derivatives that, for economic purposes, relate to banking book entries. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value of this Notes to the accounts. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 594 2018 Annual Report and Accounts · UniCredit Part B - Balance sheet Assets Section 1 - Cash and cash balances - Item 10 1.1 Cash and cash balances: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 a) Cash 1,530,300 1,483,113 b) Demand deposits with Central banks 5,930,406 24,333,595 Total 7,460,706 25,816,708 The change in the item "Demand deposits with Central Banks" is mainly attributable to the increase in cash invested with Banca d’Italia. Section 2 - Financial assets at fair value through profit or loss - Item 20 2.1 Financial assets held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Financial assets (non-derivatives) 1. Debt securities 6,511,690 64 - 1.1 Structured securities - - - 1.2 Other debt securities 6,511,690 64 - 2. Equity instruments - - - 3. Units in investment funds - - - 4. Loans - - - 4.1 Reverse Repos - - - 4.2 Other - - - Total (A) 6,511,690 64 - B. Derivative instruments 1. Financial derivatives 4,659 4,700,204 617,735 1.1 Trading 4,659 4,574,375 349,879 1.2 Linked to fair value option - 6,650 227,758 1.3 Other - 119,179 40,098 2. Credit derivatives - - - 2.1 Trading - - - 2.2 Linked to fair value option - - - 2.3 Other - - - Total (B) 4,659 4,700,204 617,735 Total (A+B) 6,516,349 4,700,268 617,735 Total Level 1, Level 2 and Level 3 11,834,352 The sub-item "Financial assets (non-derivatives)" consists mainly of Italian government bonds from Market Making activity. The sub-item "Derivative instruments-Financial derivatives-Other" comprises: (i) derivatives embedded in structured financial instruments, where the host has been classified in a category different from held-for-trading or fair value option and (ii) derivatives that, for economic purposes, relate to banking book entries. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value of this Notes to the accounts. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 594 2018 Annual Report and Accounts · UniCredit Part B - Balance sheet Assets Section 1 - Cash and cash balances - Item 10 1.1 Cash and cash balances: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 a) Cash 1,530,300 1,483,113 b) Demand deposits with Central banks 5,930,406 24,333,595 Total 7,460,706 25,816,708 The change in the item "Demand deposits with Central Banks" is mainly attributable to the increase in cash invested with Banca d’Italia. Section 2 - Financial assets at fair value through profit or loss - Item 20 2.1 Financial assets held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Financial assets (non-derivatives) 1. Debt securities 6,511,690 64 - 1.1 Structured securities - - - 1.2 Other debt securities 6,511,690 64 - 2. Equity instruments - - - 3. Units in investment funds - - - 4. Loans - - - 4.1 Reverse Repos - - - 4.2 Other - - - Total (A) 6,511,690 64 - B. Derivative instruments 1. Financial derivatives 4,659 4,700,204 617,735 1.1 Trading 4,659 4,574,375 349,879 1.2 Linked to fair value option - 6,650 227,758 1.3 Other - 119,179 40,098 2. Credit derivatives - - - 2.1 Trading - - - 2.2 Linked to fair value option - - - 2.3 Other - - - Total (B) 4,659 4,700,204 617,735 Total (A+B) 6,516,349 4,700,268 617,735 Total Level 1, Level 2 and Level 3 11,834,352 The sub-item "Financial assets (non-derivatives)" consists mainly of Italian government bonds from Market Making activity. The sub-item "Derivative instruments-Financial derivatives-Other" comprises: (i) derivatives embedded in structured financial instruments, where the host has been classified in a category different from held-for-trading or fair value option and (ii) derivatives that, for economic purposes, relate to banking book entries. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value of this Notes to the accounts. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 594 2018 Annual Report and Accounts · UniCredit Part B - Balance sheet Assets Section 1 - Cash and cash balances - Item 10 1.1 Cash and cash balances: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 a) Cash 1,530,300 1,483,113 b) Demand deposits with Central banks 5,930,406 24,333,595 Total 7,460,706 25,816,708 The change in the item "Demand deposits with Central Banks" is mainly attributable to the increase in cash invested with Banca d’Italia. Section 2 - Financial assets at fair value through profit or loss - Item 20 2.1 Financial assets held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Financial assets (non-derivatives) 1. Debt securities 6,511,690 64 - 1.1 Structured securities - - - 1.2 Other debt securities 6,511,690 64 - 2. Equity instruments - - - 3. Units in investment funds - - - 4. Loans - - - 4.1 Reverse Repos - - - 4.2 Other - - - Total (A) 6,511,690 64 - B. Derivative instruments 1. Financial derivatives 4,659 4,700,204 617,735 1.1 Trading 4,659 4,574,375 349,879 1.2 Linked to fair value option - 6,650 227,758 1.3 Other - 119,179 40,098 2. Credit derivatives - - - 2.1 Trading - - - 2.2 Linked to fair value option - - - 2.3 Other - - - Total (B) 4,659 4,700,204 617,735 Total (A+B) 6,516,349 4,700,268 617,735 Total Level 1, Level 2 and Level 3 11,834,352 The sub-item "Financial assets (non-derivatives)" consists mainly of Italian government bonds from Market Making activity. The sub-item "Derivative instruments-Financial derivatives-Other" comprises: (i) derivatives embedded in structured financial instruments, where the host has been classified in a category different from held-for-trading or fair value option and (ii) derivatives that, for economic purposes, relate to banking book entries. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value of this Notes to the accounts. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 594 2018 Annual Report and Accounts · UniCredit Part B - Balance sheet Assets Section 1 - Cash and cash balances - Item 10 1.1 Cash and cash balances: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 a) Cash 1,530,300 1,483,113 b) Demand deposits with Central banks 5,930,406 24,333,595 Total 7,460,706 25,816,708 The change in the item "Demand deposits with Central Banks" is mainly attributable to the increase in cash invested with Banca d’Italia. Section 2 - Financial assets at fair value through profit or loss - Item 20 2.1 Financial assets held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Financial assets (non-derivatives) 1. Debt securities 6,511,690 64 - 1.1 Structured securities - - - 1.2 Other debt securities 6,511,690 64 - 2. Equity instruments - - - 3. Units in investment funds - - - 4. Loans - - - 4.1 Reverse Repos - - - 4.2 Other - - - Total (A) 6,511,690 64 - B. Derivative instruments 1. Financial derivatives 4,659 4,700,204 617,735 1.1 Trading 4,659 4,574,375 349,879 1.2 Linked to fair value option - 6,650 227,758 1.3 Other - 119,179 40,098 2. Credit derivatives - - - 2.1 Trading - - - 2.2 Linked to fair value option - - - 2.3 Other - - - Total (B) 4,659 4,700,204 617,735 Total (A+B) 6,516,349 4,700,268 617,735 Total Level 1, Level 2 and Level 3 11,834,352 The sub-item "Financial assets (non-derivatives)" consists mainly of Italian government bonds from Market Making activity. The sub-item "Derivative instruments-Financial derivatives-Other" comprises: (i) derivatives embedded in structured financial instruments, where the host has been classified in a category different from held-for-trading or fair value option and (ii) derivatives that, for economic purposes, relate to banking book entries. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value of this Notes to the accounts. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 595 2.2 Financial assets held for trading: breakdown by borrowers/issuers/counterparties (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 A. Financial assets (non-derivatives) 1. Debt securities 6,511,754 a) Central Banks - b) Governments and other Public Sector Entities 6,511,742 c) Banks 12 d) Other financial companies - of which: insurance companies - e) Non-financial companies - 2. Equity instruments - a) Banks - b) Other financial companies - of which: insurance companies - c) Non-financial companies - d) Other issuers - 3. Units in investment funds - 4. Loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total A 6,511,754 B. Derivative instruments a) Central counterparties 153,012 d) Other 5,169,586 Total B 5,322,598 Total (A+B) 11,834,352 2.3 Financial assets designated at fair value: breakdown by product The items are composed of debt securities for an immaterial amount of €351. 2.4 Financial assets designated at fair value: breakdown by borrowers/issuers No data to be disclosed. 2.5 Other financial assets mandatorily at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 174,666 1,053,382 235,364 1.1 Structured securities - 4,694 29,042 1.2 Other debt securities 174,666 1,048,688 206,322 2. Equity instruments 416,346 37,464 102,838 3. Units in investment funds - 28,769 1,057,208 4. Loans - - 58,436 4.1 Structured - - - 4.2 Other - - 58,436 Total 591,012 1,119,615 1,453,846 Total Level 1, Level 2 and Level 3 3,164,473 The sub-item “Debt securities” includes investments in FINO Project’s Mezzanine and Junior Notes with a value of €60 million. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 595 2.2 Financial assets held for trading: breakdown by borrowers/issuers/counterparties (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 A. Financial assets (non-derivatives) 1. Debt securities 6,511,754 a) Central Banks - b) Governments and other Public Sector Entities 6,511,742 c) Banks 12 d) Other financial companies - of which: insurance companies - e) Non-financial companies - 2. Equity instruments - a) Banks - b) Other financial companies - of which: insurance companies - c) Non-financial companies - d) Other issuers - 3. Units in investment funds - 4. Loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total A 6,511,754 B. Derivative instruments a) Central counterparties 153,012 d) Other 5,169,586 Total B 5,322,598 Total (A+B) 11,834,352 2.3 Financial assets designated at fair value: breakdown by product The items are composed of debt securities for an immaterial amount of €351. 2.4 Financial assets designated at fair value: breakdown by borrowers/issuers No data to be disclosed. 2.5 Other financial assets mandatorily at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 174,666 1,053,382 235,364 1.1 Structured securities - 4,694 29,042 1.2 Other debt securities 174,666 1,048,688 206,322 2. Equity instruments 416,346 37,464 102,838 3. Units in investment funds - 28,769 1,057,208 4. Loans - - 58,436 4.1 Structured - - - 4.2 Other - - 58,436 Total 591,012 1,119,615 1,453,846 Total Level 1, Level 2 and Level 3 3,164,473 The sub-item “Debt securities” includes investments in FINO Project’s Mezzanine and Junior Notes with a value of €60 million. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 595 2.2 Financial assets held for trading: breakdown by borrowers/issuers/counterparties (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 A. Financial assets (non-derivatives) 1. Debt securities 6,511,754 a) Central Banks - b) Governments and other Public Sector Entities 6,511,742 c) Banks 12 d) Other financial companies - of which: insurance companies - e) Non-financial companies - 2. Equity instruments - a) Banks - b) Other financial companies - of which: insurance companies - c) Non-financial companies - d) Other issuers - 3. Units in investment funds - 4. Loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total A 6,511,754 B. Derivative instruments a) Central counterparties 153,012 d) Other 5,169,586 Total B 5,322,598 Total (A+B) 11,834,352 2.3 Financial assets designated at fair value: breakdown by product The items are composed of debt securities for an immaterial amount of €351. 2.4 Financial assets designated at fair value: breakdown by borrowers/issuers No data to be disclosed. 2.5 Other financial assets mandatorily at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 174,666 1,053,382 235,364 1.1 Structured securities - 4,694 29,042 1.2 Other debt securities 174,666 1,048,688 206,322 2. Equity instruments 416,346 37,464 102,838 3. Units in investment funds - 28,769 1,057,208 4. Loans - - 58,436 4.1 Structured - - - 4.2 Other - - 58,436 Total 591,012 1,119,615 1,453,846 Total Level 1, Level 2 and Level 3 3,164,473 The sub-item “Debt securities” includes investments in FINO Project’s Mezzanine and Junior Notes with a value of €60 million. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 595 2.2 Financial assets held for trading: breakdown by borrowers/issuers/counterparties (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 A. Financial assets (non-derivatives) 1. Debt securities 6,511,754 a) Central Banks - b) Governments and other Public Sector Entities 6,511,742 c) Banks 12 d) Other financial companies - of which: insurance companies - e) Non-financial companies - 2. Equity instruments - a) Banks - b) Other financial companies - of which: insurance companies - c) Non-financial companies - d) Other issuers - 3. Units in investment funds - 4. Loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total A 6,511,754 B. Derivative instruments a) Central counterparties 153,012 d) Other 5,169,586 Total B 5,322,598 Total (A+B) 11,834,352 2.3 Financial assets designated at fair value: breakdown by product The items are composed of debt securities for an immaterial amount of €351. 2.4 Financial assets designated at fair value: breakdown by borrowers/issuers No data to be disclosed. 2.5 Other financial assets mandatorily at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 174,666 1,053,382 235,364 1.1 Structured securities - 4,694 29,042 1.2 Other debt securities 174,666 1,048,688 206,322 2. Equity instruments 416,346 37,464 102,838 3. Units in investment funds - 28,769 1,057,208 4. Loans - - 58,436 4.1 Structured - - - 4.2 Other - - 58,436 Total 591,012 1,119,615 1,453,846 Total Level 1, Level 2 and Level 3 3,164,473 The sub-item “Debt securities” includes investments in FINO Project’s Mezzanine and Junior Notes with a value of €60 million. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 595 2.2 Financial assets held for trading: breakdown by borrowers/issuers/counterparties (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 A. Financial assets (non-derivatives) 1. Debt securities 6,511,754 a) Central Banks - b) Governments and other Public Sector Entities 6,511,742 c) Banks 12 d) Other financial companies - of which: insurance companies - e) Non-financial companies - 2. Equity instruments - a) Banks - b) Other financial companies - of which: insurance companies - c) Non-financial companies - d) Other issuers - 3. Units in investment funds - 4. Loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total A 6,511,754 B. Derivative instruments a) Central counterparties 153,012 d) Other 5,169,586 Total B 5,322,598 Total (A+B) 11,834,352 2.3 Financial assets designated at fair value: breakdown by product The items are composed of debt securities for an immaterial amount of €351. 2.4 Financial assets designated at fair value: breakdown by borrowers/issuers No data to be disclosed. 2.5 Other financial assets mandatorily at fair value: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 174,666 1,053,382 235,364 1.1 Structured securities - 4,694 29,042 1.2 Other debt securities 174,666 1,048,688 206,322 2. Equity instruments 416,346 37,464 102,838 3. Units in investment funds - 28,769 1,057,208 4. Loans - - 58,436 4.1 Structured - - - 4.2 Other - - 58,436 Total 591,012 1,119,615 1,453,846 Total Level 1, Level 2 and Level 3 3,164,473 The sub-item “Debt securities” includes investments in FINO Project’s Mezzanine and Junior Notes with a value of €60 million. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 596 2018 Annual Report and Accounts · UniCredit The item “Equity instruments” includes the investment in a “Schema Volontario” (presented among level 3 instruments) with a value of €40 million and the residual shares of Bank Pekao S.A. with a value of €416 million, reclassified into such category after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. (with subsequent loss of control) occurred in first half of 2017 and the IFRS9 adoption starting from 2018. This classification is consistent with the recognition of the “Secured mandatorily exchangeable equity-linked certificate” into financial liabilities at fair value. The item “Unit in investment funds” includes the investments in Atlante and Italian Recovery Fund, former Atlante II, presented among level 3 instruments, with a value of €355 million. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 7,338 Mezzanine 52,147 Junior 57,447 Total 116,932 Information about the units of Atlante Fund and Italian Recovery Fund (former Atlante II) Atlante is a closed-end alternative investment fund (FIA) ruled by Italian law reserved to professional investors, and managed by Quaestio Capital Management SGR S.p.A. Unipersonale (the “Quaestio SGR”). The size of the fund was equal to €4,249 million, of which UniCredit S.p.A. invested for about 19.9%. The investment policy of Atlante foresees that the fund may be invested (i) in banks with regulatory capital ratios lower than the minimum level set down in the SREP process and, thus, realise, upon request of the supervisory authority, actions of capital strengthening through capital increases and (ii) in Non-Performing Loans (NPLs) of a plurality of Italian banks. With reference to Atlante fund, as at 31 December 2018 UniCredit S.p.A. holds shares classified as financial assets mandatory at fair value (till 2017, before adoption of new principle IFRS9, shares were classified as available for sale) with a carrying value of €171 million. The year-to-date overall cash investments are equal to €844 million (€64 million carried in 2018) against which 2016 and 2017 impairments for €684 million were carried out. In addition UniCredit S.p.A. has a residual commitment to invest in the fund for an amount less than €2 million. On August 2016, it was launched the Atlante II fund, ridenominated Italian Recovery Fund since 27 October 2017, a closed-end investment alternative fund reserved to professional investors, also managed by Quaestio SGR, which, unlike the Atlante fund, may invest only in NPL and instruments linked to NPL transactions (such as warrants) in order to reduce the risk in line with the parameters used by the largest world institutional investors. With reference to Italian Recovery Fund, as at 31 December 2018 UniCredit S.p.A. holds shares with a carrying value of €184 million, classified as financial assets mandatory at fair value (till 2017, before adoption of new principle IFRS9, shares were classified as available for sale. During 2018, the net investments made in the fund amounted to €82 million. In addition UniCredit S.p.A. has a residual commitment to invest in Italian Recovery Fund for about €10 million. The book value of both funds is substantially in line with the information provided, till 31 December 2018, by the management company Quaestio SGR relating to the shares valuation. This valuation, based on the value of the assets held by the funds, determined in the year a higher value for €14 million accounted into the Bank profit and loss. Under a regulatory perspective, the treatment of the quotes held by UniCredit S.p.A. in the Atlante Fund and Italian Recovery Fund foresees the application of article 128 of the CRR (Items associated with particular high risk). With reference to the residual commitments, the regulatory treatment foresees the application of a Credit Conversion Factor equal to 100% (“full risk” according to the Annex I of CRR), for the calculation of the related Risk Weighted Assets. Information about the investment in the Schema Volontario Please refer to Part B Balance sheet - Assets - Section 2 Financial assets at fair value through profit and loss - Item 20 - Information about investment in the Schema Volontario of consolidated financial statements notes that here are intended as completely reported. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 596 2018 Annual Report and Accounts · UniCredit The item “Equity instruments” includes the investment in a “Schema Volontario” (presented among level 3 instruments) with a value of €40 million and the residual shares of Bank Pekao S.A. with a value of €416 million, reclassified into such category after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. (with subsequent loss of control) occurred in first half of 2017 and the IFRS9 adoption starting from 2018. This classification is consistent with the recognition of the “Secured mandatorily exchangeable equity-linked certificate” into financial liabilities at fair value. The item “Unit in investment funds” includes the investments in Atlante and Italian Recovery Fund, former Atlante II, presented among level 3 instruments, with a value of €355 million. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 7,338 Mezzanine 52,147 Junior 57,447 Total 116,932 Information about the units of Atlante Fund and Italian Recovery Fund (former Atlante II) Atlante is a closed-end alternative investment fund (FIA) ruled by Italian law reserved to professional investors, and managed by Quaestio Capital Management SGR S.p.A. Unipersonale (the “Quaestio SGR”). The size of the fund was equal to €4,249 million, of which UniCredit S.p.A. invested for about 19.9%. The investment policy of Atlante foresees that the fund may be invested (i) in banks with regulatory capital ratios lower than the minimum level set down in the SREP process and, thus, realise, upon request of the supervisory authority, actions of capital strengthening through capital increases and (ii) in Non-Performing Loans (NPLs) of a plurality of Italian banks. With reference to Atlante fund, as at 31 December 2018 UniCredit S.p.A. holds shares classified as financial assets mandatory at fair value (till 2017, before adoption of new principle IFRS9, shares were classified as available for sale) with a carrying value of €171 million. The year-to-date overall cash investments are equal to €844 million (€64 million carried in 2018) against which 2016 and 2017 impairments for €684 million were carried out. In addition UniCredit S.p.A. has a residual commitment to invest in the fund for an amount less than €2 million. On August 2016, it was launched the Atlante II fund, ridenominated Italian Recovery Fund since 27 October 2017, a closed-end investment alternative fund reserved to professional investors, also managed by Quaestio SGR, which, unlike the Atlante fund, may invest only in NPL and instruments linked to NPL transactions (such as warrants) in order to reduce the risk in line with the parameters used by the largest world institutional investors. With reference to Italian Recovery Fund, as at 31 December 2018 UniCredit S.p.A. holds shares with a carrying value of €184 million, classified as financial assets mandatory at fair value (till 2017, before adoption of new principle IFRS9, shares were classified as available for sale. During 2018, the net investments made in the fund amounted to €82 million. In addition UniCredit S.p.A. has a residual commitment to invest in Italian Recovery Fund for about €10 million. The book value of both funds is substantially in line with the information provided, till 31 December 2018, by the management company Quaestio SGR relating to the shares valuation. This valuation, based on the value of the assets held by the funds, determined in the year a higher value for €14 million accounted into the Bank profit and loss. Under a regulatory perspective, the treatment of the quotes held by UniCredit S.p.A. in the Atlante Fund and Italian Recovery Fund foresees the application of article 128 of the CRR (Items associated with particular high risk). With reference to the residual commitments, the regulatory treatment foresees the application of a Credit Conversion Factor equal to 100% (“full risk” according to the Annex I of CRR), for the calculation of the related Risk Weighted Assets. Information about the investment in the Schema Volontario Please refer to Part B Balance sheet - Assets - Section 2 Financial assets at fair value through profit and loss - Item 20 - Information about investment in the Schema Volontario of consolidated financial statements notes that here are intended as completely reported. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 596 2018 Annual Report and Accounts · UniCredit The item “Equity instruments” includes the investment in a “Schema Volontario” (presented among level 3 instruments) with a value of €40 million and the residual shares of Bank Pekao S.A. with a value of €416 million, reclassified into such category after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. (with subsequent loss of control) occurred in first half of 2017 and the IFRS9 adoption starting from 2018. This classification is consistent with the recognition of the “Secured mandatorily exchangeable equity-linked certificate” into financial liabilities at fair value. The item “Unit in investment funds” includes the investments in Atlante and Italian Recovery Fund, former Atlante II, presented among level 3 instruments, with a value of €355 million. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 7,338 Mezzanine 52,147 Junior 57,447 Total 116,932 Information about the units of Atlante Fund and Italian Recovery Fund (former Atlante II) Atlante is a closed-end alternative investment fund (FIA) ruled by Italian law reserved to professional investors, and managed by Quaestio Capital Management SGR S.p.A. Unipersonale (the “Quaestio SGR”). The size of the fund was equal to €4,249 million, of which UniCredit S.p.A. invested for about 19.9%. The investment policy of Atlante foresees that the fund may be invested (i) in banks with regulatory capital ratios lower than the minimum level set down in the SREP process and, thus, realise, upon request of the supervisory authority, actions of capital strengthening through capital increases and (ii) in Non-Performing Loans (NPLs) of a plurality of Italian banks. With reference to Atlante fund, as at 31 December 2018 UniCredit S.p.A. holds shares classified as financial assets mandatory at fair value (till 2017, before adoption of new principle IFRS9, shares were classified as available for sale) with a carrying value of €171 million. The year-to-date overall cash investments are equal to €844 million (€64 million carried in 2018) against which 2016 and 2017 impairments for €684 million were carried out. In addition UniCredit S.p.A. has a residual commitment to invest in the fund for an amount less than €2 million. On August 2016, it was launched the Atlante II fund, ridenominated Italian Recovery Fund since 27 October 2017, a closed-end investment alternative fund reserved to professional investors, also managed by Quaestio SGR, which, unlike the Atlante fund, may invest only in NPL and instruments linked to NPL transactions (such as warrants) in order to reduce the risk in line with the parameters used by the largest world institutional investors. With reference to Italian Recovery Fund, as at 31 December 2018 UniCredit S.p.A. holds shares with a carrying value of €184 million, classified as financial assets mandatory at fair value (till 2017, before adoption of new principle IFRS9, shares were classified as available for sale. During 2018, the net investments made in the fund amounted to €82 million. In addition UniCredit S.p.A. has a residual commitment to invest in Italian Recovery Fund for about €10 million. The book value of both funds is substantially in line with the information provided, till 31 December 2018, by the management company Quaestio SGR relating to the shares valuation. This valuation, based on the value of the assets held by the funds, determined in the year a higher value for €14 million accounted into the Bank profit and loss. Under a regulatory perspective, the treatment of the quotes held by UniCredit S.p.A. in the Atlante Fund and Italian Recovery Fund foresees the application of article 128 of the CRR (Items associated with particular high risk). With reference to the residual commitments, the regulatory treatment foresees the application of a Credit Conversion Factor equal to 100% (“full risk” according to the Annex I of CRR), for the calculation of the related Risk Weighted Assets. Information about the investment in the Schema Volontario Please refer to Part B Balance sheet - Assets - Section 2 Financial assets at fair value through profit and loss - Item 20 - Information about investment in the Schema Volontario of consolidated financial statements notes that here are intended as completely reported. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 596 2018 Annual Report and Accounts · UniCredit The item “Equity instruments” includes the investment in a “Schema Volontario” (presented among level 3 instruments) with a value of €40 million and the residual shares of Bank Pekao S.A. with a value of €416 million, reclassified into such category after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. (with subsequent loss of control) occurred in first half of 2017 and the IFRS9 adoption starting from 2018. This classification is consistent with the recognition of the “Secured mandatorily exchangeable equity-linked certificate” into financial liabilities at fair value. The item “Unit in investment funds” includes the investments in Atlante and Italian Recovery Fund, former Atlante II, presented among level 3 instruments, with a value of €355 million. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 7,338 Mezzanine 52,147 Junior 57,447 Total 116,932 Information about the units of Atlante Fund and Italian Recovery Fund (former Atlante II) Atlante is a closed-end alternative investment fund (FIA) ruled by Italian law reserved to professional investors, and managed by Quaestio Capital Management SGR S.p.A. Unipersonale (the “Quaestio SGR”). The size of the fund was equal to €4,249 million, of which UniCredit S.p.A. invested for about 19.9%. The investment policy of Atlante foresees that the fund may be invested (i) in banks with regulatory capital ratios lower than the minimum level set down in the SREP process and, thus, realise, upon request of the supervisory authority, actions of capital strengthening through capital increases and (ii) in Non-Performing Loans (NPLs) of a plurality of Italian banks. With reference to Atlante fund, as at 31 December 2018 UniCredit S.p.A. holds shares classified as financial assets mandatory at fair value (till 2017, before adoption of new principle IFRS9, shares were classified as available for sale) with a carrying value of €171 million. The year-to-date overall cash investments are equal to €844 million (€64 million carried in 2018) against which 2016 and 2017 impairments for €684 million were carried out. In addition UniCredit S.p.A. has a residual commitment to invest in the fund for an amount less than €2 million. On August 2016, it was launched the Atlante II fund, ridenominated Italian Recovery Fund since 27 October 2017, a closed-end investment alternative fund reserved to professional investors, also managed by Quaestio SGR, which, unlike the Atlante fund, may invest only in NPL and instruments linked to NPL transactions (such as warrants) in order to reduce the risk in line with the parameters used by the largest world institutional investors. With reference to Italian Recovery Fund, as at 31 December 2018 UniCredit S.p.A. holds shares with a carrying value of €184 million, classified as financial assets mandatory at fair value (till 2017, before adoption of new principle IFRS9, shares were classified as available for sale. During 2018, the net investments made in the fund amounted to €82 million. In addition UniCredit S.p.A. has a residual commitment to invest in Italian Recovery Fund for about €10 million. The book value of both funds is substantially in line with the information provided, till 31 December 2018, by the management company Quaestio SGR relating to the shares valuation. This valuation, based on the value of the assets held by the funds, determined in the year a higher value for €14 million accounted into the Bank profit and loss. Under a regulatory perspective, the treatment of the quotes held by UniCredit S.p.A. in the Atlante Fund and Italian Recovery Fund foresees the application of article 128 of the CRR (Items associated with particular high risk). With reference to the residual commitments, the regulatory treatment foresees the application of a Credit Conversion Factor equal to 100% (“full risk” according to the Annex I of CRR), for the calculation of the related Risk Weighted Assets. Information about the investment in the Schema Volontario Please refer to Part B Balance sheet - Assets - Section 2 Financial assets at fair value through profit and loss - Item 20 - Information about investment in the Schema Volontario of consolidated financial statements notes that here are intended as completely reported. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 596 2018 Annual Report and Accounts · UniCredit The item “Equity instruments” includes the investment in a “Schema Volontario” (presented among level 3 instruments) with a value of €40 million and the residual shares of Bank Pekao S.A. with a value of €416 million, reclassified into such category after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. (with subsequent loss of control) occurred in first half of 2017 and the IFRS9 adoption starting from 2018. This classification is consistent with the recognition of the “Secured mandatorily exchangeable equity-linked certificate” into financial liabilities at fair value. The item “Unit in investment funds” includes the investments in Atlante and Italian Recovery Fund, former Atlante II, presented among level 3 instruments, with a value of €355 million. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 7,338 Mezzanine 52,147 Junior 57,447 Total 116,932 Information about the units of Atlante Fund and Italian Recovery Fund (former Atlante II) Atlante is a closed-end alternative investment fund (FIA) ruled by Italian law reserved to professional investors, and managed by Quaestio Capital Management SGR S.p.A. Unipersonale (the “Quaestio SGR”). The size of the fund was equal to €4,249 million, of which UniCredit S.p.A. invested for about 19.9%. The investment policy of Atlante foresees that the fund may be invested (i) in banks with regulatory capital ratios lower than the minimum level set down in the SREP process and, thus, realise, upon request of the supervisory authority, actions of capital strengthening through capital increases and (ii) in Non-Performing Loans (NPLs) of a plurality of Italian banks. With reference to Atlante fund, as at 31 December 2018 UniCredit S.p.A. holds shares classified as financial assets mandatory at fair value (till 2017, before adoption of new principle IFRS9, shares were classified as available for sale) with a carrying value of €171 million. The year-to-date overall cash investments are equal to €844 million (€64 million carried in 2018) against which 2016 and 2017 impairments for €684 million were carried out. In addition UniCredit S.p.A. has a residual commitment to invest in the fund for an amount less than €2 million. On August 2016, it was launched the Atlante II fund, ridenominated Italian Recovery Fund since 27 October 2017, a closed-end investment alternative fund reserved to professional investors, also managed by Quaestio SGR, which, unlike the Atlante fund, may invest only in NPL and instruments linked to NPL transactions (such as warrants) in order to reduce the risk in line with the parameters used by the largest world institutional investors. With reference to Italian Recovery Fund, as at 31 December 2018 UniCredit S.p.A. holds shares with a carrying value of €184 million, classified as financial assets mandatory at fair value (till 2017, before adoption of new principle IFRS9, shares were classified as available for sale. During 2018, the net investments made in the fund amounted to €82 million. In addition UniCredit S.p.A. has a residual commitment to invest in Italian Recovery Fund for about €10 million. The book value of both funds is substantially in line with the information provided, till 31 December 2018, by the management company Quaestio SGR relating to the shares valuation. This valuation, based on the value of the assets held by the funds, determined in the year a higher value for €14 million accounted into the Bank profit and loss. Under a regulatory perspective, the treatment of the quotes held by UniCredit S.p.A. in the Atlante Fund and Italian Recovery Fund foresees the application of article 128 of the CRR (Items associated with particular high risk). With reference to the residual commitments, the regulatory treatment foresees the application of a Credit Conversion Factor equal to 100% (“full risk” according to the Annex I of CRR), for the calculation of the related Risk Weighted Assets. Information about the investment in the Schema Volontario Please refer to Part B Balance sheet - Assets - Section 2 Financial assets at fair value through profit and loss - Item 20 - Information about investment in the Schema Volontario of consolidated financial statements notes that here are intended as completely reported. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 597 2.6 Other Financial assets mandatorily at fair value:breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Equity instruments 556,648 of which: banks 416,347 of which: other financial companies 140,300 of which: non-financial companies 1 2. Debt securities 1,463,412 a) Central banks - b) Governments and other Public Sector Entities 809,576 c) Banks 397,760 d) Other financial companies 219,600 of which: insurance companies 43,179 e) Non-financial companies 36,476 3. Units in investment funds 1,085,977 4. Loans and advances 58,436 a) Central banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies 58,001 f) Households 435 Total 3,164,473 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2.1 Financial assets held for trading: product breakdown (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A) Financial assets (non-derivatives) 1. Debt securities 8,127,515 67 3 1.1 Structured securities - - 3 1.2 Other debt securities 8,127,515 67 - 2. Equity instruments - - - 3. Units in investment funds - - - 4. Loans - - - 4.1 Reverse Repos - - - 4.2 Other - - - Total (A) 8,127,515 67 3 B) Derivative instruments 1. Financial derivatives 38,139 4,983,269 714,786 1.1 Trading 38,139 4,841,652 446,345 1.2 Related to fair value option - 9,682 208,876 1.3 Other - 131,935 59,565 2. Credit derivatives - - - 2.1 Trading - - - 2.2 Related to fair value option - - - 2.3 Other - - - Total (B) 38,139 4,983,269 714,786 Total (A+B) 8,165,654 4,983,336 714,789 Total Level 1, Level 2 and Level 3 13,863,779 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 597 2.6 Other Financial assets mandatorily at fair value:breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Equity instruments 556,648 of which: banks 416,347 of which: other financial companies 140,300 of which: non-financial companies 1 2. Debt securities 1,463,412 a) Central banks - b) Governments and other Public Sector Entities 809,576 c) Banks 397,760 d) Other financial companies 219,600 of which: insurance companies 43,179 e) Non-financial companies 36,476 3. Units in investment funds 1,085,977 4. Loans and advances 58,436 a) Central banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies 58,001 f) Households 435 Total 3,164,473 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2.1 Financial assets held for trading: product breakdown (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A) Financial assets (non-derivatives) 1. Debt securities 8,127,515 67 3 1.1 Structured securities - - 3 1.2 Other debt securities 8,127,515 67 - 2. Equity instruments - - - 3. Units in investment funds - - - 4. Loans - - - 4.1 Reverse Repos - - - 4.2 Other - - - Total (A) 8,127,515 67 3 B) Derivative instruments 1. Financial derivatives 38,139 4,983,269 714,786 1.1 Trading 38,139 4,841,652 446,345 1.2 Related to fair value option - 9,682 208,876 1.3 Other - 131,935 59,565 2. Credit derivatives - - - 2.1 Trading - - - 2.2 Related to fair value option - - - 2.3 Other - - - Total (B) 38,139 4,983,269 714,786 Total (A+B) 8,165,654 4,983,336 714,789 Total Level 1, Level 2 and Level 3 13,863,779 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 597 2.6 Other Financial assets mandatorily at fair value:breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Equity instruments 556,648 of which: banks 416,347 of which: other financial companies 140,300 of which: non-financial companies 1 2. Debt securities 1,463,412 a) Central banks - b) Governments and other Public Sector Entities 809,576 c) Banks 397,760 d) Other financial companies 219,600 of which: insurance companies 43,179 e) Non-financial companies 36,476 3. Units in investment funds 1,085,977 4. Loans and advances 58,436 a) Central banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies 58,001 f) Households 435 Total 3,164,473 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2.1 Financial assets held for trading: product breakdown (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A) Financial assets (non-derivatives) 1. Debt securities 8,127,515 67 3 1.1 Structured securities - - 3 1.2 Other debt securities 8,127,515 67 - 2. Equity instruments - - - 3. Units in investment funds - - - 4. Loans - - - 4.1 Reverse Repos - - - 4.2 Other - - - Total (A) 8,127,515 67 3 B) Derivative instruments 1. Financial derivatives 38,139 4,983,269 714,786 1.1 Trading 38,139 4,841,652 446,345 1.2 Related to fair value option - 9,682 208,876 1.3 Other - 131,935 59,565 2. Credit derivatives - - - 2.1 Trading - - - 2.2 Related to fair value option - - - 2.3 Other - - - Total (B) 38,139 4,983,269 714,786 Total (A+B) 8,165,654 4,983,336 714,789 Total Level 1, Level 2 and Level 3 13,863,779 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 597 2.6 Other Financial assets mandatorily at fair value:breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Equity instruments 556,648 of which: banks 416,347 of which: other financial companies 140,300 of which: non-financial companies 1 2. Debt securities 1,463,412 a) Central banks - b) Governments and other Public Sector Entities 809,576 c) Banks 397,760 d) Other financial companies 219,600 of which: insurance companies 43,179 e) Non-financial companies 36,476 3. Units in investment funds 1,085,977 4. Loans and advances 58,436 a) Central banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies 58,001 f) Households 435 Total 3,164,473 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2.1 Financial assets held for trading: product breakdown (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A) Financial assets (non-derivatives) 1. Debt securities 8,127,515 67 3 1.1 Structured securities - - 3 1.2 Other debt securities 8,127,515 67 - 2. Equity instruments - - - 3. Units in investment funds - - - 4. Loans - - - 4.1 Reverse Repos - - - 4.2 Other - - - Total (A) 8,127,515 67 3 B) Derivative instruments 1. Financial derivatives 38,139 4,983,269 714,786 1.1 Trading 38,139 4,841,652 446,345 1.2 Related to fair value option - 9,682 208,876 1.3 Other - 131,935 59,565 2. Credit derivatives - - - 2.1 Trading - - - 2.2 Related to fair value option - - - 2.3 Other - - - Total (B) 38,139 4,983,269 714,786 Total (A+B) 8,165,654 4,983,336 714,789 Total Level 1, Level 2 and Level 3 13,863,779 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 597 2.6 Other Financial assets mandatorily at fair value:breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Equity instruments 556,648 of which: banks 416,347 of which: other financial companies 140,300 of which: non-financial companies 1 2. Debt securities 1,463,412 a) Central banks - b) Governments and other Public Sector Entities 809,576 c) Banks 397,760 d) Other financial companies 219,600 of which: insurance companies 43,179 e) Non-financial companies 36,476 3. Units in investment funds 1,085,977 4. Loans and advances 58,436 a) Central banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies 58,001 f) Households 435 Total 3,164,473 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2.1 Financial assets held for trading: product breakdown (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A) Financial assets (non-derivatives) 1. Debt securities 8,127,515 67 3 1.1 Structured securities - - 3 1.2 Other debt securities 8,127,515 67 - 2. Equity instruments - - - 3. Units in investment funds - - - 4. Loans - - - 4.1 Reverse Repos - - - 4.2 Other - - - Total (A) 8,127,515 67 3 B) Derivative instruments 1. Financial derivatives 38,139 4,983,269 714,786 1.1 Trading 38,139 4,841,652 446,345 1.2 Related to fair value option - 9,682 208,876 1.3 Other - 131,935 59,565 2. Credit derivatives - - - 2.1 Trading - - - 2.2 Related to fair value option - - - 2.3 Other - - - Total (B) 38,139 4,983,269 714,786 Total (A+B) 8,165,654 4,983,336 714,789 Total Level 1, Level 2 and Level 3 13,863,779 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 598 2018 Annual Report and Accounts · UniCredit 2.2 Financial assets held for trading: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 A. Financial assets (non-derivatives) 1. Debt securities 8,127,585 a) Governments and Central Banks 8,127,568 b) Other public-sector entities - c) Banks 12 d) Other issuers 5 2. Equity instruments - a) Banks - b) Other issuers - - insurance companies - - financial companies - - non-financial companies - - other - 3. Units in investment funds - 4. Loans - a) Governments and Central Banks - b) Other public-sector entities - c) Banks - d) Other issuers - Total A 8,127,585 B. Derivative instruments a) Banks 2,711,969 b) Customers 3,024,225 Total B 5,736,194 Total (A+B) 13,863,779 3.1 Financial assets at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities - 58,783 26,982 1.1 Structured securities - - - 1.2 Other debt securities - 58,783 26,982 2. Equity instruments 509,381 - - 3. Units in investment funds 37 - 56,737 4. Loans - - - 4.1 Structured - - - 4.2 Other - - - Total 509,418 58,783 83,719 Total Level 1, Level 2 and Level 3 651,920 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 598 2018 Annual Report and Accounts · UniCredit 2.2 Financial assets held for trading: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 A. Financial assets (non-derivatives) 1. Debt securities 8,127,585 a) Governments and Central Banks 8,127,568 b) Other public-sector entities - c) Banks 12 d) Other issuers 5 2. Equity instruments - a) Banks - b) Other issuers - - insurance companies - - financial companies - - non-financial companies - - other - 3. Units in investment funds - 4. Loans - a) Governments and Central Banks - b) Other public-sector entities - c) Banks - d) Other issuers - Total A 8,127,585 B. Derivative instruments a) Banks 2,711,969 b) Customers 3,024,225 Total B 5,736,194 Total (A+B) 13,863,779 3.1 Financial assets at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities - 58,783 26,982 1.1 Structured securities - - - 1.2 Other debt securities - 58,783 26,982 2. Equity instruments 509,381 - - 3. Units in investment funds 37 - 56,737 4. Loans - - - 4.1 Structured - - - 4.2 Other - - - Total 509,418 58,783 83,719 Total Level 1, Level 2 and Level 3 651,920 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 598 2018 Annual Report and Accounts · UniCredit 2.2 Financial assets held for trading: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 A. Financial assets (non-derivatives) 1. Debt securities 8,127,585 a) Governments and Central Banks 8,127,568 b) Other public-sector entities - c) Banks 12 d) Other issuers 5 2. Equity instruments - a) Banks - b) Other issuers - - insurance companies - - financial companies - - non-financial companies - - other - 3. Units in investment funds - 4. Loans - a) Governments and Central Banks - b) Other public-sector entities - c) Banks - d) Other issuers - Total A 8,127,585 B. Derivative instruments a) Banks 2,711,969 b) Customers 3,024,225 Total B 5,736,194 Total (A+B) 13,863,779 3.1 Financial assets at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities - 58,783 26,982 1.1 Structured securities - - - 1.2 Other debt securities - 58,783 26,982 2. Equity instruments 509,381 - - 3. Units in investment funds 37 - 56,737 4. Loans - - - 4.1 Structured - - - 4.2 Other - - - Total 509,418 58,783 83,719 Total Level 1, Level 2 and Level 3 651,920 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 598 2018 Annual Report and Accounts · UniCredit 2.2 Financial assets held for trading: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 A. Financial assets (non-derivatives) 1. Debt securities 8,127,585 a) Governments and Central Banks 8,127,568 b) Other public-sector entities - c) Banks 12 d) Other issuers 5 2. Equity instruments - a) Banks - b) Other issuers - - insurance companies - - financial companies - - non-financial companies - - other - 3. Units in investment funds - 4. Loans - a) Governments and Central Banks - b) Other public-sector entities - c) Banks - d) Other issuers - Total A 8,127,585 B. Derivative instruments a) Banks 2,711,969 b) Customers 3,024,225 Total B 5,736,194 Total (A+B) 13,863,779 3.1 Financial assets at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities - 58,783 26,982 1.1 Structured securities - - - 1.2 Other debt securities - 58,783 26,982 2. Equity instruments 509,381 - - 3. Units in investment funds 37 - 56,737 4. Loans - - - 4.1 Structured - - - 4.2 Other - - - Total 509,418 58,783 83,719 Total Level 1, Level 2 and Level 3 651,920 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 598 2018 Annual Report and Accounts · UniCredit 2.2 Financial assets held for trading: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 A. Financial assets (non-derivatives) 1. Debt securities 8,127,585 a) Governments and Central Banks 8,127,568 b) Other public-sector entities - c) Banks 12 d) Other issuers 5 2. Equity instruments - a) Banks - b) Other issuers - - insurance companies - - financial companies - - non-financial companies - - other - 3. Units in investment funds - 4. Loans - a) Governments and Central Banks - b) Other public-sector entities - c) Banks - d) Other issuers - Total A 8,127,585 B. Derivative instruments a) Banks 2,711,969 b) Customers 3,024,225 Total B 5,736,194 Total (A+B) 13,863,779 3.1 Financial assets at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities - 58,783 26,982 1.1 Structured securities - - - 1.2 Other debt securities - 58,783 26,982 2. Equity instruments 509,381 - - 3. Units in investment funds 37 - 56,737 4. Loans - - - 4.1 Structured - - - 4.2 Other - - - Total 509,418 58,783 83,719 Total Level 1, Level 2 and Level 3 651,920 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 599 3.2 Financial assets at fair value through profit or loss: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 85,765 a) Governments and central banks - b) Other public-sector entities - c) Banks 84 d) Other issuers 85,681 2. Equity instruments 509,381 a) Banks 509,381 b) Other issuers: - - insurance companies - - financial companies - - non-financial companies - - other - 3. Units in investment funds 56,774 4. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 651,920 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 3.1 Financial assets at fair value through other comprehensive income: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 41,694,225 3,342,558 231,347 1.1 Structured securities - - - 1.2 Other 41,694,225 3,342,558 231,347 2. Equity instruments 317 1,008,275 649,815 3. Loans - - - Total 41,694,542 4,350,833 881,162 Total Level 1, Level 2 and Level 3 46,926,537 Item “Debt Securities” includes investments FINO Project’s in instrument Senior and in part in instrument Mezzanine notes with a value of €230 million. Item “Equity instruments” includes (i) Banca d’Italia stake (presented among level 2 instruments), with a value of €1,008 million and (ii) ABH Holding SA investments (presented among level 3 instruments) acquired in contemplation of the sale of PJSC Ukrsotbank to Alfa Group, with a value of €334 million. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 205,211 Mezzanine 24,316 Junior - Total 229,528 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 599 3.2 Financial assets at fair value through profit or loss: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 85,765 a) Governments and central banks - b) Other public-sector entities - c) Banks 84 d) Other issuers 85,681 2. Equity instruments 509,381 a) Banks 509,381 b) Other issuers: - - insurance companies - - financial companies - - non-financial companies - - other - 3. Units in investment funds 56,774 4. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 651,920 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 3.1 Financial assets at fair value through other comprehensive income: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 41,694,225 3,342,558 231,347 1.1 Structured securities - - - 1.2 Other 41,694,225 3,342,558 231,347 2. Equity instruments 317 1,008,275 649,815 3. Loans - - - Total 41,694,542 4,350,833 881,162 Total Level 1, Level 2 and Level 3 46,926,537 Item “Debt Securities” includes investments FINO Project’s in instrument Senior and in part in instrument Mezzanine notes with a value of €230 million. Item “Equity instruments” includes (i) Banca d’Italia stake (presented among level 2 instruments), with a value of €1,008 million and (ii) ABH Holding SA investments (presented among level 3 instruments) acquired in contemplation of the sale of PJSC Ukrsotbank to Alfa Group, with a value of €334 million. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 205,211 Mezzanine 24,316 Junior - Total 229,528 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 599 3.2 Financial assets at fair value through profit or loss: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 85,765 a) Governments and central banks - b) Other public-sector entities - c) Banks 84 d) Other issuers 85,681 2. Equity instruments 509,381 a) Banks 509,381 b) Other issuers: - - insurance companies - - financial companies - - non-financial companies - - other - 3. Units in investment funds 56,774 4. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 651,920 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 3.1 Financial assets at fair value through other comprehensive income: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 41,694,225 3,342,558 231,347 1.1 Structured securities - - - 1.2 Other 41,694,225 3,342,558 231,347 2. Equity instruments 317 1,008,275 649,815 3. Loans - - - Total 41,694,542 4,350,833 881,162 Total Level 1, Level 2 and Level 3 46,926,537 Item “Debt Securities” includes investments FINO Project’s in instrument Senior and in part in instrument Mezzanine notes with a value of €230 million. Item “Equity instruments” includes (i) Banca d’Italia stake (presented among level 2 instruments), with a value of €1,008 million and (ii) ABH Holding SA investments (presented among level 3 instruments) acquired in contemplation of the sale of PJSC Ukrsotbank to Alfa Group, with a value of €334 million. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 205,211 Mezzanine 24,316 Junior - Total 229,528 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 599 3.2 Financial assets at fair value through profit or loss: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 85,765 a) Governments and central banks - b) Other public-sector entities - c) Banks 84 d) Other issuers 85,681 2. Equity instruments 509,381 a) Banks 509,381 b) Other issuers: - - insurance companies - - financial companies - - non-financial companies - - other - 3. Units in investment funds 56,774 4. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 651,920 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 3.1 Financial assets at fair value through other comprehensive income: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 41,694,225 3,342,558 231,347 1.1 Structured securities - - - 1.2 Other 41,694,225 3,342,558 231,347 2. Equity instruments 317 1,008,275 649,815 3. Loans - - - Total 41,694,542 4,350,833 881,162 Total Level 1, Level 2 and Level 3 46,926,537 Item “Debt Securities” includes investments FINO Project’s in instrument Senior and in part in instrument Mezzanine notes with a value of €230 million. Item “Equity instruments” includes (i) Banca d’Italia stake (presented among level 2 instruments), with a value of €1,008 million and (ii) ABH Holding SA investments (presented among level 3 instruments) acquired in contemplation of the sale of PJSC Ukrsotbank to Alfa Group, with a value of €334 million. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 205,211 Mezzanine 24,316 Junior - Total 229,528 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 599 3.2 Financial assets at fair value through profit or loss: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 85,765 a) Governments and central banks - b) Other public-sector entities - c) Banks 84 d) Other issuers 85,681 2. Equity instruments 509,381 a) Banks 509,381 b) Other issuers: - - insurance companies - - financial companies - - non-financial companies - - other - 3. Units in investment funds 56,774 4. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 651,920 Section 3 - Financial assets at fair value through other comprehensive income - Item 30 3.1 Financial assets at fair value through other comprehensive income: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 41,694,225 3,342,558 231,347 1.1 Structured securities - - - 1.2 Other 41,694,225 3,342,558 231,347 2. Equity instruments 317 1,008,275 649,815 3. Loans - - - Total 41,694,542 4,350,833 881,162 Total Level 1, Level 2 and Level 3 46,926,537 Item “Debt Securities” includes investments FINO Project’s in instrument Senior and in part in instrument Mezzanine notes with a value of €230 million. Item “Equity instruments” includes (i) Banca d’Italia stake (presented among level 2 instruments), with a value of €1,008 million and (ii) ABH Holding SA investments (presented among level 3 instruments) acquired in contemplation of the sale of PJSC Ukrsotbank to Alfa Group, with a value of €334 million. Valuations at fair value were classified according to a hierarchy of levels reflecting the observability of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 205,211 Mezzanine 24,316 Junior - Total 229,528 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 600 2018 Annual Report and Accounts · UniCredit Information about the shareholding in Banca d'Italia Since the third quarter of 2015, UniCredit S.p.A. started the disposal of its stake in Banca d’Italia, for an amount corresponding to its carrying value. UniCredit S.p.A. completed, until fourth quarter 2018, the disposal of about 8.7% of Banca d’Italia share capital for about €650 million, of which about €53 million in 2018, reducing its shareholding to 13.4% (carrying value equal to about €1,008 million). The disposal process is the result of a capital increase carried out in 2013 when, in order to facilitate the redistribution of shares, a limit of 3% was introduced in respect of holding shares: after an interim period of no more than 36 months, no economic rights are applicable to shares exceeding the above limit. During last years shareholders with excess shares started the disposal process, finalising sales for about 28% of the total capital. The carrying value at year end, in line with the figure at the end of the last period and the outcome of the measurement conducted by the committee of high-level experts on behalf of Banca d’Italia at the time of the capital increase, is supported by the price consideration of the transactions that took place since 2015. The relevant measurement was therefore confirmed as level 2 in the fair value classification. With regard to regulatory treatment as at 31 December 2018, the value of the investment measured at fair value in the balance sheet is given a weighting of 100% (in accordance with article 133 “Exposures in Equity Instruments” of the CRR). 3.2 Financial assets at fair value through other comprehensive income: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 45,268,130 a) Central Banks - b) Governments and other Public Sector Entities 41,670,646 c) Banks 2,554,689 d) Other financial companies 409,591 of which: insurance companies - e) Non-financial companies 633,204 2. Equity instruments 1,658,407 a) Banks 1,115,463 b) Other issuers 542,944 - Other financial companies 430,487 of which: insurance companies 4,400 - Non-financial companies 112,457 - Other - 3. Loans and advances - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 46,926,537 3.3 Financial assets at fair value through other comprehensive income: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS PARTIAL ACCUMULATED WRITE-OFFS(*) STAGE 1 STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION Debt securities 45,286,933 45,053,747 - 70 18,845 - 28 - Loans and advances - - - - - - - - Total 12.31.2018 45,286,933 45,053,747 - 70 18,845 - 28 - of which: purchased or originated credit-impaired financial assets - - - - - - - - Note: (*) value shown for information purposes Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 600 2018 Annual Report and Accounts · UniCredit Information about the shareholding in Banca d'Italia Since the third quarter of 2015, UniCredit S.p.A. started the disposal of its stake in Banca d’Italia, for an amount corresponding to its carrying value. UniCredit S.p.A. completed, until fourth quarter 2018, the disposal of about 8.7% of Banca d’Italia share capital for about €650 million, of which about €53 million in 2018, reducing its shareholding to 13.4% (carrying value equal to about €1,008 million). The disposal process is the result of a capital increase carried out in 2013 when, in order to facilitate the redistribution of shares, a limit of 3% was introduced in respect of holding shares: after an interim period of no more than 36 months, no economic rights are applicable to shares exceeding the above limit. During last years shareholders with excess shares started the disposal process, finalising sales for about 28% of the total capital. The carrying value at year end, in line with the figure at the end of the last period and the outcome of the measurement conducted by the committee of high-level experts on behalf of Banca d’Italia at the time of the capital increase, is supported by the price consideration of the transactions that took place since 2015. The relevant measurement was therefore confirmed as level 2 in the fair value classification. With regard to regulatory treatment as at 31 December 2018, the value of the investment measured at fair value in the balance sheet is given a weighting of 100% (in accordance with article 133 “Exposures in Equity Instruments” of the CRR). 3.2 Financial assets at fair value through other comprehensive income: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 45,268,130 a) Central Banks - b) Governments and other Public Sector Entities 41,670,646 c) Banks 2,554,689 d) Other financial companies 409,591 of which: insurance companies - e) Non-financial companies 633,204 2. Equity instruments 1,658,407 a) Banks 1,115,463 b) Other issuers 542,944 - Other financial companies 430,487 of which: insurance companies 4,400 - Non-financial companies 112,457 - Other - 3. Loans and advances - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 46,926,537 3.3 Financial assets at fair value through other comprehensive income: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS PARTIAL ACCUMULATED WRITE-OFFS(*) STAGE 1 STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION Debt securities 45,286,933 45,053,747 - 70 18,845 - 28 - Loans and advances - - - - - - - - Total 12.31.2018 45,286,933 45,053,747 - 70 18,845 - 28 - of which: purchased or originated credit-impaired financial assets - - - - - - - - Note: (*) value shown for information purposes Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 600 2018 Annual Report and Accounts · UniCredit Information about the shareholding in Banca d'Italia Since the third quarter of 2015, UniCredit S.p.A. started the disposal of its stake in Banca d’Italia, for an amount corresponding to its carrying value. UniCredit S.p.A. completed, until fourth quarter 2018, the disposal of about 8.7% of Banca d’Italia share capital for about €650 million, of which about €53 million in 2018, reducing its shareholding to 13.4% (carrying value equal to about €1,008 million). The disposal process is the result of a capital increase carried out in 2013 when, in order to facilitate the redistribution of shares, a limit of 3% was introduced in respect of holding shares: after an interim period of no more than 36 months, no economic rights are applicable to shares exceeding the above limit. During last years shareholders with excess shares started the disposal process, finalising sales for about 28% of the total capital. The carrying value at year end, in line with the figure at the end of the last period and the outcome of the measurement conducted by the committee of high-level experts on behalf of Banca d’Italia at the time of the capital increase, is supported by the price consideration of the transactions that took place since 2015. The relevant measurement was therefore confirmed as level 2 in the fair value classification. With regard to regulatory treatment as at 31 December 2018, the value of the investment measured at fair value in the balance sheet is given a weighting of 100% (in accordance with article 133 “Exposures in Equity Instruments” of the CRR). 3.2 Financial assets at fair value through other comprehensive income: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 45,268,130 a) Central Banks - b) Governments and other Public Sector Entities 41,670,646 c) Banks 2,554,689 d) Other financial companies 409,591 of which: insurance companies - e) Non-financial companies 633,204 2. Equity instruments 1,658,407 a) Banks 1,115,463 b) Other issuers 542,944 - Other financial companies 430,487 of which: insurance companies 4,400 - Non-financial companies 112,457 - Other - 3. Loans and advances - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 46,926,537 3.3 Financial assets at fair value through other comprehensive income: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS PARTIAL ACCUMULATED WRITE-OFFS(*) STAGE 1 STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION Debt securities 45,286,933 45,053,747 - 70 18,845 - 28 - Loans and advances - - - - - - - - Total 12.31.2018 45,286,933 45,053,747 - 70 18,845 - 28 - of which: purchased or originated credit-impaired financial assets - - - - - - - - Note: (*) value shown for information purposes Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 600 2018 Annual Report and Accounts · UniCredit Information about the shareholding in Banca d'Italia Since the third quarter of 2015, UniCredit S.p.A. started the disposal of its stake in Banca d’Italia, for an amount corresponding to its carrying value. UniCredit S.p.A. completed, until fourth quarter 2018, the disposal of about 8.7% of Banca d’Italia share capital for about €650 million, of which about €53 million in 2018, reducing its shareholding to 13.4% (carrying value equal to about €1,008 million). The disposal process is the result of a capital increase carried out in 2013 when, in order to facilitate the redistribution of shares, a limit of 3% was introduced in respect of holding shares: after an interim period of no more than 36 months, no economic rights are applicable to shares exceeding the above limit. During last years shareholders with excess shares started the disposal process, finalising sales for about 28% of the total capital. The carrying value at year end, in line with the figure at the end of the last period and the outcome of the measurement conducted by the committee of high-level experts on behalf of Banca d’Italia at the time of the capital increase, is supported by the price consideration of the transactions that took place since 2015. The relevant measurement was therefore confirmed as level 2 in the fair value classification. With regard to regulatory treatment as at 31 December 2018, the value of the investment measured at fair value in the balance sheet is given a weighting of 100% (in accordance with article 133 “Exposures in Equity Instruments” of the CRR). 3.2 Financial assets at fair value through other comprehensive income: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 45,268,130 a) Central Banks - b) Governments and other Public Sector Entities 41,670,646 c) Banks 2,554,689 d) Other financial companies 409,591 of which: insurance companies - e) Non-financial companies 633,204 2. Equity instruments 1,658,407 a) Banks 1,115,463 b) Other issuers 542,944 - Other financial companies 430,487 of which: insurance companies 4,400 - Non-financial companies 112,457 - Other - 3. Loans and advances - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 46,926,537 3.3 Financial assets at fair value through other comprehensive income: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS PARTIAL ACCUMULATED WRITE-OFFS(*) STAGE 1 STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION Debt securities 45,286,933 45,053,747 - 70 18,845 - 28 - Loans and advances - - - - - - - - Total 12.31.2018 45,286,933 45,053,747 - 70 18,845 - 28 - of which: purchased or originated credit-impaired financial assets - - - - - - - - Note: (*) value shown for information purposes Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 600 2018 Annual Report and Accounts · UniCredit Information about the shareholding in Banca d'Italia Since the third quarter of 2015, UniCredit S.p.A. started the disposal of its stake in Banca d’Italia, for an amount corresponding to its carrying value. UniCredit S.p.A. completed, until fourth quarter 2018, the disposal of about 8.7% of Banca d’Italia share capital for about €650 million, of which about €53 million in 2018, reducing its shareholding to 13.4% (carrying value equal to about €1,008 million). The disposal process is the result of a capital increase carried out in 2013 when, in order to facilitate the redistribution of shares, a limit of 3% was introduced in respect of holding shares: after an interim period of no more than 36 months, no economic rights are applicable to shares exceeding the above limit. During last years shareholders with excess shares started the disposal process, finalising sales for about 28% of the total capital. The carrying value at year end, in line with the figure at the end of the last period and the outcome of the measurement conducted by the committee of high-level experts on behalf of Banca d’Italia at the time of the capital increase, is supported by the price consideration of the transactions that took place since 2015. The relevant measurement was therefore confirmed as level 2 in the fair value classification. With regard to regulatory treatment as at 31 December 2018, the value of the investment measured at fair value in the balance sheet is given a weighting of 100% (in accordance with article 133 “Exposures in Equity Instruments” of the CRR). 3.2 Financial assets at fair value through other comprehensive income: breakdown by borrowers/issuers (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 1. Debt securities 45,268,130 a) Central Banks - b) Governments and other Public Sector Entities 41,670,646 c) Banks 2,554,689 d) Other financial companies 409,591 of which: insurance companies - e) Non-financial companies 633,204 2. Equity instruments 1,658,407 a) Banks 1,115,463 b) Other issuers 542,944 - Other financial companies 430,487 of which: insurance companies 4,400 - Non-financial companies 112,457 - Other - 3. Loans and advances - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - of which: insurance companies - e) Non-financial companies - f) Households - Total 46,926,537 3.3 Financial assets at fair value through other comprehensive income: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS PARTIAL ACCUMULATED WRITE-OFFS(*) STAGE 1 STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION Debt securities 45,286,933 45,053,747 - 70 18,845 - 28 - Loans and advances - - - - - - - - Total 12.31.2018 45,286,933 45,053,747 - 70 18,845 - 28 - of which: purchased or originated credit-impaired financial assets - - - - - - - - Note: (*) value shown for information purposes Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 601 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Available for sale financial assets:breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 55,045,801 1,784,209 229,021 1.1 Structured securities 74,029 4,752 301 1.2 Other 54,971,772 1,779,457 228,720 2. Equity instruments 97,939 1,099,213 709,159 2.1 Measured at fair value 97,939 1,099,213 552,077 2.2 Carried at cost - - 157,082 3. Units in investment funds - 31,440 721,387 4. Loans - - - Total 55,143,740 2,914,862 1,659,567 Total Level 1, Level 2 and Level 3 59,718,169 4.2 Available-for-sale financial assets: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 57,059,031 a) Governments and central banks 52,501,087 b) Other public-sector entities 222,815 c) Banks 3,269,761 d) Other issuers 1,065,368 2.Equity instruments 1,906,311 a) Banks 1,206,412 b) Other issuers: 699,899 - insurance companies 305 - financial companies 421,782 - non-financial companies 277,812 - other - 3. Units in investment funds 752,827 4. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 59,718,169 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 601 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Available for sale financial assets:breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 55,045,801 1,784,209 229,021 1.1 Structured securities 74,029 4,752 301 1.2 Other 54,971,772 1,779,457 228,720 2. Equity instruments 97,939 1,099,213 709,159 2.1 Measured at fair value 97,939 1,099,213 552,077 2.2 Carried at cost - - 157,082 3. Units in investment funds - 31,440 721,387 4. Loans - - - Total 55,143,740 2,914,862 1,659,567 Total Level 1, Level 2 and Level 3 59,718,169 4.2 Available-for-sale financial assets: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 57,059,031 a) Governments and central banks 52,501,087 b) Other public-sector entities 222,815 c) Banks 3,269,761 d) Other issuers 1,065,368 2.Equity instruments 1,906,311 a) Banks 1,206,412 b) Other issuers: 699,899 - insurance companies 305 - financial companies 421,782 - non-financial companies 277,812 - other - 3. Units in investment funds 752,827 4. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 59,718,169 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 601 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Available for sale financial assets:breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 55,045,801 1,784,209 229,021 1.1 Structured securities 74,029 4,752 301 1.2 Other 54,971,772 1,779,457 228,720 2. Equity instruments 97,939 1,099,213 709,159 2.1 Measured at fair value 97,939 1,099,213 552,077 2.2 Carried at cost - - 157,082 3. Units in investment funds - 31,440 721,387 4. Loans - - - Total 55,143,740 2,914,862 1,659,567 Total Level 1, Level 2 and Level 3 59,718,169 4.2 Available-for-sale financial assets: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 57,059,031 a) Governments and central banks 52,501,087 b) Other public-sector entities 222,815 c) Banks 3,269,761 d) Other issuers 1,065,368 2.Equity instruments 1,906,311 a) Banks 1,206,412 b) Other issuers: 699,899 - insurance companies 305 - financial companies 421,782 - non-financial companies 277,812 - other - 3. Units in investment funds 752,827 4. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 59,718,169 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 601 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Available for sale financial assets:breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 55,045,801 1,784,209 229,021 1.1 Structured securities 74,029 4,752 301 1.2 Other 54,971,772 1,779,457 228,720 2. Equity instruments 97,939 1,099,213 709,159 2.1 Measured at fair value 97,939 1,099,213 552,077 2.2 Carried at cost - - 157,082 3. Units in investment funds - 31,440 721,387 4. Loans - - - Total 55,143,740 2,914,862 1,659,567 Total Level 1, Level 2 and Level 3 59,718,169 4.2 Available-for-sale financial assets: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 57,059,031 a) Governments and central banks 52,501,087 b) Other public-sector entities 222,815 c) Banks 3,269,761 d) Other issuers 1,065,368 2.Equity instruments 1,906,311 a) Banks 1,206,412 b) Other issuers: 699,899 - insurance companies 305 - financial companies 421,782 - non-financial companies 277,812 - other - 3. Units in investment funds 752,827 4. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 59,718,169 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 601 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Available for sale financial assets:breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 ITEMS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 55,045,801 1,784,209 229,021 1.1 Structured securities 74,029 4,752 301 1.2 Other 54,971,772 1,779,457 228,720 2. Equity instruments 97,939 1,099,213 709,159 2.1 Measured at fair value 97,939 1,099,213 552,077 2.2 Carried at cost - - 157,082 3. Units in investment funds - 31,440 721,387 4. Loans - - - Total 55,143,740 2,914,862 1,659,567 Total Level 1, Level 2 and Level 3 59,718,169 4.2 Available-for-sale financial assets: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2017 1. Debt securities 57,059,031 a) Governments and central banks 52,501,087 b) Other public-sector entities 222,815 c) Banks 3,269,761 d) Other issuers 1,065,368 2.Equity instruments 1,906,311 a) Banks 1,206,412 b) Other issuers: 699,899 - insurance companies 305 - financial companies 421,782 - non-financial companies 277,812 - other - 3. Units in investment funds 752,827 4. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 59,718,169 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 602 2018 Annual Report and Accounts · UniCredit Section 4 - Financial assets at amortised cost - Item 40 4.1 Financial assets at amortised cost: breakdown by product of loans and advances to banks (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 A. Loans and advances to Central Banks 1,837,348 - - - - 1,837,348 1. Time deposits - - - X X X 2. Compulsory reserves 1,837,086 - - X X X 3. Reverse repos - - - X X X 4. Other 262 - - X X X B. Loans and advances to banks 29,134,494 - - 1,224,219 21,110,669 6,996,918 1. Loans 26,798,034 - - - 19,988,641 6,988,169 1.1 Current accounts and demand deposits 1,600,923 - - X X X 1.2 Time deposits 4,153,148 - - X X X 1.3 Other loans 21,043,963 - - X X X - Reverse repos 10,739,487 - - X X X - Finance leases - - - X X X - Other 10,304,476 - - X X X 2. Debt securities 2,336,460 - - 1,224,219 1,122,028 8,749 2.1 Structured - - - - - - 2.2 Other 2,336,460 - - 1,224,219 1,122,028 8,749 Total 30,971,842 - - 1,224,219 21,110,669 8,834,266 Total Level 1, Level 2 and Level 3 31,169,154 Loans and receivables with banks are not managed on the basis of their fair value, which is only shown in order to meet financial disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 602 2018 Annual Report and Accounts · UniCredit Section 4 - Financial assets at amortised cost - Item 40 4.1 Financial assets at amortised cost: breakdown by product of loans and advances to banks (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 A. Loans and advances to Central Banks 1,837,348 - - - - 1,837,348 1. Time deposits - - - X X X 2. Compulsory reserves 1,837,086 - - X X X 3. Reverse repos - - - X X X 4. Other 262 - - X X X B. Loans and advances to banks 29,134,494 - - 1,224,219 21,110,669 6,996,918 1. Loans 26,798,034 - - - 19,988,641 6,988,169 1.1 Current accounts and demand deposits 1,600,923 - - X X X 1.2 Time deposits 4,153,148 - - X X X 1.3 Other loans 21,043,963 - - X X X - Reverse repos 10,739,487 - - X X X - Finance leases - - - X X X - Other 10,304,476 - - X X X 2. Debt securities 2,336,460 - - 1,224,219 1,122,028 8,749 2.1 Structured - - - - - - 2.2 Other 2,336,460 - - 1,224,219 1,122,028 8,749 Total 30,971,842 - - 1,224,219 21,110,669 8,834,266 Total Level 1, Level 2 and Level 3 31,169,154 Loans and receivables with banks are not managed on the basis of their fair value, which is only shown in order to meet financial disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 602 2018 Annual Report and Accounts · UniCredit Section 4 - Financial assets at amortised cost - Item 40 4.1 Financial assets at amortised cost: breakdown by product of loans and advances to banks (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 A. Loans and advances to Central Banks 1,837,348 - - - - 1,837,348 1. Time deposits - - - X X X 2. Compulsory reserves 1,837,086 - - X X X 3. Reverse repos - - - X X X 4. Other 262 - - X X X B. Loans and advances to banks 29,134,494 - - 1,224,219 21,110,669 6,996,918 1. Loans 26,798,034 - - - 19,988,641 6,988,169 1.1 Current accounts and demand deposits 1,600,923 - - X X X 1.2 Time deposits 4,153,148 - - X X X 1.3 Other loans 21,043,963 - - X X X - Reverse repos 10,739,487 - - X X X - Finance leases - - - X X X - Other 10,304,476 - - X X X 2. Debt securities 2,336,460 - - 1,224,219 1,122,028 8,749 2.1 Structured - - - - - - 2.2 Other 2,336,460 - - 1,224,219 1,122,028 8,749 Total 30,971,842 - - 1,224,219 21,110,669 8,834,266 Total Level 1, Level 2 and Level 3 31,169,154 Loans and receivables with banks are not managed on the basis of their fair value, which is only shown in order to meet financial disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 602 2018 Annual Report and Accounts · UniCredit Section 4 - Financial assets at amortised cost - Item 40 4.1 Financial assets at amortised cost: breakdown by product of loans and advances to banks (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 A. Loans and advances to Central Banks 1,837,348 - - - - 1,837,348 1. Time deposits - - - X X X 2. Compulsory reserves 1,837,086 - - X X X 3. Reverse repos - - - X X X 4. Other 262 - - X X X B. Loans and advances to banks 29,134,494 - - 1,224,219 21,110,669 6,996,918 1. Loans 26,798,034 - - - 19,988,641 6,988,169 1.1 Current accounts and demand deposits 1,600,923 - - X X X 1.2 Time deposits 4,153,148 - - X X X 1.3 Other loans 21,043,963 - - X X X - Reverse repos 10,739,487 - - X X X - Finance leases - - - X X X - Other 10,304,476 - - X X X 2. Debt securities 2,336,460 - - 1,224,219 1,122,028 8,749 2.1 Structured - - - - - - 2.2 Other 2,336,460 - - 1,224,219 1,122,028 8,749 Total 30,971,842 - - 1,224,219 21,110,669 8,834,266 Total Level 1, Level 2 and Level 3 31,169,154 Loans and receivables with banks are not managed on the basis of their fair value, which is only shown in order to meet financial disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 602 2018 Annual Report and Accounts · UniCredit Section 4 - Financial assets at amortised cost - Item 40 4.1 Financial assets at amortised cost: breakdown by product of loans and advances to banks (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 A. Loans and advances to Central Banks 1,837,348 - - - - 1,837,348 1. Time deposits - - - X X X 2. Compulsory reserves 1,837,086 - - X X X 3. Reverse repos - - - X X X 4. Other 262 - - X X X B. Loans and advances to banks 29,134,494 - - 1,224,219 21,110,669 6,996,918 1. Loans 26,798,034 - - - 19,988,641 6,988,169 1.1 Current accounts and demand deposits 1,600,923 - - X X X 1.2 Time deposits 4,153,148 - - X X X 1.3 Other loans 21,043,963 - - X X X - Reverse repos 10,739,487 - - X X X - Finance leases - - - X X X - Other 10,304,476 - - X X X 2. Debt securities 2,336,460 - - 1,224,219 1,122,028 8,749 2.1 Structured - - - - - - 2.2 Other 2,336,460 - - 1,224,219 1,122,028 8,749 Total 30,971,842 - - 1,224,219 21,110,669 8,834,266 Total Level 1, Level 2 and Level 3 31,169,154 Loans and receivables with banks are not managed on the basis of their fair value, which is only shown in order to meet financial disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 603 4.2 Financial assets at amortised cost: breakdown by product of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 1. Loans 213,176,720 9,355,744 8,902 - 107,618,804 113,585,140 1.1 Current accounts 13,300,407 1,172,458 4,880 X X X 1.2 Reverse repos 33,824,856 - - X X X 1.3 Mortgages 94,393,045 5,575,586 3,696 X X X 1.4 Credit cards and personal loans, including wage assignment 10,520,428 183,304 1 X X X 1.5 Finance leases - - - X X X 1.6 Factoring 304,005 7,266 - X X X 1.7 Other loans 60,833,979 2,417,130 325 X X X 2. Debt securities 17,051,957 171 - 15,252,469 1,767,138 295,556 2.1 Structured securities 21,343 - - 13,408 - 8,999 2.2 Other debt securities 17,030,614 171 - 15,239,061 1,767,138 286,557 Total 230,228,677 9,355,915 8,902 15,252,469 109,385,942 113,880,696 Total Level 1, Level 2 and Level 3 238,519,107 Loans and receivables with customers are not managed on the basis of their fair value, which is only shown in order to meet disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 1,419,892 Mezzanine - Junior - Total 1,419,892 4.3 Financial leases No data to be disclosed. 4.4 Financial assets at amortised cost: breakdown by borrowers/issuers of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES STAGE 1 OR STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS 1. Debt securities 17,051,957 171 - a) Governments and other Public Sector Entities 14,335,283 - - b) Other financial companies 1,602,214 171 - of which: insurance companies 51,866 - - c) Non-financial companies 1,114,460 - - 2. Loans 213,176,720 9,355,744 8,902 a) Governments and other Public Sector Entities 4,096,711 55,757 - b) Other financial companies 68,919,013 684,726 - of which: insurance companies 197,635 - - c) Non-financial companies 76,677,986 5,593,671 6,910 d) Households 63,483,010 3,021,590 1,992 Total 230,228,677 9,355,915 8,902 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 603 4.2 Financial assets at amortised cost: breakdown by product of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 1. Loans 213,176,720 9,355,744 8,902 - 107,618,804 113,585,140 1.1 Current accounts 13,300,407 1,172,458 4,880 X X X 1.2 Reverse repos 33,824,856 - - X X X 1.3 Mortgages 94,393,045 5,575,586 3,696 X X X 1.4 Credit cards and personal loans, including wage assignment 10,520,428 183,304 1 X X X 1.5 Finance leases - - - X X X 1.6 Factoring 304,005 7,266 - X X X 1.7 Other loans 60,833,979 2,417,130 325 X X X 2. Debt securities 17,051,957 171 - 15,252,469 1,767,138 295,556 2.1 Structured securities 21,343 - - 13,408 - 8,999 2.2 Other debt securities 17,030,614 171 - 15,239,061 1,767,138 286,557 Total 230,228,677 9,355,915 8,902 15,252,469 109,385,942 113,880,696 Total Level 1, Level 2 and Level 3 238,519,107 Loans and receivables with customers are not managed on the basis of their fair value, which is only shown in order to meet disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 1,419,892 Mezzanine - Junior - Total 1,419,892 4.3 Financial leases No data to be disclosed. 4.4 Financial assets at amortised cost: breakdown by borrowers/issuers of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES STAGE 1 OR STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS 1. Debt securities 17,051,957 171 - a) Governments and other Public Sector Entities 14,335,283 - - b) Other financial companies 1,602,214 171 - of which: insurance companies 51,866 - - c) Non-financial companies 1,114,460 - - 2. Loans 213,176,720 9,355,744 8,902 a) Governments and other Public Sector Entities 4,096,711 55,757 - b) Other financial companies 68,919,013 684,726 - of which: insurance companies 197,635 - - c) Non-financial companies 76,677,986 5,593,671 6,910 d) Households 63,483,010 3,021,590 1,992 Total 230,228,677 9,355,915 8,902 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 603 4.2 Financial assets at amortised cost: breakdown by product of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 1. Loans 213,176,720 9,355,744 8,902 - 107,618,804 113,585,140 1.1 Current accounts 13,300,407 1,172,458 4,880 X X X 1.2 Reverse repos 33,824,856 - - X X X 1.3 Mortgages 94,393,045 5,575,586 3,696 X X X 1.4 Credit cards and personal loans, including wage assignment 10,520,428 183,304 1 X X X 1.5 Finance leases - - - X X X 1.6 Factoring 304,005 7,266 - X X X 1.7 Other loans 60,833,979 2,417,130 325 X X X 2. Debt securities 17,051,957 171 - 15,252,469 1,767,138 295,556 2.1 Structured securities 21,343 - - 13,408 - 8,999 2.2 Other debt securities 17,030,614 171 - 15,239,061 1,767,138 286,557 Total 230,228,677 9,355,915 8,902 15,252,469 109,385,942 113,880,696 Total Level 1, Level 2 and Level 3 238,519,107 Loans and receivables with customers are not managed on the basis of their fair value, which is only shown in order to meet disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 1,419,892 Mezzanine - Junior - Total 1,419,892 4.3 Financial leases No data to be disclosed. 4.4 Financial assets at amortised cost: breakdown by borrowers/issuers of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES STAGE 1 OR STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS 1. Debt securities 17,051,957 171 - a) Governments and other Public Sector Entities 14,335,283 - - b) Other financial companies 1,602,214 171 - of which: insurance companies 51,866 - - c) Non-financial companies 1,114,460 - - 2. Loans 213,176,720 9,355,744 8,902 a) Governments and other Public Sector Entities 4,096,711 55,757 - b) Other financial companies 68,919,013 684,726 - of which: insurance companies 197,635 - - c) Non-financial companies 76,677,986 5,593,671 6,910 d) Households 63,483,010 3,021,590 1,992 Total 230,228,677 9,355,915 8,902 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 603 4.2 Financial assets at amortised cost: breakdown by product of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 1. Loans 213,176,720 9,355,744 8,902 - 107,618,804 113,585,140 1.1 Current accounts 13,300,407 1,172,458 4,880 X X X 1.2 Reverse repos 33,824,856 - - X X X 1.3 Mortgages 94,393,045 5,575,586 3,696 X X X 1.4 Credit cards and personal loans, including wage assignment 10,520,428 183,304 1 X X X 1.5 Finance leases - - - X X X 1.6 Factoring 304,005 7,266 - X X X 1.7 Other loans 60,833,979 2,417,130 325 X X X 2. Debt securities 17,051,957 171 - 15,252,469 1,767,138 295,556 2.1 Structured securities 21,343 - - 13,408 - 8,999 2.2 Other debt securities 17,030,614 171 - 15,239,061 1,767,138 286,557 Total 230,228,677 9,355,915 8,902 15,252,469 109,385,942 113,880,696 Total Level 1, Level 2 and Level 3 238,519,107 Loans and receivables with customers are not managed on the basis of their fair value, which is only shown in order to meet disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 1,419,892 Mezzanine - Junior - Total 1,419,892 4.3 Financial leases No data to be disclosed. 4.4 Financial assets at amortised cost: breakdown by borrowers/issuers of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES STAGE 1 OR STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS 1. Debt securities 17,051,957 171 - a) Governments and other Public Sector Entities 14,335,283 - - b) Other financial companies 1,602,214 171 - of which: insurance companies 51,866 - - c) Non-financial companies 1,114,460 - - 2. Loans 213,176,720 9,355,744 8,902 a) Governments and other Public Sector Entities 4,096,711 55,757 - b) Other financial companies 68,919,013 684,726 - of which: insurance companies 197,635 - - c) Non-financial companies 76,677,986 5,593,671 6,910 d) Households 63,483,010 3,021,590 1,992 Total 230,228,677 9,355,915 8,902 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 603 4.2 Financial assets at amortised cost: breakdown by product of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES STAGE 1 AND STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS LEVEL 1 LEVEL 2 LEVEL 3 1. Loans 213,176,720 9,355,744 8,902 - 107,618,804 113,585,140 1.1 Current accounts 13,300,407 1,172,458 4,880 X X X 1.2 Reverse repos 33,824,856 - - X X X 1.3 Mortgages 94,393,045 5,575,586 3,696 X X X 1.4 Credit cards and personal loans, including wage assignment 10,520,428 183,304 1 X X X 1.5 Finance leases - - - X X X 1.6 Factoring 304,005 7,266 - X X X 1.7 Other loans 60,833,979 2,417,130 325 X X X 2. Debt securities 17,051,957 171 - 15,252,469 1,767,138 295,556 2.1 Structured securities 21,343 - - 13,408 - 8,999 2.2 Other debt securities 17,030,614 171 - 15,239,061 1,767,138 286,557 Total 230,228,677 9,355,915 8,902 15,252,469 109,385,942 113,880,696 Total Level 1, Level 2 and Level 3 238,519,107 Loans and receivables with customers are not managed on the basis of their fair value, which is only shown in order to meet disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. Exposures to securities relating to Securitisation transactions (€ '000) TRANCHING AMOUNTS AS AT 12.31.2018 Senior 1,419,892 Mezzanine - Junior - Total 1,419,892 4.3 Financial leases No data to be disclosed. 4.4 Financial assets at amortised cost: breakdown by borrowers/issuers of loans and advances to customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES STAGE 1 OR STAGE 2 STAGE 3 OF WHICH: PURCHASED OR ORIGINATED CREDIT-IMPAIRED FINANCIAL ASSETS 1. Debt securities 17,051,957 171 - a) Governments and other Public Sector Entities 14,335,283 - - b) Other financial companies 1,602,214 171 - of which: insurance companies 51,866 - - c) Non-financial companies 1,114,460 - - 2. Loans 213,176,720 9,355,744 8,902 a) Governments and other Public Sector Entities 4,096,711 55,757 - b) Other financial companies 68,919,013 684,726 - of which: insurance companies 197,635 - - c) Non-financial companies 76,677,986 5,593,671 6,910 d) Households 63,483,010 3,021,590 1,992 Total 230,228,677 9,355,915 8,902 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 604 2018 Annual Report and Accounts · UniCredit 4.5 Financial assets at amortised cost: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS STAGE 1 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 PARTIAL ACCUMULATED WRITE-OFFS(*) 1. Debt securities 19,229,050 19,175,891 195,433 311 8,441 27,625 140 - 2. Loans 231,924,532 - 11,157,575 25,410,920 541,000 729,005 16,055,176 2,394,906 Total 12.31.2018 251,153,582 19,175,891 11,353,008 25,411,231 549,441 756,630 16,055,316 2,394,906 of which: purchased or originated credit-impaired financial assets X X - 21,534 X - 12,632 24,977 Note: (*) value shown for information purposes The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Held-to-maturity investments: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 762,431 22,403 759,067 - - structured securities - - - - - other securities 762,431 22,403 759,067 - 2. Loans - - - - Total 762,431 22,403 759,067 - Total Level 1, Level 2 and Level 3 781,470 5.2 Held-to-maturity investments: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Debt securities 762,431 a) Governments and central banks 762,431 b) Other public-sector entities - c) Banks - d) Other issuers - 2. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 762,431 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 604 2018 Annual Report and Accounts · UniCredit 4.5 Financial assets at amortised cost: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS STAGE 1 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 PARTIAL ACCUMULATED WRITE-OFFS(*) 1. Debt securities 19,229,050 19,175,891 195,433 311 8,441 27,625 140 - 2. Loans 231,924,532 - 11,157,575 25,410,920 541,000 729,005 16,055,176 2,394,906 Total 12.31.2018 251,153,582 19,175,891 11,353,008 25,411,231 549,441 756,630 16,055,316 2,394,906 of which: purchased or originated credit-impaired financial assets X X - 21,534 X - 12,632 24,977 Note: (*) value shown for information purposes The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Held-to-maturity investments: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 762,431 22,403 759,067 - - structured securities - - - - - other securities 762,431 22,403 759,067 - 2. Loans - - - - Total 762,431 22,403 759,067 - Total Level 1, Level 2 and Level 3 781,470 5.2 Held-to-maturity investments: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Debt securities 762,431 a) Governments and central banks 762,431 b) Other public-sector entities - c) Banks - d) Other issuers - 2. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 762,431 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 604 2018 Annual Report and Accounts · UniCredit 4.5 Financial assets at amortised cost: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS STAGE 1 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 PARTIAL ACCUMULATED WRITE-OFFS(*) 1. Debt securities 19,229,050 19,175,891 195,433 311 8,441 27,625 140 - 2. Loans 231,924,532 - 11,157,575 25,410,920 541,000 729,005 16,055,176 2,394,906 Total 12.31.2018 251,153,582 19,175,891 11,353,008 25,411,231 549,441 756,630 16,055,316 2,394,906 of which: purchased or originated credit-impaired financial assets X X - 21,534 X - 12,632 24,977 Note: (*) value shown for information purposes The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Held-to-maturity investments: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 762,431 22,403 759,067 - - structured securities - - - - - other securities 762,431 22,403 759,067 - 2. Loans - - - - Total 762,431 22,403 759,067 - Total Level 1, Level 2 and Level 3 781,470 5.2 Held-to-maturity investments: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Debt securities 762,431 a) Governments and central banks 762,431 b) Other public-sector entities - c) Banks - d) Other issuers - 2. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 762,431 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 604 2018 Annual Report and Accounts · UniCredit 4.5 Financial assets at amortised cost: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS STAGE 1 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 PARTIAL ACCUMULATED WRITE-OFFS(*) 1. Debt securities 19,229,050 19,175,891 195,433 311 8,441 27,625 140 - 2. Loans 231,924,532 - 11,157,575 25,410,920 541,000 729,005 16,055,176 2,394,906 Total 12.31.2018 251,153,582 19,175,891 11,353,008 25,411,231 549,441 756,630 16,055,316 2,394,906 of which: purchased or originated credit-impaired financial assets X X - 21,534 X - 12,632 24,977 Note: (*) value shown for information purposes The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Held-to-maturity investments: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 762,431 22,403 759,067 - - structured securities - - - - - other securities 762,431 22,403 759,067 - 2. Loans - - - - Total 762,431 22,403 759,067 - Total Level 1, Level 2 and Level 3 781,470 5.2 Held-to-maturity investments: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Debt securities 762,431 a) Governments and central banks 762,431 b) Other public-sector entities - c) Banks - d) Other issuers - 2. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 762,431 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 604 2018 Annual Report and Accounts · UniCredit 4.5 Financial assets at amortised cost: gross value and total accumulated impairments (€ '000) GROSS VALUE TOTAL ACCUMULATED IMPAIRMENTS STAGE 1 OF WHICH: INSTRUMENTS WITH LOW CREDIT RISK EXEMPTION STAGE 2 STAGE 3 STAGE 1 STAGE 2 STAGE 3 PARTIAL ACCUMULATED WRITE-OFFS(*) 1. Debt securities 19,229,050 19,175,891 195,433 311 8,441 27,625 140 - 2. Loans 231,924,532 - 11,157,575 25,410,920 541,000 729,005 16,055,176 2,394,906 Total 12.31.2018 251,153,582 19,175,891 11,353,008 25,411,231 549,441 756,630 16,055,316 2,394,906 of which: purchased or originated credit-impaired financial assets X X - 21,534 X - 12,632 24,977 Note: (*) value shown for information purposes The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Held-to-maturity investments: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Debt securities 762,431 22,403 759,067 - - structured securities - - - - - other securities 762,431 22,403 759,067 - 2. Loans - - - - Total 762,431 22,403 759,067 - Total Level 1, Level 2 and Level 3 781,470 5.2 Held-to-maturity investments: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Debt securities 762,431 a) Governments and central banks 762,431 b) Other public-sector entities - c) Banks - d) Other issuers - 2. Loans - a) Governments and central banks - b) Other public-sector entities - c) Banks - d) Other entities - Total 762,431 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 605 6.1 Loans and receivables with banks: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Loans to Central Banks 1,923,258 - - 1,923,258 1. Time deposits - X X X 2. Compulsory reserves 1,923,237 X X X 3. Reverse repos - X X X 4. Other 21 X X X B. Loans to banks 25,643,503 29,292 12,005,277 13,857,161 1. Loans 25,394,032 - 11,786,688 13,820,357 1.1 Current accounts and demand deposits 2,418,284 X X X 1.2 Time deposits 7,377,101 X X X 1.3 Other loans 15,598,647 X X X - Reverse repos 6,585,470 X X X - Finance leases - X X X - Other 9,013,177 X X X 2. Debt securities 249,471 29,292 218,589 36,804 2.1 Structured 29,511 X X X 2.2 Other 219,960 X X X Total 27,566,761 29,292 12,005,277 15,780,419 Total impaired assets 4,998 6.2 Loans and receivables with banks subject to micro-hedging No data was disclosed in section loans and receivables with banks. 6.3 Finance leases No data was disclosed in section loans and receivables with banks. 7.1 Loans and receivables with customers: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE PERFORMING NON-PERFORMING TYPE OF TRANSACTION/VALUES PURCHASED OTHERS LEVEL 1 LEVEL 2 LEVEL 3 Loans 192,652,540 10,383 13,883,227 - 90,364,158 115,343,923 1. Current accounts 16,006,002 1,234 1,777,656 X X X 2. Reverse repos 23,889,970 - - X X X 3. Mortgages 86,843,221 8,484 8,976,461 X X X 4. Credit cards and personal loans, including wage assignment loans 9,991,804 1 162,418 X X X 5. Finance leases - - - X X X 6. Factoring 86,824 - 16,006 X X X 7. Other loans 55,834,719 664 2,950,686 X X X Debt securities 2,415,291 - 4,014 - 2,046,381 384,889 8. Structured securities - - - X X X 9. Other debt securities 2,415,291 - 4,014 X X X Total 195,067,831 10,383 13,887,241 - 92,410,539 115,728,812 Total carrying amount Performing and Non-Performing 208,965,455 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 605 6.1 Loans and receivables with banks: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Loans to Central Banks 1,923,258 - - 1,923,258 1. Time deposits - X X X 2. Compulsory reserves 1,923,237 X X X 3. Reverse repos - X X X 4. Other 21 X X X B. Loans to banks 25,643,503 29,292 12,005,277 13,857,161 1. Loans 25,394,032 - 11,786,688 13,820,357 1.1 Current accounts and demand deposits 2,418,284 X X X 1.2 Time deposits 7,377,101 X X X 1.3 Other loans 15,598,647 X X X - Reverse repos 6,585,470 X X X - Finance leases - X X X - Other 9,013,177 X X X 2. Debt securities 249,471 29,292 218,589 36,804 2.1 Structured 29,511 X X X 2.2 Other 219,960 X X X Total 27,566,761 29,292 12,005,277 15,780,419 Total impaired assets 4,998 6.2 Loans and receivables with banks subject to micro-hedging No data was disclosed in section loans and receivables with banks. 6.3 Finance leases No data was disclosed in section loans and receivables with banks. 7.1 Loans and receivables with customers: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE PERFORMING NON-PERFORMING TYPE OF TRANSACTION/VALUES PURCHASED OTHERS LEVEL 1 LEVEL 2 LEVEL 3 Loans 192,652,540 10,383 13,883,227 - 90,364,158 115,343,923 1. Current accounts 16,006,002 1,234 1,777,656 X X X 2. Reverse repos 23,889,970 - - X X X 3. Mortgages 86,843,221 8,484 8,976,461 X X X 4. Credit cards and personal loans, including wage assignment loans 9,991,804 1 162,418 X X X 5. Finance leases - - - X X X 6. Factoring 86,824 - 16,006 X X X 7. Other loans 55,834,719 664 2,950,686 X X X Debt securities 2,415,291 - 4,014 - 2,046,381 384,889 8. Structured securities - - - X X X 9. Other debt securities 2,415,291 - 4,014 X X X Total 195,067,831 10,383 13,887,241 - 92,410,539 115,728,812 Total carrying amount Performing and Non-Performing 208,965,455 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 605 6.1 Loans and receivables with banks: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Loans to Central Banks 1,923,258 - - 1,923,258 1. Time deposits - X X X 2. Compulsory reserves 1,923,237 X X X 3. Reverse repos - X X X 4. Other 21 X X X B. Loans to banks 25,643,503 29,292 12,005,277 13,857,161 1. Loans 25,394,032 - 11,786,688 13,820,357 1.1 Current accounts and demand deposits 2,418,284 X X X 1.2 Time deposits 7,377,101 X X X 1.3 Other loans 15,598,647 X X X - Reverse repos 6,585,470 X X X - Finance leases - X X X - Other 9,013,177 X X X 2. Debt securities 249,471 29,292 218,589 36,804 2.1 Structured 29,511 X X X 2.2 Other 219,960 X X X Total 27,566,761 29,292 12,005,277 15,780,419 Total impaired assets 4,998 6.2 Loans and receivables with banks subject to micro-hedging No data was disclosed in section loans and receivables with banks. 6.3 Finance leases No data was disclosed in section loans and receivables with banks. 7.1 Loans and receivables with customers: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE PERFORMING NON-PERFORMING TYPE OF TRANSACTION/VALUES PURCHASED OTHERS LEVEL 1 LEVEL 2 LEVEL 3 Loans 192,652,540 10,383 13,883,227 - 90,364,158 115,343,923 1. Current accounts 16,006,002 1,234 1,777,656 X X X 2. Reverse repos 23,889,970 - - X X X 3. Mortgages 86,843,221 8,484 8,976,461 X X X 4. Credit cards and personal loans, including wage assignment loans 9,991,804 1 162,418 X X X 5. Finance leases - - - X X X 6. Factoring 86,824 - 16,006 X X X 7. Other loans 55,834,719 664 2,950,686 X X X Debt securities 2,415,291 - 4,014 - 2,046,381 384,889 8. Structured securities - - - X X X 9. Other debt securities 2,415,291 - 4,014 X X X Total 195,067,831 10,383 13,887,241 - 92,410,539 115,728,812 Total carrying amount Performing and Non-Performing 208,965,455 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 605 6.1 Loans and receivables with banks: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Loans to Central Banks 1,923,258 - - 1,923,258 1. Time deposits - X X X 2. Compulsory reserves 1,923,237 X X X 3. Reverse repos - X X X 4. Other 21 X X X B. Loans to banks 25,643,503 29,292 12,005,277 13,857,161 1. Loans 25,394,032 - 11,786,688 13,820,357 1.1 Current accounts and demand deposits 2,418,284 X X X 1.2 Time deposits 7,377,101 X X X 1.3 Other loans 15,598,647 X X X - Reverse repos 6,585,470 X X X - Finance leases - X X X - Other 9,013,177 X X X 2. Debt securities 249,471 29,292 218,589 36,804 2.1 Structured 29,511 X X X 2.2 Other 219,960 X X X Total 27,566,761 29,292 12,005,277 15,780,419 Total impaired assets 4,998 6.2 Loans and receivables with banks subject to micro-hedging No data was disclosed in section loans and receivables with banks. 6.3 Finance leases No data was disclosed in section loans and receivables with banks. 7.1 Loans and receivables with customers: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE PERFORMING NON-PERFORMING TYPE OF TRANSACTION/VALUES PURCHASED OTHERS LEVEL 1 LEVEL 2 LEVEL 3 Loans 192,652,540 10,383 13,883,227 - 90,364,158 115,343,923 1. Current accounts 16,006,002 1,234 1,777,656 X X X 2. Reverse repos 23,889,970 - - X X X 3. Mortgages 86,843,221 8,484 8,976,461 X X X 4. Credit cards and personal loans, including wage assignment loans 9,991,804 1 162,418 X X X 5. Finance leases - - - X X X 6. Factoring 86,824 - 16,006 X X X 7. Other loans 55,834,719 664 2,950,686 X X X Debt securities 2,415,291 - 4,014 - 2,046,381 384,889 8. Structured securities - - - X X X 9. Other debt securities 2,415,291 - 4,014 X X X Total 195,067,831 10,383 13,887,241 - 92,410,539 115,728,812 Total carrying amount Performing and Non-Performing 208,965,455 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 605 6.1 Loans and receivables with banks: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF TRANSACTIONS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Loans to Central Banks 1,923,258 - - 1,923,258 1. Time deposits - X X X 2. Compulsory reserves 1,923,237 X X X 3. Reverse repos - X X X 4. Other 21 X X X B. Loans to banks 25,643,503 29,292 12,005,277 13,857,161 1. Loans 25,394,032 - 11,786,688 13,820,357 1.1 Current accounts and demand deposits 2,418,284 X X X 1.2 Time deposits 7,377,101 X X X 1.3 Other loans 15,598,647 X X X - Reverse repos 6,585,470 X X X - Finance leases - X X X - Other 9,013,177 X X X 2. Debt securities 249,471 29,292 218,589 36,804 2.1 Structured 29,511 X X X 2.2 Other 219,960 X X X Total 27,566,761 29,292 12,005,277 15,780,419 Total impaired assets 4,998 6.2 Loans and receivables with banks subject to micro-hedging No data was disclosed in section loans and receivables with banks. 6.3 Finance leases No data was disclosed in section loans and receivables with banks. 7.1 Loans and receivables with customers: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE PERFORMING NON-PERFORMING TYPE OF TRANSACTION/VALUES PURCHASED OTHERS LEVEL 1 LEVEL 2 LEVEL 3 Loans 192,652,540 10,383 13,883,227 - 90,364,158 115,343,923 1. Current accounts 16,006,002 1,234 1,777,656 X X X 2. Reverse repos 23,889,970 - - X X X 3. Mortgages 86,843,221 8,484 8,976,461 X X X 4. Credit cards and personal loans, including wage assignment loans 9,991,804 1 162,418 X X X 5. Finance leases - - - X X X 6. Factoring 86,824 - 16,006 X X X 7. Other loans 55,834,719 664 2,950,686 X X X Debt securities 2,415,291 - 4,014 - 2,046,381 384,889 8. Structured securities - - - X X X 9. Other debt securities 2,415,291 - 4,014 X X X Total 195,067,831 10,383 13,887,241 - 92,410,539 115,728,812 Total carrying amount Performing and Non-Performing 208,965,455 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 606 2018 Annual Report and Accounts · UniCredit 7.2 Loans and receivables with customers: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT 12.31.2017 PERFORMING NON-PERFORMING TYPE OF TRANSACTIONS/VALUES PURCHASED OTHERS 1. Debt securities: 2,415,291 - 4,014 a) Governments 23,648 - - b) Other public-sector entities 95,363 - - c) Other issuers 2,296,280 - 4,014 - non-financial companies 73,678 - - - financial companies 2,177,606 - 4,014 - insurance companies 44,996 - - - other - - - 2. Loans to: 192,652,540 10,383 13,883,227 a) Governments 1,275,958 - 419 b) Other public-sector entities 2,131,995 - 80,049 c) Other entities 189,244,587 10,383 13,802,759 - non-financial companies 74,546,577 5,532 7,942,329 - financial companies 56,335,509 - 725,999 - insurance companies 126,491 - - - other 58,236,010 4,851 5,134,431 Total 195,067,831 10,383 13,887,241 Total Performing and Non-Performing 208,965,455 7.4 Finance leases No data was disclosed in section loans and receivables with customers. Section 5 - Hedging derivatives - Item 50 5.1 Hedging derivatives: breakdown by hedged risk and fair value hierarchy (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 FAIR VALUE NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 98,971 4,063,749 4,599 259,516,193 16,896 4,383,043 - 259,885,843 1) Fair value 98,971 3,949,838 4,599 251,097,851 16,896 4,228,949 - 253,464,182 2) Cash flows - 113,911 - 8,418,342 - 154,094 - 6,421,661 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 98,971 4,063,749 4,599 259,516,193 16,896 4,383,043 - 259,885,843 Total Level 1, Level 2 and Level 3 4,167,319 4,399,939 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 606 2018 Annual Report and Accounts · UniCredit 7.2 Loans and receivables with customers: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT 12.31.2017 PERFORMING NON-PERFORMING TYPE OF TRANSACTIONS/VALUES PURCHASED OTHERS 1. Debt securities: 2,415,291 - 4,014 a) Governments 23,648 - - b) Other public-sector entities 95,363 - - c) Other issuers 2,296,280 - 4,014 - non-financial companies 73,678 - - - financial companies 2,177,606 - 4,014 - insurance companies 44,996 - - - other - - - 2. Loans to: 192,652,540 10,383 13,883,227 a) Governments 1,275,958 - 419 b) Other public-sector entities 2,131,995 - 80,049 c) Other entities 189,244,587 10,383 13,802,759 - non-financial companies 74,546,577 5,532 7,942,329 - financial companies 56,335,509 - 725,999 - insurance companies 126,491 - - - other 58,236,010 4,851 5,134,431 Total 195,067,831 10,383 13,887,241 Total Performing and Non-Performing 208,965,455 7.4 Finance leases No data was disclosed in section loans and receivables with customers. Section 5 - Hedging derivatives - Item 50 5.1 Hedging derivatives: breakdown by hedged risk and fair value hierarchy (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 FAIR VALUE NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 98,971 4,063,749 4,599 259,516,193 16,896 4,383,043 - 259,885,843 1) Fair value 98,971 3,949,838 4,599 251,097,851 16,896 4,228,949 - 253,464,182 2) Cash flows - 113,911 - 8,418,342 - 154,094 - 6,421,661 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 98,971 4,063,749 4,599 259,516,193 16,896 4,383,043 - 259,885,843 Total Level 1, Level 2 and Level 3 4,167,319 4,399,939 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 606 2018 Annual Report and Accounts · UniCredit 7.2 Loans and receivables with customers: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT 12.31.2017 PERFORMING NON-PERFORMING TYPE OF TRANSACTIONS/VALUES PURCHASED OTHERS 1. Debt securities: 2,415,291 - 4,014 a) Governments 23,648 - - b) Other public-sector entities 95,363 - - c) Other issuers 2,296,280 - 4,014 - non-financial companies 73,678 - - - financial companies 2,177,606 - 4,014 - insurance companies 44,996 - - - other - - - 2. Loans to: 192,652,540 10,383 13,883,227 a) Governments 1,275,958 - 419 b) Other public-sector entities 2,131,995 - 80,049 c) Other entities 189,244,587 10,383 13,802,759 - non-financial companies 74,546,577 5,532 7,942,329 - financial companies 56,335,509 - 725,999 - insurance companies 126,491 - - - other 58,236,010 4,851 5,134,431 Total 195,067,831 10,383 13,887,241 Total Performing and Non-Performing 208,965,455 7.4 Finance leases No data was disclosed in section loans and receivables with customers. Section 5 - Hedging derivatives - Item 50 5.1 Hedging derivatives: breakdown by hedged risk and fair value hierarchy (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 FAIR VALUE NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 98,971 4,063,749 4,599 259,516,193 16,896 4,383,043 - 259,885,843 1) Fair value 98,971 3,949,838 4,599 251,097,851 16,896 4,228,949 - 253,464,182 2) Cash flows - 113,911 - 8,418,342 - 154,094 - 6,421,661 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 98,971 4,063,749 4,599 259,516,193 16,896 4,383,043 - 259,885,843 Total Level 1, Level 2 and Level 3 4,167,319 4,399,939 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 606 2018 Annual Report and Accounts · UniCredit 7.2 Loans and receivables with customers: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT 12.31.2017 PERFORMING NON-PERFORMING TYPE OF TRANSACTIONS/VALUES PURCHASED OTHERS 1. Debt securities: 2,415,291 - 4,014 a) Governments 23,648 - - b) Other public-sector entities 95,363 - - c) Other issuers 2,296,280 - 4,014 - non-financial companies 73,678 - - - financial companies 2,177,606 - 4,014 - insurance companies 44,996 - - - other - - - 2. Loans to: 192,652,540 10,383 13,883,227 a) Governments 1,275,958 - 419 b) Other public-sector entities 2,131,995 - 80,049 c) Other entities 189,244,587 10,383 13,802,759 - non-financial companies 74,546,577 5,532 7,942,329 - financial companies 56,335,509 - 725,999 - insurance companies 126,491 - - - other 58,236,010 4,851 5,134,431 Total 195,067,831 10,383 13,887,241 Total Performing and Non-Performing 208,965,455 7.4 Finance leases No data was disclosed in section loans and receivables with customers. Section 5 - Hedging derivatives - Item 50 5.1 Hedging derivatives: breakdown by hedged risk and fair value hierarchy (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 FAIR VALUE NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 98,971 4,063,749 4,599 259,516,193 16,896 4,383,043 - 259,885,843 1) Fair value 98,971 3,949,838 4,599 251,097,851 16,896 4,228,949 - 253,464,182 2) Cash flows - 113,911 - 8,418,342 - 154,094 - 6,421,661 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 98,971 4,063,749 4,599 259,516,193 16,896 4,383,043 - 259,885,843 Total Level 1, Level 2 and Level 3 4,167,319 4,399,939 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 606 2018 Annual Report and Accounts · UniCredit 7.2 Loans and receivables with customers: breakdown by issuer/borrower (€ '000) AMOUNTS AS AT 12.31.2017 PERFORMING NON-PERFORMING TYPE OF TRANSACTIONS/VALUES PURCHASED OTHERS 1. Debt securities: 2,415,291 - 4,014 a) Governments 23,648 - - b) Other public-sector entities 95,363 - - c) Other issuers 2,296,280 - 4,014 - non-financial companies 73,678 - - - financial companies 2,177,606 - 4,014 - insurance companies 44,996 - - - other - - - 2. Loans to: 192,652,540 10,383 13,883,227 a) Governments 1,275,958 - 419 b) Other public-sector entities 2,131,995 - 80,049 c) Other entities 189,244,587 10,383 13,802,759 - non-financial companies 74,546,577 5,532 7,942,329 - financial companies 56,335,509 - 725,999 - insurance companies 126,491 - - - other 58,236,010 4,851 5,134,431 Total 195,067,831 10,383 13,887,241 Total Performing and Non-Performing 208,965,455 7.4 Finance leases No data was disclosed in section loans and receivables with customers. Section 5 - Hedging derivatives - Item 50 5.1 Hedging derivatives: breakdown by hedged risk and fair value hierarchy (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 FAIR VALUE NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 98,971 4,063,749 4,599 259,516,193 16,896 4,383,043 - 259,885,843 1) Fair value 98,971 3,949,838 4,599 251,097,851 16,896 4,228,949 - 253,464,182 2) Cash flows - 113,911 - 8,418,342 - 154,094 - 6,421,661 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 98,971 4,063,749 4,599 259,516,193 16,896 4,383,043 - 259,885,843 Total Level 1, Level 2 and Level 3 4,167,319 4,399,939 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 607 5.2 Hedging derivatives: composition for covered portfolios and by type of hedging (€ '000) TRANSACTIONS/TYPE OF HEDGES AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW FOREIGN INVESTMENTS MICRO-HEDGE MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHERS 1. Financial assets at fair value through other comprehensive income 62,399 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 1,510,198 X 81,395 X 4. Other transactions - - - - - - X - X - Total assets 62,399 - - - - - 1,510,198 - 81,395 - 1. Financial liabilities - X - - - - X - X X 2. Portfolio X X X X X X 2,480,811 X 32,516 X Total liabilities - - - - - - 2,480,811 - 32,516 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X - X - - Section 6 - Changes in fair value of portfolio hedged items - Item 60 6.1 Changes to macro-hedged financial assets: breakdown by hedged portfolio (€ '000) AMOUNTS AS AT CHANGES TO HEDGED ASSETS/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes 2,905,720 3,088,861 1.1 Of specific portfolios - - a) Financial assets at amortised cost - Loans and receivables - b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 1.2 Overall 2,905,720 3,088,861 2. Negative changes 1,219,745 1,374,373 2.1 Of specific portfolios - - a) Financial assets at amortised cost - Loans and receivables - b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 2.2 Overall 1,219,745 1,374,373 Total 1,685,975 1,714,488 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 607 5.2 Hedging derivatives: composition for covered portfolios and by type of hedging (€ '000) TRANSACTIONS/TYPE OF HEDGES AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW FOREIGN INVESTMENTS MICRO-HEDGE MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHERS 1. Financial assets at fair value through other comprehensive income 62,399 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 1,510,198 X 81,395 X 4. Other transactions - - - - - - X - X - Total assets 62,399 - - - - - 1,510,198 - 81,395 - 1. Financial liabilities - X - - - - X - X X 2. Portfolio X X X X X X 2,480,811 X 32,516 X Total liabilities - - - - - - 2,480,811 - 32,516 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X - X - - Section 6 - Changes in fair value of portfolio hedged items - Item 60 6.1 Changes to macro-hedged financial assets: breakdown by hedged portfolio (€ '000) AMOUNTS AS AT CHANGES TO HEDGED ASSETS/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes 2,905,720 3,088,861 1.1 Of specific portfolios - - a) Financial assets at amortised cost - Loans and receivables - b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 1.2 Overall 2,905,720 3,088,861 2. Negative changes 1,219,745 1,374,373 2.1 Of specific portfolios - - a) Financial assets at amortised cost - Loans and receivables - b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 2.2 Overall 1,219,745 1,374,373 Total 1,685,975 1,714,488 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 607 5.2 Hedging derivatives: composition for covered portfolios and by type of hedging (€ '000) TRANSACTIONS/TYPE OF HEDGES AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW FOREIGN INVESTMENTS MICRO-HEDGE MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHERS 1. Financial assets at fair value through other comprehensive income 62,399 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 1,510,198 X 81,395 X 4. Other transactions - - - - - - X - X - Total assets 62,399 - - - - - 1,510,198 - 81,395 - 1. Financial liabilities - X - - - - X - X X 2. Portfolio X X X X X X 2,480,811 X 32,516 X Total liabilities - - - - - - 2,480,811 - 32,516 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X - X - - Section 6 - Changes in fair value of portfolio hedged items - Item 60 6.1 Changes to macro-hedged financial assets: breakdown by hedged portfolio (€ '000) AMOUNTS AS AT CHANGES TO HEDGED ASSETS/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes 2,905,720 3,088,861 1.1 Of specific portfolios - - a) Financial assets at amortised cost - Loans and receivables - b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 1.2 Overall 2,905,720 3,088,861 2. Negative changes 1,219,745 1,374,373 2.1 Of specific portfolios - - a) Financial assets at amortised cost - Loans and receivables - b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 2.2 Overall 1,219,745 1,374,373 Total 1,685,975 1,714,488 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 607 5.2 Hedging derivatives: composition for covered portfolios and by type of hedging (€ '000) TRANSACTIONS/TYPE OF HEDGES AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW FOREIGN INVESTMENTS MICRO-HEDGE MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHERS 1. Financial assets at fair value through other comprehensive income 62,399 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 1,510,198 X 81,395 X 4. Other transactions - - - - - - X - X - Total assets 62,399 - - - - - 1,510,198 - 81,395 - 1. Financial liabilities - X - - - - X - X X 2. Portfolio X X X X X X 2,480,811 X 32,516 X Total liabilities - - - - - - 2,480,811 - 32,516 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X - X - - Section 6 - Changes in fair value of portfolio hedged items - Item 60 6.1 Changes to macro-hedged financial assets: breakdown by hedged portfolio (€ '000) AMOUNTS AS AT CHANGES TO HEDGED ASSETS/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes 2,905,720 3,088,861 1.1 Of specific portfolios - - a) Financial assets at amortised cost - Loans and receivables - b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 1.2 Overall 2,905,720 3,088,861 2. Negative changes 1,219,745 1,374,373 2.1 Of specific portfolios - - a) Financial assets at amortised cost - Loans and receivables - b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 2.2 Overall 1,219,745 1,374,373 Total 1,685,975 1,714,488 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 607 5.2 Hedging derivatives: composition for covered portfolios and by type of hedging (€ '000) TRANSACTIONS/TYPE OF HEDGES AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW FOREIGN INVESTMENTS MICRO-HEDGE MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHERS 1. Financial assets at fair value through other comprehensive income 62,399 - - - X X X - X X 2. Financial assets at amortised cost - X - - X X X - X X 3. Portfolio X X X X X X 1,510,198 X 81,395 X 4. Other transactions - - - - - - X - X - Total assets 62,399 - - - - - 1,510,198 - 81,395 - 1. Financial liabilities - X - - - - X - X X 2. Portfolio X X X X X X 2,480,811 X 32,516 X Total liabilities - - - - - - 2,480,811 - 32,516 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X - X - - Section 6 - Changes in fair value of portfolio hedged items - Item 60 6.1 Changes to macro-hedged financial assets: breakdown by hedged portfolio (€ '000) AMOUNTS AS AT CHANGES TO HEDGED ASSETS/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes 2,905,720 3,088,861 1.1 Of specific portfolios - - a) Financial assets at amortised cost - Loans and receivables - b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 1.2 Overall 2,905,720 3,088,861 2. Negative changes 1,219,745 1,374,373 2.1 Of specific portfolios - - a) Financial assets at amortised cost - Loans and receivables - b) Financial assets at fair value through other comprehensive income - Available-for-sale financial assets - 2.2 Overall 1,219,745 1,374,373 Total 1,685,975 1,714,488 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 608 2018 Annual Report and Accounts · UniCredit Section 7 - Equity investments - Item 70 7.1 Equity: information on shareholder's equity COMPANY NAME MAIN OFFICE LEGAL MAIN OFFICE OPERATIVE(*) EQUITY %(**) VOTING RIGHTS % A. Subsidiaries 1 Anthemis EVO LLP London London 50.00% 2 AO UniCredit Bank Moscow Moscow 100.00% 3 Bavaria Servicos de Representacao Comercial LTDA Sao Paulo Sao Paulo 100.00% (A) 4 Box 2004 S.r.l. (in liquidation) Rome Rome 100.00% 5 Capital Dev S.p.A. Rome Rome 100.00% 6 Cordusio SIM S.p.A. Milan Milan 96.10% 7 Cordusio Società Fiduciaria per Azioni Milan Milan 100.00% 8 CORIT - Concessionaria Riscossione Tributi S.p.A. (in liquidation) Rome Rome 60.00% 9 Crivelli S.r.l. Milan Milan 100.00% 10 Fineco Verwaltung AG (in liquidation) Munich Munich 100.00% 11 FinecoBank S.p.A. Milan Reggio Emilia 35.35% 12 Island Finance (ICR4) S.r.l. (in liquidation) Rome Rome 100.00% 13 Istituto Immobiare di Catania S.p.A. Catania Catania 1.12% (B) 14 Nuova Compagnia di Partecipazioni S.p.A. Rome Rome 100.00% 15 Pioneer Alternative Investments (Bermuda) Limited Hamilton Hamilton 100.00% 16 Pai Management LTD Dublin Dublin 100.00% 17 Pioneer Alternative Investments (New York) Limited Dover New York 100.00% 18 Pioneer Alternative Investments (Israel) Limited (in voluntary liquidation) Ramat Gan Ramat Gan 100.00% 19 Pirta Verwaltungs GMBH Wien Wien 100.00% 20 Sanità - S.r.l. (in liquidation) Rome Rome 99.60% 21 SIA UniCredit Leasing Riga Riga 100.00% 22 Società di Gestioni Esattoriali in Sicilia SO.G.E.SI. S.p.A. (in liquidation) Palermo Palermo 80.00% 23 Società Italiana Gestione ed Incasso Crediti S.p.A. (in liquidation) Rome Rome 100.00% 24 Sofigere Société par Actions Simplifiée Paris Paris 100.00% 25 UniCredit Bank A.D. Banja Luka Banja Luka Banja Luka 98.46% 26 UniCredit Bank AG Munich Munich 100.00% 27 UniCredit Bank Austria AG Wien Wien 99.99% 28 UniCredit Bank Ireland P.l.c. Dublin Dublin 100.00% 29 UniCredit Bank Hungary ZRT Budapest Budapest 100.00% 30 UniCreditt Bank S.A. Bucharest Bucharest 98.63% 31 UniCredit Bank Serbia JSC Belgrade Belgrade 100.00% 32 UniCredit Banka Slovenija D.D. Ljubljana Ljubljana 100.00% 33 UniCredit BPC Mortgage S.r.l. Verona Verona 60.00% 34 UniCredit Bulbank A.D. Sofia Sofia 99.45% 35 UniCredit Bank Czech Republic and Slovakia A.S. Prague Prague 100.00% 36 UniCredit Consumer Financing IFN S.A. Bucharest Bucharest 49.90% (C) 37 UniCredit Factoring S.p.A. Milan Milan 100.00% 38 UniCredit Global Leasing Export GMBH Wien Wien 100.00% 39 UniCredit International Bank (Luxembourg) S.A. Luxembourg Luxembourg 100.00% 40 UniCredit Leasing S.p.A. Milan Milan 100.00% 41 UniCredit Myagents S.r.l. Bologna Bologna 100.00% 42 UniCredit OBG S.r.l. Verona Verona 60.00% 43 UniCredit Business Integrated Solutions Società consortile per azioni Milan Milan 100.00% (D) 44 UniCredit Subito Casa S.p.A. Milan Milan 100.00% 45 UniCredit (U.K.) Trust Services Ltd London London 100.00% 46 UniCredit Turn-Around Management GMBH Wien Wien 100.00% 47 Visconti S.r.l. Milan Milan 76.00% 48 Zagrebacka Banka D.D. Zagreb Zagreb 84.48% Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 608 2018 Annual Report and Accounts · UniCredit Section 7 - Equity investments - Item 70 7.1 Equity: information on shareholder's equity COMPANY NAME MAIN OFFICE LEGAL MAIN OFFICE OPERATIVE(*) EQUITY %(**) VOTING RIGHTS % A. Subsidiaries 1 Anthemis EVO LLP London London 50.00% 2 AO UniCredit Bank Moscow Moscow 100.00% 3 Bavaria Servicos de Representacao Comercial LTDA Sao Paulo Sao Paulo 100.00% (A) 4 Box 2004 S.r.l. (in liquidation) Rome Rome 100.00% 5 Capital Dev S.p.A. Rome Rome 100.00% 6 Cordusio SIM S.p.A. Milan Milan 96.10% 7 Cordusio Società Fiduciaria per Azioni Milan Milan 100.00% 8 CORIT - Concessionaria Riscossione Tributi S.p.A. (in liquidation) Rome Rome 60.00% 9 Crivelli S.r.l. Milan Milan 100.00% 10 Fineco Verwaltung AG (in liquidation) Munich Munich 100.00% 11 FinecoBank S.p.A. Milan Reggio Emilia 35.35% 12 Island Finance (ICR4) S.r.l. (in liquidation) Rome Rome 100.00% 13 Istituto Immobiare di Catania S.p.A. Catania Catania 1.12% (B) 14 Nuova Compagnia di Partecipazioni S.p.A. Rome Rome 100.00% 15 Pioneer Alternative Investments (Bermuda) Limited Hamilton Hamilton 100.00% 16 Pai Management LTD Dublin Dublin 100.00% 17 Pioneer Alternative Investments (New York) Limited Dover New York 100.00% 18 Pioneer Alternative Investments (Israel) Limited (in voluntary liquidation) Ramat Gan Ramat Gan 100.00% 19 Pirta Verwaltungs GMBH Wien Wien 100.00% 20 Sanità - S.r.l. (in liquidation) Rome Rome 99.60% 21 SIA UniCredit Leasing Riga Riga 100.00% 22 Società di Gestioni Esattoriali in Sicilia SO.G.E.SI. S.p.A. (in liquidation) Palermo Palermo 80.00% 23 Società Italiana Gestione ed Incasso Crediti S.p.A. (in liquidation) Rome Rome 100.00% 24 Sofigere Société par Actions Simplifiée Paris Paris 100.00% 25 UniCredit Bank A.D. Banja Luka Banja Luka Banja Luka 98.46% 26 UniCredit Bank AG Munich Munich 100.00% 27 UniCredit Bank Austria AG Wien Wien 99.99% 28 UniCredit Bank Ireland P.l.c. Dublin Dublin 100.00% 29 UniCredit Bank Hungary ZRT Budapest Budapest 100.00% 30 UniCreditt Bank S.A. Bucharest Bucharest 98.63% 31 UniCredit Bank Serbia JSC Belgrade Belgrade 100.00% 32 UniCredit Banka Slovenija D.D. Ljubljana Ljubljana 100.00% 33 UniCredit BPC Mortgage S.r.l. Verona Verona 60.00% 34 UniCredit Bulbank A.D. Sofia Sofia 99.45% 35 UniCredit Bank Czech Republic and Slovakia A.S. Prague Prague 100.00% 36 UniCredit Consumer Financing IFN S.A. Bucharest Bucharest 49.90% (C) 37 UniCredit Factoring S.p.A. Milan Milan 100.00% 38 UniCredit Global Leasing Export GMBH Wien Wien 100.00% 39 UniCredit International Bank (Luxembourg) S.A. Luxembourg Luxembourg 100.00% 40 UniCredit Leasing S.p.A. Milan Milan 100.00% 41 UniCredit Myagents S.r.l. Bologna Bologna 100.00% 42 UniCredit OBG S.r.l. Verona Verona 60.00% 43 UniCredit Business Integrated Solutions Società consortile per azioni Milan Milan 100.00% (D) 44 UniCredit Subito Casa S.p.A. Milan Milan 100.00% 45 UniCredit (U.K.) Trust Services Ltd London London 100.00% 46 UniCredit Turn-Around Management GMBH Wien Wien 100.00% 47 Visconti S.r.l. Milan Milan 76.00% 48 Zagrebacka Banka D.D. Zagreb Zagreb 84.48% Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 608 2018 Annual Report and Accounts · UniCredit Section 7 - Equity investments - Item 70 7.1 Equity: information on shareholder's equity COMPANY NAME MAIN OFFICE LEGAL MAIN OFFICE OPERATIVE(*) EQUITY %(**) VOTING RIGHTS % A. Subsidiaries 1 Anthemis EVO LLP London London 50.00% 2 AO UniCredit Bank Moscow Moscow 100.00% 3 Bavaria Servicos de Representacao Comercial LTDA Sao Paulo Sao Paulo 100.00% (A) 4 Box 2004 S.r.l. (in liquidation) Rome Rome 100.00% 5 Capital Dev S.p.A. Rome Rome 100.00% 6 Cordusio SIM S.p.A. Milan Milan 96.10% 7 Cordusio Società Fiduciaria per Azioni Milan Milan 100.00% 8 CORIT - Concessionaria Riscossione Tributi S.p.A. (in liquidation) Rome Rome 60.00% 9 Crivelli S.r.l. Milan Milan 100.00% 10 Fineco Verwaltung AG (in liquidation) Munich Munich 100.00% 11 FinecoBank S.p.A. Milan Reggio Emilia 35.35% 12 Island Finance (ICR4) S.r.l. (in liquidation) Rome Rome 100.00% 13 Istituto Immobiare di Catania S.p.A. Catania Catania 1.12% (B) 14 Nuova Compagnia di Partecipazioni S.p.A. Rome Rome 100.00% 15 Pioneer Alternative Investments (Bermuda) Limited Hamilton Hamilton 100.00% 16 Pai Management LTD Dublin Dublin 100.00% 17 Pioneer Alternative Investments (New York) Limited Dover New York 100.00% 18 Pioneer Alternative Investments (Israel) Limited (in voluntary liquidation) Ramat Gan Ramat Gan 100.00% 19 Pirta Verwaltungs GMBH Wien Wien 100.00% 20 Sanità - S.r.l. (in liquidation) Rome Rome 99.60% 21 SIA UniCredit Leasing Riga Riga 100.00% 22 Società di Gestioni Esattoriali in Sicilia SO.G.E.SI. S.p.A. (in liquidation) Palermo Palermo 80.00% 23 Società Italiana Gestione ed Incasso Crediti S.p.A. (in liquidation) Rome Rome 100.00% 24 Sofigere Société par Actions Simplifiée Paris Paris 100.00% 25 UniCredit Bank A.D. Banja Luka Banja Luka Banja Luka 98.46% 26 UniCredit Bank AG Munich Munich 100.00% 27 UniCredit Bank Austria AG Wien Wien 99.99% 28 UniCredit Bank Ireland P.l.c. Dublin Dublin 100.00% 29 UniCredit Bank Hungary ZRT Budapest Budapest 100.00% 30 UniCreditt Bank S.A. Bucharest Bucharest 98.63% 31 UniCredit Bank Serbia JSC Belgrade Belgrade 100.00% 32 UniCredit Banka Slovenija D.D. Ljubljana Ljubljana 100.00% 33 UniCredit BPC Mortgage S.r.l. Verona Verona 60.00% 34 UniCredit Bulbank A.D. Sofia Sofia 99.45% 35 UniCredit Bank Czech Republic and Slovakia A.S. Prague Prague 100.00% 36 UniCredit Consumer Financing IFN S.A. Bucharest Bucharest 49.90% (C) 37 UniCredit Factoring S.p.A. Milan Milan 100.00% 38 UniCredit Global Leasing Export GMBH Wien Wien 100.00% 39 UniCredit International Bank (Luxembourg) S.A. Luxembourg Luxembourg 100.00% 40 UniCredit Leasing S.p.A. Milan Milan 100.00% 41 UniCredit Myagents S.r.l. Bologna Bologna 100.00% 42 UniCredit OBG S.r.l. Verona Verona 60.00% 43 UniCredit Business Integrated Solutions Società consortile per azioni Milan Milan 100.00% (D) 44 UniCredit Subito Casa S.p.A. Milan Milan 100.00% 45 UniCredit (U.K.) Trust Services Ltd London London 100.00% 46 UniCredit Turn-Around Management GMBH Wien Wien 100.00% 47 Visconti S.r.l. Milan Milan 76.00% 48 Zagrebacka Banka D.D. Zagreb Zagreb 84.48% Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 608 2018 Annual Report and Accounts · UniCredit Section 7 - Equity investments - Item 70 7.1 Equity: information on shareholder's equity COMPANY NAME MAIN OFFICE LEGAL MAIN OFFICE OPERATIVE(*) EQUITY %(**) VOTING RIGHTS % A. Subsidiaries 1 Anthemis EVO LLP London London 50.00% 2 AO UniCredit Bank Moscow Moscow 100.00% 3 Bavaria Servicos de Representacao Comercial LTDA Sao Paulo Sao Paulo 100.00% (A) 4 Box 2004 S.r.l. (in liquidation) Rome Rome 100.00% 5 Capital Dev S.p.A. Rome Rome 100.00% 6 Cordusio SIM S.p.A. Milan Milan 96.10% 7 Cordusio Società Fiduciaria per Azioni Milan Milan 100.00% 8 CORIT - Concessionaria Riscossione Tributi S.p.A. (in liquidation) Rome Rome 60.00% 9 Crivelli S.r.l. Milan Milan 100.00% 10 Fineco Verwaltung AG (in liquidation) Munich Munich 100.00% 11 FinecoBank S.p.A. Milan Reggio Emilia 35.35% 12 Island Finance (ICR4) S.r.l. (in liquidation) Rome Rome 100.00% 13 Istituto Immobiare di Catania S.p.A. Catania Catania 1.12% (B) 14 Nuova Compagnia di Partecipazioni S.p.A. Rome Rome 100.00% 15 Pioneer Alternative Investments (Bermuda) Limited Hamilton Hamilton 100.00% 16 Pai Management LTD Dublin Dublin 100.00% 17 Pioneer Alternative Investments (New York) Limited Dover New York 100.00% 18 Pioneer Alternative Investments (Israel) Limited (in voluntary liquidation) Ramat Gan Ramat Gan 100.00% 19 Pirta Verwaltungs GMBH Wien Wien 100.00% 20 Sanità - S.r.l. (in liquidation) Rome Rome 99.60% 21 SIA UniCredit Leasing Riga Riga 100.00% 22 Società di Gestioni Esattoriali in Sicilia SO.G.E.SI. S.p.A. (in liquidation) Palermo Palermo 80.00% 23 Società Italiana Gestione ed Incasso Crediti S.p.A. (in liquidation) Rome Rome 100.00% 24 Sofigere Société par Actions Simplifiée Paris Paris 100.00% 25 UniCredit Bank A.D. Banja Luka Banja Luka Banja Luka 98.46% 26 UniCredit Bank AG Munich Munich 100.00% 27 UniCredit Bank Austria AG Wien Wien 99.99% 28 UniCredit Bank Ireland P.l.c. Dublin Dublin 100.00% 29 UniCredit Bank Hungary ZRT Budapest Budapest 100.00% 30 UniCreditt Bank S.A. Bucharest Bucharest 98.63% 31 UniCredit Bank Serbia JSC Belgrade Belgrade 100.00% 32 UniCredit Banka Slovenija D.D. Ljubljana Ljubljana 100.00% 33 UniCredit BPC Mortgage S.r.l. Verona Verona 60.00% 34 UniCredit Bulbank A.D. Sofia Sofia 99.45% 35 UniCredit Bank Czech Republic and Slovakia A.S. Prague Prague 100.00% 36 UniCredit Consumer Financing IFN S.A. Bucharest Bucharest 49.90% (C) 37 UniCredit Factoring S.p.A. Milan Milan 100.00% 38 UniCredit Global Leasing Export GMBH Wien Wien 100.00% 39 UniCredit International Bank (Luxembourg) S.A. Luxembourg Luxembourg 100.00% 40 UniCredit Leasing S.p.A. Milan Milan 100.00% 41 UniCredit Myagents S.r.l. Bologna Bologna 100.00% 42 UniCredit OBG S.r.l. Verona Verona 60.00% 43 UniCredit Business Integrated Solutions Società consortile per azioni Milan Milan 100.00% (D) 44 UniCredit Subito Casa S.p.A. Milan Milan 100.00% 45 UniCredit (U.K.) Trust Services Ltd London London 100.00% 46 UniCredit Turn-Around Management GMBH Wien Wien 100.00% 47 Visconti S.r.l. Milan Milan 76.00% 48 Zagrebacka Banka D.D. Zagreb Zagreb 84.48% Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 608 2018 Annual Report and Accounts · UniCredit Section 7 - Equity investments - Item 70 7.1 Equity: information on shareholder's equity COMPANY NAME MAIN OFFICE LEGAL MAIN OFFICE OPERATIVE(*) EQUITY %(**) VOTING RIGHTS % A. Subsidiaries 1 Anthemis EVO LLP London London 50.00% 2 AO UniCredit Bank Moscow Moscow 100.00% 3 Bavaria Servicos de Representacao Comercial LTDA Sao Paulo Sao Paulo 100.00% (A) 4 Box 2004 S.r.l. (in liquidation) Rome Rome 100.00% 5 Capital Dev S.p.A. Rome Rome 100.00% 6 Cordusio SIM S.p.A. Milan Milan 96.10% 7 Cordusio Società Fiduciaria per Azioni Milan Milan 100.00% 8 CORIT - Concessionaria Riscossione Tributi S.p.A. (in liquidation) Rome Rome 60.00% 9 Crivelli S.r.l. Milan Milan 100.00% 10 Fineco Verwaltung AG (in liquidation) Munich Munich 100.00% 11 FinecoBank S.p.A. Milan Reggio Emilia 35.35% 12 Island Finance (ICR4) S.r.l. (in liquidation) Rome Rome 100.00% 13 Istituto Immobiare di Catania S.p.A. Catania Catania 1.12% (B) 14 Nuova Compagnia di Partecipazioni S.p.A. Rome Rome 100.00% 15 Pioneer Alternative Investments (Bermuda) Limited Hamilton Hamilton 100.00% 16 Pai Management LTD Dublin Dublin 100.00% 17 Pioneer Alternative Investments (New York) Limited Dover New York 100.00% 18 Pioneer Alternative Investments (Israel) Limited (in voluntary liquidation) Ramat Gan Ramat Gan 100.00% 19 Pirta Verwaltungs GMBH Wien Wien 100.00% 20 Sanità - S.r.l. (in liquidation) Rome Rome 99.60% 21 SIA UniCredit Leasing Riga Riga 100.00% 22 Società di Gestioni Esattoriali in Sicilia SO.G.E.SI. S.p.A. (in liquidation) Palermo Palermo 80.00% 23 Società Italiana Gestione ed Incasso Crediti S.p.A. (in liquidation) Rome Rome 100.00% 24 Sofigere Société par Actions Simplifiée Paris Paris 100.00% 25 UniCredit Bank A.D. Banja Luka Banja Luka Banja Luka 98.46% 26 UniCredit Bank AG Munich Munich 100.00% 27 UniCredit Bank Austria AG Wien Wien 99.99% 28 UniCredit Bank Ireland P.l.c. Dublin Dublin 100.00% 29 UniCredit Bank Hungary ZRT Budapest Budapest 100.00% 30 UniCreditt Bank S.A. Bucharest Bucharest 98.63% 31 UniCredit Bank Serbia JSC Belgrade Belgrade 100.00% 32 UniCredit Banka Slovenija D.D. Ljubljana Ljubljana 100.00% 33 UniCredit BPC Mortgage S.r.l. Verona Verona 60.00% 34 UniCredit Bulbank A.D. Sofia Sofia 99.45% 35 UniCredit Bank Czech Republic and Slovakia A.S. Prague Prague 100.00% 36 UniCredit Consumer Financing IFN S.A. Bucharest Bucharest 49.90% (C) 37 UniCredit Factoring S.p.A. Milan Milan 100.00% 38 UniCredit Global Leasing Export GMBH Wien Wien 100.00% 39 UniCredit International Bank (Luxembourg) S.A. Luxembourg Luxembourg 100.00% 40 UniCredit Leasing S.p.A. Milan Milan 100.00% 41 UniCredit Myagents S.r.l. Bologna Bologna 100.00% 42 UniCredit OBG S.r.l. Verona Verona 60.00% 43 UniCredit Business Integrated Solutions Società consortile per azioni Milan Milan 100.00% (D) 44 UniCredit Subito Casa S.p.A. Milan Milan 100.00% 45 UniCredit (U.K.) Trust Services Ltd London London 100.00% 46 UniCredit Turn-Around Management GMBH Wien Wien 100.00% 47 Visconti S.r.l. Milan Milan 76.00% 48 Zagrebacka Banka D.D. Zagreb Zagreb 84.48% Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 609 Continued: 7.1 Equity: information on shareholder's equity COMPANY NAME MAIN OFFICE LEGAL MAIN OFFICE OPERATIVE(*) EQUITY %(**) VOTING RIGHTS % B. Joint ventures 1 Koc Finansal Hizmetler AS Istanbul Istanbul 50.00% C. Companies under significant influence 1 Asset Bancari II Milan Milan 21.55% (E) 2 Aviva S.p.A. Milan Milan 49.00% 3 Camfin S.p.A. Milan Milan 13.64% 22.22% 4 CNP UniCredit Vita S.p.A. Milan Milan 38.80% 5 Compagnia Aerea Italiana S.p.A. Fiumicino (Rome) Fiumicino (Rome) 36.59% 6 Creditras Assicurazioni S.p.A. Milan Milan 50.00% 7 Creditras Vita S.p.A. Milan Milan 50.00% 8 Europrogetti & Finanza S.p.A. (in liquidation) Rome Rome 39.79% 9 EuroTLX SIM S.p.A. Milan Milan 15.00% 10 Fenice Holding S.p.A. (in liquidation) Calenzano (FI) Calenzano (FI) 25.91% 11 Focus Investments S.p.A. Milan Milan 8.33% 25.00% 12 Incontra Assicurazioni S.p.A. Milan Milan 49.00% 13 La Fortezza S.r.l. Catanzaro Catanzaro 1.00% 14 Le Cotoniere S.p.A. Naples Naples 33.33% 15 Le Vigne S.r.l Catanzaro Catanzaro 1.00% 16 Maccorp Italiana S.p.A. Milan Milan 25.45% 17 Mediobanca - Banca di Credito Finanziario S.p.A. Milan Milan 8.40% 18 Risanamento S.p.A. Milan Milan 22.23% 19 Torre SGR S.p.A. Rome Rome 37.50% Notes: (*) Also meaning the administrative office. (**) The equity stake is held by the Parent Company and does not include any stake held by other Group companies. (A) The remaining share of 0.47% is held by UniCredit (U.K.) Trust Services Ltd. (B) 93.92% is held by Capital Dev S.p.A. (C) A fractional share is held by various Group companies. (D) The remaining share of 50.10% is held indirectly by UniCredit Bank S.A. (E) Equity instruments (Strumenti Finanziari Partecipativi) have been subscribed; the portion subscribed is calculated on the total equity instruments issued by the investee. (F) It is a real estate closed-end investment fund. Note that, also in light of the signature of the “Consultation agreement between shareholders of Mediobanca”, the investment in Mediobanca - Banca di Credito Finanziario S.p.A. remains classified as investment in associates For further information see Consolidated report on operations - Other information, as a result of the continuing existence of an adequate representation by UniCredit in Mediobanca’s Board of Directors. The investments are individually tested for impairment in accordance with the provisions of IAS36. When the conditions provided for therein apply, their recovery value is determined, meant as the higher of their "fair value" and "value in use" (the latter determined by discounting the cash flows at a rate that takes account of the current market rates and the specific risks of the asset or using other commonly accepted valuation criteria and methods suitable for the correct valuation of the investment). If the recovery value is lower than the carrying amount, the latter is consequently reduced by allocating the corresponding impairment loss to the income statement. On the basis of the above impairment loss has been recognised in subsidiaries, including: Koc Finansal Hizmetler Istanbul -€1.319 million, AO UniCredit Bank -€244 million, Cordusio Sim -€158 million, UniCredit Banka Slovenija D.D. -€17 million, UniCredit Consumer Financing Ifn S.A. -€16 million, UniCredit Bank Austria Credistanstalt Ag -€12 million, UniCredit Turn Around Management Cee Gmbh -€13 million, UniCredit Subito Casa S.p.A. -€1 million, UniCredit Global Leasing Export Gmbh -€1 million, Aviva S.p.A. -€6 million, Risanamento S.p.A. -€6 million, Fenice S.r.l. -€2 million. Further, some write-up have been recognised, including: UniCredit Bank AG €30 million, Mediobanca Banca di Credito Finanziario S.p.A. €28 million, UniCredit International Luxembourg €4 million, Nuova Compagnia di Partecipazioni €2 million. For Koc Finansal Hizmetler Istanbul it is highlighted that the Book value of the investment at 31 December 2017 amounted to €2,313 million; the change with respect to the €1,340 million at 31 December 2018 is mainly due to the abovementioned impairment loss recorded mainly in the third quarter of 2018 (for more information about value in use determination, reference is made to the paragraph of Part B - Notes to the consolidated accounts of UniCredit group - Section 10 - Intangible assets - 10.3 Intangible assets: other information - Estimating cash flows to determine the value in use of the CGUs which is herewith quoted entirely). Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 609 Continued: 7.1 Equity: information on shareholder's equity COMPANY NAME MAIN OFFICE LEGAL MAIN OFFICE OPERATIVE(*) EQUITY %(**) VOTING RIGHTS % B. Joint ventures 1 Koc Finansal Hizmetler AS Istanbul Istanbul 50.00% C. Companies under significant influence 1 Asset Bancari II Milan Milan 21.55% (E) 2 Aviva S.p.A. Milan Milan 49.00% 3 Camfin S.p.A. Milan Milan 13.64% 22.22% 4 CNP UniCredit Vita S.p.A. Milan Milan 38.80% 5 Compagnia Aerea Italiana S.p.A. Fiumicino (Rome) Fiumicino (Rome) 36.59% 6 Creditras Assicurazioni S.p.A. Milan Milan 50.00% 7 Creditras Vita S.p.A. Milan Milan 50.00% 8 Europrogetti & Finanza S.p.A. (in liquidation) Rome Rome 39.79% 9 EuroTLX SIM S.p.A. Milan Milan 15.00% 10 Fenice Holding S.p.A. (in liquidation) Calenzano (FI) Calenzano (FI) 25.91% 11 Focus Investments S.p.A. Milan Milan 8.33% 25.00% 12 Incontra Assicurazioni S.p.A. Milan Milan 49.00% 13 La Fortezza S.r.l. Catanzaro Catanzaro 1.00% 14 Le Cotoniere S.p.A. Naples Naples 33.33% 15 Le Vigne S.r.l Catanzaro Catanzaro 1.00% 16 Maccorp Italiana S.p.A. Milan Milan 25.45% 17 Mediobanca - Banca di Credito Finanziario S.p.A. Milan Milan 8.40% 18 Risanamento S.p.A. Milan Milan 22.23% 19 Torre SGR S.p.A. Rome Rome 37.50% Notes: (*) Also meaning the administrative office. (**) The equity stake is held by the Parent Company and does not include any stake held by other Group companies. (A) The remaining share of 0.47% is held by UniCredit (U.K.) Trust Services Ltd. (B) 93.92% is held by Capital Dev S.p.A. (C) A fractional share is held by various Group companies. (D) The remaining share of 50.10% is held indirectly by UniCredit Bank S.A. (E) Equity instruments (Strumenti Finanziari Partecipativi) have been subscribed; the portion subscribed is calculated on the total equity instruments issued by the investee. (F) It is a real estate closed-end investment fund. Note that, also in light of the signature of the “Consultation agreement between shareholders of Mediobanca”, the investment in Mediobanca - Banca di Credito Finanziario S.p.A. remains classified as investment in associates For further information see Consolidated report on operations - Other information, as a result of the continuing existence of an adequate representation by UniCredit in Mediobanca’s Board of Directors. The investments are individually tested for impairment in accordance with the provisions of IAS36. When the conditions provided for therein apply, their recovery value is determined, meant as the higher of their "fair value" and "value in use" (the latter determined by discounting the cash flows at a rate that takes account of the current market rates and the specific risks of the asset or using other commonly accepted valuation criteria and methods suitable for the correct valuation of the investment). If the recovery value is lower than the carrying amount, the latter is consequently reduced by allocating the corresponding impairment loss to the income statement. On the basis of the above impairment loss has been recognised in subsidiaries, including: Koc Finansal Hizmetler Istanbul -€1.319 million, AO UniCredit Bank -€244 million, Cordusio Sim -€158 million, UniCredit Banka Slovenija D.D. -€17 million, UniCredit Consumer Financing Ifn S.A. -€16 million, UniCredit Bank Austria Credistanstalt Ag -€12 million, UniCredit Turn Around Management Cee Gmbh -€13 million, UniCredit Subito Casa S.p.A. -€1 million, UniCredit Global Leasing Export Gmbh -€1 million, Aviva S.p.A. -€6 million, Risanamento S.p.A. -€6 million, Fenice S.r.l. -€2 million. Further, some write-up have been recognised, including: UniCredit Bank AG €30 million, Mediobanca Banca di Credito Finanziario S.p.A. €28 million, UniCredit International Luxembourg €4 million, Nuova Compagnia di Partecipazioni €2 million. For Koc Finansal Hizmetler Istanbul it is highlighted that the Book value of the investment at 31 December 2017 amounted to €2,313 million; the change with respect to the €1,340 million at 31 December 2018 is mainly due to the abovementioned impairment loss recorded mainly in the third quarter of 2018 (for more information about value in use determination, reference is made to the paragraph of Part B - Notes to the consolidated accounts of UniCredit group - Section 10 - Intangible assets - 10.3 Intangible assets: other information - Estimating cash flows to determine the value in use of the CGUs which is herewith quoted entirely). Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 609 Continued: 7.1 Equity: information on shareholder's equity COMPANY NAME MAIN OFFICE LEGAL MAIN OFFICE OPERATIVE(*) EQUITY %(**) VOTING RIGHTS % B. Joint ventures 1 Koc Finansal Hizmetler AS Istanbul Istanbul 50.00% C. Companies under significant influence 1 Asset Bancari II Milan Milan 21.55% (E) 2 Aviva S.p.A. Milan Milan 49.00% 3 Camfin S.p.A. Milan Milan 13.64% 22.22% 4 CNP UniCredit Vita S.p.A. Milan Milan 38.80% 5 Compagnia Aerea Italiana S.p.A. Fiumicino (Rome) Fiumicino (Rome) 36.59% 6 Creditras Assicurazioni S.p.A. Milan Milan 50.00% 7 Creditras Vita S.p.A. Milan Milan 50.00% 8 Europrogetti & Finanza S.p.A. (in liquidation) Rome Rome 39.79% 9 EuroTLX SIM S.p.A. Milan Milan 15.00% 10 Fenice Holding S.p.A. (in liquidation) Calenzano (FI) Calenzano (FI) 25.91% 11 Focus Investments S.p.A. Milan Milan 8.33% 25.00% 12 Incontra Assicurazioni S.p.A. Milan Milan 49.00% 13 La Fortezza S.r.l. Catanzaro Catanzaro 1.00% 14 Le Cotoniere S.p.A. Naples Naples 33.33% 15 Le Vigne S.r.l Catanzaro Catanzaro 1.00% 16 Maccorp Italiana S.p.A. Milan Milan 25.45% 17 Mediobanca - Banca di Credito Finanziario S.p.A. Milan Milan 8.40% 18 Risanamento S.p.A. Milan Milan 22.23% 19 Torre SGR S.p.A. Rome Rome 37.50% Notes: (*) Also meaning the administrative office. (**) The equity stake is held by the Parent Company and does not include any stake held by other Group companies. (A) The remaining share of 0.47% is held by UniCredit (U.K.) Trust Services Ltd. (B) 93.92% is held by Capital Dev S.p.A. (C) A fractional share is held by various Group companies. (D) The remaining share of 50.10% is held indirectly by UniCredit Bank S.A. (E) Equity instruments (Strumenti Finanziari Partecipativi) have been subscribed; the portion subscribed is calculated on the total equity instruments issued by the investee. (F) It is a real estate closed-end investment fund. Note that, also in light of the signature of the “Consultation agreement between shareholders of Mediobanca”, the investment in Mediobanca - Banca di Credito Finanziario S.p.A. remains classified as investment in associates For further information see Consolidated report on operations - Other information, as a result of the continuing existence of an adequate representation by UniCredit in Mediobanca’s Board of Directors. The investments are individually tested for impairment in accordance with the provisions of IAS36. When the conditions provided for therein apply, their recovery value is determined, meant as the higher of their "fair value" and "value in use" (the latter determined by discounting the cash flows at a rate that takes account of the current market rates and the specific risks of the asset or using other commonly accepted valuation criteria and methods suitable for the correct valuation of the investment). If the recovery value is lower than the carrying amount, the latter is consequently reduced by allocating the corresponding impairment loss to the income statement. On the basis of the above impairment loss has been recognised in subsidiaries, including: Koc Finansal Hizmetler Istanbul -€1.319 million, AO UniCredit Bank -€244 million, Cordusio Sim -€158 million, UniCredit Banka Slovenija D.D. -€17 million, UniCredit Consumer Financing Ifn S.A. -€16 million, UniCredit Bank Austria Credistanstalt Ag -€12 million, UniCredit Turn Around Management Cee Gmbh -€13 million, UniCredit Subito Casa S.p.A. -€1 million, UniCredit Global Leasing Export Gmbh -€1 million, Aviva S.p.A. -€6 million, Risanamento S.p.A. -€6 million, Fenice S.r.l. -€2 million. Further, some write-up have been recognised, including: UniCredit Bank AG €30 million, Mediobanca Banca di Credito Finanziario S.p.A. €28 million, UniCredit International Luxembourg €4 million, Nuova Compagnia di Partecipazioni €2 million. For Koc Finansal Hizmetler Istanbul it is highlighted that the Book value of the investment at 31 December 2017 amounted to €2,313 million; the change with respect to the €1,340 million at 31 December 2018 is mainly due to the abovementioned impairment loss recorded mainly in the third quarter of 2018 (for more information about value in use determination, reference is made to the paragraph of Part B - Notes to the consolidated accounts of UniCredit group - Section 10 - Intangible assets - 10.3 Intangible assets: other information - Estimating cash flows to determine the value in use of the CGUs which is herewith quoted entirely). Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 609 Continued: 7.1 Equity: information on shareholder's equity COMPANY NAME MAIN OFFICE LEGAL MAIN OFFICE OPERATIVE(*) EQUITY %(**) VOTING RIGHTS % B. Joint ventures 1 Koc Finansal Hizmetler AS Istanbul Istanbul 50.00% C. Companies under significant influence 1 Asset Bancari II Milan Milan 21.55% (E) 2 Aviva S.p.A. Milan Milan 49.00% 3 Camfin S.p.A. Milan Milan 13.64% 22.22% 4 CNP UniCredit Vita S.p.A. Milan Milan 38.80% 5 Compagnia Aerea Italiana S.p.A. Fiumicino (Rome) Fiumicino (Rome) 36.59% 6 Creditras Assicurazioni S.p.A. Milan Milan 50.00% 7 Creditras Vita S.p.A. Milan Milan 50.00% 8 Europrogetti & Finanza S.p.A. (in liquidation) Rome Rome 39.79% 9 EuroTLX SIM S.p.A. Milan Milan 15.00% 10 Fenice Holding S.p.A. (in liquidation) Calenzano (FI) Calenzano (FI) 25.91% 11 Focus Investments S.p.A. Milan Milan 8.33% 25.00% 12 Incontra Assicurazioni S.p.A. Milan Milan 49.00% 13 La Fortezza S.r.l. Catanzaro Catanzaro 1.00% 14 Le Cotoniere S.p.A. Naples Naples 33.33% 15 Le Vigne S.r.l Catanzaro Catanzaro 1.00% 16 Maccorp Italiana S.p.A. Milan Milan 25.45% 17 Mediobanca - Banca di Credito Finanziario S.p.A. Milan Milan 8.40% 18 Risanamento S.p.A. Milan Milan 22.23% 19 Torre SGR S.p.A. Rome Rome 37.50% Notes: (*) Also meaning the administrative office. (**) The equity stake is held by the Parent Company and does not include any stake held by other Group companies. (A) The remaining share of 0.47% is held by UniCredit (U.K.) Trust Services Ltd. (B) 93.92% is held by Capital Dev S.p.A. (C) A fractional share is held by various Group companies. (D) The remaining share of 50.10% is held indirectly by UniCredit Bank S.A. (E) Equity instruments (Strumenti Finanziari Partecipativi) have been subscribed; the portion subscribed is calculated on the total equity instruments issued by the investee. (F) It is a real estate closed-end investment fund. Note that, also in light of the signature of the “Consultation agreement between shareholders of Mediobanca”, the investment in Mediobanca - Banca di Credito Finanziario S.p.A. remains classified as investment in associates For further information see Consolidated report on operations - Other information, as a result of the continuing existence of an adequate representation by UniCredit in Mediobanca’s Board of Directors. The investments are individually tested for impairment in accordance with the provisions of IAS36. When the conditions provided for therein apply, their recovery value is determined, meant as the higher of their "fair value" and "value in use" (the latter determined by discounting the cash flows at a rate that takes account of the current market rates and the specific risks of the asset or using other commonly accepted valuation criteria and methods suitable for the correct valuation of the investment). If the recovery value is lower than the carrying amount, the latter is consequently reduced by allocating the corresponding impairment loss to the income statement. On the basis of the above impairment loss has been recognised in subsidiaries, including: Koc Finansal Hizmetler Istanbul -€1.319 million, AO UniCredit Bank -€244 million, Cordusio Sim -€158 million, UniCredit Banka Slovenija D.D. -€17 million, UniCredit Consumer Financing Ifn S.A. -€16 million, UniCredit Bank Austria Credistanstalt Ag -€12 million, UniCredit Turn Around Management Cee Gmbh -€13 million, UniCredit Subito Casa S.p.A. -€1 million, UniCredit Global Leasing Export Gmbh -€1 million, Aviva S.p.A. -€6 million, Risanamento S.p.A. -€6 million, Fenice S.r.l. -€2 million. Further, some write-up have been recognised, including: UniCredit Bank AG €30 million, Mediobanca Banca di Credito Finanziario S.p.A. €28 million, UniCredit International Luxembourg €4 million, Nuova Compagnia di Partecipazioni €2 million. For Koc Finansal Hizmetler Istanbul it is highlighted that the Book value of the investment at 31 December 2017 amounted to €2,313 million; the change with respect to the €1,340 million at 31 December 2018 is mainly due to the abovementioned impairment loss recorded mainly in the third quarter of 2018 (for more information about value in use determination, reference is made to the paragraph of Part B - Notes to the consolidated accounts of UniCredit group - Section 10 - Intangible assets - 10.3 Intangible assets: other information - Estimating cash flows to determine the value in use of the CGUs which is herewith quoted entirely). Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 609 Continued: 7.1 Equity: information on shareholder's equity COMPANY NAME MAIN OFFICE LEGAL MAIN OFFICE OPERATIVE(*) EQUITY %(**) VOTING RIGHTS % B. Joint ventures 1 Koc Finansal Hizmetler AS Istanbul Istanbul 50.00% C. Companies under significant influence 1 Asset Bancari II Milan Milan 21.55% (E) 2 Aviva S.p.A. Milan Milan 49.00% 3 Camfin S.p.A. Milan Milan 13.64% 22.22% 4 CNP UniCredit Vita S.p.A. Milan Milan 38.80% 5 Compagnia Aerea Italiana S.p.A. Fiumicino (Rome) Fiumicino (Rome) 36.59% 6 Creditras Assicurazioni S.p.A. Milan Milan 50.00% 7 Creditras Vita S.p.A. Milan Milan 50.00% 8 Europrogetti & Finanza S.p.A. (in liquidation) Rome Rome 39.79% 9 EuroTLX SIM S.p.A. Milan Milan 15.00% 10 Fenice Holding S.p.A. (in liquidation) Calenzano (FI) Calenzano (FI) 25.91% 11 Focus Investments S.p.A. Milan Milan 8.33% 25.00% 12 Incontra Assicurazioni S.p.A. Milan Milan 49.00% 13 La Fortezza S.r.l. Catanzaro Catanzaro 1.00% 14 Le Cotoniere S.p.A. Naples Naples 33.33% 15 Le Vigne S.r.l Catanzaro Catanzaro 1.00% 16 Maccorp Italiana S.p.A. Milan Milan 25.45% 17 Mediobanca - Banca di Credito Finanziario S.p.A. Milan Milan 8.40% 18 Risanamento S.p.A. Milan Milan 22.23% 19 Torre SGR S.p.A. Rome Rome 37.50% Notes: (*) Also meaning the administrative office. (**) The equity stake is held by the Parent Company and does not include any stake held by other Group companies. (A) The remaining share of 0.47% is held by UniCredit (U.K.) Trust Services Ltd. (B) 93.92% is held by Capital Dev S.p.A. (C) A fractional share is held by various Group companies. (D) The remaining share of 50.10% is held indirectly by UniCredit Bank S.A. (E) Equity instruments (Strumenti Finanziari Partecipativi) have been subscribed; the portion subscribed is calculated on the total equity instruments issued by the investee. (F) It is a real estate closed-end investment fund. Note that, also in light of the signature of the “Consultation agreement between shareholders of Mediobanca”, the investment in Mediobanca - Banca di Credito Finanziario S.p.A. remains classified as investment in associates For further information see Consolidated report on operations - Other information, as a result of the continuing existence of an adequate representation by UniCredit in Mediobanca’s Board of Directors. The investments are individually tested for impairment in accordance with the provisions of IAS36. When the conditions provided for therein apply, their recovery value is determined, meant as the higher of their "fair value" and "value in use" (the latter determined by discounting the cash flows at a rate that takes account of the current market rates and the specific risks of the asset or using other commonly accepted valuation criteria and methods suitable for the correct valuation of the investment). If the recovery value is lower than the carrying amount, the latter is consequently reduced by allocating the corresponding impairment loss to the income statement. On the basis of the above impairment loss has been recognised in subsidiaries, including: Koc Finansal Hizmetler Istanbul -€1.319 million, AO UniCredit Bank -€244 million, Cordusio Sim -€158 million, UniCredit Banka Slovenija D.D. -€17 million, UniCredit Consumer Financing Ifn S.A. -€16 million, UniCredit Bank Austria Credistanstalt Ag -€12 million, UniCredit Turn Around Management Cee Gmbh -€13 million, UniCredit Subito Casa S.p.A. -€1 million, UniCredit Global Leasing Export Gmbh -€1 million, Aviva S.p.A. -€6 million, Risanamento S.p.A. -€6 million, Fenice S.r.l. -€2 million. Further, some write-up have been recognised, including: UniCredit Bank AG €30 million, Mediobanca Banca di Credito Finanziario S.p.A. €28 million, UniCredit International Luxembourg €4 million, Nuova Compagnia di Partecipazioni €2 million. For Koc Finansal Hizmetler Istanbul it is highlighted that the Book value of the investment at 31 December 2017 amounted to €2,313 million; the change with respect to the €1,340 million at 31 December 2018 is mainly due to the abovementioned impairment loss recorded mainly in the third quarter of 2018 (for more information about value in use determination, reference is made to the paragraph of Part B - Notes to the consolidated accounts of UniCredit group - Section 10 - Intangible assets - 10.3 Intangible assets: other information - Estimating cash flows to determine the value in use of the CGUs which is herewith quoted entirely). Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 610 2018 Annual Report and Accounts · UniCredit 7.5 Equity investments: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 44,145,485 42,935,070 B. Increases 599,330 1,872,523 of which: business combinations 1,100 57,034 B.1 Purchases 505,383 609,892 B.2 Write-backs 65,288 1,248,620 B.3 Revaluation - - B.4 Other changes 28,659 14,011 C. Decreases 1,871,903 662,108 of which: business combinations - 13,767 C.1 Sales 70,000 21,262 C.2 Write-downs 1,796,380 164,717 C.3 Impairment - - C.4 Other changes 5,523 476,129 D. Closing balance 42,872,912 44,145,485 E. Total revaluation - - F. Total write-downs 13,059,924 11,386,382 In 2017 the sub-item “B.1 Purchases” includes the effects arising from business combinations occurred in the year (incorporation of Pioneer Global Management S.p.A. and UniCredit International Luxembourg). The sub-item “C.4 Other changes” includes the reduction covered through the use of the provisions of €470 million set up in 2016 to face commitments towards the subsidiary UniCredit Leasing S.p.A. to cover its losses. Section 8 - Property, plant and equipment - Item 80 8.1 Property, plant and equipment used in the business: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 12.31.2017 1. Owned assets 1,677,556 1,668,541 a) Land 631,843 633,228 b) Buildings 743,399 721,109 c) Office furniture and fitting 37,061 38,245 d) Electronic systems 164,308 170,997 e) Other 100,945 104,962 2. Leased assets - - a) Land - - b) Buildings - - c) Office furniture and fitting - - d) Electronic systems - - e) Other - - Total 1,677,556 1,668,541 of which: obtained by the enforcement of collateral - - Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 610 2018 Annual Report and Accounts · UniCredit 7.5 Equity investments: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 44,145,485 42,935,070 B. Increases 599,330 1,872,523 of which: business combinations 1,100 57,034 B.1 Purchases 505,383 609,892 B.2 Write-backs 65,288 1,248,620 B.3 Revaluation - - B.4 Other changes 28,659 14,011 C. Decreases 1,871,903 662,108 of which: business combinations - 13,767 C.1 Sales 70,000 21,262 C.2 Write-downs 1,796,380 164,717 C.3 Impairment - - C.4 Other changes 5,523 476,129 D. Closing balance 42,872,912 44,145,485 E. Total revaluation - - F. Total write-downs 13,059,924 11,386,382 In 2017 the sub-item “B.1 Purchases” includes the effects arising from business combinations occurred in the year (incorporation of Pioneer Global Management S.p.A. and UniCredit International Luxembourg). The sub-item “C.4 Other changes” includes the reduction covered through the use of the provisions of €470 million set up in 2016 to face commitments towards the subsidiary UniCredit Leasing S.p.A. to cover its losses. Section 8 - Property, plant and equipment - Item 80 8.1 Property, plant and equipment used in the business: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 12.31.2017 1. Owned assets 1,677,556 1,668,541 a) Land 631,843 633,228 b) Buildings 743,399 721,109 c) Office furniture and fitting 37,061 38,245 d) Electronic systems 164,308 170,997 e) Other 100,945 104,962 2. Leased assets - - a) Land - - b) Buildings - - c) Office furniture and fitting - - d) Electronic systems - - e) Other - - Total 1,677,556 1,668,541 of which: obtained by the enforcement of collateral - - Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 610 2018 Annual Report and Accounts · UniCredit 7.5 Equity investments: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 44,145,485 42,935,070 B. Increases 599,330 1,872,523 of which: business combinations 1,100 57,034 B.1 Purchases 505,383 609,892 B.2 Write-backs 65,288 1,248,620 B.3 Revaluation - - B.4 Other changes 28,659 14,011 C. Decreases 1,871,903 662,108 of which: business combinations - 13,767 C.1 Sales 70,000 21,262 C.2 Write-downs 1,796,380 164,717 C.3 Impairment - - C.4 Other changes 5,523 476,129 D. Closing balance 42,872,912 44,145,485 E. Total revaluation - - F. Total write-downs 13,059,924 11,386,382 In 2017 the sub-item “B.1 Purchases” includes the effects arising from business combinations occurred in the year (incorporation of Pioneer Global Management S.p.A. and UniCredit International Luxembourg). The sub-item “C.4 Other changes” includes the reduction covered through the use of the provisions of €470 million set up in 2016 to face commitments towards the subsidiary UniCredit Leasing S.p.A. to cover its losses. Section 8 - Property, plant and equipment - Item 80 8.1 Property, plant and equipment used in the business: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 12.31.2017 1. Owned assets 1,677,556 1,668,541 a) Land 631,843 633,228 b) Buildings 743,399 721,109 c) Office furniture and fitting 37,061 38,245 d) Electronic systems 164,308 170,997 e) Other 100,945 104,962 2. Leased assets - - a) Land - - b) Buildings - - c) Office furniture and fitting - - d) Electronic systems - - e) Other - - Total 1,677,556 1,668,541 of which: obtained by the enforcement of collateral - - Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 610 2018 Annual Report and Accounts · UniCredit 7.5 Equity investments: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 44,145,485 42,935,070 B. Increases 599,330 1,872,523 of which: business combinations 1,100 57,034 B.1 Purchases 505,383 609,892 B.2 Write-backs 65,288 1,248,620 B.3 Revaluation - - B.4 Other changes 28,659 14,011 C. Decreases 1,871,903 662,108 of which: business combinations - 13,767 C.1 Sales 70,000 21,262 C.2 Write-downs 1,796,380 164,717 C.3 Impairment - - C.4 Other changes 5,523 476,129 D. Closing balance 42,872,912 44,145,485 E. Total revaluation - - F. Total write-downs 13,059,924 11,386,382 In 2017 the sub-item “B.1 Purchases” includes the effects arising from business combinations occurred in the year (incorporation of Pioneer Global Management S.p.A. and UniCredit International Luxembourg). The sub-item “C.4 Other changes” includes the reduction covered through the use of the provisions of €470 million set up in 2016 to face commitments towards the subsidiary UniCredit Leasing S.p.A. to cover its losses. Section 8 - Property, plant and equipment - Item 80 8.1 Property, plant and equipment used in the business: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 12.31.2017 1. Owned assets 1,677,556 1,668,541 a) Land 631,843 633,228 b) Buildings 743,399 721,109 c) Office furniture and fitting 37,061 38,245 d) Electronic systems 164,308 170,997 e) Other 100,945 104,962 2. Leased assets - - a) Land - - b) Buildings - - c) Office furniture and fitting - - d) Electronic systems - - e) Other - - Total 1,677,556 1,668,541 of which: obtained by the enforcement of collateral - - Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 610 2018 Annual Report and Accounts · UniCredit 7.5 Equity investments: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 44,145,485 42,935,070 B. Increases 599,330 1,872,523 of which: business combinations 1,100 57,034 B.1 Purchases 505,383 609,892 B.2 Write-backs 65,288 1,248,620 B.3 Revaluation - - B.4 Other changes 28,659 14,011 C. Decreases 1,871,903 662,108 of which: business combinations - 13,767 C.1 Sales 70,000 21,262 C.2 Write-downs 1,796,380 164,717 C.3 Impairment - - C.4 Other changes 5,523 476,129 D. Closing balance 42,872,912 44,145,485 E. Total revaluation - - F. Total write-downs 13,059,924 11,386,382 In 2017 the sub-item “B.1 Purchases” includes the effects arising from business combinations occurred in the year (incorporation of Pioneer Global Management S.p.A. and UniCredit International Luxembourg). The sub-item “C.4 Other changes” includes the reduction covered through the use of the provisions of €470 million set up in 2016 to face commitments towards the subsidiary UniCredit Leasing S.p.A. to cover its losses. Section 8 - Property, plant and equipment - Item 80 8.1 Property, plant and equipment used in the business: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT ASSETS/VALUES 12.31.2018 12.31.2017 1. Owned assets 1,677,556 1,668,541 a) Land 631,843 633,228 b) Buildings 743,399 721,109 c) Office furniture and fitting 37,061 38,245 d) Electronic systems 164,308 170,997 e) Other 100,945 104,962 2. Leased assets - - a) Land - - b) Buildings - - c) Office furniture and fitting - - d) Electronic systems - - e) Other - - Total 1,677,556 1,668,541 of which: obtained by the enforcement of collateral - - Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 611 8.2 Property, plant and equipment held for investment: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets 568,627 - - 742,709 540,914 - - 704,974 a) Land 282,562 - - 379,798 248,573 - - 333,428 b) Buildings 286,065 - - 362,911 292,341 - - 371,546 2. Leased assets - - - - - - - - a) Land - - - - - - - - b) Buildings - - - - - - - - Total 568,627 - - 742,709 540,914 - - 704,974 of which: obtained by the enforcement of collateral - - - - - - - - Total Level 1, Level 2 and Level 3 742,709 704,974 8.3 Property, plant and equipment used in the business: breakdown of revalued assets The Company does not have revalued tangible assets. 8.4 Property, plant and equipment held for investment: breakdown of assets designated at fair value For the measurement of property, plant and equipment, the Company does not apply the revaluation model. 8.5 Inventories of tangible assets regulated by IAS2: breakdown The Company does not have tangible assets to be recorded according to IAS2. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 611 8.2 Property, plant and equipment held for investment: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets 568,627 - - 742,709 540,914 - - 704,974 a) Land 282,562 - - 379,798 248,573 - - 333,428 b) Buildings 286,065 - - 362,911 292,341 - - 371,546 2. Leased assets - - - - - - - - a) Land - - - - - - - - b) Buildings - - - - - - - - Total 568,627 - - 742,709 540,914 - - 704,974 of which: obtained by the enforcement of collateral - - - - - - - - Total Level 1, Level 2 and Level 3 742,709 704,974 8.3 Property, plant and equipment used in the business: breakdown of revalued assets The Company does not have revalued tangible assets. 8.4 Property, plant and equipment held for investment: breakdown of assets designated at fair value For the measurement of property, plant and equipment, the Company does not apply the revaluation model. 8.5 Inventories of tangible assets regulated by IAS2: breakdown The Company does not have tangible assets to be recorded according to IAS2. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 611 8.2 Property, plant and equipment held for investment: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets 568,627 - - 742,709 540,914 - - 704,974 a) Land 282,562 - - 379,798 248,573 - - 333,428 b) Buildings 286,065 - - 362,911 292,341 - - 371,546 2. Leased assets - - - - - - - - a) Land - - - - - - - - b) Buildings - - - - - - - - Total 568,627 - - 742,709 540,914 - - 704,974 of which: obtained by the enforcement of collateral - - - - - - - - Total Level 1, Level 2 and Level 3 742,709 704,974 8.3 Property, plant and equipment used in the business: breakdown of revalued assets The Company does not have revalued tangible assets. 8.4 Property, plant and equipment held for investment: breakdown of assets designated at fair value For the measurement of property, plant and equipment, the Company does not apply the revaluation model. 8.5 Inventories of tangible assets regulated by IAS2: breakdown The Company does not have tangible assets to be recorded according to IAS2. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 611 8.2 Property, plant and equipment held for investment: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets 568,627 - - 742,709 540,914 - - 704,974 a) Land 282,562 - - 379,798 248,573 - - 333,428 b) Buildings 286,065 - - 362,911 292,341 - - 371,546 2. Leased assets - - - - - - - - a) Land - - - - - - - - b) Buildings - - - - - - - - Total 568,627 - - 742,709 540,914 - - 704,974 of which: obtained by the enforcement of collateral - - - - - - - - Total Level 1, Level 2 and Level 3 742,709 704,974 8.3 Property, plant and equipment used in the business: breakdown of revalued assets The Company does not have revalued tangible assets. 8.4 Property, plant and equipment held for investment: breakdown of assets designated at fair value For the measurement of property, plant and equipment, the Company does not apply the revaluation model. 8.5 Inventories of tangible assets regulated by IAS2: breakdown The Company does not have tangible assets to be recorded according to IAS2. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 611 8.2 Property, plant and equipment held for investment: breakdown of assets carried at cost (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE ASSETS/VALUES LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 1. Owned assets 568,627 - - 742,709 540,914 - - 704,974 a) Land 282,562 - - 379,798 248,573 - - 333,428 b) Buildings 286,065 - - 362,911 292,341 - - 371,546 2. Leased assets - - - - - - - - a) Land - - - - - - - - b) Buildings - - - - - - - - Total 568,627 - - 742,709 540,914 - - 704,974 of which: obtained by the enforcement of collateral - - - - - - - - Total Level 1, Level 2 and Level 3 742,709 704,974 8.3 Property, plant and equipment used in the business: breakdown of revalued assets The Company does not have revalued tangible assets. 8.4 Property, plant and equipment held for investment: breakdown of assets designated at fair value For the measurement of property, plant and equipment, the Company does not apply the revaluation model. 8.5 Inventories of tangible assets regulated by IAS2: breakdown The Company does not have tangible assets to be recorded according to IAS2. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 612 2018 Annual Report and Accounts · UniCredit 8.6 Tangible assets used in the business: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS OFFICE FURNITURE ANDFITTINGSELECTRONIC SYSTEMS OTHER TOTAL A. Gross opening balance 633,228 1,328,396 641,239 1,228,412 478,607 4,309,882 A.1 Total net reduction in value - (607,287) (602,994) (1,057,415) (373,645) (2,641,341) A.2 Net opening balance 633,228 721,109 38,245 170,997 104,962 1,668,541 B. Increases 32,576 108,918 4,062 41,449 22,108 209,113 B.1 Purchases 32,509 80,084 3,789 41,366 22,017 179,765 of which: business combinations - - - - - - B.2 Capitalised expenditure on improvements 67 28,633 - - - 28,700 B.3 Write-backs - - - - - - B.4 Increases in fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - B.5 Positive exchange differences - - 3 1 - 4 B.6 Transfer from properties held for investment - - X X X - B.7 Other changes - 201 270 82 91 644 C. Reductions 33,961 86,628 5,246 48,138 26,125 200,098 C.1 Disposals 843 578 303 334 67 2,125 of which: business combinations - - 94 334 - 428 C.2 Depreciation - 39,307 4,755 44,956 23,383 112,401 C.3 Impairment losses 17 3,341 133 2,775 86 6,352 a) In equity - - - - - - b) Through profit or loss 17 3,341 133 2,775 86 6,352 C.4 Reduction of fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - C.5 Negative exchange differences - - - - 7 7 C.6 Transfer to 33,101 42,877 - - - 75,978 a) Property, plant and equipment held for investment 21,983 10,271 X X X 32,254 b) Non-current assets and disposal groups classified as held for sale 11,118 32,606 - - - 43,724 C.7 Other changes - 525 55 73 2,582 3,235 D. Net final balance 631,843 743,399 37,061 164,308 100,945 1,677,556 D.1 Total net reduction in value - (616,625) (599,671) (1,074,139) (369,731) (2,660,166) D.2 Gross closing balance 631,843 1,360,024 636,732 1,238,447 470,676 4,337,722 E. Carried at cost - - - - - - Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 612 2018 Annual Report and Accounts · UniCredit 8.6 Tangible assets used in the business: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS OFFICE FURNITURE ANDFITTINGSELECTRONIC SYSTEMS OTHER TOTAL A. Gross opening balance 633,228 1,328,396 641,239 1,228,412 478,607 4,309,882 A.1 Total net reduction in value - (607,287) (602,994) (1,057,415) (373,645) (2,641,341) A.2 Net opening balance 633,228 721,109 38,245 170,997 104,962 1,668,541 B. Increases 32,576 108,918 4,062 41,449 22,108 209,113 B.1 Purchases 32,509 80,084 3,789 41,366 22,017 179,765 of which: business combinations - - - - - - B.2 Capitalised expenditure on improvements 67 28,633 - - - 28,700 B.3 Write-backs - - - - - - B.4 Increases in fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - B.5 Positive exchange differences - - 3 1 - 4 B.6 Transfer from properties held for investment - - X X X - B.7 Other changes - 201 270 82 91 644 C. Reductions 33,961 86,628 5,246 48,138 26,125 200,098 C.1 Disposals 843 578 303 334 67 2,125 of which: business combinations - - 94 334 - 428 C.2 Depreciation - 39,307 4,755 44,956 23,383 112,401 C.3 Impairment losses 17 3,341 133 2,775 86 6,352 a) In equity - - - - - - b) Through profit or loss 17 3,341 133 2,775 86 6,352 C.4 Reduction of fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - C.5 Negative exchange differences - - - - 7 7 C.6 Transfer to 33,101 42,877 - - - 75,978 a) Property, plant and equipment held for investment 21,983 10,271 X X X 32,254 b) Non-current assets and disposal groups classified as held for sale 11,118 32,606 - - - 43,724 C.7 Other changes - 525 55 73 2,582 3,235 D. Net final balance 631,843 743,399 37,061 164,308 100,945 1,677,556 D.1 Total net reduction in value - (616,625) (599,671) (1,074,139) (369,731) (2,660,166) D.2 Gross closing balance 631,843 1,360,024 636,732 1,238,447 470,676 4,337,722 E. Carried at cost - - - - - - Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 612 2018 Annual Report and Accounts · UniCredit 8.6 Tangible assets used in the business: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS OFFICE FURNITURE ANDFITTINGSELECTRONIC SYSTEMS OTHER TOTAL A. Gross opening balance 633,228 1,328,396 641,239 1,228,412 478,607 4,309,882 A.1 Total net reduction in value - (607,287) (602,994) (1,057,415) (373,645) (2,641,341) A.2 Net opening balance 633,228 721,109 38,245 170,997 104,962 1,668,541 B. Increases 32,576 108,918 4,062 41,449 22,108 209,113 B.1 Purchases 32,509 80,084 3,789 41,366 22,017 179,765 of which: business combinations - - - - - - B.2 Capitalised expenditure on improvements 67 28,633 - - - 28,700 B.3 Write-backs - - - - - - B.4 Increases in fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - B.5 Positive exchange differences - - 3 1 - 4 B.6 Transfer from properties held for investment - - X X X - B.7 Other changes - 201 270 82 91 644 C. Reductions 33,961 86,628 5,246 48,138 26,125 200,098 C.1 Disposals 843 578 303 334 67 2,125 of which: business combinations - - 94 334 - 428 C.2 Depreciation - 39,307 4,755 44,956 23,383 112,401 C.3 Impairment losses 17 3,341 133 2,775 86 6,352 a) In equity - - - - - - b) Through profit or loss 17 3,341 133 2,775 86 6,352 C.4 Reduction of fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - C.5 Negative exchange differences - - - - 7 7 C.6 Transfer to 33,101 42,877 - - - 75,978 a) Property, plant and equipment held for investment 21,983 10,271 X X X 32,254 b) Non-current assets and disposal groups classified as held for sale 11,118 32,606 - - - 43,724 C.7 Other changes - 525 55 73 2,582 3,235 D. Net final balance 631,843 743,399 37,061 164,308 100,945 1,677,556 D.1 Total net reduction in value - (616,625) (599,671) (1,074,139) (369,731) (2,660,166) D.2 Gross closing balance 631,843 1,360,024 636,732 1,238,447 470,676 4,337,722 E. Carried at cost - - - - - - Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 612 2018 Annual Report and Accounts · UniCredit 8.6 Tangible assets used in the business: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS OFFICE FURNITURE ANDFITTINGSELECTRONIC SYSTEMS OTHER TOTAL A. Gross opening balance 633,228 1,328,396 641,239 1,228,412 478,607 4,309,882 A.1 Total net reduction in value - (607,287) (602,994) (1,057,415) (373,645) (2,641,341) A.2 Net opening balance 633,228 721,109 38,245 170,997 104,962 1,668,541 B. Increases 32,576 108,918 4,062 41,449 22,108 209,113 B.1 Purchases 32,509 80,084 3,789 41,366 22,017 179,765 of which: business combinations - - - - - - B.2 Capitalised expenditure on improvements 67 28,633 - - - 28,700 B.3 Write-backs - - - - - - B.4 Increases in fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - B.5 Positive exchange differences - - 3 1 - 4 B.6 Transfer from properties held for investment - - X X X - B.7 Other changes - 201 270 82 91 644 C. Reductions 33,961 86,628 5,246 48,138 26,125 200,098 C.1 Disposals 843 578 303 334 67 2,125 of which: business combinations - - 94 334 - 428 C.2 Depreciation - 39,307 4,755 44,956 23,383 112,401 C.3 Impairment losses 17 3,341 133 2,775 86 6,352 a) In equity - - - - - - b) Through profit or loss 17 3,341 133 2,775 86 6,352 C.4 Reduction of fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - C.5 Negative exchange differences - - - - 7 7 C.6 Transfer to 33,101 42,877 - - - 75,978 a) Property, plant and equipment held for investment 21,983 10,271 X X X 32,254 b) Non-current assets and disposal groups classified as held for sale 11,118 32,606 - - - 43,724 C.7 Other changes - 525 55 73 2,582 3,235 D. Net final balance 631,843 743,399 37,061 164,308 100,945 1,677,556 D.1 Total net reduction in value - (616,625) (599,671) (1,074,139) (369,731) (2,660,166) D.2 Gross closing balance 631,843 1,360,024 636,732 1,238,447 470,676 4,337,722 E. Carried at cost - - - - - - Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 612 2018 Annual Report and Accounts · UniCredit 8.6 Tangible assets used in the business: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS OFFICE FURNITURE ANDFITTINGSELECTRONIC SYSTEMS OTHER TOTAL A. Gross opening balance 633,228 1,328,396 641,239 1,228,412 478,607 4,309,882 A.1 Total net reduction in value - (607,287) (602,994) (1,057,415) (373,645) (2,641,341) A.2 Net opening balance 633,228 721,109 38,245 170,997 104,962 1,668,541 B. Increases 32,576 108,918 4,062 41,449 22,108 209,113 B.1 Purchases 32,509 80,084 3,789 41,366 22,017 179,765 of which: business combinations - - - - - - B.2 Capitalised expenditure on improvements 67 28,633 - - - 28,700 B.3 Write-backs - - - - - - B.4 Increases in fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - B.5 Positive exchange differences - - 3 1 - 4 B.6 Transfer from properties held for investment - - X X X - B.7 Other changes - 201 270 82 91 644 C. Reductions 33,961 86,628 5,246 48,138 26,125 200,098 C.1 Disposals 843 578 303 334 67 2,125 of which: business combinations - - 94 334 - 428 C.2 Depreciation - 39,307 4,755 44,956 23,383 112,401 C.3 Impairment losses 17 3,341 133 2,775 86 6,352 a) In equity - - - - - - b) Through profit or loss 17 3,341 133 2,775 86 6,352 C.4 Reduction of fair value - - - - - - a) In equity - - - - - - b) Through profit or loss - - - - - - C.5 Negative exchange differences - - - - 7 7 C.6 Transfer to 33,101 42,877 - - - 75,978 a) Property, plant and equipment held for investment 21,983 10,271 X X X 32,254 b) Non-current assets and disposal groups classified as held for sale 11,118 32,606 - - - 43,724 C.7 Other changes - 525 55 73 2,582 3,235 D. Net final balance 631,843 743,399 37,061 164,308 100,945 1,677,556 D.1 Total net reduction in value - (616,625) (599,671) (1,074,139) (369,731) (2,660,166) D.2 Gross closing balance 631,843 1,360,024 636,732 1,238,447 470,676 4,337,722 E. Carried at cost - - - - - - Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 613 8.7 Tangible assets held for investment: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS TOTAL A. Opening balances 248,573 292,341 540,914 B. Increases 41,898 27,245 69,143 B.1 Purchases 3,653 9,605 13,258 B.2 Capitalised expenditure on improvements 66 2,626 2,692 B.3 Increases in fair value - - - B.4 Write-backs - - - B.5 Positive exchange differences - - - B.6 Transfer from properties used in the business 21,983 10,271 32,254 B.7 Other changes 16,196 4,743 20,939 of which: business combinations - - - C. Reductions 7,909 33,521 41,430 C.1 Disposals 356 - 356 C.2 Depreciation - 16,466 16,466 C.3 Reductions in fair value - - - C.4 Impairment losses 2,410 13,920 16,330 C.5 Negative exchange differences - - - C.6 Transfer to 5,124 3,135 8,259 a) Properties used in the business - - - b) Non-current assets and disposal groups classified as held for sale 5,124 3,135 8,259 C.7 Other changes 19 - 19 of which: business combinations - - - D. Closing balances 282,562 286,065 568,627 E. Measured at fair value 379,798 362,911 742,709 8.8 Inventories of tangible assets regulated by IAS2: annual changes No data to be disclosed. 8.9 Commitments to purchase property, plant and equipment At Financial Statement date, Commitments for the purchase of tangible assets do not exist. Section 9 - Intangible assets - Item 90 9.1 Intangible assets: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE A.1 Goodwill X - X - A.2 Other intangible assets 3,933 - 4,350 - A.2.1 Assets carried at cost 3,933 - 4,350 - a) Intangible assets generated internally - - - - b) Other assets 3,933 - 4,350 - A.2.2 Assets measured at fair value - - - - a) Intangible assets generated internally - - - - b) Other assets - - - - Total 3,933 - 4,350 - Total finite and indefinite life 3,933 4,350 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 613 8.7 Tangible assets held for investment: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS TOTAL A. Opening balances 248,573 292,341 540,914 B. Increases 41,898 27,245 69,143 B.1 Purchases 3,653 9,605 13,258 B.2 Capitalised expenditure on improvements 66 2,626 2,692 B.3 Increases in fair value - - - B.4 Write-backs - - - B.5 Positive exchange differences - - - B.6 Transfer from properties used in the business 21,983 10,271 32,254 B.7 Other changes 16,196 4,743 20,939 of which: business combinations - - - C. Reductions 7,909 33,521 41,430 C.1 Disposals 356 - 356 C.2 Depreciation - 16,466 16,466 C.3 Reductions in fair value - - - C.4 Impairment losses 2,410 13,920 16,330 C.5 Negative exchange differences - - - C.6 Transfer to 5,124 3,135 8,259 a) Properties used in the business - - - b) Non-current assets and disposal groups classified as held for sale 5,124 3,135 8,259 C.7 Other changes 19 - 19 of which: business combinations - - - D. Closing balances 282,562 286,065 568,627 E. Measured at fair value 379,798 362,911 742,709 8.8 Inventories of tangible assets regulated by IAS2: annual changes No data to be disclosed. 8.9 Commitments to purchase property, plant and equipment At Financial Statement date, Commitments for the purchase of tangible assets do not exist. Section 9 - Intangible assets - Item 90 9.1 Intangible assets: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE A.1 Goodwill X - X - A.2 Other intangible assets 3,933 - 4,350 - A.2.1 Assets carried at cost 3,933 - 4,350 - a) Intangible assets generated internally - - - - b) Other assets 3,933 - 4,350 - A.2.2 Assets measured at fair value - - - - a) Intangible assets generated internally - - - - b) Other assets - - - - Total 3,933 - 4,350 - Total finite and indefinite life 3,933 4,350 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 613 8.7 Tangible assets held for investment: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS TOTAL A. Opening balances 248,573 292,341 540,914 B. Increases 41,898 27,245 69,143 B.1 Purchases 3,653 9,605 13,258 B.2 Capitalised expenditure on improvements 66 2,626 2,692 B.3 Increases in fair value - - - B.4 Write-backs - - - B.5 Positive exchange differences - - - B.6 Transfer from properties used in the business 21,983 10,271 32,254 B.7 Other changes 16,196 4,743 20,939 of which: business combinations - - - C. Reductions 7,909 33,521 41,430 C.1 Disposals 356 - 356 C.2 Depreciation - 16,466 16,466 C.3 Reductions in fair value - - - C.4 Impairment losses 2,410 13,920 16,330 C.5 Negative exchange differences - - - C.6 Transfer to 5,124 3,135 8,259 a) Properties used in the business - - - b) Non-current assets and disposal groups classified as held for sale 5,124 3,135 8,259 C.7 Other changes 19 - 19 of which: business combinations - - - D. Closing balances 282,562 286,065 568,627 E. Measured at fair value 379,798 362,911 742,709 8.8 Inventories of tangible assets regulated by IAS2: annual changes No data to be disclosed. 8.9 Commitments to purchase property, plant and equipment At Financial Statement date, Commitments for the purchase of tangible assets do not exist. Section 9 - Intangible assets - Item 90 9.1 Intangible assets: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE A.1 Goodwill X - X - A.2 Other intangible assets 3,933 - 4,350 - A.2.1 Assets carried at cost 3,933 - 4,350 - a) Intangible assets generated internally - - - - b) Other assets 3,933 - 4,350 - A.2.2 Assets measured at fair value - - - - a) Intangible assets generated internally - - - - b) Other assets - - - - Total 3,933 - 4,350 - Total finite and indefinite life 3,933 4,350 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 613 8.7 Tangible assets held for investment: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS TOTAL A. Opening balances 248,573 292,341 540,914 B. Increases 41,898 27,245 69,143 B.1 Purchases 3,653 9,605 13,258 B.2 Capitalised expenditure on improvements 66 2,626 2,692 B.3 Increases in fair value - - - B.4 Write-backs - - - B.5 Positive exchange differences - - - B.6 Transfer from properties used in the business 21,983 10,271 32,254 B.7 Other changes 16,196 4,743 20,939 of which: business combinations - - - C. Reductions 7,909 33,521 41,430 C.1 Disposals 356 - 356 C.2 Depreciation - 16,466 16,466 C.3 Reductions in fair value - - - C.4 Impairment losses 2,410 13,920 16,330 C.5 Negative exchange differences - - - C.6 Transfer to 5,124 3,135 8,259 a) Properties used in the business - - - b) Non-current assets and disposal groups classified as held for sale 5,124 3,135 8,259 C.7 Other changes 19 - 19 of which: business combinations - - - D. Closing balances 282,562 286,065 568,627 E. Measured at fair value 379,798 362,911 742,709 8.8 Inventories of tangible assets regulated by IAS2: annual changes No data to be disclosed. 8.9 Commitments to purchase property, plant and equipment At Financial Statement date, Commitments for the purchase of tangible assets do not exist. Section 9 - Intangible assets - Item 90 9.1 Intangible assets: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE A.1 Goodwill X - X - A.2 Other intangible assets 3,933 - 4,350 - A.2.1 Assets carried at cost 3,933 - 4,350 - a) Intangible assets generated internally - - - - b) Other assets 3,933 - 4,350 - A.2.2 Assets measured at fair value - - - - a) Intangible assets generated internally - - - - b) Other assets - - - - Total 3,933 - 4,350 - Total finite and indefinite life 3,933 4,350 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 613 8.7 Tangible assets held for investment: annual changes (€ '000) CHANGES IN 2018 LANDS BUILDINGS TOTAL A. Opening balances 248,573 292,341 540,914 B. Increases 41,898 27,245 69,143 B.1 Purchases 3,653 9,605 13,258 B.2 Capitalised expenditure on improvements 66 2,626 2,692 B.3 Increases in fair value - - - B.4 Write-backs - - - B.5 Positive exchange differences - - - B.6 Transfer from properties used in the business 21,983 10,271 32,254 B.7 Other changes 16,196 4,743 20,939 of which: business combinations - - - C. Reductions 7,909 33,521 41,430 C.1 Disposals 356 - 356 C.2 Depreciation - 16,466 16,466 C.3 Reductions in fair value - - - C.4 Impairment losses 2,410 13,920 16,330 C.5 Negative exchange differences - - - C.6 Transfer to 5,124 3,135 8,259 a) Properties used in the business - - - b) Non-current assets and disposal groups classified as held for sale 5,124 3,135 8,259 C.7 Other changes 19 - 19 of which: business combinations - - - D. Closing balances 282,562 286,065 568,627 E. Measured at fair value 379,798 362,911 742,709 8.8 Inventories of tangible assets regulated by IAS2: annual changes No data to be disclosed. 8.9 Commitments to purchase property, plant and equipment At Financial Statement date, Commitments for the purchase of tangible assets do not exist. Section 9 - Intangible assets - Item 90 9.1 Intangible assets: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ASSETS/VALUES FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE A.1 Goodwill X - X - A.2 Other intangible assets 3,933 - 4,350 - A.2.1 Assets carried at cost 3,933 - 4,350 - a) Intangible assets generated internally - - - - b) Other assets 3,933 - 4,350 - A.2.2 Assets measured at fair value - - - - a) Intangible assets generated internally - - - - b) Other assets - - - - Total 3,933 - 4,350 - Total finite and indefinite life 3,933 4,350 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 614 2018 Annual Report and Accounts · UniCredit 9.2 Intangible assets: annual changes (€ '000) CHANGES IN 2018 OTHER INTANGIBLE ASSETS GENERATED INTERNALLY OTHER GOODWILL FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE TOTAL A. Gross opening balance 7,709,526 - - 241,142 - 7,950,668 A.1 Total net reduction in value (7,709,526) - - (236,792) - (7,946,318) A.2 Net opening balance - - - 4,350 - 4,350 B. Increases - - - 1,756 - 1,756 B.1 Purchases - - - 1,738 - 1,738 B.2 Increases in intangible assets generated X - - - - - B.3 Write-backs X - - - - - B.4 Increases in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - B.5 Positive exchange differences - - - - - - B.6 Other changes - - - 18 - 18 of which: business combinations - - - - - - C. Reduction - - - 2,173 - 2,173 C.1 Disposals - - - - - - C.2 Write-downs - - - 2,137 - 2,137 - Amortisation X - - 2,137 - 2,137 - Write-downs - - - - - - + In equity X - - - - - + Through profit or loss - - - - - - C.3 Reduction in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - C.4 Transfer to non-current assets held for sale - - - - - - C.5 Negative exchange differences - - - 6 - 6 C.6 Other changes - - - 30 - 30 of which: business combinations - - - - - - D. Net closing balance - - - 3,933 - 3,933 D.1 Total net write-down (7,709,526) - - (238,901) - (7,948,427) E. Gross closing balance 7,709,526 - - 242,834 - 7,952,360 F. Carried at cost - - - - - - 9.3 Other information NON PUBBLICARE SENTITO MALDIFASSI Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 614 2018 Annual Report and Accounts · UniCredit 9.2 Intangible assets: annual changes (€ '000) CHANGES IN 2018 OTHER INTANGIBLE ASSETS GENERATED INTERNALLY OTHER GOODWILL FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE TOTAL A. Gross opening balance 7,709,526 - - 241,142 - 7,950,668 A.1 Total net reduction in value (7,709,526) - - (236,792) - (7,946,318) A.2 Net opening balance - - - 4,350 - 4,350 B. Increases - - - 1,756 - 1,756 B.1 Purchases - - - 1,738 - 1,738 B.2 Increases in intangible assets generated X - - - - - B.3 Write-backs X - - - - - B.4 Increases in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - B.5 Positive exchange differences - - - - - - B.6 Other changes - - - 18 - 18 of which: business combinations - - - - - - C. Reduction - - - 2,173 - 2,173 C.1 Disposals - - - - - - C.2 Write-downs - - - 2,137 - 2,137 - Amortisation X - - 2,137 - 2,137 - Write-downs - - - - - - + In equity X - - - - - + Through profit or loss - - - - - - C.3 Reduction in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - C.4 Transfer to non-current assets held for sale - - - - - - C.5 Negative exchange differences - - - 6 - 6 C.6 Other changes - - - 30 - 30 of which: business combinations - - - - - - D. Net closing balance - - - 3,933 - 3,933 D.1 Total net write-down (7,709,526) - - (238,901) - (7,948,427) E. Gross closing balance 7,709,526 - - 242,834 - 7,952,360 F. Carried at cost - - - - - - 9.3 Other information NON PUBBLICARE SENTITO MALDIFASSI Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 614 2018 Annual Report and Accounts · UniCredit 9.2 Intangible assets: annual changes (€ '000) CHANGES IN 2018 OTHER INTANGIBLE ASSETS GENERATED INTERNALLY OTHER GOODWILL FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE TOTAL A. Gross opening balance 7,709,526 - - 241,142 - 7,950,668 A.1 Total net reduction in value (7,709,526) - - (236,792) - (7,946,318) A.2 Net opening balance - - - 4,350 - 4,350 B. Increases - - - 1,756 - 1,756 B.1 Purchases - - - 1,738 - 1,738 B.2 Increases in intangible assets generated X - - - - - B.3 Write-backs X - - - - - B.4 Increases in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - B.5 Positive exchange differences - - - - - - B.6 Other changes - - - 18 - 18 of which: business combinations - - - - - - C. Reduction - - - 2,173 - 2,173 C.1 Disposals - - - - - - C.2 Write-downs - - - 2,137 - 2,137 - Amortisation X - - 2,137 - 2,137 - Write-downs - - - - - - + In equity X - - - - - + Through profit or loss - - - - - - C.3 Reduction in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - C.4 Transfer to non-current assets held for sale - - - - - - C.5 Negative exchange differences - - - 6 - 6 C.6 Other changes - - - 30 - 30 of which: business combinations - - - - - - D. Net closing balance - - - 3,933 - 3,933 D.1 Total net write-down (7,709,526) - - (238,901) - (7,948,427) E. Gross closing balance 7,709,526 - - 242,834 - 7,952,360 F. Carried at cost - - - - - - 9.3 Other information NON PUBBLICARE SENTITO MALDIFASSI Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 614 2018 Annual Report and Accounts · UniCredit 9.2 Intangible assets: annual changes (€ '000) CHANGES IN 2018 OTHER INTANGIBLE ASSETS GENERATED INTERNALLY OTHER GOODWILL FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE TOTAL A. Gross opening balance 7,709,526 - - 241,142 - 7,950,668 A.1 Total net reduction in value (7,709,526) - - (236,792) - (7,946,318) A.2 Net opening balance - - - 4,350 - 4,350 B. Increases - - - 1,756 - 1,756 B.1 Purchases - - - 1,738 - 1,738 B.2 Increases in intangible assets generated X - - - - - B.3 Write-backs X - - - - - B.4 Increases in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - B.5 Positive exchange differences - - - - - - B.6 Other changes - - - 18 - 18 of which: business combinations - - - - - - C. Reduction - - - 2,173 - 2,173 C.1 Disposals - - - - - - C.2 Write-downs - - - 2,137 - 2,137 - Amortisation X - - 2,137 - 2,137 - Write-downs - - - - - - + In equity X - - - - - + Through profit or loss - - - - - - C.3 Reduction in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - C.4 Transfer to non-current assets held for sale - - - - - - C.5 Negative exchange differences - - - 6 - 6 C.6 Other changes - - - 30 - 30 of which: business combinations - - - - - - D. Net closing balance - - - 3,933 - 3,933 D.1 Total net write-down (7,709,526) - - (238,901) - (7,948,427) E. Gross closing balance 7,709,526 - - 242,834 - 7,952,360 F. Carried at cost - - - - - - 9.3 Other information NON PUBBLICARE SENTITO MALDIFASSI Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 614 2018 Annual Report and Accounts · UniCredit 9.2 Intangible assets: annual changes (€ '000) CHANGES IN 2018 OTHER INTANGIBLE ASSETS GENERATED INTERNALLY OTHER GOODWILL FINITE LIFE INDEFINITE LIFE FINITE LIFE INDEFINITE LIFE TOTAL A. Gross opening balance 7,709,526 - - 241,142 - 7,950,668 A.1 Total net reduction in value (7,709,526) - - (236,792) - (7,946,318) A.2 Net opening balance - - - 4,350 - 4,350 B. Increases - - - 1,756 - 1,756 B.1 Purchases - - - 1,738 - 1,738 B.2 Increases in intangible assets generated X - - - - - B.3 Write-backs X - - - - - B.4 Increases in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - B.5 Positive exchange differences - - - - - - B.6 Other changes - - - 18 - 18 of which: business combinations - - - - - - C. Reduction - - - 2,173 - 2,173 C.1 Disposals - - - - - - C.2 Write-downs - - - 2,137 - 2,137 - Amortisation X - - 2,137 - 2,137 - Write-downs - - - - - - + In equity X - - - - - + Through profit or loss - - - - - - C.3 Reduction in fair value - - - - - - - In equity X - - - - - - Through profit or loss X - - - - - C.4 Transfer to non-current assets held for sale - - - - - - C.5 Negative exchange differences - - - 6 - 6 C.6 Other changes - - - 30 - 30 of which: business combinations - - - - - - D. Net closing balance - - - 3,933 - 3,933 D.1 Total net write-down (7,709,526) - - (238,901) - (7,948,427) E. Gross closing balance 7,709,526 - - 242,834 - 7,952,360 F. Carried at cost - - - - - - 9.3 Other information NON PUBBLICARE SENTITO MALDIFASSI Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 615 Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) 10.1 Deferred tax assets: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax assets arising from Italian law 214/2011 8,150,831 8,156,932 Deferred tax assets arising from tax losses 78,000 247,000 Deferred tax assets arising from temporary differences 1,935,484 648,793 Financial assets and liabilities (different from loans and deposits) 212,687 48,579 Loans and deposits to/from banks and customers 884,471 7,156 Hedging and hedged item revaluation 42,269 43,428 Property, plant and equipment and intangible assets different from goodwill 63,356 63,124 Goodwill and equity investments - - Current assets and liabilities held for sale - - Other assets and Other liabilities 35 3,873 Provisions, pension funds and similar 732,666 482,633 Other - - Accounting offsetting (217,479) (402,455) Total 9,946,836 8,650,270 10.2 Deferred tax liabilities: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax liabilities arising from temporary differences 217,479 402,455 Financial assets and liabilities (different from loans and deposits) 99,296 258,412 Loans and deposits to/from banks and customers - - Hedging and hedged item revaluation 9,780 26,152 Property, plant and equipment and intangible assets different from goodwill 105,049 115,227 Goodwill and equity investments - - Assets and liabilities held for sale - - Other assets and Other liabilities 1,965 - Other 1,389 2,664 Accounting offsetting (217,479) (402,455) Total - - The item "Deferred tax assets deriving from Law 214/2011" includes: • the amount of €3,168 million related to Deferred tax assets (for IRES and IRAP) due to the tax release of the value of the equity investments pursuant to Art.23 of D.L. 98/2011; • the amount of €1,288 million related to Deferred tax assets (for IRES and IRAP) arising from goodwill tax redemption. At 31 December 2018, the total amount of Deferred tax assets convertible into tax credits is equal to €7,192 million for IRES and €959 million for IRAP. The above mentioned amounts are the ones resulting upon the sustainability test provided for by IAS12, taking into account the economic projections foreseeable for future years, in order to check, under a horizon of 5 years, set in order to harmonize the approach within the main Group Legal Entities, whether there are future taxable incomes to absorb them. With particular reference to Deferred tax assets due to temporary differences (€1,935 million registered before the offset against the corresponding Deferred tax liabilities), the sustainability test takes into account, besides the economic projections, the forecasts for the transformability of Deferred tax assets into tax credits under the terms of Italian Law No.214/2011. Deferred tax assets during the year increased by €1,297 million, of which €1,115 million for IRES and €182 million for IRAP partly due to the accounting for 9/10 of the tax effect of the higher loan loss provisions determined by the first adoption of IFRS9 (€ 727 million for IRES and €144 million for IRAP) and for the residual part to the normal dynamic in offsetting against current taxes. There were no reductions due to the conversion into tax credits. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 615 Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) 10.1 Deferred tax assets: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax assets arising from Italian law 214/2011 8,150,831 8,156,932 Deferred tax assets arising from tax losses 78,000 247,000 Deferred tax assets arising from temporary differences 1,935,484 648,793 Financial assets and liabilities (different from loans and deposits) 212,687 48,579 Loans and deposits to/from banks and customers 884,471 7,156 Hedging and hedged item revaluation 42,269 43,428 Property, plant and equipment and intangible assets different from goodwill 63,356 63,124 Goodwill and equity investments - - Current assets and liabilities held for sale - - Other assets and Other liabilities 35 3,873 Provisions, pension funds and similar 732,666 482,633 Other - - Accounting offsetting (217,479) (402,455) Total 9,946,836 8,650,270 10.2 Deferred tax liabilities: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax liabilities arising from temporary differences 217,479 402,455 Financial assets and liabilities (different from loans and deposits) 99,296 258,412 Loans and deposits to/from banks and customers - - Hedging and hedged item revaluation 9,780 26,152 Property, plant and equipment and intangible assets different from goodwill 105,049 115,227 Goodwill and equity investments - - Assets and liabilities held for sale - - Other assets and Other liabilities 1,965 - Other 1,389 2,664 Accounting offsetting (217,479) (402,455) Total - - The item "Deferred tax assets deriving from Law 214/2011" includes: • the amount of €3,168 million related to Deferred tax assets (for IRES and IRAP) due to the tax release of the value of the equity investments pursuant to Art.23 of D.L. 98/2011; • the amount of €1,288 million related to Deferred tax assets (for IRES and IRAP) arising from goodwill tax redemption. At 31 December 2018, the total amount of Deferred tax assets convertible into tax credits is equal to €7,192 million for IRES and €959 million for IRAP. The above mentioned amounts are the ones resulting upon the sustainability test provided for by IAS12, taking into account the economic projections foreseeable for future years, in order to check, under a horizon of 5 years, set in order to harmonize the approach within the main Group Legal Entities, whether there are future taxable incomes to absorb them. With particular reference to Deferred tax assets due to temporary differences (€1,935 million registered before the offset against the corresponding Deferred tax liabilities), the sustainability test takes into account, besides the economic projections, the forecasts for the transformability of Deferred tax assets into tax credits under the terms of Italian Law No.214/2011. Deferred tax assets during the year increased by €1,297 million, of which €1,115 million for IRES and €182 million for IRAP partly due to the accounting for 9/10 of the tax effect of the higher loan loss provisions determined by the first adoption of IFRS9 (€ 727 million for IRES and €144 million for IRAP) and for the residual part to the normal dynamic in offsetting against current taxes. There were no reductions due to the conversion into tax credits. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 615 Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) 10.1 Deferred tax assets: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax assets arising from Italian law 214/2011 8,150,831 8,156,932 Deferred tax assets arising from tax losses 78,000 247,000 Deferred tax assets arising from temporary differences 1,935,484 648,793 Financial assets and liabilities (different from loans and deposits) 212,687 48,579 Loans and deposits to/from banks and customers 884,471 7,156 Hedging and hedged item revaluation 42,269 43,428 Property, plant and equipment and intangible assets different from goodwill 63,356 63,124 Goodwill and equity investments - - Current assets and liabilities held for sale - - Other assets and Other liabilities 35 3,873 Provisions, pension funds and similar 732,666 482,633 Other - - Accounting offsetting (217,479) (402,455) Total 9,946,836 8,650,270 10.2 Deferred tax liabilities: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax liabilities arising from temporary differences 217,479 402,455 Financial assets and liabilities (different from loans and deposits) 99,296 258,412 Loans and deposits to/from banks and customers - - Hedging and hedged item revaluation 9,780 26,152 Property, plant and equipment and intangible assets different from goodwill 105,049 115,227 Goodwill and equity investments - - Assets and liabilities held for sale - - Other assets and Other liabilities 1,965 - Other 1,389 2,664 Accounting offsetting (217,479) (402,455) Total - - The item "Deferred tax assets deriving from Law 214/2011" includes: • the amount of €3,168 million related to Deferred tax assets (for IRES and IRAP) due to the tax release of the value of the equity investments pursuant to Art.23 of D.L. 98/2011; • the amount of €1,288 million related to Deferred tax assets (for IRES and IRAP) arising from goodwill tax redemption. At 31 December 2018, the total amount of Deferred tax assets convertible into tax credits is equal to €7,192 million for IRES and €959 million for IRAP. The above mentioned amounts are the ones resulting upon the sustainability test provided for by IAS12, taking into account the economic projections foreseeable for future years, in order to check, under a horizon of 5 years, set in order to harmonize the approach within the main Group Legal Entities, whether there are future taxable incomes to absorb them. With particular reference to Deferred tax assets due to temporary differences (€1,935 million registered before the offset against the corresponding Deferred tax liabilities), the sustainability test takes into account, besides the economic projections, the forecasts for the transformability of Deferred tax assets into tax credits under the terms of Italian Law No.214/2011. Deferred tax assets during the year increased by €1,297 million, of which €1,115 million for IRES and €182 million for IRAP partly due to the accounting for 9/10 of the tax effect of the higher loan loss provisions determined by the first adoption of IFRS9 (€ 727 million for IRES and €144 million for IRAP) and for the residual part to the normal dynamic in offsetting against current taxes. There were no reductions due to the conversion into tax credits. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 615 Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) 10.1 Deferred tax assets: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax assets arising from Italian law 214/2011 8,150,831 8,156,932 Deferred tax assets arising from tax losses 78,000 247,000 Deferred tax assets arising from temporary differences 1,935,484 648,793 Financial assets and liabilities (different from loans and deposits) 212,687 48,579 Loans and deposits to/from banks and customers 884,471 7,156 Hedging and hedged item revaluation 42,269 43,428 Property, plant and equipment and intangible assets different from goodwill 63,356 63,124 Goodwill and equity investments - - Current assets and liabilities held for sale - - Other assets and Other liabilities 35 3,873 Provisions, pension funds and similar 732,666 482,633 Other - - Accounting offsetting (217,479) (402,455) Total 9,946,836 8,650,270 10.2 Deferred tax liabilities: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax liabilities arising from temporary differences 217,479 402,455 Financial assets and liabilities (different from loans and deposits) 99,296 258,412 Loans and deposits to/from banks and customers - - Hedging and hedged item revaluation 9,780 26,152 Property, plant and equipment and intangible assets different from goodwill 105,049 115,227 Goodwill and equity investments - - Assets and liabilities held for sale - - Other assets and Other liabilities 1,965 - Other 1,389 2,664 Accounting offsetting (217,479) (402,455) Total - - The item "Deferred tax assets deriving from Law 214/2011" includes: • the amount of €3,168 million related to Deferred tax assets (for IRES and IRAP) due to the tax release of the value of the equity investments pursuant to Art.23 of D.L. 98/2011; • the amount of €1,288 million related to Deferred tax assets (for IRES and IRAP) arising from goodwill tax redemption. At 31 December 2018, the total amount of Deferred tax assets convertible into tax credits is equal to €7,192 million for IRES and €959 million for IRAP. The above mentioned amounts are the ones resulting upon the sustainability test provided for by IAS12, taking into account the economic projections foreseeable for future years, in order to check, under a horizon of 5 years, set in order to harmonize the approach within the main Group Legal Entities, whether there are future taxable incomes to absorb them. With particular reference to Deferred tax assets due to temporary differences (€1,935 million registered before the offset against the corresponding Deferred tax liabilities), the sustainability test takes into account, besides the economic projections, the forecasts for the transformability of Deferred tax assets into tax credits under the terms of Italian Law No.214/2011. Deferred tax assets during the year increased by €1,297 million, of which €1,115 million for IRES and €182 million for IRAP partly due to the accounting for 9/10 of the tax effect of the higher loan loss provisions determined by the first adoption of IFRS9 (€ 727 million for IRES and €144 million for IRAP) and for the residual part to the normal dynamic in offsetting against current taxes. There were no reductions due to the conversion into tax credits. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 615 Section 10 - Tax assets and tax liabilities - Item 100 (Assets) and Item 60 (Liabilities) 10.1 Deferred tax assets: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax assets arising from Italian law 214/2011 8,150,831 8,156,932 Deferred tax assets arising from tax losses 78,000 247,000 Deferred tax assets arising from temporary differences 1,935,484 648,793 Financial assets and liabilities (different from loans and deposits) 212,687 48,579 Loans and deposits to/from banks and customers 884,471 7,156 Hedging and hedged item revaluation 42,269 43,428 Property, plant and equipment and intangible assets different from goodwill 63,356 63,124 Goodwill and equity investments - - Current assets and liabilities held for sale - - Other assets and Other liabilities 35 3,873 Provisions, pension funds and similar 732,666 482,633 Other - - Accounting offsetting (217,479) (402,455) Total 9,946,836 8,650,270 10.2 Deferred tax liabilities: breakdown (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Deferred tax liabilities arising from temporary differences 217,479 402,455 Financial assets and liabilities (different from loans and deposits) 99,296 258,412 Loans and deposits to/from banks and customers - - Hedging and hedged item revaluation 9,780 26,152 Property, plant and equipment and intangible assets different from goodwill 105,049 115,227 Goodwill and equity investments - - Assets and liabilities held for sale - - Other assets and Other liabilities 1,965 - Other 1,389 2,664 Accounting offsetting (217,479) (402,455) Total - - The item "Deferred tax assets deriving from Law 214/2011" includes: • the amount of €3,168 million related to Deferred tax assets (for IRES and IRAP) due to the tax release of the value of the equity investments pursuant to Art.23 of D.L. 98/2011; • the amount of €1,288 million related to Deferred tax assets (for IRES and IRAP) arising from goodwill tax redemption. At 31 December 2018, the total amount of Deferred tax assets convertible into tax credits is equal to €7,192 million for IRES and €959 million for IRAP. The above mentioned amounts are the ones resulting upon the sustainability test provided for by IAS12, taking into account the economic projections foreseeable for future years, in order to check, under a horizon of 5 years, set in order to harmonize the approach within the main Group Legal Entities, whether there are future taxable incomes to absorb them. With particular reference to Deferred tax assets due to temporary differences (€1,935 million registered before the offset against the corresponding Deferred tax liabilities), the sustainability test takes into account, besides the economic projections, the forecasts for the transformability of Deferred tax assets into tax credits under the terms of Italian Law No.214/2011. Deferred tax assets during the year increased by €1,297 million, of which €1,115 million for IRES and €182 million for IRAP partly due to the accounting for 9/10 of the tax effect of the higher loan loss provisions determined by the first adoption of IFRS9 (€ 727 million for IRES and €144 million for IRAP) and for the residual part to the normal dynamic in offsetting against current taxes. There were no reductions due to the conversion into tax credits. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 616 2018 Annual Report and Accounts · UniCredit 10.3 Deferred tax assets: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,408,479 11,139,449 2. Increases 2,073,081 1,634,701 2.1 Deferred tax assets arisen during the year 1,717,695 1,109,935 a) Relating to previous years 50,391 50,635 b) Due to change in accounting criteria - - c) Write-backs 430,086 492,321 d) Other 1,237,218 566,979 2.2 New taxes or increases in tax rates - - 2.3 Other increases 355,386 524,766 3. Decreases 891,309 4,476,850 3.1 Deferred tax assets derecognised during the year 593,204 1,051,042 a) Reversals of temporary differences 519,855 572,800 b) Write-downs of non-recoverable items - 380,241 c) Change in accounting criteria - - d) Other 73,349 98,001 3.2 Reduction in tax rates - - 3.3 Other decreases 298,105 3,425,808 a) Conversion into tax credit under Italian Law 214/2011 - 2,859,421 b) Other 298,105 566,387 4. Closing balance 9,590,251 8,297,300 Sub-item “2.1 Deferred tax assets arisen during the year d) Other” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.3bis Deferred tax assets (Italian Law 214/2011): annual changes (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,156,932 11,017,399 2. Increases - - 3. Decreases 6,101 2,860,467 3.1 Reversals of temporary differences - - 3.2 Conversion into tax credits - 2,859,421 a) Due to loss positions arisen from P&L - 2,859,421 b) Due to tax losses - - 3.3 Other decreases 6,101 1,046 4. Closing balance 8,150,831 8,156,932 Following the 5th update of Banca d’Italia Circular 262, starting from 31 December 2018, the table shows the deferred tax asset annual changes of which L.214/2011 both equity balancing and P&L balancing. According to this new approach the values at 31 December 2017 have been restated. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 616 2018 Annual Report and Accounts · UniCredit 10.3 Deferred tax assets: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,408,479 11,139,449 2. Increases 2,073,081 1,634,701 2.1 Deferred tax assets arisen during the year 1,717,695 1,109,935 a) Relating to previous years 50,391 50,635 b) Due to change in accounting criteria - - c) Write-backs 430,086 492,321 d) Other 1,237,218 566,979 2.2 New taxes or increases in tax rates - - 2.3 Other increases 355,386 524,766 3. Decreases 891,309 4,476,850 3.1 Deferred tax assets derecognised during the year 593,204 1,051,042 a) Reversals of temporary differences 519,855 572,800 b) Write-downs of non-recoverable items - 380,241 c) Change in accounting criteria - - d) Other 73,349 98,001 3.2 Reduction in tax rates - - 3.3 Other decreases 298,105 3,425,808 a) Conversion into tax credit under Italian Law 214/2011 - 2,859,421 b) Other 298,105 566,387 4. Closing balance 9,590,251 8,297,300 Sub-item “2.1 Deferred tax assets arisen during the year d) Other” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.3bis Deferred tax assets (Italian Law 214/2011): annual changes (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,156,932 11,017,399 2. Increases - - 3. Decreases 6,101 2,860,467 3.1 Reversals of temporary differences - - 3.2 Conversion into tax credits - 2,859,421 a) Due to loss positions arisen from P&L - 2,859,421 b) Due to tax losses - - 3.3 Other decreases 6,101 1,046 4. Closing balance 8,150,831 8,156,932 Following the 5th update of Banca d’Italia Circular 262, starting from 31 December 2018, the table shows the deferred tax asset annual changes of which L.214/2011 both equity balancing and P&L balancing. According to this new approach the values at 31 December 2017 have been restated. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 616 2018 Annual Report and Accounts · UniCredit 10.3 Deferred tax assets: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,408,479 11,139,449 2. Increases 2,073,081 1,634,701 2.1 Deferred tax assets arisen during the year 1,717,695 1,109,935 a) Relating to previous years 50,391 50,635 b) Due to change in accounting criteria - - c) Write-backs 430,086 492,321 d) Other 1,237,218 566,979 2.2 New taxes or increases in tax rates - - 2.3 Other increases 355,386 524,766 3. Decreases 891,309 4,476,850 3.1 Deferred tax assets derecognised during the year 593,204 1,051,042 a) Reversals of temporary differences 519,855 572,800 b) Write-downs of non-recoverable items - 380,241 c) Change in accounting criteria - - d) Other 73,349 98,001 3.2 Reduction in tax rates - - 3.3 Other decreases 298,105 3,425,808 a) Conversion into tax credit under Italian Law 214/2011 - 2,859,421 b) Other 298,105 566,387 4. Closing balance 9,590,251 8,297,300 Sub-item “2.1 Deferred tax assets arisen during the year d) Other” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.3bis Deferred tax assets (Italian Law 214/2011): annual changes (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,156,932 11,017,399 2. Increases - - 3. Decreases 6,101 2,860,467 3.1 Reversals of temporary differences - - 3.2 Conversion into tax credits - 2,859,421 a) Due to loss positions arisen from P&L - 2,859,421 b) Due to tax losses - - 3.3 Other decreases 6,101 1,046 4. Closing balance 8,150,831 8,156,932 Following the 5th update of Banca d’Italia Circular 262, starting from 31 December 2018, the table shows the deferred tax asset annual changes of which L.214/2011 both equity balancing and P&L balancing. According to this new approach the values at 31 December 2017 have been restated. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 616 2018 Annual Report and Accounts · UniCredit 10.3 Deferred tax assets: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,408,479 11,139,449 2. Increases 2,073,081 1,634,701 2.1 Deferred tax assets arisen during the year 1,717,695 1,109,935 a) Relating to previous years 50,391 50,635 b) Due to change in accounting criteria - - c) Write-backs 430,086 492,321 d) Other 1,237,218 566,979 2.2 New taxes or increases in tax rates - - 2.3 Other increases 355,386 524,766 3. Decreases 891,309 4,476,850 3.1 Deferred tax assets derecognised during the year 593,204 1,051,042 a) Reversals of temporary differences 519,855 572,800 b) Write-downs of non-recoverable items - 380,241 c) Change in accounting criteria - - d) Other 73,349 98,001 3.2 Reduction in tax rates - - 3.3 Other decreases 298,105 3,425,808 a) Conversion into tax credit under Italian Law 214/2011 - 2,859,421 b) Other 298,105 566,387 4. Closing balance 9,590,251 8,297,300 Sub-item “2.1 Deferred tax assets arisen during the year d) Other” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.3bis Deferred tax assets (Italian Law 214/2011): annual changes (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,156,932 11,017,399 2. Increases - - 3. Decreases 6,101 2,860,467 3.1 Reversals of temporary differences - - 3.2 Conversion into tax credits - 2,859,421 a) Due to loss positions arisen from P&L - 2,859,421 b) Due to tax losses - - 3.3 Other decreases 6,101 1,046 4. Closing balance 8,150,831 8,156,932 Following the 5th update of Banca d’Italia Circular 262, starting from 31 December 2018, the table shows the deferred tax asset annual changes of which L.214/2011 both equity balancing and P&L balancing. According to this new approach the values at 31 December 2017 have been restated. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 616 2018 Annual Report and Accounts · UniCredit 10.3 Deferred tax assets: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,408,479 11,139,449 2. Increases 2,073,081 1,634,701 2.1 Deferred tax assets arisen during the year 1,717,695 1,109,935 a) Relating to previous years 50,391 50,635 b) Due to change in accounting criteria - - c) Write-backs 430,086 492,321 d) Other 1,237,218 566,979 2.2 New taxes or increases in tax rates - - 2.3 Other increases 355,386 524,766 3. Decreases 891,309 4,476,850 3.1 Deferred tax assets derecognised during the year 593,204 1,051,042 a) Reversals of temporary differences 519,855 572,800 b) Write-downs of non-recoverable items - 380,241 c) Change in accounting criteria - - d) Other 73,349 98,001 3.2 Reduction in tax rates - - 3.3 Other decreases 298,105 3,425,808 a) Conversion into tax credit under Italian Law 214/2011 - 2,859,421 b) Other 298,105 566,387 4. Closing balance 9,590,251 8,297,300 Sub-item “2.1 Deferred tax assets arisen during the year d) Other” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.3bis Deferred tax assets (Italian Law 214/2011): annual changes (€ '000) CHANGES IN 2018 2017 1. Opening balance 8,156,932 11,017,399 2. Increases - - 3. Decreases 6,101 2,860,467 3.1 Reversals of temporary differences - - 3.2 Conversion into tax credits - 2,859,421 a) Due to loss positions arisen from P&L - 2,859,421 b) Due to tax losses - - 3.3 Other decreases 6,101 1,046 4. Closing balance 8,150,831 8,156,932 Following the 5th update of Banca d’Italia Circular 262, starting from 31 December 2018, the table shows the deferred tax asset annual changes of which L.214/2011 both equity balancing and P&L balancing. According to this new approach the values at 31 December 2017 have been restated. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 617 10.4 Deferred tax liabilities: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance - - 2. Increases 146,729 137,724 2.1 Deferred tax liabilities arisen during the year 20,061 4,606 a) Relating to previous years 16 - b) Due to change in accounting criteria - - c) Other 20,045 4,606 2.2 New taxes or increases in tax rates - - 2.3 Other increases 126,668 133,118 3. Decreases 146,729 137,724 3.1 Deferred tax liabilities derecognised during the year 20,206 16,055 a) Reversals of temporary differences 18,845 16,055 b) Due to change in accounting criteria - - c) Other 1,361 - 3.2 Reduction in tax rates - - 3.3 Other decreases 126,523 121,669 4. Closing balance - - The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.5 Deferred tax assets: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 345,961 174,703 2. Increases 276,006 451,021 2.1 Deferred tax assets arisen during the year 269,965 450,083 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 269,965 450,083 2.2 New taxes or increase in tax rates - - 2.3 Other increases 6,041 938 3. Decreases 265,382 272,754 3.1 Deferred tax assets derecognised during the year 265,382 272,754 a) Reversals of temporary differences 91,070 200,760 b) Write-downs of non-recoverable items 169,000 800 c) Due to change in accounting criteria - - d) Other 5,312 71,194 3.2 Reduction in tax rates - - 3.3 Other decreases - - 4. Closing balance 356,585 352,970 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 617 10.4 Deferred tax liabilities: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance - - 2. Increases 146,729 137,724 2.1 Deferred tax liabilities arisen during the year 20,061 4,606 a) Relating to previous years 16 - b) Due to change in accounting criteria - - c) Other 20,045 4,606 2.2 New taxes or increases in tax rates - - 2.3 Other increases 126,668 133,118 3. Decreases 146,729 137,724 3.1 Deferred tax liabilities derecognised during the year 20,206 16,055 a) Reversals of temporary differences 18,845 16,055 b) Due to change in accounting criteria - - c) Other 1,361 - 3.2 Reduction in tax rates - - 3.3 Other decreases 126,523 121,669 4. Closing balance - - The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.5 Deferred tax assets: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 345,961 174,703 2. Increases 276,006 451,021 2.1 Deferred tax assets arisen during the year 269,965 450,083 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 269,965 450,083 2.2 New taxes or increase in tax rates - - 2.3 Other increases 6,041 938 3. Decreases 265,382 272,754 3.1 Deferred tax assets derecognised during the year 265,382 272,754 a) Reversals of temporary differences 91,070 200,760 b) Write-downs of non-recoverable items 169,000 800 c) Due to change in accounting criteria - - d) Other 5,312 71,194 3.2 Reduction in tax rates - - 3.3 Other decreases - - 4. Closing balance 356,585 352,970 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 617 10.4 Deferred tax liabilities: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance - - 2. Increases 146,729 137,724 2.1 Deferred tax liabilities arisen during the year 20,061 4,606 a) Relating to previous years 16 - b) Due to change in accounting criteria - - c) Other 20,045 4,606 2.2 New taxes or increases in tax rates - - 2.3 Other increases 126,668 133,118 3. Decreases 146,729 137,724 3.1 Deferred tax liabilities derecognised during the year 20,206 16,055 a) Reversals of temporary differences 18,845 16,055 b) Due to change in accounting criteria - - c) Other 1,361 - 3.2 Reduction in tax rates - - 3.3 Other decreases 126,523 121,669 4. Closing balance - - The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.5 Deferred tax assets: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 345,961 174,703 2. Increases 276,006 451,021 2.1 Deferred tax assets arisen during the year 269,965 450,083 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 269,965 450,083 2.2 New taxes or increase in tax rates - - 2.3 Other increases 6,041 938 3. Decreases 265,382 272,754 3.1 Deferred tax assets derecognised during the year 265,382 272,754 a) Reversals of temporary differences 91,070 200,760 b) Write-downs of non-recoverable items 169,000 800 c) Due to change in accounting criteria - - d) Other 5,312 71,194 3.2 Reduction in tax rates - - 3.3 Other decreases - - 4. Closing balance 356,585 352,970 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 617 10.4 Deferred tax liabilities: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance - - 2. Increases 146,729 137,724 2.1 Deferred tax liabilities arisen during the year 20,061 4,606 a) Relating to previous years 16 - b) Due to change in accounting criteria - - c) Other 20,045 4,606 2.2 New taxes or increases in tax rates - - 2.3 Other increases 126,668 133,118 3. Decreases 146,729 137,724 3.1 Deferred tax liabilities derecognised during the year 20,206 16,055 a) Reversals of temporary differences 18,845 16,055 b) Due to change in accounting criteria - - c) Other 1,361 - 3.2 Reduction in tax rates - - 3.3 Other decreases 126,523 121,669 4. Closing balance - - The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.5 Deferred tax assets: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 345,961 174,703 2. Increases 276,006 451,021 2.1 Deferred tax assets arisen during the year 269,965 450,083 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 269,965 450,083 2.2 New taxes or increase in tax rates - - 2.3 Other increases 6,041 938 3. Decreases 265,382 272,754 3.1 Deferred tax assets derecognised during the year 265,382 272,754 a) Reversals of temporary differences 91,070 200,760 b) Write-downs of non-recoverable items 169,000 800 c) Due to change in accounting criteria - - d) Other 5,312 71,194 3.2 Reduction in tax rates - - 3.3 Other decreases - - 4. Closing balance 356,585 352,970 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 617 10.4 Deferred tax liabilities: annual changes (balancing P&L) (€ '000) CHANGES IN 2018 2017 1. Opening balance - - 2. Increases 146,729 137,724 2.1 Deferred tax liabilities arisen during the year 20,061 4,606 a) Relating to previous years 16 - b) Due to change in accounting criteria - - c) Other 20,045 4,606 2.2 New taxes or increases in tax rates - - 2.3 Other increases 126,668 133,118 3. Decreases 146,729 137,724 3.1 Deferred tax liabilities derecognised during the year 20,206 16,055 a) Reversals of temporary differences 18,845 16,055 b) Due to change in accounting criteria - - c) Other 1,361 - 3.2 Reduction in tax rates - - 3.3 Other decreases 126,523 121,669 4. Closing balance - - The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.5 Deferred tax assets: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance 345,961 174,703 2. Increases 276,006 451,021 2.1 Deferred tax assets arisen during the year 269,965 450,083 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 269,965 450,083 2.2 New taxes or increase in tax rates - - 2.3 Other increases 6,041 938 3. Decreases 265,382 272,754 3.1 Deferred tax assets derecognised during the year 265,382 272,754 a) Reversals of temporary differences 91,070 200,760 b) Write-downs of non-recoverable items 169,000 800 c) Due to change in accounting criteria - - d) Other 5,312 71,194 3.2 Reduction in tax rates - - 3.3 Other decreases - - 4. Closing balance 356,585 352,970 Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 618 2018 Annual Report and Accounts · UniCredit 10.6 Deferred tax liabilities: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance - - 2. Increases 357,769 723,252 2.1 Deferred tax liabilities arisen during the year 124,051 333,789 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 124,051 333,789 2.2 New taxes or increase in tax rates - - 2.3 Other increases 233,718 389,463 3. Decreases 357,769 723,252 3.1 Deferred tax liabilities derecognised during the year 261,518 441,146 a) Reversal of temporary differences 58,264 127,859 b) Due to change in accounting criteria - - c) Other 203,254 313,287 3.2 Reduction in tax rates - - 3.3 Other decreases 96,251 282,106 4. Closing balance - - The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.7 Other information ITALIAN TAX GROUP The Tax Group regime was introduced in Italy by Legislative Decree 344 of 12 December 2003, that implemented the Italian corporate income tax (IRES) reform. The regime of national Tax Group is optional, with a duration bound for three financial years and certain conditions (controlling relationship, same operating period) to be met. The participation to the Tax Group regime allows the offsetting between taxable income and tax losses generated by the companies participating to such regime. For financial year 2018 the following legal entities adhered to the Italian Tax Group with UniCredit S.p.A.: • UniCredit Factoring - Milan; • UniCredit Leasing - Milan; • Cordusio Fiduciaria - Milan; • UniCredit Services (ex UniCredit Business Integrated Solutions) - Milan; • Cordusio SIM - Milan; • UniCredit Bank AG - Milan Branch. The number of legal entities participating to the Italian Tax Group decreased in respect to the ones of 2017 due to the exit of I-Faber from such regime, following its disposal outside the Group. DEFERRED TAX ASSETS DUE TO TAX LOSSES CARRIED FORWARD DTA on tax losses for €25 million were generated in the current year, which increases the cumulated amount of DTA on 2016 and 2017 tax losses carried forward to a total amount of €3,350 million (already including €34 million of DTA on tax losses deriving from the incorporation in 2017 of the subsidiaries PGAM and Buddy Servizi Molecolari), €3,272 million net of those accounted among deferred tax assets following sustainability test updating. In respect of foreign branches, relevant tax losses not utilized are equal to €6.356 million, due to start-up expenses or other operating costs. Said tax losses can only be used against the taxable income at the level of each single branch for taxes due in the relevant Country of establishment. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 618 2018 Annual Report and Accounts · UniCredit 10.6 Deferred tax liabilities: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance - - 2. Increases 357,769 723,252 2.1 Deferred tax liabilities arisen during the year 124,051 333,789 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 124,051 333,789 2.2 New taxes or increase in tax rates - - 2.3 Other increases 233,718 389,463 3. Decreases 357,769 723,252 3.1 Deferred tax liabilities derecognised during the year 261,518 441,146 a) Reversal of temporary differences 58,264 127,859 b) Due to change in accounting criteria - - c) Other 203,254 313,287 3.2 Reduction in tax rates - - 3.3 Other decreases 96,251 282,106 4. Closing balance - - The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.7 Other information ITALIAN TAX GROUP The Tax Group regime was introduced in Italy by Legislative Decree 344 of 12 December 2003, that implemented the Italian corporate income tax (IRES) reform. The regime of national Tax Group is optional, with a duration bound for three financial years and certain conditions (controlling relationship, same operating period) to be met. The participation to the Tax Group regime allows the offsetting between taxable income and tax losses generated by the companies participating to such regime. For financial year 2018 the following legal entities adhered to the Italian Tax Group with UniCredit S.p.A.: • UniCredit Factoring - Milan; • UniCredit Leasing - Milan; • Cordusio Fiduciaria - Milan; • UniCredit Services (ex UniCredit Business Integrated Solutions) - Milan; • Cordusio SIM - Milan; • UniCredit Bank AG - Milan Branch. The number of legal entities participating to the Italian Tax Group decreased in respect to the ones of 2017 due to the exit of I-Faber from such regime, following its disposal outside the Group. DEFERRED TAX ASSETS DUE TO TAX LOSSES CARRIED FORWARD DTA on tax losses for €25 million were generated in the current year, which increases the cumulated amount of DTA on 2016 and 2017 tax losses carried forward to a total amount of €3,350 million (already including €34 million of DTA on tax losses deriving from the incorporation in 2017 of the subsidiaries PGAM and Buddy Servizi Molecolari), €3,272 million net of those accounted among deferred tax assets following sustainability test updating. In respect of foreign branches, relevant tax losses not utilized are equal to €6.356 million, due to start-up expenses or other operating costs. Said tax losses can only be used against the taxable income at the level of each single branch for taxes due in the relevant Country of establishment. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 618 2018 Annual Report and Accounts · UniCredit 10.6 Deferred tax liabilities: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance - - 2. Increases 357,769 723,252 2.1 Deferred tax liabilities arisen during the year 124,051 333,789 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 124,051 333,789 2.2 New taxes or increase in tax rates - - 2.3 Other increases 233,718 389,463 3. Decreases 357,769 723,252 3.1 Deferred tax liabilities derecognised during the year 261,518 441,146 a) Reversal of temporary differences 58,264 127,859 b) Due to change in accounting criteria - - c) Other 203,254 313,287 3.2 Reduction in tax rates - - 3.3 Other decreases 96,251 282,106 4. Closing balance - - The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.7 Other information ITALIAN TAX GROUP The Tax Group regime was introduced in Italy by Legislative Decree 344 of 12 December 2003, that implemented the Italian corporate income tax (IRES) reform. The regime of national Tax Group is optional, with a duration bound for three financial years and certain conditions (controlling relationship, same operating period) to be met. The participation to the Tax Group regime allows the offsetting between taxable income and tax losses generated by the companies participating to such regime. For financial year 2018 the following legal entities adhered to the Italian Tax Group with UniCredit S.p.A.: • UniCredit Factoring - Milan; • UniCredit Leasing - Milan; • Cordusio Fiduciaria - Milan; • UniCredit Services (ex UniCredit Business Integrated Solutions) - Milan; • Cordusio SIM - Milan; • UniCredit Bank AG - Milan Branch. The number of legal entities participating to the Italian Tax Group decreased in respect to the ones of 2017 due to the exit of I-Faber from such regime, following its disposal outside the Group. DEFERRED TAX ASSETS DUE TO TAX LOSSES CARRIED FORWARD DTA on tax losses for €25 million were generated in the current year, which increases the cumulated amount of DTA on 2016 and 2017 tax losses carried forward to a total amount of €3,350 million (already including €34 million of DTA on tax losses deriving from the incorporation in 2017 of the subsidiaries PGAM and Buddy Servizi Molecolari), €3,272 million net of those accounted among deferred tax assets following sustainability test updating. In respect of foreign branches, relevant tax losses not utilized are equal to €6.356 million, due to start-up expenses or other operating costs. Said tax losses can only be used against the taxable income at the level of each single branch for taxes due in the relevant Country of establishment. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 618 2018 Annual Report and Accounts · UniCredit 10.6 Deferred tax liabilities: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance - - 2. Increases 357,769 723,252 2.1 Deferred tax liabilities arisen during the year 124,051 333,789 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 124,051 333,789 2.2 New taxes or increase in tax rates - - 2.3 Other increases 233,718 389,463 3. Decreases 357,769 723,252 3.1 Deferred tax liabilities derecognised during the year 261,518 441,146 a) Reversal of temporary differences 58,264 127,859 b) Due to change in accounting criteria - - c) Other 203,254 313,287 3.2 Reduction in tax rates - - 3.3 Other decreases 96,251 282,106 4. Closing balance - - The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.7 Other information ITALIAN TAX GROUP The Tax Group regime was introduced in Italy by Legislative Decree 344 of 12 December 2003, that implemented the Italian corporate income tax (IRES) reform. The regime of national Tax Group is optional, with a duration bound for three financial years and certain conditions (controlling relationship, same operating period) to be met. The participation to the Tax Group regime allows the offsetting between taxable income and tax losses generated by the companies participating to such regime. For financial year 2018 the following legal entities adhered to the Italian Tax Group with UniCredit S.p.A.: • UniCredit Factoring - Milan; • UniCredit Leasing - Milan; • Cordusio Fiduciaria - Milan; • UniCredit Services (ex UniCredit Business Integrated Solutions) - Milan; • Cordusio SIM - Milan; • UniCredit Bank AG - Milan Branch. The number of legal entities participating to the Italian Tax Group decreased in respect to the ones of 2017 due to the exit of I-Faber from such regime, following its disposal outside the Group. DEFERRED TAX ASSETS DUE TO TAX LOSSES CARRIED FORWARD DTA on tax losses for €25 million were generated in the current year, which increases the cumulated amount of DTA on 2016 and 2017 tax losses carried forward to a total amount of €3,350 million (already including €34 million of DTA on tax losses deriving from the incorporation in 2017 of the subsidiaries PGAM and Buddy Servizi Molecolari), €3,272 million net of those accounted among deferred tax assets following sustainability test updating. In respect of foreign branches, relevant tax losses not utilized are equal to €6.356 million, due to start-up expenses or other operating costs. Said tax losses can only be used against the taxable income at the level of each single branch for taxes due in the relevant Country of establishment. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 618 2018 Annual Report and Accounts · UniCredit 10.6 Deferred tax liabilities: annual changes (balancing Net Equity) (€ '000) CHANGES IN 2018 2017 1. Opening balance - - 2. Increases 357,769 723,252 2.1 Deferred tax liabilities arisen during the year 124,051 333,789 a) Relating to previous years - - b) Due to change in accounting criteria - - c) Other 124,051 333,789 2.2 New taxes or increase in tax rates - - 2.3 Other increases 233,718 389,463 3. Decreases 357,769 723,252 3.1 Deferred tax liabilities derecognised during the year 261,518 441,146 a) Reversal of temporary differences 58,264 127,859 b) Due to change in accounting criteria - - c) Other 203,254 313,287 3.2 Reduction in tax rates - - 3.3 Other decreases 96,251 282,106 4. Closing balance - - The items “2.3 Other increases” and “3.3 Other decreases” include the effect of netting DTA/DTL of previous and current year. 10.7 Other information ITALIAN TAX GROUP The Tax Group regime was introduced in Italy by Legislative Decree 344 of 12 December 2003, that implemented the Italian corporate income tax (IRES) reform. The regime of national Tax Group is optional, with a duration bound for three financial years and certain conditions (controlling relationship, same operating period) to be met. The participation to the Tax Group regime allows the offsetting between taxable income and tax losses generated by the companies participating to such regime. For financial year 2018 the following legal entities adhered to the Italian Tax Group with UniCredit S.p.A.: • UniCredit Factoring - Milan; • UniCredit Leasing - Milan; • Cordusio Fiduciaria - Milan; • UniCredit Services (ex UniCredit Business Integrated Solutions) - Milan; • Cordusio SIM - Milan; • UniCredit Bank AG - Milan Branch. The number of legal entities participating to the Italian Tax Group decreased in respect to the ones of 2017 due to the exit of I-Faber from such regime, following its disposal outside the Group. DEFERRED TAX ASSETS DUE TO TAX LOSSES CARRIED FORWARD DTA on tax losses for €25 million were generated in the current year, which increases the cumulated amount of DTA on 2016 and 2017 tax losses carried forward to a total amount of €3,350 million (already including €34 million of DTA on tax losses deriving from the incorporation in 2017 of the subsidiaries PGAM and Buddy Servizi Molecolari), €3,272 million net of those accounted among deferred tax assets following sustainability test updating. In respect of foreign branches, relevant tax losses not utilized are equal to €6.356 million, due to start-up expenses or other operating costs. Said tax losses can only be used against the taxable income at the level of each single branch for taxes due in the relevant Country of establishment. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 619 Section 11 - Non current assets and disposal groups classified as held for sale - Item 110 (Assets) and Item 70 (Liabilities) 11.1 Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Assets available for sale A.1 Financial assets 53,898 54,553 A.2 Equity investments - 8,234 A.3 Property, Plant and Equipment 62,776 87,244 of which: obtained by taking possession of collateral - A.4 Intangible assets - - A.5 Other non-current assets - - Total (A) 116,674 150,031 of which: carried at cost 59,401 70,725 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 57,273 79,306 of which: designated at fair value - level 3 - - B. Discontinued operations - B.1 Financial assets at fair value through profit and loss - - Financial assets held for trading - - Financial assets designed at fair value - - Other financial assets mandatorily at fair value - Financial assets held for trading (ex IAS39) - Financial assets at fair value through profit or loss (ex IAS39) - B.2 Financial assets at fair value through other comprehensive income - Available for sale financial assets (ex IAS39) - B.3 Financial assets at amortised cost - Held to maturity investments (ex IAS39) - Loans and receivables with banks (ex IAS39) - Loans and receivables with customers (ex IAS39) - B.4 Equity investments - - B.5 Property, Plant and Equipment - - of which: obtained by taking possession of collateral - B.6 Intangible assets - - B.7 Other assets - - Total (B) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 619 Section 11 - Non current assets and disposal groups classified as held for sale - Item 110 (Assets) and Item 70 (Liabilities) 11.1 Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Assets available for sale A.1 Financial assets 53,898 54,553 A.2 Equity investments - 8,234 A.3 Property, Plant and Equipment 62,776 87,244 of which: obtained by taking possession of collateral - A.4 Intangible assets - - A.5 Other non-current assets - - Total (A) 116,674 150,031 of which: carried at cost 59,401 70,725 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 57,273 79,306 of which: designated at fair value - level 3 - - B. Discontinued operations - B.1 Financial assets at fair value through profit and loss - - Financial assets held for trading - - Financial assets designed at fair value - - Other financial assets mandatorily at fair value - Financial assets held for trading (ex IAS39) - Financial assets at fair value through profit or loss (ex IAS39) - B.2 Financial assets at fair value through other comprehensive income - Available for sale financial assets (ex IAS39) - B.3 Financial assets at amortised cost - Held to maturity investments (ex IAS39) - Loans and receivables with banks (ex IAS39) - Loans and receivables with customers (ex IAS39) - B.4 Equity investments - - B.5 Property, Plant and Equipment - - of which: obtained by taking possession of collateral - B.6 Intangible assets - - B.7 Other assets - - Total (B) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 619 Section 11 - Non current assets and disposal groups classified as held for sale - Item 110 (Assets) and Item 70 (Liabilities) 11.1 Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Assets available for sale A.1 Financial assets 53,898 54,553 A.2 Equity investments - 8,234 A.3 Property, Plant and Equipment 62,776 87,244 of which: obtained by taking possession of collateral - A.4 Intangible assets - - A.5 Other non-current assets - - Total (A) 116,674 150,031 of which: carried at cost 59,401 70,725 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 57,273 79,306 of which: designated at fair value - level 3 - - B. Discontinued operations - B.1 Financial assets at fair value through profit and loss - - Financial assets held for trading - - Financial assets designed at fair value - - Other financial assets mandatorily at fair value - Financial assets held for trading (ex IAS39) - Financial assets at fair value through profit or loss (ex IAS39) - B.2 Financial assets at fair value through other comprehensive income - Available for sale financial assets (ex IAS39) - B.3 Financial assets at amortised cost - Held to maturity investments (ex IAS39) - Loans and receivables with banks (ex IAS39) - Loans and receivables with customers (ex IAS39) - B.4 Equity investments - - B.5 Property, Plant and Equipment - - of which: obtained by taking possession of collateral - B.6 Intangible assets - - B.7 Other assets - - Total (B) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 619 Section 11 - Non current assets and disposal groups classified as held for sale - Item 110 (Assets) and Item 70 (Liabilities) 11.1 Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Assets available for sale A.1 Financial assets 53,898 54,553 A.2 Equity investments - 8,234 A.3 Property, Plant and Equipment 62,776 87,244 of which: obtained by taking possession of collateral - A.4 Intangible assets - - A.5 Other non-current assets - - Total (A) 116,674 150,031 of which: carried at cost 59,401 70,725 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 57,273 79,306 of which: designated at fair value - level 3 - - B. Discontinued operations - B.1 Financial assets at fair value through profit and loss - - Financial assets held for trading - - Financial assets designed at fair value - - Other financial assets mandatorily at fair value - Financial assets held for trading (ex IAS39) - Financial assets at fair value through profit or loss (ex IAS39) - B.2 Financial assets at fair value through other comprehensive income - Available for sale financial assets (ex IAS39) - B.3 Financial assets at amortised cost - Held to maturity investments (ex IAS39) - Loans and receivables with banks (ex IAS39) - Loans and receivables with customers (ex IAS39) - B.4 Equity investments - - B.5 Property, Plant and Equipment - - of which: obtained by taking possession of collateral - B.6 Intangible assets - - B.7 Other assets - - Total (B) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 619 Section 11 - Non current assets and disposal groups classified as held for sale - Item 110 (Assets) and Item 70 (Liabilities) 11.1 Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 A. Assets available for sale A.1 Financial assets 53,898 54,553 A.2 Equity investments - 8,234 A.3 Property, Plant and Equipment 62,776 87,244 of which: obtained by taking possession of collateral - A.4 Intangible assets - - A.5 Other non-current assets - - Total (A) 116,674 150,031 of which: carried at cost 59,401 70,725 of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 57,273 79,306 of which: designated at fair value - level 3 - - B. Discontinued operations - B.1 Financial assets at fair value through profit and loss - - Financial assets held for trading - - Financial assets designed at fair value - - Other financial assets mandatorily at fair value - Financial assets held for trading (ex IAS39) - Financial assets at fair value through profit or loss (ex IAS39) - B.2 Financial assets at fair value through other comprehensive income - Available for sale financial assets (ex IAS39) - B.3 Financial assets at amortised cost - Held to maturity investments (ex IAS39) - Loans and receivables with banks (ex IAS39) - Loans and receivables with customers (ex IAS39) - B.4 Equity investments - - B.5 Property, Plant and Equipment - - of which: obtained by taking possession of collateral - B.6 Intangible assets - - B.7 Other assets - - Total (B) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 620 2018 Annual Report and Accounts · UniCredit continued: Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) C. Liabilities associated with assets available for sale C.1 Deposits - - C.2 Securities - - C.3 Other liabilities - - Total (C) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - D. Liabilities associated with discontinued operations - D.1 Financial liabilities at amortised cost - Deposits from banks (ex IAS39) - Deposits from customers (ex IAS39) - Debt securities in issue (ex IAS39) - D.2 Financial liabilities held for trading - Financial liabilities held for trading (ex IAS39) - D.3 Financial liabilities designated at fair value - Financial liabilities at fair value through profit or loss (ex IAS39) - D.4 Provisions - - D.5 Other liabilities - - Total (D) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - Section 12 - Other assets - Item 120 12.1 Other assets: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Margin with derivatives clearers (non-interest bearing) - Gold, silver and precious metals - Accrued income and prepaid expenses other than capitalised income 218,597 92,240 Positive value of management agreements (so-called servicing assets) - Cash and other valuables held by cashier 277,157 230,014 - Current account cheques being settled, drawn on third parties 276,861 229,671 - Current account cheques payable by group banks, cleared and in the process of being debited 296 343 - Money orders, bank drafts and equivalent securities - - - Coupons, securities due on demand, revenue stamps and miscellaneous valuables - - Interest and changes to be debited to 22,298 133 - Customers 22,298 133 - Banks - - Items in transit between branches not yet allocated to destination accounts - 12,332 Items in processing 270,701 389,975 Items deemed definitive but not-attributable to other items 1,180,601 1,521,623 - Securities and coupons to be settled 42,130 1,430 - Other transactions 1,138,471 1,520,193 Adjustments for unpaid bills and notes 6,831 264,164 Tax items other than those included in item 110 1,468,803 1,583,025 Commercial credits pursuant to IFRS15 - Loans in respect of share based payment 144,546 Other items 430,742 462,302 Total 3,875,730 4,700,354 It should be noted that, as at 31 December 2018, among the "Other items" are recognised, at their fair value of €45 million, the precious stones (diamonds) repurchased from customers within the "customer care" initiative promoted by the Bank regarding this topic. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 620 2018 Annual Report and Accounts · UniCredit continued: Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) C. Liabilities associated with assets available for sale C.1 Deposits - - C.2 Securities - - C.3 Other liabilities - - Total (C) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - D. Liabilities associated with discontinued operations - D.1 Financial liabilities at amortised cost - Deposits from banks (ex IAS39) - Deposits from customers (ex IAS39) - Debt securities in issue (ex IAS39) - D.2 Financial liabilities held for trading - Financial liabilities held for trading (ex IAS39) - D.3 Financial liabilities designated at fair value - Financial liabilities at fair value through profit or loss (ex IAS39) - D.4 Provisions - - D.5 Other liabilities - - Total (D) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - Section 12 - Other assets - Item 120 12.1 Other assets: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Margin with derivatives clearers (non-interest bearing) - Gold, silver and precious metals - Accrued income and prepaid expenses other than capitalised income 218,597 92,240 Positive value of management agreements (so-called servicing assets) - Cash and other valuables held by cashier 277,157 230,014 - Current account cheques being settled, drawn on third parties 276,861 229,671 - Current account cheques payable by group banks, cleared and in the process of being debited 296 343 - Money orders, bank drafts and equivalent securities - - - Coupons, securities due on demand, revenue stamps and miscellaneous valuables - - Interest and changes to be debited to 22,298 133 - Customers 22,298 133 - Banks - - Items in transit between branches not yet allocated to destination accounts - 12,332 Items in processing 270,701 389,975 Items deemed definitive but not-attributable to other items 1,180,601 1,521,623 - Securities and coupons to be settled 42,130 1,430 - Other transactions 1,138,471 1,520,193 Adjustments for unpaid bills and notes 6,831 264,164 Tax items other than those included in item 110 1,468,803 1,583,025 Commercial credits pursuant to IFRS15 - Loans in respect of share based payment 144,546 Other items 430,742 462,302 Total 3,875,730 4,700,354 It should be noted that, as at 31 December 2018, among the "Other items" are recognised, at their fair value of €45 million, the precious stones (diamonds) repurchased from customers within the "customer care" initiative promoted by the Bank regarding this topic. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 620 2018 Annual Report and Accounts · UniCredit continued: Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) C. Liabilities associated with assets available for sale C.1 Deposits - - C.2 Securities - - C.3 Other liabilities - - Total (C) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - D. Liabilities associated with discontinued operations - D.1 Financial liabilities at amortised cost - Deposits from banks (ex IAS39) - Deposits from customers (ex IAS39) - Debt securities in issue (ex IAS39) - D.2 Financial liabilities held for trading - Financial liabilities held for trading (ex IAS39) - D.3 Financial liabilities designated at fair value - Financial liabilities at fair value through profit or loss (ex IAS39) - D.4 Provisions - - D.5 Other liabilities - - Total (D) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - Section 12 - Other assets - Item 120 12.1 Other assets: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Margin with derivatives clearers (non-interest bearing) - Gold, silver and precious metals - Accrued income and prepaid expenses other than capitalised income 218,597 92,240 Positive value of management agreements (so-called servicing assets) - Cash and other valuables held by cashier 277,157 230,014 - Current account cheques being settled, drawn on third parties 276,861 229,671 - Current account cheques payable by group banks, cleared and in the process of being debited 296 343 - Money orders, bank drafts and equivalent securities - - - Coupons, securities due on demand, revenue stamps and miscellaneous valuables - - Interest and changes to be debited to 22,298 133 - Customers 22,298 133 - Banks - - Items in transit between branches not yet allocated to destination accounts - 12,332 Items in processing 270,701 389,975 Items deemed definitive but not-attributable to other items 1,180,601 1,521,623 - Securities and coupons to be settled 42,130 1,430 - Other transactions 1,138,471 1,520,193 Adjustments for unpaid bills and notes 6,831 264,164 Tax items other than those included in item 110 1,468,803 1,583,025 Commercial credits pursuant to IFRS15 - Loans in respect of share based payment 144,546 Other items 430,742 462,302 Total 3,875,730 4,700,354 It should be noted that, as at 31 December 2018, among the "Other items" are recognised, at their fair value of €45 million, the precious stones (diamonds) repurchased from customers within the "customer care" initiative promoted by the Bank regarding this topic. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 620 2018 Annual Report and Accounts · UniCredit continued: Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) C. Liabilities associated with assets available for sale C.1 Deposits - - C.2 Securities - - C.3 Other liabilities - - Total (C) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - D. Liabilities associated with discontinued operations - D.1 Financial liabilities at amortised cost - Deposits from banks (ex IAS39) - Deposits from customers (ex IAS39) - Debt securities in issue (ex IAS39) - D.2 Financial liabilities held for trading - Financial liabilities held for trading (ex IAS39) - D.3 Financial liabilities designated at fair value - Financial liabilities at fair value through profit or loss (ex IAS39) - D.4 Provisions - - D.5 Other liabilities - - Total (D) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - Section 12 - Other assets - Item 120 12.1 Other assets: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Margin with derivatives clearers (non-interest bearing) - Gold, silver and precious metals - Accrued income and prepaid expenses other than capitalised income 218,597 92,240 Positive value of management agreements (so-called servicing assets) - Cash and other valuables held by cashier 277,157 230,014 - Current account cheques being settled, drawn on third parties 276,861 229,671 - Current account cheques payable by group banks, cleared and in the process of being debited 296 343 - Money orders, bank drafts and equivalent securities - - - Coupons, securities due on demand, revenue stamps and miscellaneous valuables - - Interest and changes to be debited to 22,298 133 - Customers 22,298 133 - Banks - - Items in transit between branches not yet allocated to destination accounts - 12,332 Items in processing 270,701 389,975 Items deemed definitive but not-attributable to other items 1,180,601 1,521,623 - Securities and coupons to be settled 42,130 1,430 - Other transactions 1,138,471 1,520,193 Adjustments for unpaid bills and notes 6,831 264,164 Tax items other than those included in item 110 1,468,803 1,583,025 Commercial credits pursuant to IFRS15 - Loans in respect of share based payment 144,546 Other items 430,742 462,302 Total 3,875,730 4,700,354 It should be noted that, as at 31 December 2018, among the "Other items" are recognised, at their fair value of €45 million, the precious stones (diamonds) repurchased from customers within the "customer care" initiative promoted by the Bank regarding this topic. Company financial statements | Notes to the accounts Parte B - Balance sheet - Assets 620 2018 Annual Report and Accounts · UniCredit continued: Non-current assets and disposal groups classified as held for sale: breakdown by asset type (€ '000) C. Liabilities associated with assets available for sale C.1 Deposits - - C.2 Securities - - C.3 Other liabilities - - Total (C) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - D. Liabilities associated with discontinued operations - D.1 Financial liabilities at amortised cost - Deposits from banks (ex IAS39) - Deposits from customers (ex IAS39) - Debt securities in issue (ex IAS39) - D.2 Financial liabilities held for trading - Financial liabilities held for trading (ex IAS39) - D.3 Financial liabilities designated at fair value - Financial liabilities at fair value through profit or loss (ex IAS39) - D.4 Provisions - - D.5 Other liabilities - - Total (D) - - of which: carried at cost - - of which: designated at fair value - level 1 - - of which: designated at fair value - level 2 - - of which: designated at fair value - level 3 - - Section 12 - Other assets - Item 120 12.1 Other assets: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Margin with derivatives clearers (non-interest bearing) - Gold, silver and precious metals - Accrued income and prepaid expenses other than capitalised income 218,597 92,240 Positive value of management agreements (so-called servicing assets) - Cash and other valuables held by cashier 277,157 230,014 - Current account cheques being settled, drawn on third parties 276,861 229,671 - Current account cheques payable by group banks, cleared and in the process of being debited 296 343 - Money orders, bank drafts and equivalent securities - - - Coupons, securities due on demand, revenue stamps and miscellaneous valuables - - Interest and changes to be debited to 22,298 133 - Customers 22,298 133 - Banks - - Items in transit between branches not yet allocated to destination accounts - 12,332 Items in processing 270,701 389,975 Items deemed definitive but not-attributable to other items 1,180,601 1,521,623 - Securities and coupons to be settled 42,130 1,430 - Other transactions 1,138,471 1,520,193 Adjustments for unpaid bills and notes 6,831 264,164 Tax items other than those included in item 110 1,468,803 1,583,025 Commercial credits pursuant to IFRS15 - Loans in respect of share based payment 144,546 Other items 430,742 462,302 Total 3,875,730 4,700,354 It should be noted that, as at 31 December 2018, among the "Other items" are recognised, at their fair value of €45 million, the precious stones (diamonds) repurchased from customers within the "customer care" initiative promoted by the Bank regarding this topic. Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 621 Item “Accrued income and prepaid expenses other than capitalised income” includes the contract assets recognized in accordance with IFRS15. In this context accrued income represents the portion of the performance obligation already satisfied through the services provided by the Bank and that will be settled in the future periods in accordance with contractual provisions. The aggregate amount of revenues from services to customers related to the portion of performance obligations not yet satisfied, and therefore not represented in the table above, is of a non material amount and relates to performance obligations expected to be satisfied by the following year end reporting date. The following table shows the changes of accrued income and prepaid expenses occurred in the period. Periodic change of accrued income/expenses and prepaid expenses/income (€ '000) AMOUNTS AS AT 12.31.2018 ACCURRED INCOME AND PREPAID EXPENSES ACCURRED INCOME AND DEFERRED EXPENSES Opening balance 92,240 100,642 Increases 126,736 37,168 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Reversal of impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 126,736 37,168 Decreases 379 64 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 379 64 Closing balance 218,597 137,746 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 621 Item “Accrued income and prepaid expenses other than capitalised income” includes the contract assets recognized in accordance with IFRS15. In this context accrued income represents the portion of the performance obligation already satisfied through the services provided by the Bank and that will be settled in the future periods in accordance with contractual provisions. The aggregate amount of revenues from services to customers related to the portion of performance obligations not yet satisfied, and therefore not represented in the table above, is of a non material amount and relates to performance obligations expected to be satisfied by the following year end reporting date. The following table shows the changes of accrued income and prepaid expenses occurred in the period. Periodic change of accrued income/expenses and prepaid expenses/income (€ '000) AMOUNTS AS AT 12.31.2018 ACCURRED INCOME AND PREPAID EXPENSES ACCURRED INCOME AND DEFERRED EXPENSES Opening balance 92,240 100,642 Increases 126,736 37,168 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Reversal of impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 126,736 37,168 Decreases 379 64 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 379 64 Closing balance 218,597 137,746 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 621 Item “Accrued income and prepaid expenses other than capitalised income” includes the contract assets recognized in accordance with IFRS15. In this context accrued income represents the portion of the performance obligation already satisfied through the services provided by the Bank and that will be settled in the future periods in accordance with contractual provisions. The aggregate amount of revenues from services to customers related to the portion of performance obligations not yet satisfied, and therefore not represented in the table above, is of a non material amount and relates to performance obligations expected to be satisfied by the following year end reporting date. The following table shows the changes of accrued income and prepaid expenses occurred in the period. Periodic change of accrued income/expenses and prepaid expenses/income (€ '000) AMOUNTS AS AT 12.31.2018 ACCURRED INCOME AND PREPAID EXPENSES ACCURRED INCOME AND DEFERRED EXPENSES Opening balance 92,240 100,642 Increases 126,736 37,168 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Reversal of impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 126,736 37,168 Decreases 379 64 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 379 64 Closing balance 218,597 137,746 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 621 Item “Accrued income and prepaid expenses other than capitalised income” includes the contract assets recognized in accordance with IFRS15. In this context accrued income represents the portion of the performance obligation already satisfied through the services provided by the Bank and that will be settled in the future periods in accordance with contractual provisions. The aggregate amount of revenues from services to customers related to the portion of performance obligations not yet satisfied, and therefore not represented in the table above, is of a non material amount and relates to performance obligations expected to be satisfied by the following year end reporting date. The following table shows the changes of accrued income and prepaid expenses occurred in the period. Periodic change of accrued income/expenses and prepaid expenses/income (€ '000) AMOUNTS AS AT 12.31.2018 ACCURRED INCOME AND PREPAID EXPENSES ACCURRED INCOME AND DEFERRED EXPENSES Opening balance 92,240 100,642 Increases 126,736 37,168 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Reversal of impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 126,736 37,168 Decreases 379 64 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 379 64 Closing balance 218,597 137,746 Company financial statements | Notes to the accounts Part B - Balance sheet - Assets UniCredit ·2018 Annual Report and Accounts 621 Item “Accrued income and prepaid expenses other than capitalised income” includes the contract assets recognized in accordance with IFRS15. In this context accrued income represents the portion of the performance obligation already satisfied through the services provided by the Bank and that will be settled in the future periods in accordance with contractual provisions. The aggregate amount of revenues from services to customers related to the portion of performance obligations not yet satisfied, and therefore not represented in the table above, is of a non material amount and relates to performance obligations expected to be satisfied by the following year end reporting date. The following table shows the changes of accrued income and prepaid expenses occurred in the period. Periodic change of accrued income/expenses and prepaid expenses/income (€ '000) AMOUNTS AS AT 12.31.2018 ACCURRED INCOME AND PREPAID EXPENSES ACCURRED INCOME AND DEFERRED EXPENSES Opening balance 92,240 100,642 Increases 126,736 37,168 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Reversal of impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 126,736 37,168 Decreases 379 64 a) Changes due to business combinations - - b) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained) or a contract modification (IFRS15 Par. 118.b) - - c) Impairment of a contract asset (IFRS15 Par. 118.c) - X d) Change in the time frame for a right to consideration to become unconditional (ie for a contract asset to be reclassified to a receivable) (IFRS15 Par. 118.d) - - e) Change in the time frame for a performance obligation to be satisfied (ie for the recognition of revenue arising from a contract liability (IFRS15 Par. 118.e) - - f) Other 379 64 Closing balance 218,597 137,746 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 622 2018 Annual Report and Accounts · UniCredit Liabilities Section 1 - Financial liabilities at amortised cost - Item 10 1.1 Financial liabilities at amortised cost: breakdown by product of deposits from banks (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from central banks 34,627,212 X X X 2. Deposits from banks 24,367,577 X X X 2.1 Current accounts and demand deposits 3,867,456 X X X 2.2 Time deposits 5,057,073 X X X 2.3 Loans 15,442,756 X X X 2.3.1 Repos 10,298,952 X X X 2.3.2 Other 5,143,804 X X X 2.4 Liabilities relating to commitments - X X X 2.5 Other deposits 292 X X X Total 58,994,789 - 25,292,544 33,125,936 Total Level 1, Level 2 and Level 3 58,418,480 Deposits from central banks include TLTRO II facilities launched by the Governing Council of the European Central Bank with Decision (EU) 2016/810 for €33 billion, the same amount as at 2017 year end. Deposits from banks are not carried based at their fair value, which is only shown in order to meet disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.2 Financial liabilities at amortised cost: breakdown by product of deposits from customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTION/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Current accounts and demand deposits 158,060,181 X X X 2. Time deposits 1,195,705 X X X 3. Loans 47,829,401 X X X 3.1 Repos 46,890,500 X X X 3.2 Other 938,901 X X X 4. Liabilities relating to commitments to repurchase treasury shares - X X X 5. Other deposits 4,786,438 X X X Total 211,871,725 - 47,500,092 164,222,396 Total Level 1, Level 2 and Level 3 211,722,488 Deposits from customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. For further information see Part A - Accounting Policies - A.4 Information on fair value. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 622 2018 Annual Report and Accounts · UniCredit Liabilities Section 1 - Financial liabilities at amortised cost - Item 10 1.1 Financial liabilities at amortised cost: breakdown by product of deposits from banks (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from central banks 34,627,212 X X X 2. Deposits from banks 24,367,577 X X X 2.1 Current accounts and demand deposits 3,867,456 X X X 2.2 Time deposits 5,057,073 X X X 2.3 Loans 15,442,756 X X X 2.3.1 Repos 10,298,952 X X X 2.3.2 Other 5,143,804 X X X 2.4 Liabilities relating to commitments - X X X 2.5 Other deposits 292 X X X Total 58,994,789 - 25,292,544 33,125,936 Total Level 1, Level 2 and Level 3 58,418,480 Deposits from central banks include TLTRO II facilities launched by the Governing Council of the European Central Bank with Decision (EU) 2016/810 for €33 billion, the same amount as at 2017 year end. Deposits from banks are not carried based at their fair value, which is only shown in order to meet disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.2 Financial liabilities at amortised cost: breakdown by product of deposits from customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTION/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Current accounts and demand deposits 158,060,181 X X X 2. Time deposits 1,195,705 X X X 3. Loans 47,829,401 X X X 3.1 Repos 46,890,500 X X X 3.2 Other 938,901 X X X 4. Liabilities relating to commitments to repurchase treasury shares - X X X 5. Other deposits 4,786,438 X X X Total 211,871,725 - 47,500,092 164,222,396 Total Level 1, Level 2 and Level 3 211,722,488 Deposits from customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. For further information see Part A - Accounting Policies - A.4 Information on fair value. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 622 2018 Annual Report and Accounts · UniCredit Liabilities Section 1 - Financial liabilities at amortised cost - Item 10 1.1 Financial liabilities at amortised cost: breakdown by product of deposits from banks (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from central banks 34,627,212 X X X 2. Deposits from banks 24,367,577 X X X 2.1 Current accounts and demand deposits 3,867,456 X X X 2.2 Time deposits 5,057,073 X X X 2.3 Loans 15,442,756 X X X 2.3.1 Repos 10,298,952 X X X 2.3.2 Other 5,143,804 X X X 2.4 Liabilities relating to commitments - X X X 2.5 Other deposits 292 X X X Total 58,994,789 - 25,292,544 33,125,936 Total Level 1, Level 2 and Level 3 58,418,480 Deposits from central banks include TLTRO II facilities launched by the Governing Council of the European Central Bank with Decision (EU) 2016/810 for €33 billion, the same amount as at 2017 year end. Deposits from banks are not carried based at their fair value, which is only shown in order to meet disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.2 Financial liabilities at amortised cost: breakdown by product of deposits from customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTION/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Current accounts and demand deposits 158,060,181 X X X 2. Time deposits 1,195,705 X X X 3. Loans 47,829,401 X X X 3.1 Repos 46,890,500 X X X 3.2 Other 938,901 X X X 4. Liabilities relating to commitments to repurchase treasury shares - X X X 5. Other deposits 4,786,438 X X X Total 211,871,725 - 47,500,092 164,222,396 Total Level 1, Level 2 and Level 3 211,722,488 Deposits from customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. For further information see Part A - Accounting Policies - A.4 Information on fair value. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 622 2018 Annual Report and Accounts · UniCredit Liabilities Section 1 - Financial liabilities at amortised cost - Item 10 1.1 Financial liabilities at amortised cost: breakdown by product of deposits from banks (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from central banks 34,627,212 X X X 2. Deposits from banks 24,367,577 X X X 2.1 Current accounts and demand deposits 3,867,456 X X X 2.2 Time deposits 5,057,073 X X X 2.3 Loans 15,442,756 X X X 2.3.1 Repos 10,298,952 X X X 2.3.2 Other 5,143,804 X X X 2.4 Liabilities relating to commitments - X X X 2.5 Other deposits 292 X X X Total 58,994,789 - 25,292,544 33,125,936 Total Level 1, Level 2 and Level 3 58,418,480 Deposits from central banks include TLTRO II facilities launched by the Governing Council of the European Central Bank with Decision (EU) 2016/810 for €33 billion, the same amount as at 2017 year end. Deposits from banks are not carried based at their fair value, which is only shown in order to meet disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.2 Financial liabilities at amortised cost: breakdown by product of deposits from customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTION/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Current accounts and demand deposits 158,060,181 X X X 2. Time deposits 1,195,705 X X X 3. Loans 47,829,401 X X X 3.1 Repos 46,890,500 X X X 3.2 Other 938,901 X X X 4. Liabilities relating to commitments to repurchase treasury shares - X X X 5. Other deposits 4,786,438 X X X Total 211,871,725 - 47,500,092 164,222,396 Total Level 1, Level 2 and Level 3 211,722,488 Deposits from customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. For further information see Part A - Accounting Policies - A.4 Information on fair value. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 622 2018 Annual Report and Accounts · UniCredit Liabilities Section 1 - Financial liabilities at amortised cost - Item 10 1.1 Financial liabilities at amortised cost: breakdown by product of deposits from banks (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTIONS/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from central banks 34,627,212 X X X 2. Deposits from banks 24,367,577 X X X 2.1 Current accounts and demand deposits 3,867,456 X X X 2.2 Time deposits 5,057,073 X X X 2.3 Loans 15,442,756 X X X 2.3.1 Repos 10,298,952 X X X 2.3.2 Other 5,143,804 X X X 2.4 Liabilities relating to commitments - X X X 2.5 Other deposits 292 X X X Total 58,994,789 - 25,292,544 33,125,936 Total Level 1, Level 2 and Level 3 58,418,480 Deposits from central banks include TLTRO II facilities launched by the Governing Council of the European Central Bank with Decision (EU) 2016/810 for €33 billion, the same amount as at 2017 year end. Deposits from banks are not carried based at their fair value, which is only shown in order to meet disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.2 Financial liabilities at amortised cost: breakdown by product of deposits from customers (€ '000) AMOUNTS AS AT 12.31.2018 TYPE OF TRANSACTION/VALUES BOOK VALUE FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 1. Current accounts and demand deposits 158,060,181 X X X 2. Time deposits 1,195,705 X X X 3. Loans 47,829,401 X X X 3.1 Repos 46,890,500 X X X 3.2 Other 938,901 X X X 4. Liabilities relating to commitments to repurchase treasury shares - X X X 5. Other deposits 4,786,438 X X X Total 211,871,725 - 47,500,092 164,222,396 Total Level 1, Level 2 and Level 3 211,722,488 Deposits from customers are not carried at fair value, which is presented solely for the purpose of fulfilling financial disclosure requirements. Fair value measurements have been classified according to a hierarchy of levels reflecting the significance of the valuations input. The fair value of demand items was estimated to be equal to their net book value by exercising the option provided for by IFRS7.29. According to this assumption, demand items were classified as level 3 in the fair value hierarchy. For further information see Part A - Accounting Policies - A.4 Information on fair value. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 623 1.3 Financial liabilities at amortised cost: breakdown by product of debt securities in issue (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Debt securities 1. Bonds 49,459,316 27,590,067 22,461,035 1,951 1.1 Structured 716,417 - 691,130 - 1.2 Other 48,742,899 27,590,067 21,769,905 1,951 2. Other securities 3,509,529 - 169,622 3,345,000 2.1 Structured 109,800 - 113,767 - 2.2 Other 3,399,729 - 55,855 3,345,000 Total 52,968,845 27,590,067 22,630,657 3,346,951 Total Level 1, Level 2 and Level 3 53,567,675 Sub-items “1.1 structured” of bonds and “2.1. structured” of other securities totally amount to €826,217 million and represent 1.56% of the total. They mainly relate to interest-rate linked instruments with highly correlated derivative component, identified in accordance with the Mifid classification rules. Issued bonds reduce due to joint effect of maturities and new issuances and as a consequence of buy-backs realised in the period. Fair value measurements solely for financial disclosure purposes only are classified according to a hierarchy of levels reflecting the significance of the inputs used. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.4 Detail of subordinated debts/bonds The list of all subordinated debt instruments and bonds is presented in Part F - Shareholders’ Equity. The subordinated debt recognised in item “Deposits from banks” amounts to €28 million, the one in item “Deposits from customers” amounts to nil, the one in item “Debt securities in issue” amounts to €8,837 million. 1.5 Detail of structured debts Structured deposits from banks or customers do not exist. 1.6 Amounts payable under finance leases No data to be disclosed. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1.1 Deposits from banks: product breakdown (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Deposits from central banks 33,576,658 2. Deposits from banks 23,230,358 2.1 Current accounts and demand deposits 4,826,878 2.2 Time deposits 3,812,805 2.3 Loans 14,249,826 2.3.1 repos 7,737,626 2.3.2 other 6,512,200 2.4 Liabilities in respect of commitments to repurchase treasury shares - 2.5 Other liabilities 340,849 Total 56,807,016 Fair value - level 1 - Fair value - level 2 13,896,046 Fair value - level 3 43,033,573 Total fair value 56,929,619 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 623 1.3 Financial liabilities at amortised cost: breakdown by product of debt securities in issue (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Debt securities 1. Bonds 49,459,316 27,590,067 22,461,035 1,951 1.1 Structured 716,417 - 691,130 - 1.2 Other 48,742,899 27,590,067 21,769,905 1,951 2. Other securities 3,509,529 - 169,622 3,345,000 2.1 Structured 109,800 - 113,767 - 2.2 Other 3,399,729 - 55,855 3,345,000 Total 52,968,845 27,590,067 22,630,657 3,346,951 Total Level 1, Level 2 and Level 3 53,567,675 Sub-items “1.1 structured” of bonds and “2.1. structured” of other securities totally amount to €826,217 million and represent 1.56% of the total. They mainly relate to interest-rate linked instruments with highly correlated derivative component, identified in accordance with the Mifid classification rules. Issued bonds reduce due to joint effect of maturities and new issuances and as a consequence of buy-backs realised in the period. Fair value measurements solely for financial disclosure purposes only are classified according to a hierarchy of levels reflecting the significance of the inputs used. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.4 Detail of subordinated debts/bonds The list of all subordinated debt instruments and bonds is presented in Part F - Shareholders’ Equity. The subordinated debt recognised in item “Deposits from banks” amounts to €28 million, the one in item “Deposits from customers” amounts to nil, the one in item “Debt securities in issue” amounts to €8,837 million. 1.5 Detail of structured debts Structured deposits from banks or customers do not exist. 1.6 Amounts payable under finance leases No data to be disclosed. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1.1 Deposits from banks: product breakdown (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Deposits from central banks 33,576,658 2. Deposits from banks 23,230,358 2.1 Current accounts and demand deposits 4,826,878 2.2 Time deposits 3,812,805 2.3 Loans 14,249,826 2.3.1 repos 7,737,626 2.3.2 other 6,512,200 2.4 Liabilities in respect of commitments to repurchase treasury shares - 2.5 Other liabilities 340,849 Total 56,807,016 Fair value - level 1 - Fair value - level 2 13,896,046 Fair value - level 3 43,033,573 Total fair value 56,929,619 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 623 1.3 Financial liabilities at amortised cost: breakdown by product of debt securities in issue (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Debt securities 1. Bonds 49,459,316 27,590,067 22,461,035 1,951 1.1 Structured 716,417 - 691,130 - 1.2 Other 48,742,899 27,590,067 21,769,905 1,951 2. Other securities 3,509,529 - 169,622 3,345,000 2.1 Structured 109,800 - 113,767 - 2.2 Other 3,399,729 - 55,855 3,345,000 Total 52,968,845 27,590,067 22,630,657 3,346,951 Total Level 1, Level 2 and Level 3 53,567,675 Sub-items “1.1 structured” of bonds and “2.1. structured” of other securities totally amount to €826,217 million and represent 1.56% of the total. They mainly relate to interest-rate linked instruments with highly correlated derivative component, identified in accordance with the Mifid classification rules. Issued bonds reduce due to joint effect of maturities and new issuances and as a consequence of buy-backs realised in the period. Fair value measurements solely for financial disclosure purposes only are classified according to a hierarchy of levels reflecting the significance of the inputs used. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.4 Detail of subordinated debts/bonds The list of all subordinated debt instruments and bonds is presented in Part F - Shareholders’ Equity. The subordinated debt recognised in item “Deposits from banks” amounts to €28 million, the one in item “Deposits from customers” amounts to nil, the one in item “Debt securities in issue” amounts to €8,837 million. 1.5 Detail of structured debts Structured deposits from banks or customers do not exist. 1.6 Amounts payable under finance leases No data to be disclosed. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1.1 Deposits from banks: product breakdown (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Deposits from central banks 33,576,658 2. Deposits from banks 23,230,358 2.1 Current accounts and demand deposits 4,826,878 2.2 Time deposits 3,812,805 2.3 Loans 14,249,826 2.3.1 repos 7,737,626 2.3.2 other 6,512,200 2.4 Liabilities in respect of commitments to repurchase treasury shares - 2.5 Other liabilities 340,849 Total 56,807,016 Fair value - level 1 - Fair value - level 2 13,896,046 Fair value - level 3 43,033,573 Total fair value 56,929,619 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 623 1.3 Financial liabilities at amortised cost: breakdown by product of debt securities in issue (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Debt securities 1. Bonds 49,459,316 27,590,067 22,461,035 1,951 1.1 Structured 716,417 - 691,130 - 1.2 Other 48,742,899 27,590,067 21,769,905 1,951 2. Other securities 3,509,529 - 169,622 3,345,000 2.1 Structured 109,800 - 113,767 - 2.2 Other 3,399,729 - 55,855 3,345,000 Total 52,968,845 27,590,067 22,630,657 3,346,951 Total Level 1, Level 2 and Level 3 53,567,675 Sub-items “1.1 structured” of bonds and “2.1. structured” of other securities totally amount to €826,217 million and represent 1.56% of the total. They mainly relate to interest-rate linked instruments with highly correlated derivative component, identified in accordance with the Mifid classification rules. Issued bonds reduce due to joint effect of maturities and new issuances and as a consequence of buy-backs realised in the period. Fair value measurements solely for financial disclosure purposes only are classified according to a hierarchy of levels reflecting the significance of the inputs used. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.4 Detail of subordinated debts/bonds The list of all subordinated debt instruments and bonds is presented in Part F - Shareholders’ Equity. The subordinated debt recognised in item “Deposits from banks” amounts to €28 million, the one in item “Deposits from customers” amounts to nil, the one in item “Debt securities in issue” amounts to €8,837 million. 1.5 Detail of structured debts Structured deposits from banks or customers do not exist. 1.6 Amounts payable under finance leases No data to be disclosed. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1.1 Deposits from banks: product breakdown (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Deposits from central banks 33,576,658 2. Deposits from banks 23,230,358 2.1 Current accounts and demand deposits 4,826,878 2.2 Time deposits 3,812,805 2.3 Loans 14,249,826 2.3.1 repos 7,737,626 2.3.2 other 6,512,200 2.4 Liabilities in respect of commitments to repurchase treasury shares - 2.5 Other liabilities 340,849 Total 56,807,016 Fair value - level 1 - Fair value - level 2 13,896,046 Fair value - level 3 43,033,573 Total fair value 56,929,619 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 623 1.3 Financial liabilities at amortised cost: breakdown by product of debt securities in issue (€ '000) AMOUNTS AS AT 12.31.2018 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Debt securities 1. Bonds 49,459,316 27,590,067 22,461,035 1,951 1.1 Structured 716,417 - 691,130 - 1.2 Other 48,742,899 27,590,067 21,769,905 1,951 2. Other securities 3,509,529 - 169,622 3,345,000 2.1 Structured 109,800 - 113,767 - 2.2 Other 3,399,729 - 55,855 3,345,000 Total 52,968,845 27,590,067 22,630,657 3,346,951 Total Level 1, Level 2 and Level 3 53,567,675 Sub-items “1.1 structured” of bonds and “2.1. structured” of other securities totally amount to €826,217 million and represent 1.56% of the total. They mainly relate to interest-rate linked instruments with highly correlated derivative component, identified in accordance with the Mifid classification rules. Issued bonds reduce due to joint effect of maturities and new issuances and as a consequence of buy-backs realised in the period. Fair value measurements solely for financial disclosure purposes only are classified according to a hierarchy of levels reflecting the significance of the inputs used. For further information see Part A - Accounting Policies - A.4 Information on fair value. 1.4 Detail of subordinated debts/bonds The list of all subordinated debt instruments and bonds is presented in Part F - Shareholders’ Equity. The subordinated debt recognised in item “Deposits from banks” amounts to €28 million, the one in item “Deposits from customers” amounts to nil, the one in item “Debt securities in issue” amounts to €8,837 million. 1.5 Detail of structured debts Structured deposits from banks or customers do not exist. 1.6 Amounts payable under finance leases No data to be disclosed. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1.1 Deposits from banks: product breakdown (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/VALUES 12.31.2017 1. Deposits from central banks 33,576,658 2. Deposits from banks 23,230,358 2.1 Current accounts and demand deposits 4,826,878 2.2 Time deposits 3,812,805 2.3 Loans 14,249,826 2.3.1 repos 7,737,626 2.3.2 other 6,512,200 2.4 Liabilities in respect of commitments to repurchase treasury shares - 2.5 Other liabilities 340,849 Total 56,807,016 Fair value - level 1 - Fair value - level 2 13,896,046 Fair value - level 3 43,033,573 Total fair value 56,929,619 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 624 2018 Annual Report and Accounts · UniCredit 1.2 Breakdown of item 10 “Deposits from banks”: subordinated debt The list of all subordinated debt instruments was presented in Part F - Shareholders’ Equity of 2017 Company financial statements. The subordinated debt recognised in the item “Deposits from banks” amounted to €67 million. 1.3 Breakdown of item 10 “Deposits from banks”: structured debts There were no structured debts. 1.5 Amounts payable under finance leases There were no amounts payable to banks under finance leases. 2.1 Deposits from customers: breakdown by product (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Current accounts and demand deposits 154,551,338 2. Time deposits 1,584,116 3. Loans 35,885,701 3.1 repos 34,489,558 3.2 other 1,396,143 4. Liabilities in respect of commitments to repurchase treasury shares - 5. Other liabilities 5,117,607 Total 197,138,762 Fair value - level 1 - Fair value - level 2 37,732,119 Fair value - level 3 159,325,053 Total fair value 197,057,172 2.2 Breakdown of item 20 “Deposits from customers”: subordinated debt Item “Deposit from customers” included subordinated debt in the amount of €21 million. 2.3 Breakdown of item 20 "Deposits from customers": structured debts There were no structured debts from customers. 2.5 Amounts payable under finance leases There were no amounts payable to customers under finance leases. 3.1 Debt securities in issue: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Listed securities 1. Bonds 57,334,101 30,184,820 30,285,452 107 1.1 structured 1,942,982 - 1,964,090 - 1.2 other 55,391,119 30,184,820 28,321,362 107 2. Other securities 7,611,531 - 1,313,860 6,316,809 2.1 structured 127,570 - 144,446 - 2.2 other 7,483,961 - 1,169,414 6,316,809 Total 64,945,632 30,184,820 31,599,312 6,316,916 Total Level 1, Level 2 and Level 3 68,101,048 3.2 Breakdown of item 30 “Debt securities in issue”: subordinated debt securities This item includes subordinated securities in the amount of €11,591 million. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 624 2018 Annual Report and Accounts · UniCredit 1.2 Breakdown of item 10 “Deposits from banks”: subordinated debt The list of all subordinated debt instruments was presented in Part F - Shareholders’ Equity of 2017 Company financial statements. The subordinated debt recognised in the item “Deposits from banks” amounted to €67 million. 1.3 Breakdown of item 10 “Deposits from banks”: structured debts There were no structured debts. 1.5 Amounts payable under finance leases There were no amounts payable to banks under finance leases. 2.1 Deposits from customers: breakdown by product (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Current accounts and demand deposits 154,551,338 2. Time deposits 1,584,116 3. Loans 35,885,701 3.1 repos 34,489,558 3.2 other 1,396,143 4. Liabilities in respect of commitments to repurchase treasury shares - 5. Other liabilities 5,117,607 Total 197,138,762 Fair value - level 1 - Fair value - level 2 37,732,119 Fair value - level 3 159,325,053 Total fair value 197,057,172 2.2 Breakdown of item 20 “Deposits from customers”: subordinated debt Item “Deposit from customers” included subordinated debt in the amount of €21 million. 2.3 Breakdown of item 20 "Deposits from customers": structured debts There were no structured debts from customers. 2.5 Amounts payable under finance leases There were no amounts payable to customers under finance leases. 3.1 Debt securities in issue: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Listed securities 1. Bonds 57,334,101 30,184,820 30,285,452 107 1.1 structured 1,942,982 - 1,964,090 - 1.2 other 55,391,119 30,184,820 28,321,362 107 2. Other securities 7,611,531 - 1,313,860 6,316,809 2.1 structured 127,570 - 144,446 - 2.2 other 7,483,961 - 1,169,414 6,316,809 Total 64,945,632 30,184,820 31,599,312 6,316,916 Total Level 1, Level 2 and Level 3 68,101,048 3.2 Breakdown of item 30 “Debt securities in issue”: subordinated debt securities This item includes subordinated securities in the amount of €11,591 million. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 624 2018 Annual Report and Accounts · UniCredit 1.2 Breakdown of item 10 “Deposits from banks”: subordinated debt The list of all subordinated debt instruments was presented in Part F - Shareholders’ Equity of 2017 Company financial statements. The subordinated debt recognised in the item “Deposits from banks” amounted to €67 million. 1.3 Breakdown of item 10 “Deposits from banks”: structured debts There were no structured debts. 1.5 Amounts payable under finance leases There were no amounts payable to banks under finance leases. 2.1 Deposits from customers: breakdown by product (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Current accounts and demand deposits 154,551,338 2. Time deposits 1,584,116 3. Loans 35,885,701 3.1 repos 34,489,558 3.2 other 1,396,143 4. Liabilities in respect of commitments to repurchase treasury shares - 5. Other liabilities 5,117,607 Total 197,138,762 Fair value - level 1 - Fair value - level 2 37,732,119 Fair value - level 3 159,325,053 Total fair value 197,057,172 2.2 Breakdown of item 20 “Deposits from customers”: subordinated debt Item “Deposit from customers” included subordinated debt in the amount of €21 million. 2.3 Breakdown of item 20 "Deposits from customers": structured debts There were no structured debts from customers. 2.5 Amounts payable under finance leases There were no amounts payable to customers under finance leases. 3.1 Debt securities in issue: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Listed securities 1. Bonds 57,334,101 30,184,820 30,285,452 107 1.1 structured 1,942,982 - 1,964,090 - 1.2 other 55,391,119 30,184,820 28,321,362 107 2. Other securities 7,611,531 - 1,313,860 6,316,809 2.1 structured 127,570 - 144,446 - 2.2 other 7,483,961 - 1,169,414 6,316,809 Total 64,945,632 30,184,820 31,599,312 6,316,916 Total Level 1, Level 2 and Level 3 68,101,048 3.2 Breakdown of item 30 “Debt securities in issue”: subordinated debt securities This item includes subordinated securities in the amount of €11,591 million. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 624 2018 Annual Report and Accounts · UniCredit 1.2 Breakdown of item 10 “Deposits from banks”: subordinated debt The list of all subordinated debt instruments was presented in Part F - Shareholders’ Equity of 2017 Company financial statements. The subordinated debt recognised in the item “Deposits from banks” amounted to €67 million. 1.3 Breakdown of item 10 “Deposits from banks”: structured debts There were no structured debts. 1.5 Amounts payable under finance leases There were no amounts payable to banks under finance leases. 2.1 Deposits from customers: breakdown by product (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Current accounts and demand deposits 154,551,338 2. Time deposits 1,584,116 3. Loans 35,885,701 3.1 repos 34,489,558 3.2 other 1,396,143 4. Liabilities in respect of commitments to repurchase treasury shares - 5. Other liabilities 5,117,607 Total 197,138,762 Fair value - level 1 - Fair value - level 2 37,732,119 Fair value - level 3 159,325,053 Total fair value 197,057,172 2.2 Breakdown of item 20 “Deposits from customers”: subordinated debt Item “Deposit from customers” included subordinated debt in the amount of €21 million. 2.3 Breakdown of item 20 "Deposits from customers": structured debts There were no structured debts from customers. 2.5 Amounts payable under finance leases There were no amounts payable to customers under finance leases. 3.1 Debt securities in issue: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Listed securities 1. Bonds 57,334,101 30,184,820 30,285,452 107 1.1 structured 1,942,982 - 1,964,090 - 1.2 other 55,391,119 30,184,820 28,321,362 107 2. Other securities 7,611,531 - 1,313,860 6,316,809 2.1 structured 127,570 - 144,446 - 2.2 other 7,483,961 - 1,169,414 6,316,809 Total 64,945,632 30,184,820 31,599,312 6,316,916 Total Level 1, Level 2 and Level 3 68,101,048 3.2 Breakdown of item 30 “Debt securities in issue”: subordinated debt securities This item includes subordinated securities in the amount of €11,591 million. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 624 2018 Annual Report and Accounts · UniCredit 1.2 Breakdown of item 10 “Deposits from banks”: subordinated debt The list of all subordinated debt instruments was presented in Part F - Shareholders’ Equity of 2017 Company financial statements. The subordinated debt recognised in the item “Deposits from banks” amounted to €67 million. 1.3 Breakdown of item 10 “Deposits from banks”: structured debts There were no structured debts. 1.5 Amounts payable under finance leases There were no amounts payable to banks under finance leases. 2.1 Deposits from customers: breakdown by product (€ '000) AMOUNTS AS AT TYPE OF TRANSACTIONS/GROUP COMPONENTS 12.31.2017 1. Current accounts and demand deposits 154,551,338 2. Time deposits 1,584,116 3. Loans 35,885,701 3.1 repos 34,489,558 3.2 other 1,396,143 4. Liabilities in respect of commitments to repurchase treasury shares - 5. Other liabilities 5,117,607 Total 197,138,762 Fair value - level 1 - Fair value - level 2 37,732,119 Fair value - level 3 159,325,053 Total fair value 197,057,172 2.2 Breakdown of item 20 “Deposits from customers”: subordinated debt Item “Deposit from customers” included subordinated debt in the amount of €21 million. 2.3 Breakdown of item 20 "Deposits from customers": structured debts There were no structured debts from customers. 2.5 Amounts payable under finance leases There were no amounts payable to customers under finance leases. 3.1 Debt securities in issue: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 BOOK VALUE FAIR VALUE TYPE OF SECURITIES/VALUES LEVEL 1 LEVEL 2 LEVEL 3 A. Listed securities 1. Bonds 57,334,101 30,184,820 30,285,452 107 1.1 structured 1,942,982 - 1,964,090 - 1.2 other 55,391,119 30,184,820 28,321,362 107 2. Other securities 7,611,531 - 1,313,860 6,316,809 2.1 structured 127,570 - 144,446 - 2.2 other 7,483,961 - 1,169,414 6,316,809 Total 64,945,632 30,184,820 31,599,312 6,316,916 Total Level 1, Level 2 and Level 3 68,101,048 3.2 Breakdown of item 30 “Debt securities in issue”: subordinated debt securities This item includes subordinated securities in the amount of €11,591 million. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 625 Section 2 - Financial liabilities held for trading - Item 20 2.1 Financial liabilities held for trading: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Cash liabilities 1. Deposits from banks - 325,489 - - 325,489 2. Deposits from customers - 4,317,989 - - 4,317,989 3. Debt securities - - - - - 3.1 Bonds - - - - - 3.1.1 Structured - - - - X 3.1.2 Other - - - - X 3.2 Other securities - - - - - 3.2.1 Structured - - - - X 3.2.2 Other - - - - X Total (A) - 4,643,478 - - 4,643,478 B. Derivatives instruments 1. Financial derivatives X 18,290 5,295,491 426,264 X 1.1 Trading derivatives X 18,290 4,803,320 285,204 X 1.2 Linked to fair value option X - 313,414 98,449 X 1.3 Other X - 178,757 42,611 X 2. Credit derivatives X - - - X 2.1 Trading derivatives X - - - X 2.2 Linked to fair value option X - - - X 2.3 Other X - - - X Total (B) X 18,290 5,295,491 426,264 X Total (A+B) X 4,661,768 5,295,491 426,264 X Total Level 1, Level 2 and Level 3 10,383,523 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. “Deposit from banks” and “Deposit from customers” are referred to technical overdrafts in respect of which no nominal amount was attributed. They are fed by the recognition of technical overdrafts typical of primary dealer and market-maker transactions in government bonds. “Financial derivatives: other” comprises: (i) derivatives embedded in structured financial instruments, where the host has been classified in a category different from held-for-trading or fair value option and (ii) derivatives that, for economic purposes, are associated with Banking Book instruments. 2.2 Detail of financial liabilities held for trading: subordinated liabilities Subordinated trading financial liabilities do not exist. 2.3 Detail of financial liabilities held for trading: structured debts Structured trading financial liabilities do not exist. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 625 Section 2 - Financial liabilities held for trading - Item 20 2.1 Financial liabilities held for trading: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Cash liabilities 1. Deposits from banks - 325,489 - - 325,489 2. Deposits from customers - 4,317,989 - - 4,317,989 3. Debt securities - - - - - 3.1 Bonds - - - - - 3.1.1 Structured - - - - X 3.1.2 Other - - - - X 3.2 Other securities - - - - - 3.2.1 Structured - - - - X 3.2.2 Other - - - - X Total (A) - 4,643,478 - - 4,643,478 B. Derivatives instruments 1. Financial derivatives X 18,290 5,295,491 426,264 X 1.1 Trading derivatives X 18,290 4,803,320 285,204 X 1.2 Linked to fair value option X - 313,414 98,449 X 1.3 Other X - 178,757 42,611 X 2. Credit derivatives X - - - X 2.1 Trading derivatives X - - - X 2.2 Linked to fair value option X - - - X 2.3 Other X - - - X Total (B) X 18,290 5,295,491 426,264 X Total (A+B) X 4,661,768 5,295,491 426,264 X Total Level 1, Level 2 and Level 3 10,383,523 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. “Deposit from banks” and “Deposit from customers” are referred to technical overdrafts in respect of which no nominal amount was attributed. They are fed by the recognition of technical overdrafts typical of primary dealer and market-maker transactions in government bonds. “Financial derivatives: other” comprises: (i) derivatives embedded in structured financial instruments, where the host has been classified in a category different from held-for-trading or fair value option and (ii) derivatives that, for economic purposes, are associated with Banking Book instruments. 2.2 Detail of financial liabilities held for trading: subordinated liabilities Subordinated trading financial liabilities do not exist. 2.3 Detail of financial liabilities held for trading: structured debts Structured trading financial liabilities do not exist. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 625 Section 2 - Financial liabilities held for trading - Item 20 2.1 Financial liabilities held for trading: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Cash liabilities 1. Deposits from banks - 325,489 - - 325,489 2. Deposits from customers - 4,317,989 - - 4,317,989 3. Debt securities - - - - - 3.1 Bonds - - - - - 3.1.1 Structured - - - - X 3.1.2 Other - - - - X 3.2 Other securities - - - - - 3.2.1 Structured - - - - X 3.2.2 Other - - - - X Total (A) - 4,643,478 - - 4,643,478 B. Derivatives instruments 1. Financial derivatives X 18,290 5,295,491 426,264 X 1.1 Trading derivatives X 18,290 4,803,320 285,204 X 1.2 Linked to fair value option X - 313,414 98,449 X 1.3 Other X - 178,757 42,611 X 2. Credit derivatives X - - - X 2.1 Trading derivatives X - - - X 2.2 Linked to fair value option X - - - X 2.3 Other X - - - X Total (B) X 18,290 5,295,491 426,264 X Total (A+B) X 4,661,768 5,295,491 426,264 X Total Level 1, Level 2 and Level 3 10,383,523 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. “Deposit from banks” and “Deposit from customers” are referred to technical overdrafts in respect of which no nominal amount was attributed. They are fed by the recognition of technical overdrafts typical of primary dealer and market-maker transactions in government bonds. “Financial derivatives: other” comprises: (i) derivatives embedded in structured financial instruments, where the host has been classified in a category different from held-for-trading or fair value option and (ii) derivatives that, for economic purposes, are associated with Banking Book instruments. 2.2 Detail of financial liabilities held for trading: subordinated liabilities Subordinated trading financial liabilities do not exist. 2.3 Detail of financial liabilities held for trading: structured debts Structured trading financial liabilities do not exist. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 625 Section 2 - Financial liabilities held for trading - Item 20 2.1 Financial liabilities held for trading: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Cash liabilities 1. Deposits from banks - 325,489 - - 325,489 2. Deposits from customers - 4,317,989 - - 4,317,989 3. Debt securities - - - - - 3.1 Bonds - - - - - 3.1.1 Structured - - - - X 3.1.2 Other - - - - X 3.2 Other securities - - - - - 3.2.1 Structured - - - - X 3.2.2 Other - - - - X Total (A) - 4,643,478 - - 4,643,478 B. Derivatives instruments 1. Financial derivatives X 18,290 5,295,491 426,264 X 1.1 Trading derivatives X 18,290 4,803,320 285,204 X 1.2 Linked to fair value option X - 313,414 98,449 X 1.3 Other X - 178,757 42,611 X 2. Credit derivatives X - - - X 2.1 Trading derivatives X - - - X 2.2 Linked to fair value option X - - - X 2.3 Other X - - - X Total (B) X 18,290 5,295,491 426,264 X Total (A+B) X 4,661,768 5,295,491 426,264 X Total Level 1, Level 2 and Level 3 10,383,523 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. “Deposit from banks” and “Deposit from customers” are referred to technical overdrafts in respect of which no nominal amount was attributed. They are fed by the recognition of technical overdrafts typical of primary dealer and market-maker transactions in government bonds. “Financial derivatives: other” comprises: (i) derivatives embedded in structured financial instruments, where the host has been classified in a category different from held-for-trading or fair value option and (ii) derivatives that, for economic purposes, are associated with Banking Book instruments. 2.2 Detail of financial liabilities held for trading: subordinated liabilities Subordinated trading financial liabilities do not exist. 2.3 Detail of financial liabilities held for trading: structured debts Structured trading financial liabilities do not exist. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 625 Section 2 - Financial liabilities held for trading - Item 20 2.1 Financial liabilities held for trading: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Cash liabilities 1. Deposits from banks - 325,489 - - 325,489 2. Deposits from customers - 4,317,989 - - 4,317,989 3. Debt securities - - - - - 3.1 Bonds - - - - - 3.1.1 Structured - - - - X 3.1.2 Other - - - - X 3.2 Other securities - - - - - 3.2.1 Structured - - - - X 3.2.2 Other - - - - X Total (A) - 4,643,478 - - 4,643,478 B. Derivatives instruments 1. Financial derivatives X 18,290 5,295,491 426,264 X 1.1 Trading derivatives X 18,290 4,803,320 285,204 X 1.2 Linked to fair value option X - 313,414 98,449 X 1.3 Other X - 178,757 42,611 X 2. Credit derivatives X - - - X 2.1 Trading derivatives X - - - X 2.2 Linked to fair value option X - - - X 2.3 Other X - - - X Total (B) X 18,290 5,295,491 426,264 X Total (A+B) X 4,661,768 5,295,491 426,264 X Total Level 1, Level 2 and Level 3 10,383,523 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. “Deposit from banks” and “Deposit from customers” are referred to technical overdrafts in respect of which no nominal amount was attributed. They are fed by the recognition of technical overdrafts typical of primary dealer and market-maker transactions in government bonds. “Financial derivatives: other” comprises: (i) derivatives embedded in structured financial instruments, where the host has been classified in a category different from held-for-trading or fair value option and (ii) derivatives that, for economic purposes, are associated with Banking Book instruments. 2.2 Detail of financial liabilities held for trading: subordinated liabilities Subordinated trading financial liabilities do not exist. 2.3 Detail of financial liabilities held for trading: structured debts Structured trading financial liabilities do not exist. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 626 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Financial liabilities held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF TRANSACTIONS/VALUES NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Financial liabilities 1. Deposits from banks - 535,350 - - 535,350 2. Deposits from customers - 6,698,206 - - 6,698,206 3. Debt securities - - - - - 3.1 Bonds - - - - - 3.1.1 Structured - - - - X 3.1.2 Other - - - - X 3.2 Other securities - - - - - 3.2.1 Structured - - - - X 3.2.2 Other - - - - X Total A - 7,233,556 - - 7,233,556 B. Derivatives instruments 1. Financial derivatives X 6,757 5,297,269 530,299 X 1.1 Trading X 6,757 4,865,814 377,596 X 1.2 Related to fair value option X - 202,887 87,732 X 1.3 Other X - 228,568 64,971 X 2. Credit derivatives X - - - X 2.1 Trading derivatives X - - - X 2.2 Related to fair value option X - - - X 2.3 Other X - - - X Total B X 6,757 5,297,269 530,299 X Total A+B X 7,240,313 5,297,269 530,299 X Total Level 1, Level 2 and Level 3 13,067,881 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 626 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Financial liabilities held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF TRANSACTIONS/VALUES NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Financial liabilities 1. Deposits from banks - 535,350 - - 535,350 2. Deposits from customers - 6,698,206 - - 6,698,206 3. Debt securities - - - - - 3.1 Bonds - - - - - 3.1.1 Structured - - - - X 3.1.2 Other - - - - X 3.2 Other securities - - - - - 3.2.1 Structured - - - - X 3.2.2 Other - - - - X Total A - 7,233,556 - - 7,233,556 B. Derivatives instruments 1. Financial derivatives X 6,757 5,297,269 530,299 X 1.1 Trading X 6,757 4,865,814 377,596 X 1.2 Related to fair value option X - 202,887 87,732 X 1.3 Other X - 228,568 64,971 X 2. Credit derivatives X - - - X 2.1 Trading derivatives X - - - X 2.2 Related to fair value option X - - - X 2.3 Other X - - - X Total B X 6,757 5,297,269 530,299 X Total A+B X 7,240,313 5,297,269 530,299 X Total Level 1, Level 2 and Level 3 13,067,881 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 626 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Financial liabilities held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF TRANSACTIONS/VALUES NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Financial liabilities 1. Deposits from banks - 535,350 - - 535,350 2. Deposits from customers - 6,698,206 - - 6,698,206 3. Debt securities - - - - - 3.1 Bonds - - - - - 3.1.1 Structured - - - - X 3.1.2 Other - - - - X 3.2 Other securities - - - - - 3.2.1 Structured - - - - X 3.2.2 Other - - - - X Total A - 7,233,556 - - 7,233,556 B. Derivatives instruments 1. Financial derivatives X 6,757 5,297,269 530,299 X 1.1 Trading X 6,757 4,865,814 377,596 X 1.2 Related to fair value option X - 202,887 87,732 X 1.3 Other X - 228,568 64,971 X 2. Credit derivatives X - - - X 2.1 Trading derivatives X - - - X 2.2 Related to fair value option X - - - X 2.3 Other X - - - X Total B X 6,757 5,297,269 530,299 X Total A+B X 7,240,313 5,297,269 530,299 X Total Level 1, Level 2 and Level 3 13,067,881 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 626 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Financial liabilities held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF TRANSACTIONS/VALUES NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Financial liabilities 1. Deposits from banks - 535,350 - - 535,350 2. Deposits from customers - 6,698,206 - - 6,698,206 3. Debt securities - - - - - 3.1 Bonds - - - - - 3.1.1 Structured - - - - X 3.1.2 Other - - - - X 3.2 Other securities - - - - - 3.2.1 Structured - - - - X 3.2.2 Other - - - - X Total A - 7,233,556 - - 7,233,556 B. Derivatives instruments 1. Financial derivatives X 6,757 5,297,269 530,299 X 1.1 Trading X 6,757 4,865,814 377,596 X 1.2 Related to fair value option X - 202,887 87,732 X 1.3 Other X - 228,568 64,971 X 2. Credit derivatives X - - - X 2.1 Trading derivatives X - - - X 2.2 Related to fair value option X - - - X 2.3 Other X - - - X Total B X 6,757 5,297,269 530,299 X Total A+B X 7,240,313 5,297,269 530,299 X Total Level 1, Level 2 and Level 3 13,067,881 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 626 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Financial liabilities held for trading: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF TRANSACTIONS/VALUES NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 A. Financial liabilities 1. Deposits from banks - 535,350 - - 535,350 2. Deposits from customers - 6,698,206 - - 6,698,206 3. Debt securities - - - - - 3.1 Bonds - - - - - 3.1.1 Structured - - - - X 3.1.2 Other - - - - X 3.2 Other securities - - - - - 3.2.1 Structured - - - - X 3.2.2 Other - - - - X Total A - 7,233,556 - - 7,233,556 B. Derivatives instruments 1. Financial derivatives X 6,757 5,297,269 530,299 X 1.1 Trading X 6,757 4,865,814 377,596 X 1.2 Related to fair value option X - 202,887 87,732 X 1.3 Other X - 228,568 64,971 X 2. Credit derivatives X - - - X 2.1 Trading derivatives X - - - X 2.2 Related to fair value option X - - - X 2.3 Other X - - - X Total B X 6,757 5,297,269 530,299 X Total A+B X 7,240,313 5,297,269 530,299 X Total Level 1, Level 2 and Level 3 13,067,881 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 627 Section 3 - Financial liabilities designated at fair value - Item 30 3.1 Financial liabilities designated at fair value: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 2. Deposits from customers - - - - - 2.1 Structured - - - - X 2.2 Other - - - - X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 3. Debt securities 3,813,522 - 3,534,519 - 3,591,820 3.1 Structured 3,813,522 - 3,534,519 - X 3.2 Other - - - - X Total 3,813,522 - 3,534,519 - 3,591,820 Total Level 1, Level 2 and Level 3 3,534,519 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Item “Debt securities - Structured” includes “Certificates” (structured debt securities) issued by UniCredit S.p.A. starting from the first quarter of 2016 and also €396 million of “Secured mandatorily exchangeable equity-linked certificate” referred to the residual shares in Bank Pekao S.A., after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. occurred in June 2017. These securities are classified as measured at fair value their embedded derivative component not being separable. 3.2 Detail of financial liabilities designated at fair value: subordinated liabilities Subordinated financial liabilities designated at fair value do not exist. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Financial liabilities at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF TRANSACTIONS/VALUES NOMINAL VALUE FAIR VALUE FAIR VALUE(*) LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X 2. Deposits from customers - - - - - 2.1 Structured - - - - X 2.2 Other - - - - X 3. Debt securities 2,698,887 - 2,737,625 - 2,678,873 3.1 Structured 2,698,887 - 2,737,625 - X 3.2 Other - - - - X Total 2,698,887 - 2,737,625 - 2,678,873 Total Level 1, Level 2 and Level 3 2,737,625 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 627 Section 3 - Financial liabilities designated at fair value - Item 30 3.1 Financial liabilities designated at fair value: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 2. Deposits from customers - - - - - 2.1 Structured - - - - X 2.2 Other - - - - X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 3. Debt securities 3,813,522 - 3,534,519 - 3,591,820 3.1 Structured 3,813,522 - 3,534,519 - X 3.2 Other - - - - X Total 3,813,522 - 3,534,519 - 3,591,820 Total Level 1, Level 2 and Level 3 3,534,519 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Item “Debt securities - Structured” includes “Certificates” (structured debt securities) issued by UniCredit S.p.A. starting from the first quarter of 2016 and also €396 million of “Secured mandatorily exchangeable equity-linked certificate” referred to the residual shares in Bank Pekao S.A., after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. occurred in June 2017. These securities are classified as measured at fair value their embedded derivative component not being separable. 3.2 Detail of financial liabilities designated at fair value: subordinated liabilities Subordinated financial liabilities designated at fair value do not exist. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Financial liabilities at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF TRANSACTIONS/VALUES NOMINAL VALUE FAIR VALUE FAIR VALUE(*) LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X 2. Deposits from customers - - - - - 2.1 Structured - - - - X 2.2 Other - - - - X 3. Debt securities 2,698,887 - 2,737,625 - 2,678,873 3.1 Structured 2,698,887 - 2,737,625 - X 3.2 Other - - - - X Total 2,698,887 - 2,737,625 - 2,678,873 Total Level 1, Level 2 and Level 3 2,737,625 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 627 Section 3 - Financial liabilities designated at fair value - Item 30 3.1 Financial liabilities designated at fair value: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 2. Deposits from customers - - - - - 2.1 Structured - - - - X 2.2 Other - - - - X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 3. Debt securities 3,813,522 - 3,534,519 - 3,591,820 3.1 Structured 3,813,522 - 3,534,519 - X 3.2 Other - - - - X Total 3,813,522 - 3,534,519 - 3,591,820 Total Level 1, Level 2 and Level 3 3,534,519 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Item “Debt securities - Structured” includes “Certificates” (structured debt securities) issued by UniCredit S.p.A. starting from the first quarter of 2016 and also €396 million of “Secured mandatorily exchangeable equity-linked certificate” referred to the residual shares in Bank Pekao S.A., after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. occurred in June 2017. These securities are classified as measured at fair value their embedded derivative component not being separable. 3.2 Detail of financial liabilities designated at fair value: subordinated liabilities Subordinated financial liabilities designated at fair value do not exist. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Financial liabilities at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF TRANSACTIONS/VALUES NOMINAL VALUE FAIR VALUE FAIR VALUE(*) LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X 2. Deposits from customers - - - - - 2.1 Structured - - - - X 2.2 Other - - - - X 3. Debt securities 2,698,887 - 2,737,625 - 2,678,873 3.1 Structured 2,698,887 - 2,737,625 - X 3.2 Other - - - - X Total 2,698,887 - 2,737,625 - 2,678,873 Total Level 1, Level 2 and Level 3 2,737,625 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 627 Section 3 - Financial liabilities designated at fair value - Item 30 3.1 Financial liabilities designated at fair value: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 2. Deposits from customers - - - - - 2.1 Structured - - - - X 2.2 Other - - - - X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 3. Debt securities 3,813,522 - 3,534,519 - 3,591,820 3.1 Structured 3,813,522 - 3,534,519 - X 3.2 Other - - - - X Total 3,813,522 - 3,534,519 - 3,591,820 Total Level 1, Level 2 and Level 3 3,534,519 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Item “Debt securities - Structured” includes “Certificates” (structured debt securities) issued by UniCredit S.p.A. starting from the first quarter of 2016 and also €396 million of “Secured mandatorily exchangeable equity-linked certificate” referred to the residual shares in Bank Pekao S.A., after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. occurred in June 2017. These securities are classified as measured at fair value their embedded derivative component not being separable. 3.2 Detail of financial liabilities designated at fair value: subordinated liabilities Subordinated financial liabilities designated at fair value do not exist. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Financial liabilities at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF TRANSACTIONS/VALUES NOMINAL VALUE FAIR VALUE FAIR VALUE(*) LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X 2. Deposits from customers - - - - - 2.1 Structured - - - - X 2.2 Other - - - - X 3. Debt securities 2,698,887 - 2,737,625 - 2,678,873 3.1 Structured 2,698,887 - 2,737,625 - X 3.2 Other - - - - X Total 2,698,887 - 2,737,625 - 2,678,873 Total Level 1, Level 2 and Level 3 2,737,625 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 627 Section 3 - Financial liabilities designated at fair value - Item 30 3.1 Financial liabilities designated at fair value: breakdown by product (€ '000) TYPE OF TRANSACTIONS/VALUES AMOUNTS AS AT 12.31.2018 NOMINAL VALUE FAIR VALUE FAIR VALUE* LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 2. Deposits from customers - - - - - 2.1 Structured - - - - X 2.2 Other - - - - X of which: - loan commitments given - X X X X - financial guarantees given - X X X X 3. Debt securities 3,813,522 - 3,534,519 - 3,591,820 3.1 Structured 3,813,522 - 3,534,519 - X 3.2 Other - - - - X Total 3,813,522 - 3,534,519 - 3,591,820 Total Level 1, Level 2 and Level 3 3,534,519 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Item “Debt securities - Structured” includes “Certificates” (structured debt securities) issued by UniCredit S.p.A. starting from the first quarter of 2016 and also €396 million of “Secured mandatorily exchangeable equity-linked certificate” referred to the residual shares in Bank Pekao S.A., after the sale of the 32.8% stake to Powszechny Zakład Ubezpieczeń S.A. and Polish Development Fund S.A. occurred in June 2017. These securities are classified as measured at fair value their embedded derivative component not being separable. 3.2 Detail of financial liabilities designated at fair value: subordinated liabilities Subordinated financial liabilities designated at fair value do not exist. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 5.1 Financial liabilities at fair value through profit or loss: breakdown by product (€ '000) AMOUNTS AS AT 12.31.2017 TYPE OF TRANSACTIONS/VALUES NOMINAL VALUE FAIR VALUE FAIR VALUE(*) LEVEL 1 LEVEL 2 LEVEL 3 1. Deposits from banks - - - - - 1.1 Structured - - - - X 1.2 Other - - - - X 2. Deposits from customers - - - - - 2.1 Structured - - - - X 2.2 Other - - - - X 3. Debt securities 2,698,887 - 2,737,625 - 2,678,873 3.1 Structured 2,698,887 - 2,737,625 - X 3.2 Other - - - - X Total 2,698,887 - 2,737,625 - 2,678,873 Total Level 1, Level 2 and Level 3 2,737,625 Note: Fair value* = Fair value calculated excluding the value changes due to the change of credit worthiness of the issuer compared to the issue date. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 628 2018 Annual Report and Accounts · UniCredit Section 4 - Hedging derivatives - Item 40 4.1 Hedging derivatives: breakdown by type of hedging and by levels (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 337,751,208 99,485 4,413,864 11,909 256,709,902 29,210 4,529,110 - 1) Fair value 328,086,686 99,485 4,190,160 11,909 250,216,724 29,210 4,368,438 - 2) Cash flows 9,664,522 - 223,704 - 6,493,178 - 160,672 - 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 337,751,208 99,485 4,413,864 11,909 256,709,902 29,210 4,529,110 - Total Level 1, Level 2 and Level 3 4,525,258 4,558,320 4.2 Hedging derivatives: breakdown by hedged portfolios and type of hedging (€ '000) AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW MICRO-HEDGE TRANSACTIONS/HEDGE TYPES DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHER MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE FOREIGN INVESTMENTS 1. Financial assets at fair value through other comprehensive income 921,506 - 9,081 - X X X - X X 2. Financial assets at amortised cost 64,001 X - - X X X - X X 3. Portfolio X X X X X X 2,912,142 X 188,272 X 4. Other transactions - - - - - - X - X - Total assets 985,507 - 9,081 - - - 2,912,142 - 188,272 - 1. Financial liabilities - X - - - - X - X X 2. Portfolio X X X X X X 394,824 X 35,432 X Total liabilities - - - - - - 394,824 - 35,432 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X - X - - Section 5 - Value adjustment of hedged financial liabilities - Item 50 5.1 Changes to hedged financial liabilities (€ '000) AMOUNTS AS AT CHANGES TO HEDGED LIABILITIES/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes to financial liabilities 2,134,393 2,071,614 2. Negative changes to financial liabilities (364,243) (351,243) Total 1,770,150 1,720,371 Section 6 - Tax liabilities - Item 60 See Section 10 of Assets. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 628 2018 Annual Report and Accounts · UniCredit Section 4 - Hedging derivatives - Item 40 4.1 Hedging derivatives: breakdown by type of hedging and by levels (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 337,751,208 99,485 4,413,864 11,909 256,709,902 29,210 4,529,110 - 1) Fair value 328,086,686 99,485 4,190,160 11,909 250,216,724 29,210 4,368,438 - 2) Cash flows 9,664,522 - 223,704 - 6,493,178 - 160,672 - 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 337,751,208 99,485 4,413,864 11,909 256,709,902 29,210 4,529,110 - Total Level 1, Level 2 and Level 3 4,525,258 4,558,320 4.2 Hedging derivatives: breakdown by hedged portfolios and type of hedging (€ '000) AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW MICRO-HEDGE TRANSACTIONS/HEDGE TYPES DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHER MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE FOREIGN INVESTMENTS 1. Financial assets at fair value through other comprehensive income 921,506 - 9,081 - X X X - X X 2. Financial assets at amortised cost 64,001 X - - X X X - X X 3. Portfolio X X X X X X 2,912,142 X 188,272 X 4. Other transactions - - - - - - X - X - Total assets 985,507 - 9,081 - - - 2,912,142 - 188,272 - 1. Financial liabilities - X - - - - X - X X 2. Portfolio X X X X X X 394,824 X 35,432 X Total liabilities - - - - - - 394,824 - 35,432 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X - X - - Section 5 - Value adjustment of hedged financial liabilities - Item 50 5.1 Changes to hedged financial liabilities (€ '000) AMOUNTS AS AT CHANGES TO HEDGED LIABILITIES/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes to financial liabilities 2,134,393 2,071,614 2. Negative changes to financial liabilities (364,243) (351,243) Total 1,770,150 1,720,371 Section 6 - Tax liabilities - Item 60 See Section 10 of Assets. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 628 2018 Annual Report and Accounts · UniCredit Section 4 - Hedging derivatives - Item 40 4.1 Hedging derivatives: breakdown by type of hedging and by levels (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 337,751,208 99,485 4,413,864 11,909 256,709,902 29,210 4,529,110 - 1) Fair value 328,086,686 99,485 4,190,160 11,909 250,216,724 29,210 4,368,438 - 2) Cash flows 9,664,522 - 223,704 - 6,493,178 - 160,672 - 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 337,751,208 99,485 4,413,864 11,909 256,709,902 29,210 4,529,110 - Total Level 1, Level 2 and Level 3 4,525,258 4,558,320 4.2 Hedging derivatives: breakdown by hedged portfolios and type of hedging (€ '000) AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW MICRO-HEDGE TRANSACTIONS/HEDGE TYPES DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHER MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE FOREIGN INVESTMENTS 1. Financial assets at fair value through other comprehensive income 921,506 - 9,081 - X X X - X X 2. Financial assets at amortised cost 64,001 X - - X X X - X X 3. Portfolio X X X X X X 2,912,142 X 188,272 X 4. Other transactions - - - - - - X - X - Total assets 985,507 - 9,081 - - - 2,912,142 - 188,272 - 1. Financial liabilities - X - - - - X - X X 2. Portfolio X X X X X X 394,824 X 35,432 X Total liabilities - - - - - - 394,824 - 35,432 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X - X - - Section 5 - Value adjustment of hedged financial liabilities - Item 50 5.1 Changes to hedged financial liabilities (€ '000) AMOUNTS AS AT CHANGES TO HEDGED LIABILITIES/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes to financial liabilities 2,134,393 2,071,614 2. Negative changes to financial liabilities (364,243) (351,243) Total 1,770,150 1,720,371 Section 6 - Tax liabilities - Item 60 See Section 10 of Assets. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 628 2018 Annual Report and Accounts · UniCredit Section 4 - Hedging derivatives - Item 40 4.1 Hedging derivatives: breakdown by type of hedging and by levels (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 337,751,208 99,485 4,413,864 11,909 256,709,902 29,210 4,529,110 - 1) Fair value 328,086,686 99,485 4,190,160 11,909 250,216,724 29,210 4,368,438 - 2) Cash flows 9,664,522 - 223,704 - 6,493,178 - 160,672 - 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 337,751,208 99,485 4,413,864 11,909 256,709,902 29,210 4,529,110 - Total Level 1, Level 2 and Level 3 4,525,258 4,558,320 4.2 Hedging derivatives: breakdown by hedged portfolios and type of hedging (€ '000) AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW MICRO-HEDGE TRANSACTIONS/HEDGE TYPES DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHER MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE FOREIGN INVESTMENTS 1. Financial assets at fair value through other comprehensive income 921,506 - 9,081 - X X X - X X 2. Financial assets at amortised cost 64,001 X - - X X X - X X 3. Portfolio X X X X X X 2,912,142 X 188,272 X 4. Other transactions - - - - - - X - X - Total assets 985,507 - 9,081 - - - 2,912,142 - 188,272 - 1. Financial liabilities - X - - - - X - X X 2. Portfolio X X X X X X 394,824 X 35,432 X Total liabilities - - - - - - 394,824 - 35,432 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X - X - - Section 5 - Value adjustment of hedged financial liabilities - Item 50 5.1 Changes to hedged financial liabilities (€ '000) AMOUNTS AS AT CHANGES TO HEDGED LIABILITIES/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes to financial liabilities 2,134,393 2,071,614 2. Negative changes to financial liabilities (364,243) (351,243) Total 1,770,150 1,720,371 Section 6 - Tax liabilities - Item 60 See Section 10 of Assets. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 628 2018 Annual Report and Accounts · UniCredit Section 4 - Hedging derivatives - Item 40 4.1 Hedging derivatives: breakdown by type of hedging and by levels (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 A. Financial derivatives 337,751,208 99,485 4,413,864 11,909 256,709,902 29,210 4,529,110 - 1) Fair value 328,086,686 99,485 4,190,160 11,909 250,216,724 29,210 4,368,438 - 2) Cash flows 9,664,522 - 223,704 - 6,493,178 - 160,672 - 3) Net investment in foreign subsidiaries - - - - - - - - B. Credit derivatives - - - - - - - - 1) Fair value - - - - - - - - 2) Cash flows - - - - - - - - Total 337,751,208 99,485 4,413,864 11,909 256,709,902 29,210 4,529,110 - Total Level 1, Level 2 and Level 3 4,525,258 4,558,320 4.2 Hedging derivatives: breakdown by hedged portfolios and type of hedging (€ '000) AMOUNTS AS AT 12.31.2018 FAIR VALUE CASH FLOW MICRO-HEDGE TRANSACTIONS/HEDGE TYPES DEBT SECURITIES AND INTEREST RATES RISK EQUITY INSTRUMENTS AND EQUITY INDICES RISK CURRENCY AND GOLD CREDIT RISK COMMODITIES OTHER MACRO-HEDGE MICRO-HEDGE MACRO-HEDGE FOREIGN INVESTMENTS 1. Financial assets at fair value through other comprehensive income 921,506 - 9,081 - X X X - X X 2. Financial assets at amortised cost 64,001 X - - X X X - X X 3. Portfolio X X X X X X 2,912,142 X 188,272 X 4. Other transactions - - - - - - X - X - Total assets 985,507 - 9,081 - - - 2,912,142 - 188,272 - 1. Financial liabilities - X - - - - X - X X 2. Portfolio X X X X X X 394,824 X 35,432 X Total liabilities - - - - - - 394,824 - 35,432 - 1. Expected transactions X X X X X X X - X X 2. Financial assets and liabilities portfolio X X X X X X - X - - Section 5 - Value adjustment of hedged financial liabilities - Item 50 5.1 Changes to hedged financial liabilities (€ '000) AMOUNTS AS AT CHANGES TO HEDGED LIABILITIES/GROUP COMPONENTS 12.31.2018 12.31.2017 1. Positive changes to financial liabilities 2,134,393 2,071,614 2. Negative changes to financial liabilities (364,243) (351,243) Total 1,770,150 1,720,371 Section 6 - Tax liabilities - Item 60 See Section 10 of Assets. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 629 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 See Section 11 of Assets. Section 8 - Other liabilities - Item 80 8.1 Other liabilities: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Liabilities in respect of financial guarantees issued 2,454 5,724 Impairment: of financial guarantees issued, of credit derivatives, of irrevocable commitments to distribute funds 305,493 Obligations for irrevocable commitments to distribute funds - Accrued expenses and deferred income other than those to be capitalised for the financial liabilities concerned 137,746 100,642 Negative value of management agreements (so-called servicing assets) - Payment agreements based on the value of own capital instruments classified as deposits pursuant to IFRS2 82 3,286 Other liabilities due to employees 1,362,081 1,739,619 Other liabilities due to other staff 38,043 Other liabilities due to Directors and Statutory Auditors 8,644 Interest and amounts to be credited to - - - Customers - - - Banks - - Items in transit between branches and not yet allocated to destination accounts 39,933 35,921 Available amounts to be paid to others - - Items in processing 492,757 384,143 Entries relating to securities transactions 98,624 255,156 Items deemed definitive but not attributable to other lines 3,396,971 3,856,070 - Accounts payable - suppliers 621,940 600,644 - Provisions for tax withholding on accrued interest, bond coupon payments or dividends 1,660 - Other entries 2,773,371 3,255,426 Liabilities for miscellaneous entries related to tax collection service - - Adjustments for unpaid portfolio entries 929,647 - Tax items different from those included in item 60 943,045 969,957 Other entries 167,096 167,812 Total 7,617,123 7,823,823 Item “Accrued expenses and deferred income other than those to be capitalised for the financial liabilities” includes the contract liabilities recognized in accordance with IFRS15. In this context, deferred income represents the portion of performance obligations not yet satisfied through the services provided by the Bank but already settled during the period or in previous periods. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Refer to Section 12 - Other assets for information about the changes in deferred income and accrued expenses occurred in the period. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 629 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 See Section 11 of Assets. Section 8 - Other liabilities - Item 80 8.1 Other liabilities: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Liabilities in respect of financial guarantees issued 2,454 5,724 Impairment: of financial guarantees issued, of credit derivatives, of irrevocable commitments to distribute funds 305,493 Obligations for irrevocable commitments to distribute funds - Accrued expenses and deferred income other than those to be capitalised for the financial liabilities concerned 137,746 100,642 Negative value of management agreements (so-called servicing assets) - Payment agreements based on the value of own capital instruments classified as deposits pursuant to IFRS2 82 3,286 Other liabilities due to employees 1,362,081 1,739,619 Other liabilities due to other staff 38,043 Other liabilities due to Directors and Statutory Auditors 8,644 Interest and amounts to be credited to - - - Customers - - - Banks - - Items in transit between branches and not yet allocated to destination accounts 39,933 35,921 Available amounts to be paid to others - - Items in processing 492,757 384,143 Entries relating to securities transactions 98,624 255,156 Items deemed definitive but not attributable to other lines 3,396,971 3,856,070 - Accounts payable - suppliers 621,940 600,644 - Provisions for tax withholding on accrued interest, bond coupon payments or dividends 1,660 - Other entries 2,773,371 3,255,426 Liabilities for miscellaneous entries related to tax collection service - - Adjustments for unpaid portfolio entries 929,647 - Tax items different from those included in item 60 943,045 969,957 Other entries 167,096 167,812 Total 7,617,123 7,823,823 Item “Accrued expenses and deferred income other than those to be capitalised for the financial liabilities” includes the contract liabilities recognized in accordance with IFRS15. In this context, deferred income represents the portion of performance obligations not yet satisfied through the services provided by the Bank but already settled during the period or in previous periods. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Refer to Section 12 - Other assets for information about the changes in deferred income and accrued expenses occurred in the period. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 629 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 See Section 11 of Assets. Section 8 - Other liabilities - Item 80 8.1 Other liabilities: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Liabilities in respect of financial guarantees issued 2,454 5,724 Impairment: of financial guarantees issued, of credit derivatives, of irrevocable commitments to distribute funds 305,493 Obligations for irrevocable commitments to distribute funds - Accrued expenses and deferred income other than those to be capitalised for the financial liabilities concerned 137,746 100,642 Negative value of management agreements (so-called servicing assets) - Payment agreements based on the value of own capital instruments classified as deposits pursuant to IFRS2 82 3,286 Other liabilities due to employees 1,362,081 1,739,619 Other liabilities due to other staff 38,043 Other liabilities due to Directors and Statutory Auditors 8,644 Interest and amounts to be credited to - - - Customers - - - Banks - - Items in transit between branches and not yet allocated to destination accounts 39,933 35,921 Available amounts to be paid to others - - Items in processing 492,757 384,143 Entries relating to securities transactions 98,624 255,156 Items deemed definitive but not attributable to other lines 3,396,971 3,856,070 - Accounts payable - suppliers 621,940 600,644 - Provisions for tax withholding on accrued interest, bond coupon payments or dividends 1,660 - Other entries 2,773,371 3,255,426 Liabilities for miscellaneous entries related to tax collection service - - Adjustments for unpaid portfolio entries 929,647 - Tax items different from those included in item 60 943,045 969,957 Other entries 167,096 167,812 Total 7,617,123 7,823,823 Item “Accrued expenses and deferred income other than those to be capitalised for the financial liabilities” includes the contract liabilities recognized in accordance with IFRS15. In this context, deferred income represents the portion of performance obligations not yet satisfied through the services provided by the Bank but already settled during the period or in previous periods. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Refer to Section 12 - Other assets for information about the changes in deferred income and accrued expenses occurred in the period. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 629 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 See Section 11 of Assets. Section 8 - Other liabilities - Item 80 8.1 Other liabilities: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Liabilities in respect of financial guarantees issued 2,454 5,724 Impairment: of financial guarantees issued, of credit derivatives, of irrevocable commitments to distribute funds 305,493 Obligations for irrevocable commitments to distribute funds - Accrued expenses and deferred income other than those to be capitalised for the financial liabilities concerned 137,746 100,642 Negative value of management agreements (so-called servicing assets) - Payment agreements based on the value of own capital instruments classified as deposits pursuant to IFRS2 82 3,286 Other liabilities due to employees 1,362,081 1,739,619 Other liabilities due to other staff 38,043 Other liabilities due to Directors and Statutory Auditors 8,644 Interest and amounts to be credited to - - - Customers - - - Banks - - Items in transit between branches and not yet allocated to destination accounts 39,933 35,921 Available amounts to be paid to others - - Items in processing 492,757 384,143 Entries relating to securities transactions 98,624 255,156 Items deemed definitive but not attributable to other lines 3,396,971 3,856,070 - Accounts payable - suppliers 621,940 600,644 - Provisions for tax withholding on accrued interest, bond coupon payments or dividends 1,660 - Other entries 2,773,371 3,255,426 Liabilities for miscellaneous entries related to tax collection service - - Adjustments for unpaid portfolio entries 929,647 - Tax items different from those included in item 60 943,045 969,957 Other entries 167,096 167,812 Total 7,617,123 7,823,823 Item “Accrued expenses and deferred income other than those to be capitalised for the financial liabilities” includes the contract liabilities recognized in accordance with IFRS15. In this context, deferred income represents the portion of performance obligations not yet satisfied through the services provided by the Bank but already settled during the period or in previous periods. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Refer to Section 12 - Other assets for information about the changes in deferred income and accrued expenses occurred in the period. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 629 Section 7 - Liabilities associated with assets classified as held for sale - Item 70 See Section 11 of Assets. Section 8 - Other liabilities - Item 80 8.1 Other liabilities: breakdown (€ '000) AMOUNTS AS AT ITEMS/VALUES 12.31.2018 12.31.2017 Liabilities in respect of financial guarantees issued 2,454 5,724 Impairment: of financial guarantees issued, of credit derivatives, of irrevocable commitments to distribute funds 305,493 Obligations for irrevocable commitments to distribute funds - Accrued expenses and deferred income other than those to be capitalised for the financial liabilities concerned 137,746 100,642 Negative value of management agreements (so-called servicing assets) - Payment agreements based on the value of own capital instruments classified as deposits pursuant to IFRS2 82 3,286 Other liabilities due to employees 1,362,081 1,739,619 Other liabilities due to other staff 38,043 Other liabilities due to Directors and Statutory Auditors 8,644 Interest and amounts to be credited to - - - Customers - - - Banks - - Items in transit between branches and not yet allocated to destination accounts 39,933 35,921 Available amounts to be paid to others - - Items in processing 492,757 384,143 Entries relating to securities transactions 98,624 255,156 Items deemed definitive but not attributable to other lines 3,396,971 3,856,070 - Accounts payable - suppliers 621,940 600,644 - Provisions for tax withholding on accrued interest, bond coupon payments or dividends 1,660 - Other entries 2,773,371 3,255,426 Liabilities for miscellaneous entries related to tax collection service - - Adjustments for unpaid portfolio entries 929,647 - Tax items different from those included in item 60 943,045 969,957 Other entries 167,096 167,812 Total 7,617,123 7,823,823 Item “Accrued expenses and deferred income other than those to be capitalised for the financial liabilities” includes the contract liabilities recognized in accordance with IFRS15. In this context, deferred income represents the portion of performance obligations not yet satisfied through the services provided by the Bank but already settled during the period or in previous periods. The majority of this amount relates to performance obligations expected to be satisfied by the following year end reporting date. Refer to Section 12 - Other assets for information about the changes in deferred income and accrued expenses occurred in the period. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 630 2018 Annual Report and Accounts · UniCredit Section 9 - Provision for employee severance pay - Item 90 The “TFR” provision for Italy-based employee benefits is to be constructed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using ”projected unit credit” method (see Part A.2 - Main Items of the Accounts). 9.1 Provisions for employee severance pay: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 828,450 1,019,713 B. Increases 12,482 14,971 B.1 Provisions for the year 11,102 12,946 B.2 Other increases 1,380 2,025 of which: business combinations - 8 C. Reductions 211,742 206,234 C.1 Severance payments 193,536 184,995 C.2 Other decreases 18,206 21,239 of which: business combinations 3,405 276 D. Closing Balance 629,190 828,450 9.2 Provisions for employee severance pay: other information (€ '000) CHANGES IN 2018 2017 Cost Recognised in P&L: 11,102 12,946 - Current Service Cost 122 - - Interest Cost on the DBO 10,980 12,946 - Settlement (gains)/losses - - - Past Service Cost - - Remeasurement Effects (Gains) Losses Recognised in OCI (14,202) (20,408) Annual weighted average assumptions - Discount rate 1.60% 1.45% - Price inflation 1.20% 1.40% The financial duration of the commitments is 8.7 years; the balance of the negative Revaluation reserves net of tax changed from -€105 million at 31 December 2017 to -€95 million at 31 December 2018. A change of -25 basis points in the discount rate would result in an increase in liabilities of €13,759 thousand (+2.19%); an equivalent increase in the rate, on the other hand, would result in a reduction in liabilities of €13,431 thousand (-2.14%). A change of -25 basis points in the inflation rate would result in a reduction in liabilities of €8,380 thousand (-1.33%); an equivalent increase in the rate, on the other hand, would result in an increase in liabilities of €8,480 thousand (+1.35%). Section 10 - Provisions for risks and charges - Item 100 10.1 Provisions for risks and charges: breakdown (€ '000) AMOUNTS AS AT ITEMS/COMPONENTS 12.31.2018 12.31.2017 1. Provisions for credit risk on commitments and financial guarantees given 491,897 - 2. Provisions for other commitments and other guarantees given - - 3. Pensions and other post-retirement benefit obligations 90,539 77,312 4. Other provisions for risks and charges 1,900,184 1,765,693 4.1 Legal and tax disputes 707,856 585,906 4.2 Staff expenses 382,510 383,191 4.3 Other 809,818 796,596 Total 2,482,620 1,843,005 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 630 2018 Annual Report and Accounts · UniCredit Section 9 - Provision for employee severance pay - Item 90 The “TFR” provision for Italy-based employee benefits is to be constructed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using ”projected unit credit” method (see Part A.2 - Main Items of the Accounts). 9.1 Provisions for employee severance pay: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 828,450 1,019,713 B. Increases 12,482 14,971 B.1 Provisions for the year 11,102 12,946 B.2 Other increases 1,380 2,025 of which: business combinations - 8 C. Reductions 211,742 206,234 C.1 Severance payments 193,536 184,995 C.2 Other decreases 18,206 21,239 of which: business combinations 3,405 276 D. Closing Balance 629,190 828,450 9.2 Provisions for employee severance pay: other information (€ '000) CHANGES IN 2018 2017 Cost Recognised in P&L: 11,102 12,946 - Current Service Cost 122 - - Interest Cost on the DBO 10,980 12,946 - Settlement (gains)/losses - - - Past Service Cost - - Remeasurement Effects (Gains) Losses Recognised in OCI (14,202) (20,408) Annual weighted average assumptions - Discount rate 1.60% 1.45% - Price inflation 1.20% 1.40% The financial duration of the commitments is 8.7 years; the balance of the negative Revaluation reserves net of tax changed from -€105 million at 31 December 2017 to -€95 million at 31 December 2018. A change of -25 basis points in the discount rate would result in an increase in liabilities of €13,759 thousand (+2.19%); an equivalent increase in the rate, on the other hand, would result in a reduction in liabilities of €13,431 thousand (-2.14%). A change of -25 basis points in the inflation rate would result in a reduction in liabilities of €8,380 thousand (-1.33%); an equivalent increase in the rate, on the other hand, would result in an increase in liabilities of €8,480 thousand (+1.35%). Section 10 - Provisions for risks and charges - Item 100 10.1 Provisions for risks and charges: breakdown (€ '000) AMOUNTS AS AT ITEMS/COMPONENTS 12.31.2018 12.31.2017 1. Provisions for credit risk on commitments and financial guarantees given 491,897 - 2. Provisions for other commitments and other guarantees given - - 3. Pensions and other post-retirement benefit obligations 90,539 77,312 4. Other provisions for risks and charges 1,900,184 1,765,693 4.1 Legal and tax disputes 707,856 585,906 4.2 Staff expenses 382,510 383,191 4.3 Other 809,818 796,596 Total 2,482,620 1,843,005 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 630 2018 Annual Report and Accounts · UniCredit Section 9 - Provision for employee severance pay - Item 90 The “TFR” provision for Italy-based employee benefits is to be constructed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using ”projected unit credit” method (see Part A.2 - Main Items of the Accounts). 9.1 Provisions for employee severance pay: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 828,450 1,019,713 B. Increases 12,482 14,971 B.1 Provisions for the year 11,102 12,946 B.2 Other increases 1,380 2,025 of which: business combinations - 8 C. Reductions 211,742 206,234 C.1 Severance payments 193,536 184,995 C.2 Other decreases 18,206 21,239 of which: business combinations 3,405 276 D. Closing Balance 629,190 828,450 9.2 Provisions for employee severance pay: other information (€ '000) CHANGES IN 2018 2017 Cost Recognised in P&L: 11,102 12,946 - Current Service Cost 122 - - Interest Cost on the DBO 10,980 12,946 - Settlement (gains)/losses - - - Past Service Cost - - Remeasurement Effects (Gains) Losses Recognised in OCI (14,202) (20,408) Annual weighted average assumptions - Discount rate 1.60% 1.45% - Price inflation 1.20% 1.40% The financial duration of the commitments is 8.7 years; the balance of the negative Revaluation reserves net of tax changed from -€105 million at 31 December 2017 to -€95 million at 31 December 2018. A change of -25 basis points in the discount rate would result in an increase in liabilities of €13,759 thousand (+2.19%); an equivalent increase in the rate, on the other hand, would result in a reduction in liabilities of €13,431 thousand (-2.14%). A change of -25 basis points in the inflation rate would result in a reduction in liabilities of €8,380 thousand (-1.33%); an equivalent increase in the rate, on the other hand, would result in an increase in liabilities of €8,480 thousand (+1.35%). Section 10 - Provisions for risks and charges - Item 100 10.1 Provisions for risks and charges: breakdown (€ '000) AMOUNTS AS AT ITEMS/COMPONENTS 12.31.2018 12.31.2017 1. Provisions for credit risk on commitments and financial guarantees given 491,897 - 2. Provisions for other commitments and other guarantees given - - 3. Pensions and other post-retirement benefit obligations 90,539 77,312 4. Other provisions for risks and charges 1,900,184 1,765,693 4.1 Legal and tax disputes 707,856 585,906 4.2 Staff expenses 382,510 383,191 4.3 Other 809,818 796,596 Total 2,482,620 1,843,005 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 630 2018 Annual Report and Accounts · UniCredit Section 9 - Provision for employee severance pay - Item 90 The “TFR” provision for Italy-based employee benefits is to be constructed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using ”projected unit credit” method (see Part A.2 - Main Items of the Accounts). 9.1 Provisions for employee severance pay: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 828,450 1,019,713 B. Increases 12,482 14,971 B.1 Provisions for the year 11,102 12,946 B.2 Other increases 1,380 2,025 of which: business combinations - 8 C. Reductions 211,742 206,234 C.1 Severance payments 193,536 184,995 C.2 Other decreases 18,206 21,239 of which: business combinations 3,405 276 D. Closing Balance 629,190 828,450 9.2 Provisions for employee severance pay: other information (€ '000) CHANGES IN 2018 2017 Cost Recognised in P&L: 11,102 12,946 - Current Service Cost 122 - - Interest Cost on the DBO 10,980 12,946 - Settlement (gains)/losses - - - Past Service Cost - - Remeasurement Effects (Gains) Losses Recognised in OCI (14,202) (20,408) Annual weighted average assumptions - Discount rate 1.60% 1.45% - Price inflation 1.20% 1.40% The financial duration of the commitments is 8.7 years; the balance of the negative Revaluation reserves net of tax changed from -€105 million at 31 December 2017 to -€95 million at 31 December 2018. A change of -25 basis points in the discount rate would result in an increase in liabilities of €13,759 thousand (+2.19%); an equivalent increase in the rate, on the other hand, would result in a reduction in liabilities of €13,431 thousand (-2.14%). A change of -25 basis points in the inflation rate would result in a reduction in liabilities of €8,380 thousand (-1.33%); an equivalent increase in the rate, on the other hand, would result in an increase in liabilities of €8,480 thousand (+1.35%). Section 10 - Provisions for risks and charges - Item 100 10.1 Provisions for risks and charges: breakdown (€ '000) AMOUNTS AS AT ITEMS/COMPONENTS 12.31.2018 12.31.2017 1. Provisions for credit risk on commitments and financial guarantees given 491,897 - 2. Provisions for other commitments and other guarantees given - - 3. Pensions and other post-retirement benefit obligations 90,539 77,312 4. Other provisions for risks and charges 1,900,184 1,765,693 4.1 Legal and tax disputes 707,856 585,906 4.2 Staff expenses 382,510 383,191 4.3 Other 809,818 796,596 Total 2,482,620 1,843,005 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 630 2018 Annual Report and Accounts · UniCredit Section 9 - Provision for employee severance pay - Item 90 The “TFR” provision for Italy-based employee benefits is to be constructed as a “post-retirement defined benefit”. It is therefore recognised on the basis of an actuarial estimate of the amount of benefit accrued by employees discounted to present value. This benefit is calculated by an external actuary using ”projected unit credit” method (see Part A.2 - Main Items of the Accounts). 9.1 Provisions for employee severance pay: annual changes (€ '000) CHANGES IN 2018 2017 A. Opening balance 828,450 1,019,713 B. Increases 12,482 14,971 B.1 Provisions for the year 11,102 12,946 B.2 Other increases 1,380 2,025 of which: business combinations - 8 C. Reductions 211,742 206,234 C.1 Severance payments 193,536 184,995 C.2 Other decreases 18,206 21,239 of which: business combinations 3,405 276 D. Closing Balance 629,190 828,450 9.2 Provisions for employee severance pay: other information (€ '000) CHANGES IN 2018 2017 Cost Recognised in P&L: 11,102 12,946 - Current Service Cost 122 - - Interest Cost on the DBO 10,980 12,946 - Settlement (gains)/losses - - - Past Service Cost - - Remeasurement Effects (Gains) Losses Recognised in OCI (14,202) (20,408) Annual weighted average assumptions - Discount rate 1.60% 1.45% - Price inflation 1.20% 1.40% The financial duration of the commitments is 8.7 years; the balance of the negative Revaluation reserves net of tax changed from -€105 million at 31 December 2017 to -€95 million at 31 December 2018. A change of -25 basis points in the discount rate would result in an increase in liabilities of €13,759 thousand (+2.19%); an equivalent increase in the rate, on the other hand, would result in a reduction in liabilities of €13,431 thousand (-2.14%). A change of -25 basis points in the inflation rate would result in a reduction in liabilities of €8,380 thousand (-1.33%); an equivalent increase in the rate, on the other hand, would result in an increase in liabilities of €8,480 thousand (+1.35%). Section 10 - Provisions for risks and charges - Item 100 10.1 Provisions for risks and charges: breakdown (€ '000) AMOUNTS AS AT ITEMS/COMPONENTS 12.31.2018 12.31.2017 1. Provisions for credit risk on commitments and financial guarantees given 491,897 - 2. Provisions for other commitments and other guarantees given - - 3. Pensions and other post-retirement benefit obligations 90,539 77,312 4. Other provisions for risks and charges 1,900,184 1,765,693 4.1 Legal and tax disputes 707,856 585,906 4.2 Staff expenses 382,510 383,191 4.3 Other 809,818 796,596 Total 2,482,620 1,843,005 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 631 To cover liabilities that may result from pending lawsuits (excluding labor disputes, tax cases or credit recovery actions), UniCredit S.p.A. has set aside a provision for risks and charges of €621 million (€478 million at 31 December 2017). More details are included in Part E - Information on risks and risks management policies. 10.2 Provisions for risks and charges: annual changes (€ '000) CHANGES IN 2018 PROVISIONS FOR OTHER OFF-BALANCE SHEET COMMITMENTS AND OTHER GUARANTEES GIVEN PENSION AND POST-RETIREMENT BENEFIT OBLIGATIONS OTHER PROVISIONS FOR RISKS AND CHARGES TOTAL A. Opening Balance - 77,312 1,765,693 1,843,005 B. Increases - 8,644 657,586 666,230 B.1 Provisions for the year - 2,185 656,017 658,202 B.2 Changes due to the passing time - 1,262 187 1,449 B.3 Differences due to discount-rate changes - - 170 170 B.4 Other changes - 5,197 1,212 6,409 of which: business combinations - - - - C. Decreases - (4,583) 523,095 518,512 C.1 Use during the year - - 323,477 323,477 C.2 Differences due to discount-rate changes - - 308 308 C.3 Other changes - (4,583) 199,310 194,727 of which: business combinations - - - - D. Closing balance - 90,539 1,900,184 1,990,723 More details on provisions for commitments and guarantees given are presented into tables 10.3 Provisions for credit risk on commitments and financial guarantees given and 10.4 Provisions on other commitments and other issued guarantees. More details about annual changes for pensions and post-retirement benefit obligation are presented in table 10.5 - Pensions and other postretirement defined benefit obligations. 10.3 Provisions for credit risk on commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 PROVISIONS FOR CREDIT RISK ON COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL Loan commitments given 30,740 11,803 60,188 102,731 Financial guarantees given 35,380 11,842 341,944 389,166 Total 66,120 23,645 402,132 491,897 10.4 Provisions on other commitments and other issued guarantees No data to be disclosed. 10.5 Pensions and other post-retirement defined-benefit obligations 1. Pensions and other post-retirement benefit obligations In respect of Pensions and other post-retirement benefit obligations, the Annexes provide details of Internal Fund movements and include statements of changes in funds with segregated assets pursuant to Art.2117 of the Italian Civil Code, as well as explanatory notes thereto. According to IAS19, obligations arising from defined-benefit plans are determined using the “projected unit credit” method, while segregated assets are measured at fair value. The balance sheet obligation is the result of the deficit/surplus (i.e. the difference between obligations and assets) net of any impacts of the asset ceiling; actuarial gains and losses are recognised in shareholders’ equity and shown in a specific item of revaluation reserves in the financial year in which they are recorded. The actuarial assumptions used to determine obligations vary from country to country and from plan to plan; the discount rate is determined, depending on the currency of denomination of the commitments and the maturity of the liability, by reference to market yields at the balance sheet date on a basket of high quality corporate bonds. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 631 To cover liabilities that may result from pending lawsuits (excluding labor disputes, tax cases or credit recovery actions), UniCredit S.p.A. has set aside a provision for risks and charges of €621 million (€478 million at 31 December 2017). More details are included in Part E - Information on risks and risks management policies. 10.2 Provisions for risks and charges: annual changes (€ '000) CHANGES IN 2018 PROVISIONS FOR OTHER OFF-BALANCE SHEET COMMITMENTS AND OTHER GUARANTEES GIVEN PENSION AND POST-RETIREMENT BENEFIT OBLIGATIONS OTHER PROVISIONS FOR RISKS AND CHARGES TOTAL A. Opening Balance - 77,312 1,765,693 1,843,005 B. Increases - 8,644 657,586 666,230 B.1 Provisions for the year - 2,185 656,017 658,202 B.2 Changes due to the passing time - 1,262 187 1,449 B.3 Differences due to discount-rate changes - - 170 170 B.4 Other changes - 5,197 1,212 6,409 of which: business combinations - - - - C. Decreases - (4,583) 523,095 518,512 C.1 Use during the year - - 323,477 323,477 C.2 Differences due to discount-rate changes - - 308 308 C.3 Other changes - (4,583) 199,310 194,727 of which: business combinations - - - - D. Closing balance - 90,539 1,900,184 1,990,723 More details on provisions for commitments and guarantees given are presented into tables 10.3 Provisions for credit risk on commitments and financial guarantees given and 10.4 Provisions on other commitments and other issued guarantees. More details about annual changes for pensions and post-retirement benefit obligation are presented in table 10.5 - Pensions and other postretirement defined benefit obligations. 10.3 Provisions for credit risk on commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 PROVISIONS FOR CREDIT RISK ON COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL Loan commitments given 30,740 11,803 60,188 102,731 Financial guarantees given 35,380 11,842 341,944 389,166 Total 66,120 23,645 402,132 491,897 10.4 Provisions on other commitments and other issued guarantees No data to be disclosed. 10.5 Pensions and other post-retirement defined-benefit obligations 1. Pensions and other post-retirement benefit obligations In respect of Pensions and other post-retirement benefit obligations, the Annexes provide details of Internal Fund movements and include statements of changes in funds with segregated assets pursuant to Art.2117 of the Italian Civil Code, as well as explanatory notes thereto. According to IAS19, obligations arising from defined-benefit plans are determined using the “projected unit credit” method, while segregated assets are measured at fair value. The balance sheet obligation is the result of the deficit/surplus (i.e. the difference between obligations and assets) net of any impacts of the asset ceiling; actuarial gains and losses are recognised in shareholders’ equity and shown in a specific item of revaluation reserves in the financial year in which they are recorded. The actuarial assumptions used to determine obligations vary from country to country and from plan to plan; the discount rate is determined, depending on the currency of denomination of the commitments and the maturity of the liability, by reference to market yields at the balance sheet date on a basket of high quality corporate bonds. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 631 To cover liabilities that may result from pending lawsuits (excluding labor disputes, tax cases or credit recovery actions), UniCredit S.p.A. has set aside a provision for risks and charges of €621 million (€478 million at 31 December 2017). More details are included in Part E - Information on risks and risks management policies. 10.2 Provisions for risks and charges: annual changes (€ '000) CHANGES IN 2018 PROVISIONS FOR OTHER OFF-BALANCE SHEET COMMITMENTS AND OTHER GUARANTEES GIVEN PENSION AND POST-RETIREMENT BENEFIT OBLIGATIONS OTHER PROVISIONS FOR RISKS AND CHARGES TOTAL A. Opening Balance - 77,312 1,765,693 1,843,005 B. Increases - 8,644 657,586 666,230 B.1 Provisions for the year - 2,185 656,017 658,202 B.2 Changes due to the passing time - 1,262 187 1,449 B.3 Differences due to discount-rate changes - - 170 170 B.4 Other changes - 5,197 1,212 6,409 of which: business combinations - - - - C. Decreases - (4,583) 523,095 518,512 C.1 Use during the year - - 323,477 323,477 C.2 Differences due to discount-rate changes - - 308 308 C.3 Other changes - (4,583) 199,310 194,727 of which: business combinations - - - - D. Closing balance - 90,539 1,900,184 1,990,723 More details on provisions for commitments and guarantees given are presented into tables 10.3 Provisions for credit risk on commitments and financial guarantees given and 10.4 Provisions on other commitments and other issued guarantees. More details about annual changes for pensions and post-retirement benefit obligation are presented in table 10.5 - Pensions and other postretirement defined benefit obligations. 10.3 Provisions for credit risk on commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 PROVISIONS FOR CREDIT RISK ON COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL Loan commitments given 30,740 11,803 60,188 102,731 Financial guarantees given 35,380 11,842 341,944 389,166 Total 66,120 23,645 402,132 491,897 10.4 Provisions on other commitments and other issued guarantees No data to be disclosed. 10.5 Pensions and other post-retirement defined-benefit obligations 1. Pensions and other post-retirement benefit obligations In respect of Pensions and other post-retirement benefit obligations, the Annexes provide details of Internal Fund movements and include statements of changes in funds with segregated assets pursuant to Art.2117 of the Italian Civil Code, as well as explanatory notes thereto. According to IAS19, obligations arising from defined-benefit plans are determined using the “projected unit credit” method, while segregated assets are measured at fair value. The balance sheet obligation is the result of the deficit/surplus (i.e. the difference between obligations and assets) net of any impacts of the asset ceiling; actuarial gains and losses are recognised in shareholders’ equity and shown in a specific item of revaluation reserves in the financial year in which they are recorded. The actuarial assumptions used to determine obligations vary from country to country and from plan to plan; the discount rate is determined, depending on the currency of denomination of the commitments and the maturity of the liability, by reference to market yields at the balance sheet date on a basket of high quality corporate bonds. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 631 To cover liabilities that may result from pending lawsuits (excluding labor disputes, tax cases or credit recovery actions), UniCredit S.p.A. has set aside a provision for risks and charges of €621 million (€478 million at 31 December 2017). More details are included in Part E - Information on risks and risks management policies. 10.2 Provisions for risks and charges: annual changes (€ '000) CHANGES IN 2018 PROVISIONS FOR OTHER OFF-BALANCE SHEET COMMITMENTS AND OTHER GUARANTEES GIVEN PENSION AND POST-RETIREMENT BENEFIT OBLIGATIONS OTHER PROVISIONS FOR RISKS AND CHARGES TOTAL A. Opening Balance - 77,312 1,765,693 1,843,005 B. Increases - 8,644 657,586 666,230 B.1 Provisions for the year - 2,185 656,017 658,202 B.2 Changes due to the passing time - 1,262 187 1,449 B.3 Differences due to discount-rate changes - - 170 170 B.4 Other changes - 5,197 1,212 6,409 of which: business combinations - - - - C. Decreases - (4,583) 523,095 518,512 C.1 Use during the year - - 323,477 323,477 C.2 Differences due to discount-rate changes - - 308 308 C.3 Other changes - (4,583) 199,310 194,727 of which: business combinations - - - - D. Closing balance - 90,539 1,900,184 1,990,723 More details on provisions for commitments and guarantees given are presented into tables 10.3 Provisions for credit risk on commitments and financial guarantees given and 10.4 Provisions on other commitments and other issued guarantees. More details about annual changes for pensions and post-retirement benefit obligation are presented in table 10.5 - Pensions and other postretirement defined benefit obligations. 10.3 Provisions for credit risk on commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 PROVISIONS FOR CREDIT RISK ON COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL Loan commitments given 30,740 11,803 60,188 102,731 Financial guarantees given 35,380 11,842 341,944 389,166 Total 66,120 23,645 402,132 491,897 10.4 Provisions on other commitments and other issued guarantees No data to be disclosed. 10.5 Pensions and other post-retirement defined-benefit obligations 1. Pensions and other post-retirement benefit obligations In respect of Pensions and other post-retirement benefit obligations, the Annexes provide details of Internal Fund movements and include statements of changes in funds with segregated assets pursuant to Art.2117 of the Italian Civil Code, as well as explanatory notes thereto. According to IAS19, obligations arising from defined-benefit plans are determined using the “projected unit credit” method, while segregated assets are measured at fair value. The balance sheet obligation is the result of the deficit/surplus (i.e. the difference between obligations and assets) net of any impacts of the asset ceiling; actuarial gains and losses are recognised in shareholders’ equity and shown in a specific item of revaluation reserves in the financial year in which they are recorded. The actuarial assumptions used to determine obligations vary from country to country and from plan to plan; the discount rate is determined, depending on the currency of denomination of the commitments and the maturity of the liability, by reference to market yields at the balance sheet date on a basket of high quality corporate bonds. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 631 To cover liabilities that may result from pending lawsuits (excluding labor disputes, tax cases or credit recovery actions), UniCredit S.p.A. has set aside a provision for risks and charges of €621 million (€478 million at 31 December 2017). More details are included in Part E - Information on risks and risks management policies. 10.2 Provisions for risks and charges: annual changes (€ '000) CHANGES IN 2018 PROVISIONS FOR OTHER OFF-BALANCE SHEET COMMITMENTS AND OTHER GUARANTEES GIVEN PENSION AND POST-RETIREMENT BENEFIT OBLIGATIONS OTHER PROVISIONS FOR RISKS AND CHARGES TOTAL A. Opening Balance - 77,312 1,765,693 1,843,005 B. Increases - 8,644 657,586 666,230 B.1 Provisions for the year - 2,185 656,017 658,202 B.2 Changes due to the passing time - 1,262 187 1,449 B.3 Differences due to discount-rate changes - - 170 170 B.4 Other changes - 5,197 1,212 6,409 of which: business combinations - - - - C. Decreases - (4,583) 523,095 518,512 C.1 Use during the year - - 323,477 323,477 C.2 Differences due to discount-rate changes - - 308 308 C.3 Other changes - (4,583) 199,310 194,727 of which: business combinations - - - - D. Closing balance - 90,539 1,900,184 1,990,723 More details on provisions for commitments and guarantees given are presented into tables 10.3 Provisions for credit risk on commitments and financial guarantees given and 10.4 Provisions on other commitments and other issued guarantees. More details about annual changes for pensions and post-retirement benefit obligation are presented in table 10.5 - Pensions and other postretirement defined benefit obligations. 10.3 Provisions for credit risk on commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 PROVISIONS FOR CREDIT RISK ON COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL Loan commitments given 30,740 11,803 60,188 102,731 Financial guarantees given 35,380 11,842 341,944 389,166 Total 66,120 23,645 402,132 491,897 10.4 Provisions on other commitments and other issued guarantees No data to be disclosed. 10.5 Pensions and other post-retirement defined-benefit obligations 1. Pensions and other post-retirement benefit obligations In respect of Pensions and other post-retirement benefit obligations, the Annexes provide details of Internal Fund movements and include statements of changes in funds with segregated assets pursuant to Art.2117 of the Italian Civil Code, as well as explanatory notes thereto. According to IAS19, obligations arising from defined-benefit plans are determined using the “projected unit credit” method, while segregated assets are measured at fair value. The balance sheet obligation is the result of the deficit/surplus (i.e. the difference between obligations and assets) net of any impacts of the asset ceiling; actuarial gains and losses are recognised in shareholders’ equity and shown in a specific item of revaluation reserves in the financial year in which they are recorded. The actuarial assumptions used to determine obligations vary from country to country and from plan to plan; the discount rate is determined, depending on the currency of denomination of the commitments and the maturity of the liability, by reference to market yields at the balance sheet date on a basket of high quality corporate bonds. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 632 2018 Annual Report and Accounts · UniCredit In light of evolving common interpretation about “high quality corporate bonds” identification and persisting interest rates decreasing trend, UniCredit refined its Discount Rate setting methodology by limiting the number of “investment grade” bonds whose rating is lower than AA (No.11 securities ranging in 15-30 years maturity), for which an adjustment is made to reduce the excess-return. In addition, a Nelson Siegel methodology has been applied in modelling the yield-curve expressed by the basket of securities (adjusted above 25 years in order to stick the long-term maturity segments of the curve to the Euribor implied-forward rate). The balance of the negative Revaluation reserves net of tax changed from -€91 million at 31 December 2017 to -€100 million at 31 December 2018. 2. Changes of net defined benefit liability/asset and any reimbursement rights 2.1 Breakdown of defined benefit net obligation (€ '000) 12.31.2018 12.31.2017 Current value of the defined benefit obligation 343,963 378,329 Current value of the plan assets (253,630) (301,223) Deficit/(Surplus) 90,333 77,106 Irrecoverable surplus (effect of asset ceiling) - - Net defined benefit liability/(asset) as of the period end date 90,333 77,106 2.2 Changes in defined benefit obligations (€ '000) 12.31.2018 12.31.2017 Initial defined benefit obligation 378,329 405,740 Current service cost 1,111 977 Settlement (gain)/loss 739 - Past service cost 335 - Interest expense on the defined benefit obligation 5,835 5,748 Write-downs for actuarial (gains)/losses on defined benefit plans (2,251) 877 Employees' contributions for defined benefit plans - 12 Disbursements from plan assets (37,185) (32,911) Disbursements directly paid by the fund - (1,454) Settlements (4,538) - Other increases (decreases) 1,588 (660) Net defined benefit liability/(asset) as of the period end date 343,963 378,329 2.3 Changes to plan assets (€ '000) 12.31.2018 12.31.2017 Initial fair value of plan assets 301,223 33,227 Interest income on plan assets 4,642 4,489 Administrative expenses paid from plan assets (69) - Write-downs on the fair value of plan assets for actuarial gains (losses) on the discount rate (14,107) 1,959 Employer contributions 2,194 294,447 Disbursements from plan assets (37,185) (32,911) Settlements (4,538) - Other increases (decreases) 1,470 12 Final fair value of plan assets 253,630 301,223 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 632 2018 Annual Report and Accounts · UniCredit In light of evolving common interpretation about “high quality corporate bonds” identification and persisting interest rates decreasing trend, UniCredit refined its Discount Rate setting methodology by limiting the number of “investment grade” bonds whose rating is lower than AA (No.11 securities ranging in 15-30 years maturity), for which an adjustment is made to reduce the excess-return. In addition, a Nelson Siegel methodology has been applied in modelling the yield-curve expressed by the basket of securities (adjusted above 25 years in order to stick the long-term maturity segments of the curve to the Euribor implied-forward rate). The balance of the negative Revaluation reserves net of tax changed from -€91 million at 31 December 2017 to -€100 million at 31 December 2018. 2. Changes of net defined benefit liability/asset and any reimbursement rights 2.1 Breakdown of defined benefit net obligation (€ '000) 12.31.2018 12.31.2017 Current value of the defined benefit obligation 343,963 378,329 Current value of the plan assets (253,630) (301,223) Deficit/(Surplus) 90,333 77,106 Irrecoverable surplus (effect of asset ceiling) - - Net defined benefit liability/(asset) as of the period end date 90,333 77,106 2.2 Changes in defined benefit obligations (€ '000) 12.31.2018 12.31.2017 Initial defined benefit obligation 378,329 405,740 Current service cost 1,111 977 Settlement (gain)/loss 739 - Past service cost 335 - Interest expense on the defined benefit obligation 5,835 5,748 Write-downs for actuarial (gains)/losses on defined benefit plans (2,251) 877 Employees' contributions for defined benefit plans - 12 Disbursements from plan assets (37,185) (32,911) Disbursements directly paid by the fund - (1,454) Settlements (4,538) - Other increases (decreases) 1,588 (660) Net defined benefit liability/(asset) as of the period end date 343,963 378,329 2.3 Changes to plan assets (€ '000) 12.31.2018 12.31.2017 Initial fair value of plan assets 301,223 33,227 Interest income on plan assets 4,642 4,489 Administrative expenses paid from plan assets (69) - Write-downs on the fair value of plan assets for actuarial gains (losses) on the discount rate (14,107) 1,959 Employer contributions 2,194 294,447 Disbursements from plan assets (37,185) (32,911) Settlements (4,538) - Other increases (decreases) 1,470 12 Final fair value of plan assets 253,630 301,223 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 632 2018 Annual Report and Accounts · UniCredit In light of evolving common interpretation about “high quality corporate bonds” identification and persisting interest rates decreasing trend, UniCredit refined its Discount Rate setting methodology by limiting the number of “investment grade” bonds whose rating is lower than AA (No.11 securities ranging in 15-30 years maturity), for which an adjustment is made to reduce the excess-return. In addition, a Nelson Siegel methodology has been applied in modelling the yield-curve expressed by the basket of securities (adjusted above 25 years in order to stick the long-term maturity segments of the curve to the Euribor implied-forward rate). The balance of the negative Revaluation reserves net of tax changed from -€91 million at 31 December 2017 to -€100 million at 31 December 2018. 2. Changes of net defined benefit liability/asset and any reimbursement rights 2.1 Breakdown of defined benefit net obligation (€ '000) 12.31.2018 12.31.2017 Current value of the defined benefit obligation 343,963 378,329 Current value of the plan assets (253,630) (301,223) Deficit/(Surplus) 90,333 77,106 Irrecoverable surplus (effect of asset ceiling) - - Net defined benefit liability/(asset) as of the period end date 90,333 77,106 2.2 Changes in defined benefit obligations (€ '000) 12.31.2018 12.31.2017 Initial defined benefit obligation 378,329 405,740 Current service cost 1,111 977 Settlement (gain)/loss 739 - Past service cost 335 - Interest expense on the defined benefit obligation 5,835 5,748 Write-downs for actuarial (gains)/losses on defined benefit plans (2,251) 877 Employees' contributions for defined benefit plans - 12 Disbursements from plan assets (37,185) (32,911) Disbursements directly paid by the fund - (1,454) Settlements (4,538) - Other increases (decreases) 1,588 (660) Net defined benefit liability/(asset) as of the period end date 343,963 378,329 2.3 Changes to plan assets (€ '000) 12.31.2018 12.31.2017 Initial fair value of plan assets 301,223 33,227 Interest income on plan assets 4,642 4,489 Administrative expenses paid from plan assets (69) - Write-downs on the fair value of plan assets for actuarial gains (losses) on the discount rate (14,107) 1,959 Employer contributions 2,194 294,447 Disbursements from plan assets (37,185) (32,911) Settlements (4,538) - Other increases (decreases) 1,470 12 Final fair value of plan assets 253,630 301,223 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 632 2018 Annual Report and Accounts · UniCredit In light of evolving common interpretation about “high quality corporate bonds” identification and persisting interest rates decreasing trend, UniCredit refined its Discount Rate setting methodology by limiting the number of “investment grade” bonds whose rating is lower than AA (No.11 securities ranging in 15-30 years maturity), for which an adjustment is made to reduce the excess-return. In addition, a Nelson Siegel methodology has been applied in modelling the yield-curve expressed by the basket of securities (adjusted above 25 years in order to stick the long-term maturity segments of the curve to the Euribor implied-forward rate). The balance of the negative Revaluation reserves net of tax changed from -€91 million at 31 December 2017 to -€100 million at 31 December 2018. 2. Changes of net defined benefit liability/asset and any reimbursement rights 2.1 Breakdown of defined benefit net obligation (€ '000) 12.31.2018 12.31.2017 Current value of the defined benefit obligation 343,963 378,329 Current value of the plan assets (253,630) (301,223) Deficit/(Surplus) 90,333 77,106 Irrecoverable surplus (effect of asset ceiling) - - Net defined benefit liability/(asset) as of the period end date 90,333 77,106 2.2 Changes in defined benefit obligations (€ '000) 12.31.2018 12.31.2017 Initial defined benefit obligation 378,329 405,740 Current service cost 1,111 977 Settlement (gain)/loss 739 - Past service cost 335 - Interest expense on the defined benefit obligation 5,835 5,748 Write-downs for actuarial (gains)/losses on defined benefit plans (2,251) 877 Employees' contributions for defined benefit plans - 12 Disbursements from plan assets (37,185) (32,911) Disbursements directly paid by the fund - (1,454) Settlements (4,538) - Other increases (decreases) 1,588 (660) Net defined benefit liability/(asset) as of the period end date 343,963 378,329 2.3 Changes to plan assets (€ '000) 12.31.2018 12.31.2017 Initial fair value of plan assets 301,223 33,227 Interest income on plan assets 4,642 4,489 Administrative expenses paid from plan assets (69) - Write-downs on the fair value of plan assets for actuarial gains (losses) on the discount rate (14,107) 1,959 Employer contributions 2,194 294,447 Disbursements from plan assets (37,185) (32,911) Settlements (4,538) - Other increases (decreases) 1,470 12 Final fair value of plan assets 253,630 301,223 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 632 2018 Annual Report and Accounts · UniCredit In light of evolving common interpretation about “high quality corporate bonds” identification and persisting interest rates decreasing trend, UniCredit refined its Discount Rate setting methodology by limiting the number of “investment grade” bonds whose rating is lower than AA (No.11 securities ranging in 15-30 years maturity), for which an adjustment is made to reduce the excess-return. In addition, a Nelson Siegel methodology has been applied in modelling the yield-curve expressed by the basket of securities (adjusted above 25 years in order to stick the long-term maturity segments of the curve to the Euribor implied-forward rate). The balance of the negative Revaluation reserves net of tax changed from -€91 million at 31 December 2017 to -€100 million at 31 December 2018. 2. Changes of net defined benefit liability/asset and any reimbursement rights 2.1 Breakdown of defined benefit net obligation (€ '000) 12.31.2018 12.31.2017 Current value of the defined benefit obligation 343,963 378,329 Current value of the plan assets (253,630) (301,223) Deficit/(Surplus) 90,333 77,106 Irrecoverable surplus (effect of asset ceiling) - - Net defined benefit liability/(asset) as of the period end date 90,333 77,106 2.2 Changes in defined benefit obligations (€ '000) 12.31.2018 12.31.2017 Initial defined benefit obligation 378,329 405,740 Current service cost 1,111 977 Settlement (gain)/loss 739 - Past service cost 335 - Interest expense on the defined benefit obligation 5,835 5,748 Write-downs for actuarial (gains)/losses on defined benefit plans (2,251) 877 Employees' contributions for defined benefit plans - 12 Disbursements from plan assets (37,185) (32,911) Disbursements directly paid by the fund - (1,454) Settlements (4,538) - Other increases (decreases) 1,588 (660) Net defined benefit liability/(asset) as of the period end date 343,963 378,329 2.3 Changes to plan assets (€ '000) 12.31.2018 12.31.2017 Initial fair value of plan assets 301,223 33,227 Interest income on plan assets 4,642 4,489 Administrative expenses paid from plan assets (69) - Write-downs on the fair value of plan assets for actuarial gains (losses) on the discount rate (14,107) 1,959 Employer contributions 2,194 294,447 Disbursements from plan assets (37,185) (32,911) Settlements (4,538) - Other increases (decreases) 1,470 12 Final fair value of plan assets 253,630 301,223 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 633 3. Main plan asset classes (€ '000) 12.31.2018 12.31.2017 1. Shares 26,778 32,186 2. Bonds 190,787 191,523 3. Units in investment funds 9,136 - 4. Real estate properties 2,056 1,865 5. Derivative instruments - - 6. Other assets 24,874 75,649 Total 253,631 301,223 4. Significant actuarial assumptions used to determine the current value of defined benefit obligation (€ '000) 12.31.2018 12.31.2017 % % Discount rate 1.62 1.60 Expected return on plan assets 1.62 1.60 Expected compensation increase rate 1.51 1.15 Future increases relating to pension treatments 1.12 1.21 Expected inflation rate 1.46 1.67 5. Impact of changes in financial/demographic assumptions on DBOs and financial duration (€ '000) 12.31.2018 - Impact of changes in financial/demographic assumptions on DBOs A. Discount rate A1. -25 basis points 7,829 2.28% A2. +25 basis points (7,478) -2.17% B. Future increase rate relating to pension treatments B1. -25 basis points (4,871) -1.42% B2. +25 basis points 5,046 1.47% C. Mortality C.1 Life expectancy + 1 year 18,282 5.32% - Financial duration (years) 8.9 10.6 Provisions for risks and charges - other provisions (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 4.3 Other provisions for risks and charges - other Real estate risks/charges - - Restructuring costs - - Allowances payable to agents 2,540 2,047 Disputes regarding financial instruments and derivatives 6,595 6,795 Costs for liabilities arising from equity investment disposals 186,752 168,112 Other 613,931 619,642 Total 809,818 796,596 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 633 3. Main plan asset classes (€ '000) 12.31.2018 12.31.2017 1. Shares 26,778 32,186 2. Bonds 190,787 191,523 3. Units in investment funds 9,136 - 4. Real estate properties 2,056 1,865 5. Derivative instruments - - 6. Other assets 24,874 75,649 Total 253,631 301,223 4. Significant actuarial assumptions used to determine the current value of defined benefit obligation (€ '000) 12.31.2018 12.31.2017 % % Discount rate 1.62 1.60 Expected return on plan assets 1.62 1.60 Expected compensation increase rate 1.51 1.15 Future increases relating to pension treatments 1.12 1.21 Expected inflation rate 1.46 1.67 5. Impact of changes in financial/demographic assumptions on DBOs and financial duration (€ '000) 12.31.2018 - Impact of changes in financial/demographic assumptions on DBOs A. Discount rate A1. -25 basis points 7,829 2.28% A2. +25 basis points (7,478) -2.17% B. Future increase rate relating to pension treatments B1. -25 basis points (4,871) -1.42% B2. +25 basis points 5,046 1.47% C. Mortality C.1 Life expectancy + 1 year 18,282 5.32% - Financial duration (years) 8.9 10.6 Provisions for risks and charges - other provisions (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 4.3 Other provisions for risks and charges - other Real estate risks/charges - - Restructuring costs - - Allowances payable to agents 2,540 2,047 Disputes regarding financial instruments and derivatives 6,595 6,795 Costs for liabilities arising from equity investment disposals 186,752 168,112 Other 613,931 619,642 Total 809,818 796,596 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 633 3. Main plan asset classes (€ '000) 12.31.2018 12.31.2017 1. Shares 26,778 32,186 2. Bonds 190,787 191,523 3. Units in investment funds 9,136 - 4. Real estate properties 2,056 1,865 5. Derivative instruments - - 6. Other assets 24,874 75,649 Total 253,631 301,223 4. Significant actuarial assumptions used to determine the current value of defined benefit obligation (€ '000) 12.31.2018 12.31.2017 % % Discount rate 1.62 1.60 Expected return on plan assets 1.62 1.60 Expected compensation increase rate 1.51 1.15 Future increases relating to pension treatments 1.12 1.21 Expected inflation rate 1.46 1.67 5. Impact of changes in financial/demographic assumptions on DBOs and financial duration (€ '000) 12.31.2018 - Impact of changes in financial/demographic assumptions on DBOs A. Discount rate A1. -25 basis points 7,829 2.28% A2. +25 basis points (7,478) -2.17% B. Future increase rate relating to pension treatments B1. -25 basis points (4,871) -1.42% B2. +25 basis points 5,046 1.47% C. Mortality C.1 Life expectancy + 1 year 18,282 5.32% - Financial duration (years) 8.9 10.6 Provisions for risks and charges - other provisions (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 4.3 Other provisions for risks and charges - other Real estate risks/charges - - Restructuring costs - - Allowances payable to agents 2,540 2,047 Disputes regarding financial instruments and derivatives 6,595 6,795 Costs for liabilities arising from equity investment disposals 186,752 168,112 Other 613,931 619,642 Total 809,818 796,596 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 633 3. Main plan asset classes (€ '000) 12.31.2018 12.31.2017 1. Shares 26,778 32,186 2. Bonds 190,787 191,523 3. Units in investment funds 9,136 - 4. Real estate properties 2,056 1,865 5. Derivative instruments - - 6. Other assets 24,874 75,649 Total 253,631 301,223 4. Significant actuarial assumptions used to determine the current value of defined benefit obligation (€ '000) 12.31.2018 12.31.2017 % % Discount rate 1.62 1.60 Expected return on plan assets 1.62 1.60 Expected compensation increase rate 1.51 1.15 Future increases relating to pension treatments 1.12 1.21 Expected inflation rate 1.46 1.67 5. Impact of changes in financial/demographic assumptions on DBOs and financial duration (€ '000) 12.31.2018 - Impact of changes in financial/demographic assumptions on DBOs A. Discount rate A1. -25 basis points 7,829 2.28% A2. +25 basis points (7,478) -2.17% B. Future increase rate relating to pension treatments B1. -25 basis points (4,871) -1.42% B2. +25 basis points 5,046 1.47% C. Mortality C.1 Life expectancy + 1 year 18,282 5.32% - Financial duration (years) 8.9 10.6 Provisions for risks and charges - other provisions (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 4.3 Other provisions for risks and charges - other Real estate risks/charges - - Restructuring costs - - Allowances payable to agents 2,540 2,047 Disputes regarding financial instruments and derivatives 6,595 6,795 Costs for liabilities arising from equity investment disposals 186,752 168,112 Other 613,931 619,642 Total 809,818 796,596 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 633 3. Main plan asset classes (€ '000) 12.31.2018 12.31.2017 1. Shares 26,778 32,186 2. Bonds 190,787 191,523 3. Units in investment funds 9,136 - 4. Real estate properties 2,056 1,865 5. Derivative instruments - - 6. Other assets 24,874 75,649 Total 253,631 301,223 4. Significant actuarial assumptions used to determine the current value of defined benefit obligation (€ '000) 12.31.2018 12.31.2017 % % Discount rate 1.62 1.60 Expected return on plan assets 1.62 1.60 Expected compensation increase rate 1.51 1.15 Future increases relating to pension treatments 1.12 1.21 Expected inflation rate 1.46 1.67 5. Impact of changes in financial/demographic assumptions on DBOs and financial duration (€ '000) 12.31.2018 - Impact of changes in financial/demographic assumptions on DBOs A. Discount rate A1. -25 basis points 7,829 2.28% A2. +25 basis points (7,478) -2.17% B. Future increase rate relating to pension treatments B1. -25 basis points (4,871) -1.42% B2. +25 basis points 5,046 1.47% C. Mortality C.1 Life expectancy + 1 year 18,282 5.32% - Financial duration (years) 8.9 10.6 Provisions for risks and charges - other provisions (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 4.3 Other provisions for risks and charges - other Real estate risks/charges - - Restructuring costs - - Allowances payable to agents 2,540 2,047 Disputes regarding financial instruments and derivatives 6,595 6,795 Costs for liabilities arising from equity investment disposals 186,752 168,112 Other 613,931 619,642 Total 809,818 796,596 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 634 2018 Annual Report and Accounts · UniCredit Other Provisions include: • the ones posted in order to cope with the probable risks of loss related to the repurchases of diamonds, that could be carried out under action of “customer care” promoted by the Bank. To complete the information more details are included in Part E - Information about risks and hedging policies - Other claims by customers; • those referring to cover the risks related to certain standard contractual terms contained in the documentary frameworks (i.e. reps & warranties), including securitization transactions signed with the SPVs, of which UniCredit S.p.A. is Originator, pending the analysis and assessments to be completed within the deadlines established. Section 11 - Redeemable shares - Item 120 No data to be disclosed in this section. Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 Further information about shareholders’ equity are disclosed in Part F - Shareholders’ equity. 12.1 "Share capital" and "treasury shares": breakdown (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ISSUED SHARES UNDERWRITTEN SHARES ISSUED SHARES UNDERWRITTEN SHARES A. Share capital A.1 Ordinary shares 20,940,398 - 20,878,182 - A.2 Savings shares - - 2,368 - Total A 20,940,398 - 20,880,550 - B. Treasury shares B.1 Ordinary shares (2,440) - (2,440) - B.2 Savings shares - - - - Total B (2,440) - (2,440) - In 2018 share capital, which at 31 December 2017 was represented by No.2,225,692,806 ordinary shares and No.252,489 savings shares with no per-share face value, changed due to the reasons illustrated in the paragraph “Capital Strengthening concerning share capital” of the “Report on Operations” and summarized below: • on 12 March 2018, the mandatory conversion of savings shares into ordinary shares, approved by the Extraordinary Shareholders' Meeting and by the Special Meeting of Savings Shareholders on 4 December 2017, became effective. The conversion of the No.252,489 outstanding savings shares involved the issue of No.964,507 new ordinary shares with regular economic rights according to the conversion ratio of 3.82 ordinary shares for each savings share converted; the conversion did not involve variation of the overall share capital value. • on 7 February 2018 UniCredit’s Board of Directors resolved a free share capital increase by €59 million by issuing No.3,519,352 ordinary shares to be granted to the employees of UniCredit and of Group banks and companies executed through the concurrent withdrawal from the specifically constituted "Reserves related to the medium-term incentive program for Group staff”. As a result of the above at 31 December 2018 the share capital of UniCredit S.p.A. amounts to €20,940 million represented by No.2,230,176,665 ordinary shares with no nominal value. The number of treasury shares outstanding was No.4,760 ordinary shares, unchanged with respect to 2017. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 634 2018 Annual Report and Accounts · UniCredit Other Provisions include: • the ones posted in order to cope with the probable risks of loss related to the repurchases of diamonds, that could be carried out under action of “customer care” promoted by the Bank. To complete the information more details are included in Part E - Information about risks and hedging policies - Other claims by customers; • those referring to cover the risks related to certain standard contractual terms contained in the documentary frameworks (i.e. reps & warranties), including securitization transactions signed with the SPVs, of which UniCredit S.p.A. is Originator, pending the analysis and assessments to be completed within the deadlines established. Section 11 - Redeemable shares - Item 120 No data to be disclosed in this section. Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 Further information about shareholders’ equity are disclosed in Part F - Shareholders’ equity. 12.1 "Share capital" and "treasury shares": breakdown (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ISSUED SHARES UNDERWRITTEN SHARES ISSUED SHARES UNDERWRITTEN SHARES A. Share capital A.1 Ordinary shares 20,940,398 - 20,878,182 - A.2 Savings shares - - 2,368 - Total A 20,940,398 - 20,880,550 - B. Treasury shares B.1 Ordinary shares (2,440) - (2,440) - B.2 Savings shares - - - - Total B (2,440) - (2,440) - In 2018 share capital, which at 31 December 2017 was represented by No.2,225,692,806 ordinary shares and No.252,489 savings shares with no per-share face value, changed due to the reasons illustrated in the paragraph “Capital Strengthening concerning share capital” of the “Report on Operations” and summarized below: • on 12 March 2018, the mandatory conversion of savings shares into ordinary shares, approved by the Extraordinary Shareholders' Meeting and by the Special Meeting of Savings Shareholders on 4 December 2017, became effective. The conversion of the No.252,489 outstanding savings shares involved the issue of No.964,507 new ordinary shares with regular economic rights according to the conversion ratio of 3.82 ordinary shares for each savings share converted; the conversion did not involve variation of the overall share capital value. • on 7 February 2018 UniCredit’s Board of Directors resolved a free share capital increase by €59 million by issuing No.3,519,352 ordinary shares to be granted to the employees of UniCredit and of Group banks and companies executed through the concurrent withdrawal from the specifically constituted "Reserves related to the medium-term incentive program for Group staff”. As a result of the above at 31 December 2018 the share capital of UniCredit S.p.A. amounts to €20,940 million represented by No.2,230,176,665 ordinary shares with no nominal value. The number of treasury shares outstanding was No.4,760 ordinary shares, unchanged with respect to 2017. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 634 2018 Annual Report and Accounts · UniCredit Other Provisions include: • the ones posted in order to cope with the probable risks of loss related to the repurchases of diamonds, that could be carried out under action of “customer care” promoted by the Bank. To complete the information more details are included in Part E - Information about risks and hedging policies - Other claims by customers; • those referring to cover the risks related to certain standard contractual terms contained in the documentary frameworks (i.e. reps & warranties), including securitization transactions signed with the SPVs, of which UniCredit S.p.A. is Originator, pending the analysis and assessments to be completed within the deadlines established. Section 11 - Redeemable shares - Item 120 No data to be disclosed in this section. Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 Further information about shareholders’ equity are disclosed in Part F - Shareholders’ equity. 12.1 "Share capital" and "treasury shares": breakdown (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ISSUED SHARES UNDERWRITTEN SHARES ISSUED SHARES UNDERWRITTEN SHARES A. Share capital A.1 Ordinary shares 20,940,398 - 20,878,182 - A.2 Savings shares - - 2,368 - Total A 20,940,398 - 20,880,550 - B. Treasury shares B.1 Ordinary shares (2,440) - (2,440) - B.2 Savings shares - - - - Total B (2,440) - (2,440) - In 2018 share capital, which at 31 December 2017 was represented by No.2,225,692,806 ordinary shares and No.252,489 savings shares with no per-share face value, changed due to the reasons illustrated in the paragraph “Capital Strengthening concerning share capital” of the “Report on Operations” and summarized below: • on 12 March 2018, the mandatory conversion of savings shares into ordinary shares, approved by the Extraordinary Shareholders' Meeting and by the Special Meeting of Savings Shareholders on 4 December 2017, became effective. The conversion of the No.252,489 outstanding savings shares involved the issue of No.964,507 new ordinary shares with regular economic rights according to the conversion ratio of 3.82 ordinary shares for each savings share converted; the conversion did not involve variation of the overall share capital value. • on 7 February 2018 UniCredit’s Board of Directors resolved a free share capital increase by €59 million by issuing No.3,519,352 ordinary shares to be granted to the employees of UniCredit and of Group banks and companies executed through the concurrent withdrawal from the specifically constituted "Reserves related to the medium-term incentive program for Group staff”. As a result of the above at 31 December 2018 the share capital of UniCredit S.p.A. amounts to €20,940 million represented by No.2,230,176,665 ordinary shares with no nominal value. The number of treasury shares outstanding was No.4,760 ordinary shares, unchanged with respect to 2017. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 634 2018 Annual Report and Accounts · UniCredit Other Provisions include: • the ones posted in order to cope with the probable risks of loss related to the repurchases of diamonds, that could be carried out under action of “customer care” promoted by the Bank. To complete the information more details are included in Part E - Information about risks and hedging policies - Other claims by customers; • those referring to cover the risks related to certain standard contractual terms contained in the documentary frameworks (i.e. reps & warranties), including securitization transactions signed with the SPVs, of which UniCredit S.p.A. is Originator, pending the analysis and assessments to be completed within the deadlines established. Section 11 - Redeemable shares - Item 120 No data to be disclosed in this section. Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 Further information about shareholders’ equity are disclosed in Part F - Shareholders’ equity. 12.1 "Share capital" and "treasury shares": breakdown (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ISSUED SHARES UNDERWRITTEN SHARES ISSUED SHARES UNDERWRITTEN SHARES A. Share capital A.1 Ordinary shares 20,940,398 - 20,878,182 - A.2 Savings shares - - 2,368 - Total A 20,940,398 - 20,880,550 - B. Treasury shares B.1 Ordinary shares (2,440) - (2,440) - B.2 Savings shares - - - - Total B (2,440) - (2,440) - In 2018 share capital, which at 31 December 2017 was represented by No.2,225,692,806 ordinary shares and No.252,489 savings shares with no per-share face value, changed due to the reasons illustrated in the paragraph “Capital Strengthening concerning share capital” of the “Report on Operations” and summarized below: • on 12 March 2018, the mandatory conversion of savings shares into ordinary shares, approved by the Extraordinary Shareholders' Meeting and by the Special Meeting of Savings Shareholders on 4 December 2017, became effective. The conversion of the No.252,489 outstanding savings shares involved the issue of No.964,507 new ordinary shares with regular economic rights according to the conversion ratio of 3.82 ordinary shares for each savings share converted; the conversion did not involve variation of the overall share capital value. • on 7 February 2018 UniCredit’s Board of Directors resolved a free share capital increase by €59 million by issuing No.3,519,352 ordinary shares to be granted to the employees of UniCredit and of Group banks and companies executed through the concurrent withdrawal from the specifically constituted "Reserves related to the medium-term incentive program for Group staff”. As a result of the above at 31 December 2018 the share capital of UniCredit S.p.A. amounts to €20,940 million represented by No.2,230,176,665 ordinary shares with no nominal value. The number of treasury shares outstanding was No.4,760 ordinary shares, unchanged with respect to 2017. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 634 2018 Annual Report and Accounts · UniCredit Other Provisions include: • the ones posted in order to cope with the probable risks of loss related to the repurchases of diamonds, that could be carried out under action of “customer care” promoted by the Bank. To complete the information more details are included in Part E - Information about risks and hedging policies - Other claims by customers; • those referring to cover the risks related to certain standard contractual terms contained in the documentary frameworks (i.e. reps & warranties), including securitization transactions signed with the SPVs, of which UniCredit S.p.A. is Originator, pending the analysis and assessments to be completed within the deadlines established. Section 11 - Redeemable shares - Item 120 No data to be disclosed in this section. Section 12 - Shareholders’ equity - Item 110, 130, 140, 150, 160, 170 and 180 Further information about shareholders’ equity are disclosed in Part F - Shareholders’ equity. 12.1 "Share capital" and "treasury shares": breakdown (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS AS AT 12.31.2017 ISSUED SHARES UNDERWRITTEN SHARES ISSUED SHARES UNDERWRITTEN SHARES A. Share capital A.1 Ordinary shares 20,940,398 - 20,878,182 - A.2 Savings shares - - 2,368 - Total A 20,940,398 - 20,880,550 - B. Treasury shares B.1 Ordinary shares (2,440) - (2,440) - B.2 Savings shares - - - - Total B (2,440) - (2,440) - In 2018 share capital, which at 31 December 2017 was represented by No.2,225,692,806 ordinary shares and No.252,489 savings shares with no per-share face value, changed due to the reasons illustrated in the paragraph “Capital Strengthening concerning share capital” of the “Report on Operations” and summarized below: • on 12 March 2018, the mandatory conversion of savings shares into ordinary shares, approved by the Extraordinary Shareholders' Meeting and by the Special Meeting of Savings Shareholders on 4 December 2017, became effective. The conversion of the No.252,489 outstanding savings shares involved the issue of No.964,507 new ordinary shares with regular economic rights according to the conversion ratio of 3.82 ordinary shares for each savings share converted; the conversion did not involve variation of the overall share capital value. • on 7 February 2018 UniCredit’s Board of Directors resolved a free share capital increase by €59 million by issuing No.3,519,352 ordinary shares to be granted to the employees of UniCredit and of Group banks and companies executed through the concurrent withdrawal from the specifically constituted "Reserves related to the medium-term incentive program for Group staff”. As a result of the above at 31 December 2018 the share capital of UniCredit S.p.A. amounts to €20,940 million represented by No.2,230,176,665 ordinary shares with no nominal value. The number of treasury shares outstanding was No.4,760 ordinary shares, unchanged with respect to 2017. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 635 12.2 Share capital - Number of shares: annual changes CHANGES IN 2018 ITEMS/TYPES ORDINARY SAVINGS A. Issued shares as at the beginning of the year 2,225,692,806 252,489 - Fully paid 2,225,692,806 252,489 - Not fully paid - - A.1 Treasury shares (-) (4,760) - A.2 Shares outstanding: opening balance 2,225,688,046 252,489 B. Increases 4,483,859 - B.1 New issues 4,483,859 - - Against payment - - - Business combinations - - - Bonds converted - - - Warrants exercised - - - Other - - - Free 4,483,859 - - To employees 3,519,352 - - To directors - - - Other 964,507 - B.2 Sales of treasury shares - - B.3 Other changes - - C. Decreases - 252,489 C.1 Cancellation - - C.2 Purchase of treasury shares - 252,489 C.3 Business tranferred - - C.4 Other changes - - of which: business combinations - - D. Shares outstanding: closing balance 2,230,171,905 - D.1 Treasury shares (+) 4,760 - D.2 Shares outstanding as at the end of the year 2,230,176,665 - - Fully paid 2,230,176,665 - - Not fully paid - - The amount reported in item C.2 "Purchase of treasury shares" refer to mandatory conversion of savings shares into ordinary shares carried out on 12 march 2018, which involved the issue of n. 964.507new ordinary shares.reported in the item B.1 "New issues”. 12.3 Capital: other information Pursuant to the resolution passed by the Extraordinary Shareholders' Meeting on 15 December 2011, ordinary shares have no face value. Outstanding ordinary shares relating to the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” amount to No.9,675,640 (issued in the context of the January 2009 capital increase) provides for Euribor-linked discretionary payments contingent on the payment of dividends on ordinary shares. The voting right cannot be exercised on these shares. 12.4 Reserves from allocation of profit: other information (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Legal Reserve 1,517,514 1,517,514 Statutory Reserve 6,160,551 679,464 Other Reserves (2,228,195) 569,268 Total 5,449,870 2,766,246 The Legal reserve includes also €2,683 million constituted, as resolved by the approval of the Ordinary Shareholders’ Meeting of 11 May 2013, 13 May 2014 and 14 April 2016 with the withdrawal from the Share premium Reserve and therefore it is not classified among Reserves from allocation of profit. Other reserves include the negative impact from adoption of IFRS9 attributable to the effects of reclassification and measurement of financial instruments. 12.5 Equity instruments: composition and annual changes The item is entirely composed by five Additional Tier 1 issuances placed between 2014 and 2017. During the year no changes occurred. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 635 12.2 Share capital - Number of shares: annual changes CHANGES IN 2018 ITEMS/TYPES ORDINARY SAVINGS A. Issued shares as at the beginning of the year 2,225,692,806 252,489 - Fully paid 2,225,692,806 252,489 - Not fully paid - - A.1 Treasury shares (-) (4,760) - A.2 Shares outstanding: opening balance 2,225,688,046 252,489 B. Increases 4,483,859 - B.1 New issues 4,483,859 - - Against payment - - - Business combinations - - - Bonds converted - - - Warrants exercised - - - Other - - - Free 4,483,859 - - To employees 3,519,352 - - To directors - - - Other 964,507 - B.2 Sales of treasury shares - - B.3 Other changes - - C. Decreases - 252,489 C.1 Cancellation - - C.2 Purchase of treasury shares - 252,489 C.3 Business tranferred - - C.4 Other changes - - of which: business combinations - - D. Shares outstanding: closing balance 2,230,171,905 - D.1 Treasury shares (+) 4,760 - D.2 Shares outstanding as at the end of the year 2,230,176,665 - - Fully paid 2,230,176,665 - - Not fully paid - - The amount reported in item C.2 "Purchase of treasury shares" refer to mandatory conversion of savings shares into ordinary shares carried out on 12 march 2018, which involved the issue of n. 964.507new ordinary shares.reported in the item B.1 "New issues”. 12.3 Capital: other information Pursuant to the resolution passed by the Extraordinary Shareholders' Meeting on 15 December 2011, ordinary shares have no face value. Outstanding ordinary shares relating to the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” amount to No.9,675,640 (issued in the context of the January 2009 capital increase) provides for Euribor-linked discretionary payments contingent on the payment of dividends on ordinary shares. The voting right cannot be exercised on these shares. 12.4 Reserves from allocation of profit: other information (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Legal Reserve 1,517,514 1,517,514 Statutory Reserve 6,160,551 679,464 Other Reserves (2,228,195) 569,268 Total 5,449,870 2,766,246 The Legal reserve includes also €2,683 million constituted, as resolved by the approval of the Ordinary Shareholders’ Meeting of 11 May 2013, 13 May 2014 and 14 April 2016 with the withdrawal from the Share premium Reserve and therefore it is not classified among Reserves from allocation of profit. Other reserves include the negative impact from adoption of IFRS9 attributable to the effects of reclassification and measurement of financial instruments. 12.5 Equity instruments: composition and annual changes The item is entirely composed by five Additional Tier 1 issuances placed between 2014 and 2017. During the year no changes occurred. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 635 12.2 Share capital - Number of shares: annual changes CHANGES IN 2018 ITEMS/TYPES ORDINARY SAVINGS A. Issued shares as at the beginning of the year 2,225,692,806 252,489 - Fully paid 2,225,692,806 252,489 - Not fully paid - - A.1 Treasury shares (-) (4,760) - A.2 Shares outstanding: opening balance 2,225,688,046 252,489 B. Increases 4,483,859 - B.1 New issues 4,483,859 - - Against payment - - - Business combinations - - - Bonds converted - - - Warrants exercised - - - Other - - - Free 4,483,859 - - To employees 3,519,352 - - To directors - - - Other 964,507 - B.2 Sales of treasury shares - - B.3 Other changes - - C. Decreases - 252,489 C.1 Cancellation - - C.2 Purchase of treasury shares - 252,489 C.3 Business tranferred - - C.4 Other changes - - of which: business combinations - - D. Shares outstanding: closing balance 2,230,171,905 - D.1 Treasury shares (+) 4,760 - D.2 Shares outstanding as at the end of the year 2,230,176,665 - - Fully paid 2,230,176,665 - - Not fully paid - - The amount reported in item C.2 "Purchase of treasury shares" refer to mandatory conversion of savings shares into ordinary shares carried out on 12 march 2018, which involved the issue of n. 964.507new ordinary shares.reported in the item B.1 "New issues”. 12.3 Capital: other information Pursuant to the resolution passed by the Extraordinary Shareholders' Meeting on 15 December 2011, ordinary shares have no face value. Outstanding ordinary shares relating to the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” amount to No.9,675,640 (issued in the context of the January 2009 capital increase) provides for Euribor-linked discretionary payments contingent on the payment of dividends on ordinary shares. The voting right cannot be exercised on these shares. 12.4 Reserves from allocation of profit: other information (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Legal Reserve 1,517,514 1,517,514 Statutory Reserve 6,160,551 679,464 Other Reserves (2,228,195) 569,268 Total 5,449,870 2,766,246 The Legal reserve includes also €2,683 million constituted, as resolved by the approval of the Ordinary Shareholders’ Meeting of 11 May 2013, 13 May 2014 and 14 April 2016 with the withdrawal from the Share premium Reserve and therefore it is not classified among Reserves from allocation of profit. Other reserves include the negative impact from adoption of IFRS9 attributable to the effects of reclassification and measurement of financial instruments. 12.5 Equity instruments: composition and annual changes The item is entirely composed by five Additional Tier 1 issuances placed between 2014 and 2017. During the year no changes occurred. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 635 12.2 Share capital - Number of shares: annual changes CHANGES IN 2018 ITEMS/TYPES ORDINARY SAVINGS A. Issued shares as at the beginning of the year 2,225,692,806 252,489 - Fully paid 2,225,692,806 252,489 - Not fully paid - - A.1 Treasury shares (-) (4,760) - A.2 Shares outstanding: opening balance 2,225,688,046 252,489 B. Increases 4,483,859 - B.1 New issues 4,483,859 - - Against payment - - - Business combinations - - - Bonds converted - - - Warrants exercised - - - Other - - - Free 4,483,859 - - To employees 3,519,352 - - To directors - - - Other 964,507 - B.2 Sales of treasury shares - - B.3 Other changes - - C. Decreases - 252,489 C.1 Cancellation - - C.2 Purchase of treasury shares - 252,489 C.3 Business tranferred - - C.4 Other changes - - of which: business combinations - - D. Shares outstanding: closing balance 2,230,171,905 - D.1 Treasury shares (+) 4,760 - D.2 Shares outstanding as at the end of the year 2,230,176,665 - - Fully paid 2,230,176,665 - - Not fully paid - - The amount reported in item C.2 "Purchase of treasury shares" refer to mandatory conversion of savings shares into ordinary shares carried out on 12 march 2018, which involved the issue of n. 964.507new ordinary shares.reported in the item B.1 "New issues”. 12.3 Capital: other information Pursuant to the resolution passed by the Extraordinary Shareholders' Meeting on 15 December 2011, ordinary shares have no face value. Outstanding ordinary shares relating to the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” amount to No.9,675,640 (issued in the context of the January 2009 capital increase) provides for Euribor-linked discretionary payments contingent on the payment of dividends on ordinary shares. The voting right cannot be exercised on these shares. 12.4 Reserves from allocation of profit: other information (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Legal Reserve 1,517,514 1,517,514 Statutory Reserve 6,160,551 679,464 Other Reserves (2,228,195) 569,268 Total 5,449,870 2,766,246 The Legal reserve includes also €2,683 million constituted, as resolved by the approval of the Ordinary Shareholders’ Meeting of 11 May 2013, 13 May 2014 and 14 April 2016 with the withdrawal from the Share premium Reserve and therefore it is not classified among Reserves from allocation of profit. Other reserves include the negative impact from adoption of IFRS9 attributable to the effects of reclassification and measurement of financial instruments. 12.5 Equity instruments: composition and annual changes The item is entirely composed by five Additional Tier 1 issuances placed between 2014 and 2017. During the year no changes occurred. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 635 12.2 Share capital - Number of shares: annual changes CHANGES IN 2018 ITEMS/TYPES ORDINARY SAVINGS A. Issued shares as at the beginning of the year 2,225,692,806 252,489 - Fully paid 2,225,692,806 252,489 - Not fully paid - - A.1 Treasury shares (-) (4,760) - A.2 Shares outstanding: opening balance 2,225,688,046 252,489 B. Increases 4,483,859 - B.1 New issues 4,483,859 - - Against payment - - - Business combinations - - - Bonds converted - - - Warrants exercised - - - Other - - - Free 4,483,859 - - To employees 3,519,352 - - To directors - - - Other 964,507 - B.2 Sales of treasury shares - - B.3 Other changes - - C. Decreases - 252,489 C.1 Cancellation - - C.2 Purchase of treasury shares - 252,489 C.3 Business tranferred - - C.4 Other changes - - of which: business combinations - - D. Shares outstanding: closing balance 2,230,171,905 - D.1 Treasury shares (+) 4,760 - D.2 Shares outstanding as at the end of the year 2,230,176,665 - - Fully paid 2,230,176,665 - - Not fully paid - - The amount reported in item C.2 "Purchase of treasury shares" refer to mandatory conversion of savings shares into ordinary shares carried out on 12 march 2018, which involved the issue of n. 964.507new ordinary shares.reported in the item B.1 "New issues”. 12.3 Capital: other information Pursuant to the resolution passed by the Extraordinary Shareholders' Meeting on 15 December 2011, ordinary shares have no face value. Outstanding ordinary shares relating to the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” amount to No.9,675,640 (issued in the context of the January 2009 capital increase) provides for Euribor-linked discretionary payments contingent on the payment of dividends on ordinary shares. The voting right cannot be exercised on these shares. 12.4 Reserves from allocation of profit: other information (€ '000) AMOUNTS AS AT 12.31.2018 12.31.2017 Legal Reserve 1,517,514 1,517,514 Statutory Reserve 6,160,551 679,464 Other Reserves (2,228,195) 569,268 Total 5,449,870 2,766,246 The Legal reserve includes also €2,683 million constituted, as resolved by the approval of the Ordinary Shareholders’ Meeting of 11 May 2013, 13 May 2014 and 14 April 2016 with the withdrawal from the Share premium Reserve and therefore it is not classified among Reserves from allocation of profit. Other reserves include the negative impact from adoption of IFRS9 attributable to the effects of reclassification and measurement of financial instruments. 12.5 Equity instruments: composition and annual changes The item is entirely composed by five Additional Tier 1 issuances placed between 2014 and 2017. During the year no changes occurred. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 636 2018 Annual Report and Accounts · UniCredit 12.6 Other Information Revaluation reserve: breakdown (€ '000) AMOUNTS AS AT ITEM/TYPES 12.31.2018 12.31.2017 1. Equity instruments designated at fair value through other comprehensive income (244,279) 2. Financial Assets (other than equity instruments) at fair value through other comprehensive income (316,293) Available for sale financial assets (ex IAS39) 537,118 3. Hedging of equity instruments at fair value through other comprehensive income - 4. Financial liabilities at fair value through profit or loss (changes in own credit risk) 41,543 5. Hedging instruments (non-designated elements) - 6. Property, plant and equipment - - 7. Intangible assets - - 8. Hedges of foreign investments - - 9. Cash-flow hedges (66,095) (32,301) 10. Exchange differences - - 11. Non-current assets classified as held for sale - - 12. Actuarial gains (losses) on defined-benefit plans (194,562) (196,289) 13. Revaluation reserves of investments valued at net equity - - 14. Special revaluation laws 277,020 277,020 Total (502,666) 585,548 Previous year data have been disclosed in the 2017 Reports and Accounts of UniCredit S.p.A., Part F - Shareholders’ Equity. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 636 2018 Annual Report and Accounts · UniCredit 12.6 Other Information Revaluation reserve: breakdown (€ '000) AMOUNTS AS AT ITEM/TYPES 12.31.2018 12.31.2017 1. Equity instruments designated at fair value through other comprehensive income (244,279) 2. Financial Assets (other than equity instruments) at fair value through other comprehensive income (316,293) Available for sale financial assets (ex IAS39) 537,118 3. Hedging of equity instruments at fair value through other comprehensive income - 4. Financial liabilities at fair value through profit or loss (changes in own credit risk) 41,543 5. Hedging instruments (non-designated elements) - 6. Property, plant and equipment - - 7. Intangible assets - - 8. Hedges of foreign investments - - 9. Cash-flow hedges (66,095) (32,301) 10. Exchange differences - - 11. Non-current assets classified as held for sale - - 12. Actuarial gains (losses) on defined-benefit plans (194,562) (196,289) 13. Revaluation reserves of investments valued at net equity - - 14. Special revaluation laws 277,020 277,020 Total (502,666) 585,548 Previous year data have been disclosed in the 2017 Reports and Accounts of UniCredit S.p.A., Part F - Shareholders’ Equity. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 636 2018 Annual Report and Accounts · UniCredit 12.6 Other Information Revaluation reserve: breakdown (€ '000) AMOUNTS AS AT ITEM/TYPES 12.31.2018 12.31.2017 1. Equity instruments designated at fair value through other comprehensive income (244,279) 2. Financial Assets (other than equity instruments) at fair value through other comprehensive income (316,293) Available for sale financial assets (ex IAS39) 537,118 3. Hedging of equity instruments at fair value through other comprehensive income - 4. Financial liabilities at fair value through profit or loss (changes in own credit risk) 41,543 5. Hedging instruments (non-designated elements) - 6. Property, plant and equipment - - 7. Intangible assets - - 8. Hedges of foreign investments - - 9. Cash-flow hedges (66,095) (32,301) 10. Exchange differences - - 11. Non-current assets classified as held for sale - - 12. Actuarial gains (losses) on defined-benefit plans (194,562) (196,289) 13. Revaluation reserves of investments valued at net equity - - 14. Special revaluation laws 277,020 277,020 Total (502,666) 585,548 Previous year data have been disclosed in the 2017 Reports and Accounts of UniCredit S.p.A., Part F - Shareholders’ Equity. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 636 2018 Annual Report and Accounts · UniCredit 12.6 Other Information Revaluation reserve: breakdown (€ '000) AMOUNTS AS AT ITEM/TYPES 12.31.2018 12.31.2017 1. Equity instruments designated at fair value through other comprehensive income (244,279) 2. Financial Assets (other than equity instruments) at fair value through other comprehensive income (316,293) Available for sale financial assets (ex IAS39) 537,118 3. Hedging of equity instruments at fair value through other comprehensive income - 4. Financial liabilities at fair value through profit or loss (changes in own credit risk) 41,543 5. Hedging instruments (non-designated elements) - 6. Property, plant and equipment - - 7. Intangible assets - - 8. Hedges of foreign investments - - 9. Cash-flow hedges (66,095) (32,301) 10. Exchange differences - - 11. Non-current assets classified as held for sale - - 12. Actuarial gains (losses) on defined-benefit plans (194,562) (196,289) 13. Revaluation reserves of investments valued at net equity - - 14. Special revaluation laws 277,020 277,020 Total (502,666) 585,548 Previous year data have been disclosed in the 2017 Reports and Accounts of UniCredit S.p.A., Part F - Shareholders’ Equity. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 636 2018 Annual Report and Accounts · UniCredit 12.6 Other Information Revaluation reserve: breakdown (€ '000) AMOUNTS AS AT ITEM/TYPES 12.31.2018 12.31.2017 1. Equity instruments designated at fair value through other comprehensive income (244,279) 2. Financial Assets (other than equity instruments) at fair value through other comprehensive income (316,293) Available for sale financial assets (ex IAS39) 537,118 3. Hedging of equity instruments at fair value through other comprehensive income - 4. Financial liabilities at fair value through profit or loss (changes in own credit risk) 41,543 5. Hedging instruments (non-designated elements) - 6. Property, plant and equipment - - 7. Intangible assets - - 8. Hedges of foreign investments - - 9. Cash-flow hedges (66,095) (32,301) 10. Exchange differences - - 11. Non-current assets classified as held for sale - - 12. Actuarial gains (losses) on defined-benefit plans (194,562) (196,289) 13. Revaluation reserves of investments valued at net equity - - 14. Special revaluation laws 277,020 277,020 Total (502,666) 585,548 Previous year data have been disclosed in the 2017 Reports and Accounts of UniCredit S.p.A., Part F - Shareholders’ Equity. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 637 The following table, in accordance with article 2427, paragraph 7-bis, of the Italian Civil Code, provides details on the origin, possible uses and availability of distribution of shareholders’ equity, as well as the summary of its use in the three previous fiscal years. Breakdown of Shareholders' Equity (with indication of availability and distribution) SUMMARY OF USE IN THE THREE PREVIOUS FISCAL YEARS ITEMS AMOUNT PERMITTED USES(*) AVAILABLE PORTION TO COVER LOSSES OTHER REASONS Share capital 20,940,398 - - Share premium 13,392,918 A, B, C (1) 13,392,918 12,901,582 2,665,670 (2) Reserves: 9,939,544 Legal reserve 4,200,905 B (3) 4,200,905 - - Reserve for treasury shares or interests 2,440 - - - - Statutory reserves 6,160,551 A, B, C 6,160,551 - 537,840 (4) Reserves arising out of transfer of assets 420,380 A, B, C (5) 420,380 - 56,710 (14) Reserves related to the medium-term incentive programme for Group staff 85,182 - (6) - - 118,111 (15) Reserve related to equity-settled plans 715,349 - - - - Reserve related to business combinations (IFRS3) 2,093,451 A, B, C (7) 2,093,451 - 25,173 (14) Reserve related to business combinations within the Group 222,892 A, B (8) 222,892 - 263,639 (14) Reserve pursuant to Art.6, paragraph 2 Legislative Decree 38/2005 15,123 B (9) 15,123 - - Other reserves 60,326 A, B, C (10) 60,326 - 29,193 (14) Negative components of Shareholders' Equity (4,037,055) (11) (4,037,055) - - Revaluation reserves: (502,666) Monetary equalisation reserve under L.576/75 4,087 A, B, C (12) 4,087 - - Monetary revaluation reserve under L.72/83 84,658 A, B, C (12) 84,658 - - Asset revaluation reserve under L.408/90 28,965 A, B, C (12) 28,965 - - Property revaluation reserve under L.413/91 159,310 A, B, C (12) 159,310 - - Financial assets at fair value through other comprehensive (560,572) - (13) - - - Financial liabilities at fair value through profit or loss (changes 41,543 Cash-flow hedges reserve (66,095) - (13) - - - Reserve for actuarial gains (losses) on employee defined -benefit plans (194,562) - (13) - - - Total 43,770,194 22,806,511 12,901,582 3,696,336 Portion not allowed in distribution(**) 5,652,230 Remaining portion available for distribution(***) 17,154,281 Notes: (*) A: for capital increase; B: to cover losses; C: distribution to shareholders. (**) Includes the part of Share premium (see note 1), the remaining part is distributable because the legal reserve is at the level of one-fifth of the share capital, as per Art.2430 of the Italian Civil Code. (***) The distributable amount is net of negative items. (1) The amount of Share premium reserve generated as a result of the business combination with Capitalia exceeds the shareholders’ equity of the absorbed company (€8,564 million) and includes €8,229 million considered as available for distribution following the impairment losses on goodwill, intangible assets and equity investments and recognised on each occasion through profit or loss. The remaining amount of €336 million s considered non distributable. (2) Reserve used in the last three years to cover losses of 2015 (€1,441 million) and 2016 (€11,460 million); to supplement the legal reserve (€150 million) and coverage negative reserves (€2,509 million) and €7 million for cash settlement adjustment on conversion of saving shares. (3) Reserve available to cover losses only after the utilisation of other reserves, except for the reserves pursuant to article 6, paragraph 2, of Legislative Decree 38/2005. The reserve includes €2,683 million taken from Share Premium as approved by the Ordinary Shareholders’ Meetings of 11 May 2013, 13 May 2014 and 14 April 2016. (4) Reserve used for €377 million in 2016 to pay scrip dividend for 2015 by the Shareholders' Meeting resolution of 14 April 2016, in 2017 for €101 million to cover negative reserves following the resolution of the Ordinary Shareholders’ Meetings of 20 April 2017 and €60 million for allocation to the specific reserve connected to the personnel incentive plan. (5) The amount includes €215 million which is distributable according to the procedure established Art 2445 of the Italian Civil Code; if the reserve is utilised to cover losses, profits may not be distributed until the reserve is restored to its full amount or is reduced by the corresponding amount by resolution extraordinary Shareholder's Meeting resolution, without application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. (6) Allocation constraints to render the reserve available and distributable may be approved by the shareholders’ meeting. (7) The Reserve from business combination (IFRS3) is considered available to cover losses, for capital increase and distribution to shareholders for €1,058 million equal to net value adjustments due to the decrease in UniCredit Bank AG and UniCredit Bank Austria AG investments covered without using the reserve in question. The remaining portion of the Reserve from business combinations (IFRS3) is currently considered to be conservatively available only for the coverage of losses or the portion of losses deriving from write-downs of the investments and/or goodwill that generated it. (8) The outstanding balance refers to the positive reserve arising out of transfer of a business unit within the group and can be considered available for €158 million for the portion of losses deriving from write-downs of the investment. (9) If this Reserve is used to cover losses, profits cannot be distributed until this Reserve has been replenished by allocating profits from future years. (10) Other reserves include the reserve pursuant to Art.19 of Legislative Decree 87/92 non-distributable. (11) Negative items of shareholders’ equity affect the availability and distributability of positive reserves of the shareholders’ equity. Item includes the negative impact from IFRS9 first time adoption (€2,766 million) (12) If these reserves are utilised to cover losses, profits may not be distributed until the reserve is restored to its full amount or is reduced by the corresponding amount by resolution of the extraordinary Shareholders' Meeting Resolution, without application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. If the reserve is not recognised under share capital, it may only be reduced by resolution adopted in application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. (13) The reserve, when positive, is not available pursuant to article 6 of Legislative Decree 38/2005. (14) Coverage of negative components items of shareholders’ equity as per Shareholders' Meeting resolution of 20 April 2017. (15) For capital increase with respect to allocation of performance shares connected to the personnel incentive plan. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 637 The following table, in accordance with article 2427, paragraph 7-bis, of the Italian Civil Code, provides details on the origin, possible uses and availability of distribution of shareholders’ equity, as well as the summary of its use in the three previous fiscal years. Breakdown of Shareholders' Equity (with indication of availability and distribution) SUMMARY OF USE IN THE THREE PREVIOUS FISCAL YEARS ITEMS AMOUNT PERMITTED USES(*) AVAILABLE PORTION TO COVER LOSSES OTHER REASONS Share capital 20,940,398 - - Share premium 13,392,918 A, B, C (1) 13,392,918 12,901,582 2,665,670 (2) Reserves: 9,939,544 Legal reserve 4,200,905 B (3) 4,200,905 - - Reserve for treasury shares or interests 2,440 - - - - Statutory reserves 6,160,551 A, B, C 6,160,551 - 537,840 (4) Reserves arising out of transfer of assets 420,380 A, B, C (5) 420,380 - 56,710 (14) Reserves related to the medium-term incentive programme for Group staff 85,182 - (6) - - 118,111 (15) Reserve related to equity-settled plans 715,349 - - - - Reserve related to business combinations (IFRS3) 2,093,451 A, B, C (7) 2,093,451 - 25,173 (14) Reserve related to business combinations within the Group 222,892 A, B (8) 222,892 - 263,639 (14) Reserve pursuant to Art.6, paragraph 2 Legislative Decree 38/2005 15,123 B (9) 15,123 - - Other reserves 60,326 A, B, C (10) 60,326 - 29,193 (14) Negative components of Shareholders' Equity (4,037,055) (11) (4,037,055) - - Revaluation reserves: (502,666) Monetary equalisation reserve under L.576/75 4,087 A, B, C (12) 4,087 - - Monetary revaluation reserve under L.72/83 84,658 A, B, C (12) 84,658 - - Asset revaluation reserve under L.408/90 28,965 A, B, C (12) 28,965 - - Property revaluation reserve under L.413/91 159,310 A, B, C (12) 159,310 - - Financial assets at fair value through other comprehensive (560,572) - (13) - - - Financial liabilities at fair value through profit or loss (changes 41,543 Cash-flow hedges reserve (66,095) - (13) - - - Reserve for actuarial gains (losses) on employee defined -benefit plans (194,562) - (13) - - - Total 43,770,194 22,806,511 12,901,582 3,696,336 Portion not allowed in distribution(**) 5,652,230 Remaining portion available for distribution(***) 17,154,281 Notes: (*) A: for capital increase; B: to cover losses; C: distribution to shareholders. (**) Includes the part of Share premium (see note 1), the remaining part is distributable because the legal reserve is at the level of one-fifth of the share capital, as per Art.2430 of the Italian Civil Code. (***) The distributable amount is net of negative items. (1) The amount of Share premium reserve generated as a result of the business combination with Capitalia exceeds the shareholders’ equity of the absorbed company (€8,564 million) and includes €8,229 million considered as available for distribution following the impairment losses on goodwill, intangible assets and equity investments and recognised on each occasion through profit or loss. The remaining amount of €336 million s considered non distributable. (2) Reserve used in the last three years to cover losses of 2015 (€1,441 million) and 2016 (€11,460 million); to supplement the legal reserve (€150 million) and coverage negative reserves (€2,509 million) and €7 million for cash settlement adjustment on conversion of saving shares. (3) Reserve available to cover losses only after the utilisation of other reserves, except for the reserves pursuant to article 6, paragraph 2, of Legislative Decree 38/2005. The reserve includes €2,683 million taken from Share Premium as approved by the Ordinary Shareholders’ Meetings of 11 May 2013, 13 May 2014 and 14 April 2016. (4) Reserve used for €377 million in 2016 to pay scrip dividend for 2015 by the Shareholders' Meeting resolution of 14 April 2016, in 2017 for €101 million to cover negative reserves following the resolution of the Ordinary Shareholders’ Meetings of 20 April 2017 and €60 million for allocation to the specific reserve connected to the personnel incentive plan. (5) The amount includes €215 million which is distributable according to the procedure established Art 2445 of the Italian Civil Code; if the reserve is utilised to cover losses, profits may not be distributed until the reserve is restored to its full amount or is reduced by the corresponding amount by resolution extraordinary Shareholder's Meeting resolution, without application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. (6) Allocation constraints to render the reserve available and distributable may be approved by the shareholders’ meeting. (7) The Reserve from business combination (IFRS3) is considered available to cover losses, for capital increase and distribution to shareholders for €1,058 million equal to net value adjustments due to the decrease in UniCredit Bank AG and UniCredit Bank Austria AG investments covered without using the reserve in question. The remaining portion of the Reserve from business combinations (IFRS3) is currently considered to be conservatively available only for the coverage of losses or the portion of losses deriving from write-downs of the investments and/or goodwill that generated it. (8) The outstanding balance refers to the positive reserve arising out of transfer of a business unit within the group and can be considered available for €158 million for the portion of losses deriving from write-downs of the investment. (9) If this Reserve is used to cover losses, profits cannot be distributed until this Reserve has been replenished by allocating profits from future years. (10) Other reserves include the reserve pursuant to Art.19 of Legislative Decree 87/92 non-distributable. (11) Negative items of shareholders’ equity affect the availability and distributability of positive reserves of the shareholders’ equity. Item includes the negative impact from IFRS9 first time adoption (€2,766 million) (12) If these reserves are utilised to cover losses, profits may not be distributed until the reserve is restored to its full amount or is reduced by the corresponding amount by resolution of the extraordinary Shareholders' Meeting Resolution, without application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. If the reserve is not recognised under share capital, it may only be reduced by resolution adopted in application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. (13) The reserve, when positive, is not available pursuant to article 6 of Legislative Decree 38/2005. (14) Coverage of negative components items of shareholders’ equity as per Shareholders' Meeting resolution of 20 April 2017. (15) For capital increase with respect to allocation of performance shares connected to the personnel incentive plan. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 637 The following table, in accordance with article 2427, paragraph 7-bis, of the Italian Civil Code, provides details on the origin, possible uses and availability of distribution of shareholders’ equity, as well as the summary of its use in the three previous fiscal years. Breakdown of Shareholders' Equity (with indication of availability and distribution) SUMMARY OF USE IN THE THREE PREVIOUS FISCAL YEARS ITEMS AMOUNT PERMITTED USES(*) AVAILABLE PORTION TO COVER LOSSES OTHER REASONS Share capital 20,940,398 - - Share premium 13,392,918 A, B, C (1) 13,392,918 12,901,582 2,665,670 (2) Reserves: 9,939,544 Legal reserve 4,200,905 B (3) 4,200,905 - - Reserve for treasury shares or interests 2,440 - - - - Statutory reserves 6,160,551 A, B, C 6,160,551 - 537,840 (4) Reserves arising out of transfer of assets 420,380 A, B, C (5) 420,380 - 56,710 (14) Reserves related to the medium-term incentive programme for Group staff 85,182 - (6) - - 118,111 (15) Reserve related to equity-settled plans 715,349 - - - - Reserve related to business combinations (IFRS3) 2,093,451 A, B, C (7) 2,093,451 - 25,173 (14) Reserve related to business combinations within the Group 222,892 A, B (8) 222,892 - 263,639 (14) Reserve pursuant to Art.6, paragraph 2 Legislative Decree 38/2005 15,123 B (9) 15,123 - - Other reserves 60,326 A, B, C (10) 60,326 - 29,193 (14) Negative components of Shareholders' Equity (4,037,055) (11) (4,037,055) - - Revaluation reserves: (502,666) Monetary equalisation reserve under L.576/75 4,087 A, B, C (12) 4,087 - - Monetary revaluation reserve under L.72/83 84,658 A, B, C (12) 84,658 - - Asset revaluation reserve under L.408/90 28,965 A, B, C (12) 28,965 - - Property revaluation reserve under L.413/91 159,310 A, B, C (12) 159,310 - - Financial assets at fair value through other comprehensive (560,572) - (13) - - - Financial liabilities at fair value through profit or loss (changes 41,543 Cash-flow hedges reserve (66,095) - (13) - - - Reserve for actuarial gains (losses) on employee defined -benefit plans (194,562) - (13) - - - Total 43,770,194 22,806,511 12,901,582 3,696,336 Portion not allowed in distribution(**) 5,652,230 Remaining portion available for distribution(***) 17,154,281 Notes: (*) A: for capital increase; B: to cover losses; C: distribution to shareholders. (**) Includes the part of Share premium (see note 1), the remaining part is distributable because the legal reserve is at the level of one-fifth of the share capital, as per Art.2430 of the Italian Civil Code. (***) The distributable amount is net of negative items. (1) The amount of Share premium reserve generated as a result of the business combination with Capitalia exceeds the shareholders’ equity of the absorbed company (€8,564 million) and includes €8,229 million considered as available for distribution following the impairment losses on goodwill, intangible assets and equity investments and recognised on each occasion through profit or loss. The remaining amount of €336 million s considered non distributable. (2) Reserve used in the last three years to cover losses of 2015 (€1,441 million) and 2016 (€11,460 million); to supplement the legal reserve (€150 million) and coverage negative reserves (€2,509 million) and €7 million for cash settlement adjustment on conversion of saving shares. (3) Reserve available to cover losses only after the utilisation of other reserves, except for the reserves pursuant to article 6, paragraph 2, of Legislative Decree 38/2005. The reserve includes €2,683 million taken from Share Premium as approved by the Ordinary Shareholders’ Meetings of 11 May 2013, 13 May 2014 and 14 April 2016. (4) Reserve used for €377 million in 2016 to pay scrip dividend for 2015 by the Shareholders' Meeting resolution of 14 April 2016, in 2017 for €101 million to cover negative reserves following the resolution of the Ordinary Shareholders’ Meetings of 20 April 2017 and €60 million for allocation to the specific reserve connected to the personnel incentive plan. (5) The amount includes €215 million which is distributable according to the procedure established Art 2445 of the Italian Civil Code; if the reserve is utilised to cover losses, profits may not be distributed until the reserve is restored to its full amount or is reduced by the corresponding amount by resolution extraordinary Shareholder's Meeting resolution, without application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. (6) Allocation constraints to render the reserve available and distributable may be approved by the shareholders’ meeting. (7) The Reserve from business combination (IFRS3) is considered available to cover losses, for capital increase and distribution to shareholders for €1,058 million equal to net value adjustments due to the decrease in UniCredit Bank AG and UniCredit Bank Austria AG investments covered without using the reserve in question. The remaining portion of the Reserve from business combinations (IFRS3) is currently considered to be conservatively available only for the coverage of losses or the portion of losses deriving from write-downs of the investments and/or goodwill that generated it. (8) The outstanding balance refers to the positive reserve arising out of transfer of a business unit within the group and can be considered available for €158 million for the portion of losses deriving from write-downs of the investment. (9) If this Reserve is used to cover losses, profits cannot be distributed until this Reserve has been replenished by allocating profits from future years. (10) Other reserves include the reserve pursuant to Art.19 of Legislative Decree 87/92 non-distributable. (11) Negative items of shareholders’ equity affect the availability and distributability of positive reserves of the shareholders’ equity. Item includes the negative impact from IFRS9 first time adoption (€2,766 million) (12) If these reserves are utilised to cover losses, profits may not be distributed until the reserve is restored to its full amount or is reduced by the corresponding amount by resolution of the extraordinary Shareholders' Meeting Resolution, without application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. If the reserve is not recognised under share capital, it may only be reduced by resolution adopted in application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. (13) The reserve, when positive, is not available pursuant to article 6 of Legislative Decree 38/2005. (14) Coverage of negative components items of shareholders’ equity as per Shareholders' Meeting resolution of 20 April 2017. (15) For capital increase with respect to allocation of performance shares connected to the personnel incentive plan. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 637 The following table, in accordance with article 2427, paragraph 7-bis, of the Italian Civil Code, provides details on the origin, possible uses and availability of distribution of shareholders’ equity, as well as the summary of its use in the three previous fiscal years. Breakdown of Shareholders' Equity (with indication of availability and distribution) SUMMARY OF USE IN THE THREE PREVIOUS FISCAL YEARS ITEMS AMOUNT PERMITTED USES(*) AVAILABLE PORTION TO COVER LOSSES OTHER REASONS Share capital 20,940,398 - - Share premium 13,392,918 A, B, C (1) 13,392,918 12,901,582 2,665,670 (2) Reserves: 9,939,544 Legal reserve 4,200,905 B (3) 4,200,905 - - Reserve for treasury shares or interests 2,440 - - - - Statutory reserves 6,160,551 A, B, C 6,160,551 - 537,840 (4) Reserves arising out of transfer of assets 420,380 A, B, C (5) 420,380 - 56,710 (14) Reserves related to the medium-term incentive programme for Group staff 85,182 - (6) - - 118,111 (15) Reserve related to equity-settled plans 715,349 - - - - Reserve related to business combinations (IFRS3) 2,093,451 A, B, C (7) 2,093,451 - 25,173 (14) Reserve related to business combinations within the Group 222,892 A, B (8) 222,892 - 263,639 (14) Reserve pursuant to Art.6, paragraph 2 Legislative Decree 38/2005 15,123 B (9) 15,123 - - Other reserves 60,326 A, B, C (10) 60,326 - 29,193 (14) Negative components of Shareholders' Equity (4,037,055) (11) (4,037,055) - - Revaluation reserves: (502,666) Monetary equalisation reserve under L.576/75 4,087 A, B, C (12) 4,087 - - Monetary revaluation reserve under L.72/83 84,658 A, B, C (12) 84,658 - - Asset revaluation reserve under L.408/90 28,965 A, B, C (12) 28,965 - - Property revaluation reserve under L.413/91 159,310 A, B, C (12) 159,310 - - Financial assets at fair value through other comprehensive (560,572) - (13) - - - Financial liabilities at fair value through profit or loss (changes 41,543 Cash-flow hedges reserve (66,095) - (13) - - - Reserve for actuarial gains (losses) on employee defined -benefit plans (194,562) - (13) - - - Total 43,770,194 22,806,511 12,901,582 3,696,336 Portion not allowed in distribution(**) 5,652,230 Remaining portion available for distribution(***) 17,154,281 Notes: (*) A: for capital increase; B: to cover losses; C: distribution to shareholders. (**) Includes the part of Share premium (see note 1), the remaining part is distributable because the legal reserve is at the level of one-fifth of the share capital, as per Art.2430 of the Italian Civil Code. (***) The distributable amount is net of negative items. (1) The amount of Share premium reserve generated as a result of the business combination with Capitalia exceeds the shareholders’ equity of the absorbed company (€8,564 million) and includes €8,229 million considered as available for distribution following the impairment losses on goodwill, intangible assets and equity investments and recognised on each occasion through profit or loss. The remaining amount of €336 million s considered non distributable. (2) Reserve used in the last three years to cover losses of 2015 (€1,441 million) and 2016 (€11,460 million); to supplement the legal reserve (€150 million) and coverage negative reserves (€2,509 million) and €7 million for cash settlement adjustment on conversion of saving shares. (3) Reserve available to cover losses only after the utilisation of other reserves, except for the reserves pursuant to article 6, paragraph 2, of Legislative Decree 38/2005. The reserve includes €2,683 million taken from Share Premium as approved by the Ordinary Shareholders’ Meetings of 11 May 2013, 13 May 2014 and 14 April 2016. (4) Reserve used for €377 million in 2016 to pay scrip dividend for 2015 by the Shareholders' Meeting resolution of 14 April 2016, in 2017 for €101 million to cover negative reserves following the resolution of the Ordinary Shareholders’ Meetings of 20 April 2017 and €60 million for allocation to the specific reserve connected to the personnel incentive plan. (5) The amount includes €215 million which is distributable according to the procedure established Art 2445 of the Italian Civil Code; if the reserve is utilised to cover losses, profits may not be distributed until the reserve is restored to its full amount or is reduced by the corresponding amount by resolution extraordinary Shareholder's Meeting resolution, without application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. (6) Allocation constraints to render the reserve available and distributable may be approved by the shareholders’ meeting. (7) The Reserve from business combination (IFRS3) is considered available to cover losses, for capital increase and distribution to shareholders for €1,058 million equal to net value adjustments due to the decrease in UniCredit Bank AG and UniCredit Bank Austria AG investments covered without using the reserve in question. The remaining portion of the Reserve from business combinations (IFRS3) is currently considered to be conservatively available only for the coverage of losses or the portion of losses deriving from write-downs of the investments and/or goodwill that generated it. (8) The outstanding balance refers to the positive reserve arising out of transfer of a business unit within the group and can be considered available for €158 million for the portion of losses deriving from write-downs of the investment. (9) If this Reserve is used to cover losses, profits cannot be distributed until this Reserve has been replenished by allocating profits from future years. (10) Other reserves include the reserve pursuant to Art.19 of Legislative Decree 87/92 non-distributable. (11) Negative items of shareholders’ equity affect the availability and distributability of positive reserves of the shareholders’ equity. Item includes the negative impact from IFRS9 first time adoption (€2,766 million) (12) If these reserves are utilised to cover losses, profits may not be distributed until the reserve is restored to its full amount or is reduced by the corresponding amount by resolution of the extraordinary Shareholders' Meeting Resolution, without application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. If the reserve is not recognised under share capital, it may only be reduced by resolution adopted in application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. (13) The reserve, when positive, is not available pursuant to article 6 of Legislative Decree 38/2005. (14) Coverage of negative components items of shareholders’ equity as per Shareholders' Meeting resolution of 20 April 2017. (15) For capital increase with respect to allocation of performance shares connected to the personnel incentive plan. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 637 The following table, in accordance with article 2427, paragraph 7-bis, of the Italian Civil Code, provides details on the origin, possible uses and availability of distribution of shareholders’ equity, as well as the summary of its use in the three previous fiscal years. Breakdown of Shareholders' Equity (with indication of availability and distribution) SUMMARY OF USE IN THE THREE PREVIOUS FISCAL YEARS ITEMS AMOUNT PERMITTED USES(*) AVAILABLE PORTION TO COVER LOSSES OTHER REASONS Share capital 20,940,398 - - Share premium 13,392,918 A, B, C (1) 13,392,918 12,901,582 2,665,670 (2) Reserves: 9,939,544 Legal reserve 4,200,905 B (3) 4,200,905 - - Reserve for treasury shares or interests 2,440 - - - - Statutory reserves 6,160,551 A, B, C 6,160,551 - 537,840 (4) Reserves arising out of transfer of assets 420,380 A, B, C (5) 420,380 - 56,710 (14) Reserves related to the medium-term incentive programme for Group staff 85,182 - (6) - - 118,111 (15) Reserve related to equity-settled plans 715,349 - - - - Reserve related to business combinations (IFRS3) 2,093,451 A, B, C (7) 2,093,451 - 25,173 (14) Reserve related to business combinations within the Group 222,892 A, B (8) 222,892 - 263,639 (14) Reserve pursuant to Art.6, paragraph 2 Legislative Decree 38/2005 15,123 B (9) 15,123 - - Other reserves 60,326 A, B, C (10) 60,326 - 29,193 (14) Negative components of Shareholders' Equity (4,037,055) (11) (4,037,055) - - Revaluation reserves: (502,666) Monetary equalisation reserve under L.576/75 4,087 A, B, C (12) 4,087 - - Monetary revaluation reserve under L.72/83 84,658 A, B, C (12) 84,658 - - Asset revaluation reserve under L.408/90 28,965 A, B, C (12) 28,965 - - Property revaluation reserve under L.413/91 159,310 A, B, C (12) 159,310 - - Financial assets at fair value through other comprehensive (560,572) - (13) - - - Financial liabilities at fair value through profit or loss (changes 41,543 Cash-flow hedges reserve (66,095) - (13) - - - Reserve for actuarial gains (losses) on employee defined -benefit plans (194,562) - (13) - - - Total 43,770,194 22,806,511 12,901,582 3,696,336 Portion not allowed in distribution(**) 5,652,230 Remaining portion available for distribution(***) 17,154,281 Notes: (*) A: for capital increase; B: to cover losses; C: distribution to shareholders. (**) Includes the part of Share premium (see note 1), the remaining part is distributable because the legal reserve is at the level of one-fifth of the share capital, as per Art.2430 of the Italian Civil Code. (***) The distributable amount is net of negative items. (1) The amount of Share premium reserve generated as a result of the business combination with Capitalia exceeds the shareholders’ equity of the absorbed company (€8,564 million) and includes €8,229 million considered as available for distribution following the impairment losses on goodwill, intangible assets and equity investments and recognised on each occasion through profit or loss. The remaining amount of €336 million s considered non distributable. (2) Reserve used in the last three years to cover losses of 2015 (€1,441 million) and 2016 (€11,460 million); to supplement the legal reserve (€150 million) and coverage negative reserves (€2,509 million) and €7 million for cash settlement adjustment on conversion of saving shares. (3) Reserve available to cover losses only after the utilisation of other reserves, except for the reserves pursuant to article 6, paragraph 2, of Legislative Decree 38/2005. The reserve includes €2,683 million taken from Share Premium as approved by the Ordinary Shareholders’ Meetings of 11 May 2013, 13 May 2014 and 14 April 2016. (4) Reserve used for €377 million in 2016 to pay scrip dividend for 2015 by the Shareholders' Meeting resolution of 14 April 2016, in 2017 for €101 million to cover negative reserves following the resolution of the Ordinary Shareholders’ Meetings of 20 April 2017 and €60 million for allocation to the specific reserve connected to the personnel incentive plan. (5) The amount includes €215 million which is distributable according to the procedure established Art 2445 of the Italian Civil Code; if the reserve is utilised to cover losses, profits may not be distributed until the reserve is restored to its full amount or is reduced by the corresponding amount by resolution extraordinary Shareholder's Meeting resolution, without application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. (6) Allocation constraints to render the reserve available and distributable may be approved by the shareholders’ meeting. (7) The Reserve from business combination (IFRS3) is considered available to cover losses, for capital increase and distribution to shareholders for €1,058 million equal to net value adjustments due to the decrease in UniCredit Bank AG and UniCredit Bank Austria AG investments covered without using the reserve in question. The remaining portion of the Reserve from business combinations (IFRS3) is currently considered to be conservatively available only for the coverage of losses or the portion of losses deriving from write-downs of the investments and/or goodwill that generated it. (8) The outstanding balance refers to the positive reserve arising out of transfer of a business unit within the group and can be considered available for €158 million for the portion of losses deriving from write-downs of the investment. (9) If this Reserve is used to cover losses, profits cannot be distributed until this Reserve has been replenished by allocating profits from future years. (10) Other reserves include the reserve pursuant to Art.19 of Legislative Decree 87/92 non-distributable. (11) Negative items of shareholders’ equity affect the availability and distributability of positive reserves of the shareholders’ equity. Item includes the negative impact from IFRS9 first time adoption (€2,766 million) (12) If these reserves are utilised to cover losses, profits may not be distributed until the reserve is restored to its full amount or is reduced by the corresponding amount by resolution of the extraordinary Shareholders' Meeting Resolution, without application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. If the reserve is not recognised under share capital, it may only be reduced by resolution adopted in application of the provisions of the second and third paragraphs of article 2445 of the Italian Civil Code. (13) The reserve, when positive, is not available pursuant to article 6 of Legislative Decree 38/2005. (14) Coverage of negative components items of shareholders’ equity as per Shareholders' Meeting resolution of 20 April 2017. (15) For capital increase with respect to allocation of performance shares connected to the personnel incentive plan. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 638 2018 Annual Report and Accounts · UniCredit In detail the composition of negative components of shareholders’ equity: ITEMS 12.31.2018 Reserve from first time adoption of IFRS9, net of taxes (2,758,604) Reserve for disbursements on “AT1” capital instruments and on usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (535,595) Reserve for the unsustainable amount of Deferred Tax Assets relating to tax losses carried forward linked to shareholders' equity items (427,299) Reserve for capital increase costs (300,123) Financial assets at fair value through other comprehensive income (51,173) Reserve relating to business combination within the Group (37,285) ESOP share price reserve and reserve arising from reverse share split (3,985) Reserve arising out share based payments cash settlement (3,740) Total (4,037,055) Item “Reserve relating to business combinations within the Group” includes the negative differences arising from the merger of Buddy Servizi Molecolari S.p.A. (€7 million) and Pioneer Global Asset Management (PGAM) S.p.A. (€30 million). Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 638 2018 Annual Report and Accounts · UniCredit In detail the composition of negative components of shareholders’ equity: ITEMS 12.31.2018 Reserve from first time adoption of IFRS9, net of taxes (2,758,604) Reserve for disbursements on “AT1” capital instruments and on usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (535,595) Reserve for the unsustainable amount of Deferred Tax Assets relating to tax losses carried forward linked to shareholders' equity items (427,299) Reserve for capital increase costs (300,123) Financial assets at fair value through other comprehensive income (51,173) Reserve relating to business combination within the Group (37,285) ESOP share price reserve and reserve arising from reverse share split (3,985) Reserve arising out share based payments cash settlement (3,740) Total (4,037,055) Item “Reserve relating to business combinations within the Group” includes the negative differences arising from the merger of Buddy Servizi Molecolari S.p.A. (€7 million) and Pioneer Global Asset Management (PGAM) S.p.A. (€30 million). Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 638 2018 Annual Report and Accounts · UniCredit In detail the composition of negative components of shareholders’ equity: ITEMS 12.31.2018 Reserve from first time adoption of IFRS9, net of taxes (2,758,604) Reserve for disbursements on “AT1” capital instruments and on usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (535,595) Reserve for the unsustainable amount of Deferred Tax Assets relating to tax losses carried forward linked to shareholders' equity items (427,299) Reserve for capital increase costs (300,123) Financial assets at fair value through other comprehensive income (51,173) Reserve relating to business combination within the Group (37,285) ESOP share price reserve and reserve arising from reverse share split (3,985) Reserve arising out share based payments cash settlement (3,740) Total (4,037,055) Item “Reserve relating to business combinations within the Group” includes the negative differences arising from the merger of Buddy Servizi Molecolari S.p.A. (€7 million) and Pioneer Global Asset Management (PGAM) S.p.A. (€30 million). Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 638 2018 Annual Report and Accounts · UniCredit In detail the composition of negative components of shareholders’ equity: ITEMS 12.31.2018 Reserve from first time adoption of IFRS9, net of taxes (2,758,604) Reserve for disbursements on “AT1” capital instruments and on usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (535,595) Reserve for the unsustainable amount of Deferred Tax Assets relating to tax losses carried forward linked to shareholders' equity items (427,299) Reserve for capital increase costs (300,123) Financial assets at fair value through other comprehensive income (51,173) Reserve relating to business combination within the Group (37,285) ESOP share price reserve and reserve arising from reverse share split (3,985) Reserve arising out share based payments cash settlement (3,740) Total (4,037,055) Item “Reserve relating to business combinations within the Group” includes the negative differences arising from the merger of Buddy Servizi Molecolari S.p.A. (€7 million) and Pioneer Global Asset Management (PGAM) S.p.A. (€30 million). Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 638 2018 Annual Report and Accounts · UniCredit In detail the composition of negative components of shareholders’ equity: ITEMS 12.31.2018 Reserve from first time adoption of IFRS9, net of taxes (2,758,604) Reserve for disbursements on “AT1” capital instruments and on usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (535,595) Reserve for the unsustainable amount of Deferred Tax Assets relating to tax losses carried forward linked to shareholders' equity items (427,299) Reserve for capital increase costs (300,123) Financial assets at fair value through other comprehensive income (51,173) Reserve relating to business combination within the Group (37,285) ESOP share price reserve and reserve arising from reverse share split (3,985) Reserve arising out share based payments cash settlement (3,740) Total (4,037,055) Item “Reserve relating to business combinations within the Group” includes the negative differences arising from the merger of Buddy Servizi Molecolari S.p.A. (€7 million) and Pioneer Global Asset Management (PGAM) S.p.A. (€30 million). Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 639 Other information 1. Commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS OF COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL 1. Loan commitments given 23,413,557 1,434,983 500,088 25,348,628 a) Central Banks - - - - b) Governments and other Public Sector Entities 3,401,036 257,792 - 3,658,828 c) Banks 1,875,429 11,880 - 1,887,309 d) Other financial companies 4,271,978 21,149 95,364 4,388,491 e) Non-financial companies 13,209,474 1,137,943 401,341 14,748,758 f) Households 655,640 6,219 3,383 665,242 2. Financial guarantees given 38,546,380 874,535 1,105,715 40,526,630 a) Central Banks - - - - b) Governments and other Public Sector Entities 1,121,468 2,622 10 1,124,100 c) Banks 7,282,547 156,029 - 7,438,576 d) Other financial companies 4,268,686 86,243 2,897 4,357,826 e) Non-financial companies 25,648,827 580,579 1,099,388 27,328,794 f) Households 224,852 49,062 3,420 277,334 2. Others commitments and others guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS 1. Others guarantees given - of which: non-performing loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - e) Non-financial companies - f) Households - 2. Others commitments 105,900,258 of which: non-performing loans 1,797,180 a) Central Banks 1,581,587 b) Governments and other Public Sector Entities 1,302,980 c) Banks 27,339,443 d) Other financial companies 12,476,726 e) Non-financial companies 57,933,805 f) Households 5,265,717 Table “1. Commitments and financial guarantees given” shows commitments and guarantees evaluated according to the IFRS9 requirements. Table “2. Others commitments and others guarantees given” shows commitments and guarantees that are not evaluated according to the IFRS9 requirements. Note that starting from 31 December 2018, according of the 5th update of Banca d’Italia Circular 262, the tables also include the revocable commitments and the item “financial guarantees” also includes the commercial ones. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 639 Other information 1. Commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS OF COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL 1. Loan commitments given 23,413,557 1,434,983 500,088 25,348,628 a) Central Banks - - - - b) Governments and other Public Sector Entities 3,401,036 257,792 - 3,658,828 c) Banks 1,875,429 11,880 - 1,887,309 d) Other financial companies 4,271,978 21,149 95,364 4,388,491 e) Non-financial companies 13,209,474 1,137,943 401,341 14,748,758 f) Households 655,640 6,219 3,383 665,242 2. Financial guarantees given 38,546,380 874,535 1,105,715 40,526,630 a) Central Banks - - - - b) Governments and other Public Sector Entities 1,121,468 2,622 10 1,124,100 c) Banks 7,282,547 156,029 - 7,438,576 d) Other financial companies 4,268,686 86,243 2,897 4,357,826 e) Non-financial companies 25,648,827 580,579 1,099,388 27,328,794 f) Households 224,852 49,062 3,420 277,334 2. Others commitments and others guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS 1. Others guarantees given - of which: non-performing loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - e) Non-financial companies - f) Households - 2. Others commitments 105,900,258 of which: non-performing loans 1,797,180 a) Central Banks 1,581,587 b) Governments and other Public Sector Entities 1,302,980 c) Banks 27,339,443 d) Other financial companies 12,476,726 e) Non-financial companies 57,933,805 f) Households 5,265,717 Table “1. Commitments and financial guarantees given” shows commitments and guarantees evaluated according to the IFRS9 requirements. Table “2. Others commitments and others guarantees given” shows commitments and guarantees that are not evaluated according to the IFRS9 requirements. Note that starting from 31 December 2018, according of the 5th update of Banca d’Italia Circular 262, the tables also include the revocable commitments and the item “financial guarantees” also includes the commercial ones. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 639 Other information 1. Commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS OF COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL 1. Loan commitments given 23,413,557 1,434,983 500,088 25,348,628 a) Central Banks - - - - b) Governments and other Public Sector Entities 3,401,036 257,792 - 3,658,828 c) Banks 1,875,429 11,880 - 1,887,309 d) Other financial companies 4,271,978 21,149 95,364 4,388,491 e) Non-financial companies 13,209,474 1,137,943 401,341 14,748,758 f) Households 655,640 6,219 3,383 665,242 2. Financial guarantees given 38,546,380 874,535 1,105,715 40,526,630 a) Central Banks - - - - b) Governments and other Public Sector Entities 1,121,468 2,622 10 1,124,100 c) Banks 7,282,547 156,029 - 7,438,576 d) Other financial companies 4,268,686 86,243 2,897 4,357,826 e) Non-financial companies 25,648,827 580,579 1,099,388 27,328,794 f) Households 224,852 49,062 3,420 277,334 2. Others commitments and others guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS 1. Others guarantees given - of which: non-performing loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - e) Non-financial companies - f) Households - 2. Others commitments 105,900,258 of which: non-performing loans 1,797,180 a) Central Banks 1,581,587 b) Governments and other Public Sector Entities 1,302,980 c) Banks 27,339,443 d) Other financial companies 12,476,726 e) Non-financial companies 57,933,805 f) Households 5,265,717 Table “1. Commitments and financial guarantees given” shows commitments and guarantees evaluated according to the IFRS9 requirements. Table “2. Others commitments and others guarantees given” shows commitments and guarantees that are not evaluated according to the IFRS9 requirements. Note that starting from 31 December 2018, according of the 5th update of Banca d’Italia Circular 262, the tables also include the revocable commitments and the item “financial guarantees” also includes the commercial ones. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 639 Other information 1. Commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS OF COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL 1. Loan commitments given 23,413,557 1,434,983 500,088 25,348,628 a) Central Banks - - - - b) Governments and other Public Sector Entities 3,401,036 257,792 - 3,658,828 c) Banks 1,875,429 11,880 - 1,887,309 d) Other financial companies 4,271,978 21,149 95,364 4,388,491 e) Non-financial companies 13,209,474 1,137,943 401,341 14,748,758 f) Households 655,640 6,219 3,383 665,242 2. Financial guarantees given 38,546,380 874,535 1,105,715 40,526,630 a) Central Banks - - - - b) Governments and other Public Sector Entities 1,121,468 2,622 10 1,124,100 c) Banks 7,282,547 156,029 - 7,438,576 d) Other financial companies 4,268,686 86,243 2,897 4,357,826 e) Non-financial companies 25,648,827 580,579 1,099,388 27,328,794 f) Households 224,852 49,062 3,420 277,334 2. Others commitments and others guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS 1. Others guarantees given - of which: non-performing loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - e) Non-financial companies - f) Households - 2. Others commitments 105,900,258 of which: non-performing loans 1,797,180 a) Central Banks 1,581,587 b) Governments and other Public Sector Entities 1,302,980 c) Banks 27,339,443 d) Other financial companies 12,476,726 e) Non-financial companies 57,933,805 f) Households 5,265,717 Table “1. Commitments and financial guarantees given” shows commitments and guarantees evaluated according to the IFRS9 requirements. Table “2. Others commitments and others guarantees given” shows commitments and guarantees that are not evaluated according to the IFRS9 requirements. Note that starting from 31 December 2018, according of the 5th update of Banca d’Italia Circular 262, the tables also include the revocable commitments and the item “financial guarantees” also includes the commercial ones. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 639 Other information 1. Commitments and financial guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS OF COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 TOTAL 1. Loan commitments given 23,413,557 1,434,983 500,088 25,348,628 a) Central Banks - - - - b) Governments and other Public Sector Entities 3,401,036 257,792 - 3,658,828 c) Banks 1,875,429 11,880 - 1,887,309 d) Other financial companies 4,271,978 21,149 95,364 4,388,491 e) Non-financial companies 13,209,474 1,137,943 401,341 14,748,758 f) Households 655,640 6,219 3,383 665,242 2. Financial guarantees given 38,546,380 874,535 1,105,715 40,526,630 a) Central Banks - - - - b) Governments and other Public Sector Entities 1,121,468 2,622 10 1,124,100 c) Banks 7,282,547 156,029 - 7,438,576 d) Other financial companies 4,268,686 86,243 2,897 4,357,826 e) Non-financial companies 25,648,827 580,579 1,099,388 27,328,794 f) Households 224,852 49,062 3,420 277,334 2. Others commitments and others guarantees given (€ '000) AMOUNTS AS AT 12.31.2018 NOTIONAL AMOUNTS 1. Others guarantees given - of which: non-performing loans - a) Central Banks - b) Governments and other Public Sector Entities - c) Banks - d) Other financial companies - e) Non-financial companies - f) Households - 2. Others commitments 105,900,258 of which: non-performing loans 1,797,180 a) Central Banks 1,581,587 b) Governments and other Public Sector Entities 1,302,980 c) Banks 27,339,443 d) Other financial companies 12,476,726 e) Non-financial companies 57,933,805 f) Households 5,265,717 Table “1. Commitments and financial guarantees given” shows commitments and guarantees evaluated according to the IFRS9 requirements. Table “2. Others commitments and others guarantees given” shows commitments and guarantees that are not evaluated according to the IFRS9 requirements. Note that starting from 31 December 2018, according of the 5th update of Banca d’Italia Circular 262, the tables also include the revocable commitments and the item “financial guarantees” also includes the commercial ones. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 640 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1. Guarantees given and commitments (€ '000) AMOUNTS AS AT TRANSACTIONS 12.31.2017 1) Financial guarantees given to 18,891,623 a) Banks 7,449,207 b) Customers 11,442,416 2) Commercial guarantees given to 21,041,327 a) Banks 2,121,967 b) Customers 18,919,360 3) Other irrevocable commitments to disburse funds 34,025,878 a) Banks: 5,414,776 i) usage certain 4,498,615 ii) usage uncertain 916,161 b) Customers: 28,611,102 i) usage certain 7,142,884 ii) usage uncertain 21,468,218 4) Underlying obligations for credit derivatives: sales of protection - 5) Assets used to guarantee others' obligations 3,284 6) Other commitments 1,171,298 Total 75,133,410 3. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2018 1. Financial assets at fair value through profit or loss 1,943,895 2. Financial assets at fair value through other comprehensive income 21,577,223 3. Financial assets at amortised cost 70,551,455 4. Property, plant and equipment - of which: inventories of property, plant and equipment - Deposits from banks include €33,304 million relating to Banca d’Italia’s refinancing operations collateralised by credit value amounting to €16,817 million and securities nominal value amounting to €26,682 million. Of these, since the securities not recognised on balance-sheet represent repurchased or retained UniCredit S.p.A.’s financial liabilities, they amount to nominal €23,679 million. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2017 1. Financial assets held for trading 1,013,178 2. Financial assets designated at fair value - 3. Financial assets available for sale 35,386,206 4. Financial assets held to maturity 746,713 5. Loans and receivables with banks 1,632,630 6. Loans and receivables with customers 51,567,031 7. Property, plant and equipment - 4. Operating leases No data to be disclosed. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 640 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1. Guarantees given and commitments (€ '000) AMOUNTS AS AT TRANSACTIONS 12.31.2017 1) Financial guarantees given to 18,891,623 a) Banks 7,449,207 b) Customers 11,442,416 2) Commercial guarantees given to 21,041,327 a) Banks 2,121,967 b) Customers 18,919,360 3) Other irrevocable commitments to disburse funds 34,025,878 a) Banks: 5,414,776 i) usage certain 4,498,615 ii) usage uncertain 916,161 b) Customers: 28,611,102 i) usage certain 7,142,884 ii) usage uncertain 21,468,218 4) Underlying obligations for credit derivatives: sales of protection - 5) Assets used to guarantee others' obligations 3,284 6) Other commitments 1,171,298 Total 75,133,410 3. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2018 1. Financial assets at fair value through profit or loss 1,943,895 2. Financial assets at fair value through other comprehensive income 21,577,223 3. Financial assets at amortised cost 70,551,455 4. Property, plant and equipment - of which: inventories of property, plant and equipment - Deposits from banks include €33,304 million relating to Banca d’Italia’s refinancing operations collateralised by credit value amounting to €16,817 million and securities nominal value amounting to €26,682 million. Of these, since the securities not recognised on balance-sheet represent repurchased or retained UniCredit S.p.A.’s financial liabilities, they amount to nominal €23,679 million. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2017 1. Financial assets held for trading 1,013,178 2. Financial assets designated at fair value - 3. Financial assets available for sale 35,386,206 4. Financial assets held to maturity 746,713 5. Loans and receivables with banks 1,632,630 6. Loans and receivables with customers 51,567,031 7. Property, plant and equipment - 4. Operating leases No data to be disclosed. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 640 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1. Guarantees given and commitments (€ '000) AMOUNTS AS AT TRANSACTIONS 12.31.2017 1) Financial guarantees given to 18,891,623 a) Banks 7,449,207 b) Customers 11,442,416 2) Commercial guarantees given to 21,041,327 a) Banks 2,121,967 b) Customers 18,919,360 3) Other irrevocable commitments to disburse funds 34,025,878 a) Banks: 5,414,776 i) usage certain 4,498,615 ii) usage uncertain 916,161 b) Customers: 28,611,102 i) usage certain 7,142,884 ii) usage uncertain 21,468,218 4) Underlying obligations for credit derivatives: sales of protection - 5) Assets used to guarantee others' obligations 3,284 6) Other commitments 1,171,298 Total 75,133,410 3. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2018 1. Financial assets at fair value through profit or loss 1,943,895 2. Financial assets at fair value through other comprehensive income 21,577,223 3. Financial assets at amortised cost 70,551,455 4. Property, plant and equipment - of which: inventories of property, plant and equipment - Deposits from banks include €33,304 million relating to Banca d’Italia’s refinancing operations collateralised by credit value amounting to €16,817 million and securities nominal value amounting to €26,682 million. Of these, since the securities not recognised on balance-sheet represent repurchased or retained UniCredit S.p.A.’s financial liabilities, they amount to nominal €23,679 million. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2017 1. Financial assets held for trading 1,013,178 2. Financial assets designated at fair value - 3. Financial assets available for sale 35,386,206 4. Financial assets held to maturity 746,713 5. Loans and receivables with banks 1,632,630 6. Loans and receivables with customers 51,567,031 7. Property, plant and equipment - 4. Operating leases No data to be disclosed. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 640 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1. Guarantees given and commitments (€ '000) AMOUNTS AS AT TRANSACTIONS 12.31.2017 1) Financial guarantees given to 18,891,623 a) Banks 7,449,207 b) Customers 11,442,416 2) Commercial guarantees given to 21,041,327 a) Banks 2,121,967 b) Customers 18,919,360 3) Other irrevocable commitments to disburse funds 34,025,878 a) Banks: 5,414,776 i) usage certain 4,498,615 ii) usage uncertain 916,161 b) Customers: 28,611,102 i) usage certain 7,142,884 ii) usage uncertain 21,468,218 4) Underlying obligations for credit derivatives: sales of protection - 5) Assets used to guarantee others' obligations 3,284 6) Other commitments 1,171,298 Total 75,133,410 3. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2018 1. Financial assets at fair value through profit or loss 1,943,895 2. Financial assets at fair value through other comprehensive income 21,577,223 3. Financial assets at amortised cost 70,551,455 4. Property, plant and equipment - of which: inventories of property, plant and equipment - Deposits from banks include €33,304 million relating to Banca d’Italia’s refinancing operations collateralised by credit value amounting to €16,817 million and securities nominal value amounting to €26,682 million. Of these, since the securities not recognised on balance-sheet represent repurchased or retained UniCredit S.p.A.’s financial liabilities, they amount to nominal €23,679 million. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2017 1. Financial assets held for trading 1,013,178 2. Financial assets designated at fair value - 3. Financial assets available for sale 35,386,206 4. Financial assets held to maturity 746,713 5. Loans and receivables with banks 1,632,630 6. Loans and receivables with customers 51,567,031 7. Property, plant and equipment - 4. Operating leases No data to be disclosed. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 640 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 1. Guarantees given and commitments (€ '000) AMOUNTS AS AT TRANSACTIONS 12.31.2017 1) Financial guarantees given to 18,891,623 a) Banks 7,449,207 b) Customers 11,442,416 2) Commercial guarantees given to 21,041,327 a) Banks 2,121,967 b) Customers 18,919,360 3) Other irrevocable commitments to disburse funds 34,025,878 a) Banks: 5,414,776 i) usage certain 4,498,615 ii) usage uncertain 916,161 b) Customers: 28,611,102 i) usage certain 7,142,884 ii) usage uncertain 21,468,218 4) Underlying obligations for credit derivatives: sales of protection - 5) Assets used to guarantee others' obligations 3,284 6) Other commitments 1,171,298 Total 75,133,410 3. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2018 1. Financial assets at fair value through profit or loss 1,943,895 2. Financial assets at fair value through other comprehensive income 21,577,223 3. Financial assets at amortised cost 70,551,455 4. Property, plant and equipment - of which: inventories of property, plant and equipment - Deposits from banks include €33,304 million relating to Banca d’Italia’s refinancing operations collateralised by credit value amounting to €16,817 million and securities nominal value amounting to €26,682 million. Of these, since the securities not recognised on balance-sheet represent repurchased or retained UniCredit S.p.A.’s financial liabilities, they amount to nominal €23,679 million. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 2. Assets used to guarantee own liabilities and commitments (€ '000) AMOUNTS AS AT PORTFOLIOS 12.31.2017 1. Financial assets held for trading 1,013,178 2. Financial assets designated at fair value - 3. Financial assets available for sale 35,386,206 4. Financial assets held to maturity 746,713 5. Loans and receivables with banks 1,632,630 6. Loans and receivables with customers 51,567,031 7. Property, plant and equipment - 4. Operating leases No data to be disclosed. Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 641 5. Asset management and trading on behalf of others (€ '000) AMOUNTS AS AT TYPE OF SERVICES 12.31.2018 12.31.2017 1. Execution of orders on behalf of customers a) Purchases - - 1. Settled - - 2. Unsettled - - b) Sales - - 1. Settled - - 2. Unsettled - - 2. Individual portfolio management 4,388,847 4,347,694 3. Custody and administration of securities a) Third party securities on deposits: relating to depositary bank activities (excluding portfolio management) - - 1. Securities issued by companies included in consolidation - - 2. Other securities - - b) Third party securities held in deposits (excluding portfolio management): other 105,120,344 101,336,773 1. Securities issued by companies included in consolidation 6,241,632 7,333,481 2. Other securities 98,878,712 94,003,292 c) Third party securities deposited with third parties 104,345,327 101,038,199 d) Property securities deposited with third parties 92,585,809 85,861,562 4. Other transactions 7,593,187 8,146,126 6. Financial assets subject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL ASSETS FINANCIAL LIABILITIES OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL ASSETS RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 8,769,082 - 8,769,082 7,566,435 417,781 784,866 860,497 2. Reverse repos 44,564,344 - 44,564,344 23,138,548 129,423 21,296,373 - 3. Securities lending - - - - - - - 4. Others - - - - - - - Total 12.31.2018 53,333,426 - 53,333,426 30,704,983 547,204 22,081,239 X Total 12.31.2017 9,367,524 - 9,367,524 8,317,555 189,472 X 860,497 7. Liabilities subject to accounting offsetting or under master netting agreements and similar ones (€ '000) GROSS AMOUNTS OF FINANCIAL LIABILITIES FINANCIAL ASSETS OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL LIABILITIES RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 9,951,546 - 9,951,546 7,566,443 2,285,488 99,615 629,731 2. Reverse repos 55,430,370 - 55,430,370 23,138,548 17,593 32,274,229 - 3. Securities lending - - - - - - - 4. Others - - - - - - - Total 12.31.2018 65,381,916 - 65,381,916 30,704,991 2,303,081 32,373,844 X Total 12.31.2017 10,092,891 - 10,092,891 8,317,555 1,145,605 X 629,731 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 641 5. Asset management and trading on behalf of others (€ '000) AMOUNTS AS AT TYPE OF SERVICES 12.31.2018 12.31.2017 1. Execution of orders on behalf of customers a) Purchases - - 1. Settled - - 2. Unsettled - - b) Sales - - 1. Settled - - 2. Unsettled - - 2. Individual portfolio management 4,388,847 4,347,694 3. Custody and administration of securities a) Third party securities on deposits: relating to depositary bank activities (excluding portfolio management) - - 1. Securities issued by companies included in consolidation - - 2. Other securities - - b) Third party securities held in deposits (excluding portfolio management): other 105,120,344 101,336,773 1. Securities issued by companies included in consolidation 6,241,632 7,333,481 2. Other securities 98,878,712 94,003,292 c) Third party securities deposited with third parties 104,345,327 101,038,199 d) Property securities deposited with third parties 92,585,809 85,861,562 4. Other transactions 7,593,187 8,146,126 6. Financial assets subject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL ASSETS FINANCIAL LIABILITIES OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL ASSETS RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 8,769,082 - 8,769,082 7,566,435 417,781 784,866 860,497 2. Reverse repos 44,564,344 - 44,564,344 23,138,548 129,423 21,296,373 - 3. Securities lending - - - - - - - 4. Others - - - - - - - Total 12.31.2018 53,333,426 - 53,333,426 30,704,983 547,204 22,081,239 X Total 12.31.2017 9,367,524 - 9,367,524 8,317,555 189,472 X 860,497 7. Liabilities subject to accounting offsetting or under master netting agreements and similar ones (€ '000) GROSS AMOUNTS OF FINANCIAL LIABILITIES FINANCIAL ASSETS OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL LIABILITIES RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 9,951,546 - 9,951,546 7,566,443 2,285,488 99,615 629,731 2. Reverse repos 55,430,370 - 55,430,370 23,138,548 17,593 32,274,229 - 3. Securities lending - - - - - - - 4. Others - - - - - - - Total 12.31.2018 65,381,916 - 65,381,916 30,704,991 2,303,081 32,373,844 X Total 12.31.2017 10,092,891 - 10,092,891 8,317,555 1,145,605 X 629,731 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 641 5. Asset management and trading on behalf of others (€ '000) AMOUNTS AS AT TYPE OF SERVICES 12.31.2018 12.31.2017 1. Execution of orders on behalf of customers a) Purchases - - 1. Settled - - 2. Unsettled - - b) Sales - - 1. Settled - - 2. Unsettled - - 2. Individual portfolio management 4,388,847 4,347,694 3. Custody and administration of securities a) Third party securities on deposits: relating to depositary bank activities (excluding portfolio management) - - 1. Securities issued by companies included in consolidation - - 2. Other securities - - b) Third party securities held in deposits (excluding portfolio management): other 105,120,344 101,336,773 1. Securities issued by companies included in consolidation 6,241,632 7,333,481 2. Other securities 98,878,712 94,003,292 c) Third party securities deposited with third parties 104,345,327 101,038,199 d) Property securities deposited with third parties 92,585,809 85,861,562 4. Other transactions 7,593,187 8,146,126 6. Financial assets subject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL ASSETS FINANCIAL LIABILITIES OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL ASSETS RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 8,769,082 - 8,769,082 7,566,435 417,781 784,866 860,497 2. Reverse repos 44,564,344 - 44,564,344 23,138,548 129,423 21,296,373 - 3. Securities lending - - - - - - - 4. Others - - - - - - - Total 12.31.2018 53,333,426 - 53,333,426 30,704,983 547,204 22,081,239 X Total 12.31.2017 9,367,524 - 9,367,524 8,317,555 189,472 X 860,497 7. Liabilities subject to accounting offsetting or under master netting agreements and similar ones (€ '000) GROSS AMOUNTS OF FINANCIAL LIABILITIES FINANCIAL ASSETS OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL LIABILITIES RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 9,951,546 - 9,951,546 7,566,443 2,285,488 99,615 629,731 2. Reverse repos 55,430,370 - 55,430,370 23,138,548 17,593 32,274,229 - 3. Securities lending - - - - - - - 4. Others - - - - - - - Total 12.31.2018 65,381,916 - 65,381,916 30,704,991 2,303,081 32,373,844 X Total 12.31.2017 10,092,891 - 10,092,891 8,317,555 1,145,605 X 629,731 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 641 5. Asset management and trading on behalf of others (€ '000) AMOUNTS AS AT TYPE OF SERVICES 12.31.2018 12.31.2017 1. Execution of orders on behalf of customers a) Purchases - - 1. Settled - - 2. Unsettled - - b) Sales - - 1. Settled - - 2. Unsettled - - 2. Individual portfolio management 4,388,847 4,347,694 3. Custody and administration of securities a) Third party securities on deposits: relating to depositary bank activities (excluding portfolio management) - - 1. Securities issued by companies included in consolidation - - 2. Other securities - - b) Third party securities held in deposits (excluding portfolio management): other 105,120,344 101,336,773 1. Securities issued by companies included in consolidation 6,241,632 7,333,481 2. Other securities 98,878,712 94,003,292 c) Third party securities deposited with third parties 104,345,327 101,038,199 d) Property securities deposited with third parties 92,585,809 85,861,562 4. Other transactions 7,593,187 8,146,126 6. Financial assets subject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL ASSETS FINANCIAL LIABILITIES OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL ASSETS RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 8,769,082 - 8,769,082 7,566,435 417,781 784,866 860,497 2. Reverse repos 44,564,344 - 44,564,344 23,138,548 129,423 21,296,373 - 3. Securities lending - - - - - - - 4. Others - - - - - - - Total 12.31.2018 53,333,426 - 53,333,426 30,704,983 547,204 22,081,239 X Total 12.31.2017 9,367,524 - 9,367,524 8,317,555 189,472 X 860,497 7. Liabilities subject to accounting offsetting or under master netting agreements and similar ones (€ '000) GROSS AMOUNTS OF FINANCIAL LIABILITIES FINANCIAL ASSETS OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL LIABILITIES RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 9,951,546 - 9,951,546 7,566,443 2,285,488 99,615 629,731 2. Reverse repos 55,430,370 - 55,430,370 23,138,548 17,593 32,274,229 - 3. Securities lending - - - - - - - 4. Others - - - - - - - Total 12.31.2018 65,381,916 - 65,381,916 30,704,991 2,303,081 32,373,844 X Total 12.31.2017 10,092,891 - 10,092,891 8,317,555 1,145,605 X 629,731 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities UniCredit ·2018 Annual Report and Accounts 641 5. Asset management and trading on behalf of others (€ '000) AMOUNTS AS AT TYPE OF SERVICES 12.31.2018 12.31.2017 1. Execution of orders on behalf of customers a) Purchases - - 1. Settled - - 2. Unsettled - - b) Sales - - 1. Settled - - 2. Unsettled - - 2. Individual portfolio management 4,388,847 4,347,694 3. Custody and administration of securities a) Third party securities on deposits: relating to depositary bank activities (excluding portfolio management) - - 1. Securities issued by companies included in consolidation - - 2. Other securities - - b) Third party securities held in deposits (excluding portfolio management): other 105,120,344 101,336,773 1. Securities issued by companies included in consolidation 6,241,632 7,333,481 2. Other securities 98,878,712 94,003,292 c) Third party securities deposited with third parties 104,345,327 101,038,199 d) Property securities deposited with third parties 92,585,809 85,861,562 4. Other transactions 7,593,187 8,146,126 6. Financial assets subject to accounting offsetting or under master netting agreements and similar agreements (€ '000) GROSS AMOUNTS OF FINANCIAL ASSETS FINANCIAL LIABILITIES OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL ASSETS RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 8,769,082 - 8,769,082 7,566,435 417,781 784,866 860,497 2. Reverse repos 44,564,344 - 44,564,344 23,138,548 129,423 21,296,373 - 3. Securities lending - - - - - - - 4. Others - - - - - - - Total 12.31.2018 53,333,426 - 53,333,426 30,704,983 547,204 22,081,239 X Total 12.31.2017 9,367,524 - 9,367,524 8,317,555 189,472 X 860,497 7. Liabilities subject to accounting offsetting or under master netting agreements and similar ones (€ '000) GROSS AMOUNTS OF FINANCIAL LIABILITIES FINANCIAL ASSETS OFFSET IN BALANCE SHEET NET BALANCE SHEET VALUES OF FINANCIAL LIABILITIES RELATED AMOUNTS NOT SUBJECT TO ACCOUNTING OFFSETTING NET AMOUNT NET AMOUNT INSTRUMENT TYPE FINANCIAL INSTRUMENTS CASH COLLATERAL RECEIVED 12.31.2018 12.31.2017 (A) (B) (C=A-B) (D) (E) (F=C-D-E) 1. Derivatives 9,951,546 - 9,951,546 7,566,443 2,285,488 99,615 629,731 2. Reverse repos 55,430,370 - 55,430,370 23,138,548 17,593 32,274,229 - 3. Securities lending - - - - - - - 4. Others - - - - - - - Total 12.31.2018 65,381,916 - 65,381,916 30,704,991 2,303,081 32,373,844 X Total 12.31.2017 10,092,891 - 10,092,891 8,317,555 1,145,605 X 629,731 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 642 2018 Annual Report and Accounts · UniCredit 8. Security borrowing transactions (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS OF THE SECURITIES BORROWED/TRANSACTION PURPOSES TYPE OF LENDER GIVEN AS COLLATERAL IN OWN FUNDING TRANSACTIONS SOLD SOLD IN REPO TRANSACTIONS OTHER PURPOSES A. Banks - - - - B. Financial companies - - - - C. Insurance companies - - - - D. Non-financial companies - - - - E. Others - - 172,942 27,680 Total - - 172,942 27,680 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 642 2018 Annual Report and Accounts · UniCredit 8. Security borrowing transactions (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS OF THE SECURITIES BORROWED/TRANSACTION PURPOSES TYPE OF LENDER GIVEN AS COLLATERAL IN OWN FUNDING TRANSACTIONS SOLD SOLD IN REPO TRANSACTIONS OTHER PURPOSES A. Banks - - - - B. Financial companies - - - - C. Insurance companies - - - - D. Non-financial companies - - - - E. Others - - 172,942 27,680 Total - - 172,942 27,680 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 642 2018 Annual Report and Accounts · UniCredit 8. Security borrowing transactions (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS OF THE SECURITIES BORROWED/TRANSACTION PURPOSES TYPE OF LENDER GIVEN AS COLLATERAL IN OWN FUNDING TRANSACTIONS SOLD SOLD IN REPO TRANSACTIONS OTHER PURPOSES A. Banks - - - - B. Financial companies - - - - C. Insurance companies - - - - D. Non-financial companies - - - - E. Others - - 172,942 27,680 Total - - 172,942 27,680 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 642 2018 Annual Report and Accounts · UniCredit 8. Security borrowing transactions (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS OF THE SECURITIES BORROWED/TRANSACTION PURPOSES TYPE OF LENDER GIVEN AS COLLATERAL IN OWN FUNDING TRANSACTIONS SOLD SOLD IN REPO TRANSACTIONS OTHER PURPOSES A. Banks - - - - B. Financial companies - - - - C. Insurance companies - - - - D. Non-financial companies - - - - E. Others - - 172,942 27,680 Total - - 172,942 27,680 Company financial statements | Notes to the accounts Part B - Balance sheet - Liabilities 642 2018 Annual Report and Accounts · UniCredit 8. Security borrowing transactions (€ '000) AMOUNTS AS AT 12.31.2018 AMOUNTS OF THE SECURITIES BORROWED/TRANSACTION PURPOSES TYPE OF LENDER GIVEN AS COLLATERAL IN OWN FUNDING TRANSACTIONS SOLD SOLD IN REPO TRANSACTIONS OTHER PURPOSES A. Banks - - - - B. Financial companies - - - - C. Insurance companies - - - - D. Non-financial companies - - - - E. Others - - 172,942 27,680 Total - - 172,942 27,680 Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 643 Part C - Income statement Section 1 - Interests - Items 10 and 20 1.1 Interest income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBT SECURITIES LOANS OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial assets at fair value through profit or loss 117,669 824 - 118,493 1.1 Financial assets held for trading 68,704 - - 68,704 1.2 Financial assets designated at fair value - - - - 1.3 Other financial assets mandatorily at fair value 48,965 824 - 49,789 Financial assets held for trading (ex IAS39) 40,130 Financial assets at fair value through profit or loss (ex IAS39) 3,940 2. Financial assets at fair value through other comprehensive income 510,073 - X 510,073 Available-for-sale financial assets (ex IAS39) 849,519 3. Financial assets at amortised cost 113,697 4,564,243 X 4,677,940 3.1 Loans and advances to banks 13,352 241,018 X 254,370 3.2 Loans and advances to customers 100,345 4,323,225 X 4,423,570 Held-to-maturity investments (ex IAS39) 4,813 Loans and receivables with banks (ex IAS39) 112,620 Loans and receivables with customers (ex IAS39) 4,329,272 4. Hedging derivatives X X (387,373) (387,373) 285,002 5. Other assets X X 14,509 14,509 1,347 6. Other financial liabilities X X X 342,130 Total 741,439 4,565,067 (372,864) 5,275,772 5,626,643 of which: interest income on credit impaired financial assets 227 475,944 - 476,171 The interest components on financial liabilities, contributing to net interest margin, include positive €136 million benefit arising from TLTRO II facilities. 1.2.1 Interest income from financial assets denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Assets denominated in currency 536,760 390,618 1.2.2 Interest income from finance leases No data to be disclosed. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 643 Part C - Income statement Section 1 - Interests - Items 10 and 20 1.1 Interest income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBT SECURITIES LOANS OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial assets at fair value through profit or loss 117,669 824 - 118,493 1.1 Financial assets held for trading 68,704 - - 68,704 1.2 Financial assets designated at fair value - - - - 1.3 Other financial assets mandatorily at fair value 48,965 824 - 49,789 Financial assets held for trading (ex IAS39) 40,130 Financial assets at fair value through profit or loss (ex IAS39) 3,940 2. Financial assets at fair value through other comprehensive income 510,073 - X 510,073 Available-for-sale financial assets (ex IAS39) 849,519 3. Financial assets at amortised cost 113,697 4,564,243 X 4,677,940 3.1 Loans and advances to banks 13,352 241,018 X 254,370 3.2 Loans and advances to customers 100,345 4,323,225 X 4,423,570 Held-to-maturity investments (ex IAS39) 4,813 Loans and receivables with banks (ex IAS39) 112,620 Loans and receivables with customers (ex IAS39) 4,329,272 4. Hedging derivatives X X (387,373) (387,373) 285,002 5. Other assets X X 14,509 14,509 1,347 6. Other financial liabilities X X X 342,130 Total 741,439 4,565,067 (372,864) 5,275,772 5,626,643 of which: interest income on credit impaired financial assets 227 475,944 - 476,171 The interest components on financial liabilities, contributing to net interest margin, include positive €136 million benefit arising from TLTRO II facilities. 1.2.1 Interest income from financial assets denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Assets denominated in currency 536,760 390,618 1.2.2 Interest income from finance leases No data to be disclosed. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 643 Part C - Income statement Section 1 - Interests - Items 10 and 20 1.1 Interest income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBT SECURITIES LOANS OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial assets at fair value through profit or loss 117,669 824 - 118,493 1.1 Financial assets held for trading 68,704 - - 68,704 1.2 Financial assets designated at fair value - - - - 1.3 Other financial assets mandatorily at fair value 48,965 824 - 49,789 Financial assets held for trading (ex IAS39) 40,130 Financial assets at fair value through profit or loss (ex IAS39) 3,940 2. Financial assets at fair value through other comprehensive income 510,073 - X 510,073 Available-for-sale financial assets (ex IAS39) 849,519 3. Financial assets at amortised cost 113,697 4,564,243 X 4,677,940 3.1 Loans and advances to banks 13,352 241,018 X 254,370 3.2 Loans and advances to customers 100,345 4,323,225 X 4,423,570 Held-to-maturity investments (ex IAS39) 4,813 Loans and receivables with banks (ex IAS39) 112,620 Loans and receivables with customers (ex IAS39) 4,329,272 4. Hedging derivatives X X (387,373) (387,373) 285,002 5. Other assets X X 14,509 14,509 1,347 6. Other financial liabilities X X X 342,130 Total 741,439 4,565,067 (372,864) 5,275,772 5,626,643 of which: interest income on credit impaired financial assets 227 475,944 - 476,171 The interest components on financial liabilities, contributing to net interest margin, include positive €136 million benefit arising from TLTRO II facilities. 1.2.1 Interest income from financial assets denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Assets denominated in currency 536,760 390,618 1.2.2 Interest income from finance leases No data to be disclosed. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 643 Part C - Income statement Section 1 - Interests - Items 10 and 20 1.1 Interest income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBT SECURITIES LOANS OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial assets at fair value through profit or loss 117,669 824 - 118,493 1.1 Financial assets held for trading 68,704 - - 68,704 1.2 Financial assets designated at fair value - - - - 1.3 Other financial assets mandatorily at fair value 48,965 824 - 49,789 Financial assets held for trading (ex IAS39) 40,130 Financial assets at fair value through profit or loss (ex IAS39) 3,940 2. Financial assets at fair value through other comprehensive income 510,073 - X 510,073 Available-for-sale financial assets (ex IAS39) 849,519 3. Financial assets at amortised cost 113,697 4,564,243 X 4,677,940 3.1 Loans and advances to banks 13,352 241,018 X 254,370 3.2 Loans and advances to customers 100,345 4,323,225 X 4,423,570 Held-to-maturity investments (ex IAS39) 4,813 Loans and receivables with banks (ex IAS39) 112,620 Loans and receivables with customers (ex IAS39) 4,329,272 4. Hedging derivatives X X (387,373) (387,373) 285,002 5. Other assets X X 14,509 14,509 1,347 6. Other financial liabilities X X X 342,130 Total 741,439 4,565,067 (372,864) 5,275,772 5,626,643 of which: interest income on credit impaired financial assets 227 475,944 - 476,171 The interest components on financial liabilities, contributing to net interest margin, include positive €136 million benefit arising from TLTRO II facilities. 1.2.1 Interest income from financial assets denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Assets denominated in currency 536,760 390,618 1.2.2 Interest income from finance leases No data to be disclosed. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 643 Part C - Income statement Section 1 - Interests - Items 10 and 20 1.1 Interest income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBT SECURITIES LOANS OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial assets at fair value through profit or loss 117,669 824 - 118,493 1.1 Financial assets held for trading 68,704 - - 68,704 1.2 Financial assets designated at fair value - - - - 1.3 Other financial assets mandatorily at fair value 48,965 824 - 49,789 Financial assets held for trading (ex IAS39) 40,130 Financial assets at fair value through profit or loss (ex IAS39) 3,940 2. Financial assets at fair value through other comprehensive income 510,073 - X 510,073 Available-for-sale financial assets (ex IAS39) 849,519 3. Financial assets at amortised cost 113,697 4,564,243 X 4,677,940 3.1 Loans and advances to banks 13,352 241,018 X 254,370 3.2 Loans and advances to customers 100,345 4,323,225 X 4,423,570 Held-to-maturity investments (ex IAS39) 4,813 Loans and receivables with banks (ex IAS39) 112,620 Loans and receivables with customers (ex IAS39) 4,329,272 4. Hedging derivatives X X (387,373) (387,373) 285,002 5. Other assets X X 14,509 14,509 1,347 6. Other financial liabilities X X X 342,130 Total 741,439 4,565,067 (372,864) 5,275,772 5,626,643 of which: interest income on credit impaired financial assets 227 475,944 - 476,171 The interest components on financial liabilities, contributing to net interest margin, include positive €136 million benefit arising from TLTRO II facilities. 1.2.1 Interest income from financial assets denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Assets denominated in currency 536,760 390,618 1.2.2 Interest income from finance leases No data to be disclosed. Company financial statements | Notes to the accounts Part C - Income statement 644 2018 Annual Report and Accounts · UniCredit 1.3 Interest expenses and similar charges: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBTS SECURITIES OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial liabilities at amortised cost (359,552) (1,405,017) X (1,764,569) 1.1 Deposits from central banks (2,579) X X (2,579) 1.2 Deposits from banks (203,783) X X (203,783) 1.3 Deposits from customers (153,190) X X (153,190) 1.4 Debt securities in issue X (1,405,017) X (1,405,017) Deposits from central banks (ex IAS39) 156,950 Deposits from banks (ex IAS39) (140,107) Deposits from customers (ex IAS39) (48,368) Debt securities in issue (ex IAS39) (1,858,138) 2. Financial liabilities held for trading - - (25,352) (25,352) Financial liabilities held for trading (ex IAS39) (22,571) 3. Financial liabilities designated at fair value - (8,475) - (8,475) Financial liabilities at fair value through profit or loss (ex IAS39) (2,516) 4. Other liabilities and funds X X (982) (982) (954) 5. Hedging derivatives X X 879,524 879,524 - 6. Financial assets X X X (189,500) Total (359,552) (1,413,492) 853,190 (1,109,354) (1,915,704) 1.4.1 Interest expenses on liabilities denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Liabilities denominated in currency (294,562) (344,039) 1.4.2 Interest expenses on finance leases No data to be disclosed. 1.5 Differentials relating to hedging operations (€ '000) ITEMS YEAR 2018 YEAR 2017 A. Positive differentials relating to hedging operations 2,197,115 2,369,249 B. Negative differentials relating to hedging operations (1,704,964) (2,084,247) C. Net differential (A-B) 492,151 285,002 Company financial statements | Notes to the accounts Part C - Income statement 644 2018 Annual Report and Accounts · UniCredit 1.3 Interest expenses and similar charges: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBTS SECURITIES OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial liabilities at amortised cost (359,552) (1,405,017) X (1,764,569) 1.1 Deposits from central banks (2,579) X X (2,579) 1.2 Deposits from banks (203,783) X X (203,783) 1.3 Deposits from customers (153,190) X X (153,190) 1.4 Debt securities in issue X (1,405,017) X (1,405,017) Deposits from central banks (ex IAS39) 156,950 Deposits from banks (ex IAS39) (140,107) Deposits from customers (ex IAS39) (48,368) Debt securities in issue (ex IAS39) (1,858,138) 2. Financial liabilities held for trading - - (25,352) (25,352) Financial liabilities held for trading (ex IAS39) (22,571) 3. Financial liabilities designated at fair value - (8,475) - (8,475) Financial liabilities at fair value through profit or loss (ex IAS39) (2,516) 4. Other liabilities and funds X X (982) (982) (954) 5. Hedging derivatives X X 879,524 879,524 - 6. Financial assets X X X (189,500) Total (359,552) (1,413,492) 853,190 (1,109,354) (1,915,704) 1.4.1 Interest expenses on liabilities denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Liabilities denominated in currency (294,562) (344,039) 1.4.2 Interest expenses on finance leases No data to be disclosed. 1.5 Differentials relating to hedging operations (€ '000) ITEMS YEAR 2018 YEAR 2017 A. Positive differentials relating to hedging operations 2,197,115 2,369,249 B. Negative differentials relating to hedging operations (1,704,964) (2,084,247) C. Net differential (A-B) 492,151 285,002 Company financial statements | Notes to the accounts Part C - Income statement 644 2018 Annual Report and Accounts · UniCredit 1.3 Interest expenses and similar charges: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBTS SECURITIES OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial liabilities at amortised cost (359,552) (1,405,017) X (1,764,569) 1.1 Deposits from central banks (2,579) X X (2,579) 1.2 Deposits from banks (203,783) X X (203,783) 1.3 Deposits from customers (153,190) X X (153,190) 1.4 Debt securities in issue X (1,405,017) X (1,405,017) Deposits from central banks (ex IAS39) 156,950 Deposits from banks (ex IAS39) (140,107) Deposits from customers (ex IAS39) (48,368) Debt securities in issue (ex IAS39) (1,858,138) 2. Financial liabilities held for trading - - (25,352) (25,352) Financial liabilities held for trading (ex IAS39) (22,571) 3. Financial liabilities designated at fair value - (8,475) - (8,475) Financial liabilities at fair value through profit or loss (ex IAS39) (2,516) 4. Other liabilities and funds X X (982) (982) (954) 5. Hedging derivatives X X 879,524 879,524 - 6. Financial assets X X X (189,500) Total (359,552) (1,413,492) 853,190 (1,109,354) (1,915,704) 1.4.1 Interest expenses on liabilities denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Liabilities denominated in currency (294,562) (344,039) 1.4.2 Interest expenses on finance leases No data to be disclosed. 1.5 Differentials relating to hedging operations (€ '000) ITEMS YEAR 2018 YEAR 2017 A. Positive differentials relating to hedging operations 2,197,115 2,369,249 B. Negative differentials relating to hedging operations (1,704,964) (2,084,247) C. Net differential (A-B) 492,151 285,002 Company financial statements | Notes to the accounts Part C - Income statement 644 2018 Annual Report and Accounts · UniCredit 1.3 Interest expenses and similar charges: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBTS SECURITIES OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial liabilities at amortised cost (359,552) (1,405,017) X (1,764,569) 1.1 Deposits from central banks (2,579) X X (2,579) 1.2 Deposits from banks (203,783) X X (203,783) 1.3 Deposits from customers (153,190) X X (153,190) 1.4 Debt securities in issue X (1,405,017) X (1,405,017) Deposits from central banks (ex IAS39) 156,950 Deposits from banks (ex IAS39) (140,107) Deposits from customers (ex IAS39) (48,368) Debt securities in issue (ex IAS39) (1,858,138) 2. Financial liabilities held for trading - - (25,352) (25,352) Financial liabilities held for trading (ex IAS39) (22,571) 3. Financial liabilities designated at fair value - (8,475) - (8,475) Financial liabilities at fair value through profit or loss (ex IAS39) (2,516) 4. Other liabilities and funds X X (982) (982) (954) 5. Hedging derivatives X X 879,524 879,524 - 6. Financial assets X X X (189,500) Total (359,552) (1,413,492) 853,190 (1,109,354) (1,915,704) 1.4.1 Interest expenses on liabilities denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Liabilities denominated in currency (294,562) (344,039) 1.4.2 Interest expenses on finance leases No data to be disclosed. 1.5 Differentials relating to hedging operations (€ '000) ITEMS YEAR 2018 YEAR 2017 A. Positive differentials relating to hedging operations 2,197,115 2,369,249 B. Negative differentials relating to hedging operations (1,704,964) (2,084,247) C. Net differential (A-B) 492,151 285,002 Company financial statements | Notes to the accounts Part C - Income statement 644 2018 Annual Report and Accounts · UniCredit 1.3 Interest expenses and similar charges: breakdown (€ '000) AS AT 12.31.2018 AS AT DEBTS SECURITIES OTHER TRANSACTIONS 12.31.2017 ITEMS/TYPE TOTAL TOTAL 1. Financial liabilities at amortised cost (359,552) (1,405,017) X (1,764,569) 1.1 Deposits from central banks (2,579) X X (2,579) 1.2 Deposits from banks (203,783) X X (203,783) 1.3 Deposits from customers (153,190) X X (153,190) 1.4 Debt securities in issue X (1,405,017) X (1,405,017) Deposits from central banks (ex IAS39) 156,950 Deposits from banks (ex IAS39) (140,107) Deposits from customers (ex IAS39) (48,368) Debt securities in issue (ex IAS39) (1,858,138) 2. Financial liabilities held for trading - - (25,352) (25,352) Financial liabilities held for trading (ex IAS39) (22,571) 3. Financial liabilities designated at fair value - (8,475) - (8,475) Financial liabilities at fair value through profit or loss (ex IAS39) (2,516) 4. Other liabilities and funds X X (982) (982) (954) 5. Hedging derivatives X X 879,524 879,524 - 6. Financial assets X X X (189,500) Total (359,552) (1,413,492) 853,190 (1,109,354) (1,915,704) 1.4.1 Interest expenses on liabilities denominated in currency (€ '000) ITEMS YEAR 2018 YEAR 2017 a) Liabilities denominated in currency (294,562) (344,039) 1.4.2 Interest expenses on finance leases No data to be disclosed. 1.5 Differentials relating to hedging operations (€ '000) ITEMS YEAR 2018 YEAR 2017 A. Positive differentials relating to hedging operations 2,197,115 2,369,249 B. Negative differentials relating to hedging operations (1,704,964) (2,084,247) C. Net differential (A-B) 492,151 285,002 Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 645 Section 2 - Fees and commissions - Items 40 and 50 2.1 Fees and commissions income: breakdown (€ '000) TYPE OF SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees given 268,057 281,717 b) Credit derivatives - - c) Management, brokerage and consultancy services 2,014,333 2,127,093 1. Securities trading - - 2. Currency trading 90,113 96,751 3. Individual portfolio management 78,803 60,035 4. Custody and administration of securities 8,771 9,558 5. Custodian bank - - 6. Placement of securities 934,764 1,159,597 7. Reception and transmission of orders 66,528 89,230 8. Advisory services 18,625 16,209 8.1 Relating to investments 5,755 6,824 8.2 Relating to financial structure 12,870 9,385 9. Distribution of third party services 816,729 695,713 9.1 Portfolio management 2,456 3,838 9.1.1 Individual 2,456 3,838 9.1.2 Collective - - 9.2 Insurance products 812,612 685,546 9.3 Other products 1,661 6,329 d) Collection and payment services 739,505 693,048 e) Securitisation servicing 44,558 50,965 f) Factoring - - g) Tax collection services - - h) Management of multilateral trading facilities - - i) Management of current accounts 902,444 819,447 j) Other services 368,730 339,150 k) Security lending 12,947 1,404 Total 4,350,574 4,312,824 2.2 Fees and commissions income: distribution channels of products and services (€ '000) CHANNELS/VALUES YEAR 2018 YEAR 2017 a) Through bank branches 1,830,016 1,914,701 1. Portfolio management 78,803 60,035 2. Placement of securities 934,484 1,158,953 3. Others' products and services 816,729 695,713 B) Off-site offer 280 644 1. Portfolio management - - 2. Placement of securities 280 644 3. Others' products and services - - C) Other distribution channels - - 1. Portfolio management - - 2. Placement of securities - - 3. Others' products and services - - Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 645 Section 2 - Fees and commissions - Items 40 and 50 2.1 Fees and commissions income: breakdown (€ '000) TYPE OF SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees given 268,057 281,717 b) Credit derivatives - - c) Management, brokerage and consultancy services 2,014,333 2,127,093 1. Securities trading - - 2. Currency trading 90,113 96,751 3. Individual portfolio management 78,803 60,035 4. Custody and administration of securities 8,771 9,558 5. Custodian bank - - 6. Placement of securities 934,764 1,159,597 7. Reception and transmission of orders 66,528 89,230 8. Advisory services 18,625 16,209 8.1 Relating to investments 5,755 6,824 8.2 Relating to financial structure 12,870 9,385 9. Distribution of third party services 816,729 695,713 9.1 Portfolio management 2,456 3,838 9.1.1 Individual 2,456 3,838 9.1.2 Collective - - 9.2 Insurance products 812,612 685,546 9.3 Other products 1,661 6,329 d) Collection and payment services 739,505 693,048 e) Securitisation servicing 44,558 50,965 f) Factoring - - g) Tax collection services - - h) Management of multilateral trading facilities - - i) Management of current accounts 902,444 819,447 j) Other services 368,730 339,150 k) Security lending 12,947 1,404 Total 4,350,574 4,312,824 2.2 Fees and commissions income: distribution channels of products and services (€ '000) CHANNELS/VALUES YEAR 2018 YEAR 2017 a) Through bank branches 1,830,016 1,914,701 1. Portfolio management 78,803 60,035 2. Placement of securities 934,484 1,158,953 3. Others' products and services 816,729 695,713 B) Off-site offer 280 644 1. Portfolio management - - 2. Placement of securities 280 644 3. Others' products and services - - C) Other distribution channels - - 1. Portfolio management - - 2. Placement of securities - - 3. Others' products and services - - Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 645 Section 2 - Fees and commissions - Items 40 and 50 2.1 Fees and commissions income: breakdown (€ '000) TYPE OF SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees given 268,057 281,717 b) Credit derivatives - - c) Management, brokerage and consultancy services 2,014,333 2,127,093 1. Securities trading - - 2. Currency trading 90,113 96,751 3. Individual portfolio management 78,803 60,035 4. Custody and administration of securities 8,771 9,558 5. Custodian bank - - 6. Placement of securities 934,764 1,159,597 7. Reception and transmission of orders 66,528 89,230 8. Advisory services 18,625 16,209 8.1 Relating to investments 5,755 6,824 8.2 Relating to financial structure 12,870 9,385 9. Distribution of third party services 816,729 695,713 9.1 Portfolio management 2,456 3,838 9.1.1 Individual 2,456 3,838 9.1.2 Collective - - 9.2 Insurance products 812,612 685,546 9.3 Other products 1,661 6,329 d) Collection and payment services 739,505 693,048 e) Securitisation servicing 44,558 50,965 f) Factoring - - g) Tax collection services - - h) Management of multilateral trading facilities - - i) Management of current accounts 902,444 819,447 j) Other services 368,730 339,150 k) Security lending 12,947 1,404 Total 4,350,574 4,312,824 2.2 Fees and commissions income: distribution channels of products and services (€ '000) CHANNELS/VALUES YEAR 2018 YEAR 2017 a) Through bank branches 1,830,016 1,914,701 1. Portfolio management 78,803 60,035 2. Placement of securities 934,484 1,158,953 3. Others' products and services 816,729 695,713 B) Off-site offer 280 644 1. Portfolio management - - 2. Placement of securities 280 644 3. Others' products and services - - C) Other distribution channels - - 1. Portfolio management - - 2. Placement of securities - - 3. Others' products and services - - Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 645 Section 2 - Fees and commissions - Items 40 and 50 2.1 Fees and commissions income: breakdown (€ '000) TYPE OF SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees given 268,057 281,717 b) Credit derivatives - - c) Management, brokerage and consultancy services 2,014,333 2,127,093 1. Securities trading - - 2. Currency trading 90,113 96,751 3. Individual portfolio management 78,803 60,035 4. Custody and administration of securities 8,771 9,558 5. Custodian bank - - 6. Placement of securities 934,764 1,159,597 7. Reception and transmission of orders 66,528 89,230 8. Advisory services 18,625 16,209 8.1 Relating to investments 5,755 6,824 8.2 Relating to financial structure 12,870 9,385 9. Distribution of third party services 816,729 695,713 9.1 Portfolio management 2,456 3,838 9.1.1 Individual 2,456 3,838 9.1.2 Collective - - 9.2 Insurance products 812,612 685,546 9.3 Other products 1,661 6,329 d) Collection and payment services 739,505 693,048 e) Securitisation servicing 44,558 50,965 f) Factoring - - g) Tax collection services - - h) Management of multilateral trading facilities - - i) Management of current accounts 902,444 819,447 j) Other services 368,730 339,150 k) Security lending 12,947 1,404 Total 4,350,574 4,312,824 2.2 Fees and commissions income: distribution channels of products and services (€ '000) CHANNELS/VALUES YEAR 2018 YEAR 2017 a) Through bank branches 1,830,016 1,914,701 1. Portfolio management 78,803 60,035 2. Placement of securities 934,484 1,158,953 3. Others' products and services 816,729 695,713 B) Off-site offer 280 644 1. Portfolio management - - 2. Placement of securities 280 644 3. Others' products and services - - C) Other distribution channels - - 1. Portfolio management - - 2. Placement of securities - - 3. Others' products and services - - Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 645 Section 2 - Fees and commissions - Items 40 and 50 2.1 Fees and commissions income: breakdown (€ '000) TYPE OF SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees given 268,057 281,717 b) Credit derivatives - - c) Management, brokerage and consultancy services 2,014,333 2,127,093 1. Securities trading - - 2. Currency trading 90,113 96,751 3. Individual portfolio management 78,803 60,035 4. Custody and administration of securities 8,771 9,558 5. Custodian bank - - 6. Placement of securities 934,764 1,159,597 7. Reception and transmission of orders 66,528 89,230 8. Advisory services 18,625 16,209 8.1 Relating to investments 5,755 6,824 8.2 Relating to financial structure 12,870 9,385 9. Distribution of third party services 816,729 695,713 9.1 Portfolio management 2,456 3,838 9.1.1 Individual 2,456 3,838 9.1.2 Collective - - 9.2 Insurance products 812,612 685,546 9.3 Other products 1,661 6,329 d) Collection and payment services 739,505 693,048 e) Securitisation servicing 44,558 50,965 f) Factoring - - g) Tax collection services - - h) Management of multilateral trading facilities - - i) Management of current accounts 902,444 819,447 j) Other services 368,730 339,150 k) Security lending 12,947 1,404 Total 4,350,574 4,312,824 2.2 Fees and commissions income: distribution channels of products and services (€ '000) CHANNELS/VALUES YEAR 2018 YEAR 2017 a) Through bank branches 1,830,016 1,914,701 1. Portfolio management 78,803 60,035 2. Placement of securities 934,484 1,158,953 3. Others' products and services 816,729 695,713 B) Off-site offer 280 644 1. Portfolio management - - 2. Placement of securities 280 644 3. Others' products and services - - C) Other distribution channels - - 1. Portfolio management - - 2. Placement of securities - - 3. Others' products and services - - Company financial statements | Notes to the accounts Part C - Income statement 646 2018 Annual Report and Accounts · UniCredit 2.3 Fees and commissions expenses: breakdown (€ '000) SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees received (116,681) (120,433) b) Credit derivatives (8,197) (11,048) c) Management, brokerage and consultancy services (54,346) (64,430) 1. Trading financial instruments (6,893) (6,433) 2. Currency trading (618) (522) 3. Portfolio management (11,291) (11,051) 3.1 Own portfolio - (62) 3.2 Third party portfolio (11,291) (10,989) 4. Custody and administration of securities (30,459) (31,747) 5. Placement of financial instruments (1,489) (5,922) 6. Off-site distribution of financial instruments, products and services (3,596) (8,755) d) Collection and payment services (183,142) (153,381) e) Other services (37,669) (41,484) f) Security lending (302) (792) Total (400,337) (391,568) Section 3 - Dividend income and similar revenue - Item 70 3.1 Dividend income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT 12.31.2017 ITEMS/REVENUES DIVIDENDS SIMILAR REVENUES DIVIDENDS SIMILAR REVENUES A. Financial assets held for trading - - Financial assets held for trading (ex IAS39) - - B. Oher financial assets mandatorily at fair value 32,311 10,701 Financial assets at fair value through profit or loss (ex IAS39) 33,660 - C. Financial assets at fair value through other comprehensive income 15,887 - Available for sale financial assets (ex IAS39) 19,104 3,510 D. Equity investments 2,571,148 - 3,751,772 X Total 2,619,346 10,701 3,804,536 3,510 Total dividends and similar revenues 2,630,047 3,808,046 The item “Other financial assets mandatory at fair value” includes Bank Pekao S.A. dividend, reclassified into fair value option during second quarter of 2017 and in this category after IFRS9 adoption in 2018. Company financial statements | Notes to the accounts Part C - Income statement 646 2018 Annual Report and Accounts · UniCredit 2.3 Fees and commissions expenses: breakdown (€ '000) SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees received (116,681) (120,433) b) Credit derivatives (8,197) (11,048) c) Management, brokerage and consultancy services (54,346) (64,430) 1. Trading financial instruments (6,893) (6,433) 2. Currency trading (618) (522) 3. Portfolio management (11,291) (11,051) 3.1 Own portfolio - (62) 3.2 Third party portfolio (11,291) (10,989) 4. Custody and administration of securities (30,459) (31,747) 5. Placement of financial instruments (1,489) (5,922) 6. Off-site distribution of financial instruments, products and services (3,596) (8,755) d) Collection and payment services (183,142) (153,381) e) Other services (37,669) (41,484) f) Security lending (302) (792) Total (400,337) (391,568) Section 3 - Dividend income and similar revenue - Item 70 3.1 Dividend income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT 12.31.2017 ITEMS/REVENUES DIVIDENDS SIMILAR REVENUES DIVIDENDS SIMILAR REVENUES A. Financial assets held for trading - - Financial assets held for trading (ex IAS39) - - B. Oher financial assets mandatorily at fair value 32,311 10,701 Financial assets at fair value through profit or loss (ex IAS39) 33,660 - C. Financial assets at fair value through other comprehensive income 15,887 - Available for sale financial assets (ex IAS39) 19,104 3,510 D. Equity investments 2,571,148 - 3,751,772 X Total 2,619,346 10,701 3,804,536 3,510 Total dividends and similar revenues 2,630,047 3,808,046 The item “Other financial assets mandatory at fair value” includes Bank Pekao S.A. dividend, reclassified into fair value option during second quarter of 2017 and in this category after IFRS9 adoption in 2018. Company financial statements | Notes to the accounts Part C - Income statement 646 2018 Annual Report and Accounts · UniCredit 2.3 Fees and commissions expenses: breakdown (€ '000) SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees received (116,681) (120,433) b) Credit derivatives (8,197) (11,048) c) Management, brokerage and consultancy services (54,346) (64,430) 1. Trading financial instruments (6,893) (6,433) 2. Currency trading (618) (522) 3. Portfolio management (11,291) (11,051) 3.1 Own portfolio - (62) 3.2 Third party portfolio (11,291) (10,989) 4. Custody and administration of securities (30,459) (31,747) 5. Placement of financial instruments (1,489) (5,922) 6. Off-site distribution of financial instruments, products and services (3,596) (8,755) d) Collection and payment services (183,142) (153,381) e) Other services (37,669) (41,484) f) Security lending (302) (792) Total (400,337) (391,568) Section 3 - Dividend income and similar revenue - Item 70 3.1 Dividend income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT 12.31.2017 ITEMS/REVENUES DIVIDENDS SIMILAR REVENUES DIVIDENDS SIMILAR REVENUES A. Financial assets held for trading - - Financial assets held for trading (ex IAS39) - - B. Oher financial assets mandatorily at fair value 32,311 10,701 Financial assets at fair value through profit or loss (ex IAS39) 33,660 - C. Financial assets at fair value through other comprehensive income 15,887 - Available for sale financial assets (ex IAS39) 19,104 3,510 D. Equity investments 2,571,148 - 3,751,772 X Total 2,619,346 10,701 3,804,536 3,510 Total dividends and similar revenues 2,630,047 3,808,046 The item “Other financial assets mandatory at fair value” includes Bank Pekao S.A. dividend, reclassified into fair value option during second quarter of 2017 and in this category after IFRS9 adoption in 2018. Company financial statements | Notes to the accounts Part C - Income statement 646 2018 Annual Report and Accounts · UniCredit 2.3 Fees and commissions expenses: breakdown (€ '000) SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees received (116,681) (120,433) b) Credit derivatives (8,197) (11,048) c) Management, brokerage and consultancy services (54,346) (64,430) 1. Trading financial instruments (6,893) (6,433) 2. Currency trading (618) (522) 3. Portfolio management (11,291) (11,051) 3.1 Own portfolio - (62) 3.2 Third party portfolio (11,291) (10,989) 4. Custody and administration of securities (30,459) (31,747) 5. Placement of financial instruments (1,489) (5,922) 6. Off-site distribution of financial instruments, products and services (3,596) (8,755) d) Collection and payment services (183,142) (153,381) e) Other services (37,669) (41,484) f) Security lending (302) (792) Total (400,337) (391,568) Section 3 - Dividend income and similar revenue - Item 70 3.1 Dividend income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT 12.31.2017 ITEMS/REVENUES DIVIDENDS SIMILAR REVENUES DIVIDENDS SIMILAR REVENUES A. Financial assets held for trading - - Financial assets held for trading (ex IAS39) - - B. Oher financial assets mandatorily at fair value 32,311 10,701 Financial assets at fair value through profit or loss (ex IAS39) 33,660 - C. Financial assets at fair value through other comprehensive income 15,887 - Available for sale financial assets (ex IAS39) 19,104 3,510 D. Equity investments 2,571,148 - 3,751,772 X Total 2,619,346 10,701 3,804,536 3,510 Total dividends and similar revenues 2,630,047 3,808,046 The item “Other financial assets mandatory at fair value” includes Bank Pekao S.A. dividend, reclassified into fair value option during second quarter of 2017 and in this category after IFRS9 adoption in 2018. Company financial statements | Notes to the accounts Part C - Income statement 646 2018 Annual Report and Accounts · UniCredit 2.3 Fees and commissions expenses: breakdown (€ '000) SERVICES/VALUES YEAR 2018 YEAR 2017 a) Guarantees received (116,681) (120,433) b) Credit derivatives (8,197) (11,048) c) Management, brokerage and consultancy services (54,346) (64,430) 1. Trading financial instruments (6,893) (6,433) 2. Currency trading (618) (522) 3. Portfolio management (11,291) (11,051) 3.1 Own portfolio - (62) 3.2 Third party portfolio (11,291) (10,989) 4. Custody and administration of securities (30,459) (31,747) 5. Placement of financial instruments (1,489) (5,922) 6. Off-site distribution of financial instruments, products and services (3,596) (8,755) d) Collection and payment services (183,142) (153,381) e) Other services (37,669) (41,484) f) Security lending (302) (792) Total (400,337) (391,568) Section 3 - Dividend income and similar revenue - Item 70 3.1 Dividend income and similar revenues: breakdown (€ '000) AS AT 12.31.2018 AS AT 12.31.2017 ITEMS/REVENUES DIVIDENDS SIMILAR REVENUES DIVIDENDS SIMILAR REVENUES A. Financial assets held for trading - - Financial assets held for trading (ex IAS39) - - B. Oher financial assets mandatorily at fair value 32,311 10,701 Financial assets at fair value through profit or loss (ex IAS39) 33,660 - C. Financial assets at fair value through other comprehensive income 15,887 - Available for sale financial assets (ex IAS39) 19,104 3,510 D. Equity investments 2,571,148 - 3,751,772 X Total 2,619,346 10,701 3,804,536 3,510 Total dividends and similar revenues 2,630,047 3,808,046 The item “Other financial assets mandatory at fair value” includes Bank Pekao S.A. dividend, reclassified into fair value option during second quarter of 2017 and in this category after IFRS9 adoption in 2018. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 647 Provided below is the breakdown of dividends on equity investments collected during 2018 and 2017. Breakdown of dividends by investments (€ '000) YEAR 2018 YEAR 2017 UniCredit Bank AG 1,300,000 3,005,326 UniCredit Bank Austria 379,199 - UniCredit Bulbank A.D. 151,353 148,195 UniCredit Bank Czech 147,353 - Zagrebacka Banca D.D. 95,606 192,424 AO UniCredit Bank 92,582 - UniCredit Bank Hungary ZRT 78,842 71,373 Finecobank S.p.A. 61,294 60,219 UniCredit Factoring S.p.A. 42,559 58,546 UniCredit Bank Slovenia D.D. 36,270 13,882 Mediobanca S.p.A. 35,030 27,577 Aviva S.p.A. 33,819 15,190 CreditRas Vita S.p.A. 31,000 26,500 UniCredit Bank Ireland P.l.c. 23,500 73,000 Camifn S.p.A. 15,720 - SIA UniCredit Leasing 14,936 - UniCredit Bank Serbia JSC 10,618 10,088 CNP UniCredit Vita S.p.a. 9,683 9,683 UniCredit AD Banja Luka 6,488 5,634 Incontra Assicurazioni S.p.A. 3,058 6,064 Fenice S.r.l 1,827 - EuroTLX S.p.A. 412 360 UniCredit Bank S.A. - 27,631 Sviluppo Globale Geie - 80 Total 2,571,149 3,751,772 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets held for trading 49,028 369,277 (82,662) (496,640) (160,997) 1.1 Debt securities 49,028 369,277 (82,662) (496,639) (160,996) 1.2 Equity instruments - - - (1) (1) 1.3 Units in investment funds - - - - - 1.4 Loans - - - - - 1.5 Other - - - - - 2. Financial liabilities held for trading - - - - - 2.1 Debt securities - - - - - 2.2 Deposits - - - - - 2.3 Other - - - - - 3. Financial assets and liabilities: exchange differences X X X X 93,051 4. Derivatives 447,924 2,336,013 (519,195) (2,131,377) 67,633 4.1 Financial derivatives 447,924 2,336,013 (519,195) (2,131,377) 133,365 - On debt securities and interest rates 375,178 1,843,621 (431,544) (1,678,177) 109,078 - On equity securities and share indices 46,013 49,243 (60,918) (18,904) 15,434 - On currency and gold X X X X (65,732) - Other 26,733 443,149 (26,733) (434,296) 8,853 4.2 Credit derivatives - - - - - of which: economic hedges linked to the fair value option X X X X - Total 496,952 2,705,290 (601,857) (2,628,017) (313) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 647 Provided below is the breakdown of dividends on equity investments collected during 2018 and 2017. Breakdown of dividends by investments (€ '000) YEAR 2018 YEAR 2017 UniCredit Bank AG 1,300,000 3,005,326 UniCredit Bank Austria 379,199 - UniCredit Bulbank A.D. 151,353 148,195 UniCredit Bank Czech 147,353 - Zagrebacka Banca D.D. 95,606 192,424 AO UniCredit Bank 92,582 - UniCredit Bank Hungary ZRT 78,842 71,373 Finecobank S.p.A. 61,294 60,219 UniCredit Factoring S.p.A. 42,559 58,546 UniCredit Bank Slovenia D.D. 36,270 13,882 Mediobanca S.p.A. 35,030 27,577 Aviva S.p.A. 33,819 15,190 CreditRas Vita S.p.A. 31,000 26,500 UniCredit Bank Ireland P.l.c. 23,500 73,000 Camifn S.p.A. 15,720 - SIA UniCredit Leasing 14,936 - UniCredit Bank Serbia JSC 10,618 10,088 CNP UniCredit Vita S.p.a. 9,683 9,683 UniCredit AD Banja Luka 6,488 5,634 Incontra Assicurazioni S.p.A. 3,058 6,064 Fenice S.r.l 1,827 - EuroTLX S.p.A. 412 360 UniCredit Bank S.A. - 27,631 Sviluppo Globale Geie - 80 Total 2,571,149 3,751,772 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets held for trading 49,028 369,277 (82,662) (496,640) (160,997) 1.1 Debt securities 49,028 369,277 (82,662) (496,639) (160,996) 1.2 Equity instruments - - - (1) (1) 1.3 Units in investment funds - - - - - 1.4 Loans - - - - - 1.5 Other - - - - - 2. Financial liabilities held for trading - - - - - 2.1 Debt securities - - - - - 2.2 Deposits - - - - - 2.3 Other - - - - - 3. Financial assets and liabilities: exchange differences X X X X 93,051 4. Derivatives 447,924 2,336,013 (519,195) (2,131,377) 67,633 4.1 Financial derivatives 447,924 2,336,013 (519,195) (2,131,377) 133,365 - On debt securities and interest rates 375,178 1,843,621 (431,544) (1,678,177) 109,078 - On equity securities and share indices 46,013 49,243 (60,918) (18,904) 15,434 - On currency and gold X X X X (65,732) - Other 26,733 443,149 (26,733) (434,296) 8,853 4.2 Credit derivatives - - - - - of which: economic hedges linked to the fair value option X X X X - Total 496,952 2,705,290 (601,857) (2,628,017) (313) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 647 Provided below is the breakdown of dividends on equity investments collected during 2018 and 2017. Breakdown of dividends by investments (€ '000) YEAR 2018 YEAR 2017 UniCredit Bank AG 1,300,000 3,005,326 UniCredit Bank Austria 379,199 - UniCredit Bulbank A.D. 151,353 148,195 UniCredit Bank Czech 147,353 - Zagrebacka Banca D.D. 95,606 192,424 AO UniCredit Bank 92,582 - UniCredit Bank Hungary ZRT 78,842 71,373 Finecobank S.p.A. 61,294 60,219 UniCredit Factoring S.p.A. 42,559 58,546 UniCredit Bank Slovenia D.D. 36,270 13,882 Mediobanca S.p.A. 35,030 27,577 Aviva S.p.A. 33,819 15,190 CreditRas Vita S.p.A. 31,000 26,500 UniCredit Bank Ireland P.l.c. 23,500 73,000 Camifn S.p.A. 15,720 - SIA UniCredit Leasing 14,936 - UniCredit Bank Serbia JSC 10,618 10,088 CNP UniCredit Vita S.p.a. 9,683 9,683 UniCredit AD Banja Luka 6,488 5,634 Incontra Assicurazioni S.p.A. 3,058 6,064 Fenice S.r.l 1,827 - EuroTLX S.p.A. 412 360 UniCredit Bank S.A. - 27,631 Sviluppo Globale Geie - 80 Total 2,571,149 3,751,772 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets held for trading 49,028 369,277 (82,662) (496,640) (160,997) 1.1 Debt securities 49,028 369,277 (82,662) (496,639) (160,996) 1.2 Equity instruments - - - (1) (1) 1.3 Units in investment funds - - - - - 1.4 Loans - - - - - 1.5 Other - - - - - 2. Financial liabilities held for trading - - - - - 2.1 Debt securities - - - - - 2.2 Deposits - - - - - 2.3 Other - - - - - 3. Financial assets and liabilities: exchange differences X X X X 93,051 4. Derivatives 447,924 2,336,013 (519,195) (2,131,377) 67,633 4.1 Financial derivatives 447,924 2,336,013 (519,195) (2,131,377) 133,365 - On debt securities and interest rates 375,178 1,843,621 (431,544) (1,678,177) 109,078 - On equity securities and share indices 46,013 49,243 (60,918) (18,904) 15,434 - On currency and gold X X X X (65,732) - Other 26,733 443,149 (26,733) (434,296) 8,853 4.2 Credit derivatives - - - - - of which: economic hedges linked to the fair value option X X X X - Total 496,952 2,705,290 (601,857) (2,628,017) (313) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 647 Provided below is the breakdown of dividends on equity investments collected during 2018 and 2017. Breakdown of dividends by investments (€ '000) YEAR 2018 YEAR 2017 UniCredit Bank AG 1,300,000 3,005,326 UniCredit Bank Austria 379,199 - UniCredit Bulbank A.D. 151,353 148,195 UniCredit Bank Czech 147,353 - Zagrebacka Banca D.D. 95,606 192,424 AO UniCredit Bank 92,582 - UniCredit Bank Hungary ZRT 78,842 71,373 Finecobank S.p.A. 61,294 60,219 UniCredit Factoring S.p.A. 42,559 58,546 UniCredit Bank Slovenia D.D. 36,270 13,882 Mediobanca S.p.A. 35,030 27,577 Aviva S.p.A. 33,819 15,190 CreditRas Vita S.p.A. 31,000 26,500 UniCredit Bank Ireland P.l.c. 23,500 73,000 Camifn S.p.A. 15,720 - SIA UniCredit Leasing 14,936 - UniCredit Bank Serbia JSC 10,618 10,088 CNP UniCredit Vita S.p.a. 9,683 9,683 UniCredit AD Banja Luka 6,488 5,634 Incontra Assicurazioni S.p.A. 3,058 6,064 Fenice S.r.l 1,827 - EuroTLX S.p.A. 412 360 UniCredit Bank S.A. - 27,631 Sviluppo Globale Geie - 80 Total 2,571,149 3,751,772 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets held for trading 49,028 369,277 (82,662) (496,640) (160,997) 1.1 Debt securities 49,028 369,277 (82,662) (496,639) (160,996) 1.2 Equity instruments - - - (1) (1) 1.3 Units in investment funds - - - - - 1.4 Loans - - - - - 1.5 Other - - - - - 2. Financial liabilities held for trading - - - - - 2.1 Debt securities - - - - - 2.2 Deposits - - - - - 2.3 Other - - - - - 3. Financial assets and liabilities: exchange differences X X X X 93,051 4. Derivatives 447,924 2,336,013 (519,195) (2,131,377) 67,633 4.1 Financial derivatives 447,924 2,336,013 (519,195) (2,131,377) 133,365 - On debt securities and interest rates 375,178 1,843,621 (431,544) (1,678,177) 109,078 - On equity securities and share indices 46,013 49,243 (60,918) (18,904) 15,434 - On currency and gold X X X X (65,732) - Other 26,733 443,149 (26,733) (434,296) 8,853 4.2 Credit derivatives - - - - - of which: economic hedges linked to the fair value option X X X X - Total 496,952 2,705,290 (601,857) (2,628,017) (313) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 647 Provided below is the breakdown of dividends on equity investments collected during 2018 and 2017. Breakdown of dividends by investments (€ '000) YEAR 2018 YEAR 2017 UniCredit Bank AG 1,300,000 3,005,326 UniCredit Bank Austria 379,199 - UniCredit Bulbank A.D. 151,353 148,195 UniCredit Bank Czech 147,353 - Zagrebacka Banca D.D. 95,606 192,424 AO UniCredit Bank 92,582 - UniCredit Bank Hungary ZRT 78,842 71,373 Finecobank S.p.A. 61,294 60,219 UniCredit Factoring S.p.A. 42,559 58,546 UniCredit Bank Slovenia D.D. 36,270 13,882 Mediobanca S.p.A. 35,030 27,577 Aviva S.p.A. 33,819 15,190 CreditRas Vita S.p.A. 31,000 26,500 UniCredit Bank Ireland P.l.c. 23,500 73,000 Camifn S.p.A. 15,720 - SIA UniCredit Leasing 14,936 - UniCredit Bank Serbia JSC 10,618 10,088 CNP UniCredit Vita S.p.a. 9,683 9,683 UniCredit AD Banja Luka 6,488 5,634 Incontra Assicurazioni S.p.A. 3,058 6,064 Fenice S.r.l 1,827 - EuroTLX S.p.A. 412 360 UniCredit Bank S.A. - 27,631 Sviluppo Globale Geie - 80 Total 2,571,149 3,751,772 Section 4 - Gains (Losses) on financial assets and liabilities held for trading - Item 80 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets held for trading 49,028 369,277 (82,662) (496,640) (160,997) 1.1 Debt securities 49,028 369,277 (82,662) (496,639) (160,996) 1.2 Equity instruments - - - (1) (1) 1.3 Units in investment funds - - - - - 1.4 Loans - - - - - 1.5 Other - - - - - 2. Financial liabilities held for trading - - - - - 2.1 Debt securities - - - - - 2.2 Deposits - - - - - 2.3 Other - - - - - 3. Financial assets and liabilities: exchange differences X X X X 93,051 4. Derivatives 447,924 2,336,013 (519,195) (2,131,377) 67,633 4.1 Financial derivatives 447,924 2,336,013 (519,195) (2,131,377) 133,365 - On debt securities and interest rates 375,178 1,843,621 (431,544) (1,678,177) 109,078 - On equity securities and share indices 46,013 49,243 (60,918) (18,904) 15,434 - On currency and gold X X X X (65,732) - Other 26,733 443,149 (26,733) (434,296) 8,853 4.2 Credit derivatives - - - - - of which: economic hedges linked to the fair value option X X X X - Total 496,952 2,705,290 (601,857) (2,628,017) (313) Company financial statements | Notes to the accounts Part C - Income statement 648 2018 Annual Report and Accounts · UniCredit Financial derivatives include the ones connected to debt securities financial liabilities at fair value. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets held for trading 47,840 191,409 (77,881) (157,086) 4,282 1.1 Debt securities 47,840 191,407 (77,881) (157,084) 4,282 1.2 Equity instruments - 2 - (2) - 1.3 Units in investment funds - - - - - 1.4 Loans - - - - - 1.5 Other - - - - - 2. Financial liabilities held for trading - - - - - 2.1 Debt securities - - - - - 2.2 Deposits - - - - - 2.3 Other - - - - - 3. Financial assets and liabilities: exchange differences X X X X (20,208) 4. Derivatives 1,473,645 1,317,771 (1,457,441) (1,299,959) 101,147 4.1 Financial derivatives: 1,473,645 1,317,771 (1,457,441) (1,299,959) 101,147 - on debt securities and interest rates 1,451,740 986,164 (1,434,169) (975,298) 28,437 - on equity securities and share indices 2,370 29,074 (3,737) (28,974) (1,267) - on currency and gold X X X X 67,131 - other 19,535 302,533 (19,535) (295,687) 6,846 4.2 Credit derivatives - - - - - Total 1,521,485 1,509,180 (1,535,322) (1,457,045) 85,221 Section 5 - Fair value adjustments in hedge accounting - Item 90 5.1 Fair value adjustments in hedge accounting: breakdown (€ '000) P&L COMPONENT/VALUES YEAR 2018 YEAR 2017 A. Gains on A.1 Fair value hedging instruments 345,999 1,415,111 A.2 Hedged financial assets (in fair value hedge relationship) 494,589 509,662 A.3 Hedged financial liabilities (in fair value hedge relationship) 35,038 1,026,263 A.4 Cash-flow hedging derivatives 1,119 - A.5 Assets and liabilities denominated in currency - 1,962 Total gains on hedging activities (A) 876,745 2,952,998 B. Losses on B.1 Fair value hedging instruments (518,451) (1,650,886) B.2 Hedged financial assets (in fair value hedge relationship) (239,036) (1,302,694) B.3 Hedged financial liabilities (in fair value hedge relationship) (116,208) (7,958) B.4 Cash-flow hedging derivatives (1,920) (4,167) B.5 Assets and liabilities denominated in currency - - Total losses on hedging activities (B) (875,615) (2,965,705) C. Net hedging result (A – B) 1,130 (12,707) of which: net gains (losses) of hedge accounting on net positions - - The net hedging result also reflected €3 million resulting from model adjustments needed to reflect into derivatives valuations the presence of guarantees and credit risk of counterparties. Company financial statements | Notes to the accounts Part C - Income statement 648 2018 Annual Report and Accounts · UniCredit Financial derivatives include the ones connected to debt securities financial liabilities at fair value. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets held for trading 47,840 191,409 (77,881) (157,086) 4,282 1.1 Debt securities 47,840 191,407 (77,881) (157,084) 4,282 1.2 Equity instruments - 2 - (2) - 1.3 Units in investment funds - - - - - 1.4 Loans - - - - - 1.5 Other - - - - - 2. Financial liabilities held for trading - - - - - 2.1 Debt securities - - - - - 2.2 Deposits - - - - - 2.3 Other - - - - - 3. Financial assets and liabilities: exchange differences X X X X (20,208) 4. Derivatives 1,473,645 1,317,771 (1,457,441) (1,299,959) 101,147 4.1 Financial derivatives: 1,473,645 1,317,771 (1,457,441) (1,299,959) 101,147 - on debt securities and interest rates 1,451,740 986,164 (1,434,169) (975,298) 28,437 - on equity securities and share indices 2,370 29,074 (3,737) (28,974) (1,267) - on currency and gold X X X X 67,131 - other 19,535 302,533 (19,535) (295,687) 6,846 4.2 Credit derivatives - - - - - Total 1,521,485 1,509,180 (1,535,322) (1,457,045) 85,221 Section 5 - Fair value adjustments in hedge accounting - Item 90 5.1 Fair value adjustments in hedge accounting: breakdown (€ '000) P&L COMPONENT/VALUES YEAR 2018 YEAR 2017 A. Gains on A.1 Fair value hedging instruments 345,999 1,415,111 A.2 Hedged financial assets (in fair value hedge relationship) 494,589 509,662 A.3 Hedged financial liabilities (in fair value hedge relationship) 35,038 1,026,263 A.4 Cash-flow hedging derivatives 1,119 - A.5 Assets and liabilities denominated in currency - 1,962 Total gains on hedging activities (A) 876,745 2,952,998 B. Losses on B.1 Fair value hedging instruments (518,451) (1,650,886) B.2 Hedged financial assets (in fair value hedge relationship) (239,036) (1,302,694) B.3 Hedged financial liabilities (in fair value hedge relationship) (116,208) (7,958) B.4 Cash-flow hedging derivatives (1,920) (4,167) B.5 Assets and liabilities denominated in currency - - Total losses on hedging activities (B) (875,615) (2,965,705) C. Net hedging result (A – B) 1,130 (12,707) of which: net gains (losses) of hedge accounting on net positions - - The net hedging result also reflected €3 million resulting from model adjustments needed to reflect into derivatives valuations the presence of guarantees and credit risk of counterparties. Company financial statements | Notes to the accounts Part C - Income statement 648 2018 Annual Report and Accounts · UniCredit Financial derivatives include the ones connected to debt securities financial liabilities at fair value. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets held for trading 47,840 191,409 (77,881) (157,086) 4,282 1.1 Debt securities 47,840 191,407 (77,881) (157,084) 4,282 1.2 Equity instruments - 2 - (2) - 1.3 Units in investment funds - - - - - 1.4 Loans - - - - - 1.5 Other - - - - - 2. Financial liabilities held for trading - - - - - 2.1 Debt securities - - - - - 2.2 Deposits - - - - - 2.3 Other - - - - - 3. Financial assets and liabilities: exchange differences X X X X (20,208) 4. Derivatives 1,473,645 1,317,771 (1,457,441) (1,299,959) 101,147 4.1 Financial derivatives: 1,473,645 1,317,771 (1,457,441) (1,299,959) 101,147 - on debt securities and interest rates 1,451,740 986,164 (1,434,169) (975,298) 28,437 - on equity securities and share indices 2,370 29,074 (3,737) (28,974) (1,267) - on currency and gold X X X X 67,131 - other 19,535 302,533 (19,535) (295,687) 6,846 4.2 Credit derivatives - - - - - Total 1,521,485 1,509,180 (1,535,322) (1,457,045) 85,221 Section 5 - Fair value adjustments in hedge accounting - Item 90 5.1 Fair value adjustments in hedge accounting: breakdown (€ '000) P&L COMPONENT/VALUES YEAR 2018 YEAR 2017 A. Gains on A.1 Fair value hedging instruments 345,999 1,415,111 A.2 Hedged financial assets (in fair value hedge relationship) 494,589 509,662 A.3 Hedged financial liabilities (in fair value hedge relationship) 35,038 1,026,263 A.4 Cash-flow hedging derivatives 1,119 - A.5 Assets and liabilities denominated in currency - 1,962 Total gains on hedging activities (A) 876,745 2,952,998 B. Losses on B.1 Fair value hedging instruments (518,451) (1,650,886) B.2 Hedged financial assets (in fair value hedge relationship) (239,036) (1,302,694) B.3 Hedged financial liabilities (in fair value hedge relationship) (116,208) (7,958) B.4 Cash-flow hedging derivatives (1,920) (4,167) B.5 Assets and liabilities denominated in currency - - Total losses on hedging activities (B) (875,615) (2,965,705) C. Net hedging result (A – B) 1,130 (12,707) of which: net gains (losses) of hedge accounting on net positions - - The net hedging result also reflected €3 million resulting from model adjustments needed to reflect into derivatives valuations the presence of guarantees and credit risk of counterparties. Company financial statements | Notes to the accounts Part C - Income statement 648 2018 Annual Report and Accounts · UniCredit Financial derivatives include the ones connected to debt securities financial liabilities at fair value. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets held for trading 47,840 191,409 (77,881) (157,086) 4,282 1.1 Debt securities 47,840 191,407 (77,881) (157,084) 4,282 1.2 Equity instruments - 2 - (2) - 1.3 Units in investment funds - - - - - 1.4 Loans - - - - - 1.5 Other - - - - - 2. Financial liabilities held for trading - - - - - 2.1 Debt securities - - - - - 2.2 Deposits - - - - - 2.3 Other - - - - - 3. Financial assets and liabilities: exchange differences X X X X (20,208) 4. Derivatives 1,473,645 1,317,771 (1,457,441) (1,299,959) 101,147 4.1 Financial derivatives: 1,473,645 1,317,771 (1,457,441) (1,299,959) 101,147 - on debt securities and interest rates 1,451,740 986,164 (1,434,169) (975,298) 28,437 - on equity securities and share indices 2,370 29,074 (3,737) (28,974) (1,267) - on currency and gold X X X X 67,131 - other 19,535 302,533 (19,535) (295,687) 6,846 4.2 Credit derivatives - - - - - Total 1,521,485 1,509,180 (1,535,322) (1,457,045) 85,221 Section 5 - Fair value adjustments in hedge accounting - Item 90 5.1 Fair value adjustments in hedge accounting: breakdown (€ '000) P&L COMPONENT/VALUES YEAR 2018 YEAR 2017 A. Gains on A.1 Fair value hedging instruments 345,999 1,415,111 A.2 Hedged financial assets (in fair value hedge relationship) 494,589 509,662 A.3 Hedged financial liabilities (in fair value hedge relationship) 35,038 1,026,263 A.4 Cash-flow hedging derivatives 1,119 - A.5 Assets and liabilities denominated in currency - 1,962 Total gains on hedging activities (A) 876,745 2,952,998 B. Losses on B.1 Fair value hedging instruments (518,451) (1,650,886) B.2 Hedged financial assets (in fair value hedge relationship) (239,036) (1,302,694) B.3 Hedged financial liabilities (in fair value hedge relationship) (116,208) (7,958) B.4 Cash-flow hedging derivatives (1,920) (4,167) B.5 Assets and liabilities denominated in currency - - Total losses on hedging activities (B) (875,615) (2,965,705) C. Net hedging result (A – B) 1,130 (12,707) of which: net gains (losses) of hedge accounting on net positions - - The net hedging result also reflected €3 million resulting from model adjustments needed to reflect into derivatives valuations the presence of guarantees and credit risk of counterparties. Company financial statements | Notes to the accounts Part C - Income statement 648 2018 Annual Report and Accounts · UniCredit Financial derivatives include the ones connected to debt securities financial liabilities at fair value. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 4.1 Gains and losses on financial assets and liabilities held for trading: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets held for trading 47,840 191,409 (77,881) (157,086) 4,282 1.1 Debt securities 47,840 191,407 (77,881) (157,084) 4,282 1.2 Equity instruments - 2 - (2) - 1.3 Units in investment funds - - - - - 1.4 Loans - - - - - 1.5 Other - - - - - 2. Financial liabilities held for trading - - - - - 2.1 Debt securities - - - - - 2.2 Deposits - - - - - 2.3 Other - - - - - 3. Financial assets and liabilities: exchange differences X X X X (20,208) 4. Derivatives 1,473,645 1,317,771 (1,457,441) (1,299,959) 101,147 4.1 Financial derivatives: 1,473,645 1,317,771 (1,457,441) (1,299,959) 101,147 - on debt securities and interest rates 1,451,740 986,164 (1,434,169) (975,298) 28,437 - on equity securities and share indices 2,370 29,074 (3,737) (28,974) (1,267) - on currency and gold X X X X 67,131 - other 19,535 302,533 (19,535) (295,687) 6,846 4.2 Credit derivatives - - - - - Total 1,521,485 1,509,180 (1,535,322) (1,457,045) 85,221 Section 5 - Fair value adjustments in hedge accounting - Item 90 5.1 Fair value adjustments in hedge accounting: breakdown (€ '000) P&L COMPONENT/VALUES YEAR 2018 YEAR 2017 A. Gains on A.1 Fair value hedging instruments 345,999 1,415,111 A.2 Hedged financial assets (in fair value hedge relationship) 494,589 509,662 A.3 Hedged financial liabilities (in fair value hedge relationship) 35,038 1,026,263 A.4 Cash-flow hedging derivatives 1,119 - A.5 Assets and liabilities denominated in currency - 1,962 Total gains on hedging activities (A) 876,745 2,952,998 B. Losses on B.1 Fair value hedging instruments (518,451) (1,650,886) B.2 Hedged financial assets (in fair value hedge relationship) (239,036) (1,302,694) B.3 Hedged financial liabilities (in fair value hedge relationship) (116,208) (7,958) B.4 Cash-flow hedging derivatives (1,920) (4,167) B.5 Assets and liabilities denominated in currency - - Total losses on hedging activities (B) (875,615) (2,965,705) C. Net hedging result (A – B) 1,130 (12,707) of which: net gains (losses) of hedge accounting on net positions - - The net hedging result also reflected €3 million resulting from model adjustments needed to reflect into derivatives valuations the presence of guarantees and credit risk of counterparties. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 649 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) YEAR 2018 ITEMS/P&L ITEMS GAINS LOSSES NET PROFIT A. Financial assets 1. Financial assets at amortised cost 139,472 (173,531) (34,059) 1.1 Loans and advances to banks 713 (7,780) (7,067) 1.2 Loans and advances to customers 138,759 (165,751) (26,992) 2. Financial assets at fair value through other comprehensive income 345,049 (258,144) 86,905 2.1 Debt securities 345,049 (258,144) 86,905 2.2 Loans - - - Total assets (A) 484,521 (431,675) 52,846 B. Financial liabilities at amortised cost 1. Deposits from banks - - - 2. Deposits from customers - - - 3. Debt securities in issue 14,030 (14,787) (757) Total liabilities (B) 14,030 (14,787) (757) Total financial assets/liabilities 52,089 Net results on financial assets at amortized cost mainly arise from sale of non-performing loans and advances to customers. In 2017, gains and losses on disposal booked in item “Loans and receivables with customers” include those underlying the FINO Portfolio sale, respectively for €350 million and -€714 million, with a negative net amount for -€364 million. Net gains on financial assets at fair value through OCI are essentially related to effects of the sale of government bonds, mainly Italian ones. Net gains from repurchase of debts with banks in 2017 arise from buyback of some deposits before their original maturity. Net gains from repurchase of debts securities in issue arise from buyback of some issuances before their original maturity. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) ITEMS/P&L ITEMS YEAR 2017 GAINS LOSSES NET PROFIT Financial assets 1. Loans and receivables with banks 310 - 310 2. Loans and receivables with customers 491,084 (1,060,841) (569,757) 3. Available-for-sale financial assets 759,768 (446,121) 313,647 3.1 Debt securities 668,260 (442,715) 225,545 3.2 Equity instruments 47,822 (3,406) 44,416 3.3 Units in Investment funds 43,686 - 43,686 3.4 Loans - - - 4. Held-to-maturity investments - - - Total assets 1,251,162 (1,506,962) (255,800) Financial liabilities 1. Deposits with banks 19,989 (10,463) 9,526 2. Deposits with customers - - - 3. Debt securities in issue 40,402 (13,346) 27,056 Total liabilities 60,391 (23,809) 36,582 Total financial assets and liabilities (219,218) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 649 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) YEAR 2018 ITEMS/P&L ITEMS GAINS LOSSES NET PROFIT A. Financial assets 1. Financial assets at amortised cost 139,472 (173,531) (34,059) 1.1 Loans and advances to banks 713 (7,780) (7,067) 1.2 Loans and advances to customers 138,759 (165,751) (26,992) 2. Financial assets at fair value through other comprehensive income 345,049 (258,144) 86,905 2.1 Debt securities 345,049 (258,144) 86,905 2.2 Loans - - - Total assets (A) 484,521 (431,675) 52,846 B. Financial liabilities at amortised cost 1. Deposits from banks - - - 2. Deposits from customers - - - 3. Debt securities in issue 14,030 (14,787) (757) Total liabilities (B) 14,030 (14,787) (757) Total financial assets/liabilities 52,089 Net results on financial assets at amortized cost mainly arise from sale of non-performing loans and advances to customers. In 2017, gains and losses on disposal booked in item “Loans and receivables with customers” include those underlying the FINO Portfolio sale, respectively for €350 million and -€714 million, with a negative net amount for -€364 million. Net gains on financial assets at fair value through OCI are essentially related to effects of the sale of government bonds, mainly Italian ones. Net gains from repurchase of debts with banks in 2017 arise from buyback of some deposits before their original maturity. Net gains from repurchase of debts securities in issue arise from buyback of some issuances before their original maturity. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) ITEMS/P&L ITEMS YEAR 2017 GAINS LOSSES NET PROFIT Financial assets 1. Loans and receivables with banks 310 - 310 2. Loans and receivables with customers 491,084 (1,060,841) (569,757) 3. Available-for-sale financial assets 759,768 (446,121) 313,647 3.1 Debt securities 668,260 (442,715) 225,545 3.2 Equity instruments 47,822 (3,406) 44,416 3.3 Units in Investment funds 43,686 - 43,686 3.4 Loans - - - 4. Held-to-maturity investments - - - Total assets 1,251,162 (1,506,962) (255,800) Financial liabilities 1. Deposits with banks 19,989 (10,463) 9,526 2. Deposits with customers - - - 3. Debt securities in issue 40,402 (13,346) 27,056 Total liabilities 60,391 (23,809) 36,582 Total financial assets and liabilities (219,218) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 649 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) YEAR 2018 ITEMS/P&L ITEMS GAINS LOSSES NET PROFIT A. Financial assets 1. Financial assets at amortised cost 139,472 (173,531) (34,059) 1.1 Loans and advances to banks 713 (7,780) (7,067) 1.2 Loans and advances to customers 138,759 (165,751) (26,992) 2. Financial assets at fair value through other comprehensive income 345,049 (258,144) 86,905 2.1 Debt securities 345,049 (258,144) 86,905 2.2 Loans - - - Total assets (A) 484,521 (431,675) 52,846 B. Financial liabilities at amortised cost 1. Deposits from banks - - - 2. Deposits from customers - - - 3. Debt securities in issue 14,030 (14,787) (757) Total liabilities (B) 14,030 (14,787) (757) Total financial assets/liabilities 52,089 Net results on financial assets at amortized cost mainly arise from sale of non-performing loans and advances to customers. In 2017, gains and losses on disposal booked in item “Loans and receivables with customers” include those underlying the FINO Portfolio sale, respectively for €350 million and -€714 million, with a negative net amount for -€364 million. Net gains on financial assets at fair value through OCI are essentially related to effects of the sale of government bonds, mainly Italian ones. Net gains from repurchase of debts with banks in 2017 arise from buyback of some deposits before their original maturity. Net gains from repurchase of debts securities in issue arise from buyback of some issuances before their original maturity. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) ITEMS/P&L ITEMS YEAR 2017 GAINS LOSSES NET PROFIT Financial assets 1. Loans and receivables with banks 310 - 310 2. Loans and receivables with customers 491,084 (1,060,841) (569,757) 3. Available-for-sale financial assets 759,768 (446,121) 313,647 3.1 Debt securities 668,260 (442,715) 225,545 3.2 Equity instruments 47,822 (3,406) 44,416 3.3 Units in Investment funds 43,686 - 43,686 3.4 Loans - - - 4. Held-to-maturity investments - - - Total assets 1,251,162 (1,506,962) (255,800) Financial liabilities 1. Deposits with banks 19,989 (10,463) 9,526 2. Deposits with customers - - - 3. Debt securities in issue 40,402 (13,346) 27,056 Total liabilities 60,391 (23,809) 36,582 Total financial assets and liabilities (219,218) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 649 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) YEAR 2018 ITEMS/P&L ITEMS GAINS LOSSES NET PROFIT A. Financial assets 1. Financial assets at amortised cost 139,472 (173,531) (34,059) 1.1 Loans and advances to banks 713 (7,780) (7,067) 1.2 Loans and advances to customers 138,759 (165,751) (26,992) 2. Financial assets at fair value through other comprehensive income 345,049 (258,144) 86,905 2.1 Debt securities 345,049 (258,144) 86,905 2.2 Loans - - - Total assets (A) 484,521 (431,675) 52,846 B. Financial liabilities at amortised cost 1. Deposits from banks - - - 2. Deposits from customers - - - 3. Debt securities in issue 14,030 (14,787) (757) Total liabilities (B) 14,030 (14,787) (757) Total financial assets/liabilities 52,089 Net results on financial assets at amortized cost mainly arise from sale of non-performing loans and advances to customers. In 2017, gains and losses on disposal booked in item “Loans and receivables with customers” include those underlying the FINO Portfolio sale, respectively for €350 million and -€714 million, with a negative net amount for -€364 million. Net gains on financial assets at fair value through OCI are essentially related to effects of the sale of government bonds, mainly Italian ones. Net gains from repurchase of debts with banks in 2017 arise from buyback of some deposits before their original maturity. Net gains from repurchase of debts securities in issue arise from buyback of some issuances before their original maturity. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) ITEMS/P&L ITEMS YEAR 2017 GAINS LOSSES NET PROFIT Financial assets 1. Loans and receivables with banks 310 - 310 2. Loans and receivables with customers 491,084 (1,060,841) (569,757) 3. Available-for-sale financial assets 759,768 (446,121) 313,647 3.1 Debt securities 668,260 (442,715) 225,545 3.2 Equity instruments 47,822 (3,406) 44,416 3.3 Units in Investment funds 43,686 - 43,686 3.4 Loans - - - 4. Held-to-maturity investments - - - Total assets 1,251,162 (1,506,962) (255,800) Financial liabilities 1. Deposits with banks 19,989 (10,463) 9,526 2. Deposits with customers - - - 3. Debt securities in issue 40,402 (13,346) 27,056 Total liabilities 60,391 (23,809) 36,582 Total financial assets and liabilities (219,218) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 649 Section 6 - Gains (Losses) on disposals/repurchases - Item 100 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) YEAR 2018 ITEMS/P&L ITEMS GAINS LOSSES NET PROFIT A. Financial assets 1. Financial assets at amortised cost 139,472 (173,531) (34,059) 1.1 Loans and advances to banks 713 (7,780) (7,067) 1.2 Loans and advances to customers 138,759 (165,751) (26,992) 2. Financial assets at fair value through other comprehensive income 345,049 (258,144) 86,905 2.1 Debt securities 345,049 (258,144) 86,905 2.2 Loans - - - Total assets (A) 484,521 (431,675) 52,846 B. Financial liabilities at amortised cost 1. Deposits from banks - - - 2. Deposits from customers - - - 3. Debt securities in issue 14,030 (14,787) (757) Total liabilities (B) 14,030 (14,787) (757) Total financial assets/liabilities 52,089 Net results on financial assets at amortized cost mainly arise from sale of non-performing loans and advances to customers. In 2017, gains and losses on disposal booked in item “Loans and receivables with customers” include those underlying the FINO Portfolio sale, respectively for €350 million and -€714 million, with a negative net amount for -€364 million. Net gains on financial assets at fair value through OCI are essentially related to effects of the sale of government bonds, mainly Italian ones. Net gains from repurchase of debts with banks in 2017 arise from buyback of some deposits before their original maturity. Net gains from repurchase of debts securities in issue arise from buyback of some issuances before their original maturity. The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 6.1 Gains (Losses) on disposal/repurchase: breakdown (€ '000) ITEMS/P&L ITEMS YEAR 2017 GAINS LOSSES NET PROFIT Financial assets 1. Loans and receivables with banks 310 - 310 2. Loans and receivables with customers 491,084 (1,060,841) (569,757) 3. Available-for-sale financial assets 759,768 (446,121) 313,647 3.1 Debt securities 668,260 (442,715) 225,545 3.2 Equity instruments 47,822 (3,406) 44,416 3.3 Units in Investment funds 43,686 - 43,686 3.4 Loans - - - 4. Held-to-maturity investments - - - Total assets 1,251,162 (1,506,962) (255,800) Financial liabilities 1. Deposits with banks 19,989 (10,463) 9,526 2. Deposits with customers - - - 3. Debt securities in issue 40,402 (13,346) 27,056 Total liabilities 60,391 (23,809) 36,582 Total financial assets and liabilities (219,218) Company financial statements | Notes to the accounts Part C - Income statement 650 2018 Annual Report and Accounts · UniCredit Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 7.1 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets - - - - - 1.1 Debt securities - - - - - 1.2 Loans - - - - - 2. Financial liabilities 232,925 12,149 (104,226) (16,045) 124,803 2.1 Debt securities 232,925 12,149 (104,226) (16,045) 124,803 2.2 Deposits from banks - - - - - 2.3 Deposits from customers - - - - - 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - Total 232,925 12,149 (104,226) (16,045) 124,803 Debt securities into financial liabilities include the bond “Secured mandatorily exchangeable equity-linked certificate” issued in the contest of the sale of Bank Pekao S.A. which has contributed for €51 million to the result for the period. Some financial derivatives entered into for economic hedge purposes are linked to financial liabilities represented by debt securities and their economic results are included into table 4.1 Trading result in Part C - Section 4. 7.2 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of other financial assets mandatorily at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 73,528 18,152 (203,578) (21,721) (133,619) 1.1 Debt securities 1,953 632 (74,896) (14,601) (86,912) 1.2 Equity securities 6,371 17,520 (110,155) - (86,264) 1.3 Units in investment funds 59,626 - (11,403) (37) 48,186 1.4 Loans 5,578 - (7,124) (7,083) (8,629) 2. Financial assets: exchange differences X X X X - Total 73,528 18,152 (203,578) (21,721) (133,619) Equity securities into financial assets include effects of the evaluation of residual interests in Bank Pekao S.A. (-€93 million) which has been reclassified into fair value option assets in June 2017 after loose of control following the closing of the sale process and into assets mandatory at fair value following IFRS9 adoption in 2018. OICR quotes include economic effects from Atlante fund and Italian Recovery Fund, for which refer to specific comment in table 2.5 Financial assets mandatory at fair value in Part B - Section 2. Company financial statements | Notes to the accounts Part C - Income statement 650 2018 Annual Report and Accounts · UniCredit Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 7.1 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets - - - - - 1.1 Debt securities - - - - - 1.2 Loans - - - - - 2. Financial liabilities 232,925 12,149 (104,226) (16,045) 124,803 2.1 Debt securities 232,925 12,149 (104,226) (16,045) 124,803 2.2 Deposits from banks - - - - - 2.3 Deposits from customers - - - - - 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - Total 232,925 12,149 (104,226) (16,045) 124,803 Debt securities into financial liabilities include the bond “Secured mandatorily exchangeable equity-linked certificate” issued in the contest of the sale of Bank Pekao S.A. which has contributed for €51 million to the result for the period. Some financial derivatives entered into for economic hedge purposes are linked to financial liabilities represented by debt securities and their economic results are included into table 4.1 Trading result in Part C - Section 4. 7.2 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of other financial assets mandatorily at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 73,528 18,152 (203,578) (21,721) (133,619) 1.1 Debt securities 1,953 632 (74,896) (14,601) (86,912) 1.2 Equity securities 6,371 17,520 (110,155) - (86,264) 1.3 Units in investment funds 59,626 - (11,403) (37) 48,186 1.4 Loans 5,578 - (7,124) (7,083) (8,629) 2. Financial assets: exchange differences X X X X - Total 73,528 18,152 (203,578) (21,721) (133,619) Equity securities into financial assets include effects of the evaluation of residual interests in Bank Pekao S.A. (-€93 million) which has been reclassified into fair value option assets in June 2017 after loose of control following the closing of the sale process and into assets mandatory at fair value following IFRS9 adoption in 2018. OICR quotes include economic effects from Atlante fund and Italian Recovery Fund, for which refer to specific comment in table 2.5 Financial assets mandatory at fair value in Part B - Section 2. Company financial statements | Notes to the accounts Part C - Income statement 650 2018 Annual Report and Accounts · UniCredit Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 7.1 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets - - - - - 1.1 Debt securities - - - - - 1.2 Loans - - - - - 2. Financial liabilities 232,925 12,149 (104,226) (16,045) 124,803 2.1 Debt securities 232,925 12,149 (104,226) (16,045) 124,803 2.2 Deposits from banks - - - - - 2.3 Deposits from customers - - - - - 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - Total 232,925 12,149 (104,226) (16,045) 124,803 Debt securities into financial liabilities include the bond “Secured mandatorily exchangeable equity-linked certificate” issued in the contest of the sale of Bank Pekao S.A. which has contributed for €51 million to the result for the period. Some financial derivatives entered into for economic hedge purposes are linked to financial liabilities represented by debt securities and their economic results are included into table 4.1 Trading result in Part C - Section 4. 7.2 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of other financial assets mandatorily at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 73,528 18,152 (203,578) (21,721) (133,619) 1.1 Debt securities 1,953 632 (74,896) (14,601) (86,912) 1.2 Equity securities 6,371 17,520 (110,155) - (86,264) 1.3 Units in investment funds 59,626 - (11,403) (37) 48,186 1.4 Loans 5,578 - (7,124) (7,083) (8,629) 2. Financial assets: exchange differences X X X X - Total 73,528 18,152 (203,578) (21,721) (133,619) Equity securities into financial assets include effects of the evaluation of residual interests in Bank Pekao S.A. (-€93 million) which has been reclassified into fair value option assets in June 2017 after loose of control following the closing of the sale process and into assets mandatory at fair value following IFRS9 adoption in 2018. OICR quotes include economic effects from Atlante fund and Italian Recovery Fund, for which refer to specific comment in table 2.5 Financial assets mandatory at fair value in Part B - Section 2. Company financial statements | Notes to the accounts Part C - Income statement 650 2018 Annual Report and Accounts · UniCredit Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 7.1 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets - - - - - 1.1 Debt securities - - - - - 1.2 Loans - - - - - 2. Financial liabilities 232,925 12,149 (104,226) (16,045) 124,803 2.1 Debt securities 232,925 12,149 (104,226) (16,045) 124,803 2.2 Deposits from banks - - - - - 2.3 Deposits from customers - - - - - 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - Total 232,925 12,149 (104,226) (16,045) 124,803 Debt securities into financial liabilities include the bond “Secured mandatorily exchangeable equity-linked certificate” issued in the contest of the sale of Bank Pekao S.A. which has contributed for €51 million to the result for the period. Some financial derivatives entered into for economic hedge purposes are linked to financial liabilities represented by debt securities and their economic results are included into table 4.1 Trading result in Part C - Section 4. 7.2 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of other financial assets mandatorily at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 73,528 18,152 (203,578) (21,721) (133,619) 1.1 Debt securities 1,953 632 (74,896) (14,601) (86,912) 1.2 Equity securities 6,371 17,520 (110,155) - (86,264) 1.3 Units in investment funds 59,626 - (11,403) (37) 48,186 1.4 Loans 5,578 - (7,124) (7,083) (8,629) 2. Financial assets: exchange differences X X X X - Total 73,528 18,152 (203,578) (21,721) (133,619) Equity securities into financial assets include effects of the evaluation of residual interests in Bank Pekao S.A. (-€93 million) which has been reclassified into fair value option assets in June 2017 after loose of control following the closing of the sale process and into assets mandatory at fair value following IFRS9 adoption in 2018. OICR quotes include economic effects from Atlante fund and Italian Recovery Fund, for which refer to specific comment in table 2.5 Financial assets mandatory at fair value in Part B - Section 2. Company financial statements | Notes to the accounts Part C - Income statement 650 2018 Annual Report and Accounts · UniCredit Section 7 - Net gains (losses) on other financial assets/liabilities at fair value through profit or loss - Item 110 7.1 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of financial assets and liabilities designated at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets - - - - - 1.1 Debt securities - - - - - 1.2 Loans - - - - - 2. Financial liabilities 232,925 12,149 (104,226) (16,045) 124,803 2.1 Debt securities 232,925 12,149 (104,226) (16,045) 124,803 2.2 Deposits from banks - - - - - 2.3 Deposits from customers - - - - - 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - Total 232,925 12,149 (104,226) (16,045) 124,803 Debt securities into financial liabilities include the bond “Secured mandatorily exchangeable equity-linked certificate” issued in the contest of the sale of Bank Pekao S.A. which has contributed for €51 million to the result for the period. Some financial derivatives entered into for economic hedge purposes are linked to financial liabilities represented by debt securities and their economic results are included into table 4.1 Trading result in Part C - Section 4. 7.2 Net change in other financial assets/liabilities at fair value through profit or loss: breakdown of other financial assets mandatorily at fair value (€ '000) YEAR 2018 TRANSACTIONS/P&L ITEMS CAPITAL GAINS (A) REALISED PROFITS (B) CAPITAL LOSSES (C) REALISED LOSSES (D) NET PROFIT [(A + B) − (C + D)] 1. Financial assets 73,528 18,152 (203,578) (21,721) (133,619) 1.1 Debt securities 1,953 632 (74,896) (14,601) (86,912) 1.2 Equity securities 6,371 17,520 (110,155) - (86,264) 1.3 Units in investment funds 59,626 - (11,403) (37) 48,186 1.4 Loans 5,578 - (7,124) (7,083) (8,629) 2. Financial assets: exchange differences X X X X - Total 73,528 18,152 (203,578) (21,721) (133,619) Equity securities into financial assets include effects of the evaluation of residual interests in Bank Pekao S.A. (-€93 million) which has been reclassified into fair value option assets in June 2017 after loose of control following the closing of the sale process and into assets mandatory at fair value following IFRS9 adoption in 2018. OICR quotes include economic effects from Atlante fund and Italian Recovery Fund, for which refer to specific comment in table 2.5 Financial assets mandatory at fair value in Part B - Section 2. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 651 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 7.1 Net change in financial assets/liabilities at fair value through profit or loss: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets 23,653 2,725 (1,861) (21) 24,496 1.1 Debt securities 1,526 663 (1,826) (21) 342 1.2 Equity securities 21,874 500 (2) - 22,372 1.3 Units in investment funds 253 1,562 (33) - 1,782 1.4 Loans - - - - - 2. Financial liabilities 46,553 - (154,275) (44,328) (152,050) 2.1 Debt securities 46,553 - (154,275) (44,328) (152,050) 2.2 Deposits from banks - - - - - 2.3 Deposits from customers - - - - - 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - 4. Credit and financial derivatives 117,194 38,196 (128,836) - 26,554 Total 187,400 40,921 (284,972) (44,349) (101,000) Section 8 - Net losses/recoveries on credit impairment - Item 130 8.1 Net impairment losses for credit risk relating to financial assets at amortised cost: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS WRITE-OFF OTHER A. Loans and advances to banks (15,224) (1) (2,334) 10,699 - (6,860) - Loans (14,407) (1) (2,334) 10,601 - (6,141) - Debt securities (817) - - 98 - (719) of which: acquired or originated impaired loans - - - - - - B. Loans and advances to customers (697,110) (234,589) (3,616,967) 779,954 1,777,921 (1,990,791) - Loans (677,620) (234,589) (3,616,967) 770,476 1,777,921 (1,980,779) - Debt securities (19,490) - - 9,478 - (10,012) of which: acquired or originated impaired loans - (1,247) (2,849) - 117 (3,979) Total (712,334) (234,590) (3,619,301) 790,653 1,777,921 (1,997,651) 8.2 Net change for credit risk relating to financial assets at fair value through other comprehensive income: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS WRITE-OFF OTHER A. Debt securities (14,751) - - 940 43 (13,768) B. Loans - - - - - - - Loans and advances to customers - - - - - - - Loans and advances to banks - - - - - - of which: acquired or originated impaired financial assets - - - - - - Total (14,751) - - 940 43 (13,768) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 651 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 7.1 Net change in financial assets/liabilities at fair value through profit or loss: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets 23,653 2,725 (1,861) (21) 24,496 1.1 Debt securities 1,526 663 (1,826) (21) 342 1.2 Equity securities 21,874 500 (2) - 22,372 1.3 Units in investment funds 253 1,562 (33) - 1,782 1.4 Loans - - - - - 2. Financial liabilities 46,553 - (154,275) (44,328) (152,050) 2.1 Debt securities 46,553 - (154,275) (44,328) (152,050) 2.2 Deposits from banks - - - - - 2.3 Deposits from customers - - - - - 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - 4. Credit and financial derivatives 117,194 38,196 (128,836) - 26,554 Total 187,400 40,921 (284,972) (44,349) (101,000) Section 8 - Net losses/recoveries on credit impairment - Item 130 8.1 Net impairment losses for credit risk relating to financial assets at amortised cost: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS WRITE-OFF OTHER A. Loans and advances to banks (15,224) (1) (2,334) 10,699 - (6,860) - Loans (14,407) (1) (2,334) 10,601 - (6,141) - Debt securities (817) - - 98 - (719) of which: acquired or originated impaired loans - - - - - - B. Loans and advances to customers (697,110) (234,589) (3,616,967) 779,954 1,777,921 (1,990,791) - Loans (677,620) (234,589) (3,616,967) 770,476 1,777,921 (1,980,779) - Debt securities (19,490) - - 9,478 - (10,012) of which: acquired or originated impaired loans - (1,247) (2,849) - 117 (3,979) Total (712,334) (234,590) (3,619,301) 790,653 1,777,921 (1,997,651) 8.2 Net change for credit risk relating to financial assets at fair value through other comprehensive income: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS WRITE-OFF OTHER A. Debt securities (14,751) - - 940 43 (13,768) B. Loans - - - - - - - Loans and advances to customers - - - - - - - Loans and advances to banks - - - - - - of which: acquired or originated impaired financial assets - - - - - - Total (14,751) - - 940 43 (13,768) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 651 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 7.1 Net change in financial assets/liabilities at fair value through profit or loss: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets 23,653 2,725 (1,861) (21) 24,496 1.1 Debt securities 1,526 663 (1,826) (21) 342 1.2 Equity securities 21,874 500 (2) - 22,372 1.3 Units in investment funds 253 1,562 (33) - 1,782 1.4 Loans - - - - - 2. Financial liabilities 46,553 - (154,275) (44,328) (152,050) 2.1 Debt securities 46,553 - (154,275) (44,328) (152,050) 2.2 Deposits from banks - - - - - 2.3 Deposits from customers - - - - - 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - 4. Credit and financial derivatives 117,194 38,196 (128,836) - 26,554 Total 187,400 40,921 (284,972) (44,349) (101,000) Section 8 - Net losses/recoveries on credit impairment - Item 130 8.1 Net impairment losses for credit risk relating to financial assets at amortised cost: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS WRITE-OFF OTHER A. Loans and advances to banks (15,224) (1) (2,334) 10,699 - (6,860) - Loans (14,407) (1) (2,334) 10,601 - (6,141) - Debt securities (817) - - 98 - (719) of which: acquired or originated impaired loans - - - - - - B. Loans and advances to customers (697,110) (234,589) (3,616,967) 779,954 1,777,921 (1,990,791) - Loans (677,620) (234,589) (3,616,967) 770,476 1,777,921 (1,980,779) - Debt securities (19,490) - - 9,478 - (10,012) of which: acquired or originated impaired loans - (1,247) (2,849) - 117 (3,979) Total (712,334) (234,590) (3,619,301) 790,653 1,777,921 (1,997,651) 8.2 Net change for credit risk relating to financial assets at fair value through other comprehensive income: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS WRITE-OFF OTHER A. Debt securities (14,751) - - 940 43 (13,768) B. Loans - - - - - - - Loans and advances to customers - - - - - - - Loans and advances to banks - - - - - - of which: acquired or originated impaired financial assets - - - - - - Total (14,751) - - 940 43 (13,768) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 651 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 7.1 Net change in financial assets/liabilities at fair value through profit or loss: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets 23,653 2,725 (1,861) (21) 24,496 1.1 Debt securities 1,526 663 (1,826) (21) 342 1.2 Equity securities 21,874 500 (2) - 22,372 1.3 Units in investment funds 253 1,562 (33) - 1,782 1.4 Loans - - - - - 2. Financial liabilities 46,553 - (154,275) (44,328) (152,050) 2.1 Debt securities 46,553 - (154,275) (44,328) (152,050) 2.2 Deposits from banks - - - - - 2.3 Deposits from customers - - - - - 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - 4. Credit and financial derivatives 117,194 38,196 (128,836) - 26,554 Total 187,400 40,921 (284,972) (44,349) (101,000) Section 8 - Net losses/recoveries on credit impairment - Item 130 8.1 Net impairment losses for credit risk relating to financial assets at amortised cost: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS WRITE-OFF OTHER A. Loans and advances to banks (15,224) (1) (2,334) 10,699 - (6,860) - Loans (14,407) (1) (2,334) 10,601 - (6,141) - Debt securities (817) - - 98 - (719) of which: acquired or originated impaired loans - - - - - - B. Loans and advances to customers (697,110) (234,589) (3,616,967) 779,954 1,777,921 (1,990,791) - Loans (677,620) (234,589) (3,616,967) 770,476 1,777,921 (1,980,779) - Debt securities (19,490) - - 9,478 - (10,012) of which: acquired or originated impaired loans - (1,247) (2,849) - 117 (3,979) Total (712,334) (234,590) (3,619,301) 790,653 1,777,921 (1,997,651) 8.2 Net change for credit risk relating to financial assets at fair value through other comprehensive income: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS WRITE-OFF OTHER A. Debt securities (14,751) - - 940 43 (13,768) B. Loans - - - - - - - Loans and advances to customers - - - - - - - Loans and advances to banks - - - - - - of which: acquired or originated impaired financial assets - - - - - - Total (14,751) - - 940 43 (13,768) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 651 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 7.1 Net change in financial assets/liabilities at fair value through profit or loss: breakdown (€ '000) YEAR 2017 TRANSACTIONS/P&L ITEMS UNREALISED PROFITS REALISED PROFITS UNREALISED LOSSES REALISED LOSSES NET PROFIT 1. Financial assets 23,653 2,725 (1,861) (21) 24,496 1.1 Debt securities 1,526 663 (1,826) (21) 342 1.2 Equity securities 21,874 500 (2) - 22,372 1.3 Units in investment funds 253 1,562 (33) - 1,782 1.4 Loans - - - - - 2. Financial liabilities 46,553 - (154,275) (44,328) (152,050) 2.1 Debt securities 46,553 - (154,275) (44,328) (152,050) 2.2 Deposits from banks - - - - - 2.3 Deposits from customers - - - - - 3. Financial assets and liabilities in foreign currency: exchange differences X X X X - 4. Credit and financial derivatives 117,194 38,196 (128,836) - 26,554 Total 187,400 40,921 (284,972) (44,349) (101,000) Section 8 - Net losses/recoveries on credit impairment - Item 130 8.1 Net impairment losses for credit risk relating to financial assets at amortised cost: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS WRITE-OFF OTHER A. Loans and advances to banks (15,224) (1) (2,334) 10,699 - (6,860) - Loans (14,407) (1) (2,334) 10,601 - (6,141) - Debt securities (817) - - 98 - (719) of which: acquired or originated impaired loans - - - - - - B. Loans and advances to customers (697,110) (234,589) (3,616,967) 779,954 1,777,921 (1,990,791) - Loans (677,620) (234,589) (3,616,967) 770,476 1,777,921 (1,980,779) - Debt securities (19,490) - - 9,478 - (10,012) of which: acquired or originated impaired loans - (1,247) (2,849) - 117 (3,979) Total (712,334) (234,590) (3,619,301) 790,653 1,777,921 (1,997,651) 8.2 Net change for credit risk relating to financial assets at fair value through other comprehensive income: breakdown (€ '000) YEAR 2018 WRITE-DOWNS WRITE-BACKS TOTAL LEVEL 1 AND LEVEL 2 LEVEL 3 LEVEL 1 AND LEVEL 2 LEVEL 3 TRANSACTIONS/P&L ITEMS WRITE-OFF OTHER A. Debt securities (14,751) - - 940 43 (13,768) B. Loans - - - - - - - Loans and advances to customers - - - - - - - Loans and advances to banks - - - - - - of which: acquired or originated impaired financial assets - - - - - - Total (14,751) - - 940 43 (13,768) Company financial statements | Notes to the accounts Part C - Income statement 652 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 8.1 Net impairment losses on loans and receivables: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC PORTFOLIO TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER PORTFOLIO INTEREST OTHER INTEREST OTHER TOTAL A. Loans and receivables with banks - (1,175) (5,530) - 1,007 - 11,445 5,747 - Loans - (1,175) (5,530) - 1,007 - 11,445 5,747 - Debt securities - - - - - - - - B. Loans and receivables with customers (301,129) (2,766,887) (449,098) 401,400 1,120,034 - 652,398 (1,343,282) Impaired related to purchase agreements (1,584) (1,985) - 773 2,235 - - (561) - Loans (1,584) (1,985) X 773 2,235 X X (561) - Debt securities - - X - - X X - Other loans (299,545) (2,764,902) (449,098) 400,627 1,117,799 - 652,398 (1,342,721) - Loans (299,545) (2,761,513) (449,098) 400,627 1,104,919 - 652,398 (1,352,212) - Debt securities - (3,389) - - 12,880 - - 9,491 C. Total (301,129) (2,768,062) (454,628) 401,400 1,121,041 - 663,843 (1,337,535) 8.2 Net impairment losses on available for sale financial assets: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER INTEREST OTHER TOTAL A. Debt securities - (21,428) - - (21,428) B. Equity instruments (53,964) (91,239) X X (145,203) C. Units in investment funds - (146,903) X - (146,903) D. Loans to banks - - - - - E. Loans to customers - - - - - F. Total (53,964) (259,570) - - (313,534) Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 9.1 Gains (Losses) from contractual changes: breakdown (€ '000) YEAR 2018 GAINS LOSSES TOTAL A. Financial assets at amortised costs A.1 Debt securities - - - A.2 Loans to banks - - - A.3 Loans to customers 2,124 (5,417) (3,293) Total (A) 2,124 (5,417) (3,293) B. Financial assets at fair value through other comprehensive income B.1 Debt securities - - - B.2 Loans to banks - - - B.3 Loans to customers - - - Total (B) - - - Total (A+B) 2,124 (5,417) (3,293) Company financial statements | Notes to the accounts Part C - Income statement 652 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 8.1 Net impairment losses on loans and receivables: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC PORTFOLIO TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER PORTFOLIO INTEREST OTHER INTEREST OTHER TOTAL A. Loans and receivables with banks - (1,175) (5,530) - 1,007 - 11,445 5,747 - Loans - (1,175) (5,530) - 1,007 - 11,445 5,747 - Debt securities - - - - - - - - B. Loans and receivables with customers (301,129) (2,766,887) (449,098) 401,400 1,120,034 - 652,398 (1,343,282) Impaired related to purchase agreements (1,584) (1,985) - 773 2,235 - - (561) - Loans (1,584) (1,985) X 773 2,235 X X (561) - Debt securities - - X - - X X - Other loans (299,545) (2,764,902) (449,098) 400,627 1,117,799 - 652,398 (1,342,721) - Loans (299,545) (2,761,513) (449,098) 400,627 1,104,919 - 652,398 (1,352,212) - Debt securities - (3,389) - - 12,880 - - 9,491 C. Total (301,129) (2,768,062) (454,628) 401,400 1,121,041 - 663,843 (1,337,535) 8.2 Net impairment losses on available for sale financial assets: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER INTEREST OTHER TOTAL A. Debt securities - (21,428) - - (21,428) B. Equity instruments (53,964) (91,239) X X (145,203) C. Units in investment funds - (146,903) X - (146,903) D. Loans to banks - - - - - E. Loans to customers - - - - - F. Total (53,964) (259,570) - - (313,534) Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 9.1 Gains (Losses) from contractual changes: breakdown (€ '000) YEAR 2018 GAINS LOSSES TOTAL A. Financial assets at amortised costs A.1 Debt securities - - - A.2 Loans to banks - - - A.3 Loans to customers 2,124 (5,417) (3,293) Total (A) 2,124 (5,417) (3,293) B. Financial assets at fair value through other comprehensive income B.1 Debt securities - - - B.2 Loans to banks - - - B.3 Loans to customers - - - Total (B) - - - Total (A+B) 2,124 (5,417) (3,293) Company financial statements | Notes to the accounts Part C - Income statement 652 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 8.1 Net impairment losses on loans and receivables: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC PORTFOLIO TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER PORTFOLIO INTEREST OTHER INTEREST OTHER TOTAL A. Loans and receivables with banks - (1,175) (5,530) - 1,007 - 11,445 5,747 - Loans - (1,175) (5,530) - 1,007 - 11,445 5,747 - Debt securities - - - - - - - - B. Loans and receivables with customers (301,129) (2,766,887) (449,098) 401,400 1,120,034 - 652,398 (1,343,282) Impaired related to purchase agreements (1,584) (1,985) - 773 2,235 - - (561) - Loans (1,584) (1,985) X 773 2,235 X X (561) - Debt securities - - X - - X X - Other loans (299,545) (2,764,902) (449,098) 400,627 1,117,799 - 652,398 (1,342,721) - Loans (299,545) (2,761,513) (449,098) 400,627 1,104,919 - 652,398 (1,352,212) - Debt securities - (3,389) - - 12,880 - - 9,491 C. Total (301,129) (2,768,062) (454,628) 401,400 1,121,041 - 663,843 (1,337,535) 8.2 Net impairment losses on available for sale financial assets: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER INTEREST OTHER TOTAL A. Debt securities - (21,428) - - (21,428) B. Equity instruments (53,964) (91,239) X X (145,203) C. Units in investment funds - (146,903) X - (146,903) D. Loans to banks - - - - - E. Loans to customers - - - - - F. Total (53,964) (259,570) - - (313,534) Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 9.1 Gains (Losses) from contractual changes: breakdown (€ '000) YEAR 2018 GAINS LOSSES TOTAL A. Financial assets at amortised costs A.1 Debt securities - - - A.2 Loans to banks - - - A.3 Loans to customers 2,124 (5,417) (3,293) Total (A) 2,124 (5,417) (3,293) B. Financial assets at fair value through other comprehensive income B.1 Debt securities - - - B.2 Loans to banks - - - B.3 Loans to customers - - - Total (B) - - - Total (A+B) 2,124 (5,417) (3,293) Company financial statements | Notes to the accounts Part C - Income statement 652 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 8.1 Net impairment losses on loans and receivables: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC PORTFOLIO TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER PORTFOLIO INTEREST OTHER INTEREST OTHER TOTAL A. Loans and receivables with banks - (1,175) (5,530) - 1,007 - 11,445 5,747 - Loans - (1,175) (5,530) - 1,007 - 11,445 5,747 - Debt securities - - - - - - - - B. Loans and receivables with customers (301,129) (2,766,887) (449,098) 401,400 1,120,034 - 652,398 (1,343,282) Impaired related to purchase agreements (1,584) (1,985) - 773 2,235 - - (561) - Loans (1,584) (1,985) X 773 2,235 X X (561) - Debt securities - - X - - X X - Other loans (299,545) (2,764,902) (449,098) 400,627 1,117,799 - 652,398 (1,342,721) - Loans (299,545) (2,761,513) (449,098) 400,627 1,104,919 - 652,398 (1,352,212) - Debt securities - (3,389) - - 12,880 - - 9,491 C. Total (301,129) (2,768,062) (454,628) 401,400 1,121,041 - 663,843 (1,337,535) 8.2 Net impairment losses on available for sale financial assets: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER INTEREST OTHER TOTAL A. Debt securities - (21,428) - - (21,428) B. Equity instruments (53,964) (91,239) X X (145,203) C. Units in investment funds - (146,903) X - (146,903) D. Loans to banks - - - - - E. Loans to customers - - - - - F. Total (53,964) (259,570) - - (313,534) Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 9.1 Gains (Losses) from contractual changes: breakdown (€ '000) YEAR 2018 GAINS LOSSES TOTAL A. Financial assets at amortised costs A.1 Debt securities - - - A.2 Loans to banks - - - A.3 Loans to customers 2,124 (5,417) (3,293) Total (A) 2,124 (5,417) (3,293) B. Financial assets at fair value through other comprehensive income B.1 Debt securities - - - B.2 Loans to banks - - - B.3 Loans to customers - - - Total (B) - - - Total (A+B) 2,124 (5,417) (3,293) Company financial statements | Notes to the accounts Part C - Income statement 652 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. 8.1 Net impairment losses on loans and receivables: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC PORTFOLIO TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER PORTFOLIO INTEREST OTHER INTEREST OTHER TOTAL A. Loans and receivables with banks - (1,175) (5,530) - 1,007 - 11,445 5,747 - Loans - (1,175) (5,530) - 1,007 - 11,445 5,747 - Debt securities - - - - - - - - B. Loans and receivables with customers (301,129) (2,766,887) (449,098) 401,400 1,120,034 - 652,398 (1,343,282) Impaired related to purchase agreements (1,584) (1,985) - 773 2,235 - - (561) - Loans (1,584) (1,985) X 773 2,235 X X (561) - Debt securities - - X - - X X - Other loans (299,545) (2,764,902) (449,098) 400,627 1,117,799 - 652,398 (1,342,721) - Loans (299,545) (2,761,513) (449,098) 400,627 1,104,919 - 652,398 (1,352,212) - Debt securities - (3,389) - - 12,880 - - 9,491 C. Total (301,129) (2,768,062) (454,628) 401,400 1,121,041 - 663,843 (1,337,535) 8.2 Net impairment losses on available for sale financial assets: breakdown (€ '000) YEAR 2017 WRITE-DOWNS WRITE-BACKS SPECIFIC SPECIFIC TRANSACTIONS/P&L ITEMS WRITE-OFFS OTHER INTEREST OTHER TOTAL A. Debt securities - (21,428) - - (21,428) B. Equity instruments (53,964) (91,239) X X (145,203) C. Units in investment funds - (146,903) X - (146,903) D. Loans to banks - - - - - E. Loans to customers - - - - - F. Total (53,964) (259,570) - - (313,534) Section 9 - Gains (Losses) from contractual changes whit no cancellations - Item 140 9.1 Gains (Losses) from contractual changes: breakdown (€ '000) YEAR 2018 GAINS LOSSES TOTAL A. Financial assets at amortised costs A.1 Debt securities - - - A.2 Loans to banks - - - A.3 Loans to customers 2,124 (5,417) (3,293) Total (A) 2,124 (5,417) (3,293) B. Financial assets at fair value through other comprehensive income B.1 Debt securities - - - B.2 Loans to banks - - - B.3 Loans to customers - - - Total (B) - - - Total (A+B) 2,124 (5,417) (3,293) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 653 Section 10 - Administrative expenses - Item 160 10.1 Staff expenses: breakdown (€ '000) TYPE OF EXPENSES/VALUES YEAR 2018 YEAR 2017 1) Employees (2,833,667) (3,081,800) a) Wages and salaries (1,949,104) (2,127,521) b) Social charges (530,201) (575,083) c) Severance pay (27,741) (42,270) d) Social security costs - - e) Allocation to employee severance pay provision (15,359) (16,368) f) Provision for retirements and similar provisions (3,447) (1,945) - Defined contribution - - - Defined benefit (3,447) (1,945) g) Payments to external pension funds (164,985) (180,738) - Defined contribution (165,111) (180,738) - Defined benefit 126 - h) Costs arising from share-based payments (30,933) (29,764) i) Other employee benefits (111,897) (108,111) 2) Other staff (2,154) (3,488) 3) Directors and Statutory Auditors (5,296) (5,905) 4) Early retirement costs - - 5) Recoveries of payments for second employees to other companies 68,338 57,028 4) Early retirement costs (93,581) (87,326) Total (2,866,360) (3,121,491) 10.2 Average number of employees by category (€ '000) YEAR 2018 YEAR 2017 Employees 34,156 37,601 a) Senior managers 726 814 b) Managers 18,101 19,587 c) Remaining employees staff 15,329 17,200 Other Staff 1,125 982 Total 35,281 38,583 10.3 Defined benefit company retirement funds: costs and revenues (€ '000) YEAR 2018 YEAR 2017 Current service cost (1,111) (977) Settlement gains (losses) (808) - Past service cost (335) - Interest cost on the DBO (5,835) (5,748) Interest income on plan assets 4,642 4,489 Other costs/revenues - 291 Administrative expenses paid through plan assets - - Total recognised in profit or loss (3,447) (1,945) 10.4 Other employee benefits (€ '000) YEAR 2018 YEAR 2017 - Seniority premiums - - - Leaving incentives 1,496 21,041 - Other (113,393) (129,152) Total (111,897) (108,111) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 653 Section 10 - Administrative expenses - Item 160 10.1 Staff expenses: breakdown (€ '000) TYPE OF EXPENSES/VALUES YEAR 2018 YEAR 2017 1) Employees (2,833,667) (3,081,800) a) Wages and salaries (1,949,104) (2,127,521) b) Social charges (530,201) (575,083) c) Severance pay (27,741) (42,270) d) Social security costs - - e) Allocation to employee severance pay provision (15,359) (16,368) f) Provision for retirements and similar provisions (3,447) (1,945) - Defined contribution - - - Defined benefit (3,447) (1,945) g) Payments to external pension funds (164,985) (180,738) - Defined contribution (165,111) (180,738) - Defined benefit 126 - h) Costs arising from share-based payments (30,933) (29,764) i) Other employee benefits (111,897) (108,111) 2) Other staff (2,154) (3,488) 3) Directors and Statutory Auditors (5,296) (5,905) 4) Early retirement costs - - 5) Recoveries of payments for second employees to other companies 68,338 57,028 4) Early retirement costs (93,581) (87,326) Total (2,866,360) (3,121,491) 10.2 Average number of employees by category (€ '000) YEAR 2018 YEAR 2017 Employees 34,156 37,601 a) Senior managers 726 814 b) Managers 18,101 19,587 c) Remaining employees staff 15,329 17,200 Other Staff 1,125 982 Total 35,281 38,583 10.3 Defined benefit company retirement funds: costs and revenues (€ '000) YEAR 2018 YEAR 2017 Current service cost (1,111) (977) Settlement gains (losses) (808) - Past service cost (335) - Interest cost on the DBO (5,835) (5,748) Interest income on plan assets 4,642 4,489 Other costs/revenues - 291 Administrative expenses paid through plan assets - - Total recognised in profit or loss (3,447) (1,945) 10.4 Other employee benefits (€ '000) YEAR 2018 YEAR 2017 - Seniority premiums - - - Leaving incentives 1,496 21,041 - Other (113,393) (129,152) Total (111,897) (108,111) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 653 Section 10 - Administrative expenses - Item 160 10.1 Staff expenses: breakdown (€ '000) TYPE OF EXPENSES/VALUES YEAR 2018 YEAR 2017 1) Employees (2,833,667) (3,081,800) a) Wages and salaries (1,949,104) (2,127,521) b) Social charges (530,201) (575,083) c) Severance pay (27,741) (42,270) d) Social security costs - - e) Allocation to employee severance pay provision (15,359) (16,368) f) Provision for retirements and similar provisions (3,447) (1,945) - Defined contribution - - - Defined benefit (3,447) (1,945) g) Payments to external pension funds (164,985) (180,738) - Defined contribution (165,111) (180,738) - Defined benefit 126 - h) Costs arising from share-based payments (30,933) (29,764) i) Other employee benefits (111,897) (108,111) 2) Other staff (2,154) (3,488) 3) Directors and Statutory Auditors (5,296) (5,905) 4) Early retirement costs - - 5) Recoveries of payments for second employees to other companies 68,338 57,028 4) Early retirement costs (93,581) (87,326) Total (2,866,360) (3,121,491) 10.2 Average number of employees by category (€ '000) YEAR 2018 YEAR 2017 Employees 34,156 37,601 a) Senior managers 726 814 b) Managers 18,101 19,587 c) Remaining employees staff 15,329 17,200 Other Staff 1,125 982 Total 35,281 38,583 10.3 Defined benefit company retirement funds: costs and revenues (€ '000) YEAR 2018 YEAR 2017 Current service cost (1,111) (977) Settlement gains (losses) (808) - Past service cost (335) - Interest cost on the DBO (5,835) (5,748) Interest income on plan assets 4,642 4,489 Other costs/revenues - 291 Administrative expenses paid through plan assets - - Total recognised in profit or loss (3,447) (1,945) 10.4 Other employee benefits (€ '000) YEAR 2018 YEAR 2017 - Seniority premiums - - - Leaving incentives 1,496 21,041 - Other (113,393) (129,152) Total (111,897) (108,111) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 653 Section 10 - Administrative expenses - Item 160 10.1 Staff expenses: breakdown (€ '000) TYPE OF EXPENSES/VALUES YEAR 2018 YEAR 2017 1) Employees (2,833,667) (3,081,800) a) Wages and salaries (1,949,104) (2,127,521) b) Social charges (530,201) (575,083) c) Severance pay (27,741) (42,270) d) Social security costs - - e) Allocation to employee severance pay provision (15,359) (16,368) f) Provision for retirements and similar provisions (3,447) (1,945) - Defined contribution - - - Defined benefit (3,447) (1,945) g) Payments to external pension funds (164,985) (180,738) - Defined contribution (165,111) (180,738) - Defined benefit 126 - h) Costs arising from share-based payments (30,933) (29,764) i) Other employee benefits (111,897) (108,111) 2) Other staff (2,154) (3,488) 3) Directors and Statutory Auditors (5,296) (5,905) 4) Early retirement costs - - 5) Recoveries of payments for second employees to other companies 68,338 57,028 4) Early retirement costs (93,581) (87,326) Total (2,866,360) (3,121,491) 10.2 Average number of employees by category (€ '000) YEAR 2018 YEAR 2017 Employees 34,156 37,601 a) Senior managers 726 814 b) Managers 18,101 19,587 c) Remaining employees staff 15,329 17,200 Other Staff 1,125 982 Total 35,281 38,583 10.3 Defined benefit company retirement funds: costs and revenues (€ '000) YEAR 2018 YEAR 2017 Current service cost (1,111) (977) Settlement gains (losses) (808) - Past service cost (335) - Interest cost on the DBO (5,835) (5,748) Interest income on plan assets 4,642 4,489 Other costs/revenues - 291 Administrative expenses paid through plan assets - - Total recognised in profit or loss (3,447) (1,945) 10.4 Other employee benefits (€ '000) YEAR 2018 YEAR 2017 - Seniority premiums - - - Leaving incentives 1,496 21,041 - Other (113,393) (129,152) Total (111,897) (108,111) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 653 Section 10 - Administrative expenses - Item 160 10.1 Staff expenses: breakdown (€ '000) TYPE OF EXPENSES/VALUES YEAR 2018 YEAR 2017 1) Employees (2,833,667) (3,081,800) a) Wages and salaries (1,949,104) (2,127,521) b) Social charges (530,201) (575,083) c) Severance pay (27,741) (42,270) d) Social security costs - - e) Allocation to employee severance pay provision (15,359) (16,368) f) Provision for retirements and similar provisions (3,447) (1,945) - Defined contribution - - - Defined benefit (3,447) (1,945) g) Payments to external pension funds (164,985) (180,738) - Defined contribution (165,111) (180,738) - Defined benefit 126 - h) Costs arising from share-based payments (30,933) (29,764) i) Other employee benefits (111,897) (108,111) 2) Other staff (2,154) (3,488) 3) Directors and Statutory Auditors (5,296) (5,905) 4) Early retirement costs - - 5) Recoveries of payments for second employees to other companies 68,338 57,028 4) Early retirement costs (93,581) (87,326) Total (2,866,360) (3,121,491) 10.2 Average number of employees by category (€ '000) YEAR 2018 YEAR 2017 Employees 34,156 37,601 a) Senior managers 726 814 b) Managers 18,101 19,587 c) Remaining employees staff 15,329 17,200 Other Staff 1,125 982 Total 35,281 38,583 10.3 Defined benefit company retirement funds: costs and revenues (€ '000) YEAR 2018 YEAR 2017 Current service cost (1,111) (977) Settlement gains (losses) (808) - Past service cost (335) - Interest cost on the DBO (5,835) (5,748) Interest income on plan assets 4,642 4,489 Other costs/revenues - 291 Administrative expenses paid through plan assets - - Total recognised in profit or loss (3,447) (1,945) 10.4 Other employee benefits (€ '000) YEAR 2018 YEAR 2017 - Seniority premiums - - - Leaving incentives 1,496 21,041 - Other (113,393) (129,152) Total (111,897) (108,111) Company financial statements | Notes to the accounts Part C - Income statement 654 2018 Annual Report and Accounts · UniCredit 10.5 Other administrative expenses: breakdown (€ '000) TYPE OF EXPENSES/SECTORS YEAR 2018 YEAR 2017 1) Indirect taxes and duties (437,902) (468,142) 1a. Settled (437,902) (468,142) 1b. Unsettled - - 2) Contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) (272,719) (178,021) 3) Guarantee fee for DTA conversion (110,976) 9,818 4) Miscellaneous costs and expenses (2,137,914) (2,358,256) a) Advertising marketing and communication (66,491) (77,060) b) Expenses relating to credit risk (271,182) (320,147) c) Indirect expenses relating to personnel (67,149) (68,037) d) Information & Communication Technology expenses (810,819) (820,510) Lease of ICT equipment and software (11,743) (10,965) Software expenses: lease and maintenance (6,314) (6,280) ICT communication systems (5,929) (5,125) Services ICT in outsourcing (760,309) (774,683) Financial information providers (26,524) (23,457) e) Consulting and professionals services (110,144) (169,013) Consulting (92,851) (120,155) Legal expenses (17,293) (48,858) f) Real estate expenses (399,753) (455,717) Premises rentals (231,993) (275,089) Utilities (55,376) (60,005) Other real estate expenses (112,384) (120,623) g) Operating costs (412,376) (447,772) Surveillance and security services (59,317) (54,113) Money counting services and transport - - Printing and stationery (6,407) (7,301) Postage and transport of documents (24,733) (25,275) Administrative and logistic services (260,182) (299,878) Insurance (30,418) (29,071) Association dues and fees and contributions to the administrative expenses deposit guarantee funds (21,609) (20,211) Other administrative expenses - other (9,710) (11,923) Total (1+2+3+4) (2,959,511) (2,994,601) Expenses related to personnel include the expenses that do not represent remuneration of the working activity of an employee in compliance with IAS19. Contributions to Resolution and Guarantee Funds Please refer to Part C - Profit & loss - Section 12 Administrative expenses - Item 190 - contributions to resolution and guarantee funds of consolidated financial statements notes that here are intended as completely reported. DTA guarantee fees With specific reference to the parent company UniCredit S.p.A., reference is made to the same paragraph of Part C - Consolidated income statement - Section 12 Administrative expenses - item 190 of the Consolidated notes to the accounts which is herewith quoted entirely. Company financial statements | Notes to the accounts Part C - Income statement 654 2018 Annual Report and Accounts · UniCredit 10.5 Other administrative expenses: breakdown (€ '000) TYPE OF EXPENSES/SECTORS YEAR 2018 YEAR 2017 1) Indirect taxes and duties (437,902) (468,142) 1a. Settled (437,902) (468,142) 1b. Unsettled - - 2) Contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) (272,719) (178,021) 3) Guarantee fee for DTA conversion (110,976) 9,818 4) Miscellaneous costs and expenses (2,137,914) (2,358,256) a) Advertising marketing and communication (66,491) (77,060) b) Expenses relating to credit risk (271,182) (320,147) c) Indirect expenses relating to personnel (67,149) (68,037) d) Information & Communication Technology expenses (810,819) (820,510) Lease of ICT equipment and software (11,743) (10,965) Software expenses: lease and maintenance (6,314) (6,280) ICT communication systems (5,929) (5,125) Services ICT in outsourcing (760,309) (774,683) Financial information providers (26,524) (23,457) e) Consulting and professionals services (110,144) (169,013) Consulting (92,851) (120,155) Legal expenses (17,293) (48,858) f) Real estate expenses (399,753) (455,717) Premises rentals (231,993) (275,089) Utilities (55,376) (60,005) Other real estate expenses (112,384) (120,623) g) Operating costs (412,376) (447,772) Surveillance and security services (59,317) (54,113) Money counting services and transport - - Printing and stationery (6,407) (7,301) Postage and transport of documents (24,733) (25,275) Administrative and logistic services (260,182) (299,878) Insurance (30,418) (29,071) Association dues and fees and contributions to the administrative expenses deposit guarantee funds (21,609) (20,211) Other administrative expenses - other (9,710) (11,923) Total (1+2+3+4) (2,959,511) (2,994,601) Expenses related to personnel include the expenses that do not represent remuneration of the working activity of an employee in compliance with IAS19. Contributions to Resolution and Guarantee Funds Please refer to Part C - Profit & loss - Section 12 Administrative expenses - Item 190 - contributions to resolution and guarantee funds of consolidated financial statements notes that here are intended as completely reported. DTA guarantee fees With specific reference to the parent company UniCredit S.p.A., reference is made to the same paragraph of Part C - Consolidated income statement - Section 12 Administrative expenses - item 190 of the Consolidated notes to the accounts which is herewith quoted entirely. Company financial statements | Notes to the accounts Part C - Income statement 654 2018 Annual Report and Accounts · UniCredit 10.5 Other administrative expenses: breakdown (€ '000) TYPE OF EXPENSES/SECTORS YEAR 2018 YEAR 2017 1) Indirect taxes and duties (437,902) (468,142) 1a. Settled (437,902) (468,142) 1b. Unsettled - - 2) Contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) (272,719) (178,021) 3) Guarantee fee for DTA conversion (110,976) 9,818 4) Miscellaneous costs and expenses (2,137,914) (2,358,256) a) Advertising marketing and communication (66,491) (77,060) b) Expenses relating to credit risk (271,182) (320,147) c) Indirect expenses relating to personnel (67,149) (68,037) d) Information & Communication Technology expenses (810,819) (820,510) Lease of ICT equipment and software (11,743) (10,965) Software expenses: lease and maintenance (6,314) (6,280) ICT communication systems (5,929) (5,125) Services ICT in outsourcing (760,309) (774,683) Financial information providers (26,524) (23,457) e) Consulting and professionals services (110,144) (169,013) Consulting (92,851) (120,155) Legal expenses (17,293) (48,858) f) Real estate expenses (399,753) (455,717) Premises rentals (231,993) (275,089) Utilities (55,376) (60,005) Other real estate expenses (112,384) (120,623) g) Operating costs (412,376) (447,772) Surveillance and security services (59,317) (54,113) Money counting services and transport - - Printing and stationery (6,407) (7,301) Postage and transport of documents (24,733) (25,275) Administrative and logistic services (260,182) (299,878) Insurance (30,418) (29,071) Association dues and fees and contributions to the administrative expenses deposit guarantee funds (21,609) (20,211) Other administrative expenses - other (9,710) (11,923) Total (1+2+3+4) (2,959,511) (2,994,601) Expenses related to personnel include the expenses that do not represent remuneration of the working activity of an employee in compliance with IAS19. Contributions to Resolution and Guarantee Funds Please refer to Part C - Profit & loss - Section 12 Administrative expenses - Item 190 - contributions to resolution and guarantee funds of consolidated financial statements notes that here are intended as completely reported. DTA guarantee fees With specific reference to the parent company UniCredit S.p.A., reference is made to the same paragraph of Part C - Consolidated income statement - Section 12 Administrative expenses - item 190 of the Consolidated notes to the accounts which is herewith quoted entirely. Company financial statements | Notes to the accounts Part C - Income statement 654 2018 Annual Report and Accounts · UniCredit 10.5 Other administrative expenses: breakdown (€ '000) TYPE OF EXPENSES/SECTORS YEAR 2018 YEAR 2017 1) Indirect taxes and duties (437,902) (468,142) 1a. Settled (437,902) (468,142) 1b. Unsettled - - 2) Contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) (272,719) (178,021) 3) Guarantee fee for DTA conversion (110,976) 9,818 4) Miscellaneous costs and expenses (2,137,914) (2,358,256) a) Advertising marketing and communication (66,491) (77,060) b) Expenses relating to credit risk (271,182) (320,147) c) Indirect expenses relating to personnel (67,149) (68,037) d) Information & Communication Technology expenses (810,819) (820,510) Lease of ICT equipment and software (11,743) (10,965) Software expenses: lease and maintenance (6,314) (6,280) ICT communication systems (5,929) (5,125) Services ICT in outsourcing (760,309) (774,683) Financial information providers (26,524) (23,457) e) Consulting and professionals services (110,144) (169,013) Consulting (92,851) (120,155) Legal expenses (17,293) (48,858) f) Real estate expenses (399,753) (455,717) Premises rentals (231,993) (275,089) Utilities (55,376) (60,005) Other real estate expenses (112,384) (120,623) g) Operating costs (412,376) (447,772) Surveillance and security services (59,317) (54,113) Money counting services and transport - - Printing and stationery (6,407) (7,301) Postage and transport of documents (24,733) (25,275) Administrative and logistic services (260,182) (299,878) Insurance (30,418) (29,071) Association dues and fees and contributions to the administrative expenses deposit guarantee funds (21,609) (20,211) Other administrative expenses - other (9,710) (11,923) Total (1+2+3+4) (2,959,511) (2,994,601) Expenses related to personnel include the expenses that do not represent remuneration of the working activity of an employee in compliance with IAS19. Contributions to Resolution and Guarantee Funds Please refer to Part C - Profit & loss - Section 12 Administrative expenses - Item 190 - contributions to resolution and guarantee funds of consolidated financial statements notes that here are intended as completely reported. DTA guarantee fees With specific reference to the parent company UniCredit S.p.A., reference is made to the same paragraph of Part C - Consolidated income statement - Section 12 Administrative expenses - item 190 of the Consolidated notes to the accounts which is herewith quoted entirely. Company financial statements | Notes to the accounts Part C - Income statement 654 2018 Annual Report and Accounts · UniCredit 10.5 Other administrative expenses: breakdown (€ '000) TYPE OF EXPENSES/SECTORS YEAR 2018 YEAR 2017 1) Indirect taxes and duties (437,902) (468,142) 1a. Settled (437,902) (468,142) 1b. Unsettled - - 2) Contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) (272,719) (178,021) 3) Guarantee fee for DTA conversion (110,976) 9,818 4) Miscellaneous costs and expenses (2,137,914) (2,358,256) a) Advertising marketing and communication (66,491) (77,060) b) Expenses relating to credit risk (271,182) (320,147) c) Indirect expenses relating to personnel (67,149) (68,037) d) Information & Communication Technology expenses (810,819) (820,510) Lease of ICT equipment and software (11,743) (10,965) Software expenses: lease and maintenance (6,314) (6,280) ICT communication systems (5,929) (5,125) Services ICT in outsourcing (760,309) (774,683) Financial information providers (26,524) (23,457) e) Consulting and professionals services (110,144) (169,013) Consulting (92,851) (120,155) Legal expenses (17,293) (48,858) f) Real estate expenses (399,753) (455,717) Premises rentals (231,993) (275,089) Utilities (55,376) (60,005) Other real estate expenses (112,384) (120,623) g) Operating costs (412,376) (447,772) Surveillance and security services (59,317) (54,113) Money counting services and transport - - Printing and stationery (6,407) (7,301) Postage and transport of documents (24,733) (25,275) Administrative and logistic services (260,182) (299,878) Insurance (30,418) (29,071) Association dues and fees and contributions to the administrative expenses deposit guarantee funds (21,609) (20,211) Other administrative expenses - other (9,710) (11,923) Total (1+2+3+4) (2,959,511) (2,994,601) Expenses related to personnel include the expenses that do not represent remuneration of the working activity of an employee in compliance with IAS19. Contributions to Resolution and Guarantee Funds Please refer to Part C - Profit & loss - Section 12 Administrative expenses - Item 190 - contributions to resolution and guarantee funds of consolidated financial statements notes that here are intended as completely reported. DTA guarantee fees With specific reference to the parent company UniCredit S.p.A., reference is made to the same paragraph of Part C - Consolidated income statement - Section 12 Administrative expenses - item 190 of the Consolidated notes to the accounts which is herewith quoted entirely. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 655 Section 11 - Net provisions for risks and charges - Item 170 11.1 Net provisions for credit risk from loans commitments and financial guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Loan committments (78,666) 148,329 69,663 Financial guarantees given (252,053) 220,017 (32,036) 11.2 Net provisions for other commitments and guarantees given: breakdown No data to be disclosed. 11.3 Net provisions for risks and charges: breakdown (€ '000) YEAR 2018 YEAR ASSETS/P&L ITEMS PROVISIONS REALLOCATION SURPLUS TOTAL 2017 TOTAL 1. Other provisions 1.1 Legal disputes (267,239) 69,777 (197,462) (91,998) 1.2 Staff costs - - - - 1.3 Other (419,504) 188,617 (230,887) (296,399) Total (686,743) 258,394 (428,349) (388,397) Provisions for legal disputes are posted to cover potential liabilities that may result from pending lawsuits. More details are included into Part E - Information on risks and hedging policies. Section 12 - Net value adjustments/write-backs on property, plant and equipment - Item 180 12.1 Impairment on property, plant and equipment: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS DEPRECIATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Property, plant and equipment A.1 Owned (128,867) (22,682) - (151,549) - Used in the business (112,401) (6,352) - (118,753) - Held for investment (16,466) (16,330) - (32,796) - Inventories X - - - A.2 Finance lease - - - - - Used in the business - - - - - Held for investment - - - - Total A (128,867) (22,682) - (151,549) B. Non-current assets and groups of assets held for sale X (446) - (446) - Used in the business X - - - - Held for investments X (446) - (446) - Inventories X - - - Total A + B (128,867) (23,128) - (151,995) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 655 Section 11 - Net provisions for risks and charges - Item 170 11.1 Net provisions for credit risk from loans commitments and financial guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Loan committments (78,666) 148,329 69,663 Financial guarantees given (252,053) 220,017 (32,036) 11.2 Net provisions for other commitments and guarantees given: breakdown No data to be disclosed. 11.3 Net provisions for risks and charges: breakdown (€ '000) YEAR 2018 YEAR ASSETS/P&L ITEMS PROVISIONS REALLOCATION SURPLUS TOTAL 2017 TOTAL 1. Other provisions 1.1 Legal disputes (267,239) 69,777 (197,462) (91,998) 1.2 Staff costs - - - - 1.3 Other (419,504) 188,617 (230,887) (296,399) Total (686,743) 258,394 (428,349) (388,397) Provisions for legal disputes are posted to cover potential liabilities that may result from pending lawsuits. More details are included into Part E - Information on risks and hedging policies. Section 12 - Net value adjustments/write-backs on property, plant and equipment - Item 180 12.1 Impairment on property, plant and equipment: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS DEPRECIATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Property, plant and equipment A.1 Owned (128,867) (22,682) - (151,549) - Used in the business (112,401) (6,352) - (118,753) - Held for investment (16,466) (16,330) - (32,796) - Inventories X - - - A.2 Finance lease - - - - - Used in the business - - - - - Held for investment - - - - Total A (128,867) (22,682) - (151,549) B. Non-current assets and groups of assets held for sale X (446) - (446) - Used in the business X - - - - Held for investments X (446) - (446) - Inventories X - - - Total A + B (128,867) (23,128) - (151,995) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 655 Section 11 - Net provisions for risks and charges - Item 170 11.1 Net provisions for credit risk from loans commitments and financial guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Loan committments (78,666) 148,329 69,663 Financial guarantees given (252,053) 220,017 (32,036) 11.2 Net provisions for other commitments and guarantees given: breakdown No data to be disclosed. 11.3 Net provisions for risks and charges: breakdown (€ '000) YEAR 2018 YEAR ASSETS/P&L ITEMS PROVISIONS REALLOCATION SURPLUS TOTAL 2017 TOTAL 1. Other provisions 1.1 Legal disputes (267,239) 69,777 (197,462) (91,998) 1.2 Staff costs - - - - 1.3 Other (419,504) 188,617 (230,887) (296,399) Total (686,743) 258,394 (428,349) (388,397) Provisions for legal disputes are posted to cover potential liabilities that may result from pending lawsuits. More details are included into Part E - Information on risks and hedging policies. Section 12 - Net value adjustments/write-backs on property, plant and equipment - Item 180 12.1 Impairment on property, plant and equipment: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS DEPRECIATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Property, plant and equipment A.1 Owned (128,867) (22,682) - (151,549) - Used in the business (112,401) (6,352) - (118,753) - Held for investment (16,466) (16,330) - (32,796) - Inventories X - - - A.2 Finance lease - - - - - Used in the business - - - - - Held for investment - - - - Total A (128,867) (22,682) - (151,549) B. Non-current assets and groups of assets held for sale X (446) - (446) - Used in the business X - - - - Held for investments X (446) - (446) - Inventories X - - - Total A + B (128,867) (23,128) - (151,995) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 655 Section 11 - Net provisions for risks and charges - Item 170 11.1 Net provisions for credit risk from loans commitments and financial guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Loan committments (78,666) 148,329 69,663 Financial guarantees given (252,053) 220,017 (32,036) 11.2 Net provisions for other commitments and guarantees given: breakdown No data to be disclosed. 11.3 Net provisions for risks and charges: breakdown (€ '000) YEAR 2018 YEAR ASSETS/P&L ITEMS PROVISIONS REALLOCATION SURPLUS TOTAL 2017 TOTAL 1. Other provisions 1.1 Legal disputes (267,239) 69,777 (197,462) (91,998) 1.2 Staff costs - - - - 1.3 Other (419,504) 188,617 (230,887) (296,399) Total (686,743) 258,394 (428,349) (388,397) Provisions for legal disputes are posted to cover potential liabilities that may result from pending lawsuits. More details are included into Part E - Information on risks and hedging policies. Section 12 - Net value adjustments/write-backs on property, plant and equipment - Item 180 12.1 Impairment on property, plant and equipment: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS DEPRECIATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Property, plant and equipment A.1 Owned (128,867) (22,682) - (151,549) - Used in the business (112,401) (6,352) - (118,753) - Held for investment (16,466) (16,330) - (32,796) - Inventories X - - - A.2 Finance lease - - - - - Used in the business - - - - - Held for investment - - - - Total A (128,867) (22,682) - (151,549) B. Non-current assets and groups of assets held for sale X (446) - (446) - Used in the business X - - - - Held for investments X (446) - (446) - Inventories X - - - Total A + B (128,867) (23,128) - (151,995) Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 655 Section 11 - Net provisions for risks and charges - Item 170 11.1 Net provisions for credit risk from loans commitments and financial guarantees given: breakdown (€ '000) YEAR 2018 PROVISIONS REALLOCATION SURPLUS TOTAL Loan committments (78,666) 148,329 69,663 Financial guarantees given (252,053) 220,017 (32,036) 11.2 Net provisions for other commitments and guarantees given: breakdown No data to be disclosed. 11.3 Net provisions for risks and charges: breakdown (€ '000) YEAR 2018 YEAR ASSETS/P&L ITEMS PROVISIONS REALLOCATION SURPLUS TOTAL 2017 TOTAL 1. Other provisions 1.1 Legal disputes (267,239) 69,777 (197,462) (91,998) 1.2 Staff costs - - - - 1.3 Other (419,504) 188,617 (230,887) (296,399) Total (686,743) 258,394 (428,349) (388,397) Provisions for legal disputes are posted to cover potential liabilities that may result from pending lawsuits. More details are included into Part E - Information on risks and hedging policies. Section 12 - Net value adjustments/write-backs on property, plant and equipment - Item 180 12.1 Impairment on property, plant and equipment: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS DEPRECIATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Property, plant and equipment A.1 Owned (128,867) (22,682) - (151,549) - Used in the business (112,401) (6,352) - (118,753) - Held for investment (16,466) (16,330) - (32,796) - Inventories X - - - A.2 Finance lease - - - - - Used in the business - - - - - Held for investment - - - - Total A (128,867) (22,682) - (151,549) B. Non-current assets and groups of assets held for sale X (446) - (446) - Used in the business X - - - - Held for investments X (446) - (446) - Inventories X - - - Total A + B (128,867) (23,128) - (151,995) Company financial statements | Notes to the accounts Part C - Income statement 656 2018 Annual Report and Accounts · UniCredit Section 13 - Net value adjustments/write-backs on intangible assets - Item 190 13.1 Net value adjustments/write-backs on intangible assets: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS AMORTISATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Intangible assets A.1 Owned (2,137) - - (2,137) - Generated internally by the company - - - - - Other (2,137) - - (2,137) A.2 Finance leases - - - - B. Non-current assets and disposal group classified as held for sale X - - - Total (2,137) - - (2,137) Section 14 - Other operating expenses/income - Item 200 14.1 Other operating expenses: breakdown (€ '000) TYPE OF EXPENSE/VALUE YEAR 2018 YEAR 2017 Costs for operating leases - - Non-deductible tax and other fiscal charges - - Write-downs on leasehold improvements (20,779) (24,476) Costs relating to the specific service of financial leasing - - Other (198,595) (232,420) Total of other operating expenses (219,374) (256,896) The data of the previous period have been restated for the purpose of comparison. 14.2 Other operating income: breakdown (€ '000) TYPE OF REVENUE/VALUES YEAR 2018 YEAR 2017 A) Recovery of costs 507,667 558,051 B) Other revenues 123,229 131,158 Revenues from administrative services 44,551 39,544 Revenues on rentals Real Estate investments (net of operating direct costs) 28,201 29,837 Revenues from operating leases - - Recovery of miscellaneous costs paid in previous years 1,738 1,431 Revenues on financial leases activities - - Other 48,739 60,346 Total operating income (A+B) 630,896 689,209 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part C - Income statement 656 2018 Annual Report and Accounts · UniCredit Section 13 - Net value adjustments/write-backs on intangible assets - Item 190 13.1 Net value adjustments/write-backs on intangible assets: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS AMORTISATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Intangible assets A.1 Owned (2,137) - - (2,137) - Generated internally by the company - - - - - Other (2,137) - - (2,137) A.2 Finance leases - - - - B. Non-current assets and disposal group classified as held for sale X - - - Total (2,137) - - (2,137) Section 14 - Other operating expenses/income - Item 200 14.1 Other operating expenses: breakdown (€ '000) TYPE OF EXPENSE/VALUE YEAR 2018 YEAR 2017 Costs for operating leases - - Non-deductible tax and other fiscal charges - - Write-downs on leasehold improvements (20,779) (24,476) Costs relating to the specific service of financial leasing - - Other (198,595) (232,420) Total of other operating expenses (219,374) (256,896) The data of the previous period have been restated for the purpose of comparison. 14.2 Other operating income: breakdown (€ '000) TYPE OF REVENUE/VALUES YEAR 2018 YEAR 2017 A) Recovery of costs 507,667 558,051 B) Other revenues 123,229 131,158 Revenues from administrative services 44,551 39,544 Revenues on rentals Real Estate investments (net of operating direct costs) 28,201 29,837 Revenues from operating leases - - Recovery of miscellaneous costs paid in previous years 1,738 1,431 Revenues on financial leases activities - - Other 48,739 60,346 Total operating income (A+B) 630,896 689,209 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part C - Income statement 656 2018 Annual Report and Accounts · UniCredit Section 13 - Net value adjustments/write-backs on intangible assets - Item 190 13.1 Net value adjustments/write-backs on intangible assets: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS AMORTISATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Intangible assets A.1 Owned (2,137) - - (2,137) - Generated internally by the company - - - - - Other (2,137) - - (2,137) A.2 Finance leases - - - - B. Non-current assets and disposal group classified as held for sale X - - - Total (2,137) - - (2,137) Section 14 - Other operating expenses/income - Item 200 14.1 Other operating expenses: breakdown (€ '000) TYPE OF EXPENSE/VALUE YEAR 2018 YEAR 2017 Costs for operating leases - - Non-deductible tax and other fiscal charges - - Write-downs on leasehold improvements (20,779) (24,476) Costs relating to the specific service of financial leasing - - Other (198,595) (232,420) Total of other operating expenses (219,374) (256,896) The data of the previous period have been restated for the purpose of comparison. 14.2 Other operating income: breakdown (€ '000) TYPE OF REVENUE/VALUES YEAR 2018 YEAR 2017 A) Recovery of costs 507,667 558,051 B) Other revenues 123,229 131,158 Revenues from administrative services 44,551 39,544 Revenues on rentals Real Estate investments (net of operating direct costs) 28,201 29,837 Revenues from operating leases - - Recovery of miscellaneous costs paid in previous years 1,738 1,431 Revenues on financial leases activities - - Other 48,739 60,346 Total operating income (A+B) 630,896 689,209 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part C - Income statement 656 2018 Annual Report and Accounts · UniCredit Section 13 - Net value adjustments/write-backs on intangible assets - Item 190 13.1 Net value adjustments/write-backs on intangible assets: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS AMORTISATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Intangible assets A.1 Owned (2,137) - - (2,137) - Generated internally by the company - - - - - Other (2,137) - - (2,137) A.2 Finance leases - - - - B. Non-current assets and disposal group classified as held for sale X - - - Total (2,137) - - (2,137) Section 14 - Other operating expenses/income - Item 200 14.1 Other operating expenses: breakdown (€ '000) TYPE OF EXPENSE/VALUE YEAR 2018 YEAR 2017 Costs for operating leases - - Non-deductible tax and other fiscal charges - - Write-downs on leasehold improvements (20,779) (24,476) Costs relating to the specific service of financial leasing - - Other (198,595) (232,420) Total of other operating expenses (219,374) (256,896) The data of the previous period have been restated for the purpose of comparison. 14.2 Other operating income: breakdown (€ '000) TYPE OF REVENUE/VALUES YEAR 2018 YEAR 2017 A) Recovery of costs 507,667 558,051 B) Other revenues 123,229 131,158 Revenues from administrative services 44,551 39,544 Revenues on rentals Real Estate investments (net of operating direct costs) 28,201 29,837 Revenues from operating leases - - Recovery of miscellaneous costs paid in previous years 1,738 1,431 Revenues on financial leases activities - - Other 48,739 60,346 Total operating income (A+B) 630,896 689,209 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part C - Income statement 656 2018 Annual Report and Accounts · UniCredit Section 13 - Net value adjustments/write-backs on intangible assets - Item 190 13.1 Net value adjustments/write-backs on intangible assets: breakdown (€ '000) YEAR 2018 ASSETS/P&L ITEMS AMORTISATION (A) IMPAIRMENT LOSSES (B) WRITE-BACKS (C) NET PROFIT (A+B-C) A. Intangible assets A.1 Owned (2,137) - - (2,137) - Generated internally by the company - - - - - Other (2,137) - - (2,137) A.2 Finance leases - - - - B. Non-current assets and disposal group classified as held for sale X - - - Total (2,137) - - (2,137) Section 14 - Other operating expenses/income - Item 200 14.1 Other operating expenses: breakdown (€ '000) TYPE OF EXPENSE/VALUE YEAR 2018 YEAR 2017 Costs for operating leases - - Non-deductible tax and other fiscal charges - - Write-downs on leasehold improvements (20,779) (24,476) Costs relating to the specific service of financial leasing - - Other (198,595) (232,420) Total of other operating expenses (219,374) (256,896) The data of the previous period have been restated for the purpose of comparison. 14.2 Other operating income: breakdown (€ '000) TYPE OF REVENUE/VALUES YEAR 2018 YEAR 2017 A) Recovery of costs 507,667 558,051 B) Other revenues 123,229 131,158 Revenues from administrative services 44,551 39,544 Revenues on rentals Real Estate investments (net of operating direct costs) 28,201 29,837 Revenues from operating leases - - Recovery of miscellaneous costs paid in previous years 1,738 1,431 Revenues on financial leases activities - - Other 48,739 60,346 Total operating income (A+B) 630,896 689,209 The data of the previous period have been restated for the purpose of comparison. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 657 Section 15 - Gains (Losses) of equity investments - Item 220 15.1 Profit (Loss) of equity investments: breakdown (€ '000) P&L ITEMS/VALUES YEAR 2018 YEAR 2017 A. Income 210,868 3,246,309 1. Revaluations - - 2. Gains on disposal 145,580 1,997,689 3. Writebacks 65,288 1,248,620 4. Other gains - - B. Expenses (1,800,681) (503,330) 1. Writedowns - - 2. Impairment losses (1,796,381) (164,717) 3. Losses on disposal (4,300) (338,613) 4. Other expenses - - Net profit (1,589,813) 2,742,979 Gains from disposal include the results from the sale of Custodia Valore Credito su Pegno S.R.L. for €114 million, in the context of the transfer to Dorotheum of Italian pawn credit business. Further, gains from disposal have been realized from the sale of Barn BV (€29 million) and Trieste Adriatic Maritime Initiatives S.R.L (€3 million) Impairment loss in subsidiaries include Koc Finansal Hizmetler Istanbul AS (-€1.319 million), AO Unicredit Bank (-€244 million), Cordusio Sim S.p.A (-€158 million), Unicredit Banka Slovenija D.D.( -€17 million), Unicredit Consumer Financing Ifn S.A. ( -€16 million), Unicredit Bank Austria Credistanstalt Ag (-€12 million), Unicredit Turn Around Management Cee Gmbh (-€13 million), Unicredit Subito Casa S.p.A. (-€1 million), Unicredit Global Leasing Export Gmbh (-€1 million), Aviva Spa (-€6 million), Risanamento S.p.A. (-€6 million), Fenice S.R.L.(- €2 million). Writebacks in subsidiaries include Unicredit Bank Ag (€30 million), Mediobanca Banca di Credito Finanziario S.p.A. (€28 million), Unicredit International Luxembourg S.A.(€4 million), Nuova Compagnia di Partecipazioni S.p.A. (€2 million). Section 16 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 230 No data to be disclosed in this section. Section 17 - Goodwill impairment - Item 240 No data to be disclosed in this section. Section 18 - Gains (Losses) on disposals on investments - Item 250 18.1 Gains and losses on disposal of investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 A. Property - Gains on disposal 8,981 11,344 - Losses on disposal (1,841) (223) B. Other assets - Gains on disposal 44,926 202 - Losses on disposal (2,533) (1,543) Net Profit 49,533 9,780 Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 657 Section 15 - Gains (Losses) of equity investments - Item 220 15.1 Profit (Loss) of equity investments: breakdown (€ '000) P&L ITEMS/VALUES YEAR 2018 YEAR 2017 A. Income 210,868 3,246,309 1. Revaluations - - 2. Gains on disposal 145,580 1,997,689 3. Writebacks 65,288 1,248,620 4. Other gains - - B. Expenses (1,800,681) (503,330) 1. Writedowns - - 2. Impairment losses (1,796,381) (164,717) 3. Losses on disposal (4,300) (338,613) 4. Other expenses - - Net profit (1,589,813) 2,742,979 Gains from disposal include the results from the sale of Custodia Valore Credito su Pegno S.R.L. for €114 million, in the context of the transfer to Dorotheum of Italian pawn credit business. Further, gains from disposal have been realized from the sale of Barn BV (€29 million) and Trieste Adriatic Maritime Initiatives S.R.L (€3 million) Impairment loss in subsidiaries include Koc Finansal Hizmetler Istanbul AS (-€1.319 million), AO Unicredit Bank (-€244 million), Cordusio Sim S.p.A (-€158 million), Unicredit Banka Slovenija D.D.( -€17 million), Unicredit Consumer Financing Ifn S.A. ( -€16 million), Unicredit Bank Austria Credistanstalt Ag (-€12 million), Unicredit Turn Around Management Cee Gmbh (-€13 million), Unicredit Subito Casa S.p.A. (-€1 million), Unicredit Global Leasing Export Gmbh (-€1 million), Aviva Spa (-€6 million), Risanamento S.p.A. (-€6 million), Fenice S.R.L.(- €2 million). Writebacks in subsidiaries include Unicredit Bank Ag (€30 million), Mediobanca Banca di Credito Finanziario S.p.A. (€28 million), Unicredit International Luxembourg S.A.(€4 million), Nuova Compagnia di Partecipazioni S.p.A. (€2 million). Section 16 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 230 No data to be disclosed in this section. Section 17 - Goodwill impairment - Item 240 No data to be disclosed in this section. Section 18 - Gains (Losses) on disposals on investments - Item 250 18.1 Gains and losses on disposal of investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 A. Property - Gains on disposal 8,981 11,344 - Losses on disposal (1,841) (223) B. Other assets - Gains on disposal 44,926 202 - Losses on disposal (2,533) (1,543) Net Profit 49,533 9,780 Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 657 Section 15 - Gains (Losses) of equity investments - Item 220 15.1 Profit (Loss) of equity investments: breakdown (€ '000) P&L ITEMS/VALUES YEAR 2018 YEAR 2017 A. Income 210,868 3,246,309 1. Revaluations - - 2. Gains on disposal 145,580 1,997,689 3. Writebacks 65,288 1,248,620 4. Other gains - - B. Expenses (1,800,681) (503,330) 1. Writedowns - - 2. Impairment losses (1,796,381) (164,717) 3. Losses on disposal (4,300) (338,613) 4. Other expenses - - Net profit (1,589,813) 2,742,979 Gains from disposal include the results from the sale of Custodia Valore Credito su Pegno S.R.L. for €114 million, in the context of the transfer to Dorotheum of Italian pawn credit business. Further, gains from disposal have been realized from the sale of Barn BV (€29 million) and Trieste Adriatic Maritime Initiatives S.R.L (€3 million) Impairment loss in subsidiaries include Koc Finansal Hizmetler Istanbul AS (-€1.319 million), AO Unicredit Bank (-€244 million), Cordusio Sim S.p.A (-€158 million), Unicredit Banka Slovenija D.D.( -€17 million), Unicredit Consumer Financing Ifn S.A. ( -€16 million), Unicredit Bank Austria Credistanstalt Ag (-€12 million), Unicredit Turn Around Management Cee Gmbh (-€13 million), Unicredit Subito Casa S.p.A. (-€1 million), Unicredit Global Leasing Export Gmbh (-€1 million), Aviva Spa (-€6 million), Risanamento S.p.A. (-€6 million), Fenice S.R.L.(- €2 million). Writebacks in subsidiaries include Unicredit Bank Ag (€30 million), Mediobanca Banca di Credito Finanziario S.p.A. (€28 million), Unicredit International Luxembourg S.A.(€4 million), Nuova Compagnia di Partecipazioni S.p.A. (€2 million). Section 16 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 230 No data to be disclosed in this section. Section 17 - Goodwill impairment - Item 240 No data to be disclosed in this section. Section 18 - Gains (Losses) on disposals on investments - Item 250 18.1 Gains and losses on disposal of investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 A. Property - Gains on disposal 8,981 11,344 - Losses on disposal (1,841) (223) B. Other assets - Gains on disposal 44,926 202 - Losses on disposal (2,533) (1,543) Net Profit 49,533 9,780 Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 657 Section 15 - Gains (Losses) of equity investments - Item 220 15.1 Profit (Loss) of equity investments: breakdown (€ '000) P&L ITEMS/VALUES YEAR 2018 YEAR 2017 A. Income 210,868 3,246,309 1. Revaluations - - 2. Gains on disposal 145,580 1,997,689 3. Writebacks 65,288 1,248,620 4. Other gains - - B. Expenses (1,800,681) (503,330) 1. Writedowns - - 2. Impairment losses (1,796,381) (164,717) 3. Losses on disposal (4,300) (338,613) 4. Other expenses - - Net profit (1,589,813) 2,742,979 Gains from disposal include the results from the sale of Custodia Valore Credito su Pegno S.R.L. for €114 million, in the context of the transfer to Dorotheum of Italian pawn credit business. Further, gains from disposal have been realized from the sale of Barn BV (€29 million) and Trieste Adriatic Maritime Initiatives S.R.L (€3 million) Impairment loss in subsidiaries include Koc Finansal Hizmetler Istanbul AS (-€1.319 million), AO Unicredit Bank (-€244 million), Cordusio Sim S.p.A (-€158 million), Unicredit Banka Slovenija D.D.( -€17 million), Unicredit Consumer Financing Ifn S.A. ( -€16 million), Unicredit Bank Austria Credistanstalt Ag (-€12 million), Unicredit Turn Around Management Cee Gmbh (-€13 million), Unicredit Subito Casa S.p.A. (-€1 million), Unicredit Global Leasing Export Gmbh (-€1 million), Aviva Spa (-€6 million), Risanamento S.p.A. (-€6 million), Fenice S.R.L.(- €2 million). Writebacks in subsidiaries include Unicredit Bank Ag (€30 million), Mediobanca Banca di Credito Finanziario S.p.A. (€28 million), Unicredit International Luxembourg S.A.(€4 million), Nuova Compagnia di Partecipazioni S.p.A. (€2 million). Section 16 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 230 No data to be disclosed in this section. Section 17 - Goodwill impairment - Item 240 No data to be disclosed in this section. Section 18 - Gains (Losses) on disposals on investments - Item 250 18.1 Gains and losses on disposal of investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 A. Property - Gains on disposal 8,981 11,344 - Losses on disposal (1,841) (223) B. Other assets - Gains on disposal 44,926 202 - Losses on disposal (2,533) (1,543) Net Profit 49,533 9,780 Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 657 Section 15 - Gains (Losses) of equity investments - Item 220 15.1 Profit (Loss) of equity investments: breakdown (€ '000) P&L ITEMS/VALUES YEAR 2018 YEAR 2017 A. Income 210,868 3,246,309 1. Revaluations - - 2. Gains on disposal 145,580 1,997,689 3. Writebacks 65,288 1,248,620 4. Other gains - - B. Expenses (1,800,681) (503,330) 1. Writedowns - - 2. Impairment losses (1,796,381) (164,717) 3. Losses on disposal (4,300) (338,613) 4. Other expenses - - Net profit (1,589,813) 2,742,979 Gains from disposal include the results from the sale of Custodia Valore Credito su Pegno S.R.L. for €114 million, in the context of the transfer to Dorotheum of Italian pawn credit business. Further, gains from disposal have been realized from the sale of Barn BV (€29 million) and Trieste Adriatic Maritime Initiatives S.R.L (€3 million) Impairment loss in subsidiaries include Koc Finansal Hizmetler Istanbul AS (-€1.319 million), AO Unicredit Bank (-€244 million), Cordusio Sim S.p.A (-€158 million), Unicredit Banka Slovenija D.D.( -€17 million), Unicredit Consumer Financing Ifn S.A. ( -€16 million), Unicredit Bank Austria Credistanstalt Ag (-€12 million), Unicredit Turn Around Management Cee Gmbh (-€13 million), Unicredit Subito Casa S.p.A. (-€1 million), Unicredit Global Leasing Export Gmbh (-€1 million), Aviva Spa (-€6 million), Risanamento S.p.A. (-€6 million), Fenice S.R.L.(- €2 million). Writebacks in subsidiaries include Unicredit Bank Ag (€30 million), Mediobanca Banca di Credito Finanziario S.p.A. (€28 million), Unicredit International Luxembourg S.A.(€4 million), Nuova Compagnia di Partecipazioni S.p.A. (€2 million). Section 16 - Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - Item 230 No data to be disclosed in this section. Section 17 - Goodwill impairment - Item 240 No data to be disclosed in this section. Section 18 - Gains (Losses) on disposals on investments - Item 250 18.1 Gains and losses on disposal of investments: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 A. Property - Gains on disposal 8,981 11,344 - Losses on disposal (1,841) (223) B. Other assets - Gains on disposal 44,926 202 - Losses on disposal (2,533) (1,543) Net Profit 49,533 9,780 Company financial statements | Notes to the accounts Part C - Income statement 658 2018 Annual Report and Accounts · UniCredit Section 19 - Tax expenses (income) for the period from continuing operations - Item 270 Taxes on Income are accrued in accordance with IAS12. The tax charge consists of current and deferred taxes, mainly determined in accordance with the applicable provisions on IRES and IRAP, and CFC separate taxation (Controlled Foreign Companies, i.e., foreign subsidiaries taxed on a transparency basis where specific conditions are met). IRES is calculated by making specific upward or downward adjustments to the current year profit or loss as resulting from the Income statement for determining the taxable income. These tax adjustments are made as required by the provisions of the Italian Income Tax Code (TUIR), in relation to the non-deductibility of certain expenses or the non-taxability of certain revenues. The IRES tax rate applied to the taxable income is 24%. An additional surcharge of 3.5% applies to Banks and Financial companies. The above-mentioned tax adjustments may be “permanent” or “temporary”. The “permanent” adjustments refer to expenses/revenues that are totally or partially non-deductible/non-taxable. The “temporary” adjustments, on the other hand, relate to expenses or revenues whose deductibility or tax-ability is deferred to future tax periods on the occurrence of particular events, or distributed in equal quotas over a predefined number of years. The presence of “temporary” adjustments leads to the recognition of deferred tax assets (for costs to be deducted) or deferred tax liabilities (for revenues to be taxed). The purpose of the recognition of deferred tax assets and liabilities is to reconcile in the Financial statements the different tax period of relevance established by the TUIR compared to the accounting accrual principle. For IRES purposes, subject to a specific election to be submitted to the Italian Revenue Agency, this tax can be paid on a Tax Group level rather than on an individual basis. All Italian companies that meet the control pre-requisite can adhere to the Tax Group regime, in order to compute the tax payment on a unique taxable base consisting of the algebraic sum of the taxable amounts of all the companies adhering to the Tax Group regime. The tax rate applicable to the Tax Group is 24%. For IRES purposes, is stated a separate taxation “for transparency” on incomes, calculated according to the provisions of the Italian Income Tax Code (TUIR), of the foreign direct and indirect subsidiaries (so-called CFCs: Controlled Foreign Companies) established in Countries with a nominal or effective tax rate which is significantly below the Italian corresponding one. The applicable tax rate is 27.5%. IRAP is levied on productive activities and relevant taxable base corresponds to the algebraic sum of certain items of the Income Statement as specifically identified by Legislative Decree No.446 of 1997, which also states further upward and downward adjustments to be made (other than IRES ones). Law No.190 of 23 December 2014 (2015 Stability Law) establishes, starting from 2015, that personnel costs for employees with permanent employment contracts are fully deductible from IRAP in addition to the deductions already established by the so called "cuneo fiscale". Furthermore, in 2016 the full deductibility of the loan loss provisions in the year of accrual in the financial statements was introduced following the entry into force of article 16 of Law Decree 27 June 2015 No.83. The tax is calculated by apportioning the overall value of production among the various administrative Regions where the productive activities are carried out (for banks the apportionment is made on the basis of the regional distribution of customer’s deposits) and applying the respective regional rate to each of the individual portions identified. A national rate of 4.65% is established, to which each Region can autonomously add a surcharge up to 0.92%, with an overall theoretical rate of 5.57% (plus a further rate of 0.15% for Regions with a deficit in spending on the local welfare sector). During 2018 the following amendments to the tax legislation have been introduced. Specifically: • Ministerial Decree 10 January 2018 defines the tax regime applicable to the reclassification of financial assets from IAS39 categories to IFRS9 ones and establishes the full deductibility for IRES and IRAP purposes of the higher loan loss provisions determined by the adoption of a valuation criterion based on the expected losses in lieu of the actual losses; • Law 30 December 2018 No.145 (Budget Law 2019) introduces the following tax new provisions: - the tax effect determined by the IFRS9 first time adoption is spread over a 10-year period for IRES and IRAP purposes; - the reversal of convertible DTA on loan loss provision scheduled for 2018 is postponed to 2026; - the reversal plan of the convertible DTA on goodwill is re-determined up to 2029, for IRES and IRAP, based on fixed annual percentage, changing from year-to-year, as provided for by the law. No reversal is scheduled for 2018; - the Notional Interest Deduction (“ACE”) has been repealed starting from 2019. The postponement of the 2018 reversal of convertible DTA on loan loss provision and on goodwill (as per the second and third bullet above), has not determined a tax burden for UniCredit S.p.A. since the reversal at stake was already monetized in financial year 2017 in connection with the DTA conversion into tax credit performed on the 2016 accounting loss. Taxes on Income for 2018 reports a positive amount of €1,182 million, showing an improvement in comparison with a positive amounts €30 million in 2017. Company financial statements | Notes to the accounts Part C - Income statement 658 2018 Annual Report and Accounts · UniCredit Section 19 - Tax expenses (income) for the period from continuing operations - Item 270 Taxes on Income are accrued in accordance with IAS12. The tax charge consists of current and deferred taxes, mainly determined in accordance with the applicable provisions on IRES and IRAP, and CFC separate taxation (Controlled Foreign Companies, i.e., foreign subsidiaries taxed on a transparency basis where specific conditions are met). IRES is calculated by making specific upward or downward adjustments to the current year profit or loss as resulting from the Income statement for determining the taxable income. These tax adjustments are made as required by the provisions of the Italian Income Tax Code (TUIR), in relation to the non-deductibility of certain expenses or the non-taxability of certain revenues. The IRES tax rate applied to the taxable income is 24%. An additional surcharge of 3.5% applies to Banks and Financial companies. The above-mentioned tax adjustments may be “permanent” or “temporary”. The “permanent” adjustments refer to expenses/revenues that are totally or partially non-deductible/non-taxable. The “temporary” adjustments, on the other hand, relate to expenses or revenues whose deductibility or tax-ability is deferred to future tax periods on the occurrence of particular events, or distributed in equal quotas over a predefined number of years. The presence of “temporary” adjustments leads to the recognition of deferred tax assets (for costs to be deducted) or deferred tax liabilities (for revenues to be taxed). The purpose of the recognition of deferred tax assets and liabilities is to reconcile in the Financial statements the different tax period of relevance established by the TUIR compared to the accounting accrual principle. For IRES purposes, subject to a specific election to be submitted to the Italian Revenue Agency, this tax can be paid on a Tax Group level rather than on an individual basis. All Italian companies that meet the control pre-requisite can adhere to the Tax Group regime, in order to compute the tax payment on a unique taxable base consisting of the algebraic sum of the taxable amounts of all the companies adhering to the Tax Group regime. The tax rate applicable to the Tax Group is 24%. For IRES purposes, is stated a separate taxation “for transparency” on incomes, calculated according to the provisions of the Italian Income Tax Code (TUIR), of the foreign direct and indirect subsidiaries (so-called CFCs: Controlled Foreign Companies) established in Countries with a nominal or effective tax rate which is significantly below the Italian corresponding one. The applicable tax rate is 27.5%. IRAP is levied on productive activities and relevant taxable base corresponds to the algebraic sum of certain items of the Income Statement as specifically identified by Legislative Decree No.446 of 1997, which also states further upward and downward adjustments to be made (other than IRES ones). Law No.190 of 23 December 2014 (2015 Stability Law) establishes, starting from 2015, that personnel costs for employees with permanent employment contracts are fully deductible from IRAP in addition to the deductions already established by the so called "cuneo fiscale". Furthermore, in 2016 the full deductibility of the loan loss provisions in the year of accrual in the financial statements was introduced following the entry into force of article 16 of Law Decree 27 June 2015 No.83. The tax is calculated by apportioning the overall value of production among the various administrative Regions where the productive activities are carried out (for banks the apportionment is made on the basis of the regional distribution of customer’s deposits) and applying the respective regional rate to each of the individual portions identified. A national rate of 4.65% is established, to which each Region can autonomously add a surcharge up to 0.92%, with an overall theoretical rate of 5.57% (plus a further rate of 0.15% for Regions with a deficit in spending on the local welfare sector). During 2018 the following amendments to the tax legislation have been introduced. Specifically: • Ministerial Decree 10 January 2018 defines the tax regime applicable to the reclassification of financial assets from IAS39 categories to IFRS9 ones and establishes the full deductibility for IRES and IRAP purposes of the higher loan loss provisions determined by the adoption of a valuation criterion based on the expected losses in lieu of the actual losses; • Law 30 December 2018 No.145 (Budget Law 2019) introduces the following tax new provisions: - the tax effect determined by the IFRS9 first time adoption is spread over a 10-year period for IRES and IRAP purposes; - the reversal of convertible DTA on loan loss provision scheduled for 2018 is postponed to 2026; - the reversal plan of the convertible DTA on goodwill is re-determined up to 2029, for IRES and IRAP, based on fixed annual percentage, changing from year-to-year, as provided for by the law. No reversal is scheduled for 2018; - the Notional Interest Deduction (“ACE”) has been repealed starting from 2019. The postponement of the 2018 reversal of convertible DTA on loan loss provision and on goodwill (as per the second and third bullet above), has not determined a tax burden for UniCredit S.p.A. since the reversal at stake was already monetized in financial year 2017 in connection with the DTA conversion into tax credit performed on the 2016 accounting loss. Taxes on Income for 2018 reports a positive amount of €1,182 million, showing an improvement in comparison with a positive amounts €30 million in 2017. Company financial statements | Notes to the accounts Part C - Income statement 658 2018 Annual Report and Accounts · UniCredit Section 19 - Tax expenses (income) for the period from continuing operations - Item 270 Taxes on Income are accrued in accordance with IAS12. The tax charge consists of current and deferred taxes, mainly determined in accordance with the applicable provisions on IRES and IRAP, and CFC separate taxation (Controlled Foreign Companies, i.e., foreign subsidiaries taxed on a transparency basis where specific conditions are met). IRES is calculated by making specific upward or downward adjustments to the current year profit or loss as resulting from the Income statement for determining the taxable income. These tax adjustments are made as required by the provisions of the Italian Income Tax Code (TUIR), in relation to the non-deductibility of certain expenses or the non-taxability of certain revenues. The IRES tax rate applied to the taxable income is 24%. An additional surcharge of 3.5% applies to Banks and Financial companies. The above-mentioned tax adjustments may be “permanent” or “temporary”. The “permanent” adjustments refer to expenses/revenues that are totally or partially non-deductible/non-taxable. The “temporary” adjustments, on the other hand, relate to expenses or revenues whose deductibility or tax-ability is deferred to future tax periods on the occurrence of particular events, or distributed in equal quotas over a predefined number of years. The presence of “temporary” adjustments leads to the recognition of deferred tax assets (for costs to be deducted) or deferred tax liabilities (for revenues to be taxed). The purpose of the recognition of deferred tax assets and liabilities is to reconcile in the Financial statements the different tax period of relevance established by the TUIR compared to the accounting accrual principle. For IRES purposes, subject to a specific election to be submitted to the Italian Revenue Agency, this tax can be paid on a Tax Group level rather than on an individual basis. All Italian companies that meet the control pre-requisite can adhere to the Tax Group regime, in order to compute the tax payment on a unique taxable base consisting of the algebraic sum of the taxable amounts of all the companies adhering to the Tax Group regime. The tax rate applicable to the Tax Group is 24%. For IRES purposes, is stated a separate taxation “for transparency” on incomes, calculated according to the provisions of the Italian Income Tax Code (TUIR), of the foreign direct and indirect subsidiaries (so-called CFCs: Controlled Foreign Companies) established in Countries with a nominal or effective tax rate which is significantly below the Italian corresponding one. The applicable tax rate is 27.5%. IRAP is levied on productive activities and relevant taxable base corresponds to the algebraic sum of certain items of the Income Statement as specifically identified by Legislative Decree No.446 of 1997, which also states further upward and downward adjustments to be made (other than IRES ones). Law No.190 of 23 December 2014 (2015 Stability Law) establishes, starting from 2015, that personnel costs for employees with permanent employment contracts are fully deductible from IRAP in addition to the deductions already established by the so called "cuneo fiscale". Furthermore, in 2016 the full deductibility of the loan loss provisions in the year of accrual in the financial statements was introduced following the entry into force of article 16 of Law Decree 27 June 2015 No.83. The tax is calculated by apportioning the overall value of production among the various administrative Regions where the productive activities are carried out (for banks the apportionment is made on the basis of the regional distribution of customer’s deposits) and applying the respective regional rate to each of the individual portions identified. A national rate of 4.65% is established, to which each Region can autonomously add a surcharge up to 0.92%, with an overall theoretical rate of 5.57% (plus a further rate of 0.15% for Regions with a deficit in spending on the local welfare sector). During 2018 the following amendments to the tax legislation have been introduced. Specifically: • Ministerial Decree 10 January 2018 defines the tax regime applicable to the reclassification of financial assets from IAS39 categories to IFRS9 ones and establishes the full deductibility for IRES and IRAP purposes of the higher loan loss provisions determined by the adoption of a valuation criterion based on the expected losses in lieu of the actual losses; • Law 30 December 2018 No.145 (Budget Law 2019) introduces the following tax new provisions: - the tax effect determined by the IFRS9 first time adoption is spread over a 10-year period for IRES and IRAP purposes; - the reversal of convertible DTA on loan loss provision scheduled for 2018 is postponed to 2026; - the reversal plan of the convertible DTA on goodwill is re-determined up to 2029, for IRES and IRAP, based on fixed annual percentage, changing from year-to-year, as provided for by the law. No reversal is scheduled for 2018; - the Notional Interest Deduction (“ACE”) has been repealed starting from 2019. The postponement of the 2018 reversal of convertible DTA on loan loss provision and on goodwill (as per the second and third bullet above), has not determined a tax burden for UniCredit S.p.A. since the reversal at stake was already monetized in financial year 2017 in connection with the DTA conversion into tax credit performed on the 2016 accounting loss. Taxes on Income for 2018 reports a positive amount of €1,182 million, showing an improvement in comparison with a positive amounts €30 million in 2017. Company financial statements | Notes to the accounts Part C - Income statement 658 2018 Annual Report and Accounts · UniCredit Section 19 - Tax expenses (income) for the period from continuing operations - Item 270 Taxes on Income are accrued in accordance with IAS12. The tax charge consists of current and deferred taxes, mainly determined in accordance with the applicable provisions on IRES and IRAP, and CFC separate taxation (Controlled Foreign Companies, i.e., foreign subsidiaries taxed on a transparency basis where specific conditions are met). IRES is calculated by making specific upward or downward adjustments to the current year profit or loss as resulting from the Income statement for determining the taxable income. These tax adjustments are made as required by the provisions of the Italian Income Tax Code (TUIR), in relation to the non-deductibility of certain expenses or the non-taxability of certain revenues. The IRES tax rate applied to the taxable income is 24%. An additional surcharge of 3.5% applies to Banks and Financial companies. The above-mentioned tax adjustments may be “permanent” or “temporary”. The “permanent” adjustments refer to expenses/revenues that are totally or partially non-deductible/non-taxable. The “temporary” adjustments, on the other hand, relate to expenses or revenues whose deductibility or tax-ability is deferred to future tax periods on the occurrence of particular events, or distributed in equal quotas over a predefined number of years. The presence of “temporary” adjustments leads to the recognition of deferred tax assets (for costs to be deducted) or deferred tax liabilities (for revenues to be taxed). The purpose of the recognition of deferred tax assets and liabilities is to reconcile in the Financial statements the different tax period of relevance established by the TUIR compared to the accounting accrual principle. For IRES purposes, subject to a specific election to be submitted to the Italian Revenue Agency, this tax can be paid on a Tax Group level rather than on an individual basis. All Italian companies that meet the control pre-requisite can adhere to the Tax Group regime, in order to compute the tax payment on a unique taxable base consisting of the algebraic sum of the taxable amounts of all the companies adhering to the Tax Group regime. The tax rate applicable to the Tax Group is 24%. For IRES purposes, is stated a separate taxation “for transparency” on incomes, calculated according to the provisions of the Italian Income Tax Code (TUIR), of the foreign direct and indirect subsidiaries (so-called CFCs: Controlled Foreign Companies) established in Countries with a nominal or effective tax rate which is significantly below the Italian corresponding one. The applicable tax rate is 27.5%. IRAP is levied on productive activities and relevant taxable base corresponds to the algebraic sum of certain items of the Income Statement as specifically identified by Legislative Decree No.446 of 1997, which also states further upward and downward adjustments to be made (other than IRES ones). Law No.190 of 23 December 2014 (2015 Stability Law) establishes, starting from 2015, that personnel costs for employees with permanent employment contracts are fully deductible from IRAP in addition to the deductions already established by the so called "cuneo fiscale". Furthermore, in 2016 the full deductibility of the loan loss provisions in the year of accrual in the financial statements was introduced following the entry into force of article 16 of Law Decree 27 June 2015 No.83. The tax is calculated by apportioning the overall value of production among the various administrative Regions where the productive activities are carried out (for banks the apportionment is made on the basis of the regional distribution of customer’s deposits) and applying the respective regional rate to each of the individual portions identified. A national rate of 4.65% is established, to which each Region can autonomously add a surcharge up to 0.92%, with an overall theoretical rate of 5.57% (plus a further rate of 0.15% for Regions with a deficit in spending on the local welfare sector). During 2018 the following amendments to the tax legislation have been introduced. Specifically: • Ministerial Decree 10 January 2018 defines the tax regime applicable to the reclassification of financial assets from IAS39 categories to IFRS9 ones and establishes the full deductibility for IRES and IRAP purposes of the higher loan loss provisions determined by the adoption of a valuation criterion based on the expected losses in lieu of the actual losses; • Law 30 December 2018 No.145 (Budget Law 2019) introduces the following tax new provisions: - the tax effect determined by the IFRS9 first time adoption is spread over a 10-year period for IRES and IRAP purposes; - the reversal of convertible DTA on loan loss provision scheduled for 2018 is postponed to 2026; - the reversal plan of the convertible DTA on goodwill is re-determined up to 2029, for IRES and IRAP, based on fixed annual percentage, changing from year-to-year, as provided for by the law. No reversal is scheduled for 2018; - the Notional Interest Deduction (“ACE”) has been repealed starting from 2019. The postponement of the 2018 reversal of convertible DTA on loan loss provision and on goodwill (as per the second and third bullet above), has not determined a tax burden for UniCredit S.p.A. since the reversal at stake was already monetized in financial year 2017 in connection with the DTA conversion into tax credit performed on the 2016 accounting loss. Taxes on Income for 2018 reports a positive amount of €1,182 million, showing an improvement in comparison with a positive amounts €30 million in 2017. Company financial statements | Notes to the accounts Part C - Income statement 658 2018 Annual Report and Accounts · UniCredit Section 19 - Tax expenses (income) for the period from continuing operations - Item 270 Taxes on Income are accrued in accordance with IAS12. The tax charge consists of current and deferred taxes, mainly determined in accordance with the applicable provisions on IRES and IRAP, and CFC separate taxation (Controlled Foreign Companies, i.e., foreign subsidiaries taxed on a transparency basis where specific conditions are met). IRES is calculated by making specific upward or downward adjustments to the current year profit or loss as resulting from the Income statement for determining the taxable income. These tax adjustments are made as required by the provisions of the Italian Income Tax Code (TUIR), in relation to the non-deductibility of certain expenses or the non-taxability of certain revenues. The IRES tax rate applied to the taxable income is 24%. An additional surcharge of 3.5% applies to Banks and Financial companies. The above-mentioned tax adjustments may be “permanent” or “temporary”. The “permanent” adjustments refer to expenses/revenues that are totally or partially non-deductible/non-taxable. The “temporary” adjustments, on the other hand, relate to expenses or revenues whose deductibility or tax-ability is deferred to future tax periods on the occurrence of particular events, or distributed in equal quotas over a predefined number of years. The presence of “temporary” adjustments leads to the recognition of deferred tax assets (for costs to be deducted) or deferred tax liabilities (for revenues to be taxed). The purpose of the recognition of deferred tax assets and liabilities is to reconcile in the Financial statements the different tax period of relevance established by the TUIR compared to the accounting accrual principle. For IRES purposes, subject to a specific election to be submitted to the Italian Revenue Agency, this tax can be paid on a Tax Group level rather than on an individual basis. All Italian companies that meet the control pre-requisite can adhere to the Tax Group regime, in order to compute the tax payment on a unique taxable base consisting of the algebraic sum of the taxable amounts of all the companies adhering to the Tax Group regime. The tax rate applicable to the Tax Group is 24%. For IRES purposes, is stated a separate taxation “for transparency” on incomes, calculated according to the provisions of the Italian Income Tax Code (TUIR), of the foreign direct and indirect subsidiaries (so-called CFCs: Controlled Foreign Companies) established in Countries with a nominal or effective tax rate which is significantly below the Italian corresponding one. The applicable tax rate is 27.5%. IRAP is levied on productive activities and relevant taxable base corresponds to the algebraic sum of certain items of the Income Statement as specifically identified by Legislative Decree No.446 of 1997, which also states further upward and downward adjustments to be made (other than IRES ones). Law No.190 of 23 December 2014 (2015 Stability Law) establishes, starting from 2015, that personnel costs for employees with permanent employment contracts are fully deductible from IRAP in addition to the deductions already established by the so called "cuneo fiscale". Furthermore, in 2016 the full deductibility of the loan loss provisions in the year of accrual in the financial statements was introduced following the entry into force of article 16 of Law Decree 27 June 2015 No.83. The tax is calculated by apportioning the overall value of production among the various administrative Regions where the productive activities are carried out (for banks the apportionment is made on the basis of the regional distribution of customer’s deposits) and applying the respective regional rate to each of the individual portions identified. A national rate of 4.65% is established, to which each Region can autonomously add a surcharge up to 0.92%, with an overall theoretical rate of 5.57% (plus a further rate of 0.15% for Regions with a deficit in spending on the local welfare sector). During 2018 the following amendments to the tax legislation have been introduced. Specifically: • Ministerial Decree 10 January 2018 defines the tax regime applicable to the reclassification of financial assets from IAS39 categories to IFRS9 ones and establishes the full deductibility for IRES and IRAP purposes of the higher loan loss provisions determined by the adoption of a valuation criterion based on the expected losses in lieu of the actual losses; • Law 30 December 2018 No.145 (Budget Law 2019) introduces the following tax new provisions: - the tax effect determined by the IFRS9 first time adoption is spread over a 10-year period for IRES and IRAP purposes; - the reversal of convertible DTA on loan loss provision scheduled for 2018 is postponed to 2026; - the reversal plan of the convertible DTA on goodwill is re-determined up to 2029, for IRES and IRAP, based on fixed annual percentage, changing from year-to-year, as provided for by the law. No reversal is scheduled for 2018; - the Notional Interest Deduction (“ACE”) has been repealed starting from 2019. The postponement of the 2018 reversal of convertible DTA on loan loss provision and on goodwill (as per the second and third bullet above), has not determined a tax burden for UniCredit S.p.A. since the reversal at stake was already monetized in financial year 2017 in connection with the DTA conversion into tax credit performed on the 2016 accounting loss. Taxes on Income for 2018 reports a positive amount of €1,182 million, showing an improvement in comparison with a positive amounts €30 million in 2017. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 659 Current IRES, notwithstanding the high amount of profit before tax, shows a tax loss of €91 million, mainly due to non-taxable positive items (dividends), non-tax-relevant items deriving from valuation or realisation events on participations and to the distribution of a 10-year period of the higher loan loss provision deriving from the IFRS9 adoption. The tax loss that can be carried forward for the year amounts to €25 million of taxes, which therefore increases the stock of the out of balance (unrecognised) DTAs on tax losses to a total amount of €3,350 million (already including €34 million tax loss deriving from the incorporation of the subsidiaries PGAM and Buddy Servizi Molecolari). Following the sustainability test performed in line with IAS12, only a limited amount of DTA has been accrued, equal to €78 million, although from a tax perspective tax losses can be carried forward indefinitely, with no impact on the Income statement according to the international accounting standards. IRAP taxable base is positive, with a tax due equal to €63 million, following the distribution in 10 years of the higher loan loss provisions deriving from IFRS9 adoption. The “ACE” benefit (“Aiuto alla crescita economica”) estimated for 2018 amounts to €35 million, showing a reduction in comparison to the 2017 estimation of €53 million, due to the decrease of the notional yield from 1.6% in 2017 to 1.5% in 2018 (see Law 21 June 2017 No.96, art.7) following the entry into force of Ministerial Decree 3 August 2017 that amended the “ACE” relevant tax provisions by way of introducing restrictive measures. During 2018, in light of the negative taxable basis for IRES and the availability of tax losses carried forward determining an indefinite postponement of the monetization of the ACE benefit, the corresponding amount of said ACE benefit has been converted into a tax credit for IRAP purposes, as provided for by Law Decree 24 June 2014, No.91 (passed with modification by law 11 August 2014, No.116) prior to the deadline for the payment of the IRAP due for 2017. Therefore, the ACE benefit for 2016, equal to €43 million, and for 2017, equal to €56 million, were converted into a tax credit, determining an extraordinary income in the Income Statement, considered that the corresponding DTA on the ACE benefit was impaired being not sustainable. The IRAP credit will be used over 5 years in equal installments as provided for by the relevant law, with the possibility to carry forward any unused amount upon the fifth year. Financial year 2017 reports a net income in the Income Statement equal to €6,236 million; therefore, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits, pursuant to Art.2, paragraph 55, of Law Decree 29 December 2010 No.225 were not met. In order to preserve for the future the regime of conversion of DTAs into tax credits, and in order to overcome the issues raised by the European Commission in connection to the application of State Aid rules, Art.11 of DL 3 May 2016 No.59 (so-called "Banks Decree", converted into Law 30 June 2016 No.119), introduced the possibility, starting from 2016 since 2030, to elect for the payment of an annual fee equal to 1.5% levied on an aggregate amount deriving from the difference between: • the increase in convertible DTAs recognised at the end of the fiscal year and the convertible DTA existing at the end of 2007, for IRES tax, and as the end of 2012 for IRAP tax, taking into account the amounts already converted into tax credits; • taxes: - IRES paid by Tax Group starting from 1 January 2008; - IRAP paid starting from 1 January 2013 by Legal Entities included in Tax Group with convertible DTAs; - substitute taxes that generated convertible DTAs. The whole fee has been paid on 27 June 2018 by UniCredit group (as required by law) for a total amount €115.7 million, of which €111 million related to UniCredit S.p.A. itself, €4.4 million to UniCredit Leasing S.p.A. and €0.3 million to UniCredit Factoring S.p.A. 19.1 Tax expense (income) relating to profit or loss from continuing operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Current taxes (-) (72,613) (76,174) 2. Change of current taxes of previous years (+/-) 129,544 35,996 3. Reduction of current taxes for the year (+) - - 3.bis Reduction of current taxes for the year due tax credit under Law 214/2011 (+) - 2,859,337 4. Change of deferred tax assets (+/-) 1,124,491 (2,800,444) 5. Change of deferred tax liabilities (+/-) 145 11,449 6. Tax expenses for the year (-) (-1+/-2+3+3bis+/-4+/-5) 1,181,567 30,164 Sub-item “4. Change of deferred tax assets (+/-)” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 659 Current IRES, notwithstanding the high amount of profit before tax, shows a tax loss of €91 million, mainly due to non-taxable positive items (dividends), non-tax-relevant items deriving from valuation or realisation events on participations and to the distribution of a 10-year period of the higher loan loss provision deriving from the IFRS9 adoption. The tax loss that can be carried forward for the year amounts to €25 million of taxes, which therefore increases the stock of the out of balance (unrecognised) DTAs on tax losses to a total amount of €3,350 million (already including €34 million tax loss deriving from the incorporation of the subsidiaries PGAM and Buddy Servizi Molecolari). Following the sustainability test performed in line with IAS12, only a limited amount of DTA has been accrued, equal to €78 million, although from a tax perspective tax losses can be carried forward indefinitely, with no impact on the Income statement according to the international accounting standards. IRAP taxable base is positive, with a tax due equal to €63 million, following the distribution in 10 years of the higher loan loss provisions deriving from IFRS9 adoption. The “ACE” benefit (“Aiuto alla crescita economica”) estimated for 2018 amounts to €35 million, showing a reduction in comparison to the 2017 estimation of €53 million, due to the decrease of the notional yield from 1.6% in 2017 to 1.5% in 2018 (see Law 21 June 2017 No.96, art.7) following the entry into force of Ministerial Decree 3 August 2017 that amended the “ACE” relevant tax provisions by way of introducing restrictive measures. During 2018, in light of the negative taxable basis for IRES and the availability of tax losses carried forward determining an indefinite postponement of the monetization of the ACE benefit, the corresponding amount of said ACE benefit has been converted into a tax credit for IRAP purposes, as provided for by Law Decree 24 June 2014, No.91 (passed with modification by law 11 August 2014, No.116) prior to the deadline for the payment of the IRAP due for 2017. Therefore, the ACE benefit for 2016, equal to €43 million, and for 2017, equal to €56 million, were converted into a tax credit, determining an extraordinary income in the Income Statement, considered that the corresponding DTA on the ACE benefit was impaired being not sustainable. The IRAP credit will be used over 5 years in equal installments as provided for by the relevant law, with the possibility to carry forward any unused amount upon the fifth year. Financial year 2017 reports a net income in the Income Statement equal to €6,236 million; therefore, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits, pursuant to Art.2, paragraph 55, of Law Decree 29 December 2010 No.225 were not met. In order to preserve for the future the regime of conversion of DTAs into tax credits, and in order to overcome the issues raised by the European Commission in connection to the application of State Aid rules, Art.11 of DL 3 May 2016 No.59 (so-called "Banks Decree", converted into Law 30 June 2016 No.119), introduced the possibility, starting from 2016 since 2030, to elect for the payment of an annual fee equal to 1.5% levied on an aggregate amount deriving from the difference between: • the increase in convertible DTAs recognised at the end of the fiscal year and the convertible DTA existing at the end of 2007, for IRES tax, and as the end of 2012 for IRAP tax, taking into account the amounts already converted into tax credits; • taxes: - IRES paid by Tax Group starting from 1 January 2008; - IRAP paid starting from 1 January 2013 by Legal Entities included in Tax Group with convertible DTAs; - substitute taxes that generated convertible DTAs. The whole fee has been paid on 27 June 2018 by UniCredit group (as required by law) for a total amount €115.7 million, of which €111 million related to UniCredit S.p.A. itself, €4.4 million to UniCredit Leasing S.p.A. and €0.3 million to UniCredit Factoring S.p.A. 19.1 Tax expense (income) relating to profit or loss from continuing operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Current taxes (-) (72,613) (76,174) 2. Change of current taxes of previous years (+/-) 129,544 35,996 3. Reduction of current taxes for the year (+) - - 3.bis Reduction of current taxes for the year due tax credit under Law 214/2011 (+) - 2,859,337 4. Change of deferred tax assets (+/-) 1,124,491 (2,800,444) 5. Change of deferred tax liabilities (+/-) 145 11,449 6. Tax expenses for the year (-) (-1+/-2+3+3bis+/-4+/-5) 1,181,567 30,164 Sub-item “4. Change of deferred tax assets (+/-)” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 659 Current IRES, notwithstanding the high amount of profit before tax, shows a tax loss of €91 million, mainly due to non-taxable positive items (dividends), non-tax-relevant items deriving from valuation or realisation events on participations and to the distribution of a 10-year period of the higher loan loss provision deriving from the IFRS9 adoption. The tax loss that can be carried forward for the year amounts to €25 million of taxes, which therefore increases the stock of the out of balance (unrecognised) DTAs on tax losses to a total amount of €3,350 million (already including €34 million tax loss deriving from the incorporation of the subsidiaries PGAM and Buddy Servizi Molecolari). Following the sustainability test performed in line with IAS12, only a limited amount of DTA has been accrued, equal to €78 million, although from a tax perspective tax losses can be carried forward indefinitely, with no impact on the Income statement according to the international accounting standards. IRAP taxable base is positive, with a tax due equal to €63 million, following the distribution in 10 years of the higher loan loss provisions deriving from IFRS9 adoption. The “ACE” benefit (“Aiuto alla crescita economica”) estimated for 2018 amounts to €35 million, showing a reduction in comparison to the 2017 estimation of €53 million, due to the decrease of the notional yield from 1.6% in 2017 to 1.5% in 2018 (see Law 21 June 2017 No.96, art.7) following the entry into force of Ministerial Decree 3 August 2017 that amended the “ACE” relevant tax provisions by way of introducing restrictive measures. During 2018, in light of the negative taxable basis for IRES and the availability of tax losses carried forward determining an indefinite postponement of the monetization of the ACE benefit, the corresponding amount of said ACE benefit has been converted into a tax credit for IRAP purposes, as provided for by Law Decree 24 June 2014, No.91 (passed with modification by law 11 August 2014, No.116) prior to the deadline for the payment of the IRAP due for 2017. Therefore, the ACE benefit for 2016, equal to €43 million, and for 2017, equal to €56 million, were converted into a tax credit, determining an extraordinary income in the Income Statement, considered that the corresponding DTA on the ACE benefit was impaired being not sustainable. The IRAP credit will be used over 5 years in equal installments as provided for by the relevant law, with the possibility to carry forward any unused amount upon the fifth year. Financial year 2017 reports a net income in the Income Statement equal to €6,236 million; therefore, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits, pursuant to Art.2, paragraph 55, of Law Decree 29 December 2010 No.225 were not met. In order to preserve for the future the regime of conversion of DTAs into tax credits, and in order to overcome the issues raised by the European Commission in connection to the application of State Aid rules, Art.11 of DL 3 May 2016 No.59 (so-called "Banks Decree", converted into Law 30 June 2016 No.119), introduced the possibility, starting from 2016 since 2030, to elect for the payment of an annual fee equal to 1.5% levied on an aggregate amount deriving from the difference between: • the increase in convertible DTAs recognised at the end of the fiscal year and the convertible DTA existing at the end of 2007, for IRES tax, and as the end of 2012 for IRAP tax, taking into account the amounts already converted into tax credits; • taxes: - IRES paid by Tax Group starting from 1 January 2008; - IRAP paid starting from 1 January 2013 by Legal Entities included in Tax Group with convertible DTAs; - substitute taxes that generated convertible DTAs. The whole fee has been paid on 27 June 2018 by UniCredit group (as required by law) for a total amount €115.7 million, of which €111 million related to UniCredit S.p.A. itself, €4.4 million to UniCredit Leasing S.p.A. and €0.3 million to UniCredit Factoring S.p.A. 19.1 Tax expense (income) relating to profit or loss from continuing operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Current taxes (-) (72,613) (76,174) 2. Change of current taxes of previous years (+/-) 129,544 35,996 3. Reduction of current taxes for the year (+) - - 3.bis Reduction of current taxes for the year due tax credit under Law 214/2011 (+) - 2,859,337 4. Change of deferred tax assets (+/-) 1,124,491 (2,800,444) 5. Change of deferred tax liabilities (+/-) 145 11,449 6. Tax expenses for the year (-) (-1+/-2+3+3bis+/-4+/-5) 1,181,567 30,164 Sub-item “4. Change of deferred tax assets (+/-)” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 659 Current IRES, notwithstanding the high amount of profit before tax, shows a tax loss of €91 million, mainly due to non-taxable positive items (dividends), non-tax-relevant items deriving from valuation or realisation events on participations and to the distribution of a 10-year period of the higher loan loss provision deriving from the IFRS9 adoption. The tax loss that can be carried forward for the year amounts to €25 million of taxes, which therefore increases the stock of the out of balance (unrecognised) DTAs on tax losses to a total amount of €3,350 million (already including €34 million tax loss deriving from the incorporation of the subsidiaries PGAM and Buddy Servizi Molecolari). Following the sustainability test performed in line with IAS12, only a limited amount of DTA has been accrued, equal to €78 million, although from a tax perspective tax losses can be carried forward indefinitely, with no impact on the Income statement according to the international accounting standards. IRAP taxable base is positive, with a tax due equal to €63 million, following the distribution in 10 years of the higher loan loss provisions deriving from IFRS9 adoption. The “ACE” benefit (“Aiuto alla crescita economica”) estimated for 2018 amounts to €35 million, showing a reduction in comparison to the 2017 estimation of €53 million, due to the decrease of the notional yield from 1.6% in 2017 to 1.5% in 2018 (see Law 21 June 2017 No.96, art.7) following the entry into force of Ministerial Decree 3 August 2017 that amended the “ACE” relevant tax provisions by way of introducing restrictive measures. During 2018, in light of the negative taxable basis for IRES and the availability of tax losses carried forward determining an indefinite postponement of the monetization of the ACE benefit, the corresponding amount of said ACE benefit has been converted into a tax credit for IRAP purposes, as provided for by Law Decree 24 June 2014, No.91 (passed with modification by law 11 August 2014, No.116) prior to the deadline for the payment of the IRAP due for 2017. Therefore, the ACE benefit for 2016, equal to €43 million, and for 2017, equal to €56 million, were converted into a tax credit, determining an extraordinary income in the Income Statement, considered that the corresponding DTA on the ACE benefit was impaired being not sustainable. The IRAP credit will be used over 5 years in equal installments as provided for by the relevant law, with the possibility to carry forward any unused amount upon the fifth year. Financial year 2017 reports a net income in the Income Statement equal to €6,236 million; therefore, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits, pursuant to Art.2, paragraph 55, of Law Decree 29 December 2010 No.225 were not met. In order to preserve for the future the regime of conversion of DTAs into tax credits, and in order to overcome the issues raised by the European Commission in connection to the application of State Aid rules, Art.11 of DL 3 May 2016 No.59 (so-called "Banks Decree", converted into Law 30 June 2016 No.119), introduced the possibility, starting from 2016 since 2030, to elect for the payment of an annual fee equal to 1.5% levied on an aggregate amount deriving from the difference between: • the increase in convertible DTAs recognised at the end of the fiscal year and the convertible DTA existing at the end of 2007, for IRES tax, and as the end of 2012 for IRAP tax, taking into account the amounts already converted into tax credits; • taxes: - IRES paid by Tax Group starting from 1 January 2008; - IRAP paid starting from 1 January 2013 by Legal Entities included in Tax Group with convertible DTAs; - substitute taxes that generated convertible DTAs. The whole fee has been paid on 27 June 2018 by UniCredit group (as required by law) for a total amount €115.7 million, of which €111 million related to UniCredit S.p.A. itself, €4.4 million to UniCredit Leasing S.p.A. and €0.3 million to UniCredit Factoring S.p.A. 19.1 Tax expense (income) relating to profit or loss from continuing operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Current taxes (-) (72,613) (76,174) 2. Change of current taxes of previous years (+/-) 129,544 35,996 3. Reduction of current taxes for the year (+) - - 3.bis Reduction of current taxes for the year due tax credit under Law 214/2011 (+) - 2,859,337 4. Change of deferred tax assets (+/-) 1,124,491 (2,800,444) 5. Change of deferred tax liabilities (+/-) 145 11,449 6. Tax expenses for the year (-) (-1+/-2+3+3bis+/-4+/-5) 1,181,567 30,164 Sub-item “4. Change of deferred tax assets (+/-)” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 659 Current IRES, notwithstanding the high amount of profit before tax, shows a tax loss of €91 million, mainly due to non-taxable positive items (dividends), non-tax-relevant items deriving from valuation or realisation events on participations and to the distribution of a 10-year period of the higher loan loss provision deriving from the IFRS9 adoption. The tax loss that can be carried forward for the year amounts to €25 million of taxes, which therefore increases the stock of the out of balance (unrecognised) DTAs on tax losses to a total amount of €3,350 million (already including €34 million tax loss deriving from the incorporation of the subsidiaries PGAM and Buddy Servizi Molecolari). Following the sustainability test performed in line with IAS12, only a limited amount of DTA has been accrued, equal to €78 million, although from a tax perspective tax losses can be carried forward indefinitely, with no impact on the Income statement according to the international accounting standards. IRAP taxable base is positive, with a tax due equal to €63 million, following the distribution in 10 years of the higher loan loss provisions deriving from IFRS9 adoption. The “ACE” benefit (“Aiuto alla crescita economica”) estimated for 2018 amounts to €35 million, showing a reduction in comparison to the 2017 estimation of €53 million, due to the decrease of the notional yield from 1.6% in 2017 to 1.5% in 2018 (see Law 21 June 2017 No.96, art.7) following the entry into force of Ministerial Decree 3 August 2017 that amended the “ACE” relevant tax provisions by way of introducing restrictive measures. During 2018, in light of the negative taxable basis for IRES and the availability of tax losses carried forward determining an indefinite postponement of the monetization of the ACE benefit, the corresponding amount of said ACE benefit has been converted into a tax credit for IRAP purposes, as provided for by Law Decree 24 June 2014, No.91 (passed with modification by law 11 August 2014, No.116) prior to the deadline for the payment of the IRAP due for 2017. Therefore, the ACE benefit for 2016, equal to €43 million, and for 2017, equal to €56 million, were converted into a tax credit, determining an extraordinary income in the Income Statement, considered that the corresponding DTA on the ACE benefit was impaired being not sustainable. The IRAP credit will be used over 5 years in equal installments as provided for by the relevant law, with the possibility to carry forward any unused amount upon the fifth year. Financial year 2017 reports a net income in the Income Statement equal to €6,236 million; therefore, the conditions for a new conversion of Deferred Tax Assets (DTA) into tax credits, pursuant to Art.2, paragraph 55, of Law Decree 29 December 2010 No.225 were not met. In order to preserve for the future the regime of conversion of DTAs into tax credits, and in order to overcome the issues raised by the European Commission in connection to the application of State Aid rules, Art.11 of DL 3 May 2016 No.59 (so-called "Banks Decree", converted into Law 30 June 2016 No.119), introduced the possibility, starting from 2016 since 2030, to elect for the payment of an annual fee equal to 1.5% levied on an aggregate amount deriving from the difference between: • the increase in convertible DTAs recognised at the end of the fiscal year and the convertible DTA existing at the end of 2007, for IRES tax, and as the end of 2012 for IRAP tax, taking into account the amounts already converted into tax credits; • taxes: - IRES paid by Tax Group starting from 1 January 2008; - IRAP paid starting from 1 January 2013 by Legal Entities included in Tax Group with convertible DTAs; - substitute taxes that generated convertible DTAs. The whole fee has been paid on 27 June 2018 by UniCredit group (as required by law) for a total amount €115.7 million, of which €111 million related to UniCredit S.p.A. itself, €4.4 million to UniCredit Leasing S.p.A. and €0.3 million to UniCredit Factoring S.p.A. 19.1 Tax expense (income) relating to profit or loss from continuing operations: breakdown (€ '000) P&L ITEMS/SECTORS YEAR 2018 YEAR 2017 1. Current taxes (-) (72,613) (76,174) 2. Change of current taxes of previous years (+/-) 129,544 35,996 3. Reduction of current taxes for the year (+) - - 3.bis Reduction of current taxes for the year due tax credit under Law 214/2011 (+) - 2,859,337 4. Change of deferred tax assets (+/-) 1,124,491 (2,800,444) 5. Change of deferred tax liabilities (+/-) 145 11,449 6. Tax expenses for the year (-) (-1+/-2+3+3bis+/-4+/-5) 1,181,567 30,164 Sub-item “4. Change of deferred tax assets (+/-)” reflects the recognition of DTAs related to the first time adoption of IFRS9 against P&L for an amount of €871 million. Company financial statements | Notes to the accounts Part C - Income statement 660 2018 Annual Report and Accounts · UniCredit 19.2 Reconciliation of theoretical tax charge to actual tax charge (€ '000) YEAR 2018 YEAR 2017 Total profit or loss before tax from continuing operations (income statement item) 1,276,596 6,121,378 Theoretical tax rate 27.5% 27.5% Theoretical computed taxes on income (351,064) (1,683,379) 1. Different tax rates - - 2. Non-taxable income - permanent differences 856,320 2,569,154 3. Non-deductible expenses - permanent differences (571,789) (645,357) 4. Different fiscal laws/IRAP 32,803 (103,647) a) IRAP (italian companies) 63,225 (92,500) b) Other taxes (foreign companies) (30,422) (11,147) 5. Previous years and changes in tax rates 163,586 (8,941) a) Effects on current taxes 128,982 35,944 - Tax loss carryforward/unused Tax credit - - - Other effects of previous periods 128,982 35,944 b) Effects on deferred taxes 34,604 (44,885) - Changes in tax rates - - - New taxes incurred (+) previous taxes revocation (-) - - - True-ups/ adjustments of the calculated deferred taxes 34,604 (44,885) 6. Valuation adjustments and non-recognition of deferred taxes 1,051,711 (98,426) a) Deferred tax assets write-down (87,422) - b) Deferred tax assets recognition 610,363 - c) Deferred tax assets non-recognition - (98,426) d) Deferred tax assets non-recognition according to IAS12.39 and 12.44 - - e) Other 528,770 - 7. Amortisation of goodwill - - 8. Non-taxable foreign income - - 9. Other differences - 760 Recognised taxes on income 1,181,567 30,164 Section 20 - Profit (Loss) after tax from discontinued operations - Item 290 No data to be disclosed in this section. Section 21 - Other information Disclosure regarding the transparency of public funding required by article 1, paragraph 125 of the law 124/2017 Pursuant to article 1, paragraph 125 of law 124/2017, during 2018 UniCredit S.p.A. collected the following public contributions granted by Italian entities: Reduction of the extraordinary contribution pursuant to art.1, paragraph 235 of Law 232 of 11 December 2016 charged to the management of welfare interventions and pension support (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 55,293 Total 55,293 Contributions for the recruitment/stabilization of personnel deriving from the application of the CCNL of the Credit in force from time to time (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT S.P.A. 2,959 Total 2,959 Company financial statements | Notes to the accounts Part C - Income statement 660 2018 Annual Report and Accounts · UniCredit 19.2 Reconciliation of theoretical tax charge to actual tax charge (€ '000) YEAR 2018 YEAR 2017 Total profit or loss before tax from continuing operations (income statement item) 1,276,596 6,121,378 Theoretical tax rate 27.5% 27.5% Theoretical computed taxes on income (351,064) (1,683,379) 1. Different tax rates - - 2. Non-taxable income - permanent differences 856,320 2,569,154 3. Non-deductible expenses - permanent differences (571,789) (645,357) 4. Different fiscal laws/IRAP 32,803 (103,647) a) IRAP (italian companies) 63,225 (92,500) b) Other taxes (foreign companies) (30,422) (11,147) 5. Previous years and changes in tax rates 163,586 (8,941) a) Effects on current taxes 128,982 35,944 - Tax loss carryforward/unused Tax credit - - - Other effects of previous periods 128,982 35,944 b) Effects on deferred taxes 34,604 (44,885) - Changes in tax rates - - - New taxes incurred (+) previous taxes revocation (-) - - - True-ups/ adjustments of the calculated deferred taxes 34,604 (44,885) 6. Valuation adjustments and non-recognition of deferred taxes 1,051,711 (98,426) a) Deferred tax assets write-down (87,422) - b) Deferred tax assets recognition 610,363 - c) Deferred tax assets non-recognition - (98,426) d) Deferred tax assets non-recognition according to IAS12.39 and 12.44 - - e) Other 528,770 - 7. Amortisation of goodwill - - 8. Non-taxable foreign income - - 9. Other differences - 760 Recognised taxes on income 1,181,567 30,164 Section 20 - Profit (Loss) after tax from discontinued operations - Item 290 No data to be disclosed in this section. Section 21 - Other information Disclosure regarding the transparency of public funding required by article 1, paragraph 125 of the law 124/2017 Pursuant to article 1, paragraph 125 of law 124/2017, during 2018 UniCredit S.p.A. collected the following public contributions granted by Italian entities: Reduction of the extraordinary contribution pursuant to art.1, paragraph 235 of Law 232 of 11 December 2016 charged to the management of welfare interventions and pension support (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 55,293 Total 55,293 Contributions for the recruitment/stabilization of personnel deriving from the application of the CCNL of the Credit in force from time to time (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT S.P.A. 2,959 Total 2,959 Company financial statements | Notes to the accounts Part C - Income statement 660 2018 Annual Report and Accounts · UniCredit 19.2 Reconciliation of theoretical tax charge to actual tax charge (€ '000) YEAR 2018 YEAR 2017 Total profit or loss before tax from continuing operations (income statement item) 1,276,596 6,121,378 Theoretical tax rate 27.5% 27.5% Theoretical computed taxes on income (351,064) (1,683,379) 1. Different tax rates - - 2. Non-taxable income - permanent differences 856,320 2,569,154 3. Non-deductible expenses - permanent differences (571,789) (645,357) 4. Different fiscal laws/IRAP 32,803 (103,647) a) IRAP (italian companies) 63,225 (92,500) b) Other taxes (foreign companies) (30,422) (11,147) 5. Previous years and changes in tax rates 163,586 (8,941) a) Effects on current taxes 128,982 35,944 - Tax loss carryforward/unused Tax credit - - - Other effects of previous periods 128,982 35,944 b) Effects on deferred taxes 34,604 (44,885) - Changes in tax rates - - - New taxes incurred (+) previous taxes revocation (-) - - - True-ups/ adjustments of the calculated deferred taxes 34,604 (44,885) 6. Valuation adjustments and non-recognition of deferred taxes 1,051,711 (98,426) a) Deferred tax assets write-down (87,422) - b) Deferred tax assets recognition 610,363 - c) Deferred tax assets non-recognition - (98,426) d) Deferred tax assets non-recognition according to IAS12.39 and 12.44 - - e) Other 528,770 - 7. Amortisation of goodwill - - 8. Non-taxable foreign income - - 9. Other differences - 760 Recognised taxes on income 1,181,567 30,164 Section 20 - Profit (Loss) after tax from discontinued operations - Item 290 No data to be disclosed in this section. Section 21 - Other information Disclosure regarding the transparency of public funding required by article 1, paragraph 125 of the law 124/2017 Pursuant to article 1, paragraph 125 of law 124/2017, during 2018 UniCredit S.p.A. collected the following public contributions granted by Italian entities: Reduction of the extraordinary contribution pursuant to art.1, paragraph 235 of Law 232 of 11 December 2016 charged to the management of welfare interventions and pension support (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 55,293 Total 55,293 Contributions for the recruitment/stabilization of personnel deriving from the application of the CCNL of the Credit in force from time to time (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT S.P.A. 2,959 Total 2,959 Company financial statements | Notes to the accounts Part C - Income statement 660 2018 Annual Report and Accounts · UniCredit 19.2 Reconciliation of theoretical tax charge to actual tax charge (€ '000) YEAR 2018 YEAR 2017 Total profit or loss before tax from continuing operations (income statement item) 1,276,596 6,121,378 Theoretical tax rate 27.5% 27.5% Theoretical computed taxes on income (351,064) (1,683,379) 1. Different tax rates - - 2. Non-taxable income - permanent differences 856,320 2,569,154 3. Non-deductible expenses - permanent differences (571,789) (645,357) 4. Different fiscal laws/IRAP 32,803 (103,647) a) IRAP (italian companies) 63,225 (92,500) b) Other taxes (foreign companies) (30,422) (11,147) 5. Previous years and changes in tax rates 163,586 (8,941) a) Effects on current taxes 128,982 35,944 - Tax loss carryforward/unused Tax credit - - - Other effects of previous periods 128,982 35,944 b) Effects on deferred taxes 34,604 (44,885) - Changes in tax rates - - - New taxes incurred (+) previous taxes revocation (-) - - - True-ups/ adjustments of the calculated deferred taxes 34,604 (44,885) 6. Valuation adjustments and non-recognition of deferred taxes 1,051,711 (98,426) a) Deferred tax assets write-down (87,422) - b) Deferred tax assets recognition 610,363 - c) Deferred tax assets non-recognition - (98,426) d) Deferred tax assets non-recognition according to IAS12.39 and 12.44 - - e) Other 528,770 - 7. Amortisation of goodwill - - 8. Non-taxable foreign income - - 9. Other differences - 760 Recognised taxes on income 1,181,567 30,164 Section 20 - Profit (Loss) after tax from discontinued operations - Item 290 No data to be disclosed in this section. Section 21 - Other information Disclosure regarding the transparency of public funding required by article 1, paragraph 125 of the law 124/2017 Pursuant to article 1, paragraph 125 of law 124/2017, during 2018 UniCredit S.p.A. collected the following public contributions granted by Italian entities: Reduction of the extraordinary contribution pursuant to art.1, paragraph 235 of Law 232 of 11 December 2016 charged to the management of welfare interventions and pension support (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 55,293 Total 55,293 Contributions for the recruitment/stabilization of personnel deriving from the application of the CCNL of the Credit in force from time to time (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT S.P.A. 2,959 Total 2,959 Company financial statements | Notes to the accounts Part C - Income statement 660 2018 Annual Report and Accounts · UniCredit 19.2 Reconciliation of theoretical tax charge to actual tax charge (€ '000) YEAR 2018 YEAR 2017 Total profit or loss before tax from continuing operations (income statement item) 1,276,596 6,121,378 Theoretical tax rate 27.5% 27.5% Theoretical computed taxes on income (351,064) (1,683,379) 1. Different tax rates - - 2. Non-taxable income - permanent differences 856,320 2,569,154 3. Non-deductible expenses - permanent differences (571,789) (645,357) 4. Different fiscal laws/IRAP 32,803 (103,647) a) IRAP (italian companies) 63,225 (92,500) b) Other taxes (foreign companies) (30,422) (11,147) 5. Previous years and changes in tax rates 163,586 (8,941) a) Effects on current taxes 128,982 35,944 - Tax loss carryforward/unused Tax credit - - - Other effects of previous periods 128,982 35,944 b) Effects on deferred taxes 34,604 (44,885) - Changes in tax rates - - - New taxes incurred (+) previous taxes revocation (-) - - - True-ups/ adjustments of the calculated deferred taxes 34,604 (44,885) 6. Valuation adjustments and non-recognition of deferred taxes 1,051,711 (98,426) a) Deferred tax assets write-down (87,422) - b) Deferred tax assets recognition 610,363 - c) Deferred tax assets non-recognition - (98,426) d) Deferred tax assets non-recognition according to IAS12.39 and 12.44 - - e) Other 528,770 - 7. Amortisation of goodwill - - 8. Non-taxable foreign income - - 9. Other differences - 760 Recognised taxes on income 1,181,567 30,164 Section 20 - Profit (Loss) after tax from discontinued operations - Item 290 No data to be disclosed in this section. Section 21 - Other information Disclosure regarding the transparency of public funding required by article 1, paragraph 125 of the law 124/2017 Pursuant to article 1, paragraph 125 of law 124/2017, during 2018 UniCredit S.p.A. collected the following public contributions granted by Italian entities: Reduction of the extraordinary contribution pursuant to art.1, paragraph 235 of Law 232 of 11 December 2016 charged to the management of welfare interventions and pension support (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 55,293 Total 55,293 Contributions for the recruitment/stabilization of personnel deriving from the application of the CCNL of the Credit in force from time to time (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Fondo Nazionale per il sostegno dell'occupazione nel settore del credito UNICREDIT S.P.A. 2,959 Total 2,959 Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 661 Contributions for new recruits /stabilizations, introduced by the stability law 2018 (law No.205/2017) (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 248 Total 248 Contributions for the Ordinary section of the Solidarity Fund - benefits: Interministerial Decree 83486 of 28/07/2014 - article 10, paragraph 2 (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 3,936 Total 3,936 Article 8 of Legislative Decree 30/9/2005, n.203 converted, with modifications, from the law 2 December 2005, n.248. Compensatory measures for companies that assign the TFR to supplementary pension schemes and/or to the Fund for the payment of the TFR (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 9,286 Total 9,286 For further information, refer to the National State Aid Register "Transparency. Section 22 - Earnings per share 22.1 and 22.2 Average number of diluted shares and other information YEAR 2018 YEAR 2017 Net profit (loss) (thousand of €)(1) 2,364,976 6,203,514 Average number of outstanding shares 2,219,405,841 1,947,449,190 Average number of potential dilutive shares 9,835,058 10,695,178 Average number of diluted shares 2,229,240,899 1,958,144,368 Earnings per share (€) 1.070 3.190 Diluted earnings per share (€) 1.060 3.170 Note: (1) €93 million has been deducted from 2018 net profit of €2,458 million due to disbursements charged to equity made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (€32 million was deducted from 2017 net profit). Net of the average number of treasury shares and of further No.9,675,640 shares held under a contract of usufruct. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 661 Contributions for new recruits /stabilizations, introduced by the stability law 2018 (law No.205/2017) (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 248 Total 248 Contributions for the Ordinary section of the Solidarity Fund - benefits: Interministerial Decree 83486 of 28/07/2014 - article 10, paragraph 2 (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 3,936 Total 3,936 Article 8 of Legislative Decree 30/9/2005, n.203 converted, with modifications, from the law 2 December 2005, n.248. Compensatory measures for companies that assign the TFR to supplementary pension schemes and/or to the Fund for the payment of the TFR (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 9,286 Total 9,286 For further information, refer to the National State Aid Register "Transparency. Section 22 - Earnings per share 22.1 and 22.2 Average number of diluted shares and other information YEAR 2018 YEAR 2017 Net profit (loss) (thousand of €)(1) 2,364,976 6,203,514 Average number of outstanding shares 2,219,405,841 1,947,449,190 Average number of potential dilutive shares 9,835,058 10,695,178 Average number of diluted shares 2,229,240,899 1,958,144,368 Earnings per share (€) 1.070 3.190 Diluted earnings per share (€) 1.060 3.170 Note: (1) €93 million has been deducted from 2018 net profit of €2,458 million due to disbursements charged to equity made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (€32 million was deducted from 2017 net profit). Net of the average number of treasury shares and of further No.9,675,640 shares held under a contract of usufruct. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 661 Contributions for new recruits /stabilizations, introduced by the stability law 2018 (law No.205/2017) (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 248 Total 248 Contributions for the Ordinary section of the Solidarity Fund - benefits: Interministerial Decree 83486 of 28/07/2014 - article 10, paragraph 2 (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 3,936 Total 3,936 Article 8 of Legislative Decree 30/9/2005, n.203 converted, with modifications, from the law 2 December 2005, n.248. Compensatory measures for companies that assign the TFR to supplementary pension schemes and/or to the Fund for the payment of the TFR (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 9,286 Total 9,286 For further information, refer to the National State Aid Register "Transparency. Section 22 - Earnings per share 22.1 and 22.2 Average number of diluted shares and other information YEAR 2018 YEAR 2017 Net profit (loss) (thousand of €)(1) 2,364,976 6,203,514 Average number of outstanding shares 2,219,405,841 1,947,449,190 Average number of potential dilutive shares 9,835,058 10,695,178 Average number of diluted shares 2,229,240,899 1,958,144,368 Earnings per share (€) 1.070 3.190 Diluted earnings per share (€) 1.060 3.170 Note: (1) €93 million has been deducted from 2018 net profit of €2,458 million due to disbursements charged to equity made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (€32 million was deducted from 2017 net profit). Net of the average number of treasury shares and of further No.9,675,640 shares held under a contract of usufruct. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 661 Contributions for new recruits /stabilizations, introduced by the stability law 2018 (law No.205/2017) (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 248 Total 248 Contributions for the Ordinary section of the Solidarity Fund - benefits: Interministerial Decree 83486 of 28/07/2014 - article 10, paragraph 2 (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 3,936 Total 3,936 Article 8 of Legislative Decree 30/9/2005, n.203 converted, with modifications, from the law 2 December 2005, n.248. Compensatory measures for companies that assign the TFR to supplementary pension schemes and/or to the Fund for the payment of the TFR (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 9,286 Total 9,286 For further information, refer to the National State Aid Register "Transparency. Section 22 - Earnings per share 22.1 and 22.2 Average number of diluted shares and other information YEAR 2018 YEAR 2017 Net profit (loss) (thousand of €)(1) 2,364,976 6,203,514 Average number of outstanding shares 2,219,405,841 1,947,449,190 Average number of potential dilutive shares 9,835,058 10,695,178 Average number of diluted shares 2,229,240,899 1,958,144,368 Earnings per share (€) 1.070 3.190 Diluted earnings per share (€) 1.060 3.170 Note: (1) €93 million has been deducted from 2018 net profit of €2,458 million due to disbursements charged to equity made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (€32 million was deducted from 2017 net profit). Net of the average number of treasury shares and of further No.9,675,640 shares held under a contract of usufruct. Company financial statements | Notes to the accounts Part C - Income statement UniCredit ·2018 Annual Report and Accounts 661 Contributions for new recruits /stabilizations, introduced by the stability law 2018 (law No.205/2017) (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 248 Total 248 Contributions for the Ordinary section of the Solidarity Fund - benefits: Interministerial Decree 83486 of 28/07/2014 - article 10, paragraph 2 (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 3,936 Total 3,936 Article 8 of Legislative Decree 30/9/2005, n.203 converted, with modifications, from the law 2 December 2005, n.248. Compensatory measures for companies that assign the TFR to supplementary pension schemes and/or to the Fund for the payment of the TFR (€ '000) LENDING ENTITY LEGAL ENTITY BENEFICIARY PUBLIC CONTRIBUTION AMOUNT Istituto Nazionale della Previdenza Sociale UNICREDIT S.P.A. 9,286 Total 9,286 For further information, refer to the National State Aid Register "Transparency. Section 22 - Earnings per share 22.1 and 22.2 Average number of diluted shares and other information YEAR 2018 YEAR 2017 Net profit (loss) (thousand of €)(1) 2,364,976 6,203,514 Average number of outstanding shares 2,219,405,841 1,947,449,190 Average number of potential dilutive shares 9,835,058 10,695,178 Average number of diluted shares 2,229,240,899 1,958,144,368 Earnings per share (€) 1.070 3.190 Diluted earnings per share (€) 1.060 3.170 Note: (1) €93 million has been deducted from 2018 net profit of €2,458 million due to disbursements charged to equity made in connection with the usufruct contract signed with Mediobanca S.p.A. on UniCredit shares supporting the issuance of convertible securities denominated “Cashes” (€32 million was deducted from 2017 net profit). Net of the average number of treasury shares and of further No.9,675,640 shares held under a contract of usufruct. Company financial statements | Notes to the accounts Part D - Comprehensive income 662 2018 Annual Report and Accounts · UniCredit Statement of other comprehensive income (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Net profit (loss) of the year 2,458,163,164 6,235,645,406 Other comprehensive income not reclassified to profit or loss - - 20. Equity instruments designated at fair value through other comprehensive income: 12,063,917 - a) fair value changes (36,798,997) - b) tranfers to other shareholders' equity items 48,862,914 - 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes): 114,603,128 - a) fair value changes 104,439,978 - b) tranfers to other shareholders' equity items 10,163,150 - 40. Hedge accounting of equity instruments measured at fair value through other comprehensive income: - - a) fair value change (hedged instrument) - - b) fair value change (hedging instrument) - - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined benefit plans 2,381,530 20,998,701 80. Non-current assets and disposal groups classified as held for sale - - 90. Part of valuation reserves from investments valued at equity method - - 100. Tax expenses (income) relating to items not reclassified to profit or loss (9,289,976) (5,780,062) Other comprehensive income reclassified to profit or loss - - 110. Foreign investments hedging: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 120. Foreign exchange differences: - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - 130. Cash flow hedging: (50,378,203) (58,170,063) a) fair value changes (50,375,379) (58,170,063) b) reclassification to profit or loss - - c) other changes (2,824) - of which: net position - - 140. Hedging instruments (not designated items): - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - Part D - Comprehensive income Company financial statements | Notes to the accounts Part D - Comprehensive income 662 2018 Annual Report and Accounts · UniCredit Statement of other comprehensive income (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Net profit (loss) of the year 2,458,163,164 6,235,645,406 Other comprehensive income not reclassified to profit or loss - - 20. Equity instruments designated at fair value through other comprehensive income: 12,063,917 - a) fair value changes (36,798,997) - b) tranfers to other shareholders' equity items 48,862,914 - 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes): 114,603,128 - a) fair value changes 104,439,978 - b) tranfers to other shareholders' equity items 10,163,150 - 40. Hedge accounting of equity instruments measured at fair value through other comprehensive income: - - a) fair value change (hedged instrument) - - b) fair value change (hedging instrument) - - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined benefit plans 2,381,530 20,998,701 80. Non-current assets and disposal groups classified as held for sale - - 90. Part of valuation reserves from investments valued at equity method - - 100. Tax expenses (income) relating to items not reclassified to profit or loss (9,289,976) (5,780,062) Other comprehensive income reclassified to profit or loss - - 110. Foreign investments hedging: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 120. Foreign exchange differences: - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - 130. Cash flow hedging: (50,378,203) (58,170,063) a) fair value changes (50,375,379) (58,170,063) b) reclassification to profit or loss - - c) other changes (2,824) - of which: net position - - 140. Hedging instruments (not designated items): - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - Part D - Comprehensive income Company financial statements | Notes to the accounts Part D - Comprehensive income 662 2018 Annual Report and Accounts · UniCredit Statement of other comprehensive income (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Net profit (loss) of the year 2,458,163,164 6,235,645,406 Other comprehensive income not reclassified to profit or loss - - 20. Equity instruments designated at fair value through other comprehensive income: 12,063,917 - a) fair value changes (36,798,997) - b) tranfers to other shareholders' equity items 48,862,914 - 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes): 114,603,128 - a) fair value changes 104,439,978 - b) tranfers to other shareholders' equity items 10,163,150 - 40. Hedge accounting of equity instruments measured at fair value through other comprehensive income: - - a) fair value change (hedged instrument) - - b) fair value change (hedging instrument) - - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined benefit plans 2,381,530 20,998,701 80. Non-current assets and disposal groups classified as held for sale - - 90. Part of valuation reserves from investments valued at equity method - - 100. Tax expenses (income) relating to items not reclassified to profit or loss (9,289,976) (5,780,062) Other comprehensive income reclassified to profit or loss - - 110. Foreign investments hedging: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 120. Foreign exchange differences: - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - 130. Cash flow hedging: (50,378,203) (58,170,063) a) fair value changes (50,375,379) (58,170,063) b) reclassification to profit or loss - - c) other changes (2,824) - of which: net position - - 140. Hedging instruments (not designated items): - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - Part D - Comprehensive income Company financial statements | Notes to the accounts Part D - Comprehensive income 662 2018 Annual Report and Accounts · UniCredit Statement of other comprehensive income (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Net profit (loss) of the year 2,458,163,164 6,235,645,406 Other comprehensive income not reclassified to profit or loss - - 20. Equity instruments designated at fair value through other comprehensive income: 12,063,917 - a) fair value changes (36,798,997) - b) tranfers to other shareholders' equity items 48,862,914 - 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes): 114,603,128 - a) fair value changes 104,439,978 - b) tranfers to other shareholders' equity items 10,163,150 - 40. Hedge accounting of equity instruments measured at fair value through other comprehensive income: - - a) fair value change (hedged instrument) - - b) fair value change (hedging instrument) - - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined benefit plans 2,381,530 20,998,701 80. Non-current assets and disposal groups classified as held for sale - - 90. Part of valuation reserves from investments valued at equity method - - 100. Tax expenses (income) relating to items not reclassified to profit or loss (9,289,976) (5,780,062) Other comprehensive income reclassified to profit or loss - - 110. Foreign investments hedging: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 120. Foreign exchange differences: - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - 130. Cash flow hedging: (50,378,203) (58,170,063) a) fair value changes (50,375,379) (58,170,063) b) reclassification to profit or loss - - c) other changes (2,824) - of which: net position - - 140. Hedging instruments (not designated items): - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - Part D - Comprehensive income Company financial statements | Notes to the accounts Part D - Comprehensive income 662 2018 Annual Report and Accounts · UniCredit Statement of other comprehensive income (€) AS AT ITEMS 12.31.2018 12.31.2017 10. Net profit (loss) of the year 2,458,163,164 6,235,645,406 Other comprehensive income not reclassified to profit or loss - - 20. Equity instruments designated at fair value through other comprehensive income: 12,063,917 - a) fair value changes (36,798,997) - b) tranfers to other shareholders' equity items 48,862,914 - 30. Financial liabilities designated at fair value through profit or loss (own creditworthiness changes): 114,603,128 - a) fair value changes 104,439,978 - b) tranfers to other shareholders' equity items 10,163,150 - 40. Hedge accounting of equity instruments measured at fair value through other comprehensive income: - - a) fair value change (hedged instrument) - - b) fair value change (hedging instrument) - - 50. Property, plant and equipment - - 60. Intangible assets - - 70. Defined benefit plans 2,381,530 20,998,701 80. Non-current assets and disposal groups classified as held for sale - - 90. Part of valuation reserves from investments valued at equity method - - 100. Tax expenses (income) relating to items not reclassified to profit or loss (9,289,976) (5,780,062) Other comprehensive income reclassified to profit or loss - - 110. Foreign investments hedging: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 120. Foreign exchange differences: - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - 130. Cash flow hedging: (50,378,203) (58,170,063) a) fair value changes (50,375,379) (58,170,063) b) reclassification to profit or loss - - c) other changes (2,824) - of which: net position - - 140. Hedging instruments (not designated items): - - a) value changes - - b) reclassification to profit or loss - - c) other changes - - Part D - Comprehensive income Company financial statements | Notes to the accounts Part D - Comprehensive income UniCredit ·2018 Annual Report and Accounts 663 continued: Statement of other comprehensive income (€) AS AT 12.31.2018 12.31.2017 150. Financial assets (different from equity instruments) at fair value through other comprehensive income: (1,136,539,108) - a) fair value changes (1,014,650,659) - b) reclassification to profit or loss: (123,455,067) - - impairment losses 10,157,409 - - gains/losses on disposals (133,612,476) - c) other changes 1,566,618 - Available-for-sale financial assets:(ex IAS39 Item 100) - (168,692,396) a) fair value changes - 59,151,625 b) reclassification to profit or loss - (227,272,980) - impairment losses - (2,934,806) - gains/losses on disposals - (224,338,174) c) other changes - (571,041) 160. Non-current assets and disposal groups classified as held for sale: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 170. Part of valuation reserves from investments valued at equity method: - - a) fair value changes - - b) reclassification to profit or loss: - - - impairment losses - - - gains/losses on disposals - - c) other changes - - 180. Tax expenses (income) relating to items reclassified to profit or loss 329,133,191 81,010,903 190. Total other comprehensive income (738,025,521) (130,632,917) 200. Other comprehensive income (Item 10+190) 1,720,137,643 6,105,012,489 Company financial statements | Notes to the accounts Part D - Comprehensive income UniCredit ·2018 Annual Report and Accounts 663 continued: Statement of other comprehensive income (€) AS AT 12.31.2018 12.31.2017 150. Financial assets (different from equity instruments) at fair value through other comprehensive income: (1,136,539,108) - a) fair value changes (1,014,650,659) - b) reclassification to profit or loss: (123,455,067) - - impairment losses 10,157,409 - - gains/losses on disposals (133,612,476) - c) other changes 1,566,618 - Available-for-sale financial assets:(ex IAS39 Item 100) - (168,692,396) a) fair value changes - 59,151,625 b) reclassification to profit or loss - (227,272,980) - impairment losses - (2,934,806) - gains/losses on disposals - (224,338,174) c) other changes - (571,041) 160. Non-current assets and disposal groups classified as held for sale: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 170. Part of valuation reserves from investments valued at equity method: - - a) fair value changes - - b) reclassification to profit or loss: - - - impairment losses - - - gains/losses on disposals - - c) other changes - - 180. Tax expenses (income) relating to items reclassified to profit or loss 329,133,191 81,010,903 190. Total other comprehensive income (738,025,521) (130,632,917) 200. Other comprehensive income (Item 10+190) 1,720,137,643 6,105,012,489 Company financial statements | Notes to the accounts Part D - Comprehensive income UniCredit ·2018 Annual Report and Accounts 663 continued: Statement of other comprehensive income (€) AS AT 12.31.2018 12.31.2017 150. Financial assets (different from equity instruments) at fair value through other comprehensive income: (1,136,539,108) - a) fair value changes (1,014,650,659) - b) reclassification to profit or loss: (123,455,067) - - impairment losses 10,157,409 - - gains/losses on disposals (133,612,476) - c) other changes 1,566,618 - Available-for-sale financial assets:(ex IAS39 Item 100) - (168,692,396) a) fair value changes - 59,151,625 b) reclassification to profit or loss - (227,272,980) - impairment losses - (2,934,806) - gains/losses on disposals - (224,338,174) c) other changes - (571,041) 160. Non-current assets and disposal groups classified as held for sale: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 170. Part of valuation reserves from investments valued at equity method: - - a) fair value changes - - b) reclassification to profit or loss: - - - impairment losses - - - gains/losses on disposals - - c) other changes - - 180. Tax expenses (income) relating to items reclassified to profit or loss 329,133,191 81,010,903 190. Total other comprehensive income (738,025,521) (130,632,917) 200. Other comprehensive income (Item 10+190) 1,720,137,643 6,105,012,489 Company financial statements | Notes to the accounts Part D - Comprehensive income UniCredit ·2018 Annual Report and Accounts 663 continued: Statement of other comprehensive income (€) AS AT 12.31.2018 12.31.2017 150. Financial assets (different from equity instruments) at fair value through other comprehensive income: (1,136,539,108) - a) fair value changes (1,014,650,659) - b) reclassification to profit or loss: (123,455,067) - - impairment losses 10,157,409 - - gains/losses on disposals (133,612,476) - c) other changes 1,566,618 - Available-for-sale financial assets:(ex IAS39 Item 100) - (168,692,396) a) fair value changes - 59,151,625 b) reclassification to profit or loss - (227,272,980) - impairment losses - (2,934,806) - gains/losses on disposals - (224,338,174) c) other changes - (571,041) 160. Non-current assets and disposal groups classified as held for sale: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 170. Part of valuation reserves from investments valued at equity method: - - a) fair value changes - - b) reclassification to profit or loss: - - - impairment losses - - - gains/losses on disposals - - c) other changes - - 180. Tax expenses (income) relating to items reclassified to profit or loss 329,133,191 81,010,903 190. Total other comprehensive income (738,025,521) (130,632,917) 200. Other comprehensive income (Item 10+190) 1,720,137,643 6,105,012,489 Company financial statements | Notes to the accounts Part D - Comprehensive income UniCredit ·2018 Annual Report and Accounts 663 continued: Statement of other comprehensive income (€) AS AT 12.31.2018 12.31.2017 150. Financial assets (different from equity instruments) at fair value through other comprehensive income: (1,136,539,108) - a) fair value changes (1,014,650,659) - b) reclassification to profit or loss: (123,455,067) - - impairment losses 10,157,409 - - gains/losses on disposals (133,612,476) - c) other changes 1,566,618 - Available-for-sale financial assets:(ex IAS39 Item 100) - (168,692,396) a) fair value changes - 59,151,625 b) reclassification to profit or loss - (227,272,980) - impairment losses - (2,934,806) - gains/losses on disposals - (224,338,174) c) other changes - (571,041) 160. Non-current assets and disposal groups classified as held for sale: - - a) fair value changes - - b) reclassification to profit or loss - - c) other changes - - 170. Part of valuation reserves from investments valued at equity method: - - a) fair value changes - - b) reclassification to profit or loss: - - - impairment losses - - - gains/losses on disposals - - c) other changes - - 180. Tax expenses (income) relating to items reclassified to profit or loss 329,133,191 81,010,903 190. Total other comprehensive income (738,025,521) (130,632,917) 200. Other comprehensive income (Item 10+190) 1,720,137,643 6,105,012,489 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 664 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies Introduction Reference is made to the paragraph of Part E of the Notes to the consolidated accounts of UniCredit group - Introduction which is herewith quoted entirely. Section 1 - Credit risk Qualitative information 1. General aspects In UniCredit the current oversight model on credit risk envisages the centralisation of the steering and coordination responsibilities within the Parent company functions, as described in the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - qualitative information - 1. General aspects which is herewith quoted entirely. With specific reference to the Italian perimeter of UniCredit S.p.A., the coordination and management of credit risk are under the responsibility of the “CLO Italy” function, reporting to the “Group Lending Office, and who is accountable for the: • coordination and management of credit underwriting activities for UniCredit S.p.A. customers, as well as the overseeing of the post-decision phases of the credit process; • coordination and management of restructuring and workout files of Italian perimeter of UniCredit S.p.A. including the Debt to Equity and Debt to Asset transactions and the related equity participations/assets; • coordination of the credit activities of UniCredit S.p.A. Italian legal entities. Within the scope of the Italian business, the lending, monitoring and loan recovery activities are managed through specific processes and IT procedures, which are constantly improved in order to maximise their efficiency and effectiveness. In addition, the overall monitoring process, its performance metrics and the whole impaired loans management has further improved also leveraging on progressive enhancement of the specialised credit structures, already in place, that are responsible for the overall management of the unlikely to pay exposures or bad loans. In order to continue providing an adequate support to the real economy, the range of financing products has been continuously updated, enhancing the use of instruments such as the BEI and SACE guarantees, the Central Guarantee Fund and Tranched Cover operations. Furthermore, specific attention was focused on households that intend to purchase a home, thanks to a simple though diversified product offer which aims at fulfilling customers’ current and future needs. In order to allow the client the possibility of anticipating the retirement age, UniCredit joined the APE (“Anticipo Finanziario a Garanzia Pensionistica”), a governmental initiative which allows those customers eligible by law to obtain a loan granting monthly disbursements until the beginning of the retirement age. The loan repayment phase begins once retired, through monthly deduction directly from the pension. UniCredit S.p.A. moreover continued to support customers in areas affected by calamitous events, such as floods and earthquakes, by means of both governmental and self-developed initiatives. 2. Credit risk management policies 2.1 Organisational aspetcs In credit risk management, the organisational structure as of 31 December 2018, envisages specific structures and responsibilities at Group and local level. Regarding the organizational model of the Parent company functions, reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - qualitative information - 2 Credit risk policies management - 2.1 Organisational Aspects which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 664 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies Introduction Reference is made to the paragraph of Part E of the Notes to the consolidated accounts of UniCredit group - Introduction which is herewith quoted entirely. Section 1 - Credit risk Qualitative information 1. General aspects In UniCredit the current oversight model on credit risk envisages the centralisation of the steering and coordination responsibilities within the Parent company functions, as described in the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - qualitative information - 1. General aspects which is herewith quoted entirely. With specific reference to the Italian perimeter of UniCredit S.p.A., the coordination and management of credit risk are under the responsibility of the “CLO Italy” function, reporting to the “Group Lending Office, and who is accountable for the: • coordination and management of credit underwriting activities for UniCredit S.p.A. customers, as well as the overseeing of the post-decision phases of the credit process; • coordination and management of restructuring and workout files of Italian perimeter of UniCredit S.p.A. including the Debt to Equity and Debt to Asset transactions and the related equity participations/assets; • coordination of the credit activities of UniCredit S.p.A. Italian legal entities. Within the scope of the Italian business, the lending, monitoring and loan recovery activities are managed through specific processes and IT procedures, which are constantly improved in order to maximise their efficiency and effectiveness. In addition, the overall monitoring process, its performance metrics and the whole impaired loans management has further improved also leveraging on progressive enhancement of the specialised credit structures, already in place, that are responsible for the overall management of the unlikely to pay exposures or bad loans. In order to continue providing an adequate support to the real economy, the range of financing products has been continuously updated, enhancing the use of instruments such as the BEI and SACE guarantees, the Central Guarantee Fund and Tranched Cover operations. Furthermore, specific attention was focused on households that intend to purchase a home, thanks to a simple though diversified product offer which aims at fulfilling customers’ current and future needs. In order to allow the client the possibility of anticipating the retirement age, UniCredit joined the APE (“Anticipo Finanziario a Garanzia Pensionistica”), a governmental initiative which allows those customers eligible by law to obtain a loan granting monthly disbursements until the beginning of the retirement age. The loan repayment phase begins once retired, through monthly deduction directly from the pension. UniCredit S.p.A. moreover continued to support customers in areas affected by calamitous events, such as floods and earthquakes, by means of both governmental and self-developed initiatives. 2. Credit risk management policies 2.1 Organisational aspetcs In credit risk management, the organisational structure as of 31 December 2018, envisages specific structures and responsibilities at Group and local level. Regarding the organizational model of the Parent company functions, reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - qualitative information - 2 Credit risk policies management - 2.1 Organisational Aspects which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 664 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies Introduction Reference is made to the paragraph of Part E of the Notes to the consolidated accounts of UniCredit group - Introduction which is herewith quoted entirely. Section 1 - Credit risk Qualitative information 1. General aspects In UniCredit the current oversight model on credit risk envisages the centralisation of the steering and coordination responsibilities within the Parent company functions, as described in the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - qualitative information - 1. General aspects which is herewith quoted entirely. With specific reference to the Italian perimeter of UniCredit S.p.A., the coordination and management of credit risk are under the responsibility of the “CLO Italy” function, reporting to the “Group Lending Office, and who is accountable for the: • coordination and management of credit underwriting activities for UniCredit S.p.A. customers, as well as the overseeing of the post-decision phases of the credit process; • coordination and management of restructuring and workout files of Italian perimeter of UniCredit S.p.A. including the Debt to Equity and Debt to Asset transactions and the related equity participations/assets; • coordination of the credit activities of UniCredit S.p.A. Italian legal entities. Within the scope of the Italian business, the lending, monitoring and loan recovery activities are managed through specific processes and IT procedures, which are constantly improved in order to maximise their efficiency and effectiveness. In addition, the overall monitoring process, its performance metrics and the whole impaired loans management has further improved also leveraging on progressive enhancement of the specialised credit structures, already in place, that are responsible for the overall management of the unlikely to pay exposures or bad loans. In order to continue providing an adequate support to the real economy, the range of financing products has been continuously updated, enhancing the use of instruments such as the BEI and SACE guarantees, the Central Guarantee Fund and Tranched Cover operations. Furthermore, specific attention was focused on households that intend to purchase a home, thanks to a simple though diversified product offer which aims at fulfilling customers’ current and future needs. In order to allow the client the possibility of anticipating the retirement age, UniCredit joined the APE (“Anticipo Finanziario a Garanzia Pensionistica”), a governmental initiative which allows those customers eligible by law to obtain a loan granting monthly disbursements until the beginning of the retirement age. The loan repayment phase begins once retired, through monthly deduction directly from the pension. UniCredit S.p.A. moreover continued to support customers in areas affected by calamitous events, such as floods and earthquakes, by means of both governmental and self-developed initiatives. 2. Credit risk management policies 2.1 Organisational aspetcs In credit risk management, the organisational structure as of 31 December 2018, envisages specific structures and responsibilities at Group and local level. Regarding the organizational model of the Parent company functions, reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - qualitative information - 2 Credit risk policies management - 2.1 Organisational Aspects which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 664 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies Introduction Reference is made to the paragraph of Part E of the Notes to the consolidated accounts of UniCredit group - Introduction which is herewith quoted entirely. Section 1 - Credit risk Qualitative information 1. General aspects In UniCredit the current oversight model on credit risk envisages the centralisation of the steering and coordination responsibilities within the Parent company functions, as described in the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - qualitative information - 1. General aspects which is herewith quoted entirely. With specific reference to the Italian perimeter of UniCredit S.p.A., the coordination and management of credit risk are under the responsibility of the “CLO Italy” function, reporting to the “Group Lending Office, and who is accountable for the: • coordination and management of credit underwriting activities for UniCredit S.p.A. customers, as well as the overseeing of the post-decision phases of the credit process; • coordination and management of restructuring and workout files of Italian perimeter of UniCredit S.p.A. including the Debt to Equity and Debt to Asset transactions and the related equity participations/assets; • coordination of the credit activities of UniCredit S.p.A. Italian legal entities. Within the scope of the Italian business, the lending, monitoring and loan recovery activities are managed through specific processes and IT procedures, which are constantly improved in order to maximise their efficiency and effectiveness. In addition, the overall monitoring process, its performance metrics and the whole impaired loans management has further improved also leveraging on progressive enhancement of the specialised credit structures, already in place, that are responsible for the overall management of the unlikely to pay exposures or bad loans. In order to continue providing an adequate support to the real economy, the range of financing products has been continuously updated, enhancing the use of instruments such as the BEI and SACE guarantees, the Central Guarantee Fund and Tranched Cover operations. Furthermore, specific attention was focused on households that intend to purchase a home, thanks to a simple though diversified product offer which aims at fulfilling customers’ current and future needs. In order to allow the client the possibility of anticipating the retirement age, UniCredit joined the APE (“Anticipo Finanziario a Garanzia Pensionistica”), a governmental initiative which allows those customers eligible by law to obtain a loan granting monthly disbursements until the beginning of the retirement age. The loan repayment phase begins once retired, through monthly deduction directly from the pension. UniCredit S.p.A. moreover continued to support customers in areas affected by calamitous events, such as floods and earthquakes, by means of both governmental and self-developed initiatives. 2. Credit risk management policies 2.1 Organisational aspetcs In credit risk management, the organisational structure as of 31 December 2018, envisages specific structures and responsibilities at Group and local level. Regarding the organizational model of the Parent company functions, reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - qualitative information - 2 Credit risk policies management - 2.1 Organisational Aspects which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 664 2018 Annual Report and Accounts · UniCredit Part E - Information on risks and hedging policies Introduction Reference is made to the paragraph of Part E of the Notes to the consolidated accounts of UniCredit group - Introduction which is herewith quoted entirely. Section 1 - Credit risk Qualitative information 1. General aspects In UniCredit the current oversight model on credit risk envisages the centralisation of the steering and coordination responsibilities within the Parent company functions, as described in the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - qualitative information - 1. General aspects which is herewith quoted entirely. With specific reference to the Italian perimeter of UniCredit S.p.A., the coordination and management of credit risk are under the responsibility of the “CLO Italy” function, reporting to the “Group Lending Office, and who is accountable for the: • coordination and management of credit underwriting activities for UniCredit S.p.A. customers, as well as the overseeing of the post-decision phases of the credit process; • coordination and management of restructuring and workout files of Italian perimeter of UniCredit S.p.A. including the Debt to Equity and Debt to Asset transactions and the related equity participations/assets; • coordination of the credit activities of UniCredit S.p.A. Italian legal entities. Within the scope of the Italian business, the lending, monitoring and loan recovery activities are managed through specific processes and IT procedures, which are constantly improved in order to maximise their efficiency and effectiveness. In addition, the overall monitoring process, its performance metrics and the whole impaired loans management has further improved also leveraging on progressive enhancement of the specialised credit structures, already in place, that are responsible for the overall management of the unlikely to pay exposures or bad loans. In order to continue providing an adequate support to the real economy, the range of financing products has been continuously updated, enhancing the use of instruments such as the BEI and SACE guarantees, the Central Guarantee Fund and Tranched Cover operations. Furthermore, specific attention was focused on households that intend to purchase a home, thanks to a simple though diversified product offer which aims at fulfilling customers’ current and future needs. In order to allow the client the possibility of anticipating the retirement age, UniCredit joined the APE (“Anticipo Finanziario a Garanzia Pensionistica”), a governmental initiative which allows those customers eligible by law to obtain a loan granting monthly disbursements until the beginning of the retirement age. The loan repayment phase begins once retired, through monthly deduction directly from the pension. UniCredit S.p.A. moreover continued to support customers in areas affected by calamitous events, such as floods and earthquakes, by means of both governmental and self-developed initiatives. 2. Credit risk management policies 2.1 Organisational aspetcs In credit risk management, the organisational structure as of 31 December 2018, envisages specific structures and responsibilities at Group and local level. Regarding the organizational model of the Parent company functions, reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - qualitative information - 2 Credit risk policies management - 2.1 Organisational Aspects which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 665 With specific reference, instead, to the UniCredit S.p.A. perimeter, the organisational units under “CLO Italy” and responsible for the “operational” activities” (e.g. credit underwriting, performance monitoring, etc.) are: • the “Credit Underwriting” structure whose responsibilities include the following activities: - coordinating the activities of 8 Regional Industry Team; - RIT decision-making activities; - managing the lending to UniCredit S.p.A. customers; - coordinating and managing the lending to UniCredit S.p.A. customers in relation to Consumer and mortgage non banking products and post-sales phases; - preliminary and administrative activities for transactions to be submitted to the Italian Transactional Credit Committee (ITCC) and the Italian Special & Transactional Credit Committee (“IS&TCC”). The structure consists of the following units: - “Credit Committee Secretariat”; - “Central Credit Risk Underwriting Italy”; - “Individuals Credit Underwriting Italy”; - “Territorial Credit Risk Underwriting Italy” composed by 7 territorial Credit Hubs; • the “Credit Monitoring” structure whose responsibilities include the following activities: - ensure the quality of the loan portfolio through performance monitoring of the positions, risk analysis and identification of corrective measures; - support the Business functions in monitoring the credit portfolio of the territorial areas, analysing the performance and implementing the corrective measures required. The structure consists of the following units: - “Credit Monitoring Operations & Support”; - “Central Credit Risk Monitoring Italy”; - “7 Territorial Monitoring Hubs”; - “Retail Central Credit Monitoring”; • the “Special Credit” structure whose responsibilities include the following activities: - overseeing activities aimed at reducing the cost of credit risk of irregular and problematic loans; - managing the collection of delinquent and overdue unpaid credits and the related activities, as the classifications doubtful or non performing credits, according to the delegated powers, ensuring the enforcement and implementations of collection strategies and activities; - conducting borrower assessment, credit analysis and preparing the related documentation for applications to be submitted to the competent decision-making Bodies; - overseeing the administrative and accounting activities under its responsibility. The structure consists of the following units: - RTO NPL Servicing; - Special Credit Support And Administration Italy; - Workout Italy; - Customer Recovery; • the “Restructuring Italy” structure, which, inter alia, is in charge of managing , assessing and making decisions of positions undergoing restructuring, also monitoring compliance with the agreements set forth in the restructuring plan and any covenants established and managing potential Debt to Equity and Debt to Asset transactions as well as the resulting shareholdings within its perimeter of competence. The structure consists of the following units: - Corporate Files Restructuring; - Real Estate Restructuring; - Restructuring Risk Analysis & Operations; - Strategic Files Restructuring; - Inc Italy; • the “Loan Administration” structure which, inter alia, is responsible for the following activities: - monitoring administrative activities after the loan has been granted/disbursed; - managing subsidized loans; - lending and administrative activities relating to mutual guarantee institutions; - coordination and management of activities after disbursement of Mortgages by ensuring the quality and integrity of information assets and risk minimisation; The structure consists of the following units: - 5 territorial Hub of the “Loan Administration; - Subsidized Loan; - Mortgages Evaluation; - Loan Administration Operation & Support. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 665 With specific reference, instead, to the UniCredit S.p.A. perimeter, the organisational units under “CLO Italy” and responsible for the “operational” activities” (e.g. credit underwriting, performance monitoring, etc.) are: • the “Credit Underwriting” structure whose responsibilities include the following activities: - coordinating the activities of 8 Regional Industry Team; - RIT decision-making activities; - managing the lending to UniCredit S.p.A. customers; - coordinating and managing the lending to UniCredit S.p.A. customers in relation to Consumer and mortgage non banking products and post-sales phases; - preliminary and administrative activities for transactions to be submitted to the Italian Transactional Credit Committee (ITCC) and the Italian Special & Transactional Credit Committee (“IS&TCC”). The structure consists of the following units: - “Credit Committee Secretariat”; - “Central Credit Risk Underwriting Italy”; - “Individuals Credit Underwriting Italy”; - “Territorial Credit Risk Underwriting Italy” composed by 7 territorial Credit Hubs; • the “Credit Monitoring” structure whose responsibilities include the following activities: - ensure the quality of the loan portfolio through performance monitoring of the positions, risk analysis and identification of corrective measures; - support the Business functions in monitoring the credit portfolio of the territorial areas, analysing the performance and implementing the corrective measures required. The structure consists of the following units: - “Credit Monitoring Operations & Support”; - “Central Credit Risk Monitoring Italy”; - “7 Territorial Monitoring Hubs”; - “Retail Central Credit Monitoring”; • the “Special Credit” structure whose responsibilities include the following activities: - overseeing activities aimed at reducing the cost of credit risk of irregular and problematic loans; - managing the collection of delinquent and overdue unpaid credits and the related activities, as the classifications doubtful or non performing credits, according to the delegated powers, ensuring the enforcement and implementations of collection strategies and activities; - conducting borrower assessment, credit analysis and preparing the related documentation for applications to be submitted to the competent decision-making Bodies; - overseeing the administrative and accounting activities under its responsibility. The structure consists of the following units: - RTO NPL Servicing; - Special Credit Support And Administration Italy; - Workout Italy; - Customer Recovery; • the “Restructuring Italy” structure, which, inter alia, is in charge of managing , assessing and making decisions of positions undergoing restructuring, also monitoring compliance with the agreements set forth in the restructuring plan and any covenants established and managing potential Debt to Equity and Debt to Asset transactions as well as the resulting shareholdings within its perimeter of competence. The structure consists of the following units: - Corporate Files Restructuring; - Real Estate Restructuring; - Restructuring Risk Analysis & Operations; - Strategic Files Restructuring; - Inc Italy; • the “Loan Administration” structure which, inter alia, is responsible for the following activities: - monitoring administrative activities after the loan has been granted/disbursed; - managing subsidized loans; - lending and administrative activities relating to mutual guarantee institutions; - coordination and management of activities after disbursement of Mortgages by ensuring the quality and integrity of information assets and risk minimisation; The structure consists of the following units: - 5 territorial Hub of the “Loan Administration; - Subsidized Loan; - Mortgages Evaluation; - Loan Administration Operation & Support. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 665 With specific reference, instead, to the UniCredit S.p.A. perimeter, the organisational units under “CLO Italy” and responsible for the “operational” activities” (e.g. credit underwriting, performance monitoring, etc.) are: • the “Credit Underwriting” structure whose responsibilities include the following activities: - coordinating the activities of 8 Regional Industry Team; - RIT decision-making activities; - managing the lending to UniCredit S.p.A. customers; - coordinating and managing the lending to UniCredit S.p.A. customers in relation to Consumer and mortgage non banking products and post-sales phases; - preliminary and administrative activities for transactions to be submitted to the Italian Transactional Credit Committee (ITCC) and the Italian Special & Transactional Credit Committee (“IS&TCC”). The structure consists of the following units: - “Credit Committee Secretariat”; - “Central Credit Risk Underwriting Italy”; - “Individuals Credit Underwriting Italy”; - “Territorial Credit Risk Underwriting Italy” composed by 7 territorial Credit Hubs; • the “Credit Monitoring” structure whose responsibilities include the following activities: - ensure the quality of the loan portfolio through performance monitoring of the positions, risk analysis and identification of corrective measures; - support the Business functions in monitoring the credit portfolio of the territorial areas, analysing the performance and implementing the corrective measures required. The structure consists of the following units: - “Credit Monitoring Operations & Support”; - “Central Credit Risk Monitoring Italy”; - “7 Territorial Monitoring Hubs”; - “Retail Central Credit Monitoring”; • the “Special Credit” structure whose responsibilities include the following activities: - overseeing activities aimed at reducing the cost of credit risk of irregular and problematic loans; - managing the collection of delinquent and overdue unpaid credits and the related activities, as the classifications doubtful or non performing credits, according to the delegated powers, ensuring the enforcement and implementations of collection strategies and activities; - conducting borrower assessment, credit analysis and preparing the related documentation for applications to be submitted to the competent decision-making Bodies; - overseeing the administrative and accounting activities under its responsibility. The structure consists of the following units: - RTO NPL Servicing; - Special Credit Support And Administration Italy; - Workout Italy; - Customer Recovery; • the “Restructuring Italy” structure, which, inter alia, is in charge of managing , assessing and making decisions of positions undergoing restructuring, also monitoring compliance with the agreements set forth in the restructuring plan and any covenants established and managing potential Debt to Equity and Debt to Asset transactions as well as the resulting shareholdings within its perimeter of competence. The structure consists of the following units: - Corporate Files Restructuring; - Real Estate Restructuring; - Restructuring Risk Analysis & Operations; - Strategic Files Restructuring; - Inc Italy; • the “Loan Administration” structure which, inter alia, is responsible for the following activities: - monitoring administrative activities after the loan has been granted/disbursed; - managing subsidized loans; - lending and administrative activities relating to mutual guarantee institutions; - coordination and management of activities after disbursement of Mortgages by ensuring the quality and integrity of information assets and risk minimisation; The structure consists of the following units: - 5 territorial Hub of the “Loan Administration; - Subsidized Loan; - Mortgages Evaluation; - Loan Administration Operation & Support. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 665 With specific reference, instead, to the UniCredit S.p.A. perimeter, the organisational units under “CLO Italy” and responsible for the “operational” activities” (e.g. credit underwriting, performance monitoring, etc.) are: • the “Credit Underwriting” structure whose responsibilities include the following activities: - coordinating the activities of 8 Regional Industry Team; - RIT decision-making activities; - managing the lending to UniCredit S.p.A. customers; - coordinating and managing the lending to UniCredit S.p.A. customers in relation to Consumer and mortgage non banking products and post-sales phases; - preliminary and administrative activities for transactions to be submitted to the Italian Transactional Credit Committee (ITCC) and the Italian Special & Transactional Credit Committee (“IS&TCC”). The structure consists of the following units: - “Credit Committee Secretariat”; - “Central Credit Risk Underwriting Italy”; - “Individuals Credit Underwriting Italy”; - “Territorial Credit Risk Underwriting Italy” composed by 7 territorial Credit Hubs; • the “Credit Monitoring” structure whose responsibilities include the following activities: - ensure the quality of the loan portfolio through performance monitoring of the positions, risk analysis and identification of corrective measures; - support the Business functions in monitoring the credit portfolio of the territorial areas, analysing the performance and implementing the corrective measures required. The structure consists of the following units: - “Credit Monitoring Operations & Support”; - “Central Credit Risk Monitoring Italy”; - “7 Territorial Monitoring Hubs”; - “Retail Central Credit Monitoring”; • the “Special Credit” structure whose responsibilities include the following activities: - overseeing activities aimed at reducing the cost of credit risk of irregular and problematic loans; - managing the collection of delinquent and overdue unpaid credits and the related activities, as the classifications doubtful or non performing credits, according to the delegated powers, ensuring the enforcement and implementations of collection strategies and activities; - conducting borrower assessment, credit analysis and preparing the related documentation for applications to be submitted to the competent decision-making Bodies; - overseeing the administrative and accounting activities under its responsibility. The structure consists of the following units: - RTO NPL Servicing; - Special Credit Support And Administration Italy; - Workout Italy; - Customer Recovery; • the “Restructuring Italy” structure, which, inter alia, is in charge of managing , assessing and making decisions of positions undergoing restructuring, also monitoring compliance with the agreements set forth in the restructuring plan and any covenants established and managing potential Debt to Equity and Debt to Asset transactions as well as the resulting shareholdings within its perimeter of competence. The structure consists of the following units: - Corporate Files Restructuring; - Real Estate Restructuring; - Restructuring Risk Analysis & Operations; - Strategic Files Restructuring; - Inc Italy; • the “Loan Administration” structure which, inter alia, is responsible for the following activities: - monitoring administrative activities after the loan has been granted/disbursed; - managing subsidized loans; - lending and administrative activities relating to mutual guarantee institutions; - coordination and management of activities after disbursement of Mortgages by ensuring the quality and integrity of information assets and risk minimisation; The structure consists of the following units: - 5 territorial Hub of the “Loan Administration; - Subsidized Loan; - Mortgages Evaluation; - Loan Administration Operation & Support. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 665 With specific reference, instead, to the UniCredit S.p.A. perimeter, the organisational units under “CLO Italy” and responsible for the “operational” activities” (e.g. credit underwriting, performance monitoring, etc.) are: • the “Credit Underwriting” structure whose responsibilities include the following activities: - coordinating the activities of 8 Regional Industry Team; - RIT decision-making activities; - managing the lending to UniCredit S.p.A. customers; - coordinating and managing the lending to UniCredit S.p.A. customers in relation to Consumer and mortgage non banking products and post-sales phases; - preliminary and administrative activities for transactions to be submitted to the Italian Transactional Credit Committee (ITCC) and the Italian Special & Transactional Credit Committee (“IS&TCC”). The structure consists of the following units: - “Credit Committee Secretariat”; - “Central Credit Risk Underwriting Italy”; - “Individuals Credit Underwriting Italy”; - “Territorial Credit Risk Underwriting Italy” composed by 7 territorial Credit Hubs; • the “Credit Monitoring” structure whose responsibilities include the following activities: - ensure the quality of the loan portfolio through performance monitoring of the positions, risk analysis and identification of corrective measures; - support the Business functions in monitoring the credit portfolio of the territorial areas, analysing the performance and implementing the corrective measures required. The structure consists of the following units: - “Credit Monitoring Operations & Support”; - “Central Credit Risk Monitoring Italy”; - “7 Territorial Monitoring Hubs”; - “Retail Central Credit Monitoring”; • the “Special Credit” structure whose responsibilities include the following activities: - overseeing activities aimed at reducing the cost of credit risk of irregular and problematic loans; - managing the collection of delinquent and overdue unpaid credits and the related activities, as the classifications doubtful or non performing credits, according to the delegated powers, ensuring the enforcement and implementations of collection strategies and activities; - conducting borrower assessment, credit analysis and preparing the related documentation for applications to be submitted to the competent decision-making Bodies; - overseeing the administrative and accounting activities under its responsibility. The structure consists of the following units: - RTO NPL Servicing; - Special Credit Support And Administration Italy; - Workout Italy; - Customer Recovery; • the “Restructuring Italy” structure, which, inter alia, is in charge of managing , assessing and making decisions of positions undergoing restructuring, also monitoring compliance with the agreements set forth in the restructuring plan and any covenants established and managing potential Debt to Equity and Debt to Asset transactions as well as the resulting shareholdings within its perimeter of competence. The structure consists of the following units: - Corporate Files Restructuring; - Real Estate Restructuring; - Restructuring Risk Analysis & Operations; - Strategic Files Restructuring; - Inc Italy; • the “Loan Administration” structure which, inter alia, is responsible for the following activities: - monitoring administrative activities after the loan has been granted/disbursed; - managing subsidized loans; - lending and administrative activities relating to mutual guarantee institutions; - coordination and management of activities after disbursement of Mortgages by ensuring the quality and integrity of information assets and risk minimisation; The structure consists of the following units: - 5 territorial Hub of the “Loan Administration; - Subsidized Loan; - Mortgages Evaluation; - Loan Administration Operation & Support. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 666 2018 Annual Report and Accounts · UniCredit In addition, with respect to credit risk, specific committees have been set up: • the “Italian Transactional Credit Committee”, which has decision-making functions within its delegated powers and/or consulting functions for files to be approved by upper Bodies, is responsible, with regard to UniCredit S.p.A. counterparts, (excluding FIBS counterparts) for credit proposals (including “restructuring”, “INC” and “workout” positions), the classification status of positions, strategies and corrective actions to be taken for “watchlist” positions, Debt to Equity transactions and/or actions/rights-execution related to equity participations resulting from Debt to Equity transaction, Debt to Assets transactions and/or actions/rights-execution related to asset resulting from Debt to Asset transactions, issuing Non-Binding Credit Opinions concerning the proposals of the Italian Legal Entities of UniCredit group and proposals of distressed loan disposal; • the “Italian Special & Transactional Credit Committee”, which is responsible, within its delegated powers, for the evaluation and approval or, consulting functions for files to be approved by upper Bodies, on “restructuring”, “INC” and “workout” positions, as well as positions of customers managed by Special Network and Real Estate Areas, and proposals of distressed loan disposal. 2.2 Credit risk management, measurement and control Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk policies management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. 2.3 Measurement methods for expected losses Risk management practices The Credit Risk Management, Measurement and Control processes described in the previous paragraph, are also reference for the calculation of impairment of Loans and debt securities classified as financial assets at amortized cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures as required by IFRS9. For this purpose the calculation of impairment in accordance with expected credit losses is based on two main pillars: • the stage allocation of the credit exposure; • the associated calculation of expected credit loss. In UniCredit group the Stage Allocation is based on a combination of relative and absolute elements; the main are: • comparison for each transaction between PD as measured at the time of origination and PD as at the reporting date, both calculated according to internal models, through thresholds set in such a way as to consider all key variables of each transaction that can affect the bank's expectation of PD changes over time (e.g. age, maturity, PD level at the time of origination); • absolute elements such as the backstops required by law (e.g. 30 days past-due). In this case UniCredit group has chosen not to reject the significant deterioration presumption after 30days past-due by allocating always in Stage 2 transactions with more than 30 days past due; • additional internal evidence, including renegotiations of financial instruments due to financial difficulties met by the counterpart (e.g. Forborne classification). With regard to debt securities, UniCredit group is opting for application of the low credit risk exemption on investment grade securities, in full compliance with the accounting standard. The outcome of the stage allocation is the classification of credit exposure in Stage 1, Stage 2 or Stage 3 according to their absolute or relative credit quality with respect to the initial disbursement. Specifically: • the Stage 1 includes: - newly issued or acquired credit exposures; - exposures for which credit risk has not significantly deteriorated since initial recognition; and - exposures having low credit risk (low credit risk exemption); • the Stage 2 includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • the Stage 3 includes impaired credit exposures. With reference to stage 3, it should be noted that it includes impaired exposures corresponding in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates, to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS/2013/03/rev1 24 July 2014). In particular, EBA45 has defined as “non-performing” exposures that meet one or both of the following criteria: • material exposures more than 90 days past due; • exposures for which the bank assesses that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. With reference to the quantitative component of the stage allocation model, the Group has adopted a statistic approach based on a quantile regression whose goal is to define a threshold in in terms of maximum variation acceptable between the PD measure at the disbursement and the one at the reference date. 45 The regulatory framework for the new definition of default will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as at 1 January 2021. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 666 2018 Annual Report and Accounts · UniCredit In addition, with respect to credit risk, specific committees have been set up: • the “Italian Transactional Credit Committee”, which has decision-making functions within its delegated powers and/or consulting functions for files to be approved by upper Bodies, is responsible, with regard to UniCredit S.p.A. counterparts, (excluding FIBS counterparts) for credit proposals (including “restructuring”, “INC” and “workout” positions), the classification status of positions, strategies and corrective actions to be taken for “watchlist” positions, Debt to Equity transactions and/or actions/rights-execution related to equity participations resulting from Debt to Equity transaction, Debt to Assets transactions and/or actions/rights-execution related to asset resulting from Debt to Asset transactions, issuing Non-Binding Credit Opinions concerning the proposals of the Italian Legal Entities of UniCredit group and proposals of distressed loan disposal; • the “Italian Special & Transactional Credit Committee”, which is responsible, within its delegated powers, for the evaluation and approval or, consulting functions for files to be approved by upper Bodies, on “restructuring”, “INC” and “workout” positions, as well as positions of customers managed by Special Network and Real Estate Areas, and proposals of distressed loan disposal. 2.2 Credit risk management, measurement and control Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk policies management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. 2.3 Measurement methods for expected losses Risk management practices The Credit Risk Management, Measurement and Control processes described in the previous paragraph, are also reference for the calculation of impairment of Loans and debt securities classified as financial assets at amortized cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures as required by IFRS9. For this purpose the calculation of impairment in accordance with expected credit losses is based on two main pillars: • the stage allocation of the credit exposure; • the associated calculation of expected credit loss. In UniCredit group the Stage Allocation is based on a combination of relative and absolute elements; the main are: • comparison for each transaction between PD as measured at the time of origination and PD as at the reporting date, both calculated according to internal models, through thresholds set in such a way as to consider all key variables of each transaction that can affect the bank's expectation of PD changes over time (e.g. age, maturity, PD level at the time of origination); • absolute elements such as the backstops required by law (e.g. 30 days past-due). In this case UniCredit group has chosen not to reject the significant deterioration presumption after 30days past-due by allocating always in Stage 2 transactions with more than 30 days past due; • additional internal evidence, including renegotiations of financial instruments due to financial difficulties met by the counterpart (e.g. Forborne classification). With regard to debt securities, UniCredit group is opting for application of the low credit risk exemption on investment grade securities, in full compliance with the accounting standard. The outcome of the stage allocation is the classification of credit exposure in Stage 1, Stage 2 or Stage 3 according to their absolute or relative credit quality with respect to the initial disbursement. Specifically: • the Stage 1 includes: - newly issued or acquired credit exposures; - exposures for which credit risk has not significantly deteriorated since initial recognition; and - exposures having low credit risk (low credit risk exemption); • the Stage 2 includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • the Stage 3 includes impaired credit exposures. With reference to stage 3, it should be noted that it includes impaired exposures corresponding in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates, to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS/2013/03/rev1 24 July 2014). In particular, EBA45 has defined as “non-performing” exposures that meet one or both of the following criteria: • material exposures more than 90 days past due; • exposures for which the bank assesses that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. With reference to the quantitative component of the stage allocation model, the Group has adopted a statistic approach based on a quantile regression whose goal is to define a threshold in in terms of maximum variation acceptable between the PD measure at the disbursement and the one at the reference date. 45 The regulatory framework for the new definition of default will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as at 1 January 2021. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 666 2018 Annual Report and Accounts · UniCredit In addition, with respect to credit risk, specific committees have been set up: • the “Italian Transactional Credit Committee”, which has decision-making functions within its delegated powers and/or consulting functions for files to be approved by upper Bodies, is responsible, with regard to UniCredit S.p.A. counterparts, (excluding FIBS counterparts) for credit proposals (including “restructuring”, “INC” and “workout” positions), the classification status of positions, strategies and corrective actions to be taken for “watchlist” positions, Debt to Equity transactions and/or actions/rights-execution related to equity participations resulting from Debt to Equity transaction, Debt to Assets transactions and/or actions/rights-execution related to asset resulting from Debt to Asset transactions, issuing Non-Binding Credit Opinions concerning the proposals of the Italian Legal Entities of UniCredit group and proposals of distressed loan disposal; • the “Italian Special & Transactional Credit Committee”, which is responsible, within its delegated powers, for the evaluation and approval or, consulting functions for files to be approved by upper Bodies, on “restructuring”, “INC” and “workout” positions, as well as positions of customers managed by Special Network and Real Estate Areas, and proposals of distressed loan disposal. 2.2 Credit risk management, measurement and control Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk policies management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. 2.3 Measurement methods for expected losses Risk management practices The Credit Risk Management, Measurement and Control processes described in the previous paragraph, are also reference for the calculation of impairment of Loans and debt securities classified as financial assets at amortized cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures as required by IFRS9. For this purpose the calculation of impairment in accordance with expected credit losses is based on two main pillars: • the stage allocation of the credit exposure; • the associated calculation of expected credit loss. In UniCredit group the Stage Allocation is based on a combination of relative and absolute elements; the main are: • comparison for each transaction between PD as measured at the time of origination and PD as at the reporting date, both calculated according to internal models, through thresholds set in such a way as to consider all key variables of each transaction that can affect the bank's expectation of PD changes over time (e.g. age, maturity, PD level at the time of origination); • absolute elements such as the backstops required by law (e.g. 30 days past-due). In this case UniCredit group has chosen not to reject the significant deterioration presumption after 30days past-due by allocating always in Stage 2 transactions with more than 30 days past due; • additional internal evidence, including renegotiations of financial instruments due to financial difficulties met by the counterpart (e.g. Forborne classification). With regard to debt securities, UniCredit group is opting for application of the low credit risk exemption on investment grade securities, in full compliance with the accounting standard. The outcome of the stage allocation is the classification of credit exposure in Stage 1, Stage 2 or Stage 3 according to their absolute or relative credit quality with respect to the initial disbursement. Specifically: • the Stage 1 includes: - newly issued or acquired credit exposures; - exposures for which credit risk has not significantly deteriorated since initial recognition; and - exposures having low credit risk (low credit risk exemption); • the Stage 2 includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • the Stage 3 includes impaired credit exposures. With reference to stage 3, it should be noted that it includes impaired exposures corresponding in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates, to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS/2013/03/rev1 24 July 2014). In particular, EBA45 has defined as “non-performing” exposures that meet one or both of the following criteria: • material exposures more than 90 days past due; • exposures for which the bank assesses that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. With reference to the quantitative component of the stage allocation model, the Group has adopted a statistic approach based on a quantile regression whose goal is to define a threshold in in terms of maximum variation acceptable between the PD measure at the disbursement and the one at the reference date. 45 The regulatory framework for the new definition of default will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as at 1 January 2021. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 666 2018 Annual Report and Accounts · UniCredit In addition, with respect to credit risk, specific committees have been set up: • the “Italian Transactional Credit Committee”, which has decision-making functions within its delegated powers and/or consulting functions for files to be approved by upper Bodies, is responsible, with regard to UniCredit S.p.A. counterparts, (excluding FIBS counterparts) for credit proposals (including “restructuring”, “INC” and “workout” positions), the classification status of positions, strategies and corrective actions to be taken for “watchlist” positions, Debt to Equity transactions and/or actions/rights-execution related to equity participations resulting from Debt to Equity transaction, Debt to Assets transactions and/or actions/rights-execution related to asset resulting from Debt to Asset transactions, issuing Non-Binding Credit Opinions concerning the proposals of the Italian Legal Entities of UniCredit group and proposals of distressed loan disposal; • the “Italian Special & Transactional Credit Committee”, which is responsible, within its delegated powers, for the evaluation and approval or, consulting functions for files to be approved by upper Bodies, on “restructuring”, “INC” and “workout” positions, as well as positions of customers managed by Special Network and Real Estate Areas, and proposals of distressed loan disposal. 2.2 Credit risk management, measurement and control Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk policies management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. 2.3 Measurement methods for expected losses Risk management practices The Credit Risk Management, Measurement and Control processes described in the previous paragraph, are also reference for the calculation of impairment of Loans and debt securities classified as financial assets at amortized cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures as required by IFRS9. For this purpose the calculation of impairment in accordance with expected credit losses is based on two main pillars: • the stage allocation of the credit exposure; • the associated calculation of expected credit loss. In UniCredit group the Stage Allocation is based on a combination of relative and absolute elements; the main are: • comparison for each transaction between PD as measured at the time of origination and PD as at the reporting date, both calculated according to internal models, through thresholds set in such a way as to consider all key variables of each transaction that can affect the bank's expectation of PD changes over time (e.g. age, maturity, PD level at the time of origination); • absolute elements such as the backstops required by law (e.g. 30 days past-due). In this case UniCredit group has chosen not to reject the significant deterioration presumption after 30days past-due by allocating always in Stage 2 transactions with more than 30 days past due; • additional internal evidence, including renegotiations of financial instruments due to financial difficulties met by the counterpart (e.g. Forborne classification). With regard to debt securities, UniCredit group is opting for application of the low credit risk exemption on investment grade securities, in full compliance with the accounting standard. The outcome of the stage allocation is the classification of credit exposure in Stage 1, Stage 2 or Stage 3 according to their absolute or relative credit quality with respect to the initial disbursement. Specifically: • the Stage 1 includes: - newly issued or acquired credit exposures; - exposures for which credit risk has not significantly deteriorated since initial recognition; and - exposures having low credit risk (low credit risk exemption); • the Stage 2 includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • the Stage 3 includes impaired credit exposures. With reference to stage 3, it should be noted that it includes impaired exposures corresponding in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates, to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS/2013/03/rev1 24 July 2014). In particular, EBA45 has defined as “non-performing” exposures that meet one or both of the following criteria: • material exposures more than 90 days past due; • exposures for which the bank assesses that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. With reference to the quantitative component of the stage allocation model, the Group has adopted a statistic approach based on a quantile regression whose goal is to define a threshold in in terms of maximum variation acceptable between the PD measure at the disbursement and the one at the reference date. 45 The regulatory framework for the new definition of default will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as at 1 January 2021. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 666 2018 Annual Report and Accounts · UniCredit In addition, with respect to credit risk, specific committees have been set up: • the “Italian Transactional Credit Committee”, which has decision-making functions within its delegated powers and/or consulting functions for files to be approved by upper Bodies, is responsible, with regard to UniCredit S.p.A. counterparts, (excluding FIBS counterparts) for credit proposals (including “restructuring”, “INC” and “workout” positions), the classification status of positions, strategies and corrective actions to be taken for “watchlist” positions, Debt to Equity transactions and/or actions/rights-execution related to equity participations resulting from Debt to Equity transaction, Debt to Assets transactions and/or actions/rights-execution related to asset resulting from Debt to Asset transactions, issuing Non-Binding Credit Opinions concerning the proposals of the Italian Legal Entities of UniCredit group and proposals of distressed loan disposal; • the “Italian Special & Transactional Credit Committee”, which is responsible, within its delegated powers, for the evaluation and approval or, consulting functions for files to be approved by upper Bodies, on “restructuring”, “INC” and “workout” positions, as well as positions of customers managed by Special Network and Real Estate Areas, and proposals of distressed loan disposal. 2.2 Credit risk management, measurement and control Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk policies management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. 2.3 Measurement methods for expected losses Risk management practices The Credit Risk Management, Measurement and Control processes described in the previous paragraph, are also reference for the calculation of impairment of Loans and debt securities classified as financial assets at amortized cost, financial assets at fair value through other comprehensive income and relevant off-balance sheet exposures as required by IFRS9. For this purpose the calculation of impairment in accordance with expected credit losses is based on two main pillars: • the stage allocation of the credit exposure; • the associated calculation of expected credit loss. In UniCredit group the Stage Allocation is based on a combination of relative and absolute elements; the main are: • comparison for each transaction between PD as measured at the time of origination and PD as at the reporting date, both calculated according to internal models, through thresholds set in such a way as to consider all key variables of each transaction that can affect the bank's expectation of PD changes over time (e.g. age, maturity, PD level at the time of origination); • absolute elements such as the backstops required by law (e.g. 30 days past-due). In this case UniCredit group has chosen not to reject the significant deterioration presumption after 30days past-due by allocating always in Stage 2 transactions with more than 30 days past due; • additional internal evidence, including renegotiations of financial instruments due to financial difficulties met by the counterpart (e.g. Forborne classification). With regard to debt securities, UniCredit group is opting for application of the low credit risk exemption on investment grade securities, in full compliance with the accounting standard. The outcome of the stage allocation is the classification of credit exposure in Stage 1, Stage 2 or Stage 3 according to their absolute or relative credit quality with respect to the initial disbursement. Specifically: • the Stage 1 includes: - newly issued or acquired credit exposures; - exposures for which credit risk has not significantly deteriorated since initial recognition; and - exposures having low credit risk (low credit risk exemption); • the Stage 2 includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition; • the Stage 3 includes impaired credit exposures. With reference to stage 3, it should be noted that it includes impaired exposures corresponding in accordance with Banca d’Italia rules, defined in Circular No.272 of 30 July 2008 and subsequent updates, to the aggregate Non-Performing Exposures as ITS EBA (EBA/ITS/2013/03/rev1 24 July 2014). In particular, EBA45 has defined as “non-performing” exposures that meet one or both of the following criteria: • material exposures more than 90 days past due; • exposures for which the bank assesses that is unlikely that the debtor would pay in full his credit obligations without recurring to enforcement and realisation of collaterals, regardless of past due exposures and the number of days the exposure is past due. With reference to the quantitative component of the stage allocation model, the Group has adopted a statistic approach based on a quantile regression whose goal is to define a threshold in in terms of maximum variation acceptable between the PD measure at the disbursement and the one at the reference date. 45 The regulatory framework for the new definition of default will be integrated with the entry into force of the "Guidelines on the application of the definition of default under Article 178 of EU Regulation No.575/2013 "(EBA/GL/2016/07) as at 1 January 2021. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 667 Fundamental part of the model is the definition of the quantile which identifies the stage 2 quota expected on average in the long time horizon. The medium long term quantile is determined based on the average expectation of portfolio deterioration calculated considering the default rate as well as one of the other deterioration stages of deterioration (e.g.: past-due 30 days). The exposures amount classified in Stage 2 for each reporting date will fluctuate around the long term quantile on the basis of the current economic conditions as well as expectations about the future economic cycle. Stage Allocation model is tested at each reporting date, in order to timely capture both significant deterioration and its reverse in a symmetric way and to correctly allocate each transaction within the proper stage and related expected loss calculation model. The result of stage allocation affects the amount of expected credit losses recognized in financial statements. Indeed for exposures in Stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in Stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. To calculate expected loss, the Group has developed specific models based on PD, LGD and EAD parameters and the effective interest rate. In particular: • PD (Probability of Default),which expresses the exposure probability of default in a given time horizon (e.g.: 1 year); • LGD (Loss Given Default), which expresses the estimated loss percentage and therefore the expected recovery rate when a default event occurs; • EAD (Exposure at Default), expresses the level of the exposure at the time of default event; • the effective interest rate is the base rate which expresses the time value of money. Such parameters are calculated starting from the same parameters applied for regulatory purposes specifically adjusted in order to guarantee full consistency, a part from the different requirements, between accounting and regulatory treatment. Main adjustments are aimed at: • removing the conservativism required purely for regulatory purposes; • introducing “point in time” adjustments substituting the “through-the-cycle” view required by the regulation; • including “forward looking” information; • extending credit risks parameters to a multi years horizon. With reference to “lifetime” PD, PD curves calculated through-the-cycle are calibrated to reflect the point-in-time and forward-looking expectation with reference to the portfolio default rate. The recovery rate embedded in the LGD calculated along the economic cycle ("through-the-cycle") is adjusted in order to remove the margin of conservatism and reflect the current trends in recovery rates as well as expectations about future trends discounted to the effective interest rate or its best approximation. The EAD calculated along the instrument lifetime is determined by extending the prudential or managerial one-year model, removing the margin of conservatism and including expectations related to future average withdrawal levels of existing credit lines. The forecast in terms of default rate and recovery rate provided by the Stress Test function are embedded in the PD and LGD parameters during the calibration phase. The credit parameters, in fact, are normally calibrated on a horizon that considers the entire economic cycle ("Through-the-cycle - TTC"), so it is necessary to calibrate them "Point-in-time" - PIT" and "Forward-looking - FL" allowing to reflect in these credit parameters the current situation as well as expectations about the future evolution of the economic cycle. The expected credit loss deriving from the parameters previously described considers macroeconomic forecasts through the application of multiple scenarios to the forward looking components in order to compensate the partial non-linearity that is naturally embedded in the correlation between the macroeconomic changes and expected credit loss. Specifically, the non-linearity effect is incorporated by estimating a correction factor applied directly to the expected credit loss ("ECL") of the portfolio. The process defined to include macroeconomic scenarios is fully consistent with forecast processes used by UniCredit group for additional risk management purposes (as for example processes adopted to calculate expected credit losses from macroeconomic forecasts based on EBA stress test and ICAAP Framework) and also takes advantage of independent UniCredit Research function. Specifically, the Group has selected three macroeconomic scenarios to determine the forward looking component, the baseline scenario, one positive scenario and one adverse scenario. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 667 Fundamental part of the model is the definition of the quantile which identifies the stage 2 quota expected on average in the long time horizon. The medium long term quantile is determined based on the average expectation of portfolio deterioration calculated considering the default rate as well as one of the other deterioration stages of deterioration (e.g.: past-due 30 days). The exposures amount classified in Stage 2 for each reporting date will fluctuate around the long term quantile on the basis of the current economic conditions as well as expectations about the future economic cycle. Stage Allocation model is tested at each reporting date, in order to timely capture both significant deterioration and its reverse in a symmetric way and to correctly allocate each transaction within the proper stage and related expected loss calculation model. The result of stage allocation affects the amount of expected credit losses recognized in financial statements. Indeed for exposures in Stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in Stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. To calculate expected loss, the Group has developed specific models based on PD, LGD and EAD parameters and the effective interest rate. In particular: • PD (Probability of Default),which expresses the exposure probability of default in a given time horizon (e.g.: 1 year); • LGD (Loss Given Default), which expresses the estimated loss percentage and therefore the expected recovery rate when a default event occurs; • EAD (Exposure at Default), expresses the level of the exposure at the time of default event; • the effective interest rate is the base rate which expresses the time value of money. Such parameters are calculated starting from the same parameters applied for regulatory purposes specifically adjusted in order to guarantee full consistency, a part from the different requirements, between accounting and regulatory treatment. Main adjustments are aimed at: • removing the conservativism required purely for regulatory purposes; • introducing “point in time” adjustments substituting the “through-the-cycle” view required by the regulation; • including “forward looking” information; • extending credit risks parameters to a multi years horizon. With reference to “lifetime” PD, PD curves calculated through-the-cycle are calibrated to reflect the point-in-time and forward-looking expectation with reference to the portfolio default rate. The recovery rate embedded in the LGD calculated along the economic cycle ("through-the-cycle") is adjusted in order to remove the margin of conservatism and reflect the current trends in recovery rates as well as expectations about future trends discounted to the effective interest rate or its best approximation. The EAD calculated along the instrument lifetime is determined by extending the prudential or managerial one-year model, removing the margin of conservatism and including expectations related to future average withdrawal levels of existing credit lines. The forecast in terms of default rate and recovery rate provided by the Stress Test function are embedded in the PD and LGD parameters during the calibration phase. The credit parameters, in fact, are normally calibrated on a horizon that considers the entire economic cycle ("Through-the-cycle - TTC"), so it is necessary to calibrate them "Point-in-time" - PIT" and "Forward-looking - FL" allowing to reflect in these credit parameters the current situation as well as expectations about the future evolution of the economic cycle. The expected credit loss deriving from the parameters previously described considers macroeconomic forecasts through the application of multiple scenarios to the forward looking components in order to compensate the partial non-linearity that is naturally embedded in the correlation between the macroeconomic changes and expected credit loss. Specifically, the non-linearity effect is incorporated by estimating a correction factor applied directly to the expected credit loss ("ECL") of the portfolio. The process defined to include macroeconomic scenarios is fully consistent with forecast processes used by UniCredit group for additional risk management purposes (as for example processes adopted to calculate expected credit losses from macroeconomic forecasts based on EBA stress test and ICAAP Framework) and also takes advantage of independent UniCredit Research function. Specifically, the Group has selected three macroeconomic scenarios to determine the forward looking component, the baseline scenario, one positive scenario and one adverse scenario. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 667 Fundamental part of the model is the definition of the quantile which identifies the stage 2 quota expected on average in the long time horizon. The medium long term quantile is determined based on the average expectation of portfolio deterioration calculated considering the default rate as well as one of the other deterioration stages of deterioration (e.g.: past-due 30 days). The exposures amount classified in Stage 2 for each reporting date will fluctuate around the long term quantile on the basis of the current economic conditions as well as expectations about the future economic cycle. Stage Allocation model is tested at each reporting date, in order to timely capture both significant deterioration and its reverse in a symmetric way and to correctly allocate each transaction within the proper stage and related expected loss calculation model. The result of stage allocation affects the amount of expected credit losses recognized in financial statements. Indeed for exposures in Stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in Stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. To calculate expected loss, the Group has developed specific models based on PD, LGD and EAD parameters and the effective interest rate. In particular: • PD (Probability of Default),which expresses the exposure probability of default in a given time horizon (e.g.: 1 year); • LGD (Loss Given Default), which expresses the estimated loss percentage and therefore the expected recovery rate when a default event occurs; • EAD (Exposure at Default), expresses the level of the exposure at the time of default event; • the effective interest rate is the base rate which expresses the time value of money. Such parameters are calculated starting from the same parameters applied for regulatory purposes specifically adjusted in order to guarantee full consistency, a part from the different requirements, between accounting and regulatory treatment. Main adjustments are aimed at: • removing the conservativism required purely for regulatory purposes; • introducing “point in time” adjustments substituting the “through-the-cycle” view required by the regulation; • including “forward looking” information; • extending credit risks parameters to a multi years horizon. With reference to “lifetime” PD, PD curves calculated through-the-cycle are calibrated to reflect the point-in-time and forward-looking expectation with reference to the portfolio default rate. The recovery rate embedded in the LGD calculated along the economic cycle ("through-the-cycle") is adjusted in order to remove the margin of conservatism and reflect the current trends in recovery rates as well as expectations about future trends discounted to the effective interest rate or its best approximation. The EAD calculated along the instrument lifetime is determined by extending the prudential or managerial one-year model, removing the margin of conservatism and including expectations related to future average withdrawal levels of existing credit lines. The forecast in terms of default rate and recovery rate provided by the Stress Test function are embedded in the PD and LGD parameters during the calibration phase. The credit parameters, in fact, are normally calibrated on a horizon that considers the entire economic cycle ("Through-the-cycle - TTC"), so it is necessary to calibrate them "Point-in-time" - PIT" and "Forward-looking - FL" allowing to reflect in these credit parameters the current situation as well as expectations about the future evolution of the economic cycle. The expected credit loss deriving from the parameters previously described considers macroeconomic forecasts through the application of multiple scenarios to the forward looking components in order to compensate the partial non-linearity that is naturally embedded in the correlation between the macroeconomic changes and expected credit loss. Specifically, the non-linearity effect is incorporated by estimating a correction factor applied directly to the expected credit loss ("ECL") of the portfolio. The process defined to include macroeconomic scenarios is fully consistent with forecast processes used by UniCredit group for additional risk management purposes (as for example processes adopted to calculate expected credit losses from macroeconomic forecasts based on EBA stress test and ICAAP Framework) and also takes advantage of independent UniCredit Research function. Specifically, the Group has selected three macroeconomic scenarios to determine the forward looking component, the baseline scenario, one positive scenario and one adverse scenario. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 667 Fundamental part of the model is the definition of the quantile which identifies the stage 2 quota expected on average in the long time horizon. The medium long term quantile is determined based on the average expectation of portfolio deterioration calculated considering the default rate as well as one of the other deterioration stages of deterioration (e.g.: past-due 30 days). The exposures amount classified in Stage 2 for each reporting date will fluctuate around the long term quantile on the basis of the current economic conditions as well as expectations about the future economic cycle. Stage Allocation model is tested at each reporting date, in order to timely capture both significant deterioration and its reverse in a symmetric way and to correctly allocate each transaction within the proper stage and related expected loss calculation model. The result of stage allocation affects the amount of expected credit losses recognized in financial statements. Indeed for exposures in Stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in Stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. To calculate expected loss, the Group has developed specific models based on PD, LGD and EAD parameters and the effective interest rate. In particular: • PD (Probability of Default),which expresses the exposure probability of default in a given time horizon (e.g.: 1 year); • LGD (Loss Given Default), which expresses the estimated loss percentage and therefore the expected recovery rate when a default event occurs; • EAD (Exposure at Default), expresses the level of the exposure at the time of default event; • the effective interest rate is the base rate which expresses the time value of money. Such parameters are calculated starting from the same parameters applied for regulatory purposes specifically adjusted in order to guarantee full consistency, a part from the different requirements, between accounting and regulatory treatment. Main adjustments are aimed at: • removing the conservativism required purely for regulatory purposes; • introducing “point in time” adjustments substituting the “through-the-cycle” view required by the regulation; • including “forward looking” information; • extending credit risks parameters to a multi years horizon. With reference to “lifetime” PD, PD curves calculated through-the-cycle are calibrated to reflect the point-in-time and forward-looking expectation with reference to the portfolio default rate. The recovery rate embedded in the LGD calculated along the economic cycle ("through-the-cycle") is adjusted in order to remove the margin of conservatism and reflect the current trends in recovery rates as well as expectations about future trends discounted to the effective interest rate or its best approximation. The EAD calculated along the instrument lifetime is determined by extending the prudential or managerial one-year model, removing the margin of conservatism and including expectations related to future average withdrawal levels of existing credit lines. The forecast in terms of default rate and recovery rate provided by the Stress Test function are embedded in the PD and LGD parameters during the calibration phase. The credit parameters, in fact, are normally calibrated on a horizon that considers the entire economic cycle ("Through-the-cycle - TTC"), so it is necessary to calibrate them "Point-in-time" - PIT" and "Forward-looking - FL" allowing to reflect in these credit parameters the current situation as well as expectations about the future evolution of the economic cycle. The expected credit loss deriving from the parameters previously described considers macroeconomic forecasts through the application of multiple scenarios to the forward looking components in order to compensate the partial non-linearity that is naturally embedded in the correlation between the macroeconomic changes and expected credit loss. Specifically, the non-linearity effect is incorporated by estimating a correction factor applied directly to the expected credit loss ("ECL") of the portfolio. The process defined to include macroeconomic scenarios is fully consistent with forecast processes used by UniCredit group for additional risk management purposes (as for example processes adopted to calculate expected credit losses from macroeconomic forecasts based on EBA stress test and ICAAP Framework) and also takes advantage of independent UniCredit Research function. Specifically, the Group has selected three macroeconomic scenarios to determine the forward looking component, the baseline scenario, one positive scenario and one adverse scenario. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 667 Fundamental part of the model is the definition of the quantile which identifies the stage 2 quota expected on average in the long time horizon. The medium long term quantile is determined based on the average expectation of portfolio deterioration calculated considering the default rate as well as one of the other deterioration stages of deterioration (e.g.: past-due 30 days). The exposures amount classified in Stage 2 for each reporting date will fluctuate around the long term quantile on the basis of the current economic conditions as well as expectations about the future economic cycle. Stage Allocation model is tested at each reporting date, in order to timely capture both significant deterioration and its reverse in a symmetric way and to correctly allocate each transaction within the proper stage and related expected loss calculation model. The result of stage allocation affects the amount of expected credit losses recognized in financial statements. Indeed for exposures in Stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in Stages 2 or 3, impairment is equal to the expected loss calculated over a time horizon corresponding to the entire life of the exposure. To calculate expected loss, the Group has developed specific models based on PD, LGD and EAD parameters and the effective interest rate. In particular: • PD (Probability of Default),which expresses the exposure probability of default in a given time horizon (e.g.: 1 year); • LGD (Loss Given Default), which expresses the estimated loss percentage and therefore the expected recovery rate when a default event occurs; • EAD (Exposure at Default), expresses the level of the exposure at the time of default event; • the effective interest rate is the base rate which expresses the time value of money. Such parameters are calculated starting from the same parameters applied for regulatory purposes specifically adjusted in order to guarantee full consistency, a part from the different requirements, between accounting and regulatory treatment. Main adjustments are aimed at: • removing the conservativism required purely for regulatory purposes; • introducing “point in time” adjustments substituting the “through-the-cycle” view required by the regulation; • including “forward looking” information; • extending credit risks parameters to a multi years horizon. With reference to “lifetime” PD, PD curves calculated through-the-cycle are calibrated to reflect the point-in-time and forward-looking expectation with reference to the portfolio default rate. The recovery rate embedded in the LGD calculated along the economic cycle ("through-the-cycle") is adjusted in order to remove the margin of conservatism and reflect the current trends in recovery rates as well as expectations about future trends discounted to the effective interest rate or its best approximation. The EAD calculated along the instrument lifetime is determined by extending the prudential or managerial one-year model, removing the margin of conservatism and including expectations related to future average withdrawal levels of existing credit lines. The forecast in terms of default rate and recovery rate provided by the Stress Test function are embedded in the PD and LGD parameters during the calibration phase. The credit parameters, in fact, are normally calibrated on a horizon that considers the entire economic cycle ("Through-the-cycle - TTC"), so it is necessary to calibrate them "Point-in-time" - PIT" and "Forward-looking - FL" allowing to reflect in these credit parameters the current situation as well as expectations about the future evolution of the economic cycle. The expected credit loss deriving from the parameters previously described considers macroeconomic forecasts through the application of multiple scenarios to the forward looking components in order to compensate the partial non-linearity that is naturally embedded in the correlation between the macroeconomic changes and expected credit loss. Specifically, the non-linearity effect is incorporated by estimating a correction factor applied directly to the expected credit loss ("ECL") of the portfolio. The process defined to include macroeconomic scenarios is fully consistent with forecast processes used by UniCredit group for additional risk management purposes (as for example processes adopted to calculate expected credit losses from macroeconomic forecasts based on EBA stress test and ICAAP Framework) and also takes advantage of independent UniCredit Research function. Specifically, the Group has selected three macroeconomic scenarios to determine the forward looking component, the baseline scenario, one positive scenario and one adverse scenario. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 668 2018 Annual Report and Accounts · UniCredit The baseline scenario is the reference central scenario and therefore is considered to be the most probable realization. Positive and adverse scenarios represent possible alternative realizations, respectively better and worst compared to the baseline in terms of evolution of the economies of the countries in which the Group operates: • the Baseline Scenario reflects the macroeconomic evolution expected from the Group. It envisages a positive and stable economic growth, although in a slowing trend compared to 2018, both for the Eurozone and for most of the CEE countries, in a context where the short term interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. In detail, the annual real GDP growth for the Eurozone is foreseen at +1.7% for 2019, +1.1% for 2020 and +1.3% for 2021 (with Italy at +0.8%, +0.5% and +0.7% and Germany at +1.7%, +1.5% and +1.7%, respectively); among CEE countries, with the exception of Turkey (whose GDP is expected in significant contraction in 2019), economic growth is expected between +2.8% and +3.9% in 2019. The Scenario implies that the 3 months Euribor stays slightly negative in 2019 and goes back to positive in 2020; • the Positive Scenario is based on the hypothesis that the positive economic growth of 2018 both at global level and at European level only goes through a mild slowdown in 2019, sustained by the trend in the global commerce and by still accommodating economic policies. In this scenario, Eurozone would consolidate its growth results mainly due to the contribution of Germany, in acceleration until 2020, that would translate in a faster annual real GDP growth (with respect to the baseline scenario) between +0.2% and +0.6% in the 2019-2021 three-years horizon. More in detail, the annual growth of real GDP for the Eurozone would stay at +2% in 2019, slowing to +1.7% in 2020 and to +1.5% in 2021 (with Italy stable at +1% in 2019 and slowing to +0.9% in the subsequent two years) in a context of short term rates (3 months Euribor) still negative in 2019 and in continuous but slow increase in the 2020-2021 period, driven by a monetary policy tightening more aggressive than in the baseline scenario. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a trend of the economy better than the one assumed in the Baseline scenario; • the Adverse Scenario reflects one of the scenarios used in the assessment process of capital adequacy (ICAAP). In coherence with ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks within the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tensions between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for various asset classes and to a slowdown of the economic growth both in the Eurozone (lower of about one and a half percentage point per year with respect to the baseline scenario, in terms of real GDP growth in the three-years horizon) and in CEE countries. More in detail, the annual real GDP growth in the Eurozone would be +0.3% in 2019, -0.5% in 2020 and +0.5% in 2021 (with Italy at -0.6%, -1.6% and -0.5% respectively) in a context of short term rates (3 months Euribor) that would stay negative for the whole three-years horizon, based on the hypothesis that the ECB would prolong in such a market environment the liquidity support to markets. The occurrence of such scenario, at the time of its definition, is considered plausible and appropriate to quantify a potential adverse trend of the economy. In coherence with the scenario and with the magnitude of deviations from the baseline scenario, it is assumed that the Adverse scenario is less likely than the positive scenario. With reference to impaired exposures (Stage 3) the expected recoverable amount, and therefore the expected credit loss, is the present value of future cash flows expected to be recovered, discounted at the orginal interest rate. Therefore the main determinants of this value are: • the expected cash flows; • the expected timing of payments of these cash flows; • the effective interest rate used for discounting. Expected cash flows on defaulted exposures shall be calculated on an individual basis for “individually significant exposures”. Expected cash flows on already defaulted exposures that are not individually significant may be calculated either on an individual or a collective basis. Where the Bank has a number of individually significant exposures towards one single counterparty, each loan is individually assessed while also considering the overall position of the counterparty. Future cash flows must be estimated considering the historical trend of recovery for exposures having similar credit risk features. The historical trend in any case is adjusted so to embeds the current economic environment and the expected economic outlooks. Expectations for the recovery of positions classified as "Default" or Non Performing are based on: • analytical business plans, for companies with Group exposure > €1 million; • statistical grids differentiated by product type and vintage classification, for other positions. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 668 2018 Annual Report and Accounts · UniCredit The baseline scenario is the reference central scenario and therefore is considered to be the most probable realization. Positive and adverse scenarios represent possible alternative realizations, respectively better and worst compared to the baseline in terms of evolution of the economies of the countries in which the Group operates: • the Baseline Scenario reflects the macroeconomic evolution expected from the Group. It envisages a positive and stable economic growth, although in a slowing trend compared to 2018, both for the Eurozone and for most of the CEE countries, in a context where the short term interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. In detail, the annual real GDP growth for the Eurozone is foreseen at +1.7% for 2019, +1.1% for 2020 and +1.3% for 2021 (with Italy at +0.8%, +0.5% and +0.7% and Germany at +1.7%, +1.5% and +1.7%, respectively); among CEE countries, with the exception of Turkey (whose GDP is expected in significant contraction in 2019), economic growth is expected between +2.8% and +3.9% in 2019. The Scenario implies that the 3 months Euribor stays slightly negative in 2019 and goes back to positive in 2020; • the Positive Scenario is based on the hypothesis that the positive economic growth of 2018 both at global level and at European level only goes through a mild slowdown in 2019, sustained by the trend in the global commerce and by still accommodating economic policies. In this scenario, Eurozone would consolidate its growth results mainly due to the contribution of Germany, in acceleration until 2020, that would translate in a faster annual real GDP growth (with respect to the baseline scenario) between +0.2% and +0.6% in the 2019-2021 three-years horizon. More in detail, the annual growth of real GDP for the Eurozone would stay at +2% in 2019, slowing to +1.7% in 2020 and to +1.5% in 2021 (with Italy stable at +1% in 2019 and slowing to +0.9% in the subsequent two years) in a context of short term rates (3 months Euribor) still negative in 2019 and in continuous but slow increase in the 2020-2021 period, driven by a monetary policy tightening more aggressive than in the baseline scenario. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a trend of the economy better than the one assumed in the Baseline scenario; • the Adverse Scenario reflects one of the scenarios used in the assessment process of capital adequacy (ICAAP). In coherence with ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks within the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tensions between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for various asset classes and to a slowdown of the economic growth both in the Eurozone (lower of about one and a half percentage point per year with respect to the baseline scenario, in terms of real GDP growth in the three-years horizon) and in CEE countries. More in detail, the annual real GDP growth in the Eurozone would be +0.3% in 2019, -0.5% in 2020 and +0.5% in 2021 (with Italy at -0.6%, -1.6% and -0.5% respectively) in a context of short term rates (3 months Euribor) that would stay negative for the whole three-years horizon, based on the hypothesis that the ECB would prolong in such a market environment the liquidity support to markets. The occurrence of such scenario, at the time of its definition, is considered plausible and appropriate to quantify a potential adverse trend of the economy. In coherence with the scenario and with the magnitude of deviations from the baseline scenario, it is assumed that the Adverse scenario is less likely than the positive scenario. With reference to impaired exposures (Stage 3) the expected recoverable amount, and therefore the expected credit loss, is the present value of future cash flows expected to be recovered, discounted at the orginal interest rate. Therefore the main determinants of this value are: • the expected cash flows; • the expected timing of payments of these cash flows; • the effective interest rate used for discounting. Expected cash flows on defaulted exposures shall be calculated on an individual basis for “individually significant exposures”. Expected cash flows on already defaulted exposures that are not individually significant may be calculated either on an individual or a collective basis. Where the Bank has a number of individually significant exposures towards one single counterparty, each loan is individually assessed while also considering the overall position of the counterparty. Future cash flows must be estimated considering the historical trend of recovery for exposures having similar credit risk features. The historical trend in any case is adjusted so to embeds the current economic environment and the expected economic outlooks. Expectations for the recovery of positions classified as "Default" or Non Performing are based on: • analytical business plans, for companies with Group exposure > €1 million; • statistical grids differentiated by product type and vintage classification, for other positions. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 668 2018 Annual Report and Accounts · UniCredit The baseline scenario is the reference central scenario and therefore is considered to be the most probable realization. Positive and adverse scenarios represent possible alternative realizations, respectively better and worst compared to the baseline in terms of evolution of the economies of the countries in which the Group operates: • the Baseline Scenario reflects the macroeconomic evolution expected from the Group. It envisages a positive and stable economic growth, although in a slowing trend compared to 2018, both for the Eurozone and for most of the CEE countries, in a context where the short term interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. In detail, the annual real GDP growth for the Eurozone is foreseen at +1.7% for 2019, +1.1% for 2020 and +1.3% for 2021 (with Italy at +0.8%, +0.5% and +0.7% and Germany at +1.7%, +1.5% and +1.7%, respectively); among CEE countries, with the exception of Turkey (whose GDP is expected in significant contraction in 2019), economic growth is expected between +2.8% and +3.9% in 2019. The Scenario implies that the 3 months Euribor stays slightly negative in 2019 and goes back to positive in 2020; • the Positive Scenario is based on the hypothesis that the positive economic growth of 2018 both at global level and at European level only goes through a mild slowdown in 2019, sustained by the trend in the global commerce and by still accommodating economic policies. In this scenario, Eurozone would consolidate its growth results mainly due to the contribution of Germany, in acceleration until 2020, that would translate in a faster annual real GDP growth (with respect to the baseline scenario) between +0.2% and +0.6% in the 2019-2021 three-years horizon. More in detail, the annual growth of real GDP for the Eurozone would stay at +2% in 2019, slowing to +1.7% in 2020 and to +1.5% in 2021 (with Italy stable at +1% in 2019 and slowing to +0.9% in the subsequent two years) in a context of short term rates (3 months Euribor) still negative in 2019 and in continuous but slow increase in the 2020-2021 period, driven by a monetary policy tightening more aggressive than in the baseline scenario. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a trend of the economy better than the one assumed in the Baseline scenario; • the Adverse Scenario reflects one of the scenarios used in the assessment process of capital adequacy (ICAAP). In coherence with ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks within the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tensions between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for various asset classes and to a slowdown of the economic growth both in the Eurozone (lower of about one and a half percentage point per year with respect to the baseline scenario, in terms of real GDP growth in the three-years horizon) and in CEE countries. More in detail, the annual real GDP growth in the Eurozone would be +0.3% in 2019, -0.5% in 2020 and +0.5% in 2021 (with Italy at -0.6%, -1.6% and -0.5% respectively) in a context of short term rates (3 months Euribor) that would stay negative for the whole three-years horizon, based on the hypothesis that the ECB would prolong in such a market environment the liquidity support to markets. The occurrence of such scenario, at the time of its definition, is considered plausible and appropriate to quantify a potential adverse trend of the economy. In coherence with the scenario and with the magnitude of deviations from the baseline scenario, it is assumed that the Adverse scenario is less likely than the positive scenario. With reference to impaired exposures (Stage 3) the expected recoverable amount, and therefore the expected credit loss, is the present value of future cash flows expected to be recovered, discounted at the orginal interest rate. Therefore the main determinants of this value are: • the expected cash flows; • the expected timing of payments of these cash flows; • the effective interest rate used for discounting. Expected cash flows on defaulted exposures shall be calculated on an individual basis for “individually significant exposures”. Expected cash flows on already defaulted exposures that are not individually significant may be calculated either on an individual or a collective basis. Where the Bank has a number of individually significant exposures towards one single counterparty, each loan is individually assessed while also considering the overall position of the counterparty. Future cash flows must be estimated considering the historical trend of recovery for exposures having similar credit risk features. The historical trend in any case is adjusted so to embeds the current economic environment and the expected economic outlooks. Expectations for the recovery of positions classified as "Default" or Non Performing are based on: • analytical business plans, for companies with Group exposure > €1 million; • statistical grids differentiated by product type and vintage classification, for other positions. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 668 2018 Annual Report and Accounts · UniCredit The baseline scenario is the reference central scenario and therefore is considered to be the most probable realization. Positive and adverse scenarios represent possible alternative realizations, respectively better and worst compared to the baseline in terms of evolution of the economies of the countries in which the Group operates: • the Baseline Scenario reflects the macroeconomic evolution expected from the Group. It envisages a positive and stable economic growth, although in a slowing trend compared to 2018, both for the Eurozone and for most of the CEE countries, in a context where the short term interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. In detail, the annual real GDP growth for the Eurozone is foreseen at +1.7% for 2019, +1.1% for 2020 and +1.3% for 2021 (with Italy at +0.8%, +0.5% and +0.7% and Germany at +1.7%, +1.5% and +1.7%, respectively); among CEE countries, with the exception of Turkey (whose GDP is expected in significant contraction in 2019), economic growth is expected between +2.8% and +3.9% in 2019. The Scenario implies that the 3 months Euribor stays slightly negative in 2019 and goes back to positive in 2020; • the Positive Scenario is based on the hypothesis that the positive economic growth of 2018 both at global level and at European level only goes through a mild slowdown in 2019, sustained by the trend in the global commerce and by still accommodating economic policies. In this scenario, Eurozone would consolidate its growth results mainly due to the contribution of Germany, in acceleration until 2020, that would translate in a faster annual real GDP growth (with respect to the baseline scenario) between +0.2% and +0.6% in the 2019-2021 three-years horizon. More in detail, the annual growth of real GDP for the Eurozone would stay at +2% in 2019, slowing to +1.7% in 2020 and to +1.5% in 2021 (with Italy stable at +1% in 2019 and slowing to +0.9% in the subsequent two years) in a context of short term rates (3 months Euribor) still negative in 2019 and in continuous but slow increase in the 2020-2021 period, driven by a monetary policy tightening more aggressive than in the baseline scenario. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a trend of the economy better than the one assumed in the Baseline scenario; • the Adverse Scenario reflects one of the scenarios used in the assessment process of capital adequacy (ICAAP). In coherence with ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks within the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tensions between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for various asset classes and to a slowdown of the economic growth both in the Eurozone (lower of about one and a half percentage point per year with respect to the baseline scenario, in terms of real GDP growth in the three-years horizon) and in CEE countries. More in detail, the annual real GDP growth in the Eurozone would be +0.3% in 2019, -0.5% in 2020 and +0.5% in 2021 (with Italy at -0.6%, -1.6% and -0.5% respectively) in a context of short term rates (3 months Euribor) that would stay negative for the whole three-years horizon, based on the hypothesis that the ECB would prolong in such a market environment the liquidity support to markets. The occurrence of such scenario, at the time of its definition, is considered plausible and appropriate to quantify a potential adverse trend of the economy. In coherence with the scenario and with the magnitude of deviations from the baseline scenario, it is assumed that the Adverse scenario is less likely than the positive scenario. With reference to impaired exposures (Stage 3) the expected recoverable amount, and therefore the expected credit loss, is the present value of future cash flows expected to be recovered, discounted at the orginal interest rate. Therefore the main determinants of this value are: • the expected cash flows; • the expected timing of payments of these cash flows; • the effective interest rate used for discounting. Expected cash flows on defaulted exposures shall be calculated on an individual basis for “individually significant exposures”. Expected cash flows on already defaulted exposures that are not individually significant may be calculated either on an individual or a collective basis. Where the Bank has a number of individually significant exposures towards one single counterparty, each loan is individually assessed while also considering the overall position of the counterparty. Future cash flows must be estimated considering the historical trend of recovery for exposures having similar credit risk features. The historical trend in any case is adjusted so to embeds the current economic environment and the expected economic outlooks. Expectations for the recovery of positions classified as "Default" or Non Performing are based on: • analytical business plans, for companies with Group exposure > €1 million; • statistical grids differentiated by product type and vintage classification, for other positions. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 668 2018 Annual Report and Accounts · UniCredit The baseline scenario is the reference central scenario and therefore is considered to be the most probable realization. Positive and adverse scenarios represent possible alternative realizations, respectively better and worst compared to the baseline in terms of evolution of the economies of the countries in which the Group operates: • the Baseline Scenario reflects the macroeconomic evolution expected from the Group. It envisages a positive and stable economic growth, although in a slowing trend compared to 2018, both for the Eurozone and for most of the CEE countries, in a context where the short term interest rates in the Euro area are expected to be slightly growing even though they continue to be at historical low levels. In detail, the annual real GDP growth for the Eurozone is foreseen at +1.7% for 2019, +1.1% for 2020 and +1.3% for 2021 (with Italy at +0.8%, +0.5% and +0.7% and Germany at +1.7%, +1.5% and +1.7%, respectively); among CEE countries, with the exception of Turkey (whose GDP is expected in significant contraction in 2019), economic growth is expected between +2.8% and +3.9% in 2019. The Scenario implies that the 3 months Euribor stays slightly negative in 2019 and goes back to positive in 2020; • the Positive Scenario is based on the hypothesis that the positive economic growth of 2018 both at global level and at European level only goes through a mild slowdown in 2019, sustained by the trend in the global commerce and by still accommodating economic policies. In this scenario, Eurozone would consolidate its growth results mainly due to the contribution of Germany, in acceleration until 2020, that would translate in a faster annual real GDP growth (with respect to the baseline scenario) between +0.2% and +0.6% in the 2019-2021 three-years horizon. More in detail, the annual growth of real GDP for the Eurozone would stay at +2% in 2019, slowing to +1.7% in 2020 and to +1.5% in 2021 (with Italy stable at +1% in 2019 and slowing to +0.9% in the subsequent two years) in a context of short term rates (3 months Euribor) still negative in 2019 and in continuous but slow increase in the 2020-2021 period, driven by a monetary policy tightening more aggressive than in the baseline scenario. The occurrence of such scenario, at the moment of its definition, is expected to be plausible and appropriate to quantify a trend of the economy better than the one assumed in the Baseline scenario; • the Adverse Scenario reflects one of the scenarios used in the assessment process of capital adequacy (ICAAP). In coherence with ICAAP framework, the scenario has been chosen to represent one of the macroeconomic and financial risks that the Group foresees as most relevant in the context of the countries where the Group operates and for the Group’s business activities. The scenario of Widespread Contagion is based on the hypothesis of intensification of political risks within the European Union, caused by an increased influence of populist parties in Italy, Germany and France alongside with, among others, the extension of tensions between Spanish government and Catalonia Region. This context would lead to an increase of the risk premiums for various asset classes and to a slowdown of the economic growth both in the Eurozone (lower of about one and a half percentage point per year with respect to the baseline scenario, in terms of real GDP growth in the three-years horizon) and in CEE countries. More in detail, the annual real GDP growth in the Eurozone would be +0.3% in 2019, -0.5% in 2020 and +0.5% in 2021 (with Italy at -0.6%, -1.6% and -0.5% respectively) in a context of short term rates (3 months Euribor) that would stay negative for the whole three-years horizon, based on the hypothesis that the ECB would prolong in such a market environment the liquidity support to markets. The occurrence of such scenario, at the time of its definition, is considered plausible and appropriate to quantify a potential adverse trend of the economy. In coherence with the scenario and with the magnitude of deviations from the baseline scenario, it is assumed that the Adverse scenario is less likely than the positive scenario. With reference to impaired exposures (Stage 3) the expected recoverable amount, and therefore the expected credit loss, is the present value of future cash flows expected to be recovered, discounted at the orginal interest rate. Therefore the main determinants of this value are: • the expected cash flows; • the expected timing of payments of these cash flows; • the effective interest rate used for discounting. Expected cash flows on defaulted exposures shall be calculated on an individual basis for “individually significant exposures”. Expected cash flows on already defaulted exposures that are not individually significant may be calculated either on an individual or a collective basis. Where the Bank has a number of individually significant exposures towards one single counterparty, each loan is individually assessed while also considering the overall position of the counterparty. Future cash flows must be estimated considering the historical trend of recovery for exposures having similar credit risk features. The historical trend in any case is adjusted so to embeds the current economic environment and the expected economic outlooks. Expectations for the recovery of positions classified as "Default" or Non Performing are based on: • analytical business plans, for companies with Group exposure > €1 million; • statistical grids differentiated by product type and vintage classification, for other positions. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 669 In the assessment of impaired exposures (Stage 3), possible sales scenarios are also considered where the Group's NPL strategy envisages experiencing recovery through their sale to the market. For this purpose, the presumed recovery value of credit exposures is determined as weighted average between two scenarios: • internal recovery scenario, whose expected recovery value is estimated assuming an internal work-out process according to what has previously been described; • sale scenario, whose expected recovery value is estimated assuming the sale of the exposures on the market. The expected sale price is determined considering market or internal information based on the following hierarchy: - prices deriving from past sales of impaired loans with homogeneous characteristics with those evaluated; - prices observable on the market for impaired loans with homogeneous characteristics with those evaluated; - internal evaluation models. In order to calculate the weighted average, the probability of sale of credit exposures is defined by the appropriate Bank’s structures on the basis of the volume of the sales forecasted by the aforementioned Non-Performing Asset Strategy compared to the total gross exposure of the portfolio being valued. The probability of internal recovery is equal to the complement to 1 of probability of sale. 2.4 Credit risk mitigation tecniques UniCredit Group uses various credit risk mitigation techniques to reduce potential credit losses in case of the obligor default. Consistent with the ”Regulation (EU) No.575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR) and amending Regulation (EU) No.648/2012”, UniCredit group is firmly committed to satisfy the requirements for recognition of credit risk mitigation techniques, according to the different approaches adopted (Standardised, Foundation IRB or Advanced IRB), both for internal use in operations and for regulatory capital purposes as necessary for the calculation of credit risk capital requirement. At the moment specific guidelines are in force, issued by the Parent company, defining group-wide rules and principles with the aim to guide, govern and standardise the credit risk mitigation management, best practice, as well as in accordance with the relevant regulatory requirements. Integrating these guidelines, the Bank has adopted internal regulations, specifying processes, strategies and procedures for collateral management. In particular, such internal regulations detail, according to each Country's local legal system, collateral eligibility, valuation and monitoring rules and ensure the soundness, legal enforceability and timely liquidation of valuable collateral. Collateral management assessments and credit risk mitigation compliance verification have been performed by the Bank, specifically as part of Internal Rating System applications, in order to assess the presence of adequate documentation and procedure concerning the credit risk mitigation instruments used for supervisory capital. In particular, according to the current credit policy, collaterals or guarantees can be accepted only to support loans but cannot serve as a substitute for the borrower’s ability to meet its obligations. For this reason, in addition to the overall analysis of the borrowers’ credit worthiness and of his repayment capacity, collaterals are subject to specific evaluation and analysis with the aim to verify their viability to support the repayment of the exposure. Collaterals accepted in support of credit lines granted by the Bank, primarily include: • real estate, both residential and commercial; • financial collateral (including cash deposits, debt securities, equities, and units of Undertakings for Collective Investment in Transferable Securities (UCITS). Other types of collateral (pledged goods or pledged loans and life insurance policies) are less common. The Bank also makes use of bilateral netting agreements for OTC derivatives (by means of ISDA and CSA agreements), Repos and securities lending. In relation to guarantees, they can be accepted as complementary and accessory to the granting of loans, for which the risk mitigation serves as additional security for repayment. Personal guarantees are provided by banks, government, central banks and other public entities and others. The last category includes the personal guarantees provided by natural persons. In case the guarantee is represented by credit derivatives, the protection providers are mainly banks and institutional counterparties. The list of eligible protection providers depends on the specific approach adopted by the Bank. Specifically: • under the Standardized approach, eligible protection providers pertain to a restricted list of counterparts, such as Central Government and Central Banks, public sector entities and regional and local authorities, multilateral development banks, supervised institutions and corporate entities that have a credit assessment by an eligible ECAI; • Legal Entities adopting IRB-A may recognize guarantees provided that the relevant minimum requirements are satisfied and, furthermore, the Bank can evaluate the protection provider risk profile, through an internal rating system, at the time the guarantee is provided and over its entire duration. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 669 In the assessment of impaired exposures (Stage 3), possible sales scenarios are also considered where the Group's NPL strategy envisages experiencing recovery through their sale to the market. For this purpose, the presumed recovery value of credit exposures is determined as weighted average between two scenarios: • internal recovery scenario, whose expected recovery value is estimated assuming an internal work-out process according to what has previously been described; • sale scenario, whose expected recovery value is estimated assuming the sale of the exposures on the market. The expected sale price is determined considering market or internal information based on the following hierarchy: - prices deriving from past sales of impaired loans with homogeneous characteristics with those evaluated; - prices observable on the market for impaired loans with homogeneous characteristics with those evaluated; - internal evaluation models. In order to calculate the weighted average, the probability of sale of credit exposures is defined by the appropriate Bank’s structures on the basis of the volume of the sales forecasted by the aforementioned Non-Performing Asset Strategy compared to the total gross exposure of the portfolio being valued. The probability of internal recovery is equal to the complement to 1 of probability of sale. 2.4 Credit risk mitigation tecniques UniCredit Group uses various credit risk mitigation techniques to reduce potential credit losses in case of the obligor default. Consistent with the ”Regulation (EU) No.575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR) and amending Regulation (EU) No.648/2012”, UniCredit group is firmly committed to satisfy the requirements for recognition of credit risk mitigation techniques, according to the different approaches adopted (Standardised, Foundation IRB or Advanced IRB), both for internal use in operations and for regulatory capital purposes as necessary for the calculation of credit risk capital requirement. At the moment specific guidelines are in force, issued by the Parent company, defining group-wide rules and principles with the aim to guide, govern and standardise the credit risk mitigation management, best practice, as well as in accordance with the relevant regulatory requirements. Integrating these guidelines, the Bank has adopted internal regulations, specifying processes, strategies and procedures for collateral management. In particular, such internal regulations detail, according to each Country's local legal system, collateral eligibility, valuation and monitoring rules and ensure the soundness, legal enforceability and timely liquidation of valuable collateral. Collateral management assessments and credit risk mitigation compliance verification have been performed by the Bank, specifically as part of Internal Rating System applications, in order to assess the presence of adequate documentation and procedure concerning the credit risk mitigation instruments used for supervisory capital. In particular, according to the current credit policy, collaterals or guarantees can be accepted only to support loans but cannot serve as a substitute for the borrower’s ability to meet its obligations. For this reason, in addition to the overall analysis of the borrowers’ credit worthiness and of his repayment capacity, collaterals are subject to specific evaluation and analysis with the aim to verify their viability to support the repayment of the exposure. Collaterals accepted in support of credit lines granted by the Bank, primarily include: • real estate, both residential and commercial; • financial collateral (including cash deposits, debt securities, equities, and units of Undertakings for Collective Investment in Transferable Securities (UCITS). Other types of collateral (pledged goods or pledged loans and life insurance policies) are less common. The Bank also makes use of bilateral netting agreements for OTC derivatives (by means of ISDA and CSA agreements), Repos and securities lending. In relation to guarantees, they can be accepted as complementary and accessory to the granting of loans, for which the risk mitigation serves as additional security for repayment. Personal guarantees are provided by banks, government, central banks and other public entities and others. The last category includes the personal guarantees provided by natural persons. In case the guarantee is represented by credit derivatives, the protection providers are mainly banks and institutional counterparties. The list of eligible protection providers depends on the specific approach adopted by the Bank. Specifically: • under the Standardized approach, eligible protection providers pertain to a restricted list of counterparts, such as Central Government and Central Banks, public sector entities and regional and local authorities, multilateral development banks, supervised institutions and corporate entities that have a credit assessment by an eligible ECAI; • Legal Entities adopting IRB-A may recognize guarantees provided that the relevant minimum requirements are satisfied and, furthermore, the Bank can evaluate the protection provider risk profile, through an internal rating system, at the time the guarantee is provided and over its entire duration. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 669 In the assessment of impaired exposures (Stage 3), possible sales scenarios are also considered where the Group's NPL strategy envisages experiencing recovery through their sale to the market. For this purpose, the presumed recovery value of credit exposures is determined as weighted average between two scenarios: • internal recovery scenario, whose expected recovery value is estimated assuming an internal work-out process according to what has previously been described; • sale scenario, whose expected recovery value is estimated assuming the sale of the exposures on the market. The expected sale price is determined considering market or internal information based on the following hierarchy: - prices deriving from past sales of impaired loans with homogeneous characteristics with those evaluated; - prices observable on the market for impaired loans with homogeneous characteristics with those evaluated; - internal evaluation models. In order to calculate the weighted average, the probability of sale of credit exposures is defined by the appropriate Bank’s structures on the basis of the volume of the sales forecasted by the aforementioned Non-Performing Asset Strategy compared to the total gross exposure of the portfolio being valued. The probability of internal recovery is equal to the complement to 1 of probability of sale. 2.4 Credit risk mitigation tecniques UniCredit Group uses various credit risk mitigation techniques to reduce potential credit losses in case of the obligor default. Consistent with the ”Regulation (EU) No.575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR) and amending Regulation (EU) No.648/2012”, UniCredit group is firmly committed to satisfy the requirements for recognition of credit risk mitigation techniques, according to the different approaches adopted (Standardised, Foundation IRB or Advanced IRB), both for internal use in operations and for regulatory capital purposes as necessary for the calculation of credit risk capital requirement. At the moment specific guidelines are in force, issued by the Parent company, defining group-wide rules and principles with the aim to guide, govern and standardise the credit risk mitigation management, best practice, as well as in accordance with the relevant regulatory requirements. Integrating these guidelines, the Bank has adopted internal regulations, specifying processes, strategies and procedures for collateral management. In particular, such internal regulations detail, according to each Country's local legal system, collateral eligibility, valuation and monitoring rules and ensure the soundness, legal enforceability and timely liquidation of valuable collateral. Collateral management assessments and credit risk mitigation compliance verification have been performed by the Bank, specifically as part of Internal Rating System applications, in order to assess the presence of adequate documentation and procedure concerning the credit risk mitigation instruments used for supervisory capital. In particular, according to the current credit policy, collaterals or guarantees can be accepted only to support loans but cannot serve as a substitute for the borrower’s ability to meet its obligations. For this reason, in addition to the overall analysis of the borrowers’ credit worthiness and of his repayment capacity, collaterals are subject to specific evaluation and analysis with the aim to verify their viability to support the repayment of the exposure. Collaterals accepted in support of credit lines granted by the Bank, primarily include: • real estate, both residential and commercial; • financial collateral (including cash deposits, debt securities, equities, and units of Undertakings for Collective Investment in Transferable Securities (UCITS). Other types of collateral (pledged goods or pledged loans and life insurance policies) are less common. The Bank also makes use of bilateral netting agreements for OTC derivatives (by means of ISDA and CSA agreements), Repos and securities lending. In relation to guarantees, they can be accepted as complementary and accessory to the granting of loans, for which the risk mitigation serves as additional security for repayment. Personal guarantees are provided by banks, government, central banks and other public entities and others. The last category includes the personal guarantees provided by natural persons. In case the guarantee is represented by credit derivatives, the protection providers are mainly banks and institutional counterparties. The list of eligible protection providers depends on the specific approach adopted by the Bank. Specifically: • under the Standardized approach, eligible protection providers pertain to a restricted list of counterparts, such as Central Government and Central Banks, public sector entities and regional and local authorities, multilateral development banks, supervised institutions and corporate entities that have a credit assessment by an eligible ECAI; • Legal Entities adopting IRB-A may recognize guarantees provided that the relevant minimum requirements are satisfied and, furthermore, the Bank can evaluate the protection provider risk profile, through an internal rating system, at the time the guarantee is provided and over its entire duration. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 669 In the assessment of impaired exposures (Stage 3), possible sales scenarios are also considered where the Group's NPL strategy envisages experiencing recovery through their sale to the market. For this purpose, the presumed recovery value of credit exposures is determined as weighted average between two scenarios: • internal recovery scenario, whose expected recovery value is estimated assuming an internal work-out process according to what has previously been described; • sale scenario, whose expected recovery value is estimated assuming the sale of the exposures on the market. The expected sale price is determined considering market or internal information based on the following hierarchy: - prices deriving from past sales of impaired loans with homogeneous characteristics with those evaluated; - prices observable on the market for impaired loans with homogeneous characteristics with those evaluated; - internal evaluation models. In order to calculate the weighted average, the probability of sale of credit exposures is defined by the appropriate Bank’s structures on the basis of the volume of the sales forecasted by the aforementioned Non-Performing Asset Strategy compared to the total gross exposure of the portfolio being valued. The probability of internal recovery is equal to the complement to 1 of probability of sale. 2.4 Credit risk mitigation tecniques UniCredit Group uses various credit risk mitigation techniques to reduce potential credit losses in case of the obligor default. Consistent with the ”Regulation (EU) No.575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR) and amending Regulation (EU) No.648/2012”, UniCredit group is firmly committed to satisfy the requirements for recognition of credit risk mitigation techniques, according to the different approaches adopted (Standardised, Foundation IRB or Advanced IRB), both for internal use in operations and for regulatory capital purposes as necessary for the calculation of credit risk capital requirement. At the moment specific guidelines are in force, issued by the Parent company, defining group-wide rules and principles with the aim to guide, govern and standardise the credit risk mitigation management, best practice, as well as in accordance with the relevant regulatory requirements. Integrating these guidelines, the Bank has adopted internal regulations, specifying processes, strategies and procedures for collateral management. In particular, such internal regulations detail, according to each Country's local legal system, collateral eligibility, valuation and monitoring rules and ensure the soundness, legal enforceability and timely liquidation of valuable collateral. Collateral management assessments and credit risk mitigation compliance verification have been performed by the Bank, specifically as part of Internal Rating System applications, in order to assess the presence of adequate documentation and procedure concerning the credit risk mitigation instruments used for supervisory capital. In particular, according to the current credit policy, collaterals or guarantees can be accepted only to support loans but cannot serve as a substitute for the borrower’s ability to meet its obligations. For this reason, in addition to the overall analysis of the borrowers’ credit worthiness and of his repayment capacity, collaterals are subject to specific evaluation and analysis with the aim to verify their viability to support the repayment of the exposure. Collaterals accepted in support of credit lines granted by the Bank, primarily include: • real estate, both residential and commercial; • financial collateral (including cash deposits, debt securities, equities, and units of Undertakings for Collective Investment in Transferable Securities (UCITS). Other types of collateral (pledged goods or pledged loans and life insurance policies) are less common. The Bank also makes use of bilateral netting agreements for OTC derivatives (by means of ISDA and CSA agreements), Repos and securities lending. In relation to guarantees, they can be accepted as complementary and accessory to the granting of loans, for which the risk mitigation serves as additional security for repayment. Personal guarantees are provided by banks, government, central banks and other public entities and others. The last category includes the personal guarantees provided by natural persons. In case the guarantee is represented by credit derivatives, the protection providers are mainly banks and institutional counterparties. The list of eligible protection providers depends on the specific approach adopted by the Bank. Specifically: • under the Standardized approach, eligible protection providers pertain to a restricted list of counterparts, such as Central Government and Central Banks, public sector entities and regional and local authorities, multilateral development banks, supervised institutions and corporate entities that have a credit assessment by an eligible ECAI; • Legal Entities adopting IRB-A may recognize guarantees provided that the relevant minimum requirements are satisfied and, furthermore, the Bank can evaluate the protection provider risk profile, through an internal rating system, at the time the guarantee is provided and over its entire duration. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 669 In the assessment of impaired exposures (Stage 3), possible sales scenarios are also considered where the Group's NPL strategy envisages experiencing recovery through their sale to the market. For this purpose, the presumed recovery value of credit exposures is determined as weighted average between two scenarios: • internal recovery scenario, whose expected recovery value is estimated assuming an internal work-out process according to what has previously been described; • sale scenario, whose expected recovery value is estimated assuming the sale of the exposures on the market. The expected sale price is determined considering market or internal information based on the following hierarchy: - prices deriving from past sales of impaired loans with homogeneous characteristics with those evaluated; - prices observable on the market for impaired loans with homogeneous characteristics with those evaluated; - internal evaluation models. In order to calculate the weighted average, the probability of sale of credit exposures is defined by the appropriate Bank’s structures on the basis of the volume of the sales forecasted by the aforementioned Non-Performing Asset Strategy compared to the total gross exposure of the portfolio being valued. The probability of internal recovery is equal to the complement to 1 of probability of sale. 2.4 Credit risk mitigation tecniques UniCredit Group uses various credit risk mitigation techniques to reduce potential credit losses in case of the obligor default. Consistent with the ”Regulation (EU) No.575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR) and amending Regulation (EU) No.648/2012”, UniCredit group is firmly committed to satisfy the requirements for recognition of credit risk mitigation techniques, according to the different approaches adopted (Standardised, Foundation IRB or Advanced IRB), both for internal use in operations and for regulatory capital purposes as necessary for the calculation of credit risk capital requirement. At the moment specific guidelines are in force, issued by the Parent company, defining group-wide rules and principles with the aim to guide, govern and standardise the credit risk mitigation management, best practice, as well as in accordance with the relevant regulatory requirements. Integrating these guidelines, the Bank has adopted internal regulations, specifying processes, strategies and procedures for collateral management. In particular, such internal regulations detail, according to each Country's local legal system, collateral eligibility, valuation and monitoring rules and ensure the soundness, legal enforceability and timely liquidation of valuable collateral. Collateral management assessments and credit risk mitigation compliance verification have been performed by the Bank, specifically as part of Internal Rating System applications, in order to assess the presence of adequate documentation and procedure concerning the credit risk mitigation instruments used for supervisory capital. In particular, according to the current credit policy, collaterals or guarantees can be accepted only to support loans but cannot serve as a substitute for the borrower’s ability to meet its obligations. For this reason, in addition to the overall analysis of the borrowers’ credit worthiness and of his repayment capacity, collaterals are subject to specific evaluation and analysis with the aim to verify their viability to support the repayment of the exposure. Collaterals accepted in support of credit lines granted by the Bank, primarily include: • real estate, both residential and commercial; • financial collateral (including cash deposits, debt securities, equities, and units of Undertakings for Collective Investment in Transferable Securities (UCITS). Other types of collateral (pledged goods or pledged loans and life insurance policies) are less common. The Bank also makes use of bilateral netting agreements for OTC derivatives (by means of ISDA and CSA agreements), Repos and securities lending. In relation to guarantees, they can be accepted as complementary and accessory to the granting of loans, for which the risk mitigation serves as additional security for repayment. Personal guarantees are provided by banks, government, central banks and other public entities and others. The last category includes the personal guarantees provided by natural persons. In case the guarantee is represented by credit derivatives, the protection providers are mainly banks and institutional counterparties. The list of eligible protection providers depends on the specific approach adopted by the Bank. Specifically: • under the Standardized approach, eligible protection providers pertain to a restricted list of counterparts, such as Central Government and Central Banks, public sector entities and regional and local authorities, multilateral development banks, supervised institutions and corporate entities that have a credit assessment by an eligible ECAI; • Legal Entities adopting IRB-A may recognize guarantees provided that the relevant minimum requirements are satisfied and, furthermore, the Bank can evaluate the protection provider risk profile, through an internal rating system, at the time the guarantee is provided and over its entire duration. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 670 2018 Annual Report and Accounts · UniCredit For what concerns netting agreements of reciprocal credit exposures between the Bank and its counterparty are considered eligible if they are legally effective and enforceable in all relevant jurisdictions, including in the event of default or bankruptcy of counterparty, and if they meet the following operational conditions: • provide for the netting of gains and losses on transactions cleared under the master agreement; • fulfil the minimum requirements for recognition of financial collateral (valuation requirements and monitoring). The Bank can apply netting agreements only if they are able at any time to determine the position netting value (assets and liabilities with the same counterparty that are subject to the netting agreement), monitoring and controlling debts, credit and netting value. The Bank makes use of netting instruments mainly for OTC derivatives, repos and securities lending transactions where the counterparties are, generally, Financial Institutions. The management system of credit risk mitigation techniques is embedded in the credit approval process and in the credit risk monitoring process, to support the evaluation and data quality checks of collaterals/guarantees and their appropriate linking to the categories defined for LGD estimates purposes. Controls and related responsibilities are duly formalised and documented in internal rules. Furthermore processes are implemented to control that all the relevant information regarding the identification and evaluation of the credit protection are correctly registered in the system. In the collateral acquisition phase, the Bank emphasises the importance of processes and controls of the legal certainty requirements of the protection, as well as the assessment of the suitability of the collateral or guarantee. In case of personal guarantees, the protection provider (or the protection seller in case of credit default swap) has to be assessed in order to measure his/her credit worthiness and risk profile. Monitoring processes of credit risk mitigation techniques ensure that general and specific requirements set by credit policies, internal and regulatory rules are met over the time. Among such processes it is pointed out that one connected to concentration risk, which occurs when the major part of collateral financial assets (at portfolio level) are concentrated in a small number of collateral types, protection instruments, or specific providers of collaterals. Such concentration is monitored and controlled by the following processes/mechanisms: • in case of personal guarantees/credit derivatives, a contingent liability (indirect risk) is charged to the protection provider. In the evaluation of the credit application, a secondary commitment is added to the guarantor and it is reflected in the guarantor’s total credit exposure as deemed competent and approved in accordance with the Bank’s system of authority; • in case the protection provider, directly or indirectly, is a Central Bank or a Sovereign country, a specific credit limit has to be instructed and, if the guarantor is a foreign subject, it is necessary to evaluate case by case the definition of a country limit. 3. Non-performing credit exposure 3.1 Credit risk management policy Regarding the management strategies and policies in force for the UniCredit group reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 3 Non-performing credit exposures - 3.1 Management strategies and policies which is herewith quoted entirely. In order to ensure a homogeneous approach in the classification of credit exposures for regulatory and reporting purposes, UniCredit has defined group-wide guidelines for the classification of Non-Performing exposures that refer to the principles reported in the Implementing Technical Standards issued by the Authority European Banking in 2014. With regard to this definition (which includes the concept of "default" ruled by Art.178 EU Regulation No.575/2013 and the "impaired" definition reported in accounting standard IFRS 9) at operative level UniCredit group has pursued a substantial alignment between the three definitions. Furthermore, in accordance with the provisions of Banca d’Italia Circular 272/2008, credit exposures of each group entity must be classified in one of the following risk classes: • past-due and/or overdue exposures: problematic exposures that are more than 90 days past due on any material obligation (the latter assessed in line with Article 178 (2d) of EU Regulation No.575/2013 and the Technical Standards of the EBA); • unlikely to Pay: the classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realising collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any (or rate) past due and unpaid amount; • bad Loans: exposures to borrowers in a state of insolvency (even when not recognized in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 670 2018 Annual Report and Accounts · UniCredit For what concerns netting agreements of reciprocal credit exposures between the Bank and its counterparty are considered eligible if they are legally effective and enforceable in all relevant jurisdictions, including in the event of default or bankruptcy of counterparty, and if they meet the following operational conditions: • provide for the netting of gains and losses on transactions cleared under the master agreement; • fulfil the minimum requirements for recognition of financial collateral (valuation requirements and monitoring). The Bank can apply netting agreements only if they are able at any time to determine the position netting value (assets and liabilities with the same counterparty that are subject to the netting agreement), monitoring and controlling debts, credit and netting value. The Bank makes use of netting instruments mainly for OTC derivatives, repos and securities lending transactions where the counterparties are, generally, Financial Institutions. The management system of credit risk mitigation techniques is embedded in the credit approval process and in the credit risk monitoring process, to support the evaluation and data quality checks of collaterals/guarantees and their appropriate linking to the categories defined for LGD estimates purposes. Controls and related responsibilities are duly formalised and documented in internal rules. Furthermore processes are implemented to control that all the relevant information regarding the identification and evaluation of the credit protection are correctly registered in the system. In the collateral acquisition phase, the Bank emphasises the importance of processes and controls of the legal certainty requirements of the protection, as well as the assessment of the suitability of the collateral or guarantee. In case of personal guarantees, the protection provider (or the protection seller in case of credit default swap) has to be assessed in order to measure his/her credit worthiness and risk profile. Monitoring processes of credit risk mitigation techniques ensure that general and specific requirements set by credit policies, internal and regulatory rules are met over the time. Among such processes it is pointed out that one connected to concentration risk, which occurs when the major part of collateral financial assets (at portfolio level) are concentrated in a small number of collateral types, protection instruments, or specific providers of collaterals. Such concentration is monitored and controlled by the following processes/mechanisms: • in case of personal guarantees/credit derivatives, a contingent liability (indirect risk) is charged to the protection provider. In the evaluation of the credit application, a secondary commitment is added to the guarantor and it is reflected in the guarantor’s total credit exposure as deemed competent and approved in accordance with the Bank’s system of authority; • in case the protection provider, directly or indirectly, is a Central Bank or a Sovereign country, a specific credit limit has to be instructed and, if the guarantor is a foreign subject, it is necessary to evaluate case by case the definition of a country limit. 3. Non-performing credit exposure 3.1 Credit risk management policy Regarding the management strategies and policies in force for the UniCredit group reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 3 Non-performing credit exposures - 3.1 Management strategies and policies which is herewith quoted entirely. In order to ensure a homogeneous approach in the classification of credit exposures for regulatory and reporting purposes, UniCredit has defined group-wide guidelines for the classification of Non-Performing exposures that refer to the principles reported in the Implementing Technical Standards issued by the Authority European Banking in 2014. With regard to this definition (which includes the concept of "default" ruled by Art.178 EU Regulation No.575/2013 and the "impaired" definition reported in accounting standard IFRS 9) at operative level UniCredit group has pursued a substantial alignment between the three definitions. Furthermore, in accordance with the provisions of Banca d’Italia Circular 272/2008, credit exposures of each group entity must be classified in one of the following risk classes: • past-due and/or overdue exposures: problematic exposures that are more than 90 days past due on any material obligation (the latter assessed in line with Article 178 (2d) of EU Regulation No.575/2013 and the Technical Standards of the EBA); • unlikely to Pay: the classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realising collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any (or rate) past due and unpaid amount; • bad Loans: exposures to borrowers in a state of insolvency (even when not recognized in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 670 2018 Annual Report and Accounts · UniCredit For what concerns netting agreements of reciprocal credit exposures between the Bank and its counterparty are considered eligible if they are legally effective and enforceable in all relevant jurisdictions, including in the event of default or bankruptcy of counterparty, and if they meet the following operational conditions: • provide for the netting of gains and losses on transactions cleared under the master agreement; • fulfil the minimum requirements for recognition of financial collateral (valuation requirements and monitoring). The Bank can apply netting agreements only if they are able at any time to determine the position netting value (assets and liabilities with the same counterparty that are subject to the netting agreement), monitoring and controlling debts, credit and netting value. The Bank makes use of netting instruments mainly for OTC derivatives, repos and securities lending transactions where the counterparties are, generally, Financial Institutions. The management system of credit risk mitigation techniques is embedded in the credit approval process and in the credit risk monitoring process, to support the evaluation and data quality checks of collaterals/guarantees and their appropriate linking to the categories defined for LGD estimates purposes. Controls and related responsibilities are duly formalised and documented in internal rules. Furthermore processes are implemented to control that all the relevant information regarding the identification and evaluation of the credit protection are correctly registered in the system. In the collateral acquisition phase, the Bank emphasises the importance of processes and controls of the legal certainty requirements of the protection, as well as the assessment of the suitability of the collateral or guarantee. In case of personal guarantees, the protection provider (or the protection seller in case of credit default swap) has to be assessed in order to measure his/her credit worthiness and risk profile. Monitoring processes of credit risk mitigation techniques ensure that general and specific requirements set by credit policies, internal and regulatory rules are met over the time. Among such processes it is pointed out that one connected to concentration risk, which occurs when the major part of collateral financial assets (at portfolio level) are concentrated in a small number of collateral types, protection instruments, or specific providers of collaterals. Such concentration is monitored and controlled by the following processes/mechanisms: • in case of personal guarantees/credit derivatives, a contingent liability (indirect risk) is charged to the protection provider. In the evaluation of the credit application, a secondary commitment is added to the guarantor and it is reflected in the guarantor’s total credit exposure as deemed competent and approved in accordance with the Bank’s system of authority; • in case the protection provider, directly or indirectly, is a Central Bank or a Sovereign country, a specific credit limit has to be instructed and, if the guarantor is a foreign subject, it is necessary to evaluate case by case the definition of a country limit. 3. Non-performing credit exposure 3.1 Credit risk management policy Regarding the management strategies and policies in force for the UniCredit group reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 3 Non-performing credit exposures - 3.1 Management strategies and policies which is herewith quoted entirely. In order to ensure a homogeneous approach in the classification of credit exposures for regulatory and reporting purposes, UniCredit has defined group-wide guidelines for the classification of Non-Performing exposures that refer to the principles reported in the Implementing Technical Standards issued by the Authority European Banking in 2014. With regard to this definition (which includes the concept of "default" ruled by Art.178 EU Regulation No.575/2013 and the "impaired" definition reported in accounting standard IFRS 9) at operative level UniCredit group has pursued a substantial alignment between the three definitions. Furthermore, in accordance with the provisions of Banca d’Italia Circular 272/2008, credit exposures of each group entity must be classified in one of the following risk classes: • past-due and/or overdue exposures: problematic exposures that are more than 90 days past due on any material obligation (the latter assessed in line with Article 178 (2d) of EU Regulation No.575/2013 and the Technical Standards of the EBA); • unlikely to Pay: the classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realising collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any (or rate) past due and unpaid amount; • bad Loans: exposures to borrowers in a state of insolvency (even when not recognized in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 670 2018 Annual Report and Accounts · UniCredit For what concerns netting agreements of reciprocal credit exposures between the Bank and its counterparty are considered eligible if they are legally effective and enforceable in all relevant jurisdictions, including in the event of default or bankruptcy of counterparty, and if they meet the following operational conditions: • provide for the netting of gains and losses on transactions cleared under the master agreement; • fulfil the minimum requirements for recognition of financial collateral (valuation requirements and monitoring). The Bank can apply netting agreements only if they are able at any time to determine the position netting value (assets and liabilities with the same counterparty that are subject to the netting agreement), monitoring and controlling debts, credit and netting value. The Bank makes use of netting instruments mainly for OTC derivatives, repos and securities lending transactions where the counterparties are, generally, Financial Institutions. The management system of credit risk mitigation techniques is embedded in the credit approval process and in the credit risk monitoring process, to support the evaluation and data quality checks of collaterals/guarantees and their appropriate linking to the categories defined for LGD estimates purposes. Controls and related responsibilities are duly formalised and documented in internal rules. Furthermore processes are implemented to control that all the relevant information regarding the identification and evaluation of the credit protection are correctly registered in the system. In the collateral acquisition phase, the Bank emphasises the importance of processes and controls of the legal certainty requirements of the protection, as well as the assessment of the suitability of the collateral or guarantee. In case of personal guarantees, the protection provider (or the protection seller in case of credit default swap) has to be assessed in order to measure his/her credit worthiness and risk profile. Monitoring processes of credit risk mitigation techniques ensure that general and specific requirements set by credit policies, internal and regulatory rules are met over the time. Among such processes it is pointed out that one connected to concentration risk, which occurs when the major part of collateral financial assets (at portfolio level) are concentrated in a small number of collateral types, protection instruments, or specific providers of collaterals. Such concentration is monitored and controlled by the following processes/mechanisms: • in case of personal guarantees/credit derivatives, a contingent liability (indirect risk) is charged to the protection provider. In the evaluation of the credit application, a secondary commitment is added to the guarantor and it is reflected in the guarantor’s total credit exposure as deemed competent and approved in accordance with the Bank’s system of authority; • in case the protection provider, directly or indirectly, is a Central Bank or a Sovereign country, a specific credit limit has to be instructed and, if the guarantor is a foreign subject, it is necessary to evaluate case by case the definition of a country limit. 3. Non-performing credit exposure 3.1 Credit risk management policy Regarding the management strategies and policies in force for the UniCredit group reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 3 Non-performing credit exposures - 3.1 Management strategies and policies which is herewith quoted entirely. In order to ensure a homogeneous approach in the classification of credit exposures for regulatory and reporting purposes, UniCredit has defined group-wide guidelines for the classification of Non-Performing exposures that refer to the principles reported in the Implementing Technical Standards issued by the Authority European Banking in 2014. With regard to this definition (which includes the concept of "default" ruled by Art.178 EU Regulation No.575/2013 and the "impaired" definition reported in accounting standard IFRS 9) at operative level UniCredit group has pursued a substantial alignment between the three definitions. Furthermore, in accordance with the provisions of Banca d’Italia Circular 272/2008, credit exposures of each group entity must be classified in one of the following risk classes: • past-due and/or overdue exposures: problematic exposures that are more than 90 days past due on any material obligation (the latter assessed in line with Article 178 (2d) of EU Regulation No.575/2013 and the Technical Standards of the EBA); • unlikely to Pay: the classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realising collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any (or rate) past due and unpaid amount; • bad Loans: exposures to borrowers in a state of insolvency (even when not recognized in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 670 2018 Annual Report and Accounts · UniCredit For what concerns netting agreements of reciprocal credit exposures between the Bank and its counterparty are considered eligible if they are legally effective and enforceable in all relevant jurisdictions, including in the event of default or bankruptcy of counterparty, and if they meet the following operational conditions: • provide for the netting of gains and losses on transactions cleared under the master agreement; • fulfil the minimum requirements for recognition of financial collateral (valuation requirements and monitoring). The Bank can apply netting agreements only if they are able at any time to determine the position netting value (assets and liabilities with the same counterparty that are subject to the netting agreement), monitoring and controlling debts, credit and netting value. The Bank makes use of netting instruments mainly for OTC derivatives, repos and securities lending transactions where the counterparties are, generally, Financial Institutions. The management system of credit risk mitigation techniques is embedded in the credit approval process and in the credit risk monitoring process, to support the evaluation and data quality checks of collaterals/guarantees and their appropriate linking to the categories defined for LGD estimates purposes. Controls and related responsibilities are duly formalised and documented in internal rules. Furthermore processes are implemented to control that all the relevant information regarding the identification and evaluation of the credit protection are correctly registered in the system. In the collateral acquisition phase, the Bank emphasises the importance of processes and controls of the legal certainty requirements of the protection, as well as the assessment of the suitability of the collateral or guarantee. In case of personal guarantees, the protection provider (or the protection seller in case of credit default swap) has to be assessed in order to measure his/her credit worthiness and risk profile. Monitoring processes of credit risk mitigation techniques ensure that general and specific requirements set by credit policies, internal and regulatory rules are met over the time. Among such processes it is pointed out that one connected to concentration risk, which occurs when the major part of collateral financial assets (at portfolio level) are concentrated in a small number of collateral types, protection instruments, or specific providers of collaterals. Such concentration is monitored and controlled by the following processes/mechanisms: • in case of personal guarantees/credit derivatives, a contingent liability (indirect risk) is charged to the protection provider. In the evaluation of the credit application, a secondary commitment is added to the guarantor and it is reflected in the guarantor’s total credit exposure as deemed competent and approved in accordance with the Bank’s system of authority; • in case the protection provider, directly or indirectly, is a Central Bank or a Sovereign country, a specific credit limit has to be instructed and, if the guarantor is a foreign subject, it is necessary to evaluate case by case the definition of a country limit. 3. Non-performing credit exposure 3.1 Credit risk management policy Regarding the management strategies and policies in force for the UniCredit group reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 3 Non-performing credit exposures - 3.1 Management strategies and policies which is herewith quoted entirely. In order to ensure a homogeneous approach in the classification of credit exposures for regulatory and reporting purposes, UniCredit has defined group-wide guidelines for the classification of Non-Performing exposures that refer to the principles reported in the Implementing Technical Standards issued by the Authority European Banking in 2014. With regard to this definition (which includes the concept of "default" ruled by Art.178 EU Regulation No.575/2013 and the "impaired" definition reported in accounting standard IFRS 9) at operative level UniCredit group has pursued a substantial alignment between the three definitions. Furthermore, in accordance with the provisions of Banca d’Italia Circular 272/2008, credit exposures of each group entity must be classified in one of the following risk classes: • past-due and/or overdue exposures: problematic exposures that are more than 90 days past due on any material obligation (the latter assessed in line with Article 178 (2d) of EU Regulation No.575/2013 and the Technical Standards of the EBA); • unlikely to Pay: the classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realising collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any (or rate) past due and unpaid amount; • bad Loans: exposures to borrowers in a state of insolvency (even when not recognized in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 671 In the non-performing credit exposures management, the Unicredit S.p.A. adopts certain strategies that operationally define the activities necessary to achieve the targets defined yearly. The aforementioned strategies concerning impaired loans include: • an effective internal restructuring activity, supported by qualified resources with specific skills dedicated to the management of loans classified as unlikely to pay; within these activities, ad-hoc approaches are then envisaged for positions considered strategic or referring to the Corporate and Real Estate segment; • proactive portfolio management through judicial and extra-judicial procedures managed by internal Workout professionals or assigned to external agencies specialized in credit recovery; • the recourse of alternative recovery strategies (which UniCredit was one of the first banks to use) based on formalized partnerships aimed at managing positions in the industrial or Real Estate sector; • proactive management of the Leasing portfolio aimed at speeding up the negotiation times of agreements with counterparties in order to obtain a more effective remarketing process; • disposal of impaired loans as a further strategy for internal recovery both for individual positions and for portfolios of impaired loans, already classified as bad loans and unlikely to pay. These strategies reflect the main levers for reducing the amount of impaired loans and have led to an important result during 2018, highlighting: • write-off for €2,030 million (107% of the total planned in Transform 2019 for 2018 year); • recoveries of €1,730 million (91% of the total planned in Transform 2019 for 2018 year); • disposals of €3,045 million (112% of the total planne in Transform 2019 for 2018 year). The decrease amount of the stock of impaired loans to Group customers was therefore in line with the reduction targets set in the Transform 2019 plan for the year 2018, achieving an improvement in asset quality. This result was possible thanks also to an acceleration of the reduction times of the "Non Core" portfolio. Therefore, the UniCredit Group can confirm the complete closure of its Non Core legacy by 2021, thanks also to the activation of a coordinated set of levers aimed at reducing the stock. 3.2 Write-off Group guidelines for Write-Offs on Financial Assets provides that whenever a loan is deemed to be uncollectable/unrecoverable it needs to be identified at the earliest possible opportunity and properly dealt with in accordance with financial regulations. Write-offs can relate to a financial asset in its entirety, or to a portion of it. In assessing the recoverability of Non-Performing Exposures (NPE) and in determining internal NPE write-off approaches, the following cases, in particular, are taken into account: • exposures with prolonged arrears: it is assessed the recoverability of an exposure that presents arrears for a prolonged period of time. If, following this assessment, an exposure or part of an exposure is deemed as non-recoverable, it should be written-off in a timely manner, adopting different thresholds predefined on the basis of the different portfolios; • exposures under insolvency procedure: where the collateralisation of the exposure is low, legal expenses often absorb a significant portion of the proceeds from the bankruptcy procedure and therefore estimated recoveries are expected to be very low; • a partial write off may be warranted where there are reasonable elements to demonstrate the debtor's inability to repay the full amount of the debt, i.e. a significant level of debt, even following the implementation of a forbearance treatment and /or the execution of collateral. Below a non-exhaustive list of hard evidences implying, with high likelihood, the not recoverability of the exposure, to be assessed, for the potential (total or partial) write-off: • the Bank cannot call the guarantor(s), or his assets are not sufficient for the recovery of the debtor’s exposures; • negative outcome of the judicial and/or out-of-court initiatives with absence of other assets that can be called in the event of un-recoverability of the debtor’s exposures; • impossibility to initiate actions to recover credit; • current insolvency procedure, from which the procedure itself states that the unsecured exposures will not have redress; • loans not backed by mortgage security older than 3 years that have not registered repayments/ collections during the first 3 years after the NPE classification; • mortgage loans to private individuals with collaterals already executed or not recoverable (because of legal or administrative defects and if execution is considered not economically viable), if they have been classified as Non-Performing for more than 7 years, or between 2 and 7 years if the residual debt is less than €110,000. Specifically, for the UniCredit S.p.A. perimeter, total partial Write-offs on financial assets still subject to an enforcement procedure amount to €2,395 million as of 31 December 2018, of which the amount related to the 2018 financial year is €1,740 million. 2018 write-offs cannot be compared with write-offs amount reported in gross changes in non-Performing exposures, because the latter include “debt forgiveness”. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 671 In the non-performing credit exposures management, the Unicredit S.p.A. adopts certain strategies that operationally define the activities necessary to achieve the targets defined yearly. The aforementioned strategies concerning impaired loans include: • an effective internal restructuring activity, supported by qualified resources with specific skills dedicated to the management of loans classified as unlikely to pay; within these activities, ad-hoc approaches are then envisaged for positions considered strategic or referring to the Corporate and Real Estate segment; • proactive portfolio management through judicial and extra-judicial procedures managed by internal Workout professionals or assigned to external agencies specialized in credit recovery; • the recourse of alternative recovery strategies (which UniCredit was one of the first banks to use) based on formalized partnerships aimed at managing positions in the industrial or Real Estate sector; • proactive management of the Leasing portfolio aimed at speeding up the negotiation times of agreements with counterparties in order to obtain a more effective remarketing process; • disposal of impaired loans as a further strategy for internal recovery both for individual positions and for portfolios of impaired loans, already classified as bad loans and unlikely to pay. These strategies reflect the main levers for reducing the amount of impaired loans and have led to an important result during 2018, highlighting: • write-off for €2,030 million (107% of the total planned in Transform 2019 for 2018 year); • recoveries of €1,730 million (91% of the total planned in Transform 2019 for 2018 year); • disposals of €3,045 million (112% of the total planne in Transform 2019 for 2018 year). The decrease amount of the stock of impaired loans to Group customers was therefore in line with the reduction targets set in the Transform 2019 plan for the year 2018, achieving an improvement in asset quality. This result was possible thanks also to an acceleration of the reduction times of the "Non Core" portfolio. Therefore, the UniCredit Group can confirm the complete closure of its Non Core legacy by 2021, thanks also to the activation of a coordinated set of levers aimed at reducing the stock. 3.2 Write-off Group guidelines for Write-Offs on Financial Assets provides that whenever a loan is deemed to be uncollectable/unrecoverable it needs to be identified at the earliest possible opportunity and properly dealt with in accordance with financial regulations. Write-offs can relate to a financial asset in its entirety, or to a portion of it. In assessing the recoverability of Non-Performing Exposures (NPE) and in determining internal NPE write-off approaches, the following cases, in particular, are taken into account: • exposures with prolonged arrears: it is assessed the recoverability of an exposure that presents arrears for a prolonged period of time. If, following this assessment, an exposure or part of an exposure is deemed as non-recoverable, it should be written-off in a timely manner, adopting different thresholds predefined on the basis of the different portfolios; • exposures under insolvency procedure: where the collateralisation of the exposure is low, legal expenses often absorb a significant portion of the proceeds from the bankruptcy procedure and therefore estimated recoveries are expected to be very low; • a partial write off may be warranted where there are reasonable elements to demonstrate the debtor's inability to repay the full amount of the debt, i.e. a significant level of debt, even following the implementation of a forbearance treatment and /or the execution of collateral. Below a non-exhaustive list of hard evidences implying, with high likelihood, the not recoverability of the exposure, to be assessed, for the potential (total or partial) write-off: • the Bank cannot call the guarantor(s), or his assets are not sufficient for the recovery of the debtor’s exposures; • negative outcome of the judicial and/or out-of-court initiatives with absence of other assets that can be called in the event of un-recoverability of the debtor’s exposures; • impossibility to initiate actions to recover credit; • current insolvency procedure, from which the procedure itself states that the unsecured exposures will not have redress; • loans not backed by mortgage security older than 3 years that have not registered repayments/ collections during the first 3 years after the NPE classification; • mortgage loans to private individuals with collaterals already executed or not recoverable (because of legal or administrative defects and if execution is considered not economically viable), if they have been classified as Non-Performing for more than 7 years, or between 2 and 7 years if the residual debt is less than €110,000. Specifically, for the UniCredit S.p.A. perimeter, total partial Write-offs on financial assets still subject to an enforcement procedure amount to €2,395 million as of 31 December 2018, of which the amount related to the 2018 financial year is €1,740 million. 2018 write-offs cannot be compared with write-offs amount reported in gross changes in non-Performing exposures, because the latter include “debt forgiveness”. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 671 In the non-performing credit exposures management, the Unicredit S.p.A. adopts certain strategies that operationally define the activities necessary to achieve the targets defined yearly. The aforementioned strategies concerning impaired loans include: • an effective internal restructuring activity, supported by qualified resources with specific skills dedicated to the management of loans classified as unlikely to pay; within these activities, ad-hoc approaches are then envisaged for positions considered strategic or referring to the Corporate and Real Estate segment; • proactive portfolio management through judicial and extra-judicial procedures managed by internal Workout professionals or assigned to external agencies specialized in credit recovery; • the recourse of alternative recovery strategies (which UniCredit was one of the first banks to use) based on formalized partnerships aimed at managing positions in the industrial or Real Estate sector; • proactive management of the Leasing portfolio aimed at speeding up the negotiation times of agreements with counterparties in order to obtain a more effective remarketing process; • disposal of impaired loans as a further strategy for internal recovery both for individual positions and for portfolios of impaired loans, already classified as bad loans and unlikely to pay. These strategies reflect the main levers for reducing the amount of impaired loans and have led to an important result during 2018, highlighting: • write-off for €2,030 million (107% of the total planned in Transform 2019 for 2018 year); • recoveries of €1,730 million (91% of the total planned in Transform 2019 for 2018 year); • disposals of €3,045 million (112% of the total planne in Transform 2019 for 2018 year). The decrease amount of the stock of impaired loans to Group customers was therefore in line with the reduction targets set in the Transform 2019 plan for the year 2018, achieving an improvement in asset quality. This result was possible thanks also to an acceleration of the reduction times of the "Non Core" portfolio. Therefore, the UniCredit Group can confirm the complete closure of its Non Core legacy by 2021, thanks also to the activation of a coordinated set of levers aimed at reducing the stock. 3.2 Write-off Group guidelines for Write-Offs on Financial Assets provides that whenever a loan is deemed to be uncollectable/unrecoverable it needs to be identified at the earliest possible opportunity and properly dealt with in accordance with financial regulations. Write-offs can relate to a financial asset in its entirety, or to a portion of it. In assessing the recoverability of Non-Performing Exposures (NPE) and in determining internal NPE write-off approaches, the following cases, in particular, are taken into account: • exposures with prolonged arrears: it is assessed the recoverability of an exposure that presents arrears for a prolonged period of time. If, following this assessment, an exposure or part of an exposure is deemed as non-recoverable, it should be written-off in a timely manner, adopting different thresholds predefined on the basis of the different portfolios; • exposures under insolvency procedure: where the collateralisation of the exposure is low, legal expenses often absorb a significant portion of the proceeds from the bankruptcy procedure and therefore estimated recoveries are expected to be very low; • a partial write off may be warranted where there are reasonable elements to demonstrate the debtor's inability to repay the full amount of the debt, i.e. a significant level of debt, even following the implementation of a forbearance treatment and /or the execution of collateral. Below a non-exhaustive list of hard evidences implying, with high likelihood, the not recoverability of the exposure, to be assessed, for the potential (total or partial) write-off: • the Bank cannot call the guarantor(s), or his assets are not sufficient for the recovery of the debtor’s exposures; • negative outcome of the judicial and/or out-of-court initiatives with absence of other assets that can be called in the event of un-recoverability of the debtor’s exposures; • impossibility to initiate actions to recover credit; • current insolvency procedure, from which the procedure itself states that the unsecured exposures will not have redress; • loans not backed by mortgage security older than 3 years that have not registered repayments/ collections during the first 3 years after the NPE classification; • mortgage loans to private individuals with collaterals already executed or not recoverable (because of legal or administrative defects and if execution is considered not economically viable), if they have been classified as Non-Performing for more than 7 years, or between 2 and 7 years if the residual debt is less than €110,000. Specifically, for the UniCredit S.p.A. perimeter, total partial Write-offs on financial assets still subject to an enforcement procedure amount to €2,395 million as of 31 December 2018, of which the amount related to the 2018 financial year is €1,740 million. 2018 write-offs cannot be compared with write-offs amount reported in gross changes in non-Performing exposures, because the latter include “debt forgiveness”. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 671 In the non-performing credit exposures management, the Unicredit S.p.A. adopts certain strategies that operationally define the activities necessary to achieve the targets defined yearly. The aforementioned strategies concerning impaired loans include: • an effective internal restructuring activity, supported by qualified resources with specific skills dedicated to the management of loans classified as unlikely to pay; within these activities, ad-hoc approaches are then envisaged for positions considered strategic or referring to the Corporate and Real Estate segment; • proactive portfolio management through judicial and extra-judicial procedures managed by internal Workout professionals or assigned to external agencies specialized in credit recovery; • the recourse of alternative recovery strategies (which UniCredit was one of the first banks to use) based on formalized partnerships aimed at managing positions in the industrial or Real Estate sector; • proactive management of the Leasing portfolio aimed at speeding up the negotiation times of agreements with counterparties in order to obtain a more effective remarketing process; • disposal of impaired loans as a further strategy for internal recovery both for individual positions and for portfolios of impaired loans, already classified as bad loans and unlikely to pay. These strategies reflect the main levers for reducing the amount of impaired loans and have led to an important result during 2018, highlighting: • write-off for €2,030 million (107% of the total planned in Transform 2019 for 2018 year); • recoveries of €1,730 million (91% of the total planned in Transform 2019 for 2018 year); • disposals of €3,045 million (112% of the total planne in Transform 2019 for 2018 year). The decrease amount of the stock of impaired loans to Group customers was therefore in line with the reduction targets set in the Transform 2019 plan for the year 2018, achieving an improvement in asset quality. This result was possible thanks also to an acceleration of the reduction times of the "Non Core" portfolio. Therefore, the UniCredit Group can confirm the complete closure of its Non Core legacy by 2021, thanks also to the activation of a coordinated set of levers aimed at reducing the stock. 3.2 Write-off Group guidelines for Write-Offs on Financial Assets provides that whenever a loan is deemed to be uncollectable/unrecoverable it needs to be identified at the earliest possible opportunity and properly dealt with in accordance with financial regulations. Write-offs can relate to a financial asset in its entirety, or to a portion of it. In assessing the recoverability of Non-Performing Exposures (NPE) and in determining internal NPE write-off approaches, the following cases, in particular, are taken into account: • exposures with prolonged arrears: it is assessed the recoverability of an exposure that presents arrears for a prolonged period of time. If, following this assessment, an exposure or part of an exposure is deemed as non-recoverable, it should be written-off in a timely manner, adopting different thresholds predefined on the basis of the different portfolios; • exposures under insolvency procedure: where the collateralisation of the exposure is low, legal expenses often absorb a significant portion of the proceeds from the bankruptcy procedure and therefore estimated recoveries are expected to be very low; • a partial write off may be warranted where there are reasonable elements to demonstrate the debtor's inability to repay the full amount of the debt, i.e. a significant level of debt, even following the implementation of a forbearance treatment and /or the execution of collateral. Below a non-exhaustive list of hard evidences implying, with high likelihood, the not recoverability of the exposure, to be assessed, for the potential (total or partial) write-off: • the Bank cannot call the guarantor(s), or his assets are not sufficient for the recovery of the debtor’s exposures; • negative outcome of the judicial and/or out-of-court initiatives with absence of other assets that can be called in the event of un-recoverability of the debtor’s exposures; • impossibility to initiate actions to recover credit; • current insolvency procedure, from which the procedure itself states that the unsecured exposures will not have redress; • loans not backed by mortgage security older than 3 years that have not registered repayments/ collections during the first 3 years after the NPE classification; • mortgage loans to private individuals with collaterals already executed or not recoverable (because of legal or administrative defects and if execution is considered not economically viable), if they have been classified as Non-Performing for more than 7 years, or between 2 and 7 years if the residual debt is less than €110,000. Specifically, for the UniCredit S.p.A. perimeter, total partial Write-offs on financial assets still subject to an enforcement procedure amount to €2,395 million as of 31 December 2018, of which the amount related to the 2018 financial year is €1,740 million. 2018 write-offs cannot be compared with write-offs amount reported in gross changes in non-Performing exposures, because the latter include “debt forgiveness”. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 671 In the non-performing credit exposures management, the Unicredit S.p.A. adopts certain strategies that operationally define the activities necessary to achieve the targets defined yearly. The aforementioned strategies concerning impaired loans include: • an effective internal restructuring activity, supported by qualified resources with specific skills dedicated to the management of loans classified as unlikely to pay; within these activities, ad-hoc approaches are then envisaged for positions considered strategic or referring to the Corporate and Real Estate segment; • proactive portfolio management through judicial and extra-judicial procedures managed by internal Workout professionals or assigned to external agencies specialized in credit recovery; • the recourse of alternative recovery strategies (which UniCredit was one of the first banks to use) based on formalized partnerships aimed at managing positions in the industrial or Real Estate sector; • proactive management of the Leasing portfolio aimed at speeding up the negotiation times of agreements with counterparties in order to obtain a more effective remarketing process; • disposal of impaired loans as a further strategy for internal recovery both for individual positions and for portfolios of impaired loans, already classified as bad loans and unlikely to pay. These strategies reflect the main levers for reducing the amount of impaired loans and have led to an important result during 2018, highlighting: • write-off for €2,030 million (107% of the total planned in Transform 2019 for 2018 year); • recoveries of €1,730 million (91% of the total planned in Transform 2019 for 2018 year); • disposals of €3,045 million (112% of the total planne in Transform 2019 for 2018 year). The decrease amount of the stock of impaired loans to Group customers was therefore in line with the reduction targets set in the Transform 2019 plan for the year 2018, achieving an improvement in asset quality. This result was possible thanks also to an acceleration of the reduction times of the "Non Core" portfolio. Therefore, the UniCredit Group can confirm the complete closure of its Non Core legacy by 2021, thanks also to the activation of a coordinated set of levers aimed at reducing the stock. 3.2 Write-off Group guidelines for Write-Offs on Financial Assets provides that whenever a loan is deemed to be uncollectable/unrecoverable it needs to be identified at the earliest possible opportunity and properly dealt with in accordance with financial regulations. Write-offs can relate to a financial asset in its entirety, or to a portion of it. In assessing the recoverability of Non-Performing Exposures (NPE) and in determining internal NPE write-off approaches, the following cases, in particular, are taken into account: • exposures with prolonged arrears: it is assessed the recoverability of an exposure that presents arrears for a prolonged period of time. If, following this assessment, an exposure or part of an exposure is deemed as non-recoverable, it should be written-off in a timely manner, adopting different thresholds predefined on the basis of the different portfolios; • exposures under insolvency procedure: where the collateralisation of the exposure is low, legal expenses often absorb a significant portion of the proceeds from the bankruptcy procedure and therefore estimated recoveries are expected to be very low; • a partial write off may be warranted where there are reasonable elements to demonstrate the debtor's inability to repay the full amount of the debt, i.e. a significant level of debt, even following the implementation of a forbearance treatment and /or the execution of collateral. Below a non-exhaustive list of hard evidences implying, with high likelihood, the not recoverability of the exposure, to be assessed, for the potential (total or partial) write-off: • the Bank cannot call the guarantor(s), or his assets are not sufficient for the recovery of the debtor’s exposures; • negative outcome of the judicial and/or out-of-court initiatives with absence of other assets that can be called in the event of un-recoverability of the debtor’s exposures; • impossibility to initiate actions to recover credit; • current insolvency procedure, from which the procedure itself states that the unsecured exposures will not have redress; • loans not backed by mortgage security older than 3 years that have not registered repayments/ collections during the first 3 years after the NPE classification; • mortgage loans to private individuals with collaterals already executed or not recoverable (because of legal or administrative defects and if execution is considered not economically viable), if they have been classified as Non-Performing for more than 7 years, or between 2 and 7 years if the residual debt is less than €110,000. Specifically, for the UniCredit S.p.A. perimeter, total partial Write-offs on financial assets still subject to an enforcement procedure amount to €2,395 million as of 31 December 2018, of which the amount related to the 2018 financial year is €1,740 million. 2018 write-offs cannot be compared with write-offs amount reported in gross changes in non-Performing exposures, because the latter include “debt forgiveness”. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 672 2018 Annual Report and Accounts · UniCredit 3.3 Acquired or originated impaired financial assets Purchased or Originated Credit Impaired (“POCI”) are credit exposures that are already impaired on initial recognition. These credit exposures might be recognized either as a result of a purchase of non-performing exposures from third parties or as a result of the restructuring of impaired exposures which has led to the provision of significant new finance, either in absolute terms or in relative terms, compared with the amount of the original exposure. These exposures are subject to management, measurement and control according to the principles described in the paragraph of Part E - Consolidated explanatory notes of the UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk Policies Management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. In particular, the expected credit losses recorded at initial recognition within the carrying amount of the instrument are periodically reviewed on the basis of the processes described in the previous paragraphs. The expected credit loss calculated for these credit exposures is always determined considering their residual life, and such exposure are conventionally allocated into Stage 3, or in Stage 2 if, as a result of an improvement in the creditworthiness of the counterparty following the initial recognition, the assets are performing. These assets are never classified under Stage 1 because the expected credit loss must always be calculated considering a time horizon equal to the residual duration. 4. Commercial renegotiation of financial assets and forborne exposures Changes in existing financial instruments which determine a modification of contractual conditions might be the result of either: • commercial initiatives, which may be specific for each customer or applied to portfolio of customers also as a result of dedicated initiatives sponsored by public authorities or banking associations, or • concessions granted in light of debtor’s financial difficulties (Forbearance). Such changes are accounted on the basis of whether the modification is considered significant or not. In this regard, reference is made to the Part A - A.2 - Main items of the accounts. The concessions granted due to debtor’s financial difficulties, so called Forbearance initiatives, are usually considered not significant from an accounting perspective. 4.1 Loan Categorisation in the risk categories and forborne exposures Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 4.1 Loan Categorisation in the risk categories and forborne exposures which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 672 2018 Annual Report and Accounts · UniCredit 3.3 Acquired or originated impaired financial assets Purchased or Originated Credit Impaired (“POCI”) are credit exposures that are already impaired on initial recognition. These credit exposures might be recognized either as a result of a purchase of non-performing exposures from third parties or as a result of the restructuring of impaired exposures which has led to the provision of significant new finance, either in absolute terms or in relative terms, compared with the amount of the original exposure. These exposures are subject to management, measurement and control according to the principles described in the paragraph of Part E - Consolidated explanatory notes of the UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk Policies Management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. In particular, the expected credit losses recorded at initial recognition within the carrying amount of the instrument are periodically reviewed on the basis of the processes described in the previous paragraphs. The expected credit loss calculated for these credit exposures is always determined considering their residual life, and such exposure are conventionally allocated into Stage 3, or in Stage 2 if, as a result of an improvement in the creditworthiness of the counterparty following the initial recognition, the assets are performing. These assets are never classified under Stage 1 because the expected credit loss must always be calculated considering a time horizon equal to the residual duration. 4. Commercial renegotiation of financial assets and forborne exposures Changes in existing financial instruments which determine a modification of contractual conditions might be the result of either: • commercial initiatives, which may be specific for each customer or applied to portfolio of customers also as a result of dedicated initiatives sponsored by public authorities or banking associations, or • concessions granted in light of debtor’s financial difficulties (Forbearance). Such changes are accounted on the basis of whether the modification is considered significant or not. In this regard, reference is made to the Part A - A.2 - Main items of the accounts. The concessions granted due to debtor’s financial difficulties, so called Forbearance initiatives, are usually considered not significant from an accounting perspective. 4.1 Loan Categorisation in the risk categories and forborne exposures Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 4.1 Loan Categorisation in the risk categories and forborne exposures which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 672 2018 Annual Report and Accounts · UniCredit 3.3 Acquired or originated impaired financial assets Purchased or Originated Credit Impaired (“POCI”) are credit exposures that are already impaired on initial recognition. These credit exposures might be recognized either as a result of a purchase of non-performing exposures from third parties or as a result of the restructuring of impaired exposures which has led to the provision of significant new finance, either in absolute terms or in relative terms, compared with the amount of the original exposure. These exposures are subject to management, measurement and control according to the principles described in the paragraph of Part E - Consolidated explanatory notes of the UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk Policies Management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. In particular, the expected credit losses recorded at initial recognition within the carrying amount of the instrument are periodically reviewed on the basis of the processes described in the previous paragraphs. The expected credit loss calculated for these credit exposures is always determined considering their residual life, and such exposure are conventionally allocated into Stage 3, or in Stage 2 if, as a result of an improvement in the creditworthiness of the counterparty following the initial recognition, the assets are performing. These assets are never classified under Stage 1 because the expected credit loss must always be calculated considering a time horizon equal to the residual duration. 4. Commercial renegotiation of financial assets and forborne exposures Changes in existing financial instruments which determine a modification of contractual conditions might be the result of either: • commercial initiatives, which may be specific for each customer or applied to portfolio of customers also as a result of dedicated initiatives sponsored by public authorities or banking associations, or • concessions granted in light of debtor’s financial difficulties (Forbearance). Such changes are accounted on the basis of whether the modification is considered significant or not. In this regard, reference is made to the Part A - A.2 - Main items of the accounts. The concessions granted due to debtor’s financial difficulties, so called Forbearance initiatives, are usually considered not significant from an accounting perspective. 4.1 Loan Categorisation in the risk categories and forborne exposures Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 4.1 Loan Categorisation in the risk categories and forborne exposures which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 672 2018 Annual Report and Accounts · UniCredit 3.3 Acquired or originated impaired financial assets Purchased or Originated Credit Impaired (“POCI”) are credit exposures that are already impaired on initial recognition. These credit exposures might be recognized either as a result of a purchase of non-performing exposures from third parties or as a result of the restructuring of impaired exposures which has led to the provision of significant new finance, either in absolute terms or in relative terms, compared with the amount of the original exposure. These exposures are subject to management, measurement and control according to the principles described in the paragraph of Part E - Consolidated explanatory notes of the UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk Policies Management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. In particular, the expected credit losses recorded at initial recognition within the carrying amount of the instrument are periodically reviewed on the basis of the processes described in the previous paragraphs. The expected credit loss calculated for these credit exposures is always determined considering their residual life, and such exposure are conventionally allocated into Stage 3, or in Stage 2 if, as a result of an improvement in the creditworthiness of the counterparty following the initial recognition, the assets are performing. These assets are never classified under Stage 1 because the expected credit loss must always be calculated considering a time horizon equal to the residual duration. 4. Commercial renegotiation of financial assets and forborne exposures Changes in existing financial instruments which determine a modification of contractual conditions might be the result of either: • commercial initiatives, which may be specific for each customer or applied to portfolio of customers also as a result of dedicated initiatives sponsored by public authorities or banking associations, or • concessions granted in light of debtor’s financial difficulties (Forbearance). Such changes are accounted on the basis of whether the modification is considered significant or not. In this regard, reference is made to the Part A - A.2 - Main items of the accounts. The concessions granted due to debtor’s financial difficulties, so called Forbearance initiatives, are usually considered not significant from an accounting perspective. 4.1 Loan Categorisation in the risk categories and forborne exposures Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 4.1 Loan Categorisation in the risk categories and forborne exposures which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 672 2018 Annual Report and Accounts · UniCredit 3.3 Acquired or originated impaired financial assets Purchased or Originated Credit Impaired (“POCI”) are credit exposures that are already impaired on initial recognition. These credit exposures might be recognized either as a result of a purchase of non-performing exposures from third parties or as a result of the restructuring of impaired exposures which has led to the provision of significant new finance, either in absolute terms or in relative terms, compared with the amount of the original exposure. These exposures are subject to management, measurement and control according to the principles described in the paragraph of Part E - Consolidated explanatory notes of the UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.1 Credit Risk - Qualitative information - 2. Credit risk Policies Management - 2.2 Credit Risk Management, Measurement and Control which is herewith quoted entirely. In particular, the expected credit losses recorded at initial recognition within the carrying amount of the instrument are periodically reviewed on the basis of the processes described in the previous paragraphs. The expected credit loss calculated for these credit exposures is always determined considering their residual life, and such exposure are conventionally allocated into Stage 3, or in Stage 2 if, as a result of an improvement in the creditworthiness of the counterparty following the initial recognition, the assets are performing. These assets are never classified under Stage 1 because the expected credit loss must always be calculated considering a time horizon equal to the residual duration. 4. Commercial renegotiation of financial assets and forborne exposures Changes in existing financial instruments which determine a modification of contractual conditions might be the result of either: • commercial initiatives, which may be specific for each customer or applied to portfolio of customers also as a result of dedicated initiatives sponsored by public authorities or banking associations, or • concessions granted in light of debtor’s financial difficulties (Forbearance). Such changes are accounted on the basis of whether the modification is considered significant or not. In this regard, reference is made to the Part A - A.2 - Main items of the accounts. The concessions granted due to debtor’s financial difficulties, so called Forbearance initiatives, are usually considered not significant from an accounting perspective. 4.1 Loan Categorisation in the risk categories and forborne exposures Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 4.1 Loan Categorisation in the risk categories and forborne exposures which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 673 Quantitative information A. Credit quality A.1 Non-Performing and performing credit exposure: amounts, writedowns, changes, distribution by business activity A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES PERFORMING EXPOSURES TOTAL 1. Financial assets at amortised cost 2,811,285 6,242,368 302,262 5,289,538 255,910,981 270,556,434 2. Financial assets at fair value through other comprehensive income 42 - - - 45,268,088 45,268,130 3. Financial assets designated at fair value - - - - - - 4. Other financial assets mandatorily at fair value 1 59,458 - - 1,462,389 1,521,848 5. Financial instruments classified as held for sale - 53,898 - - - 53,898 Total 12.31.2018 2,811,328 6,355,724 302,262 5,289,538 302,641,458 317,400,310 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. A.1.1 Breakdown of credit exposures by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES OTHER PERFORMING EXPOSURES TOTAL 1. Available-for-sale financial assets 1 26,318 - - 57,032,712 57,059,031 2. Held-to-maturity financial instruments - - - - 762,431 762,431 3. Loans and receivables with banks - 4,998 - - 27,561,763 27,566,761 4. Loans and receivables with customers 5,638,468 7,923,599 335,557 4,337,794 190,730,037 208,965,455 5. Financial assets at fair value - 22,374 - - 63,391 85,765 6. Financial instruments classified as held for sale - 54,553 - - - 54,553 Total 12.31.2017 5,638,469 8,031,842 335,557 4,337,794 276,150,334 294,493,996 A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Financial assets at amortised cost 25,411,231 16,055,316 9,355,915 2,394,906 262,506,590 1,306,071 261,200,519 270,556,434 2. Financial assets at fair value through other comprehensive income 70 28 42 - 45,286,933 18,845 45,268,088 45,268,130 3. Financial assets designated at fair value - - - - X X - - 4. Other financial assets mandatorily at fair value 168,250 108,791 59,459 - X X 1,462,389 1,521,848 5. Financial instruments classified as held for sale 76,570 22,672 53,898 - - - - 53,898 Total 12.31.2018 25,656,121 16,186,807 9,469,314 2,394,906 307,793,523 1,324,916 307,930,996 317,400,310 Note: (*) Value shown for information purposes. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 673 Quantitative information A. Credit quality A.1 Non-Performing and performing credit exposure: amounts, writedowns, changes, distribution by business activity A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES PERFORMING EXPOSURES TOTAL 1. Financial assets at amortised cost 2,811,285 6,242,368 302,262 5,289,538 255,910,981 270,556,434 2. Financial assets at fair value through other comprehensive income 42 - - - 45,268,088 45,268,130 3. Financial assets designated at fair value - - - - - - 4. Other financial assets mandatorily at fair value 1 59,458 - - 1,462,389 1,521,848 5. Financial instruments classified as held for sale - 53,898 - - - 53,898 Total 12.31.2018 2,811,328 6,355,724 302,262 5,289,538 302,641,458 317,400,310 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. A.1.1 Breakdown of credit exposures by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES OTHER PERFORMING EXPOSURES TOTAL 1. Available-for-sale financial assets 1 26,318 - - 57,032,712 57,059,031 2. Held-to-maturity financial instruments - - - - 762,431 762,431 3. Loans and receivables with banks - 4,998 - - 27,561,763 27,566,761 4. Loans and receivables with customers 5,638,468 7,923,599 335,557 4,337,794 190,730,037 208,965,455 5. Financial assets at fair value - 22,374 - - 63,391 85,765 6. Financial instruments classified as held for sale - 54,553 - - - 54,553 Total 12.31.2017 5,638,469 8,031,842 335,557 4,337,794 276,150,334 294,493,996 A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Financial assets at amortised cost 25,411,231 16,055,316 9,355,915 2,394,906 262,506,590 1,306,071 261,200,519 270,556,434 2. Financial assets at fair value through other comprehensive income 70 28 42 - 45,286,933 18,845 45,268,088 45,268,130 3. Financial assets designated at fair value - - - - X X - - 4. Other financial assets mandatorily at fair value 168,250 108,791 59,459 - X X 1,462,389 1,521,848 5. Financial instruments classified as held for sale 76,570 22,672 53,898 - - - - 53,898 Total 12.31.2018 25,656,121 16,186,807 9,469,314 2,394,906 307,793,523 1,324,916 307,930,996 317,400,310 Note: (*) Value shown for information purposes. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 673 Quantitative information A. Credit quality A.1 Non-Performing and performing credit exposure: amounts, writedowns, changes, distribution by business activity A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES PERFORMING EXPOSURES TOTAL 1. Financial assets at amortised cost 2,811,285 6,242,368 302,262 5,289,538 255,910,981 270,556,434 2. Financial assets at fair value through other comprehensive income 42 - - - 45,268,088 45,268,130 3. Financial assets designated at fair value - - - - - - 4. Other financial assets mandatorily at fair value 1 59,458 - - 1,462,389 1,521,848 5. Financial instruments classified as held for sale - 53,898 - - - 53,898 Total 12.31.2018 2,811,328 6,355,724 302,262 5,289,538 302,641,458 317,400,310 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. A.1.1 Breakdown of credit exposures by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES OTHER PERFORMING EXPOSURES TOTAL 1. Available-for-sale financial assets 1 26,318 - - 57,032,712 57,059,031 2. Held-to-maturity financial instruments - - - - 762,431 762,431 3. Loans and receivables with banks - 4,998 - - 27,561,763 27,566,761 4. Loans and receivables with customers 5,638,468 7,923,599 335,557 4,337,794 190,730,037 208,965,455 5. Financial assets at fair value - 22,374 - - 63,391 85,765 6. Financial instruments classified as held for sale - 54,553 - - - 54,553 Total 12.31.2017 5,638,469 8,031,842 335,557 4,337,794 276,150,334 294,493,996 A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Financial assets at amortised cost 25,411,231 16,055,316 9,355,915 2,394,906 262,506,590 1,306,071 261,200,519 270,556,434 2. Financial assets at fair value through other comprehensive income 70 28 42 - 45,286,933 18,845 45,268,088 45,268,130 3. Financial assets designated at fair value - - - - X X - - 4. Other financial assets mandatorily at fair value 168,250 108,791 59,459 - X X 1,462,389 1,521,848 5. Financial instruments classified as held for sale 76,570 22,672 53,898 - - - - 53,898 Total 12.31.2018 25,656,121 16,186,807 9,469,314 2,394,906 307,793,523 1,324,916 307,930,996 317,400,310 Note: (*) Value shown for information purposes. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 673 Quantitative information A. Credit quality A.1 Non-Performing and performing credit exposure: amounts, writedowns, changes, distribution by business activity A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES PERFORMING EXPOSURES TOTAL 1. Financial assets at amortised cost 2,811,285 6,242,368 302,262 5,289,538 255,910,981 270,556,434 2. Financial assets at fair value through other comprehensive income 42 - - - 45,268,088 45,268,130 3. Financial assets designated at fair value - - - - - - 4. Other financial assets mandatorily at fair value 1 59,458 - - 1,462,389 1,521,848 5. Financial instruments classified as held for sale - 53,898 - - - 53,898 Total 12.31.2018 2,811,328 6,355,724 302,262 5,289,538 302,641,458 317,400,310 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. A.1.1 Breakdown of credit exposures by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES OTHER PERFORMING EXPOSURES TOTAL 1. Available-for-sale financial assets 1 26,318 - - 57,032,712 57,059,031 2. Held-to-maturity financial instruments - - - - 762,431 762,431 3. Loans and receivables with banks - 4,998 - - 27,561,763 27,566,761 4. Loans and receivables with customers 5,638,468 7,923,599 335,557 4,337,794 190,730,037 208,965,455 5. Financial assets at fair value - 22,374 - - 63,391 85,765 6. Financial instruments classified as held for sale - 54,553 - - - 54,553 Total 12.31.2017 5,638,469 8,031,842 335,557 4,337,794 276,150,334 294,493,996 A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Financial assets at amortised cost 25,411,231 16,055,316 9,355,915 2,394,906 262,506,590 1,306,071 261,200,519 270,556,434 2. Financial assets at fair value through other comprehensive income 70 28 42 - 45,286,933 18,845 45,268,088 45,268,130 3. Financial assets designated at fair value - - - - X X - - 4. Other financial assets mandatorily at fair value 168,250 108,791 59,459 - X X 1,462,389 1,521,848 5. Financial instruments classified as held for sale 76,570 22,672 53,898 - - - - 53,898 Total 12.31.2018 25,656,121 16,186,807 9,469,314 2,394,906 307,793,523 1,324,916 307,930,996 317,400,310 Note: (*) Value shown for information purposes. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 673 Quantitative information A. Credit quality A.1 Non-Performing and performing credit exposure: amounts, writedowns, changes, distribution by business activity A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES PERFORMING EXPOSURES TOTAL 1. Financial assets at amortised cost 2,811,285 6,242,368 302,262 5,289,538 255,910,981 270,556,434 2. Financial assets at fair value through other comprehensive income 42 - - - 45,268,088 45,268,130 3. Financial assets designated at fair value - - - - - - 4. Other financial assets mandatorily at fair value 1 59,458 - - 1,462,389 1,521,848 5. Financial instruments classified as held for sale - 53,898 - - - 53,898 Total 12.31.2018 2,811,328 6,355,724 302,262 5,289,538 302,641,458 317,400,310 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. A.1.1 Breakdown of credit exposures by portfolio and credit quality (carrying value) (€ '000) PORTFOLIOS/QUALITY BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST-DUE EXPOSURES PERFORMING PAST-DUE EXPOSURES OTHER PERFORMING EXPOSURES TOTAL 1. Available-for-sale financial assets 1 26,318 - - 57,032,712 57,059,031 2. Held-to-maturity financial instruments - - - - 762,431 762,431 3. Loans and receivables with banks - 4,998 - - 27,561,763 27,566,761 4. Loans and receivables with customers 5,638,468 7,923,599 335,557 4,337,794 190,730,037 208,965,455 5. Financial assets at fair value - 22,374 - - 63,391 85,765 6. Financial instruments classified as held for sale - 54,553 - - - 54,553 Total 12.31.2017 5,638,469 8,031,842 335,557 4,337,794 276,150,334 294,493,996 A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS PORTFOLIOS/QUALITY OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) OVERALL WRITE-DOWNS TOTAL WRITEDOWNS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Financial assets at amortised cost 25,411,231 16,055,316 9,355,915 2,394,906 262,506,590 1,306,071 261,200,519 270,556,434 2. Financial assets at fair value through other comprehensive income 70 28 42 - 45,286,933 18,845 45,268,088 45,268,130 3. Financial assets designated at fair value - - - - X X - - 4. Other financial assets mandatorily at fair value 168,250 108,791 59,459 - X X 1,462,389 1,521,848 5. Financial instruments classified as held for sale 76,570 22,672 53,898 - - - - 53,898 Total 12.31.2018 25,656,121 16,186,807 9,469,314 2,394,906 307,793,523 1,324,916 307,930,996 317,400,310 Note: (*) Value shown for information purposes. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 674 2018 Annual Report and Accounts · UniCredit (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 30,757 26,061 11,808,290 2. Hedging derivatives - - 4,167,319 Total 12.31.2018 30,757 26,061 15,975,609 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. A.1.2 Breakdown of credit exposures by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS 12.31.2017 PORTFOLIOS/QUALITY GROSS EXPOSURE SPECIFIC WRITEDOWNS NET EXPOSURE GROSS EXPOSURE PORTFOLIO ADJUSTMENTS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Available-for-sale financial assets 46,361 20,042 26,319 57,032,712 - 57,032,712 57,059,031 2. Held-to-maturity financial instruments - - - 762,431 - 762,431 762,431 3. Loans and receivables with banks 6,524 1,526 4,998 27,568,727 6,964 27,561,763 27,566,761 4. Loans and receivables with customers 32,688,524 18,790,900 13,897,624 195,984,150 916,319 195,067,831 208,965,455 5. Financial assets at fair value 23,469 1,095 22,374 X X 63,391 85,765 6. Financial instruments classified as held for sale 88,351 33,798 54,553 - - - 54,553 Total 12.31.2017 32,853,229 18,847,361 14,005,868 281,348,020 923,283 280,488,128 294,493,996 Breakdown of credit exposures by portfolio and credit quality - Financial assets held for trading and Hedging instruments (gross and net values) (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 30,563 38,343 13,825,436 2. Hedging derivatives - - 4,399,939 Total 12.31.2017 30,563 38,343 18,225,375 A.1.3 Breakdown of financial assets by past-due buckets (carrying value) (€ '000) PORTFOLIOS/RISK STAGES STAGE 1 STAGE 2 STAGE 3 FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS 1. Financial assets at amortised cost 3,385,138 274,626 97,088 576,828 445,057 510,802 3,732,353 172,278 5,451,284 2. Financial assets at fair value through other comprehensive income - - - - - - 42 - - Total 12.31.2018 3,385,138 274,626 97,088 576,828 445,057 510,802 3,732,395 172,278 5,451,284 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 674 2018 Annual Report and Accounts · UniCredit (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 30,757 26,061 11,808,290 2. Hedging derivatives - - 4,167,319 Total 12.31.2018 30,757 26,061 15,975,609 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. A.1.2 Breakdown of credit exposures by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS 12.31.2017 PORTFOLIOS/QUALITY GROSS EXPOSURE SPECIFIC WRITEDOWNS NET EXPOSURE GROSS EXPOSURE PORTFOLIO ADJUSTMENTS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Available-for-sale financial assets 46,361 20,042 26,319 57,032,712 - 57,032,712 57,059,031 2. Held-to-maturity financial instruments - - - 762,431 - 762,431 762,431 3. Loans and receivables with banks 6,524 1,526 4,998 27,568,727 6,964 27,561,763 27,566,761 4. Loans and receivables with customers 32,688,524 18,790,900 13,897,624 195,984,150 916,319 195,067,831 208,965,455 5. Financial assets at fair value 23,469 1,095 22,374 X X 63,391 85,765 6. Financial instruments classified as held for sale 88,351 33,798 54,553 - - - 54,553 Total 12.31.2017 32,853,229 18,847,361 14,005,868 281,348,020 923,283 280,488,128 294,493,996 Breakdown of credit exposures by portfolio and credit quality - Financial assets held for trading and Hedging instruments (gross and net values) (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 30,563 38,343 13,825,436 2. Hedging derivatives - - 4,399,939 Total 12.31.2017 30,563 38,343 18,225,375 A.1.3 Breakdown of financial assets by past-due buckets (carrying value) (€ '000) PORTFOLIOS/RISK STAGES STAGE 1 STAGE 2 STAGE 3 FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS 1. Financial assets at amortised cost 3,385,138 274,626 97,088 576,828 445,057 510,802 3,732,353 172,278 5,451,284 2. Financial assets at fair value through other comprehensive income - - - - - - 42 - - Total 12.31.2018 3,385,138 274,626 97,088 576,828 445,057 510,802 3,732,395 172,278 5,451,284 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 674 2018 Annual Report and Accounts · UniCredit (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 30,757 26,061 11,808,290 2. Hedging derivatives - - 4,167,319 Total 12.31.2018 30,757 26,061 15,975,609 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. A.1.2 Breakdown of credit exposures by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS 12.31.2017 PORTFOLIOS/QUALITY GROSS EXPOSURE SPECIFIC WRITEDOWNS NET EXPOSURE GROSS EXPOSURE PORTFOLIO ADJUSTMENTS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Available-for-sale financial assets 46,361 20,042 26,319 57,032,712 - 57,032,712 57,059,031 2. Held-to-maturity financial instruments - - - 762,431 - 762,431 762,431 3. Loans and receivables with banks 6,524 1,526 4,998 27,568,727 6,964 27,561,763 27,566,761 4. Loans and receivables with customers 32,688,524 18,790,900 13,897,624 195,984,150 916,319 195,067,831 208,965,455 5. Financial assets at fair value 23,469 1,095 22,374 X X 63,391 85,765 6. Financial instruments classified as held for sale 88,351 33,798 54,553 - - - 54,553 Total 12.31.2017 32,853,229 18,847,361 14,005,868 281,348,020 923,283 280,488,128 294,493,996 Breakdown of credit exposures by portfolio and credit quality - Financial assets held for trading and Hedging instruments (gross and net values) (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 30,563 38,343 13,825,436 2. Hedging derivatives - - 4,399,939 Total 12.31.2017 30,563 38,343 18,225,375 A.1.3 Breakdown of financial assets by past-due buckets (carrying value) (€ '000) PORTFOLIOS/RISK STAGES STAGE 1 STAGE 2 STAGE 3 FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS 1. Financial assets at amortised cost 3,385,138 274,626 97,088 576,828 445,057 510,802 3,732,353 172,278 5,451,284 2. Financial assets at fair value through other comprehensive income - - - - - - 42 - - Total 12.31.2018 3,385,138 274,626 97,088 576,828 445,057 510,802 3,732,395 172,278 5,451,284 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 674 2018 Annual Report and Accounts · UniCredit (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 30,757 26,061 11,808,290 2. Hedging derivatives - - 4,167,319 Total 12.31.2018 30,757 26,061 15,975,609 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. A.1.2 Breakdown of credit exposures by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS 12.31.2017 PORTFOLIOS/QUALITY GROSS EXPOSURE SPECIFIC WRITEDOWNS NET EXPOSURE GROSS EXPOSURE PORTFOLIO ADJUSTMENTS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Available-for-sale financial assets 46,361 20,042 26,319 57,032,712 - 57,032,712 57,059,031 2. Held-to-maturity financial instruments - - - 762,431 - 762,431 762,431 3. Loans and receivables with banks 6,524 1,526 4,998 27,568,727 6,964 27,561,763 27,566,761 4. Loans and receivables with customers 32,688,524 18,790,900 13,897,624 195,984,150 916,319 195,067,831 208,965,455 5. Financial assets at fair value 23,469 1,095 22,374 X X 63,391 85,765 6. Financial instruments classified as held for sale 88,351 33,798 54,553 - - - 54,553 Total 12.31.2017 32,853,229 18,847,361 14,005,868 281,348,020 923,283 280,488,128 294,493,996 Breakdown of credit exposures by portfolio and credit quality - Financial assets held for trading and Hedging instruments (gross and net values) (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 30,563 38,343 13,825,436 2. Hedging derivatives - - 4,399,939 Total 12.31.2017 30,563 38,343 18,225,375 A.1.3 Breakdown of financial assets by past-due buckets (carrying value) (€ '000) PORTFOLIOS/RISK STAGES STAGE 1 STAGE 2 STAGE 3 FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS 1. Financial assets at amortised cost 3,385,138 274,626 97,088 576,828 445,057 510,802 3,732,353 172,278 5,451,284 2. Financial assets at fair value through other comprehensive income - - - - - - 42 - - Total 12.31.2018 3,385,138 274,626 97,088 576,828 445,057 510,802 3,732,395 172,278 5,451,284 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 674 2018 Annual Report and Accounts · UniCredit (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 30,757 26,061 11,808,290 2. Hedging derivatives - - 4,167,319 Total 12.31.2018 30,757 26,061 15,975,609 The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. A.1.2 Breakdown of credit exposures by portfolio and credit quality (gross and net values) (€ '000) NON-PERFORMING ASSETS PERFORMING ASSETS 12.31.2017 PORTFOLIOS/QUALITY GROSS EXPOSURE SPECIFIC WRITEDOWNS NET EXPOSURE GROSS EXPOSURE PORTFOLIO ADJUSTMENTS NET EXPOSURE TOTAL (NET EXPOSURE) 1. Available-for-sale financial assets 46,361 20,042 26,319 57,032,712 - 57,032,712 57,059,031 2. Held-to-maturity financial instruments - - - 762,431 - 762,431 762,431 3. Loans and receivables with banks 6,524 1,526 4,998 27,568,727 6,964 27,561,763 27,566,761 4. Loans and receivables with customers 32,688,524 18,790,900 13,897,624 195,984,150 916,319 195,067,831 208,965,455 5. Financial assets at fair value 23,469 1,095 22,374 X X 63,391 85,765 6. Financial instruments classified as held for sale 88,351 33,798 54,553 - - - 54,553 Total 12.31.2017 32,853,229 18,847,361 14,005,868 281,348,020 923,283 280,488,128 294,493,996 Breakdown of credit exposures by portfolio and credit quality - Financial assets held for trading and Hedging instruments (gross and net values) (€ '000) LOW CREDIT QUALITY ASSETS OTHER ASSETS PORTFOLIOS/QUALITY CUMULATED LOSSES NET EXPOSURE NET EXPOSURE 1. Financial assets held for trading 30,563 38,343 13,825,436 2. Hedging derivatives - - 4,399,939 Total 12.31.2017 30,563 38,343 18,225,375 A.1.3 Breakdown of financial assets by past-due buckets (carrying value) (€ '000) PORTFOLIOS/RISK STAGES STAGE 1 STAGE 2 STAGE 3 FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS FROM 1 TO 30 DAYS OVER 30 AND UP TO 90 DAYS OVER 90 DAYS 1. Financial assets at amortised cost 3,385,138 274,626 97,088 576,828 445,057 510,802 3,732,353 172,278 5,451,284 2. Financial assets at fair value through other comprehensive income - - - - - - 42 - - Total 12.31.2018 3,385,138 274,626 97,088 576,828 445,057 510,802 3,732,395 172,278 5,451,284 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 675 A.1.4 Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) OVERALL WRITE-DOWNS FINANCIAL ASSETS CLASSIFIED IN STAGE 1 FINANCIAL ASSETS CLASSIFIED IN STAGE 2 SOURCES/RISK STAGES FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT Opening balance (gross amount) 560,145 8,645 - 568,790 891,551 71 - 891,622 Increases in acquired or originated financial assets 113,368 - - 113,368 49,745 - - 49,745 Reversals different from write-offs (139,451) - - (139,451) (48,465) - - (48,465) Net losses/recoveries on credit impairment (336,341) 13,811 - (322,530) 256,686 - - 256,686 Contractual changes without cancellation 802 - - 802 530 - - 530 Changes in estimation methodology - - - - - - - - Write-off (26) - - (26) (119) - - (119) Other changes 350,944 (3,611) - 347,333 (393,298) (71) - (393,369) Closing balance (gross amount) 549,441 18,845 - 568,286 756,630 - - 756,630 Recoveries from financial assets subject to write-off 49 - - 49 - - - - Write-off are not recognised directly in profit or loss (59) - - (59) (25,838) - - (25,838) continued: A.1.4 Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) SOURCES/RISK STAGES OVERALL WRITE-DOWNS TOTAL ASSETS BELONGING TO THIRD STAGE OF WHICH: ACQUIRED OR ORIGINATED IMPAIRED FINANCIAL ASSETS FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT TOTAL PROVISIONS ON LOANS COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 Opening balance (gross amount) 18,616,351 - 11,071,610 7,544,741 17,373 85,982 21,140 422,401 20,606,286 Increases in acquired or originated financial assets 384,774 - 341,488 43,286 - 30,110 5,462 31,227 614,686 Reversals different from write-offs (200,761) - (41,207) (159,554) (168) - - - (388,677) Net losses/recoveries on credit impairment 1,657,510 (43) 1,086,942 570,525 2,732 (74,026) (7,179) (23,226) 1,487,192 Contractual changes without cancellation 1,961 - 1,521 441 - - - - 3,293 Changes in estimation methodology - - - - - - - - - Write-off (4,310,130) - (1,039,204) (3,270,926) (7,045) - - - (4,310,275) Other changes (94,390) 71 (1,516,226) 1,421,907 (259) 24,054 4,222 (28,269) (140,348) Closing balance (gross amount) 16,055,315 28 9,904,924 6,150,420 12,633 66,120 23,645 402,133 17,872,157 Recoveries from financial assets subject to write-off 123,652 - 86,453 37,199 - - - - 123,701 Write-off are not recognised directly in profit or loss (388,856) - (91,592) (297,264) (1,327) - - - (414,753) Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 675 A.1.4 Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) OVERALL WRITE-DOWNS FINANCIAL ASSETS CLASSIFIED IN STAGE 1 FINANCIAL ASSETS CLASSIFIED IN STAGE 2 SOURCES/RISK STAGES FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT Opening balance (gross amount) 560,145 8,645 - 568,790 891,551 71 - 891,622 Increases in acquired or originated financial assets 113,368 - - 113,368 49,745 - - 49,745 Reversals different from write-offs (139,451) - - (139,451) (48,465) - - (48,465) Net losses/recoveries on credit impairment (336,341) 13,811 - (322,530) 256,686 - - 256,686 Contractual changes without cancellation 802 - - 802 530 - - 530 Changes in estimation methodology - - - - - - - - Write-off (26) - - (26) (119) - - (119) Other changes 350,944 (3,611) - 347,333 (393,298) (71) - (393,369) Closing balance (gross amount) 549,441 18,845 - 568,286 756,630 - - 756,630 Recoveries from financial assets subject to write-off 49 - - 49 - - - - Write-off are not recognised directly in profit or loss (59) - - (59) (25,838) - - (25,838) continued: A.1.4 Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) SOURCES/RISK STAGES OVERALL WRITE-DOWNS TOTAL ASSETS BELONGING TO THIRD STAGE OF WHICH: ACQUIRED OR ORIGINATED IMPAIRED FINANCIAL ASSETS FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT TOTAL PROVISIONS ON LOANS COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 Opening balance (gross amount) 18,616,351 - 11,071,610 7,544,741 17,373 85,982 21,140 422,401 20,606,286 Increases in acquired or originated financial assets 384,774 - 341,488 43,286 - 30,110 5,462 31,227 614,686 Reversals different from write-offs (200,761) - (41,207) (159,554) (168) - - - (388,677) Net losses/recoveries on credit impairment 1,657,510 (43) 1,086,942 570,525 2,732 (74,026) (7,179) (23,226) 1,487,192 Contractual changes without cancellation 1,961 - 1,521 441 - - - - 3,293 Changes in estimation methodology - - - - - - - - - Write-off (4,310,130) - (1,039,204) (3,270,926) (7,045) - - - (4,310,275) Other changes (94,390) 71 (1,516,226) 1,421,907 (259) 24,054 4,222 (28,269) (140,348) Closing balance (gross amount) 16,055,315 28 9,904,924 6,150,420 12,633 66,120 23,645 402,133 17,872,157 Recoveries from financial assets subject to write-off 123,652 - 86,453 37,199 - - - - 123,701 Write-off are not recognised directly in profit or loss (388,856) - (91,592) (297,264) (1,327) - - - (414,753) Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 675 A.1.4 Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) OVERALL WRITE-DOWNS FINANCIAL ASSETS CLASSIFIED IN STAGE 1 FINANCIAL ASSETS CLASSIFIED IN STAGE 2 SOURCES/RISK STAGES FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT Opening balance (gross amount) 560,145 8,645 - 568,790 891,551 71 - 891,622 Increases in acquired or originated financial assets 113,368 - - 113,368 49,745 - - 49,745 Reversals different from write-offs (139,451) - - (139,451) (48,465) - - (48,465) Net losses/recoveries on credit impairment (336,341) 13,811 - (322,530) 256,686 - - 256,686 Contractual changes without cancellation 802 - - 802 530 - - 530 Changes in estimation methodology - - - - - - - - Write-off (26) - - (26) (119) - - (119) Other changes 350,944 (3,611) - 347,333 (393,298) (71) - (393,369) Closing balance (gross amount) 549,441 18,845 - 568,286 756,630 - - 756,630 Recoveries from financial assets subject to write-off 49 - - 49 - - - - Write-off are not recognised directly in profit or loss (59) - - (59) (25,838) - - (25,838) continued: A.1.4 Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) SOURCES/RISK STAGES OVERALL WRITE-DOWNS TOTAL ASSETS BELONGING TO THIRD STAGE OF WHICH: ACQUIRED OR ORIGINATED IMPAIRED FINANCIAL ASSETS FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT TOTAL PROVISIONS ON LOANS COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 Opening balance (gross amount) 18,616,351 - 11,071,610 7,544,741 17,373 85,982 21,140 422,401 20,606,286 Increases in acquired or originated financial assets 384,774 - 341,488 43,286 - 30,110 5,462 31,227 614,686 Reversals different from write-offs (200,761) - (41,207) (159,554) (168) - - - (388,677) Net losses/recoveries on credit impairment 1,657,510 (43) 1,086,942 570,525 2,732 (74,026) (7,179) (23,226) 1,487,192 Contractual changes without cancellation 1,961 - 1,521 441 - - - - 3,293 Changes in estimation methodology - - - - - - - - - Write-off (4,310,130) - (1,039,204) (3,270,926) (7,045) - - - (4,310,275) Other changes (94,390) 71 (1,516,226) 1,421,907 (259) 24,054 4,222 (28,269) (140,348) Closing balance (gross amount) 16,055,315 28 9,904,924 6,150,420 12,633 66,120 23,645 402,133 17,872,157 Recoveries from financial assets subject to write-off 123,652 - 86,453 37,199 - - - - 123,701 Write-off are not recognised directly in profit or loss (388,856) - (91,592) (297,264) (1,327) - - - (414,753) Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 675 A.1.4 Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) OVERALL WRITE-DOWNS FINANCIAL ASSETS CLASSIFIED IN STAGE 1 FINANCIAL ASSETS CLASSIFIED IN STAGE 2 SOURCES/RISK STAGES FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT Opening balance (gross amount) 560,145 8,645 - 568,790 891,551 71 - 891,622 Increases in acquired or originated financial assets 113,368 - - 113,368 49,745 - - 49,745 Reversals different from write-offs (139,451) - - (139,451) (48,465) - - (48,465) Net losses/recoveries on credit impairment (336,341) 13,811 - (322,530) 256,686 - - 256,686 Contractual changes without cancellation 802 - - 802 530 - - 530 Changes in estimation methodology - - - - - - - - Write-off (26) - - (26) (119) - - (119) Other changes 350,944 (3,611) - 347,333 (393,298) (71) - (393,369) Closing balance (gross amount) 549,441 18,845 - 568,286 756,630 - - 756,630 Recoveries from financial assets subject to write-off 49 - - 49 - - - - Write-off are not recognised directly in profit or loss (59) - - (59) (25,838) - - (25,838) continued: A.1.4 Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) SOURCES/RISK STAGES OVERALL WRITE-DOWNS TOTAL ASSETS BELONGING TO THIRD STAGE OF WHICH: ACQUIRED OR ORIGINATED IMPAIRED FINANCIAL ASSETS FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT TOTAL PROVISIONS ON LOANS COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 Opening balance (gross amount) 18,616,351 - 11,071,610 7,544,741 17,373 85,982 21,140 422,401 20,606,286 Increases in acquired or originated financial assets 384,774 - 341,488 43,286 - 30,110 5,462 31,227 614,686 Reversals different from write-offs (200,761) - (41,207) (159,554) (168) - - - (388,677) Net losses/recoveries on credit impairment 1,657,510 (43) 1,086,942 570,525 2,732 (74,026) (7,179) (23,226) 1,487,192 Contractual changes without cancellation 1,961 - 1,521 441 - - - - 3,293 Changes in estimation methodology - - - - - - - - - Write-off (4,310,130) - (1,039,204) (3,270,926) (7,045) - - - (4,310,275) Other changes (94,390) 71 (1,516,226) 1,421,907 (259) 24,054 4,222 (28,269) (140,348) Closing balance (gross amount) 16,055,315 28 9,904,924 6,150,420 12,633 66,120 23,645 402,133 17,872,157 Recoveries from financial assets subject to write-off 123,652 - 86,453 37,199 - - - - 123,701 Write-off are not recognised directly in profit or loss (388,856) - (91,592) (297,264) (1,327) - - - (414,753) Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 675 A.1.4 Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) OVERALL WRITE-DOWNS FINANCIAL ASSETS CLASSIFIED IN STAGE 1 FINANCIAL ASSETS CLASSIFIED IN STAGE 2 SOURCES/RISK STAGES FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT Opening balance (gross amount) 560,145 8,645 - 568,790 891,551 71 - 891,622 Increases in acquired or originated financial assets 113,368 - - 113,368 49,745 - - 49,745 Reversals different from write-offs (139,451) - - (139,451) (48,465) - - (48,465) Net losses/recoveries on credit impairment (336,341) 13,811 - (322,530) 256,686 - - 256,686 Contractual changes without cancellation 802 - - 802 530 - - 530 Changes in estimation methodology - - - - - - - - Write-off (26) - - (26) (119) - - (119) Other changes 350,944 (3,611) - 347,333 (393,298) (71) - (393,369) Closing balance (gross amount) 549,441 18,845 - 568,286 756,630 - - 756,630 Recoveries from financial assets subject to write-off 49 - - 49 - - - - Write-off are not recognised directly in profit or loss (59) - - (59) (25,838) - - (25,838) continued: A.1.4 Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions (€ '000) SOURCES/RISK STAGES OVERALL WRITE-DOWNS TOTAL ASSETS BELONGING TO THIRD STAGE OF WHICH: ACQUIRED OR ORIGINATED IMPAIRED FINANCIAL ASSETS FINANCIAL ASSETS AT AMORTISED COST FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME OF WHICH: INDIVIDUAL IMPAIRMENT OF WHICH: COLLECTIVE IMPAIRMENT TOTAL PROVISIONS ON LOANS COMMITMENTS AND FINANCIAL GUARANTEES GIVEN STAGE 1 STAGE 2 STAGE 3 Opening balance (gross amount) 18,616,351 - 11,071,610 7,544,741 17,373 85,982 21,140 422,401 20,606,286 Increases in acquired or originated financial assets 384,774 - 341,488 43,286 - 30,110 5,462 31,227 614,686 Reversals different from write-offs (200,761) - (41,207) (159,554) (168) - - - (388,677) Net losses/recoveries on credit impairment 1,657,510 (43) 1,086,942 570,525 2,732 (74,026) (7,179) (23,226) 1,487,192 Contractual changes without cancellation 1,961 - 1,521 441 - - - - 3,293 Changes in estimation methodology - - - - - - - - - Write-off (4,310,130) - (1,039,204) (3,270,926) (7,045) - - - (4,310,275) Other changes (94,390) 71 (1,516,226) 1,421,907 (259) 24,054 4,222 (28,269) (140,348) Closing balance (gross amount) 16,055,315 28 9,904,924 6,150,420 12,633 66,120 23,645 402,133 17,872,157 Recoveries from financial assets subject to write-off 123,652 - 86,453 37,199 - - - - 123,701 Write-off are not recognised directly in profit or loss (388,856) - (91,592) (297,264) (1,327) - - - (414,753) Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 676 2018 Annual Report and Accounts · UniCredit A.1.5 Financial assets, loan commitments and financial guarantees given: transfers between risk stages (gross values and nominal values) (€ '000) PORTFOLIOS/RISK STAGES GROSS VALUES/NOMINAL VALUES TRANSFERS BETWEEN STAGE 1 AND STAGE 2 TRANSFERS BETWEEN STAGE 2 AND STAGE 3 TRANSFERS BETWEEN STAGE 1 AND STAGE 3 FROM STAGE 1 TO STAGE 2 FROM STAGE 2 TO STAGE 1 FROM STAGE 2 TO STAGE 3 FROM STAGE 3 TO STAGE 2 FROM STAGE 1 TO STAGE 3 FROM STAGE 3 TO STAGE 1 1. Financial assets at amortised cost 4,463,256 4,744,438 1,159,978 84,378 883,213 305,938 2. Financial assets at fair value through other comprehensive income - - 42 - - - 3. Loan commitments and financial guarantees given 1,420,439 653,593 68,380 11,351 310,873 24,812 Total 12.31.2018 5,883,695 5,398,031 1,228,400 95,729 1,194,086 330,750 A.1.6 On- and off-balance sheet credit exposures with banks: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 309 X 309 - - of which: forborne exposures - X - - - b) Unlikely to pay 3,508 X 3,508 - - of which: forborne exposures - X - - - c) Non-performing past due 26 X 26 - - of which: forborne exposures - X - - - d) Performing past due X 2 - 2 - of which: forborne exposures X - - - - e) Other performing exposures X 33,945,842 21,539 33,924,303 - of which: forborne exposures X - - - - Total (A) 3,843 33,945,844 25,382 33,924,305 - B. Off-balance sheet credit exposures a) Non-performing - X - - - b) Performing X 42,561,113 7,186 42,553,927 - Total (B) - 42,561,113 7,186 42,553,927 - Total (A+B) 3,843 76,506,957 32,568 76,478,232 - Note: (*) Value shown for information purposes. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 676 2018 Annual Report and Accounts · UniCredit A.1.5 Financial assets, loan commitments and financial guarantees given: transfers between risk stages (gross values and nominal values) (€ '000) PORTFOLIOS/RISK STAGES GROSS VALUES/NOMINAL VALUES TRANSFERS BETWEEN STAGE 1 AND STAGE 2 TRANSFERS BETWEEN STAGE 2 AND STAGE 3 TRANSFERS BETWEEN STAGE 1 AND STAGE 3 FROM STAGE 1 TO STAGE 2 FROM STAGE 2 TO STAGE 1 FROM STAGE 2 TO STAGE 3 FROM STAGE 3 TO STAGE 2 FROM STAGE 1 TO STAGE 3 FROM STAGE 3 TO STAGE 1 1. Financial assets at amortised cost 4,463,256 4,744,438 1,159,978 84,378 883,213 305,938 2. Financial assets at fair value through other comprehensive income - - 42 - - - 3. Loan commitments and financial guarantees given 1,420,439 653,593 68,380 11,351 310,873 24,812 Total 12.31.2018 5,883,695 5,398,031 1,228,400 95,729 1,194,086 330,750 A.1.6 On- and off-balance sheet credit exposures with banks: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 309 X 309 - - of which: forborne exposures - X - - - b) Unlikely to pay 3,508 X 3,508 - - of which: forborne exposures - X - - - c) Non-performing past due 26 X 26 - - of which: forborne exposures - X - - - d) Performing past due X 2 - 2 - of which: forborne exposures X - - - - e) Other performing exposures X 33,945,842 21,539 33,924,303 - of which: forborne exposures X - - - - Total (A) 3,843 33,945,844 25,382 33,924,305 - B. Off-balance sheet credit exposures a) Non-performing - X - - - b) Performing X 42,561,113 7,186 42,553,927 - Total (B) - 42,561,113 7,186 42,553,927 - Total (A+B) 3,843 76,506,957 32,568 76,478,232 - Note: (*) Value shown for information purposes. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 676 2018 Annual Report and Accounts · UniCredit A.1.5 Financial assets, loan commitments and financial guarantees given: transfers between risk stages (gross values and nominal values) (€ '000) PORTFOLIOS/RISK STAGES GROSS VALUES/NOMINAL VALUES TRANSFERS BETWEEN STAGE 1 AND STAGE 2 TRANSFERS BETWEEN STAGE 2 AND STAGE 3 TRANSFERS BETWEEN STAGE 1 AND STAGE 3 FROM STAGE 1 TO STAGE 2 FROM STAGE 2 TO STAGE 1 FROM STAGE 2 TO STAGE 3 FROM STAGE 3 TO STAGE 2 FROM STAGE 1 TO STAGE 3 FROM STAGE 3 TO STAGE 1 1. Financial assets at amortised cost 4,463,256 4,744,438 1,159,978 84,378 883,213 305,938 2. Financial assets at fair value through other comprehensive income - - 42 - - - 3. Loan commitments and financial guarantees given 1,420,439 653,593 68,380 11,351 310,873 24,812 Total 12.31.2018 5,883,695 5,398,031 1,228,400 95,729 1,194,086 330,750 A.1.6 On- and off-balance sheet credit exposures with banks: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 309 X 309 - - of which: forborne exposures - X - - - b) Unlikely to pay 3,508 X 3,508 - - of which: forborne exposures - X - - - c) Non-performing past due 26 X 26 - - of which: forborne exposures - X - - - d) Performing past due X 2 - 2 - of which: forborne exposures X - - - - e) Other performing exposures X 33,945,842 21,539 33,924,303 - of which: forborne exposures X - - - - Total (A) 3,843 33,945,844 25,382 33,924,305 - B. Off-balance sheet credit exposures a) Non-performing - X - - - b) Performing X 42,561,113 7,186 42,553,927 - Total (B) - 42,561,113 7,186 42,553,927 - Total (A+B) 3,843 76,506,957 32,568 76,478,232 - Note: (*) Value shown for information purposes. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 676 2018 Annual Report and Accounts · UniCredit A.1.5 Financial assets, loan commitments and financial guarantees given: transfers between risk stages (gross values and nominal values) (€ '000) PORTFOLIOS/RISK STAGES GROSS VALUES/NOMINAL VALUES TRANSFERS BETWEEN STAGE 1 AND STAGE 2 TRANSFERS BETWEEN STAGE 2 AND STAGE 3 TRANSFERS BETWEEN STAGE 1 AND STAGE 3 FROM STAGE 1 TO STAGE 2 FROM STAGE 2 TO STAGE 1 FROM STAGE 2 TO STAGE 3 FROM STAGE 3 TO STAGE 2 FROM STAGE 1 TO STAGE 3 FROM STAGE 3 TO STAGE 1 1. Financial assets at amortised cost 4,463,256 4,744,438 1,159,978 84,378 883,213 305,938 2. Financial assets at fair value through other comprehensive income - - 42 - - - 3. Loan commitments and financial guarantees given 1,420,439 653,593 68,380 11,351 310,873 24,812 Total 12.31.2018 5,883,695 5,398,031 1,228,400 95,729 1,194,086 330,750 A.1.6 On- and off-balance sheet credit exposures with banks: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 309 X 309 - - of which: forborne exposures - X - - - b) Unlikely to pay 3,508 X 3,508 - - of which: forborne exposures - X - - - c) Non-performing past due 26 X 26 - - of which: forborne exposures - X - - - d) Performing past due X 2 - 2 - of which: forborne exposures X - - - - e) Other performing exposures X 33,945,842 21,539 33,924,303 - of which: forborne exposures X - - - - Total (A) 3,843 33,945,844 25,382 33,924,305 - B. Off-balance sheet credit exposures a) Non-performing - X - - - b) Performing X 42,561,113 7,186 42,553,927 - Total (B) - 42,561,113 7,186 42,553,927 - Total (A+B) 3,843 76,506,957 32,568 76,478,232 - Note: (*) Value shown for information purposes. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 676 2018 Annual Report and Accounts · UniCredit A.1.5 Financial assets, loan commitments and financial guarantees given: transfers between risk stages (gross values and nominal values) (€ '000) PORTFOLIOS/RISK STAGES GROSS VALUES/NOMINAL VALUES TRANSFERS BETWEEN STAGE 1 AND STAGE 2 TRANSFERS BETWEEN STAGE 2 AND STAGE 3 TRANSFERS BETWEEN STAGE 1 AND STAGE 3 FROM STAGE 1 TO STAGE 2 FROM STAGE 2 TO STAGE 1 FROM STAGE 2 TO STAGE 3 FROM STAGE 3 TO STAGE 2 FROM STAGE 1 TO STAGE 3 FROM STAGE 3 TO STAGE 1 1. Financial assets at amortised cost 4,463,256 4,744,438 1,159,978 84,378 883,213 305,938 2. Financial assets at fair value through other comprehensive income - - 42 - - - 3. Loan commitments and financial guarantees given 1,420,439 653,593 68,380 11,351 310,873 24,812 Total 12.31.2018 5,883,695 5,398,031 1,228,400 95,729 1,194,086 330,750 A.1.6 On- and off-balance sheet credit exposures with banks: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 309 X 309 - - of which: forborne exposures - X - - - b) Unlikely to pay 3,508 X 3,508 - - of which: forborne exposures - X - - - c) Non-performing past due 26 X 26 - - of which: forborne exposures - X - - - d) Performing past due X 2 - 2 - of which: forborne exposures X - - - - e) Other performing exposures X 33,945,842 21,539 33,924,303 - of which: forborne exposures X - - - - Total (A) 3,843 33,945,844 25,382 33,924,305 - B. Off-balance sheet credit exposures a) Non-performing - X - - - b) Performing X 42,561,113 7,186 42,553,927 - Total (B) - 42,561,113 7,186 42,553,927 - Total (A+B) 3,843 76,506,957 32,568 76,478,232 - Note: (*) Value shown for information purposes. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 677 A.1.7 On- and off-balance sheet credit exposures with customers: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 13,021,547 X 10,210,219 2,811,328 2,380,231 of which: forborne exposures 1,766,326 X 1,335,246 431,080 67,419 b) Unlikely to pay 12,168,830 X 5,813,106 6,355,724 14,675 of which: forborne exposures 7,505,686 X 3,469,496 4,036,190 245 c) Non-performing past due 461,901 X 159,639 302,262 - of which: forborne exposures 22,441 X 7,069 15,372 - d) Performing past due X 5,643,403 353,867 5,289,536 - of which: forborne exposures X 932,059 124,396 807,663 - e) Other performing exposures X 276,178,419 949,510 275,228,909 - of which: forborne exposures X 2,026,499 146,844 1,879,655 - Total (A) 25,652,278 281,821,822 17,486,341 289,987,759 2,394,906 B. Off-balance sheet credit exposures a) Non-performing 3,402,984 X 402,132 3,000,852 - b) Performing X 133,532,996 82,579 133,450,417 - Total (B) 3,402,984 133,532,996 484,711 136,451,269 - Total (A+B) 29,055,262 415,354,818 17,971,052 426,439,028 2,394,906 Note: (*) Value shown for information purposes. A.1.8 On-balance sheet exposures with banks: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 309 6,190 26 of which sold non-cancelled exposures - - - B. Increases - 4,670 - B.1 Transfers from performing loans - - - B.2 Transfers from acquired or originated impaired financial assets - - - of which: business combinations - - - B.3 Transfers from other categories of non-perforiming exposures - - - B.4 Contractual changes with no cancellations - - - B.5 Other increases - 4,670 - of which: business combinations - mergers - - - C. Reductions - 7,352 - C.1 Transfers to performing loans - - - C.2 Write-offs - 18 - C.3 Collections - 2,667 - C.4 Sale proceeds - - - C.5 Losses on disposal - - - C.6 Transfers to other non-performing exposures - - - C.7 Contractual changes with no cancellations - - - C.8 Other decreases - 4,667 - of which: business combinations - - - D. Closing balance (gross amount) 309 3,508 26 of which sold non-cancelled exposures - - - A.1.8bis Regulatory consolidation - On-balance sheet exposures with banks: changes by credit quality in gross forborne exposures No data to be disclosed. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 677 A.1.7 On- and off-balance sheet credit exposures with customers: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 13,021,547 X 10,210,219 2,811,328 2,380,231 of which: forborne exposures 1,766,326 X 1,335,246 431,080 67,419 b) Unlikely to pay 12,168,830 X 5,813,106 6,355,724 14,675 of which: forborne exposures 7,505,686 X 3,469,496 4,036,190 245 c) Non-performing past due 461,901 X 159,639 302,262 - of which: forborne exposures 22,441 X 7,069 15,372 - d) Performing past due X 5,643,403 353,867 5,289,536 - of which: forborne exposures X 932,059 124,396 807,663 - e) Other performing exposures X 276,178,419 949,510 275,228,909 - of which: forborne exposures X 2,026,499 146,844 1,879,655 - Total (A) 25,652,278 281,821,822 17,486,341 289,987,759 2,394,906 B. Off-balance sheet credit exposures a) Non-performing 3,402,984 X 402,132 3,000,852 - b) Performing X 133,532,996 82,579 133,450,417 - Total (B) 3,402,984 133,532,996 484,711 136,451,269 - Total (A+B) 29,055,262 415,354,818 17,971,052 426,439,028 2,394,906 Note: (*) Value shown for information purposes. A.1.8 On-balance sheet exposures with banks: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 309 6,190 26 of which sold non-cancelled exposures - - - B. Increases - 4,670 - B.1 Transfers from performing loans - - - B.2 Transfers from acquired or originated impaired financial assets - - - of which: business combinations - - - B.3 Transfers from other categories of non-perforiming exposures - - - B.4 Contractual changes with no cancellations - - - B.5 Other increases - 4,670 - of which: business combinations - mergers - - - C. Reductions - 7,352 - C.1 Transfers to performing loans - - - C.2 Write-offs - 18 - C.3 Collections - 2,667 - C.4 Sale proceeds - - - C.5 Losses on disposal - - - C.6 Transfers to other non-performing exposures - - - C.7 Contractual changes with no cancellations - - - C.8 Other decreases - 4,667 - of which: business combinations - - - D. Closing balance (gross amount) 309 3,508 26 of which sold non-cancelled exposures - - - A.1.8bis Regulatory consolidation - On-balance sheet exposures with banks: changes by credit quality in gross forborne exposures No data to be disclosed. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 677 A.1.7 On- and off-balance sheet credit exposures with customers: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 13,021,547 X 10,210,219 2,811,328 2,380,231 of which: forborne exposures 1,766,326 X 1,335,246 431,080 67,419 b) Unlikely to pay 12,168,830 X 5,813,106 6,355,724 14,675 of which: forborne exposures 7,505,686 X 3,469,496 4,036,190 245 c) Non-performing past due 461,901 X 159,639 302,262 - of which: forborne exposures 22,441 X 7,069 15,372 - d) Performing past due X 5,643,403 353,867 5,289,536 - of which: forborne exposures X 932,059 124,396 807,663 - e) Other performing exposures X 276,178,419 949,510 275,228,909 - of which: forborne exposures X 2,026,499 146,844 1,879,655 - Total (A) 25,652,278 281,821,822 17,486,341 289,987,759 2,394,906 B. Off-balance sheet credit exposures a) Non-performing 3,402,984 X 402,132 3,000,852 - b) Performing X 133,532,996 82,579 133,450,417 - Total (B) 3,402,984 133,532,996 484,711 136,451,269 - Total (A+B) 29,055,262 415,354,818 17,971,052 426,439,028 2,394,906 Note: (*) Value shown for information purposes. A.1.8 On-balance sheet exposures with banks: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 309 6,190 26 of which sold non-cancelled exposures - - - B. Increases - 4,670 - B.1 Transfers from performing loans - - - B.2 Transfers from acquired or originated impaired financial assets - - - of which: business combinations - - - B.3 Transfers from other categories of non-perforiming exposures - - - B.4 Contractual changes with no cancellations - - - B.5 Other increases - 4,670 - of which: business combinations - mergers - - - C. Reductions - 7,352 - C.1 Transfers to performing loans - - - C.2 Write-offs - 18 - C.3 Collections - 2,667 - C.4 Sale proceeds - - - C.5 Losses on disposal - - - C.6 Transfers to other non-performing exposures - - - C.7 Contractual changes with no cancellations - - - C.8 Other decreases - 4,667 - of which: business combinations - - - D. Closing balance (gross amount) 309 3,508 26 of which sold non-cancelled exposures - - - A.1.8bis Regulatory consolidation - On-balance sheet exposures with banks: changes by credit quality in gross forborne exposures No data to be disclosed. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 677 A.1.7 On- and off-balance sheet credit exposures with customers: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 13,021,547 X 10,210,219 2,811,328 2,380,231 of which: forborne exposures 1,766,326 X 1,335,246 431,080 67,419 b) Unlikely to pay 12,168,830 X 5,813,106 6,355,724 14,675 of which: forborne exposures 7,505,686 X 3,469,496 4,036,190 245 c) Non-performing past due 461,901 X 159,639 302,262 - of which: forborne exposures 22,441 X 7,069 15,372 - d) Performing past due X 5,643,403 353,867 5,289,536 - of which: forborne exposures X 932,059 124,396 807,663 - e) Other performing exposures X 276,178,419 949,510 275,228,909 - of which: forborne exposures X 2,026,499 146,844 1,879,655 - Total (A) 25,652,278 281,821,822 17,486,341 289,987,759 2,394,906 B. Off-balance sheet credit exposures a) Non-performing 3,402,984 X 402,132 3,000,852 - b) Performing X 133,532,996 82,579 133,450,417 - Total (B) 3,402,984 133,532,996 484,711 136,451,269 - Total (A+B) 29,055,262 415,354,818 17,971,052 426,439,028 2,394,906 Note: (*) Value shown for information purposes. A.1.8 On-balance sheet exposures with banks: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 309 6,190 26 of which sold non-cancelled exposures - - - B. Increases - 4,670 - B.1 Transfers from performing loans - - - B.2 Transfers from acquired or originated impaired financial assets - - - of which: business combinations - - - B.3 Transfers from other categories of non-perforiming exposures - - - B.4 Contractual changes with no cancellations - - - B.5 Other increases - 4,670 - of which: business combinations - mergers - - - C. Reductions - 7,352 - C.1 Transfers to performing loans - - - C.2 Write-offs - 18 - C.3 Collections - 2,667 - C.4 Sale proceeds - - - C.5 Losses on disposal - - - C.6 Transfers to other non-performing exposures - - - C.7 Contractual changes with no cancellations - - - C.8 Other decreases - 4,667 - of which: business combinations - - - D. Closing balance (gross amount) 309 3,508 26 of which sold non-cancelled exposures - - - A.1.8bis Regulatory consolidation - On-balance sheet exposures with banks: changes by credit quality in gross forborne exposures No data to be disclosed. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 677 A.1.7 On- and off-balance sheet credit exposures with customers: gross and net values (€ '000) AMOUNTS AS AT 12.31.2018 EXPOSURE TYPES/AMOUNTS GROSS EXPOSURE OVERALL WRITE-DOWNS AND PROVISIONS NET EXPOSURE OVERALL PARTIAL WRITE-OFFS(*) NON-PERFORMING PERFORMING A. On-balance sheet credit exposures a) Bad exposures 13,021,547 X 10,210,219 2,811,328 2,380,231 of which: forborne exposures 1,766,326 X 1,335,246 431,080 67,419 b) Unlikely to pay 12,168,830 X 5,813,106 6,355,724 14,675 of which: forborne exposures 7,505,686 X 3,469,496 4,036,190 245 c) Non-performing past due 461,901 X 159,639 302,262 - of which: forborne exposures 22,441 X 7,069 15,372 - d) Performing past due X 5,643,403 353,867 5,289,536 - of which: forborne exposures X 932,059 124,396 807,663 - e) Other performing exposures X 276,178,419 949,510 275,228,909 - of which: forborne exposures X 2,026,499 146,844 1,879,655 - Total (A) 25,652,278 281,821,822 17,486,341 289,987,759 2,394,906 B. Off-balance sheet credit exposures a) Non-performing 3,402,984 X 402,132 3,000,852 - b) Performing X 133,532,996 82,579 133,450,417 - Total (B) 3,402,984 133,532,996 484,711 136,451,269 - Total (A+B) 29,055,262 415,354,818 17,971,052 426,439,028 2,394,906 Note: (*) Value shown for information purposes. A.1.8 On-balance sheet exposures with banks: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 309 6,190 26 of which sold non-cancelled exposures - - - B. Increases - 4,670 - B.1 Transfers from performing loans - - - B.2 Transfers from acquired or originated impaired financial assets - - - of which: business combinations - - - B.3 Transfers from other categories of non-perforiming exposures - - - B.4 Contractual changes with no cancellations - - - B.5 Other increases - 4,670 - of which: business combinations - mergers - - - C. Reductions - 7,352 - C.1 Transfers to performing loans - - - C.2 Write-offs - 18 - C.3 Collections - 2,667 - C.4 Sale proceeds - - - C.5 Losses on disposal - - - C.6 Transfers to other non-performing exposures - - - C.7 Contractual changes with no cancellations - - - C.8 Other decreases - 4,667 - of which: business combinations - - - D. Closing balance (gross amount) 309 3,508 26 of which sold non-cancelled exposures - - - A.1.8bis Regulatory consolidation - On-balance sheet exposures with banks: changes by credit quality in gross forborne exposures No data to be disclosed. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 678 2018 Annual Report and Accounts · UniCredit A.1.9 On-balance sheet credit exposures with customers: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 15,346,031 14,417,643 546,668 of which sold non-cancelled exposures 483,218 1,183,628 9,402 B. Increases 3,188,140 4,761,467 403,115 B.1 Transfer from performing loans 327,926 1,784,590 335,665 B.2 Transfer from acquired or originated impaired financial assets - 4,457 - of which: business combinations - - - B.3 Transfer from other non-performing exposures 1,802,188 147,256 4,716 B.4 Contractual changes with no cancellations - 2,096 - B.5 Other increases 1,058,026 2,823,068 62,734 of which: business combinations - mergers - - - C. Decreases 5,512,624 7,010,280 487,882 C.1 Transfers to performing loans 2,284 544,478 58,960 C.2 Write-offs 1,529,170 505,137 304 C.3 Collections 972,168 1,912,647 149,761 C.4 Sale proceeds 337,633 170,423 - C.5 Losses on disposals 94,578 61,024 - C.6 Transfers to other non-performing exposures 9,549 1,670,683 273,928 C.7 Contractual changes with no cancellations 3 4,054 - C.8 Other decreases 2,567,239 2,141,834 4,929 of which: business combinations - - - D. Closing balance (gross amount) 13,021,547 12,168,830 461,901 of which sold non-cancelled exposures 472,338 1,042,827 9,617 A.1.9bis On-balance sheet exposures with customers: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON-PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 10,276,232 3,570,116 of which sold non-cancelled exposures 760,360 291,016 B. Increases 3,493,971 1,433,681 B.1 Transfers from performing non-forborne exposures 419,960 805,367 B.2 Transfers from performing forborne exposures 124,087 X B.3 Transfers from non-performing forborne exposures X 393,601 of which: business combinations X - B.4 Other increases 2,949,924 234,713 of which: business combinations - mergers - - C. Reductions 4,475,750 2,045,239 C.1 Transfers to performing non-forborne exposures X 751,285 C.2 Transfers to performing forborne exposures 393,601 X C.3 Transfers to non-performing forborne exposures X 124,087 C.4 Write-offs 514,107 52 C.5 Collections 1,425,051 721,873 C.6 Sale proceeds 163,539 - C.7 Losses from disposal 46,035 - C.8 Other reductions 1,933,417 447,942 of which: business combinations - - D. Closing balance (gross amount) 9,294,453 2,958,558 of which sold non-cancelled exposures 734,876 232,326 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 678 2018 Annual Report and Accounts · UniCredit A.1.9 On-balance sheet credit exposures with customers: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 15,346,031 14,417,643 546,668 of which sold non-cancelled exposures 483,218 1,183,628 9,402 B. Increases 3,188,140 4,761,467 403,115 B.1 Transfer from performing loans 327,926 1,784,590 335,665 B.2 Transfer from acquired or originated impaired financial assets - 4,457 - of which: business combinations - - - B.3 Transfer from other non-performing exposures 1,802,188 147,256 4,716 B.4 Contractual changes with no cancellations - 2,096 - B.5 Other increases 1,058,026 2,823,068 62,734 of which: business combinations - mergers - - - C. Decreases 5,512,624 7,010,280 487,882 C.1 Transfers to performing loans 2,284 544,478 58,960 C.2 Write-offs 1,529,170 505,137 304 C.3 Collections 972,168 1,912,647 149,761 C.4 Sale proceeds 337,633 170,423 - C.5 Losses on disposals 94,578 61,024 - C.6 Transfers to other non-performing exposures 9,549 1,670,683 273,928 C.7 Contractual changes with no cancellations 3 4,054 - C.8 Other decreases 2,567,239 2,141,834 4,929 of which: business combinations - - - D. Closing balance (gross amount) 13,021,547 12,168,830 461,901 of which sold non-cancelled exposures 472,338 1,042,827 9,617 A.1.9bis On-balance sheet exposures with customers: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON-PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 10,276,232 3,570,116 of which sold non-cancelled exposures 760,360 291,016 B. Increases 3,493,971 1,433,681 B.1 Transfers from performing non-forborne exposures 419,960 805,367 B.2 Transfers from performing forborne exposures 124,087 X B.3 Transfers from non-performing forborne exposures X 393,601 of which: business combinations X - B.4 Other increases 2,949,924 234,713 of which: business combinations - mergers - - C. Reductions 4,475,750 2,045,239 C.1 Transfers to performing non-forborne exposures X 751,285 C.2 Transfers to performing forborne exposures 393,601 X C.3 Transfers to non-performing forborne exposures X 124,087 C.4 Write-offs 514,107 52 C.5 Collections 1,425,051 721,873 C.6 Sale proceeds 163,539 - C.7 Losses from disposal 46,035 - C.8 Other reductions 1,933,417 447,942 of which: business combinations - - D. Closing balance (gross amount) 9,294,453 2,958,558 of which sold non-cancelled exposures 734,876 232,326 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 678 2018 Annual Report and Accounts · UniCredit A.1.9 On-balance sheet credit exposures with customers: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 15,346,031 14,417,643 546,668 of which sold non-cancelled exposures 483,218 1,183,628 9,402 B. Increases 3,188,140 4,761,467 403,115 B.1 Transfer from performing loans 327,926 1,784,590 335,665 B.2 Transfer from acquired or originated impaired financial assets - 4,457 - of which: business combinations - - - B.3 Transfer from other non-performing exposures 1,802,188 147,256 4,716 B.4 Contractual changes with no cancellations - 2,096 - B.5 Other increases 1,058,026 2,823,068 62,734 of which: business combinations - mergers - - - C. Decreases 5,512,624 7,010,280 487,882 C.1 Transfers to performing loans 2,284 544,478 58,960 C.2 Write-offs 1,529,170 505,137 304 C.3 Collections 972,168 1,912,647 149,761 C.4 Sale proceeds 337,633 170,423 - C.5 Losses on disposals 94,578 61,024 - C.6 Transfers to other non-performing exposures 9,549 1,670,683 273,928 C.7 Contractual changes with no cancellations 3 4,054 - C.8 Other decreases 2,567,239 2,141,834 4,929 of which: business combinations - - - D. Closing balance (gross amount) 13,021,547 12,168,830 461,901 of which sold non-cancelled exposures 472,338 1,042,827 9,617 A.1.9bis On-balance sheet exposures with customers: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON-PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 10,276,232 3,570,116 of which sold non-cancelled exposures 760,360 291,016 B. Increases 3,493,971 1,433,681 B.1 Transfers from performing non-forborne exposures 419,960 805,367 B.2 Transfers from performing forborne exposures 124,087 X B.3 Transfers from non-performing forborne exposures X 393,601 of which: business combinations X - B.4 Other increases 2,949,924 234,713 of which: business combinations - mergers - - C. Reductions 4,475,750 2,045,239 C.1 Transfers to performing non-forborne exposures X 751,285 C.2 Transfers to performing forborne exposures 393,601 X C.3 Transfers to non-performing forborne exposures X 124,087 C.4 Write-offs 514,107 52 C.5 Collections 1,425,051 721,873 C.6 Sale proceeds 163,539 - C.7 Losses from disposal 46,035 - C.8 Other reductions 1,933,417 447,942 of which: business combinations - - D. Closing balance (gross amount) 9,294,453 2,958,558 of which sold non-cancelled exposures 734,876 232,326 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 678 2018 Annual Report and Accounts · UniCredit A.1.9 On-balance sheet credit exposures with customers: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 15,346,031 14,417,643 546,668 of which sold non-cancelled exposures 483,218 1,183,628 9,402 B. Increases 3,188,140 4,761,467 403,115 B.1 Transfer from performing loans 327,926 1,784,590 335,665 B.2 Transfer from acquired or originated impaired financial assets - 4,457 - of which: business combinations - - - B.3 Transfer from other non-performing exposures 1,802,188 147,256 4,716 B.4 Contractual changes with no cancellations - 2,096 - B.5 Other increases 1,058,026 2,823,068 62,734 of which: business combinations - mergers - - - C. Decreases 5,512,624 7,010,280 487,882 C.1 Transfers to performing loans 2,284 544,478 58,960 C.2 Write-offs 1,529,170 505,137 304 C.3 Collections 972,168 1,912,647 149,761 C.4 Sale proceeds 337,633 170,423 - C.5 Losses on disposals 94,578 61,024 - C.6 Transfers to other non-performing exposures 9,549 1,670,683 273,928 C.7 Contractual changes with no cancellations 3 4,054 - C.8 Other decreases 2,567,239 2,141,834 4,929 of which: business combinations - - - D. Closing balance (gross amount) 13,021,547 12,168,830 461,901 of which sold non-cancelled exposures 472,338 1,042,827 9,617 A.1.9bis On-balance sheet exposures with customers: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON-PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 10,276,232 3,570,116 of which sold non-cancelled exposures 760,360 291,016 B. Increases 3,493,971 1,433,681 B.1 Transfers from performing non-forborne exposures 419,960 805,367 B.2 Transfers from performing forborne exposures 124,087 X B.3 Transfers from non-performing forborne exposures X 393,601 of which: business combinations X - B.4 Other increases 2,949,924 234,713 of which: business combinations - mergers - - C. Reductions 4,475,750 2,045,239 C.1 Transfers to performing non-forborne exposures X 751,285 C.2 Transfers to performing forborne exposures 393,601 X C.3 Transfers to non-performing forborne exposures X 124,087 C.4 Write-offs 514,107 52 C.5 Collections 1,425,051 721,873 C.6 Sale proceeds 163,539 - C.7 Losses from disposal 46,035 - C.8 Other reductions 1,933,417 447,942 of which: business combinations - - D. Closing balance (gross amount) 9,294,453 2,958,558 of which sold non-cancelled exposures 734,876 232,326 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 678 2018 Annual Report and Accounts · UniCredit A.1.9 On-balance sheet credit exposures with customers: changes in gross non-performing exposures (€ '000) CHANGES IN 2018 SOURCES/CATEGORIES BAD EXPOSURES UNLIKELY TO PAY NON-PERFORMING PAST DUE A. Opening balance (gross amount) 15,346,031 14,417,643 546,668 of which sold non-cancelled exposures 483,218 1,183,628 9,402 B. Increases 3,188,140 4,761,467 403,115 B.1 Transfer from performing loans 327,926 1,784,590 335,665 B.2 Transfer from acquired or originated impaired financial assets - 4,457 - of which: business combinations - - - B.3 Transfer from other non-performing exposures 1,802,188 147,256 4,716 B.4 Contractual changes with no cancellations - 2,096 - B.5 Other increases 1,058,026 2,823,068 62,734 of which: business combinations - mergers - - - C. Decreases 5,512,624 7,010,280 487,882 C.1 Transfers to performing loans 2,284 544,478 58,960 C.2 Write-offs 1,529,170 505,137 304 C.3 Collections 972,168 1,912,647 149,761 C.4 Sale proceeds 337,633 170,423 - C.5 Losses on disposals 94,578 61,024 - C.6 Transfers to other non-performing exposures 9,549 1,670,683 273,928 C.7 Contractual changes with no cancellations 3 4,054 - C.8 Other decreases 2,567,239 2,141,834 4,929 of which: business combinations - - - D. Closing balance (gross amount) 13,021,547 12,168,830 461,901 of which sold non-cancelled exposures 472,338 1,042,827 9,617 A.1.9bis On-balance sheet exposures with customers: changes by credit quality in gross forborne exposures (€ '000) CHANGES IN 2018 SOURCES/QUALITY FORBORNE EXPOSURES: NON-PERFORMING FORBORNE EXPOSURES: PERFORMING A. Opening balance (gross amount) 10,276,232 3,570,116 of which sold non-cancelled exposures 760,360 291,016 B. Increases 3,493,971 1,433,681 B.1 Transfers from performing non-forborne exposures 419,960 805,367 B.2 Transfers from performing forborne exposures 124,087 X B.3 Transfers from non-performing forborne exposures X 393,601 of which: business combinations X - B.4 Other increases 2,949,924 234,713 of which: business combinations - mergers - - C. Reductions 4,475,750 2,045,239 C.1 Transfers to performing non-forborne exposures X 751,285 C.2 Transfers to performing forborne exposures 393,601 X C.3 Transfers to non-performing forborne exposures X 124,087 C.4 Write-offs 514,107 52 C.5 Collections 1,425,051 721,873 C.6 Sale proceeds 163,539 - C.7 Losses from disposal 46,035 - C.8 Other reductions 1,933,417 447,942 of which: business combinations - - D. Closing balance (gross amount) 9,294,453 2,958,558 of which sold non-cancelled exposures 734,876 232,326 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 679 A.1.10 On-balance sheet non-performing credit exposures with banks: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 309 - 1,191 - 26 - of which sold non-cancelled exposures - - - - - - B. Increases - - 2,335 - - - B.1 Write-downs of acquired or originated impaired financial assets - X 2,334 X - X of which: business combinations - - - - - - B.2. Other write-downs - - 1 - - - B.3 Losses on disposal - - - - - - B.4 Transfers from other categories of non-performing exposures - - - - - - B.5 Contractual changes with no cancellations - X - X - X B.6 Other increases - - - - - - of which: business combinations - mergers - - - - - - C. Reductions - - 18 - - - C.1 Write-backs from valuation - - - - - - C.2. Write-backs from collections - - - - - - C.3 Gains from disposals - - - - - - C.4 Write-offs - - 18 - - - C.5 Transfers to other categories of non-performing exposures - - - - - - C.6 Contractual changes with no cancellations - X - X - X C.7 Other decreases - - - - - - of which: business combinations - - - - - - D. Closing balance (gross amount) 309 - 3,508 - 26 - of which sold non-cancelled exposures - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 679 A.1.10 On-balance sheet non-performing credit exposures with banks: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 309 - 1,191 - 26 - of which sold non-cancelled exposures - - - - - - B. Increases - - 2,335 - - - B.1 Write-downs of acquired or originated impaired financial assets - X 2,334 X - X of which: business combinations - - - - - - B.2. Other write-downs - - 1 - - - B.3 Losses on disposal - - - - - - B.4 Transfers from other categories of non-performing exposures - - - - - - B.5 Contractual changes with no cancellations - X - X - X B.6 Other increases - - - - - - of which: business combinations - mergers - - - - - - C. Reductions - - 18 - - - C.1 Write-backs from valuation - - - - - - C.2. Write-backs from collections - - - - - - C.3 Gains from disposals - - - - - - C.4 Write-offs - - 18 - - - C.5 Transfers to other categories of non-performing exposures - - - - - - C.6 Contractual changes with no cancellations - X - X - X C.7 Other decreases - - - - - - of which: business combinations - - - - - - D. Closing balance (gross amount) 309 - 3,508 - 26 - of which sold non-cancelled exposures - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 679 A.1.10 On-balance sheet non-performing credit exposures with banks: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 309 - 1,191 - 26 - of which sold non-cancelled exposures - - - - - - B. Increases - - 2,335 - - - B.1 Write-downs of acquired or originated impaired financial assets - X 2,334 X - X of which: business combinations - - - - - - B.2. Other write-downs - - 1 - - - B.3 Losses on disposal - - - - - - B.4 Transfers from other categories of non-performing exposures - - - - - - B.5 Contractual changes with no cancellations - X - X - X B.6 Other increases - - - - - - of which: business combinations - mergers - - - - - - C. Reductions - - 18 - - - C.1 Write-backs from valuation - - - - - - C.2. Write-backs from collections - - - - - - C.3 Gains from disposals - - - - - - C.4 Write-offs - - 18 - - - C.5 Transfers to other categories of non-performing exposures - - - - - - C.6 Contractual changes with no cancellations - X - X - X C.7 Other decreases - - - - - - of which: business combinations - - - - - - D. Closing balance (gross amount) 309 - 3,508 - 26 - of which sold non-cancelled exposures - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 679 A.1.10 On-balance sheet non-performing credit exposures with banks: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 309 - 1,191 - 26 - of which sold non-cancelled exposures - - - - - - B. Increases - - 2,335 - - - B.1 Write-downs of acquired or originated impaired financial assets - X 2,334 X - X of which: business combinations - - - - - - B.2. Other write-downs - - 1 - - - B.3 Losses on disposal - - - - - - B.4 Transfers from other categories of non-performing exposures - - - - - - B.5 Contractual changes with no cancellations - X - X - X B.6 Other increases - - - - - - of which: business combinations - mergers - - - - - - C. Reductions - - 18 - - - C.1 Write-backs from valuation - - - - - - C.2. Write-backs from collections - - - - - - C.3 Gains from disposals - - - - - - C.4 Write-offs - - 18 - - - C.5 Transfers to other categories of non-performing exposures - - - - - - C.6 Contractual changes with no cancellations - X - X - X C.7 Other decreases - - - - - - of which: business combinations - - - - - - D. Closing balance (gross amount) 309 - 3,508 - 26 - of which sold non-cancelled exposures - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 679 A.1.10 On-balance sheet non-performing credit exposures with banks: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 309 - 1,191 - 26 - of which sold non-cancelled exposures - - - - - - B. Increases - - 2,335 - - - B.1 Write-downs of acquired or originated impaired financial assets - X 2,334 X - X of which: business combinations - - - - - - B.2. Other write-downs - - 1 - - - B.3 Losses on disposal - - - - - - B.4 Transfers from other categories of non-performing exposures - - - - - - B.5 Contractual changes with no cancellations - X - X - X B.6 Other increases - - - - - - of which: business combinations - mergers - - - - - - C. Reductions - - 18 - - - C.1 Write-backs from valuation - - - - - - C.2. Write-backs from collections - - - - - - C.3 Gains from disposals - - - - - - C.4 Write-offs - - 18 - - - C.5 Transfers to other categories of non-performing exposures - - - - - - C.6 Contractual changes with no cancellations - X - X - X C.7 Other decreases - - - - - - of which: business combinations - - - - - - D. Closing balance (gross amount) 309 - 3,508 - 26 - of which sold non-cancelled exposures - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 680 2018 Annual Report and Accounts · UniCredit A.1.11 On-balance sheet non-performing credit exposures with customers: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 12,107,358 1,004,936 6,426,264 3,808,439 202,311 7,522 of which sold non-cancelled exposures 249,855 10,429 516,839 364,739 2,021 184 B. Increases 2,979,858 879,642 2,290,381 1,271,649 121,679 8,626 B.1 Write-downs of acquired or originated impaired financial assets 78,855 X 300,426 X 3,160 X of which: business combinations - - - - - - B.2. Other write-downs 1,684,041 406,238 1,701,866 887,667 82,301 3,576 B.3 Losses on disposal 94,578 12,617 61,024 33,418 - - B.4 Transfers from other categories of non-performing exposures 864,553 361,950 46,550 7,618 2,062 741 B.5 Contractual changes with no cancellations 3 X 4,054 X - X B.6 Other increases 257,828 98,837 176,461 342,946 34,156 4,309 of which: business combinations - mergers - - - - - - C. Reductions 4,876,997 549,332 2,903,539 1,610,592 164,351 9,079 C.1 Write-backs from valuation 393,731 54,067 953,529 517,011 1,501 143 C.2. Write-backs from collections 316,171 24,214 70,684 26,496 42,390 682 C.3 Gains from disposals 93,778 14,764 30,180 11,597 6 - C.4 Write-offs 1,529,170 220,648 505,137 293,459 304 - C.5 Transfers to other categories of non-performing exposures 5,057 1,385 808,369 360,984 99,739 7,940 C.6 Contractual changes with no cancellations - X 2,096 X - X C.7 Other decreases 2,539,090 234,254 533,544 401,045 20,411 314 of which: business combinations - - - - - - D. Closing balance (gross amount) 10,210,219 1,335,246 5,813,106 3,469,496 159,639 7,069 of which sold non-cancelled exposures 301,046 40,366 423,758 362,844 2,198 188 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 680 2018 Annual Report and Accounts · UniCredit A.1.11 On-balance sheet non-performing credit exposures with customers: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 12,107,358 1,004,936 6,426,264 3,808,439 202,311 7,522 of which sold non-cancelled exposures 249,855 10,429 516,839 364,739 2,021 184 B. Increases 2,979,858 879,642 2,290,381 1,271,649 121,679 8,626 B.1 Write-downs of acquired or originated impaired financial assets 78,855 X 300,426 X 3,160 X of which: business combinations - - - - - - B.2. Other write-downs 1,684,041 406,238 1,701,866 887,667 82,301 3,576 B.3 Losses on disposal 94,578 12,617 61,024 33,418 - - B.4 Transfers from other categories of non-performing exposures 864,553 361,950 46,550 7,618 2,062 741 B.5 Contractual changes with no cancellations 3 X 4,054 X - X B.6 Other increases 257,828 98,837 176,461 342,946 34,156 4,309 of which: business combinations - mergers - - - - - - C. Reductions 4,876,997 549,332 2,903,539 1,610,592 164,351 9,079 C.1 Write-backs from valuation 393,731 54,067 953,529 517,011 1,501 143 C.2. Write-backs from collections 316,171 24,214 70,684 26,496 42,390 682 C.3 Gains from disposals 93,778 14,764 30,180 11,597 6 - C.4 Write-offs 1,529,170 220,648 505,137 293,459 304 - C.5 Transfers to other categories of non-performing exposures 5,057 1,385 808,369 360,984 99,739 7,940 C.6 Contractual changes with no cancellations - X 2,096 X - X C.7 Other decreases 2,539,090 234,254 533,544 401,045 20,411 314 of which: business combinations - - - - - - D. Closing balance (gross amount) 10,210,219 1,335,246 5,813,106 3,469,496 159,639 7,069 of which sold non-cancelled exposures 301,046 40,366 423,758 362,844 2,198 188 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 680 2018 Annual Report and Accounts · UniCredit A.1.11 On-balance sheet non-performing credit exposures with customers: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 12,107,358 1,004,936 6,426,264 3,808,439 202,311 7,522 of which sold non-cancelled exposures 249,855 10,429 516,839 364,739 2,021 184 B. Increases 2,979,858 879,642 2,290,381 1,271,649 121,679 8,626 B.1 Write-downs of acquired or originated impaired financial assets 78,855 X 300,426 X 3,160 X of which: business combinations - - - - - - B.2. Other write-downs 1,684,041 406,238 1,701,866 887,667 82,301 3,576 B.3 Losses on disposal 94,578 12,617 61,024 33,418 - - B.4 Transfers from other categories of non-performing exposures 864,553 361,950 46,550 7,618 2,062 741 B.5 Contractual changes with no cancellations 3 X 4,054 X - X B.6 Other increases 257,828 98,837 176,461 342,946 34,156 4,309 of which: business combinations - mergers - - - - - - C. Reductions 4,876,997 549,332 2,903,539 1,610,592 164,351 9,079 C.1 Write-backs from valuation 393,731 54,067 953,529 517,011 1,501 143 C.2. Write-backs from collections 316,171 24,214 70,684 26,496 42,390 682 C.3 Gains from disposals 93,778 14,764 30,180 11,597 6 - C.4 Write-offs 1,529,170 220,648 505,137 293,459 304 - C.5 Transfers to other categories of non-performing exposures 5,057 1,385 808,369 360,984 99,739 7,940 C.6 Contractual changes with no cancellations - X 2,096 X - X C.7 Other decreases 2,539,090 234,254 533,544 401,045 20,411 314 of which: business combinations - - - - - - D. Closing balance (gross amount) 10,210,219 1,335,246 5,813,106 3,469,496 159,639 7,069 of which sold non-cancelled exposures 301,046 40,366 423,758 362,844 2,198 188 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 680 2018 Annual Report and Accounts · UniCredit A.1.11 On-balance sheet non-performing credit exposures with customers: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 12,107,358 1,004,936 6,426,264 3,808,439 202,311 7,522 of which sold non-cancelled exposures 249,855 10,429 516,839 364,739 2,021 184 B. Increases 2,979,858 879,642 2,290,381 1,271,649 121,679 8,626 B.1 Write-downs of acquired or originated impaired financial assets 78,855 X 300,426 X 3,160 X of which: business combinations - - - - - - B.2. Other write-downs 1,684,041 406,238 1,701,866 887,667 82,301 3,576 B.3 Losses on disposal 94,578 12,617 61,024 33,418 - - B.4 Transfers from other categories of non-performing exposures 864,553 361,950 46,550 7,618 2,062 741 B.5 Contractual changes with no cancellations 3 X 4,054 X - X B.6 Other increases 257,828 98,837 176,461 342,946 34,156 4,309 of which: business combinations - mergers - - - - - - C. Reductions 4,876,997 549,332 2,903,539 1,610,592 164,351 9,079 C.1 Write-backs from valuation 393,731 54,067 953,529 517,011 1,501 143 C.2. Write-backs from collections 316,171 24,214 70,684 26,496 42,390 682 C.3 Gains from disposals 93,778 14,764 30,180 11,597 6 - C.4 Write-offs 1,529,170 220,648 505,137 293,459 304 - C.5 Transfers to other categories of non-performing exposures 5,057 1,385 808,369 360,984 99,739 7,940 C.6 Contractual changes with no cancellations - X 2,096 X - X C.7 Other decreases 2,539,090 234,254 533,544 401,045 20,411 314 of which: business combinations - - - - - - D. Closing balance (gross amount) 10,210,219 1,335,246 5,813,106 3,469,496 159,639 7,069 of which sold non-cancelled exposures 301,046 40,366 423,758 362,844 2,198 188 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 680 2018 Annual Report and Accounts · UniCredit A.1.11 On-balance sheet non-performing credit exposures with customers: changes in overall write-downs (€ '000) CHANGES IN 2018 NON-PERFORMING LOANS UNLIKELY TO PAY NON-PERFORMING PAST DUE SOURCES/CATEGORIES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES TOTAL OF WHICH FORBORNE EXPOSURES A. Opening balance (gross amount) 12,107,358 1,004,936 6,426,264 3,808,439 202,311 7,522 of which sold non-cancelled exposures 249,855 10,429 516,839 364,739 2,021 184 B. Increases 2,979,858 879,642 2,290,381 1,271,649 121,679 8,626 B.1 Write-downs of acquired or originated impaired financial assets 78,855 X 300,426 X 3,160 X of which: business combinations - - - - - - B.2. Other write-downs 1,684,041 406,238 1,701,866 887,667 82,301 3,576 B.3 Losses on disposal 94,578 12,617 61,024 33,418 - - B.4 Transfers from other categories of non-performing exposures 864,553 361,950 46,550 7,618 2,062 741 B.5 Contractual changes with no cancellations 3 X 4,054 X - X B.6 Other increases 257,828 98,837 176,461 342,946 34,156 4,309 of which: business combinations - mergers - - - - - - C. Reductions 4,876,997 549,332 2,903,539 1,610,592 164,351 9,079 C.1 Write-backs from valuation 393,731 54,067 953,529 517,011 1,501 143 C.2. Write-backs from collections 316,171 24,214 70,684 26,496 42,390 682 C.3 Gains from disposals 93,778 14,764 30,180 11,597 6 - C.4 Write-offs 1,529,170 220,648 505,137 293,459 304 - C.5 Transfers to other categories of non-performing exposures 5,057 1,385 808,369 360,984 99,739 7,940 C.6 Contractual changes with no cancellations - X 2,096 X - X C.7 Other decreases 2,539,090 234,254 533,544 401,045 20,411 314 of which: business combinations - - - - - - D. Closing balance (gross amount) 10,210,219 1,335,246 5,813,106 3,469,496 159,639 7,069 of which sold non-cancelled exposures 301,046 40,366 423,758 362,844 2,198 188 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 681 A.2 Classification of credit exposure, of loan commitments and financial guarantees given based on internal and external ratings A.2.1 Breakdown of financial assets, loan commitments and financial guarantees given by external rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 EXTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES CLASS 1 CLASS 2 CLASS 3 CLASS 4 CLASS 5 CLASS 6 A. Financial assets at amortised cost - Stage 1 1,578,339 6,583,223 40,479,347 13,350,112 3,900,027 3,038 185,259,496 251,153,582 - Stage 2 116 181,532 2,184 12,537 116,287 52,624 10,987,728 11,353,008 - Stage 3 - - - - - - 25,411,231 25,411,231 B. Financial assets at fair value through other comprehensive income - Stage 1 4,927,363 7,902,050 32,249,925 1,483 - - 206,112 45,286,933 - Stage 2 - - - - - - - - - Stage 3 - - - - - - 70 70 Total (A + B) 6,505,818 14,666,805 72,731,456 13,364,132 4,016,314 55,662 221,864,637 333,204,824 of which: acquired or originated impaired financial assets - - - - - - 21,534 21,534 C. Loan commitments and financial guarantees given - Stage 1 544,914 2,640,764 16,513,644 6,698,282 2,286,733 69,742 33,205,858 61,959,937 - Stage 2 5,719 6,657 134,184 10,676 10,921 2,199 2,139,162 2,309,518 - Stage 3 - - - - - - 1,605,803 1,605,803 Total (C) 550,633 2,647,421 16,647,828 6,708,958 2,297,654 71,941 36,950,823 65,875,258 Total (A + B + C) 7,056,451 17,314,226 89,379,284 20,073,090 6,313,968 127,603 258,815,460 399,080,082 The table details on- and off-balance sheet credits granted to counterparties rated by external rating agencies, which provide brief assessments of the creditworthiness of different classes of borrowers such as Sovereigns, Banks, Public-Sector Entities, Insurance Companies and (usually large) Enterprises. The table refers to classification of 262/2005 Banca d’Italia Circular (5th update dated 22 December 2017); then it provides, for external ratings, 6 classes of creditworthiness. Rating Agencies utilised to fill the table are: Moody’s, S&Ps, Fitch and DBRS. Where more than one agency rating is available, the most prudential rating is assigned. The “Investment Grade” area (Class 1 to Class 3) is comprised of 29% of the counterparties provided with an external rating and refers to clients with a high credit rating. Exposures without ratings amount to 65% of the total portfolio reflecting the fact that a considerable part of the portfolio is composed of private clients and small and medium sized companies for which an external rating is not available. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 681 A.2 Classification of credit exposure, of loan commitments and financial guarantees given based on internal and external ratings A.2.1 Breakdown of financial assets, loan commitments and financial guarantees given by external rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 EXTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES CLASS 1 CLASS 2 CLASS 3 CLASS 4 CLASS 5 CLASS 6 A. Financial assets at amortised cost - Stage 1 1,578,339 6,583,223 40,479,347 13,350,112 3,900,027 3,038 185,259,496 251,153,582 - Stage 2 116 181,532 2,184 12,537 116,287 52,624 10,987,728 11,353,008 - Stage 3 - - - - - - 25,411,231 25,411,231 B. Financial assets at fair value through other comprehensive income - Stage 1 4,927,363 7,902,050 32,249,925 1,483 - - 206,112 45,286,933 - Stage 2 - - - - - - - - - Stage 3 - - - - - - 70 70 Total (A + B) 6,505,818 14,666,805 72,731,456 13,364,132 4,016,314 55,662 221,864,637 333,204,824 of which: acquired or originated impaired financial assets - - - - - - 21,534 21,534 C. Loan commitments and financial guarantees given - Stage 1 544,914 2,640,764 16,513,644 6,698,282 2,286,733 69,742 33,205,858 61,959,937 - Stage 2 5,719 6,657 134,184 10,676 10,921 2,199 2,139,162 2,309,518 - Stage 3 - - - - - - 1,605,803 1,605,803 Total (C) 550,633 2,647,421 16,647,828 6,708,958 2,297,654 71,941 36,950,823 65,875,258 Total (A + B + C) 7,056,451 17,314,226 89,379,284 20,073,090 6,313,968 127,603 258,815,460 399,080,082 The table details on- and off-balance sheet credits granted to counterparties rated by external rating agencies, which provide brief assessments of the creditworthiness of different classes of borrowers such as Sovereigns, Banks, Public-Sector Entities, Insurance Companies and (usually large) Enterprises. The table refers to classification of 262/2005 Banca d’Italia Circular (5th update dated 22 December 2017); then it provides, for external ratings, 6 classes of creditworthiness. Rating Agencies utilised to fill the table are: Moody’s, S&Ps, Fitch and DBRS. Where more than one agency rating is available, the most prudential rating is assigned. The “Investment Grade” area (Class 1 to Class 3) is comprised of 29% of the counterparties provided with an external rating and refers to clients with a high credit rating. Exposures without ratings amount to 65% of the total portfolio reflecting the fact that a considerable part of the portfolio is composed of private clients and small and medium sized companies for which an external rating is not available. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 681 A.2 Classification of credit exposure, of loan commitments and financial guarantees given based on internal and external ratings A.2.1 Breakdown of financial assets, loan commitments and financial guarantees given by external rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 EXTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES CLASS 1 CLASS 2 CLASS 3 CLASS 4 CLASS 5 CLASS 6 A. Financial assets at amortised cost - Stage 1 1,578,339 6,583,223 40,479,347 13,350,112 3,900,027 3,038 185,259,496 251,153,582 - Stage 2 116 181,532 2,184 12,537 116,287 52,624 10,987,728 11,353,008 - Stage 3 - - - - - - 25,411,231 25,411,231 B. Financial assets at fair value through other comprehensive income - Stage 1 4,927,363 7,902,050 32,249,925 1,483 - - 206,112 45,286,933 - Stage 2 - - - - - - - - - Stage 3 - - - - - - 70 70 Total (A + B) 6,505,818 14,666,805 72,731,456 13,364,132 4,016,314 55,662 221,864,637 333,204,824 of which: acquired or originated impaired financial assets - - - - - - 21,534 21,534 C. Loan commitments and financial guarantees given - Stage 1 544,914 2,640,764 16,513,644 6,698,282 2,286,733 69,742 33,205,858 61,959,937 - Stage 2 5,719 6,657 134,184 10,676 10,921 2,199 2,139,162 2,309,518 - Stage 3 - - - - - - 1,605,803 1,605,803 Total (C) 550,633 2,647,421 16,647,828 6,708,958 2,297,654 71,941 36,950,823 65,875,258 Total (A + B + C) 7,056,451 17,314,226 89,379,284 20,073,090 6,313,968 127,603 258,815,460 399,080,082 The table details on- and off-balance sheet credits granted to counterparties rated by external rating agencies, which provide brief assessments of the creditworthiness of different classes of borrowers such as Sovereigns, Banks, Public-Sector Entities, Insurance Companies and (usually large) Enterprises. The table refers to classification of 262/2005 Banca d’Italia Circular (5th update dated 22 December 2017); then it provides, for external ratings, 6 classes of creditworthiness. Rating Agencies utilised to fill the table are: Moody’s, S&Ps, Fitch and DBRS. Where more than one agency rating is available, the most prudential rating is assigned. The “Investment Grade” area (Class 1 to Class 3) is comprised of 29% of the counterparties provided with an external rating and refers to clients with a high credit rating. Exposures without ratings amount to 65% of the total portfolio reflecting the fact that a considerable part of the portfolio is composed of private clients and small and medium sized companies for which an external rating is not available. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 681 A.2 Classification of credit exposure, of loan commitments and financial guarantees given based on internal and external ratings A.2.1 Breakdown of financial assets, loan commitments and financial guarantees given by external rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 EXTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES CLASS 1 CLASS 2 CLASS 3 CLASS 4 CLASS 5 CLASS 6 A. Financial assets at amortised cost - Stage 1 1,578,339 6,583,223 40,479,347 13,350,112 3,900,027 3,038 185,259,496 251,153,582 - Stage 2 116 181,532 2,184 12,537 116,287 52,624 10,987,728 11,353,008 - Stage 3 - - - - - - 25,411,231 25,411,231 B. Financial assets at fair value through other comprehensive income - Stage 1 4,927,363 7,902,050 32,249,925 1,483 - - 206,112 45,286,933 - Stage 2 - - - - - - - - - Stage 3 - - - - - - 70 70 Total (A + B) 6,505,818 14,666,805 72,731,456 13,364,132 4,016,314 55,662 221,864,637 333,204,824 of which: acquired or originated impaired financial assets - - - - - - 21,534 21,534 C. Loan commitments and financial guarantees given - Stage 1 544,914 2,640,764 16,513,644 6,698,282 2,286,733 69,742 33,205,858 61,959,937 - Stage 2 5,719 6,657 134,184 10,676 10,921 2,199 2,139,162 2,309,518 - Stage 3 - - - - - - 1,605,803 1,605,803 Total (C) 550,633 2,647,421 16,647,828 6,708,958 2,297,654 71,941 36,950,823 65,875,258 Total (A + B + C) 7,056,451 17,314,226 89,379,284 20,073,090 6,313,968 127,603 258,815,460 399,080,082 The table details on- and off-balance sheet credits granted to counterparties rated by external rating agencies, which provide brief assessments of the creditworthiness of different classes of borrowers such as Sovereigns, Banks, Public-Sector Entities, Insurance Companies and (usually large) Enterprises. The table refers to classification of 262/2005 Banca d’Italia Circular (5th update dated 22 December 2017); then it provides, for external ratings, 6 classes of creditworthiness. Rating Agencies utilised to fill the table are: Moody’s, S&Ps, Fitch and DBRS. Where more than one agency rating is available, the most prudential rating is assigned. The “Investment Grade” area (Class 1 to Class 3) is comprised of 29% of the counterparties provided with an external rating and refers to clients with a high credit rating. Exposures without ratings amount to 65% of the total portfolio reflecting the fact that a considerable part of the portfolio is composed of private clients and small and medium sized companies for which an external rating is not available. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 681 A.2 Classification of credit exposure, of loan commitments and financial guarantees given based on internal and external ratings A.2.1 Breakdown of financial assets, loan commitments and financial guarantees given by external rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 EXTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES CLASS 1 CLASS 2 CLASS 3 CLASS 4 CLASS 5 CLASS 6 A. Financial assets at amortised cost - Stage 1 1,578,339 6,583,223 40,479,347 13,350,112 3,900,027 3,038 185,259,496 251,153,582 - Stage 2 116 181,532 2,184 12,537 116,287 52,624 10,987,728 11,353,008 - Stage 3 - - - - - - 25,411,231 25,411,231 B. Financial assets at fair value through other comprehensive income - Stage 1 4,927,363 7,902,050 32,249,925 1,483 - - 206,112 45,286,933 - Stage 2 - - - - - - - - - Stage 3 - - - - - - 70 70 Total (A + B) 6,505,818 14,666,805 72,731,456 13,364,132 4,016,314 55,662 221,864,637 333,204,824 of which: acquired or originated impaired financial assets - - - - - - 21,534 21,534 C. Loan commitments and financial guarantees given - Stage 1 544,914 2,640,764 16,513,644 6,698,282 2,286,733 69,742 33,205,858 61,959,937 - Stage 2 5,719 6,657 134,184 10,676 10,921 2,199 2,139,162 2,309,518 - Stage 3 - - - - - - 1,605,803 1,605,803 Total (C) 550,633 2,647,421 16,647,828 6,708,958 2,297,654 71,941 36,950,823 65,875,258 Total (A + B + C) 7,056,451 17,314,226 89,379,284 20,073,090 6,313,968 127,603 258,815,460 399,080,082 The table details on- and off-balance sheet credits granted to counterparties rated by external rating agencies, which provide brief assessments of the creditworthiness of different classes of borrowers such as Sovereigns, Banks, Public-Sector Entities, Insurance Companies and (usually large) Enterprises. The table refers to classification of 262/2005 Banca d’Italia Circular (5th update dated 22 December 2017); then it provides, for external ratings, 6 classes of creditworthiness. Rating Agencies utilised to fill the table are: Moody’s, S&Ps, Fitch and DBRS. Where more than one agency rating is available, the most prudential rating is assigned. The “Investment Grade” area (Class 1 to Class 3) is comprised of 29% of the counterparties provided with an external rating and refers to clients with a high credit rating. Exposures without ratings amount to 65% of the total portfolio reflecting the fact that a considerable part of the portfolio is composed of private clients and small and medium sized companies for which an external rating is not available. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 682 2018 Annual Report and Accounts · UniCredit A.2.2 Breakdown of financial assets, loan commitments and financial guarantees given by internal rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 INTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES 1 2 3 4 5 6 7 8 9 A. Financial assets at amortised cost - Stage 1 9,286 1,209,849 38,951,855 109,488,227 27,458,861 15,626,347 7,744,402 1,640,905 481,000 48,542,850 251,153,582 - Stage 2 2,819 - 698,526 1,098,851 808,138 1,489,768 2,116,056 1,018,616 2,618,580 1,501,654 11,353,008 - Stage 3 - - - - - - - - - 25,411,231 25,411,231 B. Financial assets at fair value through other comprehensive income - Stage 1 1,667,897 2,117,157 39,649,704 974,831 - - - - - 877,344 45,286,933 - Stage 2 - - - - - - - - - - - - Stage 3 - - - - - - - - - 70 70 Total (A + B) 1,680,002 3,327,006 79,300,085 111,561,909 28,266,999 17,116,115 9,860,458 2,659,521 3,099,580 76,333,149 333,204,824 of which: acquired or originated impaired financial assets - - - - - - - - - 21,534 21,534 C. Loan commitments and financial guarantees given - Stage 1 500 1,643,620 17,042,469 21,420,466 5,850,532 3,469,870 1,208,798 332,974 112,436 10,878,272 61,959,937 - Stage 2 - 90 24,595 183,732 184,538 190,166 289,780 132,117 68,542 1,235,958 2,309,518 - Stage 3 - - - - - - - - - 1,605,803 1,605,803 Total (C) 500 1,643,710 17,067,064 21,604,198 6,035,070 3,660,036 1,498,578 465,091 180,978 13,720,033 65,875,258 Total (A + B + C) 1,680,502 4,970,716 96,367,149 133,166,107 34,302,069 20,776,151 11,359,036 3,124,612 3,280,558 90,053,182 399,080,082 The table contains on- and off-balance sheet exposures grouped according to the counterparties’ internal rating. Ratings are assigned to individual counterparties using internally-developed models included in their credit risk management processes. The internal models validated by the regulators are both ‘Local’ and ‘Group-wide’ (e.g. for banks, multinationals and sovereigns). The various rating scales of these models are mapped onto a single master-scale of 9 classes (illustrated above) based on Probability of Default (PD). Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 682 2018 Annual Report and Accounts · UniCredit A.2.2 Breakdown of financial assets, loan commitments and financial guarantees given by internal rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 INTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES 1 2 3 4 5 6 7 8 9 A. Financial assets at amortised cost - Stage 1 9,286 1,209,849 38,951,855 109,488,227 27,458,861 15,626,347 7,744,402 1,640,905 481,000 48,542,850 251,153,582 - Stage 2 2,819 - 698,526 1,098,851 808,138 1,489,768 2,116,056 1,018,616 2,618,580 1,501,654 11,353,008 - Stage 3 - - - - - - - - - 25,411,231 25,411,231 B. Financial assets at fair value through other comprehensive income - Stage 1 1,667,897 2,117,157 39,649,704 974,831 - - - - - 877,344 45,286,933 - Stage 2 - - - - - - - - - - - - Stage 3 - - - - - - - - - 70 70 Total (A + B) 1,680,002 3,327,006 79,300,085 111,561,909 28,266,999 17,116,115 9,860,458 2,659,521 3,099,580 76,333,149 333,204,824 of which: acquired or originated impaired financial assets - - - - - - - - - 21,534 21,534 C. Loan commitments and financial guarantees given - Stage 1 500 1,643,620 17,042,469 21,420,466 5,850,532 3,469,870 1,208,798 332,974 112,436 10,878,272 61,959,937 - Stage 2 - 90 24,595 183,732 184,538 190,166 289,780 132,117 68,542 1,235,958 2,309,518 - Stage 3 - - - - - - - - - 1,605,803 1,605,803 Total (C) 500 1,643,710 17,067,064 21,604,198 6,035,070 3,660,036 1,498,578 465,091 180,978 13,720,033 65,875,258 Total (A + B + C) 1,680,502 4,970,716 96,367,149 133,166,107 34,302,069 20,776,151 11,359,036 3,124,612 3,280,558 90,053,182 399,080,082 The table contains on- and off-balance sheet exposures grouped according to the counterparties’ internal rating. Ratings are assigned to individual counterparties using internally-developed models included in their credit risk management processes. The internal models validated by the regulators are both ‘Local’ and ‘Group-wide’ (e.g. for banks, multinationals and sovereigns). The various rating scales of these models are mapped onto a single master-scale of 9 classes (illustrated above) based on Probability of Default (PD). Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 682 2018 Annual Report and Accounts · UniCredit A.2.2 Breakdown of financial assets, loan commitments and financial guarantees given by internal rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 INTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES 1 2 3 4 5 6 7 8 9 A. Financial assets at amortised cost - Stage 1 9,286 1,209,849 38,951,855 109,488,227 27,458,861 15,626,347 7,744,402 1,640,905 481,000 48,542,850 251,153,582 - Stage 2 2,819 - 698,526 1,098,851 808,138 1,489,768 2,116,056 1,018,616 2,618,580 1,501,654 11,353,008 - Stage 3 - - - - - - - - - 25,411,231 25,411,231 B. Financial assets at fair value through other comprehensive income - Stage 1 1,667,897 2,117,157 39,649,704 974,831 - - - - - 877,344 45,286,933 - Stage 2 - - - - - - - - - - - - Stage 3 - - - - - - - - - 70 70 Total (A + B) 1,680,002 3,327,006 79,300,085 111,561,909 28,266,999 17,116,115 9,860,458 2,659,521 3,099,580 76,333,149 333,204,824 of which: acquired or originated impaired financial assets - - - - - - - - - 21,534 21,534 C. Loan commitments and financial guarantees given - Stage 1 500 1,643,620 17,042,469 21,420,466 5,850,532 3,469,870 1,208,798 332,974 112,436 10,878,272 61,959,937 - Stage 2 - 90 24,595 183,732 184,538 190,166 289,780 132,117 68,542 1,235,958 2,309,518 - Stage 3 - - - - - - - - - 1,605,803 1,605,803 Total (C) 500 1,643,710 17,067,064 21,604,198 6,035,070 3,660,036 1,498,578 465,091 180,978 13,720,033 65,875,258 Total (A + B + C) 1,680,502 4,970,716 96,367,149 133,166,107 34,302,069 20,776,151 11,359,036 3,124,612 3,280,558 90,053,182 399,080,082 The table contains on- and off-balance sheet exposures grouped according to the counterparties’ internal rating. Ratings are assigned to individual counterparties using internally-developed models included in their credit risk management processes. The internal models validated by the regulators are both ‘Local’ and ‘Group-wide’ (e.g. for banks, multinationals and sovereigns). The various rating scales of these models are mapped onto a single master-scale of 9 classes (illustrated above) based on Probability of Default (PD). Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 682 2018 Annual Report and Accounts · UniCredit A.2.2 Breakdown of financial assets, loan commitments and financial guarantees given by internal rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 INTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES 1 2 3 4 5 6 7 8 9 A. Financial assets at amortised cost - Stage 1 9,286 1,209,849 38,951,855 109,488,227 27,458,861 15,626,347 7,744,402 1,640,905 481,000 48,542,850 251,153,582 - Stage 2 2,819 - 698,526 1,098,851 808,138 1,489,768 2,116,056 1,018,616 2,618,580 1,501,654 11,353,008 - Stage 3 - - - - - - - - - 25,411,231 25,411,231 B. Financial assets at fair value through other comprehensive income - Stage 1 1,667,897 2,117,157 39,649,704 974,831 - - - - - 877,344 45,286,933 - Stage 2 - - - - - - - - - - - - Stage 3 - - - - - - - - - 70 70 Total (A + B) 1,680,002 3,327,006 79,300,085 111,561,909 28,266,999 17,116,115 9,860,458 2,659,521 3,099,580 76,333,149 333,204,824 of which: acquired or originated impaired financial assets - - - - - - - - - 21,534 21,534 C. Loan commitments and financial guarantees given - Stage 1 500 1,643,620 17,042,469 21,420,466 5,850,532 3,469,870 1,208,798 332,974 112,436 10,878,272 61,959,937 - Stage 2 - 90 24,595 183,732 184,538 190,166 289,780 132,117 68,542 1,235,958 2,309,518 - Stage 3 - - - - - - - - - 1,605,803 1,605,803 Total (C) 500 1,643,710 17,067,064 21,604,198 6,035,070 3,660,036 1,498,578 465,091 180,978 13,720,033 65,875,258 Total (A + B + C) 1,680,502 4,970,716 96,367,149 133,166,107 34,302,069 20,776,151 11,359,036 3,124,612 3,280,558 90,053,182 399,080,082 The table contains on- and off-balance sheet exposures grouped according to the counterparties’ internal rating. Ratings are assigned to individual counterparties using internally-developed models included in their credit risk management processes. The internal models validated by the regulators are both ‘Local’ and ‘Group-wide’ (e.g. for banks, multinationals and sovereigns). The various rating scales of these models are mapped onto a single master-scale of 9 classes (illustrated above) based on Probability of Default (PD). Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 682 2018 Annual Report and Accounts · UniCredit A.2.2 Breakdown of financial assets, loan commitments and financial guarantees given by internal rating classes (gross amounts) (€ '000) AMOUNT AS AT 12.31.2018 INTERNAL RATING CLASSES NO RATING TOTAL EXPOSURES 1 2 3 4 5 6 7 8 9 A. Financial assets at amortised cost - Stage 1 9,286 1,209,849 38,951,855 109,488,227 27,458,861 15,626,347 7,744,402 1,640,905 481,000 48,542,850 251,153,582 - Stage 2 2,819 - 698,526 1,098,851 808,138 1,489,768 2,116,056 1,018,616 2,618,580 1,501,654 11,353,008 - Stage 3 - - - - - - - - - 25,411,231 25,411,231 B. Financial assets at fair value through other comprehensive income - Stage 1 1,667,897 2,117,157 39,649,704 974,831 - - - - - 877,344 45,286,933 - Stage 2 - - - - - - - - - - - - Stage 3 - - - - - - - - - 70 70 Total (A + B) 1,680,002 3,327,006 79,300,085 111,561,909 28,266,999 17,116,115 9,860,458 2,659,521 3,099,580 76,333,149 333,204,824 of which: acquired or originated impaired financial assets - - - - - - - - - 21,534 21,534 C. Loan commitments and financial guarantees given - Stage 1 500 1,643,620 17,042,469 21,420,466 5,850,532 3,469,870 1,208,798 332,974 112,436 10,878,272 61,959,937 - Stage 2 - 90 24,595 183,732 184,538 190,166 289,780 132,117 68,542 1,235,958 2,309,518 - Stage 3 - - - - - - - - - 1,605,803 1,605,803 Total (C) 500 1,643,710 17,067,064 21,604,198 6,035,070 3,660,036 1,498,578 465,091 180,978 13,720,033 65,875,258 Total (A + B + C) 1,680,502 4,970,716 96,367,149 133,166,107 34,302,069 20,776,151 11,359,036 3,124,612 3,280,558 90,053,182 399,080,082 The table contains on- and off-balance sheet exposures grouped according to the counterparties’ internal rating. Ratings are assigned to individual counterparties using internally-developed models included in their credit risk management processes. The internal models validated by the regulators are both ‘Local’ and ‘Group-wide’ (e.g. for banks, multinationals and sovereigns). The various rating scales of these models are mapped onto a single master-scale of 9 classes (illustrated above) based on Probability of Default (PD). Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 683 A.3 Distribution of secured credit exposures by type of security A.3.1 Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 10,744,485 10,744,102 - - 10,739,487 - of which non-performing - - - - - - 1.2 Partially secured 1,102 1,092 - - - - of which non-performing - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured 581,968 580,774 - - 231,556 349,168 of which non-performing - - - - - - 2.2 Partially secured 138,330 138,263 - - 15,713 84,747 of which non-performing - - - - - - continued: A.3.1 Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - - 4,614 - - 10,744,101 of which non-performing - - - - - - - - - - 1.2 Partially secured - - - - - - 447 - - 447 of which non-performing - - - - - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - - - - - 580,724 of which non-performing - - - - - - - - - - 2.2 Partially secured - - - - - - - 9,607 - 110,067 of which non-performing - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 683 A.3 Distribution of secured credit exposures by type of security A.3.1 Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 10,744,485 10,744,102 - - 10,739,487 - of which non-performing - - - - - - 1.2 Partially secured 1,102 1,092 - - - - of which non-performing - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured 581,968 580,774 - - 231,556 349,168 of which non-performing - - - - - - 2.2 Partially secured 138,330 138,263 - - 15,713 84,747 of which non-performing - - - - - - continued: A.3.1 Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - - 4,614 - - 10,744,101 of which non-performing - - - - - - - - - - 1.2 Partially secured - - - - - - 447 - - 447 of which non-performing - - - - - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - - - - - 580,724 of which non-performing - - - - - - - - - - 2.2 Partially secured - - - - - - - 9,607 - 110,067 of which non-performing - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 683 A.3 Distribution of secured credit exposures by type of security A.3.1 Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 10,744,485 10,744,102 - - 10,739,487 - of which non-performing - - - - - - 1.2 Partially secured 1,102 1,092 - - - - of which non-performing - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured 581,968 580,774 - - 231,556 349,168 of which non-performing - - - - - - 2.2 Partially secured 138,330 138,263 - - 15,713 84,747 of which non-performing - - - - - - continued: A.3.1 Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - - 4,614 - - 10,744,101 of which non-performing - - - - - - - - - - 1.2 Partially secured - - - - - - 447 - - 447 of which non-performing - - - - - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - - - - - 580,724 of which non-performing - - - - - - - - - - 2.2 Partially secured - - - - - - - 9,607 - 110,067 of which non-performing - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 683 A.3 Distribution of secured credit exposures by type of security A.3.1 Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 10,744,485 10,744,102 - - 10,739,487 - of which non-performing - - - - - - 1.2 Partially secured 1,102 1,092 - - - - of which non-performing - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured 581,968 580,774 - - 231,556 349,168 of which non-performing - - - - - - 2.2 Partially secured 138,330 138,263 - - 15,713 84,747 of which non-performing - - - - - - continued: A.3.1 Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - - 4,614 - - 10,744,101 of which non-performing - - - - - - - - - - 1.2 Partially secured - - - - - - 447 - - 447 of which non-performing - - - - - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - - - - - 580,724 of which non-performing - - - - - - - - - - 2.2 Partially secured - - - - - - - 9,607 - 110,067 of which non-performing - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 683 A.3 Distribution of secured credit exposures by type of security A.3.1 Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 10,744,485 10,744,102 - - 10,739,487 - of which non-performing - - - - - - 1.2 Partially secured 1,102 1,092 - - - - of which non-performing - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured 581,968 580,774 - - 231,556 349,168 of which non-performing - - - - - - 2.2 Partially secured 138,330 138,263 - - 15,713 84,747 of which non-performing - - - - - - continued: A.3.1 Secured on-balance and off-balance sheet credit exposures with banks (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - - 4,614 - - 10,744,101 of which non-performing - - - - - - - - - - 1.2 Partially secured - - - - - - 447 - - 447 of which non-performing - - - - - - - - - - 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - - - - - 580,724 of which non-performing - - - - - - - - - - 2.2 Partially secured - - - - - - - 9,607 - 110,067 of which non-performing - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 684 2018 Annual Report and Accounts · UniCredit A.3.2 Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 135,897,212 125,556,242 66,719,182 - 35,006,366 2,236,750 of which non-performing 16,641,142 7,036,594 5,521,754 - 37,986 43,098 1.2 Partially secured 10,596,397 9,678,735 133,049 - 717,581 576,191 of which non-performing 1,223,952 349,681 48,002 - 15,411 9,350 2. Secured off-balance sheet credit exposures 2.1 Totally secured 24,543,701 24,397,699 1,722,534 - 4,170,940 300,649 of which non-performing 1,109,125 988,851 380,670 - 1,442 11,743 2.2 Partially secured 4,189,049 4,172,074 28,787 - 112,824 151,911 of which non-performing 234,687 220,095 1,677 - 39,265 18,032 continued: A.3.2 Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 2,797,921 40,254 293,850 17,456,844 124,551,167 of which non-performing - - - - - 59,142 505 49,695 985,403 6,697,583 1.2 Partially secured - - - 1,412,287 - 1,609,655 8,388 448,246 1,679,171 6,584,568 of which non-performing - - - - - 19,048 2,046 21,160 99,089 214,106 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - 1,186,864 309,615 125,392 16,351,013 24,167,007 of which non-performing - - - - - 4,051 45,333 981 499,840 944,060 2.2 Partially secured - - - - - 414,276 249,109 15,964 1,400,502 2,373,373 of which non-performing - - - - - 317 2,541 85 28,672 90,589 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 684 2018 Annual Report and Accounts · UniCredit A.3.2 Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 135,897,212 125,556,242 66,719,182 - 35,006,366 2,236,750 of which non-performing 16,641,142 7,036,594 5,521,754 - 37,986 43,098 1.2 Partially secured 10,596,397 9,678,735 133,049 - 717,581 576,191 of which non-performing 1,223,952 349,681 48,002 - 15,411 9,350 2. Secured off-balance sheet credit exposures 2.1 Totally secured 24,543,701 24,397,699 1,722,534 - 4,170,940 300,649 of which non-performing 1,109,125 988,851 380,670 - 1,442 11,743 2.2 Partially secured 4,189,049 4,172,074 28,787 - 112,824 151,911 of which non-performing 234,687 220,095 1,677 - 39,265 18,032 continued: A.3.2 Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 2,797,921 40,254 293,850 17,456,844 124,551,167 of which non-performing - - - - - 59,142 505 49,695 985,403 6,697,583 1.2 Partially secured - - - 1,412,287 - 1,609,655 8,388 448,246 1,679,171 6,584,568 of which non-performing - - - - - 19,048 2,046 21,160 99,089 214,106 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - 1,186,864 309,615 125,392 16,351,013 24,167,007 of which non-performing - - - - - 4,051 45,333 981 499,840 944,060 2.2 Partially secured - - - - - 414,276 249,109 15,964 1,400,502 2,373,373 of which non-performing - - - - - 317 2,541 85 28,672 90,589 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 684 2018 Annual Report and Accounts · UniCredit A.3.2 Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 135,897,212 125,556,242 66,719,182 - 35,006,366 2,236,750 of which non-performing 16,641,142 7,036,594 5,521,754 - 37,986 43,098 1.2 Partially secured 10,596,397 9,678,735 133,049 - 717,581 576,191 of which non-performing 1,223,952 349,681 48,002 - 15,411 9,350 2. Secured off-balance sheet credit exposures 2.1 Totally secured 24,543,701 24,397,699 1,722,534 - 4,170,940 300,649 of which non-performing 1,109,125 988,851 380,670 - 1,442 11,743 2.2 Partially secured 4,189,049 4,172,074 28,787 - 112,824 151,911 of which non-performing 234,687 220,095 1,677 - 39,265 18,032 continued: A.3.2 Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 2,797,921 40,254 293,850 17,456,844 124,551,167 of which non-performing - - - - - 59,142 505 49,695 985,403 6,697,583 1.2 Partially secured - - - 1,412,287 - 1,609,655 8,388 448,246 1,679,171 6,584,568 of which non-performing - - - - - 19,048 2,046 21,160 99,089 214,106 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - 1,186,864 309,615 125,392 16,351,013 24,167,007 of which non-performing - - - - - 4,051 45,333 981 499,840 944,060 2.2 Partially secured - - - - - 414,276 249,109 15,964 1,400,502 2,373,373 of which non-performing - - - - - 317 2,541 85 28,672 90,589 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 684 2018 Annual Report and Accounts · UniCredit A.3.2 Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 135,897,212 125,556,242 66,719,182 - 35,006,366 2,236,750 of which non-performing 16,641,142 7,036,594 5,521,754 - 37,986 43,098 1.2 Partially secured 10,596,397 9,678,735 133,049 - 717,581 576,191 of which non-performing 1,223,952 349,681 48,002 - 15,411 9,350 2. Secured off-balance sheet credit exposures 2.1 Totally secured 24,543,701 24,397,699 1,722,534 - 4,170,940 300,649 of which non-performing 1,109,125 988,851 380,670 - 1,442 11,743 2.2 Partially secured 4,189,049 4,172,074 28,787 - 112,824 151,911 of which non-performing 234,687 220,095 1,677 - 39,265 18,032 continued: A.3.2 Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 2,797,921 40,254 293,850 17,456,844 124,551,167 of which non-performing - - - - - 59,142 505 49,695 985,403 6,697,583 1.2 Partially secured - - - 1,412,287 - 1,609,655 8,388 448,246 1,679,171 6,584,568 of which non-performing - - - - - 19,048 2,046 21,160 99,089 214,106 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - 1,186,864 309,615 125,392 16,351,013 24,167,007 of which non-performing - - - - - 4,051 45,333 981 499,840 944,060 2.2 Partially secured - - - - - 414,276 249,109 15,964 1,400,502 2,373,373 of which non-performing - - - - - 317 2,541 85 28,672 90,589 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 684 2018 Annual Report and Accounts · UniCredit A.3.2 Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GROSS EXPOSURE NET EXPOSURE COLLATERALS (1) PROPERTY - MORTGAGES PROPERTY - FINANCIAL LEASES SECURITIES OTHER COLLATERALS 1. Secured on-balance sheet credit exposures 1.1 Totally secured 135,897,212 125,556,242 66,719,182 - 35,006,366 2,236,750 of which non-performing 16,641,142 7,036,594 5,521,754 - 37,986 43,098 1.2 Partially secured 10,596,397 9,678,735 133,049 - 717,581 576,191 of which non-performing 1,223,952 349,681 48,002 - 15,411 9,350 2. Secured off-balance sheet credit exposures 2.1 Totally secured 24,543,701 24,397,699 1,722,534 - 4,170,940 300,649 of which non-performing 1,109,125 988,851 380,670 - 1,442 11,743 2.2 Partially secured 4,189,049 4,172,074 28,787 - 112,824 151,911 of which non-performing 234,687 220,095 1,677 - 39,265 18,032 continued: A.3.2 Secured on-balance and off-balance sheet credit exposures with customers (€ '000) AMOUNT AS AT 12.31.2018 GUARANTEES (2) CREDIT DERIVATIVES SIGNATURE LOANS (LOANS GUARANTEES) TOTAL (1)+(2) OTHER CREDIT DERIVATIVES CLN GOVERNMENT AND CENTRAL BANKS BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES BANKS OTHER PUBLIC ENTITIES OTHER ENTITIES 1. Secured on-balance sheet credit exposures 1.1 Totally secured - - - - - 2,797,921 40,254 293,850 17,456,844 124,551,167 of which non-performing - - - - - 59,142 505 49,695 985,403 6,697,583 1.2 Partially secured - - - 1,412,287 - 1,609,655 8,388 448,246 1,679,171 6,584,568 of which non-performing - - - - - 19,048 2,046 21,160 99,089 214,106 2. Secured off-balance sheet credit exposures 2.1 Totally secured - - - - - 1,186,864 309,615 125,392 16,351,013 24,167,007 of which non-performing - - - - - 4,051 45,333 981 499,840 944,060 2.2 Partially secured - - - - - 414,276 249,109 15,964 1,400,502 2,373,373 of which non-performing - - - - - 317 2,541 85 28,672 90,589 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 685 A.4 Financial and non financial assets obtained by taking possession of collaterals A.4 Financial and non-financial assets obtained by taking possession of collaterals (€ '000) CANCELLED CREDIT EXPOSURE GROSS AMOUNT OVERALL WRITE-DOWNS CARRYING VALUE OF WHICH OBTAINED DURING THE YEAR A. Property, plant and equipment - - - - - A.1 Used in business - - - - - A.2 Held for investment - - - - - A.3 Inventories - - - - - B. Equity instruments and debt securities - 63,292 - 63,292 - C. Other assets - - - - - D. Non-current assets and disposal groups classified as held for sale - - - - - D.1 Property, plant and equipment - - - - - D.2 Other assets - - - - - Total 12.31.2018 - 63,292 - 63,292 - B. Distribution and concentration of credit exposures B.1 Distribution by segment of on-balance and off-balance sheet credit exposures with customers (€ '000) GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES FINANCIAL COMPANIES FINANCIAL COMPANIES (OF WHICH INSURANCE COMPANIES) NON-FINANCIAL COMPANIES HOUSEHOLDS EXPOSURES/COUNTERPARTIES NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 50,106 79,381 33,000 264,874 - - 1,200,416 5,762,310 1,527,806 4,103,654 of which: forborne exposures - - 6,194 42,071 - - 145,934 751,770 278,952 541,405 A.2 Unlikely to pay 5,177 4,595 729,689 415,986 - - 4,399,063 4,755,815 1,221,795 636,710 of which: forborne exposures 91 74 514,789 328,042 - - 2,747,998 2,769,309 773,312 372,071 A.3 Non-performing past-due 473 532 4,548 3,903 - - 25,250 18,251 271,991 136,953 of which: forborne exposures - - 19 12 - - 1,645 946 13,708 6,111 A.4 Performing exposures 67,423,956 70,659 71,118,075 102,200 292,680 201 78,492,969 527,177 63,483,445 603,341 of which: forborne exposures 1,053 2 25,310 2,868 - - 1,054,619 61,398 1,606,336 206,972 Total (A) 67,479,712 155,167 71,885,312 786,963 292,680 201 84,117,698 11,063,553 66,505,037 5,480,658 B. Off-balance sheet credit exposures B.1 Non-performing exposures 164 3 79,286 23,581 - - 2,874,238 376,619 47,164 1,929 B.2 Performing exsposures 7,816,435 5,001 20,831,227 18,506 947,666 132 97,965,653 52,535 6,152,663 6,537 Total (B) 7,816,599 5,004 20,910,513 42,087 947,666 132 100,839,891 429,154 6,199,827 8,466 Total (A + B) 12.31.2018 75,296,311 160,171 92,795,825 829,050 1,240,346 333 184,957,589 11,492,707 72,704,864 5,489,124 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 685 A.4 Financial and non financial assets obtained by taking possession of collaterals A.4 Financial and non-financial assets obtained by taking possession of collaterals (€ '000) CANCELLED CREDIT EXPOSURE GROSS AMOUNT OVERALL WRITE-DOWNS CARRYING VALUE OF WHICH OBTAINED DURING THE YEAR A. Property, plant and equipment - - - - - A.1 Used in business - - - - - A.2 Held for investment - - - - - A.3 Inventories - - - - - B. Equity instruments and debt securities - 63,292 - 63,292 - C. Other assets - - - - - D. Non-current assets and disposal groups classified as held for sale - - - - - D.1 Property, plant and equipment - - - - - D.2 Other assets - - - - - Total 12.31.2018 - 63,292 - 63,292 - B. Distribution and concentration of credit exposures B.1 Distribution by segment of on-balance and off-balance sheet credit exposures with customers (€ '000) GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES FINANCIAL COMPANIES FINANCIAL COMPANIES (OF WHICH INSURANCE COMPANIES) NON-FINANCIAL COMPANIES HOUSEHOLDS EXPOSURES/COUNTERPARTIES NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 50,106 79,381 33,000 264,874 - - 1,200,416 5,762,310 1,527,806 4,103,654 of which: forborne exposures - - 6,194 42,071 - - 145,934 751,770 278,952 541,405 A.2 Unlikely to pay 5,177 4,595 729,689 415,986 - - 4,399,063 4,755,815 1,221,795 636,710 of which: forborne exposures 91 74 514,789 328,042 - - 2,747,998 2,769,309 773,312 372,071 A.3 Non-performing past-due 473 532 4,548 3,903 - - 25,250 18,251 271,991 136,953 of which: forborne exposures - - 19 12 - - 1,645 946 13,708 6,111 A.4 Performing exposures 67,423,956 70,659 71,118,075 102,200 292,680 201 78,492,969 527,177 63,483,445 603,341 of which: forborne exposures 1,053 2 25,310 2,868 - - 1,054,619 61,398 1,606,336 206,972 Total (A) 67,479,712 155,167 71,885,312 786,963 292,680 201 84,117,698 11,063,553 66,505,037 5,480,658 B. Off-balance sheet credit exposures B.1 Non-performing exposures 164 3 79,286 23,581 - - 2,874,238 376,619 47,164 1,929 B.2 Performing exsposures 7,816,435 5,001 20,831,227 18,506 947,666 132 97,965,653 52,535 6,152,663 6,537 Total (B) 7,816,599 5,004 20,910,513 42,087 947,666 132 100,839,891 429,154 6,199,827 8,466 Total (A + B) 12.31.2018 75,296,311 160,171 92,795,825 829,050 1,240,346 333 184,957,589 11,492,707 72,704,864 5,489,124 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 685 A.4 Financial and non financial assets obtained by taking possession of collaterals A.4 Financial and non-financial assets obtained by taking possession of collaterals (€ '000) CANCELLED CREDIT EXPOSURE GROSS AMOUNT OVERALL WRITE-DOWNS CARRYING VALUE OF WHICH OBTAINED DURING THE YEAR A. Property, plant and equipment - - - - - A.1 Used in business - - - - - A.2 Held for investment - - - - - A.3 Inventories - - - - - B. Equity instruments and debt securities - 63,292 - 63,292 - C. Other assets - - - - - D. Non-current assets and disposal groups classified as held for sale - - - - - D.1 Property, plant and equipment - - - - - D.2 Other assets - - - - - Total 12.31.2018 - 63,292 - 63,292 - B. Distribution and concentration of credit exposures B.1 Distribution by segment of on-balance and off-balance sheet credit exposures with customers (€ '000) GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES FINANCIAL COMPANIES FINANCIAL COMPANIES (OF WHICH INSURANCE COMPANIES) NON-FINANCIAL COMPANIES HOUSEHOLDS EXPOSURES/COUNTERPARTIES NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 50,106 79,381 33,000 264,874 - - 1,200,416 5,762,310 1,527,806 4,103,654 of which: forborne exposures - - 6,194 42,071 - - 145,934 751,770 278,952 541,405 A.2 Unlikely to pay 5,177 4,595 729,689 415,986 - - 4,399,063 4,755,815 1,221,795 636,710 of which: forborne exposures 91 74 514,789 328,042 - - 2,747,998 2,769,309 773,312 372,071 A.3 Non-performing past-due 473 532 4,548 3,903 - - 25,250 18,251 271,991 136,953 of which: forborne exposures - - 19 12 - - 1,645 946 13,708 6,111 A.4 Performing exposures 67,423,956 70,659 71,118,075 102,200 292,680 201 78,492,969 527,177 63,483,445 603,341 of which: forborne exposures 1,053 2 25,310 2,868 - - 1,054,619 61,398 1,606,336 206,972 Total (A) 67,479,712 155,167 71,885,312 786,963 292,680 201 84,117,698 11,063,553 66,505,037 5,480,658 B. Off-balance sheet credit exposures B.1 Non-performing exposures 164 3 79,286 23,581 - - 2,874,238 376,619 47,164 1,929 B.2 Performing exsposures 7,816,435 5,001 20,831,227 18,506 947,666 132 97,965,653 52,535 6,152,663 6,537 Total (B) 7,816,599 5,004 20,910,513 42,087 947,666 132 100,839,891 429,154 6,199,827 8,466 Total (A + B) 12.31.2018 75,296,311 160,171 92,795,825 829,050 1,240,346 333 184,957,589 11,492,707 72,704,864 5,489,124 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 685 A.4 Financial and non financial assets obtained by taking possession of collaterals A.4 Financial and non-financial assets obtained by taking possession of collaterals (€ '000) CANCELLED CREDIT EXPOSURE GROSS AMOUNT OVERALL WRITE-DOWNS CARRYING VALUE OF WHICH OBTAINED DURING THE YEAR A. Property, plant and equipment - - - - - A.1 Used in business - - - - - A.2 Held for investment - - - - - A.3 Inventories - - - - - B. Equity instruments and debt securities - 63,292 - 63,292 - C. Other assets - - - - - D. Non-current assets and disposal groups classified as held for sale - - - - - D.1 Property, plant and equipment - - - - - D.2 Other assets - - - - - Total 12.31.2018 - 63,292 - 63,292 - B. Distribution and concentration of credit exposures B.1 Distribution by segment of on-balance and off-balance sheet credit exposures with customers (€ '000) GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES FINANCIAL COMPANIES FINANCIAL COMPANIES (OF WHICH INSURANCE COMPANIES) NON-FINANCIAL COMPANIES HOUSEHOLDS EXPOSURES/COUNTERPARTIES NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 50,106 79,381 33,000 264,874 - - 1,200,416 5,762,310 1,527,806 4,103,654 of which: forborne exposures - - 6,194 42,071 - - 145,934 751,770 278,952 541,405 A.2 Unlikely to pay 5,177 4,595 729,689 415,986 - - 4,399,063 4,755,815 1,221,795 636,710 of which: forborne exposures 91 74 514,789 328,042 - - 2,747,998 2,769,309 773,312 372,071 A.3 Non-performing past-due 473 532 4,548 3,903 - - 25,250 18,251 271,991 136,953 of which: forborne exposures - - 19 12 - - 1,645 946 13,708 6,111 A.4 Performing exposures 67,423,956 70,659 71,118,075 102,200 292,680 201 78,492,969 527,177 63,483,445 603,341 of which: forborne exposures 1,053 2 25,310 2,868 - - 1,054,619 61,398 1,606,336 206,972 Total (A) 67,479,712 155,167 71,885,312 786,963 292,680 201 84,117,698 11,063,553 66,505,037 5,480,658 B. Off-balance sheet credit exposures B.1 Non-performing exposures 164 3 79,286 23,581 - - 2,874,238 376,619 47,164 1,929 B.2 Performing exsposures 7,816,435 5,001 20,831,227 18,506 947,666 132 97,965,653 52,535 6,152,663 6,537 Total (B) 7,816,599 5,004 20,910,513 42,087 947,666 132 100,839,891 429,154 6,199,827 8,466 Total (A + B) 12.31.2018 75,296,311 160,171 92,795,825 829,050 1,240,346 333 184,957,589 11,492,707 72,704,864 5,489,124 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 685 A.4 Financial and non financial assets obtained by taking possession of collaterals A.4 Financial and non-financial assets obtained by taking possession of collaterals (€ '000) CANCELLED CREDIT EXPOSURE GROSS AMOUNT OVERALL WRITE-DOWNS CARRYING VALUE OF WHICH OBTAINED DURING THE YEAR A. Property, plant and equipment - - - - - A.1 Used in business - - - - - A.2 Held for investment - - - - - A.3 Inventories - - - - - B. Equity instruments and debt securities - 63,292 - 63,292 - C. Other assets - - - - - D. Non-current assets and disposal groups classified as held for sale - - - - - D.1 Property, plant and equipment - - - - - D.2 Other assets - - - - - Total 12.31.2018 - 63,292 - 63,292 - B. Distribution and concentration of credit exposures B.1 Distribution by segment of on-balance and off-balance sheet credit exposures with customers (€ '000) GOVERNMENTS AND OTHER PUBLIC SECTOR ENTITIES FINANCIAL COMPANIES FINANCIAL COMPANIES (OF WHICH INSURANCE COMPANIES) NON-FINANCIAL COMPANIES HOUSEHOLDS EXPOSURES/COUNTERPARTIES NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 50,106 79,381 33,000 264,874 - - 1,200,416 5,762,310 1,527,806 4,103,654 of which: forborne exposures - - 6,194 42,071 - - 145,934 751,770 278,952 541,405 A.2 Unlikely to pay 5,177 4,595 729,689 415,986 - - 4,399,063 4,755,815 1,221,795 636,710 of which: forborne exposures 91 74 514,789 328,042 - - 2,747,998 2,769,309 773,312 372,071 A.3 Non-performing past-due 473 532 4,548 3,903 - - 25,250 18,251 271,991 136,953 of which: forborne exposures - - 19 12 - - 1,645 946 13,708 6,111 A.4 Performing exposures 67,423,956 70,659 71,118,075 102,200 292,680 201 78,492,969 527,177 63,483,445 603,341 of which: forborne exposures 1,053 2 25,310 2,868 - - 1,054,619 61,398 1,606,336 206,972 Total (A) 67,479,712 155,167 71,885,312 786,963 292,680 201 84,117,698 11,063,553 66,505,037 5,480,658 B. Off-balance sheet credit exposures B.1 Non-performing exposures 164 3 79,286 23,581 - - 2,874,238 376,619 47,164 1,929 B.2 Performing exsposures 7,816,435 5,001 20,831,227 18,506 947,666 132 97,965,653 52,535 6,152,663 6,537 Total (B) 7,816,599 5,004 20,910,513 42,087 947,666 132 100,839,891 429,154 6,199,827 8,466 Total (A + B) 12.31.2018 75,296,311 160,171 92,795,825 829,050 1,240,346 333 184,957,589 11,492,707 72,704,864 5,489,124 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 686 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.1 Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES GOVERNMENTS OTHER PUBLIC ENTITIES FINANCIAL COMPANIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 101 3,041 X 70,523 57,850 X 35,706 438,522 X - of which: forborne exposures - - X - - X 4,818 37,699 X A.2 Unlikely to pay - - X 7,119 3,393 X 711,050 411,328 X - of which: forborne exposures - - X 296 241 X 512,253 273,411 X A.3 Non-Performing past-due 317 269 X 2,408 1,190 X 1,304 529 X - of which: forborne exposures - - X - - X 1 2 X A.4 Performing exposures 62,690,691 X 4,038 2,450,173 X 50,195 59,521,240 X 70,319 - of which: forborne exposures - X - - X - 102,956 X 660 Total A 62,691,109 3,310 4,038 2,530,223 62,433 50,195 60,269,300 850,379 70,319 B. Off-balance sheet exposures B.1 Bad exposures - - X - - X 175 677 X B.2. Unlikely to pay - - X - - X 100,551 - X B.3 Other Non-Performing exposures 21 2 X 559 33 X - - X B.4 Performing exposures 4,005,362 X 6 5,484,597 X 1,609 11,733,869 X 1,464 Total B 4,005,383 2 6 5,485,156 33 1,609 11,834,595 677 1,464 Total 12.31.2017 66,696,492 3,312 4,044 8,015,379 62,466 51,804 72,103,895 851,056 71,783 Continued: B.1 Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES INSURANCE COMPANIES NON-FINANCIAL COMPANIES OTHER ENTITIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures - - X 2,179,319 7,541,516 X 3,352,818 4,062,844 X - of which: forborne exposures - - X 187,709 571,298 X 293,408 273,730 X A.2 Unlikely to pay - - X 5,767,452 5,464,332 X 1,541,223 647,038 X - of which: forborne exposures - - X 3,667,102 3,161,106 X 958,792 385,884 X A.3 Non-Performing past-due - - X 86,291 40,679 X 245,237 173,304 X - of which: forborne exposures - - X 4,225 1,882 X 14,378 4,375 X A.4 Performing exposures 225,763 X 114 74,660,214 X 423,496 58,236,013 X 368,157 - of which: forborne exposures - X - 1,281,934 X 56,726 1,993,679 X 141,716 Total A 225,763 - 114 82,693,276 13,046,527 423,496 63,375,291 4,883,186 368,157 B. Off-balance sheet exposures B.1 Bad exposures - - X 101,901 38,683 X 1,042 14 X B.2. Unlikely to pay - - X 985,057 219,226 X 2,388 648 X B.3 Other Non-Performing exposures - - X 7,007 732 X 806 90 X B.4 Performing exposures 365,846 X 56 39,936,784 X 32,273 1,383,079 X 1,467 Total B 365,846 - 56 41,030,749 258,641 32,273 1,387,315 752 1,467 Total 12.31.2017 591,609 - 170 123,724,025 13,305,168 455,769 64,762,606 4,883,938 369,624 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 686 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.1 Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES GOVERNMENTS OTHER PUBLIC ENTITIES FINANCIAL COMPANIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 101 3,041 X 70,523 57,850 X 35,706 438,522 X - of which: forborne exposures - - X - - X 4,818 37,699 X A.2 Unlikely to pay - - X 7,119 3,393 X 711,050 411,328 X - of which: forborne exposures - - X 296 241 X 512,253 273,411 X A.3 Non-Performing past-due 317 269 X 2,408 1,190 X 1,304 529 X - of which: forborne exposures - - X - - X 1 2 X A.4 Performing exposures 62,690,691 X 4,038 2,450,173 X 50,195 59,521,240 X 70,319 - of which: forborne exposures - X - - X - 102,956 X 660 Total A 62,691,109 3,310 4,038 2,530,223 62,433 50,195 60,269,300 850,379 70,319 B. Off-balance sheet exposures B.1 Bad exposures - - X - - X 175 677 X B.2. Unlikely to pay - - X - - X 100,551 - X B.3 Other Non-Performing exposures 21 2 X 559 33 X - - X B.4 Performing exposures 4,005,362 X 6 5,484,597 X 1,609 11,733,869 X 1,464 Total B 4,005,383 2 6 5,485,156 33 1,609 11,834,595 677 1,464 Total 12.31.2017 66,696,492 3,312 4,044 8,015,379 62,466 51,804 72,103,895 851,056 71,783 Continued: B.1 Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES INSURANCE COMPANIES NON-FINANCIAL COMPANIES OTHER ENTITIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures - - X 2,179,319 7,541,516 X 3,352,818 4,062,844 X - of which: forborne exposures - - X 187,709 571,298 X 293,408 273,730 X A.2 Unlikely to pay - - X 5,767,452 5,464,332 X 1,541,223 647,038 X - of which: forborne exposures - - X 3,667,102 3,161,106 X 958,792 385,884 X A.3 Non-Performing past-due - - X 86,291 40,679 X 245,237 173,304 X - of which: forborne exposures - - X 4,225 1,882 X 14,378 4,375 X A.4 Performing exposures 225,763 X 114 74,660,214 X 423,496 58,236,013 X 368,157 - of which: forborne exposures - X - 1,281,934 X 56,726 1,993,679 X 141,716 Total A 225,763 - 114 82,693,276 13,046,527 423,496 63,375,291 4,883,186 368,157 B. Off-balance sheet exposures B.1 Bad exposures - - X 101,901 38,683 X 1,042 14 X B.2. Unlikely to pay - - X 985,057 219,226 X 2,388 648 X B.3 Other Non-Performing exposures - - X 7,007 732 X 806 90 X B.4 Performing exposures 365,846 X 56 39,936,784 X 32,273 1,383,079 X 1,467 Total B 365,846 - 56 41,030,749 258,641 32,273 1,387,315 752 1,467 Total 12.31.2017 591,609 - 170 123,724,025 13,305,168 455,769 64,762,606 4,883,938 369,624 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 686 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.1 Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES GOVERNMENTS OTHER PUBLIC ENTITIES FINANCIAL COMPANIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 101 3,041 X 70,523 57,850 X 35,706 438,522 X - of which: forborne exposures - - X - - X 4,818 37,699 X A.2 Unlikely to pay - - X 7,119 3,393 X 711,050 411,328 X - of which: forborne exposures - - X 296 241 X 512,253 273,411 X A.3 Non-Performing past-due 317 269 X 2,408 1,190 X 1,304 529 X - of which: forborne exposures - - X - - X 1 2 X A.4 Performing exposures 62,690,691 X 4,038 2,450,173 X 50,195 59,521,240 X 70,319 - of which: forborne exposures - X - - X - 102,956 X 660 Total A 62,691,109 3,310 4,038 2,530,223 62,433 50,195 60,269,300 850,379 70,319 B. Off-balance sheet exposures B.1 Bad exposures - - X - - X 175 677 X B.2. Unlikely to pay - - X - - X 100,551 - X B.3 Other Non-Performing exposures 21 2 X 559 33 X - - X B.4 Performing exposures 4,005,362 X 6 5,484,597 X 1,609 11,733,869 X 1,464 Total B 4,005,383 2 6 5,485,156 33 1,609 11,834,595 677 1,464 Total 12.31.2017 66,696,492 3,312 4,044 8,015,379 62,466 51,804 72,103,895 851,056 71,783 Continued: B.1 Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES INSURANCE COMPANIES NON-FINANCIAL COMPANIES OTHER ENTITIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures - - X 2,179,319 7,541,516 X 3,352,818 4,062,844 X - of which: forborne exposures - - X 187,709 571,298 X 293,408 273,730 X A.2 Unlikely to pay - - X 5,767,452 5,464,332 X 1,541,223 647,038 X - of which: forborne exposures - - X 3,667,102 3,161,106 X 958,792 385,884 X A.3 Non-Performing past-due - - X 86,291 40,679 X 245,237 173,304 X - of which: forborne exposures - - X 4,225 1,882 X 14,378 4,375 X A.4 Performing exposures 225,763 X 114 74,660,214 X 423,496 58,236,013 X 368,157 - of which: forborne exposures - X - 1,281,934 X 56,726 1,993,679 X 141,716 Total A 225,763 - 114 82,693,276 13,046,527 423,496 63,375,291 4,883,186 368,157 B. Off-balance sheet exposures B.1 Bad exposures - - X 101,901 38,683 X 1,042 14 X B.2. Unlikely to pay - - X 985,057 219,226 X 2,388 648 X B.3 Other Non-Performing exposures - - X 7,007 732 X 806 90 X B.4 Performing exposures 365,846 X 56 39,936,784 X 32,273 1,383,079 X 1,467 Total B 365,846 - 56 41,030,749 258,641 32,273 1,387,315 752 1,467 Total 12.31.2017 591,609 - 170 123,724,025 13,305,168 455,769 64,762,606 4,883,938 369,624 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 686 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.1 Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES GOVERNMENTS OTHER PUBLIC ENTITIES FINANCIAL COMPANIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 101 3,041 X 70,523 57,850 X 35,706 438,522 X - of which: forborne exposures - - X - - X 4,818 37,699 X A.2 Unlikely to pay - - X 7,119 3,393 X 711,050 411,328 X - of which: forborne exposures - - X 296 241 X 512,253 273,411 X A.3 Non-Performing past-due 317 269 X 2,408 1,190 X 1,304 529 X - of which: forborne exposures - - X - - X 1 2 X A.4 Performing exposures 62,690,691 X 4,038 2,450,173 X 50,195 59,521,240 X 70,319 - of which: forborne exposures - X - - X - 102,956 X 660 Total A 62,691,109 3,310 4,038 2,530,223 62,433 50,195 60,269,300 850,379 70,319 B. Off-balance sheet exposures B.1 Bad exposures - - X - - X 175 677 X B.2. Unlikely to pay - - X - - X 100,551 - X B.3 Other Non-Performing exposures 21 2 X 559 33 X - - X B.4 Performing exposures 4,005,362 X 6 5,484,597 X 1,609 11,733,869 X 1,464 Total B 4,005,383 2 6 5,485,156 33 1,609 11,834,595 677 1,464 Total 12.31.2017 66,696,492 3,312 4,044 8,015,379 62,466 51,804 72,103,895 851,056 71,783 Continued: B.1 Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES INSURANCE COMPANIES NON-FINANCIAL COMPANIES OTHER ENTITIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures - - X 2,179,319 7,541,516 X 3,352,818 4,062,844 X - of which: forborne exposures - - X 187,709 571,298 X 293,408 273,730 X A.2 Unlikely to pay - - X 5,767,452 5,464,332 X 1,541,223 647,038 X - of which: forborne exposures - - X 3,667,102 3,161,106 X 958,792 385,884 X A.3 Non-Performing past-due - - X 86,291 40,679 X 245,237 173,304 X - of which: forborne exposures - - X 4,225 1,882 X 14,378 4,375 X A.4 Performing exposures 225,763 X 114 74,660,214 X 423,496 58,236,013 X 368,157 - of which: forborne exposures - X - 1,281,934 X 56,726 1,993,679 X 141,716 Total A 225,763 - 114 82,693,276 13,046,527 423,496 63,375,291 4,883,186 368,157 B. Off-balance sheet exposures B.1 Bad exposures - - X 101,901 38,683 X 1,042 14 X B.2. Unlikely to pay - - X 985,057 219,226 X 2,388 648 X B.3 Other Non-Performing exposures - - X 7,007 732 X 806 90 X B.4 Performing exposures 365,846 X 56 39,936,784 X 32,273 1,383,079 X 1,467 Total B 365,846 - 56 41,030,749 258,641 32,273 1,387,315 752 1,467 Total 12.31.2017 591,609 - 170 123,724,025 13,305,168 455,769 64,762,606 4,883,938 369,624 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 686 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.1 Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES GOVERNMENTS OTHER PUBLIC ENTITIES FINANCIAL COMPANIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures 101 3,041 X 70,523 57,850 X 35,706 438,522 X - of which: forborne exposures - - X - - X 4,818 37,699 X A.2 Unlikely to pay - - X 7,119 3,393 X 711,050 411,328 X - of which: forborne exposures - - X 296 241 X 512,253 273,411 X A.3 Non-Performing past-due 317 269 X 2,408 1,190 X 1,304 529 X - of which: forborne exposures - - X - - X 1 2 X A.4 Performing exposures 62,690,691 X 4,038 2,450,173 X 50,195 59,521,240 X 70,319 - of which: forborne exposures - X - - X - 102,956 X 660 Total A 62,691,109 3,310 4,038 2,530,223 62,433 50,195 60,269,300 850,379 70,319 B. Off-balance sheet exposures B.1 Bad exposures - - X - - X 175 677 X B.2. Unlikely to pay - - X - - X 100,551 - X B.3 Other Non-Performing exposures 21 2 X 559 33 X - - X B.4 Performing exposures 4,005,362 X 6 5,484,597 X 1,609 11,733,869 X 1,464 Total B 4,005,383 2 6 5,485,156 33 1,609 11,834,595 677 1,464 Total 12.31.2017 66,696,492 3,312 4,044 8,015,379 62,466 51,804 72,103,895 851,056 71,783 Continued: B.1 Distribution by segment of On- and off-balance sheet credit exposures with customers (book value) (€ '000) COUNTERPARTIES/EXPOSURES INSURANCE COMPANIES NON-FINANCIAL COMPANIES OTHER ENTITIES NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS NET EXPOSURE SPECIFIC WRITE-DOWNS PORTFOLIO ADJUSTMENTS A. On-balance sheet exposures A.1 Bad exposures - - X 2,179,319 7,541,516 X 3,352,818 4,062,844 X - of which: forborne exposures - - X 187,709 571,298 X 293,408 273,730 X A.2 Unlikely to pay - - X 5,767,452 5,464,332 X 1,541,223 647,038 X - of which: forborne exposures - - X 3,667,102 3,161,106 X 958,792 385,884 X A.3 Non-Performing past-due - - X 86,291 40,679 X 245,237 173,304 X - of which: forborne exposures - - X 4,225 1,882 X 14,378 4,375 X A.4 Performing exposures 225,763 X 114 74,660,214 X 423,496 58,236,013 X 368,157 - of which: forborne exposures - X - 1,281,934 X 56,726 1,993,679 X 141,716 Total A 225,763 - 114 82,693,276 13,046,527 423,496 63,375,291 4,883,186 368,157 B. Off-balance sheet exposures B.1 Bad exposures - - X 101,901 38,683 X 1,042 14 X B.2. Unlikely to pay - - X 985,057 219,226 X 2,388 648 X B.3 Other Non-Performing exposures - - X 7,007 732 X 806 90 X B.4 Performing exposures 365,846 X 56 39,936,784 X 32,273 1,383,079 X 1,467 Total B 365,846 - 56 41,030,749 258,641 32,273 1,387,315 752 1,467 Total 12.31.2017 591,609 - 170 123,724,025 13,305,168 455,769 64,762,606 4,883,938 369,624 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 687 B.2 Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 2,804,612 10,145,592 5,823 47,027 665 16,712 96 271 132 617 A.2 Unlikely to pay 6,027,279 5,404,688 281,442 391,425 44,137 16,605 2,792 171 74 217 A.3 Non-performing past-due 299,386 154,844 2,481 4,208 97 186 88 199 210 202 A.4 Performing exposures 250,633,123 1,196,663 21,824,697 75,720 2,680,503 17,618 4,534,195 12,672 845,927 704 Total (A) 259,764,400 16,901,787 22,114,443 518,380 2,725,402 51,121 4,537,171 13,313 846,343 1,740 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,908,266 398,655 65,575 1,401 26,703 1,932 308 144 - - B.2 Performing exposures 116,532,535 67,192 10,103,745 9,830 4,475,291 2,240 1,341,744 3,272 312,664 45 Total (B) 119,440,801 465,847 10,169,320 11,231 4,501,994 4,172 1,342,052 3,416 312,664 45 Total (A+B) 12.31.2018 379,205,201 17,367,634 32,283,763 529,611 7,227,396 55,293 5,879,223 16,729 1,159,007 1,785 B.2 Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area - Italy (€ '000) NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 824,117 2,811,764 525,947 1,774,892 680,389 2,606,340 774,159 2,952,596 A.2 Unlikely to pay 1,729,190 1,567,774 1,154,904 1,223,714 2,006,558 1,635,020 1,136,627 978,180 A.3 Non-performing past-due 61,125 31,040 53,344 25,576 70,789 37,671 114,128 60,557 A.4 Performing exposures 71,520,830 389,472 37,719,268 214,691 118,662,225 327,193 22,730,800 265,307 Total (A) 74,135,262 4,800,050 39,453,463 3,238,873 121,419,961 4,606,224 24,755,714 4,256,640 B. Off-balance sheet credit exposures B.1 Non-performing exposures 937,380 127,461 689,086 117,603 1,058,720 136,832 223,080 16,759 B.2 Performing exposures 47,421,523 28,587 29,536,476 12,974 32,015,952 20,288 7,558,584 5,343 Total (B) 48,358,903 156,048 30,225,562 130,577 33,074,672 157,120 7,781,664 22,102 Total (A+B) 12.31.2018 122,494,165 4,956,098 69,679,025 3,369,450 154,494,633 4,763,344 32,537,378 4,278,742 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 687 B.2 Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 2,804,612 10,145,592 5,823 47,027 665 16,712 96 271 132 617 A.2 Unlikely to pay 6,027,279 5,404,688 281,442 391,425 44,137 16,605 2,792 171 74 217 A.3 Non-performing past-due 299,386 154,844 2,481 4,208 97 186 88 199 210 202 A.4 Performing exposures 250,633,123 1,196,663 21,824,697 75,720 2,680,503 17,618 4,534,195 12,672 845,927 704 Total (A) 259,764,400 16,901,787 22,114,443 518,380 2,725,402 51,121 4,537,171 13,313 846,343 1,740 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,908,266 398,655 65,575 1,401 26,703 1,932 308 144 - - B.2 Performing exposures 116,532,535 67,192 10,103,745 9,830 4,475,291 2,240 1,341,744 3,272 312,664 45 Total (B) 119,440,801 465,847 10,169,320 11,231 4,501,994 4,172 1,342,052 3,416 312,664 45 Total (A+B) 12.31.2018 379,205,201 17,367,634 32,283,763 529,611 7,227,396 55,293 5,879,223 16,729 1,159,007 1,785 B.2 Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area - Italy (€ '000) NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 824,117 2,811,764 525,947 1,774,892 680,389 2,606,340 774,159 2,952,596 A.2 Unlikely to pay 1,729,190 1,567,774 1,154,904 1,223,714 2,006,558 1,635,020 1,136,627 978,180 A.3 Non-performing past-due 61,125 31,040 53,344 25,576 70,789 37,671 114,128 60,557 A.4 Performing exposures 71,520,830 389,472 37,719,268 214,691 118,662,225 327,193 22,730,800 265,307 Total (A) 74,135,262 4,800,050 39,453,463 3,238,873 121,419,961 4,606,224 24,755,714 4,256,640 B. Off-balance sheet credit exposures B.1 Non-performing exposures 937,380 127,461 689,086 117,603 1,058,720 136,832 223,080 16,759 B.2 Performing exposures 47,421,523 28,587 29,536,476 12,974 32,015,952 20,288 7,558,584 5,343 Total (B) 48,358,903 156,048 30,225,562 130,577 33,074,672 157,120 7,781,664 22,102 Total (A+B) 12.31.2018 122,494,165 4,956,098 69,679,025 3,369,450 154,494,633 4,763,344 32,537,378 4,278,742 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 687 B.2 Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 2,804,612 10,145,592 5,823 47,027 665 16,712 96 271 132 617 A.2 Unlikely to pay 6,027,279 5,404,688 281,442 391,425 44,137 16,605 2,792 171 74 217 A.3 Non-performing past-due 299,386 154,844 2,481 4,208 97 186 88 199 210 202 A.4 Performing exposures 250,633,123 1,196,663 21,824,697 75,720 2,680,503 17,618 4,534,195 12,672 845,927 704 Total (A) 259,764,400 16,901,787 22,114,443 518,380 2,725,402 51,121 4,537,171 13,313 846,343 1,740 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,908,266 398,655 65,575 1,401 26,703 1,932 308 144 - - B.2 Performing exposures 116,532,535 67,192 10,103,745 9,830 4,475,291 2,240 1,341,744 3,272 312,664 45 Total (B) 119,440,801 465,847 10,169,320 11,231 4,501,994 4,172 1,342,052 3,416 312,664 45 Total (A+B) 12.31.2018 379,205,201 17,367,634 32,283,763 529,611 7,227,396 55,293 5,879,223 16,729 1,159,007 1,785 B.2 Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area - Italy (€ '000) NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 824,117 2,811,764 525,947 1,774,892 680,389 2,606,340 774,159 2,952,596 A.2 Unlikely to pay 1,729,190 1,567,774 1,154,904 1,223,714 2,006,558 1,635,020 1,136,627 978,180 A.3 Non-performing past-due 61,125 31,040 53,344 25,576 70,789 37,671 114,128 60,557 A.4 Performing exposures 71,520,830 389,472 37,719,268 214,691 118,662,225 327,193 22,730,800 265,307 Total (A) 74,135,262 4,800,050 39,453,463 3,238,873 121,419,961 4,606,224 24,755,714 4,256,640 B. Off-balance sheet credit exposures B.1 Non-performing exposures 937,380 127,461 689,086 117,603 1,058,720 136,832 223,080 16,759 B.2 Performing exposures 47,421,523 28,587 29,536,476 12,974 32,015,952 20,288 7,558,584 5,343 Total (B) 48,358,903 156,048 30,225,562 130,577 33,074,672 157,120 7,781,664 22,102 Total (A+B) 12.31.2018 122,494,165 4,956,098 69,679,025 3,369,450 154,494,633 4,763,344 32,537,378 4,278,742 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 687 B.2 Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 2,804,612 10,145,592 5,823 47,027 665 16,712 96 271 132 617 A.2 Unlikely to pay 6,027,279 5,404,688 281,442 391,425 44,137 16,605 2,792 171 74 217 A.3 Non-performing past-due 299,386 154,844 2,481 4,208 97 186 88 199 210 202 A.4 Performing exposures 250,633,123 1,196,663 21,824,697 75,720 2,680,503 17,618 4,534,195 12,672 845,927 704 Total (A) 259,764,400 16,901,787 22,114,443 518,380 2,725,402 51,121 4,537,171 13,313 846,343 1,740 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,908,266 398,655 65,575 1,401 26,703 1,932 308 144 - - B.2 Performing exposures 116,532,535 67,192 10,103,745 9,830 4,475,291 2,240 1,341,744 3,272 312,664 45 Total (B) 119,440,801 465,847 10,169,320 11,231 4,501,994 4,172 1,342,052 3,416 312,664 45 Total (A+B) 12.31.2018 379,205,201 17,367,634 32,283,763 529,611 7,227,396 55,293 5,879,223 16,729 1,159,007 1,785 B.2 Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area - Italy (€ '000) NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 824,117 2,811,764 525,947 1,774,892 680,389 2,606,340 774,159 2,952,596 A.2 Unlikely to pay 1,729,190 1,567,774 1,154,904 1,223,714 2,006,558 1,635,020 1,136,627 978,180 A.3 Non-performing past-due 61,125 31,040 53,344 25,576 70,789 37,671 114,128 60,557 A.4 Performing exposures 71,520,830 389,472 37,719,268 214,691 118,662,225 327,193 22,730,800 265,307 Total (A) 74,135,262 4,800,050 39,453,463 3,238,873 121,419,961 4,606,224 24,755,714 4,256,640 B. Off-balance sheet credit exposures B.1 Non-performing exposures 937,380 127,461 689,086 117,603 1,058,720 136,832 223,080 16,759 B.2 Performing exposures 47,421,523 28,587 29,536,476 12,974 32,015,952 20,288 7,558,584 5,343 Total (B) 48,358,903 156,048 30,225,562 130,577 33,074,672 157,120 7,781,664 22,102 Total (A+B) 12.31.2018 122,494,165 4,956,098 69,679,025 3,369,450 154,494,633 4,763,344 32,537,378 4,278,742 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 687 B.2 Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 2,804,612 10,145,592 5,823 47,027 665 16,712 96 271 132 617 A.2 Unlikely to pay 6,027,279 5,404,688 281,442 391,425 44,137 16,605 2,792 171 74 217 A.3 Non-performing past-due 299,386 154,844 2,481 4,208 97 186 88 199 210 202 A.4 Performing exposures 250,633,123 1,196,663 21,824,697 75,720 2,680,503 17,618 4,534,195 12,672 845,927 704 Total (A) 259,764,400 16,901,787 22,114,443 518,380 2,725,402 51,121 4,537,171 13,313 846,343 1,740 B. Off-balance sheet credit exposures B.1 Non-performing exposures 2,908,266 398,655 65,575 1,401 26,703 1,932 308 144 - - B.2 Performing exposures 116,532,535 67,192 10,103,745 9,830 4,475,291 2,240 1,341,744 3,272 312,664 45 Total (B) 119,440,801 465,847 10,169,320 11,231 4,501,994 4,172 1,342,052 3,416 312,664 45 Total (A+B) 12.31.2018 379,205,201 17,367,634 32,283,763 529,611 7,227,396 55,293 5,879,223 16,729 1,159,007 1,785 B.2 Distribution of on-balance and off-balance sheet credit exposures with customers by geographic area - Italy (€ '000) NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures 824,117 2,811,764 525,947 1,774,892 680,389 2,606,340 774,159 2,952,596 A.2 Unlikely to pay 1,729,190 1,567,774 1,154,904 1,223,714 2,006,558 1,635,020 1,136,627 978,180 A.3 Non-performing past-due 61,125 31,040 53,344 25,576 70,789 37,671 114,128 60,557 A.4 Performing exposures 71,520,830 389,472 37,719,268 214,691 118,662,225 327,193 22,730,800 265,307 Total (A) 74,135,262 4,800,050 39,453,463 3,238,873 121,419,961 4,606,224 24,755,714 4,256,640 B. Off-balance sheet credit exposures B.1 Non-performing exposures 937,380 127,461 689,086 117,603 1,058,720 136,832 223,080 16,759 B.2 Performing exposures 47,421,523 28,587 29,536,476 12,974 32,015,952 20,288 7,558,584 5,343 Total (B) 48,358,903 156,048 30,225,562 130,577 33,074,672 157,120 7,781,664 22,102 Total (A+B) 12.31.2018 122,494,165 4,956,098 69,679,025 3,369,450 154,494,633 4,763,344 32,537,378 4,278,742 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 688 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.2 Distribution of On- and off-balance sheet exposures with customers by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures 5,632,066 12,065,047 5,661 37,202 563 1,231 97 110 82 183 A.2 Unlileky to pay 7,560,430 6,111,865 411,177 381,836 53,513 32,083 1,618 88 106 219 A.3 Non-Performing past-due exposures 333,110 213,201 1,780 994 169 286 125 381 373 1,109 A.4 Performing exposures 233,400,629 837,232 19,353,689 34,148 1,791,189 29,169 2,915,773 15,342 322,814 428 Total A 246,926,235 19,227,345 19,772,307 454,180 1,845,434 62,769 2,917,613 15,921 323,375 1,939 B. Off-balance sheet exposures B.1 Bad exposures 103,118 39,374 - - - - - - - - B.2 Unlikely to pay 1,076,740 217,934 7,548 1,358 2,111 582 1,597 - - - B.3 Other Non-Performing exposures 8,387 856 2 - - - - - 4 1 B.4 Performing exposures 51,281,990 26,940 7,103,271 5,903 3,173,170 301 1,252,657 3,731 98,449 - Total B 52,470,235 285,104 7,110,821 7,261 3,175,281 883 1,254,254 3,731 98,453 1 Total A+B 12.31.2017 299,396,470 19,512,449 26,883,128 461,441 5,020,715 63,652 4,171,867 19,652 421,828 1,940 B.2 Distribution of On- and off-balance sheet exposures with customers by geographic area (book value) - Italy (€ '000) AMOUNT AS AT 12.31.2017 NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. Balance sheet exposures A.1 Bad exposures 1,879,476 3,372,830 1,108,702 2,451,148 1,220,495 3,025,298 1,423,393 3,215,771 A.2 Unlileky to pay 2,348,478 1,975,214 1,539,364 1,341,652 2,163,342 1,609,537 1,509,248 1,185,461 A.3 Non-Performing past-due exposures 61,910 42,515 51,711 34,826 97,506 56,743 121,982 79,119 A.4 Performing exposures 65,453,720 264,283 37,665,745 148,182 107,498,645 239,709 22,782,516 185,057 Total A 69,743,584 5,654,842 40,365,522 3,975,808 110,979,988 4,931,287 25,837,139 4,665,408 B. Off-balance sheet exposures B.1 Bad exposures 15,453 6,544 32,482 18,553 29,732 2,797 25,452 11,480 B.2 Unlikely to pay 411,955 124,977 163,369 47,563 441,073 40,348 60,344 5,045 B.3 Other Non-Performing exposures 717 41 647 68 6,063 687 960 59 B.4 Performing exposures 17,828,006 8,383 8,210,872 4,837 23,092,983 12,289 2,150,129 1,432 Total B 18,256,131 139,945 8,407,370 71,021 23,569,851 56,121 2,236,885 18,016 Total A+B 12.31.2017 87,999,715 5,794,787 48,772,892 4,046,829 134,549,839 4,987,408 28,074,024 4,683,424 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 688 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.2 Distribution of On- and off-balance sheet exposures with customers by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures 5,632,066 12,065,047 5,661 37,202 563 1,231 97 110 82 183 A.2 Unlileky to pay 7,560,430 6,111,865 411,177 381,836 53,513 32,083 1,618 88 106 219 A.3 Non-Performing past-due exposures 333,110 213,201 1,780 994 169 286 125 381 373 1,109 A.4 Performing exposures 233,400,629 837,232 19,353,689 34,148 1,791,189 29,169 2,915,773 15,342 322,814 428 Total A 246,926,235 19,227,345 19,772,307 454,180 1,845,434 62,769 2,917,613 15,921 323,375 1,939 B. Off-balance sheet exposures B.1 Bad exposures 103,118 39,374 - - - - - - - - B.2 Unlikely to pay 1,076,740 217,934 7,548 1,358 2,111 582 1,597 - - - B.3 Other Non-Performing exposures 8,387 856 2 - - - - - 4 1 B.4 Performing exposures 51,281,990 26,940 7,103,271 5,903 3,173,170 301 1,252,657 3,731 98,449 - Total B 52,470,235 285,104 7,110,821 7,261 3,175,281 883 1,254,254 3,731 98,453 1 Total A+B 12.31.2017 299,396,470 19,512,449 26,883,128 461,441 5,020,715 63,652 4,171,867 19,652 421,828 1,940 B.2 Distribution of On- and off-balance sheet exposures with customers by geographic area (book value) - Italy (€ '000) AMOUNT AS AT 12.31.2017 NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. Balance sheet exposures A.1 Bad exposures 1,879,476 3,372,830 1,108,702 2,451,148 1,220,495 3,025,298 1,423,393 3,215,771 A.2 Unlileky to pay 2,348,478 1,975,214 1,539,364 1,341,652 2,163,342 1,609,537 1,509,248 1,185,461 A.3 Non-Performing past-due exposures 61,910 42,515 51,711 34,826 97,506 56,743 121,982 79,119 A.4 Performing exposures 65,453,720 264,283 37,665,745 148,182 107,498,645 239,709 22,782,516 185,057 Total A 69,743,584 5,654,842 40,365,522 3,975,808 110,979,988 4,931,287 25,837,139 4,665,408 B. Off-balance sheet exposures B.1 Bad exposures 15,453 6,544 32,482 18,553 29,732 2,797 25,452 11,480 B.2 Unlikely to pay 411,955 124,977 163,369 47,563 441,073 40,348 60,344 5,045 B.3 Other Non-Performing exposures 717 41 647 68 6,063 687 960 59 B.4 Performing exposures 17,828,006 8,383 8,210,872 4,837 23,092,983 12,289 2,150,129 1,432 Total B 18,256,131 139,945 8,407,370 71,021 23,569,851 56,121 2,236,885 18,016 Total A+B 12.31.2017 87,999,715 5,794,787 48,772,892 4,046,829 134,549,839 4,987,408 28,074,024 4,683,424 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 688 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.2 Distribution of On- and off-balance sheet exposures with customers by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures 5,632,066 12,065,047 5,661 37,202 563 1,231 97 110 82 183 A.2 Unlileky to pay 7,560,430 6,111,865 411,177 381,836 53,513 32,083 1,618 88 106 219 A.3 Non-Performing past-due exposures 333,110 213,201 1,780 994 169 286 125 381 373 1,109 A.4 Performing exposures 233,400,629 837,232 19,353,689 34,148 1,791,189 29,169 2,915,773 15,342 322,814 428 Total A 246,926,235 19,227,345 19,772,307 454,180 1,845,434 62,769 2,917,613 15,921 323,375 1,939 B. Off-balance sheet exposures B.1 Bad exposures 103,118 39,374 - - - - - - - - B.2 Unlikely to pay 1,076,740 217,934 7,548 1,358 2,111 582 1,597 - - - B.3 Other Non-Performing exposures 8,387 856 2 - - - - - 4 1 B.4 Performing exposures 51,281,990 26,940 7,103,271 5,903 3,173,170 301 1,252,657 3,731 98,449 - Total B 52,470,235 285,104 7,110,821 7,261 3,175,281 883 1,254,254 3,731 98,453 1 Total A+B 12.31.2017 299,396,470 19,512,449 26,883,128 461,441 5,020,715 63,652 4,171,867 19,652 421,828 1,940 B.2 Distribution of On- and off-balance sheet exposures with customers by geographic area (book value) - Italy (€ '000) AMOUNT AS AT 12.31.2017 NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. Balance sheet exposures A.1 Bad exposures 1,879,476 3,372,830 1,108,702 2,451,148 1,220,495 3,025,298 1,423,393 3,215,771 A.2 Unlileky to pay 2,348,478 1,975,214 1,539,364 1,341,652 2,163,342 1,609,537 1,509,248 1,185,461 A.3 Non-Performing past-due exposures 61,910 42,515 51,711 34,826 97,506 56,743 121,982 79,119 A.4 Performing exposures 65,453,720 264,283 37,665,745 148,182 107,498,645 239,709 22,782,516 185,057 Total A 69,743,584 5,654,842 40,365,522 3,975,808 110,979,988 4,931,287 25,837,139 4,665,408 B. Off-balance sheet exposures B.1 Bad exposures 15,453 6,544 32,482 18,553 29,732 2,797 25,452 11,480 B.2 Unlikely to pay 411,955 124,977 163,369 47,563 441,073 40,348 60,344 5,045 B.3 Other Non-Performing exposures 717 41 647 68 6,063 687 960 59 B.4 Performing exposures 17,828,006 8,383 8,210,872 4,837 23,092,983 12,289 2,150,129 1,432 Total B 18,256,131 139,945 8,407,370 71,021 23,569,851 56,121 2,236,885 18,016 Total A+B 12.31.2017 87,999,715 5,794,787 48,772,892 4,046,829 134,549,839 4,987,408 28,074,024 4,683,424 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 688 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.2 Distribution of On- and off-balance sheet exposures with customers by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures 5,632,066 12,065,047 5,661 37,202 563 1,231 97 110 82 183 A.2 Unlileky to pay 7,560,430 6,111,865 411,177 381,836 53,513 32,083 1,618 88 106 219 A.3 Non-Performing past-due exposures 333,110 213,201 1,780 994 169 286 125 381 373 1,109 A.4 Performing exposures 233,400,629 837,232 19,353,689 34,148 1,791,189 29,169 2,915,773 15,342 322,814 428 Total A 246,926,235 19,227,345 19,772,307 454,180 1,845,434 62,769 2,917,613 15,921 323,375 1,939 B. Off-balance sheet exposures B.1 Bad exposures 103,118 39,374 - - - - - - - - B.2 Unlikely to pay 1,076,740 217,934 7,548 1,358 2,111 582 1,597 - - - B.3 Other Non-Performing exposures 8,387 856 2 - - - - - 4 1 B.4 Performing exposures 51,281,990 26,940 7,103,271 5,903 3,173,170 301 1,252,657 3,731 98,449 - Total B 52,470,235 285,104 7,110,821 7,261 3,175,281 883 1,254,254 3,731 98,453 1 Total A+B 12.31.2017 299,396,470 19,512,449 26,883,128 461,441 5,020,715 63,652 4,171,867 19,652 421,828 1,940 B.2 Distribution of On- and off-balance sheet exposures with customers by geographic area (book value) - Italy (€ '000) AMOUNT AS AT 12.31.2017 NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. Balance sheet exposures A.1 Bad exposures 1,879,476 3,372,830 1,108,702 2,451,148 1,220,495 3,025,298 1,423,393 3,215,771 A.2 Unlileky to pay 2,348,478 1,975,214 1,539,364 1,341,652 2,163,342 1,609,537 1,509,248 1,185,461 A.3 Non-Performing past-due exposures 61,910 42,515 51,711 34,826 97,506 56,743 121,982 79,119 A.4 Performing exposures 65,453,720 264,283 37,665,745 148,182 107,498,645 239,709 22,782,516 185,057 Total A 69,743,584 5,654,842 40,365,522 3,975,808 110,979,988 4,931,287 25,837,139 4,665,408 B. Off-balance sheet exposures B.1 Bad exposures 15,453 6,544 32,482 18,553 29,732 2,797 25,452 11,480 B.2 Unlikely to pay 411,955 124,977 163,369 47,563 441,073 40,348 60,344 5,045 B.3 Other Non-Performing exposures 717 41 647 68 6,063 687 960 59 B.4 Performing exposures 17,828,006 8,383 8,210,872 4,837 23,092,983 12,289 2,150,129 1,432 Total B 18,256,131 139,945 8,407,370 71,021 23,569,851 56,121 2,236,885 18,016 Total A+B 12.31.2017 87,999,715 5,794,787 48,772,892 4,046,829 134,549,839 4,987,408 28,074,024 4,683,424 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 688 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.2 Distribution of On- and off-balance sheet exposures with customers by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures 5,632,066 12,065,047 5,661 37,202 563 1,231 97 110 82 183 A.2 Unlileky to pay 7,560,430 6,111,865 411,177 381,836 53,513 32,083 1,618 88 106 219 A.3 Non-Performing past-due exposures 333,110 213,201 1,780 994 169 286 125 381 373 1,109 A.4 Performing exposures 233,400,629 837,232 19,353,689 34,148 1,791,189 29,169 2,915,773 15,342 322,814 428 Total A 246,926,235 19,227,345 19,772,307 454,180 1,845,434 62,769 2,917,613 15,921 323,375 1,939 B. Off-balance sheet exposures B.1 Bad exposures 103,118 39,374 - - - - - - - - B.2 Unlikely to pay 1,076,740 217,934 7,548 1,358 2,111 582 1,597 - - - B.3 Other Non-Performing exposures 8,387 856 2 - - - - - 4 1 B.4 Performing exposures 51,281,990 26,940 7,103,271 5,903 3,173,170 301 1,252,657 3,731 98,449 - Total B 52,470,235 285,104 7,110,821 7,261 3,175,281 883 1,254,254 3,731 98,453 1 Total A+B 12.31.2017 299,396,470 19,512,449 26,883,128 461,441 5,020,715 63,652 4,171,867 19,652 421,828 1,940 B.2 Distribution of On- and off-balance sheet exposures with customers by geographic area (book value) - Italy (€ '000) AMOUNT AS AT 12.31.2017 NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS GEOGRAPHIC AREA/EXPOSURES NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. Balance sheet exposures A.1 Bad exposures 1,879,476 3,372,830 1,108,702 2,451,148 1,220,495 3,025,298 1,423,393 3,215,771 A.2 Unlileky to pay 2,348,478 1,975,214 1,539,364 1,341,652 2,163,342 1,609,537 1,509,248 1,185,461 A.3 Non-Performing past-due exposures 61,910 42,515 51,711 34,826 97,506 56,743 121,982 79,119 A.4 Performing exposures 65,453,720 264,283 37,665,745 148,182 107,498,645 239,709 22,782,516 185,057 Total A 69,743,584 5,654,842 40,365,522 3,975,808 110,979,988 4,931,287 25,837,139 4,665,408 B. Off-balance sheet exposures B.1 Bad exposures 15,453 6,544 32,482 18,553 29,732 2,797 25,452 11,480 B.2 Unlikely to pay 411,955 124,977 163,369 47,563 441,073 40,348 60,344 5,045 B.3 Other Non-Performing exposures 717 41 647 68 6,063 687 960 59 B.4 Performing exposures 17,828,006 8,383 8,210,872 4,837 23,092,983 12,289 2,150,129 1,432 Total B 18,256,131 139,945 8,407,370 71,021 23,569,851 56,121 2,236,885 18,016 Total A+B 12.31.2017 87,999,715 5,794,787 48,772,892 4,046,829 134,549,839 4,987,408 28,074,024 4,683,424 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 689 B.3 Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - 309 - - - - - - A.2 Unlikely to pay - - - - - 3,508 - - - - A.3 Non-performing past-due - - - - - - - 26 - - A.4 Performing exposures 8,819,215 1,547 23,376,961 15,501 414,213 316 977,577 3,947 336,339 228 Total (A) 8,819,215 1,547 23,376,961 15,810 414,213 3,824 977,577 3,973 336,339 228 B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - - - - - B.2 Performing exposures 2,447,694 349 28,258,585 5,341 977,717 100 4,842,360 1,163 1,250,219 234 Total (B) 2,447,694 349 28,258,585 5,341 977,717 100 4,842,360 1,163 1,250,219 234 Total (A+B) 12.31.2018 11,266,909 1,896 51,635,546 21,151 1,391,930 3,924 5,819,937 5,136 1,586,558 462 B.3 Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area - Italy (€ '000) EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - - - - - - A.2 Unlikely to pay - - - - - - - - A.3 Non-performing past-due - - - - - - - - A.4 Performing exposures 6,045,323 1,494 276,807 12 2,497,085 41 - - Total (A) 6,045,323 1,494 276,807 12 2,497,085 41 - - B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - - - B.2 Performing exposures 1,955,101 247 291,027 67 100,348 35 101,218 - Total (B) 1,955,101 247 291,027 67 100,348 35 101,218 - Total (A+B) 12.31.2018 8,000,424 1,741 567,834 79 2,597,433 76 101,218 - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 689 B.3 Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - 309 - - - - - - A.2 Unlikely to pay - - - - - 3,508 - - - - A.3 Non-performing past-due - - - - - - - 26 - - A.4 Performing exposures 8,819,215 1,547 23,376,961 15,501 414,213 316 977,577 3,947 336,339 228 Total (A) 8,819,215 1,547 23,376,961 15,810 414,213 3,824 977,577 3,973 336,339 228 B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - - - - - B.2 Performing exposures 2,447,694 349 28,258,585 5,341 977,717 100 4,842,360 1,163 1,250,219 234 Total (B) 2,447,694 349 28,258,585 5,341 977,717 100 4,842,360 1,163 1,250,219 234 Total (A+B) 12.31.2018 11,266,909 1,896 51,635,546 21,151 1,391,930 3,924 5,819,937 5,136 1,586,558 462 B.3 Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area - Italy (€ '000) EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - - - - - - A.2 Unlikely to pay - - - - - - - - A.3 Non-performing past-due - - - - - - - - A.4 Performing exposures 6,045,323 1,494 276,807 12 2,497,085 41 - - Total (A) 6,045,323 1,494 276,807 12 2,497,085 41 - - B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - - - B.2 Performing exposures 1,955,101 247 291,027 67 100,348 35 101,218 - Total (B) 1,955,101 247 291,027 67 100,348 35 101,218 - Total (A+B) 12.31.2018 8,000,424 1,741 567,834 79 2,597,433 76 101,218 - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 689 B.3 Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - 309 - - - - - - A.2 Unlikely to pay - - - - - 3,508 - - - - A.3 Non-performing past-due - - - - - - - 26 - - A.4 Performing exposures 8,819,215 1,547 23,376,961 15,501 414,213 316 977,577 3,947 336,339 228 Total (A) 8,819,215 1,547 23,376,961 15,810 414,213 3,824 977,577 3,973 336,339 228 B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - - - - - B.2 Performing exposures 2,447,694 349 28,258,585 5,341 977,717 100 4,842,360 1,163 1,250,219 234 Total (B) 2,447,694 349 28,258,585 5,341 977,717 100 4,842,360 1,163 1,250,219 234 Total (A+B) 12.31.2018 11,266,909 1,896 51,635,546 21,151 1,391,930 3,924 5,819,937 5,136 1,586,558 462 B.3 Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area - Italy (€ '000) EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - - - - - - A.2 Unlikely to pay - - - - - - - - A.3 Non-performing past-due - - - - - - - - A.4 Performing exposures 6,045,323 1,494 276,807 12 2,497,085 41 - - Total (A) 6,045,323 1,494 276,807 12 2,497,085 41 - - B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - - - B.2 Performing exposures 1,955,101 247 291,027 67 100,348 35 101,218 - Total (B) 1,955,101 247 291,027 67 100,348 35 101,218 - Total (A+B) 12.31.2018 8,000,424 1,741 567,834 79 2,597,433 76 101,218 - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 689 B.3 Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - 309 - - - - - - A.2 Unlikely to pay - - - - - 3,508 - - - - A.3 Non-performing past-due - - - - - - - 26 - - A.4 Performing exposures 8,819,215 1,547 23,376,961 15,501 414,213 316 977,577 3,947 336,339 228 Total (A) 8,819,215 1,547 23,376,961 15,810 414,213 3,824 977,577 3,973 336,339 228 B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - - - - - B.2 Performing exposures 2,447,694 349 28,258,585 5,341 977,717 100 4,842,360 1,163 1,250,219 234 Total (B) 2,447,694 349 28,258,585 5,341 977,717 100 4,842,360 1,163 1,250,219 234 Total (A+B) 12.31.2018 11,266,909 1,896 51,635,546 21,151 1,391,930 3,924 5,819,937 5,136 1,586,558 462 B.3 Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area - Italy (€ '000) EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - - - - - - A.2 Unlikely to pay - - - - - - - - A.3 Non-performing past-due - - - - - - - - A.4 Performing exposures 6,045,323 1,494 276,807 12 2,497,085 41 - - Total (A) 6,045,323 1,494 276,807 12 2,497,085 41 - - B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - - - B.2 Performing exposures 1,955,101 247 291,027 67 100,348 35 101,218 - Total (B) 1,955,101 247 291,027 67 100,348 35 101,218 - Total (A+B) 12.31.2018 8,000,424 1,741 567,834 79 2,597,433 76 101,218 - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 689 B.3 Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area (€ '000) ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - 309 - - - - - - A.2 Unlikely to pay - - - - - 3,508 - - - - A.3 Non-performing past-due - - - - - - - 26 - - A.4 Performing exposures 8,819,215 1,547 23,376,961 15,501 414,213 316 977,577 3,947 336,339 228 Total (A) 8,819,215 1,547 23,376,961 15,810 414,213 3,824 977,577 3,973 336,339 228 B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - - - - - B.2 Performing exposures 2,447,694 349 28,258,585 5,341 977,717 100 4,842,360 1,163 1,250,219 234 Total (B) 2,447,694 349 28,258,585 5,341 977,717 100 4,842,360 1,163 1,250,219 234 Total (A+B) 12.31.2018 11,266,909 1,896 51,635,546 21,151 1,391,930 3,924 5,819,937 5,136 1,586,558 462 B.3 Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area - Italy (€ '000) EXPOSURES/GEOGRAPHIC AREAS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS NET EXPOSURE OVERALL WRITE-DOWNS A. On-balance sheet credit exposures A.1 Bad exposures - - - - - - - - A.2 Unlikely to pay - - - - - - - - A.3 Non-performing past-due - - - - - - - - A.4 Performing exposures 6,045,323 1,494 276,807 12 2,497,085 41 - - Total (A) 6,045,323 1,494 276,807 12 2,497,085 41 - - B. Off-balance sheet credit exposures B.1 Non-performing exposures - - - - - - - - B.2 Performing exposures 1,955,101 247 291,027 67 100,348 35 101,218 - Total (B) 1,955,101 247 291,027 67 100,348 35 101,218 - Total (A+B) 12.31.2018 8,000,424 1,741 567,834 79 2,597,433 76 101,218 - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 690 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.3 Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - - 309 - - - - - - A.2 Unlikely to pay - - - - 4,998 1,175 - 16 - - A.3 Non-Performing past-due - - - - - - - 25 - - A.4 Performing exposures 7,339,049 1,106 22,709,890 839 298,362 410 326,795 4,246 157,524 363 Total A 7,339,049 1,106 22,709,890 1,148 303,360 1,585 326,795 4,287 157,524 363 B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - - - B.2 Unlikely to pay - - - - 2,333 2,334 - - - - B.3 Other Non-Performing exposures - - - - - - - - - - B.4 Performing exposures 808,834 219 10,528,281 3,130 177,520 231 1,079,053 1,993 244,553 606 Total B 808,834 219 10,528,281 3,130 179,853 2,565 1,079,053 1,993 244,553 606 Total A+B 12.31.2017 8,147,883 1,325 33,238,171 4,278 483,213 4,150 1,405,848 6,280 402,077 969 B.3 Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) - Italy (€ '000) AMOUNT AS AT 12.31.2017 NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - - - - - - - A.2 Unlikely to pay - - - - - - - - A.3 Non-Performing past-due - - - - - - - - A.4 Performing exposures 4,504,476 1,014 320,499 31 2,514,053 61 21 - Total A 4,504,476 1,014 320,499 31 2,514,053 61 21 - B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - B.2 Unlikely to pay - - - - - - - - B.3 Other Non-Performing exposures - - - - - - - - B.4 Performing exposures 643,179 187 45,319 27 120,267 3 69 1 Total B 643,179 187 45,319 27 120,267 3 69 1 Total A+B 12.31.2017 5,147,655 1,201 365,818 58 2,634,320 64 90 1 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 690 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.3 Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - - 309 - - - - - - A.2 Unlikely to pay - - - - 4,998 1,175 - 16 - - A.3 Non-Performing past-due - - - - - - - 25 - - A.4 Performing exposures 7,339,049 1,106 22,709,890 839 298,362 410 326,795 4,246 157,524 363 Total A 7,339,049 1,106 22,709,890 1,148 303,360 1,585 326,795 4,287 157,524 363 B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - - - B.2 Unlikely to pay - - - - 2,333 2,334 - - - - B.3 Other Non-Performing exposures - - - - - - - - - - B.4 Performing exposures 808,834 219 10,528,281 3,130 177,520 231 1,079,053 1,993 244,553 606 Total B 808,834 219 10,528,281 3,130 179,853 2,565 1,079,053 1,993 244,553 606 Total A+B 12.31.2017 8,147,883 1,325 33,238,171 4,278 483,213 4,150 1,405,848 6,280 402,077 969 B.3 Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) - Italy (€ '000) AMOUNT AS AT 12.31.2017 NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - - - - - - - A.2 Unlikely to pay - - - - - - - - A.3 Non-Performing past-due - - - - - - - - A.4 Performing exposures 4,504,476 1,014 320,499 31 2,514,053 61 21 - Total A 4,504,476 1,014 320,499 31 2,514,053 61 21 - B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - B.2 Unlikely to pay - - - - - - - - B.3 Other Non-Performing exposures - - - - - - - - B.4 Performing exposures 643,179 187 45,319 27 120,267 3 69 1 Total B 643,179 187 45,319 27 120,267 3 69 1 Total A+B 12.31.2017 5,147,655 1,201 365,818 58 2,634,320 64 90 1 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 690 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.3 Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - - 309 - - - - - - A.2 Unlikely to pay - - - - 4,998 1,175 - 16 - - A.3 Non-Performing past-due - - - - - - - 25 - - A.4 Performing exposures 7,339,049 1,106 22,709,890 839 298,362 410 326,795 4,246 157,524 363 Total A 7,339,049 1,106 22,709,890 1,148 303,360 1,585 326,795 4,287 157,524 363 B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - - - B.2 Unlikely to pay - - - - 2,333 2,334 - - - - B.3 Other Non-Performing exposures - - - - - - - - - - B.4 Performing exposures 808,834 219 10,528,281 3,130 177,520 231 1,079,053 1,993 244,553 606 Total B 808,834 219 10,528,281 3,130 179,853 2,565 1,079,053 1,993 244,553 606 Total A+B 12.31.2017 8,147,883 1,325 33,238,171 4,278 483,213 4,150 1,405,848 6,280 402,077 969 B.3 Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) - Italy (€ '000) AMOUNT AS AT 12.31.2017 NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - - - - - - - A.2 Unlikely to pay - - - - - - - - A.3 Non-Performing past-due - - - - - - - - A.4 Performing exposures 4,504,476 1,014 320,499 31 2,514,053 61 21 - Total A 4,504,476 1,014 320,499 31 2,514,053 61 21 - B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - B.2 Unlikely to pay - - - - - - - - B.3 Other Non-Performing exposures - - - - - - - - B.4 Performing exposures 643,179 187 45,319 27 120,267 3 69 1 Total B 643,179 187 45,319 27 120,267 3 69 1 Total A+B 12.31.2017 5,147,655 1,201 365,818 58 2,634,320 64 90 1 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 690 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.3 Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - - 309 - - - - - - A.2 Unlikely to pay - - - - 4,998 1,175 - 16 - - A.3 Non-Performing past-due - - - - - - - 25 - - A.4 Performing exposures 7,339,049 1,106 22,709,890 839 298,362 410 326,795 4,246 157,524 363 Total A 7,339,049 1,106 22,709,890 1,148 303,360 1,585 326,795 4,287 157,524 363 B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - - - B.2 Unlikely to pay - - - - 2,333 2,334 - - - - B.3 Other Non-Performing exposures - - - - - - - - - - B.4 Performing exposures 808,834 219 10,528,281 3,130 177,520 231 1,079,053 1,993 244,553 606 Total B 808,834 219 10,528,281 3,130 179,853 2,565 1,079,053 1,993 244,553 606 Total A+B 12.31.2017 8,147,883 1,325 33,238,171 4,278 483,213 4,150 1,405,848 6,280 402,077 969 B.3 Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) - Italy (€ '000) AMOUNT AS AT 12.31.2017 NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - - - - - - - A.2 Unlikely to pay - - - - - - - - A.3 Non-Performing past-due - - - - - - - - A.4 Performing exposures 4,504,476 1,014 320,499 31 2,514,053 61 21 - Total A 4,504,476 1,014 320,499 31 2,514,053 61 21 - B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - B.2 Unlikely to pay - - - - - - - - B.3 Other Non-Performing exposures - - - - - - - - B.4 Performing exposures 643,179 187 45,319 27 120,267 3 69 1 Total B 643,179 187 45,319 27 120,267 3 69 1 Total A+B 12.31.2017 5,147,655 1,201 365,818 58 2,634,320 64 90 1 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 690 2018 Annual Report and Accounts · UniCredit The tables prepared pursuant to IAS39 and to previous Circular 262 of Banca d’Italia (4th update of 15 December 2015) are reported below for the purpose of comparability. B.3 Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) (€ '000) AMOUNT AS AT 12.31.2017 ITALY OTHER EUROPEAN COUNTRIES AMERICA ASIA REST OF THE WORLD EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - - 309 - - - - - - A.2 Unlikely to pay - - - - 4,998 1,175 - 16 - - A.3 Non-Performing past-due - - - - - - - 25 - - A.4 Performing exposures 7,339,049 1,106 22,709,890 839 298,362 410 326,795 4,246 157,524 363 Total A 7,339,049 1,106 22,709,890 1,148 303,360 1,585 326,795 4,287 157,524 363 B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - - - B.2 Unlikely to pay - - - - 2,333 2,334 - - - - B.3 Other Non-Performing exposures - - - - - - - - - - B.4 Performing exposures 808,834 219 10,528,281 3,130 177,520 231 1,079,053 1,993 244,553 606 Total B 808,834 219 10,528,281 3,130 179,853 2,565 1,079,053 1,993 244,553 606 Total A+B 12.31.2017 8,147,883 1,325 33,238,171 4,278 483,213 4,150 1,405,848 6,280 402,077 969 B.3 Distribution of On- and off-balance sheet credit exposures with banks by geographic area (book value) - Italy (€ '000) AMOUNT AS AT 12.31.2017 NORTH-WEST ITALY NORTH-EAST ITALY CENTRAL ITALY SOUTH ITALY AND ISLANDS EXPOSURES/GEOGRAPHIC AREA NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS NET EXPOSURE TOTAL WRITE-DOWNS A. On-balance sheet exposures A.1 Bad exposures - - - - - - - - A.2 Unlikely to pay - - - - - - - - A.3 Non-Performing past-due - - - - - - - - A.4 Performing exposures 4,504,476 1,014 320,499 31 2,514,053 61 21 - Total A 4,504,476 1,014 320,499 31 2,514,053 61 21 - B. Off-balance sheet exposures B.1 Bad exposures - - - - - - - - B.2 Unlikely to pay - - - - - - - - B.3 Other Non-Performing exposures - - - - - - - - B.4 Performing exposures 643,179 187 45,319 27 120,267 3 69 1 Total B 643,179 187 45,319 27 120,267 3 69 1 Total A+B 12.31.2017 5,147,655 1,201 365,818 58 2,634,320 64 90 1 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 691 B.4 Large exposures 12.31.2018 a) Amount book value (€ million) 312,226 b) Amount weighted value (€ million) 14,248 c) Number 7 C. Securitisation transactions Qualitative information In 2018 UniCredit S.p.A. carried out four synthetic new securitisation transactions: • Agribond 2; • Bond del Mezzogiorno 1; • Bond Italia 5 bis; • Puglia Sviluppo 1. Details of the transactions, traditional and synthetic, are set out in the tables enclosed in the ‘Annexes’ to the Consolidated Financial Statements, including also those carried out in previous financial years. It should be noted that, again during 2018: • the traditional transaction Caesar Finance was closed; • at the end of November, the amount of the Consumer Three transaction, “self-securitisation” completed in 2016 for counterbalancing capacity purposes, was increased with the sale of a new portfolio and the issue of new notes by the vehicle for 2 billion. It should also be noted that "self-securitisations" and transactions in warehousing phase are not included in the quantitative tables of Part C, as required by regulations. Part of the portfolio are: • own securitisation transactions, both traditional and synthetic, including also those traditional carried out by the Banks absorbed by UniCredit S.p.A. in previous years, for a book value of €7,816 million as at 31 December 2018; • securities arising out of securitisation transactions carried out by other Companies belonging to the UniCredit group, for a book value of €1,412 million as at 31 December 2018; • other third-party securitisation exposures, for a book value of €46 million as at 31 December 2018. Quantitative information C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised 493,544 - 250,688 - 95,715 - A.1 CBO OTHERS 493,544 - 250,688 - 95,715 - B. Partially derecognised - - 32,701 - - (3,872) C.1 CLO OTHERS - - 32,701 - - (3,872) C. Not-derecognised 5,572,696 - 436,774 - 934,300 (222,546) C.1 RMBS Prime 801,278 - 259,350 - 361,758 (180,124) C.2 CLO SME 125 - - - 30 - C.3 CLO OTHERS 4,771,293 - 177,424 - 572,512 (42,422) C.4 CONSUMER LOANS - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 691 B.4 Large exposures 12.31.2018 a) Amount book value (€ million) 312,226 b) Amount weighted value (€ million) 14,248 c) Number 7 C. Securitisation transactions Qualitative information In 2018 UniCredit S.p.A. carried out four synthetic new securitisation transactions: • Agribond 2; • Bond del Mezzogiorno 1; • Bond Italia 5 bis; • Puglia Sviluppo 1. Details of the transactions, traditional and synthetic, are set out in the tables enclosed in the ‘Annexes’ to the Consolidated Financial Statements, including also those carried out in previous financial years. It should be noted that, again during 2018: • the traditional transaction Caesar Finance was closed; • at the end of November, the amount of the Consumer Three transaction, “self-securitisation” completed in 2016 for counterbalancing capacity purposes, was increased with the sale of a new portfolio and the issue of new notes by the vehicle for 2 billion. It should also be noted that "self-securitisations" and transactions in warehousing phase are not included in the quantitative tables of Part C, as required by regulations. Part of the portfolio are: • own securitisation transactions, both traditional and synthetic, including also those traditional carried out by the Banks absorbed by UniCredit S.p.A. in previous years, for a book value of €7,816 million as at 31 December 2018; • securities arising out of securitisation transactions carried out by other Companies belonging to the UniCredit group, for a book value of €1,412 million as at 31 December 2018; • other third-party securitisation exposures, for a book value of €46 million as at 31 December 2018. Quantitative information C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised 493,544 - 250,688 - 95,715 - A.1 CBO OTHERS 493,544 - 250,688 - 95,715 - B. Partially derecognised - - 32,701 - - (3,872) C.1 CLO OTHERS - - 32,701 - - (3,872) C. Not-derecognised 5,572,696 - 436,774 - 934,300 (222,546) C.1 RMBS Prime 801,278 - 259,350 - 361,758 (180,124) C.2 CLO SME 125 - - - 30 - C.3 CLO OTHERS 4,771,293 - 177,424 - 572,512 (42,422) C.4 CONSUMER LOANS - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 691 B.4 Large exposures 12.31.2018 a) Amount book value (€ million) 312,226 b) Amount weighted value (€ million) 14,248 c) Number 7 C. Securitisation transactions Qualitative information In 2018 UniCredit S.p.A. carried out four synthetic new securitisation transactions: • Agribond 2; • Bond del Mezzogiorno 1; • Bond Italia 5 bis; • Puglia Sviluppo 1. Details of the transactions, traditional and synthetic, are set out in the tables enclosed in the ‘Annexes’ to the Consolidated Financial Statements, including also those carried out in previous financial years. It should be noted that, again during 2018: • the traditional transaction Caesar Finance was closed; • at the end of November, the amount of the Consumer Three transaction, “self-securitisation” completed in 2016 for counterbalancing capacity purposes, was increased with the sale of a new portfolio and the issue of new notes by the vehicle for 2 billion. It should also be noted that "self-securitisations" and transactions in warehousing phase are not included in the quantitative tables of Part C, as required by regulations. Part of the portfolio are: • own securitisation transactions, both traditional and synthetic, including also those traditional carried out by the Banks absorbed by UniCredit S.p.A. in previous years, for a book value of €7,816 million as at 31 December 2018; • securities arising out of securitisation transactions carried out by other Companies belonging to the UniCredit group, for a book value of €1,412 million as at 31 December 2018; • other third-party securitisation exposures, for a book value of €46 million as at 31 December 2018. Quantitative information C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised 493,544 - 250,688 - 95,715 - A.1 CBO OTHERS 493,544 - 250,688 - 95,715 - B. Partially derecognised - - 32,701 - - (3,872) C.1 CLO OTHERS - - 32,701 - - (3,872) C. Not-derecognised 5,572,696 - 436,774 - 934,300 (222,546) C.1 RMBS Prime 801,278 - 259,350 - 361,758 (180,124) C.2 CLO SME 125 - - - 30 - C.3 CLO OTHERS 4,771,293 - 177,424 - 572,512 (42,422) C.4 CONSUMER LOANS - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 691 B.4 Large exposures 12.31.2018 a) Amount book value (€ million) 312,226 b) Amount weighted value (€ million) 14,248 c) Number 7 C. Securitisation transactions Qualitative information In 2018 UniCredit S.p.A. carried out four synthetic new securitisation transactions: • Agribond 2; • Bond del Mezzogiorno 1; • Bond Italia 5 bis; • Puglia Sviluppo 1. Details of the transactions, traditional and synthetic, are set out in the tables enclosed in the ‘Annexes’ to the Consolidated Financial Statements, including also those carried out in previous financial years. It should be noted that, again during 2018: • the traditional transaction Caesar Finance was closed; • at the end of November, the amount of the Consumer Three transaction, “self-securitisation” completed in 2016 for counterbalancing capacity purposes, was increased with the sale of a new portfolio and the issue of new notes by the vehicle for 2 billion. It should also be noted that "self-securitisations" and transactions in warehousing phase are not included in the quantitative tables of Part C, as required by regulations. Part of the portfolio are: • own securitisation transactions, both traditional and synthetic, including also those traditional carried out by the Banks absorbed by UniCredit S.p.A. in previous years, for a book value of €7,816 million as at 31 December 2018; • securities arising out of securitisation transactions carried out by other Companies belonging to the UniCredit group, for a book value of €1,412 million as at 31 December 2018; • other third-party securitisation exposures, for a book value of €46 million as at 31 December 2018. Quantitative information C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised 493,544 - 250,688 - 95,715 - A.1 CBO OTHERS 493,544 - 250,688 - 95,715 - B. Partially derecognised - - 32,701 - - (3,872) C.1 CLO OTHERS - - 32,701 - - (3,872) C. Not-derecognised 5,572,696 - 436,774 - 934,300 (222,546) C.1 RMBS Prime 801,278 - 259,350 - 361,758 (180,124) C.2 CLO SME 125 - - - 30 - C.3 CLO OTHERS 4,771,293 - 177,424 - 572,512 (42,422) C.4 CONSUMER LOANS - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 691 B.4 Large exposures 12.31.2018 a) Amount book value (€ million) 312,226 b) Amount weighted value (€ million) 14,248 c) Number 7 C. Securitisation transactions Qualitative information In 2018 UniCredit S.p.A. carried out four synthetic new securitisation transactions: • Agribond 2; • Bond del Mezzogiorno 1; • Bond Italia 5 bis; • Puglia Sviluppo 1. Details of the transactions, traditional and synthetic, are set out in the tables enclosed in the ‘Annexes’ to the Consolidated Financial Statements, including also those carried out in previous financial years. It should be noted that, again during 2018: • the traditional transaction Caesar Finance was closed; • at the end of November, the amount of the Consumer Three transaction, “self-securitisation” completed in 2016 for counterbalancing capacity purposes, was increased with the sale of a new portfolio and the issue of new notes by the vehicle for 2 billion. It should also be noted that "self-securitisations" and transactions in warehousing phase are not included in the quantitative tables of Part C, as required by regulations. Part of the portfolio are: • own securitisation transactions, both traditional and synthetic, including also those traditional carried out by the Banks absorbed by UniCredit S.p.A. in previous years, for a book value of €7,816 million as at 31 December 2018; • securities arising out of securitisation transactions carried out by other Companies belonging to the UniCredit group, for a book value of €1,412 million as at 31 December 2018; • other third-party securitisation exposures, for a book value of €46 million as at 31 December 2018. Quantitative information C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised 493,544 - 250,688 - 95,715 - A.1 CBO OTHERS 493,544 - 250,688 - 95,715 - B. Partially derecognised - - 32,701 - - (3,872) C.1 CLO OTHERS - - 32,701 - - (3,872) C. Not-derecognised 5,572,696 - 436,774 - 934,300 (222,546) C.1 RMBS Prime 801,278 - 259,350 - 361,758 (180,124) C.2 CLO SME 125 - - - 30 - C.3 CLO OTHERS 4,771,293 - 177,424 - 572,512 (42,422) C.4 CONSUMER LOANS - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 692 2018 Annual Report and Accounts · UniCredit continued: C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised - - - - - - A.1 CBO OTHERS - - - - - - B. Partially derecognised - - - - - - C.1 CLO OTHERS - - - - - - C. Not-derecognised 304,000 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO SME - - - - - - C.3 CLO OTHERS 304,000 - - - - - C.4 CONSUMER LOANS - - - - - - continued: C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised - - - - - - A.1 CBO OTHERS - - - - - - B. Partially derecognised - - - - - - C.1 CLO OTHERS - - - - - - C. Not-derecognised 11,017 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO SME - - - - - - C.3 CLO OTHERS 11,017 - - - - - C.4 CONSUMER LOANS - - - - - - Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS 10,541 - - - 30,794 1,153 - CONSUMER LOANS 4,403 - - - - - - LEASING 1,412,285 - - - - - continued: C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS - - - - - - - CONSUMER LOANS - - - - - - - LEASING - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 692 2018 Annual Report and Accounts · UniCredit continued: C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised - - - - - - A.1 CBO OTHERS - - - - - - B. Partially derecognised - - - - - - C.1 CLO OTHERS - - - - - - C. Not-derecognised 304,000 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO SME - - - - - - C.3 CLO OTHERS 304,000 - - - - - C.4 CONSUMER LOANS - - - - - - continued: C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised - - - - - - A.1 CBO OTHERS - - - - - - B. Partially derecognised - - - - - - C.1 CLO OTHERS - - - - - - C. Not-derecognised 11,017 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO SME - - - - - - C.3 CLO OTHERS 11,017 - - - - - C.4 CONSUMER LOANS - - - - - - Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS 10,541 - - - 30,794 1,153 - CONSUMER LOANS 4,403 - - - - - - LEASING 1,412,285 - - - - - continued: C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS - - - - - - - CONSUMER LOANS - - - - - - - LEASING - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 692 2018 Annual Report and Accounts · UniCredit continued: C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised - - - - - - A.1 CBO OTHERS - - - - - - B. Partially derecognised - - - - - - C.1 CLO OTHERS - - - - - - C. Not-derecognised 304,000 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO SME - - - - - - C.3 CLO OTHERS 304,000 - - - - - C.4 CONSUMER LOANS - - - - - - continued: C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised - - - - - - A.1 CBO OTHERS - - - - - - B. Partially derecognised - - - - - - C.1 CLO OTHERS - - - - - - C. Not-derecognised 11,017 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO SME - - - - - - C.3 CLO OTHERS 11,017 - - - - - C.4 CONSUMER LOANS - - - - - - Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS 10,541 - - - 30,794 1,153 - CONSUMER LOANS 4,403 - - - - - - LEASING 1,412,285 - - - - - continued: C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS - - - - - - - CONSUMER LOANS - - - - - - - LEASING - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 692 2018 Annual Report and Accounts · UniCredit continued: C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised - - - - - - A.1 CBO OTHERS - - - - - - B. Partially derecognised - - - - - - C.1 CLO OTHERS - - - - - - C. Not-derecognised 304,000 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO SME - - - - - - C.3 CLO OTHERS 304,000 - - - - - C.4 CONSUMER LOANS - - - - - - continued: C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised - - - - - - A.1 CBO OTHERS - - - - - - B. Partially derecognised - - - - - - C.1 CLO OTHERS - - - - - - C. Not-derecognised 11,017 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO SME - - - - - - C.3 CLO OTHERS 11,017 - - - - - C.4 CONSUMER LOANS - - - - - - Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS 10,541 - - - 30,794 1,153 - CONSUMER LOANS 4,403 - - - - - - LEASING 1,412,285 - - - - - continued: C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS - - - - - - - CONSUMER LOANS - - - - - - - LEASING - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 692 2018 Annual Report and Accounts · UniCredit continued: C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised - - - - - - A.1 CBO OTHERS - - - - - - B. Partially derecognised - - - - - - C.1 CLO OTHERS - - - - - - C. Not-derecognised 304,000 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO SME - - - - - - C.3 CLO OTHERS 304,000 - - - - - C.4 CONSUMER LOANS - - - - - - continued: C.1 - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS A. Totally derecognised - - - - - - A.1 CBO OTHERS - - - - - - B. Partially derecognised - - - - - - C.1 CLO OTHERS - - - - - - C. Not-derecognised 11,017 - - - - - C.1 RMBS Prime - - - - - - C.2 CLO SME - - - - - - C.3 CLO OTHERS 11,017 - - - - - C.4 CONSUMER LOANS - - - - - - Write-downs and write-backs, including depreciations and revaluations posted on the income statement or to reserves, refer to financial year 2018 only. C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure (€ '000) TYPE OF SECURITISED ASSETS/EXPOSURE BALANCE-SHEET EXPOSURE SENIOR MEZZANINE JUNIOR CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS CARRYING VALUE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS 10,541 - - - 30,794 1,153 - CONSUMER LOANS 4,403 - - - - - - LEASING 1,412,285 - - - - - continued: C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE GUARANTEES GIVEN SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS - - - - - - - CONSUMER LOANS - - - - - - - LEASING - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 693 continued: C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS - - - - 1,411 - - CONSUMER LOANS - - - - - - - LEASING - - - - - - C.3 SPVs for securitisations (€ '000) NAME OF SECURITISATION/SPES COUNTRY OF INCORPORATION CONSOLIDATION ASSETS LIABILITIES LOANS AND RECEIVEBLES DEBT SECURITIES OTHERS SENIOR MEZZANINE JUNIOR Capital Mortgage S.r.l. - BIPCA Cordusio Piazzetta Monte 1 - 37121 Verona Yes 302,963 - 14,010 189,389 99,600 247 Capital Mortgage S.r.l. - 2007 Piazzetta Monte 1 - 37121 Verona Yes 649,413 - 34,032 495,744 74,000 67,592 Cordusio RMBS Securitisation S.r.l. - Serie 2006 Piazzetta Monte 1 - 37121 Verona Yes 233,578 - 10,834 72,290 141,700 10,686 Cordusio RMBS Securitisation S.r.l. - Serie 2007 Piazzetta Monte 1 - 37121 Verona Yes 840,671 - 24,523 554,353 236,400 2,004 Cordusio RMBS - UCFin S.r.l Piazzetta Monte 1 - 37121 Verona Yes 472,592 - 24,363 272,180 148,000 13,358 F-E Mortgages S.r.l. - 2003 Piazzetta Monte 1 - 37121 Verona Yes 110,595 - 26,097 37,649 59,018 7,632 F-E Mortgages S.r.l. - 2005 Piazzetta Monte 1 - 37121 Verona Yes 181,441 - 14,061 86,154 36,864 32,311 Heliconus S.r.l Piazzetta Monte 1 - 37121 Verona Yes 55,230 - 12,905 15,678 30,829 8,990 LARGE CORPORATE ONE SRL Piazzetta Monte 1 - 37121 Verona Yes 234,272 - 53,484 255,446 - 36,364 ARCOBALENO FINANCE SRL Foro Buonaparte,70 - 20121 Milano No 65,124 - 4,857 21,926 - 54,700 CREDIARC SPV SRL Foro Buonaparte,70 - 20121 Milano No 31,779 - 2,186 27,766 - 26,411 FINO 1 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 657,520 - 113,128 545,019 69,640 50,311 FINO 2 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 594,570 - 37,499 323,036 200,600 39,554 ONIF FINANCE SRL Via Alessandro Pestalozza 12/14, 20131 Milano No 282,572 - 21,443 94,438 117,481 80,877 Pillarstone Italy SPV S.r.l. - Burgo Via Pietro Mascagni, 14 - 20122 Milano No 182,581 - 8,464 6,959 132,225 27,078 Pillarstone Italy SPV S.r.l. - Premuda Via Pietro Mascagni, 14 - 20122 Milano No 226,813 - 5,252 4,544 197,347 88,911 Pillarstone Italy SPV S.r.l. - Rainbow Via Pietro Mascagni, 14 - 20122 Milano No 38,182 - 103 890 37,934 56,405 Sestante Finance S.r.l. Via Borromei, 5 - 20123 Milano No 233,586 - - 166,432 89,502 8,610 YANEZ SPV S.R.L. Via Vittorio Alfieri 1, 31015 Conegliano No 1,012,267 - 25,314 1,492 297,066 441,730 C.4 Special Purpose Vehicles for securitisation not subject to consolidation See the corresponding item of Consolidated financial statements. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 693 continued: C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS - - - - 1,411 - - CONSUMER LOANS - - - - - - - LEASING - - - - - - C.3 SPVs for securitisations (€ '000) NAME OF SECURITISATION/SPES COUNTRY OF INCORPORATION CONSOLIDATION ASSETS LIABILITIES LOANS AND RECEIVEBLES DEBT SECURITIES OTHERS SENIOR MEZZANINE JUNIOR Capital Mortgage S.r.l. - BIPCA Cordusio Piazzetta Monte 1 - 37121 Verona Yes 302,963 - 14,010 189,389 99,600 247 Capital Mortgage S.r.l. - 2007 Piazzetta Monte 1 - 37121 Verona Yes 649,413 - 34,032 495,744 74,000 67,592 Cordusio RMBS Securitisation S.r.l. - Serie 2006 Piazzetta Monte 1 - 37121 Verona Yes 233,578 - 10,834 72,290 141,700 10,686 Cordusio RMBS Securitisation S.r.l. - Serie 2007 Piazzetta Monte 1 - 37121 Verona Yes 840,671 - 24,523 554,353 236,400 2,004 Cordusio RMBS - UCFin S.r.l Piazzetta Monte 1 - 37121 Verona Yes 472,592 - 24,363 272,180 148,000 13,358 F-E Mortgages S.r.l. - 2003 Piazzetta Monte 1 - 37121 Verona Yes 110,595 - 26,097 37,649 59,018 7,632 F-E Mortgages S.r.l. - 2005 Piazzetta Monte 1 - 37121 Verona Yes 181,441 - 14,061 86,154 36,864 32,311 Heliconus S.r.l Piazzetta Monte 1 - 37121 Verona Yes 55,230 - 12,905 15,678 30,829 8,990 LARGE CORPORATE ONE SRL Piazzetta Monte 1 - 37121 Verona Yes 234,272 - 53,484 255,446 - 36,364 ARCOBALENO FINANCE SRL Foro Buonaparte,70 - 20121 Milano No 65,124 - 4,857 21,926 - 54,700 CREDIARC SPV SRL Foro Buonaparte,70 - 20121 Milano No 31,779 - 2,186 27,766 - 26,411 FINO 1 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 657,520 - 113,128 545,019 69,640 50,311 FINO 2 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 594,570 - 37,499 323,036 200,600 39,554 ONIF FINANCE SRL Via Alessandro Pestalozza 12/14, 20131 Milano No 282,572 - 21,443 94,438 117,481 80,877 Pillarstone Italy SPV S.r.l. - Burgo Via Pietro Mascagni, 14 - 20122 Milano No 182,581 - 8,464 6,959 132,225 27,078 Pillarstone Italy SPV S.r.l. - Premuda Via Pietro Mascagni, 14 - 20122 Milano No 226,813 - 5,252 4,544 197,347 88,911 Pillarstone Italy SPV S.r.l. - Rainbow Via Pietro Mascagni, 14 - 20122 Milano No 38,182 - 103 890 37,934 56,405 Sestante Finance S.r.l. Via Borromei, 5 - 20123 Milano No 233,586 - - 166,432 89,502 8,610 YANEZ SPV S.R.L. Via Vittorio Alfieri 1, 31015 Conegliano No 1,012,267 - 25,314 1,492 297,066 441,730 C.4 Special Purpose Vehicles for securitisation not subject to consolidation See the corresponding item of Consolidated financial statements. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 693 continued: C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS - - - - 1,411 - - CONSUMER LOANS - - - - - - - LEASING - - - - - - C.3 SPVs for securitisations (€ '000) NAME OF SECURITISATION/SPES COUNTRY OF INCORPORATION CONSOLIDATION ASSETS LIABILITIES LOANS AND RECEIVEBLES DEBT SECURITIES OTHERS SENIOR MEZZANINE JUNIOR Capital Mortgage S.r.l. - BIPCA Cordusio Piazzetta Monte 1 - 37121 Verona Yes 302,963 - 14,010 189,389 99,600 247 Capital Mortgage S.r.l. - 2007 Piazzetta Monte 1 - 37121 Verona Yes 649,413 - 34,032 495,744 74,000 67,592 Cordusio RMBS Securitisation S.r.l. - Serie 2006 Piazzetta Monte 1 - 37121 Verona Yes 233,578 - 10,834 72,290 141,700 10,686 Cordusio RMBS Securitisation S.r.l. - Serie 2007 Piazzetta Monte 1 - 37121 Verona Yes 840,671 - 24,523 554,353 236,400 2,004 Cordusio RMBS - UCFin S.r.l Piazzetta Monte 1 - 37121 Verona Yes 472,592 - 24,363 272,180 148,000 13,358 F-E Mortgages S.r.l. - 2003 Piazzetta Monte 1 - 37121 Verona Yes 110,595 - 26,097 37,649 59,018 7,632 F-E Mortgages S.r.l. - 2005 Piazzetta Monte 1 - 37121 Verona Yes 181,441 - 14,061 86,154 36,864 32,311 Heliconus S.r.l Piazzetta Monte 1 - 37121 Verona Yes 55,230 - 12,905 15,678 30,829 8,990 LARGE CORPORATE ONE SRL Piazzetta Monte 1 - 37121 Verona Yes 234,272 - 53,484 255,446 - 36,364 ARCOBALENO FINANCE SRL Foro Buonaparte,70 - 20121 Milano No 65,124 - 4,857 21,926 - 54,700 CREDIARC SPV SRL Foro Buonaparte,70 - 20121 Milano No 31,779 - 2,186 27,766 - 26,411 FINO 1 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 657,520 - 113,128 545,019 69,640 50,311 FINO 2 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 594,570 - 37,499 323,036 200,600 39,554 ONIF FINANCE SRL Via Alessandro Pestalozza 12/14, 20131 Milano No 282,572 - 21,443 94,438 117,481 80,877 Pillarstone Italy SPV S.r.l. - Burgo Via Pietro Mascagni, 14 - 20122 Milano No 182,581 - 8,464 6,959 132,225 27,078 Pillarstone Italy SPV S.r.l. - Premuda Via Pietro Mascagni, 14 - 20122 Milano No 226,813 - 5,252 4,544 197,347 88,911 Pillarstone Italy SPV S.r.l. - Rainbow Via Pietro Mascagni, 14 - 20122 Milano No 38,182 - 103 890 37,934 56,405 Sestante Finance S.r.l. Via Borromei, 5 - 20123 Milano No 233,586 - - 166,432 89,502 8,610 YANEZ SPV S.R.L. Via Vittorio Alfieri 1, 31015 Conegliano No 1,012,267 - 25,314 1,492 297,066 441,730 C.4 Special Purpose Vehicles for securitisation not subject to consolidation See the corresponding item of Consolidated financial statements. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 693 continued: C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS - - - - 1,411 - - CONSUMER LOANS - - - - - - - LEASING - - - - - - C.3 SPVs for securitisations (€ '000) NAME OF SECURITISATION/SPES COUNTRY OF INCORPORATION CONSOLIDATION ASSETS LIABILITIES LOANS AND RECEIVEBLES DEBT SECURITIES OTHERS SENIOR MEZZANINE JUNIOR Capital Mortgage S.r.l. - BIPCA Cordusio Piazzetta Monte 1 - 37121 Verona Yes 302,963 - 14,010 189,389 99,600 247 Capital Mortgage S.r.l. - 2007 Piazzetta Monte 1 - 37121 Verona Yes 649,413 - 34,032 495,744 74,000 67,592 Cordusio RMBS Securitisation S.r.l. - Serie 2006 Piazzetta Monte 1 - 37121 Verona Yes 233,578 - 10,834 72,290 141,700 10,686 Cordusio RMBS Securitisation S.r.l. - Serie 2007 Piazzetta Monte 1 - 37121 Verona Yes 840,671 - 24,523 554,353 236,400 2,004 Cordusio RMBS - UCFin S.r.l Piazzetta Monte 1 - 37121 Verona Yes 472,592 - 24,363 272,180 148,000 13,358 F-E Mortgages S.r.l. - 2003 Piazzetta Monte 1 - 37121 Verona Yes 110,595 - 26,097 37,649 59,018 7,632 F-E Mortgages S.r.l. - 2005 Piazzetta Monte 1 - 37121 Verona Yes 181,441 - 14,061 86,154 36,864 32,311 Heliconus S.r.l Piazzetta Monte 1 - 37121 Verona Yes 55,230 - 12,905 15,678 30,829 8,990 LARGE CORPORATE ONE SRL Piazzetta Monte 1 - 37121 Verona Yes 234,272 - 53,484 255,446 - 36,364 ARCOBALENO FINANCE SRL Foro Buonaparte,70 - 20121 Milano No 65,124 - 4,857 21,926 - 54,700 CREDIARC SPV SRL Foro Buonaparte,70 - 20121 Milano No 31,779 - 2,186 27,766 - 26,411 FINO 1 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 657,520 - 113,128 545,019 69,640 50,311 FINO 2 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 594,570 - 37,499 323,036 200,600 39,554 ONIF FINANCE SRL Via Alessandro Pestalozza 12/14, 20131 Milano No 282,572 - 21,443 94,438 117,481 80,877 Pillarstone Italy SPV S.r.l. - Burgo Via Pietro Mascagni, 14 - 20122 Milano No 182,581 - 8,464 6,959 132,225 27,078 Pillarstone Italy SPV S.r.l. - Premuda Via Pietro Mascagni, 14 - 20122 Milano No 226,813 - 5,252 4,544 197,347 88,911 Pillarstone Italy SPV S.r.l. - Rainbow Via Pietro Mascagni, 14 - 20122 Milano No 38,182 - 103 890 37,934 56,405 Sestante Finance S.r.l. Via Borromei, 5 - 20123 Milano No 233,586 - - 166,432 89,502 8,610 YANEZ SPV S.R.L. Via Vittorio Alfieri 1, 31015 Conegliano No 1,012,267 - 25,314 1,492 297,066 441,730 C.4 Special Purpose Vehicles for securitisation not subject to consolidation See the corresponding item of Consolidated financial statements. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 693 continued: C.2 - Exposure resulting from the main third-party securitisation transactions broken down by type of securitised asset and by type of exposure TYPE OF SECURITISED ASSETS/EXPOSURE CREDIT FACILITIES SENIOR MEZZANINE JUNIOR NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS NET EXPOSURE WRITE-DOWNS/WRITE-BACKS - CLO OTHERS - - - - 1,411 - - CONSUMER LOANS - - - - - - - LEASING - - - - - - C.3 SPVs for securitisations (€ '000) NAME OF SECURITISATION/SPES COUNTRY OF INCORPORATION CONSOLIDATION ASSETS LIABILITIES LOANS AND RECEIVEBLES DEBT SECURITIES OTHERS SENIOR MEZZANINE JUNIOR Capital Mortgage S.r.l. - BIPCA Cordusio Piazzetta Monte 1 - 37121 Verona Yes 302,963 - 14,010 189,389 99,600 247 Capital Mortgage S.r.l. - 2007 Piazzetta Monte 1 - 37121 Verona Yes 649,413 - 34,032 495,744 74,000 67,592 Cordusio RMBS Securitisation S.r.l. - Serie 2006 Piazzetta Monte 1 - 37121 Verona Yes 233,578 - 10,834 72,290 141,700 10,686 Cordusio RMBS Securitisation S.r.l. - Serie 2007 Piazzetta Monte 1 - 37121 Verona Yes 840,671 - 24,523 554,353 236,400 2,004 Cordusio RMBS - UCFin S.r.l Piazzetta Monte 1 - 37121 Verona Yes 472,592 - 24,363 272,180 148,000 13,358 F-E Mortgages S.r.l. - 2003 Piazzetta Monte 1 - 37121 Verona Yes 110,595 - 26,097 37,649 59,018 7,632 F-E Mortgages S.r.l. - 2005 Piazzetta Monte 1 - 37121 Verona Yes 181,441 - 14,061 86,154 36,864 32,311 Heliconus S.r.l Piazzetta Monte 1 - 37121 Verona Yes 55,230 - 12,905 15,678 30,829 8,990 LARGE CORPORATE ONE SRL Piazzetta Monte 1 - 37121 Verona Yes 234,272 - 53,484 255,446 - 36,364 ARCOBALENO FINANCE SRL Foro Buonaparte,70 - 20121 Milano No 65,124 - 4,857 21,926 - 54,700 CREDIARC SPV SRL Foro Buonaparte,70 - 20121 Milano No 31,779 - 2,186 27,766 - 26,411 FINO 1 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 657,520 - 113,128 545,019 69,640 50,311 FINO 2 SECURITISATION SRL Viale Luigi Majno 45, 20122 Milano No 594,570 - 37,499 323,036 200,600 39,554 ONIF FINANCE SRL Via Alessandro Pestalozza 12/14, 20131 Milano No 282,572 - 21,443 94,438 117,481 80,877 Pillarstone Italy SPV S.r.l. - Burgo Via Pietro Mascagni, 14 - 20122 Milano No 182,581 - 8,464 6,959 132,225 27,078 Pillarstone Italy SPV S.r.l. - Premuda Via Pietro Mascagni, 14 - 20122 Milano No 226,813 - 5,252 4,544 197,347 88,911 Pillarstone Italy SPV S.r.l. - Rainbow Via Pietro Mascagni, 14 - 20122 Milano No 38,182 - 103 890 37,934 56,405 Sestante Finance S.r.l. Via Borromei, 5 - 20123 Milano No 233,586 - - 166,432 89,502 8,610 YANEZ SPV S.R.L. Via Vittorio Alfieri 1, 31015 Conegliano No 1,012,267 - 25,314 1,492 297,066 441,730 C.4 Special Purpose Vehicles for securitisation not subject to consolidation See the corresponding item of Consolidated financial statements. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 694 2018 Annual Report and Accounts · UniCredit C.5 Servicer activities - "In-house" securitisations: collections of securitised loans and redemptions of securities issued by the special purpose vehicle for securitization (€ '000) SERVICER SPECIAL PURPOSE VEHICLE SECURITISED ASSETS (YEAR END FIGURES) LOANS COLLECTED DURING THE YEAR PERCENTAGE OF SECURITIES REDEEMED (YEAR END FIGURES) IMPAIRED PERFORMING IMPAIRED PERFORMING SENIOR MEZZANINE JUNIOR IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS UniCredit S.p.A. Capital Mortgage S.r.l. - BIPCA Cordusio 16,538 286,426 3,935 40,811 - 77.77% - - - - Capital Mortgage S.r.l. - 2007 63,233 586,180 10,187 82,056 - 79.17% - - - - Cordusio RMBS Securitisation S.r.L. - SERIE 2006 15,656 217,921 5,293 87,730 - 96.98% - - - - Cordusio RMBS Securitisation S.r.L. - SERIE 2007 59,548 781,123 13,781 149,617 - 84.89% - - - - Cordusio RMBS UCFin S.r.L. 41,926 430,665 7,517 75,014 - 88.34% - - - - F-E Mortgage S.r.L. - SERIE 2003 8,382 102,214 1,780 17,139 - 97.85% - - - - F-E Mortgage S.r.L. - SERIE 2005 13,748 167,693 2,829 24,753 - 90.95% - 10.31% - 10.31% Heliconus S.r.L. 3,832 51,398 937 9,146 - 98.52% - - - - Large Corporate One S.r.L. - 234,272 - 189,516 - - - - - - D. Information on structured entities not consolidated for accounting purposes (other than vehicles for securitisation transactions) Qualitative information See the corresponding item of Consolidated financial statements. Quantitative information See the corresponding item of Consolidated financial statements. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 694 2018 Annual Report and Accounts · UniCredit C.5 Servicer activities - "In-house" securitisations: collections of securitised loans and redemptions of securities issued by the special purpose vehicle for securitization (€ '000) SERVICER SPECIAL PURPOSE VEHICLE SECURITISED ASSETS (YEAR END FIGURES) LOANS COLLECTED DURING THE YEAR PERCENTAGE OF SECURITIES REDEEMED (YEAR END FIGURES) IMPAIRED PERFORMING IMPAIRED PERFORMING SENIOR MEZZANINE JUNIOR IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS UniCredit S.p.A. Capital Mortgage S.r.l. - BIPCA Cordusio 16,538 286,426 3,935 40,811 - 77.77% - - - - Capital Mortgage S.r.l. - 2007 63,233 586,180 10,187 82,056 - 79.17% - - - - Cordusio RMBS Securitisation S.r.L. - SERIE 2006 15,656 217,921 5,293 87,730 - 96.98% - - - - Cordusio RMBS Securitisation S.r.L. - SERIE 2007 59,548 781,123 13,781 149,617 - 84.89% - - - - Cordusio RMBS UCFin S.r.L. 41,926 430,665 7,517 75,014 - 88.34% - - - - F-E Mortgage S.r.L. - SERIE 2003 8,382 102,214 1,780 17,139 - 97.85% - - - - F-E Mortgage S.r.L. - SERIE 2005 13,748 167,693 2,829 24,753 - 90.95% - 10.31% - 10.31% Heliconus S.r.L. 3,832 51,398 937 9,146 - 98.52% - - - - Large Corporate One S.r.L. - 234,272 - 189,516 - - - - - - D. Information on structured entities not consolidated for accounting purposes (other than vehicles for securitisation transactions) Qualitative information See the corresponding item of Consolidated financial statements. Quantitative information See the corresponding item of Consolidated financial statements. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 694 2018 Annual Report and Accounts · UniCredit C.5 Servicer activities - "In-house" securitisations: collections of securitised loans and redemptions of securities issued by the special purpose vehicle for securitization (€ '000) SERVICER SPECIAL PURPOSE VEHICLE SECURITISED ASSETS (YEAR END FIGURES) LOANS COLLECTED DURING THE YEAR PERCENTAGE OF SECURITIES REDEEMED (YEAR END FIGURES) IMPAIRED PERFORMING IMPAIRED PERFORMING SENIOR MEZZANINE JUNIOR IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS UniCredit S.p.A. Capital Mortgage S.r.l. - BIPCA Cordusio 16,538 286,426 3,935 40,811 - 77.77% - - - - Capital Mortgage S.r.l. - 2007 63,233 586,180 10,187 82,056 - 79.17% - - - - Cordusio RMBS Securitisation S.r.L. - SERIE 2006 15,656 217,921 5,293 87,730 - 96.98% - - - - Cordusio RMBS Securitisation S.r.L. - SERIE 2007 59,548 781,123 13,781 149,617 - 84.89% - - - - Cordusio RMBS UCFin S.r.L. 41,926 430,665 7,517 75,014 - 88.34% - - - - F-E Mortgage S.r.L. - SERIE 2003 8,382 102,214 1,780 17,139 - 97.85% - - - - F-E Mortgage S.r.L. - SERIE 2005 13,748 167,693 2,829 24,753 - 90.95% - 10.31% - 10.31% Heliconus S.r.L. 3,832 51,398 937 9,146 - 98.52% - - - - Large Corporate One S.r.L. - 234,272 - 189,516 - - - - - - D. Information on structured entities not consolidated for accounting purposes (other than vehicles for securitisation transactions) Qualitative information See the corresponding item of Consolidated financial statements. Quantitative information See the corresponding item of Consolidated financial statements. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 694 2018 Annual Report and Accounts · UniCredit C.5 Servicer activities - "In-house" securitisations: collections of securitised loans and redemptions of securities issued by the special purpose vehicle for securitization (€ '000) SERVICER SPECIAL PURPOSE VEHICLE SECURITISED ASSETS (YEAR END FIGURES) LOANS COLLECTED DURING THE YEAR PERCENTAGE OF SECURITIES REDEEMED (YEAR END FIGURES) IMPAIRED PERFORMING IMPAIRED PERFORMING SENIOR MEZZANINE JUNIOR IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS UniCredit S.p.A. Capital Mortgage S.r.l. - BIPCA Cordusio 16,538 286,426 3,935 40,811 - 77.77% - - - - Capital Mortgage S.r.l. - 2007 63,233 586,180 10,187 82,056 - 79.17% - - - - Cordusio RMBS Securitisation S.r.L. - SERIE 2006 15,656 217,921 5,293 87,730 - 96.98% - - - - Cordusio RMBS Securitisation S.r.L. - SERIE 2007 59,548 781,123 13,781 149,617 - 84.89% - - - - Cordusio RMBS UCFin S.r.L. 41,926 430,665 7,517 75,014 - 88.34% - - - - F-E Mortgage S.r.L. - SERIE 2003 8,382 102,214 1,780 17,139 - 97.85% - - - - F-E Mortgage S.r.L. - SERIE 2005 13,748 167,693 2,829 24,753 - 90.95% - 10.31% - 10.31% Heliconus S.r.L. 3,832 51,398 937 9,146 - 98.52% - - - - Large Corporate One S.r.L. - 234,272 - 189,516 - - - - - - D. Information on structured entities not consolidated for accounting purposes (other than vehicles for securitisation transactions) Qualitative information See the corresponding item of Consolidated financial statements. Quantitative information See the corresponding item of Consolidated financial statements. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 694 2018 Annual Report and Accounts · UniCredit C.5 Servicer activities - "In-house" securitisations: collections of securitised loans and redemptions of securities issued by the special purpose vehicle for securitization (€ '000) SERVICER SPECIAL PURPOSE VEHICLE SECURITISED ASSETS (YEAR END FIGURES) LOANS COLLECTED DURING THE YEAR PERCENTAGE OF SECURITIES REDEEMED (YEAR END FIGURES) IMPAIRED PERFORMING IMPAIRED PERFORMING SENIOR MEZZANINE JUNIOR IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS IMPAIRED ASSETS PERFORMING ASSETS UniCredit S.p.A. Capital Mortgage S.r.l. - BIPCA Cordusio 16,538 286,426 3,935 40,811 - 77.77% - - - - Capital Mortgage S.r.l. - 2007 63,233 586,180 10,187 82,056 - 79.17% - - - - Cordusio RMBS Securitisation S.r.L. - SERIE 2006 15,656 217,921 5,293 87,730 - 96.98% - - - - Cordusio RMBS Securitisation S.r.L. - SERIE 2007 59,548 781,123 13,781 149,617 - 84.89% - - - - Cordusio RMBS UCFin S.r.L. 41,926 430,665 7,517 75,014 - 88.34% - - - - F-E Mortgage S.r.L. - SERIE 2003 8,382 102,214 1,780 17,139 - 97.85% - - - - F-E Mortgage S.r.L. - SERIE 2005 13,748 167,693 2,829 24,753 - 90.95% - 10.31% - 10.31% Heliconus S.r.L. 3,832 51,398 937 9,146 - 98.52% - - - - Large Corporate One S.r.L. - 234,272 - 189,516 - - - - - - D. Information on structured entities not consolidated for accounting purposes (other than vehicles for securitisation transactions) Qualitative information See the corresponding item of Consolidated financial statements. Quantitative information See the corresponding item of Consolidated financial statements. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 695 E. Sales transaction A. Financial Assets sold and not fully derecognised Quantitative information E.1 Financial assets sold and fully recognised and associated financial liabilities: book value (migliaia di €) FINANCIAL ASSETS SOLD AND FULLY RECOGNISED ASSOCIATED FINANCIAL LIABILITIES BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION OF WHICH NON-PERFORMING BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION A. Financial assets held for trading 1,041,598 - 1,041,598 X 1,017,611 - 1,017,611 1. Debt securties 1,041,598 - 1,041,598 X 1,017,611 - 1,017,611 2. Equity instruments - - - X - - - 3. Loans - - - X - - - 4. Derivative instruments - - - X - - - B. Other financial assets mandatorily at fair value 773,173 22,892 750,281 4,341 824,317 - 824,317 1. Debt securties 750,281 - 750,281 - 824,317 - 824,317 2. Equity instruments - - - X - - - 3. Loans 22,892 22,892 - 4,341 - - - C. Financial assets designated at fair value - - - - - - - 1. Debt securties - - - - - - - 2. Loans - - - - - - - D. Financial assets at fair value through other comprehensive income 19,120,302 - 19,120,302 - 18,894,175 - 18,894,175 1. Debt securties 19,120,302 - 19,120,302 - 18,894,175 - 18,894,175 2. Equity instruments - - - X - - - 3. Loans - - - - - - - E. Financial assets at amortised cost 16,808,769 9,492,531 7,316,238 812,808 8,944,538 1,639,491 7,305,047 1. Debt securties 7,316,238 - 7,316,238 - 7,305,047 - 7,305,047 2. Loans 9,492,531 9,492,531 - 812,808 1,639,491 1,639,491 - Total 12.31.2018 37,743,842 9,515,423 28,228,419 817,149 29,680,641 1,639,491 28,041,150 E.2 Financial assets sold and partially recognised and associated financial liabilities: book value (€ '000) ORIGINAL GROSS VALUE OF ASSETS BEFORE SALE BOOK VALUE OF ASSETS STILL PARTIALLY RECOGNISED OF WHICH NON-PERFORMING BOOK VALUE OF ASSOCIATED FINANCIAL LIABILITIES A. Financial assets held for trading - - X - 1. Debt securties - - X - 2. Equity instruments - - X - 3. Loans - - X - 4. Derivative instruments - - X - B. Other financial assets mandatory at fair value - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - C. Financial assets designated at fair value - - - - 1. Debt securties - - - - 2. Loans - - - - D. Financial assets at fair value through other comprehensive income - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - E. Financial assets at amortised cost 59,675 29,501 29,501 6,155 1. Debt securties - - - - 2. Loans 59,675 29,501 29,501 6,155 Total 12.31.2018 59,675 29,501 29,501 6,155 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 695 E. Sales transaction A. Financial Assets sold and not fully derecognised Quantitative information E.1 Financial assets sold and fully recognised and associated financial liabilities: book value (migliaia di €) FINANCIAL ASSETS SOLD AND FULLY RECOGNISED ASSOCIATED FINANCIAL LIABILITIES BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION OF WHICH NON-PERFORMING BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION A. Financial assets held for trading 1,041,598 - 1,041,598 X 1,017,611 - 1,017,611 1. Debt securties 1,041,598 - 1,041,598 X 1,017,611 - 1,017,611 2. Equity instruments - - - X - - - 3. Loans - - - X - - - 4. Derivative instruments - - - X - - - B. Other financial assets mandatorily at fair value 773,173 22,892 750,281 4,341 824,317 - 824,317 1. Debt securties 750,281 - 750,281 - 824,317 - 824,317 2. Equity instruments - - - X - - - 3. Loans 22,892 22,892 - 4,341 - - - C. Financial assets designated at fair value - - - - - - - 1. Debt securties - - - - - - - 2. Loans - - - - - - - D. Financial assets at fair value through other comprehensive income 19,120,302 - 19,120,302 - 18,894,175 - 18,894,175 1. Debt securties 19,120,302 - 19,120,302 - 18,894,175 - 18,894,175 2. Equity instruments - - - X - - - 3. Loans - - - - - - - E. Financial assets at amortised cost 16,808,769 9,492,531 7,316,238 812,808 8,944,538 1,639,491 7,305,047 1. Debt securties 7,316,238 - 7,316,238 - 7,305,047 - 7,305,047 2. Loans 9,492,531 9,492,531 - 812,808 1,639,491 1,639,491 - Total 12.31.2018 37,743,842 9,515,423 28,228,419 817,149 29,680,641 1,639,491 28,041,150 E.2 Financial assets sold and partially recognised and associated financial liabilities: book value (€ '000) ORIGINAL GROSS VALUE OF ASSETS BEFORE SALE BOOK VALUE OF ASSETS STILL PARTIALLY RECOGNISED OF WHICH NON-PERFORMING BOOK VALUE OF ASSOCIATED FINANCIAL LIABILITIES A. Financial assets held for trading - - X - 1. Debt securties - - X - 2. Equity instruments - - X - 3. Loans - - X - 4. Derivative instruments - - X - B. Other financial assets mandatory at fair value - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - C. Financial assets designated at fair value - - - - 1. Debt securties - - - - 2. Loans - - - - D. Financial assets at fair value through other comprehensive income - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - E. Financial assets at amortised cost 59,675 29,501 29,501 6,155 1. Debt securties - - - - 2. Loans 59,675 29,501 29,501 6,155 Total 12.31.2018 59,675 29,501 29,501 6,155 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 695 E. Sales transaction A. Financial Assets sold and not fully derecognised Quantitative information E.1 Financial assets sold and fully recognised and associated financial liabilities: book value (migliaia di €) FINANCIAL ASSETS SOLD AND FULLY RECOGNISED ASSOCIATED FINANCIAL LIABILITIES BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION OF WHICH NON-PERFORMING BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION A. Financial assets held for trading 1,041,598 - 1,041,598 X 1,017,611 - 1,017,611 1. Debt securties 1,041,598 - 1,041,598 X 1,017,611 - 1,017,611 2. Equity instruments - - - X - - - 3. Loans - - - X - - - 4. Derivative instruments - - - X - - - B. Other financial assets mandatorily at fair value 773,173 22,892 750,281 4,341 824,317 - 824,317 1. Debt securties 750,281 - 750,281 - 824,317 - 824,317 2. Equity instruments - - - X - - - 3. Loans 22,892 22,892 - 4,341 - - - C. Financial assets designated at fair value - - - - - - - 1. Debt securties - - - - - - - 2. Loans - - - - - - - D. Financial assets at fair value through other comprehensive income 19,120,302 - 19,120,302 - 18,894,175 - 18,894,175 1. Debt securties 19,120,302 - 19,120,302 - 18,894,175 - 18,894,175 2. Equity instruments - - - X - - - 3. Loans - - - - - - - E. Financial assets at amortised cost 16,808,769 9,492,531 7,316,238 812,808 8,944,538 1,639,491 7,305,047 1. Debt securties 7,316,238 - 7,316,238 - 7,305,047 - 7,305,047 2. Loans 9,492,531 9,492,531 - 812,808 1,639,491 1,639,491 - Total 12.31.2018 37,743,842 9,515,423 28,228,419 817,149 29,680,641 1,639,491 28,041,150 E.2 Financial assets sold and partially recognised and associated financial liabilities: book value (€ '000) ORIGINAL GROSS VALUE OF ASSETS BEFORE SALE BOOK VALUE OF ASSETS STILL PARTIALLY RECOGNISED OF WHICH NON-PERFORMING BOOK VALUE OF ASSOCIATED FINANCIAL LIABILITIES A. Financial assets held for trading - - X - 1. Debt securties - - X - 2. Equity instruments - - X - 3. Loans - - X - 4. Derivative instruments - - X - B. Other financial assets mandatory at fair value - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - C. Financial assets designated at fair value - - - - 1. Debt securties - - - - 2. Loans - - - - D. Financial assets at fair value through other comprehensive income - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - E. Financial assets at amortised cost 59,675 29,501 29,501 6,155 1. Debt securties - - - - 2. Loans 59,675 29,501 29,501 6,155 Total 12.31.2018 59,675 29,501 29,501 6,155 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 695 E. Sales transaction A. Financial Assets sold and not fully derecognised Quantitative information E.1 Financial assets sold and fully recognised and associated financial liabilities: book value (migliaia di €) FINANCIAL ASSETS SOLD AND FULLY RECOGNISED ASSOCIATED FINANCIAL LIABILITIES BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION OF WHICH NON-PERFORMING BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION A. Financial assets held for trading 1,041,598 - 1,041,598 X 1,017,611 - 1,017,611 1. Debt securties 1,041,598 - 1,041,598 X 1,017,611 - 1,017,611 2. Equity instruments - - - X - - - 3. Loans - - - X - - - 4. Derivative instruments - - - X - - - B. Other financial assets mandatorily at fair value 773,173 22,892 750,281 4,341 824,317 - 824,317 1. Debt securties 750,281 - 750,281 - 824,317 - 824,317 2. Equity instruments - - - X - - - 3. Loans 22,892 22,892 - 4,341 - - - C. Financial assets designated at fair value - - - - - - - 1. Debt securties - - - - - - - 2. Loans - - - - - - - D. Financial assets at fair value through other comprehensive income 19,120,302 - 19,120,302 - 18,894,175 - 18,894,175 1. Debt securties 19,120,302 - 19,120,302 - 18,894,175 - 18,894,175 2. Equity instruments - - - X - - - 3. Loans - - - - - - - E. Financial assets at amortised cost 16,808,769 9,492,531 7,316,238 812,808 8,944,538 1,639,491 7,305,047 1. Debt securties 7,316,238 - 7,316,238 - 7,305,047 - 7,305,047 2. Loans 9,492,531 9,492,531 - 812,808 1,639,491 1,639,491 - Total 12.31.2018 37,743,842 9,515,423 28,228,419 817,149 29,680,641 1,639,491 28,041,150 E.2 Financial assets sold and partially recognised and associated financial liabilities: book value (€ '000) ORIGINAL GROSS VALUE OF ASSETS BEFORE SALE BOOK VALUE OF ASSETS STILL PARTIALLY RECOGNISED OF WHICH NON-PERFORMING BOOK VALUE OF ASSOCIATED FINANCIAL LIABILITIES A. Financial assets held for trading - - X - 1. Debt securties - - X - 2. Equity instruments - - X - 3. Loans - - X - 4. Derivative instruments - - X - B. Other financial assets mandatory at fair value - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - C. Financial assets designated at fair value - - - - 1. Debt securties - - - - 2. Loans - - - - D. Financial assets at fair value through other comprehensive income - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - E. Financial assets at amortised cost 59,675 29,501 29,501 6,155 1. Debt securties - - - - 2. Loans 59,675 29,501 29,501 6,155 Total 12.31.2018 59,675 29,501 29,501 6,155 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 695 E. Sales transaction A. Financial Assets sold and not fully derecognised Quantitative information E.1 Financial assets sold and fully recognised and associated financial liabilities: book value (migliaia di €) FINANCIAL ASSETS SOLD AND FULLY RECOGNISED ASSOCIATED FINANCIAL LIABILITIES BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION OF WHICH NON-PERFORMING BOOK VALUE OF WHICH: SUBJECT TO SECURITISATION TRANSACTION OF WHICH: SUBJECT TO SALE AGREEMENT WITH REPURCHASE OBLIGATION A. Financial assets held for trading 1,041,598 - 1,041,598 X 1,017,611 - 1,017,611 1. Debt securties 1,041,598 - 1,041,598 X 1,017,611 - 1,017,611 2. Equity instruments - - - X - - - 3. Loans - - - X - - - 4. Derivative instruments - - - X - - - B. Other financial assets mandatorily at fair value 773,173 22,892 750,281 4,341 824,317 - 824,317 1. Debt securties 750,281 - 750,281 - 824,317 - 824,317 2. Equity instruments - - - X - - - 3. Loans 22,892 22,892 - 4,341 - - - C. Financial assets designated at fair value - - - - - - - 1. Debt securties - - - - - - - 2. Loans - - - - - - - D. Financial assets at fair value through other comprehensive income 19,120,302 - 19,120,302 - 18,894,175 - 18,894,175 1. Debt securties 19,120,302 - 19,120,302 - 18,894,175 - 18,894,175 2. Equity instruments - - - X - - - 3. Loans - - - - - - - E. Financial assets at amortised cost 16,808,769 9,492,531 7,316,238 812,808 8,944,538 1,639,491 7,305,047 1. Debt securties 7,316,238 - 7,316,238 - 7,305,047 - 7,305,047 2. Loans 9,492,531 9,492,531 - 812,808 1,639,491 1,639,491 - Total 12.31.2018 37,743,842 9,515,423 28,228,419 817,149 29,680,641 1,639,491 28,041,150 E.2 Financial assets sold and partially recognised and associated financial liabilities: book value (€ '000) ORIGINAL GROSS VALUE OF ASSETS BEFORE SALE BOOK VALUE OF ASSETS STILL PARTIALLY RECOGNISED OF WHICH NON-PERFORMING BOOK VALUE OF ASSOCIATED FINANCIAL LIABILITIES A. Financial assets held for trading - - X - 1. Debt securties - - X - 2. Equity instruments - - X - 3. Loans - - X - 4. Derivative instruments - - X - B. Other financial assets mandatory at fair value - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - C. Financial assets designated at fair value - - - - 1. Debt securties - - - - 2. Loans - - - - D. Financial assets at fair value through other comprehensive income - - - - 1. Debt securties - - - - 2. Equity instruments - - X - 3. Loans - - - - E. Financial assets at amortised cost 59,675 29,501 29,501 6,155 1. Debt securties - - - - 2. Loans 59,675 29,501 29,501 6,155 Total 12.31.2018 59,675 29,501 29,501 6,155 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 696 2018 Annual Report and Accounts · UniCredit E.3 Sale transactions relating to financial liabilities with repayment exclusively based on assets sold and not fully derecognised: fair value (€ '000) FULLY RECOGNISED PARTIALLY RECOGNISED TOTAL 12.31.2018 A. Financial assets held for trading - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - 4. Derivative instruments - - - B. Other financial assets mandatorily at fair value 22,892 - 22,892 1. Debt securties - - - 2. Equity instruments - - - 3. Loans 22,892 - 22,892 C. Financial assets designated at fair value - - - 1. Debt securties - - - 2. Loans - - - D. Financial assets at fair value through other comprehensive income - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - E. Financial assets at amortised cost (fair value) 3,587,942 28,038 3,615,980 1. Debt securties - - - 2. Loans 3,587,942 28,038 3,615,980 Total associated financial assets 3,610,834 28,038 3,638,872 Total associated financial liabilities 1,639,491 6,155 X Total net amount 12.31.2018 1,971,343 21,883 1,993,226 B. Financial assets sold and fully derecognised with recognition of continuing involvement Qualitative information At the end of the year there were no disposals of financial assets that had been fully derecognised, which required the recognition of continuing involvement. Quantitative Information E.4 Covered bond transaction Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 1.1 Credit Risk - Quantitative information - D. Sales Transactions - D. 4 Regulatory consolidation - Covered Bond Transactions - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Information on Sovereign exposure It should be noted that, as a result of IFRS9 adoption since 1 January 2018, Sovereign debt securities have been classified in the new categories specified by the standard in consideration of the business model followed and the related cash flow features (Solely Payment of Principal and Interests - SPPI Test). It should also be noted that during the year: • no changes have been made to the business models adopted on the 1 January and, consequently, the sovereign debt securities have not been subject to reclassification • the changed market circumstances also suggested the adoption of a "held to collect" business model for new purchases of Italian sovereign debt securities which, consequently, have to be measured at amortized cost subject to verification of the features of the related cash flows. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 696 2018 Annual Report and Accounts · UniCredit E.3 Sale transactions relating to financial liabilities with repayment exclusively based on assets sold and not fully derecognised: fair value (€ '000) FULLY RECOGNISED PARTIALLY RECOGNISED TOTAL 12.31.2018 A. Financial assets held for trading - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - 4. Derivative instruments - - - B. Other financial assets mandatorily at fair value 22,892 - 22,892 1. Debt securties - - - 2. Equity instruments - - - 3. Loans 22,892 - 22,892 C. Financial assets designated at fair value - - - 1. Debt securties - - - 2. Loans - - - D. Financial assets at fair value through other comprehensive income - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - E. Financial assets at amortised cost (fair value) 3,587,942 28,038 3,615,980 1. Debt securties - - - 2. Loans 3,587,942 28,038 3,615,980 Total associated financial assets 3,610,834 28,038 3,638,872 Total associated financial liabilities 1,639,491 6,155 X Total net amount 12.31.2018 1,971,343 21,883 1,993,226 B. Financial assets sold and fully derecognised with recognition of continuing involvement Qualitative information At the end of the year there were no disposals of financial assets that had been fully derecognised, which required the recognition of continuing involvement. Quantitative Information E.4 Covered bond transaction Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 1.1 Credit Risk - Quantitative information - D. Sales Transactions - D. 4 Regulatory consolidation - Covered Bond Transactions - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Information on Sovereign exposure It should be noted that, as a result of IFRS9 adoption since 1 January 2018, Sovereign debt securities have been classified in the new categories specified by the standard in consideration of the business model followed and the related cash flow features (Solely Payment of Principal and Interests - SPPI Test). It should also be noted that during the year: • no changes have been made to the business models adopted on the 1 January and, consequently, the sovereign debt securities have not been subject to reclassification • the changed market circumstances also suggested the adoption of a "held to collect" business model for new purchases of Italian sovereign debt securities which, consequently, have to be measured at amortized cost subject to verification of the features of the related cash flows. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 696 2018 Annual Report and Accounts · UniCredit E.3 Sale transactions relating to financial liabilities with repayment exclusively based on assets sold and not fully derecognised: fair value (€ '000) FULLY RECOGNISED PARTIALLY RECOGNISED TOTAL 12.31.2018 A. Financial assets held for trading - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - 4. Derivative instruments - - - B. Other financial assets mandatorily at fair value 22,892 - 22,892 1. Debt securties - - - 2. Equity instruments - - - 3. Loans 22,892 - 22,892 C. Financial assets designated at fair value - - - 1. Debt securties - - - 2. Loans - - - D. Financial assets at fair value through other comprehensive income - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - E. Financial assets at amortised cost (fair value) 3,587,942 28,038 3,615,980 1. Debt securties - - - 2. Loans 3,587,942 28,038 3,615,980 Total associated financial assets 3,610,834 28,038 3,638,872 Total associated financial liabilities 1,639,491 6,155 X Total net amount 12.31.2018 1,971,343 21,883 1,993,226 B. Financial assets sold and fully derecognised with recognition of continuing involvement Qualitative information At the end of the year there were no disposals of financial assets that had been fully derecognised, which required the recognition of continuing involvement. Quantitative Information E.4 Covered bond transaction Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 1.1 Credit Risk - Quantitative information - D. Sales Transactions - D. 4 Regulatory consolidation - Covered Bond Transactions - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Information on Sovereign exposure It should be noted that, as a result of IFRS9 adoption since 1 January 2018, Sovereign debt securities have been classified in the new categories specified by the standard in consideration of the business model followed and the related cash flow features (Solely Payment of Principal and Interests - SPPI Test). It should also be noted that during the year: • no changes have been made to the business models adopted on the 1 January and, consequently, the sovereign debt securities have not been subject to reclassification • the changed market circumstances also suggested the adoption of a "held to collect" business model for new purchases of Italian sovereign debt securities which, consequently, have to be measured at amortized cost subject to verification of the features of the related cash flows. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 696 2018 Annual Report and Accounts · UniCredit E.3 Sale transactions relating to financial liabilities with repayment exclusively based on assets sold and not fully derecognised: fair value (€ '000) FULLY RECOGNISED PARTIALLY RECOGNISED TOTAL 12.31.2018 A. Financial assets held for trading - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - 4. Derivative instruments - - - B. Other financial assets mandatorily at fair value 22,892 - 22,892 1. Debt securties - - - 2. Equity instruments - - - 3. Loans 22,892 - 22,892 C. Financial assets designated at fair value - - - 1. Debt securties - - - 2. Loans - - - D. Financial assets at fair value through other comprehensive income - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - E. Financial assets at amortised cost (fair value) 3,587,942 28,038 3,615,980 1. Debt securties - - - 2. Loans 3,587,942 28,038 3,615,980 Total associated financial assets 3,610,834 28,038 3,638,872 Total associated financial liabilities 1,639,491 6,155 X Total net amount 12.31.2018 1,971,343 21,883 1,993,226 B. Financial assets sold and fully derecognised with recognition of continuing involvement Qualitative information At the end of the year there were no disposals of financial assets that had been fully derecognised, which required the recognition of continuing involvement. Quantitative Information E.4 Covered bond transaction Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 1.1 Credit Risk - Quantitative information - D. Sales Transactions - D. 4 Regulatory consolidation - Covered Bond Transactions - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Information on Sovereign exposure It should be noted that, as a result of IFRS9 adoption since 1 January 2018, Sovereign debt securities have been classified in the new categories specified by the standard in consideration of the business model followed and the related cash flow features (Solely Payment of Principal and Interests - SPPI Test). It should also be noted that during the year: • no changes have been made to the business models adopted on the 1 January and, consequently, the sovereign debt securities have not been subject to reclassification • the changed market circumstances also suggested the adoption of a "held to collect" business model for new purchases of Italian sovereign debt securities which, consequently, have to be measured at amortized cost subject to verification of the features of the related cash flows. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 696 2018 Annual Report and Accounts · UniCredit E.3 Sale transactions relating to financial liabilities with repayment exclusively based on assets sold and not fully derecognised: fair value (€ '000) FULLY RECOGNISED PARTIALLY RECOGNISED TOTAL 12.31.2018 A. Financial assets held for trading - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - 4. Derivative instruments - - - B. Other financial assets mandatorily at fair value 22,892 - 22,892 1. Debt securties - - - 2. Equity instruments - - - 3. Loans 22,892 - 22,892 C. Financial assets designated at fair value - - - 1. Debt securties - - - 2. Loans - - - D. Financial assets at fair value through other comprehensive income - - - 1. Debt securties - - - 2. Equity instruments - - - 3. Loans - - - E. Financial assets at amortised cost (fair value) 3,587,942 28,038 3,615,980 1. Debt securties - - - 2. Loans 3,587,942 28,038 3,615,980 Total associated financial assets 3,610,834 28,038 3,638,872 Total associated financial liabilities 1,639,491 6,155 X Total net amount 12.31.2018 1,971,343 21,883 1,993,226 B. Financial assets sold and fully derecognised with recognition of continuing involvement Qualitative information At the end of the year there were no disposals of financial assets that had been fully derecognised, which required the recognition of continuing involvement. Quantitative Information E.4 Covered bond transaction Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 1.1 Credit Risk - Quantitative information - D. Sales Transactions - D. 4 Regulatory consolidation - Covered Bond Transactions - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Information on Sovereign exposure It should be noted that, as a result of IFRS9 adoption since 1 January 2018, Sovereign debt securities have been classified in the new categories specified by the standard in consideration of the business model followed and the related cash flow features (Solely Payment of Principal and Interests - SPPI Test). It should also be noted that during the year: • no changes have been made to the business models adopted on the 1 January and, consequently, the sovereign debt securities have not been subject to reclassification • the changed market circumstances also suggested the adoption of a "held to collect" business model for new purchases of Italian sovereign debt securities which, consequently, have to be measured at amortized cost subject to verification of the features of the related cash flows. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 697 With reference to the UniCredit S.p.A. Sovereign exposures, the book value of Sovereign debt securities as at 31 December 2018 amounted to €58,684 million, of which nearly 81% in connection with Italy. This exposures is shown in the table below: Breakdown of Sovereign Debt Securities by Country and Portfolio (€ '000) COUNTRY/PORTFOLIO AMOUNTS AS AT 12.31.2018 NOMINAL VALUE BOOK VALUE FAIR VALUE - Italy 46,469,897 47,411,039 47,656,572 Financial assets at amortised cost 14,270,296 14,263,919 14,509,452 Financial assets mandatorily at fair value 799,665 806,739 806,739 Financial assets designated at fair value - - - Financial assets/liabilities held for trading (net exposure) 1,778,671 1,867,473 1,867,473 Financial assets at fair value through other comprehensive income 29,621,265 30,472,908 30,472,908 The remaining 19% of the total of Sovereign debt securities, amounting to €11,273 million with reference to the book value as at December 2018, is divided into 15 countries, of which €4,968 million to Spain, €2,215 million to Japan, €2,011 million to France and €589 million to Germany. The table below shows the classification of bonds belonging to the banking book and their percentage proportion of the total of the portfolio under which they are classified: Breakdown of Sovereign Debt Securities by Portfolio (€ '000) AMOUNTS AS AT 12.31.2018 FINACIAL ASSETS DESIGNATED AT FAIR VALUE FINANCIAL ASSETS MANDATORILY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS AT AMORTISED COST TOTAL Book value 809,576 41,670,646 14,335,283 56,815,505 % Portfolio 100.00% 25.46% 88.80% 84.07% In addition to the exposures to Sovereign debt securities, loans given to central and local governments and governmental bodies must be taken into account. The table below shows the total amount of the loans as at 31 December 2018: Breakdown of Sovereign Loans by Country (€ '000) COUNTRY AMOUNTS AS AT 12.31.2018 BOOK VALUE - Italy 2,906,615 - Czech Republic 699,339 - Qatar 312,292 - Kenia 88,095 - Dominican Republic 53,883 - Brazil 45,335 - Other 46,910 Total on-balance sheet exposures 4,152,468 Other transaction With reference to the indications of Banca d’Italia/Consob/IVASS document No.6 of 8 March 2013 - Booking of "long-term structured repos" - instructions, there are no transactions of this kind to report. In addition, with reference to an investment of UniCredit S.p.A. in a debt security issued by the Italian Republic maturing on 30 August 2019 (ITALY 19EUR FRN) subscribed for during placement for a nominal amount of €750 million and with a book value of €750 million including accrued interest at 31 December 2018 (classified in the “mandatorily-at-fair value” portfolio in accordance with SPPI test result), a term repo (conducted in two stages) for a total nominal amount of €750 million, with a book value of liabilities of €824 million at 31 December 2018, was completed in 2012. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 697 With reference to the UniCredit S.p.A. Sovereign exposures, the book value of Sovereign debt securities as at 31 December 2018 amounted to €58,684 million, of which nearly 81% in connection with Italy. This exposures is shown in the table below: Breakdown of Sovereign Debt Securities by Country and Portfolio (€ '000) COUNTRY/PORTFOLIO AMOUNTS AS AT 12.31.2018 NOMINAL VALUE BOOK VALUE FAIR VALUE - Italy 46,469,897 47,411,039 47,656,572 Financial assets at amortised cost 14,270,296 14,263,919 14,509,452 Financial assets mandatorily at fair value 799,665 806,739 806,739 Financial assets designated at fair value - - - Financial assets/liabilities held for trading (net exposure) 1,778,671 1,867,473 1,867,473 Financial assets at fair value through other comprehensive income 29,621,265 30,472,908 30,472,908 The remaining 19% of the total of Sovereign debt securities, amounting to €11,273 million with reference to the book value as at December 2018, is divided into 15 countries, of which €4,968 million to Spain, €2,215 million to Japan, €2,011 million to France and €589 million to Germany. The table below shows the classification of bonds belonging to the banking book and their percentage proportion of the total of the portfolio under which they are classified: Breakdown of Sovereign Debt Securities by Portfolio (€ '000) AMOUNTS AS AT 12.31.2018 FINACIAL ASSETS DESIGNATED AT FAIR VALUE FINANCIAL ASSETS MANDATORILY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS AT AMORTISED COST TOTAL Book value 809,576 41,670,646 14,335,283 56,815,505 % Portfolio 100.00% 25.46% 88.80% 84.07% In addition to the exposures to Sovereign debt securities, loans given to central and local governments and governmental bodies must be taken into account. The table below shows the total amount of the loans as at 31 December 2018: Breakdown of Sovereign Loans by Country (€ '000) COUNTRY AMOUNTS AS AT 12.31.2018 BOOK VALUE - Italy 2,906,615 - Czech Republic 699,339 - Qatar 312,292 - Kenia 88,095 - Dominican Republic 53,883 - Brazil 45,335 - Other 46,910 Total on-balance sheet exposures 4,152,468 Other transaction With reference to the indications of Banca d’Italia/Consob/IVASS document No.6 of 8 March 2013 - Booking of "long-term structured repos" - instructions, there are no transactions of this kind to report. In addition, with reference to an investment of UniCredit S.p.A. in a debt security issued by the Italian Republic maturing on 30 August 2019 (ITALY 19EUR FRN) subscribed for during placement for a nominal amount of €750 million and with a book value of €750 million including accrued interest at 31 December 2018 (classified in the “mandatorily-at-fair value” portfolio in accordance with SPPI test result), a term repo (conducted in two stages) for a total nominal amount of €750 million, with a book value of liabilities of €824 million at 31 December 2018, was completed in 2012. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 697 With reference to the UniCredit S.p.A. Sovereign exposures, the book value of Sovereign debt securities as at 31 December 2018 amounted to €58,684 million, of which nearly 81% in connection with Italy. This exposures is shown in the table below: Breakdown of Sovereign Debt Securities by Country and Portfolio (€ '000) COUNTRY/PORTFOLIO AMOUNTS AS AT 12.31.2018 NOMINAL VALUE BOOK VALUE FAIR VALUE - Italy 46,469,897 47,411,039 47,656,572 Financial assets at amortised cost 14,270,296 14,263,919 14,509,452 Financial assets mandatorily at fair value 799,665 806,739 806,739 Financial assets designated at fair value - - - Financial assets/liabilities held for trading (net exposure) 1,778,671 1,867,473 1,867,473 Financial assets at fair value through other comprehensive income 29,621,265 30,472,908 30,472,908 The remaining 19% of the total of Sovereign debt securities, amounting to €11,273 million with reference to the book value as at December 2018, is divided into 15 countries, of which €4,968 million to Spain, €2,215 million to Japan, €2,011 million to France and €589 million to Germany. The table below shows the classification of bonds belonging to the banking book and their percentage proportion of the total of the portfolio under which they are classified: Breakdown of Sovereign Debt Securities by Portfolio (€ '000) AMOUNTS AS AT 12.31.2018 FINACIAL ASSETS DESIGNATED AT FAIR VALUE FINANCIAL ASSETS MANDATORILY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS AT AMORTISED COST TOTAL Book value 809,576 41,670,646 14,335,283 56,815,505 % Portfolio 100.00% 25.46% 88.80% 84.07% In addition to the exposures to Sovereign debt securities, loans given to central and local governments and governmental bodies must be taken into account. The table below shows the total amount of the loans as at 31 December 2018: Breakdown of Sovereign Loans by Country (€ '000) COUNTRY AMOUNTS AS AT 12.31.2018 BOOK VALUE - Italy 2,906,615 - Czech Republic 699,339 - Qatar 312,292 - Kenia 88,095 - Dominican Republic 53,883 - Brazil 45,335 - Other 46,910 Total on-balance sheet exposures 4,152,468 Other transaction With reference to the indications of Banca d’Italia/Consob/IVASS document No.6 of 8 March 2013 - Booking of "long-term structured repos" - instructions, there are no transactions of this kind to report. In addition, with reference to an investment of UniCredit S.p.A. in a debt security issued by the Italian Republic maturing on 30 August 2019 (ITALY 19EUR FRN) subscribed for during placement for a nominal amount of €750 million and with a book value of €750 million including accrued interest at 31 December 2018 (classified in the “mandatorily-at-fair value” portfolio in accordance with SPPI test result), a term repo (conducted in two stages) for a total nominal amount of €750 million, with a book value of liabilities of €824 million at 31 December 2018, was completed in 2012. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 697 With reference to the UniCredit S.p.A. Sovereign exposures, the book value of Sovereign debt securities as at 31 December 2018 amounted to €58,684 million, of which nearly 81% in connection with Italy. This exposures is shown in the table below: Breakdown of Sovereign Debt Securities by Country and Portfolio (€ '000) COUNTRY/PORTFOLIO AMOUNTS AS AT 12.31.2018 NOMINAL VALUE BOOK VALUE FAIR VALUE - Italy 46,469,897 47,411,039 47,656,572 Financial assets at amortised cost 14,270,296 14,263,919 14,509,452 Financial assets mandatorily at fair value 799,665 806,739 806,739 Financial assets designated at fair value - - - Financial assets/liabilities held for trading (net exposure) 1,778,671 1,867,473 1,867,473 Financial assets at fair value through other comprehensive income 29,621,265 30,472,908 30,472,908 The remaining 19% of the total of Sovereign debt securities, amounting to €11,273 million with reference to the book value as at December 2018, is divided into 15 countries, of which €4,968 million to Spain, €2,215 million to Japan, €2,011 million to France and €589 million to Germany. The table below shows the classification of bonds belonging to the banking book and their percentage proportion of the total of the portfolio under which they are classified: Breakdown of Sovereign Debt Securities by Portfolio (€ '000) AMOUNTS AS AT 12.31.2018 FINACIAL ASSETS DESIGNATED AT FAIR VALUE FINANCIAL ASSETS MANDATORILY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS AT AMORTISED COST TOTAL Book value 809,576 41,670,646 14,335,283 56,815,505 % Portfolio 100.00% 25.46% 88.80% 84.07% In addition to the exposures to Sovereign debt securities, loans given to central and local governments and governmental bodies must be taken into account. The table below shows the total amount of the loans as at 31 December 2018: Breakdown of Sovereign Loans by Country (€ '000) COUNTRY AMOUNTS AS AT 12.31.2018 BOOK VALUE - Italy 2,906,615 - Czech Republic 699,339 - Qatar 312,292 - Kenia 88,095 - Dominican Republic 53,883 - Brazil 45,335 - Other 46,910 Total on-balance sheet exposures 4,152,468 Other transaction With reference to the indications of Banca d’Italia/Consob/IVASS document No.6 of 8 March 2013 - Booking of "long-term structured repos" - instructions, there are no transactions of this kind to report. In addition, with reference to an investment of UniCredit S.p.A. in a debt security issued by the Italian Republic maturing on 30 August 2019 (ITALY 19EUR FRN) subscribed for during placement for a nominal amount of €750 million and with a book value of €750 million including accrued interest at 31 December 2018 (classified in the “mandatorily-at-fair value” portfolio in accordance with SPPI test result), a term repo (conducted in two stages) for a total nominal amount of €750 million, with a book value of liabilities of €824 million at 31 December 2018, was completed in 2012. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 697 With reference to the UniCredit S.p.A. Sovereign exposures, the book value of Sovereign debt securities as at 31 December 2018 amounted to €58,684 million, of which nearly 81% in connection with Italy. This exposures is shown in the table below: Breakdown of Sovereign Debt Securities by Country and Portfolio (€ '000) COUNTRY/PORTFOLIO AMOUNTS AS AT 12.31.2018 NOMINAL VALUE BOOK VALUE FAIR VALUE - Italy 46,469,897 47,411,039 47,656,572 Financial assets at amortised cost 14,270,296 14,263,919 14,509,452 Financial assets mandatorily at fair value 799,665 806,739 806,739 Financial assets designated at fair value - - - Financial assets/liabilities held for trading (net exposure) 1,778,671 1,867,473 1,867,473 Financial assets at fair value through other comprehensive income 29,621,265 30,472,908 30,472,908 The remaining 19% of the total of Sovereign debt securities, amounting to €11,273 million with reference to the book value as at December 2018, is divided into 15 countries, of which €4,968 million to Spain, €2,215 million to Japan, €2,011 million to France and €589 million to Germany. The table below shows the classification of bonds belonging to the banking book and their percentage proportion of the total of the portfolio under which they are classified: Breakdown of Sovereign Debt Securities by Portfolio (€ '000) AMOUNTS AS AT 12.31.2018 FINACIAL ASSETS DESIGNATED AT FAIR VALUE FINANCIAL ASSETS MANDATORILY AT FAIR VALUE FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME FINANCIAL ASSETS AT AMORTISED COST TOTAL Book value 809,576 41,670,646 14,335,283 56,815,505 % Portfolio 100.00% 25.46% 88.80% 84.07% In addition to the exposures to Sovereign debt securities, loans given to central and local governments and governmental bodies must be taken into account. The table below shows the total amount of the loans as at 31 December 2018: Breakdown of Sovereign Loans by Country (€ '000) COUNTRY AMOUNTS AS AT 12.31.2018 BOOK VALUE - Italy 2,906,615 - Czech Republic 699,339 - Qatar 312,292 - Kenia 88,095 - Dominican Republic 53,883 - Brazil 45,335 - Other 46,910 Total on-balance sheet exposures 4,152,468 Other transaction With reference to the indications of Banca d’Italia/Consob/IVASS document No.6 of 8 March 2013 - Booking of "long-term structured repos" - instructions, there are no transactions of this kind to report. In addition, with reference to an investment of UniCredit S.p.A. in a debt security issued by the Italian Republic maturing on 30 August 2019 (ITALY 19EUR FRN) subscribed for during placement for a nominal amount of €750 million and with a book value of €750 million including accrued interest at 31 December 2018 (classified in the “mandatorily-at-fair value” portfolio in accordance with SPPI test result), a term repo (conducted in two stages) for a total nominal amount of €750 million, with a book value of liabilities of €824 million at 31 December 2018, was completed in 2012. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 698 2018 Annual Report and Accounts · UniCredit At the same time, a 4.25% BTP maturing in September 2019 was purchased under a term reverse repo (conducted in 2 stages) for a total nominal value of €750 million and a book value of €824 million at 31 December 2018, with the economic purpose of obtaining the availability of more liquid securities (compared with the security ITALY 19EUR FRN), with the same maturity and similar underlying risks, that can be therefore used more easily for refinancing operations. The term repo and the term reverse repo are subject to netting (whose value is collateralised by cash) in the event of the default of one of the two counterparties or of the Italian Republic. This clause is accounted for as a financial guarantee issued, in accordance with the nature of the commitments of the parties. The fair value at trade date, €22 million, was initially recorded in other liabilities and is amortised on a pro-rata basis according to the current accounting rules. Information on trading book derivative instruments with customers The business model governing OTC derivatives trading with customers provides for centralization of market risk in the CIB Division - Markets Area, while credit risk is assumed by the Group company which, under the divisional or geographical segmentation model, manages the relevant customer’s account. The Group’s operational model provides for customer trading derivatives business to be carried on, as part of each subsidiary’s operational independence: • by the commercial banks and divisions that close transaction in OTC derivatives in order to provide non-institutional clients with products to manage currency, interest-rate and price risk. Under these transactions, the commercial banks transfer their market risks to the CIB Division by means of equal and opposite contracts, retaining only the relevant counterparty risk. The commercial banks also place or collect orders on behalf of others for investment products with embedded derivatives (e.g. structured bonds); • by the CIB Division operating with large corporate and financial institutions, in respect of which it assumes and manages both market and counterparty risk; • by CEE Banks, which transact business directly with their customers. The UniCredit group trades OTC derivatives on a wide range of underlying, e.g. interest rates, currency rates, share prices and indexes, commodities (precious metals, base metals, petroleum and energy materials) and credit rights. OTC derivatives offer considerable scope for personalization; new payoff profiles can be constructed by combining several OTC derivatives (for example, a plain vanilla IRS with one or more plain vanilla or exotic options). The risk and the complexity of the structures obtained in this manner depend on the respective characteristics of the components (reference parameters and indexation mechanisms) and the way in which they are combined. Credit and market risk arising from OTC derivatives business is controlled by the Chief Risk Officer competence line (CRO) in the Parent and/or in the Division or subsidiary involved. This control is carried out by means of guidelines and policies covering risk management, measurement and controls in terms of principles, rules and processes, as well as by setting VaR limits. The business with non-institutional clients does not (usually) entail the use of margin calls, whereas with institutional counterparties (dealt with by the CIB Division) recourse may be made to credit-risk mitigation (“CRM”) techniques, by using netting and/or collateral agreements. Write-downs and write-backs of derivatives to take account of counterparty risk are determined in line with the procedure used to assess other credit exposure, specifically: • performing exposure to customers are mapped by deriving EAD (Exposure at Default) that take into account the Wrong Way Risk and measured with PD (Probability of Default) and LGD (Loss Given Default) implied by current market default rates obtained from credit & loan-credit default swaps, in order to obtain a value in terms of ‘expected loss’ (EL) to be used for items designated and measured at fair value maximising usage of market’s inputs; • non-performing positions are valued in terms of estimated expected future cash flow according to specific indications of impairment (which are the basis for the calculation of the amount and timing of the cash flow). Here follows the breakdown of balance-sheet asset item “20a. Financial assets held for trading” and of balance-sheet liability item “20. Financial liabilities held for trading”. To make the distinction between customers and banking counterparties, the definition contained in Banca d’Italia Circular 262 (which was used for the preparation of the accounts) was used as a reference. Structured products were defined as derivative contracts that incorporate in the same instrument forms of contracts that generate exposure to several types of risk (with the exception of cross-currency swaps) and/or leverage effects. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 698 2018 Annual Report and Accounts · UniCredit At the same time, a 4.25% BTP maturing in September 2019 was purchased under a term reverse repo (conducted in 2 stages) for a total nominal value of €750 million and a book value of €824 million at 31 December 2018, with the economic purpose of obtaining the availability of more liquid securities (compared with the security ITALY 19EUR FRN), with the same maturity and similar underlying risks, that can be therefore used more easily for refinancing operations. The term repo and the term reverse repo are subject to netting (whose value is collateralised by cash) in the event of the default of one of the two counterparties or of the Italian Republic. This clause is accounted for as a financial guarantee issued, in accordance with the nature of the commitments of the parties. The fair value at trade date, €22 million, was initially recorded in other liabilities and is amortised on a pro-rata basis according to the current accounting rules. Information on trading book derivative instruments with customers The business model governing OTC derivatives trading with customers provides for centralization of market risk in the CIB Division - Markets Area, while credit risk is assumed by the Group company which, under the divisional or geographical segmentation model, manages the relevant customer’s account. The Group’s operational model provides for customer trading derivatives business to be carried on, as part of each subsidiary’s operational independence: • by the commercial banks and divisions that close transaction in OTC derivatives in order to provide non-institutional clients with products to manage currency, interest-rate and price risk. Under these transactions, the commercial banks transfer their market risks to the CIB Division by means of equal and opposite contracts, retaining only the relevant counterparty risk. The commercial banks also place or collect orders on behalf of others for investment products with embedded derivatives (e.g. structured bonds); • by the CIB Division operating with large corporate and financial institutions, in respect of which it assumes and manages both market and counterparty risk; • by CEE Banks, which transact business directly with their customers. The UniCredit group trades OTC derivatives on a wide range of underlying, e.g. interest rates, currency rates, share prices and indexes, commodities (precious metals, base metals, petroleum and energy materials) and credit rights. OTC derivatives offer considerable scope for personalization; new payoff profiles can be constructed by combining several OTC derivatives (for example, a plain vanilla IRS with one or more plain vanilla or exotic options). The risk and the complexity of the structures obtained in this manner depend on the respective characteristics of the components (reference parameters and indexation mechanisms) and the way in which they are combined. Credit and market risk arising from OTC derivatives business is controlled by the Chief Risk Officer competence line (CRO) in the Parent and/or in the Division or subsidiary involved. This control is carried out by means of guidelines and policies covering risk management, measurement and controls in terms of principles, rules and processes, as well as by setting VaR limits. The business with non-institutional clients does not (usually) entail the use of margin calls, whereas with institutional counterparties (dealt with by the CIB Division) recourse may be made to credit-risk mitigation (“CRM”) techniques, by using netting and/or collateral agreements. Write-downs and write-backs of derivatives to take account of counterparty risk are determined in line with the procedure used to assess other credit exposure, specifically: • performing exposure to customers are mapped by deriving EAD (Exposure at Default) that take into account the Wrong Way Risk and measured with PD (Probability of Default) and LGD (Loss Given Default) implied by current market default rates obtained from credit & loan-credit default swaps, in order to obtain a value in terms of ‘expected loss’ (EL) to be used for items designated and measured at fair value maximising usage of market’s inputs; • non-performing positions are valued in terms of estimated expected future cash flow according to specific indications of impairment (which are the basis for the calculation of the amount and timing of the cash flow). Here follows the breakdown of balance-sheet asset item “20a. Financial assets held for trading” and of balance-sheet liability item “20. Financial liabilities held for trading”. To make the distinction between customers and banking counterparties, the definition contained in Banca d’Italia Circular 262 (which was used for the preparation of the accounts) was used as a reference. Structured products were defined as derivative contracts that incorporate in the same instrument forms of contracts that generate exposure to several types of risk (with the exception of cross-currency swaps) and/or leverage effects. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 698 2018 Annual Report and Accounts · UniCredit At the same time, a 4.25% BTP maturing in September 2019 was purchased under a term reverse repo (conducted in 2 stages) for a total nominal value of €750 million and a book value of €824 million at 31 December 2018, with the economic purpose of obtaining the availability of more liquid securities (compared with the security ITALY 19EUR FRN), with the same maturity and similar underlying risks, that can be therefore used more easily for refinancing operations. The term repo and the term reverse repo are subject to netting (whose value is collateralised by cash) in the event of the default of one of the two counterparties or of the Italian Republic. This clause is accounted for as a financial guarantee issued, in accordance with the nature of the commitments of the parties. The fair value at trade date, €22 million, was initially recorded in other liabilities and is amortised on a pro-rata basis according to the current accounting rules. Information on trading book derivative instruments with customers The business model governing OTC derivatives trading with customers provides for centralization of market risk in the CIB Division - Markets Area, while credit risk is assumed by the Group company which, under the divisional or geographical segmentation model, manages the relevant customer’s account. The Group’s operational model provides for customer trading derivatives business to be carried on, as part of each subsidiary’s operational independence: • by the commercial banks and divisions that close transaction in OTC derivatives in order to provide non-institutional clients with products to manage currency, interest-rate and price risk. Under these transactions, the commercial banks transfer their market risks to the CIB Division by means of equal and opposite contracts, retaining only the relevant counterparty risk. The commercial banks also place or collect orders on behalf of others for investment products with embedded derivatives (e.g. structured bonds); • by the CIB Division operating with large corporate and financial institutions, in respect of which it assumes and manages both market and counterparty risk; • by CEE Banks, which transact business directly with their customers. The UniCredit group trades OTC derivatives on a wide range of underlying, e.g. interest rates, currency rates, share prices and indexes, commodities (precious metals, base metals, petroleum and energy materials) and credit rights. OTC derivatives offer considerable scope for personalization; new payoff profiles can be constructed by combining several OTC derivatives (for example, a plain vanilla IRS with one or more plain vanilla or exotic options). The risk and the complexity of the structures obtained in this manner depend on the respective characteristics of the components (reference parameters and indexation mechanisms) and the way in which they are combined. Credit and market risk arising from OTC derivatives business is controlled by the Chief Risk Officer competence line (CRO) in the Parent and/or in the Division or subsidiary involved. This control is carried out by means of guidelines and policies covering risk management, measurement and controls in terms of principles, rules and processes, as well as by setting VaR limits. The business with non-institutional clients does not (usually) entail the use of margin calls, whereas with institutional counterparties (dealt with by the CIB Division) recourse may be made to credit-risk mitigation (“CRM”) techniques, by using netting and/or collateral agreements. Write-downs and write-backs of derivatives to take account of counterparty risk are determined in line with the procedure used to assess other credit exposure, specifically: • performing exposure to customers are mapped by deriving EAD (Exposure at Default) that take into account the Wrong Way Risk and measured with PD (Probability of Default) and LGD (Loss Given Default) implied by current market default rates obtained from credit & loan-credit default swaps, in order to obtain a value in terms of ‘expected loss’ (EL) to be used for items designated and measured at fair value maximising usage of market’s inputs; • non-performing positions are valued in terms of estimated expected future cash flow according to specific indications of impairment (which are the basis for the calculation of the amount and timing of the cash flow). Here follows the breakdown of balance-sheet asset item “20a. Financial assets held for trading” and of balance-sheet liability item “20. Financial liabilities held for trading”. To make the distinction between customers and banking counterparties, the definition contained in Banca d’Italia Circular 262 (which was used for the preparation of the accounts) was used as a reference. Structured products were defined as derivative contracts that incorporate in the same instrument forms of contracts that generate exposure to several types of risk (with the exception of cross-currency swaps) and/or leverage effects. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 698 2018 Annual Report and Accounts · UniCredit At the same time, a 4.25% BTP maturing in September 2019 was purchased under a term reverse repo (conducted in 2 stages) for a total nominal value of €750 million and a book value of €824 million at 31 December 2018, with the economic purpose of obtaining the availability of more liquid securities (compared with the security ITALY 19EUR FRN), with the same maturity and similar underlying risks, that can be therefore used more easily for refinancing operations. The term repo and the term reverse repo are subject to netting (whose value is collateralised by cash) in the event of the default of one of the two counterparties or of the Italian Republic. This clause is accounted for as a financial guarantee issued, in accordance with the nature of the commitments of the parties. The fair value at trade date, €22 million, was initially recorded in other liabilities and is amortised on a pro-rata basis according to the current accounting rules. Information on trading book derivative instruments with customers The business model governing OTC derivatives trading with customers provides for centralization of market risk in the CIB Division - Markets Area, while credit risk is assumed by the Group company which, under the divisional or geographical segmentation model, manages the relevant customer’s account. The Group’s operational model provides for customer trading derivatives business to be carried on, as part of each subsidiary’s operational independence: • by the commercial banks and divisions that close transaction in OTC derivatives in order to provide non-institutional clients with products to manage currency, interest-rate and price risk. Under these transactions, the commercial banks transfer their market risks to the CIB Division by means of equal and opposite contracts, retaining only the relevant counterparty risk. The commercial banks also place or collect orders on behalf of others for investment products with embedded derivatives (e.g. structured bonds); • by the CIB Division operating with large corporate and financial institutions, in respect of which it assumes and manages both market and counterparty risk; • by CEE Banks, which transact business directly with their customers. The UniCredit group trades OTC derivatives on a wide range of underlying, e.g. interest rates, currency rates, share prices and indexes, commodities (precious metals, base metals, petroleum and energy materials) and credit rights. OTC derivatives offer considerable scope for personalization; new payoff profiles can be constructed by combining several OTC derivatives (for example, a plain vanilla IRS with one or more plain vanilla or exotic options). The risk and the complexity of the structures obtained in this manner depend on the respective characteristics of the components (reference parameters and indexation mechanisms) and the way in which they are combined. Credit and market risk arising from OTC derivatives business is controlled by the Chief Risk Officer competence line (CRO) in the Parent and/or in the Division or subsidiary involved. This control is carried out by means of guidelines and policies covering risk management, measurement and controls in terms of principles, rules and processes, as well as by setting VaR limits. The business with non-institutional clients does not (usually) entail the use of margin calls, whereas with institutional counterparties (dealt with by the CIB Division) recourse may be made to credit-risk mitigation (“CRM”) techniques, by using netting and/or collateral agreements. Write-downs and write-backs of derivatives to take account of counterparty risk are determined in line with the procedure used to assess other credit exposure, specifically: • performing exposure to customers are mapped by deriving EAD (Exposure at Default) that take into account the Wrong Way Risk and measured with PD (Probability of Default) and LGD (Loss Given Default) implied by current market default rates obtained from credit & loan-credit default swaps, in order to obtain a value in terms of ‘expected loss’ (EL) to be used for items designated and measured at fair value maximising usage of market’s inputs; • non-performing positions are valued in terms of estimated expected future cash flow according to specific indications of impairment (which are the basis for the calculation of the amount and timing of the cash flow). Here follows the breakdown of balance-sheet asset item “20a. Financial assets held for trading” and of balance-sheet liability item “20. Financial liabilities held for trading”. To make the distinction between customers and banking counterparties, the definition contained in Banca d’Italia Circular 262 (which was used for the preparation of the accounts) was used as a reference. Structured products were defined as derivative contracts that incorporate in the same instrument forms of contracts that generate exposure to several types of risk (with the exception of cross-currency swaps) and/or leverage effects. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 698 2018 Annual Report and Accounts · UniCredit At the same time, a 4.25% BTP maturing in September 2019 was purchased under a term reverse repo (conducted in 2 stages) for a total nominal value of €750 million and a book value of €824 million at 31 December 2018, with the economic purpose of obtaining the availability of more liquid securities (compared with the security ITALY 19EUR FRN), with the same maturity and similar underlying risks, that can be therefore used more easily for refinancing operations. The term repo and the term reverse repo are subject to netting (whose value is collateralised by cash) in the event of the default of one of the two counterparties or of the Italian Republic. This clause is accounted for as a financial guarantee issued, in accordance with the nature of the commitments of the parties. The fair value at trade date, €22 million, was initially recorded in other liabilities and is amortised on a pro-rata basis according to the current accounting rules. Information on trading book derivative instruments with customers The business model governing OTC derivatives trading with customers provides for centralization of market risk in the CIB Division - Markets Area, while credit risk is assumed by the Group company which, under the divisional or geographical segmentation model, manages the relevant customer’s account. The Group’s operational model provides for customer trading derivatives business to be carried on, as part of each subsidiary’s operational independence: • by the commercial banks and divisions that close transaction in OTC derivatives in order to provide non-institutional clients with products to manage currency, interest-rate and price risk. Under these transactions, the commercial banks transfer their market risks to the CIB Division by means of equal and opposite contracts, retaining only the relevant counterparty risk. The commercial banks also place or collect orders on behalf of others for investment products with embedded derivatives (e.g. structured bonds); • by the CIB Division operating with large corporate and financial institutions, in respect of which it assumes and manages both market and counterparty risk; • by CEE Banks, which transact business directly with their customers. The UniCredit group trades OTC derivatives on a wide range of underlying, e.g. interest rates, currency rates, share prices and indexes, commodities (precious metals, base metals, petroleum and energy materials) and credit rights. OTC derivatives offer considerable scope for personalization; new payoff profiles can be constructed by combining several OTC derivatives (for example, a plain vanilla IRS with one or more plain vanilla or exotic options). The risk and the complexity of the structures obtained in this manner depend on the respective characteristics of the components (reference parameters and indexation mechanisms) and the way in which they are combined. Credit and market risk arising from OTC derivatives business is controlled by the Chief Risk Officer competence line (CRO) in the Parent and/or in the Division or subsidiary involved. This control is carried out by means of guidelines and policies covering risk management, measurement and controls in terms of principles, rules and processes, as well as by setting VaR limits. The business with non-institutional clients does not (usually) entail the use of margin calls, whereas with institutional counterparties (dealt with by the CIB Division) recourse may be made to credit-risk mitigation (“CRM”) techniques, by using netting and/or collateral agreements. Write-downs and write-backs of derivatives to take account of counterparty risk are determined in line with the procedure used to assess other credit exposure, specifically: • performing exposure to customers are mapped by deriving EAD (Exposure at Default) that take into account the Wrong Way Risk and measured with PD (Probability of Default) and LGD (Loss Given Default) implied by current market default rates obtained from credit & loan-credit default swaps, in order to obtain a value in terms of ‘expected loss’ (EL) to be used for items designated and measured at fair value maximising usage of market’s inputs; • non-performing positions are valued in terms of estimated expected future cash flow according to specific indications of impairment (which are the basis for the calculation of the amount and timing of the cash flow). Here follows the breakdown of balance-sheet asset item “20a. Financial assets held for trading” and of balance-sheet liability item “20. Financial liabilities held for trading”. To make the distinction between customers and banking counterparties, the definition contained in Banca d’Italia Circular 262 (which was used for the preparation of the accounts) was used as a reference. Structured products were defined as derivative contracts that incorporate in the same instrument forms of contracts that generate exposure to several types of risk (with the exception of cross-currency swaps) and/or leverage effects. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 699 The balance of item “20a Financial assets held for trading” with regard to derivative contracts totaled €5,323 million (with a notional value of €181,963 million) including €2,894 million with customers. The notional value of derivatives with customers amounted to €76,433 million, of which €3,291 structured (fair value €143 million). The notional value of derivatives with banking counterparties totaled €105,530 million (fair value of €2,429 million) including €2,559 million related to structured derivatives (fair value of €65 million). The balance of item “20 Financial liabilities held for trading” of the consolidated accounts with regard to derivative contracts totaled €5,740 million (with a notional value of €167,972 million) including €1,747 million with customers. The notional value of derivatives with customers amounted to €48,756 million including €2,413 million in structured derivatives (fair value of €64 million). The notional value of derivatives with banking counterparties totaled €119,216 million (fair value of €3,993 million) including €3,145 million related to structured derivatives (fair value €147 million). F. Credit risk measurement models As at 31 December 2018 the expected loss on the credit risk perimeter was 0.59% of total Bank credit exposure. This trend is mitigated by the exposures which have migrated to default and therefore do not enter in the calculation of expected loss. Besides, since risk measurement systems tend to be anti-cyclical, this may result in a smaller elasticity to the swift changes of the macroeconomic scenario. The ratio between credit economic capital (including a component to cover migration risk) and its relative credit exposure amount is 4.09% with reference date end of December 2018. As far as quantitative information of UniCredit group, reference is made to the paragraph Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Credit Risk - Quantitative information - E. Credit risk measurement models. Section 2 - Market risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - General aspects - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Below end of year VaR, SVaR and IRC results: Daily VaR on Trading Book (€ million) 2018 2017 12.31.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 3.64 5.1 11.2 2.7 4.3 SVaR on Trading Book (€ million) 2018 2017 12.27.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 9.50 19.67 30.33 8.42 17.86 IRC on Trading Book € million) 2018 2017 12.27.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 89.1 180.3 376.4 34.6 182.4 2.1 Interest rate risk and price risk - Regulatory trading book Qualitative information Interest rate risk A. General aspects Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk - Qualitative information - A. General information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk - Qualitative information - B. Risk Management Processes and Measurement Methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 699 The balance of item “20a Financial assets held for trading” with regard to derivative contracts totaled €5,323 million (with a notional value of €181,963 million) including €2,894 million with customers. The notional value of derivatives with customers amounted to €76,433 million, of which €3,291 structured (fair value €143 million). The notional value of derivatives with banking counterparties totaled €105,530 million (fair value of €2,429 million) including €2,559 million related to structured derivatives (fair value of €65 million). The balance of item “20 Financial liabilities held for trading” of the consolidated accounts with regard to derivative contracts totaled €5,740 million (with a notional value of €167,972 million) including €1,747 million with customers. The notional value of derivatives with customers amounted to €48,756 million including €2,413 million in structured derivatives (fair value of €64 million). The notional value of derivatives with banking counterparties totaled €119,216 million (fair value of €3,993 million) including €3,145 million related to structured derivatives (fair value €147 million). F. Credit risk measurement models As at 31 December 2018 the expected loss on the credit risk perimeter was 0.59% of total Bank credit exposure. This trend is mitigated by the exposures which have migrated to default and therefore do not enter in the calculation of expected loss. Besides, since risk measurement systems tend to be anti-cyclical, this may result in a smaller elasticity to the swift changes of the macroeconomic scenario. The ratio between credit economic capital (including a component to cover migration risk) and its relative credit exposure amount is 4.09% with reference date end of December 2018. As far as quantitative information of UniCredit group, reference is made to the paragraph Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Credit Risk - Quantitative information - E. Credit risk measurement models. Section 2 - Market risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - General aspects - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Below end of year VaR, SVaR and IRC results: Daily VaR on Trading Book (€ million) 2018 2017 12.31.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 3.64 5.1 11.2 2.7 4.3 SVaR on Trading Book (€ million) 2018 2017 12.27.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 9.50 19.67 30.33 8.42 17.86 IRC on Trading Book € million) 2018 2017 12.27.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 89.1 180.3 376.4 34.6 182.4 2.1 Interest rate risk and price risk - Regulatory trading book Qualitative information Interest rate risk A. General aspects Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk - Qualitative information - A. General information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk - Qualitative information - B. Risk Management Processes and Measurement Methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 699 The balance of item “20a Financial assets held for trading” with regard to derivative contracts totaled €5,323 million (with a notional value of €181,963 million) including €2,894 million with customers. The notional value of derivatives with customers amounted to €76,433 million, of which €3,291 structured (fair value €143 million). The notional value of derivatives with banking counterparties totaled €105,530 million (fair value of €2,429 million) including €2,559 million related to structured derivatives (fair value of €65 million). The balance of item “20 Financial liabilities held for trading” of the consolidated accounts with regard to derivative contracts totaled €5,740 million (with a notional value of €167,972 million) including €1,747 million with customers. The notional value of derivatives with customers amounted to €48,756 million including €2,413 million in structured derivatives (fair value of €64 million). The notional value of derivatives with banking counterparties totaled €119,216 million (fair value of €3,993 million) including €3,145 million related to structured derivatives (fair value €147 million). F. Credit risk measurement models As at 31 December 2018 the expected loss on the credit risk perimeter was 0.59% of total Bank credit exposure. This trend is mitigated by the exposures which have migrated to default and therefore do not enter in the calculation of expected loss. Besides, since risk measurement systems tend to be anti-cyclical, this may result in a smaller elasticity to the swift changes of the macroeconomic scenario. The ratio between credit economic capital (including a component to cover migration risk) and its relative credit exposure amount is 4.09% with reference date end of December 2018. As far as quantitative information of UniCredit group, reference is made to the paragraph Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Credit Risk - Quantitative information - E. Credit risk measurement models. Section 2 - Market risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - General aspects - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Below end of year VaR, SVaR and IRC results: Daily VaR on Trading Book (€ million) 2018 2017 12.31.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 3.64 5.1 11.2 2.7 4.3 SVaR on Trading Book (€ million) 2018 2017 12.27.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 9.50 19.67 30.33 8.42 17.86 IRC on Trading Book € million) 2018 2017 12.27.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 89.1 180.3 376.4 34.6 182.4 2.1 Interest rate risk and price risk - Regulatory trading book Qualitative information Interest rate risk A. General aspects Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk - Qualitative information - A. General information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk - Qualitative information - B. Risk Management Processes and Measurement Methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 699 The balance of item “20a Financial assets held for trading” with regard to derivative contracts totaled €5,323 million (with a notional value of €181,963 million) including €2,894 million with customers. The notional value of derivatives with customers amounted to €76,433 million, of which €3,291 structured (fair value €143 million). The notional value of derivatives with banking counterparties totaled €105,530 million (fair value of €2,429 million) including €2,559 million related to structured derivatives (fair value of €65 million). The balance of item “20 Financial liabilities held for trading” of the consolidated accounts with regard to derivative contracts totaled €5,740 million (with a notional value of €167,972 million) including €1,747 million with customers. The notional value of derivatives with customers amounted to €48,756 million including €2,413 million in structured derivatives (fair value of €64 million). The notional value of derivatives with banking counterparties totaled €119,216 million (fair value of €3,993 million) including €3,145 million related to structured derivatives (fair value €147 million). F. Credit risk measurement models As at 31 December 2018 the expected loss on the credit risk perimeter was 0.59% of total Bank credit exposure. This trend is mitigated by the exposures which have migrated to default and therefore do not enter in the calculation of expected loss. Besides, since risk measurement systems tend to be anti-cyclical, this may result in a smaller elasticity to the swift changes of the macroeconomic scenario. The ratio between credit economic capital (including a component to cover migration risk) and its relative credit exposure amount is 4.09% with reference date end of December 2018. As far as quantitative information of UniCredit group, reference is made to the paragraph Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Credit Risk - Quantitative information - E. Credit risk measurement models. Section 2 - Market risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - General aspects - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Below end of year VaR, SVaR and IRC results: Daily VaR on Trading Book (€ million) 2018 2017 12.31.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 3.64 5.1 11.2 2.7 4.3 SVaR on Trading Book (€ million) 2018 2017 12.27.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 9.50 19.67 30.33 8.42 17.86 IRC on Trading Book € million) 2018 2017 12.27.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 89.1 180.3 376.4 34.6 182.4 2.1 Interest rate risk and price risk - Regulatory trading book Qualitative information Interest rate risk A. General aspects Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk - Qualitative information - A. General information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk - Qualitative information - B. Risk Management Processes and Measurement Methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 699 The balance of item “20a Financial assets held for trading” with regard to derivative contracts totaled €5,323 million (with a notional value of €181,963 million) including €2,894 million with customers. The notional value of derivatives with customers amounted to €76,433 million, of which €3,291 structured (fair value €143 million). The notional value of derivatives with banking counterparties totaled €105,530 million (fair value of €2,429 million) including €2,559 million related to structured derivatives (fair value of €65 million). The balance of item “20 Financial liabilities held for trading” of the consolidated accounts with regard to derivative contracts totaled €5,740 million (with a notional value of €167,972 million) including €1,747 million with customers. The notional value of derivatives with customers amounted to €48,756 million including €2,413 million in structured derivatives (fair value of €64 million). The notional value of derivatives with banking counterparties totaled €119,216 million (fair value of €3,993 million) including €3,145 million related to structured derivatives (fair value €147 million). F. Credit risk measurement models As at 31 December 2018 the expected loss on the credit risk perimeter was 0.59% of total Bank credit exposure. This trend is mitigated by the exposures which have migrated to default and therefore do not enter in the calculation of expected loss. Besides, since risk measurement systems tend to be anti-cyclical, this may result in a smaller elasticity to the swift changes of the macroeconomic scenario. The ratio between credit economic capital (including a component to cover migration risk) and its relative credit exposure amount is 4.09% with reference date end of December 2018. As far as quantitative information of UniCredit group, reference is made to the paragraph Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Credit Risk - Quantitative information - E. Credit risk measurement models. Section 2 - Market risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - General aspects - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Below end of year VaR, SVaR and IRC results: Daily VaR on Trading Book (€ million) 2018 2017 12.31.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 3.64 5.1 11.2 2.7 4.3 SVaR on Trading Book (€ million) 2018 2017 12.27.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 9.50 19.67 30.33 8.42 17.86 IRC on Trading Book € million) 2018 2017 12.27.2018 AVERAGE MAX MIN AVERAGE UniCredit S.p.A. 89.1 180.3 376.4 34.6 182.4 2.1 Interest rate risk and price risk - Regulatory trading book Qualitative information Interest rate risk A. General aspects Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk - Qualitative information - A. General information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk - Qualitative information - B. Risk Management Processes and Measurement Methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 700 2018 Annual Report and Accounts · UniCredit Price risk A. General information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Qualitative information - A. General information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Qualitative information - B. Risk Management Processes and Measurement Methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Regulatory trading portfolio: distribution by residual duration (re-pricing date) of financial assets and liabilities for cash and financial derivatives The table is not reported since a table showing Interest Rate sensitivity is described below, in accordance with Internal Model. 2. Regulatory trading portfolio: distribution of equity exposures and equity indices for the main listing countries The table is not reported since a table showing Price risk sensitivity is described below, in accordance with Internal Model. 3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. Interest rate risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk -Quantitative information- Part E of the Consolidated explanatory notes, which is herewith quoted entirely. The tables below show trading book sensitivities. (€ million) INTEREST RATES +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL -10 BP +10 BP -100 PB +100 BP CW CCW Total 0.0 -0.1 -0.1 0.0 0.1 0.0 0.0 -0.1 1.9 -1.9 20.0 -17.4 -1.0 0.4 of which: EUR 0.0 -0.1 0.0 0.0 0.0 -0.2 0.0 -0.2 2.2 -2.1 22.7 -19.0 1.9 -2.4 USD 0.0 0.0 -0.1 0.0 0.0 0.2 0.0 0.1 0.1 -0.1 0.6 -1.7 -3.4 3.4 GBP 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 -0.1 0.9 -0.9 -0.4 0.4 CHF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.1 -1.4 1.4 0.5 -0.5 JPY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.1 0.0 0.0 Price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Quantitative information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 700 2018 Annual Report and Accounts · UniCredit Price risk A. General information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Qualitative information - A. General information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Qualitative information - B. Risk Management Processes and Measurement Methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Regulatory trading portfolio: distribution by residual duration (re-pricing date) of financial assets and liabilities for cash and financial derivatives The table is not reported since a table showing Interest Rate sensitivity is described below, in accordance with Internal Model. 2. Regulatory trading portfolio: distribution of equity exposures and equity indices for the main listing countries The table is not reported since a table showing Price risk sensitivity is described below, in accordance with Internal Model. 3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. Interest rate risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk -Quantitative information- Part E of the Consolidated explanatory notes, which is herewith quoted entirely. The tables below show trading book sensitivities. (€ million) INTEREST RATES +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL -10 BP +10 BP -100 PB +100 BP CW CCW Total 0.0 -0.1 -0.1 0.0 0.1 0.0 0.0 -0.1 1.9 -1.9 20.0 -17.4 -1.0 0.4 of which: EUR 0.0 -0.1 0.0 0.0 0.0 -0.2 0.0 -0.2 2.2 -2.1 22.7 -19.0 1.9 -2.4 USD 0.0 0.0 -0.1 0.0 0.0 0.2 0.0 0.1 0.1 -0.1 0.6 -1.7 -3.4 3.4 GBP 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 -0.1 0.9 -0.9 -0.4 0.4 CHF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.1 -1.4 1.4 0.5 -0.5 JPY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.1 0.0 0.0 Price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Quantitative information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 700 2018 Annual Report and Accounts · UniCredit Price risk A. General information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Qualitative information - A. General information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Qualitative information - B. Risk Management Processes and Measurement Methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Regulatory trading portfolio: distribution by residual duration (re-pricing date) of financial assets and liabilities for cash and financial derivatives The table is not reported since a table showing Interest Rate sensitivity is described below, in accordance with Internal Model. 2. Regulatory trading portfolio: distribution of equity exposures and equity indices for the main listing countries The table is not reported since a table showing Price risk sensitivity is described below, in accordance with Internal Model. 3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. Interest rate risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk -Quantitative information- Part E of the Consolidated explanatory notes, which is herewith quoted entirely. The tables below show trading book sensitivities. (€ million) INTEREST RATES +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL -10 BP +10 BP -100 PB +100 BP CW CCW Total 0.0 -0.1 -0.1 0.0 0.1 0.0 0.0 -0.1 1.9 -1.9 20.0 -17.4 -1.0 0.4 of which: EUR 0.0 -0.1 0.0 0.0 0.0 -0.2 0.0 -0.2 2.2 -2.1 22.7 -19.0 1.9 -2.4 USD 0.0 0.0 -0.1 0.0 0.0 0.2 0.0 0.1 0.1 -0.1 0.6 -1.7 -3.4 3.4 GBP 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 -0.1 0.9 -0.9 -0.4 0.4 CHF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.1 -1.4 1.4 0.5 -0.5 JPY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.1 0.0 0.0 Price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Quantitative information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 700 2018 Annual Report and Accounts · UniCredit Price risk A. General information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Qualitative information - A. General information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Qualitative information - B. Risk Management Processes and Measurement Methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Regulatory trading portfolio: distribution by residual duration (re-pricing date) of financial assets and liabilities for cash and financial derivatives The table is not reported since a table showing Interest Rate sensitivity is described below, in accordance with Internal Model. 2. Regulatory trading portfolio: distribution of equity exposures and equity indices for the main listing countries The table is not reported since a table showing Price risk sensitivity is described below, in accordance with Internal Model. 3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. Interest rate risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk -Quantitative information- Part E of the Consolidated explanatory notes, which is herewith quoted entirely. The tables below show trading book sensitivities. (€ million) INTEREST RATES +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL -10 BP +10 BP -100 PB +100 BP CW CCW Total 0.0 -0.1 -0.1 0.0 0.1 0.0 0.0 -0.1 1.9 -1.9 20.0 -17.4 -1.0 0.4 of which: EUR 0.0 -0.1 0.0 0.0 0.0 -0.2 0.0 -0.2 2.2 -2.1 22.7 -19.0 1.9 -2.4 USD 0.0 0.0 -0.1 0.0 0.0 0.2 0.0 0.1 0.1 -0.1 0.6 -1.7 -3.4 3.4 GBP 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 -0.1 0.9 -0.9 -0.4 0.4 CHF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.1 -1.4 1.4 0.5 -0.5 JPY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.1 0.0 0.0 Price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Quantitative information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 700 2018 Annual Report and Accounts · UniCredit Price risk A. General information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Qualitative information - A. General information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Qualitative information - B. Risk Management Processes and Measurement Methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Regulatory trading portfolio: distribution by residual duration (re-pricing date) of financial assets and liabilities for cash and financial derivatives The table is not reported since a table showing Interest Rate sensitivity is described below, in accordance with Internal Model. 2. Regulatory trading portfolio: distribution of equity exposures and equity indices for the main listing countries The table is not reported since a table showing Price risk sensitivity is described below, in accordance with Internal Model. 3. Regulatory trading portfolio: internal models and other methods for sensitivity analysis For both a description of internal processes for monitoring and managing risk and an illustration of the methodologies used to analyse exposure, also refer to the introduction on internal models. Interest rate risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Interest Rate Risk -Quantitative information- Part E of the Consolidated explanatory notes, which is herewith quoted entirely. The tables below show trading book sensitivities. (€ million) INTEREST RATES +1BP LESS THAN 1 MONTH +1BP 1 MONTH TO 6 MONTHS +1BP 6 MONTHS TO 1 YEAR +1BP 1 YEAR TO 5 YEARS +1BP 5 YEARS TO 10 YEARS +1BP 10 YEARS TO 20 YEARS +1BP OVER 20 YEARS +1 BP TOTAL -10 BP +10 BP -100 PB +100 BP CW CCW Total 0.0 -0.1 -0.1 0.0 0.1 0.0 0.0 -0.1 1.9 -1.9 20.0 -17.4 -1.0 0.4 of which: EUR 0.0 -0.1 0.0 0.0 0.0 -0.2 0.0 -0.2 2.2 -2.1 22.7 -19.0 1.9 -2.4 USD 0.0 0.0 -0.1 0.0 0.0 0.2 0.0 0.1 0.1 -0.1 0.6 -1.7 -3.4 3.4 GBP 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 -0.1 0.9 -0.9 -0.4 0.4 CHF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.1 -1.4 1.4 0.5 -0.5 JPY 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.1 0.0 0.0 Price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.1. Price Risk - Quantitative information - Part E of the Consolidated explanatory notes, which is herewith quoted entirely Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 701 2.2 Interest rate and price risk - Banking book Qualitative information Interest rate risk and Price risk A. General aspects, operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk – 2.2.2 Interest Rate Risk and Price Risk - banking book - A. General aspects, operational processes and methods for measuring interest rate risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 35,774,664 141,836,652 20,403,186 18,810,430 69,125,784 22,155,435 9,238,187 - 1.1 Debt securities 499,821 6,017,791 2,945,489 6,848,110 36,589,596 12,666,159 497,189 - - With prepayment option - - - - - - - - - Other 499,821 6,017,791 2,945,489 6,848,110 36,589,596 12,666,159 497,189 - 1.2 Loans to banks 4,223,061 15,002,279 1,898,103 3,245,057 4,266,881 - - - 1.3 Loans to customers 31,051,782 120,816,582 15,559,594 8,717,263 28,269,307 9,489,276 8,740,998 - - Current accounts 13,336,175 52,156 7,474 209,107 833,956 30,668 7,708 - - Other loans 17,715,607 120,764,426 15,552,120 8,508,156 27,435,351 9,458,608 8,733,290 - - With prepayment option 10,539,115 57,427,400 7,726,836 3,335,842 18,604,979 7,622,507 7,543,460 - - Other 7,176,492 63,337,026 7,825,284 5,172,314 8,830,372 1,836,101 1,189,830 - 2. On-balance sheet liabilities 166,291,922 81,777,016 9,744,130 7,371,538 51,833,263 6,917,905 2,801,872 - 2.1 Deposits from customers 161,141,383 44,881,463 1,453,533 1,291,458 370,981 249,228 1,847,705 - - Current accounts 155,695,248 229,108 18,430 4,288 - - - - - Other 5,446,135 44,652,355 1,435,103 1,287,170 370,981 249,228 1,847,705 - - With prepayment option - - - - - - - - - Other 5,446,135 44,652,355 1,435,103 1,287,170 370,981 249,228 1,847,705 - 2.2 Deposits from banks 4,568,402 15,925,892 3,590,519 1,401,334 33,482,658 20,195 5,789 - - Current accounts 805,668 - - - - - - - - Other 3,762,734 15,925,892 3,590,519 1,401,334 33,482,658 20,195 5,789 - 2.3 Debt secuties in issue 578,396 20,969,661 4,700,078 4,678,746 17,979,624 6,648,482 948,378 - - With prepayment option - - - - - - - - - Other 578,396 20,969,661 4,700,078 4,678,746 17,979,624 6,648,482 948,378 - 2.4 Other liabilities 3,741 - - - - - - - - With prepayment option - - - - - - - - - Other 3,741 - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - 210,394 - 128,592 3,112,587 95,352 - - 3.2 Without underlying security - Option + Long positions - 3,503,463 1,251,732 3,003,468 23,027,639 16,293,043 15,578,825 - + Short positions - 1,751,732 1,251,732 3,003,468 23,777,964 16,542,656 16,278,825 - - Other derivatives + Long positions 5,324,283 218,688,584 35,424,770 63,557,535 280,998,787 37,101,577 1,808,573 - + Short positions 2,469,777 217,819,902 40,593,135 77,580,500 269,778,299 21,939,288 5,403,872 - 4. Other off-balance sheet transactions + Long positions 19,564 19,685,678 1,341,519 531,210 2,776,976 - - - + Short positions 4,253,414 19,661,689 315,537 124,306 - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 701 2.2 Interest rate and price risk - Banking book Qualitative information Interest rate risk and Price risk A. General aspects, operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk – 2.2.2 Interest Rate Risk and Price Risk - banking book - A. General aspects, operational processes and methods for measuring interest rate risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 35,774,664 141,836,652 20,403,186 18,810,430 69,125,784 22,155,435 9,238,187 - 1.1 Debt securities 499,821 6,017,791 2,945,489 6,848,110 36,589,596 12,666,159 497,189 - - With prepayment option - - - - - - - - - Other 499,821 6,017,791 2,945,489 6,848,110 36,589,596 12,666,159 497,189 - 1.2 Loans to banks 4,223,061 15,002,279 1,898,103 3,245,057 4,266,881 - - - 1.3 Loans to customers 31,051,782 120,816,582 15,559,594 8,717,263 28,269,307 9,489,276 8,740,998 - - Current accounts 13,336,175 52,156 7,474 209,107 833,956 30,668 7,708 - - Other loans 17,715,607 120,764,426 15,552,120 8,508,156 27,435,351 9,458,608 8,733,290 - - With prepayment option 10,539,115 57,427,400 7,726,836 3,335,842 18,604,979 7,622,507 7,543,460 - - Other 7,176,492 63,337,026 7,825,284 5,172,314 8,830,372 1,836,101 1,189,830 - 2. On-balance sheet liabilities 166,291,922 81,777,016 9,744,130 7,371,538 51,833,263 6,917,905 2,801,872 - 2.1 Deposits from customers 161,141,383 44,881,463 1,453,533 1,291,458 370,981 249,228 1,847,705 - - Current accounts 155,695,248 229,108 18,430 4,288 - - - - - Other 5,446,135 44,652,355 1,435,103 1,287,170 370,981 249,228 1,847,705 - - With prepayment option - - - - - - - - - Other 5,446,135 44,652,355 1,435,103 1,287,170 370,981 249,228 1,847,705 - 2.2 Deposits from banks 4,568,402 15,925,892 3,590,519 1,401,334 33,482,658 20,195 5,789 - - Current accounts 805,668 - - - - - - - - Other 3,762,734 15,925,892 3,590,519 1,401,334 33,482,658 20,195 5,789 - 2.3 Debt secuties in issue 578,396 20,969,661 4,700,078 4,678,746 17,979,624 6,648,482 948,378 - - With prepayment option - - - - - - - - - Other 578,396 20,969,661 4,700,078 4,678,746 17,979,624 6,648,482 948,378 - 2.4 Other liabilities 3,741 - - - - - - - - With prepayment option - - - - - - - - - Other 3,741 - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - 210,394 - 128,592 3,112,587 95,352 - - 3.2 Without underlying security - Option + Long positions - 3,503,463 1,251,732 3,003,468 23,027,639 16,293,043 15,578,825 - + Short positions - 1,751,732 1,251,732 3,003,468 23,777,964 16,542,656 16,278,825 - - Other derivatives + Long positions 5,324,283 218,688,584 35,424,770 63,557,535 280,998,787 37,101,577 1,808,573 - + Short positions 2,469,777 217,819,902 40,593,135 77,580,500 269,778,299 21,939,288 5,403,872 - 4. Other off-balance sheet transactions + Long positions 19,564 19,685,678 1,341,519 531,210 2,776,976 - - - + Short positions 4,253,414 19,661,689 315,537 124,306 - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 701 2.2 Interest rate and price risk - Banking book Qualitative information Interest rate risk and Price risk A. General aspects, operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk – 2.2.2 Interest Rate Risk and Price Risk - banking book - A. General aspects, operational processes and methods for measuring interest rate risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 35,774,664 141,836,652 20,403,186 18,810,430 69,125,784 22,155,435 9,238,187 - 1.1 Debt securities 499,821 6,017,791 2,945,489 6,848,110 36,589,596 12,666,159 497,189 - - With prepayment option - - - - - - - - - Other 499,821 6,017,791 2,945,489 6,848,110 36,589,596 12,666,159 497,189 - 1.2 Loans to banks 4,223,061 15,002,279 1,898,103 3,245,057 4,266,881 - - - 1.3 Loans to customers 31,051,782 120,816,582 15,559,594 8,717,263 28,269,307 9,489,276 8,740,998 - - Current accounts 13,336,175 52,156 7,474 209,107 833,956 30,668 7,708 - - Other loans 17,715,607 120,764,426 15,552,120 8,508,156 27,435,351 9,458,608 8,733,290 - - With prepayment option 10,539,115 57,427,400 7,726,836 3,335,842 18,604,979 7,622,507 7,543,460 - - Other 7,176,492 63,337,026 7,825,284 5,172,314 8,830,372 1,836,101 1,189,830 - 2. On-balance sheet liabilities 166,291,922 81,777,016 9,744,130 7,371,538 51,833,263 6,917,905 2,801,872 - 2.1 Deposits from customers 161,141,383 44,881,463 1,453,533 1,291,458 370,981 249,228 1,847,705 - - Current accounts 155,695,248 229,108 18,430 4,288 - - - - - Other 5,446,135 44,652,355 1,435,103 1,287,170 370,981 249,228 1,847,705 - - With prepayment option - - - - - - - - - Other 5,446,135 44,652,355 1,435,103 1,287,170 370,981 249,228 1,847,705 - 2.2 Deposits from banks 4,568,402 15,925,892 3,590,519 1,401,334 33,482,658 20,195 5,789 - - Current accounts 805,668 - - - - - - - - Other 3,762,734 15,925,892 3,590,519 1,401,334 33,482,658 20,195 5,789 - 2.3 Debt secuties in issue 578,396 20,969,661 4,700,078 4,678,746 17,979,624 6,648,482 948,378 - - With prepayment option - - - - - - - - - Other 578,396 20,969,661 4,700,078 4,678,746 17,979,624 6,648,482 948,378 - 2.4 Other liabilities 3,741 - - - - - - - - With prepayment option - - - - - - - - - Other 3,741 - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - 210,394 - 128,592 3,112,587 95,352 - - 3.2 Without underlying security - Option + Long positions - 3,503,463 1,251,732 3,003,468 23,027,639 16,293,043 15,578,825 - + Short positions - 1,751,732 1,251,732 3,003,468 23,777,964 16,542,656 16,278,825 - - Other derivatives + Long positions 5,324,283 218,688,584 35,424,770 63,557,535 280,998,787 37,101,577 1,808,573 - + Short positions 2,469,777 217,819,902 40,593,135 77,580,500 269,778,299 21,939,288 5,403,872 - 4. Other off-balance sheet transactions + Long positions 19,564 19,685,678 1,341,519 531,210 2,776,976 - - - + Short positions 4,253,414 19,661,689 315,537 124,306 - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 701 2.2 Interest rate and price risk - Banking book Qualitative information Interest rate risk and Price risk A. General aspects, operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk – 2.2.2 Interest Rate Risk and Price Risk - banking book - A. General aspects, operational processes and methods for measuring interest rate risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 35,774,664 141,836,652 20,403,186 18,810,430 69,125,784 22,155,435 9,238,187 - 1.1 Debt securities 499,821 6,017,791 2,945,489 6,848,110 36,589,596 12,666,159 497,189 - - With prepayment option - - - - - - - - - Other 499,821 6,017,791 2,945,489 6,848,110 36,589,596 12,666,159 497,189 - 1.2 Loans to banks 4,223,061 15,002,279 1,898,103 3,245,057 4,266,881 - - - 1.3 Loans to customers 31,051,782 120,816,582 15,559,594 8,717,263 28,269,307 9,489,276 8,740,998 - - Current accounts 13,336,175 52,156 7,474 209,107 833,956 30,668 7,708 - - Other loans 17,715,607 120,764,426 15,552,120 8,508,156 27,435,351 9,458,608 8,733,290 - - With prepayment option 10,539,115 57,427,400 7,726,836 3,335,842 18,604,979 7,622,507 7,543,460 - - Other 7,176,492 63,337,026 7,825,284 5,172,314 8,830,372 1,836,101 1,189,830 - 2. On-balance sheet liabilities 166,291,922 81,777,016 9,744,130 7,371,538 51,833,263 6,917,905 2,801,872 - 2.1 Deposits from customers 161,141,383 44,881,463 1,453,533 1,291,458 370,981 249,228 1,847,705 - - Current accounts 155,695,248 229,108 18,430 4,288 - - - - - Other 5,446,135 44,652,355 1,435,103 1,287,170 370,981 249,228 1,847,705 - - With prepayment option - - - - - - - - - Other 5,446,135 44,652,355 1,435,103 1,287,170 370,981 249,228 1,847,705 - 2.2 Deposits from banks 4,568,402 15,925,892 3,590,519 1,401,334 33,482,658 20,195 5,789 - - Current accounts 805,668 - - - - - - - - Other 3,762,734 15,925,892 3,590,519 1,401,334 33,482,658 20,195 5,789 - 2.3 Debt secuties in issue 578,396 20,969,661 4,700,078 4,678,746 17,979,624 6,648,482 948,378 - - With prepayment option - - - - - - - - - Other 578,396 20,969,661 4,700,078 4,678,746 17,979,624 6,648,482 948,378 - 2.4 Other liabilities 3,741 - - - - - - - - With prepayment option - - - - - - - - - Other 3,741 - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - 210,394 - 128,592 3,112,587 95,352 - - 3.2 Without underlying security - Option + Long positions - 3,503,463 1,251,732 3,003,468 23,027,639 16,293,043 15,578,825 - + Short positions - 1,751,732 1,251,732 3,003,468 23,777,964 16,542,656 16,278,825 - - Other derivatives + Long positions 5,324,283 218,688,584 35,424,770 63,557,535 280,998,787 37,101,577 1,808,573 - + Short positions 2,469,777 217,819,902 40,593,135 77,580,500 269,778,299 21,939,288 5,403,872 - 4. Other off-balance sheet transactions + Long positions 19,564 19,685,678 1,341,519 531,210 2,776,976 - - - + Short positions 4,253,414 19,661,689 315,537 124,306 - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 701 2.2 Interest rate and price risk - Banking book Qualitative information Interest rate risk and Price risk A. General aspects, operational processes and methods for measuring interest rate risk and price risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk – 2.2.2 Interest Rate Risk and Price Risk - banking book - A. General aspects, operational processes and methods for measuring interest rate risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 35,774,664 141,836,652 20,403,186 18,810,430 69,125,784 22,155,435 9,238,187 - 1.1 Debt securities 499,821 6,017,791 2,945,489 6,848,110 36,589,596 12,666,159 497,189 - - With prepayment option - - - - - - - - - Other 499,821 6,017,791 2,945,489 6,848,110 36,589,596 12,666,159 497,189 - 1.2 Loans to banks 4,223,061 15,002,279 1,898,103 3,245,057 4,266,881 - - - 1.3 Loans to customers 31,051,782 120,816,582 15,559,594 8,717,263 28,269,307 9,489,276 8,740,998 - - Current accounts 13,336,175 52,156 7,474 209,107 833,956 30,668 7,708 - - Other loans 17,715,607 120,764,426 15,552,120 8,508,156 27,435,351 9,458,608 8,733,290 - - With prepayment option 10,539,115 57,427,400 7,726,836 3,335,842 18,604,979 7,622,507 7,543,460 - - Other 7,176,492 63,337,026 7,825,284 5,172,314 8,830,372 1,836,101 1,189,830 - 2. On-balance sheet liabilities 166,291,922 81,777,016 9,744,130 7,371,538 51,833,263 6,917,905 2,801,872 - 2.1 Deposits from customers 161,141,383 44,881,463 1,453,533 1,291,458 370,981 249,228 1,847,705 - - Current accounts 155,695,248 229,108 18,430 4,288 - - - - - Other 5,446,135 44,652,355 1,435,103 1,287,170 370,981 249,228 1,847,705 - - With prepayment option - - - - - - - - - Other 5,446,135 44,652,355 1,435,103 1,287,170 370,981 249,228 1,847,705 - 2.2 Deposits from banks 4,568,402 15,925,892 3,590,519 1,401,334 33,482,658 20,195 5,789 - - Current accounts 805,668 - - - - - - - - Other 3,762,734 15,925,892 3,590,519 1,401,334 33,482,658 20,195 5,789 - 2.3 Debt secuties in issue 578,396 20,969,661 4,700,078 4,678,746 17,979,624 6,648,482 948,378 - - With prepayment option - - - - - - - - - Other 578,396 20,969,661 4,700,078 4,678,746 17,979,624 6,648,482 948,378 - 2.4 Other liabilities 3,741 - - - - - - - - With prepayment option - - - - - - - - - Other 3,741 - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - 210,394 - 128,592 3,112,587 95,352 - - 3.2 Without underlying security - Option + Long positions - 3,503,463 1,251,732 3,003,468 23,027,639 16,293,043 15,578,825 - + Short positions - 1,751,732 1,251,732 3,003,468 23,777,964 16,542,656 16,278,825 - - Other derivatives + Long positions 5,324,283 218,688,584 35,424,770 63,557,535 280,998,787 37,101,577 1,808,573 - + Short positions 2,469,777 217,819,902 40,593,135 77,580,500 269,778,299 21,939,288 5,403,872 - 4. Other off-balance sheet transactions + Long positions 19,564 19,685,678 1,341,519 531,210 2,776,976 - - - + Short positions 4,253,414 19,661,689 315,537 124,306 - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 702 2018 Annual Report and Accounts · UniCredit 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: euro (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 34,614,572 136,473,204 18,715,528 18,142,547 63,873,247 21,349,612 8,785,712 - 1.1 Debt securities 486,968 5,388,310 2,928,285 6,807,334 34,163,684 12,308,408 488,440 - - With prepayment option - - - - - - - - - Other 486,968 5,388,310 2,928,285 6,807,334 34,163,684 12,308,408 488,440 - 1.2 Loans to banks 3,476,334 13,131,038 1,505,025 3,155,276 3,226,157 - - - 1.3 Loans to customers 30,651,270 117,953,856 14,282,218 8,179,937 26,483,406 9,041,204 8,297,272 - - Current accounts 13,200,335 52,156 7,474 209,106 829,033 30,668 7,708 - - Other loans 17,450,935 117,901,700 14,274,744 7,970,831 25,654,373 9,010,536 8,289,564 - - With prepayment option 10,525,875 57,402,942 7,724,526 3,334,018 18,567,960 7,622,183 7,542,364 - - Other 6,925,060 60,498,758 6,550,218 4,636,813 7,086,413 1,388,353 747,200 - 2. On-balance sheet liabilities 162,069,456 76,759,148 9,471,649 7,266,582 47,276,420 6,275,270 1,933,993 - 2.1 Deposits from customers 158,685,489 44,547,602 1,423,209 1,285,623 370,981 249,228 1,847,705 - - Current accounts 153,417,700 50 - - - - - - - Other 5,267,789 44,547,552 1,423,209 1,285,623 370,981 249,228 1,847,705 - - With prepayment option - - - - - - - - - Other 5,267,789 44,547,552 1,423,209 1,285,623 370,981 249,228 1,847,705 - 2.2 Deposits from banks 2,836,215 11,422,031 3,386,686 1,303,063 33,324,570 20,195 5,789 - - Current accounts 529,544 - - - - - - - - Other 2,306,671 11,422,031 3,386,686 1,303,063 33,324,570 20,195 5,789 - 2.3 Debt secuties in issue 544,011 20,789,515 4,661,754 4,677,896 13,580,869 6,005,847 80,499 - - With prepayment option - - - - - - - - - Other 544,011 20,789,515 4,661,754 4,677,896 13,580,869 6,005,847 80,499 - 2.4 Other liabilities 3,741 - - - - - - - - With prepayment option - - - - - - - - - Other 3,741 - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - - - - - - - - 3.2 Without underlying security - Option + Long positions - 3,503,463 1,251,732 3,003,468 23,027,639 15,759,890 15,578,825 - + Short positions - 1,751,732 1,251,732 3,003,468 23,777,964 16,542,656 16,278,825 - - Other derivatives + Long positions 5,210,746 191,131,692 34,505,782 62,440,028 265,907,932 34,530,400 1,698,267 - + Short positions 2,356,240 190,122,466 39,588,993 75,949,607 258,100,570 20,676,309 5,293,566 - 4. Other off-balance sheet transactions + Long positions 1,010 19,571,326 1,315,537 531,210 2,776,976 - - - + Short positions 4,253,414 19,502,802 315,537 124,306 - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 702 2018 Annual Report and Accounts · UniCredit 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: euro (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 34,614,572 136,473,204 18,715,528 18,142,547 63,873,247 21,349,612 8,785,712 - 1.1 Debt securities 486,968 5,388,310 2,928,285 6,807,334 34,163,684 12,308,408 488,440 - - With prepayment option - - - - - - - - - Other 486,968 5,388,310 2,928,285 6,807,334 34,163,684 12,308,408 488,440 - 1.2 Loans to banks 3,476,334 13,131,038 1,505,025 3,155,276 3,226,157 - - - 1.3 Loans to customers 30,651,270 117,953,856 14,282,218 8,179,937 26,483,406 9,041,204 8,297,272 - - Current accounts 13,200,335 52,156 7,474 209,106 829,033 30,668 7,708 - - Other loans 17,450,935 117,901,700 14,274,744 7,970,831 25,654,373 9,010,536 8,289,564 - - With prepayment option 10,525,875 57,402,942 7,724,526 3,334,018 18,567,960 7,622,183 7,542,364 - - Other 6,925,060 60,498,758 6,550,218 4,636,813 7,086,413 1,388,353 747,200 - 2. On-balance sheet liabilities 162,069,456 76,759,148 9,471,649 7,266,582 47,276,420 6,275,270 1,933,993 - 2.1 Deposits from customers 158,685,489 44,547,602 1,423,209 1,285,623 370,981 249,228 1,847,705 - - Current accounts 153,417,700 50 - - - - - - - Other 5,267,789 44,547,552 1,423,209 1,285,623 370,981 249,228 1,847,705 - - With prepayment option - - - - - - - - - Other 5,267,789 44,547,552 1,423,209 1,285,623 370,981 249,228 1,847,705 - 2.2 Deposits from banks 2,836,215 11,422,031 3,386,686 1,303,063 33,324,570 20,195 5,789 - - Current accounts 529,544 - - - - - - - - Other 2,306,671 11,422,031 3,386,686 1,303,063 33,324,570 20,195 5,789 - 2.3 Debt secuties in issue 544,011 20,789,515 4,661,754 4,677,896 13,580,869 6,005,847 80,499 - - With prepayment option - - - - - - - - - Other 544,011 20,789,515 4,661,754 4,677,896 13,580,869 6,005,847 80,499 - 2.4 Other liabilities 3,741 - - - - - - - - With prepayment option - - - - - - - - - Other 3,741 - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - - - - - - - - 3.2 Without underlying security - Option + Long positions - 3,503,463 1,251,732 3,003,468 23,027,639 15,759,890 15,578,825 - + Short positions - 1,751,732 1,251,732 3,003,468 23,777,964 16,542,656 16,278,825 - - Other derivatives + Long positions 5,210,746 191,131,692 34,505,782 62,440,028 265,907,932 34,530,400 1,698,267 - + Short positions 2,356,240 190,122,466 39,588,993 75,949,607 258,100,570 20,676,309 5,293,566 - 4. Other off-balance sheet transactions + Long positions 1,010 19,571,326 1,315,537 531,210 2,776,976 - - - + Short positions 4,253,414 19,502,802 315,537 124,306 - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 702 2018 Annual Report and Accounts · UniCredit 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: euro (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 34,614,572 136,473,204 18,715,528 18,142,547 63,873,247 21,349,612 8,785,712 - 1.1 Debt securities 486,968 5,388,310 2,928,285 6,807,334 34,163,684 12,308,408 488,440 - - With prepayment option - - - - - - - - - Other 486,968 5,388,310 2,928,285 6,807,334 34,163,684 12,308,408 488,440 - 1.2 Loans to banks 3,476,334 13,131,038 1,505,025 3,155,276 3,226,157 - - - 1.3 Loans to customers 30,651,270 117,953,856 14,282,218 8,179,937 26,483,406 9,041,204 8,297,272 - - Current accounts 13,200,335 52,156 7,474 209,106 829,033 30,668 7,708 - - Other loans 17,450,935 117,901,700 14,274,744 7,970,831 25,654,373 9,010,536 8,289,564 - - With prepayment option 10,525,875 57,402,942 7,724,526 3,334,018 18,567,960 7,622,183 7,542,364 - - Other 6,925,060 60,498,758 6,550,218 4,636,813 7,086,413 1,388,353 747,200 - 2. On-balance sheet liabilities 162,069,456 76,759,148 9,471,649 7,266,582 47,276,420 6,275,270 1,933,993 - 2.1 Deposits from customers 158,685,489 44,547,602 1,423,209 1,285,623 370,981 249,228 1,847,705 - - Current accounts 153,417,700 50 - - - - - - - Other 5,267,789 44,547,552 1,423,209 1,285,623 370,981 249,228 1,847,705 - - With prepayment option - - - - - - - - - Other 5,267,789 44,547,552 1,423,209 1,285,623 370,981 249,228 1,847,705 - 2.2 Deposits from banks 2,836,215 11,422,031 3,386,686 1,303,063 33,324,570 20,195 5,789 - - Current accounts 529,544 - - - - - - - - Other 2,306,671 11,422,031 3,386,686 1,303,063 33,324,570 20,195 5,789 - 2.3 Debt secuties in issue 544,011 20,789,515 4,661,754 4,677,896 13,580,869 6,005,847 80,499 - - With prepayment option - - - - - - - - - Other 544,011 20,789,515 4,661,754 4,677,896 13,580,869 6,005,847 80,499 - 2.4 Other liabilities 3,741 - - - - - - - - With prepayment option - - - - - - - - - Other 3,741 - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - - - - - - - - 3.2 Without underlying security - Option + Long positions - 3,503,463 1,251,732 3,003,468 23,027,639 15,759,890 15,578,825 - + Short positions - 1,751,732 1,251,732 3,003,468 23,777,964 16,542,656 16,278,825 - - Other derivatives + Long positions 5,210,746 191,131,692 34,505,782 62,440,028 265,907,932 34,530,400 1,698,267 - + Short positions 2,356,240 190,122,466 39,588,993 75,949,607 258,100,570 20,676,309 5,293,566 - 4. Other off-balance sheet transactions + Long positions 1,010 19,571,326 1,315,537 531,210 2,776,976 - - - + Short positions 4,253,414 19,502,802 315,537 124,306 - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 702 2018 Annual Report and Accounts · UniCredit 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: euro (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 34,614,572 136,473,204 18,715,528 18,142,547 63,873,247 21,349,612 8,785,712 - 1.1 Debt securities 486,968 5,388,310 2,928,285 6,807,334 34,163,684 12,308,408 488,440 - - With prepayment option - - - - - - - - - Other 486,968 5,388,310 2,928,285 6,807,334 34,163,684 12,308,408 488,440 - 1.2 Loans to banks 3,476,334 13,131,038 1,505,025 3,155,276 3,226,157 - - - 1.3 Loans to customers 30,651,270 117,953,856 14,282,218 8,179,937 26,483,406 9,041,204 8,297,272 - - Current accounts 13,200,335 52,156 7,474 209,106 829,033 30,668 7,708 - - Other loans 17,450,935 117,901,700 14,274,744 7,970,831 25,654,373 9,010,536 8,289,564 - - With prepayment option 10,525,875 57,402,942 7,724,526 3,334,018 18,567,960 7,622,183 7,542,364 - - Other 6,925,060 60,498,758 6,550,218 4,636,813 7,086,413 1,388,353 747,200 - 2. On-balance sheet liabilities 162,069,456 76,759,148 9,471,649 7,266,582 47,276,420 6,275,270 1,933,993 - 2.1 Deposits from customers 158,685,489 44,547,602 1,423,209 1,285,623 370,981 249,228 1,847,705 - - Current accounts 153,417,700 50 - - - - - - - Other 5,267,789 44,547,552 1,423,209 1,285,623 370,981 249,228 1,847,705 - - With prepayment option - - - - - - - - - Other 5,267,789 44,547,552 1,423,209 1,285,623 370,981 249,228 1,847,705 - 2.2 Deposits from banks 2,836,215 11,422,031 3,386,686 1,303,063 33,324,570 20,195 5,789 - - Current accounts 529,544 - - - - - - - - Other 2,306,671 11,422,031 3,386,686 1,303,063 33,324,570 20,195 5,789 - 2.3 Debt secuties in issue 544,011 20,789,515 4,661,754 4,677,896 13,580,869 6,005,847 80,499 - - With prepayment option - - - - - - - - - Other 544,011 20,789,515 4,661,754 4,677,896 13,580,869 6,005,847 80,499 - 2.4 Other liabilities 3,741 - - - - - - - - With prepayment option - - - - - - - - - Other 3,741 - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - - - - - - - - 3.2 Without underlying security - Option + Long positions - 3,503,463 1,251,732 3,003,468 23,027,639 15,759,890 15,578,825 - + Short positions - 1,751,732 1,251,732 3,003,468 23,777,964 16,542,656 16,278,825 - - Other derivatives + Long positions 5,210,746 191,131,692 34,505,782 62,440,028 265,907,932 34,530,400 1,698,267 - + Short positions 2,356,240 190,122,466 39,588,993 75,949,607 258,100,570 20,676,309 5,293,566 - 4. Other off-balance sheet transactions + Long positions 1,010 19,571,326 1,315,537 531,210 2,776,976 - - - + Short positions 4,253,414 19,502,802 315,537 124,306 - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 702 2018 Annual Report and Accounts · UniCredit 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: euro (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 34,614,572 136,473,204 18,715,528 18,142,547 63,873,247 21,349,612 8,785,712 - 1.1 Debt securities 486,968 5,388,310 2,928,285 6,807,334 34,163,684 12,308,408 488,440 - - With prepayment option - - - - - - - - - Other 486,968 5,388,310 2,928,285 6,807,334 34,163,684 12,308,408 488,440 - 1.2 Loans to banks 3,476,334 13,131,038 1,505,025 3,155,276 3,226,157 - - - 1.3 Loans to customers 30,651,270 117,953,856 14,282,218 8,179,937 26,483,406 9,041,204 8,297,272 - - Current accounts 13,200,335 52,156 7,474 209,106 829,033 30,668 7,708 - - Other loans 17,450,935 117,901,700 14,274,744 7,970,831 25,654,373 9,010,536 8,289,564 - - With prepayment option 10,525,875 57,402,942 7,724,526 3,334,018 18,567,960 7,622,183 7,542,364 - - Other 6,925,060 60,498,758 6,550,218 4,636,813 7,086,413 1,388,353 747,200 - 2. On-balance sheet liabilities 162,069,456 76,759,148 9,471,649 7,266,582 47,276,420 6,275,270 1,933,993 - 2.1 Deposits from customers 158,685,489 44,547,602 1,423,209 1,285,623 370,981 249,228 1,847,705 - - Current accounts 153,417,700 50 - - - - - - - Other 5,267,789 44,547,552 1,423,209 1,285,623 370,981 249,228 1,847,705 - - With prepayment option - - - - - - - - - Other 5,267,789 44,547,552 1,423,209 1,285,623 370,981 249,228 1,847,705 - 2.2 Deposits from banks 2,836,215 11,422,031 3,386,686 1,303,063 33,324,570 20,195 5,789 - - Current accounts 529,544 - - - - - - - - Other 2,306,671 11,422,031 3,386,686 1,303,063 33,324,570 20,195 5,789 - 2.3 Debt secuties in issue 544,011 20,789,515 4,661,754 4,677,896 13,580,869 6,005,847 80,499 - - With prepayment option - - - - - - - - - Other 544,011 20,789,515 4,661,754 4,677,896 13,580,869 6,005,847 80,499 - 2.4 Other liabilities 3,741 - - - - - - - - With prepayment option - - - - - - - - - Other 3,741 - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - - - - - - - - 3.2 Without underlying security - Option + Long positions - 3,503,463 1,251,732 3,003,468 23,027,639 15,759,890 15,578,825 - + Short positions - 1,751,732 1,251,732 3,003,468 23,777,964 16,542,656 16,278,825 - - Other derivatives + Long positions 5,210,746 191,131,692 34,505,782 62,440,028 265,907,932 34,530,400 1,698,267 - + Short positions 2,356,240 190,122,466 39,588,993 75,949,607 258,100,570 20,676,309 5,293,566 - 4. Other off-balance sheet transactions + Long positions 1,010 19,571,326 1,315,537 531,210 2,776,976 - - - + Short positions 4,253,414 19,502,802 315,537 124,306 - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 703 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: other currencies (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 1,160,092 5,363,448 1,687,658 667,883 5,252,537 805,823 452,475 - 1.1 Debt securities 12,853 629,481 17,204 40,776 2,425,912 357,751 8,749 - - With prepayment option - - - - - - - - - Other 12,853 629,481 17,204 40,776 2,425,912 357,751 8,749 - 1.2 Loans to banks 746,727 1,871,241 393,078 89,781 1,040,724 - - - 1.3 Loans to customers 400,512 2,862,726 1,277,376 537,326 1,785,901 448,072 443,726 - - Current accounts 135,840 - - 1 4,923 - - - - Other loans 264,672 2,862,726 1,277,376 537,325 1,780,978 448,072 443,726 - - With prepayment option 13,240 24,458 2,310 1,824 37,019 324 1,096 - - Other 251,432 2,838,268 1,275,066 535,501 1,743,959 447,748 442,630 - 2. On-balance sheet liabilities 4,222,466 5,017,868 272,481 104,956 4,556,843 642,635 867,879 - 2.1 Deposits from customers 2,455,894 333,861 30,324 5,835 - - - - - Current accounts 2,277,548 229,058 18,430 4,288 - - - - - Other 178,346 104,803 11,894 1,547 - - - - - With prepayment option - - - - - - - - - Other 178,346 104,803 11,894 1,547 - - - - 2.2 Deposits from banks 1,732,187 4,503,861 203,833 98,271 158,088 - - - - Current accounts 276,124 - - - - - - - - Other 1,456,063 4,503,861 203,833 98,271 158,088 - - - 2.3 Debt secuties in issue 34,385 180,146 38,324 850 4,398,755 642,635 867,879 - - With prepayment option - - - - - - - - - Other 34,385 180,146 38,324 850 4,398,755 642,635 867,879 - 2.4 Other liabilities - - - - - - - - - With prepayment option - - - - - - - - - Other - - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - 210,394 - 128,592 3,112,587 95,352 - - 3.2 Without underlying security - Option + Long positions - - - - - 533,153 - - + Short positions - - - - - - - - - Other derivatives + Long positions 113,537 27,556,892 918,988 1,117,507 15,090,855 2,571,177 110,306 - + Short positions 113,537 27,697,436 1,004,142 1,630,893 11,677,729 1,262,979 110,306 - 4. Other off-balance sheet transactions + Long positions 18,554 114,352 25,982 - - - - - + Short positions - 158,887 - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 703 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: other currencies (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 1,160,092 5,363,448 1,687,658 667,883 5,252,537 805,823 452,475 - 1.1 Debt securities 12,853 629,481 17,204 40,776 2,425,912 357,751 8,749 - - With prepayment option - - - - - - - - - Other 12,853 629,481 17,204 40,776 2,425,912 357,751 8,749 - 1.2 Loans to banks 746,727 1,871,241 393,078 89,781 1,040,724 - - - 1.3 Loans to customers 400,512 2,862,726 1,277,376 537,326 1,785,901 448,072 443,726 - - Current accounts 135,840 - - 1 4,923 - - - - Other loans 264,672 2,862,726 1,277,376 537,325 1,780,978 448,072 443,726 - - With prepayment option 13,240 24,458 2,310 1,824 37,019 324 1,096 - - Other 251,432 2,838,268 1,275,066 535,501 1,743,959 447,748 442,630 - 2. On-balance sheet liabilities 4,222,466 5,017,868 272,481 104,956 4,556,843 642,635 867,879 - 2.1 Deposits from customers 2,455,894 333,861 30,324 5,835 - - - - - Current accounts 2,277,548 229,058 18,430 4,288 - - - - - Other 178,346 104,803 11,894 1,547 - - - - - With prepayment option - - - - - - - - - Other 178,346 104,803 11,894 1,547 - - - - 2.2 Deposits from banks 1,732,187 4,503,861 203,833 98,271 158,088 - - - - Current accounts 276,124 - - - - - - - - Other 1,456,063 4,503,861 203,833 98,271 158,088 - - - 2.3 Debt secuties in issue 34,385 180,146 38,324 850 4,398,755 642,635 867,879 - - With prepayment option - - - - - - - - - Other 34,385 180,146 38,324 850 4,398,755 642,635 867,879 - 2.4 Other liabilities - - - - - - - - - With prepayment option - - - - - - - - - Other - - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - 210,394 - 128,592 3,112,587 95,352 - - 3.2 Without underlying security - Option + Long positions - - - - - 533,153 - - + Short positions - - - - - - - - - Other derivatives + Long positions 113,537 27,556,892 918,988 1,117,507 15,090,855 2,571,177 110,306 - + Short positions 113,537 27,697,436 1,004,142 1,630,893 11,677,729 1,262,979 110,306 - 4. Other off-balance sheet transactions + Long positions 18,554 114,352 25,982 - - - - - + Short positions - 158,887 - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 703 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: other currencies (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 1,160,092 5,363,448 1,687,658 667,883 5,252,537 805,823 452,475 - 1.1 Debt securities 12,853 629,481 17,204 40,776 2,425,912 357,751 8,749 - - With prepayment option - - - - - - - - - Other 12,853 629,481 17,204 40,776 2,425,912 357,751 8,749 - 1.2 Loans to banks 746,727 1,871,241 393,078 89,781 1,040,724 - - - 1.3 Loans to customers 400,512 2,862,726 1,277,376 537,326 1,785,901 448,072 443,726 - - Current accounts 135,840 - - 1 4,923 - - - - Other loans 264,672 2,862,726 1,277,376 537,325 1,780,978 448,072 443,726 - - With prepayment option 13,240 24,458 2,310 1,824 37,019 324 1,096 - - Other 251,432 2,838,268 1,275,066 535,501 1,743,959 447,748 442,630 - 2. On-balance sheet liabilities 4,222,466 5,017,868 272,481 104,956 4,556,843 642,635 867,879 - 2.1 Deposits from customers 2,455,894 333,861 30,324 5,835 - - - - - Current accounts 2,277,548 229,058 18,430 4,288 - - - - - Other 178,346 104,803 11,894 1,547 - - - - - With prepayment option - - - - - - - - - Other 178,346 104,803 11,894 1,547 - - - - 2.2 Deposits from banks 1,732,187 4,503,861 203,833 98,271 158,088 - - - - Current accounts 276,124 - - - - - - - - Other 1,456,063 4,503,861 203,833 98,271 158,088 - - - 2.3 Debt secuties in issue 34,385 180,146 38,324 850 4,398,755 642,635 867,879 - - With prepayment option - - - - - - - - - Other 34,385 180,146 38,324 850 4,398,755 642,635 867,879 - 2.4 Other liabilities - - - - - - - - - With prepayment option - - - - - - - - - Other - - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - 210,394 - 128,592 3,112,587 95,352 - - 3.2 Without underlying security - Option + Long positions - - - - - 533,153 - - + Short positions - - - - - - - - - Other derivatives + Long positions 113,537 27,556,892 918,988 1,117,507 15,090,855 2,571,177 110,306 - + Short positions 113,537 27,697,436 1,004,142 1,630,893 11,677,729 1,262,979 110,306 - 4. Other off-balance sheet transactions + Long positions 18,554 114,352 25,982 - - - - - + Short positions - 158,887 - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 703 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: other currencies (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 1,160,092 5,363,448 1,687,658 667,883 5,252,537 805,823 452,475 - 1.1 Debt securities 12,853 629,481 17,204 40,776 2,425,912 357,751 8,749 - - With prepayment option - - - - - - - - - Other 12,853 629,481 17,204 40,776 2,425,912 357,751 8,749 - 1.2 Loans to banks 746,727 1,871,241 393,078 89,781 1,040,724 - - - 1.3 Loans to customers 400,512 2,862,726 1,277,376 537,326 1,785,901 448,072 443,726 - - Current accounts 135,840 - - 1 4,923 - - - - Other loans 264,672 2,862,726 1,277,376 537,325 1,780,978 448,072 443,726 - - With prepayment option 13,240 24,458 2,310 1,824 37,019 324 1,096 - - Other 251,432 2,838,268 1,275,066 535,501 1,743,959 447,748 442,630 - 2. On-balance sheet liabilities 4,222,466 5,017,868 272,481 104,956 4,556,843 642,635 867,879 - 2.1 Deposits from customers 2,455,894 333,861 30,324 5,835 - - - - - Current accounts 2,277,548 229,058 18,430 4,288 - - - - - Other 178,346 104,803 11,894 1,547 - - - - - With prepayment option - - - - - - - - - Other 178,346 104,803 11,894 1,547 - - - - 2.2 Deposits from banks 1,732,187 4,503,861 203,833 98,271 158,088 - - - - Current accounts 276,124 - - - - - - - - Other 1,456,063 4,503,861 203,833 98,271 158,088 - - - 2.3 Debt secuties in issue 34,385 180,146 38,324 850 4,398,755 642,635 867,879 - - With prepayment option - - - - - - - - - Other 34,385 180,146 38,324 850 4,398,755 642,635 867,879 - 2.4 Other liabilities - - - - - - - - - With prepayment option - - - - - - - - - Other - - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - 210,394 - 128,592 3,112,587 95,352 - - 3.2 Without underlying security - Option + Long positions - - - - - 533,153 - - + Short positions - - - - - - - - - Other derivatives + Long positions 113,537 27,556,892 918,988 1,117,507 15,090,855 2,571,177 110,306 - + Short positions 113,537 27,697,436 1,004,142 1,630,893 11,677,729 1,262,979 110,306 - 4. Other off-balance sheet transactions + Long positions 18,554 114,352 25,982 - - - - - + Short positions - 158,887 - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 703 1. Banking book: breakdown by maturity (repricing date) of financial assets and liabilities - Currency: other currencies (€ '000) AMOUNTS AS AT 12.31.2018 TYPE/RESIDUAL MATURITY ON DEMAND UP TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS 5 TO 10 YEARS OVER 10 YEARS INDEFINITE MATURITY 1. On-balance sheet assets 1,160,092 5,363,448 1,687,658 667,883 5,252,537 805,823 452,475 - 1.1 Debt securities 12,853 629,481 17,204 40,776 2,425,912 357,751 8,749 - - With prepayment option - - - - - - - - - Other 12,853 629,481 17,204 40,776 2,425,912 357,751 8,749 - 1.2 Loans to banks 746,727 1,871,241 393,078 89,781 1,040,724 - - - 1.3 Loans to customers 400,512 2,862,726 1,277,376 537,326 1,785,901 448,072 443,726 - - Current accounts 135,840 - - 1 4,923 - - - - Other loans 264,672 2,862,726 1,277,376 537,325 1,780,978 448,072 443,726 - - With prepayment option 13,240 24,458 2,310 1,824 37,019 324 1,096 - - Other 251,432 2,838,268 1,275,066 535,501 1,743,959 447,748 442,630 - 2. On-balance sheet liabilities 4,222,466 5,017,868 272,481 104,956 4,556,843 642,635 867,879 - 2.1 Deposits from customers 2,455,894 333,861 30,324 5,835 - - - - - Current accounts 2,277,548 229,058 18,430 4,288 - - - - - Other 178,346 104,803 11,894 1,547 - - - - - With prepayment option - - - - - - - - - Other 178,346 104,803 11,894 1,547 - - - - 2.2 Deposits from banks 1,732,187 4,503,861 203,833 98,271 158,088 - - - - Current accounts 276,124 - - - - - - - - Other 1,456,063 4,503,861 203,833 98,271 158,088 - - - 2.3 Debt secuties in issue 34,385 180,146 38,324 850 4,398,755 642,635 867,879 - - With prepayment option - - - - - - - - - Other 34,385 180,146 38,324 850 4,398,755 642,635 867,879 - 2.4 Other liabilities - - - - - - - - - With prepayment option - - - - - - - - - Other - - - - - - - - 3. Financial derivatives 3.1 With underlying security - Option + Long positions - - - - - - - - + Short positions - - - - - - - - - Other derivates + Long positions - - - - - - - - + Short positions - 210,394 - 128,592 3,112,587 95,352 - - 3.2 Without underlying security - Option + Long positions - - - - - 533,153 - - + Short positions - - - - - - - - - Other derivatives + Long positions 113,537 27,556,892 918,988 1,117,507 15,090,855 2,571,177 110,306 - + Short positions 113,537 27,697,436 1,004,142 1,630,893 11,677,729 1,262,979 110,306 - 4. Other off-balance sheet transactions + Long positions 18,554 114,352 25,982 - - - - - + Short positions - 158,887 - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 704 2018 Annual Report and Accounts · UniCredit 2. Banking book: internal models and other methods for sensitivity analysis Interest Rate Risk As at 31 December 2018, the sensitivity of interest income to an immediate and parallel shift of +100bps was +€468 million. The sensitivity of the economic value of shareholders’ equity to an immediate and parallel change in interest rates (“parallel shift”) of +200bps was -€289 million as at 31 December 201846. 2.3 Exchange rate risk Qualitative information A. General aspects, risk management processes and measurement methods Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Qualitative information - A. General information, risk management processes and measurement methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Hedging exchange rate risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Qualitative information - B. Hedging exchange rate risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Distribution by currency of assets and liabilites and derivatives (€ '000) ITEMS AMOUNTS AS AT 12.31.2018 CURRENCIES CANADA DOLLAR U.S. DOLLAR UNITED KINGDOM POUND JAPAN YEN POLAND ZLOTY OTHER CURRENCIES A. Financial assets 53,492 9,932,415 142,568 2,249,307 706,713 2,232,450 A.1 Debt securities - 1,278,227 - 2,215,866 - - A.2 Equity securities - 408,074 - - 416,346 3,219 A.3 Loans to banks 5,174 3,520,334 39,541 22,743 100,458 453,566 A.4 Loans to customers 48,318 4,725,780 103,027 10,698 189,910 1,775,665 A.5 Other financial assets - - - - - - B. Other assets 1,517 1,115,063 7,579 2,300 1,052 63,586 C. Financial liabilities 55,012 13,436,765 643,623 51,503 60,133 1,438,113 C.1 Deposits from banks 17,985 5,002,460 499,112 3,351 2,330 1,171,002 C.2 Deposits from customers 37,027 2,318,241 144,511 8,372 57,803 259,983 C.3 Debt securities in issue - 6,116,064 - 39,781 - 7,128 C.4 Other financial liabilities - - - - - - D. Other liabilities 44 58,780 2,493 61 49 4,676 E. Financial derivatives - Options + Long positions - 882,082 3,241 159 - 76,748 + Short positions - 353,196 3,241 159 - 76,748 - Other derivatives + Long positions 71,778 34,170,718 2,593,382 433,725 145,388 5,705,369 + Short positions 106,903 32,666,716 2,131,804 2,604,019 378,165 6,573,878 Total assets 126,787 46,100,278 2,746,770 2,685,490 853,154 8,078,152 Total liabilities 161,959 46,515,457 2,781,160 2,655,741 438,347 8,093,415 Difference (+/-) (35,172) (415,179) (34,390) 29,749 414,807 (15,262) 46 The figures include modeled sensitivity estimates for assets and liabilities with not well-defined maturities, such as sight and savings deposits. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 704 2018 Annual Report and Accounts · UniCredit 2. Banking book: internal models and other methods for sensitivity analysis Interest Rate Risk As at 31 December 2018, the sensitivity of interest income to an immediate and parallel shift of +100bps was +€468 million. The sensitivity of the economic value of shareholders’ equity to an immediate and parallel change in interest rates (“parallel shift”) of +200bps was -€289 million as at 31 December 201846. 2.3 Exchange rate risk Qualitative information A. General aspects, risk management processes and measurement methods Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Qualitative information - A. General information, risk management processes and measurement methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Hedging exchange rate risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Qualitative information - B. Hedging exchange rate risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Distribution by currency of assets and liabilites and derivatives (€ '000) ITEMS AMOUNTS AS AT 12.31.2018 CURRENCIES CANADA DOLLAR U.S. DOLLAR UNITED KINGDOM POUND JAPAN YEN POLAND ZLOTY OTHER CURRENCIES A. Financial assets 53,492 9,932,415 142,568 2,249,307 706,713 2,232,450 A.1 Debt securities - 1,278,227 - 2,215,866 - - A.2 Equity securities - 408,074 - - 416,346 3,219 A.3 Loans to banks 5,174 3,520,334 39,541 22,743 100,458 453,566 A.4 Loans to customers 48,318 4,725,780 103,027 10,698 189,910 1,775,665 A.5 Other financial assets - - - - - - B. Other assets 1,517 1,115,063 7,579 2,300 1,052 63,586 C. Financial liabilities 55,012 13,436,765 643,623 51,503 60,133 1,438,113 C.1 Deposits from banks 17,985 5,002,460 499,112 3,351 2,330 1,171,002 C.2 Deposits from customers 37,027 2,318,241 144,511 8,372 57,803 259,983 C.3 Debt securities in issue - 6,116,064 - 39,781 - 7,128 C.4 Other financial liabilities - - - - - - D. Other liabilities 44 58,780 2,493 61 49 4,676 E. Financial derivatives - Options + Long positions - 882,082 3,241 159 - 76,748 + Short positions - 353,196 3,241 159 - 76,748 - Other derivatives + Long positions 71,778 34,170,718 2,593,382 433,725 145,388 5,705,369 + Short positions 106,903 32,666,716 2,131,804 2,604,019 378,165 6,573,878 Total assets 126,787 46,100,278 2,746,770 2,685,490 853,154 8,078,152 Total liabilities 161,959 46,515,457 2,781,160 2,655,741 438,347 8,093,415 Difference (+/-) (35,172) (415,179) (34,390) 29,749 414,807 (15,262) 46 The figures include modeled sensitivity estimates for assets and liabilities with not well-defined maturities, such as sight and savings deposits. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 704 2018 Annual Report and Accounts · UniCredit 2. Banking book: internal models and other methods for sensitivity analysis Interest Rate Risk As at 31 December 2018, the sensitivity of interest income to an immediate and parallel shift of +100bps was +€468 million. The sensitivity of the economic value of shareholders’ equity to an immediate and parallel change in interest rates (“parallel shift”) of +200bps was -€289 million as at 31 December 201846. 2.3 Exchange rate risk Qualitative information A. General aspects, risk management processes and measurement methods Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Qualitative information - A. General information, risk management processes and measurement methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Hedging exchange rate risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Qualitative information - B. Hedging exchange rate risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Distribution by currency of assets and liabilites and derivatives (€ '000) ITEMS AMOUNTS AS AT 12.31.2018 CURRENCIES CANADA DOLLAR U.S. DOLLAR UNITED KINGDOM POUND JAPAN YEN POLAND ZLOTY OTHER CURRENCIES A. Financial assets 53,492 9,932,415 142,568 2,249,307 706,713 2,232,450 A.1 Debt securities - 1,278,227 - 2,215,866 - - A.2 Equity securities - 408,074 - - 416,346 3,219 A.3 Loans to banks 5,174 3,520,334 39,541 22,743 100,458 453,566 A.4 Loans to customers 48,318 4,725,780 103,027 10,698 189,910 1,775,665 A.5 Other financial assets - - - - - - B. Other assets 1,517 1,115,063 7,579 2,300 1,052 63,586 C. Financial liabilities 55,012 13,436,765 643,623 51,503 60,133 1,438,113 C.1 Deposits from banks 17,985 5,002,460 499,112 3,351 2,330 1,171,002 C.2 Deposits from customers 37,027 2,318,241 144,511 8,372 57,803 259,983 C.3 Debt securities in issue - 6,116,064 - 39,781 - 7,128 C.4 Other financial liabilities - - - - - - D. Other liabilities 44 58,780 2,493 61 49 4,676 E. Financial derivatives - Options + Long positions - 882,082 3,241 159 - 76,748 + Short positions - 353,196 3,241 159 - 76,748 - Other derivatives + Long positions 71,778 34,170,718 2,593,382 433,725 145,388 5,705,369 + Short positions 106,903 32,666,716 2,131,804 2,604,019 378,165 6,573,878 Total assets 126,787 46,100,278 2,746,770 2,685,490 853,154 8,078,152 Total liabilities 161,959 46,515,457 2,781,160 2,655,741 438,347 8,093,415 Difference (+/-) (35,172) (415,179) (34,390) 29,749 414,807 (15,262) 46 The figures include modeled sensitivity estimates for assets and liabilities with not well-defined maturities, such as sight and savings deposits. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 704 2018 Annual Report and Accounts · UniCredit 2. Banking book: internal models and other methods for sensitivity analysis Interest Rate Risk As at 31 December 2018, the sensitivity of interest income to an immediate and parallel shift of +100bps was +€468 million. The sensitivity of the economic value of shareholders’ equity to an immediate and parallel change in interest rates (“parallel shift”) of +200bps was -€289 million as at 31 December 201846. 2.3 Exchange rate risk Qualitative information A. General aspects, risk management processes and measurement methods Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Qualitative information - A. General information, risk management processes and measurement methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Hedging exchange rate risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Qualitative information - B. Hedging exchange rate risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Distribution by currency of assets and liabilites and derivatives (€ '000) ITEMS AMOUNTS AS AT 12.31.2018 CURRENCIES CANADA DOLLAR U.S. DOLLAR UNITED KINGDOM POUND JAPAN YEN POLAND ZLOTY OTHER CURRENCIES A. Financial assets 53,492 9,932,415 142,568 2,249,307 706,713 2,232,450 A.1 Debt securities - 1,278,227 - 2,215,866 - - A.2 Equity securities - 408,074 - - 416,346 3,219 A.3 Loans to banks 5,174 3,520,334 39,541 22,743 100,458 453,566 A.4 Loans to customers 48,318 4,725,780 103,027 10,698 189,910 1,775,665 A.5 Other financial assets - - - - - - B. Other assets 1,517 1,115,063 7,579 2,300 1,052 63,586 C. Financial liabilities 55,012 13,436,765 643,623 51,503 60,133 1,438,113 C.1 Deposits from banks 17,985 5,002,460 499,112 3,351 2,330 1,171,002 C.2 Deposits from customers 37,027 2,318,241 144,511 8,372 57,803 259,983 C.3 Debt securities in issue - 6,116,064 - 39,781 - 7,128 C.4 Other financial liabilities - - - - - - D. Other liabilities 44 58,780 2,493 61 49 4,676 E. Financial derivatives - Options + Long positions - 882,082 3,241 159 - 76,748 + Short positions - 353,196 3,241 159 - 76,748 - Other derivatives + Long positions 71,778 34,170,718 2,593,382 433,725 145,388 5,705,369 + Short positions 106,903 32,666,716 2,131,804 2,604,019 378,165 6,573,878 Total assets 126,787 46,100,278 2,746,770 2,685,490 853,154 8,078,152 Total liabilities 161,959 46,515,457 2,781,160 2,655,741 438,347 8,093,415 Difference (+/-) (35,172) (415,179) (34,390) 29,749 414,807 (15,262) 46 The figures include modeled sensitivity estimates for assets and liabilities with not well-defined maturities, such as sight and savings deposits. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 704 2018 Annual Report and Accounts · UniCredit 2. Banking book: internal models and other methods for sensitivity analysis Interest Rate Risk As at 31 December 2018, the sensitivity of interest income to an immediate and parallel shift of +100bps was +€468 million. The sensitivity of the economic value of shareholders’ equity to an immediate and parallel change in interest rates (“parallel shift”) of +200bps was -€289 million as at 31 December 201846. 2.3 Exchange rate risk Qualitative information A. General aspects, risk management processes and measurement methods Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Qualitative information - A. General information, risk management processes and measurement methods - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Hedging exchange rate risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Qualitative information - B. Hedging exchange rate risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Distribution by currency of assets and liabilites and derivatives (€ '000) ITEMS AMOUNTS AS AT 12.31.2018 CURRENCIES CANADA DOLLAR U.S. DOLLAR UNITED KINGDOM POUND JAPAN YEN POLAND ZLOTY OTHER CURRENCIES A. Financial assets 53,492 9,932,415 142,568 2,249,307 706,713 2,232,450 A.1 Debt securities - 1,278,227 - 2,215,866 - - A.2 Equity securities - 408,074 - - 416,346 3,219 A.3 Loans to banks 5,174 3,520,334 39,541 22,743 100,458 453,566 A.4 Loans to customers 48,318 4,725,780 103,027 10,698 189,910 1,775,665 A.5 Other financial assets - - - - - - B. Other assets 1,517 1,115,063 7,579 2,300 1,052 63,586 C. Financial liabilities 55,012 13,436,765 643,623 51,503 60,133 1,438,113 C.1 Deposits from banks 17,985 5,002,460 499,112 3,351 2,330 1,171,002 C.2 Deposits from customers 37,027 2,318,241 144,511 8,372 57,803 259,983 C.3 Debt securities in issue - 6,116,064 - 39,781 - 7,128 C.4 Other financial liabilities - - - - - - D. Other liabilities 44 58,780 2,493 61 49 4,676 E. Financial derivatives - Options + Long positions - 882,082 3,241 159 - 76,748 + Short positions - 353,196 3,241 159 - 76,748 - Other derivatives + Long positions 71,778 34,170,718 2,593,382 433,725 145,388 5,705,369 + Short positions 106,903 32,666,716 2,131,804 2,604,019 378,165 6,573,878 Total assets 126,787 46,100,278 2,746,770 2,685,490 853,154 8,078,152 Total liabilities 161,959 46,515,457 2,781,160 2,655,741 438,347 8,093,415 Difference (+/-) (35,172) (415,179) (34,390) 29,749 414,807 (15,262) 46 The figures include modeled sensitivity estimates for assets and liabilities with not well-defined maturities, such as sight and savings deposits. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 705 2. Internal models and other methodologies for sensitivity analysis Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Quantitative information - 2. Internal models and other methodologies for sensitivity analysis - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Credit spread risk and Stress test Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market risk - Credit Spread Risk - Stress Test - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Below end of year Stress Test results: Stress Test on trading book 27 December 2018 Scenario (€ million) 2018 WIDESPREAD CONTAGION PROTECTIONISM IR SHOCK UniCredit S.p.A. -44 -40 -5 Section 3 - Derivative instrument and hedging policies 3.1 Trading financial derivatives A. Financial derivatives A.1 Trading financial derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS UNDERLYING ACTIVITIES/TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 29,878,384 197,243,882 24,100,928 936,600 a) Options - 8,945,511 3,590,182 - b) Swap 29,878,384 188,298,371 19,675,019 - c) Forward - - 16,727 - d) Futures - - 819,000 936,600 e) Other - - - - 2. Equity instruments and stock indexes - 21,341,400 68,849 - a) Options - 21,341,400 68,849 - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 62,917,880 5,797,756 - a) Options - 9,043,609 1,714,968 - b) Swap - 14,383,518 661,067 - c) Forward - 39,490,753 3,421,721 - d) Futures - - - - e) Other - - - - 4. Commodities - 4,073,069 637,561 - 5. Other - - - - Total 29,878,384 285,576,231 30,605,094 936,600 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 705 2. Internal models and other methodologies for sensitivity analysis Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Quantitative information - 2. Internal models and other methodologies for sensitivity analysis - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Credit spread risk and Stress test Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market risk - Credit Spread Risk - Stress Test - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Below end of year Stress Test results: Stress Test on trading book 27 December 2018 Scenario (€ million) 2018 WIDESPREAD CONTAGION PROTECTIONISM IR SHOCK UniCredit S.p.A. -44 -40 -5 Section 3 - Derivative instrument and hedging policies 3.1 Trading financial derivatives A. Financial derivatives A.1 Trading financial derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS UNDERLYING ACTIVITIES/TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 29,878,384 197,243,882 24,100,928 936,600 a) Options - 8,945,511 3,590,182 - b) Swap 29,878,384 188,298,371 19,675,019 - c) Forward - - 16,727 - d) Futures - - 819,000 936,600 e) Other - - - - 2. Equity instruments and stock indexes - 21,341,400 68,849 - a) Options - 21,341,400 68,849 - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 62,917,880 5,797,756 - a) Options - 9,043,609 1,714,968 - b) Swap - 14,383,518 661,067 - c) Forward - 39,490,753 3,421,721 - d) Futures - - - - e) Other - - - - 4. Commodities - 4,073,069 637,561 - 5. Other - - - - Total 29,878,384 285,576,231 30,605,094 936,600 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 705 2. Internal models and other methodologies for sensitivity analysis Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Quantitative information - 2. Internal models and other methodologies for sensitivity analysis - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Credit spread risk and Stress test Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market risk - Credit Spread Risk - Stress Test - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Below end of year Stress Test results: Stress Test on trading book 27 December 2018 Scenario (€ million) 2018 WIDESPREAD CONTAGION PROTECTIONISM IR SHOCK UniCredit S.p.A. -44 -40 -5 Section 3 - Derivative instrument and hedging policies 3.1 Trading financial derivatives A. Financial derivatives A.1 Trading financial derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS UNDERLYING ACTIVITIES/TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 29,878,384 197,243,882 24,100,928 936,600 a) Options - 8,945,511 3,590,182 - b) Swap 29,878,384 188,298,371 19,675,019 - c) Forward - - 16,727 - d) Futures - - 819,000 936,600 e) Other - - - - 2. Equity instruments and stock indexes - 21,341,400 68,849 - a) Options - 21,341,400 68,849 - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 62,917,880 5,797,756 - a) Options - 9,043,609 1,714,968 - b) Swap - 14,383,518 661,067 - c) Forward - 39,490,753 3,421,721 - d) Futures - - - - e) Other - - - - 4. Commodities - 4,073,069 637,561 - 5. Other - - - - Total 29,878,384 285,576,231 30,605,094 936,600 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 705 2. Internal models and other methodologies for sensitivity analysis Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Quantitative information - 2. Internal models and other methodologies for sensitivity analysis - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Credit spread risk and Stress test Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market risk - Credit Spread Risk - Stress Test - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Below end of year Stress Test results: Stress Test on trading book 27 December 2018 Scenario (€ million) 2018 WIDESPREAD CONTAGION PROTECTIONISM IR SHOCK UniCredit S.p.A. -44 -40 -5 Section 3 - Derivative instrument and hedging policies 3.1 Trading financial derivatives A. Financial derivatives A.1 Trading financial derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS UNDERLYING ACTIVITIES/TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 29,878,384 197,243,882 24,100,928 936,600 a) Options - 8,945,511 3,590,182 - b) Swap 29,878,384 188,298,371 19,675,019 - c) Forward - - 16,727 - d) Futures - - 819,000 936,600 e) Other - - - - 2. Equity instruments and stock indexes - 21,341,400 68,849 - a) Options - 21,341,400 68,849 - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 62,917,880 5,797,756 - a) Options - 9,043,609 1,714,968 - b) Swap - 14,383,518 661,067 - c) Forward - 39,490,753 3,421,721 - d) Futures - - - - e) Other - - - - 4. Commodities - 4,073,069 637,561 - 5. Other - - - - Total 29,878,384 285,576,231 30,605,094 936,600 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 705 2. Internal models and other methodologies for sensitivity analysis Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market Risk - 2.2.3. Exchange Rate Risk - Quantitative information - 2. Internal models and other methodologies for sensitivity analysis - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Credit spread risk and Stress test Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.2 Market risk - Credit Spread Risk - Stress Test - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Below end of year Stress Test results: Stress Test on trading book 27 December 2018 Scenario (€ million) 2018 WIDESPREAD CONTAGION PROTECTIONISM IR SHOCK UniCredit S.p.A. -44 -40 -5 Section 3 - Derivative instrument and hedging policies 3.1 Trading financial derivatives A. Financial derivatives A.1 Trading financial derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS UNDERLYING ACTIVITIES/TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 29,878,384 197,243,882 24,100,928 936,600 a) Options - 8,945,511 3,590,182 - b) Swap 29,878,384 188,298,371 19,675,019 - c) Forward - - 16,727 - d) Futures - - 819,000 936,600 e) Other - - - - 2. Equity instruments and stock indexes - 21,341,400 68,849 - a) Options - 21,341,400 68,849 - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 62,917,880 5,797,756 - a) Options - 9,043,609 1,714,968 - b) Swap - 14,383,518 661,067 - c) Forward - 39,490,753 3,421,721 - d) Futures - - - - e) Other - - - - 4. Commodities - 4,073,069 637,561 - 5. Other - - - - Total 29,878,384 285,576,231 30,605,094 936,600 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 706 2018 Annual Report and Accounts · UniCredit A.2 Trading financial derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 456,724 50,114 - b) Interest rate swap 148,819 2,842,664 440,563 - c) Cross currency swap - 794,360 18,156 - d) Equity swap - - - - e) Forward - 280,888 31,235 - f) Futures - - 169 3,869 g) Other - 177,280 35,344 - Total 148,819 4,551,916 575,581 3,869 2. Negative fair value a) Options - 334,839 72,769 - b) Interest rate swap 118,089 3,675,403 20,193 - c) Cross currency swap - 798,560 38,091 - d) Equity swap - - - - e) Forward - 415,638 31,075 - f) Futures - - 560 17,033 g) Other - 183,280 29,233 - Total 118,089 5,407,720 191,921 17,033 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 706 2018 Annual Report and Accounts · UniCredit A.2 Trading financial derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 456,724 50,114 - b) Interest rate swap 148,819 2,842,664 440,563 - c) Cross currency swap - 794,360 18,156 - d) Equity swap - - - - e) Forward - 280,888 31,235 - f) Futures - - 169 3,869 g) Other - 177,280 35,344 - Total 148,819 4,551,916 575,581 3,869 2. Negative fair value a) Options - 334,839 72,769 - b) Interest rate swap 118,089 3,675,403 20,193 - c) Cross currency swap - 798,560 38,091 - d) Equity swap - - - - e) Forward - 415,638 31,075 - f) Futures - - 560 17,033 g) Other - 183,280 29,233 - Total 118,089 5,407,720 191,921 17,033 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 706 2018 Annual Report and Accounts · UniCredit A.2 Trading financial derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 456,724 50,114 - b) Interest rate swap 148,819 2,842,664 440,563 - c) Cross currency swap - 794,360 18,156 - d) Equity swap - - - - e) Forward - 280,888 31,235 - f) Futures - - 169 3,869 g) Other - 177,280 35,344 - Total 148,819 4,551,916 575,581 3,869 2. Negative fair value a) Options - 334,839 72,769 - b) Interest rate swap 118,089 3,675,403 20,193 - c) Cross currency swap - 798,560 38,091 - d) Equity swap - - - - e) Forward - 415,638 31,075 - f) Futures - - 560 17,033 g) Other - 183,280 29,233 - Total 118,089 5,407,720 191,921 17,033 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 706 2018 Annual Report and Accounts · UniCredit A.2 Trading financial derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 456,724 50,114 - b) Interest rate swap 148,819 2,842,664 440,563 - c) Cross currency swap - 794,360 18,156 - d) Equity swap - - - - e) Forward - 280,888 31,235 - f) Futures - - 169 3,869 g) Other - 177,280 35,344 - Total 148,819 4,551,916 575,581 3,869 2. Negative fair value a) Options - 334,839 72,769 - b) Interest rate swap 118,089 3,675,403 20,193 - c) Cross currency swap - 798,560 38,091 - d) Equity swap - - - - e) Forward - 415,638 31,075 - f) Futures - - 560 17,033 g) Other - 183,280 29,233 - Total 118,089 5,407,720 191,921 17,033 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 706 2018 Annual Report and Accounts · UniCredit A.2 Trading financial derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 456,724 50,114 - b) Interest rate swap 148,819 2,842,664 440,563 - c) Cross currency swap - 794,360 18,156 - d) Equity swap - - - - e) Forward - 280,888 31,235 - f) Futures - - 169 3,869 g) Other - 177,280 35,344 - Total 148,819 4,551,916 575,581 3,869 2. Negative fair value a) Options - 334,839 72,769 - b) Interest rate swap 118,089 3,675,403 20,193 - c) Cross currency swap - 798,560 38,091 - d) Equity swap - - - - e) Forward - 415,638 31,075 - f) Futures - - 560 17,033 g) Other - 183,280 29,233 - Total 118,089 5,407,720 191,921 17,033 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 707 A.3 OTC trading financial derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 834,494 2,876,005 20,390,430 - Positive fair value X 169 26,902 432,536 - Negative fair value X 3,442 12,576 9,779 2) Equity instruments and stock indexes - Notional amount X - - 68,849 - Positive fair value X - - - - Negative fair value X - - 33,521 3) Gold and currencies - Notional amount X 255,427 217,792 5,324,537 - Positive fair value X 6,431 1,357 71,746 - Negative fair value X 9,845 8,497 83,727 4) Commodities - Notional amount X - - 637,561 - Positive fair value X - - 36,441 - Negative fair value X - - 30,534 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 29,878,384 145,919,403 37,970,570 13,353,909 - Positive fair value 148,819 1,215,929 1,071,693 589,619 - Negative fair value 118,089 2,535,542 1,051,398 139,983 2) Equity instruments and stock indexes - Notional amount - 21,341,400 - - - Positive fair value - 261,279 - - - Negative fair value - 98,461 - - 3) Gold and currencies - Notional amount - 53,389,163 2,368,087 7,160,629 - Positive fair value - 855,063 12,843 342,762 - Negative fair value - 1,191,055 32,199 150,470 4) Commodities - Notional amount - 2,454,377 68,978 1,549,714 - Positive fair value - 95,337 2,142 105,249 - Negative fair value - 153,298 2,334 52,983 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - A.4 OTC financial derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 56,631,770 122,941,823 71,649,603 251,223,196 A.2 Financial derivative contracts on equity securities and stock indexes 3,268,710 13,641,730 4,499,808 21,410,248 A.3 Financial derivative contracts on exchange rates and hold 50,799,247 10,546,797 7,369,591 68,715,635 A.4 Financial derivative contracts on other values 4,394,948 315,682 - 4,710,630 A.5 Other financial derivatives - - - - Total 12.31.2018 115,094,675 147,446,032 83,519,002 346,059,709 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 707 A.3 OTC trading financial derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 834,494 2,876,005 20,390,430 - Positive fair value X 169 26,902 432,536 - Negative fair value X 3,442 12,576 9,779 2) Equity instruments and stock indexes - Notional amount X - - 68,849 - Positive fair value X - - - - Negative fair value X - - 33,521 3) Gold and currencies - Notional amount X 255,427 217,792 5,324,537 - Positive fair value X 6,431 1,357 71,746 - Negative fair value X 9,845 8,497 83,727 4) Commodities - Notional amount X - - 637,561 - Positive fair value X - - 36,441 - Negative fair value X - - 30,534 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 29,878,384 145,919,403 37,970,570 13,353,909 - Positive fair value 148,819 1,215,929 1,071,693 589,619 - Negative fair value 118,089 2,535,542 1,051,398 139,983 2) Equity instruments and stock indexes - Notional amount - 21,341,400 - - - Positive fair value - 261,279 - - - Negative fair value - 98,461 - - 3) Gold and currencies - Notional amount - 53,389,163 2,368,087 7,160,629 - Positive fair value - 855,063 12,843 342,762 - Negative fair value - 1,191,055 32,199 150,470 4) Commodities - Notional amount - 2,454,377 68,978 1,549,714 - Positive fair value - 95,337 2,142 105,249 - Negative fair value - 153,298 2,334 52,983 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - A.4 OTC financial derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 56,631,770 122,941,823 71,649,603 251,223,196 A.2 Financial derivative contracts on equity securities and stock indexes 3,268,710 13,641,730 4,499,808 21,410,248 A.3 Financial derivative contracts on exchange rates and hold 50,799,247 10,546,797 7,369,591 68,715,635 A.4 Financial derivative contracts on other values 4,394,948 315,682 - 4,710,630 A.5 Other financial derivatives - - - - Total 12.31.2018 115,094,675 147,446,032 83,519,002 346,059,709 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 707 A.3 OTC trading financial derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 834,494 2,876,005 20,390,430 - Positive fair value X 169 26,902 432,536 - Negative fair value X 3,442 12,576 9,779 2) Equity instruments and stock indexes - Notional amount X - - 68,849 - Positive fair value X - - - - Negative fair value X - - 33,521 3) Gold and currencies - Notional amount X 255,427 217,792 5,324,537 - Positive fair value X 6,431 1,357 71,746 - Negative fair value X 9,845 8,497 83,727 4) Commodities - Notional amount X - - 637,561 - Positive fair value X - - 36,441 - Negative fair value X - - 30,534 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 29,878,384 145,919,403 37,970,570 13,353,909 - Positive fair value 148,819 1,215,929 1,071,693 589,619 - Negative fair value 118,089 2,535,542 1,051,398 139,983 2) Equity instruments and stock indexes - Notional amount - 21,341,400 - - - Positive fair value - 261,279 - - - Negative fair value - 98,461 - - 3) Gold and currencies - Notional amount - 53,389,163 2,368,087 7,160,629 - Positive fair value - 855,063 12,843 342,762 - Negative fair value - 1,191,055 32,199 150,470 4) Commodities - Notional amount - 2,454,377 68,978 1,549,714 - Positive fair value - 95,337 2,142 105,249 - Negative fair value - 153,298 2,334 52,983 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - A.4 OTC financial derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 56,631,770 122,941,823 71,649,603 251,223,196 A.2 Financial derivative contracts on equity securities and stock indexes 3,268,710 13,641,730 4,499,808 21,410,248 A.3 Financial derivative contracts on exchange rates and hold 50,799,247 10,546,797 7,369,591 68,715,635 A.4 Financial derivative contracts on other values 4,394,948 315,682 - 4,710,630 A.5 Other financial derivatives - - - - Total 12.31.2018 115,094,675 147,446,032 83,519,002 346,059,709 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 707 A.3 OTC trading financial derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 834,494 2,876,005 20,390,430 - Positive fair value X 169 26,902 432,536 - Negative fair value X 3,442 12,576 9,779 2) Equity instruments and stock indexes - Notional amount X - - 68,849 - Positive fair value X - - - - Negative fair value X - - 33,521 3) Gold and currencies - Notional amount X 255,427 217,792 5,324,537 - Positive fair value X 6,431 1,357 71,746 - Negative fair value X 9,845 8,497 83,727 4) Commodities - Notional amount X - - 637,561 - Positive fair value X - - 36,441 - Negative fair value X - - 30,534 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 29,878,384 145,919,403 37,970,570 13,353,909 - Positive fair value 148,819 1,215,929 1,071,693 589,619 - Negative fair value 118,089 2,535,542 1,051,398 139,983 2) Equity instruments and stock indexes - Notional amount - 21,341,400 - - - Positive fair value - 261,279 - - - Negative fair value - 98,461 - - 3) Gold and currencies - Notional amount - 53,389,163 2,368,087 7,160,629 - Positive fair value - 855,063 12,843 342,762 - Negative fair value - 1,191,055 32,199 150,470 4) Commodities - Notional amount - 2,454,377 68,978 1,549,714 - Positive fair value - 95,337 2,142 105,249 - Negative fair value - 153,298 2,334 52,983 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - A.4 OTC financial derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 56,631,770 122,941,823 71,649,603 251,223,196 A.2 Financial derivative contracts on equity securities and stock indexes 3,268,710 13,641,730 4,499,808 21,410,248 A.3 Financial derivative contracts on exchange rates and hold 50,799,247 10,546,797 7,369,591 68,715,635 A.4 Financial derivative contracts on other values 4,394,948 315,682 - 4,710,630 A.5 Other financial derivatives - - - - Total 12.31.2018 115,094,675 147,446,032 83,519,002 346,059,709 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 707 A.3 OTC trading financial derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 834,494 2,876,005 20,390,430 - Positive fair value X 169 26,902 432,536 - Negative fair value X 3,442 12,576 9,779 2) Equity instruments and stock indexes - Notional amount X - - 68,849 - Positive fair value X - - - - Negative fair value X - - 33,521 3) Gold and currencies - Notional amount X 255,427 217,792 5,324,537 - Positive fair value X 6,431 1,357 71,746 - Negative fair value X 9,845 8,497 83,727 4) Commodities - Notional amount X - - 637,561 - Positive fair value X - - 36,441 - Negative fair value X - - 30,534 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 29,878,384 145,919,403 37,970,570 13,353,909 - Positive fair value 148,819 1,215,929 1,071,693 589,619 - Negative fair value 118,089 2,535,542 1,051,398 139,983 2) Equity instruments and stock indexes - Notional amount - 21,341,400 - - - Positive fair value - 261,279 - - - Negative fair value - 98,461 - - 3) Gold and currencies - Notional amount - 53,389,163 2,368,087 7,160,629 - Positive fair value - 855,063 12,843 342,762 - Negative fair value - 1,191,055 32,199 150,470 4) Commodities - Notional amount - 2,454,377 68,978 1,549,714 - Positive fair value - 95,337 2,142 105,249 - Negative fair value - 153,298 2,334 52,983 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - A.4 OTC financial derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 56,631,770 122,941,823 71,649,603 251,223,196 A.2 Financial derivative contracts on equity securities and stock indexes 3,268,710 13,641,730 4,499,808 21,410,248 A.3 Financial derivative contracts on exchange rates and hold 50,799,247 10,546,797 7,369,591 68,715,635 A.4 Financial derivative contracts on other values 4,394,948 315,682 - 4,710,630 A.5 Other financial derivatives - - - - Total 12.31.2018 115,094,675 147,446,032 83,519,002 346,059,709 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 708 2018 Annual Report and Accounts · UniCredit B. Credit derivatives No data to be disclosed. 3.2 Hedging policies Qualitative information Hedging transactions are used to manage the exposure to market risks and volatility of financial outcomes that arise as part of our normal business operations and are executed in accordance with internal policies. Derivatives are mainly used to manage of the banking book interest rate risk with the following goals: • reducing banking book interest rate risk profile according to Risk Appetite Framework approved by the Board of Directors and limits defined by relevant Committees or risk functions. Within Risk Appetite Framework, the banking book exposure to interest rate risk is defined either in terms of Net Interest Income Sensitivity and Economic Value Sensitivity; • optimizing the natural hedge between the risk profile of assets and liabilities using derivatives to manage the mismatch, even temporary, between the volume and the rates of assets and liabilities with different repricing schedules; • minimizing the net exposure of derivatives used for hedging either assets and liabilities. A. Fair value hedging activities The objective of fair value hedge on assets/liabilities is to hedge the exposure to changes in fair value coming from the embedded risk factor subject to an hedging transaction. The fair value hedge is applied both for identified financial instruments (securities, debt issues, loans, borrowings) and for portfolios of financial instruments (in particular, fixed rate loans and non-maturity deposits). The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. The hedging strategy on identified financial instruments classified as Held-to-Collect (HTC) and Held-to-Collect & Sell (HTCS) considers the contractual features of each instruments and business intent. The hedging strategy on portfolios of financial instruments refers to the amounts of money contained in the portfolio of interest rate exposures that are not already subject to "micro/specific" hedging and mirrors to the nominal amount and financial conditions of hedging derivatives. The objective of fair value hedge on assets/liabilities denominated in foreign currency is to hedge the exposure to changes in fair value by converting to Euro denominated assets/liabilities. The hedging instruments used mainly consist of interest rate swaps, basis swaps, caps, floors and cross currencies swaps. B. Cash flow hedging activities The objective of cash flow hedge on floating rate assets/liabilities is to hedge the exposure to changes in cash flows from borrowings/lendings that bear a floating interest rate. The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. Cash flow hedges are particularly used to hedge interest rate risk on floating-rate assets and liabilities, including rollovers, and foreign exchange risks on highly probable forecast foreign currency revenues. The hedging instruments used mainly consist of interest rate swaps, caps, floors, cross-currency swaps with a maturity up to 20-30 year for some commercial assets. C. Foreign net investments hedge activities No hedging strategy is in place on an investment in entities whose functional currency differs from the Group’s functional currency. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 708 2018 Annual Report and Accounts · UniCredit B. Credit derivatives No data to be disclosed. 3.2 Hedging policies Qualitative information Hedging transactions are used to manage the exposure to market risks and volatility of financial outcomes that arise as part of our normal business operations and are executed in accordance with internal policies. Derivatives are mainly used to manage of the banking book interest rate risk with the following goals: • reducing banking book interest rate risk profile according to Risk Appetite Framework approved by the Board of Directors and limits defined by relevant Committees or risk functions. Within Risk Appetite Framework, the banking book exposure to interest rate risk is defined either in terms of Net Interest Income Sensitivity and Economic Value Sensitivity; • optimizing the natural hedge between the risk profile of assets and liabilities using derivatives to manage the mismatch, even temporary, between the volume and the rates of assets and liabilities with different repricing schedules; • minimizing the net exposure of derivatives used for hedging either assets and liabilities. A. Fair value hedging activities The objective of fair value hedge on assets/liabilities is to hedge the exposure to changes in fair value coming from the embedded risk factor subject to an hedging transaction. The fair value hedge is applied both for identified financial instruments (securities, debt issues, loans, borrowings) and for portfolios of financial instruments (in particular, fixed rate loans and non-maturity deposits). The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. The hedging strategy on identified financial instruments classified as Held-to-Collect (HTC) and Held-to-Collect & Sell (HTCS) considers the contractual features of each instruments and business intent. The hedging strategy on portfolios of financial instruments refers to the amounts of money contained in the portfolio of interest rate exposures that are not already subject to "micro/specific" hedging and mirrors to the nominal amount and financial conditions of hedging derivatives. The objective of fair value hedge on assets/liabilities denominated in foreign currency is to hedge the exposure to changes in fair value by converting to Euro denominated assets/liabilities. The hedging instruments used mainly consist of interest rate swaps, basis swaps, caps, floors and cross currencies swaps. B. Cash flow hedging activities The objective of cash flow hedge on floating rate assets/liabilities is to hedge the exposure to changes in cash flows from borrowings/lendings that bear a floating interest rate. The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. Cash flow hedges are particularly used to hedge interest rate risk on floating-rate assets and liabilities, including rollovers, and foreign exchange risks on highly probable forecast foreign currency revenues. The hedging instruments used mainly consist of interest rate swaps, caps, floors, cross-currency swaps with a maturity up to 20-30 year for some commercial assets. C. Foreign net investments hedge activities No hedging strategy is in place on an investment in entities whose functional currency differs from the Group’s functional currency. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 708 2018 Annual Report and Accounts · UniCredit B. Credit derivatives No data to be disclosed. 3.2 Hedging policies Qualitative information Hedging transactions are used to manage the exposure to market risks and volatility of financial outcomes that arise as part of our normal business operations and are executed in accordance with internal policies. Derivatives are mainly used to manage of the banking book interest rate risk with the following goals: • reducing banking book interest rate risk profile according to Risk Appetite Framework approved by the Board of Directors and limits defined by relevant Committees or risk functions. Within Risk Appetite Framework, the banking book exposure to interest rate risk is defined either in terms of Net Interest Income Sensitivity and Economic Value Sensitivity; • optimizing the natural hedge between the risk profile of assets and liabilities using derivatives to manage the mismatch, even temporary, between the volume and the rates of assets and liabilities with different repricing schedules; • minimizing the net exposure of derivatives used for hedging either assets and liabilities. A. Fair value hedging activities The objective of fair value hedge on assets/liabilities is to hedge the exposure to changes in fair value coming from the embedded risk factor subject to an hedging transaction. The fair value hedge is applied both for identified financial instruments (securities, debt issues, loans, borrowings) and for portfolios of financial instruments (in particular, fixed rate loans and non-maturity deposits). The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. The hedging strategy on identified financial instruments classified as Held-to-Collect (HTC) and Held-to-Collect & Sell (HTCS) considers the contractual features of each instruments and business intent. The hedging strategy on portfolios of financial instruments refers to the amounts of money contained in the portfolio of interest rate exposures that are not already subject to "micro/specific" hedging and mirrors to the nominal amount and financial conditions of hedging derivatives. The objective of fair value hedge on assets/liabilities denominated in foreign currency is to hedge the exposure to changes in fair value by converting to Euro denominated assets/liabilities. The hedging instruments used mainly consist of interest rate swaps, basis swaps, caps, floors and cross currencies swaps. B. Cash flow hedging activities The objective of cash flow hedge on floating rate assets/liabilities is to hedge the exposure to changes in cash flows from borrowings/lendings that bear a floating interest rate. The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. Cash flow hedges are particularly used to hedge interest rate risk on floating-rate assets and liabilities, including rollovers, and foreign exchange risks on highly probable forecast foreign currency revenues. The hedging instruments used mainly consist of interest rate swaps, caps, floors, cross-currency swaps with a maturity up to 20-30 year for some commercial assets. C. Foreign net investments hedge activities No hedging strategy is in place on an investment in entities whose functional currency differs from the Group’s functional currency. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 708 2018 Annual Report and Accounts · UniCredit B. Credit derivatives No data to be disclosed. 3.2 Hedging policies Qualitative information Hedging transactions are used to manage the exposure to market risks and volatility of financial outcomes that arise as part of our normal business operations and are executed in accordance with internal policies. Derivatives are mainly used to manage of the banking book interest rate risk with the following goals: • reducing banking book interest rate risk profile according to Risk Appetite Framework approved by the Board of Directors and limits defined by relevant Committees or risk functions. Within Risk Appetite Framework, the banking book exposure to interest rate risk is defined either in terms of Net Interest Income Sensitivity and Economic Value Sensitivity; • optimizing the natural hedge between the risk profile of assets and liabilities using derivatives to manage the mismatch, even temporary, between the volume and the rates of assets and liabilities with different repricing schedules; • minimizing the net exposure of derivatives used for hedging either assets and liabilities. A. Fair value hedging activities The objective of fair value hedge on assets/liabilities is to hedge the exposure to changes in fair value coming from the embedded risk factor subject to an hedging transaction. The fair value hedge is applied both for identified financial instruments (securities, debt issues, loans, borrowings) and for portfolios of financial instruments (in particular, fixed rate loans and non-maturity deposits). The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. The hedging strategy on identified financial instruments classified as Held-to-Collect (HTC) and Held-to-Collect & Sell (HTCS) considers the contractual features of each instruments and business intent. The hedging strategy on portfolios of financial instruments refers to the amounts of money contained in the portfolio of interest rate exposures that are not already subject to "micro/specific" hedging and mirrors to the nominal amount and financial conditions of hedging derivatives. The objective of fair value hedge on assets/liabilities denominated in foreign currency is to hedge the exposure to changes in fair value by converting to Euro denominated assets/liabilities. The hedging instruments used mainly consist of interest rate swaps, basis swaps, caps, floors and cross currencies swaps. B. Cash flow hedging activities The objective of cash flow hedge on floating rate assets/liabilities is to hedge the exposure to changes in cash flows from borrowings/lendings that bear a floating interest rate. The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. Cash flow hedges are particularly used to hedge interest rate risk on floating-rate assets and liabilities, including rollovers, and foreign exchange risks on highly probable forecast foreign currency revenues. The hedging instruments used mainly consist of interest rate swaps, caps, floors, cross-currency swaps with a maturity up to 20-30 year for some commercial assets. C. Foreign net investments hedge activities No hedging strategy is in place on an investment in entities whose functional currency differs from the Group’s functional currency. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 708 2018 Annual Report and Accounts · UniCredit B. Credit derivatives No data to be disclosed. 3.2 Hedging policies Qualitative information Hedging transactions are used to manage the exposure to market risks and volatility of financial outcomes that arise as part of our normal business operations and are executed in accordance with internal policies. Derivatives are mainly used to manage of the banking book interest rate risk with the following goals: • reducing banking book interest rate risk profile according to Risk Appetite Framework approved by the Board of Directors and limits defined by relevant Committees or risk functions. Within Risk Appetite Framework, the banking book exposure to interest rate risk is defined either in terms of Net Interest Income Sensitivity and Economic Value Sensitivity; • optimizing the natural hedge between the risk profile of assets and liabilities using derivatives to manage the mismatch, even temporary, between the volume and the rates of assets and liabilities with different repricing schedules; • minimizing the net exposure of derivatives used for hedging either assets and liabilities. A. Fair value hedging activities The objective of fair value hedge on assets/liabilities is to hedge the exposure to changes in fair value coming from the embedded risk factor subject to an hedging transaction. The fair value hedge is applied both for identified financial instruments (securities, debt issues, loans, borrowings) and for portfolios of financial instruments (in particular, fixed rate loans and non-maturity deposits). The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. The hedging strategy on identified financial instruments classified as Held-to-Collect (HTC) and Held-to-Collect & Sell (HTCS) considers the contractual features of each instruments and business intent. The hedging strategy on portfolios of financial instruments refers to the amounts of money contained in the portfolio of interest rate exposures that are not already subject to "micro/specific" hedging and mirrors to the nominal amount and financial conditions of hedging derivatives. The objective of fair value hedge on assets/liabilities denominated in foreign currency is to hedge the exposure to changes in fair value by converting to Euro denominated assets/liabilities. The hedging instruments used mainly consist of interest rate swaps, basis swaps, caps, floors and cross currencies swaps. B. Cash flow hedging activities The objective of cash flow hedge on floating rate assets/liabilities is to hedge the exposure to changes in cash flows from borrowings/lendings that bear a floating interest rate. The hedging relationship is classified at the inception of the hedge by identifying the portion and type of risk to be hedged (partial term hedge), the hedging strategy, the hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. Cash flow hedges are particularly used to hedge interest rate risk on floating-rate assets and liabilities, including rollovers, and foreign exchange risks on highly probable forecast foreign currency revenues. The hedging instruments used mainly consist of interest rate swaps, caps, floors, cross-currency swaps with a maturity up to 20-30 year for some commercial assets. C. Foreign net investments hedge activities No hedging strategy is in place on an investment in entities whose functional currency differs from the Group’s functional currency. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 709 The Group put in place some economic hedges on forecasted foreign currency revenues stemming from those entities. The objective of the economic hedge on is to reduce the volatility on the income statement coming from the foreign exchange risks. FX risk on forecasted foreign currency revenues is continuously monitored and hedging strategies are periodically assessed. The hedging strategy and the percentage to be hedged is defined on a case by case basis considering, inter alia, the diversification effect and taking into account the volatility and correlation in the FX rates. The derivatives used consist mainly of currency options. These derivatives may not qualify for hedge accounting even though achieves substantially the same economic results. The impact of economic hedge is accounted in the Trading Income line. D. Hedging instruments and E. Hedging elements Prospective hedge effectiveness is established by the fact that all derivatives must, at inception, have the effect of reducing interest rate risk in term of Economic Value Sensitivity (Fair Value Hedge) or Net Interest Income Sensitivity (Cash Flow Hedge) in the specific/portfolio of hedged underlyings. Retrospectively the hedge effectiveness is quarterly measured by referring to the most stable portion of assets/liabilities using a portfolio hedge approach or by referring to the portion of risk being hedged using a micro/specific approach. Sources of ineffectiveness comes from (i) the Euribor/Eonia basis for hedging derivatives transactions subject to a collateral agreement, (ii) Credit/Debit Value and Funding Value adjustment impacting derivative transactions fair values, (iii) shortfall arising in the underlying’s specifically associated with that hedge in term of nominal or reverse sensitivity due to prepayment or default on commercial assets or withdrawals on liabilities included such as commercial non maturity deposits and are presented in Item 90 - Net Gains (Losses) on Hedge Accounting. Quantitative information A. Cash Flow hedging derivatives A.1 Cash-flow hedging derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 1,675,000 325,067,877 257,706,000 - a) Options - 4,207,050 - - b) Swap 1,675,000 320,860,827 347,000 - c) Forward - - - - d) Futures - - 257,359,000 - e) Other - - - - 2. Equity instruments and stock indexes - - - - a) Options - - - - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 14,196,524 - - a) Options - - - - b) Swap - 12,886,480 - - c) Forward - 1,310,044 - - d) Futures - - - - e) Other - - - - 4. Commodities - - - - 5. Other - - - - Total 1,675,000 339,264,401 257,706,000 - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 709 The Group put in place some economic hedges on forecasted foreign currency revenues stemming from those entities. The objective of the economic hedge on is to reduce the volatility on the income statement coming from the foreign exchange risks. FX risk on forecasted foreign currency revenues is continuously monitored and hedging strategies are periodically assessed. The hedging strategy and the percentage to be hedged is defined on a case by case basis considering, inter alia, the diversification effect and taking into account the volatility and correlation in the FX rates. The derivatives used consist mainly of currency options. These derivatives may not qualify for hedge accounting even though achieves substantially the same economic results. The impact of economic hedge is accounted in the Trading Income line. D. Hedging instruments and E. Hedging elements Prospective hedge effectiveness is established by the fact that all derivatives must, at inception, have the effect of reducing interest rate risk in term of Economic Value Sensitivity (Fair Value Hedge) or Net Interest Income Sensitivity (Cash Flow Hedge) in the specific/portfolio of hedged underlyings. Retrospectively the hedge effectiveness is quarterly measured by referring to the most stable portion of assets/liabilities using a portfolio hedge approach or by referring to the portion of risk being hedged using a micro/specific approach. Sources of ineffectiveness comes from (i) the Euribor/Eonia basis for hedging derivatives transactions subject to a collateral agreement, (ii) Credit/Debit Value and Funding Value adjustment impacting derivative transactions fair values, (iii) shortfall arising in the underlying’s specifically associated with that hedge in term of nominal or reverse sensitivity due to prepayment or default on commercial assets or withdrawals on liabilities included such as commercial non maturity deposits and are presented in Item 90 - Net Gains (Losses) on Hedge Accounting. Quantitative information A. Cash Flow hedging derivatives A.1 Cash-flow hedging derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 1,675,000 325,067,877 257,706,000 - a) Options - 4,207,050 - - b) Swap 1,675,000 320,860,827 347,000 - c) Forward - - - - d) Futures - - 257,359,000 - e) Other - - - - 2. Equity instruments and stock indexes - - - - a) Options - - - - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 14,196,524 - - a) Options - - - - b) Swap - 12,886,480 - - c) Forward - 1,310,044 - - d) Futures - - - - e) Other - - - - 4. Commodities - - - - 5. Other - - - - Total 1,675,000 339,264,401 257,706,000 - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 709 The Group put in place some economic hedges on forecasted foreign currency revenues stemming from those entities. The objective of the economic hedge on is to reduce the volatility on the income statement coming from the foreign exchange risks. FX risk on forecasted foreign currency revenues is continuously monitored and hedging strategies are periodically assessed. The hedging strategy and the percentage to be hedged is defined on a case by case basis considering, inter alia, the diversification effect and taking into account the volatility and correlation in the FX rates. The derivatives used consist mainly of currency options. These derivatives may not qualify for hedge accounting even though achieves substantially the same economic results. The impact of economic hedge is accounted in the Trading Income line. D. Hedging instruments and E. Hedging elements Prospective hedge effectiveness is established by the fact that all derivatives must, at inception, have the effect of reducing interest rate risk in term of Economic Value Sensitivity (Fair Value Hedge) or Net Interest Income Sensitivity (Cash Flow Hedge) in the specific/portfolio of hedged underlyings. Retrospectively the hedge effectiveness is quarterly measured by referring to the most stable portion of assets/liabilities using a portfolio hedge approach or by referring to the portion of risk being hedged using a micro/specific approach. Sources of ineffectiveness comes from (i) the Euribor/Eonia basis for hedging derivatives transactions subject to a collateral agreement, (ii) Credit/Debit Value and Funding Value adjustment impacting derivative transactions fair values, (iii) shortfall arising in the underlying’s specifically associated with that hedge in term of nominal or reverse sensitivity due to prepayment or default on commercial assets or withdrawals on liabilities included such as commercial non maturity deposits and are presented in Item 90 - Net Gains (Losses) on Hedge Accounting. Quantitative information A. Cash Flow hedging derivatives A.1 Cash-flow hedging derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 1,675,000 325,067,877 257,706,000 - a) Options - 4,207,050 - - b) Swap 1,675,000 320,860,827 347,000 - c) Forward - - - - d) Futures - - 257,359,000 - e) Other - - - - 2. Equity instruments and stock indexes - - - - a) Options - - - - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 14,196,524 - - a) Options - - - - b) Swap - 12,886,480 - - c) Forward - 1,310,044 - - d) Futures - - - - e) Other - - - - 4. Commodities - - - - 5. Other - - - - Total 1,675,000 339,264,401 257,706,000 - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 709 The Group put in place some economic hedges on forecasted foreign currency revenues stemming from those entities. The objective of the economic hedge on is to reduce the volatility on the income statement coming from the foreign exchange risks. FX risk on forecasted foreign currency revenues is continuously monitored and hedging strategies are periodically assessed. The hedging strategy and the percentage to be hedged is defined on a case by case basis considering, inter alia, the diversification effect and taking into account the volatility and correlation in the FX rates. The derivatives used consist mainly of currency options. These derivatives may not qualify for hedge accounting even though achieves substantially the same economic results. The impact of economic hedge is accounted in the Trading Income line. D. Hedging instruments and E. Hedging elements Prospective hedge effectiveness is established by the fact that all derivatives must, at inception, have the effect of reducing interest rate risk in term of Economic Value Sensitivity (Fair Value Hedge) or Net Interest Income Sensitivity (Cash Flow Hedge) in the specific/portfolio of hedged underlyings. Retrospectively the hedge effectiveness is quarterly measured by referring to the most stable portion of assets/liabilities using a portfolio hedge approach or by referring to the portion of risk being hedged using a micro/specific approach. Sources of ineffectiveness comes from (i) the Euribor/Eonia basis for hedging derivatives transactions subject to a collateral agreement, (ii) Credit/Debit Value and Funding Value adjustment impacting derivative transactions fair values, (iii) shortfall arising in the underlying’s specifically associated with that hedge in term of nominal or reverse sensitivity due to prepayment or default on commercial assets or withdrawals on liabilities included such as commercial non maturity deposits and are presented in Item 90 - Net Gains (Losses) on Hedge Accounting. Quantitative information A. Cash Flow hedging derivatives A.1 Cash-flow hedging derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 1,675,000 325,067,877 257,706,000 - a) Options - 4,207,050 - - b) Swap 1,675,000 320,860,827 347,000 - c) Forward - - - - d) Futures - - 257,359,000 - e) Other - - - - 2. Equity instruments and stock indexes - - - - a) Options - - - - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 14,196,524 - - a) Options - - - - b) Swap - 12,886,480 - - c) Forward - 1,310,044 - - d) Futures - - - - e) Other - - - - 4. Commodities - - - - 5. Other - - - - Total 1,675,000 339,264,401 257,706,000 - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 709 The Group put in place some economic hedges on forecasted foreign currency revenues stemming from those entities. The objective of the economic hedge on is to reduce the volatility on the income statement coming from the foreign exchange risks. FX risk on forecasted foreign currency revenues is continuously monitored and hedging strategies are periodically assessed. The hedging strategy and the percentage to be hedged is defined on a case by case basis considering, inter alia, the diversification effect and taking into account the volatility and correlation in the FX rates. The derivatives used consist mainly of currency options. These derivatives may not qualify for hedge accounting even though achieves substantially the same economic results. The impact of economic hedge is accounted in the Trading Income line. D. Hedging instruments and E. Hedging elements Prospective hedge effectiveness is established by the fact that all derivatives must, at inception, have the effect of reducing interest rate risk in term of Economic Value Sensitivity (Fair Value Hedge) or Net Interest Income Sensitivity (Cash Flow Hedge) in the specific/portfolio of hedged underlyings. Retrospectively the hedge effectiveness is quarterly measured by referring to the most stable portion of assets/liabilities using a portfolio hedge approach or by referring to the portion of risk being hedged using a micro/specific approach. Sources of ineffectiveness comes from (i) the Euribor/Eonia basis for hedging derivatives transactions subject to a collateral agreement, (ii) Credit/Debit Value and Funding Value adjustment impacting derivative transactions fair values, (iii) shortfall arising in the underlying’s specifically associated with that hedge in term of nominal or reverse sensitivity due to prepayment or default on commercial assets or withdrawals on liabilities included such as commercial non maturity deposits and are presented in Item 90 - Net Gains (Losses) on Hedge Accounting. Quantitative information A. Cash Flow hedging derivatives A.1 Cash-flow hedging derivatives: end-of-period notional amounts (€ '000) AMOUNTS AS AT 12.31.2018 OVER THE COUNTER ORGANISED MARKETS CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Debt securities and interest rate indexes 1,675,000 325,067,877 257,706,000 - a) Options - 4,207,050 - - b) Swap 1,675,000 320,860,827 347,000 - c) Forward - - - - d) Futures - - 257,359,000 - e) Other - - - - 2. Equity instruments and stock indexes - - - - a) Options - - - - b) Swap - - - - c) Forward - - - - d) Futures - - - - e) Other - - - - 3. Gold and currencies - 14,196,524 - - a) Options - - - - b) Swap - 12,886,480 - - c) Forward - 1,310,044 - - d) Futures - - - - e) Other - - - - 4. Commodities - - - - 5. Other - - - - Total 1,675,000 339,264,401 257,706,000 - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 710 2018 Annual Report and Accounts · UniCredit A.2 Cash-flow hedging derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT POSITIVE AND NEGATIVE FAIR VALUE OVER THE COUNTER ORGANISED MARKETS 12.31.2018 TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES CHANGES IN VALUE USED TO CALCULATE HEDGE INEFFECTIVENESS WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 11 - - - b) Interest rate swap 32 3,906,744 - - - c) Cross currency swap - 157,806 - - - d) Equity swap - - - - - e) Forward - 3,755 - - - f) Futures - - 98,971 - - g) Other - - - - - Total 32 4,068,316 98,971 - - 2. Negative fair value a) Options - 36,824 - - - b) Interest rate swap 50,320 4,119,994 38 - - c) Cross currency swap - 218,597 - - - d) Equity swap - - - - - e) Forward - - - - - f) Futures - - 99,485 - - g) Other - - - - - Total 50,320 4,375,415 99,523 - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 710 2018 Annual Report and Accounts · UniCredit A.2 Cash-flow hedging derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT POSITIVE AND NEGATIVE FAIR VALUE OVER THE COUNTER ORGANISED MARKETS 12.31.2018 TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES CHANGES IN VALUE USED TO CALCULATE HEDGE INEFFECTIVENESS WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 11 - - - b) Interest rate swap 32 3,906,744 - - - c) Cross currency swap - 157,806 - - - d) Equity swap - - - - - e) Forward - 3,755 - - - f) Futures - - 98,971 - - g) Other - - - - - Total 32 4,068,316 98,971 - - 2. Negative fair value a) Options - 36,824 - - - b) Interest rate swap 50,320 4,119,994 38 - - c) Cross currency swap - 218,597 - - - d) Equity swap - - - - - e) Forward - - - - - f) Futures - - 99,485 - - g) Other - - - - - Total 50,320 4,375,415 99,523 - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 710 2018 Annual Report and Accounts · UniCredit A.2 Cash-flow hedging derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT POSITIVE AND NEGATIVE FAIR VALUE OVER THE COUNTER ORGANISED MARKETS 12.31.2018 TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES CHANGES IN VALUE USED TO CALCULATE HEDGE INEFFECTIVENESS WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 11 - - - b) Interest rate swap 32 3,906,744 - - - c) Cross currency swap - 157,806 - - - d) Equity swap - - - - - e) Forward - 3,755 - - - f) Futures - - 98,971 - - g) Other - - - - - Total 32 4,068,316 98,971 - - 2. Negative fair value a) Options - 36,824 - - - b) Interest rate swap 50,320 4,119,994 38 - - c) Cross currency swap - 218,597 - - - d) Equity swap - - - - - e) Forward - - - - - f) Futures - - 99,485 - - g) Other - - - - - Total 50,320 4,375,415 99,523 - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 710 2018 Annual Report and Accounts · UniCredit A.2 Cash-flow hedging derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT POSITIVE AND NEGATIVE FAIR VALUE OVER THE COUNTER ORGANISED MARKETS 12.31.2018 TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES CHANGES IN VALUE USED TO CALCULATE HEDGE INEFFECTIVENESS WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 11 - - - b) Interest rate swap 32 3,906,744 - - - c) Cross currency swap - 157,806 - - - d) Equity swap - - - - - e) Forward - 3,755 - - - f) Futures - - 98,971 - - g) Other - - - - - Total 32 4,068,316 98,971 - - 2. Negative fair value a) Options - 36,824 - - - b) Interest rate swap 50,320 4,119,994 38 - - c) Cross currency swap - 218,597 - - - d) Equity swap - - - - - e) Forward - - - - - f) Futures - - 99,485 - - g) Other - - - - - Total 50,320 4,375,415 99,523 - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 710 2018 Annual Report and Accounts · UniCredit A.2 Cash-flow hedging derivatives: positive and negative gross fair value - breakdown by product (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT POSITIVE AND NEGATIVE FAIR VALUE OVER THE COUNTER ORGANISED MARKETS 12.31.2018 TYPE OF DERIVATIVES CENTRAL COUNTERPARTIES WITHOUT CENTRAL COUNTERPARTIES CHANGES IN VALUE USED TO CALCULATE HEDGE INEFFECTIVENESS WITH NETTING AGREEMENT WITHOUT NETTING AGREEMENT 1. Positive fair value a) Options - 11 - - - b) Interest rate swap 32 3,906,744 - - - c) Cross currency swap - 157,806 - - - d) Equity swap - - - - - e) Forward - 3,755 - - - f) Futures - - 98,971 - - g) Other - - - - - Total 32 4,068,316 98,971 - - 2. Negative fair value a) Options - 36,824 - - - b) Interest rate swap 50,320 4,119,994 38 - - c) Cross currency swap - 218,597 - - - d) Equity swap - - - - - e) Forward - - - - - f) Futures - - 99,485 - - g) Other - - - - - Total 50,320 4,375,415 99,523 - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 711 A.3 OTC Cash-flow hedging derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 257,706,000 - - - Positive fair value X 98,971 - - - Negative fair value X 99,523 - - 2) Equity instruments and stock indexes - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 3) Gold and currencies - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 4) Commodities - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 1,675,000 323,230,877 1,837,000 - - Positive fair value 32 3,894,671 12,084 - - Negative fair value 50,320 4,030,993 125,826 - 2) Equity instruments and stock indexes - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 3) Gold and currencies - Notional amount - 13,200,391 996,132 - - Positive fair value - 153,166 8,395 - - Negative fair value - 218,332 265 - 4) Commodities - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - A.4 OTC Cash-flow hedging derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 215,491,844 303,346,482 65,610,551 584,448,877 A.2 Financial derivative contracts on equity securities and stock indexes - - - - A.3 Financial derivative contracts on exchange rates and gold 2,761,166 11,081,434 353,923 14,196,523 A.4 Financial derivative contracts on other values - - - - A.5 Other financial derivatives - - - - Total 12.31.2018 218,253,010 314,427,916 65,964,474 598,645,400 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 711 A.3 OTC Cash-flow hedging derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 257,706,000 - - - Positive fair value X 98,971 - - - Negative fair value X 99,523 - - 2) Equity instruments and stock indexes - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 3) Gold and currencies - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 4) Commodities - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 1,675,000 323,230,877 1,837,000 - - Positive fair value 32 3,894,671 12,084 - - Negative fair value 50,320 4,030,993 125,826 - 2) Equity instruments and stock indexes - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 3) Gold and currencies - Notional amount - 13,200,391 996,132 - - Positive fair value - 153,166 8,395 - - Negative fair value - 218,332 265 - 4) Commodities - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - A.4 OTC Cash-flow hedging derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 215,491,844 303,346,482 65,610,551 584,448,877 A.2 Financial derivative contracts on equity securities and stock indexes - - - - A.3 Financial derivative contracts on exchange rates and gold 2,761,166 11,081,434 353,923 14,196,523 A.4 Financial derivative contracts on other values - - - - A.5 Other financial derivatives - - - - Total 12.31.2018 218,253,010 314,427,916 65,964,474 598,645,400 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 711 A.3 OTC Cash-flow hedging derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 257,706,000 - - - Positive fair value X 98,971 - - - Negative fair value X 99,523 - - 2) Equity instruments and stock indexes - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 3) Gold and currencies - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 4) Commodities - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 1,675,000 323,230,877 1,837,000 - - Positive fair value 32 3,894,671 12,084 - - Negative fair value 50,320 4,030,993 125,826 - 2) Equity instruments and stock indexes - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 3) Gold and currencies - Notional amount - 13,200,391 996,132 - - Positive fair value - 153,166 8,395 - - Negative fair value - 218,332 265 - 4) Commodities - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - A.4 OTC Cash-flow hedging derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 215,491,844 303,346,482 65,610,551 584,448,877 A.2 Financial derivative contracts on equity securities and stock indexes - - - - A.3 Financial derivative contracts on exchange rates and gold 2,761,166 11,081,434 353,923 14,196,523 A.4 Financial derivative contracts on other values - - - - A.5 Other financial derivatives - - - - Total 12.31.2018 218,253,010 314,427,916 65,964,474 598,645,400 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 711 A.3 OTC Cash-flow hedging derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 257,706,000 - - - Positive fair value X 98,971 - - - Negative fair value X 99,523 - - 2) Equity instruments and stock indexes - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 3) Gold and currencies - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 4) Commodities - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 1,675,000 323,230,877 1,837,000 - - Positive fair value 32 3,894,671 12,084 - - Negative fair value 50,320 4,030,993 125,826 - 2) Equity instruments and stock indexes - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 3) Gold and currencies - Notional amount - 13,200,391 996,132 - - Positive fair value - 153,166 8,395 - - Negative fair value - 218,332 265 - 4) Commodities - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - A.4 OTC Cash-flow hedging derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 215,491,844 303,346,482 65,610,551 584,448,877 A.2 Financial derivative contracts on equity securities and stock indexes - - - - A.3 Financial derivative contracts on exchange rates and gold 2,761,166 11,081,434 353,923 14,196,523 A.4 Financial derivative contracts on other values - - - - A.5 Other financial derivatives - - - - Total 12.31.2018 218,253,010 314,427,916 65,964,474 598,645,400 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 711 A.3 OTC Cash-flow hedging derivatives: notional amounts, positive and negative gross fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 UNDERLYING ACTIVITIES CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES Contracts not included in netting agreement 1) Debt securities and interest rate indexes - Notional amount X 257,706,000 - - - Positive fair value X 98,971 - - - Negative fair value X 99,523 - - 2) Equity instruments and stock indexes - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 3) Gold and currencies - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 4) Commodities - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - 5) Other - Notional amount X - - - - Positive fair value X - - - - Negative fair value X - - - Contracts included in netting agreement 1) Debt securities and interest rate indexes - Notional amount 1,675,000 323,230,877 1,837,000 - - Positive fair value 32 3,894,671 12,084 - - Negative fair value 50,320 4,030,993 125,826 - 2) Equity instruments and stock indexes - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 3) Gold and currencies - Notional amount - 13,200,391 996,132 - - Positive fair value - 153,166 8,395 - - Negative fair value - 218,332 265 - 4) Commodities - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - 5) Other - Notional amount - - - - - Positive fair value - - - - - Negative fair value - - - - A.4 OTC Cash-flow hedging derivatives - residual life: notional amounts (€ '000) UNDERLYING/RESIDUAL MATURITY UP TO 1 YEAR OVER 1 YEAR UP TO 5 YEARS OVER 5 YEARS TOTAL A.1 Financial derivative contracts on debt securities and interest rates 215,491,844 303,346,482 65,610,551 584,448,877 A.2 Financial derivative contracts on equity securities and stock indexes - - - - A.3 Financial derivative contracts on exchange rates and gold 2,761,166 11,081,434 353,923 14,196,523 A.4 Financial derivative contracts on other values - - - - A.5 Other financial derivatives - - - - Total 12.31.2018 218,253,010 314,427,916 65,964,474 598,645,400 Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 712 2018 Annual Report and Accounts · UniCredit B. Hedging credit derivatives No data to be disclosed. C. Non hedging instruments Note that, as provided by the 5th update of Circular 262 of Banca d’Italia, the present table is not disclosed as the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. D. Hedging instruments Note that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. In this context the following table provides the required information about hedged instruments. Micro hedging and macro hedging: breakdown by hedged item and risk type (€ '000) AMOUNT AS AT 12.31.2018 MICRO HEDGE: CARRYING AMOUNT MACRO HEDGE: CARRYING AMOUNT A) Fair value hedge 1. Assets 1.1 Financial assets measured at fair value through other comprehensive income 42,266,122 - 1.1.1 Interest rate 42,266,122 X 1.1.2 Equity - X 1.1.3 Foreign exchange and gold - X 1.1.4 Credit - X 1.1.5 Other - X 1.2 Financial assets measured at amortised cost 12,964,884 1,685,975 1.2.1 Interest rate 12,964,884 X 1.2.2 Equity - X 1.2.3 Foreign exchange and gold - X 1.2.4 Credit - X 1.2.5 Other - X 2. Liabilites 2.1 Financial liabilities measured at amortised costs - 1,770,166 2.1.1 Interest rate - X 2.1.2 Equity - X 2.1.3 Foreign exchange and gold - X 2.1.4 Credit - X 2.1.5 Other - X B) Cash flow hedge 1. Assets - X 1.1 Interest rate - X 1.2 Equity - X 1.3 Foreign exchange and gold - X 1.4 Credit - X 1.5 Other - X 2. Liabilites - X 2.1 Interest rate - X 2.2 Equity - X 2.3 Foreign exchange and gold - X 2.4 Credit - X 2.5 Other - X C) Hedge of net investments in foreign operations - X D) Porftolio - Assets X - E) Porftolio - Liabilities X - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 712 2018 Annual Report and Accounts · UniCredit B. Hedging credit derivatives No data to be disclosed. C. Non hedging instruments Note that, as provided by the 5th update of Circular 262 of Banca d’Italia, the present table is not disclosed as the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. D. Hedging instruments Note that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. In this context the following table provides the required information about hedged instruments. Micro hedging and macro hedging: breakdown by hedged item and risk type (€ '000) AMOUNT AS AT 12.31.2018 MICRO HEDGE: CARRYING AMOUNT MACRO HEDGE: CARRYING AMOUNT A) Fair value hedge 1. Assets 1.1 Financial assets measured at fair value through other comprehensive income 42,266,122 - 1.1.1 Interest rate 42,266,122 X 1.1.2 Equity - X 1.1.3 Foreign exchange and gold - X 1.1.4 Credit - X 1.1.5 Other - X 1.2 Financial assets measured at amortised cost 12,964,884 1,685,975 1.2.1 Interest rate 12,964,884 X 1.2.2 Equity - X 1.2.3 Foreign exchange and gold - X 1.2.4 Credit - X 1.2.5 Other - X 2. Liabilites 2.1 Financial liabilities measured at amortised costs - 1,770,166 2.1.1 Interest rate - X 2.1.2 Equity - X 2.1.3 Foreign exchange and gold - X 2.1.4 Credit - X 2.1.5 Other - X B) Cash flow hedge 1. Assets - X 1.1 Interest rate - X 1.2 Equity - X 1.3 Foreign exchange and gold - X 1.4 Credit - X 1.5 Other - X 2. Liabilites - X 2.1 Interest rate - X 2.2 Equity - X 2.3 Foreign exchange and gold - X 2.4 Credit - X 2.5 Other - X C) Hedge of net investments in foreign operations - X D) Porftolio - Assets X - E) Porftolio - Liabilities X - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 712 2018 Annual Report and Accounts · UniCredit B. Hedging credit derivatives No data to be disclosed. C. Non hedging instruments Note that, as provided by the 5th update of Circular 262 of Banca d’Italia, the present table is not disclosed as the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. D. Hedging instruments Note that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. In this context the following table provides the required information about hedged instruments. Micro hedging and macro hedging: breakdown by hedged item and risk type (€ '000) AMOUNT AS AT 12.31.2018 MICRO HEDGE: CARRYING AMOUNT MACRO HEDGE: CARRYING AMOUNT A) Fair value hedge 1. Assets 1.1 Financial assets measured at fair value through other comprehensive income 42,266,122 - 1.1.1 Interest rate 42,266,122 X 1.1.2 Equity - X 1.1.3 Foreign exchange and gold - X 1.1.4 Credit - X 1.1.5 Other - X 1.2 Financial assets measured at amortised cost 12,964,884 1,685,975 1.2.1 Interest rate 12,964,884 X 1.2.2 Equity - X 1.2.3 Foreign exchange and gold - X 1.2.4 Credit - X 1.2.5 Other - X 2. Liabilites 2.1 Financial liabilities measured at amortised costs - 1,770,166 2.1.1 Interest rate - X 2.1.2 Equity - X 2.1.3 Foreign exchange and gold - X 2.1.4 Credit - X 2.1.5 Other - X B) Cash flow hedge 1. Assets - X 1.1 Interest rate - X 1.2 Equity - X 1.3 Foreign exchange and gold - X 1.4 Credit - X 1.5 Other - X 2. Liabilites - X 2.1 Interest rate - X 2.2 Equity - X 2.3 Foreign exchange and gold - X 2.4 Credit - X 2.5 Other - X C) Hedge of net investments in foreign operations - X D) Porftolio - Assets X - E) Porftolio - Liabilities X - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 712 2018 Annual Report and Accounts · UniCredit B. Hedging credit derivatives No data to be disclosed. C. Non hedging instruments Note that, as provided by the 5th update of Circular 262 of Banca d’Italia, the present table is not disclosed as the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. D. Hedging instruments Note that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. In this context the following table provides the required information about hedged instruments. Micro hedging and macro hedging: breakdown by hedged item and risk type (€ '000) AMOUNT AS AT 12.31.2018 MICRO HEDGE: CARRYING AMOUNT MACRO HEDGE: CARRYING AMOUNT A) Fair value hedge 1. Assets 1.1 Financial assets measured at fair value through other comprehensive income 42,266,122 - 1.1.1 Interest rate 42,266,122 X 1.1.2 Equity - X 1.1.3 Foreign exchange and gold - X 1.1.4 Credit - X 1.1.5 Other - X 1.2 Financial assets measured at amortised cost 12,964,884 1,685,975 1.2.1 Interest rate 12,964,884 X 1.2.2 Equity - X 1.2.3 Foreign exchange and gold - X 1.2.4 Credit - X 1.2.5 Other - X 2. Liabilites 2.1 Financial liabilities measured at amortised costs - 1,770,166 2.1.1 Interest rate - X 2.1.2 Equity - X 2.1.3 Foreign exchange and gold - X 2.1.4 Credit - X 2.1.5 Other - X B) Cash flow hedge 1. Assets - X 1.1 Interest rate - X 1.2 Equity - X 1.3 Foreign exchange and gold - X 1.4 Credit - X 1.5 Other - X 2. Liabilites - X 2.1 Interest rate - X 2.2 Equity - X 2.3 Foreign exchange and gold - X 2.4 Credit - X 2.5 Other - X C) Hedge of net investments in foreign operations - X D) Porftolio - Assets X - E) Porftolio - Liabilities X - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 712 2018 Annual Report and Accounts · UniCredit B. Hedging credit derivatives No data to be disclosed. C. Non hedging instruments Note that, as provided by the 5th update of Circular 262 of Banca d’Italia, the present table is not disclosed as the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. D. Hedging instruments Note that the Group has exercised the option to continue applying the existing IAS39 hedge accounting requirements for all its hedging relationships until the IASB completes the project on accounting for macro-hedging. In this context the following table provides the required information about hedged instruments. Micro hedging and macro hedging: breakdown by hedged item and risk type (€ '000) AMOUNT AS AT 12.31.2018 MICRO HEDGE: CARRYING AMOUNT MACRO HEDGE: CARRYING AMOUNT A) Fair value hedge 1. Assets 1.1 Financial assets measured at fair value through other comprehensive income 42,266,122 - 1.1.1 Interest rate 42,266,122 X 1.1.2 Equity - X 1.1.3 Foreign exchange and gold - X 1.1.4 Credit - X 1.1.5 Other - X 1.2 Financial assets measured at amortised cost 12,964,884 1,685,975 1.2.1 Interest rate 12,964,884 X 1.2.2 Equity - X 1.2.3 Foreign exchange and gold - X 1.2.4 Credit - X 1.2.5 Other - X 2. Liabilites 2.1 Financial liabilities measured at amortised costs - 1,770,166 2.1.1 Interest rate - X 2.1.2 Equity - X 2.1.3 Foreign exchange and gold - X 2.1.4 Credit - X 2.1.5 Other - X B) Cash flow hedge 1. Assets - X 1.1 Interest rate - X 1.2 Equity - X 1.3 Foreign exchange and gold - X 1.4 Credit - X 1.5 Other - X 2. Liabilites - X 2.1 Interest rate - X 2.2 Equity - X 2.3 Foreign exchange and gold - X 2.4 Credit - X 2.5 Other - X C) Hedge of net investments in foreign operations - X D) Porftolio - Assets X - E) Porftolio - Liabilities X - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 713 E. Effects of hedging policy at equity This table has to be filled in only by entities that apply IFRS9 hedge accounting rules. 3.3 Other information on derivatives instruments (trading and hedging) A. Financial and credit derivatives A.1 OTC financial and credit derivatives: net fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES A. Financial derivatives 1) Debt securities and interest rates - Notional amount 31,553,384 272,689,161 39,654,607 28,894,710 - Positive net fair value 6,279 156,872 56,240 738,961 - Negative net fair value 25,837 123,800 12,978 11,808 2) Equity instruments and stock indexes - Notional amount - - - 68,849 - Positive net fair value - - - - - Negative net fair value - - - 33,521 3) Gold and currencies - Notional amount - 18,048,922 1,605,678 6,490,056 - Positive net fair value - 39,097 6,679 80,035 - Negative net fair value - 117,149 17,458 91,136 4) Commodities - Notional amount - - - 637,561 - Positive net fair value - - - 36,441 - Negative net fair value - - - 30,534 5) Other - Notional amount - 527,593,450 5,074,278 12,394,455 - Positive net fair value - 322,517 2,915 431,166 - Negative net fair value - 2,037,010 133,075 42,247 B. Credit derivatives 1) Protection buyer's contracts - Notional amount - - - - - Positive net fair value - - - - - Negative net fair value - - - - 2) Protection seller's contracts - Notional amount - - - - - Positive net fair value - - - - - Negative net fair value - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 713 E. Effects of hedging policy at equity This table has to be filled in only by entities that apply IFRS9 hedge accounting rules. 3.3 Other information on derivatives instruments (trading and hedging) A. Financial and credit derivatives A.1 OTC financial and credit derivatives: net fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES A. Financial derivatives 1) Debt securities and interest rates - Notional amount 31,553,384 272,689,161 39,654,607 28,894,710 - Positive net fair value 6,279 156,872 56,240 738,961 - Negative net fair value 25,837 123,800 12,978 11,808 2) Equity instruments and stock indexes - Notional amount - - - 68,849 - Positive net fair value - - - - - Negative net fair value - - - 33,521 3) Gold and currencies - Notional amount - 18,048,922 1,605,678 6,490,056 - Positive net fair value - 39,097 6,679 80,035 - Negative net fair value - 117,149 17,458 91,136 4) Commodities - Notional amount - - - 637,561 - Positive net fair value - - - 36,441 - Negative net fair value - - - 30,534 5) Other - Notional amount - 527,593,450 5,074,278 12,394,455 - Positive net fair value - 322,517 2,915 431,166 - Negative net fair value - 2,037,010 133,075 42,247 B. Credit derivatives 1) Protection buyer's contracts - Notional amount - - - - - Positive net fair value - - - - - Negative net fair value - - - - 2) Protection seller's contracts - Notional amount - - - - - Positive net fair value - - - - - Negative net fair value - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 713 E. Effects of hedging policy at equity This table has to be filled in only by entities that apply IFRS9 hedge accounting rules. 3.3 Other information on derivatives instruments (trading and hedging) A. Financial and credit derivatives A.1 OTC financial and credit derivatives: net fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES A. Financial derivatives 1) Debt securities and interest rates - Notional amount 31,553,384 272,689,161 39,654,607 28,894,710 - Positive net fair value 6,279 156,872 56,240 738,961 - Negative net fair value 25,837 123,800 12,978 11,808 2) Equity instruments and stock indexes - Notional amount - - - 68,849 - Positive net fair value - - - - - Negative net fair value - - - 33,521 3) Gold and currencies - Notional amount - 18,048,922 1,605,678 6,490,056 - Positive net fair value - 39,097 6,679 80,035 - Negative net fair value - 117,149 17,458 91,136 4) Commodities - Notional amount - - - 637,561 - Positive net fair value - - - 36,441 - Negative net fair value - - - 30,534 5) Other - Notional amount - 527,593,450 5,074,278 12,394,455 - Positive net fair value - 322,517 2,915 431,166 - Negative net fair value - 2,037,010 133,075 42,247 B. Credit derivatives 1) Protection buyer's contracts - Notional amount - - - - - Positive net fair value - - - - - Negative net fair value - - - - 2) Protection seller's contracts - Notional amount - - - - - Positive net fair value - - - - - Negative net fair value - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 713 E. Effects of hedging policy at equity This table has to be filled in only by entities that apply IFRS9 hedge accounting rules. 3.3 Other information on derivatives instruments (trading and hedging) A. Financial and credit derivatives A.1 OTC financial and credit derivatives: net fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES A. Financial derivatives 1) Debt securities and interest rates - Notional amount 31,553,384 272,689,161 39,654,607 28,894,710 - Positive net fair value 6,279 156,872 56,240 738,961 - Negative net fair value 25,837 123,800 12,978 11,808 2) Equity instruments and stock indexes - Notional amount - - - 68,849 - Positive net fair value - - - - - Negative net fair value - - - 33,521 3) Gold and currencies - Notional amount - 18,048,922 1,605,678 6,490,056 - Positive net fair value - 39,097 6,679 80,035 - Negative net fair value - 117,149 17,458 91,136 4) Commodities - Notional amount - - - 637,561 - Positive net fair value - - - 36,441 - Negative net fair value - - - 30,534 5) Other - Notional amount - 527,593,450 5,074,278 12,394,455 - Positive net fair value - 322,517 2,915 431,166 - Negative net fair value - 2,037,010 133,075 42,247 B. Credit derivatives 1) Protection buyer's contracts - Notional amount - - - - - Positive net fair value - - - - - Negative net fair value - - - - 2) Protection seller's contracts - Notional amount - - - - - Positive net fair value - - - - - Negative net fair value - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 713 E. Effects of hedging policy at equity This table has to be filled in only by entities that apply IFRS9 hedge accounting rules. 3.3 Other information on derivatives instruments (trading and hedging) A. Financial and credit derivatives A.1 OTC financial and credit derivatives: net fair value by counterparty (€ '000) AMOUNTS AS AT 12.31.2018 CENTRAL COUNTERPARTIES BANKS OTHER FINANCIAL COMPANIES OTHER ENTITIES A. Financial derivatives 1) Debt securities and interest rates - Notional amount 31,553,384 272,689,161 39,654,607 28,894,710 - Positive net fair value 6,279 156,872 56,240 738,961 - Negative net fair value 25,837 123,800 12,978 11,808 2) Equity instruments and stock indexes - Notional amount - - - 68,849 - Positive net fair value - - - - - Negative net fair value - - - 33,521 3) Gold and currencies - Notional amount - 18,048,922 1,605,678 6,490,056 - Positive net fair value - 39,097 6,679 80,035 - Negative net fair value - 117,149 17,458 91,136 4) Commodities - Notional amount - - - 637,561 - Positive net fair value - - - 36,441 - Negative net fair value - - - 30,534 5) Other - Notional amount - 527,593,450 5,074,278 12,394,455 - Positive net fair value - 322,517 2,915 431,166 - Negative net fair value - 2,037,010 133,075 42,247 B. Credit derivatives 1) Protection buyer's contracts - Notional amount - - - - - Positive net fair value - - - - - Negative net fair value - - - - 2) Protection seller's contracts - Notional amount - - - - - Positive net fair value - - - - - Negative net fair value - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 714 2018 Annual Report and Accounts · UniCredit Section 4 - Liquidity risk Qualitative information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.4 Liquidity Risk - A. General aspects, operational processes and methods for measuring liquidity risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Time breakdown by contractual residual maturity of financial assets and liabilities (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 25,209,784 15,409,353 12,361,688 16,420,502 27,417,603 17,982,114 28,550,515 115,110,142 68,493,469 1,911,961 A.1 Government securities 31,541 - 71,880 231,179 563,418 1,390,392 8,677,406 37,764,743 13,748,792 - A.2 Other debt securities 7,052 1,067 14,962 20,694 185,179 132,750 471,713 3,899,457 4,981,636 47,992 A.3 Units in investment funds 1,068,409 - - - - - - - - 17,570 A.4 Loans 24,102,782 15,408,286 12,274,846 16,168,629 26,669,006 16,458,972 19,401,396 73,445,942 49,763,041 1,846,399 - Banks 4,100,559 2,530,200 1,692,504 2,214,528 4,266,863 2,032,135 3,456,971 6,011,597 595,167 1,837,086 - Customers 20,002,223 12,878,086 10,582,342 13,954,101 22,402,143 14,426,837 15,944,425 67,434,345 49,167,874 9,313 B. On-balance sheet liabilities 171,022,505 31,789,595 9,443,497 12,214,745 10,634,815 4,699,761 9,425,281 64,519,104 19,666,567 212,034 B.1. Deposits and current accounts 162,493,342 1,223,866 1,146,484 1,821,589 903,003 936,983 342,658 35,556 97,766 - - Banks 3,734,067 1,035,773 1,053,496 1,776,953 839,791 901,461 334,570 - - - - Customers 158,759,275 188,093 92,988 44,636 63,212 35,522 8,088 35,556 97,766 - B.2 Debt securities 79,542 110,301 975,252 3,102,102 1,060,113 2,074,561 5,332,952 28,287,801 16,559,918 212,034 B.3 Other liabilities 8,449,621 30,455,428 7,321,761 7,291,054 8,671,699 1,688,217 3,749,671 36,195,747 3,008,883 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 31,451 6,898,076 7,045,488 9,607,389 12,286,941 11,711,696 8,308,687 18,718,508 5,798,822 - - Short positions 31,310 7,514,281 7,074,512 9,441,052 11,828,993 11,020,240 7,190,828 18,594,155 5,504,213 - C.2 Financial derivatives without capital swap - Long positions 3,678,392 245,878 413,994 1,104,062 2,459,808 3,622,134 5,336,580 - - - - Short positions 3,735,128 344,529 392,870 738,504 3,012,261 2,873,111 4,897,438 - - - C.3 Deposits and loans to be received - Long positions 18,554 18,423,348 - - 54,538 315,537 124,306 - - - - Short positions - 9,167,077 2,123,427 4,524,757 1,414,117 1,582,599 - 124,306 - - C.4 Commitments to disburse funds - Long positions 6,920 949,297 102,375 3,129 153,056 1,026,044 407,006 2,777,519 1,100 - - Short positions 4,261,195 165,250 - - 1,000,000 - - - - - C.5 Financial guarantees given 96 - 1,406 48,568 3,317 2,399 16,528 49,125 14,449 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 714 2018 Annual Report and Accounts · UniCredit Section 4 - Liquidity risk Qualitative information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.4 Liquidity Risk - A. General aspects, operational processes and methods for measuring liquidity risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Time breakdown by contractual residual maturity of financial assets and liabilities (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 25,209,784 15,409,353 12,361,688 16,420,502 27,417,603 17,982,114 28,550,515 115,110,142 68,493,469 1,911,961 A.1 Government securities 31,541 - 71,880 231,179 563,418 1,390,392 8,677,406 37,764,743 13,748,792 - A.2 Other debt securities 7,052 1,067 14,962 20,694 185,179 132,750 471,713 3,899,457 4,981,636 47,992 A.3 Units in investment funds 1,068,409 - - - - - - - - 17,570 A.4 Loans 24,102,782 15,408,286 12,274,846 16,168,629 26,669,006 16,458,972 19,401,396 73,445,942 49,763,041 1,846,399 - Banks 4,100,559 2,530,200 1,692,504 2,214,528 4,266,863 2,032,135 3,456,971 6,011,597 595,167 1,837,086 - Customers 20,002,223 12,878,086 10,582,342 13,954,101 22,402,143 14,426,837 15,944,425 67,434,345 49,167,874 9,313 B. On-balance sheet liabilities 171,022,505 31,789,595 9,443,497 12,214,745 10,634,815 4,699,761 9,425,281 64,519,104 19,666,567 212,034 B.1. Deposits and current accounts 162,493,342 1,223,866 1,146,484 1,821,589 903,003 936,983 342,658 35,556 97,766 - - Banks 3,734,067 1,035,773 1,053,496 1,776,953 839,791 901,461 334,570 - - - - Customers 158,759,275 188,093 92,988 44,636 63,212 35,522 8,088 35,556 97,766 - B.2 Debt securities 79,542 110,301 975,252 3,102,102 1,060,113 2,074,561 5,332,952 28,287,801 16,559,918 212,034 B.3 Other liabilities 8,449,621 30,455,428 7,321,761 7,291,054 8,671,699 1,688,217 3,749,671 36,195,747 3,008,883 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 31,451 6,898,076 7,045,488 9,607,389 12,286,941 11,711,696 8,308,687 18,718,508 5,798,822 - - Short positions 31,310 7,514,281 7,074,512 9,441,052 11,828,993 11,020,240 7,190,828 18,594,155 5,504,213 - C.2 Financial derivatives without capital swap - Long positions 3,678,392 245,878 413,994 1,104,062 2,459,808 3,622,134 5,336,580 - - - - Short positions 3,735,128 344,529 392,870 738,504 3,012,261 2,873,111 4,897,438 - - - C.3 Deposits and loans to be received - Long positions 18,554 18,423,348 - - 54,538 315,537 124,306 - - - - Short positions - 9,167,077 2,123,427 4,524,757 1,414,117 1,582,599 - 124,306 - - C.4 Commitments to disburse funds - Long positions 6,920 949,297 102,375 3,129 153,056 1,026,044 407,006 2,777,519 1,100 - - Short positions 4,261,195 165,250 - - 1,000,000 - - - - - C.5 Financial guarantees given 96 - 1,406 48,568 3,317 2,399 16,528 49,125 14,449 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 714 2018 Annual Report and Accounts · UniCredit Section 4 - Liquidity risk Qualitative information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.4 Liquidity Risk - A. General aspects, operational processes and methods for measuring liquidity risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Time breakdown by contractual residual maturity of financial assets and liabilities (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 25,209,784 15,409,353 12,361,688 16,420,502 27,417,603 17,982,114 28,550,515 115,110,142 68,493,469 1,911,961 A.1 Government securities 31,541 - 71,880 231,179 563,418 1,390,392 8,677,406 37,764,743 13,748,792 - A.2 Other debt securities 7,052 1,067 14,962 20,694 185,179 132,750 471,713 3,899,457 4,981,636 47,992 A.3 Units in investment funds 1,068,409 - - - - - - - - 17,570 A.4 Loans 24,102,782 15,408,286 12,274,846 16,168,629 26,669,006 16,458,972 19,401,396 73,445,942 49,763,041 1,846,399 - Banks 4,100,559 2,530,200 1,692,504 2,214,528 4,266,863 2,032,135 3,456,971 6,011,597 595,167 1,837,086 - Customers 20,002,223 12,878,086 10,582,342 13,954,101 22,402,143 14,426,837 15,944,425 67,434,345 49,167,874 9,313 B. On-balance sheet liabilities 171,022,505 31,789,595 9,443,497 12,214,745 10,634,815 4,699,761 9,425,281 64,519,104 19,666,567 212,034 B.1. Deposits and current accounts 162,493,342 1,223,866 1,146,484 1,821,589 903,003 936,983 342,658 35,556 97,766 - - Banks 3,734,067 1,035,773 1,053,496 1,776,953 839,791 901,461 334,570 - - - - Customers 158,759,275 188,093 92,988 44,636 63,212 35,522 8,088 35,556 97,766 - B.2 Debt securities 79,542 110,301 975,252 3,102,102 1,060,113 2,074,561 5,332,952 28,287,801 16,559,918 212,034 B.3 Other liabilities 8,449,621 30,455,428 7,321,761 7,291,054 8,671,699 1,688,217 3,749,671 36,195,747 3,008,883 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 31,451 6,898,076 7,045,488 9,607,389 12,286,941 11,711,696 8,308,687 18,718,508 5,798,822 - - Short positions 31,310 7,514,281 7,074,512 9,441,052 11,828,993 11,020,240 7,190,828 18,594,155 5,504,213 - C.2 Financial derivatives without capital swap - Long positions 3,678,392 245,878 413,994 1,104,062 2,459,808 3,622,134 5,336,580 - - - - Short positions 3,735,128 344,529 392,870 738,504 3,012,261 2,873,111 4,897,438 - - - C.3 Deposits and loans to be received - Long positions 18,554 18,423,348 - - 54,538 315,537 124,306 - - - - Short positions - 9,167,077 2,123,427 4,524,757 1,414,117 1,582,599 - 124,306 - - C.4 Commitments to disburse funds - Long positions 6,920 949,297 102,375 3,129 153,056 1,026,044 407,006 2,777,519 1,100 - - Short positions 4,261,195 165,250 - - 1,000,000 - - - - - C.5 Financial guarantees given 96 - 1,406 48,568 3,317 2,399 16,528 49,125 14,449 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 714 2018 Annual Report and Accounts · UniCredit Section 4 - Liquidity risk Qualitative information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.4 Liquidity Risk - A. General aspects, operational processes and methods for measuring liquidity risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Time breakdown by contractual residual maturity of financial assets and liabilities (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 25,209,784 15,409,353 12,361,688 16,420,502 27,417,603 17,982,114 28,550,515 115,110,142 68,493,469 1,911,961 A.1 Government securities 31,541 - 71,880 231,179 563,418 1,390,392 8,677,406 37,764,743 13,748,792 - A.2 Other debt securities 7,052 1,067 14,962 20,694 185,179 132,750 471,713 3,899,457 4,981,636 47,992 A.3 Units in investment funds 1,068,409 - - - - - - - - 17,570 A.4 Loans 24,102,782 15,408,286 12,274,846 16,168,629 26,669,006 16,458,972 19,401,396 73,445,942 49,763,041 1,846,399 - Banks 4,100,559 2,530,200 1,692,504 2,214,528 4,266,863 2,032,135 3,456,971 6,011,597 595,167 1,837,086 - Customers 20,002,223 12,878,086 10,582,342 13,954,101 22,402,143 14,426,837 15,944,425 67,434,345 49,167,874 9,313 B. On-balance sheet liabilities 171,022,505 31,789,595 9,443,497 12,214,745 10,634,815 4,699,761 9,425,281 64,519,104 19,666,567 212,034 B.1. Deposits and current accounts 162,493,342 1,223,866 1,146,484 1,821,589 903,003 936,983 342,658 35,556 97,766 - - Banks 3,734,067 1,035,773 1,053,496 1,776,953 839,791 901,461 334,570 - - - - Customers 158,759,275 188,093 92,988 44,636 63,212 35,522 8,088 35,556 97,766 - B.2 Debt securities 79,542 110,301 975,252 3,102,102 1,060,113 2,074,561 5,332,952 28,287,801 16,559,918 212,034 B.3 Other liabilities 8,449,621 30,455,428 7,321,761 7,291,054 8,671,699 1,688,217 3,749,671 36,195,747 3,008,883 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 31,451 6,898,076 7,045,488 9,607,389 12,286,941 11,711,696 8,308,687 18,718,508 5,798,822 - - Short positions 31,310 7,514,281 7,074,512 9,441,052 11,828,993 11,020,240 7,190,828 18,594,155 5,504,213 - C.2 Financial derivatives without capital swap - Long positions 3,678,392 245,878 413,994 1,104,062 2,459,808 3,622,134 5,336,580 - - - - Short positions 3,735,128 344,529 392,870 738,504 3,012,261 2,873,111 4,897,438 - - - C.3 Deposits and loans to be received - Long positions 18,554 18,423,348 - - 54,538 315,537 124,306 - - - - Short positions - 9,167,077 2,123,427 4,524,757 1,414,117 1,582,599 - 124,306 - - C.4 Commitments to disburse funds - Long positions 6,920 949,297 102,375 3,129 153,056 1,026,044 407,006 2,777,519 1,100 - - Short positions 4,261,195 165,250 - - 1,000,000 - - - - - C.5 Financial guarantees given 96 - 1,406 48,568 3,317 2,399 16,528 49,125 14,449 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 714 2018 Annual Report and Accounts · UniCredit Section 4 - Liquidity risk Qualitative information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.4 Liquidity Risk - A. General aspects, operational processes and methods for measuring liquidity risk - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Quantitative information 1. Time breakdown by contractual residual maturity of financial assets and liabilities (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 25,209,784 15,409,353 12,361,688 16,420,502 27,417,603 17,982,114 28,550,515 115,110,142 68,493,469 1,911,961 A.1 Government securities 31,541 - 71,880 231,179 563,418 1,390,392 8,677,406 37,764,743 13,748,792 - A.2 Other debt securities 7,052 1,067 14,962 20,694 185,179 132,750 471,713 3,899,457 4,981,636 47,992 A.3 Units in investment funds 1,068,409 - - - - - - - - 17,570 A.4 Loans 24,102,782 15,408,286 12,274,846 16,168,629 26,669,006 16,458,972 19,401,396 73,445,942 49,763,041 1,846,399 - Banks 4,100,559 2,530,200 1,692,504 2,214,528 4,266,863 2,032,135 3,456,971 6,011,597 595,167 1,837,086 - Customers 20,002,223 12,878,086 10,582,342 13,954,101 22,402,143 14,426,837 15,944,425 67,434,345 49,167,874 9,313 B. On-balance sheet liabilities 171,022,505 31,789,595 9,443,497 12,214,745 10,634,815 4,699,761 9,425,281 64,519,104 19,666,567 212,034 B.1. Deposits and current accounts 162,493,342 1,223,866 1,146,484 1,821,589 903,003 936,983 342,658 35,556 97,766 - - Banks 3,734,067 1,035,773 1,053,496 1,776,953 839,791 901,461 334,570 - - - - Customers 158,759,275 188,093 92,988 44,636 63,212 35,522 8,088 35,556 97,766 - B.2 Debt securities 79,542 110,301 975,252 3,102,102 1,060,113 2,074,561 5,332,952 28,287,801 16,559,918 212,034 B.3 Other liabilities 8,449,621 30,455,428 7,321,761 7,291,054 8,671,699 1,688,217 3,749,671 36,195,747 3,008,883 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 31,451 6,898,076 7,045,488 9,607,389 12,286,941 11,711,696 8,308,687 18,718,508 5,798,822 - - Short positions 31,310 7,514,281 7,074,512 9,441,052 11,828,993 11,020,240 7,190,828 18,594,155 5,504,213 - C.2 Financial derivatives without capital swap - Long positions 3,678,392 245,878 413,994 1,104,062 2,459,808 3,622,134 5,336,580 - - - - Short positions 3,735,128 344,529 392,870 738,504 3,012,261 2,873,111 4,897,438 - - - C.3 Deposits and loans to be received - Long positions 18,554 18,423,348 - - 54,538 315,537 124,306 - - - - Short positions - 9,167,077 2,123,427 4,524,757 1,414,117 1,582,599 - 124,306 - - C.4 Commitments to disburse funds - Long positions 6,920 949,297 102,375 3,129 153,056 1,026,044 407,006 2,777,519 1,100 - - Short positions 4,261,195 165,250 - - 1,000,000 - - - - - C.5 Financial guarantees given 96 - 1,406 48,568 3,317 2,399 16,528 49,125 14,449 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 715 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: euro (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 24,029,860 14,932,922 12,001,197 15,026,679 25,843,338 16,880,917 27,713,628 108,815,429 66,017,184 1,903,131 A.1 Government securities 29,032 - 70,579 231,179 563,079 1,383,378 8,628,578 35,367,927 13,410,233 - A.2 Other debt securities 7,046 1,067 8,088 20,694 183,965 116,164 456,011 3,881,986 4,283,479 39,162 A.3 Units in investment funds 1,007,919 - - - - - - - - 17,570 A.4 Loans 22,985,863 14,931,855 11,922,530 14,774,806 25,096,294 15,381,375 18,629,039 69,565,516 48,323,472 1,846,399 - Banks 3,360,551 2,395,017 1,650,355 1,518,650 3,719,431 1,610,327 3,304,157 4,906,672 175,167 1,837,086 - Customers 19,625,312 12,536,838 10,272,175 13,256,156 21,376,863 13,771,048 15,324,882 64,658,844 48,148,305 9,313 B. On-balance sheet liabilities 166,858,562 31,033,131 8,352,412 10,506,941 9,870,694 4,261,399 8,716,131 59,620,953 18,142,373 212,034 B.1. Deposits and current accounts 158,947,290 480,627 277,277 324,553 199,188 722,138 274,398 35,556 97,766 - - Banks 2,465,346 460,494 259,986 319,988 187,497 717,300 272,230 - - - - Customers 156,481,944 20,133 17,291 4,565 11,691 4,838 2,168 35,556 97,766 - B.2 Debt securities 79,372 97,078 962,188 3,062,758 1,054,172 1,901,710 5,153,836 23,706,775 15,035,724 212,034 B.3 Other liabilities 7,831,900 30,455,426 7,112,947 7,119,630 8,617,334 1,637,551 3,287,897 35,878,622 3,008,883 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 31,450 4,346,783 4,275,441 4,117,085 4,585,615 4,910,680 2,263,490 7,400,933 2,360,335 - - Short positions 1 3,337,269 2,448,727 5,142,886 6,484,399 3,395,103 3,092,680 6,852,703 2,002,305 - C.2 Financial derivatives without capital swap - Long positions 3,120,808 226,913 250,431 865,474 1,702,928 2,253,955 3,420,629 - - - - Short positions 3,192,503 320,730 172,780 508,865 1,991,962 1,759,615 3,009,581 - - - C.3 Deposits and loans to be received - Long positions - 18,373,265 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,348 2,119,696 4,517,526 1,363,171 1,582,599 - 124,306 - - C.4 Commitments to disburse funds - Long positions 6,920 945,933 102,375 - 95,280 1,000,062 407,006 2,777,519 1,100 - - Short positions 4,261,195 75,000 - - 1,000,000 - - - - - C.5 Financial guarantees given 96 - 1,406 47,906 2,038 1,257 15,869 36,576 13,997 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 715 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: euro (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 24,029,860 14,932,922 12,001,197 15,026,679 25,843,338 16,880,917 27,713,628 108,815,429 66,017,184 1,903,131 A.1 Government securities 29,032 - 70,579 231,179 563,079 1,383,378 8,628,578 35,367,927 13,410,233 - A.2 Other debt securities 7,046 1,067 8,088 20,694 183,965 116,164 456,011 3,881,986 4,283,479 39,162 A.3 Units in investment funds 1,007,919 - - - - - - - - 17,570 A.4 Loans 22,985,863 14,931,855 11,922,530 14,774,806 25,096,294 15,381,375 18,629,039 69,565,516 48,323,472 1,846,399 - Banks 3,360,551 2,395,017 1,650,355 1,518,650 3,719,431 1,610,327 3,304,157 4,906,672 175,167 1,837,086 - Customers 19,625,312 12,536,838 10,272,175 13,256,156 21,376,863 13,771,048 15,324,882 64,658,844 48,148,305 9,313 B. On-balance sheet liabilities 166,858,562 31,033,131 8,352,412 10,506,941 9,870,694 4,261,399 8,716,131 59,620,953 18,142,373 212,034 B.1. Deposits and current accounts 158,947,290 480,627 277,277 324,553 199,188 722,138 274,398 35,556 97,766 - - Banks 2,465,346 460,494 259,986 319,988 187,497 717,300 272,230 - - - - Customers 156,481,944 20,133 17,291 4,565 11,691 4,838 2,168 35,556 97,766 - B.2 Debt securities 79,372 97,078 962,188 3,062,758 1,054,172 1,901,710 5,153,836 23,706,775 15,035,724 212,034 B.3 Other liabilities 7,831,900 30,455,426 7,112,947 7,119,630 8,617,334 1,637,551 3,287,897 35,878,622 3,008,883 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 31,450 4,346,783 4,275,441 4,117,085 4,585,615 4,910,680 2,263,490 7,400,933 2,360,335 - - Short positions 1 3,337,269 2,448,727 5,142,886 6,484,399 3,395,103 3,092,680 6,852,703 2,002,305 - C.2 Financial derivatives without capital swap - Long positions 3,120,808 226,913 250,431 865,474 1,702,928 2,253,955 3,420,629 - - - - Short positions 3,192,503 320,730 172,780 508,865 1,991,962 1,759,615 3,009,581 - - - C.3 Deposits and loans to be received - Long positions - 18,373,265 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,348 2,119,696 4,517,526 1,363,171 1,582,599 - 124,306 - - C.4 Commitments to disburse funds - Long positions 6,920 945,933 102,375 - 95,280 1,000,062 407,006 2,777,519 1,100 - - Short positions 4,261,195 75,000 - - 1,000,000 - - - - - C.5 Financial guarantees given 96 - 1,406 47,906 2,038 1,257 15,869 36,576 13,997 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 715 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: euro (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 24,029,860 14,932,922 12,001,197 15,026,679 25,843,338 16,880,917 27,713,628 108,815,429 66,017,184 1,903,131 A.1 Government securities 29,032 - 70,579 231,179 563,079 1,383,378 8,628,578 35,367,927 13,410,233 - A.2 Other debt securities 7,046 1,067 8,088 20,694 183,965 116,164 456,011 3,881,986 4,283,479 39,162 A.3 Units in investment funds 1,007,919 - - - - - - - - 17,570 A.4 Loans 22,985,863 14,931,855 11,922,530 14,774,806 25,096,294 15,381,375 18,629,039 69,565,516 48,323,472 1,846,399 - Banks 3,360,551 2,395,017 1,650,355 1,518,650 3,719,431 1,610,327 3,304,157 4,906,672 175,167 1,837,086 - Customers 19,625,312 12,536,838 10,272,175 13,256,156 21,376,863 13,771,048 15,324,882 64,658,844 48,148,305 9,313 B. On-balance sheet liabilities 166,858,562 31,033,131 8,352,412 10,506,941 9,870,694 4,261,399 8,716,131 59,620,953 18,142,373 212,034 B.1. Deposits and current accounts 158,947,290 480,627 277,277 324,553 199,188 722,138 274,398 35,556 97,766 - - Banks 2,465,346 460,494 259,986 319,988 187,497 717,300 272,230 - - - - Customers 156,481,944 20,133 17,291 4,565 11,691 4,838 2,168 35,556 97,766 - B.2 Debt securities 79,372 97,078 962,188 3,062,758 1,054,172 1,901,710 5,153,836 23,706,775 15,035,724 212,034 B.3 Other liabilities 7,831,900 30,455,426 7,112,947 7,119,630 8,617,334 1,637,551 3,287,897 35,878,622 3,008,883 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 31,450 4,346,783 4,275,441 4,117,085 4,585,615 4,910,680 2,263,490 7,400,933 2,360,335 - - Short positions 1 3,337,269 2,448,727 5,142,886 6,484,399 3,395,103 3,092,680 6,852,703 2,002,305 - C.2 Financial derivatives without capital swap - Long positions 3,120,808 226,913 250,431 865,474 1,702,928 2,253,955 3,420,629 - - - - Short positions 3,192,503 320,730 172,780 508,865 1,991,962 1,759,615 3,009,581 - - - C.3 Deposits and loans to be received - Long positions - 18,373,265 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,348 2,119,696 4,517,526 1,363,171 1,582,599 - 124,306 - - C.4 Commitments to disburse funds - Long positions 6,920 945,933 102,375 - 95,280 1,000,062 407,006 2,777,519 1,100 - - Short positions 4,261,195 75,000 - - 1,000,000 - - - - - C.5 Financial guarantees given 96 - 1,406 47,906 2,038 1,257 15,869 36,576 13,997 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 715 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: euro (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 24,029,860 14,932,922 12,001,197 15,026,679 25,843,338 16,880,917 27,713,628 108,815,429 66,017,184 1,903,131 A.1 Government securities 29,032 - 70,579 231,179 563,079 1,383,378 8,628,578 35,367,927 13,410,233 - A.2 Other debt securities 7,046 1,067 8,088 20,694 183,965 116,164 456,011 3,881,986 4,283,479 39,162 A.3 Units in investment funds 1,007,919 - - - - - - - - 17,570 A.4 Loans 22,985,863 14,931,855 11,922,530 14,774,806 25,096,294 15,381,375 18,629,039 69,565,516 48,323,472 1,846,399 - Banks 3,360,551 2,395,017 1,650,355 1,518,650 3,719,431 1,610,327 3,304,157 4,906,672 175,167 1,837,086 - Customers 19,625,312 12,536,838 10,272,175 13,256,156 21,376,863 13,771,048 15,324,882 64,658,844 48,148,305 9,313 B. On-balance sheet liabilities 166,858,562 31,033,131 8,352,412 10,506,941 9,870,694 4,261,399 8,716,131 59,620,953 18,142,373 212,034 B.1. Deposits and current accounts 158,947,290 480,627 277,277 324,553 199,188 722,138 274,398 35,556 97,766 - - Banks 2,465,346 460,494 259,986 319,988 187,497 717,300 272,230 - - - - Customers 156,481,944 20,133 17,291 4,565 11,691 4,838 2,168 35,556 97,766 - B.2 Debt securities 79,372 97,078 962,188 3,062,758 1,054,172 1,901,710 5,153,836 23,706,775 15,035,724 212,034 B.3 Other liabilities 7,831,900 30,455,426 7,112,947 7,119,630 8,617,334 1,637,551 3,287,897 35,878,622 3,008,883 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 31,450 4,346,783 4,275,441 4,117,085 4,585,615 4,910,680 2,263,490 7,400,933 2,360,335 - - Short positions 1 3,337,269 2,448,727 5,142,886 6,484,399 3,395,103 3,092,680 6,852,703 2,002,305 - C.2 Financial derivatives without capital swap - Long positions 3,120,808 226,913 250,431 865,474 1,702,928 2,253,955 3,420,629 - - - - Short positions 3,192,503 320,730 172,780 508,865 1,991,962 1,759,615 3,009,581 - - - C.3 Deposits and loans to be received - Long positions - 18,373,265 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,348 2,119,696 4,517,526 1,363,171 1,582,599 - 124,306 - - C.4 Commitments to disburse funds - Long positions 6,920 945,933 102,375 - 95,280 1,000,062 407,006 2,777,519 1,100 - - Short positions 4,261,195 75,000 - - 1,000,000 - - - - - C.5 Financial guarantees given 96 - 1,406 47,906 2,038 1,257 15,869 36,576 13,997 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 715 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: euro (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 24,029,860 14,932,922 12,001,197 15,026,679 25,843,338 16,880,917 27,713,628 108,815,429 66,017,184 1,903,131 A.1 Government securities 29,032 - 70,579 231,179 563,079 1,383,378 8,628,578 35,367,927 13,410,233 - A.2 Other debt securities 7,046 1,067 8,088 20,694 183,965 116,164 456,011 3,881,986 4,283,479 39,162 A.3 Units in investment funds 1,007,919 - - - - - - - - 17,570 A.4 Loans 22,985,863 14,931,855 11,922,530 14,774,806 25,096,294 15,381,375 18,629,039 69,565,516 48,323,472 1,846,399 - Banks 3,360,551 2,395,017 1,650,355 1,518,650 3,719,431 1,610,327 3,304,157 4,906,672 175,167 1,837,086 - Customers 19,625,312 12,536,838 10,272,175 13,256,156 21,376,863 13,771,048 15,324,882 64,658,844 48,148,305 9,313 B. On-balance sheet liabilities 166,858,562 31,033,131 8,352,412 10,506,941 9,870,694 4,261,399 8,716,131 59,620,953 18,142,373 212,034 B.1. Deposits and current accounts 158,947,290 480,627 277,277 324,553 199,188 722,138 274,398 35,556 97,766 - - Banks 2,465,346 460,494 259,986 319,988 187,497 717,300 272,230 - - - - Customers 156,481,944 20,133 17,291 4,565 11,691 4,838 2,168 35,556 97,766 - B.2 Debt securities 79,372 97,078 962,188 3,062,758 1,054,172 1,901,710 5,153,836 23,706,775 15,035,724 212,034 B.3 Other liabilities 7,831,900 30,455,426 7,112,947 7,119,630 8,617,334 1,637,551 3,287,897 35,878,622 3,008,883 - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 31,450 4,346,783 4,275,441 4,117,085 4,585,615 4,910,680 2,263,490 7,400,933 2,360,335 - - Short positions 1 3,337,269 2,448,727 5,142,886 6,484,399 3,395,103 3,092,680 6,852,703 2,002,305 - C.2 Financial derivatives without capital swap - Long positions 3,120,808 226,913 250,431 865,474 1,702,928 2,253,955 3,420,629 - - - - Short positions 3,192,503 320,730 172,780 508,865 1,991,962 1,759,615 3,009,581 - - - C.3 Deposits and loans to be received - Long positions - 18,373,265 - - 54,538 315,537 124,306 - - - - Short positions - 9,160,348 2,119,696 4,517,526 1,363,171 1,582,599 - 124,306 - - C.4 Commitments to disburse funds - Long positions 6,920 945,933 102,375 - 95,280 1,000,062 407,006 2,777,519 1,100 - - Short positions 4,261,195 75,000 - - 1,000,000 - - - - - C.5 Financial guarantees given 96 - 1,406 47,906 2,038 1,257 15,869 36,576 13,997 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 716 2018 Annual Report and Accounts · UniCredit 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: other currencies (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 1,179,924 476,431 360,491 1,393,823 1,574,265 1,101,197 836,887 6,294,713 2,476,285 8,830 A.1 Government securities 2,509 - 1,301 - 339 7,014 48,828 2,396,816 338,559 - A.2 Other debt securities 6 - 6,874 - 1,214 16,586 15,702 17,471 698,157 8,830 A.3 Units in investment funds 60,490 - - - - - - - - - A.4 Loans 1,116,919 476,431 352,316 1,393,823 1,572,712 1,077,597 772,357 3,880,426 1,439,569 - - Banks 740,008 135,183 42,149 695,878 547,432 421,808 152,814 1,104,925 420,000 - - Customers 376,911 341,248 310,167 697,945 1,025,280 655,789 619,543 2,775,501 1,019,569 - B. On-balance sheet liabilities 4,163,943 756,464 1,091,085 1,707,804 764,121 438,362 709,150 4,898,151 1,524,194 - B.1. Deposits and current accounts 3,546,052 743,239 869,207 1,497,036 703,815 214,845 68,260 - - - - Banks 1,268,721 575,279 793,510 1,456,965 652,294 184,161 62,340 - - - - Customers 2,277,331 167,960 75,697 40,071 51,521 30,684 5,920 - - - B.2 Debt securities 170 13,223 13,064 39,344 5,941 172,851 179,116 4,581,026 1,524,194 - B.3 Other liabilities 617,721 2 208,814 171,424 54,365 50,666 461,774 317,125 - - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 1 2,551,293 2,770,047 5,490,304 7,701,326 6,801,016 6,045,197 11,317,575 3,438,487 - - Short positions 31,309 4,177,012 4,625,785 4,298,166 5,344,594 7,625,137 4,098,148 11,741,452 3,501,908 - C.2 Financial derivatives without capital swap - Long positions 557,584 18,965 163,563 238,588 756,880 1,368,179 1,915,951 - - - - Short positions 542,625 23,799 220,090 229,639 1,020,299 1,113,496 1,887,857 - - - C.3 Deposits and loans to be received - Long positions 18,554 50,083 - - - - - - - - - Short positions - 6,729 3,731 7,231 50,946 - - - - - C.4 Commitments to disburse funds - Long positions - 3,364 - 3,129 57,776 25,982 - - - - - Short positions - 90,250 - - - - - - - - C.5 Financial guarantees given - - - 662 1,279 1,142 659 12,549 452 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Section 5 - Operational risk Qualitative information A. General aspects, operational processes and methods for measuring operational risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks - Qualitative information - A. General aspects - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Risks arising from legal disputes Reference is made to the content of paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational Risks - Qualitative information - B. Legal Risks - Part E of the Consolidated explanatory notes, particularly relating to the parent company UniCredit S.p.A., which is herewith quoted entirely. C. Risks arising from employment law cases Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 1.5 Operational Risks - Qualitative information - C. Risks arising from employment law cases - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. D. Risks arising from tax disputes Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risk - Qualitative information - D. Risks arising from tax disputes - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 716 2018 Annual Report and Accounts · UniCredit 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: other currencies (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 1,179,924 476,431 360,491 1,393,823 1,574,265 1,101,197 836,887 6,294,713 2,476,285 8,830 A.1 Government securities 2,509 - 1,301 - 339 7,014 48,828 2,396,816 338,559 - A.2 Other debt securities 6 - 6,874 - 1,214 16,586 15,702 17,471 698,157 8,830 A.3 Units in investment funds 60,490 - - - - - - - - - A.4 Loans 1,116,919 476,431 352,316 1,393,823 1,572,712 1,077,597 772,357 3,880,426 1,439,569 - - Banks 740,008 135,183 42,149 695,878 547,432 421,808 152,814 1,104,925 420,000 - - Customers 376,911 341,248 310,167 697,945 1,025,280 655,789 619,543 2,775,501 1,019,569 - B. On-balance sheet liabilities 4,163,943 756,464 1,091,085 1,707,804 764,121 438,362 709,150 4,898,151 1,524,194 - B.1. Deposits and current accounts 3,546,052 743,239 869,207 1,497,036 703,815 214,845 68,260 - - - - Banks 1,268,721 575,279 793,510 1,456,965 652,294 184,161 62,340 - - - - Customers 2,277,331 167,960 75,697 40,071 51,521 30,684 5,920 - - - B.2 Debt securities 170 13,223 13,064 39,344 5,941 172,851 179,116 4,581,026 1,524,194 - B.3 Other liabilities 617,721 2 208,814 171,424 54,365 50,666 461,774 317,125 - - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 1 2,551,293 2,770,047 5,490,304 7,701,326 6,801,016 6,045,197 11,317,575 3,438,487 - - Short positions 31,309 4,177,012 4,625,785 4,298,166 5,344,594 7,625,137 4,098,148 11,741,452 3,501,908 - C.2 Financial derivatives without capital swap - Long positions 557,584 18,965 163,563 238,588 756,880 1,368,179 1,915,951 - - - - Short positions 542,625 23,799 220,090 229,639 1,020,299 1,113,496 1,887,857 - - - C.3 Deposits and loans to be received - Long positions 18,554 50,083 - - - - - - - - - Short positions - 6,729 3,731 7,231 50,946 - - - - - C.4 Commitments to disburse funds - Long positions - 3,364 - 3,129 57,776 25,982 - - - - - Short positions - 90,250 - - - - - - - - C.5 Financial guarantees given - - - 662 1,279 1,142 659 12,549 452 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Section 5 - Operational risk Qualitative information A. General aspects, operational processes and methods for measuring operational risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks - Qualitative information - A. General aspects - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Risks arising from legal disputes Reference is made to the content of paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational Risks - Qualitative information - B. Legal Risks - Part E of the Consolidated explanatory notes, particularly relating to the parent company UniCredit S.p.A., which is herewith quoted entirely. C. Risks arising from employment law cases Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 1.5 Operational Risks - Qualitative information - C. Risks arising from employment law cases - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. D. Risks arising from tax disputes Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risk - Qualitative information - D. Risks arising from tax disputes - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 716 2018 Annual Report and Accounts · UniCredit 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: other currencies (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 1,179,924 476,431 360,491 1,393,823 1,574,265 1,101,197 836,887 6,294,713 2,476,285 8,830 A.1 Government securities 2,509 - 1,301 - 339 7,014 48,828 2,396,816 338,559 - A.2 Other debt securities 6 - 6,874 - 1,214 16,586 15,702 17,471 698,157 8,830 A.3 Units in investment funds 60,490 - - - - - - - - - A.4 Loans 1,116,919 476,431 352,316 1,393,823 1,572,712 1,077,597 772,357 3,880,426 1,439,569 - - Banks 740,008 135,183 42,149 695,878 547,432 421,808 152,814 1,104,925 420,000 - - Customers 376,911 341,248 310,167 697,945 1,025,280 655,789 619,543 2,775,501 1,019,569 - B. On-balance sheet liabilities 4,163,943 756,464 1,091,085 1,707,804 764,121 438,362 709,150 4,898,151 1,524,194 - B.1. Deposits and current accounts 3,546,052 743,239 869,207 1,497,036 703,815 214,845 68,260 - - - - Banks 1,268,721 575,279 793,510 1,456,965 652,294 184,161 62,340 - - - - Customers 2,277,331 167,960 75,697 40,071 51,521 30,684 5,920 - - - B.2 Debt securities 170 13,223 13,064 39,344 5,941 172,851 179,116 4,581,026 1,524,194 - B.3 Other liabilities 617,721 2 208,814 171,424 54,365 50,666 461,774 317,125 - - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 1 2,551,293 2,770,047 5,490,304 7,701,326 6,801,016 6,045,197 11,317,575 3,438,487 - - Short positions 31,309 4,177,012 4,625,785 4,298,166 5,344,594 7,625,137 4,098,148 11,741,452 3,501,908 - C.2 Financial derivatives without capital swap - Long positions 557,584 18,965 163,563 238,588 756,880 1,368,179 1,915,951 - - - - Short positions 542,625 23,799 220,090 229,639 1,020,299 1,113,496 1,887,857 - - - C.3 Deposits and loans to be received - Long positions 18,554 50,083 - - - - - - - - - Short positions - 6,729 3,731 7,231 50,946 - - - - - C.4 Commitments to disburse funds - Long positions - 3,364 - 3,129 57,776 25,982 - - - - - Short positions - 90,250 - - - - - - - - C.5 Financial guarantees given - - - 662 1,279 1,142 659 12,549 452 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Section 5 - Operational risk Qualitative information A. General aspects, operational processes and methods for measuring operational risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks - Qualitative information - A. General aspects - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Risks arising from legal disputes Reference is made to the content of paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational Risks - Qualitative information - B. Legal Risks - Part E of the Consolidated explanatory notes, particularly relating to the parent company UniCredit S.p.A., which is herewith quoted entirely. C. Risks arising from employment law cases Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 1.5 Operational Risks - Qualitative information - C. Risks arising from employment law cases - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. D. Risks arising from tax disputes Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risk - Qualitative information - D. Risks arising from tax disputes - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 716 2018 Annual Report and Accounts · UniCredit 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: other currencies (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 1,179,924 476,431 360,491 1,393,823 1,574,265 1,101,197 836,887 6,294,713 2,476,285 8,830 A.1 Government securities 2,509 - 1,301 - 339 7,014 48,828 2,396,816 338,559 - A.2 Other debt securities 6 - 6,874 - 1,214 16,586 15,702 17,471 698,157 8,830 A.3 Units in investment funds 60,490 - - - - - - - - - A.4 Loans 1,116,919 476,431 352,316 1,393,823 1,572,712 1,077,597 772,357 3,880,426 1,439,569 - - Banks 740,008 135,183 42,149 695,878 547,432 421,808 152,814 1,104,925 420,000 - - Customers 376,911 341,248 310,167 697,945 1,025,280 655,789 619,543 2,775,501 1,019,569 - B. On-balance sheet liabilities 4,163,943 756,464 1,091,085 1,707,804 764,121 438,362 709,150 4,898,151 1,524,194 - B.1. Deposits and current accounts 3,546,052 743,239 869,207 1,497,036 703,815 214,845 68,260 - - - - Banks 1,268,721 575,279 793,510 1,456,965 652,294 184,161 62,340 - - - - Customers 2,277,331 167,960 75,697 40,071 51,521 30,684 5,920 - - - B.2 Debt securities 170 13,223 13,064 39,344 5,941 172,851 179,116 4,581,026 1,524,194 - B.3 Other liabilities 617,721 2 208,814 171,424 54,365 50,666 461,774 317,125 - - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 1 2,551,293 2,770,047 5,490,304 7,701,326 6,801,016 6,045,197 11,317,575 3,438,487 - - Short positions 31,309 4,177,012 4,625,785 4,298,166 5,344,594 7,625,137 4,098,148 11,741,452 3,501,908 - C.2 Financial derivatives without capital swap - Long positions 557,584 18,965 163,563 238,588 756,880 1,368,179 1,915,951 - - - - Short positions 542,625 23,799 220,090 229,639 1,020,299 1,113,496 1,887,857 - - - C.3 Deposits and loans to be received - Long positions 18,554 50,083 - - - - - - - - - Short positions - 6,729 3,731 7,231 50,946 - - - - - C.4 Commitments to disburse funds - Long positions - 3,364 - 3,129 57,776 25,982 - - - - - Short positions - 90,250 - - - - - - - - C.5 Financial guarantees given - - - 662 1,279 1,142 659 12,549 452 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Section 5 - Operational risk Qualitative information A. General aspects, operational processes and methods for measuring operational risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks - Qualitative information - A. General aspects - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Risks arising from legal disputes Reference is made to the content of paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational Risks - Qualitative information - B. Legal Risks - Part E of the Consolidated explanatory notes, particularly relating to the parent company UniCredit S.p.A., which is herewith quoted entirely. C. Risks arising from employment law cases Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 1.5 Operational Risks - Qualitative information - C. Risks arising from employment law cases - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. D. Risks arising from tax disputes Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risk - Qualitative information - D. Risks arising from tax disputes - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 716 2018 Annual Report and Accounts · UniCredit 1. Time breakdown by contractual residual maturity of financial assets and liabilities - Currency: other currencies (€ '000) ITEMS/MATURITY AMOUNT AS AT 12.31.2018 ON DEMAND 1 TO 7 DAYS 7 TO 15 DAYS 15 DAYS TO ONE MONTH 1 TO 3 MONTHS 3 TO 6 MONTHS 6 MONTHS TO 1 YEAR 1 TO 5 YEARS OVER 5 YEARS INDEFINITE MATURITY A. On-balance sheet assets 1,179,924 476,431 360,491 1,393,823 1,574,265 1,101,197 836,887 6,294,713 2,476,285 8,830 A.1 Government securities 2,509 - 1,301 - 339 7,014 48,828 2,396,816 338,559 - A.2 Other debt securities 6 - 6,874 - 1,214 16,586 15,702 17,471 698,157 8,830 A.3 Units in investment funds 60,490 - - - - - - - - - A.4 Loans 1,116,919 476,431 352,316 1,393,823 1,572,712 1,077,597 772,357 3,880,426 1,439,569 - - Banks 740,008 135,183 42,149 695,878 547,432 421,808 152,814 1,104,925 420,000 - - Customers 376,911 341,248 310,167 697,945 1,025,280 655,789 619,543 2,775,501 1,019,569 - B. On-balance sheet liabilities 4,163,943 756,464 1,091,085 1,707,804 764,121 438,362 709,150 4,898,151 1,524,194 - B.1. Deposits and current accounts 3,546,052 743,239 869,207 1,497,036 703,815 214,845 68,260 - - - - Banks 1,268,721 575,279 793,510 1,456,965 652,294 184,161 62,340 - - - - Customers 2,277,331 167,960 75,697 40,071 51,521 30,684 5,920 - - - B.2 Debt securities 170 13,223 13,064 39,344 5,941 172,851 179,116 4,581,026 1,524,194 - B.3 Other liabilities 617,721 2 208,814 171,424 54,365 50,666 461,774 317,125 - - C. Off-balance sheet transactions C.1 Financial derivatives with capital swap - Long positions 1 2,551,293 2,770,047 5,490,304 7,701,326 6,801,016 6,045,197 11,317,575 3,438,487 - - Short positions 31,309 4,177,012 4,625,785 4,298,166 5,344,594 7,625,137 4,098,148 11,741,452 3,501,908 - C.2 Financial derivatives without capital swap - Long positions 557,584 18,965 163,563 238,588 756,880 1,368,179 1,915,951 - - - - Short positions 542,625 23,799 220,090 229,639 1,020,299 1,113,496 1,887,857 - - - C.3 Deposits and loans to be received - Long positions 18,554 50,083 - - - - - - - - - Short positions - 6,729 3,731 7,231 50,946 - - - - - C.4 Commitments to disburse funds - Long positions - 3,364 - 3,129 57,776 25,982 - - - - - Short positions - 90,250 - - - - - - - - C.5 Financial guarantees given - - - 662 1,279 1,142 659 12,549 452 - C.6 Financial guarantees received - - - - - - - - - - C.7 Credit derivatives with capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - C.8 Credit derivatives without capital swap - Long positions - - - - - - - - - - - Short positions - - - - - - - - - - Section 5 - Operational risk Qualitative information A. General aspects, operational processes and methods for measuring operational risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks - Qualitative information - A. General aspects - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. B. Risks arising from legal disputes Reference is made to the content of paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational Risks - Qualitative information - B. Legal Risks - Part E of the Consolidated explanatory notes, particularly relating to the parent company UniCredit S.p.A., which is herewith quoted entirely. C. Risks arising from employment law cases Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 1.5 Operational Risks - Qualitative information - C. Risks arising from employment law cases - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. D. Risks arising from tax disputes Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risk - Qualitative information - D. Risks arising from tax disputes - Part E of the Consolidated explanatory notes, which is herewith quoted entirely. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 717 E. Other claims by customers Supporting the business structures, the Compliance function oversees the regulatory environment evolution relating to banking services and products in areas like transparency, financial and investment services and anti-usury. Compliance, as control function, develops rules, checks processes and procedures and monitors complaints trends. The Compliance function, along with the Legal one, also supports analysis and evaluation stages of adequacy of potential "customer care" actions or other initiatives designed to compose particular situations in which UniCredit S.p.A. might be involved in order to define them. Considering the regulatory complexity and interpretations not always homogeneous, UniCredit S.p.A. time-to-time assesses the accounting of provisions for risk and charges, aimed at facing costs, deemed probable, in a contest that has increased the litigiousness at baking system level. The trend in market interest rates resulted in the main benchmark reference for indexed loans, the Euribor, being negative. This has originated the issue of how to measure the overall interest rate for the clients, creating a fact pattern not existing so far. In light of such complexity, the underlying contracts with clients were subject to a deep monitoring. In this regard, and in compliance with the regulations in force, UniCredit S.p.A. takes the necessary initiatives deciding to apply the most favorable approach for the clients for the past years too, applying a final interest rate calculated as algebraic sum of the parameter (Euribor) and the spread and also allocating a provision for the reimbursement to the clients defined on the basis of the best estimation considering the available information. Diamond offer Over the years, within the diversification of investments to which the available assets are addressed and also considering in this context those investments with the characteristics of the so-called "safe haven" with a long-term horizon, several UniCredit S.p.A.’s customers have historically invested in diamonds through a specialised intermediary company, with which the Bank has stipulated, since 1998, a collaboration agreement as "Introducer", in order to regulate the "reporting” methods of the offer of diamonds by the same company to UniCredit customers. Since the end of 2016, the liquidity available on the market to meet the requests of customers who intended to divest their diamond assets has contracted to a certain extent until it became nil, with the suspension of the service by the brokerage company. In 2017 UniCredit S.p.A. started a "customer care" initiative which envisaged the availability of the Bank to intervene for the acknowledgement towards the customer of the original cost incurred for the purchase of precious items and the consequent withdrawal of the stones, upon certain conditions. The initiative has been adopted assessing the absence of responsibility for its role as "Introducer"; nevertheless, the AGCM ascertained UniCredit’s responsibility for unfair commercial practice (confirmed in appeal by the Administrative Regional Court in the second half of 2018), imposing, in 2017, a fine of €4 million paid in the same year. On 8 March 2018, a specific communication was issued from Banca d’Italia concerning the "Related activities exercisable by banks", in which large attention was given to the reporting at the bank branches of operations, purchase and sale of diamonds by specialised third-party companies. As of 31 December 2018, UniCredit: • received reimbursement requests for a total amount of about €215 million (cost originally incurred by the Clients) from No.5,680 Customers; according to a preliminary analysis, such requests fulfill the requirements envisaged by the "customer care” initiative; the finalization of the reimbursement requests is currently carried out, aimed at assessing their effective compliance with the “customer care” initiative, and then proceed with the settlement where conditions recur; • with reference to the scope outlined in the previous point (€215 million), reimbursed No.1,623 customers for about €74 million (equivalent value of original purchases). In order to cope with the probable risks of loss related to the repurchases of diamonds, a dedicated Risk and Charges Fund was set up; its quantification was also based on the outcome of an independent study (commissioned to a primary third company) aiming at evaluating the diamonds’ value. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 717 E. Other claims by customers Supporting the business structures, the Compliance function oversees the regulatory environment evolution relating to banking services and products in areas like transparency, financial and investment services and anti-usury. Compliance, as control function, develops rules, checks processes and procedures and monitors complaints trends. The Compliance function, along with the Legal one, also supports analysis and evaluation stages of adequacy of potential "customer care" actions or other initiatives designed to compose particular situations in which UniCredit S.p.A. might be involved in order to define them. Considering the regulatory complexity and interpretations not always homogeneous, UniCredit S.p.A. time-to-time assesses the accounting of provisions for risk and charges, aimed at facing costs, deemed probable, in a contest that has increased the litigiousness at baking system level. The trend in market interest rates resulted in the main benchmark reference for indexed loans, the Euribor, being negative. This has originated the issue of how to measure the overall interest rate for the clients, creating a fact pattern not existing so far. In light of such complexity, the underlying contracts with clients were subject to a deep monitoring. In this regard, and in compliance with the regulations in force, UniCredit S.p.A. takes the necessary initiatives deciding to apply the most favorable approach for the clients for the past years too, applying a final interest rate calculated as algebraic sum of the parameter (Euribor) and the spread and also allocating a provision for the reimbursement to the clients defined on the basis of the best estimation considering the available information. Diamond offer Over the years, within the diversification of investments to which the available assets are addressed and also considering in this context those investments with the characteristics of the so-called "safe haven" with a long-term horizon, several UniCredit S.p.A.’s customers have historically invested in diamonds through a specialised intermediary company, with which the Bank has stipulated, since 1998, a collaboration agreement as "Introducer", in order to regulate the "reporting” methods of the offer of diamonds by the same company to UniCredit customers. Since the end of 2016, the liquidity available on the market to meet the requests of customers who intended to divest their diamond assets has contracted to a certain extent until it became nil, with the suspension of the service by the brokerage company. In 2017 UniCredit S.p.A. started a "customer care" initiative which envisaged the availability of the Bank to intervene for the acknowledgement towards the customer of the original cost incurred for the purchase of precious items and the consequent withdrawal of the stones, upon certain conditions. The initiative has been adopted assessing the absence of responsibility for its role as "Introducer"; nevertheless, the AGCM ascertained UniCredit’s responsibility for unfair commercial practice (confirmed in appeal by the Administrative Regional Court in the second half of 2018), imposing, in 2017, a fine of €4 million paid in the same year. On 8 March 2018, a specific communication was issued from Banca d’Italia concerning the "Related activities exercisable by banks", in which large attention was given to the reporting at the bank branches of operations, purchase and sale of diamonds by specialised third-party companies. As of 31 December 2018, UniCredit: • received reimbursement requests for a total amount of about €215 million (cost originally incurred by the Clients) from No.5,680 Customers; according to a preliminary analysis, such requests fulfill the requirements envisaged by the "customer care” initiative; the finalization of the reimbursement requests is currently carried out, aimed at assessing their effective compliance with the “customer care” initiative, and then proceed with the settlement where conditions recur; • with reference to the scope outlined in the previous point (€215 million), reimbursed No.1,623 customers for about €74 million (equivalent value of original purchases). In order to cope with the probable risks of loss related to the repurchases of diamonds, a dedicated Risk and Charges Fund was set up; its quantification was also based on the outcome of an independent study (commissioned to a primary third company) aiming at evaluating the diamonds’ value. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 717 E. Other claims by customers Supporting the business structures, the Compliance function oversees the regulatory environment evolution relating to banking services and products in areas like transparency, financial and investment services and anti-usury. Compliance, as control function, develops rules, checks processes and procedures and monitors complaints trends. The Compliance function, along with the Legal one, also supports analysis and evaluation stages of adequacy of potential "customer care" actions or other initiatives designed to compose particular situations in which UniCredit S.p.A. might be involved in order to define them. Considering the regulatory complexity and interpretations not always homogeneous, UniCredit S.p.A. time-to-time assesses the accounting of provisions for risk and charges, aimed at facing costs, deemed probable, in a contest that has increased the litigiousness at baking system level. The trend in market interest rates resulted in the main benchmark reference for indexed loans, the Euribor, being negative. This has originated the issue of how to measure the overall interest rate for the clients, creating a fact pattern not existing so far. In light of such complexity, the underlying contracts with clients were subject to a deep monitoring. In this regard, and in compliance with the regulations in force, UniCredit S.p.A. takes the necessary initiatives deciding to apply the most favorable approach for the clients for the past years too, applying a final interest rate calculated as algebraic sum of the parameter (Euribor) and the spread and also allocating a provision for the reimbursement to the clients defined on the basis of the best estimation considering the available information. Diamond offer Over the years, within the diversification of investments to which the available assets are addressed and also considering in this context those investments with the characteristics of the so-called "safe haven" with a long-term horizon, several UniCredit S.p.A.’s customers have historically invested in diamonds through a specialised intermediary company, with which the Bank has stipulated, since 1998, a collaboration agreement as "Introducer", in order to regulate the "reporting” methods of the offer of diamonds by the same company to UniCredit customers. Since the end of 2016, the liquidity available on the market to meet the requests of customers who intended to divest their diamond assets has contracted to a certain extent until it became nil, with the suspension of the service by the brokerage company. In 2017 UniCredit S.p.A. started a "customer care" initiative which envisaged the availability of the Bank to intervene for the acknowledgement towards the customer of the original cost incurred for the purchase of precious items and the consequent withdrawal of the stones, upon certain conditions. The initiative has been adopted assessing the absence of responsibility for its role as "Introducer"; nevertheless, the AGCM ascertained UniCredit’s responsibility for unfair commercial practice (confirmed in appeal by the Administrative Regional Court in the second half of 2018), imposing, in 2017, a fine of €4 million paid in the same year. On 8 March 2018, a specific communication was issued from Banca d’Italia concerning the "Related activities exercisable by banks", in which large attention was given to the reporting at the bank branches of operations, purchase and sale of diamonds by specialised third-party companies. As of 31 December 2018, UniCredit: • received reimbursement requests for a total amount of about €215 million (cost originally incurred by the Clients) from No.5,680 Customers; according to a preliminary analysis, such requests fulfill the requirements envisaged by the "customer care” initiative; the finalization of the reimbursement requests is currently carried out, aimed at assessing their effective compliance with the “customer care” initiative, and then proceed with the settlement where conditions recur; • with reference to the scope outlined in the previous point (€215 million), reimbursed No.1,623 customers for about €74 million (equivalent value of original purchases). In order to cope with the probable risks of loss related to the repurchases of diamonds, a dedicated Risk and Charges Fund was set up; its quantification was also based on the outcome of an independent study (commissioned to a primary third company) aiming at evaluating the diamonds’ value. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 717 E. Other claims by customers Supporting the business structures, the Compliance function oversees the regulatory environment evolution relating to banking services and products in areas like transparency, financial and investment services and anti-usury. Compliance, as control function, develops rules, checks processes and procedures and monitors complaints trends. The Compliance function, along with the Legal one, also supports analysis and evaluation stages of adequacy of potential "customer care" actions or other initiatives designed to compose particular situations in which UniCredit S.p.A. might be involved in order to define them. Considering the regulatory complexity and interpretations not always homogeneous, UniCredit S.p.A. time-to-time assesses the accounting of provisions for risk and charges, aimed at facing costs, deemed probable, in a contest that has increased the litigiousness at baking system level. The trend in market interest rates resulted in the main benchmark reference for indexed loans, the Euribor, being negative. This has originated the issue of how to measure the overall interest rate for the clients, creating a fact pattern not existing so far. In light of such complexity, the underlying contracts with clients were subject to a deep monitoring. In this regard, and in compliance with the regulations in force, UniCredit S.p.A. takes the necessary initiatives deciding to apply the most favorable approach for the clients for the past years too, applying a final interest rate calculated as algebraic sum of the parameter (Euribor) and the spread and also allocating a provision for the reimbursement to the clients defined on the basis of the best estimation considering the available information. Diamond offer Over the years, within the diversification of investments to which the available assets are addressed and also considering in this context those investments with the characteristics of the so-called "safe haven" with a long-term horizon, several UniCredit S.p.A.’s customers have historically invested in diamonds through a specialised intermediary company, with which the Bank has stipulated, since 1998, a collaboration agreement as "Introducer", in order to regulate the "reporting” methods of the offer of diamonds by the same company to UniCredit customers. Since the end of 2016, the liquidity available on the market to meet the requests of customers who intended to divest their diamond assets has contracted to a certain extent until it became nil, with the suspension of the service by the brokerage company. In 2017 UniCredit S.p.A. started a "customer care" initiative which envisaged the availability of the Bank to intervene for the acknowledgement towards the customer of the original cost incurred for the purchase of precious items and the consequent withdrawal of the stones, upon certain conditions. The initiative has been adopted assessing the absence of responsibility for its role as "Introducer"; nevertheless, the AGCM ascertained UniCredit’s responsibility for unfair commercial practice (confirmed in appeal by the Administrative Regional Court in the second half of 2018), imposing, in 2017, a fine of €4 million paid in the same year. On 8 March 2018, a specific communication was issued from Banca d’Italia concerning the "Related activities exercisable by banks", in which large attention was given to the reporting at the bank branches of operations, purchase and sale of diamonds by specialised third-party companies. As of 31 December 2018, UniCredit: • received reimbursement requests for a total amount of about €215 million (cost originally incurred by the Clients) from No.5,680 Customers; according to a preliminary analysis, such requests fulfill the requirements envisaged by the "customer care” initiative; the finalization of the reimbursement requests is currently carried out, aimed at assessing their effective compliance with the “customer care” initiative, and then proceed with the settlement where conditions recur; • with reference to the scope outlined in the previous point (€215 million), reimbursed No.1,623 customers for about €74 million (equivalent value of original purchases). In order to cope with the probable risks of loss related to the repurchases of diamonds, a dedicated Risk and Charges Fund was set up; its quantification was also based on the outcome of an independent study (commissioned to a primary third company) aiming at evaluating the diamonds’ value. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies UniCredit ·2018 Annual Report and Accounts 717 E. Other claims by customers Supporting the business structures, the Compliance function oversees the regulatory environment evolution relating to banking services and products in areas like transparency, financial and investment services and anti-usury. Compliance, as control function, develops rules, checks processes and procedures and monitors complaints trends. The Compliance function, along with the Legal one, also supports analysis and evaluation stages of adequacy of potential "customer care" actions or other initiatives designed to compose particular situations in which UniCredit S.p.A. might be involved in order to define them. Considering the regulatory complexity and interpretations not always homogeneous, UniCredit S.p.A. time-to-time assesses the accounting of provisions for risk and charges, aimed at facing costs, deemed probable, in a contest that has increased the litigiousness at baking system level. The trend in market interest rates resulted in the main benchmark reference for indexed loans, the Euribor, being negative. This has originated the issue of how to measure the overall interest rate for the clients, creating a fact pattern not existing so far. In light of such complexity, the underlying contracts with clients were subject to a deep monitoring. In this regard, and in compliance with the regulations in force, UniCredit S.p.A. takes the necessary initiatives deciding to apply the most favorable approach for the clients for the past years too, applying a final interest rate calculated as algebraic sum of the parameter (Euribor) and the spread and also allocating a provision for the reimbursement to the clients defined on the basis of the best estimation considering the available information. Diamond offer Over the years, within the diversification of investments to which the available assets are addressed and also considering in this context those investments with the characteristics of the so-called "safe haven" with a long-term horizon, several UniCredit S.p.A.’s customers have historically invested in diamonds through a specialised intermediary company, with which the Bank has stipulated, since 1998, a collaboration agreement as "Introducer", in order to regulate the "reporting” methods of the offer of diamonds by the same company to UniCredit customers. Since the end of 2016, the liquidity available on the market to meet the requests of customers who intended to divest their diamond assets has contracted to a certain extent until it became nil, with the suspension of the service by the brokerage company. In 2017 UniCredit S.p.A. started a "customer care" initiative which envisaged the availability of the Bank to intervene for the acknowledgement towards the customer of the original cost incurred for the purchase of precious items and the consequent withdrawal of the stones, upon certain conditions. The initiative has been adopted assessing the absence of responsibility for its role as "Introducer"; nevertheless, the AGCM ascertained UniCredit’s responsibility for unfair commercial practice (confirmed in appeal by the Administrative Regional Court in the second half of 2018), imposing, in 2017, a fine of €4 million paid in the same year. On 8 March 2018, a specific communication was issued from Banca d’Italia concerning the "Related activities exercisable by banks", in which large attention was given to the reporting at the bank branches of operations, purchase and sale of diamonds by specialised third-party companies. As of 31 December 2018, UniCredit: • received reimbursement requests for a total amount of about €215 million (cost originally incurred by the Clients) from No.5,680 Customers; according to a preliminary analysis, such requests fulfill the requirements envisaged by the "customer care” initiative; the finalization of the reimbursement requests is currently carried out, aimed at assessing their effective compliance with the “customer care” initiative, and then proceed with the settlement where conditions recur; • with reference to the scope outlined in the previous point (€215 million), reimbursed No.1,623 customers for about €74 million (equivalent value of original purchases). In order to cope with the probable risks of loss related to the repurchases of diamonds, a dedicated Risk and Charges Fund was set up; its quantification was also based on the outcome of an independent study (commissioned to a primary third company) aiming at evaluating the diamonds’ value. Company financial statements | Notes to the accounts Part E - Information on risks and hedging policies 718 2018 Annual Report and Accounts · UniCredit Quantitative information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks- Quantitative information - Part E of the Notes to the consolidated accounts , which is herewith quoted entirely. In 2018, the main source of operational risk was "Clients, products and business practices”, a category which includes losses arising from the non-fulfillment of professional obligations towards clients or from the nature or characteristics of the products or services provided, as well as any sanctions for violating regulations; in this category the major event is linked to potential losses due to the ongoing American Authorities investigation for alleged violation of US sanctions. The second largest contribution to losses is related to errors in process management, execution and delivery due to operational or process management shortfalls. There were also, in decreasing order, losses stemming from internal fraud, external fraud. The residual risk categories were IT systems related problems and damage to physical assets from external events. Section 6 - Other risks Other risks included in Economic Capital Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks - Other risks included in Economic Capital with specific reference to business risk, real estate risk and financial investments risk which is herewith quoted entirely. Reputational risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.6 Others risks - Reputational risk - Part E of the Consolidated explanatory notes, wich is herewith quoted entirely. Top and emerging risk Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks - Top and emerging risk which is herewith quoted entirely 80.2%8.5%2.2%7.5%0.0%0.2%1.5%Operational losses 2018 divided by risk categoryBusiness practicesProcess executionExternal fraudInternal fraudEmployment practicesMaterial damageIT SystemsCompany financial statements | Notes to the accounts Part E - Information on risks and hedging policies 718 2018 Annual Report and Accounts · UniCredit Quantitative information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks- Quantitative information - Part E of the Notes to the consolidated accounts , which is herewith quoted entirely. In 2018, the main source of operational risk was "Clients, products and business practices”, a category which includes losses arising from the non-fulfillment of professional obligations towards clients or from the nature or characteristics of the products or services provided, as well as any sanctions for violating regulations; in this category the major event is linked to potential losses due to the ongoing American Authorities investigation for alleged violation of US sanctions. The second largest contribution to losses is related to errors in process management, execution and delivery due to operational or process management shortfalls. There were also, in decreasing order, losses stemming from internal fraud, external fraud. The residual risk categories were IT systems related problems and damage to physical assets from external events. Section 6 - Other risks Other risks included in Economic Capital Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks - Other risks included in Economic Capital with specific reference to business risk, real estate risk and financial investments risk which is herewith quoted entirely. Reputational risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.6 Others risks - Reputational risk - Part E of the Consolidated explanatory notes, wich is herewith quoted entirely. Top and emerging risk Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks - Top and emerging risk which is herewith quoted entirely 80.2%8.5%2.2%7.5%0.0%0.2%1.5%Operational losses 2018 divided by risk categoryBusiness practicesProcess executionExternal fraudInternal fraudEmployment practicesMaterial damageIT SystemsCompany financial statements | Notes to the accounts Part E - Information on risks and hedging policies 718 2018 Annual Report and Accounts · UniCredit Quantitative information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks- Quantitative information - Part E of the Notes to the consolidated accounts , which is herewith quoted entirely. In 2018, the main source of operational risk was "Clients, products and business practices”, a category which includes losses arising from the non-fulfillment of professional obligations towards clients or from the nature or characteristics of the products or services provided, as well as any sanctions for violating regulations; in this category the major event is linked to potential losses due to the ongoing American Authorities investigation for alleged violation of US sanctions. The second largest contribution to losses is related to errors in process management, execution and delivery due to operational or process management shortfalls. There were also, in decreasing order, losses stemming from internal fraud, external fraud. The residual risk categories were IT systems related problems and damage to physical assets from external events. Section 6 - Other risks Other risks included in Economic Capital Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks - Other risks included in Economic Capital with specific reference to business risk, real estate risk and financial investments risk which is herewith quoted entirely. Reputational risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.6 Others risks - Reputational risk - Part E of the Consolidated explanatory notes, wich is herewith quoted entirely. Top and emerging risk Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks - Top and emerging risk which is herewith quoted entirely 80.2%8.5%2.2%7.5%0.0%0.2%1.5%Operational losses 2018 divided by risk categoryBusiness practicesProcess executionExternal fraudInternal fraudEmployment practicesMaterial damageIT SystemsCompany financial statements | Notes to the accounts Part E - Information on risks and hedging policies 718 2018 Annual Report and Accounts · UniCredit Quantitative information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks- Quantitative information - Part E of the Notes to the consolidated accounts , which is herewith quoted entirely. In 2018, the main source of operational risk was "Clients, products and business practices”, a category which includes losses arising from the non-fulfillment of professional obligations towards clients or from the nature or characteristics of the products or services provided, as well as any sanctions for violating regulations; in this category the major event is linked to potential losses due to the ongoing American Authorities investigation for alleged violation of US sanctions. The second largest contribution to losses is related to errors in process management, execution and delivery due to operational or process management shortfalls. There were also, in decreasing order, losses stemming from internal fraud, external fraud. The residual risk categories were IT systems related problems and damage to physical assets from external events. Section 6 - Other risks Other risks included in Economic Capital Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks - Other risks included in Economic Capital with specific reference to business risk, real estate risk and financial investments risk which is herewith quoted entirely. Reputational risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.6 Others risks - Reputational risk - Part E of the Consolidated explanatory notes, wich is herewith quoted entirely. Top and emerging risk Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks - Top and emerging risk which is herewith quoted entirely 80.2%8.5%2.2%7.5%0.0%0.2%1.5%Operational losses 2018 divided by risk categoryBusiness practicesProcess executionExternal fraudInternal fraudEmployment practicesMaterial damageIT SystemsCompany financial statements | Notes to the accounts Part E - Information on risks and hedging policies 718 2018 Annual Report and Accounts · UniCredit Quantitative information Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.5 Operational risks- Quantitative information - Part E of the Notes to the consolidated accounts , which is herewith quoted entirely. In 2018, the main source of operational risk was "Clients, products and business practices”, a category which includes losses arising from the non-fulfillment of professional obligations towards clients or from the nature or characteristics of the products or services provided, as well as any sanctions for violating regulations; in this category the major event is linked to potential losses due to the ongoing American Authorities investigation for alleged violation of US sanctions. The second largest contribution to losses is related to errors in process management, execution and delivery due to operational or process management shortfalls. There were also, in decreasing order, losses stemming from internal fraud, external fraud. The residual risk categories were IT systems related problems and damage to physical assets from external events. Section 6 - Other risks Other risks included in Economic Capital Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks - Other risks included in Economic Capital with specific reference to business risk, real estate risk and financial investments risk which is herewith quoted entirely. Reputational risk Reference is made to the paragraph Section 2 - Risk of the prudential consolidated perimeter - 2.6 Others risks - Reputational risk - Part E of the Consolidated explanatory notes, wich is herewith quoted entirely. Top and emerging risk Reference is made to the paragraph of Part E - Notes to the consolidated accounts of UniCredit group - Section 2 - Risk of the prudential consolidated perimeter - 2.6 Other risks - Top and emerging risk which is herewith quoted entirely 80.2%8.5%2.2%7.5%0.0%0.2%1.5%Operational losses 2018 divided by risk categoryBusiness practicesProcess executionExternal fraudInternal fraudEmployment practicesMaterial damageIT SystemsCompany financial statements | Notes to the accounts Part F - Shareholders’ equity UniCredit ·2018 Annual Report and Accounts 719 Part F - Shareholders’ equity Section 1 - Shareholders’ equity A. Qualitative information Reference is made to the corresponding paragraph of Part F - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. B. Quantitative information B.1 Company shareholders' equity: breakdown (€ '000) AMOUNT AS AT ITEMS/VALUES 12.31.2018 12.31.2017 1. Share capital 20,940,398 20,880,550 2. Share premium reserve 13,392,918 13,399,799 3. Reserves 9,939,544 7,798,690 - from profits 5,449,870 2,766,246 a) legal 1,517,514 1,517,514 b) statutory 6,160,551 679,464 c) treasury shares - - d) other (2,228,195) 569,268 - other(*) 4,489,674 5,032,444 4. Equity instruments 4,610,073 4,610,073 5. Treasury shares (2,440) (2,440) 6. Revaluation reserves (502,666) 585,548 - Equity instruments designated at fair value through other comprehensive income (244,279) - Hedge accounting of equity instruments designated at fair value through other comprehensive income - - Financial assets (different from equity instruments) at fair value through other comprehensive income (316,293) - Available-for sale financial assets (ex IAS39) 537,118 - Property, plant and equipment - - - Intangible assets - - - Hedges of foreign investments - - - Cash flow hedges (66,095) (32,301) - Foreign investments hedging - - Exchange differences - - - Non-current assets and disposal groups classified as held for sale - - Non-current assets classified held for sale (ex IAS39) - - Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 41,543 - Actuarial gains (losses) on definited benefit plans (194,562) (196,289) - Changes in valuation reserve pertaining to equity method investments - - - Special revaluation laws 277,020 277,020 7. Net profit (loss) 2,458,163 6,235,645 Total 50,835,990 53,507,865 Note: (*) "Reserves - other" include the "Reserve of treasury shares" (€2 million), originally formed with the withdrawal from the "Share premium reserve", as well as a part of the "Legal reserve" (€2,533 million) also constituted, as resolved by the approval of the OrdinaryShareholders' Meeting of May 11, 2013, and of May 13, 2014 with the withdrawal from the "Share premium Reserve". The Shareholders’ Equity at 31 December 2018, additionally to the changes in capital explained in details in Part B) Section 12 “Shareholders’ Equity”, reflects, among the others described more in details in the Report on Operations in paragraph “Shareholders’ Equity”, the changes resulting from the Ordinary Shareholders’ Meeting resolutions of 12 April 2018 regarding the allocation of profit for the year 2017 of €6,236 million: • distribution to Shareholders holder of ordinary shares a dividend for a total amount of €711 million; • allocation of €4 million to social, charity and cultural initiatives; • allocation of €40 million to the reserve connected to the medium-term incentive plan for Group staff; • allocation 5,481 million to the statutory reserve. Company financial statements | Notes to the accounts Part F - Shareholders’ equity UniCredit ·2018 Annual Report and Accounts 719 Part F - Shareholders’ equity Section 1 - Shareholders’ equity A. Qualitative information Reference is made to the corresponding paragraph of Part F - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. B. Quantitative information B.1 Company shareholders' equity: breakdown (€ '000) AMOUNT AS AT ITEMS/VALUES 12.31.2018 12.31.2017 1. Share capital 20,940,398 20,880,550 2. Share premium reserve 13,392,918 13,399,799 3. Reserves 9,939,544 7,798,690 - from profits 5,449,870 2,766,246 a) legal 1,517,514 1,517,514 b) statutory 6,160,551 679,464 c) treasury shares - - d) other (2,228,195) 569,268 - other(*) 4,489,674 5,032,444 4. Equity instruments 4,610,073 4,610,073 5. Treasury shares (2,440) (2,440) 6. Revaluation reserves (502,666) 585,548 - Equity instruments designated at fair value through other comprehensive income (244,279) - Hedge accounting of equity instruments designated at fair value through other comprehensive income - - Financial assets (different from equity instruments) at fair value through other comprehensive income (316,293) - Available-for sale financial assets (ex IAS39) 537,118 - Property, plant and equipment - - - Intangible assets - - - Hedges of foreign investments - - - Cash flow hedges (66,095) (32,301) - Foreign investments hedging - - Exchange differences - - - Non-current assets and disposal groups classified as held for sale - - Non-current assets classified held for sale (ex IAS39) - - Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 41,543 - Actuarial gains (losses) on definited benefit plans (194,562) (196,289) - Changes in valuation reserve pertaining to equity method investments - - - Special revaluation laws 277,020 277,020 7. Net profit (loss) 2,458,163 6,235,645 Total 50,835,990 53,507,865 Note: (*) "Reserves - other" include the "Reserve of treasury shares" (€2 million), originally formed with the withdrawal from the "Share premium reserve", as well as a part of the "Legal reserve" (€2,533 million) also constituted, as resolved by the approval of the OrdinaryShareholders' Meeting of May 11, 2013, and of May 13, 2014 with the withdrawal from the "Share premium Reserve". The Shareholders’ Equity at 31 December 2018, additionally to the changes in capital explained in details in Part B) Section 12 “Shareholders’ Equity”, reflects, among the others described more in details in the Report on Operations in paragraph “Shareholders’ Equity”, the changes resulting from the Ordinary Shareholders’ Meeting resolutions of 12 April 2018 regarding the allocation of profit for the year 2017 of €6,236 million: • distribution to Shareholders holder of ordinary shares a dividend for a total amount of €711 million; • allocation of €4 million to social, charity and cultural initiatives; • allocation of €40 million to the reserve connected to the medium-term incentive plan for Group staff; • allocation 5,481 million to the statutory reserve. Company financial statements | Notes to the accounts Part F - Shareholders’ equity UniCredit ·2018 Annual Report and Accounts 719 Part F - Shareholders’ equity Section 1 - Shareholders’ equity A. Qualitative information Reference is made to the corresponding paragraph of Part F - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. B. Quantitative information B.1 Company shareholders' equity: breakdown (€ '000) AMOUNT AS AT ITEMS/VALUES 12.31.2018 12.31.2017 1. Share capital 20,940,398 20,880,550 2. Share premium reserve 13,392,918 13,399,799 3. Reserves 9,939,544 7,798,690 - from profits 5,449,870 2,766,246 a) legal 1,517,514 1,517,514 b) statutory 6,160,551 679,464 c) treasury shares - - d) other (2,228,195) 569,268 - other(*) 4,489,674 5,032,444 4. Equity instruments 4,610,073 4,610,073 5. Treasury shares (2,440) (2,440) 6. Revaluation reserves (502,666) 585,548 - Equity instruments designated at fair value through other comprehensive income (244,279) - Hedge accounting of equity instruments designated at fair value through other comprehensive income - - Financial assets (different from equity instruments) at fair value through other comprehensive income (316,293) - Available-for sale financial assets (ex IAS39) 537,118 - Property, plant and equipment - - - Intangible assets - - - Hedges of foreign investments - - - Cash flow hedges (66,095) (32,301) - Foreign investments hedging - - Exchange differences - - - Non-current assets and disposal groups classified as held for sale - - Non-current assets classified held for sale (ex IAS39) - - Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 41,543 - Actuarial gains (losses) on definited benefit plans (194,562) (196,289) - Changes in valuation reserve pertaining to equity method investments - - - Special revaluation laws 277,020 277,020 7. Net profit (loss) 2,458,163 6,235,645 Total 50,835,990 53,507,865 Note: (*) "Reserves - other" include the "Reserve of treasury shares" (€2 million), originally formed with the withdrawal from the "Share premium reserve", as well as a part of the "Legal reserve" (€2,533 million) also constituted, as resolved by the approval of the OrdinaryShareholders' Meeting of May 11, 2013, and of May 13, 2014 with the withdrawal from the "Share premium Reserve". The Shareholders’ Equity at 31 December 2018, additionally to the changes in capital explained in details in Part B) Section 12 “Shareholders’ Equity”, reflects, among the others described more in details in the Report on Operations in paragraph “Shareholders’ Equity”, the changes resulting from the Ordinary Shareholders’ Meeting resolutions of 12 April 2018 regarding the allocation of profit for the year 2017 of €6,236 million: • distribution to Shareholders holder of ordinary shares a dividend for a total amount of €711 million; • allocation of €4 million to social, charity and cultural initiatives; • allocation of €40 million to the reserve connected to the medium-term incentive plan for Group staff; • allocation 5,481 million to the statutory reserve. Company financial statements | Notes to the accounts Part F - Shareholders’ equity UniCredit ·2018 Annual Report and Accounts 719 Part F - Shareholders’ equity Section 1 - Shareholders’ equity A. Qualitative information Reference is made to the corresponding paragraph of Part F - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. B. Quantitative information B.1 Company shareholders' equity: breakdown (€ '000) AMOUNT AS AT ITEMS/VALUES 12.31.2018 12.31.2017 1. Share capital 20,940,398 20,880,550 2. Share premium reserve 13,392,918 13,399,799 3. Reserves 9,939,544 7,798,690 - from profits 5,449,870 2,766,246 a) legal 1,517,514 1,517,514 b) statutory 6,160,551 679,464 c) treasury shares - - d) other (2,228,195) 569,268 - other(*) 4,489,674 5,032,444 4. Equity instruments 4,610,073 4,610,073 5. Treasury shares (2,440) (2,440) 6. Revaluation reserves (502,666) 585,548 - Equity instruments designated at fair value through other comprehensive income (244,279) - Hedge accounting of equity instruments designated at fair value through other comprehensive income - - Financial assets (different from equity instruments) at fair value through other comprehensive income (316,293) - Available-for sale financial assets (ex IAS39) 537,118 - Property, plant and equipment - - - Intangible assets - - - Hedges of foreign investments - - - Cash flow hedges (66,095) (32,301) - Foreign investments hedging - - Exchange differences - - - Non-current assets and disposal groups classified as held for sale - - Non-current assets classified held for sale (ex IAS39) - - Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 41,543 - Actuarial gains (losses) on definited benefit plans (194,562) (196,289) - Changes in valuation reserve pertaining to equity method investments - - - Special revaluation laws 277,020 277,020 7. Net profit (loss) 2,458,163 6,235,645 Total 50,835,990 53,507,865 Note: (*) "Reserves - other" include the "Reserve of treasury shares" (€2 million), originally formed with the withdrawal from the "Share premium reserve", as well as a part of the "Legal reserve" (€2,533 million) also constituted, as resolved by the approval of the OrdinaryShareholders' Meeting of May 11, 2013, and of May 13, 2014 with the withdrawal from the "Share premium Reserve". The Shareholders’ Equity at 31 December 2018, additionally to the changes in capital explained in details in Part B) Section 12 “Shareholders’ Equity”, reflects, among the others described more in details in the Report on Operations in paragraph “Shareholders’ Equity”, the changes resulting from the Ordinary Shareholders’ Meeting resolutions of 12 April 2018 regarding the allocation of profit for the year 2017 of €6,236 million: • distribution to Shareholders holder of ordinary shares a dividend for a total amount of €711 million; • allocation of €4 million to social, charity and cultural initiatives; • allocation of €40 million to the reserve connected to the medium-term incentive plan for Group staff; • allocation 5,481 million to the statutory reserve. Company financial statements | Notes to the accounts Part F - Shareholders’ equity UniCredit ·2018 Annual Report and Accounts 719 Part F - Shareholders’ equity Section 1 - Shareholders’ equity A. Qualitative information Reference is made to the corresponding paragraph of Part F - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. B. Quantitative information B.1 Company shareholders' equity: breakdown (€ '000) AMOUNT AS AT ITEMS/VALUES 12.31.2018 12.31.2017 1. Share capital 20,940,398 20,880,550 2. Share premium reserve 13,392,918 13,399,799 3. Reserves 9,939,544 7,798,690 - from profits 5,449,870 2,766,246 a) legal 1,517,514 1,517,514 b) statutory 6,160,551 679,464 c) treasury shares - - d) other (2,228,195) 569,268 - other(*) 4,489,674 5,032,444 4. Equity instruments 4,610,073 4,610,073 5. Treasury shares (2,440) (2,440) 6. Revaluation reserves (502,666) 585,548 - Equity instruments designated at fair value through other comprehensive income (244,279) - Hedge accounting of equity instruments designated at fair value through other comprehensive income - - Financial assets (different from equity instruments) at fair value through other comprehensive income (316,293) - Available-for sale financial assets (ex IAS39) 537,118 - Property, plant and equipment - - - Intangible assets - - - Hedges of foreign investments - - - Cash flow hedges (66,095) (32,301) - Foreign investments hedging - - Exchange differences - - - Non-current assets and disposal groups classified as held for sale - - Non-current assets classified held for sale (ex IAS39) - - Financial liabilities designated at fair value through profit or loss (own creditworthiness changes) 41,543 - Actuarial gains (losses) on definited benefit plans (194,562) (196,289) - Changes in valuation reserve pertaining to equity method investments - - - Special revaluation laws 277,020 277,020 7. Net profit (loss) 2,458,163 6,235,645 Total 50,835,990 53,507,865 Note: (*) "Reserves - other" include the "Reserve of treasury shares" (€2 million), originally formed with the withdrawal from the "Share premium reserve", as well as a part of the "Legal reserve" (€2,533 million) also constituted, as resolved by the approval of the OrdinaryShareholders' Meeting of May 11, 2013, and of May 13, 2014 with the withdrawal from the "Share premium Reserve". The Shareholders’ Equity at 31 December 2018, additionally to the changes in capital explained in details in Part B) Section 12 “Shareholders’ Equity”, reflects, among the others described more in details in the Report on Operations in paragraph “Shareholders’ Equity”, the changes resulting from the Ordinary Shareholders’ Meeting resolutions of 12 April 2018 regarding the allocation of profit for the year 2017 of €6,236 million: • distribution to Shareholders holder of ordinary shares a dividend for a total amount of €711 million; • allocation of €4 million to social, charity and cultural initiatives; • allocation of €40 million to the reserve connected to the medium-term incentive plan for Group staff; • allocation 5,481 million to the statutory reserve. Company financial statements | Notes to the accounts Part F - Shareholders’ equity 720 2018 Annual Report and Accounts · UniCredit B.2 Revaluation reserves of financial assets at fair value through other comprehensive income: breakdown (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT 12.31.2017 ASSETS/VALUES POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE 1. Debt securities 169,323 (485,616) 2. Equity securities 88,818 (333,097) Units in investment funds (ex IAS39) 3,329 (7,456) 3. Loans - - Total 258,141 (818,713) B.3 Revaluation reserves of financial assets at fair value through other comprehensive income: annual change (€ '000) ASSETS/VALUES CHANGES IN 2018 DEBT SECURITIES EQUITY SECURITIES LOANS 1. Opening balance 507,698 (231,338) - 2. Positive changes 228,531 61,663 - 2.1 Fair value increases 73,679 12,502 - 2.2 Net losses on impairment - X - 2.3 Reclassification through profit or loss of negative reserves: following disposal 153,604 X - 2.4 Transfers to other comprehensive shareholders' equity (equity instruments) - - - 2.5 Other changes 1,248 (81) - 3. Negative changes (1,052,522) (74,605) - 3.1 Fair value reductions (809,301) (64,621) - 3.2 Recoveries on impairment (3,015) - - 3.3 Reclassification throught profit or loss of positive reserves: following isposal (240,094) X - 3.4 Transfers to other comprehensive shareholders' equity (equity instruments) - (374) - 3.5 Other changes (112) (9,610) - 4. Closing balance (316,293) (244,279) - B.4 Revaluation reserves to defined benefit plan: annual changes (€ '000) CHANGES IN 2018 2017 1. Net opening balance (196,289) (211,508) 2. Positive changes 12,909 18,200 2.1. Fair value increase 12,909 17,287 2.2 Other changes - 913 3. Negative changes (11,182) 2,981 3.1 Fair value reductions (11,182) 2,151 3.2 Other changes - 830 4. Closing balance (194,562) (196,289) Section 2 - Own funds and regulatory ratios For information on the regulatory ratios of UniCredit S.p.A. at the reference date and for the comparison with the previous periods refer to the own funds disclosure reported into the UniCredit group disclosure (Pillar III) published at consolidated level. Company financial statements | Notes to the accounts Part F - Shareholders’ equity 720 2018 Annual Report and Accounts · UniCredit B.2 Revaluation reserves of financial assets at fair value through other comprehensive income: breakdown (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT 12.31.2017 ASSETS/VALUES POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE 1. Debt securities 169,323 (485,616) 2. Equity securities 88,818 (333,097) Units in investment funds (ex IAS39) 3,329 (7,456) 3. Loans - - Total 258,141 (818,713) B.3 Revaluation reserves of financial assets at fair value through other comprehensive income: annual change (€ '000) ASSETS/VALUES CHANGES IN 2018 DEBT SECURITIES EQUITY SECURITIES LOANS 1. Opening balance 507,698 (231,338) - 2. Positive changes 228,531 61,663 - 2.1 Fair value increases 73,679 12,502 - 2.2 Net losses on impairment - X - 2.3 Reclassification through profit or loss of negative reserves: following disposal 153,604 X - 2.4 Transfers to other comprehensive shareholders' equity (equity instruments) - - - 2.5 Other changes 1,248 (81) - 3. Negative changes (1,052,522) (74,605) - 3.1 Fair value reductions (809,301) (64,621) - 3.2 Recoveries on impairment (3,015) - - 3.3 Reclassification throught profit or loss of positive reserves: following isposal (240,094) X - 3.4 Transfers to other comprehensive shareholders' equity (equity instruments) - (374) - 3.5 Other changes (112) (9,610) - 4. Closing balance (316,293) (244,279) - B.4 Revaluation reserves to defined benefit plan: annual changes (€ '000) CHANGES IN 2018 2017 1. Net opening balance (196,289) (211,508) 2. Positive changes 12,909 18,200 2.1. Fair value increase 12,909 17,287 2.2 Other changes - 913 3. Negative changes (11,182) 2,981 3.1 Fair value reductions (11,182) 2,151 3.2 Other changes - 830 4. Closing balance (194,562) (196,289) Section 2 - Own funds and regulatory ratios For information on the regulatory ratios of UniCredit S.p.A. at the reference date and for the comparison with the previous periods refer to the own funds disclosure reported into the UniCredit group disclosure (Pillar III) published at consolidated level. Company financial statements | Notes to the accounts Part F - Shareholders’ equity 720 2018 Annual Report and Accounts · UniCredit B.2 Revaluation reserves of financial assets at fair value through other comprehensive income: breakdown (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT 12.31.2017 ASSETS/VALUES POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE 1. Debt securities 169,323 (485,616) 2. Equity securities 88,818 (333,097) Units in investment funds (ex IAS39) 3,329 (7,456) 3. Loans - - Total 258,141 (818,713) B.3 Revaluation reserves of financial assets at fair value through other comprehensive income: annual change (€ '000) ASSETS/VALUES CHANGES IN 2018 DEBT SECURITIES EQUITY SECURITIES LOANS 1. Opening balance 507,698 (231,338) - 2. Positive changes 228,531 61,663 - 2.1 Fair value increases 73,679 12,502 - 2.2 Net losses on impairment - X - 2.3 Reclassification through profit or loss of negative reserves: following disposal 153,604 X - 2.4 Transfers to other comprehensive shareholders' equity (equity instruments) - - - 2.5 Other changes 1,248 (81) - 3. Negative changes (1,052,522) (74,605) - 3.1 Fair value reductions (809,301) (64,621) - 3.2 Recoveries on impairment (3,015) - - 3.3 Reclassification throught profit or loss of positive reserves: following isposal (240,094) X - 3.4 Transfers to other comprehensive shareholders' equity (equity instruments) - (374) - 3.5 Other changes (112) (9,610) - 4. Closing balance (316,293) (244,279) - B.4 Revaluation reserves to defined benefit plan: annual changes (€ '000) CHANGES IN 2018 2017 1. Net opening balance (196,289) (211,508) 2. Positive changes 12,909 18,200 2.1. Fair value increase 12,909 17,287 2.2 Other changes - 913 3. Negative changes (11,182) 2,981 3.1 Fair value reductions (11,182) 2,151 3.2 Other changes - 830 4. Closing balance (194,562) (196,289) Section 2 - Own funds and regulatory ratios For information on the regulatory ratios of UniCredit S.p.A. at the reference date and for the comparison with the previous periods refer to the own funds disclosure reported into the UniCredit group disclosure (Pillar III) published at consolidated level. Company financial statements | Notes to the accounts Part F - Shareholders’ equity 720 2018 Annual Report and Accounts · UniCredit B.2 Revaluation reserves of financial assets at fair value through other comprehensive income: breakdown (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT 12.31.2017 ASSETS/VALUES POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE 1. Debt securities 169,323 (485,616) 2. Equity securities 88,818 (333,097) Units in investment funds (ex IAS39) 3,329 (7,456) 3. Loans - - Total 258,141 (818,713) B.3 Revaluation reserves of financial assets at fair value through other comprehensive income: annual change (€ '000) ASSETS/VALUES CHANGES IN 2018 DEBT SECURITIES EQUITY SECURITIES LOANS 1. Opening balance 507,698 (231,338) - 2. Positive changes 228,531 61,663 - 2.1 Fair value increases 73,679 12,502 - 2.2 Net losses on impairment - X - 2.3 Reclassification through profit or loss of negative reserves: following disposal 153,604 X - 2.4 Transfers to other comprehensive shareholders' equity (equity instruments) - - - 2.5 Other changes 1,248 (81) - 3. Negative changes (1,052,522) (74,605) - 3.1 Fair value reductions (809,301) (64,621) - 3.2 Recoveries on impairment (3,015) - - 3.3 Reclassification throught profit or loss of positive reserves: following isposal (240,094) X - 3.4 Transfers to other comprehensive shareholders' equity (equity instruments) - (374) - 3.5 Other changes (112) (9,610) - 4. Closing balance (316,293) (244,279) - B.4 Revaluation reserves to defined benefit plan: annual changes (€ '000) CHANGES IN 2018 2017 1. Net opening balance (196,289) (211,508) 2. Positive changes 12,909 18,200 2.1. Fair value increase 12,909 17,287 2.2 Other changes - 913 3. Negative changes (11,182) 2,981 3.1 Fair value reductions (11,182) 2,151 3.2 Other changes - 830 4. Closing balance (194,562) (196,289) Section 2 - Own funds and regulatory ratios For information on the regulatory ratios of UniCredit S.p.A. at the reference date and for the comparison with the previous periods refer to the own funds disclosure reported into the UniCredit group disclosure (Pillar III) published at consolidated level. Company financial statements | Notes to the accounts Part F - Shareholders’ equity 720 2018 Annual Report and Accounts · UniCredit B.2 Revaluation reserves of financial assets at fair value through other comprehensive income: breakdown (€ '000) AMOUNT AS AT 12.31.2018 AMOUNT AS AT 12.31.2017 ASSETS/VALUES POSITIVE RESERVE NEGATIVE RESERVE POSITIVE RESERVE NEGATIVE RESERVE 1. Debt securities 169,323 (485,616) 2. Equity securities 88,818 (333,097) Units in investment funds (ex IAS39) 3,329 (7,456) 3. Loans - - Total 258,141 (818,713) B.3 Revaluation reserves of financial assets at fair value through other comprehensive income: annual change (€ '000) ASSETS/VALUES CHANGES IN 2018 DEBT SECURITIES EQUITY SECURITIES LOANS 1. Opening balance 507,698 (231,338) - 2. Positive changes 228,531 61,663 - 2.1 Fair value increases 73,679 12,502 - 2.2 Net losses on impairment - X - 2.3 Reclassification through profit or loss of negative reserves: following disposal 153,604 X - 2.4 Transfers to other comprehensive shareholders' equity (equity instruments) - - - 2.5 Other changes 1,248 (81) - 3. Negative changes (1,052,522) (74,605) - 3.1 Fair value reductions (809,301) (64,621) - 3.2 Recoveries on impairment (3,015) - - 3.3 Reclassification throught profit or loss of positive reserves: following isposal (240,094) X - 3.4 Transfers to other comprehensive shareholders' equity (equity instruments) - (374) - 3.5 Other changes (112) (9,610) - 4. Closing balance (316,293) (244,279) - B.4 Revaluation reserves to defined benefit plan: annual changes (€ '000) CHANGES IN 2018 2017 1. Net opening balance (196,289) (211,508) 2. Positive changes 12,909 18,200 2.1. Fair value increase 12,909 17,287 2.2 Other changes - 913 3. Negative changes (11,182) 2,981 3.1 Fair value reductions (11,182) 2,151 3.2 Other changes - 830 4. Closing balance (194,562) (196,289) Section 2 - Own funds and regulatory ratios For information on the regulatory ratios of UniCredit S.p.A. at the reference date and for the comparison with the previous periods refer to the own funds disclosure reported into the UniCredit group disclosure (Pillar III) published at consolidated level. Company financial statements | Notes to the accounts Part G - Business combinations UniCredit ·2018 Annual Report and Accounts 721 Part G - Business combinations Section 1 - Business Combinations completed in the year 1.1 Business combinations Business combinations with counterparties outside the Group are performed using the “purchase method” as required by IFRS3 “Business Combinations”, cited in the disclosure of Accounting policies, part A.2 concerning the main balance-sheet items. In 2018, the Bank did not carry out any business combinations outside the Group. For business combinations inside the Group, effective 1 January 2018, was carried out the acquisition of the shares of the subsidiary UniCredit International Bank (Luxembourg) held by UniCredit Bank AG following the demerger of the "German private banking business". Section 2 - Business Combinations completed after year-end No business combinations are performed after year-end closing. Company financial statements | Notes to the accounts Part G - Business combinations UniCredit ·2018 Annual Report and Accounts 721 Part G - Business combinations Section 1 - Business Combinations completed in the year 1.1 Business combinations Business combinations with counterparties outside the Group are performed using the “purchase method” as required by IFRS3 “Business Combinations”, cited in the disclosure of Accounting policies, part A.2 concerning the main balance-sheet items. In 2018, the Bank did not carry out any business combinations outside the Group. For business combinations inside the Group, effective 1 January 2018, was carried out the acquisition of the shares of the subsidiary UniCredit International Bank (Luxembourg) held by UniCredit Bank AG following the demerger of the "German private banking business". Section 2 - Business Combinations completed after year-end No business combinations are performed after year-end closing. Company financial statements | Notes to the accounts Part G - Business combinations UniCredit ·2018 Annual Report and Accounts 721 Part G - Business combinations Section 1 - Business Combinations completed in the year 1.1 Business combinations Business combinations with counterparties outside the Group are performed using the “purchase method” as required by IFRS3 “Business Combinations”, cited in the disclosure of Accounting policies, part A.2 concerning the main balance-sheet items. In 2018, the Bank did not carry out any business combinations outside the Group. For business combinations inside the Group, effective 1 January 2018, was carried out the acquisition of the shares of the subsidiary UniCredit International Bank (Luxembourg) held by UniCredit Bank AG following the demerger of the "German private banking business". Section 2 - Business Combinations completed after year-end No business combinations are performed after year-end closing. Company financial statements | Notes to the accounts Part G - Business combinations UniCredit ·2018 Annual Report and Accounts 721 Part G - Business combinations Section 1 - Business Combinations completed in the year 1.1 Business combinations Business combinations with counterparties outside the Group are performed using the “purchase method” as required by IFRS3 “Business Combinations”, cited in the disclosure of Accounting policies, part A.2 concerning the main balance-sheet items. In 2018, the Bank did not carry out any business combinations outside the Group. For business combinations inside the Group, effective 1 January 2018, was carried out the acquisition of the shares of the subsidiary UniCredit International Bank (Luxembourg) held by UniCredit Bank AG following the demerger of the "German private banking business". Section 2 - Business Combinations completed after year-end No business combinations are performed after year-end closing. Company financial statements | Notes to the accounts Part G - Business combinations UniCredit ·2018 Annual Report and Accounts 721 Part G - Business combinations Section 1 - Business Combinations completed in the year 1.1 Business combinations Business combinations with counterparties outside the Group are performed using the “purchase method” as required by IFRS3 “Business Combinations”, cited in the disclosure of Accounting policies, part A.2 concerning the main balance-sheet items. In 2018, the Bank did not carry out any business combinations outside the Group. For business combinations inside the Group, effective 1 January 2018, was carried out the acquisition of the shares of the subsidiary UniCredit International Bank (Luxembourg) held by UniCredit Bank AG following the demerger of the "German private banking business". Section 2 - Business Combinations completed after year-end No business combinations are performed after year-end closing. Company financial statements | Notes to the accounts Part H - Related-party transactions 722 2018 Annual Report and Accounts · UniCredit Part H - Related-party transactions Introduction Reference is made to the corresponding paragraph of Part H - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. 1. Details of Key management personnels’ compensation Details of Key management personnel’s 2018 remuneration are given below pursuant to IAS24 and to Banca d’Italia Circular 262 dated 22 December 2005 (5th update of 22 December 2017) requiring that also the Statutory Auditors’ compensation be included. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Remuneration paid to key management personnel (including directors) (€ '000) YEAR 2018 YEAR 2017 a) short-term employee benefits 15,646 15,146 b) post-retirement benefits 929 891 of which: under defined benefit plans - - of which: under defined contribution plans 929 891 c) other long-term benefits - - d) termination benefits - 4,344 e) share-based payments 6,116 5,060 Total 22,691 25,441 The information reported above include the compensation paid to Directors (€4,341 thousand), Statutory Auditors (€699 thousand), General Manager (€1,595 thousand) and other Managers with strategic responsibility (€7,695 thousand), as shown in the document "Annex 1 to the 2019 Group Compensation Policy", and €8,361 thousand relating to other costs borne in 2018 (the company share of social security contributions, allocations to deferred statutory pay funds and share-based payments using UniCredit and its subsidiaries’ equity instruments). The reduction in total remuneration (by €2,750 thousand) compared to 2017 is linked mainly to the absence of payment of termination indemnities in a context anyhow characterised by the maintenance, during 2018, of the conservative approach to remuneration that in 2017 accompanied the launch of the Transform 2019 plan. The only growing item is the one related to share-based payments, which reflects the shifting of a significant portion of variable compensation to long-term equity incentives in order to align the interests of management with those of shareholders. Company financial statements | Notes to the accounts Part H - Related-party transactions 722 2018 Annual Report and Accounts · UniCredit Part H - Related-party transactions Introduction Reference is made to the corresponding paragraph of Part H - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. 1. Details of Key management personnels’ compensation Details of Key management personnel’s 2018 remuneration are given below pursuant to IAS24 and to Banca d’Italia Circular 262 dated 22 December 2005 (5th update of 22 December 2017) requiring that also the Statutory Auditors’ compensation be included. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Remuneration paid to key management personnel (including directors) (€ '000) YEAR 2018 YEAR 2017 a) short-term employee benefits 15,646 15,146 b) post-retirement benefits 929 891 of which: under defined benefit plans - - of which: under defined contribution plans 929 891 c) other long-term benefits - - d) termination benefits - 4,344 e) share-based payments 6,116 5,060 Total 22,691 25,441 The information reported above include the compensation paid to Directors (€4,341 thousand), Statutory Auditors (€699 thousand), General Manager (€1,595 thousand) and other Managers with strategic responsibility (€7,695 thousand), as shown in the document "Annex 1 to the 2019 Group Compensation Policy", and €8,361 thousand relating to other costs borne in 2018 (the company share of social security contributions, allocations to deferred statutory pay funds and share-based payments using UniCredit and its subsidiaries’ equity instruments). The reduction in total remuneration (by €2,750 thousand) compared to 2017 is linked mainly to the absence of payment of termination indemnities in a context anyhow characterised by the maintenance, during 2018, of the conservative approach to remuneration that in 2017 accompanied the launch of the Transform 2019 plan. The only growing item is the one related to share-based payments, which reflects the shifting of a significant portion of variable compensation to long-term equity incentives in order to align the interests of management with those of shareholders. Company financial statements | Notes to the accounts Part H - Related-party transactions 722 2018 Annual Report and Accounts · UniCredit Part H - Related-party transactions Introduction Reference is made to the corresponding paragraph of Part H - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. 1. Details of Key management personnels’ compensation Details of Key management personnel’s 2018 remuneration are given below pursuant to IAS24 and to Banca d’Italia Circular 262 dated 22 December 2005 (5th update of 22 December 2017) requiring that also the Statutory Auditors’ compensation be included. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Remuneration paid to key management personnel (including directors) (€ '000) YEAR 2018 YEAR 2017 a) short-term employee benefits 15,646 15,146 b) post-retirement benefits 929 891 of which: under defined benefit plans - - of which: under defined contribution plans 929 891 c) other long-term benefits - - d) termination benefits - 4,344 e) share-based payments 6,116 5,060 Total 22,691 25,441 The information reported above include the compensation paid to Directors (€4,341 thousand), Statutory Auditors (€699 thousand), General Manager (€1,595 thousand) and other Managers with strategic responsibility (€7,695 thousand), as shown in the document "Annex 1 to the 2019 Group Compensation Policy", and €8,361 thousand relating to other costs borne in 2018 (the company share of social security contributions, allocations to deferred statutory pay funds and share-based payments using UniCredit and its subsidiaries’ equity instruments). The reduction in total remuneration (by €2,750 thousand) compared to 2017 is linked mainly to the absence of payment of termination indemnities in a context anyhow characterised by the maintenance, during 2018, of the conservative approach to remuneration that in 2017 accompanied the launch of the Transform 2019 plan. The only growing item is the one related to share-based payments, which reflects the shifting of a significant portion of variable compensation to long-term equity incentives in order to align the interests of management with those of shareholders. Company financial statements | Notes to the accounts Part H - Related-party transactions 722 2018 Annual Report and Accounts · UniCredit Part H - Related-party transactions Introduction Reference is made to the corresponding paragraph of Part H - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. 1. Details of Key management personnels’ compensation Details of Key management personnel’s 2018 remuneration are given below pursuant to IAS24 and to Banca d’Italia Circular 262 dated 22 December 2005 (5th update of 22 December 2017) requiring that also the Statutory Auditors’ compensation be included. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Remuneration paid to key management personnel (including directors) (€ '000) YEAR 2018 YEAR 2017 a) short-term employee benefits 15,646 15,146 b) post-retirement benefits 929 891 of which: under defined benefit plans - - of which: under defined contribution plans 929 891 c) other long-term benefits - - d) termination benefits - 4,344 e) share-based payments 6,116 5,060 Total 22,691 25,441 The information reported above include the compensation paid to Directors (€4,341 thousand), Statutory Auditors (€699 thousand), General Manager (€1,595 thousand) and other Managers with strategic responsibility (€7,695 thousand), as shown in the document "Annex 1 to the 2019 Group Compensation Policy", and €8,361 thousand relating to other costs borne in 2018 (the company share of social security contributions, allocations to deferred statutory pay funds and share-based payments using UniCredit and its subsidiaries’ equity instruments). The reduction in total remuneration (by €2,750 thousand) compared to 2017 is linked mainly to the absence of payment of termination indemnities in a context anyhow characterised by the maintenance, during 2018, of the conservative approach to remuneration that in 2017 accompanied the launch of the Transform 2019 plan. The only growing item is the one related to share-based payments, which reflects the shifting of a significant portion of variable compensation to long-term equity incentives in order to align the interests of management with those of shareholders. Company financial statements | Notes to the accounts Part H - Related-party transactions 722 2018 Annual Report and Accounts · UniCredit Part H - Related-party transactions Introduction Reference is made to the corresponding paragraph of Part H - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. 1. Details of Key management personnels’ compensation Details of Key management personnel’s 2018 remuneration are given below pursuant to IAS24 and to Banca d’Italia Circular 262 dated 22 December 2005 (5th update of 22 December 2017) requiring that also the Statutory Auditors’ compensation be included. Key management personnel are persons having authority and responsibility for planning, directing, and controlling UniCredit’s activities, directly or indirectly. Key management personnel include the Chief Executive Officer and the other members of the Board of Directors, the Standing Auditors, the General Manager and the other Senior Executive Vice Presidents directly reporting to the Board of Directors or to the Chief Executive Officer. Remuneration paid to key management personnel (including directors) (€ '000) YEAR 2018 YEAR 2017 a) short-term employee benefits 15,646 15,146 b) post-retirement benefits 929 891 of which: under defined benefit plans - - of which: under defined contribution plans 929 891 c) other long-term benefits - - d) termination benefits - 4,344 e) share-based payments 6,116 5,060 Total 22,691 25,441 The information reported above include the compensation paid to Directors (€4,341 thousand), Statutory Auditors (€699 thousand), General Manager (€1,595 thousand) and other Managers with strategic responsibility (€7,695 thousand), as shown in the document "Annex 1 to the 2019 Group Compensation Policy", and €8,361 thousand relating to other costs borne in 2018 (the company share of social security contributions, allocations to deferred statutory pay funds and share-based payments using UniCredit and its subsidiaries’ equity instruments). The reduction in total remuneration (by €2,750 thousand) compared to 2017 is linked mainly to the absence of payment of termination indemnities in a context anyhow characterised by the maintenance, during 2018, of the conservative approach to remuneration that in 2017 accompanied the launch of the Transform 2019 plan. The only growing item is the one related to share-based payments, which reflects the shifting of a significant portion of variable compensation to long-term equity incentives in order to align the interests of management with those of shareholders. Company financial statements | Notes to the accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 723 2. Related-party transactions The following table sets out the assets, liabilities, guarantees and commitments, for each group of related parties, pursuant to IAS24. Related-party transactions: balance sheet items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM Financial assets at fair value through profit or loss 2,427,722 - 47,855 - - 2,475,577 16.51% - - a) Financial assets held for trading 2,248,742 - - - - 2,248,742 19.00% - - b) Financial assets designated at fair value - - - - - - - - - c) Other financial assets mandatorily at fair value 178,980 - 47,855 - - 226,835 7.17% - - Financial assets at fair value through other comprehensive income - - 26,867 - - 26,867 0.06% - - Financial assets at amortised cost 42,168,849 3,383,514 1,444,504 1,756 1,134 46,999,757 17.37% 17,301 0.01% a) Loans and advances to banks 16,415,638 2,201,029 824,003 - - 19,440,670 62.77% - - b) Loans and advances to customers 25,753,211 1,182,485 620,501 1,756 1,134 27,559,087 11.50% 17,301 0.01% Hedging derivatives (assets) 4,015,220 - - - - 4,015,220 96.35% - - Non-current assets and disposal groups classified as held for sale - - - - - - - - - Other assets 206,933 4,553 999 - 1 212,486 5.48% - - Total - Assets 48,818,724 3,388,067 1,520,225 1,756 1,135 53,729,907 15.77% 17,301 0.01% Financial liabilities at amortised cost 25,564,183 1,900 440,656 2,954 166,263 26,175,956 8.08% 45,283 0.01% a) Deposits from banks 11,989,344 1,900 2,591 - - 11,993,835 20.33% 31,037 0.05% b) Deposits from customers 515,244 - 438,065 2,954 166,263 1,122,526 0.53% 14,246 0.01% c) Debt securities in issue 13,059,595 - - - - 13,059,595 24.66% - - Financial liabilities held for trading and designated at fair value 3,730,078 - - - - 3,730,078 26.80% - - Hedging derivatives (liabilities) 4,150,942 - - - - 4,150,942 91.73% - - Liabilities associated with disposal groups classified as held for sale - - - - - - - - - Other liabilities 314,046 845 10,693 - 38 325,622 4.27% 5 - Total - Liabilities 33,759,249 2,745 451,349 2,954 166,301 34,382,598 9.83% 45,288 0.01% Guarantees given and commitments 31,971,545 2,832,313 189,889 90 3,212 34,997,049 20.37% 1,173 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Company financial statements | Notes to the accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 723 2. Related-party transactions The following table sets out the assets, liabilities, guarantees and commitments, for each group of related parties, pursuant to IAS24. Related-party transactions: balance sheet items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM Financial assets at fair value through profit or loss 2,427,722 - 47,855 - - 2,475,577 16.51% - - a) Financial assets held for trading 2,248,742 - - - - 2,248,742 19.00% - - b) Financial assets designated at fair value - - - - - - - - - c) Other financial assets mandatorily at fair value 178,980 - 47,855 - - 226,835 7.17% - - Financial assets at fair value through other comprehensive income - - 26,867 - - 26,867 0.06% - - Financial assets at amortised cost 42,168,849 3,383,514 1,444,504 1,756 1,134 46,999,757 17.37% 17,301 0.01% a) Loans and advances to banks 16,415,638 2,201,029 824,003 - - 19,440,670 62.77% - - b) Loans and advances to customers 25,753,211 1,182,485 620,501 1,756 1,134 27,559,087 11.50% 17,301 0.01% Hedging derivatives (assets) 4,015,220 - - - - 4,015,220 96.35% - - Non-current assets and disposal groups classified as held for sale - - - - - - - - - Other assets 206,933 4,553 999 - 1 212,486 5.48% - - Total - Assets 48,818,724 3,388,067 1,520,225 1,756 1,135 53,729,907 15.77% 17,301 0.01% Financial liabilities at amortised cost 25,564,183 1,900 440,656 2,954 166,263 26,175,956 8.08% 45,283 0.01% a) Deposits from banks 11,989,344 1,900 2,591 - - 11,993,835 20.33% 31,037 0.05% b) Deposits from customers 515,244 - 438,065 2,954 166,263 1,122,526 0.53% 14,246 0.01% c) Debt securities in issue 13,059,595 - - - - 13,059,595 24.66% - - Financial liabilities held for trading and designated at fair value 3,730,078 - - - - 3,730,078 26.80% - - Hedging derivatives (liabilities) 4,150,942 - - - - 4,150,942 91.73% - - Liabilities associated with disposal groups classified as held for sale - - - - - - - - - Other liabilities 314,046 845 10,693 - 38 325,622 4.27% 5 - Total - Liabilities 33,759,249 2,745 451,349 2,954 166,301 34,382,598 9.83% 45,288 0.01% Guarantees given and commitments 31,971,545 2,832,313 189,889 90 3,212 34,997,049 20.37% 1,173 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Company financial statements | Notes to the accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 723 2. Related-party transactions The following table sets out the assets, liabilities, guarantees and commitments, for each group of related parties, pursuant to IAS24. Related-party transactions: balance sheet items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM Financial assets at fair value through profit or loss 2,427,722 - 47,855 - - 2,475,577 16.51% - - a) Financial assets held for trading 2,248,742 - - - - 2,248,742 19.00% - - b) Financial assets designated at fair value - - - - - - - - - c) Other financial assets mandatorily at fair value 178,980 - 47,855 - - 226,835 7.17% - - Financial assets at fair value through other comprehensive income - - 26,867 - - 26,867 0.06% - - Financial assets at amortised cost 42,168,849 3,383,514 1,444,504 1,756 1,134 46,999,757 17.37% 17,301 0.01% a) Loans and advances to banks 16,415,638 2,201,029 824,003 - - 19,440,670 62.77% - - b) Loans and advances to customers 25,753,211 1,182,485 620,501 1,756 1,134 27,559,087 11.50% 17,301 0.01% Hedging derivatives (assets) 4,015,220 - - - - 4,015,220 96.35% - - Non-current assets and disposal groups classified as held for sale - - - - - - - - - Other assets 206,933 4,553 999 - 1 212,486 5.48% - - Total - Assets 48,818,724 3,388,067 1,520,225 1,756 1,135 53,729,907 15.77% 17,301 0.01% Financial liabilities at amortised cost 25,564,183 1,900 440,656 2,954 166,263 26,175,956 8.08% 45,283 0.01% a) Deposits from banks 11,989,344 1,900 2,591 - - 11,993,835 20.33% 31,037 0.05% b) Deposits from customers 515,244 - 438,065 2,954 166,263 1,122,526 0.53% 14,246 0.01% c) Debt securities in issue 13,059,595 - - - - 13,059,595 24.66% - - Financial liabilities held for trading and designated at fair value 3,730,078 - - - - 3,730,078 26.80% - - Hedging derivatives (liabilities) 4,150,942 - - - - 4,150,942 91.73% - - Liabilities associated with disposal groups classified as held for sale - - - - - - - - - Other liabilities 314,046 845 10,693 - 38 325,622 4.27% 5 - Total - Liabilities 33,759,249 2,745 451,349 2,954 166,301 34,382,598 9.83% 45,288 0.01% Guarantees given and commitments 31,971,545 2,832,313 189,889 90 3,212 34,997,049 20.37% 1,173 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Company financial statements | Notes to the accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 723 2. Related-party transactions The following table sets out the assets, liabilities, guarantees and commitments, for each group of related parties, pursuant to IAS24. Related-party transactions: balance sheet items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM Financial assets at fair value through profit or loss 2,427,722 - 47,855 - - 2,475,577 16.51% - - a) Financial assets held for trading 2,248,742 - - - - 2,248,742 19.00% - - b) Financial assets designated at fair value - - - - - - - - - c) Other financial assets mandatorily at fair value 178,980 - 47,855 - - 226,835 7.17% - - Financial assets at fair value through other comprehensive income - - 26,867 - - 26,867 0.06% - - Financial assets at amortised cost 42,168,849 3,383,514 1,444,504 1,756 1,134 46,999,757 17.37% 17,301 0.01% a) Loans and advances to banks 16,415,638 2,201,029 824,003 - - 19,440,670 62.77% - - b) Loans and advances to customers 25,753,211 1,182,485 620,501 1,756 1,134 27,559,087 11.50% 17,301 0.01% Hedging derivatives (assets) 4,015,220 - - - - 4,015,220 96.35% - - Non-current assets and disposal groups classified as held for sale - - - - - - - - - Other assets 206,933 4,553 999 - 1 212,486 5.48% - - Total - Assets 48,818,724 3,388,067 1,520,225 1,756 1,135 53,729,907 15.77% 17,301 0.01% Financial liabilities at amortised cost 25,564,183 1,900 440,656 2,954 166,263 26,175,956 8.08% 45,283 0.01% a) Deposits from banks 11,989,344 1,900 2,591 - - 11,993,835 20.33% 31,037 0.05% b) Deposits from customers 515,244 - 438,065 2,954 166,263 1,122,526 0.53% 14,246 0.01% c) Debt securities in issue 13,059,595 - - - - 13,059,595 24.66% - - Financial liabilities held for trading and designated at fair value 3,730,078 - - - - 3,730,078 26.80% - - Hedging derivatives (liabilities) 4,150,942 - - - - 4,150,942 91.73% - - Liabilities associated with disposal groups classified as held for sale - - - - - - - - - Other liabilities 314,046 845 10,693 - 38 325,622 4.27% 5 - Total - Liabilities 33,759,249 2,745 451,349 2,954 166,301 34,382,598 9.83% 45,288 0.01% Guarantees given and commitments 31,971,545 2,832,313 189,889 90 3,212 34,997,049 20.37% 1,173 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Company financial statements | Notes to the accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 723 2. Related-party transactions The following table sets out the assets, liabilities, guarantees and commitments, for each group of related parties, pursuant to IAS24. Related-party transactions: balance sheet items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM Financial assets at fair value through profit or loss 2,427,722 - 47,855 - - 2,475,577 16.51% - - a) Financial assets held for trading 2,248,742 - - - - 2,248,742 19.00% - - b) Financial assets designated at fair value - - - - - - - - - c) Other financial assets mandatorily at fair value 178,980 - 47,855 - - 226,835 7.17% - - Financial assets at fair value through other comprehensive income - - 26,867 - - 26,867 0.06% - - Financial assets at amortised cost 42,168,849 3,383,514 1,444,504 1,756 1,134 46,999,757 17.37% 17,301 0.01% a) Loans and advances to banks 16,415,638 2,201,029 824,003 - - 19,440,670 62.77% - - b) Loans and advances to customers 25,753,211 1,182,485 620,501 1,756 1,134 27,559,087 11.50% 17,301 0.01% Hedging derivatives (assets) 4,015,220 - - - - 4,015,220 96.35% - - Non-current assets and disposal groups classified as held for sale - - - - - - - - - Other assets 206,933 4,553 999 - 1 212,486 5.48% - - Total - Assets 48,818,724 3,388,067 1,520,225 1,756 1,135 53,729,907 15.77% 17,301 0.01% Financial liabilities at amortised cost 25,564,183 1,900 440,656 2,954 166,263 26,175,956 8.08% 45,283 0.01% a) Deposits from banks 11,989,344 1,900 2,591 - - 11,993,835 20.33% 31,037 0.05% b) Deposits from customers 515,244 - 438,065 2,954 166,263 1,122,526 0.53% 14,246 0.01% c) Debt securities in issue 13,059,595 - - - - 13,059,595 24.66% - - Financial liabilities held for trading and designated at fair value 3,730,078 - - - - 3,730,078 26.80% - - Hedging derivatives (liabilities) 4,150,942 - - - - 4,150,942 91.73% - - Liabilities associated with disposal groups classified as held for sale - - - - - - - - - Other liabilities 314,046 845 10,693 - 38 325,622 4.27% 5 - Total - Liabilities 33,759,249 2,745 451,349 2,954 166,301 34,382,598 9.83% 45,288 0.01% Guarantees given and commitments 31,971,545 2,832,313 189,889 90 3,212 34,997,049 20.37% 1,173 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Company financial statements | Notes to the accounts Part H - Related-party transactions 724 2018 Annual Report and Accounts · UniCredit The following table sets out the impact of transactions, for each group of related parties, on income statements, pursuant to IAS24. Related-party transactions: profit and loss items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM 10. Interest income and similar revenues (96,491) 130,471 23,067 16 7,781 64,844 1.23% 3,167 0.06% 20. Interest expenses and similar charges 494,250 (501) (746) (1) (120) 492,882 44.43% (422) 0.04% 30. Net interest margin 397,759 129,970 22,321 15 7,661 557,726 13.39% 2,745 0.06% 40. Fees and commissions income 92,560 4,485 795,188 6 1,213 893,452 20.54% 245 - 50. Fees and commissions expenses (44,412) (7) (9,289) - - (53,708) 13.42% - - 60. Net fees and commissions 48,148 4,478 785,899 6 1,213 839,744 21.26% 245 0.01% 70. Dividend income and similar revenues - - - - - - - - - 80. Net gains (losses) on trading (229,496) - - - 4,039 (225,457) n.m. - - 90. Net gains (losses) on hedge accounting (204,095) - - - - (204,095) n.m. - - 100. Gains (Losses) on disposal and repurchase of (1,112) - - - - (1,112) 2.13% - - a) Financial assets at amortised cost - - - - - - - - - b) Financial assets at fair value through other comprehensive income (1,613) - - - - (1,613) 1.86% - - c) Financial liabilities 501 - - - - 501 66.18% - - 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss (22,918) - (2,058) - (1,984) (26,960) 305.81% - - a) Financial assets/liabilities designated at fair value - - - - - - - - - b) Other financial assets mandatorily at fair value (22,918) - (2,058) - (1,984) (26,960) 20.18% - - 120. Operating income (11,714) 134,448 806,162 21 10,929 939,846 8.71% 2,990 0.03% 130. Net losses/recoveries on credit impairment relating to (30) - (45,981) 21 (81) (46,071) 2.29% 817 0.04% a) Financial assets at amortised cost (30) - (45,981) 21 (81) (46,071) 2.31% 817 0.04% b) Financial assets at fair value through other comprehensive income - - - - - - - - - 140. Gains/Losses from contractual changes with no cancellations - - - - - - - - - 190. Administrative expenses (1,421,715) 993 (924) (7) (18) (1,421,671) 24.40% - - a) Staff costs (15,453) 1,009 535 - - (13,909) 0.49% - - b) Other administrative expenses (1,406,262) (16) (1,459) (7) (18) (1,407,762) 47.57% - - 200. Net provisions for risks and charges 92 - (52) - (7) 33 0.01% - - 230. Other operating expenses/income 64,781 4,890 (57,028) 8 40 12,691 3.08% 1 - 240. Operating costs (1,356,842) 5,883 (58,004) 1 15 (1,408,947) 24.27% 1 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Company financial statements | Notes to the accounts Part H - Related-party transactions 724 2018 Annual Report and Accounts · UniCredit The following table sets out the impact of transactions, for each group of related parties, on income statements, pursuant to IAS24. Related-party transactions: profit and loss items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM 10. Interest income and similar revenues (96,491) 130,471 23,067 16 7,781 64,844 1.23% 3,167 0.06% 20. Interest expenses and similar charges 494,250 (501) (746) (1) (120) 492,882 44.43% (422) 0.04% 30. Net interest margin 397,759 129,970 22,321 15 7,661 557,726 13.39% 2,745 0.06% 40. Fees and commissions income 92,560 4,485 795,188 6 1,213 893,452 20.54% 245 - 50. Fees and commissions expenses (44,412) (7) (9,289) - - (53,708) 13.42% - - 60. Net fees and commissions 48,148 4,478 785,899 6 1,213 839,744 21.26% 245 0.01% 70. Dividend income and similar revenues - - - - - - - - - 80. Net gains (losses) on trading (229,496) - - - 4,039 (225,457) n.m. - - 90. Net gains (losses) on hedge accounting (204,095) - - - - (204,095) n.m. - - 100. Gains (Losses) on disposal and repurchase of (1,112) - - - - (1,112) 2.13% - - a) Financial assets at amortised cost - - - - - - - - - b) Financial assets at fair value through other comprehensive income (1,613) - - - - (1,613) 1.86% - - c) Financial liabilities 501 - - - - 501 66.18% - - 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss (22,918) - (2,058) - (1,984) (26,960) 305.81% - - a) Financial assets/liabilities designated at fair value - - - - - - - - - b) Other financial assets mandatorily at fair value (22,918) - (2,058) - (1,984) (26,960) 20.18% - - 120. Operating income (11,714) 134,448 806,162 21 10,929 939,846 8.71% 2,990 0.03% 130. Net losses/recoveries on credit impairment relating to (30) - (45,981) 21 (81) (46,071) 2.29% 817 0.04% a) Financial assets at amortised cost (30) - (45,981) 21 (81) (46,071) 2.31% 817 0.04% b) Financial assets at fair value through other comprehensive income - - - - - - - - - 140. Gains/Losses from contractual changes with no cancellations - - - - - - - - - 190. Administrative expenses (1,421,715) 993 (924) (7) (18) (1,421,671) 24.40% - - a) Staff costs (15,453) 1,009 535 - - (13,909) 0.49% - - b) Other administrative expenses (1,406,262) (16) (1,459) (7) (18) (1,407,762) 47.57% - - 200. Net provisions for risks and charges 92 - (52) - (7) 33 0.01% - - 230. Other operating expenses/income 64,781 4,890 (57,028) 8 40 12,691 3.08% 1 - 240. Operating costs (1,356,842) 5,883 (58,004) 1 15 (1,408,947) 24.27% 1 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Company financial statements | Notes to the accounts Part H - Related-party transactions 724 2018 Annual Report and Accounts · UniCredit The following table sets out the impact of transactions, for each group of related parties, on income statements, pursuant to IAS24. Related-party transactions: profit and loss items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM 10. Interest income and similar revenues (96,491) 130,471 23,067 16 7,781 64,844 1.23% 3,167 0.06% 20. Interest expenses and similar charges 494,250 (501) (746) (1) (120) 492,882 44.43% (422) 0.04% 30. Net interest margin 397,759 129,970 22,321 15 7,661 557,726 13.39% 2,745 0.06% 40. Fees and commissions income 92,560 4,485 795,188 6 1,213 893,452 20.54% 245 - 50. Fees and commissions expenses (44,412) (7) (9,289) - - (53,708) 13.42% - - 60. Net fees and commissions 48,148 4,478 785,899 6 1,213 839,744 21.26% 245 0.01% 70. Dividend income and similar revenues - - - - - - - - - 80. Net gains (losses) on trading (229,496) - - - 4,039 (225,457) n.m. - - 90. Net gains (losses) on hedge accounting (204,095) - - - - (204,095) n.m. - - 100. Gains (Losses) on disposal and repurchase of (1,112) - - - - (1,112) 2.13% - - a) Financial assets at amortised cost - - - - - - - - - b) Financial assets at fair value through other comprehensive income (1,613) - - - - (1,613) 1.86% - - c) Financial liabilities 501 - - - - 501 66.18% - - 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss (22,918) - (2,058) - (1,984) (26,960) 305.81% - - a) Financial assets/liabilities designated at fair value - - - - - - - - - b) Other financial assets mandatorily at fair value (22,918) - (2,058) - (1,984) (26,960) 20.18% - - 120. Operating income (11,714) 134,448 806,162 21 10,929 939,846 8.71% 2,990 0.03% 130. Net losses/recoveries on credit impairment relating to (30) - (45,981) 21 (81) (46,071) 2.29% 817 0.04% a) Financial assets at amortised cost (30) - (45,981) 21 (81) (46,071) 2.31% 817 0.04% b) Financial assets at fair value through other comprehensive income - - - - - - - - - 140. Gains/Losses from contractual changes with no cancellations - - - - - - - - - 190. Administrative expenses (1,421,715) 993 (924) (7) (18) (1,421,671) 24.40% - - a) Staff costs (15,453) 1,009 535 - - (13,909) 0.49% - - b) Other administrative expenses (1,406,262) (16) (1,459) (7) (18) (1,407,762) 47.57% - - 200. Net provisions for risks and charges 92 - (52) - (7) 33 0.01% - - 230. Other operating expenses/income 64,781 4,890 (57,028) 8 40 12,691 3.08% 1 - 240. Operating costs (1,356,842) 5,883 (58,004) 1 15 (1,408,947) 24.27% 1 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Company financial statements | Notes to the accounts Part H - Related-party transactions 724 2018 Annual Report and Accounts · UniCredit The following table sets out the impact of transactions, for each group of related parties, on income statements, pursuant to IAS24. Related-party transactions: profit and loss items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM 10. Interest income and similar revenues (96,491) 130,471 23,067 16 7,781 64,844 1.23% 3,167 0.06% 20. Interest expenses and similar charges 494,250 (501) (746) (1) (120) 492,882 44.43% (422) 0.04% 30. Net interest margin 397,759 129,970 22,321 15 7,661 557,726 13.39% 2,745 0.06% 40. Fees and commissions income 92,560 4,485 795,188 6 1,213 893,452 20.54% 245 - 50. Fees and commissions expenses (44,412) (7) (9,289) - - (53,708) 13.42% - - 60. Net fees and commissions 48,148 4,478 785,899 6 1,213 839,744 21.26% 245 0.01% 70. Dividend income and similar revenues - - - - - - - - - 80. Net gains (losses) on trading (229,496) - - - 4,039 (225,457) n.m. - - 90. Net gains (losses) on hedge accounting (204,095) - - - - (204,095) n.m. - - 100. Gains (Losses) on disposal and repurchase of (1,112) - - - - (1,112) 2.13% - - a) Financial assets at amortised cost - - - - - - - - - b) Financial assets at fair value through other comprehensive income (1,613) - - - - (1,613) 1.86% - - c) Financial liabilities 501 - - - - 501 66.18% - - 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss (22,918) - (2,058) - (1,984) (26,960) 305.81% - - a) Financial assets/liabilities designated at fair value - - - - - - - - - b) Other financial assets mandatorily at fair value (22,918) - (2,058) - (1,984) (26,960) 20.18% - - 120. Operating income (11,714) 134,448 806,162 21 10,929 939,846 8.71% 2,990 0.03% 130. Net losses/recoveries on credit impairment relating to (30) - (45,981) 21 (81) (46,071) 2.29% 817 0.04% a) Financial assets at amortised cost (30) - (45,981) 21 (81) (46,071) 2.31% 817 0.04% b) Financial assets at fair value through other comprehensive income - - - - - - - - - 140. Gains/Losses from contractual changes with no cancellations - - - - - - - - - 190. Administrative expenses (1,421,715) 993 (924) (7) (18) (1,421,671) 24.40% - - a) Staff costs (15,453) 1,009 535 - - (13,909) 0.49% - - b) Other administrative expenses (1,406,262) (16) (1,459) (7) (18) (1,407,762) 47.57% - - 200. Net provisions for risks and charges 92 - (52) - (7) 33 0.01% - - 230. Other operating expenses/income 64,781 4,890 (57,028) 8 40 12,691 3.08% 1 - 240. Operating costs (1,356,842) 5,883 (58,004) 1 15 (1,408,947) 24.27% 1 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Company financial statements | Notes to the accounts Part H - Related-party transactions 724 2018 Annual Report and Accounts · UniCredit The following table sets out the impact of transactions, for each group of related parties, on income statements, pursuant to IAS24. Related-party transactions: profit and loss items (€ '000) AMOUNTS AS AT 12.31.2018 CONTROLLED JOINT VENTURE ASSOCIETED COMPANIES KEY MANAGEMENT PERSONNEL OTHER RELATED PARTIES TOTAL % ON ACCOUNTS ITEM SHAREHOLDERS(*) % ON ACCOUNTS ITEM 10. Interest income and similar revenues (96,491) 130,471 23,067 16 7,781 64,844 1.23% 3,167 0.06% 20. Interest expenses and similar charges 494,250 (501) (746) (1) (120) 492,882 44.43% (422) 0.04% 30. Net interest margin 397,759 129,970 22,321 15 7,661 557,726 13.39% 2,745 0.06% 40. Fees and commissions income 92,560 4,485 795,188 6 1,213 893,452 20.54% 245 - 50. Fees and commissions expenses (44,412) (7) (9,289) - - (53,708) 13.42% - - 60. Net fees and commissions 48,148 4,478 785,899 6 1,213 839,744 21.26% 245 0.01% 70. Dividend income and similar revenues - - - - - - - - - 80. Net gains (losses) on trading (229,496) - - - 4,039 (225,457) n.m. - - 90. Net gains (losses) on hedge accounting (204,095) - - - - (204,095) n.m. - - 100. Gains (Losses) on disposal and repurchase of (1,112) - - - - (1,112) 2.13% - - a) Financial assets at amortised cost - - - - - - - - - b) Financial assets at fair value through other comprehensive income (1,613) - - - - (1,613) 1.86% - - c) Financial liabilities 501 - - - - 501 66.18% - - 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss (22,918) - (2,058) - (1,984) (26,960) 305.81% - - a) Financial assets/liabilities designated at fair value - - - - - - - - - b) Other financial assets mandatorily at fair value (22,918) - (2,058) - (1,984) (26,960) 20.18% - - 120. Operating income (11,714) 134,448 806,162 21 10,929 939,846 8.71% 2,990 0.03% 130. Net losses/recoveries on credit impairment relating to (30) - (45,981) 21 (81) (46,071) 2.29% 817 0.04% a) Financial assets at amortised cost (30) - (45,981) 21 (81) (46,071) 2.31% 817 0.04% b) Financial assets at fair value through other comprehensive income - - - - - - - - - 140. Gains/Losses from contractual changes with no cancellations - - - - - - - - - 190. Administrative expenses (1,421,715) 993 (924) (7) (18) (1,421,671) 24.40% - - a) Staff costs (15,453) 1,009 535 - - (13,909) 0.49% - - b) Other administrative expenses (1,406,262) (16) (1,459) (7) (18) (1,407,762) 47.57% - - 200. Net provisions for risks and charges 92 - (52) - (7) 33 0.01% - - 230. Other operating expenses/income 64,781 4,890 (57,028) 8 40 12,691 3.08% 1 - 240. Operating costs (1,356,842) 5,883 (58,004) 1 15 (1,408,947) 24.27% 1 - Note: (*) Shareholders and related companies holding more than 2% of voting shares in UniCredit. Company financial statements | Notes to the accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 725 The “Other related-parties IAS” category includes: • close family members of key management personnel (i.e. those family members who, as is expected, may influence, or be influenced by, the person in question); • companies controlled (or jointly controlled) by key management personnel or their close family members; • Group employee post-employment benefit plans. With reference to the description of main transactions with related parties, reference is made to the corresponding paragraph of Part H - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. Company financial statements | Notes to the accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 725 The “Other related-parties IAS” category includes: • close family members of key management personnel (i.e. those family members who, as is expected, may influence, or be influenced by, the person in question); • companies controlled (or jointly controlled) by key management personnel or their close family members; • Group employee post-employment benefit plans. With reference to the description of main transactions with related parties, reference is made to the corresponding paragraph of Part H - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. Company financial statements | Notes to the accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 725 The “Other related-parties IAS” category includes: • close family members of key management personnel (i.e. those family members who, as is expected, may influence, or be influenced by, the person in question); • companies controlled (or jointly controlled) by key management personnel or their close family members; • Group employee post-employment benefit plans. With reference to the description of main transactions with related parties, reference is made to the corresponding paragraph of Part H - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. Company financial statements | Notes to the accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 725 The “Other related-parties IAS” category includes: • close family members of key management personnel (i.e. those family members who, as is expected, may influence, or be influenced by, the person in question); • companies controlled (or jointly controlled) by key management personnel or their close family members; • Group employee post-employment benefit plans. With reference to the description of main transactions with related parties, reference is made to the corresponding paragraph of Part H - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. Company financial statements | Notes to the accounts Part H - Related-party transactions UniCredit ·2018 Annual Report and Accounts 725 The “Other related-parties IAS” category includes: • close family members of key management personnel (i.e. those family members who, as is expected, may influence, or be influenced by, the person in question); • companies controlled (or jointly controlled) by key management personnel or their close family members; • Group employee post-employment benefit plans. With reference to the description of main transactions with related parties, reference is made to the corresponding paragraph of Part H - Notes to the consolidated accounts of UniCredit group which is herewith quoted entirely. Company financial statements | Notes to the accounts Part I - Share based payments 726 2018 Annual Report and Accounts · UniCredit Part I - Share-based payments A. Qualitative information 1. Description of payment agreements based on own equity instruments Reference is made to the paragraph Share-Based Payments - A - Qualitative information - 1. Description of payment agreements based on own equity instruments - Part I of the Consolidated explanatory notes, which is herewith quoted for the part that concern the delivery of UniCredit shares. B. Quantitative information 1. Annual changes Reference is made to the paragraph Share-Based Payments - B - Quantitative information - 1. Annual changes - Part I of the Consolidated explanatory notes, which is herewith quoted entirely. 2. Other information All Share-Based Payment granted after 7 November 2002 whose vesting period ends after 1 January 2005 are included within the scope of the IFRS2. Financial statement presentation related to share based payments (€ '000) 2018 2017 TOTAL VESTED PLANS TOTAL VESTED PLANS (Costs)/Revenues (20,270) (29,765) - connected to equity-settled plan(1) (20,270) (32,413) - connected to cash-settled plans - 2,648 Debts for cash-settled plans - - - - Note: (1) Includes costs for €1.9 million related to golden parachute. Company financial statements | Notes to the accounts Part I - Share based payments 726 2018 Annual Report and Accounts · UniCredit Part I - Share-based payments A. Qualitative information 1. Description of payment agreements based on own equity instruments Reference is made to the paragraph Share-Based Payments - A - Qualitative information - 1. Description of payment agreements based on own equity instruments - Part I of the Consolidated explanatory notes, which is herewith quoted for the part that concern the delivery of UniCredit shares. B. Quantitative information 1. Annual changes Reference is made to the paragraph Share-Based Payments - B - Quantitative information - 1. Annual changes - Part I of the Consolidated explanatory notes, which is herewith quoted entirely. 2. Other information All Share-Based Payment granted after 7 November 2002 whose vesting period ends after 1 January 2005 are included within the scope of the IFRS2. Financial statement presentation related to share based payments (€ '000) 2018 2017 TOTAL VESTED PLANS TOTAL VESTED PLANS (Costs)/Revenues (20,270) (29,765) - connected to equity-settled plan(1) (20,270) (32,413) - connected to cash-settled plans - 2,648 Debts for cash-settled plans - - - - Note: (1) Includes costs for €1.9 million related to golden parachute. Company financial statements | Notes to the accounts Part I - Share based payments 726 2018 Annual Report and Accounts · UniCredit Part I - Share-based payments A. Qualitative information 1. Description of payment agreements based on own equity instruments Reference is made to the paragraph Share-Based Payments - A - Qualitative information - 1. Description of payment agreements based on own equity instruments - Part I of the Consolidated explanatory notes, which is herewith quoted for the part that concern the delivery of UniCredit shares. B. Quantitative information 1. Annual changes Reference is made to the paragraph Share-Based Payments - B - Quantitative information - 1. Annual changes - Part I of the Consolidated explanatory notes, which is herewith quoted entirely. 2. Other information All Share-Based Payment granted after 7 November 2002 whose vesting period ends after 1 January 2005 are included within the scope of the IFRS2. Financial statement presentation related to share based payments (€ '000) 2018 2017 TOTAL VESTED PLANS TOTAL VESTED PLANS (Costs)/Revenues (20,270) (29,765) - connected to equity-settled plan(1) (20,270) (32,413) - connected to cash-settled plans - 2,648 Debts for cash-settled plans - - - - Note: (1) Includes costs for €1.9 million related to golden parachute. Company financial statements | Notes to the accounts Part I - Share based payments 726 2018 Annual Report and Accounts · UniCredit Part I - Share-based payments A. Qualitative information 1. Description of payment agreements based on own equity instruments Reference is made to the paragraph Share-Based Payments - A - Qualitative information - 1. Description of payment agreements based on own equity instruments - Part I of the Consolidated explanatory notes, which is herewith quoted for the part that concern the delivery of UniCredit shares. B. Quantitative information 1. Annual changes Reference is made to the paragraph Share-Based Payments - B - Quantitative information - 1. Annual changes - Part I of the Consolidated explanatory notes, which is herewith quoted entirely. 2. Other information All Share-Based Payment granted after 7 November 2002 whose vesting period ends after 1 January 2005 are included within the scope of the IFRS2. Financial statement presentation related to share based payments (€ '000) 2018 2017 TOTAL VESTED PLANS TOTAL VESTED PLANS (Costs)/Revenues (20,270) (29,765) - connected to equity-settled plan(1) (20,270) (32,413) - connected to cash-settled plans - 2,648 Debts for cash-settled plans - - - - Note: (1) Includes costs for €1.9 million related to golden parachute. Company financial statements | Notes to the accounts Part I - Share based payments 726 2018 Annual Report and Accounts · UniCredit Part I - Share-based payments A. Qualitative information 1. Description of payment agreements based on own equity instruments Reference is made to the paragraph Share-Based Payments - A - Qualitative information - 1. Description of payment agreements based on own equity instruments - Part I of the Consolidated explanatory notes, which is herewith quoted for the part that concern the delivery of UniCredit shares. B. Quantitative information 1. Annual changes Reference is made to the paragraph Share-Based Payments - B - Quantitative information - 1. Annual changes - Part I of the Consolidated explanatory notes, which is herewith quoted entirely. 2. Other information All Share-Based Payment granted after 7 November 2002 whose vesting period ends after 1 January 2005 are included within the scope of the IFRS2. Financial statement presentation related to share based payments (€ '000) 2018 2017 TOTAL VESTED PLANS TOTAL VESTED PLANS (Costs)/Revenues (20,270) (29,765) - connected to equity-settled plan(1) (20,270) (32,413) - connected to cash-settled plans - 2,648 Debts for cash-settled plans - - - - Note: (1) Includes costs for €1.9 million related to golden parachute. Company financial statements | Notes to the accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 727 Part L - Segment reporting Segment reporting of UniCredit S.p.A., parent company of the UniCredit banking group, is provided in Part L of the Notes to the consolidated accounts, in accordance to the IFRS8. Company financial statements | Notes to the accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 727 Part L - Segment reporting Segment reporting of UniCredit S.p.A., parent company of the UniCredit banking group, is provided in Part L of the Notes to the consolidated accounts, in accordance to the IFRS8. Company financial statements | Notes to the accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 727 Part L - Segment reporting Segment reporting of UniCredit S.p.A., parent company of the UniCredit banking group, is provided in Part L of the Notes to the consolidated accounts, in accordance to the IFRS8. Company financial statements | Notes to the accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 727 Part L - Segment reporting Segment reporting of UniCredit S.p.A., parent company of the UniCredit banking group, is provided in Part L of the Notes to the consolidated accounts, in accordance to the IFRS8. Company financial statements | Notes to the accounts Part L - Segment reporting UniCredit ·2018 Annual Report and Accounts 727 Part L - Segment reporting Segment reporting of UniCredit S.p.A., parent company of the UniCredit banking group, is provided in Part L of the Notes to the consolidated accounts, in accordance to the IFRS8. Company financial statements | Notes to the accounts Part L - Segment reporting I 728 2018 Annual Report and Accounts · UniCredit Company financial statements | Notes to the accounts Part L - Segment reporting I 728 2018 Annual Report and Accounts · UniCredit Company financial statements | Notes to the accounts Part L - Segment reporting I 728 2018 Annual Report and Accounts · UniCredit Company financial statements | Notes to the accounts Part L - Segment reporting I 728 2018 Annual Report and Accounts · UniCredit Company financial statements | Notes to the accounts Part L - Segment reporting I 728 2018 Annual Report and Accounts · UniCredit Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 729 Annexes Annex 1 - Reconciliation schemes for the arrangement of the reclassified financial statements A reconciliation of the reclassified balance sheet and profit and loss account to the mandatory reporting schedules, is provided below. Any discrepancy in the data shown in this table is solely due to roundings. An explanation for the restatement of comparative figures is provided in the previous sections. Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 ASSETS Cash and cash balances 7,461 10. Cash and cash balances 7,461 Financial assets held for trading 11,834 20. Financial assets at fair value through profit and loss: a) Financial assets held for trading 11,834 Loans to banks 28,635 40. Financial assets at amortised cost: a) Loans and receivables with banks 30,972 less: Reclassification of debt securities in Other financial assets (2,336) Loans to customers 222,591 40. Financial assets at amortised cost: b) Loans and receivables with customers 239,585 less: Reclassification of debt securities in Other financial assets (17,052) + Reclassification of loans from Other financial assets - Item 20 c) 58 Other financial assets 112,294 20. Financial assets at fair value through profit and loss: b) Financial assets designated at fair value - 20. Financial assets at fair value through profit and loss: c) Other financial assets mandatorily at fair value 3,164 less: Reclassification of loans in Loans to customers (58) 30. Financial assets at fair value through other comprehensive income 46,927 70. Equity investments 42,873 + Reclassification of debt securities from Loans to banks - Item 40 a) 2,336 + Reclassification of debt securities from Loans to customers - Item 40 b) 17,052 Hedging instruments 5,853 50. Hedging derivatives 4,167 60. Changes in fair value of portfolio hedged items (+/-) 1,686 Property, plant and equipment 2,246 80. Property, plant and equipment 2,246 Goodwill - 90. Intangible assets of which: goodwill - Other intangible assets 4 90. Intangible assets net of goodwill 4 Tax assets 10,704 100. Tax assets 10,704 Non-current assets and disposal groups classified as held for sale 117 110. Non-current assets and disposal groups classified as held for sale 117 Other assets 3,877 120. Other assets 3,876 Total assets 405,616 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 729 Annexes Annex 1 - Reconciliation schemes for the arrangement of the reclassified financial statements A reconciliation of the reclassified balance sheet and profit and loss account to the mandatory reporting schedules, is provided below. Any discrepancy in the data shown in this table is solely due to roundings. An explanation for the restatement of comparative figures is provided in the previous sections. Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 ASSETS Cash and cash balances 7,461 10. Cash and cash balances 7,461 Financial assets held for trading 11,834 20. Financial assets at fair value through profit and loss: a) Financial assets held for trading 11,834 Loans to banks 28,635 40. Financial assets at amortised cost: a) Loans and receivables with banks 30,972 less: Reclassification of debt securities in Other financial assets (2,336) Loans to customers 222,591 40. Financial assets at amortised cost: b) Loans and receivables with customers 239,585 less: Reclassification of debt securities in Other financial assets (17,052) + Reclassification of loans from Other financial assets - Item 20 c) 58 Other financial assets 112,294 20. Financial assets at fair value through profit and loss: b) Financial assets designated at fair value - 20. Financial assets at fair value through profit and loss: c) Other financial assets mandatorily at fair value 3,164 less: Reclassification of loans in Loans to customers (58) 30. Financial assets at fair value through other comprehensive income 46,927 70. Equity investments 42,873 + Reclassification of debt securities from Loans to banks - Item 40 a) 2,336 + Reclassification of debt securities from Loans to customers - Item 40 b) 17,052 Hedging instruments 5,853 50. Hedging derivatives 4,167 60. Changes in fair value of portfolio hedged items (+/-) 1,686 Property, plant and equipment 2,246 80. Property, plant and equipment 2,246 Goodwill - 90. Intangible assets of which: goodwill - Other intangible assets 4 90. Intangible assets net of goodwill 4 Tax assets 10,704 100. Tax assets 10,704 Non-current assets and disposal groups classified as held for sale 117 110. Non-current assets and disposal groups classified as held for sale 117 Other assets 3,877 120. Other assets 3,876 Total assets 405,616 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 729 Annexes Annex 1 - Reconciliation schemes for the arrangement of the reclassified financial statements A reconciliation of the reclassified balance sheet and profit and loss account to the mandatory reporting schedules, is provided below. Any discrepancy in the data shown in this table is solely due to roundings. An explanation for the restatement of comparative figures is provided in the previous sections. Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 ASSETS Cash and cash balances 7,461 10. Cash and cash balances 7,461 Financial assets held for trading 11,834 20. Financial assets at fair value through profit and loss: a) Financial assets held for trading 11,834 Loans to banks 28,635 40. Financial assets at amortised cost: a) Loans and receivables with banks 30,972 less: Reclassification of debt securities in Other financial assets (2,336) Loans to customers 222,591 40. Financial assets at amortised cost: b) Loans and receivables with customers 239,585 less: Reclassification of debt securities in Other financial assets (17,052) + Reclassification of loans from Other financial assets - Item 20 c) 58 Other financial assets 112,294 20. Financial assets at fair value through profit and loss: b) Financial assets designated at fair value - 20. Financial assets at fair value through profit and loss: c) Other financial assets mandatorily at fair value 3,164 less: Reclassification of loans in Loans to customers (58) 30. Financial assets at fair value through other comprehensive income 46,927 70. Equity investments 42,873 + Reclassification of debt securities from Loans to banks - Item 40 a) 2,336 + Reclassification of debt securities from Loans to customers - Item 40 b) 17,052 Hedging instruments 5,853 50. Hedging derivatives 4,167 60. Changes in fair value of portfolio hedged items (+/-) 1,686 Property, plant and equipment 2,246 80. Property, plant and equipment 2,246 Goodwill - 90. Intangible assets of which: goodwill - Other intangible assets 4 90. Intangible assets net of goodwill 4 Tax assets 10,704 100. Tax assets 10,704 Non-current assets and disposal groups classified as held for sale 117 110. Non-current assets and disposal groups classified as held for sale 117 Other assets 3,877 120. Other assets 3,876 Total assets 405,616 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 729 Annexes Annex 1 - Reconciliation schemes for the arrangement of the reclassified financial statements A reconciliation of the reclassified balance sheet and profit and loss account to the mandatory reporting schedules, is provided below. Any discrepancy in the data shown in this table is solely due to roundings. An explanation for the restatement of comparative figures is provided in the previous sections. Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 ASSETS Cash and cash balances 7,461 10. Cash and cash balances 7,461 Financial assets held for trading 11,834 20. Financial assets at fair value through profit and loss: a) Financial assets held for trading 11,834 Loans to banks 28,635 40. Financial assets at amortised cost: a) Loans and receivables with banks 30,972 less: Reclassification of debt securities in Other financial assets (2,336) Loans to customers 222,591 40. Financial assets at amortised cost: b) Loans and receivables with customers 239,585 less: Reclassification of debt securities in Other financial assets (17,052) + Reclassification of loans from Other financial assets - Item 20 c) 58 Other financial assets 112,294 20. Financial assets at fair value through profit and loss: b) Financial assets designated at fair value - 20. Financial assets at fair value through profit and loss: c) Other financial assets mandatorily at fair value 3,164 less: Reclassification of loans in Loans to customers (58) 30. Financial assets at fair value through other comprehensive income 46,927 70. Equity investments 42,873 + Reclassification of debt securities from Loans to banks - Item 40 a) 2,336 + Reclassification of debt securities from Loans to customers - Item 40 b) 17,052 Hedging instruments 5,853 50. Hedging derivatives 4,167 60. Changes in fair value of portfolio hedged items (+/-) 1,686 Property, plant and equipment 2,246 80. Property, plant and equipment 2,246 Goodwill - 90. Intangible assets of which: goodwill - Other intangible assets 4 90. Intangible assets net of goodwill 4 Tax assets 10,704 100. Tax assets 10,704 Non-current assets and disposal groups classified as held for sale 117 110. Non-current assets and disposal groups classified as held for sale 117 Other assets 3,877 120. Other assets 3,876 Total assets 405,616 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 729 Annexes Annex 1 - Reconciliation schemes for the arrangement of the reclassified financial statements A reconciliation of the reclassified balance sheet and profit and loss account to the mandatory reporting schedules, is provided below. Any discrepancy in the data shown in this table is solely due to roundings. An explanation for the restatement of comparative figures is provided in the previous sections. Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 ASSETS Cash and cash balances 7,461 10. Cash and cash balances 7,461 Financial assets held for trading 11,834 20. Financial assets at fair value through profit and loss: a) Financial assets held for trading 11,834 Loans to banks 28,635 40. Financial assets at amortised cost: a) Loans and receivables with banks 30,972 less: Reclassification of debt securities in Other financial assets (2,336) Loans to customers 222,591 40. Financial assets at amortised cost: b) Loans and receivables with customers 239,585 less: Reclassification of debt securities in Other financial assets (17,052) + Reclassification of loans from Other financial assets - Item 20 c) 58 Other financial assets 112,294 20. Financial assets at fair value through profit and loss: b) Financial assets designated at fair value - 20. Financial assets at fair value through profit and loss: c) Other financial assets mandatorily at fair value 3,164 less: Reclassification of loans in Loans to customers (58) 30. Financial assets at fair value through other comprehensive income 46,927 70. Equity investments 42,873 + Reclassification of debt securities from Loans to banks - Item 40 a) 2,336 + Reclassification of debt securities from Loans to customers - Item 40 b) 17,052 Hedging instruments 5,853 50. Hedging derivatives 4,167 60. Changes in fair value of portfolio hedged items (+/-) 1,686 Property, plant and equipment 2,246 80. Property, plant and equipment 2,246 Goodwill - 90. Intangible assets of which: goodwill - Other intangible assets 4 90. Intangible assets net of goodwill 4 Tax assets 10,704 100. Tax assets 10,704 Non-current assets and disposal groups classified as held for sale 117 110. Non-current assets and disposal groups classified as held for sale 117 Other assets 3,877 120. Other assets 3,876 Total assets 405,616 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 730 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits from banks 58,995 10. Financial liabilities at amortised cost: a) Deposits from banks 58,995 Deposits from customers 211,872 10. Financial liabilities at amortised cost: b) Deposits from customers 211,872 Debt securities issued 52,969 10. Financial liabilities at amortised cost: c) Debt securities in issue 52,969 Financial liabilities held for trading 10,384 20. Financial liabilities held for trading 10,384 Financial liabilities designated at fair value 3,535 30. Financial liabilities designated at fair value 3,535 Hedging instruments 6,295 40. Hedging derivatives 4,525 50. Value adjustment of hedged financial liabilities (+/-) 1,770 Tax liabilities 2 60. Tax liabilities 2 Liabilities included in disposal group classified as held for sale - 70. Liabilities referrable to disposal groups classified as held for sale - Other liabilities 10,728 80. Other liabilities 7,617 90. Provision for employee severance pay 629 100. Provisions for risks and charges 2,483 Shareholders' Equity: 50,836 - Capital and reserves 48,378 110. Valuation reserves (503) 120. Redeemable shares - 130. Equity instruments 4,610 140. Reserves 9,940 150. Share premium 13,393 160. Share capital 20,940 170. Treasury shares (-) (2) - Net profit (loss) 2,458 180. Profit (Loss) of the period (+/-) 2,458 Total liabilities and Shareholders' Equity 405,616 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 730 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits from banks 58,995 10. Financial liabilities at amortised cost: a) Deposits from banks 58,995 Deposits from customers 211,872 10. Financial liabilities at amortised cost: b) Deposits from customers 211,872 Debt securities issued 52,969 10. Financial liabilities at amortised cost: c) Debt securities in issue 52,969 Financial liabilities held for trading 10,384 20. Financial liabilities held for trading 10,384 Financial liabilities designated at fair value 3,535 30. Financial liabilities designated at fair value 3,535 Hedging instruments 6,295 40. Hedging derivatives 4,525 50. Value adjustment of hedged financial liabilities (+/-) 1,770 Tax liabilities 2 60. Tax liabilities 2 Liabilities included in disposal group classified as held for sale - 70. Liabilities referrable to disposal groups classified as held for sale - Other liabilities 10,728 80. Other liabilities 7,617 90. Provision for employee severance pay 629 100. Provisions for risks and charges 2,483 Shareholders' Equity: 50,836 - Capital and reserves 48,378 110. Valuation reserves (503) 120. Redeemable shares - 130. Equity instruments 4,610 140. Reserves 9,940 150. Share premium 13,393 160. Share capital 20,940 170. Treasury shares (-) (2) - Net profit (loss) 2,458 180. Profit (Loss) of the period (+/-) 2,458 Total liabilities and Shareholders' Equity 405,616 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 730 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits from banks 58,995 10. Financial liabilities at amortised cost: a) Deposits from banks 58,995 Deposits from customers 211,872 10. Financial liabilities at amortised cost: b) Deposits from customers 211,872 Debt securities issued 52,969 10. Financial liabilities at amortised cost: c) Debt securities in issue 52,969 Financial liabilities held for trading 10,384 20. Financial liabilities held for trading 10,384 Financial liabilities designated at fair value 3,535 30. Financial liabilities designated at fair value 3,535 Hedging instruments 6,295 40. Hedging derivatives 4,525 50. Value adjustment of hedged financial liabilities (+/-) 1,770 Tax liabilities 2 60. Tax liabilities 2 Liabilities included in disposal group classified as held for sale - 70. Liabilities referrable to disposal groups classified as held for sale - Other liabilities 10,728 80. Other liabilities 7,617 90. Provision for employee severance pay 629 100. Provisions for risks and charges 2,483 Shareholders' Equity: 50,836 - Capital and reserves 48,378 110. Valuation reserves (503) 120. Redeemable shares - 130. Equity instruments 4,610 140. Reserves 9,940 150. Share premium 13,393 160. Share capital 20,940 170. Treasury shares (-) (2) - Net profit (loss) 2,458 180. Profit (Loss) of the period (+/-) 2,458 Total liabilities and Shareholders' Equity 405,616 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 730 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits from banks 58,995 10. Financial liabilities at amortised cost: a) Deposits from banks 58,995 Deposits from customers 211,872 10. Financial liabilities at amortised cost: b) Deposits from customers 211,872 Debt securities issued 52,969 10. Financial liabilities at amortised cost: c) Debt securities in issue 52,969 Financial liabilities held for trading 10,384 20. Financial liabilities held for trading 10,384 Financial liabilities designated at fair value 3,535 30. Financial liabilities designated at fair value 3,535 Hedging instruments 6,295 40. Hedging derivatives 4,525 50. Value adjustment of hedged financial liabilities (+/-) 1,770 Tax liabilities 2 60. Tax liabilities 2 Liabilities included in disposal group classified as held for sale - 70. Liabilities referrable to disposal groups classified as held for sale - Other liabilities 10,728 80. Other liabilities 7,617 90. Provision for employee severance pay 629 100. Provisions for risks and charges 2,483 Shareholders' Equity: 50,836 - Capital and reserves 48,378 110. Valuation reserves (503) 120. Redeemable shares - 130. Equity instruments 4,610 140. Reserves 9,940 150. Share premium 13,393 160. Share capital 20,940 170. Treasury shares (-) (2) - Net profit (loss) 2,458 180. Profit (Loss) of the period (+/-) 2,458 Total liabilities and Shareholders' Equity 405,616 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 730 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ million) AMOUNTS AS AT 12.31.2018 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits from banks 58,995 10. Financial liabilities at amortised cost: a) Deposits from banks 58,995 Deposits from customers 211,872 10. Financial liabilities at amortised cost: b) Deposits from customers 211,872 Debt securities issued 52,969 10. Financial liabilities at amortised cost: c) Debt securities in issue 52,969 Financial liabilities held for trading 10,384 20. Financial liabilities held for trading 10,384 Financial liabilities designated at fair value 3,535 30. Financial liabilities designated at fair value 3,535 Hedging instruments 6,295 40. Hedging derivatives 4,525 50. Value adjustment of hedged financial liabilities (+/-) 1,770 Tax liabilities 2 60. Tax liabilities 2 Liabilities included in disposal group classified as held for sale - 70. Liabilities referrable to disposal groups classified as held for sale - Other liabilities 10,728 80. Other liabilities 7,617 90. Provision for employee severance pay 629 100. Provisions for risks and charges 2,483 Shareholders' Equity: 50,836 - Capital and reserves 48,378 110. Valuation reserves (503) 120. Redeemable shares - 130. Equity instruments 4,610 140. Reserves 9,940 150. Share premium 13,393 160. Share capital 20,940 170. Treasury shares (-) (2) - Net profit (loss) 2,458 180. Profit (Loss) of the period (+/-) 2,458 Total liabilities and Shareholders' Equity 405,616 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 731 Balance sheet (€ million) AMOUNTS AS AT 12.31.2017 ASSETS Cash and cash balances 25,817 10. Cash and cash balances 25,817 Financial assets held for trading 13,864 20. Financial assets held for trading 13,864 Loans to banks 27,567 60. Loans and receivables with banks 27,567 Loans to customers 206,546 70. Loans and receivables with customers 208,965 Reclassification of debt securities with customers (2,419) Other financial assets 107,697 30. Financial assets at fair value through profit or loss 652 40. Available-for-sale financial assets 59,718 50. Held-to maturity investments 762 100. Investments in associates and joint ventures 44,145 Reclassification of debt securities with customers 2,419 Hedging instruments 6,114 80. Hedging derivatives 4,400 90. Changes in fair value of portfolio hedged items (+/-) 1,714 Property, plant and equipment 2,209 110. Property, plant and equipment 2,209 Goodwill - 120. Intangible assets net of which: goodwill - Other intangible assets 4 120. Intangible assets net of goodwill 4 Tax assets 10,311 130. Tax assets 10,311 Non-current assets and disposal groups classified as held for sale 150 140. Non-current assets and disposal groups classified as held for sale 150 Other assets 4,701 150. Other assets 4,700 Total assets 404,980 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 731 Balance sheet (€ million) AMOUNTS AS AT 12.31.2017 ASSETS Cash and cash balances 25,817 10. Cash and cash balances 25,817 Financial assets held for trading 13,864 20. Financial assets held for trading 13,864 Loans to banks 27,567 60. Loans and receivables with banks 27,567 Loans to customers 206,546 70. Loans and receivables with customers 208,965 Reclassification of debt securities with customers (2,419) Other financial assets 107,697 30. Financial assets at fair value through profit or loss 652 40. Available-for-sale financial assets 59,718 50. Held-to maturity investments 762 100. Investments in associates and joint ventures 44,145 Reclassification of debt securities with customers 2,419 Hedging instruments 6,114 80. Hedging derivatives 4,400 90. Changes in fair value of portfolio hedged items (+/-) 1,714 Property, plant and equipment 2,209 110. Property, plant and equipment 2,209 Goodwill - 120. Intangible assets net of which: goodwill - Other intangible assets 4 120. Intangible assets net of goodwill 4 Tax assets 10,311 130. Tax assets 10,311 Non-current assets and disposal groups classified as held for sale 150 140. Non-current assets and disposal groups classified as held for sale 150 Other assets 4,701 150. Other assets 4,700 Total assets 404,980 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 731 Balance sheet (€ million) AMOUNTS AS AT 12.31.2017 ASSETS Cash and cash balances 25,817 10. Cash and cash balances 25,817 Financial assets held for trading 13,864 20. Financial assets held for trading 13,864 Loans to banks 27,567 60. Loans and receivables with banks 27,567 Loans to customers 206,546 70. Loans and receivables with customers 208,965 Reclassification of debt securities with customers (2,419) Other financial assets 107,697 30. Financial assets at fair value through profit or loss 652 40. Available-for-sale financial assets 59,718 50. Held-to maturity investments 762 100. Investments in associates and joint ventures 44,145 Reclassification of debt securities with customers 2,419 Hedging instruments 6,114 80. Hedging derivatives 4,400 90. Changes in fair value of portfolio hedged items (+/-) 1,714 Property, plant and equipment 2,209 110. Property, plant and equipment 2,209 Goodwill - 120. Intangible assets net of which: goodwill - Other intangible assets 4 120. Intangible assets net of goodwill 4 Tax assets 10,311 130. Tax assets 10,311 Non-current assets and disposal groups classified as held for sale 150 140. Non-current assets and disposal groups classified as held for sale 150 Other assets 4,701 150. Other assets 4,700 Total assets 404,980 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 731 Balance sheet (€ million) AMOUNTS AS AT 12.31.2017 ASSETS Cash and cash balances 25,817 10. Cash and cash balances 25,817 Financial assets held for trading 13,864 20. Financial assets held for trading 13,864 Loans to banks 27,567 60. Loans and receivables with banks 27,567 Loans to customers 206,546 70. Loans and receivables with customers 208,965 Reclassification of debt securities with customers (2,419) Other financial assets 107,697 30. Financial assets at fair value through profit or loss 652 40. Available-for-sale financial assets 59,718 50. Held-to maturity investments 762 100. Investments in associates and joint ventures 44,145 Reclassification of debt securities with customers 2,419 Hedging instruments 6,114 80. Hedging derivatives 4,400 90. Changes in fair value of portfolio hedged items (+/-) 1,714 Property, plant and equipment 2,209 110. Property, plant and equipment 2,209 Goodwill - 120. Intangible assets net of which: goodwill - Other intangible assets 4 120. Intangible assets net of goodwill 4 Tax assets 10,311 130. Tax assets 10,311 Non-current assets and disposal groups classified as held for sale 150 140. Non-current assets and disposal groups classified as held for sale 150 Other assets 4,701 150. Other assets 4,700 Total assets 404,980 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 731 Balance sheet (€ million) AMOUNTS AS AT 12.31.2017 ASSETS Cash and cash balances 25,817 10. Cash and cash balances 25,817 Financial assets held for trading 13,864 20. Financial assets held for trading 13,864 Loans to banks 27,567 60. Loans and receivables with banks 27,567 Loans to customers 206,546 70. Loans and receivables with customers 208,965 Reclassification of debt securities with customers (2,419) Other financial assets 107,697 30. Financial assets at fair value through profit or loss 652 40. Available-for-sale financial assets 59,718 50. Held-to maturity investments 762 100. Investments in associates and joint ventures 44,145 Reclassification of debt securities with customers 2,419 Hedging instruments 6,114 80. Hedging derivatives 4,400 90. Changes in fair value of portfolio hedged items (+/-) 1,714 Property, plant and equipment 2,209 110. Property, plant and equipment 2,209 Goodwill - 120. Intangible assets net of which: goodwill - Other intangible assets 4 120. Intangible assets net of goodwill 4 Tax assets 10,311 130. Tax assets 10,311 Non-current assets and disposal groups classified as held for sale 150 140. Non-current assets and disposal groups classified as held for sale 150 Other assets 4,701 150. Other assets 4,700 Total assets 404,980 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 732 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ million) AMOUNTS AS AT 12.31.2017 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits from banks 56,807 10. Deposits from banks 56,807 Deposits from customers and debt securities in issue 197,139 20. Deposits from customers 197,138 Debt securities issued 64,945 30. Debt securities in issue 64,946 Financial liabilities held for trading 13,068 40. Financial liabilities held for trading 13,068 Financial liabilities at fair value through profit or loss 2,738 50. Financial liabilities at fair value through profit or loss 2,738 Hedging instruments 6,279 60. Hedging derivatives 4,558 70. Changes in fair value of portfolio hedged items (+/-) 1,720 Tax liabilities 1 80. Tax Liabilities 1 Liabilities included in disposal group classified as held for sale - 90. Liabilities included in disposal group classified as held for sale - Other liabilities 10,495 100. Other liabilities 7,824 110. Provision for employee severance pay 828 120. Provisions for risks and charges 1,843 Shareholders' Equity: 53,508 - Capital and reserves 47,272 130. Revaluation reserves 586 140. Redeemable shares - 150. Equity instruments 4,610 160. Reserves 7,799 170. Share premium 13,400 180. Issued capital 20,881 190. Treasury shares (2) - Net profit (loss) 6,236 200. Net profit (loss) for the period (+/-) 6,236 Total liabilities and Shareholders' equity 404,980 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 732 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ million) AMOUNTS AS AT 12.31.2017 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits from banks 56,807 10. Deposits from banks 56,807 Deposits from customers and debt securities in issue 197,139 20. Deposits from customers 197,138 Debt securities issued 64,945 30. Debt securities in issue 64,946 Financial liabilities held for trading 13,068 40. Financial liabilities held for trading 13,068 Financial liabilities at fair value through profit or loss 2,738 50. Financial liabilities at fair value through profit or loss 2,738 Hedging instruments 6,279 60. Hedging derivatives 4,558 70. Changes in fair value of portfolio hedged items (+/-) 1,720 Tax liabilities 1 80. Tax Liabilities 1 Liabilities included in disposal group classified as held for sale - 90. Liabilities included in disposal group classified as held for sale - Other liabilities 10,495 100. Other liabilities 7,824 110. Provision for employee severance pay 828 120. Provisions for risks and charges 1,843 Shareholders' Equity: 53,508 - Capital and reserves 47,272 130. Revaluation reserves 586 140. Redeemable shares - 150. Equity instruments 4,610 160. Reserves 7,799 170. Share premium 13,400 180. Issued capital 20,881 190. Treasury shares (2) - Net profit (loss) 6,236 200. Net profit (loss) for the period (+/-) 6,236 Total liabilities and Shareholders' equity 404,980 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 732 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ million) AMOUNTS AS AT 12.31.2017 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits from banks 56,807 10. Deposits from banks 56,807 Deposits from customers and debt securities in issue 197,139 20. Deposits from customers 197,138 Debt securities issued 64,945 30. Debt securities in issue 64,946 Financial liabilities held for trading 13,068 40. Financial liabilities held for trading 13,068 Financial liabilities at fair value through profit or loss 2,738 50. Financial liabilities at fair value through profit or loss 2,738 Hedging instruments 6,279 60. Hedging derivatives 4,558 70. Changes in fair value of portfolio hedged items (+/-) 1,720 Tax liabilities 1 80. Tax Liabilities 1 Liabilities included in disposal group classified as held for sale - 90. Liabilities included in disposal group classified as held for sale - Other liabilities 10,495 100. Other liabilities 7,824 110. Provision for employee severance pay 828 120. Provisions for risks and charges 1,843 Shareholders' Equity: 53,508 - Capital and reserves 47,272 130. Revaluation reserves 586 140. Redeemable shares - 150. Equity instruments 4,610 160. Reserves 7,799 170. Share premium 13,400 180. Issued capital 20,881 190. Treasury shares (2) - Net profit (loss) 6,236 200. Net profit (loss) for the period (+/-) 6,236 Total liabilities and Shareholders' equity 404,980 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 732 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ million) AMOUNTS AS AT 12.31.2017 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits from banks 56,807 10. Deposits from banks 56,807 Deposits from customers and debt securities in issue 197,139 20. Deposits from customers 197,138 Debt securities issued 64,945 30. Debt securities in issue 64,946 Financial liabilities held for trading 13,068 40. Financial liabilities held for trading 13,068 Financial liabilities at fair value through profit or loss 2,738 50. Financial liabilities at fair value through profit or loss 2,738 Hedging instruments 6,279 60. Hedging derivatives 4,558 70. Changes in fair value of portfolio hedged items (+/-) 1,720 Tax liabilities 1 80. Tax Liabilities 1 Liabilities included in disposal group classified as held for sale - 90. Liabilities included in disposal group classified as held for sale - Other liabilities 10,495 100. Other liabilities 7,824 110. Provision for employee severance pay 828 120. Provisions for risks and charges 1,843 Shareholders' Equity: 53,508 - Capital and reserves 47,272 130. Revaluation reserves 586 140. Redeemable shares - 150. Equity instruments 4,610 160. Reserves 7,799 170. Share premium 13,400 180. Issued capital 20,881 190. Treasury shares (2) - Net profit (loss) 6,236 200. Net profit (loss) for the period (+/-) 6,236 Total liabilities and Shareholders' equity 404,980 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 732 2018 Annual Report and Accounts · UniCredit continued: Balance sheet (€ million) AMOUNTS AS AT 12.31.2017 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits from banks 56,807 10. Deposits from banks 56,807 Deposits from customers and debt securities in issue 197,139 20. Deposits from customers 197,138 Debt securities issued 64,945 30. Debt securities in issue 64,946 Financial liabilities held for trading 13,068 40. Financial liabilities held for trading 13,068 Financial liabilities at fair value through profit or loss 2,738 50. Financial liabilities at fair value through profit or loss 2,738 Hedging instruments 6,279 60. Hedging derivatives 4,558 70. Changes in fair value of portfolio hedged items (+/-) 1,720 Tax liabilities 1 80. Tax Liabilities 1 Liabilities included in disposal group classified as held for sale - 90. Liabilities included in disposal group classified as held for sale - Other liabilities 10,495 100. Other liabilities 7,824 110. Provision for employee severance pay 828 120. Provisions for risks and charges 1,843 Shareholders' Equity: 53,508 - Capital and reserves 47,272 130. Revaluation reserves 586 140. Redeemable shares - 150. Equity instruments 4,610 160. Reserves 7,799 170. Share premium 13,400 180. Issued capital 20,881 190. Treasury shares (2) - Net profit (loss) 6,236 200. Net profit (loss) for the period (+/-) 6,236 Total liabilities and Shareholders' equity 404,980 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 733 Income statement (€ million) YEAR 2018 Net interest 4,166 30. Net interest margin 4,166 Dividends and other income from equity investments 2,630 70. Dividend income and similar revenue 2,630 Net fees and commissions 3,839 60. Net fees and commissions 3,950 + Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans (from Item 160 b) (111) Net trading income 78 80. Net gains (losses) on trading - 90. Net gains (losses) on hedge accounting 1 100. Gains (Losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income 87 100. Gains (Losses) on disposal and repurchase of: c) financial liabilities (1) 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss (9) + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - debt securities (from Item 100 a) - Net other expenses/income (94) 200. Other operating expenses/income 412 less: Other operating expenses/income - recovery of expenses (508) less: Other operating expenses/income - leasehold improvements 21 less: Other operating expenses/income - integration costs 1 + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans (from Item 100 a) (1) + Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans - penalties (from Item 160 b) (18) OPERATING INCOME 10,619 Payroll costs (2,866) 160. Administrative expenses: a) staff costs (2,866) less: Administrative expenses - staff costs - integration costs - Other administrative expenses (2,465) 160. Administrative expenses: b) Other administrative expenses (2,960) less: Administrative expenses - other administrative expenses contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA 384 less: Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans 111 less: Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans - penalties 18 less: Administrative expenses - other administrative expenses - integration costs 2 + Other operating expenses/income - leasehold improvements (from Item 200) (21) Recovery of expenses 508 + Other operating expenses/income - recovery of expenses (from Item 200) 508 Amortisation, depreciation and impairment losses on intangible and tangible assets (137) 180. Net value adjustments/write-backs on property, plant and equipment (152) less: Net value adjustments/write backs on property, plant and equipment - owned for investment 17 190. Net value adjustments/write-backs on intangible assets (2) Operating costs (4,960) OPERATING PROFIT (LOSS) 5,659 Net impairment losses on loans and provisions for guarantees and commitments (1,986) 100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost (34) less: Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans 1 less: Gains (Losses) on disposal and repurchase of financial assets at amortised cost - debt securities - 130. Net losses/recoveries on impairment relating to: a) financial assets at amortised cost (1,998) less: Net losses/recoveries on impairment relating to financial assets at amortised cost - debt securities 11 130. Net losses/recoveries on impairment relating to: b) financial assets at fair value through other comprehensive income (14) less: Net losses/recoveries on impairment relating to financial assets at fair value through other comprehensive income - debt securities 14 140. Gains/Losses from contractual changes with no cancellations (3) 170. Net provisions for risks and charges: a) commitments and financial guarantees given 38 NET OPERATING PROFIT (LOSS) 3,673 Other charges and provisions (786) 170. Net provisions for risks and charges: b) other net provisions (428) less: Tax disputes relating to income tax (interests and sanctions excluded) 26 + Administrative expenses - other administrative expenses contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA (from Item 160 b) (384) Integration costs (3) + Administrative expenses - staff costs - integration costs (from Item 160 a) - + Administrative expenses - other administrative expenses - integration costs (from Item 160 b) (2) + Net other expenses/income - integration costs - (from Item 200) (1) Net income from investments (1,582) 220. Profit (Loss) of equity investments (1,590) 230. Net gains (losses) on tangible and intangible assets measured at fair value - 250. Gains (Losses) on disposal of investments 50 + Net losses/recoveries on impairment relating to financial assets at amortised cost - debt securities (from Item 130 a) (11) + Net losses/recoveries on impairment relating to financial assets at fair value through other comprehensive income - debt securities (from Item 130 b) (14) + Net value adjustments/write backs on property, plant and equipment - owned for investment (from Item 180) (17) PROFIT (LOSS) BEFORE TAX 1,302 Income tax 1,156 270. Tax expenses (income) from continuing operations 1,182 + Other changes and provisions - Tax disputes relating to income tax (interests and sanctions excluded) - (from Item 170 b) (26) PROFIT (LOSS) AFTER TAX 2,458 Profit (Loss) from non-current assets held for sale after tax - 290. Profit (Loss) after tax from discontinued operations - PROFIT (LOSS) FOR THE PERIOD 2,458 Goodwill impairment - 240. Goodwill impairment - NET PROFIT (LOSS) 2,458 300. Net profit (loss) for the period 2,458 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 733 Income statement (€ million) YEAR 2018 Net interest 4,166 30. Net interest margin 4,166 Dividends and other income from equity investments 2,630 70. Dividend income and similar revenue 2,630 Net fees and commissions 3,839 60. Net fees and commissions 3,950 + Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans (from Item 160 b) (111) Net trading income 78 80. Net gains (losses) on trading - 90. Net gains (losses) on hedge accounting 1 100. Gains (Losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income 87 100. Gains (Losses) on disposal and repurchase of: c) financial liabilities (1) 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss (9) + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - debt securities (from Item 100 a) - Net other expenses/income (94) 200. Other operating expenses/income 412 less: Other operating expenses/income - recovery of expenses (508) less: Other operating expenses/income - leasehold improvements 21 less: Other operating expenses/income - integration costs 1 + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans (from Item 100 a) (1) + Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans - penalties (from Item 160 b) (18) OPERATING INCOME 10,619 Payroll costs (2,866) 160. Administrative expenses: a) staff costs (2,866) less: Administrative expenses - staff costs - integration costs - Other administrative expenses (2,465) 160. Administrative expenses: b) Other administrative expenses (2,960) less: Administrative expenses - other administrative expenses contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA 384 less: Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans 111 less: Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans - penalties 18 less: Administrative expenses - other administrative expenses - integration costs 2 + Other operating expenses/income - leasehold improvements (from Item 200) (21) Recovery of expenses 508 + Other operating expenses/income - recovery of expenses (from Item 200) 508 Amortisation, depreciation and impairment losses on intangible and tangible assets (137) 180. Net value adjustments/write-backs on property, plant and equipment (152) less: Net value adjustments/write backs on property, plant and equipment - owned for investment 17 190. Net value adjustments/write-backs on intangible assets (2) Operating costs (4,960) OPERATING PROFIT (LOSS) 5,659 Net impairment losses on loans and provisions for guarantees and commitments (1,986) 100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost (34) less: Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans 1 less: Gains (Losses) on disposal and repurchase of financial assets at amortised cost - debt securities - 130. Net losses/recoveries on impairment relating to: a) financial assets at amortised cost (1,998) less: Net losses/recoveries on impairment relating to financial assets at amortised cost - debt securities 11 130. Net losses/recoveries on impairment relating to: b) financial assets at fair value through other comprehensive income (14) less: Net losses/recoveries on impairment relating to financial assets at fair value through other comprehensive income - debt securities 14 140. Gains/Losses from contractual changes with no cancellations (3) 170. Net provisions for risks and charges: a) commitments and financial guarantees given 38 NET OPERATING PROFIT (LOSS) 3,673 Other charges and provisions (786) 170. Net provisions for risks and charges: b) other net provisions (428) less: Tax disputes relating to income tax (interests and sanctions excluded) 26 + Administrative expenses - other administrative expenses contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA (from Item 160 b) (384) Integration costs (3) + Administrative expenses - staff costs - integration costs (from Item 160 a) - + Administrative expenses - other administrative expenses - integration costs (from Item 160 b) (2) + Net other expenses/income - integration costs - (from Item 200) (1) Net income from investments (1,582) 220. Profit (Loss) of equity investments (1,590) 230. Net gains (losses) on tangible and intangible assets measured at fair value - 250. Gains (Losses) on disposal of investments 50 + Net losses/recoveries on impairment relating to financial assets at amortised cost - debt securities (from Item 130 a) (11) + Net losses/recoveries on impairment relating to financial assets at fair value through other comprehensive income - debt securities (from Item 130 b) (14) + Net value adjustments/write backs on property, plant and equipment - owned for investment (from Item 180) (17) PROFIT (LOSS) BEFORE TAX 1,302 Income tax 1,156 270. Tax expenses (income) from continuing operations 1,182 + Other changes and provisions - Tax disputes relating to income tax (interests and sanctions excluded) - (from Item 170 b) (26) PROFIT (LOSS) AFTER TAX 2,458 Profit (Loss) from non-current assets held for sale after tax - 290. Profit (Loss) after tax from discontinued operations - PROFIT (LOSS) FOR THE PERIOD 2,458 Goodwill impairment - 240. Goodwill impairment - NET PROFIT (LOSS) 2,458 300. Net profit (loss) for the period 2,458 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 733 Income statement (€ million) YEAR 2018 Net interest 4,166 30. Net interest margin 4,166 Dividends and other income from equity investments 2,630 70. Dividend income and similar revenue 2,630 Net fees and commissions 3,839 60. Net fees and commissions 3,950 + Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans (from Item 160 b) (111) Net trading income 78 80. Net gains (losses) on trading - 90. Net gains (losses) on hedge accounting 1 100. Gains (Losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income 87 100. Gains (Losses) on disposal and repurchase of: c) financial liabilities (1) 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss (9) + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - debt securities (from Item 100 a) - Net other expenses/income (94) 200. Other operating expenses/income 412 less: Other operating expenses/income - recovery of expenses (508) less: Other operating expenses/income - leasehold improvements 21 less: Other operating expenses/income - integration costs 1 + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans (from Item 100 a) (1) + Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans - penalties (from Item 160 b) (18) OPERATING INCOME 10,619 Payroll costs (2,866) 160. Administrative expenses: a) staff costs (2,866) less: Administrative expenses - staff costs - integration costs - Other administrative expenses (2,465) 160. Administrative expenses: b) Other administrative expenses (2,960) less: Administrative expenses - other administrative expenses contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA 384 less: Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans 111 less: Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans - penalties 18 less: Administrative expenses - other administrative expenses - integration costs 2 + Other operating expenses/income - leasehold improvements (from Item 200) (21) Recovery of expenses 508 + Other operating expenses/income - recovery of expenses (from Item 200) 508 Amortisation, depreciation and impairment losses on intangible and tangible assets (137) 180. Net value adjustments/write-backs on property, plant and equipment (152) less: Net value adjustments/write backs on property, plant and equipment - owned for investment 17 190. Net value adjustments/write-backs on intangible assets (2) Operating costs (4,960) OPERATING PROFIT (LOSS) 5,659 Net impairment losses on loans and provisions for guarantees and commitments (1,986) 100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost (34) less: Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans 1 less: Gains (Losses) on disposal and repurchase of financial assets at amortised cost - debt securities - 130. Net losses/recoveries on impairment relating to: a) financial assets at amortised cost (1,998) less: Net losses/recoveries on impairment relating to financial assets at amortised cost - debt securities 11 130. Net losses/recoveries on impairment relating to: b) financial assets at fair value through other comprehensive income (14) less: Net losses/recoveries on impairment relating to financial assets at fair value through other comprehensive income - debt securities 14 140. Gains/Losses from contractual changes with no cancellations (3) 170. Net provisions for risks and charges: a) commitments and financial guarantees given 38 NET OPERATING PROFIT (LOSS) 3,673 Other charges and provisions (786) 170. Net provisions for risks and charges: b) other net provisions (428) less: Tax disputes relating to income tax (interests and sanctions excluded) 26 + Administrative expenses - other administrative expenses contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA (from Item 160 b) (384) Integration costs (3) + Administrative expenses - staff costs - integration costs (from Item 160 a) - + Administrative expenses - other administrative expenses - integration costs (from Item 160 b) (2) + Net other expenses/income - integration costs - (from Item 200) (1) Net income from investments (1,582) 220. Profit (Loss) of equity investments (1,590) 230. Net gains (losses) on tangible and intangible assets measured at fair value - 250. Gains (Losses) on disposal of investments 50 + Net losses/recoveries on impairment relating to financial assets at amortised cost - debt securities (from Item 130 a) (11) + Net losses/recoveries on impairment relating to financial assets at fair value through other comprehensive income - debt securities (from Item 130 b) (14) + Net value adjustments/write backs on property, plant and equipment - owned for investment (from Item 180) (17) PROFIT (LOSS) BEFORE TAX 1,302 Income tax 1,156 270. Tax expenses (income) from continuing operations 1,182 + Other changes and provisions - Tax disputes relating to income tax (interests and sanctions excluded) - (from Item 170 b) (26) PROFIT (LOSS) AFTER TAX 2,458 Profit (Loss) from non-current assets held for sale after tax - 290. Profit (Loss) after tax from discontinued operations - PROFIT (LOSS) FOR THE PERIOD 2,458 Goodwill impairment - 240. Goodwill impairment - NET PROFIT (LOSS) 2,458 300. Net profit (loss) for the period 2,458 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 733 Income statement (€ million) YEAR 2018 Net interest 4,166 30. Net interest margin 4,166 Dividends and other income from equity investments 2,630 70. Dividend income and similar revenue 2,630 Net fees and commissions 3,839 60. Net fees and commissions 3,950 + Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans (from Item 160 b) (111) Net trading income 78 80. Net gains (losses) on trading - 90. Net gains (losses) on hedge accounting 1 100. Gains (Losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income 87 100. Gains (Losses) on disposal and repurchase of: c) financial liabilities (1) 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss (9) + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - debt securities (from Item 100 a) - Net other expenses/income (94) 200. Other operating expenses/income 412 less: Other operating expenses/income - recovery of expenses (508) less: Other operating expenses/income - leasehold improvements 21 less: Other operating expenses/income - integration costs 1 + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans (from Item 100 a) (1) + Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans - penalties (from Item 160 b) (18) OPERATING INCOME 10,619 Payroll costs (2,866) 160. Administrative expenses: a) staff costs (2,866) less: Administrative expenses - staff costs - integration costs - Other administrative expenses (2,465) 160. Administrative expenses: b) Other administrative expenses (2,960) less: Administrative expenses - other administrative expenses contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA 384 less: Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans 111 less: Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans - penalties 18 less: Administrative expenses - other administrative expenses - integration costs 2 + Other operating expenses/income - leasehold improvements (from Item 200) (21) Recovery of expenses 508 + Other operating expenses/income - recovery of expenses (from Item 200) 508 Amortisation, depreciation and impairment losses on intangible and tangible assets (137) 180. Net value adjustments/write-backs on property, plant and equipment (152) less: Net value adjustments/write backs on property, plant and equipment - owned for investment 17 190. Net value adjustments/write-backs on intangible assets (2) Operating costs (4,960) OPERATING PROFIT (LOSS) 5,659 Net impairment losses on loans and provisions for guarantees and commitments (1,986) 100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost (34) less: Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans 1 less: Gains (Losses) on disposal and repurchase of financial assets at amortised cost - debt securities - 130. Net losses/recoveries on impairment relating to: a) financial assets at amortised cost (1,998) less: Net losses/recoveries on impairment relating to financial assets at amortised cost - debt securities 11 130. Net losses/recoveries on impairment relating to: b) financial assets at fair value through other comprehensive income (14) less: Net losses/recoveries on impairment relating to financial assets at fair value through other comprehensive income - debt securities 14 140. Gains/Losses from contractual changes with no cancellations (3) 170. Net provisions for risks and charges: a) commitments and financial guarantees given 38 NET OPERATING PROFIT (LOSS) 3,673 Other charges and provisions (786) 170. Net provisions for risks and charges: b) other net provisions (428) less: Tax disputes relating to income tax (interests and sanctions excluded) 26 + Administrative expenses - other administrative expenses contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA (from Item 160 b) (384) Integration costs (3) + Administrative expenses - staff costs - integration costs (from Item 160 a) - + Administrative expenses - other administrative expenses - integration costs (from Item 160 b) (2) + Net other expenses/income - integration costs - (from Item 200) (1) Net income from investments (1,582) 220. Profit (Loss) of equity investments (1,590) 230. Net gains (losses) on tangible and intangible assets measured at fair value - 250. Gains (Losses) on disposal of investments 50 + Net losses/recoveries on impairment relating to financial assets at amortised cost - debt securities (from Item 130 a) (11) + Net losses/recoveries on impairment relating to financial assets at fair value through other comprehensive income - debt securities (from Item 130 b) (14) + Net value adjustments/write backs on property, plant and equipment - owned for investment (from Item 180) (17) PROFIT (LOSS) BEFORE TAX 1,302 Income tax 1,156 270. Tax expenses (income) from continuing operations 1,182 + Other changes and provisions - Tax disputes relating to income tax (interests and sanctions excluded) - (from Item 170 b) (26) PROFIT (LOSS) AFTER TAX 2,458 Profit (Loss) from non-current assets held for sale after tax - 290. Profit (Loss) after tax from discontinued operations - PROFIT (LOSS) FOR THE PERIOD 2,458 Goodwill impairment - 240. Goodwill impairment - NET PROFIT (LOSS) 2,458 300. Net profit (loss) for the period 2,458 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules UniCredit ·2018 Annual Report and Accounts 733 Income statement (€ million) YEAR 2018 Net interest 4,166 30. Net interest margin 4,166 Dividends and other income from equity investments 2,630 70. Dividend income and similar revenue 2,630 Net fees and commissions 3,839 60. Net fees and commissions 3,950 + Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans (from Item 160 b) (111) Net trading income 78 80. Net gains (losses) on trading - 90. Net gains (losses) on hedge accounting 1 100. Gains (Losses) on disposal and repurchase of: b) financial assets at fair value through other comprehensive income 87 100. Gains (Losses) on disposal and repurchase of: c) financial liabilities (1) 110. Net gains (losses) on other financial assets/liabilities at fair value through profit or loss (9) + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - debt securities (from Item 100 a) - Net other expenses/income (94) 200. Other operating expenses/income 412 less: Other operating expenses/income - recovery of expenses (508) less: Other operating expenses/income - leasehold improvements 21 less: Other operating expenses/income - integration costs 1 + Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans (from Item 100 a) (1) + Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans - penalties (from Item 160 b) (18) OPERATING INCOME 10,619 Payroll costs (2,866) 160. Administrative expenses: a) staff costs (2,866) less: Administrative expenses - staff costs - integration costs - Other administrative expenses (2,465) 160. Administrative expenses: b) Other administrative expenses (2,960) less: Administrative expenses - other administrative expenses contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA 384 less: Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans 111 less: Administrative expenses - other administrative expenses - outsourced services for the management of non-performing loans - penalties 18 less: Administrative expenses - other administrative expenses - integration costs 2 + Other operating expenses/income - leasehold improvements (from Item 200) (21) Recovery of expenses 508 + Other operating expenses/income - recovery of expenses (from Item 200) 508 Amortisation, depreciation and impairment losses on intangible and tangible assets (137) 180. Net value adjustments/write-backs on property, plant and equipment (152) less: Net value adjustments/write backs on property, plant and equipment - owned for investment 17 190. Net value adjustments/write-backs on intangible assets (2) Operating costs (4,960) OPERATING PROFIT (LOSS) 5,659 Net impairment losses on loans and provisions for guarantees and commitments (1,986) 100. Gains (Losses) on disposal and repurchase of: a) financial assets at amortised cost (34) less: Gains (Losses) on disposal and repurchase of financial assets at amortised cost - performing loans 1 less: Gains (Losses) on disposal and repurchase of financial assets at amortised cost - debt securities - 130. Net losses/recoveries on impairment relating to: a) financial assets at amortised cost (1,998) less: Net losses/recoveries on impairment relating to financial assets at amortised cost - debt securities 11 130. Net losses/recoveries on impairment relating to: b) financial assets at fair value through other comprehensive income (14) less: Net losses/recoveries on impairment relating to financial assets at fair value through other comprehensive income - debt securities 14 140. Gains/Losses from contractual changes with no cancellations (3) 170. Net provisions for risks and charges: a) commitments and financial guarantees given 38 NET OPERATING PROFIT (LOSS) 3,673 Other charges and provisions (786) 170. Net provisions for risks and charges: b) other net provisions (428) less: Tax disputes relating to income tax (interests and sanctions excluded) 26 + Administrative expenses - other administrative expenses contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA (from Item 160 b) (384) Integration costs (3) + Administrative expenses - staff costs - integration costs (from Item 160 a) - + Administrative expenses - other administrative expenses - integration costs (from Item 160 b) (2) + Net other expenses/income - integration costs - (from Item 200) (1) Net income from investments (1,582) 220. Profit (Loss) of equity investments (1,590) 230. Net gains (losses) on tangible and intangible assets measured at fair value - 250. Gains (Losses) on disposal of investments 50 + Net losses/recoveries on impairment relating to financial assets at amortised cost - debt securities (from Item 130 a) (11) + Net losses/recoveries on impairment relating to financial assets at fair value through other comprehensive income - debt securities (from Item 130 b) (14) + Net value adjustments/write backs on property, plant and equipment - owned for investment (from Item 180) (17) PROFIT (LOSS) BEFORE TAX 1,302 Income tax 1,156 270. Tax expenses (income) from continuing operations 1,182 + Other changes and provisions - Tax disputes relating to income tax (interests and sanctions excluded) - (from Item 170 b) (26) PROFIT (LOSS) AFTER TAX 2,458 Profit (Loss) from non-current assets held for sale after tax - 290. Profit (Loss) after tax from discontinued operations - PROFIT (LOSS) FOR THE PERIOD 2,458 Goodwill impairment - 240. Goodwill impairment - NET PROFIT (LOSS) 2,458 300. Net profit (loss) for the period 2,458 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 734 2018 Annual Report and Accounts · UniCredit Income statement (€ million) YEAR 2017 Net interest 3,960 30. Net interest margin 3,711 + reclassification of interests from impairment losses on loans 249 Dividends and other income from equity investments 3,808 70. Dividend income and similar revenue 3,808 Net fees and commissions 3,798 60. Net fees and commissions 3,921 + other administrative expenses - of which: outsourced services for the management of non-performing loans (135) + recovery of expenses - commissioni di istruttoria veloce (CIV) 12 Net trading income 302 80. Gains (Losses) on financial assets and liabilities held for trading 85 90. Fair value adjustments in hedge accounting (13) 100. Gains (Losses) on disposal of: b) available-for-sale financial assets 314 less: gains (losses) on disposals AFS - Equity instruments - Equity investments - day one profit/loss (20) 100. Gains (Losses) on disposal of: d) financial liabilities 37 110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss (101) Net other expenses/income (95) 190. Other net operating income 432 + gains (losses) on disposal/repurchase on loans and receivables - not impaired position (from Item 100) 16 + outsourced services for the management of non-performing loans - penalties (9) less: other operating income - of which: recovery of expenses (558) less: other operating expenses - of which on leasehold improvements 24 OPERATING INCOME 11,773 Payroll costs (3,139) 150. Administrative expenses - a) staff costs (3,121) less: integration costs (18) Other administrative expenses (2,694) 150. Administrative expenses - b) other administrative expenses (2,995) less: contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA 181 less: outsourced services for the management of non-performing loans 135 less: outsourced services for the management of non-performing loans - penalties 9 + other operating expenses - of which on leasehold improvements (24) Recovery of expenses 546 190. Other net operating income - of which: operating income - recovery of expenses 558 less: commissioni istruttoria veloce (CIV) (12) Amortisation, depreciation and impairment losses on intangible and tangible assets (137) 170. Impairment/Write-backs on property, plant and equipment (165) less: impairment losses/write backs on property owned for investment 32 180. Impairment/Write-backs on intangible assets (4) Operating costs (5,424) OPERATING PROFIT (LOSS) 6,349 Net impairment losses on loans and provisions for guarantees and commitments (2,103) 100. Gains (Losses) on disposal of: a) loans (569) less: gains and losses on disposal/repurchase on loans and receivables - not impaired position (from Item 100) (16) 130. Impairment losses on a) loans (1,337) less: Reclassification of interests from impairment losses on loans (249) 130. Impairment losses on d) other financial assets 68 NET OPERATING PROFIT (LOSS) 4,246 Other charges and provisions (565) 160. Net provisions for risks and charges (388) + contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA (181) less: integration costs 4 Integration costs 14 Net income (losses) from investments 2,427 130. Impairment losses on: b) available-for-sale financial assets (314) + impairment losses/write backs on property owned for investment (32) + gains (losses) on disposal AFS - Equity instruments day one profit/loss 20 210. Profit (Loss) of investments 2,743 220. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - 240. Gains (Losses) on disposal of investments 10 PROFIT (LOSS) BEFORE TAX 6,122 Income tax 30 260. Tax expense (income) related to profit or loss from continuing operations 30 PROFIT (LOSS) AFTER TAX 6,152 Profit (Loss) from non-current assets held for sale after tax 84 280. Profit (Loss) after tax from discontinued operations 84 PROFIT (LOSS) FOR THE PERIOD 6,236 Goodwill impairment - 230. Goodwill impairment - NET PROFIT (LOSS) 6,236 290. Net profit (loss) for the period 6,236 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 734 2018 Annual Report and Accounts · UniCredit Income statement (€ million) YEAR 2017 Net interest 3,960 30. Net interest margin 3,711 + reclassification of interests from impairment losses on loans 249 Dividends and other income from equity investments 3,808 70. Dividend income and similar revenue 3,808 Net fees and commissions 3,798 60. Net fees and commissions 3,921 + other administrative expenses - of which: outsourced services for the management of non-performing loans (135) + recovery of expenses - commissioni di istruttoria veloce (CIV) 12 Net trading income 302 80. Gains (Losses) on financial assets and liabilities held for trading 85 90. Fair value adjustments in hedge accounting (13) 100. Gains (Losses) on disposal of: b) available-for-sale financial assets 314 less: gains (losses) on disposals AFS - Equity instruments - Equity investments - day one profit/loss (20) 100. Gains (Losses) on disposal of: d) financial liabilities 37 110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss (101) Net other expenses/income (95) 190. Other net operating income 432 + gains (losses) on disposal/repurchase on loans and receivables - not impaired position (from Item 100) 16 + outsourced services for the management of non-performing loans - penalties (9) less: other operating income - of which: recovery of expenses (558) less: other operating expenses - of which on leasehold improvements 24 OPERATING INCOME 11,773 Payroll costs (3,139) 150. Administrative expenses - a) staff costs (3,121) less: integration costs (18) Other administrative expenses (2,694) 150. Administrative expenses - b) other administrative expenses (2,995) less: contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA 181 less: outsourced services for the management of non-performing loans 135 less: outsourced services for the management of non-performing loans - penalties 9 + other operating expenses - of which on leasehold improvements (24) Recovery of expenses 546 190. Other net operating income - of which: operating income - recovery of expenses 558 less: commissioni istruttoria veloce (CIV) (12) Amortisation, depreciation and impairment losses on intangible and tangible assets (137) 170. Impairment/Write-backs on property, plant and equipment (165) less: impairment losses/write backs on property owned for investment 32 180. Impairment/Write-backs on intangible assets (4) Operating costs (5,424) OPERATING PROFIT (LOSS) 6,349 Net impairment losses on loans and provisions for guarantees and commitments (2,103) 100. Gains (Losses) on disposal of: a) loans (569) less: gains and losses on disposal/repurchase on loans and receivables - not impaired position (from Item 100) (16) 130. Impairment losses on a) loans (1,337) less: Reclassification of interests from impairment losses on loans (249) 130. Impairment losses on d) other financial assets 68 NET OPERATING PROFIT (LOSS) 4,246 Other charges and provisions (565) 160. Net provisions for risks and charges (388) + contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA (181) less: integration costs 4 Integration costs 14 Net income (losses) from investments 2,427 130. Impairment losses on: b) available-for-sale financial assets (314) + impairment losses/write backs on property owned for investment (32) + gains (losses) on disposal AFS - Equity instruments day one profit/loss 20 210. Profit (Loss) of investments 2,743 220. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - 240. Gains (Losses) on disposal of investments 10 PROFIT (LOSS) BEFORE TAX 6,122 Income tax 30 260. Tax expense (income) related to profit or loss from continuing operations 30 PROFIT (LOSS) AFTER TAX 6,152 Profit (Loss) from non-current assets held for sale after tax 84 280. Profit (Loss) after tax from discontinued operations 84 PROFIT (LOSS) FOR THE PERIOD 6,236 Goodwill impairment - 230. Goodwill impairment - NET PROFIT (LOSS) 6,236 290. Net profit (loss) for the period 6,236 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 734 2018 Annual Report and Accounts · UniCredit Income statement (€ million) YEAR 2017 Net interest 3,960 30. Net interest margin 3,711 + reclassification of interests from impairment losses on loans 249 Dividends and other income from equity investments 3,808 70. Dividend income and similar revenue 3,808 Net fees and commissions 3,798 60. Net fees and commissions 3,921 + other administrative expenses - of which: outsourced services for the management of non-performing loans (135) + recovery of expenses - commissioni di istruttoria veloce (CIV) 12 Net trading income 302 80. Gains (Losses) on financial assets and liabilities held for trading 85 90. Fair value adjustments in hedge accounting (13) 100. Gains (Losses) on disposal of: b) available-for-sale financial assets 314 less: gains (losses) on disposals AFS - Equity instruments - Equity investments - day one profit/loss (20) 100. Gains (Losses) on disposal of: d) financial liabilities 37 110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss (101) Net other expenses/income (95) 190. Other net operating income 432 + gains (losses) on disposal/repurchase on loans and receivables - not impaired position (from Item 100) 16 + outsourced services for the management of non-performing loans - penalties (9) less: other operating income - of which: recovery of expenses (558) less: other operating expenses - of which on leasehold improvements 24 OPERATING INCOME 11,773 Payroll costs (3,139) 150. Administrative expenses - a) staff costs (3,121) less: integration costs (18) Other administrative expenses (2,694) 150. Administrative expenses - b) other administrative expenses (2,995) less: contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA 181 less: outsourced services for the management of non-performing loans 135 less: outsourced services for the management of non-performing loans - penalties 9 + other operating expenses - of which on leasehold improvements (24) Recovery of expenses 546 190. Other net operating income - of which: operating income - recovery of expenses 558 less: commissioni istruttoria veloce (CIV) (12) Amortisation, depreciation and impairment losses on intangible and tangible assets (137) 170. Impairment/Write-backs on property, plant and equipment (165) less: impairment losses/write backs on property owned for investment 32 180. Impairment/Write-backs on intangible assets (4) Operating costs (5,424) OPERATING PROFIT (LOSS) 6,349 Net impairment losses on loans and provisions for guarantees and commitments (2,103) 100. Gains (Losses) on disposal of: a) loans (569) less: gains and losses on disposal/repurchase on loans and receivables - not impaired position (from Item 100) (16) 130. Impairment losses on a) loans (1,337) less: Reclassification of interests from impairment losses on loans (249) 130. Impairment losses on d) other financial assets 68 NET OPERATING PROFIT (LOSS) 4,246 Other charges and provisions (565) 160. Net provisions for risks and charges (388) + contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA (181) less: integration costs 4 Integration costs 14 Net income (losses) from investments 2,427 130. Impairment losses on: b) available-for-sale financial assets (314) + impairment losses/write backs on property owned for investment (32) + gains (losses) on disposal AFS - Equity instruments day one profit/loss 20 210. Profit (Loss) of investments 2,743 220. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - 240. Gains (Losses) on disposal of investments 10 PROFIT (LOSS) BEFORE TAX 6,122 Income tax 30 260. Tax expense (income) related to profit or loss from continuing operations 30 PROFIT (LOSS) AFTER TAX 6,152 Profit (Loss) from non-current assets held for sale after tax 84 280. Profit (Loss) after tax from discontinued operations 84 PROFIT (LOSS) FOR THE PERIOD 6,236 Goodwill impairment - 230. Goodwill impairment - NET PROFIT (LOSS) 6,236 290. Net profit (loss) for the period 6,236 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 734 2018 Annual Report and Accounts · UniCredit Income statement (€ million) YEAR 2017 Net interest 3,960 30. Net interest margin 3,711 + reclassification of interests from impairment losses on loans 249 Dividends and other income from equity investments 3,808 70. Dividend income and similar revenue 3,808 Net fees and commissions 3,798 60. Net fees and commissions 3,921 + other administrative expenses - of which: outsourced services for the management of non-performing loans (135) + recovery of expenses - commissioni di istruttoria veloce (CIV) 12 Net trading income 302 80. Gains (Losses) on financial assets and liabilities held for trading 85 90. Fair value adjustments in hedge accounting (13) 100. Gains (Losses) on disposal of: b) available-for-sale financial assets 314 less: gains (losses) on disposals AFS - Equity instruments - Equity investments - day one profit/loss (20) 100. Gains (Losses) on disposal of: d) financial liabilities 37 110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss (101) Net other expenses/income (95) 190. Other net operating income 432 + gains (losses) on disposal/repurchase on loans and receivables - not impaired position (from Item 100) 16 + outsourced services for the management of non-performing loans - penalties (9) less: other operating income - of which: recovery of expenses (558) less: other operating expenses - of which on leasehold improvements 24 OPERATING INCOME 11,773 Payroll costs (3,139) 150. Administrative expenses - a) staff costs (3,121) less: integration costs (18) Other administrative expenses (2,694) 150. Administrative expenses - b) other administrative expenses (2,995) less: contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA 181 less: outsourced services for the management of non-performing loans 135 less: outsourced services for the management of non-performing loans - penalties 9 + other operating expenses - of which on leasehold improvements (24) Recovery of expenses 546 190. Other net operating income - of which: operating income - recovery of expenses 558 less: commissioni istruttoria veloce (CIV) (12) Amortisation, depreciation and impairment losses on intangible and tangible assets (137) 170. Impairment/Write-backs on property, plant and equipment (165) less: impairment losses/write backs on property owned for investment 32 180. Impairment/Write-backs on intangible assets (4) Operating costs (5,424) OPERATING PROFIT (LOSS) 6,349 Net impairment losses on loans and provisions for guarantees and commitments (2,103) 100. Gains (Losses) on disposal of: a) loans (569) less: gains and losses on disposal/repurchase on loans and receivables - not impaired position (from Item 100) (16) 130. Impairment losses on a) loans (1,337) less: Reclassification of interests from impairment losses on loans (249) 130. Impairment losses on d) other financial assets 68 NET OPERATING PROFIT (LOSS) 4,246 Other charges and provisions (565) 160. Net provisions for risks and charges (388) + contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA (181) less: integration costs 4 Integration costs 14 Net income (losses) from investments 2,427 130. Impairment losses on: b) available-for-sale financial assets (314) + impairment losses/write backs on property owned for investment (32) + gains (losses) on disposal AFS - Equity instruments day one profit/loss 20 210. Profit (Loss) of investments 2,743 220. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - 240. Gains (Losses) on disposal of investments 10 PROFIT (LOSS) BEFORE TAX 6,122 Income tax 30 260. Tax expense (income) related to profit or loss from continuing operations 30 PROFIT (LOSS) AFTER TAX 6,152 Profit (Loss) from non-current assets held for sale after tax 84 280. Profit (Loss) after tax from discontinued operations 84 PROFIT (LOSS) FOR THE PERIOD 6,236 Goodwill impairment - 230. Goodwill impairment - NET PROFIT (LOSS) 6,236 290. Net profit (loss) for the period 6,236 Company financial statement | Annexes Annex 1 - Reconciliation between reclassified balance sheet and income statement accounts and mandatory reporting schedules 734 2018 Annual Report and Accounts · UniCredit Income statement (€ million) YEAR 2017 Net interest 3,960 30. Net interest margin 3,711 + reclassification of interests from impairment losses on loans 249 Dividends and other income from equity investments 3,808 70. Dividend income and similar revenue 3,808 Net fees and commissions 3,798 60. Net fees and commissions 3,921 + other administrative expenses - of which: outsourced services for the management of non-performing loans (135) + recovery of expenses - commissioni di istruttoria veloce (CIV) 12 Net trading income 302 80. Gains (Losses) on financial assets and liabilities held for trading 85 90. Fair value adjustments in hedge accounting (13) 100. Gains (Losses) on disposal of: b) available-for-sale financial assets 314 less: gains (losses) on disposals AFS - Equity instruments - Equity investments - day one profit/loss (20) 100. Gains (Losses) on disposal of: d) financial liabilities 37 110. Gains (Losses) on financial assets/liabilities at fair value through profit or loss (101) Net other expenses/income (95) 190. Other net operating income 432 + gains (losses) on disposal/repurchase on loans and receivables - not impaired position (from Item 100) 16 + outsourced services for the management of non-performing loans - penalties (9) less: other operating income - of which: recovery of expenses (558) less: other operating expenses - of which on leasehold improvements 24 OPERATING INCOME 11,773 Payroll costs (3,139) 150. Administrative expenses - a) staff costs (3,121) less: integration costs (18) Other administrative expenses (2,694) 150. Administrative expenses - b) other administrative expenses (2,995) less: contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA 181 less: outsourced services for the management of non-performing loans 135 less: outsourced services for the management of non-performing loans - penalties 9 + other operating expenses - of which on leasehold improvements (24) Recovery of expenses 546 190. Other net operating income - of which: operating income - recovery of expenses 558 less: commissioni istruttoria veloce (CIV) (12) Amortisation, depreciation and impairment losses on intangible and tangible assets (137) 170. Impairment/Write-backs on property, plant and equipment (165) less: impairment losses/write backs on property owned for investment 32 180. Impairment/Write-backs on intangible assets (4) Operating costs (5,424) OPERATING PROFIT (LOSS) 6,349 Net impairment losses on loans and provisions for guarantees and commitments (2,103) 100. Gains (Losses) on disposal of: a) loans (569) less: gains and losses on disposal/repurchase on loans and receivables - not impaired position (from Item 100) (16) 130. Impairment losses on a) loans (1,337) less: Reclassification of interests from impairment losses on loans (249) 130. Impairment losses on d) other financial assets 68 NET OPERATING PROFIT (LOSS) 4,246 Other charges and provisions (565) 160. Net provisions for risks and charges (388) + contributions to Resolution Funds and Deposit Guarantee Schemes (DGS) and Guarantee fees for DTA (181) less: integration costs 4 Integration costs 14 Net income (losses) from investments 2,427 130. Impairment losses on: b) available-for-sale financial assets (314) + impairment losses/write backs on property owned for investment (32) + gains (losses) on disposal AFS - Equity instruments day one profit/loss 20 210. Profit (Loss) of investments 2,743 220. Net gains (losses) on property, plant and equipment and intangible assets measured at fair value - 240. Gains (Losses) on disposal of investments 10 PROFIT (LOSS) BEFORE TAX 6,122 Income tax 30 260. Tax expense (income) related to profit or loss from continuing operations 30 PROFIT (LOSS) AFTER TAX 6,152 Profit (Loss) from non-current assets held for sale after tax 84 280. Profit (Loss) after tax from discontinued operations 84 PROFIT (LOSS) FOR THE PERIOD 6,236 Goodwill impairment - 230. Goodwill impairment - NET PROFIT (LOSS) 6,236 290. Net profit (loss) for the period 6,236 Company financial statements | Annexes Annex 2 - Fees for annual audits and related services UniCredit ·2018 Annual Report and Accounts 735 Annex 2 - Fees for annual audits and other services (pursuant to article 149-duodecies, CONSOB Regulation No.11971/99, as supplemented) (€ '000) DISCLOSURE OF EXTERNAL AUDITORS' FEES - UNICREDIT S.P.A. - FINANCIAL YEAR 2018 - DELOITTE NETWORK As prescribed by §149-duodecies of the Consob Issuers Regulation, the following table gives fees paid in 2018 for audit services rendered by the Auditor and firms in its network. EXTERNAL AUDITING SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF AUDITING FIRM COMPANY NAME Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Audit of Company and Consolidated Accounts and First Half Report, accounting checks and foreign branches(2) 3,543 Auditing Firm Total 3,543 External Auditing Total 3,543 CHECKING FOR THE PURPOSES OF OTHER OPINIONS SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF AUDITING FIRM COMPANY NAME Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Limited review on 2018 non financial information, Limited review on 2Q 2018 and 3Q 2018 Consolidated Reports for the inclusion of interim net profit in Common Equity Tier 1 Capital, Issuing Comfort Letters concerning bond issues, Signing the Italian tax declaration forms, Supervisory Fees ECB ISA805, Reporting data TLTRO II ISAE3000, Limited Assurance Engagement OBG ISAE3000, English translation of the Financial Reports 1,894 Auditing Firm Total 1,894 Network Auditing Firm(s) Deloitte Touche Tohmatsu CPA LLP, Deloitte & Touche Middle Est LLP, Deloitte SL UniCredit S.p.A. Local statutory audit report of foreign branches of Shanghai, Abu Dhabi and Madrid according to local regulations 107 Network Auditing Firm(s) Total 107 Data Checking Total 2,001 OTHER NON-AUDITING SERVICES SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF THE AUDITING FIRM COMPANY NAME TYPE Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Agreed Upon Procedure (AUP) on Own Funds, AUP on quarterly calculation foreign exchange risk of CIUs, AUP on contributions to the Single Resolution Fund, AUP on Servicing Report Cordusio RMBS Other services 246 Auditing Firm Total 246 Network Auditing Firm(s) Deloitte Consulting S.r.l. UniCredit S.p.A. Support to Projects "New App Mobile Banking", "Mobile Banking App Evolution" and "MREL Framework and Reporting" Other services 593 Network Auditing Firm(s) 593 Other Non-Auditing Services Total 839 Grand Total 6,383 Notes: (1) Excluding VAT and expenses. (2) Contract authorized by the Resolution of the Shareholders' Meeting of 11 May 2012 for a total amount of €2,206,600 (integrated by €150,000 in 2013, by €250,000 in 2016, by €250,000 in 2017 and by €586,600 in 2018), plus ISTAT indexation amounting to €100,138. Company financial statements | Annexes Annex 2 - Fees for annual audits and related services UniCredit ·2018 Annual Report and Accounts 735 Annex 2 - Fees for annual audits and other services (pursuant to article 149-duodecies, CONSOB Regulation No.11971/99, as supplemented) (€ '000) DISCLOSURE OF EXTERNAL AUDITORS' FEES - UNICREDIT S.P.A. - FINANCIAL YEAR 2018 - DELOITTE NETWORK As prescribed by §149-duodecies of the Consob Issuers Regulation, the following table gives fees paid in 2018 for audit services rendered by the Auditor and firms in its network. EXTERNAL AUDITING SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF AUDITING FIRM COMPANY NAME Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Audit of Company and Consolidated Accounts and First Half Report, accounting checks and foreign branches(2) 3,543 Auditing Firm Total 3,543 External Auditing Total 3,543 CHECKING FOR THE PURPOSES OF OTHER OPINIONS SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF AUDITING FIRM COMPANY NAME Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Limited review on 2018 non financial information, Limited review on 2Q 2018 and 3Q 2018 Consolidated Reports for the inclusion of interim net profit in Common Equity Tier 1 Capital, Issuing Comfort Letters concerning bond issues, Signing the Italian tax declaration forms, Supervisory Fees ECB ISA805, Reporting data TLTRO II ISAE3000, Limited Assurance Engagement OBG ISAE3000, English translation of the Financial Reports 1,894 Auditing Firm Total 1,894 Network Auditing Firm(s) Deloitte Touche Tohmatsu CPA LLP, Deloitte & Touche Middle Est LLP, Deloitte SL UniCredit S.p.A. Local statutory audit report of foreign branches of Shanghai, Abu Dhabi and Madrid according to local regulations 107 Network Auditing Firm(s) Total 107 Data Checking Total 2,001 OTHER NON-AUDITING SERVICES SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF THE AUDITING FIRM COMPANY NAME TYPE Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Agreed Upon Procedure (AUP) on Own Funds, AUP on quarterly calculation foreign exchange risk of CIUs, AUP on contributions to the Single Resolution Fund, AUP on Servicing Report Cordusio RMBS Other services 246 Auditing Firm Total 246 Network Auditing Firm(s) Deloitte Consulting S.r.l. UniCredit S.p.A. Support to Projects "New App Mobile Banking", "Mobile Banking App Evolution" and "MREL Framework and Reporting" Other services 593 Network Auditing Firm(s) 593 Other Non-Auditing Services Total 839 Grand Total 6,383 Notes: (1) Excluding VAT and expenses. (2) Contract authorized by the Resolution of the Shareholders' Meeting of 11 May 2012 for a total amount of €2,206,600 (integrated by €150,000 in 2013, by €250,000 in 2016, by €250,000 in 2017 and by €586,600 in 2018), plus ISTAT indexation amounting to €100,138. Company financial statements | Annexes Annex 2 - Fees for annual audits and related services UniCredit ·2018 Annual Report and Accounts 735 Annex 2 - Fees for annual audits and other services (pursuant to article 149-duodecies, CONSOB Regulation No.11971/99, as supplemented) (€ '000) DISCLOSURE OF EXTERNAL AUDITORS' FEES - UNICREDIT S.P.A. - FINANCIAL YEAR 2018 - DELOITTE NETWORK As prescribed by §149-duodecies of the Consob Issuers Regulation, the following table gives fees paid in 2018 for audit services rendered by the Auditor and firms in its network. EXTERNAL AUDITING SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF AUDITING FIRM COMPANY NAME Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Audit of Company and Consolidated Accounts and First Half Report, accounting checks and foreign branches(2) 3,543 Auditing Firm Total 3,543 External Auditing Total 3,543 CHECKING FOR THE PURPOSES OF OTHER OPINIONS SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF AUDITING FIRM COMPANY NAME Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Limited review on 2018 non financial information, Limited review on 2Q 2018 and 3Q 2018 Consolidated Reports for the inclusion of interim net profit in Common Equity Tier 1 Capital, Issuing Comfort Letters concerning bond issues, Signing the Italian tax declaration forms, Supervisory Fees ECB ISA805, Reporting data TLTRO II ISAE3000, Limited Assurance Engagement OBG ISAE3000, English translation of the Financial Reports 1,894 Auditing Firm Total 1,894 Network Auditing Firm(s) Deloitte Touche Tohmatsu CPA LLP, Deloitte & Touche Middle Est LLP, Deloitte SL UniCredit S.p.A. Local statutory audit report of foreign branches of Shanghai, Abu Dhabi and Madrid according to local regulations 107 Network Auditing Firm(s) Total 107 Data Checking Total 2,001 OTHER NON-AUDITING SERVICES SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF THE AUDITING FIRM COMPANY NAME TYPE Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Agreed Upon Procedure (AUP) on Own Funds, AUP on quarterly calculation foreign exchange risk of CIUs, AUP on contributions to the Single Resolution Fund, AUP on Servicing Report Cordusio RMBS Other services 246 Auditing Firm Total 246 Network Auditing Firm(s) Deloitte Consulting S.r.l. UniCredit S.p.A. Support to Projects "New App Mobile Banking", "Mobile Banking App Evolution" and "MREL Framework and Reporting" Other services 593 Network Auditing Firm(s) 593 Other Non-Auditing Services Total 839 Grand Total 6,383 Notes: (1) Excluding VAT and expenses. (2) Contract authorized by the Resolution of the Shareholders' Meeting of 11 May 2012 for a total amount of €2,206,600 (integrated by €150,000 in 2013, by €250,000 in 2016, by €250,000 in 2017 and by €586,600 in 2018), plus ISTAT indexation amounting to €100,138. Company financial statements | Annexes Annex 2 - Fees for annual audits and related services UniCredit ·2018 Annual Report and Accounts 735 Annex 2 - Fees for annual audits and other services (pursuant to article 149-duodecies, CONSOB Regulation No.11971/99, as supplemented) (€ '000) DISCLOSURE OF EXTERNAL AUDITORS' FEES - UNICREDIT S.P.A. - FINANCIAL YEAR 2018 - DELOITTE NETWORK As prescribed by §149-duodecies of the Consob Issuers Regulation, the following table gives fees paid in 2018 for audit services rendered by the Auditor and firms in its network. EXTERNAL AUDITING SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF AUDITING FIRM COMPANY NAME Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Audit of Company and Consolidated Accounts and First Half Report, accounting checks and foreign branches(2) 3,543 Auditing Firm Total 3,543 External Auditing Total 3,543 CHECKING FOR THE PURPOSES OF OTHER OPINIONS SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF AUDITING FIRM COMPANY NAME Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Limited review on 2018 non financial information, Limited review on 2Q 2018 and 3Q 2018 Consolidated Reports for the inclusion of interim net profit in Common Equity Tier 1 Capital, Issuing Comfort Letters concerning bond issues, Signing the Italian tax declaration forms, Supervisory Fees ECB ISA805, Reporting data TLTRO II ISAE3000, Limited Assurance Engagement OBG ISAE3000, English translation of the Financial Reports 1,894 Auditing Firm Total 1,894 Network Auditing Firm(s) Deloitte Touche Tohmatsu CPA LLP, Deloitte & Touche Middle Est LLP, Deloitte SL UniCredit S.p.A. Local statutory audit report of foreign branches of Shanghai, Abu Dhabi and Madrid according to local regulations 107 Network Auditing Firm(s) Total 107 Data Checking Total 2,001 OTHER NON-AUDITING SERVICES SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF THE AUDITING FIRM COMPANY NAME TYPE Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Agreed Upon Procedure (AUP) on Own Funds, AUP on quarterly calculation foreign exchange risk of CIUs, AUP on contributions to the Single Resolution Fund, AUP on Servicing Report Cordusio RMBS Other services 246 Auditing Firm Total 246 Network Auditing Firm(s) Deloitte Consulting S.r.l. UniCredit S.p.A. Support to Projects "New App Mobile Banking", "Mobile Banking App Evolution" and "MREL Framework and Reporting" Other services 593 Network Auditing Firm(s) 593 Other Non-Auditing Services Total 839 Grand Total 6,383 Notes: (1) Excluding VAT and expenses. (2) Contract authorized by the Resolution of the Shareholders' Meeting of 11 May 2012 for a total amount of €2,206,600 (integrated by €150,000 in 2013, by €250,000 in 2016, by €250,000 in 2017 and by €586,600 in 2018), plus ISTAT indexation amounting to €100,138. Company financial statements | Annexes Annex 2 - Fees for annual audits and related services UniCredit ·2018 Annual Report and Accounts 735 Annex 2 - Fees for annual audits and other services (pursuant to article 149-duodecies, CONSOB Regulation No.11971/99, as supplemented) (€ '000) DISCLOSURE OF EXTERNAL AUDITORS' FEES - UNICREDIT S.P.A. - FINANCIAL YEAR 2018 - DELOITTE NETWORK As prescribed by §149-duodecies of the Consob Issuers Regulation, the following table gives fees paid in 2018 for audit services rendered by the Auditor and firms in its network. EXTERNAL AUDITING SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF AUDITING FIRM COMPANY NAME Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Audit of Company and Consolidated Accounts and First Half Report, accounting checks and foreign branches(2) 3,543 Auditing Firm Total 3,543 External Auditing Total 3,543 CHECKING FOR THE PURPOSES OF OTHER OPINIONS SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF AUDITING FIRM COMPANY NAME Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Limited review on 2018 non financial information, Limited review on 2Q 2018 and 3Q 2018 Consolidated Reports for the inclusion of interim net profit in Common Equity Tier 1 Capital, Issuing Comfort Letters concerning bond issues, Signing the Italian tax declaration forms, Supervisory Fees ECB ISA805, Reporting data TLTRO II ISAE3000, Limited Assurance Engagement OBG ISAE3000, English translation of the Financial Reports 1,894 Auditing Firm Total 1,894 Network Auditing Firm(s) Deloitte Touche Tohmatsu CPA LLP, Deloitte & Touche Middle Est LLP, Deloitte SL UniCredit S.p.A. Local statutory audit report of foreign branches of Shanghai, Abu Dhabi and Madrid according to local regulations 107 Network Auditing Firm(s) Total 107 Data Checking Total 2,001 OTHER NON-AUDITING SERVICES SERVICE PROVIDER UNICREDIT GROUP SUBSIDIARY ASSIGNING THE SERVICE DESCRIPTION OF SERVICE FEES(1) NAME OF THE AUDITING FIRM COMPANY NAME TYPE Auditing Firm Deloitte & Touche S.p.A. UniCredit S.p.A. Agreed Upon Procedure (AUP) on Own Funds, AUP on quarterly calculation foreign exchange risk of CIUs, AUP on contributions to the Single Resolution Fund, AUP on Servicing Report Cordusio RMBS Other services 246 Auditing Firm Total 246 Network Auditing Firm(s) Deloitte Consulting S.r.l. UniCredit S.p.A. Support to Projects "New App Mobile Banking", "Mobile Banking App Evolution" and "MREL Framework and Reporting" Other services 593 Network Auditing Firm(s) 593 Other Non-Auditing Services Total 839 Grand Total 6,383 Notes: (1) Excluding VAT and expenses. (2) Contract authorized by the Resolution of the Shareholders' Meeting of 11 May 2012 for a total amount of €2,206,600 (integrated by €150,000 in 2013, by €250,000 in 2016, by €250,000 in 2017 and by €586,600 in 2018), plus ISTAT indexation amounting to €100,138. Company financial statement | Annexes Annex 3 - Internal pension funds: statement of changes in the year and final accounts 736 2018 Annual Report and Accounts · UniCredit Annex 3 - Internal pension funds: statement of changes Internal Pension Funds As at December 31, 2018 Unicredit S.P.A. with regard to internal pension funds maintain committments to the funds set up for the employees of the London and the Munich branch - of which the main details follow: Statement of changes in internal pension funds (€ '000) FUNDS AND DESCRIPTION OF MOVEMENTS NO. OF RETIREES AS AT 12.31.2018 NO. OF MEMBERS AS AT 12.31.2018 TYPE ACCOUNTING FIGURES CONTRIBUTION RATE Statement of the "Pension fund for employees of the former Banca di Roma - London Branch" 6 20(*) Defined benefit _ Opening balance as at 12.31.2017 3,749 Provisions for the year: - Past service cost 56 - Interest cost on defined benefit obligations 144 - Interest Income on plan assets (92) Administrative expenses paid from plan assets 69 Employer Contributions (8) Exchange rate effect (30) Actuarial (gains)/losses recognised in the year (1,102) Balance as at 12.31.2018 2,786 Present value of the liabilities 8,831 Present value of plan assets 6,045 Net Liability as at 12.31.2018 2,786 Note: (*) of which 20 deferred benefit. Statement of the "Pension fund for the employees of the London Branch" (ex Credito Italiano) 10 66(*) Defined benefit _ Opening balance as at 12.31.2017 4,052 Provisions for the year: - Current service cost (gross) 407 - Past service cost 279 - Interest cost on defined benefit obligations 866 - Interest Income on plan assets (766) Employer Contributions (2,003) Exchange rate effects (33) Actuarial (gains)/losses recognised in the year (2,063) Balance as at 12.31.2018 739 Present value of the liabilities 25,099 Present value of plan assets 24,360 Net Liability as at 12.31.2018 739 Note: (*) of which 66 deferred benefit. Company financial statement | Annexes Annex 3 - Internal pension funds: statement of changes in the year and final accounts 736 2018 Annual Report and Accounts · UniCredit Annex 3 - Internal pension funds: statement of changes Internal Pension Funds As at December 31, 2018 Unicredit S.P.A. with regard to internal pension funds maintain committments to the funds set up for the employees of the London and the Munich branch - of which the main details follow: Statement of changes in internal pension funds (€ '000) FUNDS AND DESCRIPTION OF MOVEMENTS NO. OF RETIREES AS AT 12.31.2018 NO. OF MEMBERS AS AT 12.31.2018 TYPE ACCOUNTING FIGURES CONTRIBUTION RATE Statement of the "Pension fund for employees of the former Banca di Roma - London Branch" 6 20(*) Defined benefit _ Opening balance as at 12.31.2017 3,749 Provisions for the year: - Past service cost 56 - Interest cost on defined benefit obligations 144 - Interest Income on plan assets (92) Administrative expenses paid from plan assets 69 Employer Contributions (8) Exchange rate effect (30) Actuarial (gains)/losses recognised in the year (1,102) Balance as at 12.31.2018 2,786 Present value of the liabilities 8,831 Present value of plan assets 6,045 Net Liability as at 12.31.2018 2,786 Note: (*) of which 20 deferred benefit. Statement of the "Pension fund for the employees of the London Branch" (ex Credito Italiano) 10 66(*) Defined benefit _ Opening balance as at 12.31.2017 4,052 Provisions for the year: - Current service cost (gross) 407 - Past service cost 279 - Interest cost on defined benefit obligations 866 - Interest Income on plan assets (766) Employer Contributions (2,003) Exchange rate effects (33) Actuarial (gains)/losses recognised in the year (2,063) Balance as at 12.31.2018 739 Present value of the liabilities 25,099 Present value of plan assets 24,360 Net Liability as at 12.31.2018 739 Note: (*) of which 66 deferred benefit. Company financial statement | Annexes Annex 3 - Internal pension funds: statement of changes in the year and final accounts 736 2018 Annual Report and Accounts · UniCredit Annex 3 - Internal pension funds: statement of changes Internal Pension Funds As at December 31, 2018 Unicredit S.P.A. with regard to internal pension funds maintain committments to the funds set up for the employees of the London and the Munich branch - of which the main details follow: Statement of changes in internal pension funds (€ '000) FUNDS AND DESCRIPTION OF MOVEMENTS NO. OF RETIREES AS AT 12.31.2018 NO. OF MEMBERS AS AT 12.31.2018 TYPE ACCOUNTING FIGURES CONTRIBUTION RATE Statement of the "Pension fund for employees of the former Banca di Roma - London Branch" 6 20(*) Defined benefit _ Opening balance as at 12.31.2017 3,749 Provisions for the year: - Past service cost 56 - Interest cost on defined benefit obligations 144 - Interest Income on plan assets (92) Administrative expenses paid from plan assets 69 Employer Contributions (8) Exchange rate effect (30) Actuarial (gains)/losses recognised in the year (1,102) Balance as at 12.31.2018 2,786 Present value of the liabilities 8,831 Present value of plan assets 6,045 Net Liability as at 12.31.2018 2,786 Note: (*) of which 20 deferred benefit. Statement of the "Pension fund for the employees of the London Branch" (ex Credito Italiano) 10 66(*) Defined benefit _ Opening balance as at 12.31.2017 4,052 Provisions for the year: - Current service cost (gross) 407 - Past service cost 279 - Interest cost on defined benefit obligations 866 - Interest Income on plan assets (766) Employer Contributions (2,003) Exchange rate effects (33) Actuarial (gains)/losses recognised in the year (2,063) Balance as at 12.31.2018 739 Present value of the liabilities 25,099 Present value of plan assets 24,360 Net Liability as at 12.31.2018 739 Note: (*) of which 66 deferred benefit. Company financial statement | Annexes Annex 3 - Internal pension funds: statement of changes in the year and final accounts 736 2018 Annual Report and Accounts · UniCredit Annex 3 - Internal pension funds: statement of changes Internal Pension Funds As at December 31, 2018 Unicredit S.P.A. with regard to internal pension funds maintain committments to the funds set up for the employees of the London and the Munich branch - of which the main details follow: Statement of changes in internal pension funds (€ '000) FUNDS AND DESCRIPTION OF MOVEMENTS NO. OF RETIREES AS AT 12.31.2018 NO. OF MEMBERS AS AT 12.31.2018 TYPE ACCOUNTING FIGURES CONTRIBUTION RATE Statement of the "Pension fund for employees of the former Banca di Roma - London Branch" 6 20(*) Defined benefit _ Opening balance as at 12.31.2017 3,749 Provisions for the year: - Past service cost 56 - Interest cost on defined benefit obligations 144 - Interest Income on plan assets (92) Administrative expenses paid from plan assets 69 Employer Contributions (8) Exchange rate effect (30) Actuarial (gains)/losses recognised in the year (1,102) Balance as at 12.31.2018 2,786 Present value of the liabilities 8,831 Present value of plan assets 6,045 Net Liability as at 12.31.2018 2,786 Note: (*) of which 20 deferred benefit. Statement of the "Pension fund for the employees of the London Branch" (ex Credito Italiano) 10 66(*) Defined benefit _ Opening balance as at 12.31.2017 4,052 Provisions for the year: - Current service cost (gross) 407 - Past service cost 279 - Interest cost on defined benefit obligations 866 - Interest Income on plan assets (766) Employer Contributions (2,003) Exchange rate effects (33) Actuarial (gains)/losses recognised in the year (2,063) Balance as at 12.31.2018 739 Present value of the liabilities 25,099 Present value of plan assets 24,360 Net Liability as at 12.31.2018 739 Note: (*) of which 66 deferred benefit. Company financial statement | Annexes Annex 3 - Internal pension funds: statement of changes in the year and final accounts 736 2018 Annual Report and Accounts · UniCredit Annex 3 - Internal pension funds: statement of changes Internal Pension Funds As at December 31, 2018 Unicredit S.P.A. with regard to internal pension funds maintain committments to the funds set up for the employees of the London and the Munich branch - of which the main details follow: Statement of changes in internal pension funds (€ '000) FUNDS AND DESCRIPTION OF MOVEMENTS NO. OF RETIREES AS AT 12.31.2018 NO. OF MEMBERS AS AT 12.31.2018 TYPE ACCOUNTING FIGURES CONTRIBUTION RATE Statement of the "Pension fund for employees of the former Banca di Roma - London Branch" 6 20(*) Defined benefit _ Opening balance as at 12.31.2017 3,749 Provisions for the year: - Past service cost 56 - Interest cost on defined benefit obligations 144 - Interest Income on plan assets (92) Administrative expenses paid from plan assets 69 Employer Contributions (8) Exchange rate effect (30) Actuarial (gains)/losses recognised in the year (1,102) Balance as at 12.31.2018 2,786 Present value of the liabilities 8,831 Present value of plan assets 6,045 Net Liability as at 12.31.2018 2,786 Note: (*) of which 20 deferred benefit. Statement of the "Pension fund for the employees of the London Branch" (ex Credito Italiano) 10 66(*) Defined benefit _ Opening balance as at 12.31.2017 4,052 Provisions for the year: - Current service cost (gross) 407 - Past service cost 279 - Interest cost on defined benefit obligations 866 - Interest Income on plan assets (766) Employer Contributions (2,003) Exchange rate effects (33) Actuarial (gains)/losses recognised in the year (2,063) Balance as at 12.31.2018 739 Present value of the liabilities 25,099 Present value of plan assets 24,360 Net Liability as at 12.31.2018 739 Note: (*) of which 66 deferred benefit. Company financial statement | Annexes Annex 3 - Internal pension funds: statement of changes in the year and final accounts UniCredit ·2018 Annual Report and Accounts 737 Statement of the "Pension fund for the employees of Munich Branch" - 10(*) Defined benefit _ Opening balance as at 12.31.2017 216 Provisions for the year: - Current service cost (gross) 188 - Interest cost on defined benefit obligations 9 - Interest Income on plan assets (5) Employer Contributions (182) Other increases (decreses) 182 Actuarial (gains)/losses recognised in the year 150 Balance as at 12.31.2018 558 Present value of the liabilities 965 Present value of plan assets 407 Net Liability as at 12.31.2018 558 Note: (*) of which 3 deferred benefit. Company financial statement | Annexes Annex 3 - Internal pension funds: statement of changes in the year and final accounts UniCredit ·2018 Annual Report and Accounts 737 Statement of the "Pension fund for the employees of Munich Branch" - 10(*) Defined benefit _ Opening balance as at 12.31.2017 216 Provisions for the year: - Current service cost (gross) 188 - Interest cost on defined benefit obligations 9 - Interest Income on plan assets (5) Employer Contributions (182) Other increases (decreses) 182 Actuarial (gains)/losses recognised in the year 150 Balance as at 12.31.2018 558 Present value of the liabilities 965 Present value of plan assets 407 Net Liability as at 12.31.2018 558 Note: (*) of which 3 deferred benefit. Company financial statement | Annexes Annex 3 - Internal pension funds: statement of changes in the year and final accounts UniCredit ·2018 Annual Report and Accounts 737 Statement of the "Pension fund for the employees of Munich Branch" - 10(*) Defined benefit _ Opening balance as at 12.31.2017 216 Provisions for the year: - Current service cost (gross) 188 - Interest cost on defined benefit obligations 9 - Interest Income on plan assets (5) Employer Contributions (182) Other increases (decreses) 182 Actuarial (gains)/losses recognised in the year 150 Balance as at 12.31.2018 558 Present value of the liabilities 965 Present value of plan assets 407 Net Liability as at 12.31.2018 558 Note: (*) of which 3 deferred benefit. Company financial statement | Annexes Annex 3 - Internal pension funds: statement of changes in the year and final accounts UniCredit ·2018 Annual Report and Accounts 737 Statement of the "Pension fund for the employees of Munich Branch" - 10(*) Defined benefit _ Opening balance as at 12.31.2017 216 Provisions for the year: - Current service cost (gross) 188 - Interest cost on defined benefit obligations 9 - Interest Income on plan assets (5) Employer Contributions (182) Other increases (decreses) 182 Actuarial (gains)/losses recognised in the year 150 Balance as at 12.31.2018 558 Present value of the liabilities 965 Present value of plan assets 407 Net Liability as at 12.31.2018 558 Note: (*) of which 3 deferred benefit. Company financial statement | Annexes Annex 3 - Internal pension funds: statement of changes in the year and final accounts UniCredit ·2018 Annual Report and Accounts 737 Statement of the "Pension fund for the employees of Munich Branch" - 10(*) Defined benefit _ Opening balance as at 12.31.2017 216 Provisions for the year: - Current service cost (gross) 188 - Interest cost on defined benefit obligations 9 - Interest Income on plan assets (5) Employer Contributions (182) Other increases (decreses) 182 Actuarial (gains)/losses recognised in the year 150 Balance as at 12.31.2018 558 Present value of the liabilities 965 Present value of plan assets 407 Net Liability as at 12.31.2018 558 Note: (*) of which 3 deferred benefit. Company Financial Statements | Annexes Annex 4 - Securitisations - qualitative tables 738 2018 Annual Report and Accounts · UniCredit Annex 4 - Securitisations - qualitative tables Reference is made to the Annexes - Annex 3 - Securitisations - qualitative tables of Consolidated financial statements of UniCredit group with specific reference to UniCredit S.p.A. as Originator which is herewith quoted entirely. Company Financial Statements | Annexes Annex 4 - Securitisations - qualitative tables 738 2018 Annual Report and Accounts · UniCredit Annex 4 - Securitisations - qualitative tables Reference is made to the Annexes - Annex 3 - Securitisations - qualitative tables of Consolidated financial statements of UniCredit group with specific reference to UniCredit S.p.A. as Originator which is herewith quoted entirely. Company Financial Statements | Annexes Annex 4 - Securitisations - qualitative tables 738 2018 Annual Report and Accounts · UniCredit Annex 4 - Securitisations - qualitative tables Reference is made to the Annexes - Annex 3 - Securitisations - qualitative tables of Consolidated financial statements of UniCredit group with specific reference to UniCredit S.p.A. as Originator which is herewith quoted entirely. Company Financial Statements | Annexes Annex 4 - Securitisations - qualitative tables 738 2018 Annual Report and Accounts · UniCredit Annex 4 - Securitisations - qualitative tables Reference is made to the Annexes - Annex 3 - Securitisations - qualitative tables of Consolidated financial statements of UniCredit group with specific reference to UniCredit S.p.A. as Originator which is herewith quoted entirely. Company Financial Statements | Annexes Annex 4 - Securitisations - qualitative tables 738 2018 Annual Report and Accounts · UniCredit Annex 4 - Securitisations - qualitative tables Reference is made to the Annexes - Annex 3 - Securitisations - qualitative tables of Consolidated financial statements of UniCredit group with specific reference to UniCredit S.p.A. as Originator which is herewith quoted entirely.  UniCredit ·2018 Annual Report and Accounts 739 UniCredit ·2018 Annual Report and Accounts 739 UniCredit ·2018 Annual Report and Accounts 739 UniCredit ·2018 Annual Report and Accounts 739 UniCredit ·2018 Annual Report and Accounts 739  I 740 2018 Annual Report and Accounts · UniCredit I 740 2018 Annual Report and Accounts · UniCredit I 740 2018 Annual Report and Accounts · UniCredit I 740 2018 Annual Report and Accounts · UniCredit I 740 2018 Annual Report and Accounts · UniCredit Company Financial Statements | Certification Annual financial statements certification pursuant to art.81-ter of Consob regulation No.11971/99, as amended UniCredit ·2018 Annual Report and Accounts 741 Certification on loan applications falling 1. The undersigned Jean Pierre Mustier (as Chief Executive Officer) and Stefano Porro (as the Manager Charged with preparing the financial reports) of UniCredit S.p.A., also in compliance with Art.154-bis, (paragraphs 3 and 4) of Italian Legislative Decree No.58 of 24 February 1998, do hereby certify: • the adequacy in relation to the Legal Entity’s features, and • the actual application of the administrative and accounting procedures employed to draw up the 2018 Annual Financial Statements. 2. The adequacy of the administrative and accounting procedures employed to draw up the 2018 Annual Financial Statements has been evaluated by applying a model developed by UniCredit S.p.A., in accordance with the “Internal Controls - Integrated Framework (CoSO)” and the “Control Objective for IT and Related Technologies (Cobit)”, which represent generally accepted international standards for internal control system and for financial reporting in particular. 3. The undersigned also certify that: 3.1 the 2018 Annual Financial Statements: a) were prepared in compliance with applicable international accounting standards recognized by the European Community pursuant to European Parliament and Council Regulation No.1606/2002, of 19 July 2002; b) correspond to the results of the accounting books and records; c) are suitable to provide a fair and correct representation of the economic and financial situation of the issuer; 3.2 the Report on Operations includes a reliable analysis of the operating trend and results as well as of the situation of the issuer, together with a description of the main risks and uncertainties they are exposed to. Milan - 6 February 2019 Jean Pierre MUSTIER Stefano PORRO Annual Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended Company Financial Statements | Certification Annual financial statements certification pursuant to art.81-ter of Consob regulation No.11971/99, as amended UniCredit ·2018 Annual Report and Accounts 741 Certification on loan applications falling 1. The undersigned Jean Pierre Mustier (as Chief Executive Officer) and Stefano Porro (as the Manager Charged with preparing the financial reports) of UniCredit S.p.A., also in compliance with Art.154-bis, (paragraphs 3 and 4) of Italian Legislative Decree No.58 of 24 February 1998, do hereby certify: • the adequacy in relation to the Legal Entity’s features, and • the actual application of the administrative and accounting procedures employed to draw up the 2018 Annual Financial Statements. 2. The adequacy of the administrative and accounting procedures employed to draw up the 2018 Annual Financial Statements has been evaluated by applying a model developed by UniCredit S.p.A., in accordance with the “Internal Controls - Integrated Framework (CoSO)” and the “Control Objective for IT and Related Technologies (Cobit)”, which represent generally accepted international standards for internal control system and for financial reporting in particular. 3. The undersigned also certify that: 3.1 the 2018 Annual Financial Statements: a) were prepared in compliance with applicable international accounting standards recognized by the European Community pursuant to European Parliament and Council Regulation No.1606/2002, of 19 July 2002; b) correspond to the results of the accounting books and records; c) are suitable to provide a fair and correct representation of the economic and financial situation of the issuer; 3.2 the Report on Operations includes a reliable analysis of the operating trend and results as well as of the situation of the issuer, together with a description of the main risks and uncertainties they are exposed to. Milan - 6 February 2019 Jean Pierre MUSTIER Stefano PORRO Annual Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended Company Financial Statements | Certification Annual financial statements certification pursuant to art.81-ter of Consob regulation No.11971/99, as amended UniCredit ·2018 Annual Report and Accounts 741 Certification on loan applications falling 1. The undersigned Jean Pierre Mustier (as Chief Executive Officer) and Stefano Porro (as the Manager Charged with preparing the financial reports) of UniCredit S.p.A., also in compliance with Art.154-bis, (paragraphs 3 and 4) of Italian Legislative Decree No.58 of 24 February 1998, do hereby certify: • the adequacy in relation to the Legal Entity’s features, and • the actual application of the administrative and accounting procedures employed to draw up the 2018 Annual Financial Statements. 2. The adequacy of the administrative and accounting procedures employed to draw up the 2018 Annual Financial Statements has been evaluated by applying a model developed by UniCredit S.p.A., in accordance with the “Internal Controls - Integrated Framework (CoSO)” and the “Control Objective for IT and Related Technologies (Cobit)”, which represent generally accepted international standards for internal control system and for financial reporting in particular. 3. The undersigned also certify that: 3.1 the 2018 Annual Financial Statements: a) were prepared in compliance with applicable international accounting standards recognized by the European Community pursuant to European Parliament and Council Regulation No.1606/2002, of 19 July 2002; b) correspond to the results of the accounting books and records; c) are suitable to provide a fair and correct representation of the economic and financial situation of the issuer; 3.2 the Report on Operations includes a reliable analysis of the operating trend and results as well as of the situation of the issuer, together with a description of the main risks and uncertainties they are exposed to. Milan - 6 February 2019 Jean Pierre MUSTIER Stefano PORRO Annual Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended Company Financial Statements | Certification Annual financial statements certification pursuant to art.81-ter of Consob regulation No.11971/99, as amended UniCredit ·2018 Annual Report and Accounts 741 Certification on loan applications falling 1. The undersigned Jean Pierre Mustier (as Chief Executive Officer) and Stefano Porro (as the Manager Charged with preparing the financial reports) of UniCredit S.p.A., also in compliance with Art.154-bis, (paragraphs 3 and 4) of Italian Legislative Decree No.58 of 24 February 1998, do hereby certify: • the adequacy in relation to the Legal Entity’s features, and • the actual application of the administrative and accounting procedures employed to draw up the 2018 Annual Financial Statements. 2. The adequacy of the administrative and accounting procedures employed to draw up the 2018 Annual Financial Statements has been evaluated by applying a model developed by UniCredit S.p.A., in accordance with the “Internal Controls - Integrated Framework (CoSO)” and the “Control Objective for IT and Related Technologies (Cobit)”, which represent generally accepted international standards for internal control system and for financial reporting in particular. 3. The undersigned also certify that: 3.1 the 2018 Annual Financial Statements: a) were prepared in compliance with applicable international accounting standards recognized by the European Community pursuant to European Parliament and Council Regulation No.1606/2002, of 19 July 2002; b) correspond to the results of the accounting books and records; c) are suitable to provide a fair and correct representation of the economic and financial situation of the issuer; 3.2 the Report on Operations includes a reliable analysis of the operating trend and results as well as of the situation of the issuer, together with a description of the main risks and uncertainties they are exposed to. Milan - 6 February 2019 Jean Pierre MUSTIER Stefano PORRO Annual Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended Company Financial Statements | Certification Annual financial statements certification pursuant to art.81-ter of Consob regulation No.11971/99, as amended UniCredit ·2018 Annual Report and Accounts 741 Certification on loan applications falling 1. The undersigned Jean Pierre Mustier (as Chief Executive Officer) and Stefano Porro (as the Manager Charged with preparing the financial reports) of UniCredit S.p.A., also in compliance with Art.154-bis, (paragraphs 3 and 4) of Italian Legislative Decree No.58 of 24 February 1998, do hereby certify: • the adequacy in relation to the Legal Entity’s features, and • the actual application of the administrative and accounting procedures employed to draw up the 2018 Annual Financial Statements. 2. The adequacy of the administrative and accounting procedures employed to draw up the 2018 Annual Financial Statements has been evaluated by applying a model developed by UniCredit S.p.A., in accordance with the “Internal Controls - Integrated Framework (CoSO)” and the “Control Objective for IT and Related Technologies (Cobit)”, which represent generally accepted international standards for internal control system and for financial reporting in particular. 3. The undersigned also certify that: 3.1 the 2018 Annual Financial Statements: a) were prepared in compliance with applicable international accounting standards recognized by the European Community pursuant to European Parliament and Council Regulation No.1606/2002, of 19 July 2002; b) correspond to the results of the accounting books and records; c) are suitable to provide a fair and correct representation of the economic and financial situation of the issuer; 3.2 the Report on Operations includes a reliable analysis of the operating trend and results as well as of the situation of the issuer, together with a description of the main risks and uncertainties they are exposed to. Milan - 6 February 2019 Jean Pierre MUSTIER Stefano PORRO Annual Financial Statements Certification pursuant to Art.81-ter of Consob Regulation No.11971/99, as amended  I 742 2018 Annual Report and Accounts · UniCredit I 742 2018 Annual Report and Accounts · UniCredit I 742 2018 Annual Report and Accounts · UniCredit I 742 2018 Annual Report and Accounts · UniCredit I 742 2018 Annual Report and Accounts · UniCredit Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 743 Reports and resolutions Report of the Board of Statutory Auditors (English translation of the Italian original document) BOARD OF STATUTORY AUDITORS' REPORT TO THE SHAREHOLDERS MEETING OF APRIL 11, 2019 (PURSUANT TO ART.153 OF ITALIAN LEGISLATIVE DECREE 58/1998 AND ART. 2429, PAR. 2, OF THE ITALIAN CIVIL CODE) Board of Statutory Auditors' report to the Shareholders' Meeting of April 20, 2017 (pursuant to Art.153 of Italian Legislative Decree 58/1998 and Art.2429, paragraph 2, of the Italian Civil Code) Dear Shareholders, the Board of Statutory Auditors (hereinafter, also the "BoSA") is called to report to the Shareholders' Meeting of UniCredit S.p.A. (hereinafter, also the "Bank", the "Parent Company") on the oversight activity performed during the year and on any detected omissions and censurable facts, pursuant to Art.153 of Italian Legislative Decree no. 58/1998 (Consolidated law on finance TUF) and art. 2429, paragraph 2, of the Italian Civil Code. The Board of Statutory Auditors is also entitled to make comments and proposals concerning the financial statements, their approval and all matters within its remit. During 2018, the Board of Statutory Auditors performed its institutional duties in compliance with the Italian Civil Code, Italian Legislative Decree no. 385/1993 (Consolidated law on banking TUB), 58/1998 (TUF) and 39/2010 and subsequent amendments and/or additions, the provisions of the company Bylaws and those issued by the Authorities that exercise supervisory and control activities, also taking into consideration the rules of conduct recommended by the Italian National Board of Certified Public Accountants and Accounting Experts (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili). This report provides the information required by Consob Communication 1025564/2001 as amended and/or supplemented. 1. Appointment and activities of the Board of Statutory Auditors On 14 April 2016, the Shareholders' Meeting of UniCredit S.p.A. renewed the Board of Statutory Auditors, which had lapsed from office after completing its three-year term, appointing its members for the subsequent period and until the approval of the financial statements at 31 December 2018. These were Mr. Pierpaolo Singer (Chairman), Mr. Angelo Rocco Bonissoni, Mr. Enrico Laghi, Ms. Benedetta Navarra, and Ms. Maria Enrica Spinardi (Statutory Auditors). On 2 May 2017, Mr. Enrico Laghi resigned from office due to increasing professional commitments. He was replaced by Mr. Guido Paolucci, former Alternate Auditor from the same list, whose appointment was confirmed by the Shareholders' Meeting on 4 December 2017. On 26 October 2017, Ms. Maria Enrica Spinardi resigned from office for reasons related to her family commitments. She was replaced by Ms. Antonella Bientinesi, former Alternate Auditor from the same list, whose appointment was confirmed by the Shareholders' Meeting on 4 December 2017. During the 2018 financial year, the Board of Statutory Auditors carried out its activities, holding 38 meetings with an average duration of about 3 hours and 50 minutes, of which 26 after the Shareholders' Meeting of 12 April 2018. During 2019 and until the date of this Report, the Board of Statutory Auditors met 10 times. The Board of Statutory Auditors participated in all 17 meetings of the Board of Directors. In 2018, the Board of Statutory Auditors, with the presence of all members, participated in 4 meetings of the Internal Control & Risk Committee (hereinafter, also "IC&RC"); subsequently, following the renewal of the composition of the IC&RC in April 2018, it participated on the invitation of the Chairman of the Board (9 meetings, May – December 2018 period). 2. Development of Group activities and other corporate operations The Board of Statutory Auditors, in parallel with the monitoring carried out continuously by the Board of Directors and related to the implementation of the Strategic Plan Transform 2019 (hereinafter, also the "Plan") approved in December 2016 and reconfirmed in December 2017, continued its analyses aimed at examining the implementation of the main actions contemplated in the Plan and carried out specific in-depth studies with the Top Management within the respective remits regarding the significant advances in the implementation of the five pillars of the Plan: • Transforming the operating model; • Maximizing the commercial bank value; • Strengthening and optimizing the capital; • Improving asset quality; • Adopting a Group Corporate Center that is streamlined yet with directional powers strongly oriented towards coordinating the business. The implementation of Transform 2019 is fully in line with expectations. The Consolidated Management Report also lists the initiatives for the sale of non-performing loan portfolios, which are aimed at reducing non-performing exposures and non-core assets and strengthening the Group's risk profile set in the Plan. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 743 Reports and resolutions Report of the Board of Statutory Auditors (English translation of the Italian original document) BOARD OF STATUTORY AUDITORS' REPORT TO THE SHAREHOLDERS MEETING OF APRIL 11, 2019 (PURSUANT TO ART.153 OF ITALIAN LEGISLATIVE DECREE 58/1998 AND ART. 2429, PAR. 2, OF THE ITALIAN CIVIL CODE) Board of Statutory Auditors' report to the Shareholders' Meeting of April 20, 2017 (pursuant to Art.153 of Italian Legislative Decree 58/1998 and Art.2429, paragraph 2, of the Italian Civil Code) Dear Shareholders, the Board of Statutory Auditors (hereinafter, also the "BoSA") is called to report to the Shareholders' Meeting of UniCredit S.p.A. (hereinafter, also the "Bank", the "Parent Company") on the oversight activity performed during the year and on any detected omissions and censurable facts, pursuant to Art.153 of Italian Legislative Decree no. 58/1998 (Consolidated law on finance TUF) and art. 2429, paragraph 2, of the Italian Civil Code. The Board of Statutory Auditors is also entitled to make comments and proposals concerning the financial statements, their approval and all matters within its remit. During 2018, the Board of Statutory Auditors performed its institutional duties in compliance with the Italian Civil Code, Italian Legislative Decree no. 385/1993 (Consolidated law on banking TUB), 58/1998 (TUF) and 39/2010 and subsequent amendments and/or additions, the provisions of the company Bylaws and those issued by the Authorities that exercise supervisory and control activities, also taking into consideration the rules of conduct recommended by the Italian National Board of Certified Public Accountants and Accounting Experts (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili). This report provides the information required by Consob Communication 1025564/2001 as amended and/or supplemented. 1. Appointment and activities of the Board of Statutory Auditors On 14 April 2016, the Shareholders' Meeting of UniCredit S.p.A. renewed the Board of Statutory Auditors, which had lapsed from office after completing its three-year term, appointing its members for the subsequent period and until the approval of the financial statements at 31 December 2018. These were Mr. Pierpaolo Singer (Chairman), Mr. Angelo Rocco Bonissoni, Mr. Enrico Laghi, Ms. Benedetta Navarra, and Ms. Maria Enrica Spinardi (Statutory Auditors). On 2 May 2017, Mr. Enrico Laghi resigned from office due to increasing professional commitments. He was replaced by Mr. Guido Paolucci, former Alternate Auditor from the same list, whose appointment was confirmed by the Shareholders' Meeting on 4 December 2017. On 26 October 2017, Ms. Maria Enrica Spinardi resigned from office for reasons related to her family commitments. She was replaced by Ms. Antonella Bientinesi, former Alternate Auditor from the same list, whose appointment was confirmed by the Shareholders' Meeting on 4 December 2017. During the 2018 financial year, the Board of Statutory Auditors carried out its activities, holding 38 meetings with an average duration of about 3 hours and 50 minutes, of which 26 after the Shareholders' Meeting of 12 April 2018. During 2019 and until the date of this Report, the Board of Statutory Auditors met 10 times. The Board of Statutory Auditors participated in all 17 meetings of the Board of Directors. In 2018, the Board of Statutory Auditors, with the presence of all members, participated in 4 meetings of the Internal Control & Risk Committee (hereinafter, also "IC&RC"); subsequently, following the renewal of the composition of the IC&RC in April 2018, it participated on the invitation of the Chairman of the Board (9 meetings, May – December 2018 period). 2. Development of Group activities and other corporate operations The Board of Statutory Auditors, in parallel with the monitoring carried out continuously by the Board of Directors and related to the implementation of the Strategic Plan Transform 2019 (hereinafter, also the "Plan") approved in December 2016 and reconfirmed in December 2017, continued its analyses aimed at examining the implementation of the main actions contemplated in the Plan and carried out specific in-depth studies with the Top Management within the respective remits regarding the significant advances in the implementation of the five pillars of the Plan: • Transforming the operating model; • Maximizing the commercial bank value; • Strengthening and optimizing the capital; • Improving asset quality; • Adopting a Group Corporate Center that is streamlined yet with directional powers strongly oriented towards coordinating the business. The implementation of Transform 2019 is fully in line with expectations. The Consolidated Management Report also lists the initiatives for the sale of non-performing loan portfolios, which are aimed at reducing non-performing exposures and non-core assets and strengthening the Group's risk profile set in the Plan. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 743 Reports and resolutions Report of the Board of Statutory Auditors (English translation of the Italian original document) BOARD OF STATUTORY AUDITORS' REPORT TO THE SHAREHOLDERS MEETING OF APRIL 11, 2019 (PURSUANT TO ART.153 OF ITALIAN LEGISLATIVE DECREE 58/1998 AND ART. 2429, PAR. 2, OF THE ITALIAN CIVIL CODE) Board of Statutory Auditors' report to the Shareholders' Meeting of April 20, 2017 (pursuant to Art.153 of Italian Legislative Decree 58/1998 and Art.2429, paragraph 2, of the Italian Civil Code) Dear Shareholders, the Board of Statutory Auditors (hereinafter, also the "BoSA") is called to report to the Shareholders' Meeting of UniCredit S.p.A. (hereinafter, also the "Bank", the "Parent Company") on the oversight activity performed during the year and on any detected omissions and censurable facts, pursuant to Art.153 of Italian Legislative Decree no. 58/1998 (Consolidated law on finance TUF) and art. 2429, paragraph 2, of the Italian Civil Code. The Board of Statutory Auditors is also entitled to make comments and proposals concerning the financial statements, their approval and all matters within its remit. During 2018, the Board of Statutory Auditors performed its institutional duties in compliance with the Italian Civil Code, Italian Legislative Decree no. 385/1993 (Consolidated law on banking TUB), 58/1998 (TUF) and 39/2010 and subsequent amendments and/or additions, the provisions of the company Bylaws and those issued by the Authorities that exercise supervisory and control activities, also taking into consideration the rules of conduct recommended by the Italian National Board of Certified Public Accountants and Accounting Experts (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili). This report provides the information required by Consob Communication 1025564/2001 as amended and/or supplemented. 1. Appointment and activities of the Board of Statutory Auditors On 14 April 2016, the Shareholders' Meeting of UniCredit S.p.A. renewed the Board of Statutory Auditors, which had lapsed from office after completing its three-year term, appointing its members for the subsequent period and until the approval of the financial statements at 31 December 2018. These were Mr. Pierpaolo Singer (Chairman), Mr. Angelo Rocco Bonissoni, Mr. Enrico Laghi, Ms. Benedetta Navarra, and Ms. Maria Enrica Spinardi (Statutory Auditors). On 2 May 2017, Mr. Enrico Laghi resigned from office due to increasing professional commitments. He was replaced by Mr. Guido Paolucci, former Alternate Auditor from the same list, whose appointment was confirmed by the Shareholders' Meeting on 4 December 2017. On 26 October 2017, Ms. Maria Enrica Spinardi resigned from office for reasons related to her family commitments. She was replaced by Ms. Antonella Bientinesi, former Alternate Auditor from the same list, whose appointment was confirmed by the Shareholders' Meeting on 4 December 2017. During the 2018 financial year, the Board of Statutory Auditors carried out its activities, holding 38 meetings with an average duration of about 3 hours and 50 minutes, of which 26 after the Shareholders' Meeting of 12 April 2018. During 2019 and until the date of this Report, the Board of Statutory Auditors met 10 times. The Board of Statutory Auditors participated in all 17 meetings of the Board of Directors. In 2018, the Board of Statutory Auditors, with the presence of all members, participated in 4 meetings of the Internal Control & Risk Committee (hereinafter, also "IC&RC"); subsequently, following the renewal of the composition of the IC&RC in April 2018, it participated on the invitation of the Chairman of the Board (9 meetings, May – December 2018 period). 2. Development of Group activities and other corporate operations The Board of Statutory Auditors, in parallel with the monitoring carried out continuously by the Board of Directors and related to the implementation of the Strategic Plan Transform 2019 (hereinafter, also the "Plan") approved in December 2016 and reconfirmed in December 2017, continued its analyses aimed at examining the implementation of the main actions contemplated in the Plan and carried out specific in-depth studies with the Top Management within the respective remits regarding the significant advances in the implementation of the five pillars of the Plan: • Transforming the operating model; • Maximizing the commercial bank value; • Strengthening and optimizing the capital; • Improving asset quality; • Adopting a Group Corporate Center that is streamlined yet with directional powers strongly oriented towards coordinating the business. The implementation of Transform 2019 is fully in line with expectations. The Consolidated Management Report also lists the initiatives for the sale of non-performing loan portfolios, which are aimed at reducing non-performing exposures and non-core assets and strengthening the Group's risk profile set in the Plan. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 743 Reports and resolutions Report of the Board of Statutory Auditors (English translation of the Italian original document) BOARD OF STATUTORY AUDITORS' REPORT TO THE SHAREHOLDERS MEETING OF APRIL 11, 2019 (PURSUANT TO ART.153 OF ITALIAN LEGISLATIVE DECREE 58/1998 AND ART. 2429, PAR. 2, OF THE ITALIAN CIVIL CODE) Board of Statutory Auditors' report to the Shareholders' Meeting of April 20, 2017 (pursuant to Art.153 of Italian Legislative Decree 58/1998 and Art.2429, paragraph 2, of the Italian Civil Code) Dear Shareholders, the Board of Statutory Auditors (hereinafter, also the "BoSA") is called to report to the Shareholders' Meeting of UniCredit S.p.A. (hereinafter, also the "Bank", the "Parent Company") on the oversight activity performed during the year and on any detected omissions and censurable facts, pursuant to Art.153 of Italian Legislative Decree no. 58/1998 (Consolidated law on finance TUF) and art. 2429, paragraph 2, of the Italian Civil Code. The Board of Statutory Auditors is also entitled to make comments and proposals concerning the financial statements, their approval and all matters within its remit. During 2018, the Board of Statutory Auditors performed its institutional duties in compliance with the Italian Civil Code, Italian Legislative Decree no. 385/1993 (Consolidated law on banking TUB), 58/1998 (TUF) and 39/2010 and subsequent amendments and/or additions, the provisions of the company Bylaws and those issued by the Authorities that exercise supervisory and control activities, also taking into consideration the rules of conduct recommended by the Italian National Board of Certified Public Accountants and Accounting Experts (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili). This report provides the information required by Consob Communication 1025564/2001 as amended and/or supplemented. 1. Appointment and activities of the Board of Statutory Auditors On 14 April 2016, the Shareholders' Meeting of UniCredit S.p.A. renewed the Board of Statutory Auditors, which had lapsed from office after completing its three-year term, appointing its members for the subsequent period and until the approval of the financial statements at 31 December 2018. These were Mr. Pierpaolo Singer (Chairman), Mr. Angelo Rocco Bonissoni, Mr. Enrico Laghi, Ms. Benedetta Navarra, and Ms. Maria Enrica Spinardi (Statutory Auditors). On 2 May 2017, Mr. Enrico Laghi resigned from office due to increasing professional commitments. He was replaced by Mr. Guido Paolucci, former Alternate Auditor from the same list, whose appointment was confirmed by the Shareholders' Meeting on 4 December 2017. On 26 October 2017, Ms. Maria Enrica Spinardi resigned from office for reasons related to her family commitments. She was replaced by Ms. Antonella Bientinesi, former Alternate Auditor from the same list, whose appointment was confirmed by the Shareholders' Meeting on 4 December 2017. During the 2018 financial year, the Board of Statutory Auditors carried out its activities, holding 38 meetings with an average duration of about 3 hours and 50 minutes, of which 26 after the Shareholders' Meeting of 12 April 2018. During 2019 and until the date of this Report, the Board of Statutory Auditors met 10 times. The Board of Statutory Auditors participated in all 17 meetings of the Board of Directors. In 2018, the Board of Statutory Auditors, with the presence of all members, participated in 4 meetings of the Internal Control & Risk Committee (hereinafter, also "IC&RC"); subsequently, following the renewal of the composition of the IC&RC in April 2018, it participated on the invitation of the Chairman of the Board (9 meetings, May – December 2018 period). 2. Development of Group activities and other corporate operations The Board of Statutory Auditors, in parallel with the monitoring carried out continuously by the Board of Directors and related to the implementation of the Strategic Plan Transform 2019 (hereinafter, also the "Plan") approved in December 2016 and reconfirmed in December 2017, continued its analyses aimed at examining the implementation of the main actions contemplated in the Plan and carried out specific in-depth studies with the Top Management within the respective remits regarding the significant advances in the implementation of the five pillars of the Plan: • Transforming the operating model; • Maximizing the commercial bank value; • Strengthening and optimizing the capital; • Improving asset quality; • Adopting a Group Corporate Center that is streamlined yet with directional powers strongly oriented towards coordinating the business. The implementation of Transform 2019 is fully in line with expectations. The Consolidated Management Report also lists the initiatives for the sale of non-performing loan portfolios, which are aimed at reducing non-performing exposures and non-core assets and strengthening the Group's risk profile set in the Plan. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 743 Reports and resolutions Report of the Board of Statutory Auditors (English translation of the Italian original document) BOARD OF STATUTORY AUDITORS' REPORT TO THE SHAREHOLDERS MEETING OF APRIL 11, 2019 (PURSUANT TO ART.153 OF ITALIAN LEGISLATIVE DECREE 58/1998 AND ART. 2429, PAR. 2, OF THE ITALIAN CIVIL CODE) Board of Statutory Auditors' report to the Shareholders' Meeting of April 20, 2017 (pursuant to Art.153 of Italian Legislative Decree 58/1998 and Art.2429, paragraph 2, of the Italian Civil Code) Dear Shareholders, the Board of Statutory Auditors (hereinafter, also the "BoSA") is called to report to the Shareholders' Meeting of UniCredit S.p.A. (hereinafter, also the "Bank", the "Parent Company") on the oversight activity performed during the year and on any detected omissions and censurable facts, pursuant to Art.153 of Italian Legislative Decree no. 58/1998 (Consolidated law on finance TUF) and art. 2429, paragraph 2, of the Italian Civil Code. The Board of Statutory Auditors is also entitled to make comments and proposals concerning the financial statements, their approval and all matters within its remit. During 2018, the Board of Statutory Auditors performed its institutional duties in compliance with the Italian Civil Code, Italian Legislative Decree no. 385/1993 (Consolidated law on banking TUB), 58/1998 (TUF) and 39/2010 and subsequent amendments and/or additions, the provisions of the company Bylaws and those issued by the Authorities that exercise supervisory and control activities, also taking into consideration the rules of conduct recommended by the Italian National Board of Certified Public Accountants and Accounting Experts (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili). This report provides the information required by Consob Communication 1025564/2001 as amended and/or supplemented. 1. Appointment and activities of the Board of Statutory Auditors On 14 April 2016, the Shareholders' Meeting of UniCredit S.p.A. renewed the Board of Statutory Auditors, which had lapsed from office after completing its three-year term, appointing its members for the subsequent period and until the approval of the financial statements at 31 December 2018. These were Mr. Pierpaolo Singer (Chairman), Mr. Angelo Rocco Bonissoni, Mr. Enrico Laghi, Ms. Benedetta Navarra, and Ms. Maria Enrica Spinardi (Statutory Auditors). On 2 May 2017, Mr. Enrico Laghi resigned from office due to increasing professional commitments. He was replaced by Mr. Guido Paolucci, former Alternate Auditor from the same list, whose appointment was confirmed by the Shareholders' Meeting on 4 December 2017. On 26 October 2017, Ms. Maria Enrica Spinardi resigned from office for reasons related to her family commitments. She was replaced by Ms. Antonella Bientinesi, former Alternate Auditor from the same list, whose appointment was confirmed by the Shareholders' Meeting on 4 December 2017. During the 2018 financial year, the Board of Statutory Auditors carried out its activities, holding 38 meetings with an average duration of about 3 hours and 50 minutes, of which 26 after the Shareholders' Meeting of 12 April 2018. During 2019 and until the date of this Report, the Board of Statutory Auditors met 10 times. The Board of Statutory Auditors participated in all 17 meetings of the Board of Directors. In 2018, the Board of Statutory Auditors, with the presence of all members, participated in 4 meetings of the Internal Control & Risk Committee (hereinafter, also "IC&RC"); subsequently, following the renewal of the composition of the IC&RC in April 2018, it participated on the invitation of the Chairman of the Board (9 meetings, May – December 2018 period). 2. Development of Group activities and other corporate operations The Board of Statutory Auditors, in parallel with the monitoring carried out continuously by the Board of Directors and related to the implementation of the Strategic Plan Transform 2019 (hereinafter, also the "Plan") approved in December 2016 and reconfirmed in December 2017, continued its analyses aimed at examining the implementation of the main actions contemplated in the Plan and carried out specific in-depth studies with the Top Management within the respective remits regarding the significant advances in the implementation of the five pillars of the Plan: • Transforming the operating model; • Maximizing the commercial bank value; • Strengthening and optimizing the capital; • Improving asset quality; • Adopting a Group Corporate Center that is streamlined yet with directional powers strongly oriented towards coordinating the business. The implementation of Transform 2019 is fully in line with expectations. The Consolidated Management Report also lists the initiatives for the sale of non-performing loan portfolios, which are aimed at reducing non-performing exposures and non-core assets and strengthening the Group's risk profile set in the Plan. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 744 2018 Annual Report and Accounts · UniCredit Among the operations and initiatives on shareholdings described in the financial statements, please note the following: Disposal of Italian pawncredit business On 1 July 2018, the holding UniCredit S.p.A. completed the disposal of its Italian pawncredit business to Dorotheum. The transaction envisaged a consideration of €141 million, paid by Dorotheum at closing, and a potential earn-out in favor of UniCredit S.p.A. up to €9 million, to be paid after three years. In 3Q18 the transaction generated a positive impact for UniCredit S.p.A. of about €100 million in the consolidated accounts and of almost 4 bps on the consolidated CET1 ratio. Sale of the investment in i-Faber S.p.A. On 30 April 2018, UniCredit S.p.A. finalized the sale of the entire stake (100%) held in i-Faber S.p.A. to Accenture Managed Services S.p.A., as part of the broader action aimed at streamlining the Group's shareholdings. Constitution of UniCredit myAgents S.r.l. In February 2018, UniCredit myAgents S.r.l., a wholly owned subsidiary of UniCredit S.p.A., was set up to operate as a financial business agency, mainly as a driver for recruiting and training associates to strengthen its distribution network, in order to contribute to the business development of Italian commercial bank business. The company has been operational since April 2018. 3. Other information on Group activities Contract renegotiation with ES Shared Service Center S.p.A. In line with the new HR Transformation program led by the UniCredit HR Transformation & Operations Office, a thorough revision of the relationship with ES Shared Service Center S.p.A. has been negotiated. The latter provides services in the field of Human Resources for UniCredit Group companies in Italy and Austria through an outsourcing contract spanning 15 years. In line with the agreements, the subsidiary UniCredit Services Scpa has exercised its termination right of the agreement related to Italy which is effective from 1 July 2018. The termination of the said agreement envisages also a post termination assistance in order to ensure the continuity of the services and to support the migration of the systems and the activities to UniCredit S.p.A. In this context and in execution of the reached agreement, UniCredit Services has exercised its "put option"; therefore starting from 19 December 2018 UniCredit Services ceased to be a shareholder of ES SSC. Treatment of Cashes In reference to the request made by Caius Capital on 20 July 2018, the EBA (European Banking Authority) decided not to open an investigation for breach of EU law regarding the regulatory treatment of the Cashes operation. UniCredit S.p.A. therefore confirmed the position of 2012 concerning the treatment of the Cashes, supported by the fact that the treatment was reviewed and affirmed by all the relevant authorities and that UniCredit ordinary shares are qualified as Common Equity Tier 1 Capital - CET1. UniCredit S.p.A. also has filed a complaint against Caius Capital and the Caius funds in the Milan Court, asking for damages quantified at about €90 million due to the initiatives taken by them in regards to the Cashes. In December 2018, UniCredit S.p.A. and Caius Capital jointly communicated that they had reached a definitive settlement agreement on the dispute, and UniCredit's complaint against Caius and the funds it manages has been withdrawn. Mediobanca S.p.A. - new consultation agreement At 31 December 2018, UniCredit S.p.A. is the largest shareholder in Mediobanca Banca di Credito Finanziario S.p.A. ("Mediobanca") with a stake of 74.5 million shares, corresponding to 8.4% of the share capital. As a result of the termination of the existing Shareholders' Agreement of Mediobanca from 31 December 2018, on 20 December 2018, the holders of 20.7% of the share capital of Mediobanca, including UniCredit S.p.A., signed a new "consultation agreement" effective from 1st January 2019. The stake in Mediobanca is classified among the related companies subject to considerable influence, in line with the previous years and on the basis of an opinion requested from an external law firm. Given the signing of the new consultation agreement, UniCredit continues to hold significant influence on Mediobanca, as the new agreement does not introduce changes in the governance framework of Mediobanca so substantial to require an update in UniCredit classification and valuation criteria of such stake; UniCredit preserves its representation in the Board of Directors of Mediobanca and the participation in determining its financial and operating policies. Approval of the Italian Budgetary law 2019 and consequent effects on deferred taxes associated with the adoption of the IFRS9 principle As indicated in the consolidated Notes, starting from 1st January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1st January 2018 net equity (First Time Adoption - FTA). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Italian Budgetary Law, approved in December 2018, envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 744 2018 Annual Report and Accounts · UniCredit Among the operations and initiatives on shareholdings described in the financial statements, please note the following: Disposal of Italian pawncredit business On 1 July 2018, the holding UniCredit S.p.A. completed the disposal of its Italian pawncredit business to Dorotheum. The transaction envisaged a consideration of €141 million, paid by Dorotheum at closing, and a potential earn-out in favor of UniCredit S.p.A. up to €9 million, to be paid after three years. In 3Q18 the transaction generated a positive impact for UniCredit S.p.A. of about €100 million in the consolidated accounts and of almost 4 bps on the consolidated CET1 ratio. Sale of the investment in i-Faber S.p.A. On 30 April 2018, UniCredit S.p.A. finalized the sale of the entire stake (100%) held in i-Faber S.p.A. to Accenture Managed Services S.p.A., as part of the broader action aimed at streamlining the Group's shareholdings. Constitution of UniCredit myAgents S.r.l. In February 2018, UniCredit myAgents S.r.l., a wholly owned subsidiary of UniCredit S.p.A., was set up to operate as a financial business agency, mainly as a driver for recruiting and training associates to strengthen its distribution network, in order to contribute to the business development of Italian commercial bank business. The company has been operational since April 2018. 3. Other information on Group activities Contract renegotiation with ES Shared Service Center S.p.A. In line with the new HR Transformation program led by the UniCredit HR Transformation & Operations Office, a thorough revision of the relationship with ES Shared Service Center S.p.A. has been negotiated. The latter provides services in the field of Human Resources for UniCredit Group companies in Italy and Austria through an outsourcing contract spanning 15 years. In line with the agreements, the subsidiary UniCredit Services Scpa has exercised its termination right of the agreement related to Italy which is effective from 1 July 2018. The termination of the said agreement envisages also a post termination assistance in order to ensure the continuity of the services and to support the migration of the systems and the activities to UniCredit S.p.A. In this context and in execution of the reached agreement, UniCredit Services has exercised its "put option"; therefore starting from 19 December 2018 UniCredit Services ceased to be a shareholder of ES SSC. Treatment of Cashes In reference to the request made by Caius Capital on 20 July 2018, the EBA (European Banking Authority) decided not to open an investigation for breach of EU law regarding the regulatory treatment of the Cashes operation. UniCredit S.p.A. therefore confirmed the position of 2012 concerning the treatment of the Cashes, supported by the fact that the treatment was reviewed and affirmed by all the relevant authorities and that UniCredit ordinary shares are qualified as Common Equity Tier 1 Capital - CET1. UniCredit S.p.A. also has filed a complaint against Caius Capital and the Caius funds in the Milan Court, asking for damages quantified at about €90 million due to the initiatives taken by them in regards to the Cashes. In December 2018, UniCredit S.p.A. and Caius Capital jointly communicated that they had reached a definitive settlement agreement on the dispute, and UniCredit's complaint against Caius and the funds it manages has been withdrawn. Mediobanca S.p.A. - new consultation agreement At 31 December 2018, UniCredit S.p.A. is the largest shareholder in Mediobanca Banca di Credito Finanziario S.p.A. ("Mediobanca") with a stake of 74.5 million shares, corresponding to 8.4% of the share capital. As a result of the termination of the existing Shareholders' Agreement of Mediobanca from 31 December 2018, on 20 December 2018, the holders of 20.7% of the share capital of Mediobanca, including UniCredit S.p.A., signed a new "consultation agreement" effective from 1st January 2019. The stake in Mediobanca is classified among the related companies subject to considerable influence, in line with the previous years and on the basis of an opinion requested from an external law firm. Given the signing of the new consultation agreement, UniCredit continues to hold significant influence on Mediobanca, as the new agreement does not introduce changes in the governance framework of Mediobanca so substantial to require an update in UniCredit classification and valuation criteria of such stake; UniCredit preserves its representation in the Board of Directors of Mediobanca and the participation in determining its financial and operating policies. Approval of the Italian Budgetary law 2019 and consequent effects on deferred taxes associated with the adoption of the IFRS9 principle As indicated in the consolidated Notes, starting from 1st January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1st January 2018 net equity (First Time Adoption - FTA). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Italian Budgetary Law, approved in December 2018, envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 744 2018 Annual Report and Accounts · UniCredit Among the operations and initiatives on shareholdings described in the financial statements, please note the following: Disposal of Italian pawncredit business On 1 July 2018, the holding UniCredit S.p.A. completed the disposal of its Italian pawncredit business to Dorotheum. The transaction envisaged a consideration of €141 million, paid by Dorotheum at closing, and a potential earn-out in favor of UniCredit S.p.A. up to €9 million, to be paid after three years. In 3Q18 the transaction generated a positive impact for UniCredit S.p.A. of about €100 million in the consolidated accounts and of almost 4 bps on the consolidated CET1 ratio. Sale of the investment in i-Faber S.p.A. On 30 April 2018, UniCredit S.p.A. finalized the sale of the entire stake (100%) held in i-Faber S.p.A. to Accenture Managed Services S.p.A., as part of the broader action aimed at streamlining the Group's shareholdings. Constitution of UniCredit myAgents S.r.l. In February 2018, UniCredit myAgents S.r.l., a wholly owned subsidiary of UniCredit S.p.A., was set up to operate as a financial business agency, mainly as a driver for recruiting and training associates to strengthen its distribution network, in order to contribute to the business development of Italian commercial bank business. The company has been operational since April 2018. 3. Other information on Group activities Contract renegotiation with ES Shared Service Center S.p.A. In line with the new HR Transformation program led by the UniCredit HR Transformation & Operations Office, a thorough revision of the relationship with ES Shared Service Center S.p.A. has been negotiated. The latter provides services in the field of Human Resources for UniCredit Group companies in Italy and Austria through an outsourcing contract spanning 15 years. In line with the agreements, the subsidiary UniCredit Services Scpa has exercised its termination right of the agreement related to Italy which is effective from 1 July 2018. The termination of the said agreement envisages also a post termination assistance in order to ensure the continuity of the services and to support the migration of the systems and the activities to UniCredit S.p.A. In this context and in execution of the reached agreement, UniCredit Services has exercised its "put option"; therefore starting from 19 December 2018 UniCredit Services ceased to be a shareholder of ES SSC. Treatment of Cashes In reference to the request made by Caius Capital on 20 July 2018, the EBA (European Banking Authority) decided not to open an investigation for breach of EU law regarding the regulatory treatment of the Cashes operation. UniCredit S.p.A. therefore confirmed the position of 2012 concerning the treatment of the Cashes, supported by the fact that the treatment was reviewed and affirmed by all the relevant authorities and that UniCredit ordinary shares are qualified as Common Equity Tier 1 Capital - CET1. UniCredit S.p.A. also has filed a complaint against Caius Capital and the Caius funds in the Milan Court, asking for damages quantified at about €90 million due to the initiatives taken by them in regards to the Cashes. In December 2018, UniCredit S.p.A. and Caius Capital jointly communicated that they had reached a definitive settlement agreement on the dispute, and UniCredit's complaint against Caius and the funds it manages has been withdrawn. Mediobanca S.p.A. - new consultation agreement At 31 December 2018, UniCredit S.p.A. is the largest shareholder in Mediobanca Banca di Credito Finanziario S.p.A. ("Mediobanca") with a stake of 74.5 million shares, corresponding to 8.4% of the share capital. As a result of the termination of the existing Shareholders' Agreement of Mediobanca from 31 December 2018, on 20 December 2018, the holders of 20.7% of the share capital of Mediobanca, including UniCredit S.p.A., signed a new "consultation agreement" effective from 1st January 2019. The stake in Mediobanca is classified among the related companies subject to considerable influence, in line with the previous years and on the basis of an opinion requested from an external law firm. Given the signing of the new consultation agreement, UniCredit continues to hold significant influence on Mediobanca, as the new agreement does not introduce changes in the governance framework of Mediobanca so substantial to require an update in UniCredit classification and valuation criteria of such stake; UniCredit preserves its representation in the Board of Directors of Mediobanca and the participation in determining its financial and operating policies. Approval of the Italian Budgetary law 2019 and consequent effects on deferred taxes associated with the adoption of the IFRS9 principle As indicated in the consolidated Notes, starting from 1st January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1st January 2018 net equity (First Time Adoption - FTA). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Italian Budgetary Law, approved in December 2018, envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 744 2018 Annual Report and Accounts · UniCredit Among the operations and initiatives on shareholdings described in the financial statements, please note the following: Disposal of Italian pawncredit business On 1 July 2018, the holding UniCredit S.p.A. completed the disposal of its Italian pawncredit business to Dorotheum. The transaction envisaged a consideration of €141 million, paid by Dorotheum at closing, and a potential earn-out in favor of UniCredit S.p.A. up to €9 million, to be paid after three years. In 3Q18 the transaction generated a positive impact for UniCredit S.p.A. of about €100 million in the consolidated accounts and of almost 4 bps on the consolidated CET1 ratio. Sale of the investment in i-Faber S.p.A. On 30 April 2018, UniCredit S.p.A. finalized the sale of the entire stake (100%) held in i-Faber S.p.A. to Accenture Managed Services S.p.A., as part of the broader action aimed at streamlining the Group's shareholdings. Constitution of UniCredit myAgents S.r.l. In February 2018, UniCredit myAgents S.r.l., a wholly owned subsidiary of UniCredit S.p.A., was set up to operate as a financial business agency, mainly as a driver for recruiting and training associates to strengthen its distribution network, in order to contribute to the business development of Italian commercial bank business. The company has been operational since April 2018. 3. Other information on Group activities Contract renegotiation with ES Shared Service Center S.p.A. In line with the new HR Transformation program led by the UniCredit HR Transformation & Operations Office, a thorough revision of the relationship with ES Shared Service Center S.p.A. has been negotiated. The latter provides services in the field of Human Resources for UniCredit Group companies in Italy and Austria through an outsourcing contract spanning 15 years. In line with the agreements, the subsidiary UniCredit Services Scpa has exercised its termination right of the agreement related to Italy which is effective from 1 July 2018. The termination of the said agreement envisages also a post termination assistance in order to ensure the continuity of the services and to support the migration of the systems and the activities to UniCredit S.p.A. In this context and in execution of the reached agreement, UniCredit Services has exercised its "put option"; therefore starting from 19 December 2018 UniCredit Services ceased to be a shareholder of ES SSC. Treatment of Cashes In reference to the request made by Caius Capital on 20 July 2018, the EBA (European Banking Authority) decided not to open an investigation for breach of EU law regarding the regulatory treatment of the Cashes operation. UniCredit S.p.A. therefore confirmed the position of 2012 concerning the treatment of the Cashes, supported by the fact that the treatment was reviewed and affirmed by all the relevant authorities and that UniCredit ordinary shares are qualified as Common Equity Tier 1 Capital - CET1. UniCredit S.p.A. also has filed a complaint against Caius Capital and the Caius funds in the Milan Court, asking for damages quantified at about €90 million due to the initiatives taken by them in regards to the Cashes. In December 2018, UniCredit S.p.A. and Caius Capital jointly communicated that they had reached a definitive settlement agreement on the dispute, and UniCredit's complaint against Caius and the funds it manages has been withdrawn. Mediobanca S.p.A. - new consultation agreement At 31 December 2018, UniCredit S.p.A. is the largest shareholder in Mediobanca Banca di Credito Finanziario S.p.A. ("Mediobanca") with a stake of 74.5 million shares, corresponding to 8.4% of the share capital. As a result of the termination of the existing Shareholders' Agreement of Mediobanca from 31 December 2018, on 20 December 2018, the holders of 20.7% of the share capital of Mediobanca, including UniCredit S.p.A., signed a new "consultation agreement" effective from 1st January 2019. The stake in Mediobanca is classified among the related companies subject to considerable influence, in line with the previous years and on the basis of an opinion requested from an external law firm. Given the signing of the new consultation agreement, UniCredit continues to hold significant influence on Mediobanca, as the new agreement does not introduce changes in the governance framework of Mediobanca so substantial to require an update in UniCredit classification and valuation criteria of such stake; UniCredit preserves its representation in the Board of Directors of Mediobanca and the participation in determining its financial and operating policies. Approval of the Italian Budgetary law 2019 and consequent effects on deferred taxes associated with the adoption of the IFRS9 principle As indicated in the consolidated Notes, starting from 1st January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1st January 2018 net equity (First Time Adoption - FTA). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Italian Budgetary Law, approved in December 2018, envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 744 2018 Annual Report and Accounts · UniCredit Among the operations and initiatives on shareholdings described in the financial statements, please note the following: Disposal of Italian pawncredit business On 1 July 2018, the holding UniCredit S.p.A. completed the disposal of its Italian pawncredit business to Dorotheum. The transaction envisaged a consideration of €141 million, paid by Dorotheum at closing, and a potential earn-out in favor of UniCredit S.p.A. up to €9 million, to be paid after three years. In 3Q18 the transaction generated a positive impact for UniCredit S.p.A. of about €100 million in the consolidated accounts and of almost 4 bps on the consolidated CET1 ratio. Sale of the investment in i-Faber S.p.A. On 30 April 2018, UniCredit S.p.A. finalized the sale of the entire stake (100%) held in i-Faber S.p.A. to Accenture Managed Services S.p.A., as part of the broader action aimed at streamlining the Group's shareholdings. Constitution of UniCredit myAgents S.r.l. In February 2018, UniCredit myAgents S.r.l., a wholly owned subsidiary of UniCredit S.p.A., was set up to operate as a financial business agency, mainly as a driver for recruiting and training associates to strengthen its distribution network, in order to contribute to the business development of Italian commercial bank business. The company has been operational since April 2018. 3. Other information on Group activities Contract renegotiation with ES Shared Service Center S.p.A. In line with the new HR Transformation program led by the UniCredit HR Transformation & Operations Office, a thorough revision of the relationship with ES Shared Service Center S.p.A. has been negotiated. The latter provides services in the field of Human Resources for UniCredit Group companies in Italy and Austria through an outsourcing contract spanning 15 years. In line with the agreements, the subsidiary UniCredit Services Scpa has exercised its termination right of the agreement related to Italy which is effective from 1 July 2018. The termination of the said agreement envisages also a post termination assistance in order to ensure the continuity of the services and to support the migration of the systems and the activities to UniCredit S.p.A. In this context and in execution of the reached agreement, UniCredit Services has exercised its "put option"; therefore starting from 19 December 2018 UniCredit Services ceased to be a shareholder of ES SSC. Treatment of Cashes In reference to the request made by Caius Capital on 20 July 2018, the EBA (European Banking Authority) decided not to open an investigation for breach of EU law regarding the regulatory treatment of the Cashes operation. UniCredit S.p.A. therefore confirmed the position of 2012 concerning the treatment of the Cashes, supported by the fact that the treatment was reviewed and affirmed by all the relevant authorities and that UniCredit ordinary shares are qualified as Common Equity Tier 1 Capital - CET1. UniCredit S.p.A. also has filed a complaint against Caius Capital and the Caius funds in the Milan Court, asking for damages quantified at about €90 million due to the initiatives taken by them in regards to the Cashes. In December 2018, UniCredit S.p.A. and Caius Capital jointly communicated that they had reached a definitive settlement agreement on the dispute, and UniCredit's complaint against Caius and the funds it manages has been withdrawn. Mediobanca S.p.A. - new consultation agreement At 31 December 2018, UniCredit S.p.A. is the largest shareholder in Mediobanca Banca di Credito Finanziario S.p.A. ("Mediobanca") with a stake of 74.5 million shares, corresponding to 8.4% of the share capital. As a result of the termination of the existing Shareholders' Agreement of Mediobanca from 31 December 2018, on 20 December 2018, the holders of 20.7% of the share capital of Mediobanca, including UniCredit S.p.A., signed a new "consultation agreement" effective from 1st January 2019. The stake in Mediobanca is classified among the related companies subject to considerable influence, in line with the previous years and on the basis of an opinion requested from an external law firm. Given the signing of the new consultation agreement, UniCredit continues to hold significant influence on Mediobanca, as the new agreement does not introduce changes in the governance framework of Mediobanca so substantial to require an update in UniCredit classification and valuation criteria of such stake; UniCredit preserves its representation in the Board of Directors of Mediobanca and the participation in determining its financial and operating policies. Approval of the Italian Budgetary law 2019 and consequent effects on deferred taxes associated with the adoption of the IFRS9 principle As indicated in the consolidated Notes, starting from 1st January 2018, the new accounting standard IFRS9 which deals with the recognition and measurement of Financial instruments has been applied for the preparation of Financial statements. The adoption of the new accounting standard has determined, among other effects, an increase in Loan Loss Provisions (LLPs) whose economic effects have been recognized as a reduction of 1st January 2018 net equity (First Time Adoption - FTA). At the same date, UniCredit S.p.A. has not recognised IRAP and IRES tax assets related to the mentioned LLPs because the tax rule applicable at the time required the full deductibility in 2018 and, absent a sufficient taxable income, the sustainability test showed the inability to recover the IRES deferred tax assets associated with tax losses carried forward. The new 2019 Italian Budgetary Law, approved in December 2018, envisaged the deductibility of LLPs recognized in FTA on a 10 years period (1/10 in 2018 and 9/10 in future periods up to 2027), for both IRES and IRAP purposes. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 745 This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. The Board of Statutory Auditors noted that the recognition of these DTAs has required a specific analysis by the Company Management in order to identify the appropriate accounting, taking into account the absence of specific guidelines from the IAS12 on the allocation of such effects to net assets rather than to the income statement. On the issue, which is purely representative and does not involve recognition or measurement issues, the Company Management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and Isvap (now Ivass) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). Therefore, the DTAs related to the first adoption of the IFRS9 principle have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €3,892 million (€1,727million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €3,006 million (€840 million in the fourth quarter of 2018); 20% of rectified net profit (3,006 million) is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting. Lastly, to be pointed out that the the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. 4. Atypical or unusual transactions The financial statements, the information received during the meetings of the Board of Directors and the information received from the Chairman and the CEO, the management, the direct subsidiaries’ Boards of Statutory Auditors, and the External Auditor revealed no atypical or unusual transactions, including intragroup or related-party transactions. 5. Related-party transactions The financial statements shows the information relating to transactions with related parties, together with the relevant certifications (Art. 5 Consob resolution no. 17221/2010 and subsequent amendments "Information to the public on transactions with related parties"). Global Policy "Transactions with related parties, related entities and Corporate Representatives under Art. 136 TUB [Consolidated Banking Law]" With a resolution of 6 February 2019, the Board of Directors approved an updated version of the Global Policy for the management of transactions with persons in conflict of interest, pursuant to Consob Regulation 17221/2010 of the Bank of Italy Circular 285/2013 and of Art. 136 of Italian Legislative Decree 385/1993. The regulation requires annually checking its adequacy and the need to make any amendments. The Global Policy, renamed Global Policy "Transactions with related parties, associated persons and Corporate Officers ex art 136 TUB" and adopted in accordance with the above-mentioned provisions, has been revised with a view to streamlining and easing the user's comprehension and merges into a single document the" Global Policy for the management of transactions with parties in conflict of interest" and the "Global Policy - Internal controls on risk activities with persons in conflict of interest". The main changes include: • identification of operations with Single Perimeter members and cases of exclusion • the increase in the materiality threshold from 2% to 3% for the inclusion of shareholders/Shareholders' Agreement members in the Single Perimeter • the qualification of the plafonds/internal limits. On 30 January 2019, the Board of Statutory Auditors,after obtaining the favourable opinion of the Related Parties Committee, issued an opinion of the overall adequacy and suitability of the renewed Global Policy for the achievement of the objectives set by the regulations in force. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 745 This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. The Board of Statutory Auditors noted that the recognition of these DTAs has required a specific analysis by the Company Management in order to identify the appropriate accounting, taking into account the absence of specific guidelines from the IAS12 on the allocation of such effects to net assets rather than to the income statement. On the issue, which is purely representative and does not involve recognition or measurement issues, the Company Management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and Isvap (now Ivass) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). Therefore, the DTAs related to the first adoption of the IFRS9 principle have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €3,892 million (€1,727million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €3,006 million (€840 million in the fourth quarter of 2018); 20% of rectified net profit (3,006 million) is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting. Lastly, to be pointed out that the the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. 4. Atypical or unusual transactions The financial statements, the information received during the meetings of the Board of Directors and the information received from the Chairman and the CEO, the management, the direct subsidiaries’ Boards of Statutory Auditors, and the External Auditor revealed no atypical or unusual transactions, including intragroup or related-party transactions. 5. Related-party transactions The financial statements shows the information relating to transactions with related parties, together with the relevant certifications (Art. 5 Consob resolution no. 17221/2010 and subsequent amendments "Information to the public on transactions with related parties"). Global Policy "Transactions with related parties, related entities and Corporate Representatives under Art. 136 TUB [Consolidated Banking Law]" With a resolution of 6 February 2019, the Board of Directors approved an updated version of the Global Policy for the management of transactions with persons in conflict of interest, pursuant to Consob Regulation 17221/2010 of the Bank of Italy Circular 285/2013 and of Art. 136 of Italian Legislative Decree 385/1993. The regulation requires annually checking its adequacy and the need to make any amendments. The Global Policy, renamed Global Policy "Transactions with related parties, associated persons and Corporate Officers ex art 136 TUB" and adopted in accordance with the above-mentioned provisions, has been revised with a view to streamlining and easing the user's comprehension and merges into a single document the" Global Policy for the management of transactions with parties in conflict of interest" and the "Global Policy - Internal controls on risk activities with persons in conflict of interest". The main changes include: • identification of operations with Single Perimeter members and cases of exclusion • the increase in the materiality threshold from 2% to 3% for the inclusion of shareholders/Shareholders' Agreement members in the Single Perimeter • the qualification of the plafonds/internal limits. On 30 January 2019, the Board of Statutory Auditors,after obtaining the favourable opinion of the Related Parties Committee, issued an opinion of the overall adequacy and suitability of the renewed Global Policy for the achievement of the objectives set by the regulations in force. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 745 This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. The Board of Statutory Auditors noted that the recognition of these DTAs has required a specific analysis by the Company Management in order to identify the appropriate accounting, taking into account the absence of specific guidelines from the IAS12 on the allocation of such effects to net assets rather than to the income statement. On the issue, which is purely representative and does not involve recognition or measurement issues, the Company Management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and Isvap (now Ivass) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). Therefore, the DTAs related to the first adoption of the IFRS9 principle have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €3,892 million (€1,727million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €3,006 million (€840 million in the fourth quarter of 2018); 20% of rectified net profit (3,006 million) is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting. Lastly, to be pointed out that the the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. 4. Atypical or unusual transactions The financial statements, the information received during the meetings of the Board of Directors and the information received from the Chairman and the CEO, the management, the direct subsidiaries’ Boards of Statutory Auditors, and the External Auditor revealed no atypical or unusual transactions, including intragroup or related-party transactions. 5. Related-party transactions The financial statements shows the information relating to transactions with related parties, together with the relevant certifications (Art. 5 Consob resolution no. 17221/2010 and subsequent amendments "Information to the public on transactions with related parties"). Global Policy "Transactions with related parties, related entities and Corporate Representatives under Art. 136 TUB [Consolidated Banking Law]" With a resolution of 6 February 2019, the Board of Directors approved an updated version of the Global Policy for the management of transactions with persons in conflict of interest, pursuant to Consob Regulation 17221/2010 of the Bank of Italy Circular 285/2013 and of Art. 136 of Italian Legislative Decree 385/1993. The regulation requires annually checking its adequacy and the need to make any amendments. The Global Policy, renamed Global Policy "Transactions with related parties, associated persons and Corporate Officers ex art 136 TUB" and adopted in accordance with the above-mentioned provisions, has been revised with a view to streamlining and easing the user's comprehension and merges into a single document the" Global Policy for the management of transactions with parties in conflict of interest" and the "Global Policy - Internal controls on risk activities with persons in conflict of interest". The main changes include: • identification of operations with Single Perimeter members and cases of exclusion • the increase in the materiality threshold from 2% to 3% for the inclusion of shareholders/Shareholders' Agreement members in the Single Perimeter • the qualification of the plafonds/internal limits. On 30 January 2019, the Board of Statutory Auditors,after obtaining the favourable opinion of the Related Parties Committee, issued an opinion of the overall adequacy and suitability of the renewed Global Policy for the achievement of the objectives set by the regulations in force. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 745 This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. The Board of Statutory Auditors noted that the recognition of these DTAs has required a specific analysis by the Company Management in order to identify the appropriate accounting, taking into account the absence of specific guidelines from the IAS12 on the allocation of such effects to net assets rather than to the income statement. On the issue, which is purely representative and does not involve recognition or measurement issues, the Company Management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and Isvap (now Ivass) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). Therefore, the DTAs related to the first adoption of the IFRS9 principle have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €3,892 million (€1,727million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €3,006 million (€840 million in the fourth quarter of 2018); 20% of rectified net profit (3,006 million) is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting. Lastly, to be pointed out that the the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. 4. Atypical or unusual transactions The financial statements, the information received during the meetings of the Board of Directors and the information received from the Chairman and the CEO, the management, the direct subsidiaries’ Boards of Statutory Auditors, and the External Auditor revealed no atypical or unusual transactions, including intragroup or related-party transactions. 5. Related-party transactions The financial statements shows the information relating to transactions with related parties, together with the relevant certifications (Art. 5 Consob resolution no. 17221/2010 and subsequent amendments "Information to the public on transactions with related parties"). Global Policy "Transactions with related parties, related entities and Corporate Representatives under Art. 136 TUB [Consolidated Banking Law]" With a resolution of 6 February 2019, the Board of Directors approved an updated version of the Global Policy for the management of transactions with persons in conflict of interest, pursuant to Consob Regulation 17221/2010 of the Bank of Italy Circular 285/2013 and of Art. 136 of Italian Legislative Decree 385/1993. The regulation requires annually checking its adequacy and the need to make any amendments. The Global Policy, renamed Global Policy "Transactions with related parties, associated persons and Corporate Officers ex art 136 TUB" and adopted in accordance with the above-mentioned provisions, has been revised with a view to streamlining and easing the user's comprehension and merges into a single document the" Global Policy for the management of transactions with parties in conflict of interest" and the "Global Policy - Internal controls on risk activities with persons in conflict of interest". The main changes include: • identification of operations with Single Perimeter members and cases of exclusion • the increase in the materiality threshold from 2% to 3% for the inclusion of shareholders/Shareholders' Agreement members in the Single Perimeter • the qualification of the plafonds/internal limits. On 30 January 2019, the Board of Statutory Auditors,after obtaining the favourable opinion of the Related Parties Committee, issued an opinion of the overall adequacy and suitability of the renewed Global Policy for the achievement of the objectives set by the regulations in force. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 745 This circumstance has determined the transformation of these DTAs from tax assets related to tax losses carried forward to tax assets related to temporary differences (IRES and IRAP) and, consequently, their recognition in financial statements for an amount determined through the sustainability test carried out coherently with the new tax rules. The Board of Statutory Auditors noted that the recognition of these DTAs has required a specific analysis by the Company Management in order to identify the appropriate accounting, taking into account the absence of specific guidelines from the IAS12 on the allocation of such effects to net assets rather than to the income statement. On the issue, which is purely representative and does not involve recognition or measurement issues, the Company Management: • has performed technical analysis, also considering the content of the Document issued by Banca d’Italia, Consob and Isvap (now Ivass) on 21 February 2008 concerning the application of IAS/IFRS (in particular the Document was issued so to clarify the accounting treatment of negative changes in DTA related to the first time adoption of IAS/IFRS and resulting from the change in IRES and IRAP tax rates set by 2008 Budgetary Law); • has concluded that the content of the mentioned Document is applicable also to the present case absent further indications by IFRS IC (Interpretation Commitments) or changes by IASB (International Accounting Standard Board). Therefore, the DTAs related to the first adoption of the IFRS9 principle have been recognised against P&L for an amount of €871 million. As a result, also considering the impact of IRAP current taxes for €16 million, the net profit for 2018 is equal to €3,892 million (€1,727million in the fourth quarter of 2018). In case these DTAs were recognised against equity, the net profit for 2018 would have been equal to €3,006 million (€840 million in the fourth quarter of 2018); 20% of rectified net profit (3,006 million) is subject to proposal of dividend distribution to UniCredit Shareholders’ Meeting. Lastly, to be pointed out that the the choice to recognise these DTAs against equity, instead against P&L as happened, would have not determined different effects on the overall equity capital of the Bank. 4. Atypical or unusual transactions The financial statements, the information received during the meetings of the Board of Directors and the information received from the Chairman and the CEO, the management, the direct subsidiaries’ Boards of Statutory Auditors, and the External Auditor revealed no atypical or unusual transactions, including intragroup or related-party transactions. 5. Related-party transactions The financial statements shows the information relating to transactions with related parties, together with the relevant certifications (Art. 5 Consob resolution no. 17221/2010 and subsequent amendments "Information to the public on transactions with related parties"). Global Policy "Transactions with related parties, related entities and Corporate Representatives under Art. 136 TUB [Consolidated Banking Law]" With a resolution of 6 February 2019, the Board of Directors approved an updated version of the Global Policy for the management of transactions with persons in conflict of interest, pursuant to Consob Regulation 17221/2010 of the Bank of Italy Circular 285/2013 and of Art. 136 of Italian Legislative Decree 385/1993. The regulation requires annually checking its adequacy and the need to make any amendments. The Global Policy, renamed Global Policy "Transactions with related parties, associated persons and Corporate Officers ex art 136 TUB" and adopted in accordance with the above-mentioned provisions, has been revised with a view to streamlining and easing the user's comprehension and merges into a single document the" Global Policy for the management of transactions with parties in conflict of interest" and the "Global Policy - Internal controls on risk activities with persons in conflict of interest". The main changes include: • identification of operations with Single Perimeter members and cases of exclusion • the increase in the materiality threshold from 2% to 3% for the inclusion of shareholders/Shareholders' Agreement members in the Single Perimeter • the qualification of the plafonds/internal limits. On 30 January 2019, the Board of Statutory Auditors,after obtaining the favourable opinion of the Related Parties Committee, issued an opinion of the overall adequacy and suitability of the renewed Global Policy for the achievement of the objectives set by the regulations in force. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 746 2018 Annual Report and Accounts · UniCredit Global Policy "Internal controls on risk activities with Persons in conflict of interest" The Bank of Italy's regulations (Circular no. 263 - Title V, Chapter 5) provide for the annual assessment of the policies of internal control on activities at risk with respect to Related Parties. During 2018, the Board of Statutory Auditors took note that the relevant Group Risk Management and Group Compliance Functions assessed as unnecessary the revision of the Global Policy "Internal controls on Risk Activities with Parties in conflict of interest". Therefore, the contents of the version approved by the Board of Directors Meeting of 2 August 2016, were therefore confirmed on the basis of approvals respectively issued by the Related Parties Committee and the Board of Statutory Auditors. Moreover, as indicated in the previous paragraph, at its meeting of 6 February 2019, the Board of Directors approved the new version of the Global Policy "Transactions with related parties, related entities and Corporate Representatives under Art. 136 TUB", which includes the "Global Policy - Internal controls on Risk Activities with Parties in conflict of interest". Transactions pursuant to Art. 136 TUB With reference to transactions approved by the Board of Directors pursuant to Article 136 of Italian Legislative Decree no. 385/1993 (TUB), the competent structures conducted an analysis of the creditworthiness of each of the proposals, expressing a favourable opinion and specifying that the transactions subjected to Board approval were assessed at market conditions, in line with those envisaged for customers with a similar risk profile and economic sector of business. 6. Oversight of the external audit activity Directive 2014/56/EU Art. 28 amended Directive 2006/43/EC concerning external audit and was transposed in Italy with Legislative Decree no. 135/2016, which updated Italian Legislative Decree no. 39/2010. Regulation (EU) 537/2014 of April 16, 2014, Art. 10 (hereafter also the "Regulation") defines the specific requirements of the audit report for public interest entities. Pursuant to Art. 19 of Italian Legislative Decree no. 135/2016, during the course of 2018 and up to the date of this Report to the Shareholders, the Board of Statutory Auditors carried out a monitoring process during all the activity carried out by the External Auditors. The BoSA scheduled a series of specific meetings during the various phases of the audit, during which it examined, among other things: • the 2018 Transparency Report, with particular reference to the processes of certification of independence of the personnel of the External Auditors and quality control (practice review); • the resources and hours budgeted for the 2018 external audit; • the scope of work, materiality and significant risks 2018; • the 2018 Audit Plan; • the 2018 Group Audit timetable. The Board of Statutory Auditors analyzed the methodology adopted by the External Auditors and acquired the necessary information during the task, with constant interaction on the audit approach used for the various significant areas of the financial statements, sharing the issues related to corporate risks, as well as receiving updates on the progress of the audit and on the main aspects examined by the External Auditors. In November 2018, the Board of Statutory Auditors met in two separate sessions with the Partners of the Deloitte network in charge of the audits of UniCredit Bank AG, UniCredit Bank Austria AG, AO UniCredit Bank and of the Companies belonging to CEE (Central Eastern Europe), as well as FinecoBank Spa, Cordusio SIM, UniCredit Factoring, UniCredit Leasing SpA, UniCredit Services ScpA, for the usual annual update on the scenario developments in the various countries and on the main results of the respective audit activities The Board of Statutory Auditors reviewed the following reports of the External Auditors Deloitte & Touche S.p.A., whose activity supplements the general framework of the control Functions required by the regulations in regard to financial information: • the auditing reports issued on 8 March 2019 pursuant to Art. 14 of Italian Legislative Decree 39/2010 and Art. 10 of Regulation (EU) no. 537/2014, • the supplemental report issued on 8 March 2019, pursuant to article 11 of the aforementioned Regulation, to the Board of Statutory Auditors in its capacity as internal control and auditing committee; • the annual confirmation of independence, issued on 8 March 2019, pursuant to Art. 6 par. 2) subpar. a) of the Regulation and pursuant to paragraph 17 of ISA Italia 260. The aforementioned reports on the audit of the Company financial statements and the consolidated financial statements of the Group highlight that they both provide a truthful and correct representation of the equity and financial situation of UniCredit S.p.A. and of the UniCredit Group at 31 December 2018, of the economic performance and cash flow for the year ended on that date, in accordance with the International Financial Reporting Standards adopted by the European Union as well as the provisions issued in implementation of Art. 9 of Italian Legislative Decree no. 38/05 and of Art. 43 of Italian Legislative Decree no. 136/15. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 746 2018 Annual Report and Accounts · UniCredit Global Policy "Internal controls on risk activities with Persons in conflict of interest" The Bank of Italy's regulations (Circular no. 263 - Title V, Chapter 5) provide for the annual assessment of the policies of internal control on activities at risk with respect to Related Parties. During 2018, the Board of Statutory Auditors took note that the relevant Group Risk Management and Group Compliance Functions assessed as unnecessary the revision of the Global Policy "Internal controls on Risk Activities with Parties in conflict of interest". Therefore, the contents of the version approved by the Board of Directors Meeting of 2 August 2016, were therefore confirmed on the basis of approvals respectively issued by the Related Parties Committee and the Board of Statutory Auditors. Moreover, as indicated in the previous paragraph, at its meeting of 6 February 2019, the Board of Directors approved the new version of the Global Policy "Transactions with related parties, related entities and Corporate Representatives under Art. 136 TUB", which includes the "Global Policy - Internal controls on Risk Activities with Parties in conflict of interest". Transactions pursuant to Art. 136 TUB With reference to transactions approved by the Board of Directors pursuant to Article 136 of Italian Legislative Decree no. 385/1993 (TUB), the competent structures conducted an analysis of the creditworthiness of each of the proposals, expressing a favourable opinion and specifying that the transactions subjected to Board approval were assessed at market conditions, in line with those envisaged for customers with a similar risk profile and economic sector of business. 6. Oversight of the external audit activity Directive 2014/56/EU Art. 28 amended Directive 2006/43/EC concerning external audit and was transposed in Italy with Legislative Decree no. 135/2016, which updated Italian Legislative Decree no. 39/2010. Regulation (EU) 537/2014 of April 16, 2014, Art. 10 (hereafter also the "Regulation") defines the specific requirements of the audit report for public interest entities. Pursuant to Art. 19 of Italian Legislative Decree no. 135/2016, during the course of 2018 and up to the date of this Report to the Shareholders, the Board of Statutory Auditors carried out a monitoring process during all the activity carried out by the External Auditors. The BoSA scheduled a series of specific meetings during the various phases of the audit, during which it examined, among other things: • the 2018 Transparency Report, with particular reference to the processes of certification of independence of the personnel of the External Auditors and quality control (practice review); • the resources and hours budgeted for the 2018 external audit; • the scope of work, materiality and significant risks 2018; • the 2018 Audit Plan; • the 2018 Group Audit timetable. The Board of Statutory Auditors analyzed the methodology adopted by the External Auditors and acquired the necessary information during the task, with constant interaction on the audit approach used for the various significant areas of the financial statements, sharing the issues related to corporate risks, as well as receiving updates on the progress of the audit and on the main aspects examined by the External Auditors. In November 2018, the Board of Statutory Auditors met in two separate sessions with the Partners of the Deloitte network in charge of the audits of UniCredit Bank AG, UniCredit Bank Austria AG, AO UniCredit Bank and of the Companies belonging to CEE (Central Eastern Europe), as well as FinecoBank Spa, Cordusio SIM, UniCredit Factoring, UniCredit Leasing SpA, UniCredit Services ScpA, for the usual annual update on the scenario developments in the various countries and on the main results of the respective audit activities The Board of Statutory Auditors reviewed the following reports of the External Auditors Deloitte & Touche S.p.A., whose activity supplements the general framework of the control Functions required by the regulations in regard to financial information: • the auditing reports issued on 8 March 2019 pursuant to Art. 14 of Italian Legislative Decree 39/2010 and Art. 10 of Regulation (EU) no. 537/2014, • the supplemental report issued on 8 March 2019, pursuant to article 11 of the aforementioned Regulation, to the Board of Statutory Auditors in its capacity as internal control and auditing committee; • the annual confirmation of independence, issued on 8 March 2019, pursuant to Art. 6 par. 2) subpar. a) of the Regulation and pursuant to paragraph 17 of ISA Italia 260. The aforementioned reports on the audit of the Company financial statements and the consolidated financial statements of the Group highlight that they both provide a truthful and correct representation of the equity and financial situation of UniCredit S.p.A. and of the UniCredit Group at 31 December 2018, of the economic performance and cash flow for the year ended on that date, in accordance with the International Financial Reporting Standards adopted by the European Union as well as the provisions issued in implementation of Art. 9 of Italian Legislative Decree no. 38/05 and of Art. 43 of Italian Legislative Decree no. 136/15. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 746 2018 Annual Report and Accounts · UniCredit Global Policy "Internal controls on risk activities with Persons in conflict of interest" The Bank of Italy's regulations (Circular no. 263 - Title V, Chapter 5) provide for the annual assessment of the policies of internal control on activities at risk with respect to Related Parties. During 2018, the Board of Statutory Auditors took note that the relevant Group Risk Management and Group Compliance Functions assessed as unnecessary the revision of the Global Policy "Internal controls on Risk Activities with Parties in conflict of interest". Therefore, the contents of the version approved by the Board of Directors Meeting of 2 August 2016, were therefore confirmed on the basis of approvals respectively issued by the Related Parties Committee and the Board of Statutory Auditors. Moreover, as indicated in the previous paragraph, at its meeting of 6 February 2019, the Board of Directors approved the new version of the Global Policy "Transactions with related parties, related entities and Corporate Representatives under Art. 136 TUB", which includes the "Global Policy - Internal controls on Risk Activities with Parties in conflict of interest". Transactions pursuant to Art. 136 TUB With reference to transactions approved by the Board of Directors pursuant to Article 136 of Italian Legislative Decree no. 385/1993 (TUB), the competent structures conducted an analysis of the creditworthiness of each of the proposals, expressing a favourable opinion and specifying that the transactions subjected to Board approval were assessed at market conditions, in line with those envisaged for customers with a similar risk profile and economic sector of business. 6. Oversight of the external audit activity Directive 2014/56/EU Art. 28 amended Directive 2006/43/EC concerning external audit and was transposed in Italy with Legislative Decree no. 135/2016, which updated Italian Legislative Decree no. 39/2010. Regulation (EU) 537/2014 of April 16, 2014, Art. 10 (hereafter also the "Regulation") defines the specific requirements of the audit report for public interest entities. Pursuant to Art. 19 of Italian Legislative Decree no. 135/2016, during the course of 2018 and up to the date of this Report to the Shareholders, the Board of Statutory Auditors carried out a monitoring process during all the activity carried out by the External Auditors. The BoSA scheduled a series of specific meetings during the various phases of the audit, during which it examined, among other things: • the 2018 Transparency Report, with particular reference to the processes of certification of independence of the personnel of the External Auditors and quality control (practice review); • the resources and hours budgeted for the 2018 external audit; • the scope of work, materiality and significant risks 2018; • the 2018 Audit Plan; • the 2018 Group Audit timetable. The Board of Statutory Auditors analyzed the methodology adopted by the External Auditors and acquired the necessary information during the task, with constant interaction on the audit approach used for the various significant areas of the financial statements, sharing the issues related to corporate risks, as well as receiving updates on the progress of the audit and on the main aspects examined by the External Auditors. In November 2018, the Board of Statutory Auditors met in two separate sessions with the Partners of the Deloitte network in charge of the audits of UniCredit Bank AG, UniCredit Bank Austria AG, AO UniCredit Bank and of the Companies belonging to CEE (Central Eastern Europe), as well as FinecoBank Spa, Cordusio SIM, UniCredit Factoring, UniCredit Leasing SpA, UniCredit Services ScpA, for the usual annual update on the scenario developments in the various countries and on the main results of the respective audit activities The Board of Statutory Auditors reviewed the following reports of the External Auditors Deloitte & Touche S.p.A., whose activity supplements the general framework of the control Functions required by the regulations in regard to financial information: • the auditing reports issued on 8 March 2019 pursuant to Art. 14 of Italian Legislative Decree 39/2010 and Art. 10 of Regulation (EU) no. 537/2014, • the supplemental report issued on 8 March 2019, pursuant to article 11 of the aforementioned Regulation, to the Board of Statutory Auditors in its capacity as internal control and auditing committee; • the annual confirmation of independence, issued on 8 March 2019, pursuant to Art. 6 par. 2) subpar. a) of the Regulation and pursuant to paragraph 17 of ISA Italia 260. The aforementioned reports on the audit of the Company financial statements and the consolidated financial statements of the Group highlight that they both provide a truthful and correct representation of the equity and financial situation of UniCredit S.p.A. and of the UniCredit Group at 31 December 2018, of the economic performance and cash flow for the year ended on that date, in accordance with the International Financial Reporting Standards adopted by the European Union as well as the provisions issued in implementation of Art. 9 of Italian Legislative Decree no. 38/05 and of Art. 43 of Italian Legislative Decree no. 136/15. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 746 2018 Annual Report and Accounts · UniCredit Global Policy "Internal controls on risk activities with Persons in conflict of interest" The Bank of Italy's regulations (Circular no. 263 - Title V, Chapter 5) provide for the annual assessment of the policies of internal control on activities at risk with respect to Related Parties. During 2018, the Board of Statutory Auditors took note that the relevant Group Risk Management and Group Compliance Functions assessed as unnecessary the revision of the Global Policy "Internal controls on Risk Activities with Parties in conflict of interest". Therefore, the contents of the version approved by the Board of Directors Meeting of 2 August 2016, were therefore confirmed on the basis of approvals respectively issued by the Related Parties Committee and the Board of Statutory Auditors. Moreover, as indicated in the previous paragraph, at its meeting of 6 February 2019, the Board of Directors approved the new version of the Global Policy "Transactions with related parties, related entities and Corporate Representatives under Art. 136 TUB", which includes the "Global Policy - Internal controls on Risk Activities with Parties in conflict of interest". Transactions pursuant to Art. 136 TUB With reference to transactions approved by the Board of Directors pursuant to Article 136 of Italian Legislative Decree no. 385/1993 (TUB), the competent structures conducted an analysis of the creditworthiness of each of the proposals, expressing a favourable opinion and specifying that the transactions subjected to Board approval were assessed at market conditions, in line with those envisaged for customers with a similar risk profile and economic sector of business. 6. Oversight of the external audit activity Directive 2014/56/EU Art. 28 amended Directive 2006/43/EC concerning external audit and was transposed in Italy with Legislative Decree no. 135/2016, which updated Italian Legislative Decree no. 39/2010. Regulation (EU) 537/2014 of April 16, 2014, Art. 10 (hereafter also the "Regulation") defines the specific requirements of the audit report for public interest entities. Pursuant to Art. 19 of Italian Legislative Decree no. 135/2016, during the course of 2018 and up to the date of this Report to the Shareholders, the Board of Statutory Auditors carried out a monitoring process during all the activity carried out by the External Auditors. The BoSA scheduled a series of specific meetings during the various phases of the audit, during which it examined, among other things: • the 2018 Transparency Report, with particular reference to the processes of certification of independence of the personnel of the External Auditors and quality control (practice review); • the resources and hours budgeted for the 2018 external audit; • the scope of work, materiality and significant risks 2018; • the 2018 Audit Plan; • the 2018 Group Audit timetable. The Board of Statutory Auditors analyzed the methodology adopted by the External Auditors and acquired the necessary information during the task, with constant interaction on the audit approach used for the various significant areas of the financial statements, sharing the issues related to corporate risks, as well as receiving updates on the progress of the audit and on the main aspects examined by the External Auditors. In November 2018, the Board of Statutory Auditors met in two separate sessions with the Partners of the Deloitte network in charge of the audits of UniCredit Bank AG, UniCredit Bank Austria AG, AO UniCredit Bank and of the Companies belonging to CEE (Central Eastern Europe), as well as FinecoBank Spa, Cordusio SIM, UniCredit Factoring, UniCredit Leasing SpA, UniCredit Services ScpA, for the usual annual update on the scenario developments in the various countries and on the main results of the respective audit activities The Board of Statutory Auditors reviewed the following reports of the External Auditors Deloitte & Touche S.p.A., whose activity supplements the general framework of the control Functions required by the regulations in regard to financial information: • the auditing reports issued on 8 March 2019 pursuant to Art. 14 of Italian Legislative Decree 39/2010 and Art. 10 of Regulation (EU) no. 537/2014, • the supplemental report issued on 8 March 2019, pursuant to article 11 of the aforementioned Regulation, to the Board of Statutory Auditors in its capacity as internal control and auditing committee; • the annual confirmation of independence, issued on 8 March 2019, pursuant to Art. 6 par. 2) subpar. a) of the Regulation and pursuant to paragraph 17 of ISA Italia 260. The aforementioned reports on the audit of the Company financial statements and the consolidated financial statements of the Group highlight that they both provide a truthful and correct representation of the equity and financial situation of UniCredit S.p.A. and of the UniCredit Group at 31 December 2018, of the economic performance and cash flow for the year ended on that date, in accordance with the International Financial Reporting Standards adopted by the European Union as well as the provisions issued in implementation of Art. 9 of Italian Legislative Decree no. 38/05 and of Art. 43 of Italian Legislative Decree no. 136/15. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 746 2018 Annual Report and Accounts · UniCredit Global Policy "Internal controls on risk activities with Persons in conflict of interest" The Bank of Italy's regulations (Circular no. 263 - Title V, Chapter 5) provide for the annual assessment of the policies of internal control on activities at risk with respect to Related Parties. During 2018, the Board of Statutory Auditors took note that the relevant Group Risk Management and Group Compliance Functions assessed as unnecessary the revision of the Global Policy "Internal controls on Risk Activities with Parties in conflict of interest". Therefore, the contents of the version approved by the Board of Directors Meeting of 2 August 2016, were therefore confirmed on the basis of approvals respectively issued by the Related Parties Committee and the Board of Statutory Auditors. Moreover, as indicated in the previous paragraph, at its meeting of 6 February 2019, the Board of Directors approved the new version of the Global Policy "Transactions with related parties, related entities and Corporate Representatives under Art. 136 TUB", which includes the "Global Policy - Internal controls on Risk Activities with Parties in conflict of interest". Transactions pursuant to Art. 136 TUB With reference to transactions approved by the Board of Directors pursuant to Article 136 of Italian Legislative Decree no. 385/1993 (TUB), the competent structures conducted an analysis of the creditworthiness of each of the proposals, expressing a favourable opinion and specifying that the transactions subjected to Board approval were assessed at market conditions, in line with those envisaged for customers with a similar risk profile and economic sector of business. 6. Oversight of the external audit activity Directive 2014/56/EU Art. 28 amended Directive 2006/43/EC concerning external audit and was transposed in Italy with Legislative Decree no. 135/2016, which updated Italian Legislative Decree no. 39/2010. Regulation (EU) 537/2014 of April 16, 2014, Art. 10 (hereafter also the "Regulation") defines the specific requirements of the audit report for public interest entities. Pursuant to Art. 19 of Italian Legislative Decree no. 135/2016, during the course of 2018 and up to the date of this Report to the Shareholders, the Board of Statutory Auditors carried out a monitoring process during all the activity carried out by the External Auditors. The BoSA scheduled a series of specific meetings during the various phases of the audit, during which it examined, among other things: • the 2018 Transparency Report, with particular reference to the processes of certification of independence of the personnel of the External Auditors and quality control (practice review); • the resources and hours budgeted for the 2018 external audit; • the scope of work, materiality and significant risks 2018; • the 2018 Audit Plan; • the 2018 Group Audit timetable. The Board of Statutory Auditors analyzed the methodology adopted by the External Auditors and acquired the necessary information during the task, with constant interaction on the audit approach used for the various significant areas of the financial statements, sharing the issues related to corporate risks, as well as receiving updates on the progress of the audit and on the main aspects examined by the External Auditors. In November 2018, the Board of Statutory Auditors met in two separate sessions with the Partners of the Deloitte network in charge of the audits of UniCredit Bank AG, UniCredit Bank Austria AG, AO UniCredit Bank and of the Companies belonging to CEE (Central Eastern Europe), as well as FinecoBank Spa, Cordusio SIM, UniCredit Factoring, UniCredit Leasing SpA, UniCredit Services ScpA, for the usual annual update on the scenario developments in the various countries and on the main results of the respective audit activities The Board of Statutory Auditors reviewed the following reports of the External Auditors Deloitte & Touche S.p.A., whose activity supplements the general framework of the control Functions required by the regulations in regard to financial information: • the auditing reports issued on 8 March 2019 pursuant to Art. 14 of Italian Legislative Decree 39/2010 and Art. 10 of Regulation (EU) no. 537/2014, • the supplemental report issued on 8 March 2019, pursuant to article 11 of the aforementioned Regulation, to the Board of Statutory Auditors in its capacity as internal control and auditing committee; • the annual confirmation of independence, issued on 8 March 2019, pursuant to Art. 6 par. 2) subpar. a) of the Regulation and pursuant to paragraph 17 of ISA Italia 260. The aforementioned reports on the audit of the Company financial statements and the consolidated financial statements of the Group highlight that they both provide a truthful and correct representation of the equity and financial situation of UniCredit S.p.A. and of the UniCredit Group at 31 December 2018, of the economic performance and cash flow for the year ended on that date, in accordance with the International Financial Reporting Standards adopted by the European Union as well as the provisions issued in implementation of Art. 9 of Italian Legislative Decree no. 38/05 and of Art. 43 of Italian Legislative Decree no. 136/15. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 747 Furthermore, in the opinion of the External Auditors, the Management Report and some specific information contained in the Report on Corporate Governance and Ownership Structure indicated in Art. 123-bis, paragraph 4, of Italian Legislative Decree no. 58/98 (TUF) are consistent with the financial statements of UniCredit S.p.A. and with the consolidated financial statements of the UniCredit group at 31 December 2018 and are prepared in accordance with the law. With reference to the possible identification of significant errors in the Management Report (Article 14, paragraph 2, subpar. e) of Italian Legislative Decree no. 39/2010), the External Auditors declared that there was nothing to report. Starting from the 2017 financial year, the reports on the auditing of the financial statements and the consolidated financial statements show the key audit matters that, according to the professional opinion of the External Auditors, were more significant in the accounting audit of the Company and consolidated financial statements for the year under review [ISA (Italy) 701]. The particular aspects are the following: • the first adoption of the international accounting standard IFRS9; • risk of uncorrected classification and valuation of performing customers loans; • risk of uncorrected classification and valuation of non performing loans to customers (unlikely to pay and bad loans); • legal risks related to non- compliance with the economic sanctions imposed by the United States of America ("U.S.") to other countries. Regarding the aforementioned key matters, for which the External Auditors’ reports illustrate the related audit procedures adopted, the External Auditors do not express a separate opinion, as the same have been dealt with in the audit, and in the assessment of the financial statements as a whole. The aforementioned key matters have been the subject of detailed analysis and updating during the periodic meetings that the Board of Statutory Auditors held with the External Auditors. The Board of Statutory Auditors met regularly with the Auditing Company as required by Art. 150, paragraph 3, of Italian Legislative Decree 58/1998 (TUF) for a mutual exchange of information. It informed the Board of Statutory Auditors that there were no censurable actions or facts or irregularities which would have required specific reporting under Art. 155, paragraph 2, of Italian Legislative Decree 58/1998 (TUF). In light of the foregoing, the Board of Statutory Auditors deems the process of interaction with the the External Auditors to be adequate and transparent. It also believes that the improvement of the “two-way dialogue” between the the External Auditors and the bodies responsible for governance on the areas of budget risk and on the procedures identified to oversee them further supported the role and responsibility of the parties involved in the preparation of the financial statements and in the auditing activities. 7. Oversight on the independence of the External Auditors During the 2018 financial year, pursuant to Art. 19 of Italian Legislative Decree 39/2010, the Board of Statutory Auditors verified and monitored the independence of the External Auditors Deloitte & Touche S.p.A., pursuant to articles 10, 10-bis, 10-ter, 10-quater and 17 of the aforementioned decree and article 6 of the Regulation, in particular with regard to the adequacy of the provision of services other than auditing to the audited entity. Furthermore, as previously stated (see previous paragraph), the Board of Statutory Auditors received the declaration confirming its independence from UniCredit S.p.A.. Following the entry into force of the aforementioned Regulation on specific requirements related to the external audit of the accounts of public interest entities (PIE), the Board of Statutory Auditors carried out, together with the relevant Bank Functions (Group Cost Management), a review of the existing internal regulations, Global Operational Instruction (GOI), called "Management of contractual relations with the external Group Auditing Company", issued in October 2014 and addressed to all Group subsidiaries. From January 2017, the Bank has sent operating instructions to all the companies of the UniCredit Group so that they may submit each individual non-audit assignment for the assessment and approval of the Internal Control Body of each Group company (Board of Statutory Auditors, Audit Committee or equivalent body), then to the UniCredit S.p.A. Board of Statutory Auditors to issue the final binding opinion. The Board of Statutory Auditors also took note of the information concerning non-audit services prepared through a preventive and four-monthly flow by the competent Function. Therefore, pursuant to this process, all the companies of the UniCredit group contributed to the transmission of the data requested and required by internal regulations, in order to enable the timely monitoring of the costs of the services provided to the External Auditors and by all entities belonging to the Deloitte network. The aforementioned revision of the internal operating instructions, aimed at strengthening the steering, coordination and control with further details, rules, responsibilities, processes and activities for the correct application of EU Regulation no. 537/2014 - ended on 27 March 2018, with the publication of OdS [Internal Regulation] 1316/1 referred to as "Global Operational Regulation - Principles and rules for the management of contractual relations with the Group's External Auditors ". On the basis of the final data for 2018, the services provided by the Group's External Auditors amount to approximately € 35.8 million, of which € 6.1 million refer to non-audit services. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 747 Furthermore, in the opinion of the External Auditors, the Management Report and some specific information contained in the Report on Corporate Governance and Ownership Structure indicated in Art. 123-bis, paragraph 4, of Italian Legislative Decree no. 58/98 (TUF) are consistent with the financial statements of UniCredit S.p.A. and with the consolidated financial statements of the UniCredit group at 31 December 2018 and are prepared in accordance with the law. With reference to the possible identification of significant errors in the Management Report (Article 14, paragraph 2, subpar. e) of Italian Legislative Decree no. 39/2010), the External Auditors declared that there was nothing to report. Starting from the 2017 financial year, the reports on the auditing of the financial statements and the consolidated financial statements show the key audit matters that, according to the professional opinion of the External Auditors, were more significant in the accounting audit of the Company and consolidated financial statements for the year under review [ISA (Italy) 701]. The particular aspects are the following: • the first adoption of the international accounting standard IFRS9; • risk of uncorrected classification and valuation of performing customers loans; • risk of uncorrected classification and valuation of non performing loans to customers (unlikely to pay and bad loans); • legal risks related to non- compliance with the economic sanctions imposed by the United States of America ("U.S.") to other countries. Regarding the aforementioned key matters, for which the External Auditors’ reports illustrate the related audit procedures adopted, the External Auditors do not express a separate opinion, as the same have been dealt with in the audit, and in the assessment of the financial statements as a whole. The aforementioned key matters have been the subject of detailed analysis and updating during the periodic meetings that the Board of Statutory Auditors held with the External Auditors. The Board of Statutory Auditors met regularly with the Auditing Company as required by Art. 150, paragraph 3, of Italian Legislative Decree 58/1998 (TUF) for a mutual exchange of information. It informed the Board of Statutory Auditors that there were no censurable actions or facts or irregularities which would have required specific reporting under Art. 155, paragraph 2, of Italian Legislative Decree 58/1998 (TUF). In light of the foregoing, the Board of Statutory Auditors deems the process of interaction with the the External Auditors to be adequate and transparent. It also believes that the improvement of the “two-way dialogue” between the the External Auditors and the bodies responsible for governance on the areas of budget risk and on the procedures identified to oversee them further supported the role and responsibility of the parties involved in the preparation of the financial statements and in the auditing activities. 7. Oversight on the independence of the External Auditors During the 2018 financial year, pursuant to Art. 19 of Italian Legislative Decree 39/2010, the Board of Statutory Auditors verified and monitored the independence of the External Auditors Deloitte & Touche S.p.A., pursuant to articles 10, 10-bis, 10-ter, 10-quater and 17 of the aforementioned decree and article 6 of the Regulation, in particular with regard to the adequacy of the provision of services other than auditing to the audited entity. Furthermore, as previously stated (see previous paragraph), the Board of Statutory Auditors received the declaration confirming its independence from UniCredit S.p.A.. Following the entry into force of the aforementioned Regulation on specific requirements related to the external audit of the accounts of public interest entities (PIE), the Board of Statutory Auditors carried out, together with the relevant Bank Functions (Group Cost Management), a review of the existing internal regulations, Global Operational Instruction (GOI), called "Management of contractual relations with the external Group Auditing Company", issued in October 2014 and addressed to all Group subsidiaries. From January 2017, the Bank has sent operating instructions to all the companies of the UniCredit Group so that they may submit each individual non-audit assignment for the assessment and approval of the Internal Control Body of each Group company (Board of Statutory Auditors, Audit Committee or equivalent body), then to the UniCredit S.p.A. Board of Statutory Auditors to issue the final binding opinion. The Board of Statutory Auditors also took note of the information concerning non-audit services prepared through a preventive and four-monthly flow by the competent Function. Therefore, pursuant to this process, all the companies of the UniCredit group contributed to the transmission of the data requested and required by internal regulations, in order to enable the timely monitoring of the costs of the services provided to the External Auditors and by all entities belonging to the Deloitte network. The aforementioned revision of the internal operating instructions, aimed at strengthening the steering, coordination and control with further details, rules, responsibilities, processes and activities for the correct application of EU Regulation no. 537/2014 - ended on 27 March 2018, with the publication of OdS [Internal Regulation] 1316/1 referred to as "Global Operational Regulation - Principles and rules for the management of contractual relations with the Group's External Auditors ". On the basis of the final data for 2018, the services provided by the Group's External Auditors amount to approximately € 35.8 million, of which € 6.1 million refer to non-audit services. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 747 Furthermore, in the opinion of the External Auditors, the Management Report and some specific information contained in the Report on Corporate Governance and Ownership Structure indicated in Art. 123-bis, paragraph 4, of Italian Legislative Decree no. 58/98 (TUF) are consistent with the financial statements of UniCredit S.p.A. and with the consolidated financial statements of the UniCredit group at 31 December 2018 and are prepared in accordance with the law. With reference to the possible identification of significant errors in the Management Report (Article 14, paragraph 2, subpar. e) of Italian Legislative Decree no. 39/2010), the External Auditors declared that there was nothing to report. Starting from the 2017 financial year, the reports on the auditing of the financial statements and the consolidated financial statements show the key audit matters that, according to the professional opinion of the External Auditors, were more significant in the accounting audit of the Company and consolidated financial statements for the year under review [ISA (Italy) 701]. The particular aspects are the following: • the first adoption of the international accounting standard IFRS9; • risk of uncorrected classification and valuation of performing customers loans; • risk of uncorrected classification and valuation of non performing loans to customers (unlikely to pay and bad loans); • legal risks related to non- compliance with the economic sanctions imposed by the United States of America ("U.S.") to other countries. Regarding the aforementioned key matters, for which the External Auditors’ reports illustrate the related audit procedures adopted, the External Auditors do not express a separate opinion, as the same have been dealt with in the audit, and in the assessment of the financial statements as a whole. The aforementioned key matters have been the subject of detailed analysis and updating during the periodic meetings that the Board of Statutory Auditors held with the External Auditors. The Board of Statutory Auditors met regularly with the Auditing Company as required by Art. 150, paragraph 3, of Italian Legislative Decree 58/1998 (TUF) for a mutual exchange of information. It informed the Board of Statutory Auditors that there were no censurable actions or facts or irregularities which would have required specific reporting under Art. 155, paragraph 2, of Italian Legislative Decree 58/1998 (TUF). In light of the foregoing, the Board of Statutory Auditors deems the process of interaction with the the External Auditors to be adequate and transparent. It also believes that the improvement of the “two-way dialogue” between the the External Auditors and the bodies responsible for governance on the areas of budget risk and on the procedures identified to oversee them further supported the role and responsibility of the parties involved in the preparation of the financial statements and in the auditing activities. 7. Oversight on the independence of the External Auditors During the 2018 financial year, pursuant to Art. 19 of Italian Legislative Decree 39/2010, the Board of Statutory Auditors verified and monitored the independence of the External Auditors Deloitte & Touche S.p.A., pursuant to articles 10, 10-bis, 10-ter, 10-quater and 17 of the aforementioned decree and article 6 of the Regulation, in particular with regard to the adequacy of the provision of services other than auditing to the audited entity. Furthermore, as previously stated (see previous paragraph), the Board of Statutory Auditors received the declaration confirming its independence from UniCredit S.p.A.. Following the entry into force of the aforementioned Regulation on specific requirements related to the external audit of the accounts of public interest entities (PIE), the Board of Statutory Auditors carried out, together with the relevant Bank Functions (Group Cost Management), a review of the existing internal regulations, Global Operational Instruction (GOI), called "Management of contractual relations with the external Group Auditing Company", issued in October 2014 and addressed to all Group subsidiaries. From January 2017, the Bank has sent operating instructions to all the companies of the UniCredit Group so that they may submit each individual non-audit assignment for the assessment and approval of the Internal Control Body of each Group company (Board of Statutory Auditors, Audit Committee or equivalent body), then to the UniCredit S.p.A. Board of Statutory Auditors to issue the final binding opinion. The Board of Statutory Auditors also took note of the information concerning non-audit services prepared through a preventive and four-monthly flow by the competent Function. Therefore, pursuant to this process, all the companies of the UniCredit group contributed to the transmission of the data requested and required by internal regulations, in order to enable the timely monitoring of the costs of the services provided to the External Auditors and by all entities belonging to the Deloitte network. The aforementioned revision of the internal operating instructions, aimed at strengthening the steering, coordination and control with further details, rules, responsibilities, processes and activities for the correct application of EU Regulation no. 537/2014 - ended on 27 March 2018, with the publication of OdS [Internal Regulation] 1316/1 referred to as "Global Operational Regulation - Principles and rules for the management of contractual relations with the Group's External Auditors ". On the basis of the final data for 2018, the services provided by the Group's External Auditors amount to approximately € 35.8 million, of which € 6.1 million refer to non-audit services. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 747 Furthermore, in the opinion of the External Auditors, the Management Report and some specific information contained in the Report on Corporate Governance and Ownership Structure indicated in Art. 123-bis, paragraph 4, of Italian Legislative Decree no. 58/98 (TUF) are consistent with the financial statements of UniCredit S.p.A. and with the consolidated financial statements of the UniCredit group at 31 December 2018 and are prepared in accordance with the law. With reference to the possible identification of significant errors in the Management Report (Article 14, paragraph 2, subpar. e) of Italian Legislative Decree no. 39/2010), the External Auditors declared that there was nothing to report. Starting from the 2017 financial year, the reports on the auditing of the financial statements and the consolidated financial statements show the key audit matters that, according to the professional opinion of the External Auditors, were more significant in the accounting audit of the Company and consolidated financial statements for the year under review [ISA (Italy) 701]. The particular aspects are the following: • the first adoption of the international accounting standard IFRS9; • risk of uncorrected classification and valuation of performing customers loans; • risk of uncorrected classification and valuation of non performing loans to customers (unlikely to pay and bad loans); • legal risks related to non- compliance with the economic sanctions imposed by the United States of America ("U.S.") to other countries. Regarding the aforementioned key matters, for which the External Auditors’ reports illustrate the related audit procedures adopted, the External Auditors do not express a separate opinion, as the same have been dealt with in the audit, and in the assessment of the financial statements as a whole. The aforementioned key matters have been the subject of detailed analysis and updating during the periodic meetings that the Board of Statutory Auditors held with the External Auditors. The Board of Statutory Auditors met regularly with the Auditing Company as required by Art. 150, paragraph 3, of Italian Legislative Decree 58/1998 (TUF) for a mutual exchange of information. It informed the Board of Statutory Auditors that there were no censurable actions or facts or irregularities which would have required specific reporting under Art. 155, paragraph 2, of Italian Legislative Decree 58/1998 (TUF). In light of the foregoing, the Board of Statutory Auditors deems the process of interaction with the the External Auditors to be adequate and transparent. It also believes that the improvement of the “two-way dialogue” between the the External Auditors and the bodies responsible for governance on the areas of budget risk and on the procedures identified to oversee them further supported the role and responsibility of the parties involved in the preparation of the financial statements and in the auditing activities. 7. Oversight on the independence of the External Auditors During the 2018 financial year, pursuant to Art. 19 of Italian Legislative Decree 39/2010, the Board of Statutory Auditors verified and monitored the independence of the External Auditors Deloitte & Touche S.p.A., pursuant to articles 10, 10-bis, 10-ter, 10-quater and 17 of the aforementioned decree and article 6 of the Regulation, in particular with regard to the adequacy of the provision of services other than auditing to the audited entity. Furthermore, as previously stated (see previous paragraph), the Board of Statutory Auditors received the declaration confirming its independence from UniCredit S.p.A.. Following the entry into force of the aforementioned Regulation on specific requirements related to the external audit of the accounts of public interest entities (PIE), the Board of Statutory Auditors carried out, together with the relevant Bank Functions (Group Cost Management), a review of the existing internal regulations, Global Operational Instruction (GOI), called "Management of contractual relations with the external Group Auditing Company", issued in October 2014 and addressed to all Group subsidiaries. From January 2017, the Bank has sent operating instructions to all the companies of the UniCredit Group so that they may submit each individual non-audit assignment for the assessment and approval of the Internal Control Body of each Group company (Board of Statutory Auditors, Audit Committee or equivalent body), then to the UniCredit S.p.A. Board of Statutory Auditors to issue the final binding opinion. The Board of Statutory Auditors also took note of the information concerning non-audit services prepared through a preventive and four-monthly flow by the competent Function. Therefore, pursuant to this process, all the companies of the UniCredit group contributed to the transmission of the data requested and required by internal regulations, in order to enable the timely monitoring of the costs of the services provided to the External Auditors and by all entities belonging to the Deloitte network. The aforementioned revision of the internal operating instructions, aimed at strengthening the steering, coordination and control with further details, rules, responsibilities, processes and activities for the correct application of EU Regulation no. 537/2014 - ended on 27 March 2018, with the publication of OdS [Internal Regulation] 1316/1 referred to as "Global Operational Regulation - Principles and rules for the management of contractual relations with the Group's External Auditors ". On the basis of the final data for 2018, the services provided by the Group's External Auditors amount to approximately € 35.8 million, of which € 6.1 million refer to non-audit services. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 747 Furthermore, in the opinion of the External Auditors, the Management Report and some specific information contained in the Report on Corporate Governance and Ownership Structure indicated in Art. 123-bis, paragraph 4, of Italian Legislative Decree no. 58/98 (TUF) are consistent with the financial statements of UniCredit S.p.A. and with the consolidated financial statements of the UniCredit group at 31 December 2018 and are prepared in accordance with the law. With reference to the possible identification of significant errors in the Management Report (Article 14, paragraph 2, subpar. e) of Italian Legislative Decree no. 39/2010), the External Auditors declared that there was nothing to report. Starting from the 2017 financial year, the reports on the auditing of the financial statements and the consolidated financial statements show the key audit matters that, according to the professional opinion of the External Auditors, were more significant in the accounting audit of the Company and consolidated financial statements for the year under review [ISA (Italy) 701]. The particular aspects are the following: • the first adoption of the international accounting standard IFRS9; • risk of uncorrected classification and valuation of performing customers loans; • risk of uncorrected classification and valuation of non performing loans to customers (unlikely to pay and bad loans); • legal risks related to non- compliance with the economic sanctions imposed by the United States of America ("U.S.") to other countries. Regarding the aforementioned key matters, for which the External Auditors’ reports illustrate the related audit procedures adopted, the External Auditors do not express a separate opinion, as the same have been dealt with in the audit, and in the assessment of the financial statements as a whole. The aforementioned key matters have been the subject of detailed analysis and updating during the periodic meetings that the Board of Statutory Auditors held with the External Auditors. The Board of Statutory Auditors met regularly with the Auditing Company as required by Art. 150, paragraph 3, of Italian Legislative Decree 58/1998 (TUF) for a mutual exchange of information. It informed the Board of Statutory Auditors that there were no censurable actions or facts or irregularities which would have required specific reporting under Art. 155, paragraph 2, of Italian Legislative Decree 58/1998 (TUF). In light of the foregoing, the Board of Statutory Auditors deems the process of interaction with the the External Auditors to be adequate and transparent. It also believes that the improvement of the “two-way dialogue” between the the External Auditors and the bodies responsible for governance on the areas of budget risk and on the procedures identified to oversee them further supported the role and responsibility of the parties involved in the preparation of the financial statements and in the auditing activities. 7. Oversight on the independence of the External Auditors During the 2018 financial year, pursuant to Art. 19 of Italian Legislative Decree 39/2010, the Board of Statutory Auditors verified and monitored the independence of the External Auditors Deloitte & Touche S.p.A., pursuant to articles 10, 10-bis, 10-ter, 10-quater and 17 of the aforementioned decree and article 6 of the Regulation, in particular with regard to the adequacy of the provision of services other than auditing to the audited entity. Furthermore, as previously stated (see previous paragraph), the Board of Statutory Auditors received the declaration confirming its independence from UniCredit S.p.A.. Following the entry into force of the aforementioned Regulation on specific requirements related to the external audit of the accounts of public interest entities (PIE), the Board of Statutory Auditors carried out, together with the relevant Bank Functions (Group Cost Management), a review of the existing internal regulations, Global Operational Instruction (GOI), called "Management of contractual relations with the external Group Auditing Company", issued in October 2014 and addressed to all Group subsidiaries. From January 2017, the Bank has sent operating instructions to all the companies of the UniCredit Group so that they may submit each individual non-audit assignment for the assessment and approval of the Internal Control Body of each Group company (Board of Statutory Auditors, Audit Committee or equivalent body), then to the UniCredit S.p.A. Board of Statutory Auditors to issue the final binding opinion. The Board of Statutory Auditors also took note of the information concerning non-audit services prepared through a preventive and four-monthly flow by the competent Function. Therefore, pursuant to this process, all the companies of the UniCredit group contributed to the transmission of the data requested and required by internal regulations, in order to enable the timely monitoring of the costs of the services provided to the External Auditors and by all entities belonging to the Deloitte network. The aforementioned revision of the internal operating instructions, aimed at strengthening the steering, coordination and control with further details, rules, responsibilities, processes and activities for the correct application of EU Regulation no. 537/2014 - ended on 27 March 2018, with the publication of OdS [Internal Regulation] 1316/1 referred to as "Global Operational Regulation - Principles and rules for the management of contractual relations with the Group's External Auditors ". On the basis of the final data for 2018, the services provided by the Group's External Auditors amount to approximately € 35.8 million, of which € 6.1 million refer to non-audit services. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 748 2018 Annual Report and Accounts · UniCredit The ratio between the cost of non-audit services and the three-year average of audit services (2015-2016-2017) amounted to 29% for 2018, lower than the limit established by internal and external regulations (70%). On the other hand, as regards the non-audit services planning for 2019, the Deloitte network will be assigned services with a value of approximately € 7.2 million, with a forecast CAP of 32%. With reference to the information provided in the statement relating to the "Publication of the remuneration - UniCredit S.p.A. - 2018 financial year - Deloitte network", the Board of Statutory Auditors notes that, compared to the previous year, the costs of the services assigned to the External Auditors increased, net of inflation, by €518,000, in consideration of the supplemental fees requested by the External Auditors following the introduction of the new IFRS 9 principle, while the costs of certification services, amounting to €2,001,000, decreased compared to the previous year by 41%. The costs of non-audit services, amounting to €839,000, decreased compared to the previous year by 11%. At the Group level, the costs of non-audit services assigned to the External Auditors decreased by 10% compared to 2017. In order to be able to monitor effectively and promptly the allocation and the costs of the non-audit services, the Board of Statutory Auditors reserves the right to establish a more restrictive CAP annually. 8. Oversight of the financial information process For the purposes of overseeing the financial reporting processes, the Board of Statutory Auditors, in addition to the aforementioned in-depth analysis carried out with the External Auditors , which did not reveal significant critical issues of the internal control system concerning the financial reporting process, carried out the planned and periodic meetings with the Manager in charge with preparing the financial reports and the competent Accounting and Group Risk Management structures. The administrative and accounting procedures for drafting the Company and consolidated financial statements and all other financial information were set up under the responsibility of the Financial Reporting Manager who, together with the CEO, attests that they are adequate and actually applied. During these periodic meetings, the Manager in charge with preparing the financial reports did not report any significant shortcomings in the operating and control processes that could undermine the adequacy and actual application of the administrative and accounting procedures, in order to correctly represent the economic, asset and financial aspects of the accounting events in compliance with international accounting standards. The Manager with preparing the financial reports and the Chief Executive Officer signed the statements relating to the individual and consolidated financial statements at 31 December 2018, pursuant to Art. 81-ter of the Issuer Regulation, approved by Consob with Resolution 11971/1999 as amended and supplemented. The Board of Statutory Auditors has examined the internal regulations relating to the process which allows the Manager with preparing the financial reports and the Chief Executive Officer to issue the cited certificates and has taken note of the updates on the subject, including those relating to the "Manualof Group Accounting Rules and Principles (Internal Regulation 911)" (approved by the Board of Directors in January and March 2018 and January 2019), with particular reference to the introduction of the new accounting standards (IFRS9, IFRS15), and the issuance of the update of Circular 262 by the Bank of Italy, and the findings of the Quality Assurance carried out by Deloitte as part of the IFRS9 Project. The Board of Statutory Auditors also considered the updates to the Manual made as a result of the entry into force from 1st January 2019 of IFRS16, as well as those related to the new Policy "IFRS9 Held to collect - Sales". The Board of Statutory Auditors also acknowledged the "Report on the status of the internal control system on the Financial Reporting - Management Report" with regard to the certification campaign L. 262/05 on the financial statements at 31 December 2018, issued on 6 February 2019. In light of the information received and of the analyses carried out, as also described below, the Board of Statutory Auditors deems the overall administrative accounting system to be adequate in regards to the current regulations. In any case, it recommends continuing without delay the direction and implementation of the corrective actions planned by the Management, as well as further strengthening the role of steering and coordination on the Group companies by the Corporate Center structures, with a view to increasingly sharing, harmonization and monitoring the different financial reporting processes. Compared to a total of 505 companies wholly consolidated at 31 December 2018, on the basis of the criteria defined in the aforementioned internal regulations, the companies subject to certification for the 262 campaign amount to 65 and cover 98.1% of the Group Total Aggregated Assets ("GTAA"). The certification campaign at 31 December 2018, which for UniCredit S.p.A. involved 321 processes that undergo 1469 checks, ended with the issuance of all the so-called "internal certificates" to the UniCredit S.p.A. Manager in charge with preparing the financial reports by the counterparties of the relevant companies. Given the fact that the process system and the related checks are constantly updated, the Board of Statutory Auditors has recommended particular care in ensuring their complete mapping for the purposes of the related 262 certification. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 748 2018 Annual Report and Accounts · UniCredit The ratio between the cost of non-audit services and the three-year average of audit services (2015-2016-2017) amounted to 29% for 2018, lower than the limit established by internal and external regulations (70%). On the other hand, as regards the non-audit services planning for 2019, the Deloitte network will be assigned services with a value of approximately € 7.2 million, with a forecast CAP of 32%. With reference to the information provided in the statement relating to the "Publication of the remuneration - UniCredit S.p.A. - 2018 financial year - Deloitte network", the Board of Statutory Auditors notes that, compared to the previous year, the costs of the services assigned to the External Auditors increased, net of inflation, by €518,000, in consideration of the supplemental fees requested by the External Auditors following the introduction of the new IFRS 9 principle, while the costs of certification services, amounting to €2,001,000, decreased compared to the previous year by 41%. The costs of non-audit services, amounting to €839,000, decreased compared to the previous year by 11%. At the Group level, the costs of non-audit services assigned to the External Auditors decreased by 10% compared to 2017. In order to be able to monitor effectively and promptly the allocation and the costs of the non-audit services, the Board of Statutory Auditors reserves the right to establish a more restrictive CAP annually. 8. Oversight of the financial information process For the purposes of overseeing the financial reporting processes, the Board of Statutory Auditors, in addition to the aforementioned in-depth analysis carried out with the External Auditors , which did not reveal significant critical issues of the internal control system concerning the financial reporting process, carried out the planned and periodic meetings with the Manager in charge with preparing the financial reports and the competent Accounting and Group Risk Management structures. The administrative and accounting procedures for drafting the Company and consolidated financial statements and all other financial information were set up under the responsibility of the Financial Reporting Manager who, together with the CEO, attests that they are adequate and actually applied. During these periodic meetings, the Manager in charge with preparing the financial reports did not report any significant shortcomings in the operating and control processes that could undermine the adequacy and actual application of the administrative and accounting procedures, in order to correctly represent the economic, asset and financial aspects of the accounting events in compliance with international accounting standards. The Manager with preparing the financial reports and the Chief Executive Officer signed the statements relating to the individual and consolidated financial statements at 31 December 2018, pursuant to Art. 81-ter of the Issuer Regulation, approved by Consob with Resolution 11971/1999 as amended and supplemented. The Board of Statutory Auditors has examined the internal regulations relating to the process which allows the Manager with preparing the financial reports and the Chief Executive Officer to issue the cited certificates and has taken note of the updates on the subject, including those relating to the "Manualof Group Accounting Rules and Principles (Internal Regulation 911)" (approved by the Board of Directors in January and March 2018 and January 2019), with particular reference to the introduction of the new accounting standards (IFRS9, IFRS15), and the issuance of the update of Circular 262 by the Bank of Italy, and the findings of the Quality Assurance carried out by Deloitte as part of the IFRS9 Project. The Board of Statutory Auditors also considered the updates to the Manual made as a result of the entry into force from 1st January 2019 of IFRS16, as well as those related to the new Policy "IFRS9 Held to collect - Sales". The Board of Statutory Auditors also acknowledged the "Report on the status of the internal control system on the Financial Reporting - Management Report" with regard to the certification campaign L. 262/05 on the financial statements at 31 December 2018, issued on 6 February 2019. In light of the information received and of the analyses carried out, as also described below, the Board of Statutory Auditors deems the overall administrative accounting system to be adequate in regards to the current regulations. In any case, it recommends continuing without delay the direction and implementation of the corrective actions planned by the Management, as well as further strengthening the role of steering and coordination on the Group companies by the Corporate Center structures, with a view to increasingly sharing, harmonization and monitoring the different financial reporting processes. Compared to a total of 505 companies wholly consolidated at 31 December 2018, on the basis of the criteria defined in the aforementioned internal regulations, the companies subject to certification for the 262 campaign amount to 65 and cover 98.1% of the Group Total Aggregated Assets ("GTAA"). The certification campaign at 31 December 2018, which for UniCredit S.p.A. involved 321 processes that undergo 1469 checks, ended with the issuance of all the so-called "internal certificates" to the UniCredit S.p.A. Manager in charge with preparing the financial reports by the counterparties of the relevant companies. Given the fact that the process system and the related checks are constantly updated, the Board of Statutory Auditors has recommended particular care in ensuring their complete mapping for the purposes of the related 262 certification. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 748 2018 Annual Report and Accounts · UniCredit The ratio between the cost of non-audit services and the three-year average of audit services (2015-2016-2017) amounted to 29% for 2018, lower than the limit established by internal and external regulations (70%). On the other hand, as regards the non-audit services planning for 2019, the Deloitte network will be assigned services with a value of approximately € 7.2 million, with a forecast CAP of 32%. With reference to the information provided in the statement relating to the "Publication of the remuneration - UniCredit S.p.A. - 2018 financial year - Deloitte network", the Board of Statutory Auditors notes that, compared to the previous year, the costs of the services assigned to the External Auditors increased, net of inflation, by €518,000, in consideration of the supplemental fees requested by the External Auditors following the introduction of the new IFRS 9 principle, while the costs of certification services, amounting to €2,001,000, decreased compared to the previous year by 41%. The costs of non-audit services, amounting to €839,000, decreased compared to the previous year by 11%. At the Group level, the costs of non-audit services assigned to the External Auditors decreased by 10% compared to 2017. In order to be able to monitor effectively and promptly the allocation and the costs of the non-audit services, the Board of Statutory Auditors reserves the right to establish a more restrictive CAP annually. 8. Oversight of the financial information process For the purposes of overseeing the financial reporting processes, the Board of Statutory Auditors, in addition to the aforementioned in-depth analysis carried out with the External Auditors , which did not reveal significant critical issues of the internal control system concerning the financial reporting process, carried out the planned and periodic meetings with the Manager in charge with preparing the financial reports and the competent Accounting and Group Risk Management structures. The administrative and accounting procedures for drafting the Company and consolidated financial statements and all other financial information were set up under the responsibility of the Financial Reporting Manager who, together with the CEO, attests that they are adequate and actually applied. During these periodic meetings, the Manager in charge with preparing the financial reports did not report any significant shortcomings in the operating and control processes that could undermine the adequacy and actual application of the administrative and accounting procedures, in order to correctly represent the economic, asset and financial aspects of the accounting events in compliance with international accounting standards. The Manager with preparing the financial reports and the Chief Executive Officer signed the statements relating to the individual and consolidated financial statements at 31 December 2018, pursuant to Art. 81-ter of the Issuer Regulation, approved by Consob with Resolution 11971/1999 as amended and supplemented. The Board of Statutory Auditors has examined the internal regulations relating to the process which allows the Manager with preparing the financial reports and the Chief Executive Officer to issue the cited certificates and has taken note of the updates on the subject, including those relating to the "Manualof Group Accounting Rules and Principles (Internal Regulation 911)" (approved by the Board of Directors in January and March 2018 and January 2019), with particular reference to the introduction of the new accounting standards (IFRS9, IFRS15), and the issuance of the update of Circular 262 by the Bank of Italy, and the findings of the Quality Assurance carried out by Deloitte as part of the IFRS9 Project. The Board of Statutory Auditors also considered the updates to the Manual made as a result of the entry into force from 1st January 2019 of IFRS16, as well as those related to the new Policy "IFRS9 Held to collect - Sales". The Board of Statutory Auditors also acknowledged the "Report on the status of the internal control system on the Financial Reporting - Management Report" with regard to the certification campaign L. 262/05 on the financial statements at 31 December 2018, issued on 6 February 2019. In light of the information received and of the analyses carried out, as also described below, the Board of Statutory Auditors deems the overall administrative accounting system to be adequate in regards to the current regulations. In any case, it recommends continuing without delay the direction and implementation of the corrective actions planned by the Management, as well as further strengthening the role of steering and coordination on the Group companies by the Corporate Center structures, with a view to increasingly sharing, harmonization and monitoring the different financial reporting processes. Compared to a total of 505 companies wholly consolidated at 31 December 2018, on the basis of the criteria defined in the aforementioned internal regulations, the companies subject to certification for the 262 campaign amount to 65 and cover 98.1% of the Group Total Aggregated Assets ("GTAA"). The certification campaign at 31 December 2018, which for UniCredit S.p.A. involved 321 processes that undergo 1469 checks, ended with the issuance of all the so-called "internal certificates" to the UniCredit S.p.A. Manager in charge with preparing the financial reports by the counterparties of the relevant companies. Given the fact that the process system and the related checks are constantly updated, the Board of Statutory Auditors has recommended particular care in ensuring their complete mapping for the purposes of the related 262 certification. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 748 2018 Annual Report and Accounts · UniCredit The ratio between the cost of non-audit services and the three-year average of audit services (2015-2016-2017) amounted to 29% for 2018, lower than the limit established by internal and external regulations (70%). On the other hand, as regards the non-audit services planning for 2019, the Deloitte network will be assigned services with a value of approximately € 7.2 million, with a forecast CAP of 32%. With reference to the information provided in the statement relating to the "Publication of the remuneration - UniCredit S.p.A. - 2018 financial year - Deloitte network", the Board of Statutory Auditors notes that, compared to the previous year, the costs of the services assigned to the External Auditors increased, net of inflation, by €518,000, in consideration of the supplemental fees requested by the External Auditors following the introduction of the new IFRS 9 principle, while the costs of certification services, amounting to €2,001,000, decreased compared to the previous year by 41%. The costs of non-audit services, amounting to €839,000, decreased compared to the previous year by 11%. At the Group level, the costs of non-audit services assigned to the External Auditors decreased by 10% compared to 2017. In order to be able to monitor effectively and promptly the allocation and the costs of the non-audit services, the Board of Statutory Auditors reserves the right to establish a more restrictive CAP annually. 8. Oversight of the financial information process For the purposes of overseeing the financial reporting processes, the Board of Statutory Auditors, in addition to the aforementioned in-depth analysis carried out with the External Auditors , which did not reveal significant critical issues of the internal control system concerning the financial reporting process, carried out the planned and periodic meetings with the Manager in charge with preparing the financial reports and the competent Accounting and Group Risk Management structures. The administrative and accounting procedures for drafting the Company and consolidated financial statements and all other financial information were set up under the responsibility of the Financial Reporting Manager who, together with the CEO, attests that they are adequate and actually applied. During these periodic meetings, the Manager in charge with preparing the financial reports did not report any significant shortcomings in the operating and control processes that could undermine the adequacy and actual application of the administrative and accounting procedures, in order to correctly represent the economic, asset and financial aspects of the accounting events in compliance with international accounting standards. The Manager with preparing the financial reports and the Chief Executive Officer signed the statements relating to the individual and consolidated financial statements at 31 December 2018, pursuant to Art. 81-ter of the Issuer Regulation, approved by Consob with Resolution 11971/1999 as amended and supplemented. The Board of Statutory Auditors has examined the internal regulations relating to the process which allows the Manager with preparing the financial reports and the Chief Executive Officer to issue the cited certificates and has taken note of the updates on the subject, including those relating to the "Manualof Group Accounting Rules and Principles (Internal Regulation 911)" (approved by the Board of Directors in January and March 2018 and January 2019), with particular reference to the introduction of the new accounting standards (IFRS9, IFRS15), and the issuance of the update of Circular 262 by the Bank of Italy, and the findings of the Quality Assurance carried out by Deloitte as part of the IFRS9 Project. The Board of Statutory Auditors also considered the updates to the Manual made as a result of the entry into force from 1st January 2019 of IFRS16, as well as those related to the new Policy "IFRS9 Held to collect - Sales". The Board of Statutory Auditors also acknowledged the "Report on the status of the internal control system on the Financial Reporting - Management Report" with regard to the certification campaign L. 262/05 on the financial statements at 31 December 2018, issued on 6 February 2019. In light of the information received and of the analyses carried out, as also described below, the Board of Statutory Auditors deems the overall administrative accounting system to be adequate in regards to the current regulations. In any case, it recommends continuing without delay the direction and implementation of the corrective actions planned by the Management, as well as further strengthening the role of steering and coordination on the Group companies by the Corporate Center structures, with a view to increasingly sharing, harmonization and monitoring the different financial reporting processes. Compared to a total of 505 companies wholly consolidated at 31 December 2018, on the basis of the criteria defined in the aforementioned internal regulations, the companies subject to certification for the 262 campaign amount to 65 and cover 98.1% of the Group Total Aggregated Assets ("GTAA"). The certification campaign at 31 December 2018, which for UniCredit S.p.A. involved 321 processes that undergo 1469 checks, ended with the issuance of all the so-called "internal certificates" to the UniCredit S.p.A. Manager in charge with preparing the financial reports by the counterparties of the relevant companies. Given the fact that the process system and the related checks are constantly updated, the Board of Statutory Auditors has recommended particular care in ensuring their complete mapping for the purposes of the related 262 certification. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 748 2018 Annual Report and Accounts · UniCredit The ratio between the cost of non-audit services and the three-year average of audit services (2015-2016-2017) amounted to 29% for 2018, lower than the limit established by internal and external regulations (70%). On the other hand, as regards the non-audit services planning for 2019, the Deloitte network will be assigned services with a value of approximately € 7.2 million, with a forecast CAP of 32%. With reference to the information provided in the statement relating to the "Publication of the remuneration - UniCredit S.p.A. - 2018 financial year - Deloitte network", the Board of Statutory Auditors notes that, compared to the previous year, the costs of the services assigned to the External Auditors increased, net of inflation, by €518,000, in consideration of the supplemental fees requested by the External Auditors following the introduction of the new IFRS 9 principle, while the costs of certification services, amounting to €2,001,000, decreased compared to the previous year by 41%. The costs of non-audit services, amounting to €839,000, decreased compared to the previous year by 11%. At the Group level, the costs of non-audit services assigned to the External Auditors decreased by 10% compared to 2017. In order to be able to monitor effectively and promptly the allocation and the costs of the non-audit services, the Board of Statutory Auditors reserves the right to establish a more restrictive CAP annually. 8. Oversight of the financial information process For the purposes of overseeing the financial reporting processes, the Board of Statutory Auditors, in addition to the aforementioned in-depth analysis carried out with the External Auditors , which did not reveal significant critical issues of the internal control system concerning the financial reporting process, carried out the planned and periodic meetings with the Manager in charge with preparing the financial reports and the competent Accounting and Group Risk Management structures. The administrative and accounting procedures for drafting the Company and consolidated financial statements and all other financial information were set up under the responsibility of the Financial Reporting Manager who, together with the CEO, attests that they are adequate and actually applied. During these periodic meetings, the Manager in charge with preparing the financial reports did not report any significant shortcomings in the operating and control processes that could undermine the adequacy and actual application of the administrative and accounting procedures, in order to correctly represent the economic, asset and financial aspects of the accounting events in compliance with international accounting standards. The Manager with preparing the financial reports and the Chief Executive Officer signed the statements relating to the individual and consolidated financial statements at 31 December 2018, pursuant to Art. 81-ter of the Issuer Regulation, approved by Consob with Resolution 11971/1999 as amended and supplemented. The Board of Statutory Auditors has examined the internal regulations relating to the process which allows the Manager with preparing the financial reports and the Chief Executive Officer to issue the cited certificates and has taken note of the updates on the subject, including those relating to the "Manualof Group Accounting Rules and Principles (Internal Regulation 911)" (approved by the Board of Directors in January and March 2018 and January 2019), with particular reference to the introduction of the new accounting standards (IFRS9, IFRS15), and the issuance of the update of Circular 262 by the Bank of Italy, and the findings of the Quality Assurance carried out by Deloitte as part of the IFRS9 Project. The Board of Statutory Auditors also considered the updates to the Manual made as a result of the entry into force from 1st January 2019 of IFRS16, as well as those related to the new Policy "IFRS9 Held to collect - Sales". The Board of Statutory Auditors also acknowledged the "Report on the status of the internal control system on the Financial Reporting - Management Report" with regard to the certification campaign L. 262/05 on the financial statements at 31 December 2018, issued on 6 February 2019. In light of the information received and of the analyses carried out, as also described below, the Board of Statutory Auditors deems the overall administrative accounting system to be adequate in regards to the current regulations. In any case, it recommends continuing without delay the direction and implementation of the corrective actions planned by the Management, as well as further strengthening the role of steering and coordination on the Group companies by the Corporate Center structures, with a view to increasingly sharing, harmonization and monitoring the different financial reporting processes. Compared to a total of 505 companies wholly consolidated at 31 December 2018, on the basis of the criteria defined in the aforementioned internal regulations, the companies subject to certification for the 262 campaign amount to 65 and cover 98.1% of the Group Total Aggregated Assets ("GTAA"). The certification campaign at 31 December 2018, which for UniCredit S.p.A. involved 321 processes that undergo 1469 checks, ended with the issuance of all the so-called "internal certificates" to the UniCredit S.p.A. Manager in charge with preparing the financial reports by the counterparties of the relevant companies. Given the fact that the process system and the related checks are constantly updated, the Board of Statutory Auditors has recommended particular care in ensuring their complete mapping for the purposes of the related 262 certification. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 749 Regarding the areas of improvement that emerged from the certification campaign, which mainly concern i) the existence of substantial manual procedures that characterize part of the operations of Functions directly involved in the preparation of Company and consolidated financial statements/reports, ii) the supply of automated reports/procedures to improve the production and control activities carried out manually, the BoSA will continue to monitor the complete addressing of the related remedial actions (Group Remediation Plan), with a view to gradually reducing the use of compensatory actions, which are often manual and operationally burdensome, and which can raise the related operational risk. As part of the project actions aimed at the 262 processes, the Board of Statutory Auditors confirmed the general revision of UniCredit S.p.A.'s operational model for the management of all the significant Workout processes in order to optimize their overall effectiveness (i.e. "doBank project"). A specific independent analysis was carried out as part of a comparative market survey by a leading consultancy company on the management of guarantees regarding non-performing exposures on the counterparties managed by the Servicers and, more generally, under the Master Service Agreement (MSA) with doBank: based on the results provided, an assessment is underway on actions to strengthen the supervision of doBank's activity, which, where necessary and agreed, could find future formalization within the existing Master Service Agreement. The Board of Statutory Auditors considers the aforementioned activity very significant also in the context of a general strengthening of the supervision of Outsourcer/Third-Party operations. The Board of Statutory Auditors has taken note of the procedures carried out by the External Auditors requested by the Bank ("Agreed upon procedures") as suggested by the Board of Statutory Auditors, regarding the production of the disclosure made with reference to the date of 31 December 2018 by UniCredit S.p.A. in the document known as Disclosure of the UniCredit Group drawn up pursuant to Regulation (EU) no. 575/2013 ("Pillar III"), in relation to:(i) the processes and their first- and second-level controls for: (a) the determination of the Own Funds and Banking Regulatory Ratios; (b) the determination of Risk Weighted Assets; (c) the production of the disclosure made in Pillar III; (ii) verifying the composition, the correct determination and the arithmetic correctness of certain information provided in Pillar III; (iii) the trend and consistency analysis of the Own Funds, Banking Regulatory Ratios and Risk Weighted Assets. The Board of Statutory Auditors believes that the above-described activity makes it possible to consider the internal regulatory framework adequate and updated, the design of the procedures and the control processes implemented sufficiently formalized and comprehensible, and the planned control activities (both first and second level) actually implemented and effective. It also contributes to the growth of the internal culture regarding the analysis of the phenomena underlying the formation of the Own Funds as well as an ever greater transparency towards the markets. In regards to the activities related to the strengthening of the governance of data and information (Data Quality), as well as the strongest safeguards serving the decision-making and risk-control processes, a topic on which the Board of Statutory Auditors has placed significant attention over time, updates have been carried out with the relevant structures on the ongoing actions following the "Overall Data Quality Plan". The Board of Statutory Auditors also found the new Umbrella Program initiative, led by the GRM and COO Functions, whose objectives consist either in monitoring the resolution initiatives of the recommendations of the Supervisor under the SREP (Supervisory Review and Evaluation Process), or in laying the foundations for long-term strategic initiatives in the data architecture/aggregation/reporting field, to be included in the Strategic Plan 2020/2023, with the aim of responding to regulatory developments. The Umbrella Program will include not only the liquidity and interest rate data - which in the short term represent the priority - but also, more generally, all those subject to aggregation (as attributable to the Group perimeter) and/or regulatory reporting. Keeping in mind the overall capacity to produce reporting quickly and comprehensively, the Board of Statutory Auditors considers it important, as per the approach adopted by the Bank, that each architectural investment aimed at strengthening the data aggregation capacity or speed is included in the Umbrella Program in order to synergistically harmonize the strengthening initiatives and the projects that involve data quality. The Board of Statutory Auditors notes the results of the goodwill impairment test and other intangible assets at 31 December 2018. This activity was carried out by uniformly calculating the capital allocated to the CGU - Cash Generating Unit (unit generating financial flows identifiable in segments of the Group's operating activities) of the CEE compared to the method used for all the other CGUs. Goodwill is monitored by the CGUs at the lowest level in the Group in line with its business model. The Notes to the Accounts show the effects of deferred tax assets (IRES and IRAP) deriving from exempting the excess values of the control shareholdings pursuant to Art. 23 of Italian Legislative Decree 98/2011 and those relating to deferred tax assets (IRES and IRAP) arising from the tax exemption of accounting goodwill; the values are those resulting from the sustainability test in accordance with IAS12, taking into account the foreseeable economic forecasts for the future periods, in order to verify that there are, on the basis of a time span of 5 years adopted in order to harmonize the approach between the main Group entities, future taxable incomes against which the same can be used. Over the course of the year, the Board of Statutory Auditors continued to analyse the adoption status of the "IFRS9" implementation project, which is proceeding in accordance with the planned timelines. It also took note of the results of the analysis carried out by the External Auditors regarding the most significant areas of the Project, both at the local and Group level, from which no major critical issues emerged. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 749 Regarding the areas of improvement that emerged from the certification campaign, which mainly concern i) the existence of substantial manual procedures that characterize part of the operations of Functions directly involved in the preparation of Company and consolidated financial statements/reports, ii) the supply of automated reports/procedures to improve the production and control activities carried out manually, the BoSA will continue to monitor the complete addressing of the related remedial actions (Group Remediation Plan), with a view to gradually reducing the use of compensatory actions, which are often manual and operationally burdensome, and which can raise the related operational risk. As part of the project actions aimed at the 262 processes, the Board of Statutory Auditors confirmed the general revision of UniCredit S.p.A.'s operational model for the management of all the significant Workout processes in order to optimize their overall effectiveness (i.e. "doBank project"). A specific independent analysis was carried out as part of a comparative market survey by a leading consultancy company on the management of guarantees regarding non-performing exposures on the counterparties managed by the Servicers and, more generally, under the Master Service Agreement (MSA) with doBank: based on the results provided, an assessment is underway on actions to strengthen the supervision of doBank's activity, which, where necessary and agreed, could find future formalization within the existing Master Service Agreement. The Board of Statutory Auditors considers the aforementioned activity very significant also in the context of a general strengthening of the supervision of Outsourcer/Third-Party operations. The Board of Statutory Auditors has taken note of the procedures carried out by the External Auditors requested by the Bank ("Agreed upon procedures") as suggested by the Board of Statutory Auditors, regarding the production of the disclosure made with reference to the date of 31 December 2018 by UniCredit S.p.A. in the document known as Disclosure of the UniCredit Group drawn up pursuant to Regulation (EU) no. 575/2013 ("Pillar III"), in relation to:(i) the processes and their first- and second-level controls for: (a) the determination of the Own Funds and Banking Regulatory Ratios; (b) the determination of Risk Weighted Assets; (c) the production of the disclosure made in Pillar III; (ii) verifying the composition, the correct determination and the arithmetic correctness of certain information provided in Pillar III; (iii) the trend and consistency analysis of the Own Funds, Banking Regulatory Ratios and Risk Weighted Assets. The Board of Statutory Auditors believes that the above-described activity makes it possible to consider the internal regulatory framework adequate and updated, the design of the procedures and the control processes implemented sufficiently formalized and comprehensible, and the planned control activities (both first and second level) actually implemented and effective. It also contributes to the growth of the internal culture regarding the analysis of the phenomena underlying the formation of the Own Funds as well as an ever greater transparency towards the markets. In regards to the activities related to the strengthening of the governance of data and information (Data Quality), as well as the strongest safeguards serving the decision-making and risk-control processes, a topic on which the Board of Statutory Auditors has placed significant attention over time, updates have been carried out with the relevant structures on the ongoing actions following the "Overall Data Quality Plan". The Board of Statutory Auditors also found the new Umbrella Program initiative, led by the GRM and COO Functions, whose objectives consist either in monitoring the resolution initiatives of the recommendations of the Supervisor under the SREP (Supervisory Review and Evaluation Process), or in laying the foundations for long-term strategic initiatives in the data architecture/aggregation/reporting field, to be included in the Strategic Plan 2020/2023, with the aim of responding to regulatory developments. The Umbrella Program will include not only the liquidity and interest rate data - which in the short term represent the priority - but also, more generally, all those subject to aggregation (as attributable to the Group perimeter) and/or regulatory reporting. Keeping in mind the overall capacity to produce reporting quickly and comprehensively, the Board of Statutory Auditors considers it important, as per the approach adopted by the Bank, that each architectural investment aimed at strengthening the data aggregation capacity or speed is included in the Umbrella Program in order to synergistically harmonize the strengthening initiatives and the projects that involve data quality. The Board of Statutory Auditors notes the results of the goodwill impairment test and other intangible assets at 31 December 2018. This activity was carried out by uniformly calculating the capital allocated to the CGU - Cash Generating Unit (unit generating financial flows identifiable in segments of the Group's operating activities) of the CEE compared to the method used for all the other CGUs. Goodwill is monitored by the CGUs at the lowest level in the Group in line with its business model. The Notes to the Accounts show the effects of deferred tax assets (IRES and IRAP) deriving from exempting the excess values of the control shareholdings pursuant to Art. 23 of Italian Legislative Decree 98/2011 and those relating to deferred tax assets (IRES and IRAP) arising from the tax exemption of accounting goodwill; the values are those resulting from the sustainability test in accordance with IAS12, taking into account the foreseeable economic forecasts for the future periods, in order to verify that there are, on the basis of a time span of 5 years adopted in order to harmonize the approach between the main Group entities, future taxable incomes against which the same can be used. Over the course of the year, the Board of Statutory Auditors continued to analyse the adoption status of the "IFRS9" implementation project, which is proceeding in accordance with the planned timelines. It also took note of the results of the analysis carried out by the External Auditors regarding the most significant areas of the Project, both at the local and Group level, from which no major critical issues emerged. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 749 Regarding the areas of improvement that emerged from the certification campaign, which mainly concern i) the existence of substantial manual procedures that characterize part of the operations of Functions directly involved in the preparation of Company and consolidated financial statements/reports, ii) the supply of automated reports/procedures to improve the production and control activities carried out manually, the BoSA will continue to monitor the complete addressing of the related remedial actions (Group Remediation Plan), with a view to gradually reducing the use of compensatory actions, which are often manual and operationally burdensome, and which can raise the related operational risk. As part of the project actions aimed at the 262 processes, the Board of Statutory Auditors confirmed the general revision of UniCredit S.p.A.'s operational model for the management of all the significant Workout processes in order to optimize their overall effectiveness (i.e. "doBank project"). A specific independent analysis was carried out as part of a comparative market survey by a leading consultancy company on the management of guarantees regarding non-performing exposures on the counterparties managed by the Servicers and, more generally, under the Master Service Agreement (MSA) with doBank: based on the results provided, an assessment is underway on actions to strengthen the supervision of doBank's activity, which, where necessary and agreed, could find future formalization within the existing Master Service Agreement. The Board of Statutory Auditors considers the aforementioned activity very significant also in the context of a general strengthening of the supervision of Outsourcer/Third-Party operations. The Board of Statutory Auditors has taken note of the procedures carried out by the External Auditors requested by the Bank ("Agreed upon procedures") as suggested by the Board of Statutory Auditors, regarding the production of the disclosure made with reference to the date of 31 December 2018 by UniCredit S.p.A. in the document known as Disclosure of the UniCredit Group drawn up pursuant to Regulation (EU) no. 575/2013 ("Pillar III"), in relation to:(i) the processes and their first- and second-level controls for: (a) the determination of the Own Funds and Banking Regulatory Ratios; (b) the determination of Risk Weighted Assets; (c) the production of the disclosure made in Pillar III; (ii) verifying the composition, the correct determination and the arithmetic correctness of certain information provided in Pillar III; (iii) the trend and consistency analysis of the Own Funds, Banking Regulatory Ratios and Risk Weighted Assets. The Board of Statutory Auditors believes that the above-described activity makes it possible to consider the internal regulatory framework adequate and updated, the design of the procedures and the control processes implemented sufficiently formalized and comprehensible, and the planned control activities (both first and second level) actually implemented and effective. It also contributes to the growth of the internal culture regarding the analysis of the phenomena underlying the formation of the Own Funds as well as an ever greater transparency towards the markets. In regards to the activities related to the strengthening of the governance of data and information (Data Quality), as well as the strongest safeguards serving the decision-making and risk-control processes, a topic on which the Board of Statutory Auditors has placed significant attention over time, updates have been carried out with the relevant structures on the ongoing actions following the "Overall Data Quality Plan". The Board of Statutory Auditors also found the new Umbrella Program initiative, led by the GRM and COO Functions, whose objectives consist either in monitoring the resolution initiatives of the recommendations of the Supervisor under the SREP (Supervisory Review and Evaluation Process), or in laying the foundations for long-term strategic initiatives in the data architecture/aggregation/reporting field, to be included in the Strategic Plan 2020/2023, with the aim of responding to regulatory developments. The Umbrella Program will include not only the liquidity and interest rate data - which in the short term represent the priority - but also, more generally, all those subject to aggregation (as attributable to the Group perimeter) and/or regulatory reporting. Keeping in mind the overall capacity to produce reporting quickly and comprehensively, the Board of Statutory Auditors considers it important, as per the approach adopted by the Bank, that each architectural investment aimed at strengthening the data aggregation capacity or speed is included in the Umbrella Program in order to synergistically harmonize the strengthening initiatives and the projects that involve data quality. The Board of Statutory Auditors notes the results of the goodwill impairment test and other intangible assets at 31 December 2018. This activity was carried out by uniformly calculating the capital allocated to the CGU - Cash Generating Unit (unit generating financial flows identifiable in segments of the Group's operating activities) of the CEE compared to the method used for all the other CGUs. Goodwill is monitored by the CGUs at the lowest level in the Group in line with its business model. The Notes to the Accounts show the effects of deferred tax assets (IRES and IRAP) deriving from exempting the excess values of the control shareholdings pursuant to Art. 23 of Italian Legislative Decree 98/2011 and those relating to deferred tax assets (IRES and IRAP) arising from the tax exemption of accounting goodwill; the values are those resulting from the sustainability test in accordance with IAS12, taking into account the foreseeable economic forecasts for the future periods, in order to verify that there are, on the basis of a time span of 5 years adopted in order to harmonize the approach between the main Group entities, future taxable incomes against which the same can be used. Over the course of the year, the Board of Statutory Auditors continued to analyse the adoption status of the "IFRS9" implementation project, which is proceeding in accordance with the planned timelines. It also took note of the results of the analysis carried out by the External Auditors regarding the most significant areas of the Project, both at the local and Group level, from which no major critical issues emerged. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 749 Regarding the areas of improvement that emerged from the certification campaign, which mainly concern i) the existence of substantial manual procedures that characterize part of the operations of Functions directly involved in the preparation of Company and consolidated financial statements/reports, ii) the supply of automated reports/procedures to improve the production and control activities carried out manually, the BoSA will continue to monitor the complete addressing of the related remedial actions (Group Remediation Plan), with a view to gradually reducing the use of compensatory actions, which are often manual and operationally burdensome, and which can raise the related operational risk. As part of the project actions aimed at the 262 processes, the Board of Statutory Auditors confirmed the general revision of UniCredit S.p.A.'s operational model for the management of all the significant Workout processes in order to optimize their overall effectiveness (i.e. "doBank project"). A specific independent analysis was carried out as part of a comparative market survey by a leading consultancy company on the management of guarantees regarding non-performing exposures on the counterparties managed by the Servicers and, more generally, under the Master Service Agreement (MSA) with doBank: based on the results provided, an assessment is underway on actions to strengthen the supervision of doBank's activity, which, where necessary and agreed, could find future formalization within the existing Master Service Agreement. The Board of Statutory Auditors considers the aforementioned activity very significant also in the context of a general strengthening of the supervision of Outsourcer/Third-Party operations. The Board of Statutory Auditors has taken note of the procedures carried out by the External Auditors requested by the Bank ("Agreed upon procedures") as suggested by the Board of Statutory Auditors, regarding the production of the disclosure made with reference to the date of 31 December 2018 by UniCredit S.p.A. in the document known as Disclosure of the UniCredit Group drawn up pursuant to Regulation (EU) no. 575/2013 ("Pillar III"), in relation to:(i) the processes and their first- and second-level controls for: (a) the determination of the Own Funds and Banking Regulatory Ratios; (b) the determination of Risk Weighted Assets; (c) the production of the disclosure made in Pillar III; (ii) verifying the composition, the correct determination and the arithmetic correctness of certain information provided in Pillar III; (iii) the trend and consistency analysis of the Own Funds, Banking Regulatory Ratios and Risk Weighted Assets. The Board of Statutory Auditors believes that the above-described activity makes it possible to consider the internal regulatory framework adequate and updated, the design of the procedures and the control processes implemented sufficiently formalized and comprehensible, and the planned control activities (both first and second level) actually implemented and effective. It also contributes to the growth of the internal culture regarding the analysis of the phenomena underlying the formation of the Own Funds as well as an ever greater transparency towards the markets. In regards to the activities related to the strengthening of the governance of data and information (Data Quality), as well as the strongest safeguards serving the decision-making and risk-control processes, a topic on which the Board of Statutory Auditors has placed significant attention over time, updates have been carried out with the relevant structures on the ongoing actions following the "Overall Data Quality Plan". The Board of Statutory Auditors also found the new Umbrella Program initiative, led by the GRM and COO Functions, whose objectives consist either in monitoring the resolution initiatives of the recommendations of the Supervisor under the SREP (Supervisory Review and Evaluation Process), or in laying the foundations for long-term strategic initiatives in the data architecture/aggregation/reporting field, to be included in the Strategic Plan 2020/2023, with the aim of responding to regulatory developments. The Umbrella Program will include not only the liquidity and interest rate data - which in the short term represent the priority - but also, more generally, all those subject to aggregation (as attributable to the Group perimeter) and/or regulatory reporting. Keeping in mind the overall capacity to produce reporting quickly and comprehensively, the Board of Statutory Auditors considers it important, as per the approach adopted by the Bank, that each architectural investment aimed at strengthening the data aggregation capacity or speed is included in the Umbrella Program in order to synergistically harmonize the strengthening initiatives and the projects that involve data quality. The Board of Statutory Auditors notes the results of the goodwill impairment test and other intangible assets at 31 December 2018. This activity was carried out by uniformly calculating the capital allocated to the CGU - Cash Generating Unit (unit generating financial flows identifiable in segments of the Group's operating activities) of the CEE compared to the method used for all the other CGUs. Goodwill is monitored by the CGUs at the lowest level in the Group in line with its business model. The Notes to the Accounts show the effects of deferred tax assets (IRES and IRAP) deriving from exempting the excess values of the control shareholdings pursuant to Art. 23 of Italian Legislative Decree 98/2011 and those relating to deferred tax assets (IRES and IRAP) arising from the tax exemption of accounting goodwill; the values are those resulting from the sustainability test in accordance with IAS12, taking into account the foreseeable economic forecasts for the future periods, in order to verify that there are, on the basis of a time span of 5 years adopted in order to harmonize the approach between the main Group entities, future taxable incomes against which the same can be used. Over the course of the year, the Board of Statutory Auditors continued to analyse the adoption status of the "IFRS9" implementation project, which is proceeding in accordance with the planned timelines. It also took note of the results of the analysis carried out by the External Auditors regarding the most significant areas of the Project, both at the local and Group level, from which no major critical issues emerged. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 749 Regarding the areas of improvement that emerged from the certification campaign, which mainly concern i) the existence of substantial manual procedures that characterize part of the operations of Functions directly involved in the preparation of Company and consolidated financial statements/reports, ii) the supply of automated reports/procedures to improve the production and control activities carried out manually, the BoSA will continue to monitor the complete addressing of the related remedial actions (Group Remediation Plan), with a view to gradually reducing the use of compensatory actions, which are often manual and operationally burdensome, and which can raise the related operational risk. As part of the project actions aimed at the 262 processes, the Board of Statutory Auditors confirmed the general revision of UniCredit S.p.A.'s operational model for the management of all the significant Workout processes in order to optimize their overall effectiveness (i.e. "doBank project"). A specific independent analysis was carried out as part of a comparative market survey by a leading consultancy company on the management of guarantees regarding non-performing exposures on the counterparties managed by the Servicers and, more generally, under the Master Service Agreement (MSA) with doBank: based on the results provided, an assessment is underway on actions to strengthen the supervision of doBank's activity, which, where necessary and agreed, could find future formalization within the existing Master Service Agreement. The Board of Statutory Auditors considers the aforementioned activity very significant also in the context of a general strengthening of the supervision of Outsourcer/Third-Party operations. The Board of Statutory Auditors has taken note of the procedures carried out by the External Auditors requested by the Bank ("Agreed upon procedures") as suggested by the Board of Statutory Auditors, regarding the production of the disclosure made with reference to the date of 31 December 2018 by UniCredit S.p.A. in the document known as Disclosure of the UniCredit Group drawn up pursuant to Regulation (EU) no. 575/2013 ("Pillar III"), in relation to:(i) the processes and their first- and second-level controls for: (a) the determination of the Own Funds and Banking Regulatory Ratios; (b) the determination of Risk Weighted Assets; (c) the production of the disclosure made in Pillar III; (ii) verifying the composition, the correct determination and the arithmetic correctness of certain information provided in Pillar III; (iii) the trend and consistency analysis of the Own Funds, Banking Regulatory Ratios and Risk Weighted Assets. The Board of Statutory Auditors believes that the above-described activity makes it possible to consider the internal regulatory framework adequate and updated, the design of the procedures and the control processes implemented sufficiently formalized and comprehensible, and the planned control activities (both first and second level) actually implemented and effective. It also contributes to the growth of the internal culture regarding the analysis of the phenomena underlying the formation of the Own Funds as well as an ever greater transparency towards the markets. In regards to the activities related to the strengthening of the governance of data and information (Data Quality), as well as the strongest safeguards serving the decision-making and risk-control processes, a topic on which the Board of Statutory Auditors has placed significant attention over time, updates have been carried out with the relevant structures on the ongoing actions following the "Overall Data Quality Plan". The Board of Statutory Auditors also found the new Umbrella Program initiative, led by the GRM and COO Functions, whose objectives consist either in monitoring the resolution initiatives of the recommendations of the Supervisor under the SREP (Supervisory Review and Evaluation Process), or in laying the foundations for long-term strategic initiatives in the data architecture/aggregation/reporting field, to be included in the Strategic Plan 2020/2023, with the aim of responding to regulatory developments. The Umbrella Program will include not only the liquidity and interest rate data - which in the short term represent the priority - but also, more generally, all those subject to aggregation (as attributable to the Group perimeter) and/or regulatory reporting. Keeping in mind the overall capacity to produce reporting quickly and comprehensively, the Board of Statutory Auditors considers it important, as per the approach adopted by the Bank, that each architectural investment aimed at strengthening the data aggregation capacity or speed is included in the Umbrella Program in order to synergistically harmonize the strengthening initiatives and the projects that involve data quality. The Board of Statutory Auditors notes the results of the goodwill impairment test and other intangible assets at 31 December 2018. This activity was carried out by uniformly calculating the capital allocated to the CGU - Cash Generating Unit (unit generating financial flows identifiable in segments of the Group's operating activities) of the CEE compared to the method used for all the other CGUs. Goodwill is monitored by the CGUs at the lowest level in the Group in line with its business model. The Notes to the Accounts show the effects of deferred tax assets (IRES and IRAP) deriving from exempting the excess values of the control shareholdings pursuant to Art. 23 of Italian Legislative Decree 98/2011 and those relating to deferred tax assets (IRES and IRAP) arising from the tax exemption of accounting goodwill; the values are those resulting from the sustainability test in accordance with IAS12, taking into account the foreseeable economic forecasts for the future periods, in order to verify that there are, on the basis of a time span of 5 years adopted in order to harmonize the approach between the main Group entities, future taxable incomes against which the same can be used. Over the course of the year, the Board of Statutory Auditors continued to analyse the adoption status of the "IFRS9" implementation project, which is proceeding in accordance with the planned timelines. It also took note of the results of the analysis carried out by the External Auditors regarding the most significant areas of the Project, both at the local and Group level, from which no major critical issues emerged. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 750 2018 Annual Report and Accounts · UniCredit The Notes to the Consolidated Accounts provide information about the impacts of the transition to IFRS9 – Financial Instruments. The adoption of the principle is the result of a multiannual project aimed at creating accounting and risk monitoring methodologies, harmonized between the various Group companies, which ensure full compliance with the provisions of the accounting principle, updating the governance and monitoring processes in light of the relevant regulatory innovations. The Board of Statutory Auditors acknowledges the value adjustments arising from the entry into force of the abovementioned accounting standard IFRS9, which required the development of models to calculate the amount of the adjustments on the basis of the expected credit loss. These models are based on two fundamental pillars: i) the allocation of credit exposures to stages 1, 2 and 3 provided for by the principle (Stage allocation); ii) the determination of the expected credit loss. Detailed information is provided in the financial statements in relation to the investments in the Voluntary Scheme. With reference to the measures in favour of Banca Carige S.p.A., UniCredit S.p.A.'s contribution amounted to about €62.5 million (of which about €53 million attributable to UniCredit S.p.A.) and was identified as a financial instrument, classified according to the Current Accounting Standard IFRS9 under item 20.c) ”Financial assets mandatorily at fair value through profit or loss”. As no market valuations or prices of comparable securities are available, at 31 December 2018 the fair value of the instrument was determined using internal models (discounted cash flow and market multiples), also having as reference the valuation of the financial assets of the Voluntary Scheme (supported by the advisor in charge) contained in the 2018 Statement of the Voluntary Scheme. The Notes provide detailed information on any liabilities and costs that may arise from pending judicial proceedings. The Board of Statutory Auditors has investigated with the Bank's Legal Function the methodology and the process adopted in analyzing the dispute and determining the related provisions. In particular, in the Notes to the Consolidated Accounts, information is provided on the evolution of the investigations still underway by the US Authorities on issues related to the economic Sanctions imposed by the United States, with reference to UCB AG, UCB Austria and UniCredit S.p.A.. Each of these companies is collaborating with the relevant US Authorities and remediation activities are underway, in particular regarding internal policies and procedures. The respective companies of the UniCredit Group keep the competent Authorities duly updated. As indicated in the Notes, it is also possible that investigations into historical compliance practices may be extended to other companies within the Group or that new investigations or proceedings may be commenced against the parent company UniCredit S.p.A. and/or the Group. Recent violations of US sanctions and certain US dollar payment practices by other European financial institutions have resulted in those institutions entering into settlements and paying material fines and penalties to various US authorities. It should be noted, therefore, that such inspections and/or proceedings against the Group companies could result in the enforcement against UniCredit S.p.A. and/or the Group of the payment of significant civil or criminal penalties. UniCredit S.p.A., UCB AG and UCB Austria are continuing their settlement negotiations with the various US authorities in order to define an agreement and resolve the various proceedings accordingly. Therefore it is not possible to determine with any certainty the terms and timing of any resolution with any relevant authorities, including what final costs, remediation, payments or other criminal or civil liability may occur in connection with a final resolution. The investigation costs, remediation required and/or payments or other legal liabilities to be incurred in connection with the proceedings could lead to liquidity outflows, potentially affect net results and have a material adverse effect on a reputational basis and business activities. The Group booked provisions which are deemed appropriate. The timing of any agreement with the various U.S. authorities is currently not determinable, however it is possible that settlement discussions with any or all of the Group entities could be completed by the end of the first semester of 2019. The Notes to the Consolidated Accounts also provide an update on the proceeding regarding the Squeeze-Out of former minority shareholders of UCB AG and UCB Austria (so-called Appraisal Proceeding). In reference to the Appraisal Proceeding of the minority shareholders of UCB AG, a forthcoming hearing will be scheduled at the Munich District Court for February 2020, to examine the supplementary expert report for the valuation of UCB AG at the time of the squeeze-out. The Bank continues to believe that it has operated in full compliance with the law and considers the price paid to minority shareholders to be adequate. At this stage, it is not possible to estimate the disputed amount or the duration of the proceeding, which could even last for a number of years and could result in the Parent Company UniCredit S.p.A. having to pay additional compensation to the minority shareholders. In reference to the Appraisal Proceeding of the minority shareholders of UCB Austria, the proceeding will continue before the Commercial Court in Vienna, which has ordered the parties to submit further documents and must decide both on the assessment of the above price and on the legal issues. UniCredit S.p.A., considering the nature of the valuation methods used, believes that the amount paid to the minority shareholders was adequate. Currently, it is not possible to evaluate the amount under dispute and the possible risk connected with the above-described Appraisal Proceeding. The Directors provide information about the litigation related to certain forms of banking operations connected to its operations with clients, which are not specific to the UniCredit group, rather affect the financial sector in general. The proceedings pertaining to compound interest mainly involve damages requests from clients arising from the alleged unlawfulness of the calculation methods of the amount of interest payable in connection with certain banking contracts. Starting from the first years of 2000, there has been a progressive increase in claims brought by the account holders due to the unwinding of the interest payable arisen from the quarterly compound interest. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 750 2018 Annual Report and Accounts · UniCredit The Notes to the Consolidated Accounts provide information about the impacts of the transition to IFRS9 – Financial Instruments. The adoption of the principle is the result of a multiannual project aimed at creating accounting and risk monitoring methodologies, harmonized between the various Group companies, which ensure full compliance with the provisions of the accounting principle, updating the governance and monitoring processes in light of the relevant regulatory innovations. The Board of Statutory Auditors acknowledges the value adjustments arising from the entry into force of the abovementioned accounting standard IFRS9, which required the development of models to calculate the amount of the adjustments on the basis of the expected credit loss. These models are based on two fundamental pillars: i) the allocation of credit exposures to stages 1, 2 and 3 provided for by the principle (Stage allocation); ii) the determination of the expected credit loss. Detailed information is provided in the financial statements in relation to the investments in the Voluntary Scheme. With reference to the measures in favour of Banca Carige S.p.A., UniCredit S.p.A.'s contribution amounted to about €62.5 million (of which about €53 million attributable to UniCredit S.p.A.) and was identified as a financial instrument, classified according to the Current Accounting Standard IFRS9 under item 20.c) ”Financial assets mandatorily at fair value through profit or loss”. As no market valuations or prices of comparable securities are available, at 31 December 2018 the fair value of the instrument was determined using internal models (discounted cash flow and market multiples), also having as reference the valuation of the financial assets of the Voluntary Scheme (supported by the advisor in charge) contained in the 2018 Statement of the Voluntary Scheme. The Notes provide detailed information on any liabilities and costs that may arise from pending judicial proceedings. The Board of Statutory Auditors has investigated with the Bank's Legal Function the methodology and the process adopted in analyzing the dispute and determining the related provisions. In particular, in the Notes to the Consolidated Accounts, information is provided on the evolution of the investigations still underway by the US Authorities on issues related to the economic Sanctions imposed by the United States, with reference to UCB AG, UCB Austria and UniCredit S.p.A.. Each of these companies is collaborating with the relevant US Authorities and remediation activities are underway, in particular regarding internal policies and procedures. The respective companies of the UniCredit Group keep the competent Authorities duly updated. As indicated in the Notes, it is also possible that investigations into historical compliance practices may be extended to other companies within the Group or that new investigations or proceedings may be commenced against the parent company UniCredit S.p.A. and/or the Group. Recent violations of US sanctions and certain US dollar payment practices by other European financial institutions have resulted in those institutions entering into settlements and paying material fines and penalties to various US authorities. It should be noted, therefore, that such inspections and/or proceedings against the Group companies could result in the enforcement against UniCredit S.p.A. and/or the Group of the payment of significant civil or criminal penalties. UniCredit S.p.A., UCB AG and UCB Austria are continuing their settlement negotiations with the various US authorities in order to define an agreement and resolve the various proceedings accordingly. Therefore it is not possible to determine with any certainty the terms and timing of any resolution with any relevant authorities, including what final costs, remediation, payments or other criminal or civil liability may occur in connection with a final resolution. The investigation costs, remediation required and/or payments or other legal liabilities to be incurred in connection with the proceedings could lead to liquidity outflows, potentially affect net results and have a material adverse effect on a reputational basis and business activities. The Group booked provisions which are deemed appropriate. The timing of any agreement with the various U.S. authorities is currently not determinable, however it is possible that settlement discussions with any or all of the Group entities could be completed by the end of the first semester of 2019. The Notes to the Consolidated Accounts also provide an update on the proceeding regarding the Squeeze-Out of former minority shareholders of UCB AG and UCB Austria (so-called Appraisal Proceeding). In reference to the Appraisal Proceeding of the minority shareholders of UCB AG, a forthcoming hearing will be scheduled at the Munich District Court for February 2020, to examine the supplementary expert report for the valuation of UCB AG at the time of the squeeze-out. The Bank continues to believe that it has operated in full compliance with the law and considers the price paid to minority shareholders to be adequate. At this stage, it is not possible to estimate the disputed amount or the duration of the proceeding, which could even last for a number of years and could result in the Parent Company UniCredit S.p.A. having to pay additional compensation to the minority shareholders. In reference to the Appraisal Proceeding of the minority shareholders of UCB Austria, the proceeding will continue before the Commercial Court in Vienna, which has ordered the parties to submit further documents and must decide both on the assessment of the above price and on the legal issues. UniCredit S.p.A., considering the nature of the valuation methods used, believes that the amount paid to the minority shareholders was adequate. Currently, it is not possible to evaluate the amount under dispute and the possible risk connected with the above-described Appraisal Proceeding. The Directors provide information about the litigation related to certain forms of banking operations connected to its operations with clients, which are not specific to the UniCredit group, rather affect the financial sector in general. The proceedings pertaining to compound interest mainly involve damages requests from clients arising from the alleged unlawfulness of the calculation methods of the amount of interest payable in connection with certain banking contracts. Starting from the first years of 2000, there has been a progressive increase in claims brought by the account holders due to the unwinding of the interest payable arisen from the quarterly compound interest. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 750 2018 Annual Report and Accounts · UniCredit The Notes to the Consolidated Accounts provide information about the impacts of the transition to IFRS9 – Financial Instruments. The adoption of the principle is the result of a multiannual project aimed at creating accounting and risk monitoring methodologies, harmonized between the various Group companies, which ensure full compliance with the provisions of the accounting principle, updating the governance and monitoring processes in light of the relevant regulatory innovations. The Board of Statutory Auditors acknowledges the value adjustments arising from the entry into force of the abovementioned accounting standard IFRS9, which required the development of models to calculate the amount of the adjustments on the basis of the expected credit loss. These models are based on two fundamental pillars: i) the allocation of credit exposures to stages 1, 2 and 3 provided for by the principle (Stage allocation); ii) the determination of the expected credit loss. Detailed information is provided in the financial statements in relation to the investments in the Voluntary Scheme. With reference to the measures in favour of Banca Carige S.p.A., UniCredit S.p.A.'s contribution amounted to about €62.5 million (of which about €53 million attributable to UniCredit S.p.A.) and was identified as a financial instrument, classified according to the Current Accounting Standard IFRS9 under item 20.c) ”Financial assets mandatorily at fair value through profit or loss”. As no market valuations or prices of comparable securities are available, at 31 December 2018 the fair value of the instrument was determined using internal models (discounted cash flow and market multiples), also having as reference the valuation of the financial assets of the Voluntary Scheme (supported by the advisor in charge) contained in the 2018 Statement of the Voluntary Scheme. The Notes provide detailed information on any liabilities and costs that may arise from pending judicial proceedings. The Board of Statutory Auditors has investigated with the Bank's Legal Function the methodology and the process adopted in analyzing the dispute and determining the related provisions. In particular, in the Notes to the Consolidated Accounts, information is provided on the evolution of the investigations still underway by the US Authorities on issues related to the economic Sanctions imposed by the United States, with reference to UCB AG, UCB Austria and UniCredit S.p.A.. Each of these companies is collaborating with the relevant US Authorities and remediation activities are underway, in particular regarding internal policies and procedures. The respective companies of the UniCredit Group keep the competent Authorities duly updated. As indicated in the Notes, it is also possible that investigations into historical compliance practices may be extended to other companies within the Group or that new investigations or proceedings may be commenced against the parent company UniCredit S.p.A. and/or the Group. Recent violations of US sanctions and certain US dollar payment practices by other European financial institutions have resulted in those institutions entering into settlements and paying material fines and penalties to various US authorities. It should be noted, therefore, that such inspections and/or proceedings against the Group companies could result in the enforcement against UniCredit S.p.A. and/or the Group of the payment of significant civil or criminal penalties. UniCredit S.p.A., UCB AG and UCB Austria are continuing their settlement negotiations with the various US authorities in order to define an agreement and resolve the various proceedings accordingly. Therefore it is not possible to determine with any certainty the terms and timing of any resolution with any relevant authorities, including what final costs, remediation, payments or other criminal or civil liability may occur in connection with a final resolution. The investigation costs, remediation required and/or payments or other legal liabilities to be incurred in connection with the proceedings could lead to liquidity outflows, potentially affect net results and have a material adverse effect on a reputational basis and business activities. The Group booked provisions which are deemed appropriate. The timing of any agreement with the various U.S. authorities is currently not determinable, however it is possible that settlement discussions with any or all of the Group entities could be completed by the end of the first semester of 2019. The Notes to the Consolidated Accounts also provide an update on the proceeding regarding the Squeeze-Out of former minority shareholders of UCB AG and UCB Austria (so-called Appraisal Proceeding). In reference to the Appraisal Proceeding of the minority shareholders of UCB AG, a forthcoming hearing will be scheduled at the Munich District Court for February 2020, to examine the supplementary expert report for the valuation of UCB AG at the time of the squeeze-out. The Bank continues to believe that it has operated in full compliance with the law and considers the price paid to minority shareholders to be adequate. At this stage, it is not possible to estimate the disputed amount or the duration of the proceeding, which could even last for a number of years and could result in the Parent Company UniCredit S.p.A. having to pay additional compensation to the minority shareholders. In reference to the Appraisal Proceeding of the minority shareholders of UCB Austria, the proceeding will continue before the Commercial Court in Vienna, which has ordered the parties to submit further documents and must decide both on the assessment of the above price and on the legal issues. UniCredit S.p.A., considering the nature of the valuation methods used, believes that the amount paid to the minority shareholders was adequate. Currently, it is not possible to evaluate the amount under dispute and the possible risk connected with the above-described Appraisal Proceeding. The Directors provide information about the litigation related to certain forms of banking operations connected to its operations with clients, which are not specific to the UniCredit group, rather affect the financial sector in general. The proceedings pertaining to compound interest mainly involve damages requests from clients arising from the alleged unlawfulness of the calculation methods of the amount of interest payable in connection with certain banking contracts. Starting from the first years of 2000, there has been a progressive increase in claims brought by the account holders due to the unwinding of the interest payable arisen from the quarterly compound interest. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 750 2018 Annual Report and Accounts · UniCredit The Notes to the Consolidated Accounts provide information about the impacts of the transition to IFRS9 – Financial Instruments. The adoption of the principle is the result of a multiannual project aimed at creating accounting and risk monitoring methodologies, harmonized between the various Group companies, which ensure full compliance with the provisions of the accounting principle, updating the governance and monitoring processes in light of the relevant regulatory innovations. The Board of Statutory Auditors acknowledges the value adjustments arising from the entry into force of the abovementioned accounting standard IFRS9, which required the development of models to calculate the amount of the adjustments on the basis of the expected credit loss. These models are based on two fundamental pillars: i) the allocation of credit exposures to stages 1, 2 and 3 provided for by the principle (Stage allocation); ii) the determination of the expected credit loss. Detailed information is provided in the financial statements in relation to the investments in the Voluntary Scheme. With reference to the measures in favour of Banca Carige S.p.A., UniCredit S.p.A.'s contribution amounted to about €62.5 million (of which about €53 million attributable to UniCredit S.p.A.) and was identified as a financial instrument, classified according to the Current Accounting Standard IFRS9 under item 20.c) ”Financial assets mandatorily at fair value through profit or loss”. As no market valuations or prices of comparable securities are available, at 31 December 2018 the fair value of the instrument was determined using internal models (discounted cash flow and market multiples), also having as reference the valuation of the financial assets of the Voluntary Scheme (supported by the advisor in charge) contained in the 2018 Statement of the Voluntary Scheme. The Notes provide detailed information on any liabilities and costs that may arise from pending judicial proceedings. The Board of Statutory Auditors has investigated with the Bank's Legal Function the methodology and the process adopted in analyzing the dispute and determining the related provisions. In particular, in the Notes to the Consolidated Accounts, information is provided on the evolution of the investigations still underway by the US Authorities on issues related to the economic Sanctions imposed by the United States, with reference to UCB AG, UCB Austria and UniCredit S.p.A.. Each of these companies is collaborating with the relevant US Authorities and remediation activities are underway, in particular regarding internal policies and procedures. The respective companies of the UniCredit Group keep the competent Authorities duly updated. As indicated in the Notes, it is also possible that investigations into historical compliance practices may be extended to other companies within the Group or that new investigations or proceedings may be commenced against the parent company UniCredit S.p.A. and/or the Group. Recent violations of US sanctions and certain US dollar payment practices by other European financial institutions have resulted in those institutions entering into settlements and paying material fines and penalties to various US authorities. It should be noted, therefore, that such inspections and/or proceedings against the Group companies could result in the enforcement against UniCredit S.p.A. and/or the Group of the payment of significant civil or criminal penalties. UniCredit S.p.A., UCB AG and UCB Austria are continuing their settlement negotiations with the various US authorities in order to define an agreement and resolve the various proceedings accordingly. Therefore it is not possible to determine with any certainty the terms and timing of any resolution with any relevant authorities, including what final costs, remediation, payments or other criminal or civil liability may occur in connection with a final resolution. The investigation costs, remediation required and/or payments or other legal liabilities to be incurred in connection with the proceedings could lead to liquidity outflows, potentially affect net results and have a material adverse effect on a reputational basis and business activities. The Group booked provisions which are deemed appropriate. The timing of any agreement with the various U.S. authorities is currently not determinable, however it is possible that settlement discussions with any or all of the Group entities could be completed by the end of the first semester of 2019. The Notes to the Consolidated Accounts also provide an update on the proceeding regarding the Squeeze-Out of former minority shareholders of UCB AG and UCB Austria (so-called Appraisal Proceeding). In reference to the Appraisal Proceeding of the minority shareholders of UCB AG, a forthcoming hearing will be scheduled at the Munich District Court for February 2020, to examine the supplementary expert report for the valuation of UCB AG at the time of the squeeze-out. The Bank continues to believe that it has operated in full compliance with the law and considers the price paid to minority shareholders to be adequate. At this stage, it is not possible to estimate the disputed amount or the duration of the proceeding, which could even last for a number of years and could result in the Parent Company UniCredit S.p.A. having to pay additional compensation to the minority shareholders. In reference to the Appraisal Proceeding of the minority shareholders of UCB Austria, the proceeding will continue before the Commercial Court in Vienna, which has ordered the parties to submit further documents and must decide both on the assessment of the above price and on the legal issues. UniCredit S.p.A., considering the nature of the valuation methods used, believes that the amount paid to the minority shareholders was adequate. Currently, it is not possible to evaluate the amount under dispute and the possible risk connected with the above-described Appraisal Proceeding. The Directors provide information about the litigation related to certain forms of banking operations connected to its operations with clients, which are not specific to the UniCredit group, rather affect the financial sector in general. The proceedings pertaining to compound interest mainly involve damages requests from clients arising from the alleged unlawfulness of the calculation methods of the amount of interest payable in connection with certain banking contracts. Starting from the first years of 2000, there has been a progressive increase in claims brought by the account holders due to the unwinding of the interest payable arisen from the quarterly compound interest. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 750 2018 Annual Report and Accounts · UniCredit The Notes to the Consolidated Accounts provide information about the impacts of the transition to IFRS9 – Financial Instruments. The adoption of the principle is the result of a multiannual project aimed at creating accounting and risk monitoring methodologies, harmonized between the various Group companies, which ensure full compliance with the provisions of the accounting principle, updating the governance and monitoring processes in light of the relevant regulatory innovations. The Board of Statutory Auditors acknowledges the value adjustments arising from the entry into force of the abovementioned accounting standard IFRS9, which required the development of models to calculate the amount of the adjustments on the basis of the expected credit loss. These models are based on two fundamental pillars: i) the allocation of credit exposures to stages 1, 2 and 3 provided for by the principle (Stage allocation); ii) the determination of the expected credit loss. Detailed information is provided in the financial statements in relation to the investments in the Voluntary Scheme. With reference to the measures in favour of Banca Carige S.p.A., UniCredit S.p.A.'s contribution amounted to about €62.5 million (of which about €53 million attributable to UniCredit S.p.A.) and was identified as a financial instrument, classified according to the Current Accounting Standard IFRS9 under item 20.c) ”Financial assets mandatorily at fair value through profit or loss”. As no market valuations or prices of comparable securities are available, at 31 December 2018 the fair value of the instrument was determined using internal models (discounted cash flow and market multiples), also having as reference the valuation of the financial assets of the Voluntary Scheme (supported by the advisor in charge) contained in the 2018 Statement of the Voluntary Scheme. The Notes provide detailed information on any liabilities and costs that may arise from pending judicial proceedings. The Board of Statutory Auditors has investigated with the Bank's Legal Function the methodology and the process adopted in analyzing the dispute and determining the related provisions. In particular, in the Notes to the Consolidated Accounts, information is provided on the evolution of the investigations still underway by the US Authorities on issues related to the economic Sanctions imposed by the United States, with reference to UCB AG, UCB Austria and UniCredit S.p.A.. Each of these companies is collaborating with the relevant US Authorities and remediation activities are underway, in particular regarding internal policies and procedures. The respective companies of the UniCredit Group keep the competent Authorities duly updated. As indicated in the Notes, it is also possible that investigations into historical compliance practices may be extended to other companies within the Group or that new investigations or proceedings may be commenced against the parent company UniCredit S.p.A. and/or the Group. Recent violations of US sanctions and certain US dollar payment practices by other European financial institutions have resulted in those institutions entering into settlements and paying material fines and penalties to various US authorities. It should be noted, therefore, that such inspections and/or proceedings against the Group companies could result in the enforcement against UniCredit S.p.A. and/or the Group of the payment of significant civil or criminal penalties. UniCredit S.p.A., UCB AG and UCB Austria are continuing their settlement negotiations with the various US authorities in order to define an agreement and resolve the various proceedings accordingly. Therefore it is not possible to determine with any certainty the terms and timing of any resolution with any relevant authorities, including what final costs, remediation, payments or other criminal or civil liability may occur in connection with a final resolution. The investigation costs, remediation required and/or payments or other legal liabilities to be incurred in connection with the proceedings could lead to liquidity outflows, potentially affect net results and have a material adverse effect on a reputational basis and business activities. The Group booked provisions which are deemed appropriate. The timing of any agreement with the various U.S. authorities is currently not determinable, however it is possible that settlement discussions with any or all of the Group entities could be completed by the end of the first semester of 2019. The Notes to the Consolidated Accounts also provide an update on the proceeding regarding the Squeeze-Out of former minority shareholders of UCB AG and UCB Austria (so-called Appraisal Proceeding). In reference to the Appraisal Proceeding of the minority shareholders of UCB AG, a forthcoming hearing will be scheduled at the Munich District Court for February 2020, to examine the supplementary expert report for the valuation of UCB AG at the time of the squeeze-out. The Bank continues to believe that it has operated in full compliance with the law and considers the price paid to minority shareholders to be adequate. At this stage, it is not possible to estimate the disputed amount or the duration of the proceeding, which could even last for a number of years and could result in the Parent Company UniCredit S.p.A. having to pay additional compensation to the minority shareholders. In reference to the Appraisal Proceeding of the minority shareholders of UCB Austria, the proceeding will continue before the Commercial Court in Vienna, which has ordered the parties to submit further documents and must decide both on the assessment of the above price and on the legal issues. UniCredit S.p.A., considering the nature of the valuation methods used, believes that the amount paid to the minority shareholders was adequate. Currently, it is not possible to evaluate the amount under dispute and the possible risk connected with the above-described Appraisal Proceeding. The Directors provide information about the litigation related to certain forms of banking operations connected to its operations with clients, which are not specific to the UniCredit group, rather affect the financial sector in general. The proceedings pertaining to compound interest mainly involve damages requests from clients arising from the alleged unlawfulness of the calculation methods of the amount of interest payable in connection with certain banking contracts. Starting from the first years of 2000, there has been a progressive increase in claims brought by the account holders due to the unwinding of the interest payable arisen from the quarterly compound interest. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 751 In the course of 2018, the number of claims for refunds/compensation for compound interest did not show particular variations compared to 2017. At present, the parent company UniCredit S.p.A. has made provisions that it deems appropriate for the risks associated with these claims. With regard to the litigation connected to derivative products, the Directors report that several financial institutions, including UniCredit group companies, entered into a number of derivative contracts, both with institutional and non-institutional investors. In Germany and in Italy there are a number of pending proceedings against certain Group companies that relate to derivative contracts concluded by both institutional and non-institutional investors. The filing of such litigations affects the financial sector generally and is not specific to the parent company UniCredit S.p.A. and its Group companies. At present, it is not possible to assess the full impact of these legal challenges on the Group. Considering the regulatory complexity and interpretations not always homogeneous, UniCredit S.p.A. time-to-time assesses the accounting of provisions for risk and charges, aimed at facing costs, deemed probable, in a contest that has increased the litigiousness at baking system level.The Compliance Function, together with the Legal Function, supports the phases of analysis and assessment of the adequacy of possible customer care actions or other initiatives that can create particular situations in which the Bank could be involved, in order to better define them. The trend in market interest rates resulted in the main benchmark reference for indexed loans, the Euribor, being negative. This has originated the issue of how to measure the overall interest rate for the clients, creating a fact pattern not existing so far. In light of such complexity, the underlying contracts with clients were subject to a deep monitoring. In this regard, and in compliance with the regulations in force, UniCredit S.p.A. takes the necessary initiatives deciding to apply the most favorable approach for the clients for the past years too, applying a final interest rate calculated as algebraic sum of the parameter (Euribor) and the spread. In response to possible disbursements to customers, this has resulted in the allocation of a risk and charge fund determined on the basis of the best possible estimates. In regard to the diamond issue, under an agreement concluded in 1998 with a specialised brokerage firm, the Bank played a "Introducer" role. As indicated in the financial statements, from the end of 2016 the liquidity available on the market to meet the requests of customers to divest their diamond assets contracted to a certain extent until it became nil, with the suspension of the service by the brokerage company. Already during 2017 UniCredit S.p.A. launched a “customer care” initiative which, which envisaged the availability of the Bank to intervene for the acknowledgement towards the customer of the original cost incurred for the purchase of precious items and the consequent withdrawal of the stones, upon certain conditions. The initiative has been adopted assessing the absence of responsibility for its role as "Introducer"; nevertheless, the AGCM (Autorita’ Garante della Concorrenza e del Mercato) ascertained UniCredit’s responsibility for unfair commercial practice (confirmed in appeal by the Administrative Regional Court in the second half of 2018), imposing, in 2017, a fine of €4 million paid in the same year. On 8 March 2018, a specific communication was issued from Banca d’Italia concerning the "Related activities exercisable by banks", in which large attention was given to the reporting at the bank branches of operations, purchase and sale of diamonds by specialised third-party companies. As of 31 December 2018, UniCredit S.p.A.: • received reimbursement requests for a total amount of about €215 million (cost originally incurred by the Clients) from n 5,680 Customers; according to a preliminary analysis, such requests fulfill the requirements envisaged by the "customer care” initiative; the finalization of the reimbursement requests is currently carried out, aimed at assessing their effective compliance with the “customer care” initiative, and then proceed with the settlement where conditions recur; • with reference to the scope outlined in the previous point (€ 215 million), reimbursed n 1,623 customers for about € 74 million (equivalent value of original purchases. In order to cope with the probable risks of loss related to the repurchases of diamonds, a dedicated Risk and Charges Fund was set up; its quantification was also based on the the outcome of an independent study (commissioned to a primary third company) aiming at evaluating the diamonds’ value. The Notes to the Consolidated Accounts also provide information on the risk fund to cover tax risks for litigation and tax audits and risks arising from labor lawsuits. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 751 In the course of 2018, the number of claims for refunds/compensation for compound interest did not show particular variations compared to 2017. At present, the parent company UniCredit S.p.A. has made provisions that it deems appropriate for the risks associated with these claims. With regard to the litigation connected to derivative products, the Directors report that several financial institutions, including UniCredit group companies, entered into a number of derivative contracts, both with institutional and non-institutional investors. In Germany and in Italy there are a number of pending proceedings against certain Group companies that relate to derivative contracts concluded by both institutional and non-institutional investors. The filing of such litigations affects the financial sector generally and is not specific to the parent company UniCredit S.p.A. and its Group companies. At present, it is not possible to assess the full impact of these legal challenges on the Group. Considering the regulatory complexity and interpretations not always homogeneous, UniCredit S.p.A. time-to-time assesses the accounting of provisions for risk and charges, aimed at facing costs, deemed probable, in a contest that has increased the litigiousness at baking system level.The Compliance Function, together with the Legal Function, supports the phases of analysis and assessment of the adequacy of possible customer care actions or other initiatives that can create particular situations in which the Bank could be involved, in order to better define them. The trend in market interest rates resulted in the main benchmark reference for indexed loans, the Euribor, being negative. This has originated the issue of how to measure the overall interest rate for the clients, creating a fact pattern not existing so far. In light of such complexity, the underlying contracts with clients were subject to a deep monitoring. In this regard, and in compliance with the regulations in force, UniCredit S.p.A. takes the necessary initiatives deciding to apply the most favorable approach for the clients for the past years too, applying a final interest rate calculated as algebraic sum of the parameter (Euribor) and the spread. In response to possible disbursements to customers, this has resulted in the allocation of a risk and charge fund determined on the basis of the best possible estimates. In regard to the diamond issue, under an agreement concluded in 1998 with a specialised brokerage firm, the Bank played a "Introducer" role. As indicated in the financial statements, from the end of 2016 the liquidity available on the market to meet the requests of customers to divest their diamond assets contracted to a certain extent until it became nil, with the suspension of the service by the brokerage company. Already during 2017 UniCredit S.p.A. launched a “customer care” initiative which, which envisaged the availability of the Bank to intervene for the acknowledgement towards the customer of the original cost incurred for the purchase of precious items and the consequent withdrawal of the stones, upon certain conditions. The initiative has been adopted assessing the absence of responsibility for its role as "Introducer"; nevertheless, the AGCM (Autorita’ Garante della Concorrenza e del Mercato) ascertained UniCredit’s responsibility for unfair commercial practice (confirmed in appeal by the Administrative Regional Court in the second half of 2018), imposing, in 2017, a fine of €4 million paid in the same year. On 8 March 2018, a specific communication was issued from Banca d’Italia concerning the "Related activities exercisable by banks", in which large attention was given to the reporting at the bank branches of operations, purchase and sale of diamonds by specialised third-party companies. As of 31 December 2018, UniCredit S.p.A.: • received reimbursement requests for a total amount of about €215 million (cost originally incurred by the Clients) from n 5,680 Customers; according to a preliminary analysis, such requests fulfill the requirements envisaged by the "customer care” initiative; the finalization of the reimbursement requests is currently carried out, aimed at assessing their effective compliance with the “customer care” initiative, and then proceed with the settlement where conditions recur; • with reference to the scope outlined in the previous point (€ 215 million), reimbursed n 1,623 customers for about € 74 million (equivalent value of original purchases. In order to cope with the probable risks of loss related to the repurchases of diamonds, a dedicated Risk and Charges Fund was set up; its quantification was also based on the the outcome of an independent study (commissioned to a primary third company) aiming at evaluating the diamonds’ value. The Notes to the Consolidated Accounts also provide information on the risk fund to cover tax risks for litigation and tax audits and risks arising from labor lawsuits. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 751 In the course of 2018, the number of claims for refunds/compensation for compound interest did not show particular variations compared to 2017. At present, the parent company UniCredit S.p.A. has made provisions that it deems appropriate for the risks associated with these claims. With regard to the litigation connected to derivative products, the Directors report that several financial institutions, including UniCredit group companies, entered into a number of derivative contracts, both with institutional and non-institutional investors. In Germany and in Italy there are a number of pending proceedings against certain Group companies that relate to derivative contracts concluded by both institutional and non-institutional investors. The filing of such litigations affects the financial sector generally and is not specific to the parent company UniCredit S.p.A. and its Group companies. At present, it is not possible to assess the full impact of these legal challenges on the Group. Considering the regulatory complexity and interpretations not always homogeneous, UniCredit S.p.A. time-to-time assesses the accounting of provisions for risk and charges, aimed at facing costs, deemed probable, in a contest that has increased the litigiousness at baking system level.The Compliance Function, together with the Legal Function, supports the phases of analysis and assessment of the adequacy of possible customer care actions or other initiatives that can create particular situations in which the Bank could be involved, in order to better define them. The trend in market interest rates resulted in the main benchmark reference for indexed loans, the Euribor, being negative. This has originated the issue of how to measure the overall interest rate for the clients, creating a fact pattern not existing so far. In light of such complexity, the underlying contracts with clients were subject to a deep monitoring. In this regard, and in compliance with the regulations in force, UniCredit S.p.A. takes the necessary initiatives deciding to apply the most favorable approach for the clients for the past years too, applying a final interest rate calculated as algebraic sum of the parameter (Euribor) and the spread. In response to possible disbursements to customers, this has resulted in the allocation of a risk and charge fund determined on the basis of the best possible estimates. In regard to the diamond issue, under an agreement concluded in 1998 with a specialised brokerage firm, the Bank played a "Introducer" role. As indicated in the financial statements, from the end of 2016 the liquidity available on the market to meet the requests of customers to divest their diamond assets contracted to a certain extent until it became nil, with the suspension of the service by the brokerage company. Already during 2017 UniCredit S.p.A. launched a “customer care” initiative which, which envisaged the availability of the Bank to intervene for the acknowledgement towards the customer of the original cost incurred for the purchase of precious items and the consequent withdrawal of the stones, upon certain conditions. The initiative has been adopted assessing the absence of responsibility for its role as "Introducer"; nevertheless, the AGCM (Autorita’ Garante della Concorrenza e del Mercato) ascertained UniCredit’s responsibility for unfair commercial practice (confirmed in appeal by the Administrative Regional Court in the second half of 2018), imposing, in 2017, a fine of €4 million paid in the same year. On 8 March 2018, a specific communication was issued from Banca d’Italia concerning the "Related activities exercisable by banks", in which large attention was given to the reporting at the bank branches of operations, purchase and sale of diamonds by specialised third-party companies. As of 31 December 2018, UniCredit S.p.A.: • received reimbursement requests for a total amount of about €215 million (cost originally incurred by the Clients) from n 5,680 Customers; according to a preliminary analysis, such requests fulfill the requirements envisaged by the "customer care” initiative; the finalization of the reimbursement requests is currently carried out, aimed at assessing their effective compliance with the “customer care” initiative, and then proceed with the settlement where conditions recur; • with reference to the scope outlined in the previous point (€ 215 million), reimbursed n 1,623 customers for about € 74 million (equivalent value of original purchases. In order to cope with the probable risks of loss related to the repurchases of diamonds, a dedicated Risk and Charges Fund was set up; its quantification was also based on the the outcome of an independent study (commissioned to a primary third company) aiming at evaluating the diamonds’ value. The Notes to the Consolidated Accounts also provide information on the risk fund to cover tax risks for litigation and tax audits and risks arising from labor lawsuits. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 751 In the course of 2018, the number of claims for refunds/compensation for compound interest did not show particular variations compared to 2017. At present, the parent company UniCredit S.p.A. has made provisions that it deems appropriate for the risks associated with these claims. With regard to the litigation connected to derivative products, the Directors report that several financial institutions, including UniCredit group companies, entered into a number of derivative contracts, both with institutional and non-institutional investors. In Germany and in Italy there are a number of pending proceedings against certain Group companies that relate to derivative contracts concluded by both institutional and non-institutional investors. The filing of such litigations affects the financial sector generally and is not specific to the parent company UniCredit S.p.A. and its Group companies. At present, it is not possible to assess the full impact of these legal challenges on the Group. Considering the regulatory complexity and interpretations not always homogeneous, UniCredit S.p.A. time-to-time assesses the accounting of provisions for risk and charges, aimed at facing costs, deemed probable, in a contest that has increased the litigiousness at baking system level.The Compliance Function, together with the Legal Function, supports the phases of analysis and assessment of the adequacy of possible customer care actions or other initiatives that can create particular situations in which the Bank could be involved, in order to better define them. The trend in market interest rates resulted in the main benchmark reference for indexed loans, the Euribor, being negative. This has originated the issue of how to measure the overall interest rate for the clients, creating a fact pattern not existing so far. In light of such complexity, the underlying contracts with clients were subject to a deep monitoring. In this regard, and in compliance with the regulations in force, UniCredit S.p.A. takes the necessary initiatives deciding to apply the most favorable approach for the clients for the past years too, applying a final interest rate calculated as algebraic sum of the parameter (Euribor) and the spread. In response to possible disbursements to customers, this has resulted in the allocation of a risk and charge fund determined on the basis of the best possible estimates. In regard to the diamond issue, under an agreement concluded in 1998 with a specialised brokerage firm, the Bank played a "Introducer" role. As indicated in the financial statements, from the end of 2016 the liquidity available on the market to meet the requests of customers to divest their diamond assets contracted to a certain extent until it became nil, with the suspension of the service by the brokerage company. Already during 2017 UniCredit S.p.A. launched a “customer care” initiative which, which envisaged the availability of the Bank to intervene for the acknowledgement towards the customer of the original cost incurred for the purchase of precious items and the consequent withdrawal of the stones, upon certain conditions. The initiative has been adopted assessing the absence of responsibility for its role as "Introducer"; nevertheless, the AGCM (Autorita’ Garante della Concorrenza e del Mercato) ascertained UniCredit’s responsibility for unfair commercial practice (confirmed in appeal by the Administrative Regional Court in the second half of 2018), imposing, in 2017, a fine of €4 million paid in the same year. On 8 March 2018, a specific communication was issued from Banca d’Italia concerning the "Related activities exercisable by banks", in which large attention was given to the reporting at the bank branches of operations, purchase and sale of diamonds by specialised third-party companies. As of 31 December 2018, UniCredit S.p.A.: • received reimbursement requests for a total amount of about €215 million (cost originally incurred by the Clients) from n 5,680 Customers; according to a preliminary analysis, such requests fulfill the requirements envisaged by the "customer care” initiative; the finalization of the reimbursement requests is currently carried out, aimed at assessing their effective compliance with the “customer care” initiative, and then proceed with the settlement where conditions recur; • with reference to the scope outlined in the previous point (€ 215 million), reimbursed n 1,623 customers for about € 74 million (equivalent value of original purchases. In order to cope with the probable risks of loss related to the repurchases of diamonds, a dedicated Risk and Charges Fund was set up; its quantification was also based on the the outcome of an independent study (commissioned to a primary third company) aiming at evaluating the diamonds’ value. The Notes to the Consolidated Accounts also provide information on the risk fund to cover tax risks for litigation and tax audits and risks arising from labor lawsuits. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 751 In the course of 2018, the number of claims for refunds/compensation for compound interest did not show particular variations compared to 2017. At present, the parent company UniCredit S.p.A. has made provisions that it deems appropriate for the risks associated with these claims. With regard to the litigation connected to derivative products, the Directors report that several financial institutions, including UniCredit group companies, entered into a number of derivative contracts, both with institutional and non-institutional investors. In Germany and in Italy there are a number of pending proceedings against certain Group companies that relate to derivative contracts concluded by both institutional and non-institutional investors. The filing of such litigations affects the financial sector generally and is not specific to the parent company UniCredit S.p.A. and its Group companies. At present, it is not possible to assess the full impact of these legal challenges on the Group. Considering the regulatory complexity and interpretations not always homogeneous, UniCredit S.p.A. time-to-time assesses the accounting of provisions for risk and charges, aimed at facing costs, deemed probable, in a contest that has increased the litigiousness at baking system level.The Compliance Function, together with the Legal Function, supports the phases of analysis and assessment of the adequacy of possible customer care actions or other initiatives that can create particular situations in which the Bank could be involved, in order to better define them. The trend in market interest rates resulted in the main benchmark reference for indexed loans, the Euribor, being negative. This has originated the issue of how to measure the overall interest rate for the clients, creating a fact pattern not existing so far. In light of such complexity, the underlying contracts with clients were subject to a deep monitoring. In this regard, and in compliance with the regulations in force, UniCredit S.p.A. takes the necessary initiatives deciding to apply the most favorable approach for the clients for the past years too, applying a final interest rate calculated as algebraic sum of the parameter (Euribor) and the spread. In response to possible disbursements to customers, this has resulted in the allocation of a risk and charge fund determined on the basis of the best possible estimates. In regard to the diamond issue, under an agreement concluded in 1998 with a specialised brokerage firm, the Bank played a "Introducer" role. As indicated in the financial statements, from the end of 2016 the liquidity available on the market to meet the requests of customers to divest their diamond assets contracted to a certain extent until it became nil, with the suspension of the service by the brokerage company. Already during 2017 UniCredit S.p.A. launched a “customer care” initiative which, which envisaged the availability of the Bank to intervene for the acknowledgement towards the customer of the original cost incurred for the purchase of precious items and the consequent withdrawal of the stones, upon certain conditions. The initiative has been adopted assessing the absence of responsibility for its role as "Introducer"; nevertheless, the AGCM (Autorita’ Garante della Concorrenza e del Mercato) ascertained UniCredit’s responsibility for unfair commercial practice (confirmed in appeal by the Administrative Regional Court in the second half of 2018), imposing, in 2017, a fine of €4 million paid in the same year. On 8 March 2018, a specific communication was issued from Banca d’Italia concerning the "Related activities exercisable by banks", in which large attention was given to the reporting at the bank branches of operations, purchase and sale of diamonds by specialised third-party companies. As of 31 December 2018, UniCredit S.p.A.: • received reimbursement requests for a total amount of about €215 million (cost originally incurred by the Clients) from n 5,680 Customers; according to a preliminary analysis, such requests fulfill the requirements envisaged by the "customer care” initiative; the finalization of the reimbursement requests is currently carried out, aimed at assessing their effective compliance with the “customer care” initiative, and then proceed with the settlement where conditions recur; • with reference to the scope outlined in the previous point (€ 215 million), reimbursed n 1,623 customers for about € 74 million (equivalent value of original purchases. In order to cope with the probable risks of loss related to the repurchases of diamonds, a dedicated Risk and Charges Fund was set up; its quantification was also based on the the outcome of an independent study (commissioned to a primary third company) aiming at evaluating the diamonds’ value. The Notes to the Consolidated Accounts also provide information on the risk fund to cover tax risks for litigation and tax audits and risks arising from labor lawsuits. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 752 2018 Annual Report and Accounts · UniCredit 9. Oversight of the adequacy of the internal control and risk management system The internal control system in the UniCredit Group is based on: • Control bodies and functions which involve, each for their respective remits, the Board of Directors, the Internal Controls & Risks Committee (IC&RC), the Chief Executive Officer as Director in charge of the internal control and risk management system, the Board of Statutory Auditors, as well as the company Functions with specific duties in this regard; • information flows and methods of coordination between the parties involved in the internal control and risk management system; • Group Governance mechanisms. As indicated in the Report on Corporate Governance and Ownership Structures, the types of control in UniCredit - in compliance with current legislation and inspired by international best practices - are structured on three levels: • line controls (known as first-level controls), handled by the corporate Functions responsible for the business/operating activities, as well as a dedicated structure (Internal Controls Italy), which supports the Co-Heads Italy as system manager of first-level operational controls, including those set forth by "special laws", with reference to the relevant structures/activities; • controls on risks and compliance (known as second-level controls), handled by the Group Compliance and Group Risk Management Functions, each for the matters within their respective remit; • internal audit (known as third-level controls), handled by the Internal Audit Function. Pursuant to Circular no. 285/2013 of the Bank of Italy, the Anti-Money Laundering Function and the Internal Validation Function are also included in the corporate control Functions, respectively positioned within Group Compliance and Group Risk Management. During the period in question, the Board of Statutory Auditors acknowledges having carried out a periodic exchange of relevant information with the aforementioned Control Functions. It also acknowledges that the aforementioned Control Functions have fulfilled the related disclosure obligations towards theBoSA. Moreover, in order to guarantee a continuous and timely flow of information with Internal Audit, the Head of the Function has a standing invitation to the Board of Statutory Auditors meetings. On the basis of the information acquired and included in the 2018 Report(Integrated Audit Report) of the Internal Audit Function, the internal control system was assessed overall as "mostly satisfactory", confirming the same assessment for the previous period. The audits highlighted the positive trend of reduction of major delayed findings and a stronger discipline in resolution of remedial actions. With regard to the credit risk, which is more broadly dealt with in the appropriate section below, the assessment of Internal Audit remains "partially satisfactory" in view of the fact that the completion of the main initiatives undertaken (NPE Program, doBank project, IRB Model Roadmap), even though on schedule, is expected by 2020. The Board of Statutory Auditors has examined and formulated its own recommendations on the Internal Audit assessment of risks which have seen a rise in the alert level, such as: (i) ICT security, with particular reference to outsourcer/third party governance profiles and access rights; (ii) operational risk in terms of data quality/aggregation; (iii) supervision of smaller/subsidiary Group entities, with specific regard to critical issues arising from a foreign branch (including, weak risk culture, fragmentation of the IT system, lack of management of access rights and segregation of functions) and for which a specific remedial plan has been prepared by the Management. With reference to the report "Outsourcing of business activities" prepared by the Internal Audit Function in accordance with the requirements of the Bank of Italy (Circular 285/2013), in addition to the Supervisory provisions, said report also includes the results of the audits in relation to non-relevant external outsourcers and ICT third parties (not considered outsourcers), from which no specific critical issues have emerged in relation to the Group outsourcing framework. The overall monitoring process of Retained Organization (RTO) Functions on the quality of service provided was effective. However, Internal Audit has detected some areas worthy of strengthening in terms of ICT and Security by some outsourcers. In particular, the aforementioned "doBank" project (see also paragraph 8) intends to address also the critical issues highlighted by Internal Audit. The results of the audits expressed in the "Annual Internal Audit Report pursuant to Art. 14 Bank of Italy/Consob joint register of 29 October 2007" on the provision of investment services show an overall assessment of "mostly satisfactory" for the internal control system also for 2018. The audit analyses focused in particular on the implementation of the MiFID II project. The activities of collection, archiving and centralization of the customer's compulsory documentation together with the actions to ensure their dematerialization are still underway, with interventions whose completion is expected by 2019. Credit, counterparty, market, operational risk With regard to the credit risk (IRB Systems), the assessments of the Internal Validation (GRM) and Internal Audit Function, respectively "overall compliant" and "regulatory requirements overall met at the Group level", agree that the IRB systems are compliant with regulatory requirements. With regard to counterparty, market (IMOD) and operational (AMA) risks, the assessments of the Validation and Internal Audit Function, respectively "adequate" and "mostly satisfactory", considered the relevant systems to be overall compliant with the regulatory provisions. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 752 2018 Annual Report and Accounts · UniCredit 9. Oversight of the adequacy of the internal control and risk management system The internal control system in the UniCredit Group is based on: • Control bodies and functions which involve, each for their respective remits, the Board of Directors, the Internal Controls & Risks Committee (IC&RC), the Chief Executive Officer as Director in charge of the internal control and risk management system, the Board of Statutory Auditors, as well as the company Functions with specific duties in this regard; • information flows and methods of coordination between the parties involved in the internal control and risk management system; • Group Governance mechanisms. As indicated in the Report on Corporate Governance and Ownership Structures, the types of control in UniCredit - in compliance with current legislation and inspired by international best practices - are structured on three levels: • line controls (known as first-level controls), handled by the corporate Functions responsible for the business/operating activities, as well as a dedicated structure (Internal Controls Italy), which supports the Co-Heads Italy as system manager of first-level operational controls, including those set forth by "special laws", with reference to the relevant structures/activities; • controls on risks and compliance (known as second-level controls), handled by the Group Compliance and Group Risk Management Functions, each for the matters within their respective remit; • internal audit (known as third-level controls), handled by the Internal Audit Function. Pursuant to Circular no. 285/2013 of the Bank of Italy, the Anti-Money Laundering Function and the Internal Validation Function are also included in the corporate control Functions, respectively positioned within Group Compliance and Group Risk Management. During the period in question, the Board of Statutory Auditors acknowledges having carried out a periodic exchange of relevant information with the aforementioned Control Functions. It also acknowledges that the aforementioned Control Functions have fulfilled the related disclosure obligations towards theBoSA. Moreover, in order to guarantee a continuous and timely flow of information with Internal Audit, the Head of the Function has a standing invitation to the Board of Statutory Auditors meetings. On the basis of the information acquired and included in the 2018 Report(Integrated Audit Report) of the Internal Audit Function, the internal control system was assessed overall as "mostly satisfactory", confirming the same assessment for the previous period. The audits highlighted the positive trend of reduction of major delayed findings and a stronger discipline in resolution of remedial actions. With regard to the credit risk, which is more broadly dealt with in the appropriate section below, the assessment of Internal Audit remains "partially satisfactory" in view of the fact that the completion of the main initiatives undertaken (NPE Program, doBank project, IRB Model Roadmap), even though on schedule, is expected by 2020. The Board of Statutory Auditors has examined and formulated its own recommendations on the Internal Audit assessment of risks which have seen a rise in the alert level, such as: (i) ICT security, with particular reference to outsourcer/third party governance profiles and access rights; (ii) operational risk in terms of data quality/aggregation; (iii) supervision of smaller/subsidiary Group entities, with specific regard to critical issues arising from a foreign branch (including, weak risk culture, fragmentation of the IT system, lack of management of access rights and segregation of functions) and for which a specific remedial plan has been prepared by the Management. With reference to the report "Outsourcing of business activities" prepared by the Internal Audit Function in accordance with the requirements of the Bank of Italy (Circular 285/2013), in addition to the Supervisory provisions, said report also includes the results of the audits in relation to non-relevant external outsourcers and ICT third parties (not considered outsourcers), from which no specific critical issues have emerged in relation to the Group outsourcing framework. The overall monitoring process of Retained Organization (RTO) Functions on the quality of service provided was effective. However, Internal Audit has detected some areas worthy of strengthening in terms of ICT and Security by some outsourcers. In particular, the aforementioned "doBank" project (see also paragraph 8) intends to address also the critical issues highlighted by Internal Audit. The results of the audits expressed in the "Annual Internal Audit Report pursuant to Art. 14 Bank of Italy/Consob joint register of 29 October 2007" on the provision of investment services show an overall assessment of "mostly satisfactory" for the internal control system also for 2018. The audit analyses focused in particular on the implementation of the MiFID II project. The activities of collection, archiving and centralization of the customer's compulsory documentation together with the actions to ensure their dematerialization are still underway, with interventions whose completion is expected by 2019. Credit, counterparty, market, operational risk With regard to the credit risk (IRB Systems), the assessments of the Internal Validation (GRM) and Internal Audit Function, respectively "overall compliant" and "regulatory requirements overall met at the Group level", agree that the IRB systems are compliant with regulatory requirements. With regard to counterparty, market (IMOD) and operational (AMA) risks, the assessments of the Validation and Internal Audit Function, respectively "adequate" and "mostly satisfactory", considered the relevant systems to be overall compliant with the regulatory provisions. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 752 2018 Annual Report and Accounts · UniCredit 9. Oversight of the adequacy of the internal control and risk management system The internal control system in the UniCredit Group is based on: • Control bodies and functions which involve, each for their respective remits, the Board of Directors, the Internal Controls & Risks Committee (IC&RC), the Chief Executive Officer as Director in charge of the internal control and risk management system, the Board of Statutory Auditors, as well as the company Functions with specific duties in this regard; • information flows and methods of coordination between the parties involved in the internal control and risk management system; • Group Governance mechanisms. As indicated in the Report on Corporate Governance and Ownership Structures, the types of control in UniCredit - in compliance with current legislation and inspired by international best practices - are structured on three levels: • line controls (known as first-level controls), handled by the corporate Functions responsible for the business/operating activities, as well as a dedicated structure (Internal Controls Italy), which supports the Co-Heads Italy as system manager of first-level operational controls, including those set forth by "special laws", with reference to the relevant structures/activities; • controls on risks and compliance (known as second-level controls), handled by the Group Compliance and Group Risk Management Functions, each for the matters within their respective remit; • internal audit (known as third-level controls), handled by the Internal Audit Function. Pursuant to Circular no. 285/2013 of the Bank of Italy, the Anti-Money Laundering Function and the Internal Validation Function are also included in the corporate control Functions, respectively positioned within Group Compliance and Group Risk Management. During the period in question, the Board of Statutory Auditors acknowledges having carried out a periodic exchange of relevant information with the aforementioned Control Functions. It also acknowledges that the aforementioned Control Functions have fulfilled the related disclosure obligations towards theBoSA. Moreover, in order to guarantee a continuous and timely flow of information with Internal Audit, the Head of the Function has a standing invitation to the Board of Statutory Auditors meetings. On the basis of the information acquired and included in the 2018 Report(Integrated Audit Report) of the Internal Audit Function, the internal control system was assessed overall as "mostly satisfactory", confirming the same assessment for the previous period. The audits highlighted the positive trend of reduction of major delayed findings and a stronger discipline in resolution of remedial actions. With regard to the credit risk, which is more broadly dealt with in the appropriate section below, the assessment of Internal Audit remains "partially satisfactory" in view of the fact that the completion of the main initiatives undertaken (NPE Program, doBank project, IRB Model Roadmap), even though on schedule, is expected by 2020. The Board of Statutory Auditors has examined and formulated its own recommendations on the Internal Audit assessment of risks which have seen a rise in the alert level, such as: (i) ICT security, with particular reference to outsourcer/third party governance profiles and access rights; (ii) operational risk in terms of data quality/aggregation; (iii) supervision of smaller/subsidiary Group entities, with specific regard to critical issues arising from a foreign branch (including, weak risk culture, fragmentation of the IT system, lack of management of access rights and segregation of functions) and for which a specific remedial plan has been prepared by the Management. With reference to the report "Outsourcing of business activities" prepared by the Internal Audit Function in accordance with the requirements of the Bank of Italy (Circular 285/2013), in addition to the Supervisory provisions, said report also includes the results of the audits in relation to non-relevant external outsourcers and ICT third parties (not considered outsourcers), from which no specific critical issues have emerged in relation to the Group outsourcing framework. The overall monitoring process of Retained Organization (RTO) Functions on the quality of service provided was effective. However, Internal Audit has detected some areas worthy of strengthening in terms of ICT and Security by some outsourcers. In particular, the aforementioned "doBank" project (see also paragraph 8) intends to address also the critical issues highlighted by Internal Audit. The results of the audits expressed in the "Annual Internal Audit Report pursuant to Art. 14 Bank of Italy/Consob joint register of 29 October 2007" on the provision of investment services show an overall assessment of "mostly satisfactory" for the internal control system also for 2018. The audit analyses focused in particular on the implementation of the MiFID II project. The activities of collection, archiving and centralization of the customer's compulsory documentation together with the actions to ensure their dematerialization are still underway, with interventions whose completion is expected by 2019. Credit, counterparty, market, operational risk With regard to the credit risk (IRB Systems), the assessments of the Internal Validation (GRM) and Internal Audit Function, respectively "overall compliant" and "regulatory requirements overall met at the Group level", agree that the IRB systems are compliant with regulatory requirements. With regard to counterparty, market (IMOD) and operational (AMA) risks, the assessments of the Validation and Internal Audit Function, respectively "adequate" and "mostly satisfactory", considered the relevant systems to be overall compliant with the regulatory provisions. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 752 2018 Annual Report and Accounts · UniCredit 9. Oversight of the adequacy of the internal control and risk management system The internal control system in the UniCredit Group is based on: • Control bodies and functions which involve, each for their respective remits, the Board of Directors, the Internal Controls & Risks Committee (IC&RC), the Chief Executive Officer as Director in charge of the internal control and risk management system, the Board of Statutory Auditors, as well as the company Functions with specific duties in this regard; • information flows and methods of coordination between the parties involved in the internal control and risk management system; • Group Governance mechanisms. As indicated in the Report on Corporate Governance and Ownership Structures, the types of control in UniCredit - in compliance with current legislation and inspired by international best practices - are structured on three levels: • line controls (known as first-level controls), handled by the corporate Functions responsible for the business/operating activities, as well as a dedicated structure (Internal Controls Italy), which supports the Co-Heads Italy as system manager of first-level operational controls, including those set forth by "special laws", with reference to the relevant structures/activities; • controls on risks and compliance (known as second-level controls), handled by the Group Compliance and Group Risk Management Functions, each for the matters within their respective remit; • internal audit (known as third-level controls), handled by the Internal Audit Function. Pursuant to Circular no. 285/2013 of the Bank of Italy, the Anti-Money Laundering Function and the Internal Validation Function are also included in the corporate control Functions, respectively positioned within Group Compliance and Group Risk Management. During the period in question, the Board of Statutory Auditors acknowledges having carried out a periodic exchange of relevant information with the aforementioned Control Functions. It also acknowledges that the aforementioned Control Functions have fulfilled the related disclosure obligations towards theBoSA. Moreover, in order to guarantee a continuous and timely flow of information with Internal Audit, the Head of the Function has a standing invitation to the Board of Statutory Auditors meetings. On the basis of the information acquired and included in the 2018 Report(Integrated Audit Report) of the Internal Audit Function, the internal control system was assessed overall as "mostly satisfactory", confirming the same assessment for the previous period. The audits highlighted the positive trend of reduction of major delayed findings and a stronger discipline in resolution of remedial actions. With regard to the credit risk, which is more broadly dealt with in the appropriate section below, the assessment of Internal Audit remains "partially satisfactory" in view of the fact that the completion of the main initiatives undertaken (NPE Program, doBank project, IRB Model Roadmap), even though on schedule, is expected by 2020. The Board of Statutory Auditors has examined and formulated its own recommendations on the Internal Audit assessment of risks which have seen a rise in the alert level, such as: (i) ICT security, with particular reference to outsourcer/third party governance profiles and access rights; (ii) operational risk in terms of data quality/aggregation; (iii) supervision of smaller/subsidiary Group entities, with specific regard to critical issues arising from a foreign branch (including, weak risk culture, fragmentation of the IT system, lack of management of access rights and segregation of functions) and for which a specific remedial plan has been prepared by the Management. With reference to the report "Outsourcing of business activities" prepared by the Internal Audit Function in accordance with the requirements of the Bank of Italy (Circular 285/2013), in addition to the Supervisory provisions, said report also includes the results of the audits in relation to non-relevant external outsourcers and ICT third parties (not considered outsourcers), from which no specific critical issues have emerged in relation to the Group outsourcing framework. The overall monitoring process of Retained Organization (RTO) Functions on the quality of service provided was effective. However, Internal Audit has detected some areas worthy of strengthening in terms of ICT and Security by some outsourcers. In particular, the aforementioned "doBank" project (see also paragraph 8) intends to address also the critical issues highlighted by Internal Audit. The results of the audits expressed in the "Annual Internal Audit Report pursuant to Art. 14 Bank of Italy/Consob joint register of 29 October 2007" on the provision of investment services show an overall assessment of "mostly satisfactory" for the internal control system also for 2018. The audit analyses focused in particular on the implementation of the MiFID II project. The activities of collection, archiving and centralization of the customer's compulsory documentation together with the actions to ensure their dematerialization are still underway, with interventions whose completion is expected by 2019. Credit, counterparty, market, operational risk With regard to the credit risk (IRB Systems), the assessments of the Internal Validation (GRM) and Internal Audit Function, respectively "overall compliant" and "regulatory requirements overall met at the Group level", agree that the IRB systems are compliant with regulatory requirements. With regard to counterparty, market (IMOD) and operational (AMA) risks, the assessments of the Validation and Internal Audit Function, respectively "adequate" and "mostly satisfactory", considered the relevant systems to be overall compliant with the regulatory provisions. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 752 2018 Annual Report and Accounts · UniCredit 9. Oversight of the adequacy of the internal control and risk management system The internal control system in the UniCredit Group is based on: • Control bodies and functions which involve, each for their respective remits, the Board of Directors, the Internal Controls & Risks Committee (IC&RC), the Chief Executive Officer as Director in charge of the internal control and risk management system, the Board of Statutory Auditors, as well as the company Functions with specific duties in this regard; • information flows and methods of coordination between the parties involved in the internal control and risk management system; • Group Governance mechanisms. As indicated in the Report on Corporate Governance and Ownership Structures, the types of control in UniCredit - in compliance with current legislation and inspired by international best practices - are structured on three levels: • line controls (known as first-level controls), handled by the corporate Functions responsible for the business/operating activities, as well as a dedicated structure (Internal Controls Italy), which supports the Co-Heads Italy as system manager of first-level operational controls, including those set forth by "special laws", with reference to the relevant structures/activities; • controls on risks and compliance (known as second-level controls), handled by the Group Compliance and Group Risk Management Functions, each for the matters within their respective remit; • internal audit (known as third-level controls), handled by the Internal Audit Function. Pursuant to Circular no. 285/2013 of the Bank of Italy, the Anti-Money Laundering Function and the Internal Validation Function are also included in the corporate control Functions, respectively positioned within Group Compliance and Group Risk Management. During the period in question, the Board of Statutory Auditors acknowledges having carried out a periodic exchange of relevant information with the aforementioned Control Functions. It also acknowledges that the aforementioned Control Functions have fulfilled the related disclosure obligations towards theBoSA. Moreover, in order to guarantee a continuous and timely flow of information with Internal Audit, the Head of the Function has a standing invitation to the Board of Statutory Auditors meetings. On the basis of the information acquired and included in the 2018 Report(Integrated Audit Report) of the Internal Audit Function, the internal control system was assessed overall as "mostly satisfactory", confirming the same assessment for the previous period. The audits highlighted the positive trend of reduction of major delayed findings and a stronger discipline in resolution of remedial actions. With regard to the credit risk, which is more broadly dealt with in the appropriate section below, the assessment of Internal Audit remains "partially satisfactory" in view of the fact that the completion of the main initiatives undertaken (NPE Program, doBank project, IRB Model Roadmap), even though on schedule, is expected by 2020. The Board of Statutory Auditors has examined and formulated its own recommendations on the Internal Audit assessment of risks which have seen a rise in the alert level, such as: (i) ICT security, with particular reference to outsourcer/third party governance profiles and access rights; (ii) operational risk in terms of data quality/aggregation; (iii) supervision of smaller/subsidiary Group entities, with specific regard to critical issues arising from a foreign branch (including, weak risk culture, fragmentation of the IT system, lack of management of access rights and segregation of functions) and for which a specific remedial plan has been prepared by the Management. With reference to the report "Outsourcing of business activities" prepared by the Internal Audit Function in accordance with the requirements of the Bank of Italy (Circular 285/2013), in addition to the Supervisory provisions, said report also includes the results of the audits in relation to non-relevant external outsourcers and ICT third parties (not considered outsourcers), from which no specific critical issues have emerged in relation to the Group outsourcing framework. The overall monitoring process of Retained Organization (RTO) Functions on the quality of service provided was effective. However, Internal Audit has detected some areas worthy of strengthening in terms of ICT and Security by some outsourcers. In particular, the aforementioned "doBank" project (see also paragraph 8) intends to address also the critical issues highlighted by Internal Audit. The results of the audits expressed in the "Annual Internal Audit Report pursuant to Art. 14 Bank of Italy/Consob joint register of 29 October 2007" on the provision of investment services show an overall assessment of "mostly satisfactory" for the internal control system also for 2018. The audit analyses focused in particular on the implementation of the MiFID II project. The activities of collection, archiving and centralization of the customer's compulsory documentation together with the actions to ensure their dematerialization are still underway, with interventions whose completion is expected by 2019. Credit, counterparty, market, operational risk With regard to the credit risk (IRB Systems), the assessments of the Internal Validation (GRM) and Internal Audit Function, respectively "overall compliant" and "regulatory requirements overall met at the Group level", agree that the IRB systems are compliant with regulatory requirements. With regard to counterparty, market (IMOD) and operational (AMA) risks, the assessments of the Validation and Internal Audit Function, respectively "adequate" and "mostly satisfactory", considered the relevant systems to be overall compliant with the regulatory provisions. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 753 During its oversight activity, by means of the due updates with the competent Functions, the Board of Statutory Auditors has been able to positively ascertain the progress of the actions planned by the "IRB Model Roadmap 2018-2020" approved by the Board of Directors in November 2017. Noticing the remarkable commitment and discipline spent in the execution of the aforementioned plan, the Board of Statutory Auditors also acknowledged the different fine-tuning requested by the ECB (European Central Bank), in terms of further models’simplification and harmonization, in order to ensure the best adherence to the Group's methodological standards, as well as their grouping with regard to the "model submission" to ECB in accordance with the new application process in force. As part of the reorganization of the GRM Function, the Board of Statutory Auditors has also observed the implementation of the new Internal Validation framework, consisting of three pillars: (i) organizational set-up, (ii) operating model, (iii) new validation methodological standards, contributing to a unique and rigorous validation process. In the framework of the overall improvements achieved, the Board of Statutory Auditors nonetheless considered it necessary to focus on the following aspects: (i) the persistence of execution risk in relation to the activities envisaged by the Model Roadmap and aimed at overcoming the remaining critical aspects due to the individual models and to the compliance with the regulatory framework (including the application of the new Definition of Default and entry into force of the EBA Guidelines); (ii) the strengthening of the inherent IT and Data Quality profiles, for which the Board of Statutory Auditors expects a consistent focus for the resolution of the issues concerning the data architecture/aggregation/reporting. Lastly, the Board has noted that it has acknowledge the strong committee of the Management in the methodical implementation of concrete actions aimed at making the targets set achievable. On 28 February 2019, the Board of Statutory Auditors issued its favorable opinion for the certification by the Board of Directors of the existence of the requirements for using the Group's credit, counterparty, market and operational risk management, measurement and control systems. As part of the various credit initiatives, the BoSA analyzed the "Update on the implementation of the strategic and operative plan to address the high level of NPEs and foreclosed assets" forwarded to the Supervisor. The BoSA noted the qualitative and quantitative progress recorded for the Group NPEs (non-performing exposures) and invited the Bank to continue with determination the planned implementations, in order to reinforce the effectiveness and efficiency of the processes of disposal and recovery, as well as to promote the rooting of a solid risk culture. During the financial year, the Board of Statutory Auditors also examined various audit reports focused on loans. It noted, particularly for the "strategic file restructuring" portfolio, the need to implement the new dedicated platform suitable to optimize the supervision of the restructuring process, already planned within the NPE project, which is expected to be implemented by 2019. It also noted the different weaknesses that emerged on the "collaterals and guarantees management" mainly in terms of data quality, of the resulting corrective actions defined by the Management for revisiting the end to end process related to the guarantees and associated simplification, as well as the critical issues arising in relation to the workout processes outsourced to doBank, for which the aforementioned "doBank project" is underway. Liquidity risk In the context of the initiatives and actions concerning the liquidity monitoring processes, the Board of Statutory Auditors welcomed the new "Global Policy - Roles and responsibilities in the context of liquidity management & control", approved by the Board of Directors in January 2019, which implements the innovations in terms of roles and responsibilities within the liquidity framework, with a strengthening of the procedures between the different involved parties (CFO, CRO, GRM), in particular to further strengthen the steering by the Parent Company and the overall framework of the first- and second-level controls, in line with the ECB guidelines and the requests formulated in the scope of the "LCR deep dive". Compliance risk The Board of Statutory Auditors took note of the Annual Report of the Compliance Function, which includes the assessments formulated by the Compliance Function with regard to potential compliance risks, at the Group level, with reference both to Italian companies, including UniCredit S.p.A., and to the main foreign companies. The abovementioned report also fulfilled the requirements of Art.89 of Consob regulation no. 20307/2018. Taking into account the results of the performed Compliance Risk assessment and second-level controls, the material completion of all the activities carried out as set forth in the Compliance Plan 2018, the ECB inspection and the audits carried out in 2018, as well as the support for the implementation of the Bank's "Transform 2019" Strategic Plan, the Compliance Function expressed a "mostly satisfactory" assessment regarding the management of non-compliance risk. The overall situation at the end of 2018 is in line with that of last year (the areas with Limited or Medium risk constituted 93% of the covered regulatory areas, a slight decrease compared to the 95% recorded in 2017). At the Group level, no regulatory area has Critical risk levels and only 7% shows Significant levels. The necessary mitigation actions are in the implementation phase, in line with the respective plans. In taking note of the results of the abovementioned ECB inspection aimed at assessing the internal governance of the Compliance Function, the Board of Statutory Auditors also found that the related remedial actions are, where compatible, already reflected in the Compliance Plan for 2019. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 753 During its oversight activity, by means of the due updates with the competent Functions, the Board of Statutory Auditors has been able to positively ascertain the progress of the actions planned by the "IRB Model Roadmap 2018-2020" approved by the Board of Directors in November 2017. Noticing the remarkable commitment and discipline spent in the execution of the aforementioned plan, the Board of Statutory Auditors also acknowledged the different fine-tuning requested by the ECB (European Central Bank), in terms of further models’simplification and harmonization, in order to ensure the best adherence to the Group's methodological standards, as well as their grouping with regard to the "model submission" to ECB in accordance with the new application process in force. As part of the reorganization of the GRM Function, the Board of Statutory Auditors has also observed the implementation of the new Internal Validation framework, consisting of three pillars: (i) organizational set-up, (ii) operating model, (iii) new validation methodological standards, contributing to a unique and rigorous validation process. In the framework of the overall improvements achieved, the Board of Statutory Auditors nonetheless considered it necessary to focus on the following aspects: (i) the persistence of execution risk in relation to the activities envisaged by the Model Roadmap and aimed at overcoming the remaining critical aspects due to the individual models and to the compliance with the regulatory framework (including the application of the new Definition of Default and entry into force of the EBA Guidelines); (ii) the strengthening of the inherent IT and Data Quality profiles, for which the Board of Statutory Auditors expects a consistent focus for the resolution of the issues concerning the data architecture/aggregation/reporting. Lastly, the Board has noted that it has acknowledge the strong committee of the Management in the methodical implementation of concrete actions aimed at making the targets set achievable. On 28 February 2019, the Board of Statutory Auditors issued its favorable opinion for the certification by the Board of Directors of the existence of the requirements for using the Group's credit, counterparty, market and operational risk management, measurement and control systems. As part of the various credit initiatives, the BoSA analyzed the "Update on the implementation of the strategic and operative plan to address the high level of NPEs and foreclosed assets" forwarded to the Supervisor. The BoSA noted the qualitative and quantitative progress recorded for the Group NPEs (non-performing exposures) and invited the Bank to continue with determination the planned implementations, in order to reinforce the effectiveness and efficiency of the processes of disposal and recovery, as well as to promote the rooting of a solid risk culture. During the financial year, the Board of Statutory Auditors also examined various audit reports focused on loans. It noted, particularly for the "strategic file restructuring" portfolio, the need to implement the new dedicated platform suitable to optimize the supervision of the restructuring process, already planned within the NPE project, which is expected to be implemented by 2019. It also noted the different weaknesses that emerged on the "collaterals and guarantees management" mainly in terms of data quality, of the resulting corrective actions defined by the Management for revisiting the end to end process related to the guarantees and associated simplification, as well as the critical issues arising in relation to the workout processes outsourced to doBank, for which the aforementioned "doBank project" is underway. Liquidity risk In the context of the initiatives and actions concerning the liquidity monitoring processes, the Board of Statutory Auditors welcomed the new "Global Policy - Roles and responsibilities in the context of liquidity management & control", approved by the Board of Directors in January 2019, which implements the innovations in terms of roles and responsibilities within the liquidity framework, with a strengthening of the procedures between the different involved parties (CFO, CRO, GRM), in particular to further strengthen the steering by the Parent Company and the overall framework of the first- and second-level controls, in line with the ECB guidelines and the requests formulated in the scope of the "LCR deep dive". Compliance risk The Board of Statutory Auditors took note of the Annual Report of the Compliance Function, which includes the assessments formulated by the Compliance Function with regard to potential compliance risks, at the Group level, with reference both to Italian companies, including UniCredit S.p.A., and to the main foreign companies. The abovementioned report also fulfilled the requirements of Art.89 of Consob regulation no. 20307/2018. Taking into account the results of the performed Compliance Risk assessment and second-level controls, the material completion of all the activities carried out as set forth in the Compliance Plan 2018, the ECB inspection and the audits carried out in 2018, as well as the support for the implementation of the Bank's "Transform 2019" Strategic Plan, the Compliance Function expressed a "mostly satisfactory" assessment regarding the management of non-compliance risk. The overall situation at the end of 2018 is in line with that of last year (the areas with Limited or Medium risk constituted 93% of the covered regulatory areas, a slight decrease compared to the 95% recorded in 2017). At the Group level, no regulatory area has Critical risk levels and only 7% shows Significant levels. The necessary mitigation actions are in the implementation phase, in line with the respective plans. In taking note of the results of the abovementioned ECB inspection aimed at assessing the internal governance of the Compliance Function, the Board of Statutory Auditors also found that the related remedial actions are, where compatible, already reflected in the Compliance Plan for 2019. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 753 During its oversight activity, by means of the due updates with the competent Functions, the Board of Statutory Auditors has been able to positively ascertain the progress of the actions planned by the "IRB Model Roadmap 2018-2020" approved by the Board of Directors in November 2017. Noticing the remarkable commitment and discipline spent in the execution of the aforementioned plan, the Board of Statutory Auditors also acknowledged the different fine-tuning requested by the ECB (European Central Bank), in terms of further models’simplification and harmonization, in order to ensure the best adherence to the Group's methodological standards, as well as their grouping with regard to the "model submission" to ECB in accordance with the new application process in force. As part of the reorganization of the GRM Function, the Board of Statutory Auditors has also observed the implementation of the new Internal Validation framework, consisting of three pillars: (i) organizational set-up, (ii) operating model, (iii) new validation methodological standards, contributing to a unique and rigorous validation process. In the framework of the overall improvements achieved, the Board of Statutory Auditors nonetheless considered it necessary to focus on the following aspects: (i) the persistence of execution risk in relation to the activities envisaged by the Model Roadmap and aimed at overcoming the remaining critical aspects due to the individual models and to the compliance with the regulatory framework (including the application of the new Definition of Default and entry into force of the EBA Guidelines); (ii) the strengthening of the inherent IT and Data Quality profiles, for which the Board of Statutory Auditors expects a consistent focus for the resolution of the issues concerning the data architecture/aggregation/reporting. Lastly, the Board has noted that it has acknowledge the strong committee of the Management in the methodical implementation of concrete actions aimed at making the targets set achievable. On 28 February 2019, the Board of Statutory Auditors issued its favorable opinion for the certification by the Board of Directors of the existence of the requirements for using the Group's credit, counterparty, market and operational risk management, measurement and control systems. As part of the various credit initiatives, the BoSA analyzed the "Update on the implementation of the strategic and operative plan to address the high level of NPEs and foreclosed assets" forwarded to the Supervisor. The BoSA noted the qualitative and quantitative progress recorded for the Group NPEs (non-performing exposures) and invited the Bank to continue with determination the planned implementations, in order to reinforce the effectiveness and efficiency of the processes of disposal and recovery, as well as to promote the rooting of a solid risk culture. During the financial year, the Board of Statutory Auditors also examined various audit reports focused on loans. It noted, particularly for the "strategic file restructuring" portfolio, the need to implement the new dedicated platform suitable to optimize the supervision of the restructuring process, already planned within the NPE project, which is expected to be implemented by 2019. It also noted the different weaknesses that emerged on the "collaterals and guarantees management" mainly in terms of data quality, of the resulting corrective actions defined by the Management for revisiting the end to end process related to the guarantees and associated simplification, as well as the critical issues arising in relation to the workout processes outsourced to doBank, for which the aforementioned "doBank project" is underway. Liquidity risk In the context of the initiatives and actions concerning the liquidity monitoring processes, the Board of Statutory Auditors welcomed the new "Global Policy - Roles and responsibilities in the context of liquidity management & control", approved by the Board of Directors in January 2019, which implements the innovations in terms of roles and responsibilities within the liquidity framework, with a strengthening of the procedures between the different involved parties (CFO, CRO, GRM), in particular to further strengthen the steering by the Parent Company and the overall framework of the first- and second-level controls, in line with the ECB guidelines and the requests formulated in the scope of the "LCR deep dive". Compliance risk The Board of Statutory Auditors took note of the Annual Report of the Compliance Function, which includes the assessments formulated by the Compliance Function with regard to potential compliance risks, at the Group level, with reference both to Italian companies, including UniCredit S.p.A., and to the main foreign companies. The abovementioned report also fulfilled the requirements of Art.89 of Consob regulation no. 20307/2018. Taking into account the results of the performed Compliance Risk assessment and second-level controls, the material completion of all the activities carried out as set forth in the Compliance Plan 2018, the ECB inspection and the audits carried out in 2018, as well as the support for the implementation of the Bank's "Transform 2019" Strategic Plan, the Compliance Function expressed a "mostly satisfactory" assessment regarding the management of non-compliance risk. The overall situation at the end of 2018 is in line with that of last year (the areas with Limited or Medium risk constituted 93% of the covered regulatory areas, a slight decrease compared to the 95% recorded in 2017). At the Group level, no regulatory area has Critical risk levels and only 7% shows Significant levels. The necessary mitigation actions are in the implementation phase, in line with the respective plans. In taking note of the results of the abovementioned ECB inspection aimed at assessing the internal governance of the Compliance Function, the Board of Statutory Auditors also found that the related remedial actions are, where compatible, already reflected in the Compliance Plan for 2019. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 753 During its oversight activity, by means of the due updates with the competent Functions, the Board of Statutory Auditors has been able to positively ascertain the progress of the actions planned by the "IRB Model Roadmap 2018-2020" approved by the Board of Directors in November 2017. Noticing the remarkable commitment and discipline spent in the execution of the aforementioned plan, the Board of Statutory Auditors also acknowledged the different fine-tuning requested by the ECB (European Central Bank), in terms of further models’simplification and harmonization, in order to ensure the best adherence to the Group's methodological standards, as well as their grouping with regard to the "model submission" to ECB in accordance with the new application process in force. As part of the reorganization of the GRM Function, the Board of Statutory Auditors has also observed the implementation of the new Internal Validation framework, consisting of three pillars: (i) organizational set-up, (ii) operating model, (iii) new validation methodological standards, contributing to a unique and rigorous validation process. In the framework of the overall improvements achieved, the Board of Statutory Auditors nonetheless considered it necessary to focus on the following aspects: (i) the persistence of execution risk in relation to the activities envisaged by the Model Roadmap and aimed at overcoming the remaining critical aspects due to the individual models and to the compliance with the regulatory framework (including the application of the new Definition of Default and entry into force of the EBA Guidelines); (ii) the strengthening of the inherent IT and Data Quality profiles, for which the Board of Statutory Auditors expects a consistent focus for the resolution of the issues concerning the data architecture/aggregation/reporting. Lastly, the Board has noted that it has acknowledge the strong committee of the Management in the methodical implementation of concrete actions aimed at making the targets set achievable. On 28 February 2019, the Board of Statutory Auditors issued its favorable opinion for the certification by the Board of Directors of the existence of the requirements for using the Group's credit, counterparty, market and operational risk management, measurement and control systems. As part of the various credit initiatives, the BoSA analyzed the "Update on the implementation of the strategic and operative plan to address the high level of NPEs and foreclosed assets" forwarded to the Supervisor. The BoSA noted the qualitative and quantitative progress recorded for the Group NPEs (non-performing exposures) and invited the Bank to continue with determination the planned implementations, in order to reinforce the effectiveness and efficiency of the processes of disposal and recovery, as well as to promote the rooting of a solid risk culture. During the financial year, the Board of Statutory Auditors also examined various audit reports focused on loans. It noted, particularly for the "strategic file restructuring" portfolio, the need to implement the new dedicated platform suitable to optimize the supervision of the restructuring process, already planned within the NPE project, which is expected to be implemented by 2019. It also noted the different weaknesses that emerged on the "collaterals and guarantees management" mainly in terms of data quality, of the resulting corrective actions defined by the Management for revisiting the end to end process related to the guarantees and associated simplification, as well as the critical issues arising in relation to the workout processes outsourced to doBank, for which the aforementioned "doBank project" is underway. Liquidity risk In the context of the initiatives and actions concerning the liquidity monitoring processes, the Board of Statutory Auditors welcomed the new "Global Policy - Roles and responsibilities in the context of liquidity management & control", approved by the Board of Directors in January 2019, which implements the innovations in terms of roles and responsibilities within the liquidity framework, with a strengthening of the procedures between the different involved parties (CFO, CRO, GRM), in particular to further strengthen the steering by the Parent Company and the overall framework of the first- and second-level controls, in line with the ECB guidelines and the requests formulated in the scope of the "LCR deep dive". Compliance risk The Board of Statutory Auditors took note of the Annual Report of the Compliance Function, which includes the assessments formulated by the Compliance Function with regard to potential compliance risks, at the Group level, with reference both to Italian companies, including UniCredit S.p.A., and to the main foreign companies. The abovementioned report also fulfilled the requirements of Art.89 of Consob regulation no. 20307/2018. Taking into account the results of the performed Compliance Risk assessment and second-level controls, the material completion of all the activities carried out as set forth in the Compliance Plan 2018, the ECB inspection and the audits carried out in 2018, as well as the support for the implementation of the Bank's "Transform 2019" Strategic Plan, the Compliance Function expressed a "mostly satisfactory" assessment regarding the management of non-compliance risk. The overall situation at the end of 2018 is in line with that of last year (the areas with Limited or Medium risk constituted 93% of the covered regulatory areas, a slight decrease compared to the 95% recorded in 2017). At the Group level, no regulatory area has Critical risk levels and only 7% shows Significant levels. The necessary mitigation actions are in the implementation phase, in line with the respective plans. In taking note of the results of the abovementioned ECB inspection aimed at assessing the internal governance of the Compliance Function, the Board of Statutory Auditors also found that the related remedial actions are, where compatible, already reflected in the Compliance Plan for 2019. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 753 During its oversight activity, by means of the due updates with the competent Functions, the Board of Statutory Auditors has been able to positively ascertain the progress of the actions planned by the "IRB Model Roadmap 2018-2020" approved by the Board of Directors in November 2017. Noticing the remarkable commitment and discipline spent in the execution of the aforementioned plan, the Board of Statutory Auditors also acknowledged the different fine-tuning requested by the ECB (European Central Bank), in terms of further models’simplification and harmonization, in order to ensure the best adherence to the Group's methodological standards, as well as their grouping with regard to the "model submission" to ECB in accordance with the new application process in force. As part of the reorganization of the GRM Function, the Board of Statutory Auditors has also observed the implementation of the new Internal Validation framework, consisting of three pillars: (i) organizational set-up, (ii) operating model, (iii) new validation methodological standards, contributing to a unique and rigorous validation process. In the framework of the overall improvements achieved, the Board of Statutory Auditors nonetheless considered it necessary to focus on the following aspects: (i) the persistence of execution risk in relation to the activities envisaged by the Model Roadmap and aimed at overcoming the remaining critical aspects due to the individual models and to the compliance with the regulatory framework (including the application of the new Definition of Default and entry into force of the EBA Guidelines); (ii) the strengthening of the inherent IT and Data Quality profiles, for which the Board of Statutory Auditors expects a consistent focus for the resolution of the issues concerning the data architecture/aggregation/reporting. Lastly, the Board has noted that it has acknowledge the strong committee of the Management in the methodical implementation of concrete actions aimed at making the targets set achievable. On 28 February 2019, the Board of Statutory Auditors issued its favorable opinion for the certification by the Board of Directors of the existence of the requirements for using the Group's credit, counterparty, market and operational risk management, measurement and control systems. As part of the various credit initiatives, the BoSA analyzed the "Update on the implementation of the strategic and operative plan to address the high level of NPEs and foreclosed assets" forwarded to the Supervisor. The BoSA noted the qualitative and quantitative progress recorded for the Group NPEs (non-performing exposures) and invited the Bank to continue with determination the planned implementations, in order to reinforce the effectiveness and efficiency of the processes of disposal and recovery, as well as to promote the rooting of a solid risk culture. During the financial year, the Board of Statutory Auditors also examined various audit reports focused on loans. It noted, particularly for the "strategic file restructuring" portfolio, the need to implement the new dedicated platform suitable to optimize the supervision of the restructuring process, already planned within the NPE project, which is expected to be implemented by 2019. It also noted the different weaknesses that emerged on the "collaterals and guarantees management" mainly in terms of data quality, of the resulting corrective actions defined by the Management for revisiting the end to end process related to the guarantees and associated simplification, as well as the critical issues arising in relation to the workout processes outsourced to doBank, for which the aforementioned "doBank project" is underway. Liquidity risk In the context of the initiatives and actions concerning the liquidity monitoring processes, the Board of Statutory Auditors welcomed the new "Global Policy - Roles and responsibilities in the context of liquidity management & control", approved by the Board of Directors in January 2019, which implements the innovations in terms of roles and responsibilities within the liquidity framework, with a strengthening of the procedures between the different involved parties (CFO, CRO, GRM), in particular to further strengthen the steering by the Parent Company and the overall framework of the first- and second-level controls, in line with the ECB guidelines and the requests formulated in the scope of the "LCR deep dive". Compliance risk The Board of Statutory Auditors took note of the Annual Report of the Compliance Function, which includes the assessments formulated by the Compliance Function with regard to potential compliance risks, at the Group level, with reference both to Italian companies, including UniCredit S.p.A., and to the main foreign companies. The abovementioned report also fulfilled the requirements of Art.89 of Consob regulation no. 20307/2018. Taking into account the results of the performed Compliance Risk assessment and second-level controls, the material completion of all the activities carried out as set forth in the Compliance Plan 2018, the ECB inspection and the audits carried out in 2018, as well as the support for the implementation of the Bank's "Transform 2019" Strategic Plan, the Compliance Function expressed a "mostly satisfactory" assessment regarding the management of non-compliance risk. The overall situation at the end of 2018 is in line with that of last year (the areas with Limited or Medium risk constituted 93% of the covered regulatory areas, a slight decrease compared to the 95% recorded in 2017). At the Group level, no regulatory area has Critical risk levels and only 7% shows Significant levels. The necessary mitigation actions are in the implementation phase, in line with the respective plans. In taking note of the results of the abovementioned ECB inspection aimed at assessing the internal governance of the Compliance Function, the Board of Statutory Auditors also found that the related remedial actions are, where compatible, already reflected in the Compliance Plan for 2019. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 754 2018 Annual Report and Accounts · UniCredit The Board of Statutory Auditors has also favorably noted the actions and initiatives put in place during 2018 by the Bank in order to further strengthen and promote the compliance culture in the Group. These are targeted for each of the 5 Pillars of the Compliance Culture Framework (support of the Top Management and Tone from the Top, Governance and processes, learning and development , communication and people engagement, and performance appraisal), also in expectation of the relevance of the increasing dissemination of ethics in business. The training activities were also strengthened and further developed, constantly monitoring their level of fruition at the Group level. In particular, the Board of Statutory Auditors has noted favourably that the introduction of the obligation to complete all mandatory compliance courses by a certain deadline in order to be able to access the incentive system has further strengthened the risk culture and is a sign of the Top Management's focus on the subject. The Board of Statutory Auditors hopes to maintain the strong focus expressed by the Top Management on the "Culture" factor, considered a strategic element for the Group's overall sustainability. The Board of Statutory Auditors was informed on the implementation of the Group Rules by the Group companies: at the end of 2018 there is no delay in their implementation. The Board of Statutory Auditors took note of the actions carried out in 2018 aimed at increasing compliance at the Group level through the design and implementation of new second-level controls and the refinement of existing ones, with particular reference to the controls of the Financial benchmarks, consumer credit and mortgage, PSD II, PRIIPS, IDD - Insurance DistributionDirective, and Data Protection areas. Regarding the new methodology of compliance risk assessment adopted during 2018 updated with the establishment of a single mode of execution applicable to all relevant regulatory areas in order to: • align with the markets standards; • improve the harmonization between the Group companies; • increase the level of granularity of the analysis, the adoption of the associated tool by all the Group Companies relevant for the purposes of the compliance risk assessment is envisaged in 2019. The Board of Statutory Auditors took note of the "Complaints Report". Compared to 2017, it shows an increase of about 16% in the complaints received and an increase of 180% in the amount of refunds to customers; the increase is mainly attributable to the "diamonds" component, net of which a reduction would be recorded in both the number of received complaints and refunds paid. The Board of Statutory Auditors took note of the "Report of the Anti-Money Laundering Function of UniCredit S.p.A. - Italian Perimeter - 2018" presented to the Board of Directors of UniCredit at the meeting held on 5 March 2019. The activities carried out for the self-assessment of the risks of money laundering and terrorist financing have confirmed, just like in 2017, the attribution of the "Significant" level of residual risk This invariance was determined by: (i) the findings (some of which expire during 2019) contained in the reports issued by the Internal Audit Function; (ii) the results of the second-level controls that have highlighted points of attention mainly related to the backlog in revisions/renewals of the customer due diligence (on which the Function has intervened, completing the activities by the end of 2018, with specific focus on the 2016-2017 backlog). The Board of Statutory Auditors has been informed about the analysis of Suspicious Activity Report ("SARs"). On this subject, the downward trend of the SARs flow received by the competent UniCredit Functions already underway in the previous period 2017, was confirmed. Specifically, the number of SARS received in 2018 was 6,388 (-16.5% compared with the 7,652 of 2017) and the main motivations behind this trend can be identified: • in the confirmed significant reduction of the phenomenon of "Voluntary Disclosure"; • in the confirmed increased sensitivity of the reporting structures, acquired through the constant education measures aimed at the Sales network. Finally, the Board of Statutory Auditors took note of the Anti-Money Laundering Training Plan 2019 - UniCredit S.p.A., which contains training measures for employees and external associates, through a training program aimed at recognizing activities that are potentially related to money laundering or terrorist financing. The Board of Statutory Auditors therefore recommends a particular focus on the revision/renewal profiles of the customer due diligence , with the constant commitment to paying attention to Anti-Money Laundering issues, in order to make the Bank's operations more and more compliant with the provisions of the Bank of Italy given the changing nature of the threats posed by money laundering and terrorist financing. The Board of Statutory Auditors noted the information contained in the Report on the internal violation reporting system (so-called Whisteblowing) for 2018 - prepared pursuant to the Bank of Italy's Oversight Provisions (Circular 285/2013 Part One, Title IV, Chapter 3, Section VIII "Internal violation reporting systems", which summarizes the information concerning the 37 (86 in 2017) reports received by UniCredit S.p.A. during 2018. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 754 2018 Annual Report and Accounts · UniCredit The Board of Statutory Auditors has also favorably noted the actions and initiatives put in place during 2018 by the Bank in order to further strengthen and promote the compliance culture in the Group. These are targeted for each of the 5 Pillars of the Compliance Culture Framework (support of the Top Management and Tone from the Top, Governance and processes, learning and development , communication and people engagement, and performance appraisal), also in expectation of the relevance of the increasing dissemination of ethics in business. The training activities were also strengthened and further developed, constantly monitoring their level of fruition at the Group level. In particular, the Board of Statutory Auditors has noted favourably that the introduction of the obligation to complete all mandatory compliance courses by a certain deadline in order to be able to access the incentive system has further strengthened the risk culture and is a sign of the Top Management's focus on the subject. The Board of Statutory Auditors hopes to maintain the strong focus expressed by the Top Management on the "Culture" factor, considered a strategic element for the Group's overall sustainability. The Board of Statutory Auditors was informed on the implementation of the Group Rules by the Group companies: at the end of 2018 there is no delay in their implementation. The Board of Statutory Auditors took note of the actions carried out in 2018 aimed at increasing compliance at the Group level through the design and implementation of new second-level controls and the refinement of existing ones, with particular reference to the controls of the Financial benchmarks, consumer credit and mortgage, PSD II, PRIIPS, IDD - Insurance DistributionDirective, and Data Protection areas. Regarding the new methodology of compliance risk assessment adopted during 2018 updated with the establishment of a single mode of execution applicable to all relevant regulatory areas in order to: • align with the markets standards; • improve the harmonization between the Group companies; • increase the level of granularity of the analysis, the adoption of the associated tool by all the Group Companies relevant for the purposes of the compliance risk assessment is envisaged in 2019. The Board of Statutory Auditors took note of the "Complaints Report". Compared to 2017, it shows an increase of about 16% in the complaints received and an increase of 180% in the amount of refunds to customers; the increase is mainly attributable to the "diamonds" component, net of which a reduction would be recorded in both the number of received complaints and refunds paid. The Board of Statutory Auditors took note of the "Report of the Anti-Money Laundering Function of UniCredit S.p.A. - Italian Perimeter - 2018" presented to the Board of Directors of UniCredit at the meeting held on 5 March 2019. The activities carried out for the self-assessment of the risks of money laundering and terrorist financing have confirmed, just like in 2017, the attribution of the "Significant" level of residual risk This invariance was determined by: (i) the findings (some of which expire during 2019) contained in the reports issued by the Internal Audit Function; (ii) the results of the second-level controls that have highlighted points of attention mainly related to the backlog in revisions/renewals of the customer due diligence (on which the Function has intervened, completing the activities by the end of 2018, with specific focus on the 2016-2017 backlog). The Board of Statutory Auditors has been informed about the analysis of Suspicious Activity Report ("SARs"). On this subject, the downward trend of the SARs flow received by the competent UniCredit Functions already underway in the previous period 2017, was confirmed. Specifically, the number of SARS received in 2018 was 6,388 (-16.5% compared with the 7,652 of 2017) and the main motivations behind this trend can be identified: • in the confirmed significant reduction of the phenomenon of "Voluntary Disclosure"; • in the confirmed increased sensitivity of the reporting structures, acquired through the constant education measures aimed at the Sales network. Finally, the Board of Statutory Auditors took note of the Anti-Money Laundering Training Plan 2019 - UniCredit S.p.A., which contains training measures for employees and external associates, through a training program aimed at recognizing activities that are potentially related to money laundering or terrorist financing. The Board of Statutory Auditors therefore recommends a particular focus on the revision/renewal profiles of the customer due diligence , with the constant commitment to paying attention to Anti-Money Laundering issues, in order to make the Bank's operations more and more compliant with the provisions of the Bank of Italy given the changing nature of the threats posed by money laundering and terrorist financing. The Board of Statutory Auditors noted the information contained in the Report on the internal violation reporting system (so-called Whisteblowing) for 2018 - prepared pursuant to the Bank of Italy's Oversight Provisions (Circular 285/2013 Part One, Title IV, Chapter 3, Section VIII "Internal violation reporting systems", which summarizes the information concerning the 37 (86 in 2017) reports received by UniCredit S.p.A. during 2018. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 754 2018 Annual Report and Accounts · UniCredit The Board of Statutory Auditors has also favorably noted the actions and initiatives put in place during 2018 by the Bank in order to further strengthen and promote the compliance culture in the Group. These are targeted for each of the 5 Pillars of the Compliance Culture Framework (support of the Top Management and Tone from the Top, Governance and processes, learning and development , communication and people engagement, and performance appraisal), also in expectation of the relevance of the increasing dissemination of ethics in business. The training activities were also strengthened and further developed, constantly monitoring their level of fruition at the Group level. In particular, the Board of Statutory Auditors has noted favourably that the introduction of the obligation to complete all mandatory compliance courses by a certain deadline in order to be able to access the incentive system has further strengthened the risk culture and is a sign of the Top Management's focus on the subject. The Board of Statutory Auditors hopes to maintain the strong focus expressed by the Top Management on the "Culture" factor, considered a strategic element for the Group's overall sustainability. The Board of Statutory Auditors was informed on the implementation of the Group Rules by the Group companies: at the end of 2018 there is no delay in their implementation. The Board of Statutory Auditors took note of the actions carried out in 2018 aimed at increasing compliance at the Group level through the design and implementation of new second-level controls and the refinement of existing ones, with particular reference to the controls of the Financial benchmarks, consumer credit and mortgage, PSD II, PRIIPS, IDD - Insurance DistributionDirective, and Data Protection areas. Regarding the new methodology of compliance risk assessment adopted during 2018 updated with the establishment of a single mode of execution applicable to all relevant regulatory areas in order to: • align with the markets standards; • improve the harmonization between the Group companies; • increase the level of granularity of the analysis, the adoption of the associated tool by all the Group Companies relevant for the purposes of the compliance risk assessment is envisaged in 2019. The Board of Statutory Auditors took note of the "Complaints Report". Compared to 2017, it shows an increase of about 16% in the complaints received and an increase of 180% in the amount of refunds to customers; the increase is mainly attributable to the "diamonds" component, net of which a reduction would be recorded in both the number of received complaints and refunds paid. The Board of Statutory Auditors took note of the "Report of the Anti-Money Laundering Function of UniCredit S.p.A. - Italian Perimeter - 2018" presented to the Board of Directors of UniCredit at the meeting held on 5 March 2019. The activities carried out for the self-assessment of the risks of money laundering and terrorist financing have confirmed, just like in 2017, the attribution of the "Significant" level of residual risk This invariance was determined by: (i) the findings (some of which expire during 2019) contained in the reports issued by the Internal Audit Function; (ii) the results of the second-level controls that have highlighted points of attention mainly related to the backlog in revisions/renewals of the customer due diligence (on which the Function has intervened, completing the activities by the end of 2018, with specific focus on the 2016-2017 backlog). The Board of Statutory Auditors has been informed about the analysis of Suspicious Activity Report ("SARs"). On this subject, the downward trend of the SARs flow received by the competent UniCredit Functions already underway in the previous period 2017, was confirmed. Specifically, the number of SARS received in 2018 was 6,388 (-16.5% compared with the 7,652 of 2017) and the main motivations behind this trend can be identified: • in the confirmed significant reduction of the phenomenon of "Voluntary Disclosure"; • in the confirmed increased sensitivity of the reporting structures, acquired through the constant education measures aimed at the Sales network. Finally, the Board of Statutory Auditors took note of the Anti-Money Laundering Training Plan 2019 - UniCredit S.p.A., which contains training measures for employees and external associates, through a training program aimed at recognizing activities that are potentially related to money laundering or terrorist financing. The Board of Statutory Auditors therefore recommends a particular focus on the revision/renewal profiles of the customer due diligence , with the constant commitment to paying attention to Anti-Money Laundering issues, in order to make the Bank's operations more and more compliant with the provisions of the Bank of Italy given the changing nature of the threats posed by money laundering and terrorist financing. The Board of Statutory Auditors noted the information contained in the Report on the internal violation reporting system (so-called Whisteblowing) for 2018 - prepared pursuant to the Bank of Italy's Oversight Provisions (Circular 285/2013 Part One, Title IV, Chapter 3, Section VIII "Internal violation reporting systems", which summarizes the information concerning the 37 (86 in 2017) reports received by UniCredit S.p.A. during 2018. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 754 2018 Annual Report and Accounts · UniCredit The Board of Statutory Auditors has also favorably noted the actions and initiatives put in place during 2018 by the Bank in order to further strengthen and promote the compliance culture in the Group. These are targeted for each of the 5 Pillars of the Compliance Culture Framework (support of the Top Management and Tone from the Top, Governance and processes, learning and development , communication and people engagement, and performance appraisal), also in expectation of the relevance of the increasing dissemination of ethics in business. The training activities were also strengthened and further developed, constantly monitoring their level of fruition at the Group level. In particular, the Board of Statutory Auditors has noted favourably that the introduction of the obligation to complete all mandatory compliance courses by a certain deadline in order to be able to access the incentive system has further strengthened the risk culture and is a sign of the Top Management's focus on the subject. The Board of Statutory Auditors hopes to maintain the strong focus expressed by the Top Management on the "Culture" factor, considered a strategic element for the Group's overall sustainability. The Board of Statutory Auditors was informed on the implementation of the Group Rules by the Group companies: at the end of 2018 there is no delay in their implementation. The Board of Statutory Auditors took note of the actions carried out in 2018 aimed at increasing compliance at the Group level through the design and implementation of new second-level controls and the refinement of existing ones, with particular reference to the controls of the Financial benchmarks, consumer credit and mortgage, PSD II, PRIIPS, IDD - Insurance DistributionDirective, and Data Protection areas. Regarding the new methodology of compliance risk assessment adopted during 2018 updated with the establishment of a single mode of execution applicable to all relevant regulatory areas in order to: • align with the markets standards; • improve the harmonization between the Group companies; • increase the level of granularity of the analysis, the adoption of the associated tool by all the Group Companies relevant for the purposes of the compliance risk assessment is envisaged in 2019. The Board of Statutory Auditors took note of the "Complaints Report". Compared to 2017, it shows an increase of about 16% in the complaints received and an increase of 180% in the amount of refunds to customers; the increase is mainly attributable to the "diamonds" component, net of which a reduction would be recorded in both the number of received complaints and refunds paid. The Board of Statutory Auditors took note of the "Report of the Anti-Money Laundering Function of UniCredit S.p.A. - Italian Perimeter - 2018" presented to the Board of Directors of UniCredit at the meeting held on 5 March 2019. The activities carried out for the self-assessment of the risks of money laundering and terrorist financing have confirmed, just like in 2017, the attribution of the "Significant" level of residual risk This invariance was determined by: (i) the findings (some of which expire during 2019) contained in the reports issued by the Internal Audit Function; (ii) the results of the second-level controls that have highlighted points of attention mainly related to the backlog in revisions/renewals of the customer due diligence (on which the Function has intervened, completing the activities by the end of 2018, with specific focus on the 2016-2017 backlog). The Board of Statutory Auditors has been informed about the analysis of Suspicious Activity Report ("SARs"). On this subject, the downward trend of the SARs flow received by the competent UniCredit Functions already underway in the previous period 2017, was confirmed. Specifically, the number of SARS received in 2018 was 6,388 (-16.5% compared with the 7,652 of 2017) and the main motivations behind this trend can be identified: • in the confirmed significant reduction of the phenomenon of "Voluntary Disclosure"; • in the confirmed increased sensitivity of the reporting structures, acquired through the constant education measures aimed at the Sales network. Finally, the Board of Statutory Auditors took note of the Anti-Money Laundering Training Plan 2019 - UniCredit S.p.A., which contains training measures for employees and external associates, through a training program aimed at recognizing activities that are potentially related to money laundering or terrorist financing. The Board of Statutory Auditors therefore recommends a particular focus on the revision/renewal profiles of the customer due diligence , with the constant commitment to paying attention to Anti-Money Laundering issues, in order to make the Bank's operations more and more compliant with the provisions of the Bank of Italy given the changing nature of the threats posed by money laundering and terrorist financing. The Board of Statutory Auditors noted the information contained in the Report on the internal violation reporting system (so-called Whisteblowing) for 2018 - prepared pursuant to the Bank of Italy's Oversight Provisions (Circular 285/2013 Part One, Title IV, Chapter 3, Section VIII "Internal violation reporting systems", which summarizes the information concerning the 37 (86 in 2017) reports received by UniCredit S.p.A. during 2018. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 754 2018 Annual Report and Accounts · UniCredit The Board of Statutory Auditors has also favorably noted the actions and initiatives put in place during 2018 by the Bank in order to further strengthen and promote the compliance culture in the Group. These are targeted for each of the 5 Pillars of the Compliance Culture Framework (support of the Top Management and Tone from the Top, Governance and processes, learning and development , communication and people engagement, and performance appraisal), also in expectation of the relevance of the increasing dissemination of ethics in business. The training activities were also strengthened and further developed, constantly monitoring their level of fruition at the Group level. In particular, the Board of Statutory Auditors has noted favourably that the introduction of the obligation to complete all mandatory compliance courses by a certain deadline in order to be able to access the incentive system has further strengthened the risk culture and is a sign of the Top Management's focus on the subject. The Board of Statutory Auditors hopes to maintain the strong focus expressed by the Top Management on the "Culture" factor, considered a strategic element for the Group's overall sustainability. The Board of Statutory Auditors was informed on the implementation of the Group Rules by the Group companies: at the end of 2018 there is no delay in their implementation. The Board of Statutory Auditors took note of the actions carried out in 2018 aimed at increasing compliance at the Group level through the design and implementation of new second-level controls and the refinement of existing ones, with particular reference to the controls of the Financial benchmarks, consumer credit and mortgage, PSD II, PRIIPS, IDD - Insurance DistributionDirective, and Data Protection areas. Regarding the new methodology of compliance risk assessment adopted during 2018 updated with the establishment of a single mode of execution applicable to all relevant regulatory areas in order to: • align with the markets standards; • improve the harmonization between the Group companies; • increase the level of granularity of the analysis, the adoption of the associated tool by all the Group Companies relevant for the purposes of the compliance risk assessment is envisaged in 2019. The Board of Statutory Auditors took note of the "Complaints Report". Compared to 2017, it shows an increase of about 16% in the complaints received and an increase of 180% in the amount of refunds to customers; the increase is mainly attributable to the "diamonds" component, net of which a reduction would be recorded in both the number of received complaints and refunds paid. The Board of Statutory Auditors took note of the "Report of the Anti-Money Laundering Function of UniCredit S.p.A. - Italian Perimeter - 2018" presented to the Board of Directors of UniCredit at the meeting held on 5 March 2019. The activities carried out for the self-assessment of the risks of money laundering and terrorist financing have confirmed, just like in 2017, the attribution of the "Significant" level of residual risk This invariance was determined by: (i) the findings (some of which expire during 2019) contained in the reports issued by the Internal Audit Function; (ii) the results of the second-level controls that have highlighted points of attention mainly related to the backlog in revisions/renewals of the customer due diligence (on which the Function has intervened, completing the activities by the end of 2018, with specific focus on the 2016-2017 backlog). The Board of Statutory Auditors has been informed about the analysis of Suspicious Activity Report ("SARs"). On this subject, the downward trend of the SARs flow received by the competent UniCredit Functions already underway in the previous period 2017, was confirmed. Specifically, the number of SARS received in 2018 was 6,388 (-16.5% compared with the 7,652 of 2017) and the main motivations behind this trend can be identified: • in the confirmed significant reduction of the phenomenon of "Voluntary Disclosure"; • in the confirmed increased sensitivity of the reporting structures, acquired through the constant education measures aimed at the Sales network. Finally, the Board of Statutory Auditors took note of the Anti-Money Laundering Training Plan 2019 - UniCredit S.p.A., which contains training measures for employees and external associates, through a training program aimed at recognizing activities that are potentially related to money laundering or terrorist financing. The Board of Statutory Auditors therefore recommends a particular focus on the revision/renewal profiles of the customer due diligence , with the constant commitment to paying attention to Anti-Money Laundering issues, in order to make the Bank's operations more and more compliant with the provisions of the Bank of Italy given the changing nature of the threats posed by money laundering and terrorist financing. The Board of Statutory Auditors noted the information contained in the Report on the internal violation reporting system (so-called Whisteblowing) for 2018 - prepared pursuant to the Bank of Italy's Oversight Provisions (Circular 285/2013 Part One, Title IV, Chapter 3, Section VIII "Internal violation reporting systems", which summarizes the information concerning the 37 (86 in 2017) reports received by UniCredit S.p.A. during 2018. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 755 None of the reports of UniCredit S.p.A. closed in 2018, gave rise to disciplinary penalties. In 2018, 17 disciplinary penalties were adopted for a case closed at the end of 2017. During the first half of 2018, the Internal Audit assessed as "satisfactory" the Bank's whistleblowing process, and the implementation of the first set of strengthening actions suggested by Internal Audit was completed. To point out that at the European Union level, regulation 2016/679 "General Data Protection Regulation" (GDPR), which entered into force on 25 May 2018, increased the safeguards for the personal data protection of the whistleblower, the reported party and any third parties; the Board of Statutory Auditors took note of the Bank's attention to the subject, including its promotion initiatives on the use of Whistleblowing within the Group, and to this end in 2018 the Bank launched a new communication and training campaign that involved all the Companies, with interviews with the Top Managers published on the Group Intranet to highlight the importance of the process of reporting offences and protecting the Whistleblowers. Moreover, in order to further reinforce the whistleblowing process, over the course of 2018 a Whistleblowing Managerial Forum was set up in UniCredit S.p.A. and a new escalation process was developed for reporting serious cases. The Board of Statutory Auditors has also taken note of the information contained in the Report of the Data Protection Officer (DPO) of UniCredit S.p.A. drafted for the first time since the introduction of the regulations in May 2018. During the month of February 2019, the Board of Directors appointed the new Data Protection Officer (DPO) of UniCredit S.p.A. to replace the previous one, who had been provisionally appointed in February 2018 given his role as project leader. The Board of Statutory Auditors has examined the progress of the GDPR General Data Protection Regulation Project, together with the results of the "Global Audit on GDPR implementation" and the related management plan, in order to overcome the findings, taking into consideration the results of the GDPR risk assessment carried out on all the Group Companies in the perimeter at 3Q 2018 - in accordance with the new risk assessment methodology introduced in 2018 - which highlighted for UniCredit S.p.A. a "significant" overall assessment of both the intrinsic risk (assessment of the potential impact of risks irrespective of the existence and/or mitigation measures of adequacy) and of the relevant residual risk. On the issue of data breaches, the Board of Statutory Auditors took note of the most significant cases determined by "external" events, such as cyber attacks on applications used by the Bank or fraud committed by unknown persons. These have been notified to both the competent oversight authority (Data Protection Authority) in accordance with GDPR requirements, and to the parties involved, to protect the rights and freedoms of the customers involved, who have also been provided adequate information and assistance from the Bank's competent functions. Lastly, the Board of Statutory Auditors took note of the "MiFID" Report set forth in Art.13 of the Consob/Bank of Italy Joint Regulation of 28 October 2008, prepared by Group Risk Management. ICT Risk Also in 2018, the Board of Statutory Auditors has placed particular attention on the topic of ICT Risk, meeting with the competent structures at various times for the necessary in-depth examinations. The Board of Statutory Auditors has, among other things, examined: • the 2018 report drafted by Internal Audit on Business Continuity Management (which includes Business Continuity, Disaster Recovery and Crisis Management processes), which does not reveal any major critical issues; • the Business Continuity (BC) Plan, which includes the BC overall structure and BC Strategies, submitted for approval by the Board of Directors Meeting of 5 March 2019, verifying its completeness, adequacy, functionality and reliability; • the Adequacy and Cost of ICT (Information Communication Technology) report, which shows the essential adequacy of the maturity cycle of the ICT process with certain appropriate improvements regarding data architecture and infrastructural architecture management, as well as the maintenance of the related costs; • the Group and UC SpA ICT and Cyber Risk reports (presented by Group Risk Management), which account for the assessment carried out in order to: (i) evaluate the current risk transfer strategies for worst case scenarios, (ii) provide business owners with the framework of expected impacts and risk mitigation actions; • the ICT Security current and 2019 main priorities document, which reports global trends for ICT security, identifying cyber crime among the main risks due to the increasing number and sophistication of cyber attacks; also on the basis of a benchmark carried out by an external consultant, the Bank's "cybersecurity maturity" was assessed, highlighting the need for further investments. In reference to access rights, the Board of Statutory Auditors took note of the results of the follow-up by the Supervisor regarding ICT Risk issues in relation to UniCredit S.p.A. and other Group Companies. Even in the presence of improvements in the systems and the organizational framework, they also noted the need for further corrective actions, promptly addressed by the Management in the appropriate remedial plan. The Board of Statutory Auditors considered that access rights represent a cross-company topic in the Group, therefore the Management gives them the utmost attention. Finally, the Board of Statutory Auditors has received updates from the experts of the External Auditors regarding the audit of (i) the information systems of the Bank and the Group (ISAE 3402 E&Y), (ii) the Cyber Risk and its benchmark. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 755 None of the reports of UniCredit S.p.A. closed in 2018, gave rise to disciplinary penalties. In 2018, 17 disciplinary penalties were adopted for a case closed at the end of 2017. During the first half of 2018, the Internal Audit assessed as "satisfactory" the Bank's whistleblowing process, and the implementation of the first set of strengthening actions suggested by Internal Audit was completed. To point out that at the European Union level, regulation 2016/679 "General Data Protection Regulation" (GDPR), which entered into force on 25 May 2018, increased the safeguards for the personal data protection of the whistleblower, the reported party and any third parties; the Board of Statutory Auditors took note of the Bank's attention to the subject, including its promotion initiatives on the use of Whistleblowing within the Group, and to this end in 2018 the Bank launched a new communication and training campaign that involved all the Companies, with interviews with the Top Managers published on the Group Intranet to highlight the importance of the process of reporting offences and protecting the Whistleblowers. Moreover, in order to further reinforce the whistleblowing process, over the course of 2018 a Whistleblowing Managerial Forum was set up in UniCredit S.p.A. and a new escalation process was developed for reporting serious cases. The Board of Statutory Auditors has also taken note of the information contained in the Report of the Data Protection Officer (DPO) of UniCredit S.p.A. drafted for the first time since the introduction of the regulations in May 2018. During the month of February 2019, the Board of Directors appointed the new Data Protection Officer (DPO) of UniCredit S.p.A. to replace the previous one, who had been provisionally appointed in February 2018 given his role as project leader. The Board of Statutory Auditors has examined the progress of the GDPR General Data Protection Regulation Project, together with the results of the "Global Audit on GDPR implementation" and the related management plan, in order to overcome the findings, taking into consideration the results of the GDPR risk assessment carried out on all the Group Companies in the perimeter at 3Q 2018 - in accordance with the new risk assessment methodology introduced in 2018 - which highlighted for UniCredit S.p.A. a "significant" overall assessment of both the intrinsic risk (assessment of the potential impact of risks irrespective of the existence and/or mitigation measures of adequacy) and of the relevant residual risk. On the issue of data breaches, the Board of Statutory Auditors took note of the most significant cases determined by "external" events, such as cyber attacks on applications used by the Bank or fraud committed by unknown persons. These have been notified to both the competent oversight authority (Data Protection Authority) in accordance with GDPR requirements, and to the parties involved, to protect the rights and freedoms of the customers involved, who have also been provided adequate information and assistance from the Bank's competent functions. Lastly, the Board of Statutory Auditors took note of the "MiFID" Report set forth in Art.13 of the Consob/Bank of Italy Joint Regulation of 28 October 2008, prepared by Group Risk Management. ICT Risk Also in 2018, the Board of Statutory Auditors has placed particular attention on the topic of ICT Risk, meeting with the competent structures at various times for the necessary in-depth examinations. The Board of Statutory Auditors has, among other things, examined: • the 2018 report drafted by Internal Audit on Business Continuity Management (which includes Business Continuity, Disaster Recovery and Crisis Management processes), which does not reveal any major critical issues; • the Business Continuity (BC) Plan, which includes the BC overall structure and BC Strategies, submitted for approval by the Board of Directors Meeting of 5 March 2019, verifying its completeness, adequacy, functionality and reliability; • the Adequacy and Cost of ICT (Information Communication Technology) report, which shows the essential adequacy of the maturity cycle of the ICT process with certain appropriate improvements regarding data architecture and infrastructural architecture management, as well as the maintenance of the related costs; • the Group and UC SpA ICT and Cyber Risk reports (presented by Group Risk Management), which account for the assessment carried out in order to: (i) evaluate the current risk transfer strategies for worst case scenarios, (ii) provide business owners with the framework of expected impacts and risk mitigation actions; • the ICT Security current and 2019 main priorities document, which reports global trends for ICT security, identifying cyber crime among the main risks due to the increasing number and sophistication of cyber attacks; also on the basis of a benchmark carried out by an external consultant, the Bank's "cybersecurity maturity" was assessed, highlighting the need for further investments. In reference to access rights, the Board of Statutory Auditors took note of the results of the follow-up by the Supervisor regarding ICT Risk issues in relation to UniCredit S.p.A. and other Group Companies. Even in the presence of improvements in the systems and the organizational framework, they also noted the need for further corrective actions, promptly addressed by the Management in the appropriate remedial plan. The Board of Statutory Auditors considered that access rights represent a cross-company topic in the Group, therefore the Management gives them the utmost attention. Finally, the Board of Statutory Auditors has received updates from the experts of the External Auditors regarding the audit of (i) the information systems of the Bank and the Group (ISAE 3402 E&Y), (ii) the Cyber Risk and its benchmark. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 755 None of the reports of UniCredit S.p.A. closed in 2018, gave rise to disciplinary penalties. In 2018, 17 disciplinary penalties were adopted for a case closed at the end of 2017. During the first half of 2018, the Internal Audit assessed as "satisfactory" the Bank's whistleblowing process, and the implementation of the first set of strengthening actions suggested by Internal Audit was completed. To point out that at the European Union level, regulation 2016/679 "General Data Protection Regulation" (GDPR), which entered into force on 25 May 2018, increased the safeguards for the personal data protection of the whistleblower, the reported party and any third parties; the Board of Statutory Auditors took note of the Bank's attention to the subject, including its promotion initiatives on the use of Whistleblowing within the Group, and to this end in 2018 the Bank launched a new communication and training campaign that involved all the Companies, with interviews with the Top Managers published on the Group Intranet to highlight the importance of the process of reporting offences and protecting the Whistleblowers. Moreover, in order to further reinforce the whistleblowing process, over the course of 2018 a Whistleblowing Managerial Forum was set up in UniCredit S.p.A. and a new escalation process was developed for reporting serious cases. The Board of Statutory Auditors has also taken note of the information contained in the Report of the Data Protection Officer (DPO) of UniCredit S.p.A. drafted for the first time since the introduction of the regulations in May 2018. During the month of February 2019, the Board of Directors appointed the new Data Protection Officer (DPO) of UniCredit S.p.A. to replace the previous one, who had been provisionally appointed in February 2018 given his role as project leader. The Board of Statutory Auditors has examined the progress of the GDPR General Data Protection Regulation Project, together with the results of the "Global Audit on GDPR implementation" and the related management plan, in order to overcome the findings, taking into consideration the results of the GDPR risk assessment carried out on all the Group Companies in the perimeter at 3Q 2018 - in accordance with the new risk assessment methodology introduced in 2018 - which highlighted for UniCredit S.p.A. a "significant" overall assessment of both the intrinsic risk (assessment of the potential impact of risks irrespective of the existence and/or mitigation measures of adequacy) and of the relevant residual risk. On the issue of data breaches, the Board of Statutory Auditors took note of the most significant cases determined by "external" events, such as cyber attacks on applications used by the Bank or fraud committed by unknown persons. These have been notified to both the competent oversight authority (Data Protection Authority) in accordance with GDPR requirements, and to the parties involved, to protect the rights and freedoms of the customers involved, who have also been provided adequate information and assistance from the Bank's competent functions. Lastly, the Board of Statutory Auditors took note of the "MiFID" Report set forth in Art.13 of the Consob/Bank of Italy Joint Regulation of 28 October 2008, prepared by Group Risk Management. ICT Risk Also in 2018, the Board of Statutory Auditors has placed particular attention on the topic of ICT Risk, meeting with the competent structures at various times for the necessary in-depth examinations. The Board of Statutory Auditors has, among other things, examined: • the 2018 report drafted by Internal Audit on Business Continuity Management (which includes Business Continuity, Disaster Recovery and Crisis Management processes), which does not reveal any major critical issues; • the Business Continuity (BC) Plan, which includes the BC overall structure and BC Strategies, submitted for approval by the Board of Directors Meeting of 5 March 2019, verifying its completeness, adequacy, functionality and reliability; • the Adequacy and Cost of ICT (Information Communication Technology) report, which shows the essential adequacy of the maturity cycle of the ICT process with certain appropriate improvements regarding data architecture and infrastructural architecture management, as well as the maintenance of the related costs; • the Group and UC SpA ICT and Cyber Risk reports (presented by Group Risk Management), which account for the assessment carried out in order to: (i) evaluate the current risk transfer strategies for worst case scenarios, (ii) provide business owners with the framework of expected impacts and risk mitigation actions; • the ICT Security current and 2019 main priorities document, which reports global trends for ICT security, identifying cyber crime among the main risks due to the increasing number and sophistication of cyber attacks; also on the basis of a benchmark carried out by an external consultant, the Bank's "cybersecurity maturity" was assessed, highlighting the need for further investments. In reference to access rights, the Board of Statutory Auditors took note of the results of the follow-up by the Supervisor regarding ICT Risk issues in relation to UniCredit S.p.A. and other Group Companies. Even in the presence of improvements in the systems and the organizational framework, they also noted the need for further corrective actions, promptly addressed by the Management in the appropriate remedial plan. The Board of Statutory Auditors considered that access rights represent a cross-company topic in the Group, therefore the Management gives them the utmost attention. Finally, the Board of Statutory Auditors has received updates from the experts of the External Auditors regarding the audit of (i) the information systems of the Bank and the Group (ISAE 3402 E&Y), (ii) the Cyber Risk and its benchmark. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 755 None of the reports of UniCredit S.p.A. closed in 2018, gave rise to disciplinary penalties. In 2018, 17 disciplinary penalties were adopted for a case closed at the end of 2017. During the first half of 2018, the Internal Audit assessed as "satisfactory" the Bank's whistleblowing process, and the implementation of the first set of strengthening actions suggested by Internal Audit was completed. To point out that at the European Union level, regulation 2016/679 "General Data Protection Regulation" (GDPR), which entered into force on 25 May 2018, increased the safeguards for the personal data protection of the whistleblower, the reported party and any third parties; the Board of Statutory Auditors took note of the Bank's attention to the subject, including its promotion initiatives on the use of Whistleblowing within the Group, and to this end in 2018 the Bank launched a new communication and training campaign that involved all the Companies, with interviews with the Top Managers published on the Group Intranet to highlight the importance of the process of reporting offences and protecting the Whistleblowers. Moreover, in order to further reinforce the whistleblowing process, over the course of 2018 a Whistleblowing Managerial Forum was set up in UniCredit S.p.A. and a new escalation process was developed for reporting serious cases. The Board of Statutory Auditors has also taken note of the information contained in the Report of the Data Protection Officer (DPO) of UniCredit S.p.A. drafted for the first time since the introduction of the regulations in May 2018. During the month of February 2019, the Board of Directors appointed the new Data Protection Officer (DPO) of UniCredit S.p.A. to replace the previous one, who had been provisionally appointed in February 2018 given his role as project leader. The Board of Statutory Auditors has examined the progress of the GDPR General Data Protection Regulation Project, together with the results of the "Global Audit on GDPR implementation" and the related management plan, in order to overcome the findings, taking into consideration the results of the GDPR risk assessment carried out on all the Group Companies in the perimeter at 3Q 2018 - in accordance with the new risk assessment methodology introduced in 2018 - which highlighted for UniCredit S.p.A. a "significant" overall assessment of both the intrinsic risk (assessment of the potential impact of risks irrespective of the existence and/or mitigation measures of adequacy) and of the relevant residual risk. On the issue of data breaches, the Board of Statutory Auditors took note of the most significant cases determined by "external" events, such as cyber attacks on applications used by the Bank or fraud committed by unknown persons. These have been notified to both the competent oversight authority (Data Protection Authority) in accordance with GDPR requirements, and to the parties involved, to protect the rights and freedoms of the customers involved, who have also been provided adequate information and assistance from the Bank's competent functions. Lastly, the Board of Statutory Auditors took note of the "MiFID" Report set forth in Art.13 of the Consob/Bank of Italy Joint Regulation of 28 October 2008, prepared by Group Risk Management. ICT Risk Also in 2018, the Board of Statutory Auditors has placed particular attention on the topic of ICT Risk, meeting with the competent structures at various times for the necessary in-depth examinations. The Board of Statutory Auditors has, among other things, examined: • the 2018 report drafted by Internal Audit on Business Continuity Management (which includes Business Continuity, Disaster Recovery and Crisis Management processes), which does not reveal any major critical issues; • the Business Continuity (BC) Plan, which includes the BC overall structure and BC Strategies, submitted for approval by the Board of Directors Meeting of 5 March 2019, verifying its completeness, adequacy, functionality and reliability; • the Adequacy and Cost of ICT (Information Communication Technology) report, which shows the essential adequacy of the maturity cycle of the ICT process with certain appropriate improvements regarding data architecture and infrastructural architecture management, as well as the maintenance of the related costs; • the Group and UC SpA ICT and Cyber Risk reports (presented by Group Risk Management), which account for the assessment carried out in order to: (i) evaluate the current risk transfer strategies for worst case scenarios, (ii) provide business owners with the framework of expected impacts and risk mitigation actions; • the ICT Security current and 2019 main priorities document, which reports global trends for ICT security, identifying cyber crime among the main risks due to the increasing number and sophistication of cyber attacks; also on the basis of a benchmark carried out by an external consultant, the Bank's "cybersecurity maturity" was assessed, highlighting the need for further investments. In reference to access rights, the Board of Statutory Auditors took note of the results of the follow-up by the Supervisor regarding ICT Risk issues in relation to UniCredit S.p.A. and other Group Companies. Even in the presence of improvements in the systems and the organizational framework, they also noted the need for further corrective actions, promptly addressed by the Management in the appropriate remedial plan. The Board of Statutory Auditors considered that access rights represent a cross-company topic in the Group, therefore the Management gives them the utmost attention. Finally, the Board of Statutory Auditors has received updates from the experts of the External Auditors regarding the audit of (i) the information systems of the Bank and the Group (ISAE 3402 E&Y), (ii) the Cyber Risk and its benchmark. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 755 None of the reports of UniCredit S.p.A. closed in 2018, gave rise to disciplinary penalties. In 2018, 17 disciplinary penalties were adopted for a case closed at the end of 2017. During the first half of 2018, the Internal Audit assessed as "satisfactory" the Bank's whistleblowing process, and the implementation of the first set of strengthening actions suggested by Internal Audit was completed. To point out that at the European Union level, regulation 2016/679 "General Data Protection Regulation" (GDPR), which entered into force on 25 May 2018, increased the safeguards for the personal data protection of the whistleblower, the reported party and any third parties; the Board of Statutory Auditors took note of the Bank's attention to the subject, including its promotion initiatives on the use of Whistleblowing within the Group, and to this end in 2018 the Bank launched a new communication and training campaign that involved all the Companies, with interviews with the Top Managers published on the Group Intranet to highlight the importance of the process of reporting offences and protecting the Whistleblowers. Moreover, in order to further reinforce the whistleblowing process, over the course of 2018 a Whistleblowing Managerial Forum was set up in UniCredit S.p.A. and a new escalation process was developed for reporting serious cases. The Board of Statutory Auditors has also taken note of the information contained in the Report of the Data Protection Officer (DPO) of UniCredit S.p.A. drafted for the first time since the introduction of the regulations in May 2018. During the month of February 2019, the Board of Directors appointed the new Data Protection Officer (DPO) of UniCredit S.p.A. to replace the previous one, who had been provisionally appointed in February 2018 given his role as project leader. The Board of Statutory Auditors has examined the progress of the GDPR General Data Protection Regulation Project, together with the results of the "Global Audit on GDPR implementation" and the related management plan, in order to overcome the findings, taking into consideration the results of the GDPR risk assessment carried out on all the Group Companies in the perimeter at 3Q 2018 - in accordance with the new risk assessment methodology introduced in 2018 - which highlighted for UniCredit S.p.A. a "significant" overall assessment of both the intrinsic risk (assessment of the potential impact of risks irrespective of the existence and/or mitigation measures of adequacy) and of the relevant residual risk. On the issue of data breaches, the Board of Statutory Auditors took note of the most significant cases determined by "external" events, such as cyber attacks on applications used by the Bank or fraud committed by unknown persons. These have been notified to both the competent oversight authority (Data Protection Authority) in accordance with GDPR requirements, and to the parties involved, to protect the rights and freedoms of the customers involved, who have also been provided adequate information and assistance from the Bank's competent functions. Lastly, the Board of Statutory Auditors took note of the "MiFID" Report set forth in Art.13 of the Consob/Bank of Italy Joint Regulation of 28 October 2008, prepared by Group Risk Management. ICT Risk Also in 2018, the Board of Statutory Auditors has placed particular attention on the topic of ICT Risk, meeting with the competent structures at various times for the necessary in-depth examinations. The Board of Statutory Auditors has, among other things, examined: • the 2018 report drafted by Internal Audit on Business Continuity Management (which includes Business Continuity, Disaster Recovery and Crisis Management processes), which does not reveal any major critical issues; • the Business Continuity (BC) Plan, which includes the BC overall structure and BC Strategies, submitted for approval by the Board of Directors Meeting of 5 March 2019, verifying its completeness, adequacy, functionality and reliability; • the Adequacy and Cost of ICT (Information Communication Technology) report, which shows the essential adequacy of the maturity cycle of the ICT process with certain appropriate improvements regarding data architecture and infrastructural architecture management, as well as the maintenance of the related costs; • the Group and UC SpA ICT and Cyber Risk reports (presented by Group Risk Management), which account for the assessment carried out in order to: (i) evaluate the current risk transfer strategies for worst case scenarios, (ii) provide business owners with the framework of expected impacts and risk mitigation actions; • the ICT Security current and 2019 main priorities document, which reports global trends for ICT security, identifying cyber crime among the main risks due to the increasing number and sophistication of cyber attacks; also on the basis of a benchmark carried out by an external consultant, the Bank's "cybersecurity maturity" was assessed, highlighting the need for further investments. In reference to access rights, the Board of Statutory Auditors took note of the results of the follow-up by the Supervisor regarding ICT Risk issues in relation to UniCredit S.p.A. and other Group Companies. Even in the presence of improvements in the systems and the organizational framework, they also noted the need for further corrective actions, promptly addressed by the Management in the appropriate remedial plan. The Board of Statutory Auditors considered that access rights represent a cross-company topic in the Group, therefore the Management gives them the utmost attention. Finally, the Board of Statutory Auditors has received updates from the experts of the External Auditors regarding the audit of (i) the information systems of the Bank and the Group (ISAE 3402 E&Y), (ii) the Cyber Risk and its benchmark. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 756 2018 Annual Report and Accounts · UniCredit Operational Risk - Group Top Risks The Board of Statutory Auditors took positive note of the initiative launched by the three Control Functions, aimed at providing an integrated vision of the activities and initiatives related to the main operational risks for 2018 (Cyber Risk; Regulatory Framework Evolution; Conduct Risk; Business Transformation), as well as providing the first indications regarding 2019 (Third Party/Outsourcer risk, in addition to those mentioned above). The initiative in question has allowed the three Functions to develop synergies, thanks to the mutual exchange of the results of the enacted activities and to benefit from the different approaches to the issues. The Board of Statutory Auditors has advised the Bank to continue with determination in the assessment and integrated monitoring of the operational risk by the Control Functions, in order to take account of each new arising risk that could potentially affect the Group, helping to change at any given time and with high priority the interventions on priority risks and to extend the monitoring where necessary. Other contributions With reference to further reporting containing information on the internal control and risk management system, the Board of Statutory Auditors has noted that, at the date of this Report, the assessment of the adequacy of the allocation of Group capital (ICAAP) is underway by the structures in charge, together with the assessment of the overall functionality of the Internal Liquidity Adequacy Assessment Process (ILAAP). The Board of Statutory Auditors examined the "2018 Group ICS Management Evaluation Assessment" document, prepared by the Group COO IT & Operations, Security and Internal Controls, aimed at supporting the Board of Directors in assessing the completeness, adequacy, functionality and reliability of the Group Internal Control System as a whole. Based on the self-assessment carried out by the Management in 2018, the Group's internal control system (24 companies subject to self-assessment by the reference Management and 14 Foreign Branches of the Group) was rated overall as "mostly satisfactory", in line with the aforementioned rating expressed by the Internal Audit Function. The Board of Statutory Auditors, in acknowledging the areas of attention identified by the Management, related mainly to data aggregation and data quality, anti financial crime and customer protection, operational risk management, first- and second-level controls, cyber risk (access right management), IT Risk, Risk culture (Tone from the Top), took note of the initiatives adopted or being finalized, aimed at further strengthening the internal control and risk management system. Lastly, the Board of Statutory Auditors took note of the Report concerning the second half of 2018 of the 231 Oversight Body (hereinafter also "231 OB") on the implementation of the Organization and Management Model adopted by UniCredit S.p.A. pursuant to Italian Legislative Decree no. 231/2001. In closing, the Board of Statutory Auditors did not identify critical situations or facts that could make the internal control and risk management system as a whole inadequate, even though situations that required the planning and addressing of specific corrective actions did emerge. Lastly, the Board of Statutory Auditors acknowledges the greater and renewed reactivity and proactive nature of the Management in relation to the definition and operational implementation of the actions to improve and remedy the detected weaknesses and shortcomings. 10. Oversight of the adequacy of the organizational structure In consideration of the fact that the organizational and managerial structure is an integral part of the Bank's and the Group's transformation plan, the Board of Statutory Auditors acknowledges that the Group's structure reflects an organizational and business model that guarantees the autonomy of the countries and local banks on specific activities in order to ensure greater proximity to the customer. This model also guarantees efficient decision-making processes and considers a divisional structure with regard to the governance of the Corporate Investment Banking (CIB) products/businesses and the business in the Central and Eastern Europe (CEE) area countries, as well as a global supervision of the supporting corporate Functions. The Board of Statutory Auditors examined the report prepared by the competent Group Human Capital structure which considers the organizational structure of UniCredit S.p.A. to be adequate, by virtue of the robustness of the overall regulatory framework that ensures the uniqueness of the system of responsibility and powers with reference to the bodies/committees and the corporate structures. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 756 2018 Annual Report and Accounts · UniCredit Operational Risk - Group Top Risks The Board of Statutory Auditors took positive note of the initiative launched by the three Control Functions, aimed at providing an integrated vision of the activities and initiatives related to the main operational risks for 2018 (Cyber Risk; Regulatory Framework Evolution; Conduct Risk; Business Transformation), as well as providing the first indications regarding 2019 (Third Party/Outsourcer risk, in addition to those mentioned above). The initiative in question has allowed the three Functions to develop synergies, thanks to the mutual exchange of the results of the enacted activities and to benefit from the different approaches to the issues. The Board of Statutory Auditors has advised the Bank to continue with determination in the assessment and integrated monitoring of the operational risk by the Control Functions, in order to take account of each new arising risk that could potentially affect the Group, helping to change at any given time and with high priority the interventions on priority risks and to extend the monitoring where necessary. Other contributions With reference to further reporting containing information on the internal control and risk management system, the Board of Statutory Auditors has noted that, at the date of this Report, the assessment of the adequacy of the allocation of Group capital (ICAAP) is underway by the structures in charge, together with the assessment of the overall functionality of the Internal Liquidity Adequacy Assessment Process (ILAAP). The Board of Statutory Auditors examined the "2018 Group ICS Management Evaluation Assessment" document, prepared by the Group COO IT & Operations, Security and Internal Controls, aimed at supporting the Board of Directors in assessing the completeness, adequacy, functionality and reliability of the Group Internal Control System as a whole. Based on the self-assessment carried out by the Management in 2018, the Group's internal control system (24 companies subject to self-assessment by the reference Management and 14 Foreign Branches of the Group) was rated overall as "mostly satisfactory", in line with the aforementioned rating expressed by the Internal Audit Function. The Board of Statutory Auditors, in acknowledging the areas of attention identified by the Management, related mainly to data aggregation and data quality, anti financial crime and customer protection, operational risk management, first- and second-level controls, cyber risk (access right management), IT Risk, Risk culture (Tone from the Top), took note of the initiatives adopted or being finalized, aimed at further strengthening the internal control and risk management system. Lastly, the Board of Statutory Auditors took note of the Report concerning the second half of 2018 of the 231 Oversight Body (hereinafter also "231 OB") on the implementation of the Organization and Management Model adopted by UniCredit S.p.A. pursuant to Italian Legislative Decree no. 231/2001. In closing, the Board of Statutory Auditors did not identify critical situations or facts that could make the internal control and risk management system as a whole inadequate, even though situations that required the planning and addressing of specific corrective actions did emerge. Lastly, the Board of Statutory Auditors acknowledges the greater and renewed reactivity and proactive nature of the Management in relation to the definition and operational implementation of the actions to improve and remedy the detected weaknesses and shortcomings. 10. Oversight of the adequacy of the organizational structure In consideration of the fact that the organizational and managerial structure is an integral part of the Bank's and the Group's transformation plan, the Board of Statutory Auditors acknowledges that the Group's structure reflects an organizational and business model that guarantees the autonomy of the countries and local banks on specific activities in order to ensure greater proximity to the customer. This model also guarantees efficient decision-making processes and considers a divisional structure with regard to the governance of the Corporate Investment Banking (CIB) products/businesses and the business in the Central and Eastern Europe (CEE) area countries, as well as a global supervision of the supporting corporate Functions. The Board of Statutory Auditors examined the report prepared by the competent Group Human Capital structure which considers the organizational structure of UniCredit S.p.A. to be adequate, by virtue of the robustness of the overall regulatory framework that ensures the uniqueness of the system of responsibility and powers with reference to the bodies/committees and the corporate structures. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 756 2018 Annual Report and Accounts · UniCredit Operational Risk - Group Top Risks The Board of Statutory Auditors took positive note of the initiative launched by the three Control Functions, aimed at providing an integrated vision of the activities and initiatives related to the main operational risks for 2018 (Cyber Risk; Regulatory Framework Evolution; Conduct Risk; Business Transformation), as well as providing the first indications regarding 2019 (Third Party/Outsourcer risk, in addition to those mentioned above). The initiative in question has allowed the three Functions to develop synergies, thanks to the mutual exchange of the results of the enacted activities and to benefit from the different approaches to the issues. The Board of Statutory Auditors has advised the Bank to continue with determination in the assessment and integrated monitoring of the operational risk by the Control Functions, in order to take account of each new arising risk that could potentially affect the Group, helping to change at any given time and with high priority the interventions on priority risks and to extend the monitoring where necessary. Other contributions With reference to further reporting containing information on the internal control and risk management system, the Board of Statutory Auditors has noted that, at the date of this Report, the assessment of the adequacy of the allocation of Group capital (ICAAP) is underway by the structures in charge, together with the assessment of the overall functionality of the Internal Liquidity Adequacy Assessment Process (ILAAP). The Board of Statutory Auditors examined the "2018 Group ICS Management Evaluation Assessment" document, prepared by the Group COO IT & Operations, Security and Internal Controls, aimed at supporting the Board of Directors in assessing the completeness, adequacy, functionality and reliability of the Group Internal Control System as a whole. Based on the self-assessment carried out by the Management in 2018, the Group's internal control system (24 companies subject to self-assessment by the reference Management and 14 Foreign Branches of the Group) was rated overall as "mostly satisfactory", in line with the aforementioned rating expressed by the Internal Audit Function. The Board of Statutory Auditors, in acknowledging the areas of attention identified by the Management, related mainly to data aggregation and data quality, anti financial crime and customer protection, operational risk management, first- and second-level controls, cyber risk (access right management), IT Risk, Risk culture (Tone from the Top), took note of the initiatives adopted or being finalized, aimed at further strengthening the internal control and risk management system. Lastly, the Board of Statutory Auditors took note of the Report concerning the second half of 2018 of the 231 Oversight Body (hereinafter also "231 OB") on the implementation of the Organization and Management Model adopted by UniCredit S.p.A. pursuant to Italian Legislative Decree no. 231/2001. In closing, the Board of Statutory Auditors did not identify critical situations or facts that could make the internal control and risk management system as a whole inadequate, even though situations that required the planning and addressing of specific corrective actions did emerge. Lastly, the Board of Statutory Auditors acknowledges the greater and renewed reactivity and proactive nature of the Management in relation to the definition and operational implementation of the actions to improve and remedy the detected weaknesses and shortcomings. 10. Oversight of the adequacy of the organizational structure In consideration of the fact that the organizational and managerial structure is an integral part of the Bank's and the Group's transformation plan, the Board of Statutory Auditors acknowledges that the Group's structure reflects an organizational and business model that guarantees the autonomy of the countries and local banks on specific activities in order to ensure greater proximity to the customer. This model also guarantees efficient decision-making processes and considers a divisional structure with regard to the governance of the Corporate Investment Banking (CIB) products/businesses and the business in the Central and Eastern Europe (CEE) area countries, as well as a global supervision of the supporting corporate Functions. The Board of Statutory Auditors examined the report prepared by the competent Group Human Capital structure which considers the organizational structure of UniCredit S.p.A. to be adequate, by virtue of the robustness of the overall regulatory framework that ensures the uniqueness of the system of responsibility and powers with reference to the bodies/committees and the corporate structures. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 756 2018 Annual Report and Accounts · UniCredit Operational Risk - Group Top Risks The Board of Statutory Auditors took positive note of the initiative launched by the three Control Functions, aimed at providing an integrated vision of the activities and initiatives related to the main operational risks for 2018 (Cyber Risk; Regulatory Framework Evolution; Conduct Risk; Business Transformation), as well as providing the first indications regarding 2019 (Third Party/Outsourcer risk, in addition to those mentioned above). The initiative in question has allowed the three Functions to develop synergies, thanks to the mutual exchange of the results of the enacted activities and to benefit from the different approaches to the issues. The Board of Statutory Auditors has advised the Bank to continue with determination in the assessment and integrated monitoring of the operational risk by the Control Functions, in order to take account of each new arising risk that could potentially affect the Group, helping to change at any given time and with high priority the interventions on priority risks and to extend the monitoring where necessary. Other contributions With reference to further reporting containing information on the internal control and risk management system, the Board of Statutory Auditors has noted that, at the date of this Report, the assessment of the adequacy of the allocation of Group capital (ICAAP) is underway by the structures in charge, together with the assessment of the overall functionality of the Internal Liquidity Adequacy Assessment Process (ILAAP). The Board of Statutory Auditors examined the "2018 Group ICS Management Evaluation Assessment" document, prepared by the Group COO IT & Operations, Security and Internal Controls, aimed at supporting the Board of Directors in assessing the completeness, adequacy, functionality and reliability of the Group Internal Control System as a whole. Based on the self-assessment carried out by the Management in 2018, the Group's internal control system (24 companies subject to self-assessment by the reference Management and 14 Foreign Branches of the Group) was rated overall as "mostly satisfactory", in line with the aforementioned rating expressed by the Internal Audit Function. The Board of Statutory Auditors, in acknowledging the areas of attention identified by the Management, related mainly to data aggregation and data quality, anti financial crime and customer protection, operational risk management, first- and second-level controls, cyber risk (access right management), IT Risk, Risk culture (Tone from the Top), took note of the initiatives adopted or being finalized, aimed at further strengthening the internal control and risk management system. Lastly, the Board of Statutory Auditors took note of the Report concerning the second half of 2018 of the 231 Oversight Body (hereinafter also "231 OB") on the implementation of the Organization and Management Model adopted by UniCredit S.p.A. pursuant to Italian Legislative Decree no. 231/2001. In closing, the Board of Statutory Auditors did not identify critical situations or facts that could make the internal control and risk management system as a whole inadequate, even though situations that required the planning and addressing of specific corrective actions did emerge. Lastly, the Board of Statutory Auditors acknowledges the greater and renewed reactivity and proactive nature of the Management in relation to the definition and operational implementation of the actions to improve and remedy the detected weaknesses and shortcomings. 10. Oversight of the adequacy of the organizational structure In consideration of the fact that the organizational and managerial structure is an integral part of the Bank's and the Group's transformation plan, the Board of Statutory Auditors acknowledges that the Group's structure reflects an organizational and business model that guarantees the autonomy of the countries and local banks on specific activities in order to ensure greater proximity to the customer. This model also guarantees efficient decision-making processes and considers a divisional structure with regard to the governance of the Corporate Investment Banking (CIB) products/businesses and the business in the Central and Eastern Europe (CEE) area countries, as well as a global supervision of the supporting corporate Functions. The Board of Statutory Auditors examined the report prepared by the competent Group Human Capital structure which considers the organizational structure of UniCredit S.p.A. to be adequate, by virtue of the robustness of the overall regulatory framework that ensures the uniqueness of the system of responsibility and powers with reference to the bodies/committees and the corporate structures. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 756 2018 Annual Report and Accounts · UniCredit Operational Risk - Group Top Risks The Board of Statutory Auditors took positive note of the initiative launched by the three Control Functions, aimed at providing an integrated vision of the activities and initiatives related to the main operational risks for 2018 (Cyber Risk; Regulatory Framework Evolution; Conduct Risk; Business Transformation), as well as providing the first indications regarding 2019 (Third Party/Outsourcer risk, in addition to those mentioned above). The initiative in question has allowed the three Functions to develop synergies, thanks to the mutual exchange of the results of the enacted activities and to benefit from the different approaches to the issues. The Board of Statutory Auditors has advised the Bank to continue with determination in the assessment and integrated monitoring of the operational risk by the Control Functions, in order to take account of each new arising risk that could potentially affect the Group, helping to change at any given time and with high priority the interventions on priority risks and to extend the monitoring where necessary. Other contributions With reference to further reporting containing information on the internal control and risk management system, the Board of Statutory Auditors has noted that, at the date of this Report, the assessment of the adequacy of the allocation of Group capital (ICAAP) is underway by the structures in charge, together with the assessment of the overall functionality of the Internal Liquidity Adequacy Assessment Process (ILAAP). The Board of Statutory Auditors examined the "2018 Group ICS Management Evaluation Assessment" document, prepared by the Group COO IT & Operations, Security and Internal Controls, aimed at supporting the Board of Directors in assessing the completeness, adequacy, functionality and reliability of the Group Internal Control System as a whole. Based on the self-assessment carried out by the Management in 2018, the Group's internal control system (24 companies subject to self-assessment by the reference Management and 14 Foreign Branches of the Group) was rated overall as "mostly satisfactory", in line with the aforementioned rating expressed by the Internal Audit Function. The Board of Statutory Auditors, in acknowledging the areas of attention identified by the Management, related mainly to data aggregation and data quality, anti financial crime and customer protection, operational risk management, first- and second-level controls, cyber risk (access right management), IT Risk, Risk culture (Tone from the Top), took note of the initiatives adopted or being finalized, aimed at further strengthening the internal control and risk management system. Lastly, the Board of Statutory Auditors took note of the Report concerning the second half of 2018 of the 231 Oversight Body (hereinafter also "231 OB") on the implementation of the Organization and Management Model adopted by UniCredit S.p.A. pursuant to Italian Legislative Decree no. 231/2001. In closing, the Board of Statutory Auditors did not identify critical situations or facts that could make the internal control and risk management system as a whole inadequate, even though situations that required the planning and addressing of specific corrective actions did emerge. Lastly, the Board of Statutory Auditors acknowledges the greater and renewed reactivity and proactive nature of the Management in relation to the definition and operational implementation of the actions to improve and remedy the detected weaknesses and shortcomings. 10. Oversight of the adequacy of the organizational structure In consideration of the fact that the organizational and managerial structure is an integral part of the Bank's and the Group's transformation plan, the Board of Statutory Auditors acknowledges that the Group's structure reflects an organizational and business model that guarantees the autonomy of the countries and local banks on specific activities in order to ensure greater proximity to the customer. This model also guarantees efficient decision-making processes and considers a divisional structure with regard to the governance of the Corporate Investment Banking (CIB) products/businesses and the business in the Central and Eastern Europe (CEE) area countries, as well as a global supervision of the supporting corporate Functions. The Board of Statutory Auditors examined the report prepared by the competent Group Human Capital structure which considers the organizational structure of UniCredit S.p.A. to be adequate, by virtue of the robustness of the overall regulatory framework that ensures the uniqueness of the system of responsibility and powers with reference to the bodies/committees and the corporate structures. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 757 The Board of Directors Meeting of 6 February 2019, approved the optimization of the organizational model and the managerial team reorganization project with the start of the development of the Strategic Plan 2020-2023, which will be presented to the financial community on 3rd December. The reorganization project has set itself the objective of continuing the streamlining process that was launched with Transform 2019 and to ensure that the managerial team that will implement the new Strategic Plan is in charge of it from the beginning of the planning process. The current organizational structure is focused on the following main areas of responsibility: • The Chief Executive Officer exercises direct control over the Business pending the detailed implementation of the aforementioned reorganization, and over the definition of the Group Strategy, Risks, Compliance, Human Resources, e optimization of the Cost structure and the main operational activities; • the Chief Operating Office (COO), a position held by two co-Heads (co-Chief Operating Officers), is responsible for supervising the activities of Finance, Cost Management, IT & Operations, Security and Internal Controls; • the CIB division has a coverage role for multinational customers ("Multinational"), for selected "Large Corporate" customers with a strong potential demand for investment banking products, for Financial and Institutional Groups (FIG) and is responsible for Global Product Lines "Global Transaction Banking (GTB)", "Global Financing & Advisory (F & A)", "Markets", as well as internationalization activities; • as regards the Italian perimeter, the co-Heads of the "Italy" structure are responsible for defining the business strategies of the "commercial bank" and for the direction, coordination and control of the networks; • the CEE Division coordinates the activities in the countries of Central and Eastern Europe where the Groupoperates, aligning them with a single comprehensive business vision in the area; • Group Institutional Affairs & Sustainability and Group Regulatory Affairs are respectively responsible for the development of relations with institutional counterparts of interest for the Group and the management of relations with the banking Supervisory Authorities at the European level (e.g. EBA, ECB) and with the Bank of Italy; • the various Functions defined as "Competence Line" (Internal Audit, Planning, Finance & Administration, Risk Management, Lending, Legal, Compliance, Identity & Communications, Human Capital) maintain, each within their remit, the responsibility for the direction, coordination and control of the Group's activities and related risks. The Board of Statutory Auditors has examined the main organizational changes that occurred in 2018, including: • the creation of two distinct entities ("Group Regulatory Affairs" and "Group Institutional Affairs and Sustainability"), with the aim of: (i) clearly separating the responsibilities between regulatory and institutional activities and make each area more focused and effective; (ii) strengthening the area of institutional affairs by grouping relevant activities at the Group level, including social banking/environmental responsibility initiatives and the Sustainability Report; • the creation of a Non-Core Asset Management structure, directly reporting to Group Risk Management and a newly established functional line to the Group Lending Office/GLO, responsible for coordinating and managing the files classified under restructuring and workout by UniCredit S.p.A. in relation to the non-performing non-core portfolio, and performing the transfer of the latter according the rundown strategy of the non-core portfolio defined by the Group; • the reorganization of the Data Protection Advisory structure under the new General Data Protection Regulation, (GDPR), applying the instructions of the Board of Directors Meeting of 7 February 2018, and in order to create a single Compliance safeguard for Privacy/data protection. The Head of the structure is the Group Data Protection Officer of UniCredit S.p.A., who covers the role of Data Protection Officer both for UniCredit SpA and for the Italian Entities that have outsourced that role to the Parent Company, directly reporting to the Chief Compliance Officer to ensure the necessary independence and autonomy required by the GDPR; • the assignment, within the framework of the "Group Operational & Reputational Risks" - GORR structure, starting from June 2018, of the following responsibilities: assessment of exposure to Information & Communication Technology and Cyber Risks (ICT & Cyber Risks) through the definition of a specific framework for their management, as well as the monitoring of their implementation in order to ensure a more effective monitoring in the second-level control activity on ICT risks, including Cyber Risks, and to ensure a better distribution of the governance and control of operational and reputational risks with the aim of further strengthening the processes of measurement, control and related mitigation; • the creation of the "Group Transformation Office" structure, from October 2018, under the leadership of the Group Chief Transformation Officer (GCA), responsible for managing the transformation and ensuring a significant and durable change in order to achieve greater and measurable customer satisfaction and quality of service, while also improving cost efficiency. Lastly, the Board of Statutory Auditors examined the changes in the area of the Chief Operating Office for reorganizing the Group ICT & Security Office (GISO) Function, noting the direct reporting of the Function Manager to the COO, also in line with the market benchmarks, as well as the factual content of the operational mandate aimed at guaranteeing, inter alia, a "lean and steering" coordination of ICT activities, the definition of the Group strategy on the subject of Security, a uniform approach in terms of business continuity and emergency & crisis management. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 757 The Board of Directors Meeting of 6 February 2019, approved the optimization of the organizational model and the managerial team reorganization project with the start of the development of the Strategic Plan 2020-2023, which will be presented to the financial community on 3rd December. The reorganization project has set itself the objective of continuing the streamlining process that was launched with Transform 2019 and to ensure that the managerial team that will implement the new Strategic Plan is in charge of it from the beginning of the planning process. The current organizational structure is focused on the following main areas of responsibility: • The Chief Executive Officer exercises direct control over the Business pending the detailed implementation of the aforementioned reorganization, and over the definition of the Group Strategy, Risks, Compliance, Human Resources, e optimization of the Cost structure and the main operational activities; • the Chief Operating Office (COO), a position held by two co-Heads (co-Chief Operating Officers), is responsible for supervising the activities of Finance, Cost Management, IT & Operations, Security and Internal Controls; • the CIB division has a coverage role for multinational customers ("Multinational"), for selected "Large Corporate" customers with a strong potential demand for investment banking products, for Financial and Institutional Groups (FIG) and is responsible for Global Product Lines "Global Transaction Banking (GTB)", "Global Financing & Advisory (F & A)", "Markets", as well as internationalization activities; • as regards the Italian perimeter, the co-Heads of the "Italy" structure are responsible for defining the business strategies of the "commercial bank" and for the direction, coordination and control of the networks; • the CEE Division coordinates the activities in the countries of Central and Eastern Europe where the Groupoperates, aligning them with a single comprehensive business vision in the area; • Group Institutional Affairs & Sustainability and Group Regulatory Affairs are respectively responsible for the development of relations with institutional counterparts of interest for the Group and the management of relations with the banking Supervisory Authorities at the European level (e.g. EBA, ECB) and with the Bank of Italy; • the various Functions defined as "Competence Line" (Internal Audit, Planning, Finance & Administration, Risk Management, Lending, Legal, Compliance, Identity & Communications, Human Capital) maintain, each within their remit, the responsibility for the direction, coordination and control of the Group's activities and related risks. The Board of Statutory Auditors has examined the main organizational changes that occurred in 2018, including: • the creation of two distinct entities ("Group Regulatory Affairs" and "Group Institutional Affairs and Sustainability"), with the aim of: (i) clearly separating the responsibilities between regulatory and institutional activities and make each area more focused and effective; (ii) strengthening the area of institutional affairs by grouping relevant activities at the Group level, including social banking/environmental responsibility initiatives and the Sustainability Report; • the creation of a Non-Core Asset Management structure, directly reporting to Group Risk Management and a newly established functional line to the Group Lending Office/GLO, responsible for coordinating and managing the files classified under restructuring and workout by UniCredit S.p.A. in relation to the non-performing non-core portfolio, and performing the transfer of the latter according the rundown strategy of the non-core portfolio defined by the Group; • the reorganization of the Data Protection Advisory structure under the new General Data Protection Regulation, (GDPR), applying the instructions of the Board of Directors Meeting of 7 February 2018, and in order to create a single Compliance safeguard for Privacy/data protection. The Head of the structure is the Group Data Protection Officer of UniCredit S.p.A., who covers the role of Data Protection Officer both for UniCredit SpA and for the Italian Entities that have outsourced that role to the Parent Company, directly reporting to the Chief Compliance Officer to ensure the necessary independence and autonomy required by the GDPR; • the assignment, within the framework of the "Group Operational & Reputational Risks" - GORR structure, starting from June 2018, of the following responsibilities: assessment of exposure to Information & Communication Technology and Cyber Risks (ICT & Cyber Risks) through the definition of a specific framework for their management, as well as the monitoring of their implementation in order to ensure a more effective monitoring in the second-level control activity on ICT risks, including Cyber Risks, and to ensure a better distribution of the governance and control of operational and reputational risks with the aim of further strengthening the processes of measurement, control and related mitigation; • the creation of the "Group Transformation Office" structure, from October 2018, under the leadership of the Group Chief Transformation Officer (GCA), responsible for managing the transformation and ensuring a significant and durable change in order to achieve greater and measurable customer satisfaction and quality of service, while also improving cost efficiency. Lastly, the Board of Statutory Auditors examined the changes in the area of the Chief Operating Office for reorganizing the Group ICT & Security Office (GISO) Function, noting the direct reporting of the Function Manager to the COO, also in line with the market benchmarks, as well as the factual content of the operational mandate aimed at guaranteeing, inter alia, a "lean and steering" coordination of ICT activities, the definition of the Group strategy on the subject of Security, a uniform approach in terms of business continuity and emergency & crisis management. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 757 The Board of Directors Meeting of 6 February 2019, approved the optimization of the organizational model and the managerial team reorganization project with the start of the development of the Strategic Plan 2020-2023, which will be presented to the financial community on 3rd December. The reorganization project has set itself the objective of continuing the streamlining process that was launched with Transform 2019 and to ensure that the managerial team that will implement the new Strategic Plan is in charge of it from the beginning of the planning process. The current organizational structure is focused on the following main areas of responsibility: • The Chief Executive Officer exercises direct control over the Business pending the detailed implementation of the aforementioned reorganization, and over the definition of the Group Strategy, Risks, Compliance, Human Resources, e optimization of the Cost structure and the main operational activities; • the Chief Operating Office (COO), a position held by two co-Heads (co-Chief Operating Officers), is responsible for supervising the activities of Finance, Cost Management, IT & Operations, Security and Internal Controls; • the CIB division has a coverage role for multinational customers ("Multinational"), for selected "Large Corporate" customers with a strong potential demand for investment banking products, for Financial and Institutional Groups (FIG) and is responsible for Global Product Lines "Global Transaction Banking (GTB)", "Global Financing & Advisory (F & A)", "Markets", as well as internationalization activities; • as regards the Italian perimeter, the co-Heads of the "Italy" structure are responsible for defining the business strategies of the "commercial bank" and for the direction, coordination and control of the networks; • the CEE Division coordinates the activities in the countries of Central and Eastern Europe where the Groupoperates, aligning them with a single comprehensive business vision in the area; • Group Institutional Affairs & Sustainability and Group Regulatory Affairs are respectively responsible for the development of relations with institutional counterparts of interest for the Group and the management of relations with the banking Supervisory Authorities at the European level (e.g. EBA, ECB) and with the Bank of Italy; • the various Functions defined as "Competence Line" (Internal Audit, Planning, Finance & Administration, Risk Management, Lending, Legal, Compliance, Identity & Communications, Human Capital) maintain, each within their remit, the responsibility for the direction, coordination and control of the Group's activities and related risks. The Board of Statutory Auditors has examined the main organizational changes that occurred in 2018, including: • the creation of two distinct entities ("Group Regulatory Affairs" and "Group Institutional Affairs and Sustainability"), with the aim of: (i) clearly separating the responsibilities between regulatory and institutional activities and make each area more focused and effective; (ii) strengthening the area of institutional affairs by grouping relevant activities at the Group level, including social banking/environmental responsibility initiatives and the Sustainability Report; • the creation of a Non-Core Asset Management structure, directly reporting to Group Risk Management and a newly established functional line to the Group Lending Office/GLO, responsible for coordinating and managing the files classified under restructuring and workout by UniCredit S.p.A. in relation to the non-performing non-core portfolio, and performing the transfer of the latter according the rundown strategy of the non-core portfolio defined by the Group; • the reorganization of the Data Protection Advisory structure under the new General Data Protection Regulation, (GDPR), applying the instructions of the Board of Directors Meeting of 7 February 2018, and in order to create a single Compliance safeguard for Privacy/data protection. The Head of the structure is the Group Data Protection Officer of UniCredit S.p.A., who covers the role of Data Protection Officer both for UniCredit SpA and for the Italian Entities that have outsourced that role to the Parent Company, directly reporting to the Chief Compliance Officer to ensure the necessary independence and autonomy required by the GDPR; • the assignment, within the framework of the "Group Operational & Reputational Risks" - GORR structure, starting from June 2018, of the following responsibilities: assessment of exposure to Information & Communication Technology and Cyber Risks (ICT & Cyber Risks) through the definition of a specific framework for their management, as well as the monitoring of their implementation in order to ensure a more effective monitoring in the second-level control activity on ICT risks, including Cyber Risks, and to ensure a better distribution of the governance and control of operational and reputational risks with the aim of further strengthening the processes of measurement, control and related mitigation; • the creation of the "Group Transformation Office" structure, from October 2018, under the leadership of the Group Chief Transformation Officer (GCA), responsible for managing the transformation and ensuring a significant and durable change in order to achieve greater and measurable customer satisfaction and quality of service, while also improving cost efficiency. Lastly, the Board of Statutory Auditors examined the changes in the area of the Chief Operating Office for reorganizing the Group ICT & Security Office (GISO) Function, noting the direct reporting of the Function Manager to the COO, also in line with the market benchmarks, as well as the factual content of the operational mandate aimed at guaranteeing, inter alia, a "lean and steering" coordination of ICT activities, the definition of the Group strategy on the subject of Security, a uniform approach in terms of business continuity and emergency & crisis management. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 757 The Board of Directors Meeting of 6 February 2019, approved the optimization of the organizational model and the managerial team reorganization project with the start of the development of the Strategic Plan 2020-2023, which will be presented to the financial community on 3rd December. The reorganization project has set itself the objective of continuing the streamlining process that was launched with Transform 2019 and to ensure that the managerial team that will implement the new Strategic Plan is in charge of it from the beginning of the planning process. The current organizational structure is focused on the following main areas of responsibility: • The Chief Executive Officer exercises direct control over the Business pending the detailed implementation of the aforementioned reorganization, and over the definition of the Group Strategy, Risks, Compliance, Human Resources, e optimization of the Cost structure and the main operational activities; • the Chief Operating Office (COO), a position held by two co-Heads (co-Chief Operating Officers), is responsible for supervising the activities of Finance, Cost Management, IT & Operations, Security and Internal Controls; • the CIB division has a coverage role for multinational customers ("Multinational"), for selected "Large Corporate" customers with a strong potential demand for investment banking products, for Financial and Institutional Groups (FIG) and is responsible for Global Product Lines "Global Transaction Banking (GTB)", "Global Financing & Advisory (F & A)", "Markets", as well as internationalization activities; • as regards the Italian perimeter, the co-Heads of the "Italy" structure are responsible for defining the business strategies of the "commercial bank" and for the direction, coordination and control of the networks; • the CEE Division coordinates the activities in the countries of Central and Eastern Europe where the Groupoperates, aligning them with a single comprehensive business vision in the area; • Group Institutional Affairs & Sustainability and Group Regulatory Affairs are respectively responsible for the development of relations with institutional counterparts of interest for the Group and the management of relations with the banking Supervisory Authorities at the European level (e.g. EBA, ECB) and with the Bank of Italy; • the various Functions defined as "Competence Line" (Internal Audit, Planning, Finance & Administration, Risk Management, Lending, Legal, Compliance, Identity & Communications, Human Capital) maintain, each within their remit, the responsibility for the direction, coordination and control of the Group's activities and related risks. The Board of Statutory Auditors has examined the main organizational changes that occurred in 2018, including: • the creation of two distinct entities ("Group Regulatory Affairs" and "Group Institutional Affairs and Sustainability"), with the aim of: (i) clearly separating the responsibilities between regulatory and institutional activities and make each area more focused and effective; (ii) strengthening the area of institutional affairs by grouping relevant activities at the Group level, including social banking/environmental responsibility initiatives and the Sustainability Report; • the creation of a Non-Core Asset Management structure, directly reporting to Group Risk Management and a newly established functional line to the Group Lending Office/GLO, responsible for coordinating and managing the files classified under restructuring and workout by UniCredit S.p.A. in relation to the non-performing non-core portfolio, and performing the transfer of the latter according the rundown strategy of the non-core portfolio defined by the Group; • the reorganization of the Data Protection Advisory structure under the new General Data Protection Regulation, (GDPR), applying the instructions of the Board of Directors Meeting of 7 February 2018, and in order to create a single Compliance safeguard for Privacy/data protection. The Head of the structure is the Group Data Protection Officer of UniCredit S.p.A., who covers the role of Data Protection Officer both for UniCredit SpA and for the Italian Entities that have outsourced that role to the Parent Company, directly reporting to the Chief Compliance Officer to ensure the necessary independence and autonomy required by the GDPR; • the assignment, within the framework of the "Group Operational & Reputational Risks" - GORR structure, starting from June 2018, of the following responsibilities: assessment of exposure to Information & Communication Technology and Cyber Risks (ICT & Cyber Risks) through the definition of a specific framework for their management, as well as the monitoring of their implementation in order to ensure a more effective monitoring in the second-level control activity on ICT risks, including Cyber Risks, and to ensure a better distribution of the governance and control of operational and reputational risks with the aim of further strengthening the processes of measurement, control and related mitigation; • the creation of the "Group Transformation Office" structure, from October 2018, under the leadership of the Group Chief Transformation Officer (GCA), responsible for managing the transformation and ensuring a significant and durable change in order to achieve greater and measurable customer satisfaction and quality of service, while also improving cost efficiency. Lastly, the Board of Statutory Auditors examined the changes in the area of the Chief Operating Office for reorganizing the Group ICT & Security Office (GISO) Function, noting the direct reporting of the Function Manager to the COO, also in line with the market benchmarks, as well as the factual content of the operational mandate aimed at guaranteeing, inter alia, a "lean and steering" coordination of ICT activities, the definition of the Group strategy on the subject of Security, a uniform approach in terms of business continuity and emergency & crisis management. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 757 The Board of Directors Meeting of 6 February 2019, approved the optimization of the organizational model and the managerial team reorganization project with the start of the development of the Strategic Plan 2020-2023, which will be presented to the financial community on 3rd December. The reorganization project has set itself the objective of continuing the streamlining process that was launched with Transform 2019 and to ensure that the managerial team that will implement the new Strategic Plan is in charge of it from the beginning of the planning process. The current organizational structure is focused on the following main areas of responsibility: • The Chief Executive Officer exercises direct control over the Business pending the detailed implementation of the aforementioned reorganization, and over the definition of the Group Strategy, Risks, Compliance, Human Resources, e optimization of the Cost structure and the main operational activities; • the Chief Operating Office (COO), a position held by two co-Heads (co-Chief Operating Officers), is responsible for supervising the activities of Finance, Cost Management, IT & Operations, Security and Internal Controls; • the CIB division has a coverage role for multinational customers ("Multinational"), for selected "Large Corporate" customers with a strong potential demand for investment banking products, for Financial and Institutional Groups (FIG) and is responsible for Global Product Lines "Global Transaction Banking (GTB)", "Global Financing & Advisory (F & A)", "Markets", as well as internationalization activities; • as regards the Italian perimeter, the co-Heads of the "Italy" structure are responsible for defining the business strategies of the "commercial bank" and for the direction, coordination and control of the networks; • the CEE Division coordinates the activities in the countries of Central and Eastern Europe where the Groupoperates, aligning them with a single comprehensive business vision in the area; • Group Institutional Affairs & Sustainability and Group Regulatory Affairs are respectively responsible for the development of relations with institutional counterparts of interest for the Group and the management of relations with the banking Supervisory Authorities at the European level (e.g. EBA, ECB) and with the Bank of Italy; • the various Functions defined as "Competence Line" (Internal Audit, Planning, Finance & Administration, Risk Management, Lending, Legal, Compliance, Identity & Communications, Human Capital) maintain, each within their remit, the responsibility for the direction, coordination and control of the Group's activities and related risks. The Board of Statutory Auditors has examined the main organizational changes that occurred in 2018, including: • the creation of two distinct entities ("Group Regulatory Affairs" and "Group Institutional Affairs and Sustainability"), with the aim of: (i) clearly separating the responsibilities between regulatory and institutional activities and make each area more focused and effective; (ii) strengthening the area of institutional affairs by grouping relevant activities at the Group level, including social banking/environmental responsibility initiatives and the Sustainability Report; • the creation of a Non-Core Asset Management structure, directly reporting to Group Risk Management and a newly established functional line to the Group Lending Office/GLO, responsible for coordinating and managing the files classified under restructuring and workout by UniCredit S.p.A. in relation to the non-performing non-core portfolio, and performing the transfer of the latter according the rundown strategy of the non-core portfolio defined by the Group; • the reorganization of the Data Protection Advisory structure under the new General Data Protection Regulation, (GDPR), applying the instructions of the Board of Directors Meeting of 7 February 2018, and in order to create a single Compliance safeguard for Privacy/data protection. The Head of the structure is the Group Data Protection Officer of UniCredit S.p.A., who covers the role of Data Protection Officer both for UniCredit SpA and for the Italian Entities that have outsourced that role to the Parent Company, directly reporting to the Chief Compliance Officer to ensure the necessary independence and autonomy required by the GDPR; • the assignment, within the framework of the "Group Operational & Reputational Risks" - GORR structure, starting from June 2018, of the following responsibilities: assessment of exposure to Information & Communication Technology and Cyber Risks (ICT & Cyber Risks) through the definition of a specific framework for their management, as well as the monitoring of their implementation in order to ensure a more effective monitoring in the second-level control activity on ICT risks, including Cyber Risks, and to ensure a better distribution of the governance and control of operational and reputational risks with the aim of further strengthening the processes of measurement, control and related mitigation; • the creation of the "Group Transformation Office" structure, from October 2018, under the leadership of the Group Chief Transformation Officer (GCA), responsible for managing the transformation and ensuring a significant and durable change in order to achieve greater and measurable customer satisfaction and quality of service, while also improving cost efficiency. Lastly, the Board of Statutory Auditors examined the changes in the area of the Chief Operating Office for reorganizing the Group ICT & Security Office (GISO) Function, noting the direct reporting of the Function Manager to the COO, also in line with the market benchmarks, as well as the factual content of the operational mandate aimed at guaranteeing, inter alia, a "lean and steering" coordination of ICT activities, the definition of the Group strategy on the subject of Security, a uniform approach in terms of business continuity and emergency & crisis management. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 758 2018 Annual Report and Accounts · UniCredit Suitability of Control Functions and Activity Plans Internal Audit Function The Board of Statutory Auditors examined the 2019 Audit Plan (as an integral part of the Multi-year Audit Plan) approved by the Board of Directors in January 2019. In addition to providing for coverage of the Group's main risks, this plan takes into account legislative and regulatory developments and the requirements of the Supervisor and the IC&RC. The planning, based on the riskiness of the activities/processes, includes on-site and off-site activities, also using remote control methods for the Retail structures as well as measures aimed at acquiring an end-to-end assessment of the processes at the Group level. The Board of Statutory Auditors noted the issuance of the new version of the Global Policy "Mandate of the Group Internal Audit", also revised following a recommendation emerged during the last external assessment of the Internal Audit Function carried out by Ernst & Young, which had suggested to expressly plan for an annual update of the Mandate. Therefore, the Board of Statutory Auditors has noted the number of resources included in the Function and the related skills, of the job rotation initiatives undertaken with the Business Functions and with the other Control Functions aimed also at improving the dissemination of the risk culture. Particularly in regards to the skills, Internal Audit implemented training programs, especially for data analytics and IT profiles. Any gaps of resources will be filled during 2019 also through external recruitment. The overall efficiency of the Function is increased by relying on a series of levers, such as remote audits and remote control, and the increased availability of data. On the basis of the information acquired, the Board of Statutory Auditors considers that the Function's capacity to fulfill its tasks is adequate. Group Risk Management The Board of Statutory Auditors has examined the Activities Plan 2019 - approved by the Board of Directors in January 2019 - of the Group Risk Management (GRM) Function, developed taking into account the overall context of ECB requests, the developments in the regulatory environment, the attention to operational and reputational risk, Cyber/IT risks, and the dissemination of the Risk Culture and awareness of issues of conduct risk, also with attention to third parties. The Plan also takes into account the strong focus on data quality and risk data aggregation. These are important issues for the Supervisor and closely related to the efficiency of the control functions, together with the great attention to the management of remedial actions to ensure the timely closure of the findings by Supervisor and Internal Audit, strengthening second-level controls and optimizing costs. On the basis of the information acquired, the Board of Statutory Auditors considers the size and capacity of the GRM Function to be adequate for achieving the objectives laid down in the Plan 2019. Compliance Function The Board of Statutory Auditors has examined the foundation lines of the Activity Plan 2019 of the Compliance Function (approved by the Board of Directors in January 2019). The Plan was constructed by taking a number of elements such as, for example, the ECB recommendations arising from the results of the completed inspection (in particular, strengthening the steering and governance activities of the Group companies, including the smaller ones), the strategic guidelines and priorities of the Function, the results of the controls and risk assessments of Compliance, the directions deriving from the audits by Internal Audit, and any new regulations. In terms of resource development and skill adaptation, the training programs have been further strengthened. Overall, the challenge for the future will be based on finding and organizing a correct mix of skills also in the use of new technologies, such as artificial intelligence, areas in which the Bank is investing heavily. On the basis of the information acquired, the Board of Statutory Auditors considers the Function's capacity to fulfill its tasks as adequate. 11. Remuneration policies The Board of Statutory Auditors noted that the Board of Directors, in its meeting of 5 March 2019, approved the document "Group 2019 Remuneration Policy" and the related Board of Directors’ Report to be submitted to the Shareholders' Meeting. This document defines the principles and standards used to design, implement and monitor the Group's remuneration systems, as part of the review of the Group's strategy described in the 2016-2019 Strategic Plan, which confirms the pre-existing pillars with renewed architecture. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 758 2018 Annual Report and Accounts · UniCredit Suitability of Control Functions and Activity Plans Internal Audit Function The Board of Statutory Auditors examined the 2019 Audit Plan (as an integral part of the Multi-year Audit Plan) approved by the Board of Directors in January 2019. In addition to providing for coverage of the Group's main risks, this plan takes into account legislative and regulatory developments and the requirements of the Supervisor and the IC&RC. The planning, based on the riskiness of the activities/processes, includes on-site and off-site activities, also using remote control methods for the Retail structures as well as measures aimed at acquiring an end-to-end assessment of the processes at the Group level. The Board of Statutory Auditors noted the issuance of the new version of the Global Policy "Mandate of the Group Internal Audit", also revised following a recommendation emerged during the last external assessment of the Internal Audit Function carried out by Ernst & Young, which had suggested to expressly plan for an annual update of the Mandate. Therefore, the Board of Statutory Auditors has noted the number of resources included in the Function and the related skills, of the job rotation initiatives undertaken with the Business Functions and with the other Control Functions aimed also at improving the dissemination of the risk culture. Particularly in regards to the skills, Internal Audit implemented training programs, especially for data analytics and IT profiles. Any gaps of resources will be filled during 2019 also through external recruitment. The overall efficiency of the Function is increased by relying on a series of levers, such as remote audits and remote control, and the increased availability of data. On the basis of the information acquired, the Board of Statutory Auditors considers that the Function's capacity to fulfill its tasks is adequate. Group Risk Management The Board of Statutory Auditors has examined the Activities Plan 2019 - approved by the Board of Directors in January 2019 - of the Group Risk Management (GRM) Function, developed taking into account the overall context of ECB requests, the developments in the regulatory environment, the attention to operational and reputational risk, Cyber/IT risks, and the dissemination of the Risk Culture and awareness of issues of conduct risk, also with attention to third parties. The Plan also takes into account the strong focus on data quality and risk data aggregation. These are important issues for the Supervisor and closely related to the efficiency of the control functions, together with the great attention to the management of remedial actions to ensure the timely closure of the findings by Supervisor and Internal Audit, strengthening second-level controls and optimizing costs. On the basis of the information acquired, the Board of Statutory Auditors considers the size and capacity of the GRM Function to be adequate for achieving the objectives laid down in the Plan 2019. Compliance Function The Board of Statutory Auditors has examined the foundation lines of the Activity Plan 2019 of the Compliance Function (approved by the Board of Directors in January 2019). The Plan was constructed by taking a number of elements such as, for example, the ECB recommendations arising from the results of the completed inspection (in particular, strengthening the steering and governance activities of the Group companies, including the smaller ones), the strategic guidelines and priorities of the Function, the results of the controls and risk assessments of Compliance, the directions deriving from the audits by Internal Audit, and any new regulations. In terms of resource development and skill adaptation, the training programs have been further strengthened. Overall, the challenge for the future will be based on finding and organizing a correct mix of skills also in the use of new technologies, such as artificial intelligence, areas in which the Bank is investing heavily. On the basis of the information acquired, the Board of Statutory Auditors considers the Function's capacity to fulfill its tasks as adequate. 11. Remuneration policies The Board of Statutory Auditors noted that the Board of Directors, in its meeting of 5 March 2019, approved the document "Group 2019 Remuneration Policy" and the related Board of Directors’ Report to be submitted to the Shareholders' Meeting. This document defines the principles and standards used to design, implement and monitor the Group's remuneration systems, as part of the review of the Group's strategy described in the 2016-2019 Strategic Plan, which confirms the pre-existing pillars with renewed architecture. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 758 2018 Annual Report and Accounts · UniCredit Suitability of Control Functions and Activity Plans Internal Audit Function The Board of Statutory Auditors examined the 2019 Audit Plan (as an integral part of the Multi-year Audit Plan) approved by the Board of Directors in January 2019. In addition to providing for coverage of the Group's main risks, this plan takes into account legislative and regulatory developments and the requirements of the Supervisor and the IC&RC. The planning, based on the riskiness of the activities/processes, includes on-site and off-site activities, also using remote control methods for the Retail structures as well as measures aimed at acquiring an end-to-end assessment of the processes at the Group level. The Board of Statutory Auditors noted the issuance of the new version of the Global Policy "Mandate of the Group Internal Audit", also revised following a recommendation emerged during the last external assessment of the Internal Audit Function carried out by Ernst & Young, which had suggested to expressly plan for an annual update of the Mandate. Therefore, the Board of Statutory Auditors has noted the number of resources included in the Function and the related skills, of the job rotation initiatives undertaken with the Business Functions and with the other Control Functions aimed also at improving the dissemination of the risk culture. Particularly in regards to the skills, Internal Audit implemented training programs, especially for data analytics and IT profiles. Any gaps of resources will be filled during 2019 also through external recruitment. The overall efficiency of the Function is increased by relying on a series of levers, such as remote audits and remote control, and the increased availability of data. On the basis of the information acquired, the Board of Statutory Auditors considers that the Function's capacity to fulfill its tasks is adequate. Group Risk Management The Board of Statutory Auditors has examined the Activities Plan 2019 - approved by the Board of Directors in January 2019 - of the Group Risk Management (GRM) Function, developed taking into account the overall context of ECB requests, the developments in the regulatory environment, the attention to operational and reputational risk, Cyber/IT risks, and the dissemination of the Risk Culture and awareness of issues of conduct risk, also with attention to third parties. The Plan also takes into account the strong focus on data quality and risk data aggregation. These are important issues for the Supervisor and closely related to the efficiency of the control functions, together with the great attention to the management of remedial actions to ensure the timely closure of the findings by Supervisor and Internal Audit, strengthening second-level controls and optimizing costs. On the basis of the information acquired, the Board of Statutory Auditors considers the size and capacity of the GRM Function to be adequate for achieving the objectives laid down in the Plan 2019. Compliance Function The Board of Statutory Auditors has examined the foundation lines of the Activity Plan 2019 of the Compliance Function (approved by the Board of Directors in January 2019). The Plan was constructed by taking a number of elements such as, for example, the ECB recommendations arising from the results of the completed inspection (in particular, strengthening the steering and governance activities of the Group companies, including the smaller ones), the strategic guidelines and priorities of the Function, the results of the controls and risk assessments of Compliance, the directions deriving from the audits by Internal Audit, and any new regulations. In terms of resource development and skill adaptation, the training programs have been further strengthened. Overall, the challenge for the future will be based on finding and organizing a correct mix of skills also in the use of new technologies, such as artificial intelligence, areas in which the Bank is investing heavily. On the basis of the information acquired, the Board of Statutory Auditors considers the Function's capacity to fulfill its tasks as adequate. 11. Remuneration policies The Board of Statutory Auditors noted that the Board of Directors, in its meeting of 5 March 2019, approved the document "Group 2019 Remuneration Policy" and the related Board of Directors’ Report to be submitted to the Shareholders' Meeting. This document defines the principles and standards used to design, implement and monitor the Group's remuneration systems, as part of the review of the Group's strategy described in the 2016-2019 Strategic Plan, which confirms the pre-existing pillars with renewed architecture. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 758 2018 Annual Report and Accounts · UniCredit Suitability of Control Functions and Activity Plans Internal Audit Function The Board of Statutory Auditors examined the 2019 Audit Plan (as an integral part of the Multi-year Audit Plan) approved by the Board of Directors in January 2019. In addition to providing for coverage of the Group's main risks, this plan takes into account legislative and regulatory developments and the requirements of the Supervisor and the IC&RC. The planning, based on the riskiness of the activities/processes, includes on-site and off-site activities, also using remote control methods for the Retail structures as well as measures aimed at acquiring an end-to-end assessment of the processes at the Group level. The Board of Statutory Auditors noted the issuance of the new version of the Global Policy "Mandate of the Group Internal Audit", also revised following a recommendation emerged during the last external assessment of the Internal Audit Function carried out by Ernst & Young, which had suggested to expressly plan for an annual update of the Mandate. Therefore, the Board of Statutory Auditors has noted the number of resources included in the Function and the related skills, of the job rotation initiatives undertaken with the Business Functions and with the other Control Functions aimed also at improving the dissemination of the risk culture. Particularly in regards to the skills, Internal Audit implemented training programs, especially for data analytics and IT profiles. Any gaps of resources will be filled during 2019 also through external recruitment. The overall efficiency of the Function is increased by relying on a series of levers, such as remote audits and remote control, and the increased availability of data. On the basis of the information acquired, the Board of Statutory Auditors considers that the Function's capacity to fulfill its tasks is adequate. Group Risk Management The Board of Statutory Auditors has examined the Activities Plan 2019 - approved by the Board of Directors in January 2019 - of the Group Risk Management (GRM) Function, developed taking into account the overall context of ECB requests, the developments in the regulatory environment, the attention to operational and reputational risk, Cyber/IT risks, and the dissemination of the Risk Culture and awareness of issues of conduct risk, also with attention to third parties. The Plan also takes into account the strong focus on data quality and risk data aggregation. These are important issues for the Supervisor and closely related to the efficiency of the control functions, together with the great attention to the management of remedial actions to ensure the timely closure of the findings by Supervisor and Internal Audit, strengthening second-level controls and optimizing costs. On the basis of the information acquired, the Board of Statutory Auditors considers the size and capacity of the GRM Function to be adequate for achieving the objectives laid down in the Plan 2019. Compliance Function The Board of Statutory Auditors has examined the foundation lines of the Activity Plan 2019 of the Compliance Function (approved by the Board of Directors in January 2019). The Plan was constructed by taking a number of elements such as, for example, the ECB recommendations arising from the results of the completed inspection (in particular, strengthening the steering and governance activities of the Group companies, including the smaller ones), the strategic guidelines and priorities of the Function, the results of the controls and risk assessments of Compliance, the directions deriving from the audits by Internal Audit, and any new regulations. In terms of resource development and skill adaptation, the training programs have been further strengthened. Overall, the challenge for the future will be based on finding and organizing a correct mix of skills also in the use of new technologies, such as artificial intelligence, areas in which the Bank is investing heavily. On the basis of the information acquired, the Board of Statutory Auditors considers the Function's capacity to fulfill its tasks as adequate. 11. Remuneration policies The Board of Statutory Auditors noted that the Board of Directors, in its meeting of 5 March 2019, approved the document "Group 2019 Remuneration Policy" and the related Board of Directors’ Report to be submitted to the Shareholders' Meeting. This document defines the principles and standards used to design, implement and monitor the Group's remuneration systems, as part of the review of the Group's strategy described in the 2016-2019 Strategic Plan, which confirms the pre-existing pillars with renewed architecture. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 758 2018 Annual Report and Accounts · UniCredit Suitability of Control Functions and Activity Plans Internal Audit Function The Board of Statutory Auditors examined the 2019 Audit Plan (as an integral part of the Multi-year Audit Plan) approved by the Board of Directors in January 2019. In addition to providing for coverage of the Group's main risks, this plan takes into account legislative and regulatory developments and the requirements of the Supervisor and the IC&RC. The planning, based on the riskiness of the activities/processes, includes on-site and off-site activities, also using remote control methods for the Retail structures as well as measures aimed at acquiring an end-to-end assessment of the processes at the Group level. The Board of Statutory Auditors noted the issuance of the new version of the Global Policy "Mandate of the Group Internal Audit", also revised following a recommendation emerged during the last external assessment of the Internal Audit Function carried out by Ernst & Young, which had suggested to expressly plan for an annual update of the Mandate. Therefore, the Board of Statutory Auditors has noted the number of resources included in the Function and the related skills, of the job rotation initiatives undertaken with the Business Functions and with the other Control Functions aimed also at improving the dissemination of the risk culture. Particularly in regards to the skills, Internal Audit implemented training programs, especially for data analytics and IT profiles. Any gaps of resources will be filled during 2019 also through external recruitment. The overall efficiency of the Function is increased by relying on a series of levers, such as remote audits and remote control, and the increased availability of data. On the basis of the information acquired, the Board of Statutory Auditors considers that the Function's capacity to fulfill its tasks is adequate. Group Risk Management The Board of Statutory Auditors has examined the Activities Plan 2019 - approved by the Board of Directors in January 2019 - of the Group Risk Management (GRM) Function, developed taking into account the overall context of ECB requests, the developments in the regulatory environment, the attention to operational and reputational risk, Cyber/IT risks, and the dissemination of the Risk Culture and awareness of issues of conduct risk, also with attention to third parties. The Plan also takes into account the strong focus on data quality and risk data aggregation. These are important issues for the Supervisor and closely related to the efficiency of the control functions, together with the great attention to the management of remedial actions to ensure the timely closure of the findings by Supervisor and Internal Audit, strengthening second-level controls and optimizing costs. On the basis of the information acquired, the Board of Statutory Auditors considers the size and capacity of the GRM Function to be adequate for achieving the objectives laid down in the Plan 2019. Compliance Function The Board of Statutory Auditors has examined the foundation lines of the Activity Plan 2019 of the Compliance Function (approved by the Board of Directors in January 2019). The Plan was constructed by taking a number of elements such as, for example, the ECB recommendations arising from the results of the completed inspection (in particular, strengthening the steering and governance activities of the Group companies, including the smaller ones), the strategic guidelines and priorities of the Function, the results of the controls and risk assessments of Compliance, the directions deriving from the audits by Internal Audit, and any new regulations. In terms of resource development and skill adaptation, the training programs have been further strengthened. Overall, the challenge for the future will be based on finding and organizing a correct mix of skills also in the use of new technologies, such as artificial intelligence, areas in which the Bank is investing heavily. On the basis of the information acquired, the Board of Statutory Auditors considers the Function's capacity to fulfill its tasks as adequate. 11. Remuneration policies The Board of Statutory Auditors noted that the Board of Directors, in its meeting of 5 March 2019, approved the document "Group 2019 Remuneration Policy" and the related Board of Directors’ Report to be submitted to the Shareholders' Meeting. This document defines the principles and standards used to design, implement and monitor the Group's remuneration systems, as part of the review of the Group's strategy described in the 2016-2019 Strategic Plan, which confirms the pre-existing pillars with renewed architecture. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 759 The Board of Statutory Auditors took note of the report issued by the Internal Audit Function "2018 Remuneration Policies and Practices", which ends with the formulation of a "satisfactory" rating. Finally, in compliance with current legislation, the Board of Statutory Auditors examined the proposals for: • Goal Setting 2019 for the Chief Executive Officer, the Co-Chief Operating Officer - Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A.; • 2019 remuneration review for the Co-Chief Operating Officer- Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A. (for the Chief Executive Officer, it remained unchanged from the previous year); • review of the 2018 bonus for the Co-Chief Operating Officer- Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A. (no 2018 bonus proposal was formulated for the Chief Executive Officer in view of the fact that the 2017-2019 LTI Long-Term Incentives Plan replaces the variable bonus for the entire duration of the Plan) and verified the correctness of the Bank's adopted process and criteria, including the consistency with the relevant legislation, thus expressing its favorable opinions to the Board of Directors. 12. Non-Financial Statement The Board of Statutory Auditors, taken note of Italian Legislative Decree no. 254/2016 on the disclosure of non-financial information and the Implementing Regulation issued by Consob with a resolution dated 18 January 2018, exercised its functions by supervising the compliance with the provisions contained therein regarding the drafting of the Non-Financial Statement (hereinafter also "DNF") as part of the Integrated Financial Statements, approved by the Board of Directors on 5 March 2019. The Board of Statutory Auditors held various meetings the Function responsible for drafting the DNF, the representatives of the appointed External Auditors (Deloitte & Touche) and examined the documentation made available. Th BoSA analyzed the Assonime Circular no. 13 of 12 June 2017, a commentiary on Italian Legislative Decree 254/2016 and found the application of the Global Rule "Preparation of Non-Financial Information for the Integrated Report Production", aimed at defining roles, responsibilities, activities, controls and information flows of coordination between the Parent Company and the Group's Companies and structures. It also acknowledged the report issued by the External Auditors on 8 March 2019 which states that no elements were received that would suggest that the DNF of the UniCredit Group for the financial year ended on 31 December 2018 had not been drafted in all significant aspects in accordance with the relevant regulations. On the basis of the information acquired, the Board of Statutory Auditors attests that, in the course of its examination of the Non-Financial Statement, elements of non-compliance and/or violation of the relevant regulatory provisions have not come to its attention. 13. Additional activity by the Board of Statutory Auditors’ and information requested by Consob In performing its duties, as prescribed by Art. 2403 of the Italian Civil Code and Art. 149 of Italian Legislative Decree 58/1998 (TUF), the Board of Statutory Auditors: • exercised oversight on the implementation of the corporate governance rules contained in the codes of conduct that the Company declares to abide by. UniCredit S.p.A. complies with the Corporate Governance Code promoted by Borsa Italiana S.p.A. and has prepared, pursuant to Article 123-bis of Italian Legislative Decree no. 58/1998 (TUF), the annual "Report on Corporate Governance and Ownership Structure" which provides information on: i) the corporate governance practices actually applied; ii) the main features of the risk management and internal control systems; iii) the functioning mechanisms of the Shareholders' Meeting, its main powers, the rights of Shareholders and the procedures for exercising them; iv) the composition and functioning of the administrative and control bodies and their committees as well as the other information required by Article 123-bis of Italian Legislative Decree no. 58/1998 (TUF); • exercised oversight of the adequacy of the instructions given to subsidiaries pursuant to Art. 114, par. 2 of Italian Legislative Decree 58/1998. • exchanged information with the Boards of Statutory Auditors of the directly controlled companies as required by Art. 151, paragraph 2, of Italian Legislative Decree no. 58/1998 (TUF) and by the Supervisory Instructions of the Bank of Italy. In January 2019, in addition to an exchange of correspondence, the Board of Statutory Auditors met the Chairmen of the Boards of Statutory Auditors of the main Italian companies of the Group, in order to receive reports on any critical issues affecting the administration and control systems and the general trend of corporate activity; • it carried out its oversight activities at some Foreign Branches of UniCredit S.p.A. (Paris and Madrid), as well as through investigations conducted at the Central Region and Sicilia Region on selected samples of managed positions; • in accordance with the regulations and customary practices, the BoSA met with the Supervisory Authorities for the purpose of a fruitful exchange of information on subjects of mutual interest, including specific issues illustrated in this Report. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 759 The Board of Statutory Auditors took note of the report issued by the Internal Audit Function "2018 Remuneration Policies and Practices", which ends with the formulation of a "satisfactory" rating. Finally, in compliance with current legislation, the Board of Statutory Auditors examined the proposals for: • Goal Setting 2019 for the Chief Executive Officer, the Co-Chief Operating Officer - Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A.; • 2019 remuneration review for the Co-Chief Operating Officer- Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A. (for the Chief Executive Officer, it remained unchanged from the previous year); • review of the 2018 bonus for the Co-Chief Operating Officer- Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A. (no 2018 bonus proposal was formulated for the Chief Executive Officer in view of the fact that the 2017-2019 LTI Long-Term Incentives Plan replaces the variable bonus for the entire duration of the Plan) and verified the correctness of the Bank's adopted process and criteria, including the consistency with the relevant legislation, thus expressing its favorable opinions to the Board of Directors. 12. Non-Financial Statement The Board of Statutory Auditors, taken note of Italian Legislative Decree no. 254/2016 on the disclosure of non-financial information and the Implementing Regulation issued by Consob with a resolution dated 18 January 2018, exercised its functions by supervising the compliance with the provisions contained therein regarding the drafting of the Non-Financial Statement (hereinafter also "DNF") as part of the Integrated Financial Statements, approved by the Board of Directors on 5 March 2019. The Board of Statutory Auditors held various meetings the Function responsible for drafting the DNF, the representatives of the appointed External Auditors (Deloitte & Touche) and examined the documentation made available. Th BoSA analyzed the Assonime Circular no. 13 of 12 June 2017, a commentiary on Italian Legislative Decree 254/2016 and found the application of the Global Rule "Preparation of Non-Financial Information for the Integrated Report Production", aimed at defining roles, responsibilities, activities, controls and information flows of coordination between the Parent Company and the Group's Companies and structures. It also acknowledged the report issued by the External Auditors on 8 March 2019 which states that no elements were received that would suggest that the DNF of the UniCredit Group for the financial year ended on 31 December 2018 had not been drafted in all significant aspects in accordance with the relevant regulations. On the basis of the information acquired, the Board of Statutory Auditors attests that, in the course of its examination of the Non-Financial Statement, elements of non-compliance and/or violation of the relevant regulatory provisions have not come to its attention. 13. Additional activity by the Board of Statutory Auditors’ and information requested by Consob In performing its duties, as prescribed by Art. 2403 of the Italian Civil Code and Art. 149 of Italian Legislative Decree 58/1998 (TUF), the Board of Statutory Auditors: • exercised oversight on the implementation of the corporate governance rules contained in the codes of conduct that the Company declares to abide by. UniCredit S.p.A. complies with the Corporate Governance Code promoted by Borsa Italiana S.p.A. and has prepared, pursuant to Article 123-bis of Italian Legislative Decree no. 58/1998 (TUF), the annual "Report on Corporate Governance and Ownership Structure" which provides information on: i) the corporate governance practices actually applied; ii) the main features of the risk management and internal control systems; iii) the functioning mechanisms of the Shareholders' Meeting, its main powers, the rights of Shareholders and the procedures for exercising them; iv) the composition and functioning of the administrative and control bodies and their committees as well as the other information required by Article 123-bis of Italian Legislative Decree no. 58/1998 (TUF); • exercised oversight of the adequacy of the instructions given to subsidiaries pursuant to Art. 114, par. 2 of Italian Legislative Decree 58/1998. • exchanged information with the Boards of Statutory Auditors of the directly controlled companies as required by Art. 151, paragraph 2, of Italian Legislative Decree no. 58/1998 (TUF) and by the Supervisory Instructions of the Bank of Italy. In January 2019, in addition to an exchange of correspondence, the Board of Statutory Auditors met the Chairmen of the Boards of Statutory Auditors of the main Italian companies of the Group, in order to receive reports on any critical issues affecting the administration and control systems and the general trend of corporate activity; • it carried out its oversight activities at some Foreign Branches of UniCredit S.p.A. (Paris and Madrid), as well as through investigations conducted at the Central Region and Sicilia Region on selected samples of managed positions; • in accordance with the regulations and customary practices, the BoSA met with the Supervisory Authorities for the purpose of a fruitful exchange of information on subjects of mutual interest, including specific issues illustrated in this Report. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 759 The Board of Statutory Auditors took note of the report issued by the Internal Audit Function "2018 Remuneration Policies and Practices", which ends with the formulation of a "satisfactory" rating. Finally, in compliance with current legislation, the Board of Statutory Auditors examined the proposals for: • Goal Setting 2019 for the Chief Executive Officer, the Co-Chief Operating Officer - Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A.; • 2019 remuneration review for the Co-Chief Operating Officer- Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A. (for the Chief Executive Officer, it remained unchanged from the previous year); • review of the 2018 bonus for the Co-Chief Operating Officer- Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A. (no 2018 bonus proposal was formulated for the Chief Executive Officer in view of the fact that the 2017-2019 LTI Long-Term Incentives Plan replaces the variable bonus for the entire duration of the Plan) and verified the correctness of the Bank's adopted process and criteria, including the consistency with the relevant legislation, thus expressing its favorable opinions to the Board of Directors. 12. Non-Financial Statement The Board of Statutory Auditors, taken note of Italian Legislative Decree no. 254/2016 on the disclosure of non-financial information and the Implementing Regulation issued by Consob with a resolution dated 18 January 2018, exercised its functions by supervising the compliance with the provisions contained therein regarding the drafting of the Non-Financial Statement (hereinafter also "DNF") as part of the Integrated Financial Statements, approved by the Board of Directors on 5 March 2019. The Board of Statutory Auditors held various meetings the Function responsible for drafting the DNF, the representatives of the appointed External Auditors (Deloitte & Touche) and examined the documentation made available. Th BoSA analyzed the Assonime Circular no. 13 of 12 June 2017, a commentiary on Italian Legislative Decree 254/2016 and found the application of the Global Rule "Preparation of Non-Financial Information for the Integrated Report Production", aimed at defining roles, responsibilities, activities, controls and information flows of coordination between the Parent Company and the Group's Companies and structures. It also acknowledged the report issued by the External Auditors on 8 March 2019 which states that no elements were received that would suggest that the DNF of the UniCredit Group for the financial year ended on 31 December 2018 had not been drafted in all significant aspects in accordance with the relevant regulations. On the basis of the information acquired, the Board of Statutory Auditors attests that, in the course of its examination of the Non-Financial Statement, elements of non-compliance and/or violation of the relevant regulatory provisions have not come to its attention. 13. Additional activity by the Board of Statutory Auditors’ and information requested by Consob In performing its duties, as prescribed by Art. 2403 of the Italian Civil Code and Art. 149 of Italian Legislative Decree 58/1998 (TUF), the Board of Statutory Auditors: • exercised oversight on the implementation of the corporate governance rules contained in the codes of conduct that the Company declares to abide by. UniCredit S.p.A. complies with the Corporate Governance Code promoted by Borsa Italiana S.p.A. and has prepared, pursuant to Article 123-bis of Italian Legislative Decree no. 58/1998 (TUF), the annual "Report on Corporate Governance and Ownership Structure" which provides information on: i) the corporate governance practices actually applied; ii) the main features of the risk management and internal control systems; iii) the functioning mechanisms of the Shareholders' Meeting, its main powers, the rights of Shareholders and the procedures for exercising them; iv) the composition and functioning of the administrative and control bodies and their committees as well as the other information required by Article 123-bis of Italian Legislative Decree no. 58/1998 (TUF); • exercised oversight of the adequacy of the instructions given to subsidiaries pursuant to Art. 114, par. 2 of Italian Legislative Decree 58/1998. • exchanged information with the Boards of Statutory Auditors of the directly controlled companies as required by Art. 151, paragraph 2, of Italian Legislative Decree no. 58/1998 (TUF) and by the Supervisory Instructions of the Bank of Italy. In January 2019, in addition to an exchange of correspondence, the Board of Statutory Auditors met the Chairmen of the Boards of Statutory Auditors of the main Italian companies of the Group, in order to receive reports on any critical issues affecting the administration and control systems and the general trend of corporate activity; • it carried out its oversight activities at some Foreign Branches of UniCredit S.p.A. (Paris and Madrid), as well as through investigations conducted at the Central Region and Sicilia Region on selected samples of managed positions; • in accordance with the regulations and customary practices, the BoSA met with the Supervisory Authorities for the purpose of a fruitful exchange of information on subjects of mutual interest, including specific issues illustrated in this Report. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 759 The Board of Statutory Auditors took note of the report issued by the Internal Audit Function "2018 Remuneration Policies and Practices", which ends with the formulation of a "satisfactory" rating. Finally, in compliance with current legislation, the Board of Statutory Auditors examined the proposals for: • Goal Setting 2019 for the Chief Executive Officer, the Co-Chief Operating Officer - Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A.; • 2019 remuneration review for the Co-Chief Operating Officer- Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A. (for the Chief Executive Officer, it remained unchanged from the previous year); • review of the 2018 bonus for the Co-Chief Operating Officer- Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A. (no 2018 bonus proposal was formulated for the Chief Executive Officer in view of the fact that the 2017-2019 LTI Long-Term Incentives Plan replaces the variable bonus for the entire duration of the Plan) and verified the correctness of the Bank's adopted process and criteria, including the consistency with the relevant legislation, thus expressing its favorable opinions to the Board of Directors. 12. Non-Financial Statement The Board of Statutory Auditors, taken note of Italian Legislative Decree no. 254/2016 on the disclosure of non-financial information and the Implementing Regulation issued by Consob with a resolution dated 18 January 2018, exercised its functions by supervising the compliance with the provisions contained therein regarding the drafting of the Non-Financial Statement (hereinafter also "DNF") as part of the Integrated Financial Statements, approved by the Board of Directors on 5 March 2019. The Board of Statutory Auditors held various meetings the Function responsible for drafting the DNF, the representatives of the appointed External Auditors (Deloitte & Touche) and examined the documentation made available. Th BoSA analyzed the Assonime Circular no. 13 of 12 June 2017, a commentiary on Italian Legislative Decree 254/2016 and found the application of the Global Rule "Preparation of Non-Financial Information for the Integrated Report Production", aimed at defining roles, responsibilities, activities, controls and information flows of coordination between the Parent Company and the Group's Companies and structures. It also acknowledged the report issued by the External Auditors on 8 March 2019 which states that no elements were received that would suggest that the DNF of the UniCredit Group for the financial year ended on 31 December 2018 had not been drafted in all significant aspects in accordance with the relevant regulations. On the basis of the information acquired, the Board of Statutory Auditors attests that, in the course of its examination of the Non-Financial Statement, elements of non-compliance and/or violation of the relevant regulatory provisions have not come to its attention. 13. Additional activity by the Board of Statutory Auditors’ and information requested by Consob In performing its duties, as prescribed by Art. 2403 of the Italian Civil Code and Art. 149 of Italian Legislative Decree 58/1998 (TUF), the Board of Statutory Auditors: • exercised oversight on the implementation of the corporate governance rules contained in the codes of conduct that the Company declares to abide by. UniCredit S.p.A. complies with the Corporate Governance Code promoted by Borsa Italiana S.p.A. and has prepared, pursuant to Article 123-bis of Italian Legislative Decree no. 58/1998 (TUF), the annual "Report on Corporate Governance and Ownership Structure" which provides information on: i) the corporate governance practices actually applied; ii) the main features of the risk management and internal control systems; iii) the functioning mechanisms of the Shareholders' Meeting, its main powers, the rights of Shareholders and the procedures for exercising them; iv) the composition and functioning of the administrative and control bodies and their committees as well as the other information required by Article 123-bis of Italian Legislative Decree no. 58/1998 (TUF); • exercised oversight of the adequacy of the instructions given to subsidiaries pursuant to Art. 114, par. 2 of Italian Legislative Decree 58/1998. • exchanged information with the Boards of Statutory Auditors of the directly controlled companies as required by Art. 151, paragraph 2, of Italian Legislative Decree no. 58/1998 (TUF) and by the Supervisory Instructions of the Bank of Italy. In January 2019, in addition to an exchange of correspondence, the Board of Statutory Auditors met the Chairmen of the Boards of Statutory Auditors of the main Italian companies of the Group, in order to receive reports on any critical issues affecting the administration and control systems and the general trend of corporate activity; • it carried out its oversight activities at some Foreign Branches of UniCredit S.p.A. (Paris and Madrid), as well as through investigations conducted at the Central Region and Sicilia Region on selected samples of managed positions; • in accordance with the regulations and customary practices, the BoSA met with the Supervisory Authorities for the purpose of a fruitful exchange of information on subjects of mutual interest, including specific issues illustrated in this Report. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 759 The Board of Statutory Auditors took note of the report issued by the Internal Audit Function "2018 Remuneration Policies and Practices", which ends with the formulation of a "satisfactory" rating. Finally, in compliance with current legislation, the Board of Statutory Auditors examined the proposals for: • Goal Setting 2019 for the Chief Executive Officer, the Co-Chief Operating Officer - Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A.; • 2019 remuneration review for the Co-Chief Operating Officer- Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A. (for the Chief Executive Officer, it remained unchanged from the previous year); • review of the 2018 bonus for the Co-Chief Operating Officer- Manager in charge with preparing the financial reports and the Head of the Internal Audit Function of UniCredit S.p.A. (no 2018 bonus proposal was formulated for the Chief Executive Officer in view of the fact that the 2017-2019 LTI Long-Term Incentives Plan replaces the variable bonus for the entire duration of the Plan) and verified the correctness of the Bank's adopted process and criteria, including the consistency with the relevant legislation, thus expressing its favorable opinions to the Board of Directors. 12. Non-Financial Statement The Board of Statutory Auditors, taken note of Italian Legislative Decree no. 254/2016 on the disclosure of non-financial information and the Implementing Regulation issued by Consob with a resolution dated 18 January 2018, exercised its functions by supervising the compliance with the provisions contained therein regarding the drafting of the Non-Financial Statement (hereinafter also "DNF") as part of the Integrated Financial Statements, approved by the Board of Directors on 5 March 2019. The Board of Statutory Auditors held various meetings the Function responsible for drafting the DNF, the representatives of the appointed External Auditors (Deloitte & Touche) and examined the documentation made available. Th BoSA analyzed the Assonime Circular no. 13 of 12 June 2017, a commentiary on Italian Legislative Decree 254/2016 and found the application of the Global Rule "Preparation of Non-Financial Information for the Integrated Report Production", aimed at defining roles, responsibilities, activities, controls and information flows of coordination between the Parent Company and the Group's Companies and structures. It also acknowledged the report issued by the External Auditors on 8 March 2019 which states that no elements were received that would suggest that the DNF of the UniCredit Group for the financial year ended on 31 December 2018 had not been drafted in all significant aspects in accordance with the relevant regulations. On the basis of the information acquired, the Board of Statutory Auditors attests that, in the course of its examination of the Non-Financial Statement, elements of non-compliance and/or violation of the relevant regulatory provisions have not come to its attention. 13. Additional activity by the Board of Statutory Auditors’ and information requested by Consob In performing its duties, as prescribed by Art. 2403 of the Italian Civil Code and Art. 149 of Italian Legislative Decree 58/1998 (TUF), the Board of Statutory Auditors: • exercised oversight on the implementation of the corporate governance rules contained in the codes of conduct that the Company declares to abide by. UniCredit S.p.A. complies with the Corporate Governance Code promoted by Borsa Italiana S.p.A. and has prepared, pursuant to Article 123-bis of Italian Legislative Decree no. 58/1998 (TUF), the annual "Report on Corporate Governance and Ownership Structure" which provides information on: i) the corporate governance practices actually applied; ii) the main features of the risk management and internal control systems; iii) the functioning mechanisms of the Shareholders' Meeting, its main powers, the rights of Shareholders and the procedures for exercising them; iv) the composition and functioning of the administrative and control bodies and their committees as well as the other information required by Article 123-bis of Italian Legislative Decree no. 58/1998 (TUF); • exercised oversight of the adequacy of the instructions given to subsidiaries pursuant to Art. 114, par. 2 of Italian Legislative Decree 58/1998. • exchanged information with the Boards of Statutory Auditors of the directly controlled companies as required by Art. 151, paragraph 2, of Italian Legislative Decree no. 58/1998 (TUF) and by the Supervisory Instructions of the Bank of Italy. In January 2019, in addition to an exchange of correspondence, the Board of Statutory Auditors met the Chairmen of the Boards of Statutory Auditors of the main Italian companies of the Group, in order to receive reports on any critical issues affecting the administration and control systems and the general trend of corporate activity; • it carried out its oversight activities at some Foreign Branches of UniCredit S.p.A. (Paris and Madrid), as well as through investigations conducted at the Central Region and Sicilia Region on selected samples of managed positions; • in accordance with the regulations and customary practices, the BoSA met with the Supervisory Authorities for the purpose of a fruitful exchange of information on subjects of mutual interest, including specific issues illustrated in this Report. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 760 2018 Annual Report and Accounts · UniCredit From the date of the previous Report of the Board of Statutory Auditors and up to the date of this Report, communications and/or complaint have been received, also qualified as such pursuant to Art. 2408 of the Italian Civil Code. The following are noted in particular: • a communication dated 9 April 2018, received on 9 April 2018 by certified email from the shareholder Mr. Marco Bava; • a communication dated 11 April 2018, received on 12 April 2018 by certified email from the shareholder Mr. Marco Bava; • a question from the shareholder Mr. Gianfranco D'Atri dated 12 April 2018, formulated during a speech at the shareholders' meeting of 12 April 2018; • a complaint dated 1st May 2018 to the Bank of Italy formulated by the shareholder Mr. Marco Bava, communicated to UniCredit by the Bank of Italy on 13 June 2018; • a communication dated 4 September 2018, received on 4 September 2018 by certified email from the shareholder Mr. Marco Bava; • a communication dated 12 January 2019, received on 16 January 2019 by registered letter from the shareholder Mr. Francesco Santoro. In response to each received communication/complaint, the Board of Statutory Auditors promptly carried out adequate in-depth examinations with the support of the Bank's competent structures, checking the possible merits of the reported facts, gathering the necessary information to examine and evaluate the cases submitted and sharing, in all cases, the reasonableness of the conclusions presented by those structures. At the outcome of the investigations, no irregularities were found that required reporting to the Shareholders' Meeting. During the year, the Board of Statutory Auditors issued the opinions and expressed the observations that the current regulations and supervisory provisions for banks assign to its responsibility. Furthermore, the Board of Statutory Auditors reports that: • it has taken note of the self-assessment required by the regulatory provisions, carried out by the Board of Directors in the meeting of 5 March 2019; • it found that the criteria and procedures establishing the requirements of independence adopted by the Board of Directors for the annual assessment of the independence of its members were correctly applied; • it found that the Board of Directors carried out the verification of the positions held for the purposes of the interlocking prohibition pursuant to Article 36 of Italian Legislative Decree 201/2011; • it verified, as required by the Corporate Governance Code issued by Borsa Italiana S.p.A., that its members fulfill the same requirements of independence required for Directors; • it verified the fulfillment of the independence requirements of the individual members of the Board of Statutory Auditors and carried out, periodically and occasionally, the acknowledgement and the assessments concerning the communications received by the individual members regarding the number of awarded/lapsed appointments and the associated time commitment; • in addition to the board meetings, it participated in specific meetings with the Directors, also open to the Statutory Auditors, dedicated to the perspectives and key elements of the strategy of the Group and the entire European banking sector; • it oversaw that transactions undertaken with persons with administrative, managerial or control functions were always conducted in compliance with Art. 136 TUB and Supervisory Instructions. The Board of Statutory Auditors does not deem it necessary to exercise the option of making proposals to the Shareholders’ Meeting pursuant to Art. 153, second paragraph, of Italian Legislative Decree 58/1998. Corporate Governance The Board of Statutory Auditors of UniCredit S.p.A. operates within the framework of an integrated governance and of adequate and structured internal corporate information flows. The BoSA took note of the information provided in the Report on Corporate Governance and Ownership Structures, approved by the Board of Directors during the meeting held on 5 March 2019. TheBoSA, pursuant to the provisions of Circular 285/2013 of the Bank of Italy, carried out the self-assessment on its composition and operation, considering them adequate also in light of its development over time and its range of skills, responsibilities and expertise, which ensured the effective ongoing operation of the Body. During the year, the members of the Board of Statutory Auditors participated in the permanent induction program for the members of the Board of Directors, based on three-year cycles linked to the BoSA's mandate and prepared also with the support of an external consultant. This program includes both sessions aimed at facilitating the addition of new Directors and recurring training sessions in order to preserve, inter alia, the wealth of technical skills necessary to carry out the Role with awareness. During 2018, the Board of Statutory Auditors participated in the meetings of the IC&RC, according to the modalities laid down in the Regulation of the Company Bodies and Committees of UniCredit S.p.A. (the Chairman of the Board of Statutory Auditors in all cases and the other Statutory Auditors until the renewal of the composition of the IC&RC of April 2018), receiving periodic information on the issues of common interest, and met the members of the Related Parties Committee for a mutual exchange of information, with a view to an integrated governance. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 760 2018 Annual Report and Accounts · UniCredit From the date of the previous Report of the Board of Statutory Auditors and up to the date of this Report, communications and/or complaint have been received, also qualified as such pursuant to Art. 2408 of the Italian Civil Code. The following are noted in particular: • a communication dated 9 April 2018, received on 9 April 2018 by certified email from the shareholder Mr. Marco Bava; • a communication dated 11 April 2018, received on 12 April 2018 by certified email from the shareholder Mr. Marco Bava; • a question from the shareholder Mr. Gianfranco D'Atri dated 12 April 2018, formulated during a speech at the shareholders' meeting of 12 April 2018; • a complaint dated 1st May 2018 to the Bank of Italy formulated by the shareholder Mr. Marco Bava, communicated to UniCredit by the Bank of Italy on 13 June 2018; • a communication dated 4 September 2018, received on 4 September 2018 by certified email from the shareholder Mr. Marco Bava; • a communication dated 12 January 2019, received on 16 January 2019 by registered letter from the shareholder Mr. Francesco Santoro. In response to each received communication/complaint, the Board of Statutory Auditors promptly carried out adequate in-depth examinations with the support of the Bank's competent structures, checking the possible merits of the reported facts, gathering the necessary information to examine and evaluate the cases submitted and sharing, in all cases, the reasonableness of the conclusions presented by those structures. At the outcome of the investigations, no irregularities were found that required reporting to the Shareholders' Meeting. During the year, the Board of Statutory Auditors issued the opinions and expressed the observations that the current regulations and supervisory provisions for banks assign to its responsibility. Furthermore, the Board of Statutory Auditors reports that: • it has taken note of the self-assessment required by the regulatory provisions, carried out by the Board of Directors in the meeting of 5 March 2019; • it found that the criteria and procedures establishing the requirements of independence adopted by the Board of Directors for the annual assessment of the independence of its members were correctly applied; • it found that the Board of Directors carried out the verification of the positions held for the purposes of the interlocking prohibition pursuant to Article 36 of Italian Legislative Decree 201/2011; • it verified, as required by the Corporate Governance Code issued by Borsa Italiana S.p.A., that its members fulfill the same requirements of independence required for Directors; • it verified the fulfillment of the independence requirements of the individual members of the Board of Statutory Auditors and carried out, periodically and occasionally, the acknowledgement and the assessments concerning the communications received by the individual members regarding the number of awarded/lapsed appointments and the associated time commitment; • in addition to the board meetings, it participated in specific meetings with the Directors, also open to the Statutory Auditors, dedicated to the perspectives and key elements of the strategy of the Group and the entire European banking sector; • it oversaw that transactions undertaken with persons with administrative, managerial or control functions were always conducted in compliance with Art. 136 TUB and Supervisory Instructions. The Board of Statutory Auditors does not deem it necessary to exercise the option of making proposals to the Shareholders’ Meeting pursuant to Art. 153, second paragraph, of Italian Legislative Decree 58/1998. Corporate Governance The Board of Statutory Auditors of UniCredit S.p.A. operates within the framework of an integrated governance and of adequate and structured internal corporate information flows. The BoSA took note of the information provided in the Report on Corporate Governance and Ownership Structures, approved by the Board of Directors during the meeting held on 5 March 2019. TheBoSA, pursuant to the provisions of Circular 285/2013 of the Bank of Italy, carried out the self-assessment on its composition and operation, considering them adequate also in light of its development over time and its range of skills, responsibilities and expertise, which ensured the effective ongoing operation of the Body. During the year, the members of the Board of Statutory Auditors participated in the permanent induction program for the members of the Board of Directors, based on three-year cycles linked to the BoSA's mandate and prepared also with the support of an external consultant. This program includes both sessions aimed at facilitating the addition of new Directors and recurring training sessions in order to preserve, inter alia, the wealth of technical skills necessary to carry out the Role with awareness. During 2018, the Board of Statutory Auditors participated in the meetings of the IC&RC, according to the modalities laid down in the Regulation of the Company Bodies and Committees of UniCredit S.p.A. (the Chairman of the Board of Statutory Auditors in all cases and the other Statutory Auditors until the renewal of the composition of the IC&RC of April 2018), receiving periodic information on the issues of common interest, and met the members of the Related Parties Committee for a mutual exchange of information, with a view to an integrated governance. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 760 2018 Annual Report and Accounts · UniCredit From the date of the previous Report of the Board of Statutory Auditors and up to the date of this Report, communications and/or complaint have been received, also qualified as such pursuant to Art. 2408 of the Italian Civil Code. The following are noted in particular: • a communication dated 9 April 2018, received on 9 April 2018 by certified email from the shareholder Mr. Marco Bava; • a communication dated 11 April 2018, received on 12 April 2018 by certified email from the shareholder Mr. Marco Bava; • a question from the shareholder Mr. Gianfranco D'Atri dated 12 April 2018, formulated during a speech at the shareholders' meeting of 12 April 2018; • a complaint dated 1st May 2018 to the Bank of Italy formulated by the shareholder Mr. Marco Bava, communicated to UniCredit by the Bank of Italy on 13 June 2018; • a communication dated 4 September 2018, received on 4 September 2018 by certified email from the shareholder Mr. Marco Bava; • a communication dated 12 January 2019, received on 16 January 2019 by registered letter from the shareholder Mr. Francesco Santoro. In response to each received communication/complaint, the Board of Statutory Auditors promptly carried out adequate in-depth examinations with the support of the Bank's competent structures, checking the possible merits of the reported facts, gathering the necessary information to examine and evaluate the cases submitted and sharing, in all cases, the reasonableness of the conclusions presented by those structures. At the outcome of the investigations, no irregularities were found that required reporting to the Shareholders' Meeting. During the year, the Board of Statutory Auditors issued the opinions and expressed the observations that the current regulations and supervisory provisions for banks assign to its responsibility. Furthermore, the Board of Statutory Auditors reports that: • it has taken note of the self-assessment required by the regulatory provisions, carried out by the Board of Directors in the meeting of 5 March 2019; • it found that the criteria and procedures establishing the requirements of independence adopted by the Board of Directors for the annual assessment of the independence of its members were correctly applied; • it found that the Board of Directors carried out the verification of the positions held for the purposes of the interlocking prohibition pursuant to Article 36 of Italian Legislative Decree 201/2011; • it verified, as required by the Corporate Governance Code issued by Borsa Italiana S.p.A., that its members fulfill the same requirements of independence required for Directors; • it verified the fulfillment of the independence requirements of the individual members of the Board of Statutory Auditors and carried out, periodically and occasionally, the acknowledgement and the assessments concerning the communications received by the individual members regarding the number of awarded/lapsed appointments and the associated time commitment; • in addition to the board meetings, it participated in specific meetings with the Directors, also open to the Statutory Auditors, dedicated to the perspectives and key elements of the strategy of the Group and the entire European banking sector; • it oversaw that transactions undertaken with persons with administrative, managerial or control functions were always conducted in compliance with Art. 136 TUB and Supervisory Instructions. The Board of Statutory Auditors does not deem it necessary to exercise the option of making proposals to the Shareholders’ Meeting pursuant to Art. 153, second paragraph, of Italian Legislative Decree 58/1998. Corporate Governance The Board of Statutory Auditors of UniCredit S.p.A. operates within the framework of an integrated governance and of adequate and structured internal corporate information flows. The BoSA took note of the information provided in the Report on Corporate Governance and Ownership Structures, approved by the Board of Directors during the meeting held on 5 March 2019. TheBoSA, pursuant to the provisions of Circular 285/2013 of the Bank of Italy, carried out the self-assessment on its composition and operation, considering them adequate also in light of its development over time and its range of skills, responsibilities and expertise, which ensured the effective ongoing operation of the Body. During the year, the members of the Board of Statutory Auditors participated in the permanent induction program for the members of the Board of Directors, based on three-year cycles linked to the BoSA's mandate and prepared also with the support of an external consultant. This program includes both sessions aimed at facilitating the addition of new Directors and recurring training sessions in order to preserve, inter alia, the wealth of technical skills necessary to carry out the Role with awareness. During 2018, the Board of Statutory Auditors participated in the meetings of the IC&RC, according to the modalities laid down in the Regulation of the Company Bodies and Committees of UniCredit S.p.A. (the Chairman of the Board of Statutory Auditors in all cases and the other Statutory Auditors until the renewal of the composition of the IC&RC of April 2018), receiving periodic information on the issues of common interest, and met the members of the Related Parties Committee for a mutual exchange of information, with a view to an integrated governance. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 760 2018 Annual Report and Accounts · UniCredit From the date of the previous Report of the Board of Statutory Auditors and up to the date of this Report, communications and/or complaint have been received, also qualified as such pursuant to Art. 2408 of the Italian Civil Code. The following are noted in particular: • a communication dated 9 April 2018, received on 9 April 2018 by certified email from the shareholder Mr. Marco Bava; • a communication dated 11 April 2018, received on 12 April 2018 by certified email from the shareholder Mr. Marco Bava; • a question from the shareholder Mr. Gianfranco D'Atri dated 12 April 2018, formulated during a speech at the shareholders' meeting of 12 April 2018; • a complaint dated 1st May 2018 to the Bank of Italy formulated by the shareholder Mr. Marco Bava, communicated to UniCredit by the Bank of Italy on 13 June 2018; • a communication dated 4 September 2018, received on 4 September 2018 by certified email from the shareholder Mr. Marco Bava; • a communication dated 12 January 2019, received on 16 January 2019 by registered letter from the shareholder Mr. Francesco Santoro. In response to each received communication/complaint, the Board of Statutory Auditors promptly carried out adequate in-depth examinations with the support of the Bank's competent structures, checking the possible merits of the reported facts, gathering the necessary information to examine and evaluate the cases submitted and sharing, in all cases, the reasonableness of the conclusions presented by those structures. At the outcome of the investigations, no irregularities were found that required reporting to the Shareholders' Meeting. During the year, the Board of Statutory Auditors issued the opinions and expressed the observations that the current regulations and supervisory provisions for banks assign to its responsibility. Furthermore, the Board of Statutory Auditors reports that: • it has taken note of the self-assessment required by the regulatory provisions, carried out by the Board of Directors in the meeting of 5 March 2019; • it found that the criteria and procedures establishing the requirements of independence adopted by the Board of Directors for the annual assessment of the independence of its members were correctly applied; • it found that the Board of Directors carried out the verification of the positions held for the purposes of the interlocking prohibition pursuant to Article 36 of Italian Legislative Decree 201/2011; • it verified, as required by the Corporate Governance Code issued by Borsa Italiana S.p.A., that its members fulfill the same requirements of independence required for Directors; • it verified the fulfillment of the independence requirements of the individual members of the Board of Statutory Auditors and carried out, periodically and occasionally, the acknowledgement and the assessments concerning the communications received by the individual members regarding the number of awarded/lapsed appointments and the associated time commitment; • in addition to the board meetings, it participated in specific meetings with the Directors, also open to the Statutory Auditors, dedicated to the perspectives and key elements of the strategy of the Group and the entire European banking sector; • it oversaw that transactions undertaken with persons with administrative, managerial or control functions were always conducted in compliance with Art. 136 TUB and Supervisory Instructions. The Board of Statutory Auditors does not deem it necessary to exercise the option of making proposals to the Shareholders’ Meeting pursuant to Art. 153, second paragraph, of Italian Legislative Decree 58/1998. Corporate Governance The Board of Statutory Auditors of UniCredit S.p.A. operates within the framework of an integrated governance and of adequate and structured internal corporate information flows. The BoSA took note of the information provided in the Report on Corporate Governance and Ownership Structures, approved by the Board of Directors during the meeting held on 5 March 2019. TheBoSA, pursuant to the provisions of Circular 285/2013 of the Bank of Italy, carried out the self-assessment on its composition and operation, considering them adequate also in light of its development over time and its range of skills, responsibilities and expertise, which ensured the effective ongoing operation of the Body. During the year, the members of the Board of Statutory Auditors participated in the permanent induction program for the members of the Board of Directors, based on three-year cycles linked to the BoSA's mandate and prepared also with the support of an external consultant. This program includes both sessions aimed at facilitating the addition of new Directors and recurring training sessions in order to preserve, inter alia, the wealth of technical skills necessary to carry out the Role with awareness. During 2018, the Board of Statutory Auditors participated in the meetings of the IC&RC, according to the modalities laid down in the Regulation of the Company Bodies and Committees of UniCredit S.p.A. (the Chairman of the Board of Statutory Auditors in all cases and the other Statutory Auditors until the renewal of the composition of the IC&RC of April 2018), receiving periodic information on the issues of common interest, and met the members of the Related Parties Committee for a mutual exchange of information, with a view to an integrated governance. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 760 2018 Annual Report and Accounts · UniCredit From the date of the previous Report of the Board of Statutory Auditors and up to the date of this Report, communications and/or complaint have been received, also qualified as such pursuant to Art. 2408 of the Italian Civil Code. The following are noted in particular: • a communication dated 9 April 2018, received on 9 April 2018 by certified email from the shareholder Mr. Marco Bava; • a communication dated 11 April 2018, received on 12 April 2018 by certified email from the shareholder Mr. Marco Bava; • a question from the shareholder Mr. Gianfranco D'Atri dated 12 April 2018, formulated during a speech at the shareholders' meeting of 12 April 2018; • a complaint dated 1st May 2018 to the Bank of Italy formulated by the shareholder Mr. Marco Bava, communicated to UniCredit by the Bank of Italy on 13 June 2018; • a communication dated 4 September 2018, received on 4 September 2018 by certified email from the shareholder Mr. Marco Bava; • a communication dated 12 January 2019, received on 16 January 2019 by registered letter from the shareholder Mr. Francesco Santoro. In response to each received communication/complaint, the Board of Statutory Auditors promptly carried out adequate in-depth examinations with the support of the Bank's competent structures, checking the possible merits of the reported facts, gathering the necessary information to examine and evaluate the cases submitted and sharing, in all cases, the reasonableness of the conclusions presented by those structures. At the outcome of the investigations, no irregularities were found that required reporting to the Shareholders' Meeting. During the year, the Board of Statutory Auditors issued the opinions and expressed the observations that the current regulations and supervisory provisions for banks assign to its responsibility. Furthermore, the Board of Statutory Auditors reports that: • it has taken note of the self-assessment required by the regulatory provisions, carried out by the Board of Directors in the meeting of 5 March 2019; • it found that the criteria and procedures establishing the requirements of independence adopted by the Board of Directors for the annual assessment of the independence of its members were correctly applied; • it found that the Board of Directors carried out the verification of the positions held for the purposes of the interlocking prohibition pursuant to Article 36 of Italian Legislative Decree 201/2011; • it verified, as required by the Corporate Governance Code issued by Borsa Italiana S.p.A., that its members fulfill the same requirements of independence required for Directors; • it verified the fulfillment of the independence requirements of the individual members of the Board of Statutory Auditors and carried out, periodically and occasionally, the acknowledgement and the assessments concerning the communications received by the individual members regarding the number of awarded/lapsed appointments and the associated time commitment; • in addition to the board meetings, it participated in specific meetings with the Directors, also open to the Statutory Auditors, dedicated to the perspectives and key elements of the strategy of the Group and the entire European banking sector; • it oversaw that transactions undertaken with persons with administrative, managerial or control functions were always conducted in compliance with Art. 136 TUB and Supervisory Instructions. The Board of Statutory Auditors does not deem it necessary to exercise the option of making proposals to the Shareholders’ Meeting pursuant to Art. 153, second paragraph, of Italian Legislative Decree 58/1998. Corporate Governance The Board of Statutory Auditors of UniCredit S.p.A. operates within the framework of an integrated governance and of adequate and structured internal corporate information flows. The BoSA took note of the information provided in the Report on Corporate Governance and Ownership Structures, approved by the Board of Directors during the meeting held on 5 March 2019. TheBoSA, pursuant to the provisions of Circular 285/2013 of the Bank of Italy, carried out the self-assessment on its composition and operation, considering them adequate also in light of its development over time and its range of skills, responsibilities and expertise, which ensured the effective ongoing operation of the Body. During the year, the members of the Board of Statutory Auditors participated in the permanent induction program for the members of the Board of Directors, based on three-year cycles linked to the BoSA's mandate and prepared also with the support of an external consultant. This program includes both sessions aimed at facilitating the addition of new Directors and recurring training sessions in order to preserve, inter alia, the wealth of technical skills necessary to carry out the Role with awareness. During 2018, the Board of Statutory Auditors participated in the meetings of the IC&RC, according to the modalities laid down in the Regulation of the Company Bodies and Committees of UniCredit S.p.A. (the Chairman of the Board of Statutory Auditors in all cases and the other Statutory Auditors until the renewal of the composition of the IC&RC of April 2018), receiving periodic information on the issues of common interest, and met the members of the Related Parties Committee for a mutual exchange of information, with a view to an integrated governance. Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 761 The Board of Statutory Auditors reported every six months to the Board of Directors and the IC&RC about the main activities carried out and the recommendations made. In specific regard to the attribution to the Board of Statutory Auditors also of the functions of Oversight Body according to Italian Legislative Decree 231/2001, the Board of Directors of UniCredit S.p.A., on its meeting of 6 February 2019, decided the attribution of these duties to the Board of Statutory Auditors starting from its renewal for the years 2019 - 2021. Until the renewal of the Board of Statutory Auditors, the previous structure is maintained, entrusting these functions to a specifically constituted independent body composed of external members and senior executives with direction, support and control functions. Conclusions The oversight of the Board of Statutory Auditors revealed no censurable actions, omissions or irregularities requiring to be noted in this Report. During the meetings of the Board of Directors, during which the most significant economic, financial and equity transactions of UniCredit S.p.A. and its subsidiaries were examined, the Board of Statutory Auditors received the information pursuant to Art. 150, paragraph 1, of Italian Legislative Decree. 58/1998 (TUF). Based on the information acquired through its oversight activity, the Board of Statutory Auditors did not become aware of any operations during the period covered by this report performed not in compliance with the principles of proper management, resolved and carried out not in accordance with the law and the Company Bylaws, not in the Company’s interest, not in accordance with Shareholders’ resolutions, manifestly imprudent or reckless, lacking the necessary information where Directors’ interests were involved, or prejudicial to the Company’s assets. Having regard to the foregoing, the Board of Statutory Auditors, having examined the reports drawn up by the Auditing Company, having noted the joint attestations issued by the Chief Executive Officer and the Financial Reporting Manager, does not find in the areas under its remit any impediment to the approval of the proposal of the Financial Statements as of 31 December 2018 and the distribution of dividends submitted by the Board of Directors. In this regard, the Board of Statutory Auditors notes that the Board of Directors assessed the dividend distribution proposal based on prudent assumptions aimed at allowing, linearly over time, the constant compliance with prudential capital requirements. The mandate of the Board of Statutory Auditors appointed by the Shareholders' Meeting of 14 April 2016 expires on 31 December 2018, with the approval of the Financial Statements. Consequently, the Shareholders' Meeting of 11 April 2019 is called to appoint the new Board of Statutory Auditors for the three-year period 2019 - 2021. This is the occasion to thank you for the trust given to the Board of Statutory Auditors during these years of mandate. Milan, 13 March 2019 For the Board of Statutory Auditors The Chairman Pierpaolo Singer Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 761 The Board of Statutory Auditors reported every six months to the Board of Directors and the IC&RC about the main activities carried out and the recommendations made. In specific regard to the attribution to the Board of Statutory Auditors also of the functions of Oversight Body according to Italian Legislative Decree 231/2001, the Board of Directors of UniCredit S.p.A., on its meeting of 6 February 2019, decided the attribution of these duties to the Board of Statutory Auditors starting from its renewal for the years 2019 - 2021. Until the renewal of the Board of Statutory Auditors, the previous structure is maintained, entrusting these functions to a specifically constituted independent body composed of external members and senior executives with direction, support and control functions. Conclusions The oversight of the Board of Statutory Auditors revealed no censurable actions, omissions or irregularities requiring to be noted in this Report. During the meetings of the Board of Directors, during which the most significant economic, financial and equity transactions of UniCredit S.p.A. and its subsidiaries were examined, the Board of Statutory Auditors received the information pursuant to Art. 150, paragraph 1, of Italian Legislative Decree. 58/1998 (TUF). Based on the information acquired through its oversight activity, the Board of Statutory Auditors did not become aware of any operations during the period covered by this report performed not in compliance with the principles of proper management, resolved and carried out not in accordance with the law and the Company Bylaws, not in the Company’s interest, not in accordance with Shareholders’ resolutions, manifestly imprudent or reckless, lacking the necessary information where Directors’ interests were involved, or prejudicial to the Company’s assets. Having regard to the foregoing, the Board of Statutory Auditors, having examined the reports drawn up by the Auditing Company, having noted the joint attestations issued by the Chief Executive Officer and the Financial Reporting Manager, does not find in the areas under its remit any impediment to the approval of the proposal of the Financial Statements as of 31 December 2018 and the distribution of dividends submitted by the Board of Directors. In this regard, the Board of Statutory Auditors notes that the Board of Directors assessed the dividend distribution proposal based on prudent assumptions aimed at allowing, linearly over time, the constant compliance with prudential capital requirements. The mandate of the Board of Statutory Auditors appointed by the Shareholders' Meeting of 14 April 2016 expires on 31 December 2018, with the approval of the Financial Statements. Consequently, the Shareholders' Meeting of 11 April 2019 is called to appoint the new Board of Statutory Auditors for the three-year period 2019 - 2021. This is the occasion to thank you for the trust given to the Board of Statutory Auditors during these years of mandate. Milan, 13 March 2019 For the Board of Statutory Auditors The Chairman Pierpaolo Singer Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 761 The Board of Statutory Auditors reported every six months to the Board of Directors and the IC&RC about the main activities carried out and the recommendations made. In specific regard to the attribution to the Board of Statutory Auditors also of the functions of Oversight Body according to Italian Legislative Decree 231/2001, the Board of Directors of UniCredit S.p.A., on its meeting of 6 February 2019, decided the attribution of these duties to the Board of Statutory Auditors starting from its renewal for the years 2019 - 2021. Until the renewal of the Board of Statutory Auditors, the previous structure is maintained, entrusting these functions to a specifically constituted independent body composed of external members and senior executives with direction, support and control functions. Conclusions The oversight of the Board of Statutory Auditors revealed no censurable actions, omissions or irregularities requiring to be noted in this Report. During the meetings of the Board of Directors, during which the most significant economic, financial and equity transactions of UniCredit S.p.A. and its subsidiaries were examined, the Board of Statutory Auditors received the information pursuant to Art. 150, paragraph 1, of Italian Legislative Decree. 58/1998 (TUF). Based on the information acquired through its oversight activity, the Board of Statutory Auditors did not become aware of any operations during the period covered by this report performed not in compliance with the principles of proper management, resolved and carried out not in accordance with the law and the Company Bylaws, not in the Company’s interest, not in accordance with Shareholders’ resolutions, manifestly imprudent or reckless, lacking the necessary information where Directors’ interests were involved, or prejudicial to the Company’s assets. Having regard to the foregoing, the Board of Statutory Auditors, having examined the reports drawn up by the Auditing Company, having noted the joint attestations issued by the Chief Executive Officer and the Financial Reporting Manager, does not find in the areas under its remit any impediment to the approval of the proposal of the Financial Statements as of 31 December 2018 and the distribution of dividends submitted by the Board of Directors. In this regard, the Board of Statutory Auditors notes that the Board of Directors assessed the dividend distribution proposal based on prudent assumptions aimed at allowing, linearly over time, the constant compliance with prudential capital requirements. The mandate of the Board of Statutory Auditors appointed by the Shareholders' Meeting of 14 April 2016 expires on 31 December 2018, with the approval of the Financial Statements. Consequently, the Shareholders' Meeting of 11 April 2019 is called to appoint the new Board of Statutory Auditors for the three-year period 2019 - 2021. This is the occasion to thank you for the trust given to the Board of Statutory Auditors during these years of mandate. Milan, 13 March 2019 For the Board of Statutory Auditors The Chairman Pierpaolo Singer Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 761 The Board of Statutory Auditors reported every six months to the Board of Directors and the IC&RC about the main activities carried out and the recommendations made. In specific regard to the attribution to the Board of Statutory Auditors also of the functions of Oversight Body according to Italian Legislative Decree 231/2001, the Board of Directors of UniCredit S.p.A., on its meeting of 6 February 2019, decided the attribution of these duties to the Board of Statutory Auditors starting from its renewal for the years 2019 - 2021. Until the renewal of the Board of Statutory Auditors, the previous structure is maintained, entrusting these functions to a specifically constituted independent body composed of external members and senior executives with direction, support and control functions. Conclusions The oversight of the Board of Statutory Auditors revealed no censurable actions, omissions or irregularities requiring to be noted in this Report. During the meetings of the Board of Directors, during which the most significant economic, financial and equity transactions of UniCredit S.p.A. and its subsidiaries were examined, the Board of Statutory Auditors received the information pursuant to Art. 150, paragraph 1, of Italian Legislative Decree. 58/1998 (TUF). Based on the information acquired through its oversight activity, the Board of Statutory Auditors did not become aware of any operations during the period covered by this report performed not in compliance with the principles of proper management, resolved and carried out not in accordance with the law and the Company Bylaws, not in the Company’s interest, not in accordance with Shareholders’ resolutions, manifestly imprudent or reckless, lacking the necessary information where Directors’ interests were involved, or prejudicial to the Company’s assets. Having regard to the foregoing, the Board of Statutory Auditors, having examined the reports drawn up by the Auditing Company, having noted the joint attestations issued by the Chief Executive Officer and the Financial Reporting Manager, does not find in the areas under its remit any impediment to the approval of the proposal of the Financial Statements as of 31 December 2018 and the distribution of dividends submitted by the Board of Directors. In this regard, the Board of Statutory Auditors notes that the Board of Directors assessed the dividend distribution proposal based on prudent assumptions aimed at allowing, linearly over time, the constant compliance with prudential capital requirements. The mandate of the Board of Statutory Auditors appointed by the Shareholders' Meeting of 14 April 2016 expires on 31 December 2018, with the approval of the Financial Statements. Consequently, the Shareholders' Meeting of 11 April 2019 is called to appoint the new Board of Statutory Auditors for the three-year period 2019 - 2021. This is the occasion to thank you for the trust given to the Board of Statutory Auditors during these years of mandate. Milan, 13 March 2019 For the Board of Statutory Auditors The Chairman Pierpaolo Singer Company financial statements | Report and resolutions Board of Statutory Auditors’ Report UniCredit ·2018 Annual Report and Accounts 761 The Board of Statutory Auditors reported every six months to the Board of Directors and the IC&RC about the main activities carried out and the recommendations made. In specific regard to the attribution to the Board of Statutory Auditors also of the functions of Oversight Body according to Italian Legislative Decree 231/2001, the Board of Directors of UniCredit S.p.A., on its meeting of 6 February 2019, decided the attribution of these duties to the Board of Statutory Auditors starting from its renewal for the years 2019 - 2021. Until the renewal of the Board of Statutory Auditors, the previous structure is maintained, entrusting these functions to a specifically constituted independent body composed of external members and senior executives with direction, support and control functions. Conclusions The oversight of the Board of Statutory Auditors revealed no censurable actions, omissions or irregularities requiring to be noted in this Report. During the meetings of the Board of Directors, during which the most significant economic, financial and equity transactions of UniCredit S.p.A. and its subsidiaries were examined, the Board of Statutory Auditors received the information pursuant to Art. 150, paragraph 1, of Italian Legislative Decree. 58/1998 (TUF). Based on the information acquired through its oversight activity, the Board of Statutory Auditors did not become aware of any operations during the period covered by this report performed not in compliance with the principles of proper management, resolved and carried out not in accordance with the law and the Company Bylaws, not in the Company’s interest, not in accordance with Shareholders’ resolutions, manifestly imprudent or reckless, lacking the necessary information where Directors’ interests were involved, or prejudicial to the Company’s assets. Having regard to the foregoing, the Board of Statutory Auditors, having examined the reports drawn up by the Auditing Company, having noted the joint attestations issued by the Chief Executive Officer and the Financial Reporting Manager, does not find in the areas under its remit any impediment to the approval of the proposal of the Financial Statements as of 31 December 2018 and the distribution of dividends submitted by the Board of Directors. In this regard, the Board of Statutory Auditors notes that the Board of Directors assessed the dividend distribution proposal based on prudent assumptions aimed at allowing, linearly over time, the constant compliance with prudential capital requirements. The mandate of the Board of Statutory Auditors appointed by the Shareholders' Meeting of 14 April 2016 expires on 31 December 2018, with the approval of the Financial Statements. Consequently, the Shareholders' Meeting of 11 April 2019 is called to appoint the new Board of Statutory Auditors for the three-year period 2019 - 2021. This is the occasion to thank you for the trust given to the Board of Statutory Auditors during these years of mandate. Milan, 13 March 2019 For the Board of Statutory Auditors The Chairman Pierpaolo Singer Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 762 2018 Annual Report and Accounts · UniCredit Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 762 2018 Annual Report and Accounts · UniCredit Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 762 2018 Annual Report and Accounts · UniCredit Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 762 2018 Annual Report and Accounts · UniCredit Company financial statements | Report and resolutions Board of Statutory Auditors’ Report 762 2018 Annual Report and Accounts · UniCredit Company financial statements | Report and resolutions Report of the External Auditors UniCredit ·2018 Annual Report and Accounts 773 Company financial statements | Report and resolutions Report of the External Auditors UniCredit ·2018 Annual Report and Accounts 773 Company financial statements | Report and resolutions Report of the External Auditors UniCredit ·2018 Annual Report and Accounts 773 Company financial statements | Report and resolutions Report of the External Auditors UniCredit ·2018 Annual Report and Accounts 773 Company financial statements | Report and resolutions Report of the External Auditors UniCredit ·2018 Annual Report and Accounts 773  774 2018 Annual Report and Accounts · UniCredit 774 2018 Annual Report and Accounts · UniCredit 774 2018 Annual Report and Accounts · UniCredit 774 2018 Annual Report and Accounts · UniCredit 774 2018 Annual Report and Accounts · UniCredit  Glossary UniCredit ·2018 Annual Report and Accounts 775 Shareholders’ meeting resolutions Glossary ABCP Conduits - Asset Backed Commercial Paper Conduits Asset Backed Commercial Paper Conduits are a type of “SPV - Special Purpose Vehicle” (see item) set up to securitise various types of assets and financed by Commercial Paper (see item). Commercial Paper generally matures in 270 days, with payment of principal and interest depending on the cash flow generated by the underlying assets. ABCP Conduits may be single-sellers or multi-sellers according to the number of issues they make. Conduits generally require several SPVs. The first-level vehicles issue the Commercial Paper and finance one or more second-level vehicles or Purchase Companies (see item) which purchase the assets to be securitised. An ABCP Conduit will have the following: • issues of short-term paper creating a maturity mismatch between the assets held and the paper issued; • liquidity lines covering the maturity mismatch; and • security covering default risk in respect of both specific assets and the entire programme. ABS - Asset Backed Securities Debt securities, generally issued by an “SPV - Special Purpose Vehicle” (see item) guaranteed by assets of various types such as mortgage loans, consumer credits, credit card receivables, etc. Principal and interest payments are subject to the performance of the securitised assets and the existence of any further security guaranteeing the bond. ABSs are divided into tranches (senior, mezzanine and junior) according to the priority with which principal and interest will be paid. Absorbed capital Absorbed capital represents the amount of capital that the Group sets aside as a buffer against potential losses and needs to support its business activities and all positions held. It is measured by the regulatory capital and the internal capital. The regulatory capital is obtained by multiplying risk-weighted assets by target Common Equity tier 1 ratio. The internal capital is the sum of the economic capital, obtained through aggregation of the capital needed to cover the different types of risk measured according to internal models, plus a reserve to consider the effects of the cycle and model risk. Acquisition Finance Finance for business acquisition operations. The most common form of Acquisition Finance is the leveraged buy-out (see Leveraged Finance). Affluent Banking customer segment whose available assets for investment are regarded as moderate to high. Allocated capital It represents the amount of capital absorbed by the Group and the Divisions to perform their business activities and to cover all the types of related risks. It is measured by Regulatory Capital obtained by multiplying risk-weighted assets by target Common Equity tier 1 ratio, plus certain regulatory deductions (e.g. shortfall, securitisations, equity exposures). Only for Fineco and Private Banking, it is measured by the maximum between the result of the Regulatory Capital and Internal Capital. The Internal Capital is the capital needed to cover, with an high level of confidence, the risks faced by the Group measured according to internal models. ALM - Asset & Liability Management Integrated management of assets and liabilities, designed to allocate resources in such a manner as to optimise the risk/return ratio. ALT-A (residential mortgages) Mortgages whose borrowers, while not subject to the significant repayment problems of those described as Subprime (see item), have a risk profile with high loan-to-value and installment-to-income ratios or incomplete documentation of the debtor's income. Alternative investment Alternative investments cover a wide range of forms of investment, including investments in Private Equity (see item) and Hedge Funds (see item). AMA (Advanced Measurement Approach) Applying this methodology the operational risk requirement is obtained with calculation models based on operational loss data and other evaluation elements collected and processed by the bank. Admittance threshold and specific suitability requirements have been provided for the use of the standardised and advanced approaches. For the AMA approach the requirements concern, beside the management system, also the measurement system. Glossary UniCredit ·2018 Annual Report and Accounts 775 Shareholders’ meeting resolutions Glossary ABCP Conduits - Asset Backed Commercial Paper Conduits Asset Backed Commercial Paper Conduits are a type of “SPV - Special Purpose Vehicle” (see item) set up to securitise various types of assets and financed by Commercial Paper (see item). Commercial Paper generally matures in 270 days, with payment of principal and interest depending on the cash flow generated by the underlying assets. ABCP Conduits may be single-sellers or multi-sellers according to the number of issues they make. Conduits generally require several SPVs. The first-level vehicles issue the Commercial Paper and finance one or more second-level vehicles or Purchase Companies (see item) which purchase the assets to be securitised. An ABCP Conduit will have the following: • issues of short-term paper creating a maturity mismatch between the assets held and the paper issued; • liquidity lines covering the maturity mismatch; and • security covering default risk in respect of both specific assets and the entire programme. ABS - Asset Backed Securities Debt securities, generally issued by an “SPV - Special Purpose Vehicle” (see item) guaranteed by assets of various types such as mortgage loans, consumer credits, credit card receivables, etc. Principal and interest payments are subject to the performance of the securitised assets and the existence of any further security guaranteeing the bond. ABSs are divided into tranches (senior, mezzanine and junior) according to the priority with which principal and interest will be paid. Absorbed capital Absorbed capital represents the amount of capital that the Group sets aside as a buffer against potential losses and needs to support its business activities and all positions held. It is measured by the regulatory capital and the internal capital. The regulatory capital is obtained by multiplying risk-weighted assets by target Common Equity tier 1 ratio. The internal capital is the sum of the economic capital, obtained through aggregation of the capital needed to cover the different types of risk measured according to internal models, plus a reserve to consider the effects of the cycle and model risk. Acquisition Finance Finance for business acquisition operations. The most common form of Acquisition Finance is the leveraged buy-out (see Leveraged Finance). Affluent Banking customer segment whose available assets for investment are regarded as moderate to high. Allocated capital It represents the amount of capital absorbed by the Group and the Divisions to perform their business activities and to cover all the types of related risks. It is measured by Regulatory Capital obtained by multiplying risk-weighted assets by target Common Equity tier 1 ratio, plus certain regulatory deductions (e.g. shortfall, securitisations, equity exposures). Only for Fineco and Private Banking, it is measured by the maximum between the result of the Regulatory Capital and Internal Capital. The Internal Capital is the capital needed to cover, with an high level of confidence, the risks faced by the Group measured according to internal models. ALM - Asset & Liability Management Integrated management of assets and liabilities, designed to allocate resources in such a manner as to optimise the risk/return ratio. ALT-A (residential mortgages) Mortgages whose borrowers, while not subject to the significant repayment problems of those described as Subprime (see item), have a risk profile with high loan-to-value and installment-to-income ratios or incomplete documentation of the debtor's income. Alternative investment Alternative investments cover a wide range of forms of investment, including investments in Private Equity (see item) and Hedge Funds (see item). AMA (Advanced Measurement Approach) Applying this methodology the operational risk requirement is obtained with calculation models based on operational loss data and other evaluation elements collected and processed by the bank. Admittance threshold and specific suitability requirements have been provided for the use of the standardised and advanced approaches. For the AMA approach the requirements concern, beside the management system, also the measurement system. Glossary UniCredit ·2018 Annual Report and Accounts 775 Shareholders’ meeting resolutions Glossary ABCP Conduits - Asset Backed Commercial Paper Conduits Asset Backed Commercial Paper Conduits are a type of “SPV - Special Purpose Vehicle” (see item) set up to securitise various types of assets and financed by Commercial Paper (see item). Commercial Paper generally matures in 270 days, with payment of principal and interest depending on the cash flow generated by the underlying assets. ABCP Conduits may be single-sellers or multi-sellers according to the number of issues they make. Conduits generally require several SPVs. The first-level vehicles issue the Commercial Paper and finance one or more second-level vehicles or Purchase Companies (see item) which purchase the assets to be securitised. An ABCP Conduit will have the following: • issues of short-term paper creating a maturity mismatch between the assets held and the paper issued; • liquidity lines covering the maturity mismatch; and • security covering default risk in respect of both specific assets and the entire programme. ABS - Asset Backed Securities Debt securities, generally issued by an “SPV - Special Purpose Vehicle” (see item) guaranteed by assets of various types such as mortgage loans, consumer credits, credit card receivables, etc. Principal and interest payments are subject to the performance of the securitised assets and the existence of any further security guaranteeing the bond. ABSs are divided into tranches (senior, mezzanine and junior) according to the priority with which principal and interest will be paid. Absorbed capital Absorbed capital represents the amount of capital that the Group sets aside as a buffer against potential losses and needs to support its business activities and all positions held. It is measured by the regulatory capital and the internal capital. The regulatory capital is obtained by multiplying risk-weighted assets by target Common Equity tier 1 ratio. The internal capital is the sum of the economic capital, obtained through aggregation of the capital needed to cover the different types of risk measured according to internal models, plus a reserve to consider the effects of the cycle and model risk. Acquisition Finance Finance for business acquisition operations. The most common form of Acquisition Finance is the leveraged buy-out (see Leveraged Finance). Affluent Banking customer segment whose available assets for investment are regarded as moderate to high. Allocated capital It represents the amount of capital absorbed by the Group and the Divisions to perform their business activities and to cover all the types of related risks. It is measured by Regulatory Capital obtained by multiplying risk-weighted assets by target Common Equity tier 1 ratio, plus certain regulatory deductions (e.g. shortfall, securitisations, equity exposures). Only for Fineco and Private Banking, it is measured by the maximum between the result of the Regulatory Capital and Internal Capital. The Internal Capital is the capital needed to cover, with an high level of confidence, the risks faced by the Group measured according to internal models. ALM - Asset & Liability Management Integrated management of assets and liabilities, designed to allocate resources in such a manner as to optimise the risk/return ratio. ALT-A (residential mortgages) Mortgages whose borrowers, while not subject to the significant repayment problems of those described as Subprime (see item), have a risk profile with high loan-to-value and installment-to-income ratios or incomplete documentation of the debtor's income. Alternative investment Alternative investments cover a wide range of forms of investment, including investments in Private Equity (see item) and Hedge Funds (see item). AMA (Advanced Measurement Approach) Applying this methodology the operational risk requirement is obtained with calculation models based on operational loss data and other evaluation elements collected and processed by the bank. Admittance threshold and specific suitability requirements have been provided for the use of the standardised and advanced approaches. For the AMA approach the requirements concern, beside the management system, also the measurement system. Glossary UniCredit ·2018 Annual Report and Accounts 775 Shareholders’ meeting resolutions Glossary ABCP Conduits - Asset Backed Commercial Paper Conduits Asset Backed Commercial Paper Conduits are a type of “SPV - Special Purpose Vehicle” (see item) set up to securitise various types of assets and financed by Commercial Paper (see item). Commercial Paper generally matures in 270 days, with payment of principal and interest depending on the cash flow generated by the underlying assets. ABCP Conduits may be single-sellers or multi-sellers according to the number of issues they make. Conduits generally require several SPVs. The first-level vehicles issue the Commercial Paper and finance one or more second-level vehicles or Purchase Companies (see item) which purchase the assets to be securitised. An ABCP Conduit will have the following: • issues of short-term paper creating a maturity mismatch between the assets held and the paper issued; • liquidity lines covering the maturity mismatch; and • security covering default risk in respect of both specific assets and the entire programme. ABS - Asset Backed Securities Debt securities, generally issued by an “SPV - Special Purpose Vehicle” (see item) guaranteed by assets of various types such as mortgage loans, consumer credits, credit card receivables, etc. Principal and interest payments are subject to the performance of the securitised assets and the existence of any further security guaranteeing the bond. ABSs are divided into tranches (senior, mezzanine and junior) according to the priority with which principal and interest will be paid. Absorbed capital Absorbed capital represents the amount of capital that the Group sets aside as a buffer against potential losses and needs to support its business activities and all positions held. It is measured by the regulatory capital and the internal capital. The regulatory capital is obtained by multiplying risk-weighted assets by target Common Equity tier 1 ratio. The internal capital is the sum of the economic capital, obtained through aggregation of the capital needed to cover the different types of risk measured according to internal models, plus a reserve to consider the effects of the cycle and model risk. Acquisition Finance Finance for business acquisition operations. The most common form of Acquisition Finance is the leveraged buy-out (see Leveraged Finance). Affluent Banking customer segment whose available assets for investment are regarded as moderate to high. Allocated capital It represents the amount of capital absorbed by the Group and the Divisions to perform their business activities and to cover all the types of related risks. It is measured by Regulatory Capital obtained by multiplying risk-weighted assets by target Common Equity tier 1 ratio, plus certain regulatory deductions (e.g. shortfall, securitisations, equity exposures). Only for Fineco and Private Banking, it is measured by the maximum between the result of the Regulatory Capital and Internal Capital. The Internal Capital is the capital needed to cover, with an high level of confidence, the risks faced by the Group measured according to internal models. ALM - Asset & Liability Management Integrated management of assets and liabilities, designed to allocate resources in such a manner as to optimise the risk/return ratio. ALT-A (residential mortgages) Mortgages whose borrowers, while not subject to the significant repayment problems of those described as Subprime (see item), have a risk profile with high loan-to-value and installment-to-income ratios or incomplete documentation of the debtor's income. Alternative investment Alternative investments cover a wide range of forms of investment, including investments in Private Equity (see item) and Hedge Funds (see item). AMA (Advanced Measurement Approach) Applying this methodology the operational risk requirement is obtained with calculation models based on operational loss data and other evaluation elements collected and processed by the bank. Admittance threshold and specific suitability requirements have been provided for the use of the standardised and advanced approaches. For the AMA approach the requirements concern, beside the management system, also the measurement system. Glossary UniCredit ·2018 Annual Report and Accounts 775 Shareholders’ meeting resolutions Glossary ABCP Conduits - Asset Backed Commercial Paper Conduits Asset Backed Commercial Paper Conduits are a type of “SPV - Special Purpose Vehicle” (see item) set up to securitise various types of assets and financed by Commercial Paper (see item). Commercial Paper generally matures in 270 days, with payment of principal and interest depending on the cash flow generated by the underlying assets. ABCP Conduits may be single-sellers or multi-sellers according to the number of issues they make. Conduits generally require several SPVs. The first-level vehicles issue the Commercial Paper and finance one or more second-level vehicles or Purchase Companies (see item) which purchase the assets to be securitised. An ABCP Conduit will have the following: • issues of short-term paper creating a maturity mismatch between the assets held and the paper issued; • liquidity lines covering the maturity mismatch; and • security covering default risk in respect of both specific assets and the entire programme. ABS - Asset Backed Securities Debt securities, generally issued by an “SPV - Special Purpose Vehicle” (see item) guaranteed by assets of various types such as mortgage loans, consumer credits, credit card receivables, etc. Principal and interest payments are subject to the performance of the securitised assets and the existence of any further security guaranteeing the bond. ABSs are divided into tranches (senior, mezzanine and junior) according to the priority with which principal and interest will be paid. Absorbed capital Absorbed capital represents the amount of capital that the Group sets aside as a buffer against potential losses and needs to support its business activities and all positions held. It is measured by the regulatory capital and the internal capital. The regulatory capital is obtained by multiplying risk-weighted assets by target Common Equity tier 1 ratio. The internal capital is the sum of the economic capital, obtained through aggregation of the capital needed to cover the different types of risk measured according to internal models, plus a reserve to consider the effects of the cycle and model risk. Acquisition Finance Finance for business acquisition operations. The most common form of Acquisition Finance is the leveraged buy-out (see Leveraged Finance). Affluent Banking customer segment whose available assets for investment are regarded as moderate to high. Allocated capital It represents the amount of capital absorbed by the Group and the Divisions to perform their business activities and to cover all the types of related risks. It is measured by Regulatory Capital obtained by multiplying risk-weighted assets by target Common Equity tier 1 ratio, plus certain regulatory deductions (e.g. shortfall, securitisations, equity exposures). Only for Fineco and Private Banking, it is measured by the maximum between the result of the Regulatory Capital and Internal Capital. The Internal Capital is the capital needed to cover, with an high level of confidence, the risks faced by the Group measured according to internal models. ALM - Asset & Liability Management Integrated management of assets and liabilities, designed to allocate resources in such a manner as to optimise the risk/return ratio. ALT-A (residential mortgages) Mortgages whose borrowers, while not subject to the significant repayment problems of those described as Subprime (see item), have a risk profile with high loan-to-value and installment-to-income ratios or incomplete documentation of the debtor's income. Alternative investment Alternative investments cover a wide range of forms of investment, including investments in Private Equity (see item) and Hedge Funds (see item). AMA (Advanced Measurement Approach) Applying this methodology the operational risk requirement is obtained with calculation models based on operational loss data and other evaluation elements collected and processed by the bank. Admittance threshold and specific suitability requirements have been provided for the use of the standardised and advanced approaches. For the AMA approach the requirements concern, beside the management system, also the measurement system.  Glossary 776 2018 Annual Report and Accounts · UniCredit Asset allocation Decisions to invest in markets, geographical areas, sectors or products. Asset management Activities of management of the financial investments of third parties. ATM - Automated Teller Machine Automated machine that allows customers to carry out operations such as withdrawing cash, paying in cash or checks, requesting account information, paying utility bills, topping up mobile phone credits, etc. The customer activates the terminal by inserting a smart card and entering his/her Personal Identification Number. Audit Process of controlling a company's activities and accounting, carried out either by an internal body (internal audit) or by an external firm of auditors (external audit). Backstop prudential provisioning (i.e. Calendar provisioning) Quantitative guidelines defining coverage practices of Non Performing exposures (ie. Past Due, Unlikely to Pay, Bad loans), which require a full coverage of a Non Performing exposure starting from the second year up to the ninth year since the date of the counterparty’s classification to default depending on whether the exposure is unsecured or secured respectively. Back-testing Statistical technique which entails the comparison of model estimates of risk parameters with the ex-post empirical evidences. Bad Loans (“Sofferenze”) Exposures to borrowers in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank (i.e. irrespective of whether any, secured or personal, guarantees covering the exposures). Banking Book Used in relation to financial instruments, particularly securities, this term identifies the portion of such portfolios intended for "proprietary" activities. Bank Levy Charges applied at national level specifically to financial institutions, mainly based on Balance Sheet figures, or parts of it. Basel 2 New international capital agreement redefining the guidelines for determining the minimum capital requirements for banks. The new prudential regulations, which came into force in Italy in 2008, are based on three pillars. • Pillar 1: while the objective of a level of capitalisation equivalent to 8% of the risk-weighted exposures remains unchanged, a new set of rules has been defined for measuring the typical risks associated with banking and financial activities (credit risk, counterparty risk, market risk and operational risk) which provides for alternative calculation methods characterised by different levels of complexity, with the ability to use internally developed models subject to prior authorisation by the Regulatory Authority; • Pillar 2: this requires the banks to have processes and tools for determining the adequate level of total internal capital (Internal Capital Adequacy Assessment Process - ICAAP) for covering all types of risk, including risks other than those covered by the overall capital requirement (Pillar 1), within the framework of an evaluation of current and future exposure that takes account of strategies and of changes in the reference context. It is the Regulatory Authority's task to examine the ICAAP process, formulate an overall judgment and, where necessary, apply the appropriate corrective measures; • Pillar 3: this introduces obligations to publish information concerning capital adequacy, exposure to risks, and the general characteristics of the systems used for identifying, measuring and managing those risks. Basel 3 In the light of the crisis that in recent years has hit the financial markets, the Basel Committee on Banking Supervision has approved the substantial enhancement of the minimum capital requirements and the changes to the rules on the liquidity of banks (Basel 3) by providing for the gradual introduction of the new prudential requirements as at 1 January 2014. These rules have been implemented at the European level through the CRD IV “Package”. Glossary 776 2018 Annual Report and Accounts · UniCredit Asset allocation Decisions to invest in markets, geographical areas, sectors or products. Asset management Activities of management of the financial investments of third parties. ATM - Automated Teller Machine Automated machine that allows customers to carry out operations such as withdrawing cash, paying in cash or checks, requesting account information, paying utility bills, topping up mobile phone credits, etc. The customer activates the terminal by inserting a smart card and entering his/her Personal Identification Number. Audit Process of controlling a company's activities and accounting, carried out either by an internal body (internal audit) or by an external firm of auditors (external audit). Backstop prudential provisioning (i.e. Calendar provisioning) Quantitative guidelines defining coverage practices of Non Performing exposures (ie. Past Due, Unlikely to Pay, Bad loans), which require a full coverage of a Non Performing exposure starting from the second year up to the ninth year since the date of the counterparty’s classification to default depending on whether the exposure is unsecured or secured respectively. Back-testing Statistical technique which entails the comparison of model estimates of risk parameters with the ex-post empirical evidences. Bad Loans (“Sofferenze”) Exposures to borrowers in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank (i.e. irrespective of whether any, secured or personal, guarantees covering the exposures). Banking Book Used in relation to financial instruments, particularly securities, this term identifies the portion of such portfolios intended for "proprietary" activities. Bank Levy Charges applied at national level specifically to financial institutions, mainly based on Balance Sheet figures, or parts of it. Basel 2 New international capital agreement redefining the guidelines for determining the minimum capital requirements for banks. The new prudential regulations, which came into force in Italy in 2008, are based on three pillars. • Pillar 1: while the objective of a level of capitalisation equivalent to 8% of the risk-weighted exposures remains unchanged, a new set of rules has been defined for measuring the typical risks associated with banking and financial activities (credit risk, counterparty risk, market risk and operational risk) which provides for alternative calculation methods characterised by different levels of complexity, with the ability to use internally developed models subject to prior authorisation by the Regulatory Authority; • Pillar 2: this requires the banks to have processes and tools for determining the adequate level of total internal capital (Internal Capital Adequacy Assessment Process - ICAAP) for covering all types of risk, including risks other than those covered by the overall capital requirement (Pillar 1), within the framework of an evaluation of current and future exposure that takes account of strategies and of changes in the reference context. It is the Regulatory Authority's task to examine the ICAAP process, formulate an overall judgment and, where necessary, apply the appropriate corrective measures; • Pillar 3: this introduces obligations to publish information concerning capital adequacy, exposure to risks, and the general characteristics of the systems used for identifying, measuring and managing those risks. Basel 3 In the light of the crisis that in recent years has hit the financial markets, the Basel Committee on Banking Supervision has approved the substantial enhancement of the minimum capital requirements and the changes to the rules on the liquidity of banks (Basel 3) by providing for the gradual introduction of the new prudential requirements as at 1 January 2014. These rules have been implemented at the European level through the CRD IV “Package”. Glossary 776 2018 Annual Report and Accounts · UniCredit Asset allocation Decisions to invest in markets, geographical areas, sectors or products. Asset management Activities of management of the financial investments of third parties. ATM - Automated Teller Machine Automated machine that allows customers to carry out operations such as withdrawing cash, paying in cash or checks, requesting account information, paying utility bills, topping up mobile phone credits, etc. The customer activates the terminal by inserting a smart card and entering his/her Personal Identification Number. Audit Process of controlling a company's activities and accounting, carried out either by an internal body (internal audit) or by an external firm of auditors (external audit). Backstop prudential provisioning (i.e. Calendar provisioning) Quantitative guidelines defining coverage practices of Non Performing exposures (ie. Past Due, Unlikely to Pay, Bad loans), which require a full coverage of a Non Performing exposure starting from the second year up to the ninth year since the date of the counterparty’s classification to default depending on whether the exposure is unsecured or secured respectively. Back-testing Statistical technique which entails the comparison of model estimates of risk parameters with the ex-post empirical evidences. Bad Loans (“Sofferenze”) Exposures to borrowers in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank (i.e. irrespective of whether any, secured or personal, guarantees covering the exposures). Banking Book Used in relation to financial instruments, particularly securities, this term identifies the portion of such portfolios intended for "proprietary" activities. Bank Levy Charges applied at national level specifically to financial institutions, mainly based on Balance Sheet figures, or parts of it. Basel 2 New international capital agreement redefining the guidelines for determining the minimum capital requirements for banks. The new prudential regulations, which came into force in Italy in 2008, are based on three pillars. • Pillar 1: while the objective of a level of capitalisation equivalent to 8% of the risk-weighted exposures remains unchanged, a new set of rules has been defined for measuring the typical risks associated with banking and financial activities (credit risk, counterparty risk, market risk and operational risk) which provides for alternative calculation methods characterised by different levels of complexity, with the ability to use internally developed models subject to prior authorisation by the Regulatory Authority; • Pillar 2: this requires the banks to have processes and tools for determining the adequate level of total internal capital (Internal Capital Adequacy Assessment Process - ICAAP) for covering all types of risk, including risks other than those covered by the overall capital requirement (Pillar 1), within the framework of an evaluation of current and future exposure that takes account of strategies and of changes in the reference context. It is the Regulatory Authority's task to examine the ICAAP process, formulate an overall judgment and, where necessary, apply the appropriate corrective measures; • Pillar 3: this introduces obligations to publish information concerning capital adequacy, exposure to risks, and the general characteristics of the systems used for identifying, measuring and managing those risks. Basel 3 In the light of the crisis that in recent years has hit the financial markets, the Basel Committee on Banking Supervision has approved the substantial enhancement of the minimum capital requirements and the changes to the rules on the liquidity of banks (Basel 3) by providing for the gradual introduction of the new prudential requirements as at 1 January 2014. These rules have been implemented at the European level through the CRD IV “Package”. Glossary 776 2018 Annual Report and Accounts · UniCredit Asset allocation Decisions to invest in markets, geographical areas, sectors or products. Asset management Activities of management of the financial investments of third parties. ATM - Automated Teller Machine Automated machine that allows customers to carry out operations such as withdrawing cash, paying in cash or checks, requesting account information, paying utility bills, topping up mobile phone credits, etc. The customer activates the terminal by inserting a smart card and entering his/her Personal Identification Number. Audit Process of controlling a company's activities and accounting, carried out either by an internal body (internal audit) or by an external firm of auditors (external audit). Backstop prudential provisioning (i.e. Calendar provisioning) Quantitative guidelines defining coverage practices of Non Performing exposures (ie. Past Due, Unlikely to Pay, Bad loans), which require a full coverage of a Non Performing exposure starting from the second year up to the ninth year since the date of the counterparty’s classification to default depending on whether the exposure is unsecured or secured respectively. Back-testing Statistical technique which entails the comparison of model estimates of risk parameters with the ex-post empirical evidences. Bad Loans (“Sofferenze”) Exposures to borrowers in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank (i.e. irrespective of whether any, secured or personal, guarantees covering the exposures). Banking Book Used in relation to financial instruments, particularly securities, this term identifies the portion of such portfolios intended for "proprietary" activities. Bank Levy Charges applied at national level specifically to financial institutions, mainly based on Balance Sheet figures, or parts of it. Basel 2 New international capital agreement redefining the guidelines for determining the minimum capital requirements for banks. The new prudential regulations, which came into force in Italy in 2008, are based on three pillars. • Pillar 1: while the objective of a level of capitalisation equivalent to 8% of the risk-weighted exposures remains unchanged, a new set of rules has been defined for measuring the typical risks associated with banking and financial activities (credit risk, counterparty risk, market risk and operational risk) which provides for alternative calculation methods characterised by different levels of complexity, with the ability to use internally developed models subject to prior authorisation by the Regulatory Authority; • Pillar 2: this requires the banks to have processes and tools for determining the adequate level of total internal capital (Internal Capital Adequacy Assessment Process - ICAAP) for covering all types of risk, including risks other than those covered by the overall capital requirement (Pillar 1), within the framework of an evaluation of current and future exposure that takes account of strategies and of changes in the reference context. It is the Regulatory Authority's task to examine the ICAAP process, formulate an overall judgment and, where necessary, apply the appropriate corrective measures; • Pillar 3: this introduces obligations to publish information concerning capital adequacy, exposure to risks, and the general characteristics of the systems used for identifying, measuring and managing those risks. Basel 3 In the light of the crisis that in recent years has hit the financial markets, the Basel Committee on Banking Supervision has approved the substantial enhancement of the minimum capital requirements and the changes to the rules on the liquidity of banks (Basel 3) by providing for the gradual introduction of the new prudential requirements as at 1 January 2014. These rules have been implemented at the European level through the CRD IV “Package”. Glossary 776 2018 Annual Report and Accounts · UniCredit Asset allocation Decisions to invest in markets, geographical areas, sectors or products. Asset management Activities of management of the financial investments of third parties. ATM - Automated Teller Machine Automated machine that allows customers to carry out operations such as withdrawing cash, paying in cash or checks, requesting account information, paying utility bills, topping up mobile phone credits, etc. The customer activates the terminal by inserting a smart card and entering his/her Personal Identification Number. Audit Process of controlling a company's activities and accounting, carried out either by an internal body (internal audit) or by an external firm of auditors (external audit). Backstop prudential provisioning (i.e. Calendar provisioning) Quantitative guidelines defining coverage practices of Non Performing exposures (ie. Past Due, Unlikely to Pay, Bad loans), which require a full coverage of a Non Performing exposure starting from the second year up to the ninth year since the date of the counterparty’s classification to default depending on whether the exposure is unsecured or secured respectively. Back-testing Statistical technique which entails the comparison of model estimates of risk parameters with the ex-post empirical evidences. Bad Loans (“Sofferenze”) Exposures to borrowers in a state of insolvency (even when not recognised in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank (i.e. irrespective of whether any, secured or personal, guarantees covering the exposures). Banking Book Used in relation to financial instruments, particularly securities, this term identifies the portion of such portfolios intended for "proprietary" activities. Bank Levy Charges applied at national level specifically to financial institutions, mainly based on Balance Sheet figures, or parts of it. Basel 2 New international capital agreement redefining the guidelines for determining the minimum capital requirements for banks. The new prudential regulations, which came into force in Italy in 2008, are based on three pillars. • Pillar 1: while the objective of a level of capitalisation equivalent to 8% of the risk-weighted exposures remains unchanged, a new set of rules has been defined for measuring the typical risks associated with banking and financial activities (credit risk, counterparty risk, market risk and operational risk) which provides for alternative calculation methods characterised by different levels of complexity, with the ability to use internally developed models subject to prior authorisation by the Regulatory Authority; • Pillar 2: this requires the banks to have processes and tools for determining the adequate level of total internal capital (Internal Capital Adequacy Assessment Process - ICAAP) for covering all types of risk, including risks other than those covered by the overall capital requirement (Pillar 1), within the framework of an evaluation of current and future exposure that takes account of strategies and of changes in the reference context. It is the Regulatory Authority's task to examine the ICAAP process, formulate an overall judgment and, where necessary, apply the appropriate corrective measures; • Pillar 3: this introduces obligations to publish information concerning capital adequacy, exposure to risks, and the general characteristics of the systems used for identifying, measuring and managing those risks. Basel 3 In the light of the crisis that in recent years has hit the financial markets, the Basel Committee on Banking Supervision has approved the substantial enhancement of the minimum capital requirements and the changes to the rules on the liquidity of banks (Basel 3) by providing for the gradual introduction of the new prudential requirements as at 1 January 2014. These rules have been implemented at the European level through the CRD IV “Package”.  Glossary UniCredit ·2018 Annual Report and Accounts 777 Best practice Behaviour commensurate with the most significant experience and/or the best level of knowledge achieved in relation to a given technical or professional field. Budget Statement forecasting the future costs and revenues of a business. CBO - Collateralised Bond Obligations CDO - Collateralised Debt Obligations (see item) with bonds as underlyings. CCF - Credit Conversion Factor Ratio between (a) the unused portion of the line of credit that it is estimated may be used in the event of default and (b) the portion currently unused. CDO - Collateralised Debt Obligations Bonds issued by a vehicle with loans, bonds, ABS - Asset Backed Securities (see item) or other CDOs as underlyings. CDOs make it possible to derecognise assets in the bank’s balance sheet and also to arbitrage the differences in yield between the securitised assets and the bonds issued by the vehicle. CDOs may be funded if the vehicle legally acquires title to the assets or unfunded if the vehicle acquires the underlying risk by means of a CDS - Credit Default Swap (see item) or similar security. These bonds may be further subdivided as follows: • CDOs of ABSs, which in turn have tranches of ABSs as underlyings; • Commercial Real Estate CDOs (CRE CDOs), with commercial property loans as underlyings; • Balance Sheet CDOs which enable the Originator (see item), usually a bank, to transfer its credit risk to outside investors, and, where possible under local law and supervisory regulations, to derecognise the assets from its balance sheet; • Market Value CDOs whereby payments of interest and principal are made not only out of cash flow from the underlying assets, but also by trading the instruments. The performance of the notes issued by the vehicle thus depends not only on the credit risk, but also on the market value of the underlyings; • Preferred Stock CDOs with hybrid debt/equity instruments or Preference shares (see item) issued by financial institutions; • Synthetic Arbitrage CDOs which arbitrage the differences in yield between the securitised assets acquired synthetically by means of derivatives and the bonds issued by the vehicle. CDS - Credit Default Swap A derivative in which a seller of protection engages, for a fee, to pay the buyer of protection a fixed amount should a certain event indicating a deterioration of the creditworthiness of a reference entity occur. CEO Chief Executive Officer. CFO Chief Financial Officer. CGU - Cash Generating Unit A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CLO Chief Lending Officer. CLO - Collateralised Loan Obligations CDO - Collateralised Debt Obligations (see item) with loans made by authorised lenders such as commercial banks as underlyings. CMBS - Commercial Mortgage Backed Securities ABS - Asset Backed Securities (see item) with commercial mortgages as underlyings. Glossary UniCredit ·2018 Annual Report and Accounts 777 Best practice Behaviour commensurate with the most significant experience and/or the best level of knowledge achieved in relation to a given technical or professional field. Budget Statement forecasting the future costs and revenues of a business. CBO - Collateralised Bond Obligations CDO - Collateralised Debt Obligations (see item) with bonds as underlyings. CCF - Credit Conversion Factor Ratio between (a) the unused portion of the line of credit that it is estimated may be used in the event of default and (b) the portion currently unused. CDO - Collateralised Debt Obligations Bonds issued by a vehicle with loans, bonds, ABS - Asset Backed Securities (see item) or other CDOs as underlyings. CDOs make it possible to derecognise assets in the bank’s balance sheet and also to arbitrage the differences in yield between the securitised assets and the bonds issued by the vehicle. CDOs may be funded if the vehicle legally acquires title to the assets or unfunded if the vehicle acquires the underlying risk by means of a CDS - Credit Default Swap (see item) or similar security. These bonds may be further subdivided as follows: • CDOs of ABSs, which in turn have tranches of ABSs as underlyings; • Commercial Real Estate CDOs (CRE CDOs), with commercial property loans as underlyings; • Balance Sheet CDOs which enable the Originator (see item), usually a bank, to transfer its credit risk to outside investors, and, where possible under local law and supervisory regulations, to derecognise the assets from its balance sheet; • Market Value CDOs whereby payments of interest and principal are made not only out of cash flow from the underlying assets, but also by trading the instruments. The performance of the notes issued by the vehicle thus depends not only on the credit risk, but also on the market value of the underlyings; • Preferred Stock CDOs with hybrid debt/equity instruments or Preference shares (see item) issued by financial institutions; • Synthetic Arbitrage CDOs which arbitrage the differences in yield between the securitised assets acquired synthetically by means of derivatives and the bonds issued by the vehicle. CDS - Credit Default Swap A derivative in which a seller of protection engages, for a fee, to pay the buyer of protection a fixed amount should a certain event indicating a deterioration of the creditworthiness of a reference entity occur. CEO Chief Executive Officer. CFO Chief Financial Officer. CGU - Cash Generating Unit A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CLO Chief Lending Officer. CLO - Collateralised Loan Obligations CDO - Collateralised Debt Obligations (see item) with loans made by authorised lenders such as commercial banks as underlyings. CMBS - Commercial Mortgage Backed Securities ABS - Asset Backed Securities (see item) with commercial mortgages as underlyings. Glossary UniCredit ·2018 Annual Report and Accounts 777 Best practice Behaviour commensurate with the most significant experience and/or the best level of knowledge achieved in relation to a given technical or professional field. Budget Statement forecasting the future costs and revenues of a business. CBO - Collateralised Bond Obligations CDO - Collateralised Debt Obligations (see item) with bonds as underlyings. CCF - Credit Conversion Factor Ratio between (a) the unused portion of the line of credit that it is estimated may be used in the event of default and (b) the portion currently unused. CDO - Collateralised Debt Obligations Bonds issued by a vehicle with loans, bonds, ABS - Asset Backed Securities (see item) or other CDOs as underlyings. CDOs make it possible to derecognise assets in the bank’s balance sheet and also to arbitrage the differences in yield between the securitised assets and the bonds issued by the vehicle. CDOs may be funded if the vehicle legally acquires title to the assets or unfunded if the vehicle acquires the underlying risk by means of a CDS - Credit Default Swap (see item) or similar security. These bonds may be further subdivided as follows: • CDOs of ABSs, which in turn have tranches of ABSs as underlyings; • Commercial Real Estate CDOs (CRE CDOs), with commercial property loans as underlyings; • Balance Sheet CDOs which enable the Originator (see item), usually a bank, to transfer its credit risk to outside investors, and, where possible under local law and supervisory regulations, to derecognise the assets from its balance sheet; • Market Value CDOs whereby payments of interest and principal are made not only out of cash flow from the underlying assets, but also by trading the instruments. The performance of the notes issued by the vehicle thus depends not only on the credit risk, but also on the market value of the underlyings; • Preferred Stock CDOs with hybrid debt/equity instruments or Preference shares (see item) issued by financial institutions; • Synthetic Arbitrage CDOs which arbitrage the differences in yield between the securitised assets acquired synthetically by means of derivatives and the bonds issued by the vehicle. CDS - Credit Default Swap A derivative in which a seller of protection engages, for a fee, to pay the buyer of protection a fixed amount should a certain event indicating a deterioration of the creditworthiness of a reference entity occur. CEO Chief Executive Officer. CFO Chief Financial Officer. CGU - Cash Generating Unit A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CLO Chief Lending Officer. CLO - Collateralised Loan Obligations CDO - Collateralised Debt Obligations (see item) with loans made by authorised lenders such as commercial banks as underlyings. CMBS - Commercial Mortgage Backed Securities ABS - Asset Backed Securities (see item) with commercial mortgages as underlyings. Glossary UniCredit ·2018 Annual Report and Accounts 777 Best practice Behaviour commensurate with the most significant experience and/or the best level of knowledge achieved in relation to a given technical or professional field. Budget Statement forecasting the future costs and revenues of a business. CBO - Collateralised Bond Obligations CDO - Collateralised Debt Obligations (see item) with bonds as underlyings. CCF - Credit Conversion Factor Ratio between (a) the unused portion of the line of credit that it is estimated may be used in the event of default and (b) the portion currently unused. CDO - Collateralised Debt Obligations Bonds issued by a vehicle with loans, bonds, ABS - Asset Backed Securities (see item) or other CDOs as underlyings. CDOs make it possible to derecognise assets in the bank’s balance sheet and also to arbitrage the differences in yield between the securitised assets and the bonds issued by the vehicle. CDOs may be funded if the vehicle legally acquires title to the assets or unfunded if the vehicle acquires the underlying risk by means of a CDS - Credit Default Swap (see item) or similar security. These bonds may be further subdivided as follows: • CDOs of ABSs, which in turn have tranches of ABSs as underlyings; • Commercial Real Estate CDOs (CRE CDOs), with commercial property loans as underlyings; • Balance Sheet CDOs which enable the Originator (see item), usually a bank, to transfer its credit risk to outside investors, and, where possible under local law and supervisory regulations, to derecognise the assets from its balance sheet; • Market Value CDOs whereby payments of interest and principal are made not only out of cash flow from the underlying assets, but also by trading the instruments. The performance of the notes issued by the vehicle thus depends not only on the credit risk, but also on the market value of the underlyings; • Preferred Stock CDOs with hybrid debt/equity instruments or Preference shares (see item) issued by financial institutions; • Synthetic Arbitrage CDOs which arbitrage the differences in yield between the securitised assets acquired synthetically by means of derivatives and the bonds issued by the vehicle. CDS - Credit Default Swap A derivative in which a seller of protection engages, for a fee, to pay the buyer of protection a fixed amount should a certain event indicating a deterioration of the creditworthiness of a reference entity occur. CEO Chief Executive Officer. CFO Chief Financial Officer. CGU - Cash Generating Unit A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CLO Chief Lending Officer. CLO - Collateralised Loan Obligations CDO - Collateralised Debt Obligations (see item) with loans made by authorised lenders such as commercial banks as underlyings. CMBS - Commercial Mortgage Backed Securities ABS - Asset Backed Securities (see item) with commercial mortgages as underlyings. Glossary UniCredit ·2018 Annual Report and Accounts 777 Best practice Behaviour commensurate with the most significant experience and/or the best level of knowledge achieved in relation to a given technical or professional field. Budget Statement forecasting the future costs and revenues of a business. CBO - Collateralised Bond Obligations CDO - Collateralised Debt Obligations (see item) with bonds as underlyings. CCF - Credit Conversion Factor Ratio between (a) the unused portion of the line of credit that it is estimated may be used in the event of default and (b) the portion currently unused. CDO - Collateralised Debt Obligations Bonds issued by a vehicle with loans, bonds, ABS - Asset Backed Securities (see item) or other CDOs as underlyings. CDOs make it possible to derecognise assets in the bank’s balance sheet and also to arbitrage the differences in yield between the securitised assets and the bonds issued by the vehicle. CDOs may be funded if the vehicle legally acquires title to the assets or unfunded if the vehicle acquires the underlying risk by means of a CDS - Credit Default Swap (see item) or similar security. These bonds may be further subdivided as follows: • CDOs of ABSs, which in turn have tranches of ABSs as underlyings; • Commercial Real Estate CDOs (CRE CDOs), with commercial property loans as underlyings; • Balance Sheet CDOs which enable the Originator (see item), usually a bank, to transfer its credit risk to outside investors, and, where possible under local law and supervisory regulations, to derecognise the assets from its balance sheet; • Market Value CDOs whereby payments of interest and principal are made not only out of cash flow from the underlying assets, but also by trading the instruments. The performance of the notes issued by the vehicle thus depends not only on the credit risk, but also on the market value of the underlyings; • Preferred Stock CDOs with hybrid debt/equity instruments or Preference shares (see item) issued by financial institutions; • Synthetic Arbitrage CDOs which arbitrage the differences in yield between the securitised assets acquired synthetically by means of derivatives and the bonds issued by the vehicle. CDS - Credit Default Swap A derivative in which a seller of protection engages, for a fee, to pay the buyer of protection a fixed amount should a certain event indicating a deterioration of the creditworthiness of a reference entity occur. CEO Chief Executive Officer. CFO Chief Financial Officer. CGU - Cash Generating Unit A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CLO Chief Lending Officer. CLO - Collateralised Loan Obligations CDO - Collateralised Debt Obligations (see item) with loans made by authorised lenders such as commercial banks as underlyings. CMBS - Commercial Mortgage Backed Securities ABS - Asset Backed Securities (see item) with commercial mortgages as underlyings.  Glossary 778 2018 Annual Report and Accounts · UniCredit Commercial Paper Short-term securities issued to raise funds from third-party subscribers as an alternative to other forms of debt. Commodity risk The risk that the value of the instrument decreases due to commodity prices (e.g. gold, crude oil) changes. Consumer ABS ABS (see item) in which the collateral consists of consumer credits. Corporate Customer segment consisting of medium to large businesses. Cost/Income Ratio The ratio between operating expenses and operating income. It is one of the main key performance indicators of the bank’s efficiency: the lower the ratio, the more efficient the bank. Cost of risk The ratio between loan loss provisions and loans and receivables with customers. It is one of the indicators of the bank assets’ level of risk: the lower the ratio, the less risky the bank assets. Counterparty Credit Risk The risk that the counterparty to a transaction involving financial instruments might default prior to completing all agreed cash-flows exchanges. Covenant A loan agreement clause whereby the lender is entitled to restructure or call in the loan on occurrence of the events specified in the clause, which ties changes in the borrower’s profits and financial situation to events of default or restructuring (modifying e.g. the repayment schedule or the interest rate charged). Covered bond A bond which, as well as being guaranteed by the issuing bank, may also be covered by a portfolio of mortgages or other high-quality loans transferred, to this end, to a suitable SPV - Special Purpose Vehicle (see item). CRD (Capital Requirement Directive) EU directives No.2006/48 and 2006/49, incorporated into Banca d’Italia Circular 263/2006 of 27 December 2006 as amended. The CRD IV “Package” has replaced the two aforementioned Directives and consists of the EU Directive 2013/36 on the taking up of the business of credit institutions and prudential supervision and the EU Regulation 575/2013 on prudential requirements, incorporated into Banca d’Italia Circular 285 of 17 December 2013 as amended. Credit Quality Step Step based on external ratings, which is used to assign risk weights under credit risk Standardised Approach. Credit risk The risk that an unexpected change in the creditworthiness of a counterparty, the value of the guarantees provided by it or the margins used by it in the event of insolvency might produce an unexpected change in the value of the bank's credit position. Credit Valuation Adjustment (CVA) Is the adjustment to the valuation of a portfolio of transactions reflecting the market value of the counterparties' credit risk. CRM Credit Risk Mitigation is a set of techniques, contracts accessories to the loan or other instruments (e.g. securities, guarantees), which allows a reduction of the credit risk capital requirements. Glossary 778 2018 Annual Report and Accounts · UniCredit Commercial Paper Short-term securities issued to raise funds from third-party subscribers as an alternative to other forms of debt. Commodity risk The risk that the value of the instrument decreases due to commodity prices (e.g. gold, crude oil) changes. Consumer ABS ABS (see item) in which the collateral consists of consumer credits. Corporate Customer segment consisting of medium to large businesses. Cost/Income Ratio The ratio between operating expenses and operating income. It is one of the main key performance indicators of the bank’s efficiency: the lower the ratio, the more efficient the bank. Cost of risk The ratio between loan loss provisions and loans and receivables with customers. It is one of the indicators of the bank assets’ level of risk: the lower the ratio, the less risky the bank assets. Counterparty Credit Risk The risk that the counterparty to a transaction involving financial instruments might default prior to completing all agreed cash-flows exchanges. Covenant A loan agreement clause whereby the lender is entitled to restructure or call in the loan on occurrence of the events specified in the clause, which ties changes in the borrower’s profits and financial situation to events of default or restructuring (modifying e.g. the repayment schedule or the interest rate charged). Covered bond A bond which, as well as being guaranteed by the issuing bank, may also be covered by a portfolio of mortgages or other high-quality loans transferred, to this end, to a suitable SPV - Special Purpose Vehicle (see item). CRD (Capital Requirement Directive) EU directives No.2006/48 and 2006/49, incorporated into Banca d’Italia Circular 263/2006 of 27 December 2006 as amended. The CRD IV “Package” has replaced the two aforementioned Directives and consists of the EU Directive 2013/36 on the taking up of the business of credit institutions and prudential supervision and the EU Regulation 575/2013 on prudential requirements, incorporated into Banca d’Italia Circular 285 of 17 December 2013 as amended. Credit Quality Step Step based on external ratings, which is used to assign risk weights under credit risk Standardised Approach. Credit risk The risk that an unexpected change in the creditworthiness of a counterparty, the value of the guarantees provided by it or the margins used by it in the event of insolvency might produce an unexpected change in the value of the bank's credit position. Credit Valuation Adjustment (CVA) Is the adjustment to the valuation of a portfolio of transactions reflecting the market value of the counterparties' credit risk. CRM Credit Risk Mitigation is a set of techniques, contracts accessories to the loan or other instruments (e.g. securities, guarantees), which allows a reduction of the credit risk capital requirements. Glossary 778 2018 Annual Report and Accounts · UniCredit Commercial Paper Short-term securities issued to raise funds from third-party subscribers as an alternative to other forms of debt. Commodity risk The risk that the value of the instrument decreases due to commodity prices (e.g. gold, crude oil) changes. Consumer ABS ABS (see item) in which the collateral consists of consumer credits. Corporate Customer segment consisting of medium to large businesses. Cost/Income Ratio The ratio between operating expenses and operating income. It is one of the main key performance indicators of the bank’s efficiency: the lower the ratio, the more efficient the bank. Cost of risk The ratio between loan loss provisions and loans and receivables with customers. It is one of the indicators of the bank assets’ level of risk: the lower the ratio, the less risky the bank assets. Counterparty Credit Risk The risk that the counterparty to a transaction involving financial instruments might default prior to completing all agreed cash-flows exchanges. Covenant A loan agreement clause whereby the lender is entitled to restructure or call in the loan on occurrence of the events specified in the clause, which ties changes in the borrower’s profits and financial situation to events of default or restructuring (modifying e.g. the repayment schedule or the interest rate charged). Covered bond A bond which, as well as being guaranteed by the issuing bank, may also be covered by a portfolio of mortgages or other high-quality loans transferred, to this end, to a suitable SPV - Special Purpose Vehicle (see item). CRD (Capital Requirement Directive) EU directives No.2006/48 and 2006/49, incorporated into Banca d’Italia Circular 263/2006 of 27 December 2006 as amended. The CRD IV “Package” has replaced the two aforementioned Directives and consists of the EU Directive 2013/36 on the taking up of the business of credit institutions and prudential supervision and the EU Regulation 575/2013 on prudential requirements, incorporated into Banca d’Italia Circular 285 of 17 December 2013 as amended. Credit Quality Step Step based on external ratings, which is used to assign risk weights under credit risk Standardised Approach. Credit risk The risk that an unexpected change in the creditworthiness of a counterparty, the value of the guarantees provided by it or the margins used by it in the event of insolvency might produce an unexpected change in the value of the bank's credit position. Credit Valuation Adjustment (CVA) Is the adjustment to the valuation of a portfolio of transactions reflecting the market value of the counterparties' credit risk. CRM Credit Risk Mitigation is a set of techniques, contracts accessories to the loan or other instruments (e.g. securities, guarantees), which allows a reduction of the credit risk capital requirements. Glossary 778 2018 Annual Report and Accounts · UniCredit Commercial Paper Short-term securities issued to raise funds from third-party subscribers as an alternative to other forms of debt. Commodity risk The risk that the value of the instrument decreases due to commodity prices (e.g. gold, crude oil) changes. Consumer ABS ABS (see item) in which the collateral consists of consumer credits. Corporate Customer segment consisting of medium to large businesses. Cost/Income Ratio The ratio between operating expenses and operating income. It is one of the main key performance indicators of the bank’s efficiency: the lower the ratio, the more efficient the bank. Cost of risk The ratio between loan loss provisions and loans and receivables with customers. It is one of the indicators of the bank assets’ level of risk: the lower the ratio, the less risky the bank assets. Counterparty Credit Risk The risk that the counterparty to a transaction involving financial instruments might default prior to completing all agreed cash-flows exchanges. Covenant A loan agreement clause whereby the lender is entitled to restructure or call in the loan on occurrence of the events specified in the clause, which ties changes in the borrower’s profits and financial situation to events of default or restructuring (modifying e.g. the repayment schedule or the interest rate charged). Covered bond A bond which, as well as being guaranteed by the issuing bank, may also be covered by a portfolio of mortgages or other high-quality loans transferred, to this end, to a suitable SPV - Special Purpose Vehicle (see item). CRD (Capital Requirement Directive) EU directives No.2006/48 and 2006/49, incorporated into Banca d’Italia Circular 263/2006 of 27 December 2006 as amended. The CRD IV “Package” has replaced the two aforementioned Directives and consists of the EU Directive 2013/36 on the taking up of the business of credit institutions and prudential supervision and the EU Regulation 575/2013 on prudential requirements, incorporated into Banca d’Italia Circular 285 of 17 December 2013 as amended. Credit Quality Step Step based on external ratings, which is used to assign risk weights under credit risk Standardised Approach. Credit risk The risk that an unexpected change in the creditworthiness of a counterparty, the value of the guarantees provided by it or the margins used by it in the event of insolvency might produce an unexpected change in the value of the bank's credit position. Credit Valuation Adjustment (CVA) Is the adjustment to the valuation of a portfolio of transactions reflecting the market value of the counterparties' credit risk. CRM Credit Risk Mitigation is a set of techniques, contracts accessories to the loan or other instruments (e.g. securities, guarantees), which allows a reduction of the credit risk capital requirements. Glossary 778 2018 Annual Report and Accounts · UniCredit Commercial Paper Short-term securities issued to raise funds from third-party subscribers as an alternative to other forms of debt. Commodity risk The risk that the value of the instrument decreases due to commodity prices (e.g. gold, crude oil) changes. Consumer ABS ABS (see item) in which the collateral consists of consumer credits. Corporate Customer segment consisting of medium to large businesses. Cost/Income Ratio The ratio between operating expenses and operating income. It is one of the main key performance indicators of the bank’s efficiency: the lower the ratio, the more efficient the bank. Cost of risk The ratio between loan loss provisions and loans and receivables with customers. It is one of the indicators of the bank assets’ level of risk: the lower the ratio, the less risky the bank assets. Counterparty Credit Risk The risk that the counterparty to a transaction involving financial instruments might default prior to completing all agreed cash-flows exchanges. Covenant A loan agreement clause whereby the lender is entitled to restructure or call in the loan on occurrence of the events specified in the clause, which ties changes in the borrower’s profits and financial situation to events of default or restructuring (modifying e.g. the repayment schedule or the interest rate charged). Covered bond A bond which, as well as being guaranteed by the issuing bank, may also be covered by a portfolio of mortgages or other high-quality loans transferred, to this end, to a suitable SPV - Special Purpose Vehicle (see item). CRD (Capital Requirement Directive) EU directives No.2006/48 and 2006/49, incorporated into Banca d’Italia Circular 263/2006 of 27 December 2006 as amended. The CRD IV “Package” has replaced the two aforementioned Directives and consists of the EU Directive 2013/36 on the taking up of the business of credit institutions and prudential supervision and the EU Regulation 575/2013 on prudential requirements, incorporated into Banca d’Italia Circular 285 of 17 December 2013 as amended. Credit Quality Step Step based on external ratings, which is used to assign risk weights under credit risk Standardised Approach. Credit risk The risk that an unexpected change in the creditworthiness of a counterparty, the value of the guarantees provided by it or the margins used by it in the event of insolvency might produce an unexpected change in the value of the bank's credit position. Credit Valuation Adjustment (CVA) Is the adjustment to the valuation of a portfolio of transactions reflecting the market value of the counterparties' credit risk. CRM Credit Risk Mitigation is a set of techniques, contracts accessories to the loan or other instruments (e.g. securities, guarantees), which allows a reduction of the credit risk capital requirements.  Glossary UniCredit ·2018 Annual Report and Accounts 779 CRO Chief Risk Officer. CRR (Capital Requirements Regulation) Regulation EU No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012. Currency risk The risk that the value of the instrument decreases due to foreign exchange rates changes. Daily VaR It reflects the Value at Risk risk measures calibrated to a 1-day holding period to compare with the 99% confidence level with its trading outcomes. Default A party's declared inability to honor its debts and/or the payment of the associated interest. Duration This is generally calculated as the weighted average of the maturities for payment of the interest and capital associated with a bond, and represents an indicator of the interest rate risk to which a security or a bond portfolio is subject. EAD - Exposure at Default Relating to the on-balance and off-balance sheet positions, EAD is defined as the estimation of the future value of an exposure at the time of the debtor’s default. Only banks that meet the requirements for adopting the IRB - Internal Rating Based (see item) advanced approach are allowed to estimate EAD (see item). Other banks are required to refer to regulatory estimations. EBA - European Banking Authority The European Banking Authority is an independent EU Authority which works to ensure effective and consistent prudential regulation and supervision across the European banking sector. Its overall objectives are to maintain financial stability in the EU and to safeguard the integrity, efficiency and orderly functioning of the banking sector. ECA Export Credit Agency. ECAI External credit assessment institution. ECB European Central Bank The ECB is the central bank for Europe's single currency, the euro. The ECB's main task is to preserve the purchasing power of the single currency thus ensuring the maintenance of price stability in the Euro area. Economic capital Capital level that is required to cover the bank’s losses that may occur with at a time horizon of one year and a certain probability or confidence level. Economic Capital is a measure of the variability of the Expected Loss of the portfolio and depends on the degree of diversification of the portfolio itself. Economic value perspective Variation in interest rates can affect the economic value of assets and liabilities. EL Expected Losses are the losses recorded on average over a one year period on each exposure (or pool of exposures). EPS - Earnings Per Share An indicator of a company’s profitability calculated as: Net Profit divided by Average total outstanding shares (excluding treasury shares). Equity risk The risk that the value of the instrument decreases due to stock or index prices changes. Glossary UniCredit ·2018 Annual Report and Accounts 779 CRO Chief Risk Officer. CRR (Capital Requirements Regulation) Regulation EU No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012. Currency risk The risk that the value of the instrument decreases due to foreign exchange rates changes. Daily VaR It reflects the Value at Risk risk measures calibrated to a 1-day holding period to compare with the 99% confidence level with its trading outcomes. Default A party's declared inability to honor its debts and/or the payment of the associated interest. Duration This is generally calculated as the weighted average of the maturities for payment of the interest and capital associated with a bond, and represents an indicator of the interest rate risk to which a security or a bond portfolio is subject. EAD - Exposure at Default Relating to the on-balance and off-balance sheet positions, EAD is defined as the estimation of the future value of an exposure at the time of the debtor’s default. Only banks that meet the requirements for adopting the IRB - Internal Rating Based (see item) advanced approach are allowed to estimate EAD (see item). Other banks are required to refer to regulatory estimations. EBA - European Banking Authority The European Banking Authority is an independent EU Authority which works to ensure effective and consistent prudential regulation and supervision across the European banking sector. Its overall objectives are to maintain financial stability in the EU and to safeguard the integrity, efficiency and orderly functioning of the banking sector. ECA Export Credit Agency. ECAI External credit assessment institution. ECB European Central Bank The ECB is the central bank for Europe's single currency, the euro. The ECB's main task is to preserve the purchasing power of the single currency thus ensuring the maintenance of price stability in the Euro area. Economic capital Capital level that is required to cover the bank’s losses that may occur with at a time horizon of one year and a certain probability or confidence level. Economic Capital is a measure of the variability of the Expected Loss of the portfolio and depends on the degree of diversification of the portfolio itself. Economic value perspective Variation in interest rates can affect the economic value of assets and liabilities. EL Expected Losses are the losses recorded on average over a one year period on each exposure (or pool of exposures). EPS - Earnings Per Share An indicator of a company’s profitability calculated as: Net Profit divided by Average total outstanding shares (excluding treasury shares). Equity risk The risk that the value of the instrument decreases due to stock or index prices changes. Glossary UniCredit ·2018 Annual Report and Accounts 779 CRO Chief Risk Officer. CRR (Capital Requirements Regulation) Regulation EU No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012. Currency risk The risk that the value of the instrument decreases due to foreign exchange rates changes. Daily VaR It reflects the Value at Risk risk measures calibrated to a 1-day holding period to compare with the 99% confidence level with its trading outcomes. Default A party's declared inability to honor its debts and/or the payment of the associated interest. Duration This is generally calculated as the weighted average of the maturities for payment of the interest and capital associated with a bond, and represents an indicator of the interest rate risk to which a security or a bond portfolio is subject. EAD - Exposure at Default Relating to the on-balance and off-balance sheet positions, EAD is defined as the estimation of the future value of an exposure at the time of the debtor’s default. Only banks that meet the requirements for adopting the IRB - Internal Rating Based (see item) advanced approach are allowed to estimate EAD (see item). Other banks are required to refer to regulatory estimations. EBA - European Banking Authority The European Banking Authority is an independent EU Authority which works to ensure effective and consistent prudential regulation and supervision across the European banking sector. Its overall objectives are to maintain financial stability in the EU and to safeguard the integrity, efficiency and orderly functioning of the banking sector. ECA Export Credit Agency. ECAI External credit assessment institution. ECB European Central Bank The ECB is the central bank for Europe's single currency, the euro. The ECB's main task is to preserve the purchasing power of the single currency thus ensuring the maintenance of price stability in the Euro area. Economic capital Capital level that is required to cover the bank’s losses that may occur with at a time horizon of one year and a certain probability or confidence level. Economic Capital is a measure of the variability of the Expected Loss of the portfolio and depends on the degree of diversification of the portfolio itself. Economic value perspective Variation in interest rates can affect the economic value of assets and liabilities. EL Expected Losses are the losses recorded on average over a one year period on each exposure (or pool of exposures). EPS - Earnings Per Share An indicator of a company’s profitability calculated as: Net Profit divided by Average total outstanding shares (excluding treasury shares). Equity risk The risk that the value of the instrument decreases due to stock or index prices changes. Glossary UniCredit ·2018 Annual Report and Accounts 779 CRO Chief Risk Officer. CRR (Capital Requirements Regulation) Regulation EU No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012. Currency risk The risk that the value of the instrument decreases due to foreign exchange rates changes. Daily VaR It reflects the Value at Risk risk measures calibrated to a 1-day holding period to compare with the 99% confidence level with its trading outcomes. Default A party's declared inability to honor its debts and/or the payment of the associated interest. Duration This is generally calculated as the weighted average of the maturities for payment of the interest and capital associated with a bond, and represents an indicator of the interest rate risk to which a security or a bond portfolio is subject. EAD - Exposure at Default Relating to the on-balance and off-balance sheet positions, EAD is defined as the estimation of the future value of an exposure at the time of the debtor’s default. Only banks that meet the requirements for adopting the IRB - Internal Rating Based (see item) advanced approach are allowed to estimate EAD (see item). Other banks are required to refer to regulatory estimations. EBA - European Banking Authority The European Banking Authority is an independent EU Authority which works to ensure effective and consistent prudential regulation and supervision across the European banking sector. Its overall objectives are to maintain financial stability in the EU and to safeguard the integrity, efficiency and orderly functioning of the banking sector. ECA Export Credit Agency. ECAI External credit assessment institution. ECB European Central Bank The ECB is the central bank for Europe's single currency, the euro. The ECB's main task is to preserve the purchasing power of the single currency thus ensuring the maintenance of price stability in the Euro area. Economic capital Capital level that is required to cover the bank’s losses that may occur with at a time horizon of one year and a certain probability or confidence level. Economic Capital is a measure of the variability of the Expected Loss of the portfolio and depends on the degree of diversification of the portfolio itself. Economic value perspective Variation in interest rates can affect the economic value of assets and liabilities. EL Expected Losses are the losses recorded on average over a one year period on each exposure (or pool of exposures). EPS - Earnings Per Share An indicator of a company’s profitability calculated as: Net Profit divided by Average total outstanding shares (excluding treasury shares). Equity risk The risk that the value of the instrument decreases due to stock or index prices changes. Glossary UniCredit ·2018 Annual Report and Accounts 779 CRO Chief Risk Officer. CRR (Capital Requirements Regulation) Regulation EU No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012. Currency risk The risk that the value of the instrument decreases due to foreign exchange rates changes. Daily VaR It reflects the Value at Risk risk measures calibrated to a 1-day holding period to compare with the 99% confidence level with its trading outcomes. Default A party's declared inability to honor its debts and/or the payment of the associated interest. Duration This is generally calculated as the weighted average of the maturities for payment of the interest and capital associated with a bond, and represents an indicator of the interest rate risk to which a security or a bond portfolio is subject. EAD - Exposure at Default Relating to the on-balance and off-balance sheet positions, EAD is defined as the estimation of the future value of an exposure at the time of the debtor’s default. Only banks that meet the requirements for adopting the IRB - Internal Rating Based (see item) advanced approach are allowed to estimate EAD (see item). Other banks are required to refer to regulatory estimations. EBA - European Banking Authority The European Banking Authority is an independent EU Authority which works to ensure effective and consistent prudential regulation and supervision across the European banking sector. Its overall objectives are to maintain financial stability in the EU and to safeguard the integrity, efficiency and orderly functioning of the banking sector. ECA Export Credit Agency. ECAI External credit assessment institution. ECB European Central Bank The ECB is the central bank for Europe's single currency, the euro. The ECB's main task is to preserve the purchasing power of the single currency thus ensuring the maintenance of price stability in the Euro area. Economic capital Capital level that is required to cover the bank’s losses that may occur with at a time horizon of one year and a certain probability or confidence level. Economic Capital is a measure of the variability of the Expected Loss of the portfolio and depends on the degree of diversification of the portfolio itself. Economic value perspective Variation in interest rates can affect the economic value of assets and liabilities. EL Expected Losses are the losses recorded on average over a one year period on each exposure (or pool of exposures). EPS - Earnings Per Share An indicator of a company’s profitability calculated as: Net Profit divided by Average total outstanding shares (excluding treasury shares). Equity risk The risk that the value of the instrument decreases due to stock or index prices changes.  Glossary 780 2018 Annual Report and Accounts · UniCredit Expected Shortfall Risk measure representing the expected loss of a portfolio or a counterparty calculated in the scenarios of loss exceeding the VaR. EVA - Economic Value Added Expresses the ability to create value in monetary terms. EVA is equal to the difference between the Net Operating Profit After Tax (“NOPAT” Net Operating Profit After Tax - see item) and the cost of the absorbed capital. Factoring Contract for the sale without recourse (with credit risk borne by the buyer) or with recourse (with credit risk borne by the seller) of commercial credits to banks or specialist companies, for the purposes of management and collection. May be associated with financing in favor of the seller. Fair value The sum for which, in a freely competitive market, an item can be exchanged or a liability extinguished between aware and independent parties. FINREP Document issued by the Committee of European Banking Supervisors (CEBS). The Committee gives advice to the European Commission on policy and regulatory issues related to banking supervision; it also promotes cooperation and convergence of supervisory practice across the European Union. The objective of FINREP is to provide guidelines for implementation of the consolidated Financial Reporting framework for supervisory purposes; it is based on International Financial Reporting Standards (IFRSs). Forbearance/Forborne exposures According to EBA Implementing Technical Standards, forborne exposures consist of exposures to which forbearance measures have been extended, i.e. concessions towards a debtor who is facing or about to face difficulties in meeting its financial commitments (“financial difficulties”). Forwards Forward contracts on interest rates, exchange rates or share indices, generally traded on "OTC - Over-the-Counter" (see item) markets, in which the conditions are fixed when the contract is agreed but execution will take place at a predetermined future date, by means of the collection or payment of differentials calculated with reference to various parameters according to the subject of the contract. FRA - Forward Rate Agreement Contract whereby the parties agree to receive (pay) at maturity the difference between the value calculated by applying a predetermined interest rate to the transaction amount and the value obtained on the basis of the level reached by a reference rate preselected by the parties. FTE - Full Time Equivalent The number of a company’s full-time employees. Part-time employees are considered on a pro-rata temporis basis. Full Revaluation Approach Is a methodology behind the historical simulation approach for VaR calculation, when the value of a portfolio is estimated by the complete revaluation of its value according to the simulation results. Funding Provision, in various forms, of the funds necessary to finance business activities or particular financial transactions. Futures Standardised contracts whereby the parties undertake to exchange money, transferable securities or goods at a preset price at a future date. These contracts are traded on regulated markets, where their execution is guaranteed. GDP (Gross Domestic Product) The total market value of the products and services produced by Country residents in a given time frame. GIV Group Internal Validation. Glossary 780 2018 Annual Report and Accounts · UniCredit Expected Shortfall Risk measure representing the expected loss of a portfolio or a counterparty calculated in the scenarios of loss exceeding the VaR. EVA - Economic Value Added Expresses the ability to create value in monetary terms. EVA is equal to the difference between the Net Operating Profit After Tax (“NOPAT” Net Operating Profit After Tax - see item) and the cost of the absorbed capital. Factoring Contract for the sale without recourse (with credit risk borne by the buyer) or with recourse (with credit risk borne by the seller) of commercial credits to banks or specialist companies, for the purposes of management and collection. May be associated with financing in favor of the seller. Fair value The sum for which, in a freely competitive market, an item can be exchanged or a liability extinguished between aware and independent parties. FINREP Document issued by the Committee of European Banking Supervisors (CEBS). The Committee gives advice to the European Commission on policy and regulatory issues related to banking supervision; it also promotes cooperation and convergence of supervisory practice across the European Union. The objective of FINREP is to provide guidelines for implementation of the consolidated Financial Reporting framework for supervisory purposes; it is based on International Financial Reporting Standards (IFRSs). Forbearance/Forborne exposures According to EBA Implementing Technical Standards, forborne exposures consist of exposures to which forbearance measures have been extended, i.e. concessions towards a debtor who is facing or about to face difficulties in meeting its financial commitments (“financial difficulties”). Forwards Forward contracts on interest rates, exchange rates or share indices, generally traded on "OTC - Over-the-Counter" (see item) markets, in which the conditions are fixed when the contract is agreed but execution will take place at a predetermined future date, by means of the collection or payment of differentials calculated with reference to various parameters according to the subject of the contract. FRA - Forward Rate Agreement Contract whereby the parties agree to receive (pay) at maturity the difference between the value calculated by applying a predetermined interest rate to the transaction amount and the value obtained on the basis of the level reached by a reference rate preselected by the parties. FTE - Full Time Equivalent The number of a company’s full-time employees. Part-time employees are considered on a pro-rata temporis basis. Full Revaluation Approach Is a methodology behind the historical simulation approach for VaR calculation, when the value of a portfolio is estimated by the complete revaluation of its value according to the simulation results. Funding Provision, in various forms, of the funds necessary to finance business activities or particular financial transactions. Futures Standardised contracts whereby the parties undertake to exchange money, transferable securities or goods at a preset price at a future date. These contracts are traded on regulated markets, where their execution is guaranteed. GDP (Gross Domestic Product) The total market value of the products and services produced by Country residents in a given time frame. GIV Group Internal Validation. Glossary 780 2018 Annual Report and Accounts · UniCredit Expected Shortfall Risk measure representing the expected loss of a portfolio or a counterparty calculated in the scenarios of loss exceeding the VaR. EVA - Economic Value Added Expresses the ability to create value in monetary terms. EVA is equal to the difference between the Net Operating Profit After Tax (“NOPAT” Net Operating Profit After Tax - see item) and the cost of the absorbed capital. Factoring Contract for the sale without recourse (with credit risk borne by the buyer) or with recourse (with credit risk borne by the seller) of commercial credits to banks or specialist companies, for the purposes of management and collection. May be associated with financing in favor of the seller. Fair value The sum for which, in a freely competitive market, an item can be exchanged or a liability extinguished between aware and independent parties. FINREP Document issued by the Committee of European Banking Supervisors (CEBS). The Committee gives advice to the European Commission on policy and regulatory issues related to banking supervision; it also promotes cooperation and convergence of supervisory practice across the European Union. The objective of FINREP is to provide guidelines for implementation of the consolidated Financial Reporting framework for supervisory purposes; it is based on International Financial Reporting Standards (IFRSs). Forbearance/Forborne exposures According to EBA Implementing Technical Standards, forborne exposures consist of exposures to which forbearance measures have been extended, i.e. concessions towards a debtor who is facing or about to face difficulties in meeting its financial commitments (“financial difficulties”). Forwards Forward contracts on interest rates, exchange rates or share indices, generally traded on "OTC - Over-the-Counter" (see item) markets, in which the conditions are fixed when the contract is agreed but execution will take place at a predetermined future date, by means of the collection or payment of differentials calculated with reference to various parameters according to the subject of the contract. FRA - Forward Rate Agreement Contract whereby the parties agree to receive (pay) at maturity the difference between the value calculated by applying a predetermined interest rate to the transaction amount and the value obtained on the basis of the level reached by a reference rate preselected by the parties. FTE - Full Time Equivalent The number of a company’s full-time employees. Part-time employees are considered on a pro-rata temporis basis. Full Revaluation Approach Is a methodology behind the historical simulation approach for VaR calculation, when the value of a portfolio is estimated by the complete revaluation of its value according to the simulation results. Funding Provision, in various forms, of the funds necessary to finance business activities or particular financial transactions. Futures Standardised contracts whereby the parties undertake to exchange money, transferable securities or goods at a preset price at a future date. These contracts are traded on regulated markets, where their execution is guaranteed. GDP (Gross Domestic Product) The total market value of the products and services produced by Country residents in a given time frame. GIV Group Internal Validation. Glossary 780 2018 Annual Report and Accounts · UniCredit Expected Shortfall Risk measure representing the expected loss of a portfolio or a counterparty calculated in the scenarios of loss exceeding the VaR. EVA - Economic Value Added Expresses the ability to create value in monetary terms. EVA is equal to the difference between the Net Operating Profit After Tax (“NOPAT” Net Operating Profit After Tax - see item) and the cost of the absorbed capital. Factoring Contract for the sale without recourse (with credit risk borne by the buyer) or with recourse (with credit risk borne by the seller) of commercial credits to banks or specialist companies, for the purposes of management and collection. May be associated with financing in favor of the seller. Fair value The sum for which, in a freely competitive market, an item can be exchanged or a liability extinguished between aware and independent parties. FINREP Document issued by the Committee of European Banking Supervisors (CEBS). The Committee gives advice to the European Commission on policy and regulatory issues related to banking supervision; it also promotes cooperation and convergence of supervisory practice across the European Union. The objective of FINREP is to provide guidelines for implementation of the consolidated Financial Reporting framework for supervisory purposes; it is based on International Financial Reporting Standards (IFRSs). Forbearance/Forborne exposures According to EBA Implementing Technical Standards, forborne exposures consist of exposures to which forbearance measures have been extended, i.e. concessions towards a debtor who is facing or about to face difficulties in meeting its financial commitments (“financial difficulties”). Forwards Forward contracts on interest rates, exchange rates or share indices, generally traded on "OTC - Over-the-Counter" (see item) markets, in which the conditions are fixed when the contract is agreed but execution will take place at a predetermined future date, by means of the collection or payment of differentials calculated with reference to various parameters according to the subject of the contract. FRA - Forward Rate Agreement Contract whereby the parties agree to receive (pay) at maturity the difference between the value calculated by applying a predetermined interest rate to the transaction amount and the value obtained on the basis of the level reached by a reference rate preselected by the parties. FTE - Full Time Equivalent The number of a company’s full-time employees. Part-time employees are considered on a pro-rata temporis basis. Full Revaluation Approach Is a methodology behind the historical simulation approach for VaR calculation, when the value of a portfolio is estimated by the complete revaluation of its value according to the simulation results. Funding Provision, in various forms, of the funds necessary to finance business activities or particular financial transactions. Futures Standardised contracts whereby the parties undertake to exchange money, transferable securities or goods at a preset price at a future date. These contracts are traded on regulated markets, where their execution is guaranteed. GDP (Gross Domestic Product) The total market value of the products and services produced by Country residents in a given time frame. GIV Group Internal Validation. Glossary 780 2018 Annual Report and Accounts · UniCredit Expected Shortfall Risk measure representing the expected loss of a portfolio or a counterparty calculated in the scenarios of loss exceeding the VaR. EVA - Economic Value Added Expresses the ability to create value in monetary terms. EVA is equal to the difference between the Net Operating Profit After Tax (“NOPAT” Net Operating Profit After Tax - see item) and the cost of the absorbed capital. Factoring Contract for the sale without recourse (with credit risk borne by the buyer) or with recourse (with credit risk borne by the seller) of commercial credits to banks or specialist companies, for the purposes of management and collection. May be associated with financing in favor of the seller. Fair value The sum for which, in a freely competitive market, an item can be exchanged or a liability extinguished between aware and independent parties. FINREP Document issued by the Committee of European Banking Supervisors (CEBS). The Committee gives advice to the European Commission on policy and regulatory issues related to banking supervision; it also promotes cooperation and convergence of supervisory practice across the European Union. The objective of FINREP is to provide guidelines for implementation of the consolidated Financial Reporting framework for supervisory purposes; it is based on International Financial Reporting Standards (IFRSs). Forbearance/Forborne exposures According to EBA Implementing Technical Standards, forborne exposures consist of exposures to which forbearance measures have been extended, i.e. concessions towards a debtor who is facing or about to face difficulties in meeting its financial commitments (“financial difficulties”). Forwards Forward contracts on interest rates, exchange rates or share indices, generally traded on "OTC - Over-the-Counter" (see item) markets, in which the conditions are fixed when the contract is agreed but execution will take place at a predetermined future date, by means of the collection or payment of differentials calculated with reference to various parameters according to the subject of the contract. FRA - Forward Rate Agreement Contract whereby the parties agree to receive (pay) at maturity the difference between the value calculated by applying a predetermined interest rate to the transaction amount and the value obtained on the basis of the level reached by a reference rate preselected by the parties. FTE - Full Time Equivalent The number of a company’s full-time employees. Part-time employees are considered on a pro-rata temporis basis. Full Revaluation Approach Is a methodology behind the historical simulation approach for VaR calculation, when the value of a portfolio is estimated by the complete revaluation of its value according to the simulation results. Funding Provision, in various forms, of the funds necessary to finance business activities or particular financial transactions. Futures Standardised contracts whereby the parties undertake to exchange money, transferable securities or goods at a preset price at a future date. These contracts are traded on regulated markets, where their execution is guaranteed. GDP (Gross Domestic Product) The total market value of the products and services produced by Country residents in a given time frame. GIV Group Internal Validation.  Glossary UniCredit ·2018 Annual Report and Accounts 781 GLO Group Lending Office. Goodwill The additional sum paid for the acquisition of an equity interest, equal to the difference between the cost and the corresponding share of net assets, for the portion not attributable to the identifiable assets of the acquired company. Hedge Fund Speculative mutual investment fund adopting hedging techniques which generally are not used by ordinary mutual funds, in order to deliver a constant performance, which is only hardly linked to reference markets. Hedge Funds are distinguished by a limited number of partners and require a high minimum level of investment. IAA Internal Assessment Approach. IAS/IFRS International accounting standards issued by the International Accounting Standard Board (IASB), a private international body established in April 2001, involving representatives of the accounting professions of the principal countries and, as observers, the European Union, IOSCO (International Organisation of Securities Commissions) and the Basel Committee. This body is the successor of the International Accounting Standards Committee (IASC), set up in 1973 to promote harmonisation of the rules for the preparation of company accounts. When the IASC became the IASB, it was decided, among other things, to name the new accounting principles "International Financial Reporting Standards" (IFRS). At international level, work is currently underway to harmonise the IAS/IFRS with the US GAAP - United States Generally Accepted Accounting Principles (see item). IBNR Incurred But Not Reported (losses). ICAAP - Internal Capital Adequacy Assessment Process See "Basel 2 - Pillar 2". IMA Internal Models Approach is an approach to calculate market risk capital requirement using internal models. Impaired loans Loans are subjected to periodic examination in order to identify those which, following events occurring after their entry in the accounts (at the market value, normally equal to the disbursed amount including the transaction costs and revenues directly attributable to the disbursement of the loan), show objective signs of a possible loss of value. This category includes loans that have been classed as bad, doubtful, restructured or overdue, in accordance with Banca d’Italia rules consistent with IAS/IFRS (see item). Impairment Within the framework of the IAS/IFRS (see item), this refers to the loss of value of a balance sheet asset, recorded when the book value is greater than the recoverable value, i.e. the sum that can be obtained by selling or using the asset. Index linked Policies whose performance at maturity depends on a benchmark parameter that may be a share index, a basket of securities or another indicator. Interest rate risk The risk that the value of the instrument decreases due to interest rates changes. (Internal) validation Expert unit, internal but sufficiently independent, that verifies the adequacy of internal models for internal and regulatory purposes and issues a formal opinion about their usefulness and effectiveness. Usually a prerequisite for the validation process carried out by the authorities. Investment banking Banking segment devoted to the subscription and placement of newly issued securities, as well as the trading of financial instruments. Glossary UniCredit ·2018 Annual Report and Accounts 781 GLO Group Lending Office. Goodwill The additional sum paid for the acquisition of an equity interest, equal to the difference between the cost and the corresponding share of net assets, for the portion not attributable to the identifiable assets of the acquired company. Hedge Fund Speculative mutual investment fund adopting hedging techniques which generally are not used by ordinary mutual funds, in order to deliver a constant performance, which is only hardly linked to reference markets. Hedge Funds are distinguished by a limited number of partners and require a high minimum level of investment. IAA Internal Assessment Approach. IAS/IFRS International accounting standards issued by the International Accounting Standard Board (IASB), a private international body established in April 2001, involving representatives of the accounting professions of the principal countries and, as observers, the European Union, IOSCO (International Organisation of Securities Commissions) and the Basel Committee. This body is the successor of the International Accounting Standards Committee (IASC), set up in 1973 to promote harmonisation of the rules for the preparation of company accounts. When the IASC became the IASB, it was decided, among other things, to name the new accounting principles "International Financial Reporting Standards" (IFRS). At international level, work is currently underway to harmonise the IAS/IFRS with the US GAAP - United States Generally Accepted Accounting Principles (see item). IBNR Incurred But Not Reported (losses). ICAAP - Internal Capital Adequacy Assessment Process See "Basel 2 - Pillar 2". IMA Internal Models Approach is an approach to calculate market risk capital requirement using internal models. Impaired loans Loans are subjected to periodic examination in order to identify those which, following events occurring after their entry in the accounts (at the market value, normally equal to the disbursed amount including the transaction costs and revenues directly attributable to the disbursement of the loan), show objective signs of a possible loss of value. This category includes loans that have been classed as bad, doubtful, restructured or overdue, in accordance with Banca d’Italia rules consistent with IAS/IFRS (see item). Impairment Within the framework of the IAS/IFRS (see item), this refers to the loss of value of a balance sheet asset, recorded when the book value is greater than the recoverable value, i.e. the sum that can be obtained by selling or using the asset. Index linked Policies whose performance at maturity depends on a benchmark parameter that may be a share index, a basket of securities or another indicator. Interest rate risk The risk that the value of the instrument decreases due to interest rates changes. (Internal) validation Expert unit, internal but sufficiently independent, that verifies the adequacy of internal models for internal and regulatory purposes and issues a formal opinion about their usefulness and effectiveness. Usually a prerequisite for the validation process carried out by the authorities. Investment banking Banking segment devoted to the subscription and placement of newly issued securities, as well as the trading of financial instruments. Glossary UniCredit ·2018 Annual Report and Accounts 781 GLO Group Lending Office. Goodwill The additional sum paid for the acquisition of an equity interest, equal to the difference between the cost and the corresponding share of net assets, for the portion not attributable to the identifiable assets of the acquired company. Hedge Fund Speculative mutual investment fund adopting hedging techniques which generally are not used by ordinary mutual funds, in order to deliver a constant performance, which is only hardly linked to reference markets. Hedge Funds are distinguished by a limited number of partners and require a high minimum level of investment. IAA Internal Assessment Approach. IAS/IFRS International accounting standards issued by the International Accounting Standard Board (IASB), a private international body established in April 2001, involving representatives of the accounting professions of the principal countries and, as observers, the European Union, IOSCO (International Organisation of Securities Commissions) and the Basel Committee. This body is the successor of the International Accounting Standards Committee (IASC), set up in 1973 to promote harmonisation of the rules for the preparation of company accounts. When the IASC became the IASB, it was decided, among other things, to name the new accounting principles "International Financial Reporting Standards" (IFRS). At international level, work is currently underway to harmonise the IAS/IFRS with the US GAAP - United States Generally Accepted Accounting Principles (see item). IBNR Incurred But Not Reported (losses). ICAAP - Internal Capital Adequacy Assessment Process See "Basel 2 - Pillar 2". IMA Internal Models Approach is an approach to calculate market risk capital requirement using internal models. Impaired loans Loans are subjected to periodic examination in order to identify those which, following events occurring after their entry in the accounts (at the market value, normally equal to the disbursed amount including the transaction costs and revenues directly attributable to the disbursement of the loan), show objective signs of a possible loss of value. This category includes loans that have been classed as bad, doubtful, restructured or overdue, in accordance with Banca d’Italia rules consistent with IAS/IFRS (see item). Impairment Within the framework of the IAS/IFRS (see item), this refers to the loss of value of a balance sheet asset, recorded when the book value is greater than the recoverable value, i.e. the sum that can be obtained by selling or using the asset. Index linked Policies whose performance at maturity depends on a benchmark parameter that may be a share index, a basket of securities or another indicator. Interest rate risk The risk that the value of the instrument decreases due to interest rates changes. (Internal) validation Expert unit, internal but sufficiently independent, that verifies the adequacy of internal models for internal and regulatory purposes and issues a formal opinion about their usefulness and effectiveness. Usually a prerequisite for the validation process carried out by the authorities. Investment banking Banking segment devoted to the subscription and placement of newly issued securities, as well as the trading of financial instruments. Glossary UniCredit ·2018 Annual Report and Accounts 781 GLO Group Lending Office. Goodwill The additional sum paid for the acquisition of an equity interest, equal to the difference between the cost and the corresponding share of net assets, for the portion not attributable to the identifiable assets of the acquired company. Hedge Fund Speculative mutual investment fund adopting hedging techniques which generally are not used by ordinary mutual funds, in order to deliver a constant performance, which is only hardly linked to reference markets. Hedge Funds are distinguished by a limited number of partners and require a high minimum level of investment. IAA Internal Assessment Approach. IAS/IFRS International accounting standards issued by the International Accounting Standard Board (IASB), a private international body established in April 2001, involving representatives of the accounting professions of the principal countries and, as observers, the European Union, IOSCO (International Organisation of Securities Commissions) and the Basel Committee. This body is the successor of the International Accounting Standards Committee (IASC), set up in 1973 to promote harmonisation of the rules for the preparation of company accounts. When the IASC became the IASB, it was decided, among other things, to name the new accounting principles "International Financial Reporting Standards" (IFRS). At international level, work is currently underway to harmonise the IAS/IFRS with the US GAAP - United States Generally Accepted Accounting Principles (see item). IBNR Incurred But Not Reported (losses). ICAAP - Internal Capital Adequacy Assessment Process See "Basel 2 - Pillar 2". IMA Internal Models Approach is an approach to calculate market risk capital requirement using internal models. Impaired loans Loans are subjected to periodic examination in order to identify those which, following events occurring after their entry in the accounts (at the market value, normally equal to the disbursed amount including the transaction costs and revenues directly attributable to the disbursement of the loan), show objective signs of a possible loss of value. This category includes loans that have been classed as bad, doubtful, restructured or overdue, in accordance with Banca d’Italia rules consistent with IAS/IFRS (see item). Impairment Within the framework of the IAS/IFRS (see item), this refers to the loss of value of a balance sheet asset, recorded when the book value is greater than the recoverable value, i.e. the sum that can be obtained by selling or using the asset. Index linked Policies whose performance at maturity depends on a benchmark parameter that may be a share index, a basket of securities or another indicator. Interest rate risk The risk that the value of the instrument decreases due to interest rates changes. (Internal) validation Expert unit, internal but sufficiently independent, that verifies the adequacy of internal models for internal and regulatory purposes and issues a formal opinion about their usefulness and effectiveness. Usually a prerequisite for the validation process carried out by the authorities. Investment banking Banking segment devoted to the subscription and placement of newly issued securities, as well as the trading of financial instruments. Glossary UniCredit ·2018 Annual Report and Accounts 781 GLO Group Lending Office. Goodwill The additional sum paid for the acquisition of an equity interest, equal to the difference between the cost and the corresponding share of net assets, for the portion not attributable to the identifiable assets of the acquired company. Hedge Fund Speculative mutual investment fund adopting hedging techniques which generally are not used by ordinary mutual funds, in order to deliver a constant performance, which is only hardly linked to reference markets. Hedge Funds are distinguished by a limited number of partners and require a high minimum level of investment. IAA Internal Assessment Approach. IAS/IFRS International accounting standards issued by the International Accounting Standard Board (IASB), a private international body established in April 2001, involving representatives of the accounting professions of the principal countries and, as observers, the European Union, IOSCO (International Organisation of Securities Commissions) and the Basel Committee. This body is the successor of the International Accounting Standards Committee (IASC), set up in 1973 to promote harmonisation of the rules for the preparation of company accounts. When the IASC became the IASB, it was decided, among other things, to name the new accounting principles "International Financial Reporting Standards" (IFRS). At international level, work is currently underway to harmonise the IAS/IFRS with the US GAAP - United States Generally Accepted Accounting Principles (see item). IBNR Incurred But Not Reported (losses). ICAAP - Internal Capital Adequacy Assessment Process See "Basel 2 - Pillar 2". IMA Internal Models Approach is an approach to calculate market risk capital requirement using internal models. Impaired loans Loans are subjected to periodic examination in order to identify those which, following events occurring after their entry in the accounts (at the market value, normally equal to the disbursed amount including the transaction costs and revenues directly attributable to the disbursement of the loan), show objective signs of a possible loss of value. This category includes loans that have been classed as bad, doubtful, restructured or overdue, in accordance with Banca d’Italia rules consistent with IAS/IFRS (see item). Impairment Within the framework of the IAS/IFRS (see item), this refers to the loss of value of a balance sheet asset, recorded when the book value is greater than the recoverable value, i.e. the sum that can be obtained by selling or using the asset. Index linked Policies whose performance at maturity depends on a benchmark parameter that may be a share index, a basket of securities or another indicator. Interest rate risk The risk that the value of the instrument decreases due to interest rates changes. (Internal) validation Expert unit, internal but sufficiently independent, that verifies the adequacy of internal models for internal and regulatory purposes and issues a formal opinion about their usefulness and effectiveness. Usually a prerequisite for the validation process carried out by the authorities. Investment banking Banking segment devoted to the subscription and placement of newly issued securities, as well as the trading of financial instruments.  Glossary 782 2018 Annual Report and Accounts · UniCredit Investor Any entity other than the Sponsor (see item) or Originator (see item) with exposure to a securitisation. IPRE Income Producing Real Estate. IRB - Internal Rating Based Method for determining the capital needed to cover credit risk within the framework of Pillar 1 of Basel 2 (see item). The rules are applied to the exposures of the banking portfolio. Furthermore, in the IRB methods the risk weightings of the assets are determined on the basis of the bank's own internal evaluations of the debtors (or, in some cases, of the transactions). Using systems based on internal ratings, the banks determine the weighted risk exposure. The IRB methods consist of a basic method and an advanced method, which differ in terms of the risk parameters that the bank must estimate: in the basic method, the banks use their own estimates for "PD - Probability of Default” and the regulatory values for the other risk parameters; in the advanced method, the banks use their own estimates for " PD - Probability of Default ", "LGD - Loss Given Default", "CCF - Credit Conversion Factors" and, where provided for, "M - Maturity" (see item). The use of IRB methods for the calculation of capital requirements is subject to authorisation from Banca d’Italia. IRC Incremental Risk Charge is a measure of potential losses arising from default and migration risks of unsecuritised credit products over a 1-year capital horizon at a 99.9% confidence level, taking into account the liquidity horizons of individual positions. IRS - Interest Rate Swap See "Swap". Joint venture Agreement between two or more companies for the conduct of a given economic activity, usually through the constitution of a joint stock company. Junior, Mezzanine and Senior exposures In a securitisation transaction, the exposures may be classified as follows: • junior exposures are the last to be repaid, and consequently absorb the first loss produced by the securitisation transaction; • mezzanine exposures are those with medium repayment priority, between senior and junior; • senior exposures are the first to be repaid. Ke The cost of equity is the minimum return on investment required by the shareholder. It is the sum of a risk-free rate and an additional spread remunerating the shareholder for the credit risk and the volatility of the share price. The cost of capital is based on medium/longterm averages of market parameters. KPI - “Key Performance Indicators” Set of indicators used to evaluate the success of a particular activity or process. LCP Loss Confirmation Period. LCR (Liquidity Coverage Ratio) The ratio of a credit institution’s liquidity buffer to its net liquidity outflows over a 30 calendar day stress period. Lead Arranger The bank responsible for arranging a securitisation. The arranger’s duties include checking the quality and quantity of the assets to be securitised, conducting relations with rating agencies, drawing up the prospectus and dealing with accounting and legal problems. Leasing Contract whereby one party (the lessor) grants to another party (the lessee) for a given period of time the enjoyment of an asset purchased or built by the lessor at the choice and on the instructions of the lessee, with the latter having the option of acquiring ownership of the asset under predetermined conditions at the end of the leasing contract. Glossary 782 2018 Annual Report and Accounts · UniCredit Investor Any entity other than the Sponsor (see item) or Originator (see item) with exposure to a securitisation. IPRE Income Producing Real Estate. IRB - Internal Rating Based Method for determining the capital needed to cover credit risk within the framework of Pillar 1 of Basel 2 (see item). The rules are applied to the exposures of the banking portfolio. Furthermore, in the IRB methods the risk weightings of the assets are determined on the basis of the bank's own internal evaluations of the debtors (or, in some cases, of the transactions). Using systems based on internal ratings, the banks determine the weighted risk exposure. The IRB methods consist of a basic method and an advanced method, which differ in terms of the risk parameters that the bank must estimate: in the basic method, the banks use their own estimates for "PD - Probability of Default” and the regulatory values for the other risk parameters; in the advanced method, the banks use their own estimates for " PD - Probability of Default ", "LGD - Loss Given Default", "CCF - Credit Conversion Factors" and, where provided for, "M - Maturity" (see item). The use of IRB methods for the calculation of capital requirements is subject to authorisation from Banca d’Italia. IRC Incremental Risk Charge is a measure of potential losses arising from default and migration risks of unsecuritised credit products over a 1-year capital horizon at a 99.9% confidence level, taking into account the liquidity horizons of individual positions. IRS - Interest Rate Swap See "Swap". Joint venture Agreement between two or more companies for the conduct of a given economic activity, usually through the constitution of a joint stock company. Junior, Mezzanine and Senior exposures In a securitisation transaction, the exposures may be classified as follows: • junior exposures are the last to be repaid, and consequently absorb the first loss produced by the securitisation transaction; • mezzanine exposures are those with medium repayment priority, between senior and junior; • senior exposures are the first to be repaid. Ke The cost of equity is the minimum return on investment required by the shareholder. It is the sum of a risk-free rate and an additional spread remunerating the shareholder for the credit risk and the volatility of the share price. The cost of capital is based on medium/longterm averages of market parameters. KPI - “Key Performance Indicators” Set of indicators used to evaluate the success of a particular activity or process. LCP Loss Confirmation Period. LCR (Liquidity Coverage Ratio) The ratio of a credit institution’s liquidity buffer to its net liquidity outflows over a 30 calendar day stress period. Lead Arranger The bank responsible for arranging a securitisation. The arranger’s duties include checking the quality and quantity of the assets to be securitised, conducting relations with rating agencies, drawing up the prospectus and dealing with accounting and legal problems. Leasing Contract whereby one party (the lessor) grants to another party (the lessee) for a given period of time the enjoyment of an asset purchased or built by the lessor at the choice and on the instructions of the lessee, with the latter having the option of acquiring ownership of the asset under predetermined conditions at the end of the leasing contract. Glossary 782 2018 Annual Report and Accounts · UniCredit Investor Any entity other than the Sponsor (see item) or Originator (see item) with exposure to a securitisation. IPRE Income Producing Real Estate. IRB - Internal Rating Based Method for determining the capital needed to cover credit risk within the framework of Pillar 1 of Basel 2 (see item). The rules are applied to the exposures of the banking portfolio. Furthermore, in the IRB methods the risk weightings of the assets are determined on the basis of the bank's own internal evaluations of the debtors (or, in some cases, of the transactions). Using systems based on internal ratings, the banks determine the weighted risk exposure. The IRB methods consist of a basic method and an advanced method, which differ in terms of the risk parameters that the bank must estimate: in the basic method, the banks use their own estimates for "PD - Probability of Default” and the regulatory values for the other risk parameters; in the advanced method, the banks use their own estimates for " PD - Probability of Default ", "LGD - Loss Given Default", "CCF - Credit Conversion Factors" and, where provided for, "M - Maturity" (see item). The use of IRB methods for the calculation of capital requirements is subject to authorisation from Banca d’Italia. IRC Incremental Risk Charge is a measure of potential losses arising from default and migration risks of unsecuritised credit products over a 1-year capital horizon at a 99.9% confidence level, taking into account the liquidity horizons of individual positions. IRS - Interest Rate Swap See "Swap". Joint venture Agreement between two or more companies for the conduct of a given economic activity, usually through the constitution of a joint stock company. Junior, Mezzanine and Senior exposures In a securitisation transaction, the exposures may be classified as follows: • junior exposures are the last to be repaid, and consequently absorb the first loss produced by the securitisation transaction; • mezzanine exposures are those with medium repayment priority, between senior and junior; • senior exposures are the first to be repaid. Ke The cost of equity is the minimum return on investment required by the shareholder. It is the sum of a risk-free rate and an additional spread remunerating the shareholder for the credit risk and the volatility of the share price. The cost of capital is based on medium/longterm averages of market parameters. KPI - “Key Performance Indicators” Set of indicators used to evaluate the success of a particular activity or process. LCP Loss Confirmation Period. LCR (Liquidity Coverage Ratio) The ratio of a credit institution’s liquidity buffer to its net liquidity outflows over a 30 calendar day stress period. Lead Arranger The bank responsible for arranging a securitisation. The arranger’s duties include checking the quality and quantity of the assets to be securitised, conducting relations with rating agencies, drawing up the prospectus and dealing with accounting and legal problems. Leasing Contract whereby one party (the lessor) grants to another party (the lessee) for a given period of time the enjoyment of an asset purchased or built by the lessor at the choice and on the instructions of the lessee, with the latter having the option of acquiring ownership of the asset under predetermined conditions at the end of the leasing contract. Glossary 782 2018 Annual Report and Accounts · UniCredit Investor Any entity other than the Sponsor (see item) or Originator (see item) with exposure to a securitisation. IPRE Income Producing Real Estate. IRB - Internal Rating Based Method for determining the capital needed to cover credit risk within the framework of Pillar 1 of Basel 2 (see item). The rules are applied to the exposures of the banking portfolio. Furthermore, in the IRB methods the risk weightings of the assets are determined on the basis of the bank's own internal evaluations of the debtors (or, in some cases, of the transactions). Using systems based on internal ratings, the banks determine the weighted risk exposure. The IRB methods consist of a basic method and an advanced method, which differ in terms of the risk parameters that the bank must estimate: in the basic method, the banks use their own estimates for "PD - Probability of Default” and the regulatory values for the other risk parameters; in the advanced method, the banks use their own estimates for " PD - Probability of Default ", "LGD - Loss Given Default", "CCF - Credit Conversion Factors" and, where provided for, "M - Maturity" (see item). The use of IRB methods for the calculation of capital requirements is subject to authorisation from Banca d’Italia. IRC Incremental Risk Charge is a measure of potential losses arising from default and migration risks of unsecuritised credit products over a 1-year capital horizon at a 99.9% confidence level, taking into account the liquidity horizons of individual positions. IRS - Interest Rate Swap See "Swap". Joint venture Agreement between two or more companies for the conduct of a given economic activity, usually through the constitution of a joint stock company. Junior, Mezzanine and Senior exposures In a securitisation transaction, the exposures may be classified as follows: • junior exposures are the last to be repaid, and consequently absorb the first loss produced by the securitisation transaction; • mezzanine exposures are those with medium repayment priority, between senior and junior; • senior exposures are the first to be repaid. Ke The cost of equity is the minimum return on investment required by the shareholder. It is the sum of a risk-free rate and an additional spread remunerating the shareholder for the credit risk and the volatility of the share price. The cost of capital is based on medium/longterm averages of market parameters. KPI - “Key Performance Indicators” Set of indicators used to evaluate the success of a particular activity or process. LCP Loss Confirmation Period. LCR (Liquidity Coverage Ratio) The ratio of a credit institution’s liquidity buffer to its net liquidity outflows over a 30 calendar day stress period. Lead Arranger The bank responsible for arranging a securitisation. The arranger’s duties include checking the quality and quantity of the assets to be securitised, conducting relations with rating agencies, drawing up the prospectus and dealing with accounting and legal problems. Leasing Contract whereby one party (the lessor) grants to another party (the lessee) for a given period of time the enjoyment of an asset purchased or built by the lessor at the choice and on the instructions of the lessee, with the latter having the option of acquiring ownership of the asset under predetermined conditions at the end of the leasing contract. Glossary 782 2018 Annual Report and Accounts · UniCredit Investor Any entity other than the Sponsor (see item) or Originator (see item) with exposure to a securitisation. IPRE Income Producing Real Estate. IRB - Internal Rating Based Method for determining the capital needed to cover credit risk within the framework of Pillar 1 of Basel 2 (see item). The rules are applied to the exposures of the banking portfolio. Furthermore, in the IRB methods the risk weightings of the assets are determined on the basis of the bank's own internal evaluations of the debtors (or, in some cases, of the transactions). Using systems based on internal ratings, the banks determine the weighted risk exposure. The IRB methods consist of a basic method and an advanced method, which differ in terms of the risk parameters that the bank must estimate: in the basic method, the banks use their own estimates for "PD - Probability of Default” and the regulatory values for the other risk parameters; in the advanced method, the banks use their own estimates for " PD - Probability of Default ", "LGD - Loss Given Default", "CCF - Credit Conversion Factors" and, where provided for, "M - Maturity" (see item). The use of IRB methods for the calculation of capital requirements is subject to authorisation from Banca d’Italia. IRC Incremental Risk Charge is a measure of potential losses arising from default and migration risks of unsecuritised credit products over a 1-year capital horizon at a 99.9% confidence level, taking into account the liquidity horizons of individual positions. IRS - Interest Rate Swap See "Swap". Joint venture Agreement between two or more companies for the conduct of a given economic activity, usually through the constitution of a joint stock company. Junior, Mezzanine and Senior exposures In a securitisation transaction, the exposures may be classified as follows: • junior exposures are the last to be repaid, and consequently absorb the first loss produced by the securitisation transaction; • mezzanine exposures are those with medium repayment priority, between senior and junior; • senior exposures are the first to be repaid. Ke The cost of equity is the minimum return on investment required by the shareholder. It is the sum of a risk-free rate and an additional spread remunerating the shareholder for the credit risk and the volatility of the share price. The cost of capital is based on medium/longterm averages of market parameters. KPI - “Key Performance Indicators” Set of indicators used to evaluate the success of a particular activity or process. LCP Loss Confirmation Period. LCR (Liquidity Coverage Ratio) The ratio of a credit institution’s liquidity buffer to its net liquidity outflows over a 30 calendar day stress period. Lead Arranger The bank responsible for arranging a securitisation. The arranger’s duties include checking the quality and quantity of the assets to be securitised, conducting relations with rating agencies, drawing up the prospectus and dealing with accounting and legal problems. Leasing Contract whereby one party (the lessor) grants to another party (the lessee) for a given period of time the enjoyment of an asset purchased or built by the lessor at the choice and on the instructions of the lessee, with the latter having the option of acquiring ownership of the asset under predetermined conditions at the end of the leasing contract.  Glossary UniCredit ·2018 Annual Report and Accounts 783 Leveraged Finance Loans provided mainly to Private Equity funds in order to finance the acquisition of a company through a financial transaction based on the cash flow generation capacity of such target company. This can result in a higher level of debt and therefore a higher level of risk. Leveraged finance may be syndicated. LGD - Loss Given Default Expected value (which may be conditional upon adverse scenarios) of the ratio, expressed as a percentage, between the loss giving rise to the default and the amount of exposure at the time of the default (“EAD - Exposure At Default”, see item). Liquidity risk The risk of the company being unable to meet its payment commitments due to the inability to mobilise assets or obtain adequate funding from the market (funding liquidity risk) or due to the difficulty/impossibility of easily liquidating positions in financial assets without significantly and unfavourably affecting the price because of insufficient depth or temporary malfunction of the financial market (market liquidity risk). M - Maturity The average, for a given exposure, of the residual contractual maturities, each weighted for the relevant amount. Mark-up Positive differential with respect to a benchmark index, generally an interbank rate, applied to the lending rate offered to customers. Market risk The effect that changes in market variables might have on the economic value of the Group's portfolio, where this includes both the assets held in the Trading Book and those entered in the Banking Book, or the operations connected with the characteristic management of the commercial bank and its strategic investment choices. MDA Stands for Maximum Distributable Amount i.e. a limit to the distributable profits in order to preserve the Combined Buffer Requirement. Medium Term Note Bond with a maturity of between 5 and 10 years. Merchant banking This term covers activities such as the subscription of securities, shares or debt instruments, by corporate customers for subsequent placement on the market, the taking of more permanent equity interests but always with a view to subsequent disposal, and the conduct of business consultancy activities for the purposes of mergers and acquisitions or restructurings. Monoline Insurers Insurance companies that insure only one kind of risk. Against payment of premium they guarantee the repayment of principal and interest of bonds, usually “ABS - Asset Backed Securities” (see item) or US municipal bonds, on default by the issuer, which enables the guaranteed bond to obtain a better rating than similar unguaranteed issues. Non-Performing Exposures According to EBA Implementing Technical Standards, Non-Performing Exposures are debt instruments and off-balance sheet exposures which satisfy either or both of the following criteria: (i) material exposures which are more than 90 days past-due; (ii) the debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or of the number of days past due. NOPAT - Net Operating Profit After Tax Net Operating Profit after tax and minority interests, adjusted by elements that would not allow to assess the capability to create value through ordinary operations. It represents the share of Group Net Profit produced by typical business activities, gross of the costs of capital. Notch Level, referred to a scale. Glossary UniCredit ·2018 Annual Report and Accounts 783 Leveraged Finance Loans provided mainly to Private Equity funds in order to finance the acquisition of a company through a financial transaction based on the cash flow generation capacity of such target company. This can result in a higher level of debt and therefore a higher level of risk. Leveraged finance may be syndicated. LGD - Loss Given Default Expected value (which may be conditional upon adverse scenarios) of the ratio, expressed as a percentage, between the loss giving rise to the default and the amount of exposure at the time of the default (“EAD - Exposure At Default”, see item). Liquidity risk The risk of the company being unable to meet its payment commitments due to the inability to mobilise assets or obtain adequate funding from the market (funding liquidity risk) or due to the difficulty/impossibility of easily liquidating positions in financial assets without significantly and unfavourably affecting the price because of insufficient depth or temporary malfunction of the financial market (market liquidity risk). M - Maturity The average, for a given exposure, of the residual contractual maturities, each weighted for the relevant amount. Mark-up Positive differential with respect to a benchmark index, generally an interbank rate, applied to the lending rate offered to customers. Market risk The effect that changes in market variables might have on the economic value of the Group's portfolio, where this includes both the assets held in the Trading Book and those entered in the Banking Book, or the operations connected with the characteristic management of the commercial bank and its strategic investment choices. MDA Stands for Maximum Distributable Amount i.e. a limit to the distributable profits in order to preserve the Combined Buffer Requirement. Medium Term Note Bond with a maturity of between 5 and 10 years. Merchant banking This term covers activities such as the subscription of securities, shares or debt instruments, by corporate customers for subsequent placement on the market, the taking of more permanent equity interests but always with a view to subsequent disposal, and the conduct of business consultancy activities for the purposes of mergers and acquisitions or restructurings. Monoline Insurers Insurance companies that insure only one kind of risk. Against payment of premium they guarantee the repayment of principal and interest of bonds, usually “ABS - Asset Backed Securities” (see item) or US municipal bonds, on default by the issuer, which enables the guaranteed bond to obtain a better rating than similar unguaranteed issues. Non-Performing Exposures According to EBA Implementing Technical Standards, Non-Performing Exposures are debt instruments and off-balance sheet exposures which satisfy either or both of the following criteria: (i) material exposures which are more than 90 days past-due; (ii) the debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or of the number of days past due. NOPAT - Net Operating Profit After Tax Net Operating Profit after tax and minority interests, adjusted by elements that would not allow to assess the capability to create value through ordinary operations. It represents the share of Group Net Profit produced by typical business activities, gross of the costs of capital. Notch Level, referred to a scale. Glossary UniCredit ·2018 Annual Report and Accounts 783 Leveraged Finance Loans provided mainly to Private Equity funds in order to finance the acquisition of a company through a financial transaction based on the cash flow generation capacity of such target company. This can result in a higher level of debt and therefore a higher level of risk. Leveraged finance may be syndicated. LGD - Loss Given Default Expected value (which may be conditional upon adverse scenarios) of the ratio, expressed as a percentage, between the loss giving rise to the default and the amount of exposure at the time of the default (“EAD - Exposure At Default”, see item). Liquidity risk The risk of the company being unable to meet its payment commitments due to the inability to mobilise assets or obtain adequate funding from the market (funding liquidity risk) or due to the difficulty/impossibility of easily liquidating positions in financial assets without significantly and unfavourably affecting the price because of insufficient depth or temporary malfunction of the financial market (market liquidity risk). M - Maturity The average, for a given exposure, of the residual contractual maturities, each weighted for the relevant amount. Mark-up Positive differential with respect to a benchmark index, generally an interbank rate, applied to the lending rate offered to customers. Market risk The effect that changes in market variables might have on the economic value of the Group's portfolio, where this includes both the assets held in the Trading Book and those entered in the Banking Book, or the operations connected with the characteristic management of the commercial bank and its strategic investment choices. MDA Stands for Maximum Distributable Amount i.e. a limit to the distributable profits in order to preserve the Combined Buffer Requirement. Medium Term Note Bond with a maturity of between 5 and 10 years. Merchant banking This term covers activities such as the subscription of securities, shares or debt instruments, by corporate customers for subsequent placement on the market, the taking of more permanent equity interests but always with a view to subsequent disposal, and the conduct of business consultancy activities for the purposes of mergers and acquisitions or restructurings. Monoline Insurers Insurance companies that insure only one kind of risk. Against payment of premium they guarantee the repayment of principal and interest of bonds, usually “ABS - Asset Backed Securities” (see item) or US municipal bonds, on default by the issuer, which enables the guaranteed bond to obtain a better rating than similar unguaranteed issues. Non-Performing Exposures According to EBA Implementing Technical Standards, Non-Performing Exposures are debt instruments and off-balance sheet exposures which satisfy either or both of the following criteria: (i) material exposures which are more than 90 days past-due; (ii) the debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or of the number of days past due. NOPAT - Net Operating Profit After Tax Net Operating Profit after tax and minority interests, adjusted by elements that would not allow to assess the capability to create value through ordinary operations. It represents the share of Group Net Profit produced by typical business activities, gross of the costs of capital. Notch Level, referred to a scale. Glossary UniCredit ·2018 Annual Report and Accounts 783 Leveraged Finance Loans provided mainly to Private Equity funds in order to finance the acquisition of a company through a financial transaction based on the cash flow generation capacity of such target company. This can result in a higher level of debt and therefore a higher level of risk. Leveraged finance may be syndicated. LGD - Loss Given Default Expected value (which may be conditional upon adverse scenarios) of the ratio, expressed as a percentage, between the loss giving rise to the default and the amount of exposure at the time of the default (“EAD - Exposure At Default”, see item). Liquidity risk The risk of the company being unable to meet its payment commitments due to the inability to mobilise assets or obtain adequate funding from the market (funding liquidity risk) or due to the difficulty/impossibility of easily liquidating positions in financial assets without significantly and unfavourably affecting the price because of insufficient depth or temporary malfunction of the financial market (market liquidity risk). M - Maturity The average, for a given exposure, of the residual contractual maturities, each weighted for the relevant amount. Mark-up Positive differential with respect to a benchmark index, generally an interbank rate, applied to the lending rate offered to customers. Market risk The effect that changes in market variables might have on the economic value of the Group's portfolio, where this includes both the assets held in the Trading Book and those entered in the Banking Book, or the operations connected with the characteristic management of the commercial bank and its strategic investment choices. MDA Stands for Maximum Distributable Amount i.e. a limit to the distributable profits in order to preserve the Combined Buffer Requirement. Medium Term Note Bond with a maturity of between 5 and 10 years. Merchant banking This term covers activities such as the subscription of securities, shares or debt instruments, by corporate customers for subsequent placement on the market, the taking of more permanent equity interests but always with a view to subsequent disposal, and the conduct of business consultancy activities for the purposes of mergers and acquisitions or restructurings. Monoline Insurers Insurance companies that insure only one kind of risk. Against payment of premium they guarantee the repayment of principal and interest of bonds, usually “ABS - Asset Backed Securities” (see item) or US municipal bonds, on default by the issuer, which enables the guaranteed bond to obtain a better rating than similar unguaranteed issues. Non-Performing Exposures According to EBA Implementing Technical Standards, Non-Performing Exposures are debt instruments and off-balance sheet exposures which satisfy either or both of the following criteria: (i) material exposures which are more than 90 days past-due; (ii) the debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or of the number of days past due. NOPAT - Net Operating Profit After Tax Net Operating Profit after tax and minority interests, adjusted by elements that would not allow to assess the capability to create value through ordinary operations. It represents the share of Group Net Profit produced by typical business activities, gross of the costs of capital. Notch Level, referred to a scale. Glossary UniCredit ·2018 Annual Report and Accounts 783 Leveraged Finance Loans provided mainly to Private Equity funds in order to finance the acquisition of a company through a financial transaction based on the cash flow generation capacity of such target company. This can result in a higher level of debt and therefore a higher level of risk. Leveraged finance may be syndicated. LGD - Loss Given Default Expected value (which may be conditional upon adverse scenarios) of the ratio, expressed as a percentage, between the loss giving rise to the default and the amount of exposure at the time of the default (“EAD - Exposure At Default”, see item). Liquidity risk The risk of the company being unable to meet its payment commitments due to the inability to mobilise assets or obtain adequate funding from the market (funding liquidity risk) or due to the difficulty/impossibility of easily liquidating positions in financial assets without significantly and unfavourably affecting the price because of insufficient depth or temporary malfunction of the financial market (market liquidity risk). M - Maturity The average, for a given exposure, of the residual contractual maturities, each weighted for the relevant amount. Mark-up Positive differential with respect to a benchmark index, generally an interbank rate, applied to the lending rate offered to customers. Market risk The effect that changes in market variables might have on the economic value of the Group's portfolio, where this includes both the assets held in the Trading Book and those entered in the Banking Book, or the operations connected with the characteristic management of the commercial bank and its strategic investment choices. MDA Stands for Maximum Distributable Amount i.e. a limit to the distributable profits in order to preserve the Combined Buffer Requirement. Medium Term Note Bond with a maturity of between 5 and 10 years. Merchant banking This term covers activities such as the subscription of securities, shares or debt instruments, by corporate customers for subsequent placement on the market, the taking of more permanent equity interests but always with a view to subsequent disposal, and the conduct of business consultancy activities for the purposes of mergers and acquisitions or restructurings. Monoline Insurers Insurance companies that insure only one kind of risk. Against payment of premium they guarantee the repayment of principal and interest of bonds, usually “ABS - Asset Backed Securities” (see item) or US municipal bonds, on default by the issuer, which enables the guaranteed bond to obtain a better rating than similar unguaranteed issues. Non-Performing Exposures According to EBA Implementing Technical Standards, Non-Performing Exposures are debt instruments and off-balance sheet exposures which satisfy either or both of the following criteria: (i) material exposures which are more than 90 days past-due; (ii) the debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or of the number of days past due. NOPAT - Net Operating Profit After Tax Net Operating Profit after tax and minority interests, adjusted by elements that would not allow to assess the capability to create value through ordinary operations. It represents the share of Group Net Profit produced by typical business activities, gross of the costs of capital. Notch Level, referred to a scale.  Glossary 784 2018 Annual Report and Accounts · UniCredit Operational risk The risk of losses due to errors, violations, interruptions, damages caused by internal processes, personnel or systems, or by external events. This definition includes legal and compliance risk, but excludes strategic and reputational risk. For example, operational risks include losses deriving from internal or external fraud, employment contracts and employment protection regulations, customer claims, distribution of products, fines and other sanctions arising from breaches of regulations, damages to the company’s assets, interruption of operations, malfunction of systems and the management of processes. Option The right, but not the commitment, acquired by the payment of a premium, to buy (call option) or sell (put option) a financial instrument at a given price (strike price) by or at a determined future date (American option/European option). Originator The entity that originated the assets to be securitised or acquired them from others. OTC - Over the counter Over-the-counter (OTC) trading consists of the exchange of financial instruments such as shares, bonds, derivatives or goods directly between two counterparties. The OTC markets do not have standardised contracts or buying/selling procedures and are not associated with a set of rules (admissions, controls, obligations of information, etc.) like those that govern the official markets. Overcollateralisation The value of the assets underlying the bonds issued is higher than the amount of the bonds. Past Due Problematic exposures that, at the reporting date, are more than 90 days past due on any material obligation, as required by the relevant prudential regulation. Past due can be determined either at individual debtor or at single transaction level according to the relevant local prudential regulation. Payout ratio It indicates the percentage of net income that is distributed to shareholders. The percentage distributed is determined mainly on the basis of the company’s self-financing needs and the return expected by shareholders. PD - Probability of Default Probability of a counterparty entering into a situation of "default" (see item) within a time horizon of one year. Preference shares Capital instruments that associate forms of remuneration tied to market rates with particularly pronounced subordination conditions, such as non-recovery in subsequent years of the interest not paid by the bank and bearing a share of its losses in the event that these produce a significant reduction in the capital requirements. The regulatory authorities set the conditions under which preference shares may be counted among the core capital of banks and banking groups. Private banking Financial services aimed at so-called "high-end" private customers for the global management of financial needs. Private equity Investments in the risk capital of companies, generally unlisted but with high growth potential and the ability to generate constant cash flows. Investments in private equity include a wide range of operations that vary according to both the development phase of the company concerned and the investment techniques used. These techniques include closed-end private equity funds. Purchase Companies Vehicle used by “ABCP Conduits - Asset Backed Commercial Paper Conduits” (see item) to purchase the assets to be securitised and subsequently financed by the Conduit vehicle by means of commercial paper. Rating Evaluation of the quality of a company or its issues of debt securities on the basis of the company's financial soundness and prospects. This evaluation is made either by specialist agencies or by the bank on the basis of internal models. Glossary 784 2018 Annual Report and Accounts · UniCredit Operational risk The risk of losses due to errors, violations, interruptions, damages caused by internal processes, personnel or systems, or by external events. This definition includes legal and compliance risk, but excludes strategic and reputational risk. For example, operational risks include losses deriving from internal or external fraud, employment contracts and employment protection regulations, customer claims, distribution of products, fines and other sanctions arising from breaches of regulations, damages to the company’s assets, interruption of operations, malfunction of systems and the management of processes. Option The right, but not the commitment, acquired by the payment of a premium, to buy (call option) or sell (put option) a financial instrument at a given price (strike price) by or at a determined future date (American option/European option). Originator The entity that originated the assets to be securitised or acquired them from others. OTC - Over the counter Over-the-counter (OTC) trading consists of the exchange of financial instruments such as shares, bonds, derivatives or goods directly between two counterparties. The OTC markets do not have standardised contracts or buying/selling procedures and are not associated with a set of rules (admissions, controls, obligations of information, etc.) like those that govern the official markets. Overcollateralisation The value of the assets underlying the bonds issued is higher than the amount of the bonds. Past Due Problematic exposures that, at the reporting date, are more than 90 days past due on any material obligation, as required by the relevant prudential regulation. Past due can be determined either at individual debtor or at single transaction level according to the relevant local prudential regulation. Payout ratio It indicates the percentage of net income that is distributed to shareholders. The percentage distributed is determined mainly on the basis of the company’s self-financing needs and the return expected by shareholders. PD - Probability of Default Probability of a counterparty entering into a situation of "default" (see item) within a time horizon of one year. Preference shares Capital instruments that associate forms of remuneration tied to market rates with particularly pronounced subordination conditions, such as non-recovery in subsequent years of the interest not paid by the bank and bearing a share of its losses in the event that these produce a significant reduction in the capital requirements. The regulatory authorities set the conditions under which preference shares may be counted among the core capital of banks and banking groups. Private banking Financial services aimed at so-called "high-end" private customers for the global management of financial needs. Private equity Investments in the risk capital of companies, generally unlisted but with high growth potential and the ability to generate constant cash flows. Investments in private equity include a wide range of operations that vary according to both the development phase of the company concerned and the investment techniques used. These techniques include closed-end private equity funds. Purchase Companies Vehicle used by “ABCP Conduits - Asset Backed Commercial Paper Conduits” (see item) to purchase the assets to be securitised and subsequently financed by the Conduit vehicle by means of commercial paper. Rating Evaluation of the quality of a company or its issues of debt securities on the basis of the company's financial soundness and prospects. This evaluation is made either by specialist agencies or by the bank on the basis of internal models. Glossary 784 2018 Annual Report and Accounts · UniCredit Operational risk The risk of losses due to errors, violations, interruptions, damages caused by internal processes, personnel or systems, or by external events. This definition includes legal and compliance risk, but excludes strategic and reputational risk. For example, operational risks include losses deriving from internal or external fraud, employment contracts and employment protection regulations, customer claims, distribution of products, fines and other sanctions arising from breaches of regulations, damages to the company’s assets, interruption of operations, malfunction of systems and the management of processes. Option The right, but not the commitment, acquired by the payment of a premium, to buy (call option) or sell (put option) a financial instrument at a given price (strike price) by or at a determined future date (American option/European option). Originator The entity that originated the assets to be securitised or acquired them from others. OTC - Over the counter Over-the-counter (OTC) trading consists of the exchange of financial instruments such as shares, bonds, derivatives or goods directly between two counterparties. The OTC markets do not have standardised contracts or buying/selling procedures and are not associated with a set of rules (admissions, controls, obligations of information, etc.) like those that govern the official markets. Overcollateralisation The value of the assets underlying the bonds issued is higher than the amount of the bonds. Past Due Problematic exposures that, at the reporting date, are more than 90 days past due on any material obligation, as required by the relevant prudential regulation. Past due can be determined either at individual debtor or at single transaction level according to the relevant local prudential regulation. Payout ratio It indicates the percentage of net income that is distributed to shareholders. The percentage distributed is determined mainly on the basis of the company’s self-financing needs and the return expected by shareholders. PD - Probability of Default Probability of a counterparty entering into a situation of "default" (see item) within a time horizon of one year. Preference shares Capital instruments that associate forms of remuneration tied to market rates with particularly pronounced subordination conditions, such as non-recovery in subsequent years of the interest not paid by the bank and bearing a share of its losses in the event that these produce a significant reduction in the capital requirements. The regulatory authorities set the conditions under which preference shares may be counted among the core capital of banks and banking groups. Private banking Financial services aimed at so-called "high-end" private customers for the global management of financial needs. Private equity Investments in the risk capital of companies, generally unlisted but with high growth potential and the ability to generate constant cash flows. Investments in private equity include a wide range of operations that vary according to both the development phase of the company concerned and the investment techniques used. These techniques include closed-end private equity funds. Purchase Companies Vehicle used by “ABCP Conduits - Asset Backed Commercial Paper Conduits” (see item) to purchase the assets to be securitised and subsequently financed by the Conduit vehicle by means of commercial paper. Rating Evaluation of the quality of a company or its issues of debt securities on the basis of the company's financial soundness and prospects. This evaluation is made either by specialist agencies or by the bank on the basis of internal models. Glossary 784 2018 Annual Report and Accounts · UniCredit Operational risk The risk of losses due to errors, violations, interruptions, damages caused by internal processes, personnel or systems, or by external events. This definition includes legal and compliance risk, but excludes strategic and reputational risk. For example, operational risks include losses deriving from internal or external fraud, employment contracts and employment protection regulations, customer claims, distribution of products, fines and other sanctions arising from breaches of regulations, damages to the company’s assets, interruption of operations, malfunction of systems and the management of processes. Option The right, but not the commitment, acquired by the payment of a premium, to buy (call option) or sell (put option) a financial instrument at a given price (strike price) by or at a determined future date (American option/European option). Originator The entity that originated the assets to be securitised or acquired them from others. OTC - Over the counter Over-the-counter (OTC) trading consists of the exchange of financial instruments such as shares, bonds, derivatives or goods directly between two counterparties. The OTC markets do not have standardised contracts or buying/selling procedures and are not associated with a set of rules (admissions, controls, obligations of information, etc.) like those that govern the official markets. Overcollateralisation The value of the assets underlying the bonds issued is higher than the amount of the bonds. Past Due Problematic exposures that, at the reporting date, are more than 90 days past due on any material obligation, as required by the relevant prudential regulation. Past due can be determined either at individual debtor or at single transaction level according to the relevant local prudential regulation. Payout ratio It indicates the percentage of net income that is distributed to shareholders. The percentage distributed is determined mainly on the basis of the company’s self-financing needs and the return expected by shareholders. PD - Probability of Default Probability of a counterparty entering into a situation of "default" (see item) within a time horizon of one year. Preference shares Capital instruments that associate forms of remuneration tied to market rates with particularly pronounced subordination conditions, such as non-recovery in subsequent years of the interest not paid by the bank and bearing a share of its losses in the event that these produce a significant reduction in the capital requirements. The regulatory authorities set the conditions under which preference shares may be counted among the core capital of banks and banking groups. Private banking Financial services aimed at so-called "high-end" private customers for the global management of financial needs. Private equity Investments in the risk capital of companies, generally unlisted but with high growth potential and the ability to generate constant cash flows. Investments in private equity include a wide range of operations that vary according to both the development phase of the company concerned and the investment techniques used. These techniques include closed-end private equity funds. Purchase Companies Vehicle used by “ABCP Conduits - Asset Backed Commercial Paper Conduits” (see item) to purchase the assets to be securitised and subsequently financed by the Conduit vehicle by means of commercial paper. Rating Evaluation of the quality of a company or its issues of debt securities on the basis of the company's financial soundness and prospects. This evaluation is made either by specialist agencies or by the bank on the basis of internal models. Glossary 784 2018 Annual Report and Accounts · UniCredit Operational risk The risk of losses due to errors, violations, interruptions, damages caused by internal processes, personnel or systems, or by external events. This definition includes legal and compliance risk, but excludes strategic and reputational risk. For example, operational risks include losses deriving from internal or external fraud, employment contracts and employment protection regulations, customer claims, distribution of products, fines and other sanctions arising from breaches of regulations, damages to the company’s assets, interruption of operations, malfunction of systems and the management of processes. Option The right, but not the commitment, acquired by the payment of a premium, to buy (call option) or sell (put option) a financial instrument at a given price (strike price) by or at a determined future date (American option/European option). Originator The entity that originated the assets to be securitised or acquired them from others. OTC - Over the counter Over-the-counter (OTC) trading consists of the exchange of financial instruments such as shares, bonds, derivatives or goods directly between two counterparties. The OTC markets do not have standardised contracts or buying/selling procedures and are not associated with a set of rules (admissions, controls, obligations of information, etc.) like those that govern the official markets. Overcollateralisation The value of the assets underlying the bonds issued is higher than the amount of the bonds. Past Due Problematic exposures that, at the reporting date, are more than 90 days past due on any material obligation, as required by the relevant prudential regulation. Past due can be determined either at individual debtor or at single transaction level according to the relevant local prudential regulation. Payout ratio It indicates the percentage of net income that is distributed to shareholders. The percentage distributed is determined mainly on the basis of the company’s self-financing needs and the return expected by shareholders. PD - Probability of Default Probability of a counterparty entering into a situation of "default" (see item) within a time horizon of one year. Preference shares Capital instruments that associate forms of remuneration tied to market rates with particularly pronounced subordination conditions, such as non-recovery in subsequent years of the interest not paid by the bank and bearing a share of its losses in the event that these produce a significant reduction in the capital requirements. The regulatory authorities set the conditions under which preference shares may be counted among the core capital of banks and banking groups. Private banking Financial services aimed at so-called "high-end" private customers for the global management of financial needs. Private equity Investments in the risk capital of companies, generally unlisted but with high growth potential and the ability to generate constant cash flows. Investments in private equity include a wide range of operations that vary according to both the development phase of the company concerned and the investment techniques used. These techniques include closed-end private equity funds. Purchase Companies Vehicle used by “ABCP Conduits - Asset Backed Commercial Paper Conduits” (see item) to purchase the assets to be securitised and subsequently financed by the Conduit vehicle by means of commercial paper. Rating Evaluation of the quality of a company or its issues of debt securities on the basis of the company's financial soundness and prospects. This evaluation is made either by specialist agencies or by the bank on the basis of internal models.  Glossary UniCredit ·2018 Annual Report and Accounts 785 RBA Ratings-Based Approach. Retail Customer segment consisting principally of private individuals, self-employed professionals, traders and artisans. RIC IRB calculation model - Rating Integrato Privati (Individuals Integrate Rating). RISB IRB calculation model - Rating Integrato Small Business (Small Business Integrate Rating). RMBS - Residential Mortgage Backed Securities Asset Backed Securities (see item) with residential mortgages as underlyings. ROA - Return On Asset Ratio between Net Profit/(Loss) of the year and Total Assets as per IFRS balance sheet. ROAC - Return On Allocated Capital Annualised ratio between the net profit and the average allocated capital. It shows in percentage terms the earning capacity for absorbed capital units. A corrective factor is applied to divisional net profit where capitalisation is substantially higher than Group’s target. ROTE - Return on Tangible Equity Annualised ratio between the net profit and the average tangible equity. Tangible Equity is defined as Shareholders’ equity (including Consolidated Profit of the period) less intangible assets (goodwill and other intangibles), less AT1 component. Dividend pay-out is accounted for on a cash basis. RUF Revolving Underwriting Facility. RWA - Risk Weighted Assets On-balance sheet assets and off-balance sheet assets (derivatives and guarantees) classified and weighted by different coefficients referring to risks, following banking rules issued by local Supervisors (i.e. Banca d’Italia, Bafin, etc.), to calculate solvency ratios. Securitisation Transfer of a portfolio of assets to an “SPV - Special Purpose Vehicle” (see item) and the issue of securities with various levels of seniority to meet any default by the underlying assets. Securitisations can be: • traditional: method of securitisation whereby transfer of the assets is by means of sale of the portfolio to the “SPV - Special Purpose Vehicle” (see item); • synthetic: method of securitisation whereby the transfer of assets is by means of credit derivatives or similar security enabling the risk of the portfolio to be transferred. Sensitivity The greater or lesser degree of sensitivity with which certain assets or liabilities react to changes in rates or other reference parameters. SFA Supervisory Formula Approach. SL Specialised Lending. SME Small and Medium Enterprises. Glossary UniCredit ·2018 Annual Report and Accounts 785 RBA Ratings-Based Approach. Retail Customer segment consisting principally of private individuals, self-employed professionals, traders and artisans. RIC IRB calculation model - Rating Integrato Privati (Individuals Integrate Rating). RISB IRB calculation model - Rating Integrato Small Business (Small Business Integrate Rating). RMBS - Residential Mortgage Backed Securities Asset Backed Securities (see item) with residential mortgages as underlyings. ROA - Return On Asset Ratio between Net Profit/(Loss) of the year and Total Assets as per IFRS balance sheet. ROAC - Return On Allocated Capital Annualised ratio between the net profit and the average allocated capital. It shows in percentage terms the earning capacity for absorbed capital units. A corrective factor is applied to divisional net profit where capitalisation is substantially higher than Group’s target. ROTE - Return on Tangible Equity Annualised ratio between the net profit and the average tangible equity. Tangible Equity is defined as Shareholders’ equity (including Consolidated Profit of the period) less intangible assets (goodwill and other intangibles), less AT1 component. Dividend pay-out is accounted for on a cash basis. RUF Revolving Underwriting Facility. RWA - Risk Weighted Assets On-balance sheet assets and off-balance sheet assets (derivatives and guarantees) classified and weighted by different coefficients referring to risks, following banking rules issued by local Supervisors (i.e. Banca d’Italia, Bafin, etc.), to calculate solvency ratios. Securitisation Transfer of a portfolio of assets to an “SPV - Special Purpose Vehicle” (see item) and the issue of securities with various levels of seniority to meet any default by the underlying assets. Securitisations can be: • traditional: method of securitisation whereby transfer of the assets is by means of sale of the portfolio to the “SPV - Special Purpose Vehicle” (see item); • synthetic: method of securitisation whereby the transfer of assets is by means of credit derivatives or similar security enabling the risk of the portfolio to be transferred. Sensitivity The greater or lesser degree of sensitivity with which certain assets or liabilities react to changes in rates or other reference parameters. SFA Supervisory Formula Approach. SL Specialised Lending. SME Small and Medium Enterprises. Glossary UniCredit ·2018 Annual Report and Accounts 785 RBA Ratings-Based Approach. Retail Customer segment consisting principally of private individuals, self-employed professionals, traders and artisans. RIC IRB calculation model - Rating Integrato Privati (Individuals Integrate Rating). RISB IRB calculation model - Rating Integrato Small Business (Small Business Integrate Rating). RMBS - Residential Mortgage Backed Securities Asset Backed Securities (see item) with residential mortgages as underlyings. ROA - Return On Asset Ratio between Net Profit/(Loss) of the year and Total Assets as per IFRS balance sheet. ROAC - Return On Allocated Capital Annualised ratio between the net profit and the average allocated capital. It shows in percentage terms the earning capacity for absorbed capital units. A corrective factor is applied to divisional net profit where capitalisation is substantially higher than Group’s target. ROTE - Return on Tangible Equity Annualised ratio between the net profit and the average tangible equity. Tangible Equity is defined as Shareholders’ equity (including Consolidated Profit of the period) less intangible assets (goodwill and other intangibles), less AT1 component. Dividend pay-out is accounted for on a cash basis. RUF Revolving Underwriting Facility. RWA - Risk Weighted Assets On-balance sheet assets and off-balance sheet assets (derivatives and guarantees) classified and weighted by different coefficients referring to risks, following banking rules issued by local Supervisors (i.e. Banca d’Italia, Bafin, etc.), to calculate solvency ratios. Securitisation Transfer of a portfolio of assets to an “SPV - Special Purpose Vehicle” (see item) and the issue of securities with various levels of seniority to meet any default by the underlying assets. Securitisations can be: • traditional: method of securitisation whereby transfer of the assets is by means of sale of the portfolio to the “SPV - Special Purpose Vehicle” (see item); • synthetic: method of securitisation whereby the transfer of assets is by means of credit derivatives or similar security enabling the risk of the portfolio to be transferred. Sensitivity The greater or lesser degree of sensitivity with which certain assets or liabilities react to changes in rates or other reference parameters. SFA Supervisory Formula Approach. SL Specialised Lending. SME Small and Medium Enterprises. Glossary UniCredit ·2018 Annual Report and Accounts 785 RBA Ratings-Based Approach. Retail Customer segment consisting principally of private individuals, self-employed professionals, traders and artisans. RIC IRB calculation model - Rating Integrato Privati (Individuals Integrate Rating). RISB IRB calculation model - Rating Integrato Small Business (Small Business Integrate Rating). RMBS - Residential Mortgage Backed Securities Asset Backed Securities (see item) with residential mortgages as underlyings. ROA - Return On Asset Ratio between Net Profit/(Loss) of the year and Total Assets as per IFRS balance sheet. ROAC - Return On Allocated Capital Annualised ratio between the net profit and the average allocated capital. It shows in percentage terms the earning capacity for absorbed capital units. A corrective factor is applied to divisional net profit where capitalisation is substantially higher than Group’s target. ROTE - Return on Tangible Equity Annualised ratio between the net profit and the average tangible equity. Tangible Equity is defined as Shareholders’ equity (including Consolidated Profit of the period) less intangible assets (goodwill and other intangibles), less AT1 component. Dividend pay-out is accounted for on a cash basis. RUF Revolving Underwriting Facility. RWA - Risk Weighted Assets On-balance sheet assets and off-balance sheet assets (derivatives and guarantees) classified and weighted by different coefficients referring to risks, following banking rules issued by local Supervisors (i.e. Banca d’Italia, Bafin, etc.), to calculate solvency ratios. Securitisation Transfer of a portfolio of assets to an “SPV - Special Purpose Vehicle” (see item) and the issue of securities with various levels of seniority to meet any default by the underlying assets. Securitisations can be: • traditional: method of securitisation whereby transfer of the assets is by means of sale of the portfolio to the “SPV - Special Purpose Vehicle” (see item); • synthetic: method of securitisation whereby the transfer of assets is by means of credit derivatives or similar security enabling the risk of the portfolio to be transferred. Sensitivity The greater or lesser degree of sensitivity with which certain assets or liabilities react to changes in rates or other reference parameters. SFA Supervisory Formula Approach. SL Specialised Lending. SME Small and Medium Enterprises. Glossary UniCredit ·2018 Annual Report and Accounts 785 RBA Ratings-Based Approach. Retail Customer segment consisting principally of private individuals, self-employed professionals, traders and artisans. RIC IRB calculation model - Rating Integrato Privati (Individuals Integrate Rating). RISB IRB calculation model - Rating Integrato Small Business (Small Business Integrate Rating). RMBS - Residential Mortgage Backed Securities Asset Backed Securities (see item) with residential mortgages as underlyings. ROA - Return On Asset Ratio between Net Profit/(Loss) of the year and Total Assets as per IFRS balance sheet. ROAC - Return On Allocated Capital Annualised ratio between the net profit and the average allocated capital. It shows in percentage terms the earning capacity for absorbed capital units. A corrective factor is applied to divisional net profit where capitalisation is substantially higher than Group’s target. ROTE - Return on Tangible Equity Annualised ratio between the net profit and the average tangible equity. Tangible Equity is defined as Shareholders’ equity (including Consolidated Profit of the period) less intangible assets (goodwill and other intangibles), less AT1 component. Dividend pay-out is accounted for on a cash basis. RUF Revolving Underwriting Facility. RWA - Risk Weighted Assets On-balance sheet assets and off-balance sheet assets (derivatives and guarantees) classified and weighted by different coefficients referring to risks, following banking rules issued by local Supervisors (i.e. Banca d’Italia, Bafin, etc.), to calculate solvency ratios. Securitisation Transfer of a portfolio of assets to an “SPV - Special Purpose Vehicle” (see item) and the issue of securities with various levels of seniority to meet any default by the underlying assets. Securitisations can be: • traditional: method of securitisation whereby transfer of the assets is by means of sale of the portfolio to the “SPV - Special Purpose Vehicle” (see item); • synthetic: method of securitisation whereby the transfer of assets is by means of credit derivatives or similar security enabling the risk of the portfolio to be transferred. Sensitivity The greater or lesser degree of sensitivity with which certain assets or liabilities react to changes in rates or other reference parameters. SFA Supervisory Formula Approach. SL Specialised Lending. SME Small and Medium Enterprises.  Glossary 786 2018 Annual Report and Accounts · UniCredit Sponsor An entity other than the Originator (see item) which sets up and manages an ABCP conduit or other securitisation scheme where assets are acquired from a third entity for securitisation. SPV - Special Purpose Vehicles An entity, partnership, limited company or trust, set up to carry out a set object, such as isolating financial risk or obtaining special regulatory or tax treatment for specific portfolios of financial assets. SPV’s operations are accordingly limited by a set of rules designed for this purpose. In general SPVs’ sponsors (see item) do not hold equity in them. The equity is held by other entities in order to ensure that there is no shareholder relationship with the Sponsor (see item). SPVs are usually bankruptcy-remote, in that their assets cannot be claimed by the creditors of the sponsor, even if the latter becomes insolvent. Stress Test Risk measure complementary to the VaR, that allows a portfolio analysis with stress exercises by the application of simple and complex scenarios. Subprime (Residential Mortgages) Although Subprime has no univocal definition, this category includes mortgages granted to borrowers who have had repayment difficulties in the past, e.g. delayed installments, insolvency or bankruptcy, or who are more likely to default than the average due to high loan-to-value and installment-to-income ratios. SVaR - Stressed VaR Stressed VaR is a quantification of exposures to particular extreme losses that can be inflicted to a Bank during market tensions, by modeling the portfolio response conditional on historical data from a (continuous 12-month) period of significant financial stress. Swap A transaction that generally consists of the exchange of financial streams between operators according to different contractual arrangements. In the case of an interest rate swap (IRS), the counterparties exchange payment streams that may or may not be linked to interest rates, calculated on a notional principal amount (for example, one counterparty pays a stream on the basis of a fixed rate, while the other does so on the basis of a variable rate). In the case of a currency swap, the counterparties exchange specific amounts in two different currencies, with these amounts being exchanged back in due course according to predefined arrangements that may concern both the capital (notional) and the streams of interest payments. Tier 1 Capital The most reliable and liquid part of a bank’s capital, as defined by regulatory rules. Tier 1 Capital Ratio The percentage of a bank’s Tier 1 Capital to its risk weighted assets “RWA - Risk Weighted Assets” (see item). TSR - Total Shareholder Return It is the full reward, in terms of capital gain and dividends, that a shareholder gets from holding one share. UCI - Undertakings for Collective Investment This term includes "UCITS" (see item) and other collective investment Funds (real estate collective investment funds, closed-end investment funds). UCITS - Undertakings for Collective Investment in Transferable Securities This term covers open-end real estate investment funds, both Italian and foreign, and investment companies with variable capital. The latter are joint stock companies that have the sole purpose of collective investment of the assets gathered through a public offer of their own shares. UGRM The pool of software applications, IT structure and database used by The Group for the financial risk analysis. UL Unexpected Losses are the losses exceeding the expected losses. Glossary 786 2018 Annual Report and Accounts · UniCredit Sponsor An entity other than the Originator (see item) which sets up and manages an ABCP conduit or other securitisation scheme where assets are acquired from a third entity for securitisation. SPV - Special Purpose Vehicles An entity, partnership, limited company or trust, set up to carry out a set object, such as isolating financial risk or obtaining special regulatory or tax treatment for specific portfolios of financial assets. SPV’s operations are accordingly limited by a set of rules designed for this purpose. In general SPVs’ sponsors (see item) do not hold equity in them. The equity is held by other entities in order to ensure that there is no shareholder relationship with the Sponsor (see item). SPVs are usually bankruptcy-remote, in that their assets cannot be claimed by the creditors of the sponsor, even if the latter becomes insolvent. Stress Test Risk measure complementary to the VaR, that allows a portfolio analysis with stress exercises by the application of simple and complex scenarios. Subprime (Residential Mortgages) Although Subprime has no univocal definition, this category includes mortgages granted to borrowers who have had repayment difficulties in the past, e.g. delayed installments, insolvency or bankruptcy, or who are more likely to default than the average due to high loan-to-value and installment-to-income ratios. SVaR - Stressed VaR Stressed VaR is a quantification of exposures to particular extreme losses that can be inflicted to a Bank during market tensions, by modeling the portfolio response conditional on historical data from a (continuous 12-month) period of significant financial stress. Swap A transaction that generally consists of the exchange of financial streams between operators according to different contractual arrangements. In the case of an interest rate swap (IRS), the counterparties exchange payment streams that may or may not be linked to interest rates, calculated on a notional principal amount (for example, one counterparty pays a stream on the basis of a fixed rate, while the other does so on the basis of a variable rate). In the case of a currency swap, the counterparties exchange specific amounts in two different currencies, with these amounts being exchanged back in due course according to predefined arrangements that may concern both the capital (notional) and the streams of interest payments. Tier 1 Capital The most reliable and liquid part of a bank’s capital, as defined by regulatory rules. Tier 1 Capital Ratio The percentage of a bank’s Tier 1 Capital to its risk weighted assets “RWA - Risk Weighted Assets” (see item). TSR - Total Shareholder Return It is the full reward, in terms of capital gain and dividends, that a shareholder gets from holding one share. UCI - Undertakings for Collective Investment This term includes "UCITS" (see item) and other collective investment Funds (real estate collective investment funds, closed-end investment funds). UCITS - Undertakings for Collective Investment in Transferable Securities This term covers open-end real estate investment funds, both Italian and foreign, and investment companies with variable capital. The latter are joint stock companies that have the sole purpose of collective investment of the assets gathered through a public offer of their own shares. UGRM The pool of software applications, IT structure and database used by The Group for the financial risk analysis. UL Unexpected Losses are the losses exceeding the expected losses. Glossary 786 2018 Annual Report and Accounts · UniCredit Sponsor An entity other than the Originator (see item) which sets up and manages an ABCP conduit or other securitisation scheme where assets are acquired from a third entity for securitisation. SPV - Special Purpose Vehicles An entity, partnership, limited company or trust, set up to carry out a set object, such as isolating financial risk or obtaining special regulatory or tax treatment for specific portfolios of financial assets. SPV’s operations are accordingly limited by a set of rules designed for this purpose. In general SPVs’ sponsors (see item) do not hold equity in them. The equity is held by other entities in order to ensure that there is no shareholder relationship with the Sponsor (see item). SPVs are usually bankruptcy-remote, in that their assets cannot be claimed by the creditors of the sponsor, even if the latter becomes insolvent. Stress Test Risk measure complementary to the VaR, that allows a portfolio analysis with stress exercises by the application of simple and complex scenarios. Subprime (Residential Mortgages) Although Subprime has no univocal definition, this category includes mortgages granted to borrowers who have had repayment difficulties in the past, e.g. delayed installments, insolvency or bankruptcy, or who are more likely to default than the average due to high loan-to-value and installment-to-income ratios. SVaR - Stressed VaR Stressed VaR is a quantification of exposures to particular extreme losses that can be inflicted to a Bank during market tensions, by modeling the portfolio response conditional on historical data from a (continuous 12-month) period of significant financial stress. Swap A transaction that generally consists of the exchange of financial streams between operators according to different contractual arrangements. In the case of an interest rate swap (IRS), the counterparties exchange payment streams that may or may not be linked to interest rates, calculated on a notional principal amount (for example, one counterparty pays a stream on the basis of a fixed rate, while the other does so on the basis of a variable rate). In the case of a currency swap, the counterparties exchange specific amounts in two different currencies, with these amounts being exchanged back in due course according to predefined arrangements that may concern both the capital (notional) and the streams of interest payments. Tier 1 Capital The most reliable and liquid part of a bank’s capital, as defined by regulatory rules. Tier 1 Capital Ratio The percentage of a bank’s Tier 1 Capital to its risk weighted assets “RWA - Risk Weighted Assets” (see item). TSR - Total Shareholder Return It is the full reward, in terms of capital gain and dividends, that a shareholder gets from holding one share. UCI - Undertakings for Collective Investment This term includes "UCITS" (see item) and other collective investment Funds (real estate collective investment funds, closed-end investment funds). UCITS - Undertakings for Collective Investment in Transferable Securities This term covers open-end real estate investment funds, both Italian and foreign, and investment companies with variable capital. The latter are joint stock companies that have the sole purpose of collective investment of the assets gathered through a public offer of their own shares. UGRM The pool of software applications, IT structure and database used by The Group for the financial risk analysis. UL Unexpected Losses are the losses exceeding the expected losses. Glossary 786 2018 Annual Report and Accounts · UniCredit Sponsor An entity other than the Originator (see item) which sets up and manages an ABCP conduit or other securitisation scheme where assets are acquired from a third entity for securitisation. SPV - Special Purpose Vehicles An entity, partnership, limited company or trust, set up to carry out a set object, such as isolating financial risk or obtaining special regulatory or tax treatment for specific portfolios of financial assets. SPV’s operations are accordingly limited by a set of rules designed for this purpose. In general SPVs’ sponsors (see item) do not hold equity in them. The equity is held by other entities in order to ensure that there is no shareholder relationship with the Sponsor (see item). SPVs are usually bankruptcy-remote, in that their assets cannot be claimed by the creditors of the sponsor, even if the latter becomes insolvent. Stress Test Risk measure complementary to the VaR, that allows a portfolio analysis with stress exercises by the application of simple and complex scenarios. Subprime (Residential Mortgages) Although Subprime has no univocal definition, this category includes mortgages granted to borrowers who have had repayment difficulties in the past, e.g. delayed installments, insolvency or bankruptcy, or who are more likely to default than the average due to high loan-to-value and installment-to-income ratios. SVaR - Stressed VaR Stressed VaR is a quantification of exposures to particular extreme losses that can be inflicted to a Bank during market tensions, by modeling the portfolio response conditional on historical data from a (continuous 12-month) period of significant financial stress. Swap A transaction that generally consists of the exchange of financial streams between operators according to different contractual arrangements. In the case of an interest rate swap (IRS), the counterparties exchange payment streams that may or may not be linked to interest rates, calculated on a notional principal amount (for example, one counterparty pays a stream on the basis of a fixed rate, while the other does so on the basis of a variable rate). In the case of a currency swap, the counterparties exchange specific amounts in two different currencies, with these amounts being exchanged back in due course according to predefined arrangements that may concern both the capital (notional) and the streams of interest payments. Tier 1 Capital The most reliable and liquid part of a bank’s capital, as defined by regulatory rules. Tier 1 Capital Ratio The percentage of a bank’s Tier 1 Capital to its risk weighted assets “RWA - Risk Weighted Assets” (see item). TSR - Total Shareholder Return It is the full reward, in terms of capital gain and dividends, that a shareholder gets from holding one share. UCI - Undertakings for Collective Investment This term includes "UCITS" (see item) and other collective investment Funds (real estate collective investment funds, closed-end investment funds). UCITS - Undertakings for Collective Investment in Transferable Securities This term covers open-end real estate investment funds, both Italian and foreign, and investment companies with variable capital. The latter are joint stock companies that have the sole purpose of collective investment of the assets gathered through a public offer of their own shares. UGRM The pool of software applications, IT structure and database used by The Group for the financial risk analysis. UL Unexpected Losses are the losses exceeding the expected losses. Glossary 786 2018 Annual Report and Accounts · UniCredit Sponsor An entity other than the Originator (see item) which sets up and manages an ABCP conduit or other securitisation scheme where assets are acquired from a third entity for securitisation. SPV - Special Purpose Vehicles An entity, partnership, limited company or trust, set up to carry out a set object, such as isolating financial risk or obtaining special regulatory or tax treatment for specific portfolios of financial assets. SPV’s operations are accordingly limited by a set of rules designed for this purpose. In general SPVs’ sponsors (see item) do not hold equity in them. The equity is held by other entities in order to ensure that there is no shareholder relationship with the Sponsor (see item). SPVs are usually bankruptcy-remote, in that their assets cannot be claimed by the creditors of the sponsor, even if the latter becomes insolvent. Stress Test Risk measure complementary to the VaR, that allows a portfolio analysis with stress exercises by the application of simple and complex scenarios. Subprime (Residential Mortgages) Although Subprime has no univocal definition, this category includes mortgages granted to borrowers who have had repayment difficulties in the past, e.g. delayed installments, insolvency or bankruptcy, or who are more likely to default than the average due to high loan-to-value and installment-to-income ratios. SVaR - Stressed VaR Stressed VaR is a quantification of exposures to particular extreme losses that can be inflicted to a Bank during market tensions, by modeling the portfolio response conditional on historical data from a (continuous 12-month) period of significant financial stress. Swap A transaction that generally consists of the exchange of financial streams between operators according to different contractual arrangements. In the case of an interest rate swap (IRS), the counterparties exchange payment streams that may or may not be linked to interest rates, calculated on a notional principal amount (for example, one counterparty pays a stream on the basis of a fixed rate, while the other does so on the basis of a variable rate). In the case of a currency swap, the counterparties exchange specific amounts in two different currencies, with these amounts being exchanged back in due course according to predefined arrangements that may concern both the capital (notional) and the streams of interest payments. Tier 1 Capital The most reliable and liquid part of a bank’s capital, as defined by regulatory rules. Tier 1 Capital Ratio The percentage of a bank’s Tier 1 Capital to its risk weighted assets “RWA - Risk Weighted Assets” (see item). TSR - Total Shareholder Return It is the full reward, in terms of capital gain and dividends, that a shareholder gets from holding one share. UCI - Undertakings for Collective Investment This term includes "UCITS" (see item) and other collective investment Funds (real estate collective investment funds, closed-end investment funds). UCITS - Undertakings for Collective Investment in Transferable Securities This term covers open-end real estate investment funds, both Italian and foreign, and investment companies with variable capital. The latter are joint stock companies that have the sole purpose of collective investment of the assets gathered through a public offer of their own shares. UGRM The pool of software applications, IT structure and database used by The Group for the financial risk analysis. UL Unexpected Losses are the losses exceeding the expected losses.  Glossary UniCredit ·2018 Annual Report and Accounts 787 Unlikely to Pay The classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realising collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any amount (or rate) past due and unpaid. US GAAP - United States Generally Accepted Accounting Principles Accounting principles issued by the FASB (Financial Accounting Statement Board), generally accepted in the USA. VaR - Value at Risk A method used for quantifying risk. It measures potential future losses which will not be exceeded within a specified period and with a specified probability. Vintage The year of issue of the collateral underlying bonds created by securitisation. In the case of subprime mortgages this information is an indicator of the riskiness of the bond, since the practice of granting mortgages to subprime borrowers became significant in the US starting in 2005. Warehousing A stage in the preparation of a securitisation transaction whereby an “SPV - Special Purpose Vehicle” (see item) acquires assets for a certain period of time until it reaches a sufficient quantity to be able to issue an ABS. Glossary UniCredit ·2018 Annual Report and Accounts 787 Unlikely to Pay The classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realising collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any amount (or rate) past due and unpaid. US GAAP - United States Generally Accepted Accounting Principles Accounting principles issued by the FASB (Financial Accounting Statement Board), generally accepted in the USA. VaR - Value at Risk A method used for quantifying risk. It measures potential future losses which will not be exceeded within a specified period and with a specified probability. Vintage The year of issue of the collateral underlying bonds created by securitisation. In the case of subprime mortgages this information is an indicator of the riskiness of the bond, since the practice of granting mortgages to subprime borrowers became significant in the US starting in 2005. Warehousing A stage in the preparation of a securitisation transaction whereby an “SPV - Special Purpose Vehicle” (see item) acquires assets for a certain period of time until it reaches a sufficient quantity to be able to issue an ABS. Glossary UniCredit ·2018 Annual Report and Accounts 787 Unlikely to Pay The classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realising collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any amount (or rate) past due and unpaid. US GAAP - United States Generally Accepted Accounting Principles Accounting principles issued by the FASB (Financial Accounting Statement Board), generally accepted in the USA. VaR - Value at Risk A method used for quantifying risk. It measures potential future losses which will not be exceeded within a specified period and with a specified probability. Vintage The year of issue of the collateral underlying bonds created by securitisation. In the case of subprime mortgages this information is an indicator of the riskiness of the bond, since the practice of granting mortgages to subprime borrowers became significant in the US starting in 2005. Warehousing A stage in the preparation of a securitisation transaction whereby an “SPV - Special Purpose Vehicle” (see item) acquires assets for a certain period of time until it reaches a sufficient quantity to be able to issue an ABS. Glossary UniCredit ·2018 Annual Report and Accounts 787 Unlikely to Pay The classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realising collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any amount (or rate) past due and unpaid. US GAAP - United States Generally Accepted Accounting Principles Accounting principles issued by the FASB (Financial Accounting Statement Board), generally accepted in the USA. VaR - Value at Risk A method used for quantifying risk. It measures potential future losses which will not be exceeded within a specified period and with a specified probability. Vintage The year of issue of the collateral underlying bonds created by securitisation. In the case of subprime mortgages this information is an indicator of the riskiness of the bond, since the practice of granting mortgages to subprime borrowers became significant in the US starting in 2005. Warehousing A stage in the preparation of a securitisation transaction whereby an “SPV - Special Purpose Vehicle” (see item) acquires assets for a certain period of time until it reaches a sufficient quantity to be able to issue an ABS. Glossary UniCredit ·2018 Annual Report and Accounts 787 Unlikely to Pay The classification in this category is the result of the judgment of the bank about the unlikeliness, without recourse to actions such as realising collaterals, that the obligor will pay in full (principal and/or interest) its credit obligations. This assessment should be carried out independently of the presence of any amount (or rate) past due and unpaid. US GAAP - United States Generally Accepted Accounting Principles Accounting principles issued by the FASB (Financial Accounting Statement Board), generally accepted in the USA. VaR - Value at Risk A method used for quantifying risk. It measures potential future losses which will not be exceeded within a specified period and with a specified probability. Vintage The year of issue of the collateral underlying bonds created by securitisation. In the case of subprime mortgages this information is an indicator of the riskiness of the bond, since the practice of granting mortgages to subprime borrowers became significant in the US starting in 2005. Warehousing A stage in the preparation of a securitisation transaction whereby an “SPV - Special Purpose Vehicle” (see item) acquires assets for a certain period of time until it reaches a sufficient quantity to be able to issue an ABS.  Glossary 788 2018 Annual Report and Accounts · UniCredit Glossary 788 2018 Annual Report and Accounts · UniCredit Glossary 788 2018 Annual Report and Accounts · UniCredit Glossary 788 2018 Annual Report and Accounts · UniCredit Glossary 788 2018 Annual Report and Accounts · UniCredit  Contacts UniCredit ·2018 Annual Report and Accounts 789 Contacts UniCredit S.p.A. Head Office in Milan Piazza Gae Aulenti 3 - Tower A 20154 Milano +39 02 88 621 Media Relations: Tel. +39 02 88623569; e-mail: MediaRelations@unicredit.eu Investor Relations: Tel. +39 02 88621034; e-mail: InvestorRelations@unicredit.eu Contacts UniCredit ·2018 Annual Report and Accounts 789 Contacts UniCredit S.p.A. Head Office in Milan Piazza Gae Aulenti 3 - Tower A 20154 Milano +39 02 88 621 Media Relations: Tel. +39 02 88623569; e-mail: MediaRelations@unicredit.eu Investor Relations: Tel. +39 02 88621034; e-mail: InvestorRelations@unicredit.eu Contacts UniCredit ·2018 Annual Report and Accounts 789 Contacts UniCredit S.p.A. Head Office in Milan Piazza Gae Aulenti 3 - Tower A 20154 Milano +39 02 88 621 Media Relations: Tel. +39 02 88623569; e-mail: MediaRelations@unicredit.eu Investor Relations: Tel. +39 02 88621034; e-mail: InvestorRelations@unicredit.eu Contacts UniCredit ·2018 Annual Report and Accounts 789 Contacts UniCredit S.p.A. Head Office in Milan Piazza Gae Aulenti 3 - Tower A 20154 Milano +39 02 88 621 Media Relations: Tel. +39 02 88623569; e-mail: MediaRelations@unicredit.eu Investor Relations: Tel. +39 02 88621034; e-mail: InvestorRelations@unicredit.eu Contacts UniCredit ·2018 Annual Report and Accounts 789 Contacts UniCredit S.p.A. Head Office in Milan Piazza Gae Aulenti 3 - Tower A 20154 Milano +39 02 88 621 Media Relations: Tel. +39 02 88623569; e-mail: MediaRelations@unicredit.eu Investor Relations: Tel. +39 02 88621034; e-mail: InvestorRelations@unicredit.eu  I I I I I  Cov er and introduction creativ e def inition: UniCredit S.p.A. S orter pag es creativ e def inition: UniCredit S.p.A. D esig n, g raph ic dev elopm ent and production: UniCredit S.p.A. rint: CPZ S.p.A. April 2019 P h e em issions related to th e printing and distrib ution of th e 2018 Annual Report and Accounts and the 201(cid:27) Integrated Report have been compensated (cid:90)ith the support of Officin(cid:160) (cid:57)erdi, (cid:90)hich uses Gold Standard credits gained through the development of a landfill gas capture project in China(cid:17) The Gold Standard is supported by WWF as it is the most rigorous global certification standard for carbon offset projects(cid:17) T unicreditgroup.eu 

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